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CRS_RL33529	{ "title": [ "", "Overview: U.S.-India Relations", "Notable Developments in 2011", "Early Obama Administration Engagement", "June 2010 Strategic Dialogue", "President Obama's November 2010 Visit to India", "A Permanent U.N. Security Council Seat for India?", "Reactions to the President's Visit", "July 2011 Strategic Dialogue", "India's Foreign Policy and Foreign Relations", "Major Streams of Thought in Indian Foreign Policy", "Rivalry and Conflict With Pakistan49", "The India-Pakistan Peace Process", "Background", "Developments in 2010", "Developments in 2011", "Mumbai Terrorist Attacks and the LeT60", "The Kashmir Dispute66", "India and the Afghan Insurgency73", "Partnership and Reconstruction Assistance", "Afghan Reconciliation, Security Concerns, and the U.S. Drawdown", "India-China Relations: Asia's Titanic Rivalry?83", "Background and Context", "India-China Commercial Relations", "Is There a Chinese \"String of Pearls\" Strategy in the Indian Ocean?", "Recent Developments", "India's Other Regional Foreign Relations", "India-Sri Lanka113", "India-Bangladesh119", "India-Nepal131", "India-Burma138", "India-ASEAN", "India-Iran149", "India-Russia161", "India-Japan166", "India-Africa", "India's Domestic Policy Setting", "National Political System, Elections, and Parties", "National System and Elections", "Major Political Parties", "Indian National Congress172", "Bharatiya Janata Party173", "Regional Parties", "The Left Front177", "Corruption Scandals and Congress Party Woes", "Late 2010 Corruption Stories Break", "Increasing Public Protest and the Rise of Anna Hazare", "Status of the \"Lokpal\" Legislation", "Congress Party Woes", "Notable State-Level Developments", "India's Economy", "Overview", "Poverty", "Poor Infrastructure", "Corruption and Economic Freedoms", "Inflationary Pressures", "Foreign Investment", "Other Economic Issues", "India's Energy, Environment, and Climate Change Policies", "Energy Issues", "The Environment and Climate Change Issues", "Security-Related Issues", "The Indian Military", "Overview and Strategy", "Defense Equipment and Procurement250", "Separatism in the Jammu and Kashmir State", "Background", "Mid-2010 Uprising", "The Search for a Political Solution", "Maoist Rebellion, Other Insurgencies, and Communalism", "Maoist Rebels", "Separatism and Insurgency in the Northeast", "Communal Tensions and Conflict", "Nuclear Arms Control and Nonproliferation", "U.S.-India Bilateral Issues", "U.S.-India Economic and Trade Relations", "U.S.-India Economic Issues and Engagement", "Intellectual Property Rights Protection", "Trade in Dual-Use Technology", "U.S Market Access in India", "India's Participation in the GSP Program", "Bilateral Investment Treaty", "U.S. Restrictions on Trade in Services", "U.S. Farm Subsidy Program", "Multilateral Trade Negotiations322", "Space Cooperation", "U.S.-India Civil Nuclear Cooperation324", "Background", "Recent Developments", "U.S.-India Security Cooperation", "Intelligence and Counterterrorism", "Defense Cooperation and Trade", "Combined Military Exercises", "Defense Trade", "Outstanding Defense Cooperation Agreements", "MMRCA \"Deselection\"", "Human Rights Concerns", "Religious Freedom", "Caste-Based Discrimination", "Human Trafficking", "Female Infanticide and Feticide", "U.S. Foreign Assistance" ], "paragraphs": [ "", "The United States does not just believe, as some people say, that India is a rising power; we believe that India has already risen. India is taking its rightful place in Asia and on the global stage. And we see India's emergence as good for the United States and good for the world. -President Barack Obama, Mumbai, India, November 7, 2010\nWith the lifting of Cold War geopolitical constraints and the near-simultaneous opening of India's economy in early 1990s, the world's largest democracy has emerged as an increasingly important player on the global stage. India dominates the geography of the now strategically vital South Asia region, and its vibrant economy, pluralist society, cultural influence, and growing military power have made the country a key focus of U.S. foreign policy attention in the 21 st century. This attention is to some degree motivated by China's longer-standing and more rapid rise, with many analysts viewing U.S. and Indian geopolitical interests as convergent on many fronts, perhaps especially in the area of Asian power balances. President George W. Bush is credited with building on the breakthrough visit by President Bill Clinton in 2000, which ended the estrangement of the post-1998 Indian nuclear weapons tests. Under President Bush and continuing with President Barack Obama the U.S. and Indian governments have been seeking to sustain a substantive \"strategic partnership,\" even as bilateral commercial and people-to-people contacts flourish of their own accord.\nThe U.S.-India partnership is based on shared values such as democracy, pluralism, and rule of law. Numerous economic, security, and global initiatives, including unprecedented plans for civilian nuclear cooperation, are underway. The two countries inked a ten-year defense framework agreement in 2005 to facilitate expanded bilateral security cooperation. In the new century, large-scale combined military exercises have become commonplace, and bilateral cooperation on intelligence and counterterrorism is increasing. Unprecedented major U.S. arms sales to India are underway; more are anticipated. The influence of a geographically dispersed and relatively wealthy Indian-American community of some 2.7 million is reflected in Congress's largest country-specific caucus. More than 100,000 Indian students are attending American universities. Notably, a number of Indian-Americans now occupy senior positions in the Obama Administration, Agency for International Development Administrator Rajiv Shah among them.\nFurther U.S. interest in South Asia focuses on ongoing tensions between India and Pakistan rooted largely in competing claims to the Kashmir region and in \"cross-border terrorism\" in both Kashmir and major Indian cities. In the interests of regional stability, in particular as a means of forwarding U.S. interests in nearby Afghanistan, the United States strongly endorses an existing, but until recently moribund India-Pakistan peace initiative, and remains concerned about the\npotential for conflict over Kashmiri sovereignty to cause open hostilities between these two nuclear-armed countries. The United States also seeks to curtail the proliferation of nuclear weapons and missiles in South Asia.\nPresident Obama desires to continue expanded engagement and cooperation with India. His May 2010 National Security Strategy noted that, \"The United States and India are building a strategic partnership that is underpinned by our shared interests, our shared values as the world's two largest democracies, and close connections among our people.\" Yet there are concerns among observers in both countries that momentum has waned (by some accounts due to U.S. inattention), that outstanding areas of friction continue to hinder optimal levels of cooperation, and that India's geostrategic, economic, and security circumstances combine with New Delhi's lingering skepticism over America's global and regional role to preclude the kind of \"special relationship\" that many boosters of U.S.-India ties envisage. While U.S.-India engagement under the Obama Administration has not (to date) realized any groundbreaking initiatives as was the case under the Bush Administration, it may be that the apparently growing \"dominance of ordinariness\" in the relationship is a hidden strength that demonstrates its maturing into diplomatic normalcy.\nIndeed, there is a pervasive sense in policy circles that dramatic new breakthroughs in U.S.-India relations are not on the horizon, and that President Obama's November 2010 travel to India may have brought the two countries to a plateau of sorts whereupon routinized, but still meaningful interactions take place in the near term. Both national governments have been dealing with serious domestic issues in 2011 (the United States with federal budget issues, India with major corruption scandals), as well as with more pressing foreign policy concerns.\nGiven a setting in which the private sectors of both countries are impatient with the pace of economic reform in India and with rampant corruption there, some analysts call on the two governments to concentrate on limited goals with clear chances for success, such as in defense trade and with the development of multilateral and Asian architectures, in both the economic and security realms. One leading Indian commentator urges American patience and recognition that New Delhi views engagement with the United States as its highest foreign policy priority. The contention here is that India's four purported top long-term foreign policy objectives—a stable Afghanistan-Pakistan region; exerting influence across the Indian Ocean region; obtaining status as a \"rule-maker\" in the international system; and strengthening \"global power\" factors such as sustained economic growth and military modernization—all require strategic cooperation with the United States. Yet a more pessimistic view has the bilateral relationship constrained in large part by differences over the U.S.-Pakistan alliance and by India's apparent reluctance to exert power in its own region, resulting in years of \"a lot of rhetoric but very little substantive movement\" in U.S.-India ties.\nThe sweeping scope of the bilateral relationship, as well as the perceived lack of focus within it, may be found in the various and usually large number of issue-areas listed in joint statements. However, in May 2011, the lead U.S. diplomat for the region helpfully summarized U.S.-India relations under the rubric of four major \"agendas\":\nan innovation agenda that includes collaboration on energy security, civil nuclear cooperation, agriculture, space, climate, and other sciences; a security agenda that includes military-to-military relations, arms sales, and nonproliferation; a people-to-people agenda that encourages civic engagement, and open governance and democracy initiatives; and a growth agenda focused on increasing bilateral trade and investment by removing barriers to both.\nTangible progress is being made in each of these areas despite ongoing U.S. government irritants, in particular obstacles to full implementation of civil nuclear cooperation; overly restrictive limits on foreign investment; lingering barriers to trade; and insufficient protection of intellectual property rights, among others. Even leading American boosters of expanded U.S.-India ties insistently call on New Delhi to take more rapid action in these areas.", "U.S.-India cooperation in the area of nuclear energy—an initiative launched in 2005 and approved by Congress in 2008—continues to be delayed by the lack of both a liability arrangement and an agreement on monitoring arrangements for U.S. nuclear exports to certain Indian entities (see the \"U.S.-India Civil Nuclear Cooperation\" section below). In April, New Delhi announced that it had narrowed the list of competitors for a roughly $11 billion contract for 126 new medium multi-role combat aircraft (MMRCA) to two finalists, both European vendors. U.S. government officials expressed being \"deeply disappointed\" by news of the \"deselection\" of U.S.-based Boeing and Lockheed Martin from consideration, and what seemed a choice with major geostrategic implications elicited much debate over its meaning (see the \"Defense Cooperation and Trade\" section below). Major corruption scandals that broke in New Delhi in late 2010 have snowballed into a crisis not only for the sitting Congress Party-led United Progressive Alliance national coalition government, but also for India's political system writ large. Summer months have seen the emergence of a massive people's movement protesting the country's pervasive corruption, a movement lead in particular by social activist Anne Hazare (see the \"Corruption Scandals and Congress Party Woes\" section below). U.S. Ambassador to India Tim Roemer tendered his resignation on April 28, 2011, the same day that New Delhi announced the MMRCA deselection, and departed the New Delhi post on June 30. Roemer explained his departure as arising for personal, professional, and family reasons. The interim Chief of Mission, Peter Burleigh, is a highly competent veteran American diplomat with significant regional experience, but observers warn that U.S.-India relations could suffer if the Obama Administration does not move quickly to appoint a new permanent Ambassador. In June, Ranjan Mathai, a career foreign service office and former ambassador to France, was appointed to replace Nirupama Rao as Indian foreign secretary beginning in August. Rao retired from the Indian Foreign Service and was appointed to succeed Meera Shankar as Ambassador to the United States.", "Just days into President Obama's term, Secretary of State Hillary Clinton and Indian External Affairs Minister S.M. Krishna agreed to \"further strengthen the excellent bilateral relationship\" between the United States and India. Soon after, President Obama issued a statement asserting that, \"Our rapidly growing and deepening friendship with India offers benefits to all the world's citizens\" and that the people of India \"should know they have no better friend and partner than the people of the United States.\" As part of her confirmation hearing to become Secretary of State, Clinton told Senators she would work to fulfill President Obama's commitment to \"establish a true strategic partnership with India, increase our military cooperation, trade, and support democracies around the world.\"\nDespite such top-level assurances from the new U.S. Administration, during 2009 and into 2010, many in India became concerned that Washington was not focusing on the bilateral relationship with the same vigor as did the Bush Administration, which was viewed in India as having pursued both broader and stronger ties in an unprecedented manner. Many concerns arose in New Delhi, among them that the Obama Administration was overly focused on U.S. relations with China in ways that would reduce India's influence and visibility; that it was intent on deepening relations with India's main rival, Pakistan, in ways that could be harmful to Indian security and perhaps lead to a more interventionist approach to the Kashmir problem; that a new U.S. emphasis on nonproliferation and arms control would lead to pressure on India join such multilateral initiatives as the Comprehensive Test Ban Treaty and the Fissile Material Cutoff Treaty; and that the Administration might pursue so-called protectionist economic policies that could adversely affect bilateral commerce in goods and services.\nWhile some of these concerns persist, robust, positive, high-level U.S. attention to relations with India has continued. Secretary Clinton was widely seen to have concluded a successful visit to India in July 2009, inking several agreements, and also making important symbolic points by staying at Mumbai's Taj Mahal hotel (site of a major Islamist terrorist attack in 2008) and having a high-profile meeting with women's groups.\nIn November 2009, President Obama hosted his inaugural state visit when Indian Prime Minister Manmohan Singh dined at the White House. Despite the important symbolism, the resulting diplomacy was seen by many proponents of closer ties as disappointing (if not an outright failure) in its outcome, at least to the extent that no \"breakthroughs\" in the bilateral relationship were announced. Yet from other perspectives there were visible ideational gains: the relationship was shown to transcend the preferences of any single leader or government; the two leaders demonstrated that their countries' strategic goals were increasingly well aligned; and plans were made to continue taking advantage of complementarities while differences are well managed. Perhaps most significantly, the visit itself contributed to ameliorating concerns in India that the Obama Administration was insufficiently attuned to India's potential role as a U.S. partner.\nStill, in the wake of Prime Minister Singh's U.S. travel, some observers continued voicing concerns at the Obama Administration's perceived \"air of ambivalence\" toward India, with one going so far as to accuse the U.S. Administration of \"diplomatic negligence\" in its allegedly insufficient attention to New Delhi's key concerns, and for policies that could \"put India into its subcontinental box\" by relegating it to a regional role through the Asia-wide elevation of China.", "The United States and India formally reengaged the U.S.-India Strategic Dialogue initiated under President G.W. Bush when a large delegation of high-ranking Indian officials led by External Affairs Minister Krishna visited Washington, DC, in June 2010. As leader of the U.S. delegation, Secretary Clinton lauded India as \"an indispensable partner and a trusted friend.\" At a State Department reception, President Obama declared his firm belief that \"the relationship between the United States and India will be a defining partnership in the 21 st century.\"\nIn anticipation of the Dialogue, Undersecretary of State for Political Affairs William Burns had given a policy speech on \"India's rise and the future of the U.S.-India relationship\" in which he asserted, \"The simple truth that India's strength and progress on the world stage is deeply in the strategic interest of the United States.\" Burns acknowledged that progress in the partnership is not automatic and would require sustained efforts on both sides, and also that some Indians worry the United States sees India through the prism of ties with Pakistan and/or was overly focused on China. He sought to ameliorate these concerns by assuring his audience that the United States does not view relations in Asia as a zero-sum game and that its relations with Pakistan did not come at the expense of India. Two days later, the Strategic Dialogue produced a joint statement in which the two countries pledged to \"deepen people-to-people, business-to-business, and government-to-government linkages … for the mutual benefit of both countries and for the promotion of global peace, stability, and prosperity.\"", "As the U.S. President planned his November 2010 visit to India, an array of prickly bilateral issues confronted him, including differences over the proper regional roles to be played by China and Pakistan; the status of conflict in Afghanistan; international efforts to address Iran's controversial nuclear program; restrictions on high-technology exports to India, outsourcing, and sticking points on the conclusion of arrangements for both civil nuclear and defense cooperation, among others. Moreover, while Indian officials will present a long list of demands to their American interlocutors, they come under fire for paying insufficient attention to American interests and concerns, and for not recognizing the sometimes serious costs of appearing insensitive to same.\nUpon arriving in the Indian financial hub of Mumbai on November 7, 2010, President Obama laid a white rose at a memorial to the victims of the November 2008 terrorist attack and spoke at the Taj Mahal Palace hotel, a main target of that attack. While in that city, the President announced $10 billion in new trade deals, among them a $7.7 billion contract for Boeing to supply 30 737 commercial aircraft to India's SpiceJet airline. The new deals were projected to create some 50,000 U.S. jobs. Many Indian observers were irked by the President's failure to mention Pakistan in his initial remarks, fueling for some a persistent Indian belief that the United States remains too devoted to its alliance with Islamabad. When asked about this in a meeting with a group of Mumbai college students, President Obama sought to impress upon the audience a belief that no country has a bigger stake in Pakistan's success than does India, commenting, \"I think that if Pakistan is unstable, that's bad for India. If Pakistan is stable and prosperous, that's good.\"\nIn New Delhi, President Obama's historic speech to a joint session of the Indian Parliament characterized the U.S.-India partnership as serving three broad purposes: (1) promoting prosperity on both countries, especially through greater trade and two-way investment, and food security and health-related initiatives; (2) enhancing shared security by working together to prevent terrorist attacks, and; (3) strengthening democratic governance and human rights. In the context of this last issue-area, President Obama chided India for often \"shying away\" from taking clear public stands in the face of gross human rights violations and the suppression of democratic movements, as was recently seen to be the case in Burma.\nWhile appearing a joint news conference, Prime Minister Singh called the American President \"a sincere and valued friend\" of India, and he welcomed an acceleration of the deepening of bilateral ties with an aim of working \"as equal partners\" in the relationship. For his part, President Obama reiterated his view that the U.S.-India relationship will be one of the defining partnerships of the 21 st century, and he reviewed the litany of varied bilateral initiatives both underway and planned. Both leaders expressed satisfaction with adjustments in U.S. export control regulations that are expected to facilitate greater joint cooperation in high-technology fields.", "During his address to Indian parliamentarians, President Obama received thunderous applause for his endorsement of a permanent Indian seat on the U.N. Security Council as part of elevating that country to \"its rightful place in the world.\" This was the most explicit such endorsement to date; previously, the U.S. government had endorsed only Japan as a new permanent member of that body. There is evidence of U.S. congressional support for a permanent Indian role on the Council. Although this unprecedented expression of support was widely hailed as a positive shift in U.S. policy, some Indian observers noted that the President's statement was not nearly as explicit an endorsement as was received by Japan and that, in the absence of a timeline for Security Council reform, it could be taken as little more than a \"vague promise.\" In neighboring Pakistan, the endorsement met with expected resistance; Islamabad claimed India is undeserving of such status given New Delhi's \"conduct in relations with its neighbors and its continued flagrant violations of Security Council resolutions on Jammu and Kashmir.\"", "President Obama's India trip was widely considered successful as a diplomatic exercise, although reviews of the substantive outcome were somewhat mixed. As External Affairs Minister Krishna later reported to his Parliament: \"The visit was successful in strengthening mutual understanding on regional and global issues, accelerating the momentum of bilateral cooperation, and creating a long-term framework to elevate the India-U.S. strategic partnership to a new level.\" Assistant Secretary of State Robert Blake later said the trip \"will be remembered as a watershed, when the U.S. and India embarked at a new level on concrete initiatives to build a global partnership.\" The President's visit was itself seen by many in India and abroad as reflective of the country's rising visibility on the global stage. Even in the absence of major new initiatives, there was a sense among some observers that the visit had exceeded expectations, with the U.S. President's \"calm demeanor and soaring rhetoric\" winning over a previously skeptical Indian audience.\nOther commentators, however, saw President Obama turning a blind eye toward or underestimating the seriousness of India's ongoing struggles with poverty, government bureaucracy, and health and education issues while remaining overly focused on the country's high-technology innovation successes. In these accounts, the New Delhi government's failure to push forward with economic reforms has made foreign investors wary, a problem only exacerbated by recent corruption scandals. There also continued to be contentions from some quarters that India's polity is skeptical about being subsumed into a U.S. \"imperialist agenda,\" with fears that Indian commercial markets will be opened in ways that do not benefit the country's people and that India will be drawn into a military alliance with the United States.", "Another Strategic Dialogue was held in New Delhi in July 2011. Given the persistence of doubts about the robustness of the U.S.-India relationship, there were hopes that Secretary Clinton's attendance could reinvigorate a relationship that many analysts still see as incomplete and in need of more specific focus. Clinton traveled with a group of nine other senior U.S. officials, including the Director of National Intelligence. Yet even before the final Joint Statement was issued, commentators were lowering expectations with the assumption that neither government's circumstances was ripe for new large-scale initiatives.\nUpon her arrival, Secretary Clinton highlighted three issue areas: (1) trade and investment (\"This is a good news story, but ... Each of our countries can do more to reduce barriers, open our markets, and find new opportunities for economic partnership\"); (2) security cooperation (especially on counterterrorism and maritime security); and (3) the civil nuclear agreement (\"[T]o reap the benefits of that investment and to see returns on the political capital that has been spent on both sides, we need to resolve remaining issues....\"). The resulting Joint Statement highlighted a bilateral commitment to \"broaden and deepen the U.S.-India global strategic partnership\" in the cause of global stability and prosperity, and to enhance the partnership in numerous issue-areas. Among the notable clauses of the Statement were:\na reaffirmation of the two countries' \"commitment for consultation, coordination, and cooperation on Afghanistan,\" to include a reconciliation process there that is \"Afghan-led, Afghan-owned, and inclusive\"; a call for Pakistan \"to move expeditiously in prosecuting those involved in the November 2008 Mumbai terrorist attack\"; a continued commitment to \"full implementation of the U.S.-India civil nuclear energy cooperation agreement\"; and plans to resume technical-level negotiations on a bilateral investment treaty.\nIn a major policy speech in the southern Indian city of Chennai (formerly Madras) the next day, Secretary Clinton laid out the Administration's vision for future relations, emphasizing India's growing leadership role in the world, especially in the Asia-Pacific and in South and Central Asia. On the former, and in what could be seen as a thinly veiled expression of concern about China's rise, she sought India's close cooperation in seeing formation of a regional architecture that adopts \"international norms on security, trade, rule of law, human rights, and accountable governance.\" In this respect she welcomed New Delhi's \"Look East\" policy of closer engagement with the ASEAN countries. She also took the opportunity to issue an unusually open criticism of India's Burma policy, contending that, \"As India takes on a larger role throughout the Asia-Pacific, it does have increasing responsibilities, including the duty to speak out against violations of universal human rights.\" This last reflects a pervasive view in Washington that New Delhi is too hesitant to exercise India's growing power and influence.\nOn South and Central Asia, Secretary Clinton focused on three key issues. First, a reiteration of a strong and lasting U.S. commitment to Afghanistan well beyond the planned 2014 withdrawal of American combat troops, and a reiteration of \"unambiguous redlines\" for reconciliation with Afghan insurgents (their renunciation of violence, divorce from Al Qaeda, and acceptance of the laws and constitution of Afghanistan). She acknowledged New Delhi's \"rightly expressed concerns about outside interference in the reconciliation process\" and vowed to consult closely with India on this shared concern. Second, and related, Clinton stated that lasting peace and security in the region will \"require a stable, democratic, prosperous Pakistan free from violent extremism,\" and assured listeners that the United States continues to press the Pakistani government to seek those ends. Finally, the new \"Silk Road\" initiative was raised: \"an international web and network of economic and transit connections\" that would facilitate regional commerce and prosperity. According to senior U.S. officials speaking later, this regional economic integration would be \"anchored in the Indian economy.\"\nAs with President Obama's earlier travel to India, the Administration's second Strategic Dialogue session and Secretary Clinton's public appearances in New Delhi and Chennai were widely hailed as successful in moving the bilateral relationship forward. Yet, in another indication that current U.S.-India relations have no obvious, specific focus, the read-outs from two major wire services highlighted very different issue-areas.", "The end of Cold War political constraints and the rapid growth of India's economy has allowed New Delhi to more energetically engage global diplomacy. Expanded engagement is evident through the huge increase in the number of bilateral defense arrangements the Indian government has made in the past decade, more than tripling from 7 in 2000 to at least 26 today. During the latter half of 2010, every major world leader paid a visit to India, including those from all five permanent U.N. Security Council members. Much of the international attention on India is due to the country's vast market potential—the retail sector alone is worth an estimated $450 billion.\nSome observers argue that the New Delhi government acts too timidly on the global stage, and that the country's regional and domestic difficulties continue to hinder its ability to exert influence in geopolitics. As a rising power, India has appeared unwilling to take the kinds of policy stances expected of major global players, in particular those who sit on the U.N. Security Council, as India has been in 2011. From vague positions on Middle East uprisings to the appearance of fence-sitting on issues such as U.S.-led efforts to isolate Iran and Burma, New Delhi's leaders may be finding it increasingly difficult to avoid taking on the responsibilities many in Washington and elsewhere are looking for. One example is New Delhi's largely hands-off response to uprisings in the Arab world, with External Affairs Minister Krishna saying India would not \"jump into the fray\" unless invited and would maintain a \"very cautious\" approach to the Libyan conflict. In March 2011, India officially opposed NATO's military action in Libya and notably abstained—along with Brazil, China, Russia, and Germany—from voting on U.N. Resolution 1973, which approved of such action. More recently, Secretary of State Clinton has sought greater Indian assistance in pressuring the faltering Syrian regime.\nHuman rights activists have joined foreign governments in prodding India to be more proactive on key foreign policy issues, even those in India's own neighborhood such as in Burma and Sri Lanka. One such observer has criticized New Delhi for issuing \"bland propositions\" that \"can convey indifference to the plight of subjugated people.\" She challenges India's leaders to \"stand with people or with dictators.\"\nMany analysts view India's foreign policy establishment—its foreign service, think-tanks, public universities, and relevant media—as being too small and/or too poorly developed for India to achieve true great power status in the foreseeable future. By one substantive account, without a major modernizing and revamping of this establishment, \"India's worldview will be parochial, reactive, and increasingly dominated by business rather than by strategic or political concerns.\" Thus, even as India's rising stature commands greater attention in many world capitals, the country's diplomatic influence remains limited—especially in comparison to that of China—and the central government continues to concentrate mainly on domestic development and poverty alleviation. Indeed, India's domestic and social indices continue to rank it as a developing country, or what one former senior Indian diplomat called a \"premature power.\" Moreover, Indian bureaucrats' prickly and sometimes distrustful attitude toward their American counterparts survives long after the Cold War's end, and is sometimes evident in New Delhi's vehement reactions to what many Americans would consider minor and essentially meaningless slights.", "In the assessment of one former U.S. diplomat and longtime South Asia expert, there are two major schools of thought in India's current foreign policy approach: \"21 st century Nehruvian\" and \"great power advocates.\" The former is notable for its essential continuation of Jawaharlal Nehru's emphasis on developing world unity and an attendant skepticism regarding U.S. power, which, from this view, may require taking action to balance against. The latter, energized by India's rapid economic growth and higher visibility on the world stage, concentrates on New Delhi's triangular relations with Washington and Beijing with an eye toward increasing India's relative power, mainly through economic growth and innovation. Yet both schools share several important basic characteristics, including a view of India as a more-or-less natural regional hegemon; limited attention to global governance issues; a commitment to maintaining India's \"strategic autonomy\"; and a preference for hedging strategies, be they balancing against a more aggressive China by welcoming a continued major U.S. presence in the region, or by working with China and Russia to preclude an excessively dominant American presence.\nIn an informal but extensive survey of Indian elite opinion about the United States, this same expert found broad areas of consensus and concluded that Washington has now supplanted Moscow as New Delhi's most important external partner. As is reflected in opinion surveys of the Indian public more broadly, views of the United States, its varied power capabilities, and its continued substantive presence as a player in Asia are widely welcomed by Indian decision makers. The United States is seen to possess a unique ability to turn innovation into wealth and military power, both coveted by aspiring global powers such as India. America's national will and soft power tend to be admired by Indians, and the leading U.S. role in international institutions may serve as a model for New Delhi. Moreover—40 years after the Nixon Administration was seen to \"tilt\" toward Pakistan by sending the USS Enterprise carrier task force into the Bay of Bengal—American military capabilities and ability to project significant power into the Indian Ocean Region are no longer viewed as threatening to most in New Delhi, where there is a widely held view of the United States as the only viable hedge against the rise of a potentially adversarial or revisionist China.\nThe above-noted schools of thought correspond closely to what two other senior observers identify as India's \"traditional nationalist\" and \"pragmatist\" strains of foreign policy visions. These analysts see policy makers tending to \"split the difference\" by mouthing traditional nationalist rhetoric while pursuing a largely pragmatic course. While nationalists are inherently opposed to any international alliance that would constrict India's autonomy and tend toward legal-moral rather than political arguments, pragmatists are accepting of a balance of power approach emphasizing a flexible pursuit of Indian national interests over ideological positioning. One result is that pragmatists are less averse to alliance-making and international treaties. Their rising influence thus opens greater possibilities for closer and more meaningful U.S.-India ties, perhaps especially in the area of nonproliferation (New Delhi's Iran policy has become a bellwether issue of contention between nationalists and pragmatists).", "Three full-scale wars—in 1947-1948, 1965, and 1971—and a constant state of military preparedness on both sides of their mutual border have marked more than six decades of bitter rivalry between India and its western neighbor, Pakistan. The acrimonious partition of British India into two successor states in 1947 and the unresolved issue of Kashmiri sovereignty have been major sources of tension. Both countries have built large defense establishments at significant cost to economic and social development, and the bilateral conflict has precluded the development of meaningful regional organizations.\nA major factor in U.S. interest in South Asia is ongoing tension between India and Pakistan rooted largely in competing territorial claims and in \"cross-border terrorism\" in both Kashmir and major Indian cities. In the interests of regional stability, the United States strongly endorses a recently revived India-Pakistan peace initiative, and it remains concerned about the potential for India-Pakistan to cause open hostilities between these two nuclear-armed countries. Senior Indian officials continue to press the U.S. government to convince Islamabad to take stronger action against anti-India terrorist groups operating inside Pakistan.\nThe effects of this bilateral conflict are seen to negatively affect U.S.-led efforts to stabilize Afghanistan. Most observers assert that U.S. success in Afghanistan is to a significant degree dependent on improved India-Pakistan relations, the logic being that Pakistan will need to feel more secure vis-à-vis a perceived existential threat on its eastern front in order to shift its attention and military resources more toward the west. Some in Pakistan believe that, by feeding their country's insecurities, the increasingly warm U.S.-India relationship actually foments regional instability.\nIn 2010, Indian decision makers became discomfited by signs that the United States and its allies are preparing to leave Afghanistan in such a way that would provide a central role for Pakistan in mediating between Kabul and Taliban elements, perhaps even to include a role for the latter in Afghanistan's governance. Such an outcome would be anathema to Indian leaders, who wish to limit Islamabad's influence in a post-war Afghanistan. During his 2010 confirmation hearing, the U.S. military commander in Afghanistan (and current Director of Central Intelligence), Gen. David Petraeus, said India \"without question\" has a legitimate interests in Afghanistan.\nAlso in 2010, conflict over water resources emerged as another major exacerbating factor in the bilateral relationship. Some in Pakistan accuse India of violating international law, bilateral agreements, and ethical principles of peaceful coexistence through the allegedly illicit manipulation of water flows into Pakistan. Of particular concern for Indian and Western observers has been the fact that some of these complaints are emanating from the leaders of militant Pakistani Islamist groups such as Lashkar-e-Taiba. Pakistan's then-foreign minister said water was \"emerging as a very serious source of [bilateral] tension,\" but a senior Indian official denied that India is in violation of the Indus Waters Treaty and called Pakistani rhetoric a \"political gimmick\" meant to distract from Islamabad's own poor water management.\nThe Indian government suspended the bilateral peace process following the late 2008 terrorist attack on Mumbai that was traced to a Pakistan-based terrorist group. In early 2011, New Delhi chose to reengage dialogue with Islamabad despite the fact that many of the alleged planners of that attack have not been brought to justice. A panel of experts of security and terrorism brought together by India Today magazine in 2010 outlined ten strategies for India-Pakistan dialogue. Each of the top three involved actions to be taken by Pakistan: (1) firmer and more rapid action the perpetrators of the 11/08 Mumbai attack; (2) extradition of the fugitives most wanted in India; and (3) action against the \"terrorist infrastructure\" on Pakistani soil. The experts also called for establishment of a regular dialogue between the two countries' intelligence chiefs. These remain among New Delhi's key concerns.\nThe immense pressures now faced by Islamabad—ongoing and widespread Islamist militancy and extremism, the unprecedented embarrassments of bin Laden's discovery and an attack on a naval base in May, and deteriorating relations with the United States foremost among them—may have the effect of shifting the focus of Pakistan's military decision makers away from conflict with New Delhi. This may in turn open a window of opportunity for India to pursue improved relations with Pakistan.", "", "A bilateral \"Composite Dialogue\" between New Delhi and Islamabad, initiated in the 1990s and officially resumed in 2004, has realized some modest but still meaningful successes, including a formal cease-fire along the entire shared frontier, and some unprecedented trade and people-to-people contacts across the Kashmiri Line of Control (LOC). As per New Delhi's and Islamabad's intents, the dialogue has been meant to bring about \"peaceful settlement of all bilateral issues, including Jammu and Kashmir, to the satisfaction of both sides.\" Yet 2008 saw significant deterioration in India-Pakistan relations, especially following the large-scale November terrorist attack on Mumbai, India, that left some 165 civilians dead (22 of those killed were foreigners, including 6 Americans). More broadly, militarized territorial disputes over Kashmir, the Siachen Glacier, and the Sir Creek remain unresolved, and Pakistani officials regularly express unhappiness that more substantive progress, especially on the \"core issue\" of Kashmir, is not occurring. Officials in New Delhi continue to declare unacceptable the \"terrorist-infrastructure\" they say remains intact in Pakistani Kashmir.\nThe Obama Administration continues to refrain from taking any direct role in the bilateral dispute, and Indian leaders see no need for third-party involvement, in any case. However, to the satisfaction of his Indian audience, while in New Delhi in late 2010, President Obama said, \"We'll continue to insist to Pakistan's leaders that terrorist safe havens within their borders are unacceptable, and that terrorists behind the Mumbai attacks must be brought to justice.\"", "Despite its formal suspension of the peace process, New Delhi did continue engaging in high-level talks with Islamabad in 2010. Pakistani observers variously attributed this Indian willingness to an apparent failure of coercive diplomacy, to U.S. pressure, and to new talk of reconciliation with the Afghan Taliban, which could leave India in a disadvantageous position vis-à-vis Kabul. From the Indian perspective, New Delhi's leaders were compelled by the desire to offer Islamabad tangible benefits for cooperating, and by a perceived need for greater flexibility in the case of future terrorists attacks traced to Pakistan. Islamabad welcomed this Indian willingness to talk, seeing it as an opportunity to raise \"all core issues\" and urge India to resolve them quickly. New Delhi reiterated that the Composite Dialogue remained in suspension and that, while all subjects could be raised at impending meetings, India would focus solely on terrorism.\nA series of high-level interactions ensued, but none produced any new agreements or major initiatives. Pakistani Foreign Secretary Salman Bashir visited New Delhi in February. Following that meeting, India's then-Foreign Secretary Rao said the time was not yet right for a resumption of the Composite Dialogue as requested by Islamabad. Subsequent major military exercises by both countries near their shared border (India in February, Pakistan in April) indicated that mutual distrust remained serious. In April, senior Indian leaders still ruled out any renewal of substantive talks until Pakistan took \"credible steps\" to bring Mumbai perpetrators to justice. Yet Prime Minister Singh did meet with his Pakistani counterpart on the sidelines of a regional summit in April 2010 in Thimpu, Bhutan, where the Indian leader expressed a willingness to discuss all issues of mutual interest, apparently with the conviction that even a dialogue that produces no immediate results is preferable to a diplomatic freeze. More high-level talks were held in Islamabad in June when Secretary Rao again met her Pakistani counterpart. The very fact of the meeting had many observers optimistic that the bilateral peace process was getting back on track. External Affairs Minister Krishna was in Islamabad a month later, but what he called \"good and constructive\" talks produced only an agreement to keep talking. Islamabad called India's \"selective\" approach to outstanding issues (an oblique reference to Kashmir) a major impediment. Despite their strong suspicion of official Pakistani involvement in the 2008 Mumbai attack, Indian leaders saw no good option other than continuing the dialogue.", "Given a lack of progress with its so-called \"coercive diplomacy,\" the national coalition-leading Congress Party announced that it would officially reengage dialogue with Pakistan. The decision met with some political resistance from the opposition. A June meeting of foreign secretaries in Islamabad appeared unexpectedly positive to many, with the two officials agreeing to expand confidence-building measures related to both nuclear and conventional weapons, as well as to increase trade and travel across the Kashmiri LOC. In July, new Pakistani Foreign Minister Hina Rabbani Khar was in New Delhi for talks with External Affairs Minister Krishna, who reaffirmed India's intention to reduce the bilateral trust deficit and conveyed New Delhi's desire for \"a stable, prosperous Pakistan acting as a bulwark against terrorism, and at peace with itself and with its neighbors.\" Khar had raised some hackles in New Delhi—and an explicit expression of \"displeasure\" from Krishna—by meeting with Kashmiri separatists before seeing Indian government officials. Yet the resulting Joint Statement further loosened trade and travel restrictions across the LOC, and was widely taken as a successful representation of a peace process back on track after a more than two-year hiatus.", "The perpetrators of a horrific terrorist attack on India's business and entertainment capital that resulted in 165 innocent deaths were identified as members of the Pakistan-based Lashkar-e-Taiba (LeT), a U.S.-designated terrorist group that has received significant past support from Pakistani security agencies (the Jamaat-ud-Dawa or JuD, ostensibly a charitable organization, is widely considered to be a continuation of the LeT under a new name). The Indian government demands that Pakistan take conclusive action to shut down the LeT and bring its terrorist leadership to justice. At least one ranking Indian official has openly accused Pakistan's powerful main intelligence agency of overseeing the planning and execution of the attack. After being granted access to David Headley, an American national of Pakistani descent who pled guilty to participating in the planning of the attack, Indian officials claimed to have established an official Pakistani role, a claim Islamabad strongly rejected as \"baseless.\" Yet reports continue to finger Pakistan's main intelligence service as being culpable.\nOf particular relevance for India is LeT founder Hafiz Saeed, whom India believes is demonstrably culpable, but whom Pakistani officials say they do not possess sufficient evidence to formally charge. In September 2009, Pakistani police placed Saeed under house arrest. Only weeks later, a court dismissed the two cases brought against him (unrelated to the Mumbai attack), but he remained confined to his home. The Islamabad government insisted that it was powerless to take further action against Saeed in the absence of more convincing evidence of wrongdoing. New Delhi countered that Pakistan was \"shielding\" the masterminds of the attack. In May 2010, Pakistan's Supreme Court dismissed a government appeal and upheld a lower court's decision to release Saeed, saying the case presented against him was insufficient. A senior Indian official expressed disappointment with the ruling. Many analysts believe Saeed maintains substantive control of the organization's daily operations even as he remains under house arrest.\nIn late 2009, Pakistani authorities had brought formal charges against seven men accused of planning the Mumbai raid, among them Zaki ur-Rehman Lakhvi, a senior LeT figure said to have been the operational commander. New Delhi insists that the suspects be extradited to India. Yet the Islamabad government refuses and has to date pressed no further than preliminary hearings, and the start-and-stop nature of the proceedings has only engendered Indian and international skepticism about Pakistan's determination. While in India in July 2011, the Pakistani foreign minister asked Indian officials to have \"patience, trust, and confidence in the proceedings,\" saying \"Pakistan was not trying to abdicate responsibility.\"\nOsama bin Laden's May 2011 killing by U.S. commandos in the Pakistani city of Abbottabad elicited more insistent Indian demands that Islamabad hand over the Mumbai suspects, but to no avail. One senior observer, reflecting a widely-held view, contends that the Pakistani military \"will do everything to preserve Lashkar as long as it believes there is a threat from India.\" Analysts warn that another major terrorist attack in India that is traced to Pakistan would likely lead to an international crisis. One has offered numerous U.S. policy options for preventing such an attack or managing any crisis that results.\nJuly 2011 terrorist bombings in Mumbai—most likely the work of indigenous Islamist militants—were evidence for many that the city remains highly vulnerable to attack. Well after the 2008 attacks, measures had been taking to improve the city's security, but major initiatives such as establishment of a dedicated federal ministry were not taken up, and nearly all of the political and police officials involved had avoided termination or even reprimand.", "Many U.S. officials, as well as the Pakistani government, aver that regional peace is inextricably linked to a solution of the Kashmir dispute. New Delhi views separatism in its Jammu and Kashmir state to be an internal issue or, at most, a bilateral one with Pakistan. It rejects any third-party or multilateral engagement. While levels of violence in Kashmir have declined significantly from their 1990s peak, the situation remains fragile, and Islamabad insists that what it calls New Delhi's \"administrative and half-hearted political measures\" will not resolve what is in essence a Kashmiri \"struggle for the right to self-determination.\"\nUnder the Obama Administration, the U.S. government has continued its long-standing policy of keeping distance from the Kashmir dispute and refraining from any mediation role therein. As expressed by President Obama in speaking to a joint session of the Indian Parliament, \"We will continue to welcome dialogue between India and Pakistan, even as we recognize that disputes between your two countries can only be resolved by the people of your two countries.\" The now deceased U.S. Special Representative for Afghanistan and Pakistan, Richard Holbrooke, who at times used the term \"K-word\" in discussing Kashmir, said, \"We are not going to negotiate or mediate on that issue and I'm going to try to keep my record and not even mention it by name.\"\nOfficially, India lays claim to the entire former princely state, but in practice New Delhi is generally accepting of the status quo wherein it controls two-thirds, including the prized, Muslim-majority Kashmir Valley, site of the state's summer capital and largest city, Srinagar (pop. 1.3 million). Indian policy will not accept any territorial or border shifts, but Prime Minister Singh has for many years sought to \"make the border irrelevant\" and open the LOC to greater trade and people-to-people contacts. A rare major opinion survey of 3,700 Kashmiris on both sides of the LOC in 2010 found that less than half supported separatist goals. Only in the Muslim-majority valley did a large majority (up to 95%) express support for full Kashmiri independence.\nIndian officials consistently aver that, despite significant decreases in rates of separatist violence, the Pakistani threat to Indian Kashmir remains undiminished, with Pakistan accused of providing occasional support for militant infiltration across the LOC, as well as of maintaining—or at the very least tolerating—militant bases in Pakistani Kashmir. In 2010, India's defense minister claimed there were \"conscious, calculated attempts\" underway to push more militants into the Valley, and the army chief later reiterated his claim that Pakistan was not taking action to dismantle the \"terror infrastructure\" on its side of the LOC. According the Indian Home Ministry's most recent annual report, \"[T]here are reports to indicate that the infrastructure for training to terrorist elements across-the border continues to remain intact and efforts to infiltrate militants into the State continue unabated.\"\nDuring the summer of 2010, Indian Kashmir experienced its worst separatist-related violence in years. The spasm began in June, when a 17-year-old protester was killed by a tear gas canister fired by police. By mid-September, more than 100 other mostly young street protesters died in clashes with security forces, a curfew was imposed in the Valley, dozens of separatist political leaders were arrested, and thousands of Indian police and paramilitary troops were deployed to quell the protests. Pakistan's Foreign Ministry issued a formal condemnation of \"the blatant use of force by Indian security forces,\" called the ongoing violence \"unacceptable,\" and asked New Delhi to \"exercise restraint.\" The Pakistani Parliament subsequently passed resolutions on the issue; New Delhi angrily rejected the attempted interference in \"what is purely an internal affair of India.\" Islamabad was not deterred, however, and further sharp diplomatic exchanges ensued. A feared repeat of such turmoil did not materialize in the summer of 2011 (see also the \" Separatism in the Jammu and Kashmir State \" section below).", "", "Indian leaders envisage a peaceful Afghanistan that can serve as a hub for regional trade and energy flows. India takes an active role in assisting reconstruction efforts in Afghanistan, having committed a total of some $2 billion to this cause since 2001 (the most recent pledge of $500 million was made in May), as well as contributing thousands of workers and opening four consulates there. It is the leading regional contributor to Afghan reconstruction. New Delhi characterizes its relations with Kabul as unique in that Indian humanitarian assistance and infrastructure development projects are geographically extensive while also entirely Afghan-led in terms of prioritization. India's wide-reaching assistance program in the country is aimed at boosting all sectors of development in all areas of Afghanistan.\nIn May 2011, Prime Minister Singh met with Afghan President Hamid Karzai in Kabul, where the two leaders announced a new India-Afghanistan \"Strategic Partnership\" elevating bilateral ties to a higher level with regular summit meetings, expanded trade and commercial links, and institutionalized dialogues on an array of bilateral issues. New Delhi vows to assist in Afghanistan's emergence \"as a land bridge and trade, transportation and energy hub connecting Central and South Asia by enabling free and more unfettered transport and transit linkages.\" Singh pledged another $500 million in bilateral development aid over the next six years.\nAmong Indian assistance to Afghanistan are funding for a new $111 million power station, a $77 million dam project, construction of Kabul's new $67 million Parliament building, and construction of Afghanistan's leading children's hospital. Indian engineers also have completed a 160-mile-long, $84 million road project linking Afghanistan's southwestern Nimroz province with Iran's Chabahar port on the Arabian Sea in hopes of providing landlocked Afghanistan with an alternative supply route and reducing the country's dependence on access through Pakistan. India provides daily school lunches to 2 million Afghan children. In December 2010, India signed agreements to participate in the multi-billion-dollar Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, which leaders hope to see completed in 2015 (India's former petroleum minister characterized the project as a new \"Silk Route\" linking Central and South Asia). Thousands of Indian personnel are working on various relief and reconstruction projects inside Afghanistan. These workers are guarded by hundreds of Indian police forces which have sustained casualties in attacks by insurgents. In the private sector, Indian firms are vying for exploration rights in Bamiyan, Afghanistan, where the Hajigak mines contain some 1.8 billion tons of high-quality iron ore.", "New Delhi declares itself \"committed to the unity, integrity, and independence of Afghanistan underpinned by democracy and cohesive pluralism and free from external interference.\" It supports efforts toward peace and reintegration with Taliban insurgents, but emphasizes that, to be successful and enduring, these should be wholly \"Afghan-led and Afghan-owned,\" the clear implication being that Islamabad's substantive involvement is not desired. In May 2011, Prime Minister Singh reiterated his government's wish that an Afghan-led reconciliation process takes place \"without outside interference or coercion.\" After a long period of uneasiness with the idea of President Karzai negotiating directly with Afghan insurgents, New Delhi's leadership—in line with a similar policy shift by the United States—now fully supports a reconciliation process that might include discussions with Taliban elements. Yet hardline Indian analysts foresee \"catastrophic\" implications for India's security if Pakistan takes a major role in the Afghan endgame, and New Delhi continues to worry about Washington's \"toxic dependence\" on the Pakistani army in pursuing a military victory in Afghanistan.\nNew Delhi's keen security interests in Afghanistan are longstanding, and Indian investment in that country is motivated by a desire to bypass Pakistan when engaging West and Central Asia, constrain the spread of Islamist militancy on its western flank, and also dampen the influence of both Islamist and Hindutva extremism domestically. Yet Indian efforts to project influence into Afghanistan are significantly hindered by geography and ethnicity (where Pakistan enjoys clear advantages), Islamabad's demonstrated willingness to undertake provocative anti-India policies in Afghanistan, and, perhaps most importantly, ambivalence among Indian policy makers and ordinary citizens alike about the cost-benefit calculation of continuing what may be risky investments in an unstable country. Given the June 2011 announcement of an impending U.S. drawdown from Afghanistan, New Delhi faces a choice of maintaining/increasing its efforts in Afghanistan, risking potentially dangerous reactions from Islamabad, or scaling back its efforts in the hope of easing Pakistan's insecurities. The latter option may facilitate greater stability, but at considerable cost to India's aspirations for regional dominance and global power status.\nBy some accounts, India and Pakistan are fighting a \"shadow war\" inside Afghanistan with spies and proxies, although it is exclusively high-visibility Indian targets that have come under attack there. A July 2008 suicide bombing at India's Kabul Embassy was traced to militants with ties to the Pakistani military, and was taken as a stark message to Indian leaders that Taliban militants and their allies want New Delhi to withdraw from Afghanistan. Prime Minster Singh instead responded by pledging $450 million in new Indian aid for Afghan reconstruction.\nIslamabad accuses New Delhi of using an exaggerated number of Indian consulates in Afghanistan as bases for malevolent interference in Pakistan's Baluchistan province, specifically by materially supporting Baloch separatist militants. The Pakistani government also accuses India of interfering in Pakistan's western tribal regions along the Afghanistan border. When asked about such claims in late 2009, Secretary of State Clinton said the U.S. government had seen no supporting evidence. Yet senior Pakistani officials remained insistent.\nIn the view of many analysts, Pakistan's \"paranoia\" with regard to the perceived threat from India leads Pakistani leaders to engage a zero-sum regional competition with New Delhi. In this way, Pakistan's primary goal with regard to Afghanistan is to prevent any dominant Indian influence there. Signs of increasing cooperation between the Kabul and Islamabad governments can cause trepidation in other regional capitals, especially including New Delhi, for above-noted reasons.\nSome observers viewed a senior U.S. military commander's 2009 assessment that \"increasing India's influence in Afghanistan is likely to exacerbate regional tensions\" as a sign that U.S. officials might press India to keep a low or lower profile there, yet the U.S. government has continued to welcome and laud India's role in Afghanistan while at the same time rhetorically recognizing Islamabad's legitimate security interests in having a friendly western neighbor. Obama Administration officials have sought to ease India's fears by assuring New Delhi that it has a legitimate role to play in Afghanistan and that the United States does not view regional relationships as a zero-sum game.\nStill, the perception among some observers that the United States is in some way planning to abandon Afghanistan elicits great anxiety in New Delhi and fears of a Taliban role in a future Kabul government, with the attendant possibility that Afghanistan could again become a haven for anti-India militants. Even without this worst-case outcome, a U.S. withdrawal and deterioration of security would likely jeopardize India's role and standing in Afghanistan. New Delhi's leaders may not yet have a coherent plan for this possibility. According to one senior analyst, \"So far, India's plans consist largely of hand-wringing and facile hopes.\" A presumed lack of U.S. consultation with India previous to President Obama's June 2011 drawdown announcement left some in India dubious about a U.S.-India partnership that did not (in their view) give sufficient consideration to India's security concerns about a potential future governance role for Afghan Taliban elements. Leaked U.S. diplomatic cables reportedly support the notion that New Delhi has been anxious about the implications of a U.S. withdrawal.", "", "India and China together account for one-third of the world's population, and are seen to be rising 21 st century powers and potential strategic rivals. As India has sought to expand its strategic horizons in recent years—eyeing influence over a vast region from Iran and the Persian Gulf states in the west to the Straits of Malacca and Gulf of Thailand and perhaps even the South China Sea in the east—it increasingly finds itself bumping into a spreading Chinese presence in the same area. New Delhi fears \"encirclement\" by Beijing, and many analysts view the Indian Ocean Region (IOR) as a key stage upon which 21 st century geopolitical power struggles will play out. Some further encourage Washington to leverage its own relationship with the region's leading pluralistic democracy to \"set limits on Chinese expansion,\" perhaps especially through increased joint naval coordination. Meanwhile, some strategic thinkers in India worry that the United States is on a path of engagement with China that could threaten Indian interests and relegate India to a secondary role in Asia.\nIndia and China fought a brief but intense border war in 1962 that left China in control of large swaths of territory still claimed by India. Today, India accuses China of illegitimately occupying nearly 15,000 square miles of Indian territory in Kashmir (the Aksai Chin region), while China lays claim to 35,000 square miles in the northeastern Indian state of Arunachal Pradesh. The 1962 clash ended a previously friendly relationship between the two leaders of the Cold War \"nonaligned movement\" and left many Indians feeling shocked and betrayed. While some aspects of India-China relations, including bilateral trade, have warmed measurably in recent years, the two countries have yet to reach a final boundary agreement. Adding to New Delhi's sense of insecurity have been suspicions regarding China's long-term nuclear weapons capabilities and strategic intentions in South and Southeast Asia. A strategic orientation focused on China appears to have affected the course and scope of New Delhi's own nuclear weapons, ballistic missile, and other power projection programs.\nDuring a landmark 1993 visit to Beijing, Prime Minister Narasimha Rao signed an agreement to reduce troops and maintain peace along the Line of Actual Control (LOAC) that divides the two countries' forces at the disputed border. Numerous rounds of border talks and joint working group meetings aimed at reaching a final settlement have been held since 1981—13 of these since both countries appointed special representatives in 2003—with New Delhi and Beijing agreeing to move forward in other issue-areas even as territorial claims remain unresolved.\nBeijing's military and economic support for Pakistan—support that is widely understood to have included nuclear weapons- and missile-related transfers—is a major and ongoing source of bilateral friction. Past Chinese support for Pakistan's Kashmir position, along with more recent reports of a Chinese military presence in Aksai Chin, have added to the discomfort of Indian leaders. There have been reports of links between Chinese intelligence agencies and insurgent groups in India's northeast. India and China also have competed for trade partners and energy resources in other developing regions to feed their rapidly growing economies; India's relative poverty puts New Delhi at a significant disadvantage in such competition.\nThe Chinese are increasingly wary over the growing strategic relationship between the United States and India, and Beijing has expressed concern over potential alignments in Asia that could result in the \"encirclement\" of China. Chinese concern in this regard was made evident when Beijing protested discussions under the Bush Administration to develop a quadrilateral group of like-minded democracies in Asia that would include the United States, Japan, Australia, and India. Still, while Indians can at times appear to be obsessed with comparisons to China, the Chinese are generally far more complacent, giving the rivalry an appearance of one-sidedness.\nChina is also particularly sensitive to India's influence in Tibet. India allows the Dalai Lama to live in India and has allowed him to visit India's Arunachal Pradesh state abutting Tibet. The Indian territory of Ladakh, which is near the Chinese-held, Indian-claimed territory of Aksai Chin, is also ethnically Tibetan. Nonetheless, India is particularly sensitive to the development of U.S.-China relations, especially as they pertain to South Asia. This was evident as India railed at a clause in the 2009 U.S.-China Joint Statement that called for Washington and Beijing to \"work together to promote peace, stability, and prosperity in South Asia.\"\nDespite the anxieties elicited by the now simultaneous rise of Asia's two largest countries, New Delhi calls its relationship with Beijing a \"priority\" and asserts that the two countries have \"stepped up functional cooperation in all areas, including efforts to build military-to-military trust and confidence through bilateral defense interactions\" that are \"growing.\" It also notes ongoing bilateral cooperation in areas such as finance, agriculture, water resources, energy, environment, tourism, and information technology, along with joint efforts in multilateral fora on global issues such as trade negotiations and energy security, which includes \"cooperating very closely\" on climate change issues. Both governments have hailed their \"strategic and cooperative partnership\" which, according to New Delhi, has established important confidence-building measures and broadened people-to-people contacts.", "China has in recent years overtaken the United States as India's leading trade partner. The value of India-China trade surpassed $62 billion in 2010, up an impressive 43% over the previous year. China is the single largest source of imports for India, accounting for above $40 billion worth or more than 11% of all imports in FY2010/11. China is also the third largest export market for Indian goods (behind the United Arab Emirates and United States), accounting for $19.4 billion worth or about 7.7% of all exports in FY2010/11. Yet the course of the bilateral trade relationship may not favor India over the middle- and long-term, given clear signs of both qualitative and quantitative imbalances. China now accounts for nearly one-fifth of India's total trade deficit. Roughly half of India's electronics imports come from China, along with nearly one-quarter of machinery products imports and about one-sixth of total steel imports. Meanwhile iron ore is by far the leading Indian export to China, accounting for nearly half of the total value in recent years. India has not yet been able to exploit its advantages in the services sector, and many analysts see China trade as an area in which India can at least partially mitigate its badly lagging manufacturing sector.\nNumerous large state-owned Chinese companies have operations in India, especially in power generation, and machinery and infrastructure construction. The cumulative value of contractual Chinese investment projects in India is nearly $30 billion. Indian companies also operate in China, notably in the manufacturing, information technology, and banking sectors, but the degree is far more modest at less than $1 billion cumulatively.", "There are mounting fears among some in India that China is encroaching upon what New Delhi sees as its legitimate sphere of influence in South Asia. This concern focuses especially on China's construction of port facilities in the IOR, which has elicited a debate over Beijing's future intentions and concerns that it may seek to interdict or dominate sea lines of communication (SLOCs) there. In 2004, a Washington, DC-based consultancy firm identified China's involvement in developing major new ports in Pakistan (at Gwadar), Sri Lanka (at Hambantota), and Bangladesh (at Chittagong) as representing a potential \"string of pearls\" strategy which some strategic analysts and media commentators point to as evidence of Beijing's aim to encircle India with naval bases. In mid-2010, Chinese warships docked for a first-ever visit to Burma's Thilawa port. China's plans to develop an overland transportation and energy link from the northern reaches of the Bay of Bengal through Burma to Yunnan is another aspect of this perceived strategy. Port access to the Indian Ocean's strategically vital SLOCs does appear to be a source of considerable rivalry: For example, India desires to see Iran's Chabahar port grow in importance as a transit point into Central Asia that would bypass Pakistan. China, meanwhile, looks to Pakistan's Gwadar port as providing a major future land-line for energy and other supplies to East Asia that would reduce Chinese dependence on Indian Ocean and Malacca Straits sea lanes.\nSome analysts dismiss Indian fears as overwrought and note that China does not have the capability to project significant naval power into the IOR. Others take a longer view and see present developments as part of a long term strategic plan that will give the Chinese the necessary logistical infrastructure in the IOR to secure its SLOCs to the energy rich Persian Gulf. If developed, this infrastructure could give China a strong naval position relative to India in the IOR, though this will likely take decades to develop. China only just sent its first aircraft carrier out for sea trials in August 2011. The U.S. Department of Defense, in its most recent (August 2011) assessment of Chinese military capabilities, noted Beijing's civilian port projects in the IOR and their potential to improve China's peacetime logistical support options, but also contended that Beijing's power projection abilities in the region will remain limited in the absence of overseas military bases.\nChina has no naval bases in the IOR at present, and available evidence suggests that Beijing's \"string of pearls\" strategy is in an embryonic phase. Some analysts encourage stronger U.S.-India strategic and military ties with an eye specifically on preventing China from dominating the region and its sea lanes. Others contend that a (limited) Chinese navy presence in the Indian Ocean is not inherently illegitimate or threatening. Some are relatively sanguine that, even if the Chinese navy were to establish overtly military posts on the Indian Ocean in the future, India would still enjoy considerable geographic and logistical advantages in the case of open conflict. Such advantages could be built upon with some fairly facile Indian policies, including reinforcing its Andaman and Nicobar Command, which could present a sturdy \"barrier\" to hostile forces entering the Bay of Bengal from the east, and expanding maritime intelligence-sharing with the United States. A strong Indian naval presence near the entrance to the Strait of Malacca would be well positioned to interdict Chinese shipping in the event of conflict.", "Tensions between India and China appear to have increased over the past year despite a 30-fold jump in the value of their bilateral trade over the past decade. Many commentators are speculating that a new \"Great Game\" is unfolding between Asia's two largest countries, perhaps to be centered on Kashmir, and that the bilateral relationship \"has begun to take the form of a true geopolitical rivalry.\" In 2009, India added two full army divisions to those already deployed near the disputed border, built at least three new airstrips in the region, and moved two squadrons of advanced Sukhoi-30 MKI combat aircraft to a base in the nearby Assam state. The latter months of 2009 saw New Delhi and Beijing engage increasingly vituperative diplomatic and media barbs, placing U.S. officials in something of a dilemma over how to maintain friendly relations with both countries. China's 2010 decision to issue special visas to Indian citizens from Arunachal Pradesh and Jammu and Kashmir reflected Beijing's official position that residents of these states have different status than other Indians, a position that obviously antagonizes India.\nMeanwhile, the unresolved border dispute is seen to be a significant obstacle to expanded India-China economic and trade relations, and some analysts see Beijing's Kashmir stance becoming more adversarial, as was the case in the past, perhaps even more hostile to India than is Islamabad's. Indian sources have accused Chinese patrols of \"transgressing\" the LOAC—an average of about ten such incursions per month was reported in 2008—and periodic reports of incursions continue. Official Chinese news outlets at times accuse the Indian media of issuing \"war rhetoric\" and \"sowing the seeds of enmity\" with reports of Chinese \"intrusions\" across the LOAC. Earlier in 2011, Indian military officials issued statements that the alleged presence of Chinese troops in Pakistan-held Kashmir poses a serious military challenge to India. Beijing denies reports of a Chinese military presence in Kashmir.\nIn August 2010, three separate episodes illuminated ongoing frictions. First, New Delhi and Beijing exchanged sharp diplomatic words after China refused to issue a visa to the Indian general responsible for Indian Kashmir. Later, India reportedly moved to counter the alleged deployment of advanced Chinese missiles to the border area with its own plans to place intermediate-range Agni II and short-range Prithvi III missiles near the frontier. Finally, two Chinese warships paid a first-ever port visit to Burma, exacerbating fears among some that Chinese naval power was being wielded too closely to Indian shores. In September 2010, Prime Minister Singh reportedly warned that China \"would like to have a foothold in South Asia.\" Only days earlier, External Affairs Minister Krishna opined that China had been showing \"more than the normal interest in the Indian Ocean affairs. So we are closely monitoring the Chinese intentions.\"\nWhile few Indian decision makers are desirous of direct conflict with China, there seems to be an upswing in negative views about Beijing's evolving regional and global role, with misgivings perhaps arising along a perspective that New Delhi's past policies have been too concessionary in dealing with a China that may increasingly be perceived as \"an erratic, ultra-nationalist state that seeks to constrain India.\" The pessimistic Indian perspective sees Beijing as unworthy of New Delhi's trust and so rejects the Chinese government's rhetorical commitment to cooperation and dispute resolution as bromides veiling more nefarious intent.\nWhile there are causes for concern in the India-China relationship, there are also some new areas of convergence between the two states, as was made evident when the two governments closely coordinated their positions in the lead up to the Copenhagen Conference on climate change. The potential for future renewed conflict between India and China warrants a close watch as the correlates of power and strategic architectures evolve in Asia. Yet, while tensions appear to mount, neither country is likely to seek open conflict as both have made economic development their key national priority.\nFrom this perspective, increased economic interdependence will act as an inhibitor to conflict, but the workings of this dynamic are not so clear. Some analysts also note that the nature and imbalance of the dramatically growing trade between India and China is leading to a degree of mutual antagonism over the trade relationship. Yet China arguably faces strong disincentives to behave aggressively in the IOR given that doing so would be likely to accelerate India's partnership with the United States, and that any open conflict in the region could cause potentially major harm to the Chinese economy. The argument is thus that incentives for India and China to cooperate are strong. In a sign that recent India-China animosity may have crested, Indian National Security Advisor Shiv Shankar Menon announced in April 2011 that the two countries had agreed to restore suspended defense ties, take steps to enhance their balance of trade, and establish a new consultation mechanism to address border disputes.", "", "India's relationship with the island nation of Sri Lanka dates back millennia and is marked by intimate cultural, religious, and linguistic interaction. For most of the past three decades, relations have been dominated by the now-concluded Sri Lankan civil war between Colombo's government forces and the Liberation Tigers of Tamil Eelam (LTTE). Sri Lanka is divided between a largely Sinhalese-Buddhist majority in the south, which dominates the government, and a Hindu-Tamil minority in the north and east. The still-unresolved ethnic conflict has complicated the relationship between India and Sri Lanka due to the presence in south India of a large Tamil minority of more than 60 million (mainly the state of Tamil Nadu). Some strategic analysts in India are concerned by increased Chinese activity in Sri Lanka.\nDomestic sentiment and increased flows of refugees led India to intervene in the conflict in 1987 by sending a large Indian Peace Keeping Force to Sri Lanka to establish order and disarm Tamil militants. Former Indian Prime Minister Rajiv Gandhi was assassinated by an LTTE suicide bomber in 1991. India later withdrew its forces after they suffered some 1,000 deaths, and it subsequently refrained from direct involvement in the conflict. New Delhi did, however, continue to acknowledge Colombo's right to act against \"terrorist forces.\"\nThe mid-2009 end of combat in Sri Lanka opened the way for newly deepened bilateral relations. New Delhi offered an immediate $115 million grant and provided other support to assist in dealing with the resulting humanitarian crisis and resettlement of hundreds of thousands of internally displaced persons. During a mid-2010 visit to India, Sri Lankan President Mahinda Rajapaksa agreed with Prime Minister Singh that the two countries' \"vibrant and multi-faceted partnership\" warranted agreements on social, legal, and women's affairs, energy and transportation, as well as a soft loan of $800 million for the reconstruction of a northern railway that was destroyed during the war. The total value of bilateral trade exceeded $3 billion in 2010, up some 47% over the previous year. Indian defense ties with Sri Lanka have been revived. New Delhi today contends that relations with Colombo are \"strong and poised for a quantum jump.\"\nYet India remains concerned with the situation in Sri Lanka even after the end of open hostilities there. Members of India's Parliament worry that Indian aid intended for displaced Tamils has not reached the targeted community. Then-Foreign Secretary Rao traveled to Sri Lanka as Special Emissary in 2010 to assess rehabilitation efforts, reportedly conveying to Colombo India's hope that Sri Lanka would initiate a political process to resolve the underlying ethnic issues that fueled the previous civil war in addition to resettling and rehabilitating displaced Tamils. New Delhi continues to emphasize its view that Sri Lanka's national reconciliation must come through a negotiated political settlement of ethnic issues that is \"acceptable to all communities within the framework of a united Sri Lanka and which is consistent with democracy, pluralism, and respect for human rights.\" In meetings with Sri Lanka's President in June 2011, three top Indian officials asked that his government move quickly to reach a political settlement with the Tamils.\nA 2011 report by the Brussels-based International Crisis Group acknowledged New Delhi's \"active engagement and unprecedented financial assistance\" in Sri Lanka, but contends that India's policies have failed to date in facilitating a sustainable peace on the island. The report urges the Indian government to work more closely with the United States, European Union, and Japan in pressing Colombo to negotiate a political settlement to Sri Lanka's ethnic disputes, in part by lifting blanket emergency rule, re-establishing civil administration in Tamil-majority areas, and taking other democratizing and reconciliatory actions. Some independent analysts likewise convey a perception that India has done too little to foster democracy, ensure that ethnic minority rights are respected, and hedge against growing Chinese influence in Sri Lanka.", "India shares close historical, cultural, linguistic, social, and economic ties with neighboring Bangladesh, a country also born of colonial British India. However, and despite India's key role in the 1971 \"liberation\" of the former East Pakistan, New Delhi's past relations with Dhaka have been fraught with tensions related mainly to the cross-border infiltration of Islamist and separatist militants, and to the tens of millions of illegal Bangladeshi migrants in India. The two countries share a heavily-populated, 2,540-mile-long border, the great majority of which New Delhi has attempted to seal through fence construction. The two countries' border forces have in the past engaged in sometimes lethal gun battles, and Bangladesh-based terrorists groups have been active inside India. Still, New Delhi and Dhaka have cooperated on joint counterterrorism efforts and talks on extensive energy cooperation continue. In 2010, India extended a $1 billion line of credit to Bangladesh to aid infrastructure development there, and New Delhi offers rice supplies at below-market prices. The value of bilateral trade was about $3.5 billion in 2009/2010, up more than 12% over the previous fiscal year.\nIndia-Bangladesh ties improved markedly after 2008, facilitated by the election that year of Bangladeshi Prime Minister Sheikh Hasina, whose Awami League has historically closer ties to India than does the opposition Bangladesh National Party. New Delhi has lauded the restoration of multi-party democracy in Dhaka. During her 2010 visit to India, Hasina—accompanied by a 123-person delegation and 50-member business contingent—agreed with Prime Minster Singh to put in place \"a comprehensive framework of cooperation for development between the two countries,\" and signed a number of agreements, including pacts on cultural exchange, security, crime prevention, and power supply. India is also allowing increased trade access for Bangladesh across Indian territory to Bhutan and Nepal.\nExternal Affairs Minister Krishna was in Bangladesh in July 2011 for what he called a \"very productive\" visit marked by the signing of two new trade and commerce agreements, along with \"significant forward movement\" in bilateral power sector cooperation. However, Prime Minister Singh made some badly-timed remarks posted on an Indian government website: Just before his Krishna arrived in Dhaka, Singh claimed that \"at least 25%\" of Bangladeshis \"swear by Jamaat-e-Islami [Bangladesh's largest Islamist political party] and are very anti-Indian.\" The comment was widely reported in Bangladesh and contributed to straining relations.\nPrime Minister Singh is scheduled to visit Bangladesh in September 2011. This will be the first such travel in 12 years. The visit is expected to develop ties between the two nations and help resolve differences over border disputes, trade, and water issues. There reportedly are 162 disputed enclaves on both sides of the border. The visit will also offer the two leaders the opportunity to discuss shared challenges arising from global climate change. Some observers see India developing east-west connectivity with Bangladesh to facilitate links with both its own isolated northeastern states and Southeast Asia, as well as with Bangladesh. A few express concern that Bangladesh's expanding ties with China could facilitate Beijing's north-south connectivity with the Indian Ocean littoral at the expense of India.\nCross-border issues and the use of Bangladesh territory by insurgents in India's northeast remain key for New Delhi. A Joint Boundary Working Group established in 2000 met for the fourth time in late 2010, but demarcation disputes remain unresolved in numerous sectors. Human rights watchdogs have been critical of what they call the \"shoot-to-kill\" policy of India's border security forces, who reportedly have killed nearly 1,000 people, most of them unarmed Bangladeshis, who attempted to cross the border illegally over the past decade. The issue has become a sore point for Dhaka; Bangladesh's foreign minister has urged Indian border security forces to exercise \"utmost restraint\" and was assured by her Indian counterpart that steps were being taken to address the problem. Prime Minister Hasina has discussed with Prime Minister Singh her government's crackdown on Bangladesh-based Indian separatists, and reportedly made a commitment that she would not allow Bangladesh territory to be used for anti-Indian activities. Hasina's government reportedly arrested and handed over to India a key leader of the United Liberation Front of Assam early in 2010, then later in the year remanded to India 28 leaders of the United Liberation Front of Assam (ULFA). Dhaka's efforts to crack down on Indian separatist militants there apparently has led many of those elements to relocate to Burma.\nImproved ties with Bangladesh can provide India with an opportunity to counter Pakistani and Chinese influence there. China has been assisting Bangladesh in developing port facilities in Chittagong, and some Indian sources believe Pakistan's main intelligence agency has used Bangladesh to infiltrate operatives and even \"terrorists\" into India. In October 2010, Bangladesh formally sought Chinese assistance to build a deep water sea port in the Bay of Bengal near the southeastern island of Sonadia. The Dhaka government hopes that such a port could become a key shipping hub for northeast India and China's Yunnan Province, as well as for Nepal, Bhutan, and Burma. Bangladesh is also reportedly in discussion with China and Burma on plans to build a highway linking Bangladesh's Chittagong with Kunming, the capital of China's Yunnan Province. Such connectivity with China would likely be an issue of concern for India. India's multi-billion-dollar transit projects could go far in bringing development to isolated regions of both countries, but some in Dhaka worry that India intends to create a \"security corridor\" across Bangladesh to supply counterinsurgency forces in its northeastern states and potentially even defense forces facing China in Arunachal Pradesh, which could elicit reprisals from Beijing.", "India-Nepal relations traditionally have been close and come under the aegis of the 1950 Indo-Nepal Peace and Friendship Treaty, which allows for unrestricted travel and residency across their 1,150-mile-long shared border. From New Delhi's view, the Treaty affords Nepali citizens \"unparalleled advantages in India,\" and has \"enabled Nepal to overcome many of the disadvantages of being a landlocked country.\" India remains in close consultation with the Nepali government in an effort to support Nepal's transition to a democratic, peaceful, and prosperous state. Prime Minister Singh conveyed his \"warmest felicitations\" to newly elected Nepali Prime Minister Baburam Bhattarai in August 2011. Bhattarai received his doctorate degree from New Delhi's Jawaharlal Nehru University. Nepal is the world's only officially Hindu country, and India continues to be its leading trade partner, as well as source of foreign investment and tourist arrivals. India has taken a lead role in efforts to train and equip the Nepal Army. The Madhesh people of Nepal's Terai region bordering India share the Hindi language, as well as many familial ties across the open border. The largely Hindu social and religious structure of Nepal makes Nepali culture similar to India's in many respects.\nThe bilateral relationship is driven by two major geopolitical considerations. First, Nepal is viewed as a \"buffer state\" between India and China. As such, India seeks to minimize (or at least balance against) Chinese influence there. The substantial Tibetan community in Nepal can at times complicate this dynamic. While the Kathmandu government allows Tibetans to live in Nepal, it has a policy of not allowing any \"anti-China\" activity inside Nepal. Nepali authorities prevented the election of a Tibetan community government-in-exile in October 2010, a step taken by some as a hardening of Kathmandu's stance toward Tibetan refugees. Tibetan protests in Nepal in the lead-up to the 2008 Beijing Olympics had also led to a crackdown by Nepali authorities. There is growing evidence of Chinese ties with Nepali Maoists. A high profile bribery case alleges that a Maoist leader asked a Chinese official for substantial amounts of money to influence Madheshi lawmakers in support of the Maoist's bid for the prime ministership. Former Nepali Prime Minister Prachanda traveled to China at least four times. Current Prime Minister Bhattarai, also of the CPN-M, has stated that Nepal needs to be sensitive to the security concerns of both India and China. Prachanda was viewed by some as having tilted towards China. India reportedly was \"deeply uncomfortable with and suspicious of Maoist intentions\" under the previous Prachanda government. Bhattarai has reportedly offered that \"the days of playing India and China are over.\"\nThe second key Indian geopolitical interest in Nepal is to maintain political stability in Kathmandu and keep Nepal from becoming a base of support for insurgents in India. India is concerned that a Maoist government in Nepal could lend support to the already significant Maoist insurgency in India. Thus far, there have been only limited connections between these groups, but it appears that India is concerned the links could grow should the Maoists assert their dominance over Nepal. Political stability in Nepal could lead to infrastructure development and the establishment of major new projects to tap the country's estimated 43,000 megawatts of hydropower potential that is seen to be technically feasible and economically viable. This could go far in addressing the growing energy needs of India's northern states.", "India and Burma share close historical, ethnic, cultural, and religious ties, along with a 1,000-mile-long border and maritime proximity in the Bay of Bengal. New Delhi continues to pursue closer relations with the repressive military regime in neighboring Rangoon for both economic and political reasons. India seeks to bolster its energy security by increasing \"connectivity\" between its northeastern states and western Burma. India is also concerned about the maintenance of political stability in Burma, fearful that instability could result in a surge of refugees into India and a further increase in China's regional influence. New Delhi may also view good relations with Rangoon as a key aspect of its strategy to address ongoing territorial disputes with China and Pakistan. In addition, many observers see past and continued cooperation by the Burmese military as being vital in New Delhi's efforts to battle separatist militants in India's northeast. India was Burma's fourth-largest trading partner in FY2009/10 (after Thailand, China, and Singapore), with total trade of a record $1.2 billion, up 27% over the previous fiscal year. India is engaged in more than a dozen major projects in Burma, most of them related to improving that country's transportation and communication links.\nIn 2007, Burma's military junta, the State Peace and Development Council (SPDC), launched a violent crackdown to suppress major pro-democracy street protests led by Buddhist monks. In response, the United States imposed new sanctions on Burma and urged other countries to follow suit, yet New Delhi continued to favor dialogue and opposed the imposition of new sanctions. Moreover, during the protests and immediately afterwards, India moved ahead with plans to assist with the construction of a port in northwestern Burma as part of an effort to develop that country's natural gas industry. New Delhi's approach, justified by Indian leaders as being a pragmatic pursuit of their own national interests and as part of their \"Look East\" policy (see below), elicited accusations of Indian complicity in Burmese repression. Press reports in late 2007 indicated that New Delhi was halting arms sales to Rangoon; in fact, India's supply of military equipment to Burma was only \"slowed.\"\nBurma again became the focus of international discussions in early 2010, when the SPDC released new laws governing parliamentary elections to be held later in the year. The laws appeared to restrict the participation of Burma's opposition parties, in particular the National League for Democracy and its leader, Aung San Suu Kyi. While the United States, the European Union, and others were quick to criticize the laws, India's response was comparatively muted. New Delhi chose to disassociate itself from a June 2010 U.N. Human Rights Council resolution that condemned \"ongoing systematic violations of human rights\" in Burma. However, as one of 14 countries in the \"Group of Friends on Burma\"—a consultative body formed by U.N. Secretary-General Ban Ki-Moon—New Delhi did support the Group's call for free and fair elections, and for the release of all political prisoners.\nIn mid-2010, SPDC chief Senior General Than Shwe traveled to New Delhi—his second visit in six years—and met with Prime Minister Singh to discuss bilateral ties. The leaders reportedly discussed matters such as border security, economic relations, and upcoming elections in Burma. There were subsequent reports that the Indian military plan would move additional Border Security Force troops to guard the border with Burma. Even strident boosters of deepening U.S.-India relations issued criticisms of New Delhi's \"Machiavellian turn\" in welcoming the Burmese leader and pursuing greater links with his military regime. Independent analysts also insist that, as perhaps the only external power with the ability to tip the balance in favor of Burma's democratic forces, India has an obligation to look beyond its more mercenary interests to take a more principled stand.\nPresident Obama dismissed Burma's November 2010 elections as having been neither free nor fair. While concurrently visiting New Delhi, the President was openly critical of India's relative silence on the Burmese regime's suppression of democratic movements and violations of human rights, saying democracies with global aspirations have an obligation to condemn such actions. Soon after, an unnamed Indian official said New Delhi has \"strategic interests\" in Burma and that its policies are driven by \"political compulsions.\" Secretary of State Clinton repeated the U.S. President's contention while in Chennai in mid-2011, expressing her hope that New Delhi would continue pressing Rangoon to move ahead with democratization and contending that India has \"the duty to speak out against violations of universal human rights.\"\nSuu Kyi's November 2010 release from house arrest was officially welcomed by New Delhi with the hope that it would begin a process of reconciliation in Burma; Suu Kyi has herself urged India to play a more active role in standing up for democracy and \"look beyond a commercial kind of view\" when dealing with Burma. In June 2011, External Affairs Minister Krishna paid a three-day visit to Rangoon, but did not take the opportunity to meet Suu Kyi (a task undertaken by the Indian foreign secretary).", "Initiated by Prime Minister Narasimha Rao in 1991, India's \"Look East\" policy coincided with the country's economic liberalization and has for two decades reflected New Delhi's focused efforts to deepen commercial and diplomatic relations with East and Southeast Asia. It also has included security cooperation with many of India's eastern neighbors, likely in response to China's growing regional influence. As the ASEAN countries realized significant economic growth, Indian leaders have fairly consistently pursued greater engagement in Southeast Asia. Given the Indian foreign secretary's view that \"India is as much a Southeast Asian nation as a South Asian nation,\" New Delhi's policy seeks to \"reconnect and reach out in the civilizational space we share with our neighbors.\"\nLike the United States, India is designated as an ASEAN \"Dialogue Partner.\" At the India-ASEAN Post-Ministerial Meeting in Indonesia in July 2011, there was unanimous agreement that engagement should be strengthened in the security and economic fields, to include upgraded efforts to combat international terrorism and threats to maritime security, and aspirations to finalize a pending Services and Investment Agreement. New Delhi hopes to boost trade with the ten ASEAN states to $70 billion by 2012. Moreover, India has since 1996 been a member of the ASEAN Regional Forum (ARF), in which 27 member states come together to consult on matters affecting regional peace and security. New Delhi's participation further reflects India's growing engagement with the Asia-Pacific region and tracks well with its Look East policy.\nIndia's Look East Policy may not be entirely welcome by China. New Delhi is reportedly spending $2 billion to set up a military command in the Andaman Islands located to the northwest of the Strait of Malacca, through which much of China's energy and trade flow. In July, an Indian Navy vessel based in the Andamans reportedly received a warning from the Chinese navy that it was entering Chinese waters as it sailed from Vietnam's Nha Trang port towards Haiphong. Some interpret the presence of Indian naval ships in Vietnam as \"possibly the start of an Indian bid for influence in the South China Sea.\"", "India's relations with Iran traditionally have been positive and are marked by centuries of substantive interactions between the Indus Valley and Persian civilizations. Diplomatic ties were formalized in 1950, and New Delhi has maintained high-level engagement with Tehran's Islamist regime after 1979. In 2003, the two countries launched a bilateral \"strategic partnership\" of their own, setting out to deepen economic, energy, science, and education cooperation, as well as work together on Afghan reconstruction and counterterrorism. Yet, as India has grown closer to the United States and other Western countries in the new century, New Delhi's policy has slowly shifted—perhaps most notably when India voted with the United States (and the majority) at key International Atomic Energy Agency sessions in 2005 and 2006—leaving most aspects of the envisaged India-Iran partnership unrealized. Most recently, New Delhi has moved to more fully embrace the international sanctions regime against Tehran, causing new tensions with Iran. In late 2010, Iran's Ayatollah Ali Khamenei made repeated mention of the \"Kashmir problem,\" leading some to see an \"anti-India tilt\" in Iranian policy. In a reflection of more constricted bilateral commercial relations, the total value of bilateral trade dropped by more than 10% in FY2009/2010 after peaking at nearly $15 billion the previous year.\nThere are U.S. concerns that India will seek greater energy resources from Iran, thus benefitting financially a country the United States is seeking to isolate. Indian firms have in recent years taken long-term contracts for purchase of Iranian gas and oil. Natural gas purchases could be worth many billions of dollars, but thus far differences over pricing and transport have precluded sales. Building upon growing energy ties is the proposed construction of a pipeline to deliver Iranian natural gas to India through Pakistan (the \"IPI\" pipeline), but participation in this project apparently has been abandoned by New Delhi. Still, India has imported an average of about 400,000 barrels of Iranian crude oil per day in recent years, accounting for about one-seventh of India's total oil imports and making it Iran's third-largest market in this category.\nOfficially, New Delhi continues to discuss the IPI pipeline project with Tehran, along with long-term supplies of liquid natural gas (LNG), development of Iran's South Pars LNG project, the development of the Farsi oil and gas blocks, and Iran's Chabahar port and railway projects. Many in New Delhi see development of Iran's Chabahar port as providing India with access to Central Asian markets bypassing Pakistan. Indian officials have for years been encouraging Iran to more quickly develop the port's facilities, but Chabahar's current capacity of 2.5 million tons per year is only about one-fifth of the target. Tehran's reluctance to move faster may be linked to its concerns about security in Iran's Sistan-Baluchistan region, the site of a Sunni Muslim insurgency. Plans by India's state-owned natural gas company to purchase a 40% stake in Iran's South Pars Phase 12 gas project have been delayed by concerns about violating the international sanctions regime; banks have been unwilling to fund the investment while global pressure grows over Iran's nuclear program.\nIn its new role as a nonpermanent member of the U.N. Security Council, India has firmed its stand on the need to fully implement Iran sanctions. In the final week of 2010, the Reserve Bank of India declared that a regional clearinghouse, the Asian Clearing Union, could no longer be used to settle energy trade transactions. The Obama Administration praised the decision; Washington had long sought the move as a way of making Indian companies' purchases of Iranian oil and gas more difficult, and thus of tightening sanctions targeting Iran. New Delhi may have taken the action as a means of bolstering its case for a permanent seat on the UNSC. Tehran at first refused to sell outside the previous arrangement, but quickly agreed to ensure continuing shipments as officials in both countries scrambled to find a lasting solution. By February, the two countries appeared to have found resolution by agreeing to make transactions in euros through an Iranian bank with German accounts, but, in May, proliferation-related EU scrutiny of that bank jeopardized this new arrangement and Indian payments were again halted. In early summer, Iran's state oil firm threatened Indian refiners with an August supply cutoff if the issue wasn't resolved, but Tehran quickly stated that no cutoff was planned. Still, Iranian exports were reduced, Saudi Arabia increased its sales to India to compensate, and the now estimated $4.8 billion impasse may yet lead to a full cutoff.\nThe Iran-Libya Sanctions Act ( P.L. 107-24 ) required the President to impose sanctions on foreign companies that make an \"investment\" of more than $20 million in one year in Iran's energy sector. The 109 th Congress extended this provision in the Iran Freedom Support Act ( P.L. 109-293 ). The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, which became P.L. 111-195 , further tightened sanctions on Iran. To date, no Indian firms have been sanctioned under these Acts, although Indian firms potentially involved in the gas pipeline project would be sanctionable, as would companies that sell gasoline to Iran. Reliance Industries of Mumbai, a major supplier in recent years, has halted such sales.\nDuring the period 2004-2006, the United States sanctioned Indian scientists and chemical companies for transferring to Iran WMD-related equipment and/or technology (most sanctions were chemical-related, but one scientist was alleged to have aided Iran's nuclear program). New Delhi called the moves unjustified. Included in legislation to enable U.S.-India civil nuclear cooperation ( P.L. 109-401 , the \"Hyde Act\") was a non-binding assertion that U.S. policy should \"secure India's full and active participation\" in U.S. efforts to prevent Iran from acquiring weapons of mass destruction. New Delhi firmly opposes the emergence of any new nuclear weapons powers in the region, but also opposes the use of force and even sanctions, favoring instead diplomacy to address Iran's controversial nuclear program.\nThe 2003 India-Iran Joint Statement included plans to \"explore opportunities for cooperation in defense in agreed areas, including training and exchange of visits.\" While some in Congress have expressed concerns about signs of nascent India-Iran defense cooperation, most observers view such relations as remaining thin and patchy to date, at most, although some Indian strategic analysts call for increasing these as a means of strengthening regional security, as well as to maintain New Delhi's foreign policy independence, especially vis-à-vis the United States.", "Moscow was New Delhi's main foreign benefactor for the first four decades of Indian independence. Today, Russia continues to be \"a trusted and reliable strategic partner,\" and New Delhi views its ties with Moscow as a \"key pillar of India's foreign policy.\" The Russian President was in New Delhi in December 2010 in an effort to sustain close India-Russia relations despite New Delhi's warmer relations with the West. During a follow-on visit to Moscow, External Affairs Minister Krishna described the India-Russia friendship as being a \"special and privileged strategic partnership.\" Moscow seeks to continue supplies of nuclear technology and expertise, as well as win millions of dollars worth of contracts for the maintenance of India's extensive inventory of Russian-made military hardware. Among the outcomes of the December summit was the inking of agreements to deepen cooperation in the nuclear energy, pharmaceutical, and information technology sectors. The governments also seek to more than double annual bilateral trade to $20 billion by 2015 (trade topped $8.5 billion in 2010, up 15% over the previous year). India's single largest foreign investment is a $1 billion stake in a joint oil and gas venture on Russia's Sakhalin Island.\nDespite some post-Cold War diversification of its defense suppliers, India continues to obtain the great bulk of its imported military hardware from Russian firms, which are estimated to have been the source of more than 80% of India's total arms imports for the period 2006-2010. Russia's status as a main supplier of Indian defense equipment has come under threat in several disputes, including over the refitting of an aircraft carrier (which has seen major delays and cost overruns), a spat over Russia's allegedly substandard upgradation of an Indian attack submarine, and other irritants. Still, the New Delhi government appears proud to have shifted from a buyer-seller defense relationship to \"more elaborate and advanced cooperation\" involving joint design, production, and marketing of such weapons systems as the Fifth Generation Fighter Aircraft and the Brahmos cruise missile.", "India's relations with Japan only began to blossom in the current century after being significantly undermined by India's 1998 nuclear weapons tests. Today, leaders from both countries acknowledge numerous common values and interests. They are engaging a \"strategic and global partnership\" formally launched in 2006, when the Indian foreign minister spoke of Japan as a \"natural partner in the quest to create an arc of advantage and prosperity\" in Asia. He also emphasized India's desire for economic integration in Asia and cooperative efforts to secure vital sea lanes, especially in the Indian Ocean. Japan's support for the latter initiative has included plans for unprecedented joint naval exercises. New Delhi and Tokyo also share an interest in seeing membership of the U.N. Security Council expanded—both governments aspire to permanent seats.\nAfter years of negotiations, New Delhi and Tokyo finalized a free trade agreement in October 2010, after differences over Indian tariff rates and Japanese restrictions on the importation of generic Indian pharmaceuticals were settled. Bilateral trade was already increasing rapidly: its total value in 2010 exceeded $14.5 billion, up by some 46% over 2009. India has also secured a $4.5 billion loan from Japan for construction of a 900-mile freight railway between Delhi and Mumbai, the largest-ever single-project overseas loan offered by Japan. The Indian government hopes that the \"Delhi-Mumbai Industrial Corridor\" project will attract more than $90 billion in foreign investment following completion. According to the Japanese Ministry of Foreign Affairs, Japan has since 1986 been India's largest aid donor.\nU.S., Indian, and Japanese naval vessels held unprecedented combined naval exercises in the Bay of Bengal in 2007 (Australian and Singaporean vessels also participated). Officials stressed that the exercises—which involved a total of 27 ships and submarines, among them two U.S. aircraft carriers—were not prompted by China's growing military strength. New Delhi favors greater trilateral India-U.S.-Japan cooperation, especially in the areas of trade and energy security, but shies from anything that could be construed as a multilateral security alliance. Washington, New Delhi, and Tokyo have plans to commence a senior-level trilateral dialogue in 2011.", "India's historic engagement with Africa has been considerable and has included ancient trade patterns, active support for African liberation movements in the 20 th century, and robust participation in U.N. peacekeeping operations on the continent. Indian leaders appear to be reviving links to old friends in the developing world with an eye on access to natural resources and perhaps also support for a permanent seat on the U.N. Security Council. While speaking to a group of African leaders in Ethiopia in May 2011, Prime Minister Singh offered a $5 billion line of Indian credit to nations there and pledged his government's support for African education and infrastructure.\nIndia's interests and influence in Africa arguably align well with those of the United States, especially given New Delhi's commitment to secularism, pluralism, and democracy. This stands in contrast to China's role in Africa, which may be considered more mercantile. China's foreign exchange reserves of more than $3 trillion are some ten times greater than India's, and China has been aggressive in using its state-owned development banks to make huge investments in oil, gas, and other natural resources in Africa. At $46 billion in 2010, the value of India's total trade with the continent remains less than half of that of China. The United States may thus benefit by welcoming and coordinating with India in engagement of African countries, perhaps especially in the area of security initiatives.", "", "India is the world's most populous democracy and remains firmly committed to representative government and rule of law. As a nation-state, India contains hundreds of different ethnic groups, religious sects, and social castes. U.S. policymakers commonly identify in the Indian political system shared core values, and this has facilitated increasingly friendly relations between the U.S. and Indian governments. In 2011, the often-cited Freedom House again rated India as \"free\" in the areas of political rights and civil liberties, assigning it a score identical to that of Indonesia.", "With a robust and working democratic system, India is a federal republic where the bulk of executive power rests with the prime minister and his or her cabinet (the Indian president is a ceremonial chief of state with limited executive powers). Most of India's 15 prime ministers have come from the country's Hindi-speaking northern regions and all but two have been upper-caste Hindus. The 543-seat Lok Sabha (People's House) is the locus of national power, with directly elected representatives from each of the country's 28 states and 7 union territories. A smaller upper house, the Rajya Sabha (Council of States), may review, but not veto, most legislation, and has no power over the prime minister or the cabinet. National and state legislators are elected to five-year terms. The most recent parliamentary elections were held in the spring of 2009 when the incumbent Indian National Congress Party (hereinafter \"Congress\")-led coalition won a convincing victory, as it had five years earlier.\nNational elections in 1999 had secured ruling power for a Bharatiya Janata Party (BJP)-led coalition government headed by Prime Minister Atal Vajpayee. That outcome decisively ended the historic dominance of the Nehru-Gandhi-led Congress Party, which was relegated to sitting in opposition at the national level (its members continued to lead many state governments). However, a surprise Congress resurgence under party president Sonia Gandhi in the 2004 elections brought to power a new left-leaning coalition government led by former finance minister and Oxford-educated economist Manmohan Singh, a Sikh and India's first-ever non-Hindu prime minister. Many analysts attributed Congress's 2004 resurgence to the resentment of rural and poverty-stricken urban voters who felt left out of the \"India shining\" campaign of a BJP more associated with urban, middle-class interests. Others saw in the results a rejection of the Hindu nationalism associated with the BJP.\nThe Congress Party and its major coalition allies significantly improved their national standing in the spring 2009 elections. More than 1,000 parties vied for office and 60% of the country's 714 million eligible voters turned out at 838,000 polling stations. Congress Party candidates performed strongly both in direct contests against BJP opponents, as well as when contending against so-called \"Third Front\" candidates from a coalition of smaller regional parties that had sought to displace the incumbents. The result was a net increase of 61 Lok Sabha seats for Congress, bringing its total representation to 206 seats, or 38% of the total. Although the BJP's percentage share of the total vote was similar to that in 2004, it lost 22 more seats, and its second consecutive national defeat left it leaderless and in disarray. Meanwhile, the Left Front grouping of communist parties (former supporters of the Congress-led coalition) was devastated, losing 35 of its 60 seats. See Figure 1 for major party representation in the current Lok Sabha.\nPrime Minister Singh oversees the United Progressive Alliance (UPA) ruling coalition that has now marked more than seven years in power, far exceeding the expectations of some early observers. Both he and party chief Gandhi have remained fairly popular national figures, although both have seen their favorability suffer with major corruption scandals breaking since late 2010. Despite some notable successes, the UPA government has remained unpopular by many measures, having failed to capitalize on opportunities, and appearing to many as meek and indecisive. Singh himself, though still generally admired as an honest and intelligent figure, has been unable to succeed in pushing through much of the UPA's domestic agenda, which focuses on development and uplift for India's hundreds of millions of poor citizens.", "", "Congress's electoral strength had reached a nadir in 1999, when the party won only 110 Lok Sabha seats. Observers attributed the poor showing to a number of factors, including the failure of Congress to make strong pre-election alliances (as had the BJP) and perceptions that party leader Sonia Gandhi lacked the experience to lead the country. Support for the Congress, which dominated Indian politics for decades, had been in fairly steady decline following the 1984 assassination of Prime Minister Indira Gandhi and the 1991 assassination of her son, Prime Minister Rajiv Gandhi.\nSonia Gandhi, Rajiv's Italian-born, Catholic widow, refrained from active politics until the late 1990s. She later made efforts to revitalize the party by phasing out older leaders and attracting more women and lower castes—efforts that appear to have paid off in 2004. Today, Congress again occupies more parliamentary seats (206) than any other party and, through unprecedented alliances with powerful regional parties, it again leads India's government under the UPA coalition. As party chief and UPA chair, Gandhi is seen to wield considerable influence over the coalition's policy making process. Her foreign origins have presented an obstacle and likely were a major factor in her surprising 2004 decision to decline the prime ministership. As discussed below, her son, Rahul, is widely seen as the most likely heir to Congress leadership.", "With the rise of Hindu nationalism, the BJP rapidly increased its parliamentary strength during the 1980s. In 1993, the party's image was tarnished among some, burnished for others, by its alleged complicity in serious communal violence in Mumbai and elsewhere. Some hold elements of the BJP, as the political arm of extremist Hindu groups, responsible for the incidents (the party has advocated \"Hindutva,\" or an India based on Hindu culture, and views this as key to nation-building; Hindutva can at times take an anti-Western cast). While leading a national coalition from 1998-2004, the BJP worked—with only limited success—to change its image from right-wing Hindu fundamentalist to conservative and secular, although 2002 communal rioting in Gujarat again damaged the party's credentials as a moderate organization. The BJP-led National Democratic Alliance (NDA) was overseen by party notable Prime Minister Atal Vajpayee, whose widespread personal popularity helped to keep the BJP in power.\nFollowing its upset loss in 2004 and even sounder defeat in 2009, the party has been in some disarray. While it continues to lead several important state governments, its national influence has eroded in recent years. Party leader Lal Krishna Advani, who had served as Vajpayee's deputy and home minister while the BJP was in power, apparently sought to transcend his Hindu nationalist roots by posturing mostly as \"governance, security, development\" candidate in 2009; the party's loss likely ended his political career.\nAt present, the BJP president is Nitin Gadkari, a former Maharashtran official known for his avid support of privatization. Although still in some disorder in 2011, there are signs that the BJP has made changes necessary to be a formidable challenger in scheduled 2014 polls. These include a more effective branding of the party as one focused on development and good governance rather than emotive, Hindutva-related issues, and Gadkari's success at quelling intra-party dissidence and, by some accounts, showing superior strategizing and organizing skills as compared to his predecessors. Yet among the party's likely candidates for the prime ministership in future elections is Gujarat Chief Minister Narendra Modi, who has overseen impressive development successes in his state, but who is also dogged by controversy over his alleged complicity in lethal anti-Muslim rioting there in 2002 (Modi has in the past been denied a U.S. visa under an American law barring entry for foreign government officials found to be complicit in severe violations of religious freedom).", "The influence of regional and caste-based parties has become an increasingly important variable in Indian politics; both the 2004 and 2009 national elections saw such parties receiving about half of all votes cast. Never before 2004 had the Congress Party entered into pre-poll alliances at the national level, and numerous analysts attributed Congress's success to precisely this new tack, especially thorough arrangements with the Bihar-based Rashtriya Janata Dal and Tamil Nadu's Dravida Munnetra Kazhagam. The newfound power of both large and smaller regional parties, alike, is reflected in the UPA's ministerial appointments, and in the Congress-led coalition's professed attention to rural issues and to relations between state governments and New Delhi.\nTwo of India's three most notable regional parties are based in the densely-populated northern state of Uttar Pradesh (UP), home to some 190 million persons. The Samajwadi Party, a largely Muslim- and lower caste-based organization, is highly influential there, and holds 23 Lok Sabha seats. The rival Bahujan Samaj Party (BSP) controls the UP state government; its lower-caste, female leader and current Chief Minister Mayawati, is believed to have national political aspirations. The BSP occupies 21 Lok Sabha seats. A final regional party of note is the Janata Dal (United) (JDU), based out of neighboring Bihar and led by that state's Chief Minister, Nitish Kumar. The JDU holds 20 Lok Sabha seats.", "Although the Communist Party of India (Marxist) (CPI-M) seated the third largest number of parliamentarians after the 2004 elections (43), its vote bank has been almost wholly limited to West Bengal and Kerala. Communist parties (the CPI-M and several smaller allies) have in the past been bitter rivals of the Congress in these states, but a mutual commitment to secularism motivated their cooperation against the BJP in 2004. This \"Left Front\" is vocal in its criticisms of closer India-U.S. relations, adamantly opposing bilateral civil nuclear cooperation and railing at any signs that the United States seeks to make India a \"junior partner\" in efforts to counter China. This made the communists difficult partners for the first UPA government, and they subsequently were jettisoned as Congress supporters. In the 2009 national elections, the Left Front competed for 130 seats, but won only 20, suffering especially costly losses in their traditional strongholds. Many analysts attributed their setbacks to poor governance records in these very states. What may be the final blow came when 34 uninterrupted years of communist rule in West Bengal ended upon the Congress-allied Trinamool Congress Party's electoral rout of the communist coalition in May 2011 state assembly elections.", "", "Corruption has long been a serious problem in India (see also \" India's Economy \" section, below). Pervasive, major, and high-level corruption and iniquity is now identified as a central obstacle to India's economic and social development, and is seen as a key cause of a steep decline in foreign investment in late 2010 and early 2011. November 2010 witnessed a baring of two major Indian scandals that have left the national government largely paralyzed and unable to effectively govern to date. The first involves apparent corruption and gross negligence by officials overseeing the October 2010 Commonwealth Games hosted by New Delhi; the second relates to the government's sale of broadband licenses at far below market prices, costing the government many billions of dollars.\nFirst, in November 2010, two senior Congress Party figures—the chief organizer of the Commonwealth Games and Maharashtra's Chief Minister—were forced to resign under a cloud of corruption allegations. In February 2011, two more senior Commonwealth Games officials were arrested on suspicion of corruption, specifically, for conspiring to inflate costs while procuring timers and scoring equipment from a Swiss firm at a net loss to the government of nearly $24 million. Two months later, federal agents arrested the former chief organizer of the games on similar charges. By July, Sports Minister M.S. Gill had resigned his post.\nYet it is the telecom scandal that has been the most sensational and damaging of the several recent corruption stories, especially after an independent auditor estimated that the central government had lost some $39 billion by selling the 2G spectrum rights too cheaply. Soon after the Commonwealth Games story broke came a spate of revelations about the process by which federal Communications and Information Technology Ministry officials had auctioned off parts of the 2G spectrum, apparently receiving only $3.6 billion for licenses that should have been worth as much as $45 billion. In November 2010, Communications and Information Technology Minister A. Raja, a leading Congress Party-allied DMK party figure who personally approved of the improper spectrum license sales, resigned under intense pressure and subsequently was arrested along with two other ministry officials. Police, acting upon evidence of their collusion with private sector figures, arrested a telecom company executive in February 2011. In July, another federal cabinet figure and DMK colleague of Raja's, Textile Minister Dayanidhi Maran, quit his post after coming under investigation in the scandal.\nIn a further embarrassment for the ruling coalition, the qualifications of a new high-level anti-corruption official, P.J. Thomas, who had been appointed in September 2010, was questioned by the Supreme Court later that year due to his potentially criminal role in an alleged palm oil import scam in his home state of Kerala. By the final month of 2010, outrage from opposition parties had essentially shut down Parliament for three weeks; the Congress-led coalition was able use its majority to pass some spending bills, but most major legislation was blocked. The multiple scandals have continued to render the Congress-led coalition unable to push through major economic reforms that would require the acquiescence of opposition parties.\nWhile it has benefitted from the UPA's woes, the main opposition BJP has not escaped culpability in recent corruption scandals. In July 2011, Karnataka's ombudsman issued a report implicating the state's BJP chief minister, B.S. Yeddyurappa, in a $3.5 billion scandal involving the illegal mining of iron ore. Yeddyurappa, accused of receiving a $2 million illicit payment from a mining company and selling state land at an inflated price, quickly lost the support of his party and resigned.\nIn addition to the major incidents of graft and corruptions discussed above, reports of large-scale political bribery sparked much outrage in early 2011 when U.S. diplomatic cables released by Wikileaks reportedly described an American diplomat's eyewitness mid-2008 account of being shown chests containing about $25 million in cash that a Congress Party aide allegedly said was to be used as payoffs to secure Parliament's endorsement of the controversial U.S.-India civil nuclear deal. Although Prime Minster Singh himself denied that his party had paid any bribes or broken any laws, and described the account as \"unverified and unverifiable,\" the episode has led to at least two arrests in an ongoing probe and provided further fuel for opposition party attacks on the UPA government. Moreover, in the current year, new attention also has focused on hundreds of billions of dollars in funds illicitly stashed by Indians abroad. In July 2011, India's Supreme Court requested that the government find and repatriate this so called \"black money,\" adding new pressure on the Congress-led coalition to combat high-level corruption.\nWhile Prime Minister Singh is not accused of personal wrongdoing, he has come under fire for an allegedly inattentive management style that, for some observers, facilitated an environment in which corruption could spread. In the face of mounting pressure to act, Congress President Sonia Gandhi acknowledged that problems existed \"at all levels\" of society, but she squashed rumors of any rift between herself and the Prime Minister, expressing full confidence in Singh's leadership. Soon after, Singh himself offered to appear before any investigative body, declaring he had nothing to hide about his actions. Yet, as his government continued to be paralyzed by scandals and infighting into 2011, speculation about Singh's status mounted, and in February the Prime Minister gave a nationally-televised interview in which he defended his own actions, promised to crack down on corruption, and called the related scandals the greatest regret of his term in office. Days later, Singh dropped his longstanding resistance and acceded to opposition demands for a parliamentary investigation of the telecom scandal in return for an end to their filibuster that had paralyzed the legislature for two months.", "By the spring of 2011, negative emotions sparked by months-long revelations of high-level corruption reached the point where mass public mobilization could occur. Two figures were notable in initiating this development: In early June, prominent yoga guru Swami Ramdev—his television program attracts about 30 million viewers—staged a major anticorruption protest in the Indian capital, and launched his own mass hunger strike to demand government action to recover \"black money.\" That night, after apparently inaccurate reports that the government had acceded to Ramdev's demands, hundreds of police swept through the protesters, using tear gas and batons to disperse them; at least 30 people were injured. Government officials explained that Ramdev's permit allowed only for yoga and not a political demonstration; police said that permit was for a maximum of 5,000 attendees and some 40,000-60,000 showed up. Critics accused the government of using unnecessary force against peaceful protesters. Over following days, Ramdev's fast attracted thousands of participants across the country. Public officials were discomfited by the exercise of political influence through a perceived \"publicity stunt\"; other observers were alarmed that hardline Hindu nationalists were at times sharing the stage with Ramdev. There was thus relief felt across India's political spectrum when, in mid-June, Ramdev called off his fast.\nYet a previously unknown figure has assumed far more influence at the national level. Two months before the Ramdev-led protest, social activist Anna Hazare, an uneducated 72-year-old from an indigent Maharashtran family, had set himself up at a New Delhi tourist sight and vowed to \"fast unto death\" unless the central government moved to toughen its anti-corruption laws, in particular by establishing a new \"Lokpal\" (ombudsman) post to review corruption complaints reaching to the highest levels of government. Less than a week later, after many thousands in cities across India had taken up his cause, Hazare ended his strike and declared victory upon the government's announcement that it would form a committee to draft Lokpal legislation.\nThe composition of that committee—five government officials and five nongovernmental activists—quickly became a matter of controversy, with critics questioning why members of civil society groups, with no standing as elected representatives of the people, should be involved in a process with major political implications. Moreover, the government representatives found themselves in serious disagreement with \"Team Anna,\" as the civil society members and other Hazare supporters came to be known. In the end, the government officials produced one version (the Lokpal bill) and civil society members produced another (the Jan Lokpal bill). Opinion surveys have found huge majorities (80%-90%) of Indians favoring the civil society version.\nTop Congress Party leaders, including Prime Minister Singh, have argued that multiple tactics to combat corruption are required, and that no single group could claim to represent the whole of civil society. Still, the government has come under fire for failing to open lines of communication with alternative civil society groups, leaving an impression that Hazare's movement speaks for the entire nation. Meanwhile, \"Team Anna\" itself has been criticized for allegedly dividing poorer minority communities, and for signs that Hindu nationalists are providing the bulk of its organizational muscle.", "On July 28, 2011, 43 years after the first draft was conceived, India's federal cabinet approved a Lokpal bill that did not include serving prime ministers or the higher judiciary under its purview. The bill did, however, incorporate some minor provisions of the Jan Lokpal bill and had the support of all but one of the Congress Party's coalition partners. Nevertheless, Hazare called the bill \"unacceptable,\" and the opposition BJP joined him in expressing disappointment that the prime minister was excluded from oversight.\nTo express his dissatisfaction with the government's actions, Hazare vowed to begin another fast \"unto death\" in New Delhi on August 16. On that morning, as thousands of supporters began to gather at a city park, plain-clothes police arrested Hazare and took him away. At this point, his supporters released a pre-recorded videotape in which Hazare, anticipating his own detention, announced the start of a \"second independence campaign\" for India. By jailing Hazare, the government looked both inept and undemocratic, and united a wide range of otherwise reluctant actors in support of Hazare's movement. In a further twist, Hazare refused an offer to be released until he was given permission to launch a 15-day hunger strike without any restrictions on crowd size at the anticipated protest site.\nIn late August, a parliamentary committee began considering the Jan Lokpal bill submitted by Hazare and his supporters, thus meeting a central demand of the protestors. Yet Hazare rejected a personal plea from the prime minister to end his fast until being guaranteed that certain key provisions of the bill would be enacted. On August 27, the 13 th day of his latest fast, Hazare declared victory when negotiations among government ministers, opposition lawmakers, and civil society representatives resulted in an agreement.", "Even before major corruption scandals broke in late 2010, the Congress-led UPA was under considerable criticism for drift and ineffectiveness. Since that time, the decline of the Congress Party's standing has been precipitous: less than two years after the party won a convincing 2009 national reelection victory, opinion polls showed a majority of Indians believing the UPA coalition had lost its moral authority to rule. Many analysts identify the slow response to corruption scandals as having been particularly damaging.\nIn the face of growing public anger, Prime Minister Singh made changes to the federal cabinet in January, demoting several ministers who had been tainted by scandal or criticized for ineffectiveness. Yet the changes were relatively minor, leaving most commentators unimpressed, and the opposition BJP accused the government of lacking enough courage to remove corrupt figures. Over the course of recent political upheaval, Singh's mild, nonpolitical bearing, once considered part of his appeal, has for many become a liability, especially as the Indian leader has appeared slow-footed in reacting to national outrage over increasing evidence of high-level corruption. In June, he publically denied charges that he had become a \"lame duck\" leader.\nPoor economic news also continues to leech support for the Congress-led government; in February, some 100,000 trade unionists took to the streets of New Delhi to protest high food prices and unemployment. In March, the Congress Party nearly lost one of its key coalition partners, Tamil Nadu's Dravida Munnetra Kazhagam (DMK), which has 18 seats in Parliament but was badly beaten in state elections. Some Congress leaders reportedly wanted to end ties with the DMK, given that the federal minister at the center of the ongoing telecom scandal, A. Raja, was a DMK figure who was seen to taint the overall coalition. In the end, however, Congress president Sonia Gandhi chose to maintain a DMK role in the UPA coalition upon condition that it concede to Congress's demand for more Tamil Nadu state assembly seats.\nMeanwhile, Congress President Gandhi is suffering from an unknown illness, and in early August virtually disappeared from India's political stage, having left the country for surgery at an undisclosed U.S. hospital. Moreover, as key Congress figures express support for the future leadership role of Sonia Gandhi's youthful son, parliamentarian Rahul Gandhi, Manmohan Singh's political authority is correspondingly undermined. The 2009 polls may have represented a coming out party of sorts for the younger Gandhi, who many expect to be put forward as Congress's prime ministerial candidate in scheduled 2014 elections. Yet this heir-apparent remains dogged by questions about his abilities to lead the party, given a mixed record as an election strategist, uneasy style in public appearances, and reputation for gaffes.", "Perhaps India's best example of effective governance and impressive development is found in Gujarat (pop. 60 million), where controversial Chief Minister Narendra Modi has streamlined economic processes, removing red tape and curtailing corruption in ways that have made the state a key driver of national economic growth. Seeking to overcome the taint of his alleged complicity in deadly 2002 anti-Muslim riots, Modi has overseen heavy investment in modern roads and power infrastructure, and annual growth of more than 11% in recent years. The state has attracted major international investors such as General Motors and Mitsubishi and, with only 5% of the country's population, Gujarat now accounts for more than one-fifth of India's exports.\nAnother positive example in 2011 has been Bihar (pop. 104 million), one of India's poorest states, where Chief Minister Nitish Kumar has won national attention through his considerable success in emphasizing good governance over caste-based politics; he is credited with restoring law and order across much of the state, as well as overseeing infrastructure and educational improvements of direct benefit to common citizens projects. Kumar's Janata Dal (United) party, in alliance with the main national opposition BJP, won an overwhelming reelection majority in November 2010 state elections.\nThe examples set in by Chief Ministers Modi and Kumar may have inspired the popular leader of India's most populous state, Uttar Pradesh (pop. 200 million). Chief Minister Mayawati, who is widely believed to maintain national political ambitions and was at the forefront of a nascent \"Third Front\" in 2009, has shifted her own focus much more toward infrastructure projects such as road-building and improving the state's poor energy grid.\nAn ongoing movement to carve a new state out of Andhra Pradesh (pop. 85 million) has caused sometimes major public disturbances. The UPA government had first committed to form the new state in late 2009, but has since deferred, causing protests. Because the new state would include the important high-technology hub of Hyderabad, the movement could have both domestic and international economic implications. In March 2011, 100,000 proponents of a new Telangana state were detained by police and another 50,000 rallied in defiance of an unofficial curfew. In July, a statewide protest strike disrupted business and transportation, and nine Congress party Lok Sabha members resigned over their party's failure to take a stand on the issue.\nIn the key eastern state of West Bengal (pop. 91 million), the group of communist parties that had ruled the state for 24 years met with an historic reversal in 2011 state elections, falling from 235 assembly seats to only 61. The big winner was the Trinamool Congress of Mamata Banerjee, a federal cabinet minister in the Congress-led national coalition (her party had in the past allied with the BJP). As West Bengal's new Chief Minister, Banerjee is faced with repairing one of India's poorest states.\nIn Tamil Nadu (pop. 72 million), the Dravida Munnetra Kazhagam (DMK), a major Congress Party ally in the national coalition, was routed and lost power in June state assembly elections, winning only 30 seats after having won 160. Their rivals, sometime BJP allies All India Anna Dravida Munnetra Kazhagam (AIADMK), now enjoy an overwhelming majority in that state.\nFinally, Jammu and Kashmir (pop. 13 million) held local Panchayat (village-level) elections from April to June, described by the state's chief minister as the first \"real\" such poll in 33 years (the 2006 round was deferred due to security circumstances and the 2001 round was not considered credible by most observers). More than 5 million voters representing more than three-quarters of the electorate cast votes in the largely peaceful election. New Delhi urges the state government to move quickly on a devolution plan that would transfer more power to the more than 4,000 newly elected village leaders.", "", "India has been in the midst of a major and rapid economic expansion, with an economy projected to soon be the world's third largest. Although there is widespread and serious poverty in the country, observers believe long-term economic potential is tremendous, and recent strides in the technology sector have brought international attention to such new global high-technology centers as Bangalore and Hyderabad. However, many analysts and business leaders, along with U.S. government officials, point to excessive regulatory and bureaucratic structures as a hindrance to the realization of India's full economic potential. Although India has made major progress in reducing corruption, it is still perceived as a major obstacle for the economy. The high cost of capital (rooted in large government budget deficits) and an abysmal infrastructure also draw negative appraisals as obstacles to growth. Ubiquitous comparisons with the progress of the Chinese economy show India lagging in rates of growth, foreign investment, poverty reduction, and in the removal of trade barriers.\nIt is a testament to the strength of India's economy that, even in the face of widespread corruption, poor infrastructure, political uncertainty, inflationary pressures, and more recently, declining rates of foreign investment, it has continued to grow by at least 8% annually in recent years. In the absence of such major obstacles, the national economy would most likely enjoy double-digit growth, and in many respects government is seen to be an impediment rather than facilitator of better performance.\nAccording to the International Monetary Fund (IMF), India's nominal gross domestic product (GDP) in 2010 was $1.538 trillion, making it the 9 th largest economy in the world. However, with a population of 1.17 billion people, India's per capita GDP is $1,265, 139 th in the world and slightly higher than that of Pakistan, but still below that of Bhutan. Although India has had one of the fastest growing economies in the world since 2001, relatively high income disparities have left much of India's population in poverty. According to the United Nations Development Program (UNDP), nearly a third of India's population, and more than 60% of its women, live below the national poverty line.\nIndia was struck by the secondary effects of the global financial crisis of 2008, but its impact was comparatively light. According to the IMF, real GDP growth decreased from 7.3% in 2008 to 5.7% in 2009. While its financial sectors were largely insulated from the collapse of selected financial markets, the ensuing economic slowdown (particularly in Europe and the United States) led to a drop in demand for India's leading exports. In addition, the decline in global liquidity placed downward pressure on India's currency, the rupee. With less access to overseas capital, India's private sector turned to domestic sources, leading to a rise in interest rates. To expedite India's recovery, the Indian government passed a fiscal stimulus package amounting to about 3% of GDP in December 2008.\nConsultations have begun for the India's 12 th five-year plan. Deputy Chairman of India's Planning Commission Montek Ahluwalia wrote a May 2011 article summarizing India's performance during the 11 th five-year plan and setting out four major challenges for the 12 th five-year plan. According to Ahluwalia, India had done well in achieving the growth targets of the latest plan, but was less successful in efforts to reduce poverty. Although overall poverty rates were lowered, India continues to struggle with significant income and wealth inequality across regions, and between the urban and rural population. Looking ahead to the 12 th five-year plan, Ahluwalia sees four major challenges: (1) managing the energy sector; (2) managing the water resources; (3) addressing the problems associated with the expected urbanization; and (4) protecting the environment during rapid economic growth. He also highlights ongoing issues for India that include provision of basic services to the poor, access to education (particularly in rural areas), and the rise of \"crony capitalism,\" wherein government officials and major corporations selfishly manipulate markets and government procurement to the detriment of India.\nIndia's economy is showing signs of rebounding from the 2009 slowdown. Real GDP growth in FY2010 was 7.4% and in FY2011 was 8.5%. India's Planning Commission has set a goal of 10% annual growth for the nation's 12 th Five-Year Plan (2012-2017). However, the nation faces several major obstacles to further economic development, including endemic and stubborn poverty; poor infrastructure; corruption and market economy restrictions; inflationary pressures; fluctuating rates of foreign investment; and other issues.", "Despite impressive economic growth, India continues to fare poorly in human development measures; the U.N.'s 2010 Human Development Index ranked India 119 th among 169 countries, but lowered India's composite score by some 30% over the previous year, in large part due to increasing inequalities. A \"Multidimensional Poverty Index\" created by the University of Oxford found in 2010 that more than half of the world's poor people live in South Asia, and that 645 million—more than half of all Indian citizens—are \"poor\" by their measure. Critics of neoliberal economic policies say the growth resulting since post-1991 reforms has been uneven, favoring only a fraction of the population, especially those in the services sector, while harming the vital agriculture sector and doing little to alleviate poverty, which continues to affect at least one-third of the population.\nThe benefits of India's recent economic growth has also been geographically mixed. Less attention is given to the fact that India's impressive economic boom has not been country-wide. Some states—especially Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Delhi—have enjoyed rapid growth, while others—most notably densely-populated Uttar Pradesh—continue to struggle with underdevelopment. Such uneven performance becomes stark when malnourishment rates are considered: the average caloric intake among India's poorest states has remained static for more than a decade, and more than half of India's children under the age of five suffer developmental problems due to inadequate nutrition. Some analysts contend that static rates of malnutrition among India's children are evidence that economic growth there is benefiting only narrow sections of the society. Young females remain particularly vulnerable to malnutrition.\nDecades of central government social uplift schemes have a poor record of success to date. Massive government spending on poverty-reduction programs have met with halting progress, at best, most likely because of corruption and poor administration. Despite spending about 2% of its GDP on such programs in 2010—a higher percentage than any country in Asia and some three times that spent by China—food, health, and job insecurity persist.", "India's infrastructure is inadequate and inefficient. Analysts continue to identify this poor infrastructure as perhaps the most serious impediment to greater economic development, and they urge political reforms at the state level so as to better deliver reliable energy and transportation services. Indian officials report that only 20% of India's urban sewage is treated before disposal and less than 25% of its 85 largest cities have local bus service. According to a U.S. State Department official, India will need to invest $1.25 trillion in energy production, $392 billion in transportation infrastructure, and $143 billion in health care by 2030 to support its rapidly growing population. Poor infrastructure costs India an estimated 2% in annual economic growth. Urban areas are especially affected, with the pace of urban development outstripping that of population increases; the country spends only $17 per capita on urban infrastructure as compared with $116 per capita in China. A World Bank study estimated that a lack of toilets and poor public hygiene cost India some $54 billion each year though premature deaths, treatment for the sick, and lost tourism revenue.\nIndia's system for generating and distributing electricity poses a particular problem for the nation's economic growth, as undercapacity and poor management lead to frequent brownouts and blackouts. In addition, many businesses and households illegally tap into the electrical grid for power. Efforts to reform India's electricity system have been repeatedly thwarted by local politicians, who use access to electricity as a means of staying in power. India's transportation infrastructure is also in need of greater investment. The Indian government has been making significant investments in the nation's roads, but much still needs to be done.", "Berlin-based Transparency International placed India 87 th out of 178 countries in its 2010 \"corruption perceptions index,\" characterizing it as moderately corrupt, with a score of 3.3, comparable to China, Greece, and Thailand. India also appears in the lowest cluster of the group's 2008 \"bribe payer's index.\" Evidence of rampant, high-level corruption is another contributor to a downturn in India's economic outlook, leading to what one parliamentarian and former businessman called a \"psychological crisis of confidence\" for the country. By some accounts, graft now rivals poor infrastructure as the most acute concern of foreign investors.\nThe Heritage Foundation's 2011 Index of Economic Freedom —which may overemphasize the value of absolute growth and downplay broader quality-of-life measurements—rated India's economy as being \"55% free\" and ranked it 124 th out of 179 countries. The index highlights restrictive trade policies, heavy government involvement in the banking and finance sectors, rigorous investment caps, demanding regulatory structures, and a high incidence of corruption. The Vancouver-based Fraser Institute provides a more positive assessment, while also faulting India's excessive restrictions on capital markets.", "Inflationary pressures in India remain strong, particularly for food, which has a disproportionally harmful effect on the poor. India's wholesale price index for July 2011 was up 9.44% compared to a year before. The Reserve Bank of India (RBI) raised interest rates in June 2011—the 10 th such interest rate increase in 16 months—in an effort to reduce inflation. The RBI reportedly attributes some of India's inflation problems to the ongoing government debt crisis in Europe. Prime Minister Singh has called inflation a \"serious threat\" to future economic growth, saying that rates above 8% are unsustainable. Food inflation has been a particular concern, with prices rising at annual rates of up to 18% in late 2010 and early 2011. Rising food and crude oil prices have evoked fears among some that India's high rates of inflation may be structural rather than cyclical, given a national economy characterized by supply constraints, shortages of skilled labor, and quickly rising expectations among the populace.", "India has become an increasingly lucrative investment destination for international finance in recent years. Yet FDI into India dropped by nearly one-third over the entire course of 2010, and the country's Nifty 50 stock index was down 17% in the first month of 2011, falling from record highs only two months earlier. Along with infamous bureaucratic hurdles to investment, foreign investors are more recently seen to be deterred by India's corruption scandals and high rates of inflation. Despite such hiccups, FDI levels were on the rise again by mid-2011. FDI dropped by 25% in the fiscal year ending March 2011, but shot up by 300% for the month of June 2011. Also in June, the central government halted efforts to secure land for what would be the country's largest-ever foreign investment project, a long-delayed $12 billion steel plant to be built by a South Korean interest. Although the project received final go-ahead in May after a five-year delay, protesting farmers' families have blocked the selected site, halting work \"indefinitely.\" The tensions between the government's central aim of further economic development is persistently at odds with the country's still relatively closed and restrictive economy.", "Employment, monetary policy, and bureaucratic \"red tape\" are further problem areas for New Delhi's economic decision makers. India continues to be bedeviled by unemployment and underemployment. Despite years of comparatively high economic growth, job creation has lagged well behind the increases in international trade and GDP. In contrast to neighboring China, India's economic growth has relied on more capital-intensive, low employment sectors (such as information technology) and less on labor-intensive manufacturing. In addition, for much of rural India, there are few employment alternatives to agriculture.\nMoreover, India's monetary policy is under pressure from differing directions. After nearly two decades of economic reform, India's financial sector remains a mixture of state and private institutions subject to selective strict regulatory control. India's central bank and chief regulator of the nation's financial system is the Reserve Bank of India (RBI). The Indian government and the RBI have generally maintained a relatively conservative view on financial regulation, prohibiting institutions from taking on excessive risk or allowing overexposure to international capital flows. This has been reinforced by the Asian financial crisis of 1997, as well as the global financial crisis of 2008. To sustain economic growth, the RBI could lower interest rates, but its concerns about inflation would support raising interest rates. In addition, India's comparatively high interest rates (India's commercial banks' prime lending rates are between 11% and 14%) have contributed to inward capital flows and a strengthening of the rupee. However, under India's \"managed float\" exchange rate regime, the RBI has attempted to reduce upward pressure on the rupee to maintain the competitiveness of India's exports. As of September 2011, U.S. $1 = 45.85 rupees.\nFinally, although the days of the infamous \"License Raj\" are gone, India continues to have a very complex bureaucratic system, often involving multiple layers of government and numerous agencies with regulatory oversight of the economy.", "", "India's continued economic growth and security are intimately linked to the supply of energy resources. Indeed, Indian leaders insist that energy security is an essential component of the country's development agenda, calling for an integrated national energy policy, diversification of energy supplies, greater energy efficiency, and rationalization of pricing mechanisms. The country's relatively poor natural energy resource endowment and poorly functioning energy market are widely viewed as major constraints on continued economic growth. The current New Delhi government aspires to increase the nation's electricity generation by five-fold by the year 2030. The U.S. government has committed to assist India in promoting the development of stable and efficient energy markets there; a U.S.-India Energy Dialogue was launched in 2005 to provide a forum for bolstering bilateral energy cooperation.\nIndia was the world's fourth largest energy consumer in 2009 (after the United States, China, and Japan) and may become third by the middle of this century. Overall power generation in the country more than doubled from 1991 to 2005, and the country's energy demands are expected to quadruple by 2035. Estimates suggest that in order to maintain current rates of economic growth India will need to expand energy consumption by approximately 4% per year while reducing energy intensity. As of March 2011, India's total installed power generation capacity mix was 54% coal, 22% hydro, 11% renewables (including biomass, waste, wind, and solar), 10% gas, and 3% nuclear.\nIndia is the world's third most productive coal producer (although most of India's coal is an inefficient low-grade, high-ash variety), but also the world's fourth-ranked importer. New Delhi is beginning to develop coalbed methane despite concerns about carbon emissions and the impact on limited water resources. About 70% of India's oil is imported (at a rate of 2.1 million barrels per day in 2009), mostly from the West Asia/Middle East region, making India a leading net importer in this category, as well. India's domestic natural gas supply, while significant, has not keep pace with demand, and the country has been a net importer since 2004. Hydropower, especially abundant in the country's northeast and near the border with Nepal, is a booming sector. Nuclear power, which Indian government officials and some experts say is a sector in dire need of expansion, continues to account for less than 3% of total electricity generation.\nRoughly one-fifth of the India's power is consumed by farmers' irrigation systems, making the farm lobby a powerful obstacle to curtailing subsidies provided by State Electricity Boards, which collectively lose billions of dollars annually. Moreover, from one-quarter to one-half of India's electricity is said to disappear though \"transmission losses,\" i.e., theft. Approximately 44% of rural households, representing some 400 million Indians, do not have access to electricity. Government plans to increase energy production by 65% in less than a decade will increase demand for coal-fired power plants by an estimated 2% per annum to nearly double by 2030.\nIndia's dependence on oil imports presents India with a strategic and economic vulnerability and acts as an impetus for developing alternative sources of energy and reducing demand. In the absence of alternative energy sources, India's net oil imports are projected to increase to 90% by 2030. New Delhi's 11 th five-year plan includes a target of increasing energy efficiency by 20% by the year 2017. New Delhi has set a goal of 20% of its energy coming from renewable sources by 2020 and having 15% of its greenhouse gasses taken up by its forests by 2030. India hopes to create a new carbon sink by expanding forest cover from 22% of total land area to 33% of its land area. A shift to relatively cleaner oil or gas will likely necessitate further dependence on foreign sources of energy, most from the Middle East. It is likely that the Government of India will continue developing alternative energy sources, such as solar, because there is a perception that India's growth will be jeopardized unless it embraces alternative sources of energy. The country's Solar Mission's Plan may face major challenges in its goal of increasing solar energy production to 20 gigawatts by 2020. The extent to which it will be successful in this objective and the time frame within which it may do so remain obscure. A market-based mechanism known as the Perform, Achieve, and Trade (PAT) scheme was initiated in 2011 to set benchmark efficiency standards for 563 power plants, steel mills, and cement plants that collectively account for more than half of India's energy consumption. The scheme includes energy savings certificates that can be sold and traded.", "The carrying capacity of India's land is under stress. India has 2% of the world's surface area, 4% of the its fresh water, and 17% of its population. Over 70% of Indians depend on farm incomes with about 65% of Indian farms dependant on rain fall. Pressure on agricultural production from climate change is exacerbated by degraded soils and water shortages. An estimated 45% of Indian land is seriously degraded due to erosion, soil acidity, alkalinity and salinity, and water logging. Rain has become more erratic in recent years as ground water is being depleted. One study found that the water table in India's northwest is falling by 1.6 inches per year.\nGlobal climate change is anticipated to affect India in a number of ways. Sea level rise from global warming would inundate low lying areas. More intense and destructive weather events, such as cyclones, are also anticipated. Potential changes to the monsoon rains, which are critical for agricultural production in India, could also reduce agricultural output and undermine food security for millions in India. Rising temperatures will also likely lead to Himalayan glacial melt that would alter the flow of India's rivers. The Indian Institute for Meteorology has demonstrated that global warming will likely cause erratic monsoon behavior in India that would itself lead to static or declining food output for India. Agricultural yield in India grew over 3% for the 1980s. This has already slowed to a growth rate of 1.5% for the 2001 to 2010 period for rice and wheat. The annual increase in demand for food grains in India is projected to be 5% to 6% per annum. The Indian Ministry of Agriculture has reportedly asked for funding to develop new varieties of wheat and rice that consume 30% to 40% less water than traditional varieties.\nThe Prime Minister's Council on Climate Change issued a National Action Plan on Climate Change in 2008 that envisaged a gradual shift to greater reliance on sustainable sources of energy with an emphasis on solar power, but India has not made a commitment to binding carbon emissions cuts. In announcing the National Action Plan, Prime Minister Dr. Manmohan Singh pointed out that in order to eradicate poverty in India there was a necessity for rapid economic growth but added that \"I also believe that ecologically sustainable development need not be in contradiction to achieving our growth objectives.\" The Plan has eight key components: (1) solar; (2) enhanced energy efficiency; (3) sustainable habitat; (4) water; (5) sustaining the Himalayan ecosystem; (6) \"Green India\"; (7) sustainable agriculture; and (8) strategic knowledge on climate change. A report titled \"Environment and Energy Sustainability: An Approach for India,\" published by McKinsey Co. in 2009 has estimated that India could reduce its carbon footprint by half by 2030 through significant investment in energy efficiency. The Prime Minister's Council on Climate Change announced in 2011 that it approved a National Mission for a Green India Initiative with plans for significant investment in India's forests.\nDespite the likely negative consequences of climate change and some moves to place new emphasis on renewable sources of energy in its energy mix, India has not taken a leadership role in addressing climate change on the world stage. As a developing economy that long suffered underdevelopment due to its colonial subjugation under the British, India is reluctant to undertake measures that it feels will hinder or slow its economic development for a problem it believes was largely caused by the West. India notes the fact that, on a per capita basis, its emissions are low. Indians emit 1.16 tons of CO 2 on a per capita basis as compared to 19.78 for the United States, 9.66 for the United Kingdom, and 4.58 for China according to one source. While very low at present, India's CO 2 emissions are projected to rise significantly to 3-3.5 tons annually by 2030.\nClimate change is an issue that has the possibility to create tensions between India and the West at a time when the United States has been seeking a closer relationship with India and will likely require adept diplomacy to bring India along in global efforts to address the problem. India shares with China the fear that global efforts to contain carbon emissions will hinder its economic development. This commonality of interests with China was made evident by their dual opposition to European efforts to obtain meaningful binding carbon emissions reductions at the December 2009 U.N. Climate Conference in Copenhagen. China and India subsequently signed the last-minute agreement that emerged from the summit. The Copenhagen Accord calls for limiting global temperature rise to no more than 2 degrees Celsius beyond preindustrial levels, but is not legally binding.\nThe United States and India have begun working together on energy efficiency and carbon reduction projects. In November 2009, the U.S. and India announced that they would work together to jointly develop clean coal technologies, smart grids, and increased energy efficiency. Prime Minister Singh and President Obama launched a Clean Energy and Climate Change Initiative as part of their reaffirmation of their global strategic partnership. The November 2009 MoU is to Enhance Cooperation on Energy Security, Energy Efficiency, Clean Energy and Climate Change.\nIndia shares China's position that the Kyoto Protocol should be extended when it expires in 2012 to lock in commitments by developed states to cut emissions. While India has pledged reductions under the Copenhagen accord it is not subject to binding reductions. Developed states sought to shape a successor agreement to Kyoto that would be legally binding and would replace the Kyoto Protocol during the October 2010 meeting of 177 governments in Tianjin, China. Many in the United States and other developed nations want India and China to accept firm emissions goals which they have resisted. A key tension in the talks has been the view by developing nations that the developed world needs to do more because the bulk of carbon emissions since the beginning of the industrial revolution have been caused by developed nations.", "", "", "India is in the midst of transforming its military into one with global reach. With more than 1.3 million active personnel, India's is the world's third-largest military (after China and the United States). New Delhi's defense budget rose above $38 billion for 2010, a nearly 12% increase over the previous year. Another 11.6% boost is proposed for FY2011/12, but this increase would be partially mitigated by high rates of inflation. The army—more than 1 million strong and accounting for about half of the total budget—has traditionally dominated, but the navy and air force are becoming more important as India seeks to project its power and protect an Exclusive Economic Zone of more than 2 million square kilometers. For 2011, the air force procurement budget of $6.8 billion accounts for about half of the service-specific total, with the army receiving $4 billion and the navy another $3 billion. The late 2008 Mumbai terrorist attacks elicited a spike in Indian security spending, including plans to enhance the navy's surveillance capabilities, across-the-board strengthening of the National Security Guard (NSG) counterterrorism force, and the raising of 29 new Border Security Force battalions (elite NSG commandos now operate from four new regional hubs—in Chennai, Hyderabad, Kolkata, and Mumbai—to improve response time in emergencies).\nIn 2010, Indian defense planners were seen to be focusing much more attention on China, a apparent shift from their decades-long Pakistan-specific planning. A much-discussed \"Cold Start\" doctrine, informally aired in 2004, apparently represents an Indian effort to address the escalatory problems posed by Pakistan's nuclear deterrent and the perceived inability of the Indian military to respond effectively to Pakistani provocations in 2002. It calls for the establishment of smooth interservices coordination and forward deployments that would allow for rapid but limited retaliatory strikes by \"integrated battle groups.\" Observers in Islamabad and elsewhere see in the doctrine an offensive military strategy with the potential to destabilize the region's fragile strategic balance.\nAlthough the Cold Start concept was discussed by India's Army Chief until 2008, Indian military leaders now officially deny that any such doctrine exists. Yet leaked U.S. diplomatic cables reportedly confirm at least indirect Indian government endorsement of the doctrine. Moreover, these documents may exhibit widespread doubts about Cold Start's efficacy held in both New Delhi and Washington, based in particular on limited Indian government support for the doctrine, potentially serious logistical problems with its execution, and worries that it could heighten the risk of escalation above the nuclear threshold, among others. Moreover, some reports indicate that the doctrine has come under criticism from top American military commanders and Administration officials who view it as a source of further India-Pakistan tension and thus as a hindrance of the U.S. military effort in Afghanistan.", "The Indian army operates more than 4,100 main battle tanks, the majority of them Russian-built T-72s and T-55s, and some 4,000 towed artillery tubes. The navy has grown rapidly in recent years, currently operating 23 principal surface combatants (including one aircraft carrier) and 16 submarines. There also is a significant amphibious capacity: 17 landing ships (including one acquired from the United States) can carry 4,000 troops or 88 tanks. The navy has developed an indigenous nuclear-powered attack submarine (INS Arihant ) to be armed with nuclear-tipped cruise missiles, and it also plans to lease a Russian Akula -class boat in 2011 as part of its \"sea-based strategic deterrence.\" The air force flies some 655 combat-capable aircraft, the majority of them Russian-built MiGs, but also including 122 late-model Su-30 MKIs, as well as French-built Mirage and Anglo-French Jaguar aircraft. It also possesses modest airborne early warning and in-flight refueling capabilities provided by Russian-made platforms. A Strategic Forces Command oversees as many as 180 intermediate- and 280 short-range ballistic missiles capable of delivering nuclear warheads, and has plans to field a new Agni-IV missile with a range that would give it intercontinental capabilities. A three-stage, 5,000-km-range Agni-V is set to be tested in late 2011.\nThe Stockholm International Peace Research Institute named India as the world's largest weapons importer—accounting for fully 9% of the world's total arms imports from 2006 to 2010—a designation the country is likely to keep for the foreseeable future. Current army programs concentrate on tank and missile acquisitions; the navy is pursuing major aircraft carrier and submarine programs; and the air force is seeking to procure more than 100 additional advanced, Russian-made Su-30 fighters, along with upgradation of its fleet of French-built Mirage ground attack aircraft.\nRussia continues to provide the bulk of India's imported defense wares. Moscow does not require enduse monitoring agreements for most arms sales as does Washington. This has made Russia an appealing supplier for India, which in the past has been willing to accept less advanced technology in return for both lower costs and fewer doubts about supplier reliability. More recently, however, India's rapid economic growth has provided New Delhi with larger procurement budgets and thus an ability to purchase the most advanced weaponry on the market. In recent years, Israel has roughly equaled Russia in the value of defense exports to India—arms trade with Israel now tops $2 billion annually and, like Russia, Israel does not impose political conditions on purchases. Moreover, India and Israel are engaging in new joint development projects involving missile technology.\nNew Delhi increasingly seeks to shift advanced military imports from finished platforms to co-production with foreign suppliers. Under a license arrangement with Russia, India's Hindustan Aeronautics Limited is building hundreds of advanced Su-30 MKI ground attack jets. A 2005 deal with France provides for technology transfers and Indian construction of six Scorpene submarines to be delivered in 2015-2017. In seeking to replace its aging arsenal of MiG-21 fighters, India plans to purchase up to 186 new jets (126 for the air force and 60 for the navy) and has signaled a desire for technology sharing and co-production in this effort: only 18 of the new air force jets are to be manufactured abroad. In addition to the Scorpene submarines, other notable recent purchases for the Indian military include 347 of the latest Russian T-90 tanks (with another 1,000 such tanks to be built in India under a technology-sharing agreement) and upgrades on 600 existing T-72s; 3 new Russian-built missile frigates; 24 new MiG-29K naval jets for deployment on the INS Vitramaditya (formerly the Russian Gorshkov ); 42 additional upgraded Su-30s, major upgrades on existing MiG and Jaguar aircraft; and 66 jet trainers from Britain.\nSome analysts predict that, in the absence of major policy and organizational adjustments, India's efforts to modernize its armed forces will have little or no impact on the country's overall capacity to address security threats. Among the recommended changes are development of a more transparent and efficient procurement process, creation of a new Chief of Defense Staff position (to better integrate interservices planning), and the opening of India's defense research agencies to greater oversight. Although improvements in the procurement system have been effected, transparency and corruption continue to plague the process.", "Although India suffers from several militant regional separatist movements, the Kashmir issue has proven the most lethal and intractable. It also poses the most serious international dilemma, given competing territorial claims with Pakistan. Gun battles and bomb blasts in India's Jammu and Kashmir state reportedly killed an average of five or six people every day over the period 1989-2006. Conflict over Kashmiri sovereignty also has brought global attention to a potential \"flashpoint\" for interstate war between nuclear-armed powers. Yet—despite a peaceful uprising in the summer of 2008, a resurgence of international attention to the issue following the late 2008 terrorist attack in Mumbai, and another round of sometimes lethal street demonstrations in mid-2010—the number of militant incidents in the state has been falling continuously and is now at its lowest point since the violence began. Critics continue to accuse New Delhi of using brutal tactics to squash true democracy in the region.\nIndia has long blamed Pakistan for supporting \"cross-border terrorism\" and for fueling a separatist rebellion in the Muslim-majority Kashmir Valley with arms, training, and militants through an \"terrorism infrastructure\" on the Pakistani side of the LOC. Islamabad, for its part, claims to provide only diplomatic and moral support to what it calls \"freedom fighters\" who resist Indian rule and suffer alleged human rights abuses in the region. New Delhi insists that the dispute should not be \"internationalized\" through involvement by third-party mediators and India is widely believed to be content with the territorial status quo. Islamabad has sought to bring external major power persuasion to bear on India, especially from the United States.\nThe longstanding U.S. position on Kashmir is that the issue must be resolved through negotiations between India and Pakistan while taking into account the wishes of the Kashmiri people. When asked about Kashmir while in New Delhi in November 2010, President Obama described a \"longstanding dispute between India and Pakistan\" upon which \"the United States cannot impose a solution.\" He did, however, reiterate the U.S. government's willingness to play a role in reducing tensions in whatever way the two parties think appropriate. The United Nations refrains from playing a role in the Kashmir issue unless both India and Pakistan request its engagement.", "The Kashmir problem is rooted in competing claims to the former princely state, divided since 1948 by a military Line of Control (LOC) separating India's Muslim-majority Jammu and Kashmir state and Pakistan-controlled Azad [Free] Kashmir and Gilgit-Baltistan (formerly known as the Northern Areas) (see Figure 2 ). The dispute relates to the national identities of both countries: India has long sought to maintain its secular, multi-religious credentials, in part by successfully incorporating a Muslim-majority region, while Pakistan has since independence been conceived as a homeland for the subcontinent's Muslims. India and Pakistan fought full-scale wars over Kashmir in 1947-1948 and 1965. Some Kashmiris seek independence from both countries. Spurred by a perception of rigged state elections in 1989, an ongoing separatist war between Islamic militants (and their supporters) and Indian security forces in Indian-held Kashmir is ongoing and has claimed tens of thousands of lives. Soon after the armed insurgency began, much of the Kashmir Valley's indigenous Hindu population fled. At least 8,000 Kashmiris have \"disappeared\" during the conflict; some of these may occupy the unmarked graves discovered in 55 villages over a three-year study.\nSome separatist groups, such as the Jammu and Kashmir Liberation Front (JKLF), continue to seek an independent or autonomous Kashmir. Others, including the militant Hizbul Mujahideen (HuM), seek union with Pakistan. In 1993, the All Parties Hurriyat [Freedom] Conference was formed as an umbrella organization for groups opposed to Indian rule in Kashmir. The Hurriyat membership of more than 20 political and religious groups has included the JKLF (originally a leading militant force, now a political group) and Jamaat-e-Islami (the political wing of the HuM). The Hurriyat Conference, which states that it is committed to seeking dialogue with the Indian government on a broad range of issues, calls for a tripartite conference on Kashmir, including Pakistan, India, and representatives of the Kashmiri people. Hurriyat leaders demand Kashmiri representation at any talks between India and Pakistan on Kashmir. The Hurriyat formally split in 2003 after a dispute between hardliners allied with Islamabad and moderates favoring negotiation with New Delhi. Subsequent efforts to reunify the group failed. In 2005, the Congress Party-led government renewed high-level contact with moderate Hurriyat leaders begun by the previous BJP-led coalition. Two years later, however, Hurriyat leader and noted Kashmiri cleric Mirwaiz Umar Farooq said talks between the Indian government and moderate Kashmiri separatists had suffered a \"complete breakdown of communication,\" and he accused New Delhi of lacking the will needed to find a political solution to the problem.\nLevels of violence in Kashmir were high and steady through the mid- and late 1990s, peaked in 2001, and have been in steady decline since (see Figure 3 ). The long-term reduction in violence has allowed for a rebirth of the scenic region's major tourist industry. Yet, despite waning rates of infiltration and separatist-related violence, the issue continues to rankle leaders in New Delhi and remains a serious impediment to progress in the current India-Pakistan peace initiative. Even as the normalization of India-Pakistan relations moves forward—and to some extent in reaction to their apparent marginalization in the face of this development—separatist militants continue their attacks on both civilians and Indian security forces, and many observers in both India and the United States believe that active support for Kashmiri militants remains Pakistani policy. The militants, seeing their relevance and goals threatened by movement toward peaceful resolution, still lash out with bloody attacks likely meant to derail the process.", "A more-or-less spontaneous resurgence of open separatist protest emerged in the summer of 2010. In June of that year, large-scale street protests led to violence and the deaths of several protestors in clashes with paramilitary police. Within weeks, regular Indian army troops were being deployed on the streets of Srinagar to restore and maintain order, yet civil unrest only increased and spread to other parts of Indian Kashmir, even as separatist leaders appealed for calm. By August, the unrest—comprised mainly of large numbers of youths hurling stones at security personnel—was being called a \"full-blown separatist uprising\"—the most serious challenge to central rule in two decades—and evidence grew that the current iteration of unrest represented a wider and more spontaneous movement than those in past years. New Delhi imposed an indefinite curfew in September, but the central government, along with that of the state's Chief Minister, Omar Abdullah, were seen to be flummoxed by the resilience and depth of resentment demonstrated by protestors. International human rights groups urged Indian government officials to avoid excessive use of force while investigating the deaths of children.\nPrime Minister Singh convened an all-parties meeting in September to discuss the crisis with opposition parties and announced modest efforts to reduce the presence of security forces and facilities in the region even as the Indian military continued to resist amendment or suspension of the controversial Armed Forces Special Powers Act (AFSPA) that is named by rights groups as a facilitator of abuses in Kashmir and elsewhere. In November, Chief Minister Abdullah ordered nearly 1,000 paramilitary Central Reserve Police Force personnel withdrawn from Srinagar as part of a peace initiative. Singh later contended the \"troubled period\" of summer 2010 street protests by youths highlighted the need for security forces to develop better nonlethal means of response, and he has directed his home ministry to prepare these. Meanwhile, Hurriyat leaders have discouraged any repeat of the protests; even hardline separatist leader Syed Ali Shah Geelani has come out against stone throwing as a form of resistance, saying it gives security forces \"an excuse to kill\" Kashmiris and that only peaceful resistance will forward his cause. Still, Srinagar and the surrounding Kashmir Valley have remained unsettled.", "In October 2010, the UPA government appointed a trio of official and unofficial \"mediators,\" but the team's composition was widely deemed to be disappointing. During the closing months of the year, the three interlocutors—senior journalist Dileep Padgaonkar, social activist Radha Kumar, and former information commissioner M.M. Ansari—made multiple trips to the state in an effort to find \"a political solution for a political problem.\" Some of their preliminary recommendations to Home Minister Chidambaram were made public in December and included\nexpediting cases of under-trials, permitting peaceful protests, releasing militants/protestors against whom there are no serious charges, training of security forces, identifying jobs for young men and women in Central/State Government offices, announcing scholarships for Kashmiri students, enhancing monetary assistance to widows and orphans, enhanced efforts to trace missing persons, promoting investments in Kashmir, ... increasing monthly allowances to Kashmiri Pandits, etc.\nA final report is expected in September 2011. While the value of the interlocutor's efforts to meet with a wide spectrum of the state's population is generally acknowledged, two key weaknesses are identified in their approach. First, their interaction has been almost exclusively with Kashmiris who accept the state's status as a part of India; while their mandate officially includes dialogue with \"separatists,\" this has not occurred in practice, and Hurriyat leaders have refused to meet with them. Second, these interlocutors have no mandate to interact with another major stakeholder: Pakistan. Given these two problems, any progress realized though this tack is likely to remain limited.\nMoreover, cynics contend that those most energetically seeking a \"political solution\" in Kashmir are often themselves the major obstacles to progress. The argument here is that the key breakthroughs such as the split among separatists into moderate and militant wings are made without the involvement of federal or state officials, and that the government's unilateral reductions in security force levels amount to \"appeasement of extremist elements.\" From this perspective, resolution lies in maintaining pressure on violent, Pakistan-backed separatists, including the \"stone-pelters\" of mid-2010, while empowering moderate Hurriyat figures who are willing to disown the \"terrorists\" who have \"hijacked\" the movement, in part by having New Delhi's interlocutors meet directly with such figures.\nKashmiri separatist leaders have themselves called New Delhi's efforts \"cosmetic\" and they continue to demand a blanket lifting of AFSPA, the withdrawal of army troops from the Valley, and the release of all political prisoners as preconditions for talks with the government. Chief Minister Abdullah has chided Hurriyat leaders for resisting talks with New Delhi's interlocutors while showing no hesitation for meeting with the Pakistani High Commissioner and Foreign Minister in the Indian capital. Abdullah is among many state politicians who believe dialogue with New Delhi is the only way forward for separatist leaders.\nSome of the separatist demands noted above also appear as suggestions in independent analyses, many of which emphasize economic development and political devolution as the best means of mitigating Kashmiri discontent. Indeed, economic uplift, perhaps in the form of a large-scale jobs program for the region, could be the most effective policy to address the growing numbers of disaffected Kashmiri youth. In 2011, New Delhi has sought to mollify Kashmiri anger with a \"charm offensive\" of sorts, including new job training programs, the launching of numerous cricket and soccer clubs in the Valley, language courses for Indian security forces to speak the local tongue, and blanket amnesty for the \"stone-pelters\" of mid-2010. Yet, while these initiatives and smarter police tactics have kept the Valley calm in mid-2011, in the absence of a substantive political settlement, these measures are seen as conflict management only.", "As a vast mosaic of ethnicities, languages, cultures, and religions, India can be difficult to govern. Internal instability resulting from diversity is further complicated by colonial legacies such as international borders that separate members of the same ethnic groups, creating flashpoints for regional dissidence and separatism. In addition to the violent, decades-old Kashmir dispute, Maoist rebels continue to operate in numerous states and represent a serious and growing threat to internal sovereignty. At the same time, separatist insurgents in remote and underdeveloped northeast regions confound New Delhi and create international tensions by operating out of neighboring Bangladesh, Burma, Bhutan, and Nepal. New Delhi has at times blamed the governments of those countries for \"sheltering\" separatist groups beyond the reach of Indian security forces, and New Delhi has launched joint counter-insurgency operations with some of these neighbors. India also has suffered outbreaks of serious communal violence between Hindus and Muslims, especially in the western Gujarat state.\nMore than half of India's 636 administrative districts are said to suffer from chronic activity by insurgent, terrorist, and/or separatist groups. The State Department's most recent Country Reports on Terrorism (released August 2011) found that, although rates of terrorist violence in India declined in 2010, \"the loss of nearly 1,900 lives (civilian, security forces, and terrorists) still made India one of the world's most terrorism-afflicted countries.\"", "Increasingly prevalent in India are \"Naxalites\"—Maoist insurgents ostensibly engaged in violent struggle on behalf of landless laborers and tribals. These groups, most active in inland areas of east-central India, claim to be battling oppression and exploitation in order to create a classless society. Their opponents call them terrorists and extortionists. The rebels get their name from Naxalbari, a West Bengal village and site of a militant peasant uprising in 1967. In 2006, Prime Minister Singh identified a worsening Maoist insurgency as \"the single biggest internal security challenge\" ever faced by India, saying it threatened India's democracy and \"way of life.\" At least 8,000 hardcore Naxalite fighters now operate in 20 of India's 28 states, more than one-third of the country's 636 administrative districts, and one-seventh of the country's 14,000 police districts. Related violence has killed more than 5,000 people over the six years, including more 1,000 deaths in both 2009 and 2010, the great majority of these in the states of West Bengal and Chhattisgarh. Analysts warn that, by blocking access to raw materials vital to India's manufacturing sector and deterring investors, the Naxalite movement could thwart India's long-term economic success.\nThe most notable of India's Maoist militant outfits are the People's War Group (PWG), emanating from the southern Andhra Pradesh state, and the Maoist Communist Center of West Bengal and Bihar. In 2004, the two groups merged to form the Communist Party of India (Maoist). Both have appeared on the U.S. State Department Counterterrorism Office's list of \"groups of concern\" and both are designated as terrorist organizations by the New Delhi government.\nIn 2005, the Chhattisgarh state government began sponsoring a grassroots anti-Maoist effort. This \"Salwa Judum\" (\"Campaign for Peace\" or, literally, \"collective hunt\") militia—comprised of some 5,000 lightly-armed tribals paid about $1 per day—was viewed by some as an effective countervailing people's movement. Others labeled it a vigilante group that engaged in its own coercive and violent tactics against innocent tribals, serving only to accentuate the conflict as \"a cure that is worse than the disease.\" A 2008 report for India's Planning Commission contended that the Salwa Judum campaign represented \"an abdication of the state itself\" and should immediately cease. New York-based Human Rights Watch later called on the New Delhi and Chhattisgarh governments to end all official support for the campaign, including provision of weapons, and to launch \"serious and independent investigations\" of related human rights abuses. In July 2011, India's Supreme Court barred Chhattisgarh from arming tribal militias to fight the Maoists, calling the renamed Special Police Officers \"cannon fodder.\"\nThe New Delhi government has sought to undermine the Maoist rebellion in part by boosting development spending in affected areas. Yet unsettled debate among national-level political leaders between those favoring a militarized counterinsurgency effort versus those calling for a development/welfare approach may be hindering New Delhi's anti-Maoist policies. Naxalite activity—including swarming attacks on government facilities and coordinated, multi-state economic blockades—is spreading and becoming more audacious in the face of incoherent and insufficient Indian government policies to halt it. A shortage of police personnel appears to be a key problem; the rebels are able to attack in large enough numbers that most police units, oftentimes fighting with inferior weapons, are rendered helpless.\nTop Indian leaders continue to identify Maoist rebels as the leading domestic security threat and some 60,000 paramilitary forces (the Central Reserve Police Force) have been deployed to combat them in several affected states. In mid-2010, New Delhi announced that it would increase its assistance to state governments through the provision of more helicopters, the establishment or strengthening of 400 police stations, and the improvement of road connectivity in affected areas, among other measures. It also asked the governments of the four most-affected states (Chhattisgarh, Jharkhand, Orissa, and West Bengal) to create a Unified Command for anti-Naxal operations. However, these efforts do not address the \"intellectual appeal\" of the Maoists, which India's former national security advisor has identified as a key problem.\nIn February 2011, Prime Minister Singh noted that, while the incidence of Maoist violence had been somewhat reduced in 2010, the number of civilian casualties in such violence increased that year, and he listed Naxalite activity in six states—Chhattisgarh, Bihar, West Bengal, Jharkhand, Orissa, and Maharashtra—as being of serious concern. His government currently seeks to implement an \"Integrated Action Plan\" for 60 districts in affected areas that will allow substantive district-level control of resources. Maoist militants continue to stage sometimes spectacular attacks on both civilian and security targets, indicating that their capabilities are only growing (perhaps most notable among these was an April 2010 ambush in Chhattisgarh's Dantewada district that killed 75 Indian paramilitary soldiers). According to New Delhi's Institute for Conflict Management, Maoist-related violence in India during the first half of 2011 left an average of two people dead every day .", "Since the time of India's foundation as an independent nation, numerous militant groups have fought for greater ethnic autonomy, tribal rights, or independence in the country's northeast region. Some of the tribal struggles in the small states known as the Seven Sisters are centuries old; there are more than 200 ethnic groups in India's northeast alone. More than 50,000 people are estimated to have been killed in such fighting since 1948, including about 20,000 deaths in a 30-year-old Naga insurgency and another 10,000 deaths in 17 years of fighting in the Assam state. In the small state of Manipur alone there are said to be more than 20 separatists groups fighting the Indian army at a cost of more than 8,000 lives over two decades, and the writ of the central government there remains tenuous in many areas.\nAs militant groups are seen to benefit from highly profitable criminal activities such as informal taxation, kidnapping, and smuggling, many observers conclude that only more effective economic development and integration of India's northeast will allow for the resolution of myriad ethnic conflicts there. In a possible indication that such policies are being effective, fatalities linked to separatist militancy in the northeast fell dramatically in 2010 as compared with the previous year (from 852 to 322), with the historically most-affected states of Manipur and Assam enjoying particularly strong improvements in the security situation.\nThe United Liberation Front of Assam (ULFA), the National Liberation Front of Tripura, the National Democratic Front of Bodoland, and the United National Liberation Front (seeking an independent Manipur) are among the approximately 40 northeastern militant groups warring with the central government. They reportedly field a total of no more than 20,000 trained cadres. ULFA, like other groups, accuses New Delhi of exploiting their state's resources while doing little to forward development and allowing thousands of non-indigenous people (often Hindi-speakers from Bihar) to flood the local job markets. In 2005, the U.S. State Department's Counterterrorism Office listed ULFA among its \"other groups of concern,\" the first time an Indian separatist group outside Kashmir was so named. In September 2011, the central government and ULFA signed a mutual ceasefire agreement pending political settlement of their dispute.", "Hindu-Muslim Conflict. Some elements of India's Hindu majority have at times engaged in violent communal conflict with the country's large Muslim minority of some 150 million, which is relatively poor, uneducated, and underrepresented in professions such as law and medicine. In 1992, a huge mob of Hindu activists in the western city of Ayodhya demolished a 16 th -century mosque said to have been built at the birth site of the Hindu god Rama. Ensuing communal riots left many hundreds dead in cities across India. Mumbai was especially hard hit as the site of coordinated 1993 terrorist bombings believed to have been a retaliatory strike by Muslims. In 2002, another group of Hindu activists returning by train to the western state of Gujarat after a visit to the Ayodhya site of the now razed Babri Mosque (and a proposed Hindu temple) were attacked by a Muslim mob in the town of Godhra; 58 were killed. Up to 2,000 people died in the fearsome communal rioting that followed, most of them Muslims. The BJP-led state and national governments came under fire for inaction; some observers saw evidence of state government complicity in anti-Muslim attacks. In February 2011, a court found 31 Muslims guilty of setting fire to the train; another 63 people were acquitted. Of those convicted, 11 were sentenced to death and the remaining 20 to life imprisonment.\nThe U.S. State Department and human rights groups have been critical of New Delhi's largely ineffectual efforts to bring those responsible for the post-Godhra rioting and murders to justice; some of these criticisms were echoed by the Indian Supreme Court in 2003. In 2005, the State Department made a controversial decision to deny a U.S. visa to Gujarat Chief Minster Narendra Modi under a U.S. law barring entry for foreign government officials found to be complicit in severe violations of religious freedom. The decision was strongly criticized in India. In 2008, a Gujarat state government commission exonerated Modi, claiming to have found \"absolutely no evidence\" that he or his ministers had acted improperly. More than nine years after the Gujarat riots, international human rights groups express concerns about obstacles faced by victims seeking justice, the continuing internal displacement of thousands of families who lack basic necessities, and large numbers of uninvestigated related criminal cases (despite the Indian Supreme Court's 2004 order to reopen nearly 1,600 such cases). In September 2010, the Allahabad High Court issued a much-anticipated ruling on the Ayodhya site, determining that Hindus and Muslims should share the land. Expected large-scale communal violence did not occur. However, in May 2011, India's Supreme Court suspended the ruling, saying it had opened the doors to a flood of unnecessary litigation.\nIndigenous Islamist Terrorism. Despite New Delhi's reluctance to openly acknowledge the fact, India also has its own indigenous Islamist terrorism threat. The newly emergent \"Indian Mujahideen\" (IM) group, widely believed to be an offshoot or pseudonym of the Students Islamic Movement of India (SIMI), has been found complicit in a number of recent bombings, even as government leaders continue to name Pakistan as an abettor of such episodes. The New Delhi government formally outlawed the IM in 2010; months later, the group claimed responsibility for a December bombing in the Hindu holy city of Varanasi that left a child dead and at least 20 people injured. In July 2011, three synchronized bomb blasts killed 17 people and injured some 130 more during Mumbai's evening rush hour. No credible claims of responsibility were received and, to date, Indian officials have refrained from naming any specific foreign or domestic groups as suspects, but the coordinated bombings appear to have required sophisticated explosives training (Pakistan's two top leaders had immediately condemned the attack). Early indications are that the perpetrators were India-based, perhaps from the IM, rather than from a Pakistan-based group.\nSome Indian experts assert that the IM's top operators, drawn mostly from SIMI's ranks, receive training at camps inside Pakistan. Prime Minister Singh acknowledged in 2008 that the involvement of \"local elements\" in terrorist attacks added a \"new dimension\" to the country's indigenous militancy problem. SIMI may be viewed in alignment with the greater international jihadi movement, given its endorsement of the goals of Al Qaeda and its links with other international terrorist groups such as the Pakistan-based Lashkar-e-Taiba and Harakat-ul-Jihad-Islami. As India's Muslim minority continues to suffer from glaring social inequities, it is likely that some among its numbers will remain vulnerable to recruitment in SIMI and/or the IM.\nIndigenous Hindu Terrorism. Even more recent are overt signs that India is home to militant Hindu nationalist groups intent on launching domestic terrorist attacks. In September 2008, seven people were killed by two bomb blasts in the Maharashtran city of Malegaon, a hotbed of Hindu-Muslim communal strife. By year's end, police had arrested nine members of a \"Hindu terrorist cell\" in connection with the bombing, including an active army lieutenant colonel and a Hindu nun with links to the main opposition BJP. Thus did \"Hindu terrorism\" become a new and highly controversial phrase in India's national dialogue. Never before in the country's history had the phrase been so widely used, and the development had major and continuing effects on India's national psyche. Many Indian observers warned of the danger of a \"militant majoritarianism\" among Hindu nationalists that threatens to rend the secular fabric of the nation.\nIn late 2010, Hindutva extremist Swami Aseemanand confessed to involvement in a number of terrorist attacks previously blamed on Islamist militants, including the 2006 bombing of a Muslim cemetery in Malegaon that killed 37 people and the 2007 bombing of the transborder Samjhauta Express, a train linking Delhi and Lahore, Pakistan, that killed 68 people, most of them Pakistani civilians. Aseemanand said these and other attacks were to avenge Islamist terrorist attacks on Hindu temples. The confessions were an embarrassment for law enforcement agencies that had arrested Muslim suspects, and gave credibility to analysts who identify Hindu militancy as a threat to India's security.\nHindu-Christian Conflict . In 2008, lethal attacks on Orissa Christians erupted in apparent retaliation for the murder of a prominent local Hindu leader. Police blamed the murder on Maoist rebels, but Hindu radicals blamed local Christians. Rampaging mobs burned churches and other Christian buildings, killing at least 38 people and leaving up to 50,000 more homeless. U.S. officials took note of the unrest and urged the Indian government to protect religious freedom throughout the country. By some accounts, the Hindu radicals were pursuing a political agenda; there was speculation that violent attacks on Orissa's Christian communities was part of an organized political project by Hindu nationalist parties. Communal strife continued throughout the remainder of the year at a lower level, and state-level officials may have failed to provide sufficient security for the Christian minority. For some, the violence provided \"a window into India's hidden fragility, its sometimes dangerous political climate, and the fierce historical divisions buried in its vast diversity.\" There continue to be small-scale attacks on and harassment of Christians and their places of worship in India (see also the \" Religious Freedom \" section below).", "India exploded a \"peaceful\" nuclear device in 1974 and tested nuclear weapons again in 1998. The country has 60-100 nuclear warheads, according to public estimates, and continues to produce plutonium for weapons. New Delhi has stated that it will not engage in a nuclear arms race and needs only a \"credible minimum deterrent,\" but India has never defined what it means by such a deterrent. Both the U.S.-India nuclear cooperation agreement and the associated 2008 Nuclear Suppliers Group decision described below have renewed New Delhi's access to the international uranium market. This access will result in more indigenous Indian uranium available for weapons because it will not be consumed by India's newly safeguarded reactors.\nNew Delhi has refused either to sign the nuclear Nonproliferation Treaty (NPT) or accept International Atomic Energy Agency (IAEA) safeguards on all of its nuclear material and facilities. The NPT states-parties adopted language following the 2010 NPT Review Conference, which ended on May 28, 2010, calling on non-signatories to accede to the treaty as \"non-nuclear-weapon States ... promptly and without any conditions.\" U.N. Security Council Resolution 1172, adopted after New Delhi's 1998 nuclear tests, called on India to take a number of steps which it has not taken, such as acceding to the NPT, ratifying the Comprehensive Test Ban Treaty (CTBT), and refraining from developing nuclear-capable ballistic missiles.\nDespite this resistance to international arms control and nonproliferation agreements, M.K. Narayanan, then-National Security Adviser to Prime Minister Singh, stated in December 2009 that \"India has a long-standing commitment to global, non-discriminatory and verifiable nuclear disarmament.\" Indeed, New Delhi has issued proposals for achieving global nuclear disarmament. For example, a 2007 working paper to the Conference on Disarmament called for the \"[n]egotiation of a Nuclear Weapons Convention prohibiting the development, production, stockpiling and use of nuclear weapons and on their destruction, leading to the global, non-discriminatory and verifiable elimination of nuclear weapons with a specified timeframe.\" Moreover, Singh stated during the April 2010 Nuclear Security Summit that New Delhi is ready to \"participate in the negotiation of an internationally verifiable Fissile Material Cut-off Treaty.\" Additionally, India has, despite its refusal to sign the CTBT, committed itself to a voluntary unilateral moratorium on nuclear testing.\nNew Delhi also supported the joint statement adopted at the Nuclear Security Summit, which contained a pledge to improve nuclear security standards and share best practices with other countries. Indian Prime Minister Manmohan Singh announced April 13, 2010, that New Delhi had \"decided to set up a 'Global Centre for Nuclear Energy Partnership' in India.\" Describing the center as \"a state of the art facility based on international participation from the IAEA and other interested foreign partners,\" Singh stated that it would include a \"School\" dealing with nuclear security. The United States and India signed in November 2010 a Memorandum of Understanding (MOU) providing \"a general framework for cooperative activities in working with\" the center. There is no public evidence that India has since conducted nuclear security activities with the United States, but the two governments are to hold the first meeting regarding implementation of the MOU sometime in 2011, according to a July 19, 2011, joint statement.\nAn off-the-record May 2011 gathering of regional and nuclear proliferation experts in Washington, DC, found widespread agreement that Pakistan's current weapons proliferation activities are destabilizing, that India's potential adoption of an altered nuclear doctrine (to include a delivery triad and ballistic missile defense) could exacerbate instability, and that the U.S. government may in the near future confront new nonproliferation challenges in South Asia that could even supplant counterterrorism imperatives.", "", "As one of India's leading trade and investment partners, the United States strongly supports New Delhi's continuing economic reform policies. A U.S.-India Trade Policy Forum was created in 2005 to expand bilateral economic engagement and provide a venue for discussing multilateral trade issues. According to U.S. trade statistics, U.S. exports to India in 2010 totaled $19.222 billion and imports from India totaled $29.531 billion, for a bilateral trade deficit of $10.309 billion. With a total trade of $48.753 billion, India was the 12 th largest trading partner for the United States in 2010.\nThe leading U.S. exports to India in 2010 were (in order):\nNatural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof and imitation jewelry (chapter 71)—$4.206 billion; nuclear reactors, boilers, machinery, and mechanical appliances, or parts thereof (chapter 84)—$ 2.607 billion; and electrical machinery and equipment and parts thereof (chapter 85)—$1.367 billion.\nThe top imports from India were (in order):\nNatural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof and imitation jewelry (chapter 71)—$6.850 billion; pharmaceutical products (chapter 30)—$2.388 billion; and mineral fuels, mineral oils and products of their distillation (chapter 27)—$2.324 billion.\nThe cross-trade in items under chapter 71 reflects a strong interrelationship for the industries in both nations. India is a major global supplier of precious gems and stones, whereas the United States is a major supplier of finished jewelry.\nIn addition to their merchandise trade flows, India and the United States have significant service trade relations. In 2009 (latest available figures), U.S. private services exports to India totaled $9.940 billion, and imports from India totaled $12.377 billion. The leading U.S. service export to India was education ($3.155 billion), and the leading service import from India was \"business, professional, and technical services\" ($8.920 billion).\nAnnual inward foreign direct investment (FDI) to India from all countries rose from about $100 million in FY1990/91 to nearly $3 billion in FY2000/01 and over $19 billion in FY2010/11. The stock of U.S. FDI in India as of March 2011 stood at $9.4 billion. According to the Indian Ministry of Commerce and Industry, about 7.5% of FDI in India since 2000 has come from U.S. firms; in recent years, the major U.S.-based companies Microsoft, Dell, Oracle, and IBM have made multi-billion-dollar investments in India. Wisconsin-based Harley-Davidson recently opened a motorcycle manufacturing plant in India's northern Haryana state, its second outside the United States. Michigan-based Ford Motor Company has plans to expand its operation in India by investing $1 billion in a new factory in Gujarat, its second production line in India. In 2011, Illinois-based Boeing, which sees no more important a potential customer in the world, projected that India will spend some $150 billion on more than 1,300 new passenger airplanes over the next two decades. India is also among the fastest growing investors in the United States; the Administration reports that investment capital from India grew at an annualized rate of 53% over the past decade, reaching about $4.4 billion in 2009. Among the most important investors has been India's Tata Group, which reportedly employs some 19,000 people in the United States.", "While bilateral relations are generally good, there are a number of economic and trade issues between India and the United States of varying degrees of importance. For the United States, the more pressing issues are intellectual property rights protection, trade in dual-use technology, access to selective Indian markets, and India's participation in the U.S. Generalized System of Preferences (GSP) program. For India, the key issues are negotiations of a bilateral investment treaty (BIT), U.S. restrictions on the trade in services (including the limited supply of H1-B visas), high-technology export controls, and the U.S. farm subsidy program.\nCommerce Secretary Locke led a trade mission to New Delhi, Bangalore, and Mumbai in February 2011, accompanied by representatives of 24 U.S. companies, many of them seeking to strike weapons sales deals or capitalize on the 2008 U.S.-India civil nuclear agreement. In meetings with his Indian counterpart, Locke raised longstanding issues of friction, including market access barriers and intellectual property protection. Speaking at a Confederation of Indian Industry luncheon, the Secretary went into some detail on these and other issues, asserting that seizing the full potential of bilateral cooperation will require India to take further steps to open its economy by reducing an array of tariff and nontariff barriers, and lifting restrictions on foreign direct investment:\nUltimately, what America seeks is a level playing field for its companies, where the cost and quality of their products determines whether or not they win business. In seeking a level playing field, we are merely asking for the same treatment foreign companies and investors receive in America.\nRepeats of this message from the Administration have become both firmer and more common in 2011. In a major May speech on the future of U.S.-India relations, Assistant Secretary Blake said:\n[E]conomic impediments make it hard for American exporters to gain access to Indian markets, especially in agricultural goods. Restrictions in retail, insurance, defense, and other key areas have also limited the expansion of American firms, and the Indian firms with whom they seek to partner. To maintain this trajectory [of increased trade], we need to methodically address trade and investment barriers and foster market openings that position us to capitalize on this continued growth, and allow our private sectors to thrive.\nThe outgoing U.S. Ambassador put it even more bluntly, saying, \"India needs to be asking itself: Is it delivering on the global partnership? ... There's no doubt this needs to be a two-way street.\" Commerce Department officials and the White House Chief of Staff have more recently admonished New Delhi to move forward with economic reforms. Of particular recent concern to Secretary Locke and other U.S. officials is New Delhi's restrictions on imports of solar power technology. The central government plans to disburse some $20 billion in subsidies to power-plant developers this decade, but is barring importation of foreign-made solar panels, making it difficult for U.S. firms to get a share of the market.\nIn June 2011, Treasury Secretary Tim Geithner led the U.S. delegation at the second meeting of the U.S.-India Financial and Trade Partnership in Washington, DC, where he and his Indian counterpart, Finance Minister Pranab Mukherjee, agreed to further expand bilateral trade and investment links. While acknowledging that reducing barriers to investment was politically challenging for the Indian government, he reiterated the U.S. contention that easing such barriers would benefit both national economies and be an important step toward their \"integration.\"", "Inadequate intellectual property rights protection is a long-standing issue between the United States and India. India remained on the U.S. Special 301 \"Priority Watch List\" in 2011 for failing to provide an adequate level of IPR protection or enforcement, or market access for persons relying on intellectual property protection. The report recognized the introduction of a Copyright Amendment Bill as an improvement in the regulatory regime, but expressed concerns about its compliance with international standards. The United States also acknowledged India's progress on enforcement, but maintained that piracy and counterfeiting, including the counterfeiting of pharmaceuticals, remains widespread. India remains critical of U.S. efforts to pressure developing nations, including India, to adopt laws and regulations governing pharmaceuticals that are overly supportive of the major pharmaceutical companies and could potentially deny poorer nations of access to important medicines.", "The year 2003 saw the inaugural session of the U.S.-India High-Technology Cooperation Group (HTCG), a forum in which officials can discuss a wide range of issues relevant to creating the conditions for more robust bilateral high technology commerce. The 8 th HTCG meeting was held in New Delhi, India, on July 19, 2011, with discussion focusing on dual-use technology and ways to foster greater research and development cooperation. In 2007, India and the United States concluded a bilateral 123 Agreement on civil nuclear cooperation. While the accord addressed many concerns about India's nuclear program and trade in dual-use technology, there remain concerns in the United States about India's ability to prevent the distribution of potentially dangerous technology and equipment to undesirable recipients.\nSince 1998, a number of Indian entities have been subjected to case-by-case licensing requirements and appear on the U.S. export control \"Entity List\" of foreign end users involved in weapons proliferation activities. In 2004, as part of NSSP implementation, the United States modified some export licensing policies and removed the Indian Space Research Organization (ISRO) headquarters from the Entity List. Further adjustments came in 2005 when six more subordinate entities were removed. In January 2011, Commerce's Bureau of Industry and Security removed several Indian space- and defense-related companies from the Entity List.", "The United States would like greater access to India's domestic markets, particularly for such products and services as agricultural goods, financial services, and retail distribution. India's extensive trade and investment barriers have been criticized by U.S. government officials and business leaders as an impediment to its own economic development, as well as to stronger U.S.-India ties. The U.S. government maintains that India is using sanitary and phytosanitary (SPS) regulations to restrict the import of certain U.S. agricultural goods. India denies these claims, arguing that the U.S. farm subsidy program unfairly subsidies U.S. agricultural exports and greater market access would threaten the livelihood of many of India's farmers.\nMulti-brand foreign retailers such as Wal-Mart and Target continue to be barred from the Indian market due to fears that India's small shops (there are as many as 12 million of them) would be overwhelmed by the competition. The U.S.-India Business Council is among those commercial groups contending that liberalization and greater international participation would benefit India by creating new and better employment opportunities, and by modernizing the country's supply chain management and distribution.", "India is designated as a beneficiary developing country (BDC) in the U.S. GSP program since its inception in 1974. As such, a limited amount of Indian imports of selected goods can enter the United States duty-free. Some in Congress believe that India is too developed to remain a GSP beneficiary, while others contend that India should be removed from the GSP program because of its stance on various issues related to the World Trade Organization's Doha Round negotiations. India was the third largest GSP beneficiary in 2010, after Angola and Thailand.", "India is pressing the United States to carry out negotiations of a bilateral investment treaty (BIT). A BIT is frequently seen as the first step in the possible progress towards a free trade agreement (FTA). In addition, a BIT between India and the United States might foster greater FDI flows between the two nations. Preliminary talks were held in 2009, and there has been only rhetorical progress on the issue since. The United States may be missing out on multiple business opportunities as India goes forward with comprehensive trade agreements that will lower tariffs on imports into India from countries such as Japan and Malaysia. Faster movement toward a U.S.-India BIT could improve prospects for American investors, as well as reassure those in Asia who question the U.S. commitment to a long-term economic role in the region. During a session of the U.S.-India Trade Policy Forum in Washington, DC, in June 2011, visiting Indian Commerce Minister Anand Sharma and U.S. Trade Representative Ron Kirk agreed to \"fast-track technical negotiations for an early conclusion\" of a BIT.", "India would like to have greater access to U.S. services market, particularly the ability of Indian nationals to provide services in the United States. There are two aspects of this issue. First, via its various certification programs, the United States restricts the ability of many Indian professionals (such as accountants, medical doctors, and lawyers) from providing services in the United States. Second, the United States limits the number of people who can work in the country under its H1-B visa program for certain high-skilled jobs. India would like the United States to increase or remove the limit on H1-B visas.", "India maintains that the U.S. farm subsidy program—worth an estimated $17.7 billion per year—provides U.S. agricultural exports with an unfair trade advantage. To the Indian government, the U.S. program poses a threat to millions of Indian farmers, hence it maintains restrictions on U.S. agricultural imports. In addition, India sees the U.S. reluctance to curtail or eliminate its farm subsidy program as a major roadblock in making progress in the Doha Round negotiations.", "In 2006, the World Trade Organization's \"Doha Round\" of multilateral trade negotiations were suspended due to disagreement among the WTO's six core group members—which include the United States and India—over methods to reduce trade-distorting domestic subsidies, eliminate export subsidies, and increase market access for agricultural products. The United States and other developed countries seek substantial tariff reductions in the developing world. India, like other members of the \"G-20\" group of developing states, has sought more market access for its goods and services in the developed countries, while claiming that developing countries should be given additional time to liberalize their own markets. In particular, India resists opening its markets to subsidized agricultural products from developed countries, claiming this would be detrimental to tens of millions of Indian farmers and lead to further depopulation of the countryside. According to Indian officials, the WTO's narrow focus on economic issues excludes political and social variables which are equally sensitive for New Delhi and which constrain the options available to the Indian government. They seek greater U.S. understanding of this dynamic. The Indian economy could benefit significantly from lowered farm subsidies in developed countries and expanded trade in services, but indigenous industries could also be harmed if New Delhi were to reduce tariffs that currently protect India's exporting sectors, especially in textiles and garments.", "Bilateral space cooperation may be a particularly productive pursuit now that the U.S. Commerce Department has removed obstacles to trade with India's civil space agencies. The United States welcomes India's robust participation in multilateral fora such as the Committee on Earth Observation Satellites and the Group on Earth Observations, and has engaged in preliminary talks on human space flight cooperation. Earth observation cooperation benefits agricultural productivity through more accurate weather and climate forecasting. Some analysts view bilateral space cooperation as a particularly productive pursuit now that the U.S. Commerce Department has removed obstacles to trade with India's civil space agencies. However, India's space program suffered a major setback in late 2010 when the country's Geo-Synchronous Launch Vehicle (GSLV) went out of control 47 seconds after launch and was destroyed along with its telecommunications satellite payload. With a 50% success rate, the GSLV may no longer be considered a viable option for many commercial satellite launches.", "", "India's status as a non-signatory to the 1968 Nuclear Nonproliferation Treaty (NPT) kept it from accessing most nuclear technology and fuels on the international market for more than three decades. New Delhi's 1974 \"peaceful nuclear explosion\" spurred the U.S.-led creation of the Nuclear Suppliers Group (NSG)—an international export control regime for nuclear-related trade—and Washington further tightened its own export laws with the Nuclear Nonproliferation Act of 1978 ( P.L. 95-242 ). New Delhi has long railed at a \"nuclear apartheid\" created by an apparent double standard inherent in the NPT, which, they maintain, has allowed certain states to deploy nuclear weapons legitimately while other states cannot. Senior Indian officials maintain the widely held Indian perspective that reaching a civil nuclear deal with the United States was crucial to the process of removing constraints placed on India by \"an increasingly selective, rigorous, and continually expanding regime of technology denial,\" claiming that only by \"turning the nuclear key\" would India be able to open the door to global trade in dual use and other sophisticated technologies, including nuclear technologies.\nDifferences over nuclear policy bedeviled U.S.-India ties for decades and—given New Delhi's lingering resentments—presented a serious psychological obstacle to more expansive bilateral relations. In a major policy shift, a July 2005 U.S.-India Joint Statement notably asserted that \"as a responsible state with advanced nuclear technology, India should acquire the same benefits and advantages as other such states,\" and President Bush vowed to work on achieving \"full civilian nuclear energy cooperation with India.\" As a reversal of three decades of U.S. nonproliferation policy, such proposed cooperation stirred controversy and required changes in both U.S. law and in NSG guidelines. India reciprocally agreed to take its own steps, including identifying and separating its civilian and military nuclear facilities in a phased manner and placing the former under International Atomic Energy Agency safeguards.\nAfter extensive and difficult negotiations, U.S. legislation allowing the United States to conclude a peaceful nuclear cooperation agreement with India became law in December 2006 ( P.L. 109-401 ). President Bush signed P.L. 110-369 , which approved the agreement, into law in October 2008. Secretary of State Condoleezza Rice and India's External Affairs Minister Pranab Mukherjee signed the agreement later that month and it entered into force in December 2008. Following an intense U.S. lobbying effort, the NSG decided in September 2008 to exempt India from some of its export requirements—a decision that enabled the government to conclude nuclear cooperation agreements with several countries.\nIn the realm of geopolitics, much of the Bush Administration's argument for moving forward with the U.S.-India nuclear initiative appeared rooted in an anticipation/expectation that New Delhi would in coming years and decades make policy choices that are more congruent with U.S. regional and global interests (a desire for such congruence is, in fact, written into the enabling legislation, P.L. 109-401 ). Proponents have suggested that this U.S. \"gesture\" would have significant and lasting psychological and symbolic effects in addition to the material ones, and that Indian leaders require such a gesture in order to feel confident in the United States as a reliable partner on the world stage. Skeptics aver that the potential strategic benefits of the nuclear initiative have been over-sold. Indeed, centuries of Indian anti-colonial sentiments and oftentimes prickly, independent foreign policy choices are unlikely to be set aside in the short run, meaning that the anticipated geopolitical benefits of civil nuclear cooperation with India remain largely speculative and at least somewhat dependent upon unknowable global political developments. It is worth noting that, although proponents of the nuclear agreement argued that it would bring New Delhi into the \"nonproliferation mainstream,\" India has not made any significant changes to its nuclear-weapons policies.", "U.S. companies have not yet started nuclear trade with India. Washington and New Delhi announced March 29, 2010, that they had concluded an agreement on a reprocessing facility in India; the two countries signed the agreement July 30, 2010. The arrangement, which the Administration had submitted to Congress on May 11, 2010, would not have taken effect if Congress had adopted a joint resolution of disapproval within 30 days of continuous session; Congress did not adopt such a resolution. New Delhi had reportedly insisted that India and the United States conclude the arrangement before New Delhi would sign contracts with U.S. nuclear firms. Despite the subsequent arrangement, U.S. firms may be reluctant to engage in nuclear trade with India if the government does not resolve concerns regarding its policies on liability for nuclear reactor operators and suppliers.\nIndia signed the Convention on Supplementary Compensation for Nuclear Damage (CSC), which has not yet entered into force, October 27, 2010. However, many observers have argued that India's Civil Liability for Nuclear Damage Bill, which both houses of India's parliament adopted in August 2010, is not consistent with the CSC, citing the provisions which make reactor suppliers, in addition to operators, liable for damages caused by a reactor accident. U.S. officials have argued that India's law should be consistent with the Convention. Assistant Secretary of State Robert Blake stated in a June 9, 2010, interview with India Abroad that the U.S. interest is to \"ensure that the bill that ultimately is enacted is compliant\" with the CSC. Although Under Secretary of State William Burns described New Delhi's signing of the CSC as a \"very positive step\" during an October 27 press briefing, he also indicated that India will need to take additional steps in order to resolve U.S. concerns regarding India's liability policies. Secretary of State Hillary Clinton indicated during a July 19, 2011, press conference that the United States wants India to ratify the CSC by the end of 2011, as well as adopt a liability regulatory regime that \"fully conforms with the international requirements\" under the CSC. India's then-Foreign Secretary Nirupama Rao stated in a July 29, 2011, interview that India would ratify the CSC \"before the end of the year.\" She also explained that \"the rules and regulations concerning the civil nuclear liability bill ... are in the process of being framed and in this process we are consulting with both the domestic companies and the foreign companies concerned.\"\nWashington and New Delhi are also discussing necessary monitoring arrangements for U.S. nuclear exports. Section 104 (d)(5) of the Hyde Act requires the President to \"ensure that all appropriate measures are taken to maintain accountability with respect to nuclear materials, equipment, and technology sold, leased, exported, or re-exported to India,\" including a \"detailed system of reporting and accounting for technology transfers, including any retransfers in India, authorized by the Department of Energy pursuant to section 57 b. of the Atomic Energy Act.\" India has provided retransfer assurances covering several state-owned entities, but has not yet provided them for private entities.", "Defense cooperation between the United States and India remains in relatively early stages of development (unlike U.S.-Pakistan military ties, which date back to the 1950s). Since late 2001, and despite a concurrent U.S. rapprochement with Pakistan, U.S.-India security cooperation has flourished; U.S. diplomats rate military cooperation among the most important aspects of transformed bilateral relations. The India-U.S. Defense Policy Group (DPG)—moribund after India's 1998 nuclear tests and ensuing U.S. sanctions—was revived in 2001 and meets annually. At the most recent session, in Washington, DC, in March 2011, senior U.S. State Department and Pentagon officials and their Indian counterparts reaffirmed the importance of and expressed satisfaction with ongoing bilateral defense cooperation, especially in the areas of joint military exercises and arms sales. The DPG operates four subgroups—a Military Cooperation Group, a Joint Technology Group, a Senior Technology Security Group, and a Defense Procurement and Production Group—which meet throughout the year.\nIn June 2005, the United States and India signed a ten-year defense pact outlining planned collaboration in multilateral operations, expanded two-way defense trade, increasing opportunities for technology transfers and co-production, expanded collaboration related to missile defense, and establishment of a bilateral Defense Procurement and Production Group. The agreement may be the most ambitious such security pact ever engaged by New Delhi. A Maritime Security Cooperation Agreement, inked in 2006, commits both countries to \"comprehensive cooperation\" in protecting the free flow of commerce and addressing a wide array of threats to maritime security, including piracy and the illicit trafficking of weapons of mass destruction and related materials.\nThe United States views defense cooperation with India in the context of \"common principles and shared national interests\" such as defeating terrorism, preventing weapons proliferation, and maintaining regional stability. Senior officials in the Obama Administration's Pentagon have assured New Delhi that the United States is \"fully committed to strengthening ties through the enhancement of our defense relationship.\" In a report accompanying the Department of Defense Authorization Act for FY2012 ( S. 1253 , S.Rept. 112-26 ), the Senate Armed Services Committee, in expressing its belief that a deepened strategic partnership with India will be \"critical\" to the promotion of core mutual national interests in the 21 st century, would direct the Secretary of Defense to report to Congress a detailed plan to enhance U.S.-India security cooperation.\nMany analysts view increased U.S.-India security ties as providing an alleged \"hedge\" against or \"counterbalance\" to growing Chinese influence in Asia, though both Washington and New Delhi repeatedly downplay such probable motives. Still, while a congruence of U.S. and Indian national security objectives is unlikely in the foreseeable future, convergences are identified in areas such as shared values, the emergence of a new balance-of-power arrangement in the region, and on distinct challenges such as WMD proliferation, Islamist extremism, and energy security. There remain indications that the perceptions and expectations of top U.S. and Indian strategic planners are divergent on several key issues, perhaps especially on the role of Pakistan and policies toward the ongoing Afghan insurgency, as well as on India's relations with Iran and repressive governments in places such as Burma and Sudan.", "One facet of the emerging \"strategic partnership\" between the United States and India is greatly increased intelligence and counterterrorism cooperation. In 2000, the two governments established a U.S.-India Joint Working Group on Counterterrorism to coordinate bilateral efforts in this realm. In 2002, India and the United States launched the Indo-U.S. Cyber Security Forum to safeguard critical infrastructures from cyber attack. The 2005 \"New Framework for the U.S.-India Defense Relationship\" listed \"defeating terrorism and violent religious extremism\" as one of four key shared security interests, and it called for a bolstering of mutual defense capabilities required for such a goal. A bilateral Counterterrorism Cooperation Initiative was formally launched in July 2010.\nCounterterrorism cooperation is described by the Administration as a pillar of the bilateral relationship. Programs include exchanges of law enforcement best practices, reciprocal visits of senior-level officials, joint military training exercises, and joint approaches in relevant international fora. The FBI's Quantico laboratory has hosted visits by senior Indian forensics experts and the agency regularly shares best-practices with senior Indian law enforcement officials. The State Department's Anti-Terrorism Assistance program has conducted scores of training courses for more than 1,600 Indian law enforcement officials.\nCIA and FBI personnel have worked in India to investigate terrorist attacks, including a major 2006 bombing in Mumbai, as well as the 2008 attack on the same city (FBI forensics experts provided testimony to the Indian court trying the sole surviving gunmen in the latter attack). In June 2010, the Indian government was granted access to David Headley, an American national who has confessed to participating in planning the November 2008 Mumbai assault. Then-U.S. Ambassador to India Tim Roemer identified the development as \"historic in the nature of security cooperation\" and expressed optimism about multiple U.S.-India partnerships in this area, including cooperation on launching a National Counterterrorism Center in India modeled on that in the United States. Yet lingering and significant distrust of the United States—and its close relationship with Pakistan's military and intelligence services—became evident after it was learned that U.S. officials had received prior warnings about LeT intentions to attack Mumbai from Coleman's former wives. U.S. officials deny that any useful intelligence information had been withheld from India, but some observers remained skeptical.\nHomeland Security Secretary Janet Napolitano was in New Delhi and Mumbai in May 2011, where she meet with Indian officials and representatives of private industry to promote counterterrorism and law enforcement cooperation. Under the rubric of the bilateral Strategic Dialogue, a U.S.-India Homeland Security dialogue was established, with Indian Home Minister Chidambaram as co-chair, wherein agency-to-agency engagements are being fostered on a wide array of law enforcement issues, including counternarcotics counterfeit currency, illicit financing and transnational crime, infrastructure security, transportation and trade, coastal security, and large-city policing.", "", "Since early 2002, the United States and India have held a series of unprecedented and increasingly substantive combined exercises involving all military services. Such military-to-military relations have been key aspect of U.S.-India relations in recent years—India now conducts more exercises and personnel exchanges with the United States than with any other country. These include \"Cope India\" air exercises, joint Special Forces training, and major annual \"Malabar\" joint naval exercises are held off the Indian coast. U.S. and Indian officials tout ongoing joint maneuvers as improving interoperability and as evidence of an overall deepening of the bilateral defense relationship. Countries such as China and Pakistan are acutely interested in the progress of such relations, seeing them as the potential seeds of a more formal defense alliance.", "Along with increasing military-to-military ties, the issue of U.S. arms sales to India has taken a higher profile. New Delhi is undertaking a major military modernization program, potentially spending $100 billion over the next decade to update its mostly Soviet-era arsenal. U.S. weapons makers are eager to gain a slice of this lucrative pie, and American security companies also see in India a potentially also huge new market for sophisticated equipment such as surveillance and detection systems. Some analysts suggest that increased defense trade could be a means of reviving what are perceived as stagnating U.S.-India relations. Yet many Indians continue to be wary of closer defense ties with the United States and are concerned that these could lead to future strings, such as conditionality and/or cutoffs, and perhaps constrain New Delhi's foreign policy freedom. In an unusually open expression of frustration with the United States in this realm, India's Army Chief in May 2010 informed his Defense Ministry that the U.S. Foreign Military Sales program had proven troublesome for India. Nevertheless, the value of new and unprecedented major defense sales to India has continued to grow, with the United States now offering to sell India some of its most sophisticated military hardware.\nThe first-ever major U.S. arms sale to India came in 2002, when the Pentagon negotiated delivery of 12 counter-battery radar sets (or \"Firefinder\" radars) worth a total of $190 million. In 2006, Congress authorized and New Delhi approved the $44 million purchase of the USS Trenton , a decommissioned American amphibious transport dock. The ship, which became the second-largest in the Indian navy when it was commissioned as the INS Jalashwa in 2007, set sail for India carrying six surplus Sikorsky UH-3H Sea King helicopters purchased for another $39 million. The Security Cooperation Act of 2010 ( P.L. 111-266 ) authorized the President to transfer to India two Osprey-class coastal minehunter ships as Excess Defense Articles. In 2008, Washington and New Delhi finalized a deal to send to India six C-130J Hercules military transport aircraft (along with related equipment, training, and services). The deal, which represented the largest-ever U.S. defense sale to India to date, is worth nearly $1 billion to the manufacturer, Maryland-based Lockheed Martin (the C-130Js, configured to support Indian special operations requirements, were delivered in December 2010). In 2009, New Delhi signed a $2.1 billion deal to purchase eight P-8I maritime surveillance aircraft from Illinois-based Boeing. These aircraft, slated for delivery in 2013, also provide anti-submarine warfare capabilities, and their sale set a new record as the largest-ever U.S. arms transfer to India.\nIn 2010, the Pentagon notified Congress of a potential sale to India of ten C-17 Globemaster III military transport aircraft (with training equipment, spare parts, and other support). Yet another new record sale was realized when, in June 2011, New Delhi formally approved the $4.1 billion purchase, the largest-ever Indian defense contract with a U.S. company. Washington welcomed the sale as both advancing the U.S.-India partnership and in sustaining some 23,000 American jobs in 44 states. Other potential upcoming sales include\n22 Boeing AH-64D Apache attack helicopters, along with accompanying General Electric engines, and radars, missiles, training, and other support that could be worth an estimated $1.4 billion; 145 lightweight 155mm M777 towed howitzers with laser targeting systems (worth $647 million); and 26 Harpoon anti-ship missiles for $200 million and 32 Mk-54 torpedoes for $86 million—both weapons intended for use on the Indian Navy's newly-purchased P-8I Neptune maritime patrol aircraft.\nYet by far the most lucrative hoped-for sale would have served India's quest for 126 new medium, multi-role combat aircraft (MMRCA) in a deal that could be worth some $11 billion. Lockheed Martin's F-16 and Boeing's F/A-18 were competing with aircraft built in Russia, France, Sweden, and by a European consortium. Hopes of an American firm landing the MMCA deal received a boost in 2009 when General Electric won in its bid to provide India with 99 jet engines for its Tejas light combat aircraft for some $800 million, but in 2011 New Delhi announced that it would not look to American firms for this larger sale (see below).", "Some Indian officials express concern that the United States is a \"fickle\" partner that may not always be relied upon to provide the reciprocity, sensitivity, and high-technology transfers sought by New Delhi, and that may act intrusively. This has contributed to New Delhi's years-long political resistance to sign several defense cooperation accords, including the Communications Interoperability and Security Memorandum of Agreement (CISMoA), the Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA), and the Logistics Support Agreement (LSA). U.S. law requires that certain sensitive defense technologies can only be transferred to recipient countries that have signed the CISMoA and/or the BECA. All three outstanding accords have been opposed by some influential Indian politicians for their \"intrusive\" nature, and the issue was not taken up at the July 2011 Strategic Dialogue talks.\nNew Delhi did in 2009 sign on to an End User Monitoring Agreement (EUMA) after two years of protracted negotiations, but only after receiving the concession that the time and location of equipment verification would be determined by Indian officials. Then-Secretary of Defense Robert Gates, on a visit to New Delhi in 2010, stated that not getting the outstanding agreements signed \"is an obstacle to Indian access to the very highest level of technology.\" Despite U.S. claims that India's military capabilities are hampered by lack of access to U.S. equipment and technologies, senior Indian military officers have reported to their government that the absence of these agreements makes no substantial difference in their operational abilities.", "By the turn of the new century, New Delhi began to address the need to replace their air force's large and aging fleet of Russian-built MiG-21 combat aircraft, which were crashing regularly and became known to some Indian pilots as \"flying coffins.\" Refurbishment was deemed impractical, and no indigenously-built replacement could be online for up to two decades so, in 2004, the government issued formal Requests For Information (RFIs) on potentially purchasing 126 new aircraft from one of four vendors: Lockheed Martin (F-16IN), France's Dassault (Rafale), Sweden's Saab (Gripen JAS-39), and Russia's Mikoyan (MiG-35). Soon after, Boeing (F/A-18E/F) and a European consortium (Eurofighter Typhoon) joined in the bidding.\nIn April 2011, seven years after the first RFIs were issued, New Delhi announced that it had narrowed the list of competitors to two finalists: the French Rafale and the Eurofighter. The government described the decision as having been wholly rooted in technical assessments of the contending aircraft. These assessments determined that the Rafale and the Typhoon were best suited to the needs of their air forces. Assistant Secretary of State Blake expressed Washington's obvious disappointment, while also stressing that the United States will remain committed to the bilateral defense partnership—he contended that India had \"shown confidence in American products\" such as C-130J, C-17, and P-8 military aircraft—as well as to the greater strategic partnership. Blake later said that choosing one of the American-made platforms would have \"provided a ladder to even higher levels of U.S.-India technology transfers\" and it was \"a source of puzzlement\" that the Indian Air Force deselected them. New Delhi's decision elicited much criticism both from U.S.-based analysts as well as some Indian strategic thinkers, and sparked some debate over the \"real\" reasons for what seemed a major geostrategic choice.\nSome commentators considered the Indian decision short-sighted and potentially damaging to the greater U.S.-India partnership. From this perspective, political and geostrategic considerations were given short-shrift or even ignored in New Delhi's apparently narrow focus on purely technical variables. The decision may not have been the great surprise that was perceived by some in Washington: Indian skepticism about U.S. reliability as an arms supplier is longstanding, and Washington's close defense relationship with Islamabad over the past decade has added to New Delhi's doubts.\nIndeed, many analysts sought to explain the decision by pointing to Indian concerns about U.S. reliability and Indian annoyance with U.S. arms supplies to Pakistan, with some also viewing the Europeans as being more willing than the Americans to transfer technologies desired by India. Supply reliability may have played a central role in what may have been a largely political decision. A few even suspected that deselecting the U.S.-built planes was an indirect statement that New Delhi did not seek full alignment with the United States. When viewed in light of serious obstacles to implementing bilateral civil nuclear commerce, and New Delhi's UNSC abstention on Libya and tepid support for Burmese democratization, the MMRCA decision was for some observers a (troubling) signal that Indian decision makers are uncomfortable with developing closer ties with the United States.\nOthers rejected these arguments as unreasonable, given that most major powers seek to diversify their strategic relationships, the United States among them. For these commentators, the overarching relationship was not diminished by this one development and does best when a transactional approach is avoided. The judgment here is that there was no \"strategic rebuff\" of the United States, and Indian doubts about American reliability in arms trade is much diminished in recent years (U.S. firms have won numerous other Indian defense contracts). In the words of one close observer, \"[T]he current threats to the burgeoning defense partnership derive less from abortive military sales and more from a lack of vision, focus, and determination to create the strategic affiliation that serves common interests.\" Moreover, it does appear that the Indian procurement process worked exactly as it was supposed to—divorced from political considerations—and that corruption scandals in New Delhi and the ruling coalition's recent travails made strategic factors even more unlikely to have played a role.", "Many of India's more than 1 billion citizens suffer from oftentimes serious human rights abuses. Some analysts are concerned that, as Washington pursues a new \"strategic partnership\" with New Delhi, U.S. government attention to such abuses has waned. In a notable shift, the State Department's most recent Country Report on Human Rights Practices (released April 2011) does not include what had been regular overarching statements in previous reports about the Indian government's general respect for the rights of its citizens, nor does its introductory section make note of Indian government efforts or improvements in certain areas. Instead, the report moves quickly to a listing of India's \"major human rights problems,\" including\nreported extrajudicial killings of persons in custody, killings of protesters, and torture and rape by police and other security forces. Investigations into individual abuses and legal punishment for perpetrators occurred, but for many abuses, a lack of accountability due to weak law enforcement, a lack of trained police, and an overburdened court system created an atmosphere of impunity; lengthy court backlogs prolong the latter. Poor prison conditions and lengthy detentions were significant problems. Unlike in previous years (2008 and 2009), there were no instances of officials using antiterrorism legislation to justify excessive use of force; however, indiscriminate use of force by Border Security Forces was a problem. Corruption existed at all levels of government and police. There were reports of delays in obtaining legal redress for past attacks against minorities. The law in some states restricted religious conversion, but there were no reports of convictions under these restrictions. Violence associated with caste bias occurred. Domestic violence, child marriage, bonded labor, dowry-related deaths, honor crimes, and female feticide remained serious problems.\nSeparatist insurgents and terrorists in Jammu and Kashmir, the Northeastern States, and the Naxalite belt committed numerous serious abuses, including killing armed forces personnel, police, government officials, and civilians. Insurgents engaged in widespread torture, rape, beheadings, kidnapping, and extortion. The number of incidents, however, declined compared with the previous year.\nInternational human rights groups echo many of these findings. According to the 201 1 World Report of Human Rights Watch,\nAuthorities made little progress [in 2010] in reforming the police; improving healthcare, education, and food security for millions still struggling for subsistence; ending discrimination against Dalits (\"untouchables\"), tribal groups, and religious minorities; and protecting the rights of women and children.\nConstraints on religious freedom are another matter of concern; India's Muslim and Christian minorities continue to face sometimes violent persecution. Moreover, rampant caste-based discrimination is identified as a major societal problem, as are female infanticide and feticide. \"Honor killings\" of couples accused of violating Hindu marriage traditions may be on the rise. The State Department's Bureau of Democracy, Human Rights, and Labor has in the past claimed that India's human right abuses \"are generated by a traditionally hierarchical social structure, deeply rooted tensions among the country's many ethnic and religious communities, violent secessionist movements and the authorities' attempts to repress them, and deficient police methods and training.\"\nGovernment treatment of actual or suspected militants and terrorists can be severe and potentially unlawful. India's 1958 Armed Forces Special Powers Act, which gives security forces wide leeway to act with impunity in conflict zones, has been called a facilitator of grave human rights abuses in several Indian states. Visits by representatives of the International Committee of the Red Cross in 2002-2004 reportedly revealed evidence of widespread torture by security forces in Kashmir. Such evidence was presented to U.S. officials, according to press reports about leaked diplomatic cables. A senior Indian police official in Kashmir called the allegations \"baseless propaganda.\" A 2010 report by the Delhi-based Asian Center for Human Rights found that the incidence of torture and prison custody deaths in India is on the rise, and it chastised the current New Delhi government for failing to address these problems through legislative changes. After examining India's nonconflict areas, Human Rights Watch issued a 2011 report detailing what it calls India's \"numerous, serious human rights violations\" in the treatment of terrorism suspects detained following attacks, saying the \"abuses are both unlawful under Indian and international law and counterproductive in the fight against terrorism.\"\nIndian authorities have brought and threatened to bring sedition charges against prominent social activists. According to watchdog groups, India's colonial-era sedition law has been used to intimidate peaceful political dissenters in cases involving activists such as Dr. Binayak Sen and Arundhati Roy. Human Rights Watch repeatedly has called for the law's repeal. Sen, who spent in a total of 28 months in what he described as horrific prison conditions, later accused the government of using the sedition laws \"to silence voices of dissent.\"", "An officially secular nation, India has a long tradition of religious tolerance (with periodic lapses), which is protected under its constitution. The population includes a Hindu majority of 82% as well as a large Muslim minority of some 150 million (14%). Christians, Sikhs, Buddhists, Jains, and others total less than 4%. Although freedom of religion is protected by the Indian government, human rights groups have noted that India's religious tolerance is susceptible to attack by religious extremists. In its annual report on international religious freedom released in November 2010, the State Department contended that the New Delhi government\ngenerally respected, provided incentives for, and intervened to protect religious freedom; however, some state and local governments imposed limits on this freedom. There was no change in the status of respect for religious freedom by the government during the reporting period. The national government, led by the United Progressive Alliance (UPA), continued to implement an inclusive and secular platform that included respect for the right to religious freedom. Despite the national government's rejection of Hindutva (Hindu nationalism), a few state and local governments continued to be influenced by Hindutva.... The law generally provided remedy for violations of religious freedom, however, due to a lack of sufficient trained police and corruption, the law was not always enforced rigorously or effectively in some cases pertaining to religiously oriented violence.\nA May 2011 report of the U.S. Commission on International Religious Freedom found that \"India's progress in protecting and promoting religious freedom during the past year continued to be mixed\" and that \"justice for victims of communal violence ... remains slow and often ineffective.\" While noting the Indian government's creation of some structures to address past problems of communal violence, and recognizing positive steps taken by the central and state governments to improve religious freedom, the Commission again placed India on a \"Watch List\" of countries where it believes violations of religious freedom require very close attention. It urged the U.S. government to encourage and assist New Delhi in being more vigorous and effective in efforts to better protect religious freedom in India, including those aimed at halting violent attacks on religious minorities, undertaking more timely investigations and prosecutions of those alleged to have perpetrated such violence, among others.", "The millennia-old Hindu caste system reflects Indian occupational and socially defined hierarchies. Sanskrit sources refer to four social categories: priests (Brahmin), warriors (Kshatriya), traders (Vayisha) and farmers (Shudra). Tribals and lower castes were long known as \"untouchables\"—a term now officially banned but still widely used—or Dalits. Although these categories are understood throughout India, they describe reality only in the most general terms. National-level legislation exists to protect India's lower castes, yet, according to the U.S. State Department, \"The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act lists offenses against disadvantaged persons and prescribes stiff penalties for offenders; however, this act had only a modest effect in curbing abuse and there were very few convictions.\" In the 110 th Congress, H.Con.Res. 139 , expressing the sense of Congress that the United States should address the ongoing problem of untouchability in India, was passed by the full House, but was not considered by the Senate.", "The State Department's latest annual report on trafficking in persons (issued June 2011) again said, \"India is a source, destination, and transit country for men, women, and children subjected to forced labor and sex trafficking.... The Government of India does not fully comply with the minimum standards for the elimination of trafficking; however, it is making significant efforts to do so.\" Moreover, in noting the Indian Home Ministry's more focused efforts and the government's ratification a relevant U.N. Protocol in May, India's designation as a \"Tier 2 Watch List\" country, which it had held since 2004, was upgraded to \"Tier 2,\" the second highest of four designations. Still, State criticized law enforcement efforts against bonded labor as remaining \"inadequate,\" and said the complicity of public officials in human trafficking \"remained a serious problem\" and \"impeded progress.", "Given traditional societal discrimination against females, uneven female-to-male ratios are a matter of growing concern for India. The incidence of female infanticide and gender-selective abortions is identified as a serious human rights problem in India. The diffusion of enabling medical technology and the existence of unethical doctors have made sex-selective abortions more common there. Prime Minister Singh has called female feticide a \"national shame\" and said the government has a responsibility to curtail the widespread practice. The country's 2001 census found only 927 girls aged 0-6 for every 1,000 boys nationwide. Wealthier states, such as Delhi, Punjab, and Gujarat, have the lowest ratios (Punjab's was the lowest at 798). A 2006 study published in the British medical journal Lancet estimated that up to 10 million Indian females are \"missing\" due to sex-selective abortions and infanticide over the past two decades, and that some 500,000 girls are being \"lost\" annually. In subsequent years, the incidence of such practices only appears to be increasing. The most recent U.S. State Department Country Report on Human Rights for India (released April 2011), identified Punjab and Haryana as states in which female feticide was an especially \"serious problem,\" and noted reports of relatives \"forcing\" women to engage in female feticide. A June 2011 survey of gender experts ranked India as the world's fourth most dangerous country for women, citing high rates of female feticide, infanticide, and human trafficking (neighboring Pakistan was ranked third).", "A total of more than $15.9 billion in direct U.S. aid went to India from 1947 through 2010, nearly all of it in the form of economic grants and loans, more than half as food aid. In 2007, in response to several years of rapid Indian economic expansion and New Delhi's new status as a donor government, the State Department announced a 35% reduction in assistance programs for India. The bulk of the cuts came from development assistance and food aid programs. Another smaller decrease came in 2008 \"in recognition of the continuing growth of the Indian economy and the ability of the government to fund more\" development programs. Under the Obama Administration, however, increases in Global Health and Child Survival funds, along with some added Development Assistance, have reverted aid amounts to their previous levels. Table 1 shows U.S. foreign assistance categories and figures for FY2001-FY2012.\nAccording to the U.S. Agency for International Development (USAID), India has the world's largest concentration of people living in poverty (more than 700 million earning less than $2 per day). USAID and economic-related State Department programs in India, budgeted nearly $120 million in FY2010, concentrate on five areas: economic growth; health; disaster management; energy and environment; and opportunity and equity.\nThe United States has provided about $175 million in military assistance to India since 1947, more than 90% of this distributed from 1962-1966. In recent years, modest security-related assistance has emphasized export control enhancements, counterterrorism and counternarcotics programs, and military training." ], "depth": [ 0, 1, 2, 2, 2, 2, 3, 3, 2, 1, 2, 2, 3, 4, 4, 4, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 1, 2, 3, 3, 4, 4, 4, 4, 3, 4, 4, 4, 4, 4, 2, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 2, 3, 4, 4, 3, 4, 4, 4, 3, 4, 4, 4, 3, 1, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 2, 3, 3, 4, 4, 4, 4, 2, 3, 3, 3, 3, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_title h1_title", "", "", "h1_full", "h1_full", "", "", "h2_full h1_full", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h2_title h1_title", "h0_full", "", "", "", "", "", "", "", "", "", "", "h0_title h2_title", "h0_full", "h2_full", "h0_full h1_full", "", "h1_title", "", "", "", "h1_full", "", "", "", "", "", "h2_full" ] }	{ "question": [ "How important is South Asia to U.S. foreign policy interests?", "Which country in particular is seen as an “indispensable partner” to the United States?", "How has the U.S. developed ties with India?", "What security commitments have the U.S. and India made?", "How has U.S. - India trade changed from 2004 to 2008?", "In what places can India’s influence on the U.S. be seen?", "How has the Obama administration developed the U.S.-India relationship?", "How did the U.S.-India Strategic Dialogue session develop the relationship?", "How important is the U.S.-India relationship in an international context?", "What areas of friction exist between the U.S. and India?", "How is India governed?", "What party is currently in control of India?", "What is the state of India's economy?", "How is India's population characterized?" ], "summary": [ "South Asia emerged in the 21st century as increasingly vital to core U.S. foreign policy interests.", "India, the region's dominant actor with more than 1 billion citizens, is often characterized as a nascent great power and \"indispensable partner\" of the United States, one that many analysts view as a potential counterweight to China's growing clout.", "Since 2004, Washington and New Delhi have been pursuing a \"strategic partnership\" based on shared values and apparently convergent geopolitical interests. Numerous economic, security, and global initiatives, including plans for civilian nuclear cooperation, are underway.", "Also in 2005, the United States and India signed a ten-year defense framework agreement to expanding bilateral security cooperation. The two countries now engage in numerous and unprecedented combined military exercises, and major U.S. arms sales to India are underway.", "The value of all bilateral trade tripled from 2004 to 2008 and continues to grow; significant two-way investment also flourishes.", "The influence of a large, relatively wealthy, and geographically dispersed Indian-American community is reflected in Congress's largest country-specific caucus. More than 100,000 Indian students are attending American universities.", "President Barack Obama's Administration has sought to build upon the deepened U.S. engagement with India begun by President Bill Clinton in 2000 and expanded upon during much of the past decade under President G.W. Bush.", "This \"U.S.-India 3.0\" diplomacy was most recently on display in July 2011, when the second U.S.-India Strategic Dialogue session saw a large delegation of senior U.S. officials visit New Delhi to discuss a broad range of global and bilateral issues.", "Many analysts view the U.S.-India relationship as being among the world's most important in coming decades and see potentially large benefits to be accrued through engagement on many convergent interests.", "Outstanding areas of bilateral friction include obstacles to bilateral trade and investment, including in the high-technology sector; outsourcing; the status of conflict in Afghanistan; climate change; and stalled efforts to initiate civil nuclear cooperation.", "India is the world's most populous democracy and remains firmly committed to representative government and rule of law.", "Its left-leaning Congress Party-led ruling national coalition has been in power for more than seven years under the leadership of Prime Minister Manmohan Singh, an Oxford-trained economist.", "The national economy has been growing rapidly—India's is projected to be the world's third-largest economy in the foreseeable future—yet poor infrastructure, booming energy demand, and restrictive trade and investment practices are seen to hamper full economic potential.", "Despite the growth of a large urban middle-class, India's remains a largely rural and agriculture-based society, and is home to some 500-600 million people living in poverty." ], "parent_pair_index": [ -1, 0, 1, 2, 2, 0, -1, 0, 0, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3 ] }
CRS_R43492	{ "title": [ "", "Introduction", "Review of Sanctions Imposed", "U.S. Sanctions: 1979-2006", "U.N. Sanctions: 2006-2010", "Multinational Sanctions: 2010 to the Present", "Debate Over Achievements of Sanctions", "Temporary Sanctions Relief During JPA Period", "The Way Forward: Potential Scenarios for Iran Sanctions23", "If the Parties Reach a Comprehensive Nuclear Settlement", "If Negotiations Collapse", "If the JPA is Extended", "Other Scenarios" ], "paragraphs": [ "", "This report analyzes the effect that sanctions have had in contributing to the achievement of U.S. objectives on Iran and analyzes several scenarios that might affect whether sanctions are eased or increased, or that might affect the effectiveness of the sanctions. The report briefly reviews the imposition of sanctions, both by the United States and the international community, and discusses their stated objectives.\nSanctions are one component of a broader U.S. and international policy toward Iran. It is not possible to clearly or definitively distinguish the effect of sanctions on Iran from the effect of other policy tools that have been employed. In addition, there are many other variables that might shape Iran's behavior, including Iranian decision making, the outcome of Iranian elections, and Iranian financial management and business negotiating style.\nThe report refers to various U.S. sanctions laws and Executive Orders implementing those laws. A detailed description of the provisions of these laws and Orders is included in other CRS reports: CRS Report RS20871, Iran Sanctions , by [author name scrubbed], and CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions , by [author name scrubbed]. For information on the Iranian nuclear program and related negotiations, see CRS Report R40094, Iran's Nuclear Program: Tehran's Compliance with International Obligations , by [author name scrubbed], and CRS Report R43333, Interim Agreement on Iran's Nuclear Program , by [author name scrubbed] and [author name scrubbed].", "The sections below discuss U.S. and multilateral sanctions imposed during each period as well as the stated or implied objectives of the sanctions imposed. Many of the sanctions imposed against Iran have had multiple purposes; the primary purposes of each were determined through analysis of Administration statements, legislative history of sanctions imposed by law, and the content of the specific provisions.", "From the time of the 1979 Islamic revolution until 2006, the United States was the only major power that imposed substantial economic sanctions against Iran. For most of this period, Iran's nuclear program was at an early stage of development and not an overriding factor in U.S. policy. Until 1996, most of the U.S. sanctions imposed applied to U.S. firms, with the objective of shutting Iran out of the large U.S. market. Because other countries did not enact similar sanctions, many U.S. sanctions imposed after 1996 were intended to compel foreign countries and foreign firms to choose between dealing with Iran and accessing the U.S. market. A key example of this type of \"secondary sanction\" was the Iran Sanctions Act of 1996, which has been expanded significantly through legislative amendments.\nThe sanctions imposed on Iran in this period had two main stated purposes:\nReducing Iran's Support for Terrorism : First and foremost, the United States sought to dissuade Iran from supporting groups that the United States characterized as terrorist organizations, such as Lebanese Hezbollah and the Palestinian Islamist organization Hamas. Sanctions imposed to accomplish that specific objective were primarily those triggered by Iran's designation in January 1984 as a \"state sponsor of acts of international terrorism.\" That designation triggers multiple U.S. sanctions, such as restrictions on U.S. exports and foreign aid, under various laws and Executive Orders. In May 1995, President Clinton issued Executive Order 12957 to ban U.S. firms from trading with and investing in Iran. The Administration stated the ban was justified by Iran's support of terrorist groups and its efforts to develop a civilian nuclear power capability—at that time limited to contracting with Russia to complete a civilian nuclear reactor at Bushehr. Executive Order 13224 of September 2001, which blocks U.S.-based property of entities determined to have provided support for acts of international terrorism, was issued primarily as a response to the September 11, 2001, attacks on the United States by the Al Qaeda organization. However, it subsequently has also been applied to Iranian and Iran-supported organizations and persons.\nReducing Iran's Strategic Capabilities . Several laws passed and Executive Orders issued during this time-frame were intended to reduce Iran's ability to acquire advanced conventional weaponry or equipment that could be used in actual or potential weapons of mass destruction (WMD) programs. The \"state sponsor of terrorism list\" designation had prevented Iran from obtaining U.S. arms and WMD-capable technology, but contained no penalties for any third country suppliers that sold such equipment to Iran.\nExamples of laws enacted to compel foreign countries and technology suppliers to cease sales to Iran include the Iran-Iraq Arms Non-Proliferation Act of 1992. That law penalizes foreign countries and foreign firms determined by the Administration to have provided advanced conventional arms or WMD technology to Iran. The above-mentioned Iran Sanctions Act, enacted in August 1996, sought to dissuade foreign firms from exploring and developing Iran's oil and gas fields. Supporters of that law asserted that doing so would, at least over the long term, deny Iran the oil revenue required to fund regional terrorist groups and acquire WMD-related technology.", "In 2002, after the revelation that Iran was constructing several nuclear facilities including some capable of enriching uranium, the issue of Iran's nuclear program rose to prominence on the U.S. foreign policy agenda. Perhaps seeking to head off a broad international confrontation with Iran, three European countries (\"EU-3\": Britain, France, and Germany) initiated a separate negotiating track to try to persuade Iran not to enrich uranium. After some initial successes during 2003-2005 in persuading Iran not to advance its uranium enrichment program, the negotiations broke down in 2005 after hardline Iranian President Mahmoud Ahmadinejad took office.\nAfter the European-led negotiations failed, these countries as well as Russia and China joined the United States in enacting U.N. economic sanctions against Iran. During 2006-2010, four U.N. Security Council resolutions were adopted (1737, 1747, 1803, and 1929), imposing targeted sanctions on Iran. The first three such resolutions required U.N. member states to cease transactions with named Iranian persons and entities, and banned Iran from exporting arms. The latter, Resolution 1929, authorized but did not compel U.N. member states to ban their firms from working in Iran's energy sector; providing insurance for shipping to or from Iran; providing credits for trade with Iran; or conducting financial transactions with Iran's banks. It also banned U.N. member states from selling major combat systems to Iran.\nThe primary goals of the U.N. sanctions were similar to those imposed by the United States unilaterally during this time period. White House WMD Coordinator Gary Samore articulated the objectives of the sanctions as (1) enforcing the credibility and integrity of international non-proliferation regimes; (2) making it more difficult for Iran to obtain materials for its nuclear program; and (3) affecting Tehran's \"calculation of the costs and benefits of continuing to pursue its nuclear program.\" Some experts assert that U.S. allies, Russia, and China supported the multilateral effort at least in part to try to head off more assertive U.S. or Israeli action such as a military attack on Iran's nuclear facilities. In explaining their support for Resolution 1929, Russian officials noted that the mandated sanctions would not harm the Iranian population. The bans on Iran's exportation and importation of arms represented an effort to limit Iran's regional influence and its military capabilities.", "Subsequent to the adoption of Resolution 1929 in June 2010, the United States and its partners in Europe and in Asia chose to use all the authorities specified in that resolution. Russia, China, and several other countries opted to enforce only the mandatory provisions of the resolution, including a ban on sales of major conventional arms systems to Iran.\nSanctions notwithstanding, nuclear negotiations between Iran and an expanded negotiating group, the \"P5+1\" (United States, Britain, France, Germany, Russia, and China) did not appear to be slowing the advance of Iran's nuclear program. Congress subsequently enacted several major Iran sanctions bills, such as the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA); a provision (Section 1245) of the FY2012 National Defense Authorization Act; the Iran Threat Reduction and Syria Human Rights Act (ITRSHA); and the Iran Counter-Proliferation Act (IFCA). The Administration issued several Executive Orders to implement the provisions of these laws, and in some cases took additional steps to limit worldwide economic engagement with Iran. Most of the U.S. sanctions were secondary sanctions—essentially denying access to the U.S. market to foreign firms that conduct transactions with major sectors of the Iranian economy, including banking, energy, and shipping.\nSome of these sanctions sought to alter Iran's human rights practices, to reduce its ability to suppress political opposition and freedom of expression and assembly, and to reduce Iran's attempts to influence events in neighboring countries. For example, Executive Order 13572 of April 2011 sanctioned persons or entities determined to be responsible for human rights abuses and repression of the Syrian people. An earlier Executive Order, 13438 of July 2007, sanctioned persons deemed to be posing a threat to stability in Iraq.\nA core goal of the sanctions imposed during this period was to significantly reduce Iran's exportation of oil and its ability to access the hard currency it earned abroad from the sale of oil. The stated objective of these sanctions was to place substantial economic pressure on Iran and presumably compel it to accommodate U.S. and other country concerns about its nuclear program. Some experts argued that the significant increase in sanctions represented an effort, instead, to try to bring about the downfall of Iran's regime.", "There has been substantial debate over the degree to which sanctions have contributed to altering Iranian policies—particularly regarding Iran's willingness to negotiate limits to its nuclear program. This debate has been affected significantly by the \"Joint Plan of Action\" (JPA) agreed on November 24, 2013, between Iran and the P5+1. The agreement, implementation of which began on January 20, 2014, requires Iran to halt further development of most aspects of its nuclear program in exchange for a modest and temporary easing of multilateral sanctions.\nPrior to 2013, there appeared to be a consensus that U.S. and U.N. sanctions had not accomplished their core strategic objective of compelling Iran to verifiably limit its nuclear development to purely peaceful purposes. Many rounds of P5+1-Iran talks since 2006, including five rounds just during 2012 and early 2013, produced no breakthroughs. The JPA cracked this consensus, with many experts describing Iran's agreement to the JPA as evidence that sanctions contributed substantially to Iran's willingness to halt further development of its nuclear program in exchange for relatively modest sanctions relief. The JPA was agreed to relatively soon after the June 14, 2013, first round presidential election victory of relatively moderate mid-ranking cleric Hassan Rouhani. He ran on a platform of achieving an easing of sanctions and ending Iran's international isolation, whereas several of the other candidates advocated a \"resistance economy\"—economic self-reliance intended to try to defy international sanctions. Sanctions arguably contributed to the political climate in which the candidate more committed to ending international isolation won.\nOn the other hand, some experts assert that Iran's signing of the JPA was attributable less to sanctions and more to Iran's perceptions of U.S. flexibility—in particular an apparent U.S. willingness to accept some long-term enrichment of uranium by Iran and pursue overall U.S.-Iran rapprochement. Those who take this view assert that Deputy Secretary of State William Burns and other U.S. officials had begun meeting with Iranian officials in early 2013 in Oman to explore the possibility of a nuclear deal. These meetings, in which U.S. officials reportedly signaled flexibility, took place well before Rouhani's election, but accelerated after Rouhani took office in August 2013. Oman's leader, Sultan Qaboos bin Said Al Said, visited Iran in August 2013, reportedly in part to help pave the way for U.S.-Iran diplomatic overtures and the JPA.\nThe debate over the effectiveness of sanctions will likely continue at least until there is international certainty that Iran does not intend to and could not quickly develop a nuclear weapon. Director of National Intelligence (DNI) James Clapper testified when presenting the annual worldwide threat assessment to Congress on January 29, 2014, that Iran's ultimate nuclear intentions remain unclear. This testimony suggests that sanctions and other factors might have temporarily, but not necessarily permanently, altered Iran's nuclear policies. If Iran were to move ahead with attempting to acquire a nuclear weapon, many might argue that sanctions were not as effective on the nuclear issue as they are currently perceived to have been.\nThe following sections provide brief analysis of the effectiveness of sanctions in accomplishing several stated additional objectives that were discussed above:\nSlowing Nuclear and Missile Program Development . Sanctions appear to have had limited effect in curbing the expansion of Iran's nuclear program or the development of other advanced militarily useful capabilities. Analysis of International Atomic Energy Agency (IAEA) reports issued before the JPA was agreed noted that Iran continued to develop more advanced centrifuges and expand its uranium enrichment program. DNI Clapper has testified that Iran continues to expand the scale and sophistication of its ballistic missile arsenal, and has the \"means and motivation to develop longer-range missiles, including an intercontinental ballistic missile (ICBM).\" Limiting Military Capabilities . The ban on worldwide arms sales to Iran has prevented Iran from modernizing its combat aircraft or ground armor from major arms suppliers such as Russia or China. U.S. officials have not publicly cited any foreign government for violating the ban in Resolution 1929 on supplying major combat systems to Iran. As a prominent example, after the adoption of Resolution 1929, Russia cancelled a contract to deliver an advanced air defense system, the S-300, which could have given Iran the capability of defending against airstrikes by sophisticated air forces such as those of the United States or Israel. However, Iran has enough indigenous technological capability that it has continued to increase its supply and sophistication of cruise and other missiles that have military utility. Curbing Support for Militant Terrorist Movements . Administration reports, such as the annual State Department report on international terrorism, do not indicate that sanctions have reduced Iran's willingness or ability to provide material support to militant movements in the Middle East and to the Syrian regime. Iran's arms exports contravene Resolution 1747, which bans Iran's exportation of arms. Extensive Iranian support to Syrian President Bashar al Asad is continuing, and DNI Clapper has said Iran continues to arm rebel factions in Yemen and Bahrain as well as Palestinian groups. Improving Human Rights Practices . Recent reports on Iran's human rights practices by the State Department and a U.N. \"special rapporteur\" indicate that there has been little, if any, improvement in Iran's practices over the past few years. On the other hand, the U.N. Special Rapporteur on human rights in Iran noted in his March 2014 report that President Rouhani's government has released 80 political prisoners and proposed a new \"charter of citizen's rights.\" It is unclear to what extent these steps are directly attributable to sanctions. Constricting Iran's Econom y . There appears to be a clear consensus that sanctions have taken a substantial toll on Iran's economy, contributing to the election of Rouhani and to Iran's accession to the JPA. Iran's gross domestic product (GDP)—the broadest measure of economic performance—contracted by 5%-8 % in 2012, according to the Department of the Treasury, and continued to contract in 2013. The oil export sector, which is the key driver of Iran's economy, was affected substantially. Oil exports fell from a 2011 daily average of 2.5 million barrels per day to only 1 million barrels per day at the end of 2013—the level at which exports are to remain for the JPA period.", "U.S. officials have said publicly that the JPA requires \"limited, temporary, targeted, and reversible\" easing of international sanctions from January 20 to July 20, 2014. According to the Administration, the sanctions relief offered maintains \"the vast bulk of sanctions, including the oil, finance, and banking sanctions architecture.\" According to the Administration, \"If Iran fails to meet its commitments, [the United States and its partners] will revoke the relief.\" The interim agreement does not require an easing of any U.S. sanctions that were imposed in the 1980s and 1990s primarily to address Iran's support for acts of international terrorism, or any sanctions that address Iran's alleged human rights abuses or its influence in neighboring countries.\nU.S. officials have given the sanctions relief during the JPA period a dollar value of $7 billion. That includes $4.2 billion in hard currency that Iran is permitted to access directly from ongoing oil sales, as well as sales of petrochemicals that Iran is permitted during the JPA period. Iran also has been allowed to resume trading in precious metals and to import goods for its automotive manufacturing sector, which reportedly has increased its activity since the January 20, 2014, JPA implementation start date. Iran's oil export volumes are to remain constant at 1 million barrels per day (mbd) for the six-month duration of the deal. Treasury Department officials say the relief will have a small positive impact on Iran's economy, and the International Monetary Fund estimates that the agreement will enable Iran to return to slight GDP growth of about 1%-2% for all of 2014.", "For the duration of the JPA period, international sanctions on Iran are likely to remain in a state of ambiguity—no international sanctions have been lifted or repealed, but many sanctions imposed by individual states are, at least temporarily, relaxed. The future course of Iran sanctions will almost certainly depend, at least in part, on the outcome of the ongoing P5+1 – Iran negotiations for a final settlement on Iran's nuclear program. Those negotiations began in February 2014 with the intent of concluding a comprehensive nuclear settlement by the July 20, 2014, expiration of the JPA period. Some possible scenarios for the direction of sanctions on Iran are discussed in the sections below.", "The text of the JPA states that a comprehensive solution on Iran's nuclear program \"would produce the comprehensive lifting of all UN Security Council sanctions, as well as multilateral and national sanctions related to Iran's nuclear program.\" But, this provision contains a number of uncertainties because many of the applicable Iran sanctions cannot be terminated by Administration action alone; lifting them would require congressional action. The JPA appears to acknowledge that, particularly in the U.S. case, there is a political process required to implement U.S. negotiating commitments. With respect to the JPA commitment not to impose new nuclear sanctions during the JPA period, the document states that \"The U.S. Administration, acting consistent with the respective roles of the President and the Congress, will refrain from imposing new nuclear related sanctions.\"\nIn response to a question about the Administration's ability to fulfill any commitment to Iran to lift sanctions outright, a \"senior Administration official\" told journalists\nWell, we are doing a considerable amount of work, including consultations with the Congress, in that regard. We need to understand in great detail how to unwind sanctions and what—under what authorities and what can be done by the Executive Branch, what can be done by waivers, what will need congressional action. So we are detailing all of that. We are in agreement with our partners in the P5+1 and the EU [European Union] and with Iran that any sanctions relief, should we get to a comprehensive agreement, will be phased in and will be in response to actions that Iran takes.\nThat lifting some sanctions would require congressional action raises the issue of congressional responses to any comprehensive deal that is reached. A letter to President Obama, signed by 82 Senators, sets out parameters for what the signers would consider an \"acceptable\" comprehensive settlement, and states that the Administration will need congressional action to enact \"implementing legislation to provide longer-term sanctions relief beyond existing waiver authorities—either through suspension, repeal or amendment of statutory sanctions.\"\nThe letter, and similar statements by Members of Congress, suggests that there is potential for Congress to demand requirements of Iran in any comprehensive settlement beyond those sought by the Administration. Congress could also refuse outright to enact legislation to lift sanctions, or could lift only certain sanctions and leave in place others. For example, some Members might argue that sanctions enacted primarily to address Iran's support of terrorist organizations or its human rights practices be left in place, whether or not the Administration requests termination.\nThere are potential consequences should Congress not lift nuclear-related sanctions after a comprehensive deal. It is possible that some P5+1 countries, such as Russia and China, could accuse the United States of failing to fulfill promises to Iran that were to form a key part of a comprehensive nuclear settlement. Some speculate that Russia and China might refuse, in the future, to cooperate with U.S. efforts to use multilateral sanctions to address the actions of countries of concern. That outcome could, in turn, reduce the utility of multinational sanctions generally, relating not only to Iran but also to other global hotspots.\nIf Congress declines to lift sanctions, the Administration might decide to offer Iran, as an alternative fulfillment of the U.S. commitment, the indefinite suspension of sanctions. Most of the Iran sanctions laws provide waiver and other authorities that would avoid applying sanctions to Iran, even if not terminating them outright. It is not clear whether Iran would accept that alternative or would instead hold out for termination or repeal.\nA further consideration is whether U.S. sanctions that prohibit American companies from doing business with Iran would be lifted if there were a comprehensive settlement. The Administration might opt to keep in place the ban on U.S. trade with Iran as a means of exerting some leverage over Iran in any potential discussions about restoring U.S.-Iran relations. The Administration has not indicated that any sanctions that apply to U.S.-Iran commerce would be lifted as part of a comprehensive nuclear deal with Iran. However, it is likely that American firms would argue that they should be held to the same standards as are companies in partner countries so as not to be deprived of significant business opportunities.", "Iran sanctions are likely to pursue a far different course if negotiations on a comprehensive nuclear settlement collapse. Were that to occur, there is a prospect that not only would the temporary sanctions relief of the JPA be revoked, but that new sanctions would be imposed beyond those in place before the JPA took effect. President Obama and other senior U.S. officials have asserted that the Administration would strongly support new sanctions if negotiations collapse or Iran violates the JPA. The Senators' letter cited above states that \"Should negotiations fail or Iran violate the Joint Plan of Action, Congress will need to ensure that the legislative authority exists to rapidly and dramatically expand sanctions.\"\nThe Administration has not articulated publicly what specific new sanctions it might seek to impose should negotiations collapse. Nor did the Senate letter specify what additional sanctions the signers might seek to enact in this scenario. One possibility is that Members might choose to act on legislation pending before and during the JPA period, including H.R. 850 , a bill that passed the House in July 2013, and S. 1881 . The latter bill was introduced after the JPA was signed and the Administration threatened to veto it as a violation of the JPA's \"no new nuclear sanctions\" commitment—even though its provisions would not have taken effect until after the JPA period. That veto threat, by all accounts, contributed to the Senate setting aside further consideration of the bill, at least for now.\nA collapse of the negotiations would raise the question of whether partner countries would join the United States in imposing additional sanctions, or cooperate with any new secondary U.S. sanctions that might be imposed. It can be argued that partner countries would likely support increased sanctions if the collapse of negotiations were widely attributed to Iranian refusal to agree to what were perceived by partner countries as reasonable demands for a comprehensive nuclear settlement.\nWere partner governments to attribute a collapse to perceived unreasonable U.S. demands during the settlement negotiations, these governments and their companies could potentially reduce cooperation with the existing global Iran sanctions regime. If the Administration were to then impose sanctions on partner country firms, thereby causing economic losses for companies incorporated in those countries, that could potentially weaken solidarity with the United States on the Iran issue. Moreover, if sanctions on partner country firms were viewed as unreasonably severe, firms in those countries might become less likely to do business with U.S. companies or to invest in the United States.\nIt is also possible that a perception of U.S. inflexibility in negotiations could cause friction on the Iran issue with Russia and China. Both countries strongly oppose any U.S., Israeli, or other military action against Iran's nuclear facilities, and there is potential for both countries to perceive that a breakdown of negotiations increases the likelihood of such a strike.", "Another possible scenario is that the negotiations neither reach a comprehensive settlement nor collapse by the time the JPA period expires on July 20, 2014. Senior U.S., partner country, and Iranian officials have said that the issues involved in a comprehensive nuclear settlement are complex and agreement might not be reached by the time the JPA expires. Shortly after the JPA was signed on November 24, 2013, President Obama said he placed the chances of reaching a comprehensive nuclear settlement at no higher than \"50-50.\" The JPA provides for its renewal \"by mutual consent,\" and many experts assess that the most likely scenario is that the JPA will be renewed for an additional six month period to provide additional time to reach a comprehensive solution.\nAn extension of the JPA has several potential implications for the course of Iran sanctions. The Administration has indicated that such an extension would apply to all provisions of the JPA, including the modest sanctions relief that could provide additional resources to the Iranian government. However, it is possible that some in Congress could interpret an extension as an indication of Iranian reluctance to agree to acceptable terms in a final settlement.\nAn extension might also produce concerns in Congress that international commitment to maintain sanctions will erode before a final settlement is reached. In hearings and statements, some Members of Congress have expressed concern that the JPA sanctions relief will cause an erosion of sanctions as companies seek to position themselves to return to the Iran market if and when most sanctions are lifted permanently. Congress might seek to enact additional sanctions, such as those included in H.R. 850 or S. 1881 , in an attempt to head off that erosion, although such legislative action has the potential to cause Iran to leave any ongoing negotiations.\nIt is also possible that the JPA, if extended, would be in force at the time of the U.S. mid-term elections in November 2014. The 114 th Congress could conceivably take a different approach toward Iran sanctions than the current Congress. For example, President Obama's threat to veto S. 1881 , if enacted, has apparently stalled Senate action on that legislation. There is potential for the next Senate to act on legislation such as the provisions contained in S. 1881 despite President Obama's veto threat.\nFor its part, the Administration has indicated that expressed congressional concerns about sanctions erosion have been unfounded to date. President Obama and other officials assert that companies that have held talks with Iranian officials and businessmen during the JPA period have reached no firm business deals that would violate any Iran sanctions. President Obama warned at a joint press conference with visiting French President Francois Hollande on February 11, 2014, that companies that might violate sanctions \"do so at their own peril right now because we will come down on them like a ton of bricks with respect to the sanctions that we control, and we expect full compliance ... during this interim [period].\"", "The scenarios above do not take into account the potential for issues completely unrelated to the nuclear negotiations to alter the course of Iran sanctions. The United States and Iran have been at odds over many issues since the 1979 Islamic revolution. Neither U.S. unilateral nor multilateral sanctions have altered many of the Iranian policies that the United States has found objectionable. The following sections provide examples of Iranian actions that could significantly alter the position of the Administration and/or Congress on Iran sanctions.\nCatastrophic Incident Caused by an Iran-Supported Group . The Administration asserts that Iran continues to provide material support to a wide range of groups the United States designates as Foreign Terrorist Organizations. There is potential for any of these groups, with or without the knowledge or involvement of Iran, to conduct a catastrophic attack in the Middle East or elsewhere. Whether or not Iran had prior knowledge or involvement in the action, a catastrophic terrorist attack itself could cause the Administration and Congress to question Iran's trustworthiness to uphold any nuclear commitments it makes. A related possibility is an attack in the United States by Iran or Iranian proxies, against U.S. or partner interests. In such a case, the Administration and Congress could decide to impose additional sanctions on Iran, intended to reduce Iran's ability to fund and supply militant organizations. Another line of inquiry among experts is whether hardliners in Iranian-supported organizations might attempt a catastrophic terrorist attack with the express purpose of derailing any potential rapprochement between Iran and the West. According to this view, Iran-supported militants might seek to prevent Iran from potentially abandoning its commitment to militant causes in the region. A related view holds that hardliners in Iran itself, such in as the Islamic Revolutionary Guard Corps – Qods Force (IRGC-QF), might promote a catastrophic terrorist attack to prevent Iran from resuming normal relations with the United States and other partner countries. Dramatic Realignment of Political Forces in Iran . Since the June 2013 election of President Hassan Rouhani, relatively moderate forces in Iran's political system have held sway with respect to the nuclear negotiations. However, harder line figures have expressed skepticism of the Rouhani emphasis on compromise and negotiations. In several statements, Iran's Supreme Leader Ali Khamene'i has stated that he backs negotiations but is skeptical that a comprehensive solution can be reached because he distrusts U.S. intentions toward Iran. Iranian hardliners reportedly have sought to reinforce Khamene'i's distrust and to enlist him in marginalizing Rouhani and his top aides. Were these factions to succeed in that objective, it is possible that Iran's willingness to forge or uphold commitments under a comprehensive settlement could be called into question by the United States and its partners. That outcome could prompt the Administration and Congress to consider imposing additional sanctions, even if doing so could potentially strengthen the hardliners' assertions that the United States cannot be trusted to end policies the hardliners describe as \"hostile\" to Iran and its revolution. On the other hand, should Rouhani and his allies appear to become entrenched and enjoy the consistent and strong support of the Supreme Leader, some in the United States and elsewhere might seek to reinforce that unity by easing sanctions further. Advocates of that approach might argue that easing sanctions would demonstrate to Rouhani and the Iranian population the benefits of engagement and negotiations, thus creating support in Iran for further compromises with the international community. Resurgence of a Popular Uprising in Iran . Another popular uprising in Iran also could alter the prognosis for international sanctions on Iran. An uprising erupted in June 2009 over public perceptions that regime fraud had resulted in a re-election victory for then President Mahmoud Ahmadinejad. Demonstrations took place until the end of 2009 but the uprising was ultimately suppressed by the security forces. A repeat of this process, particularly if the government is seen as using brutal repressive tactics, could increase the likelihood of additional sanctions on Iran—particularly those directed at security organizations and persons involved in a crackdown. Some in the Administration and Congress also might argue that adding sanctions during a domestic uprising would signal support for anti-regime activists and help a rebellion succeed. On the other hand, a regime response to a new uprising that differs from that in 2009 could create international support to ease sanctions on Iran. If the regime did not use force to suppress such demonstrations, some in the international community might conclude that the regime was committed to accommodating international criticism even on issues of Iran's domestic political affairs. Stepping Up Direct Military Action in the Region . A shift in international views on sanctions could result from an Iranian decision to undertake direct military action in the region. A potential scenario exists in Syria, where some experts speculate that Iran could decide to massively expand its currently limited intervention to help the Asad regime try to decisively defeat its armed opposition. On the other hand, some might argue that a larger direct military intervention by Iran would represent only an incremental expansion of Iran's current support for the Asad regime and would not necessarily require sanctions beyond those already in place. A related scenario includes a renewal of hostilities between Israel and Lebanese Hezbollah, which receives copious Iranian support including supplies of advanced rockets and missiles. Israel and Hezbollah fought a major conflict for several weeks in 2006, and Iran has supported Hezbollah's intervention on behalf of the Asad regime in Syria. A flaring of major Israel-Hezbollah conflict could cause the United States and potentially its partners as well to impose additional sanctions against Iran." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 1, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h1_title", "", "", "h1_full", "h0_full h3_full h1_full", "h1_full", "h2_title h1_title h3_title", "h3_full", "h2_full", "h3_full", "h1_full" ] }	{ "question": [ "How have the sanctions imposed on Iran affected its nuclear program?", "How have sanctions affected Iranian foreign policy?", "How effective have sanctions against Iran been overall?", "How has the interim nuclear deal of 2013 affected the sanctions?", "What will likely be the next step in sanctions against Iran?", "What is the public opinion in the U.S. regarding Iran sanctions?", "How invested is Congress in the future of the Iran sanctions?", "What are criticisms of this approach?", "How could adding sanctions affect U.S. partners?", "How could a failure of negotiations lead to an international increase in Iran sanctions?", "How does the JPA affect the Administration's approach to Iran nuclear sanctions?", "How would this affect other Iran sanctions?", "What do proponents of this approach argue?", "What do opponents of this approach argue?" ], "summary": [ "Most experts agree that the multilateral sanctions imposed on Iran since 2010 have contributed significantly to producing flexibility in Iran's position on the scope of its nuclear program.", "There is similar agreement that the effect of sanctions on Iran's foreign policy—particularly on its core interests in the Middle East region—and on its human rights practices, appear to have been minimal to date.", "In assessing effectiveness, however, it is difficult to separate the effect of sanctions from other variables such as Iran's purported economic mismanagement, attitudes of the Iranian public, and Iranian politics.", "Sanctions have been eased temporarily under an interim nuclear deal of November 2013 (\"Joint Plan of Action,\" JPA), which included a commitment from the United States to impose no new nuclear-related sanctions for the JPA period (until July 20, 2014).", "Virtually any next step in U.S. and multilateral sanctions on Iran is likely to depend on the course of negotiations for a comprehensive agreement on Iran's nuclear program.", "Opinion in the United States on the future course of Iran sanctions is deeply divided.", "As Congress has been an active proponent of sanctions on Iran for many years, it will remain keenly interested in the future direction of Iran sanctions policy.", "Critics of this approach maintain that additional sanctions imposed while comprehensive nuclear settlement talks are in progress would reinforce hardliners in Iran who oppose a nuclear agreement with the United States out of distrust of U.S. intentions.", "Adding sanctions could also cause U.S. partners to separate their Iran policies from those of the United States—particularly if there is a collapse in the negotiations that appears to stem from what others consider to be excessive U.S. demands.", "Alternatively, a failure of negotiations that is attributed to Iran's unwillingness to accept seemingly reasonable offers would likely lead to a broad international increase in sanctions on Iran.", "The JPA commits the Administration and its negotiating partners to lifting \"nuclear-related sanctions\" on Iran if there is a comprehensive nuclear deal.", "Because of the substantial overlap between nuclear related sanctions and those imposed primarily because of other issues, in practice that represents a commitment to broad sanctions relief.", "Those who support that commitment maintain that Iran will not have the incentive to agree to a permanent settlement unless there is the prospect of substantial sanctions relief.", "Critics of this view argue that broad sanctions relief will provide Iran even more resources with which it can support militant movements that oppose U.S. interests in the Middle East, and will not likely compel Iran to conform to international standards of human rights practices." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, -1, -1, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 6, 6, 6, 8, 8, 8, 8 ] }
CRS_R45481	{ "title": [ "", "Introduction", "\"Affirmative Action\" as Affirmative Obligation: Dismantling De Jure Segregation", "De Jure Segregation in Higher Ed and the Equal Protection Clause", "Segregated Colleges and Universities Before 1954", "The Affirmative Duty to Eliminate De Jure Segregation in Higher Education", "United States v. Fordice (1992)", "Flagship Universities and Historically Black Colleges and Universities (HBCUs)", "Legal Challenges Following Fordice", "Unnecessary Program Duplication: Program Transfers to Mergers", "Challenges to Disproportionate Allocations of Federal and State Land Grants", "Open Questions After Fordice", "Racial Segregation and Discriminatory Intent", "Beyond De Jure: Judicial Scrutiny of Racial Classifications", "Equal Protection and Racial Classifications", "1. Bakke's Splintered Levels of Scrutiny", "2. Settling on Strict Scrutiny", "Voluntary \"Affirmative Action\" in Higher Education: Scrutinizing Admissions", "From \"Student Body Diversity\" to Concrete and Particular Diversity-Related Goals", "1. Bakke and the Diversity Interest", "2. \"Critical Mass\" and Diversity", "3. From \"Critical Mass\" to \"Concrete and Precise Goals\"", "The Harvard Plan and the Five Hallmarks of Narrow Tailoring", "A Narrowly Tailored Affirmative Action Policy: Bakke's Harvard Plan", "Ratifying the Harvard Model", "Five Hallmarks of a Narrowly Tailored Admissions Policy", "Title VI and Higher Education", "Agency Interpretation and Enforcement of Title VI", "Congress and Title VI", "Conclusion" ], "paragraphs": [ "", "The last several years have seen renewed debate over the role that race plays in higher education—a debate over \"affirmative action.\" A high-profile lawsuit challenging Harvard University's consideration of race in admitting its incoming classes, and the recent withdrawal of Obama Administration-era guidance addressing similar race-conscious policies, have focused the debate on \"affirmative action\" in perhaps its more familiar sense: the voluntary consideration of student applicants' race as a way of increasing the participation of racial minorities in higher education. Meanwhile, a recent lawsuit involving Maryland's university system has brought renewed attention to \"affirmative action\" in its other, original sense: the mandatory use of race by public higher education systems to eliminate the remnants of state-imposed racial segregation. This report addresses \"affirmative action\" in each of these two senses and discusses how the federal courts have analyzed them under the Fourteenth Amendment's guarantee of \"equal protection.\"\nThe report first considers \"affirmative action\" in its original sense: the mandatory race-conscious measures that the federal courts have imposed on de jure segregated public university systems. The Supreme Court has made clear that a state that had a segregated system of education must eliminate all \"vestiges\" of that system, including through expressly race-conscious remedies. In its consequential 1992 decision United States v. Fordice , the Court charted a three-step inquiry for assessing whether a state has fulfilled that constitutional obligation, examining whether a current policy is traceable to the de jure segregated system, has continued discriminatory effect, and can be modified or practicably eliminated consistent with sound educational policy.\nOutside this de jure context, \"affirmative action\" has come to refer to a different category of race-conscious policies. These involve what the Court once called the \"benign\" use of racial classifications —voluntary measures designed not directly to remedy past governmental discrimination, but to increase the representation of racial minorities previously excluded from various societal institutions. And in the context of higher education the Court has addressed one type of policy in particular: the use of race as a factor in admissions decisions, a practice now observed by many public and private colleges and universities.\nAs this report explains, the federal courts have come to subject these voluntary \"affirmative action\" policies to a particularly searching form of review, known today as strict scrutiny. And they have so far upheld those policies under a single theory: that the educational benefits that flow from a diverse student body uniquely justify some consideration of race when deciding how to assemble an incoming class. To rely on that diversity rationale, however, the Court now requires universities to articulate in concrete and precise terms what their diversity-related goals are, and why they have chosen those goals in particular. And even once those goals are established, a university must still show that its admissions policy achieves its diversity-related goals as precisely as possible, while ultimately \"treat[ing] each applicant as an individual.\"\nBecause both lines of cases discussed here have their roots in the Equal Protection Clause, this report focuses primarily on public universities, all of which are directly subject to constitutional requirements. But those same requirements apply equally to private colleges and universities that receive federal funds pursuant to Title VI of the Civil Rights Act of 1964 (Title VI or the Act), which similarly prohibits recipients of federal dollars from discriminating on the basis of race. This report concludes by discussing the role that Title VI plays in ensuring equal protection in higher education, both public and private, including several avenues for congressional action under the Act.", "", "Though government-sanctioned racial segregation in public education is commonly associated with primary and secondary schools, numerous states had also mandated or permitted racial segregation in institutions of higher education, including through the latter part of the 20 th century, categorically excluding black students solely because of their race. Though the Supreme Court held decades ago that state-sanctioned racial segregation in higher education violates the Equal Protection Clause, such intentional segregation, or practices arising from formerly de jure segregated university systems and their discriminatory effects, may still persist.\nAddressing such circumstances, the Supreme Court has held the Equal Protection Clause to require states to eliminate all vestiges of their formerly de jure segregated public university systems that continue to have discriminatory effect. As the Court concluded in United States v. Fordice , state actors \"shall be adjudged in violation of the Constitution and Title VI [of the Civil Rights Act]\" to the extent they have failed to satisfy this affirmative duty to dismantle a de jure segregated public university system. A state actor therefore remains in violation of the Equal Protection Clause today if it maintains a policy or practice \"traceable\" to a formerly de jure segregated public university system that continues to foster racial segregation. Where such a violation is shown, race-conscious measures are not only constitutionally permissible, but may be constitutionally required to remedy and eliminate such unconstitutional remnants.", "As in the K-12 context, a number of states maintained racially segregated public university systems and denied black students admission to post-secondary schools—including colleges, law schools, and doctoral programs —on the basis that these institutions educated white students only. Prior to 1954—the year of the Supreme Court's landmark Brown v. Board of Education decision ( Brown I ) —the Court had interpreted the Equal Protection Clause to permit state-sanctioned racially segregated public educational systems, provided that the separate schools for black students were substantially equal to those reserved for white students.\nFor example, in its 1950 decision Sweatt v. Painter , the Court addressed an equal protection claim raised by a black student challenging the University of Texas Law School's denial of his admission based on his race, pursuant to its white-only admissions policy. At the time of the plaintiff's application in 1946, the state did not have a law school that admitted black students. Denying the plaintiff's requested relief for admission, the state trial court instead granted additional time to Texas to create a law school for black students; the state thereafter created a law school at the Texas State University for Negroes. The Supreme Court, however, held that the law school—which, among other features, lacked accreditation —did not offer an education \"substantially equal\" to that which the plaintiff would receive at the University of Texas Law School. On that basis—the absence of a separate but equivalent legal education—the Court held that the Equal Protection Clause required the plaintiff's admission to the University of Texas Law School.\nA decisive turn in the Court's interpretation and application of the Equal Protection Clause, however, came by way of its 1954 decision in Brown I . There, the Court held for the first time that race-based segregation \"in the field of public education\" violates the Equal Protection Clause. The Court concluded that race-based segregation in public schools deprives minority students of equal educational opportunities, and observed that segregation commonly denotes inferiority of the minority group. Segregated educational facilities, the Court concluded, are \"inherently unequal.\"\nThe Court's holding in Brown I applies with equal force to public higher education—that is, to public colleges and universities —as does the Court's subsequent 1955 decision in the same case (\" Brown II \"), in which the Court addressed how school authorities and federal courts were to implement the mandate of Brown I . Indeed, one of the Court's earliest applications of Brown I and Brown II was in the higher education context. In that case, State of Fla. Ex. Rel. Hawkins v. Board of Control , the Supreme Court vacated a Florida supreme court decision that declined to order the state's white-only law school to admit a black student. Relying on language in Brown II that courts could consider practical obstacles to a school's transition to desegregation, the Florida court refused to order the plaintiff's admission. The Supreme Court vacated the state court's decision, concluding that in the case of admitting a black student \"to a graduate professional school, there [wa]s no reason for delay\" and that he was \"entitled to prompt admission under the rules and regulations applicable to other qualified candidates.\"", "Following Brown I and Brown II , the Court's equal protection jurisprudence in the public education context expanded significantly to address questions regarding the scope and sufficiency of state actions to \"dismantle\" racially segregated systems in public school districts across the country, and various challenges to district court-ordered remedies. As the Court revisited these legal standards over time, it continued to describe the affirmative duty of formerly segregated public school entities as the duty to \"take all steps necessary to eliminate the vestiges of the unconstitutional de jure system\" to the extent practicable. Turning to the context of higher education, the Court addressed, in its 1992 decision United States v. Fordice , how these equal protection principles and legal standards apply to a state's affirmative duty to dismantle a formerly de jure segregated public university system.", "Though it had \"many occasions to evaluate whether a public school district has met its affirmative obligation to dismantle its prior de jure segregated system in elementary and secondary schools,\" the Court explained, Fordice presented the issue of \"what standards to apply\" in determining whether the state has met this obligation in the university context.\nAt issue before the Court was Mississippi's prior de jure public university system. The Court observed that since establishing the University of Mississippi as an institution of \"higher education exclusively of white persons\" in 1848, Mississippi had created four more exclusively white institutions and three exclusively black institutions through 1950. Thereafter, it continued to maintain its racially segregated public university system, and admitted its first black student to the University of Mississippi in 1962 \"only by court order.\" For the \"next 12 years,\" the state's segregated university system \"remained largely intact.\" Around 1987, when the case went to trial, over 99 percent of the state's white students attended the five universities that had been formerly white-only, while the three formerly black-only institutions had student bodies between 92 percent to 99 percent black.\nCiting its precedent addressing de jure segregation in the K-12 context, the Court stated that \"[o]ur decisions establish that a [s]tate does not satisfy its constitutional obligations until it eradicates policies and practices traceable to its prior de jure dual system that continue to foster segregation.\" Perhaps critically, in the context of remedying a formerly de jure segregated system, a state's \"adoption and implementation of race-neutral policies alone \" is not sufficient to demonstrate that it has \"completely abandoned its prior dual system.\" Aside from segregative admissions policies, the Court explained, a state's other policies may shape and determine student choice and attendance, and continue to foster segregation.\nInstead, to determine whether a state has satisfied its affirmative duty to dismantle its de jure public university system, the Court set out a three-step analysis. First , the analysis examines whether the challenged policy or practice maintained by the state is \"traceable to its prior [ de jure ] system.\" By way of example, the Court identified four policies that, in its view, were \"readily apparent\" vestiges of de jure segregation:\nadmissions standards based on a test-score range originally adopted for discriminatory reasons; unnecessary program duplication throughout the university system (e.g., multiple institutions offering the same \"nonbasic\" courses); the state's academic mission assignments to its higher education institutions (e.g., assigning the broadest academic missions to only formerly white-only institutions and the narrowest academic mission to a formerly black-only institution); and the continued operation of all public universities established in the de jure segregated system.\nWith respect to traceability, the Court's analysis reflects that where a current policy functions based on distinctions or a framework created in a formerly de jure system, traceability can be shown. For example, when concluding that the state's designation of academic missions to its universities was traceable to de jure segregation, the Court cited evidence that the state's current method of assigning its universities into three academic missions levels largely mirrored a three-tiered grouping of its universities in the de jure system. In addition and more generally, an interim change or new, nondiscriminatory justification for a current policy does not necessarily sever its traceability to a de jure system. Where the traceability of a policy or policies is shown, a party need not show discriminatory intent with respect to those challenged policies.\nWhere traceability is not shown—that is, where the policies \"do not have such historical antecedents\" to de jure segregation—an equal protection challenge would then require \"a showing of discriminatory purpose.\" In those instances, the Court explained, \"the question becomes whether the fact of racial separation establishes a new violation of the Fourteenth Amendment under traditional principles.\"\nSecond , once traceability is shown, the analysis turns to whether those traceable policies have continued discriminatory or \"segregative\" effects in student choice, enrollment, or other facets of the university system. At this stage, the Court noted that a court should not consider \"this issue in isolation,\" but rather examine the \"combined effects\" of all the challenged policies together \"in evaluating whether the State ha[s] met its duty to dismantle its prior de jure segregated system.\" In light of this instruction, it appears the focus of the second step of the test is not on establishing causation between specific racial disparities and specific policies—by this stage, a court has already found traceability—but rather to evaluate whether a state has sufficiently dismantled its formerly de jure system. Consistent with the state's burden of proving it has dismantled its de jure segregated system, the state must show the absence of segregative effects; plaintiffs are not required to establish this second element.\nThird , because traceable policies that have discriminatory effects \"run afoul of the Equal Protection Clause,\" such policies must accordingly \"be reformed to the extent practicable and consistent with sound educational practices.\" Thus, at the third step, a court assesses whether traceable policies can be \"practicably eliminated\" \"consistent with sound educational practices,\" with the burden on the state to show that the challenged policies are \"not susceptible to elimination without eroding sound educational policy.\" Because the Court remanded the case to the lower court to address practicable elimination, its analysis in Fordice on this point is limited. The Court suggested, however, that if a current policy lacks sound educational justification, it reasonably follows that it can be practicably eliminated in part or in whole. In addition, the Court observed that in some cases, a merger or closure of institutions could be constitutionally required to eliminate vestiges, should other methods fail to eliminate their discriminatory effects. Finally, the Court repeatedly stated that so long as vestiges remain, which have discriminatory effects, the state remains in violation of the Equal Protection Clause unless it can show it cannot practicably eliminate those policies or practices.\nIn addition, Justice O'Connor, in a separate concurring opinion in Fordice , emphasized the \"narrow\" circumstances under which a state could maintain a traceable policy or practice with segregative effects. In her view, courts may \"infer lack of good faith\" on the part of the state if it could accomplish educational objectives through less segregative means, and the state has a \"'heavy burden'\" to explain its preference for retaining the challenged practice. Moreover, even if the state shows that retaining certain traceable policies or practices is \"essential to accomplish its legitimate goals,\" Justice O'Connor asserted that the state must still prove it has \"counteracted and minimized the segregative impact of such policies to the extent possible.\"", "The Court in Fordice observed that the closure or merger of certain institutions may be constitutionally required, consistent with its holding that any vestige of a de jure segregated system that continues to have discriminatory effect must be eliminated to the extent practicable and consistent with sound educational policy. Yet that invited a new—and more difficult—set of questions: which institutions would be most subject to closure or merger, and under what circumstances would such action be required?\nSignificantly, the Court did not categorically identify which institutions would be most subject to such remedial action —a state's flagship, formerly white-only institutions from which a de jure system originated, for example, or formerly black-only institutions created to preserve white-only admission at other institutions. Instead, the Court concluded that it was unable to determine—on the record presented in Fordice —whether closures or mergers were required in that case and directed the lower court on remand to \"carefully explore\" several considerations. This instruction to the lower court, while not part of the holding in Fordice , suggests that several factors are relevant for determining whether merger or closure is constitutionally required. In addition, the Court observed that maintaining all eight higher education institutions in Mississippi was \"wasteful and irrational,\" particularly in light of the close geographic proximity between some of the universities. This observation suggests that close proximity between institutions offering similar programs could be a relevant factor in assessing remedial closure or merger as well.\nRegarding the fate of a state's historically black institutions, Justice Thomas, in a concurring opinion, did not read Fordice to \"forbid[]\" those institutions' continued operation or \"foreclose the possibility that there exists 'sound educational justification' for maintaining historically black colleges as such .\" Justice Thomas emphasized that \"[d]espite the shameful history of state-enforced segregation,\" historically black colleges and universities were and remain institutions critical to the academic flourishing and leadership development of many students, and observed that \"[i]t would be ironic, to say the least, if the institutions that sustained blacks during segregation were themselves destroyed in an effort to combat its vestiges.\" In his view, though a state is not constitutionally required to maintain its historically black institutions as such, their continued operation is constitutionally permissible, so long as admission is open to all students \"on a race-neutral basis, but with established traditions and programs that might disproportionately appeal to one race or another.\"", "Following Fordice , plaintiffs, including the United States in Title VI enforcement actions, have brought suit challenging practices allegedly traceable to a state's de jure segregated university system. Challenged practices have included unnecessary program duplication, which the Court identified in Fordice as one of the \"readily apparent\" remnants of de jure segregation, as well as others such as scholarship policies, funding practices, and the use of curricula at formerly white-only institutions with little representation of black history and culture. More recently, in 2018, a legal challenge against the State of Maryland alleged that practices relating to capital and operational funding, unnecessary program duplication, and the limited institutional missions of the state's formerly black-only institutions are traceable to the state's formerly de jure segregated higher education system.\nTo date, however, only a few federal appellate courts have had occasion to analyze Fordice -based claims, and the Supreme Court has not, since its 1992 decision, addressed claims challenging higher education policies or practices as unconstitutional vestiges of de jure segregation. Though development of the Fordice standard in federal case law is limited, the few appellate decisions applying Fordice provide at least some analytical examples and reflect discernible differences in approach, particularly with respect to the evidence sufficient to satisfy the third element of the Fordice standard—that elimination of a practice is not possible, despite being traceable and having continued discriminatory effect.", "As discussed above, the Supreme Court in Fordice identified \"unnecessary program duplication\" as a practice traceable to the prior de jure segregated system of higher education at issue in that case, stating that \"it can hardly be denied\" that such duplication was a requisite feature of the prior dual system because \"the whole notion of 'separate but equal' required duplicative programs in two sets of schools.\" Drawing upon that rationale, courts that have addressed unnecessary program duplication have generally had little difficulty tracing duplicative courses and degree programs to prior de jure segregation. On the matter of if and how program duplication might be eliminated, however, there is lesser consensus. Generally, federal courts have considered several methods for eliminating program duplication, such as transferring existing programs from one institution to another, eliminating certain programs altogether, creating cooperative programs, and—perhaps most drastically—merging institutions.", "Plaintiffs have also raised equal protection challenges to state funding practices that allocate all or most of their federal and state land grants to institutions that were formerly white-only in a de jure system while dedicating significantly less or no funds to formerly black-only institutions. More specifically, these cases have concerned a state's allocation of federal land grants provided annually to support research on agricultural issues and the dissemination or \"extension\" of that research.\nAt issue in Knight v. Alabama , for example, was the State of Alabama's allocation of federal funds between its two land grant universities, Auburn University, formerly white-only in the de jure system, and Alabama A&M University (A&M), formerly established as black-only. The state allocated to Auburn the entirety of Alabama's approximately $4 million in federal aid for agricultural research, and allocated an additional $14 million to Auburn in state funds. Meanwhile, the state had \"for years\" allocated no federal aid to A&M and given state funds for agricultural research in amounts that \"today still totals less than $200,000 each year.\" The U.S. Court of Appeals for the Eleventh Circuit held that the state's current funding allocation was traceable to de jure segregation and instructed the lower court on remand to make determinations with respect to the second and third parts of the Fordice test. On the issue of practicable elimination, the Eleventh Circuit observed that reduced efficiency would not necessarily render a proposed modification impracticable or educationally unsound.\nBy contrast, the Fifth Circuit affirmed a district court's ruling that permitted a state to retain its traceable funding practices. There, despite finding traceability and discriminatory effects, the district court had concluded, based on inefficiencies related to running more than one agricultural research program, that it was not practicable for the state to eliminate its exclusive funding allocation to its formerly white-only land grant institution.", "The Supreme Court has not revisited its analysis in Fordice , leaving open questions about the permissible applications of its three-part legal standard to an array of fact patterns and legal theories. Similarly, as discussed above, few courts of appeals have addressed claims under Fordice , limiting the development and interpretation of Fordice in federal case law.\nOne such unresolved question is under what circumstances, if any, traceability can be established under Fordice when a state makes changes to an originally discriminatory policy such that the current policy functions differently, but there is still some evidence of traceability between the two, or perpetuation of similar segregative effects under the changed policy as under the original policy. In addition, the Supreme Court and circuit courts have not yet expressly addressed how far a district court may go in remedying an unconstitutional vestige or remnant of a prior de jure public university system. In the K-12 context, the Supreme Court has upheld district court orders that set certain faculty and student ratios at schools in noncompliant school districts, to desegregate them pursuant to Brown and its progeny . It remains unclear, however, whether the district courts enjoy similar authority under Fordice to order similarly extensive remedies. Indeed, the few cases alleging Fordice -type claims that did reach the federal appellate courts ultimately resolved in settlements, thus leaving little judicial guidance on the scope of a court's authority to mandate specific remedies if a state fails to dismantle its formerly de jure segregated public university system. With respect to these unresolved questions, the Supreme Court's express reliance in Fordice on precedent addressing de jure segregation in the primary and secondary school context suggests that at least some of this same precedent should inform future analyses, with adaptation to the higher education context.", "A finding of a state entity's intent to segregate students by race in the higher education context is critical to showing a violation of the Equal Protection Clause, and has significant legal consequences. In such cases of de jure —that is, intentional, state-imposed —segregation, the state has an affirmative duty under the Equal Protection Clause to eliminate all vestiges of its de jure system by dismantling the infrastructure and other mechanisms that produced the discriminatory segregation. According to the Supreme Court's 1992 Fordice decision, this duty commands more than just the repeal of state laws sanctioning racial segregation in higher education. The state must also uproot or reform any policy or practice \"traceable\" to its formerly de jure system that continues to have discriminatory effect.\nIn Fordice , the state's intent to racially segregate its higher education system was plain: with the founding of the University of Mississippi in 1848, Mississippi explicitly set out to create a public university \"dedicated to the higher education exclusively of white persons,\" and racially segregated its public university system over the next 100 years through the creation of other \"exclusively white institutions\" and \"solely black institutions.\" Nor was Mississippi's system unique in this regard. \"[D]ual system[s]\" of public higher education—one for black students, another for white—were codified in other state and local laws throughout the country. Thus far, federal courts that have addressed de jure segregation in higher education have done so in the context of such codified segregation, as in Fordice .\nThe absence of a codified dual system of higher education, however, may not mean that a university system was not or is not intentionally segregated. As reflected in the Supreme Court decision Keyes v. School District No. 1, Denver, Colorado , even when state authorities have not segregated their public schools by statute, they may still have engaged in unconstitutional racial segregation. Thus, in the K-12 context, federal courts have found de jure segregation based on evidence reflecting a state actor's impermissible segregative intent. This line of cases would appear to apply in the context of higher education as well. As the Court noted in Fordice , where a plaintiff is unable to show that a policy or practice is a vestige of prior de jure segregation, she may nonetheless prove a \"new\" constitutional violation with evidence of a present-day intent to racially segregate students \"under traditional principles\" governing discriminatory intent. This would be consistent with the Court's application of Brown and its progeny broadly across \"the field of public education,\" including higher education, as reflected in Fordice .\nBecause the Supreme Court has yet to address segregative intent in higher education, it is unclear what intent evidence would be sufficient to establish a de jure segregated public university or institution, apart from a law codifying such segregation. As a general matter, though, a court's determination of discriminatory intent is a fact-intensive, \"sensitive inquiry.\" And the Supreme Court has observed that this is even more so in cases alleging de jure segregation in public education. Where the evidence indicates, for example, that a state actor undertook a policy or practice knowing that doing so would have the \"foreseeable\" effect of segregating students by race, that evidence may support an inference of de jure segregation. In addition, at least in the K-12 context, a finding of a state entity's segregative intent in one part of a school system creates a rebuttable presumption that segregation found in other parts of the same system was also intentional. De jure segregation proved by such nonstatutory evidence generally triggers the same affirmative obligation on the state to eliminate the vestiges of its state-imposed segregation, as when de jure segregation is shown through state or local laws.\nThough segregative intent analyses at the K-12 level may be instructive, the guidance these decisions provide may be limited by the nature of the evidence at issue in those particular cases: the method of student assignment to elementary or secondary schools, for example, or the drawing of attendance zones to create racially segregated schools. It appears unlikely that such evidence would be at issue or directly applicable in cases alleging segregative intent at the collegiate or graduate level. Nonetheless, these decisions generally suggest that categorical distinctions—between evidence indicative of de jure segregation and evidence of existing segregation insufficiently linked to state intent—are difficult to draw. Indeed, given the difficulties that can arise in a court's analysis of \"segregative intent,\" over the years a number of Justices have called into question the rationale and basis for the distinction between de jure and so-called de facto segregation, though the majority of the Court has recognized and continues to recognize this distinction.\nWhatever the open questions may be regarding the evidence sufficient to show segregative intent, particularly in the higher education context, Fordice instructs that a plaintiff need not provide evidence of new discriminatory intent when alleging that a state has failed to eliminate vestiges of a prior de jure segregated system. And with respect to remedying intentional racial segregation, the Court has repeatedly held that a state not only may use a broad array of explicit race-conscious policies and practices to remedy its constitutional violation, but often must do so. By themselves, race-neutral measures simply may not be enough, the Court has explained, to provide equitable, make-whole relief for intentionally segregative acts.\nThis affirmative obligation to consider race arises, however, only in the context of de jure segregation. Outside that de jure context, institutions of higher education subject to the Equal Protection Clause have no such duty to remedy racial segregation. Nor may they—or the federal courts, for that matter—use the same broad array of race-conscious measures available for remedying de jure segregation.\nDe jure segregation, however, is not the only context in which race-conscious measures in higher education may be used. For over forty years colleges and universities have considered race as a way of increasing the racial diversity of their student bodies, independent from a legal basis relating to de jure segregation. Thus far, however, the Supreme Court has addressed only one type of discretionary race-conscious measure in the higher education context: admissions policies. And when evaluating these discretionary policies, the Court reviews them under a notably different analytical lens, looking to their precision in achieving certain concretely defined and \"compelling\" educational interests, as explained more fully below.", "\"Affirmative action\" in its original sense grew out of the states' affirmative obligation under the Equal Protection Clause to rid their public institutions of the lingering vestiges of de jure segregation. But \"affirmative action\" has also come to refer to race-conscious policies developed outside this de jure context. These are policies voluntarily adopted by institutions to help racial minorities overcome the effects of their earlier exclusion. And unlike the measures ordered by the courts to right the wrongs of de jure segregation, these policies are strictly voluntary, with their legality consequently turning on constitutional considerations unlike those involved in the de jure context.\n\"Affirmative action\" in this more familiar, voluntary sense has also been among the most contentious subjects in constitutional law. In the forty years since Regents of the University of California v. Bakke , when the Court first addressed those programs' constitutionality, the Justices have divided sharply over when or whether such programs can survive constitutional scrutiny. And a major point of disagreement among the Justices—lingering to this day —is how strictly to review those policies and what the government or other state entity must do to justify its use of \"benign\" racial classifications. In recent decisions, the Court has reviewed such classifications under a seemingly \"elastic\" regime of strict scrutiny, accepting those classifications only where they have been narrowly tailored to serve compelling government interests.", "The constitutional guarantee of equal protection broadly prohibits the government from employing \"arbitrary classification[s].\" And the use of racial classifications in particular has long been of special concern for the courts. Indeed, this \"heightened judicial solicitude\" for racial categorizing has roots nearly as old as the Fourteenth Amendment itself. As the Supreme Court explained in an early decision under the Amendment, the \"spirit and meaning\" of the Equal Protection Clause was \"that the law in the States shall be the same for the black as for the white; that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, ... that no discrimination shall be made against them by law because of their color.\" In the decades since, the Court has only made clearer that it regards the government's use of racial classifications as \"inherently suspect\" and therefore subject to more demanding scrutiny than other classifications, which are typically reviewed only for basic rationality.\nThere has been significant disagreement, however, over just how rigidly the courts should scrutinize a racial classification, especially when the point of the classification is to benefit racial minorities, as in the case of affirmative action. That issue came before the Court for the first time in Bakke , involving a challenge to an affirmative action admissions program begun at the then newly created medical school at the University of California at Davis (the Medical School). And the Court's fractured decision there prefigured the central disagreements that the Justices still face in reviewing so-called \"benign\" racial classifications.", "In the early 1970s, not long after the Medical School opened, it adopted a race-conscious admissions policy to increase its enrollment of certain \"disadvantaged\" students. Under that policy, the school each year would set aside 16 seats in its entering class of 100 specifically for members of this \"disadvantaged\" group, to be admitted by a \"special admissions\" committee. Although many white students sought admission under this \"special\" policy, the committee considered only students of specifically identified racial minorities. After Allan Bakke, a white male, twice sought—and was denied—admission to the school, he brought suit challenging the set-aside under the Equal Protection Clause as well as Title VI, which prohibits institutional recipients of federal funds—like the Medical School—from discriminating on the basis of race.\nBakke's case eventually found its way to the Supreme Court and into the hands of a divided bench. The Justices found themselves particularly at odds over the case's threshold question—what level of scrutiny the Court should apply in reviewing Bakke's challenge. Justice Stevens, writing for a quartet of Justices, concluded that the program violated Title VI, sidestepping the constitutional question. Another four Justices would have reached the equal protection challenge, and in doing so would have required the Medical School to point to \"important governmental objectives\" that justified its admissions policy's use of \"remedial\" racial classifications, along with evidence that their use was \"substantially related to\" achieving those important objectives . Under that standard—a form of intermediate scrutiny —these Justices would have upheld the policy.\nJustice Powell, announcing the Court's judgment but writing for himself, insisted that all \"racial and ethnic distinctions\" drawn by the government must be regarded as \"inherently suspect,\" calling for \"the most exacting judicial examination.\" What that meant in Bakke , according to Justice Powell, was that the Medical School would need to prove that its use of the \"special admissions\" carve-out was \"precisely tailored to serve a compelling governmental interest\"—the standard of review now known simply as strict scrutiny . And because, in his view, the school could come forward with no such proof, Justice Powell concluded that its affirmative-action policy could not survive the Court's scrutiny, whether under the Fourteenth Amendment or the overlapping standards of Title VI.", "Because Bakke yielded no majority opinion, it could only hint at how the Court might treat other \"benign\" race-conscious policies that did not involve the sort of apparent quota invalidated in that case or cases outside the unique context of higher education. That uncertainty would last another decade, as the Court, in another series of splintered decisions, weighed constitutional challenges to differently structured affirmative action policies in other contexts, each time without resolving the appropriate standard of review.\nThat uncertainty appeared to abate with the Court's 1989 decision in Richmond v. J.A. Croson , Co. There, for the first time, five Justices clearly signaled that they would apply strict scrutiny to affirmative action plans implemented at the state and local levels, including the program they invalidated in that case, involving the City of Richmond's set-aside of public work funds for minority-owned businesses. But the next year, in Metro Broadcasting, Inc. v. FCC , the Court, in another 5-4 ruling, suggested that it would review federal affirmative action plans differently. In the Court's view there, \"benign race-conscious measures mandated by Congress \" need only \"serve important governmental objectives\" and be \"substantially related to the achievement of those objectives\"—satisfying an intermediate level of scrutiny.\nJust a few years later, however, in Adarand Constructors, Inc. v. Peńa , the Supreme Court reversed course. There, in a federal contracting case, the Court drew a different lesson from its pre- Metro line of race-classification cases: in the view of the Adarand majority, \"any person, of whatever race, has the right to demand that any governmental actor subject to the Constitution justify any racial classification subjecting that person to unequal treatment under the strictest judicial scrutiny.\" That simple rule therefore precluded the divided regime upheld in Metro Broadcasting , subjecting the states' use of racial classifications to strict scrutiny, while relaxing the review of comparable classifications enacted by Congress. Instead, the Adarand Court held, \"[f]ederal racial classifications, like those of a State, must serve a compelling governmental interest, and must be narrowly tailored to further that interest.\" And to the extent that Metro Broadcasting was \"inconsistent\" with that uniform rule, it was accordingly overruled.\nAfter Adarand strict scrutiny therefore became the test of any classification that subjected individuals to unequal treatment based on their race, no matter which state actor was doing the classifying. And the Court expressly extended that holding to the context of higher education. As the Court reaffirmed in Fisher v. University of Texas , \"because racial characteristics so seldom provide a relevant basis for disparate treatment,\" \"[r]ace may not be considered [by a university] unless [its] admissions process can withstand strict scrutiny.\"\nIt therefore appears that a classification that subjects individuals to unequal treatment because of their race, even if for a \"benign\" purpose, will have to satisfy strict scrutiny. In its canonical formulation, that test calls for measuring such classifications along the two dimensions Justice Powell identified in Bakke : (1) the classification must serve a compelling governmental interest and (2) the use of that classification must also be narrowly tailored to achieving that interest. The government has the burden of proving both, and neither is easy to do. Indeed, in the sixty years that separated the Court's now-repudiated decision in Korematsu v. United States from Grutter v. Bollinger , when the Court first upheld an affirmative action policy at a public university, the only other \"racial classifications upheld under strict scrutiny [have been] race-based remedies for prior racial discrimination by the government.\" To many commentators \"strict scrutiny\" has thus come to seem rather more \"strict in theory, but fatal in fact\" —a point sometimes echoed by the Justices themselves.", "Strict scrutiny may typically be fatal in fact, but affirmative action policies in higher education have been a notable exception. Partly this has to do with the Equal Protection Clause itself, and the often crucial difference that a particular context makes in deciding cases under that \"broad provision[].\" And for several Justices the context of affirmative action, involving the arguably \"benign\" use of race, has seemed particularly distinctive. Yet, despite this contextual difference, the Court has made it clear that its scrutiny of race-conscious admission policies is still every bit as strict. Or, as Justice Kennedy put the point in the first Fisher case, even though \"[s]trict scrutiny must not be 'strict in theory, but fatal in fact,'\" it must also \"not be strict in theory but feeble in fact.\"\nThis seeming tension—between the strictness of the Court's scrutiny and its approval of race-conscious admissions policies—has led the Court to adjust its framework for scrutinizing similar policies over the years. And since Bakke that framework appears to have shifted in two significant respects, corresponding to each of the two prongs of strict scrutiny. First, the Court now requires public universities that adopt affirmative action admissions policies to explain in increasingly \"concrete and precise\" terms what diversity-related educational goals those policies serve and why the university has chosen to pursue them. Anything less, the Court has held, would fail to present an interest sufficiently compelling under strict scrutiny. Second, the Court also now expects universities to prove that their policies achieve those \"concrete and precise goals\" in an appropriately \"flexible\" way, as most clearly exemplified by the Harvard plan that Justice Powell singled out in Bakke . That model has yielded \"five hallmarks\" of an appropriately tailored affirmative action policy, criteria that have since guided lower courts in assessing other affirmative action plans.", "For a university's affirmative action policy to survive strict scrutiny, a university must first \"demonstrate with clarity that its 'purpose or interest is both constitutionally permissible and substantial.\" The Court has recognized only a single interest that meets that standard: \"the attainment of a diverse student body.\" What exactly that interest amounts to—and how, consequently, a university should ensure it has appropriately tailored its policy to achieve that interest—has been a point of uncertainty since Bakke . With its two decisions in Fisher v. University of Texas , however, the Court appears now to require a more \"concrete and precise\" articulation of the diversity-related educational goals a university hopes to achieve through its affirmative action admissions policy. In addition, the Court also now appears to expect a university to provide a reasoned and principled explanation of why the school believes it important to achieve those goals.", "The diversity rationale emerged with the Court's first encounter with a voluntary affirmative-action policy, in Bakke . There—in an opinion for the Court joined by no other Justice—Justice Powell explained what interests clearly would not count as compelling enough to satisfy strict scrutiny. Those included the Medical School's alleged interest in having \"some specified percentage\" of certain racial or ethnic groups in a student body and its interest in \"remedying ... the effects of societal discrimination,\" as well as the school's particular interest in \"the delivery of health-care services to communities currently underserved.\" None of these interests, Justice Powell concluded, provided a reason substantial enough to justify turning to race-conscious measures. Nor has the Court said otherwise since.\nBut Justice Powell was also clear about what interest he believed would satisfy strict scrutiny: \"student body diversity.\" And just as importantly, he also explained why: colleges and universities, he suggested, had a uniquely academic interest in promoting an \"atmosphere of speculation, experiment, and creation\"—an interest, more simply, in \"academic freedom.\" That interest, Justice Powell observed, was not only \"essential to the quality of higher education,\" but had also long \"been viewed as a special concern of the First Amendment.\" Thus the \"right to select those students who will contribute the most to the robust exchange of ideas\" not only allowed a university \"to achieve a goal that is of paramount importance in the fulfillment of its mission,\" it also represented a \"countervailing constitutional interest\" that, in Justice Powell's view, called for the Court's respect.\nIn Bakke , Justice Powell set out the basic theory for why diversity could justify an affirmative action policy, at least \"in the context of a university's admissions program. But he gave few details about what that interest encompassed. As he saw it, that interest must have its limits: pursuing diversity would not allow a university to resort to racial quotas, for example, nor could the school disregard other \"constitutional limitations protecting individual rights.\" But Justice Powell declined to indicate where those other limitations fell or how they circumscribed the goals a university could permissibly seek in the name of a diverse student body. And because the Bakke Court fractured as it did, with no one opinion commanding a majority of the Justices' votes, the lessons of that case have been hard to discern, especially after the Court appeared to decline a similar diversity rationale in later cases outside higher education. Perhaps unsurprisingly, the lower courts soon came to reflect this uncertain division of opinion in later cases involving affirmative action programs at other public universities.", "Some clarity over Bakke 's diversity theory came in 2003, with a pair of decisions reviewing affirmative action policies of the University of Michigan: Grutter v. Bollinger , challenging the university's law school admission program, and Gratz v. Bollinger , challenging the policy used by the university's undergraduate program. Grutter , especially, helped clarify what an interest in diversity involved, and how a university could rely on that interest to defend a race-conscious admissions policy.\nUnder the admissions policy of the University of Michigan Law School ( the Law School) challenged in Grutter , applicants to incoming classes were admitted under a policy that weighed a composite of the applicant's LSAT score and undergraduate GPA along with several more individualized factors, including the applicant's race. The Law School set out to create classes with what it called a \"critical mass of underrepresented minority students,\" to ensure that those students felt \"encourage[d] ... to participate in the classroom and not feel isolated.\" The school, however, never explicitly assigned a numerical target for any particular racial group, though it did track, on an ongoing basis, \"the racial composition of the developing class.\" A rejected white applicant claimed the Law School's admission policy discriminated against her based on her race, in violation of the Equal Protection Clause and Title VI. And her challenge eventually reached the Supreme Court, alongside its companion case, Gratz , challenging the university's admissions policy for its undergraduate program.\nGiven the uncertainties surrounding Bakke 's bottom line, the first major question in Grutter centered on the basic goal of the Law School's policy: Is achieving student diversity an interest compelling enough to justify a school's use of race at all in its admissions decisions? And for the first time the Supreme Court held that it was. Writing for a clear majority, Justice O'Connor adopted the view Justice Powell set out in Bakke : \"student body diversity is a compelling state interest that can justify the use of race in university admissions.\"\nMore than that, the Court made clear that it was willing to defer to the Law School's understanding of that interest, and its goal of \"enroll[ing] a 'critical mass' of minority students.'\" As Justice O'Connor explained for the Court, by enrolling a \"critical mass\" of students, the Law School was trying to achieve the \"substantial\" \"educational benefits that diversity is designed to produce\"—benefits such as \"promot[ing] cross-racial understanding,\" \"break[ing] down racial stereotypes,\" \"promot[ing] learning outcomes,\" and \"better prepar[ing students] as professionals.\" Achieving a \"critical mass\" of underrepresented students, the Court agreed, was simply one way that the Law School could try to vindicate those diversity-related educational benefits. And because this interest was deemed compelling enough to satisfy strict scrutiny, the Court was therefore willing to treat the school's use of the \"critical mass\" target as a permissible proxy for achieving those benefits.\nNot all the Justices agreed, however, that the university's invocation of \"critical mass\" made the diversity interest more concrete or compelling. In dissent, Justice Kennedy sided with Chief Justice Rehnquist's view that \"the concept of critical mass [was] a delusion used by the Law School to mask its attempt to make race an automatic factor in most instances and to achieve numerical goals indistinguishable from quotas.\" That \"delusion,\" according to Justice Kennedy, did not just make the school's appeal to \"critical mass\" \"inconsistent with [the] individual consideration\" of applicants. It also, in his view, turned the school's admissions policy into a veiled form of racial balancing. And all four dissenting Justices found that result incompatible with the Equal Protection Clause.", "Grutter appeared to settle the major question left open by the fractured decision in Bakke : whether achieving student diversity was a compelling enough interest for a public university to justify its consideration of race in its admissions policies. Grutter confirmed not only that the Court still viewed student diversity as a compelling interest, but also that a school could vindicate that interest by seeking to enroll a \"critical mass\" of underrepresented minorities in its incoming classes.\nThe ruling also effectively swept aside contrary lower court decisions that struck down other state universities' affirmative action policies, including in Texas. In the wake of Grutter , the University of Texas (UT Austin) decided to revisit its applicant review process, eventually choosing to introduce race as one of the factors considered in its admissions policy. Under the revised policy, UT Austin would continue to admit all Texas high school students who graduated in the top ten percent of their class, and fill in the rest of its incoming undergraduate classes using an index score incorporating two assessments: (1) an \"Academic Index\" (AI) that weighed the applicant's SAT score and academic record; and (2) a \"Personal Achievement Index\" (PAI) that included a more holistic appraisal of the student's character and, following post- Grutter revisions, also factored in the applicant's race. Abigail Fisher, a white Texas student whose application to UT Austin was rejected under this process, challenged the AI-PAI system. That system, she argued, had discriminated against her as a white applicant by allegedly allowing race to figure in the decision to reject her application, in violation of the Equal Protection Clause. Her challenge eventually made its way to the Supreme Court as Fisher v. University of Texas , where the Supreme Court remanded the challenge to the lower court to review UT Austin's policy under strict scrutiny ( Fis her I ), and then upon appeal upheld the school's admission policy ( Fis her II ).\nIn her suit, Fisher did not challenge Grutter 's basic holding—that the university had a compelling interest in student diversity, or even that the school could pursue that interest in diversity by enrolling a \"critical mass\" of underrepresented minorities. But when the Court finally took up her challenge on the merits in Fisher II , Justice Kennedy also took the occasion to revisit Grutter 's analysis, offering several \"controlling principles\" on behalf of the four-Justice majority that would guide its review of UT Austin's race-conscious admissions policy.\nIn Fisher II , as in Fisher I , Justice Kennedy confirmed that Grutter 's bottom line remained good law: \"obtaining 'the educational benefits that flow from student body diversity,'\" he confirmed, was still an interest compelling enough to satisfy strict scrutiny. But perhaps mindful of his dissent in Grutter , Justice Kennedy also clarified that \"asserting an interest in the educational benefits of diversity writ large\" would not suffice. That, he explained, would make the \"university's goals\" too \"elusory or amorphous\" \"to permit judicial scrutiny of the policies adopted to reach them.\"\nThe Court thus cut two new benchmarks for reviewing a university's asserted interest in resorting to race as a factor in its admissions policy. First, the university had to articulate \"precise and concrete goals\" that its race-conscious policy served, goals \"sufficiently measurable\" under \"judicial scrutiny.\" And, second, the university had to provide a \"'reasoned, principled explanation' for its decision to pursue those goals\"—a sound academic rationale, in other words, for wanting to achieve whatever diversity-related goals it set for itself. In the majority's view, UT Austin's use of race in its admissions decisions measured up to both benchmarks.\nAccording to the Court, the first benchmark was straightforwardly met: the goals UT Austin articulated, Justice Kennedy pointed out, effectively \"mirror[ed] the 'compelling interest' th[e] Court ha[d] approved in its prior cases.\" And under Grutter , the majority concluded, those benefits passed constitutional muster.\nNotably, however, achieving critical mass was not among those Justice Kennedy listed. Nor did Justice Kennedy return to the question he raised in Grutter : whether the \"critical mass\" concept even has a place among the \"concrete and precise goals\" that could survive strict scrutiny. But that question was also arguably beside the point in Fisher II . As Justice Kennedy emphasized for the Court, the goals that UT Austin articulated were clearly constitutionally adequate, having come nearly verbatim from the Court's case law. And the university's officials had all offered \"the same, consistent 'reasoned, principled explanation'\" for pursuing them—meeting the Court's second benchmark. That was apparently enough for the Court to conclude that a compelling interest justified the university's diluted use of race in its holistic review of applications.", "With Fisher I and II , the Court reiterated that the educational benefits that come with a racially diverse student body count among the few interests compelling enough to survive strict scrutiny. But Fisher I and II also narrowed that interest: seeking student body diversity had to involve objectives more specific than the simple desire for \"diversity writ large.\" Rather, under the Fisher formulation, the university must articulate the \"concrete and precise goals\" it expects its affirmative action policy to accomplish, along with a \"reasoned, principled explanation\" of why it has chosen to pursue them. So long as a university does that, it will likely have a strong case, under Fisher I and II , that a compelling interest supports its use of a race-conscious admissions policy.\nThat, however, is only the first of two tests that a policy has to pass under strict scrutiny. The second—probing whether the university has narrowly tailored its policy to achieve those diversity-related benefits—has proved equally critical in the Court's review of affirmative action policies. And once again owing to Justice Powell's opinion in Bakke , the Court appears to have embraced a model of what a narrowly tailored policy looks like: Harvard College's admissions program endorsed in Bakke , now more commonly known as the \"Harvard plan.\" The Harvard plan has also provided the Court with a basis for developing more specific criteria for evaluating other affirmative action policies—what one court has described as the \"five hallmarks of a narrowly tailored affirmative action plan.\"", "The first affirmative action program to come before the Court—the policy challenged in Bakke at U.C. Davis's Medical School—was also the first to falter under the Court's scrutiny. But because the Justices were unable to cobble together a majority there, they also settled on no single rationale for why the Medical School's policy could not survive the Court's scrutiny. This uncertainty left the lower courts without clear guidance on the permissibility of race-conscious admissions policies structured differently than the one struck down in Bakke .\nIn announcing the judgment in Bakke , however, Justice Powell offered a clear reason why, in his view, the Medical School's policy could not survive a challenge under the Equal Protection Clause. The school's 16-seat set-aside for minority students was not \"the only effective means of serving [the school's] interest in diversity\" —in constitutional parlance, the set-aside was not narrowly tailored. And to explain why not, Justice Powell pointed to the Harvard plan as an example of an appropriately tailored affirmative action policy.\nThat plan, according to Justice Powell, had several significant features that distinguished it—favorably—from the set-aside struck down in Bakk e :\nIn [Harvard's] admissions program, race or ethnic background [is] deemed a \"plus\" in a particular applicant's file, yet it does not insulate the individual from comparison with all other candidates for the available seats. The file of a particular black applicant may be examined for his potential contribution to diversity without the factor of race being decisive when compared, for example, with that of an applicant identified as an Italian-American if the latter is thought to exhibit qualities more likely to promote beneficial educational pluralism. Such qualities could include exceptional personal talents, unique work or service experience, leadership potential, maturity, demonstrated compassion, a history of overcoming disadvantage, ability to communicate with the poor, or other qualifications deemed important ... [And] the weight attributed to a particular quality may vary from year to year depending upon the 'mix' both of the student body and the applicants for the incoming class.\nUnlike this \"flexible\" system of review, the Medical School policy at issue in Bakke was rigid: reserving a predetermined number of seats for a \"selected ethnic group.\" In Justice Powell's view, that technique effectively precluded a more holistic review, that \"treats each applicant as an individual.\" \"[R]ace or ethnic origin,\" as he saw it, did not serve as \"a single though important element\" of an applicant's file in the Medical School's policy; it had instead become a factor that \"foreclosed\" other applicants \"from all consideration for [certain] seat[s] simply because [they were] not the right color or had the wrong surname.\" A program like that, Justice Powell concluded, could not be narrowly tailored—precisely because another more individualized and \"holistic\" model, like Harvard's, could serve instead.", "Even if Bakke suggested that the Court's scrutiny of a race-conscious admissions policy would be every bit as strict as for other racial classifications, later cases have made clear that such scrutiny need not always be fatal. The companion cases of Grutter v. Bollinger and Gratz v. Bollinger offer clear examples: each involved affirmative action admissions policies at the University of Michigan, and each yielded a different bottom line, with the Court upholding the Law School's policy in Grutter while striking down the university's undergraduate admissions policy in Gratz . But those diverging results appeared to proceed from a common starting point: how closely the challenged admissions policy resembled the Harvard plan.\nIn the case of the Law School's admissions policy, the Court found the resemblance quite close. As Justice O'Connor explained for the Court in Grutter , \"the Law School engages in a highly individualized, holistic review of each applicant's file, giving serious consideration to all the ways an applicant might contribute to a diverse educational environment.\" It therefore did not award \"mechanical, predetermined diversity 'bonuses' based on race or ethnicity.\" And \"[l]ike the Harvard Plan, the Law School's admissions policy\" accorded each applicant the same sort of flexible consideration that Justice Powell had called for in Bakke .\nThat \"policy st[ood] in sharp contrast,\" however, with the way the Court viewed the university's undergraduate admissions policy in Gratz . Under the undergraduate policy, admissions officers automatically awarded \"20 points, or one-fifth of the points needed to guarantee admission, to every single 'underrepresented minority' applicant solely because of race.\" As Chief Justice Rehnquist explained for the Court, that policy therefore violated a basic feature of \"[t]he admission program Justice Powell described\" in Bakke —a program that \"did not contemplate that any single characteristic automatically ensured a specific and identifiable contribution to a university's diversity.\" The result was a policy that did not \"offer applicants the individualized selection process described in Harvard's example,\" and that could consequently not pass strict scrutiny.\nOn that point Justice O'Connor also agreed. As she explained in supplying her decisive fifth vote, the undergraduate policy simply did not \"enable[] admissions officers to make nuanced judgments with respect to the contributions each applicant is likely to make to the diversity of the incoming class,\" unlike the Law School's more holistic policy. This was true even though the undergraduate policy \"assign[ed] 20 points to some 'soft' variables other than race,\" such as \"leadership and service, personal achievement, and geographic diversity.\" None of that, in Justice O'Connor's view, could counteract the more problematic effect of those factors' being \"capped at much lower levels,\" so that \"even the most outstanding national high school leader could never receive more than five points for his or her accomplishments—a mere quarter of the points automatically assigned to an underrepresented minority solely based on the fact of his or her race.\" That weighting, though not problematic in all cases, had all but ensured there \"that the diversity contributions of applicants [could not] be individually assessed.\" A thumb pressed that heavily on the racial scale, Justice O'Connor concluded, came too close to the \"nonindividualized, mechanical\" balancing condemned by Bakke to survive strict scrutiny.", "Despite their contrasting results, Gratz and Grutter gestured at several basic criteria by which to assess a university's race-conscious admissions policy. Those criteria, as the U.S. Court of Appeals for the Ninth Circuit later described them, could be summed up in \"five hallmarks of a narrowly tailored affirmative action plan.\" And all five can be traced in one way or another to Justice Powell's analysis of the Harvard plan.\n1. No Quotas.\nPerhaps the clearest violation of the requirement that a policy be narrowly tailored is the use of racial quotas. As Justice O'Connor explained in Grutter , a \"'quota' is a program in which a certain fixed number or proportion of opportunities are reserved exclusively for certain minority groups,\" consequently \"insulat[ing] the individual [applicant] from comparison with all other candidates for the available seats.\" And as Justice Powell emphasized in Bakke , and as has been consistently reaffirmed by the Court since, \"[t]o be narrowly tailored, a race-conscious admissions program cannot use a quota system.\" This ban on quotas therefore precludes the use of a rigid set-aside like the one challenged in Bakke . And it likewise rules out the sort of \"mechanical,\" automatic points system that was once in place at the University of Michigan's undergraduate college and was later invalidated in Gratz .\n2. Individualized Consideration.\nThe flip side of the Court's refusal to accept racial quotas has been its insistence on individualizing the consideration of applicants. As Justice Kennedy reaffirmed in Fisher I , echoing Justice Powell's description of the Harvard plan in Bakke , an appropriately tailored program \"must 'remain flexible enough to ensure that each applicant is evaluated as an individual and not in a way that makes an applicant's race or ethnicity the defining feature of his or her application.'\" And as the Court suggested in Gratz and Grutter , an acceptable plan will therefore engage in a \"highly individualized, holistic review of each applicant's file, giving serious consideration to all the ways an applicant might contribute to a diverse educational environment.\" Such review allows \"the use of race as one of many 'plus factors' in an admissions program,\" like in the University of Michigan Law School's policy upheld in Grutter . It also appears to bar a school from \"automatically award[ing] points to applicants from certain racial minorities\" as an effectively decisive factor, as it became under the university's undergraduate policy.\n3. Serious, Good-Faith Consideration of Race-Neutral or More Flexible Alternatives.\nNeither of these two criteria, however, implies that a university must exhaust \"every conceivable race-neutral alternative\" before turning to a race-conscious policy. Instead, a university need only provide evidence that it undertook \"serious, good faith consideration of workable race-neutral alternatives\" before resorting to its choice of a race-conscious plan, but that those alternatives either did not suffice to meet its approved educational goals or would have required some sacrifice of its \"reputation for academic excellence.\" The same holds true, moreover, of more flexible race-conscious alternatives. Thus Justice Powell explained in Bakke that the Medical School's program was not narrowly tailored when the school could have adopted the more individualized, holistic program then in use at Harvard, an option the Medical School apparently did not consider.\n4. No Undue Harm.\nEven though the Court has allowed the use of race-conscious admissions policies under the exacting standard of strict scrutiny, it has also long \"acknowledge[d] that 'there are serious problems of justice connected with the idea of preference itself.'\" In Grutter , Justice O'Connor drew another corollary from that apparent discomfort with racial preferences. \"[A] race-conscious admissions program,\" she explained, must \"not unduly harm members of any racial group.\" What this corollary means more specifically remains unclear; so far it has received only passing attention from the Court. At the least, Justice O'Connor suggested, a race-conscious admissions policy must not \"unduly burden individuals who are not members of the favored racial and ethnic groups.\" And in Grutter , Justice O'Connor put more flesh on that analysis: an affirmative action policy that closely resembled the Harvard plan, she suggested, would not \"unduly harm\" other applicants. It remains to be seen, however, whether this principle might take on new life in the Court's review of other plans.\n5. Ongoing Review.\nIn Grutter , Justice O'Connor also drew a fifth and final corollary from the basic premise that the Fourteenth Amendment was meant \"to do away with all governmentally imposed discrimination based on race.\" \"[R]ace-conscious admissions policies,\" she concluded, \"must be limited in time.\" This requirement, Justice O'Connor explained for the Court, reflected a consideration apparently unique to racial classifications: \"however compelling their goals, [they] are potentially so dangerous that they may be employed no more broadly than the interest demands.\" Doctrinally, this meant there could be no \"permanent justification\" for race-conscious admissions policies in higher education; sooner or later they had to end, as the university conceded in its briefing. Practically, this \"logical end point\" could come in one of several ways. It could take the form of an explicit \"durational limit,\" such as a sunset provision. Or it could arrive as a result of \"periodic reviews to determine whether racial preferences are still necessary to achieve student body diversity.\" But, however a university chooses to pursue that end, it has an \"ongoing obligation to engage in constant deliberation and continued reflection regarding its admissions policies\" and the role race plays in them, or whether it should continue to play one at all.\nFor several Justices this ongoing obligation of review also pointed to something more definite—an expiration date, when \"the use of racial preferences will no longer be necessary to further [the school's] interest\" in student body diversity. Looking back over the quarter-century since Bakke , Justice O'Connor \"expect[ed]\" that day to come twenty-five years after casting her deciding votes in Gratz and Grutter —ten years from this writing. What exactly this meant, as either a practical or doctrinal matter, also remains unclear. Indeed, even then several of her fellow Justices seemed less sure, or simply unsure, what to make of that unusually specific constitutional deadline. But with six Justices having since departed the Court, Justices O'Connor and Kennedy included, it remains to be seen whether in the next ten years race-conscious admissions policies will reach this foreordained \"logical end point.\"\nWhat seems clear for now, however, is that the Harvard plan described in Bakke remains the Court's working model of a constitutionally satisfactory race-conscious admissions policy. And that, as the Court has consistently said since, is a policy capable of achieving the diversity \"essential\" to the life of a modern university, while still \"treat[ing] each applicant as an individual.\"", "Race has come to play two major doctrinal roles in higher education today, mirroring the two senses of \"affirmative action\" discussed in this report: the mandatory role, rooted in the affirmative obligation states have to eliminate the vestiges of de jure segregation, and the voluntary role, particularly in admissions decisions at selective colleges and universities. In the context of higher education, the Court has so far considered these two forms of \"affirmative action\" only in relation to public universities, and then primarily as a matter of constitutional law, under the Fourteenth Amendment's Equal Protection Clause. But many of those cases have also involved claims brought under Title VI of the Civil Rights Act of 1964 (Title VI or the Act). And while the Court has read Title VI's protections to overlap with the Equal Protection Clause, Congress still has a significant say over the substantive scope of Title VI as well as its enforcement.", "Title VI generally protects participants in federally funded \"program[s] or activit[ies]\" from discrimination based on their \"race, color, or national origin.\" To ensure that statutory right, the Act grants all federal funding agencies the authority to issue implementing regulations, and the power to enforce the regulations they issue. In practice, much of the interpretive authority falls to the U.S. Department of Justice (DOJ), and for educational programs, the U.S. Department of Education (ED). Both DOJ and ED have also established their own processes for receiving and investigating complaints of suspected Title VI violations. ED, meanwhile, has also issued its own set of rules to govern the federal education dollars it disburses each year, reaching some 4,700 colleges and universities.\nEvery agency that awards federal funds—ED included—has the authority not just to issue implementing regulations but to enforce those rules against noncompliant recipients, including through an investigation that may, upon a finding of noncompliance, result in the termination, suspension, or refusal to grant federal funds. Thus, for example, where ED finds a school in violation of Title VI or its implementing regulations the department may seek to cut off federal funding through an \"administrative fund termination proceeding,\" as it has in at least some cases. And since the passage of the Civil Rights Restoration Act of 1987, the courts have read the scope of liability under Title VI broadly. With respect to the termination of funds, a Title VI violation in one program at a college or university could therefore jeopardize funding for the institution as a whole.\nWithdrawing funds may be the ultimate means of enforcing Title VI, but it is far from exclusive. DOJ, for its part, has also sought to achieve compliance through the federal courts, intervening in some private suits alleging Title VI violations and otherwise representing executive branch agencies, such as ED, in lawsuits seeking enforcement of Title VI. DOJ has participated in cases challenging practices of formerly de jure segregated public university systems as well as in settlements resolving such Fordice -related claims. DOJ has also taken a position in cases challenging affirmative action admissions policies, most recently in the ongoing litigation surrounding Harvard College's admissions policies. ED has ventured into this area as well, having recently opened investigations into the admissions decisions at several prominent private universities.", "Congress continues to have considerable say over how Title VI works—at least within the parameters of the Supreme Court's equal protection jurisprudence. Perhaps the most direct way of doing so is by amendment. As a general matter, Congress could revise Title VI in one of two directions, to make the statute either (1) more restrictive than the Court's current Equal Protection jurisprudence or (2) expressly permissive of race-conscious measures that the Court has upheld or has thus far not addressed.\nIn the more restrictive direction, Congress could prohibit recipients of federal funds from using voluntary race-conscious measures at all—a result that four Justices in Bakke argued Title VI already requires, but which the Court has so far not embraced. A statutory revision of that kind would also implicitly reject the Harvard Plan discussed in Bakke , by excluding race as a permissible factor in admissions decisions at the many universities subject to Title VI, including the many private universities that receive federal funds. And, consequently, an amendment along these lines would make unlawful the type of admissions policies that the Court has approved under the Equal Protection Clause, like those at issue in Grutter and Fisher II .\nOn the other hand, Congress could expressly open other avenues for effectuating Title VI's antidiscrimination mandate. This could include incorporating a private right of action to bring suit under Title VI, which, at present, is an implied right with no statutorily defined remedies. More consequentially, Congress could also amend Title VI to provide for disparate impact liability—that is, a Title VI violation based on a funding recipient's use of certain policies or practices that disproportionately and negatively impact members of a protected class, as already exists under Title VII of the same Act. A provision addressing disparate impact liability—either its availability or foreclosure under Title VI—would resolve a significant and ongoing debate on the issue. Such an addition would also be one way of clarifying whether Congress does in fact intend for Title VI to be read coextensively with the Equal Protection Clause.\nBeyond legislative amendments, Congress also exercises oversight over the agencies charged with carrying out Title VI's antidiscrimination mandate. As discussed earlier, DOJ and ED are primarily responsible for enforcing Title VI in educational programs. For its part, ED investigates and seeks compliance through its Office for Civil Rights, while the Educational Opportunities Section of the Department of Justice's (DOJ's) Civil Rights Division typically enforces Title VI in educational programs for the department. Both offices maintain public archives documenting their past and current investigations, as well as wider-ranging reports detailing their enforcement priorities and investigatory procedures. And because Title VI applies to a wide variety of entities that receive federal financial assistance, not just colleges and universities, DOJ also publishes news and updates on Title VI enforcement activity in other programmatic areas, from agencies across the federal government.", "Race has come to play two major doctrinal roles in higher education today, reflecting the two senses of \"affirmative action\" discussed in this report. \"Affirmative action\" in its original sense grew out of the affirmative obligation imposed on the states by the Equal Protection Clause to eliminate the vestiges of de jure segregation from their public schools. And in that sense, \"affirmative action\" involves the mandatory use of race-conscious measures in higher education to right the enduring wrongs of state-sanctioned segregation. But \"affirmative action\" has also come to refer to race-conscious policies outside this de jure context—policies voluntarily adopted by institutions to help racial minorities overcome the effects of their earlier exclusion. In higher education, none has been more salient—or stirred more debate—than the race-conscious admissions policies that colleges and universities across the country have used to diversify their student bodies.\nThus far, remedial measures addressing de jure segregation, and voluntary measures designed to promote student-body diversity, have been the only race-conscious measures that the Court has approved under the Equal Protection Clause. And both remain areas of active litigation and administrative enforcement. Over the years, however, the Court has made it clear that it will subject voluntary \"affirmative action\" policies to especially close scrutiny, approving them only when they can be shown to be narrowly tailored to serve compelling educational goals. It has approved such polices twice already, most recently in 2016. Still, several Justices have suggested that the rationales supporting these voluntary race-conscious measures will one day run out. But for the time being, at least, these two lines of authority nevertheless provide a place for affirmative action in higher education today.\nThis authority, however, leaves questions as of yet unexplored. It appears to be an open question, for example, whether a public institution of higher education can cite its own history of intentional exclusion, or else its \"past discrimination,\" as a basis for adopting a race-conscious admissions policy, among other measures. Whether—and how—the courts might assess such untested arguments would likely turn on a range of factors, including the further development of the two lines of authority addressed in this report. Regardless of those and other possible developments, however, Congress still has a significant say in in this area, through its authority not just to revise Title VI but to oversee the Act's enforcement." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3, 2, 1, 1, 2, 3, 3, 1, 2, 3, 3, 3, 2, 3, 3, 3, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "h0_full", "", "", "", "", "h2_full", "", "", "", "", "", "", "", "", "h0_full h3_title", "", "h3_full", "" ] }	{ "question": [ "How is affirmative action in public education related to the Fourteenth Amendment?", "What precedent did United States v. Fordice?", "What framework did the Court establish to evaluate the efficiency of this affirmative action?", "To what extent are mandatory race-conscious measures present in the education system?", "To what does \"affirmative action\" refer?", "What do these policies consist of?", "What affirmative action has the Court addressed regarding higher education institutions?", "How do federal courts review affirmative action policies?", "To what extent is this applicable to higher education?", "How does the Court reconcile the difference in race-conscious education policy review?", "How is equal protection ensured in higher education?", "How is Title VI related to the Equal Protection Clause?", "How is Title VI compliance ensured?" ], "summary": [ "Because state-sanctioned race segregation in public education violates the Fourteenth Amendment's Equal Protection Clause, in certain cases involving a state's formerly de jure segregated public university system, a state's consideration of race in its higher education policies and practices may be an affirmative obligation.", "As the U.S. Supreme Court explained in its consequential 1992 decision United States v. Fordice, equal protection may require states that formerly maintained de jure segregated university systems to consider race for the purpose of eliminating all vestiges of their prior \"dual\" systems.", "Drawing upon its precedent addressing racially segregated public schools in the K-12 context, the Court established a three-part legal standard in Fordice for evaluating the sufficiency and effectiveness of a state's efforts in \"dismantl[ing]\" its formerly de jure segregated public university system.", "To that remedial end, mandatory race-conscious measures—in this de jure context—are not limited to admissions. Instead, remedies may also address policies and practices relating to academic programs, institutional missions, funding, and other aspects of public university operations.", "Outside this de jure context, \"affirmative action\" has come to refer to a different category of race-conscious policies.", "These involve what the Court at one time called the \"benign\" use of racial classifications—voluntary measures designed not to remedy past de jure discrimination, but to help racial minorities overcome the effects of their earlier exclusion.", "And for institutions of higher education, the Court has addressed one type of affirmative action policy in particular: the use of race as a factor in admissions decisions, a practice now widely observed by both public and private colleges and universities.", "The federal courts have come to subject these voluntary race-conscious policies—\"affirmative action\" in its perhaps more familiar sense—to a particularly searching form of review known as strict scrutiny.", "And even though this heightened judicial scrutiny has long been regarded as strict in theory but fatal in fact, the Court's review of race-conscious admissions policies in higher education has proved a notable exception, with the Court having twice upheld universities' use of race as one of many factors considered when assembling their incoming classes.", "The Court has long grappled with this seeming tension—between the strictness of its scrutiny and its approval of race-conscious admissions policies—beginning with its landmark 1978 decision in Regents of the University of California v. Bakke through its 2016 decision in Fisher v. University of Texas.", "Though the Equal Protection Clause generally concerns public universities and their constitutional obligations under the Fourteenth Amendment, federal statutory law also plays a role in ensuring equal protection in higher education.", "To that end, Title VI of the Civil Rights Act of 1964 prohibits recipients of federal funding—including private colleges and universities—from, at a minimum, discriminating against students and applicants in a manner that would violate the Equal Protection Clause.", "Federal agencies, including the Departments of Justice and Education, investigate and administratively enforce institutions' compliance with Title VI." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 0, -1, 0, 1, -1, 0, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 4, 4, 4 ] }
CRS_RS21238	{ "title": [ "", "Political Background", "Human Rights", "Economic Developments", "Oil and Gas", "Foreign Policy and Defense", "Terrorism and Unrest", "The 2005 Violence in Andijon, Uzbekistan", "U.S. Relations", "Contributions to Counter-Terrorism", "" ], "paragraphs": [ "", "Uzbekistan gained independence at the end of 1991 with the breakup of the Soviet Union. The landlocked country is the largest in Central Asia in terms of population and the third-largest in territory (behind Kazakhstan and Turkmenistan; see box and Figure 1 ). The existing president, Islam Karimov, retained his post following the country's independence, and was reelected in 2000 and 2007. He has pursued a policy of cautiously opening the country to global economic and other influences.\nIn January 2002, Karimov orchestrated a referendum on a new constitution that created a bicameral legislature. A constitutional provision extended the presidential term to seven years. The legislature (termed the Oliy Majlis or Supreme Assembly) consists of a 120-member (later expanded, see below), directly elected lower chamber, the Legislative Chamber, and a 100-member upper chamber, the Senate. The Senate is composed of 16 members appointed by the president, with the rest selected by local legislatures. The Legislative Chamber has formal responsibility for drafting laws. Constitutional amendments approved in April 2003 established that—after the presidential election at the end of 2007—the prime minister would exercise greater power. In January 2005, Karimov explained that he aimed to create three powerful branches of government, to correct a situation where \"everything now depends on me.\"\nOnly government-controlled parties operate legally: the People's Democratic Party (PDP), formerly the communist party headed by Karimov; the Adolat (Justice) Social Democratic Party; the Liberal-Democratic Party (LDP), consisting of government-connected businessmen; the Milliy Tiklanish (National Revival) Party, consisting of state-supported intellectuals; and the Ecological Movement of Uzbekistan. Opposition parties such as Birdamlik, Birlik, Erk, Free Farmers, and the Sunshine Coalition are illegal. The former Fidokorlar (Self-Sacrifice) National Democracy Party, created by Karimov as a youth party, merged with the National Revival Party in June 2008, and the enlarged party joined the \"Democratic Bloc\" of Legislative Chamber factions (including Adolat and the Liberal Democratic Party) in August 2008. A constitutional law on parties and democratization came into effect in 2008 that permits \"opposition\" party deputies in the Legislative Chamber to offer alternative bills and take part in debates. The law also calls for the president to \"consult\" with Legislative Chamber factions before nominating a candidate for prime minister.\nIn December 2008, President Karimov signed electoral legislation that eliminated the nomination of candidates for legislative and presidential elections by independent initiative groups, leaving only parties as eligible to nominate candidates. The law also expanded the size of the Legislative Chamber from 120 to 150. Fifteen of the members of the Chamber are to be elected by delegates to a conference of the Ecological Movement of Uzbekistan (EMU), registered as a political party in September 2008. The EMU proclaims that it is not like green parties in other countries, so that it can focus on environmental issues rather than grasping for political power.\nThe Uzbek Central Election Commission (CEC) in mid-November 2007 approved four candidates to run in the prospective December 23, 2007, presidential election. Incumbent President Karimov was nominated by the LDP. The party which Karimov once headed, the PDP, nominated its current head, Asliddin Rustamov. The Adolat Social Democratic Party nominated its head, Dilorom Toshmuhammadova. A citizen's initiative committee nominated Akmal Saidov. The CEC disqualified the candidates nominated by the Milliy Taklanish and Fidokorlar parties at their conventions (the latter party had sponsored Karimov during his 2000 election), saying they had not gathered enough signatures. Although the Uzbek constitution bars a president from more than two terms, the CEC argued that since the most recent constitution was approved in 2002, Karimov's \"first term\" followed his election in January 2000, and that he was eligible to run for a \"second term\" in December 2007.\nAccording to the report of a small election observation mission sponsored by the OSCE's Office of Democratic Institutions and Human Rights (ODIHR), the Uzbek CEC and local electoral commissions controlled public appearances and spending by the candidates. There were no campaign debates and media coverage was minimal, according to ODIHR. Each presidential candidate used similar language to laud economic development and democratization under the incumbent president. State-owned media urged the electorate to vote for Karimov. According to the CEC, Karimov received 88% of 14.8 million votes with a 90.6% turnout. The OHIDR election mission issued a press statement assessing the election as \"generally fail[ing] to meet many OSCE commitments for democratic elections.\" Besides the problems noted above, others included lax rules regarding early voting, frequent voting by one member of a household for all members, and an observed low turnout.\nElections to the Legislative Chamber were held on December 27, 2009. Over 500 candidates from the four approved parties ran for 135 seats, and an additional 15 seats were filled by voting at a conference of the EMU. Turnout reportedly was almost 88% of 17.2 million registered voters. The Central Electoral Commission reported that in 39 districts no candidate had received over 50% of the vote, so that run-offs would be held on January 10, 2010. Following these run-offs, the Liberal Democratic Party had won 53 seats, the People's Democratic Party had won 32 seats, the Milliy Tiklanish Party had won 31 seats, and the Adolat Social Democratic Party had won 19 seats. The OSCE declined to send observers, stating that the electoral environment did not permit a free and fair contest. Some U.S. embassy personnel observed some of the voting, and the embassy stated afterward that the election campaign failed to reflect diverse viewpoints, since candidates from only pro-Karimov parties were permitted to run. Indirect elections to the Senate were held on January 20-22, 2010. The president's 16 appointees to the Senate included deputy prime ministers, the chairman of the Supreme Court, and the foreign minister, making the Senate an amalgam of the three branches of government.\nPerhaps to create the appearance of diversity, the Liberal Democratic Party, the Milliy Tiklanish Party, and the Adolat Social Democratic Party have declared that they form a \"majority democratic bloc\" in the Legislative Chamber. The People's Democratic Party has declared that it is the \"minority opposition\" party. Opening a joint session of the newly elected legislature in late January 2010, President Karimov called for studying the activities of the U.S. Congress in order to boost the role of budgeting and oversight in the Uzbek legislature.\nIn a speech in November 2010, President Karimov called for several constitutional changes which were approved by the legislature and signed into law by the president in April 2011. One of the changes provides for the political party that controls a majority of seats in the lower legislative chamber to have the right to nominate a candidate for prime minister (all existing political parties are pro-Karimov). Procedures also are outlined for the legislature to hold a vote of no confidence in the prime minister. The prime minister is given responsibility for appointing regional administrators, a power formerly lodged with the president. Another amendment specifies that in the event the president is incapacitated, the chairman of the Senate will serve as the interim head of state pending the holding of a presidential election within three months. Some skeptics have linked the constitutional changes to government concerns that civil discontent could become manifest as it did in several Middle Eastern countries in early 2011. Others suggest that since some of the ostensible reform efforts predate the \"Arab Spring,\" they are linked to infighting within the elite. Perhaps supporting the latter view, in mid-July 2011 the legislature passed a joint resolution criticizing an economic report delivered by the prime minister.\nOn December 5, 2011, the legislature approved amendments to the constitution reducing the presidential term from seven to five years. The change was hailed as advancing democratization, but was a reversion to the pre-2002 term in office. In March 2012, the legislature approved holding legislative elections on December 28, 2014, and the presidential election in March or April 2015. Some observers suggest that President Karimov might consider succession contingencies at that time, such as designating a possible heir.\nIn April 2012, Uzbek legislators and officials visiting the United States reported that bills had been introduced to provide for the legislature to hold hearings to question the prime minister, to hold a vote of non-confidence in the government, and to strengthen the rights of NGOs. Displaying a guarded attitude toward democratization, President Karimov stated in June 2012 that \"we should live in an evolutionary way ... not in a revolution or coup.... Tell me if it is possible to say a people happy, if they live in uncertainties: how will life change tomorrow, how will prices change, what sort of calamities are awaiting us.... Only peace, tranquility and unity make ... the Uzbek people [happy].... This is the Uzbek people's biggest demand from life.\" U.S. analyst Martha Olcott has argued that Uzbek society is becoming more religiously traditional (although not radical), and that politics will probably be influenced by these societal views, so that a secular liberal democratic political system may not soon emerge.\nIn December 2012, President Karimov stressed that the country was following a path of \"evolutionary\" democratization, including by increasing the checks and balances among the three branches of power and strengthening political parties. At the same time, he stated that the government's power would continue to increase in the \"transitional period\" in order for it to direct the reforms, and cautioned that the process of democratization was lengthy and never-ending.", "The NGO Freedom House repeatedly has included Uzbekistan among nine countries such as North Korea, Sudan, Saudi Arabia, and Turkmenistan ranked as \"the world's worst human rights abusers\" in terms of human rights and civil liberties.\nAccording to the State Department's Country Reports on Human Rights Practices for 2012 , police routinely beat and otherwise mistreated detainees to obtain confessions, and torture reportedly was common in prisons and detention facilities. The government frequently harassed, arrested, and prosecuted human rights activists and political oppositionists. Most human rights organizations estimated that authorities held hundreds or even thousands of political prisoners. There were no jury trials. In the vast majority of criminal cases brought to court, the defendant was found guilty. Judges often based their verdicts solely on confessions and witness testimony extracted through abuse and threats to family members. In mid-2012, Gulnaza Yuldasheva, a human rights activist, was convicted of charges of extortion viewed by many observers as politically motivated; she had earlier accused a number of local officials of complicity in human trafficking. Officials released some high-profile prisoners during the year, and a few police officers were convicted on charges of torture or other abuse. In late 2012, legislation was approved that ostensibly expanded the use of habeas corpus in criminal cases.\nThe government severely limited freedom of expression. The law imposed significant fines for libel and defamation, and insulting the president was punishable by up to five years in prison. The government used such charges as well as other methods to arrest, harass, and intimidate journalists. The government allowed publication of a few private newspapers with limited circulation that included infrequent stories critical of government socio-economic policies. Four state-run television channels dominated broadcasting. Regional television outlets sometimes broadcast some moderately critical stories on local issues. In late 2012, the government reportedly issued new regulations widening control over media, including the power to block or ban media that threaten the integrity of the \"national information space.\" The government regularly gave explicit instructions about the types of stories permitted for publication.\nThe government often restricted freedom of assembly. Authorities dispersed and occasionally detained persons who were involved in peaceful protests. The law requires that all non-governmental organizations (NGOs) be registered formally with the government. The government compelled most NGOs to join a state-controlled NGO association that enabled close oversight over their funding and activities. The government limited freedom of travel and emigration, in particular through the continued requirement for citizens and permanent residents to obtain exit visas, although it generally granted the visas. There were reports that the government delayed exit visas for human rights activists and independent journalists. Government-compelled forced labor occurred during the cotton harvest, including 15- to 18-year-old students, teachers, medical workers, government and military personnel, retirees, and persons receiving welfare. Credible reporting suggested that the expanded use of forced mobilization of adult state workers was to compensate for reductions in labor by children younger than 15.\nSince November 2006, the State Department has designated Uzbekistan a \"country of particular concern\" (CPC), for severe religious and other human rights violations that could lead to U.S. sanctions. However, since 2009, the State Department has issued waivers for Uzbekistan, so that no U.S. sanctions have been taken. According to the State Department, the Uzbek government \"engaged in or tolerated particularly severe violations of religious freedom,\" including restrictions on unregistered groups and the prohibition of many activities, such as proselytizing. Many members of registered and unregistered minority religious groups faced heavy fines and short jail terms. The government continued to deal harshly with Muslims who practiced outside of sanctioned mosques, but permitted the regular activities of religious groups deemed traditionally present in the country, including the Muslim, Jewish, Catholic, and Russian Orthodox communities. The State Department followed the recommendation of the U.S. Commission on International Religious Freedom in again designating Uzbekistan as a CPC.\nIn June 2013, the State Department reported that Uzbekistan is a source country for human trafficking for forced labor and sex, and that while the government greatly reduced the number of children under 15 years of age involved in the 2012 cotton harvest, the government continued to subject older children and adults to forced labor in the harvest. Also, Uzbekistan has not demonstratively investigated or prosecuted government officials suspected to be complicit in forced labor. The State Department estimates that there are over 1 million individuals subject to state-imposed internal forced labor in Uzbekistan. Since designations began in 2003, Uzbekistan has ranked as a Tier 2, Tier 2 Watch List, or Tier 3 country (a Tier 2 country does not fully comply with the minimum standards for the elimination of trafficking but is making significant efforts to comply; a Watch List country does not fully comply, the number of victims may be increasing, and efforts to comply are slipping; a Tier 3 country does not fully comply and is not making significant efforts to do so). In the 2003, 2006, and 2007 reports, Uzbekistan was listed as a Tier 3 country, but in the 2008-2012 reports, Uzbekistan was on the Tier 2 Watch List. In the 2011-2012 reports, Uzbekistan was granted waivers from an otherwise required downgrade to Tier 3 because the government had written plans to comply, according to the State Department. However, the government plans were not realized, and since Uzbekistan had exhausted its maximum of two consecutive waivers, it was placed on Tier 3 in the 2013 report. Countries placed on Tier 3 are subject to certain sanctions, including the withholding of non-humanitarian, non-trade-related foreign assistance. However, Uzbekistan has received partial or full waivers.\nThe U.S. Department of Labor has listed Uzbekistan as among countries that use child labor to pick cotton. This list is meant to inform the choices made by the buying public. In addition, on July 23, 2013, cotton from Tajikistan and Uzbekistan again was included on a list that requires U.S. government contractors to certify that they have made a good faith effort to determine whether forced or indentured child labor was used to produce the cotton.\nIn testimony to Congress in April 2013, an official of the U.S. International Labor Rights Forum (IRLF), an NGO, reported that as a member of the Cotton Campaign, an international coalition of NGOs, industries, and trade unions, the IRLF had supported diplomatic and economic pressure on Uzbekistan to end forced child and adult labor in cotton production. He reported that forced child and adult labor continued to be used in the autumn 2012 cotton harvest, and that security personnel were deployed on the farms to enforce production quotas and to prevent pickers from taking pictures or otherwise documenting the use of forced labor. Ostensibly, the pickers were \"volunteers\" recruited from government agencies, private firms, colleges, and high schools, the latter including a majority of all faculty members. Children under age 15 were officially excused from the harvest, although many aged 11-15 were observed in the fields. Individuals could pay a fee in lieu of participating in the harvest, but most reportedly were afraid of repercussions such as dismissal from a job or university if they did not participate, according to the ILRF official. He also reported that the use of forced labor throughout the economy was increasing. The IRLF has called for the U.S. Customs Service to enforce the Tariff Act of 1930 to block the importation of Uzbek cotton materials produced by forced labor\nThe U.N. Children's Fund (UNICEF) was permitted to monitor the autumn 2011 cotton harvest in Uzbekistan, but not the 2012 harvest, and the country continues to bar monitors from the U.N.'s International Labor Organization. The Uzbek Ministry of Labor asserted in early September 2012 that the use of forced child labor in the agricultural sector was not permitted in Uzbekistan. It stated that all cotton in the country is produced on private \"family farms,\" where international legal norms permit children who are members of farmers' families to assist in chores. Observers have pointed out that the Uzbek government owns the land and sets production quotas and prices, and that the farmers are tenants under contract.\nAt his confirmation hearing on May 15, 2011, Ambassador-designate to Uzbekistan George Krol reportedly stated that the United States will \"relentlessly raise individual cases of [human rights] repression both privately and publicly at all levels of the Uzbekistani government and will seek to identify opportunities to support and expand space for civil society and human rights activists.\" He also pledged that the United States would continue to support \"embattled civil society and independent media.\"\nIn June 2013, Hasan Choriyev—the 71-year old father of oppositionist Bahodyr Choriyev, who fled Uzbekistan in 2004 and resides in the United States—was arrested on rape charges the day after a report that his son might be interested in eventually running for president. Observers deemed the charges politically motivated, given the elder Choriyev's ill health and the fact that he had been detained for questioning on another matter at the time of the alleged rape.\nOn June 26, 2013, 12 U.S. Senators sent a letter to President Karimov urging him to release human rights lawyer Agzam Turgenov and journalists Dilmurod Saidov and Salijon Abdurakhmanov, whom had been imprisoned in 2008-2009 and were termed political prisoners by the Senators.\nIn July 2013, the U.N. Human Rights Council issued a working group report on Uzbekistan that contained recommendations by the member states on improving human rights conditions in Uzbekistan. The United States urged that forced labor and hazardous child labor be eliminated, that all torture allegations be independently investigated, that politically motivated prosecutions be ended, and that the harassment and detention of persons who exercise their rights to freedoms of expression, assembly, association, and religion be ended and that those held on such grounds be released. Uzbekistan rejected all the U.S. recommendations, as well as all others as factually incorrect or un-germane. The Uzbek delegation asserted that there are no political prisoners in Uzbekistan, and that so-called journalists and human rights defenders who were imprisoned had been sentenced for criminal actions. They stated that all allegations of torture are investigated and that as a result, five law enforcement officers had been brought to justice in 2012 and that religious freedom is recognized, except for proselytism, missionary activities, and the operation of unregistered religious groups. Missionary activities and proselytism, it warned, could upset the majority Muslim population and inter-faith relations. The delegation asserted that Uzbekistan does not use forced child labor during the cotton harvest, and rejected calls for an ILO special mission to inspect the harvest on the grounds that such requests were the \"result of competition for economic markets [by] a number of Western cotton companies.\" They claimed that an April 2013 decision by the ICRC to halt visits to prisons in Uzbekistan was not due to lack of cooperation by Uzbekistan, as averred by the ICRC. They also stated that male homosexual relations would continue to be outlawed in accordance with tradition.", "After economic dislocations associated with the breakup of the Soviet Union, the Uzbek economy ceased to decline and began to turn around in 1996. In 2003, Uzbekistan announced that it would permit full currency convertibility, but vitiated the reform by reducing money in circulation, closing borders, and placing punitive tariffs on imports. These restrictions helped fuel organized crime, corruption, and consumer shortages. Uzbekistan is the world's third-largest cotton exporter. The agricultural sector accounts for about one-fifth of the country's GDP, and nearly one-half of the population depends on agriculture and related activities for their livelihoods. The largest portion of foreign currency earnings is based on cotton exports, followed by exports of gold and natural gas. Most exports in 2011 went to China, Kazakhstan, Turkey, Russia, Ukraine, and Bangladesh. The government closely controls export earning sectors. The government claims that 16% of the population remains in poverty, based on calories of food consumption per day. A sizeable portion of the working-age population has migrated abroad for work. Some international companies have boycotted purchases of Uzbek cotton and finished goods on the grounds that forced child and adult labor is used in harvesting.\nIn response to the global economic downturn in 2008, the Uzbek government launched an anti-crisis program to increase budgetary expenditures on infrastructure modernization, extend credit to export industries, restructure bank debts, boost investment in small-sized businesses, and augment public-sector wages and social welfare. Transfers from the Fund for Reconstruction and Development (FRD; a pool of export and portfolio earnings launched in 2006, currently said to hold $15 billion) were used for some of these expenditures, although the Economist Intelligence Unit (EIU) firm alleges that mainly state-owned companies received the funds. A new industrial and infrastructure modernization program set at $47 billion was launched for 2011-2015, which the government hopes to finance partly with FRD funds and increased domestic and foreign direct investment (FDI). A new program of privatization has been announced to attract FDI. However, since 2010, dozens of foreign investors have had their businesses seized by the Uzbek government. Some Turkish businessmen whose stores were seized in 2011 alleged that they were tortured until they signed confessions of tax evasion and illegal activities. In January 2013, a Russian telecom firm filed for bankruptcy in Uzbekistan, accusing Uzbek government officials of seeking to destroy the firm and seize its assets. These confiscations of foreign assets reportedly have contributed to a sizeable falloff in FDI since 2011.\nThe EIU states that the Uzbek government's economic data are untrustworthy, so that the true state of the economy is hard to ascertain. The EIU estimates that GDP increased by 8.0% in 2012. Economic growth was supported by increasing remittances by migrant workers and robust growth in the service, construction, and agricultural sectors, but was hampered somewhat by stalling world prices for gold and falling prices for cotton. These problems may continue to impede GDP growth in 2013, which the EIU estimates may slow to 7.3%. In July 2013, Uzbekistan reported a near-record grain harvest.\nMigrant workers remitted $2.3 billion in 2012, according to the World Bank (Russia's Central Bank reported remittances of $5.7 billion in 2012). By some accounts, up to one-fourth or more of Uzbekistan's labor force may be employed abroad. Appearing to discount the pressures driving Uzbeks to seek work abroad, on June 20, 2013, President Karimov stated that \"I describe as lazy those who go to Moscow and sweep its streets and squares. One feels disgusted with Uzbeks going there for a slice of bread. Nobody is starving to death in Uzbekistan.... I call such people lazy because they go there in order to make big money fast, and they are a disgrace to us all.\"\nThe EIU estimates that inflation was 14.3% at the end of 2012. The Uzbek government has tried to limit inflation through price controls on food and energy, but also has contributed to inflation by increasing public sector wages, pensions, and educational stipends at an average rate of about 20% per year since 2006, according to the World Bank. Added restrictions in early 2013 on the purchase of foreign exchange by residents may increase the import costs for private businesses forced to obtain foreign currency on the black market.\nIn late 2008, Tashkent suspended its membership in the Eurasian Economic Community (a Russia-led group including Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan that promotes unified customs tariffs and free trade). Some observers linked this action to Uzbekistan's opposition to Russian leader Vladimir Putin's neo-imperialist initiatives (other moves include suspending participation in the Collective Security Treaty Organizaton; see below). However, during his June 4, 2012, visit to Uzbekistan, President Putin and President Karimov signed a memorandum of understanding pledging Russian support for Uzbekistan joining the CIS Free Trade Zone, launched in 2011.Uzbekistan was formally admitted as a member of the Free Trade Zone at the end of May 2013. Uzbekistan's strict border controls and corruption stifle regional trade, according to observers.\nThe United States and Uzbekistan have minimal trade. U.S. exports to Uzbekistan were about $285 million in 2012 (mainly aircraft; see below), and imports were about $26 million, according to the U.S. Commerce Department. Among major trade initiatives, Uzbekistan purchased four Boeing 767s in late 2008, of which three were delivered by mid-2012. A joint venture between General Motors and the Uzbek state automobile firm UzAvtosanoat, termed GM Uzbekistan, was formed in 2008 and assembles over 200,000 automobiles annually for the Uzbek domestic market and for export to Russia and elsewhere. Another joint venture between the two firms opened a factory in November 2011 to assemble engines for GM Uzbekistan.\nTajikistan has alleged that Uzbekistan delays rail freight shipments, purportedly to pressure Tajikistan to halt construction of the Rogun hydro-electric power dam on the Vakhsh River, which Uzbekistan fears could limit the flow of water into the country. In November 2011, Uzbekistan closed a rail link to southern Tajikistan, reporting that a bridge was damaged, but since then allegedly has dismantled the span. In early April 2012, Tajikistan's prime minister and its foreign ministry denounced the rail restriction as part of an \"economic blockade\" aiming to destabilize Tajikistan. The Uzbek prime minister responded that all Uzbek actions were in accordance with bilateral agreements or responses to Tajik actions, so that the accusations were \"groundless.\"\nIn July 2013, Tajikistan claimed that it had released water from its Qayroqqum reservoir into the Syr Darya River, which flows into Uzbekistan and Kazakhstan. Tajik officials stated that they acted to avert water shortages downstream, and blamed the lowered river flow on upsteam Kyrgyzstan, which was impounding virtually all water in its Toktogul reservoir for winter power generation.", "British Petroleum's (BP's) Statistical Review of World Energy reports that Uzbekistan has about 600 million barrels of proven oil reserves and an estimated 39.7 trillion cubic feet of proven natural gas reserves as of 2012 (negligible in terms of world oil reserves but about 0.6% of world gas reserves). Uzbekistan is a net importer of oil. Uzbek oil production has been declining for many years, attributable to lack of investment. The country consumes the bulk of its gas production domestically, but has used its network of Soviet-era gas pipelines to export some gas to Russia and to other Central Asian states (Kazakhstan, Kyrgyzstan, and Tajikistan). According to BP, Uzbekistan exported about 479 bcf of gas in 2010 (since then, BP's Statistical Review has not reported exports for Uzbekistan). According to some reports, gas exports declined to 424 bcf in 2011 but rebounded slightly to 441.4 bcf in 2012. Gas is provided to Russia and Kazakhstan through the Russian-owned Central Asia-Center Pipeline system. Uzbekistan began to export some gas through this pipeline system to Ukraine in 2011. Reportedly, Uzbekistan has been an unreliable gas exporter to other Central Asian states in recent winters, diverting exports to meet urgent cold-weather domestic needs. At the end of 2012, Uzbekistan suddenly ended gas shipments to Tajikistan, and these had not resumed as of August 2013.\nUzbekistan largely has been closed to Western energy investment, although efforts to attract international energy firms have appeared to increase in recent years. Russian firms Gazprom and Lukoil are the largest investors in Uzbek gas development and production. Reportedly, Gazprom pays European-pegged gas prices for only a fraction of imports from Uzbekistan. In 2005, CNPC and Uzbekistan's state-owned Uzbekneftegaz firm announced that they would form a joint venture to develop oil and gas resources. In 2007, Uzbekistan and China signed an agreement on building a 326-mile section of the Central Asia-China Pipeline, and a joint venture between Uzbekneftegaz and CNPC launched construction in 2008. Two side-by-side pipelines were completed in 2009-2010, and the third is under construction. In October 2011, Uztransgaz (Uzbek gas transportation firm) and a subsidiary of CNPC signed a contract to supply gas though this pipeline beginning in 2012. In April 2012, China announced it would spend $15 billion for oil and gas exploration in Uzbekistan. A production sharing consortium composed of Uzbekneftegaz, Lukoil, the Korea National Oil Corporation, and CNPC is exploring for gas in the Aral Sea region.\nIn August 2012, Uzbekistan began to export gas to China through the Central Asia-China pipeline. The Uzbek State Statistics Committee reported that energy exports in 2012 had nearly doubled over those of the previous year, from $2.78 billion to $5.03 billion, with exports to China probably accounting for much of the increase. Reportedly, the exports constrained domestic supplies, which were under further pressure from the declining output of Uzbekistan's oil and gas fields. Uzbekistan reportedly exported 141 bcf of gas to China in the latter part of 2012 and plans to supply 353 bcf of gas to China in 2013. In May 2013, Shokir Fayzullayev, the chairman of the board of the state holding company Uzbekneftegaz (Uzbek Oil and Gas), denied that gas exports were to blame for shortages. He claimed that the domestic gas distribution system was inadequate, particularly in the winter, but that it was being upgraded.", "Home to more than half of the population of Central Asia, Uzbekistan seeks to play a leading role in regional affairs. Foreign policy is highly dependent on presidential decision-making. A new foreign policy concept was submitted to the legislature by President Karimov and quickly approved in early August 2012. It states that the main goals of Uzbekistan's foreign policy are strengthening the state's independence and sovereignty; ensuring a role in international affairs; joining the ranks of democratic and developed countries; and creating security, stability, and cooperative ties with neighboring states. Relations with Central Asian states are deemed the highest foreign policy priority because the vital interests of the country are connected with the region, including water sharing. The concept states that \"Uzbekistan has always remained committed to conducting an open, friendly, and pragmatic policy towards its neighbors [and] is taking political, economic and other measures to prevent its involvement in armed conflicts and tensions in neighboring countries.\" The concept calls for regional problems to be solved without the interference of external forces. It proclaims that Uzbekistan \"reserves the right to conclude unions, join commonwealths and other interstate groups, and also leave them.\" At the same time, however, the concept appears to embrace neutrality in security relations, specifying that \"Uzbekistan pursues a peace-loving policy and does not take part in military-political blocs,\" and that the country \"reserves the right of exit from any interstate group in the case of its transformation into a military-political bloc\" (these provisions appear to reflect Uzbekistan's limited or non-participation in military exercises; see below). The concept also states that Uzbekistan neither will permit the stationing of foreign military bases on its soil—ostensibly referring to new bases—nor will participate in peacekeeping operations abroad.\nFrom the late 1990s until mid-2005, Karimov's priority was to seek closer ties with the United States, the European Union, and NATO while maintaining working relations with Russia and China. However, after the mid-2005 events in Andijon (see below), he shifted to closer ties with the latter two states. In 2001, Uzbekistan joined the Shanghai Cooperation Organization and in 2003 insisted on hosting its Regional Anti-Terrorism Center. During his early June 2012 visit to China to attend a SCO summit, President Karimov and Chinese President Hu Jintao had a side meeting and signed a declaration on strategic partnership to herald closer ties. Uzbekistan will host a meeting of the SCO prime ministers in September 2013.\nUzbekistan has ongoing tensions with other Central Asian states over its mining of borders, water-sharing, border delineation, and other issues.\nTajikistan's relations with Uzbekistan have been problematic, including disagreements about water-sharing, Uzbek gas supplies, the mining of borders, border demarcation, and environmental pollution. In July 2008, the head of the Tajik Supreme Court asserted that Uzbek security forces had bombed the Supreme Court building the previous summer as part of efforts to topple the government. In late 2010, Uzbekistan began a transit slowdown and other economic measures to pressure Tajikistan to halt building the Rogun dam (see above). Turkmenistan's relations with Uzbekistan and Azerbaijan have been tense. Azerbaijan and Turkmenistan have rival claims to some Caspian Sea oil and gas fields. Turkmenistan and Uzbekistan have vied for regional influence and argued over water-sharing. In 2002, the Turkmen government accused Uzbek officials of conspiring to overthrow it. Uzbekistan also objected to the treatment of ethnic Uzbeks in Turkmenistan under the previous president. The Kyrgyz premier rejected claims by Karimov in 2005 that Kyrgyzstan had provided training facilities and other support for the Andijon militants. Karimov again accused Kyrgyzstan in late May 2009 of harboring terrorists whom had attacked across the border. After the April 2010 coup in Kyrgyzstan, Uzbekistan tightened border controls with this country, greatly harming its economy. Conflict between ethnic Uzbeks and ethnic Kyrgyz in southern Kyrgyzstan in June 2010 further strained relations between the two countries. Up to 100,000 ethnic Uzbeks fled fighting in southern Kyrgyzstan to refugee camps in Uzbekistan. Although critical of the Kyrgyz government, Uzbekistan did not intervene militarily or permit its citizens to enter Kyrgyzstan to join in the fighting. On July 17, 2012, border guards exchanged gunfire at a Kyrgyzstan-Uzbekistan border post, reportedly killing a guard on each side. Uzbekistan responded by restricting border crossings at this post. In January 2013, Kyrgyz border guards wounded five Uzbeks in the Uzbek enclave of Sokh in Kyrgyzstan's Batken Region, bordering Uzbekistan. The Uzbeks allegedly had attempted to block an incursion into Sokh by the Kyrgyz border guards. Up to 1,000 local Uzbeks then temporarily took over three dozen Kyrgyz hostage. Uzbekistan in retaliation closed a road from Kyrgyzstan to a Kyrgyz enclave in Uzbekistan, and this road remains closed. In July 2013, Kyrgyzstan began building a fence around the Sokh enclave. That same month, Kyrgyz guards allegedly killed two Uzbek guards along the Namangan-Jalalabad regional border during a reported shoot-out.\nOn the other hand, there have been some contacts between Karimov and other Central Asian leaders:\nIn early September 2012, President Karimov visited Kazakhstan for a bilateral summit. One observer suggested that this summit was an effort by the two major regional powers to join together to spur greater region-wide integration, including common responses to security threats such as terrorism and instability in Afghanistan. The two leaders also aimed to bolster significant trade ties and issued a joint statement on regional water-sharing. In mid-June 2013, President Nazarbayev visited Uzbekistan. The two presidents signed a strategic partnership treaty, stressing that their two countries were the most strategically important in Central Asia and the necessity of holding \"constant\" bilateral consultations. Karimov stated that closer bilateral ties were needed to address the drawdown of International Security Assistance Force (ISAF) operations in Afghanistan and to buttress economic development and trade. Both leaders stated that each country was economically complementary to the other. Both also emphasized that regional water issues should be resolved peacefully and equitably with an internationally mediated independent examination of environmental hazards. However, President Karimov also suggested that the Kambarata and Rogun dams should not be constructed because of the danger of earthquakes, and rejected the idea that water was a commodity that could be traded. Since Berdimuhamedow came to power, relations between Turkmenistan and Uzbekistan have improved. In early October 2012, President Karimov visited Turkmenistan and met with President Berdimuhamedow, and the two leaders discussed boosting trade and other cooperation. They also called for region-wide talks before Tajikistan and Kyrgyzstan build dams that could affect water-sharing. In February 2013, President Karimov phoned Berdimuhamedow to invite him to visit to discuss joint projects.\nUzbekistan has developed some ties with post-Taliban Afghanistan. In August 2011, Uzbekistan completed a 50-mile railroad linking its border town of Hairatan with the city of Mazar-e-Sharif in Afghanistan. The railway is part of the Northern Distribution Network (NDN) of U.S. and NATO-developed land, air, and sea routes from Europe through Eurasia to Afghanistan. Since 2002, Uzbekistan has provided some electricity to northern Afghanistan. Since early 2008, President Karimov has advocated the opening of U.N.-sponsored \"6+3\" Afghan peace talks (participants would include regional powers Uzbekistan, Tajikistan, Turkmenistan, Pakistan, China, and Iran and outside powers NATO, the United States, and Russia), similar to the \"6+2\" Afghan peace talks he had helped originate and which were held from 1999 to 2001 (NATO was not included at that time). The United States has stressed an Afghan-led reconciliation process (see also below, \" Contributions to Counter-Terrorism \").\nThe Uzbek armed forces is the largest in the region in terms of manpower, but some observers have argued that Kazakhstan's military modernization efforts are challenging Uzbekistan's security dominance. The armed forces consist of about 24,500 ground force troops, 7,500 air force troops, and 16,000 joint troops. There are also up to 19,000 internal security (police) troops and 1,000 national guard troops. Uzbekistan spent about 3.1% (about $1.4 billion) of its GDP in 2011 on the defense sector, which would be about 10% of the budget. One report stated that much of this spending was on officer and servicemen's benefits, and that this high level of defense spending was straining the budget. Uzbekistan's military doctrine proclaims that it makes no territorial claims on other states and adheres to nuclear non-proliferation. President Karimov has stated that he strongly opposes military hazing and supports adequate social support for the troops. Military cooperation between Russia and Uzbekistan is ensured through a 1992 Friendship Treaty, a 1994 military treaty, a 1999 accord on combating terrorism and Islamic extremism, and a November 2005 Treaty of Alliance. The latter accord calls for mutual consultations in case of a security threat to either party.\nAfter withdrawing in 1999, Uzbekistan rejoined the Collective Security Treaty Organization in December 2006 (CSTO; members have included Russia, Belarus, Armenia, and the Central Asian states except Turkmenistan). However, Uzbekistan declined to participate in rapid reaction forces established in June 2009 because of concerns that the forces could become involved in disputes within the Commonwealth of Independent States (CIS; a grouping of Soviet successor states) on the basis of decisions made by the affected parties (rather than solely upon the agreement of all CSTO members). At CSTO summits in December 2010 and December 2011, the members reportedly agreed on procedures for intervening in domestic \"emergency\" situations within a member state at the behest of the member. At the latter meeting, they also agreed that no member could host a foreign military base without the permission of the CSTO. Uzbekistan reportedly raised concerns about these measures. On June 20, 2012, Uzbekistan informed the CSTO that it was suspending its membership in the organization, including because the CSTO was ignoring its concerns. However, Uzbek officials stated that the country would continue to participate in the CIS air defense system and other military affairs. According to some observers, the withdrawal of Central Asia's largest military from the CSTO highlighted the organization's ineffectiveness.\nDuring President Putin's early June 2012 visit to Uzbekistan, the two sides concluded a Declaration on Deepening the Strategic Partnership, building on a 2004 agreement, which called for mutual consultations in the event of a threat to either party. Uzbekistan signed a strategic partnership accord with China within a few days and with Kazakhstan in June 2013 (see above). According to some observers, these accords have been pursued by Uzbekistan as preferable to the CSTO as a means to buttress cooperation on stability in Central Asia as ISAF draws down its forces in Afghanistan. President Karimov highlighted his concerns about Afghanistan in early May 2013 when he stated that \"the main threat for not only Uzbekistan but also for all countries surrounding Afghanistan is the cruel war that has been continuing in Afghanistan for over 30 years.... Unfortunately, when [ISAF] leaves, conflicts will intensify between the forces which are opposing each other.... Terrorism, drug addiction, drug trafficking, and various religious and ethnic conflicts ... will escalate.... Tension will definitely increase in the Central Asian countries after they pull out without having settled the problem of Afghanistan.\"\nAlthough the SCO Regional Anti-Terrorism Center is in Tashkent, Uzbek troops have not participated in SCO exercises, although its officers have been observers. Uzbek officers were observers at SCO military exercises held in Kazakhstan in June 2013 (Kazakh, Kyrgyz, and Tajik troops took part, while Russian and Chinese troops held separate SCO Peace Mission 2013 exercises in Russia in August 2013).", "On February 16, 1999, six bomb blasts in Tashkent's governmental area by various reports killed 16-28 and wounded 100-351. Karimov termed the bombing an assassination attempt. He alleged that exiled Erk Party leader Mohammad Solikh (Salih) led the plot, assisted by Afghanistan's Taliban and IMU co-leaders Tahir Yuldashev and Juma Namanganiy. Solikh denied any role in the bombings. In November 2000, Yuldashev and Namanganiy received death sentences and Solikh 15.5 years in prison. Another defendant, Najmiddin Jalolov (see below), received 18 years (all in absentia ). Other security threats included the invasion of neighboring Kyrgyzstan in July-August 1999 by several hundred IMU and other guerrillas. They were rumored to be aiming to create an Islamic state in south Kyrgyzstan as a springboard for a jihad in Uzbekistan. By mid-October 1999, they had been forced out of Kyrgyzstan with Uzbek aid. In August 2000, dozens of IMU and other guerrillas again invaded Kyrgyzstan and Uzbekistan, but were expelled by late October.\nA series of bombings and armed attacks took place in Uzbekistan in late March-early April 2004, reportedly killing 47 individuals. President Karimov asserted that the attacks were aimed to \"cause panic among our people, [and] to make them lose their trust\" in the government. The then-Combined Forces Commander for Afghanistan, Lieutenant General David Barno, visited Uzbekistan in April 2004 and stressed that \"we stand with Uzbekistan in facing down this terrorist menace.\" The obscure Islamic Jihad Union of Uzbekistan (IJU; reportedly a breakaway faction of the IMU) claimed responsibility. Suspected terrorists testified at a trial in mid-2004 that Jalolov was the leader of IJU, that they were trained by Arabs and others at camps in Kazakhstan and Pakistan, and that the IJU was linked to Hizb ut-Tahrir, the Taliban, Uighur extremists, and Al Qaeda. During this trial, explosions occurred on July 30, 2004, at the U.S. and Israeli embassies and the Uzbek Prosecutor-General's Office in Tashkent. The IMU and IJU claimed responsibility.\nOn May 25-26, 2009, a police checkpoint was attacked on the Kyrgyz-Uzbek border, attacks took place in the border town of Khanabad, and four bombings occurred in Andijon in the commercial district, including at least one by suicide bombers. Several deaths and injuries were alleged, although reporting was suppressed. Uzbek officials blamed the IMU, although the IJU allegedly claimed responsibility. President Karimov flew to Andijon on May 31. In late August 2009, shootings took place in Tashkent that resulted in the deaths of three alleged IMU members and the apprehension of other group members. The Uzbek government alleged that the group had been involved in the 1999 explosions and in recent assassinations in Tashkent.\nIn September 2000, the State Department designated the IMU as a Foreign Terrorist Organization, stating that the IMU, aided by Afghanistan's Taliban and by Osama bin Laden, resorts to terrorism, actively threatens U.S. interests, and attacks American citizens. The \"main goal of the IMU is to topple the current government in Uzbekistan,\" the State Department warned, and it linked the IMU to bombings and attacks on Uzbekistan in 1999-2000. IMU forces assisting the Taliban and Al Qaeda suffered major losses during coalition actions in Afghanistan, and IMU co-head Namanganiy was probably killed.\nFormer CIA Director Porter Goss testified in March 2005 that the IJG/IJU \"has become a more virulent threat to U.S. interests and local governments.\" In May 2005, the State Department designated the IJG/IJU as a Foreign Terrorist Organization and Specially Designated Global Terrorist, and in June, the U.N. Security Council added the IJG/IJU to its terrorism list. In June 2008, IJG head Jalolov and his associate Suhayl Fatilloevich Buranov were added to the U.N. 1267 Sanctions Committee's Consolidated List of individuals and entities associated with bin Laden, al Qaeda, and the Taliban. Also, the U.S. Treasury Department ordered that any of their assets under U.S. jurisdiction be frozen and prohibited U.S. citizens from financial dealings with the terrorists. IMU head Yuldashev reportedly was killed in late August 2009 in Pakistan by a U.S. predator drone missile, and Jalalov allegedly similarly was killed in late September 2009. Yuldashev's deputy, Abu Usmon Odil, became the head of the IMU.\nIn July 2011, an Uzbek citizen on an expired student visa was arrested on charges of being directed by IMU terrorists to assassinate President Obama. He confessed and was sentenced in 2012. Two other ethnic Uzbeks were arrested in the United States in early 2012 on charges of collaborating with the IJU. One of the Uzbeks had been granted refugee status after he fled the Uzbek government crackdown in Andijon in 2005. He was arrested at a U.S. airport while allegedly planning to join IJU terrorists abroad. In May 2013, an ethnic Uzbek was arrested in Idaho on charges of providing money and computer support to the IMU for an unspecified attack.", "Dozens or perhaps hundreds of civilians were killed or wounded on May 13, 2005, after Uzbek troops fired on demonstrators in the eastern town of Andijon. The protestors had gathered to demand the end of a trial of local businessmen charged with belonging to an Islamic terrorist group. The night before, a group stormed a prison where those on trial were held and released hundreds of inmates. Many freed inmates then joined others in storming government buildings. President Karimov flew to the city to direct operations, and reportedly had restored order by late on May 13. On July 29, 439 people who had fled from Uzbekistan to Kyrgyzstan were airlifted to Romania for resettlement processing, after the United States and others raised concerns that they might be tortured if returned to Uzbekistan.\nThe United States and others in the international community repeatedly called for an international inquiry into events in Andijon, which the Uzbek government rejected as violating its sovereignty. In November 2005, the EU Council approved a visa ban on 12 Uzbek officials it stated were \"directly responsible for the indiscriminate and disproportionate use of force in Andijon and for the obstruction of an independent inquiry.\" The Council also embargoed exports of \"arms, military equipment, and other equipment that might be used for internal repression.\" In October 2007 and April 2008, the EU Council suspended the visa ban for six months but left the arms embargo in place. In October 2008, the EU Council praised what it viewed as some positive trends in human rights in Uzbekistan and lifted the visa ban, although it left the arms embargo in place. In October 2009, it lifted the arms embargo.\nAt the first major trial of 15 alleged perpetrators of the Andijon unrest in late 2005, the accused all confessed and asked for death penalties. They testified that they were members of Akramiya, a branch of Hizb ut-Tahrira (HT), a banned Islamic political organization launched in 1994 by Akram Yuldashev that allegedly aimed to use force to create a caliphate in the area of the Fergana Valley located in Uzbekistan. Besides receiving assistance from HT, Akramiya was alleged to receive financial aid and arms training from the IMU. The defendants also claimed that the U.S. and Kyrgyz governments helped finance and support their effort to overthrow the government, and that international media colluded with local human rights groups and non-governmental organizations (NGOs) in this effort. The U.S. and Kyrgyz governments denied involvement, and many observers criticized the trial as appearing stage-managed. Reportedly, 100 or more individuals were arrested and sentenced, including some Uzbek opposition party members and media and NGO representatives. Partly in response, the U.S. Congress tightened conditions on aid to Uzbekistan at that time (see below).", "According to testimony to Congress in 2012 by Assistant Secretary of State Robert Blake, \"Uzbekistan has been a critical part of regional support for Afghanistan, building a rail line connecting Afghanistan to Central Asia and providing electricity that benefits the Afghan people. In addition, Uzbekistan has a central role in the NDN, with the majority of supplies transiting through the Uzbek-Afghan border.\" He also stated that U.S. officials continue to raise human rights concerns and that \"we continually advocate for those who seek peaceful democratic reforms. In particular, we ask the government to take steps to eliminate the forced labor of children and adults during the cotton harvest.... We are also working with the Government of Uzbekistan to increase religious freedom by addressing its overly restrictive religious registration policies and allegations of arbitrary arrests and detentions of peaceful religious leaders.\" He raised hopes that Uzbekistan would address restrictive currency conversion law and pervasive corruption, so that U.S. investment could increase. He also called for Uzbekistan to facilitate scientific and educational exchanges.\nDuring President Karimov's March 2002 U.S. visit, former Uzbek Foreign Minister Abdulaziz Komilov and former Secretary of State Colin Powell signed a Declaration on Strategic Partnership and Cooperation that set forth broad-scale goals for political, economic, security, and humanitarian cooperation. The accord pledged the United States to \"urgent consultations\" in the case of external security threats to Uzbekistan and pledged Uzbekistan \"to further intensify the democratic transformation of society in the political, economic and spiritual areas,\" and to \"ensure the effective exercise and protection of human rights.\" U.S. relations with Uzbekistan were set back in 2005 after the United States joined others in the international community to criticize an Uzbek government crackdown in the town of Andijon (see above). The criticism contributed to Uzbekistan's closure of over a dozen U.S.-based or U.S.-supported non-governmental organizations (NGOs), the termination of U.S. basing rights at Karshi-Khanabad (see below), a fall-off in official and diplomatic contacts, and the strengthening of U.S. congressional restrictions on aid to the Uzbek government (see directly below).\nU.S.-Uzbek relations recently have improved, according to the Administration. Assistant Secretary Blake visited Uzbekistan in November 2009 and stated that his meetings there were \"a reflection of the determination of President Obama and Secretary Clinton to strengthen ties between the United States and Uzbekistan.\" He proposed that the two countries set up high-level annual consultations to \"build our partnership across a wide range of areas. These include trade and development, border security, cooperation on narcotics, the development of civil society, and individual rights.\" The first Annual Bilateral Consultation (ABC) took place in late December 2009 with a U.S. visit by an Uzbek delegation led by Foreign Minister Vladimir Norov. The two sides drew up a plan for cooperation for 2010 that involved diplomatic visits, increased military-to-military contacts, and investment and trade overtures.\nIn November 2010, Assistant Secretary Blake testified to Congress that\nthe Obama Administration has increased its engagement with Uzbekistan on a full agenda of security, economic and human rights issues. In the regional security field, Uzbekistan has become a key partner for the United States' effort in Afghanistan…. It has facilitated transit for essential supplies to Coalition forces and constructed an important railroad line inside of Afghanistan.... We have seen an improved relationship with Uzbekistan, but many challenges remain. We continue to encourage the Uzbek authorities to address significant human rights concerns.\nDuring her December 2010 visit to Uzbekistan, Secretary of State Hillary Clinton stated that an improved bilateral relationship was \"crucial\" to U.S. interests. She reportedly thanked President Islam Karimov for Uzbekistan's support for the Northern Distribution Network (transport routes supporting military operations in Afghanistan) and for other assistance to Afghanistan. She stated that issues of human rights also had been discussed. She hailed the signing of a bilateral science and technology cooperation agreement as an effort \"to try to find other ways to connect with and promote positive cooperation between our two countries.\"\nThe second U.S.-Uzbek ABC took place in February 2011 with a visit to Uzbekistan led by Assistant Secretary Blake. The talks reportedly included security cooperation, trade and development, science and technology, counter-narcotics, civil society development, and human rights. A U.S. business delegation discussed means to increase trade ties. Blake reported that the United States had purchased $23 million in Uzbek goods for transit to Afghanistan in FY2010 (see below).\nPresident Obama telephoned President Karimov on September 28, 2011, to thank him for Uzbekistan's cooperation in stabilization efforts in Afghanistan, and reportedly to urge him to facilitate the transit of U.S. and NATO cargoes into and out of Afghanistan. During her October 22-23, 2011, visit to Tajikistan and Uzbekistan, Secretary Clinton discussed the U.S. \"New Silk Road Vision\" to turn Afghanistan into a regional transportation, trade, and energy hub linked to Central Asia. She also warned the presidents of both countries that restrictions on religious freedom could contribute to rising religious discontent. A congressional delegation led by Representative Dan Burton visited Uzbekistan in early July 2012 and met with President Karimov, who called for closer Uzbek-U.S. ties.\nThe third ABC was held in August 2012, and like the second involved a visit to Tashkent by a U.S. delegation led by Assistant Secretary Blake. He reported that the meeting covered Uzbekistan's support for U.S. operations in Afghanistan, energy, agriculture, health, parliamentary exchanges, education, science and technology, counter-narcotics, border security, counter-terrorism, religious freedom, trafficking in persons, and human rights. At an associated U.S.-Uzbek business forum, Assistant Secretary of State Blake raised concerns about currency convertibility and contract sanctity that hamper foreign investment.\nIn a speech in October 2012, Blake stated that because of Uzbekistan's poor human rights record, the United States provided it only non-lethal security assistance.\nIndicative of U.S. interest in Uzbekistan, Deputy Assistant Secretary of State Jane Zimmerman visited Uzbekistan in mid-July 2013, reportedly to discuss human rights issues, and Deputy Assistant Secretary of Commerce Matthew Murray visited in May to discuss trade and investment (U.S. businesses discussed projects in Uzbekistan at a business round table in Washington D.C. later that month). Assistant Secretary Blake visited Uzbekistan in late April 2013. He reported that human trafficking and civil society problems were among human rights issues that were discussed. He indicated that discussions were beginning on providing Uzbekistan with possible excess defense articles from Afghanistan. He also stated that trade and investment issues were discussed, including U.S. concerns about added restrictions on currency convertibility and repatriation. Assistant Secretary of State Mike Hammer visited Uzbekistan in April 2013. He discussed U.S. concerns about freedom of the press, while praising some Uzbek open government initiatives. In March 2013, Secretary Kerry met with visiting Uzbek Foreign Minister Kamilov. Secretary Kerry stated that U.S.-Uzbek relations were continuing to improve, and to expand beyond mutual concerns about Afghanistan. In February 2013, a Congressional delegation headed by Representative Dana Rohrabacher visited Uzbekistan.\nCumulative U.S. assistance budgeted for Uzbekistan in FY1992-FY2010 was $971.36 million (all agencies and programs), according to the data compiled by the State Department's Office of the Coordinator of U.S. Assistance to Europe and Eurasia. Of this aid, $393.0 million (about two-fifths) was budgeted for combating weapons of mass destruction (including Comprehensive Threat Reduction aid), Foreign Military Financing, counter-narcotics, Partnership for Peace, and anti-crime support. Food, health, and other social welfare and humanitarian aid accounted for $222.4 million (nearly one-fourth), and democratization aid accounted for $174.1 million (nearly one-fifth). See Table 1 and Table 2 .\nBudgeted assistance was $11.34 million in FY2011 and $16.7 million in FY2012, and the Administration has requested $11.6 million for FY2014 (numbers include funds from the Economic Support Fund and other \"Function 150\" foreign aid, and exclude Defense and Energy Department funds). Country totals are not yet available for FY2013. The main priorities of U.S. assistance requested for FY2014 are technical advice for Uzbekistan's planned accession to WTO ($3 million); training for judges and defense lawyers on habeas corpus, funding to improve the legal environment for NGOs, and other support for local NGOs and independent media ($1.8 million); and funding for health programs ($3 million).\nIn FY2003 foreign operations appropriations ( P.L. 108-7 ) and thereafter, Congress prohibited assistance to the government of Uzbekistan unless the Secretary of State determined and reported that Uzbekistan was making substantial progress in meeting commitments to respect human rights; establish a multiparty system; and ensure free and fair elections, freedom of expression, and the independence of the media. Congress received a determination of progress in FY2003. In FY2004 and thereafter, however, some aid to Uzbekistan was withheld because of lack of progress on democratic reforms. In FY2008, Congress added a provision blocking Uzbek government officials from entering the United States if they were deemed to have been responsible for events in Andijon or to have violated other human rights.\nIn late 2009, Congress permitted ( P.L. 111-84 , §801)—for the first time since restrictions were put in place—the provision of some assistance on national security grounds to facilitate the acquisition of supplies for U.S. and NATO operations in Afghanistan from countries along the Northern Distribution Network. In 2010, Congress permitted ( P.L. 111-117 ) an expanded IMET program for training Uzbek military officers on human rights, civilian control of the military, and other democracy topics.\nConsolidated Appropriations for FY2012 ( P.L. 112-74 ; signed into law on December 23, 2011) provides for the Secretary of State to waive conditions on assistance to Uzbekistan for a period of not more than six months and every six months thereafter until September 30, 2013, on national security grounds and as necessary to facilitate U.S. access to and from Afghanistan. The law requires that the waiver include an assessment of democratization progress, and calls for a report on aid provided to Uzbekistan, including expenditures made in support of the NDN in Uzbekistan and any credible information that such assistance or expenditures are being diverted for corrupt purposes. The law also extends a provision permitting expanded IMET assistance for Uzbekistan. The State Department has issued waivers for assistance to Uzbekistan, while assessing human rights conditions as of \"serious concern.\" Under the waivers, $2.69 million in Foreign Military Financing was provided to Uzbekistan for FY2012, and $1.5 million is requested for FY2014. The Consolidated and Further Continuing Appropriations Act for FY2013 ( P.L. 113-6 ; signed into law on March 26, 2013), calls for foreign assistance to be provided under the authority and conditions provided in FY2012 in P.L. 112-74 .", "Even before the terrorist attacks on the United States on September 11, 2001, Uzbekistan had cooperated with the United States on regional anti-terrorism efforts, including allegedly serving as a base for U.S. drone operations in Afghanistan. This Uzbek support was attributed by observers to the country's concerns about the IMU. An agreement on the U.S. use of the Khanabad airbase, near the town of Karshi (termed the K2 base) for Operation Enduring Freedom (OEF) in Afghanistan was signed in October 2001, and a joint statement pledged the two sides to consult in the event of a threat to Uzbekistan's security and territorial integrity. This non-specific security pledge was reiterated in the March 2002 \"Strategic Partnership\" accord (mentioned above). In addition to security assurances and increased military and other aid, U.S. forces in Afghanistan killed many terrorists belonging to the Islamic Movement of Uzbekistan (IMU; dedicated to the forceful establishment of Islamic rule in Uzbekistan). Uzbekistan allegedly also served as a site for extraordinary renditions of U.S. terrorism suspects in the early 2000s.\nFollowing U.S. criticism of Uzbek government actions in Andijon, the government demanded at the end of July 2005 that the United States vacate K2 within six months (U.S.-Uzbek relations had shown strains before this demand). On November 21, 2005, the United States officially ceased operations at K2. The Uzbek government has permitted Germany to maintain a small airbase at Termez with about 163 troops. According to some German reports, the country has paid an average of 11 million euros since 2002 for basing privileges.\nAmong possible signs of improving U.S.-Uzbek relations, in early 2008 Uzbekistan reportedly permitted U.S. military personnel under NATO command, on a case-by-case basis, to transit through the Termez airbase operated by Germany. President Karimov attended the NATO Summit in Bucharest, Romania, in early April 2008 and stated that Uzbekistan was ready to discuss the transit of non-lethal goods and equipment by NATO through Uzbekistan to Afghanistan. This issue was part of the agenda during then-Assistant Secretary of State Richard Boucher's May 30-June 3, 2008, visit to Uzbekistan. After the Commander of the U.S. Central Command, General David Petraeus, visited Uzbekistan in January 2009, the country reportedly began facilitating the transit of U.S. non-lethal supplies to Afghanistan as part of the NDN. A first rail shipment of U.S. non-lethal supplies departed from Latvia and entered Afghanistan in late March 2009 after transiting Russia, Kazakhstan, and Uzbekistan. President Karimov announced in May 2009 that the United States and NATO had been permitted to use the Navoi airport (located between Samarkand and Bukhara in east-central Uzbekistan) to receive non-lethal supplies, which could then be transported by air, rail, and ground to Afghanistan. In August 2009, General Petraeus visited and signed an accord on boosting military educational exchanges and training. Reportedly, these visits also resulted in permission by Uzbekistan for military overflights carrying weapons to Afghanistan. President Karimov hailed the visit by General Petraeus as a sign that \"relations between our states are developing further. In the fact that we are meeting with you again I see a big element of the fact that both sides are interested in boosting and developing relations.\"\nAmong other security-related visits, in November 2010, then-U.S. Central Command Commander James Mattis visited Uzbekistan, where he signed a military cooperation accord with General-Major Kabul Berdiyev, the Uzbek Minister of Defense, on engagements and training between USCENTCOM and the Ministry of Defense to be held in 2011, a follow-on to the accord signed in August 2009. In late May 2011, Deputy National Security Advisor Denis McDonough met with President Karimov to discuss Uzbekistan's assistance to Afghanistan. In early July 2011, Principal Deputy Assistant Secretary of State, Bureau of Political-Military Affairs, Kurt Amend visited Uzbekistan. His specialties include defense cooperation and status of forces negotiations. In February 2012, the director of the U.S. Drug Enforcement Administration's Middle East regional office, Mark Destito, visited the Interior Ministry and reportedly discussed DEA training courses carried out in Uzbekistan. Also in February 2012, Elizabeth Jones, the Deputy Special Representative for Afghanistan and Pakistan, visited Uzbekistan to discuss its cooperation efforts in Afghanistan.\nIn late March 2012, then-USCENTCOM Commander Mattis visited Uzbekistan and met with Karimov. During this visit, the two sides signed an accord on military air transit of cargo and personnel from Afghanistan, which the Uzbek legislature later approved. In early June 2012, NATO Secretary General Anders Fogh Rasmussen announced that agreements had been reached with Uzbekistan, Kazakhstan, and Tajikistan for the land transit of materials from Afghanistan. On June 12-13, 2012, Deputy Secretary Bill Burns visited Uzbekistan to discuss security issues, including Afghanistan. He also met with civil society representatives. A few days later, Alice Wells, the National Security Council's Senior Director for Russian and Eurasian Affairs, visited Uzbekistan. U.S. Transportation Command (USTRANSCOM) Commander William Fraser visited in October 2012, reportedly to discuss NDN-related issued, and new USCENTCOM Commander Lloyd Austin visited in July 2013.\nAlthough Uzbekistan's rail network to Afghanistan has been relied upon to ship most of the fuel used by ISAF, corruption and bureaucracy in Uzbekistan reportedly have posed challenges to the use of the NDN routes through the country. Reportedly, only a small percentage of ISAF material is being shipped out of Afghanistan along the NDN for a variety of reasons, including the difficulties of the mountainous terrain in northern Afghanistan, the focus of current military operations in eastern Afghanistan, and restrictions by NDN transit states on cargoes, particularly Uzbekistan.", "" ], "depth": [ 0, 1, 2, 1, 2, 1, 1, 2, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "", "", "", "h0_full h1_full", "", "", "h0_full h2_full", "h1_full", "" ] }	{ "question": [ "How did Uzbekistan gain independence?", "Why could Uzbekistan potentially become a regional power?", "What leadership in the country stayed the same following the country’s independence?", "What policies has Karimov pursued?", "When did the U.S. forge ties with Uzbekistan?", "What aid has Uzbekistan offered the United States?", "Why did the U.S.-Uzbek relationship break down?", "How has the U.S-Uzbek relationship progressed since then?", "What aid assistance did the U.S. budget for Uzbekistan in FY1992-FY2010?", "How was this aid funding budgeted?", "How has the amount of budgeted assistance changed since FY2010?" ], "summary": [ "Uzbekistan gained independence at the end of 1991 with the breakup of the Soviet Union.", "The landlocked country is a potential Central Asian regional power by virtue of its population, the largest in the region, its substantial energy and other resources, and its location at the heart of regional trade and transport networks.", "The existing president, Islam Karimov, retained his post following the country's independence, and was reelected in 2000 and 2007.", "He has pursued a policy of caution in economic and political reforms, and many observers have criticized Uzbekistan's human rights record.", "The United States pursued close ties with Uzbekistan following its independence.", "After the terrorist attacks on the United States in September 2001, Uzbekistan offered over-flight and basing rights to U.S. and coalition forces.", "However, U.S. basing rights at Karshi-Khanabad were terminated in 2005 following U.S. criticism and other actions related to the Karimov government's allegedly violent crackdown on unrest in the southern city of Andijon.", "Since then, the United States has attempted to improve relations, particularly in support of operations in Afghanistan. In 2009, Uzbekistan began to participate in the Northern Distribution Network of land, sea, and air transit routes from Europe through Eurasia for U.S. and NATO military supplies entering and exiting Afghanistan.", "Cumulative U.S. assistance budgeted for Uzbekistan in FY1992-FY2010 was $971.36 million (all agencies and programs).", "Of this aid, about two-fifths was budgeted for combating weapons of mass destruction (including Comprehensive Threat Reduction aid), Foreign Military Financing, counter-narcotics, Partnership for Peace, and anti-crime support. Food, health, and other social welfare and humanitarian aid accounted for nearly one-fourth, and democratization aid accounted for nearly one-fifth.", "Budgeted assistance was $11.3 million in FY2011 and $16.7 million in FY2012, and the Administration has requested $11.6 million for FY2014 (these latter amounts include foreign assistance listed in the Congressional Budget Justification for Foreign Operations, and exclude Defense and Energy Department funding; country data for FY2013 are not yet available)." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, -1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2 ] }
GAO_GAO-13-534	{ "title": [ "Background", "M&O Contractors Differ in How They Allocate Indirect Costs, and Efforts to Standardize Cost Reporting May Provide Limited Improvements", "Differences in How M&O Contractors Allocate Indirect Costs Limit the Comparability of Program Costs across Laboratories", "DOE and NNSA Are Taking Additional Steps to Standardize the Reporting of Certain Indirect Costs, but These Efforts May Provide Only Limited Improvements", "NNSA Takes Some Steps to Assess the Accuracy of M&O Contractors’ Indirect Cost Allocations", "NNSA Examines Laboratory M&O Contractors’ Cost Allocation Models for Compliance with Cost Accounting Standards", "NNSA Generally Relies on M&O Contractors’ Internal Audits to Assess Whether Day-to-day Cost Allocation Practices Conform to Disclosed M&O Contractor Models", "NNSA’s Efforts to Independently Assess M&O Contractors’ Day-to- day Cost Allocation Practices for Compliance With Cost Accounting Standards Are Limited", "NNSA Reviews M&O Contractor Information and Uses Other Means to Help Ensure the Reasonableness of Indirect Costs", "NNSA Reviews M&O Contractor Information to Assess Whether Indirect Costs Are Reasonable", "NNSA Uses Other Means to Help Ensure the Reasonableness of Costs, but These Efforts Vary Across Laboratories", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Federal Cost Accounting Standards", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "M&O contractors operate and maintain NNSA’s three national security laboratories, as well as the infrastructure necessary to support the nuclear weapons stockpile and the capabilities to conduct the scientific, technical, engineering, and production activities that ensure the continued safety and reliability of the stockpile. These laboratories perform various forms of weapons research and development activities as follows:\nLos Alamos National Laboratory in Los Alamos, New Mexico, operated by Los Alamos National Security, LLC,nuclear components and providing unique capabilities such as neutron scattering and radiography. Los Alamos also manufactures plutonium components and weapons detonators. is responsible for\nLawrence Livermore National Laboratory in Livermore, California, operated by Lawrence Livermore National Security, LLC,responsible for nuclear components and providing unique capabilities in high-energy density physics; high explosives research, development, and assessment; and environmental containment of high-hazard experiments.\nSandia National Laboratories in Albuquerque, New Mexico, and Livermore, California, operated by Lockheed Martin Corporation, is primarily responsible for nonnuclear components, including environmental testing of nuclear weapons systems, nonnuclear component engineering, and some nonnuclear component production.\nNNSA and DOE officials are responsible for a variety of oversight functions at the laboratories. For example, NNSA oversees and conducts annual performance reviews of its M&O contractors at each laboratory. OFFM, which includes the field Chief Financial Officer, is primarily responsible for ensuring the integrity of the laboratories’ financial management systems, including the proper allocation of direct and indirect costs. In addition, NNSA maintains an on-site presence at each of the laboratories through field offices that assist in the daily management of the M&O contractor. The DOE OIG, which has audit authority at NNSA laboratories, assists NNSA in carrying out its oversight responsibilities by conducting independent audits as necessary.\nIn general, federal contractors such as NNSA’s M&O contractors are subject to federal Cost Accounting Standards. These standards provide direction for the consistent and equitable distribution of contractors’ costs to help federal agencies more accurately determine the actual costs of its contracts. Table 1 briefly describes Cost Accounting Standards. Appendix II describes these standards in more detail.\nIn addition to Cost Accounting Standards, M&O contractors, DOE, and NNSA must comply with other federal requirements, including the Federal Acquisition Regulation and DOE financial management and accounting orders. In particular, the Federal Acquisition Regulation applies to federal agencies to help regulate the policies and procedures for acquisitions for the government. A requirement of this regulation is that a contractor’s costs must be reasonable.\nWe previously reported that indirect costs could not be readily compared across laboratories and discussed steps DOE has taken to try to provide more comparability of its costs. Specifically, in 2005, we reported that differences in how indirect costs are identified and allocated to programs and differences in the facilities’ missions, corporate structures, and accounting systems affected the comparability of costs across laboratories. In that report, we noted that while DOE required its M&O contractors to separately report data on costs to support missions, such as administrative support, these costs could not be readily compared. These include costs that are classified as both direct and indirect. Further, in 2012, in response to limitations in these data, we reported that DOE was trying to improve its ability to oversee its M&O contractors’ costs through the implementation of the Institutional Cost Reporting initiative.Specifically, this initiative is a multiyear effort that aims to collect certain cost data and report them at an aggregate level across broad cost categories such as maintenance and central administrative support.", "M&O contractors differ in how they classify and allocate indirect costs, which continues to make it difficult for NNSA, Congress, and others to compare program costs across laboratories. Recognizing the limitations of its cost data, DOE and NNSA are implementing the Institutional Cost Reporting initiative, but this initiative may only provide limited improvements over existing data.", "M&O contractors’ differ in how they allocate indirect costs to specific programs, as allowed by Cost Accounting Standards. To allocate costs to programs, M&O contractors classify costs as either direct or indirect. Direct costs, such as labor and materials, are assigned to the benefitting program or programs. Indirect costs—those costs that cannot be assigned to a particular program such as costs for administration and site support—are accumulated, or grouped, into indirect costs pools. The M&O contractor estimates the amount of indirect costs (accumulated into indirect cost pools) that will need to be distributed to each program and adjusts the costs to actual costs by the end of the fiscal year. The contractor then distributes these costs based on a rate in accordance with the cost allocation model. Typically, labor costs receive a higher allocation of indirect costs than do costs such as direct material expenditures. The final program cost is the sum of the total direct costs plus the indirect costs distributed to the program (see fig. 1).\nIn implementing this allocation process, however, similar costs can be allocated differently because M&O contractors’ cost allocation models, which outline the M&O contractor’s structure for identifying and allocating indirect costs, differ. Officials in NNSA’s OFFM said that because of the flexibility the Cost Accounting Standards provide, NNSA does not have the authority to require M&O contractors to classify and allocate costs in a uniform manner. Specifically, M&O contractor cost allocation models differ in how they (1) classify costs as either direct or indirect, (2) accumulate these costs into indirect cost pools, and (3) distribute indirect costs to specific programs. For example:\nClassification. M&O contractors differ in how they classify costs as direct or indirect. For example, M&O contractors at Los Alamos told us they make significant use of service centers—departments which perform specific technical or administrative services for programs such as for telecommunications and computing and separately assign these costs directly to the benefitting laboratory department overheads or programs. In total, service center costs for fiscal year 2012 totaled around $180 million at Los Alamos. In contrast, M&O contractors at Lawrence Livermore reported making limited use of service centers—their costs totaling around $20 million for fiscal year 2012—and instead classified these costs as indirect. Lawrence Livermore officials said that they conducted a business process analysis, which found that it was more efficient and cost-effective for their laboratory to allocate these costs through an indirect-cost pool than to try to develop and administer service centers that would then charge each program directly.\nAccumulation. M&O contractors differ in how they accumulate indirect costs into indirect-cost pools. For example, the M&O contractor at Sandia used both program management and division support indirect- cost pools to accumulate certain indirect support costs that could not be charged to specific projects. The M&O contractors at Los Alamos and Lawrence Livermore recovered these costs through different indirect-cost pools such as program office overhead and site support. For fiscal year 2011, we found that M&O contractors accumulated costs into differing numbers of indirect-cost pools, with one site using as few as 4 pools and another using as many as 11.\nDistribution. M&O contractors differ in how they distribute indirect costs accumulated into indirect-cost pools to programs. For example, in fiscal year 2013, the M&O contractor at Lawrence Livermore distributed General and Administrative costs—costs incurred for the administration of the lab such as executive management and human resources—to total costs excluding materials and subcontract costs incurred by programs, while the M&O contractor at Los Alamos distributed these costs to total program costs including those for labor, materials, and subcontract costs.\nM&O contractors’ cost allocation models have also substantially changed over time. For example, according to M&O contractor documentation for Los Alamos, the M&O contractor substantially changed and simplified its cost allocation model in fiscal year 2013 to improve compliance with Cost Accounting Standards and increase the transparency of these costs. M&O contractor documentation outlining the major changes indicated that these changes increased administrative efficiency at the laboratory. While the change in the cost allocation model did not change the total amount of indirect costs allocated at the laboratory, the changes did affect the amount of indirect costs allocated to certain program costs, such as the cost of subcontractors employed at the laboratory and construction projects, which now received a greater distribution of indirect costs. The M&O contractor at Lawrence Livermore also substantially changed its cost allocation model in recent years. For example, for fiscal years 2005 to 2013, the M&O contractor decreased the number of different rates used to allocate indirect costs to its programs from 184 to 12. The M&O contractor at Sandia has also substantially changed its cost allocation model since fiscal year 2010. For example, the M&O contractor combined certain indirect pools and changed the amount of indirect costs allocated to some program costs, such as those for subcontractor labor.\nBecause of the differences in how M&O contractors allocate indirect costs and changes in allocation practices over time, it remains difficult to compare program costs either across laboratories or at an individual laboratory over time. In particular, it is unclear whether the allocation differences or other factors, such as more effective program management, were the primary cause for the difference in program costs. Specifically, differences in how costs are classified as either indirect or direct, accumulated into indirect-cost pools, and distributed to specific programs can impact the ratio of indirect to total program costs at the laboratories. This ratio is, in part, used by Congress to compare M&O contractor performance. However, as we have previously reported, this ratio alone should not be used as a tool to compare performance as it does not account for the myriad factors that can affect the ratio of indirect to total program costs. Specifically, data on these costs do not account for differences in M&O contractor allocation practices or differences in laboratories’ mission, size, age, or condition, which affects costs. For example, the maintenance costs for a 50-year-old manufacturing facility will likely be higher than those of a modern research facility.\nDOE officials noted that Cost Accounting Standards do not require all contractors to use the same methodology to allocate indirect costs and that project management and cost estimation can be conducted through a variety of project management tools. However, GAO has previously noted shortcomings with data collected, as well as its use by DOE and NNSA to manage projects and estimate costs. For example, in 2010, we reported that NNSA cannot accurately identify the total costs to operate and maintain weapons facilities and infrastructure. In 2011, we reported that NNSA needs more comprehensive infrastructure and workforce data to improve its enterprisewide decision making. Further, in 2012, we reported that NNSA lacked the analytical capability needed to review proposals for program activities and verify cost estimates. Additionally, according to a senior CAPE official responsible for working with NNSA to develop more accurate cost estimates for its weapons programs, the cost data collected by NNSA’s M&O contractors has shortcomings. According to the official, M&O contractors organize their cost data to meet two primary goals. First, contractors want to ensure that they are fully reimbursed for their costs. Second, contractors want to ensure that they fairly allocate indirect costs to programs and projects. However, the CAPE official stated that these data are of limited use to support decision making for programs, projects, and activities including weapons life extension programs, facility construction projects, and facility operations. The official stated that, during his team’s review, they found that the M&O contractors’ cost data for the laboratories was rarely in a form that would be useful for decision-making analysis. In addition, the official stated that the quality of data varied widely across M&O contractors and substantial effort by the CAPE team and the M&O contractor was required to understand and explain trends in the data. The CAPE official added that NNSA does not currently have the data needed to accurately identify the total costs to operate and maintain its weapons facilities and structures. The official stated that NNSA’s needs are changing rapidly as officials deal with difficult choices in a budget-constrained environment. He added that the need for better cost data collection to support decision making is both immediate and imperative. The official stated that CAPE is actively working with NNSA to guide and improve its ability to gather, analyze, and present more useful M&O contractor cost data to decision makers. In May 2013, NNSA announced the creation of the Office of Program Review and Analysis, to provide independent analytical advice to help improve NNSA’s ability to budget, plan, and oversee programs.", "DOE and NNSA are taking steps to standardize the reporting of certain costs; however, these efforts may provide only limited improvements because the data will continue to only be reported at an aggregate level. As noted previously, in 2010, DOE began implementation of Institutional Cost Reporting—a DOE-wide initiative to create a standardized report of certain costs, including many indirect costs—to improve its ability to oversee its sites’ costs. Specifically, Institutional Cost Reporting is a system to collect and report costs at an aggregate level across 28 broad cost categories. DOE officials and documentation noted several anticipated improvements that are expected from implementing Institutional Cost Reporting, including improved data reliability as compared with previous method for collecting and reporting support costs. In January 2012, we recommended that DOE take steps to ensure that the data resulting from the Institutional Cost Reporting are complete and comparable for monitoring sites’ support costs, and DOE concurred with our recommendation. DOE established joint DOE and contractor teams to perform peer reviews intended in part to standardize the data collected through Institutional Cost Reporting. In May 2013, DOE officials said that they had completed the reviews for several sites, including Lawrence Livermore, Los Alamos, and Sandia. Officials stated that they were uncertain when the remaining reviews would be completed.\nAccording to DOE documents, the Institutional Cost Reporting initiative established general goals to develop more timely, accurate, and meaningful data on M&O contractor’s costs. However, DOE officials responsible for helping implement the initiative stated that they are uncertain how or if the data will actually be used. This is because this initiative replaced an earlier system used by DOE to collect and report support costs and, like this earlier system, the Institutional Cost Reporting data will only provide data at an aggregate level across cost categories, such as maintenance. In addition, DOE officials told us that since the Institutional Cost Reporting data appear at an aggregate level, further analyses will be needed to assess the causes for any differences in Institutional Cost Reporting cost categories across the laboratories and other sites. For example, if costs for an activity such as maintenance are significantly higher at one laboratory than another, further research would be needed to determine if the difference is due to efficiency or differences in mission, condition of infrastructure, location, or other reasons. A senior DOE official said that Institutional Cost Reporting is in its early stages and that DOE does not currently know how the data will be used. Further, DOE officials said they were uncertain about the extent to which Institutional Cost Reporting data can be used to improve the transparency and management of laboratory costs, especially indirect costs. To better understand the Institutional Cost Reporting data and help identify potential management uses, DOE officials said that they had initiated several analyses to review specific cost items in the Institutional Cost Reporting data. However, a DOE official helping oversee these efforts noted that the data gathered through Institutional Cost Reporting may ultimately not prove to be useful, as it may not provide meaningful data that can be used to aid management and oversight. Officials with DOD’s CAPE office have also expressed concerns over the usefulness of these aggregated data to improve transparency, aid management, and identify opportunities for cost savings. Moreover, in commenting on a draft of this report, DOE noted that it has determined that the Institutional Cost Reporting initiative data are aggregated at such a high level that they cannot be used to compare detailed contractor costs.\nOFFM officials also stated that their use of the Institutional Cost Reporting data to assess costs and potentially identify cost savings is still largely in the planning stages. Specifically, OFFM officials stated that, while the Institutional Cost Reporting data is more useful and comparable than other data, such as indirect cost rates, additional analyses are still needed to determine if the cost differences identified in Institutional Cost Reporting data are due to efficiency differences or other differences among the laboratories. To date, OFFM officials have taken some steps to use Institutional Cost Reporting data to compare costs across its laboratories and help identify cost savings. For example, NNSA officials said they used Institutional Cost Reporting data to help compare M&O contractor costs. Following this comparison, OFFM is now planning an effort to reduce the amount of state taxes paid by its M&O contractors.", "NNSA has taken steps to examine the accuracy of M&O contractors’ cost allocation models, but actions to independently assess day-to-day cost allocation practices have been more limited. Specifically, NNSA’s OFFM examines laboratory M&O contractors’ cost allocation models for compliance with Cost Accounting Standards requirements, which helps ensure accuracy. NNSA generally relies on M&O contractors’ internal audits to assess whether day-to-day cost allocation practices conform to disclosed M&O contractor models. NNSA’s efforts to independently assess M&O contractors’ day-to-day cost allocation practices to ensure compliance with Cost Accounting Standards are more limited.", "NNSA’s OFFM examines laboratory M&O contractors’ detailed cost allocation models for compliance with Cost Accounting Standards each time a contractor changes its model, which typically occurs upon initiation of the contract and at least annually thereafter. Specifically, within 60 days before a contractor implements changes in a new cost allocation model, the contractor must submit the proposed changes—in a document called a disclosure statement—to OFFM for a compliance review. These disclosure statements include a summary and justification of proposed changes, a reference to the Cost Accounting Standards that apply to each change, and information on the anticipated impact of the proposed changes on a program area’s costs. OFFM reviews the disclosure statement to determine whether the proposed change is adequately described and complies with applicable Cost Accounting Standards. In doing so, OFFM typically follows a detailed review plan or checklist adapted as necessary for the review, including conducting on-site visits or follow-up with the contractor to ensure the disclosed changes to the model are in compliance with Cost Accounting Standards. Based on this review, OFFM sends its recommendation for approval of the disclosure statement to the contracting officer, who then makes the determination to approve.\nOFFM works with laboratory M&O contractors to try to bring cost allocation models into compliance with Cost Accounting Standards and has identified instances when a laboratory’s cost allocation model did not comply with Cost Accounting Standards. Some of these instances affected the accurate allocation of indirect costs. OFFM officials stated that instances of noncompliance have been resolved or are in the process of being resolved. Examples are as follows: In March 2009, OFFM and NNSA site officials determined that the M&O contractor’s indirect cost allocation model for Lawrence Livermore did not fully comply with Cost Accounting Standards. Specifically, activities such as science and technology strategic planning and laboratory outreach were included in a strategic mission support indirect-cost pool. These costs were viewed by Lawrence Livermore as broadly institutional in the same manner as General and Administrative costs. According to NNSA officials, the M&O contractor allowed this practice to occur because it believed that these programs did not equitably benefit from the activities covered by these indirect costs. OFFM officials disagreed, and the M&O contractor changed its cost allocation model in fiscal year 2013 to include these indirect costs in the General and Administrative indirect-cost pool.\nIn October 2009, OFFM reviewed M&O contractor indirect cost allocations at Lawrence Livermore being applied to the National Ignition Facility—a research facility intended to demonstrate nuclear fusion reactions using lasers—and determined that the M&O contractor’s cost allocation model did not comply with certain aspects of the Cost Accounting Standards. Specifically, the M&O contractor’s model did not equitably distribute indirect costs during the construction of the facility, as the Cost Accounting Standards require. NNSA’s contracting officer concurred but permitted the M&O contractor to continue using this model through October 2012 to minimize disruption to the program. As a result, 18 other programs at the site continued to assume a greater share of these indirect costs, which totaled about $134 million for fiscal year 2013, according to our analysis of M&O contractor documents. For example, according to M&O contractor documents, the Departments of Defense and Homeland Security, which conduct research at Lawrence Livermore, paid more each year to cover indirect costs that would have otherwise been collected from the National Ignition Facility project.\nIn July 2010 and January 2011, OFFM determined that the M&O contractor’s indirect cost allocation model for Los Alamos did not fully comply with Cost Accounting Standards because construction projects and certain other types of labor were fully or partially exempt from having to contribute the standard cost allocation amounts for General and Administrative indirect costs at the laboratory. According to OFFM officials, other programs at the site needed to contribute more money to the General and Administrative cost pool to compensate for this shortfall, resulting in the inequitable sharing of these indirect costs across all programs. Los Alamos changed its allocation model in fiscal year 2013 to eliminate these exemptions and more equitably share these indirect costs across all programs.", "Officials with NNSA’s OFFM told us that they generally rely on the M&O contractors’ internal audit efforts to assess whether M&O contractors’ day-to-day cost allocation practices conform to their disclosed cost allocation models. OFFM officials told us that they perform some limited testing to verify that M&O contractors’ practices conform to their cost allocation models but that they largely rely on the M&O contractors’ M&O contractors’ internal audit groups to perform this verification.internal audits have found that some contractor allocation practices do not conform to their models. Internal audits at all three of the laboratories identified some problems—particularly with how labor hours are charged to projects, but NNSA officials stated that these problems are not significant in relation to the costs incurred by M&O contractors. According to OFFM officials, M&O contractors, and documents, the laboratories have corrected or are in the process of correcting these problems, and follow-up audits are also being conducted at some sites to verify that problems are adequately addressed. Following are examples:\nLos Alamos. In 2009, Los Alamos’ M&O contractor conducted an internal audit to determine whether its laboratory’s day-to-day labor allocation practices conformed to its disclosed cost allocation model. The audit determined that labor hours reported by M&O contractor employees did not always reflect the actual work performed, and labor costs may not have been allocated equitably among all benefitting programs and therefore was not consistent with their cost allocation model. For example, one employee interviewed during the contractor’s internal audit noted an instance where labor hours were transferred from one program to another to prevent a cost overrun. The M&O contractor identified and implemented corrective actions to address the problem, including providing training and guidance to laboratory employees about proper time and labor reporting practices. In April 2011, the M&O contractor’s internal audit office conducted a follow-up audit and found that three of four corrective actions identified in the prior report were completed but that there was still need for further improvement regarding the allocation of labor costs. Specifically, the follow-up report concluded that the allocation of indirect labor costs posed a high risk and significant concern. According to the M&O contractor documentation, M&O contractor managers later determined that the problem was not significant enough to warrant further corrective action. However, the M&O contractor’s internal audit management and OFFM officials told us that they are continuing to work to resolve the issue.\nLawrence Livermore. Lawrence Livermore’s M&O contractor internal auditors reported similar problems in September 2010, including some instances where indirect labor hours were inaccurately allocated to direct projects, inconsistent with its disclosed cost allocation model. To correct these problems, M&O contractor managers agreed to update policies, procedures, and guidance on proper cost allocation practices at the laboratory, and develop training for employees. The M&O contractor’s internal audit office plan for fiscal year 2013 states that it expects to review the results of prior internal audits to determine the need for additional audits in specific areas.\nSandia. Based on the problems found at the other two laboratories, an NNSA Sandia Field Office official recently asked its M&O contractor’s internal audit office at Sandia to verify Sandia’s labor hour allocations. Sandia’s internal audit office reported in October 2012 that M&O contractor employees were not always accurately allocating their time in accordance with actual work performed. Corrective actions in response to this audit are still being implemented. Specifically, the M&O contractor agreed to improve guidance and training provided to all employees about proper time charging practices and policies, and to conduct periodic self-assessments to ensure compliance with these practices and policies.", "Although NNSA’s OFFM has responsibility for supporting contracting officers in the day-to-day oversight of M&O contractors’ management of indirect costs, its role does not include conducting independent audits to assess compliance with Cost Accounting Standards, according to OFFM officials. On a limited basis, however, OFFM reviews some summary M&O contractor data to determine whether actual cost allocation practices are consistent with disclosed practices and complies with applicable federal requirements, and conducts expanded reviews, as needed. Specifically, M&O contractors must annually submit a formal statement documenting the total size of their indirect-cost pools and allocations, as well as the indirect rates used during the previous fiscal year. In addition to these steps, OFFM can request audit assistance from the OIG—which has audit authority at NNSA laboratories.\nOIG officials stated that the frequency and scope for conducting audits for contractors’ compliance with Cost Accounting Standards should be based on the level of risk. However, OFFM and OIG officials and M&O contractors hold varying opinions regarding the level of risk of inaccurate indirect cost allocation practices at the laboratories. For example, some OFFM and OIG officials and M&O contractors told us that they believe the risk is generally low compared with other federal agencies. Specifically, because NNSA M&O contractor operations are federally funded, and the operations are not mixed with private activities, the risk is low that federal funds are being used to pay an inequitable and higher share of indirect costs for private, nonfederal activities. In contrast, senior NNSA field office official told us that he is concerned about the ongoing possibility that indirect costs could be manipulated—that is, allocated to other programs—to avoid exceeding program budgets and, therefore, believes the risk is high. This concern was echoed by an M&O contractor’s internal audit office, which reported in April 2011 that, based on its audit findings the allocation of indirect costs posed a high risk. This contractor’s internal audit office also confirmed that M&O contractor labor hours in at least one instance were transferred to another program to prevent a cost overrun. Despite the uncertainty of the risk of noncompliance, NNSA’s Chief Financial Officer in OFFM does not conduct formal periodic risk assessments. One of the federal standards for internal control—risk assessment—states that management should assess the risks faced entity-wide, and at the activity level, from both external and internal sources. The standard also states that if risks have been identified, management should decide what actions should be taken to mitigate them. The identification and prioritization of these risks can then influence decisions regarding the type, timing, and extent of future monitoring or oversight. Risk identification methods may include, among other things, forecasting and strategic planning, and consideration of findings from audits and other assessments. Without a formal, periodic risk assessment regarding the level of risk posed by noncompliance, NNSA may not have a well-documented basis for its decisions regarding the type, timing, and extent of future monitoring or oversight.\nRecently, the OIG has taken some steps to improve its understanding of the risks associated with M&O contractors’ noncompliance with Cost Accounting Standards. First, the OIG contracted a private auditing firm to perform a limited audit at Lawrence Livermore in 2012 to test compliance with one Cost Accounting Standard that addresses the allocation of direct and indirect costs.problems or potential issues or challenges were identified. Second, in January 2013, OIG officials stated that they were developing additional guidance to ensure that field staff document their consideration of these risks in their annual assessments, as necessary.", "NNSA reviews M&O contractor information to assess the reasonableness of M&O contractor costs, including indirect costs, at the laboratories. NNSA also uses other means to help ensure the reasonableness of costs, such as requiring M&O contractors to compare costs with other laboratories and industry, but these efforts vary across laboratories.", "NNSA reviews M&O contractor information and cost data to assess the reasonableness of M&O contractor costs at the laboratories. In order for a contractor’s costs to be reimbursed, they must be reasonable. The Federal Acquisition Regulation provides that a cost is reasonable based on a number of considerations and circumstances, including whether the type of cost is generally recognized as ordinary and necessary for the conduct of the contractor’s business or the contract performance.To demonstrate compliance with the Federal Acquisition Regulation, M&O contractors submit summary and some detailed information and data on their costs to NNSA and the OIG for review and approval. For example, according to DOE guidance, M&O contractors are required to annually prepare and submit summary information identifying costs incurred during the year. This information is then reviewed by NNSA’s field office Chief Financial Officer, contracting officers located at the laboratories, and the OIG, among others. Further, NNSA contracting officers told us that they review the M&O contractors’ own system of internal controls for ensuring that incurred indirect costs comply with contract provisions, such as by reviewing the M&O contractors’ internal audits assessing the reasonableness of their costs. Contracting officers serve a principal role in ensuring the reasonableness of M&O contractor costs, as required in the Federal Acquisition Regulation. Decisions to approve M&O contractor costs are documented in contracting officers’ approval memos, however, the specific steps taken in these reviews to determine reasonableness are not documented. In addition to the contracting officers’ review efforts, OFFM officials stated that they review M&O contractors’ high-level summary indirect cost information to help ensure the reasonableness of M&O contractor costs. OFFM officials stated that they act in a supporting role to the review efforts of the contracting officers in helping to ensure the reasonableness of M&O contractors’ costs.", "NNSA also uses other means to encourage M&O contractors to manage the laboratories in a cost-efficient and effective manner. In particular, NNSA includes provisions in its contracts to encourage or require laboratories to take steps to manage costs. For example, NNSA’s contracts require M&O contractors to regularly benchmark costs to standards for high performing external businesses and other contractors. Laboratory M&O contractors take some steps to benchmark costs and practices to industry and take corrective actions as needed, but these efforts have varied from laboratory to laboratory. For example, the M&O contractor at one laboratory stated that they undertook a benchmarking study to compare the costs of servicing the laboratory’s fleet of vehicles in-house as compared with using an outside vendor. The M&O contractor, concluding that an outside provider would be more cost-effective, contracted with an outside provider and estimated an annual savings of approximately $775,000. In addition to M&O contractor-led efforts, NNSA has also taken steps to benchmark costs at its laboratories and sites. Specifically, NNSA hired external consulting groups to conduct benchmarking studies in the areas of finance, information technology, and human resources management across multiple NNSA sites, which provided their reports to NNSA in March 2009.areas for improvement and, while M&O contractors noted that they consider the information from these studies in decision-making processes, they were unable to provide documentation showing what steps were taken specifically in response to findings or recommendations in these studies.\nAlthough contracts for the three laboratories do require that benchmarking be performed, the contract provisions do not specify the areas that should be examined, how frequently benchmarking should occur, and what process should be used for implementing any needed corrective actions. In contrast, DOE provides more specific requirements for benchmarking pension and post-retirement benefit costs. Specifically, DOE guidance requires contractors to benchmark certain employee benefits every 2 to 3 years and implement corrective action plans if benchmarking efforts show that the value of certain employee benefits are 5 percent or higher than industry averages.\nIn addition to benchmarking, OFFM is involved in other activities to help identify cost savings, improve efficiency, and help ensure the reasonableness of costs. We previously reported on efforts taken by DOE and NNSA to reduce M&O contractors’ costs at its laboratories such as through streamlining and centralizing certain support functions, such as for human resources. In addition to those efforts, the OIG also conducts audits to help reduce costs, including indirect costs. OFFM officials said that they also participate in NNSA’s Business Management Advisory Council, which includes NNSA’s Chief Operating Officer, chief operating officers from each M&O contractor, field office representatives, and the NNSA Senior Procurement Executive. The Business Management Advisory Council meets quarterly to discuss proposals and initiatives to improve efficiency and identify cost savings. For example, we previously reported that, in 2011, the Business Management Advisory Council considered consolidating human resource and other services at all of NNSA’s sites to achieve cost savings.\nTo further encourage M&O contractors to manage the laboratories in an effective and efficient manner, NNSA also includes performance-based fees in its contracts. Specifically, field office contracting officials rate the M&O contractors’ efforts to identify and implement cost-savings measures, while also achieving mission goals, through annual performance evaluation plans. These cost management efforts also include efforts to identify and implement cost-savings measures. However, according to NNSA officials, the amount of performance-based fee tied to cost management efforts is relatively small—$1 million or less at each laboratory annually—and may not provide a meaningful incentive to the contractors. In contrast, the overall incentive fees for laboratory M&O contractor work can be up to $60 million annually. NNSA officials stated that, because financial incentive amounts are limited, mission work could be negatively impacted if financial incentives were redirected to improving cost management at the laboratories.\nNNSA is exploring ways to improve the use of incentives in its contracts to encourage M&O contractors to manage the laboratories in an efficient and effective manner. Specifically, according to NNSA officials, NNSA added requirements in the proposed combined contract for its Y-12 and Pantex sites in fiscal year 2013, which would link future contract extensions to cost-savings goals to improve cost management. For example, these new provisions would have required the M&O contractors to achieve at least 80 percent of the proposed cost-savings measures, as outlined in their contractual language, in order to receive a contract extension. However, we have questioned these anticipated cost savings because of the limited details available about the actual work that will be consolidated, and the adequacy of data used to estimate cost savings.\nAs of June 2013, the status of NNSA’s combined contract award for the Y-12 and Pantex sites is uncertain. On April 29, 2013, we sustained portions of bid protests regarding this combined contract. Specifically, we concluded that NNSA failed to meaningfully assess the majority of each offeror’s proposed cost savings, and based its source selection decision on the unsupported assumption that all cost savings proposed by every offeror would be achieved. The protest decision recommended that NNSA reopen the procurement for this contract and request additional information from the offerors about their proposed cost savings. Following this decision, in May 2013, NNSA announced that it would reopen competition for the combined contract. Because the contract has not yet been implemented, it is too soon to evaluate the effectiveness of these new contract provisions, but NNSA officials stated they anticipate incorporating similar provisions into future contracts for the laboratories.", "It is critical that NNSA and its M&O contractors ensure that the billions of dollars spent each year at the laboratories are used effectively. Because Cost Accounting Standards allow flexibility in how M&O contractors classify and allocate direct and indirect costs to programs, however, it can be difficult to assess cost data and meaningfully compare cost management performance across laboratories. Recognizing these challenges, DOE has been developing the Institutional Cost Reporting initiative to separately collect data on certain costs, including many indirect costs, in an effort to improve its ability to oversee M&O contractors’ costs, including, indirect costs, at the NNSA laboratories. The initiative is still under development, however, and the uses for the data collected have not been determined. Without a clearer understanding of how Institutional Cost Reporting data can be used to manage costs and what data are needed, it is unclear if this initiative will provide meaningful improvement over existing data.\nNNSA has made progress in improving M&O contractors’ cost allocation models to better comply with Cost Accounting Standards. However, key officials hold differing views about the level of risk of inaccurate indirect cost allocation practices at the laboratories. OIG officials stated that the frequency and scope for conducting audits for contractors’ compliance with Cost Accounting Standards should be based on the level of risk. However, OFFM does not conduct periodic, formal risk assessments of contractor compliance to determine the level of risk. Without such assessments, NNSA does not have important information needed to make decisions about the type, timing, and extent of future monitoring or oversight.\nIn addition to efforts to assess the accuracy of indirect costs, NNSA and M&O contractors also use benchmarking as a means to assess the reasonableness of costs. Although DOE orders and M&O contracts define specific benchmarking requirements for pension costs, contracts are less specific in terms of what types of indirect costs should be benchmarked, how frequently benchmarking should take place, and the process for ensuring corrective actions are taken, as needed. Without more consistent and comparable benchmarking, NNSA will likely lack useful data about costs across the laboratories, as well as in the private sector, that could inform cost management decisions at the laboratories and identify areas for cost savings.", "To help improve its ability to oversee M&O contractor costs, including indirect costs, for its laboratories and make more effective use of DOE and contractor resources, we recommend the Secretary of Energy take— or, as appropriate, direct the Administrator of NNSA to take—the following three actions:\nClarify how data collected by the Institutional Cost Reporting initiative will be used.\nDirect OFFM to conduct formal, periodic risk assessments of M&O contractors’ compliance with Cost Accounting Standards by using (1) laboratory M&O contractor internal audit results, (2) OIG audit results, and (3) other relevant information obtained through ongoing monitoring and oversight to provide a well-documented basis for its future monitoring and oversight, including determining the appropriate level of OIG audit assistance needed.\nIncorporate more specific benchmarking requirements into future laboratory contracts—similar to the benchmarking requirements used by DOE to assess and manage pension and post-retirement benefit costs—including which costs should be benchmarked, how frequently benchmarking should occur, and what process should be used to ensure corrective actions are taken, as needed.", "We provided a draft of this report to DOE for its review and comment. In written comments, NNSA’s Associate Administrator for Management and Budget, responding on behalf of DOE and NNSA, wrote that DOE agreed with our report’s three recommendations. DOE’s written comments on our draft report are included in appendix III. DOE also provided technical comments, which we incorporated into the report as appropriate.\nIn response to our first recommendation that DOE clarify how data collected by the Institutional Cost Reporting initiative will be used, DOE stated in its written comments that it will clarify the uses of the data, and that its estimated completion for this action is September 30, 2013. However, DOE stated that it has determined that the data are aggregated at such a high level that they cannot be used to compare detailed contractor costs. We remain concerned that, without better cost data, DOE and NNSA may continue to be limited in their abilities to effectively oversee M&O contractor costs. DOE agreed with our second recommendation that it conduct formal, periodic risk assessments of M&O compliance with Cost Accounting Standards. In its comments, DOE stated that OFFM will conduct such assessments and that its estimated completion date for this action is September 30, 2013. The agency also agreed in principle to our third recommendation that it incorporate more specific benchmarking requirements into future laboratory contracts, similar to its benchmarking requirements used to assess and manage pension and postretirement benefit costs, stating that it would evaluate options to determine appropriate benchmarking requirements for inclusion in future M&O contracts. DOE stated that the estimated completion for this action is December 31, 2013.\nDOE also provided a general comment referencing our draft report’s discussion of the flexibility afforded NNSA’s eight integrated contractors by Cost Accounting Standards and the cost data collected by NNSA. In particular, DOE stated that the Cost Accounting Standards intentionally afford flexibility for all government contractors and that our report leaves the false impression that NNSA is somehow required to create consistency, when current practices are intentionally designed for flexibility. As stated in our report, we agree that Cost Accounting Standards provide flexibility for contractors and provided additional clarification in the report. DOE stated that the repeated statements about \"flexibility\" and how the current data do not address CAPE-identified requirements are misleading to the average reader who may not distinguish between the appropriateness of accounting practices and the separate issue of collecting data from accounting and other project management systems. DOE noted that project management and cost estimation are done through a variety of project management tools and that, as presented, the report would give the impression that NNSA is somehow not \"accounting\" for costs appropriately, and it is factually incorrect to suggest that accounting practices that adhere to applicable law are somehow askew. We recognize that there are various methods to gather data, however, as our previous work and CAPE’s work have noted, these data have shortcomings for supporting decision making for programs, projects, and activities. NNSA also stated that it agreed that efforts to produce information to better support decision making from existing data could be improved. We continue to believe that improved data could aid DOE and NNSA in their efforts to oversee and manage sites’ costs.\nWe are sending copies of this report to the Secretary of Energy, the NNSA Administrator, the appropriate congressional committees, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.", "This report examines (1) whether laboratory Management and Operating (M&O) contractors' practices differ for allocating indirect costs and, if so, how; (2) the extent to which National Nuclear Security Administration (NNSA) ensures that laboratory M&O contractors’ allocated indirect costs are accurate; and (3) the extent to which NNSA ensures that laboratory M&O contractors’ indirect costs are reasonable.\nTo determine whether laboratory M&O contractors’ practices differ for allocating indirect costs, and, if so, how, we reviewed federal Cost Accounting Standards, which, in part, guide M&O contractor allocation practices, and NNSA and M&O contractor documentation associated with complying with these standards. We met with officials from NNSA’s Office of Field Financial Management (OFFM) in Albuquerque, New Mexico. We also visited Lawrence Livermore, Los Alamos, and Sandia National Laboratories and interviewed M&O contractors and NNSA field office officials. We reviewed NNSA and contractor documents showing the actions taken by NNSA and the M&O contractors to manage indirect costs at the three laboratories, as well as data on these costs. We reviewed indirect cost data used by M&O contractors to document compliance with Cost Accounting Standards and manage indirect costs and met with knowledgeable NNSA officials and M&O contractors to assess the reliability of these data. We found them to be sufficiently reliable for the purposes of this report. To gather additional perspectives on how differences in cost allocation practices affect stakeholders, we met with the Office of the Secretary of Defense’s Cost Assessment and Program Evaluation (CAPE) office to discuss their review of the laboratories’ cost accounting systems to improve cost estimation for weapons stockpile programs. To describe DOE and NNSA’s Institutional Cost Reporting initiative, we spoke with DOE officials in its headquarters and Germantown, Maryland, offices for financial management and accounting and NNSA officials in OFFM. We also reviewed DOE and NNSA internal guidance, as well as documents describing this initiative.\nTo examine the extent to which NNSA ensures that laboratory M&O contractors’ reported indirect costs are accurate, we reviewed relevant federal requirements, in particular, federal Cost Accounting Standards. We also interviewed OFFM officials and M&O contractors to discuss whether and how these standards apply to laboratory M&O contractors and the steps taken to ensure that M&O contractor cost allocation models comply with applicable standards. In addition, we obtained specific information regarding OFFM’s identification of key instances where the M&O contractors’ cost allocation models did not comply with these standards, how they did not comply, and the general status of actions to correct any significant problems. To determine the extent to which NNSA ensures that laboratory M&O contractor’s day-to-day cost allocation practices conform to their disclosed cost allocation models, we interviewed OFFM, M&O contractor internal audit, and DOE Office of Inspector General (OIG) officials. As appropriate, we reviewed relevant past audits at each of the laboratories, the associated corrective actions taken and planned, and general plans for future audits. To understand the OIG’s historical involvement in conducting independent audits of Cost Accounting Standards at NNSA laboratories, we reviewed relevant correspondence between NNSA and the OIG, and met with OIG officials to clarify their role in conducting past and future audits.\nTo examine the extent to which NNSA ensures that laboratory M&O contractors’ indirect costs are reasonable, we reviewed pertinent documents and interviewed NNSA officials and M&O contractors about steps taken to assess the reasonableness of indirect costs. We reviewed requirements relating ensuring the reasonableness of costs, including the Federal Acquisition Regulation, DOE’s accounting handbook, and DOE orders. We reviewed the M&O laboratory contracts in place in fiscal year 2012 to identify requirements for managing costs, including indirect costs. We also identified any requirements in the contracts for benchmarking efforts and financial incentives, if any, to encourage cost management. We reviewed performance evaluations of the laboratory M&O contractors to identify any information related to the reasonableness of costs or the effectiveness of cost-savings initiatives. We also reviewed pertinent NNSA and contractor documents related to the review and approval of M&O contractor costs, including reasonableness. We reviewed pertinent studies performed by NNSA, M&O contractors, or outside consulting firms that were completed between 2008 and 2013 related to assessing or addressing the reasonableness of laboratories’ costs. We reviewed NNSA requirements linking M&O contract extensions to cost-savings initiatives to help ensure the reasonableness of costs, including the proposed combined contract for the Y-12 and Pantex sites. We met with officials from OFFM in Albuquerque and also visited Lawrence Livermore, Los Alamos, and Sandia National Laboratories to interview M&O contractors and NNSA field office officials on their efforts to ensure cost reasonableness at the laboratories, and to discuss any opportunities for improvement in this area.\nWe conducted this performance audit from April 2012 to June 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Description The cost accounting practices used in accumulating and reporting of actual cost must be consistent with the practices used in estimating costs in pricing proposals. The purpose of the standard is to enhance the likelihood that comparable transactions are treated alike and to obtain improved reliability of estimates and comparisons with performance.\nThe same type of cost must be consistently classified as direct or indirect with respect to all work performed. The purpose of this standard is to require that each type of cost is allocated only once and on only one basis to any contract or other cost objective in order to prevent overcharging of some contracts and to eliminate double counting.\nEstablishes the criteria for allocation of home office expenses to segments and minimizes the amount of such expenses classified as residual.\nFacilitates the consistent measurement of costs based on a capitalization policy that adheres to the criteria of the standard.\nThe purpose of this standard is to facilitate the negotiation, audit, and settlement of unallowable costs.\nProvides criteria for the periods to be used as cost accounting periods for contract estimating, accumulating, and reporting of cost.\nProvides criteria for using standard costs for estimating, accumulating, and reporting costs of direct material and direct labor. The standard also provides criteria regarding the establishment of standards, accumulation of standard costs, and disposition of variances from standard costs.\nProvides criterion for assigning these compensated personal costs to the cost accounting period in which the related entitlement is earned.\nProvides criteria for assigning costs of tangible assets to cost accounting periods and for consistent allocation of those costs to cost objectives.\nProvides criteria for the allocation of the cost of general and administrative expenses based on their beneficial or causal relationships.\nThis standard requires the contractor to have written statements of accounting policies and practices for accumulating the costs of material and for allocating costs of material to cost objectives.\nDescription Establishes the components of pension costs and the bases for measuring such costs. It also provides criteria for determining the amount of pension costs to be assigned to cost accounting periods.\nProvides for adjustment of pension cost for actuarial gains and losses, their assignment to cost accounting periods, and bases for allocation of pension costs to business segments.\nProvides for the explicit recognition of the cost of money for facilities capital as an element of contract costs.\nProvides criteria for the measurement and assignment of deferred compensation costs to cost accounting periods. The cost of deferred compensation is to be assigned to the cost accounting period in which the contractor incurs an obligation to compensate the employee.\nProvides criteria for the measurement of insurance costs, the assignment of such costs to cost accounting periods, and their allocation to cost objectives.\nEstablishes criteria for the measurement of the cost of money attributable to capital assets under construction, fabrication, or development as an element of the cost of those assets.\nProvides for consistent determination of direct and indirect costs, provides criteria for the accumulation of indirect costs, including service center and overhead costs in indirect-cost pools, and provides guidance relating to the selection of allocation measures based on the beneficial or causal relationship between an indirect- cost pool and cost objectives.\nProvides criteria for the accumulation of independent research and development costs and bid and proposal costs. It also provides criteria for the allocation of such costs to cost objectives based on the beneficial or causal relationship between such costs and cost objectives.", "", "", "In addition to the contact named above, Janet Frisch, Assistant Director; Paul Kinney; Mehrzad Nadji; Alison O’Neill; Christopher Pacheco; Sophia Payind; Cheryl Peterson; Steven Putansu; Kiki Theodoropoulos; Nick Weeks; and William Woods made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full h1_full", "h0_full h2_title h4_title h3_title", "h3_full h2_full h4_full", "h0_full", "h1_full", "", "", "h1_full", "h2_full h1_full", "", "h2_full", "h3_full h1_full", "", "", "h0_full h4_full", "", "", "", "" ] }	{ "question": [ "How do NNSA managing and operating contractors classify indirect costs?", "How does this compare to Cost Accounting Standards?", "How are DOE and NNSA mitigating the limitations of current cost data?", "How will DOE use the information from this initiative?", "How does NNSA ensure Cost Accounting Standards requirements?", "To what extent does NNSA rely on the internal audits of M&O contractors?", "How does NNSA verify these internal audits?", "To what extent is the reliance on internal audits risk for NNSA?", "How does NNSA assess M&O contractors' data?", "How do NNSA contracts help ensure reasonable costs?", "What weaknesses exist in the NNSA contracts?", "How does this affect M&O contractor costs?", "What is NNSA's role regarding nuclear security?", "What role do M&O contractors have in NNSA?", "What costs are associated with M&O contractors?", "How do Federal Cost Accounting Standards affect M&O contractors?", "What was GAO asked to examine?", "What did this report examine regarding NNSA?", "How did GAO collect data for this report?" ], "summary": [ "The National Nuclear Security Administration’s (NNSA) management and operating (M&O) contractors differ in how they classify and allocate indirect costs at NNSA laboratories.", "Although different approaches are allowed by Cost Accounting Standards, these differences limit the ability to compare program costs across the laboratories.", "Recognizing the limitations of its current cost data, the Department of Energy (DOE) and NNSA are implementing the Institutional Cost Reporting initiative intended to create a standardized report of certain costs, including many indirect costs.", "However, DOE is uncertain how it will use the data gathered by this initiative, and these efforts may provide only limited improvements because the data will continue to only be reported at an aggregate level.", "NNSA examines M&O contractors’ models for allocating indirect costs for compliance with Cost Accounting Standards’ requirements at least annually, which helps ensure accuracy. NNSA has identified instances when these models did not comply with these requirements, but NNSA has worked with M&O contractors to address these issues.", "NNSA generally relies on the M&O contractors’ internal audits, however, to assess whether M&O contractors’ day-to-day cost allocation practices conform to disclosed cost allocation models.", "NNSA reviews some summary data to independently assess day-to-day compliance with Cost Accounting Standards but does not conduct independent audits.", "However, NNSA and OIG officials and M&O contractors hold varying opinions regarding the level of risk that inaccurate indirect cost allocation practices at the laboratories pose. In the absence of formal, periodic risk assessments, NNSA may not have a well-documented basis for its decisions regarding the type, timing, and extent of future monitoring or oversight.", "NNSA reviews M&O contractors’ cost data and other information to assess the reasonableness of their costs, including indirect costs. NNSA also uses other means to help ensure the reasonableness of these costs.", "For example, NNSA’s contracts require M&O contractors to regularly benchmark their costs to other contractors and industry.", "These requirements, however, do not specify the areas that should be examined, how frequently benchmarking should occur, and what process should be used for implementing any needed corrective actions.", "As a result, M&O contractor efforts to benchmark costs varied across laboratories.", "NNSA, a semiautonomous agency within DOE, oversees the nation’s nuclear security programs.", "M&O contractors manage NNSA’s facilities, including its national security laboratories––Lawrence Livermore, Los Alamos, and Sandia.", "Each year, M&O contractors spend billions of dollars to manage and operate these laboratories. Costs include both direct costs—which can be identified with a specific objective or program—and indirect costs, such as management, administrative, and facility costs.", "Federal Cost Accounting Standards give M&O contractors flexibility in how costs are classified as direct or indirect and allocated to programs.", "GAO was asked to review M&O contractor indirect cost management.", "GAO examined (1) whether laboratory M&O contractors' practices differ for allocating indirect costs and, if so, how; (2) the extent to which NNSA ensures that laboratory M&O contractors’ allocated indirect costs are accurate; and (3) the extent to which NNSA ensures that laboratory M&O contractors’ indirect costs are reasonable.", "GAO reviewed NNSA and laboratory M&O contractor data and documents and spoke with DOE and NNSA officials and M&O contractors." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 1, 0, -1, -1, 1, 2, -1, 0, -1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }
GAO_GAO-17-135	{ "title": [ "Background", "LPTV and Translator Stations Provide Programming and Information That Might Not Be Available to Over-the- Air Viewers after the Auction", "LPTV and Translator Stations Are Diverse in Their Programming and Owned by Various Types of Entities", "Number of Stations and Communities of License", "Ownership", "The Incentive Auction Could Affect Viewers’ Ability to Receive LPTV and Translator Stations’ Programming and Televised Emergency Information", "Selected Stakeholders View FCC’s Actions as Having Limited Usefulness and Have Proposed Additional Actions to Mitigate the Auction’s Effects", "Selected Stakeholders View FCC’s Actions as Helpful in Some Circumstances but Insufficient", "Channel Sharing", "Stakeholders Suggested a Variety of Actions to Help Mitigate the Potential Impact of the Auction", "Reconsider Various Aspects of the Auction", "Provide Funding for Relocation Expenses", "Permit Use of Alternative Technical Standards", "Provide Opportunity to Obtain Primary Interference Protection Status", "Selected Stakeholders Expressed Varying Views on Outcomes of Preserving a Vacant Television Channel", "Loss of Existing Broadcast Service", "Development of New Technologies and Innovation", "Improvement of Wi-Fi Internet", "Improvement of Rural Broadband Service", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Survey of Low Power Television and Translator Stations", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "LPTV stations, as indicated by their name, operate at lower power levels and transmit over smaller areas than full-power television stations. FCC established a licensing process for LPTV stations in 1982 to add to programming diversity and provide opportunities for locally oriented television service in small communities. LPTV stations may originate programming and, according to FCC, have created opportunities for new entry into television broadcasting, provided a means of local self- expression, and permitted fuller use of the broadcast spectrum. Translator stations retransmit programming from another station—such as a major network (ABC, CBS, FOX, or NBC)—to audiences unable to receive signals directly, usually because of distance or terrain barriers, such as mountains, that limit the signal’s ability to travel long distances. FCC rules prohibit translator stations from originating any programming. As shown in figure 1, some translator stations are part of a “daisy chain” in which multiple translator stations relay signals from one translator station to another, allowing the originating station’s signal to be received a few hundred miles away despite distance or other terrain obstacles.\nLPTV and translator service is secondary, meaning these stations may not cause interference to, and must accept interference from, primary services including primary television stations, which are full-power and Class A television stations. When interference with a full-power station cannot be remedied by adjusting an antenna or other technological methods, LPTV and translator stations must vacate the channel either by requesting FCC’s permission to move to another channel or by requesting permission to turn off their broadcast signal while searching for another channel. LPTV stations generally do not have “must-carry” rights—that is, cable and satellite providers are generally not required to carry signals from LPTV stations, but cable and satellite providers may agree to do so.\nThe 2012 act authorized FCC to conduct an incentive auction for broadcast television spectrum. This auction comprises two separate but interdependent auctions—a “reverse auction” to determine the amount of compensation that each broadcast television licensee would accept in return for voluntarily relinquishing some or all its spectrum rights; and a “forward auction” to determine the price companies are willing to pay for the relinquished spectrum. The spectrum being auctioned is in the UHF range, which currently consists of channels 14 through 51, except for channel 37. According to FCC, the spectrum being auctioned has excellent propagation characteristics that allow signals to cover large geographic areas and penetrate walls and other structures. As shown in figure 2, at the time of this report, the incentive auction was ongoing and FCC expected it to conclude at the earliest in late 2016.\nAfter the auction concludes, FCC reported it intends to reorganize the television broadcast band on a smaller range of channels to free up a portion of the spectrum; FCC refers to this reorganization as “repacking.” Relocating the remaining stations on lower channels allows for new, flexible-use spectrum licenses suitable for providing mobile broadband services. In April 2016, FCC announced an initial spectrum clearing target—the amount of spectrum FCC aimed to clear and repurpose in the auction and repack—of 126 MHz. In November 2016, after the first and second stages of the forward auction concluded without meeting the reserve price, FCC announced a new clearing target of 108 MHz, requiring television stations to use channels 2 through 32. As shown in figure 3, the number of channels available for both television stations and spectrum available for mobile broadband services varies depending on the clearing target.\nThe 2012 act authorized FCC to repack the remaining eligible stations and directed FCC to make all reasonable efforts to preserve the coverage area and population served of each eligible broadcast television licensee when making channel reassignments or reallocations following the incentive auction. In June 2014, FCC released the incentive auction report and order adopting rules to implement the incentive auction and subsequent repacking process. In the report and order, FCC stated that, as required by Congress in the 2012 act, FCC will preserve or protect the coverage area and population served by eligible broadcast television licensees. Further, FCC concluded that protecting other categories of facilities, including LPTV and translator stations, which are—secondary in nature and not entitled to protection from primary services under FCC’s current rule—would unduly constrain FCC’s flexibility in the repacking process and undermine the likelihood of meeting FCC’s objectives for the incentive auction. FCC recognized the decision not to extend repacking protection and not to guarantee channels for LPTV and translator stations will result in some viewers losing service, may negatively affect the investments displaced LPTV and translator licensees have made in their existing facilities, and may cause displaced licensees that choose to move to a new channel to incur the cost of doing so. Although FCC does not know the number of affected LPTV and translator stations, FCC concluded that these concerns are outweighed by the detrimental impact that protecting LPTV and translator stations would have on the repacking process and on the success of the incentive auction. In two separate cases in December 2015, LPTV licensees and an individual party brought suit against FCC over the incentive auction and its potential impact, claiming, among other things, that FCC denied protections to LPTV stations in the auction and repacking process and that FCC’s actions violated the 2012 act. In 2016, the U.S. Court of Appeals for the District of Columbia Circuit dismissed the petition for review in one case and sustained FCC’s orders in the other case. At the time of our review a separate, late-filed lawsuit raising similar concerns was ongoing.\nIn addition to adopting rules related to the incentive auction and subsequent repacking process, the incentive auction report and order announced a number of actions intended to make a significant amount of spectrum available for unlicensed use, including permitting unlicensed operations (1) on channel 37 in locations sufficiently removed from incumbent users to protect from harmful interference and (2) in the spectrum guard bands. Additionally, FCC indicated in the incentive auction report and order that it anticipated there would be at least one channel in all areas throughout the country not assigned to a television station that could be used by unlicensed devices. In June 2015, FCC issued an NPRM to this effect, proposing to preserve at least one vacant channel in the UHF television band throughout the country. The NPRM proposes that the channel preserved would be a UHF channel above channel 20, and the specific vacant channel preserved could vary depending on the particular area. This proposal, known as the vacant channel proposal, would require LPTV and translator stations displaced by the repacking process to demonstrate that any new or modified facilities needed for a station to relocate to another channel would not eliminate the last remaining vacant channel in an area. FCC tentatively concluded that the vacant channel proposal would ensure the public continues to have access to the significant benefits provided by unlicensed devices and wireless microphones across the country. According to FCC officials at the time of our review, it had not taken further action on the vacant channel NPRM and those matters were still under consideration.\nUnlicensed devices that operate in the television spectrum band are sometimes referred to as white space devices because they operate in spectrum “white spaces”—buffer zones FCC established to mitigate unwanted interference between adjacent stations. According to FCC, unlicensed devices are an important part of the nation’s communications capabilities, serve to augment the operations of licensed services, and meet the needs of a wide range of wireless applications including Wi-Fi, Bluetooth, baby monitors, and garage door openers. The Consumer Electronics Association reported in 2014 that devices using unlicensed spectrum generate approximately $62 billion annually in retail-level sales and that further estimated growth in the market for devices that rely on unlicensed spectrum was “extremely strong.”", "", "Through analysis of FCC data, our survey of LPTV and translator station representatives, and meetings with stakeholders as discussed below, we obtained information on LPTV and translator stations, including (1) the number of such stations and their communities of license, (2) types of programming and hours of broadcasting, and (3) ownership. Information obtained through our survey is non-generalizable.", "According to our analysis of FCC data, there were 2,063 LPTV stations and 3,660 translator stations in the U.S. and its territories as of May 25, 2016. LPTV stations’ communities of license are shown in figure 4. According to one broadcast industry association we interviewed, LPTV stations serve a wide range of diverse audiences, including those in both rural counties with limited access to full-power stations and in large urban areas.\nAccording to our analysis of FCC data, translator stations’ communities of license are shown in figure 5. Translator stations tend to be concentrated in both rural and mountainous areas where they serve communities that cannot receive signals from full-power stations because they are too far away or because terrain blocks the signals.\nAccording to FCC officials, pursuant to the First Amendment, FCC does not generally monitor broadcast stations’ content and programming choices and because the few public service obligations LPTV stations have do not pertain to programming provided. Therefore FCC does not collect information on the programming provided by LPTV stations or their hours of broadcasting, and we did not identify other sources of such data. In our non-generalizable survey of LPTV and translator station representatives, respondents representing 535 of the 2,063 LPTV stations in the U.S. and its territories provided information about the types of programming broadcast by the stations they represent (see fig. 6). Survey respondents indicated that most of these stations broadcast locally produced programming, and almost half of the stations represented by survey respondents broadcast at least 18 hours per day and an average of 3 hours per week of locally produced content, two factors similar to requirements for Class A status under the Community Broadcaster Protection Act of 1999.\nThe locally produced programming broadcast by LPTV stations may be diverse and is broadcast in a variety of languages. Through our survey we identified examples of such content, including: programming in languages such as Bosnian, Hmong, Italian, Polish, Spanish, and various Native American languages; local news, weather, and traffic; local information, including community events, political debates, and volunteer opportunities; local recreational and tourism information such as skiing, fishing, and hunting reports; public health programming; arts and special interest programming such as art and cooking shows; children’s programming.\nAdditionally, survey respondents provided information about programming broadcast by the stations they represent that is not locally produced. As shown in figure 7, the most common type of non-locally produced programming broadcast by LPTV stations represented by survey respondents is general entertainment.\nTable 1 provides examples of these different types of programming that is not locally produced. These examples are from our survey, comments to FCC, and interviews.\nMoreover, LPTV stations that broadcast digitally may simultaneously transmit multiple signals and therefore can broadcast different content on multiple sub-channels. For example, representatives of a station ownership group told us about programming they broadcast on digital sub-channels in the Los Angeles area. On one digital sub-channel, they broadcast programming imported from Central America that is the primary news source for many of the about 2 million immigrants from Central America living in the area, according to these representatives. On another digital sub-channel, they broadcast programming imported from Cambodia, which is the only Cambodian station in the U.S. and reaches between 50,000 and 70,000 Cambodian speakers in the area, according to these representatives.", "FCC collects information biennially on racial and ethnic minority and female broadcast ownership for certain commercial stations. FCC’s reports based on this data collection do not present data on the number of stations owned by different types of entities such as for-profit, not-for- profit, and governmental. Further, while full-power, Class A, and LPTV stations are required to provide this information, FCC officials told us that translator stations are not required to submit this information and that, according to the most recent report based on these filings, about one third of LPTV stations did not file the required reports.\nOur survey collected information on the types of entities that own the LPTV and translator stations represented by respondents. As shown in figure 8, most of the 535 LPTV stations represented by survey respondents are owned by for-profit entities, while more than a third of the 1,515 translator stations represented by survey respondents are owned by governmental entities. Ownership of translator stations tends to vary depending on factors such as the direct market size of full-power stations and geography, according to representatives we interviewed from a broadcast industry association. For example, in New Mexico and Oregon, where the direct market for full-power stations is less populous, full-power stations may own and operate translator stations to extend the reach of their programming. In mountainous areas where geography may limit the reach of full-power stations, translator stations tend to be locally owned by governmental entities or other community organizations, according to a broadcast industry association we interviewed.\nOwnership type and structure may affect stations’ vulnerability in the auction even in areas where spectrum is available following the auction, according to various stakeholders as discussed below.\nGovernment- and community-owned stations typically rely on municipal budgets and tax revenues to operate, and in some cases the community served would have to raise taxes or dues to obtain the capital necessary to relocate, according to representatives from two broadcast industry associations we interviewed and three survey respondents.\nStations owned by for-profit, not-for-profit, and educational entities may not be able to afford the capital costs required to relocate, particularly when the entity operates on a small budget, according to two broadcast industry associations we interviewed and two survey respondents. For example, while some translator stations may be owned by station ownership groups that own a portfolio of stations— including full-power stations, Class A stations, or both—of the 115 station representatives who completed our survey, more than two- thirds (81) represent 10 stations or fewer, and 33 respondents represent a single station. Further, according to a station ownership group we interviewed securing financing to fund relocation costs is difficult because investors are unwilling to invest in LPTV and translator stations because of their uncertain future.\nSome station owners, regardless of the type of ownership entity, use revenue from stations in more populated areas to supplement funding for the operation of stations in less populated areas. For example, station representatives who operate three LPTV stations serving Native American communities told us that the stations serving less populated areas would not be able to operate without supplemental revenue from the stations serving more populated areas. According to these representatives, these stations provide diverse programming such as locally produced Native American cultural programming, educational programming, information on tribal affairs, and programming in multiple Native American languages.", "We found LPTV and translator station viewers may lose access to programming or emergency alert information through several possible ways, including the following:\nAlternatives to broadcast programming are cost-prohibitive or unavailable: Many LPTV and translator station viewers are economically or geographically disadvantaged and may not be able to afford other options for accessing programming such as for satellite television or broadband Internet, according to two broadcast industry associations we interviewed and six survey respondents, among others. For example, one survey respondent, a county treasurer/recorder in a rural area, described the situation for viewers of the county’s translator stations. The county charges each household $30 per year for television service. The survey respondent said that there are many county residents who are elderly, on fixed incomes, or otherwise low-income and cannot afford to pay a higher monthly television subscription fee, such as satellite service. Further, some viewers live in areas where paid television service or broadband service, or both are unavailable, according to one broadcast industry association we interviewed, a station ownership group, and one survey respondent.\nNiche programming: Viewers of locally produced programming and niche programming, such as the programming described above, may lose access to this programming, and similar programming may not be available through the remaining over-the-air broadcast channels according to three broadcast industry associations and a station ownership group we interviewed. For example, if an LPTV station broadcasting non-English-language programming in a city is displaced in the incentive auction and cannot find an available channel in the repack, its viewers may have no other options for similar programming. Moreover, LPTV stations that provide niche programming to a particular audience in a particular area could be forced out of business following the incentive auction and repack even if they are able to find available spectrum in the repack. For example, a non-English language channel may exist to serve a segment of the population that resides in a small pocket of an urban area. If displaced, that channel may be unable to relocate to a replacement channel that would reach its primary viewers, as shown in figure 9. Without access to its primary viewers, the station may not be able to raise the funds necessary to continue operation.\nTelevised emergency alerts: Some viewers in geographically remote areas receive broadcast television signals only from a station or stations that are not protected in the incentive auction and repack, meaning the station might be unable to relocate and thus cease broadcasting. Viewers in these areas may no longer have access to televised emergency alerts. Of the 2,050 LPTV and translator stations represented by survey respondents, more than 10 percent (211) serve areas that receive no service from full-power or Class A stations, according to survey respondents. Moreover, of the 1,515 translator stations represented by survey respondents, 433 rebroadcast signals received from another translator station and 212 send signals to another translator station. This interconnectedness among translator stations could compound these stations’ vulnerability in the auction, according to representatives of a broadcast industry association that represents translator stations. Although it is possible for LPTV or translator stations to serve as the only source of televised emergency alerts, FCC considered whether such stations should have special priority in the repacking process and declined to adopt any such measures. In particular, in a 2012 NPRM FCC sought comment on whether the public interest would be served by establishing a set of selection priorities to choose among applications of displaced LPTV and translator stations and on the types of selection priorities to adopt. In the incentive auction report and order, FCC declined to adopt the particular selection priorities suggested by commenters in the NPRM, including providing priority for stations that are primary Emergency Alert System providers.\nAs noted previously, FCC has acknowledged that the incentive auction will potentially displace some LPTV and translator stations. FCC officials told us they have not systematically analyzed the potential displacement impact on LPTV or translator stations because of Congress’s determination not to include these stations in the auction or protect them in the repacking process. As discussed below, FCC has taken some actions to try to mitigate the auction’s effects on these stations.", "", "According to FCC officials, FCC’s actions to mitigate the effects of the incentive auction include: (1) channel sharing, (2) the digital transition deadline, (3) FCC’s optimization software, and (4) cross-border coordination. While broadcast industry associations generally expressed support for these measures in comments to FCC, some representatives of these groups told us and stated in comments to FCC that the actions will not do much to mitigate the effects of the incentive auction on LPTV and translator stations. Moreover, we asked the 115 representatives of 535 LPTV and 1,515 translator stations who responded to our survey to rate the usefulness of these four measures, and, in all but one case, the number of both LPTV and translator stations represented by respondents was greater for those who rated the action as not useful. Furthermore, those who rated these measures as useful often did so with caveats.", "In the LPTV and translator report and order, FCC announced that it will allow channel sharing among LPTV and translator stations and proposed allowing channel sharing between LPTV and translator stations and full- power and Class A stations. Stations that enter into such agreements may divide the capacity of the shared channel however they would like, as long as each station retains spectrum usage rights sufficient to transmit at least one standard definition programming stream at all times, but will continue to be licensed separately and will separately be subject to FCC’s obligations, rules, and policies. According to FCC, these measures have the potential to be beneficial to LPTV and translator stations, and some broadcast industry associations expressed support of these measures in comments to FCC. However, all of the broadcast industry associations with whom we discussed the issue stated that allowing LPTV and translator stations to enter into channel-sharing agreements will not be helpful in a meaningful way. For example, a representative from one broadcast industry association told us that channel sharing would likely require stations to degrade their signal, which may inhibit multicasting and the use of high-definition signals, and another broadcast industry association told us that stations will use channel sharing only as a last resort. Additionally, as shown in table 2 below, survey respondents representing more stations rated channel sharing as not useful, than useful.\nIn the LPTV and translator report and order, FCC announced it will use its incentive auction and repacking optimization software to identify channels that will be available for displaced stations. FCC plans to publish a list of available channels 60 days prior to the beginning of the LPTV and translator displacement window, and displaced stations will be able to use this information when applying for replacement channels. While FCC stated in the LPTV and translator report and order that this proposal garnered considerable support from broadcast industry associations, representatives from the four broadcast industry associations that mentioned this measure to us said that it will be minimally helpful. Specifically, one broadcast industry association told us that it will provide almost no help to LPTV stations, and another stated that the measure is hollow and will have limited effect, if any. Additionally, as shown in table 3 below, survey respondents representing more stations rated this measure as not useful, than rated it as useful.\nIn the LPTV and translator report and order, FCC extended the deadline by which analog LPTV and translator stations must complete the transition to digital so that stations would not have to make significant capital investments to meet the digital transition deadline, only to face possible displacement in the auction and repack process. According to FCC, the September 2015 deadline had been established in anticipation of the auction being conducted in 2014. While FCC cited broad support from the LPTV and translator industry for this measure, two broadcast industry associations stated in comments to FCC that this action was more a common sense policy change than an action to mitigate the effects of the auction. These commenters said it was only fair for FCC to extend the date given the cost associated with transitioning to digital and then potentially relocating after the auction. As shown in table 4 below, survey respondents representing more stations rated extending the digital transition deadline as not useful, than useful.\nIn the LPTV and translator report and order, FCC addressed commenters’ suggestions that FCC develop a streamlined approach to coordinating with foreign governments on the interference and application approval process to address situations where stations’ signals may cross an international border, such as into Canada or Mexico. FCC stated that the cross-border coordination process is continual and that FCC has used its existing processes to keep Canada and Mexico fully informed on the incentive auction coordination issues. FCC further stated that it intends to make efforts to streamline the cross-border coordination processes so that it will not delay the post-auction displacement application process for LPTV and translator stations. As shown in table 5 below, a greater portion of LPTV stations were represented by survey respondents that rated this measure as useful than not useful, whereas the opposite is true for translator stations. However, regarding cross-border coordination, survey respondents provided similar responses regardless of the rating they provided.", "In addition to the measures discussed above, the broadcast industry associations and station ownership groups we interviewed and the station representatives who responded to our survey identified other actions they believe FCC or Congress could take that could help mitigate the effects of the incentive auction on LPTV and translator stations. The proposals that arose the most frequently in the interviews and survey were: (1) reconsidering various aspects of the auction, (2) providing funding for relocation costs incurred by LPTV and translator stations displaced in the auction, (3) allowing LPTV and translator stations to operate with alternative technical standards, and (4) providing LPTV and translator stations an opportunity to obtain primary interference protection status, which would protect these stations from future displacement by primary services.", "The suggestions that arose most frequently related to FCC reconsidering various aspects of the incentive auction. For example, 15 survey respondents suggested that FCC protect LPTV and translator stations in the incentive auction and repack; 12 survey respondents suggested that FCC or Congress provide compensation for lost spectrum rights to displaced LPTV and translator stations; 7 survey respondents suggested that FCC provide protection in the auction and repack for certain types of stations such as rural translator stations, tribally owned stations, and stations broadcasting locally produced content; 6 survey respondents suggested that FCC or Congress cancel the auction; and 5 survey respondents suggested that FCC provide LPTV and translator stations more time to move channels. Regarding these and similar suggestions raised in the incentive auction proceeding, FCC stated in the LPTV and translator report and order that the proposed measures were fully considered in the incentive auction rulemaking proceeding and subsequent orders and FCC declined to revisit them.", "The second most frequent suggestion related to FCC or Congress providing funding for relocation costs incurred by LPTV and translator stations that are displaced in the auction, either through a grant program or through reimbursement of expenses. While FCC has studied the costs associated with relocating eligible full-power and Class A stations that are reassigned to new channels during the repack process, FCC officials told us that because Congress did not make LPTV or translator stations eligible to be reimbursed for certain relocation costs, the officials have not studied the costs associated with relocating LPTV and translator stations. A broadcast industry association we interviewed indicated that the costs for relocating LPTV and translator stations vary widely depending on a number of factors such as the distance of the move; whether a new tower will be required; and the availability of engineers, tower crews, and equipment. Of the 83 survey respondents that represent LPTV stations, 28 respondents reported estimated relocation costs ranging from $25,000 to over $600,000 per station. Of the 50 survey respondents that represent translator stations, 15 respondents reported estimated relocation costs for their stations ranging from approximately $8,500 to approximately $37,500, with an additional $100,000 per site if microwave equipment were required. FCC addressed similar suggestions in the LPTV and translator report and order and in previous orders related to the incentive auction and stated that the decision whether to authorize such funding is Congress’s prerogative and that the 2012 act limits reimbursement to full- power and Class A stations.", "Half of the broadcast industry associations we interviewed, all of the station ownership groups we interviewed, and 13 survey respondents proposed various measures by which FCC would allow LPTV and translator stations to operate with different technical standards or network architectures. Proposals include enabling broadcasters to seek innovative ways to use their spectrum and adopting Advanced Television Systems Committee (ATSC) 3.0. ATSC 3.0 is an alternative technical standard for digital broadcast television that, according to proponents, has the potential to enhance the viewing experience, provide for more robust signaling, expand diverse programming opportunities, enhance emergency alert capabilities, and provide for new service offerings. Additionally, some broadcast industry association representatives we interviewed stated that timely adoption of ATSC 3.0 or other alternative technical standards for digital broadcast television would enable many LPTV and translator stations to survive the auction because stations would be more efficient in their use of spectrum, freeing more spectrum for broadcast use in the repack. In the LPTV and translator report and order, FCC stated that consideration of alternative technical standards, including ATSC 3.0, is outside of the scope of the incentive auction proceeding and is better left for future proceedings. In April 2016, several broadcast industry stakeholders filed a joint petition for rulemaking asking FCC to amend its rules to allow broadcasters to use ATSC 3.0, and later that month FCC issued a public notice seeking comment on the petition, with comments due in June 2016. According to FCC officials, these comments are under consideration and FCC could decide to issue an NPRM; however, as of September 2016, FCC has not announced a timeline for doing so.", "Two broadcast industry associations and a station ownership group we interviewed as well as some survey respondents suggested that FCC provide an opportunity for LPTV and/or translator stations to obtain primary interference protection status, such as Class A status or some other designation, to avoid future displacement by primary users. Some proponents stated that such a measure would provide more certainty for the industry going forward, which in turn would enable investment in the industry. In the LPTV and translator report and order, FCC declined all proposals that would allow LPTV and/or translator stations to obtain primary interference protection status before the completion of the post- auction transition period, but stated that FCC may consider at a later date whether to allow LPTV and/or translator stations to obtain primary status after the completion of this period.", "Through our interviews with selected stakeholders—including six broadcast industry associations, three station ownership groups, two technology companies, a technology industry association, and a public interest group—and analyzing comments filed with FCC, we identified four primary expected outcomes of preserving a vacant television channel: (1) loss of existing broadcast service, (2) development of new technologies and innovation, (3) improvement of Wi-Fi Internet, and (4) improvement of rural broadband service. FCC officials told us these outcomes are the main outcomes stakeholders discuss in comments submitted to FCC. The broadcast industry associations and station ownership groups generally opposed the proposal, while the technology companies, the technology industry association, and the public interest group were proponents of the proposal. As discussed below, stakeholders expressed varying views about the expected outcomes.", "Representatives from all the broadcast industry associations told us that preserving a vacant channel will result in a loss of existing broadcast television service for viewers. For example, a representative from one broadcast industry association told us the vacant channel proposal will force existing LPTV and translator stations off the air because there will be one less channel where a displaced LPTV or translator station can relocate and that many rural and underserved communities will likely lose access to the broadcast stations on which they rely. Additionally, representatives of the three station ownership groups we interviewed also expressed concern that the vacant channel proposal would result in a loss of existing broadcast service. A representative from one of these groups told us the vacant channel proposal will exacerbate the challenges faced by LPTV stations by taking at least one more channel and preventing them from relocating there following a stations displacement after the incentive auction.\nIn the vacant channel NPRM, FCC stated a tentative conclusion that the proposal, if adopted, would not be a significant burden in terms of the availability of channels for future use for broadcasters, including LPTV and translator stations. The NPRM further stated that the impact will be limited because multiple vacant channels will still exist in all or most areas after the channel repack. FCC officials told us they have not conducted a systematic analysis on the expected effects of the vacant channel proposal on LPTV and translator stations, but noted they proposed preserving a vacant channel because of the overall potential public- interest benefits expected from doing so. The officials noted that FCC used available information including comments filed with FCC to inform the proposal and that they sought additional comment on the proposals and tentative conclusions contained in the NPRM. The officials told us that the National Association of Broadcasters (NAB) and Google had each submitted filings to FCC that included analysis on the expected loss of service effects of preserving a vacant channel and that the studies reached very different conclusions. According to NAB’s analysis, the number of LPTV and translator stations that would go off the air if the vacant channel proposal were adopted ranged from 347 stations to 433 stations, depending on the amount of spectrum that FCC ultimately clears in the auction. The analysis concluded that FCC’s proposal would have a devastating impact on LPTV and translator stations and the viewers who rely on those stations to receive over-the-air signals. On the other hand, Google’s analysis found that FCC’s vacant channel proposal would have minimal impact on LPTV and translator stations. Google analyzed five markets selected for a variety of reasons including, to represent areas with large numbers of LPTV and translator stations, mountainous terrain, large rural areas, and urban areas to identify which LPTV and translator stations, if any, would be unable to continue operations as a result of FCC’s proposed rule. Google concluded that for the typical viewer, in the majority of scenarios, no LPTV or translator station will be affected. The analysis also indicated that in 72 percent of the nearly 400 counties included in the analysis, not a single station would be affected, and that even in the specific counties likely to be the most affected, the preservation of a vacant channel will have only a small impact. Both NAB and Google have submitted comments to FCC critiquing the other’s conclusions.", "Proponents of FCC’s vacant channel proposal whom we interviewed and who commented on the proposal generally expect it will contribute to innovation and the development of new technologies. In our analysis of comments filed with FCC by proponents of the vacant channel proposal, at least five groups expressed the idea that preserving vacant channels would help the development of new technologies. For example, one of these commenters noted that ensuring unlicensed devices have nationwide access to spectrum in the reallocated television spectrum band will promote investment and innovation in these technologies. In comments filed by another proponent of the proposal, the group stated reserving at least one vacant television channel in every market nationwide for public use on an unlicensed basis is essential to spurring investment and achieving the enormous public interest benefits of developing new personal portable devices. The commenter went on to state that ensuring a substantial amount of unlicensed spectrum on a nationwide basis is critical for developing markets for new, innovative, and affordable chips, devices, applications, and services.\nThree of the four proponents of the proposal to preserve a vacant channel whom we interviewed told us that three channels for unlicensed use are needed to develop new technology and that preserving a vacant television channel would contribute to this needed amount of spectrum. As discussed previously, FCC’s incentive auction report and order announced a number of actions intended to make more spectrum available for unlicensed use, including permitting unlicensed operations on channel 37 (in locations sufficiently removed from incumbent users to protect from harmful interference) and in the spectrum guard bands. Taken together, these measures will provide two of the three channels that, according to proponents of the vacant channel proposal, are needed to develop new technologies. For example, one of the proposal’s proponents told us that unless FCC guarantees there will be three channels available nationwide for unlicensed use, it is very unlikely that new mobile uses will move forward into production. This proponent explained that for companies to invest the money needed to develop new unlicensed technologies and innovate, companies need certainty that sufficient spectrum will be available to invest the tens of millions of dollars needed for development. This proponent also commented that this is particularly important because insufficient spectrum (i.e., less than three channels) in even a single major market, such as Los Angeles, would result in companies not investing money to develop new technologies. This proponent said that FCC’s adopting the vacant channel proposal would help provide this certainty by providing a third channel for nationwide unlicensed use.", "All representatives from the four organizations we interviewed who are proponents of the vacant channel proposal expect the proposal could result in improving Wi-Fi Internet. Specifically, they told us that the proposal could improve Wi-Fi because of the characteristics associated with the UHF television spectrum band. They noted that while traditional Wi-Fi has a relatively limited range and can be blocked by walls or other environmental barriers, Wi-Fi operating in the UHF television spectrum band can travel much farther and penetrate obstacles such as buildings and hills. Representatives of two groups supporting the vacant channel proposal told us that because of the long-range characteristics and ability to travel farther through obstructions, Wi-Fi could be expanded more thoroughly throughout homes and businesses giving people greater connectivity. One of these proponents also added that this could help extend coverage to people who might not have affordable access to the Internet.", "Stakeholders we interviewed supporting FCC’s vacant channel proposal generally expect the proposal could result in improved and expanded broadband Internet service in rural areas. Specifically, three of the four proponents of the proposal we interviewed told us that preserving a vacant channel could contribute to improved and expanded broadband in rural areas by allowing people to connect their homes and businesses wirelessly to the Internet. One proponent told us that in rural areas, unlicensed spectrum use allows consumers to connect to the Internet wirelessly from their home or business. They noted that this use of spectrum is currently occurring and that preserving a vacant channel could help lower costs and improve the technology, thus improving and expanding broadband in rural areas.", "We provided a draft of this report to FCC for review and comment. FCC provided technical comments, which we incorporated into the report as appropriate.\nWe are sending copies of this report to the Chairman of FCC and appropriate congressional committees. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov.\nIf you or members of your staff have any questions about this report, please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are listed in appendix III.", "This report focuses on the possible effects of the Federal Communication Commission’s (FCC) spectrum incentive auction on low power television (LPTV) and translator stations and their viewers. Specifically, our objectives were to examine (1) what is known about LPTV and translator stations and how FCC’s spectrum incentive auction might affect viewers’ access to the stations’ services, (2) selected stakeholder views on actions has proposed or taken to mitigate the possible effects of the incentive auction on LPTV and translator stations, and additional stakeholder proposals for doing so, and (3) selected stakeholder views on the expected outcomes of preserving a vacant channel for unlicensed use of the television broadcast spectrum.\nTo determine what is known about LPTV and translator stations and how FCC’s spectrum incentive auction might affect viewers’ access to these services, we reviewed FCC documents related to the incentive auction, including FCC’s June 2014 incentive auction report and order and FCC’s December 2015 LPTV and translator report and order. We obtained data from FCC’s Consolidated Database System (CDBS) as of May 25, 2016, to determine the number of LPTV and translator stations in the U.S. and its territories along with the communities of license. We determined the data were reliable for our purposes after reviewing FCC user guides and forms for CDBS and interviewing knowledgeable FCC officials regarding data entry and analysis procedures. We also conducted a web-based survey of LPTV and translator stations to obtain information on LPTV station programming, ownership of LPTV and translator stations, and station representatives’ views on actions that FCC has proposed or taken and actions Congress or others could take to mitigate the effects of the incentive auction on LPTV and translator stations. For the web-based survey, we obtained LPTV’s and translator station representatives’ e-mail addresses from CDBS; however, because CDBS did not include e-mail addresses for representatives of all of the 2,063 LPTV and 3,660 translator stations, we sent survey invitations for all LPTV and translator station representatives for whom we could obtain e-mail addresses. We supplemented the e-mail addresses obtained from CDBS with addresses obtained from station representatives and in total identified 330 valid e- mail addresses for LPTV and translator station representatives. Because the e-mail addresses do not represent all LPTV and translator stations, the results of our survey are not generalizable and are only used for descriptive purposes. After preparing draft survey questions and response categories, we spoke with representatives from three broadcast industry associations and a translator station representative chosen for their broad industry perspective and expertise in particular segments of the industry to determine whether selected questions were answerable by station representatives and whether the response categories provided were appropriate, and updated our survey accordingly. We then pre- tested our survey with four representatives of LPTV and/or translator stations—selected to provide for variety in type of station (LPTV and translator), number of stations represented, and geography—to ensure that our survey questions and skip pattern were clear and logical and that respondents could answer the questions without undue burden. In the course of pre-testing our survey, we also obtained information that we present in this report. We administered the survey from June 2016 through August 2016 and received 115 responses. These responses represent 535 of the 2,063 LPTV stations, and 1,515 of the 3,660 translator stations in the U.S. and its territories. In our report, we provide survey results based on the number of respondents to each question. Because not all respondents answered every question of the survey, the total number of respondents may be fewer than 115 for some results. The results of our survey are not generalizable, and we did not verify respondents’ responses. We also interviewed officials from FCC to determine what information they had regarding LPTV and translator stations and how the incentive auction might affect viewers’ access to these services.\nTo determine stakeholder views on actions FCC has proposed or taken to mitigate the possible effects of the incentive auction on LPTV and translator stations, and additional stakeholder proposals for doing so, we reviewed selected comments and other filings associated with the incentive auction proceeding. We selected the comments for review by performing keyword searches on filings submitted between October 9, 2014, (when FCC sought comment on a number of issues related to LPTV and translator stations, including additional means to mitigate the potential impact of the incentive auction and repacking process on these stations) and April 1, 2016, to allow additional time to include comments filed after end of the formal comment process. We reviewed filings from entities that filed more than one comment, reply to comment, letter, or notice of ex parte in this time period. We also interviewed broadcast industry associations and station ownership groups that own LPTV and/or translator stations, as shown in table 6. We selected stakeholders to represent a range of views from various types of organizations based on our review of comments filed in FCC’s incentive auction proceeding, as well as based on recommendations from other organizations we interviewed. We chose three station ownership groups that own LPTV and/or translator stations and that broadcast a variety of programming types. Through our web-based survey, we also obtained station representatives’ views on actions that FCC has proposed or taken and that Congress or others could take to mitigate the effects of the incentive auction on LPTV and translator stations. In our report, we use “some” when three or more stakeholder sources combined supported a particular idea or statement.\nTo identify selected stakeholder views on the expected outcomes of preserving a vacant channel for unlicensed use of the television broadcast spectrum, we reviewed FCC’s June 2015 notice of proposed rulemaking where FCC proposes to preserve one vacant channel in the ultra high frequency television band for use by white space devices and wireless microphones, and we reviewed selected comments and other filings association with this proceeding. We selected comments and other filings for review, by performing keyword searches on filings submitted between October 9, 2014, and April 1, 2016, and we reviewed filings from entities that filed more than one comment, reply to comment, letter, or notice of ex parte in this time period. We also interviewed stakeholders, as shown in table 6 above.\nWe also reviewed relevant statutes and regulations, including the Middle Class Tax Relief and Job Creation Act of 2012, which authorized FCC to conduct the spectrum incentive auction. We searched various web-based databases to identify existing articles, peer-reviewed journals, trade and industry articles, government reports, and conference papers related to these topics. We identified articles from 2010 to 2016 and examined summary-level information that we believed to be germane to our report. It is possible that we may not have identified all of the reports with findings relevant to our objectives.", "The questions we asked in our survey of low power television (LPTV) and translator stations are shown below. In this appendix, we include all the survey questions and aggregate results of responses to the closed-ended questions; we do not provide information on responses provided to the open-ended questions. However, all respondents did not have the opportunity to answer each question because of skip patterns. Furthermore, some respondents may have decided not to respond to a particular question. For a more detailed discussion of our survey methodology see appendix I.", "", "In addition to the individual named above, Sally Moino (Assistant Director), Aaron Kaminsky, (Analyst in Charge), David Hooper, John Mingus, Josh Ormond, Rebecca Rygg, Kelly Rubin, Andrew Stavisky, and Michelle Weathers made key contributions to this report." ], "depth": [ 1, 1, 2, 3, 3, 2, 1, 2, 3, 2, 3, 3, 3, 3, 1, 2, 2, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h3_full", "h0_title", "h0_title", "h0_full", "", "h0_full", "h0_title h1_title h3_title", "h0_title h3_title h1_full", "h0_full h3_full h1_full", "", "", "", "", "", "h2_full h3_title", "h2_full", "h3_full h2_full", "h2_full", "", "h4_full", "h4_full", "", "", "" ] }	{ "question": [ "To what extent are LPTV stations and translator stations still in use in the United States and its territories?", "How may the FCC's incentive auction affect LPTV and translator stations?", "How do auctions affect the spectrum?", "To what extent has the FCC acknowledged the effect the auction has on LPTV and translator stations?", "Because these stations cannot participate in the auction, what are they unable to do?", "Why are LPTV stations especially important for rural communities?", "How have broadcast industry associations reacted?", "To what extent have the FCC's actions to mitigate the effects of the LPTV auction been successful?", "What actions has the FCC taken?", "To what extent were these actions supported by broadcast industry associations?", "How effective were the FCC's actions regarded by LPTV and translator station representatives?", "How will the FCC's proposal affect unlicensed broadcast service?", "How did various stakeholders react to the FCC's proposal?", "What are the benefits of the FCC proposal regarding vacant channels?", "How will the FCC proposal affect LPTV and translator stations?", "How did the FCC get authorization to conduct broadcast auctions?", "What are the goals of these auctions?", "How does the FCC plan to allow unlicensed devices access to the spectrum?", "What was GAO asked to review?", "What does this report examine?", "How did GAO collect data for this report?", "How did GAO make use of FCC's comments?" ], "summary": [ "As of May 2016, there were 2,063 low power television (LPTV) stations and 3,660 translator stations in the United States and its territories, serving diverse communities.", "However, some LPTV and translator stations may be displaced and need to find a new channel or discontinue operation after the Federal Communications Commission's (FCC) ongoing incentive auction of broadcast television spectrum.", "After the auction, FCC intends to reorganize the television stations remaining on the air so that they will occupy a smaller range of channels, thus freeing up spectrum for other uses.", "FCC has acknowledged that the auction and channel reorganization may negatively affect an unknown number of LPTV and translator stations and that some viewers will lose service, and concluded the success of the auction outweighs these concerns.", "By statute, these stations were not designated as eligible to participate in the auction; consequently, they cannot voluntarily relinquish their spectrum usage rights in return for compensation.", "LPTV stations may serve rural communities with limited access to full-power stations and niche communities in urban areas, whereas translator stations retransmit the programming of other stations, mostly to viewers in rural areas who cannot otherwise receive television signals.", "Broadcast industry associations and others have raised concerns about viewers' losing access to programming and emergency alert information these stations provide.", "Selected stakeholders viewed FCC's actions to mitigate the effects of the incentive auction on LPTV and translator stations as helpful in some circumstances, but overall as insufficient.", "FCC's actions include using its software to identify channels that will be available for displaced stations following the auction and allowing channel sharing.", "While broadcast industry associations generally supported these measures in comments to FCC, some representatives told GAO that the actions will not do much to mitigate the effects of the incentive auction on LPTV and translator stations.", "Moreover, in response to GAO's non-generalizable survey, representatives of LPTV and translator stations generally indicated FCC's actions have limited usefulness.", "According to selected stakeholders, FCC's proposal to preserve a vacant television channel in all areas throughout the country for unlicensed use, such as Wi-Fi Internet, could result in the loss of some existing broadcast service, but could have various benefits.", "Of the stakeholders GAO contacted, the broadcast industry associations generally opposed the proposal, while the technology companies supported it.", "On the other hand, technology companies and other supporters of the vacant channel proposal maintain that preserving at least one vacant channel for unlicensed use will contribute to innovation and the development of new technologies. Proponents also said that preserving a vacant channel could help expand Wi-Fi more thoroughly giving people and businesses greater connectivity and could help extend coverage to people who might not have affordable access to the Internet.", "According to a broadcast industry association, the proposal will force some LPTV and translator stations off the air because there will be one less channel where a displaced station can relocate, and many rural and underserved communities will likely lose access to the broadcast stations on which they rely.", "In 2012, Congress authorized FCC to conduct an incentive auction of broadcast television spectrum whereby eligible broadcasters can voluntarily relinquish their spectrum usage rights in return for compensation.", "This auction will make spectrum available for new uses such as mobile broadband and will also potentially affect LPTV and translator stations.", "In addition to conducting the auction, FCC proposed preserving at least one vacant television channel in all areas that could be used by unlicensed devices to ensure the public continues to have access to the benefits associated with these devices.", "GAO was asked to review the possible effects of the auction on LPTV and translator stations and their viewers.", "This report examines: (1) LPTV and translator stations and how FCC's incentive auction might affect their viewers, (2) selected stakeholders' views on actions FCC has proposed to mitigate the possible effects of the auction on such stations, and (3) selected stakeholders' views on the expected outcomes of preserving a vacant television channel for unlicensed use.", "GAO reviewed relevant FCC proceedings and comments associated with those proceedings; surveyed a non-generalizable sample of 330 LPTV and translator station representatives with available e-mail addresses; and interviewed officials from FCC and industry stakeholders selected to represent various types of organizations, such as broadcast industry associations and technology companies.", "FCC's technical comments have been incorporated." ], "parent_pair_index": [ -1, -1, 1, 2, 3, -1, 5, -1, 0, 1, -1, -1, 0, 0, -1, -1, 0, 0, -1, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1, 1 ] }
GAO_GAO-15-532T	{ "title": [ "NNSA Faces Challenges Implementing Its Plans to Modernize the Nuclear Security Enterprise", "NNSA Does Not Fully Understand the Causes of Its Contract and Project Management Problems and Appears Resistant to Implementing GAO’s Recommendations", "NNSA’s Continued Corrective Actions Suggest It Does Not Understand the Causes of Its Contract and Project Management Problems", "DOE Appears Resistant to Implementing Recommendations Intended to Improve DOE Project Management Problems", "NNSA’s DNN Programs Have Made Some Progress Securing Vulnerable Nuclear Material, but Significant Challenges Remain", "NNSA Faces Challenges in Its Governance of the Nuclear Security Enterprise", "GAO Contact and Staff Acknowledgments", "Selected Recent GAO Products Assessing the Department of Energy’s and National Nuclear Security Administration’s Management Efforts" ], "paragraphs": [ "NNSA manages a complex, decades-long effort to modernize the nuclear security enterprise. In its recent report, the Augustine-Mies Panel observed that NNSA’s SSMP, which is intended to communicate long- range plans and cost estimates, has varied from year to year in the costs and schedules for the delivery of several major life extension programs (LEP) and nuclear facilities, and the Panel concluded that the lack of a stable, executable plan for modernization is a fundamental weakness for NNSA. Our 2013 report similarly found that NNSA’s SSMP has shown changes in plans and long-term budget estimates from year to year and that some assumptions on future spending estimates may not be realistic. For example, in 2013 we found that:\nThe planned schedules for key weapons LEPs had changed. For example, key dates for the W78/88 LEP were pushed several years into the future. Specifically, this program shifted from a 2021 first- production-unit and 2031 completion time frame in the fiscal year 2012 SSMP to a 2025 first-production-unit and 2036 completion time frame in the fiscal year 2014 SSMP. We have ongoing work looking at the fiscal year 2015 SSMP.\nNNSA’s long-term budget estimates for the nuclear security enterprise For example, we found have continued to change from year to year. that NNSA’s stockpile budget estimates from 2014 through 2031 increased by about $27 billion compared with the 2012 stockpile budget estimates for the same time period. We noted that some of these changes were due to decisions made by the Nuclear Weapons Council. For example, according to the 2014 SSMP, the Nuclear Weapons Council directed changes to the planned schedules for some of the LEPs to accommodate the number and scope of all LEPs, which contributed to increases in the stockpile budget estimates.\nNNSA had not included estimated costs to construct both the Uranium Processing Facility (UPF) and the Chemistry Metallurgy Replacement Facility (CMRR). We recommended that NNSA include in its estimates at least a range of budget estimates for known future expenses for large capital projects even when a fully developed cost estimate had not been developed. NNSA agreed with this recommendation and the 2015 SSMP included estimates for these major large capital projects, which had previously been excluded. In addition, in the 2014 SSMP, NNSA also changed its methodology for developing budget estimates for LEPs. For example, NNSA officials said that the 2012 budget estimates for LEPs were based on an older LEP because there was not enough data at that time from recent and ongoing LEPs to develop cost models. In contrast, NNSA officials told us that they based their 2014 estimates on more reliable data from an ongoing LEP.\nOur 2013 report also found that some assumptions in the SSMP may be unrealistic. NNSA’s budget estimates to operate and maintain its existing facilities and infrastructure remain relatively flat through 2031 at about $1.5 billion per year (in constant dollars). However, much of NNSA’s existing facilities and infrastructure were constructed more than 50 years ago and are reaching the end of their useful lives. As a result, the agency is undertaking a number of improvement projects to modernize and maintain these facilities. We concluded that it may not be realistic for NNSA to assume that its annual budget estimates for operations and maintenance of facilities from 2014 to 2031 can remain relatively flat when its aging facilities will likely need additional resources to maintain them in the future.", "In our February 2015 update to our high risk list, we expressed concern that DOE, including NNSA, may not have adequately identified the root causes of its contract and project management challenges. Our update also found that NNSA appeared resistant to implementing some of the recommendations we made in 2014 to correct these problems.", "DOE has undertaken numerous efforts over the years to understand and address its contract and project management challenges. Our 2015 high risk update described a sequence of actions starting in 2008, when DOE issued a root cause analysis and a corrective action plan that identified what DOE considered to be the 10 most significant issues in managing its contracts and projects, and the actions needed to mitigate these issues. These issues included problems with front-end planning, project funding, accountability, cost estimating, contract and project management workforce, and project oversight. DOE issued another report in 2011 that stated that the corrective actions it implemented from its 2008 plan had effectively mitigated most of the root causes of these issues. However, the department continued to identify additional root causes and corrective actions and recommendations to address its persistent contract and project management challenges. In 2010, DOE identified in a report six additional barriers to improving contract and project management and developed corrective actions to address these barriers.issued another report stating that it had completed or partially completed In 2012, DOE the corrective actions necessary to address these barriers. In November 2014, DOE issued another report on project management that identified four key factors that contribute to project management success or failure at DOE: front-end planning, project funding, accountability, and project oversight. The report also included 21 recommendations to address continuing project management challenges. Notably, all four of these factors are among those discussed in DOE’s 2008 root cause analyses and among those that DOE said in 2011 it had at least partially mitigated. As we noted in our February 2015 update to our high risk list,long history of identifying additional corrective actions suggests that it has not always fully understood the causes of its contract and project management problems.\nMore importantly, DOE’s December 2014 project management report included a description of actions to address the four key factors it had identified; however it did not discuss why the previous attempts to address these issues had either failed or why these problems had reemerged. For example, the 2008 corrective action plan found front-end planning as one of the top 10 issues contributing to the department’s contract and project management problems. The corrective actions DOE identified in that report included developing a more detailed internal front- end planning process, such as identifying and defining specific assumptions for technical design and nuclear safety requirements. However, this is contrary to DOE’s 2011 report that stated that the department had fully or partially completed all corrective measures from 2008, including those related to front-end planning. In addition, the 2008 report identified a number of areas where DOE had continuing challenges, including cost estimating and an inadequate number of federal contracting and project management personnel. For cost estimating, our November 2014 report also found that DOE and NNSA cost estimating requirements and guidance for projects and programs generally did not reflect best practices for developing cost estimates. For federal personnel, our February 2015 high risk report found that DOE did not meet the criteria for having the capacity (people and resources) to resolve contract and project management problems. Our report cited a DOE workforce analysis from 2013 that concluded that DOE had an extremely low number of contract specialists. We also noted in our report that this workforce analysis did not include the other key staff members normally included in the description of the acquisition workforce, such as program and project managers and contracting officer representatives.In contrast to these findings, DOE reported, in 2011, that it would complete its efforts to improve cost estimating later that year, and that had substantially completed its efforts to enhance the federal contract and project management workforce.", "We have previously noted instances where DOE appeared resistant to implementing some of our recommendations to correct DOE’s project management problems. For example, our February 2014 report included an evaluation of NNSA’s mixed oxide (MOX) fuel fabrication facility, the estimated cost of which NNSA had increased by more than $6.3 billion from NNSA’s initial estimate in 1997 to about $7.7 billion in 2014.report, we recommended that DOE require a root cause analysis for projects that experience cost increases or schedule delays exceeding a certain threshold established by the department, including the MOX facility. We noted that such an analysis would help ensure that future In that DOE projects benefit from lessons learned that reflect the causes of past projects’ cost increases and schedule delays. DOE disagreed with our recommendation, stating that such an analysis should not be required, and that DOE program offices could decide on a case-by-case basis when to conduct such an analysis. However, DOE’s requirements do not define how or when a root cause analysis should be conducted and it is not clear when or what would trigger a root cause analysis, which could result in analyses not being conducted consistently or not being conducted at all, hampering DOE’s ability to apply lessons learned from past projects to ongoing or future projects. We continue to believe that a root cause analysis should be conducted for all projects that experience cost increases or schedule delays above a threshold established by the department. We also note that our recommendation is consistent with a requirement in the Weapon Systems Acquisition Reform Act of 2009, under which that the Department of Defense must perform a root cause analysis of a cost increase that exceeds a certain threshold.\nSimilarly, in 2014, we issued two reports with recommendations addressing key elements of the front-end planning process for large projects and programs. In both reports, DOE agreed with the recommendations, but it did not indicate whether it would implement them. In November 2014, we noted that DOE had a history of struggling to complete many of its major construction projects within initial cost and schedule estimates. We found that DOE and NNSA cost estimating requirements and guidance for projects and programs generally do not reflect best practices for developing cost estimates. We also found in November 2014 that, because DOE and NNSA do not require reviews of program cost estimates, the extent of weaknesses in program cost estimates is largely unknown. DOE itself, in 2008, identified inadequate cost estimating capability as one of the top 10 most significant issues contributing to its contract and project management challenges. To address these issues, we recommended that DOE, among other things, revise its requirements and guidance for projects and programs to ensure DOE and NNSA and its contractors develop cost estimates in accordance with cost estimating best practices, and that independent reviews of programs are conducted periodically. DOE agreed with these recommendations. However, DOE did not specify a timeline for implementing many of these recommendations, indicating to us DOE’s lack of urgency or commitment in correcting these issues.\nIn the second report, issued in December 2014, we examined how DOE selects approaches for its projects to meet mission requirements. In this report, we found that several of DOE’s major construction projects, including some of NNSA’s, had incurred significant cost increases and schedule delays, and that DOE was in the process of reassessing the originally selected project alternative for each project. We found that neither DOE’s requirements nor its guidance for analyzing alternatives conformed to best practices, and therefore DOE could not have confidence that applying its requirements and guidance would lead to a reliable analysis. A reliable analysis is critical to ensuring that key capital asset and program decisions will both meet mission needs and be cost- effective. To address these issues, we recommended that DOE incorporate all best practices into its analysis-of-alternatives requirements. DOE agreed with this recommendation, but again, it did not specify a timeline for implementing the recommendation, indicating to us a lack of urgency and commitment to correct the problem.", "Our reports have found that DNN has made some progress in securing vulnerable nuclear material. Specifically, we reported in December 2010 on NNSA’s efforts to carry out the President’s April 2009 initiative (also known as the Prague initiative) calling on the agency to secure all vulnerable nuclear material around the world within 4 years.report, we found that NNSA’s Materials Protection, Control and Accounting Program had made considerable progress securing Russian nuclear warheads and materials at numerous Russian sites. The president’s 2009 Prague initiative ended in December 2013, but DNN and the U.S. government’s commitment to ensuring the security of worldwide nuclear materials endures, and we have ongoing work examining it.\nIn that However, our reports have also identified key challenges NNSA faces in its efforts to secure vulnerable nuclear materials. In our December 2010 report, we found that NNSA had estimated it would assist Russia in consolidating its HEU to fewer, more secure locations by removing material from five sites and 50 buildings completely by 2010; however, it had achieved removal of all highly enriched uranium (HEU) from only one site and 25 buildings. In addition, we found that NNSA had made little progress in converting research reactors in Russia from the use of HEU. At that time, NNSA planned to complete the conversion or verify the shutdown of 71 HEU-fueled research reactors and related facilities in Russia by 2020; however, Russia had not agreed to convert any of these facilities. Nonetheless, Russia verified to NNSA in February 2010 that it had shut down three of its research reactors, and NNSA achieved an agreement in principle to conduct conversion feasibility studies on six additional Russian research reactors.\nIn addition, in September 2011, we found that DNN and U.S. agencies faced significant challenges in accounting for and ensuring the security of U.S. weapons-usable nuclear materials as a result of foreign nuclear research and commercial power activities. That report found that, of 55 visits by U.S. physical protection teams to overseas sites from 1994 through 2010, partner countries met international physical security guidelines about half the time.\nMoreover, we identified weaknesses in DNN’s and other U.S. agencies’ management of this effort. Among other concerns, we found in September 2011 that DNN’s and U.S. agencies’ activities for prioritizing and coordinating physical protection visits and measuring performance did not meet GAO’s best practices for agency performance or DOE’s standards for internal control. agencies had not systematically visited countries believed to be holding the highest proliferation risk quantities of U.S. nuclear material. DNN and U.S. agencies had not systematically revisited sites that did not meet physical security guidelines in a timely manner, and NNSA and U.S. agencies did not have a comprehensive, current inventory of U.S.\nSpecifically, we found that DNN and U.S.\nGAO-11-920. weapons usable nuclear materials overseas. We suggested that the Congress consider directing NNSA and the Nuclear Regulatory Commission to compile an inventory of U.S. HEU and separated plutonium overseas. We also recommended that NNSA develop a more systematic process for identifying and prioritizing future physical protection visits, and periodically review performance toward meeting goals for the U.S. physical protection program visits. NNSA disagreed with our recommendations. However, it has taken some actions to address them including compiling an initial inventory of U.S.-origin HEU overseas and developing a more systematic process for identifying and prioritizing future protection visits.\nWe have also identified challenges in another element of DNN’s mission—improving the capabilities of other countries to detect, deter and interdict smuggled nuclear material. The Second Line of Defense program—including the Megaports Initiative, which was consolidated into Second Line of Defense in 2014—is essential to this effort. In October 2012, we issued a report examining the Megaports Initiative and found that the continuity and sustainability of the Megaports program could be a concern going forward. We found that NNSA had not finalized a long-term plan for ensuring the sustainability of the Megaports Initiative and recommended that NNSA finalize a sustainability plan for ensuring ongoing operations after NNSA transfers all equipment, maintenance, operations, and related financial responsibilities to partner countries. We also found that the initiative’s performance measures did not provide sufficient information for decision making because they did not evaluate the program’s impact and effectiveness. We recommended that NNSA develop and maintain useful and reliable measures to assess the performance of the initiative. NNSA agreed with our recommendations and, in fiscal year 2014, added a new metric that tracks the cumulative number of sites that are being maintained by the host country.\nFinally, the effectiveness of NNSA’s nuclear nonproliferation mission depends in part on the agency’s plutonium disposition program, and we found in 2014 NNSA faces challenges in this regard. The plutonium disposition program has represented a significant portion of the DNN budget over the past 5 years, ranging from approximately 18 percent of the DNN budget request in fiscal year 2015 to approximately 36 percent of the DNN budget request in fiscal year 2013. This program is a key element of the U.S. commitment to dispose of 34 metric tons of weapons grade surplus plutonium under the Plutonium Management and Disposition Agreement between the United States and Russia. The construction of the MOX facility at DOE’s Savannah River Site in South Carolina has been the central focus in meeting this commitment. In February 2015, we reported on several challenges in this program, including a cost increase of approximately $2.9 billion and a schedule delay of about 3 years, and DOE generally agreed with our recommendations to address these issues.construct the MOX facility and is conducting additional analyses of the project, including independent cost and schedule estimates as well as an analysis of alternatives approaches for plutonium disposition.\nNNSA recently reorganized its DNN programs into a new structure, and for several years has sustained an effort to assess “over the horizon” nuclear and radiological proliferation threats and trends—in other words, evolving threats over the next decade. However, according to NNSA officials, the Russian government recently decided to cease joint cooperation with NNSA at most Russian weapons complex and civilian nuclear sites as of December 2014, which presents new challenges for NNSA and raises questions about the status of projects not yet completed and the sustainability of progress already made. We will continue to follow these issues and have ongoing work looking at NNSA’s nonproliferation programs, including planning, management, and their effectiveness.", "The Augustine-Mies’s Panel’s report highlighted the challenges NNSA faces in its governance of the nuclear security enterprise. The issues and concerns identified in this report appear to be consistent with those that we have previously described in our work.\nRegarding NNSA’s modernization efforts, the Augustine-Mies Panel observed that the 2015 SSMP assumes a budget that may not be achievable and that NNSA’s nuclear modernization plans are significantly underfunded relative to identified needs. The panel further noted that the SSMP reflected significant delays in the delivery of several major LEPs and nuclear facilities, and that the lack of a stable, executable plan for modernization is a fundamental weakness for NNSA. As noted earlier, our work has found that NNSA’s long-term budget estimates for the nuclear security enterprise have continued to change from year to year and that some assumptions in the SSMP may be unrealistic.\nIn addition, consistent with our 2015 high risk update, the Augustine-Mies Panel found that NNSA’s capital projects have been a continuing source of cost overruns and schedule delays. The panel noted that these have significantly undermined the agency’s credibility and recommended that DOE strengthen its efforts to develop independent cost and resource analysis capabilities and that leadership employ a rigorous analysis of alternatives early in the decision process as the basis for assessing and validating program requirements. The panel also recommended holding managers accountable for implementing the department’s directive on project management (Order 413.3B). The panel noted that while adherence to DOE orders is mandatory, in practice, Order 413.3B has been viewed more as guidance that is not always followed, and that stricter enforcement is necessary. In addition, the Augustine-Mies Panel found specific shortfalls in critical skills for program management, cost estimation, and resource management and recommended that NNSA leadership analyze the level and skill mix of the workforce necessary to meet future needs and invest in the needed skills in the workforce. Our high risk update noted that DOE, including NNSA, did not have the capacity (people and resources) to resolve contract and project management problems. We reported that DOE, including NNSA, had taken some actions to address capacity issues, but these actions have not yet ensured that the department has the capacity to fully address its contract and project management challenges.\nOn implementation of corrective actions plans, the panel noted that there have been numerous previous studies with numerous valid recommendations, many of which recurred in the panel’s assessment as well. The panel noted, however, that there was not a well-established process for reviewing these recommendations, performing root cause analysis of them, taking corrective action where appropriate, and then following up to ensure that the corrective actions are institutionalized. The panel recommended that nuclear security enterprise leadership develop a process to provide accountability and follow up on findings and recommendations from studies and reviews, both internal and external. In December 2014, the Secretary issued a memo stating that DOE would strengthen the role of the Energy Systems Acquisition Advisory Board and establish a project management risk committee to provide agency- wide project management risk assessment and expert advice. As we noted in our 2015 high risk update, this initiative demonstrates the continued commitment of top leadership to address its contract and project management challenges, but DOE’s cycle of identifying root causes, recommendations and corrective actions—which DOE declares successful, only to later issue another set of root causes and corrective actions—raises concerns that DOE has not fully identified the root causes behind these problems.\nThe panel also examined NNSA’s oversight of its management and operating (M&O) contractors and raised questions regarding the impact and effectiveness of contract requirements and performance metrics on mission execution. We have ongoing work examining NNSA’s contract oversight policies and guidance that examines NNSA’s approach to overseeing and evaluating its M&O contractors and how NNSA determines the extent to which it can use contractor assurance systems This report is expected to be for deciding M&O contractor award fees.completed in May 2015.\nChairman Sessions, Ranking Member Donnelly, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions you may have at this time.", "If you or your staff members have any questions about this testimony, please contact me at (202) 512-3841 or [email protected]. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this testimony are Nathan Anderson, Assistant Director; Allison Bawden; Alisa Beyninson; Antoinette Capaccio; Daniel Feehan; Jonathan Gill; Bridget Grimes; William Hoehn; Amanda Kolling; Michelle Munn; Alison O’Neill; and Rebecca Shea.", "The following is a selection of GAO’s recent work assessing the Department of Energy’s and National Nuclear Security Administration’s management efforts: High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February 11, 2015.\nDOE and NNSA Project Management: Analysis of Alternatives Could Be Improved by Incorporating Best Practices GAO-15-37. Washington, D.C.: December 11, 2014.\nProject and Program Management: DOE Needs to Revise Requirements and Guidance for Cost Estimating and Related Reviews. GAO-15-29. Washington, D.C.: November 25, 2014.\nNuclear Weapons: Some Actions Have Been Taken to Address Challenges with the Uranium Processing Facility Design. GAO-15-126. Washington, D.C.: October 10, 2014.\nPlutonium Disposition Program: DOE Needs to Analyze the Root Causes of Cost Increases and Develop Better Cost Estimate. GAO-14-231.Washington, D.C.: February 13, 2014.\nModernizing the Nuclear Security Enterprise: NNSA’s Budget Estimates Do Not Fully Align with Plans. GAO-14-45. Washington, D.C.: December 11, 2013.\nModernizing the Nuclear Security Enterprise: Observations on NNSA’s Options for Meeting Its Plutonium Research Needs. GAO-13-533. Washington, D.C.: September 11, 2013.\nDepartment of Energy: Observations on DOE’s Management Challenges and Steps Taken to Address Them. GAO-13-767T. Washington, D.C.: July 24, 2013.\nNational Nuclear Security Administration: Laboratories’ Indirect Cost Management Has Improved, but Additional Opportunities Exist. GAO-13-534. Washington, D.C.: June 28, 2013.\nNuclear Nonproliferation: IAEA Has Made Progress in Implementing Critical Programs but Continues to Face Challenges. GAO-13-139. Washington, D.C.: May 16, 2013.\nDepartment of Energy: Observations on Project and Program Cost Estimating in NNSA and the Office of Environmental Management. GAO-13-510T. Washington, D.C.: May 8, 2013.\nModernizing the Nuclear Security Enterprise: Observations on DOE’s and NNSA’s Efforts to Enhance Oversight of Security, Safety, and Project and Contract Management. GAO-13-482T. Washington, D.C.: March 13, 2013.\nHigh-Risk Series: An Update. GAO-13-283. Washington, D.C.: February 2013.\nDepartment of Energy: Better Information Needed to Determine If Nonmajor Projects Meet Performance Targets. GAO-13-129. Washington, D.C.: December19, 2012.\nCombating Nuclear Smuggling: Megaports Initiative Faces Funding and Sustainability Challenges. GAO-13-37. Washington, D.C.: October 31, 2012.\nModernizing the Nuclear Security Enterprise: Observations on the National Nuclear Security Administration’s Oversight of Safety, Security, and Project Management. GAO-12-912T. Washington, D.C.: September 12, 2012.\nModernizing the Nuclear Security Enterprise: Observations on the Organization and Management of the National Nuclear Security Administration. GAO-12-867T. Washington, D.C.: June 27, 2012.\nModernizing the Nuclear Security Enterprise: NNSA’s Reviews of Budget Estimates and Decisions on Resource Trade-offs Need Strengthening. GAO-12-806. Washington, D.C.: July 31, 2012.\nModernizing the Nuclear Security Enterprise: Strategies and Challenges in Sustaining Critical Skills in Federal and Contractor Workforces. GAO-12-468. Washington, D.C.: April 26, 2012.\nModernizing the Nuclear Security Enterprise: New Plutonium Research Facility at Los Alamos May Not Meet All Mission Needs. GAO-12-337. Washington, D.C.: March 26, 2012.\nNuclear Weapons: NNSA Needs to Improve Guidance on Weapon Limitations and Planning for Its Stockpile Surveillance Program. GAO-12-188. Washington, D.C.: February 8, 2012.\nDepartment of Energy: Additional Opportunities Exist to Streamline Support Functions at NNSA and Office of Science Sites. GAO-12-255. Washington, D.C.: January 31, 2012.\nNuclear Nonproliferation: Action Needed to Address NNSA’s Program Management and Coordination Challenges. GAO-12-71. Washington, D.C.: December 14, 2011.\nHigh-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.\nNuclear Nonproliferation: U.S. Agencies Have Limited Ability to Account for, Monitor, and Evaluate the Security of U.S. Nuclear Material Overseas. GAO-11-920. Washington, D.C.: September 8, 2011.\nNuclear Nonproliferation: Comprehensive U.S. Planning and Better Foreign Cooperation Needed to Secure Vulnerable Nuclear Materials Worldwide. GAO-11-227. Washington, D.C.: December 15, 2010.\nNuclear Weapons: National Nuclear Security Administration’s Plans for Its Uranium Processing Facility Should Better Reflect Funding Estimates and Technology Readiness. GAO-11-103. Washington, D.C.: November 19, 2010.\nNuclear Nonproliferation: National Nuclear Security Administration Has Improved the Security of Reactors in its Global Research Reactor Program, but Action Is Needed to Address Remaining Concerns. GAO-09-949. Washington, D.C.: September 17, 2009.\nNuclear Weapons: Actions Needed to Identify Total Costs of Weapons Complex Infrastructure and Research and Production Capabilities. GAO-10-582. Washington, D.C.: June 21, 2010.\nNuclear Nonproliferation: DOE Needs to Address Uncertainties with and Strengthen Independent Safety Oversight of Its Plutonium Disposition Program. GAO-10-378. Washington, D.C.: March 26, 2010.\nImplemented and Sustained. GAO-09-321. Washington, D.C.: March 16, 2009.\nNuclear Weapons: NNSA and DOD Need to More Effectively Manage the Stockpile Life Extension Program. GAO-09-385. Washington, D.C.: March 2, 2009.\nNuclear Nonproliferation: DOE’s Program to Assist Weapons Scientists in Russia and Other Countries Needs to Be Reassessed. GAO-08-189. Washington, D.C.: December 12, 2007.\nNuclear and Worker Safety: Actions Needed to Determine the Effectiveness of Safety Improvement Efforts at NNSA’s Weapons Laboratories. GAO-08-73. Washington, D.C.: October 31, 2007.\nSecuring U.S. Nuclear Material: DOE Has Made Little Progress Consolidating and Disposing of Special Nuclear Material. GAO-08-72. Washington, D.C.: October 4, 2007.\nNuclear Nonproliferation: Progress Made in Improving Security at Russian Nuclear Sites, but the Long-term Sustainability of U.S.-Funded Security Upgrades Is Uncertain. GAO-07-404. Washington, D.C.: February 28, 2007.\nNational Nuclear Security Administration: Additional Actions Needed to Improve Management of the Nation’s Nuclear Programs. GAO-07-36. Washington, D.C.: January 19, 2007.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 1, 1, 1, 1 ], "alignment": [ "", "h0_full", "", "h0_full", "h1_full", "h0_full h3_full h2_full", "", "h0_full h3_full h1_full" ] }	{ "question": [ "What does GAO's 2015 high risk report note?", "What are the implications of this pattern?", "What has GAO done to correct this?", "Has NNSA followed these recommendations?", "What does this indicate?", "What has the NNSA made progress in?", "What challenges does the NNSA face?", "What did GAO recommend the NNSA do to overcome these challenges?", "How did the NNSA respond to this recommendation?", "What does the NNSA face challenges in?", "Where were these challenges highlighted?", "What does the Augustine-Mies Panel's report address?", "What issues and concerns does the report address?", "What do GAO's reports highlight?", "What do these challenges contribute to?", "What highlights the NNSA's importance?" ], "summary": [ "As noted in GAO's 2015 high risk report, NNSA has a long history of identifying corrective actions and declaring them successfully resolved, only to follow with the identification of additional actions.", "As GAO has reported, this suggests that NNSA does not have a full understanding of the root causes of its contract and project management challenges.", "In its prior reports, GAO has made numerous recommendations to correct NNSA's project management problems.", "While NNSA has initiated some actions and made some progress, the agency has not taken action on many of these recommendations, including improving cost estimating capabilities and employing a rigorous analysis of alternatives to ensure that key capital asset and program decisions will both meet mission needs and be cost-effective.", "This suggests a lack of urgency or commitment on DOE's part to address identified challenges.", "NNSA's Defense Nuclear Nonproliferation (DNN) programs have made progress securing vulnerable nuclear materials, but significant challenges remain.", "For example, GAO found in 2011 that NNSA faced challenges accounting for and ensuring the security of U.S. weapons-usable nuclear materials. In addition, prior GAO work has raised concerns about the effectiveness of DNN program management and implementation, particularly with regard to execution of its plutonium disposition program, performance measures, and sustainability.", "GAO recommended that NNSA improve its process for securing these materials.", "Although NNSA disagreed, it has since taken some steps to prioritize its efforts.", "NNSA faces challenges in its governance of the nuclear security enterprise.", "The Augustine-Mies Panel highlighted such challenges in its report.", "The report addresses issues and concerns that GAO has also previously described in its work.", "For example, consistent with GAO's 2015 update to its high risk list, the Panel noted that NNSA major projects have been a continuing source of program schedule delays and cost overruns and that, as a result, NNSA needs to strengthen its cost estimating capabilities. The report also recommended that NNSA leadership employ a rigorous analysis of alternatives early in the decision process as the basis for assessing and validating program requirements, which is consistent with past GAO recommendations.", "GAO's reports have highlighted challenges NNSA has faced for several years.", "These challenges contribute to GAO's continuing inclusion of NNSA's management of contracts and major projects on GAO's list of agencies and program areas that are high risk due to their vulnerabilities to fraud, waste, abuse, and mismanagement, or are in most need of transformation.", "A recent series of commissions on NNSA's management, governance, and structure—such as the Augustine-Mies Panel—highlights the importance of NNSA's mission." ], "parent_pair_index": [ -1, 0, -1, 2, 3, -1, 0, 1, 2, -1, 0, 1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 5, 5, 5, 5, 5, 6, 6, 6, 6, 7, 7, 7, 7, 1, 1, 1 ] }
GAO_GAO-14-596T	{ "title": [ "Background", "OMB Has Launched Major Initiatives for Overseeing Investments", "Opportunities Exist to Improve Acquisition and Management of IT Investments", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "Information technology should enable government to better serve the American people. However, despite spending hundreds of billions on IT since 2000, the federal government has experienced failed IT projects and has achieved little of the productivity improvements that private industry has realized from IT. Too often, federal IT projects run over budget, behind schedule, or fail to deliver results. In combating this problem, proper oversight is critical.\nBoth OMB and federal agencies have key roles and responsibilities for overseeing IT investment management, and OMB is responsible for working with agencies to ensure investments are appropriately planned and justified. However, as we have described in numerous reports, although a variety of best practices exist to guide their successful acquisition, federal IT projects too frequently incur cost overruns and schedule slippages while contributing little to mission-related outcomes.\nAgencies have reported that poor-performing projects have often used a “big bang” approach—that is, projects that are broadly scoped and aim to deliver capability several years after initiation. For example, in 2009 the Defense Science Board reported that the Department of Defense’s (Defense) acquisition process for IT systems was too long, ineffective, and did not accommodate the rapid evolution of IT. The board reported that the average time to deliver an initial program capability for a major IT system acquisition at Defense was over 7 years.\nEach year, OMB and federal agencies work together to determine how much the government plans to spend on IT projects and how these funds are to be allocated. As reported to OMB, federal agencies plan to spend more than $82 billion on IT investments in fiscal year 2014, which is the total expended for not only acquiring such investments, but also the funding to operate and maintain them. Of the reported amount, 27 federal agencies plan to spend about $75 billion: $17 billion on development and acquisition and $58 billion on operations and maintenance (O&M). Figure 1 shows the percentages of total planned spending for 2014 for the $75 billion spent on development and O&M.\nHowever, this $75 billion does not reflect the spending of the entire federal government. We have previously reported that OMB’s figure understates the total amount spent in IT investments. Specifically, it does not include IT investments by 58 independent executive branch agencies, including the Central Intelligence Agency or by the legislative or judicial branches. Further, agencies differed on what they considered an IT investment; for example, some have considered research and development systems as IT investments, while others have not. As a result, not all IT investments are included in the federal government’s estimate of annual IT spending. OMB provided guidance to agencies on how to report on their IT investments, but this guidance did not ensure complete reporting or facilitate the identification of duplicative investments. Consequently, we recommended, among other things, that OMB improve its guidance to agencies on identifying and categorizing IT investments.\nFurther, over the past several years, we have reported that overlap and fragmentation among government programs or activities could be harbingers of unnecessary duplication. Thus, the reduction or elimination of duplication, overlap, or fragmentation could potentially save billions of tax dollars annually and help agencies provide more efficient and effective services.", "OMB has implemented a series of initiatives to improve the oversight of underperforming investments, more effectively manage IT, and address duplicative investments. These efforts include the following: IT Dashboard. Given the importance of transparency, oversight, and management of the government’s IT investments, in June 2009, OMB established a public website, referred to as the IT Dashboard, that provides detailed information on 760 major IT investments at 27 federal agencies, including ratings of their performance against cost and schedule targets. The public dissemination of this information is intended to allow OMB; other oversight bodies, including Congress; and the general public to hold agencies accountable for results and performance. Among other things, agencies are to submit Chief Information Officer (CIO) ratings, which, according to OMB’s instructions, should reflect the level of risk facing an investment on a scale from 1 (high risk) to 5 (low risk) relative to that investment’s ability to accomplish its goals. Ultimately, CIO ratings are assigned colors for presentation on the Dashboard, according to the five-point rating scale, as illustrated in table 1.\nAs of April 2014, according to the IT Dashboard, 201 of the federal government’s 760 major IT investments—totaling $12.4 billion—were in need of management attention (rated “yellow” to indicate the need for attention or “red” to indicate significant concerns). (See fig. 2.)\nTechStat reviews. In January 2010, the Federal CIO began leading TechStat sessions—face-to-face meetings to terminate or turnaround IT investments that are failing or are not producing results. These meetings involve OMB and agency leadership and are intended to increase accountability and transparency and improve performance. Subsequently, OMB empowered agency CIOs to hold their own TechStat sessions within their respective agencies. According to the former Federal CIO, the efforts of OMB and federal agencies to improve management and oversight of IT investments have resulted in almost $4 billion in savings.\nFederal Data Center Consolidation Initiative. Concerned about the growing number of federal data centers, in February 2010 the Federal CIO established the Federal Data Center Consolidation Initiative. This initiative’s four high-level goals are to promote the use of “green IT” by reducing the overall energy and real estate footprint of government data centers; reduce the cost of data center hardware, software, and operations; increase the overall IT security posture of the government; and shift IT investments to more efficient computing platforms and technologies. OMB believes that this initiative has the potential to provide about $3 billion in savings by the end of 2015.\nIT Reform Plan. In December 2010, OMB released its 25-point plan to reform federal IT. This document established an ambitious plan for achieving operational efficiencies and effectively managing large- scale IT programs. In particular, as part of an effort to reduce the risk associated with IT acquisitions, the plan calls for federal IT programs to deploy capabilities or functionality in release cycles no longer than 12 months, and ideally, less than 6 months. The plan also identifies key actions that can help agencies implement this incremental development guidance, such as working with Congress to develop IT budget models that align with incremental development and issuing contracting guidance and templates to support incremental development.\nPortfolioStat. In order to eliminate duplication, move to shared services, and improve portfolio management processes, in March 2012, OMB launched the PortfolioStat initiative. Specifically, PortfolioStat requires agencies to conduct an annual agency-wide IT portfolio review to, among other things, reduce commodity IT spending and demonstrate how their IT investments align with the agency’s mission and business functions. PortfolioStat is designed to assist agencies in assessing the current maturity of their IT investment management process, making decisions on eliminating duplicative investments, and moving to shared solutions in order to maximize the return on IT investments across the portfolio. OMB believes that the PortfolioStat effort has the potential to save the government $2.5 billion over the next 3 years by, for example, consolidating duplicative systems.", "Given the magnitude of the federal government’s annual IT budget, which is expected to be more than $82 billion in fiscal year 2014, it is important that agencies leverage all available opportunities to ensure that their IT investments are acquired in the most effective manner possible. To do so, agencies can rely on IT acquisition best practices, incremental development, and initiatives such as OMB’s IT Dashboard and OMB- mandated TechStat sessions. Additionally, agencies can save billions of dollars by continuing to consolidate federal data centers and by eliminating duplicative investments through OMB’s PortfolioStat initiative.\nBest Practices Are Intended to Help Ensure Successful Major Acquisitions In 2011, we identified seven successful acquisitions and nine common factors critical to their success and noted that (1) the factors support OMB’s objective of improving the management of large-scale IT acquisitions across the federal government and (2) wide dissemination of these factors could complement OMB’s efforts. Specifically, we reported that federal agency officials identified seven successful acquisitions, in that they best achieved their respective cost, schedule, scope, and performance goals. Notably, all of these were smaller increments, phases, or releases of larger projects. The common factors critical to the success of three or more of the seven acquisitions are generally consistent with those developed by private industry and are identified in table 2.\nThese critical factors support OMB’s objective of improving the management of large-scale IT acquisitions across the federal government; wide dissemination of these factors could complement OMB’s efforts.\nIT Dashboard Can Improve the Transparency into and Oversight of Major IT Investments The IT Dashboard serves an important role in allowing OMB and other oversight bodies to hold agencies accountable for results and performance. However, we have issued a series of reports highlighting deficiencies with the accuracy and reliability of the data reported on the Dashboard. For example, we reported in October 2012 that Defense had not rated any of its investments as either high or moderately high risk and that, in selected cases, these ratings did not appropriately reflect significant cost, schedule, and performance issues reported by GAO and others. We recommended that Defense ensure that its CIO ratings reflect available investment performance assessments and its risk management guidance. Defense concurred and has revised its process to address these concerns.\nFurther, while we reported in 2011 that the accuracy of Dashboard cost and schedule data had improved over time, more recently, in December 2013 we found that agencies had removed investments from the Dashboard by reclassifying their investments—representing a troubling trend toward decreased transparency and accountability. Specifically, the Department of Energy reclassified several of its supercomputer investments from IT to facilities and the Department of Commerce decided to reclassify its satellite ground system investments. Additionally, as of December 2013, the public version of the Dashboard was not updated for 15 of the previous 24 months because OMB does not revise it as the President’s budget request is being created.\nWe also found that, while agencies experienced several issues with reporting the risk of their investments, such as technical problems and delayed updates to the Dashboard, the CIO ratings were mostly or completely consistent with investment risk at seven of the eight selected agencies. Additionally, the agencies had already addressed several of the discrepancies that we identified. The final agency, the Department of Veterans Affairs (VA), did not update 7 of its 10 selected investments because it elected to build, rather than buy, the ability to automatically update the Dashboard and has now resumed updating all investments. To their credit, agencies’ continued attention to reporting the risk of their major IT investments supports the Dashboard’s goal of providing transparency and oversight of federal IT investments.\nNevertheless, the rating issues that we identified with performance reporting and annual baselining, some of which are now corrected, serve to highlight the need for agencies’ continued attention to the timeliness and accuracy of submitted information in order to allow the Dashboard to continue to fulfill its stated purpose. We recommended that agencies appropriately categorize IT investments and that OMB make Dashboard information available independent of the budget process. OMB neither agreed nor disagreed with these recommendations. Six agencies generally agreed with the report or had no comments and two others did not agree, believing their categorizations were appropriate. We continue to believe that our recommendations are valid.\nAgencies Need to Establish and Implement Incremental Development Policies to Better Achieve Cost, Schedule, and Performance Goals for IT Investments Incremental development can help agencies to effectively manage IT acquisitions and, as such, OMB has recently placed a renewed emphasis on it. In particular, in 2010 OMB called for IT investments to deliver functionality every 12 months, and since 2012 has required investments to deliver functionality every 6 months.\nHowever, as discussed in our report being released today, most selected agencies have not effectively established and implemented incremental development approaches. Specifically, although all five agencies in our review—the Departments of Defense, Health and Human Services (HHS), Homeland Security (DHS), Transportation (Transportation), and VA—have established policies that address incremental development, the policies usually did not fully address three key components we identified for implementing OMB’s guidance. Table 3 provides an assessment of each agency’s policies against the three key components of an incremental development policy.\nAmong other things, agencies cited the following reasons that contributed to these weaknesses: (1) OMB’s guidance was not feasible because not all types of investments should deliver functionality in 6 months and (2) the guidance did not identify what agencies’ policies are to include or time frames for completion. We agreed that these concerns have merit.\nAdditionally, the weaknesses in agency policies have enabled inconsistent implementation of incremental development approaches. Specifically, almost three-quarters of the selected investments we reviewed did not plan to deliver functionality every 6 months and less than half planned to deliver functionality in 12-month cycles. Table 4 shows how many of the selected investments at each agency planned on delivering functionality every 6 and 12 months during fiscal years 2013 and 2014.\nConsidering agencies’ concerns about delivering functionality every 6 months and given that so few are planning to deliver functionality in that time frame, our report noted that delivering functionality every 12 months, consistent with OMB’s IT Reform Plan, would be an appropriate starting point and a substantial improvement. Until OMB issues realistic and clear guidance and agencies update their policies to reflect this guidance, agencies may not consistently adopt incremental development approaches, and IT expenditures will continue to produce disappointing results—including sizable cost overruns and schedule slippages and questionable progress in meeting mission goals and outcomes. In the report being released today, we recommend that OMB develop and issue realistic and clear guidance on incremental development, and that Defense, HHS, DHS, and Transportation update and implement their incremental development policies, once OMB’s guidance is made available. OMB stated that it agreed with our recommendation to update and issue incremental development guidance, but did not agree that its current guidance is not realistic. However, slightly more than one-fourth of selected investments planned to deliver functionality every 6 months— and less than one-half planned to do so every 12 months. Additionally, there are three types of investments for which it may not always be practical or necessary to expect functionality to be delivered in 6-month cycles. Thus, we continue to believe that delivering functionality every 6 months is not an appropriate requirement for all agencies and that requiring the delivery of functionality every 12 months, consistent with OMB’s IT Reform Plan, is a more appropriate starting point. We therefore maintain that OMB should require projects associated with major IT investments to deliver functionality at least every 12 months.\nFour agencies—Defense, HHS, DHS, VA—generally agreed with the report or had no comments and one agency—Transportation—did not agree that its recommendation should be dependent on OMB first taking action. Specifically, the department explained that relying on another agency to concur with one of our recommendations before Transportation can take action leaves the department with the potential challenge of a recommendation that cannot be implemented. However, as previously stated, OMB agrees with our recommendation to update and issue incremental guidance, meaning that OMB has committed to taking the actions necessary to enable Transportation to begin addressing our recommendation. Accordingly, we continue to believe that our recommendations are warranted and can be implemented.\nTechStat Reviews Can Help Highlight and Evaluate Poorly Performing Investments TechStat reviews were initiated by OMB to enable the federal government to turnaround, halt, or terminate IT projects that are failing or are not producing results. In 2013, we reported that OMB and selected agencies had held multiple TechStats, but that additional OMB oversight was needed to ensure that these meetings were having the appropriate impact on underperforming projects and that resulting cost savings were valid. Specifically, we determined that, as of April 2013, OMB reported conducting 79 TechStats, which focused on 55 investments at 23 federal agencies. Further, 4 selected agencies—the Departments of Agriculture, Commerce, HHS, and DHS—conducted 37 TechStats covering 28 investments. About 70 percent of the OMB-led and 76 percent of agency- led TechStats on major investments were considered medium to high risk at the time of the TechStat.\nHowever, the number of at-risk TechStats held was relatively small compared to the current number of medium- and high-risk major IT investments. Specifically, the OMB-led TechStats represented roughly 18.5 percent of the investments across the government that had a medium- or high-risk CIO rating. For the 4 selected agencies, the number of TechStats represented about 33 percent of the investments that have a medium- or high-risk CIO rating. We concluded that, until OMB and agencies develop plans to address these weaknesses, the investments would likely remain at risk.\nIn addition, we reported that OMB and selected agencies had tracked and reported positive results from TechStats, with most resulting in improved governance. Agencies also reported projects with accelerated delivery, reduced scope, or termination. We also found that OMB reported in 2011 that federal agencies achieved almost $4 billion in life-cycle cost savings as a result of TechStat sessions. However, we were unable to validate OMB’s reported results because OMB did not provide artifacts showing that it ensured the results were valid. Among other things, we recommended that OMB require agencies to report on how they validated the outcomes. OMB generally agreed with this recommendation.\nContinued Oversight Needed to Consolidate Federal Data Centers and Achieve Cost Savings In an effort to consolidate the growing number of federal data centers, in 2010, OMB launched a consolidation initiative intended to close 40 percent of government data centers by 2015, and, in doing so, save $3 billion. Since 2011, we have issued a series of reports on the efforts of agencies to consolidate their data centers. For example, in July 2011 and July 2012, we reported that agencies had developed plans to consolidate data centers; however, these plans were incomplete and did not include best practices. In addition, although we reported that agencies had made progress on their data center closures, OMB had not determined initiative-wide cost savings, and oversight of the initiative was not being performed in all key areas. Among other things, we recommended that OMB track and report on key performance measures, such as cost savings to date, and improve the execution of important oversight responsibilities. We also recommended that agencies complete inventories and plans. OMB agreed with these two recommendations, and most agencies agreed with our recommendations to them.\nAdditionally, as part of ongoing follow-up work, we have determined that while agencies had closed data centers, the number of federal data centers was significantly higher than previously estimated by OMB.\nSpecifically, as of May 2013, agencies had reported closing 484 data centers by the end of April 2013 and were planning to close an additional 571 data centers—for a total of 1,055—by September 2014. However, as of July 2013, 22 of the 24 agencies participating in the initiative had collectively reported 6,836 data centers in their inventories— approximately 3,700 data centers more than OMB’s previous estimate from December 2011. This dramatic increase in the count of data centers highlights the need for continued oversight of agencies’ consolidation efforts.\nWe have ongoing work looking at OMB’s data center consolidation initiative, including evaluating the extent to which agencies have achieved planned cost savings through their consolidation efforts, identifying agencies’ notable consolidation successes and challenges in achieving cost savings, and evaluating the extent to which data center optimization metrics have been established.\nAgencies’ PortfolioStat Efforts Have the Potential to Save Billions of Dollars OMB launched the PortfolioStat initiative in March 2012, which required 26 executive agencies to, among other things, reduce commodity IT spending and demonstrate how their IT investments align with the agencies’ mission and business functions. In November 2013, we reported on agencies’ efforts to complete key required PortfolioStat actions and make portfolio improvements. We noted that all 26 agencies that were required to implement the PortfolioStat initiative took actions to address OMB’s requirements. However, there were shortcomings in their implementation of selected requirements, such as addressing all required elements of an action plan to consolidate commodity IT and migrating two commodity areas to a shared service by the end of 2012. In addition, several agencies had weaknesses in selected areas such as the CIO’s authority to review and approve the entire portfolio and ensuring a complete baseline of information relative to commodity IT. Further, we observed that OMB’s estimate of about 100 consolidation opportunities and a potential $2.5 billion in savings from the PortfolioStat initiative was understated because, among other things, it did not include estimates from Defense and the Department of Justice. Our analysis, which included these estimates, showed that, collectively, the 26 agencies reported about 200 opportunities and at least $5.8 billion in potential savings through fiscal year 2015—at least $3.3 billion more than the number initially reported by OMB.\nIn March 2013, OMB issued a memorandum commencing the second iteration of its PortfolioStat initiative. This memorandum identified a number of improvements that should help strengthen IT portfolio management and address key issues we have identified. However, we concluded that selected OMB efforts could be strengthened to improve the PortfolioStat initiative and ensure agencies achieve identified cost savings, including addressing issues related to existing CIO authority at federal agencies and publicly reporting on agency-provided data. We recommended, among other things, that OMB require agencies to fully disclose limitations with respect to CIO authority. In addition, we made several recommendations to improve agencies’ implementation of PortfolioStat requirements. OMB partially agreed with these recommendations, and responses from 20 of the agencies commenting on the report varied.\nWe have ongoing work looking at the second iteration of OMB’s PortfolioStat initiative, including identifying action items and associated time frames from joint OMB-agency PortfolioStat meetings, determining agencies’ progress in addressing these action items, and evaluating the extent to which agencies have realized planned savings.\nIn summary, OMB’s and agencies’ recent efforts have resulted in greater transparency and oversight of federal spending, but continued leadership and attention are necessary to build on the progress that has been made.\nThe expanded use of the common factors critical to the successful management of large-scale IT acquisitions should result in more effective delivery of mission-critical systems. Additionally, federal agencies need to continue to improve the accuracy and availability of information on the Dashboard to provide greater transparency and even more attention to the billions of dollars invested in troubled projects. Further, agencies need to implement incremental development approaches in order to increase the likelihood that major IT investments meet their cost, schedule, and performance goals. Additionally, agencies should conduct additional TechStat reviews to focus management attention on troubled projects and establish clear action items to turn the projects around or terminate them.\nThe federal government can also build on the progress of agencies’ data center closures and reduction of commodity IT. With the possibility of over $5.8 billion in savings from the data center consolidation and PortfolioStat initiatives, agencies should continue to identify consolidation opportunities in both data centers and commodity IT. In addition, better support for the estimates of cost savings associated with the opportunities identified would increase the likelihood that these savings will be achieved.\nChairman Carper, Ranking Member Coburn, and Members of the Committee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.", "If you or your staffs have any questions about this testimony, please contact me at (202) 512-9286 or at [email protected]. Individuals who made key contributions to this testimony are Dave Hinchman (Assistant Director), Deborah A. Davis (Assistant Director), Rebecca Eyler, Kaelin Kuhn, Meredith Raymond, Jamelyn Payan, Bradley Roach, Andrew Stavisky, and Kevin Walsh.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 1, 1 ], "alignment": [ "h3_title", "h3_full", "h0_full h3_full h2_full h1_full", "" ] }	{ "question": [ "What did GAO find in 2011?", "What did GAO find in a recent report?", "What did GAO make recommendations for?", "How did agencies respond to these recommendations?", "What does OMB's key reform emphasize?", "How has this reform impacted requirements for agency investments?", "What did GAO find in today's report?", "What did GAO recommend to OMB?", "How did agencies respond to these recommendations?", "What did OMB do to consolidate the number of federal data centers?", "By 2014, what were the results of this initiative?", "What did GAO recommend to OMB?", "What did OMB do to better manage the government's IT systems?", "What did GAO find in regard to this initiative?", "What did GAO recommend in regard to this initiative?", "How did OMB and other agencies respond to these recommendations?" ], "summary": [ "GAO has issued a series of reports on Dashboard accuracy and, in 2011, found that, while there were issues with the accuracy and reliability of cost and schedule data, the accuracy of these data had improved over time.", "However, a recent GAO report found that agencies had removed major investments from the Dashboard, representing a troubling trend toward decreased transparency. GAO also reported that, as of December 2013, the public version of the Dashboard was not updated for 15 of the previous 24 months.", "GAO made recommendations to ensure that the Dashboard includes all major IT investments and increase its availability.", "Agencies generally agreed with the report or had no comments.", "An additional key reform initiated by OMB emphasizes incremental development in order to reduce investment risk.", "In 2010 it called for agency investments to deliver functionality every 12 months and since 2012 has required investments to deliver functionality every 6 months.", "However, in its report released today, GAO found that almost three-quarters of investments reviewed did not plan to deliver capabilities every 6 months and less than half planned to deliver capabilities in 12-month cycles.", "GAO recommended that OMB develop and issue clearer guidance on incremental development and that selected agencies update and implement their associated policies.", "Most agencies agreed with GAO recommendations, while others disagreed or had no comment.", "In an effort to consolidate the number of federal data centers, OMB launched a consolidation initiative intended to close 40 percent of data centers by 2015, and in doing so, save $3 billion.", "GAO reported that agencies planned to close 1,055 data centers by the end of fiscal year 2014, but also highlighted the need for continued oversight.", "Among other things, GAO recommended that OMB improve the execution of important oversight responsibilities, with which OMB agreed.", "To better manage the government's existing IT systems, OMB launched the PortfolioStat initiative, which, among other things, requires agencies to conduct annual reviews of their IT investments and make decisions on eliminating duplication.", "GAO reported that agencies continued to identify duplicative spending as part of PortfolioStat and that this initiative has the potential to save at least $5.8 billion by fiscal year 2015, but that weaknesses existed in agencies' implementation of the initiative's requirements.", "Among other things, GAO made several recommendations to improve agencies' implementation of PortfolioStat requirements.", "OMB partially agreed with these recommendations, and most of the other 20 agencies agreed to implement them." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, -1, -1, 3, -1, 0, -1, -1, 0, 0, 2 ], "summary_paragraph_index": [ 5, 5, 5, 5, 6, 6, 6, 6, 6, 7, 7, 7, 8, 8, 8, 8 ] }
CRS_R40929	{ "title": [ "", "Introduction", "Context", "History of Federal Youth Employment and Job Training Programs8", "Depression Era", "War on Poverty Programs", "Expanding Youth Programs", "Comprehensive Employment and Training Act (CETA) and Youth Employment and Demonstrations Project Act (YEDPA)", "Job Training Partnership Act (JTPA)", "School to Work Opportunity Act (STWOA)", "Workforce Investment Act (WIA)", "Workforce Innovation and Opportunity Act (WIOA)", "Overview of Youth Programs Authorized Under Title I of WIOA", "Coordination", "Funding", "Funding for FY2000-FY2016", "FY2016 Funding", "FY2015 Funding", "FY2014 Funding", "WIOA Youth Activities Program24", "Overview and Purpose", "Program Structure", "Allocations", "Elements of Local Programs", "Participants", "Performance", "Job Corps54", "Overview and Purpose", "Program Structure", "Services for Students", "Community Engagement", "Allocations", "Participants", "Performance", "Performance Oversight", "Financial Oversight", "YouthBuild81", "Overview and Purpose", "Program Structure", "Participants", "Allocations", "Performance", "Reentry Employment Opportunities Program86", "Overview and Purpose", "Program Structure", "Participants", "Allocations", "Performance", "Appendix. Funding for the WIOA Youth Program" ], "paragraphs": [ "", "In an increasingly competitive economy, and with retirement underway for the Baby Boomer generation, Congress has indicated a strong interest in ensuring that today's young people have the educational attainment and employment experience necessary to become highly skilled workers, contributing taxpayers, and successful participants in civic life. Challenges in the economy and among vulnerable youth populations, however, have heightened concern among policymakers that many young people may not be prepared to fill these roles.\nThe employment levels for youth under age 25 have generally declined since 2000, though attachment to the workforce has improved for this population in the wake of the recession that extended from December 2007 through June 2009. Certain young people in particular—including those from low-income families, high school dropouts, foster youth, and other at-risk populations—face b arriers to completing school and entering the workforce. Since the 1960s, federal job training programs and policies have sought to connect these youth to education and employment pathways. Contemporary federal employment programs with this same purpose include the Youth Activities program; Job Corps; YouthBuild; and the Reentry Employment Opportunities (REO) program, which includes a youth component. These programs provide a range of services and supports to youth. Some of the programs concentrate on specific job trades and/or serve targeted at-risk populations. The programs were previously authorized under the Workforce Investment Act (WIA) of 1998 ( P.L. 105-220 ). On July 22, 2014, President Obama signed into law the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ). WIOA superseded WIA and made significant amendments to the youth programs. Changes made by WIOA generally went into effect on July 1, 2015.\nThis report provides an overview of federal employment programs for vulnerable young people. It begins with a discussion of the current challenges in preparing all youth today for the workforce. The report then provides a chronology of job training and employment programs for at-risk youth that began in the 1930s and were expanded or modified from the 1960s through the 1990s. It goes on to discuss the four youth programs authorized under WIOA, and draws comparisons between these programs. Following this section is a detailed discussion of each of the programs.", "As they leave high school, either through graduation or by dropping out, young people can pursue various options. Youth with a high school diploma may attend a two- or four-year college, enlist in the armed services, or secure part-time or full-time employment (sometimes paired with attending school). Youth without a high school diploma can do some of these same things, but their opportunities are more limited. They cannot enroll in a four-year college or, in most cases, enlist in the military. These youth will likely have difficulty supporting themselves if they do work.\nIn fact, individuals who drop out are less likely to secure employment and have lower earning power. As the level of education rises, the unemployment rate decreases and median weekly earnings increase for those who work. In 2015, among workers with less than a high school degree, the unemployment rate was 8.0% and earnings averaged $493 per week. This is compared to an unemployment rate of 5.4% and $678 in weekly earnings for workers with a high school degree. Workers with a bachelor's degree had an unemployment rate of 2.8% and median weekly earnings of $1,137. With the shift to a knowledge-based economy, many new jobs will require some college education or better. According to DOL's Bureau of Labor Statistics (BLS), the fastest growing occupations between 2014 and 2024 will require some postsecondary education. The costs of dropping out extend beyond the individual's foregone job opportunities and lower wages. According to the research literature, costs can be incurred by society overall. These costs include possible lost payroll tax revenue and increased transfers for welfare payments, imprisonment, and programs to re-enroll dropouts in school.\nFederal youth employment and job training programs have long targeted services to young people who leave school before graduating or are in school and may be vulnerable to dropping out. The purpose of these programs, as they currently exist, is to provide job training, employment, educational services, and social services that can help youth become economically self-sufficient and achieve their career and academic goals. These contemporary programs also emphasize leadership development and community service. Note that while youth employment and job training programs are also enhanced with state workforce and other dollars, the extent to which this support is provided is unclear.", "For more than 90 years, the federal government has played a role in helping young people secure employment and achieve academic success. Generally, these young people have been defined as being vulnerable in some way—either because they are economically disadvantaged and/or have a barrier to securing employment or completing their education. During the Great Depression, the focus was on employing idle young men in public works and other projects. The employment programs from this era included an educational component to encourage youth to obtain their high school diplomas. Beginning in the 1960s, the federal government started funding programs for low-income youth, such as Job Corps, that address their multiple needs, including job training, educational services, housing, and supportive services. During the 1970s and 1980s, Job Corps was expanded and the federal government funded additional programs for both in-school and out-of-school youth. Funding was also appropriated to test the efficacy of some of these programs. The Workforce Investment Act of 1998 extended earlier programs and created new ones, with the intention of providing more seamless job training and education services for youth year-round. The Workforce Innovation and Opportunity Act maintained these programs and changed some of their requirements. Generally, these programs are targeted to teenagers and young adults, usually to age 24, who are at risk of dropping out or have already done so.", "Prior to the 1930s, the federal government's involvement in youth employment was primarily limited to regulating child labor. The Great Depression served as a catalyst for the creation of federal programs to employ and educate young people who were out of work or at risk of dropping out of school due to financial difficulties. The Civilian Conservation Corps (CCC) began in 1933 as an employment program for unemployed males ages 18 to 25 (and veterans, Indians, and residents of territories of any age) to participate in projects planned by the Departments of the Interior and Agriculture. These projects focused on creating and improving infrastructure, transportation, and recreational services, among other categories. The young men lived in camps and were provided with an allowance, food, and medical care. The CCC also included an educational component, which taught nearly 35,000 participants to read and write and assisted a smaller number with attaining their high school and college degrees. Until the program ended in 1945, it served nearly 3 million men, of whom approximately 10% were veterans.\nOther Depression era programs—the Student Aid program, Works Project program, and Guidance and Placement program—were administered by the National Youth Administration, which was created as part of the now-defunct Works Progress Administration by an executive order in 1935. The programs provided funds for part-time employment of needy high school, college, and graduate students to assist them in completing school, as well as funds for part-time employment for unemployed out-of-school youth. These young people, all of whom were ages 16 through 25, were employed in a number of broad areas, including construction, clerical work, and research. These programs served hundreds of thousands of youth before they were discontinued in the early 1940s.", "The 1960s marked a period of federal efforts to assist poor and disadvantaged children, adolescents, and their families through job training and other programs. In response to concerns about high unemployment, the Manpower Development and Training Act of 1962 (P.L. 87-415) and subsequent amendments to it authorized funding for employment training. Specifically, amendments to the act in 1963 (P.L. 88-214) encouraged the Department of Labor to provide assistance to youth so that they might be able to successfully enter the labor force, and expanded the share of job training funds that could be used to train youth under age 22 from 5% to 25%. Further, federal funding was first authorized through the 1963 amendments to provide employment opportunities to youth from low-income families.\nPresident Lyndon B. Johnson's subsequent War on Poverty established new youth-targeted programs in job training and educational assistance under an initiative known as the Neighborhood Youth Corps (NYC). The NYC was made up of work training programs, the Work Study program, and Job Corps. The work training programs provided work experience, job training, and supportive services to low-income unemployed youth ages 16 through 21 who were in school or out of school, including dropouts. The Work Study program was modeled on the Depression-era Student Aid program and provided money to high school and college students from low-income families who needed earnings to stay in school. The program continues today for college students. Job Corps, which also continues today, was established under the Economic Opportunity Act of 1964 (P.L. 88-452) to provide educational and job training opportunities to disadvantaged youth at residential and non-residential centers. (See \" Job Corps ,\" below, for further information.)", "The 1973 Comprehensive Employment and Training Act (CETA, P.L. 93-203 ) was the first of four laws enacted during the 1970s and 1980s that focused greater federal attention on youth employment and training. The second law, the Youth Employment and Demonstrations Project Act (YEDPA, P.L. 95-93 ) was enacted in 1977 and established a variety of employment, training, and demonstration programs for youth. The 1982 Job Training Partnership Act (JTPA, P.L. 97-300 ) repealed CETA. JTPA was subsequently repealed by WIA. Separately, the School-to-Work Opportunities Act of 1994 (STWOA, P.L. 103-239 ) supported the development of programs that encouraged students to pursue learning opportunities and experiences that incorporated occupational skills. Activities authorized under these acts were administered by DOL. STWOA was additionally carried out by the Department of Education (ED).", "As amended through 1978, CETA authorized a range of employment and training programs for adults and youth. Job Corps and the Summer Program for Economically Disadvantaged Youth (SPEDY) were the primary youth programs authorized under CETA. SPEDY provided funding to employers to hire low-income youth ages 14 through 21 during the summer months. Youth served as assistants in hospitals, libraries, community service organizations, and schools, among other settings.\nThe Youth Employment and Demonstrations Project Act (YEDPA), signed into law in 1977, amended CETA. YEDPA increased authorization of appropriations for Job Corps and SPEDY and authorized three additional programs targeted to \"economically disadvantaged\" (defined under the act) youth ages 14 through 21: Youth Employment and Training Programs (YETP), Youth Community Conservation and Improvement Projects (YCCIP), and Youth Incentive Entitlement Pilot Projects (YIEPP). YEDPA was passed in response to high levels of unemployment among youth relative to adults, even during periods of economic expansion, and growing gaps in youth unemployment among whites and blacks, males and females, and in-school and out-of-school youth. The programs were carried out during the Carter Administration, from 1977 through 1981. Over this period, YEDPA served 6.1 million youth.\nYETP and YCCIP were intended to meet the immediate employment needs of youth, and funding for the programs was allocated primarily on a formula basis. YETP activities include work experience, pre-employment skills, and an emphasis on the transition from school to work. YCCIP was intended to assist unemployed, out-of-school youth obtain a high school degree, conditional on satisfactory performance in work and school. Further, it was aimed at improving coordination between the job training and educational systems as a means of addressing the dropout problem. Finally, YIEPP funded evaluations to test the efficacy of demonstration programs; the other two programs included funding for demonstration programs. During the YEDPA years, more than 60 major demonstrations were funded in about 300 sites, operated by DOL in cooperation with six other federal agencies and private nonprofit intermediaries.", "CETA was repealed in 1982 by the Job Training Partnership Act. JTPA was distinct from its predecessor because it emphasized that states and localities, rather than the federal government, had the primary responsibility for administering job training and employment programs. Funding was appropriated under JTPA through FY1999. JTPA programs focused on the training needs of \"economically disadvantaged\" (defined under the act) youth and adults facing significant barriers to employment. JTPA programs included the Summer Youth Employment and Training program, the Youth Training Program, and Job Corps.\nThe Summer Youth Employment and Training program provided employment and training activities during the summer months for low-income youth ages 14 through 21 to strengthen basic educational skills, encourage school completion, provide work exposure, and enhance citizenship skills. In the summer of 1997, an estimated 500,000 youth participated. The Youth Training Program was established by the Job Training Reform Amendments of 1992 ( P.L. 102-367 ), which amended JTPA to address concerns that school dropouts were not being reached by the then-existing combined program for disadvantaged adults and youth, and that the program primarily served youth who were the easiest to place in jobs and required the fewest services. The program was year-round and provided direct services, such as on-the-job training, tutoring and study skills training, and school-to-work transition services. It also provided training-related and supportive services, including job search assistance, drug and alcohol abuse counseling, and cash incentives based on attendance and performance in a program. Economically disadvantaged in-school and out-of-school youth ages 16 through 21 were eligible, but 50% of participants had to be out of school. Further, at least 65% of youth had to be hard to serve, meaning they were school dropouts (if out of school), pregnant or parenting, or offenders, among other qualifications. In program year 1997, an estimated 107,000 youth participated. JTPA was replaced by WIA.", "The School to Work Opportunity Act of 1994 authorized the School-to-Work (STW) program administered jointly by DOL and the Department of Education through the National School-to-Work Office. The program was funded from FY1994 through FY2000. The law supported the development of programs with three main elements: work-based learning to provide participating students with work experience and on-the-job training; school-based learning, involving upgrading and integrating the occupational skills participating students learn in school and the workplace; and program coordination to aid the planning, implementation, and operation of the program. STWOA grants were competitively awarded to states, local partnerships, programs for Indian youth, and U.S. territories to implement school-to-work systems. In addition, STWOA authorized national activities, such as research and demonstrations. Some school-to-work programs that received seed money from the federal program continue to operate today.", "The Workforce Investment Act of 1998 replaced JTPA. WIA includes titles that authorize programs for job training and related services (Title I), adult education and literacy (Title II), employment services (Title III), and vocational rehabilitation (Title IV). Title I of WIA authorized job training programs for youth, adults, and dislocated workers. Funding was authorized for the program through FY2003, and Congress continued to appropriate funding for the programs in subsequent years.", "Congress took steps toward reauthorizing WIA from the 108 th to the 113 th Congresses, ultimately passing the Workforce Innovation and Opportunity Act (WIOA) on July 9, 2014. President Obama signed the bill into law ( P.L. 113-128 ) on July 22, 2014. As of July 1, 2015, the law superseded WIA. Like WIA, WIOA includes titles that authorize programs for job training and related services (Title I), adult education and literacy (Title II), employment services (Title III), and vocational rehabilitation (Title IV). The major job training programs for youth and other workers are authorized in Title I.", "WIOA authorizes, and Congress has funded, three job training and employment services for youth:\nYouth Workforce Investment Activities Program (hereinafter, Youth Activities Program), a formula grant program for state and local workforce development boards (WDBs) that includes employment and other services that are provided year-round; Job Corps , a program that provides job training and related services primarily at residential centers maintained by contractor organizations; and YouthBuild , a competitive grant program that emphasizes job training and education in the construction trades.\nAs mentioned, Job Corps was enacted as part of the Economic Opportunity Act of 1964 (P.L. 88-452), and was later incorporated into CETA, JTPA, and WIA. YouthBuild was originally authorized under the Cranston-Gonzalez National Affordable Housing Act of 1992 ( P.L. 102-550 ). The program was administered by the Department of Housing and Urban Development (HUD) until it was transferred to DOL in 2007 under the YouthBuild Transfer Act ( P.L. 109-281 ) and incorporated into WIA. Under WIA's pilot and demonstration authority, DOL established the Reintegration of Ex-Offenders (ReXO) program, a program for juvenile and adult offenders that provides job training and other services. WIOA does not explicitly authorize the program, now known as the Reentry Employment Opportunities (REO) program; however, Congress appropriated funding in FY2016 ( P.L. 114-113 ) under the authority of Section 169 of WIOA and the Second Chance Act. Section 169 authorizes evaluations and research.\nDOL's Employment and Training Administration (ETA) administers the four programs. All of the programs offer employment, job training, and educational services. For example, local workforce development areas must provide specific elements, including mentoring and follow-up, to youth who receive services under the Youth Activities program. YouthBuild program participants engage in employment and other activities primarily related to housing and other types of construction work. Job Corps is the only one of the programs that provides residential services; youth can live onsite and receive health care services, child care, and other supports. Further, the programs generally serve vulnerable youth. Participants in YouthBuild and Job Corps must be low-income and have specified barriers to employment. The same is true in the Youth Activities program, except those who are out-of-school do not have to be low-income. The youth component of the Reentry Employment Opportunities program serves youth who have become involved in the juvenile justice or criminal justice system or youth at risk of becoming involved. The programs are funded somewhat differently. DOL allocates funding for the Youth Activities program to state WDBs based on a formula, while Job Corps enters into contracts with nonprofit and for-profit organizations and into an interagency agreement with the U.S. Department of Agriculture's Forest Service. The other programs competitively award grants to nonprofit and other organizations and local communities. Table 1 summarizes the programs' major features.", "The WIOA Youth program and other youth programs make up a network of job training and employment opportunities for youth. In some communities, this may be formalized while in others, coordination between the programs may be less structured. WIOA includes provisions that encourage or require the programs to coordinate with one another. The state workforce board may include representatives of organizations that have demonstrated experience and expertise in addressing the employment, training, or education needs of eligible youth, including representatives of organizations that serve out-of-school youth. These boards are responsible for carrying out WIOA programs at the state level and allocating funds to local WDBs.\nFurther, under the state workforce plan (\"unified state plan\"), states are required to submit a description of the state's strategic vision and goals for preparing an educated and skilled workforce—including preparing youth and individuals with barriers to employment—and for meeting the skilled workforce needs of employers, among other requirements. In addition, local WDBs, which receive funds to carry out the Youth Activities program are required, as part of their local plans, to describe and assess the type and availability of youth workforce investment activities in the local area, including activities for youth with disabilities. The plan must identify successful models of such youth workforce investment activities. Local workforce boards may choose to establish a standing committee to provide information and assist with planning to provide services to youth. Further, the Youth Activities program, Job Corps, and YouthBuild are required partners at one-stop centers. One-stop centers are operated by local WDBs and include federal programs that coordinate employment and other services in a community for all youth and adults.", "WIOA provides funding authorization from FY2015 through FY2019 for youth employment and job training programs. Funds appropriated for a program or activity carried out under Title I of the act are available for obligation on the basis of a program year. The program year begins on July 1 in the fiscal year for which the appropriation is made and ends June 30 of the following year. Funds for the Youth Activities program may first become available for a new program year in the preceding April. In addition, Congress has tended to specify that funds appropriated for YouthBuild and the youth component of the Reentry Employment Opportunities program are available for obligation beginning in the April preceding a given program year. Congress has generally required that obligated funds for Job Corps are made available for one program year, although funding for certain purposes can be obligated through later dates. Funds obligated for any program year for the Youth Activities may be expended by each state receiving such funds during that program year and the two succeeding program years. Local areas may expend funds received from the state during the program year and the succeeding program year.", "Table 2 includes the level of funds appropriated to each of the youth job training and employment programs for FY2000 through FY2016. Appropriations for these years correspond to the same program year, and are reported as such in the table (i.e., PY2000 through PY2016). Congress appropriated a total of $2.4 billion to $2.8 billion annually for these programs in most years over this period. Table A-1 in the Appendix presents Youth program funding allocated to the states and outlying areas for PY2009 through PY2016.\nJob Corps has generally received the largest appropriation each year, followed by the Youth program, YouthBuild, and the youth component of the Reintegration of Ex-Offenders (although in two years, YouthBuild received less funding than the ReXO youth component).", "Following three continuing resolutions ( P.L. 114-53 , P.L. 114-96 , and P.L. 114-100 ), Congress passed, and President Obama enacted, the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) to fund the Department of Labor and other agencies. FY2016 funding for the four youth job training and employment programs totaled $2.7 billion. Funding increased from FY2015 by nearly $42 million for the Youth program and nearly $5 million for the YouthBuild program. The funding for the youth component of the Reentry Employment Opportunities program decreased by $4.5 million and for Job Corps by $3.1 million.", "Following two continuing resolutions ( P.L. 113-164 and P.L. 113-202 ), Congress passed, and President Obama enacted, the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) to fund DOL programs through FY2015. Funding for the youth programs totaled $2.6 billion. Funding increased from FY2014 by over $11 million for the Youth program; over $7 million for the YouthBuild program; and nearly $2 million for the youth component of the Reentry Employment Opportunities program; Job Corps funding remained level.", "FY2014 (PY2014) appropriations were not enacted prior to the beginning of the fiscal year (October 1), resulting in a 16-day shutdown of the federal government. On October 16, 2013, the Senate and House agreed to a bill ( H.R. 2775 ) to provide temporary government-wide FY2014 funding through January 15, 2014 (or until full-year funding was appropriated). This bill was signed by the President on October 17, 2013 ( P.L. 113-46 ). A second short-term continuing resolution ( P.L. 113-73 ) extended appropriations through January 18, 2014. On January 17, 2014, the President signed into law the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) to fund appropriations through September 30, 2014. In total, $2.6 billion was appropriated for youth job training and employment programs.\nThe next section of the report provides further discussion about the youth programs authorized under Title I of WIOA.", "", "The Youth Activities program is one of three formula grant programs that were initially authorized by WIA, and is now authorized under WIOA as the Youth Workforce Investment Activities program. The other two WIOA programs target adults (Adult Activities) and dislocated workers (Dislocated Worker Activities), although youth ages 18 or older are eligible for services provided through the Adult Activities program. These programs provide core funding for a coordinated system of employment and training services overseen by a state workforce development board and the governor, and composed of representatives of businesses and other partners. WIOA does not include purpose areas for the Youth Activities program; however, it generally seeks to provide assistance to youth in achieving academic and employment success.", "With assistance from the state workforce development board, the governor develops a plan (known as the unified state plan) that is submitted to DOL. The plan is to address several items related to employment and training needs, performance accountability, and employment and training activities. The plan is to be submitted every four years for the Youth Activities, Adult Activities, and Dislocated Activities programs. Further, the unified state plan is to address youth primarily in two places. It must outline the state's strategic vision and goals for preparing an educated and skilled workforce, include preparing youth with barriers to employment. It must also outline the criteria to be used by local boards in awarding contracts for youth services and describing how local WDBs will take into consideration the ability of providers to meet performance measures that are based on primary indicators of performance for the Youth Activities program (these indicators are discussed in a subsequent section).\nAs specified under WIOA, a local workforce area is overseen by the local workforce development board. The local board is made up of partners that collaborate to provide coordinated employment and training services in the community. Membership of the local board is to include representatives of businesses, local education entities, labor organizations, community-based organizations, and economic development agencies, among others. The boards may include representatives of organizations that have demonstrated experience and expertise in addressing the employment, training, or education needs of eligible youth, including representatives of organizations that serve out-of-school youth.\nLocal boards are to competitively award funds to local organizations and other entities to provide employment and job training services to youth. Grants or contracts awarded are to be based on criteria in the state plan, and by taking into consideration the ability of the providers to meet performance accountability measures that are based on primary indicators of performance for the Youth Activities program. Further, a local board may award funding on a sole-source basis if the board determines there is an insufficient number of eligible providers of youth workforce investment activities in the local area to participate on a competitive basis. Local boards may terminate \"for cause\" the eligibility of these providers.\nThe local board develops a local plan that discusses items similar to those in the state plan, except that the plan describes the local area's one-stop delivery system. A one-stop system is intended to provide central access to employment and training services in a community. The Youth Activities program is a required partner in the one-stop system under WIOA. The WIOA regulations specify that local boards must either collocate youth program staff at one-stop centers and/or ensure one-stop centers and staff are equipped to advise youth in order to increase youth access to services and connect youth to the program that best aligns with their needs. Further, one-stop systems may have specialized centers to address special needs. WIOA specifies that this may include the needs of youth.\nThe local board must ensure that parents and other stakeholders are involved in designing and implementing the Youth Activities program. In addition, the local board may establish a standing committee to provide information and to assist with planning, operational, and other issues relating to providing services to youth, including community-based organizations with a demonstrated record of success in serving eligible youth. If a local board establishes a standing youth committee, it may assign it the responsibility of selecting youth providers. The WIOA regulations discuss the potential role of a standing youth committee, including to recommend policy direction to the local board for the design and development of programs to benefit all youth; the design of a comprehensive community workforce development system to ensure a full range of services and responsibilities for all youth, including disconnected youth; and ways to leverage resources and coordinate services among schools, public programs, and community-based organizations serving youth, among other possible responsibilities.", "Funding for the Youth Activities program is allocated from DOL to states, including Puerto Rico and Washington, DC, and the outlying areas. WIOA requires that not more than 0.25% is reserved for outlying areas and not more than 1.5% is reserved for youth activities in programs to serve Native American youth. WIOA specifies that the allotments for the outlying areas are based on a competitive grant process.\nThe remainder of the funds are allocated to states by a formula. The formula is based (1) one-third on the relative number of unemployed individuals residing in areas of substantial unemployment (an average unemployment rate of at least 6.5% for the most recent 12 months); (2) one-third on the relative \"excess\" number of unemployed individuals (an unemployment rate of at least 4.5%); and (3) one-third on the relative number of disadvantaged youth (individuals 16 through 21 who receive an income that, in relation to family size, does not exceed the higher of the poverty line or 70% of the lower living standard income level). WIOA specifies that states are to receive, at minimum, the higher of 90% of their relative share of the prior year's funding or, at maximum, 130% of their relative share of the prior year's funding.\nOf the funds allocated to states for the Youth Activities program (as well as for the Adult and Dislocated Worker programs), not more than 15% can be reserved for statewide activities (only 5% of reserved funds may be used for administrative activities, per WIOA). States must use these funds for certain specified activities, and may use the funds for other specified activities. For example, WIOA requires states to use the statewide funds to carry out monitoring and oversight activities of the Youth Activities program (and Adult and Dislocated Worker programs), which may include a review comparing the services provided to male and female youth.\nThe balance of funding that goes to states is allocated to local workforce development areas on the same basis that Youth Activities funds are allocated to states, to take into account the relative numbers of unemployed individuals and low-income youth in the area compared to other local areas of the state. In addition, the law includes provisions for minimum (90% of the average allocation for the preceding two years) and maximum (130% of the average allocation for the preceding two years) funding that goes to local areas. Local areas may reserve no more than 10% of funds allotted under the program for administrative costs.", "Job training and employment programs that are funded under WIOA and carried out by local WDBs are responsible for providing direct services to youth participants. The programs must be designed to include an objective assessment of the youth's skills, and they must develop service strategies for these youth that are linked to employment goals. These service strategies must be directly linked to one or more of the indicators of performance for the program and they must identify career pathways that include both education and employment goals. Each local program for youth must also provide specific services, or elements. Table 3 shows the 14 elements required under WIOA. WIOA amended some of these elements and added some new ones. The table is organized based on whether the elements are targeted for educational achievement, employment services, linkages between educational achievement and employment services, leadership development activities, additional support for youth services, and other activities.\nLocal boards must provide each youth with information on the full array of applicable or appropriate services available through the local board, other eligible providers, or one-stop partners, and they must also refer youth to appropriate training and educational programs, among other activities. In addition, at least 20% of the funds allocated to the local area must be used to provide youth (whether they are in school or not) with paid and unpaid work experiences that have academic and occupational education as a component.\nAlthough local boards have to make all program elements available to youth, each individual youth does not need to participate in all elements. Further, a local program that receives Youth Activities funding is not required to provide all program elements with WIOA funds; however, these other activities would have to be provided by a partner organization, and the other activities must be closely coordinated with the local programs. The program must have an agreement in place if it partners with another organization to ensure that a program element will be offered by that organization. In practice, this means that youth program case managers must contact and monitor the other provider to ensure the activity is of high quality and beneficial to the youth participant.", "As shown in Table 4 , WIOA specifies that youth are eligible for the Activities program if they are ages 14 through 24. In addition, local workforce development areas (and states) must use no less than 75% of funds for serving out-of-school youth. Up to 5% of the in-school youth in a local area may be eligible because they require additional assistance to complete an educational program or to secure or hold employment. A local workforce development area (or state) may adjust the share of out-of-school youth to 50% if the state determines it will be unable to use a certain share of funding to serve these youth. WIOA requires in-school youth generally and two groups of out-of-school youth to be low-income, and enables up to 5% of these youth to not meet the income criteria. Youth ages 18 through 21 may enroll in the Youth Activities program or Adult Activities program, or may co-enroll in both programs.", "WIOA established six primary indicators of performance for the Youth program that superseded the WIA performance measures. These six primary indicators apply to all youth, regardless of age, and went into effect at the beginning of PY2016:\npercentage of program participants who are in education or training activities, or in unsubsidized employment, during the second quarter after exit from the program; percentage of program participants who are in education or training activities, or in unsubsidized employment, during the fourth quarter after exit from the program; median earnings of program participants who are in unsubsidized employment during the second quarter after exit from the program; percentage of program participants who obtain a recognized postsecondary credential, or a secondary school diploma or its recognized equivalent, during participation in or within one year after exit from the program; percentage of program participants who, during a program year, are in an education or training program that leads to a recognized postsecondary credential or employment and who are achieving measurable skill gains toward such a credential or employment; and indicators of effectiveness in serving employers.\nStates are required to reach an agreement with DOL, in conjunction with the Department of Education (ED), about the levels of performance for each state. These levels of performance are to be based on specified factors, including how the levels compare with other states' adjusted levels of performance. Further, states are to ensure the levels are adjusted using an objective statistical model established by DOL.\nThe following sections of the report discuss, in less detail, additional programs for youth that are authorized under WIOA.", "", "The Job Corps program is carried out by the Office of Job Corps within DOL's Employment and Training Administration, and consists of residential centers throughout the country. The purpose of the program is to provide disadvantaged youth with the skills needed to—obtain secondary school diplomas or recognized postsecondary credentials leading to successful careers in in-demand industry sectors or occupations or the Armed Forces; or enroll in postsecondary education, including apprenticeship programs.", "Currently, 125 Job Corps centers are in operation, and there is at least one center in every state and Puerto Rico. Of these 125 centers, 26 are known as Civilian Conservation Corps Centers, which are operated by the U.S. Department of Agriculture's Forest Service, through an interagency agreement with DOL. Programs at these sites focus on conserving, developing, or managing public natural resources or public recreational areas. Most Job Corps centers are located on property that is owned or leased long-term by the federal government. Job Corps campuses include dormitories, classrooms, workshops for various trades, health centers, a cafeteria, a career services building, and administrative buildings. In addition to WIOA and its regulation, centers are to follow detailed guidelines about all aspects of the program as they are outlined in the program's extensive policy guidance, known as the Policy and Requirements Handbook.\nAs specified under WIOA, Job Corps centers may be operated by a federal, state, or local agency; an area career and technical education school, or residential vocational school; or a private organization. Authorization for new Job Corps centers is contained in appropriations law. DOL initiates a competitive process seeking applicants that are selected based on their ability to coordinate activities in the workforce system for youth; ability to offer career and technical training opportunities that reflect local employment opportunities; relationships with the surrounding communities, employers, and other stakeholders; and (where applicable) past performance. Additionally, under WIOA, an entity applying to operate a center must submit to DOL certain information, such as how employment, education, and other opportunities offered at the center will reflect state and local employment opportunities and a description of the entity's strong fiscal controls in place, among other information. WIOA specifies the contract may be for up to a two-year period with up to three one-year renewal periods.", "While at a Job Corps center, students receive the following services:\neducation programs, including English language acquisition programs; career and technical education, work experience, and work-based learning; and recreational activities, physical rehabilitation and development, driver's education, and counseling, which may include information about financial literacy.\nYouth also receive personal allowances while in the program and transition allowances as they are leaving the program. WIOA specifies that these transition allowances are to be incentive-based to reflect the graduate's completion of academic, career and technical education or training, and attainment of recognized postsecondary credentials.\nStudents tend to experience the program in four stages. First, students learn about the program and center through orientation sessions and other outreach efforts conducted by the center and its contractor for outreach and admissions. Second, students who decide they want to pursue the program and are selected to continue on in with career preparation activities in the first few weeks of enrolling in the program. Third, students who continue on focus on career development activities. During this period, students learn and demonstrate career technical, academic, and employability skills. Training focuses on academic subject matters and how they are applied to specific trades or occupations. Students who did not graduate from high school can pursue a high school diploma or GED. Finally, students participate in a period of career transition, in which they receive placement services that focus on transitioning them in full-time jobs that are related to their career and technical training and pay wages that allow them to be self-sufficient, or placing them in higher education or advanced training programs, including apprenticeship programs.\nFor one year after exiting the program, Job Corps must provide graduates with services that include transition support and workplace counseling. Some graduates may go on to participate in an advanced career training program. These students continue to remain in the program for another year while obtaining additional training and education, such as an Associate's Degree.\nDOL contracts with entities—known as outreach and admissions (OA) contractors (though not referred to in the law as such)—to recruit students to the program. OA contractors seek out potential applicants, conduct interviews with applicants to identify their needs and eligibility status, and identify youth who are interested and likely Job Corps participants. Similarly, DOL contracts career transition services (CTS) providers—organizations that enter into a contract or other agreement with Job Corps—to provide placement services for graduates and, to the extent possible, former students. OA and CTS providers work closely with Job Corps centers, and in some cases are operated by the same organizations.", "Each Job Corps center director must establish relationships with employers, applicable one-stop centers and local boards, entities carrying out relevant apprenticeship programs and youth programs, and other stakeholders. Each center must establish a workforce council, made up of private sector employers who must have substantial management and other responsibilities and represent businesses with employment opportunities for youth in the program; representatives of labor organizations (where present) and representatives of employees; and Job Corps students and graduates. A majority of the members must be employers. The council must work with local workforce development boards and review local market information to provide recommendations about the center's education and training offerings.", "DOL enters into contracts with nonprofit and for-profit organizations to operate the centers. Contracts are competitively awarded to organizations based on ranked scores, in conjunction with other factors. The contract period is two years, with three one-year-option renewals. DOL transfers funding for Civilian Conservation Centers to the U.S. Department of Agriculture (USDA) under an interagency agreement.", "Job Corps participants must be ages 16 through 24, low-income, and be one or more of the following: (1) basic skills deficient; (2) a school dropout; (3) homeless, a runaway, or a foster child (including an individual who was in foster care and has aged out of foster care); (4) a parent; (5) victims of a severe form of trafficking, as defined by the Trafficking Victims Protection Act; or (6) an individual in need of additional education, vocational training, or intensive counseling and related assistance in order to participate in regular schoolwork or to secure and maintain employment. A veteran is eligible if he or she meets the eligibility criteria; however, the income requirement does not apply if the veteran's income earned in the military (within the six-month period prior to applying for the program) exceeds the income limit.\nJob Corps centers take additional factors into consideration when selecting participants, such as whether the program can best meet their educational and vocational needs and whether the youth can engage successfully in group situations and settings. The applicant must also pass a background check that is conducted in accordance with applicable state and local laws. WIOA prohibits an individual from being denied a position in the Job Corps program solely on the basis of his or her contact with the criminal justice system, except that an individual can be denied a position if he or she has been convicted of a felony consisting of murder (as described in Title 18 of the U.S. Code), child abuse, or a crime involving rape or sexual assault. Each Job Corps center must develop standards for student conduct and implement what is known as a zero tolerance policy for offenses related to violence and drug and alcohol use, and selected other behaviors. Students are dismissed from the program if they violate this policy.\nStudents are to be assigned to the center that offers the type of career and technical education and training that he or she selects (unless the parent or the guardian of an enrollee under 18 objects). Among the centers that offer such education and training, the enrollee is to be assigned to the one closest to his or her home. No more than 20% of participants may live off the grounds of the Job Corps center.\nWIOA specified that no individual may be enrolled in Job Corps for more than two years, except (1) when completing an advance training program that would require the individual to participate for more than an additional year (as permitted for such a program); (2) an individual with a disability who would reasonably be expected to graduate, if allowed to participate for up to an additional year; and (3) in the case of an individual who participates in national service (as authorized by the Civilian Conservation Corps program) who may extend enrollment to equal the period of such national service.", "WIOA directs DOL to establish expected levels of performance for the program and individual centers that relate to each of the six primary indicators of performance for the Youth Workforce Activities program. These indicators include (1) entry into education, training, or unsubsidized employment (during both the (a) second quarter and (b) fourth quarter after exiting the program); (2) median earnings; (3) obtaining a recognized postsecondary credential or secondary school diploma or its equivalent; (4) participation in an education or training program that leads to a credential or employment; and (5) program effectiveness in serving employers.\nWIOA further specifies performance measures for recruiters (outreach and admissions) and CTS contractors. The OA performance measures pertain to recruitment and performance of students, as well as some of the same information that is to be included in a DOL report to Congress. This report must include information on the performance of each center, the program overall, and the OA and CTS contractors; demographic information on enrollees; the number of graduates who entered the Armed Forces, apprenticeships, unsubsidized employment, and postsecondary education; average wage of graduates; total cost per enrollee and graduate; information regarding the state of Job Corps facilities and buildings; and information regarding the national and community service activities of students, particularly those enrolled at Civilian Conservation Centers, among other information.", "WIOA designates centers as high-performing based on their ranking and performance under the primary indicators of performance for youth. It also enables the operator of a high-performing center to compete in any competitive selection process carried out for an award to operate such center.\nWIOA specifies that a Job Corps center operator failing to meet expected performance levels can be placed under a performance improvement plan (PIP). PIPs are documented plans that outline deficiencies in program performance, corrective actions, and targets for improvement. The plan is to encompass certain actions taken by DOL during a one-year period, including providing technical assistance to the centers; changing the career and technical training offered at the center; changing the management staff of the center; replacing the operator of the center; reducing the capacity of the center; relocating the center; or closing the center. WIOA also enables DOL to establish additional PIPs when a Job Corps center fails to meet performance requirements. These discretionary PIPs have to include the actions described above.\nWIOA provides that DOL may not renew the agreement with a center operator if in the most recent two preceding years for which data are available the center is ranked in the lowest 10% of centers and fails to achieve an average of 50% or higher in the expected levels of performance under each of the primary indicators of performance for eligible youth in the program. The law allows DOL to renew an agreement with these centers (for up to two years and if in the best interest of the program) under certain circumstances (e.g., performance is due to circumstances beyond the operator's control, etc.), and specifies standards that all centers must meet for agreements to be renewed (e.g., satisfactory record of integrity and business ethics, etc.). DOL must inform Congress of such renewals. WIOA specifies that DOL must select another entity to operate a Civilian Conservation Center if it fails to meet the expected levels of performance relating to the primary indicators of performance or fails to improve performance after three program years.\nPrior to the closure of any Job Corps center, DOL must ensure (1) that the proposed decision to close the center is announced in advance to the general public through publication in the Federal Register or other appropriate means; (2) that a reasonable comment period, not to exceed 30 days, is established for interested individuals to submit written comments to the Secretary; and (3) that the Member of Congress who represents the district in which a center is located is notified within a reasonable period of time in advance of any final decision to close the center.\nFinally, WIOA directs DOL to provide for a third-party evaluation of the program every five years, and to submit the results to Congress. The evaluation must address the general effectiveness of the program in relation to its costs; the effectiveness of the performance measures for the program; the effectiveness of the structure and mechanisms for delivering services; the impact of the program on the community, businesses, and participants involved; the extent to which the program and activities meet the needs of various demographic groups; and other such factors that may be appropriate.", "WIOA requires DOL to prepare and submit reports to Congress that include information about implementing financial oversight measures suggested in a 2013 DOL IG report about oversight of Job Corps funding, a description of any budgetary shortfalls in the period covered by the report, and an explanation for approving contract expenditures that are in excess of the amount specified under a contract. The reports are to be provided every six months for an initial three-year period, then annually for another two years. WIOA further requires DOL to submit an additional report to Congress if the program has a budget shortfall, including an explanation of how the shortfall will be addressed. The report must be submitted within 90 days after the shortfall is identified.", "", "In 2007, YouthBuild was transferred from the Department of Housing and Urban Development to DOL under the YouthBuild Transfer Act ( P.L. 109-281 ). As stated in WIOA, the purpose of YouthBuild is to (1) enable disadvantaged youth to obtain the education and employment skills necessary to achieve economic self-sufficiency in occupations in demand and post-secondary education and training opportunities; (2) provide disadvantaged youth with opportunities for meaningful work and service to communities; (3) foster the development of employment and leadership skills and commitment to community development among youth in low-income communities; (4) expand the supply of permanent affordable housing for homeless individuals and low-income families by utilizing the energy of disadvantaged youth; and (5) improve the quality and energy efficiency of community and other nonprofit and public facilities, including those facilities that are used to serve homeless and low-income families.", "DOL competitively awards YouthBuild funds to organizations that carry out the program in cooperation with subgrantees or contractors or through arrangements made with local education agencies and certain other entities. Entities that are eligible to apply for funding include a public or private nonprofit agency or organization, including a consortium of such agencies or organizations. Specifically, such entities may include community-based or faith-based organizations; entities that carry out activities authorized under certain other parts of WIOA, such as a local workforce development board; community action agencies; state or local housing development agencies; an Indian tribe or agencies primarily serving Indians; state or local youth service or conservation corps; or any other entity eligible to provide education or employment training under a federal program.\nWhile in the program, youth participate in a range of education and workforce investment activities, as listed in Table 5 . These activities include instruction, skill building, alternative education, mentoring, and training in rehabilitation or construction of housing. Notably, any housing unit that is rehabilitated or reconstructed may be available only for rental by, or sale to, homeless individuals or low-income families; or for use as transitional or permanent housing to assist homeless individuals achieve independent living. All educational programs, including programs that award academic credit, and activities supported with YouthBuild funds must be consistent with applicable state and local educational standards.\nAt least 40% of the time, youth must participate in certain work and skill development activities (these activities are denoted by footnote \"a\" in Table 5 ). At least an additional 50% of the time, participants must be engaged in education and related services and activities designed to meet their educational needs (these activities are denoted by footnote \"b\" in Table 5 ). If approved by the DOL Secretary, training and supports may be provided in additional in-demand industry sectors or occupations. This is consistent with a 2012 regulation for the program that enables grantees to expand their occupational skills training beyond construction skills training; however, all programs must still provide training in the construction trades.", "Youth are eligible for the program if they are (1) ages 16 through 24; (2) a member of a low-income family, a youth in foster care, a youth offender, an individual with a disability, a child of incarcerated parents, or a migrant youth; and (3) a school dropout. However, up to 25% of youth in the program are not required to meet the income or dropout criteria, so long as they are basic skills deficient despite having earned a high school diploma, GED, or the equivalent; or have been referred by a high school for the purpose of obtaining a high school diploma.", "Grants are competitively awarded to organizations based on ranked scores, in conjunction with other factors, such as the applicant's potential for developing a successful YouthBuild program; the need for the program in the community; the applicant's commitment to providing skills training, leadership development, and education to participants; regional distribution of grantees; and the applicant's coordination of activities to be carried out with certain other stakeholders, including employers, one-stop partners, and national service and other systems; among other criteria.\nDOL makes awards for three years (two years of program operations with a one-year period of follow-up). Applicants must provide cash or in-kind resources equivalent to at least 25% of the grant award amount as matching funds. Prior investments and federal resources do not count toward the match.", "WIOA requires YouthBuild grantees to meet the primary indicators of performance for eligible youth described in the Youth Activities program. Specifically, these indicators pertain to entry into education, training, or unsubsidized employment (both two and four quarters after exiting the program); median earnings; obtaining a recognized postsecondary credential or secondary school diploma or its equivalent; participation in an education or training program that leads to a credential or employment; and program effectiveness in serving employers.", "", "Grants to provide education and employment activities for youth offenders have been funded by DOL since FY1999. Under WIA, these grants were made part of the Reintegration of Ex-Offenders program. Funding for the program was authorized under both WIA and Section 112 (Responsible Reintegration of Offenders) of the Second Chance Act ( P.L. 110-199 ), enacted on April 9, 2008. The Second Chance Act authorizes DOL to make grants to nonprofit organizations for the purpose of providing mentoring, job training and job placement services, and other comprehensive transitional services to assist eligible offenders ages 18 and older in obtaining and retaining employment. Following the enactment of WIOA, Congress has appropriated funding for the program, now known as the Reentry Employment Opportunities program, under the authority of Section 169 of WIOA and the Second Chance Act. Section 169 authorizes evaluations and research.\nThe youth component of the REO program (and its predecessor programs) has been comprised of related initiatives that seek to assist youth offenders and youth at risk of dropping out (or who have dropped out) with pre-release, mentoring, housing, case management, and employment services; to reduce violence within persistently dangerous schools through a combination of mentoring, educational, employment, case management, and violence prevention strategies; and to provide alternative education and related services for youth at risk of involvement with the justice system. Currently , the program supports education and reentry initiatives.", "The earliest DOL initiatives for youth offenders, from FY1999 through FY2004, operated under what is known as the Youth Offender Demonstration Project (YODP). The pilot funded 52 grantees to assist youth at risk of court or gang involvement, youth offenders, and gang members ages 14 to 24 in finding long-term employment.\nThe more contemporary grant programs for youth offenders have funded multiple projects in recent years that have a focus similar to the earlier projects under YODP. These projects have included (1) education-related grants; (2) apprenticeship and related grants under grants collectively called Categorical Grants (Youth Offender Registered Apprenticeship, Alternative Education, and Project Expansion Grants); (3) grants that focus on reentry, including Beneficiary-Choice Demonstration, High Growth Youth Offender Initiative, Planning, State/Local Implementation, and Replication Grants; and (4) grants that focus on community service, including Civic Justice Grants and Serving Young Adult Ex-Offenders through Training and Service Learning. Grantees have included local and state governments, nonprofit organizations, including faith-based organizations; school districts; and community colleges.\nFY2016 appropriations support an education-related grant, the Pathways to Justice Careers program. Funds have been provided to five nonprofit organizations and two local governments to support youth 16 to 21 who are at risk of dropping out of high school, becoming involved in the juvenile justice system, or already have had involvement in the juvenile justice system. The program focuses on providing mentoring—by individuals in justice-related positions (e.g., police officers, fire fighters, lawyers, etc.)—and career training that uses a career pathways model for youth who are in school. A career pathway model includes a sequence of rigorous academic and career and technical education courses that result in educational and skills credentials. The program also aims to ensure that youth graduate from high school and/or pursue further training or post-secondary education.\nA reentry program, Reentry Demonstration Projects for Young Adults, is also funded with FY2016 appropriations. These projects are designed to assist youth ages 18 to 24 who are reentering, with a focus on interventions such as mentoring, registered apprenticeships, family unification efforts, and other promising practices that focus on providing occupational training and credentials. DOL intends to conduct a rigorous evaluation of the seven grantees.", "Each of the initiatives funded under the Reentry Employment Opportunities program (and its predecessor programs) have generally served select groups of at-risk youth. However, the projects generally serve youth ages 14 and older (or 18 or older) who have been involved with or have a high risk of involvement in gangs or the juvenile justice system or criminal justice system.", "As noted, grants have been competitively awarded to entities such as community-based organizations and state and local juvenile justice agencies, based on ranked scores and other factors, depending on the project. Only schools that meet the criteria of \"persistently dangerous,\" as specified by the states and as permitted under the Elementary and Secondary Education Act were eligible to apply for funds under the Persistently Dangerous Schools Initiative. Allocations have varied for each of the projects, but, generally, grantees have received grants of $1 million to $5 million for one or more years.", "DOL has three performance measures for each REO initiative: (1) attainment of a degree or industry-recognized certificate for individuals age 18 or older; (2) literacy and numeracy attainment; and (3) out-of-school participants age 18 or older who are placed in unsubsidized jobs, post-secondary education, or occupational training.", "" ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3, 1, 2, 1, 2, 3, 3, 3, 1, 2, 2, 2, 3, 2, 2, 1, 2, 2, 3, 3, 2, 2, 2, 3, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "", "h2_title h1_full", "", "", "h2_title", "", "", "", "h2_full", "", "h2_full", "", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "Why is Congress particularly interested in today's youth?", "Why are policymakers concerned that the youth may be unprepared for these roles?", "How do employment rates compound this concern?", "Which youth populations are most at risk?", "What have federal job training and employment programs sought to do?", "How are these vulnerable youth identified as at-risk?", "What were federal employment programs focused on during the Great Depression?", "What did employment programs from this era include?", "What did the federal government start funding in the 1960s?", "What were the four programs authorized under?", "What did Obama do in July of 2014?", "How did WIOA help secure funding for the four programs?", "How are WIA and WIOA alike?" ], "summary": [ "In an increasingly global economy, and with retirement underway for the Baby Boomer generation, Congress has indicated a strong interest in ensuring that today's young people have the educational attainment and employment experience needed to become highly skilled workers, contributing taxpayers, and successful participants in civic life.", "Challenges in the economy and among certain youth populations, however, have heightened concern among policymakers that some young people may not be prepared to fill these roles.", "The employment levels for youth under age 25 have declined markedly in recent years, including in the wake of the 2007-2009 recession.", "Certain young people—such as high school dropouts, current and former foster youth, and other at-risk populations—face challenges in completing school and entering the workforce.", "Since the 1930s, federal job training and employment programs and policies have sought to connect vulnerable youth to work and school.", "Generally, these young people have been defined as being at-risk because they are economically disadvantaged and have a barrier to employment.", "During the Great Depression, the focus was on employing young men who were idle through public works and other projects.", "The employment programs from this era included an educational component to encourage youth to obtain their high school diplomas.", "Beginning in the 1960s, the federal government started funding programs for low-income youth that address their multiple needs through job training, educational services, and supportive services.", "The four programs were authorized under the Workforce Investment Act of 1998 (WIA, P.L. 105-220) through FY2003, and Congress continued to appropriate funding for the programs in subsequent years.", "On July 22, 2014, President Obama signed into law the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128).", "WIOA amended these programs, particularly the Youth Activities program and Job Corps. Like WIA, WIOA does not explicitly authorize the Reentry Employment Opportunities program; however, Congress appropriated funding for the program in FY2016 (P.L. 114-113) under the authority of Section 169 of WIOA and the Second Chance Act.", "Like WIA, WIOA does not explicitly authorize the Reentry Employment Opportunities program; however, Congress appropriated funding for the program in FY2016 (P.L. 114-113) under the authority of Section 169 of WIOA and the Second Chance Act." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, -1, 2, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 3, 3, 3, 3 ] }
GAO_GAO-18-696T	{ "title": [ "Background", "Interoperability: An Overview", "VA and DOD Have a Long History of Efforts to Achieve Electronic Health Record Interoperability", "The Interagency Program Office Has Not Functioned as the Single Point of Accountability for VA and DOD’s Efforts to Increase Electronic Health Record Interoperability", "The Interagency Program Office Became Operational, but Was Not Positioned to Be the Single Point of Accountability for Achieving Interoperability", "The Interagency Program Office Was to Be the Single Point of Accountability for Establishing a Lifetime Electronic Record for Servicemembers and Veterans, but VA and DOD Did Not Develop Complete Plans for the Effort", "The Interagency Program Office Was Responsible for the Development of a Joint Electronic Health Record System for VA and DOD, but the Office Was Not Positioned for Effective Collaboration", "The Interagency Program Office Subsequently Took Steps to Improve Interoperability Measurement and Additional Actions Are Planned", "The Interagency Program Office’s Role in Governing VA’s New Electronic Health Record System Acquisition Is Uncertain", "Conclusions", "Recommendation for Executive Action", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "Historically, patient health information has been scattered across paper records kept by many different caregivers in many different locations, making it difficult for a clinician to access all of a patient’s health information at the time of care. Lacking access to these critical data, a clinician may be challenged in making the most informed decisions on treatment options, potentially putting the patient’s health at risk.\nThe use of technology to electronically collect, store, retrieve, and transfer clinical, administrative, and financial health information has the potential to improve the quality and efficiency of health care. Electronic health records are particularly crucial for optimizing the health care provided to military personnel and veterans. While in active military status and later as veterans, many DOD and VA personnel, along with their family members, tend to be highly mobile and may have health records residing at multiple medical facilities within and outside the United States.\nVA and DOD operate separate electronic health record systems that they rely on to create and manage patient health information. In particular, VA currently uses its integrated medical information system—VistA—which was developed in-house by the department’s clinicians and IT personnel and has been in operation since the early 1980s. Over the last several decades, VistA has evolved into a technically complex system comprised of about 170 modules that support health care delivery at 170 VA Medical Centers and over 1,200 outpatient sites. In addition, customization of VistA, such as changes to the modules by the various medical facilities, has resulted in about 130 versions of the system—referred to as instances.\nFor its part, DOD relies on its Armed Forces Health Longitudinal Technology Application (AHLTA), which comprises multiple legacy medical information systems that were developed from commercial software products and customized for specific uses. For example, the Composite Health Care System (CHCS), which was formerly DOD’s primary health information system, is used to capture information related to pharmacy, radiology, and laboratory order management. In addition, the department uses Essentris (also called the Clinical Information System), a commercial health information system customized to support inpatient treatment at military medical facilities.\nIn July 2015, DOD awarded a contract for a new commercial electronic health record system to be developed by the Cerner Corporation. Known as MHS GENESIS, this system is intended to replace DOD’s existing AHLTA system. The transition to MHS GENESIS began in February 2017 and implementation is expected to be complete throughout the department in 2022.", "The sharing of health information among organizations is especially important because the health care system is highly fragmented, with care and services provided in multiple settings, such as physician offices and hospitals, that may not be able to coordinate patient medical care records. Thus, a means for sharing information among providers, such as between DOD’s and VA’s health care systems, is by achieving interoperability.\nThe Office of the National Coordinator for Health IT, within the Department of Health and Human Services, has issued guidance, describing interoperability as: the ability of systems to exchange electronic health information and the ability to use the electronic health information that has been exchanged from other systems without special effort on the part of the user.\nSimilarly, the National Defense Authorization Act for Fiscal Year 2014 defines interoperability, per its use in the provision governing VA’s and DOD’s electronic health records, as “the ability of different electronic health records systems or software to meaningfully exchange information in real time and provide useful results to one or more systems.” Thus, in these contexts, interoperability allows patients’ electronic health information to be available from provider to provider, regardless of where the information originated.\nAchieving interoperability depends on, among other things, the use of agreed-upon health data standards to ensure that information can be shared and used. If electronic health records conform to interoperability standards, they potentially can be created, managed, and consulted by authorized clinicians and staff across more than one health care organization, thus providing patients and their caregivers the information needed for optimal care. Information that is electronically exchanged from one provider to another must adhere to the same standards in order to be interpreted and used in electronic health records, thereby permitting interoperability.\nIn the health IT field, standards may govern areas ranging from technical issues, such as file types and interchange systems, to content issues, such as medical terminology. On a national level, the Office of the National Coordinator has been assigned responsibility for identifying health data standards and technical specifications for electronic health record technology and overseeing the certification of this technology.\nIn addition to exchanging the information, systems must be able to use the information that is exchanged. Thus, if used in a way that improves providers’ and patients’ access to critical information, electronic health record technology has the potential to improve the quality of care that patients receive and to reduce health care costs. For example, with interoperability, medical providers have the ability to query data from other sources while managing chronically ill patients, regardless of geography or the network on which the data reside.", "Since 1998, DOD and VA have relied on a patchwork of initiatives involving their health information systems to exchange information and increase electronic health record interoperability. These have included initiatives to share viewable data in existing (legacy) systems; link and share computable data between the departments’ updated health data repositories; develop a virtual lifetime electronic health record to enable private sector interoperability; implement IT capabilities for the first joint federal health care center; and jointly develop a single integrated system. Table 1 provides a brief description of the history of these various initiatives.\nIn addition to the initiatives mentioned in table 1, DOD and VA previously responded to provisions in the National Defense Authorization Act for Fiscal Year 2008 directing the departments to jointly develop and implement fully interoperable electronic health record systems or capabilities in 2009. The act also called for the departments to set up the Interagency Program Office to be a single point of accountability for their efforts to implement these systems or capabilities by the September 30, 2009, deadline.", "The Interagency Program Office has been involved in the various approaches taken by VA and DOD to increase health information interoperability and modernize their respective electronic health record systems. These approaches have included development of the Virtual Lifetime Electronic Record (VLER) and a new, common integrated electronic health record (iEHR) system. However, although the Interagency Program Office has led efforts to identify data standards that are critical to interoperability between systems, the office has not been effectively positioned to be the single point of accountability as called for in the National Defense Authorization Act for Fiscal Year 2008. Moreover, the future role of the office with respect to VA’s current electronic health record modernization program is uncertain.", "Although VA and DOD took steps to set up the Interagency Program Office, the office was not positioned to be the single point of accountability for the departments’ efforts to achieve electronic health record interoperability by September 30, 2009. When we first reported in July 2008 on its establishment, VA and DOD’s efforts to set up the office were still in their early stages. Leadership positions in the office were not yet permanently filled, staffing was not complete, and facilities to house the office had not been designated. Further, the implementation plan for setting up the office was in draft and, although the plan included schedules and milestones, the dates for several activities (such as implementing a capability to share immunization records) had not yet been determined, even though all capabilities were to be achieved by September 2009.\nWe concluded that without a fully established program office and a finalized implementation plan with set milestones, the departments could be challenged in meeting the required date for achieving interoperability. Accordingly, we recommended that the departments give priority to fully establishing the office by putting in place permanent leadership and staff, as well as finalizing the draft implementation plan. Both departments agreed with this recommendation.\nWe later reported in January 2009 that VA and DOD had continued to take steps to set up the Interagency Program Office. For example, the departments had developed descriptions for key positions within the office. In addition, the departments had developed a document that depicted the Interagency Program Office’s organizational structure; they also had approved a program office charter to describe, among other things, the mission and functions of the office.\nHowever, we pointed out that VA and DOD had not yet fully executed their plan to set up the office. For example, among other activities, they had not filled key positions for the Director and Deputy Director, or for 22 of 30 other positions identified for the office.\nOur report stressed that, in the continued absence of a fully established Interagency Program Office, the departments would remain ineffectively positioned to assure that interoperable electronic health records and capabilities would be achieved by the required date. Thus, we recommended that the departments develop results-oriented performance goals and measures to be used as the basis for reporting interoperability progress. VA and DOD agreed with our recommendation.\nNevertheless, in a subsequent July 2009 report, we noted that the Interagency Program Office was not effectively positioned to function as a single point of accountability for the implementation of fully interoperable electronic health record systems or capabilities between VA and DOD. While the departments had made progress in setting up the office by hiring additional staff, they continued to fill key leadership positions on an interim basis. Further, while the office had begun to demonstrate responsibilities outlined in its charter, it was not yet fulfilling key IT management responsibilities in the areas of performance measurement (as we previously recommended), project planning, and scheduling, which were essential to establishing the office as a single point of accountability for the departments’ interoperability efforts. Thus, we recommended that the departments improve the management of their interoperability efforts by developing a project plan and a complete and detailed integrated master schedule. VA and DOD stated that they agreed with this recommendation.\nIn our January 2010 final report in response to the National Defense Authorization Act for Fiscal Year 2008, we noted that VA and DOD officials believed they had satisfied the act’s September 30, 2009, requirement for full interoperability by meeting specific interoperability- related objectives that the departments had established. These objectives included: refine social history data, share physical exam data, and demonstrate initial document scanning between the departments.\nAdditionally, the departments had made progress in setting up their Interagency Program Office by hiring additional staff, including a permanent director. In addition, consistent with our recommendations in the three previously mentioned reports, the office had begun to demonstrate responsibilities outlined in its charter in the areas of scheduling, planning, and performance measurement.\nNevertheless, the office’s efforts in these areas did not fully satisfy the recommendations and were incomplete. Specifically, the office did not have a schedule that included information about tasks, resource needs, or relationships between tasks associated with ongoing activities to increase interoperability. Also, key IT management responsibilities in the areas of planning and performance measurement remained incomplete. We reiterated that, by not having fulfilled key management responsibilities, as we had previously recommended, the Interagency Program Office continued to not be positioned to function as a single point of accountability for the delivery of the future interoperable capabilities that the departments were planning.", "Although the Interagency Program Office charter named the office as the single point of accountability for the initiative, the office did not have key plans to define and guide the effort. In April 2009, the President announced that VA and DOD would work together to define and build VLER to streamline the transition of electronic medical, benefits, and administrative information between the two departments. VLER was intended to enable access to all electronic records for service members as they transition from military to veteran status, and throughout their lives. Further, the initiative was to expand the departments’ health information sharing capabilities by enabling access to private sector health data.\nShortly after the April 2009 announcement, VA, DOD, and the Interagency Program Office began working to define and plan for the VLER initiative. Further, the office was rechartered in September 2009 and named as the single point of accountability for the coordination and oversight of jointly approved IT projects, data, and information sharing activities, including VLER.\nIn our February 2011 report on the departments’ efforts to address their common health IT needs, we noted that, among other things, the Interagency Program Office had not developed an approved integrated master schedule, master program plan, or performance metrics for the VLER initiative, as outlined in the office’s charter. We noted that if the departments did not address these issues, their ability to effectively deliver capabilities to support their joint health IT needs would be uncertain. Thus, we recommended that the Secretaries of VA and DOD strengthen their efforts to establish VLER by developing plans that would include scope definition, cost and schedule estimation, and project plan documentation and approval. Although the departments stated they agreed with this recommendation, they did not implement it.", "The Interagency Program Office was assigned responsibility for the development of an electronic health record system that VA and DOD were to share. However, the departments did not provide the office with control over the resources (i.e., funds and staff) it needed to facilitate effective collaboration.\nIn March 2011, the Secretaries of VA and DOD committed the two departments to developing the iEHR system, and in May 2012 announced their goal of implementing it across the departments by 2017. To oversee this new effort, in October 2011, VA and DOD re-chartered the Interagency Program Office to give it increased authority, expanded responsibilities, and increased staffing levels for leading the integrated system effort. The new charter also gave the office responsibility for program planning and budgeting, acquisition and development, and implementation of clinical capabilities. However, in February 2013, the Secretaries of VA and DOD announced that they would not continue with their joint development of a single electronic health record system.\nIn February 2014, we reported on the departments’ decision to abandon their plans for iEHR. Specifically, we reported that VA and DOD had not addressed management barriers to effective collaboration on their joint health IT efforts. For example, the Interagency Program Office was intended to better position the departments to collaborate, but the departments had not implemented the office in a manner consistent with effective collaboration. Specifically, the Interagency Program Office lacked effective control over essential resources such as funding and staffing. In addition, decisions by the departments had diffused responsibility for achieving integrated health records, potentially undermining the office’s intended role as the single point of accountability.\nWe concluded that providing the Interagency Program Office with control over essential resources and clearer lines of authority would better position it for effective collaboration. Further, we recommended that VA and DOD better position the office to function as the single point of accountability for achieving interoperability between the departments’ electronic health record systems by ensuring that the office has authority (1) over dedicated resources (e.g., budget and staff), (2) to develop interagency processes, and (3) to make decisions over the departments’ interoperability efforts. Although VA and DOD stated that they agreed with this recommendation, they did not implement it.", "In light of the departments’ not having implemented a solution that allowed for seamless electronic sharing of medical health care data, the National Defense Authorization Act for Fiscal Year 2014 included requirements pertaining to the implementation, design, and planning for interoperability between VA and DOD’s separate electronic health record systems. Among other things, the departments were each directed to (1) ensure that all health care data contained in VA’s VistA and DOD’s AHLTA systems complied with national standards and were computable in real time by October 1, 2014, and (2) deploy modernized electronic health record software to support clinicians while ensuring full standards- based interoperability by December 31, 2016.\nIn August 2015, we reported that VA and DOD, with guidance from the Interagency Program Office, had taken actions to increase interoperability between their electronic health record systems. Among other things, the departments had initiated work focused on near-term objectives, including standardizing their existing health data and making them viewable by both departments’ clinicians in an integrated format. The departments also developed longer-term plans to modernize their respective electronic health record systems. For its part, the Interagency Program Office issued guidance outlining the technical approach for achieving interoperability between the departments’ systems.\nHowever, even with the actions taken, VA and DOD did not certify by the October 1, 2014, deadline established in the National Defense Authorization Act for Fiscal Year 2014 for compliance with national data standards that all health care data in their systems complied with national standards and were computable in real time.\nWe also reported that the departments’ system modernization plans identified a number of key activities to be implemented beyond December 31, 2016—the deadline established in the act for the two departments to deploy modernized electronic health record software to support clinicians while ensuring full standards-based interoperability. Specifically, DOD had issued plans and announced the contract award for acquiring a modernized system to include interoperability capabilities across military operations. VA had issued plans describing an incremental approach to modernizing its existing electronic health records system. These plans—if implemented as described—indicated that deployment of the new systems with interoperability capabilities would not be completed across the departments until after 2018.\nWith regard to its role, the Interagency Program Office had taken steps to develop process metrics intended to monitor progress related to the data standardization and exchange of health information consistent with its responsibilities. For example, it had issued guidance that calls for tracking metrics, such as the percentage of data domains within the departments’ current health information systems that are mapped to national standards.\nHowever, the office had not yet specified outcome-oriented metrics and established related goals that are important to gauging the impact that interoperability capabilities have on improving health care services for shared patients. As a result, we recommended that VA and DOD, working with the Interagency Program Office, take actions to establish a time frame for identifying outcome-oriented metrics, define goals to provide a basis for assessing and reporting on the status of interoperability-related activities and the extent to which interoperability is being achieved by the departments’ modernized electronic health record systems, and update Interagency Program Office guidance to reflect the metrics and goals identified.\nSubsequently, we reported that VA and DOD had certified in April 2016 that all health care data in their systems complied with national standards and were computable in real time. However, VA acknowledged that it did not expect to complete a number of key activities related to its electronic health record system until sometime after the December 31, 2016, statutory deadline for deploying modernized electronic health record software with interoperability.\nFurther, in following up on implementation of the recommendations in our August 2015 report, we found that VA, DOD, and the Interagency Program Office had addressed the recommendations in full by updating guidance to include goals and objectives and an approach to developing metrics that would improve the departments’ ability to report on the status of interoperability activities.", "In June 2017, the former VA Secretary announced a significant shift in the department’s approach to modernizing the department’s electronic health record system. Specifically, rather than continue to use VistA, the Secretary stated that the department planned to acquire the same Cerner electronic health record system that DOD has been acquiring.\nAccordingly, the department awarded a contract to Cerner in May 2018 for a maximum of $10 billion over 10 years. Cerner is to replace VistA with a commercial electronic health record system. This new system is to support a broad range of health care functions that include, for example, acute care, clinical decision support, dental care, and emergency medicine. When implemented, the new system will be expected to provide access to authoritative clinical data sources and become the authoritative source of clinical data to support improved health, patient safety, and quality of care provided by VA.\nDeployment of the new electronic health record system at three initial sites is planned for within 18 months of October 1, 2018, with a phased implementation of the remaining sites over the next decade. Each VA medical facility is expected to continue using VistA until the new system has been deployed at that location.\nAs we testified in June 2018, VA has taken steps to establish a program management office and has drafted a structure for technology, functional, and joint governance of the electronic health record implementation. Specifically, in January 2018, the former VA Secretary established the Electronic Health Record Modernization (EHRM) program office that reports directly to the VA Deputy Secretary.\nFurther, VA has drafted a memorandum that describes the role of governance bodies within VA, as well as governance intended to facilitate coordination between the department and DOD. According to EHRM program documentation, VA is in the process of establishing a Functional Governance Board, a Technical Governance Board, and a Governance Integration Board comprised of program officials intended to provide guidance and coordinate with DOD, as appropriate. Further, a joint governance structure between VA and DOD has been proposed that would be expected to leverage existing joint governance facilitated by the Interagency Program Office.\nNevertheless, while VA’s plans for governance of the EHRM program provide a framework for high-level oversight for program decisions moving forward, EHRM officials have noted that the governance bodies will not be finalized until October 2018. Accordingly, the officials have not yet indicated what role, if any, the Interagency Program Office is to have in the governance process.", "The responsibilities of the Interagency Program Office have been intended to support the numerous approaches taken by VA and DOD to increase health information interoperability and modernize their respective electronic health record systems. Yet, while the office has led key efforts to identify data standards that are critical to interoperability between systems, the office has not been effectively positioned to be the single point of accountability originally described in the National Defense Authorization Act for Fiscal Year 2008. Further, the future role of the Interagency Program Office remains unclear despite the continuing need for VA and DOD to share the electronic health records of servicemembers and veterans. In particular, what role, if any, that the office is to have in VA’s acquisition of the same electronic health record system that DOD is currently acquiring is uncertain.", "We are making the following recommendation to VA: The Secretary of Veterans Affairs should ensure that the role and responsibilities of the Interagency Program Office are clearly defined within the governance plans for acquisition of the department’s new electronic health record system. (Recommendation 1)\nChairman Banks, Ranking Member Lamb, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.", "If you or your staffs have any questions about this testimony, please contact Carol C. Harris, Director, Information Technology Management Issues, at (202) 512-4456 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony statement. GAO staff who made key contributions to this testimony are Mark Bird (Assistant Director), Jennifer Stavros-Turner (Analyst in Charge), Rebecca Eyler, Jacqueline Mai, Scott Pettis, and Charles Youman.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1, 1 ], "alignment": [ "h3_title", "h3_full", "h3_full", "h0_full h2_title h1_title", "", "h0_full", "h1_full", "", "h2_full", "", "h2_full", "" ] }	{ "question": [ "What was the Interagency Program Office assigned responsibility for in 2009?", "What did GAO report in 2011?", "What did GAO recommend to amend these deficiencies?", "What did VA and DOD commit to in 2011?", "How did this commitment change in 2013?", "What did GAO recommend in 2014?", "What did VA announce in June 2017?", "What did GAO testify to in June 2018?", "What had VA's officials stated at the time?", "What had the VA officials failed to indicate?", "What is essential to VA acquiring and implementing the same system as DOD?", "What provisions did the National Defense Authorization Act for Fiscal Year 2008 include?", "With what did the National Defense Authorization Act require VA and DOD's systems comply?", "What did the act establish as a point of accountability?" ], "summary": [ "In April 2009, the Interagency Program Office was assigned responsibility for establishing a lifetime electronic record for servicemembers and veterans, called the Virtual Lifetime Electronic Record.", "GAO reported in February 2011 that, among other things, the office had not developed and approved an integrated master schedule, a master program plan, or performance metrics for the initiative, as outlined in the office's charter.", "Accordingly, GAO recommended that the departments correct these deficiencies to strengthen their efforts to establish the Virtual Lifetime Electronic Record.", "In March 2011, VA and DOD committed to jointly developing a new, common integrated electronic health record system and empowered the Interagency Program Office with increased authority, expanded responsibilities, and increased staffing levels for leading the integrated system effort.", "However, in February 2013, the departments abandoned their plan to develop the integrated system and stated that they would again pursue separate modernization efforts.", "In February 2014, GAO reported on this decision and recommended that VA and DOD take steps to better position the office to function as the single point of accountability for achieving interoperability between the departments' electronic health record systems.", "In June 2017 VA announced that it planned to acquire the same electronic health record system that DOD has been acquiring.", "GAO testified in June 2018 that a governance structure had been proposed that would be expected to leverage existing joint governance facilitated by the Interagency Program Office.", "At that time, VA's program officials had stated that the department's governance plans for the new program were expected to be finalized in October 2018.", "However, the officials have not yet indicated what role, if any, the Interagency Program Office is to have in the governance process.", "Ensuring that the role and responsibilities of the office are clearly defined within these governance plans is essential to VA successfully acquiring and implementing the same system as DOD.", "The National Defense Authorization Act for Fiscal Year 2008 included provisions that VA and DOD jointly develop and implement electronic health record systems or capabilities and accelerate the exchange of health care information.", "The act also required that these systems be compliant with applicable interoperability standards.", "Further, the act established a joint Interagency Program Office to act as a single point of accountability for the efforts, with the function of implementing, by September 30, 2009, electronic health record systems that allow for full interoperability." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, -1, -1, 1, 2, -1, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 4, 5, 5, 5, 7, 7, 7, 7, 7, 0, 0, 0 ] }
CRS_RL31720	{ "title": [ "", "Introduction", "Energy Policy Since the 1973-74 Arab Embargo", "The Period of Oil Price Controls", "The Early Effects of a Market-Oriented Energy Policy", "Other Responses to the Disruptions of the 1970s and 1980s", "The Challenge Faced by Policymakers", "An Energy Policy Schematic", "The Current Context: What's Different?", "Major Unresolved Energy Issues", "Petroleum and Natural Gas", "Clean Air Standards and Gasoline Supply and Distribution", "Drilling in ANWR and on Other Federal Lands", "Natural Gas Supply", "Electricity Regulation and Supply", "Conservation and Energy Efficiency", "The Uncertain Future" ], "paragraphs": [ "", "In the first session of the 110 th Congress, energy policy enters its eighth year as a major legislative issue. The previous Congress passed a massive energy bill, the Energy Policy Act of 2005 (EPACT, P.L. 109-58 ), but subsequent developments worked to keep crude oil and gasoline prices high and interest in legislative solutions active.\nEPACT was enacted on August 8, 2005. Successive hurricanes, Katrina and Rita, in late August and late September 2005, brought about the shutdown of more than 5 million barrels per day of refining capacity in Texas and Louisiana and initially shut down the 25% of U.S. crude oil production and 20% of U.S. natural gas production that comes from the Outer Continental Shelf in the Gulf of Mexico. World and domestic demand for oil has remained strong, taking up most of the world's spare production capacity. The phaseout of the gasoline additive methyl tertiary butyl ether (MTBE) and a renewable fuels mandate in EPACT have placed additional pressure on gasoline price and deliverability in the United States. In the summer of 2006, gasoline prices returned to the post-Katrina peaks of more than $3.00 per gallon and stayed there throughout the peak driving season. Nevertheless, U.S. gasoline demand reached a record high, averaging over 9.5 million barrels per day in July. During early 2007, gasoline prices were in the low- to mid-$2 range.\nThe passage of EPACT had its roots in an unexpected jump in oil prices that began in the late spring of 1999, following a production cut by the Organization of Petroleum Exporting Countries (OPEC). In early 2003, oil prices were reaching into the mid-$30s. Prices rose even higher during 2004—exceeding $50 per barrel for a brief period—owing to growing world demand both in the United States and the Far East, inadequate refining capacity, and Hurricane Ivan, which reduced U.S. production from the Gulf of Mexico for several months. Crude oil and petroleum product prices escalated further during 2005. These increases were initially attributable to growing international demand for oil that, domestically, put a strain on U.S. and world refining capacity. Then, in August and September, hurricanes Katrina and Rita caused further supply disruption.\nThis continuing period of volatility in fuel supplies and prices has been the fourth significant episode since 1973 to jog American awareness of the extent to which the U.S. economy and lifestyle depend on inexpensive and plentiful energy. However, this surge in price represents a departure from historic trends because the rise in the price for oil fuels and energy products has occurred for more than five years and has been sustained. Some analysts have coined the term \"demand destruction\" to describe price-induced reductions in consumption, but overall demand for oil has proven resilient. World demand for oil has grown from roughly 78 million barrels daily in 2001 to roughly 84 million barrels daily during 2005.\nAn additional departure from past patterns is that, historically, increases in crude oil prices owing to supply or international issues have driven product prices as the higher cost for crude feedstock is passed on. However, crude supply and stocks in 2005—prior to the hurricanes—were adequate. Commitments by OPEC during the course of the year to maintain or boost production appeared to have little but short-term effects on crude prices. Tightness in refined products prior to the hurricanes and the accompanying rise of product prices was a function of insufficient refining capacity in the United States to meet demand for a range of summer gasoline formulations. The pressures on product prices appeared to work backwards to support higher prices for crude. The hurricanes exacerbated these dynamics, further tightening product supply owing to problems with pipeline distribution as well as refining capacity, and introducing at the same time an uncertainty about crude supply that had not been as strong a worry prior to the storms.\nIn 2006 and 2007, a number of factors—new and old—have contributed to an especially brittle climate for energy supply and price. Whenever the United States has experienced a period marked by sharp increases in the price for energy and concern about the adequacy of essential supplies, there is widespread concern that the nation has no energy policy. However, not only does the nation have an energy policy, it has adopted several distinct policy approaches over the years.\nThis report discusses those major policy approaches, provides a conceptual framework for categorizing energy policy proposals, and briefly describes energy issues that remain current in the debate after the enactment of EPACT. Most policymakers acknowledged that EPACT would provide negligible price relief in the short term, but they contended that it would encourage domestic production of oil and gas and further conservation and alternative fuel initiatives. At issue for Congress is whether there should be an additional policy response in the face of continued pressure on oil price and supply.", "In the 30 years since the Arab oil embargo, the United States has pursued a number of different energy policy courses. In the course of several episodes during this period when oil price and supply became unstable, the U.S. moved from a set of policies more reliant on the federal government, to policies more dependent upon markets. This history is briefly summarized in the section to follow.", "In the aftermath of the Arab oil embargo in 1973, many looked to government to solve the problem, for both the short- and long-term. By 1975, refiner acquisition costs for imported crude oil had roughly tripled, rising from an average cost of $4/barrel (bbl) in 1973 to $12.50/barrel in 1974. However, refiner acquisition costs for domestic crude did not even double—rising from $4/bbl to $7/bbl—owing to a system of federal price controls that kept the price of domestic production below the market price. This discouraged domestic production and encouraged imports. However, controls may have helped insulate consumers from some of the price increase, which was the intended effect.\nAutomobile fuel economy standards were enacted during the late 1970's to reduce gasoline consumption in the transportation sector. At the same time, hopes were invested in government-funded research and development of conservation technologies and alternative fuels.\nA second supply interruption was triggered in1979 by the fall of the Shah of Iran and a greatly reduced flow of Iranian oil to world markets for several months. A phased deregulation of oil prices, enacted in 1975 in the Energy Policy and Conservation Act (EPCA, P.L. 94-163 ), was designed to enable prices to become more responsive to market conditions. But the pace of the deregulation was conceived to be gradual. At the time of the Iranian revolution, gasoline prices in the United States were still subject to some control. The result was long lines at U.S. gas pumps.", "Letting the market set prices, supporters of deregulation had argued in the 1975 debate, would encourage the development of additional domestic supplies of oil as well as the development of alternative energy sources. Shortly after assuming office in 1981, President Reagan accelerated the EPCA schedule for price decontrol. Energy policy, in general, became more market-oriented, and the government role was lessened.\nSustained high crude oil prices contributed to a reduction in U.S. petroleum consumption from 18.8 to 15.2 million barrels per day (mbd) from 1978 to 1982; there was more substitution of other fuels for oil, more efficient consumption of oil, and price-induced conservation. Higher prices resulted in new oil production from non-OPEC nations, allowing the United States and other consuming nations to diversify their sources of supply. Faced with a loss of market share and revenue, OPEC increased its own production in the mid-1980s, thereby lowering the price for crude oil. In the course of the year from 1985 to 1986, world oil prices plunged. In the United States, refiner acquisition cost for imported oil fell from $27/barrel to $14/barrel.\nPrices remained depressed until a fresh round of spikes in oil prices occurred in 1990-91 following Iraq's invasion of Kuwait in early August 1990. That resulted in a cut-off of 4.3 million barrels per day (mbd) from world markets. The price of oil, which had averaged $16/bbl at the end of July 1990, exceeded $28 by late August and reached $36/bbl in September 1990.\nResponding to the Iraqi threat, Western and Middle Eastern nations found common ground that would have been unimaginable a decade earlier. By the late 1980s, recognition had grown of the interdependence of oil-producing and oil-consuming nations; the OPEC nations had come to recognize that long-term demand for their oil was jeopardized by any prolonged period of high oil prices. Most did not wish to repeat the cycle of the early- to mid-1980s and boosted their production to make up for some of the lost supply. Consuming nations also coordinated the release of strategic stocks of crude and products. Prices began to fall in mid-October 1990 when the United Nations approved the use of force against Iraq. Prices fell more sharply after the United States and a consortium of nations began conducting air strikes on Iraq in mid-January 1991.", "During all of these episodes, importance was placed on conservation, more efficient use of energy, and development of alternative energy sources. The oil shocks of the mid- and late-1970s spurred considerable spending on alternative energy—including solar, geothermal, wind, clean coal, synthetic fuels, alcohol-based fuels—and technologies to improve the efficiency of energy use. Regulations were developed to improve the efficiency of home appliances and to incorporate more energy-efficient designs in buildings. In the early 1980s, states and utilities promoted energy efficiency as one form of \"demand-side management\" to reduce the need for construction of new power plants. Many industries re-engineered their processes to save energy. Conservation and efficiency were championed by some as a lower-cost and more environmentally appealing way to achieve greater energy security than policies to boost supply. However, largely because of the generally lower prices over time for fossil fuels—as is noted below—these energy programs showed mixed results.", "As suggested earlier, each episode of short supply and higher prices spurs concern that the nation lacks an energy policy and has ignored past lessons. However, it is apparent from a review of the years since the time of the Arab oil embargo and first oil price shock in 1973 until 2004 that it is more accurate to see this 30-year period as one of general price and supply stability that was periodically broken by short episodes of supply disruption and price volatility. It wasn't so much that energy policy failed to be responsive to earlier crises; rather, during lengthy periods of stability and declining prices for conventional fuels, it proved difficult to sustain certain policy courses that might help shield the nation from future episodes of instability.\nAn energy policy that would most effectively shield the nation and the economy from the worst effects of supply shortages would be a policy that might well deny the nation the full benefits of cheap and plentiful energy when markets are stable. The periods of relative calm and stability result in a markedly uncertain environment for investment in alternative fuels, energy efficiency technologies, and boosting the production of conventional fuels in regions where production costs are significantly higher than in the Middle East. State and local regulations and codes further cloud the climate for investment. Local opposition to new on- and off-shore production projects, power plants, electric transmission lines, refineries, and pipelines is often most effective during periods of price and supply stability, but sometimes eases only after shortages have actually occurred.\nHowever, a prolonged climate for higher prices—stemming from tightness in the supply of products and continuing instability in Middle East regions where oil reserves are concentrated—may introduce new changes in the character and particulars of U.S. energy policy. This possibility is a benchmark to keep in mind when thinking about energy policy conceptually and as subsequent debate on energy policy continues in Congress.", "Constructing a balanced energy policy that will not undermine other competing and equally legitimate policy goals is a complex problem. How to boost energy supply without exacting an unacceptable toll on the environment? How, then, to reduce gasoline consumption, a commodity central to the nation's economy and lifestyle, when raising its price to achieve a meaningful reduction in demand could be economically disruptive and politically unappealing? Should federal policy encourage the use of more expensive alternative fuels and technologies that heighten efficiency, when OPEC has generally demonstrated a capability to adjust the price of oil to keep it far cheaper than its substitutes?\nDebate over energy policy has produced an enormous range of proposals, many of which have been adopted at one point or another over the years. In general, it is helpful to recognize the broad categories into which most proposals fall: Most energy policies are designed to affect either the supply of or the demand for energy products, and they are, at the same time, designed to have an effect either in the near term or the longer term.\nTraditionally, the energy debate has been the most vigorous over the balance to be struck between increasing supply and encouraging conservation. However, energy policy turns on the additional axis of short- and long-term policies. In the midst of high prices during the spring of 2001, policymakers were pressed to come up with immediate policy responses that would afford consumers price relief. However, at that time President Bush was advising Congress and Americans that the Administration's energy policy plan would focus on long-term remedies for the nation's energy problems and that there would be no immediate relief for consumers paying higher prices for gasoline, electricity, and other fuels. The President and his supporters suggested that by setting out an action-oriented and actionable comprehensive policy, markets and consumers should feel some short-term reassurance. This did not quell all the demands for more immediate action to reduce energy prices. Nor were they completely quelled during the protracted debate over omnibus energy legislation from 2003 until the enactment of EPACT in the summer of 2005.\nIt is useful to clarify the differences between short-term and long-term policy initiatives. For example, a drawdown of oil from the Strategic Petroleum Reserve (SPR) affects crude oil supply in the near term. However, enactment of tax incentives for investment in new oil drilling technologies might add to domestic crude supply further in the future. Proponents of drilling in the Arctic National Wildlife Refuge (ANWR) argue it might add anywhere from 300,000 b/d (barrels per day) to 1.4 mbd to U.S. domestic supply, but this, too, is a longer-term policy initiative.\nTurning to the consumption side of the ledger, boosting the federal gasoline tax by $1.50/gallon might be expected to reduce gasoline consumption in the near term, but increasing the corporate average fuel economy (CAFE) standards on new motor vehicles would not take full effect until older vehicles were largely replaced, a process that could take more than a decade.\nThe table below suggests a way in which many energy policies may be visualized along these lines:\nThe axis of long-term/short-term, supply/demand does not capture all policy options. For example, one of the major issues in energy policy is the price for fuels. Energy policy generally is designed to affect price indirectly—by having price follow, or reflect, current demand or supply for energy. There are a few exceptions. Tax policy may address energy price directly to the extent that excise taxes on fuel products can be raised or lowered (recognizing that these tax boosts or cuts may not be reflected penny-for-penny in the \"pump\" price for fuels).\nShort-term policies to affect supply, such as potential use of strategic reserves, have been sometimes very controversial because, in the absence of a very clear-cut and widely acknowledged physical shortage, such initiatives are perceived to be thinly disguised efforts to grant price relief. Some suggest at times that high prices—left uninterfered with—are the best policy of all, encouraging markets to provide more supply in due course, and that federal policy should address only those most adversely affected by sharply higher prices. The Low Income Home Energy Assistance Program (LIHEAP) is one such effort to provide direct assistance to families whose quality of life is especially burdened by high energy prices. LIHEAP is a short-term policy for addressing the impact of high prices for energy.\nSupply and demand may also be affected by external events, including political and diplomatic dynamics between or among the producing nations. Weather, seasonal or otherwise, will affect supply and demand; policy cannot affect the weather, only its consequences. Lastly, Congress always has the option to require study and analysis of a problem before settling on a policy course. Requirements for such studies are regularly included in appropriations bills and other legislation.", "In every energy debate, one question is a constant: How extensive a federal role is appropriate in energy policy? However often that question recurs, the context in which it is raised changes. The current context has become distinctly different than in previous episodes.\nU.S. energy policy was primarily market-based for roughly 20 years, but policy makers have been weighing whether problems in some sectors and with some fuels are attributable to distribution or regulatory inefficiencies interfering with markets, or whether government intervention may be necessary to protect consumers and the economy from problems to which markets cannot flexibly respond. Some critics of U.S. energy policy argue that these inefficiencies and distortions are themselves the consequence of government intervention—for example, Clean Air Act requirements that have required the manufacture of several different regional formulations of gasoline. Strong economic growth during the mid- and late 1990s at a time of declining real energy prices resulted in growth in consumption even though efficiency of energy use is dramatically better than during the 1970s and 1980s. Growth in petroleum consumption in the United States as domestic production declines has meant a commensurate increase in oil imports. During the second half of 2004, growth in demand as well from the Far East pressured spare oil production capacity. In the midst of market uncertainties, increased OPEC production—unlike in the past—appeared unable to exert its historical effect of moderating crude oil prices. There is recognition of the interdependence of producing and consuming nations; however, the political balance among the OPEC nations is delicate and can influence oil production decisions and whether OPEC is able to exert market control at all. There is growing recognition that the recent shortages and price spikes in some regions of the country have been compounded by insufficiencies in the nation's energy infrastructure—refining capacity, gas and oil pipelines, transmission lines, and electric generating facilities. Some have questioned the advisability of locating so much of the nation's refining capacity in the Louisiana, Alabama, and Texas. Problems with gasoline supply and home heating oil stocks since 2000 imply some need to develop additional refining capacity and transport systems that will add both capacity and flexibility to distribution. However, national and local environmental regulation and requirements, and local community sentiment, affect the speed and ease of siting and building such facilities. Because high prices tend to eventually depress demand, the industry is sometimes wary of making investment in capacity that would achieve profit targets only during short-lived periods of unusually high prices. Uncertainty about the course of the economy may also contribute to questions about the profitability of these investments. Concerns about greenhouse gas emissions add an additional measure of uncertainty. Policymakers have debated additional measures for \"refinery revitalization\" and streamlining the process for approval of refinery siting and construction.", "The shift to a more market-oriented energy policy, additional lessons some have taken from experiences during the 1980s and 1990s, geopolitical developments and developments such as those outlined above are likely to play a part in any consideration of energy issues still pending and of interest to many policymakers in a post-EPACT climate. Some of these issues are broadly reviewed below. Tax policy plays a role in many of these areas. (See CRS Report RL33578, Energy Tax Policy: History and Current Issues , by [author name scrubbed].)", "The latest rise in crude oil prices had its origins in March 1999, when cuts by OPEC in world crude production sent domestic refiner acquisition costs for crude oil on a sharp ascent from less than $11/bbl in February 1999 to $24.50/bbl by December of the same year. Responding, in part, to intense lobbying by the United States, the OPEC oil ministers boosted crude production and settled upon $22-$28 per barrel as a desirable \"price band.\" But the price band grew increasingly out-of-touch and irrelevant as prices renewed their increase, and surged during 2004. Prices for crude breached $70/bbl in May 2006 and remained in the $50-$60 range in early 2007.\nGrowth in demand, internationally and domestically, partly accounts for price increases. Demand for petroleum products in the United States averaged 20.7 mbd during 2004 and 20.8 mbd in 2005, but averaged 20.6 mbd during 2006. Increases in demand, as well as declining domestic production, have led to increased crude and product imports, which averaged 13.6 mbd in 2006—10.1 mbd of crude and 3.5 mbd of refined product.\nContributing to the gasoline price spike of mid-2006 were rising prices for crude, some resumption in demand, and a tilt toward the manufacture of distillates that was slowing additions to gasoline stocks. In addition, five fuel specification changes during 2005 put additional pressure on the gasoline supply system. An ultra-low sulfur diesel program that began in June 2006 required that 80% of on-highway diesel have no more than 15 ppm (parts per million) sulfur content. The elimination of MTBE (methyl tertiary butyl ether) placed pressure on ethanol supply and prices and incurred some loss to product yield in the manufacture of RFG (reformulated gasoline).\nThe ability of the OPEC cartel to exert influence upon oil prices at critical times underscores that—with respect to petroleum—the problem is less that the world supply of oil is tight than that so much of it is concentrated in other parts of the globe, principally the Middle East. U.S. dependence upon imported oil is now about 60% of total consumption. Absent some elusive technical \"fix,\" there are limited prospects for significantly reducing that figure without incurring economic hardship and lifestyle compromises. However, relatively modest increases in worldwide production or reductions in demand by consuming nations can substantially reduce the magnitude of oil price spikes.", "Attention has focused on the Clean Air Act standards that regulate the oxygen content, volatility, benzene, and the sulfur content of gasoline. Refineries face state and local standards on how to achieve compliance with federal requirements. The expiration in early May 2006 of the oxygenate requirement for reformulated gasoline and the use of methyl tertiary butyl ether (MTBE) spurred demand for ethanol, leading to higher prices and tighter supply for ethanol.\nOne consequence of regional variations is that gasoline supply loses some of its fungibility; one region experiencing a shortage may no longer be able to secure additional supply from a nearby locality with a different blend of gasoline. Distribution becomes more complicated because different blends sharing the same pipeline must be carefully batched to avoid contamination. In the wake of the 2005 hurricanes, and again in the spring of 2006, some standards were temporarily relaxed in an effort to improve gasoline production and ease distribution problems. Additionally, foreign refineries that supply the U.S. gasoline market do not make the regional formulations.\nSome have urged a rationalization of Clean Air Act standards that would permit a \"harmonization\" of U.S. gasoline standards. This would introduce flexibility into the gasoline manufacture and distribution system that might bring prices down. Opponents of harmonization argue that it might compromise air quality, and lead to further compromise of clean air objectives in the future. Harmonization might also raise prices for fuel in regions that did not require the more exacting formulations.", "The greater the nation's ability to produce its own fuels, the less vulnerable it is to unanticipated international developments that can reduce or threaten supply. But the policy options on the supply side, such as opening up the Arctic National Wildlife Refuge (ANWR) for exploration, are mostly long-term. Alaskan oil production, which once touched 2 mbd, has now fallen below 900,000 mbd and, without new production, will continue to decline. Low production could result in rising transport tariffs on the Trans-Alaska Pipeline, with further adverse impacts on North Slope production.\nProponents of exploring ANWR point to advances in exploration and drilling technology and methods that have significantly reduced the extent of surface disturbance. While opponents concede this may be so, they argue that these advances are limited to exploration and extraction, and that considerable risk to the environment remains during the production and transportation phases. Opponents also suggest that the risks are not worth bearing, especially if the resources in ANWR turn out to be at the lower range of estimates, providing only an additional 300,000 b/d of supply. Some respond to this argument by noting that the nation has experienced periods of tight supply when even an additional few hundred thousand barrels of crude oil per day would have significantly reduced gasoline and heating oil prices. For some opponents, any weighing of risks and benefits are pointless because, citing the area's pristine character, they argue that its ecology and habitat should not be disturbed under any circumstances.\nThere was some expectation that proponents of ANWR exploration would gain congressional authorization during the 109 th Congress, but they did not succeed. (For additional information and background, see CRS Report RL31278, Arctic National Wildlife Refuge: Background and Issues , by [author name scrubbed] et al.)\nThe broader issue raised by ANWR—that of access to public lands for energy exploration and development—is a significant component of the national energy debate. There is considerable disagreement about the potential resources on federal lands—particularly the amount of oil and gas that may be \"locked up\" by land-use restrictions and other regulatory factors. The Bush Administration's energy policy report recommended an examination of \"land status and lease stipulation impediments\" and that policymakers \"consider modifications where appropriate.\" A report by the Department of Interior, on the other hand, indicates this may not be the problem some have alleged. (For additional information and background, see CRS Report RS20902, National Monument Issues , by [author name scrubbed].)", "For the past decade in the United States, natural gas consumption was encouraged, particularly for gas-fired combined-cycle power plants that could provide incremental electric supply to the nation's power grid at highly competitive prices and with few environmental constraints. Plentiful supplies, and relatively low prices for several years, discouraged additions to natural gas reserves during the 1990s. With surges in demand for electricity and a colder winter in 2000-2001, residential and other consumers of natural gas suddenly faced sharply higher prices as competition grew for gas supplies. At the wellhead, gas prices rose from $2.16 per thousand cubic feet (mcf) in 1999 to $4.00 per mcf in 2001. But they reached the $8.00 level for a few months during this period, and prices continued to rise during 2003 and 2004.\nBut these developments hardly prepared markets for Hurricanes Katrina and Rita, which sidelined 1.5 mbd of crude oil production and 10 billion cubic feet per day. It should be noted that there is no \"catch-up\" for production lost because of the hurricanes—more than 110 million barrels of oil and more than 580 bcf of natural gas. Natural gas price futures briefly exceeded $15/mcf (thousand cubic feet) in mid-December. Warmer than typical weather in January 2006 caused prices to decline to well under $10/mcf early that month. The wellhead price averaged above $6 in late 2006. Sharp fluctuations in supply, demand, and price for natural gas can occur suddenly between seasons.\nA major potential source of additional gas is tanker-borne imports in the form of liquefied natural gas (LNG). Expansion and refurbishment of facilities to accommodate LNG imports continues. In addition, there are a number of proposals for new facilities that have received certification from the Federal Energy Regulatory Commission (FERC); these facilities would receive LNG produced abroad for consumption in the United States. The Alaska North Slope holds large proven reserves of natural gas. Shortly before adjournment, the 108 th Congress approved an $18 billion loan guarantee for the construction of this pipeline ( P.L. 108-357 ), but development of this resource has remained difficult and controversial.", "A reliable electric system depends on adequate transmission capacity. The blackout of 2003 in the Northeast, Midwest, and Canada highlighted the need for infrastructure improvements and standard operating rules. The regulatory regime has shifted in the electricity industry to encourage competition in the generation sector, but investment in transmission infrastructure has not kept up with increases in bulk power transfers and electricity demand. Additionally, transmission lines are congested in several regions of the United States. Difficulty in siting the lines and regulatory uncertainty have dampened interest in investing in the transmission system. The Energy Policy Act of 2005 includes a provision that will allow transmission companies, under certain conditions, to petition in U.S. District Court to acquire rights-of-way through the exercise of the right of eminent domain.\nSome have argued that transmission and wholesale power markets cannot be competitive without additional market transparency, or access to market information. The Energy Policy Act of 2005 allows FERC to promulgate rules that will facilitate the dissemination of information about the availability and prices of wholesale electric energy in transmission service. Proposals have been made to require FERC to issue rules establishing an electronic information system to provide information about the availability and price of wholesale electric energy and transmission services to FERC, state commissions, buyers and sellers of wholesale electric energy, users of transmission services, and the public. However, concerns have been raised that such a system would take away too much authority from the states.\nConcern over electricity supply has also led to some reassessment of the relative roles that natural gas, coal, renewables, and nuclear energy may have in future electricity generation. In its energy policy report, the Bush Administration indicated its objectives to remove barriers to the use of coal in electric power generation, with a renewed emphasis on cleaner-burning coal technologies.\nSupporters of renewable energy have urged the establishment of a national \"renewable portfolio standard,\" which would require that a certain percentage of electricity generation come from non-hydro renewable energy sources. Nuclear energy supporters have long proposed that new nuclear generating capacity receive incentives for helping to reduce air emissions.", "As has been noted, the energy policy debate has turned partly on perceptions of the balance between supply-oriented and conservation-oriented policies that make up an appropriate energy policy to address the current matrix of energy problems. For example, environmental groups often ask why ANWR should be opened to leasing if a comparable amount of oil could be saved by raising motor vehicle fuel economy.\nThe Energy Policy and Conservation Act ( P.L. 94-163 ) established new car corporate average fuel economy (CAFE) standards, beginning with model year 1978. Currently, the standards are 27.5 miles per gallon (mpg) for cars and 20.7 mpg for light-duty trucks, including sport utility vehicles (SUVs). Proposals to raise the CAFE standards have been controversial. Beginning with enactment of the FY1996 Department of Transportation Appropriations Act, Congress forbade the expenditure of appropriated funds to make any change in the current CAFE requirements.\nHowever, a study by the National Academy of Sciences (NAS), requested by the 106 th Congress, to recommend \"appropriate\" CAFE standards, was released at the end of July 2001. While the report did not recommend a specific level for CAFE, it did conclude that \"significant\" reductions in fuel consumption could be achieved within 15 years utilizing existing technologies. Were increases in new car fuel economy achieved by reducing vehicle weight or disproportionately encouraging the sale of small vehicles, the study allowed that additional fatalities could result. However, some members of the NAS panel dissented, suggesting that the analysis of the relationship between fuel economy and vehicle safety is extremely complex.\nThere is little question that the price hikes during past episodes of tight energy supply spurred many improvements in energy efficiency. Some argue, however, that the easiest and lowest-cost efficiency gains have been achieved, and that expectations should be lowered about the additional efficiency gains that can be captured in the present price framework for energy. When the Reagan Administration redirected energy policy to a more market-oriented framework, it was argued that R&D needed to be carefully focused on areas that were promising, but unlikely to be explored by the private sector.\nIn its energy policy plan, the Bush Administration recommended a review of the funding and performance of energy efficiency research and development for the purpose of determining appropriate funding for performance-based research in public-private partnerships.", "As apparent as it seems to many that the nation should do \"something\" about energy, the preceding pages have outlined the layers of complexity that augur against easy agreement to many of the policy options that have been proposed and debated since the mid-1970s. A review of the history shows that every episode of instability has had its own set of unique contributing factors—and that these may be geopolitical, based in energy infrastructure or unanticipated natural disasters, or triggered by extremes of heat or cold beyond anyone's control. Making policy decisions that will anticipate unpredictable future developments, or settling on policies to mitigate the consequences when these events are before us, will remain a challenge for policymakers as the energy debate continues." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 1, 1, 2, 3, 3, 3, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h2_title h1_title", "", "", "", "h2_full h1_full", "h2_full", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "Despite passage of the Energy Policy Act of 2005, what remains a major legislative issue?", "How did Hurricanes Katrina and Rita impact the energy industry in Texas and Louisiana?", "How did demand for oil change following EPACT's enactment?", "Why does interest in energy policy remain high in Congress?", "Under what circumstances is there concern that the nation has no energy policy?", "Despite this concern, how has the nation developed energy policy?", "How did oil prices behave in 1973-2003?", "Why has energy policy seemingly failed to respond to last crises?", "Why are longer-range energy policies favorable?", "How does this differ from traditional energy policymaking?" ], "summary": [ "Energy policy continues to be a major legislative issue, despite passage of the Energy Policy Act of 2005 (EPACT, P.L. 109-58).", "Shortly after EPACT's enactment, Hurricanes Katrina and Rita temporarily shut down production of oil and gas and refining capacity in Texas and Louisiana.", "World and domestic demand for oil remained strong, and other factors have placed pressure on gasoline prices and deliverability in the United States.", "In the face of these developments, and because the prospect that this episode of elevated prices is likely to be a long one, interest in energy policy remains high in the 110th Congress.", "When the United States experiences a period marked by sharp increases in the price for energy and concern about the adequacy of essential supplies, there is widespread concern that the nation has no energy policy.", "The nation has, in fact, adopted several distinct policy approaches over the years, and many of the debates have been about determining the appropriate extent of the federal government's role in energy.", "There were episodes from 1973-2003 when oil prices spiked, but these were generally for comparatively brief periods; overall, the period was one of general price and supply stability.", "It isn't so much that energy policy failed to be adequately responsive to past crises; rather, during lengthy periods of stability and declining prices for conventional fuels, it has proven difficult to sustain certain policy courses that might help shield the nation from occasional episodes of instability.", "Because prices are now expected by some analysts to remain high, the prospect for certain longer-range energy policies may now be more favorable.", "Traditionally, the energy debate has been most vigorous over the balance to be struck between increasing supply and encouraging conservation. However, when markets are unstable, debate turns on another axis as well, that of short-term versus long-term policies." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2, 2 ] }
CRS_R42452	{ "title": [ "", "Background", "Federal Timber Harvests", "Payments for Counties", "Secure Rural Schools Act", "Title I of H.R. 4019", "Section 101. Definitions", "Section 102. County, Schools, and Revenue Trust", "Section 103. Opt-Out Option", "Section 104. Determination of Annual Revenue Requirement and Minimum Sale Level", "Section 105. County, Schools, and Revenue Trust Projects", "Public Review and Comment", "Environmental Review", "Section 106. Distribution of Amounts from Trust Projects", "Section 107. Payments to Beneficiary Counties from County, Schools, and Revenue Trust", "Section 108. Initial Payments Pending Implementation of Trust Projects", "Analysis of Possible Issues for Congress", "Fiduciary Trust Responsibilities and Federal Assets", "Annual Revenue Requirements", "Gross Receipts", "Receipts Available for Deposit to the Trust", "Additional Receipts Needed", "Where the Receipts Might Come From", "Additional Timber Sales", "Other Possible Sources of Revenues", "Effects If Annual Revenue Requirements Are Not Met", "Public Involvement and Environmental Reporting", "Allocation and Distribution of Trust Payments", "Implementation", "Provision on State Education Funding", "Inclusion of the O&C Lands", "Implementation for Parts of National Forests", "Timber Sale Practices and Procedures", "Regulations for Implementation", "Impacts on USFS Staffing and Funding" ], "paragraphs": [ "Since 1908, the Forest Service (USFS) in the U.S. Department of Agriculture has paid 25% of its gross receipts from timber sales and most other revenue-generating activities to the states for use on roads and schools in the counties where the national forests are located. This was intended to compensate localities for the tax-exempt status of federal lands. Similarly, since 1937, the Bureau of Land Management (BLM) in the U.S. Department of the Interior has paid 50% of its gross receipts to the counties containing the \"O&C lands\" (described below). Payments have declined substantially in many areas due to falling USFS and BLM timber sales. Congress has enacted temporary programs to sustain the payments at higher levels; the most recent such program, the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS), expired following payments made for FY2011. Because of continuing concerns about substantial declines in USFS and BLM timber sales and payments for county roads and schools, Congress is considering related legislation. Title I of H.R. 4019 , the Federal Forests County Revenue, Schools, and Jobs Act of 2012, addresses federal land management to provide timber jobs and revenues for county roads and schools. The House Committee on Natural Resources ordered the bill reported on February 16, 2012.", "", "The USFS has been selling timber for more than a century. The President was authorized to proclaim national forests (originally called forest reserves) in 1891. Congressional concerns over proclamations by President Grover Cleveland led to provisions in the Sundry Civil Expenses Appropriations Act for FY1898 limiting the forest reservations to specific purposes, including \"to furnish a continuous supply of timber for the use and necessities of citizens,\" and authorizing the sale of \"dead, matured, or large growth of trees.\" The first timber sale was in 1899 to the Homestake Mining Company in South Dakota.\nUSFS timber sales grew slowly in the subsequent decades. Then, in the 1950s, USFS sales expanded rapidly, fueled by demand from the post-World War II economic expansion and by the decline in timber supply from private forests. (See Figure 1 .) Except for the 1980 and 1982 recessions, the high USFS timber sale level was sustained through the 1980s. The decline in USFS sales began in 1990 with litigation to protect the northern spotted owl in western Washington, western Oregon, and northwestern California. Though commonly believed to be a result of listing the northern spotted owl as threatened under the Endangered Species Act (ESA), the original litigation was primarily under a provision of the regulations to implement the National Forest Management Act of 1976 (NFMA) that required management for viable populations of native species. However, USFS timber sales declined in nearly all regions in the early 1990s, indicating more widespread problems than just northern spotted owls. USFS timber sales have continued at relatively modest levels for the past two decades, owing to continued concerns about the environmental effects of timber sales and relatively weak wood products demand in the United States and globally.\nThe Bureau of Land Management (BLM) in the U.S. Department of the Interior (DOI) also sells timber. The vast majority (about 95%) of BLM timber sales are from the Oregon and California (O&C) grant lands in western Oregon. These lands were granted to the Oregon and California Railroad Company in 1869 for building a railroad north from the Oregon-California border, and the lands were to be sold to settlers. The 2.5 million acres of timberland in western Oregon were returned to (\"revested in\") federal ownership under a U.S. Supreme Court decision in 1915 for violations of the terms of the grant. The O&C lands are often understood to include the Coos Bay Wagon Road (CBWR) grant lands, 74,547 acres of timberland amid the O&C lands. These lands were granted in 1869 to the Southern Oregon Company to build a military wagon road between Coos Bay and Roseburg, Oregon, and returned (\"reconveyed\") to federal ownership by an act of Congress in 1919 to terminate litigation over violations of the terms of the original grant. Federal administration of the O&C and CBWR lands was subject to various statutes until Congress directed management by the DOI in the O&C Act of 1937. Management was initially by the General Land Office, which was merged with the U.S. Grazing Service in 1946 to create the BLM. As with USFS timber sales, O&C timber sales declined after 1990, as shown in Figure 1 , initially owing to protection of northern spotted owl habitat.", "In 1908, Congress added a provision to the Agriculture Appropriations Act directing the USFS to give 25% of its gross receipts to the states for use on roads and schools in the counties where the national forest lands are located. Thus, the money is paid to the state, and the state determines how much goes toward roads and how much toward schools (or leaves some or all of the discretion to the counties). The state also determines which programs can be funded (e.g., salaries, construction, maintenance, etc.) and which local governmental agency receives the funds (e.g., counties, townships, school districts, etc.), but the state cannot retain any of the funds, even for administrative costs. How much must be spent in each county is calculated by the USFS based on gross receipts from all sources (timber, grazing, special use permits, etc.) and acres in each county for each of the 156 proclaimed national forests. The payment basis was altered in 2008 to provide 25% of a seven-year rolling average of receipts (rather than current-year receipts), to reduce annual fluctuations in payments. The USFS 25% payments to states have mandatory spending authority, and thus the payments are made automatically, unless Congress acts to alter the payments.\nThe O&C Act of 1937 provided for payments from the O&C lands. The act allocated 50% of receipts directly to the counties for any governmental purpose, 25% for administering the O&C lands (with any remainder returned to the Treasury), and 25% to pay the counties for accrued tax liabilities through March 1, 1938; after the accrued tax liabilities were paid, the 25% was to be used for administering the O&C lands, with any remainder provided to the counties. In practice, after the tax liabilities were paid (by 1952), all of the 25% has been used to administer the O&C lands, raising the Treasury share to 50%. Thus, the counties receive 50% of receipts. Payments for the CBWR lands were not included in the O&C Act, but were included in a later act. The program paralleled the O&C payments: the counties could effectively receive up to 50% of receipts. However, the CBWR act also directed that the payments \"be computed by applying the same rates of taxation as are applied to privately owned property of similar character in such counties.\" Thus, the actual payments are the county tax bills (county tax rates for assessed value of the lands), up to 50% of the receipts from the CBWR lands.\nConcern over declining timber sales and thus declining payments, attributed to protecting spotted owls and other species, led President Clinton to propose a 10-year payment program to address regional economic problems resulting from protection efforts that reduced federal timber harvests in the Pacific Northwest. Congress enacted this program in the Omnibus Budget Reconciliation Act of 1993. For 1994, these \"spotted owl payments\" began at 85% of the average payments between FY1986 and FY1990, and declined by 3 percentage points annually, to 58% in FY2003.", "Concerns about declining timber sales and county payments continued and expanded, especially with the declining spotted owl payments and in areas without northern spotted owls. Congress responded with a temporary, optional substitute payment program: the Secure Rural Schools and Community Self-Determination (SRS) Act of 2000. For counties that chose the SRS payments, the program provided payments at the average of the three highest payments between FY1986 and FY1999. (Some counties with USFS lands chose to continue receiving payments of 25% of gross receipts.) Under Title II of SRS, counties receiving payments of $100,000 or more were required to spend 15%-20% of the payment on reinvestment projects (e.g., watershed improvement, wildfire fuel reduction, etc.) on the federal lands, and under Title III up to 7% could be used for additional specified purposes (e.g., search and rescue on federal lands). SRS payments were authorized for six years, FY2001-FY2006. Congress enacted a one-year extension for FY2007, then amended the SRS law in 2008. The amendment authorized a four-year extension (though FY2011) and modified the payments through a complicated formula that included the average of the three highest payments between FY1986 and FY1999, the eligible federal lands in each county, and relative per capita income in each county. The amended version also included transition payments for several states, and retained the Title II (federal land reinvestment) and Title III (special purposes) provisions of the payments.\nThe amended SRS payments expired at the end of FY2011, and the USFS and O&C payments will return to their previous historic levels (25% and 50% of receipts, respectively) for FY2012 unless Congress enacts an alternative payment program before September 30, 2012. There have been many issues involved in congressional efforts to reauthorize SRS, as described in CRS Report R41303, Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000 . One of the most significant difficulties has been the need for offsets to fund the reauthorization of the mandatory payments, and Congress continues to examine options on this issue.\nOne other issue relates to the payments more generally. The issue has been referred to as \"linkage.\" Some observers have noted that, because the counties historically received a share of revenues, they were rewarded for advocating revenue-generating activities (principally timber sales) and for opposing management that reduced or constrained activities that generate no revenues to the local forest (e.g., protecting commercial or sport fish harvests or designating wilderness areas). Thus, counties often allied themselves with the timber industry, and opposed environmental groups, in debates over USFS and O&C management and budget decisions. Because SRS payments were based on historic payments, and not on current agency receipts, they were seen as \"de-linked\" from the pressure to produce revenues—a situation desired by many environmental and conservation organizations but opposed by many user groups.", "Three bills addressing USFS payments for counties have been introduced in the 112 th Congress. Two, H.R. 3599 and S. 1692 , would extend the SRS Act for five additional years. The other, Title I of H.R. 4019 , takes a different approach, and thus warrants a separate analysis. This title of H.R. 4019 is called the County, Schools, and Revenue Trust for Federal Forest Land. It contains eight sections, described below.", "This section contains 14 definitions. Eight are unique to this bill, including defining the Secretary of Agriculture as the \"Trustee.\" Two are common or defined in other sources: \"State\" (to include the Commonwealth of Puerto Rico, the only territory with national forest lands); and \"community wildfire protection plans.\" The other four include potentially conflicting definitions. \"Federal lands,\" for example, are defined to include the National Forest System and the O&C lands (§101(7)), and the \"National Forest System\" is then defined in the bill to exclude certain National Forest System lands (§101(9)). \"Secretary\" is defined as the Secretary of Agriculture (§101(10)), while \"Secretary concerned\" is defined as the Secretary of Agriculture for National Forest System lands and the Secretary of the Interior for the O&C lands (§101(11)).", "This section would establish the County, Schools, and Revenue Trust. It would direct that the Trustee (the Secretary of Agriculture) \"has a fiduciary responsibility to beneficiary counties to use … Projects to generate amounts sufficient to satisfy the annual revenue requirements established for units of the National Forest System.\" It would establish the trust with an appropriation of $875 million and would direct that the portion of receipts from trust projects, as required in Section 106(a)(1), be deposited in the trust. It also would prohibit garnishment by or payment to a county creditor; spending other than as directed in Section 107; and offsetting state funding \"for local schools, facilities, or educational purposes.\"", "This section would allow political subdivisions of states (referred to as counties throughout the bill and this report) with National Forest System lands eligible for payments under SRS to elect not to participate; such an election would need to be submitted each year the county chooses not to participate. Counties otherwise would be automatically included in the trust program. The section would prohibit trust projects from commencing on lands in counties that have opted not to participate.", "This section would require the Secretary of Agriculture to determine, for each unit of the National Forest System, the annual revenue requirement for the unit and the minimum sale level for the unit. (\"Unit\" is not defined.) The annual revenue requirement is defined (§101(1)) as 60% of the \"average annual gross receipts from the unit during the 20-year period beginning with\" FY1980 (i.e., FY1980-FY1999).\nThe minimum sale level is defined (§101(8)) as 50% of the \"average annual chargeable timber volume (as measured in net sawtimber volume) sold from the unit during the period beginning with fiscal year 1980 through fiscal year 2000\" (i.e., for the 21-year period). Chargeable volume is defined (§101(4)) as \"the volume of timber and other forest products that is counted toward meeting the allowable sale quantity of a unit of National Forest System land based on the regionally applicable utilization and merchantability standards.\" Allowable sale quantity is a provision that limits USFS timber sales to \"a quantity equal to or less than a quantity which can be removed from such [national] forest annually in perpetuity on a sustained-yield basis.\" Accordingly, Section 104 might cause management problems for forest supervisors for meeting the minimum sale level, if it conflicted with maintaining a perpetual supply.", "This section would provide for the implementation and review of projects that provide funds to be deposited in the trust. Trust projects would include any projects, but \"may not exceed the number of projects necessary to meet the annual revenue requirement.\" Trust projects could not occur on National Forest System lands in counties that opt out of the trust program, in components of the National Wilderness Preservation System, on lands where Congress had prohibited timber harvesting, or on lands \"over which administrative jurisdiction was assumed by the Forest Service under section 311.\" It is not clear to what this latter provision refers, as there is no Section 311 in the bill. Section 105 also would direct that trust projects be consistent with the standards and guidelines in the NFMA plans for each National Forest System unit, but also would allow the standards and guidelines to be modified for each trust project. Thus, it is not clear what role existing land management plans would have in the proposed trust system.\nSection 105(d) would provide for public review, public comments, and environmental review. Section 105(e) would direct that the provisions of this section, for implementing trust projects, are \"deemed to be compliance with the requirements of\" the Forest and Rangeland Renewable Resources Planning Act of 1974 (RPA), the National Forest Management Act of 1976 (NFMA), the Multiple Use-Sustained Yield Act of 1960 (MUSYA), the National Environmental Policy Act of 1969 (NEPA), and the Endangered Species Act of 1973 (ESA). Accordingly, the reviews, appeals, and analyses offered by these statutes would be superseded by the abbreviated process within H.R. 4019 .", "Section 105(d)(1) would establish a notice and comment process for trust projects. Proposed projects would require a Federal Register notice, and the public would have 30 days to provide written comments on the proposals. After considering the written comments, the decision-maker would be required to issue a final decision within 90 days after the end of the comment period. This would require another Federal Register notice, marking the start of a 30-day objection period. Only parties who submitted written comments on the proposed projects could submit written objections. However, there is no provision that would require consideration of the written objections. This process is identified as the sole means for the public to seek administrative review of trust projects.", "Section 105(d)(2) would require an environmental report on each proposed trust project within 180 days of the initial Federal Register notice, as much as 30 days after the deadline for written comments on the project's final decision. For catastrophic events, defined as events that have caused or will cause severe damage to National Forest System lands (§101(3)), the deadline would be shortened to 30 days, with public comment and objection periods shortened as necessary. The environmental review would include an evaluation of environmental impacts \"to the extent the Secretary considers appropriate and feasible,\" including any effect on threatened or endangered plants or animals listed under ESA. The environmental review also would include the public comments and objections and any response, as well as modifications needed \"to ensure the annual revenue requirement is met.\" The environmental report would not be allowed to cost more than one-third of the estimated receipts generated by the project. It is not clear whether the environmental review would be published or otherwise available to the public. Finally, the environmental report would not be subject to judicial review.", "This section would allocate receipts from trust projects:\n65% would be deposited in the trust; and 35% would be \"deposited in the general fund of the Treasury for use ... in such amounts as may be provided in advance in appropriation Acts, for the Forest Service.\" Of this amount, up to 1% would be available for \"performance-based cash awards ... to employees of the Forest Service who assist a unit in exceeding its minimum sale level for the fiscal year.\"", "This section would direct that all deposits to the trust be distributed to the states each year as soon as practicable after the end of the fiscal year. Section 107(a) would direct each state's allocation \"to the beneficiary counties in the manner provided by\" SRS Section 102(c)(1). That section of SRS directed allocations among the counties in accordance with the USFS 25% Payments to States Act and the Weeks Law. These two laws direct the states to spend the money on roads and schools in the counties where the national forests are located; the money is not necessarily paid to the counties, and some states direct the payments to school districts or other local governmental entities. The USFS 25% payment allocation within each state is based on the receipts from each proclaimed national forest and the acreage of each county within each proclaimed forest.\nSection 107 is silent concerning the allocation among the states. It could be based on the current receipts from each proclaimed national forest, as is done under the USFS 25% Payments to States Act and the Weeks Law. However, it also could be based on the complicated formula in SRS, based on each county's share of historic receipts and of eligible lands, adjusted by relative per capita income.\nSection 107(b) would direct use of the trust payments in accordance with SRS Sections 102(c)(2) and (d). SRS Section 102(c)(2) directed use of payments in accordance with the USFS 25% Payments to States Act and the Weeks Law—that is, on roads and schools as determined by each state. SRS Section 102(d) required that, for counties with payments greater than $350,000 in a fiscal year, 80%-85% of the payment must have been used in accordance with Section 102(c)(2). Up to 7% of the remainder could be used for certain projects, as specified in SRS Title III (e.g., for search-and-rescue or for local wildfire protection). The remaining funds were to be used as specified in SRS Title II—reinvested in projects on the federal lands in accordance with recommendations of local resource advisory committees (RACs) and approval of the Secretary. Counties with smaller annual payments were excused from some or all of allocation to Title II and Title III projects. Section 107(b) is silent on whether the Title II projects can be done as trust projects in accordance with the implementation provisions of Section 105.", "This section would direct allocations of the appropriations provided to the trust for the first two fiscal years. For FY2012, the Secretaries would make payments to beneficiary counties equal to the FY2010 SRS payments. For FY2013, the payments would be 75% of the FY2012 payments. The payments would be used in accordance with the provisions directed in Section 107(b).", "Title I of H.R. 4019 raises many possible issues for Congress. The bill would shift the focus of management for some federal lands to generating revenues for counties, possibly at the expense of providing benefits to the American people for current and future generations, but also possibly creating jobs in the timber industry. It would presume that the new management focus complies with many existing statutes that require informing the public about possible impacts of decisions and alternatives (NEPA), protecting rare plants and animals (ESA), and assuring sustained forest ecosystems (NFMA). This would effectively eliminate the external enforcement of these provisions for projects on many federal lands. There are also many technical implementation questions. Specific issues are discussed below.\nIn addition, while it appears that H.R. 4019 is intended as a substitute for USFS 25% payments to states and O&C 50% payments to counties, nowhere does the bill direct that these payments not be made. Thus, the trust payments would apparently be in addition to the USFS 25% and O&C 50% payments. However, the bill includes no direction on deposits to the National Forest Fund to make the USFS 25% payments.", "The bill would establish a fiduciary responsibility to the Secretary of Agriculture as trustee for the trust. Typically, a trust is a collection of assets to be administered by its trustee for the beneficiaries, typically to provide income while preserving the assets of the trust. The beneficiaries of the income and of the assets can differ; for example, some trusts are established to provide a surviving spouse with income while maintaining the assets for the children.\nIn H.R. 4019 , the trust is defined as the income, not as the assets. The bill would establish a responsibility to produce income, but is unclear on the responsibilities of the agency and the means citizens might have to protect the assets—the federal lands and resources. H.R. 4019 would constrain some of the opportunities to challenge management decisions on trust projects to produce income for the counties. It is not clear whether the trust requirements to manage for income to the counties would outweigh long-term management to maintain the assets.\nThe counties would be the principal beneficiaries of the trust, but would appear to bear few of the responsibilities or costs associated with the implementation and administration of the trust. That is, the costs to prepare and administer trust projects to produce income for the counties are borne by the federal government. In addition to the costs of the trust projects, there would also likely be costs to establish and administer the trust, also borne by the federal government. While 35% of the receipts from trust projects could be made available in advance in appropriations acts, it is unclear whether this funding would be sufficient to cover the costs of implementing the trust projects and administering the trust. It is also unclear whether this funding would be supplemental to or in lieu of annual appropriations.", "H.R. 4019 would establish an annual revenue requirement of 60% of the average annual gross receipts from each National Forest System unit between FY1980 and FY1999. This provision raises a number of potential questions for Congress. For example, it may be unclear to some why 60% of annual gross receipts from FY1980 through FY1999 was selected for the bill; the committee and subcommittee press releases and statements from the chairmen do not include explanations for either the level or the selected period. (The eligibility period under SRS was FY1986 through FY1999.) Other possible questions include what would be included in \"gross receipts\"; what receipts would be available to make the specified payments; what additional receipts would be needed to make the specified payments; and where those receipts might come from.", "The bill does not define \"gross receipts.\" For USFS 25% payments to states, \"gross receipts\" include some receipts but not others. For example, timber purchaser deposits to the Knutson-Vandenberg (K-V) Fund and deposits in the Salvage Timber Sale Fund are included as receipts for USFS 25% payments. In contrast, timber purchaser deposits for brush disposal, fees for forest botanical product harvests, and recreation fees under the Federal Lands Recreation Enhancement Act are exempt from the USFS 25% payments. Thus, the basis for calculating the 60% of gross receipts is unclear. If the gross receipts subject to the annual revenue requirement in the bill were the average gross receipts from FY1980 through FY1999 used to determine the USFS 25% payments to states, then the annual revenue requirement nationally would likely be about $550 million to $600 million. However, the actual annual revenue requirement could be higher or lower than this estimate, depending on a host of estimates and assumptions about options and future receipts.", "The above discussion of gross receipts suggests several categories of receipts that could be deposited in the trust. One category of receipts that could be deposited in the trust are those currently deposited in the National Forest Fund (NFF). This is a receipt account that accumulates USFS receipts which are not deposited directly into an account with mandatory spending authority (an MSA). Congress has directed many of the NFF funds to be used for specific purposes, such as the 10% Roads and Trails Fund. The USFS has historically reported on NFF deposits in its annual budget justification, although that table was not included in the FY2013 budget justification. Many of the various land and resource uses generate receipts:\nTimber sales—$18.8 million annually for FY2008-FY2010, after deducting the mandatory spending from NFF deposits ($7.6 million annually). Grazing fees—$1.9 million annually for FY2008-FY2010, after deducting the mandatory spending from NFF deposits ($3.3 million annually). Minerals—$45.3 million annually for FY2008-FY2010, after deducting the mandatory spending from NFF deposits ($0.2 million annually). Of this amount, $44.0 million annually for FY2008-FY2010 was collected by the Minerals Management Service (MMS) in the U.S. Department of the Interior (now the Office of Natural Resource Revenues) and deposited in the NFF; because the collections are not USFS receipts, it is not certain whether they can be identified as trust projects and deposited in the trust. Recreation fees—$44.2 million annually for FY2008-FY2010, after deducting the mandatory spending from NFF deposits ($7.6 million annually). This does not include recreation fees under the Federal Lands Recreation Enhancement Act (FLREA), since these collections are deposited directly into an MSA. Fees for land uses and power—$16.9 million annually for FY2008-FY2010, after deducting the mandatory spending from NFF deposits ($3.3 million annually).\nThus, NFF funds for FY2008-FY2010 that could have been available for the trust would have averaged $127.1 million annually, if MMS deposits were included, or $83.1 million annually, if the MMS were not included.\nOne possible source of funds for the trust could be funds deposited in many of the MSAs. It is unclear whether the provisions of H.R. 4019 could override previous statutes on the disposition of receipts to the MSAs. For certain accounts associated with timber sales, the USFS determines the amount deposited (if any) in each of the MSAs. These accounts include:\nThe Knutson-Vandenberg (K-V) Fund—$101.9 million annually for FY2008-FY2010. These funds are a portion of timber sale receipts currently used for reforestation, timber stand improvement, and mitigation and enhancement of other resources in timber sale areas. The Salvage Sale Fund—$27.0 million annually for FY2008-FY2010. These funds are a portion of timber sale receipts currently used to prepare and administer additional salvage timber sales. Brush Disposal—$7.5 million annually for FY2008-FY2010. These funds are additional deposits from timber purchasers currently used to clean up the \"slash\" (tree tops and limbs) in timber sale areas. Stewardship Contracting retained receipts—$5.5 million annually for FY2008-FY2010. Stewardship contracts are special timber sales where the USFS is authorized to require additional land and resource treatments in exchange for lower timber payments; the USFS is also authorized to retain any receipts generated by stewardship contracts to be used for additional stewardship contracting activities.\nBecause the USFS determines the amount deposited in the first three of these accounts, and can choose not to undertake stewardship contracting, the agency could substantially expand the funds available for the trust. The K-V and Salvage Sale Funds could be directly deposited in the trust, while reducing or halting the use of brush disposal and stewardship contracting would likely increase the bid prices for USFS timber sales. The total amount available from these accounts that could have been available for the trust averaged $141.9 million annually for FY2008-FY2010.\nFunds directed to be deposited into other MSAs might also be diverted to the trust. The statutes establishing these many MSAs direct the deposit of specified receipts into these accounts. However, the USFS might be able to designate the activities generating these receipts as trust projects, shifting funds from the MSAs to the trust. The total amount available from these accounts that could have been available for the trust averaged $124.0 million annually for FY2008-FY2010. While many of the accounts are relatively modest (less than $5 million annually), two accounts are relatively large:\nRecreation fees under FLREA—$64.4 million annually for FY2008-FY2010. These funds have been used primarily to address the $5.5 billion backlog of deferred maintenance in the national forests. The 10% Roads and Trails Fund—$14.0 million annually for FY2008-FY2010. These funds were originally set aside to supplement appropriations for road construction; at various times, they have been returned to the U.S. Treasury to offset USFS road appropriations, although for several years they were authorized to be used for other forest health activities in the national forests.\nThere are a few MSAs that are unlikely to be available for the trust. These accounts include funds for specific purposes that would not have been deposited into the accounts without use for those purposes. The largest account is Restoration of Lands and Improvements, which accumulates recoveries from cash bonds, forfeitures, judgments, settlements, and the like from contractors who fail to complete the required work; the funds are used for others to complete the work. Similarly, the Cooperative Work account includes deposits from contractors and cooperators for commensurately funding jointly beneficial work (e.g., USFS expenditures to maintain jointly used roads). The total amount from these accounts averaged $67.7 million annually for FY2008-FY2010, but would probably not be available for the trust.", "The discussion of sources suggests that current NFF receipts could provide about $83 million to $127 million annually, depending on the availability of the MMS deposits. Reducing or eliminating the use of the several timber-related MSAs, and depositing those receipts in the trust, could generate another $142 million annually. Shifting deposits from the other MSAs, excluding the last group (whose funds likely would not be available for the trust), could add another $124 million to the trust. Thus, if the USFS chose (and were able) to designate all these activities as trust projects and deposit all the receipts in the trust, total deposits in FY2008-FY2010 could have been as much as $349 million to $393 million annually.\nAs described above, the trust would likely need receipts of about $550 million to $600 million annually. If only current NFF receipts were deposited in the trust, additional annual requirements could range from $423 million to $517 million. As NFF deposits from timber harvests averaged $18.8 million annually for FY2008-FY2010, timber sales would need to increase by more than 20 times above the average timber harvest level of FY2008-FY2010 (2.6 billion board feet (bbf)) to generate sufficient funds. This could lead to annual USFS timber harvests increasing to as much as or more than the current annual timber harvest level from all lands (federal and nonfederal) in the United States. Thus, the USFS would have to alter the way it has been selling timber and/or allocating receipts.\nIf the timber receipts deposited in the timber-related MSAs were allocated to the trust as receipts from trust projects, the need for additional annual requirements would be reduced. NFF and timber-related MSA deposits averaged about $161 million for FY2008-FY2010. Thus, the additional funds needed for the trust would be about $281 million to $375 million. With this allocation, timber sales would need to increase by more modest, but still substantial, amounts—about 175% to 233% above current levels. This would imply USFS sale levels of about 7.2 bbf to 8.7 bbf. While roughly triple the harvest levels of the past 20 years, these would be within historic levels. (See Figure 1 , above.)\nIf all activities that provide funds for MSAs were designated to be trust projects, the additional annual requirements would be reduced to about $157 million to $251 million. Using additional timber receipts (deposits to the NFF and timber-related MSA deposits, about $161 million annually for FY2008-FY2010) would require increasing timber sales between 98% and 156%, 5.1 bbf to 6.7 bbf, double or more the FY2008-FY2010 average of 2.6 bbf.", "", "Interests disagree about whether such increased timber sales are feasible and desirable. One question is whether sufficient timber exists in the national forests to provide the necessary additional receipts for the annual revenue requirements. Timber inventory data show that softwood growing stock on all forest lands increased by 23% between 1953 and 2007, and by 18% in the national forests. The increase has largely been in medium-sized trees (7-17 inches in diameter), while the inventory in large trees (more than 29 inches in diameter) has declined, especially in the Pacific Coast states (Alaska, Washington, Oregon, and California).\nThe national forests contain more timber now than when harvest levels were much higher, and timber growth exceeds harvests and mortality, so timber inventories will continue to grow. This is true even with extensive wildfires and insect infestations (e.g., mountain pine beetles) in recent years. This suggests that, biologically, more timber could be cut from the national forests, at least in the near term and especially in salvaging trees killed by fires, insects, or diseases. However, salvage timber and the smaller average tree diameter suggest lower values for the remaining timber. Furthermore, in some areas of the Rocky Mountains, sawmill capacity has declined substantially in the past 20 years, raising questions about whether sufficient markets exist for increased federal timber harvests.\nIf additional timber were harvested under the bill, additional jobs would likely be generated in the timber industry. Job multipliers based on timber harvests are imprecise, because they are influenced by many factors, such as tree diameters, mill characteristics, and more. One meta-study on northern spotted owl impacts in 1990 showed timber job multipliers ranging from 6 to 26 direct and indirect jobs per million board feet harvested, although most ranged from 14 to 16 jobs per million board feet. More recent studies have suggested that timber job multipliers are now lower—11.28 jobs per million board feet in Washington in 2004. If the additional timber sales estimated above (5.1 billion to 8.7 billion board feet) were achieved, the 2004 multiplier would suggest additional direct and indirect timber industry jobs of 57,000 to 98,000 jobs.\nThe USFS likely could adjust its timber practices to provide at least some of the annual revenue requirement. As implied above, significant additional receipts could come from receipts that previously were being deposited in the K-V, Salvage, and brush disposal funds and were being used in stewardship contracts. Because the level of deposits and use of stewardship contracts are within the agency's discretion, shifting these funds to the trust is feasible. However, additional appropriations would likely be needed to accomplish the tasks now being supported by these funds—reforestation, timber sale preparation, treatment of logging debris to reduce wildfire threats, and more.\nThe USFS also could likely shift timber harvests to emphasize the remaining large-diameter timber (or at least the largest-diameter trees that remain). This could lead to ecological problems, however. For example, one of the contributing factors in the forest health and wildfire problem of the intermountain West has been the historic emphasis on logging large-diameter pines. Cutting more of the large-diameter trees and leaving the small trees, undergrowth, and debris exacerbates wildfire threats. Increased logging does not reduce wildfire threats because it puts more dead biomass at ground level, which makes fires more difficult to control, and leaves small trees to serve as fuel ladders to carry fires into the canopy; this could lead to catastrophic wildfires. Another potential ecological problem could be degraded forest conditions. It has long been recognized that harvesting the best trees, and leaving the poorer-quality trees, is not desirable in the long run; this approach is called \"high-grading\" the forest, and is generally regarded as a poor forest management practice. Because harvests account for a relatively small acreage in any one year, and because on-the-ground inventories occur only periodically, it could be decades before the extent of high-grading were known, and it would take decades, if it were even feasible, to restore the forests to healthy conditions after such practices occur. In addition, the loss of large-diameter trees would likely alter the composition of wildlife populations.\nFinally, it would also be possible to harvest additional timber in some national forests, and use those revenues to provide the trust payments to other counties. Only receipts from trust projects would be deposited in the trust, and trust projects could only occur in counties that did not opt out of the trust payment program. However, all trust project receipts would be deposited in the trust, and the allocation to counties in the trust payment program would not be based on where those receipts were generated. Thus, the USFS could emphasize timber sales in areas with high timber values, such as in the Allegheny National Forest (PA) and in the south Atlantic and Gulf coastal national forests. For example, two of the four counties that have Allegheny NF land opted for SRS payments, while the other two opted for the USFS 25% payments. If those two counties opted for trust payments, the USFS could expand timber sales in those two counties to make trust payments in other areas. This is significant, because the value of USFS timber in the Allegheny in 2010 was 20 times greater (per thousand board feet) than in Colorado or Nevada.", "Much of the attention on H.R. 4019 has been on increased timber sales to provide the additional revenues for the trust. However, the bill would not limit revenues to timber sales. Specifically, Section 105(b)(2) also included \"issuance of a grazing permit, issuance of a special use permit involving land use, mineral development, power generation, or recreational use, and projects implementing a community wildfire protection plan.\" Livestock grazing is unlikely to provide much revenue, as the administrative fee for grazing use (there is no fee for a grazing permit) is set under a formula originally enacted in law, and administrative efforts to raise grazing fees have been controversial. Potential revenues from community wildfire protection plan projects would also likely be modest, at best. Biomass removal for wildfire protection generally involves removing biomass on or near the ground, such as underbrush and small trees. Such biomass has little or no commercial value. While the biomass could have some value for energy production, such use to date has required federal and state subsidies to be viable, and no independent commercial biomass energy facilities using biomass from forests are currently in operation.\nSpecial use permits, however, could offer more opportunities. Special use permits are employed for a wide variety of activities in the national forests, such as ski areas, commercial filming, and commercial telecommunication sites. The USFS generally seeks to recover fair market values for special use permits. New or higher fees for renewable energy production, such as from wind or solar farms, could be a possible source of revenues, although the capacity to generate fees from these sources and the possible environmental and social impacts from renewable energy farming continue to be studied. Other activities for which special use permits might be required could include other uses for which the USFS is not prohibited from charging fees. For example, under FLREA, some recreational activities cannot be charged user fees, such as parking and picnicking, camping at undeveloped sites, and hunting and fishing \"for any person who has a right of access for hunting or fishing privileges under a specific provision of law or treaty.\" However, other recreational users could be charged a fair market price for special use permits, such as for hunting and fishing for persons lacking a right of access, for using all-terrain vehicles or snowmobiles off roads, for commercial outfitters and guides, and more. The amount of possible revenues from such special use permits is unknown, and in remote areas, the cost to collect and enforce the fees may exceed the potential receipts. In addition, it seems likely that most of the burden of the fee increases would be borne by people living closest to the national forests and those living in the counties to which these revenues would be transferred.", "The bill provides no penalties or guidance on consequences for not meeting the annual revenue requirements.", "Section 105(d)(2) would require an environmental report for each proposed trust project. The report must be produced within 180 days of the Federal Register notice on the proposed trust project, meaning that the USFS could issue a report 30 days after the deadline for written comments on its final decision.\nThus, H.R. 4019 appears not to provide a notice-and-comment process on the environmental report for either the public or other agencies. Furthermore, in cases of catastrophic events, the USFS would be required to produce the environmental report within 30 days of the notice of the proposed project and permitted to shorten the public comment period on the trust project. H.R. 4019 does not identify any penalties or consequences if the USFS fails to meet the specified deadlines.\nUnder current law, non-trust timber sales require an environmental review under NEPA and an ESA consultation with either the Fish and Wildlife Service (FWS) or the National Marine Fisheries Service (NMFS) about the sale's impacts on listed species and critical habitat. Section 105(e), however, would exclude trust projects from NEPA and ESA compliance. Moreover, H.R. 4019 's requirements suggest that the environmental report would not be a functional equivalent of a review under NEPA or a biological assessment under ESA. The \"minimum\" contents of the report would be:\nan evaluation of the environmental impacts, including the effect on threatened or endangered species, to the extent \"appropriate and feasible\"; public comments and objections and \"any response\" to them; and any modifications to the project to ensure annual revenue is met.\nSection 105 would expressly ban judicial review of the report and would limit administrative review to an opportunity to submit objections to the trust project final decision; however, H.R. 4019 would not require USFS to review or respond to the objections. Thus, the rationale for preparing the report is unclear, as it does not appear to inform the USFS or the public of the consequences of a trust project in a timely manner, nor would it arguably provide agencies or the public an adequate opportunity to comment meaningfully on the report.\nIf H.R. 4019 were enacted, review could not be forced under many other statutes pertaining to timber harvests. The bill states that compliance with Section 105 would be deemed as compliance with the requirements of the Multiple Use-Sustained Yield Act, the National Environmental Policy Act, the Endangered Species Act, the Forest and Rangeland Renewable Resources Planning Act, and the National Forest Management Act. It is not clear how NFMA Section 14 could be satisfied by the environmental report, as that law pertains to bidding, contracting, and harvesting practices. However, it appears to mean that, under H.R. 4019 , timber harvests for trust projects would not need to be made at appraised value or overseen by federal employees.\nThe possibility of litigation related to trust projects would not be entirely precluded by H.R. 4019 . Courts could be asked to review violations under several laws, including the Clean Water Act, the Clean Air Act, the National Historic Preservation Act, and the Archaeological Resources Protection Act.\nIn addition, by barring ESA consultation, H.R. 4019 could potentially expose companies performing trust projects to liability. The consultation process under ESA typically leads to either FWS or NMFS issuing what is called an incidental take statement, immunizing the agency and any applicant from liability if the project incidentally harms a listed species. By eliminating the consultation process in this way, Section 105(e) insulates the USFS from ESA liability, but does not appear to protect private parties, such as timber companies, from suit.", "The bill would allocate 65% of trust project receipts to the trust. This would be a significant increase from the historic allocation—25% of USFS receipts and 50% of O&C receipts. The trust payments would be allocated by the states to the counties in accordance with SRS Section 102(c)(1), which refers to the original USFS 25% payments to states. This clearly would direct allocations for roads and schools in the counties based on revenues from each proclaimed national forest and acreage of that national forest in each county; the payment may or may not go to the county, depending on each state's statutory direction.\nHow the trust payments would be allocated among the states is not clear. The allocation could be based on the average 1980-1999 USFS revenues in each state; this is shown in the fifth column in Table 1 (under \"Calculated Payments, Historic Allocation\"). Table 1 shows the historic USFS payments: the second column shows the average annual payments for 1980-1999; the third column shows the average annual payments for 2001-2007; and the fourth column shows the average annual payments for 2008-2011. Because the bill refers to the distribution in SRS as amended, the allocation of the trust payments could be based on the allocation of SRS payments in each state; this calculated allocation is shown in the sixth column in Table 1 .\nThe allocation among states—by historic payments or SRS formula—would make a substantial difference in state payments. If the allocation were based on historic payments, trust payments would rise from the SRS 2008-2011 average annual payments in a few states, notably Oregon, Washington, and California. In fact, the average annual trust payments in California would likely exceed the average annual payments for any of the preceding periods. In contrast, if the allocation were based on the SRS formula, trust payments would decline from the SRS 2008-2011 average annual payments in many states, especially western states with large land areas but modest historic receipts, such as Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming.\nIn addition, because the payments would be distributed \"subject to\" SRS Sections 102(c)(2) and (d), counties where the payments exceed the specified amounts must or may (depending on the level and the circumstances) allocate 15%-20% of their payments for projects in accordance with SRS Titles II and III. Thus, the amounts shown in the fourth and fifth data columns overstate the likely payments in many of the counties opting for the trust payment program. For counties opting out of the trust payment program, if current receipts were significantly higher than their 1980-1999 average receipts, the actual payments could be higher than shown in the table. The trust payments also appear to be in addition to the USFS 25% payments, which would lead to greater payments (perhaps substantially greater) in some areas.\nThe bill also would allocate 35% of receipts to the U.S. Treasury, and would allow the funds to be appropriated to the USFS. For trust project receipts appropriated to the USFS, the agency would be allowed to use up to 1% of that appropriation for bonuses to employees \"who assist a unit in exceeding its minimum sale level for the fiscal year.\" This bonus would reward employees who help in increasing timber sales, regardless of the environmental and economic consequences of those sales, since it would be for exceeding volume targets, not for achieving revenue requirements. Efforts to increase receipts from other sources (such as those described above) would not be eligible for bonuses.", "The implementation of H.R. 4019 also raises a number of possible issues. Some issues may appear to be relatively minor; for example, grazing fees are charged for actual use, not for permits (as implied in Section 105(b)(2)), and chargeable volume (Section 101(4)) in some national forests is calculated in growing stock (cubic feet), not in merchantable sawtimber (board feet), making the minimum sale level calculation (Section 104(2) from the definition in Section 101(8)) difficult, at best. Six implementation provisions could raise more complicated issues and warrant some additional discussion: the provision on state education funding; inclusion of the O&C lands; implementation in parts of national forests; directions on timber sale practices and procedures; the need for regulations for implementation; and impacts on USFS staffing and funding.", "Section 102(c)(3) would direct that the \"assets of the Trust shall not ... be used in lieu of or to otherwise offset State funding sources for local schools, facilities, or educational purposes.\" This provision appears to be intended to prevent states from adjusting their allocation of state educational funds in response to USFS state payments, as is currently done in Washington and other states. Some might view this as federal interference in state prerogatives to allocate state funding as the state sees fit, which would violate the Spending Clause/Tenth Amendment of the U.S. Constitution. Others would likely argue that this is a legitimate condition of the federal trust payments. While the language of Section 102(c)(3) appears to make this a requirement only for counties choosing the trust payments, the automatic opt-in provision (§103) and the allocation and distribution provisions (§§106 and 107) make this appear less of a voluntary grant program.", "The bill would include payments for the O&C lands in western Oregon through the definition of federal land (§101(7)(B)). However, some of the actions required by the bill would not be applied to the O&C lands. The provisions of Section 105, implementing the trust projects, direct the Secretary of Agriculture to identify trust projects on National Forest System lands. There are no directions for the Secretary of the Interior to identify trust projects on O&C lands, and no authorization for the trust project designation, public involvement, or environmental review provisions to be implemented on the O&C lands. Section 106 would direct that trust project revenues be deposited in the U.S. Treasury to be available for appropriation to the USFS. Finally, Section 107 would direct use of the funds consistent with SRS Section 102(c), which refers to the USFS 25% Payments to States Act requiring use of funds for roads and schools; under the 1937 O&C Act, the O&C payments have been available for any local governmental purpose. Thus, the bill includes the O&C lands in its definition of federal land, but other provisions of the bill seem not to apply to the O&C lands and it is not clear whether the counties with O&C lands would be eligible for trust payments.", "The bill would allow each county to opt out of the trust payment program, and would prohibit trust projects from occurring on lands in counties that have opted out of the program. However, calculations and decisions would generally be directed to be done at units of the National Forest System. These two aspects could significantly complicate national forest management. First, the bill does not define \"unit\" of the National Forest System. NFMA allows multiple national forests to be combined for planning purposes, and the USFS has combined several national forests for administrative purposes; for example, the Choctawhatchee National Forest (NF), with 743 acres, is administered with three other national forests as the National Forests in Florida. However, the USFS 25% payments to states program is organized by proclaimed national forest, not by administrative designation. The bill is not clear on which of these approaches may or must be used for the required calculations and decisions.\nAn additional possible complication is that some national forests are spread over many counties; the Mark Twain NF, for example, has land in 29 counties in Missouri, while the Daniel Boone NF and Jefferson NF each have land in 22 counties, the latter in three different states. Under the SRS payment program, counties could opt in, and in 38 of the 156 proclaimed national forests (24%), some counties opted in while others opted out. If similar choices were made under the trust payment program, about a quarter of the national forests would be required to administer some lands with trust projects and their implementation guidance, and other lands under MUSYA, NFMA, and other laws. This might require additional surveying, to assure that trust projects occur only in those counties that have not opted out of the trust payment program.", "Section 14 of NFMA sets forth guidelines for timber sales in the National Forest System. It requires an appraisal of the timber value in each sale and advertisement of the sale. Each sale is to be at not less than the appraised value, in open and competitive bidding. The timber harvest is to be supervised by a USDA employee. And the Secretary of Agriculture is to develop timber utilization standards, measurement methods, and harvesting practices \"to provide for the optimum practical use of the wood material.\" Since the bill states that trust projects comply with NFMA (among other laws), it is unclear whether these guidelines would necessarily continue to be implemented and enforced.", "The bill does not require regulations to implement its provisions. However, the USFS would be implementing different timber sale procedures on different lands, depending on decisions by the counties. Thus, regulations for the timber sale procedures for trust projects might be needed to provide consistent practices and to assure that adequate receipts are deposited in the trust. Moreover, counties could move into and out of the trust program from year to year, and the USFS might need regulations to guide timber practices on sales begun as trust projects versus those begun as non-trust projects.", "H.R. 4019 would likely increase USFS staffing needs and funding requirements. Additional staff would likely be needed to prepare and administer the expected increase in timber sales, although some staff might be saved by decreasing the needed environmental analysis on those sales. However, implementing different sets of sale regulations on possibly adjoining lands could significantly increase the total work effort. In addition, it seems likely that some additional staff will be needed to administer the trust and trust payments.\nAdditional funding would likely be needed. As noted above, one possible avenue for achieving the revenue requirements is to reduce or eliminate USFS deposits to many of the MSAs. Thus, additional funding would likely be needed to replace funds for:\ntimber sale preparation and administration from the Salvage Sale Fund and possibly the Timber Sale Pipeline Fund; reforestation from the K-V Fund and brush disposal funds; fuel treatment to replace brush disposal funds and to replace forest health improvements achieved through stewardship contracts; and mitigation of the effects of the additional timber sales on other resource values and conditions, such as degradation to water quality and loss of certain types of animal habitats, from the K-V fund.\nIn addition, funding for staff to administer the trust and trust payments would likely be needed, since trust funds are not authorized to be used for administration of the trust.\nThe extent of possible additional funding needs is unclear, but seems likely to be at least as much as the decline in deposits to USFS MSAs—$142 million annually for FY2008-FY2010 for the four timber-related accounts and another $124 million annually for FY2008-FY2010 for the other MSAs. In the current tight federal fiscal situation, it is unclear how such additional funding might be provided." ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 3, 3, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 4, 4, 3, 2, 2, 2, 3, 3, 3, 3, 3, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_title", "h0_full", "h0_full", "h0_full", "h2_title h1_full", "", "h1_full", "", "", "h2_full", "h2_full", "", "", "", "", "h2_full h1_full", "h2_full", "h2_title", "", "", "", "h2_title", "h2_full", "", "", "h2_full", "h2_full h1_full", "h2_full h1_title", "", "", "", "", "h1_full", "" ] }	{ "question": [ "What has the USFS done since 1908?", "How has the BLM similarly paid?", "Why did the volume of these payments change in the 1990s?", "How did Congress attempt to respond to this?", "What has the 112th Congress considered to address this issue?", "How would H.R 4019 address this issue?", "How would this bill impact the USFS?", "Why is H.R. 4019 problematic?", "What is one issues?", "How could H.R. 4019 restrict an individual's ability to challenge decisions?", "How would H.R. 4019 impact decision making?", "What would be presumed about trust project decisions?", "What portion of trust project receipts would be paid to the states?", "How is the bill unclear regarding the states?", "What implementation issues may arise?", "What questions does the annual revenue requirement raise?" ], "summary": [ "Since 1908, the Forest Service (USFS) in the Department of Agriculture has paid 25% of its receipts to the states for use on roads and schools in the counties where the national forests are located.", "The Bureau of Land Management (BLM) in the Department of the Interior has paid 50% of its receipts to the Oregon counties where the revested (returned to federal ownership) Oregon and California Railroad (O&C) grant lands are located.", "Payments under these programs dropped substantially in the 1990s, largely because of declining timber sales.", "In the Secure Rural Schools and Community Self-Determination Act of 2000 (P.L. 106-393; SRS), Congress created an optional alternative payment system for these lands, but the law expired at the end of FY2011.", "The 112th Congress has considered options for addressing the lower payments from federal lands due to lower timber sales.", "One bill, H.R. 4019 (Title I, the County, Schools, and Revenue Trust for Federal Forest Land), would establish a new payment program; the House Committee on Natural Resources has ordered the bill reported. The bill also would direct the allocation and use of the trust payments, and provide appropriations for the payments until trust projects generated receipts for the trust payments.", "The bill would establish the trust with receipts from certain projects, and give the USFS the \"fiduciary responsibility\" to undertake projects to achieve annual revenue requirements in counties that do not opt out of the trust program. The bill would direct the USFS to calculate the revenue requirements and, to implement trust projects, establish procedures for public involvement, environmental reporting, and judicial review.", "H.R. 4019 raises several issues for Congress.", "One is that, although the trust program has been described as a replacement for the SRS, the payments would apparently be in addition to the USFS 25% and O&C 50% payments that had been replaced by the SRS.", "Also, the fiduciary responsibility for trust payments makes the counties the primary beneficiary of federal land management and could restrict the ability of individuals to challenge decisions that they feel could degrade the federal lands and resources.", "Public involvement would be limited to written comments and objections to proposed and final trust decisions, filed before the required environmental report is prepared. The environmental report would not need to be made available, and could not be challenged in court or administratively.", "Trust project decisions would be presumed to be in accordance with several laws, such as the National Environmental Policy Act, the Endangered Species Act, and the National Forest Management Act.", "The 65% of trust project receipts that would be paid to the states would be a significant increase over the 25% USFS payments and the 50% O&C payments.", "The bill is unclear on the allocation among states; it could be based on historic receipts or on SRS payments, with substantially different results.", "There could also be numerous implementation issues, such as treatment of state education funding, inclusion of the O&C lands, forests with some counties opting out of the trust payments, existing federal timber sale requirements, the possible need for implementing regulations, and possible additional staffing and funding requirements.", "The annual revenue requirement—60% of average 1980-1999 gross receipts—raises several questions: what would be included in \"gross receipts\"; what receipts could be deposited in the trust (e.g., whether deposits to other accounts could instead be deposited in the trust); how much additional revenue would be needed; and where those revenues could come from (e.g., how much additional timber might need to be cut, how many jobs might be created, where the timber could be cut, and what other options might be feasible, such as permits for currently free uses)." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, 1, -1, 0, 0, 0, 0, 4, 5, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2 ] }
CRS_R44592	{ "title": [ "", "Introduction", "Sage-Grouse Breeding and Biology", "Threats to Sage-Grouse Habitat", "How Does ESA Work?", "How Do Different Types of Conservation Agreements Qualify to Avoid Listing?", "Chronology of Petitions and FWS Sage-Grouse Action26", "Why Did FWS Decide Not to List Sage-Grouse?", "Collaborative Mechanisms to Protect Sage-Grouse", "State and Private Actions", "BLM and FS Sage-Grouse Strategy and Conservation Plans52", "Improve Sage-Grouse Habitat Condition", "Minimize Surface Disturbances", "Reduce Wildfire Threat", "Conflicting Views on BLM and FS Plans", "Implementation and Other Issues" ], "paragraphs": [ "", "There has been controversy for more than 25 years concerning whether to list sage-grouse for protection under the Endangered Species Act (ESA). As with many controversies over rare species, a theme in the sage-grouse controversy is the use of dwindling resources by both humans and sage-grouse—in this case, broad, unfragmented expanses of sagebrush lands. Loss of habitat is the most common factor leading to species' decline. Sagebrush habitat in the western United States is diminishing and becoming fragmented due to energy development, infrastructure, agricultural conversion, wildfire, invasive plants, and other factors. Although the total remaining sagebrush habitat is vast, its fragmentation is problematic for sage-grouse, which need large treeless areas to discourage the roosting of avian predators and to permit travel between breeding and nesting sites. Thus, fences, roads, drilling rigs, and utility poles can produce a substantial change in available sagebrush habitat, even when the actual surface disturbance is minimal.\nThe sage-grouse ( Centrocercus urophasianus ) is found in 11 western states. The species first appeared as a candidate for listing under ESA in 1991, and its subsequent history with regard to the act has included various petitions, missed deadlines, and lawsuits. Multiple petitions were filed under ESA to ask the Fish and Wildlife Service (FWS, Department of the Interior) to protect the sage-grouse. (See \" Chronology of Petitions and FWS Sage-Grouse Action ,\" below.)\nMost recently, on September 22, 2015, FWS announced its decision not to list the sage-grouse under ESA, based on the adequacy of existing regulatory mechanisms to protect the species. Some have praised the decision as affording the proper protection through state, local, and private conservation efforts. Others have opposed the decision for varying reasons, including assertions that the existing regulatory mechanisms are not sufficiently protective or that the regulatory mechanisms result in excessive restrictions on land uses. (See \" Implementation and Other Issues ,\" below .)", "The sage-grouse is a squat, feathered, chicken-like bird, grayish with a black belly and spiked tail feathers; it is highly prized by hunters. (See Figure 1 .) Sage-grouse have one of the lowest reproductive rates of any North American game bird. Because of this, \"its populations are not able to recover from low numbers as quickly as many other upland game bird species.\"\nA particular issue has been conservation of the locations where male sage-grouse gather in the spring year after year—areas called leks . The leks are found in open sagebrush areas, usually on broad ridges or valley floors where visibility is excellent and noise will travel well. There, the males strut, raise and lower their wings, fan their tail feathers, and make loud booming noises with the aid of bright yellow inflatable air sacs in their necks. Under optimal conditions, these sounds carry for hundreds of yards. Dozens or even hundreds of males attract the attention of resident females, who survey the offerings of the displaying males, make their choices, and mate. Once mating has occurred, females leave the lek to nest, sometimes at a distance of several miles. Females raise their offspring alone, without help from males. Due to the importance of leks in the breeding cycle, maintenance and protection of traditional lek areas are key concerns for species conservation.", "The sage-grouse is vulnerable to multiple interrelated changes in its habitat. The construction of a road in sagebrush habitat, for example, may have diverse effects. Sage-grouse hens may hesitate to cross a road with their chicks. A road can also provide ingress for invasive species such as cheatgrass, which is the primary invasive species threat to sagebrush habitat. The plant tends to appear after an area has been grazed or when roads are developed. The nonnative grass spreads quickly, is disliked as forage by grazing mammals and sage-grouse, and burns more readily than native plants. Moreover, the fire threat posed by cheatgrass could be exacerbated by pervasive drought and climate change. Both the number of fires and the total area burned in sage-grouse habitat have increased in the last 100 years. This example illustrates the links among a range of threats to sage-grouse.\nAdditionally, certain types of development, such as coal-bed methane production and oil wells, introduce standing pools of water into an environment where none existed previously. These pools provide habitat for mosquitoes, and mosquitoes can carry the West Nile Virus. According to the U.S. Geological Survey, the federal agency responsible for tracking wildlife disease, the West Nile Virus is always fatal for the sage-grouse. By 2006, West Nile Virus had been reported among sage-grouse in every state of the sage-grouse's range except for Washington.\nThe various threats cited above also sum to form a larger threat: fragmentation of the sagebrush landscape. Although much of the West is still dominated by sagebrush, much of this habitat is no longer intact. As a result, such areas have become unsuitable for successful breeding. Moreover, because habitats are becoming fragmented, sage-grouse populations are becoming genetically isolated, leaving them more vulnerable. Habitat fragmentation, along with lek protection, is a key concern in species conservation.\nAccording to a team assembled by FWS to study the sage-grouse, habitat fragmentation is severely affecting the viability of the species:\nThe primary threat to greater sage grouse is fragmentation. Large expanses of intact sagebrush habitat are necessary to maintain viable sage grouse populations. Only two areas in the 11-state range currently provide such expanses and both are already heavily fragmented and are projected to experience additional significant fragmentation in the foreseeable future. Dramatic population declines and local extirpations have already occurred and future fragmentation and habitat degradation is expected to result in remnant, isolated, and dysfunctional populations of greater sage grouse that are in danger of extinction in the foreseeable future.\nThe sage-grouse was once abundant in 16 western states. Its current range includes portions of 11 states: California, Colorado, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, Wyoming, and Washington. Multiple sources point to a severe decline in the number of sage-grouse; FWS estimates that sage-grouse population numbers may have declined between 69% and 99% from historic to more recent times. FWS also cites data from the Western States Sage and Columbia Sharp-Tailed Grouse Technical Committee, which estimated the decline between historic times and 1999 to have been about 86%.\nThe increasing threats and declining sage-grouse populations eventually led to eight proposals to list the species or portions of the species under ESA. (See \" Chronology of Petitions and FWS Sage-Grouse Action ,\" below.) In making its decision, FWS was required to consider the general requirements for listing a species (see \" How Does ESA Work? \" below) and the minimum requirements for conservation agreements to be considered adequate to avoid listing. The specific decision not to list the sage-grouse is discussed below in \" Why Did FWS Decide Not to List Sage-Grouse? \"", "ESA is intended to protect plants and animals from becoming extinct. It authorizes creating a list of protected species, either endangered (defined as being in danger of extinction) or threatened (defined as likely to become endangered in the foreseeable future). ESA prohibits taking these species, with limited exceptions. In addition, it prohibits federal agencies from jeopardizing the continued existence of listed species and from destroying or adversely modifying listed species' designated critical habitats.\nFWS is the federal agency that manages most species under ESA. The Secretary of the Interior, acting through FWS, is charged with deciding whether to list a species. ESA specifies that a listing decision is to be based on five criteria:\n1. The present or threatened destruction, modification, or curtailment of a species' habitat or range. 2. Overutilization for commercial, recreational, scientific, or educational purposes. 3. Disease or predation. 4. Inadequacy of existing regulatory mechanisms. 5. Other natural or man-made factors affecting a species' continued existence.\nIn making a listing determination, FWS is charged with relying \"solely on the basis of the best scientific and commercial data available.\"\nFWS may list a species independently, or citizens may petition the agency to make a listing. When a petition is filed, certain deadlines are imposed by statute. FWS must determine and publish a decision in the Federal Register within 90 days of the filing of the petition on whether the petition presents substantial evidence in support of a listing. Within 12 months of filing the petition, FWS must publish a notice on whether listing is warranted. A final decision must be made one year after the 12-month notice. FWS has the option of publishing a determination at the time of a 12-month finding that a listing is \"warranted but precluded\" due to limited FWS resources. If the adequacy of existing regulatory mechanisms provides the rationale not to list a species, those mechanisms must meet certain criteria, described below.", "Under a candidate conservation agreement with assurances (CCAA), FWS provides incentives to nonfederal property owners to carry out voluntary conservation measures that may help to make listing unnecessary. In return, the property owner receives a permit \"containing assurances that if they engage in certain conservation actions for the species included in the CCAA, the owner will not be required to implement additional measures beyond those in the CCAA.\" Moreover, there will be no additional obligations imposed if the species is listed later, unless the owner agrees. Courts have looked at three criteria in determining the adequacy of existing regulatory mechanisms:\n1. Courts have found that voluntary actions are not regulatory ; the protections must be enforceable. 2. Courts define adequate as sufficient to keep populations at a level such that listing will not prove necessary. 3. Existing means the plans for protection must be in place and are not future or speculative.\nRegarding the first criterion, no court has deemed a voluntary state action as a regulatory action sufficient to avoid federal listing. Even the Ninth Circuit, which found there were adequate regulatory measures to remove the grizzly bear from the threatened species list, expressly ignored the state voluntary actions: \"For the purposes of the [existing adequate regulatory mechanisms] determination, however, we need not, and do not consider those [state] measures, some or all of which may not be binding.\"\nThe second criterion is whether the measures are adequate —that is, sufficient to keep populations at a level such that listing will not prove necessary. Courts have typically looked at the types of measures being taken, in addition to the size of areas being protected, as a way of finding adequacy.\nFor example, in the case of listing steelhead trout, the Northern District of California found that the state protection plans of Oregon and California for this species were voluntary and thus did not count as a regulatory measure. The court also found that a federal plan for protecting the species would cover only 64% of habitat, which was not enough to prevent species' further decline. Therefore, the regulatory measure affecting federal habitat was not adequate to prevent the need for listing. By contrast, in the previously cited case on grizzly bears, the Ninth Circuit held that a plan that would have the force of law on federal lands but would be voluntary on other lands was adequate to protect the grizzly bear because federal lands constituted 98% of the grizzly's primary conservation area.\nThe third criterion is that the regulatory mechanisms be in place— existing —and not future or speculative. One court said it would not consider a new agreement to be an adequate regulatory mechanism and would require a conservation agreement to have a record of two years to be sufficient.", "This section provides a brief chronology of major sage-grouse protection actions, beginning with petitions filed in 1999 to list the sage-grouse for protection under ESA and ending with the FWS decision in 2015 not to list the species. Major events are listed below and followed by discussion.\nBetween 1999 and 2005, eight petitions were filed to protect sage-grouse in all or portions of the species' range. Some petitions were rejected because they were not considered substantive enough to be eligible. In 2004, FWS found that three of the petitions (received from 2002 to 2003) were substantive—that is, the petitions presented substantial evidence in support of the listing. In 2005, FWS determined that listing was not warranted. This determination was challenged, questioning the scientific basis for the decision not to list the species. In a 2007 court decision, the District Court for the District of Idaho held that the Deputy Assistant Secretary of the Department of the Interior wrongfully interfered with the listing decision and that FWS did not use the best science as required by ESA. The case was remanded to the agency, and in 2008 FWS issued a notice of status review for the species. In 2010, FWS found that \"that the inadequacy of existing regulatory mechanisms is a significant threat to the greater sage-grouse now and in the foreseeable future\" and announced that \"listing the greater sage-grouse (rangewide) is warranted, but precluded by higher priority listing actions. We will develop a proposed rule to list the greater sage-grouse as our priorities allow.\" FWS assigned the species a listing priority number of 8 (out of 12, with 1 being the highest priority). In a separate court settlement in 2011, FWS agreed to make a decision on whether to list the sage-grouse by the end of FY2015. A plaintiff not involved in that settlement sued, arguing that FWS was not making expeditious progress in listing the species, as required under ESA, but the court held otherwise. That plaintiff, Western Watersheds Project, had sued to force listing of the sage-grouse prior to the compromise deadline, but the court held that \"despite troubling aspects of the FWS decision process,\" the warranted but precluded finding was not arbitrary or capricious. As part of a court-ordered settlement agreement concerning prior decisions on sage-grouse, FWS filed a work plan in 2011 that committed either to publish proposed rules to list the species or to find that listing was not warranted for sage-grouse by September 30, 2015. On December 16, 2014, the President signed the Consolidated and Further Appropriations Act, 2015, which included a provision to prohibit funding to issue a proposed rule for sage-grouse before September 30, 2015. On September 22, 2015, FWS announced its decision not to list the sage-grouse under ESA, based on the adequacy of existing regulatory mechanisms to protect the species. This decision was published in the Federal Register on October 2, 2015.", "In response to the 2010 FWS finding that sage-grouse warranted ESA listing, federal, state, and private landowners undertook many and varied actions to conserve the species and prevent listing. Secretary of the Interior Sally Jewell later referred to the federal, state, and private collaborative actions to preserve sage-grouse as the most comprehensive conservation effort in the nation's history. As a result, in September 2015, FWS concluded that sage-grouse met the ESA standard of having adequate existing regulatory mechanisms, at several levels. These collaborative, governmental, and nongovernmental efforts are discussed below.", "Many efforts involved multiple agencies and landowners. In 2011, several federal agencies signed a memorandum of understanding to coordinate and cooperate in management of sage-grouse habitat. Also in 2011, Wyoming Governor Matt Mead and then-secretary of the Interior Ken Salazar cohosted a meeting to coordinate a multistate effort to protect sage-grouse across land ownerships. As a result of the meeting, two entities were established: a Sage-Grouse Task Force, chaired by the governor of Wyoming, governor of Colorado, and director of the Bureau of Land Management (BLM), and a Conservation Objectives Team (COT), consisting of FWS and state representatives. The COT team issued a report setting out objectives for the conservation and survival of the sage-grouse. FWS Director Dan Ashe indicated that the report was not only for his use in making decisions regarding the sage-grouse but also for guiding other federal land management agencies, state sage-grouse teams, and others in conserving the species.", "Many western states were concerned about the prospect of listing the sage-grouse on the grounds that listing might affect land use through potential restrictions on energy development, grazing, urban development, and other activities. In particular, states were concerned that listing would affect management of BLM and FS lands, where economic uses such as mining, fossil and alternative fuel development, grazing, hunting, fishing, and outdoor recreation may all be important to local and regional economies.\nTo avoid potential adverse impacts on these sectors, states took diverse steps to conserve the species and to avoid a listing. For example, the Western Association of Fish and Wildlife Agencies (WAFWA) developed guidelines for best practices to assist states in managing sage-grouse habitat; WAFWA also signed memoranda of understanding with federal agencies. Some states acted to protect sage-grouse and its habitat to avoid further reductions in numbers. California, Colorado, Idaho, Montana, Nevada, and Wyoming all issued conservation plans whose measures varied but included bag limits; where, when, and whether hunting was allowed; control of nonnative predators; limits on placement of utility lines; vegetative treatments to reduce invading juniper trees; habitat restoration after energy development; and other actions.\nFor private lands, the Natural Resources Conservation Service (NRCS, U.S. Department of Agriculture) has led voluntary conservation efforts through its Sage-Grouse Initiative (SGI), which began in 2010. The SGI uses existing federal conservation programs, namely the Environmental Quality Incentives Program (EQIP) and the Agricultural Conservation Easement Program (ACEP), to provide technical and financial assistance to help farmers and ranchers accelerate installation of conservation practices beneficial to sage-grouse. Examples of approved conservation practices include implementing grazing systems to improve cover for birds, removing invasive conifers from grasslands to improve habitat and increase forage for livestock, and marking or moving fences near breeding sites to reduce bird collisions. The initiative is offered in the 11 western states with areas of high sage-grouse populations. Between FY2010 and FY2015, NRCS through the SGI obligated more than $296 million through 1,289 contracts on more than 5 million acres. In August 2015, NRCS expanded the initiative (referred to as SGI 2.0 ), committing approximately $211 million through FY2018 to bring the total to more than 8 million acres conserved.\nSGI is part of a larger Working Lands for Wildlife (WLFW) initiative at NRCS. In addition to financial and technical assistance, the WLFW initiative ensures that participating producers who continue to maintain NRCS conservation practices to benefit the targeted species will be considered compliant with ESA for periods as long as 30 years, even if the species is subsequently listed under ESA.", "An estimated 271,604 square miles of sage-grouse habitat remain; of this total, two federal agencies manage more than half: BLM manages 45%, and FS manages 6%. In response to the FWS 2010 finding that sage-grouse warranted ESA listing, BLM and FS began a coordinated and cooperative effort to develop and implement a joint conservation strategy to \"protect, enhance, and restore sage-grouse and its habitat and to provide sufficient regulatory certainty\" to warrant FWS not listing the species. In 2011, both agencies published a notice of intent to prepare environmental impact statements (EISs) to incorporate sage-grouse conservation measures into the agencies' land and resource management plans across the range of the species. The final COT report, mentioned above, other research efforts, WAFWA, state conservation plans, and conservation activities on private lands all contributed to the development of the federal conservation strategy.\nIn 2013, BLM and FS released for public comment and review draft EISs to amend 98 land and resource management plans covering the range of the sage-grouse in 10 states. The final EISs were published in May 2015, and the records of decision were signed in September 2015. These plans establish management goals, objectives, and direction for sage-grouse habitat and conservation on FS and BLM lands but do not require specific on-the-ground activities. However, any FS or BLM project or on-the-ground activity planned within these areas must comply with the management direction established by the plans.\nThe plans build on the multitiered approach identified by WAFWA and state conservation plans and establish different land allocations, with different land management prescriptions, based on habitat conditions. Lands identified as the most valuable habitat will be afforded the highest levels of protection, whereas other lands may permit more flexible management and resource development. The land allocations are identified as follows:\nPriority Habitat Management Areas (PHMAs): Lands identified as having the highest habitat value for maintaining sustainable sage-grouse populations. Sagebrush Focal Areas (SFAs): Subsets of PHMAs, these lands were identified as having the highest densities of sage-grouse and other criteria important for the persistence of the species. These areas include the highest protections from new surface disturbances, such as mining activities, to protect sensitive habitats. General Habitat Management Areas (GHMAs): Lands that are seasonal or year-round habitat outside of PHMA where some special management would apply to sustain sage-grouse populations.\nThe FS and BLM plans are based on three objectives for conserving and protecting sage-grouse habitat as identified by the final COT report: improve habitat condition, minimize new or additional surface disturbance, and reduce the threat of rangeland fire to sage-grouse and sagebrush habitat. Each of these objectives is briefly summarized below.", "The plans seek to enhance sage-grouse habitat through varied means. One such means pertains to mitigation by avoiding, minimizing, and compensating for impacts of development. Another relates to consideration for sage-grouse habitat management during the permitting and monitoring processes for livestock grazing, for example. A third involves monitoring and evaluation of population changes, habitat condition, and mitigation efforts. A fourth provides for adjustment of plans to correct for declines in population or habitat.", "The plans describe several strategies to minimize surface disturbances in sage-grouse habitat, including capping surface disturbances at different levels for different habitat areas. One strategy involves reducing surface disturbances from mineral and energy resource uses, such as locating renewable energy and other projects outside of priority habitat areas. As part of that strategy, the Secretary of the Interior has proposed to withdraw from location and entry under the U.S. mining laws approximately 10 million acres of BLM and National Forest System land in specified sage-grouse habitat in six states, subject to valid existing rights. During the ongoing segregation period, which can last up to two years while the Secretary decides whether to make the withdrawal, the location and entry of new mining claims in these areas are prohibited. During the segregation, BLM is coordinating the National Environmental Policy Act (NEPA) process, including conducting environmental surveys and analyses and inviting public input on the proposed withdrawal.", "The COT report identified fire, and the post-fire spread of invasive grasses, as one of the most immediate threats to sage-grouse habitat. The FS and BLM plans provide guidance and strategies to address this threat, including positioning wildland fire management resources to maximize response capacity, managing vegetation to reduce fire risk, and promoting the post-fire restoration of native grassland species.", "The BLM and FS plans have received both support and opposition. Supporters have commended the collaborative process that generated the protections on federal and other lands. Some conservationists and others have praised the plans as containing the necessary safeguards for sage-grouse to recover. However, other environmental organizations have objected to the plans as not protective enough of sensitive sage-grouse habitat and called for an ESA listing or more stringent conservation provisions in the plans. Some states, industries, and others have argued that the plans could unnecessarily restrict uses of federal land, including energy and mineral development, livestock grazing, hunting, and recreation. Other questions have centered on whether the federal government or states should take the lead in conserving the sage-grouse. Some states that had adopted conservation plans disputed the need for federal plans or opposed provisions of those plans as in conflict with their own. Some critics questioned whether the plans were based on adequate science.\nMore broadly, other concerns have been raised about the overall protection afforded through federal, state, and local efforts. These efforts eliminated only the ESA listing per se, because they formed the basis for the FWS decision not to list the species. However, some conflated an FWS decision not to list with the opportunity to avoid strong conservation measures. For such individuals, the FWS decision seemed like a \"bait and switch\" because the effects of the federal, state, and local efforts seemed similar to effects that would have been expected from an ESA listing.", "Although controversy over sage-grouse conservation began decades ago with the question of whether the species was depleted enough to need protection, the current debate has turned to the validity of the FWS decision not to list the species and the impacts of the protections that avoided ESA listing, especially the revised BLM and FS land management plans. Among the issues that have been raised by various parties are the following:\nthe efficacy of state management and whether management of federal lands for sage-grouse conservation should be made subordinate to state management; the variation among states in protecting the species from recurring threats, and in some cases the failure to limit activities that pose the greatest risk in a given state, such as energy development in Wyoming or geothermal development in Nevada; whether restrictions on grazing will be implemented soon enough to reduce nest trampling from cattle; whether the decision not to list the species was predicated on the best available science; whether federal land management plans to protect sage-grouse habitat disregard the mandates of BLM and FS for multiple use and sustained yield; and whether any relaxation of land management plans in a manner to favor economic development might increase the possibility that FWS would revisit its decision not to list the species.\nFor these and other reasons, states and interest groups have filed lawsuits. In addition, a number of bills have been introduced in the 114 th Congress to address aspects of sage-grouse conservation on specific lands. Provisions in various bills overlap considerably but include\npreventing delay of a future listing of the species (e.g., H.R. 4739 ; H.R. 4909 (§2864)/ S. 2943 (§2864)); exempting certain vegetative management practices designed to benefit sage-grouse from the NEPA (e.g., H.R. 1793 / S. 468 ); allowing states to develop their own sage-grouse management plans (e.g., H.R. 1997 / S. 1036 ); allowing state preemption of federal land management plans regarding sage-grouse (e.g., H.R. 1997 / S. 1036 ); reversing prior land withdrawals made to protect sage-grouse (e.g., H.R. 4739 ; H.R. 4909 (§2864)/ S. 2943 (§2864)); and exempting sage-grouse provisions from judicial review (e.g., H.R. 4739 )." ], "depth": [ 0, 1, 1, 1, 1, 2, 1, 1, 2, 2, 2, 3, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "h0_full", "", "h0_full", "h0_full h2_title h1_title", "h0_full", "h1_full", "h2_full", "", "", "", "", "h1_full" ] }	{ "question": [ "What did the FWS do in October 2015?", "Why did the FWS conclude this?", "What was the impact of this conclusion?", "What did these efforts include?", "What happened after FWS decided not to list sage-grouse?", "How did other federal agencies and other levels of government carry out these commitments?", "How did the NCRS help carry out these commitments?", "Why have the BLM and FS had the greatest role in conserving sage-grouse?", "What happened in September of 2015?", "What lands will be protected according to these plans?", "What goals do these plans have?" ], "summary": [ "On October 2, 2015, the Fish and Wildlife Service (FWS, Department of the Interior) published its decision not to list the greater sage-grouse as threatened or endangered under ESA.", "However, FWS concluded that existing regulatory mechanisms for lands under federal, tribal, state, or local control were adequate to avoid the need to list the species.", "Before the listing decision, federal, state, and local governments, as well as other stakeholders in the states where sage-grouse are still found had undertaken extensive efforts to develop conservation plans, monitoring, and other actions to obviate the need for listing sage-grouse.", "These efforts included collaboration across levels of government, action plans by state governments, voluntary federal programs to assist private landowners in conserving sage-grouse habitat, and revisions in the land management plans of federal agencies.", "After FWS decided not to list sage-grouse, it fell to other federal agencies and other levels of government to carry out the commitments that had served to avoid listing.", "All 11 states have plans and programs to address the varying threats to the species in each state.", "For private lands, the Natural Resources Conservation Service (NRCS, Department of Agriculture) has led voluntary conservation efforts. NRCS uses existing federal conservation programs to help farmers and ranchers benefit sage-grouse.", "On federal lands, the Bureau of Land Management (BLM, Department of the Interior) and the Forest Service (FS, Department of Agriculture) have had the greatest role in conserving sage-grouse because more than half of the bird's remaining habitat is found on BLM and FS lands.", "In September 2015, after a review process including public notice and comment, the two agencies signed records of decision amending 98 land and resource management plans covering the range of the sage-grouse.", "Lands identified as the most valuable habitat will be given the highest level of protection.", "The plans have three goals: (1) to improve sage-grouse habitat condition; (2) to minimize new or additional surface disturbance; and (3) to reduce the threat of rangeland fire to sage-grouse and sage-grouse habitat." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, -1, -1, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 3, 3, 3, 4, 4, 4, 4 ] }
CRS_R40449	{ "title": [ "", "Background", "Use of Hormones in Meat Production", "The EU Beef Hormone Ban", "Hormone Dispute in the WTO", "Overview of WTO Proceedings", "Role of Scientific Reviews in the Dispute", "EU Reviews", "U.S. Response to EU Reviews", "U.S. Trade Sanctions and Retaliation", "Initial 1999 Retaliatory Action", "Revised 2009 Retaliatory Action", "2009 Memorandum of Understanding", "Recent Developments in 2016", "Role of Ongoing Trade Negotiations Between the U.S. and EU", "Opposition by U.S. Importers", "Trade Effects for Selected Products", "U.S. Exports to the EU", "Recent Trends", "USDA's Non-Hormone Treated Cattle (NHTC) Program", "Other Compensation Efforts", "U.S. Imports from the EU", "Congressional Interest" ], "paragraphs": [ "", "The United States and the European Union (EU) have engaged in a long-standing and acrimonious trade dispute over the EU's decision to ban hormone-treated meat, dating back to the early 1980s. Despite an ongoing series of dispute settlement proceedings and decisions by the World Trade Organization (WTO), there is continued disagreement between the United States and the EU on a range of legal and procedural issues, as well as the scientific evidence and consensus concerning the safety of hormone-treated beef. Many in the United States perceive the EU's ban as an example of how sanitary and phytosanitary (SPS) measures and non-tariff barriers are used as disguised protectionism, primarily intended to restrict imports from other countries.\nIn January 2009, the U.S. Trade Representative (USTR) for the outgoing Bush Administration announced changes to the list of EU products subject to increased tariffs under the dispute. These changes were scheduled to go into effect on March 23, 2009. The EU claimed this action constituted an \"escalation\" of the dispute and was \"more punitive\" than current trade sanctions. The EU decided to hold off further action until the Obama Administration reviewed the decision. The Administration delayed implementing the changes, pending further negotiations with the EU.\nIn May 2009, following a series of negotiations, the United States and the EU signed a memorandum of understanding (MOU), which phased in certain changes over the next several years. As part of this MOU, the EU granted market access to U.S. exports of beef raised without the use of growth promotants, and the United States suspended its retaliatory tariffs for imported EU products under the dispute. However, in December 2016, USTR took steps to reinstate retaliatory tariffs on the list of EU products under the dispute given continued concerns about U.S. beef access to the EU market. Specifically, under the MOU, the EU agreed to create a 45,000 metric ton duty-free quota for imports of non-hormone-fed beef that, according to the U.S. beef industry, has been filled by countries other than the United States, including Australia, Uruguay and Argentina. A public hearing is scheduled for 2017.\nThis issue has also been raised in ongoing trade negotiations between the United States and the EU to establish a free trade area as part of the Transatlantic Trade and Investment Partnership (T-TIP). Some Members of Congress continue to push for the EU's hormone ban to be lifted and expect the T-TIP negotiations to resolve long-standing trade disputes regarding SPS rules between the two trading blocs and enhance disciplines to address SPS issues and other non-tariff barriers. The provisional agreement allows the EU to maintain its restrictions on U.S. beef imports in a manner that many U.S. farm organizations believe to be inconsistent with WTO rules, not to mention a scientific consensus supporting the safety to consumers of eating hormone-treated meat. To date, the EU continues to ban imports of hormone-treated meat and restricts most meat exports to the EU to a limited quantity of beef imports that are certified as produced without the use of hormones, beta agonists, and other growth promotants.", "Growth-promoting hormones are used widely in beef production in the United States and in other meat-exporting countries. In the United States, hormones have been approved for use since the 1950s and are now believed to be used on approximately two-thirds of all cattle and about 90% of the cattle on feedlots. In large U.S. commercial feedlots, their use approaches 100%. Cattle producers use hormones because they allow animals to grow larger and more quickly on less feed and fewer other inputs, thus reducing production costs, but also because they produce a leaner carcass more in line with consumer preferences for diets with reduced fat and cholesterol.\nGrowth-promoting hormones include compounds that either naturally occur in an animal's body or mimic naturally occurring compounds. Estradiol, progesterone, and testosterone (three natural hormones), and zeranol and trenbolone acetate (two synthetic hormones), may be used as an implant on the animal's ear. Melengestrol acetate, which can be used to improve weight gain and feed efficiency, is approved for use as a feed additive. Not all combinations of hormones are approved for use in all classes of cattle. The U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) cooperate in regulating growth promotants for livestock. Both of these agencies maintain that hormones in beef from an implanted animal have no physiological significance for humans. All animal drug products are approved for safety and effectiveness under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.). About 30 animal growth-promoting products are marketed in the United States.\nIn addition to the United States, other countries that have approved the use of growth-promoting hormones in beef production are Canada, Australia, New Zealand, South Africa, Mexico, Chile, and Japan, among other countries. The use of hormones in beef production, however, is not allowed in the European Union, or in other European countries that assume many of the rights and obligations of the EU single market. To date, the EU continues to ban imports of hormone-treated meat and restricts most meat exports to the European Union to a limited quantity of beef imports that are certified as produced without the use of hormones.", "The European Commission (EC) enacted its ban on both the production and importation of meat derived from animals treated with growth-promoting hormones in the early 1980s. This ban restricts the use of natural hormones to therapeutic purposes, bans the use of synthetic hormones, and prohibits imports of animals and meat from animals that have been administered the hormones. The ban, however, did not go into effect until January 1, 1989. Initially the ban covered meat and meat products from animals treated with six growth promotants that are approved for use and administered in the United States, including estradiol, testosterone, progesterone, zeranol, trenbolone acetate and melengestrol acetate. In 2003, the commission amended its policy to permanently ban one hormone—estradiol-17β—while provisionally banning the use of the five other hormones, as it continued to seek more complete scientific information. The ban reflects the EU's approach to food safety policy, known as the precautionary principle, which supports taking protective action before there is complete scientific proof of a risk. The ban also effectively restricts trade of meat and meat products from countries that regularly treat farm animals with these growth promotants.\nThe commission has justified its ban as necessary to protect consumer health and safety. This position initially evolved, in part, as a reaction to reports in the 1970s over the illegal use of dethylstilboestrol (DES) in veal production in France, and consumer concerns that this was linked to reports of hormonal irregularities in Italian adolescents. This created concerns over the possible negative health effects of using hormones in livestock production, and contributed to a general climate in Europe that was suspicious of the use of hormones in livestock production and the potentially harmful health effects to consumers.\nDuring the 1990s, EU consumer meat demand was again adversely affected by outbreaks in British cattle herds of bovine spongiform encephalopathy (BSE), a fatal brain disease, commonly known as \"mad cow disease.\" Scientifically established links between BSE and Creutzfeldt-Jakob disease (CJD), the human variant of BSE, added to consumer distrust about the safety of the meat supply. Continued discovery of BSE-infected cattle in some European countries contributed further to an unfavorable political, economic, and social environment for resolving the meat hormone dispute. Although BSE has nothing to do with hormones, many EU beef producers are fearful of doing anything, like using hormones, that might give consumers another disincentive to buy meat. Many of these same types of concerns have surfaced in consumer reactions to the introduction of transgenic plants and other forms of biotechnology into the food chain.\nPolitical and economic considerations also have likely contributed to the commission's decision to continue its policy to ban hormone-treated beef. Opposition to hormone-treated meat continues unabated, and both producer and consumer interest groups in the EU continue to exert pressure on EU trade policy officials to hold to their position banning hormone-treated beef. The EU's beef sector benefits from both domestic producer support and trade policies under the EU's Common Agricultural Policy (CAP), which is reported to have resulted in the accumulation of large, costly-to-store beef surpluses. Many European cattle producers support the EU's import ban in part because they are concerned about competition from possibly cheaper imported beef from the United States and other beef exporting countries. Along with responding to consumer concerns, EU agricultural policymakers have been resistant to policies that might accelerate the contraction of the agricultural sector and contribute to increased unemployment.", "The United States has continued to challenge the EU's beef hormone ban in the World Trade Organization (WTO) and to question whether the ban is consistent with the EU's WTO obligations under the Sanitary and Phytosanitary (SPS) Agreement (see box). After a series of WTO consultations, panel decisions, and appeals in the case, both the United States and the European Union claim these formal proceedings have vindicated their respective positions in the dispute. This case has proven so intractable in part because it involves internal national regulation and domestic policy issues, and rules for dispute settlement and the use of SPS measures to restrict trade, rather than routine commercial disputes over trade or customs regulations.\nAlthough the WTO has issued decisions that have questioned the validity of the ban, the EU has repeatedly voted to maintain it, citing consumer worries, questions of animal welfare, meat quality, and effects of hormones on the EU's beef and milk sectors. The laws governing the EU's ban have been reissued and/or updated numerous times (in 1988, in 1996, and again in 2003). The EU claims that its position to maintain the ban is supported by studies on the potential human health risks associated with the consumption of hormone-treated beef.\nThe United States continues to question whether the EU has conducted an adequate risk assessment to support its position, and maintains there is a clear worldwide scientific consensus supporting the safety to consumers of eating hormone-treated meat. In retaliation, starting in the late 1980s, the United States imposed trade sanctions—as authorized by the WTO—in the form of high import tariffs on selected EU agricultural products.\nTo further complicate matters, in October 2008, the WTO issued a mixed ruling that allows the United States to continue its trade sanctions, but also allows the EU to maintain its ban. As a result, the United States has continued to impose its trade sanctions, while the EU has continued to maintain its ban.\nA detailed timeline showing a chronology of major events is provided at the end of this report ( Appendix D ).\nFor a more detailed discussion of the dispute settlement process in the WTO, see CRS Report RS20088, Dispute Settlement in the World Trade Organization (WTO): An Overview .", "In response to the EU's initial ban on hormone-treated meat in the 1980s, the United States first invoked GATT dispute settlement in 1986-1987 under the Tokyo Round's Technical Barriers to Trade Agreement, and also threatened to implement retaliatory tariffs on selected EU imports. This action delayed full implementation of the EU ban until January 1, 1989. Once the ban was implemented, the United States instituted retaliatory tariffs (100% ad valorem ) on EU imports valued at $93 million, which stayed in effect until May 1996. Earlier in 1996, both the United States and the EU had requested WTO consultations in an attempt to resolve the dispute.\nIn April 1996, the United States requested a WTO dispute settlement panel case against the EU, claiming that the ban is inconsistent with the EU's WTO obligations under the SPS Agreement. Australia, Canada, and New Zealand joined the United States in the complaint. The EU maintained the ban, and issued updates to its law confirming and extending the prohibitions.\nIn August 1997, the WTO dispute settlement panel released its report agreeing with the United States that the ban violated several provisions of the SPS Agreement. Specifically, the EU ban was found to violate SPS requirements that such measures:\nbe based on international standards, guidelines or recommendations (Article 3.1); be based on a risk assessment and take into account risk assessment techniques developed by the relevant international organizations (Article 5.1); and avoid arbitrary or unjustifiable distinctions that result in discrimination or a disguised restriction on international trade (Article 5.5).\nThe EU appealed the ruling, and in February 1998, the WTO Appellate Body found that the EU ban did contravene the EU's obligations under the SPS Agreement, but left open the option for the EU to conduct a risk assessment of hormone-treated meat. A WTO arbitration panel ruled subsequently that 15 months from the date of the decision (i.e., May 13, 1999) would be a reasonable period of time for the EU to conduct its assessment. By the deadline, the EU did not complete its scientific review and decided it would not consider removing the ban before conducting additional review. This led the way for the United States to retaliate by imposing its current trade sanctions against U.S. imports of EU products starting in July 1999.\nFollowing the 1997 WTO decision, the EU commissioned various research studies and conducted scientific reviews of the issue. In 1999, as justification for continuing the ban, the EU offered the first in its series of scientific reviews and opinions that estradiol-17β may be carcinogenic. (Further opinions and studies followed in 2000, 2002, and 2007, as discussed in the section of this report titled \" EU Reviews .\") In 2003, the EU announced that its scientific review had concluded that estradiol-17β was carcinogenic and that for the five other hormones the current state of knowledge did not make it possible to provide a quantitative assessment of their risks to consumers. An October 2003 EU press release claimed that EU's scientific reviews constitute \"a thorough risk assessment based on current scientific knowledge\" and thus fulfill the EU's WTO obligations. The United States continues to question whether the EU Commission's studies constitute risk assessments.\nAccordingly, in 2003, the EU issued a new directive and revised its ban to permanently ban estradiol-17β and provisionally ban the five other hormones. The EU claims the decision to provisionally ban the five other hormones is necessary, while the commission seeks more complete scientific information. The EU claims that its actions replacing its original ban with a provisional ban comply with its WTO obligations under Article 5.7 of the SPS Agreement.\nU.S. trade and veterinary officials have repeatedly rejected the EU studies, claiming that the scientific evidence is not new information nor does it establish a risk to consumers from eating hormone-treated meat. The United States also claims that these findings ignore and contradict numerous scientific studies, including some by European scientists (as discussed in the section titled \" U.S. Response to EU Reviews \").\nClaiming that its ban is justified and in compliance with its WTO obligations, the EU has continued to initiate counteractions against the United States (and Canada), stating that there is no longer a legal basis for the United States to impose trade sanctions against the European Union. In November 2004, the EU requested WTO consultations, claiming that the United States should remove its retaliatory measures since the EU has removed the measures found to be WTO-inconsistent in the original case. In 2005, the EU initiated new WTO dispute settlement proceedings against the United States and Canada. A final panel report was delayed until 2008, owing, the panel said, to the complexity of the dispute and other administrative and procedural matters.\nThe March 2008 panel report cited fault with all three parties (EU, United States, and Canada) on various substantive and procedural aspects of the dispute. The panel found that the EU had not presented sufficient scientific evidence to justify the import ban, including the EU's 2003 risk assessment report. The panel faulted the United States and Canada for maintaining their imposed trade sanctions. The panels found that both parties had made procedural violations under the WTO Dispute Settlement Understanding (DSU) because of unilateral actions they had taken. Both parties filed appeals citing procedural errors and disagreements with the panel findings.\nIn October 2008, the WTO Appellate Body issued a mixed ruling that allows for continued imposition of trade sanctions on the EU by the United States and Canada, but also allows the EU to continue its ban on imports of hormone-treated beef. The Appellate Body report reversed the dispute panel decision by stating that the EU's ban is not incompatible with WTO law, thus granting more deference to the EU in deciding the basis for food safety regulations.\nThe WTO Appellate Body also recommended that the parties initiate a compliance panel proceeding under Article 21.5 of the DSU to determine whether the EU is in compliance with its WTO obligations in the underlying beef hormone dispute. In late December, the EU requested consultations under Article 21.5, and may request a panel at a later date.\nThe WTO Appellate Body's reversal of the panel on this issue of scientific evidence has led some to argue that this is a potentially precedent-setting decision that might be perceived to instruct dispute settlement panels to be more deferential to national governments when the relevant scientific evidence is not available to make an objective risk assessment. Some claim that this could allow for more flexibility to countries in imposing SPS requirements in future WTO compliance panels, and might also change how panels operate on matters related to the burden of proof and in post-retaliation situations. Typically complainants initiating the compliance panel proceedings bear the burden of proof, because it is in their interest to prove that the respondent has not brought itself into compliance with WTO rules.\nIn November 2008, following the announcement by USTR that it was seeking comment on possible modification of the list of EU products subject to increased tariffs under the dispute, the EU filed a new WTO challenge against U.S. and Canadian sanctions imposed on imports of EU products in retaliation to the EU's ban on hormone-treated beef.\nIn January 2009, USTR announced changes to the list of EU products subject to increased tariffs under the dispute, adding countries and raising the tariff on select products. The EU claimed that USTR's action constitutes an \"escalation\" of the dispute and is \"more punitive\" than the current trade sanctions. The EU was prepared to challenge the United States in the WTO. In May 2009, following a series of negotiations, the United States and the EU signed a memorandum of understanding (MOU), which phases in certain changes over several years, as discussed later in section \" 2009 Memorandum of Understanding .\"", "One critical issue in this seemingly intractable debate is an underlying disagreement about the scientific consensus regarding the safety of hormone-treated beef for human consumption.", "The EU continues to maintain that \"there is a lack of data on the type and amount of [growth-promoting hormone] residues in meat on which to make a quantitative exposure assessment\" that would change the EU's understanding of the \"possible risks to human health\" associated with hormone-treated meat and meat products. It claims that this position is supported by a series of commissioned research studies and scientific reviews conducted by the EU, although there has been no conclusive testing on the issue.\nA 1997 WTO decision found that the EU's ban on imports of hormone-treated meat was inconsistent with the EU's WTO obligations under the Sanitary and Phytosanitary (SPS) Agreement since the EU had not conducted a risk assessment. In response, the EU commissioned 17 studies to address the scientific basis of the import ban on meat and meat products and animals treated with hormones for growth promotion purposes. The studies addressed toxicological and carcinogenicity aspects, residue analysis, potential abuse and control problems, and environmental aspects of six growth promotants (estradiol-17β, progesterone, testosterone, zeranol, trenbolone acetate, and melengestrol acetate) and their metabolites.\nBetween 1999 and 2002, the EC's Scientific Committee on Veterinary Measures relating to Public Health (SCVPH) issued a series of opinions on the potential risks to human health from hormone residues in bovine meat and meat products. The first review's opinion, issued in April 1999, stated that there is evidence showing that the growth hormone estradiol-17β, used in U.S. cattle production, is carcinogenic, among other potential health risks to consumers. The second review, finalized in May 2000, concluded that new information questioning the findings of the SCVPH's first review did \"not provide convincing data and arguments demanding revision of the conclusions drawn in the 1999 SCVPH opinion on the potential risks to human health from hormone residues in bovine meat and meat products.\" The third opinion, issued in May 2002, concluded that the committee's review of the 17 studies initiated in 1998 again reconfirmed the previous findings of the 1999 and 2000 reviews.\nThe most recent review was conducted in 2007 by the European Food Safety Authority (EFSA). The review covered new scientific evidence that emerged after the previous risk assessments (1999, 2000, and 2002) relating to the use of certain natural and synthetic growth-promoting hormones in cattle. EFSA's Scientific Panel on Contaminants in the Food Chain (CONTAM) concluded:\nAt present, epidemiological data provide convincing evidence for an association between the amount of red meat consumed and certain forms of hormone-dependent cancers. Whether hormone residues in meat contribute to this risk is currently unknown.\nThe CONTAM Panel concluded that the new data that are publicly available do not provide quantitative information that would be informative for risk characterisation and therefore do not call for a revision of the previous assessments of the Scientific Committee on Veterinary Measures relating to Public Health (SCVPH) (EC, 1999, 2000, 2002).\nAmong the stated concerns is that excess intake of hormone residues from all six hormones and their metabolites could pose a risk to the consumer. The review cites evidence supporting that estradiol-17β be considered as a carcinogen, and states that all six hormones may pose endocrine, developmental, immunological, neurobiological, immunotoxic, genotoxic, and carcinogenic effects, particularly for susceptible risk groups (such as prepubertal children). The toxicological and epidemiological data reviewed by the commission panels do not allow a quantitative estimate of the risk, leading to the panel's conclusions that no threshold levels can be defined for any of the six hormones.\nBased on this series of reviews, the commission maintains that these reviews \"reaffirmed public health concerns about the large scale use of hormones administered to cattle for growth promoting purposes,\" and therefore \"provided the scientific basis for community legislation not allowing the use of hormones for growth promoting purposes in the EU.\" Accordingly, the EU claims that the retaliatory tariffs imposed on EU export to the United States are not in compliance with its WTO obligations and should be discontinued.", "The United States continues to maintain that U.S. beef from cattle treated with certain approved growth hormones poses no public health risk. Overall, the official U.S. position is that \"there is a clear world-wide scientific consensus supporting the safety of these approved and licensed hormones when used according to good veterinary practice.\" The United States claims that this position is supported by \"scientific reviews of the six hormones, international standards pertaining to their use, and a long-standing history of administering the six hormones to cattle for growth promotion purposes.\" Accordingly, the United States claims that the use of these hormones as growth promoters in beef production is safe, when applied in accordance with good veterinary practices.\nThe United States claims that numerous U.S. and international scientific studies of the six hormones support its position, including safety assessments by the U.S. FDA and comparable food safety institutions in other countries; the reports of the EC-commissioned 1984 and 1987 Scientific Group on Anabolic Agents in Animal Production (the so-called \"Lamming Committee\"); the 1983 World Organization for Animal Health Symposium; the Joint Expert Committee on Food Additives (JECFA) reports; the Codex Alimentarius Commission reports; the EC-commissioned 1995 Scientific Conference on Growth Promotion in Meat Production; the EC-commissioned Committee for Veterinary Medicinal Products on the Safety Evaluation of Steroidal Sex Hormones reports; the United Kingdom's 1999 and 2006 Veterinary Products Committee reports; and the 2003 Australian review. In general, these studies report that the three natural hormones—estradiol, progesterone, and testosterone—and their derivatives, when used as growth-promoting agents and according to good veterinary practice, are \"safe,\" are \"not hazardous,\" or \"do not pose a risk to consumers.\" Some reports determined that it was unnecessary to specify maximum residue levels (MRLs) for natural hormones administered according to good veterinary practices, and recommended MRLs or acceptable daily intake levels for two of the three synthetic hormones in dispute.\nThe United States also points out that the EU's own 1995 Scientific Conference on Growth Promoting Substances in Meat Production concluded that \"at present there is no evidence for possible health risks to the consumer due to the use of natural sex hormones for growth promotion.\" The United States also cites as support the findings of the 1996-1997 WTO panel in the dispute. The panel report states that \"[n]one of the scientific evidence referred to by the European Communities which specifically addresses the safety of some or all of the hormones in dispute when used for growth promotion, indicates that an identifiable risk arises for human health from use of these hormones if good practice is followed.\" The panel noted \"that this conclusion has also been confirmed by the scientific experts advising the Panel.\"\nThe United States has criticized the EU's scientific opinions for focusing on only one growth promotant—estradiol-17β—and on its potential genotoxicity, while directing relatively little attention toward the other natural and synthetic hormones. The United States also claims that the \"EU failed to use solid evaluative methods in their studies and completely disregarded the large body of evidence from epidemiological studies that indicate that estradiol does not contribute to any increased cancer risk and that meat from animals tested with estradiol is safe for consumers.\"\nRegarding the EU's more recent reviews, the United States claims they fail to provide any new evidence that would call into question the findings and conclusions of other authoritative reviews. More broadly, the United States also disputes whether the EU's scientific reviews serve as a risk assessment. The United States claims: \"There has been no new risk assessment based on scientific information and reasoning presented by the EU,\" further claiming that the \"17 studies\" funded by the commission beginning in 1998 were \"not intended as to serve as a risk assessment, but instead were to fill in the gaps.\" Accordingly, the United States claims the EU's 2003 update to its hormone ban is not in compliance with its WTO obligations and should be discontinued.\nIndustry groups in the United States voice these same criticisms. The National Cattlemen's Beef Association (NCBA), the largest national group of cattle producers, has long opposed the EU's ban on imports of U.S. hormone-treated beef, claiming that the ban is scientifically unjustified and fails to satisfy the EU's WTO requirements under the SPS. Similar concerns have been expressed by other U.S. farm groups, including American Farm Bureau Federation (AFBF), the Animal Health Institute (AHI), and the American Meat Institute (AMI). Many trade analysts believe that the United States has a strong case against the hormone ban under WTO rules that require SPS restrictions to be based on risk assessment and to have a scientific justification. These various interest groups have continued to exert pressure on U.S. trade policy officials to hold to their position regarding the EU's meat hormone ban.", "", "Insisting that the scientific evidence demonstrates that hormone-treated beef is safe to consumers, the United States began to consider retaliatory tariffs on EU imports starting in the 1980s. In 1987, the United States announced but then suspended retaliatory tariffs (100% ad valorem ) on about $100 million worth of EU imports. On January 1, 1989, the United States instituted 100% tariffs on EU imports valued at about $93 million per year. These higher tariffs remained in effect until May 1996, when the EU sought a WTO panel against the U.S action.\nAgain, in 1999, following the EU's failure to implement the WTO's recommendations related to its obligations under the SPS Agreement, the United States and Canada formally sought and obtained WTO authorization to suspend tariff concessions and retaliate against trade from the European Union. Initially, the United States requested authorization to impose import duties in excess of bound rates on a list of products equivalent, on an annual basis, to $202 million. The WTO arbitrators set the level at $116.8 million for the United States.\nOn July 27, 1999, USTR announced its decision to impose a 100% ad valorem rate of duty on a specified list of products from certain EU member states. The list of products includes beef and pork products, goose pâté, Roquefort cheese, truffles, onions, carrots, preserved tomatoes, soups, yarn, Dijon mustard, juices, chicory, toasted breads, French chocolate, and jams, as well as agricultural-based byproducts, such as glue and wool grease. The list targeted France, Germany, Italy, and Denmark, as well as Austria, Belgium, Finland, Greece, Ireland, Luxembourg, the Netherlands, Portugal, Spain, and Sweden. The list did not include products of the United Kingdom because it has indicated support for lifting the ban. Appendix A provides a listing of the product imports initially affected by the U.S. trade sanctions imposed in 1999.\nAccording to USTR, the imposition of these higher duties is \"intended to restore the balance of trade concessions under the WTO and to induce compliance by the EU with the WTO's rulings and recommendations in the original EC-Hormones dispute.\" However, some point out that these retaliatory duties have been mostly ineffective since they do not provide any direct benefit to the U.S. beef industry, and claim that it is U.S. and EU consumers who lose by paying higher prices for a wide variety of imported foods. The U.S. beef industry has long maintained that the EU ban is merely a disguised trade barrier, intended to protect EU domestic beef producers. Some in Congress have questioned whether the EU's ban is motivated more by politics than by sound science. Yet the EU continues to claim that the United States is not justified in maintaining its trade sanctions, given its belief that there is a scientific basis for banning hormone-treated beef and given updates to their laws governing the ban in 2003.", "In October 2008, USTR initiated action to modify the retaliation list of EU products subject to 100% tariffs in connection with the U.S.-EU beef hormones dispute. Such an action is consistent with legislation enacted by Congress in 2000, under the Trade and Development Act ( P.L. 106-200 ), which amended the 1974 Trade Act. The law included a so-called \"carousel retaliation\" provision requiring the Administration periodically to rotate, or change, the types of products targeted for trade retaliation. Prior to this, the provision had not been implemented per the legislation. USTR did consider modifying the retaliation list in 2006, but ultimately decided not to do so, as was recommended by the U.S. beef industry. Public comments sent to USTR in late 2008 reflected support by agricultural industry groups for maintaining higher tariffs on a range of current and expanded products, while some importers recommend removing some products.\nIn January 2009, the USTR under the outgoing Bush Administration announced changes to the list of EU products subject to increased tariffs under the dispute ( Appendix B ). The modified list added products from many of the newly acceded countries under EU expansion (such as Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, and Malta). The modified list added additional products (such as pork products, cut flowers and plants, processed fruits, nuts, fruit juices, drinking waters, confectionary and chewing gum, and oats), but deleted some products currently on the list (such as onions, carrots, processed tomatoes, toasted breads, coffee, mustard, fish products, soups, yarns, and glue). The modified list did not include some of the initially proposed products, such as yarns, hair clippers, and motorcycles. The modified list also raised the tariff on Roquefort cheese to 300% from 100% under the current retaliation. These changes were scheduled to go into effect on March 23, 2009. The EU claimed that this action constituted an \"escalation\" of the dispute, and was \"more punitive\" than the current trade sanctions.\nIn February 2009, further consultations between the United States and the EU on the dispute were not successful, and the EU was expected to seek a dispute settlement panel on whether its ban was consistent with the SPS Agreement. In March, USTR announced that it would delay the imposition of additional duties on a modified list of EU products by one month; in April, USTR announced it would further extend this delay until May 2009 in order to provide \"more time to negotiate a settlement with the EU.\" Press reports indicated that among the issues to be resolved were the U.S. demand for increased market access of U.S. non-hormone-treated beef for export to the EU, and the U.S. demand that the EU refrain from seeking a new WTO ruling that its revised ban in 2003 now complies with the SPS Agreement. In March 2009, the United States drafted a \"reduced list\" of EU import products subject to 100% ad valorem duties ( Appendix C ).", "On May 13, 2009, following a series of negotiations, the United States and the EU signed a memorandum of understanding (MOU) implementing an agreement that could resolve this long-standing dispute. The MOU sets up three phases, as follows.\n1. Phase 1: (a) Expanded market access for beef to the EU under an annual tariff-rate quota (TRQ) of 20,000 metric tons (MT) at zero duty for beef produced without growth-promoting hormones (\"High Quality Beef\"); and (b) agreement by the United States that it will delay implementation of the January 2009 modifications (\"increased duties,\" Appendix B ) for certain EU imports. The new quota is in addition to the existing 11,500 MT of hormone-free beef. The United States will continue to impose U.S. import duties on the \"reduced list\" of products ( Appendix C ). Phase 1 of the MOU was scheduled to conclude August 3, 2012. 2. Phase 2: (a) Further expansion of EU market access for High Quality Beef to 45,000 MT; and (b) agreement by the United States to reduce \"increased duties\" to zero ( Appendix B ). A decision on whether to move to Phase 2 would depend on conditions at the end of Phase 1 and the U.S. beef industry's ability to make full use of the additional quota. Phase 2 would last one year. 3. Phase 3: (a) EU maintains the TRQ for High Quality Beef at 45,000 MT; and (b) the United States removes import duties on selected EU products under the dispute, leading to the possible longer-term resolution of the dispute. Before the end of the fourth year, a decision on whether to move to Phase 3 would be made following negotiations between the United States and the EU on selected issues (such as duration, withdrawal, and status of WTO litigation, etc.).\nSome U.S. farm organizations were unhappy with the MOU because it did not lift the EU's ban on beef from hormone-treated cattle and because the EU did not concede to the terms of the science regarding the safety of hormone-treated beef.\nAs part of Phase 1, the EC adopted regulations opening a tariff quota for 20,000 MT imports of high-quality beef (HQB), effective August 2009. U.S. beef products under this quota must originate from animals that have never been treated with growth hormones; eligibility requirements may be met by participating in USDA's Non-Hormone Treated Cattle (NHTC) Program. In 2010, the United States was reported to have shipped about 16,500 MT to the EU under the quota, which was about three times that shipped in 2008 under previous quota levels. (For more information, see the section of this report titled \" USDA's Non-Hormone Treated Cattle (NHTC) Program .\")\nThe United States, in Phase 1, agreed not to implement its January 2009 revised (\"carousel\") sanctions, which would have resulted in higher retaliatory duties on selected EU exports to the United States (see Appendix B ). In September 2009, USTR announced it was officially terminating its plan to rotate the list of products. Trade sanctions were to remain in effect on certain EU exports (listed in Appendix C ) until the final phase of the agreement. During the first 18 months of the agreement, the United States or the EU would refrain from further WTO litigation regarding the dispute. In May 2011, USTR announced it was terminating higher duties for imported products listed under the dispute. The removal of retaliatory tariffs under the dispute was ahead of the scheduled date under the MOU, and was reported to have been intended to encourage a successful transition to Phase 2 of the MOU.\nAs part of Phase 2, in June 2012, the EU issued regulations increasing the HQB quota and changing the quota management system to a \"first come, first served\" basis. The HQB quota was raised to 48,200 MT and is consistent with Phase 2 in the MOU on the beef hormone dispute, fully effective by August 2012. Changes to the HQB quota management are intended to \"provide easier quota access to new and smaller importers of U.S. beef, as well as to terminate the trade in quota import licenses that occurred as demand for import licenses exceeded the quota volume.\"\nIn October 2013, the EU approved a two-year extension of the deal, allowing for access of U.S. beef raised without the use of growth promotants in exchange for continued U.S. suspension of retaliatory import duties on some EU food products. By extending Phase 2, the EU and United States were opting not to proceed to Phase 3, which would require the EU to maintain its annual TRQ of 45,000 MT and require the United States to end its retaliatory import duties and give up its ability to reimpose higher duties.\nAs of year-end 2016, the U.S. and EU have not entered into the Phase 3 of the MOU. Nevertheless, over the years, USTR and the U.S. beef industry have continued to monitor EU implementation of the MOU and other policies affecting market access for U.S. beef products.", "In December 2016, USTR took steps to reinstate retaliatory tariffs on the list of EU products under the dispute. Some attribute these actions to the perceived failure of T-TIP negotiations between the United States and the EU and to continued concerns about U.S. beef access to the EU market. Starting in August 2012, the EU increased the TRQ for high-quality (non-hormone treated) beef to 45,000 MT. However, according to USTR and the U.S. beef industry, most of this duty-free quota has been filled by countries other than the United States, including Australia, Uruguay, and Argentina. According to U.S. officials, the \"EU has been unwilling to consider an allocation that would reserve a significant part of the TRQ for the United States.\" A public hearing is scheduled for 2017.\nRegarding the EU's quota, some meat-exporting countries—including Argentina, Brazil, India, New Zealand, Nicaragua, Paraguay, and Uruguay—have argued that the TRQ should be available to all most-favored-nation (MFN) countries. Some of these countries claim that the U.S.-EU agreement is \"discriminatory\" and inconsistent with WTO rules, since it allows for an increase in the U.S. quota but does not make similar concessions to other countries. Brazil, for example, is reported to have considered asking the WTO to investigate whether the EU sets different rules for beef from Brazil than those from the United States and Canada. By invoking MFN status, these countries argue that equal treatment and trade advantages should be accorded to all MFN trading partners and that all should have access to export products under the quota.\nPress reports claim that an EC Commission official has claimed that the \"EU has fully complied, both in the letter and in spirit, with the Memorandum of Understanding signed with the United States in 2009, establishing a hormone-free beef quota of more than 60,000 tons.\"", "The U.S-EU beef hormone dispute has been raised as an issue as part of the current negotiations between the United States and the EU seeking to establish a free trade area as part of T-TIP. Some Members of Congress continue to push for the EU's hormone ban to be lifted and expect the T-TIP negotiations to resolve long-standing trade disputes regarding SPS rules between the two trading blocs, as well as enhance disciplines to address SPS issues and other non-tariff barriers. Major concerns revolve around meat and poultry production and processing methods, specifically involving the U.S. use of beef hormones and ractopamine, pathogen reduction and other treatment technologies, BSE-related regulations, and other plant processing regulations. In February 2014, European Commissioner Karl De Gucht indicated that the EU would not change its regulations prohibiting imports of meat raised with growth promotants. More generally, the provisional agreement allows the EU to maintain its restrictions on U.S. beef imports in a manner that many U.S. farm organizations believe to be inconsistent with WTO rules—not to mention with a scientific consensus supporting the safety to consumers of eating hormone-treated meat. To date, the EU continues to ban imports of hormone-treated meat and restricts most meat exports to the EU to a limited quantity of beef imports that are certified as produced without the use of hormones, beta agonists, and other growth promotants.\nOther issues also need to be resolved. According to press reports, the U.S. government is seeking to resolve other issues regarding the EU's disapproval of the common U.S. practice in the beef industry of using antimicrobial treatments to ensure that meat is not contaminated with pathogens. The EU has claimed that the use of such washes is cover for unsanitary production methods. EU representatives have stated that they would be unwilling to accept U.S. beef products treated with antimicrobial washes. In 2013, EU lifted its previous ban to allow the use of lactic acid as a pathogen reduction treatment (PRT) on beef carcasses, half-carcasses, and beef quarters in the slaughterhouse. Many in the United States considered this action to be a \"major victory for science-based food processing.\" However, the EU still prohibits the use of other types of PRTs and antimicrobial washes when shipping beef and poultry to the EU.", "Some U.S. importers have actively contested higher tariffs on U.S. imports on the retaliation list. For example, Gilda Industries, an importer of Spanish toasted breads, filed a series of protests with U.S. Customs against higher tariffs on toasted breads. Gilda Industries later brought a lawsuit against the United States in the U.S. Court of International Trade (CIT), seeking to force USTR to remove toasted breads from its retaliation list. For years, the United States and Canada have refused to remove their trade sanctions on grounds that the scientific evidence claimed by the EU does not provide new information and does not establish a risk to consumers from eating hormone-treated meat. In the original case, the CIT ordered a refund of all punitive duties paid on affected goods imported after July 29, 2007. The United States appealed the decision. Toasted breads were subsequently removed from the \"revised\" retaliation list ( Appendix C ).\nFollowing proposed changes in January 2009 adding imported waters to the list of EU products subject to higher U.S. tariffs, Nestle Waters of North America, Inc., also filed a preliminary injunction order in the CIT against the action. The suit claimed that retaliation is not authorized because there was no request for changes in the product mix within the most recent deadline for such a request. In addition, Gilda Industries, along with several other importing companies, sought a partial refund of retaliatory duties that the United States has imposed under the dispute. In October 2010, the U.S. Court of Appeals for the Federal Circuit issued a decision in the Gilda Industries case, which could make importers of certain foods from the EU eligible for refunds for retaliatory duties paid since July 29, 2007. The current status of this case is not known.", "", "", "Initially, lost U.S. beef exports because of the EU's ban were estimated at about $100 million annually, and valued approximately equal to retaliatory trade sanctions against selected EU food product exports. Currently, U.S. exports do not account for a sizable share of the EU beef import market. Under the ban, eligible U.S. beef exports to the EU must be certified as not having been treated with hormones and are further subject to quotas that limit the total amount of beef imported under preferential tariffs. The U.S. beef industry claims that, absent the ban, U.S. beef exports to the European Union would be much greater.\nEvaluating actual trade trends is complicated by large discrepancies between the U.S.-reported export data and the EU-reported import data for beef. Because of concerns that the U.S. beef export data may not reflect actual trade conditions, in part due to possible transshipments via certain EU port destinations and/or trade data inaccuracies, this report examines available EU import data. These data are available only back to 1999 and do not allow for a full evaluation of how the ban has affected U.S. beef exports over the time period. These data indicate that EU beef imports from the United States were lower during the 2000-2006 period, compared to 1999, and averaged between $5 million and $6 million per year ( Figure 1 ). During this period, U.S. beef accounted for less than 1% of the EU beef import market. The majority (more than 90%) of EU beef imports were supplied by Brazil, Argentina, and Uruguay, among other countries. Available U.S. export data for the 10-year period from 1989 to 1998 indicate that U.S. exports to the EU of fresh/chilled and frozen beef averaged between $11 million and $13 million annually. The U.S. Meat Export Federation (USMEF) reports that in 2010, U.S. beef exports to EU were valued at an estimated $165 million.\nThe EU import data also indicate that in the past couple of years, U.S. beef exports have risen, particularly for fresh and chilled beef products, which reached nearly $260 million in 2015 ( Figure 1 ). According to EU import data, as a share of the EU import market, U.S. beef accounted for nearly 17% of EU fresh/chilled beef imports, up from about 4% in 2008. U.S. exports still accounted for less than 1% of EU imports of frozen beef and offal products. Despite potential questions surrounding the available trade data, the USMEF acknowledges that U.S. beef exports to the EU turned upward in 2007-2008, and that trend continues through 2015 ( Figure 1 ). The rise may be attributable to the approval of additional, larger U.S. beef plants to export to the EU under USDA's Non-Hormone Treated Cattle (NHTC) Program (see discussion in next section).\nVolume shipments for most beef products are limited by the EU's so-called \"Hilton quota\" for high-quality beef (HQB), a tariff rate quota that has been in effect since 1997 and allows only a fixed amount of fresh/chilled beef to be imported from selected countries before being subject to higher tariffs. This quota allows for North American beef exports (and also Canadian beef exports) to the EU of 11,500 MT at a 20% tariff. The quota covers exports of fresh/chilled beef (HTS 0201); however, the EU also imports accredited frozen meat (HTS 0202) and offal products (HTS 0206), which are outside the quota. Currently the EU has extended an annual TRQ for 45,000 MT of hormone-free beef from certain countries, including the United States.\nU.S. beef shipments to the European Union have increased sharply in recent years. In 2008, a reported 4,900 MT of U.S. beef was shipped to the EU under the previous quota, a roughly twofold increase compared to 2007. In 2009, the United States shipped a reported 12,000 MT under the revised quota—another doubling compared to shipments in 2008. According to EU import data, U.S. beef shipments to the EU-27 countries were between 17,000-18,000 MT during 2013-2015 under its existing quota, or about 8% of beef imports over the period.", "Only U.S. beef from cattle raised under control measures specified in USDA's NHTC Program is eligible for export to the EU. (See box, below, for information on this program.) The program was initiated in 1989 when the United States and the EU agreed to control measures to facilitate the trade of non-hormone treated bovine meat, including veal. As of December 2016, more than a dozen farms, ranches, feedlots, and cattle management groups have been audited and approved as sources of non-hormone treated cattle and are eligible for further evaluation by USDA's Food Safety and Inspection Service (FSIS).\nAll export shipments must also be accompanied by a health certificate issued by FSIS under the non-hormone treated cattle program, certifying that all meat must originate from animals that have never been treated with growth hormones. Import licenses are issued by authorities in the EU member states, and the quantity available is published every month by the European Union.\nInitially, few U.S. plants were approved for export to the EU, and U.S. volume exports were low and often well below the allowable quota limit. Because, historically, the U.S. quota had not been filled, this caused some to conclude that increasing the quota would not likely offer any benefit to U.S. beef exporters, particularly given additional costs of raising and shipping untreated beef. In the past, negotiations between the United States and the EU to increase the quota have not been successful. However, recently some larger facilities have been approved and volume exports have been higher, approaching or possibly exceeding the quota limit, and there is renewed interest in increasing U.S. market access under the quota.", "Prior to 2009, EU offers of compensation or trade concessions for lost U.S. meat exports were rejected by the United States. In lieu of lifting the ban, the EU has considered offering the United States compensation in the form of an expanded quota for hormone-free beef and reducing the 20% in-quota tariff. In January 2009, the EU offered to expand access for U.S. beef by 58,000 metric tons—well below what the United States initially requested. However, there were unresolved issues in these negotiations, including the timing of the United States' lifting of its current trade sanctions against the European Union. The United States also asked for changes to the program, including simplifying the current system and requirements for plants, and reducing the number of chemical residues U.S. inspectors must test for before clearing shipments. In addition, the United States wanted its beef exports to be allowed to be treated with antimicrobial washes to ensure cleanliness. The EU objects to such washes unless accompanied by adequate labeling, which the United States has resisted. The U.S. beef industry claims its beef exporters do not use antimicrobial washes on beef destined to the EU, but that it is often difficult to set-aside or segment production within individual plants. Previously, negotiations had been slowed by related disputes over detection of the presence of EU-listed hormones in U.S. shipments of presumably non-hormone treated beef.\nOther previous attempts by the United States and the EU to resolve the dispute have not been successful. In the late 1990s, the EU and the United States also discussed other options to resolve the dispute, including compensation for not lifting the ban, removal of the ban coupled with a labeling system, and conversion of the ban to a temporary measure. These options were ultimately rejected by the United States—backed by most of the U.S. beef industry—preferring instead full removal of the ban and arguing that other forms of compensation would not be large enough to compensate for losses of hormone-treated exports.", "The 1999 imposition of retaliatory (100%) tariffs on selected U.S. agricultural imports from EU member countries has significantly reduced imports of these products since these tariffs went into effect ( Figure 2 , Table 1 ). This graph only looks at the period from 1996-2008, since the United States has agreed to suspend retaliatory import tariffs on selected EU products under the terms of the MOU signed in May 2009 (see section titled \" 2009 Memorandum of Understanding \").\nOverall, U.S. imports of these products dropped from about $130 million in 1997-1998 to under $15 million in 2008. Products with the most significant decline in imports include meat and fish products, fruit juices, other fruit and vegetable products, processed foods, chocolate products, yarns, and other agriculture-based byproducts. Imports of some products, such as Roquefort cheese, mustard, and coffee products, also are lower, but less so. During this period, these EU products were still being imported to the United States and presumably sold at a higher price, given the need to cover higher importing costs due to higher tariffs.", "Many in Congress have long maintained an interest in the U.S.-EU hormone dispute in support of the U.S. beef industry and its concern that the EU ban may be a disguised trade barrier, intended to protect EU domestic beef producers by restricting imports. As discussed, Congress enacted the carousel retaliation provision as part of the Trade and Development Act of 2000 ( P.L. 106-200 ), largely in response to the dispute. In addition, over the years, the dispute has been invoked at various congressional hearings and has been a subject of introduced legislation, mostly to illustrate how SPS measures and other non-tariff barriers are often used to unjustifiably restrict trade. In addition, in 2000, former Senator Max Baucus introduced the Trade Injury Compensation Act ( S. 2709 ), intended to establish a Beef Industry Compensation Trust Fund with the duties imposed on products of countries that do not comply with certain WTO dispute resolution decisions; a Senate Agriculture subcommittee hearing was held on this matter.\nThere also have been resolutions intended to express the sense of Congress that the Administration should continue to take action against the EU under the dispute. The dispute is regularly noted in USTR's annual trade policy reports as an example of the EU's continued use of non-tariff trade barriers to limit or prevent U.S. beef exports, despite the United States' measures to ensure the safety of the food supply. In addition, the dispute has been raised as an issue under ongoing T-TIP negotiations by Members of Congress who are hoping to resolve long-standing trade disputes involving SPS and other non-tariff barriers, including the EU's hormone ban.\nSome in Congress have further maintained an interest in the U.S.-EU hormone dispute because of the concerns raised by some U.S. importers that may have been affected by the United States' active and ongoing trade sanctions against the EU, which have effectively restricted U.S. imports of selected EU products. Previously, in 1999 and 2000, former Representative Menendez introduced two bills that would exempt certain small importing businesses from higher tariffs imposed against EU products under the U.S.-EU beef hormone dispute.\nFinally, resolution of the hormone dispute could remove a critical irritant to the overall U.S.-EU trade relationship. In addition, the way in which this dispute is ultimately resolved could have important implications for future WTO disputes involving the use of SPS measures to restrict trade. The 1997 WTO meat hormone decision was the first to deal with SPS measures and, along with subsequent decisions, it provided an affirmation of the SPS Agreement and its requirements that countries base SPS measures on scientific justification and risk assessment. Beyond that, the case is a critical test of the durability of internationally agreed-upon rules and procedures for resolving disputes that are in conflict with popular concerns and national political decisions.\nAppendix A. Initial Retaliation List (July 1999)\nAppendix B. Revised Retaliation List (January 2009)\nAppendix C. \"Reduced\" Product List (March 2009)\nAppendix D. Chronology of the U.S.-EU Beef Hormone Dispute\n1981-1988— The European Commission institutes a series of restrictions on livestock production (Directives 81/602, 88/146, and 88/299) limiting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals and meat from animals that have been administered with hormones.\nBetween 1986-1987, the United States raises the EU hormone ban in the Committee on Technical Barriers to Trade (\"Standards Code\"), and invokes dispute settlement under the Tokyo Round Agreement on Technical Barriers to Trade in the General Agreement on Tariffs and Trade (GATT). The EU delays implementing its ban until January 1, 1989. In late 1987, President Reagan announces, and suspends, retaliatory tariffs (100% ad valorem ) on about $100 million worth of EU imports.\nAlso during this time, various scientific reviews are initiated, including studies by the commission, the Joint Expert Committee on Food Additives (JECFA) of the World Health Organization and the United Nations Food and Agriculture Organization, the Committee on Veterinary Drugs of the Codex Alimentarius Commission (\"Codex\"), and the U.S. Food and Drug Administration and comparable institutions in other countries.\n1989— The EU fully implements its ban on meat and meat product imports from animals treated with six growth promotants, three of which are naturally occurring—estradiol-17β, progesterone and testosterone—and three of which are synthetic—zeranol, trenbolone, and melengestrol. These six hormones are approved for use in the United States. The EU's ban effectively cuts off U.S. beef exports to the European Union. The United States institutes retaliatory tariffs (100% ad valorem ) on EU imports valued at $93 million, which remain in effect until May 1996, when the EU seeks a WTO panel against the U.S. action.\n1995— The GATT Uruguay Round Agreement, including the Sanitary and Phytosanitary (SPS) Agreement, enters into force. Codex decides Maximum Residue Limits (MRLs) are not necessary for the three natural hormones and adopts MRLs for the two synthetics. The EU concludes that there is no evidence of health risk from the five hormones approved for use in the United States.\n1996— The EU votes to maintain the ban. The United States requests a WTO dispute settlement panel case against the EU, claiming the ban is inconsistent with the EU's WTO obligations. Australia, Canada, and New Zealand join the United States in the complaint. The commission issues a new Directive 96/22, which repeals the 1981 and 1988 directives, and confirms and extends the prohibitions. The law becomes effective July 1, 1997.\n1997— A WTO dispute settlement panel releases its report, ruling that the EU ban on the use of hormones to promote the growth of cattle is inconsistent with its obligations under the SPS Agreement (specifically, Articles 3.1, 5.1, and 5.5), in that the ban is not based on science, that is, on an adequate risk assessment or according to relevant international standards. The EU appeals the dispute panel's decision and also initiates a series of scientific studies on these six hormones.\n1998— The WTO Appellate Body (AB) upholds the dispute panel's decision but overrules some panel findings. The AB decides the EU had not scientifically proven that the hormones in question posed a cancer risk to consumers; the AB also acknowledges that countries may adopt stricter standards, if supported by an adequate risk assessment. The AB rules the EU ban does not constitute a hidden barrier to international trade. The WTO Dispute Settlement Body (DSB) adopts the panel decision and the AB rulings on the ban. The EU says it will implement the WTO ruling in \"as short a time as possible.\" Neither party is able to agree on a \"reasonable period of time\" for implementation; the arbitrator decides the EU needs 15 months (until May 13, 1999).\n1999— In February, the EU outlines three options to resolve the dispute: (1) compensation, (2) removal of the ban coupled with a suitable labeling system, and (3) the conversion of the ban to a temporary measure. The United States sends a letter to EC Commissioners of Agriculture and of Trade outlining a possible labeling system. The United States backed by most of the U.S. beef industry, decides against various compensation measures, preferring instead removal of the ban. The EU decides it wants to conduct additional risk reviews before considering removing the ban. In March, the U.S. announces it will consider trade sanctions against the EU and publishes a preliminary list of products that could be subject to increased tariffs if the dispute is not resolved.\nIn April, the EU issues its first review and opinion based on studies by the EU's Scientific Committee on Veterinary Measures relating to Public Health (SCVPH) on the potential human health risks associated with consumption of hormone-treated beef. The SCVPH opinion states that it has evidence to show that a growth hormone (estradiol-17β) used in U.S. cattle production is carcinogenic, among other potential health risks to consumers. The report draws criticism from the United Kingdom's Veterinary Products Committee, as outlined in a report.\nThe EU deadline for implementing the AB ruling expires on May 13. In July, the United States and Canada seek WTO authorization to suspend tariff concessions and retaliate against the European Union. The WTO sets the levels at $116.8 million (United States) and C$11.3 million (Canada). The Office of the U.S. Trade Representative (USTR) announces its decision to impose a 100% ad valorem rate of duty on a specified list of products from certain EU member states, effective July 29. The product list includes beef, pork, goose livers, cheese, truffles, onions, carrots, preserved tomatoes, sausage casings, soups, yarn, mustard, juice, chicory, toasted breads, chocolate, jams, glue, and wool grease. The U.S. list targets France, Germany, Italy, and Denmark, but excludes the United Kingdom.\n2000— In May, the EU issues its second review and opinion based on studies by the EU's SCVPH on the potential human health risks associated with consumption of hormone-treated beef. The review concludes that the new information does \"not provide convincing data and arguments demanding revision of the conclusions\" of the SCVPH April 1999 opinion on the \"potential risks to human health from hormone residues in bovine meat and meat products.\"\nCongress passes legislation as part of the Trade and Development Act of 2000 ( P.L. 106-200 ), requiring the USTR to review and periodically revise the list of products subject to retaliation when another country fails to implement a WTO dispute decision. This periodic revision of the product list has become known as \"carousel retaliation.\"\n2001— The commission provides documentation of studies and journals for publications. The United States and European Union initiate compensation discussions.\n2002— In April, the EU issues its third review and opinion based on studies by the EU's SCVPH on the potential human health risks associated with consumption of hormone-treated beef. The review concludes its review of the 17 studies initiated in 1998, and again confirms the previous findings of the two earlier reviews (1999 and 2000).\n2003— In September, the commission issues Directive 2003/74, amending 96/22. The new law permanently bans the use of estradiol in farm animals and provisionally bans use of the five other hormones, while it seeks more complete scientific information. The EU declares its effort to replace its original ban with a provisional ban is in compliance with its WTO obligations, citing Article 5.7 of the SPS Agreement (allows for provisional measures when there is insufficient scientific evidence, provided that a risk assessment is conducted within a reasonable time).\nIn October, the EU issues a press release claiming its ban is supported by the 1999 and 2002 SCVPH reviews, which constitute \"a thorough risk assessment based on current scientific knowledge \" and thus fulfill its WTO obligations. The United States questions whether the SCVPH studies constitute a risk assessment. The EU claims the United States and Canada have no legal basis for continuing trade sanctions against the EU. In December, the EU refers the dispute to the WTO for a multilateral decision.\n2004-2005— The EU initiates a new dispute claiming that because it has modified its ban, the United States (and Canada) should remove its trade sanctions against the EU, as the continued retaliation by the United States and Canada is no longer consistent with WTO rules. The United States and Canada cases are effectively merged under the one panel cases, given largely identical substance, even though they are technically separate. Australia and Mexico join the consultations. The EU requests that a new WTO panel be established and the substantive panel meeting takes place in September 2005. It is the first WTP panel open for observation by the public.\n2006— The WTO panel announces that due to the complexity of the dispute, and the administrative and procedural matters involved, the panel will not complete its work until October 2006.\nThe United Kingdom's Veterinary Products Committee issues a second report criticizing the SCVPH findings.\nIn October, USTR decides against revising the list of EU products subject to higher U.S. import tariffs under the dispute. This decision is supported by the National Cattlemen's Beef Association and the U.S. Meat Export Federation. The U.S. Court of International Trade determines this action meets requirements under \"carousel retaliation.\"\n2007— The WTO panel again announces that due to the complexity of the scientific issues involved and scheduling difficulties, the panel's final report is delayed until June 2007.\nIn June, the European Food Safety Authority (EFSA) adopts an opinion related to hormone residues in bovine meat and meat products based on its review of the scientific data. EFSA concludes that the new publicly available data do not provide quantitative information for a risk assessment and therefore do not call for a revision of previous risk assessments.\nIn July, the WTO panel issues its interim report, including findings and conclusions. The expected final report date is delayed until October 2007, and eventually is issued in December.\n2008— In March, the WTO panel report is circulated to members. The panel announces that it found fault with all three parties (EU, United States, and Canada) on various substantive and procedural aspects of the dispute. The panel report claims the EU had not presented sufficient scientific evidence to justify the import ban, including the EU's 2003 risk assessment report. The panel report faults the United States and Canada for maintaining its trade sanctions. Both parties file appeals citing procedural errors and disagreements with the panel findings.\nIn October, the WTO's AB issues a mixed ruling that allows for continued imposition of trade sanctions on the EU by the United States and Canada, but also grants that the EU can continue to ban imports of hormone-treated beef from the United States and Canada. The AB reverses the dispute panel decision by stating that the EU's ban is not incompatible with WTO law, thus granting the EU more deference in deciding the basis for its food safety regulations.\nThe USTR announces in October that it is seeking comment on possible modification of the list of EU products subject to increased tariffs under the dispute. In December 2008, the EU requests consultations under Article 21.5 of the DSU to determine whether it is in compliance with its WTO obligations in the underlying beef hormone dispute.\n2009— In January, USTR announces changes to the list of EU products subject to increased tariffs under the dispute, adding countries and raising the tariff on select products, effective March 23, 2009. The EU claims USTR's action constitutes an \"escalation\" of the dispute, and is \"more punitive\" than the current trade sanctions. In May 2009, following a series of negotiations, the United States and the EU sign a memorandum of understanding (MOU) in an attempt to resolve this long-standing dispute by further opening up the EU market to non-hormone treated beef. The terms of this agreement are to be phased in over the next few years.\nAs part of Phase 1 of the MOU, the EC adopted regulations opening a tariff quota for 20,000 metric tons imports of high-quality beef (HQB), effective August 2009. The United States agreed not to implement its January 2009 revised (\"carousel\") sanctions, which would have resulted in higher retaliatory duties on selected EU exports to the United States. Trade sanctions would remain in effect on certain EU exports until the final phase of the agreement.\n2010— In October 2010, a U.S. Court of Appeals issued a decision in a case regarding duties paid by importers from the EU under the dispute, which could make them eligible for refunds.\n201 1 — In May 2011, USTR announced it was suspending higher duties for imported products listed under the dispute, ahead of the scheduled date under the MOU.\n201 2 — As part of Phase 2 of the MOU, in June 2012, the EU issued regulations increasing the HQB quota to 48,200 MT and changing the quota management system to a \"first come, first served\" basis, fully effective by August 2012.\n201 3 — In October 2013, the EU approved a two-year extension of Phase 2 of the MOU, allowing for access of U.S. beef raised without the use of growth promotants in exchange for continued U.S. suspension of retaliatory import duties on some EU food products. The extension will remain in place until August 2015. Earlier that year, the EU had lifted its previous ban to allow the use of lactic acid as a pathogen reduction treatment (PRT) on beef carcasses, half-carcasses, and beef quarters in the slaughterhouse. Also, in July, the United States and EU entered into formal free trade negotiations as part of the Transatlantic Trade and Investment Partnership.\n201 6 — In December 2016, USTR took steps to reinstate retaliatory tariffs on the list of EU products under the dispute. A public hearing is scheduled for 2017.\nSources: Compiled by CRS from various USDA and WTO documents, and other information." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 3, 3, 2, 3, 3, 2, 3, 3, 2, 1, 2, 3, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h3_full h0_title", "", "h0_full", "h2_full h1_title h3_title", "h2_full h1_full", "h2_title", "h2_full", "", "h1_title", "h1_full", "", "h3_title", "h3_full", "", "", "", "", "", "", "", "", "h0_full h2_full" ] }	{ "question": [ "What did the EU adopt restrictions on in 1981?", "How was this extended in 1989?", "What did this ban cover?", "How was this ban amended in 2003?", "What did the US do as part of this dispute?", "What tariffs did the US impose in 1989?", "What additional action did the US take in 1999?", "How have the US and EU attempted to resolve this dispute?", "Why did the 1997 WTO panel decision rule against the EU?", "How did the EU respond to this?", "What did the EU claim in regard to hormone-treated meat?", "How did the US respond to this claim?", "What did the WTO rule in 2008?", "What did the USTR announce in January 2009?", "How did the EU respond to this announcement?", "How did the US and EU conclude negotiations in May 2009?", "What did this MOU entail?", "How did the US break this agreement in 2016?", "In what other setting has this issue been raised?" ], "summary": [ "Starting in 1981, the EU adopted restrictions on livestock production limiting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals and meat from animals that have been administered the hormones.", "In 1989, the EU fully implemented its ban on imports of meat and meat products from animals treated with growth promotants.", "Initially the ban covered six growth promotants that are approved for use and administered in the United States.", "The EU amended its ban in 2003, permanently banning one hormone—estradiol-17β—while provisionally banning the use of the five other hormones.", "As part of this dispute, the United States suspended trade concessions with the EU by imposing higher import tariffs on EU products.", "The first U.S. action in 1989 imposed retaliatory tariffs of 100% ad valorem duty on selected food products, and remained in effect until 1996.", "The second U.S. action in 1999 again imposed a 100% ad valorem duty on selected foods from EU countries.", "Over the years, the United States and the EU have attempted to resolve this dispute through a series of WTO dispute consultations, settlement panels, arbitration proceedings, and formal appeals.", "One of the earlier WTO panel decisions in 1997 ruled against the EU on the grounds that the ban is inconsistent with the EU's WTO obligations under the Sanitary and Phytosanitary (SPS) Agreement because the EU had not conducted a risk assessment.", "In response, the EU commissioned studies and reviews to address the scientific basis of its ban on hormone-treated meat.", "Following each of these reviews, the EU reaffirmed its position that there are possible risks to human health associated with hormone-treated meat, given the available scientific data.", "The United States disputes whether the EU has conducted an adequate risk assessment to support its position and maintains there is a clear worldwide scientific consensus supporting the safety to consumers of eating hormone-treated meat.", "In October 2008, the WTO issued a mixed ruling allowing the United States to continue its trade sanctions, but allowing the EU to maintain its ban.", "In January 2009, the U.S. Trade Representative (USTR) announced its intent to make changes to the list of EU products subject to increased tariffs under the dispute, including changes to the EU countries and products affected, and higher tariffs on some products.", "The EU claimed this action constituted an \"escalation\" of the dispute.", "In May 2009, following a series of negotiations, the United States and the EU signed a memorandum of understanding (MOU), which phased in certain changes over the next several years.", "As part of this MOU, the EU granted new market access to U.S. exports of beef raised without the use of growth promotants, and the United States suspended its retaliatory tariffs on certain EU products.", "However, in December 2016, USTR took steps to reinstate retaliatory tariffs on the list of EU products under the dispute given continued concerns about U.S. beef access to the EU market.", "This issue has also been raised in ongoing trade negotiations between the United States and the EU to establish a free trade area as part of the Transatlantic Trade and Investment Partnership (T-TIP)." ], "parent_pair_index": [ -1, 0, 0, 2, -1, -1, 1, -1, -1, 1, -1, 3, -1, -1, 0, -1, 2, 2, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4 ] }
CRS_RL32801	{ "title": [ "", "Introduction", "Regulatory Flexibility Act", "Implementation of the Section 610 Requirements", "GAO Reviews of Section 610: 1997-1999", "Issues Affecting Section 610 Implementation", "Agencies' Section 610 Reviews in 2004", "GAO's 2007 Report on \"Lookback\" Reviews", "Implications for Regulatory Reform", "Developments During the 110th Congress", "Analysis" ], "paragraphs": [ "", "Several interest groups have suggested that Congress require agencies to reexamine their existing regulations to determine whether they are still needed or can be made less burdensome. One model that has been suggested for such regulatory \"lookbacks\" is an expansion of a requirement already in place in Section 610 of the Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. §§601-612).\nSection 610 of the RFA is the only crosscutting statutory requirement that federal agencies reexamine certain rules after they have been issued. Specifically, Subsection 610(a) of the RFA requires each agency to develop a plan for the review of its existing rules that have or will have a \"significant economic impact on a substantial number of small entities.\" (Section 601 of the RFA defines a \"small entity\" as including small businesses, small governmental jurisdictions, or other small organizations.) The Section 610 review plans were to require agencies to review all existing rules within 10 years of the effective date of the statute (January 1, 1981), and require any new rules to be reviewed within 10 years of their publication as a final rule. According to the RFA, the purpose of the reviews is to determine whether the rules should be continued without change, or should be amended or rescinded to minimize their impact on small entities. Subsection 610(c) of the RFA requires agencies to provide an annual Federal Register notice of rules they have designated for review within the next 12 months. In essence, Subsection 610(c) is an advance notice requirement designed to facilitate public input into reviews of existing rules.\nAlthough this statutory \"lookback\" requirement has been in place since 1981, it is still difficult to determine with any degree of certainty whether agencies are consistently implementing it. However, it appears that agencies are carrying out relatively few Section 610 reviews. One reason why so few reviews are done is that the act gives agencies a significant amount of discretion to decide which rules are covered by the review requirement. There also appears to be substantial confusion among the agencies regarding what Section 610 requires, thereby limiting its effectiveness. This report examines those issues and their implications for future regulatory reforms, but begins with a brief background discussion of the RFA itself.", "Under the RFA, all agencies (cabinet departments, independent agencies, and independent regulatory agencies) must prepare a regulatory flexibility analysis at the time proposed and certain final rules are issued. The RFA requires the analysis to describe, among other things, (1) the reasons why the regulatory action is being considered; (2) the small entities to which the rule will apply and, where feasible, an estimate of their number; (3) the projected reporting, record-keeping, and other compliance requirements of the rule; and (4) any significant alternatives to the rule that would accomplish the statutory objectives while minimizing the impact on small entities.\nHowever, these analytical requirements are not triggered if the head of the issuing agency certifies that the forthcoming rule would not have a \"significant economic impact on a substantial number of small entities.\" The RFA does not define \"significant economic impact\" or \"substantial number of small entities,\" thereby giving federal agencies substantial discretion to determine when the act's analytical requirements are initiated. Also, the RFA's analytical requirements do not apply to final rules for which the agency does not publish a proposed rule. Judicial review of agency compliance with certain provisions of the RFA is available to small entities, including Section 610. Section 612 of the RFA requires the Small Business Administration's (SBA's) Chief Counsel for Advocacy to monitor and report at least annually on agencies' implementation of the act.\nThe General Accounting Office (GAO, now the Government Accountability Office) has examined the implementation of the RFA several times since its enactment, and a recurring theme in GAO's reports has been a lack of clarity in the act and a resulting variability in the act's implementation. For example, in 1991 GAO reported that each of the four federal agencies that it reviewed had a different interpretation of key RFA provisions. In 1994 GAO again reported that agencies' compliance with the RFA varied widely from one agency to another and that agencies were interpreting the statute differently. In a 2000 report on the implementation of the RFA at the Environmental Protection Agency (EPA), GAO concluded that the agency had broad discretion to determine what the statute required—even when EPA concluded that a rule costing more than 5,000 small businesses more than $5,000 each did not have a \"significant economic impact on a substantial number of small entities.\" GAO reported that in the two and one-half years after the enactment of the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 (which was intended to strengthen the implementation of the RFA), EPA certified that 96% of its proposed rules would not have a significant impact on small entities—nearly 20 percentage points higher than in the two and one-half years before SBREFA was enacted. Two of EPA's program offices (pesticides and solid waste) said all 46 of their proposed rules published during this period would not have a significant impact on small entities.\nIn all of these reports, GAO suggested that Congress consider clarifying the act's requirements and/or giving SBA or some other entity the responsibility to develop criteria for whether and how agencies should conduct RFA analyses. In 2001, GAO testified that the promise of the RFA may never be realized until Congress or some other entity defines what a \"significant economic impact\" and a \"substantial number of small entities\" mean in a rulemaking setting. In 2002, GAO testified that the implementation of the RFA was still problematic, and raised even more questions about how the statute should be interpreted. For example, in determining whether a rule has a significant impact on small entities, should agencies take into account the cumulative impact of similar rules in the same area? Should agencies consider the RFA triggered when a rule has a significant positive impact on small entities? GAO went on to say the following:\nThese questions are not simply matters of administrative conjecture within the agencies. They lie at the heart of the RFA and SBREFA, and the answers to the questions can have a substantive effect on the amount of regulatory relief provided through those statutes. Because Congress did not answer these questions when the statutes were enacted, agencies have had to develop their own answers—and those answers differ. If Congress does not like the answers that the agencies have developed, it needs to either amend the underlying statutes and provide what it believes are the correct answers or give some other entity the authority to issue guidance on these issues.\nSimilarly, in 2006, GAO testified that \"the full promise of RFA may never be realized until Congress clarifies key terms and definitions in the act, such as 'a substantial number of small entities,' or provides an agency or office with the clear authority and responsibility to do so.\" GAO said \"Congress might wish to review the procedures, definitions, exemptions, and other provisions of RFA to determine whether changes are needed to better achieve the purposes Congress intended.\" Also, GAO said \"attention should ... be paid to the domino effect that an agency's initial determination of whether RFA is applicable to a rulemaking has on other statutory requirements, such as preparing compliance guides for small entities and periodically reviewing existing regulations [under Section 610].\"\nOn the other hand, other observers have indicated that the definitions of these terms should remain flexible because of significant differences in each agency's operating environment. For example, the SBA Office of Advocacy said that \"[n]o definition could, or arguably should, be devised to apply to all rules given the dynamics of the economy and changes that are constantly occurring in the structure of small-entity sectors.\"\nIn August 2002, President George W. Bush issued Executive Order 13272, which was intended to promote compliance with the RFA. The executive order required agencies to issue written procedures and policies to ensure that the potential impacts of their draft rules on small entities are properly considered, and required them to notify the Office of Advocacy of any draft rules with a significant economic impact on a substantial number of small entities. Although the order required the Office of Advocacy to provide training on compliance with the RFA and to provide comments on draft rules, it did not define what should be considered a \"significant\" economic impact or a \"substantial\" number of small entities.", "SBA's annual reports on the implementation of the RFA have only occasionally mentioned Section 610 of the statute. However, in April and May 1992, SBA's Chief Counsel for Advocacy sent letters to the heads of at least 83 executive departments and agencies requesting that they provide information on their implementation of Section 610. Of the 55 agencies that responded, 13 said they had published the required plan for the review of their rules. The remaining 42 respondents indicated that they had not done so, most often saying that none of their rules had a significant economic impact on a substantial number of small entities. In 1994, the Chief Counsel told GAO that SBA did not follow up with these agencies because SBA had no authority to compel agencies to plan for or conduct a review of their rules.\nIn February 1998, the House Committee on Small Business held a hearing on the implementation of Section 610 of the RFA. In general, the witnesses indicated that few Section 610 reviews had been done, and the reasons for this lack of action varied. For example, one witness said certain agencies had effectively written themselves out of portions of the RFA by indicating that their \"interpretative rules\" are not covered by the act, or by defining a \"small business\" in such a way that the act was not triggered.", "Section 602 of the RFA requires each agency to publish in the Federal Register a \"regulatory flexibility agenda\" describing each rule the agency intends to promulgate that is likely to have a significant economic impact on a substantial number of small entities. As noted previously, Subsection 610(c) of the RFA requires agencies to publish a notice in the Federal Register of rules that they plan to review within the next 12 months. A number of agencies have used the Unified Agenda of Federal Regulatory and Deregulatory Actions to publish these notices, although the statute does not refer to or require its use. The Unified Agenda is published twice each year in the Federal Register by the Regulatory Information Service Center, and provides uniform reporting of data on regulatory activities under development throughout the federal government. In essence, the Agenda is intended to be a compendium of agency rulemaking actions within the next 12 months. Therefore, the number of Section 610 notices in the Unified Agenda should provide some indication of the extent to which agencies are conducting the required \"lookbacks\" under the RFA.\nGAO used the Unified Agenda to examine the implementation of Section 610 of the RFA several times, and each time concluded that its implementation appeared flawed. For example, in April 1997 and February 1998, GAO reported that relatively few agencies had entries in the November 1996 and October 1997 editions of the Unified Agenda that they characterized as Section 610 reviews. Also, where present, the agencies' entries frequently did not meet the specific requirements of Subsection 610(c).\nIn April 1999, GAO examined the April 1998 and November 1998 editions of the Unified Agenda , and again reported that few regulatory agencies indicated that they were conducting Section 610 reviews—even among agencies that indicated they issued a large number of rules with a significant economic impact on a substantial number of small entities. For example, of the 61 federal departments and agencies with entries in the November 1998 Unified Agenda , only eight agencies indicated that they were reviewing rules under Section 610, and most of them were reviewing only one or two rules each. Several of the agencies with no Section 610 review entries had indicated in 20 successive editions of the Agenda that many of their regulatory actions would have a significant economic impact on small entities—thereby strongly indicating that they would need to review many of their rules under Section 610.", "However, in that 1999 report, GAO said it could not definitively determine whether more rules should have been reviewed under Section 610, or which rules, because no authoritative database existed delineating (1) the final rules that agencies determined would have a significant impact on small entities or (2) the rules for which Section 610 reviews had already been conducted. Also, GAO determined there were significant differences of opinion among federal agencies regarding the act's requirements, or misunderstandings of those requirements. For example:\nSubsection 610(c) requires agencies to publish notices in the Federal Register of rules that \"have\" a significant economic impact on a substantial number of small entities. Some agencies (e.g., EPA) indicated that this language required a review of any rule that had such an impact at the time the final rule was promulgated (i.e., any rule for which they had prepared a final regulatory flexibility analysis). In contrast, other agencies (e.g., the Department of Transportation) said that the impact of rules can change dramatically over a 10-year period, and said they interpreted the statute's use of the present tense \"have\" to mean they must review rules that have such an impact at the time the agency conducts the review . Under this reading of the statute, agencies cannot rely on their previous determinations and must reexamine all of their rules within 10 years of their issuance to determine their current economic effect on small entities. Other agencies (e.g., the Department of Health and Human Services) said they believed they had met the public notice requirements of Subsection 610(c) by simply listing rules in the Unified Agenda that they believed would have a significant impact on small entities. (Department officials said they subsequently understood that interpretation was wrong.) Still other agencies (e.g., the Small Business Administration) said they had not done any Section 610 reviews at the time of GAO's study because they had reviewed and revised all of their rules in the mid-1990s as part of the Clinton Administration's regulatory reform initiative. Therefore, they argued, the agencies had no rules more than 10 years old that had not been reviewed. (Notably, GAO examined SBA's announcements of these reviews and concluded that they did not meet the requirements of the RFA.)\nAt a meeting at GAO in February 2000, regulatory agencies raised a number of other issues regarding the interpretation of the RFA's Section 610 \"lookback\" requirement that have affected its implementation. For example:\nSome agencies indicated that they had established a \"high threshold\" for what constituted a \"significant economic impact on a substantial number of small entities.\" By designating few of their rules as having that level of impact, the number of rules from those agencies that were subject to reexamination was small. Some agencies said their rules often only implemented the requirements in the underlying statutes. Therefore, they considered the underlying statutes to have a significant impact on small entities, not their regulations , so they believed that few of their rules were subject to Section 610. Similarly, some agencies said that while the actions of states and other parties implementing certain federal rules (e.g., health standards) would likely have a significant impact on small entities, the federal rules themselves would not have that impact. Other agencies indicated that it was unclear whether amending all or part of a rule within the 10-year period provided in Section 610 would \"restart the clock.\" If so, they said agencies could prevent any \"lookbacks\" simply by making changes to their rules at least once every 10 years. Still other agencies questioned what was considered a \"rule\" under Section 610. For example, if a Federal Register provision amended an existing part in the Code of Federal Regulations (CFR), they said it was unclear whether the agency should review the CFR part as a whole within 10 years or only the portion that was amended by the Federal Register provision.", "By 2004, GAO had not examined the implementation of Section 610 of the RFA during the past five years. Therefore, it was unclear whether agencies have improved their implementation of Section 610 or whether the same basic pattern is evident. Using the same methodology that GAO employed, CRS examined agencies' implementation of the review requirement during calendar year 2004.\nThe Unified Agendas published in June 2004 and December 2004 each contained more than 4,000 entries (e.g., notices of forthcoming proposed rules and final rules) from more than 60 regulatory agencies. In each volume, the agencies indicated that about 400 of the regulatory actions identified in those entries could have a significant economic impact on a substantial number of small entities. As Table 1 indicates, the agencies with the largest number of such entries were the Federal Communications Commission (FCC); the Securities and Exchange Commission (SEC); the Small Business Administration (SBA); and the Departments of Commerce (DOC), Health and Human Services (HHS), Agriculture (USDA), Transportation (DOT), and Labor (DOL). Those eight departments and agencies accounted for about 90% of the regulatory actions in the Agendas that the agencies expected to trigger the RFA. The same departments and agencies also indicated they issued many RFA-related rules when GAO did its study examining the Unified Agendas from 1988 through 1998. Therefore, it would be reasonable to expect that, since they indicated that they intended to issue a large number of rules each year with a significant effect on small entities, those same agencies would need to reexamine a large number of rules each year under Section 610.\nHowever, as Table 1 also illustrates, the June 2004 edition of the Unified Agenda contained only 35 notices of upcoming Section 610 reviews, and the December edition contained only 31. Some of the agencies that indicated they planned to issue the most rules affecting small entities had either no Section 610 notices (DOC, SBA, and SEC) or had only one or two such notices (HHS and FCC). GAO reported the same pattern for the same five agencies in its 1999 report. Therefore, if the Unified Agenda really is the compendium of forthcoming regulatory activity that it purports to be, it appears that agencies are still not conducting many reviews under Section 610 of the RFA.\nIn fact, the number of Section 610 reviews that federal agencies conduct each year is actually much less than the above table suggests. All but four (two from DOL and two from DOT) of the 31 Section 610 notices listed in the December 2004 edition of the Unified Agenda were previously listed among the 35 notices in the June edition. Likewise, all but nine of the 35 notices in the June 2004 edition had been listed in the December 2003 edition of the Agenda. The same type of overlap exists with regard to the number of rules expected to have a significant impact on small entities. For example, of the 38 USDA entries in the December 2004 edition of the Unified Agenda with an impact on small entities, all but six were in the June 2004 edition of the Agenda . Overall, though, if the Unified Agenda is a valid general indication of agencies' activities in this area, it appears that agencies are reviewing less than 10% of their rules with an impact on small entities.", "In July 2007, GAO reported on a broad examination of agency \"lookback\" reviews, including mandatory reviews like those conducted under Section 610 of the RFA and reviews initiated at the agencies' discretion. GAO said that, from 2001 through 2006, the selected agencies completed over 1,300 reviews of existing regulations. The mix of reviews conducted, in terms of impetus (mandatory or discretionary) and purpose, varied among agencies. GAO reported that mandatory requirements were sometimes the impetus for reviews, but agencies more often exercised their own discretionary authorities to review regulations. The main purpose of most reviews was to examine the effectiveness of the implementation of regulations, but agencies also conducted reviews to identify ways to reduce regulatory burdens and to validate the original estimates of benefits and costs.\nGAO also said that the processes and standards guiding reviews varied across agencies and the impetus and phase of the review process. For example, while almost all agencies had standards for conducting mandatory reviews, only about half of the agencies had such standards for conducting discretionary reviews. The extent of public involvement varied across review phases, with the public having relatively more of a role in the selection process for discretionary reviews. GAO also reported that discretionary reviews more often resulted in changes to rules and related documents than mandatory reviews. Among other things, GAO recommended that agencies incorporate various elements into their policies and procedures to improve the effectiveness and transparency of retrospective regulatory reviews and that they identify opportunities for Congress to revise and consolidate existing requirements.", "The failure of Section 610 of the RFA to get many agencies to review the impact of their existing rules on small entities offers a number of valuable lessons for current advocates of even broader \"lookback\" requirements. In general, the drafters of any regulatory review legislation should be sure that the requirements for review are clear in terms of which rules need to be reviewed, and how the reviews are to be conducted. Giving agencies the discretion to decide which rules meet certain broad criteria for review appears (in many cases) to be an invitation for the agencies to declare that few if any of their rules meet that threshold.\nClearly, many of the problems associated with the implementation of Section 610 are traceable to problems associated with the RFA as a whole. Agencies have substantial discretion to certify rules as not having a significant economic impact on a substantial number of small entities. Agencies that so certify all or most of their rules (e.g., EPA) would never even appear in a listing like Table 1 of agencies that issue a large number of rules that require reexamination under Section 610. It is ironic that SBREFA, a statute intended to strengthen the RFA, may have had the unintended effect of making fewer rules subject to the RFA's analytical requirements, including Section 610.\nOne way to address this problem in the context of any new statutory \"lookback\" requirement could be to eliminate agency discretion entirely and require the agencies to review all of their existing rules, or all rules they had issued within a set period of time prior to the enactment of any review requirement (e.g., within the past 10 years). However, these sorts of all-encompassing reviews would likely be very difficult and time-consuming for the agencies to conduct. Also, most of the thousands of final rules that agencies issue each year are routine or administrative (e.g., bridge opening schedules or air worthiness directives), and are not likely to be the type of rules considered burdensome or in need of reform by the public. One way to make such a comprehensive review requirement more manageable could be to require agencies to review all final rules that both the Office of Management and Budget (OMB) and the agencies considered \"significant\" under Executive Order 12866 (about 300 final rules each year) or \"major\" under SBREFA (about 70 final rules each year). However, even this approach would include some rules that are somewhat ministerial in nature (e.g., major rules establishing migratory bird hunting seasons or Medicare reimbursement rates). OMB or some other entity outside of the regulatory agencies could be authorized to waive the review requirement for such rules.\nAnother approach could be to solicit suggestions from the public regarding the rules they believe should be reviewed. However, some would argue that this approach is already underway. The \"Regulatory Right to Know Act\" (Section 624 of the Treasury and General Government Appropriations Act of 2001) required that OMB report on \"recommendations for reform.\" In response to that requirement, OMB has been asking the public to nominate rules that they believe are in need of review. Initially, OMB asked the public to suggest rules that could be \"rescinded or changed\" to increase net benefits to the public. In response, OMB received 71 suggestions from the public. Subsequently, though, OMB broadened the request to include revisions that would increase net benefits by either eliminating or modifying existing rules, or by extending or expanding existing regulatory programs. In response to that request, OMB received 316 suggestions from the public, and referred those suggestions to the agencies for their consideration. OMB is continuing to obtain suggestions from the public regarding rules in need of review.\nWhichever approach is taken, federal agencies' experience with Section 610 of the RFA suggests that Congress be as clear as possible regarding its expectations for these reviews. For example, Congress faces the challenge of clearly indicating:\nwhat should be considered a \"rule\" to be reviewed (e.g., an entire CFR part or only certain provisions that are changed through a Federal Register notice); whether any \"burden\" that is associated with a rule's underlying statute (or subsequent implementation by state governments or other parties) should be considered part of the rule; and whether any revisions to a rule would \"restart the clock\" for any requirement that rules be revised within a particular period of time.\nAlso, in order to permit the public to be involved in these reviews and to permit tracking of which rules are still in need of review, agencies could be required to post their upcoming and completed reviews in the Unified Agenda or on the agency's website. As a result, Congress and the public would know which rules were required to be reviewed, which ones had been reviewed, and which ones were still in need of review.\nFinally, Congress could consider including some type of enforcement mechanism to any generalized lookback requirement, either through the budget (e.g., withholding some portion of the appropriations of agencies that have not carried out the required reviews), by including judicial review provisions that do more than just require agencies to do the reviews that they neglected to do in the first place, or through some other approach. Regular scrutiny of agencies' implementation of any lookback requirement by Congress, OMB, or some other entity could also raise the requirement's profile. Without some type of enforcement of the review requirement, agencies are unlikely to conduct many more reviews than have occurred pursuant to Section 610.", "On December 12, 2007, H.R. 4458 —the \"Small Business Regulatory Improvement Act\"—was introduced by Representative Brad Ellsworth and nine cosponsors, and the bill was referred to the House Committee on the Judiciary and the House Committee on Small Business. On December 13, 2007, the House Small Business Committee unanimously reported the bill. No action on H.R. 4458 has been scheduled by the House Committee on the Judiciary, and no comparable legislation has been introduced in the Senate. Similar legislation was introduced in the 109 th Congress ( H.R. 682 and S. 1388 ), but was not acted upon.\nH.R. 4458 would make a number of changes to the RFA—all of which are supported by the SBA Office of Advocacy and small business representatives. For example, Section 3 of the bill would amend Section 601 of the RFA and define \"economic impact\" to include direct economic effects of a rule on small entities as well as any indirect effect \"which is reasonably foreseeable and results from such rule.\" Section 4 of the bill would make several changes to the RFA's requirements—adding new analytical or reporting requirements, and adding to the level of detail in existing requirements. For example, whereas the RFA currently requires an initial regulatory flexibility analysis to contain a \"description\" of the reasons why the agency action is being considered and a \"succinct statement\" of the objectives of and legal basis for the proposed rule, H.R. 4458 would require a \"detailed statement\" describing those elements.\nSection 5 of H.R. 4458 would amend Section 610 of the RFA and establish new requirements for the periodic review of rules. Specifically, within 180 days after enactment, the bill would require agencies to publish in the Federal Register and on their websites a plan for reviewing all existing rules that the agency heads determine have a \"significant economic impact on a substantial number of small entities\"—regardless of whether the agency published a final regulatory flexibility analysis under Section 604 of the RFA at the time the rule was promulgated. The plan would have to provide for the review of all existing rules within 10 years after the enactment of the legislation (although the agency head could extend that deadline by two years if completion of the review was not feasible), and for the review of rules issued after enactment within 10 years of their publication in the Federal Register . Also, each agency would have to publish a list of the rules to be reviewed pursuant to the plan, including why the agency determined each rule has a significant impact, and would have to request comments from the public, the SBA Chief Counsel for Advocacy, and the Regulatory Enforcement Ombudsman on the \"enforcement\" of the rule. Finally, the bill would require agencies to submit a report annually to Congress and, for agencies other than independent regulatory agencies, to the OIRA Administrator. The annual report is to include (1) the identification of any rule for which the agency head had \"made a determination\" regarding whether the rule overlaps or conflicts with other rules, and the length of time since the rule had previously been evaluated; and (2) a \"detailed explanation of the reasons for such determination.\"", "H.R. 4458 would clarify how agencies' reviews under Section 610 of the RFA should be conducted. As a result, agencies would be required to review all of their rules to determine if they currently have a \"significant economic impact on a substantial number of small entities,\" and could not simply rely on their previous determinations when the final rule was published in the Federal Register . Enactment of this change may result in substantially more Section 610 reviews, but with a concomitant increase in time and effort required by federal agencies. Still unclear, however, is what would constitute a \"rule\" under this requirement (e.g., only the provision published in the Federal Register or the entire Code of Federal Regulations part that the provision amended). Also, because the legislation does not clarify what constitutes a \"significant\" economic impact on a \"substantial\" number of small entities, federal agencies would appear to continue to have a great deal of discretion to decide when those reviews would need to be conducted." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 1, 2, 3 ], "alignment": [ "h0_title", "", "", "", "", "", "", "", "h0_full", "h0_title", "h0_full" ] }	{ "question": [ "What does the implementation history of Section 610 of the RFA offer?", "What actions has Congress taken to address implementation of the RFA and Section 610?", "What challenge does Congress face?", "How can implementation of the lookback requirement be improved?" ], "summary": [ "The poor implementation history of Section 610 of the RFA offers a number of valuable lessons for current advocates of even broader \"lookback\" reviews.", "Legislation has been introduced in the 110th Congress (H.R. 4458) that addresses some of the issues regarding the implementation of the RFA and Section 610 reviews.", "For any such process to work, Congress faces the challenge of clearly specifying what rules should be reviewed and how the reviews should be conducted.", "Also, some means of tracking the reviews, congressional or executive branch oversight, and a meaningful enforcement mechanism appear important to improving the implementation of the lookback requirement." ], "parent_pair_index": [ -1, 0, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2 ] }
CRS_R44979	{ "title": [ "", "Background", "Political Situation", "Migration", "Terrorism", "Kosovo's Economy", "Relations with Serbia", "Territorial Adjustment", "Relations with the European Union", "Relations with the United States" ], "paragraphs": [ "", "During the medieval period, Kosovo served as the center of a Serbian Empire. The defeat of Serbian forces by the Turkish military at the Battle of Kosovo in 1389 ushered in a period of five centuries of rule under the Ottoman Empire. During this period, large numbers of Turks and Albanians moved to and settled in Kosovo. By the end of the 19 th century, Albanians replaced Serbs as the dominant ethnic group in Kosovo, although a large ethnic Serb majority remained in an area north of the Ibar River and in a few other parts of Kosovo. Serbia regained control over the region from the Ottoman Empire during the First Balkan War of 1912. Kosovo was then incorporated into the Kingdom of the Serbs, Croats, and Slovenes (later named Yugoslavia) after World War I.\nAfter World War II, Kosovo's present-day boundaries were established when Kosovo became an autonomous province of Serbia in the Socialist Federal Republic of Yugoslavia. During the 1980s, as Albanian nationalism increased in Kosovo, protests and calls for Kosovo's independence occurred more frequently. The Serbs—many of whom viewed Kosovo as their cultural and religious heartland—responded in 1989 by instituting a new constitution revoking Kosovo's autonomous status and setting off years of political unrest.\nBy 1998, following the breakup of Yugoslavia, growing ethnic unrest and violence in Kosovo, promoted by the Kosovo Liberation Army (KLA), led Serbian leader Slobodan Milosevic to launch a counterinsurgency campaign against the ethnic Albanian and Kosovar communities in Kosovo. After international attempts to mediate the conflict failed, a three-month military operation led by the North Atlantic Treaty Organization (NATO) was launched in March 1999 against Serb forces in Kosovo and against Serbia itself. The NATO operation ultimately forced the Serbs to agree to withdraw their military and police forces from Kosovo. A U.N. Security Council Resolution adopted in 1999 placed Kosovo under a U.N. Interim Administration Mission in Kosovo (UNMIK), pending a determination of Kosovo's future status. A NATO-led military force in Kosovo (KFOR) was also established to provide security. U.N.-led negotiations on the future of Kosovo began in late 2005 but ended in late 2007 without agreement between Belgrade and Kosovo leaders in Pristina.\nIn February 2008, over the objections of Serbia and the Serb minority in Kosovo, Kosovo's leaders declared independence from Serbia. Serbia won an important diplomatic victory when the U.N. General Assembly voted in October 2008 to refer the question of the legality of Kosovo's declaration of independence to the International Court of Justice (ICJ). However, Serbia's diplomatic strategy suffered a setback when the ICJ ruled in July 2010 that Kosovo's declaration of independence did not contravene international law.\nToday, Kosovo is recognized by over 110 countries worldwide, including the United States. However, Serbia has refused to recognize Kosovo's independence, as have Russia, China, and several EU countries. Nevertheless, Kosovo joined the International Monetary Fund and the World Bank in 2009, the European Bank for Reconstruction and Development (EBRD) in 2012, and the Council of Europe Development Bank (CEB) in 2013. Kosovo most recently joined the Council of Europe's Venice Commission and the International Olympic Committee in 2014.\nDespite celebrating its 10 th anniversary of independence in February 2018 and having made, according to many, significant political and economic progress, Pristina does not yet enjoy all of the benefits of an independent, sovereign country, and Kosovo remains heavily overseen by international organizations.\nFor instance, Serbia's refusal to recognize Kosovo's independence has resulted in an unresolved border between the two. In addition, a large swath of territory in northern Kosovo dominated by ethnic Serbs as well as other Serb communities in Kosovo have not been fully integrated into Kosovo and have demanded autonomy from Pristina on a number of issues. They also demand continued direct links to Belgrade.\nA 400-member U.N. mission in Kosovo (UNMIK) continues to be deployed to Kosovo. Its mission is to promote local security, stability, and the protection of human rights in Kosovo and the region and to promote constructive engagement between Pristina and Belgrade, the Serb and Kosovar communities in northern Kosovo, and between regional and international actors with interests in Kosovo.\nThe European Union's rule-of-law mission (EULEX) has operated in Kosovo under the EU's Common Security and Defense Policy (CSDP) since 2008. The mission was recently downsized and now, according to the EU, will no longer have executive authorities but will continue to support relevant rule-of-law institutions in Kosovo on their path toward increased effectiveness, sustainability, multiethnicity, and accountability, free from political interference and in full compliance with EU best practices. The mission will monitor selected cases and trials in Kosovo's criminal and civil justice institutions and will continue monitoring, mentoring, and advising the Kosovo Correctional Service.\nInternational prosecutors and judges still ensure equity in Kosovo's courts and the potential prosecution of Kosovo citizens. A new special court located in The Hague will hear cases of Kosovo citizens who served as members of the then-Kosovo Liberation Army during the conflict years, accused of alleged war crimes.\nKFOR, a NATO-led peacekeeping force in Kosovo, has the role of ensuring Kosovo's overall security. KFOR also plays the leading role in overseeing the training of the 2,500-personnel Kosovo Security Force (KSF, which is not considered a Kosovo military). In July 2018, approximately 4,000 troops from 28 countries were contributing to the KFOR mission, including about 685 from the United States, approximately 540 from Italy, and 450 from Austria.\nA Central European Free Trade Agreement (CEFTA) was established in 1992 to facilitate trade and promote economic development among the many Central and Eastern European countries and the Balkan countries. CEFTA today includes Albania, Bosnia, Macedonia, Moldova, Montenegro, and Serbia. Kosovo was permitted to join in 2007, but, as a result of Serb objections, Kosovo's interests are represented by UNMIK.", "The president of Kosovo, currently Hashim Thaçi of the centrist Democratic Party of Kosovo (PDK), serves as the head of state. During the 1998-1999 conflict with Serbia, Thaçi served as the political leader of the KLA. He is a long-time political figure in Kosovo and has also served as deputy prime minister. The president of Kosovo represents the country abroad and also nominates a prime minister to lead the government, generally the candidate from the party or coalition that holds the largest number of seats in the parliament. The candidate for prime minister must then be approved by a vote of the unicameral parliament (Assembly).\nThe government of Kosovo is headed by a prime minister and a Cabinet. In June 2017, national elections were held after the previous government lost a vote of confidence in the Assembly. A three-party coalition referred to as the PAN, composed of the PDK, the Alliance for the Future of Kosovo (AAK), and the Initiative for Kosovo (NISMA), won the most seats in the 120-seat Assembly. The PAN coalition parties reached an agreement in which the PDK nominated Kadri Veseli for speaker and the AAK nominated its leader, Ramush Haradinaj, for prime minister. After serving briefly as prime minister in 2004, Haradinaj resigned his office and turned himself in to the International Criminal Tribunal for the former Yugoslavia (ICTY), established in 1993 in The Hague, Netherlands, to face war crimes charges; Haradinaj was subsequently cleared twice by the ICTY.\nAlthough the PAN coalition won 39 seats, it did not have enough to form a government, which required the PAN to enter into negotiations with other parties to reach a majority. A three-month deadlock over forming a government was broken on September 4, 2017, when the New Alliance for Kosovo party, led by Behgjet Pacolli, ended its partnership with the Liberal Democratic Party of Kosovo (LDK) and agreed to join with the PAN to form a government. On September 7, the Assembly elected Kadri Veseli as speaker with 62 votes. President Thaçi then gave Haradinaj the mandate to form a government. On September 9, Haradinaj was narrowly elected prime minister with 61 votes in the Assembly, including 9 from the Serb-dominated Srpska Lista party, despite its serious concerns over Haradinaj leading the government. Srpska Lista was given three ministry posts in the new government. Behgjet Pacolli was subsequently named deputy prime minister and foreign minister.\nVetevendosje, the ultranationalist party, won 32 seats in the election becoming the single largest party in the Assembly and the second-largest political group in the parliament, after the PAN coalition. Vetevendosje opposed both candidates for speaker and prime minister. Vetevendosje and the LDK, now in the opposition, claimed the new government would be overdependent on Serbia, owing to the fact that Kosovo's ethnic Albanian parties were not able to form a majority by themselves and needed the votes of the Serb minority. Ironically, the Srpska Lista was criticized by opposition nationalist groups in Serbia for handing the Kosovo government over to Haradinaj, whom many in Serbia consider to be a war criminal.\nThe decision by the Srpska Lista members of the Kosovo Assembly to support the election of Veseli and Haradinaj was seen by some as a calculated decision likely supported by Serb President Aleksandar Vučić in order to strengthen the position of Kosovo's Serb minorities in Belgrade's dealings with the new government in Pristina.\nAlthough some observers believed the Haradinaj government would have difficulty governing, given its narrow victory in the Assembly and former Prime Minister Isa Mustafa's prediction that the new government would not last more than six months, the Haradinaj government has survived—although not without criticism over some difficult decisionmaking.\nFor instance, following the 2015 signing of two agreements, one with Serbia regarding the creation of an \"association\" of Serb-majority municipalities in Kosovo (see below) and another with Montenegro over a border demarcation, political paralysis overtook Pristina. Opposition political parties, as well as the Serb minority party, blocked all parliamentary activity with a campaign of occasionally violent protests against the government.\nThe Kosovo opposition, including the PDK itself, repeatedly argued that the Serb \"community associations\" would have too many powers and that the border agreement would give away too much of Kosovo's western territory. The Srpska Lista also objected to the border agreement on the larger issue that the government in Pristina could not give away what they claim is still Serb territory. Former Prime Minister Mustafa proposed to have the parliament consider the border agreement in September 2016 but had to withdraw the bill when the Srpska Lista walked out of the chamber, denying the government the two-thirds of Members of the Assembly needed to amend the constitution, setting off the six-month period of paralysis in the Assembly. In the interim, Montenegro's parliament approved the border agreement. Tensions eased somewhat when the Srpska Lista members returned to parliament at the end of March 2017, ending their six-month boycott.\nUpon taking office in September, Prime Minister Haradinaj, a vocal critic of the border agreement, announced that he intended to renegotiate the agreement with Montenegro, claiming Kosovo stood to lose a large swath of territory. Subsequently, the government of Montenegro indicated it would not agree to revisit the agreement. With a slim majority in the Assembly, Haradinaj faced a difficult challenge. In late 2017, Haradinaj stated that he was considering taking the border issue to the Permanent Court of Arbitration in The Hague, a step that technically would have required Montenegro's agreement. After continued pressure by the EU, which had offered to support visa-free travel to the EU for citizens of Kosovo on the condition that Kosovo ratify the border demarcation agreement with Montenegro, among other demands, Haradinaj agreed to move the agreement to the Parliament for ratification in mid-February 2018.\nHoping to resolve the standoff, Haradinaj agreed to allow two reports, one produced by a former commission for border demarcation appointed by the previous Mustafa government and one produced by a commission appointed by Haradinaj, offering conflicting views about how the agreement could affect Kosovo, to be adopted by the government. On February 22, 2017, with opposition from the Vetevendosje party and Srpska Lista's reluctance to vote, the border agreement did not have the 80 votes (out of 120) to pass. A second attempt on February 28 was postponed again for a lack of majority support. Finally, on March 21, 2018, and despite the vocal opposition from Vetevendosje, which included the use of tear gas to disrupt the vote, the Assembly secured the 80 votes necessary to pass the agreement. One member of the Assembly from Srpska Lista supported the agreement.\nHaving resolved the border issue, Prime Minister Haradinaj turned his attention to the thorny issue of establishing the autonomous Association of Serbian Municipalities in the country, something Belgrade and the Srpska Lista have demanded. When the former Mustafa government tried to push ahead with such an agreement, opposition ultimately led to his losing a vote of confidence in the Assembly, prompting the snap elections that brought Haradinaj to power. The issue remains unresolved.\nThe Thaçi/Haradinaj government faced other political challenges, as well, such as the issue of weak governing institutions, particularly in the area of the rule of law. The Organization for Security and Cooperation in Europe (OSCE) and the European Commission (the EU's executive) have noted serious problems, such as a legacy of strong executive influence on judicial decisions, threats against judges and their families, and poor court infrastructure and security arrangements.\nAnother issue that has become more controversial is possible war crimes and crimes against humanity allegedly committed in 1999-2000 by former members of the KLA against ethnic Serb and other minorities and \"political opponents\" during and after the conflict between Kosovo and Serbia.\nAlthough the ICTY detained, tried, and convicted war crimes suspects from the entire region and from different ethnic groups, most were Serbs and Bosnian Serbs. Belgrade had long pointed out that Kosovars and Albanians also had been responsible for war crimes but had not been prosecuted as often or as vigorously as had the Serbs. Following allegations in 2008 by Carla Del Ponte, the former chief prosecutor at the ICTY, that top members of the KLA had committed crimes against Serb and other ethnic minorities during the conflict, the European Commission tasked Senator Dick Marty, the Council of Europe's Special Rapporteur, to conduct a thorough investigation. In 2010, following Marty's investigation, the council called for an independent investigation and potential prosecution of these alleged crimes and set in motion the establishment of a special court to conduct the investigations.\nFive years after the council's conclusion, the government of Kosovo in 2015 pushed through the Assembly a controversial amendment to the country's constitution creating a Specialist Court for Kosovo to investigate potential war crimes by former KLA members. In January 2016, the government of the Netherlands announced that the special court, although linked to the Kosovo judicial system, would be housed in The Hague and would include international judges and prosecutors. The opening of the court raised tensions in Pristina, and President Thaçi described the new court as a \"historic injustice\" against Kosovo Albanians. It remains controversial because some elements of the public in Kosovo view potential suspects as freedom fighters, whereas other former KLA members are now playing active roles in Kosovo's current political system. The Marty investigation identified some of the alleged perpetrators by name, including President Thaci and Speaker Veseli, among others.\nIn late 2017, a group of former KLA veterans launched a petition calling for the law governing the new special court to be changed because it was \"discriminatory\" in that it would only arrest and try former KLA members and not Serbs living in Kosovo. In December 2017, the Kosovo Assembly was convened after 43 of the 120 members of the Assembly signed a demand for an extraordinary parliamentary session to revoke the Kosovo law on the special court. Although the initial attempt to repeal the law failed for a lack of a quorum, many Assembly members from the governing coalition political parties joined in the effort to repeal the law. A second attempt to repeal was proposed and defeated. The United States, the EU, and others have cautioned the Kosovo leadership against repeal of the law, which they suggest would call into question Kosovo's commitment to the rule of law. Following the legislative attempts to remove the law, Speaker of Parliament Veseli, while describing the Court as unjust, said future attempts to stop the Court would not succeed.\nAlthough the arrest and trial of former KLA soldiers will be controversial, the most sensitive issue for the court's work likely will be the ability to secure and protect Kosovar citizens who were witnesses to any possible crimes committed by the KLA and who may be willing to appear before the court.\nThe government in Pristina has been bracing for the first indictments of former KLA fighters, which could trigger street protests and other acts of violence against the government, the international presence, and Serbs. Indictments also could distract or strain the current government in Pristina and could impact Serb-Kosovo negotiations.", "In 2015, Europe began to experience a large influx of migrants and refugees, particularly from Syria. Kosovo was generally not a major part of the so-called \"Balkan route,\" which generally ran through Serbia. In fact, the migration crisis provided the opportunity for a new wave of Kosovar citizens to join the migrant flows into the EU, driven mostly by the poor state of Kosovo's economy and the relaxed border controls with Serbia. The Kosovo government was then forced to publicize the fact that asylum applications by Kosovars would be routinely rejected by other European countries and had to take measures to stop the migrant flows. Many Kosovars were forced to return to Kosovo. One issue that has arisen has been the flow of Turkish citizens into Kosovo as a result of the military crackdown in Turkey after an alleged coup attempt against the government of Recep Tyyip Erdogan. The Erdogan government has accused several Turks in Kosovo as being part of that coup attempt and has pressured the Kosovo government to extradite several of these citizens, prompting an increase in asylum applications. As Turkey has become a major economic presence in Kosovo, relations between Pristina and Ankara have become tense over this issue.", "One area of concern for U.S. and European policymakers is the number of Kosovars who initially left the region to join other foreign forces fighting in Syria and Iraq. According to the Kosovo government, about 300 Kosovars—including Lavdrim Muhaxheri, who became a well-known commander of the Islamic State (IS, or ISIS)—left Kosovo to join ISIS, a significant number for such a small country. Kosovo is a member of the Global Coalition to Defeat ISIS and has taken steps to support various efforts of the coalition, within the limits of its capabilities.\nIn 2015, the Kosovo parliament passed a law making it a crime for a Kosovo citizen to participate in foreign conflicts, with a maximum penalty of 15 years imprisonment. Around 60 persons are currently on trial in Kosovo courts in relation to terrorist activities, following the arrests of approximately 100 suspects, including 14 imams, since September 2014. These persons are suspected of participating in the conflict, or of recruiting or funding activities in support of the Islamic State. In March 2015, 7 of the 60 detainees were indicted on terrorism charges. In July 2016, several defendants were convicted and sentenced to 10 to 13 years in prison.\nKosovo is following in the footsteps of other European countries such as Denmark and Germany by creating rehabilitation and de-radicalization programs for its citizens who allegedly have been involved in the wars in Syria or Iraq. Officials from the Kosovo government had stated that they were preparing several programs that would \"exclusively and explicitly\" deal with the rehabilitation of people who either have participated in or are ready to join terrorist groups in Syria or elsewhere in the Middle East. In November 2017, the government released a draft National Strategy against Terrorism and Action Plan 2018-2022 that mirrors in some ways the EU's counterterrorism strategy of prevention, protection, pursuit, and response. Nevertheless, U.S. and EU officials continue to be concerned over the number of Kosovars that feel an affinity for ISIS and for those who still may return to Kosovo.\nRadical religious extremism, however, has been a relatively new problem for Muslim Kosovars, who generally have practiced a more moderate version of Islam. According to the U.S. Department of State, the threat of violent Islamist extremism has been growing in Kosovo, assisted in part by funding from foreign organizations that preach extremist ideologies and violent extremist groups actively using social media, particularly Facebook, to spread propaganda and recruit followers. A New York Times article in 2016 suggested that \"Saudi money and influence may be transforming this once-tolerant Muslim society into a font of Islamic extremism and a pipeline for jihadists, aided by a corps of extremist clerics and secretive associations. Kosovo now finds itself, like the rest of Europe, fending off the threat of radical Islam.\"\nOne example of the sensitivity of the threat of rising extremism and the Kosovo government's commitment to address this issue came in late December 2017 and early January 2018, when a former imam of Pristina's Grand Mosque was charged in the Pristina Basic Court with incitement to commit terrorist acts and inciting national, racial, and religious hatred through many of his lectures at the mosque during the period 2013-2014. However, the Basic Court in March 2018 acquitted Imam Shefqet Krasniqi of inciting terrorism and religious hatred.\nSecurity experts have cautioned that, despite crackdowns on radical Islamic extremists and other security measures, including stiff prison sentences, significant numbers of young people from the Balkans, including from Kosovo, continue to be targets of ISIS recruiting. A report issued in September 2017 by the Kosovar Center for Security Studies indicated that the Islamic State will likely remain a challenge for Kosovo until the country's institutions implement a credible and sustained strategy to counter the ISIS \"narrative.\"\nAccording to the State Department, the Kosovo government continues its counterterrorism cooperation with the United States. Various U.S. government agencies have assisted law enforcement and judicial institutions in Kosovo on active counterterrorism cases. Kosovo has issued biometric travel and identity documents since 2013. All major border crossing points, including Pristina International Airport, are equipped with computerized fraudulent/altered document identification equipment, for which a database is updated regularly with information from other countries. The Kosovo Police (KP) Counterterrorism Directorate is also enhancing its investigative capacities by increasing personnel and by developing a cyber-counterterrorism unit.\nKosovo has adopted a Law on the Prevention of Money Laundering and Terrorist Financing, modeled after international anti-money laundering and counterterrorist finance standards. Kosovo has also established a Financial Intelligence Unit (FIU). On February 1, 2017, Kosovo became a member of the Egmont Group of Financial Intelligence Units. This group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing.", "With approximately 30% of the population of Kosovo living below the poverty line, Kosovo is one of the poorest countries in Europe. Kosovo also has an unemployment rate of over 30% and a youth unemployment rate near 60%. In a country where the average age is 26, the lack of job prospects has encouraged migration of young Kosovars and fuels a significant informal, unreported economy. A large percentage of Kosovo's population lives in rural towns outside of the capital, Pristina. Agriculture accounts for about 11% of Kosovo's economy, although inefficient, near-subsistence farming is common—the result of small plots, limited mechanization, and a lack of technical expertise. However, Kosovo enjoys lower labor costs than the rest of the region\nAccording to the International Monetary Fund (IMF), Kosovo is characterized by insufficient transport infrastructure, poor energy dependability, very limited connectivity to the rest of the world, and inadequate and unreliable energy supply, requiring Kosovo to invest in more public infrastructure spending. Similarly, according to the World Bank, Kosovo's current growth strategy needs to be focused on addressing energy infrastructure, creating an environment more conducive to private-sector development, equipping its young population with the right skills to make them attractive to employers, and building up governance and the rule of law.\nDespite these shortcomings, according to the EBRD, Kosovo's economy was more resilient than its neighbors in the Western Balkans throughout the global and Eurozone crises beginning in 2008, growing by 3.5% annually on average over 2009-2013. Kosovo was one of only four countries in Europe to experience growth in every year. After a slowdown in 2014, the economy bounced back in 2015 with growth of 4%, boosted by strong domestic demand, with investment contributing the most. The economy continued to perform well in 2016, although the rate of growth slowed slightly to 3.4%. Growth is expected to pick up in the coming years as reforms advance and investment increases further.\nIn January 2016, the IMF's Executive Board completed the first review of the €185 million Stand-By Arrangement (SBA) approved for Kosovo in 2015. The program aims to preserve low public deficits and debt and remove key structural impediments to growth. In May-June 2018, an IMF mission visited Pristina to discuss recent economic developments and Kosovo's economic outlook. The IMF mission concluded that Kosovo's economic performance continued to be solid, with growth expected at about 4% in 2018.\nThe drivers of growth in Kosovo continue to be robust private consumption, helped by major inflows of remittances. Remittances from the diaspora—located mainly in Germany, Switzerland, and the Nordic countries—are estimated to account for about 15% of GDP, and international donor assistance accounts for approximately 10% of GDP. The country has little large-scale industry and few exports, which is one factor that limits foreign direct investment. Kosovo does have significant deposits of metals and lignite and operates its largest mining complex at the Trepca mines in northern Kosovo. However, full production of the mine has been hampered by a dispute with Serbia over ownership.\nWith international assistance, Kosovo has been able to privatize a number of its state-owned enterprises. However, according to the IMF, Kosovo needs to improve its investment climate in order to stimulate growth and attract further foreign investment beyond the current estimate of $200 million in FDI in 2017. High levels of corruption and little contract enforcement have also discouraged potential investors.\nSmall and medium-sized enterprises (SMEs) form the main part of Kosovo's private-sector economy. According to a study conducted in 2014 by the Austrian Institute for SME Research, there were approximately 46,000 enterprises in Kosovo, of which 90% were SMEs. These accounted for approximately 80% of employment. Almost 90% of Kosovo's SMEs employ 50 or fewer persons. An important challenge for the government has been providing access to credit for those SMEs. Many SMEs need loans but are often credit-constrained due to a generally weak economic environment, onerous collateral requirements, high levels of informality, lack of business or credit history, and insufficient collateral, as well as the low development of capital markets. Improving access to finance for SMEs has been a priority for the EBRD, which continues to work with local partner banks to this end.\nOne innovative approach by the government has been the creation of the Kosovo Credit Guarantee Fund (KCGF), a mechanism intended to stimulate lending by providing a partial loan guarantee that can serve as a substitute for collateral, allowing banks to reduce their collateral requirements, and providing assurance as banks expand lending in underserved markets or sectors previously perceived as too risky. The U.S. Agency for International Development (USAID), in partnership with the Government of Kosovo and other donors, helped launched the KCGF in April 2016. According to USAID, increased lending has allowed SMEs to pursue business expansion and provide needed jobs. KCGF has signed agreements with 7 of 10 Kosovo commercial banks, which represent 90% of the banking sector. As of October 30, 2017, 558 individual loans had been disbursed, totaling some $23 million.\nAnother example of how Kosovo is attempting to promote a stronger economy and to encourage a more positive business environment has been seen in the World Bank's \"Doing Business\" project. The project provides objective measures of business regulations and their enforcement across 190 economies and looks at small and medium-sized companies and the regulations that apply to them. According to the World Bank's 2018 report, Kosovo was described as \"the second most-reformed country in the fragile states group,\" achieving an overall ranking of 40 compared to its 2017 ranking of 60. The World Bank further indicated that Kosovo has made significant progress in three indicators: starting a business, getting credit, and resolving insolvency. In this last category, Kosovo has made resolving insolvency easier by introducing a new bankruptcy framework for corporate insolvency, making liquidation and reorganization procedures available to debtors and creditors. As a result of Kosovo's efforts, the country was rated at 49 in the World Bank's report, down from 163 in just one year.", "As noted, Serbia has refused to recognize Kosovo's independence. In the years immediately after Kosovo declared independence, both sides avoided any direct contact. During this time, Serbia continued to provide political and economic support for the autonomy of the Serb majority areas in northern Kosovo, including part of the town of Mitrovica, and the protection of Serb minority rights throughout Kosovo.\nDespite Serbia's nonrecognition of Kosovo, Pristina entered into talks with Belgrade in 2011 facilitated by the EU, which conditioned Serbia's progress toward EU membership on holding such talks. Initial discussions centered on technical issues, and agreements have been concluded regarding free movement of persons, customs stamps, mutual recognition of university diplomas, real estate records, civil registries (which record births, deaths, marriages, etc., for legal purposes), integrated border/boundary management (IBM), and regional cooperation. Implementation of many of these accords, however, has lagged due to disagreements over their scope and enforcement. The two sides also agreed to exchange liaison personnel (to be located in EU offices in Belgrade and Pristina) to monitor the implementation of agreements and address any problems that may arise.\nOn April 19, 2013, the governments of Kosovo and Serbia concluded a landmark \"First Agreement of Principles Governing the Normalization of Relations\" between the two. The agreement affirmed the primacy of Kosovo's legal and institutional framework throughout Kosovo's territory. One of the key provisions of the 15-point agreement was the creation of an \"Association/Community of Serbian-majority municipalities\" in northern Kosovo. This \"Association/Community\" would have \"full overview\" of economic development, education, health, urban and rural planning, and any other policy areas that Kosovo's central government in Pristina deems within the Association's purview. The Serb police in northern Kosovo would form part of Kosovo's unified police force, and be paid only by Pristina. The police commander in the North was to be a Kosovo Serb selected by Pristina from a list of nominees provided by the mayors of the four Serb municipalities in the North. The ethnic composition of the local police force in the North was to reflect the ethnic composition there.\nThe situation in the judicial system was to be resolved in a similar manner, with implementation of a Justice Agreement that was scheduled to take effect in October 2017. The judicial system in northern and southern Kosovo would operate under Kosovo's legal framework and would include the integration of Serbian judges and prosecutors into Kosovo's justice institutions. An Appellate Court in Pristina would be composed of a majority of Kosovo Serb judges to deal with all Kosovo Serb-majority municipalities. A division of the Appellate Court would be based in northern Mitrovica. Serbian judges in the North, however, initially complained that they had received no information on how the new integrated court system would work and indicated they would not willingly transfer into the Kosovo system until their status was regulated by a special law.\nOn October 24, 2017, President Thaçi issued a decree appointing 40 Kosovo Serb judges and 13 prosecutors, as agreed under the Dialogue Agreement on the Judiciary. The affected judges and prosecutors appeared in person in the president's office to accept their new appointments under the Republic of Kosovo system, in the presence of the Justice Minister, Supreme Court President, Chief State Prosecutor, and EULEX representatives. The integration of the Serb judicial authorities in the north of Kosovo marks the unification of Kosovo's justice system, in line with its constitution.\nDespite these accomplishments, Pristina and Belgrade have continued to disagree over the next steps. Although a final draft of plan was due on August 4, 2018, the Haradinaj government has had a difficult time formalizing the remainder of the parameters of the Association of Serbian-majority Municipalities plan that was agreed to in 2013. As mentioned, this is a controversial issue inside Kosovo and has many political opponents. The agreement has been fiercely contested by opposition parties in Kosovo's parliament, which claim it is a capitulation to Serbian interests. On August 3, 2018, it was reported that Serb President Vučić in an open letter to Kosovo Serbs stated that Pristina will \"not lift a finger\" to establish the promised association in Kosovo. In response to the slow speed of the Kosovo government, Vučić warned that Serbia would \"protect\" Kosovo Serbs and would not stand for \"organized violence\" against them.\nDespite the ongoing negotiations between Kosovo and Serbia and the fact that Pristina continues to seek ways to cooperate, tensions persist and incidents between the two regularly continue to flare up. Some examples include the following:\nIn January 2017, an incident arose involving the regular run of a Belgrade-to-Mitrovica train. The train was painted in Serb colors with \"Kosovo is Serb\" painted on the train cars. Kosovo President Thaçi accused Serbia of wanting to annex the Serb minority territory of northern Kosovo and threatened to fight, if necessary, any such Serb intention. Serbia's then-prime minister, Aleksandar Vučić, threatened to dispatch military forces to the border to protect Serbs in Kosovo. Tensions eased when the train was halted prior to crossing the border. In a September 2017 interview, Albania's Prime Minister Edi Rama apparently stated that a union between Albania and ethnic Albanian-dominated Kosovo could not be ruled out if EU membership prospects for the remaining countries of the Western Balkans fade. Serbian officials and other Serbs throughout the region responded vehemently and warned of another war in the Balkans if Albanians tried to form a joint state with Kosovo. Serbian government minister Aleksandar Vulin said he expected the EU and NATO to denounce such statements, and said another war in the Balkans could also include Macedonia and Montenegro, which have large ethnic-Albanian populations. On January 15, 2018, a Serb political leader of northern Kosovo, Oliver Ivanović, was murdered by unknown assailants outside his office in Mitrovica. Ivanović reportedly supported reconciliation talks between Serbia and Kosovo. Kosovo's President Thaçi condemned the murder and urged the police to bring the perpetrators to justice as soon as possible. Ivanović was considered a moderate influence by some who supported reconciliation between Serbs and Kosovars. Some have speculated that Serbs living in northern Kosovo, opposed to working with Kosovo, wanted to silence Ivanović and his views. Others have speculated that Ivanović may have been willing to identify former KLA fighters who operated in northern Kosovo for prosecution in the new Special Court for Kosovo war crimes. At the same time, Kosovo's Deputy Prime Minister Enver Hoxhaj suggested that Russia, which seeks to keep Serbia out of the EU, may have been involved in an attempt to meddle in Kosovo's affairs and cause destabilization. On March 20, 2018, Kosovo police arrested a Kosovo Serb refugee who had returned to Kosovo on charges of war crimes. Belgrade complained that the arrest was part of a \"policy of violence and intimidation\" aimed at discouraging Kosovo Serb refugees from returning home and was a \"provocation\" meant to distract from the implementation of th e Brussels agreement to normaliz e relations between Belgrade and Pristina .On March 26, Kosovo Special police in North Mitrovica detained Marko Djuric, head of the Ser bian government ' s Kosovo office. The Kosovo government claimed that Djuric had improperly entered the country. Djuric was transferred to Pristina , prompting a protest from Serbian President Vučić and protests by Serb residents in North Mitrovica . Djuric was subsequently deported to Serbia.\nAlthough tensions persist, relations between Pristina and Belgrade have also taken some interesting turns. For instance, during the Serb presidential election, Pristina permitted Serbia's prime minister and presidential candidate, Vučić, to campaign briefly among the Serb communities in Kosovo, who were permitted to vote in the Serb election. In addition, Serbia continues to pay off close to €900 million in Kosovo foreign debt to the Paris Club, the London Club, and the EBRD incurred between 1970 and 1990 because Serbia considers the former province a part of its own territory. Trade between Kosovo and Serbia amounts to approximately €450 million annually, but that trade appears highly skewed in Serbia's favor, which has raised complaints by Pristina that Serbia is blocking freer trade relations.\nIn an early August 2017 \"commentary\" in the Serb newspaper Blic , Serbian President Vučić observed that it was time the people [of Serbia] \"stopped putting their heads in the sand\" on Kosovo and \"got real.\" This article caught the attention of both the nationalists in Serbia who oppose any concessions to Kosovo, and the government in Pristina. Although the Kosovo government is not under any illusion that Vučić would recognize Kosovo's independence any time soon, it nevertheless interpreted the article as a trial balloon that Vučić might be willing to make other concessions on Kosovo in order to ease tensions and smooth Serbia's relations with the EU. For instance, Pristina has looked to Serbia to stop blocking Kosovo's ability to join some U.N. organizations, such as the United Nations Educational, Scientific, and Cultural Organization (UNESCO) or even the International Police Agency (Interpol). In September, shortly after taking office, Haradinaj condemned a newly released Serbian documentary film that reportedly attacked Pristina's bid to join UNESCO. Also in September 2017, Haradinaj announced that Kosovo would withdraw its application to join Interpol due to an insufficient number of votes, and opposition from Serbia and China.", "One other difficult issue that continues to stir controversy both within and outside of Kosovo and Serbia has been the idea of border adjustments. Essentially, proponents have suggested that under a border-adjustment proposal, Kosovo would cede parts of Serb-dominated northern Kosovo (north of the Ibar River) in exchange for diplomatic recognition, while territory in southern Serbia in the Albanian-dominated Presevo Valley would be ceded to Kosovo. The idea has been rejected previously by Kosovo and by Serbia, which argues that because Kosovo is still considered part of Serbia, Pristina cannot offer a territorial swap. In the past, many observers of Serb-Kosovo relations also have rejected the idea, suggesting that any changes could lead to new ethnic tensions and could become a rallying cry for others in the region with similar ethnic problems.\nNevertheless, the idea did resurface again in summer 2018. This time, however, the idea was raised by Kosovo President Thaci in early August, when he appeared to have made references to \"border corrections\" with Serbia. Some have speculated that Thaci, knowing only sovereign states can exchange territory, may have been offering the Serbs a few villages in northern Kosovo as a face-saving gesture to Vučić in exchange for recognition, which then could lead to further territorial exchanges. Thaci also appeared to suggest that a referendum should be held in Kosovo asking whether territorial adjustments in exchange for recognition would be acceptable to the Kosovo population. Nevertheless, Thaci's remarks set off another round of intense debate and, although Thaci did step back from his comments to say he was not advocating partition, he did seem to suggest that Kosovo should explore every opportunity to reach a historic deal with Serbia.\nIn response to Thaci's \"trial balloon,\" it was reported that some 30 or more nongovernmental organizations from Kosovo and Serbia—including some from Kosovo's majority-Serb north—may have sent a letter to EU High Representative for Foreign Affairs Federica Mogherini asking for a clear EU stand against Kosovo's partition or any exchange of territories with Serbia along ethnic lines.", "The European Union—both its member countries and its institutions, notably the European Commission—plays a prominent role in the institution-building needs and socioeconomic development of Kosovo. The EU is by far the single largest donor providing assistance to Kosovo. Kosovo has received more than €2.3 billion in EU assistance since 1999, targeted mostly at projects involving public infrastructure including roads, hospitals, and water supply. Other projects include supporting and promoting business, farms, civil society, human rights, education, access to health care, and transportation. The EU is Kosovo's largest trade partner, with approximately 32% of Kosovo's exports going to the EU. As noted above, in 2016, the EU offered Kosovo visa-free travel for its citizens conditioned on progress on its boundary dispute with Montenegro and its efforts to address corruption and weaknesses in its rule-of-law institutions.\nA priority goal of Kosovo is to become a member of the EU, and Kosovo has been recognized by the EU as a potential candidate for membership since 2008. In 2014, the EU signed a Stabilization and Association Agreement (SAA) with Kosovo intended to enhance EU-Kosovo cooperation. The SAA entered into force in April 2016. The SAA is viewed as a key first step in the long path toward EU accession. In his 2017 annual State of the Union speech to the European Parliament, European Commission President Jean-Claude Juncker reiterated that although the EU will likely welcome new members from the Balkans at some point, no candidate or potential candidate country would likely join the EU until 2025. Juncker, however, did note that Montenegro and Serbia were on a good track to join the EU by then. Juncker also singled out Kosovo (along with Bosnia) as lagging behind the others in its preparations for eventual EU accession negotiations due in part to Kosovo's continued political and economic difficulties. This drew the ire of Kosovo President Thaçi, who raised the issue of whether there was an anti-Muslim, anti-Albania prejudice at work within the EU.\nKosovo faces at least one other large hurdle in its quest to begin accession negotiations with the EU: several EU member states have not recognized the independence of Kosovo, mostly due to their own internal ethnic politics. Recently, this issue was highlighted by Spain, which asked that, in light of its own issues with its region of Catalonia, Kosovo's potential application for EU membership be put on hold. The EU rejected that approach, and Spain has since backed away, saying it would agree to follow Serbia's lead on the matter. Because the launch of accession negotiations requires unanimous approval by all EU member states, it is unlikely that the EU will be able to move forward on Kosovo's candidacy in the near term, unless Kosovo and Serbia resolve their own dispute over the status of Kosovo, which could lead to support for the start of Kosovo's accession negotiations.\nOne point of contention between Brussels and Pristina has been the issue of visa-free travel for Kosovo citizens. Kosovo is the last Balkan nation whose citizens are required to obtain visas to travel into the EU's passport-free Schengen zone. As noted above, the EU had conditioned visa-free travel on Kosovo's ratification of a border demarcation agreement with Montenegro. In defiance of the EU, in early October 2017, during a visit to Albania, Kosovo President Thaçi asked Tirana to approve a law that would allow Kosovars to apply for dual Albanian-Kosovo citizenship, which would enable them to skirt EU restrictions and travel to Europe without visas. Now that the border dispute has been resolved, Pristina has begun to ask when Brussels will institute the visa-free provisions.", "The United States recognized Kosovo's independence on February 18, 2008, one of the first countries to do so. Although the EU, not the United States, has played the leading role in Serbia-Kosovo normalization efforts, the United States has strongly supported the process. Experts argue the U.S. role in Kosovo is still important, given that Kosovar leaders view the United States as their country's most powerful and reliable ally. This view has been reinforced on several occasions in 2017 with statements by U.S. Ambassador to the U.N. Nikki Haley, a congratulatory letter from President Trump to Pristina marking the ninth anniversary of its independence, and a summer 2017 visit to Pristina by the U.S. Congress's House Democracy Partnership. Nevertheless, there has been concern in Pristina that the Trump Administration over the long term may not place as high a priority on the Balkans as the United States has in the past and that certain social attitudes toward Muslims could sour what has been a good relationship. Some Kosovars appeared disappointed that the summer 2017 visit to the Balkan region by Vice President Mike Pence did not include a stop in Pristina.\nIn an effort to reinforce Kosovo's desired relations with Washington, Haradinaj's first meeting as prime minister was with U.S. Ambassador Greg Delawie on September 11, 2017. In a statement, the U.S. embassy welcomed the formation of the new government, writing \"the United States continues to support Kosovo on its path towards Euro-Atlantic integration, strengthening the rule of law, improving economic development, and normalizing regional relations.\"\nU.S.-Kosovo relations hit a snag in early 2018 when, as mentioned above, several members from the Assembly attempted to force the Assembly to repeal the law that created a special court to try former KLA members for human rights abuses and crimes against humanity. During the attempt to repeal the law, U.S. Ambassador Greg Delawie stated that the effort, \"if it succeeds, will have profoundly negative implications for Kosovo's future as part of Europe. It will be considered by the United States as a stab in the back.\"\nIn March 2018, the new U.S. Assistant Secretary of State for European Affairs Wess Mitchell visited Pristina (and Belgrade) on what the Secretary indicated was a chance to try to resolve some of the regional conflicts. Mitchell reportedly discussed with President Thaci the importance of Kosovo staying very closely engaged with Serbia and normalizing relations with Belgrade. The Secretary apparently also suggested that if Kosovo was going to pursue the creation of a Kosovo army, it should be done in consultation with and with the support of all parties and communities.\nDirect U.S. economic and trade relations with Kosovo are limited. Kosovo ranks 202 nd among U.S. trade partners. In 2017, total trade in goods between the United States and Kosovo amounted to approximately $12 million, with U.S. exports to Kosovo around $10 million and imports at $2.7 million. According to the Department of State, U.S. investors in Kosovo are involved with projects in the construction, energy, health, telecommunications, and real estate development sectors. Kosovo has been designated as a beneficiary country under the Generalized System of Preferences (GSP) program, which promotes economic development by eliminating duties on approximately 3,500 products imported from Kosovo.\nU.S. aid to Kosovo is aimed at stemming corruption in government institutions, increasing transparency and accountability to citizens, and coordinating with the EU on Kosovo's continued move toward membership in the EU. USAID played a key role working with the justice sector over the past three years to facilitate and prepare authorities for the recent integration of Kosovo's judicial system into the Serbian communities in northern Kosovo.\nEconomic assistance focuses on improving fiscal and banking policies and creating an investor-friendly business environment. In FY2017, the Obama Administration requested approximately $53 million in aid for Kosovo, including $38.5 million for Economic Support Funding (ESF) that was intended to help Kosovo's nascent institutions address the challenges of effective governance, including integrating the Serb communities in the northern part of the country into Kosovo institutions; furthering justice-sector development; driving private sector-led economic growth through policy reform and support to key sectors, including energy; strengthening democratic institutions; developing future leaders; building the capacity of civil society and independent media to address corruption; and promoting government accountability.\nAs mentioned above, USAID development assistance to the Kosovo Credit Guarantee Fund highlights how U.S. assistance, using an approach that stressed government buy-in and leveraged donor resources, has been successful in promoting economic development by supporting Kosovo's small but critical private sector. USAID assistance also helped make starting a business in Kosovo easier by simplifying the process of registering employees and supporting the drafting of Kosovo's first bankruptcy law, establishing clear priority rules for secured creditors and clear grounds for relief for secured creditors in reorganization procedures.\nPristina initially expressed concern that the Trump Administration's proposed reductions in U.S. foreign assistance would have a significant impact on Kosovo's efforts to modernize and address reforms. The Trump Administration's FY2018 request for Kosovo amounted to $34 million, a reduction from the FY2017 request. However, the FY2018 request approved by Congress included approximately $52 million for Kosovo. The Administration's foreign assistance request for FY2019 seeks approximately $30 million for Kosovo.\nIn March 2016, President Thaçi and U.S. Ambassador Greg Delawie signed an extradition agreement, which would enable police and prosecutors in the United States and Kosovo to cooperate more effectively and to extradite criminals between the two countries. This agreement is viewed by the United States as an important tool in the struggle against terrorism and against transnational crime in the Balkans region.\nOn September 12, 2017, the U.S. Government's Millennium Challenge Corporation and the government of Kosovo signed a $49 million \"threshold program,\" which will focus on reforms to spur economic growth and private investment. The program is designed to increase publicly available and accessible data on the judiciary and to help modernize the energy sector in order to foster more collaborative relationships among government, civil society, and the private sector. It will also encourage investments in energy efficiency and support the adoption of less expensive sources of heating.\nAccording to the Department of State's Country Report on Human Rights Practices for 2017, the most significant human rights issues included assaults on journalists; violence against displaced persons; endemic government corruption; lack of judicial independence, including failures of due process and selective implementation of decisions; and violence against members of ethnic minorities and members of the lesbian, gay, bisexual, transgender, and intersex (LGBTI) community.\nIn its 2018 Trafficking in Persons report, the Department of State noted that Kosovo remains a Tier 2 source and destination country for women, children, and men subjected to sex trafficking and forced labor, including in the restaurant industry. The government demonstrated increasing efforts by issuing guidance for proactive identification of victims and conducting joint proactive investigations with labor inspectors, prosecutors, and social workers. The Office of the Chief State Prosecutor also appointed a special coordinator for trafficking and established a new database to monitor trafficking cases. However, the government did not meet the minimum standards in several key areas. Judges imposed weak sentences on convicted traffickers, and prosecutors continued to downgrade trafficking cases to lesser crimes." ], "depth": [ 0, 1, 1, 2, 2, 1, 1, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "", "", "", "h1_full", "", "", "h0_full", "h3_full h2_full" ] }	{ "question": [ "What allowed countries of former Yugoslavia to pursue reform and adopt Western values?", "How did these countries pursue and adopt Western values?", "How are these countries continuing to pursue and adopt Western values?", "Why is Kosovo important?", "How has Kosovo become a stable, democratic state?", "What challenges does Kosovo still face despite being a stable state?", "How has Kosovo made progress?", "How has the United States been involved in Kosovo?", "Why did the United States give Kosovo assistance?", "What is a new element of US commitment to Kosovo?", "How did the U.S. show this commitment to and interest in the region?", "What do Balkan watchers caution about US involvement in Kosovo?", "How do members of the U.S. Congress feel about Kosovo?", "How will Congress feel about Kosovo in the future?", "Why did congressional delegations visit Pristina?", "How was the MCC received?" ], "summary": [ "Following the conflicts in the late 1990s in the countries of the former Yugoslavia (Serbia, Kosovo, Bosnia-Herzegovina, Macedonia, Montenegro, Croatia, and Slovenia), the prospect of membership in the Euro-Atlantic community, and the active presence of the United States in the region referred to as the Western Balkans, provided a level of stability that allowed most of the countries of the region to pursue reform and adopt Western values.", "During this time, Slovenia (2004) and Croatia (2013) joined the European Union (EU). These countries, along with Albania (2009), also joined the North Atlantic Treaty Organization (NATO). Montenegro became NATO's 29th member on June 3, 2017.", "Other nations of the Western Balkans are at various stages on the path toward EU or NATO membership.", "Along with Serbia, Kosovo stands at the center of the Western Balkans and occupies a key strategic juncture at the social, political, and geographic crossroads between Eastern and Western Europe.", "With the assistance of a number of international organizations, and despite its tense relationship with neighboring Serbia, which does not recognize Kosovo's independence, Kosovo has become a viable, democratic, and stable state.", "Although Kosovo faces major economic, rule-of-law, and corruption challenges, many observers believe Kosovo has made significant progress in strengthening its democratic institutions, its free-market economy and its Euro-Atlantic aspirations.", "Although Kosovo faces major economic, rule-of-law, and corruption challenges, many observers believe Kosovo has made significant progress in strengthening its democratic institutions, its free-market economy and its Euro-Atlantic aspirations.", "The United States has had a long history of involvement in Kosovo, dating to the conflicts in the Balkans during the 1990s and since Kosovo declared its independence, which the United States has recognized. The United States has consistently provided support for the people of Kosovo and its commitment to democratic principles.", "Kosovo has over the years been one of the largest recipients of U.S. foreign assistance designed to strengthen institutions, human rights, rule of law, and more recently, reconciliation with Serbia and potential integration into the EU.", "A new \"threshold agreement\" reached in September 2017 between Kosovo and the U.S. Millennium Challenge Corporation (MCC) has become another element in the U.S. commitment to Kosovo.", "In March 2018, in one of his first trips to Europe, U.S. Assistant Secretary of State for Europe Wess Mitchell visited Pristina as a further indication of U.S. interest in the region.", "Nevertheless, some Balkan watchers caution that the United States needs to remain actively engaged in Kosovo even as it supports the EU's efforts to bring Kosovo closer to the EU.", "Many in the U.S. Congress have long been interested in the Balkans, and in particular, in Kosovo. In addition to a history of hearings on the Balkans, and an active Albania Caucus, established and led by the current ranking minority member on the House Committee on Foreign Affairs, many Members of Congress have been active supporters of U.S. involvement in and commitment to Kosovo's independence and development.", "It is likely that Congress will continue its support for Kosovo and the evolution of Kosovo-Serb relations through its oversight of the Balkans.", "During 2017, the U.S. House Democracy Partnership (HDP), as well as several other congressional delegations, visited Pristina to further congressional contacts and reaffirm U.S. commitments.", "The signing ceremony of the MCC agreement mentioned above was held in the U.S. House of Representatives and witnessed by several Members of Congress, including the cochair of the HDP. The MCC received comments of support from the chairman and ranking Democrat of the House Committee on Foreign Affairs." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, 1, -1, 0, 0, 2, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }
GAO_GAO-12-749	{ "title": [ "Background", "Financial Eligibility for Medicaid Coverage for Long-Term Care", "States Required Applicants to Document Most Assets, but What Was Considered Acceptable Proof Varied", "All States Obtained Some Amount of Asset Information from Third Parties, and No State Had Implemented an Asset Verification System", "States Varied in the Extent to Which They Obtained Information from Third Parties", "No State Had Implemented an Asset Verification System to Obtain Information from Financial Institutions", "It Is Unclear Whether Some States Obtain Sufficient Information to Implement Certain DRA Provisions", "Concluding Observations", "Agency Comments", "Appendix I: GAO Analysis of State Applications", "Appendix II: States’ Asset Documentation Requirements", "Table 10a: Applicant Documentation Requirements for Medicaid Long-Term Care, by State and Type of Asset, 2011", "Earned income", "Table 10b: Applicant Documentation Requirements for Medicaid Long-Term Care, by State and Type of Asset, 2011 (continued)", "State Ohio", "Earning", "Table 14a: States’ Treatment of Unearned Income Documentation, by State and Type of Documentation, 2011", "Statement or", "Table 14b: States’ Treatment of Unearned Income Documentation, by State and Type of Documentation, 2011 (continued)", "Itemized bank", "Bank", "Property deed", "Property deed", "Vehicle title", "Appendix III: States’ Use of Data Matches to Verify Applicants’ Assets", "Table 27a: Proportion of Applicants for which States Conduct Data Matches with Third Parties to Verify Applicants’ Assets, by State and Source of Data Match, 2011", "Social Security Administration", "Table 27b: Proportion of Applicants for which States Conduct Data Matches with Third Parties to Verify Applicants’ Assets, by State and Source of Data Match, 2011 (continued)", "Internal Revenue", "Table 28a: Timing of State Data Matches in Relation to Eligibility Determination, by State and Source of Data Match, 2011", "Social Security Administration", "Table 28b: Timing of State Data Matches in Relation to Eligibility Determination, by State and Source of Data Match, 2011 (continued)", "Internal Revenue", "Appendix IV: States’ Contact with Financial Institutions to Verify Applicants’ Assets", "Appendix V: States’ Use of Property Records Searches to Verify Applicants’ Assets", "Appendix VI: States’ Use of Vehicle Records Searches to Verify Applicants’ Assets", "Total", "Appendix VII: States’ Collection of Third- Party Information to Identify Transfers of Assets", "Appendix VIII: GAO Analysis of Annuity Language Contained in States’ Application Forms", "Appendix IX: Comments from the Department of Health and Human Services", "Appendix X: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Long-term care includes many types of services needed by individuals who have a physical disability, a mental disability, or both. Long-term care services can be provided in a variety of settings, including an individual’s home or an institution, such as a nursing home. To be eligible for Medicaid coverage for long-term care, individuals must be within certain eligibility categories—such as those that are aged or disabled—and meet functional and financial criteria. Within broad federal standards, states determine whether an individual meets the functional criteria for long-term care coverage by assessing an individual’s ability to carry out activities of daily living (ADL), such as eating and getting around the house; and instrumental activities of daily living (IADL), such as preparing meals and shopping for groceries. The financial eligibility criteria are based on individuals’ assets—income and resources together. States are responsible for determining whether applicants meet the financial and other eligibility criteria for Medicaid coverage for long-term care.", "To qualify for Medicaid coverage for long-term care, individuals must have assets that fall below established standards, which vary by state, but are within standards set by the federal government. The Medicaid program bases its characterization of assets—income and resources—on that used in the Supplemental Security Income program. Income is something received during a calendar month, paid either in cash or in- kind, that is used or could be used to meet food or shelter needs; resources are cash or real or personal property that are owned that can be converted to cash and be used for food or shelter. (See table 1 for examples of different types of income and resources.) In establishing policy for determining financial eligibility for Medicaid coverage for long- term care, states can decide, within federal standards, which assets are countable. For example, states may disregard certain types or amounts of income, and may elect not to count certain resources. In most states, to be financially eligible for Medicaid coverage for long-term care, individuals must have $2,000 or less in countable resources ($3,000 for a married couple).\nFederal law limits Medicaid payment for long-term care services for persons who divest themselves of—or “transfer”—their assets for less than FMV within a specified time period. As a result, when an individual applies for Medicaid coverage for long-term care, states conduct a review, or “look back,” to determine whether the applicant (or his or her spouse, if married) transferred assets to another person or party. If the state determines an applicant transferred an asset for less than FMV during the look-back period, the individual may be ineligible for Medicaid coverage for long-term care for a period of time, called the penalty period. The DRA extended the look-back period for transfers made on or after February 8, 2006, to 60 months; prior to that, it was generally 36 months.\nThe DRA also specified circumstances under which the purchase of certain assets—such as an annuity, promissory note or loan, or life estate—is considered a transfer for less than FMV, and when entrance fees for CCRCs are countable for purposes of determining Medicaid eligibility. Additionally, while an individual’s primary residence is generally not a countable resource for determining Medicaid eligibility, the DRA specified when an individual with substantial equity interest in his or her home is to be excluded from eligibility for Medicaid payment for long-term care; the amount of allowable equity interest is established by each state within federal guidelines. See table 2 for a summary of these DRA provisions. Most, but not all, of these DRA provisions became applicable on the date the law was enacted, February 8, 2006.\nTo assess applicants’ financial eligibility for Medicaid coverage for long- term care, and to determine whether they transferred assets for less than FMV, states generally require applicants to submit applications and to provide documentation of certain assets reported on the applications. State Medicaid programs may also obtain information from third parties, such as financial institutions or other government agencies, such as the Social Security Administration. Such information helps states verify the accuracy of applicants’ reported assets, as well as determine whether applicants have assets they failed to report or transferred for less than FMV during the look-back period. The processing of Medicaid applications—including the collection of documentation and information from applicants and third parties—is generally performed by local or county-based eligibility workers.\nIn 2008, Congress passed legislation that required states to implement electronic asset verification systems (AVS) to verify the assets of aged, blind, or disabled applicants for Medicaid, including those seeking Medicaid coverage for long-term care, with financial institutions. An AVS would provide states with an electronic mechanism to contact multiple financial institutions, including those not reported by an applicant, to determine if an applicant has, or had, an account and the value of any existing accounts. The law provides for states’ implementation of these systems to occur on a rolling basis; the first systems were to be implemented by the end of fiscal year 2009, with all states implementing systems by the end of fiscal year 2013. (See table 3.)", "States reported requiring applicants to provide documentation for most of the 13 types of assets contained in our survey; however, the types and number of months of documentation that the states considered to be acceptable proof for determining an applicant’s financial eligibility for Medicaid coverage for long-term care varied. Specifically, 44 states required documentation for at least 12 of the 13 types of assets. All states reported requiring documentation of annuities, burial contracts and prepaid funeral arrangements, financial and investment resources, life estates, and trusts, while fewer states reported requiring documentation of other types of assets. States were least likely to require documentation of vehicles (38 states) and primary residence (37 states), resources that states may choose not to count for purposes of determining financial eligibility for Medicaid coverage for long-term care. (See fig. 1.)\nOfficials from several states reported not requiring documentation for a particular type of asset because the state was able to obtain the necessary information from a third party. For example, while 50 states reported requiring applicants to submit documentation of earned income, one state did not have such a requirement because the amount of earned income was verified through an interface with the state’s Department of Labor. It was less clear how states assessed other assets—such as vehicles or CCRC entrance fees—absent documentation.\nOur survey also showed that states varied in how they treated specific types of documentation; that is, whether the documentation was required, acceptable as proof by itself, acceptable as proof with other documentation, or not acceptable as proof of an applicant’s assets. For example, while states generally found a written statement of earnings from an employer as acceptable documentation of earned income, there was more variation in how they treated other types of documentation. (See table 4.)\nStates also varied in the number of months of documentation required from applicants, especially as it related to financial and investment resources. Although all 51 states reported requiring documentation of financial and investment resources, 27 required only current documentation, while the remaining 24 required both current and past documentation. Of the 24 states that required documentation of both current and past financial and investment resources, most required 60 months of documentation, while the remaining states required fewer months of documentation. (See fig. 2.) There was some variation, but to a lesser extent, in the amount of documentation of earned and unearned income that states required from applicants. Of the 50 states that required applicants to provide earned income documentation, 47 required only current documentation. Of the 3 remaining states, 2 required 3 months of documentation and 1 required 2 months of documentation. Of the 49 states that required unearned income documentation, 47 only required documentation of current unearned income. The other 2 states required 3 months of documentation.\nIn addition to the documentation required to assess whether applicants’ assets were within state financial eligibility levels, 38 states reported requiring additional documentation from at least some applicants to identify assets transferred for less than FMV. Of these 38 states, 16 indicated they required additional documentation only if an applicant reported making a transfer, 5 reported doing so only if an applicant’s information was questionable, and 8 reported both of these reasons. Of the remaining 9 states, 7 required additional documentation from all applicants, and 2 did not specify the circumstances that would result in a request for additional documentation.\nAppendix II provides additional information on states’ asset documentation requirements for individuals applying for Medicaid coverage for long-term care.", "All 51 states reported that they obtained some amount of asset information from third parties, although the extent of the screenings conducted varied by state. No state had implemented an electronic AVS, which would allow them to contact multiple financial institutions— including those not reported by an applicant—to determine the existence and value of any accounts belonging to an applicant. States reported challenges to implementing an AVS including not having sufficient resources.", "To varying degrees, states reported obtaining information from third parties through a variety of mechanisms, including data matches, direct contact with financial institutions, and property and vehicle records searches. Some states also reported taking additional verification steps to determine if an applicant transferred assets for less than FMV during the look-back period.\nAll 51 states reported that they conduct data matches with the Social Security Administration to verify at least some applicants’ assets. However, states’ use of data matches with other sources of asset information—primarily related to income—varied, ranging from 48 states reporting data matches with state unemployment records, to as few as 6 states reporting data matches with state tax records. On average, states conducted data matches with 6 of the 10 sources included in our survey; the number of sources states reported using ranged from 1 to 9.In addition to variations in the use of data match sources, states varied in terms of the proportion of applicants screened, and when during the eligibility process the state conducted the screen. For example, most states reported conducting a data match with the Social Security Administration generally before determining an applicant’s eligibility. In contrast, of the 30 states that reported conducting a data match with the Internal Revenue Service for at least some applicants, 21 reported doing so generally after determining eligibility. (See table 5 for summary information and app. III for more detailed information about the data matches conducted by states.)\nTwenty-four states reported that they contact financial institutions to verify at least some applicants’ financial and investment resources, while the remaining 27 did not. However, these 24 states varied in terms of the range of financial institutions they contacted and the proportion of applicants about whom they inquired. (See table 6.)\nSome states reported contacting multiple types of financial institutions, such as institutions applicants reported having accounts with, and some that applicants did not report. However, 13 of the 24 states reported contacting only financial institutions with whom the applicant reported having an account; of these 13 states, 3 states contacted financial institutions for all applicants, while the other 10 states did so for some applicants. These 13 states, and the 27 that reported not contacting any financial institutions, are unlikely to identify accounts that an applicant failed to report. Of the remaining 11 states that reported contacting financial institutions not reported by an applicant, 3 reported contacting only local institutions, whereas the other 8 contacted a combination of local, statewide, and national institutions. Regarding the proportion of applicants for which states contact financial institutions, half of the 24 states reported they only contact financial institutions if an applicant submits insufficient information or provides questionable information.\nOf the 24 states that reported they contact financial institutions to request information, the type of information—account balances or itemized statements—and the number of months they request varied. (See fig. 3.) Specifically, half of these states requested itemized statements that include information on each transaction, while the other half requested monthly account balances. Most of the states that requested account balances did so for 3 or fewer months. Of the 12 states that requested itemized statements, 5 requested 60 months of statements, 3 requested only the statement for the current month, and the other 4 states requested between 3 and 36 months of information.\nMost of the states (20 of 24) reported that they contact financial institutions for asset information before determining eligibility. Appendix IV provides additional information about states’ contact with financial institutions to verify applicants’ assets.\nThirty-five states reported that they conduct some type of property records search to verify at least some applicants’ real property. The extent of the searches varied in terms of the geographic area covered and the proportion of applicants for which property searches were conducted. (See table 7.)\nOf the 35 states that reported conducting property searches, 2 states conduct property searches only within an applicant’s county of residence. Of the 33 states that reported conducting property searches beyond an applicant’s county of residence, 8 do so only if they have reason to believe the applicant lived in another county or state. Additionally, 12 of the 35 states indicated they conduct property searches only when an applicant submits questionable or insufficient information, an applicant reports the property, or a combination of both factors.\nStates reported being able to conduct property searches using several types of information, including an applicant’s name (33 states), property address (32 states), property zip code (12 states), or an applicant’s Social Security number (10 states). Most of the states (29 of the 35) reported that they generally conduct property searches before determining eligibility. Appendix V provides additional information about the property searches conducted by states.\nThirty states reported that they conduct searches of Department of Motor Vehicles’ (DMV) records to verify at least some applicants’ vehicles. Specifically, 14 states reported conducting vehicle searches for all applicants and 1 state reported conducting searches for most of its applicants. The remaining 15 reported conducting such searches for less than half of their applicants; of these 15 states, 6 indicated that they only conduct searches of vehicle records if they receive information from an applicant that they deem questionable. States reported being able to search these records using several types of information, including an applicant’s name (29 states), a vehicle identification number (20 states), and an applicant’s driver’s license or license plate number (18 states each). Most of the states (25 of the 30 states) reported that they generally conduct DMV searches before determining eligibility. Appendix VI provides additional information about the vehicle searches conducted by states.\nTwenty-two states reported taking additional steps to obtain information from third parties, such as conducting additional property searches, to identify assets transferred for less than FMV; 7 states reported doing this for all applicants; and 15 states reported doing this for some applicants. Of the 15 states that reported taking additional verification steps for just some applicants, most of them indicated they do so only if they question the information provided by applicants or have reason to believe a transfer may have occurred, such as if an applicant reported making a transfer. Appendix VII provides information on the proportion of applicants for which each state reported taking additional verification steps to identify assets transferred for less than FMV during the look-back period.", "Although 25 states were supposed to have implemented their electronic AVS to obtain information from financial institutions by the end of fiscal year 2011, no state had implemented one at the time of our survey. Eighteen states reported that they were in the process of implementing an AVS, while the remaining 33 states had yet to begin implementation.\nWhen asked about the challenges to implementing an AVS, 32 states reported that they did not have enough resources—such as money, staff, or time—required to implement such a system, and 18 states reported that it had been or would be challenging to get financial institutions to participate and provide information. One state reported that it had initially planned to have its AVS implemented by December 2011, but was unable to do so because financial institutions in the state were unwilling to participate in the AVS until state legislation is passed that releases the financial institutions from any liability, ensures they are fairly reimbursed for their services, and makes the process voluntary. The state Medicaid program is seeking such legislation during the state’s 2012 legislative session and then plans to proceed with implementing its AVS.\nCMS acknowledged that states may have challenges that could affect their ability to implement an AVS as scheduled. CMS officials were aware of states’ progress in implementing the AVS and told us that the agency was regularly communicating with states regarding AVS implementation.", "On the basis of states’ responses to questions about the documentation required from applicants and the asset information obtained from third parties, it is unclear whether some states obtain sufficient information to implement certain DRA provisions, particularly the provisions related to the look-back period and home equity. The results of our survey raise questions about some states’ implementation of the DRA, but are not conclusive, and we have additional work planned related to Medicaid long-term care financial eligibility.\nLook-back Period. We asked states about (1) the number of months of financial and investment resources documentation required to determine eligibility, (2) additional documentation required to identify assets transferred for less than fair market value, and (3) number of months of documentation obtained directly from financial institutions. When considering states’ responses to those questions, we found that 31 states reported obtaining less than 60 months of information about at least some applicants’ assets. Three of the 31 states reported requiring a single month of documentation from applicants and did not obtain any information from financial institutions. CMS officials noted that it is costly and time consuming to conduct a review for the 60 month look-back period. Thus, these officials stated, it was understandable for states to use discretion and only conduct reviews when there is reason to believe that a transfer could have been made during the look-back period. For example, a state might determine the need to conduct a more thorough review as a result of red flags found through other checks, such as when an applicant has very high income and no resources. However, the application forms in 6 of the 31 states did not ask about transfers made during the entire look-back period. Thus, it is unclear how these 6 states would know whether assets were transferred for less than FMV in the 60 months prior to application, and how all 31 states would be able to detect unreported transfers of assets made during the entire look-back period. In contrast, 20 states reported requiring 60 months of documentation from all applicants, 5 of which also requested 60 months of information from financial institutions for at least some applicants.\nHome Equity. Fourteen states reported not requiring documentation of a primary residence. Of these 14 states, 8 indicated that they conduct property record searches in the county of residence for at least some applicants to try to obtain information about property the applicant may own. Additionally, 1 state indicated that it could obtain information about an applicant’s primary residence from a third party. The remaining 5 states reported they did not conduct property records searches; as such, it is unclear how these states would determine if an applicant owns a home that he or she failed to report, and the value of an applicant’s equity interest in the home. Of the 37 states that reported requiring applicants to submit documentation of a primary residence, only 3 reported requiring documentation that could provide the state with information on the value of the home or an applicant’s equity interest in the home. The remaining 34 states reported requiring documentation about applicants’ primary residence, but the documentation received may not provide all of the information necessary to determine if applicants’ equity interest in their homes exceeds the state’s allowable amount.\nLife Estates. Among the 32 states that provided information on our survey about life estates, 2 states reported not assessing the length of time an applicant with a life estate resided in the property. The remaining 30 states reported requiring some type of proof in order to determine the amount of time an applicant resided in the property after the purchase of the life estate interest. On the basis of our analysis of state responses, 7 of the 30 states reported relying only on a statement from an applicant or another person who owns the residence to determine the length of time an applicant resided in the property; however, 2 of these 7 states said that they would require more documentation if they determined that the information they received was questionable. The remaining 23 states reported relying on documentation, such as a utility bill; a statement from an applicant; a statement from a third party; or some combination of these sources to determine the length of time an applicant lived in the property.\nCCRCs. On the basis of our survey results, most states—46 of 51—reported requiring applicants to provide documentation of CCRC or life care community entrance fees, such as a copy of the contract or agreement. Thus, these states should have sufficient information to determine if, under the DRA, an applicant’s entrance fees should be countable resources for determining Medicaid eligibility. However, it is unclear how the remaining 5 states would be able to determine if an applicant has paid such fees, and whether they should be counted toward the applicant’s Medicaid long-term care eligibility determination.\nPromissory Notes. Fifty states reported on our survey that they require applicants to provide documentation of promissory notes or loans; such documentation should allow the state to determine if a note meets the requirements specified in the DRA, such as providing for payments to be made in equal installments throughout the course of the loan, or if a note should be treated as a transfer of assets for less than FMV.\nAnnuities. In responding to our survey, all states reported requiring documentation of annuities and thus should have sufficient information to determine whether an annuity should be considered a transfer of assets for less than FMV under the DRA. Additionally, our review of 49 states’ long-term care application forms found that 45 required the disclosure of any interest the applicant or spouse has in an annuity and 27 contained statements regarding the state becoming a remainder beneficiary of such annuities. (See app. VIII.)", "As the demand for long-term care services increases and federal and state resources continue to be strained, it is important to ensure that only eligible individuals receive Medicaid coverage for long-term care. Since each state is responsible for day-to-day implementation of its Medicaid program, variation in policies and practices for determining financial eligibility is expected. However, some of the variation we found may raise questions regarding how states determine Medicaid eligibility for long- term care and enforce certain provisions of the DRA.\nStates must balance the costs of eligibility determination efforts with the need to ensure that those efforts provide sufficient information to implement federal requirements. While third-party verification of applicants’ financial information likely provides states with the best assurance of having a complete picture of an applicant’s financial status, it can be a complex and costly process that requires a significant amount of information and review. Given the complexities involved, it may be reasonable for states to adhere to a risk-based approach and focus their eligibility determination efforts on applicants who appear to be more likely to have assets or to have transferred assets that would make them ineligible. The electronic AVS that is required by law may help states identify some unreported or transferred assets. However, it is too early to assess its overall effectiveness, which will ultimately depend on the breadth of the financial institutions participating and the depth of the information obtained.", "We provided a draft of this report to HHS for its review, and HHS provided written comments (see app. IX). HHS concurred with our findings and noted that the results of our comprehensive report will serve as a resource for all interested parties. Further, HHS indicated that the report will be helpful for targeting CMS’s ongoing technical assistance and oversight efforts with states.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Administrator of CMS and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix X.", "", "", "", "State reported it did not count a primary residence when determining an applicant’s eligibility—and therefore did not require documentation—if an applicant was living in the home or intended to return home. State reported it did not require documentation of primary residence unless it appeared as though the primary residence could exceed the allowable amount of equity interest. State reported it did not require documentation of primary residence because it was not countable when determining an applicant’s eligibility. State reported it did not count a primary residence when determining an applicant’s eligibility—and therefore did not require documentation—if an applicant’s spouse, child under 20 years old, or disabled child was living in the home. State reported requiring documentation of vehicle loan value only if it affected eligibility determination. State reported requiring documentation of a life insurance policy if the applicant reported that it had a face value of $10,000 or more.\nState reported it did not require documentation of primary residence unless the applicant reported the value of the residence was within $200,000 of the allowable amount of equity interest.", "", "", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.", "", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.", "", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.\nRhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia  = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation. — = Response not provided.", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.", " = Required.  = Acceptable as proof by itself.  = Acceptable as proof with other documentation.  = Not acceptable as proof. — = Response not provided.", "", "", " = All applicants.  = Most (more than half) applicants.  = Some applicants.  = No applicants. — = Response not provided.", "", " = All applicants.  = Most (more than half) applicants.  = Some applicants.  = No applicants. — = Response not provided.", "", " = Generally before eligibility determination.  = Sometimes before and sometimes after eligibility determination.  = Generally after eligibility determination.\nN/A = Not applicable, state did not conduct data match with respective source. — = Response not provided.", "", " = Generally before eligibility determination.  = Sometimes before and sometimes after eligibility determination.  = Generally after eligibility determination.\nN/A = Not applicable, state did not conduct data match with respective source. — = Response not provided.", "Appendix IV: States’ Contact with Financial Institutions to Verify Applicants’ Assets State Alaska Arizona Connecticut Illinois Indiana Kentucky Louisiana Maine Maryland Michigan Missouri New Jersey New York Rhode Island South Carolina Texas Vermont  = All applicants.  = Most (more than half) applicants.  = Some applicants.  = No applicants. — = Response not provided. — = Response not provided.  = Generally before eligibility determination.  = Sometimes before and sometimes after eligibility determination.  = Generally after eligibility determination.", "Appendix V: States’ Use of Property Records Searches to Verify Applicants’ Assets State Alabama Alaska Arizona Colorado Connecticut Delaware Hawaii Illinois Iowa Kansas Kentucky Louisiana Maine Maryland Michigan Mississippi Missouri Montana Nevada New Hampshire New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island   = All applicants.  = Most (more than half) applicants.  = Some applicants.  = No applicants. — = Response not provided. — — = Response not provided.  = Generally before eligibility determination.  = Sometimes before and sometimes after eligibility determination.  = Generally after eligibility determination.", "Pennsylvania Rhode Island South Carolina  = All applicants.  = Most (more than half) applicants.  = Some applicants.  = No applicants.", "— = Response not provided.  = Generally before eligibility determination.  = Sometimes before and sometimes after eligibility determination.  = Generally after eligibility determination.", "Rhode Island South Carolina South Dakota Tennessee Texas  = All applicants.  = Some applicants.  = No applicants. — = Response not provided.", "Appendix VIII: GAO Analysis of Annuity Language Contained in States’ Application Forms ● Application form contained language regarding Name the state as a remainder 27 State collected information from applicants through an interview rather than a paper application form.", "", "", "", "In addition to the contact named above, Michelle B. Rosenberg, Assistant Director; Emily Binek; Julianne Flowers; Kaycee M. Glavich; Shirin Hormozi; Emily Loriso; Christina Ritchie; and Phillip J. Stadler made key contributions to this report." ], "depth": [ 1, 2, 1, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 1, 1, 1, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h4_title h3_title", "h0_full h3_full h4_full", "", "h0_title", "h0_full", "h0_full", "h4_full h1_full", "h0_full h2_full", "h4_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How did states vary in how they obtained third party information for Medicaid?", "Why was AVS not fully implemented by states?", "What did officials from CMS tell GAO?", "Why is it unclear whether states obtained sufficient information to implement DRA provisions?", "How has uncertainty about implementation been raised?", "Why has uncertainty about implementation been raised?", "What do CMS officials believe is reasonable for states to do?", "What plans does GAO have?", "How should states implement federal Medicaid requirements?", "Why might states use a risk-based approach for implementing Medicaid requirements?", "How will effectiveness of AVS be determined?", "What is Medicaid?", "How can people be eligible for Medicaid?", "How can people be ineligible for Medicaid?", "What changes did DRA bring?", "What entity is responsible for assessing applicant eligibility?", "What was GAO asked to provide?", "What did GAO examine?", "How did GAO obtain information?", "What is CMS?" ], "summary": [ "States varied in the extent to which they obtained information from third parties to verify applicants’ assets. For example, all states conducted data matches with the Social Security Administration but used other sources to a lesser extent.", "While states’ implementation of an electronic asset verification system (AVS) was required on a rolling basis beginning in 2009, no state had fully implemented an AVS at the time of GAO’s survey. Among the implementation challenges reported by states were lack of resources and getting financial institutions to participate.", "Officials from the Centers for Medicare & Medicaid Services (CMS) were aware of states’ progress and challenges and told GAO that they regularly communicated with states on AVS implementation.", "On the basis of states’ responses to questions about the extent of documentation required from applicants and information obtained from third parties, it is unclear whether some states obtain sufficient information to implement certain provisions of the Deficit Reduction Act of 2005 (DRA).", "The results of GAO’s survey raise questions about states’ implementation of the DRA, but are not conclusive.", "For example, 31 states reported requiring less than 60 months of documentation from applicants and financial institutions.", "CMS officials said that it is reasonable for states to only conduct reviews when there is reason to believe a transfer of assets occurred.", "GAO has additional work planned related to Medicaid long-term care financial eligibility.", "States must balance the costs of eligibility determination efforts with the need to ensure that those efforts provide sufficient information to implement federal requirements.", "Given the complexities involved, it may be reasonable for states to adhere to a risk-based approach and focus their eligibility determination efforts on applicants who appear to be more likely to have assets or to have transferred assets that would make them ineligible.", "It is too early to assess the effectiveness of the AVS; its utility will ultimately depend on the breadth of the financial institutions participating and the depth of the information obtained.", "Medicaid—a joint federal-state health care financing program for certain low income individuals—paid for nearly half of the nation’s $263 billion long-term care expenditures in 2010.", "To be financially eligible for Medicaid coverage for long-term care, applicants cannot have assets—income and resources—above certain limits.", "Federal law discourages individuals from artificially impoverishing themselves in order to establish financial eligibility for Medicaid. Specifically, those who transfer assets for less than fair market value during a specified time period—or “look-back” period—before applying for Medicaid may be ineligible for coverage for longterm care for a period of time.", "The DRA extended the look-back period to 60 months and introduced new requirements for the treatment of certain types of assets, such as annuities, in determining eligibility.", "States are responsible for assessing applicants’ eligibility for Medicaid, the criteria for which varies by state.", "GAO was asked to provide information on states’ requirements and practices for assessing the financial eligibility of applicants for Medicaid long-term care coverage.", "GAO examined the extent to which states (1) require documentation of assets from applicants, (2) obtain information from third parties to verify applicants’ assets, and (3) obtain information about applicants’ assets that could be used to implement eligibility-related DRA provisions.", "From October 2011 to November 2011, GAO surveyed Medicaid officials from each of the 50 states and the District of Columbia. GAO also interviewed officials from CMS, the agency within HHS that oversees Medicaid.", "GAO also interviewed officials from CMS, the agency within HHS that oversees Medicaid." ], "parent_pair_index": [ -1, -1, -1, -1, 0, 0, -1, -1, -1, 0, -1, -1, 0, 0, -1, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 0, 0, 0, 0, 0, 1, 1, 1, 1 ] }
GAO_GAO-13-412T	{ "title": [ "Background", "ISCD Has Assigned Thousands of Facilities to Tiers, but ISCD’s Approach to Risk Assessment Does Not Reflect All Risk Elements", "ISCD Has Tiered Thousands of High-Risk Chemical Facilities and Resolved Some Problems Using Its Risk Assessment Approach to Assign Tiers", "ISCD’s Risk Assessment Approach Does Not Consider All Elements of Risk", "ISCD Has Begun to Take Actions to Examine How Its Approach Could Be Enhanced", "ISCD Revised Its Security Plan Review Process, but Plan Approvals Could Take Years", "ISCD Revised Its Security Plan Review Process because of ISCD Managers’ Concerns, and Plans to Measure Related Improvements Moving Forward", "Security Plan Reviews Could Take Years to Complete, but ISCD Is Examining How It Can Accelerate the Review Process", "ISCD Has Increased Its Efforts to Communicate and Work with Facilities, but Does Not Solicit Systematic Feedback on Effectiveness of Its Outreach", "ISCD’s External Communication Efforts with Facilities Have Increased since 2007, but Selected Trade Associations Had Mixed Views about ISCD Efforts", "ISCD Seeks Informal Feedback, but Does Not Solicit Systematic Feedback on the Effectiveness of Its Outreach Efforts", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "Section 550 of the DHS appropriations act for fiscal year 2007 requires DHS to issue regulations establishing risk-based performance standards for the security of facilities that the Secretary determines to present high levels of security risk, among other things. The CFATS rule was published in April 2007, and appendix A to the rule, published in November 2007, listed 322 chemicals of interest and the screening threshold quantities for each. ISCD has direct responsibility for implementing DHS’s CFATS rule, including assessing potential risks and identifying high-risk chemical facilities, promoting effective security planning, and ensuring that final high-risk facilities meet applicable standards through site security plans approved by DHS. From fiscal years 2007 through 2012, DHS dedicated about $442 million to the CFATS program. During fiscal year 2012, ISCD was authorized 242 full-time- equivalent positions.\nISCD uses a risk assessment approach to develop risk scores to assign chemical facilities to one of four final tiers. Facilities placed in one of these tiers (tier 1, 2, 3, or 4) are considered to be high risk, with tier 1 facilities considered to be the highest risk. According to an ISCD document that describes how ISCD develops its CFATS risk score, the risk score is intended to be derived from estimates of consequence (the adverse effects of a successful attack), threat (the likelihood of an attack), and vulnerability (the likelihood of a successful attack, given an attempt). ISCD’s risk assessment approach is composed of three models, each based on a particular security issue: (1) release, (2) theft or diversion, and (3) sabotage, depending on the type of risk associated with the 322 chemicals. Once ISCD estimates a risk score based on these models, it assigns the facility to a final tier.", "", "In July 2007, ISCD began reviewing information submitted by the owners and operators of approximately 40,000 facilities. By January 2013, ISCD had designated about 4,400 of the 40,000 facilities as high risk and thereby covered by the CFATS rule. ISCD had assigned about 3,500 of those facilities to a final tier, of which about 90 percent were tiered because of the risk of theft or diversion. The remaining 10 percent were tiered because of the risk of release or the risk of sabotage.\nOver the last 2 years, ISCD has identified problems with the way the release chemicals model assigns chemical facilities to tiers and has taken or begun to take action to address those problems. In February 2011, ISCD found that some chemical facilities had been placed in an incorrect final tier because this model included incorrect data about the release of high-risk chemicals of interest. In June 2011, ISCD officials adjusted the model, which resulted in lowering the tier for about 250 facilities, about 100 of which were subsequently removed from the CFATS program. In October 2012, ISCD officials stated that they had uncovered another defect that led the model to exclude population density calculations for about 150 facilities in states or U.S. territories outside the continental United States, including Alaska, Hawaii, Puerto Rico, and Guam. In February 2013, ISCD officials said that they had made adjustments to the model to resolve this issue and do not expect any facilities’ tier will change due to this issue.", "Our preliminary analyses indicates that the tiering approach ISCD uses to assess risk and assign facilities to final tiers does not consider all of the elements of risk associated with a terrorist attack involving certain chemicals. According to the NIPP, which, among other things, establishes the framework for managing risk among the nation’s critical infrastructure, risk is a function of three components—consequence, threat, and vulnerability—and a risk assessment approach must assess each component for every defined risk scenario. Furthermore, the CFATS rule calls for ISCD to review consequence, threat, and vulnerability information in determining a facility’s final tier. However, ISCD’s risk assessment approach does not fully consider all of the core criteria or components of a risk assessment, as specified by the NIPP, nor does it comport with parts of the CFATS rule.  Consequence. The NIPP states that at a minimum, consequences should focus on the two most fundamental components—human consequences and the most relevant direct economic consequences. The CFATS rule states that chemical facilities covered by the rule are those that present a high risk of significant adverse consequences for human life or health, or critical economic assets, among other things, if subjected to terrorist attack, compromise, infiltration, or exploitation. Our review of ISCD’s risk assessment approach and discussions with ISCD officials shows that the approach is currently limited to focusing on one component of consequences—human casualties associated with a terrorist attack involving a chemical of interest—and does not consider consequences associated with economic criticality. ISCD officials said that the economic consequences part of their risk-tiering approach will require additional work before it is ready to be introduced. In September 2012, ISCD officials stated that they had engaged Sandia National Laboratories to examine how ISCD could gather needed information and determine the risk associated with economic impact, but this effort is in the initial stages, with an expected completion date of June 2014. ISCD officials added they are uncertain about how Sandia’s efforts will affect their risk assessment approach.  Threat. ISCD’s risk assessment approach is also not consistent with the NIPP because it does not consider threat for the majority of regulated facilities. According to the NIPP, risk assessments should estimate threat as the likelihood that the adversary would attempt a given attack method against the target. The CFATS rule requires that, as part of assessing site vulnerability, facilities conduct a threat assessment, which is to include a description of the internal, external, and internally assisted threats facing the facility and that ISCD review site vulnerability as part of the final determination of a facility’s tier. Our review of the models and discussions with ISCD officials shows that (1) ISCD is inconsistent in how it assesses threat using the different models because while it considers threat for the 10 percent of facilities tiered because of the risk of release or sabotage, it does not consider threat for the approximately 90 percent of facilities that are tiered because of the risk of theft or diversion; and (2) ISCD does not use current threat data for the 10 percent of facilities tiered because of the risk of release or sabotage. ISCD did not have documentation to show why threat had not been factored into the formula for approximately 90 percent of facilities tiered because of the risk of theft or diversion. However, ISCD officials pointed out that the cost of adding a threat analysis for these facilities might outweigh the benefits of doing so. ISCD officials said that given the complexity of assessing threat for theft or diversion, they are considering reexamining their approach. ISCD officials also said that they are exploring how they can use more current threat data for the 10 percent of facilities tiered because of the risk of release or sabotage.  Vulnerability. ISCD’s risk assessment approach is also not consistent with the NIPP because it does not consider vulnerability when developing risk scores. According to the NIPP, risk assessments should identify vulnerabilities, describe all protective measures, and estimate the likelihood of an adversary’s success for each attack scenario. Similar to the NIPP, the CFATS rule calls for ISCD to review facilities’ security vulnerability assessments as part of its risk-based tiering process. This assessment is to include the identification of potential security vulnerabilities and the identification of existing countermeasures and their level of effectiveness in both reducing identified vulnerabilities and meeting the aforementioned risk-based performance standards. Our review of the risk assessment approach and discussions with ISCD officials shows that the security vulnerability assessment contains numerous questions aimed at assessing vulnerability and security measures in place but the information is not used to assign facilities to risk-based tiers. ISCD officials said they do not use the information because it is “self- reported” by facilities and they have observed that it tends to overstate or understate vulnerability. As a result, ISCD’s risk assessment approach treats every facility as equally vulnerable to a terrorist attack regardless of location and on-site security. ISCD officials told us that they consider facility vulnerability, but at the latter stages of the CFATS regulatory process particularly with regard to the development and approval of the facility site security plan.", "Our preliminary work indicates that ISCD has begun to take some actions to examine how its risk assessment approach can be enhanced. For example, in addition to engaging Sandia National Laboratories to develop the framework for assessing economic consequences previously discussed, ISCD has commissioned a panel of subject matter experts to examine the strengths and weaknesses of its current risk assessment approach. ISCD officials stated that the panel’s work is intended to focus on whether ISCD is heading in the right direction, and they view it as a preliminary assessment. According to ISCD’s task execution plan, the panel is to provide actionable recommendations on potential improvements to the CFATS models, but the panel is not to develop alternative CFATS models or formally validate or verify the current CFATS risk assessment approach—steps that would analyze the structure of the models and determine whether they calculate values correctly. In February 2013, after the panel was convened, ISCD officials stated that they provided information to the panel about various issues that they might want to consider, among them, (1) how to address vulnerability in the models given ISCD concerns about data quality, and (2) what the appropriate variables to use, if any, are for threats associated with theft or diversion, as discussed earlier.\nWe believe that ISCD is moving in the right direction by commissioning the panel to identify the strengths and weaknesses of its risk assessment approach, and the results of the panel’s work could help ISCD identify issues for further review and recommendations for improvement. Given the critical nature of ISCD’s risk assessment approach in laying the foundation for further regulatory steps in improving facility security—such as the development and approval of facility site security plans—it is important that its approach for assigning facilities to tiers is complete within the NIPP risk management framework and the CFATS rule. Once ISCD’s develops a more complete approach for assessing risk it would then be better positioned to commission an independent peer review. In our past work, we reported that peer reviews are a best practice in risk management and that independent expert review panels can provide objective reviews of complex issues. Furthermore, the National Research Council of the National Academies has recommended that DHS improve its risk analyses for infrastructure protection by validating the models and submitting them to external peer review. As we have previously reported, independent peer reviews cannot ensure the success of a risk assessment approach, but they can increase the probability of success by improving the technical quality of projects and the credibility of the decision-making process. We will continue to monitor and assess ISCD’s efforts to examine its risk assessment approach through our ongoing work and consider any recommendations needed to address these issues.", "", "Our preliminary work shows that ISCD has made various revisions to its security plan review process to address concerns expressed by ISCD managers about slow review times. Under the CFATS rule, once a facility is assigned a final tier, it is to submit a site security plan to describe security measures to be taken and how it plans to address applicable risk-based performance standards. The November 2011 internal memorandum that discussed various challenges facing the CFATS program noted that ISCD had not approved any security plans and stated that the process was overly complicated and created bottlenecks. The memorandum stated that revising the process was a top program priority because the initial security plan reviews were conducted using the risk- based standards as prescriptive criteria rather than as standards for developing an overall facility security strategy.\nAccording the ISCD officials, the first revision was called the interim review process, whereby individual reviewers were to consider how layers of security measures met the intent of each of the 18 standards. Under the interim review process, ISCD assigned portions of each facility’s plan to security specialists (e.g., cyber, chemical, and physical, among others) who reviewed plans in a sequential, linear fashion. Using this approach, plans were reviewed by different specialists at different times culminating in a quality review. ISCD officials told us that the interim review process was unsustainable, labor-intensive, and time-consuming, particularly when individual reviewers were looking at pieces of thousands of plans that funneled to one quality reviewer. In July 2012, ISCD stopped using the interim review process and began using the current revised process, which entails using contractors, teams of ISCD employees (physical, cyber, chemical, and policy specialists), and ISCD field office inspectors, who are to review plans simultaneously.\nISCD officials said that they believe the revised process for reviewing security plans is a “quantum leap” forward, but they did not capture data that would enable them to measure how, if at all, the revised process is more efficient (i.e., less time-consuming) than the former processes. They said that, under the revised process, among other things, field inspectors are to work with facilities with the intent of resolving any deficiencies ISCD identifies in their site security plans. They added that this contrasts with past practices whereby ISCD would review the entire plan even when problems were identified early and not return the plan to the facility until the review was complete, resulting in longer reviews. Moving forward, ISCD officials said they intend to measure the time it takes to complete parts of the revised process and have recently implemented a plan to measure various aspects of the process. Specifically, ISCD’s Annual Operating Plan, published in December 2012, lists 63 performance measures designed to look at various aspects of the site security plan review process—from the point the plans are received by ISCD to the point where plans are reviewed and approved. Collecting data to measure performance about various aspects of the security plan review process is a step in the right direction, but it may take time before the process has matured to the point where ISCD is able to establish baselines and assess its progress.", "ISCD has taken action to improve its security plan review process, but based on our preliminary analysis, it could take years to review the plans of thousands of facilities that have already been assigned a final tier. ISCD hopes to address this by examining how it can further accelerate the review process. According to ISCD officials, between July 2012 and December 2012, ISCD had approved 18 security plans, with conditions. ISCD officials told us that, moving forward, they anticipate that the revised security plan review process could enable ISCD to approve security plans at a rate of about 30 to 40 a month.\nUsing ISCD’s estimated approval rate of 30 to 40 plans a month, our preliminary analysis indicates that it could take anywhere from 7 to 9 years to complete reviews and approvals for the approximately 3,120 plans submitted by facilities that have been final-tiered that ISCD has not yet begun to review. Figure 1 shows our estimate of the number of years it could take to approve all of the security plans for the approximately 3,120 facilities that, as of January 2013, had been final- tiered, assuming an approval rate of 30 to 40 plans a month.\nIt is important to note that our 7- to 9-year preliminary estimate does not include other activities central to the CFATS mission, either related to or aside from the security plan review process. In addition, our estimate does not include developing and implementing the compliance inspection process, which occurs after security plans are approved and is intended to ensure that facilities that are covered by the CFATS rule are compliant with the rule, within the context of the 18 performance standards. According to ISCD officials, they are actively exploring ways to expedite the speed with which the backlog of security plans could be cleared, such as potentially leveraging alternative security programs, reprioritizing resources, and streamlining the inspection and review requirements. ISCD officials added that they plan to complete authorizations inspections and approve security plans for tier 1 facilities by the first quarter of fiscal year 2014 and for tier 2 facilities by the third quarter of fiscal year 2014.", "", "Our preliminary work shows that ISCD’s efforts to communicate and work with owners and operators to help them enhance security at their facilities have increased since the CFATS program’s inception in 2007, particularly in recent years. Since 2007, ISCD has taken various actions to communicate with facility owners and operators and various stakeholders—including officials representing state and local governments, private industry, and trade associations—to increase awareness about CFATS. From fiscal years 2007 through 2009, most of ISCD’s communication efforts entailed outreach with owners and operators and stakeholders through presentations to familiarize them with CFATS; field visits with federal, state, and local government and private industry officials; and compliance assistance visits at facilities that are intended to assist facilities with compliance or technical issues. By 2010 and in subsequent years, ISCD had revised its outreach efforts to focus on authorization inspections during which inspectors visited facilities to verify that the information in their security plans was accurate and complete, and other outreach activities including stakeholder outreach.\nHowever, analysis of industry trade associations’ responses to questions we sent them about the program shows mixed views about ISCD’s efforts to communicate with owners and operators through ISCD outreach efforts. For example, 3 of the 11 trade associations that responded to our questions indicated that ISCD’s outreach program was effective in general, 3 reported that the effectiveness of ISCD’s outreach was mixed, 4 reported that ISCD’s outreach was not effective, and 1 respondent reported that he did not know.", "Our preliminary results indicate that ISCD seeks informal feedback on its outreach efforts but does not systematically solicit feedback to assess the effectiveness of outreach activities, and it does not have a mechanism to measure the effectiveness of ISCD’s outreach activities. Trade association officials reported that in general ISCD seeks informal feedback on its outreach efforts and that members provide feedback to ISCD. Association officials further reported that among other things ISCD has encouraged association members to contact local ISCD inspectors and has hosted roundtable discussions and meetings where members of the regulated community provide feedback, suggest improvements, or make proposals regarding aspects of the CFATS program such as site security plans, alternative security programs, and gasoline storage site risks. Furthermore, according to ISCD officials, while feedback is solicited from the regulated community generally on an informal basis, inspectors and other staff involved in ISCD’s outreach activities are not required to solicit feedback during meetings, presentations, and assistance visits, and inspectors are also not required to follow up with the facilities after compliance assistance visits to obtain their views on the effectiveness of the outreach.\nISCD, as part of its annual operating plan, has established a priority for fiscal year 2013 to develop a strategic communications plan intended to address external communication needs including industry outreach. We have previously reported on the benefits of soliciting systematic feedback. Specifically, our prior work on customer service efforts in the government indicates that systematic feedback from those receiving services can provide helpful information as to the kind and quality of services they want and their level of satisfaction with existing services. We will continue to monitor and assess ISCD’s efforts to develop a systematic way to solicit feedback through our ongoing work and consider any recommendations needed to address this issue.\nChairman Shimkus, Ranking Member Tonko, and members of the subcommittee, this completes my prepared statement. I would be happy to respond to any questions you may have at this time.", "For information about this statement please contact Stephen L. Caldwell, at (202) 512-9610 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals making key contributions included John F. Mortin, Assistant Director; Chuck Bausell; Jose Cardenas; Michele Fejfar; Jeff Jensen; Tracey King; Marvin McGill; Jessica Orr; and Ellen Wolfe.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h0_full h3_full h4_full", "h0_title h3_title", "", "h0_full h3_full", "h0_full", "h1_title h3_title", "h3_full h1_full", "h1_full", "h2_title h4_title", "h4_full h2_full", "h4_full h2_full", "h2_full" ] }	{ "question": [ "What tasks have the ISCD in DHS assigned since 2007?", "What is the problem with the way ISCD assessed risk?", "How is ISCD reexamining its risk assessment?", "Why is ISCD's risk assessment approach important?", "Despite ISCD revising its process, what problem exists?", "Why is the revised process an improvement?", "How will the revised process be better?", "How can the revised process still be improved?", "What problems did ISCD have with its previous process?", "What actions has ISCD taken?", "What is the problem with the actions ISCD has taken?", "According to GAO, what is the importance of systematic feedback?", "What work will GAO continue to do?", "Why are facilities that produce, store, or use hazardous chemicals of interest to terrorists?", "What has been established to protect these facilities from terrorists?", "What is the role of ISCD in the CFATS program?", "What brought up a concern with ISCD’s ability to fulfill its mission?", "What information does GAO's statement provide?", "How did GAO get information from this statement?", "What input did GAO receive?", "What are the pros/cons of the input GAO received?" ], "summary": [ "Since 2007, the Department of Homeland Security’s (DHS) Infrastructure Security Compliance Division (ISCD) has assigned about 3,500 high-risk chemical facilities to risk-based tiers under its Chemical Facilities Anti-Terrorism Standards (CFATS) program, but it has not fully assessed its approach for doing so.", "The approach ISCD used to assess risk and make decisions to place facilities in final tiers does not consider all of the elements of consequence, threat, and vulnerability associated with a terrorist attack involving certain chemicals. For example, the risk assessment approach is based primarily on consequences arising from human casualties, but does not consider economic consequences, as called for by the National Infrastructure Protection Plan (NIPP) and the CFATS regulation, nor does it include vulnerability, consistent with the NIPP.", "ISCD has begun to take some actions to examine how its risk assessment approach can be enhanced. Specifically, ISCD has, among other things, engaged Sandia National Laboratories to examine how economic consequences can be incorporated into ISCD's risk assessment approach and commissioned a panel of experts to assess the current approach, identify strengths and weaknesses, and recommend improvements.", "Given the critical nature of ISCD's risk assessment approach in laying the foundation for further regulatory steps in improving facility security, it is important that its approach for assigning facilities to tiers is complete within the NIPP risk management framework and the CFATS regulation.", "DHS's ISCD has revised its process for reviewing facilities' site security plans-- which are to be approved by ISCD before it performs compliance inspections-- but it did not track data on the prior process so is unable to measure any improvements.", "ISCD views its revised process to be a significant improvement because, among other things, teams of experts review parts of the plans simultaneously rather than sequentially, as occurred in the past.", "Moving forward, ISCD intends to measure the time it takes to complete reviews, but will not be able to do so until the process matures.", "Using ISCD's expected plan approval rate of 30 to 40 plans a month, GAO estimated that it could take another 7 to 9 years before ISCD is able to complete reviews on the approximately 3,120 plans in its queue. ISCD officials said that they are exploring ways to expedite the process, such as reprioritizing resources.", "The past process was considered by ISCD to be difficult to implement and caused bottlenecks in approving plans.", "DHS's ISCD has also taken various actions to work with facility owners and operators, including increasing the number of visits to facilities to discuss enhancing security plans, but trade associations that responded to GAO's query had mixed views on the effectiveness of ISCD's outreach.", "ISCD solicits informal feedback from facility owners and operators on its efforts to communicate and work with them, but it does not have an approach for obtaining systematic feedback on its outreach activities.", "Prior GAO work on customer service efforts in the government indicates that systematic feedback from those receiving services can provide helpful information as to the kind and quality of services they want and their level of satisfaction with existing services.", "GAO will continue to assess ISCD's efforts in these areas and consider any recommendations needed to address these issues. GAO expects to issue a report on its results in April 2013.", "Facilities that produce, store, or use hazardous chemicals could be of interest to terrorists intent on using toxic chemicals to inflict mass casualties in the United States.", "As required by statute, DHS issued regulations that establish standards for the security of high-risk chemical facilities. DHS established the CFATS program in 2007 to assess the risk posed by these facilities and inspect them to ensure compliance with DHS standards.", "ISCD, which manages the program, places high-risk facilities in risk-based tiers and is to conduct inspections after it approves facility security plans.", "A November 2011 ISCD internal memorandum raised concerns about ISCD's ability to fulfill its mission.", "This statement is based on GAO's ongoing work conducted for several congressional committees and subcommittees and provides preliminary observations regarding the extent to which DHS has (1) assigned chemical facilities to tiers and assessed its approach for doing so, (2) revised its process to review facility security plans, and (3) communicated and worked with owners and operators to improve security.", "To conduct this ongoing work, GAO reviewed DHS reports and plans on risk assessments, security plan reviews, and facility outreach and interviewed DHS officials.", "GAO received input from 11 trade associations representing chemical facilities about ISCD outreach.", "The results of this input are not generalizable but provide insights about DHS outreach efforts." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, 0, 0, -1, -1, 0, -1, -1, -1, 0, -1, 2, -1, 0, 0, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1, 1 ] }
CRS_R41023	{ "title": [ "", "Recent Developments", "Current Conditions", "Preliminary Numbers at a Glance", "Haitian Government Response", "The Government's New Action Plan", "Extra-Constitutional Rule Begins after May 10", "U.N. Stabilization Mission in Haiti (MINUSTAH)17", "", "Humanitarian Relief Operation", "Overall Status of the Relief Effort", "United Nations Humanitarian Response", "Humanitarian Relief Sectors: Recent Developments28", "Haiti's Humanitarian Needs in Context", "Other Humanitarian Actors", "U.S. Humanitarian Assistance", "U.S. Humanitarian Assistance to Haiti FY2009-FY2011, Prior to the Earthquake", "U.S. Humanitarian Assistance to Haiti following the Earthquake", "FY2010 Supplemental Humanitarian Relief Funding for Haiti", "USAID", "Department of Defense: Operation Unified Response33", "Non-Governmental Organizations (NGOs)", "Overall U.S. FY2010 Assistance", "FY2010 Supplemental Funding Request for Haiti", "International Humanitarian Funding", "U.N. Consolidated Appeals Process", "Other Pledges and Contributions", "Donor Contributions and Pledges", "Private Contributions", "Recovery Planning among Donors and Haiti40", "Early Recovery Planning", "March 31, 2010 Donors Conference41", "The Role of the United Nations and Other Organizations", "Response of International Financial Institutions43", "Multilateral Lending", "World Bank", "Inter-American Development Bank", "International Monetary Fund", "Debt Relief Prior to the Earthquake", "World Bank", "Bilateral Creditors", "Debt Relief Since the Earthquake", "Inter-American Development Bank", "World Bank", "International Fund for Agriculture and Development", "International Monetary Fund", "The IMF and Haiti's Financial Sector", "Debt Relief in the FY2010 Supplemental Funding Request", "Regional Response", "Political and Economic Situation in Haiti61", "Conditions in Haiti Before the Earthquake", "Political Conditions", "The National Assembly and the Question of 2010 Elections", "Socioeconomic Conditions Prior to the Earthquake", "Long-term Reconstruction Strategy", "Review of Haiti's Development Strategy", "Principles of Assistance for the Reconstruction of Haiti77", "Select Issues to be Addressed in the Long-term Reconstruction Strategy", "Agricultural Capacity and the Environment", "Decentralization of Population and Services", "Education", "Energy", "Health Care", "Job Creation", "Trade and Exports", "Recovery and Reconstruction Funding in the FY2010 Supplemental Request", "Congressional Concerns", "FY2010 Supplemental Funding Request for Haiti", "Budget Priorities", "Burdensharing and Donor Fatigue", "Coordinating the Relief Response in Haiti", "Elections in Haiti", "Immigration, Adoption85", "Medical Evacuation94", "Tax Incentives for Charitable Donations", "Trade Preferences105", "Constituent Concerns", "Legislation in the 111th Congress107" ], "paragraphs": [ "", "A major global donors' conference was held March 31, 2010, in New York. Donors pledged over $5 billion for the first 18 months of Haiti's reconstruction. The United States pledged $1.2 billion. The Haitian government presented an action plan for reconstruction and development, and a Post Disaster Needs Assessment that estimated the total value of recovery and reconstruction needs to be $11.5 billion. The Obama Administration requested $2.8 billion in FY2010 supplemental funding for relief and reconstruction support for Haiti. Extra-constitutional rule will begin after May 10, when most parliamentarians' terms expire; President Préval will probably rule by decree after that. Haiti passed a State of Emergency Law on April 20 giving the President broad powers. The international community is urging Haiti to hold legislative and presidential elections in November 2010. Humanitarian assistance is focused on providing waterproof emergency shelter, improving sanitation and meeting the basic needs of the displaced and other vulnerable Haitians. The relief effort is expected to last for many months. Most U.S. military forces will withdraw from Haiti by about June 1, 2010.", "The largest earthquake ever recorded in Haiti devastated parts of the country, including the capital, on January 12, 2010. The quake, centered about 15 miles southwest of Port-au-Prince, had a magnitude of 7.0. A series of strong aftershocks have followed. The damage was severe and catastrophic. Thousands of buildings collapsed, leaving unknown numbers of people trapped, and hundreds of thousands of people homeless in the streets. Estimates of casualties are constantly being updated. According to the Secretary-General of the United Nations, \"[o]f Haiti's 9 million people, initial reports suggest roughly a third may be affected by the disaster.\"\nThe Inter-American Development Bank (IDB) issued a study on February 11 estimating the damage caused by the earthquake to be at least $8 billion, and as high as $14 billion. One of the report's authors, economist Andrew Powell, said that, \"This disaster, given the size of Haiti ... is the most devastating catastrophe that a country has experienced possibly ever.\" The report compared the damage to other catastrophes, finding, for example, that the earthquake's damage amounted to 117% of Haiti's annual economic output, while the 2004 tsunami damage amounted to 2% of Indonesia's annual economic output. The Haiti Post Disaster Needs Assessment, conducted by Haiti and international institutions, reported similar findings, estimating the total value of recovery and reconstruction needs to be $11.5 billion.\nAll of this damage was sustained in a country that the United Nations had already designated as one of the 50 \"least developed countries\" in the world, facing a higher risk than other countries of failing to come out of poverty, and therefore needing the highest degree of attention from the international community.\nRecovery efforts have been made extremely difficult by the loss of personnel and infrastructure that would be part of a recovery effort. Among the missing and dead were Haitian government officials and international aid personnel, including many U.N. personnel. Housing, hospitals, schools, and many government buildings collapsed. Basic services such as electricity and water were almost completely disrupted. Major transportation routes were damaged and/or blocked. The Port-au-Prince airport control tower was destroyed; the airport continued to function, and air traffic control authority was quickly transferred to U.S. personnel with portable radar. On February 18, commercial air traffic in and out of Port-au-Prince resumed. As of early March, relief flights into Haiti had dropped from a peak of 160 flights per day to an average of 75. The main port suffered heavy damage; U.S. troops are repairing the port facilities. The port is expected to handle 1,500 containers of relief supplies once it is fully repaired. The use of airfields and ports in the Dominican Republic, with humanitarian corridors over land, have also eased the burden on Haitian facilities.\nHaitian government officials continue to function in makeshift conditions. The roof of the Presidential Palace collapsed and the President's private residence was also destroyed. President Préval was initially unable to communicate with his Cabinet and has been working out of a small room in a police headquarters. The Parliament building collapsed, with some Members trapped inside and others killed. The Parliament has convened in the National Police Academy. Twenty-eight of 29 Ministry buildings were destroyed.\nThe United Nations, which already had a strong presence in Haiti, is at the forefront of on-the-ground response for security and humanitarian assistance, and suffered heavy losses as well. Its headquarters collapsed, and 101 U.N. personnel are confirmed dead and 6 others remain unaccounted for. The head of the U.N. Stabilization Mission in Haiti (MINUSTAH), Special Representative Hedi Annabi, and his deputy, Luiz Carlos da Costa, were among the dead. U.N. Secretary General Ban Ki-moon sent Assistant Secretary General Edmond Mulet to Haiti on January 13 to direct the U.N.'s immediate response efforts; Mulet is a former Special Representative of the Secretary General for MINUSTAH.\nPrior to the earthquake, the international community was providing extensive development and humanitarian assistance to Haiti. With that assistance, the Haitian government had made significant progress in recent years in many areas of its development strategy, including security; judicial reform; macroeconomic management; procurement processes and fiscal transparency; increased voter registration; and jobs creation. It had also made progress in providing broader access to clean water and other services. Parliamentary elections scheduled for February 2010 have been delayed. There is tentative agreement that Haiti will hold joint parliamentary and presidential elections in November 2010. President Préval's term will end in February 2011, and he is not eligible to run for reelection.\nThe destruction of Haiti's nascent infrastructure and other extensive damage caused by January's earthquake will set back Haiti's development significantly. U.N. Special Envoy and former President Bill Clinton said that Haiti's long-term development plans \"will need to be amended ... but they cannot be abandoned.\" Soon after the earthquake, the government of Haiti and the international donor community held meetings and conferences to begin planning a long-term strategy for Haitian recovery.\nA major global donors' conference was held March 31, 2010, in New York at which 48 countries, multilateral institutions, and a coalition of non-governmental organizations pledged $5.3 billion for the first 18 months of Haiti's reconstruction, part of nearly $10 billion pledged toward long-term reconstruction efforts. The IDB damage assessment stated that donor coordination will be key in any reconstruction effort. The report further noted that there are different models for coordination, but that however it is coordinated, \"[a] single executing agency with appropriate powers, transparency and accountability to the Haitian Government and donors would be helpful\" in achieving the needed coordination on the ground. To that end, Haiti and the international donor community have established a Multi-Donor Trust Fund to monitor, coordinate, and distribute funds.\nThe Obama Administration is requesting $2.8 billion in FY2010 supplemental funding to cover costs associated with relief and reconstruction support for Haiti. The U.S. pledge of $1.2 billion made at the donors conference is included in that request.", "It is estimated that 3 million people, approximately one-third of the overall population, have been affected by the earthquake. The government of Haiti is reporting an estimated 230,000 deaths (2% of the population), 300,600 injured and 383 missing. Earlier reports indicated there were 1.2 million Internally Displaced Persons (IDPs), which included 700,000 people displaced in the Port-au-Prince area, many without shelter, and more than 597,000 people who left Port-au-Prince for rural areas. More recent numbers indicate a higher number of IDPs with a possible total of over 2 million displaced in Haiti. This number includes 1.69 million displaced in settlements in Port-au-Prince and more than 300,000 in areas outside the city. Much smaller numbers of Haitians have left for the Dominican Republic, nearby islands, and the United States.\nAccording to the State Department, a total of 16,000 Americans in Haiti have been accounted for, and 16,704 U.S. citizens have been evacuated. There are 103 reported deaths of U.S. citizens due to the earthquake. Now that commercial airlines are operating out of Port-au-Prince, the U.S. embassy is no longer assisting with citizen evacuations.", "In the immediate wake of the earthquake, President Préval described conditions in his country as \"unimaginable,\" and appealed for international assistance. The country's top priority was to conduct search and rescue operations for survivors. Other material priorities included an offshore vessel medical unit and electricity generation capability. The government also requested communications equipment so that government officials could better function and coordinate response efforts. As those immediate needs are met and the humanitarian relief operation continues, the government is struggling to restore the institutions needed for it to function and to address long-term reconstruction and development planning. \"The first thing is political stability,\" said Préval. \"Secondly, we hope the international community will help us in the short-term, mid-term, and long-term.\"\nPrior to this disaster, the World Bank and others were working with the Haitian government to incorporate disaster risk management into Haiti's overall development strategy and to develop its capacity for disaster response. The capacity was still in its early stages, however, and the focus of much of its risk management efforts was not geared toward earthquakes, but toward hurricanes, which are the most common cause of natural disasters on the island. The last major earthquake in Haiti was 150 years ago, in 1860.\nSome Haitians complain that they have seen or heard little of President Préval since the earthquake. The perception that the Haitian government was not doing enough contributed to calls by some Haitians, both in Haiti and the United States, for the United States to take control of Haiti in place of the current government in the days following the disaster.\nThe destruction of buildings, equipment, and loss of skilled personnel has drastically reduced the ability of the government to respond rapidly. According to the Haitian Chamber of Commerce, the earthquake destroyed approximately 25,000 public and commercial buildings. Twenty-one out of 22 Ministry buildings were destroyed. Along with the buildings, government records were destroyed; re-establishing and expanding transparency in government spending will be particularly challenging. These losses, plus the difficulty of delivering and transporting material supplies, will hinder delivery of services. The already significant need for services is now vastly expanded.\nHaitian ministries are addressing issues such as long-term housing for those left homeless by the earthquake as they operate out of makeshift offices. Haitian authorities and international relief agencies are delivering food and water to hundreds of makeshift camps in Port-au-Prince. The government provided free transportation to evacuate people from the capital to cities not damaged by the earthquake. Interior Minister Paul Antoine Bien-Aime indicated that as many as 482,000 people may be relocated outside Port-au-Prince. The Haitian government is sending officials to small cities to help officials in those communities establish priorities.\nOther elements of the government are working along with international actors. The Haitian National Police are contributing to maintaining security, for example, and Haitian air traffic controllers are working along with U.S. controllers at the Port-au-Prince airport.\nThe Haitian government, the United Nations, and donor representatives met in Haiti on January 14 to coordinate their efforts, and have continued to do so at various conferences. Eighteen Haitian senators elected two commissions on January 28 to monitor aid and manage agreements with aid organizations.", "President Préval and Prime Minister Bellerive went to the March 31 international donors'conference with a 10-year recovery action plan. According to the Haiti Post Disaster Needs Assessment conducted by Haiti and international institutions, the total value of recovery and reconstruction needs is $11.5 billion. At the conference The Préval Administration sought a minimum of $3.9 billion for the first 18 months of Haiti's reconstruction.\nThe priorities the Haitian government established in the \"Action Plan for the Reconstruction and National Development of Haiti\" are:\nensuring preparedness for the 2010 rainy and hurricane seasons, especially for displaced populations; providing assistance to the population affected by the earthquake while hastening recovery efforts with an eye to reducing dependence on foreign aid; including environmental factors and risk and disaster management in all recovery and reconstruction activities; actively providing employment and vocational training; strengthening governmental authority while also decentralizing basic services, creating a social safety net for the poorest population; and creating growth poles to support and encourage settlement of displaced populations around the country and to make Port-au-Prince less congested.\nHaitian government officials see the earthquake's devastation in Port-au-Prince as an opportunity to establish a more sustainable distribution of population elsewhere in the country. Bellerive has asked international donors to aid in a massive revival of agriculture, in order to provide jobs and keep relocated Haitians in the provinces.\nSome observers have questioned whether historical and current allegations of various levels of corruption in the Haitian government may impair short- and long-term recovery efforts. The government of Haiti made major progress in recent years in reducing corruption, increasing transparency, and improving fiscal management. These improvements qualified Haiti for Heavily Indebted Poor Country (HIPC) debt relief last year. In its new Action Plan, the government said the momentum of those programs must continue, and proposed the Interim Commission for the Reconstruction of Haiti, a Development Agency, and the Multi-Donor Trust Fund to improve development planning, coordination, and accountability. New concerns about transparency and oversight may also arise as the legislature ceases to function as a whole because elections have not been held. Normally, the legislature must approve federal procurement contracts, and authorize spending. Under a State of Emergency law passed by the legislature in April, the executive branch will have those powers for the next 18 months.", "Haiti passed a State of Emergency Law on April 20 giving the President broad powers. The terms of all of the Chamber of Deputies, and of one-third of the Senate, will expire on May 10. How the government will function after that is not entirely clear. President Préval will probably rule by decree. The remaining 19 Senators may continue to meet, however, and the Senate has the power to dismiss the Prime Minister and censure government programs. As a result, political tensions are likely to increase. The international community is urging Haiti to hold legislative and presidential elections in November 2010. Préval has promised to step down when his term expires on February 7, 2011.", "The U.N. Security Council created the U.N. Stabilization Mission in Haiti (MINUSTAH) on April 30, 2004, having determined that the situation in Haiti continued to be a threat to international peace and security in the region and acting under Chapter VII of the U.N. Charter. As a U.N.-conducted peacekeeping operation, MINUSTAH was given a mandate under three broad areas: a secure and stable environment, the political process, and human rights. On October 13, 2009, the Council extended its mandate until October 15, 2010, \"with the intention of further renewal.\" The Council monitors the activities of MINUSTAH through semiannual reports made by the U.N. Secretary-General and his special representative, and also not later than 45 days before expiration of its mandate.\nOn January 19, 2010, the U.N. Security Council increased the overall force levels of MINUSTAH \"to support the immediate recovery, reconstruction and stability efforts.\" The Council decided that \"MINUSTAH will consist of a military component of up to 8,940 troops of all ranks and of a police component of up to 3,711 police and that it will keep the new levels of troops and police in MINUSTAH under review as necessary.\" The limits had been set at 6,940 for the military component and 2,211 for the police component. As of April 13, 2010, the military component of MINUSTAH totaled 8,306 troops, including four engineering companies, and 2,178 police officers.\nOn April 28, 2010, the U.N. Security Council met to consider the situation in Haiti, especially the April 2010 report of Secretary-General Ban Ki-moon on MINUSTAH. This was his first report since September 1, 2009 and covered up to April 15, 2010, with a focus on events since the earthquake. Ban noted, in his report,\nthat his Special Representative will continue to oversee the activities of the whole United Nations system and, within means and capabilities, ensure the full support of the MINUSTAH military, police and logistics components to humanitarian and recovery efforts.\nBan proposed that MINUSTAH \"assume the lead role in coordinating international electoral assistance in order to ensure its efficiency and avoid the duplication of efforts.\" Ban observed that a \"major focus of effort will be timely preparations for the 2010 presidential, legislative and municipal elections.\" In addition, he stated that MINUSTAH \"will reconfigure the military component within the existing troop ceiling to provide additional military engineers on a surge basis.\" Ban also recommended that the Council increase the MINUSTAH police component, adding 680 police personnel to the force levels already authorized by the Council in January 2010. As of May 3, 2010, the Council has not acted in response to the report of the Secretary-General.\nThe headquarters of the U.N. Stabilization Mission in Haiti (MINUSTAH) was demolished in the earthquake, with 101 U.N. staff confirmed dead. These included the Special Representative of the Secretary-General and Head of MINUSTAH Hedi Annabi and his Deputy, Luiz Carlos da Costa. On March 31, 2010, Secretary-General Ban announced the appointment of Edmond Mulet, as his Special Representative (SRSG) for Haiti and Head of MINUSTAH. Since January 14, 2010, Mr. Mulet had been acting SRSG and Head of MINUSTAH. On April 29, 2010, Ban announced the appointment of Kevin Kennedy (United States) as Deputy Special Representative for Haiti and Deputy Head of MINUSTAH, succeeding Mr. da Costa, and Nigel Fisher (Canada) as Deputy Special Representative, Ad Interim, for Haiti, succeeding Kim Bolduc (Canada).\nOn March 24, 2010, President Obama, in a supplemental budget request to Congress on Haiti, requested in the State Department's Contributions to International Peacekeeping Activities (CIPA) account a total of $96.5 million for U.S. assessed contributions to MINUSTAH. This was to fund the increase in assessments resulting from the Security Council's increase in force levels on January 19, 2010. The March 24 supplemental request also included, under Foreign Operations, in the International Narcotics Control and Law Enforcement Affairs (INCLE) account, $45,000,000 to support U.S. personnel to MINUSTAH: the \"secondment of 50 police advisers, five corrections advisers, and one drug specialist.\" These funds would increase the U.S. police and corrections officer contribution to MINUSTAH from 50 and 5 to 80 and 10, respectively.", "", "", "Experts break relief operations into several phases: search and rescue; treatment and survival; relocation and rehabilitation; early recovery; and long-term reconstruction. As with any significant natural disaster that has many moving parts, it can take days to get a relief effort underway. Delays in transportation and congestion, lack of transportation infrastructure, bureaucratic problems, and lack of access all can cause bottlenecks at key points in the system. While timing is critical to save lives, to enable a network of this size to function efficiently requires the coordination of assessments and appropriate responses with the government, local communities, and the international community.\nThe sheer scale of the relief effort in Haiti has brought together tremendous capacity and willingness to help, but an ongoing effort and strategic planning is required at each phase to work out coordination and logistics issues. The massive humanitarian relief operation underway was hampered by a number of significant challenges, including a general lack of transportation, extremely limited communications systems, and damaged infrastructure. In many parts of Port-au-Prince, roads were ruptured or blocked by collapsed buildings, debris, bodies, and people seeking open space. Working conditions remain hugely challenging for aid personnel. Humanitarian supplies are coming in to Haiti via Port-au-Prince and Santo Domingo, Dominican Republic. The airport in the Dominican Republic is also being used as a humanitarian staging area to help with the coordination effort and allow for relief teams and supplies to get to Haiti by land.\nChallenges consistent with a response to a disaster of this scope continue. In the first two weeks following the earthquake, priorities were focused on (1) search and rescue assistance, including teams with heavy-lift equipment and medical assistance and supplies; (2) addressing a critical need for food, clean water and sanitation, medical assistance, and emergency shelter; and (3) setting up key infrastructure and logistics operations. Three months after the disaster, the relief effort remains an immediate and critical priority amid plans under discussion for early recovery and reconstruction. There are concerns about security and potential for looting and violence, but according to the United Nations, the overall situation remains calm and stable, with some incidences of looting and criminality. However, 5,000 or so prison inmates escaped the National Penitentiary and other jails in Port-au-Prince during the earthquake (with some re-apprehended) and the whereabouts of the others is unknown, although it is suspected that a significant number may have retreated to Cite Soleil. Reports of rape cases in camps, roadblocks and fake tolls along roads, and other possible gang activity related to drugs and other crimes point to involvement by some of these criminals. U.N. and government officials are urging Haitians to turn in escaped criminals while also focusing on specific security interventions focused on their recapture.\nMore in-depth assessments, necessary to obtain a better understanding of the situation on the ground, continue. The Post-Disaster Needs Assessment (PDNA) a joint effort among representatives from the Government of Haiti, World Bank, United Nations and other actors, was completed in time for the March 31 conference in New York. The information is critical for determining whether personnel are in place with adequate resources, planning recovery and reconstruction initiatives, developing strategies for the use of funding, and paving the way for donor pledges and long-term support. The PDNA and donors conference are discussed later in the report.", "At the outset of the disaster, the United Nations established Disaster Assessment and Coordination (UNDAC) and U.N. Office for the Coordination of Humanitarian Affairs (OCHA) teams. The UNDAC team coordinated the Onsite Operations and Coordination Center (OSOCC). Two sub-OSOCCs were established in Jacmel and Leogane to assist local authorities. The UNDAC team concluded its work in Haiti in February.\nIn the weeks following the earthquake, OCHA helped to coordinate the search and rescue teams and continues to coordinate the assistance effort while focusing on other humanitarian priorities. In addition to working closely with the government of Haiti, OCHA is the lead agency working with actors on the ground, coordinating with the military, and enlisting donor support. The Humanitarian Country Team convened on February 1 and meets twice a week, with at least one of those meetings co-chaired by a representative from the government of Haiti. In consultation with MINUSTAH and international military forces, OCHA has developed a Joint Operations Tasking Centre (JOTC) which began operating on January 26 and focuses on civil-military coordination and logistics. The OCHA Civil-Military Coordination (CMCoord) team first convened on January 31 and brings together civil-military points of contact from humanitarian organizations, MINUSTAH, and international military forces. A Debris Management Planning Task Force was assembled on February 23.\nHumanitarian relief sectors are typically established during humanitarian crises to enable the United Nations to coordinate partners, prioritize resources, and facilitate planning. In Haiti, relief sectors have been organized into twelve clusters led by various agencies. The clusters include\nAgriculture (Food and Agriculture Organization, FAO); Camp Coordination and Camp Management (International Organization for Migration, IOM); Early Recovery (U.N. Development Program, UNDP); Education (U.N. Children's Fund, UNICEF); Emergency Shelter and Non-Food Items (International Federation of Red Cross and Red Crescent Societies, IFRC); Emergency Telecommunications (World Food Program, WFP); Food (World Food Program, WFP); Health (World Health Organization, WHO, and Pan American Health Organization, PAHO). Logistics (WFP); Nutrition (UNICEF); Protection (Office of the High Commissioner for Human Rights, OHCHR), with Child Protection (UNICEF); Gender Based Violence (U.N. Population Fund, UNFPA); Water, Sanitation, and Hygiene (UNICEF).\nInitially, there were criticisms of the slow initial response by the humanitarian aid community to the crisis. In recent press conferences, the United Nations has stated the cluster system appears to be working well, but others suggest that some clusters appear to be doing better than others.\nCluster arrangements have also been established in Leogane, Jacmel, and Gonaives. The cluster set up in the Dominican Republic was dissolved on April 13.", "Emergency Shelter: After the earthquake struck, people began gathering spontaneously in open spaces in Port-au-Prince. It was estimated that there were 500 or more makeshift camp sites with a combined total of more than 700,000 people. Aid workers are delivering basic necessities to areas with population concentrations. Emergency shelter was in very short supply. Reports indicate that 97,000 houses were destroyed and 188,000 sustained damage. It is estimated that 1.9 million lost their homes. Approximately 597,000 people were initially reported to have relocated in departments outside the city, with the highest number concentrated in Artibonite Department. Reports indicated that a number of areas saw increases of 15%-20% in the population. Ninety percent of the new arrivals were staying with host families. Reportedly, prices of basic commodities increased. See the maps in Appendix B and Appendix C . In early April, the estimated number of displaced was adjusted, with an increase in the number of IDPs in Port-au-Prince to 1.69 million and IDPs displaced in areas outside the city appearing to decrease to 300,000. The adjustment may in part reflect more accurate numbers as a result of IDP registrations. It may also reflect a \"pull factor\" where those who left Port-au-Prince initially are now returning to the capitol as services improve and recovery gets underway. The United Nations reports that 86% of the known caseload of IDPs have been reached with emergency shelter materials. As the rainy season begins, there remain concerns about whether there is sufficient waterproof emergency shelter, the need to move people from unsafe settlements, and ongoing challenges to improve sanitation. In addition, houses and buildings weakened by the earthquake could collapse or slide in wet conditions, adding to the 65 million tons of rubble needing to be removed. Finding space to shelter the displaced remains an issue. For those living in unsafe areas, the International Organization for Migration (IOM) has identified several options: (1) return to the permanent home if the structure is considered safe; (2) return to home area to a temporary shelter or proximity site; (3) seek accommodation with host communities—usually relatives or friends; (4) relocate to a new site. The first phase of humanitarian relocations for vulnerable families living in high-risk displacement sites was completed at the end of April, with more than 1,750 families moving to two temporary relocation sites at the edge of Port-au-Prince. Another plot in Corail Cesselesse (Port-au-Prince) has received over 3,000 people. IOM also reported that an estimated 49% of IDPs in the Port-au-Prince area were renters prior to the earthquake and 37% owned their own homes (14% did not identify their status.) Providing sustainable, long-term shelter to renters may be more problematic as renters do not own land for shelter installation and landowners may decide not to rebuild rental homes. In addition, owners of private schools have forced the eviction of those inhabiting their property as they seek to reopen their schools. Where to build on a more permanent basis will be a major decision—many of the poorest people were squatters on land subject to landslides and floods. The type of structures to be built will also have to be determined as there will be a need for inexpensive housing that is both earthquake- and hurricane-resistant. Food: Food and water are reaching people every day, but the needs remain constant. It is estimated that 2 million people in Haiti need regular food aid. Some areas outside Port-au-Prince that were previously considered food secure are facing difficulties as prices increase. Supplementary food programs have been launched for children under 5 and pregnant women in the Port-au-Prince area. WFP has provided emergency food rations to 3.5 million people since the earthquake struck. The heads of three U.N. agencies – WFP, the Food and Agriculture Organization (FAO) and the International Fund for Agricultural Development (IFAD) formed a new Task Force for Food Security in Haiti. The task force aims to assist the Haitian government with the implementation of a coordinated and targeted immediate and long term food security strategy. It will also work with the relevant U.N. humanitarian clusters. The WFP is now transitioning to a focus on long-term food security and investments in human capital programs. As part of this initiative, it is also rolling out food- and cash-for-work initiatives. Health: Acute respiratory illness is the most commonly reported illness, and in recent weeks, there have been some possible cases of malaria identified, but disease remains at baseline rates with none at epidemic levels. The health cluster is coordinating closely with other clusters on food assistance, shelter, sanitation, and education to assist the Haitian population. The need for sanitation and medical assistance remains. Limited follow-up, post-operative care is available and amputees are among those requiring longer-term assistance. The government of Haiti has shifted away from emergency services to focus on primary health care, health centers, and hospitals. The focus of the health cluster is also on basic primary health care services, such as maternal child health, rehabilitation services, and chronic diseases including diabetes, heart disease, HIV, and tuberculosis. Vaccination programs are being implemented and a targeted immunization program for populations in temporary settlements began on February 2. The provision of mental health care and psychosocial support to help survivors deal with trauma is also a recognized priority and organizations are mobilizing to address this issue. The identification and collection of mortal remains continues. Logistics: In both Haiti and the Dominican Republic, WFP is heading the in-country Food aid, Logistics and Emergency Telecommunications clusters. UNHAS is running a twice daily flight from Santa Domingo to Port-au-Prince. The WFP is prepositioning food and non-food items as well as equipment throughout Haiti in preparation for the hurricane season. Protection: The sub-cluster is focused on child protection activities in settlements, orphanages, and hospitals to determine the needs of children and to provide care to separated and unaccompanied children. Another main priority is protection of children during the relocation process. With so many people displaced and in need of protection, general security against crime is a critical concern. In addition, protection activities are focused on Haitian children displaced in the Dominican Republic. Water, Sanitation and Hygiene (WASH): A water supply strategy is being planned to phase out water trucking and to develop more sustainable options. Limited water network capacity remains a challenge. Access to safe drinking water has improved. Latrine usage and sanitation remain problems at spontaneous settlements. Increasing sanitation support is a main priority. This is seen as an important public health issue to avoid spread of disease, particularly during the rainy season. Plans are underway to increase the provision of water and sanitation services in communities. Education: Schools in areas unaffected by the earthquake reopened on February 1. Schools continue to open progressively, although the official reopening of schools was on April 5. Approximately 700 schools have now reopened in Port-au-Prince. The United Nations reports that 4,000 students were killed in the earthquake. It is estimated that 1,300 schools were destroyed and between 2,000 to 4,600 schools were damaged by the earthquake. Temporary schools are being provided with shelters, safe water, sanitation facilities, and educational materials for the rainy/hurricane season. Fourteen percent of the population of Haiti is under 14 years of age. Early Recovery: More than 95,700 people have been employed under UNDP's cash-for-work program. Activities include clearance of drainage canals and the removal of rubble.", "A number of natural disasters have struck Haiti in the last decade (mostly in the form of hurricanes), prompting the need for international assistance through the United Nations and other actors. In addition to miscellaneous humanitarian funding provided for general emergency conditions, specific natural disasters include:\nFloods—May 2002 Tropical Storm Jeanne/Floods—September 2004 Floods—November 2006 Hurricane Dean—August 2007 Hurricane Felix—September 2007 Tropical Storm Noel—October 2007 Hurricanes Gustav and Ike, and Tropical Storms Fay and Hanna—September 2008 Haiti Earthquake—January 2010\nDisaster risks in Haiti are significant. Experts recognize that finding ways to overcome the cycle of disaster and develop a disaster response capacity are critical not only to minimize humanitarian consequences but to sustain reconstruction efforts in the future.", "The international community has provided significant humanitarian assistance in response to these disasters and their ongoing impact. The United Nations, along with other partners, including the United States, has had a strong presence in Haiti, and remains at the forefront of the current on-the-ground response for humanitarian assistance. Many international actors are providing humanitarian relief to Haiti, either through financial contributions to the government of Haiti or aid organizations or by directly providing relief supplies and emergency personnel.\nInternational recovery efforts are typically complex because they require coordination among numerous different actors and international entities. In the current crisis, apart from U.N. agencies, those responding to humanitarian crises include international organizations, NGOs, Private Voluntary Agencies (PVOs), and bilateral and multilateral donors.\nThe International Federation of the Red Cross and Red Crescent Societies (IFRC) is working with the Haitian Red Cross Society (HRCS) and other national red cross societies, including the American Red Cross, to provide assistance to earthquake survivors. The IFRC is coordinating efforts with the International Committee of the Red Cross (ICRC), which is focused on medical assistance, tracing the missing and helping to restore family links. The ICRC is also helping with the identification and collection of mortal remains. In recent weeks, ICRC delegates have also visited 700 or so detainees in detention facilities in Port-au-Prince and Cap Haitien. Representatives of more than 20 national societies gathered in Montreal, Canada in mid February for a two-day meeting to develop a comprehensive approach with the red cross movement to Haiti's needs.\nVarious international NGOs that were already operating in Haiti before the earthquake mobilized to respond to the crisis. According to the United Nations, there are reportedly more than 900 NGOs focused on humanitarian relief operating in Haiti. Hundreds of local staff are assisting with the relief effort.", "", "Prior to the January earthquake, and in response to other natural disasters, the United States was already providing humanitarian assistance to Haiti (see Table 1 below.)", "Following the earthquake, on January 13, 2010, U.S. Ambassador to Haiti Kenneth H. Merten issued a disaster declaration, and the U.S. Agency for International Development (USAID), through the Office of Foreign Disaster Assistance (OFDA), authorized $50,000 for the initial implementation of an emergency response program. (See Appendix E for further information about the U.S. Government humanitarian response mechanism.) The embassy also facilitated the evacuation of U.S. citizens and issued a travel warning.\nThe U.S. government immediately set up an interagency task force to coordinate and facilitate the humanitarian response to the earthquake in Haiti through the Washington, DC-based Response Management Team (RMT) headed by U.S. Agency for International Development (USAID), through the Office of Foreign Disaster Assistance (OFDA). In the first three months following the earthquake, the overall focus of the U.S. government's response has included search and rescue, logistics and infrastructure support, provision of assistance, and conducting needs assessments.\nOn January 14, 2010, President Obama announced $100 million in humanitarian assistance (in addition to pre-existing funding appropriated for Haiti) to meet the immediate needs on the ground. As of April 30, 2010, USAID reported that the United States has provided more than $1 billion in humanitarian funding for Haiti as follows:", "The Administration is requesting a total of $1.5 billion in relief and disaster assistance funding for Haiti, which would reimburse U.S. government agencies for services provided and for funds already obligated for ongoing relief activities. The humanitarian relief funding request also covers other relief-related assistance. The $1.5 billion request includes $350.7 million for USAID International Disaster Assistance (IDA); $150 million for Agriculture Department emergency food assistance; $96.5 million for State Department: Contributions to International Peacekeeping Activities; $655 million for Department of Defense and $45 million for U.S. Coast Guard relief activities; $220 million for Department of Health and Human Services to provide grants to States to cover services to Haitian evacuees; and $15 million for Department of Homeland Security immigration fees.\nThe activities of two of the key agencies—USAID and DOD—are described briefly below.", "Within 24 hours of the earthquake, the United States began deploying search and rescue teams along with support staff, and including search and rescue canines and rescue equipment, from Fairfax, VA, Los Angeles, and Miami. USAID/OFDA also deployed a 32-member Disaster Assistance Response Team (DART). The RMT (mentioned above) supported the USAID/DART, which focused on assessing humanitarian needs, positioning emergency relief supplies, and coordinating assistance with the U.S. Embassy in Haiti, the government of Haiti, and the international community. USAID personnel have been active in the following U.N. clusters: Water, Sanitation, and Hygiene; Emergency Food Assistance and Food Security Planning; Logistics; Health; and Shelter, and Protection. USAID/OFDA issues regular situation reports assessing the progress of relief operations. See map in Appendix D . On April 25, the USAID/DART transitioned to the USAID/OFDA Program Office.", "In response to the crisis in Haiti, the Department of Defense (DOD) deployed a broad range of military assets in Operation Unified Response to support U.S. and international assistance efforts. On February 1, 2010, Admiral Mullen, chairman of the Joint Chiefs of Staff, stated that \"We will remain in Haiti just as long as we are needed. At the request of the Haitian government and in partnership with the U.N. and international community, we will continue to do all that is required to alleviate suffering there.\" (See Appendix F for further information on the military units participating in Operation Unified Response.) At the peak of operations, DOD had deployed over 22,000 personnel, 15 Navy and Coast Guard vessels, and 58 aircraft to Haiti, including 7,000 ground troops. Currently, 1,000 soldiers remain ashore in Haiti and will remain through May, when they will be replaced with 500 Louisiana National Guard troops dedicated to reconstruction efforts. The USS Iwo Jima, an amphibious assault ship, will remain in the region through the upcoming hurricane season.\nU.S. Southern Command (SOUTHCOM), located in Miami, oversaw the Department's response efforts, and U.S. Northern Command detailed over 100 disaster recovery specialists to Operation Unified Response. SOUTHCOM is well-experienced in this type of operation, having supported 14 relief missions in the Latin American and Caribbean area since 2005. SOUTHCOM's initial assessment team, consisting of military engineers, operational planners, and command and control communication specialists, deployed to Haiti within 24 hours of the earthquake. U.S. Air Force Special Operations Command personnel dispatched to the Port au Prince International Airport restored air traffic control capability and rapidly enabled round-the-clock airfield operations. The airport can now handle up to 120 flights a day, up from the 20 daily flights it handled prior to the earthquake. According to SOUTHCOM, over 14,000 U.S. citizens were evacuated safely.\nU.S. military forces have delivered over 2.6 million bottled waters, 2.3 million food rations, 15 million lbs of bulk food, more than 125,000 lbs of medical supplies, and more than 844,000 lbs of bulk fuel. Additional tasks undertaken by DOD personnel included casualty treatment both ashore and afloat, aerial reconnaissance to assist rescue/supply efforts, the distribution of 73,000 hand-crank commercial radios, and the provision of radio broadcast capacity for emergency services information.\nThe U.S. Air Force's Air Mobility Command (AMC) provided a range of transport aircraft, including C-17 Globemaster IIIs and C-130 Hercules. Air National Guard units from Ohio and Puerto Rico also provided transport aircraft. The Navy Expeditionary Combat Command deployed units that can provide explosive ordnance disposal, maritime and riverine security, diving/salvage experts, and naval construction personnel. U.S. Navy surveillance and Air Force unmanned aircraft performed aerial surveys of the earthquake damage to assist remediation efforts. Of particular importance to improving rescue/recovery supply operations, a U.S. Coast Guard Maritime Transportation Recovery Unit coordinated efforts to restore the Port au Prince harbor facilities, and the U.S. Navy deployed a variety of specialized ships (salvage, heavy-crane, and oceanographic survey) to assist in these efforts. To date, eight Haitian ports are fully operational, and Port-au-Prince facilities are operating at partial capacity.\nThe 22 nd Marine Expeditionary Unit (2,000 personnel) and a brigade combat team from the 82 nd Airborne Division (3,400 personnel) have conducted security/humanitarian operations. Though there have been incidents of violence and looting, military commanders noted these have been concentrated primarily in areas known for violence prior to the earthquake, and the commanders are optimistic that violence will not spread to the general population, provided that the distribution of basic humanitarian supplies continues to improve. Fewer than 1% of the U.S. military personnel in Haiti have been required to conduct security operations. A U.S. Marine Fleet Anti-terrorism Security Team has provided protection for U.S. Embassy facilities. Civil Affairs units from the Army, Navy, and Marine Corps deployed to stricken areas to facilitate interaction between the population, the Haitian government, and organizations undertaking relief and recovery operations. The U.S. Coast Guard has undertaken the air-medical evacuation of injured U.S. civilian personnel to the Guantanamo Naval Station, supplied two C-130 transport aircraft, and deployed six cutters.\nThe Department of Defense has requested a supplemental appropriation of $655 million for its humanitarian relief efforts in Haiti. This request comprises $133.3 million each for both the Army and Navy Operations and Maintenance (O&M) Accounts, $133.4 million for the Air Force Operations and Maintenance, and $255 million for the Overseas Humanitarian, Disaster, and Civic Aid Account (OHDACA). The requested funds for the Services will back-fill the $400 million in O&M funds that were initially reprogrammed to the OHDACA account, the account used by DOD to conduct humanitarian relief efforts. The $255 million requested for OHDACA fulfills the remainder of the $655 million requirement for Operation Unified Response. This supplemental request covers expenses already incurred, in addition to permitting continued operations through June 15, 2010. Specifically, the funding will provide for soldier subsistence; personal, operational, transportation support; humanitarian relief supplies; and a number of humanitarian relief projects.", "There is no central database that tracks activities and funding of national or international NGOs. It is therefore not possible to provide comprehensive and accurate information on their programs and funding, either for this crisis or for activities over the past decade. The United States Institute of Peace estimates that prior to the earthquake, the number of NGOs operating in Haiti ranged from 3,000 to 10,000.\nU.S.-based NGOs are playing an active role in the relief and recovery effort in Haiti, several of them with U.S. government funding. A list of U.S. NGOs working in Haiti can be obtained from a variety of sources. A NGO Coordination Unit has been established to ensure better coordination among NGOs, the United Nations, and the military.", "In the FY2010 Consolidated Appropriations Act ( P.L. 111-117 ) Congress provided \"not less than $295,530,000\" for assistance for Haiti, about $2.7 million more than the Administration had requested. Congress also included Haiti in the Caribbean Basin Security Initiative, to provide equipment and training to combat drug trafficking and related violence and organized crime, and for judicial reform, institution building, education, anti-corruption, rule of law activities, and maritime security. (See \" Legislation in the 111 th Congress \" section below.)\nThe estimated FY2010 assistance for Haiti is $363 million, including $23 million and $121 million for Global Health and Child Survival under USAID and State Department, respectively; $161 million in Economic Support Funds; $35.5 million in P.L. 480 food aid; $21 million for International Narcotics Control and Law Enforcement; $0.22 million for International Military Education and Training, and $1.6 million in Foreign Military Financing.\nThe Administration had requested $359 million in FY2011 assistance for Haiti, including $35 million and $121 million for Global Health and Child Survival under USAID and State Department, respectively; $146 million in Economic Support Funds; $35.5 million in P.L. 480 food aid; $19 million for International Narcotics Control and Law Enforcement; $0.22 million for International Military Education and Training, and $1.6 million in Foreign Military Financing.", "The Obama Administration is requesting $2.8 billion in FY2010 supplemental funding to cover costs associated with relief and reconstruction support for Haiti following the earthquake.\nThe Administration has requested that all of the proposed funds be considered as emergency requirements, in response to urgent and essential needs in Haiti. Some of the funds are available until September 30, 2012, others until expended. The supplemental request covers both reimbursement of obligations already incurred and new activities by various U.S. agencies . CRS estimates that 55% of the total Haiti supplemental request is for reimbursement of relief activities related to the earthquake disaster, 40% for new recovery and reconstruction activities, and 6% for diplomatic operations administration.", "A great many international actors are also providing relief to Haiti, either through financial contributions to the government of Haiti or aid organizations or by directly providing relief supplies and emergency personnel.", "The earthquake disaster in Haiti has received worldwide attention and focus. Under the U.N. Consolidated Appeals Process, on January 15, 2010, the U.N. Humanitarian Country Team in Haiti issued a Flash Appeal for emergency financial assistance in the amount of $575 million to support emergency food aid, health, water, sanitation, emergency education, and other key needs and early recovery efforts (typically the initial six months after a disaster). As of February 15, commitments of $619 million had been received (107 % of the Flash Appeal) and a further $29 million in uncommitted pledges. On February 19, 2010, the United Nations announced that it had revised its humanitarian aid appeal for Haiti to $1.44B – a record high. The Revised Humanitarian Appeal includes the original six-month Flash Appeal amount and it extends the humanitarian operation through 2010. As of April 29, 2010, commitments of $831 million (55.4% of the Revised Appeal) had been received and a further $27 million in uncommitted pledges.", "Additional pledges and contributions have also been made outside the Flash Appeal. Many countries, including the U.S. government, are providing assistance in the form of direct contributions of items such as food and tents, or through the operation of relief flights and logistics support. In addition to bilateral assistance, funding has also been provided to NGOs operating outside of the U.N. appeal.\nThe Emergency Relief Response Fund for Haiti has more than $76 million in pledges, of which $63 million has been received. These funds have been allocated by cluster to U.N. and NGO organizations.\nThe U.N.'s Central Emergency Response Fund (CERF) initially made available $10 million which later increased to $37.9 million.", "So far, through governments and the private sector, the international community has pledged millions of dollars in aid, materials, and technical support. Appendix G highlights donor contributions and in-kind pledges. At least 116 countries from around the world have contributed to the relief effort. Obtaining an exact up-to-date record of all international contributions is not possible—in part because some assistance is not reported to governments or coordinating agencies—and in part because of the delay in their recording. As the recovery effort gets underway, the Haitian government is considering a geographical distribution of tasks or tasks that are theme based as a way of engaging donor interest. For example, one country might \"adopt\" a province or city or target a specific need in the Haitian government.", "Private sector assistance has already been substantial and is expected to continue to grow. Some reports indicate that as of April 2010, private companies and individuals had contributed more than $1 billion to support relief efforts in Haiti. Initiatives in the United States include the campaign by the American Red Cross to raise funds through text messages ($31 million), the Hollywood star-studded telethon that featured performances by a broad range of musicians and was broadcast on major U.S. television networks ($66 million), and numerous local fund raising activities.\nOn January 16, 2010, President Obama announced that former Presidents George W. Bush and Bill Clinton, who is also serving as the U.N. Special Envoy to Haiti, would lead a fundraising effort and work with the U.S. private sector in support of Haiti. The initiative is called the Clinton Bush Haiti Fund. Cash donations are being encouraged. To date, the fund has received more than $200,000 in contributions. On March 22, Presidents Bush and Clinton visited Haiti to assess relief and recovery efforts.", "President Préval has asked the international community to focus not just on immediate humanitarian relief efforts, but also on long-term development needs.", "Discussions among the government of Haiti and the international donor community regarding a long-term strategy for Haiti began almost immediately. To that end, at a preliminary meeting among some international donors held in the Dominican Republic the week following the earthquake, Dominican President Leonel Fernandez proposed a $10 billion five-year assistance program for Haiti.\nRepresentatives from Haiti, the \"Friends of Haiti\" nations, other countries, and U.N. officials held a high-level Ministerial Conference in Montreal, Canada, on January 25, 2010, to discuss reconstruction plans for Haiti. Haitian Prime Minister Jean-Max Bellerive thanked the donor community for its help so far, but said that an international commitment of 5 to 10 years was needed to support Haitian development. Conferees agreed to study recent examples of multilateral recovery efforts in order to develop an optimal aid-delivery mechanism that ensures effectiveness and accountability, and creates the conditions for sustainable development.\nThe World Economic Forum launched a global initiative to integrate business into Haiti's reconstruction at its meeting January 27-31.", "The global donor conference in New York on March 31 secured commitments for substantial funds for Haiti's recovery. Donors pledged nearly $10 billion toward long-term reconstruction efforts, $5.3 billion of that for the first 18 months. These pledges are in addition to commitments made to the U.N. flash appeal for Haiti.\nThe Obama Administration, other international donors, the Haitian government, and others actors have all stated the need for improved accountability of all donor assistance to Haiti, to improve aid effectiveness and reduce the potential for corruption. Several entities have been established to improve development planning, coordination, and accountability. Although some Haitians think foreign donors are exerting too much control through these mechanisms, Haitian President Rene Préval and Prime Minister Jean-Max Bellerive have acknowledged that Haitian capacities were already limited, and were considerably diminished by the earthquake, and proposed such entities in their action plan. The National Assembly approved the Interim Haiti Recovery Commission.\nMulti Donor Trust Fund. The World Bank will receive international funding and act as the fiscal agent for the funds. The Haitian government will lead a Steering Committee that will decide which agencies will receive the funds. The Bank will ensure that the Haitian government is meeting legal requirements before funds are transferred to it for budget support.\nHaiti Reconstruction Platform . To ensure further transparency, the U.S. Agency for International Development has helped Haiti establish an internet-based system to track donor pledges, and monitor the implementation and spending of assistance.\nInterim Haiti Recovery Commission. Before the conference, the Préval Administration announced the formation of this Commission to guide long term development. It is to be co-chaired by former President Clinton and Haitian Prime Minister Jean-Max Bellerive. Other members are to include two Haitian legislators, local authorities, union and business representatives, a Caribbean Community (Caricom) delegate, and one representative of each of Haiti's largest donors. Those donors include the United States, Canada, Brazil, France, Venezuela and the European Union, as well as the Inter-American Development Bank, the World Bank, and the United Nations. It is designed to give Haitian officials the opportunity to exert leadership regarding their priorities, while working with international experts to hone their ability to design and execute development programs and process foreign assistance. According to Secretary of State Clinton's chief of staff, Cheryl Mills, the goal is to turn the process over to Haitian authorities in 18 months, at which time it would become the Haitian Development Authority .", "The United Nations, in association with other U.N. system agencies and programs, conducted the initial needs assessments necessary for planning Haiti's long-term and comprehensive recovery. Among the major actors involved were the World Bank, the U.N. Development Program, the multitude of U.N. specialized agencies (such as the World Health Organization, the U.N. Educational, Scientific, and Cultural Organization, the Food and Agriculture Organization), as well as regional organizations, including the European Union (EU), the Organization for American States (OAS), the Inter-American Development Bank, and the Caribbean Community (Caricom). Many of these organizations worked together previously in Haiti in response to the 2008 hurricanes and are responding to the international humanitarian needs in the aftermath of the earthquake. The Human Rights Council held a special session on Haiti on January 27-28, 2010, and in its resolution, it stressed the importance of protecting human rights during the recovery effort. The Office of the High Commissioner for Human Rights (OHCHR) has sent a human rights monitoring team to Haiti. The OHCHR along with the United Nations High Commissioner for Refugees (UNHCR) continue to press all countries to suspend involuntary returns to Haiti due to the humanitarian crisis.", "", "The multilateral development banks (MDBs) have been active in Haiti for several years, providing debt relief, loans, and grants to both the Haitian government and the private sector. Following the earthquake, the World Bank, the Inter-American Development Bank (IDB), and the International Monetary Fund (IMF) announced new financial support for the country.", "After the earthquake, the World Bank announced $100 million in emergency grant funding to support recovery and reconstruction, in addition to its existing $308 million portfolio of grants projects in Haiti. The existing projects are in areas including disaster risk management, infrastructure, community-driven development, education, and economic governance. At the March Donor's conference, the World Bank announced an additional $250 million in new funding for Haiti. This includes $151 million in grants, a $39 million write-off from cancelling Haiti's remaining debt to the Bank and $60 million in investments from the Bank's private sector arm, the International Finance Corporation (IFC).", "On January 12, 2010, Inter-American Development Bank (IDB) President Luis Alberto Moreno announced a $200,000 emergency grant for immediate relief aid. The IDB is Haiti's largest multilateral donor, with a portfolio of programs worth over $700 million as of the end of 2009. These programs include both grants and concessional loans. Of this amount, $330 million is undisbursed, of which $90 million could be quickly redirected to high-priority civil works and reconstruction projects. IDB management also announced that it anticipates the approval of up to $128 million in already-planned grants, potentially providing more resources for reconstruction. In March 2010, IDB donor governments committed to providing necessary resources so that the IDB can provide at least $2 billion in grants to Haiti over the next ten years.", "Haiti receives concessional loans from the International Monetary Fund (IMF) as well as from the multilateral development banks. In response to the earthquake, the IMF approved $102 million in new assistance. Including the new lending, total Haiti debt to the IMF is now $271 million.", "Haiti completed the multilateral Enhanced Heavily Indebted Poor Countries (HIPC) Initiative in June 2009, making it eligible to receive debt relief from the multilateral and some bilateral creditors.", "Under the terms of Haiti's participation in the Enhanced HIPC program, the World Bank provided Haiti debt relief for debts incurred through December 2003. According to the World Bank, debt relief under the Enhanced HIPC Initiative amounts to $140.3 million. Inter-American Development Bank\nThe IDB, in September 2009, provided $511 million in debt relief. Debts eligible for cancellation were those incurred through 2004 (compared to 2003 in the case of IDA). According to the IDB, Haiti currently owes $429 million (principal-only) to the IDB. This includes $305 million from loans made in 2005 and 2006, after the debt cancellation cut-off date of December 31, 2004, and $124 million from undisbursed balances of loans made before the cut-off date. Beginning in 2009, Haiti's payments on its debt to the IDB have been made by a U.S.-supported trust fund that currently amounts to $20 million.", "Haiti has also received debt relief from its bilateral creditors. Haiti's completion of the HIPC program triggered debt relief of $62.7 million by the Paris Club group of official creditors. Haiti's Paris Club creditors agreed to go beyond the requirements of the HIPC program, however, and provide $152 million in additional debt cancellation, thus completely cancelling Haiti's external Paris Club debt of $214 million. That said, Paris Club debt relief is not automatic. Creditor nations collectively sign bilateral agreements with the debtor nation, giving effect to the multilateral debt relief agreement. By mid-January, for example, France had only cancelled €4 million ($5.75 million) of €58 million ($83.36 million) owed to them by Haiti.\nOn September 18, 2009, the United States cancelled $12.6 million (100%) of Haiti's outstanding debt to the United States. The United States has not extended new loans to Haiti since September 2009. Haiti does not currently have any outstanding debt obligations to the United States.", "Agreement has been reached by several donor nations to finance the cost of additional Haiti debt relief for three institutions: the IDB, the World Bank, and the International Fund for Agriculture and Development (IFAD).", "Haiti's remaining debt from the IDB totals $447 million. An estimated $186 million of additional loans have been approved but have not yet been disbursed. Once these are provided, they will add to the debt stock. There is also a $28 million balance that represents Haiti's local currency conversion obligation to the IDB's low-income lending arm, the Fund for Special Operations (FSO). At the IDB's March 2010 annual meetings, member states agreed to fund 100% cancellation of Haiti's remaining debts owed to the IDB, although all details have not been finalized.", "Haiti's remaining debt to the International Development Association, the World Bank's low-income lending facility, is $39 million. On March 31, 2010, the World Bank announced that 14 donor countries, Belgium, Canada, Germany, Finland, France, Ireland, Italy, Japan, The Netherlands, Norway, Spain, Sweden, Switzerland and the United States, have pledged to provide a total of $39 million to cancel Haiti's remaining IDA debt.", "Haiti's remaining debts to IFAD are around $79 million. In April 2010, member nations agreed to cancel these debts. Under the agreement, IFAD - an international financial institution and a specialized United Nations agency dedicated to eradicating poverty and hunger in rural areas of developing countries - will contribute up to 30 per cent of the debt relief requirement, with member states needing to contribute the remaining 70%.\nSince the earthquake, other countries have stepped forward to provide debt relief to Haiti. At the end of January 2010, Venezuela announced it would forgive Haiti's debt, totaling $295 million. In mid-February 2010, French President Nicolas Sarkozy visited Haiti and announced a new French aid package for Haiti that reportedly included the cancelling of all the debt owed by Haiti to France, totally €56 million (approximately $77 million). Taiwan, another major bilateral creditor to Haiti with $90 million of outstanding debt to Haiti, has discussed canceling Haiti's debt but nothing has materialized to date.", "To date, there has been no international agreement on forgiveness of Haiti's debts to the IMF of $271 million. The interest rate on Haiti's IMF loans is zero until 2012, however, with no payments due until 2013.", "On February 24, 2010, the IMF issued a press release on its role in helping revive Haiti's financial sector. Officials from the IMF and Haiti's Central Bank discussed a proposal prepared by Haiti's authorities to maintain financial stability and restart private sector credit. The IMF's press release states that \"this proposal will be critical to allowing the private sector to fully play its role in rebuilding the economy and providing jobs, in the context of the broader reconstruction and economic recovery.\" The IMF also announced that it will help Haiti's authorities design a partial credit guarantee fund.", "To help Haiti in its recovery from the earthquake, the Administration is proposing U.S. contributions of $252 million to help cancel Haiti's debts of $781 million to three international organizations: the Inter-American Development Bank, World Bank, and International Fund for Agriculture and Development. Through FY2010 supplemental funding, the Administration requests reallocating up to $40 million from the Treasury Department's Debt Restructuring Account appropriated for the multilateral Heavily Indebted Poor Countries (HIPC) Trust Fund from this or subsequent fiscal years to Haiti. The Administration also seeks new contributions of $212 million for multilateral debt relief. Congressional authorization is required for the $40 million reallocation, and both authorization and appropriations are required for the additional $212 million.", "Latin American countries have responded to Haiti's crisis with immediate provision of emergency supplies and personnel and pledges of financial and other assistance for its long-term recovery. Members of the Organization of American States (OAS) pledged humanitarian, financial and other support to Haiti. The OAS Group of Friends of Haiti met on January 14 to coordinate search and rescue efforts, prompt donations, and discuss ways to promote recovery.\nThe 15-member Caribbean Community (CARICOM), of which Haiti is also a member, was working in Haiti prior to the earthquake. Afterwards, it mobilized its disaster emergency response system to assist Haiti, and several members have sent emergency supplies or promised financial assistance. The Caribbean Disaster Emergency Management Agency assembled a response team to assess conditions in Haiti as well.\nMany countries in the region already have peacekeeping troops in Haiti serving with MINUSTAH. Brazil leads the U.N. peacekeeping mission, and had 1,284 uniformed personnel already serving there as of December 2009.\nMany countries in the region have made bilateral cash or in-kind contributions as well. (See \"Regional Donors to Haiti Relief Effort,\" in Appendix F .)The Dominican Republic, which shares the island of Hispaniola with Haiti but did not suffer heavy damage from the earthquake, responded swiftly and generously. The two countries have a long history of hostility toward one another, but Presidents Préval and Fernandez have worked in recent years toward having a more cooperative relationship, and this has been reflected in the Dominican response. Haiti's neighbor was the first country to send relief supplies and personnel, and has facilitated aid delivery through use of its airports, roads, and port. It has stopped repatriation of undocumented Haitians, and opened its border to injured Haitians, thousands of whom have been treated in both public and private hospitals. Fernandez organized a preparatory meeting for donors to discuss future aid to Haiti the week after the earthquake, and the Dominican Republic hosted a technical meeting prior to the March 31 donor conference.", "", "Long before the earthquake struck, Haiti was a country socially and ecologically at risk. It has some of the lowest socioeconomic indicators in the world . Haiti was already in an acute environmental crisis. Only 2% of its forest cover remains intact. Following the hurricanes of 2008, the President of the Inter-American Development Bank (IDB), Luis Moreno, called Haiti the most fragile of IDB's member countries, saying that no other nation in Latin America and the Caribbean is as vulnerable to economic shocks and natural disasters as is Haiti.\nHaiti had been making progress, however. The U.N. Secretary-General commissioned a report, published in January 2009, that recommended a strategy to move Haiti beyond recovery to economic security. Indeed, the U.N. Security Council conducted a fact-finding visit to Haiti in March 2009, and concluded that there was \"a window of opportunity to enable the consolidation of stability and the undertaking of a process of sustainable development.\"", "President Préval is in his second (non-consecutive) five-year term as President of Haiti. During the first three years of this term, Préval established relative internal political stability. He outlined two main missions for his government: (1) to build institutions, and (2) to establish favorable conditions for private investment in order to create jobs. In November 2007, his Administration published its National Strategy for Growth and Poverty Reduction, a key step in meeting IMF requirements for debt relief, which it met in June 2009. With the support of MINUSTAH, which arrived in Haiti in 2004, security conditions improved, as did the capacity of the country's police force. Both the former and current U.S. Administrations praised Préval for his efforts to improve economic conditions and establish the rule of law in Haiti. Préval pledged to cooperate with U.S. counternarcotics efforts. Both President Barack Obama and Secretary of State Hillary Clinton met with President Préval early in 2009, and since the earthquake have provided humanitarian assistance and pledged long-term support for development in Haiti.\nThe Haitian government is functioning under extremely difficult conditions, with 28 of 29 government Ministry buildings destroyed, and 17% of the country's civil service killed. U.S. and U.N. officials both say they are coordinating relief and recovery efforts with the Préval administration. To provide the Haitian government some operating space, the U.S. Department of State agreed on January 16 to lease the old U.S. Embassy building in downtown Port-au-Prince to the Haitian government for $1 a year. That building had been put up for sale in June 2008 after the new U.S. Embassy opened near the Port-au-Prince airport. On February 16, 2010, Canadian Prime Minister Stephen Harper while in Haiti announced that Canada would provide $12 million to build temporary facilities to house several Haitian government ministries.\nThough greatly improved, Haiti's political stability remains fragile. Préval's inauguration in 1996 was the first transition between two democratically elected presidents in Haitian history. The government has its third prime minister since April 2008. Parliament dismissed Prime Minister Michele Pierre-Louis in October 2009, barely a year after her appointment. Nonetheless, the transition was smooth as President Préval swiftly appointed, and the Parliament confirmed, Jean-Max Bellerive to take her place. As Minister of Planning and External Cooperation from 2006 to 2009, Bellerive helped to prepare Haiti's National Strategy for Growth and Poverty Reduction.\nAfter the earthquake, former President Jean-Bertrand Aristide announced he would like to return to Haiti, although he has since given no explicit plans to do so. Aristide has lived in exile in South Africa since his government collapsed in 2004. Once—and possibly still—extremely popular among some Haitians, he is nonetheless a divisive figure. Aristide would face charges of corruption and would likely contribute to political instability if he were to return.", "Haiti's parliament, the National Assembly, also faces enormous challenges in trying to reestablish itself: some of its members were killed in the earthquake; the parliament buildings were destroyed, as was the electoral council's building. The U.S. House of Representatives' Democracy Partnership and others are working with the Parliament to help it function again. The National Assembly has been meeting since shortly after the earthquake in makeshift offices. The Senate elected two commissions on January 28 to monitor international aid and manage agreements with aid organizations.\nPolitical tensions were mounting ahead of parliamentary elections scheduled for February 28 and March 3, 2010. In late 2009, President Préval cut ties to the Lespwa movement that elected him in 2006, and formed a new movement, Unity. Opposition groups accused the presidentially appointed electoral council of bias in favor of the President's new movement. The electoral council disqualified, without explanation about 15 rival political groups, which included members of Lespwa who did not join Préval's new party. Opposition groups expressed concern that if Unity won a legislative majority, it would push through constitutional amendments, possibly including one allowing Préval to run for another term in 2011. The constitution allows only two non-consecutive terms for a President, and Préval is completing his second term. Préval has promised to step down when his term expires on February 7, 2011, and said he would not run again. There is no clear candidate to succeed him. In February 2010, the electoral council postponed the elections indefinitely. The elections were to determine all 99 seats in the House and one-third of the seats in the Senate. Tensions are likely to increase when those legislative terms expire on May 10, 2010 without replacements having been elected. As mentioned earlier, it is not entirely clear how the government will function after that date. But Haiti passed a State of Emergency Law on April 20 giving the President broad powers and President Préval will probably rule by decree. After May 10 the remaining 19 Senators may continue to meet, however, and the Senate has the power to dismiss the Prime Minister and censure government programs. The international community is urging Haiti to hold legislative and presidential elections in November 2010.", "Plagued by chronic political instability and frequent natural disasters, Haiti remains the poorest country in the Western Hemisphere. Haiti's poverty is massive and deep. Over half the population (54%) of 9.8 million people live in extreme poverty, living on less than $1 a day; 78% live on $2 or less a day, according to the World Bank. Poverty among the rural population is even more widespread: 69% of rural dwellers live on less than $1 a day, and 86% live on less than $2 a day. Hunger is also widespread: 81% of the national population and 87% of the rural population do not get the minimum daily ration of food defined by the World Health Organization. In remote parts of Haiti, children have died from malnutrition.\nIn order to reach its Millennium Development Goal of eradicating extreme poverty and hunger by 2015, Haiti's Gross Domestic Product (GDP) would have to grow 3.5% per year, a goal the International Monetary Fund (IMF) says Haiti is not considered likely to achieve. Over the past 40 years, Haiti's per capita real GDP has declined by 30%. Therefore, economic growth, even if it is greater than population growth, is not expected to be enough to reduce poverty. Haiti has experienced some economic growth since 2004. Economic growth for FY2007 was 3.2%, the highest rate since the 1990s. Before the earthquake, the forecasted growth for FY2009-20010 was 2.5%, reflecting the impact of recent storms and the global economic crisis, and up to 3.5% for 2010-2011. The global economic crisis also had led to a drop of about 10% in remittances from Haitians abroad, which in 2008 amounted to about $1.65 billion, more than a fourth of Haiti's annual income.\nThe likelihood that economic growth will contribute to the reduction of poverty in Haiti is further reduced by its significant income distribution gap. Haiti has the second largest income disparity in the world. Over 68% of the total national income accrues to the wealthiest 20% of the population, while less than 1.5% of Haiti's national income is accumulated by the poorest 20% of the population. When the level of inequality is as high as Haiti's, according to the World Bank, the capacity of economic growth to reduce poverty \"approaches zero.\"", "", "Haiti already had a National Strategy for Growth and Poverty Reduction in place for 2007-2010, supported by the international donor community. As Minister of Planning and External Cooperation from 2006 to 2009, current Prime Minister Jean-Max Bellerive helped to prepare that Strategy. The poverty reduction strategy focuses on three \"priority pillars.\" The first is areas for growth, focusing on agriculture and rural development; tourism; infrastructure modernization; and science, technology and innovation. The second pillar is human development, concentrating on education and training; health; water and sanitation; persons with disabilities; childhood poverty; young people; HIV/AIDS; and gender equity. The third pillar calls for investment in democratic governance, focusing on the establishment of an equitable justice system; creation of a climate of security; modernization of the state; and political and economic decentralization.\nAfter a series of devastating hurricanes in 2008, the government of Haiti revised its strategy incorporating the findings of a Post-Disaster Needs Assessment and the U.N.'s \"Haiti: From Natural Catastrophe to Economic Security\" report, at a donors conference held April 21, 2009, in Washington, DC. The Haitian government outlined the priorities of its new two-year plan, \"Haiti: a New Paradigm,\" which include investing in strategic infrastructure, improving economic governance and the business environment, improving the provision of basic services, and ensuring environmental sustainability.\nThe government was making strides toward meeting goals of its growth and poverty reduction strategy, and some analysts were viewing its potential for sustainable development with optimism. Investors were returning to Haiti and the country was promoting its economic development. The earthquake has reversed years of progress. Haiti's strategy will therefore need to be reviewed, revised, and built upon to incorporate new conditions and needs.\nHaiti's National Strategy for Growth and Poverty Reduction remains relevant, and the government says its pillars will remain the basic pillars of its strategy. The Préval Administration will present a revised vision statement at the March 31 donors conference, and more fully revise its strategy after the completion of the post-disaster needs assessment.\nThe U.S. Department of State was about to announce a new strategy toward Haiti, on which it had been collaborating with the Préval Administration for almost a year. That, too, will need to be revised. The assessment concluded that a new strategy needed: (1) a comprehensive integrated approach to achieve sustainable long-term stability and economic growth; (2) investment in plans led by the Haitian government to ensure sustainability; (3) better coordination to maximize the effectiveness of U.S. and other donor assistance; (4) expanded reach of U.S. programs by using partnerships with other international actors; and (5) improved accountability and measurement of results.\nThe State Department's assessment and plan focused on four areas: agriculture, energy, health, and security. All of these areas, plus others such as governance and education, will need to be addressed in the short term, while simultaneously developing plans to rebuild in the long term.", "At the March donors conference in April, the donor countries agreed to the following principles:\nOwnership: Donors will align their assistance with priorities established by the Haitian government and will involve the Haitian people in the development and implementation of projects.\nCoordination and Effectiveness: Participants will strengthen coordination through consultation and \"unprecedented\" transparency, and concentration on priority sectors for each donor, and will adhere to the principles of aid effectiveness and build on lessons learned.\nInclusiveness: The conference emphasized the importance of consulting with key communities, such as the Haitian people, civil society, non-governmental organizations, local governments, the private sector, the Haitian diaspora, MINUSTAH stakeholders, and regional partners.\nAccountability and Transparency: The government of Haiti and donors agreed to increased accountability and transparency in both pledges and use of assistance, and established a monitoring and transparency unit within the Interim Haitian Reconstruction Commission/Haitian development authority accountable to the Haitian and international public.\nSustainability: The international community pledged a long-term commitment to Haiti's reconstruction.", "The priorities of the Haitian government's Action Plan for the Reconstruction and National Development of Haiti are outlined in \"The Government's New Action Plan\" earlier in the report. Analysts and donors are stressing that Haiti cannot be merely re-built, but must be re-built better. In this crisis, many people see the opportunity to address some of the underlying problems contributing to the country's endemic poverty and underdevelopment. The Action Plan addresses these issues, and is the basis for donor contributions and activity.", "Rebuilding Haiti's agricultural capacity is a key element of the country's reconstruction strategy and is seen as a way of broadening Haiti's economy, and reducing its reliance on food imports. Yet Haiti's environment was in a state of crisis before the earthquake struck. Obstacles to agricultural development include massive deforestation, erosion of topsoil, lack of investment in agricultural technology for decades, and unclear land titles. A relatively new infrastructure is in place to help with the process of incorporating post-earthquake needs into Haiti's overall environmental rehabilitation plan. Following the destructive hurricane season of 2008, efforts to revive Haiti's ecology had been renewed when a coalition of U.N. agencies, government agencies, non-governmental organizations, and technical institutes launched a Haiti Regeneration Initiative.", "A core goal of the revised Haitian development strategy, supported by the donors conference, is to catalyze economic growth and provide services and opportunities outside of Port-au-Prince. According to U.N. and U.S. officials, decentralization is the focus of the second phase of delivery assistance as well, and food, shelter, jobs programs, and other services are being delivered to communities around the country to help them cope with the influx of people from the capital.\nHaiti was once a predominantly rural population, with only about 20% of its population living in cities. By the time of the 2010 earthquake, the vast majority of Haitians lived in cities, primarily Port-au-Prince. Parts of the Haitian government and private sector have concentrated resources, services, and job opportunities in Port-au-Prince for decades. Prime Minister Bellerive and analysts who follow Haiti suggest that the current crisis provides an opportunity to correct what had become an unsustainable urban-rural distribution of people and resources in the country. Some have suggested not rebuilding Port-au-Prince because it lies on a fault line and remains susceptible to further earthquakes.\nProperty rights are not clearly established throughout Haiti, and are of concern as the Haitian government and donors try to set up relocation settlements, reforestation and agricultural programs, and encourage investors to build outside of the capital. U.S. programs will help develop infrastructure in support of decentralization and help seek resolutions to property rights issues.", "Canada and France are the countries designated to focus on helping Haiti develop education in the reconstruction phase. Haiti's schools were woefully inadequate prior to the earthquake, and many were destroyed by the earthquake. Most schools are privately run. Education is crucial to raising Haitians out of a cycle of poverty, by providing the knowledge and skills individuals need to take advantage of job opportunities. Experts note that job creation must be accompanied by education programs.", "Energy is one of the United States' areas of focus in the development strategy. By virtually all accounts, Haiti's current energy sources are inefficient and inadequate. They are often destructive as well: Haitians' reliance on charcoal for fuel has contributed to the deforestation of all but 2% of its forest cover. Some observers have suggested that clean energy technology could help Haiti \"avoid some of the poverty traps of the old system.\" According to at least one analysis, developing small-scale, alternative energy sources at the local level rather than trying to rebuild the previously ineffectual Haitian electricity service would increase the quality of life of many Haitians and have a positive impact on economic growth.", "Because the United States is already a leading provider of health care in Haiti, it is one of the areas on which it will focus in the reconstruction phase. In much of the country the government did not provide basic services prior to the earthquake. The lack of medicines or medical treatment and adequate sanitation in Haiti has been exacerbated by the earthquake. In the long-term, health care is crucial to raising Haitians out of a cycle of poverty, by providing the good health that enables children to develop and adults to function fully, whether as students, family providers or employees.", "Job creation in both the short- and long-term are important parts of the recovery strategy. UNDP has already launched cash-for-work programs both to stimulate the local economy and ease the delivery of humanitarian assistance. The program will quickly expand to earthquake-damaged areas in and outside of Port-au-Prince, and employ 220,000 people, indirectly benefiting about one million Haitians, according to UNDP. The current jobs are for clearing streets of building rubble and disposing of debris. Donors are also creating job programs outside Port-au-Prince to benefit communities receiving an influx of people from the capital. Public works such as building roads, housing, and infrastructure are to generate jobs in the reconstruction phase.", "Plans for economic growth include restoring and continuing to expand industrial exports. Many analysts emphasize, however, that economic plans must be comprehensive, to avoid over-reliance on any one area, such as the apparel assembly industry, which could leave the Haitian economy overly vulnerable.", "Within the Haiti supplemental proposal, the request for Recovery and Reconstruction funding is $1.1 billion. This is primarily for new activities, in support of the Haitian government's Action Plan. U.S. programs to be funded through the supplemental request focus on urgent infrastructure repairs, especially in the energy and agricultural sectors; critical health care; governance; and security.", "Many Members have already expressed a strong desire to support Haiti and provide it with substantial assistance. The 111 th Congress gave bipartisan support to assist the Préval government during its first session, and has continued to respond in that spirit to the crisis generated by the January earthquake. Committees in the Senate and House have held hearings on Haiti. Both Members and witnesses stressed the need for a massive, coordinated international effort not only for immediate humanitarian needs, but also for long-term development. Moving forward, they said, strategies must consider new approaches, aim to create a more sustainable Haiti, and increase Haitian capacity to utilize foreign aid effectively and to provide services and direct its own economy.", "Regarding the Obama Administration's total request for $2.8 billion in FY2010 supplemental funding for costs related to Haitian relief and recovery activities, key concerns include:\nChoosing Priorities . To coordinate aid programs better, donors have agreed to focus on certain areas of assistance. Some observers have expressed concern that U.S. assistance is neglecting areas crucial to Haitian recovery, such as improving the educational system, which is to be the focus of Canada and France. While advocates say this approach avoids duplication among donors, critics question the priorities, or the limited approach to aid.\nSome experts suggest developing small-scale, alternative or clean energy sources at the local level rather than trying to rebuild the previously ineffectual Haitian electricity service would increase the quality of life of many Haitians and have a positive impact on economic growth. Some Members have expressed concern that insufficient funding is being focused on the needs of children, or on psychological support for the traumatized population. There is no additional funding for Global Health and Child Survival in the supplemental request. Some long-term care for psychological support is included in the health activities proposed in the supplemental.\nDecentralization and Economic Growth: Will they lead to Poverty Reduction? A key element of the revised Haitian development strategy, supported by the supplemental request, is to catalyze economic growth and provide services and opportunities outside of Port-au-Prince. The Haitian government and donors agree that the current crisis provides an opportunity to correct what had become an unsustainable urban-rural imbalance in the country, with the rest of the country suffering neglect while people, resources, and services were concentrated in the capital. Funds in the supplemental request would address both short- and long-term elements involved in this decentralization strategy – meeting the immediate needs of newly displaced populations that have migrated to less developed areas of the country, and strengthening local governance, infrastructure, and agriculture to develop new \"growth poles\" outside of Port-au-Prince. Scientists are helping Haitian authorities to select areas for development that are less vulnerable to natural disasters. While there is general support of this strategy, officials also note that developing areas long-neglected will be costly. Some also warn that populations should not be forcibly relocated in executing these plans. Experts also warn that economic growth is not sufficient to reduce poverty in Haiti, and that programs specifically targeted at poverty reduction are needed. As mentioned earlier, the World Bank says that when the level of economic inequality is as high as Haiti's, the ability of economic growth to reduce poverty approaches zero.\nEffective Capacity Building? Most observers agree that one goal of aid to Haiti should be to build the capacity of Haitians so they can eventually assume responsibility for the project at hand. Yet there is a tension between the standard definition of effectiveness and efficiency, and the time and money required for capacity building. Aid organizations are pressed to have measureable outcomes and usually operate on short-term contracts. If thorough training and coordinating with Haitian ministries is to be an element of all foreign aid programs, which many experts advocate, there will have to be a recognition that those programs may require more time, funding, and personnel, and measureable results may take longer to achieve.", "Humanitarian assistance generally receives strong bipartisan congressional support and the United States is typically a leader and major contributor to relief efforts in humanitarian disasters. When disasters require immediate emergency relief, the Administration may fund pledges by depleting its disaster accounts intended for worldwide use throughout a fiscal year. President Obama announced the United States would provide $100 million in immediate aid for Haiti. That aid is drawn from existing funds. The international community is also making substantial donations toward meeting immediate needs.\nAmid efforts to tackle rising budget deficits by, among other measures, slowing or reducing discretionary spending or finding the resources to sustain U.S. aid pledges may be difficult. After the 2004 tsunami disaster, some Members of Congress publicly expressed concern that funding for tsunami relief and reconstruction, which depleted most worldwide disaster contingency accounts, could jeopardize resources for subsequent international disasters or for other aid priorities from which tsunami emergency aid had been transferred. These accounts were fully restored through supplemental appropriations. At the time, others noted the substantial size of American private donations for tsunami victims and argued that because of other budget pressures, the United States government did not need to transfer additional aid beyond what was already pledged. In Haiti, the full extent and cost of the disaster is not yet known. Disaster accounts are being drawn down to provide relief to Haiti. The State Department reports that in order to respond to future humanitarian crises, these resources would need to be replenished by June 1, 2010. If not replenished, U.S. capacity to respond to other emergencies could be impacted. The relief funding in the current FY2010 supplemental request would provide reimbursement for funding already provided or obligated.\nCongress may reevaluate and revise priorities and approaches of U.S. assistance to Haiti in light of the changed conditions there. Issues that have previously concerned Congress have included democracy building, development assistance and poverty reduction, security enhancement and stability, counternarcotics efforts, police and judicial reform, and disaster recovery and prevention.", "The earthquake disaster in Haiti has received worldwide attention and focus. The government of Haiti, the United States, the United Nations and many others have asked for and encouraged governments to provide assistance. It is not always evident whether figures listing donor amounts represent pledges of support or more specific obligations. Pledges made by governments do not necessarily result in actual contributions. It also cannot be assumed that the funds committed to relief actually represent new contributions, since the money may previously have been allocated elsewhere. It will take time for a more complete picture to reveal how the actual costs of the Haiti disaster will be shared among international donors. Comparing USG and international aid is also difficult because of the often dramatically different forms the assistance takes (in-kind contributions vs. cash, for instance). As the situation in Haiti stabilizes, and early recovery and reconstruction gets underway, sustaining donor interest in Haiti (and commitment to honor existing pledges) could be a challenge. Moreover, this challenge is compounded by the need to maintain funding priorities and secure funds needed for other disaster areas worldwide.", "Some have criticized the response by the international community in the actual delivery of humanitarian assistance as far too slow. For example, in the days following the earthquake some press reports commented on what they perceived to be a critical lack of food and water, insufficient medical care for the wounded, the slow pace of search and rescue, and the non-existent presence of law and order. Others have argued that there has been a great deal of unfair criticism of the slowness of the international aid effort. The weakened capacity of the Haitian government, critically damaged infrastructure, and logistical challenges posed by the influx of massive aid into a city largely destroyed by the earthquake all contributed to delay and difficulties on the ground.\nStill others have been concerned about bureaucratic red tape, lack of civil-military cooperation, control by the U.S. military of flight priorities at the Port-au-Prince airport, and overall coordination issues. Evaluations of the relief response in Haiti will likely continue to be conducted and debated as the humanitarian effort moves ahead. A disaster of this scope is almost certain to run into many obstacles because the challenges on the ground are so daunting. While managing expectations of what is possible under these circumstances is important, so too, are the observations and lessons learned that with time and hindsight may benefit the actions and plans of those responding to future disasters. A U.N. Inter-Agency Real Time Evaluation (RTE) Mission was launched in April and will be conducted in several phases, the results of which will also be incorporated into the implementation of the Revised Humanitarian Appeal.", "Another issue of concern to Congress is likely to involve arrangements regarding elections. The Haitian Electoral Council is responsible for carrying out elections, and MINUSTAH provides technical and logistical support. The United Nations is encouraging the Haitian government to get back on an election schedule as soon as possible, to avoid the possible politically destabilizing effect extended delays and rule by decree might create. The United States is encouraging Haiti to hold presidential elections when they are due to be held, in fall 2011, and to combine them with legislative elections.\nThere are currently enormous obstacles to conducting elections before year's end. During the earthquake, election experts were killed, and the U.N.'s offices were destroyed, along with records and equipment. Throughout the country, many buildings in which elections are usually held were destroyed. In addition, many Haitian citizens lost their identity cards, and many more have been displaced and will need to register at their new locales. Some elections experts say it is possible to carry the elections out this year if the preparations are begun immediately.", "The devastation caused by the January 12, 2010, earthquake in Haiti led Department of Homeland Security (DHS) Secretary Janet Napolitano to grant Temporary Protected Status (TPS) to Haitians in the United States at the time of the earthquake. As soon as the earthquake hit, some Members of Congress had called for the Obama Administration to do so. On January 13, 2010, DHS had announced that it was temporarily halting the deportation of Haitians. On January 15, 2010, DHS Secretary Napolitano granted TPS to Haitian nationals for 18 months.\nHaitian children who were legally confirmed as orphans eligible for intercountry adoption by the government of Haiti and who were in the process of being adopted by U.S. residents prior to the earthquake have been given humanitarian parole to come to the United States. Other Haitian orphans potentially eligible for humanitarian parole include children who were identified by an adoption service provider or facilitator as eligible for intercountry adoption and who were matched to prospective American adoptive parents prior to January 12, 2010. The parole program stopped taking new applications on April 14, 2010. DHS anticipates that approximately 1,200 orphans will ultimately receive parole under this program. The Haitian government says its first priority regarding displaced children is to try to reunite them with relatives.\nOn January 29, 2010, 10 U.S. citizens, most from an Idaho Baptist group, were arrested in Haiti and charged with child kidnapping and criminal association. The U.S. citizens were trying to cross the Haitian border with the Dominican Republic with a busload of 33 children who they said were orphaned by the January 12, 2010, earthquake. The U.S. citizens did not have authorization to remove the children from Haiti, and it appears that many of the children were not orphans. On February 11, Haitian Judge Bernard Sainvil ordered the release of the U.S. citizens on their own recognizance \"because there had been no evidence demonstrating 'criminal intentions' on their part to support charges of child kidnapping and criminal association leveled against them.\" The charges have been dropped against all 9 of the U.S. citizens, while the remaining U.S. citizen will be tried in Haiti on the charge of arranging \"irregular travel.\"\nThose Haitians who are given humanitarian parole to come to the United States are deemed Cuban-Haitian Entrants and, thus, are among the subset of foreign nationals who are eligible for federal benefits and cash assistance much like refugees. Those Haitians who are newly arriving legal permanent residents, however, are barred from the major federal benefits and cash assistance for the first five years after entry. The President has included funding to cover additional costs for federal benefits and cash assistance resulting from Haitians evacuees, among other activities in his FY2010 supplemental request. Specifically, the President has requested $220.0 million for the Department of Health and Human Services (HHS) to fund four types of activities, of which two are directly related to Haitians brought to the United States after the earthquake. These two are: the state share of Medicaid and Children's Health Insurance Program (CHIP) costs for eligible Haitians; and cash, medical, and repatriation assistance for eligible Haitians. The supplemental request also includes $15 million for the U.S. Citizenship and Immigration Services to use for fee waivers for eligible Haitians granted TPS, those given humanitarian parole to bring medical evacuees and certain categories of Haitians into the United States, and to cover costs associated with processing the adoption of Haitian orphans.\nAccording to the Department of State, there are 54,716 Haitians who have approved petitions to immigrate to the United States and who are waiting for visas to become available. Advocates for Haitians are asking Secretary Napolitano to give humanitarian parole to those Haitians with approved petitions for visas. Proponents of expediting the admission of Haitians with family in the United States maintain that it would relieve at least some of the humanitarian burden in Haiti and would increase the remittances sent back to Haiti to provide critical help as the nation tries to rebuild. Those opposed to expediting the admission of Haitians assert that it would not be in the national interest, nor would it be fair to others foreign nationals waiting to reunite with their families.\nThere are growing concerns that the crisis conditions in Haiti may result in mass migration from the country. The phenomenon of Haitians coming to the United States by boat without proper travel documents dates back at least to the 1970s. The Reagan Administration reached an agreement in 1981 with the Haitian government to interdict (i.e., stop and search certain vessels suspected of transporting undocumented Haitians), and this policy, with some modifications, has continued. During the first two weeks of February, the U.S. Coast Guard returned almost 90 Haitians found at sea to northern Haiti, although U.S. officials say there is no sign of a mass exodus from Haiti by sea. If mass migration were to occur, Congress may weigh in on the balancing of immigration control responsibilities with humanitarian concerns in the midst of Haiti's humanitarian disaster.", "In the initial weeks after the earthquake, U.S. military airlifts brought non-U.S.-citizen Haitians to Florida for medical care that was unavailable in Haiti. These patients, who often had very serious injuries, were admitted to a number of non-federal hospitals, principally in south Florida. On January 27, 2010, Florida Governor Charlie Crist wrote to Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services (HHS), saying that the state's health care system was reaching saturation, and asking Sebelius to activate the National Disaster Medical System (NDMS) to coordinate the distribution of medical evacuees to other states, and to compensate states for the costs of their care. On February 1, 2010, HHS announced that it was activating the NDMS hospital component. Federal medical evacuations resumed at that point, but are no longer underway as of early March, 2010, as the most critical needs have abated or can now be addressed in Haiti.\nHHS administers the NDMS, which consists of three components for the response to mass casualty incidents. First, teams of medical providers deploy rapidly to provide critical medical care in disaster conditions when local health care capacity has been destroyed or overwhelmed. Second, NDMS provides medical evacuation, the coordinated movement of seriously ill or injured victims to sites where they can receive definitive care. Typically, U.S. military assets such as cargo planes and attending medical personnel are used for this purpose. Third, participating U.S. hospitals agree to provide medical care to NDMS evacuees on a voluntary basis, and receive federal reimbursement at 110% of the Medicare rate.\nThe first NDMS component is used frequently. Teams are deployed many times each year in response to domestic disasters (for which deployment costs are typically paid by the Federal Emergency Management Agency's Disaster Relief Fund ) and international humanitarian relief efforts (for which deployment costs are often paid by USAID). NDMS teams were deployed to Haiti shortly after the earthquake. In contrast, the second (medical evacuation) and third (U.S. participating hospital) NDMS components have rarely been activated. Although U.S. military flights had initially brought Haitian medical evacuees to Florida during January, the NDMS hospital component had not yet been activated, and it was not clear at that time if the federal government would assume the costs of care for those patients.\nThe HHS Secretary has considerable discretion with respect to the activation of NDMS. No specific legal triggers or other requirements must be met. However, the Secretary does not have a dedicated funding mechanism to support extensive NDMS deployments. Under HHS policy for this incident, NDMS will reimburse hospitals for the costs of care, for 30 days, for any individual who was medically evacuated from Haiti by NMDS, regardless of citizenship or nationality. NDMS does not pay costs beyond 30 days, costs for services provided by non-hospital facilities (such as rehabilitation facilities), or costs for the care of individuals who were not evacuated through the NDMS system. President Obama has requested emergency supplemental funding to support the Haiti earthquake response. The request includes $220 million for HHS, which would be used, among other things, to reimburse NDMS hospitals that cared for medical evacuees.", "In a bipartisan effort, Congress passed a bill designed to increase charitable donations to Haiti. The Haiti Assistance Income Tax Incentive (HAITI) Act (signed into law January 22, 2010, P.L. 111-126 ) accelerates income tax benefits for charitable cash contributions for the relief of earthquake victims. It allows taxpayers to deduct donations made in early 2010 on their income tax returns for 2009. The Joint Committee on Taxation estimates that the HAITI Act would lead to U.S. revenue losses of about $2 million. Information on how to make charitable donations is in Appendix I .", "One long-standing targeted policy that the U.S. Congress has taken to support economic development in Caribbean countries is to provide tariff preferences for their exports. Haiti is eligible for such benefits under the Caribbean Basin Trade Partnership Act (CBTPA— P.L. 106-200 ) and the Haiti Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, as amended ( P.L. 110-246 ). In particular, flexible and generous tariff preferences are provided to Haiti's apparel assembly business, which has been established for decades, with admittedly mixed success over time, and viewed by many as one pillar of economic growth in an economy with limited opportunities in the short-run.\nThe U.S. Congress continued to support this approach with the Haiti Economic Lift Program (HELP) Act ( S. 3275 ), introduced on April 28, 2010. The bill, which had bicameral and bipartisan support, extends the CBTPA and the Haiti HOPE Act through FY2020. It focuses on expanding preferences for apparel exports, benefits some have argued might also be extended to other industries to help promote economic diversification. Currently, however, such opportunities are very limited, and Congress appears to have opted to review the HOPE Act carefully and enhance those trade preferences rules that have had the most demonstrable effect in stimulating increased apparel production and exports for the U.S. market, and by extension, job creation in Haiti.\nApparel accounts for 93% of Haitian exports to the United States and reflects a comparative advantage based on low-cost labor and proximity to the U.S. market. Earthquake damage to apparel firms created new hardships for this industry, and there is need for a considerable increase in both domestic and foreign investment for the apparel industry to survive and expand. Of the 23 plants operating in late 2009, the earthquake completely destroyed one, killing some 500 people, and seriously damaged four others. Currently 19 are fully operational, two are being relocated, and two are closed. Employment attendance rates have returned to levels seen prior to the earthquake, but with fewer factories operating, total employment has fallen from 26,500 to 23,300. Monthly apparel exports have declined from $58.2 million in February 2009 to $33.1 million in February 2010.\nFocusing trade assistance on this sector attempts to respond to Haiti's level of development and play into the best prospects for creating employment in the near term. The strategy does have its critics, who argue that it has had limited effects in the past and should be employed within a broader development plan that seeks to diversify growth of output and exports over the longer term. In addition, critics contend that more needs to be done to provide better job opportunities as the country faces wholesale reconstruction. Congress recognizes these problems and has responded with broader development assistance and within the parameters of the HOPE Act with the detailed labor provisions. For example, the HOPE Act has put in place a system that requires Haitian firms that wish to avail themselves of the tariff preferences to conform to internationally recognized labor standards, and submit to an independent factory monitoring system operated by the United Nations.", "Lawmakers are also helping constituents find persons missing in Haiti. Information on how to help them do so is in Appendix H . Members were also helping citizens in Haiti leave Haiti. Now that commercial air traffic has been resumed, there are no more emergency evacuations being carried out.\nLawmakers may also seek to find ways for the Haitian and U.S. governments to speed pending and potential adoptions of Haitian orphans. Links for further information on adoptions and orphans are in Appendix H .\nMany constituents want to know how to contribute to relief efforts. Information on how to do so is in Appendix I .", "P.L. 111-8 . In the Omnibus Appropriations Act, 2009, Section 7045 makes the government of Haiti eligible to purchase U.S. defense articles and services for its Coast Guard. It also obligates funds for (1) Haiti under Titles III and VI of this Act; health care, nutrition, sanitation, education, and shelter for migrant workers and others. It prohibits the use of specified funds under this Act for the transfer of U.S. weapons, ammunition, or other lethal property to the Haitian National Police until the Secretary certifies to the Appropriations Committees that any members of the Haitian National Police alleged to have committed serious crimes, including drug trafficking and human rights violations, have been suspended. Introduced February 23, 2009, signed into law March 11, 2009.\nP.L. 111-117 . In the Consolidated Appropriations Act, 2010, Sec. 7045(b) deals expressly with Haiti, stating that, (1) The government of Haiti shall be eligible to purchase defense articles and services under the Arms Export Control Act (22 U.S.C. 2751 et seq.), for the Coast Guard; (2) of the funds appropriated by this Act under Titles III, Bilateral Economic Assistance, and IV, International Security Assistance, not less than $295,530,000 shall be made available for assistance for Haiti; and (3) none of the funds made available by this Act under the heading \"International Narcotics Control and Law Enforcement\" may be used to transfer excess weapons, ammunition or other lethal property of an agency of the United States Government to the government of Haiti for use by the Haitian National Police until the Secretary of State reports to the Committees on Appropriations that any members of the Haitian National Police who have been credibly alleged to have committed serious crimes, including drug trafficking and violations of internationally recognized human rights, have been suspended.\nHaiti is included in Sec. 7045(c), as part of the Caribbean Basin Security Initiative. The section reads as follows:\nOf the funds appropriated under the headings 'Development Assistance,' 'Economic Support Fund,' 'International Narcotics Control and Law Enforcement,' and 'Foreign Military Financing Program' in this Act, not less than $37,000,000 should be made available for assistance for the countries of the Caribbean Basin, to provide equipment and training to combat drug trafficking and related violence and organized crime, and for judicial reform, institution building, education, anti-corruption, rule of law activities, and maritime security, of which not less than $21,100,000 should be made available for social justice and education programs to include vocational training, workforce development and juvenile justice activities: Provided , That none of the funds made available under this subsection shall be made available for budget support or as cash payments.\nThe Act calls on the Secretary of State to provide a detailed spending plan to the Committees on Appropriations no later than 45 days after this Act is enacted, for funds appropriated or otherwise made available for the countries of the Caribbean Basin, with concrete goals, actions to be taken, budget proposals, and anticipated results. Introduced July 22, 2009, signed into law on December 16, 2009.\nP.L. 111-126 . The Act to Accelerate the Income Tax Benefits for Charitable Cash Contributions for the Relief of Victims of the Earthquake in Haiti, allows taxpayers who donate to Haiti earthquake relief between January 11, 2010, and March 1, 2010, to claim those contributions on their 2009 tax return. Introduced January 19, 2010, signed into law on January 22, 2010.\nP.L. 111-127 . The Emergency Aid to American Survivors of the Haiti Earthquake Act amends title XI of the Social Security Act (SSA) to increase the funding cap under the U.S. Repatriation Program to $25 million for FY2010 for temporary assistance to U.S. citizens (and their dependents) returning from foreign countries in the event of destitution, illness, war, threat of war, invasion, or similar crisis; amends SSA title XIX (Medicaid) to provide $65 million in additional funding for the Qualified Individual (QI) Program which pays the Medicare part B premium costs for low-income seniors. Reduces a corresponding amount otherwise available to the Medicaid Improvement Fund for FY2014. Introduced January 25, 2010, signed into law January 27, 2010.\nP.L. 111-158 . Debt Relief for Earthquake Recovery in Haiti Act of 2010. Amends the International Financial Institutions Act to direct the Secretary of the Treasury to instruct the U.S. Executive Directors at the International Monetary Fund (IMF), the International Bank for Reconstruction and Development, the Inter-American Development Bank, and other multilateral development institutions to: (1) cancel all debts owed by Haiti to such institutions; (2) suspend Haiti's debt payments to such institutions until the debts are canceled completely; and (3) provide additional assistance from such institutions to Haiti in grant form in order to avoid additional debt accumulation. Introduced February 2, 2010. Signed into law on April 26, 2010.\nH.R. 144 . The Haitian Protection Act of 2009 would require the Secretary of Homeland Security to designate Haiti as a country whose qualifying nationals may be eligible for temporary protected status. Introduced January 6, 2009; referred to the House Judiciary Committee's Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law February 9, 2009.\nH.R. 264 . The Save America Comprehensive Immigration Act of 2009 would amend the Immigration and Nationality Act (INA) to provide increased protections and eligibility for family-sponsored immigrants, including to authorize adjustment of status for certain nationals or citizens of Haiti. Introduced January 7, 2009, referred to House Judiciary; House Homeland Security; House Oversight and Government Reform Committees; referred to the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law February 9, 2009.\nH.R. 417 . The Next Steps for Haiti Act of 2009 would authorize the Director of Foreign Assistance, in consultation with the government of Haiti and Haitian civil society organizations, to establish the Haiti Professional Exchange Program to assign qualified Haitian Americans and others to provide technical assistance to help Haiti improve in areas vital to its growth and development, including education, energy, environment, health care, infrastructure, security, transportation, and disaster preparedness. Directs the Secretary of State to implement a student loan forgiveness program for program participants. Introduced and referred to the House Committee on Foreign Affairs January 9, 2009.\nH.R. 1567 . The Haitian Refugee Immigration Fairness Act (HRIFA) Improvement Act of 2009 would amend the 1998 HRIFA to (1) require determinations with respect to children to be made using the age and status of an individual on October 21, 1998 (enactment date of the HRIFA of 1998); (2) permit an application based upon child status to be filed by a parent or guardian if the child is present in the United States on such filing date; and (3) include document fraud among the grounds of inadmissibility which shall not preclude an otherwise qualifying Haitian alien from permanent resident status adjustment. It would also permit new status adjustment applications to be filed for a limited time period. Introduced March 17, 2009, referred to the House Judiciary Committee's Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law on April 27, 2009.\nH.R. 3077 . The Global Food Security Act of 2009, partner legislation with S. 384 , authorizes the President to provide assistance under this Act or the Foreign Assistance Act of 1961 for unexpected urgent food assistance needs. Establishes a United States Emergency Rapid Response to Food Crisis Fund to carry out such purposes. Introduced June 26, 2009.\nH.R. 4206 . The Haiti Reforestation Act of 2009 seeks to authorize the Secretary of Agriculture to provide assistance to the government of Haiti. The purpose of the act is to end the deforestation in Haiti within five years and to restore the tropical forest cover to its state in 1990 within a 30-year time frame. The legislation was both introduced and referred to the House Committee on Foreign Affairs on December 3, 2009.\nH.R. 4468 Haiti Action Initiative and Tax Incentive Act of 2010. Treats cash contributions made during January 2010 for the relief of earthquake victims in Haiti as having been made on December 31, 2009, for purposes of the tax deduction for charitable contributions. Introduced on January 19, 2010 and referred to the House Committee on Ways and Means.\nH.R. 4577 . Emergency Health Services for Haitian Earthquake Victims Act of 2010. Introduced and referred to the House Committee on Energy and Commerce February 3, 2010.\nH.R. 4603 . Haitian Orphan Placement Effort Act or the HOPE Act – Would direct the Secretary of Homeland Security (DHS) to expand the humanitarian parole policy for certain Haitian orphans; would apply on a case-by-case basis to children who were legally confirmed as orphans eligible for inter-country adoption by the government of Haiti before January 12, 2010; would authorize the placement of Haitian children granted humanitarian parole into the United States in an unaccompanied refugee minor program if a suitable family member is not available to provide care. Introduced February 4, 2010 and referred to the House Committee on the Judiciary.\nH.R. 4616 . Haitian Emergency Life Protection Act of 2010. Would temporarily expand the V nonimmigrant visa category to include Haitians whose petition for a family-sponsored immigrant visa was approved on or before January 12, 2010. Introduced on Feb. 5, 2010 and referred to the House Committee on the Judiciary. Referred to the Subcommittee on Immigration, Citizenship, Refugees, Border Security and International Law on April 26, 2010.\nH.R. 4952 . The HAITI Act seeks to establish the Office of the Special Coordinator for Assistance to Haiti and to establish the Office of the Special Inspector General for Assistance to Haiti. Introduced and referred to the House Committee on Foreign Affairs on March 25, 2010.\nH.R. 4961 . The Haitian Private Sector Encouragement Act of 2010 intends to provide for the establishment of the Haitian-American Enterprise Fund. Introduced and referred to the House Committee on Foreign Affairs on March 25, 2010.\nH.R. 5006 . The White House Conference on Haiti Act of 2010 will require the President to call a White House Conference on Haiti. Introduced and referred to the Committee on Foreign Affairs as well as the Committee on Rules for consideration on April 13, 2010.\nH.R. 5160 . The Haiti Economic Lift Program Act of 2010 seeks to extend the Caribbean Basin Economic Recovery Act, to provide customs support services to Haiti, among other goals. Introduced and referred to the House Committee on Ways and Means on April 28, 2010. Passed House under suspension on May 5, 2010.\nH.R. 5171 . The Partnership with America's Rapid Rebuilding of Haiti Act of 2010 allows qualified and available United States construction workers and appropriate equipment to be sent to Haiti to assist Haitians in the rebuilding of their country after the devastating January 12, 2010, earthquake, as requested by the government of Haiti. Introduced and referred to the House Committee on Foreign Affairs on April 28, 2010.\nH.Con.Res. 17 . The resolution addresses the humanitarian assistance provided to Caribbean countries affected by past hurricanes and tropical storms. It acknowledges the affected countries' efforts to aid their citizens in recovery. The resolution also expresses support of the international assistance received by the Dominican Republic, Haiti, Jamaica, the Bahamas, Cuba and Turks and Caicos. Referred to the House Committee on Foreign Affairs January 9, 2009.\nH.Con.Res. 165 . Supports the yielding of temporary protected status for Haitian nationals who currently reside in the United States. Introduced July 17, 2009; referred to the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law on August 19, 2009.\nH.Res. 1021 . Expressing condolences to and solidarity with the people of Haiti in the aftermath of the devastating earthquake of January 12, 2010. Introduced January 20, 2010 and agreed to January 21, 2010.\nH.Res. 1048 . A resolution commending the efforts and honoring the work of the men and women of USNS Comfort and the United States Navy in the immediate response to those affected by the January earthquake. Introduced January 27, 2010 and agreed to in the House on February 23, 2010.\nH.Res. 1066 . A resolution recognizing the efforts of the U.S. Armed Forces, local first responders, and other members of Operation Unified Response for their swift and coordinated action in light of the devastation caused by the earthquake. Introduced on February 3, 2010 and agreed to on February 23, 2010 in the House.\nH.Res. 1159 . A resolution supporting efforts to address the crisis faced by Haitian orphans following the earthquake. Introduced and referred to the House Committee on Foreign Affairs on March 10, 2010.\nH.Res. 1160 . A resolution calling for the establishment of a Haiti Marshall Plan Committee to coordinate aid and development initiatives from multilateral development banks, international financial institutions, U.S. bilateral aid programs, and major international charities and nongovernmental organizations in response to the earthquake. Introduced and referred to the Committees on Financial Services and Foreign Affairs on March 10, 2010.\nH.Res. 1277 . A resolution commending the efforts and honoring the work of the State of Israel, its Defense Forces, and the Israeli people for their efforts to provide relief to Haiti in the aftermath of the earthquake in January, 2010. Introduced and referred to the House Committee on Foreign Affairs on April 20, 2010.\nS. 2931 . Would accelerate the income tax benefits for charitable cash contributions for the relief of victims of the earthquake in Haiti. Would treat cash contributions made after January 11, 2010, and before February 16, 2010, for the relief of earthquake victims in Haiti as having been made on December 31, 2009, for purposes of the tax deduction for charitable contributions. Introduced January 20, 2010, and read twice and referred to the Committee on Finance.\nS. 2936 . Haiti Assistance Income Tax Incentive Act. Would treat cash contributions made after January 11, 2010, and before March 1, 2010, for the relief of earthquake victims in Haiti as having been made on December 31, 2009, for purposes of the tax deduction for charitable contributions. Would deem a contribution as meeting the recordkeeping requirements of the Internal Revenue Code if the taxpayer produces a telephone bill showing the name of the donee organization and the date and amount of the contribution. Introduced January 20, 2010, read twice and referred to the Committee on Finance.\nS. 2961 . The Haiti Recovery Act would urge the Secretary of the Treasury to direct the U.S. Executive Director to each international financial institution to advocate: (1) the cancellation of all remaining debt obligations of Haiti, including obligations incurred after the date of the enactment of this Act and before February 1, 2012; (2) the provision of debt service relief for all of Haiti's remaining payments; and (3) that new assistance to Haiti should be primarily grants rather than loans.\nWould urge the Secretary to: (1) instruct the U.S. Executive Director of the International Monetary Fund (IMF) to advocate the use of certain proceeds to provide debt stock relief, debt service relief, and grants for low-income countries that are eligible for the Poverty Reduction and Growth Facility or any other programs to assist low-income countries, including Haiti; (2) support the creation of an Inter-American Development Bank trust fund for Haiti that would leverage U.S. contributions and promote bilateral donations for the purpose of investing in Haiti's infrastructure; and (3) direct the U.S. Executive Director of the Inter-American Development Bank to increase earnings transfer to the Fund for Special Operations, which finances programming in Haiti and other weak economies in the Western Hemisphere.\nWould urge the Secretary and the Secretary of State to use all appropriate diplomatic influence to secure cancellation of all remaining bilateral debt of Haiti. Introduced, read twice and referred to the Committee on Foreign Relations January 28, 2010. Placed on the Senate Legislative Calendar under General Orders, Calendar No. 276 and later held at the desk on March 9, 2010.\nS. 2978 . The Renewing Hope for Haitian Trade and Investment Act of 2010 would: direct the Secretary of Homeland Security (DHS), acting through the Commissioner for U.S. Customs and Border Protection (CBP), to commit sufficient CBP resources to: (1) enhance commercial assistance to promote trade among Haiti, the Dominican Republic, and the United States; (2) facilitate the preclearance of valid cargo from Haiti to the United States; (3) promote the efficient and secure movement of articles entering the United States under the Caribbean Basin Economic Recovery Act (CBERA); and (4) provide technical assistance and training to Haiti's customs service to improve production validation and compliance and understanding of U.S. customs procedures, such as the Electronic Visa Information System;\namend CBERA to extend, in each succeeding one-year period through FY2013 (transition period), the duty-free treatment of certain imported knit apparel articles made in one or more Caribbean Basin Trade Partnership Act (CBTPA) beneficiary countries from yarns wholly formed in the United States;\nextend the value-added rule of origin for certain apparel and other textile articles imported from Haiti.\nextend, for the initial applicable one-year period, and each one-year period thereafter through FY2022, the duty-free treatment of apparel articles imported directly into the United States from Haiti or the Dominican Republic in amounts not to exceed specified percentages of the aggregate square meter equivalents of all apparel articles imported into the United States in the most recent 12-month period;\nextend, through December 20, 2013, the preferential treatment of wire harness automotive components manufactured in Haiti and imported into the United States, provided Haiti meets certain economic and political eligibility requirements;\nestablish the Haiti Recovery and Investment Task Force to promote foreign investment in Haiti;\ndirect the Comptroller General to report to Congress on the effectiveness of the trade preferences provided under the Haitian Hemispheric Opportunity Through Partnership Encouragement Act of 2006 (HOPE Act), as amended, as well as recommendations for improving such preferences. Introduced, read twice and referred to the Committee on Finance Feb. 2, 2010.\nS. 2998 . The Haitian Emergency Life Protection Act of 2010 would amend the Immigration and Nationality Act with respect to V- visa non-immigrants (spouses and minor children of lawful permanent residents who come to the United States to wait for completion of the immigrant visa process). This would include unmarried sons and daughters of such lawful permanent residents; Haitian nationals whose petition for a family-sponsored immigrant visa was approved on or before January 12, 2010; would authorize the Department of State to use secondary evidence to verify eligibility for such status or for immediate relative status; would sunset the provisions of this Act two years after its enactment. Introduced February 4, 2010, read twice and referred to the Committee on the Judiciary.\nS. 3202 . The Haitian-American Enterprise Fund Act would promote the strengthening of the Haitian private sector. Introduced and referred to the Senate Committee on Foreign Relations on April 14, 2010.\nS. 3275 . The Haiti Economic Lift Program Act of 2010 would extend the Caribbean Basin Economic Recovery Act, to provide customs support services to Haiti. Introduced, read twice, and referred to the Committee on Finance on April 28, 2010.\nS.Con.Res. 61 . A concurrent resolution expressing the sense of Congress that general aviation pilots and industry should be recognized for the contributions made in response to Haiti earthquake relief efforts. Introduced on April 27, 2010 and referred to the House Committee on Transportation and Infrastructure on May 3, 2010.\nS.Res. 414 . A resolution expressing the sense of the Senate on the recovery, rehabilitation, and rebuilding of Haiti following the humanitarian crisis caused by the January 12, 2010 earthquake in Haiti. Introduced February 9, 2010 and on February 24, 2010, placed on Senate Legislative Calendar under General Orders. Calendar No. 275. On March 4, 2010, the resolution was agreed to in Senate without amendment and with a preamble by unanimous consent.\nS. 3317 . The Haiti Empowerment, Assistance, and Rebuilding Act of 2010 would authorize appropriations of $3.1 billion over five years in addition to amounts otherwise available for assistance for Haiti. This would include authorizing $1.5 billion for FY 2010, and $0.5 billion per year for FY2011 through FY2014. The bill would make it U.S. policy, in partnership with the government of Haiti and in coordination with the international community, to support the sustainable recovery and rebuilding of Haiti. It would establish a Senior Coordinator for Haiti within the Department of State who would advise and coordinate all U.S. government policies related to Haiti. It would also direct the USAID Administrator, with input provided by the Coordinator, to submit to Congress a multi-year strategy to provide assistance in support of Haiti's reconstruction. Introduced and referred to Senate Committee on Foreign Relations on May 5, 2010.\nAppendix A. Exposed Population\nAppendix B. Haiti Population Movement\nAppendix C. Emergency Shelter Gap: April 19, 2010\nAppendix D. U.S. Earthquake Assistance to Haiti\nAppendix E. The U.S. Government Emergency Response Mechanism for International Disasters\nThe United States is generally a leader and major contributor to relief efforts in response to humanitarian disasters. The President has broad authority to provide emergency assistance for foreign disasters and the U.S. government provides disaster assistance through several U.S. agencies. The very nature of humanitarian disasters—the need to respond quickly in order to save lives and provide relief—has resulted in a rather unrestricted definition of what this type of assistance consists of at both a policy and an operational level. While humanitarian assistance is assumed to provide for urgent food, shelter, and medical needs, the agencies within the U.S. government providing this support typically expand or contract the definition in response to circumstances. Funds may be used for U.S. agencies to deliver services or to provide grants to international organizations (IOs), international governmental and non-governmental organizations (NGOs), and private or religious voluntary organizations (PVOs). The U.S. Agency for International Development (USAID) is the U.S. government agency charged with coordinating U.S. government and private sector assistance. It also coordinates with international organizations, the governments of countries suffering disasters, and other governments.\nThe Office of Foreign Disaster Assistance (OFDA) in USAID's Bureau for Democracy, Conflict and Humanitarian Assistance (DCHA) provides immediate relief materials and personnel, many of whom are already abroad on mission. It is responsible for providing non-food humanitarian assistance and can quickly assemble Disaster Assistance Response Teams (DARTs) to assess conditions. OFDA has wide authority to borrow funds, equipment, and personnel from other parts of USAID and other federal agencies. USAID has two other offices that administer U.S. humanitarian aid: Food For Peace (FFP) and the Office of Transition Initiatives (OTI). USAID administers emergency food aid under FFP (Title II of P.L. 480) and provides relief and development food aid that does not have to be repaid. OTI provides post-disaster transition assistance, which includes mainly short-term peace and democratization projects with some attention to humanitarian elements but not emergency relief.\nThe Department of Defense (DOD) Overseas Humanitarian, Disaster and Civic Aid (OHDACA) funds three Dodd humanitarian programs: the Humanitarian Assistance Program (HAP), Humanitarian Mine Action (HMA) Program, and Foreign Disaster Relief and Emergency Response (FDR/ER). OHDACA provides humanitarian support to stabilize emergency situations and deals with a range of tasks including providing food, shelter and supplies, and medical evacuations. In addition the President has the authority to draw down defense equipment and direct military personnel to respond to disasters. The President may also use the Denton program to provide space-available transportation on military aircraft and ships to private donors who wish to transport humanitarian goods and equipment in response to a disaster.\nGenerally, OFDA provides emergency assistance for 30 to 90 days after a disaster. The same is true for Department of Defense humanitarian assistance. After the initial emergency is over, assistance is provided through other channels, such as the regular country development programs of USAID.\nThe State Department also administers programs for humanitarian relief with a focus on refugees and the displaced. The Emergency Refugee and Migration Account (ERMA) is a contingency fund that provides wide latitude to the President in responding to refugee emergencies. Assistance to address emergencies lasting more than a year comes out of the regular Migration and Refugee Account (MRA) through the Population, Migration and Refugees (PRM) bureau. PRM assists refugees worldwide, conflict victims, and populations of concern to the United Nations High Commissioner for Refugees (UNHCR), often extended to include internally displaced people (IDPs). Humanitarian assistance includes a range of services from basic needs to community services.\nAppendix F. Operation Unified Response: U.S. Military Units Participating\nMajor Commands\nU.S. Southern Command http://www.southcom.mil/appssc/index.php\nU.S. Air Mobility Command http://www.amc.af.mil\nU.S. Air Force Special Operations Command http://www.afsoc.af.mil/\nU.S. Navy Expeditionary Combat Command http://www.necc.navy.mil\nGround Units\n82 nd Airborne Division Brigade Combat Team http://www.bragg.army.mil/82DV/\n22 nd Marine Expeditionary Unit http://www.lejeune.usmc.mil/22ndMEU/\nNaval Units\nSS Cape May—Heavy-lift ship\nSS Cornhusker State—Crane ship\nUSS Bataan—Amphibious assault ships\nUSS Fort McHenry, USS Carter Hall—Dock landing ships\nUSNS Comfort—Hospital ship\nUSNS Grasp—Salvage ship\nUSNS Sacagewea – Dry cargo ship\nUSNS Big Horn – Replenishment oiler\n6 U.S. Coast Guard cutters\nAppendix G. Donor Contributions and Pledges to Haiti in Response to the January 12, 2010, Earthquake\nAppendix H. How to Search for or Report on Individuals in Haiti\nRegarding U.S. Citizens in Haiti\nThe U.S. Embassy in Port Au Prince has set up a task force at the embassy that is taking calls as conditions permit. The embassy is working to identify U.S. citizens in Haiti who need urgent assistance and to identify sources of emergency help. U.S. citizens in Haiti are urged to contact the embassy via e-mail ( [email address scrubbed] ) to request assistance. U.S. citizens in Haiti can call the embassy's Consular Task Force at 509-2229-8942, 509-2229-8089, 509-2229-8322, or 509-2229-8672.\nThe Department of State has also created a task force to monitor the emergency. People in the United States or Canada with information or inquiries about U.S. citizens in Haiti may reach the Haiti Task Force at 888-407-4747, or by e-mail at [email address scrubbed] . The Task Force phone number for those outside the United States and Canada is 202-501-4444.\nIn order to expedite requests for information about persons in Haiti, the following information is needed:\nfull name date of birth citizenship time date place of last known location any contact information, such as a cell phone number or hotel/church number where the person could be reached the person's e-mail address passport information, if known\nIt is also important to provide the requestor's contact information, including phone numbers, relationship to the person about whom the inquiry is being made, and any special or emergency circumstances.\nThe following website provides information for calls regarding the welfare of American citizens in Haiti: http://haiti.usembassy.gov/service/emergency-contact.html .\nThe International Committee of the Red Cross also has a directory for missing and located persons in Haiti at http://www.familylinks.icrc.org/wfl/wfl_hti.nsf/bottin?openview .\nHaitian Citizens in the U.S.\nHaitian citizens in the U.S. trying to locate people in Haiti can register their names with the International Committee for the Red Cross at http://www.icrc.org/web/doc/siterfl0.nsf/htmlall/familylinks-haiti-eng?opendocument .\nThey can also call the Haitian Embassy in Washington, DC, at 202-332-4090, or the Haitian Consulate in New York City at 305-859-2003.\nThe Miami Herald provides a page to help families connect with family members at http://www.miamiherald.com/news/americas/haiti/connect/#vmix_media_id=9304036 .\nHaitian citizens in the United States may also consult the directory on the International Committee of the Red Cross website for missing relatives, friends, and colleagues at http://www.familylinks.icrc.org/wfl/wfl_hti.nsf/bottin?openview .\nU.S. Citizens with Pending Adoption Cases in Haiti\nU.S. Department of Homeland Security Secretary Napolitano has announced a humanitarian parole policy for two categories of Haitian children in the process of being adopted by American citizens. This policy is explained at http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=9c22546ade146210VgnVCM100000082ca60aRCRD&vgnextchannel=68439c7755cb9010VgnVCM10000045f3d6a1RCRD .\nU.S. citizens with adoptions pending should send detailed information to the U.S. Department of Homeland Security (USDHS)/U.S. Citizenship and Immigration Services (USCIS) at [email address scrubbed] . This e-mail address is intended only for submitting documents for pending adoption cases. Additional information may be found at the USCIS website at http://www.uscis.gov .\nThe Department of State has a dedicated website to Intercountry Adoptions at http://adoption.state.gov/news/children_affected_by_natural_disasters_conflict.html . The Department of State also hosts a dedicated blog about Intercountry Adoptions at http://blogs.state.gov/index.php/site/entry/haiti_earthquake_and_intercountry_adoption . It has also established an e-mail address for questions at [email protected].\nThe following information will need to be included in any inquiries addressed to either the Department of Homeland Security or the Department of State: Subject Line: \"Haitian Adoption Information\" Full name and contact information (including e-mail address) of parents Full name(s) of child(ren) Date(s) of birth of child(ren) (if possible) A brief summary of the status of the case Name and contact information for the orphanage\nFor more information on the U.S. government's response to Haiti's most vulnerable children, people may contact [email address scrubbed] or 202-712-0550.\nAppendix I. How to Contribute to Relief Efforts\nHow to Make Donations\nAccording to Inter Action and other relief agencies, the best way to help is to donate financially to organizations responding to a disaster. Cash allows relief professionals to procure exactly what is needed in a disaster situation and ensure that donations are culturally, dietetically, and environmentally appropriate. Cash donations do not use up other scarce resources, such as transportation, staff time or warehouse space. As needed, cash can also be transferred quickly to where it is needed, helping bolster the economy of the disaster-stricken region.\nThe White House suggests that those wishing to make a donation to relief efforts may contribute online through http:// ClintonBushHaitiFund.org ; text \"QUAKE\" to 20222 to charge a $10 donation to the Clinton Bush Haiti Fund (the donation will be added to your cell phone bill); or text \"HAITI\" to 90999, and $10 will be given automatically to the Red Cross, charged to your cell phone bill. Those wishing to donate may also visit InterAction, at http://www.interaction.org , to contribute to other non-governmental organizations.\nThe Department of State suggests that those who have significant in-kind contributions to make, such as a plane, a cargo ship, a team of doctors, portable generators, or large-scale water purification equipment, go to http://www.usaid.gov/helphaiti/ .\nUSAID, through the non-profit organization, Aidmatrix Foundation, Inc., at http://www.aidmatrixnetwork.org/fema/PublicPortal/ListOfNeeds.aspx?PortalID=133 , provides a searchable database to connect donors with needs. The lists of needs may be filtered by category, NGO, or item description.\nA second option allows the donor to submit details of in-kind donations, and Aidmatrix will use the information to confirm the need with an NGO. Those who have significant in-kind contributions to make, such as a plane, a cargo ship, portable generators, or large-scale water purification equipment, may also access Aidmatrix at http://www.aidmatrixnetwork.org/fema/PublicPortal/NewDonation.aspx?PortalID=133 .\nUSAID recently released guidelines for doing business with USAID in Haiti. The following links provide information for grants, contracts, and unsolicited proposals:\nFor contracting opportunities, FedBizzOpps, at http://www.fbo.gov . For grants opportunities, http://www.grants.gov . Unsolicited proposals guidelines, http://www.usaid.gov/business/business_opportunities/ .\nAppendix J. Links for Further Information\nU.S. Government Agencies\nU.S. Agency for International Development (USAID)\nhttp://www.usaid.gov/helphaiti/\nUSAID AIDMATRIX: In Kind Donations\nhttp://www.aidmatrixnetwork.org/fema/PublicPortal/ListOfNeeds.aspx?PortalID=133\nUSAID Humanitarian Assistance to Haiti for the Earthquake and Earthquake Affected Areas Maps\nhttp://www.usaid.gov/helphaiti/documents/02.15.10-USAID-DCHAHaitiEarthquakeMapbook34.pdf\nU.S. Department of Defense\nhttp://www.defense.gov/home/features/2010/0110_haiti/\nMajor Military Support for Haiti at a Glance\nhttp://www.defense.gov/home/features/2010/0110_haiti/military-support.html\nU.S. Department of Health and Human Services\nhttp://www.hhs.gov/haiti/\nCenters for Disease Control Guidance for Relief Workers and Travelers to Haiti for Earthquake Response\nhttp://wwwnc.cdc.gov/travel/content/news-announcements/relief-workers-haiti.aspx\nU.S. Department of Homeland Security\nhttp://www.dhs.gov/journal/theblog/2010/02/guardians-report-in-from-haiti-video.html\nU.S. Department of State\nhttp://www.state.gov/p/wha/ci/ha/earthquake/index.htm\nU.S. Department of State Embassy, Port-au-Prince\nhttp://haiti.usembassy.gov/\nU.S. Geological Survey\nhttp://earthquake.usgs.gov/earthquakes/eqinthenews/2010/us2010rja6/\nWhite House: Help for Haiti\nhttp://www.whitehouse.gov/blog/2010/01/13/help-haiti\nInformation on the Haitian Earthquake\nHaiti Earthquake Damage Map\nhttp://www.reliefweb.int/rw/fullmaps_am.nsf/eca57e2740e7a919412569cf003180fa/0573522688593a18c12576aa00483368/ $FILE/100112_07.45NYT_Haiti_Epicenter.pdf\nHaiti Earthquake Intensity Map\nhttp://www.reliefweb.int/rw/fullmaps_am.nsf/luFullMap/A4228B2905DCFFE6C12576AB0028581B/$File/map.pdf?OpenElement\nHaiti Earthquake 2010, Multidisciplinary Center for Earthquake and Engineering Research (MCEER)\nhttp://mceer.buffalo.edu/research/Reconnaissance/Haiti1-12-10/default.asp\nOther Resources\nCenter for International Disaster Information (CIDI)\nhttp://www.cidi.org/news/haiti-quake.htm\nEarthquake Engineering Research Institute (EERI)\nhttp://www.eqclearinghouse.org/20100112-haiti/\nEuropean Commission for Humanitarian Aid (ECHO)\nhttp://ec.europa.eu/echo/aid/caribbean_pacific/haiti_earthquake_en.htm\nInterAction\nhttp://www.interaction.org/crisis-list/earthquake-haiti\nInter American Development Bank\nhttp://www.iadb.org/haiti/index.cfm?lang=en&id=6407\nInternational Monetary Fund\nhttp://www.imf.org/external/country/hti/index.htm\nOrganization of American States: Pan American Disaster Foundation\nhttp://www.panamericanrelief.org/\nPan American Health Organization\nhttp://new.paho.org/disasters/index.php?option=com_content&task=view&id=1088&Itemid=1\nRed Cross Movement\nThe American Red Cross\nhttp://www.redcross.org\nThe International Federation of Red Cross and Red Crescent Societies\nhttp://www.ifrc.org\nThe Haitian Red Cross\nhttp://www.ifrc.org/address/ht.asp\nThe International Committee of the Red Cross\nhttp://www.icrc.org/web/eng/siteeng0.nsf/htmlall/haiti\nRelief Web\nhttp://www.reliefweb.int/rw/dbc.nsf/doc108?OpenForm&emid=EQ-2010-000009-HTI&rc=2\nUnited Nations\nUnited Nations Children's Fund (UNICEF) http://www.unicef.org/infobycountry/haiti_newsline.html\nUnited Nations Habitat(UN-Habitat)\nhttp://www.unhabitat.org/content.asp?cid=7780&catid=5&typeid=6&subMenuId=0\nUnited Nations News Center\nhttp://www.un.org/apps/news/infocusRel.asp?infocusID=91&Body=Haiti&Body1=\nUnited Nations Office for the Coordination of Human Affairs (OCHA)\nhttp://www.reliefweb.int/rw/RWFiles2010.nsf/FilesByRWDocUnidFilename/MUMA-84TW2F-full_report.pdf/$File/full_report.pdf\nUnited Nations Stabilization Mission in Haiti (MINUSTAH)\nhttp://www.un.org/en/peacekeeping/missions/minustah/\nUnited Nations World Food Program (WFP)\nhttp://www.wfp.org/stories/haiti-wfp-bring-food-devastating-quake\nWorld Bank\nhttp://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/HAITIEXTN/0,,menuPK:338184~pagePK:141159~piPK:141110~theSitePK:338165,00.html" ], "depth": [ 0, 1, 1, 2, 1, 2, 2, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 2, 3, 1, 2, 2, 2, 2, 2, 3, 3, 2, 1, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 2, 2, 1, 1, 2, 2, 3, 3, 1, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h1_full", "h0_full", "h0_full", "", "", "", "", "h1_title", "h1_full", "", "", "", "", "h1_title", "", "h1_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "", "", "", "", "", "", "", "", "", "h1_full", "h2_full", "", "h2_full", "", "", "", "h2_full", "", "", "", "", "h2_full" ] }	{ "question": [ "What consequences has the largest earthquake in Haiti caused?", "How is Haiti recovering from the earthquake?", "What role had the international community played in Haiti's development prior to the earthquake?", "How will Haiti continue to recover?", "How was the U.S. involved in Haiti’s recovery efforts?", "What will happen after May 10?", "In what way is there uncertainty regarding new elections?", "How is the humanitarian relief operation helping Haiti?", "How long is the effort expected to last?", "What has the scale of the relief effort shown on part of the assisting nations?", "What actions has President Barack Obama taken to help Haiti?", "What was US Administration seeking as of April 30, 2010?", "Why is the US Administration requesting money for recovery and reconstruction?", "What action has the Department of Homeland Security taken?", "What concerns does Congress have?", "How has Congress addressed these concerns?", "What is the focus of the report?" ], "summary": [ "Experts estimate the earthquake caused $8 to $14 billion in damage. Approximately 3 million people, roughly one-third of the overall population, have been affected by the earthquake with estimates ranging from 1.2 to 2 million people displaced. The government of Haiti is reporting an estimated 230,000 deaths and 300,600 injured.", "In the immediate aftermath of the earthquake, President Rene Préval described conditions in his country as \"unimaginable,\" and appealed for international assistance. As the humanitarian relief operation continues, the government is struggling to restore the institutions needed for it to function, ensure political stability, and address long-term reconstruction and development planning.", "Prior to the earthquake, the international community was providing extensive development and humanitarian assistance to Haiti. With that assistance, the Haitian government had made significant progress in recent years in many areas of its development strategy.", "A post-disaster needs assessment estimated the total value of recovery and reconstruction needs to be $11.5 billion. The Haitian government presented an action plan for reconstruction and development at a global donors' conference held on March 31, 2010. Donors pledged over $5 billion for the first 18 months of Haiti's reconstruction.", "The United States pledged $1.2 billion.", "Extra-constitutional rule will begin after May 10, when most parliamentarians' terms expire; President Préval will probably rule by decree after that.", "There is no timetable for new parliamentary elections.", "As the rainy and hurricane seasons begin, the massive humanitarian relief operation underway in Haiti is focused on providing waterproof emergency shelter, improving sanitation and meeting the basic needs of the displaced and other vulnerable Haitians.", "The relief effort is expected to last for many months.", "The sheer scale of the relief effort in Haiti has brought together tremendous capacity and willingness to help.", "On January 12, 2010, President Barack Obama assembled heads of U.S. agencies to begin working immediately on a coordinated response to the disaster, with the U.S. Agency for International Development through the Office of Foreign Disaster Assistance as the lead agency. On January 14, the Administration announced $100 million in humanitarian assistance to Haiti to meet the immediate needs on the ground.", "In the FY2010 supplemental request, the Administration is seeking a total of $2.8 billion for Haiti. Of that, $1.5 billion is for relief and disaster assistance, which would reimburse U.S. government agencies for services provided and for funds already obligated for ongoing relief activities. The request for recovery and reconstruction is $1.1 billion.", "This is primarily for new activities, focused on urgent infrastructure repairs, especially in the energy and agricultural sectors; critical health care; governance; and security.", "The Department of Homeland Security has temporarily halted the deportation of Haitians and granted Temporary Protected Status for 18 months to Haitian nationals in the United States as of January 12, 2010.", "Congressional concerns include budget priorities and oversight, burden-sharing, immigration, tax incentives for charitable donations, trade preferences for Haiti, and helping constituents with adoptions and other issues.", "Several congressional committees have held hearings on Haiti.", "The focus of this report is on the immediate crisis in Haiti as a result of the earthquake, the U.S. and international response to date, and long-term implications of the earthquake." ], "parent_pair_index": [ -1, -1, 1, 1, 3, -1, 5, -1, 0, 0, -1, -1, 4, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2 ] }
GAO_GAO-16-243	{ "title": [ "Background", "Key Federal Agencies Have Taken Various Actions to Address Electromagnetic Risks to the Grid; Some Actions Align with the 2008 EMP Commission Recommendations", "Federal Agencies Have Taken Actions to Address Electromagnetic Risks to the Grid", "Some Actions Taken by DHS and DOE Align with EMP Commission Recommendations", "Additional Opportunities Exist for Federal Agencies to Identify Responsibilities, Assess Risks, and Strengthen Collaboration with Partners to Address Electromagnetic Risks", "DHS Has Not Identified Roles and Responsibilities for Addressing Electromagnetic Risks", "DHS and DOE Have Not Fully Addressed NIPP Requirement to Identify Key Electrical Infrastructure Assets", "DHS Has Not Fully Leveraged Existing Opportunities to Collect and Analyze Information on Electromagnetic Risks", "Threat", "Vulnerability and Consequence", "Federal Agencies Have Not Fully Coordinated Efforts to Implement Key EMP Risk Management Activities", "EMP Research and Development", "Evaluation of Protective Equipment", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Overview of Geomagnetic Disturbance and Historical Events", "Appendix II: Summary of Key Federal Agency Actions Addressing Electromagnetic Risks to the Electric Grid", "Standards, Guidelines, Tools, and Demonstration Projects", "Research Reports", "Strategy Development and Planning", "Training and Outreach", "Appendix III: Summary of Alignment between 2008 EMP Commission Recommendation and Key Federal Agency Actions", "Appendix IV: Comments from the Department of Energy", "Appendix V: Comments from the Department of Homeland Security", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "According to experts, a nuclear EMP is the burst of electromagnetic radiation resulting from the detonation of a nuclear device, which can disrupt or destroy electronic equipment. Nonnuclear EMP weapons can also be designed to intentionally disrupt electronics, but these generally have short range and are not a threat to multiple assets. The threat focused on primarily by the EMP Commission, and specifically addressed in this report, is the high-altitude EMP (HEMP). A HEMP event is caused by the detonation of a nuclear device above the atmosphere, from about 40 to 400 kilometers (approximately 25 to 250 miles) above the earth’s surface. A HEMP attack is not intended to cause direct physical impacts at the earth’s surface, such as injury or damage directly from heat, blast, or radiation, but instead creates an intense electromagnetic pulse that can disrupt computers and damage electronics and insulators, and could cause significant damage to critical electrical infrastructure, such as transformers. The components of EMP—commonly identified as E1, E2, and E3—can cause disruption and damage to electronic systems and electrical infrastructure. For example, the E1 component, or fast pulse, primarily disrupts or damages electronic-based control systems, sensors, computers, and similar devices, but may also adversely affect long-line electrical systems; the E2 component, similar to lightning, has the similar ability to impair or destroy control features that are not protected from lightning; and the E3 component is a subsequent, slower-rising, longer- duration pulse that creates disruptive currents in transmission lines, which causes grid instability and increases heat in transformers. If the E3 pulse is high enough and long enough it can result in grid collapse and potentially damage transformers.\nIn addition to manmade EMPs, naturally occurring solar weather events of sufficient intensity can also cause electromagnetic impacts similar to the E3 pulse that can adversely affect components of the commercial electric grid, as well as other infrastructure such as satellites and undersea cables. The resulting impact of solar weather is commonly referred to as a geomagnetic disturbance (GMD). In 1989, a GMD caused wide-scale impacts on the Hydro-Quebec power system in Canada which caused this regional electric grid to collapse within 92 seconds and left 6 million customers without power for up to 9 hours. See appendix I for additional information on GMD events. See table 1 for an overview of electromagnetic threats and their primary effects.\nAs noted in Presidential Policy Directive 21 (PPD-21), the energy and communications sectors are uniquely critical due to the enabling functions they provide to other critical infrastructure sectors. The U.S. electric power delivery system is a highly complex network of substations and electric lines that transport electricity from generators to residential, commercial, and industrial consumers. The U.S. electric grid has three main components: generation (creation of electricity), transmission (long haul transport of electricity), and distribution (shorter distances connecting the electricity to the consumer/end user). In November 2015, FERC reported that there are over 24,000 substations nationwide, connected by over 430,000 miles of transmission lines.\nGiven the interdependency among infrastructure sectors, an EMP or major GMD event that disrupts the electric grid could also result in potential cascading impacts on fuel distribution, transportation systems, food and water supplies, and communications and equipment for emergency services, as well as other communication systems that utilize the civilian electrical infrastructure. PPD-21 also recognizes that DHS has numerous responsibilities to protect critical infrastructure, including such things as analyzing threats to, vulnerabilities of, and potential consequences from all hazards on critical infrastructure.\nWithin DHS, NPPD is responsible for working with public and industry infrastructure partners, and leads the coordinated national effort to mitigate risk to the nation’s infrastructure through the development and implementation of the infrastructure protection program. NPPD has two principal offices with responsibilities to facilitate protection of critical infrastructure that could be at risk from EMP and GMD events—the Office of Infrastructure Protection (IP) and the Office of Cybersecurity and Communications (CS&C). In addition, FEMA and S&T have roles related to addressing potential impacts to the electric grid, which could include EMP and GMD threats. The offices of Cyber and Infrastructure Analysis and I&A also help support related departmental activities.\nDOE also has a significant role as the sector-specific agency for the energy sector, which includes critical infrastructure and key resources related to electricity. For example, DOE is responsible for developing an Energy Sector-Specific Plan—in collaboration with other stakeholders, including DHS and energy sector owners and operators—that applies the NIPP risk management model to critical infrastructure and key resources within the sector. Within DOE, the Office of Electricity Delivery and Energy Reliability leads national efforts to increase the security and reliability of the energy infrastructure and facilitate recovery from disruptions to the energy supply. Legislation enacted in December 2015 further authorizes the Secretary of Energy, upon submission by the president of a written directive or determination identifying an electrical grid emergency, to issue orders for emergency measures necessary to protect or restore the reliability of critical electric infrastructure or of defense critical infrastructure during such an emergency and establishes the Secretary of Energy as the lead sector-specific agency for cybersecurity for the energy sector. DOE national laboratories also provide research support and technical expertise to federal and industry stakeholders regarding EMP and GMD impacts.\nOther principal federal agencies working to address the threat of EMP and GMD include DOD and FERC, as well as NOAA, the U.S. Geological Survey (USGS), and the National Aeronautics and Space Administration (NASA).\nElectrical infrastructure is primarily operated by private industry, which owns approximately 85 percent of the nation’s critical electrical infrastructure. Industry entities are represented, in part, through membership in industry associations such as the American Public Power Association, Edison Electric Institute, and National Rural Electric Cooperative Association. The North American Electric Reliability Corporation (NERC) also has authority to develop reliability standards to address the protection and improvement of the reliability and security of the electrical infrastructure.", "", "DHS, DOE and FERC have taken various actions to address electromagnetic risks to the electric grid, which generally fall under four categories: (1) standards, guidelines, tools and demonstration projects; (2) research reports; (3) strategy development and planning; and (4) training and outreach.\nBecause federal agencies generally do not own electric grid infrastructure, federal actions to address GMD risks are more indirect through such things as developing standards and guidelines, and conducting research that could benefit electric grid owners and operators. Federal agencies have also been involved in strategy development and planning, as well as training and outreach efforts, as a means of preparing federal officials and others to respond to both EMP and GMD events, and enhancing knowledge about electromagnetic risks. For example, DHS S&T led the design and development of a prototype transformer that can be more easily transported to another location to help restore electric power in a timelier manner. DHS has also participated in various training and outreach events to enhance understanding of an EMP and GMD event. DOE’s primary efforts include supporting research to enhance the understanding of the potential impacts to the electric grid from electromagnetic events. Overall, DHS and DOE have led most of the federal actions addressing protection and mitigation efforts. They were also the key participants, with the White House Office of Science and Technology Policy (OSTP) and NOAA, in developing the National Space Weather Strategy and Action Plan issued in October 2015 along with support from a variety of federal departments and agencies. Table 2 below summarizes the key actions taken by federal agencies—most of which were conducted since 2012—that help to address electromagnetic risks. More detailed information on these individual activities is also included in appendix II.", "The actions recommended by the EMP Commission generally align with existing authorities and responsibilities of DHS and DOE relating to the protection of critical infrastructure, such as identifying key assets and analyzing risks, and as discussed above, DHS and DOE have taken actions to address some risks to the electric grid from electromagnetic events. Although DHS and DOE did not report that any of their actions were taken in response to the commission report, actions taken by both agencies have aligned with some of the recommendations. Specifically, the EMP Commission made seven recommendations related to the electric grid, most of which were directed to DHS and DOE. Of these seven recommendations, some of the actions that DHS and DOE took aligned with four of them. The seven EMP Commission recommendations related to the electric grid include the following: 1. conducting research to better understand infrastructure systems and 2. expanding activities to address the vulnerability of control systems, 3. identifying clear authority and responsibility to respond to an EMP 4. engaging federal and industry entities to determine liabilities and 5. establishing monitoring efforts and defining testing standards and 6. providing capabilities to help protect the electric grid from an EMP attack and recover as rapidly and effectively as possible, and 7. utilizing industry and governmental institutions to assure cost effective outcomes.\nDHS and DOE efforts to protect the electrical grid aligned with the first three recommendations noted above: conducting research to better understand the interdependencies of critical infrastructures, addressing the vulnerability of control systems to an EMP attack; and identifying responsibilities for responding to an EMP attack. They also aligned with the seventh recommendation, which includes 15 subparts, on utilizing industry and other governmental institutions to assure the most cost- effective outcomes. For example, with respect to the recommendation on conducting research to better understand interdependencies of critical infrastructures, DHS’s Sector Resilience Report: Electric Power Delivery includes some assessment of how various critical infrastructures— including the energy, communications, and transportation sectors, among others—are interdependent in maintaining operations.\nWith regard to the last multipart recommendation identified above, DHS and DOE took some actions that aligned with 5 of the 15 subparts of this recommendation. Some of the sub-parts include such efforts as developing national and regional restoration plans and assuring the availability of critical communication channels, among other efforts. For example, DHS and DOE have actions underway to develop a Power Outage Incident Annex plan, which, according to DHS officials, is intended to provide incident-specific information regarding how the federal government plans to respond to and recover from a loss of power resulting from deliberate acts of terrorism or natural disasters, including an EMP or GMD event. In addition, a DHS entity developed EMP protection guidelines to help federal agencies and industry identify options for safeguarding critical communication equipment and control elements, such as Supervisory Control and Data Acquisition (SCADA) systems, from an EMP attack. For more detailed information regarding how identified federal actions align with these seven EMP Commission recommendations, see appendix III.", "", "DHS has not clearly identified internal roles and responsibilities for addressing electromagnetic risks to the electric grid or communicated these to external federal and industry partners. While multiple DHS components and offices, including NPPD, FEMA, and S&T, have each conducted independent activities addressing electromagnetic risks to the electric grid, none have been tasked with lead responsibility for coordinating related activities within the department or with federal and industry stakeholders. As a result, we experienced ongoing challenges in identifying applicable DHS personnel and related departmental actions. For example, NPPD officials had difficulty identifying their specific roles and activities addressing electromagnetic risks to the electric grid, including efforts to collect or synthesize available risk information to provide input into department-wide risk assessments, such as the Homeland Security National Risk Characterization (HSNRC). An official within NPPD/CS&C subsequently provided information to us regarding applicable activities conducted as part of his role leading efforts to help safeguard communications and information/control system capabilities in the event of EMP-related attacks or disasters. However, this official was initially identified to us by a non-DHS stakeholder and several other DHS entities that we interviewed regarding related efforts to address electromagnetic events lacked awareness of these activities. Further, DHS officials did not identify any DHS representatives or offices as having broader designated responsibility for performing key oversight or coordination roles regarding electromagnetic risks within DHS’s overall infrastructure protection efforts, including activities intended to help address risks to the electrical grid.\nFurthermore, industry representatives and other federal officials told us it is not clear who within DHS is responsible for addressing electromagnetic risks. One major industry association reported that although senior DHS officials participated in some collaborative bodies, such as the Electricity Subsector Coordinating Council, association representatives were unable to identify applicable DHS representatives at a working level because there was generally limited engagement with industry on these issues. In contrast, industry representatives stated that other key agencies, including DOE and FERC, have recognized offices and points of contact that were knowledgeable about electromagnetic issues of concern to the industry. Some industry officials also commented that having clarity about the DHS contacts was critical because DHS may be best positioned to serve as a liaison between them and DOD, which generally does not interact directly with industry on these issues. DOE officials also indicated that they did not know whom at DHS they should contact with regard to requesting related information, such as specific DHS research reports related to electromagnetic risks.\nThe Energy Sector-Specific Plan, which is guided by the NIPP, highlights the importance of identifying clear roles and responsibilities in achieving goals and objectives in security programs and emergency response planning. According to the Energy Sector-Specific Plan, stakeholders should clearly understand their respective roles and responsibilities, and plan to integrate their independently executed roles to achieve a common set of infrastructure protection outcomes. The 2008 EMP Commission report also recommended that DHS make clear its authority and responsibilities, as well as delineate the functioning interfaces with other governmental institutions, regarding EMP response efforts. Standards for Internal Control in the Federal Government also cite this principle, stating the importance of ensuring that authority and responsibility are clearly assigned throughout the organization.\nAccording to officials within the DHS Office of Policy, addressing EMP risks has generally been a lower priority compared to other risks due to a combination of differing opinions on the likelihood of these events and their expectation that other federal agencies will be involved in responding to an electromagnetic event. For example, DHS officials noted that the nature of an EMP attack would constitute an “act of war” that would generally be included within DOD’s mission. According to a senior DHS official, in the case of an EMP attack, it is likely that DOD would serve in the principal role of identifying our adversaries and taking applicable defensive or retaliatory actions; however, DHS and DOE are designated in the NIPP as the key federal entities responsible for efforts to protect the electric grid and recover from such an attack. DHS acknowledged this responsibility through its inclusion of EMP as a risk event in the 2015 update of the Strategic National Risk Assessment (SNRA), noting that damage from a deliberate attack on the grid could cause cascading impacts through other infrastructure systems, leading to economic disruption and the potential loss of life.\nThe growing recognition of GMD as a significant risk event requiring the collaborative efforts of multiple federal agencies and industry stakeholders, to both prepare for and respond to, underscores the concerns that industry and other officials have raised about DHS’s roles and responsibilities being clearly designated. In recent years, there has been a growing consensus among federal agencies, industry representatives, and independent researchers that a major GMD event could have significant impacts on the nation’s electric grid and is probable enough to warrant federal action. For example, the recent National Space Weather Strategy and Action Plan, issued by the White House in October 2015, and ongoing development of the FERC GMD reliability standard further exemplify the growing recognition of GMD as a significant risk event that requires the collective expertise of multiple federal agencies, as well as applicable industry partners. Designating internal roles and responsibilities within DHS regarding electromagnetic risks and communicating these to federal and industry partners could provide additional awareness of related activities and help ensure more effective and coordinated engagement with other federal agencies and industry stakeholders. The lack of clarity regarding DHS activities to address electromagnetic risks also increases the risk of potential duplication, overlap, or fragmentation within the department or across federal agencies. Officials from the DHS Office of Policy agreed that enhanced internal coordination among DHS entities could be beneficial and noted that there are actions currently underway to establish a Cyber, Infrastructure, and Resiliency group within the Office of Policy that could potentially facilitate further coordination efforts.", "DHS and DOE have not taken actions to identify key electrical infrastructure assets as required given their respective critical infrastructure responsibilities under the NIPP. Specifically, as the two primary federal entities responsible for addressing key risk management objectives outlined in the NIPP related to the energy sector, DHS and DOE have important roles in determining the extent to which critical infrastructure assets are adequately identified and all applicable information is included in related analyses. For example, the NIPP explicitly states that to manage critical infrastructure risk effectively, partners must identify the assets, systems, and networks that are essential to their continued operation, considering associated dependencies and interdependencies of other infrastructure sectors. Further underscoring the importance of identifying critical electrical infrastructure assets, a DOE-sponsored November 2015 report developed by the Idaho National Laboratory also emphasizes the need to identify the grid facilities most critical to restoration and recovery to prioritize those assets which should be protected from EMP effects, citing that it is not feasible or cost-effective to protect all infrastructure assets across the electricity sector. The 2008 EMP Commission report also specifically recommended that DHS and DOE prioritize nodes that are critical for the rapid recovery of other key sectors that rely upon electricity to function, including those assets that must remain in service or be restored within hours of an EMP attack.\nNotwithstanding these responsibilities, DHS and DOE did not report any actions taken to identify critical electrical infrastructure as part of risk management efforts for the energy sector. In response to our July 2015 testimony citing limited DHS activities to identify applicable electrical infrastructure assets, DHS stated that it was aware of a study that FERC had conducted that identified critical electrical substations and cited potential duplication as the reason for why DHS did not conduct any additional related efforts. The study, which FERC staff conducted in 2013, utilized network modeling to identify critical substations that FERC deemed significant enough to produce wide area outages across the U.S. power grid. According to FERC, the analysis was conducted, in part, to engage with owners and operators of those facilities to encourage the use of cyber and physical security best practices. While the FERC study provided data that could help inform further analysis of critical electrical infrastructure assets, FERC officials did not indicate their analysis was intended to address specific critical infrastructure responsibilities laid out in the NIPP.\nMoreover, while FERC’s study remains a positive step toward identifying select critical electrical infrastructure assets and addressing the EMP Commission’s recommendations, it did not solicit participation from other federal agencies, including DHS and DOE. Given the significant critical infrastructure responsibilities and expertise of these agencies, this lack of participation may have diminished the potential robustness of the study. For example, DOE officials stated that the FERC study did not include an analysis of “blackstart” capability, which DOE officials believe may be another important element that should be considered when analyzing the criticality of electrical generation facilities. Blackstart capability indicates that a facility can resume operations without reliance on external power sources—a capability that is important in the aftermath of an electrical grid shutdown. As the designated sector-specific agency, DOE has valuable expertise that could be useful based on their broad understanding of the bulk-power system, load factors, and specific asset characteristics that may be important to consider when determining the key elements of criticality that should be evaluated. In addition, DHS has specific expertise related to infrastructure dependencies that may be helpful to identify potential cascading impacts to other assets or systems resulting from electrical power outages that should be considered. Both DHS and DOE acknowledged that further collaborative efforts to assess critical electrical infrastructure could be beneficial; however, as of November 2015, neither DHS nor DOE have reported on any efforts to review the 2013 FERC study or collaborate further to jointly determine the key elements of criticality that they believe should be considered when evaluating the vast array of infrastructure assets constituting the U.S electric grid.\nThe extensive size and scope of the electric power system necessitates collaboration among partners to ensure all individual expertise is effectively leveraged. For example, a senior FERC official testified in July 2015 that determining which of the substations nationwide are the most critical depends on the outcome one is pursuing. The official noted that if grid stability and continuity is the desired outcome, then a relatively small set of substations (in the hundreds) could be considered critical; however, if preserving power supply to specific DOD or nuclear power station is the desired outcome, then an additional collection of substations would need to be included. The NIPP also notes that critical infrastructure partners may view criticality differently, based on their unique situations, operating models, and associated risks. Leveraging additional DHS and DOE expertise could help to ensure that all key elements of criticality are reflected in the results of FERC’s study. Our work on federal agency collaboration supports this approach as well, noting that it is important to ensure that all of the relevant participants have been included in the collaborative effort. Reviewing FERC’s analysis and collaboratively determining the extent to which further assessment of critical electrical infrastructure may be needed would provide DHS and DOE an opportunity to contribute their unique knowledge and expertise, as well as better ensure that NIPP responsibilities are adequately addressed and all applicable elements of criticality are being considered.", "Although DHS components have independently conducted some efforts to assess electromagnetic risks as identified above, the department has not fully leveraged available risk information or conducted a comprehensive analysis of these risks. Within the DHS Office of Policy, there is recognition that “space weather” and “power grid failure” are significant risk events, which DHS officials have determined pose great risk to the security of the nation. However, these officials were unable to provide detailed information about the specific risk inputs—namely threat, vulnerability, and consequence information—that were used to assess how electromagnetic events compared to other risk events, or how they were used to inform DHS’s applicable risk-management priorities. Further, officials within NPPD were unable to identify any specific actions taken or plans to systematically collect or analyze risk information regarding electromagnetic impacts to the electric grid as part of department-wide risk assessment efforts.", "According to experts, with respect to threat, there is a distinction between GMD and EMP regarding the ability to assess the probability of occurrence. In the case of GMD, space weather researchers currently estimate a 6 to 12 percent chance that a Carrington class storm—a solar storm comparable in size to the largest on record—is likely to hit the earth in the next 10 years. The potential threat was recently illustrated in July 2012, when a Carrington class solar storm missed the earth by approximately 1 week, as the storm occurred on the far side of the sun facing away from the earth. In contrast, assessing the threat of an EMP attack remains more difficult given that analysts have to also account for human factors that can increase the level of uncertainty. Specifically, within the 2011 SNRA, DHS notes that incomplete knowledge of adversary capabilities and intent are sources of uncertainty regarding the frequency of some risks.\nAlthough DHS components identified multiple efforts to support the collection of information regarding the threat of GMD, DHS identified a more limited range of efforts to collect threat information regarding potential EMP attacks. I&A officials indicated that while there is no dedicated Center of Excellence within the Intelligence Community on EMP, there is subject-matter expertise available from analysts in related mission areas, such as chemical, biological, radiological, and nuclear issues. CS&C representatives further noted that a group of analysts in that office routinely monitor classified intelligence sources for EMP- related threat information, such as those available through the Joint Worldwide Intelligence Communications System. However, some additional opportunities may exist to leverage EMP threat information through I&A or direct collaboration with DOD, DOE, or other intelligence sources. For example, classified analytical products are available that address specific components of threat, such as assessment of EMP- related missile technologies, which could serve as an important input regarding adversary capabilities as part of DHS’s overall assessment of electromagnetic threats. Although I&A officials have direct access to these materials, neither I&A nor NPPD officials identified efforts to specifically leverage this information as part of any department-wide risk- assessment efforts. However, I&A officials noted that they remain well- positioned to pursue additional collection and analysis of EMP-related information through the Intelligence Community, if tasked to do so by NPPD. Acquiring more comprehensive information on potential EMP threats may be helpful because, as one EMP expert stated in recent testimony, there are misconceptions regarding the nature and impact of potential EMP attacks, which may have a negative effect on the ability of stakeholders to determine reasonable steps needed to protect critical infrastructure and mitigate potential impacts. One industry association further noted that the lack of threat information regarding EMP attacks makes it more difficult for their members to justify to their management, shareholders, or regulators the need for investments in EMP protective measures.", "DHS components have also conducted some research efforts to better understand the impacts to electrical infrastructure from EMP or GMD events; however, opportunities exist to leverage additional information through existing DHS programs and enhanced collaboration with federal partners. While the NPPD Office of Infrastructure Protection (IP) conducts various assessments to identify vulnerabilities, interdependencies, and potential cascading impacts across different sectors of the nation’s critical infrastructure, these have generally not been utilized to obtain specific information about vulnerabilities or consequences related to EMP or GMD events. Examples include the following: Infrastructure Survey Tool (IST). Through this program, IP administers survey questions to asset owners across all critical infrastructure sectors about key dependencies on utilities, including the supply of electric power. However, DHS officials did not identify any efforts to utilize this information to develop any specific consequence assessments associated with potential cascading impacts of a widespread power grid failure, which could be caused by an electromagnetic event. According to DHS, over 300 IST’s have been conducted at electrical substations since 2009 but, as of November 2015, the survey does not include any questions to capture the extent to which any specific protective equipment or mitigation measures may have been employed to address electromagnetic vulnerabilities.\nRegional Resiliency Assessment Program (RRAP). DHS identified three RRAP projects—of the 56 conducted since 2009—in which an EMP or GMD risk was considered, among other risk events. DHS used summary information it obtained from these assessments (and other IP site visits) to inform products such as the June 2014 Sector Resiliency Report: Electric Power Delivery. However, NPPD did not identify any efforts to utilize RRAP findings to develop more rigorous vulnerability or consequence analyses. For example, RRAP findings could help inform more detailed modeling of sector interdependencies, as called for by the EMP Commission, or serve as input to the identification of critical electrical infrastructure assets that could be impacted by electromagnetic events. Further, our review of a resiliency assessment from one of the three applicable RRAP projects indicated that although an EMP or solar storm was used as one of several threat scenarios that could disrupt the infrastructure assets of focus, there was limited discussion about specific asset vulnerabilities to such an event or identification of any additional information needed to inform future analysis.\nDefense Critical Infrastructure Program. This DOD program is conducted to assess infrastructure and other key military assets in the United States using a range of threat scenarios including EMP events. Among other functions, these assessments identify critical assets and identify vulnerabilities, including dependence on the commercial electric grid. Such information could assist DHS in efforts to identify critical substations supporting DOD facilities and further inform risk- assessment activities. Although DOD officials indicated some collaboration with DHS Protective Security Advisors when RRAP projects are conducted in areas with applicable defense assets or installations, they reported that DHS and DOD had not coordinated to review the results of DOD’s assessments under the Defense Critical Infrastructure Program.\nCollecting and utilizing risk information obtained through the above programs could help DHS to better understand the specific consequences across different sectors that may result from long-term electrical power outages, and may contribute to efforts to identify critical electrical infrastructure and asset protection priorities. For example, further collection of information on sector interdependencies could help DHS to assess the potential economic consequences associated with long-term power outages. Assessment of direct and indirect economic consequences is currently limited but could be useful to help determine relative risk rankings and provide information to help assess the cost- effectiveness of various mitigation strategies.\nFurther, a more comprehensive assessment of vulnerability and consequences may help inform broader DHS risk assessment efforts, including the HSNRC. These vulnerability and consequence inputs are key components to help ensure that the HSNRC can be effectively utilized to identify the relative rankings of various risk events, including other threats to the electrical grid, such as physical or cyberattack. According to officials within the DHS Office of Policy, the original HSNRC process conducted in 2012-2013 included estimates of broad consequences for 40 individual risk events. However, officials noted that certain categories, such as loss of life, were primary factors in designating selected risk events as priorities for further analysis. These officials also reported that given limited information about the specific consequences likely to result from an EMP event, DHS instead utilized proxy consequence information from an analytical study of a major regional earthquake that would be expected to cause damage to a wide range of critical infrastructure including electrical power operations. However, this postulated event—which included an estimate of approximately 86,000 injuries and fatalities across the 8-state study region—is unlikely to be on par with an EMP attack that, according to experts, could include the extended disruption of electric power and cascading impacts to other critical infrastructure across much of the United States.\nAccording to the NIPP, to assess risk effectively, critical infrastructure partners—including owners and operators, sector councils, and government agencies—need timely, reliable, and actionable information regarding threats, vulnerabilities, and consequences. Under the NIPP, DHS’s responsibilities include establishing and maintaining a comprehensive, multitiered, and dynamic information-sharing network designed to provide timely and actionable threat information, assessments, and warnings to public- and private-sector partners. In addition, the Quadrennial Energy Review specifically notes the importance of applicable threat information, stating that incomplete or ambiguous threat information may lead to inconsistency in physical security among grid owners, inefficient spending of limited resources at facilities, or deployment of security measures against the wrong threat. The Quadrennial Energy Review also states that, in regard to critical high- voltage transformers, current programs to address vulnerability may not be adequate to address the security and reliability concerns associated with simultaneous failures of multiple high-voltage transformers.\nMoreover, according to subject-matter experts, the impact to the electric grid from electromagnetic threats may vary substantially by location, network and operating characteristics, and other factors. For example, key reports on GMD indicate that high-voltage transformers located at higher latitudes in the United States are likely subject to increased potential for adverse impacts from GMD events than those at lower latitudes. However, this is not the case with EMP, which may have impacts equal to or greater than GMD in any latitude of the United States. Additionally, an EMP would subject infrastructure assets to a combination of E1, E2, and E3 effects compared to GMD which only produces impacts similar to the E3 effect. Federal and industry researchers have also noted that given these distinct effects and the different types of mitigation efforts necessary to protect against them, more comprehensive risk information may be necessary to evaluate their unique impacts to the electric grid. The electric grid remains vulnerable to other potential threats, such as physical and cyberattacks, which each present unique vulnerabilities to assess. Better collection of threat, vulnerability, and consequence information through existing DHS programs and strengthened collaboration with federal partners could help DHS better assess the relative risk ranking of electromagnetic events versus other risks and help determine potential protection priorities to address identified vulnerabilities.", "Key federal agencies, including DHS and DOE, as well as industry partners have not established a fully coordinated approach to identifying and implementing risk management activities to address EMP risks. According to the NIPP Risk Management Framework, such activities include identifying and prioritizing research and development efforts, and evaluating potential mitigation options, including the cost-effectiveness of specific protective equipment. The publication of the National Space Weather Action Plan in October 2015 identified many key federal activities in these areas regarding the GMD risk; however, no similar efforts have been proposed regarding EMP risks to the electric grid.", "There are several areas of EMP research highlighted in previous studies where coordinated federal involvement could help address identified gaps and further inform risk assessment efforts. For example, a recent effort funded by DOE—and conducted by Idaho National Laboratory (INL)— identified the need for updated research and analysis regarding the likely impacts of the E1, or early time pulse, of an EMP event. According to the report, most information sources on the impact of EMP E1 to electric power grids are decades old, include only observational information, and do not account for modern grid technologies and electronic control systems. For example, the report states that assessing the effectiveness of routinely recognized protective actions such as shielding equipment in faraday cages remains difficult given the limited experimentation data available, outside of DOD. As a result, the report notes that the electric power industry may not have sufficient information regarding EMP effects to design adequate protections. Overall, the report concludes that there are more unknowns than knowns regarding EMP effects and mitigation, and recommends that the government collect additional data on E1 threats, their impact to the electric grid, and potential mitigation measures.\nA 2013 white paper developed by a leading research organization for the electric industry also reported a lack of widespread and coordinated research and development efforts to protect and mitigate effects of EMP attacks against the commercial electric grid. Among the specific actions identified is a recommendation for stakeholders to define key characteristics of an EMP event—such as potential altitudes of detonation—for further study of corresponding impacts. According to this paper, and representatives from an individual utility we interviewed, the lack of more specific parameters for determining potential EMP effects makes it difficult to develop applicable protective guidelines and equipment design specifications. However, FERC officials noted that additional work is being done outside of the United States to further develop applicable standards and implement equipment designed to mitigate the effects of or protect against EMP risks.\nFurther research and development efforts on EMP effects could also include evaluation of the impacts of additional devices intended to disrupt or destroy electrical infrastructure or control systems, such as intentional electromagnetic interference. Updated information on the specific electromagnetic effects of EMP events or intentional electromagnetic interference weapons could help ensure that protective and mitigation efforts are designed to be effective for multiple threat scenarios.\nSimilarly, any proposed mitigation strategies resulting from efforts to address GMD, including the National Space Weather Action Plan, could also consider how effective these strategies might be against a potential EMP attack so that fully informed investment decisions can be made. For example, as one EMP expert noted in recent congressional testimony, if designing protective equipment to withstand specified levels of E3 effects from an EMP attack, there may be collateral benefits for providing protection against GMD effects; however, the reverse may not be true. That is, protecting against identified benchmark levels of GMD may not prove sufficient to protect against EMP E3 impacts.", "Another potential area for additional federal collaboration involves further research and evaluation of protective equipment intended to help mitigate the impacts of an EMP event. Such research, also identified in the 2008 EMP Commission report, may include further evaluation of EMP hardening or shielding strategies, as well as specific testing of commercial products intended to protect or mitigate the effects of EMP attacks on key infrastructure assets, such as transformers. Government and industry stakeholders cite potential adverse operational impacts that may result from the use of such devices as a reason for not retrofitting existing assets. According to one major electrical industry association, EMP impacts on the electric grid are not fully understood and many EMP mitigation techniques involve significant investment and remain unproven. Further evaluation of the effectiveness of these types of products may help to inform government and industry cost-benefit analyses and provide more sound estimates on the potential costs associated with implementation of various protective measures across the electric grid. A lead researcher within DOE stressed that sound science is required to help inform any federal efforts to establish standards and protective guidelines intended to address the potential impacts of EMP. DOE officials further stated that assessing the cost-effectiveness of select EMP or GMD protective measures could also help state public utility commissions determine whether the cost of such measures can be included in base utility rates.\nIn addition to bringing additional information and expertise to the table, enhanced engagement by key federal agencies could present opportunities for stakeholders to jointly fund and develop collaborative research projects. Among a few potential examples identified by government and industry stakeholders would be additional research and testing conducted at DOE National Laboratories or even possible pilot projects performed at government-operated utilities.\nThe NIPP calls for the implementation of risk-management activities, which includes research and development to reduce vulnerabilities that have proven difficult or expensive to address. Additionally, the Energy Sector-Specific Plan states that energy-sector partners such as DHS and DOE are to pursue a focused, coordinated management approach that aligns current activities to research and development goals and milestones, initiates specific projects to address critical gaps, and provides a mechanism for collaboration, project management, and oversight. This approach aims to develop clearly defined activities, projects, and initiatives with time-based deliverables that are tied to priority research and development requirements. Given the limited experimental data regarding EMP effects on the electric grid, additional collaboration among government agencies and industry regarding EMP- related research and development could help fill existing information gaps and help better understand EMP effects on the electrical grid.\nDHS officials and industry representatives noted that some discussion of EMP, including areas for additional research, has been conducted within forums such as the Electricity Subsector Coordinating Council, but that it has not surfaced as a key priority. In addition, DHS officials stated that an EMP attack generally remains a lower risk priority compared to other risk events with higher probability such as natural disasters or cyberattacks. However, as discussed previously, it is not clear that DHS has assessed all available risk inputs regarding EMP events to develop fully informed relative risk rankings. Officials also noted that efforts to comply with Office of Management and Budget Circular A-11—which calls for executive-branch departments to adopt an enterprise risk- management approach—contributes to decisions regarding which operational risks to address given limited resources. Officials stated that, as a result, operational risks, such as counterterrorism and counterdrug efforts, remain higher priorities for the department than EMP and solar weather events, because these events represent a better opportunity for DHS to maximize its return on investment. DOE officials also noted resource limitations and competing priorities as the key driver for not pursuing additional risk management activities specifically related to EMP events. However, DOE officials concurred that there is potential for enhanced collaboration with other federal agencies and industry stakeholders regarding identification of future research needs and priorities related to EMP.\nEven if an EMP attack is not determined to be among the highest resource priorities for DHS and DOE relative to other risk events, there are opportunities for enhanced collaboration among federal agencies and industry stakeholders to address identified gaps and help ensure that limited resources are more effectively coordinated and prioritized. Better identification and implementation of key risk-management activities, including collaborative identification and support of research and development priorities, may help close some of the gaps identified regarding EMP events and provide the groundwork necessary for a more robust research-based evaluation of additional protection and mitigation options.", "Given the foundational importance of electrical power to support other critical infrastructure sectors such as communications and transportation, not securing the electric grid from electromagnetic events could result in the loss of electrical services essential to maintaining our national economy and security. Recognizing this possibility, federal agencies have taken a range of actions since 2008—when the EMP Commission report was issued—to provide guidance, conduct research, develop strategies and plans, and participate in training, among other things, to address electromagnetic risks to the electric grid. Although DHS’s and DOE’s actions were not taken directly in response to the EMP Commission’s recommendations, they do align with their respective critical infrastructure protection responsibilities in law and policy, including under the NIPP. However, DHS could take additional actions to help address risks to the electric grid. Designating roles and responsibilities within DHS regarding electromagnetic risks could help ensure enhanced awareness of related activities within the department and improve coordination with other federal agencies and industry stakeholders. Once clear roles and responsibilities are established and communicated, DHS and other federal agencies will be better positioned to leverage their respective expertise to inform future actions.\nOne area in particular, where this collective expertise could be more fully leveraged is in determining the nation’s critical electric infrastructure assets. Although FERC conducted a related analysis, it was completed without collaboration and input from DHS and DOE entities, and as a result opportunities may have been missed to leverage their unique knowledge and expertise. Additional collaboration to review FERC’s analysis and determine whether further assessment is needed could help ensure that all applicable elements of criticality are being considered. While DHS recognizes that both space weather and power grid failure are risk events that can affect the nation’s security, there are additional opportunities for DHS to collect key risk inputs, such as further collaboration with DOD to obtain applicable EMP threat, vulnerability, and consequence information. Additional data collection could also inform DHS’s broader risk-assessment efforts to better determine the relative risk ranking of electromagnetic threats compared to other potential risks— a key factor in ensuring that protection and resource allocation priorities are appropriately considered and resourced.\nLastly, given the potentially significant impacts that an EMP attack would have on the electric grid and the potential cost of additional protective measures to mitigate against electromagnetic impacts, federal entities could better coordinate to identify and implement key EMP risk management activities. Such activities, including collaborative identification and support of research and development priorities, may help close some of the gaps identified regarding EMP events and provide the groundwork necessary for a more robust research-based evaluation of additional protective efforts.", "To enhance accountability for key risk-management activities and facilitate coordination with federal and industry stakeholders regarding electromagnetic risks, we recommend that the Secretary of Homeland Security designate roles and responsibilities within the department for addressing electromagnetic risks and communicate these to federal and industry partners.\nTo more fully leverage critical infrastructure expertise and address responsibilities to identify critical electrical infrastructure assets as called for in the NIPP, we recommend that the Secretary of Homeland Security and the Secretary of Energy direct responsible officials to review FERC’s electrical infrastructure analysis and collaborate to determine whether further assessment is needed to adequately identify critical electric infrastructure assets, potentially to include additional elements of criticality that might be considered.\nTo enhance federal efforts to assess electromagnetic risks and help determine protection priorities, we also recommend that the Secretary of Homeland Security direct the Under Secretary for NPPD and the Assistant Secretary for the IP to work with other federal and industry partners to collect and analyze key inputs on threat, vulnerability, and consequence related to electromagnetic risks—potentially to include collecting additional information from DOD sources and leveraging existing assessment programs such as the IST, RRAP, and DCIP.\nTo facilitate federal and industry efforts to coordinate risk-management activities to address an EMP attack, we recommend that the Secretary of Homeland Security and the Secretary of Energy direct responsible officials to engage with federal partners and industry stakeholders to identify and implement key EMP research and development priorities, including opportunities for further testing and evaluation of potential EMP protection and mitigation options.", "We provided a draft of this report to DHS, DOE, DOD, NOAA, and FERC for their review and comment. DHS and DOE provided written comments, which are reproduced in appendices IV and V. In their comments, DHS and DOE concurred with each of the recommendations made to their respective departments and described actions underway or planned to address them, including applicable timeframes for completion. If fully implemented, these actions should address the intent of the recommendations and better position DHS and DOE to further support federal and industry efforts to help protect the U.S. electric grid from electromagnetic events.\nFor example, in regards to designating applicable roles and responsibilities within the department, DHS noted that the Cyber, Infrastructure, and Resilience Policy Office within the DHS Office of Policy is currently developing its portfolio to further support electromagnetic risks. Specific actions identified to be completed by December 2016 include coordination across the department to identify and document applicable roles and responsibilities regarding electromagnetic issues to ensure full mission coverage while minimizing potential overlap or redundancy. In regards to engagement with industry stakeholders to identify and implement key research and development priorities, DHS and DOE each identified actions to convene applicable stakeholders to jointly determine mitigation options and conduct further testing and evaluation. DOE also identified that the department is working with EPRI to develop an EMP Strategy that lays out applicable goals and objectives. According to DOE, the EMP Strategy is scheduled for completion by August 31, 2016, and is to be followed by a more detailed action plan identifying R&D priorities and specific opportunities to test and evaluate EMP mitigation and protection measures.\nDHS, DOE, NOAA, and FERC also provided technical comments, which we incorporated as appropriate. DOD did not provide comments on this report.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretaries of Commerce, Defense, Energy, and Homeland Security, and the Chairman of the Federal Energy Regulatory Commission. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (404) 679-1875 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "According to research reports developed by subject-matter experts that we reviewed, geomagnetic disturbances (GMD) occur when the sun ejects charged particles that interact with and cause changes in the earth’s magnetic fields. These charged particles typically reach the earth within 18 to 96 hours and can cause currents to enter the power system through long conductors, such as transmission lines. These currents can disrupt the normal operation of the power system and, in some cases, damage equipment such as transformers. Specific characteristics of the U.S. electric grid also make it potentially more vulnerable to GMD impacts. For example, the grid is located in northern latitudes, which is closer to the aurora of a geomagnetic storm, and near oceans which are filled with conductive salt water.\nThe Space Weather Prediction Center operated by the National Oceanic and Atmospheric Administration (NOAA) conducts continuous monitoring of solar activity and provides applicable watches, warnings, and alerts to stakeholders, including the electric power industry. If staff forecast that a coronal mass ejection is earth-bound, NOAA issues a watch that provides a 1 to 4 day notice that a geomagnetic storm is expected. Once the Deep Space Climate Observatory (DSCOVR) satellite—located 1 million miles from the earth—measures and provides data about the characteristics of the storm, forecasters can provide alerts between 15 to 60 minutes in advance of the storm hitting the Earth. These alerts may also include an index figure that describes the strength of the impending storm according to specific thresholds. Since 1859, scientists have observed GMD impacts on the earth. The following table describes notable GMD events and their respective impacts on electrical grid assets.", "", "Since 2008, the Department of Homeland Security (DHS), the Department of Energy (DOE), and the Federal Energy Regulatory Commission (FERC) have taken an array of actions aimed at addressing electromagnetic risks to the electric grid. Because federal agencies do not own electrical grid infrastructure, their actions to address geomagnetic disturbance (GMD) threats are more indirect through such things as developing standards and guidelines and utilizing tools and demonstration projects. Specifically, federal agencies have taken steps to develop standards and guidelines. For example, the North American Electric Reliability Corporation (NERC) has begun the process of developing GMD reliability standards for FERC to review, and DHS has developed electromagnetic pulse (EMP) protection guidelines to safeguard critical assets and facilities. Below is a summary of these efforts and other actions taken by DHS, DOE, and FERC since 2013. Collectively, these actions are intended to protect critical infrastructure from both EMP and GMD events.\nGMD Reliability Standards Rulemaking Process. In May 2013, FERC directed a two-phase approach for NERC to develop reliability standards that address the impact of GMD on reliable operation of the bulk-power system. For the first phase, NERC developed and FERC approved a reliability standard that requires responsible entities to develop and implement operational procedures to mitigate the effects of GMD on the bulk-power system. The second phase, which is ongoing, is intended to provide more comprehensive protections by requiring responsible entities to protect their facilities against a benchmark GMD event. On January 21, 2015, NERC submitted to FERC a proposed second stage reliability standard that included a definition of a benchmark GMD event against which industry would have to assess and mitigate vulnerabilities. On May 14, 2015, FERC issued a Notice of Proposed Rulemaking seeking comments on NERC’s proposal to approve, as well as its proposed modifications to the reliability standard, and other issues. Public comments on the Notice were due near the end of July 2015, and FERC extended the comment date two additional times in response to developments in the record. As of January 2016, FERC had not issued a final rule.\nEMP Protection Guidelines. In November 2014, DHS developed guidelines to help federal agencies and industry identify options to protect critical equipment, facilities, and communication and data centers from various forms of EMP attacks, including High-Altitude EMP (HEMP), ground burst Source Region EMP, solar geomagnetic disturbances, and other Intentional Electromagnetic Interference, such as from radio frequency weapons. These guidelines include four levels of protection that are based on using specific devices, such as EMP-capable surge arresters on power cords to mitigate EMP vulnerabilities.\nSolar Storm Mitigation. In 2014, DHS led an effort to develop a forecasting tool that will enable more localized and precise geomagnetic induced current (GIC) forecast levels. In coordination with the National Aeronautics and Space Administration (NASA) and National Oceanic and Atmospheric Administration (NOAA), among others, DHS intends to provide utility owners and operators with timely and accurate GIC forecast information, allowing them to make key operational decisions, such as shutting down, reducing power, or rerouting power to minimize the impact of a GIC event. DHS expects to complete this joint effort in fiscal year 2016.\nInstallation of Magnetometers. In 2014, DOE funded an initiative to gather additional data on GIC and magnetic fields to help scientists validate models and develop more accurate estimations and modeling. As of October 2015, DOE reported plans to add 12 magnetometers to supplement the existing 6 that United States Geological Survey (USGS) has deployed nationwide. Two of those 12 will be fully funded by industry while 10 will be funded through a cost- share program between DOE and industry. These magnetometers are intended to provide owners and operators with real-time data on the expected currents that may impact their transformers. DOE officials added that this is a less costly alternative to deploying more monitors on transformers to measure actual currents during a GMD.\nRecovery Transformer (RecX). In 2012, DHS Science & Technology (S&T), with support from DOE and electricity sector representatives as part of the sector specific plan, partnered with industry to develop three prototype single-phase, extra-high-voltage transformers that could significantly reduce the time to transport, install, and energize a transformer to reduce recovery time from power outages associated with transformer failures from several months to less than 1 week. S&T, along with industry partners, piloted the RecX prototype for 2.5 years. DHS reported that RecX proved to be successful in an operational environment and could potentially reduce the impact of power outages.\nResilient Electric Grid (REG). In 2007, S&T partnered with industry to develop a fault current limiting high temperature superconducting cable that allows power substations to interconnect and share power in an internet-like fashion enabling multiple paths for power to flow while mitigating the risk of cascading fault currents. The cable system enables re-architecting urban area distribution grids to allow power to be rerouted in emergencies and will facilitate rapid and resilient recovery for grid outages. A prototype cable will be deployed in the grid in New York for a pilot demonstration. S&T is also evaluating a commercial scale deployment of the technology in downtown Chicago.", "Key federal agencies, specifically DHS and DOE, have developed research reports to better understand the potential impacts of electromagnetic threats. Since 2007, DHS and DOE have developed or commissioned 17 key research reports addressing both EMP and GMD events. Some of the DHS-commissioned reports, authored by external industry experts, focused primarily on analyzing the impacts of EMP threats, including HEMP and Source Region EMP, while others assessed the potential impact of GMD events, including solar superstorms. Specifically, one DHS-commissioned report identified three main approaches to lessen the impact of a severe geomagnetic storm. That report concluded that thorough research, testing, and cost analysis will be required to determine the best approach. Three of DHS’s additional research reports are highlighted below.\nElectromagnetic Pulse Impacts on Extra High Voltage Power Transformers. This 2010 report analyzed the potential impact of an EMP on extra high voltage transformers—focusing primarily on transformer equipment designs and identifying specific mitigation efforts such as blocking devices that minimize the impact of GIC on the electric grid. The report concluded that the similarity of EMP effects, regardless of source, indicates that solar weather provide a useful basis for transformer impact analysis and that selective installation of blocking devices would minimize the impacts of GIC on transformers, among other findings.\nImpacts of Severe Space Weather on the Electric Grid. This 2011 report assessed the impacts of space weather on the electric grid, seeking to understand how previous solar storms have affected some electric grids, and what cost-effective mitigation efforts are available to protect the electric grid, among other topics. Some of the key findings and recommendations include the need for a rigorous risk assessment to determine how plausible a worst-case scenario may be and additional research to better understand how transformers may be impacted by electromagnetic risks. This report also recommended the potential installation of blocking devices to minimize the impacts of GIC.\nSector Resilience Report: Electric Power Delivery. This 2014 report summarizes an analysis of key electric power dependencies and interdependencies, such as communications, transportation, and other lifeline infrastructure systems. The report included an assessment of, and best practices for, improving infrastructure resilience such as: modeling to identify potential vulnerabilities, conducting a cost-benefit analysis of alternative, technology-based options, and installing protective measures and hardening at-risk equipment, among others.\nFederal agencies have also sponsored research studies and identified risk information regarding electromagnetic risks. Below is a summary of key studies identified that address possible EMP mitigation and protective measures, the procurement and supply environment of large power transformers, susceptibility of transformers to GMD events, and the potential impact of a GMD event.\nSix Technical Reports Addressing EMP Impacts on the U.S.\nPower Grid. In January 2010, the Oak Ridge National Laboratory (ORNL) developed six technical reports—authored by external industry experts—for DOE, DHS, and FERC, that examined the EMP threats and their potential impacts, and analyzed potential solutions for preventing and mitigating their effects. Some of the reports key findings and recommendations include efforts to develop, test, and deploy mitigation technologies to automatically protect the power grid from costly damage, and to improve reporting and monitoring of GMD and power grid events.\nIdaho National Laboratory Study on EMP. In November 2015, DOE’s Idaho National Laboratory released a study to identify and describe possible EMP mitigation and protection measures, to examine the measures’ cost effectiveness, and to provide some potential strategies and solutions to reduce the effects of EMP on the commercial bulk electric grid. The report also discusses protection strategies for the electric grid and identifies future actions to be taken by both government and industry to enhance the security of the energy infrastructure.\nLarge Power Transformer Study. In April 2014, DOE updated its 2012 report on Large Power Transformers and the U.S. Electric Grid that assessed the procurement and supply environment of large power transformers. In this research report, DOE examined the characteristics and procurement of large power transformers, and the availability of global and domestic suppliers, and assessed the potential risks facing these transformers, among others. The DOE report also updates the prior 2012 study and discusses new government and industry efforts to augment risk management options for critical infrastructure, including power transformers.\nOak Ridge National Laboratory Study on the Susceptibility of Transformers to GMD. In November 2015, DOE officials reported initiating a study by ORNL to quantify the risks associated with GMD on electric power system reliability. The study plans to identify power lines and their associated transformers within the eastern section of the power grid and to determine those that are most susceptible to the effects of GMD. DOE officials expect the study to be completed in July 2016.\nPacific Northwest National Laboratory Study on Geomagnetic Storms and Long-Term Impact on Power Systems. In December 2011, DOE’s Pacific Northwest National Laboratory conducted a study to determine the potential impact of a severe GIC event on the western U.S.-Canada power grid, referred to as the Western Interconnection. The study results indicated that the Western Interconnection was not substantially at risk to GIC because of the relatively small number of transmission lines that did not include series capacitors. The report recommended that the electric power industry consider the adoption of new protective relaying approaches that will prevent GIC events from damaging transformers.", "Since 2008, key federal agencies have taken actions to develop strategic plans to address the impact of GMD events to the electric grid. Specifically, DHS and DOE have developed key planning efforts that identify specific goals and outline key activities addressing electromagnetic risks. Below is a summary of DHS’s efforts.\nNational Space Weather Strategy and Action Plan. In October 2015, the White House Office of Science and Technology Policy (OSTP), DHS, and NOAA, in collaboration with DOE and other key federal agencies, issued the National Space Weather Strategy and Action Plan. As a co-chair of the Space Weather Operations, Research and Mitigation Task Force, DHS was jointly responsible for developing a strategy to achieve several goals, including efforts to establish benchmarks for space weather events, enhance response and recovery capabilities, improve protection and mitigation efforts, and improve assessment, modeling, and prediction of impacts on critical infrastructure, among other goals. The strategy identifies goals and establishes the principles that will guide these efforts in both the near and long term, while the Action Plan identifies specific activities, outcomes, and timelines that the federal government will pursue accordingly.\nPower Outage Incident Annex. In 2014, FEMA, in coordination with DOE, began developing a Power Outage Incident Annex to provide incident-specific information in support of the National Response and National Disaster Recovery Frameworks. Although not specific to addressing electromagnetic events, such as EMP and solar weather, according to FEMA officials, the incident annex will describe the process and organizational constructs that the federal government will utilize to respond to and recover from loss of power resulting from deliberate acts of terrorism or natural disasters. Among other tasks, the incident annex is designed to identify key federal government capabilities and resources, prioritize core capabilities, and outline response and recovery resource requirements. FEMA officials reported that the incident annex is scheduled to be completed by mid- 2016.\nBelow is a summary of DOE’s strategy development and planning efforts.\nNational Transformer Strategy. In 2015, DOE developed a draft national strategy to reduce the risk to grid reliability posed by the loss of critical large power transformers. As drafted, the National Strategy for Reducing Risk from the Loss of Large Power Transformer focuses on protecting the bulk electric system—a system of 9,000 electric generating units connected across over 200,000 miles of high-voltage transmission lines—and ensuring the nation’s supply of electricity remains resilient. To achieve these efforts, the draft national strategy focuses on three areas: (1) understanding and mitigating current and future risks to transformers, (2) enhancing protection of transformers, and (3) ensuring transformer replacement equipment is available. The draft national strategy also calls upon federal government entities, to partner with electricity operators, equipment manufacturers, and state and local authorities to develop risk assessments and modeling tools to guide their efforts and prioritize activities. As of December 2015, DOE officials reported that the strategy is undergoing ongoing review.\nQuadrennial Energy Review. In April 2015, the White House Quadrennial Energy Review Task Force, with support from DOE and other federal agencies, issued its first installment of the Quadrennial Energy Review, which addresses infrastructure for energy transmission, storage, and distribution. A key chapter of this report focuses on a broad range of challenges and how the electric grid is vulnerable, specifically transformers, to a range of potential risks, including solar storms and EMP events. The report acknowledges that the federal government can fill gaps in creating data sets, tools, and assessments that provide a more complete and robust analytical approach towards measuring resilience needs and investments. Furthermore, the report recommends that DOE, in collaboration with DHS and others, develop common analytical frameworks, tools, and data to assess the resilience of energy infrastructures and to mitigate the risks associated with the loss of transformers.", "Key federal agencies, such as DHS, DOE, and FERC, have also developed training and outreach efforts that could help address the potential impact of power outages caused by electromagnetic threats, such as a GMD event. Specifically, since 2012, DHS has reported participating in several briefings before conferences and training workshops that addressed electromagnetic threats, including EMP and solar weather events. Several of the briefings summarized the findings identified by previously issued DHS-commissioned research reports. For example, DHS gave presentations on multiple occasions about the potential impacts of an EMP event, including likely impacts on regional communication systems within major U.S. cities. DHS officials reported that as a result of these briefings, DHS has subsequently developed EMP protection guidelines to help federal agencies identify options for safeguarding critical equipment, facilities, and communication centers. These guidelines include four levels of protection that are based on using specific devices, such as EMP-capable surge arresters on power cords to mitigate EMP vulnerabilities. Below is a summary of DHS’s additional training and outreach efforts.\nGridEx II. In November 2013, DHS and DOE, along with the Federal Bureau of Investigation, and other relevant government agencies, participated in an industry-wide exercise assessing the readiness of the electric industry to respond to a physical or cyberattack on the bulk-power system. The key goals of GridEx II were to review existing command, control, and communication plans and tools, incorporate lessons learned from a previous exercise, and to identify potential improvements in cyber and physical security plans and programs. Upon completing the exercises, participants identified key lessons learned, which included the need for enhanced information sharing, and clarification of roles and responsibilities during a physical or cyberattack.\nSecure Grid. In October 2011, DHS, along with multiple federal agencies and industry representatives, participated in a 2-day security exercise to assess the federal government’s response to an extreme solar weather event. The exercise entailed a crisis simulation with the goal of exploring how private and government agencies would respond to a solar storm causing widespread power outages and damage to the electric grid, how they might cooperate during such a crisis, and to explore what steps could be taken to mitigate such severe events. Two of the key findings, among others, cite the need to develop a national strategy to determine the costs of hardening the electric grid against space weather events, and the need to conduct a comprehensive study to assess the cascading effects of a widespread and long-term shutdown of the electric grid caused by a space weather event.\nBelow is a summary of DOE and FERC’s training and outreach efforts.\nSpace Weather Workshops. In 2015, DOE conducted multiple training workshops addressing space weather issues and its potential impact on the electric grid. For example, in February 2015, DOE cosponsored a North Atlantic Space Weather workshop with the White House and international representatives from the United Kingdom, the Republic of Ireland, and Canada. DOE officials reported that the primary focus on the workshop was discussing the potential impact of space weather on power grids. In March 2015, DOE also co-sponsored a workshop with its Canadian counterpart, Natural Resources Canada. Similarly, in April and June 2015, DOE participated in training workshops with the Idaho National Laboratory and Electric Power Research Institute and discussed the potential impact that space weather and EMP events may have on the electric grid.\nGMD Technical Conference. On April 30, 2012, FERC held a technical conference to discuss issues related to the reliability of the bulk-power system as affected by GMD events and to explore the risks and impacts from GIC to transformers and other equipment on the bulk-power system, as well as options for addressing or mitigating the risks and impacts. Participants included members from federal agencies, industry stakeholders, and academia. Panelists agreed that a collective effort is needed to protect the electric grid and that a national standard would be beneficial to assure effective and consistent protection. FERC officials we interviewed familiar with the technical conference stated that many participants agreed that there could be a cascading series of effects of a GMD event and there is a need to address this risk to help prevent a grid collapse. On March 1, 2016, FERC convened a second technical conference on GMD to discuss issues related to the proposed Reliability Standard for Transmission System Planned Performance for Geomagnetic Disturbance Events.", "", "", "", "", "Chris Currie, (404) 679-1875 or [email protected].", "In addition to the individual named above, Dawn Hoff (Assistant Director) and Ryan Lambert (Analyst-in-charge) managed this assignment. Chuck Bausell, Kendall Childers, Katherine Davis, Josh Diosomito, Leah English, Tom Lombardi, John Rastler, and Steven Putansu made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 3, 3, 2, 3, 3, 1, 1, 1, 1, 1, 2, 2, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_title h2_title", "", "h0_full h2_full", "h1_title", "h1_full", "h1_full", "h1_full", "", "h1_full", "h1_full", "", "h1_full", "h0_full h2_full h1_full", "", "", "", "h0_title h2_title", "h0_full h2_full", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "What actions have agencies taken to address electromagnetic risks to the electric grid?", "What have the DHS, the DOE, and the FERC done to address these risks?", "What did GAO find about the actions?", "How did these actions align with EMP Commission recommendations?", "How do agency actions and EMP Commission recommendations align with DHS and DOE critical infrastructure responsibilities?", "How can federal efforts to address electromagnetic risks be enhanced?", "How would enhancing efforts be beneficial?", "What are some key risk inputs regarding electromagnetic risks?", "How could better collection of risk inputs be beneficial?", "What did the DHS and DOE not report, which is a cause for concern?", "What else did the DHS and DOE not to, regarding implementing risk management activities?", "What might risk management activities include?", "How might DHS and DOE’s knowledge and expertise be utilized?", "How might further coordination between the two help alleviate concerns?", "What was GAO asked to do?", "What does the GAO report examine?", "How did GAO get information for the report?" ], "summary": [ "Key federal agencies have taken various actions to address electromagnetic risks to the electric grid, and some actions align with the recommendations made in 2008 by the Commission to Assess the Threat to the United States from Electromagnetic Pulse Attack (EMP Commission).", "Since 2008, the Department of Homeland Security (DHS), the Department of Energy (DOE), and the Federal Energy Regulatory Commission (FERC) have taken actions such as establishing industry standards and federal guidelines, and completing EMP-related research reports.", "GAO found that their actions aligned with some of the EMP Commission recommendations related to the electric grid.", "For example, DHS developed EMP protection guidelines to help federal agencies and industry identify options for safeguarding critical communication equipment and control systems from an EMP attack.", "Further, agency actions and EMP Commission recommendations generally align with DHS and DOE critical infrastructure responsibilities, such as assessing risks and identifying key assets.", "Additional opportunities exist to enhance federal efforts to address electromagnetic risks to the electric grid. Specifically, DHS has not identified internal roles and responsibilities for addressing electromagnetic risks, which has led to limited awareness of related activities within the department and reduced opportunity for coordination with external partners.", "Doing so could provide additional awareness of related activities and help ensure more effective collaboration with other federal agencies and industry stakeholders.", "Moreover, although DHS components have independently conducted some efforts to assess electromagnetic risks, DHS has not fully leveraged opportunities to collect key risk inputs—namely threat, vulnerability, and consequence information—to inform comprehensive risk assessments of electromagnetic events.", "Within DHS, there is recognition that space weather and power grid failure are significant risk events, which DHS officials have determined pose great risk to the security of the nation. Better collection of risk inputs, including additional leveraging of information available from stakeholders, could help to further inform DHS assessment of these risks.", "DHS and DOE also did not report taking any actions to identify critical electrical infrastructure assets, as called for in the National Infrastructure Protection Plan.", "Finally, DHS and DOE, in conjunction with industry, have not established a coordinated approach to identifying and implementing key risk management activities to address EMP risks.", "Such activities include identifying and prioritizing key research and development efforts, and evaluating potential mitigation options, including the cost-effectiveness of specific protective equipment.", "Although FERC conducted a related effort in 2013, DHS and DOE were not involved and have unique knowledge and expertise that could be utilized to better ensure that key assets are adequately identified and all applicable elements of criticality are considered.", "Enhanced coordination to determine key research priorities could help address some identified research gaps and may help alleviate concerns voiced by industry regarding the costs and potential adverse consequences on grid reliability that may be caused by implementation of such equipment.", "GAO was asked to review federal efforts to address electromagnetic risks to the electric grid.", "This report examines (1) the extent to which key federal agencies have taken action to address electromagnetic risks and how these actions align with the 2008 EMP Commission report recommendations, and (2) what additional opportunities exist to enhance federal efforts to address electromagnetic risks to the electric grid.", "GAO reviewed the EMP Commission report and federal program documents, and interviewed DHS, DOE, and FERC officials and relevant stakeholders who provided insights on key actions taken." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 0, -1, 2, -1, 4, 5, -1, 7, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 1, 1, 1 ] }
CRS_R44011	{ "title": [ "", "Introduction", "A Short History of Diffuse Legislation", "Threat of Invasive Species", "Geographic Origins of Non-native Species", "Unusually Susceptible Habitats", "Pathways of Invasion", "Coordinating Science", "Predicting an Invasion: Black and White?", "Methods for Predicting Invasiveness", "Black Lists", "White Lists", "No List", "Benefits from Non-native Species", "Invasive Species Prevention: Stopping at the Border", "Guidelines for Release into New Regions or Nations", "Quarantines and Inspections", "Basic Methods of Invasive Species Control", "Preventing Dispersal After Entry to the United States", "Controls Designed for Confined Spaces", "Cultural Controls", "Mechanical Controls", "Baits and Attractants", "Biological Controls", "Chemical Controls60", "Bounties and Commercial Exploitation", "Site Removal", "Use of Other Species to Detect Invasives", "Issues for Congress: Actions and Approaches", "Federal Agency Actions: Patchwork and Gaps", "Animal and Plant Health Inspection Service", "Army Corps of Engineers", "Fish and Wildlife Service", "National Marine Fisheries Service", "Approaches to Regulation: Species-by-Species vs. Pathways", "Legislative or Policy Options" ], "paragraphs": [ "", "It is easy to find well-publicized examples of threats from invasive species: Burmese pythons multiply in South Florida, becoming top carnivores and killing large numbers of native species of reptiles, birds, and mammals. Formosan termites devastate living trees and historic buildings in New Orleans' French Quarter. Leafy spurge slashes the forage value of western grazing land, thereby creating precipitous drops in land value. To continue with a full list of the damaging effects of invasive plants and animals risks sounding like hyperbole. So vast is this \"bioinvasion\" (as some have termed it) that only rough estimates can be made of the numbers of non-native species now in North America, much less the rest of the world.\nHowever, it is unclear how best to manage or prevent these effects or what legislation would be needed to address these problems. Laws concerning wild plants and animals—whether native or introduced—do not form a comprehensive body at the federal level. The absence of a generalized federal responsibility in this area also circumscribes the federal role in addressing invasive species. Under the U.S. system, inherited from English legal tradition, the government regulates the taking of native wild animals generally and landowners control the native (and other) plants growing on their lands. Thus, colonial governments regulated native wild animals (to the extent there was regulation of the take of wild animals at all) and, after the U.S. Constitution was ratified, the states retained the rights they previously had as colonies to control the wildlife within their boundaries.\nWith states retaining the right to regulate wildlife, the majority of wild plant and animal species are not federal responsibilities under current law. Moreover, because the problem of invasive species has continued to present itself as a series of seemingly disconnected crises, legislation has become a patchwork as each crisis has been addressed. This report outlines the nature of the invasive species threat, the ability to predict invasions, methods of pest prevention or control, gaps in regulation, and options for congressional action.", "The range of relevant federal laws (as well as the federal agencies responsible for enforcing or administering them) is addressed in another Congressional Research Service (CRS) report, but a short review of these laws is useful here. The laws addressing invasive species threats to agriculture—for centuries a well-developed North American industry whose risks from non-native invasions are relatively clear—tend to be more developed than laws protecting other industries or those protecting ecosystems. In consequence, agencies whose mission it is to address those risks also are better developed. Yet even the responsibilities to protect agriculture from invasives established in some U.S. regions but not others are diffuse, shared, or even lacking. Moreover, the enormous volume of trade makes the burden on federal inspection systems so severe as to permit only limited or cursory inspections and to force a strong reliance on self-reporting by importers of living and (apparently) nonliving cargo.\nLaws protecting the natural ecosystems on which industries such as tourism, electric power, or city water supplies depend are far less developed. For example, a state agency that wishes to bring in a sport fish from another continent to benefit its anglers may face few obstacles in doing so, much less a burden of proof to show that the action will not harm other economic interests, natural resources, or ecosystems. Some laws, such as the Lacey Act, force the burden of proof in the other direction: an import is deemed safe unless it is on a list of organisms known to be harmful.\nA local or state government, faced with the recent arrival of a new invasive species—whether terrestrial, freshwater, or marine; plant or animal; agricultural pest or recreational nuisance—has no single source to query to begin its response or guide it through a maze of options. Moreover, federal help, especially any timely help in the weeks or months after initial discovery, is rare to nonexistent and focuses more on information and less on practical assistance. More than two decades ago, the Office of Technology Assessment wrote \"The current Federal framework is a largely uncoordinated patchwork of laws, regulations, policies, and programs. Some focus on narrowly drawn problems. Many others peripherally address [nonindigenous species]. In general, present Federal efforts only partially match the problems at hand.\"\nThis assessment largely holds true to this day, although since that time, the National Invasive Species Council (NISC; see \"Executive Order 13112\" text box, above) has addressed some aspects of the invasive species problem. It has taken steps toward sharing more information across governments and with the public. Based on its mandate under E.O. 13112, NISC asks specific agencies to take the lead in developing policies within their existing legislative mandates. Through its 2008-2012 report, Meeting the Invasive Species Challenge , NISC outlined a set of actions to address the bulk of existing problems. These actions include developing legislative proposals to fill gaps in current law. However, legislative efforts to date have tended to focus on well-established problems, such as the clear invasion of a single species, a specific pathway of introduction, or damage or risks to agriculture.", "Various abundant invasive species have had severe economic impacts on U.S. industries and the natural environment. Damage varies by species and can span an enormous range of effects, including power outages; loss of farmland property value; contamination of grain; spread of disease; increases in operating costs; loss of irrigation water; collapse of buildings; competition with native plants; loss of sport, game, or endangered species; and ecosystem disturbance.\nSome invasive plants have been notorious for years for causing both economic and ecological damage; kudzu, melaleuca, cordgrass, salt cedar, purple loosestrife, spotted knapweed, and Russian thistle are examples. Their damage includes lowering water tables, poisoning humans and livestock, decreasing crop yields, and increasing pest control costs. A serious infestation can cause substantial losses in property values.\nInvasive invertebrates also are well-known and include gypsy moths, Japanese beetles, Asian longhorn beetles, Asian tiger mosquitoes, fire ants, and Africanized honeybees. In addition, introduced vertebrate pests (e.g., walking catfish, lake trout, cane toads, monk parakeets, starlings, bighorn sheep, nutria, and rats) can have serious economic and ecological impacts. Introductions also include various human parasites and diseases.\nIn some cases, the source of the introduction is either known or strongly suspected. Introducers of some species, such as kudzu, melaleuca, and starlings, actually intended that their imports proliferate in the wild. Their purposes ranged from the practical (kudzu for erosion control) to the quixotic (starlings for a purported desire to bring all of the birds mentioned in Shakespeare's works to the United States). Whatever the motive, society itself was the loser in the importers' Faustian bargains as the organisms proliferated to the detriment of the economy, native fauna and flora, and ecosystems.\nIntroductions of non-native species may be intentional or unintentional. Some intentional introductions have produced benefits or at least low levels of harm, as in the case of the ring-necked pheasant (a game bird native to Asia) or honeybees (originally native to Eurasia). Unintentionally introduced species may be present for years or decades before their presence is even recognized and the harm that they do, if any, is measured or observed. However, catastrophic results can come from both accidental introductions (e.g. , sea lampreys in the Great Lakes) and intentional introductions (e.g. , pigs in Hawaii).", "Plants and animals tend to survive best in a new site that is similar to their original habitat. As result, the risk of a species becoming invasive could be affected by the ecological similarity between its origin and the U.S. region into which it is imported. Thus, the plants and animals of northern Europe, northern China, and New England are more likely to be a threat to the stability of each other's ecosystems than they are to be a threat to the fauna and flora of Miami or Singapore. Regions with similar climates and soils are tending toward increasing biological homogenization as species spread and new arrivals thrive at the expense of natives. This process reverses the normal evolutionary pattern of ever-greater species divergence between two geographically separated regions—from biodiversity to \"biosimilarity\"—as the new arrivals create a homogenized flora and fauna in the two regions.\nNear neighbors are less likely than distant lands to be a source of pests. Canada, whose northern forests are contiguous with those of the United States, is not likely to be a source of forest pests because its forests have no meaningful biological barrier separating them from U.S. forests.\nConsequently, if a native Canadian species could survive in a U.S. forest, it is probably already in one. Similarly, desert plants of the southwestern United States are probably shared with Mexico, and neither country's native desert fauna or flora poses much of a threat to the other.", "Harmful non-native species occur throughout the United States, but some ecosystems are more susceptible to invasion than others. Mild climate, geographic isolation, disturbance of the natural landscape, and a high rate of exposure to non-native species are all factors that can make a habitat particularly susceptible to invasion. Islands, remote lakes, and other long-isolated areas with unique plants and animals also are known to be particularly susceptible to invasive species.\nHawaii and Florida are perhaps the major examples of this phenomenon in the United States. Both have many threatened and endangered species and, not coincidentally, a plethora of invasives. Both states were long isolated biologically and have large numbers of native species found nowhere else. The mild climates of Hawaii and Florida make it easier for the rich flora and fauna from other tropical and semitropical regions to survive and also make the states attractive to businesses that import, maintain, or breed non-native animals and plants, such as tropical fishes and ornamental plants. In Florida, one group compiled statistics on reported captures, kills, or encounters with exotic animals between January 2010 and October 2013. The report included more than 56 Burmese pythons (see Figure 1 ), 15 pythons of other species, 1 gaboon viper, 304 monitor lizards, 100 bearded lizards, 1 emu, 1 kangaroo, 2 serval cats, 6 lemurs, and 5 capuchin monkeys. By focusing only on reported incidents rather than providing a systematic survey, the list likely understates the scope of invasive species in Florida.\nAnother factor putting some environments at risk is the sheer number of opportunities for new introductions. Both Hawaii and Florida are major travel destinations and transportation hubs, so they are even more likely to be subjected to inadvertent introductions. Relative biological isolation, combined with easy transportation access also compounds the likelihood of invasion in aquatic habitats such as the Great Lakes. Seaports, where many ships exchange ballast water, are at severe risk of invasions: even if only a tiny proportion of newly arriving non-native species survive in busy ports like San Francisco Bay or Chesapeake Bay, the actual number of successful invasive species may be large. The areas around airports, with increasing volumes of international traffic and tourism, are also at risk.", "To some extent, pathways of invasion between countries can be predicted. For example, the propensity of brown tree snakes to hide in dark places has done much to focus attention on air stowaways. The arrival of a number of beetle species has played a similar role in focusing attention on pallet wood, packing crates, live plants, and airport warehouses as pathways and centers of biotic invasion. Live animals or plants may harbor microorganisms, parasites, or seeds that pose a danger to other species, even if the animal or plant itself does not survive in the wild. In general, any arrival of living or untreated material could present a possible pathway for biotic invasion. A comprehensive review of possible pathways, their risks, options for control, and research needs is, to the authors' knowledge, currently lacking.\nNonetheless, between or within countries, some pathways for species invasions are already well-known:\nTransportation corridors . Railroads, rivers, and highways can all spread invasive species. In the 19 th century, the railroads over which cattle were transported were a major path for the establishment of new plants. In the 20 th century, zebra mussels quickly escaped the drainage of the Great Lakes (probably via the Chicago Sanitary and Ship Canal) and began an invasion into the Mississippi River drainage, and Asian carp are repeating the process in the opposite direction. Interstate highways also help to spread invasive species such as weed seeds, freshwater bivalves (on trailered vehicles), and wood-boring beetles (in firewood). I ntentional importation of non-native pets . The importer is hardly ever interested in seeing the imported organisms escape, preferring usually to sell, raise, or keep them instead. But once the specimens are sold, control is lost, and purchasers sometimes release unwanted animals into local lakes, streams, or forests, perhaps feeling they are being humane by releasing the animals. The United States is a major importer of reptiles, and though concern often has been for potential effects on host countries (e.g., loss of iguanas from Central America), there are issues regarding possible escapes, especially in southern states. A number of species are thought or known to have entered the United States as pets, or in association with pets: apple snails, goldfish, walking catfish, lionfish, budgerigars, ring-necked doves, and common pigeons, among others. Landscaping plants . A number of woody invasive plants in the United States originally were introduced by the landscape industry. A garden or greenhouse plant imported for horticulture may scatter shoots or seeds far more widely than expected. Water hyacinths, for example, were brought from South America in the late 19 th century as pool ornaments. The plant now covers thousands of acres in the southern United States, plus parts of Cape Cod and California, as well as parts of Africa and Asia. As a result of this and similar escapes, the nursery industry has been subjected to increasing criticism, and some states are increasing their regulation of potentially invasive nursery plants. Aquaculture . Many cultured aquatic species are not native. There is concern about the escape and establishment of cultivated species that may be harmful to native ones. Examples include the potential escape of Atlantic salmon in the Pacific Northwest; introduction of Asian oysters into Chesapeake Bay; and the inadvertent introduction of diseases, such as two diseases affecting oysters (called dermo and MSX ), or of other pest species. Deliberate release for propagation in the wild . Deliberate release into the wild for propagation occurs for a variety of purposes. Several species of fish were released into the Colorado River for sport anglers, for example. (The continuing presence of these game fish has been one complicating factor in efforts to recover threatened and endangered species in and along the river, as well as to manage the river more naturally.) Salt cedar (or tamarisk) was introduced from Central Asia into the desert in the American Southwest in the early 19 th century, in part to control erosion along river banks. The tree now forms dense thickets on more than 1 million acres of riparian habitat, and these thickets severely limit the growth of native cottonwood trees. To control the trees, in 2005 the Animal and Plant Health Inspection Service (APHIS, in the U.S. Department of Agriculture [USDA]) introduced the salt cedar leaf beetle ( Diorhabda ), which feeds exclusively on leaves of this tree, and the beetle began to reduce the populations of the tree. Unfortunately, it was determined that an endangered bird called the southwest willow flycatcher had adapted to the presence of this new tree and begun to nest in it, further complicating control of the tree as well as recovery of the endangered bird.", "Among recent efforts to coordinate scientific research on invasive species, a consortium of federal, state, and academic institutions formed the National Institute for Invasive Species Science (NIISS). Through its website, NIISS allows researchers to share a range of information on taxonomy, identification, geospatial data, and so on. Its mission is\nto develop cooperative approaches for invasive species science that meet the urgent needs of land managers and the public. Administratively housed at the U.S. Geological Survey Fort Collins Science Center in Colorado, the National Institute of Invasive Species Science provides a hub for invasive species science collaboration, coordination, and integration across agencies and disciplines.... The mission of the National Institute of Invasive Species Science is to work with others to coordinate data and research from many sources to predict and reduce the effects of harmful non-native plants, animals, and diseases in natural areas and throughout the United States.\nHowever, the NIISS website is not intended for the general public and is difficult to use for such fundamental questions as the known distribution of invasives. A second organization, also a consortium, is the North American Invasive Species Network (NAISN). It is a\nnon-profit organization that was formed in 2010 by university and government scientists from across North America.... The countries of Mexico and Canada participate as NAISN members through a Memorandum of Understanding.... [Members are] regional university centers and institutes, government institutions, non-profit organizations, research labs, and/or other groups and individuals with invasive species interests and qualifications that are valuable to the mission of NAISN.... NAISN aims to unify and connect existing regional invasive species efforts into a single network ... to help current invasive species management and prevention efforts across the continent.\nIts website ( http://www.naisn.org/ ) is designed for a wider audience than NIISS. It offers videos demonstrating the characteristics of several dozen invasive plants and lists services offered by the consortium; the services focus on data collection and coordination among agencies.", "Federal laws have tended to focus on black lists (anything not on the list is allowed) in contrast to a white list (anything not on the list is excluded). (See summary of various approaches in Table 1 .) Each requires some, or even considerable, knowledge of the species to be listed in order to predict the likelihood of invasion. The types of lists are discussed below.", "A central dilemma in making any list is the difficulty in predicting a species' ability to invade. What characteristics of seed dispersal, nesting, food and host preferences, etc., are most likely to lead to exuberant proliferation and result in economic and ecological harm? For example, it seems logical that, all else being equal, plants producing many seeds will be more invasive than those producing few seeds. The problem is that \"all else being equal\" rarely is equal—a variety of factors affect invasiveness. The abundant seed producer may require a special pollinating insect; the newly arrived plant with few seeds may leave behind its major herbivores, and so on. A host of other factors may complicate prediction.\nNonetheless, there are a few characteristics that may serve as predictors. One example is propagule pressure . This term describes those species that attempt invasions (somehow arrive in large numbers) most frequently and/or with the largest number of arriving individuals and therefore are more likely to be successful invaders. A second strategy to model invasiveness is Hazard Analysis and Critical Control Points (HACCP), a method to analyze the critical points at which an invasion may be prevented or stopped. Scientists continue to model other factors that might increase invasiveness. However, no evidence to date has identified a suite of features that seems to be a reliable predictor of invasiveness, and thus many experts view all importations as suspect.", "A black list can be prepared in various ways, but it usually is made up of species already shown to cause serious damage to fisheries, endangered species, or (especially) agriculture. This evidence may be based on experience with the species domestically or in other countries. Preventing the spread of the species after it enters the United States may have to rely on public education, penalties for shippers, monitoring, and other means. In general, black lists require time to gather information on the damage created by the species and then proceed through rule-making. This approach allows more flexibility for industries that depend on the importation of new species of plants or animals. Black lists do not readily address introductions by persons who are unaware that they are bringing in non-native organisms.", "With the white list approach, there is an attempt to predict potential harm before a species' arrival. The prediction would be based on known characteristics of a species, such as how it reproduces, the number of seeds or offspring, etc. Species that are not predicted to cause harm would be added to a white list of allowable species, and any species not on the list would be excluded. The mongoose, for example, has a history of becoming a pest on islands where it has been introduced. It seems unlikely that the mongoose would ever be placed on a (white) list of allowable species. In contrast, new varieties of orchids, sheep, tulips, or any other species with a long track record in this country would likely gain admission.", "The existence of a list, whether white or black, implies that people actually know they are importing living organisms. An effort to prevent unintentional introductions would be compatible with any shade of list or no list at all. Potential pathways continue to be discovered, and there are likely other pathways yet to be determined.", "Although the ecological damage from some non-native species can be great, many such species are beneficial. (For many species, the economic impacts are simply unknown.) Some industries rely heavily on non-natives. For example, very few food plants and animals in the United States are native to the areas where they are now grown. In addition to agriculture, the nursery, aquaculture, and pet industries rely significantly on non-native species.\nA wide variety of intentional introductions have had effects that, even if harmful to natural ecosystems or biodiversity, have produced economic benefits sufficient to cause acceptance of collateral damage. These include such food sources as cattle, chickens, honeybees, wheat, kiwi fruit, and soybeans and such ornamentals as tulips, chrysanthemums, and dawn redwoods, to name a few. In each case, the introduction of these species was intentional and their propagation was more or less controlled. The economic benefits conveyed by these species are vast and probably exceed many estimates for the annual costs of invasive species. U.S. agriculture would have a far different appearance if it were limited to the several dozen food crops known to have been cultivated in North America before 1492 rather than the hundreds of crops grown today. These non-native crops and their benefits are not the focus of this report but should not be forgotten in discussions of those imported species that cause serious harm.", "The first—and perhaps only—line of defense against invasive species is preventing introductions into the country because controlling invasive species, once established, has been difficult. Prevention usually is economically advantageous because established invasive species can rarely be eradicated. Furthermore, controlling these species to acceptable levels, when or if possible, may be an expensive and endless task.", "Some international organizations have developed guidelines and codes of practice for the deliberate release of non-native organisms. The World Organisation for Animal Health, the Antarctic Treaty Secretariat, and the International Council for the Exploration of the Sea, for example, have prepared such guidelines to assist regulatory bodies and other groups to determine whether an introduction is justified and then to advise them on what to do after an introduction is approved. Such guidelines focus on hazard identification, risk assessment, risk management, and risk communication. They provide a conceptual framework for determining whether the risk of introduction is acceptable, and they suggest any necessary quarantines, monitoring, and/or adaptive management if an introduction is approved.", "Quarantines and inspections are methods of prevention by which the entry of non-native species through specific pathways might be controlled. The quarantine approach requires, first, that species be recognized as pests or that pathways be recognized as likely to transfer pests. Second, there must be a prohibition on entry, either of particular organisms or of particular types of cargo. Quarantines operate basically on either of two strategies:\ninvesting in strict control at points of entry to prevent organisms from leaving the quarantine area (with the risk that it could be too late to prevent escape) or attempting to control before the organisms arrive in the country (i.e., trying to act on the source or point of export or regulating the pathway of import).\nCargo and luggage inspections at ports of entry are examples of the former. A quarantine also may be posted in an area where an invasive species has been introduced to prevent its further spread and promote its eradication. An example of the latter occurs when contaminated ballast water is treated or removed at sea and before entry into port to eliminate potential invaders.\nQuarantines and inspections for agricultural pests are a major responsibility of APHIS. In addition, various states (particularly California, Arizona, and Florida) and territories conduct their own inspection programs aimed at agricultural pests. However, inspections and quarantines may be inappropriate for many species, especially species that enter through uncontrolled or unrecognized pathways and species that are not yet recognized as pests.", "If inspections and quarantines fail to keep an invasive plant or animal out of a region and a species becomes established, the problem shifts to control of the species, which includes preventing its spread between local areas and beyond any established perimeter. Control of invasive species is divided into two related tasks: eradication, where possible, and reduction to manageable/tolerable levels where eradication is not possible. Key to this effort is early detection and rapid response (EDRR). With EDRR, eradicating very small populations before they become established may be possible and is more likely if many methods, such as those described below, are used intensively and in combination, including treating outlying populations as soon as they are discovered. Few control methods, if any, promise eradication if a species is well-established, but several methods, used in combination and continuously, might reduce a target species' population to tolerable levels.\nSeveral methods may be used to address an invasive species population, including cultural controls, mechanical controls, baits and attractants, biological controls, chemical controls, and bounties. To apply any of these strategies, substantial knowledge of the target species' behavior, biochemistry, dietary preferences, diseases, or other aspects of its biology is usually essential. Combining pest control with an understanding of the underlying ecology of the species is central to integrated pest management (IPM), which may be defined as:\nan ecosystem-based strategy that focuses on long-term prevention of pests or their damage through a combination of techniques such as biological control, habitat manipulation, modification of cultural practices, and use of resistant varieties. Pesticides are used only after monitoring indicates they are needed according to established guidelines, and treatments are made with the goal of removing only the target organism. Pest control materials are selected and applied in a manner that minimizes risks to human health, beneficial and nontarget organisms, and the environment.\nGenerally \"the most effective, long-term way to manage pests is by using a combination of methods that work better together than separately.\" The strategies described below overlap somewhat, both in concept and in practice, but their differences in timing or breadth of application make distinctions useful.", "After introduction, prevention means taking steps early to limit the spread of an invasive species that has begun to escape confinement (from a few lakes, one airport, one farm, one region, etc.). Prevention practices vary depending on the species and surrounding environment, and they may include more than one of the methods described below. Often this may simply require \"removing the pests' sources of food, water, and shelter, or blocking their access into buildings or plants\" to prevent population growth. This also may involve implementing certain best management practices for invasive species.\nFor example, to prevent the spread of invasive species in forested areas, the U.S. Forest Service encourages forest land managers generally to identify suspect plants or animals, prevent the introduction of seeds/eggs/organisms into an area; detect and promptly eradicate new outbreaks; minimize disturbance of desirable vegetation; build up native species' populations; periodically inspect high-risk areas (such as access points, transportation corridors, and disturbed ground); manage stand density and growing conditions in forested stands; revegetate disturbed sites; and periodically evaluate management protocols. Prevention of invasive aquatic species that are just becoming established in a limited area may involve equally wide-ranging efforts.", "Lethal substances can be used to target pests in confined areas or to prevent them from crossing a geographic bottleneck. Methods for use in confined spaces are often—but not exclusively—pesticides. (See also \" Chemical Controls .\") These methods can be used either to create pest-free \"islands\" in a zone of infestation or to prevent invasive species from leaving an infested area via boxes, cargo holds, etc. Some species are known to avoid certain substances, such as tear gas or gasoline. Obviously, some of these substances can be used only in areas where human access is infrequent. In a confined body of water, a compound called rotenone can be spread to kill invasive fish—possibly involving a short-term sacrifice of resident fish. Light is known to repel some nocturnal animals. Submerged surfaces have been electrified at water and power facilities to discourage the settling of zebra mussel larvae and on ship hulls to inhibit barnacle settlement. Barriers can be used to discourage access to new habitats, such as the electrical barrier in the Chicago Sanitary and Ship Canal intended to prevent or reduce the dispersal of invasive Asian carp.", "Cultural controls refer to agricultural production practices that modify a pest's environment or habitat to reduce the pest's spread by reducing its ability to survive, disperse, establish, or reproduce. Examples include crop rotation techniques; intercropping (also companion or mixed cropping); managed application of water or fertilizer; improved sanitation and hygiene; timed plantings and harvests; purchase of certified plants (grown under sterile or quarantined conditions); soil solarization; tilling or mulching weeds; use of resistant plant and seed varieties (such as resistance to diseases, nematodes, or certain weeds); practices that change soil pH or fertility levels; irrigation practices; and use of beneficial predators (such as chickens or ladybugs). Some cultural control methods, although minimal in cost and equipment, may require an additional commitment of labor and are unlikely to be effective unless combined with other control methods.", "Mechanical and physical controls refer to a variety of techniques and include manual controls (such as hand-pulling weeds or physically removing a plant or animal); mowing; use of mulches for weed management; barriers such as screens; the use of heavy machinery such as harvesters and shredders designed to cut, shred, crush, lift, transport, and remove pests (such as stands of aquatic plants and associated organic material); use of a specific tool for removal of specific pests (including traps); and other types of physical methods of pest control, such as hot water or steam treatment and steam sterilization of the soil for disease management. Such actions are intended either to kill a pest directly or to make the surrounding environment unsuitable. Mechanical controls also are used to prevent the further spreading of established invasive species, and they include cleaning the equipment (e.g., during highway construction) and using certified weed-free seed and feed (e.g., weed seeds have been mechanically excluded or removed).\nLike cultural control methods, some of these methods may require expensive specialized equipment or a substantial commitment of labor to be effective. For example, mechanical harvesters may be used in the management of invasive aquatic vegetation, such as hydrilla and water hyacinth, but are ineffective for control of these species on large bodies of water.\nThe use of traps for rodent control also may be limited by cost, as well as by the time required to service traps and the inability of traps to control target species over large areas. Various trap designs are available, and most are used in combination with some type of bait or attractant, such as prey or attractive scents (see \" Baits and Attractants \"). For confined areas such as cargo holds and buildings, traps may be successful. However, traps have drawbacks in open situations with either abundant alternative foods or very low target species densities. In addition, traps may affect nontarget organisms. Traps are relatively safe to use, although they require some care when trapped individuals are killed and removed. Sticky traps have been used on rodents and cockroaches. Invasive Chinese mitten crabs have been trapped at irrigation screens during their downstream migration to spawn in saltwater.", "Baits and attractants are used to draw individuals of a target species toward a potential source of food or mates (see also discussion of pheromones under \" Chemical Controls \"), where the target species can be counted, trapped, killed, or studied. Difficulties with baits and attractants commonly include sustaining a long-term monitoring effort and preventing harm to nontarget species. Baits and attractants seem most promising when the area needing protection is well-defined with clear boundaries and has a significant density of the target species.", "A biological control organism competes with, preys on, parasitizes, or causes disease in a targeted pest species. Ideally, biological control agents attack the target species and no others. Considerable knowledge of both the target species' and the control organism's basic biology and ecology is necessary to select a suitable control. Together, individual state laws and APHIS regulate the introduction of biological control organisms, and USDA's Agricultural Research Service administers a Biological Control Documentation Program.\nA particular concern with biological control organisms is that they might eat or infect nontarget species once target species are sparse or eradicated. A historical example of this problem is mongoose introductions. In the 1600s, mongooses were introduced in Puerto Rico to eradicate rats, which they did with great success. Unfortunately, mongooses proliferated and began to eat a variety of birds and other native animals. In light of such problems, vertebrate animals with broad feeding habits are seldom, if ever, used today as biological control agents.\nFieldwork in a species' native habitat usually is necessary to identify an effective disease or parasite. Although the requisite research might be expensive or slow, biological agents may offer long-term control, if not eradication. The use of alligator weed flea beetles ( Agasicles hygrophila ) for control of alligator weed ( Alternanthera philoxeroides ) is one example of this tactic.\nNatural biological control also can occur through adaptive ecosystem response by native species to invasive species. An example in Oregon is larvae of the native defoliating butterfly, Vanessa cardui ; they feed not only on their normal broad range of host plants but also on introduced thistles, Cirsium arvense and C. vulgare .\nOther forms for biological control may involve planting competing vegetation and managing livestock grazing. For example, grazing by sheep and goats can be an effective management tool for controlling leafy spurge.", "In integrated pest management (IPM) strategies, pesticides may be considered as part of the strategy but generally are a last resort, after other nonchemical methods have been exhausted or proved ineffective or unavailable. Pesticides are used \"only when needed and in combination with other approaches for more effective, long-term control\" and \"are selected and applied in a way that minimizes their possible harm\" to humans and other organisms, as well as the environment.\nChemical control agents can be subdivided into those derived from manufactured (conventional) or natural (biological) sources.\nConventional . Where chemical control is an option, pesticides affecting or controlling only one or a group of related species are strongly preferable because broadly toxic substances risk substantial harm to nontarget species. For example, TFM (3-trifluoromethyl-4-nitrophenol) is very specific in its toxicity to larval lampreys. Similarly, a variety of aquatic herbicides can be used specifically for the control of hydrilla and water hyacinth. In contrast, methyl bromide is broadly fatal to many species. However, even if pesticides are highly specific, safety precautions often suggest the use of the chemical agent in conjunction with baits to reduce risks to children, pets, and other nontarget organisms. Biological . Biopesticides are derived from natural materials, such as animals, plants, bacteria, and certain minerals. In 2014, EPA reports there were 430 registered biopesticide active ingredients and 1,230 actively registered biopesticide products. Biopesticides can be divided into three major classes: biochemical pesticides are naturally occurring substances (e.g., pheromones) that control pests by nontoxic mechanisms (e.g., interfering with finding mates); microbial pesticides contain a microorganism (e.g., a bacterium, fungus, virus, or protozoan) as the active ingredient, such as various types of the bacterium Bacillus thuringiensis (Bt) used to control certain insects harmful to cabbages, potatoes, and other crops; and plant-incorporated protectants are pesticides that plants produce from genetic material that has been added to the plant, as when the gene for the Bt pesticidal protein is introduced into a plant's own genetic material, causing the plant to manufacture the substance that destroys pests.\nAlthough biopesticides tend to pose fewer risks than conventional pesticides (they tend to be less toxic, usually are effective in very small quantities, often decompose quickly, and generally affect only the target pest and related organisms), users need to know a great deal about pests to employ them effectively. Their use is commonly part of IPM.", "Under a bounty system, someone is paid to catch and kill the target species. High bounties may be necessary for a substantial effect on the target species' population. For example, a 2013 bounty hunt for Burmese pythons in Florida produced only about 50 captures, although more than 1,500 persons sought licenses, according to press reports. Moreover, paying bounties can create a market incentive to produce or introduce more of the invasive species—a particular risk when a population dwindles to very low levels and prices go up or bounties are increased. In August 1999, the California Department of Fish and Game decided against permitting the commercial harvest of invasive Chinese mitten crabs, concluding that such harvest would not contribute to controlling this species and might encourage further introductions.", "One unusually drastic method is to remove or poison each site where the invasive species lives. This option works best when the sites are isolated or at least well-defined. For example, the Asian longhorn beetle currently is being controlled by removing all trees on which the pests might feed in neighborhoods where they have been found. The species has been eradicated in New Jersey and Illinois using these methods in combination with other measures. Other states also are employing the same tactic. In addition, site removal has been used in California to eradicate hydrilla by draining small ponds and filling their depressions with earth. Such a strategy becomes unworkable if a pest is widely dispersed.", "Rather than using one species to control another, a slightly different technique is to use one species to detect the presence of an invasive species, after which other methods are used to kill individual organisms. Commonly, this approach involves training dogs to detect the scent of the target species. Dogs have been used to detect Burmese pythons in Florida and spotted knapweed, among other species. Training of such dogs is expensive, and cost may limit their use. However, their utility at high-risk entry points (airports, cargo terminals, dockyards) decreases their cost per find and may prevent the entry of invasive species at the most efficient phase: before the invasive species has entered.", "Current federal laws concerning invasive species form a patchwork, stronger in certain areas, such as agriculture and ballast water, and weaker or absent in other areas. Current laws do not clearly address\nprevention of biological invasion across foreseeable pathways (with the exception of ship ballast water) or early detection and rapid response before the establishment of the new species. At the latter event, the focus of effort shifts from less expensive prevention to more expensive and less efficient control.\nCoordination of current efforts alone means that, where there are gaps due to lack of coverage by existing laws or agency jurisdiction, those gaps will remain. Congress could choose to address these gaps either by explicitly delegating such authority to the President or by crafting legislation.", "The National Invasive Species Council (NISC) has become the focus for federal efforts to control and prevent invasive species affecting a broad range of industries or ecosystems. However, many of the past shortages of authorities or personnel that have hampered efforts to limit the entrance of and damage from invasive species remain. Without clear federal legal authority to protect the nation's ecosystems (except in agriculture), the information sharing under NISC and the National Institute for Invasive Species Science (NIISS) takes on even greater importance. Simply informing responsible parties of the risks of their proposed actions may be one of the few vehicles available to deter potentially damaging releases due to gaps in the coverage of these agencies or their statutes. Although many agencies have some role in addressing invasive species, four agencies—APHIS, the Army Corps of Engineers, the Fish and Wildlife Service, and the National Marine Fisheries Service—have had major roles for many years. Yet even for these four agencies, important gaps remain; the gaps in their authorities are described below.", "Although APHIS oversees the importation of plants or animals, its authority to regulate living plants or animals once they are admitted is more limited. Specifically, it does not regulate the release of a species into the wild once they have been admitted, unless that species is already designated a noxious weed or disease carrier. For example, APHIS could inspect imported emus or ostriches for the sake of protecting domestic poultry from foreign diseases. However, after the markets for these birds crashed some years ago and many were released by emu ranchers, APHIS did not have authority to control the release of this non-native species. Nor does APHIS regulate the sale of species that are already well-established. For example, although English ivy is widely recognized as an invasive plant and harmful to forests, its sale does not violate federal law. The sheer volume of plant and animal imports into the United States, as well as ever-increasing trade, raises practical questions about APHIS's ability to maintain its oversight role.", "The Corps attempts to control noxious aquatic plant species (e.g., hydrilla) and other impediments to inland navigation. Yet the Corps has no authority to prevent or regulate the release of such pests in the first place. The hydrilla infestations in Florida and the Potomac River, for example, very likely were caused by aquarium hobbyists dumping fish tank contents, but it is unclear whether the dumpers violated any state or federal laws. Similarly, the Corps did not regulate the import of Asian carp by fish aquaculturists, but it now has a major responsibility to manage certain Corps locks in Illinois to prevent the spread of this species from the Mississippi River basin into the Great Lakes.", "Fish and Wildlife Service (FWS) does not have authority to provide general protection for the country's ecosystems from invasive species, nor even to protect most species popular with hunters and anglers. Only if the species were already regulated under the Lacey Act, or if FWS knew that the introduced species might harm a species protected under the Endangered Species Act, would it have any authority to stop the importation and release. Instead, FWS waits for evidence of injury from the species to place it under regulation through provisions of the Lacey Act. It does not currently have emergency authority under this law. To make listings under the Lacey Act more expeditious, FWS proposed a categorical exclusion under the National Environmental Policy Act (NEPA). The proposal would have listings continue to be subject to the other \"legal requirements of the Lacey Act, the Regulatory Flexibility Act, and other required determinations for all injurious [species] rulemakings\" as well as other requirements of NEPA. The regulation has not been finalized.", "On inland waters, the National Marine Fisheries Service (NMFS) has little regulatory authority because its responsibilities largely are confined to demonstrable effects on anadromous species protected under the Endangered Species Act. Moreover, its authority to prevent harmful introductions into marine ecosystems appears to be nonexistent. The dumping of invasive lionfish into the waters of the Atlantic Ocean and Gulf of Mexico, for example, appears to have violated no federal law.", "Legislation to address invasive species could take a species-by-species approach, a pathway approach, or a combination of the two. The species approach implicitly assumes knowledge about a species' risk (black list) or safety (white list). A central dilemma, however, is the difficulty in making this prediction. Moreover, this approach assumes knowledge that a particular species actually is being imported. A pathway approach does not assume knowledge about any particular species, only that a particular set of circumstances favors the arrival of unwanted organisms.\nSome agencies, including APHIS and FWS, currently analyze the risk presented by particular species that may become invasive. However, addressing the multitude of agricultural pests relies on scarce agency resources at APHIS. In addition, some have criticized FWS for its slow response to the blacklisting of species under the Lacey Act. Both agencies arguably would improve their effectiveness if they could provide faster assessments of either species or pathways so that they could direct resources to the most critical areas.\nRegulation by pathway is an approach suited to unintentional or unknowing introductions, as no list needs to be created. Among the most comprehensive pathway approaches to date is the Non-indigenous Aquatic Nuisance Prevention and Control Act. Its goals put prevention on an equal or higher footing compared with control of species that are already established. It requires the participation of several federal agencies, promotes research, and implements regulations on the mid-ocean exchange of ballast water and other measures to exclude invasives from U.S. ports.", "A review of writings by various specialists in this field suggests additional areas that might be explored by policymakers. Over the years, Congress has considered many issues related to particular invasive species. The list of options below is compiled from many sources and focuses only on topics that cover a broad range of species, pathways, or agencies.\nResearch to identify pathways . With the exception of agricultural threats, few comprehensive reviews exist to identify pathways providing the greatest risk of invasives. Research goals in this area might overlap with research designed to prevent certain kinds of security threats, and might benefit from cooperation with agencies involved in antiterrorism programs. Expert review of planned releases . Panels of experts might be created to analyze risks and make recommendations on planned releases by governmental or nongovernmental sources into any environment in which the species are not native. According to NISC, such steps are planned and, in the case of plants that may affect agriculture, are in progress at APHIS. Although such a panel could not have sounded the alarm on the unauthorized release of hydrilla into the Potomac, for instance, it could provide a public warning on planned releases of exotic grasses by federal agencies or of non-native game fish. Exotic plants are proposed as feedstocks for biofuels and provide a current example of a release that might benefit from such reviews. The use of the expertise of federal and other scientists and managers, if it prevented even a few ill-advised introductions, might be a cost-effective option. Education al campaign . An educational campaign, possibly aimed in part at children, to prevent simple, inadvertent acts by the public might play a role in preventing some types of invasive species introductions. Preventing releases of exotic pets and aquarium species after the point of sale might be particularly susceptible to this type of approach. Warning list . An informational warning list (or gray list) of species might be created by the collaboration of federal and state agencies. The warning list might include species currently restricted under state laws, species thought to be newly arrived from other countries, and other species felt to merit special attention by regulators. Although a gray list would lack regulatory force, at least without legislation at the federal level, it could be designed to provide information on species whose eradication or control is in its early phases. Unification of data and reporting from many agencies would add greatly to the utility of such a list. Review of industries dependent on importing and transferring non-native species . Such a review could include a focus on cooperative methods to reduce introductions or releases after the point of sale. The focus of past efforts has tended to be on the entry of these species into the United States. To protect their businesses, import-dependent industries naturally have tried to reduce current obstacles and prevent imposition of new ones. In this effort, the pet, hobby aquarium, and nursery businesses have been relatively successful. Yet there are other avenues to reduce risk besides prohibition. These avenues might include incentives for the sale of sterile animals or plants only or efforts to create point-of-sale educational programs about the risk of releasing pets or plants into the wild and any penalties for doing so. Multi-agency federal or cooperative center for \"first strike\" prevention and control . Congress could authorize the creation of a first strike center along the lines of the National Interagency Fire Center. Since the creation of NISC, agencies have begun to respond across a broad front in the days, weeks, or months after an invasion is discovered. The prompt notification and agency attention to the discovery of northern snakeheads in Maryland is an example of such a response. (Ultimately, the effort was too late, and the fish spread widely in the Chesapeake Bay area.) However, although constraints on coordination and jurisdiction interfere with prompt responses less than in the past, much more progress is possible. NISC is beginning to model its efforts on interagency fire management, a federal program that has long faced similar issues. It seems possible that a similar center devoted to first strike prevention and control of invasive species, regardless of affected industry, ecosystem, or lead agency, could provide critical support at a time when eradication of a new animal or plant invader might still be possible. In recent years, the National Park Service (NPS) has adopted roughly this approach for plant pests. Emergency Plant Management Teams address not only crises but also ongoing problems. While the current 16 teams work primarily on NPS lands, they also may work with adjoining landowners. Expansion of this program, perhaps with multi-agency teams, could provide a more efficient method of addressing new or incipient invasions. It seems unlikely, however, that each federal agency would need to create its own separate team modeled after those of NPS, because the duplication of manpower, equipment, and supplies could be substantial. Measures to reduce the risk of exporting invasive species . The United States might take further internal steps to avoid exporting potentially invasive species to other countries. These measures could be as simple as preventing their accidental export in bilateral aid programs or certifying that identified U.S. products (e.g., used tires) are free of pests. Such certification is done for agricultural shipments. Such a review might examine disaster aid and emergency relief, for example: in the rush to provide humanitarian relief, shipments of supplies, equipment, and personnel may inadvertently introduce diseases or pests unknown in the receiving country. Because such supplies sometimes are prepared for shipment in advance, they could be examined to reduce the risk of such transfers. The NISC management plan considers international cooperation generally and describes actions that might be taken on a multilateral or bilateral basis to reduce the import and export of invasive species. However, it does not address steps the United States might take unilaterally, nor does it assess any positive or negative effects on U.S. trade that might occur from such steps. It is difficult to discern progress in this area in the last few years.\nThese options are not mutually exclusive. They likely would be under the jurisdiction of multiple committees in both House and Senate. They may offer opportunities for savings both to the economy and to ecosystems." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 1, 2, 2, 2, 2, 1, 1, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "", "h1_full", "h0_full h1_title", "h0_full", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full h2_title h1_title", "", "", "", "", "", "h2_full h1_full", "h2_full h1_full" ] }	{ "question": [ "How were invasive species first transferred to North America?", "Specifically, what sorts of species were transferred?", "What was the initial response to non-native invasive species?", "Why did the response to invasive species change?", "Why has the response to invasive species become stronger?", "What have been congressional responses to invasive species?", "Why have these responses been ineffective?", "How was a 1998 executive order helpful?", "What current actions are being taken to address invasive species?", "What approaches are there to limiting the spread of invasive species?", "How do these approaches interact, if at all?", "How do policymakers use these approaches?" ], "summary": [ "For the first few centuries after the arrival of Europeans in North America, plants and animals of many species were sent between the two land masses. They were joined by various species arriving deliberately or accidentally from Asia and Africa.", "The transfer of non-natives consisted not only of intentional westbound species ranging from pigs to dandelions but also of intentional eastbound species such as grey squirrels and tomatoes.", "And for those centuries, the remaining non-native species crossing the Atlantic, uninvited and often unwelcome, were ignored if they were noticed at all.", "The national focus on invasive species arose in the 19th century, primarily owing to losses in agriculture (due to weeds or plant diseases), the leading industry of the time.", "A few recently arrived invasive species, and estimates of adverse economic impacts exceeding $100 billion annually have sharpened that focus.", "In the century or so of congressional responses to invasive species, the usual approach has been an ad hoc attack on the particular problem, from impure seed stocks to Asian carp in the Chicago Sanitary and Ship Canal.", "A few notable attempts have begun to address specific pathways by which invasives arrive (e.g., ship ballast water), but no current law addresses the broad, general concern over non-native species and the variety of paths by which they enter this country.", "A 1998 executive order took a step in bringing together some of the current authorities and resources to address a problem that has expanded with both increasing world trade and travel and decreasing transit time for humans and cargo.", "Multiple bills have been introduced on this subject in recent Congresses.", "There are two basic approaches to limiting the spread of invasive species: a species-by-species assessment of the risks or benefits of admitting or excluding species, and a policy based on controlling pathways of entry in which vigilance is maintained on incoming ballast tanks, cargo holds, packing materials, and similar vehicles for unwanted organisms.", "These two approaches may complement each other.", "Policymakers also may emphasize prevention over post hoc control or vice-versa, or they may adopt a combination of the two approaches." ], "parent_pair_index": [ -1, 0, -1, 2, 2, -1, 0, -1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 3, 3, 3, 3, 4, 4, 4 ] }
GAO_GAO-12-136	{ "title": [ "Background", "NQF’s Contract with HHS", "NQF Made Progress on Projects under Each of Its Contract Activities but Has Not Met Expected Time Frames and Has Exceeded Cost Estimates", "NQF Made Progress on Projects under Each of the Contract Activities as of August 31, 2011", "NQF Did Not Meet Expected Time Frames and Exceeded Cost Estimates", "HHS Did Not Use All Monitoring Tools Required under the NQF Contract", "NQF Reported Costs and Fixed Fees of over $20 Million from January 2010 through August 2011", "HHS Used or Planned to Use Some NQF Measures Received under the Contract but Has Not Comprehensively Planned for Other Measurement Needs to Implement PPACA", "HHS Has Used or Planned to Use 164 of the 344 Measures That NQF Has Endorsed, Maintained, or Retooled under the Contract", "HHS Does Not Have a Comprehensive Plan for Determining How It Will Use NQF’s Work under the Contract to Implement PPACA Requirements Related to Quality Measurement", "Conclusions", "Recommendations for Executive Action", "Agency and Other External Comments and Our Evaluation", "HHS Comments", "NQF Comments", "Appendix I: Health Care Quality Measurement Framework", "HHS’s Role in Planning and Identifying Gap Areas", "Appendix II: How GAO Categorized NQF’s 16 Tasks under the Contract into Nine Contract Activities", "Appendix III: Status of NQF’s Nine Contract Activities and the Projects under Each Activity GAO Identified", "Appendix IV: Summary of Projects to Review the National Quality Forum’s Endorsement Process", "Appendix V: Comments from the Department of Health and Human Services", "Appendix VI: Comments from the National Quality Forum", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "NQF is a nonprofit organization established in 1999 in order to foster agreement, or consensus, on national standards for measuring and public reporting of health care performance data.more than 400 organizations that represent multiple sectors of the health care system, including providers, consumers, and researchers. NQF’s mission focuses on three core areas: (1) building consensus on national priorities and goals for performance improvement and working in partnership to achieve them, (2) endorsing national consensus standards for measuring and publicly reporting on performance, and (3) promoting the attainment of national goals through education and outreach programs.\nIts membership includes Prior to its contract with HHS, NQF established a consensus development process (CDP) to evaluate available health care quality measures to determine which ones are qualified to be endorsed—that is, recognized— as national standards. Under this process, organizations that develop quality measures submit them to NQF for consideration, in response to specific solicitations by NQF. NQF forms a committee of experts from its member organizations as well as other organizations and agencies to conduct an objective and transparent review of these quality measures against four standardized criteria established by NQF, such as whether the measures are scientifically acceptable. After this committee evaluates the measures against these criteria, NQF’s process allows for a period during which its member organizations and the public may comment on the committee’s recommendation for each measure. The process also provides for a period for its member organizations to vote on whether the measures should be endorsed by NQF as a national standard. Ultimately, NQF’s board of directors makes a final decision on whether NQF should formally endorse the measures.\nAs of October 2011, NQF has endorsed over 600 health care quality measures in 27 areas, such as cancer and diabetes. HHS uses NQF- endorsed measures in its programs and initiatives to promote quality measurement, and NQF continues to endorse quality measures separate from its contract with HHS.", "NQF’s work under the contract includes endorsement of quality measures and other activities that are expected to support HHS’s quality measurement efforts, such as through value-based purchasing programs. Specifically, NQF’s work under the contract consists of various projects under the nine contract activities related to health care quality measurement. The work plans developed annually to respond to MIPPA and NQF’s technical proposal to respond to PPACA delineate the projects NQF is required to conduct under the nine contract activities, as well as expected time frames and cost estimates for the projects for each year. Table 1 provides more detailed information on the nine contract activities. Some of these activities are required by either MIPPA or PPACA, while others are quality measurement activities established by HHS or administrative activities.\nTo help determine the activities and the projects under the nine contract activities that NQF is expected to perform during each contract year, HHS has established an interagency workgroup that comprises officials from multiple divisions within HHS, including the Agency for Healthcare Research and Quality, the Centers for Medicare & Medicaid Services (CMS), and the Office of the National Coordinator for Health Information Technology. The workgroup is responsible for prioritizing and selecting the activities and projects under each activity that NQF is expected to perform during each contract year. HHS officials told us that the representatives from these various HHS agencies provide input on the work NQF is expected to perform, including determining quality measures requested from NQF for their respective programs. The activities and projects selected by the interagency workgroup become part of NQF’s scope of work under the contract. Some of the projects under the contract activities that NQF is expected to perform during the year will be ongoing from the previous contract year while new work will be incorporated into the work plan as necessary.\nFor the NQF contract, HHS selected a cost-plus-fixed-fee contract, under which HHS reimburses NQF for actual costs incurred under the contract in addition to a fixed fee that is unrelated to costs. Cost-plus-fixed-fee contracts are used for efforts such as research, design, or study efforts where costs and technical uncertainties exist and it is desirable to retain as much flexibility as possible in order to accommodate change. However, this type of contract provides only a minimum incentive to the contractor to control costs. As we reported in 2009, these contracts are suitable when the cost of work to be done is difficult to estimate and the level of effort required is unknown. This cost-plus-fixed-fee contract is NQF’s first cost-reimbursement contract. For cost-reimbursement contracts, the Federal Acquisition Regulation (FAR) requires appropriate government surveillance during performance to provide reasonable assurance that efficient methods and effective cost controls are used. Under the FAR, contracts are to contain a provision for agency approval of a contractor’s subcontracts. HHS’s contract with NQF contains this provision and also requires the approval of consultants engaged under the contract. The review and approval of NQF’s use of subcontractors and consultants require appropriate support documentation provided by NQF to HHS, including a description of the services, the proposed price, and a negotiation memo that reflects the principal elements of the price negotiations between NQF and the subcontractor or consultant. Under its contract with HHS, NQF has utilized 31 subcontractors and 16 consultants since January 14, 2010, to provide support to NQF on many of the contract activities and associated projects.\nTwo HHS components are principally responsible for administering the NQF contract: the office of the Assistant Secretary for Planning and Evaluation (ASPE) and CMS—an agency within HHS. Specifically, the project officer for the NQF contract is a representative of ASPE. This individual is responsible for program management and works with the contracting officer to oversee the contract. The contracting officer for the NQF contract, responsible for administering the contract, is a representative of CMS.contracting officer is required to perform, such as conducting an annual evaluation of the contractor’s performance.", "From January 14, 2010, through August 31, 2011, NQF made progress on projects under its contract activities. However, our review of NQF documents found that NQF had not met or did not expect to meet time frames on more than half of the projects, and it exceeded its cost estimates for projects under three of the contract activities. HHS did not use all tools for monitoring that are required under the contract.", "From January 14, 2010, through August 31, 2011, NQF has made progress on 60 of the 63 projects under the activities required under its contract with HHS. Specifically, NQF had completed 26 projects and was (App. III provides the continuing to work on the remaining 34 projects.status of all contract activities and the projects under each activity NQF was expected to perform during our reporting period.) Examples of projects under the contract activities include both completed and continuing projects:\nEndorsement of Measures Activity. NQF endorsed 101 measures since the beginning of the second contract year by conducting work on endorsement projects on different topic areas. Specifically, NQF completed two projects to endorse 38 outcome measures related to 20 high-priority conditions identified by CMS that account for the majority of Medicare’s costs, and mental health and child health conditions; and 21 performance measures for chronic and postacute care nursing facilities. NQF also worked on two projects related to child health quality and patient safety. As of August 2011, NQF endorsed 41 child health quality measures and 1 patient safety measure under these projects. NQF expected to complete the child health quality project in September 2011 and the patient safety project in December 2011. In addition, NQF completed a contractually required review of its endorsement process, subcontracting with Mathematica Policy Research, Inc. (Mathematica). The review focused on the timeliness and effectiveness of the endorsement process; identified inefficiencies, including those that may contribute to delays; and recommended, among other steps, that NQF create a schedule for its endorsement process for measure developers and develop feasible time lines that include clear goals for each endorsement project. HHS officials stated that Mathematica’s recommendations were valuable because much of the work under the NQF contract needs to be completed in an accelerated timeline to help fill critical measurement gaps associated with HHS’s health care quality programs and initiatives. For more information about this review, see appendix IV.\nMaintenance of Endorsed Quality Measures Activity. NQF maintained—that is, updated or retired—124 measures under the contract since the beginning of the second contract year. These included 41 measures reviewed under NQF’s 3-year review cycle related to diabetes, mental health, and musculoskeletal conditions. In addition, 83 measures were maintained under NQF’s other maintenance review processes. NQF was also continuing to work on maintenance projects it initiated in 2010 for measures related to cardiovascular and surgery measures. As of August 2011, the two projects were expected to be completed by December 2011 and January 2012, respectively.\nPromotion of the Development and Use of Electronic Health Records Activity. NQF has made progress on three projects related to retooling—that is, converting previously endorsed quality measures to an electronic format that is compatible with electronic health records (EHR). First, NQF completed initial retooling of 113 measures. This work is intended to allow data from EHRs to be used for quality measurement, which is a part of HHS’s long-term goal to use health information technology to exchange information and improve quality of care. Second, as of August 2011, NQF convened an expert review panel to review the retooled measures to ensure that each retooled measure is properly formatted, the logic is correctly stated, and the intent of the measures is maintained in the electronic format that will use data obtained from EHRs, instead of from claims as originally formatted. Third, as of August 2011, NQF was expected to complete another project to provide an updated list of the 113 retooled measures to HHS by December 2011, which would incorporate any revisions identified by the expert review panel and others involved in the retooling process. After these updated measures are completed, HHS officials told us that they will contract with other entities to conduct testing of some of the 113 retooled measures to assess the feasibility of implementing the measures in the electronic format. Although NQF’s endorsement process requires that measure developers submit data on validity and reliability testing of measures they submit for endorsement, this testing does not include feasibility testing for implementing the measures in an electronic format for performance measurement. As of December 2011, HHS officials did not provide an expected date of completion for this feasibility testing but told us that they have awarded two contracts that include this in their scope of work. In addition to the retooling projects, NQF is developing a software tool—the Measure Authoring Tool—to allow measure developers to create standardized electronic measures that help capture information in EHRs so that less retooling would be needed in the future. As of August 2011, NQF was completing final testing of the beta, or initial, version of this tool. NQF expected to complete testing and publish an updated version for public use by January 2012.\nMultistakeholder Input into HHS’s National Quality Strategy Activity. NQF convened the National Priorities Partnership (NPP), a multistakeholder group expected to provide annual input on national priorities, among other things, to be considered in the National Quality Strategy. As of August 2011, the NPP was completing a report on this input, which was then published in September 2011. The report noted the need for a national comprehensive strategy that identifies core sets of standardized measures to meet each of the national priorities HHS identified in the 2011 National Quality Strategy, among other things. The NPP noted in the report that a common data platform, core measure set, and public reporting mechanism are key components of the infrastructure for performance measurement. It also highlighted that a strategic plan, road map, and timeline for establishing an infrastructure should be accelerated to allow for rapid implementation over the next 5 years. Additionally, the NPP reported that it was critical that all federal programs drive toward the establishment of a common platform for measurement and reporting.\nMultistakeholder Input on the Selection of Quality Measures Activity. NQF has convened the Measure Applications Partnership (MAP). The MAP is a multistakeholder group that is expected to conduct work in two areas. First, the MAP is expected to provide input to the Secretary of HHS on the selection of quality measures for use in payment programs and value-based purchasing programs required by PPACA, among others. The MAP will review a list of measures published by the Secretary of HHS on December 1 of each year, and develop a report that contains a framework to help guide measure selection. The MAP will provide its annual input beginning February 1, 2012, for measures used in the following 11 programs: hospice, hospital inpatient, hospital outpatient, physician offices, cancer hospitals, end-stage renal disease (ESRD) facilities, inpatient rehabilitation facilities, long-term care hospitals, hospital value-based purchasing, psychiatric hospitals, and home health care. Second, the MAP is expected to publish reports that provide input on the selection of measures for use in various quality reporting programs, including those for physicians. As of August 2011, the MAP had held meetings and initiated its work for reports due October 1, 2011.\nOther Health Care Quality Measurement Activity. NQF completed a project to endorse six imaging efficiency measures. NQF was also continuing to work on a project to identify existing quality measures and gap areas related to measurement of regionalized emergency care services.", "Our review of NQF documents found that NQF had not met or did not expect to meet time frames on more than half of the projects under the contract activities that were completed or ongoing, as of August 2011. Specifically, our review of documents found that NQF had not met expected time frames on 18 of the 26 projects it completed under the nine contract activities. Further, NQF did not expect to meet time frames on 14 of the 34 projects on which it was continuing to work. The delays of these projects under the contract activities varied in time from about 1 to 12 months. HHS officials told us they approved all changes to the time frames, which were established by HHS and NQF in NQF’s 2010 and 2011 final annual MIPPA work plans and the PPACA technical proposal. Appendix III provides the status for all projects related to each of the nine contract activities, including information on their expected and actual time frames for completion during our reporting period. Examples of projects under the contract activities for which NQF did not meet or did not expect to meet expected time frames include the following:\nEndorsement of Measures Activity. NQF did not meet or did not expect to meet time frames for all five endorsement projects under the endorsement contract activity. (See app. III for details on the five projects.) For example, NQF was expected to complete an endorsement project for nursing home quality measures in July 2010; however, the measures were not endorsed until February 2011. (See fig. 1 for estimated time frames and actual completion dates for all projects related to the endorsement contract activity.)\nNQF officials stated that several factors contributed to NQF exceeding the expected time frames for the five endorsement projects, including the high volume of measures submitted for review, the amount of time it took to harmonize measures between measure developers, and a need for additional technical expertise on review panels.\nPromotion of the Development and Use of Electronic Health Records Activity. NQF did not meet or did not expect to meet expected time frames for five out of eight projects related to the EHR contract activity. For example, NQF was expected to complete its initial retooling of 113 endorsed quality measures into electronic formats by September 2010, but this effort was not completed until December 2010. (See fig. 2 for estimated time frames and actual completion dates for all projects related to the EHR contract activity.) In addition, NQF was expected to complete the project to convene an expert panel to review the 113 retooled measures by January 2011. However, the panel did not complete its review of the 113 measures until June 2011.\nAccording to HHS and NQF officials, several factors contributed to NQF exceeding expected time frames for the retooling project under the EHR contract activity. HHS officials stated that the first set of 44 retooled measures submitted had errors that required correction. For example, HHS officials stated that they found errors in the electronic coding of these 44 retooled measures requiring NQF and its subcontractors who retooled the measures to make corrections. In addition, HHS and NQF officials stated that after starting the retooling project, they quickly learned that the estimated time frames for the retooling project, as well as other projects related to the EHR activity, were overly ambitious, given the scope and complexity of the work. For example, HHS officials noted that retooling of quality measures into electronic format had never been attempted before and the technical complexity and labor required to complete the project were greater than anticipated. NQF officials also told us that HHS’s requests to modify the scope of work for this project often required changing the time frame for completing the retooled measures. These factors resulted in an extension of the project that delayed the final delivery of the 113 retooled measures as well as contributed to the need for additional staff at NQF.\nOther Health Care Quality Measurement Activity. NQF was expected to complete two projects under the other health care quality measurement activity related to efficiency and resource use—one white paper on resource use and another on geographic-level efficiency by July 2010. These white papers were intended to provide information for an endorsement project on resource-use measures that began in January 2011. However, as of August 2011, the resource-use paper was still under review by HHS, and NQF officials stated they expected to receive comments in September 2011. The geographic-level efficiency paper was canceled in June 2010 at the request of HHS. NQF initially intended to subcontract the work on these two projects, but officials told us that they were unable to identify a subcontractor at the level of funding approved for this project. As a result, HHS approved NQF’s proposal to complete this work internally. HHS officials stated that the drafts NQF submitted on both topics were poor in quality and did not meet its needs, resulting in HHS requesting additional revisions for the resource-use white paper that delayed its completion, and requesting the cancellation of the geographic-level efficiency white paper.\nAdministrative Activity. NQF did not meet the expected time frames for completing one of the required projects under the administrative activity—finalizing its annual work plan. Specifically, the NQF contract requires NQF to develop an annual work plan and to receive final approval from HHS within the first 4 weeks of each contract year; however, NQF did not meet this requirement in 2010 or 2011. For example, the final 2011 MIPPA annual work plan was not developed by NQF and approved by HHS until April 1, 2011. According to NQF and HHS officials, the 2011 MIPPA work plan was not developed and approved on time due to extended discussions on the scope and cost estimates of NQF’s EHR activities. HHS officials told us that the primary reason for the extended discussions was that they expected the costs to reflect all the work needed to complete the Measure Authoring Tool (MAT) by the end of the second contract year. However, they said that NQF only submitted a beta version of the tool by the end of the second contract year, which was not the version expected by HHS. NQF officials told us that the version was never intended to be final but rather a beta version, consistent with their understanding of HHS’s expectations. As a result, HHS and NQF officials needed to evaluate the scope of work and cost estimates for this and other projects. Further, NQF officials told us the delay in completing the 2011 MIPPA annual work plan resulted in the interruption of NQF’s ongoing work related to the MAT under the EHR contract activity. The delay also delayed its receipt of funding for some new or ongoing work under the contract. In some instances, NQF chose to start new or continue ongoing work with its own funding. For example, NQF officials stated that NQF began work related to the MAP using its own funds until HHS authorized the work. In addition, the delay in completing the 2011 MIPPA work plan resulted in the need to set the start date for fall 2011 rather than earlier in the contract year for some of the projects under the maintenance activity.\nNQF also exceeded its cost estimates for projects under three of the contract activities. HHS officials told us they approved the changes to the cost estimates and in some cases modified NQF’s scope of work to help ensure that NQF’s costs did not exceed the amount HHS had obligated for the contract activities. NQF officials stated that in certain cases, not meeting expected time frames contributed to NQF exceeding these cost estimates. For example, the delays in projects related to the EHR contract activity, including expanding the scope of the retooling project, contributed to NQF exceeding its cost estimate of about $3.8 million for the entire EHR contract activity by about $560,000 in the second contract year. In another example, the delays in finalizing the 2010 and 2011 MIPPA work plans contributed in part to NQF exceeding its cost estimate for developing and finalizing these plans, which is a project under the administrative contract activity. Specifically, while NQF estimated that completion of the annual work plan would cost approximately $77,000, NQF reported an actual cost of $176,590. In addition, NQF also exceeded its cost estimate for the endorsement contract activity during the second contract year for various reasons, including a need for additional technical experts for review panels. Specifically, NQF exceeded estimated costs of about $3.1 million for the entire endorsement activity by about $146,000 While HHS officials told us they approved in the second contract year.all changes to the cost estimates, in certain cases they reduced the scope of NQF’s work in 2011 to ensure that total available funding for the contract year was not exceeded and that sufficient funding was available for ongoing projects. For example, HHS officials told us that they had hoped to start several new endorsement projects beginning in 2011; however, these projects were not included in the 2011 final annual MIPPA work plan so that funding would be available for NQF to complete its ongoing projects, including work that was delayed under the EHR contract activity. In addition, HHS requested that NQF discontinue its work on one project related to the development of a public website for 2011, which is associated with the administrative contract activity.", "HHS officials told us that to help monitor NQF’s performance on the projects under the contract activities, they rely on NQF to report any issues, including those related to time frames or cost estimates, in the monthly progress reports that NQF is required to submit to HHS or during phone calls held at least monthly. While HHS monitored NQF’s progress and approved changes to the time frames and cost estimates for the projects under the contract activities, HHS did not use available tools for monitoring that are required under NQF’s contract. These tools could have helped to provide an opportunity for HHS to make any appropriate changes to NQF’s projects. For example, HHS did not conduct an annual performance evaluation required by the contract that would assess timeliness and cost control issues, among other things, for the previous contract year. The results of such an evaluation could help HHS officials to consider potential timeliness and cost issues when determining NQF’s scope of work for the next year. Further, while monthly progress reports and invoices include information on NQF’s costs, these documents do not compare reported costs to initial cost estimates. HHS officials told us that, prior to August 2011, they had not enforced a contractual requirement for NQF to submit—nor had it received from NQF—a financial graph in its monthly progress reports that provides information comparing NQF’s monthly incurred costs for each of the contract activities with initial cost estimates. Instead, HHS officials informally requested that NQF provide them with the financial status of the contract activities in midyear 2010, which helped them to plan for NQF’s work under the contract for 2011. Having a financial graph in the monthly progress report could have helped HHS officials to identify instances where any contract activity was approaching or exceeding NQF’s initial cost estimates prior to HHS’s midyear review. This, in turn, could have provided HHS and NQF an opportunity to adjust estimates of future costs for these or related activities earlier in the contract year. HHS officials had asked NQF to begin to include such a financial graph in its monthly progress reports beginning in August 2011.", "From January 14, 2010, through August 31, 2011, NQF reported a total of approximately $22.4 million in costs and fixed fees on monthly invoices submitted to HHS for projects under activities conducted in response to MIPPA and PPACA. Specifically, NQF reported about $12.8 million in total costs and fixed fees for the contract activities it performed during the second contract year—January 14, 2010, through January 13, 2011. From January 14, 2011, through August 31, 2011, part of the third contract year, NQF reported an additional $9.6 million in total costs and fixed fees.\nDuring the second contract year, the majority of NQF’s reported costs were related to the promotion of the development and use of EHRs (36 percent, or $4.6 million) and endorsement of health care quality measures (26 percent, or $3.3 million). Figure 3 illustrates the costs and fixed fees NQF reported for eight of the nine contract activities we reviewed that occurred during the second contract year. The ninth contract activity relates to multistakeholder input on the selection of quality and efficiency measures, as directed by PPACA. This contract activity did not begin until after January 14, 2011, which is the start of the third contract year.\nFor the part of the third contract year covered in our review—January 14, 2011, through August 31, 2011—almost one-half of NQF’s reported costs were for the activity to promote the development and use of EHRs and for the activity to provide multistakeholder input on the selection of quality and efficiency measures. Each of these activities accounted for 22 percent, or about $2.1 million of NQF’s reported costs. Other costs reported by NQF include those for the activity related to providing multistakeholder input into HHS’s annual National Quality Strategy ($1.55 million, or 16 percent) and those for the activity related to the maintenance of endorsed quality measures activity (13 percent, or $1.29 million). Figure 4 illustrates the costs and fixed fees NQF reported for the part of the third contract year covered in our review for each of the nine contract activities we reviewed.\nAccording to HHS, as of August 2011, about $55.2 million remains available for the NQF contract. About $15.1 million in MIPPA funding remains available for work to be conducted through January 13, 2013. In addition, HHS plans to obligate approximately $40.1 million of its PPACA funding through 2014 for NQF’s activities related to health care quality measurement in response to PPACA.", "For its various programs or initiatives, HHS has used or planned to use about one-half of the quality measures that NQF has endorsed, maintained, or retooled under the contract, as of August 31, 2011, and HHS officials expect to evaluate if and how the remaining measures will be used. However, HHS has not comprehensively determined how it will use NQF’s work under the contract to implement PPACA requirements related to quality measures.", "According to HHS officials, HHS has used or planned to use about one- half (164) of the 344 health care quality measures it has received from NQF through various endorsement, maintenance, and retooling projects under the contract, as of August 31, 2011. For example, of the 164 measures used or planned for use, 44 were used in CMS’s Medicare and Medicaid EHR Incentive Program after being retooled—that is, converted to an electronic format that is compatible with EHRs—under the NQF contract. Although these 44 retooled measures were used in the EHR Incentive Program, HHS officials stated that NQF and HHS detected coding and other errors in the versions of the 44 retooled measures that were published in the program’s final rule in July 2010 that required NQF to make corrections to them after publication of the final rule. NQF did not submit the revised versions of the 44 retooled measures published in the final rule to HHS until December 2010. HHS officials stated that because the final rule had already been published prior to receiving the final formatted measures, CMS listed general guidance on its website to address the errors. HHS officials told us that these 44 measures are being used but have not yet been tested to assess the feasibility of implementing them in the electronic format. Until the testing is complete, HHS runs the risk that some of these measures may not work as intended when implemented in electronic format for performance measurement. As a result, the agency does not have reasonable assurance that the retooled versions of the measures will correctly capture information from EHRs. In addition to the 44 retooled measures used in the EHR Incentive Program, HHS also has used or planned to use 120 measures that it received from endorsement and maintenance projects under the NQF contract for various HHS programs and initiatives. (See table 2 for details on specific programs in which HHS has used or planned to use health care quality measures received from NQF under the contract.)\nHHS officials told us that they expect to evaluate if and how they could use all of the remaining 180 of the 344 quality measures that were endorsed, maintained, or retooled under the NQF contract that are not currently in use or planned for use in HHS programs or initiatives. According to HHS officials, any measure developer can submit a measure to be considered for NQF endorsement. Therefore, all the measures received under the contract may not be applicable to a particular HHS health care quality program or initiative. HHS officials told us that they will review the remaining 180 measures to determine if they are applicable to their health care quality programs or initiatives. The officials expect that many of these measures will be used in HHS programs or initiatives required by PPACA. For example, HHS officials told us that they will consider implementation of most of the retooled measures in future stages of the EHR Incentive Program. In addition, PPACA directed HHS to establish a hospital value-based purchasing program, as well as to make plans or begin pilot programs for value-based purchasing in other settings of care. The hospital value-based purchasing program will use various quality measures and depend on the information collected on them to determine payments to providers. PPACA also required the development of no less than 10 provider-level outcome measures for hospitals and physicians by March 2012. Further, PPACA directed HHS to identify quality measures that could be used to evaluate hospice programs and publish these measures by October 1, 2012. HHS officials told us that they are in the process of determining whether or to what extent the remaining 180 measures HHS has received under the NQF contract can be used to address the new measurement needs and priorities established by PPACA. HHS officials told us that they prefer to use NQF-endorsed measures to meet HHS’s measurement needs because these quality measures are nationally recognized standards and in some cases HHS is required to use them.", "Although HHS has taken steps to determine how it can use the measures received under the contract with NQF, the agency does not have a comprehensive plan for determining how it will use the remainder of the work conducted under NQF’s contract to implement PPACA requirements, including plans for additional quality measures that need to be endorsed during the remaining contract years. HHS officials told us that HHS determines on an annual basis which activities—including work on quality measures—NQF is to perform under the contract through the interagency workgroup. The workgroup is comprised of representatives from various HHS agencies and allows them to provide input on their needs, including quality measures that need endorsement from NQF, for their respective programs. However, HHS officials told us that each HHS program assesses its quality measurement needs separately and provides varying levels of detail about its needs. Therefore, it is unclear the extent to which all programs consistently incorporate PPACA’s quality measurement requirements and deadlines into these assessments. The NPP’s September 2011 report noted the importance of greater alignment of national quality measurement efforts, including the establishment of a comprehensive measurement strategy that identifies core measure sets, among other things. In addition, the report noted that all federal programs should work toward the establishment of a common platform for measurement and reporting. Without a comprehensive plan that delineates HHS’s quality measurement needs, and given that each program assesses its quality measurement needs separately, the interagency workgroup may not be able to systematically ensure that all of HHS’s quality measurement needs that implement PPACA requirements align with the selection and prioritization of activities for NQF to complete under the contract.\nWhile HHS has begun various efforts to assess its quality measurement needs, the lack of a plan that comprehensively determines the impact of PPACA on its needs could affect the agency’s progress on its quality measurement efforts as well as how it selects and prioritizes NQF’s contract activities. Officials told us that prior to PPACA’s enactment, CMS maintained a 5-year plan that listed its measurement needs based on agency priorities and the priorities established by the NPP for some of its programs.to reflect the requirements related to quality measurement and time frames established by PPACA. In March 2011, HHS published the National Quality Strategy as required by PPACA, which included six priority areas of focus. The report was required by PPACA to include agency-specific plans, goals, benchmarks, and standardized quality metrics for each priority area, but did not do so. HHS officials stated that this document describes HHS’s initial plan for these elements and that they may be included in future versions of the strategy. In June 2011, HHS officials told us that they plan to convene a Quality Measurement Task Force within CMS with a goal to comprehensively align, coordinate, and approve the development, maintenance, and implementation of health care quality measures for use in various CMS programs. As of August 2011, the task force was in an early stage of development, and therefore it is too early to determine whether it will accomplish its goal. Although these various HHS efforts are key steps toward helping the agency meet its quality measurement needs, they are not guided by a comprehensive plan that synthesizes key priority areas identified in various sources, such as those reported by the NPP or in the National Quality Strategy, for which measures may be needed. Without such a plan, HHS may be limited in its efforts to prioritize which specific measures it needs to develop and have endorsed by NQF for its health care quality programs and initiatives established by PPACA. As a result, HHS may be unable to ensure that the agency receives the quality measures needed to meet PPACA requirements and specified time frames related to quality measurement.", "Health care quality measures are increasingly important to HHS as it uses and will continue to use them in its existing and forthcoming programs and initiatives to evaluate health care delivery. For example, HHS’s value- based purchasing programs are pay-for-performance programs that will require providers to collect and report information on health care quality measures and adjust payment levels based on providers’ performance against the measures. PPACA has increased HHS’s quality measurement needs, and the time frames specified in the law have also increased the urgency of obtaining endorsed quality measures—which are nationally recognized standards and in some cases are required by statute—to meet these needs. Given that NQF is the entity in the United States with lead responsibility for endorsing health care quality measures, NQF’s endorsement activities under the contract are of key importance to help meet HHS’s quality measurement needs.\nHowever, NQF’s endorsement process takes time. For more than half of the projects, including all five projects in the endorsement activity, NQF did not meet or did not expect to meet the initial time frames approved by HHS. In addition, projects under three of the contract activities have exceeded initial cost estimates, which resulted in HHS’s modification of NQF’s scope of work in some instances to help ensure that NQF’s costs did not exceed the funding allocated for the contract activities. While HHS received information in monthly progress reports to help monitor NQF’s performance under the contract, the agency did not use all of the monitoring tools required under the contract to help address issues related to time lines and cost estimates. These monitoring tools included an annual performance evaluation that could help HHS officials consider potential issues related to NQF’s time frames and cost estimates when planning work for the next year and a financial graph to be included in NQF’s monthly progress reports. The graph would have compared reported costs to initial cost estimates, which is something that monthly progress reports do not do. Although HHS officials reported that they recently began in August 2011 to enforce the contractual requirement for NQF to submit the graph, they have not implemented the required annual performance evaluation. By not taking advantage of these tools, HHS runs the risk of not having detailed and timely information that could help identify instances in which NQF might be at risk of not meeting time frames or exceeding estimated costs. Identifying such instances could provide an opportunity for HHS to make any appropriate changes to NQF’s scope of work, including setting priorities to ensure that HHS receives the quality measures it needs in a timely manner.\nWith the time remaining under the contract, HHS has an opportunity to ensure that the work performed under NQF’s contract better meets the agency’s needs for its programs and initiatives. However, HHS has not developed a plan that comprehensively identifies its quality measurement needs for its programs and initiatives in light of PPACA’s requirements or determines how it will use the work conducted during the remaining years of the NQF contract to help it meet these needs. In addition, critical tasks may need to be completed outside of the NQF contract. For example, HHS requested that NQF retool 113 measures under the contract and used 44 of the 113 measures that included errors in its EHR Incentive Program. As of November 2011, feasibility testing related to implementation of the retooled measures had not been completed, and HHS expected to perform this work outside of the NQF contract. Until the testing is completed, HHS runs the risk that some of the retooled measures may not work as intended when implemented in electronic format for performance measurement, which is a concern because use of these measures is an important component of HHS’s long-term goal for providers to use health information technology (IT) to exchange information and improve the quality of care.\nWithout a comprehensive plan, HHS lacks assurance that its selection of the work to be performed by NQF—and the approximately $55.2 million that the agency expects to spend for remaining work under the NQF contract—will be prioritized in the most effective way possible. Given that PPACA includes time frames for the implementation of quality measurement programs, NQF’s pace in completing some of the work under the contract—particularly the endorsement activity—raises concerns. If the endorsement projects continue to require extended completion times, HHS runs the risk of not having all the endorsed measures it needs for implementing its programs and initiatives. Should this occur, HHS may need to select nonendorsed measures for its programs and initiatives that have not undergone an objective and transparent review by NQF.", "To help ensure that HHS receives the quality measures it needs to effectively implement its quality measurement programs and initiatives within required time frames, we recommend that the Secretary of HHS take the following three actions: use monitoring tools required under the NQF contract to obtain detailed and timely information on NQF’s performance and use that information to inform any appropriate changes to time frames, projects, and cost estimates for the remaining contract years; ensure that testing of the electronic versions of the measures retooled by NQF that are being used or are planned for use in the Medicare and Medicaid EHR Incentive programs is completed in a timely manner to help identify potential errors and address issues of implementation; and develop a comprehensive plan that identifies the quality measurement needs of HHS programs and initiatives, including PPACA requirements, and provides a strategy for using the work NQF performs under the contract to help meet these needs.", "We provided a draft of this report to HHS and NQF for review and comment. HHS neither agreed nor disagreed with our recommendations and provided general comments. NQF concurred with many of the findings in the report and provided clarification and additional context on the findings and recommendations. HHS and NQF’s letters conveying their comments are reproduced in appendixes V and VI, respectively. In addition to the overall comments discussed below, we received technical comments from HHS and NQF, which we incorporated into our report as appropriate.", "HHS’s comments included separate general comments from CMS and ASPE that provided context on aspects of our findings and recommendations. CMS’s comments stated that the draft report suggests that CMS must use all of the measures endorsed by NQF, and noted that not all NQF-endorsed measures are suitable for HHS quality reporting and public reporting programs. Although our draft report did not state that CMS must use all of the measures endorsed by NQF, we modified it to note specifically, among other things, that all measures received under the contract may not be applicable to a particular HHS health care quality program or initiative. CMS also stated that the report suggests that CMS has not developed measurement plans for various provisions of PPACA related to quality reporting, public reporting, and value-based purchasing programs. CMS provided additional context for current planning efforts to address these requirements, including its Quality Measurement Task Force. The draft report acknowledged this and other CMS planning efforts to address the health care quality requirements contained in PPACA and noted that, as of August 2011, this initiative was just beginning. Further, while various efforts are underway and CMS’s comments state that it has documented how quality measures will be used to address all relevant provisions of PPACA, CMS has not provided documentation of comprehensive plans to address PPACA requirements that include alignment across programs, detailed time frames to meet PPACA deadlines, or how it will use the NQF contract to help ensure that it receives the endorsed measures it needs to meet these requirements.\nASPE’s comments noted, with respect to our first recommendation, that HHS used all except two of the monitoring tools called for in the contract. As noted in the draft report, HHS began receiving the monthly financial graph—one of the two monitoring tools—from NQF in August 2011. Also, ASPE noted its plans to update its performance evaluation system with NQF performance information for the first 2 contract years—the period January 14, 2009, through January 13, 2011—and to complete a final performance evaluation at the end of the contract in January 2013, which is the end of the fourth contract year. It did not indicate any plans to conduct the annual performance evaluation for the third contract year— January 14, 2011, through January 13, 2012—which would be consistent with the contract’s requirements. With respect to our second recommendation, ASPE provided technical comments and also told us that CMS issued a contract solicitation to test the retooled measures, but CMS did not receive any bids. Instead, ASPE noted in its comments that two of CMS’s current contractors will conduct feasibility testing on 69 of the 113 retooled measures that are planned for use in HHS’s EHR Incentive programs. CMS does not plan to issue a solicitation for a new contract to test the feasibility of the remaining 44 retooled measures, which are currently being used in HHS’s EHR Incentive Program. We noted these comments in the report. Regarding our third recommendation, ASPE stated that the measures that are not currently in “use” are being evaluated by HHS and that any conclusions that they will not be used are not accurate. Our draft report provided information on which measures were used or planned for use as of August 2011, and indicated that the remaining measures may be used in the future. Specifically, the report noted that HHS officials expect that many of these measures will be used in HHS programs or initiatives, and that HHS officials told us that they will review all the measures received under the contract to determine if they are applicable to their health care quality programs or initiatives. ASPE’s comments also noted that our draft report did not include information on all NQF-endorsed measures used by the various agencies within HHS. As noted in the draft report, we relied on HHS to identify programs and initiatives across HHS that use or plan to use these health care quality measures and recognize that those included in our report may not represent a comprehensive list of all health care quality programs and initiatives. As we recommended in our report, having a comprehensive plan could help HHS identify programs or initiatives that use or plan to use health care quality measures, including those endorsed by NQF.", "NQF’s comments state that it is providing its services to HHS under a cost reimbursement contract, which is used in circumstances where aspects of performance, such as time frames, cost estimates, and scope of work, cannot be reasonably estimated, and therefore, should not be expected. As noted in the draft report, the contract type used for this work is used for efforts such as research, design, or study efforts where costs and technical uncertainties exist and it is desirable to retain as much flexibility as possible in order to accommodate change. However, the draft report also noted that this type of contract provides only a minimum incentive to the contractor to control costs. Given the risk associated with this type of contract, the fact that NQF has not met expected time frames on about half of its projects as of August 2011, and that NQF exceeded its initial cost estimates for some of its projects under its contract activities, it is especially important that HHS obtain detailed and timely information on NQF’s performance and use that information to inform any appropriate changes to time frames, projects, and cost estimates for the remaining contract years, as noted in our recommendations. NQF’s comments also state that time frames and costs for the work performed under the contract were initial estimates based on an early understanding of the work, that HHS and NQF understood that there would likely be changes to them as a result of the complexity and novelty of the work, and that they have worked collaboratively throughout the contract period to address these and other factors. As noted in the draft report, the final work plans, the technical proposal, and other documents that we reviewed included initial time frames for all projects and costs for the work performed during the contract year that were approved by HHS in collaboration with NQF. The draft report also notes several examples of reasons why the time frames and costs were modified over time. Contributing factors include the high volume of measures submitted, changes to the scope of work, and the novelty and complexity of the work.\nWe are sending copies of this report to the Secretary of Health and Human Services and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or at [email protected]. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix VII.", "Figure 5 illustrates a health care quality measurement framework of the various stages that a quality measure will go through, as described by the Department of Health and Human Services (HHS) and National Quality Forum (NQF) officials and others. These stages include measure development, endorsement, selection, and use, among others. This framework also shows examples of which entities, including HHS and NQF, are involved in each of the stages.", "As an example of actions taken during the second stage of this quality measurement framework, HHS officials described two different processes used for planning and identifying gap areas.\nThe Centers for Medicare & Medicaid Services (CMS) Office of Clinical Standards and Quality has developed a standardized approach to identify quality measures that it uses in its health quality initiatives and programs using CMS’s Measures Management System. The Measures Management System requires the convening of a technical expert panel in the initial planning stage. Once convened, the technical expert panel is expected to work with measure developers who will gather information that will help the panel determine whether measures need to be developed for a program or initiative. During this stage, measure developers may conduct environmental scans or literature reviews, to determine the existence of measures that could be used for a program or initiative. If a measure does not exist, then the developer will work with CMS to develop the needed measures for the program or initiative, including measure testing. Upon development of the measures, the technical expert panel will evaluate them based on (1) importance to making significant gains in health care quality and improving health outcomes, (2) scientific acceptability of the measure properties including tests of reliability and validity, (3) usability, and (4) feasibility. Measures recommended by the panel are generally submitted for NQF endorsement.\nIn contrast, CMS’s Center for Medicaid, Children’s Health Insurance Program (CHIP), and Survey & Certification Office—the CMS center which implements CHIP—uses a measure identification process that relies on existing measures rather than development of new measures, according to officials. This office worked with a technical advisory group, the Subcommittee on Children’s Healthcare Quality Measures for Medicaid and CHIP, to recommend an initial core set of measures for the CHIP. With assistance from CMS, the subcommittee evaluated measures based on importance, validity, and feasibility. CMS officials told us that they considered existing NQF-endorsed and non-NQF-endorsed measures based on the measurement needs of the program, and relied on measure testing conducted by the measure developers. Officials stated that they have also relied on the subcommittee to evaluate candidate measures for Medicaid child health programs. Officials said that they are not required to submit measures that will be used for Medicaid programs for NQF endorsement.", "From January 14, 2010, through August 31, 2011, the National Quality Forum’s (NQF) contract with the Department of Health and Human Services (HHS) included 16 tasks that NQF is required to perform. For purposes of our work, we categorized these tasks into nine contract activities. Specifically, in certain cases, we grouped activities that covered related areas of work into a single contract activity. For example, we consolidated the six administrative activities NQF is required to perform into a single contract activity. (See table 3 that shows how we consolidated these contract activities.)\nNQF was required to perform specific projects under the nine contract activities we identified. For example, under the endorsement contract activity, NQF was required to complete an endorsement project related to patient outcome measures. For purposes of our work, we identified and reviewed 63 projects NQF is required to perform under the nine contract activities, as shown in appendix III.", "The tables below provide a status update on the projects that the National Quality Forum (NQF) is required to complete under the nine contract activities we identified (see app. II). The contract activities and the projects under the activities NQF is expected to perform are determined on an annual basis by the Department of Health and Human Services (HHS) and NQF. As a result, the number of projects under the contract activities varies by contract year. For our reporting period—January 2010 through August 2011—we determined that NQF was required to conduct work on 63 projects under the contract activities we reviewed. To determine initial time frames for each project, we calculated the approximate time between expected start and end dates established in NQF’s 2009, 2010, and 2011 final annual Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) work plans, the 2011 Patient Protection and Affordable Care Act (PPACA) technical proposal, and other NQF documents. Actual time frames were determined by calculating the approximate time between the actual start date and the actual date of completion. For projects that were not yet complete as of August 2011, we included an expected time frame based on the approximate difference between the actual start date and the expected date of completion. NQF and HHS officials stated that any changes to the initial time frames were approved by HHS.", "As part of a project under its contract with the Department of Health and Human Services (HHS), NQF was required to review its endorsement process. To complete this project, the National Quality Forum (NQF) subcontracted with Mathematica Policy Research, Inc. (Mathematica), to conduct a review of NQF’s endorsement process, as requested by HHS. HHS officials stated that, given the importance of the endorsement process as part of the health care quality measurement framework, they requested that an objective and thorough review of NQF’s endorsement process that focused on timeliness, efficiency, and effectiveness should be conducted. For example, they stated that they were interested in whether there were any efficiencies that could be implemented to shorten the process while maintaining an objective review of the health care quality measures that were evaluated under the process. Mathematica initiated its review of NQF’s endorsement process in October 2009 and completed the work in December 2010.\nIn December 2010, Mathematica submitted a final report to NQF and recommended eight areas where improvements could be made and inefficiencies could be addressed in the endorsement process. In the final report, Mathematica noted that the current process is lengthy and the timeliness of the endorsement projects varies substantially. The report further noted that the length of the endorsement process affects the availability of endorsed measures for end users, such as HHS. To help reduce the time required to complete projects, Mathematica recommended that NQF create a schedule for its endorsement process for measure developers and develop feasible time lines that include clear goals for each endorsement project.\nAs of May 2011, NQF officials stated that NQF has taken steps or plans to take steps in its future projects to address the eight areas for improvement Mathematica identified. For example, as of May 2011, NQF has solicited measures earlier based on a tentative annual project schedule to reduce the time lines of its endorsement process and reduced the period for voting by NQF member organizations from 30 to 15 days. NQF officials stated that they believe their efforts to implement the recommendations will shorten the time lines for the endorsement projects by 3 to 4 months without compromising the integrity of the endorsement process and measures to be evaluated under the process. HHS officials stated Mathematica’s recommendations were valuable because much of the work under the NQF contract needs to be completed in an accelerated time line to help fill critical measurement gaps associated with HHS’s health care quality programs and initiatives. They noted that it is too soon to tell the effects of these changes on the endorsement process, but they plan to monitor implementation of the changes in NQF’s 2011 endorsement projects under the contract. In addition, as of September 2011, HHS approved a new project under the contract to identify how the endorsement process can best align with HHS’s time frame for needed measures. As part of this project, NQF is expected to work with a consulting group to identify key performance metrics and define milestones and time lines to help streamline its endorsement process.", "", "", "", "", "In addition to the contact named above, Will Simerl, Assistant Director; La Sherri Bush; Krister Friday; Amy Leone; Carla Lewis; John Lopez; Elizabeth Martinez; Lisa Motley; Teresa Tucker; Carla Willis; and William T. Woods made key contributions to this report." ], "depth": [ 1, 2, 1, 2, 2, 2, 1, 1, 2, 2, 1, 1, 1, 2, 2, 1, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "h0_title h1_title", "", "h0_full", "h1_full", "", "h0_title", "h0_full", "h0_full", "h1_full", "", "", "", "", "", "", "", "h1_full", "h1_full", "", "", "", "", "" ] }	{ "question": [ "What issues are there with NQF's retooled measures?", "Why might it be risky for HHS to use these retooled measures?", "To what extent had HHS planned to use NQF’s retooled measures?", "What have HHS officials told GAO regarding the remaining HHS measures?", "What has HHS still not determined or established?", "How does a lack of a comprehensive measurement plan affect HHS?", "What did MIPPA ask HHS to do?", "With what entity did the HHS decide to work?", "What did PPACA do?", "What does GAO examine in its report?", "What resources does GAO use in making its report?" ], "summary": [ "For example, HHS used 44 measures that NQF retooled under the contract in its EHR Incentive Program. HHS officials stated that the 44 measures used in the program contained errors, which required corrections.", "HHS officials also have not yet tested the retooled measures to assess the feasibility of implementing them in the electronic format; therefore, HHS runs the risk that some of these measures may not work as intended when implemented.", "HHS had used or planned to use about half of the measures—164 of 344—that it received from NQF under the contract, as of August 2011.", "HHS officials told GAO they expect to evaluate if and how they could use all of the remaining measures HHS received under the contract.", "However, HHS has not determined how PPACA requirements for quality measurement may have changed its needs for endorsed quality measures. As a result, HHS has not established a comprehensive plan that identifies its measurement needs and time frames for obtaining endorsed measures and that accounts for relevant PPACA requirements.", "Without such a plan, HHS may be limited in its efforts to prioritize which specific measures it needs to develop and to have endorsed by NQF during the remainder of the NQF contract. As a result, HHS may be unable to ensure that the agency receives the quality measures needed to meet PPACA requirements, including time frames for implementing quality measurement programs.", "The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) directed the Department of Health and Human Services (HHS) to enter into a 4-year contract with an entity to perform various activities related to health care quality measurement.", "In January 2009, HHS awarded a contract to the National Quality Forum (NQF), a nonprofit organization that endorses health care quality measures—that is, recognizes certain ones as national standards.", "In 2010, the Patient Protection and Affordable Care Act (PPACA) established additional duties for NQF.", "This is the second of two reports MIPPA required GAO to submit on NQF’s contract with HHS. In this report—which covers NQF’s performance under the contract from January 14, 2010, through August 31, 2011—GAO examines (1) the status of projects under NQF’s required contract activities and (2) the extent to which HHS used or planned to use the measures it has received from NQF under the contract to meet its quality measurement needs, as of August 2011.", "GAO interviewed NQF and HHS officials, reviewed relevant laws, and reviewed HHS and NQF documents." ], "parent_pair_index": [ -1, 0, 0, -1, 3, 4, -1, 0, -1, -1, 3 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0 ] }
CRS_R42690	{ "title": [ "", "Background", "Legal Issues", "Are ICE's Detainer Regulations and Practices Within Its Statutory Authority?", "Are States and Localities Required to Comply with Immigration Detainers?", "Who Has Custody of Aliens Subject to Detainers?", "Do Detainer Practices Violate Aliens' Constitutional Rights?", "Are Aliens Seized in Violation of Their Constitutional Rights?", "Do Detainers Result in Aliens Being Deprived of Liberty Interests Without Due Process of Law?", "Conclusion" ], "paragraphs": [ "An \"immigration detainer\" is a document by which U.S. Immigration and Customs Enforcement (ICE) advises other law enforcement agencies of its interest in individual aliens whom these agencies are detaining. The standard detainer form (Form I-247) allows ICE to indicate that it has taken certain actions that could lead to the alien's removal (e.g., determining that there is reason to believe the alien is removable, initiating removal proceedings). The form also allows ICE to request that the other agency take certain actions that could facilitate such removal (e.g., holding the alien temporarily, notifying ICE prior to releasing the alien).\nICE and its predecessor, the Immigration and Naturalization Service (INS), have used detainers as one means of obtaining custody of aliens for purposes of removal proceedings since at least 1950. However, ICE's implementation of the Secure Communities program in the period between 2008 and 2014 raised numerous questions about detainers. This program relied upon information sharing between various levels and agencies of government to identify potentially removable aliens. Detainers were then issued for some of these aliens. The Department of Homeland Security (DHS) emphasized that it prioritized \"criminal aliens,\" those who posed a threat to public safety, and repeat immigration violators for removal through Secure Communities, and the former Director of ICE further instructed that, among \"criminal aliens,\" the focus was to be upon those convicted of \"aggravated felonies,\" as defined in the Immigration and Nationality Act (INA); those convicted of other felonies; and those convicted of three or more misdemeanors. However, there were reports of detainers issued for persons who were not convicted of any offense, or whose sole offense was a misdemeanor. As a result of these and related reports, several jurisdictions adopted policies of declining immigration detainer requests for at least some aliens. Several lawsuits were also filed challenging the detainer practices of state, local, or federal governments.\nThe Obama Administration's announcement on November 20, 2014, that it is replacing the Secure Communities program with a new Priority Enforcement Program (PEP) could effectively resolve certain of these questions and concerns about detainers. PEP is like Secure Communities in that it \"will continue to rely on fingerprint-based biometric data submitted during bookings by state and local law enforcement agencies to the Federal Bureau of Investigation for criminal background checks.\" However, with PEP, detainers are to be issued only for aliens who have been convicted of (rather than just arrested for ) certain offenses that are among ICE's priorities for civil immigration enforcement. Further, with PEP, detainers are generally to be used only to request that state and local law enforcement officials notify ICE prior to the alien's release or transfer to another institution, not to request that state and local officials detain aliens beyond the point when they otherwise would be released for the state or local offense so that ICE may assume custody. Any detainers issued to request detention (as opposed to notification) must generally specify that (1) the alien is subject to a final order of removal, or (2) \"there is other sufficient probable cause to find that the person is a removable alien.\"\nBy way of background, this report surveys the various authorities governing immigration detainers, including the standard detainer form (Form I-247) sent by ICE to other law enforcement agencies. The report also discusses key legal issues raised by immigration detainers, including (1) whether DHS's detainer regulations and practices are within its statutory authority; (2) whether states and localities are required to comply with immigration detainers; (3) who has custody of aliens subject to detainers; and (4) whether detainer practices violate aliens' constitutional rights. In considering these topics, it is important to note that Form I-247 and DHS's detainer practices have changed several times since 2010, including as a result of the actions announced by the Obama Administration on November 20, 2014. Among other actions, the Administration announced the discontinuance of the Secure Communities program, which had arguably prompted many recent questions regarding immigration detainers.", "ICE and its predecessor, the INS, have long issued detainers for potentially removable aliens, although the case law mentioning such detainers may provide only a partial picture of INS's practices, in particular. For example, in a 1950 decision, a federal district court addressed a challenge to the legality of a deportation order for an alien who was the subject of an immigration detainer requesting his delivery \"to the custody of the immigration authorities at the time sentence is fulfilled in the state institute.\" Later, in a 1975 decision, the Board of Immigration Appeals, the highest administrative body for interpreting and applying immigration laws, heard an alien's challenge to the conditions under which federal prison authorities held him, allegedly as the result of an immigration detainer which requested that the prison notify INS at least 30 days prior to his release. Between them, these two cases illustrate INS's use of detainers to request that a law enforcement agency transfer an alien to INS custody at the completion of the alien's criminal sentence and notify INS prior to the alien's release. However, they do not indicate whether INS used detainers for other purposes, such as to request that a person be held after he or she would otherwise have been released for any criminal offense so that INS could investigate the person's removability and/or take custody.\nThe Immigration and Nationality Act (INA) did not expressly address the issuance of detainers prior to 1986. However, the INS appears to have issued detainers prior to this date pursuant to various powers and responsibilities delegated to it by the INA. Specifically, the INA (1) grants the Attorney General (currently the Secretary of Homeland Security) \"the power and duty to control and guard the borders and boundaries of the United States against the illegal entry of aliens;\" (2) establishes certain categories of aliens who are barred from admission to the United States, or may be removed from the United States after their admission; and (3) generally grants immigration officials broad discretion as to their enforcement priorities. The INS cited all these provisions, among others, as authority when it ultimately promulgated regulations governing the issuance of detainers, as discussed below, and it seems to have consistently viewed these provisions as broadly authorizing its detainer practices. Neither INS nor ICE appears to have relied upon the \"inherent authority\" of law enforcement to issue detainers, although at least one jurisdiction has recognized such authority.\nThen, in 1986, Congress enacted the Anti-Drug Abuse Act, which, among other things, amended Section 287 of the INA to address the issuance of detainers for aliens arrested for \"violation[s] of any law relating to controlled substances.\" Section 287 generally specifies the powers of immigration officers and employees and, as amended, provides that\n[i]n the case of an alien who is arrested by a Federal, State, or local law enforcement official for a violation of any law relating to controlled substances, if the official (or another official)—\n(1) has reason to believe that the alien may not have been lawfully admitted to the United States or otherwise is not lawfully present in the United States,\n(2) expeditiously informs an appropriate officer or employee of the Service authorized and designated by the Attorney General of the arrest and of the facts concerning the status of the alien, and\n(3) requests the Service to determine promptly whether or not to issue a detainer to detain the alien, the officer or employee of the Service shall promptly determine whether or not to issue such a detainer. If a detainer is issued and the alien is not otherwise detained by Federal, State, or local officials, the Attorney General shall effectively and expeditiously take custody of the alien.\nAfter the 1986 amendments, the INS amended its regulations to address the issuance of detainers. The INS initially promulgated two separate regulations, one (codified in 8 C.F.R. §287.7) governing detainers for controlled substance offenses and another (codified in 8 C.F.R. §242.2) governing detainers for other offenses. The final versions of these two regulations were virtually identical, and in 1997, the two regulations were merged into one. This regulation is located at 8 C.F.R. §287.7, the former location of the regulation governing detainers for controlled substance offenses. However, it notes that detainers \"are issued pursuant to sections 236 and 287\" of the INA. Section 236 authorizes or requires the detention of certain aliens pending their removal, while Section 287 generally specifies the powers of immigration officers and employees (as well as expressly authorizes the issuance of detainers for controlled substance offenses).\nThese detainer regulations currently provide that \"[a]ny authorized immigration officer may at any time issue a Form I-247 … to any other Federal, State, or local law enforcement agency,\" and identify specific personnel authorized to issue detainers (e.g., deportation officers; immigration inspectors). These personnel are the same personnel who are authorized to make warrantless arrests for violations of federal immigration law under certain conditions, as discussed below. In addition, the regulations:\nrequire that other agencies requesting the issuance of a detainer provide DHS with \"all documentary records and information\" related to the alien's status; limit the period for which aliens may be held at DHS's request so that DHS may assume custody to 48 hours (excluding weekends and federal holidays); and specify that DHS is not financially responsible for an alien's detention unless it issues a detainer for, or assumes custody of, the alien.\nThe standard detainer form (Form 1-247) has apparently been in use since at least 1984, and has been amended several times, including in response to criticisms of the Secure Communities program. This form enables ICE to notify another agency that it has (1) determined that an individual is an alien subject to removal based on certain grounds specified on the form (e.g., a prior felony conviction), or otherwise noted by immigration officials; (2) initiated removal proceedings and served a Notice to Appear or other charging document on the alien; (3) served a warrant of arrest for removal proceedings; or (4) obtained an order of deportation or removal for the alien. It also allows ICE to request that the other agency take one or more of the following actions:\nMaintain custody of the subject for a period NOT TO EXCEED 48 HOURS, excluding Saturdays, Sundays, and holidays, beyond the time when the subject would have otherwise been released from ... custody to allow DHS to take custody of the subject. ...\nProvide a copy to the subject of th[e] detainer.\nNotify [DHS] of the time of release at least 30 days prior to release or as far in advance as possible.\nNotify [DHS] in the event of the inmate's death, hospitalization or transfer to another institution.\nConsider this request for a detainer operative only upon the subject's conviction.\nCancel the detainer previously placed by [DHS] on ____________________(date).\nThe option of requesting that a copy of the detainer be provided to the alien who is the subject of the detainer was added in June 2011, in response to concerns that aliens who were subject to detainers were not always aware of this fact. The option of requesting that the detainer be considered operative only upon the alien's conviction was also added in June 2011, because of criticism that ICE has issued detainers for aliens whose charges were dismissed, or who were found not guilty.\nICE also issued guidance and made other changes pertaining to its use of detainers in response to certain criticisms of the Secure Communities program. First, in August 2010, ICE issued an interim policy on detainers that prohibited immigration officers from issuing detainers unless a law enforcement agency \"exercised its independent authority to arrest the alien,\" as well as discouraged officers from \"relying\" on the hold period purportedly authorized by the detainer form and federal regulations. Then, in December 2011, ICE established a toll-free hotline that detained individuals could call if they believed they were U.S. citizens or victims of a crime. Later, in December 2012, ICE issued guidance that detainers were to be issued only when the subject of the detainer was reasonably believed to be an alien subject to removal from the United States and met certain other criteria.\nMost recently, on November 24, 2014, when announcing that DHS was discontinuing the Secure Communities program, the Secretary of Homeland Security directed that detainers are generally to be issued only for aliens who have been convicted of (rather than just arrested for ) certain offenses that are among ICE's priorities for civil immigration enforcement. Further, the Secretary directed that detainers are generally to be used only to request that state and local law enforcement officials notify ICE prior to the alien's release or transfer to another institution. They are generally not to be used to request that state and local officials detain aliens beyond the point when they would otherwise be released unless the detainer specifies that (1) the alien is subject to a final order of removal, or (2) \"there is other sufficient probable cause to find that the person is a removable alien.\"\nThe issuance of a detainer for an alien begins a process that could result in the removal of the alien, although ICE does not pick up or attempt to remove all aliens for whom it issues detainers. ICE issued 270,988 detainers in FY2009 and 201,778 detainers in the first eleven months of FY2010 (both years in which the Secure Communities program was operational). It is unclear, however, how many individuals subject to detainers were ultimately removed. It is also unclear how many of these detainers resulted in an alien being held by state or local authorities beyond the time when he or she would otherwise have been released from custody.", "Numerous questions about detainers were raised in the period between March 2008, when the Secure Communities program began, and November 2014, when the Obama Administration announced it is discontinuing the Secure Communities program and replacing it with a new Priority Enforcement Program (PEP). These questions include (1) whether DHS's detainer regulations and practices are beyond its statutory authority; (2) whether states and localities are required to comply with immigration detainers; (3) who has custody of aliens subject to detainers; and (4) whether detainer practices violate aliens' constitutional rights. This report discusses each of these questions individually below. However, it is important to note that certain questions may have less salience after the discontinuance of Secure Communities than they did while Secure Communities was operational. In particular, certain questions about holds of aliens pursuant to detainers may have been mooted by the Obama Administration's announcement that ICE will generally request such holds only \"in special circumstances\" when the alien is subject to a final order of removal, or when there is other sufficient probable cause to believe that the alien is removable.", "Because the INA only addresses detainers for controlled substance offenses, several plaintiffs and commentators have asserted that ICE's detainer regulations and practices exceed its statutory authority and, thus, are unlawful. In particular, those making this argument note that (1) these regulations and practices entail the issuance of detainers for offenses that do not involve controlled substances; and (2) ICE personnel are generally the ones determining whether to issue a detainer. Both things are, they assert, contrary to Section 287 of the INA, which they take to mean that ICE is only to determine whether to issue a detainer for an alien arrested for a controlled substance offense if and when requested to do so by a \"Federal, State, or local law enforcement officer\" or \"another official.\" Federal immigration authorities, in contrast, have taken a broader view of their authority, issuing detainers for offenses that do not involve controlled substances without a request from a non-immigration officer. In particular, the INS seems to have taken the position that holds are permissible pursuant to its general authority to make warrantless arrests for immigration violations, discussed below, and not Section 287's detainer provisions.\nThe only court to have ruled on this issue to date—the U.S. District Court for the Northern District of California—found that DHS's detainer regulations are within DHS's statutory authority in its 2009 decision in Committee for Immigrant Rights of Sonoma County v. County of Sonoma . In so finding, the court reviewed DHS's regulations in light of the Supreme Court's decision in Chevron, U.S.A. v. Natural Resources Defense Council , which established a two-step test for judicial review of an agency's construction of a statute which it administers: (1) Has Congress directly spoken to the precise question at issue, and (2) If not, is the agency's reasonable interpretation of the statute consistent with the purposes of the statute? Applying Chevron , the court first found that the DHS regulations were not \"facially invalid,\" or contrary to the unambiguously expressed intent of Congress. According to the court:\nThe fact that §[287] does not expressly authorize ICE to issue detainers for violations of laws other than laws relating to controlled substances hardly amounts to the kind of unambiguous expression of congressional intent that would remove the agency's discretion at Chevron step one. Rather, the court finds that because Congress left a statutory gap for the agency to fill, Chevron step two requires the court to defer to the agency's reasonable interpretation of the statute so long as the interpretation is consistent with the purposes of the statute.\nThe court further found that DHS's regulations are \"consistent with the purpose of the statute\" and \"not contrary to the discernible intent of Congress … [g]iven the broad authority vested in the Secretary of Homeland Security to establish such regulations as she deems necessary for carrying out her authority to administer and enforce laws relating to the immigration and naturalization of aliens.\" Here, the court specifically noted that the detainer provisions in Section 287 of the INA are to be construed \"simply [as] placing special requirements on officials issuing detainers for a violation of any law relating to controlled substances, not as expressly limiting the issuance of immigration detainers solely to individuals violating laws relating to controlled substances.\"\nThe question of whether DHS's detainer regulations and practices are beyond its statutory authority has, however, persisted despite the Committee for Immigrants Rights decision. For example, at least one suit filed against DHS in the early 2010s alleges that the government's \"application of the immigration detainer regulations and issuance of detainers … exceeds [its] … statutory authority.\" It remains to be seen whether and how other courts might address such arguments and what significance, if any, they might attach to the legislative history of the 1986 amendments, which was apparently not considered by the California district court. Although this history is sparse, a statement by the sponsor of the 1986 amendments read on the floor in the House could be construed as indicating that these amendments were intended to expand—rather than restrict—the use of detainers by requiring immigration officers to at least consider issuing detainers when requested to do so by other law enforcement officers. According to this statement, the amendments responded to complaints from state and local officers that INS did not \"issue judgment on a suspect's citizenship fast enough to allow the authorities to continue to detain him,\" and sought to compel INS to take \"the necessary actions to detain the suspect and process the case.\"", "Questions as to whether states and localities are required to honor immigration detainers seem to have arisen primarily from a DHS regulation which states that:\n[u]pon a determination by the Department to issue a detainer for an alien not otherwise detained by a criminal justice agency, such agency shall maintain custody of the alien for a period [generally] not to exceed 48 hours ... in order to permit assumption of custody by the Department.\nThis regulation uses the word \"shall,\" and \"shall\" has been construed as indicating mandatory action when used in other contexts. Thus, the argument has been made that its use here means that states and localities are required to hold aliens whenever DHS issues a detainer calling for them to be held. However, others—including DHS—have taken the position that the regulation's mandatory language applies only to the period of any detention pursuant to an immigration detainer, and does not require detention at DHS's request.\nEarlier versions of the standard detainer form (Form I-247) may also have contributed to the view that compliance with immigration detainers is required. Indeed, the version of Form I-247 used between 1997 and 2010 expressly stated that federal regulations \"required\" recipients to hold aliens for up to 48 hours (excluding weekends and federal holidays) so that ICE could assume custody. This form was amended in August 2010 to indicate that ICE \"requested\"—rather than \"required\"—that aliens be held. However, DHS further amended Form I-247 in December 2011, in a way that certain affected parties allege created confusion as to whether compliance with detainers is requested or required. Specifically, as amended in December 2011, Form I-247 stated that\nThis request flows from federal regulation 8 C.F.R. §287.7, which provides that a law enforcement agency \" shall maintain custody of an alien\" once a detainer has been issued by DHS.\nThis language was, however, only used until December 2012, when ICE amended the detainer form yet again to indicate that \"detainer request[s] derive[] from federal regulation,\" without quoting the text of that regulation. Some jurisdictions may also have taken DHS's statements that they were required, at that time, to participate in the Secure Communities program to mean that they must honor detainers issued in conjunction with that program. (DHS announced the discontinuance of the Secure Communities program on November 20, 2014.)\nThe only federal appeals court to have addressed the issue found that states and localities are not required to comply with immigration detainers. Specifically, in its March 4, 2014, decision in Galarza v. Szalczyk , a majority of the reviewing three-judge panel of the U.S. Court of Appeals for the Third Circuit found that the word \"shall\" in DHS's detainer regulation prescribes the maximum period of any detention, instead of requiring states and localities to hold aliens for DHS. The majority did so, in part, because it construed other language in 8 C.F.R. §287.7 as unambiguously describing detainers as \"requests.\" However, the majority also noted that, if the regulation were seen as ambiguous, DHS's interpretation would \"hold persuasive weight,\" and that DHS and the INS have historically viewed detainers as requests, not commands. The majority also noted other federal court decisions that, while not directly addressing whether states and localities are required to comply with immigration detainers, characterized detainers as requests.\nThe Third Circuit majority also cited the doctrine of constitutional avoidance in support of its interpretation, noting that \"[e]ven if there were any doubt about whether immigration detainers are requests and not mandatory orders to local law enforcement officials, settled constitutional law clearly establishes that they must be deemed requests.\" Specifically, the majority found that the Tenth Amendment's anti-commandeering principle, as articulated by the Supreme Court in New York v. United States and Printz v. United States , means that federal officials cannot require states and localities to detain aliens for them. According to the majority, if states and localities were required to detain aliens for DHS, they would have to \"expend funds and resources to effectuate a federal regulatory scheme,\" something found to be impermissible in New York and Printz . Further, according to the majority, such a requirement would be \"exactly the type of command that has historically disrupted our system of federalism\" by obscuring which level of government is accountable for particular policies, as was also noted in New York and Printz .\nThe Third Circuit's decision could potentially resolve the uncertainty as to whether compliance with immigration detainers is mandatory, as well as the related debate over whether state and local policies of declining to honor detainers for at least some aliens are preempted by federal law. However, while the Third Circuit's Tenth Amendment concerns, in particular, seem well founded, those who view compliance with immigration detainers as mandatory may continue to assert that compliance with immigration detainers is required based on district court decisions from other jurisdictions , which are not bound by the Third Circuit's decision. For example, at least one district court outside the Third Circuit has expressly rejected the view that the word \"shall\" in 8 C.F.R. §287.7(d) prescribes the maximum period of any detention, instead of requiring the alien be detained.", "The term \"custody\" is generally understood to \"encompass[] most restrictions on liberty\" resulting from a criminal or other charge or conviction, including arrest or supervised release. Custody is not determined solely by where a person is detained, and the entity by whom the person is physically detained is not necessarily the entity that would be found to have \"technical\" or legal custody of the person. Who has custody of a detained alien can be significant for purposes of any habeas corpus challenge to the legality of the detention, and potentially also for determining whether any \"hold\" that may have occurred as a result of the issuance of an immigration detainer was authorized. The writ of habeas corpus has historically \"served as a means of reviewing the legality of Executive detention,\" and detained aliens could challenge the fact, duration, or execution of their detention by federal, state, or local law enforcement. Successfully maintaining a habeas action depends, in part, upon determining who has custody. Federal courts will generally find that they lack jurisdiction if the alien against whom the detainer is lodged is in state custody, while state courts will find that they lack jurisdiction if the alien subject to the detainer is in federal custody. Who has custody could also be relevant in determining whether any \"hold\" of the alien that results from the issuance of a detainer is authorized. For example, assuming that holds are made pursuant to ICE's general authority to make warrantless arrests—rather than the detainer statute, regulations, or form —questions could arise as to whether state and local officers who are not acting pursuant to a 287(g) agreement have authority to detain an alien found to be in state custody. Such questions could, however, potentially be avoided if the alien were found to be in DHS custody.\nWhether DHS, or a state or local government, is seen as having custody of an alien for whom a detainer has been issued appears to depend upon how detainers are characterized, as well as the facts and circumstances of the case. Courts in numerous jurisdictions have held that the filing of a detainer, in itself, does not result in an alien being in federal custody. However, these courts have generally viewed detainers as administrative devices, designed to give states and localities notice of ICE's intentions. Thus, their decisions probably cannot be read to mean that an alien for whom a detainer has been issued is never in federal custody. For example, in Mohammed v. Sullivan , the U.S. Court of Appeals for the Eighth Circuit affirmed the district court's dismissal without prejudice of the petitioner's habeas petition because \"the filing of an INS detainer with prison officials does not constitute the requisite 'technical custody' for purposes of habeas jurisdiction.\" The petitioner here was serving a sentence for several drug-related offenses when INS filed a detainer that resulted in a more restrictive security and custody classification being applied. However, the court found that he was not in INS custody for purposes of his challenge to this re-classification. Similarly, in Orozco v. U.S. INS , the U.S. Court of Appeals for the Eleventh Circuit found that the \"filing of a detainer, standing alone, did not cause [the petitioner] to come within the custody of the INS\" for purposes of a habeas proceeding. The detainer in this case indicated that INS had initiated an investigation to determine whether the petitioner was removable, and the court found that \"merely lodging\" a detainer with such a notice did not result in INS custody.\nIn certain cases, however, the court has found that an alien is, or at least could potentially be, in federal custody because of the filing of an immigration detainer. For example, in Galaviz-Medina v. Wooten , the U.S. Court of Appeals for the Tenth Circuit found that an alien subject to a deportation order and serving a sentence with the federal Bureau of Prisons was in INS custody as a result of an immigration detainer lodged against him. According to the court, while the lodging of the detainer, in itself, did not result in INS custody, the deportation order \"establishe[d] conclusively the INS's right to custody following the expiration of his current term.\" Thus, because the \"INS ha[d] a more concrete interest in this alien,\" the court found that he was in INS custody. Similarly, in Vargas v. Swan , the U.S. Court of Appeals for the Seventh Circuit rejected the INS's attempt to characterize a detainer as \"an internal administrative mechanism\" which would not support a finding that the alien was in INS custody. Instead, the court remanded the case for a determination as to whether the jurisdiction receiving the detainer would treat it as a simple notice of INS's interest in a prisoner, or as a request to hold the inmate after his criminal sentence is completed so that INS could take him into custody.", "Aliens within the United States, including aliens who are unlawfully present, enjoy certain protections under the U.S. Constitution. Among other things, they have been found to be entitled to the protections of the Fourth and Fifth Amendments because they are encompassed by the usage of the word \"person \" in those amendments. The Fourth Amendment guarantees \"[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures,\" while the Fifth Amendment provides that \"[n]o person shall be … deprived of life, liberty, or property, without due process of law.\" For purposes of the Fourth Amendment, a \"seizure\" occurs when a person's \"freedom to walk away\" has been restrained. Similarly, \"[f]reedom from imprisonment—from government custody, detention, or other forms of physical restraint—lies at the heart of the liberty\" that is protected by the Due Process clause of the Fifth Amendment.\nIn considering whether the detainer practices of federal, state, and/or local governments infringe upon aliens' constitutional rights, courts would probably look at the specific actions taken pursuant to individual detainers, as well as ICE's reasons for issuing the individual detainers, rather than considering detainers in the abstract. Arguments can be made that the mere lodging of a detainer can negatively affect aliens' criminal cases and/or sentences, regardless of the actions that ICE requests of state or local officials. For example, an alien subject to a detainer could be denied bond, or given a more restrictive custody or security designation, because of the detainer. Nonetheless, despite such effects, certain actions pursuant to a detainer would not appear to entail a seizure of the alien's person, or a protected liberty interest (e.g., notifying ICE prior to releasing an alien, or in the event of the alien's transfer or death). Holding a person who otherwise would have been released, in contrast, could be said to result in a seizure of that person and, as such, would implicate protected liberty interests. Such a hold is arguably the equivalent of a new arrest and thus requires independent authority. The authority underlying the initial arrest would not, in itself, permit the hold.\nHowever, while holds pursuant to detainers would appear to involve seizures of the alien's person and protected liberty interests, they could still be found to be constitutional, depending upon the grounds for the hold. ICE can use Form I-247 to request holds on various grounds, including (1) a determination that there is reason to believe an individual is an alien subject to removal; (2) the initiation of removal proceedings; (3) a warrant of arrest for removal proceedings; and (4) a removal order. Different grounds could potentially raise different issues. For example, for various reasons explained below, a hold based upon a warrant of arrest for removal proceedings, or a removal order, could be found to raise different issues than a hold based on ICE's determination that there is reason to believe an alien is removable. Arrests pursuant to warrants are presumptively reasonable, and ICE has broad authority to detain aliens for removal. In contrast, authority to hold aliens based on a belief they are removable appears to be more limited.", "The Fourth Amendment does not prohibit all \"seizures\" of persons, only those that are \"unreasonable.\" Seizures that are made pursuant to a warrant—including warrants of arrest for removal proceedings—are presumptively reasonable. In contrast, those \"conducted outside the judicial process without prior approval by a judge or magistrate, are per se unreasonable…[,] subject only to a few specifically established and well-delineated exceptions.\" One such exception is where a law enforcement officer has sufficient reason to believe the person arrested has committed a felony. Congress has granted immigration officers similar authority as to immigration offenses. Specifically, Section 287(a) of the INA provides that\n[a]ny officer or employee of the Service authorized under regulations prescribed by the Attorney General [currently the Secretary of Homeland Security] shall have power without warrant … to arrest any alien in the United States, if he has reason to believe that the alien so arrested is in the United States in violation of any … law or regulation [governing the admission, exclusion, expulsion, or removal of aliens] and is likely to escape before a warrant can be obtained for his arrest, but the alien arrested shall be taken without unnecessary delay for examination before an officer of the Service having authority to examine aliens as to their right to enter or remain in the United States.\nThe listing of officers and employees who are authorized to make warrantless arrests pursuant to Section 287(a) is the same as that of officers and employees who are authorized to issue detainers, and the INS, at least, appears to have taken the position that a detainer placed pursuant to 8 C.F.R. §287.7 \"is an arrest\" pursuant to Section 287(a) of the INA. Other provisions of immigration law authorizing or requiring the detention of aliens have also been cited as authority for ICE's detainer practices, including Sections 236 and 241 of the INA. Section 236(a) authorizes the arrest and detention of any alien, on a warrant issued by DHS, pending a decision on whether the alien is to be removed, while Section 236(c) requires the detention of aliens who are inadmissible or removable because they have committed certain criminal offenses. Section 241(a)(2), in turn, requires the detention, during the removal period, of aliens found to be inadmissible or deportable on criminal and related grounds, or due to terrorist activities. In addition, at least some commentators would construe Section 287(d) of the INA to authorize the detention of aliens arrested for controlled substance offenses.\nWhether holds pursuant to an ICE detainer would be found to be authorized by one of these authorities if the alien were found to be in ICE custody has not been definitively settled by the courts. As discussed above, some commentators have asserted that the provisions of the INA addressing the issuance of detainers for controlled substance offenses and the regulations implementing them are the sole authority for holds pursuant to detainers. If this argument were adopted by the courts, then holds pursuant to detainers of aliens who were not arrested for controlled substance offenses could be found to be impermissible. However, even if other authorities were found to be generally applicable, questions could be raised as to whether the holds of particular aliens were authorized pursuant to these authorities. For example, for a warrantless arrest to be permissible pursuant to Section 287(a) of the INA, there must be (1) \"reason to believe\" that the alien is (a) in the United States in violation of immigration law and (b) likely to escape before a warrant can be obtained for his or her arrest; and (2) the alien must be taken \"without unnecessary delay\" before an immigration officer having authority to examine aliens as to their right to enter or remain in the United States.\n\"Reason to believe\" an alien is in the United States in violation of immigration law has generally been construed to mean that there is probable cause to believe that the alien is in the country in violation of the law. Probable cause, in turn, \"exists where the facts and circumstances within [an officer's] knowledge and of which [he] had reasonably trustworthy information [are] sufficient in themselves to warrant a man of reasonable caution in the belief that an offense has been or is being committed.\" Given this definition, questions could be raised about whether ICE in fact had probable cause to believe that individual aliens were removable based on the information available at the time the detainer was issued (e.g., the alien's immigration status and the offense(s) for which he was arrested or convicted). Moreover, some jurisdictions require an individualized assessment of factors such as ties to the community (e.g., family, home, job) and attempts to flee in determining whether there is reason to believe that an alien is likely to escape before a warrant is obtained for his or her arrest, and a court could find a hold placed without any consideration of these factors is impermissible. Moreover, even when there is reason to believe an alien is unlawfully present and likely to escape before a warrant can be obtained, the arresting officer must generally bring the alien before another immigration officer having authority to examine aliens as to their right to enter or remain in the United States within a \"reasonable time\" after arrest. ICE regulations provide for some flexibility in determining what constitutes a reasonable time by providing that a determination as to whether to bring formal removal proceedings against the alien will generally be made within 48 hours of arrest, \"except in the event of an emergency or other extraordinary circumstance[,] in which case a determination will be made within an additional reasonable period of time.\" However, in the case of particularly long holds, ICE could be found to have failed to bring individual aliens before an immigration officer within a reasonable time.\nAdditional questions may arise if an alien held pursuant to an immigration detainer is found to be in state custody, not DHS custody. Key among these questions is whether there must be some basis in state law for any action taken by a state or locality pursuant to an immigration detainer, or whether federal law provides the requisite authority for state and local actions. Some jurisdictions have suggested that there must be some basis in state law for any state or local action, and that the federal regulations and forms do not provide the requisite authority. Other jurisdictions, in contrast, appear to have adopted the position that the detainer regulations and/or Form I-247 suffice to authorize state and local actions. However, even in jurisdictions taking the latter view, questions could be raised about whether specific actions taken pursuant to immigration detainers are, in fact, authorized under federal law. For example, in two recent decisions, federal district courts found actual or potential violations of the Fourth Amendment when states or localities held aliens pursuant to immigration detainers so that ICE could investigate the alien's removability. In so finding, both courts characterized such \"holds\" as \"investigatory delays,\" which are generally seen to run afoul of the Fourth Amendment. Neither court purported to address whether federal law authorizes ICE to hold aliens in order to investigate their removability. However, the courts' findings suggest that these courts, at least, would not view holding an alien in order to investigate his or her removability as authorized by federal law, regardless of whether ICE or the state or locality is \"responsible\" for the hold. (Section 287 of the INA does not purport to authorize such holds, and DHS no longer includes the option of requesting a hold so that ICE may investigate the alien's removability on its detainer form.) These courts also did not opine on the permissibility of holds pursuant to immigration detainers for purposes other than investigating the alien's removability (e.g., holds when there is probable cause to believe the alien is removable).", "The Fifth Amendment's guarantee of procedural due process operates to ensure that the government does not arbitrarily interfere with certain key interests (i.e., life, liberty, and property). However, procedural due process rules are not meant to protect persons from the deprivation of these interests, per se. Rather, they are intended to prevent the \" mistaken or unjustified deprivation of life, liberty, or property,\" by ensuring that the government uses fair and just procedures when taking away such interests. The type of procedures necessary to satisfy due process can vary depending upon the circumstances and interests involved. In Mathews v. Eldridge , the Supreme Court announced the prevailing standard for assessing the requirements of due process, finding that\n[i]dentification of the specific dictates of due process generally requires consideration of three distinct factors: first , the private interest that will be affected by the official action; second , the risk of erroneous deprivation of such interest through the procedures used, and probable value, if any, of additional or substitute procedural safeguards; and finally , the Government's interest, including the function involved and the administrative and fiscal burdens that the additional or substitute procedural requirements would entail.\nAlthough the requirements of due process may vary depending on the particular context, the government must provide persons with the ability to contest the basis upon which they are to be deprived of a protected interest. This generally entails notice of the proposed deprivation and a hearing before an impartial tribunal. Additional procedural protections, such as discovery of evidence or an opportunity to confront adverse witnesses, may also be required in certain circumstances to minimize the occurrence of unfair or mistaken deprivations of protected interests.\nWhether the practices of local and/or federal governments could be found to violate aliens' due process rights under the test established by Mathews would, thus, appear to depend upon the aliens' and the government's interests, as well as existing and potential procedural safeguards. Loss of freedom, such as would result when an alien who would otherwise have been released is held pursuant to a detainer, has historically been seen as carrying significant weight for purposes of due process, although some courts have suggested that the liberty interests of at least certain aliens who entered or remained in the United States in violation of immigration law may be entitled to less weight. On the other hand, the government has been recognized as having some significant interests in the detention of at least certain aliens. For example, in Demore v. Kim , the Supreme Court recognized the government's interest in detaining deportable aliens \"during the limited period necessary for their removal proceedings\" so as to ensure that they do not flee and, thus, evade removal. Similarly, in Carlson v. Landon , the Court recognized that detention of certain aliens furthers the government's efforts to protect the safety and welfare of the community. Both these interests have been expressly recognized by the courts in upholding, at least in certain circumstances, the constitutionality of provisions of the INA authorizing or requiring the detention of certain aliens pending a decision on their removability or removal proceedings, as previously discussed.\nBecause there are potentially significant interests involved on the part of the alien and the government, the procedural safeguards associated with the issuance of detainers could play a significant role in the court's analysis of any claim that aliens held pursuant to immigration detainers have been deprived of their liberty without due process of law. The nature of these procedural safeguards has evolved over the years, however, as the federal government has amended its detainer form and practices (largely in response to criticism of the recently discontinued Secure Communities program). In particular, Form I-247 was amended in June 2011 to include the option to request that a copy of the detainer be provided to the alien who is the subject of the detainer. Previously, advocates for immigrants' rights had noted that persons subject to detainers were not always aware that detainers had been lodged against them. Even with the June 2011 amendments, however, aliens only have notice of an ICE detainer after it has been issued, not prior to its issuance. In addition, in December 2011, ICE established a toll-free hotline that detained individuals can call if they believe they are U.S. citizens or victims of a crime. This hotline can be seen as responding to criticisms that state and local officials have impinged upon the rights of aliens subject to detainers by using the issuance of a detainer as grounds for holding an alien in excess of 48 hours. The hotline would apparently give certain aliens the opportunity to contest the issuance of a detainer for them. However, there does not appear to be any formal procedure associated with calls to this hotline, and whatever procedure there might be occurs after the issuance of a detainer. Whether these procedural safeguards are adequate to protect against erroneous deprivations of persons' liberty rights remains to be seen. It is also unclear what weight, if any, a court might accord to the fact that persons whom ICE seeks to remove from the United States generally receive a Notice to Appear and have their cases heard before immigration judges prior to their removal. These procedures have generally been seen as providing due process to the individuals involved, although it is unclear whether a court would view the existence of due process in future removal proceedings as sufficient to protect against deprivations of aliens' liberty interests prior to the commencement of such proceedings.", "Numerous questions about immigration detainers have been raised recently as a result of the Secure Communities program. These questions include (1) whether DHS's detainer regulations and practices are beyond its statutory authority; (2) whether states and localities are required to comply with immigration detainers; (3) who has custody of aliens subject to detainers; and (4) whether detainer practices violate aliens' constitutional rights.\nThe Obama Administration's recent announcement that it is discontinuing the Secure Communities program and replacing it with a new Priority Enforcement Program (PEP) seems likely to lessen the salience of at least some of these questions. Immigration detainers will still be used with the PEP program, but generally only when an alien has been convicted of (rather than just arrested for) certain \"priority\" offenses. Further, under PEP, detainers will generally be used only to request that state and local law enforcement officials notify ICE prior to the alien's release from custody for the state or local offense, rather than to request that state and local officials hold the alien for a period of up to 48 hours (excluding weekends and holidays) so that ICE may assume custody. Detainers may, however, continue to be used to request holds in cases where (1) the alien is subject to a final order of removal, or (2) there is probable cause to believe the alien is removable.\nEven this more limited use of detainers could continue to raise questions in particular cases, though. Note also that future administrations could adopt different policies as to the use of immigration detainers, and some Members of Congress have recently introduced legislation that could potentially result in increased use of such detainers." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h0_full h2_title h3_title", "h2_full", "h2_full", "h3_full", "h3_full", "", "", "h0_full" ] }	{ "question": [ "What is the purpose of an \"immigration detainer\"?", "How have ICE and INS used detainers?", "What program raised questions about detainers?", "What did this program rely upon?", "How does PEP moot questions raised by detainers?", "How did Congress amend the INA to address detainers?", "What was the INA stance towards detainers before 1986?", "How was the INS changed by the 1986 amendments?", "What does INS now address?", "What does Form I-247 do?", "What federal regulation has provided some confusion as to whether states and localities are required to hold aliens for ICE?", "What is the view on Form I-247 has been rejected in Galarza v. Szalcyzk?", "What view has Galarza v. Szalcyzk enforced?", "What questions have been raised about detainers in relation to aliens?", "Why might these answers vary?", "How can filing a detainer result in the federal custody of aliens?", "What can holding an alien pursuant to a detainer be affected by?" ], "summary": [ "An \"immigration detainer\" is a document by which U.S. Immigration and Customs Enforcement (ICE) advises other law enforcement agencies of its interest in individual aliens whom these agencies are detaining.", "ICE and its predecessor, the Immigration and Naturalization Service (INS), have used detainers as one means of obtaining custody of aliens for removal proceedings since at least 1950.", "ICE's implementation of the Secure Communities program in the period between 2008 and 2014 raised numerous questions about detainers.", "This program relied upon information sharing between various levels and agencies of government to identify potentially removable aliens.", "However, the Obama Administration's announcement on November 20, 2014, that it is replacing the Secure Communities program with a new Priority Enforcement Program (PEP) may moot certain questions, since detainers are to be used differently with PEP than with Secure Communities.", "However, in 1986, Congress amended the INA to address the issuance of detainers for aliens arrested for controlled substance offenses.", "Prior to 1986, the Immigration and Nationality Act (INA) did not explicitly address detainers, and the INS appears to have issued detainers pursuant to its \"general authority\" to guard U.S. borders and boundaries against the illegal entry of aliens, among other things.", "After the 1986 amendments, INS promulgated two regulations, one addressing the issuance of detainers for controlled substance offenses and the other addressing detainers for other offenses.", "These regulations were merged in 1997 and currently address various topics, including who may issue detainers and the temporary detention of aliens by other law enforcement agencies.", "There is also a standard detainer form (Form I-247) that allows ICE to indicate that it has taken actions that could lead to the alien's removal, and request that another agency take actions that could facilitate such removal (e.g., notify ICE before the alien's release).", "Some have also suggested that a federal regulation—which provides that law enforcement agencies receiving immigration detainers \"shall maintain custody of the alien for a period [generally] not to exceed 48 hours\"—means that states and localities are required to hold aliens for ICE.", "Prior versions of Form I-247 may also have been construed as requiring compliance with detainers. However, in its recent decision in Galarza v. Szalczyk, the U.S. Court of Appeals for the Third Circuit rejected this view.", "Instead, it adopted the same interpretation of the regulation that the Department of Homeland Security (DHS) has advanced, construing it as prescribing the maximum period of any detention pursuant to a detainer, rather than mandating detention.", "In addition, questions have been raised about who has custody of aliens subject to detainers, and whether the detainer practices of state, local, and/or federal governments impinge upon aliens' constitutional rights.", "Answers to these questions may depend upon the facts and circumstances of particular cases.", "For example, courts have found that the filing of a detainer, in itself, does not result in an alien being in federal custody, although aliens could be found to be in federal custody if they are subject to final orders of removal.", "Similarly, holding an alien pursuant to a detainer when there is not probable cause to believe the alien is removable could be distinguished from holding an alien when there is probable cause, or when the alien is subject to a removal order." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 0, -1, 2, -1, -1, -1, 1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 3, 3, 3, 4, 4, 4, 4 ] }
CRS_R44697	{ "title": [ "", "Introduction", "Brief Legislative History", "1960s-1970s", "1980s-1990s", "VHA Eligibility, Enrollment, and Long-Term Care", "Overview of VHA Eligibility", "VHA Enrollment", "Veterans and Long-Term Care", "VHA Organization and Long-Term Care", "Overview of VHA Organization", "VA Long-Term Care Organization", "VHA Long-Term Care Services", "Non-Institutional Care", "VA Provided Care", "VA-Purchased Care", "Institutional Care", "VHA Long-Term Care Expenditures", "Institutional Care", "Non-Institutional Care", "Issues for Congress", "Access to Care", "Institutional vs. Home and Community-Based Services", "Coverage Options and Federal Coordination" ], "paragraphs": [ "", "The United States has a long history of providing benefits to those who have served in the defense of the nation. What began as a disability compensation and pension program for veterans during the early years of the republic has grown into a comprehensive veteran benefits and services system. The federal responsibility of managing this system has been entrusted by Congress primarily to the Department of Veterans Affairs (VA). The VA carries out its veterans programs nationwide through the following three administrations and an appeals board:\nThe Veterans Health Administration (VHA) is responsible for veteran health care programs. The Veterans Benefits Administration (VBA) is responsible for disability compensation, pension, vocational rehabilitation, education assistance, home loan guaranty, and insurance, among other benefits. The National Cemetery Administration (NCA) is responsible for providing burial space and maintaining national cemeteries, among other responsibilities. The Board of Veterans Appeals (BVA) renders final decisions on appeals regarding veteran benefits claims.\nThe VHA, the largest and most visible operating unit, is predominantly a direct service provider of primary and specialty care, similar in many ways to a large private sector health care system. However, some aspects of the VHA are very different from a private health care system. Not only does the VHA employ health professionals to provide health care services directly, but the VHA also purchases care for certain veterans from community health providers. Further, the VHA provides social services and other supportive services—such as housing assistance, home health aide services, and adult day health care—that are rarely tied to private sector health care providers or financed by private health insurance or Medicare. Beyond the provision of health care and other support services to veterans and eligible family members, the VHA is statutorily required to conduct medical research into the special health care needs of veterans, to train health care professionals, to serve as a contingency back up to the Department of Defense (DOD) medical system during a national security emergency, and to provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS) as necessary.\nIn addition to providing inpatient, outpatient, and a range of other medical care services, the VHA has been authorized by Congress since the 1960s to provide nursing home care to eligible veterans in VA facilities, private nursing facilities contracted by the VA, and state veterans homes. Although the VHA initially provided only institutional-based long-term care, VA long-term care services have expanded to include a full range of long-term services and supports (LTSS)—both institutional and non-institutional. These services include programs of care directly provided by the VA, such as home-based primary care and geriatric evaluation, as well as services purchased by the VA, such as home health aide and home respite care. The VA typically refers to programs under this broad umbrella as Geriatrics and Extended Care (GEC) Programs (see Figure 1 and text box for terminology used in this report). These programs share a primary goal: to support veterans to remain safe in the least restrictive environment.\nThis report provides an overview of the long-term care services offered by the VA, whether directly provided or purchased from the community. It first provides a brief history of legislation relevant to VA long-term care services. Next, it provides information on veteran eligibility for care and enrollment, to give a picture of who these programs serve. It then provides an overview of the structure of the VHA to explain how care is administered, followed by a description of the various long-term care programs that the VA offers. Finally, the report discusses potential issues of interest for Congress.", "", "Prior to the enactment of P.L. 88-450 in 1964, the VA did not have explicit statutory authority to provide nursing home care to veterans in VA facilities; however, the VA did provide a limited form of institutional care in its domiciliaries for those who no longer needed hospitalization. Toward the end of FY1964, within the scope of existing statutory authority, the VA began making plans to implement a nursing home care program with 2,000 beds in VA hospitals \"for those veterans who have obtained maximum hospital benefits, [but] are too physically disabled for domiciliary care, and still have a need for nursing care which for various reasons cannot be provided in the community.\" In August 1964, P.L. 88-450 authorized, among other things, 4,000 beds for nursing home care. It further authorized care in private or public nursing homes for no more than six months at VA expense for VA patients who had received maximum hospital benefits but who still needed long-term nursing home care. If the veteran needed permanent nursing home care for more than six months, the veteran would be placed in a VA nursing home rather than a private nursing home. P.L. 88-450 also authorized the VA to make per diem payments to state veterans' nursing homes for the care of eligible veterans. In enacting P.L.88-450, Congress recognized the growing need for nursing home care for World War II veterans in future years, and at the same time recognized the need for VA to move patients from expensive hospitals settings (when they no longer needed hospitalization) to less expensive nursing home settings for longer-term convalescence.\nP.L. 91-101, enacted in 1969, amended P.L. 88-450 and eliminated the six-month limitation on care at a contracted community nursing home for veterans who were previously hospitalized in a VA hospital for a service-connected disability. For all other veterans, the six-month limitation applied, but the VA was authorized to extend the time period at its discretion. The Veterans Health Care Expansion Act of 1973 ( P.L. 93-82 ) further liberalized eligibility for contracted community nursing home care for veterans with service-connected conditions and authorized the VA to provide nursing home care to veterans in contracted community nursing homes without having to be admitted to a VA hospital first.", "In 1998, a Federal Advisory Committee on the Future of VA Long-Term Care found that\nVA's long-term care system developed incrementally in the 1970s and early 1980s. Nursing home care remains its primary emphasis, while home and community based care is underdeveloped. In addition, long-term care programs are not fully integrated into the healthcare system at many VA facilities. Despite a continuum of offerings, services are not available universally and access often is restricted. Many facilities do not have mechanisms for coordinating long-term care services, relying on episodic admissions to individual programs. Long-term care is largely viewed as an adjunct rather than an integral part of the healthcare system, VA long-term care services must be remodeled to effectively deliver needed services.\nBased on recommendations of the Federal Advisory Committee on the Future of VA Long-Term Care, Congress began to examine the VA's long-term care programs, which led to the enactment of the Veterans Millennium Health Care and Benefits Act ( P.L. 106-117 ) in November 1999. This act, among other things, mandated nursing home care for veterans with a service-connected condition in need of such care and for veterans with nonservice-connected conditions who are 70% or more service-connected disabled. Among other things, it also required the VA to provide non-institutional care, such as home-based care and adult day health care, to all enrolled veterans. In his signing statement, President Clinton stated:\nThis bill is especially significant for its approach in the provision of enhanced extended care services to veterans. It firmly establishes that the Department of Veterans Affairs (VA) should accord the highest priority for nursing home care to the most severely disabled veterans and those needing care for service-connected disabilities. It will also ensure that veterans enrolled in the VA health care system receive noninstitutional, extended-care services, including geriatric evaluations and adult day health care.", "In general, eligibility for VA long-term care services depends on several factors, including veterans' need for the service, as determined by the VA; whether the service is institutional or non-institutional; and, for certain programs, veterans' service-connected status. However, to understand eligibility for VA long-term care services, it is important to understand eligibility for VA health care in general, the VA's enrollment process, and its enrollment priority groups. Unlike Medicare or Medicaid, VA medical care is not an entitlement program. Contrary to numerous claims made concerning promises of \"free health care for life,\" not every veteran is automatically entitled to health care from the VA.", "Eligibility for VA health care is based primarily on \"veteran status\" resulting from military service. In general, veteran status is established by active-duty status in the military, naval, or air service and a discharge or release from active military service under \"other than dishonorable\" conditions (e.g., general, honorable, under honorable conditions). After veteran status has been established, the VA next places an applicant into one of two categories.\nThe first category comprises veterans with service-connected disabilities or with incomes below an established threshold. Service-connected disability means that such disability was incurred or aggravated in the line of duty in active service. Veterans with service-connected disability or income below the threshold are regarded by the VA as \"high priority\" veterans and are enrolled in Priority Groups 1-6 (see Figure B-1 ). The second category of veterans comprises those who do not fall into one of the first six priority groups—primarily veterans with nonservice-connected medical conditions and with incomes above the VA-established threshold. These veterans are enrolled in Priority Group 7 or 8.\nAs shown in Table 1 , the majority of VA-enrolled veterans (77%) fall into Priority Groups 1-6, with 23% of veterans in Priority Group 1 (those with 50% or more service-connected disability or determined by VA to be unemployable due to service-connected conditions) and 22% of veterans in Priority Group 5 (those with incomes below the threshold, receiving VA pensions, or receiving Medicaid). Once veterans are enrolled in the VA health care system, they remain in the system and do not have to reapply for enrollment annually, unless they wish to disenroll formally.", "The size and scope of the VA health care system are influenced by several factors, including the size of the veteran population, the number of veterans eligible for VA health care, veterans' decisions about whether to enroll, and once enrolled, whether to utilize VA health care services, including long-term care services. An estimated 9.1 million veterans (43% of all veterans) were enrolled in the VA health care system in FY2016. Those not enrolled are either ineligible to enroll or eligible but choose not to enroll. In addition, some veterans may be eligible but unaware of their eligibility status. While overall the number of veterans in the United States has declined since FY2000, the number of veterans enrolled in the VA health care system has increased significantly.\nThe Veterans' Health Care Eligibility Reform Act of 1996 ( P.L. 104-262 ) required the establishment of a national enrollment system to manage the delivery of inpatient and outpatient medical care. The VHA began formally enrolling veterans for the first time in FY1999. As shown in Figure 2 , just over 4.9 million veterans (19% of all veterans) were enrolled in the VHA in FY2000; by FY2016, that number was estimated to have increased 86%, to 9.1 million enrollees. This increase is due, in part, to factors such as enrollment in newer veterans from Operation Enduring Freedom/Operation Iraqi Freedom/Operation New Dawn (OEF/OIF/OND), a larger number of female veterans, and economic conditions, among other factors. The number of veterans receiving VA health care services is projected to level off over the next 10 years.", "VHA enrollees are a clinically complex population with significant health care needs. VHA enrollees are more likely than nonveterans to be diagnosed with chronic health conditions, including those linked to their military service. For example, conditions such as PTSD are more prevalent in veterans compared with nonveterans, as are conditions such as cancer and diabetes. This likelihood is due, in part, to VHA eligibility policies based on service-connected conditions. Moreover, VHA policies regarding mental health screening, for example, lead to higher rates of diagnosis. In addition, veterans who access the VHA also tend to be older, less socioeconomically well off, and less healthy than veterans who do not rely on the VA for care.\nThe VA health care system faces the challenge of providing care to those aging with disability as well as those aging into disability. Veterans of all ages may need long-term care, both younger veterans with disabilities and aging veterans. Moreover, the number of veterans with a service-connected disability, defined as a disability caused by injury or disease incurred or aggravated during active military service, is increasing. The VA determines whether veterans have service-connected disabilities, and for those with such disabilities, assigns ratings from 0% to 100% (in increments of 10%) based on the severity of the disability. As shown in Figure 3 , nearly 2.5 million veterans had a service-connected disability in FY2003; by FY2013, that number had increased to over 3.7 million. Moreover, the number of veterans who are rated in the highest disability rating group (i.e., veterans with 70% to 100% service-connected disabilities) has increased. Among those veterans with service-connected conditions, about 2 in 10 veterans (18%) were rated as having 70% to 100% service-connected disabilities in FY2003, compared with 3 in 10 veterans (30%) in FY2013. As the number of veterans with a service-connected disability increases, the demand for VA long-term care services over a veteran's lifespan will likely increase.\nThe need for long-term care typically increases with age. In the general population, it is estimated that about half (52%) of individuals turning age 65 will develop a disability serious enough to need long-term care. Most will need care for two years, on average. However, one in seven is expected to have care needs for five years or more. Because the veteran population is older than the general population, long-term care services are an important part of VA's health benefits package. In 2016, 48% of all veterans enrolled in the VHA were aged 65 and over, compared with 15% of the general population (as of 2015). The majority of older veterans (85%) are aged 65 to 84. Vietnam-era veterans are the largest cohort of veterans and the cohort now reaching advanced age.", "", "The VHA is the largest integrated health care system in the United States, with over 1,700 sites of care, including medical centers, nursing facilities, clinics, and vet centers. To administer this large system, the VHA has divided the country into Veterans Integrated Service Networks (VISN), based on geography (see Figure 5 ). There are currently 18 VISNs, which vary regarding the number of sites of care, the types and number of facilities, and the geographic size of the network's region. Each VISN has a VISN Director, who has oversight of the VA facilities within that VISN and directly supervises the facility director at each facility.\nFor example, VISN 10 has oversight of VA facilities in Indiana, the lower peninsula of Michigan, and Ohio, including 10 medical centers (VAMCs) and one outpatient health care center (HCC). Each of these main facilities has associated community based outpatient clinics (CBOCs) under its purview; for example,\nCleveland, OH VAMC has 12 CBOCs in outlying areas, such as Akron and Canton. The Columbus, OH, HCC has four CBOCs, including Zanesville and Marion.\nMany facilities also have a Community Living Center (CLC), which is a nursing facility owned and operated by the VA. The CLC may be located within the same physical structure as the VA hospital, or it may be a separate structure at a nearby location; regardless, the CLC is considered a part of the parent VAMC and is under the direction of that facility's director. Alternatively, VISN 1 covers more states (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont) and has 11 VAMCs. In contrast, VISN 21 covers a large geographical area and has nine VAMCs in three states (Northern California, Hawaii, and Nevada) and covers U.S. territories such as Guam, which has one CBOC and one Vet Center under the purview of the VAMC in Honolulu, HI. Table 2 shows national numbers of different types of facilities as of December 2015.", "VA LTC programs are administrated at the VAMC/HCC level. Each VAMC/HCC offers certain mandatory programs and may offer several optional programs as well. The VISN Director offers some oversight into programming, but each facility has latitude to administer the various programs, within the parameters of national handbooks and directives, resulting in variability from facility to facility even within the same VISN. For example, in VISN 17, which primarily encompasses the state of Texas, all but two of the VAMCs offer the Medical Foster Home Program (MFH). MFH is a VA-approved adult foster care setting and is not currently mandated nationally. The Waco and Harlington, TX, VAMCs do not offer MFH—a local facility decision that may be based on factors such as lack of patient demand, staffing, budget, and availability of interested caregivers. Another example of program variability is Veteran Directed Home and Community Based Services (VD-HCBS), a collaborative program of the VA and the Administration for Community Living (ACL) that provides veterans with a budget to direct their own home care services. Sixty-eight VAMCs (out of 168) offered this program, as of October 2016; veterans served by other VA facilities do not have access to VD-HCBS. Nationally, the VHA Office of Geriatrics and Extended Care (GEC) provides guidance and oversight for these programs, including performance metrics, policy, auditing, and staff training.\nAt the facility level, LTC programs may be organized in one Geriatrics Department (often called a \"Service\" or \"Care Line\") or housed in one of several different departments (such as Social Work Service, Nursing Service, or Primary Care). Geriatrics Departments may be led by an Associate Chief of Staff for Geriatrics, or equivalent position, who is responsible at the facility level for the administration of LTC programs and reports to the facility chief of staff. From facility to facility, there is variability in program organization and management.", "The VA offers long-term care in both institutional and non-institutional settings. Institutional settings may include both inpatient acute care and nursing home care, although the majority of long-term care the VA provides in institutional settings occurs in a nursing home setting, which is the primary focus in this report. Non-institutional care includes outpatient or ambulatory care settings, as well as care that occurs in the home or another community-based setting. These services cover a full spectrum of care needs, spanning veterans who are largely independent, to those who require significant assistance with basic daily activities, to those who are near the end of life. Some long-term care services are provided directly by VA staff, while other services are purchased from providers outside the VA. The subsection below describes non-institutional services provided and purchased by the VA. The next subsection provides information about long-term care provided in institutional settings.", "The VA provides home and community-based care to eligible veterans enrolled in the VHA who meet certain clinical criteria (see Table 3 ). A primary goal of these programs is to support veterans in remaining safely in their home settings, with optimum health and wellness as they age. The VA is statutorily required to provide two non-institutional long-term care services: adult health care and respite care. VA's other non-institutional long-term care services are provided as part of the health care benefits package. Although the VA provides many of these services directly, it also purchases certain services from community providers and then pays those providers, similar to other federal payers such as Medicare. These programs are described below.", "The Home Based Primary Care (HBPC) program provides long-term, comprehensive primary care services to eligible veterans. Such services are coordinated by an interdisciplinary team that makes home visits. Generally, veterans who have difficulty getting around outside the home due to a chronic health condition or other long-term care need are eligible for HBPC. The HBPC team comprises VA staff, including physicians, nurse practitioners or physician's assistants, nurses, social workers, dietitians, physical or occupational therapists, psychologists, and pharmacists. Team members make separate home visits, form a medical care plan, and provide comprehensive case management for veterans. Primary goals of the program include maintaining veterans safely in their home, reducing hospitalizations and emergency department visits, and managing complex chronic illnesses to help increase veterans' quality of life. HBPC programs are accredited by the Joint Commission on the Accreditation of Health Care Organizations (Joint Commission) under home care standards and are surveyed every three years by the Joint Commission.\nThe Community Residential Care (CRC) program is a supported housing program where veterans reside in a VA-approved group home. VA staff provide case management services to the veteran and monitor the care provided by the group home staff. The CRC program is designed for veterans who do not need a nursing home level of care, but do need support with their daily living skills, such as household tasks, meal preparation, and transportation. The veteran pays the CRC home out-of-pocket for room and board, which varies depending on geographic cost of living and amount of care provided. The VA staff make regular visits to see the veteran and inspect the home initially and annually. In addition, VA staff offer ongoing education and training to the CRC caregivers on topics such as infection control, working with challenging behaviors, and falls prevention.\nFor veterans who need more assistance than a CRC home can provide, the Medical Foster Home (MFH) program may be an option available at some VAs. MFH is a subset of the CRC program providing a higher level of care to eligible veterans. The veteran resides in a VA-approved adult foster care setting, with caregivers providing supervision 24 hour per day. Caregivers are private individuals, many of whom have nursing or nursing aide backgrounds, who choose to open up their home to veterans. The caregiver must also live in the home and may accept no more than three veterans as residents at a time. The MFH program is designed for veterans who would need nursing home level of care if not for significant in-home supports. The MFH caregiver provides assistance with personal care, supervision, and management of household tasks for the veteran. The veteran pays the MFH caregiver out-of-pocket for room and board, with these costs varying by the amount of care needed and geographic cost of living. All MFH veterans are also enrolled in a home visiting VA program, such as HBPC, which provides case management and oversight of the veteran's care. In addition, the VA MFH Coordinator arranges the placement of the veteran, monitors the care, organizes education and training for the caregivers similar to the CRC trainings, and arranges for initial and annual inspections of the homes that are conducted by VA staff, which typically includes the coordinator, a life safety expert, dietitian, and nurse.\nIn addition to programs offered in the home setting, the VA offers several outpatient clinic-based services. For example, as required under current law, VA offers geriatric evaluation in many settings, including outpatient, inpatient, and long-term care settings. Although VA is required to provide geriatric evaluation to eligible veterans it may not be provided at all VA facilities. In part, this is due to facilities not having a geriatrician, another provider with geriatric expertise, or the necessary interdisciplinary expertise. The key component of geriatric evaluation is a comprehensive, interdisciplinary assessment, with team members including, but not limited to, a physician and at least two of the following disciplines: nurse, social worker, occupational or physical therapist, dietitian, or pharmacist. Veterans are referred from primary care or other specialties seeking input related to issues, such as\nincreasing functional deficits; behavioral issues related to dementia; complicated psychosocial situations related to aging; polypharmacy (i.e., aging veterans who are taking medications that may cause side effects, and who could benefit from a simplified medication regimen); and frequent hospitalizations.\nThe team forms a recommended treatment plan and then either manages the implementation of that plan or makes recommendations back to the primary care team for how to best manage the veteran's care.\nAnother clinic-based option available to veterans is outpatient palliative care. The outpatient Palliative Care Clinic focuses on comfort care and symptom management for veterans with chronic illnesses helping to increase veterans' quality of life. Veterans may be seen in a Palliative Care Clinic even while continuing to receive curative treatment. Generally, veterans may have a prognosis of two years or less to live. Palliative care may also be appropriate earlier, when a veteran's goals are primarily related to symptom management and quality of life. The Palliative Care Team includes a medical provider, social worker, nurse, chaplain, and may include a psychologist and dietitian. Hospice, a specific form of palliative care for veterans with six months or less to live, is provided in home or inpatient settings.\nA limited number of VA facilities offer onsite Adult Day Health Care (ADHC) . ADHC is an outpatient day program that provides activities, socialization, supervision, and meals in a congregant setting. This program is targeted toward veterans who would need nursing home care if not for such assistance, including veterans who need assistance with personal care and daily living skills, as well as veterans with cognitive impairments that need supervision. ADHC programs generally offer structured activities such as restorative exercises and social activities (e.g., music, crafts, and outings), personal care, me dication management, and meals.", "Adult Day Health Care , as described above, is also purchased by the VA from community agencies. In this situation, the VA has agreements with local community agencies that provide ADHC services. The VA refers veterans to those ADHC sites, authorizes how many days per week the veteran may attend based on clinical need, and monitors the care provided via onsite visits made by VA clinical staff at least quarterly. In addition, the VA staff conducts an annual inspection of the ADHC site. The VA pays an agreed-upon daily or hourly rate to the ADHC sites, similar to state Medicaid programs.\nHomemaker/Home Health Aide (H/HHA) services are another service that the VA purchases from community agencies. Clinical eligibility for H/HHA services is the same as for the ADHC program; veterans who are clinically eligible for nursing home level of care may receive home health aide services in their home, with the goal of keeping the veterans in their home rather than in a nursing facility. A VA provider assesses the need for care and places an order. Next, a VA coordinator contacts the veteran to discuss his or her needs, determines amount of care to be provided based on clinical need, and makes a referral to a community home health agency. The VA reassesses the veteran's need for care at least annually and assesses the agency's quality annually.\nRespite services are also purchased by the VA and provided either in the home by a home health agency or in an ADHC setting. Respite services are intended to be short term and are generally limited to thirty days per calendar year per veteran; respite is meant to give the family caregiver a break from caring for the veteran. Clinical eligibility is the same as for ADHC or home health aide services.\nThe VA also purchases skilled home care , which is provided by qualified personnel for a limited time with the goal of rehabilitation or restoring health status. Skilled home care includes but is not limited to home physical, occupational, or speech therapy; wound care; and intravenous (IV) care. A VA physician determines that a veteran needs the skilled care and then orders the skilled care and VA coordinators contact the veteran and arrange the care. In general, the VA purchases skilled home care from Medicare-certified home care agencies. The VA monitors the agencies' quality measures at least annually.\nAnother service that the VA purchases from community agencies is home hospice . As mentioned previously, hospice is a type of palliative care or comfort care. To be eligible for hospice, a veteran must have a life-limiting diagnosis and a physician must determine that a veteran has a life expectancy of six months or less. The VA hospice coordinator then contacts the veteran and family to provide further education regarding hospice and makes a referral to a community hospice agency. The hospice agency provides an interdisciplinary care team, which manages the symptoms of the life-limiting diagnosis, works with the veteran on goals for care, and seeks to improve quality of life. The team generally consists of a physician, nurses, a social worker, aides, and a chaplain. If the veteran's needs cannot be met in the home, the VA may pay for a general inpatient hospice stay or an inpatient respite stay in a community facility. Or the VA may transfer the veteran to a VA Community Living Center (CLC) to receive inpatient hospice services in a VA facility.\nFinally, a limited number of VA facilities offer Veteran-Directed Home and Community- Based Services (VD-HCBS) . Clinical eligibility is the same as for ADHC or H/HHA services (see Table 3 ). VD-HCBS provides veterans with a budget for services, and the veteran determines how to use that budget to hire home health aides or arrange other supportive services to help the veteran live independently. The goals of the program are to provide the veteran more control and choices related to his or her care and to keep the veteran safely in his or her home. The veteran may use the funds to pay a family member or private citizen to provide aide services. The VA has agreements with local Area Agencies on Aging (AAA) to administer the program, including providing case management services and oversight of budget.", "As the VA works to support veterans in their home environment, some veterans may have long-term care needs that can be served in institutional settings (see Table 4 ). The VA is mandated to provide nursing home care to certain service - connected veterans . As previously mentioned, the Veterans Millennium Health Care and Benefits Act ( P.L. 106-117 ) requires the VA to provide nursing home care to the following veterans:\nany veteran in need of such care for a service-connected disability; or to any veteran who is in need of such care and who has a service-connected disability rating of 70% or more; or any veteran who has a service-connected disability rated 60% or more and unemployable; or any veteran who has a service-connected disability rated 60% or more and who has been rated permanently and totally disabled.\nDepending on available resources, the VA may also provide nursing home care to nonservice-connected veterans who are clinically in need of institutional care. This care may be provided in a VA Community Living Center (CLC), a Community Nursing Home (CNH), or a State Veteran's Home.\nThe VA has 135 Community Living Centers (CLC) associated with VAMCs across the country that provide nursing home level of care. CLCs are staffed by VA employees and may provide rehabilitation, custodial, and hospice care to veterans. Some CLCs may offer specialty services, such as a specialized dementia unit. In the mid-2000s, this program underwent a change in the model of care, renaming the facilities from Nursing Home Care Units to Community Living Centers to evoke a more homelike atmosphere and acknowledge that CLCs are the veterans' home. In addition to the name change, the VA launched a system-wide program to promote cultural transformation, including a more person-centered approach, more homelike interior design, and more resident choice related to daily schedule of meals, sleep and wake times, and bathing. CLCs are inspected by the VA's Office of the Inspector General and the Long-Term Care Institute.\nWhile not all VAMCs have CLCs, all are required to operate a Community Nursing Home (CNH) program. Under this model, the VA has contracts with community nursing facilities to provide care to veterans. The VA inspects the nursing facility initially and then reviews quality annually, and VA clinical staff make monthly visits to each nursing facility where veterans have been placed to monitor the care being provided. The VA Community Nursing Home Coordinator makes arrangements for placement of eligible veterans and acts as a liaison for the nursing facility.\nThe third setting for VA nursing home care is in a State Veterans Home (SVH) . SVHs are owned and operated by the state in which they reside, and eligibility requirements are determined by the state of jurisdiction. The state may apply for grants from the VA to cover some of the cost of infrastructure, and the SVH may receive a per diem that covers approximately one-third of the cost of the veteran's care. The VA also surveys the SVH annually. Each state operates SVHs differently, but may offer various levels of care in addition to nursing home, such as domiciliary (independent living), assisted living, and adult day health care.\nIn addition to providing long-term care in these settings, VA facilities may choose to provide respite, hospice, and palliative care, as well as geriatric evaluation programs, to eligible veterans in an institutional setting. As previously mentioned, veterans are eligible for 30 days of respite care per calendar year, in general; if needed, this care may be provided in an institutional setting (such as CLC or CNH), depending on resource availability, to give the family caregiver a break from caregiving. The clinical criteria for veterans receiving institutional respite care is the same as for home respite; however, this program may be limited in certain VA facilities depending on resource or bed availability. In addition, hospice care may be provided to veterans in an institutional setting. For example, veterans receiving home hospice whose care needs can no longer be managed at home may move into a VA CLC to receive hospice care for a short time, while their symptoms are managed, or while they are actively dying. In some cases, the VA may also pay for inpatient hospice care in other institutional settings, such as community inpatient hospice facilities. Also, palliative care may be offered in institutional settings; some CLCs may have palliative care units, or a VA may have a palliative care team that consults at the bedside of veterans in a hospital intensive care unit. Similarly, geriatric evaluation teams may consult with veterans residing in acute inpatient settings. Although the provision of these programs varies across VA facilities, the programs should be available to eligible veterans residing in institutional settings.", "Long-term care expenditures are a small but not insignificant part of the VHA medical care budget, at just over one-tenth of the VHA's total medical care budget. In FY2015, the VHA spent $7.4 billion, just over 13% of its total medical care spending ($55.8 billion), for veteran's long-term care (see Table 5 ). Institutional care accounted for almost $5.3 billion, or 71% of VA's total long-term care spending, while non-institutional care accounted for $2.1 billion, or 29%. While total appropriated funding for VHA medical care has increased 25% (in nominal dollars) since FY2010, the proportion of total appropriations spent on long-term care has remained relatively unchanged. However, non-institutional long-term care expenditures doubled from FY2010 to FY2015 (non-inflation adjusted dollars). As a proportion of total VA long-term care spending, non-institutional care increased from 19% to 29% from FY2010 to FY2015. As Table 5 shows, the percentage of total VHA medical care spent on long-term care ranged from approximately 12% to 13% from FY2010 to FY2015.", "The majority of VHA institutional care spending (64%) is for VA Community Living Centers (CLCs), which are nursing facilities owned and operated by the VHA (see Table 6 ). For FY2015, just over 9,000 veterans received care in CLCs. However, the majority of the \"workload\"—defined as the average number of veterans receiving nursing home care per day (or the average daily census)—was provided by state veterans' nursing homes, which are owned and operated by states. Over half (53%) of the workload for FY2015 was accounted for by state veterans nursing homes. It is important to note that total medical care obligations for state nursing homes identified in Table 6 , as well as per diem costs, account only for VA's portion of the total cost of care in state homes. States and veterans are also responsible for a share of the total costs of care in these settings.\nMoreover, most VHA institutional spending pays for long-stay care. Across all institutional settings, 88% of residents were long-stay residents (defined as veterans residing in a setting for 91 days or more). Compared with other VA institutional settings, CLCs have higher per diem costs, on average, but also have a greater proportion of short-stay residents. Short-stay residents are more likely to need post-acute or rehabilitative care, which is often more resource-intensive than custodial nursing care provided to long-stay residents. Table 6 compares FY2015 short-stay versus long-stay per diem costs by institutional setting. As shown in the table, average per diem rates for CLC short-stay in 2015 were greater than their average long-stay rates. According to the VA, CLCs may provide specialized care for veterans with mental or behavioral health conditions, as well as certain programs for those with dementia or spinal cord injuries. In addition, CLC per diem costs account for other direct and indirect VA expenditures such as physician and other skilled medical staff, medical education and research, and overhead expenditures related to VA national programs. These types of costs are not included in per diem costs for CNHs and state nursing homes.", "In FY2015, almost 70% of expenditures for long-term care provided in non-institutional settings were for either home-based primary care or homemaker/home health aide programs (see Table 7 ). The program that received the most visits or encounters (referred to as clinic stops/procedures in the table) was homemaker/home health aide programs. Services through homemaker/home health aide programs are provided more frequently, often several times a week, if not daily, to veterans who need ongoing assistance with personal care needs.", "Three broad issues emerge for Congress when considering VA long-term care eligibility, financing, and delivery. The first issue is veterans' access to care, specifically access to long-term care services. The second issue is the setting where long-term care services are provided and the appropriate balance between home and community-based versus institutional services. The third issue involves veteran's health coverage options and federal coordination of financing and health care delivery within the VA health care system and across federal programs.", "The veteran population, on average, is older than the general population. Further, the number of veterans who have disabilities that are rated as 70% or more service-connected, and therefore are eligible for VA-paid nursing home care, has increased. This growth may lead to more veterans needing access to long-term care services in order to remain in the community, as well as a greater number of veterans eligible for nursing home care at VA's expense. However, the current policy discussion has primarily focused on reforming access to care within the VA health care system, particularly in relation to primary and specialty care. The Veterans Access, Choice, and Accountability Act of 2014 ( P.L. 113-146 ), as amended, required two different external assessments of the VA. The first was an independent assessment of the VA offering multiple broad recommendations for next steps for the VA. The second assessment, conducted by the Commission on Care, made various recommendations regarding the future of the VA in a report published in July 2016. Both sets of recommendations acknowledge the challenges associated with an increasing number of aging and disabled veterans, but they were largely silent on how such demographic implications will affect the demand for VA long-term care services. The VA's capacity to meet the needs of aged and disabled veterans over time depends on its ability to provide that care directly, but also to purchase care from the community.\nThis challenge raises several questions for policymakers: In the context of VA health system reform, are there access issues to be considered for long-term care as well as for specialty and primary care areas? How can the VA maximize quality and efficiency, recognizing that access to long-term care services and care coordination across acute and long-term care may prevent the frequency or need for more expensive care, such as acute inpatient stays or emergency department visits? Does the VA have the right size and mix of geriatric and extended care health professionals to meet the demands of the disabled and aging veteran population both now and in the future? Does the VA have the flexibility it needs to negotiate with community partners who provide much of VA's home and community-based care?", "Over the past two decades, federal financing and delivery of long-term care, particularly for the largest federal payer of LTSS (Medicaid) has shifted toward the provision of care in home and community-based settings rather than institutional care. In FY1995, the proportion of Medicaid LTSS spending on institutional care was 82%, with 18% spent on home and community-based services (HCBS). Almost 20 years later, the proportion of Medicaid LTSS spending on institutional care has decreased to 47%, with more than half of spending (53%) on HCBS (data for FY2014). Medicaid's shift toward more HCBS occurred with various administrative efforts and activities, as well as financial incentives and broader statutory authority from Congress for states to provide such services. In part, Medicaid HCBS expansion was prompted by the U.S. Supreme Court decision in Olmstead v. L.C. , which held that the institutionalization of people who could be cared for in community settings was a violation of Title II of the Americans with Disabilities Act (ADA). The movement to expand HCBS has occurred alongside the shift to more patient-centered and consumer-driven models of care, which seek to honor the preferences of the individual. Most individuals express a strong preference for remaining in their homes and communities rather than in institutions.\nSimilarly, the VA has expressed a desire to move toward \"a more balanced offering of home and community-based services.\" However, in FY2015, 29% of VA long-term care spending was on non-institutional care versus 71% of spending on institutional care. One issue that may affect the balance of long-term care services offered is VA's statutory requirement to provide nursing home care to veterans with 70% or more service-connected disability, as well as the requirement to provide nursing home care to veterans who are service-connected and need care for their service-connected disability. Thus, similar to federal Medicaid statute, which requires states to provide nursing home care to certain eligible beneficiaries, the VA operates under a mandate to provide such care to certain veterans.\nMoreover, the current design of the State Veterans Home (SVH) program generally favors institutional care over HCBS. As stated previously, under this federal-state partnership, the VA provides grants to states to build, modify, or acquire nursing home, domiciliary, and adult day health care facilities—a federal grant to the state may not exceed 65% of the total project cost. In addition to providing grants to states for facility construction, the VA provides a fixed per diem to states for each veteran who receives care in a state veteran's home. Thus, under the current program design, states generally have an incentive to continue to maintain long-term and extended care facilities rather than explore non-institutional alternatives.\nAccording to the VA, HCBS is less costly than facility-based options and growth in LTSS expenditures can be moderated by moving toward the provision of more HCBS. However, in the aggregate LTSS spending can be moderated only if HCBS spending increases as institutional spending decreases. VA's requirement to maintain a specific level of long-term care beds and staffing, as well as the mandate to provide institutional care to certain veterans, may create barriers to shifting care to HCBS. To efficiently use the institutional resources it has, the VA must keep the institutional beds occupied. Further, whether beds are occupied or not, the cost to maintain the physical infrastructure of facilities owned and operated by the VA is a consideration. Current contracting requirements may limit the VA's ability to purchase institutional care in the community, thereby offsetting the need for institutional settings owned and operated by the VA. Such requirements may also limit the VA's capacity to provide care to veterans in their communities. Unless VA institutional spending can be reduced, spending on more HCBS may be an additional cost to the VA rather than a shift in cost.\nThis issue raises several questions for policymakers: What is the right proportion of VA LTSS spending on institutional versus non-institutional care? Does the VA have the appropriate number of CLC beds offering the right types of care? Does the VA have the ability and flexibility needed to partner with community long-term care facilities to provide care to veterans in their communities and potentially reduce demand for VA-owned and operated CLCs? Should Congress review the VA's long-term care infrastructure, comparing projected demand against capacity? And, finally, how might Congress compel the VA to shift care from institutions to home and community-based settings?", "Not all veterans rely on the VA exclusively for their health care. Many veterans access care through other sources of health coverage, and most enrolled veterans have more than one source of coverage. According to the 2015 VHA Survey of Enrollees, approximately 78% of veterans enrolled in the VHA have some type of public or private health care coverage in addition to VA health care. For example, 51% of veterans reported they were enrolled in Medicare, 7% had Medicaid, 19% had TRICARE, and 28% had private insurance (note that individuals may have reported more than one source of coverage). Only 20% of veterans surveyed reported having no other health coverage.\nVeterans with more than one coverage option may choose to access the VA instead of care covered under another health care program or insurer for a variety of reasons: personal preference, lower or no out-of-pocket costs (copayments) for certain services, or access to services that may not be available through traditional health insurance or Medicare. Veterans who have Medicare or private health insurance may seek services not covered by those plans from the VA, such as adult day health care or respite care. Although the VA offers some long-term care services similar to Medicaid (e.g., home health aides to assist with personal care), unlike Medicaid, the VA does not require veterans to spend down assets or meet strict income guidelines to receive long-term care. Conversely, some eligible veterans may elect other coverage options and choose to receive their health care in the community due to personal preference, proximity, or more timely access to a provider. Veterans' reliance on VA health care varies; some veterans rely solely on the VA, whereas others use the VA intermittently for certain health care services. This discrepancy presents a challenge for the VA in understanding current demand, and predicting future demand, for health care services. As veterans age, they may come to rely more on VA's long-term care services, which are not covered by Medicare or private health insurance.\nVeterans enrolled in the VHA are likely to receive health care in other settings and through other forms of coverage. Coordination across federally financed health care programs is important to ensure efficient, appropriate, and high-quality health care. It is also critical to avoiding service duplication and overutilization—aspects that may further constrain VA's health care system resources and capacity. This raises several questions for policymakers: Where are there inefficiencies or duplication that could be limited or coordination that could be enhanced? When, or for what services, should veterans access Medicaid, Medicare, and the VA? What do the VA and CMS know about veterans dually enrolled in Medicare or Medicaid and the VHA, or enrolled in all three programs, that could inform care coordination? How can the VA best plan for future demand when veterans have multiple care options and may ultimately seek none, some, or all of their care from the VA?\nAppendix A. VHA Copayments for Long-Term Care Services\nVeterans who are enrolled in the VA health care system do not pay any premiums; however, some veterans are required to pay copayments for certain services and outpatient medications related to the treatment of a nonservice-connected condition. Table A-1 summarizes which Priority Groups are charged copayments for long-term care services. Only veterans in Priority Group 1 (those who have been rated 50% or more service-connected) and veterans who are deemed catastrophically disabled by a VA provider are never charged a copayment, even for treatment of a nonservice-connected condition. For veterans required to pay long-term care copayments, these charges are based on three levels of nonservice-connected care, including copayments for inpatient, non-institutional, and adult day health care. However, actual copayments may vary depending on a veteran's financial situation. For example, P.L.114-315, the Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 exempted Medal of Honor recipients from paying LTC copayments for both service and nonservice connected LTC.\nCertain VA long-term care programs have associated costs other than a VA copayment. For example, regardless of service-connected status, veterans residing in Medical Foster Home or Community Residential Care homes pay out of pocket for room and board. The out-of-pocket cost varies by geographical area and amount of care needed. There is no additional VA copayment. Similarly, veterans who reside in State Veterans Homes may have out-of-pocket costs; this varies from state to state and is often on a sliding fee scale. The payment is made to the State Veterans Home, and there is no additional VA copayment. Conversely, there is no copayment or cost to the veteran of any kind for VA hospice services, regardless of veterans' income or service-connected status.\nAppendix B. Veterans Priority Groups\nFigure B-1 lists the Veterans Priority Groups 1 through 8 and their eligibility criteria." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 2, 3, 3, 2, 1, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h0_full h4_full h1_full", "h1_title h3_title", "h1_full", "h3_full h1_full", "h3_full h2_title", "h3_full", "h2_full", "", "h3_title", "", "h3_full", "h5_full h4_full h1_title h0_title", "h0_full h1_full", "", "", "", "h5_full h4_title", "h5_full h4_full", "", "h2_title", "h2_full", "", "" ] }	{ "question": [ "What is the VHA?", "What services does the VHA provide?", "Besides the VHA, what entity is a federal payer of long-term care services?", "What has the VA been authorized to provide to eligible veterans through P.L. 88-450?", "What did P.L. 91-101 and P.L. 93-82 do?", "What did the Veterans Millennium Health Care and Benefits Act require the VA to do?", "What changes was the VA required to make to their medical benefits package as a result of this legislation?", "How has the overall number of veterans in the VHA changed since FY2000?", "How has the number of veterans enrolled in the VHA changed since FY2000?", "What is a possible cause for the increase in enrollees?", "What can make a veteran eligible for VA paid nursing home care?", "What primarily affects eligibility for VA health care?", "What affects eligibility for long-term care services?", "What does each VA facility offer?", "How are VA long-term care programs administered?", "What kinds of care do institutional settings include?", "What settings do non-institutional care include?", "What kinds of settings do VA long-term care take place in?", "What people provide long-term care services?", "How much of the VHA's budget is dedicated to long-term care?", "How does the amount of money dedicated towards institutional care compare to the amount for non-institutional care?", "For what was the majority of VHA institutional care spent?" ], "summary": [ "The Veterans Health Administration (VHA), an operating unit of the Department of Veterans Affairs (VA), is a direct service provider of health care, similar in many ways to a large private sector health care system.", "In addition to providing inpatient, outpatient, and a range of other medical care services, the VHA provides and purchases long-term care services.", "The VA is one of two federal payers of long-term care services (the other being Medicaid).", "Since the 1960s, the VA has been authorized to provide nursing home care to eligible veterans in various settings, including VA facilities, private nursing facilities contracted by the VA, and state veterans homes (P.L. 88-450).", "These nursing home benefits were further expanded in subsequent legislation (P.L. 91-101 and P.L. 93-82).", "In 1999, the Veterans Millennium Health Care and Benefits Act (P.L. 106-117) required the VA to provide such benefits to veterans needing nursing home care due to one of their service-connected conditions, as well as veterans who overall have a service-connected disability rating of 70% or more, who need the care for any condition, service-connected or not.", "In addition, the law required the VA to maintain staffing and level of services for institutional care not less than the FY1998 level; the law also required non-institutional long-term care services as part of the VA medical benefits package.", "About 9.1 million veterans (43% of all veterans) were estimated to be enrolled in the VHA in FY2016. Although the overall number of veterans in the United States has declined since FY2000, the number of veterans enrolled in the VHA has increased significantly in that same time period.", "In FY2000, just over 4.9 million veterans were enrolled in the VHA; by FY2016 that number was estimated to have increased 86%, to 9.1 million enrollees.", "This increase is due, in part, to the growing number of veterans with service-connected disabilities, as well as more liberal enrollment policies.", "Among veterans with a service-connected disability, the proportion who have a disability rated as 70% or more service-connected (and therefore eligible for VA paid nursing home care) has also increased.", "Eligibility for VA long-term care programs depends on eligibility for VA health care, which is based primarily on \"veteran status\" resulting from military service.", "Once enrolled, veterans' eligibility for long-term care services depends on several factors, including veterans' need for the service (as determined by the VA), whether the service is institutional or non-institutional, and (for certain programs), veterans' service-connected status.", "Each VA facility offers certain mandatory programs and may offer several optional programs as well.", "VA long-term care programs are administered at the VA facility level, with some variability in how programs are administered.", "Institutional settings may include both inpatient acute care and nursing home care.", "Non-institutional care includes outpatient and ambulatory care settings, as well as care that occurs in the home or another community-based setting.", "However, the majority of VA long-term care provided in institutional settings occurs in nursing home facilities, such as VA Community Living Centers (CLCs), community nursing homes, and state veterans homes.", "Some long-term care services are provided directly by VA staff, whereas others are purchased from providers outside of the VA.", "Long-term care expenditures are a small but not insignificant part of the VHA total medical care budget, at just over one-tenth of the VHA's budget.In FY2015, the VHA spent $7.4 billion (13% of its total appropriated funding for medical care, which was $55.8 billion) for veterans' long-term care.", "Institutional care accounted for almost $5.3 billion, or 71% of VA's total long-term care spending, while non-institutional care accounted for $2.1 billion, or 29%.", "The majority of VHA institutional care spending (64%) was for VA Community Living Centers (CLCs), nursing facilities owned and operated by the VA." ], "parent_pair_index": [ -1, 0, 1, -1, -1, -1, 2, -1, 0, 1, -1, -1, 0, -1, -1, -1, 0, -1, -1, -1, 1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 6, 6, 6, 6 ] }
GAO_GAO-12-881	{ "title": [ "Background", "Community Banks and Credit Unions Have Declined in Number but Remain Important for Small Businesses and Agriculture", "Changes in Regulation and Other Factors Have Led to the Consolidation of Many Community Banks and Credit Unions", "Compared with Larger Banks, Community Banks and Credit Unions Allocate More of Their Lending to Small Businesses and Agriculture", "Many Dodd-Frank Act Provisions May Affect Community Banks and Credit Unions, but the Full Extent of Their Impact Is Uncertain", "Some Provisions Have Reduced Costs or Provided Other Benefits", "CFPB Provisions May Help Level the Regulatory Playing Field but also May Result in Additional Compliance Requirements", "Mortgage Reforms Are Expected to Impose Additional Costs, but Their Impact Depends on Future Rule Makings", "Risk Retention Provision Initially May Have a Limited Impact", "Other Provisions May Impose Additional Costs or Other Compliance Requirements, but Their Impact Depends Partly on Future Rule Makings", "Too Early to Determine the Impact of the Dodd-Frank Act on Community Banks’ and Credit Unions’ Small Business Lending", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Provisions of the Dodd-Frank Act Expected by Federal Regulators, State Regulatory Associations, and Industry Associations to Impact Community Banks and Credit Unions", "Appendix III: Comments from the Bureau of Consumer Financial Protection", "Appendix IV: Comments from the National Credit Union Administration", "Appendix V: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "In the banking industry, the specific regulatory configuration for a banking institution depends on the type of charter the institution chooses. Depository institution charter types include: commercial banks, which originally focused on the banking needs of businesses but over time have broadened their services; thrifts, which include savings banks, savings associations, and savings and loans, and were originally created to serve the needs— particularly the mortgage needs—of those not typically served by commercial banks; and credit unions, which are member-owned cooperatives run by member- elected boards with an historical emphasis on serving people of modest means.\nThese charters may be obtained at the state or federal level. State regulators charter institutions and participate in their oversight, but all institutions that offer federal deposit insurance have a prudential regulator. The prudential regulators—which generally may issue regulations for and take enforcement actions against industry participants within their jurisdiction—are identified in table 1.\nAs shown in table 2, almost 7,400 (about 99 percent) of all banks had less than $10 billion in assets in 2011 and thus fell within our definition of a community bank. The majority of community banks have $250 million or less in total assets. Although community banks comprise the vast majority of all banks, they held in aggregate about 20 percent of the industry’s total assets (about $2.8 trillion) in 2011.\nSimilarly, table 3 shows that the vast majority of credit unions (over 99 percent) had $10 billion or less in total assets in 2011. Furthermore, around 80 percent of the credit unions had $100 million or less in total assets.\nThe Dodd-Frank Act made important and fundamental changes to the structure of the U.S. financial system to strengthen safeguards for consumers and investors and to provide regulators with better tools for limiting risk in the major financial institutions and the financial markets. According to the Financial Stability Oversight Council, the core elements of the act are designed to build a stronger, more resilient financial system—less vulnerable to crisis, more efficient in allocating financial resources, and less vulnerable to fraud and abuse. Under the Dodd- Frank Act, federal financial regulatory agencies are directed or have the authority to issue hundreds of regulations to implement the act’s reforms. The Dodd-Frank Act directs agencies to adopt regulations to implement the act’s provisions and, in some cases, gives the agencies little or no discretion in deciding how to implement the provisions. However, other rule-making provisions in the act are discretionary in nature, stating that (1) certain agencies may issue rules to implement particular provisions or that the agencies may issue regulations that they decide are “necessary and appropriate,” or (2) agencies must issue regulations to implement particular provisions but have some level of discretion as to the substance of the regulations. As a result, the agencies may decide to promulgate rules for all, some, or none of the provisions, and often have broad discretion to decide what these rules will contain. Many of the provisions in the Dodd-Frank Act target the largest and most complex financial institutions, and regulators have noted that much of the act is not meant to apply to community banks. As such, the act directs regulators in a number of areas to consider whether to exempt small banks and credit unions. However, the act is comprehensive and far-reaching and will impact smaller institutions, specifically those that undertake activities thought to be precipitating factors in the 2007 through 2009 financial crisis.", "The number of community banks and credit unions has declined in recent decades, as smaller institutions have expanded, merged with, or been purchased by larger institutions. The trend of consolidation in banks and credit unions has been facilitated by statutory and regulatory changes and may have resulted, in part, from advantages in efficiency at larger institutions. However, community banks and credit unions still play an important role in the economy. Community banks and credit unions allocate more of their lending to small businesses and rural areas than large banks, which research suggests is due to their focus on relationship-based lending.", "The number of community banks and credit unions has continued to decline significantly since at least the mid-1980s. According to FDIC research presented in 2012, the number of banks with less than $10 billion in assets declined from 17,997 to 7,551, or by about 58 percent, between 1985 and 2010. Similarly, according to NCUA annual reports, the number of federally insured credit unions declined from 15,045 to 7,339, or by about 51 percent, between 1985 and 2010. Despite the decline in the number of credit unions, our analysis of Census data found that membership in credit unions doubled over the same period. Our analysis of SNL Financial data shows that the number of community banks and credit unions declined further in 2011, to 7,385 and 7,094, respectively.\nThe decline in the number of community banks and credit unions has resulted largely from consolidations, in which two or more institutions generally merge into one larger institution. In their 2012 research, FDIC staff found that of the banks that exited the market between 1985 and 2010, 16 percent failed but 80 percent merged with another financial institution or consolidated within a single holding company. FDIC staff also found that the smallest banks (those with less than $100 million in assets) experienced the largest decline in number, decreasing by 81 percent. Consistent with a pattern of consolidation and expansion, the number of midsize banks (those with $250 million to $1 billion in assets) and large banks (those with over $10 billion in assets) increased by 47 percent and 197 percent, respectively.\nTwo key statutory and regulatory changes have facilitated consolidation by removing regulatory barriers to geographic and membership expansion by banks and credit unions, respectively. First, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 authorized interstate mergers between banks starting in June 1997, regardless of whether the transaction would be prohibited by state law. Previously, most banks that wanted to operate across state lines had to establish a bank holding company and, with certain restrictions, acquire or charter a bank in each state in which they wanted to operate. With the advent of interstate branching, banks that previously were not permitted to expand across state lines could do so by acquiring existing banks, and some multistate bank holding companies could consolidate their operations into Second, after the passage of the a single bank with multistate branches.Credit Union Membership Access Act in 1998, NCUA revised its regulations to make it easier for federal credit unions to qualify for community charters that allowed people to qualify for membership in a credit union based on their geographic location (e.g., such as a county) rather than based on their employer or affiliation in an organization. As a result, community-chartered credit unions were able to expand, according to one expert we interviewed, by consolidating with other local credit unions, whose members resided in their geographic area. As we previously reported, the total number of federally chartered credit unions declined from 2000 through 2005, but the number of federal community- chartered credit unions more than doubled.\nAnother factor that may have contributed to consolidation is economies of scale, which refer to how a bank’s or credit union’s scale of operations, or size, is related to its costs. Increasing returns to scale are created when an increase in size leads to a less than proportionate increase in cost and, therefore, a decline in average cost. Banks and credit unions that can take advantage of economies of scale can generate revenues at lower costs by increasing their size through expansion and consolidation. For example, a bank could reduce the average cost in its technology investment by increasing the volume of its goods and services, and thereby increase its profitability. Importantly, the existence of economies of scale in banking has been subject to debate. Studies using data from the 1980s failed to find scale economies beyond very small banks, but For later studies have found scale economies in various sized banks. example, a 2009 study covering all commercial banks from 1984 to 2006 found that banks had increasing returns to scale throughout the distribution of banks, and the authors concluded that industry consolidation had been driven, at least in part, by scale economies.Similarly, in a 2008 study of credit union consolidation presented at FDIC’s Mergers and Acquisitions of Financial Institutions Conference, researchers found that smaller and less profitable credit unions were more likely to merge with other credit unions, and that the assets of a small credit union might be used more efficiently if the credit union were acquired and its assets were absorbed into a larger institution.\nNCUA officials noted that while banks and credit unions often collect the same data, comparisons between the two are limited because of differences in organizational structure and regulation. Specifically, credit unions operate as not-for-profit institutions and have limited fields of membership. similar to that of returns on assets, with large bank earning higher returns on equity than small financial institutions from 2002 through 2006. Moreover, the gap in returns on equity between large and small financial institutions was greater than the gap in returns on assets before the financial crisis. In their 2004 study, FDIC staff also found that smaller institutions tend to have higher capital ratios than large banks, which also leads to lower returns on equity at a given level of earnings.\nOur analysis also indicates that community banks and credit unions have generated revenues at higher average costs than large banks since 2002. As of the end of 2011, large banks earned $1.71 per dollar of operating costs, while community banks earned $1.27 and credit unions earned $1.09. We also found that larger community banks and credit unions were more efficient than smaller institutions by this measure, suggesting that those institutions may have benefited from some economies of scale. As shown in figure 2, the difference in efficiency between community banks and credit unions and large banks generally remained consistent between 2002 and 2010. However, recent declines in revenue per dollar of overhead cost at large banks, along with gains in efficiency at community banks, decreased the difference in 2011. Although community banks with less than $100 million in assets were the least efficient in each year between 2002 and 2011, they (unlike the other banks) experienced an overall increase in their efficiency over the period. These measures of efficiency and profitability also can be influenced by other factors outside of economies of scale, such as increased competition. In April 2011, an OCC official testified that declines in net interest margins have played a major role in decreasing community bank profits.\nSome research suggests that one area in which large banks are able to take advantage of economies of scale is regulatory compliance, which contributes to their advantage in terms of operational efficiency. Federal regulators and state regulatory association and industry officials that we interviewed stated that regulatory compliance costs are not regularly tracked in Call Reports, and these costs have not been studied recently in the research literature. Thus, information on economies of scale in this area is limited. However, in a 1998 study, Federal Reserve staff reviewed statistical studies that empirically examined possible economies of scale in regulatory compliance at banks, noting that “if regulatory costs exhibit economies of scale, smaller banks would face higher average costs in complying with regulations than larger banks.” The studies found statistical evidence that indicated economies of scale in compliance costs for several regulations, which suggested that smaller banks, relative to larger banks, have a cost disadvantage that may discourage the entry of new firms into banking, may stimulate consolidation of the industry into larger banks, and may inhibit competition among institutions in markets for specific financial products. Additionally, several experts that we spoke with said that smaller institutions are disproportionately affected by increased regulation, because they are less able to absorb additional costs.", "Our analysis suggests that community banks have done more small business and agricultural lending as a percentage of their total lending than large banks over the past decade. To examine small business lending, we used business loans of $1 million or less as a proxy for small business loans at banks, though these loans were not necessarily made to small businesses. As shown in figure 3, our analysis of SNL Financial data found that about 18 percent of total lending at community banks was small business loans, compared to about 5 percent at larger banks in 2011. Figure 3 also shows that while the difference between small business lending at community banks and large banks has remained fairly consistent over the past decade, small business lending as a percentage of total lending declined at both community banks and large banks by about 2 percent from 2002 through 2011. Despite allocating less of their lending to small business loans, banks with more than $10 billion in assets still made about 45 percent of all small business loans in 2011, while accounting for about 1 percent of the total number of banks.\nCommunity banks also have done significantly more agricultural lending as a percentage of total lending than large banks, with the smallest community banks allocating the highest percentage of lending to agricultural loans. Our analysis found that banks with less than $100 million in assets had allocated about 14 percent of their lending to agricultural loans on average from 2002 through 2011, while banks with over $10 billion in assets had allocated less than 1 percent of their loans to agriculture on average. In a 2003 study, Federal Reserve staff also found that community banks played an important role in rural areas generally, where they represented a much higher percent of branches and deposits than in urban areas.banks represented nearly 58 percent of bank branches and 49 percent of The study found that community total deposits in rural areas, compared to 24 percent of branches and around 14 percent of deposits in urban areas.\nSome credit unions also make small business and agricultural loans, but differences in regulation and structure make comparisons to banks difficult. We found that small business lending at credit unions with less than $10 billion in assets increased from about 2 percent to about 7 percent of their total lending from 2002 through 2011. A recent study conducted on behalf of SBA found that credit union lending may have offset some of the decrease in small business lending at banks. We recently reported that such loans can be risky for credit unions and have contributed to the failure of a number of credit unions. Specifically, we reported that our analysis of NCUA and its Office of Inspector General’s data indicated that member business loans contributed to 13 of the 85 credit union failures from January 2008 to June 2011. The Credit Union Membership and Access Act of 1998 contains a provision that limits business lending by credit unions to the lesser of 12.25 percent of total Experts and credit union officials told assets or 175 percent of net worth.us that smaller credit unions may not be able to engage profitably in small business lending due in part to the lending cap. To engage in such lending, these officials told us a credit union has to develop business lending expertise and resources and may need to hire additional staff, but the cap may not allow them to make the volume of loans needed to cover these costs. Larger credit unions are able to make more loans under the cap and thus are better able to develop the necessary resources. Our analysis found that small business lending increased much more dramatically at credit unions with at least $100 million in assets from 2002 through 2011. Figure 4 shows that small business lending at these large credit unions increased from about 2 percent of total loans in 2002 to nearly 8 percent in 2011. While most credit unions do little or no agricultural lending, some credit unions have been chartered specifically to provide agricultural credit, and industry officials told us that these institutions play key roles in their communities.\nResearch has indicated that community banks and credit unions have advantages over larger banks in providing small business loans and loans in rural areas because of their direct relationships with and knowledge of individual customers. The 2003 study by Federal Reserve staff found that community banks have focused on “relationship banking,” basing lending decisions on personal knowledge of their customers and an understanding of their local economies. The study contrasted this approach to that of large banks, which often rely on data, credit scoring, and centralized decision making. FDIC staff noted that relationship lending gives community banks the ability to lend to borrowers without long credit histories, because it allows them to use nonstandard information to make profitable loans to customers who are seen as high risk by large banks. Experts we spoke with noted that small businesses often do not have audited financial statements and other data that may be used by large banks in credit scoring models. One expert stated that loans to small business and rural residents tend to have nonstandard terms and require knowledge of the personal or professional history of the business or person seeking the loan. As shown in figure 5, we found that loans make up a slightly greater proportion of their total assets, which suggests that community banks and credit unions may be more focused on traditional lending services than large banks.", "The Dodd-Frank Act’s reforms are directed primarily at large, complex U.S. financial institutions, and the act exempts small institutions, including community banks and credit unions, from several of its provisions. However, federal regulators, state regulatory associations, and industry associations collectively identified provisions within 7 of the act’s 16 titles that they expect to impact community banks and credit unions. (See app. II for the Dodd-Frank Act provisions identified by the above entities.) We analyzed the impact of a number of these Dodd-Frank Act provisions and, in brief, found that: some provisions, including the depository insurance reforms and CFPB supervision of nonbank providers of financial services and products, have benefited or may benefit community banks and credit unions; certain of the act’s mortgage reforms are expected to impose additional costs on community banks and credit unions, but their impact depends on future rule makings; the act’s risk retention provision for securitizations is expected to initially have a limited impact on community banks and credit unions; and other provisions, including those covering proprietary trading, remittance transfers, and executive compensation, are expected to impose additional requirements on community banks and credit unions, but their impact depends partly on future rule makings.\nIndustry officials told us that determining which provisions will affect small institutions is difficult, because the impact may depend on how agencies implement certain provisions through their rules, and many of the rules needed to implement the act have not been finalized.reason, regulators and industry officials have noted that the full impact of the Dodd-Frank Act on community banks and credit unions is uncertain. Nonetheless, regulators and industry officials have noted that they expect that some of the act’s regulations will increase regulatory requirements on community banks and credit unions and disproportionately affect them For the same relative to larger banks because of their size. Moreover, some industry officials have expressed concern that the reforms targeting only large banks eventually will be applied to small institutions in varying degrees, for example, through industry best practices. In our interviews with officials from community banks and credit unions, several told us that they may reduce certain business activity or exit certain lines of business as a result of the new regulations. However, some also have cited benefits of particular provisions for smaller institutions.\nAs recognized by federal regulators, industry officials, and others, the Dodd-Frank Act contains several provisions to help minimize certain regulatory requirements on small institutions. For example, the act includes provisions that generally exempt (1) small bank holding companies from certain leverage and risk-based capital requirements, (2) small banks and credit unions from supervision by CFPB, (3) small debit card issuers from the debit interchange fee standards, and (4) small financial institutions from disclosure and reporting requirements for incentive-based compensation arrangements. The Dodd-Frank Act also provides federal agencies with the authority to provide small institutions with relief from certain regulations. For example, the act and certain of the federal consumer financial laws provide CFPB with the authority to exempt covered persons or transactions from certain CFPB rules, and it directs the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to consider exempting small banks and credit unions from their swap clearing requirements.\nCFPB, FDIC, the Federal Reserve, OCC, and NCUA have undertaken various efforts to reach out to community banks and credit unions outside of the examination process, in part to understand challenges being raised for them by the Dodd-Frank Act. Examples of such outreach efforts include the following:\nCFPB has created the Office of Small Business, Community Banks, and Credit Unions, to help it incorporate the perspectives of these institutions in its policy-making process, communicate relevant policy initiatives to them, and work with them to identify areas for regulatory streamlining. According to CFPB officials, CFPB has convened three small business panels in conjunction with SBA’s Chief Counsel for Advocacy and the Office of Management and Budget’s Office of Information and Regulatory Affairs.\nFDIC has held roundtable discussions with community banks in each of its regions and a community bank conference. It is researching a variety of issues involving community banks and expects to issue its study by the end of 2012. In 2009, FDIC established the FDIC Advisory Committee on Community Banking to provide it with advice and guidance on policy issues affecting community banks, and the committee’s meetings have included discussions of the Dodd-Frank Act.\nIn October 2010, the Federal Reserve formed the Community Depository Institutions Advisory Council to provide the agency with direct insight and information from community bankers about supervisory matters and other issues of interest to community banks. In a recent testimony, a Federal Reserve official noted that the agency expects these ongoing discussions to provide a useful and relevant forum for improving its understanding of the effect of legislation, regulation, and examination activities on small banking organizations.\nOCC has conducted a variety of outreach activities, including Meet the Comptroller events, chief executive officer roundtables, and teleconferences on topical issues. In preparation for the transfer of federal savings associations to OCC supervision, OCC presented numerous programs for thrift executives around the country to provide information and perspective on OCC’s approach to supervision and regulation. OCC also has chartered advisory committees for federal savings associations with mutual charters and minority-owned institutions similar to those OTS had chartered.\nNCUA officials told us that to assist credit unions in complying with the Dodd-Frank Act, they have posted articles on their website, conducted a webinar with the CFPB director, and issued letters to credit unions on any rule changes.\nAs presented below, we analyzed a number of the Dodd-Frank Act provisions that regulators, industry officials, and others expect to impact community banks and credit unions. While several of these provisions have been implemented through finalized rules, most have not. The impact of those provisions will depend, in part, on how they are implemented by federal agencies through their regulations. As the act’s impact on individual banks and credit unions will depend on their organizational form, mix of activities, or other factors, our analysis focused on assessing, where data were available, which of these institutions may be subject to the selected provisions. As part of our analysis, we also document industry and other views on the potential impact of the provisions and the status of regulations needed to implement the provisions. As noted above, assessing whether such provisions or their related regulations should apply to community banks and credit unions was beyond the scope of our work.", "Some of the Dodd-Frank Act provisions that we analyzed have benefited or may benefit community banks or credit unions, such as by reducing costs.\nThe Dodd-Frank Act’s depository and share insurance reforms have reduced costs for community banks and increased consumer confidence to the benefit of community banks and credit unions. Title III of the Dodd- Frank Act includes several provisions reforming the Deposit Insurance Fund (DIF) and National Credit Union Share Insurance Fund. For example, section 331 revised the method used to calculate DIF assessments. Section 335 permanently increased the standard deposit and share insurance coverage amount from $100,000 to $250,000. Section 343 provided temporary unlimited deposit and share insurance coverage for non-interest-bearing transaction accounts, such as consumer checking accounts.\nSection 331 required FDIC to redefine the DIF assessment base, generally basing it on average consolidated total assets rather than domestic deposits, on which it was previously based. According to FDIC, the change in the assessment base shifted some of the overall assessment burden from community banks to the largest institutions, which rely less on domestic deposits for their funding than smaller institutions, but without affecting the overall amount of assessment revenue collected. As shown in table 4, after the rule became effective on April 1, 2011, DIF assessments for community banks (those with less than $10 billion in assets) decreased in aggregate by $342 million, (33 According to FDIC, percent) from the first to second quarter of 2011.this rule has resulted in a sharing of the DIF assessment burden that better reflects each group’s share of industry assets. Officials from industry associations told us that they viewed this change as positive for community banks overall. In addition, officials from the two community bank state associations told us that assessments likely have decreased for their member institutions. Also, officials from five community banks told us that their assessments have either decreased or stayed about the same, but officials from three community banks told us that that their assessments had increased (one of these banks has between $1 billion to $10 billion in assets).\nSection 335 made permanent the temporary increase of the maximum deposit and share insurance amounts from $100,000 to $250,000. Beginning in October 2008, the deposit and share insurance coverage had been increased temporarily to $250,000 to help consumers maintain confidence in the banking system and the marketplace. These increases were made permanent and effective in August and September 2010, respectively. According to FDIC, the higher insurance coverage level should help community banks attract and retain core deposits. Industry associations and officials from the community banks and credit unions we spoke with generally viewed the increase in insurance coverage as beneficial to community banks and credit unions.\nSection 343 provided temporary unlimited deposit and share insurance coverage for non-interest-bearing transaction accounts from December 31, 2010, through December 31, 2012. According to FDIC, the 10.7 percent increase in insured deposits during 2011 was primarily attributable to growth in non-interest-bearing transaction account balances receiving temporary coverage. However, according to an NCUA official, non-interest-bearing transaction accounts typically are held by businesses for payroll and accounts payable and, therefore, are less common at credit unions than at banks. Although this insurance program was designed to be a temporary response to financial instability, several industry associations representing banks are advocating for this provision to be extended. In addition, officials from two state associations representing community banks we spoke with said they expect the termination of the coverage to have a negative or very negative impact on their member institutions. In contrast, officials from the two state associations representing credit unions said they expect the termination would have no impact. But the responses from the individual community banks and credit unions were more mixed. Officials from five of the eight community banks and two of the four credit unions we spoke with said that they expect the termination of the coverage to have a negative or very negative impact on their institution. Officials from the other three community banks and two credit unions said that the termination would have no impact on their institution or it was too soon to determine the impact.\nSection 989G of the Dodd-Frank Act eliminates an audit requirement for a number of small community banks and bank holding companies that are public companies. In response to numerous corporate failures arising from corporate mismanagement and fraud, Congress passed the Sarbanes-Oxley Act of 2002 to help protect investors, in part by improving the accuracy, reliability, and transparency of corporate financial reporting and disclosures. Specifically, section 404(a) of the Sarbanes-Oxley Act requires a public company’s management to assess and report on the effectiveness of its internal controls over financial reporting. In turn, section 404(b) requires an independent auditor to attest to and report on management’s assessment. Under SEC rules, non-accelerated filers (generally defined as public companies with a public float under $75 million) have been required to comply with section 404(a) for fiscal years However, before the passage of ending on or after December 15, 2007.the Dodd-Frank Act, these filers were not required to comply with section 404(b) for fiscal years ending before June 15, 2010. SEC had provided such issuers with several extensions to the compliance dates in response to concerns about compliance costs and management’s preparedness.\nSection 989G of the Dodd-Frank Act amended the Sarbanes-Oxley Act to exempt non-accelerated filers from section 404(b). Using SNL Financial data, we found that around 630 publicly traded financial institutions, including community banks and bank holding companies, identified themselves as non-accelerated filers. These financial institutions may qualify for the exemption and not have to incur the audit-related costs to comply with section 404(b). In a 2009 survey, which included 99 public companies with a public float under $75 million, SEC’s Office of Economic Analysis found that these companies had incurred a median (average) annual cost of $157,500 ($259,004) to comply with section 404(b) following reforms SEC made in 2007. In our prior work, we found that smaller public companies faced disproportionately higher costs (as a percentage of revenues) in complying with section 404.\nUnlike large banks, community banks and credit unions generally have not, on average, experienced a significant decline in their debit interchange fees as a result of the Federal Reserve’s implementation of section 1075 of the Dodd-Frank Act. Debit cards can be used to make noncash purchases at merchants. When a consumer uses a debit card to make a purchase, the merchant does not receive the full purchase amount. Part of the amount (called the merchant discount fee) is deducted and distributed among the merchant’s bank, debit card issuer, and payment card network processing the transaction. Historically, the majority of the merchant discount fee was paid from the merchant’s bank to the debit card issuer in the form of an interchange fee. Debit card interchange fees are established by card networks and ultimately paid by merchants to debit card issuers for each electronic debit transaction.\nIn July 2011, the Federal Reserve adopted Regulation II (Debit Card Interchange Fees and Routing) to implement section 1075 of the Dodd- Frank Act. Regulation II establishes standards for assessing whether debit card interchange fees received by issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions. The rule sets a cap on the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction at $0.21 per transaction, plus 5 basis points multiplied by the transaction’s value. The fee cap became effective on October 1, 2011. However, the rule exempts from the fee cap issuers that have, together with their affiliates, less than $10 billion in assets, and transactions made using debit cards issued pursuant to government-administered payment programs or certain reloadable prepaid cards. In addition, Regulation II prohibits issuers and card networks from restricting the number of networks over which electronic debit transactions may be processed to less than two unaffiliated networks. The rule further prohibits issuers and networks from inhibiting a merchant from directing the routing of an electronic debit transaction over any network allowed by the issuer.\nInstitutions that qualified for the exemption during 2011 were those institutions that had, together with affiliates, assets of less than $10 billion as of December 31, 2010. the first three quarters of 2011 to $0.43 in the fourth quarter of 2011. During the same period, the interchange fee as a percentage of the average transaction value for exempt issuers declined from 1.16 percent to 1.10 percent. In comparison, the average interchange fee received by issuers subject to the fee cap (nonexempt issuers) declined from $0.50 to $0.24, or by 52 percent, between the two periods. Our analysis of SNL Financial data shows that interchange fee income received by around 6,450 exempt banks increased, in aggregate, on a quarterly basis after the rule became effective, but the data do not allow us to determine why fee income increased, such as because of an increase in transaction volume. The aggregate interchange fee income reported quarterly by these banks from the second quarter of 2011 through the first quarter of 2012 was about $532 million, $547 million, $575 million, and $585 million, respectively.\nAlthough Regulation II has had a limited impact on exempt issuers to date, concerns remain about the potential for their interchange fees or fee income to decline over the long term. For example, industry officials and others have noted that (1) some merchants may steer customers to lower-cost payment options, even if networks maintain a two-tiered fee structure, (2) the prohibition on network exclusivity and routing restrictions may lead networks to lower their interchange fees, in part to encourage merchants to route debit card transactions through their networks, or (3) economic forces may cause networks not to maintain a two-tiered fee structure that provides a meaningful differential between fees for exempt and other issuers. Some merchants and others have noted that major card networks have adopted a two-tiered fee structure and have an incentive to maintain that structure to attract exempt issuers. According to Federal Reserve officials, the agency plans to collect data annually that analyze the rule’s impact on exempt issuer fees. It also plans to survey exempt issuers in 2012 to determine how much it cost them to comply with the network exclusivity prohibition and whether any merchants are refusing to accept their debit cards.", "According to some regulators and industry officials, subjecting certain nonbank providers of financial services or products (nonbanks) to federal consumer protection laws and CFPB supervision may benefit community banks and credit unions by helping to level the regulatory playing field. Although community banks and small credit unions are not supervised by CFPB, they generally are subject to its regulations. CFPB’s implementation of the Dodd-Frank Act’s mortgage-related and other provisions are expected to impose additional requirements on community banks and credit unions. However, the impact of these regulations will depend on how CFPB implements such provisions and exercises its exemption authority. The Dodd-Frank Act established CFPB and authorized it to supervise certain nonbank financial companies and large banks and credit unions with over $10 billion in assets and their affiliates for consumer protection purposes. Before the Dodd-Frank Act, responsibility for administering and enforcing consumer financial laws for these entities was spread across several federal agencies. The act transferred supervisory and enforcement authority over a number of consumer financial institutions and services, as well as rule-making and enforcement authority (for those institutions it supervises) over many previously enacted consumer protection laws, to CFPB.\nSection 1024 of the Dodd-Frank Act authorizes CFPB to supervise certain entities and individuals that engage in offering or providing a consumer financial product or service and their service providers that are not covered by sections 1025 or 1026 of the act. Specifically, section 1024 applies to those entities and individuals who offer or provide mortgage-related products or services and payday and private student loans as well as larger participants of other consumer financial service or product markets as defined by a CFPB rule, among others, plus their service providers. Section 1025 authorizes CFPB to supervise, with respect to consumer finance laws, large insured depository institutions and credit unions with more than $10 billion in total assets and all their affiliates (including subsidiaries), as well as service providers for such entities. Under section 1026, CFPB has the authority to require reports, as necessary, from banks and credit unions under $10 billion, and CFPB, at its discretion, may include its examiners on a sampling basis in examinations conducted by their prudential regulator for these entities. Under sections 1026 and 1061(c), CFPB has supervisory authority over a service provider to a substantial number of smaller depository institutions. factors that focus on risk to consumers, nonbanks engaged in the residential mortgage industry, private education lending, and payday lending. For other financial services or product markets, CFPB’s authority applies only to a “larger participant.” CFPB’s supervisory authority also covers nonbanks that it has reasonable cause to determine are engaging, or have engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services. In January 2012, CFPB launched its nonbank supervision program, under which it examines such entities for, among other things, compliance with federal consumer financial laws. According to CFPB, nonbanks will be identified for examination based on risks to consumers, including consideration of the company’s asset size, volume of consumer financial transactions, extent of state oversight, and other relevant factors.\nRegulators and industry representatives expect CFPB supervision of nonbanks to benefit community banks and credit unions by leveling the regulatory playing field. For example, in 2011, an FDIC official testified that CFPB will likely reduce the unfair competitive advantage that nonbanks have long enjoyed as under-regulated—and often unregulated and unsupervised—financial services providers. Industry officials have testified that community banks and credit unions did not engage in abusive lending practices and were not the cause of the financial crisis, and urged CFPB to focus its efforts on regulating nonbanks as many of the problems that led to the financial crisis began outside the regulated banking industry. Officials from half of the 16 state associations, community banks, and credit unions we interviewed told us that they expect CFPB supervision of nonbanks to have a positive impact. Officials from three of these entities expect CFPB supervision to have no impact, three thought it was too soon to tell, and two thought it could have a negative impact.\nThe Dodd-Frank Act grants broad rule-making authority to CFPB, but requires it to coordinate with other federal agencies to ensure consistency in its regulation of consumer products and services. Although CFPB does not directly supervise community banks and small credit unions, its regulations generally apply to all banks and credit unions (and most nonbanks). According to CFPB, its rule-making activities have focused on two main areas: implementing protections required by the Dodd-Frank Act and streamlining inherited regulations. Pursuant to the Dodd-Frank Act, CFPB has proposed or finalized various regulations involving the mortgage market and international money transfers (discussed below). In December 2011, CFPB issued a notice requesting public comment on how to streamline existing regulations implementing federal consumer financial laws.\nSection 1022 of the Dodd-Frank Act permits CFPB to exempt any class of product or institution, including small institutions, from its regulations issued under Title X of the act. In issuing any such exemption, CFPB must take into account several factors, including the existing provisions of law applicable to the consumer financial product or service and the extent to which such provisions provide consumers with adequate protections. Furthermore, other federal consumer financial laws provided CFPB with varying degrees of exemption authority, generally with respect to classes of transactions where certain conditions are met. In a recent testimony, the CFPB Director said that when it is appropriate to treat smaller institutions differently from larger institutions, CFPB will consider doing so. Similarly, CFPB staff told us that they will need to determine how much regulatory relief the agency will provide small institutions on a rule- by-rule basis. For example, in early July 2012, pursuant to sections 1032(f), 1100A, and 1098 of the Dodd-Frank Act, CFPB proposed a rule to integrate mortgage disclosures required by two different mortgage- lending-related statutes into one form. In the proposed rule, CFPB is considering exempting small entities (including some banks and credit unions with $10 billion or less in assets) from electronic data retention requirements to reduce their burden. In addition, CFPB is seeking comment on how much time industry needs to make any changes required in implementing the rule and whether small entities should have more time.\nWhile many consumer protection and mortgage reforms are not yet finalized, CFPB staff told us that they are in the process of proposing several additional regulations to provide guidance to the mortgage industry in implementing new reforms under the Dodd-Frank Act. As mandated by the statute, most of these rules are due in final form by January 21, 2013. However, industry representatives and others have expressed concern about the potential impact of CFPB regulations on community banks and credit unions. In congressional testimony and our interviews, industry representatives have said that they are hopeful that CFPB will be able to consolidate and simplify rules for all financial institutions. They also have noted that CFPB has conducted outreach efforts to obtain input on CFPB’s activities. However, industry representatives expressed concern that the numerous new regulations from CFPB will impose additional regulatory burden and compliance costs on small institutions, potentially causing them to exit certain lines of business. Specifically, they cited concerns about the additional time, resources, and effort it would take their institutions to address new regulatory requirements. In particular, they were concerned about having to comply with numerous regulations issued around the same time by CFPB. Industry representatives also were concerned that the standardization of processes through CFPB regulations could reduce the ability of community banks and credit unions to offer differentiated products to better serve their communities. In congressional testimony and our interviews, community bank and credit union associations and representatives have emphasized that they believe these entities have a long history of serving customers fairly. Some commented that it is their opinion that CFPB regulations should not apply to them as they did not engage in the types of abuses that prompted the passage of the Dodd- Frank Act. Credit union representatives added that credit unions are owned by their members and, thus, have a strong incentive to treat their consumers well.", "The Dodd-Frank Act’s mortgage reform provisions are expected to impose additional costs on a large percentage of community banks and credit unions. However, the full cost to these entities will depend on the extent to which CFPB (and other agencies where appropriate) exercises its authority, where available, to exempt small institutions from any of its regulations and how it implements specific provisions that provide more limited relief to small institutions, particularly those operating in rural or underserved communities. The act’s mortgage reforms include (1) additional origination and servicing requirements; (2) minimum standards for mortgage loans (including determining a borrower’s ability to repay the loan); (3) limits on charges for mortgage prepayments; (4) expanding the definition of “high-cost mortgages” and protections that apply to such loans; (5) new disclosure requirements; (6) establishing various appraisal standards; and (7) requiring additional data elements to be reported under the Home Mortgage Disclosure Act (HMDA) reporting requirements. The Dodd-Frank Act’s mortgage reforms generally seek to address substandard residential mortgage lending practices that contributed to spikes in foreclosures and the 2007 through 2009 financial crisis. A key challenge in implementing these reforms is balancing the goals of protecting consumers from abuse and maintaining broad access to credit. Authority for implementing these reforms generally was transferred from the Federal Reserve to CFPB in July 2011.the rule-making authority for most of these regulations, and in other cases agencies are jointly responsible for rule making. While federal agencies have proposed a number of rules to implement the act’s mortgage reforms, most of the required rules have not been finalized.\nThe Dodd-Frank Act’s mortgage reforms could apply to and impact the vast majority of community banks and credit unions, given their involvement in mortgage lending. On the basis of our analysis of SNL Financial data, over 97 percent of community banks and over 70 percent of credit unions held residential mortgage loans in 2011. Over the past 5 years, community banks within different asset-sized categories generally dedicated about 30 percent of their lending portfolios to mortgage lending. However, mortgage lending by credit unions was more varied by asset size. As a percentage of a credit union’s total lending portfolio in 2011, mortgage lending comprised, on average, over 50 percent for credit unions holding more than $100 million in assets, about 44 percent for those with $20 million to $100 million in assets, about 26 percent for those with $5 million to $20 million in assets, and about 7 percent for those with less than $5 million in assets.\nAlthough the Dodd-Frank Act’s mortgage reforms may affect the majority of community banks and credit unions, precisely how or to what extent the reforms will affect these institutions is uncertain. Many of the reforms have not yet been implemented; therefore, data do not exist to assess their impact. However, some regulators and industry representatives expect the potential cumulative effect of the mortgage reforms to increase the regulatory burden for smaller institutions, potentially leading them to decrease certain mortgage lending activities or, at the extreme, exit the mortgage business. In our interviews with state associations, community banks, and credit unions, officials from 9 of the 16 entities told us that they expected the act’s mortgage reforms to decrease their or their member institutions’ lending, but officials from seven of the entities told us it was too soon to determine the reforms’ potential impact. Some officials also told us that the mortgage reforms may reduce community banks’ and credit unions’ advantage not only in serving niche markets (e.g., rural communities) by standardizing mortgage terms but also in making loans based on “soft information” by increasing the cost of providing these loans. Evaluating these concerns is difficult, especially given the CFPB’s regulatory flexibility. As discussed in the previous section, the Dodd-Frank Act and federal consumer financial protection laws provide CFPB with varying amounts of exemptive authority with regard to particular transactions and circumstances. In addition, the Dodd-Frank Act’s provisions that establish minimum standards for mortgage underwriting (“ability-to-repay” provision), additional escrow requirements, and appraisal standards provide some exceptions and regulatory relief for small institutions. These particular provisions were identified by regulators and industry representatives as potentially having a significant impact on community banks and credit unions.\nSections 1411 and 1412 of Title XIV of the Dodd-Frank Act amended the Truth in Lending Act (TILA) by prohibiting creditors from making mortgage loans without regard to consumers’ ability to repay them and establishing standards for making a reasonable and good faith determination based on verified and documented information. This reform was enacted to address the loosening of underwriting standards, which was partly responsible for the dramatic increase in mortgage delinquencies and foreclosures beginning in 2006. A creditor can meet the ability-to-repay requirement by satisfying certain underwriting factors, or the creditor may also be presumed to have satisfied the ability-to-repay requirement and receive some protection from liability if it originates a “qualified mortgage” (QM) as defined by criteria in the Dodd-Frank Act and implemented by CFPB. In other sections of subtitle B of Title XIV, the act sets steeper penalties for noncompliance with the requirements and allows consumers to cite ability-to-repay violations as a set off in foreclosures.\nIn a 2011 report, we examined five of the nine QM criteria specified in the Dodd-Frank Act for which sufficient data were available and generally found that most mortgages likely would have met the individual criteria for each year from 2001 through 2010. However, we noted that the impact of the full set of QM criteria was uncertain, partly because data limitations made analysis of the other four criteria difficult and partly because CFPB could establish different criteria in developing final regulations. Consumer and industry groups indicated that the criteria specified in the act would likely encourage sound underwriting, but could also restrict the availability of and raise the cost of mortgage credit for some homebuyers. Provisions in the act and proposed regulations attempt to address some of these issues, in part by providing exemptions for certain loan products in certain locales, such as rural areas.\nWithin subtitle E of Title XIV, sections 1461 and 1462 of the Dodd-Frank Act amended TILA to expand escrow requirements for certain types of mortgage loans to enhance consumer protection. Before the Dodd- Frank Act, regulations issued under TILA required that creditors establish escrow accounts for taxes and insurance for higher-priced residential mortgage loans. The Dodd-Frank Act substantially codified these requirements and lengthened the time during which a mandatory escrow account established for a higher-priced mortgage loan must be maintained from 1 to 5 years. In addition, the act established additional disclosure requirements for escrow accounts.\nBoth the ability-to-repay and escrow provisions may provide some relief to creditors operating in predominantly rural or underserved communities. As discussed previously, smaller banks generally have higher levels of agricultural loans as a percentage of their total lending portfolios. In addition, some credit unions are chartered specifically to serve agricultural communities. Community banks and credit unions may make balloon loans to help ensure access to credit in rural or underserved communities where consumers may be able to obtain credit only from these institutions offering such loans and to hedge against interest rate risk. Section 1412 of the Dodd-Frank Act defines a balloon payment as a scheduled payment that is more than twice as large as the average of earlier scheduled payments. Under this provision, CFPB may by regulation allow some creditors, including those operating in predominantly “rural or underserved” areas, to make balloon-payment QMs that meet certain criteria. In other cases, balloon-payment loans may not be considered QMs, and creditors making these loans would not be protected from certain liabilities. The act provides a similar exemption from mandatory escrow requirements for similar types of creditors. To qualify for these exemptions, in both cases, creditors must operate in predominately rural or underserved areas, be under total annual asset and mortgage loan origination limits to be set by CFPB (initially set by the Federal Reserve, see following discussion), and retain their mortgage loans in their portfolios. The intent behind these exemptions is to preserve access to credit for consumers located in rural or underserved areas, where creditors may originate balloon loans to hedge against interest rate risk or higher-priced mortgages, but in volumes too small to justify the expense of establishing and maintaining escrow accounts for loans held in portfolio.\nBefore the transfer of rule-making authority for TILA to CFPB, the Federal Reserve proposed rules to implement both the ability-to-repay and escrow requirements. In May 2011, the Federal Reserve proposed Its regulations for compliance with the ability-to-repay provisions.proposal provided a definition for a QM and, in accordance with the act, proposed that creditors with under $2 billion in assets operating predominantly in “rural or underserved” areas may make a balloon- payment QM that meets certain conditions. Due to the lack of available data, the agency requested comment on how to set a mortgage loan origination limit. In March 2011, the Federal Reserve proposed rules for implementing the act’s escrow requirements. With respect to the exemption, the agency proposed a threshold of no more than 100 total mortgage loan originations a year and chose not to propose an asset-size threshold. In both rules, the Federal Reserve defined “underserved” areas as counties where not more than two creditors may make five or more mortgages a year and “rural” areas as counties classified by the U.S. Department of Agriculture as representing the most remote rural areas— where access to the resources of more urban communities and mobility is limited.\nIn their comment letters on these proposed rules, community bank and credit union associations supported the intent of the reforms but were concerned about regulatory burden. One community bank association noted that the additional requirements could lead to an economic environment where only larger creditors would continue doing business, as they generally are better equipped to absorb increased regulatory costs. Industry representatives added that community banks and credit unions had not engaged in the abusive lending practices or substandard underwriting practices the mortgage provisions sought to address. For example, a community bank association noted that community banks have provided balloon loans in small communities for decades without problems and that these types of loans may be the only available credit option for consumers in rural communities. They also noted that many balloon loans would fall under the definition of higher-priced loans and, therefore, would be covered by the mandatory escrow requirement. In our interviews with state associations, community banks, and credit unions, officials from 8 of the 16 entities expected the ability-to-repay provisions to decrease their or their member institutions’ mortgage lending, four thought the provisions would have no impact, and four thought it was too soon to tell.\nFor both of the proposed rules, a state regulatory association and several industry associations emphasized the importance of the exemptions for small institutions, but disagreed with how “underserved” and “rural” areas were defined and, in turn, proposed that their definitions be expanded. They said the proposed definitions were too narrow and complicated, and would exclude many community banks and credit unions that should be covered. A state regulatory association and industry associations also supported expanding these exemptions to cover all creditors holding loans in portfolio, maintaining that these institutions have an incentive to ensure higher standards of underwriting and retain the risk associated with consumers failing to pay taxes and insurance. With respect to the escrow requirements, industry representatives suggested increasing the proposed threshold of 100 loans.\nAs of August 2012, CFPB has not finalized either rule. In early June 2012, CFPB reopened the comment period for the proposed ability-to-repay rule. In particular, CFPB requested additional data on mortgage lending underwriting criteria and loan performance, as well as estimates of litigation costs and liability risks associated with claims alleging ability-to- repay requirement violations. CFPB expects to issue final rules for the ability-to-repay provisions and the escrow requirements by the end of this year. According to the Dodd-Frank Act, these provisions become effective 18 months after rule-making authority was transferred to CFPB (that is, January 21, 2013) if implementing regulations have not been issued. Where implementing regulations are issued by the deadline, the statutory provisions take effect when the rules take effect. In some cases, implementing rules must take effect within 12 months of issuance.\nSubtitle F of Title XIV established additional appraisal requirements for mortgage lending. Among other provisions, section 1471 establishes additional requirements for “higher risk” mortgages. Section 1472 of the act amends TILA to require that appraisers be independent to reduce any conflicts of interests. It declared the Home Valuation Code of Conduct, the previous standard for appraisal independence for loans purchased by Fannie Mae and Freddie Mac (the enterprises), to no longer be in effect but codified several of the code’s provisions. The intent of section 1472 is to better ensure that real estate appraisals used to support creditors’ decisions are based on the appraiser’s independent judgment, free of any influence from parties that may have an interest in the transaction. Among other requirements, section 1472 (1) prohibits coercion and bribery to influence the value of an appraisal, (2) prohibits appraisers from having a financial interest in property they are appraising, (3) prohibits a creditor from extending credit if it knows that a violation of appraisal independence has occurred, (4) mandates that the parties involved in the transaction report appraiser misconduct to state appraiser licensing authorities, and (5) mandates the payment of reasonable and customary compensation for appraisals.\nCFPB, FDIC, the Federal Reserve, the Federal Housing Finance Agency (FHFA), OCC, and NCUA are jointly responsible for implementing the act’s appraisal provisions. Section 1471 of the act provides the rule- making agencies discretion in exempting certain loans from its requirements. In their August 2012 proposed rule, the agencies sought comment on whether the final rule should provide an exemption for certain appraisal requirements for higher-risk mortgage loans made in rural areas. They also sought comment on whether the final rule should define “rural” areas as proposed in the ability-to-repay rule. In October 2010, the Federal Reserve issued an interim final rule implementing section 1472. The Federal Reserve included a safe harbor for compliance with prohibitions on conflicts of interest for employees and affiliates of creditors holding less than $250 million in assets. According to our analysis of SNL Financial data, about 65 percent of community banks and about 90 percent of credit unions held less than $250 million in assets in 2011. The agency noted that without allowances for staff and other limitations of smaller creditors, smaller creditors may decrease their lending, which could reduce credit availability and harm many consumers. Further, the agency stated that the federal banking agencies have long recognized that small institutions may be unable to achieve strict separation between valuation and loan underwriting staff, and the rule provides special guidance taking this limitation into account. Specifically, the interim final rule provides that the appraiser can be employed or affiliated with the creditor as long as (1) their compensation does not depend on the value of the appraisal and (2) the appraiser does not participate in the decision as to whether to make a loan or not.\nIn their comment letters on the interim final rule, several bank and credit union associations supported the intent and key aspects of the rule. However, both a banking and a credit union association suggested that the safe harbor be expanded to include institutions with less than $1 billion in assets and that hold their loans in portfolio. Specifically, they noted that many smaller community banks are predominately portfolio creditors and often make lending decisions based on long-term relationships and experience in their communities, which would extend to any valuation activity. CFPB, FDIC, the Federal Reserve, FHFA, OCC, and NCUA share responsibility for jointly issuing any further final rules on appraisal requirements under section 1472, as well as implementing section 1471 and other appraisal provisions.", "The Dodd-Frank Act’s risk retention provision for securitizations, found in section 941 of the act, is expected to have a limited initial impact on community banks and credit unions largely because of the limited nature of their current involvement in securitizations. However, as we recently reported, the implications of section 941 with respect to residential mortgage lending will depend on a variety of regulatory decisions and potential changes in the mortgage market that could affect the availability and cost of mortgage credit and the viability of a private mortgage securitization market. In turn, such market changes could affect community banks and credit unions. As discussed in the previous section, our analysis of SNL Financial data found that over 97 percent of community banks and over 70 percent of credit unions held residential mortgage loans in 2011. To securitize residential mortgage loans, lenders may, in some cases, sell their loans to third parties, generating funds that they can use to make more loans. The third parties, or securitizers, bundle mortgages and sell them as investment products, called residential mortgage-backed securities (RMBS). Securitizers include investment banks, commercial banks, mortgage companies, and real estate investment trusts.are (1) Ginnie Mae-RMBS backed by cash flows from federally insured or guaranteed mortgages, (2) enterprise RMBS backed by mortgages that meet the criteria for purchase by the enterprises, and (3) private-label RMBS, which are backed by mortgages that may not meet some aspect Types of RMBS sold in the secondary market of enterprise underwriting criteria.expensive for lenders than raising funds directly, and it transfers some or all of the credit and interest rate risk from the lender to the investors. At the height of the mortgage boom, as demand for securitization of mortgage loans grew, lenders and securitizers were increasingly compensated based on loan volume rather than loan quality, contributing to a decline in underwriting standards.\nSection 941 of the Dodd-Frank Act requires, in part, that mortgage securitizers retain a financial exposure of no less than 5 percent of the credit risk of any securitized residential mortgage that is not a “qualified residential mortgage” (QRM)—that is, one that does not meet certain underwriting criteria to be defined by the rule-making agencies (FDIC, the Federal Reserve, OCC, SEC, FHFA, and the Department of Housing and Urban Development). RMBS have an economic stake in the assets included in the securitizations they sponsor and, thus, an incentive to help ensure that lenders originate well-underwritten mortgages. In addition to the securitization of loans that meet the QRM criteria, the act exempts securitizations of government-insured or government-guaranteed mortgages (and certain other assets) from the risk retention requirement (excluding mortgages backed by the enterprises, which are currently in Although the purpose and scope of the government conservatorship).\nThe Dodd-Frank Act’s risk retention requirement also applies to securities backed by other asset classes, such as commercial loans, commercial real estate mortgage loans, credit cards, and automobile loans.\nQM and QRM provisions are somewhat different, they could be expected to work together by increasing lenders’ and securitizers’ exposure to the risks that are associated with mortgages whose features and terms may put borrowers at a higher risk of default and foreclosure.\nSection 941 requires the rule-making agencies to jointly prescribe regulations for the risk retention requirement. The Dodd-Frank Act requires that in crafting the risk retention regulations, the rule-making agencies must specify, among other things, criteria for QRMs, taking into consideration underwriting and product features that historical loan performance data indicate result in a lower risk of default; permissible forms of risk retention and the minimum duration for whether credit risk is to be allocated from securitizers to loan the possibility of permitting a lower risk retention requirement (less than 5 percent) for any non-QRM that meets underwriting standards that the agencies develop in regulations.\nFederal banking and other agencies issued a proposed rule for the risk retention requirement in April 2011 but have not finalized the rule.proposed rule, the agencies established criteria for QRMs, including that the mortgage, if made in connection with a purchase, must have a loan- In the to-value ratio of 80 percent or less.full guarantee provided by the enterprises would satisfy the risk retention requirement for securitizations sponsored by the enterprises while they are under conservatorship with the capital support of the U.S. Department of the Treasury. Although the Dodd-Frank Act places the responsibility for retaining risk on securitizers, it permits the agencies to require lenders to share the risk retention obligations. The proposed rule permits but does not require a securitizer to allocate a portion of its risk retention requirement to any lender that contributed at least 20 percent of the underlying assets to the asset pool underlying a securitization transaction.\nThe Regulatory Flexibility Act generally requires that an agency, in connection with a notice of proposed rulemaking, prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities or certify that the rule will not have a significant economic impact on a substantial number of small entities (defined in regulations promulgated by SBA to include banking organizations with total assets of less than or equal to $175 million). aggregated balances of at least $500 million. Accordingly, under the proposed rule, a securitizer could allocate a portion of the risk retention requirement to a small banking organization only if the bank originated at least 20 percent ($100 million based on the above estimate) of the securitized mortgages. According to the regulators, only one small banking organization reported an outstanding principal balance of over $100 million in assets sold and securitized as of September 30, 2010. Using SNL Financial data, we expanded this analysis to include banks with less than $10 billion in total assets (our definition of “community bank”) at year-end 2011. We found that over 890 of these banks originated loans for securitization, of which 9 reported an outstanding principal balance of over $100 million in assets sold and securitized, primarily residential mortgages. NCUA officials said that there is limited Call Report data on credit unions’ securitization of mortgage loans and stated that credit unions that do securitize mortgage loans usually sell their loans to the enterprises. Therefore, under the proposed rule, such credit unions would not be allocated credit risk because it has been transferred to the enterprises. Also, under the proposed rule, the enterprises would be required to retain the risk (and while under conservatorship, the enterprise guarantee would satisfy the risk retention requirement).\nIn our 2011 report, we reported that many industry stakeholders and consumer groups noted that the implications of the proposed risk retention rule depend on a variety of regulatory decisions and potential changes in the mortgage market.characteristics of QRMs that would be exempt from the risk retention requirement, the forms of risk retention that would be allowed, the percentage that securitizers would be required to hold, and the risk- sharing arrangements between securitizers and lenders. They noted that these factors could affect the availability and cost of mortgage credit and These include decisions on the the future viability of the private-label RMBS market, which could impact all institutions involved in mortgage lending. In addition, several mortgage industry representatives indicated that smaller lenders, such as independent mortgage companies and small community banks, could lack sufficient capital resources to share risk retention obligations or hold non-QRMs that were not securitized on their balance sheets. As we reported, a few mortgage and securitization market participants told us that large lenders had the financial capacity to share risk retention obligations with securitizers or hold non-QRMs on their balance sheets, giving them an advantage over smaller lenders that could ultimately reduce competition in mortgage lending. Finally, a number of market participants noted that even if lenders were not required to share risk in the manner prescribed by the Dodd-Frank Act, securitizers could be expected to take steps to transfer the cost of risk exposure by paying lenders less for the mortgages they sold or requiring additional collateral to ensure the underwriting quality of the mortgages. But others noted that creditors would pass this cost on to borrowers and that the cost would likely be marginal.\nIn our interviews with state associations, community banks, and credit unions, officials from 8 of the 16 entities said that the QRM proposed rule would have a negative impact on community banks and credit unions and may cause them to decrease their mortgage lending. Five said that it was too soon to discern the impact of the proposed QRM rule, and three said the rule would have no impact. One bank noted that the risk retention requirement would likely curtail the availability of securitizers because of tighter guidelines for them and limit the bank’s potential market. Officials from several banks and credit unions said that the risk retention requirement would not have any impact on their institution because they did not securitize any of their mortgage loans. One bank official said that his bank sells its loans in the private market and that its portion of the securitization is less than 20 percent; thus, the bank would not be affected by the provision as proposed.", "A number of provisions are expected to impose additional costs or other requirements on certain community banks or credit unions. However, the extent to which these small institutions will be affected is largely uncertain, in part because the rules implementing the provisions have not been finalized.\nFew community banks may be directly affected by the Dodd-Frank Act’s proprietary trading prohibitions, but the federal regulators’ proposed rules implementing this provision would create additional compliance responsibilities for community banks. Section 619 of the Dodd-Frank Act, also known as the Volcker Rule, amends the Bank Holding Company Act to prohibit banking entities from engaging in proprietary trading and having ownership interests in hedge funds and private equity funds (covered funds). The provision’s prohibitions are designed to restrain risk-taking and reduce the potential for federal support of entities covered by the provision. To implement the provision, four agencies proposed a joint rule that was published in the Federal Register in November 2011. The restrictions and prohibitions in section 619 were to be effective the earlier of either a year after the issuance of final rules or July 21, 2012. As final rules have not yet been issued, the prohibitions became effective on July 21, 2012. Banking and nonbank entities covered by the provision generally will have 2 years to bring existing activities into conformance. The act defines proprietary trading as the purchase or sale of securities, derivatives, commodities futures, or options on these instruments (covered positions) for the trading account of a banking entity or nonbank financial entity, as opposed to on behalf of a customer. The act further defines a trading account as any account used principally with the intent to profit from short-term price movements. The proposed rule implements statutory exemptions from the prohibition on proprietary trading for certain government securities, and for hedging, market-making, and underwriting activities. The proposed rule also provides guidance on the types of interests that are considered to be ownership interests in hedge funds, which commonly are understood to be investment vehicles that engage in active trading of securities and other financial contracts, and private equity funds, which commonly are understood to be funds that use leverage or other methods to invest in companies or other less-liquid investments.\nOur analysis found that few community banks may be affected by the proposed rule’s prohibitions, but data on proprietary trading and involvement with covered funds at community banks are limited. Thus, the exact number of institutions that may be affected by the proposed rule is unknown. Using SNL Financial data, we found that about 1 percent of banks with more than $100 million and less than $10 billion in assets reported having financial instruments that may fall under the definition of a covered position in their trading accounts at the end of 2011. In previous analysis conducted on proprietary trading in July 2011, we found that most proprietary trading has been conducted by the largest bank holding companies. However, because banks with less than $100 million in total assets or less than $2 million in trading assets are not required to report their trading assets in Call Reports by the type of financial instrument, not all community banks involved in proprietary trading may be captured in the data. Further, Call Reports do not require banks to report ownership stakes in covered funds, so we could not estimate the number of community banks that may be affected by this prohibition.\nDespite the small percentage of community banks that may be affected by the Dodd-Frank Act’s proprietary trading and covered fund prohibitions, the proposed rules could have an impact on community banks due to their compliance requirements. The proposed rules have a tiered compliance program, which was not expressly part of the act but could apply to all banks. Under the proposed rules, banks that do not engage in any covered trading or fund activities must ensure that their existing investment policies and procedures include measures that are designed to prevent them from becoming engaged in prohibited activities in the future, for example, by limiting their authorized investments to those exposures exempt from the prohibition. Banks engaging in covered activities under the proposed rules must establish a six-part compliance framework to demonstrate that their activities are allowed by one of the rules’ exemptions. Specific exemptions also have additional compliance requirements. For example, to use the exemption for risk- mitigating hedging, banks must be able to demonstrate that their hedging positions are reasonably correlated with specific risks. Our analysis of SNL Financial data on over-the-counter (OTC) derivatives found that about 15 percent of community banks held derivatives for purposes other than trading, such as hedging risk. The extent to which the risk mitigating hedging provision may affect community banks will depend on the requirements or standards that the regulators establish for demonstrating that a hedge is reasonably correlated with specific risks and whether such correlations must be on a transaction or portfolio basis. The proposed rule did not include any specific exemptions from the compliance requirements for small institutions, so if the proposed rules were adopted, these banks may have to expand their compliance frameworks to accommodate any additional hedging requirements imposed by the rule.\nAlthough the impact of the proposed rules’ compliance requirements on community banks still is unknown, industry associations have expressed concern that the rules will impose an undue burden on small banks. As part of the proposed rules, the regulators considered the impact of the rules on small entities in accordance with the Regulatory Flexibility Act, and concluded that the compliance requirements in the proposed rule would not result in a significant economic impact on a substantial number of small entities. However, one industry association expressed concerns in its comment letter that the proposed rule will adversely affect community banks. The association noted that it would be costly for banks with no covered activities to amend their compliance policies and procedures, but did not estimate the anticipated increase in compliance costs for these institutions. The industry association also recommended that community banks that occasionally engage in interest rate swaps to hedge their interest rate risk be able to do so without meeting the compliance requirements for that exemption because these requirements are more extensive. However, the level of compliance burden may be relatively small for most community banks, given that the proprietary trading provisions do not apply to types of exposures that comprise the investment portfolio of most of the smaller community banks.\nThe Dodd-Frank Act’s swap provisions under Title VII may impose additional costs on the fraction of community banks currently using swaps, but CFTC and SEC have taken steps to help minimize the burden. A swap is a type of derivative that involves an ongoing exchange of one or more assets, liabilities, or payments for a specified period. Unlike exchange-traded derivatives, swaps traditionally have been traded in the OTC market and generally have not been cleared through clearinghouses. Financial and nonfinancial firms use swaps and other OTC derivatives to hedge risk, speculate, or for other purposes, but the market is dominated by a limited number of dealers. According to the Financial Stability Oversight Council, OTC derivatives, with the exception of credit risk transfer products, generally were not a central cause of the recent financial crisis but were a factor in the propagation of risks, as their complexity and opacity contributed to excessive risk taking and a lack of clarity about the ultimate distribution of risks.\nTitle VII of the Dodd-Frank Act establishes a new regulatory framework for swaps to reduce risk, increase transparency, and promote market integrity in the financial system. The act authorizes CFTC to regulate “swaps,” and SEC to regulate “security-based swaps” (hereafter collectively referred to as swaps). Among other things, Title VII (1) provides for the registration and regulation of swap dealers and major swap participants; (2) imposes clearing and trade execution requirements on swaps, subject to certain exceptions; and (3) creates record-keeping and real-time reporting regimes. CFTC and SEC are continuing to implement Title VII through their rule makings. According to Davis Polk, CFTC, SEC, and other regulators have finalized 43 of the 90 rules required under Title VII (as of July 2, 2012).\nAs shown in table 5, Call Report data aggregated by FDIC show that 1,101 of the 7,250 community banks (15 percent) held derivatives in 2011. According to industry officials, community banks typically use swaps to manage their exposure to interest rate risk or to help customers meet their risk management needs. Indeed, banks with $10 billion or less in total assets held nearly $88.8 million (notional amount) in derivatives at year-end 2011, of which $82.4, nearly 93 percent, was interest rate derivatives. Table 5 also shows that a considerably higher percentage of larger community banks hold derivatives than smaller community banks, but the use of derivatives within each asset-size class increased over the past 5 years. In 2011, for instance, over 50 percent of banks with over $1 billion to $10 billion held derivatives, but around 3 percent of banks with less than $100 million in assets held derivatives. In contrast to community banks, federally chartered credit unions have been prohibited by NCUA from engaging in derivatives, except through a pilot program. the Dodd-Frank Act’s clearing requirements and its pilot program experience, NCUA is reconsidering whether to permit credit unions to engage in derivatives to hedge risk.\nAlthough permitted by law, NCUA currently allows only a limited number of credit unions, on a case-by-case basis, to engage in such transactions under an investment pilot program.\nCommunity bank and other industry officials have raised concerns about the potential for Title VII provisions or related regulations to impede the ability of community banks to use swaps. One concern is that community banks entering into swaps with customers could be required to register as swap dealers, unless they qualify for an exemption, and therefore be subject to capital, margin, business conduct, and other regulations. CFTC and SEC finalized their rule defining, among other things, a swap dealer. The final rule excludes persons engaged in a de minimis amount of swap-dealing activity from the definition of a swap dealer. Based on our analysis of SNL Financial data, we identified over 1,000 community banks that held OTC derivatives at year-end 2011. The data provided a snapshot of the notional amount of a bank’s derivatives activity, but did not indicate the value of derivatives entered into in the previous year, which is needed to determine whether any of the banks we analyzed met the definition of a swaps dealer. However, the bank with the highest notional amount of OTC derivatives held around $4.1 billion, which is considerably below the de minimis amounts set by CFTC and SEC for CFTC-regulated swaps and SEC-regulated credit default swaps. In addition, as directed by the Dodd-Frank Act, CFTC and SEC’s rule excludes from the swap dealer definition banks that enter into a swap with a customer in connection with originating a loan with that customer and meet other conditions specified under the rule.\nAnother concern raised by industry officials is that community banks, unless exempted, could be required to clear their swaps through a clearinghouse, which would impose additional costs on them. Title VII requires those swaps that CFTC or SEC determines must be cleared to be cleared through a clearinghouse, but provides an exception from the clearing requirement to end-users that are not financial entities and use these swaps to hedge or mitigate commercial risk. CFTC and SEC are required to consider whether to except, among others, small banks and credit unions from the definition of financial entity and thereby provide them with an exception from the mandatory requirement. In July 2012, CFTC adopted a final rule that exempts banks, savings associations, farm credit system institutions, and credit unions with total assets of $10 billion or less from the definition of “financial entity,” making such “small financial institutions” eligible for the end-user exception. As noted above, community banks’ derivatives activities are limited largely to interest rate derivatives, which are regulated by CFTC. In December 2010, SEC proposed rules that would allow small banks and credit unions to use the end-user exception from mandatory clearing created by the Dodd-Frank Act.\nEven if community banks were provided with an exception from the mandatory swap clearing requirements, community bank officials are concerned that their noncleared swaps could be subject to margin requirements set by CFTC, SEC, or prudential regulators. According to an industry association, margin requirements could make it difficult or impossible for many community banks to continue using swaps. CFTC and the prudential regulators have issued proposed regulations for noncleared swaps. CFTC’s proposal would not impose margin requirements on nonfinancial entities. The prudential regulators’ proposal would impose margin requirements on nonfinancial entities but categorize them as lower-risk, requiring the dealer to collect margin from a nonfinancial entity only when the dealer’s exposure to the entity exceeded whatever credit limit the dealer has established for that particular customer, after evaluation of the customer’s particular financial repayment capacity.\nAccording to FDIC staff, under long-standing banking agency guidance that predates the Dodd-Frank Act, a dealer bank engaging in an interest rate or other derivative with a community bank would not be expected to collect margin as long as the dealer bank’s exposure to the community bank was below the credit exposure limits that the dealer bank had established under its credit assessment processes and procedures. FDIC staff noted that the joint margin rule proposed by the prudential regulators reiterates this long-standing interagency safety and soundness guidance and that the proposed rule would effectively maintain the status quo with respect to commercial banks that are end-users of interest rate or other derivatives.\nSection 1073 of the Dodd-Frank Act imposes new requirements on remittance transfers (typically money transferred from consumers to their families or friends in other countries) that likely will increase costs for community banks and credit unions, but it also provides some temporary This provision established new consumer protections regulatory relief. for remittance transfers, including most electronic wire transfers sent by consumers in the United States to individuals and businesses in other countries. In February 2012, CFPB issued a final rule to implement section 1073 and provided a 1-year implementation period, making the rule effective in February 2013.providers to provide disclosures and receipts to consumers who provide the exact price of the remittance transfer, exchange rate, amount of currency to be delivered, and date of the funds’ availability. In addition, the rule generally provides that consumers have 30 minutes to cancel a The rule generally requires transfer transaction after payment and the ability to dispute errors related to the transfer. NCUA analysis of Call Report data estimated that about 10 percent of all credit unions offered remittance services in the fourth quarter of 2011. Although comparable data on remittance services do not exist for community banks, a recent Federal Reserve study found that most U.S. depository institutions process international wire transfers on behalf of their customers.\nIndustry associations have questioned the ability of institutions that use open networks to make remittance transfers, such as community banks and credit unions, to continue to provide such services because of their difficulty in complying with the rule’s disclosure requirements. These associations suggested that open network transfer providers be given regulatory relief. In addition, two industry associations commented that the final rule does not level the playing field for consumer financial products, as it favors remittance transfer providers that use closed networks, such as nonbank institutions. In the February final rule, CFPB noted that it does not plan to provide an exemption for open network transfers, because the Dodd-Frank Act clearly covers these types of transfers.community banks and credit unions, are provided with a temporary However, insured depository institutions, including statutory exemption that allows them to provide estimated disclosures for certain information, including exchange rates and foreign fees and taxes, in certain circumstances rather than exact pricing. This exemption expires on July 21, 2015, but CFPB may extend the exemption for an additional 5 years. In addition, to reduce the compliance burden for institutions that provide remittance services outside of their normal course of business, CFPB has excluded from disclosure requirements those institutions that provide 100 or fewer remittance transfers per year.\nOfficials from 5 of the 12 community banks and credit unions we spoke with said their institutions offer remittance services, and officials from two of the four state associations we spoke to said that they have members that offer remittance services. Of this group, officials from five of the entities expect that the new remittance transfer rule to decrease their (or their member institutions’) remittance transfer business. In particular, one credit union official told us that his institution may exit this line of business due to the increased disclosure requirements.\nSubtitle E of Title IX of the Dodd-Frank Act will provide investors with more input on executive compensation practices, but may impose additional compliance requirements on certain publicly traded community banks and publicly traded companies that hold community banks. According to the Dodd-Frank Act’s legislative history, Subtitle E of Title IX is intended to address executive compensation practices that promoted excessive risk taking.intended to provide shareholders with greater influence over, and insight into, the activities of publicly traded companies. For example, section 951 requires shareholder advisory votes on executive compensation and “golden parachutes.” Section 953 requires disclosure of pay versus performance and the ratio between the chief executive officer’s total compensation and median total compensation for other employees. Section 954 requires listed companies to develop and implement The title contains a number of provisions clawback policies for incentive-based compensation. Based on our analysis of SNL Financial data, we identified approximately 200 publicly traded community banks and approximately 1,200 community banks held by public companies, some of which may be affected by these provisions.\nSection 951 amends the Securities Exchange Act of 1934 to require public companies subject to the proxy rules to conduct a separate shareholder advisory vote on compensation for executives (“say-on-pay”) at least every 3 years and a vote on the frequency of these votes at least every 6 years (“say-on-frequency”). shareholder advisory vote on whether to approve certain golden parachute compensation arrangements in connection with a business combination. Section 951 provides that SEC may exempt an issuer from the advisory voting requirements. In determining whether to make an exemption, SEC is to take into account, among other considerations, whether the requirements disproportionately burden small issuers.\nThe JOBS Act further amended the Securities Exchange Act of 1934 to provide that emerging growth companies—issuers with less than $1 billion in total annual gross revenues—are not required to seek advisory votes related to executive compensation. associations recommended that community banks be exempted from the rule because they believe it will add significant burdens. While SEC did not exempt community banks from the rule, it extended the compliance date for the say-on-pay and say-on-frequency advisory votes for smaller reporting companies and newly public companies that qualify as smaller reporting companies, so that they will not be required to comply until the first annual or other shareholder meeting occurring on or after January 21, 2013. According to SEC, this deferral served, in part, to allow those companies to better prepare for implementation of the rules.\nSection 953(a) requires public companies subject to the proxy rules to provide disclosure about pay versus performance, and section 953(b) requires reporting companies to disclose the ratio between the chief executive officer’s total compensation and the median total compensation for all other company employees. that the provision would require complex financial calculations and potentially expand the universe of persons subject to executive compensation disclosure requirements. In addition, the association suggested that SEC should exempt community banks from this provision, in light of SEC’s recognition that the compensation arrangements at smaller reporting companies generally are less complex than at other public companies. SEC has not yet proposed a rule to implement this provision.\nSection 953(a) amends section 14 of the Securities Exchange Act of 1934. In addition, the JOBS Act further amended the Securities Exchange Act of 1934 to provide that emerging growth companies are not required to make these disclosures. and could make privately held community banks reluctant to become publicly traded companies. The industry association suggested that SEC should exempt community banks from this provision. SEC has not yet proposed a rule to implement this provision.\nThe Dodd-Frank Act’s incentive-based compensation provision, section 956, will require a small percentage of community banks and credit unions to report incentive-based compensation. Specifically, section 956 requires that financial institutions with $1 billion or more in total assets disclose the structures of all incentive-based compensation arrangements to their federal regulators. The required disclosures will be used to determine whether the compensation structure provides excessive compensation, fees, or benefits, or could lead to a material financial loss to the institution, which section 956 also requires the regulators to prohibit. According to our analysis of SNL Financial data, most community banks and credit unions would not be subject to this provision. Our analysis indicates that, as of year-end 2011, around 7 percent of community banks and around 3 percent of credit unions have between $1 billion and $10 billion in assets and, therefore, could be subject to the provision.\nThe responsible rule-making agencies jointly issued a proposed rule to implement section 956 in April 2011, but a final rule has yet to be issued as of August 2012. Under the proposed rule, financial institutions with $1 billion or more in assets would be required to report incentive compensation arrangements annually to their appropriate regulators. However, pursuant to section 956, specific compensation to individuals will not be disclosed. Incentive compensation arrangements that encourage inappropriate risks through excessive compensation or pose a risk of material financial loss to an institution would be prohibited. Incentive compensation would be considered excessive when amounts paid are unreasonable or disproportionate to, among other things, the amount, nature, quality, and scope of services performed. In addition, larger financial institutions—such as banks with $50 billion or more in assets and credit unions with $10 billion or more in assets—would be subject to additional incentive compensation rules. Incentive compensation would be deemed to lead to material financial loss unless the arrangement fulfills certain requirements, including balancing risk and financial rewards and involving effective risk management and strong corporate governance.\nIn their comment letters, industry associations suggested changes to the proposed rule to benefit community banks and credit unions. One industry association suggested that the final rule be phased in over a longer time period for institutions with assets between $1 billion and $10 billion. Another industry association suggested that institutions with $15 billion or less in assets with few incentive compensation arrangements should be required to disclose incentive-based compensation plans once every 2 years, rather than annually, to relieve excessive disclosure requirements for smaller institutions. Also, several industry associations commented that the definition of excessive incentive compensation was overly broad and should be narrowed. Of the 12 banks and credit unions we interviewed, three of these institutions had more than $1 billion in assets and may be subject to this rule, and officials from all three of these institutions told us that they offer incentive compensation. Two officials expect the proposed rule, if adopted, to have no impact on their institutions, and the other official said that it was too soon to judge what the impact would be.\nSection 975 of the Dodd-Frank Act requiring the registration of municipal advisors may or may not affect the majority of community banks, depending on how SEC interprets “municipal advisor” in its final rule. Section 975 amended section 15B of the Securities Exchange Act to require municipal advisors, who previously were largely unregulated, to register with SEC like investment advisers. Before the Dodd-Frank Act, some municipal advisors were involved in, among other abuses, “pay-to- play” scandals—that is, influencing the award of business through political contributions—and recommended unsuitable investments to small municipalities. Section 975 also authorizes the Municipal Securities Rulemaking Board to develop professional standards, continuing education requirements, and business conduct requirements for municipal advisors. SEC proposed a rule to implement section 975 but has not yet finalized the rule.that meet the definition of a “municipal advisor” to submit registration documents to SEC detailing their organizational structure, business activities, and other information. Further, the proposed rule would require employees at institutions that meet the definition of a municipal advisor to register with SEC.\nThe proposed rule requires institutions The definition of “municipal advisor” in the proposed rule could cover many community banks. SEC noted in the proposed rule that the statutory definition of a “municipal advisor” in the Dodd-Frank Act is “broad and includes persons that traditionally have not been considered to be financial advisors. municipal advisors: (1) financial advisors that provide advice to municipal entities with respect to their issuance of municipal securities and municipal financial products, (2) investment advisers that advise municipal pension funds and other municipal entities on the investment of funds held by or on behalf of municipal entities, and (3) third-party marketers and solicitors. ” The rule identifies three general types of The proposed rule noted that while some types of financial advisors were exempted in the statutory language, banks were not included in the exemptions. The proposed rule also notes that every bank account of a municipal entity is comprised of funds held by or on behalf of a municipal entity. Thus, if the rule is finalized as proposed, community banks that provide advice to municipal entities with respect to traditional depository services could be considered municipal advisors. If community banks providing such advice to municipal entities are included in the definition of municipal advisors, community banks and the individual employees that provide these services would need to register with SEC, who may be a new regulator for many community banks.\n76 Fed. Reg. 824, 828. entities at the end of 2011. In the proposed rule, SEC analyzed the anticipated initial compliance burden for the registration requirement, and estimated that the institutions would spend 6.5 hours completing the registration, on average, and individuals would spend 3 hours, on average.\nIn the proposed rule, SEC sought comment on whether the definition of a municipal advisor should exclude banks to the extent that the bank provides advice to a municipal entity about traditional banking products, such as deposit accounts. Industry associations commented that banks should be explicitly exempted in the proposed rule because their activities are already supervised by federal and state banking regulators. However, SEC noted that federal and state banking regulators supervise banks for safety and soundness purposes and not the quality of the investment advice they provide to their municipal entity clients. SEC also received several comment letters from members of Congress who noted that it was not the intent of Congress to include traditional banking in the definition of municipal advice. SEC is reviewing the comments it has received as it develops a final rule, and SEC staff commented that the agency expects to implement its new oversight responsibilities for municipal advisors after careful consideration of the comments received.", "Regulators and industry officials have noted that the full impact of the Dodd-Frank Act on community banks and credit unions remains uncertain. Industry officials also have noted that it generally is too soon to determine the act’s overall impact on community banks’ and credit unions’ ability to lend to small businesses. According to our analysis of SNL Financial data, almost 90 percent of community banks and about one- third of credit unions held loans to small businesses in 2011. Although any provision in the Dodd-Frank Act that affects these institutions could impact their customers (including small businesses), officials from federal agencies, state regulatory associations, and industry associations we interviewed identified only one provision in the Dodd-Frank Act (discussed below) that may directly impact community banks’ and credit unions’ ability to lend to small businesses. As discussed above, community banks are important lenders to small businesses. Over the past decade, community banks have done more small business lending as a percentage of their total lending than large banks, although large banks have done more small business lending overall. Small business lending by credit unions with less than $10 billion in assets has increased over the past decade from 2 percent to about 7 percent of their total lending.\nAlthough a number of provisions may ultimately impact lending by smaller institutions, section 1071 was the only Dodd-Frank Act provision identified by regulators and industry representatives as potentially having a direct impact on small business lending by community banks and credit unions. Section 1071 amends the Equal Credit Opportunity Act to require financial institutions to collect and report information concerning credit applications made by women-owned, minority-owned, and small businesses. The provision serves, among other purposes, to facilitate the enforcement of fair lending laws. CFPB expects to undertake action to implement section 1071 in June 2013.\nIndustry officials and others have expressed concerns about section 1071. According to industry and regulatory officials, the reporting requirements will increase the costs associated with small business lending. Industry officials also have noted that the reporting requirements could lead community banks and credit unions to develop standardized criteria for their small business lending to avoid being criticized or penalized by regulators for being discriminatory. They added that such standardization could then result in less lending to small businesses. Officials from 12 of the 16 state associations, community banks, and credit unions we spoke with expect this provision to negatively affect their institutions or member institutions, and four officials said it was too soon to tell how this provision would affect their institutions.\nWe also asked officials from the 16 state associations, community banks, and credit unions if they expected the Dodd-Frank Act generally to impact the amount of small business lending conducted by their institutions. Officials from 11 of these entities told us it was too soon to tell, although two officials said the Dodd-Frank Act would have no impact. Officials from three of the entities said that they expected the act to decrease their small business lending. In our interviews, industry officials also said that the Dodd-Frank Act provisions cumulatively could increase their compliance and other costs and adversely affect their competitiveness in the small business lending market.", "We provided a draft of this report to CFPB, FDIC, the Federal Reserve, OCC, NCUA, SBA, and SEC for review and comment. CFPB and NCUA provided written comments that we have reprinted in appendices III and IV. CFPB and NCUA generally agreed with our report. In addition, CFPB, FDIC, OCC, and SEC staff provided technical comments, which we have incorporated, as appropriate. The Federal Reserve and SBA did not provide any comments.\nIn its comment letter, CFPB generally agreed with the report’s analysis of the role played by community banks and credit unions in the economy and discussion of CFPB’s responsibilities in implementing Dodd-Frank Act reforms. CFPB further elaborated on the status of its rule makings related to mortgage reforms and efforts to seek input from small businesses, community banks, and credit unions about the impacts and potential alternatives for its rule-making initiatives.\nAlthough generally agreeing with our report, NCUA commented on a finding that we cited from a GAO report issued in January 2012.noted that it does not believe there is sufficient evidence to suggest that member business loans pose a higher risk to credit unions or that a key driver in credit union failures is commercial loans. In our prior report, our analysis of NCUA’s and its Office of Inspector General’s data indicated that member business loans contributed to 13 of the 85 credit union failures from January 2008 to June 2011.\nWe are sending copies of this report to CFPB, CFTC, FDIC, the Federal Reserve, NCUA, OCC, SBA, SEC, interested congressional committees, members, and others. This report will also be available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix V.", "Our objectives in this report were to examine (1) significant changes that community banks and credit unions have undergone in the past decade, including the factors that have contributed to such changes, and (2) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act) provisions that regulators, industry associations, and others expect to impact community banks and credit unions, including their small business lending.\nThe Main Street Alliance is a national network of state-based small business coalitions.\nFinancial, a private financial database that contains publicly filed and financial reports, including Consolidated Reports on Condition and Income (Call Reports) submitted to FDIC, Thrift Financial Reports submitted to the Office of Thrift Supervision, and 5300 Call Reports (Call Reports) submitted to NCUA. We used SNL Financial data to identify changes in the total number, profitability, lending activities (including small business lending), expenses, and other metrics of community banks and credit unions from 2002 through 2011. As regulators do not collect data specifically on small business lending, we created a proxy for small business lending using Call Report data on commercial real estate and commercial and industrial loans for under $1 million for community banks and member business lending by credit unions. As a result, what we characterize as small business lending also may include, to some degree, small loans to larger businesses. We analyzed the data for different asset classes of community banks (assets of $10 billion or more, $1 billion to $10 billion, $250 million to $1 billion, $100 million to $250 million, and less than $100 million) and credit unions (assets of $10 billion or more, $1 billion to $10 billion, $100 million to $1 billion, $20 million to $100 million, $5 million to $20 million, and less than $5 million). We reviewed the SNL Financial data and found the data to be sufficiently reliable for our purposes, and we have relied on the data in our previous reports. We also interviewed the federal agencies and associations identified above and four academic and industry experts about trends in the community bank and credit union sectors and their causes.\nTo address our second objective, we reviewed the Dodd-Frank Act and related materials, including relevant congressional hearings; comment letters on proposed rules; and studies or analysis prepared by federal and state regulators, industry associations, law firms, and academics. To help us identify the Dodd-Frank Act provisions applicable to community banks and credit unions and assess their impact on such institutions, we interviewed and obtained documentation, when available, from the federal agencies, state regulatory associations, and industry associations identified above, and the Bureau of Consumer Financial Protection. Appendix II contains a table of the provisions identified collectively by these groups. We also analyzed a number of the Dodd-Frank Act provisions that regulators, industry officials, and others expect to impact community banks and credit unions. We used Call Report and other data compiled by SNL Financial to assess the extent to which community banks and credit unions may be subject to or otherwise affected by various Dodd-Frank Act provisions. We took steps to ensure consistency in data analyses for the various provisions within this reporting section and determined that any differences in data due to the date on which we downloaded them from SNL Financial did not have a material impact on our analysis. Our review of the SNL Financial data also found the data to be sufficiently reliable for making judgments about the institutions likely impacted. To obtain further insights into the expected impact of the Dodd- Frank Act, we conducted semistructured interviews with a sample of four state associations and a sample of 12 community banks and credit unions. We interviewed two state banking associations and two credit union associations from Georgia, Illinois, Minnesota, and Pennsylvania, based on the number and uniformity of community banks and credit unions within the states. We randomly selected and interviewed eight community banks and four credit unions from California, Florida, Massachusetts, Michigan, Ohio, Oklahoma, South Dakota, Texas, Virginia, and Wisconsin. For selected associations and institutions that were unavailable to participate, we substituted other similar institutions. In conducting our interviews, we first sent structured questions by e-mail and then followed up with in-depth telephone interviews. These interviews were conducted, in part, to confirm whether the state-level bank and credit union associations and individual community banks and credit unions generally considered the same Dodd-Frank Act provisions identified by regulators, industry associations, and others as potentially impacting their institutions (or member institutions). These interviews also provided further insights on the expected impact of the Dodd-Frank Act, but their responses are not generalizable to the population of community banks and credit unions.\nWe conducted this performance audit between February and September 2012, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The following table lists the Dodd-Frank Act provisions that are expected to impact some or all community banks and credit unions. These provisions were identified primarily based on information we collected from federal regulators, state regulatory associations, and industry associations. Industry officials also told us that it is difficult to identify all of the provisions that may impact small institutions because such outcomes may depend on how agencies implement certain provisions through their rules, and many rules have not been finalized. For the same reason, regulators and industry officials also have noted that enough time has not passed to assess the full impact of the Dodd-Frank Act on community banks and credit unions. In particular, the table identifies provisions that are expected to impact community banks and credit unions or a subset of these institutions. The table also includes provisions with explicit exemptions for community banks and credit unions or that provide regulators with the authority to exempt certain entities or financial products from a provision.\nAs discussed in the report, some provisions or exemptions in the act are expected to have an indirect impact on community banks and credit unions. For example, section 1024 is expected to have an indirect impact on community banks and credit unions because it authorizes the Bureau of Consumer Financial Protection (CFPB) to supervise nonbank financial institutions. Before the Dodd-Frank Act, nonbank financial institutions generally were not subject to supervision at the federal level with respect to the federal consumer financial laws, and CFPB’s supervision is expected to help level the playing field between these institutions and regulated institutions, such as community banks and credit unions.", "", "", "", "", "In addition to the contact named above, Richard Tsuhara (Assistant Director), Allison Abrams, Jeremy Conley, Stuart Kaufman, Colleen Moffatt, Patricia Moye, Jennifer Schwartz, Seyda Wentworth, and Henry Wray made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_full", "h0_full h1_title", "h0_full", "h0_full h1_full", "h1_full", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "Why has there been a decline in the number of banks under $10 billion in assets and credit unions?", "Despite the decline, to what entities and people do these banks remain important?", "To what extent have these banks declined?", "How could banks save costs?", "What is the relationship-banking model?", "How can banks and credit unions benefit from using the relationship-banking model?", "To what extent is small business lending used in community banks?", "How is the model used by banks and credit unions in rural areas?", "What is the purpose of the Dodd-Frank Act?", "Why does the act exempt small institutions from several of its provisions?", "What kind of bank is considered a community bank?", "How have community banks and credit unions benefited others?" ], "summary": [ "The decline resulted largely from consolidations, which were facilitated by changes in federal law that made it easier for banks and credit unions to expand geographically. Another factor that may have contributed to consolidations is economies of scale, which refer to how an institution's size is related to its costs.", "While the number of community banks and credit unions has declined in recent years, they have remained important lenders to small businesses and other local customers.", "From 1985 through 2010, the number of banks under $10 billion in assets and credit unions declined by over 50 percent to 7,551 and 7,339, respectively.", "Although the existence of economies of scale in banking has been subject to debate, some recent research suggests that banks can save costs by expanding.", "Despite the decline in their number, community banks and credit unions have maintained their relationship-banking model, relying on their relationships with customers and local knowledge to make loans.", "Such institutions can use their relationship-based information to make loans to small businesses and other borrowers that larger banks may not make because of their general reliance on more automated processes.", "About 20 percent of lending by community banks can be categorized as small business lending (based on a commonly used proxy), compared to about 5 percent by larger banks.", "Community banks and credit unions also play an important role in rural areas, using relationship-based lending to serve customers with limited credit histories.", "The Dodd-Frank Act includes numerous reforms to strengthen oversight of financial services firms and consolidate certain consumer protection responsibilities within CFPB.", "To help minimize its regulatory burden on small institutions, including community banks and credit unions, the act exempts such institutions from several of its provisions.", "Although no commonly accepted definition of a community bank exists, the term often is associated with smaller banks.", "Historically, community banks and credit unions have played an important role in providing credit to small businesses and other local customers." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 4, 4, 4, -1, 0, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0 ] }
GAO_GAO-15-48	{ "title": [ "Background", "Budget Authority and Collections", "Agency Flexibility Regarding Uses of Funding from Alternative Sources", "Budgetary Resources and Government Financial Statements", "About 15 Percent of DOJ’s Total Budgetary Resources Comes from Alternative Sources of Funding, and Laws Specific to Each Source Determine How Funds Should Be Obligated", "About 15 Percent of DOJ’s Budgetary Resources Comes from Seven Alternative Sources of Funding", "DOJ Flexibility to Use Alternative Sources of Funding Varies across the Seven Major Sources of Funding", "DOJ Can Improve the Management of Unobligated Balances of Selected Alternative Sources of Funding", "DOJ Has Taken Steps to Manage the Three Percent Fund but Could Better Clarify a Reserve Policy and Estimates of Future Needs", "DOJ Could Improve Transparency in Fingerprint Checks Fees and Determine Appropriate Size of Unobligated Balances", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Department of Justice (DOJ) Alternative Sources of Funding in Fiscal Year 2013", "Appendix II: Objectives, Scope, and Methodology", "Appendix III: Information on the Seven Selected Alternative Sources of Funding", "Assets Forfeiture Fund", "Background", "Legal Requirements", "Funding Characteristics", "Crime Victims Fund", "Background", "Legal Requirements", "Criminal Justice Information Services Fees", "Background", "Legal Requirements", "Funding Characteristics", "Diversion Control Fee Account Background", "Legal Requirements", "Funding Characteristics", "Federal Prison Industries, Inc. (FPI)", "Background", "Legal Requirements", "Funding Characteristics", "Three Percent Fund", "Background", "Legal Requirements", "Funding Characteristics", "United States Trustee System Fund", "Background", "Legal Requirements", "Funding Characteristics", "Appendix IV: Comments from the Department of Justice", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The congressional “power of the purse” refers to the power of Congress to appropriate funds and to prescribe the conditions governing the use of those funds. Congress exercises this power by providing budget authority, which is authority provided by federal law to enter into financial obligations that will result in immediate or future outlays involving federal government funds.\nFor the purposes of this report, “alternative sources of funding” refers to collections that are available to DOJ to obligate and expend. Some of these collections, known as offsetting collections, are available for obligation and expenditure without further legislative action. Others, however, called offsetting receipts, cannot be used without being appropriated. Examples of the various types of collections at DOJ include fees from regulated industries, such as fees associated with the federal bankruptcy system collected through the United States Trustee Program; the collection of fines, settlements, and other penalties associated with criminal and civil litigation activities; businesslike transactions such as the Bureau of Prisons’ Federal Prison Industries (FPI) sale of goods and services; and CJIS fingerprint checks fees.", "Congress typically appropriates and conducts oversight of funds for DOJ at the account level, directing that accounts be used for specific purposes, restricting the amount or purpose for which the funds can be used, and at times requiring DOJ to report on activities conducted at the For each alternative source of funding, Congress must account level.provide DOJ authority to (1) collect amounts, (2) conduct the activity in question, and (3) obligate and expend the funds collected on that activity. In each of these three areas, Congress can delegate some flexibility to agencies in how they exercise these authorities, or it can retain control. Regardless of the flexibility Congress provides DOJ regarding alternative sources of funding, it always retains oversight over the funding and associated activities. Figure 1 outlines key characteristics through which Congress may increase or decrease an agency’s flexibility in funding.", "The President’s Budget provides agencies’ estimated and actual budget authority, obligations, and unobligated balances, among other things. Total budgetary resources are also reported annually in an agency’s statement of budgetary resources, which is published in either a performance and accountability report, or an agency financial report. Whereas the President’s Budget provides information used by the Office of Management and Budget (OMB) for planning and controls, the financial reports prepared by agencies are required as part of the Chief Financial Officers Act of 1990, as amended.with the financial reports are subject to audit.", "Seven alternative sources of funding made up approximately 15 percent of DOJ’s total budgetary resources in fiscal year 2013, and different legislative requirements affect the agency’s flexibility in using these funds. Specifically, DOJ had about $4.3 billion in collections from seven major alternative sources of funding in 2013, and generally used this funding for related program costs. In addition, agency flexibility regarding using the seven funding sources varied with laws specifying funding purposes, amounts, and availability.", "In fiscal year 2013, about 15 percent of DOJ’s total budgetary resources—or $5.8 billion out of $39.5 billion—came from seven major alternative sources of funding. Specifically, during fiscal year 2013, collections for these seven sources totaled about $4.3 billion, which was available to DOJ to obligate. DOJ also brought forward $1.3 billion in unobligated balances from fiscal year 2012 for these seven sources.\nIn addition to collections that DOJ had the authority to use, in fiscal year 2013, DOJ received deposits of about $1.6 billion from two of the seven alternative sources of funding that were by law not available for the department to obligate, and therefore not counted as a budgetary resource.\nThe seven major alternative sources of funding are the following:\nAssets Forfeiture Fund: The AFF receives monies from the proceeds of forfeiture of assets used in criminal operations. Proceeds deposited in the AFF are used to pay for expenses of the Asset Forfeiture Program, including asset management and disposal, the equity of innocent third parties and lienholders, equitable sharing payments, program investigative expenses, and other authorized expenses of the program.\nCrime Victims Fund: Criminal fines and penalties collected from offenders, among other sources, are deposited in the CVF. The CVF funds victims’ assistance programs and provides direct compensation to crime victims.\nCriminal Justice Information Services fingerprint checks fees: CJIS, a division of the FBI, collects fees from federal, state, and other authorized entities requesting fingerprint identification records for noncriminal justice purposes such as employment and licensing. Fees collected pay for the costs of providing the service and for the automation of fingerprint identification and other criminal justice information services.\nDiversion Control Fee Account (DCFA): Fees paid by Drug Enforcement Administration (DEA) registrants, such as manufacturers, distributors, dispensers (including physicians), importers, and exporters of controlled substances (such as narcotics and stimulants) and certain listed chemicals (such as ephedrine) are deposited in the DCFA. Fees collected are used to recover the full costs of the program, including personnel costs and operation costs such as investigative costs, travel, and the purchase of goods and services.\nFederal Prison Industries, Inc.: FPI, a wholly owned government corporation within the Bureau of Prisons (BOP), sells products and services manufactured by federal inmates.for FPI program expenses, such as wages for federal inmates.\nThree Percent Fund: DOJ collects 3 percent of most amounts paid resulting from “civil debt collection litigation activities,” including civil judgments in Medicare fraud cases and student loan collections. DOJ uses these funds to defray costs associated with its debt collection activities, such as paying the costs of the Debt Collection Management Staff (DCM) and financial litigation unit personnel and activities at the U.S. Attorneys’ Offices.\nUnited States Trustee System Fund (USTSF): The U.S. Trustee Program (USTP) receives and deposits in the USTSF fees collected generally from four sources: (1) a portion of the filing fee paid at the beginning of each bankruptcy case for chapters 7, 11, 12, and 13; (2) chapter 11 quarterly fees; (3) excess percentage fees collected by chapter 12 or chapter 13 standing trustees; and (4) interest on invested funds. These fees are used by the USTP for expenses, such as salaries and benefits, related to overseeing the bankruptcy process as specified in annual appropriations acts.\nTo determine collections, obligations, and unobligated balance amounts for the seven alternative sources of funding, we relied on data that were reconciled to DOJ’s audited financial statements. DOJ was able to reconcile the data for six of the seven alternative sources for fiscal years 2009 through 2013. For the CJIS fingerprint checks fees, as part of our procedures, we obtained collections, obligations, and unobligated balances data from the FBI program offices for fiscal years 2009 through 2013. To validate the data provided, we requested that the FBI reconcile these amounts with the FBI’s audited statement of budgetary resources (SBR) for those respective periods. The FBI provided updated amounts for fiscal year 2013 based on its reconciliation to the FBI’s audited SBR. However, the FBI was unable to demonstrate that it could reconcile amounts it provided for fiscal years 2009 through 2012 to the amounts in its audited SBR for each of the respective years. For the purposes of this report, we will be reporting CJIS fingerprint checks fees data for fiscal years 2009 through 2012 as reported to us by the FBI.\nOf the seven major alternative sources of funding, the two with the highest amount of deposits were the AFF and the CVF, each receiving deposits of $10.5 billion and $10.4 billion respectively over the 5-year time period, not all of which was available to DOJ to obligate. The remaining five alternative sources of funding brought in collections totaling $9.0 billion during this same time period.\nGenerally, collections from the seven major alternative sources of funding were obligated to support the associated programs or activities. For example, fees collected and deposited into the DCFA paid for all expenses required to run the Diversion Control Program.\nFor all seven major alternative sources of funding, DOJ obligated about $22.8 billion, or on average about $4.6 billion a year, from fiscal years 2009 through 2013. Specifically, for five of the seven alternative sources of funding—CJIS fingerprint checks fees, DCFA, FPI, the Three Percent Fund, and USTSF—DOJ obligated about 97 percent of total collections, or about $8.8 billion of $9.0 billion collected. For the two remaining alternative sources of funding—the CVF and the AFF—DOJ obligated about $14.0 billion. The AFF and the CVF included deposits that, pursuant to law, have not been available for obligation. At the end of fiscal year 2013, about $9.7 billion from the AFF and the CVF was unavailable for obligation by DOJ. The majority of this amount came from the CVF, which will be discussed in more detail later in this report.\nWhile the majority of DOJ’s alternative sources of funding came from these seven sources, DOJ has other alternative sources of funding, which are listed in appendix I. In addition, appendix III provides more detail on collections and obligations for the seven major alternative sources of funding, including relevant legal requirements.", "Congress has used different options to either increase or decrease agency flexibility related to the use of DOJ’s seven major alternative sources of funding. As previously discussed, Congress establishes agency flexibility through the requirements in authorizing legislation, appropriation acts, or other laws that, for instance, require agencies to obligate the funds in a given year or over multiple years, or obligate a certain amount for a certain purpose.\nCongress may limit the availability of funds so they are available for obligation only in a given fiscal year—characterized as 1-year funds— such as a portion of the CJIS fingerprint checks fee amounts. In contrast, Congress may establish funding as available for obligation indefinitely—characterized as no-year funds—such as funds deposited in other major alternative sources of funding like the Three Percent Fund, which can be carried over from 1 year to the next.\nCongress has imposed additional annual reporting requirements for certain of the seven alternative sources of funding (see app. III). For example, DOJ is required to provide annual reports for the AFF.\nTable 1 shows requirements related to authorized purposes and amounts for the seven major alternative sources of funding.", "Selected alternative sources of funding have growing unobligated balances, some of which could benefit from improved management. We conducted case studies for three alternative sources of funding with unobligated balances: the Three Percent Fund, CJIS fingerprint checks fees, and the Crime Victims Fund. DOJ officials responsible for the Three Percent Fund have taken steps to manage the fund such as annually reviewing how much they allocate in the fiscal year. However, they have not, for example, projected collections for the following year when determining the availability of funding for the next fiscal year. In addition, DOJ lacks transparency over how fingerprint checks fees are broken out, and has not evaluated what an appropriate carryover balance should be. Finally, unobligated balances that have been made temporarily unavailable to DOJ in the Crime Victims Fund have continued to grow, and these balances have an increasing impact on DOJ’s reporting of annual discretionary budget authority.", "results in a civil judgment. For example, in one case that was resolved in fiscal year 2013, DOJ reportedly collected $13 million from a civil settlement involving fraud against the U.S. Postal Service. Of the $13 million that was awarded to the U.S. Postal Service, DOJ deposited $390,000 into the Three Percent Fund. Amounts from the Three Percent fund are then allocated to DOJ components that requested funds for specified activities, such as tracking civil and criminal debt collection Officials responsible for the Three Percent Fund stated that litigation.they generally review and fund component requests at the beginning of the fiscal year. As shown in figure 2, obligations of the Three Percent Fund have generally risen with increased budgetary resources. Specifically, from fiscal years 2009 through 2013, obligations increased by about $74 million, while collections in the Three Percent Fund have increased by almost $75 million over the same 5 years.\nDOJ officials stated that they have taken steps to manage the Three Percent Fund and analyze the availability of funding for obligations such as allocations to components, the costs of managing the systems that collect and disburse civil collections, and administrative support. Specifically, the Collection Resources Allocation Board (CRAB)—the body established by DOJ to allocate collections among eligible components to offset litigation and collection costs—manages the fund in several ways:\nThe CRAB sets aside funding to operate the Debt Collection Management Staff for the following fiscal year prior to considering annual allocations for other debt–collection related activities. DCM is fully funded through Three Percent Fund collections and receives no other appropriation.\nCRAB officials consider the longer-term viability of the program when making funding decisions by, for example, considering whether programs receiving funding may bring in additional Three Percent Fund collections in future years. Programs that have potential to bring in more funding to the Three Percent Fund may be prioritized over programs that bring in less or no funding to the Three Percent Fund.\nThe CRAB informs components making requests that any employees hired should be term employees and not holders of permanent positions. CRAB officials stated this policy stresses to components that they should not rely on Three Percent Fund allocations in the future, even if funds were allocated for such positions in the past.\nCRAB officials consider allocating resources for activities that may span multiple years and set aside more resources at the beginning of the year for these activities instead of funding new activities.\nCRAB officials identify a reserve, an amount needed in the Three Percent Fund at the beginning of the following fiscal year.\nWhile CRAB officials have taken steps to manage the Three Percent Fund, according to officials responsible for managing the fund, they do not know how, if at all, changes in unobligated balances affect identified future resource needs because they do not conduct analyses that include projected collections, reserves that align with DOJ priorities and stated needs, or the impact of previous obligation rates on unobligated balances. As shown in figure 3, the CRAB’s rate of allocations has resulted in a 12- point decrease in the percentage of unobligated balances remaining at the end of the following year from fiscal years 2009 through 2013. Specifically, while DOJ’s unobligated balances have marginally increased, the CRAB has had more total budgetary resources available during the fiscal year and has obligated a larger portion of those resources. CRAB officials stated that they conduct analyses to determine how to allocate Three Percent Fund amounts in the following year, but they could not demonstrate how, if at all, increasing obligation rates may have an impact on the availability of funding in future years. Without analyzing trends in unobligated balances, it is difficult to determine if committing larger portions of budgetary resources is sustainable or has an impact on future-year funding.\nIn response, CRAB officials stated that the CRAB’s typical practice is to obligate only the amount that is carried forward from the previous year, and not to consider any amounts that may come into the Three Percent Fund in the following year. The agency does not conduct analyses of unobligated balances to, for example, help estimate future collections or determine future reserve needs. According to CRAB officials, they do not incorporate estimates for collection amounts from year to year because the CRAB does not have control over how much will be collected in the Three Percent Fund. Collections are determined from civil settlements and other judgments, and CRAB officials believe that soliciting information from litigating units to develop estimates may be viewed as inappropriate pressure on litigators. However, in the 5-year time period we examined, DOJ consistently collected at least $83 million annually, indicating stability in collections.\nWhile we understand DOJ’s concerns about determining precise estimates, these concerns could be mitigated by developing strategies for projecting collections without a negative perception. For example, in lieu of projecting a specific dollar amount, CRAB could determine a range between the potential lowest and highest collection amounts based on historical trends and current collection activities.\nAdditionally, while CRAB officials identified a reserve to set aside for the following fiscal year, as shown in table 2, the Three Percent Fund’s unobligated balances at the end of the year have been notably higher than DOJ’s identified reserve in each fiscal year from 2009 through 2013. Specifically, in comparing the reserve that officials reported they needed and the unobligated balance, the amount carried over was consistently larger by a factor of at least two. Such a consistent difference between the unobligated balance and the reserve fund needed the following year may indicate that the Three Percent Fund could fund additional activities during the following year. For example, CRAB officials stated that several activities and initiatives either do not receive funding or receive a smaller portion of funding, including funding for more litigative term personnel for civil debt collection activities. Some of these activities, if funded, could result in more collections for the Three Percent Fund.\nCRAB officials stated that DOJ has limited discretion for when amounts are received in the Three Percent Fund because many transactions result from judgments from courts and are not controlled by DOJ. As a result, CRAB officials stated that they could not commit more funding during the year because they do not know what amounts may come in the following year and generally make funding decisions only once during the year. If the CRAB has determined that no more funds can be committed in a fiscal year than it currently allocates, then the reported reserve needed in the Three Percent Fund may be too low and not accurately reflect the Three Percent Fund operational needs. However, if the CRAB is confident that the reported reserve for the following year is correct and the reserve is much lower than the beginning unobligated balances as reported in table 2, then the CRAB may be missing opportunities to fund additional activities.\nGAO’s Key Questions to Consider When Evaluating Balances in Federal Accounts has emphasized the importance of regularly analyzing these balances by, for example, estimating and managing such balances—such as estimating collections and determining reserve needs—in order to effectively anticipate program needs and ensure the most efficient use of resources. The Key Questions also concluded that if an agency does not have a robust strategy in place for estimating and managing carryover balances, balances may either fall too low to efficiently manage operations or rise to unnecessarily high levels. While DOJ officials disagreed that they may allocate and obligate more because their practice is to allocate only what is in the fund at the beginning of the year, our analysis demonstrated that the Three Percent Fund’s beginning unobligated balances consistently outpace DOJ’s stated reserve needs. This is, in part, because DOJ does not consider estimates of collections in future years as part of its determination of reserve needs. DOJ’s current practice has resulted in increasing balances in the fund as it allocates a larger portion of its total budgetary resources. Without an analysis that includes projected collections, reserves that align with DOJ priorities and stated needs, and the impact of previous obligation rates on unobligated balances, it is difficult to determine the impact of committing funds on unobligated balances in the Three Percent Fund. By developing a policy for conducting regular analyses of unobligated balances by, for example, estimating future collections and determining future reserve needs, DOJ could better ensure it is able to efficiently fund as many programs as possible and best support the fund’s priorities.", "According to DOJ-provided data, in fiscal years 2009 through 2013, the FBI’s CJIS Division collected on average about $385 million per year in fingerprint checks fees. Of this, on average $154 million was for cost recovery and $231 million was for automation. CJIS determines fingerprint checks fees using three major elements: (1) estimates of the cost to provide the fingerprint checks services—this makes up the cost recovery portion; (2) depreciation of current infrastructure for fingerprint identification, such as the Integrated Automated Fingerprint Identification System, and other criminal justice information services systems—this makes up the automation portion; and (3) the expected volume of individual transactions.\nCriminal Justice Information Services (CJIS) Fingerprint Checks Fees Purpose Fingerprint checks fees are paid by entities requesting a fingerprint check for individuals for non-criminal justice purposes. The fee is made up of two parts:\nThe cost recovery portion covers the cost of providing the service, which includes operational labor cost, support labor cost, and nonlabor costs such as printing, utilities, supplies and equipment.\nThe automation portion covers expenses for automation of fingerprint identification and criminal justice information services such as the Next Generation Identification, a system that offers biometric identification services. CJIS also uses automation fees for information- sharing technology and for operational support.\nThe two portions of the fee have different statutory requirements. The cost recovery portion of the fee is 1-year money that must be obligated in the same year it is collected to cover the cost of providing the service. The automation portion of the fee is no-year money that can be carried over from year to year. It is collected for the purpose of helping to defray the cost of any new automation initiative in the future. The law provides the FBI with broad authority to set the automation portion of the fee. According to CJIS officials, CJIS reviews the fingerprint checks fee every year. As shown in figure 4, according to data provided by CJIS, for fiscal years 2009 through 2013, about 40 percent of the total collected in fingerprint checks fees—about $770 million of about $1.93 billion—was from cost recovery collections to cover the costs of providing the service. The automation portion of the fingerprint checks fee composed the other 60 percent, or about $1.16 billion.\nStarting in March 2012, the fee for an electronic fingerprint check was $14.50, of which $6.38 was cost recovery and $8.12 was automation. About 64 percent of the volume of fingerprint checks comes from other federal agencies with the remaining 33 percent coming from state, tribal, and local governments, and other entities that submit fingerprint checks.\nUnobligated balances in the Crime Victims Fund have continued to grow and have impacted DOJ’s reporting of annual discretionary budget authority. From fiscal years 2009 through 2013, the CVF—which is funded by collections of criminal fines, forfeited bail bonds, penalties, and assessments—collected about $3.3 billion in budgetary resources and received additional deposits not available as a budgetary resource of $7.1 OJP obligated over $3.5 billion, totaling about $10.4 billion in deposits.billion of these funds. When including balances from fiscal years prior to 2009, the CVF had a temporarily unavailable balance—composed of funds received in excess of obligations made—of nearly $9 billion at the end of fiscal year 2013.\nCrime Victims Fund (CVF) Administration The Office of Justice Programs (OJP) is the primary component within the Department of Justice (DOJ) responsible for managing DOJ grant programs, with the Office for Victims of Crime being the primary component within OJP that administers and manages CVF funding.\nCrime Victims Fund (CVF) Purposes The Victims of Crime Act of 1984 (VOCA), as amended, establishes the CVF and authorizes the fund to be used for specific crime victims assistance purposes and provides formulas for the Department of Justice (DOJ) to allocate funding among those purposes. These include 1. up to $20 million for grants under the Children’s funding for victim assistance services at the U.S. Attorneys’ Offices, the Federal Bureau of Investigation, and for a victim notification system. programs such as $425 million for state-administered victim assistance grants and almost $160 million in state victim compensation grants.\nCongress placed limitations on DOJ’s ability to use amounts in the CVF in excess of the annual obligation limits. Specifically, annual appropriations legislation prohibited DOJ from making obligations in excess of the obligation limitation, and as a result, DOJ could not obligate the excess funds during the course of the given fiscal year. For instance, CVF deposits totaled about $1.75 billion during fiscal year 2009. However, because federal law limited DOJ’s allowable CVF obligations to about $640 million that year, DOJ was unable to obligate over $1 billion of CVF deposits during the remaining fiscal year. Figure 5 shows the annual deposits and obligations in the CVF.\nIn fiscal years 2009 through 2013, annual CVF deposits exceeded the limit in allowable annual obligations. During this time period, funds not available for obligation by DOJ in this account have served as a credit or offset to DOJ’s total discretionary budget, as reported in DOJ’s budget submissions. Specifically, during the annual appropriations process, the CVF balance unavailable for obligation by DOJ during the year counts as a “savings.” Consistent with scorekeeping guidelines used during the congressional budget process, this savings resulted in DOJ reporting a lower level of net budget authority because the unavailable CVF balance For example, is applied as a credit to DOJ’s total discretionary budget.in fiscal year 2013,\nDOJ received about $25 billion in enacted total discretionary budget authority according to DOJ’s congressional budget justification. DOJ obligated these funds to pay for the department’s programs and activities.\nBalances primarily composed of CVF funds provided a credit of about $10 billion.account and were not spent.\nThese unavailable balances remained in the CVF\nThe credit from these balances lowered DOJ’s reported net discretionary budget authority to about $15 billion.\nAs a result, DOJ’s total discretionary budget authority provided in law of $25 billion was $10 billion higher than the reported net discretionary budget authority of $15 billion.\nSince fiscal year 2009, the growing CVF unavailable balance has resulted in increasingly higher offsets to DOJ’s budget authority and has represented a higher percentage of DOJ’s total discretionary budget authority. For example, according to DOJ’s congressional budget justification, in fiscal year 2009, balances composed mostly of CVF funds created an offset of about $2.7 billion, or 10 percent of DOJ’s total discretionary budget authority. However, in fiscal year 2013, the $10 billion offset made up about 39 percent of DOJ’s total discretionary budget authority. For more details, see figure 6.\nWhile the CVF funding has been subject to an obligation limitation each year, OJP officials responsible for managing the programs funded by the CVF have started to take some steps in determining how more of the CVF unavailable balance could be obligated in the future should the limit be increased. Specifically, OJP officials stated that victim assistance stakeholders such as state administrators of crime victims’ grants have told them that the current funding levels provided in law are not adequately addressing the needs of crime victims nationwide. However, OJP officials state that stakeholders have not been able to verify how much funding need exists nationwide, in part because of current restraints on administrative spending in VOCA that limit state administrators’ ability to monitor the effectiveness of grants or evaluate crime victim needs.\nIn response, OJP has taken steps to determine crime victim needs. For instance, in 2010, OJP developed an initiative called Vision 21, where the goals are to identify recommendations to help OJP adopt a systematic approach in addressing crime victim needs. This culminated in a report released in 2013 that contained recommendations for better addressing crime victim needs, including overcoming challenges related to constraints in CVF funding due to VOCA restrictions. In addition, in 2012, OJP entered into an interagency agreement with the U.S. Bureau of Justice Statistics to conduct a survey of victim assistance administrators and other stakeholders, the purpose of which includes validating crime victim needs nationwide. OJP officials stated that the results of the survey will help determine and validate funding needs and help OJP provide empirically driven policy options to address such needs. OJP officials responsible for CVF funding stated that the results from the survey may be obtained as late as 2016.", "The seven major sources of DOJ’s alternative funding bring in more than $3 billion annually. This represents a significant portion of DOJ’s budgetary resources. For example, in fiscal year 2013, 15 percent of DOJ’s total budgetary resources came from alternative sources of funding. DOJ used these resources to support several programs, including funding for victims compensation and assistance, and generally help DOJ fulfill its law enforcement and criminal and civil litigation missions. DOJ’s annual use of billions of dollars from these funds highlights the importance of ensuring program needs are met and resources are used effectively.\nIn some cases, DOJ brings in significantly more in collections than it obligates, underscoring the importance of properly managing these funds. By developing a policy to analyze unobligated balances from the Three Percent Fund, DOJ could better manage balances to ensure efficient and effective use of resources to support program activities. In addition, CJIS is missing opportunities for meaningful feedback that could affect the outcome of changes in fees and program implementation by not transparently communicating with stakeholders and customers the breakout of cost recovery and automation fees. Finally, by developing a policy to estimate the extent to which carryover balances from CJIS’s fingerprint automation pool of money are appropriate and implementing that policy, CJIS could better ensure that its automation fees are set at a level to avoid excessive revenues.", "To help ensure the efficient use of resources for the Three Percent Fund, we recommend that the Attorney General develop a policy and implement procedures to regularly analyze unobligated balances and develop collection estimates in order to determine an appropriate reserve amount and inform estimates of future funding needs.\nTo improve transparency and ensure the effective use of automation fees for the CJIS fingerprint checks fees, we recommend that the Director of the Federal Bureau of Investigation take the following actions:\nPublish in the Federal Register, or other documents such as annual reports, how much is assessed for automation and cost recovery in each transaction to better communicate the cost of the service to customers and stakeholders.\nDevelop a policy to analyze the unobligated balances coming from the automation portion of the fee to inform program needs, including improving methods for anticipating automation collections, and establishing a range of appropriate carryover amounts to support program needs.", "We provided a draft of this report to DOJ for review and comment. We received written comments from DOJ, which are reproduced in full in appendix IV. DOJ also provided technical comments on this report that we incorporated as appropriate.\nOur first recommendation directed the Attorney General to develop a policy and implement procedures to regularly analyze unobligated balances and develop collection estimates for the Three Percent Fund in order to determine an appropriate reserve amount. DOJ agreed that it could improve how it estimates the amount of reserve funds needed for the next fiscal year. DOJ stated it is going to adjust the current methodology for improving reserve estimates by, for example, including additional costs such as one quarter of the previous year’s administrative and professional contract costs.\nDOJ also provided various reasons why it does not query or calculate revenue estimates. For example, DOJ does not query litigating components for the number of cases that will be settled because the agency does not want to be perceived as inappropriately encouraging larger government civil collections. Additionally, DOJ does not calculate such estimates due to the high level of variability in the civil debt litigation cases that make it difficult to use historical information to estimate reserves. The report recognizes these concerns. Specifically, on page 20, we acknowledge DOJ’s concern about soliciting information from its litigating units. However, we believe that DOJ could develop an estimated range of potential collections based on historical trends and current collection activities. Estimates are not expected to be perfect predictions of the future; however, analyzing historical data can help the agency to identify patterns and anomalies and to understand the magnitude of significant events.\nDOJ concurred with our second recommendation and agreed to break out the automation and cost recovery portions of the CJIS fingerprint checks fees more explicitly in the future. DOJ stated it believed the FBI had been transparent with its stakeholders and that this recommendation is consistent with current business practices.\nDOJ concurred with our third recommendation, which called for the FBI to develop a policy to analyze the unobligated balances coming from the automation portion of the CJIS fingerprint checks fees and establish a range of appropriate carryover amounts to support program needs. Specifically, DOJ stated it would analyze the balances coming from the automation portion of the fee. DOJ also noted that it does not believe that establishing a range of carryover balances would enhance the current financial business practices of the CJIS fund. We believe the FBI would benefit from assessing what an appropriate range should be to ensure the funds will be available for agreed upon future investments.\nIn its comments, DOJ also referred to the report’s discussion on the CVF and its associated scorekeeping rules. In particular, DOJ noted that the department reports both net budget authority and total discretionary budget authority. We agree that both numbers can be found in the annual budget materials, appropriately labeled, and we included both in our report on pages 34-35.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Attorney General, selected congressional committees, and other interested parties. In addition, this report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any further questions about this report, please contact me at (202) 512-9627 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributions to this reported are listed in appendix V.", "In fiscal year 2013, according to DOJ-provided data, the department collected approximately $4.9 billion through 21 “alternative sources of funding,” which, for the purposes of this report, refers to collections by DOJ and other agencies that are available to DOJ to obligate and expend. Specifically, DOJ collections for these 21 sources of funding ranged from 0 to about $1.9 billion in fiscal year 2013. For the seven major alternative sources of funding, we used information from DOJ’s annual financial statements in its corresponding performance and accountability reports or agency financial reports. For the remaining 14 alternative sources of funding, which are otherwise not included in this report, we relied primarily on DOJ-reported information from its financial information systems (See app. II for more information on our scope and methodology). Table 3 describes each of the 21 alternative funding sources, as well as total collections and funding availability in fiscal year 2013.", "To address the first question, we identified various alternative sources of funding across the Department of Justice (DOJ) accounts or programs by interviewing DOJ officials knowledgeable about the DOJ budget and reviewing various budget documents. We identified 21 accounts or programs that received “alternative sources of funding,” which, for the purposes of this report, refers to collections by DOJ and other agencies that are available to DOJ to obligate and expend. We narrowed our review to seven alternative sources of funding using the following decision criteria: Collections must be at or above $100 million annually in order to focus on the alternative sources bringing in the most money to DOJ, the funds must be managed primarily by DOJ, and the funds must We excluded alternative sources that not be entitlements or trust funds.funded entitlement programs from our review because entitlement authorities are controlled by statute, and DOJ does not have authority to determine eligibility requirements or the amounts provided to recipients.\nFurther, we excluded alternative sources of funding that are deposited into trust funds—such as the Federal Prison Commissary Fund—because trust funds generally do not impose a fiduciary responsibility on the government. The scope of our review covered funding from fiscal years 2009 through 2013 so that we could include enough years to identify any recent trends in collections, obligations, and unobligated balances. To report the financial information such as collections and obligations related to alternative sources of funding for the 5 years, we analyzed DOJ annual financial statements in its corresponding performance and accountability reports or agency financial report and data provided by DOJ. We compared the amounts in the selected seven alternative sources of funding against DOJ’s statement of budgetary resources using DOJ’s audited information reported in its annual financial statements. For six of the seven alternative sources of funding—the Assets Forfeiture Fund, the Crime Victims Fund, the Diversion Control Fee Account, the Federal Prison Industries, the Three Percent Fund, and the United States Trustee System Fund—we determined that the data on the amounts reported for the years under review DOJ-wide were sufficiently reliable for determining how much of DOJ’s budgetary resources come from these alternative sources of funding. We also determined that for fiscal year 2013, the fingerprint-based Criminal History Record Information checks provided by the Federal Bureau of Investigation (FBI) Criminal Justice Information Services (CJIS) Division (CJIS fingerprint checks fees) were also reliable for our purposes. However, the amounts for fiscal years 2009 through 2012 for the CJIS fingerprint checks fees were provided by DOJ sources and could not be reconciled to the audited financial statements. See the section on DOJ’s total budgetary resources regarding data limitations. To report on DOJ’s flexibility in using alternative sources of funding for DOJ activities, we identified key statutory characteristics that increase or decrease agency flexibility with respect to these funds by reviewing principles of appropriations law and our prior work.statutory language and identified legal requirements applicable to the seven funds in the scope of this objective for each of these key areas: (1) purpose—for what purposes the funds may be obligated, (2) amount— how available amounts are determined and what action triggers the availability of funding, (3) time—what is the period of availability for the funding, and (4) review—what specific reporting requirements apply to the funding. We also interviewed agency officials about the alternative sources of funding to understand their interpretation of the laws.\nSee GAO, Justice Assets Forfeiture Fund: Transparency of Balances and Controls over Equitable Sharing Should Be Improved, GAO-12-736 (Washington, D.C.: July 12, 2012), and Department of Justice: Working Capital Fund Adheres to Some Key Operating Principles but Could Better Measure Performance and Communicate with Customers, GAO-12-289 (Washington, D.C.: Jan. 20, 2012). guide for federal user fees and (2) our past work identifying fee design options for managing carryover balances in fee accounts. To determine financial activity for the CVF, we compared both reconciled financial information and separate DOJ-provided information on receipts. To report on the impact of unavailable balances from the CVF and the AFF to the department’s annual discretionary budget authority, we used reported information from the President’s Budget for DOJ’s total discretionary budget authority and the scorekeeping credit from the three sources (the Crime Victims Fund, the Assets Forfeiture Fund, and the Working Capital Fund). We used information from the President’s Budget instead of the audited financial information reported in the previous objective because credits provided to DOJ’s discretionary budget authority were not recorded in DOJ’s audited statements. Moreover, the President’s Budget was used by decision makers for determining DOJ’s annual discretionary budget authority.\nTo list the collections for all 21 sources in fiscal year 2013 as shown in appendix I, we relied primarily on DOJ-reported data for the 14 sources that otherwise were not included in this report. We asked DOJ about the reliability of the data for these 14 sources and determined that the data were sufficiently reliable to convey a description of each funding source and the general magnitude of funding source collections and obligations. In addition, for the 7 major alternative sources of funding in appendix III, we relied primarily on DOJ’s statements of budgetary resources from fiscal years 2009 through 2013. However, in a few instances, we provided additional details that were obtained from other sources. Those sources are discussed, when appropriate, in the particular section of the appendix.\nWe conducted this performance audit from September 2013 through February 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "This appendix describes background information, funding characteristics, budgetary information, and legal requirements for the seven accounts within the Department of Justice (DOJ) receiving major alternative sources of funding:\nAssets Forfeiture Fund;\nCrime Victims Fund;\nCriminal Justice Information Services fees;\nDiversion Control Fee Account;\nFederal Prison Industries, Inc.;\nThree Percent Fund; and\nUnited States Trustee System Fund.", "", "Every year, federal, state, and local law enforcement agencies seize millions of dollars in assets that are forfeited through the DOJ Asset Forfeiture Program (AFP). Forfeited assets can include, but are not limited to, businesses, cash, bank accounts, automobiles, boats, airplanes, jewelry, art objects, and real estate.program is preventing and reducing crime through the seizure and forfeiture of assets that were used in or acquired as a result of criminal activity. The Comprehensive Crime Control Act of 1984 established the Assets Forfeiture Fund (AFF) to receive the millions of dollars in assets that are forfeited through the AFP.", "Funds are available for program-related expenses, including payments to victims and lien holders and the costs of storing and maintaining forfeited assets, and certain law enforcement activities, such as the payment of overtime salaries, travel, fuel, among other things, for state and local law enforcement officers when they participate in a joint operation with federal law enforcement agencies participating in the fund. After the AFF sets aside enough to ensure amounts are available in subsequent fiscal years for the specified purposes, it can use the excess generated by that fiscal year’s operations for other purposes. This excess is called the excess unobligated balance. Subject to certain notification procedures to Congress, any excess unobligated balance remaining in the AFF is available to DOJ “for any federal law enforcement, litigative/prosecutive, and correctional activities, or any other authorized purpose of .”", "The AFF is financed primarily through the forfeiture of assets that were seized as a result of criminal activity. From fiscal years 2009 through 2013, collections in the AFF totaled about $10.5 billion, which does not include amounts deposited in the AFF and then made unavailable pursuant to law. At the end of fiscal year 2013, about $792 million was temporarily unavailable because of annual enacted temporary rescissions.\nFrom fiscal years 2009 through 2013, obligations from the AFF totaled about $10.6 billion. Obligations made from the AFF cover three major categories: (1) payments to third parties, including payments to satisfy interested parties such as lien holders of forfeited properties, as well as the return of funds to victims of large-scale fraud; (2) equitable sharing payments to state and local law enforcement agencies that participate in law enforcement efforts resulting in the forfeitures; and (3) all other program operations expenses that include expenditure categories such as asset management and disposal, the storage and destruction of drugs, and investigative expenses leading to a seizure. According to DOJ data, of the funds obligated during this time period, about 44 percent went for payments to third parties, about 26 percent went to equitable sharing, and about 30 percent covered all other program operation expenses.\nTrends in Annual Collections, Obligations, and Unobligated Balances From fiscal years 2009 through 2013, obligations have generally tracked closely with collections. Generally, AFF collections have been increasing, with a large spike in fiscal year 2012, and a corresponding spike in obligations, attributable to a $2.2 billion deposit into the AFF related to the Bernard Madoff financial fraud case. End-of-year unobligated balances were over $1 billion for fiscal years 2009 through 2011 and then dropped to about $762 million in fiscal year 2012 and $887 million in fiscal year 2013. As we previously reported, DOJ carries forward unobligated balances in order to ensure solvency, equitable sharing, and third-party payments in the following fiscal year.\nFigure 7 shows AFF collections, obligations, and unobligated balances for fiscal years 2009 through 2013.", "", "The Crime Victims Fund (CVF) was established by the Victims of Crime Act of 1984 (VOCA) to provide assistance and grants for victim services throughout the United States. It is managed by the Office for Victims of Crime (OVC) within the Office of Justice Programs (OJP). The CVF supports several state and federal crime victim assistance–related grants and activities. The VOCA outlines these activities and prescribes specific funding limitations and requirements.", "Funding from the CVF is allocated for specific purposes outlined in statute: 1. Based on amounts collected, up to $20 million is available to fund programs authorized under the Children’s Justice Act, as amended. Up to $17 million is transferred to the Department of Health and Human Services to administer state grants, while OVC administers up to $3 million to support similar grants benefiting Native American tribal lands. Programs include funding activities to revise tribal codes to address child sexual abuse, providing child advocacy services for children in court proceedings, and developing procedures for reporting, investigating, and prosecuting child abuse cases, among others. 2. Funds required for managing victim assistance programs in the Federal Bureau of Investigation (FBI) and Executive Office for U.S. Attorneys (EOUSA) to improve crime victims services, and for amounts to run the Federal Victim Notification System. The notification system provides victims of crimes computer automated services on the investigative, prosecutorial, and corrections aspects of related cases. It is run by EOUSA, the Federal Bureau of Prisons, and the FBI.\nAfter these activities have been funded, the remaining CVF funding is to be determined as follows. 3. A 47.5 percent share of funds is available for a grant program for states to provide crime victim compensation. The law provides that CVF is available for up to a 60 percent match of what the state provided in compensation. Any remaining funding set aside for victims compensation up to the 47.5 percent may be used to support victim assistance grants. Compensation grants reimburse victims for out-of- pocket expenses such as medical and mental health counseling, lost wages, and funeral and burials costs. 4. Another 47.5 percent is available for a grant program for states to provide victim assistance. Grants are provided to states to administer to domestic violence shelters, rape crisis centers, and child abuse programs, among other advocacy groups that support comprehensive services to victims. 5. Last, 5 percent is available to fund discretionary grant programs to support federal crime victim assistance program evaluation, compliance efforts, and training and technical assistance services, among other things, including services for victims of federal crime. At least half of these funds must be allocated for specified activities, including training, technical assistance, and demonstration or evaluation projects, and improving outreach and services.\nIn addition to these amounts, DOJ is authorized to maintain a reserve of $50 million for the Antiterrorism Emergency Reserve Fund. These funds are available for grants to states and other entities that provide assistance to victims of crime to provide emergency relief—including crisis response efforts, assistance, and training—to victims of terrorist acts or mass violence occurring outside the United States, as well as for carrying out a program to compensate victims of international terrorism occurring outside the United States. This reserve can be replenished annually.\nWhile VOCA authorizes funds collected in the CVF to be available until expended, annual appropriations acts have included obligation limitations. See table 4 for annual obligation limitations from fiscal years 2009 through 2013.\nThe CVF is financed primarily by the federal courts, U.S. Attorneys’ Offices, and Federal Bureau of Prisons collections of fines, penalty assessments, and bond forfeitures collected from convicted federal offenders. From fiscal years 2009 through 2013, deposits in the CVF totaled about $10.4 billion.fines are small amounts for bail forfeitures or other criminal fines, larger While DOJ officials stated that most of these amounts have contributed to rising collection amounts. For instance, in fiscal year 2010, the largest single deposit into the CVF was over $1 billion and made up about half of the total deposits during the fiscal year.\nFrom fiscal years 2009 through 2013, DOJ obligated over $3.5 billion in CVF funding. According to DOJ data, the majority of CVF funding was allocated for state grants to victims of crimes assistance and compensation. Specifically, DOJ data show that over $2.9 billion, or over 80 percent of all obligations, was allocated through victim assistance and compensation grant programs. See figure 8 for a breakout of CVF obligations by category.\nTrends in Annual Collections, Obligations, and Unavailable Balances As discussed previously in the report, from fiscal years 2009 through 2013, the CVF received deposits of about $10.4 billion in total. Annual deposits varied from year to year, the lowest total occurring in fiscal year 2013 at about $1.5 billion. Fiscal year 2012 marked the year with the largest CVF deposit amount, totaling almost $2.8 billion. Figure 9 illustrates annual deposit totals.\nAs noted above, annual appropriation acts have included obligations limitations for CVF funds. In accordance with the limits placed on the fund, DOJ obligations have steadily increased from fiscal years 2009 through 2013. DOJ obligations from CVF funding were around $637 million in fiscal years 2009. In 2013, obligations increased by nearly $100 million to $736 million.\nAs discussed in our report, unavailable balances in the CVF have increased steadily in each year, as deposits into the CVF outpace obligations. CVF balances increased from just over $3 billion in 2009 to about $9 billion in 2013.result of deposits in excess of obligation limits on the fund.", "", "Within the Federal Bureau of Investigation (FBI), the Criminal Justice Information Services Division (CJIS) provides criminal justice information services to state, tribal, federal, local law enforcement, authorized noncriminal justice entities, and intelligence community partners. CJIS also collects fees from authorized users requesting fingerprint-based Criminal History Record Information (CHRI) checks for noncriminal justice purposes. The FBI has collected user fees for fingerprint checks since 1982.", "The FBI is authorized to establish and collect fees for providing fingerprint-based CHRI checks and other identification services submitted by authorized users for noncriminal justice purposes, including employment and licensing. The FBI may set such fees at a level to include an amount to establish a fund to defray expenses for the automation of fingerprint identification and criminal justice information services and associated costs.", "To report collection, obligation, and unobligated balance amounts for the CJIS fingerprint checks fees for fiscal years 2009 through 2013, we requested and received data provided by the FBI. In order to determine that the data were reliable, we requested that the FBI reconcile these amounts with the FBI’s audited statement of budgetary resources (SBR). FBI officials provided updated amounts for fiscal year 2013 based on their reconciliation to the FBI’s SBR; however, officials were unable to demonstrate that they could reconcile amounts for fiscal years 2009 through 2012. Accordingly, in table 5, we are providing the numbers that were given to us by the FBI for fiscal years 2009 through 2012 but we cannot determine if the numbers are reliable. The numbers reported for fiscal year 2013, as seen in table 6, were reconciled to the audited SBR.", "The Drug Enforcement Administration (DEA) is the primary agency for enforcing the provisions of the Controlled Substances Act that pertain to the diversion of controlled pharmaceuticals, such as narcotics, stimulants, depressants, and regulated chemicals such as ephedrine. DEA’s Office of Diversion Control oversees the Diversion Control Program (DCP), and carries out the mandates of the Controlled Substances Act by preventing the diversion of controlled substances and listed chemicals into the illicit market while ensuring a sufficient supply of the substances and chemicals for legitimate medical, scientific, research, and industrial purposes. The DCP is funded through registration fees that manufacturers, distributors, dispensers (such as physicians), importers, and exporters of controlled substances and certain regulated chemicals pay into an account called the Diversion Control Fee Account (DCFA).", "The purposes of the funds deposited in the DCFA are for the operation of the DCP. Federal law directs DEA to set the fees at a level that ensures the recovery of the full costs of operating the various aspects of the program. Collections over $15 million are to be deposited in the DCFA, which means that the first $15 million goes to the Treasury and the rest of the fees are available to DEA. Fees charged are periodically refunded by the Treasury to DEA to reimburse expenses incurred in the DCP, in accordance with estimates made in DEA’s budget request. Changes in the amounts designated in the budget requests can be made only after notification to the Appropriations Committees, 15 days in advance.\nThe DCFA fee schedule is contained in regulations that DEA issues, and when amending the fee amounts, DEA issues a notice of proposed rulemaking describing the process for determining the fee amounts and then issues a final rule setting the fees. DEA’s most recent rule was issued in 2012.", "The DCP is fully funded by fees relating to the registration and control of the manufacture, distribution, dispensing, import, and export of controlled substances and listed chemicals. Fees vary based on the registrant class (e.g., researcher, practitioner, distributor, manufacturer, etc.) and range from $244 annually for a researcher, for example, to $3,047 annually for a manufacturer of chemical and controlled substances.2009 through 2013, DEA collected a total of about $1.39 billion in fees.\nFrom fiscal years 2009 through 2013, DEA obligated a total of about $1.37 billion. According to DOJ data, about 58 percent of obligations were for personnel costs of salaries and benefits, and the other 42 percent covered nonpersonnel costs such as rent, equipment, operations and maintenance of equipment, and purchase of goods and services.\nTrends in Annual Collections, Obligations, and Unobligated Balances As can be seen in figure 10, collections have been slightly increasing over time. For example, in fiscal year 2009, DEA collected about $235 million in fees and in fiscal year 2013, collected about $328 million in fees. Likewise, obligations have also increased slightly over time. Generally, unobligated balances have remained relatively stable and averaged about $67 million a year. The highest unobligated balance was at the end of fiscal year 2009, at about $88 million, and the lowest was at the end of fiscal year 2011, at about $42 million. DEA maintains an unobligated balance, called the operational continuity fund, in order to avoid operational disruptions throughout the year that might occur because of fluctuations in collections and obligations. Figure 10 shows collections, obligations, and unobligated balances for fiscal years 2009 through 2013.", "", "FPI, managed by the Federal Bureau of Prisons (BOP) and governed by a presidentially appointed Board of Directors, is a wholly owned FPI’s mission is government corporation created by federal law in 1934.to protect society and reduce crime by preparing inmates in federal penal and correctional institutions and disciplinary barracks for successful reentry into society through job training. Specifically, FPI provides inmates employment and job skills through the production of market- priced high-quality goods, such as furniture, clothing, electronics, and vehicular and metal products, and through services such as printing, data processing, call centers, and laundry. FPI’s factories are operated by civilian supervisors and managers responsible for training and overseeing the work of inmates.\nFederal law generally requires agencies to purchase products from FPI. According to FPI, it was designed to be a “mandatory source” of federal supply for the products it manufactures to help ensure a steady work flow and partially offset some of the competitive disadvantages associated with operating in a correctional environment, such as lower productivity levels. In fiscal year 2013, FPI products were organized into five business sectors: clothing and textiles, electronics, (which includes fleet management and vehicular products), office furniture, recycling, and As of September 30, 2013, FPI had industrial and service services.operations at 78 factories located at 62 prison facilities, and employed about 13,000 inmates.", "See 18 U.S.C. § 4124 and 48 C.F.R. §§ 8.601-08. administrative costs, including salaries for management personnel, travel expenses, and supplies. FPI funds are generally available until expended without further action from Congress. That is, FPI has the authority to carry over balances from 1 fiscal year to the next.", "FPI is fully funded by and operated as a revolving fund—that is, it charges for the sale of products or services and uses the proceeds to finance its spending, usually on a self-sustaining basis—and does not receive an annual appropriation.\nThe majority of FPI’s funding is derived from the sale of products and services to other federal departments, agencies, and bureaus, and FPI’s sales revenue has declined from fiscal years 2009 through 2013. In addition to sales revenue, FPI received income from the interest earned by investing its carryover balances. In fiscal year 2013, three of FPI’s five business sectors—clothing and textiles, electronics, and office furniture— reported a decline in sales revenue compared with fiscal year 2009 revenue.\nSales revenue from FPI’s activities is obligated to defray all operating costs, including the purchase of raw materials and equipment, staff salaries and benefits, and inmate wages, among other things. For example, factories utilize raw materials and parts purchased from the private sector to produce finished goods, such as office furniture.\nTrends in Annual Collections, Obligations, and Carryover From fiscal years 2009 through 2013, FPI’s total proceeds of sales and operation costs decreased each year, and these operating costs have generally decreased at a faster rate than its sales revenues declined. Because FPI’s operating costs have declined at a greater rate than its sales revenues have declined, FPI’s unobligated balance has increased during this time period. Specifically, at the end of fiscal year 2013, FPI’s unobligated balance had increased by more than $139 million compared with its end-of-year balance in fiscal year 2009. According to FPI’s annual financial statements, a decline in overall federal spending, coupled with declining interest rates, has negatively affected FPI’s sources of funding. In addition, the passage of legislation that affected FPI’s designation as a mandatory source of federal supply for the products it manufactures contributed to declines in sales during this time period. For example, before purchasing an item from FPI, agencies are generally required to conduct market research to determine whether the item is comparable to items available from the private sector that best meet the government’s price, quality, and time-of-delivery specifications.FPI’s sales revenues and obligations have generally decreased, while unobligated balances have increased during this time period.", "", "The DOJ Three Percent Fund is an account composed of 3 percent of amounts collected “pursuant to civil debt collection litigation activities.” According to DOJ officials, civil debt litigation activities may include activities such as bringing civil cases to court or conducting administrative activities such as tracking unpaid debts and issuing notices for payments due. Civil debt does not include criminal fines and penalties or forfeiture of properties and assets. Eligible transactions from the payor to the government are assessed a 3 percent fee, which is used to offset costs for DOJ to manage the collection and distribution of funds to federal agencies awarded the civil judgment as well as civil and criminal litigation activities conducted by the department.\nCivil debt transactions provided to the Three Percent Fund are managed by the DOJ Justice Management Division Debt Collection Management Staff (DCM). DCM provides the operational, policy, and client support services—including training and reporting—to facilitate the collection of debts owed to the United States government. DCM manages the computer systems used to manage transactions and collections retained in the Three Percent Fund.\nDOJ annually disburses Three Percent Fund collections to DOJ components that conduct activities related to civil and criminal debt collections—which, according to DOJ, also include investigatory, litigation, and administrative activities related to obtaining these debts— based on eligibility of costs and DOJ priorities. DOJ established the Collection Resources Allocation Board (CRAB) to review components’ requests for funds based on intended uses, awarding funds to the components to offset costs for activities covered in the requests for funding for the year. Funds are offsetting collections that reduce the costs for conducting these activities, which otherwise do not obtain funding or are funded through other appropriations provided to the DOJ component conducting the activities.", "Three Percent Fund collections are no-year funds available for paying the costs of processing and tracking civil and criminal debt collection litigation and, thereafter, for financial systems and for debt collection–related personnel, administrative, and litigation expenses. The CRAB is responsible for determining the activities that receive agency funding. Any amounts unobligated at the end of the fiscal year are retained as an unobligated balance in the Three Percent Fund. They are available the following year to DOJ to obligate and expend.", "Three Percent Fund collections are received from payors that owe debts resulting from civil settlements, judgments, or referred debt to DOJ.\nFrom fiscal years 2009 through 2013, Three Percent Fund collections totaled more than $623 million. According to DCM officials, debt collections are from private individuals as well as from businesses. DCM officials stated that while most collections are from small debts, single transactions for larger civil debts may provide several million dollars to the fund. For instance, according to information provided by DCM, in 2013, there were over 15,000 separate transactions of funds in the Three Percent Fund. According to these transactional data, fewer than 30 transactions provided collections of $1 million or more. The largest transaction resulted in a deposit of over $22 million to the Three Percent Fund.\nThe CRAB awards Three Percent funds based on priorities established by the board. According to DOJ officials responsible for the fund, amounts are provided using the following broader priorities: 1. Costs to manage debt collection activities, including full funding for DCM costs and the computer system infrastructure to manage transfers of funds from payors to the various federal agencies receiving civil collections. 2. Debt collection activities such as tracking debtors’ funds, training for properly conducting debt collections and understanding the resources available to federal agencies for obtaining debts, and conducting administrative activities such as sending demand letters to debtors. 3. Costs of conducting civil litigation and investigation where collections are presumed to be obtained. This includes both referred debt where the debt has already been established, and affirmative civil litigation where the debt has not yet been established in court. Such activities include personnel, court costs, and administrative activities that support such litigation. 4. Costs of conducting criminal litigation or investigation where collections are presumed to be obtained from the defendant. Such activities include personnel and administrative activities that support such litigation.\nFrom 2009 through 2013, seven DOJ components have received Three Percent Fund allocations, in addition to DCM being fully funded. Of the total $600 million allocated during that time, about 33 percent—about $200 million—was to the Executive Office for U.S. Attorneys (EOUSA). About 26 percent—over $150 million—was awarded to the Civil Division. Officials responsible for awarding amounts from the Three Percent Fund said that this reflects the prioritization process as the U.S. Attorneys conduct most of the litigation activities for DOJ, and the Civil Division is the component within DOJ that specializes in larger, more complex civil litigation activities. See figure 12 for a breakout of amounts in the Three Percent Fund by the receiving component within DOJ.\nTrends in Collections, Obligations, and Unobligated Balances From fiscal years 2009 through 2013, both collections and obligations in the Three Percent Fund generally increased at similar rates, while unobligated balances fluctuated but generally increased during the 5-year period. Specifically, collections increased from $83 million in fiscal year 2009 to $158 million in fiscal year 2013—an increase of about 90 percent over the 5-year period.fiscal year 2009 to about $158 million in fiscal year 2013—an increase of about 88 percent. Over the 5-year period, unobligated balances increased from about $136 million to $161 million. See figure 13 for collections, obligations, and end-of-year unobligated balances from fiscal years 2009 through 2013.", "", "The U.S. Trustee Program’s (USTP) mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders—debtors, creditors, and the public. The USTP investigates and civilly prosecutes bankruptcy fraud and abuse; refers suspected criminal activity to the U.S. Attorney and other law enforcement partners; monitors and takes action to address the conduct of debtors, creditors, attorneys, credit counselors, and others; oversees private trustees; and ensures compliance with applicable laws and regulations in all bankruptcy cases, from individual consumer filings to large corporate reorganizations. In fiscal year 2013, the USTP oversaw the administration of more than 1 million bankruptcy cases filed by both individual and business debtors in federal judicial districts. The USTP is primarily funded through fees paid by bankruptcy debtors that are deposited into the United States Trustee System Fund (USTSF). According to USTP annual budget justifications, the total number of bankruptcy cases filings increased from fiscal year 2009 to 2010, and has steadily decreased from fiscal years 2010 through 2013. In fiscal year 2013, chapter 7 case filings constituted 69 percent of total bankruptcy cases filed, compared with 30 percent of chapter 13 cases, and 1 percent or less of chapter 11 and chapter 12 filings.", "The USTP may obligate deposits in the USTSF for specified program- related expenses, such as salaries and benefits, as specified in annual appropriation acts. While amounts deposited in the USTSF remain in the fund until expended, they are not available to the USTP until appropriated. detailed report on the amounts deposited in the USTSF and a description of related expenditures to Congress 120 days after the end of each fiscal year.\nThe USTP may also invest funds not currently needed for program purposes. 28 U.S.C. § 589a(c).", "USTP receives and deposits into the USTSF fees collected generally from four sources: (1) a portion of the filing fee in every bankruptcy case paid at the beginning of each case for chapters 7, 11, 12, and 13, (2) chapter 11 quarterly fees, (3) excess percentage fees collected by chapter 12 or chapter 13 standing trustees, and (4) interest on invested funds. According to USTP data, from fiscal years 2009 through 2013, chapter 11 quarterly fees accounted for about $692 million, or about 57 percent of total fees deposited in the USTSF. In comparison, bankruptcy filing and conversion fees accounted for about $515 million, or about 42 percent of total USTSF fees deposited.\nDuring this time period, the majority of the USTP’s obligations were related to personnel costs. According to USTP data, in fiscal year 2013, personnel pay and benefits accounted for 74 percent of the USTP’s obligations, and rental payments for USTP office space accounted for 13 percent of obligations. According to the USTP, it allocates funding for personnel according to hours used by USTP staff performing bankruptcy enforcement and case administration activities, as well as resources directly related to the performance of these activities.\nTrends in Collections, Obligations, and Unobligated Balances USTSF collections and obligations from fiscal years 2009 through 2013 were relatively stable. Specifically, collections totals ranged from $217 million to about $223 million. During the same time, obligations ranged from about $214 million to about $226 million. The smallest collection and obligation totals were both in fiscal year 2013. The end-of-year unobligated balances from fiscal years 2009 through 2013 were also relatively stable, ranging from about $500,000 to about $8.6 million. According to USTP officials, the USTP uses the unobligated balance to meet its obligations to fund the program’s continuing operations.", "", "", "", "In addition to the contact named above, Dawn Locke (Assistant Director), Valerie P. Kasindi and Jeremy P. Manion (Analysts-in-Charge), Thomas Beall, Dean D. Carpenter, Wendy Dye, Cynthia Grant, Eric Hauswirth, Felicia Lopez, Alicia Loucks, Cory A. Mazer, Leah Q. Nash, Jessica S. Orr, Amanda J. Postiglione, and Janet Temko-Blinder made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "h0_full", "h0_full", "", "h2_title h1_full", "h2_full", "h1_full", "", "", "h2_full h1_full", "", "", "h1_title", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How does funding from sources such as fines or fees impact the DOJ's budget resources?", "What kinds of funding sources does the Department of Justice have?", "How did spending vary from source to source?", "What makes up the fees collected by the CJIS division for providing non-criminal justice fingerprint checks?", "What disconnect is there between the FBI and stakeholders regarding these fees?", "How have projected volumes affected the amount set for fees?", "What has the discrepancy between actual volumes and projected volumes caused?", "What do CJIS officials need to address regarding unobligated balances?", "What does GAO recommend DOJ create a policy for in regards to the Three Percent Fund?", "Why might GAO recommend that the FBI publish cost recovery and automation portions of fingerprint checks fees?", "Why does DOJ have concerns with GAO's recommendations?" ], "summary": [ "Alternative sources of funding—collections by the Department of Justice (DOJ) from sources such as fines, fees, and penalties—made up about 15 percent of DOJ's total budgetary resources in fiscal year 2013.", "Specifically, DOJ collected about $4.3 billion from seven major alternative sources of funding—including the Assets Forfeiture Fund, the Crime Victims Fund (CVF), and noncriminal fingerprint checks fees, among others—which were available to DOJ.", "Agency flexibility regarding the use of the seven funding sources varied with laws specifying funding purposes, amounts, and availability by, for instance, limiting obligations from a source or limiting the period in which funds may be obligated.", "The Federal Bureau of Investigation's (FBI) Criminal Justice Information Services (CJIS) Division collected $396 million in fees for providing non-criminal justice fingerprint checks during fiscal year 2013.", "The fee is made up of a cost recovery and automation portion but the breakout between the two portions of the fee is not explicitly communicated to stakeholders. As a result, stakeholders do not have complete information for providing meaningful feedback.", "Additionally, CJIS sets fees, in part, based on projected volume of transactions.", "Actual volumes have exceeded projected volumes, resulting in CJIS bringing in more than anticipated in automation fees and contributing to an unobligated balance of $284 million at the end of fiscal year 2013.", "CJIS officials stated that they are aware of growing unobligated balances but have not evaluated what an appropriate amount should be. As a result, CJIS does not know if it is carrying over a suitable amount to meet future needs.", "GAO recommends that DOJ develop a policy to analyze unobligated carryover balances of the Three Percent Fund.", "GAO also recommends that the FBI publish cost recovery and automation portions of fingerprint checks fees and develop a policy to analyze and determine an appropriate range for unobligated balances from automation fees.", "DOJ generally concurred with our recommendations, but noted concerns with developing revenue estimates for the Three Percent Fund and establishing a range of carryover balances for FBI fingerprint check fees." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, 2, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 4, 4, 4, 4, 4, 6, 6, 6 ] }
GAO_GAO-13-570	{ "title": [ "Background", "Our Interviews at Health and Human Services Agencies", "Our Interviews at Labor Agencies", "Our Interviews at Agriculture Agencies", "Federal Managers Reported That, Where Available, Evaluations Had Helped Improve Programs", "Most Managers Lacked Recent Evaluations of Their Programs", "Most Managers Who Had Evaluations Reported That Evaluations Helped Them Assess and Improve Programs", "Increasing Understanding of Program Performance", "Allocating Program Resources", "Informing the Public", "Program Context Hinders an Evaluation’s Use More Than Its Limitations or the Agency’s Lack of Capacity", "Potential Barriers Associated with Study Features or Agency Evaluation Capacity", "Managers’ Limited Knowledge of Congressional Support for Evaluation", "Lessons for Facilitating Agencies’ Use of Evaluation Results", "Demonstrate Leadership Support for Evaluation for Program Accountability and Improvement", "Build a Strong Body of Evidence", "Engage Program Stakeholders throughout an Evaluation", "Concluding Observations", "Agency Comments", "Appendix I: Methodology for Federal Managers Survey", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "References", "Related GAO Products" ], "paragraphs": [ "Program evaluations are systematic studies that use research methods to address specific questions about program performance. Evaluation is closely related to performance measurement and reporting. Whereas performance measurement entails the ongoing monitoring and reporting of program progress toward preestablished goals, program evaluation typically assesses the achievement of a program’s objectives and other aspects of performance in the context in which the program operates. In particular, evaluations can be designed to isolate the causal impacts of programs from other external economic or environmental conditions in order to assess a program’s effectiveness. Thus, an evaluation study can provide a valuable supplement to ongoing performance reporting by measuring results that are too difficult or expensive to assess annually, explaining the reasons why performance goals were not met, or assessing whether one approach is more effective than another.\nEvaluation can play a key role in program planning, management, and oversight by providing feedback on both program design and execution to program managers, legislative and executive branch policy officials, and the public. The program evaluation literature has identified different ways that program managers and policy makers can use evaluation results to (1) clarify understanding of how the program does or does not address a problem of interest, (2) make changes to improve the design or management of an existing program or policy, (3) support or change resource allocations within or across programs, (4) share promising practices or lessons learned with service providers or program partners, or (5) improve the quality of program or policy assessment.\nIn addition, the program evaluation literature has identified influences on whether evaluation results are used for decision making such as (1) characteristics of the evaluation study (for example, quality and relevance), (2) agency evaluation capacity (skills and understanding), (3) policy context of decision making, and (4) stakeholder involvement in the evaluation. For example, our recent reviews of evaluations of programs funded under the President’s Plan for AIDS Relief (PEPFAR) and programs supporting education in science, technology, engineering, and mathematics concluded that limitations in evaluation quality, planning, and dissemination were barriers to the use of study results.", "In HHS, we interviewed officials at ACF and CDC because of their mature evaluation experience and officials from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) because they coordinate HHS’s evaluation, research, and demonstration activities and report to the Congress on its evaluations. ASPE conducts some studies on cross- cutting issues but primarily relies on other agencies to evaluate their own programs.\nACF oversees and helps finance programs to improve the social and economic well-being of families, individuals, and communities—the Head Start program is an example. ACF also assists Temporary Assistance for Needy Families (TANF) as well as state programs for child support enforcement. The principal office for managing evaluation at ACF is the Office of Planning, Research, and Evaluation (OPRE), which also provides guidance, analysis, technical assistance, and oversight related to strategic planning, performance measurement, research, and evaluation methods. OPRE conducts statistical, policy, and program analyses and synthesizes and disseminates research and demonstration findings. It consults with outside groups on ideas that feed into program and evaluation planning, including researchers, program partners, and other content area experts.\nCDC is charged with protecting the public health by developing and providing to persons and communities information and tools for preventing and controlling disease, promoting health, and preparing for new health threats. Some evaluation activities are funded by the Public Health Service (PHS) evaluation set-aside; in 2012, the Secretary of Health and Human Services was authorized to use up to 2.5 percent of appropriations for programs authorized by the PHS Act for evaluating the implementation and effectiveness of those programs. The set-aside is also used to fund databases of the National Center for Health Statistics and programs that cut across CDC’s divisions. Presently, the divisions within CDC control most of the evaluation funding that is focused on their respective programs. In 2010, CDC created the Office of the Associate Director for Program (OADPG) to promote program improvement through evidence-based practice. Among other duties, the office provides CDC-wide direction, standardization, and technical assistance for program planning, performance and accountability, and evaluation.\nIn addition to interviews with OADPG, we interviewed evaluation staff from CDC’s Division of HIV/AIDS Prevention (DHAP) and from the National Diabetes Prevention Program (National DPP) in the Division of Diabetes Translation (DDT) to discuss their use of evaluations. DHAP is charged with preventing HIV infection and reducing the incidence of HIV- related illness and death. DHAP provides national leadership and support for HIV prevention research and for developing, implementing, and evaluating evidence-based HIV prevention programs. It also conducts surveillance and tests biomedical interventions to reduce HIV transmission and progression. The Division of Diabetes Translation focuses on translating science into everyday practice. For example, the National Diabetes Prevention Program promotes evidence-based lifestyle change programs to prevent type 2 diabetes. The National DPP is a public-private partnership of community organizations, insurers, employers, health care organizations, and government agencies designed to help establish a network of structured, evidence-based lifestyle change programs for people at high risk for the disease.", "Labor’s ETA plays an important role in providing job training, employment assistance, and labor market information and income maintenance services primarily through state and local workforce development systems. The Office of Policy Development and Research (OPDR) provides ETA with strategic approaches to improve performance and outcomes through research, demonstrations, and the evaluation of major ETA programs. In addition to ETA’s staff, we interviewed staff from Labor’s Chief Evaluation Office. Labor established the Chief Evaluation Officer position in 2010 within its Office of the Assistant Secretary for Policy to manage and coordinate Labor’s evaluation agenda. The Chief Evaluation Office supports a wide range of high-priority and special research and evaluation activities across the department. To foster research relevant to policy, these activities include developing designs and proposed methodology (experimental as well as nonexperimental designs), collecting and analyzing data, maintaining information systems, developing reports, convening meetings, and briefing federal executive and other staff.", "FNS works within USDA’s Food, Nutrition, and Consumer Services to end hunger and obesity, administering 15 federal nutrition assistance programs, including the Supplemental Nutrition Assistance Program (SNAP), and school meals. FNS conducts a variety of studies, evaluations, and related activities to meet nutrition assistance program goals. Its Office of Policy Support (OPS) conducts program analysis and assessment to inform the policymaking and management of federal nutrition assistance. OPS is FNS’s coordinating point for program-related nutrition and policy services, working to coordinate its strategic and operational planning processes; its multidisciplinary staff analyze and evaluate key policy and program issues for the Congress and the public.", "", "Our governmentwide survey of federal managers found that the majority did not have recent evaluations of their programs. Just over a third (37 percent) reported that an evaluation had been completed in the past 5 years on any program, operation, or project they were involved in. Significantly more Senior Executive Service (SES) managers reported having had evaluations than non-SES managers (54 percent versus 36 percent). This should be expected, since SES managers are likely to oversee a broader range of programs than non-SES managers, any one of which might have been evaluated.\nMoreover, a similar number of federal managers (40 percent) reported that they did not know if an evaluation had been completed. We believe, for three reasons, that this may represent midlevel staff’s lack of familiarity with activities outside their programs rather than their problems in understanding the definition of “program evaluation.” First, in the fairly broad definition of evaluation we provided in the survey, we included both implementation and outcome or effectiveness evaluation. Second, many more non-SES managers than SES managers reported not knowing if there had been an evaluation (41 percent compared to 24 percent). Third, in other questions in our survey about GPRAMA provisions, larger proportions of midlevel managers reported that they had not heard of GPRAMA (21 percent of SES, 50 percent of non-SES managers) or were not familiar with any of the cross-agency priority goals it requires OMB, in coordination with agencies, to establish (26 percent of SES, 41 percent of non-SES managers).\nOf the 37 percent of managers who had evaluations, almost all (90 percent) reported that the agency or program itself conducted or contracted for these evaluations. Many of these managers also reported that studies had been conducted by their Inspector General or GAO (46 and 38 percent, respectively) or others such as independent boards or commissions (23 percent). Because of variation in the responsibilities of federal managers, we cannot deduce from these results how many programs have been evaluated. However, even had additional evaluations been conducted by others within or outside an agency, if managers were unaware of them, their results would not have been available for use.", "For the 37 percent of federal managers who had evaluations, the survey asked to what extent those evaluations had contributed to a variety of program management and policy making activities. Eighty to 81 percent of these managers reported that evaluations contributed to a moderate or greater extent to implementing changes to improve program management or performance and in assessing program effectiveness or value. Fewer managers reported that evaluations contributed to resource allocation or informing the public. Figure 1 summarizes their responses to the 11 activities the survey posed.\nManagers reported that evaluations had contributed to a moderate or greater extent to their taking direct actions to improve programs such as implementing changes to improve program management or performance (81 percent), sharing what works with others (73 percent), developing or revising performance goals (72 percent), and designing or supporting program reforms (71 percent).\nThey reported that evaluations had to a lesser extent helped them streamline programs to reduce duplicative activities (61 percent).\nThe evaluators we interviewed provided several examples of how evaluations had contributed to their modifying existing or developing new programs. For example, the FNS evaluators stated that conducting a series of cost-effectiveness studies had led to replacing paper coupons with electronic benefit cards in the Supplemental Nutrition Assistance Program (previously, food stamps).\nCDC, too, led the design of the lifestyle change diabetes prevention program for persons at high risk of developing type 2 diabetes based on a systematic review of the research and evaluation evidence on diabetes prevention. CDC joined with federal researchers, state health officials, and healthcare industry representatives to review the evidence to identify the key features strongly associated with successful diabetes prevention—weight loss, greater physical activity, stress management, and supportive group interaction. This strong research base laid the basis for the program and was said to have been critical in obtaining support for the program. “the process by which evaluation influences change is iterative, messy, and complex. Policy changes do not occur as a direct result of an answer to an evaluation question; rather, a body of evaluation results, research, and other evidence influences policy and practice over time.”\nThe evaluators explained that sharing what works with others is often the most direct action federal managers can take in decentralized programs where they do not have direct control of program activities conducted by others at the state or local level. In the public workforce system, states and localities set the amount of a voucher or Individual Training Account for individual jobseekers to obtain employment training, as well as how much guidance and direction counselors provide. ETA conducted a comparative effectiveness evaluation of how different service delivery models affected participation in counseling, training choices, expenditures, and impacts on participants’ earnings. It found that providing more flexible, higher-value training awards was cost effective and had positive impacts on job seekers’ long-term earnings. ETA then disseminated the results to state and local employment agencies to help inform their choice of programming.\nHHS contracted for an evaluation review to identify programs effective in reducing teen pregnancy and sexually transmitted infections or sexual risk behaviors. The review rated the rigor of program impact studies and described the strength of evidence supporting different program models. Findings from the review were released along with grant announcements for the Office of Adolescent Health’s Teen Pregnancy Prevention program, which supports the replication of evidence-based models and tests of additional models and innovative strategies. ACF evaluators disseminate their evaluation findings to researchers and practitioners through a listserv and events such as their annual Welfare Research and Evaluation Conference and Head Start’s Biennial National Research Conference. Since the 1990s these events have presented current research and evaluation for broad audiences of federal, state, and local government officials, practitioners, and researchers.\nGAO, 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits, GAO-13-279SP (Washington, D.C.: Apr. 9, 2013); 2012 Annual Report: Opportunities to Reduce Duplication, Overlap, and Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington, D.C.: Feb. 28, 2012); and Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011). and results to help inform decisions about how to streamline these programs. Evaluation studies, if carefully designed, can address specific questions about the comparative effectiveness of and extent of overlap among related programs. Common outcome measures are an important first step in comparing the effectiveness of alternative approaches. Collecting targeted data to compare the programs’ actual coverage of specific localities or populations can clarify the extent of duplication and reveal opportunities for streamlining or better coordinating these programs.\nFor example, ETA used state data to “unbundle” the effects of Unemployment Insurance from other forms of assistance for low-income workers and families (such as SNAP and TANF) that were unavailable from analyses of national macroeconomic data. Officials noted that the evaluation, which looked at results during an earlier recession, helped the Congress understand the utility of the program and factored into their considerations on whether to extend benefits. The macroeconomic simulation models reaffirmed the value of these benefits as an automatic economic stabilizer during the latest recession.", "Managers reported that evaluations contributed to a moderate or greater extent to improving their understanding of program performance, such as in their assessing program effectiveness, value, or worth (80 percent); increasing understanding about the program or topic (76 percent); and supplementing or explaining performance results (75 percent).\nThe primary purpose of program and policy evaluations, of course, is to provide systematic evidence on how well a program is working, whether it is operating as intended or achieving its intended results. All the evaluators we interviewed indicated that each evaluation study added to a body of evidence and knowledge about the program that would influence policy over time. ACF evaluators noted that a 2012 report by the Advisory Committee on Head Start Research and Evaluation had drawn on a plethora of evidence about the program. The committee made use of a large body of knowledge on early childhood program interventions, including rigorous studies of Head Start and Early Head Start, to develop a number of recommendations for future research, policy, and practice. The Advisory Committee’s recommendations were based on an intensive review and extensive deliberation on the implications of Head Start’s history and unique features, as well as the current and evolving policy context for early childhood programs.\nEvaluations reportedly also serve as a valuable supplement to routine performance monitoring. Managers reported that they contributed to a moderate or greater extent to developing or revising goals (72 percent) and supplementing or explaining performance results (75 percent). We have reported that evaluations can help explain the reasons for change (or lack of change) in program performance as well as measure more complex forms of performance than can feasibly be obtained on a routine basis. ETA evaluators noted that performance measures are a good source of ideas for future research and evaluation, identifying areas that need attention. Moreover, they saw them as two prongs of evidence- based decision making; evaluation results are often integrated into program management through the use of performance measures. ACF evaluators indicated that the funds allocated for the evaluation of the Health Professions Opportunity Grant program led to the development of a management information system for the program. The National Implementation Evaluation is to assess implementation, system change, and outcomes in improving education and employment opportunities for TANF recipients and other low-income individuals. In setting up the program, the evaluators worked with the program staff and grantees to develop a reporting system to track grantee progress and inform the evaluation.", "Fewer managers reported that evaluations contributed to a moderate or greater extent to allocating resources within the program (67 percent) than to improving program management or increasing understanding. Yet, in order to ensure that funds are directed toward activities most likely to significantly affect the HIV epidemic, CDC incorporated information from a national HIV-related resource allocation model to revise the way in which the agency funds health departments for HIV prevention. The new approach focused more on the highest-impact prevention strategies, informed in part by data on the costs and efficacy of key interventions for populations at various levels of risk for acquiring HIV.\nFewer managers also reported that evaluations contributed to a moderate or greater extent to supporting program budget requests (62 percent). This result is not surprising because, as we have pointed out, other factors and priorities influence the budget process. OMB staff noted that evaluations do not typically address high-stakes issues, such as whether a program should be continued, but address lower-stakes issues, such as how program performance might be improved. However, several evaluators reported that their agencies included evaluation results in their budget justifications for OMB and the Congress.", "These federal managers’ use of evaluations appears to be oriented more internally than externally. Few managers reported that evaluations contributed to informing the public about how programs were performing (36 percent rated it as small or no extent, and 26 percent reported that they had no basis to judge). This does not mean that they do not make their evaluation reports public; several agencies post them on their websites. It does imply that government transparency may still be a work in progress. For example, ETA posts evaluation evidence on best practices on a website targeted to the public workforce system for community colleges and state and local agencies to apply to their programs.the public through Data.gov, the federal database repository, to encourage others to conduct research and evaluation on ETA programs.", "Our governmentwide survey asked federal managers who had had evaluations completed in the past 5 years to what extent 12 potential barriers had hindered their using evaluations in their agencies. We found that modest concerns related to program and policy context were reported to be greater barriers to an evaluation’s use than problems with study quality or agency capacity or support for evaluation. Figure 2 summarizes their responses to all the barriers the survey posed.\nThe only factor that more than one-fourth of the managers reported as having hindered the agency’s use of evaluation to a great or very great extent was lack of resources to implement the evaluation findings (33 percent). The next most important barriers were also related to program context: difficulty resolving differences in opinion among internal or external program stakeholders (23 percent rated great or very great extent), difficulty distinguishing between the results produced by the program and the results caused by other factors (19 percent), and concern that the evaluation did not address issues that are important to decision-makers (18 percent).\nAmong federal managers who had evaluations of their programs, policies, or projects, the barrier to their use most frequently identified was lack of resources (one-third rated a great or very great extent). This is not surprising given today’s constrained federal budget resources; in a climate of budget reductions, agencies are hard pressed to argue for expanding or creating new programs. Some of the evaluators we interviewed noted that expensive or complicated programs, even if found to be effective, are unlikely to be adopted. Other evaluators thought it would be easier to defend a new investment if it were shown to be a cost- effective approach. Evaluators reported addressing this challenge by focusing on the cost-effectiveness of interventions and encouraging simpler program designs and effective program partnerships.\nFor example, CDC developed an optimal allocation tool to help state and local health departments determine how best to allocate their federal HIV prevention funds among interventions with the goal of preventing the greatest number of new cases of HIV. The evaluators reported that as program budgets remained constant or declined and as the number of persons living with HIV increased, health departments and local stakeholders became more accepting of transparent approaches to decision making, where the costs and benefits of decisions were made clear.\nSome evaluators recommended a focus on identifying the key features that define an effective program in order to reduce the burden on grantees’ attempting to implement a complex program and to improve their likelihood of success. The CDC Diabetes Prevention Program staff described four levers for scaling up a national program: quality standards with which to certify program sites, training to ensure that the program model would be implemented with fidelity, support and reimbursement for program sites, and participant engagement. The staff noted that having analyzed various options, they determined that it was important to develop a business model to operate—and obtain insurance reimbursement for—a new practical, scalable, and sustainable program outside the overburdened health care system.\nAlmost a quarter of federal managers perceived the effort to resolve differences of opinion among program stakeholders as a barrier to evaluation’s use to a great or very great extent. The wide range of program stakeholders can include the Congress, executive branch officials, nonfederal program partners (state and local agencies and community-based organizations), program beneficiaries, and the policy research community. Their perspectives on evaluation results may differ because of the complexity of study findings or differences in their policy opinions. One evaluator noted disagreements about what to do next when findings are not wholly positive or negative.\nThe CDC evaluators indicated that having a clear program outcome goal provided discipline and focus for basing a program’s development on a review of research and evaluation, ensuring that they examined only approaches found effective in achieving the program goal. Evaluators also emphasized the importance of reaching out early to program staff to get buy-in on evaluation questions and establish ongoing communication throughout, building trusting relationships. In the end, however, evaluators said they recognized that sometimes political or ideological concerns override evaluation findings in decision making.\nSome federal managers we surveyed (19 percent) reported that difficulty distinguishing between results produced by the program and results caused by other factors was a great or very great barrier to evaluation use. Across the government, programs aim to achieve outcomes that they do not control, that are influenced by other programs or external social, economic, or environmental factors. Typically, this challenge is met by conducting a net impact evaluation that compares what occurred with an estimate of what would have occurred in the absence of the program.\nHowever, these studies can be difficult to conduct and may not provide definitive results. Even when rigorous designs successfully exclude the influence of other factors, program officials may be reluctant to accept findings that do not match their expectations. Most of the evaluators we interviewed indicated that transparency regarding the evaluation’s assumptions and how the data were obtained were important for gaining stakeholder buy-in to the credibility of the evaluation and its proposed use. In addition, they said that as program staff gained more understanding and familiarity with evaluation methods, they became more comfortable using their results.\nHowever, in some circumstances, it may not be possible to construct evaluation designs that effectively isolate a program’s impact. FNS evaluators explained, for example, that since many federal nutrition programs are entitlement programs that serve all eligible applicants, it is difficult to find comparable nonparticipants with which to estimate the specific effects of receiving food assistance. In response to this challenge, evaluators said that they often evaluate, instead, the effects of modifications to entitlement programs. For example, FNS evaluators studied the effects of altering the way Summer Food Service Program benefits are delivered by using existing electronic benefits transfer technologies for SNAP and WIC (Special Supplemental Nutrition Program for Women, Infants, and Children) to provide $60 per month in food benefits to low-income children during the summer, when they do not receive school meals.\nSome federal managers (18 percent) reported that the concern that an evaluation did not address issues that were important to decision-makers hindered its use to a great or very great extent. The evaluators we interviewed noted that evaluations were often not useful for budget justifications, for example, because they had been designed for a different, narrower purpose, such as assessing grantee performance or the effectiveness of a particular approach. As we pointed out in a previous report on how experienced agencies develop evaluation agendas, reaching out to key program and congressional stakeholders before developing proposals can help ensure that evaluations will be used effectively in management and legislative oversight. Most of the evaluators indicated that their maintaining close communication with stakeholders helps them understand the issues that are important to program managers and policy makers and then design evaluations that will be useful to them.\nFor example, ETA evaluators described developing learning agendas with program staff: 5-year evaluation agendas that served as a strategic plan for conducting evaluations and revisiting them every 2 years to ensure that they continued to address the important issues. According to these evaluators, the process of setting these learning agendas has several benefits. Not only does joint planning create an opportunity for program staff to have ownership of and investment in the process; it also creates buy-in for the subsequent evaluations at executive and staff levels.", "Of seven potential barriers to use concerning the studies or an agency’s capacity or support for using evaluations, none were generally considered significant by the 37 percent of federal managers who reported having evaluations: concern about the credibility (validity or reliability) of study results (49 percent rated small or no extent); difficulty generalizing the results to other persons or localities (53 difficulty obtaining study results in time to be useful (58 percent); difficulty determining how to use evaluation findings to improve the program (54 percent); lack of staff knowledgeable about interpreting or analyzing program evaluation results (50 percent); difficulty accepting evaluation findings that do not conform to expectations (54 percent); lack of ongoing top executive commitment or support for using evaluation to make program or funding decisions (55 percent).\nAs we have reported before, an effective evaluation agenda aims to provide credible, timely answers to important policy and program questions.credibility of study results (49 percent) or the ability to generalize the results to other persons or locations (53 percent) to be a significant barrier to use, the evaluators we interviewed generally emphasized the importance of having a body of strong evidence.\nAlthough many federal managers did not consider the They said that they try to ensure study credibility by conducting rigorous, objective, independent research and that having several concurring studies helped build confidence in the findings and willingness to act on them. The evaluators said that research rigor was defined not by a particular choice of methods but by rigorous application of whatever method one chose: using “the right tool for the right situation.” The evaluators did not raise the issue of the generalizability of results directly but did note the advantage of a body of evidence over a single study in showing that effects are consistent across different conditions and locations.\nThe majority of federal managers with evaluations (58 percent) reported that not obtaining results in time to be useful was a barrier to a small or no extent. The evaluators we interviewed indicated that evaluations might arrive too late to contribute to policy decisions for a variety of reasons. First, they noted that the pace of policy making is much quicker than the time it takes to conduct an evaluation and that they often faced a trade-off between obtaining robust results from careful study methods and providing timely answers to policy questions. They saw this as a particular disincentive for policy officials to conduct large evaluations. Evaluators described three different strategies for addressing this issue: providing managers with interim results or lessons learned about implementing program changes that they could use right away, assembling a body of evidence on a program or issue from which evaluators could respond to questions as they arise, and involving stakeholders in planning their evaluation agenda to ensure that they will have the information needed in the future.\nSecond, several evaluators singled out the reviews of data collection instruments required under the Paperwork Reduction Act of 1995 as adding at least a year to their evaluation planning, thus precluding the use of rigorous methods to produce quick policy responses. Among other things, the act requires agencies to obtain public comment and secure OMB’s approval before requiring members of the public to provide information. The purpose of these reviews includes improving the quality and practical utility of the information the federal government requests and reducing paperwork burden on the public. Prior to OMB’s review, agencies are required, with some exceptions, to provide a 60-day public notice-and-comment period for each proposed information collection requirement not contained in a proposed rule. OMB’s 60-day review process generally includes a second 30-day period of public comment. In addition, the public and OMB reviews are typically preceded by internal agency review, which also adds time to the evaluation planning process.\nOthers in the evaluation community have complained about the length of the review process, its application to quite small as well as large data collection efforts, and its discouraging effect on evaluation activity. In 2010, OMB clarified the guidance for employing a streamlined “generic clearance” process intended for proposals to conduct multiple information collections using very similar methods. In response to continued concerns, OMB staff recently met with federal evaluators to answer questions and discuss ways in which the review process might be streamlined.\nThe majority of federal managers (54 percent) reported that determining how to use the findings to improve the program was a barrier to a small or no extent. The evaluators we interviewed described circumstances in which study results might be tentative or open to interpretation, providing no clear recommendation for action. For example, a study might have a process component insufficient to help identify the reasons for poor performance. Broadly, all the evaluators we interviewed recommended developing a clear report message, distilling the findings into an easily digestible and usable form, and tailoring the message to the intended actor or audience. For example, CDC evaluators stated that to respond to frequent congressional and other stakeholder requests about the cost- effectiveness of their programs, they develop a one-page document that includes a succinct, clear message describing the value of their programs.\nWe have previously reported on the importance of agency evaluation culture—sustaining a commitment to accountability and improving program performance—to supporting the regular conduct and use of evaluations.had access to evaluations reported that the presence of ongoing top executive commitment to using evaluations (55 percent rated small or no extent), staff knowledgeable about analyzing evaluation results (50 percent), and acceptance of findings that do not conform to expectations (54 percent) were not significant barriers to evaluation use.\nAs one might expect, most federal managers in offices that Indeed, all the evaluators we interviewed pointed to the research and policy expertise of their evaluation staff and their agency leadership’s commitment to evaluation as key to facilitating the use of their evaluation results. The ACF, ETA, and FNS evaluation offices, and many of their staff, have been producing evaluations for decades. The leadership of these agencies also demonstrates support for evaluation through allocating funding for evaluation and the operations of these offices and forming close working relationships with their evaluators. At the department level, Labor’s Deputy Secretary asked each component agency to substantiate its congressional budget justifications and operating plans with performance data and evaluation information. CDC’s Office of the Associate Director for Program described working with the program offices to integrate evaluation findings into their budget justifications for OMB and congressional appropriators. An evaluator we interviewed noted, however, that political staff turnover can inhibit developing leadership support for evaluation because it is hard to gain support for a study whose results may arrive after staff have left the agency.\nSome of the evaluators we interviewed noted that differences between evaluators and program staff in mission, world view, and pace sometimes made it difficult to gain program staff support for or interest in longer-term studies or for the notion of continuous program improvement. They pointed out that while evaluation staff are interested in assessing long- term program impacts, program staff are more interested in shorter-term projects. Evaluations can be a burden for program offices, given their workload, and program staff may discount negative findings unless they understand how they were derived.\nThe evaluators generally said that diligent outreach, effective relationships and trust, evaluation training, and developing audience- friendly formats for presenting results help mitigate these challenges. Evaluators described a variety of efforts—formal and informal—to engage regularly with program staff: providing technical assistance and tools for performance monitoring and evaluation, building staff understanding of the logic of evaluation, and improving evaluators’ understanding of program and policy issues and information needs. ETA evaluators brief program staff on completed evaluations’ evidence and findings. Evaluation offices throughout Labor host two to three seminars a month to discuss both substantive and methodological issues to improve staff’s awareness and knowledge of evaluation.\nFor example, the CDC Office of the Associate Director for Program developed a template for all nonresearch domestic Funding Opportunity Announcements to, among other things, ensure clarity for applicants on the program’s purpose and scope and provide a strong evaluation approach that aligns with the program’s purpose, activities, and outcomes. The template also requires applicants and CDC programs to indicate how findings will be made available and used, helping to ensure that evaluations align with the CDC program’s work plan and produce findings that will be used in planning and other decision making.\nDecentralized programs, whose control over program activities is state and local, can restrict the ability of federal program officials to act on evaluation results. Officials must convince state or local program officials, grantees, or others in industry to adopt program evaluation findings and recommendations. Evaluators explained that program partners and grantees who deliver program services but are not directly managed by federal staff may lack evaluation capacity and may be reluctant to use evaluation findings to change their activities without a clear mandate to do so. Some evaluators described using carrots and sticks to obtain program staff and partners’ interest and involvement in their evaluations. The allocation of funds for evaluation and requirements in grants to conduct evaluation helped gain program partners’ interest and involvement in the evaluations and their results. Evaluators reported disseminating evaluation results and program guidance to local service providers, engaging with intermediary organizations such as professional associations to disseminate their evaluation results, and working directly with program staff to help grantees implement effective program approaches.", "Only 18 percent of managers reported that lack of ongoing congressional commitment to use evaluation to make program or funding decisions was a barrier to use to a great or very great extent; however, more (39 percent) reported not being able to judge whether this was a barrier. Of course, agency staff on their own can implement some evaluation recommendations, whereas others may require legislative changes. In addition, agency managers, especially those not in the SES, may have quite limited contact with congressional staff and members; our interviews with evaluators indicated few such contacts. One evaluator stated that, for the most part, agency officials conduct formal briefings for the Congress in a tense, high-stakes environment; they lack the opportunity for informal discussion. To help improve the usefulness of agency performance information to Congress, GPRAMA significantly enhances requirements for agencies to consult with Congress when establishing or adjusting their strategic plans and agency priority goals. We recently issued a guide to assist Congress in ensuring the usefulness of these consultations and in using performance information in various legislative and oversight activities.\nAgencies may strategically plan work to gain congressional attention. ETA planned a survey to coincide with the anniversary of the Family Medical Leave Act of 1993 so that policy makers could use results in reexamining the program. CDC assembled a body of research and evaluation evidence supporting diabetes prevention that resulted in congressional support and authorizing legislation for the National Diabetes Prevention Program. However, as discussed previously, several responses to our survey suggest that many federal managers are focused relatively internally on their programs rather than on the broader policy environment and may be unfamiliar with congressional concerns.", "The evaluators we interviewed emphasized three basic strategies to facilitate evaluation’s influencing program management and policy: demonstrate leadership support of evaluation for accountability and build a strong body of evidence, and engage stakeholders throughout the evaluation process.", "Agency leadership can both provide support for conducting evaluations and encourage a culture of experimentation and continuous improvement. During the administrations of Presidents George W. Bush and Barack Obama, OMB has encouraged agencies formally and informally to expand their evaluation efforts and to use evidence and rigorous evaluation in budget, management, and policy decisions to improve government effectiveness. In 2002−07, OMB used the Program Assessment Rating Tool (PART) to bring assessments of program results explicitly into the budget formulation process. By asking whether a program had undergone regular independent program evaluations, PART sent the message that program assessment and evaluation was an important management tool.\nIn October 2009, OMB announced an initiative to strengthen federal program evaluation by posting information online on all agencies’ planned and ongoing impact evaluations, establishing an interagency group to promote the sharing of evaluation expertise, and funding some rigorous In new agency impact evaluations and capacity strengthening efforts. May 2012, OMB asked agencies to demonstrate the use of evidence and evaluation throughout their budget submissions, encouraged the designation of a high-level official responsible for program evaluation, and announced a number of forums for information development and sharing to improve agency use of evidence. In interviews, OMB staff noted that agencies vary so much that they cannot deliver a top-down evaluation mandate on what to do; instead, they work with OMB Resource Management Officers and agency staff on how to use evaluations and institutionalize evaluations “as part of agencies’ DNA.”\nNevertheless, as OMB staff observed, the federal government’s capacity and support for evaluation vary widely. The agencies where we conducted interviews were selected for their evaluation capacity and, naturally, demonstrated leadership support for conducting and using evaluations. Several evaluators reported that their deputy secretary and other senior officials strongly emphasized the use of evidence for decision making and asked for performance and evaluation data in budget justifications and operating plans. In addition, these five agencies gave the evaluation offices responsibility for promoting evaluation capacity and providing an organizational framework for planning and conducting evaluation, similar to that recommended by the American Evaluation Association.\nLabor created the Office of the Chief Evaluation Officer in 2010 to coordinate and provide guidance to evaluations conducted throughout the department. Also in 2010, CDC created the Office of the Associate Director for Program to promote continuous program improvement and provide direction and consultation to program planning, performance measurement, and evaluation conducted by individual CDC centers. In November 2012, ACF established a formal evaluation policy that reaffirms its commitment to conducting evaluation and using evidence from evaluations to inform policy and practice. The policy describes the procedures and policies by which ACF seeks to promote the principles of rigor, relevance, transparency, independence, and ethics in conducting evaluation.\nThe ACF and FNS evaluation offices have a long history of supporting their agencies’ policy making process and described having close communication with and support from their agency leadership. For example, the Associate Administrator heading FNS’s evaluation office reported participating regularly in discussions of program and policy changes with the Administrator. ACF OPRE has also partnered with HHS’s Office of the Assistant Secretary for Planning and Evaluation to research the best techniques for disseminating evaluation results.", "Strong evidence may include descriptive research, clinical trials, evaluations of innovative practices, survey statistics, performance data, case studies, and program administrative data. All the evaluators indicated that attention to evaluation rigor and quality was critical, no matter the methods used. They noted that randomized experiments, although extremely powerful for assessing program net impact, were not always necessary or feasible and that it was important to use the right tool for the right situation.\nThese evaluators drew on systematic literature reviews, a portfolio of studies and program data, and an agency’s many years of experience with scaling up national programs to develop a knowledge base over time. A body of evidence was considered more valuable than a single study because multiple studies with similar results strengthens confidence in their conclusions, and a body of information can yield answers to a variety of different questions, whenever stakeholders pose them.\nThese evaluators pointed out that they rarely based decisions on a single study. Individual evaluation studies typically do not simply identify whether a program works but, rather, assess the effects of an individual program or intervention on specific domains (such as employment or educational attainment) for the specific populations and conditions studied. Programs found effective in their initial development stage need to be reevaluated when implemented by someone other than the program developer under less auspicious conditions. Accumulating a body of evidence on an issue was also considered important because no one study or form of data can answer all questions. It is also a strategy for ensuring that information is available for input to fast-breaking policy discussions.", "All the evaluation officials we interviewed stressed the importance of developing good relationships with program stakeholders and involving them in evaluations to promote their use. They involved stakeholders throughout the evaluation planning, execution, and reporting stages to gain their buy-in on the relevance and credibility of evaluation findings.\nEvaluators recommended conducting outreach to and maintaining close communication with program managers and policymakers in order to understand the issues they face and design evaluations that will be helpful to them. Evaluators at ACF, ETA, and FNS consulted with their program offices and other stakeholders to ensure that their evaluation agendas addressed policy and management information needs. Consulting with program staff throughout an evaluation was said to help ensure a more trusting relationship and a greater willingness to hear not- so-good news when the evaluation results came in. Program staff may be unwilling to accept negative findings because they have a vested interest in trying to make the program work. But this can be countered if staff understand the logic of the evaluation or if the study provides information on barriers that might be overcome.\nSome evaluators noted that it was important to find the right balance of proximity and independence between program and evaluation staff. Evaluations have to be objective and independent enough that readers have faith in their findings and conclusions, but stretching independence too far risks the irrelevance of results to the policy and program staff. Others warned that if evaluators are located within program offices, then their studies may get buried and important findings may not reach the leadership. ACF’s evaluation policy highlights the importance of obtaining stakeholder input to evaluation priorities and planning while protecting independence in evaluation design, conduct, and analysis.\nThe evaluators described providing assistance, training, and incentives to program staff and service providers to conduct and use evaluations. Evaluation offices provided technical assistance themselves or through contractors for evaluations conducted by program offices or grantees and for performance measurement systems. Both Labor’s CEO and the CDC OADPG developed tools and guidance for evaluation planning and use. The CEO described developing checklists for implementation and effectiveness evaluations, method guidelines, and templates for preparing data collection packages for OMB’s review. They also reported holding two or three seminars a month on evaluation methods or individual studies for both evaluation and program staff. OADPG provided evaluation guidelines and recommendations, and a grant announcement template for focusing an evaluation’s purpose and intended use. OADPG also funds an evaluation fellows program to increase evaluation capacity in the centers. ACF sponsors an annual Welfare Research and Evaluation Conference of researchers, state and local program administrators, practitioners, and federal officials and policymakers who meet and learn about research on and experience with family self- sufficiency and social welfare programs and policies. ACF and ETA evaluators noted that embedding evaluation in grant programs serves as a significant incentive for state and local agency staff to get involved in and use evaluations.\nA key strategy recommended for promoting the use of evaluation findings was to distill them to make them digestible and usable and to proactively disseminate them. In addition to posting findings on agency websites, evaluators may tailor a message to fit various audiences such as federal agency program offices and policy makers, state and local agencies, and local program affiliates. It can be very important to provide program staff with interim results or lessons from early implementation to ensure timely data for program decisions, as well as help them integrate findings into their program budget justifications.\nETA conducts briefings for agency staff on each evaluation as it is completed and packages lessons learned from evaluations as “promising practices” and guidance to local program affiliates in private industry through the Workforce Systems Strategies website. ACF uses regular research conferences and a listserv to disseminate evaluation findings to intermediary professional organizations that can be especially influential for program practitioners’ adoption of those findings. In the diabetes prevention program, CDC provided an unusual example of leveraging and coordinating the resources of several nongovernmental program partners to implement a national program based on evaluation findings.", "Agencies’ lack of evaluations may be the greatest barrier to their ability to inform program management and policy making. Four-fifths of federal managers who had evaluations reported that they contributed to implementing changes to improve program management or performance. Moreover, the greatest barrier to evaluation use was having insufficient resources to implement their findings rather than having difficulty accepting them or determining how to use them. Yet, just over a third of federal managers reported that an evaluation had been completed in the past 5 years on any of the programs, operations, or projects that they were involved in. We believe this gap represents lost opportunities for agencies to identify ways to improve federal government efficiency and effectiveness.\nSeeking out in advance the interests and concerns of key program stakeholders, including the Congress, can help ensure that agency evaluations provide the information necessary for effective management and congressional oversight. Two of the barriers to evaluation use managers most frequently cited in our survey concerned addressing issues important to decision makers and resolving differences of opinion among stakeholders. Yet, nearly 40 percent of managers who had evaluations reported that they did not know whether lack of ongoing congressional commitment to using evaluations was a barrier, and some of the evaluators we interviewed reported few congressional consultations in planning evaluations. Consultation with congressional stakeholders in developing evaluation agendas is important to help ensure that agency evaluations meet their information needs and inform decisions.\nComprehensive program evaluations that examine the coverage and effectiveness of a cluster of federal programs and policies aimed at achieving similar outcomes could be key in coordinating and streamlining programs so as to reduce duplication and overlap. Over the past 3 years, we have identified numerous areas of fragmentation, overlap, or duplication in federal programs and activities. Carefully designed evaluation of performance and results for clusters of related programs— adoption of common measures and direct assessment of their overlap— could reveal ways to streamline, consolidate, or better coordinate those programs.", "We requested comments on a draft of this report from the Secretaries of Agriculture, Health and Human Services, and Labor and the Director of the Office of Management and Budget. The agencies and OMB staff provided technical comments that we incorporated as appropriate.\nWe are sending copies of this report to the Secretaries of Agriculture, Health and Human Services, and Labor; to the Director of the Office of Management and Budget; and to appropriate congressional committees. The report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2700 or [email protected]. Contact points for our Office of Congressional Relations and Office of Public Affairs may be found on the last page of this report. Staff who made key contributions to this report are listed in appendix II.", "We administered a web-based questionnaire on organizational performance and management issues to a stratified random sample of 4,391 persons from a population of approximately 148,300 mid-level and upper-level civilian managers and supervisors working in the 24 executive branch agencies covered by the Chief Financial Officers Act of 1990 (CFO Act), as amended. The sample was drawn from the Office of Personnel Management’s (OPM) Central Personnel Data File (CPDF) as of March 2012, using file designators indicating performance of managerial and supervisory functions. The sample was stratified by agency and by whether the manager or supervisor was a member of the Senior Executive Service (SES) or not. The management levels covered general schedule (GS) or equivalent schedules in other pay plans at levels comparable to GS-13 through GS-15 and career SES, or equivalent. In reporting the questionnaire data, when we use the term “governmentwide” or the phrase “across the federal government” we are referring to these 24 CFO Act executive branch agencies, and when we use the terms “federal managers” and “managers” we are referring to both managers and supervisors.\nThe questionnaire was designed to obtain the observations and perceptions of respondents on various aspects of such results-oriented management topics as the presence and use of performance measures, hindrances to measuring performance and using performance information, agency climate, and program evaluation use. In addition, to address implementation of GPRAMA, the questionnaire included a section requesting respondents’ views on various provisions of GPRAMA, such as cross-agency priority goals, agency priority goals, and quarterly performance reviews.\nThis survey is similar to surveys we have conducted four times previously at the 24 CFO Act agencies—1997, 2000, 2003, and 2007—except that the questions on GPRAMA provisions and program evaluation use were new in 2013. The 1997 survey was conducted as part of the work we did in response to a GPRA requirement that we report on implementation of the act. The 2000, 2003, and 2007 surveys were designed to update the results from each of the previous surveys.new questions with federal managers in several of the 24 CFO Act agencies.\nWe conducted pretests of the Most of the items on the questionnaire were closed-ended, meaning that depending on the particular item, respondents could choose one or more response categories or rate the strength of their perception on a 5-point “extent” scale ranging from “to no extent” at the low end of the scale to “to a very great extent” at the high end. On most items, respondents also had an option of choosing the response category “no basis to judge/not applicable.” A few items had yes, no, or do not know options for respondents.\nTo administer the survey, an e-mail was sent to managers in the sample that notified them of the survey’s availability on the GAO website and included instructions on how to access and complete the survey. Managers in the sample who did not respond to the initial notice were sent up to four subsequent e-mail reminders and follow-up phone calls asking them to participate in the survey. From the 4,391 managers selected for this survey, we found that 266 of the sampled managers had retired, separated, died, or otherwise left the agency or had some other reason that excluded them from the population of interest. We received usable questionnaires from 2,762 sample respondents, or about 69 percent of the remaining eligible sample. The response rate across the 24 agencies ranged from 57 percent to 88 percent.\nThe overall survey results can be generalized to the population of managers as described above at each of the 24 agencies and governmentwide. The responses of each eligible sample member who provided a usable questionnaire were weighted in the analyses to account statistically for all members of the population. All results are subject to some uncertainty or sampling error as well as nonsampling error. The governmentwide percentage estimates based on our sample from 2012 presented in this report have 95 percent confidence intervals within plus or minus 4 percentage points of the estimate itself for the initial question about whether an evaluation had been completed and within 5 to 6 percentage points for subsequent questions about use of those evaluations. An online e-supplement shows the questions asked on the survey along with the percentage estimates and associated 95 percent confidence intervals for each item for each agency and governmentwide. For additional details on the survey methodology, see our report summarizing our body of work on the implementation of GPRAMA.", "", "", "In addition to the contact named above, Stephanie Shipman (Assistant Director), Thomas Beall, Valerie Caracelli, Thomas Clarke, Stuart Kaufman, Jamila Kennedy, Penny Pickett, Mark Ramage, and Paul Teicher made key contributions to this report.", "Administration for Children and Families. Evaluation Policy. Washington, D.C.: Department of Health and Human Services, November 2012.\nAmerican Evaluation Association. Comments on the Paperwork Reduction Act. Fairhaven, Mass.: December 16, 2009.\nAmerican Evaluation Association. An Evaluation Roadmap for a More Effective Government. Fairhaven, Mass.: September 2010. www.eval.org/EPTF.asp.\nCousins, J. Bradley and Kenneth A. Leithwood. “Current Empirical Research on Evaluation Utilization,” Review of Educational Research, 56:3 (1986): 331−64.\nHatry, Harry P., and others. How Federal Programs Use Outcome Information: Opportunities for Federal Managers. Washington, D.C.: IBM Endowment for the Business of Government, 2003.\nThe Lewin Group. Getting the Most out of Evaluations: A Guide to Successful Evaluation Utilization. Washington, D.C.: U.S. Department of Health and Human Services, June 30, 2009.\nMacoubrie, J., and C. Harrison. Human Services Research Dissemination: What Works? OPRE Report 2013-09. Washington, D.C.: Office of Planning, Research, and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services, 2013.\nMacoubrie, J., and C. Harrison. The Value-Added Research Dissemination Framework. OPRE Report 2013-10. Washington, D.C.: Office of Planning, Research, and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services, 2013.\nMark, Melvin M., Gary T. Henry, and George Julnes. Evaluation: An Integrated Framework for Understanding, Guiding, and Improving Public and Nonprofit Policies and Programs. San Francisco, Calif.: Jossey-Bass, 2000.\nMathison, Sandra, ed. Encyclopedia of Evaluation. Thousand Oaks, Calif.: Sage Publications, 2005.\nNutley, Sandra M., Isabel Walter, and Huw T. O. Davies. Using Evidence: How Research Can Inform Public Services. Bristol, U.K.: The Policy Press, 2007.\nOffice of Management and Budget. Increased Emphasis on Program Evaluations. Memorandum for the Heads of Executive Departments and Agencies, M-10-01. Washington, D.C.: The White House, Oct. 7, 2009.\nOffice of Management and Budget. Paperwork Reduction Act—Generic Clearances, Memorandum for the Heads of Executive Departments and Agencies and Independent Regulatory Agencies. Washington, D.C.: The White House, May 28, 2010.\nOffice of Management and Budget. Use of Evidence and Evaluation in the 2014 Budget, Memorandum to the Heads of Executive Departments and Agencies, M-12-14. Washington, D.C.: The White House, May 18, 2012.\nOttoson, J. M. “Knowledge-for-Action Theories in Evaluation: Knowledge Utilization, Diffusion, Implementation, Transfer, and Translation.” In J. M. Ottoson and P. Hawe, eds. Knowledge Utilization, Diffusion, Implementation, Transfer, and Translation: Implications for Evaluation. New Directions for Evaluation, 124 (2009): 7−20.\nPatton, Michael Quinn. Utilization-Focused Evaluation, 4th ed. Los Angeles, Calif.: Sage, 2008.\nPrewitt, Kenneth, Thomas A. Schwandt, and Miron L. Straf, eds. Using Science as Evidence in Public Policy. National Research Council, Division of Behavioral and Social Sciences and Education. Washington, D.C.: National Academies Press, 2012.\nWeiss, Carol H., and others. “The Fairy Godmother and Her Warts: Making the Dream of Evidence-Based Policy Come True.” American Journal of Evaluation, 29:1 (March 2008): 29−47.", "Managing for Results: 2013 Federal Managers Survey on Organizational Performance and Management Issues. GAO-13-519SP. Washington, D.C.: June 2013.\nManaging for Results: Executive Branch Should More Fully Implement the GPRA Modernization Act to Address Pressing Governance Challenges. GAO-13-518. Washington, D.C.: June 26, 2013.\nManaging for Results: Leading Practices Should Guide the Continued Development of Performance.gov. GAO-13-517. Washington, D.C.: June 6, 2013.\nManaging for Results: Agencies Should More Fully Develop Priority Goals under the GPRA Modernization Act. GAO-13-174. Washington, D.C.: April 19, 2013.\nManaging for Results: Agencies Have Elevated Performance Management Leadership Roles, but Additional Training Is Needed. GAO-13-356. Washington, D.C.: April 16, 2013. 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits. GAO-13-279SP. Washington, D.C.: April 9, 2013.\nManaging for Results: Data-Driven Performance Reviews Show Promise but Agencies Should Explore How to Involve Other Relevant Agencies. GAO-13-228. Washington, D.C.: February 27, 2013.\nManaging for Results: A Guide for Using the GPRA Modernization Act to Help Inform Congressional Decision Making. GAO-12-621SP. Washington, D.C.: June 15, 2012.\nManaging for Results: GAO’s Work Related to the Interim Crosscutting Priority Goals under the GPRA Modernization Act. GAO-12-620R. Washington, D.C.: May 31, 2012. 2012 Annual Report: Opportunities to Reduce Duplication, Overlap, and Fragmentation, Achieve Savings, and Enhance Revenue. GAO-12-342SP. Washington, D.C.: February 28, 2012.\nDesigning Evaluations: 2012 Revision. GAO-12-208G. Washington, D.C.: January 2012.\nPerformance Measurement and Evaluation: Definitions and Relationships. GAO-11-646SP. Washington, D.C.: May 2011.\nEmployment and Training Administration: More Actions Needed to Improve Transparency and Accountability of Its Research Program. GAO-11-285. Washington, D.C.: March 15, 2011.\nOpportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington, D.C.: March 1, 2011.\nProgram Evaluation: Experienced Agencies Follow a Similar Model for Prioritizing Research. GAO-11-176. Washington, D.C.: January 14, 2011.\nEmployment and Training Administration: Increased Authority and Accountability Could Improve Research Program. GAO-10-243. Washington, D.C.: January 29, 2010.\nGovernment Performance: Lessons Learned for the Next Administration on Using Performance Information to Improve Results. GAO-08-1026T. Washington, D.C.: July 24, 2008.\nPerformance Budgeting: PART Focuses Attention on Program Performance, but More Can Be Done to Engage Congress. GAO-06-28. Washington, D.C.: October 28, 2005.\nManaging for Results: Enhancing Agency Use of Performance Information for Management Decision Making. GAO-05-927. Washington, D.C.: September 9, 2005.\nPerformance Budgeting: Observations on the Use of OMB’s Program Assessment Rating Tool for the Fiscal Year 2004 Budget. GAO-04-174. Washington, D.C.: January 30, 2004.\nProgram Evaluation: An Evaluation Culture and Collaborative Partnerships Help Build Agency Capacity. GAO-03-454. Washington, D.C.: May 2, 2003.\nProgram Evaluation: Studies Helped Agencies Measure or Explain Program Performance. GAO/GGD-00-204. Washington, D.C.: September 29, 2000." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 2, 2, 1, 1 ], "alignment": [ "", "", "", "", "h0_title h2_title", "h0_full", "h2_full", "h0_full", "h0_full", "", "h3_full h1_full", "h1_full", "h1_full", "", "", "", "", "", "h3_full", "h3_full", "", "", "", "", "h0_full h2_full" ] }	{ "question": [ "How often do federal managers evaluate programs?", "Why should managers complete evaluations of programs?", "How do evaluations help improve programs?", "What factor did federal managers find to be most hindering?", "What other factors did managers find hindering?", "What issues are not significant barriers?", "Why might the evaluations from federal managers not be very accurate?", "What is the purpose of the GPRA Modernization Act of 2010?", "How does GPRAMA involve GAO?", "What does GAO examine in their report?", "How did GAO decide what kind of people to randomly sample?", "Why did GAO interview the Office of Management and Budget?", "Why might GAO need to be wary of making conclusions from the officials they've interviewed?" ], "summary": [ "In a governmentwide survey, GAO found that most federal managers lack recent evaluations of their programs. Thirty-seven percent reported that an evaluation had been completed within the past 5 years of any program, operation, or project they were involved in. Another 40 percent of managers reported that they did not know if an evaluation had been completed.", "However, 80 percent of managers who did have evaluations reported that those evaluations contributed to a moderate or greater extent to improving program management or performance and to assessing program effectiveness or value.", "Fewer reported that evaluations contributed moderately or more to allocating resources within a program (67 percent) or streamlining programs (61 percent).", "Of the 37 percent of federal managers who had evaluations, the factor most often rated as having hindered use to a great or very great extent was lack of resources to implement the evaluation findings (33 percent).", "The next most frequently reported barriers related to program context, such as resolving differences of opinion among program stakeholders (23 percent).", "Other issues were not considered significant barriers by these managers, such as the lack of credibility or timeliness of study results, lack of leadership commitment or support for using evaluations, or difficulty accepting unexpected findings.", "Managers reported limited knowledge of congressional support for using results; 39 percent reported not being able to judge whether this was a barrier.", "The GPRA Modernization Act of 2010 (GPRAMA) aims to ensure that agencies use performance information in decision making and holds them accountable for achieving results and improving government performance.", "GPRAMA requires GAO to evaluate the act's implementation; this report is one of a series to assess its initial implementation.", "GAO examined the extent of agencies' use of program evaluations--a particular form of performance information, factors that may hinder their use in program management and policy making, and strategies that may facilitate their use.", "GAO surveyed a stratified random sample of 4,391 federal civilian managers and supervisors to obtain their perspectives on several results-oriented management topics, including the extent of and barriers to their evaluation use.", "GAO also interviewed the Office of Management and Budget and evaluators on barriers to evaluation use and strategies to facilitate it at five agencies selected for their evaluation experience in the Departments of Agriculture, Health and Human Services, and Labor.", "These officials' views cannot be generalized but provide useful insights." ], "parent_pair_index": [ -1, 0, 1, -1, 0, -1, -1, -1, 0, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }
GAO_GAO-12-800	{ "title": [ "Background", "Relevant Orders and Regulations", "Position Designation Process", "Personnel Security Clearance and Suitability Reforms", "The Executive Branch Has Not Issued Clearly Defined Policy Guidance for Determining When a Federal Civilian Position Needs a Security Clearance", "The DNI Has a Role to Guide Agencies in Designating Positions for Security Clearances, But Has Not Provided Agencies with Clearly Defined Policy Guidance", "OPM Has Developed a Tool to Help Agencies Determine the Proper Sensitivity Level for Most Federal Positions, but the Tool Lacks Input from the DNI", "The Executive Branch Does Not Have a Consistent Process for Reviewing and Validating Existing Security Clearance Requirements for Civilian Positions", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "ODNI Comments", "OPM Comments", "DHS Comments", "Appendix I: Scope and Methodology", "Appendix II: Position Designation Guidance", "Department of Homeland Security", "Department of Defense", "Appendix III: Personnel Security Clearance Process", "Appendix IV: Comments from the Office of the Director of National Intelligence", "Appendix V: Comments from the Office of Personnel Management", "Appendix VI: Comments from the Department of Homeland Security", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Security clearances are required for access to certain national security information, which is classified at one of three levels: top secret, secret, or confidential. The level of classification denotes the degree of protection required for information and the amount of damage that unauthorized disclosure could reasonably cause to national security.", "Executive Order 10450, which was originally issued in 1953, makes the heads of departments or agencies responsible for establishing and maintaining effective programs for ensuring that civilian employment and retention is clearly consistent with the interests of the national security. Agency heads are also responsible for designating positions within their respective agencies as sensitive if the occupant of that position could, by virtue of the nature of the position, bring about a material adverse effect on national security. In addition, Executive Order 12968, issued in 1995, is relevant to position designation because the order also makes the heads of agencies—including executive branch agencies and the military departments—responsible for establishing and maintaining an effective program to ensure that access to classified information by each employee is clearly consistent with the interests of national security. This order also states that, subject to certain exceptions, eligibility for access to classified information shall only be requested and granted on the basis of a demonstrated, foreseeable need for access. Further, part 732 of Title 5 of the Code of Federal Regulations provides requirements and procedures for the designation of national security positions, which include positions that (1) involve activities of the government that are concerned with the protection of the nation from foreign aggression or espionage, and (2) require regular use of or access to classified national security information.\nIn addition, part 732 states that most federal government positions that could bring about, by virtue of the nature of the position, a material adverse effect on national security must be designated as a sensitive position and require a sensitivity level designation. The sensitivity level designation determines the type of background investigation required, with positions designated at a greater sensitivity level requiring a more extensive background investigation. Part 732 establishes three sensitivity levels—special-sensitive, critical-sensitive, and noncritical-sensitive— which are described in figure 1. According to OPM, positions that an agency designates as special-sensitive and critical-sensitive require a background investigation that typically results in a top secret clearance. Noncritical-sensitive positions typically require an investigation that supports a secret or confidential clearance. OPM also defines non- sensitive positions that do not have a national security element, but still require a designation of risk for suitability purposes. That risk level determines the type of investigation required for those positions. Those investigations include aspects of an individual’s character or conduct that may have an effect on the integrity or efficiency of his or her service.", "The personnel security clearance process begins when a human resources or security professional determines a position’s level of sensitivity, which includes consideration of whether or not a position requires access to classified information and, if required, the level of access. DHS and DOD follow a general process for determining whether a federal civilian position requires access to classified information, which informs whether a position requires a security clearance. This process is described in figure 1 below and is based on our review of the corresponding guidance and testimonial evidence gathered during interviews with DHS and DOD officials. In addition, a more thorough description of DHS and DOD component-level policies appears in appendix II.\nThe personnel security clearance process is further described in appendix III.", "The increased demand for personnel with security clearances following the events of September 11, 2001, led GAO and others to identify delays and incomplete documentation in the security clearance process. In light of these concerns, Congress passed the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA), which set objectives and established requirements for improving the clearance process, including improving the timeliness of the clearance process, achieving interagency reciprocity, establishing an integrated database to track investigative and adjudicative information, and evaluating available technology for investigations and adjudications.\nExecutive Order 13467 calls for investigations of suitability and security to be aligned using consistent standards, to the extent practicable. predecessor that continues to focus on the reform effort—detailing reform-related plans, including a February 2010 strategic framework that established goals, performance measures, roles and responsibilities, and proposed metrics for determining the quality of security clearance investigations and adjudications. Those reports contained a reform plan that outlined a new seven-step process for end-to-end suitability and security clearance reform, see figure 2 below. According to ODNI officials, the first step—to “validate need,”—focuses on ensuring that the sensitivity level of positions is designated appropriately on the basis of mission needs, among other things.\nSeparate from, but related to, security clearances are determinations of suitability that the executive branch uses to ensure individuals are suitable, based on character and conduct, for federal employment in their agency or position. Suitability requirements sometimes overlap with national security requirements. For example, the Department of Justice checks suitability to ensure that applicants for jobs with the Drug Enforcement Agency have never used illegal drugs. In addition, Health and Human Services checks the suitability of applicants for jobs working with children. Similarly, the Intelligence Community requires polygraph evaluations, among other things, to determine suitability for most intelligence positions. OPM was involved in many aspects of the suitability investigation process under Part 731 of Title 5 of the Code of Federal Regulations, prior to the issuance of Executive Order 13467 and, as the Suitability Executive Agent, the Director continues to be responsible for developing and implementing uniform and consistent policies and procedures to ensure the effective, efficient, and timely completion of background investigations and adjudications relating to determinations of suitability.\nIn contrast, the DNI was assigned a new role. Executive Order 13467 states that the DNI, as the Security Executive Agent, is responsible for, among other things, developing uniform and consistent policies and procedures to ensure the effective, efficient, and timely completion of background investigations and adjudications relating to determinations of eligibility for access to classified information or eligibility to hold a sensitive position. In addition to these responsibilities, the Executive Order also provides the DNI the authority to issue guidelines and instructions to the heads of agencies to ensure appropriate uniformity, centralization, efficiency, effectiveness, and timeliness in processes relating to determinations by agencies of eligibility for access to classified information or eligibility to hold a sensitive position. The order also states that the Performance Accountability Council is responsible for ensuring that the Executive Agents align their respective processes. Finally, the order states that agency heads should implement any policy or procedure developed by either the Performance Accountability Council or Executive Agents under the order.", "The DNI, in the capacity as Security Executive Agent responsible for developing uniform and consistent policies related to the security clearance process, has expressed intent to issue guidance relating to national security positions. However, the DNI has not provided agencies with clearly defined policy through regulation or other guidance to help ensure that executive branch agencies use appropriate and consistent criteria when determining if positions require a security clearance. Instead, executive branch agencies are using a position designation tool developed by OPM. This tool is designed to determine the sensitivity level of civilian positions which, in turn, informs the type of background investigation needed if a clearance is warranted. The DNI, however, did not have a role in its development even though the two Executive Agents are to align their respective processes. As a result, agency officials we met expressed mixed views on the effectiveness of the tool for national security positions.", "According to Executive Order 13467, issued in June 2008, the DNI, as the Security Executive Agent, is responsible for developing uniform and consistent policies and procedures for determinations of eligibility for access to classified information or to hold a sensitive position. Further, the executive order states that agency heads shall assist the Performance Accountability Council and Executive Agents in carrying out any function under the order, which includes implementing any policies or procedures developed pursuant to the order. Although agency heads retain the flexibility to make determinations regarding which positions in their agency require a security clearance, the DNI is well positioned, by virtue of its role as the Security Executive Agent, to provide guidance to help align the process from agency to agency. The DNI, however, has not provided agencies with clearly defined policy or instructions.", "To assist with position designation, the Director of OPM—the Executive Agent for Suitability—has developed a process that includes a position designation system and corresponding automated tool to guide agencies in determining the proper sensitivity level for the majority of federal This tool—namely, the Position Designation of National positions.Security and Public Trust Positions—enables a user to evaluate a position’s national security and suitability requirements so as to determine a position’s sensitivity and risk levels, which in turn dictate the type of background investigation that will be required for the individual who will occupy that position. In most agencies outside the Intelligence Community, OPM conducts the background investigations for both suitability and security clearance purposes. The tool does not directly determine whether a position requires a clearance, but rather helps determine the sensitivity level of the position. The determination to grant a clearance is based on whether a position requires access to classified information or other relevant factors, and, if access is required, the responsible official will designate the position to require a clearance.\nOPM developed the position designation system and automated tool for multiple reasons. First, OPM determined through a 2007 initiative that its existing regulations and guidance for position designation were complex and difficult to apply, resulting in inconsistent designations. As a result of a recommendation from the initiative, OPM created a simplified position designation process in 2008. Additionally, OPM officials noted that the tool is to support the goals of the security and suitability reform efforts, which require proper designation of national security and suitability positions.\nOPM first introduced the automated tool in November 2008, and issued an update of the tool in 2010. In August 2010, OPM issued guidance (1) recommending all agencies that request OPM background investigations use the tool and (2) requiring agencies to use the tool for all positions in the competitive service, positions in the excepted service where the incumbent can be noncompetitively converted to the competitive service, and career appointments in the Senior Executive Service. Both DHS and DOD components use the tool. A DHS instruction requires personnel to designate all DHS positions by using OPM’s position sensitivity designation guidance, which is the basis of the tool. In addition, DOD issued guidance in September 2011 requiring its personnel to use OPM’s tool to determine the proper position sensitivity designation for new or vacant positions, including the establishment and reclassification of positions. ODNI officials told us that they believe OPM’s tool is useful for determining a position’s sensitivity level. However, despite the DNI’s responsibility for policy related to ensuring uniformity in the security clearance process, ODNI officials noted that the DNI did not have input into recent revisions of OPM’s position designation tool.\nDHS Management Instruction 121-01-007, Department of Homeland Security Personnel Suitability and Security Program (June 2009). the DNI as Executive Agents are still evolving, although Executive Order 13467 defines responsibilities for each Executive Agent. Accordingly, we found that the Director of OPM and the DNI have not fully collaborated in executing their respective roles in the process for determining position designations. For example, OPM has had long-standing responsibility for establishing standards with respect to suitability for most federal government positions. Accordingly, the sections of the tool to be used for evaluating a position’s suitability risk level are significantly more detailed than the sections designed to aid in designating the national security sensitivity level of the position. While most of OPM’s position designation system, which is the basis of the tool, is devoted to suitability issues, only two pages are devoted to national security issues, despite the reference to national security in its title. Moreover, OPM did not seek to collaborate with the DNI when updating the tool in 2010. Similarly, in 2010, OPM initiated revisions to the part of the Code of Federal Regulations that According to OPM and ODNI pertain to national security positions.officials, the revision is expected to clarify the standards for designating whether federal positions are national security sensitive, which will help agencies more accurately assess the sensitivity of a position. The sensitivity level includes consideration of whether a position is eligible for access to classified information and the level of access. Further, the revision is currently expected to update the definition of national security positions to include positions that could have a material impact on national security, but might not clearly fall within the current definition in part 732 of Title 5 of the Code of Federal Regulations. For example, such positions include those with duties that involve the protection of borders, ports, and critical infrastructure, as well as those with responsibilities related to public safety, law enforcement, and the protection of government information systems.\nDuring our review, human capital and security officials from DHS and DOD and the selected components affirmed that they were using the existing tool to determine the sensitivity level required by a position. However, in the absence of clearly defined policy from the DNI and the lack of collaborative input into the tool’s design, officials explained that they sometimes had difficulty in using the tool to designate the sensitivity level of national security positions.\nOPM regularly conducts audits of its executive branch customer agency personnel security and suitability programs, which include a review of position designation to assess the agencies’ alignment with OPM’s position designation guidance. In the audit reports we obtained, OPM found examples of inconsistency between agency position designation and OPM guidance, both before and after the implementation of OPM’s tool. For instance, prior to the implementation of the tool, in a 2006 audit of an executive branch agency, OPM found that its sensitivity designations differed from the agency’s designation in 13 of 23 positions. Specifically, OPM concluded that 11 positions were underdesignated, 1 position was overdesignated, and 1 position was adjusted. More recently, after the implementation of the tool, in an April 2012 audit of a DOD agency, OPM assessed the sensitivity levels of 39 positions, and OPM’s designations differed from the agency’s designations in 26 of those positions. In the April 2012 report, the DOD agency agreed with OPM’s recommendations related to position designation, and the audit report confirmed that the agency had submitted evidence of corrective action in response to the position designation recommendations. OPM provided us with the results of 10 audits that it had conducted between 2005 and 2012, and 9 of those audit reports reflected inconsistencies between OPM position designation guidance and determinations of position sensitivity conducted by the agency. OPM officials noted, however, that they do not have the authority to direct agencies to make different designations because Executive Order 10450 provides agency heads with the ultimate responsibility for designating which positions are sensitive positions.\nAs of May 2012, the Naval Audit Service is currently finalizing its own internal audit on its top secret requirements determination process for civilian positions. While the results were not complete at the time of our review, officials explained to us that they began this audit to validate their top secret requirements and ensure that they have effective internal controls over their designation process.\nDHS and DOD officials expressed varying opinions regarding the tool. For instance, some of the officials we met raised concerns regarding the guidance provided through the tool and expressed that they had difficulty implementing it. Specifically, officials from DHS’s U.S. Immigration and Customs Enforcement stated that the use of the tool occasionally resulted in inconsistency, such as over- or underdesignating a position, and expressed a need for additional clear, easily interpreted guidance on designating national security positions. DOD officials stated that they have had difficulty implementing the tool because it focuses more on suitability than security, and the national security aspects of DOD’s positions are of more concern to them than the suitability aspects. Further, an official from DOD’s Office of the Under Secretary of Defense for Personnel and Readiness stated that the tool and DOD policy do not always align and that the tool does not cover the requirements for some DOD positions. For example, DOD’s implementing guidance on using the tool states that terms differ between DOD’s personnel security policy and the tool, and the tool might suggest different position sensitivity levels than DOD policy requires. Also, officials from the Air Force Personnel Security Office told us that they had challenges using the tool to classify civilian positions, including difficulty in linking the tool with Air Force practices for position designation. Moreover, an Air Force official stated a concern that the definition for national security positions is broadly written and could be considered to include all federal positions. Further, individuals responsible for making position designation determinations can easily reach different conclusions. For instance, officials from DHS’s U.S. Immigration and Customs Enforcement stated that the tool is not necessarily intuitive and users of the tool need to understand its nuances in order to avoid overdesignating a position. Conversely, officials from the U.S. Coast Guard stated that they found the tool to be intuitive, and that it helps to ensure consistency in designation. Finally, officials from the Transportation Security Administration noted that the tool is user friendly and provides consistency for managers.\nRecently, we have seen indications that the Executive Agents are working to align their respective processes. According to OPM’s website, OPM has conferred with the Office of Management and Budget (OMB) concerning the possibility of reissuing pertinent sections of the Code of Federal Regulations jointly with ODNI, with a targeted issuance before the end of the 2012 calendar year. ODNI officials also stated their intention to work with OPM on the revision effort. ODNI officials further acknowledged that they are collaborating with OPM to reach agreement on their respective roles as Executive Agents. Our prior work has found that two or more agencies with related goals can benefit from enhancing their collaboration in various areas to achieve common outcomes.", "According to Executive Order 12968, the number of employees that each agency determines is eligible for access to classified information shall be kept to the minimum required, and, subject to certain exceptions, eligibility shall be requested or granted only on the basis of a demonstrated, foreseeable need for access. Additionally, Executive Order 12968 states that access to classified information shall be terminated when an employee no longer has a need for access, and that requesting or approving eligibility for access in excess of the actual requirements is prohibited. Also, Executive Order 13467 authorizes the DNI to issue guidelines or instructions to the heads of agencies regarding, among other things, uniformity in determining eligibility for access to classified information. However, the DNI has not issued policies and procedures for agencies to review and revise or validate the existing clearance requirements for their federal civilian positions to ensure that clearances are kept to a minimum and reserved only for those positions with security clearance requirements that are in accordance with the national security needs of the time.\nAs previously noted, OPM published a December 2010 notice in the Federal Register of a proposed revision to the Code of Federal Regulations to clarify the policy for designating national security positions. Again, as we previously noted, OPM’s website states that OPM has conferred with OMB concerning the possibility of reissuing pertinent sections of the Code of Federal Regulations jointly with ODNI. One feature of the proposed revision would require all federal agencies to conduct a onetime review of position descriptions and requirements over a period of 2 years to ensure that all positions are properly designated using the revision’s updated definition for national security positions. Position descriptions not only identify the major duties and responsibilities of the position, but they also play a critical role in recruitment, training, and performance management, among other things. While position descriptions may change, so can the national security environment as previously observed.\nDuring our review of several DHS and DOD components, we found that officials were aware of the need to keep the number of security clearances to a minimum but were not always subject to a requirement to review and validate the security clearance needs of existing positions on a periodic basis. We found, instead, that agencies’ policies provide for a variety of practices for reviewing the clearance needs of federal civilian positions. According to DHS guidance, supervisors are responsible for ensuring that (1) position designations are updated when a position undergoes major changes (e.g., changes in missions and functions, job responsibilities, work assignments, legislation, or classification standards), and (2) position security designations are assigned as new positions are created. Some components have additional requirements to review position designation more regularly to cover positions other than those newly created or vacant. For example,\nU.S. Coast Guard guidance states that hiring officials and supervisors should review position descriptions even when there is no vacancy and, as appropriate, either revise or review them.\nAccording to officials in U.S. Immigration and Customs Enforcement, supervisors are supposed to review position descriptions annually during the performance review process to ensure that the duties and responsibilities on the position description are up-to-date and accurate. However, officials stated that U.S. Immigration and Customs Enforcement does not have policies or requirements in place to ensure any particular level of detail in that review.\nDOD’s personnel security regulation and other guidancecomponents with criteria to consider when determining whether a position is sensitive or requires access to classified information, and some of the components also have developed their own guidance. provides DOD\nAn Air Force Instruction requires commanders to review all military and civilian position designations annually to ensure proper level of access to classified information.\nThe Army issued a memorandum in 2006 that required an immediate review of position sensitivity designations for all Army civilian positions by the end of the calendar year and requires subsequent reviews biennially. That memorandum further states that if a review warrants a change in position sensitivity affecting an individual’s access to classified information, then access should be administratively adjusted and the periodic reinvestigation submitted accordingly. However, officials explained that improper position sensitivity designations continue to occur in the Army because they have a limited number of personnel in the security office relative to workload, and they only spot check clearance requests to ensure that they match the level of clearance required.\nOfficials from DOD’s Washington Headquarters Services told us that they have an informal practice of reviewing position descriptions and security designations for vacant or new positions, but they do not have a schedule for conducting periodic reviews of personnel security designations for already-filled positions.\nThese various policies notwithstanding, agency officials told us that they are implemented inconsistently.\nSome of the components we met were in the process of conducting a onetime review of position designation during our review. For example, Transportation Security Administration officials stated that they reevaluated all of their position descriptions over the last 2 years because the agency determined that the re-evaluation of its position designations would improve operational efficiency by ensuring that positions were appropriately designated by using OPM’s updated position designation tool. Further, those officials told us that they review position descriptions as positions become vacant or are created. Between fiscal years 2010 and 2011, while the Transportation Security Administration’s overall workforce increased from 61,586 to 66,023, the number of investigations for top secret clearances decreased from 1,483 to 1,127. In March 2011, the Naval Audit Service begin an audit of its top secret requirements determination process for civilian positions at selected activities to verify that civilian top secret clearances are based on valid requirements and that effective internal controls over the top secret requirements determination process are in place. According to a Navy official, the results of the audit were still undergoing the Navy’s internal review process as of May 2012.\nThere is a cost to conducting background investigations, and a potential for dollar savings when overdesignated positions are identified. DHS and DOD officials acknowledged to us that overdesignating a position can result in expenses for unnecessary investigations. When a position is overdesignated, additional resources are unnecessarily spent conducting the investigation and adjudication of a background investigation that exceeds agency requirements. As stated earlier in this report, the investigative workload for a top secret clearance is about 20-times greater than that of a secret clearance because it must be periodically reinvestigated twice as often as secret clearance investigations (every 5 years versus every 10 years) and requires 10 times as many investigative staff hours. The fiscal year 2012 base price for a top secret clearance investigation conducted by OPM is $4,005 and the periodic reinvestigation is $2,711, while the base price of an investigation for a secret clearance is $260. Further, the base price of a Moderate Risk Background Investigation—most commonly used by DHS, according to officials—is $752. However, we did not find policies in which position designation reviews were linked to the position holders’ periodic reinvestigations. In contrast, underdesignating a position carries security risks, such as the potential release of classified information or the placement of a person in a position for which they have not been properly cleared.\nAgencies employ varying practices because the DNI has not established a requirement that executive branch agencies consistently review and revise or validate existing position designations on a recurring basis. Such a recurring basis could include reviewing position designations during the periodic reinvestigation process. Without a requirement to consistently review, revise, or validate existing security clearance position designations, executive branch agencies—such as DHS and DOD—may be hiring and budgeting for both initial and periodic security clearance investigations using position descriptions and security clearance requirements that no longer reflect national security needs. Finally, since reviews are not being done consistently, DHS and DOD and other executive branch agencies cannot have reasonable assurances that they are keeping to a minimum the number of positions that require security clearances on the basis of a demonstrated and foreseeable need for access.", "Executive Order 13467, issued in June 2008, established a Suitability and Security Clearance Performance Accountability Council and appointed the DNI as the Security Executive Agent and the Director of OPM as the Suitability Executive Agent. However, while the order gives the Executive Agents the authority to issue policy, the DNI has not provided executive branch agencies with clearly defined policy and procedures for determining whether federal civilian positions require a security clearance. Until the DNI articulates such policy and procedures, executive branch agencies, such as DHS and DOD, will not have a foundation on which to build consistent and uniform policies. Further, Executive Order 13467 indicates that executive branch policies and procedures relating to, among other things, suitability and eligibility for access to classified information shall be aligned using consistent standards to the extent possible. However, OPM updated its position designation tool in 2010 without input from the DNI. Without collaborative input from both OPM and DNI in future revisions to the tool, executive branch agencies will continue to risk making security clearance determinations that are inconsistent or at improper levels. Finally, while Executive Order 12968 says that clearances should, subject to certain exceptions, be granted only on the basis of a demonstrated need for access and kept to a minimum, the DNI has not issued guidance that requires agencies to review and revise or validate their existing federal civilian position designations. Until the DNI does so, DHS and DOD, along with other executive branch agencies, cannot have reasonable assurances that all security clearance designations are correct, which could compromise national security if positions are underdesignated, or create unnecessary and costly investigative coverage if positions are overdesignated.", "We recommend that the DNI, in coordination with the Director of OPM and other executive branch agencies as appropriate, issue clearly defined policy and procedures for federal agencies to follow when determining if federal civilian positions require a security clearance.\nIn addition, we recommend that, once the policy and procedures are issued, the DNI and the Director of OPM collaborate in their respective roles as Executive Agents to revise the position designation tool to reflect that guidance.\nFinally, we recommend that the DNI, in coordination with the Director of OPM and other executive branch agencies as appropriate, issue guidance to require executive branch agencies to periodically review and revise or validate the designation of all federal civilian positions.", "We provided a draft of this report to ODNI, OPM, DHS, and DOD for comment. Written comments from ODNI, OPM, and DHS are reprinted in their entirety in appendices IV, V, and VI respectively. Technical comments were provided separately by ODNI, OPM, and DHS, and were incorporated as appropriate. DOD concurred with the report without written comment. We also provided a draft of the report to OMB for information purposes.", "In commenting on this report, ODNI stated that the report is a fair assessment of existing executive branch policies for determining security clearance requirements for federal civilian positions. The DNI has a lead or collaborative role in our recommendations, and ODNI concurred with all three. First, ODNI concurred with our recommendation that the DNI, in coordination with the Director of OPM and other executive branch agencies as appropriate, issue clearly defined policy and procedures for federal agencies to follow when determining if federal civilian positions require a security clearance. ODNI agreed that executive branch agencies require simplified and uniform policy guidance to assist in determining appropriate sensitivity designations, and cited steps it is taking in coordination with OPM, DOD, and OMB. Specifically, ODNI acknowledged its work with OMB and OPM to jointly issue revisions to part 732 of Title 5 of the Code of Federal Regulations by the end of 2012. Second, ODNI concurred with our recommendation that, once the policy and procedures are issued, the DNI coordinate with the Director of OPM to revise the position designation tool to reflect that guidance. ODNI stated that it plans to work with OPM and other executive branch agencies through the Security Executive Agent Advisory Committee to develop a position designation tool that provides detailed descriptions of the types of positions where the occupant could bring about a material adverse impact to national security due to the duties and responsibilities of the position. ODNI stated its belief that a tool that provides agencies with detailed descriptions of this type will bring about greater uniformity across the government in agency position designations. Third, ODNI concurred with our recommendation that the DNI, in coordination with the Director of OPM and other executive branch agencies as appropriate, issue guidance to require executive branch agencies to periodically review and revise or validate the designation of all federal civilian positions. ODNI agreed with our assessment that the duties and responsibilities of federal positions may be subject to change, and stated that it plans to work with OPM and other executive branch agencies through the Security Executive Agent Advisory Committee to ensure that position designation policies and procedures include a provision for periodic reviews.\nWhile ODNI recognized that the emphasis of this report is on civilian positions that require access to classified information, it wished to emphasize that the DNI’s role as Security Executive Agent under Executive Order 13467 applies to all sensitive positions, and that positions that require access to classified information are a subset of all sensitive positions. ODNI stated that any guidance issued by the Security Executive Agent will cover all sensitive positions and associated investigative standards and adjudicative guidelines.", "OPM also commented on all three of the recommendations in this report in its written comments. OPM concurred with our second recommendation, which is addressed more directly to OPM, that its Director collaborate with the DNI in their respective roles as executive agents to revise the position designation tool to reflect updated federal position designation guidance. OPM stated that it committed to doing so in a February 2010 strategic framework document which was executed by officials within OMB, OPM, DOD, and ODNI. OPM also acknowledged that any revisions to the tool need to await final action with respect to proposed position designation regulations, which is consistent with our recommendation. In addition, OPM summarized executive orders that describe its authority. OPM also supported our third recommendation that the DNI, in coordination with the Director of OPM and other executive branch agencies as appropriate, issue guidance to require executive branch agencies to periodically review and revise or validate the designation of all federal civilian positions. OPM stated that it would be pleased to work with the DNI on guidance concerning periodic reviews of existing designations.\nWhile ODNI concurred with our first recommendation—that the DNI, in coordination with the Director of OPM and other executive branch agencies as appropriate, issue clearly defined policy and procedures for federal agencies to follow when determining whether federal civilian positions require a security clearance—OPM stated that it is not clear to OPM that it has a significant role in prescribing the policy and procedures for federal agencies to follow when determining if a federal civilian position requires a security clearance. The basis for OPM’s statement is Executive Order 12968 (as amended by Executive Order 13467), which gives agency heads the ultimate responsibility to grant or deny security clearances, subject to investigative standards and adjudicative guidelines prescribed by the DNI. In this report, we acknowledge that authority to grant or deny a security clearance resides with agency heads under Executive Order 12968. However, as we also state in our report, Executive Order 13467 provides the DNI the authority to issue guidelines and instructions to the heads of agencies to ensure appropriate uniformity, centralization, efficiency, effectiveness, and timeliness in processes relating to determinations by agencies of eligibility for access to classified information or eligibility to hold a sensitive position. Further, as we state in our report, this Executive Order established a Suitability and Security Clearance Performance Accountability Council to be the government-wide governance structure responsible for driving implementation and overseeing security and suitability reform efforts. This order appointed the DNI as the Security Executive Agent and the Director of OPM as the Suitability Executive Agent, and calls for investigations of suitability and security to be aligned using consistent standards, to the extent practicable. Therefore, we continue to believe that additional guidance from the Security Executive Agent—the DNI—would help align processes across multiple executive branch agencies, and note that ODNI agreed with this assessment. Further, we included OPM in our recommendation as a consulting agency in its role as the Suitability Executive Agent and because, according to OPM, it is the investigative service provider for much of the executive branch. Finally, we recommended that the DNI work with other agencies as necessary in an acknowledgement of the joint nature of reform effort and its oversight structure through the Performance Accountability Council.\nOPM’s response to this report discussed other points for consideration, which are summarized below.\nRelationship between the existing position designation tool and security clearances: OPM stated in its comments that one of the premises upon which this report is based is not accurate. Specifically, OPM asserted that we repeatedly posited that agencies must perform the national security designation in order to know whether the occupant will require a security clearance when, in fact, whether the occupant of a particular position will need access to classified information or eligibility for such access (i.e. a security clearance) is one of the factors that help determine whether a position is sensitive. Accordingly, OPM wrote that there is no basis for GAO to conclude that OPM’s position designation tool affects how agencies determine whether the occupant of a position requires access to classified information or eligibility for such access. We state in our report that to assist with position designation, the Director of OPM has developed a process that includes a position designation system and corresponding tool. We continue by stating that the tool does not directly determine whether a position requires a clearance, but rather helps determine the sensitivity of the position, which informs the type of investigation needed. We believe that these statements are consistent with OPM’s explanations and, therefore, do not believe that one of the premises upon which this report is based is inaccurate. However, we have reviewed and made revisions to other statements in our final report to ensure consistency with this point.\nAdditional need for guidance to support the position designation tool: OPM noted that it provided us with copies of audits that OPM had performed on agencies that employ competitive service civilian personnel, where it observed inconsistencies in agency application of the tool. In its comments, OPM cited several reasons why this might happen. We believe this is consistent with our findings that OPM found examples of inconsistency between agency position designation and OPM guidance, and also that officials from executive branch departments expressed varying opinions to us regarding the tool. In response to other discussion in our report about the tool, OPM stated that its proposed revision to part 732 of Title 5 of the Code of Federal Regulations was intended to establish a basis for more detailed guidance. We also note, as previously discussed, that OPM concurred with our recommendation to collaborate with the DNI to revise the tool.", "In its written comments, DHS noted GAO’s positive acknowledgement of DHS’ efforts to ensure that only those who need a security clearance are authorized one. Although the report does not contain any recommendations specifically directed to DHS, the Department stated that it remains committed to being an active member of the government- wide Suitability and Security Clearance Performance Accountability Council.\nWe are sending copies of this report to the House Committee on Homeland Security. We are also sending copies to the Director of National Intelligence, the Director of the Office of Personnel Management, the Secretary of Homeland Security, the Secretary of Defense, and the Office of Management and Budget. This report will also be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3604 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VII.", "This report reviewed government policies and practices for identifying federal civilian positions that require security clearances, and analyzed whether a uniform, consistent, and effective security clearance requirements determination process is in place. Our work focused on the Office of the Director of National Intelligence (ODNI), on the basis of its role to develop personnel security clearance policy and guidance for the federal government. Further, the scope of our work focused more specifically on the security clearance requirements of federal civilian positions from selected components within the Department of Homeland Security (DHS) and the Department of Defense (DOD), because of the volume of clearances that these two agencies process. Within DHS, selected components include the U.S. Coast Guard, U.S. Immigration and Customs Enforcement, and the Transportation Security Administration. Within DOD, selected components include the headquarters level elements of the Departments of the Army, the Navy, the Air Force, and the Washington Headquarters Services. We also included the Office of Personnel Management (OPM) in our review on the basis of its role implementing security clearance reform and as the primary investigative service provider of the federal government. See table 1 for a complete list of the agencies and departments interviewed for our review.\nTo determine the extent to which the executive branch has established policies and procedures for agencies to use when first determining whether federal civilian positions require a security clearance, we interviewed key federal officials from the above mentioned federal agencies and selected components, as well as OPM and ODNI. We reviewed relevant Executive Orders including 10450, 12968, and 13467, Joint Reform Team reports, OPM and ODNI audits, and part 732 of Title 5 of the Code of Federal Regulations. We also reviewed OPM’s proposed revision to the Code of Federal Regulations, which aims to clarify the policy for designating national security positions that was published in the Federal Register in December 2010. We obtained and analyzed personnel security clearance policies within DHS, DOD, and the selected components within these departments to identify the extent to which they have outlined processes for individuals responsible for determining if federal civilian positions require a security clearance. In addition, we obtained and analyzed OPM’s position designation system and tool because agencies we visited use the tool in the position designation process.\nTo determine the extent to which the executive branch has established policies and procedures for agencies to review and revise or validate existing federal civilian position security clearance requirements, we interviewed knowledgeable officials from the federal agencies and selected components in table 1. We reviewed part 732 of Title 5 of the Code of Federal Regulations to identify the extent to which it delineates processes and responsibilities for federal agencies to review and revise or validate whether federal civilian positions require a security clearance. We also analyzed DHS’s and DOD’s personnel security policies, and the applicable policies of selected components within these departments to identify the extent to which each department and selected component has established processes for reviewing, revising, and validating existing federal civilian position security clearance requirements.\nWe conducted this performance audit from July 2011 through July 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our objectives.", "The Department of Homeland Security (DHS), the Department of Defense (DOD), and their respective components have developed policies and procedures that relate to position designation. Both DHS and DOD policies provide criteria, in addition to those outlined in the Office of Personnel Management’s (OPM) tool, for position designating officials to use in determining the sensitivity level of the position. Table 2 below provides a descriptive comparison of DHS- and DOD-specific position designation guidance.", "DHS’s management instruction regarding the personnel security and suitability program (DHS Management Instruction 121-01-007) defines sensitivity levels and instructs the DHS components to follow OPM’s position sensitivity designation guidance when determining the proper sensitivity level for civilian positions. Further, the supervising official with sufficient knowledge of duty assignments is responsible for collaborating with Human Resources and assigning position sensitivity designations and then those designations are subject to final approval by the component’s respective Personnel Security Office.\nImmigration and Customs Enforcement: In addition to DHS’s management directive, Immigration and Customs Enforcement officials confirmed that they are using OPM’s position sensitivity designation guidance and position designation tool to ensure that their civilian positions have the proper sensitivity level. According to these officials, the Immigration and Customs Enforcement’s Office of Professional Responsibility and Office of Human Capital work with the program offices to establish and validate position security designations.\nTransportation Security Administration: In addition to DHS’s management directive, the Transportation Security Administration developed informal guidance on the position designation process and uses OPM’s position designation tool to determine the sensitivity level for its positions. The Transportation Security Administration Personnel Security Section requires the manager to confirm that access to classified information is required to perform the duties of the position. In addition, the Transportation Security Administration’s Personnel Security Section does a final review of all position and risk designations.\nU.S. Coast Guard: According to U.S. Coast Guard officials, the U.S. Coast Guard follows the criteria for position designation laid out in the Commandant of the Coast Guard Instruction 5520.12C, Personnel Security and Suitability Program. In addition, those officials indicated that the U.S. Coast Guard uses OPM’s position designation tool for determining the sensitivity level for civilian positions. As part of a standard hiring practice, supervisors engage Human Resources with a request for personnel action. This initiates the prerecruitment phase of the process where the need of the position is validated, the position description is reviewed and updated, the job analysis is confirmed, and the recruitment strategy is executed.", "provide the DOD’s personnel security regulation and other guidanceDOD components with detailed criteria to consider when determining whether a position requires access to classified information. Although DOD’s policy is also under revision, the current policy incorporates OPM’s definitions for critical-sensitive and noncritical sensitive positions. Further, DOD’s regulation specifically states that personnel security clearances shall not normally be issued: to persons in nonsensitive positions; to persons whose regular duties do not require authorized access to classified information; for ease of movement of persons within a restricted area whose duties do not require access to classified information; to persons who may only have inadvertent access to sensitive information or areas, such as guards, emergency service personnel, firefighters, doctors, nurses, police, ambulance drivers, or similar personnel; to persons working in shipyards whose duties do not require access to classified information; to persons who can be prevented from accessing classified information by being escorted by cleared personnel; to food service personnel, vendors and similar commercial sales or service personnel whose duties do not require access to classified information; to maintenance or cleaning personnel who may only have inadvertent access to classified information unless such access cannot be reasonably prevented; to persons who perform maintenance on office equipment, computers, typewriters, and similar equipment who can be denied classified access by physical security measures; to perimeter security personnel who have no access to classified information; and to drivers, chauffeurs and food service personnel.\nIn addition, DOD’s Under Secretary of Defense for Personnel and Readiness issued a memorandum requiring the use of OPM’s position designation system and tool to determine the sensitivity level for civilian positions. Further, some of the DOD components that we visited have developed policies that extend beyond the DOD personnel security policy.\nArmy: Army officials affirmed that they use OPM’s position designation tool to determine the sensitivity level of all civilian positions. In addition, Army Regulation 380-67 defines sensitive positions and gives heads of DOD components or their designees authority, subject to certain conditions, to delegate the designation of position sensitivity within their chain of command. Further, a 2006 Army memorandum called for sensitivity reviews of all Army civilian positions every 2 years, at a minimum.\nNavy: According to officials, the Department of the Navy follows guidance in the Secretary of the Navy Regulation M-5510.30 along with DOD’s personnel security regulation, which requires designators to set the clearance level for civilian personnel according to the risk the position poses. According to a Navy personnel security official, Human Resources offices and local commands have been revalidating positions according to the needs of the command in response to a 2011 memorandum from the Assistant Secretary of the Navy for Manpower and Reserve Affairs. According to Navy officials, Human Resources offices used the position designation tool provided by OPM to determine the sensitivity level for all civilian positions.\nAir Force: The Air Force uses Air Force Instruction 31-501 coupled with the DOD 5200.2-R to implement its personnel security program. According to the instruction, commanders with position designation authority determine the security sensitivity of civilian positions. Each position is coded with the appropriate security access requirement and identified in the unit manning document and the Defense Civilian Personnel Data System. If the security access requirement code requires a change, the unit commander submits an authorization change request to the servicing security activity. The commander also conducts an annual review of positions to determine the accuracy of position coding and adjust coding if necessary. Air Force officials confirmed that they are using OPM’s Position Designation System and Tool to determine the proper sensitivity level for all civilian positions. Also, according to Air Force officials, in situations where a commander wants to upgrade a particular position, it must be reviewed and approved by a 3-star general.\nWashington Headquarters Services: Washington Headquarters Services oversees position designation for certain DOD headquarters activities and defense agencies. According to Washington Headquarters Services officials, these agencies and activities follow DOD’s personnel security regulation for position designation and use OPM’s position designation system and tool in accordance with DOD policy.", "Since 1997, federal agencies have followed a common set of personnel security investigative standards and adjudicative guidelines for determining whether federal workers and others are eligible to receive security clearances. Once an applicant is selected for a position that requires a security clearance, government agencies rely on a multiphased personnel security clearance process that includes the application submission phase, investigation phase, and adjudication phase, among others. Different departments and agencies may have slightly different security clearance processes—the steps outlined below are intended to be illustrative of a typical process.\nThe application submission phase. A security officer from an executive branch agency (1) requests an investigation of an individual requiring a clearance; (2) forwards a personnel security questionnaire (Standard Form 86) using the Office of Personnel Management’s (OPM) e-QIP system or a paper copy of the Standard Form 86 to the individual to complete; (3) reviews the completed questionnaire; and (4) sends the questionnaire and supporting documentation, such as fingerprints and signed waivers, to OPM or the investigation service provider.\nThe investigation phase. Federal investigative standards and OPM’s internal guidance are typically used to conduct and document the investigation of the applicant. The scope of information gathered in an investigation depends on the level of clearance needed and whether the investigation is for an initial clearance or a reinvestigation for a clearance renewal. For example, in an investigation for a top secret clearance, investigators gather additional information through more time-consuming efforts, such as traveling to conduct in-person interviews to corroborate information about an applicant’s employment and education. After the investigation is complete, the resulting investigative report is provided to the agency.\nThe adjudication phase. Adjudicators from an agency use the information from the investigative report to determine whether an applicant is eligible for a security clearance. To make clearance eligibility decisions, the adjudication guidelines specify that adjudicators consider 13 specific areas that elicit information about (1) conduct that could raise security concerns and (2) factors that could allay those security concerns and permit granting a clearance.\nIn addition, once the background investigation and adjudication for a security clearance are complete, the requesting agency determines whether the individual is eligible for access to classified information. However, often the security clearance—either at the secret or top secret level—does not become effective until an individual needs to work with classified information. At that point, the individual would sign a nondisclosure agreement and receive a briefing in order for the clearance to become effective. DOD commonly employs this practice and, in some cases, the individual ultimately never requires access to classified information. Therefore, not all security clearance investigations result in an active security clearance.\nFinally, once an individual is in a position that requires access to classified national security information, that individual is reinvestigated periodically at intervals that are dependent on the level of security clearance. For example, top secret clearanceholders are reinvestigated every 5 years, and secret clearanceholders are reinvestigated every 10 years.", "", "", "", "", "", "In addition to the contact named above, David Moser (Assistant Director), Sara Cradic, Cynthia Grant, Nicole Harris, Jeffrey Heit, Kimberly Mayo, Richard Powelson, Jason Wildhagen, Michael Willems, and Elizabeth Wood made key contributions to this report.", "Personnel Security Clearances: Continuing Leadership and Attention Can Enhance Momentum Gained from Reform Effort. GAO-12-815T. Washington, D.C.: June 21, 2012.\nBackground Investigations: Office of Personnel Management Needs to Improve Transparency of Its Pricing and Seek Cost Savings. GAO-12-197. Washington, D.C.: February 28, 2012.\nHigh-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.\nPersonnel Security Clearances: Overall Progress Has Been Made to Reform the Governmentwide Security Clearance Process. GAO-11-232T. Washington, D.C.: December 1, 2010.\nPersonnel Security Clearances: Progress Has Been Made to Improve Timeliness but Continued Oversight Is Needed to Sustain Momentum. GAO-11-65. Washington, D.C.: November 19, 2010.\nDOD Personnel Security Clearance Reform: Preliminary Observations on Timeliness and Quality. GAO-11-185T. Washington, D.C.: November 16, 2010.\nPrivacy: OPM Should Better Monitor Implementation of Privacy-Related Policies and Procedures for Background Investigations. GAO-10-849. Washington, D.C.: September 7, 2010.\nPersonnel Security Clearances: An Outcome-Focused Strategy and Comprehensive Reporting of Timeliness and Quality Would Provide Greater Visibility over the Clearance Process. GAO-10-117T. Washington, D.C.: October 1, 2009.\nPersonnel Security Clearances: Progress Has Been Made to Reduce Delays but Further Actions Are Needed to Enhance Quality and Sustain Reform Efforts. GAO-09-684T. Washington, D.C.: September 15, 2009.\nPersonnel Security Clearances: An Outcome-Focused Strategy Is Needed to Guide Implementation of the Reformed Clearance Process. GAO-09-488. Washington, D.C.: May 19, 2009.\nDOD Personnel Clearances: Comprehensive Timeliness Reporting, Complete Clearance Documentation, and Quality Measures Are Needed to Further Improve the Clearance Process. GAO-09-400. Washington, D.C.: May 19, 2009.\nHigh-Risk Series: An Update. GAO-09-271. Washington, D.C.: January 22, 2009.\nDOD Personnel Clearances: Preliminary Observations about Timeliness and Quality. GAO-09-261R. Washington, D.C.: December 19, 2008.\nPersonnel Security Clearances: Preliminary Observations on Joint Reform Efforts to Improve the Governmentwide Clearance Eligibility Process. GAO-08-1050T. Washington, D.C.: July 30, 2008.\nPersonnel Clearances: Questions for the Record Regarding Security Clearance Reform. GAO-08-965R. Washington, D.C.: July 14, 2008.\nPersonnel Clearances: Key Factors for Reforming the Security Clearance Process. GAO-08-776T. Washington, D.C.: May 22, 2008.\nEmployee Security: Implementation of Identification Cards and DOD’s Personnel Security Clearance Program Need Improvement. GAO-08-551T. Washington, D.C.: April 9, 2008.\nDOD Personnel Clearances: Questions for the Record Related to the Quality and Timeliness of Clearances. GAO-08-580R. Washington D.C.: March 25, 2008.\nDOD Personnel Clearances: DOD Faces Multiple Challenges in Its Efforts to Improve Clearance Processes for Industry Personnel. GAO-08-470T. Washington, D.C.: February 12, 2008.\nPersonnel Clearances: Key Factors to Consider in Efforts to Reform Security Clearance Processes. GAO-08-352T. Washington, D.C.: February 27, 2008.\nDOD Personnel Clearances: Improved Annual Reporting Would Enable More Informed Congressional Oversight. GAO-08-350. Washington, D.C.: February 13, 2008.\nDOD Personnel Clearances: Delays and Inadequate Documentation Found for Industry Personnel. GAO-07-842T. Washington, D.C.: May 17, 2007.\nHigh Risk Series: An Update. GAO-07-310. Washington, D.C.: January 2007.\nDOD Personnel Clearances: Additional OMB Actions Are Needed to Improve the Security Clearance Process. GAO-06-1070. Washington, D.C.: September 28, 2006.\nDOD Personnel Clearances: Questions and Answers for the Record Following the Second in a Series of Hearings on Fixing the Security Clearance Process. GAO-06-693R. Washington, D.C.: June 14, 2006.\nDOD Personnel Clearances: New Concerns Slow Processing of Clearances for Industry Personnel. GAO-06-748T. Washington, D.C.: May 17, 2006.\nDOD Personnel Clearances: Funding Challenges and Other Impediments Slow Clearances for Industry Personnel. GAO-06-747T. Washington, D.C.: May 17, 2006.\nQuestions for the Record Related to DOD’s Personnel Security Clearance Program and the Government Plan for Improving the Clearance Process. GAO-06-323R. Washington, D.C.: January 17, 2006.\nDOD Personnel Clearances: Government Plan Addresses Some Long- standing Problems with DOD’s Program, But Concerns Remain. GAO-06-233T. Washington, D.C.: November 9, 2005.\nDOD Personnel Clearances: Some Progress Has Been Made but Hurdles Remain to Overcome the Challenges That Led to GAO’s High-Risk Designation. GAO-05-842T. Washington, D.C.: June 28, 2005.\nHigh-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 2005." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 1, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_full", "", "", "h0_full", "h0_title", "", "h0_full", "h1_full", "h0_full", "h3_full h2_full", "h3_title", "", "h3_full", "", "h0_full h2_full", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "What responsibilities does Executive Order 13467 assign DNI?", "What has DNI not provided agencies with to date?", "What are agencies using in absence of DNI guidance?", "What problems does this tool pose?", "How did an April 2012 audit reveal problems in implementing OPM’s tool?", "Why might these problems exist?", "Why is it important that DNI establish guidance and collaborate with OPM?", "About what regarding civilian positions has DNI not established guidance?", "What is the purpose of Executive Order 12968?", "What did GAO find when reviewing DHS and DOD components of security clearances?", "Why is it problematic that agency officials were not always required to conduct periodic reviews and validations of security clearance needs?", "How can underdesignating positions also be a problem?", "How is DNI implicated in the fact that agencies’ practices vary?", "Why should the DNI establish guidance?", "How does a lack of guidance affect executive branch agencies like DHS and DOD?", "How can agencies better manage costs and safeguard classified data?", "Why is it important to safeguard classified data?", "To what extent do employees currently hold clearances?", "What was GAO asked to examine?", "What resources did GAO use to create their report?", "What does GAO recommend DNI implement as far as policies?", "What kind of guidance does GAO recommend regarding the DNI issue?", "How did parties involved in GAO's recommendation react?" ], "summary": [ "Executive Order 13467 assigns DNI responsibility for, among other things, developing uniform and consistent policies to determine eligibility for access to classified information, and gives the DNI authority to issue guidance to agency heads to ensure uniformity in processes relating to those determinations.", "The Director of National Intelligence (DNI), as Security Executive Agent, has not provided agencies clearly defined policy and procedures to consistently determine if a position requires a security clearance.", "In the absence of this guidance, agencies are using an Office of Personnel Management (OPM) tool that OPM designed to determine the sensitivity and risk levels of civilian positions which, in turn, inform the type of investigation needed.", "OPM audits, however, found inconsistency in these position designations, and some agencies described problems in implementing OPM’s tool.", "In an April 2012 audit, OPM reviewed the sensitivity levels of 39 positions in an agency within the Department of Defense (DOD) and reached different conclusions than the agency for 26 of them.", "Problems exist, in part, because OPM and the Office of the Director of National Intelligence (ODNI) did not collaborate on the development of the position designation tool, and because their roles for suitability—consideration of character and conduct for federal employment—and security clearance reform are still evolving.", "Without guidance from the DNI, and without collaboration between the DNI and OPM in future revisions to the tool, executive branch agencies will continue to risk making security clearance determinations that are inconsistent or at improper levels.", "The DNI also has not established guidance to require agencies to review and revise or validate existing federal civilian position designations.", "Executive Order 12968 says each agency shall request or grant clearance determinations, subject to certain exceptions, based on a demonstrated need for access, and keep to a minimum the number of employees that it determines are eligible for access to classified information. The order also states that access to classified information shall be terminated when an employee no longer has a need for access, and prohibits agencies from requesting or approving eligibility in excess of actual requirements for access.", "During this review of Department of Homeland Security (DHS) and DOD components, GAO found that agency officials were aware of the need to keep the number of security clearances to a minimum, but were not always required to conduct periodic reviews and validations of the security clearance needs of existing positions.", "Overdesignating positions results in significant cost implications, given that the fiscal year 2012 base price for a top secret clearance investigation conducted by OPM is $4,005, while the base price of a secret clearance is $260.", "Conversely, underdesignating positions could lead to security risks.", "GAO found that the agencies follow varying practices because the DNI has not established guidance that requires executive branch agencies to review and revise or validate position designations on a recurring basis.", "Without such a requirement, executive branch agencies may be hiring and budgeting for initial and periodic security clearance investigations using position descriptions and security clearance requirements that no longer reflect national security needs.", "Further, since reviews are not done consistently, DHS and DOD and other executive branch agencies cannot have assurances that they are keeping the number of positions that require security clearances to a minimum.", "To safeguard classified data and manage costs, agencies need an effective process to determine whether civilian positions require a clearance.", "Security clearances allow personnel access to classified information that, through unauthorized disclosure, can, in some cases, cause exceptionally grave damage to U.S. national security.", "In 2011, the DNI reported that over 4.8 million federal government and contractor employees held or were eligible for a clearance.", "GAO was asked to examine the extent to which the executive branch has established policies and procedures for agencies to use when (1) first determining if federal civilian positions require a security clearance and (2) reviewing and revising or validating existing federal civilian position security clearance requirements.", "GAO reviewed executive orders and the Code of Federal Regulations and met with officials from ODNI and OPM because of their Directors’ assigned roles as Security and Suitability executive agents, as well as DHS and DOD based on the volume of clearances they process.", "GAO recommends that the DNI issue clearly defined policy for agencies to follow when determining if federal civilian positions require a security clearance, and that the DNI and Director of OPM collaborate to revise the existing position designation tool.", "GAO further recommends that the DNI issue guidance to require agencies to periodically review and revise or validate the designation of their existing federal civilian positions.", "ODNI and OPM concurred, although OPM raised concerns with which GAO disagrees and addresses in the report." ], "parent_pair_index": [ -1, 0, -1, 2, 3, 3, -1, -1, -1, -1, 2, 3, -1, 5, 6, -1, 0, 0, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 3, 3, 3 ] }
CRS_R41233	{ "title": [ "", "Introduction to the Department of Housing and Urban Development (HUD)", "Overview and Trends in HUD Funding", "FY2011 Appropriations", "Actions in the 111th Congress", "President's Budget", "House Action", "Senate Action", "Continuing Resolutions", "Actions in 112th Congress", "H.R. 1", "Continuing Resolutions", "P.L. 112-10", "Key Budget Issues and Selected Accounts, FY2011", "The Federal Housing Administration Reforms and Funding Levels", "Credit Subsidy and Offsetting Receipts", "Positive Credit Subsidy (HECMs)", "Proposed FHA Reforms", "Funding Levels for Housing for the Elderly and Persons with Disabilities", "Section 8 Voucher Funding", "Renewal Funding Formula", "Section 811 Vouchers", "New Vouchers", "Project-Based Section 8 Renewal Funding", "New Initiative: Transforming Rental Assistance", "Public Housing Funding, HOPE VI, and Choice Neighborhoods", "Operating and Capital Funds", "HOPE VI and Choice Neighborhoods", "Funding the Housing Trust Fund", "The Transformation Initiative", "Community and Economic Development Initiatives", "Community Development Fund31", "CDBG", "Catalytic Competition Grants", "Sustainable Communities", "Section 108 Loan Guarantees", "Capacity Building", "Self-Help and Assisted Homeownership Opportunity Program Account", "HUD's Housing Counseling Assistance Program", "The National Foreclosure Mitigation Counseling Program", "Native American Housing Block Grants", "Appendix. Related Budget Actions and Funding Legislation" ], "paragraphs": [ "", "Most of the funding for the activities of the Department of Housing and Urban Development (HUD) comes from discretionary appropriations provided each year in the annual appropriations acts enacted by Congress. HUD's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs. These include several programs of rental assistance for persons who are poor, elderly, and/or have disabilities. Three rental assistance programs—Public Housing, Section 8 Vouchers, and Section 8 project-based rental assistance—account for the majority of the department's non-emergency funding (almost 73% in FY2010). Two flexible block grant programs—HOME and Community Development Block Grants (CDBG)—help communities finance a variety of housing and community development activities designed to serve low-income families. Other, more specialized grant programs help communities meet the needs of homeless persons, including those with AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to lower-income home buyers, many of whom have below-average credit records, and to developers of multifamily rental buildings containing relatively affordable units. FHA collects fees from insured borrowers, which are used to sustain the insurance fund and offset its administrative costs. Surplus FHA funds have been used to offset the cost of the HUD budget.\nIn recent years, the HUD budget has also received significant amounts of emergency supplemental funding. Almost $20 billion was provided through HUD's budget for recovery assistance to communities affected by Hurricane Katrina and the other hurricanes of 2005. Most recently, the economic stimulus legislation ( P.L. 111-5 ) provided over $13 billion to HUD's programs.\nTable 1 presents total enacted appropriations for HUD over the past five years, including emergency appropriations.", "HUD's regular funding (not including emergency supplemental funding, discussed later) has increased by 57% in the past nine years. And, as demonstrated by the line in Figure 1 , the rate of growth has increased in recent years. In FY2004 and FY2005, year-over-year growth was relatively flat (under 2%), but since then, HUD's budget has had year-over-year increases of 5% or more each year, with growth of nearly 10% in FY2009 and nearly 12% in FY2010.\nAdjusting for inflation, the growth in \"real\" funding (shown by the gray bars in Figure 1 ) has been less robust. Over the nine-year period, adjusting for inflation, HUD's budget grew by about 17%. Through FY2008, the year-over-year growth never exceeded about 3.5%, and in two years there were declines. Most of the growth over the previous nine years has come in the last two years.\nAs shown in Figure 2 , HUD's funding is made up of several components. The components of HUD's annual funding, or budget authority, include regular annual appropriations, emergency appropriations, rescissions, and offsets.\nHUD's programs and activities are funded almost entirely through regular annual appropriations , also referred to as discretionary appropriations. The amount provided in the annual appropriations acts each year generally determines how much funding will be obligated and eventually spent for each of HUD's programs and activities.\nIn some years, Congress will also provide emergency appropriations , usually in response to disasters, through one or more of HUD's programs. These funds are generally provided outside of the regular appropriations acts—often in emergency supplemental spending bills—and are generally provided in addition to regular annual appropriations.\nCongressional appropriators are generally subject to limits on the amount of new non-emergency discretionary funding they can provide in a year. One way to stay within these limits is to provide less in regular annual appropriations. Another way is to find offsets. A portion of the cost of HUD's regular annual appropriations acts is generally offset in two ways. The first is through rescissions , or cancellations of unobligated or recaptured balances from previous years' funding. The second is through offsetting receipts and collections , generally derived from fees paid by HUD partners or clients.\nThe interaction between new appropriations and offsets provided through rescissions, receipts, and collections determines HUD's total net budget authority. Net budget authority is also the \"cost\" of the HUD budget, as estimated by the Congressional Budget Office in its scorekeeping process. The total amount of net budget authority provided to HUD each year, while important for federal budgeting purposes, is not necessarily the best measure of the amount of funding that is being provided for HUD's programs and activities. Because of the role of offsets, declining or increasing net budget authority did not necessarily mean declining or increasing regular appropriations.\nAs shown by the line in Figure 2 , which repeats the data shown by the line in Figure 1 , net non-emergency budget authority for HUD increased 57% between FY2002 and FY2010, from over $29 billion to over $46 billion. However, the overall increase in net new non-emergency budget authority masks several important trends.\nThe 57% increase in net non-emergency budget authority is not fully attributable to increased appropriations for HUD programs. From FY2002 to FY2010, regular annual appropriations, which is the amount provided by Congress to fund HUD's programs and activities, grew by only 37% (shown by the dark green bars in Figure 2 ). During the same period, the amount available in offsetting receipts and collections and the amount rescinded, which Congress uses to reduce the cost of providing new appropriations, declined by more than 70% and 96%, respectively (shown by the dark and light red bars in Figure 2 ). As a result, part of the increase in net non-emergency budget authority from FY2002-FY2010 is attributable to decreases in the amount available in offsetting receipts and collections and the amount of rescissions taken.\nThe 37% growth in regular appropriations during this period (shown by the dark green bars in Figure 2 ) is largely attributable to growth in HUD's Section 8 voucher and project-based rental assistance programs, which, combined, are the largest component of the HUD budget. As can be seen in Figure 3 , from FY2002 to FY2010, appropriations for the combined Section 8 programs grew by over 70%, while aggregate funding for all other HUD programs and activities grew by only 8%. During this period, the Section 8 programs went from accounting for about 46% of HUD's regular appropriations in FY2002 to accounting for about 57% of HUD's regular appropriations in FY2010. As can be seen in the chart, for a number of years, Section 8 funding grew while aggregate funding for all other HUD programs declined. However, in FY2009 and FY2010, funding for other HUD programs began to grow as well.\nThe more than 70% decline in offsetting receipts shown in Figure 2 is largely attributable to declines in offsetting receipts available from the FHA mortgage insurance programs. The amount available from FHA to offset the cost of new HUD appropriations has declined from a high of over $3 billion in FY2004 to well under $0.5 billion in FY2010.", "The annual appropriations process generally begins with the release of the President's budget request in the spring of the prior fiscal year. The House and the Senate Appropriations Committees then hold hearings and begin crafting their versions of appropriations legislation. Since the federal fiscal year ends on September 30 and the new one begins on October 1, appropriations legislation must be enacted before September 30 in order to avoid a government funding lapse. In years when Congress does not complete appropriations action before the end of the fiscal year, Congress generally enacts short-term continuing resolutions, which continue funding for government programs at the prior fiscal year levels until final actions are taken.\nThe FY2011 appropriations process began with the release of the President's budget on February 1, 2010, but did not end until more than a year later, when P.L. 112-10 was signed into law on April 15, 2011. The process of adopting final FY2011 funding spanned two calendar years as well as two Congresses. The following section of this report summarizes the major actions in the development of the FY2011 appropriations for HUD. Table 2 , which follows, compares HUD funding by account from FY2010 to FY2011.", "", "The President's FY2011 budget request was released on February 1, 2010. As shown in Table 2 , for FY2011 the President's budget requested about $45.6 billion in net new budget authority for HUD, a decrease of about 1% from the FY2010 enacted level. However, the requested decrease in net new budget authority would actually represent a 3% increase in appropriations for HUD programs in aggregate. The President's budget proposed to more than offset the overall increase in appropriations with a substantial increase in offsetting collections and receipts, which are estimated to come from proposed changes to the FHA mortgage insurance programs (see \" The Federal Housing Administration Reforms and Funding Levels \" later in this report).\nThe President's budget requested the largest funding increases for the two Section 8 programs, followed by programs for the homeless and for HUD's research and technology needs. The President's budget requested decreased funding for other programs, including programs providing housing for persons who are elderly and persons with disabilities and public housing capital repairs. The President's budget requested no new funding for the brownfields redevelopment program.", "As shown in Table 2 , the FY2011 HUD funding bill approved by the House on July 29, 2010 ( H.R. 5850 ), would have provided about $1 billion more for HUD than requested by the President. These funding levels would have provided a 1% increase in net new budget authority over the FY2010 enacted level and a 5% increase in appropriations for HUD programs in aggregate.\nThe bill would have rejected the President's proposed cuts to housing programs for persons who are elderly and persons with disabilities, public housing capital funding, and the brownfields program. The bill also rejected funding for several of the President's proposed initiatives, including Choice Neighborhoods and Transforming Rental Assistance. It was not enacted before the end of the 111 th Congress.", "As shown in Table 2 , like the House bill, the FY2011 HUD funding bill approved by the Senate Appropriations Committee on July 23, 2010 ( S. 3644 ), would have provided about $1 billion more for HUD than requested by the President. Like the House bill, the Senate bill would have provided a 1% increase in net new budget authority over the FY2010 enacted level and a 5% increase in appropriations for HUD programs in aggregate.\nThe Senate bill also would have rejected the President's proposed cuts to housing programs for persons who are elderly and persons with disabilities, public housing capital funding, and the brownfields program, and would have provided funding for the President's Transforming Rental Assistance initiative. Unlike the House bill, the Senate committee bill would have funded the President's Choice Neighborhoods Initiative. The bill was not enacted before the end of the 111 th Congress.", "Because no FY2011 appropriations legislation was enacted before the beginning of the fiscal year (October 1, 2010), the 111 th Congress enacted a series of continuing resolutions (CRs) that continue funding at the FY2010 level for most accounts in the federal budget (including all of the accounts in HUD's budget). The first continuing resolution lasted from October 1, 2010, until December 3, 2010 (S. Amend. to H.R. 3081 , P.L. 111-242 ). The next two CRs extended the original CR through December 18, 2010, and December 21, 2010, respectively ( P.L. 111-290 , P.L. 111-317 ).\nThe CR approved just before adjournment of the 111 th Congress ( P.L. 111-322 ) was slated to expire at the earlier of March 4, 2011, or enactment of FY2011 appropriations legislation, leaving action on funding for the remainder of FY2011 to the 112 th Congress. In addition to continuing funding for HUD programs, P.L. 111-322 also extended, through the end of FY2011, FHA mortgage limit increases that would otherwise have expired in December 2010.", "", "On February 18, 2011, the House approved a year-long continuing resolution to fund the federal government through the end of FY2011. That bill, H.R. 1 , would have funded many HUD accounts at their FY2010 levels, but would have cut others. Overall, H.R. 1 would have provided about $5 billion less in aggregate appropriations (11%) for HUD programs, which is about $7 billion less in net new budget authority (16%), compared to FY2010. The difference between the aggregate appropriations and net budget authority is attributable to rescissions of prior-year funding proposed by H.R. 1 and an increase in the estimated amount of offsets available from the FHA insurance fund in FY2011 compared to FY2010 (see discussion under \" Credit Subsidy and Offsetting Receipts \" later in this report).\nOn March 9, 2011, the Senate considered, but failed to pass, both H.R. 1 as passed by the House and a Senate Amendment to H.R. 1 ( S.Amdt. 149 ). The Senate Amendment to H.R. 1 would have increased funding for HUD, compared to H.R. 1 , by nearly $6 billion and would not have rescinded any FY2010 funding. It would have represented a reduction of over $1 billion in net budget authority from FY2010 (under 3%), but it would have represented an increase of about $900 million in aggregate appropriations compared to FY2010 (under 2%). As previously noted, this difference is attributable to an increase in the estimate of offsetting receipts from FHA in FY2011 compared to FY2010.", "Prior to the expiration of the last CR of the 111 th Congress ( P.L. 111-322 ), the 112 th Congress approved a short-term CR ( H.J.Res. 44 , P.L. 112-4 ) to fund the government through March 18, 2011. That short-term CR continued funding for most accounts at FY2010 levels; however, it reduced funding for some accounts below FY2010 levels. For HUD, only the Community Development Fund (CDF) account, which funds the Community Development Block Grant (CDBG) program, was reduced. Under H.J.Res. 44 , the CDF was funded at an annualized level approximately $195 million lower than the FY2010 level. That funding reduction is equivalent to the amount of funding that was provided in the account for congressional earmarks through Economic Development Initiatives (EDI) and Neighborhood Initiatives (NI) in FY2010.\nPrior to the expiration of H.J.Res. 44 , Congress enacted another short-term CR ( H.J.Res. 48 , P.L. 112-6 ), which continued funding through April 8, 2011. It maintained funding for most HUD accounts at their FY2010 levels, but continued the reduction in funding for the CDF included in H.J.Res. 44 . Further, H.J.Res. 48 provided no funding for HUD's Brownfields Redevelopment account, which had been funded at $17 million in FY2010.\nA final short-term CR, P.L. 112-8 , was enacted on April 8, 2011. It extended funding through April 15, 2011, while work on a final FY2011 year-long funding bill was completed. It reduced funding for the public housing operating fund and specified that no CDF funds could be used for EDI and NI earmarks.", "On April 15, 2011, the Department of Defense and Full-Year Continuing Appropriations Act of 2011 was signed into law ( P.L. 112-10 ). Division A provided year-long FY2011 appropriations for the Department of Defense; Divison B provided year-long FY2011 appropriations for the remaining government agencies, including HUD. Since it is a CR, it funded some HUD programs at FY2010 levels, but it reduced funding for other programs and increased funding for the two Section 8 programs. The act also included an across-the-board 0.2% rescission from all non-defense discretionary accounts, including those in HUD's budget.\nAs shown in Table 2 , the law provided an estimated $41.1 billion in net new budget authority for HUD, a decrease of about 11% from the FY2010 enacted level. However, the requested decrease in net new budget authority would only represent a 4% decrease in appropriations for HUD programs in aggregate, due to a substantial increase in offsetting collections and receipts from the FHA mortgage insurance programs (see \" The Federal Housing Administration Reforms and Funding Levels \" later in this report).", "", "The Federal Housing Administration (FHA) insures mortgage loans made by private lenders to eligible borrowers. Those eligible borrowers then pay both upfront and monthly fees for the cost of the insurance. The provision of FHA insurance helps to make mortgage credit more widely available, and at a lower cost, than it might be in the absence of the insurance. The FHA home loan insurance programs are administered primarily through two program accounts in the HUD budget: the Mutual Mortgage Insurance/Cooperative Management Housing Insurance Fund account (MMI/CMHI) and the General Insurance/Special Risk Insurance Fund account (GI/SRI).\nThe Mutual Mortgage Insurance (MMI) Fund is the largest of the FHA insurance funds, and when there is public discussion of \"FHA insurance\" or \"FHA loans,\" the discussion is usually related to the MMI fund and the single-family home loans insured under that fund. The Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) also moved the Home Equity Conversion Mortgage (HECM) program, FHA's reverse mortgage program, into the MMI Fund. This movement has resulted in the establishment of two risk categories in the MMI Fund: the MMI Purchase and Refinance risk category and the MMI HECM risk category. The GI/SRI Fund provides insurance for more-risky home mortgages, for multifamily rental housing, and for an assortment of special-purpose loans such as hospitals and nursing homes.\nThe issues discussed in this section apply to the single-family loans insured under the MMI Fund. (For more information on the programs in the MMI Fund, see CRS Report RS20530, FHA-Insured Home Loans: An Overview , by [author name scrubbed] and [author name scrubbed]; and CRS Report RL33843, Reverse Mortgages: Background and Issues , by [author name scrubbed].)", "The Federal Credit Reform Act of 1990 (FCRA) provided that the cost of federal loan insurance in a given fiscal year is the net present value of all expected cash flows from loans insured in that year. For the MMI fund, the cash inflows are mainly the insurance premiums paid by borrowers, and the cash outflows are mainly the payments to lenders for the cost of loan defaults.\nThe net value of these cash flows is expressed as a percentage of the volume of insured loans and is referred to as the subsidy rate. If the cash inflows exceed the cash outflows, the subsidy rate is expressed as a negative number because net income from business type activities is shown in the budget as negative outlays. If the cash outflows exceed the cash inflows, the subsidy rate is expressed as a positive number. When the subsidy rate is applied to the expected loan volume in a given year, the result is the amount of credit subsidy that a federal credit program needs over the life of the loans. The budget rules require an appropriation of this credit subsidy in the budget year that the loans are originated. However, actual cash flows over the life of the loans are likely to differ from those projected in the first year. Therefore, agencies are required to periodically revise the initial subsidy estimates to include actual experience on the loans.\nHistorically, the MMI Fund has had a negative subsidy rate, which means that it generated negative credit subsidy that could be used to offset the funding needs of other programs in the HUD budget. (A negative credit subsidy means that the MMI Fund makes money for the government.) In other words, the MMI Fund has generally made more money in fees than it has paid out in claims, and therefore it has not historically needed an appropriation from Congress in order to operate, although it does traditionally receive a congressional appropriation for administrative expenses.\nAs described earlier, the MMI Fund is now divided into the MMI Purchase and Refinance risk category and the MMI HECM risk category. The Administration estimated that the Purchase and Refinance risk category of the MMI Fund would have a negative subsidy rate of -2.59% for FY2011, which is above the negative subsidy rate of -0.62% that was estimated for FY2010. The Administration further estimated that this means the Purchase and Refinance risk category of the MMI Fund would generate about $5.8 billion in negative credit subsidy in FY2011. Negative credit subsidy results in the availability of offsetting receipts. The estimated increase in negative credit subsidy would result partly from a series of FHA reforms that have been proposed by HUD (see \" Proposed FHA Reforms \" later in this report).\nThe Congressional Budget Office, in its re-estimate of the President's budget, estimated that the MMI Purchase and Refinance risk category would generate a smaller negative credit subsidy than the Administration projected. CBO projected that FHA's Purchase and Refinance risk category would generate around $1.9 billion in negative credit subsidy. This included $960 million without FHA's proposed changes, and an additional $902 million with HUD-proposed program reforms. Although these projections were lower than the Administration's, CBO still projected that this category of the MMI Fund would make more money than it loses in the upcoming year, and therefore would not require a positive credit subsidy in FY2011. The differences between the offsetting receipts in the President's FY2011 budget request and CBO's re-estimate are shown in Table 3 .\nGiven that the full-year FY2011 appropriations law ( P.L. 112-10 ) was not enacted until April 2011, FHA's estimates of FY2011 negative credit subsidy had been revised upward by the time the appropriations law was enacted. This was largely due to an increase in the annual premium that FHA charges that went into effect in April 2011, described later in this section. In the President's FY2012 budget request, FHA indicated that this change in the annual premium would result in a -3.92% subsidy rate for the Mutual Mortgage Insurance Fund's Purchase and Refinance risk category for the remainder of FY2011, or a weighted average of -3.25% for FY2011 as a whole. Consequently, FHA's estimates of offsetting receipts for the Purchase and Refinance risk category in FY2011 increased to nearly $10 billion by the time the FY2012 budget was released, from an estimate of $5.8 billion when the FY2011 budget was released. CBO also increased its estimate of FHA receipts for FY2011 by over $1 billion from the beginning of the FY2011 appropriations process until final enactment.", "As described above, the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) moved the Home Equity Conversion Mortgage (HECM) program into the MMI fund, and it is accounted separately. While the MMI Purchase and Refinance risk category is estimated to have a negative credit subsidy of -2.59% (as described above), the MMI HECM risk category is estimated to have a positive credit subsidy of 0.83% and will require an appropriation of $250 million in positive credit subsidy.\nIn FY2010, HUD took steps to make changes to the HECM program so that it would not require a positive credit subsidy, but these did not prove to be sufficient. For FY2011, HUD proposed to increase the HECM borrowers' annual insurance premiums from the current 0.5% of the loan balance to 1.25% of the loan balance. HUD also planned to adjust the formula that determines the size of the initial loan that a HECM borrower may obtain. The formula changes would result in smaller loans for borrowers and would lessen and maybe eliminate the need for positive credit subsidies.\nH.R. 5850 would have provided $140 million in credit subsidies for HECMs, $110 million less than the Administration's estimate, and S. 3644 would have provided $150 million in credit subsidies, $100 million less than the Administration's estimate. The final FY2012 appropriations law ( P.L. 112-10 ) continued language from FY2010 directing the Secretary of HUD to make adjustments to the HECM program such that the program will result in a zero credit subsidy, meaning it will not require appropriations.", "As is generally the case when the private market tightens its lending standards, the demand for FHA-insured mortgages has been increasing in the past few years. FHA insured 18.7% of new single-family mortgages in FY2009, up from about 2% in FY2006.\nThe growing volume of new mortgages insured by FHA means a higher volume of mortgage insurance premiums paid into the MMI Fund. Given that the average credit score on FHA-insured loans has been in the 690s in recent months, compared to the 650s in late 2007, FHA believes that the newer mortgages it is insuring are of a better credit quality than past mortgages. However, the default rate on past FHA-insured loans is still rising, and this puts some strain on the MMI Fund.\nIn the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ), Congress mandated that within 10 years after enactment, the MMI Fund must have a capital reserve ratio of at least 2%, and that it must maintain that ratio at all times going forward. The capital reserve ratio is a measure of the resources that FHA has on hand to cover unexpected losses, after accounting for expected losses based on its current book of business. During FY2009, the capital reserve ratio was estimated to be 0.53%. This was the first time since the requirement was put into effect that the capital reserve ratio had fallen below 2%.\nIn response to concerns over the financial stability of the MMI Fund, FHA has announced a number of proposed changes to its single-family mortgage insurance programs. FHA can implement some of these changes administratively, while others will require congressional action. FHA has proposed or implemented the following changes:\nIncreasing the annual mortgage insurance premium. Congress sets a statutory cap on the annual mortgage insurance premium that FHA can charge. P.L. 111-229 , signed by the President on August 11, 2010, sets the maximum annual insurance premium amounts at 1.5% for borrowers with downpayments greater than 5%, and 1.55% for borrowers with downpayments of 5% or less. At the time this law was enacted, FHA had been charging the maximum annual insurance premium allowed by law. After P.L. 111-229 was enacted, FHA increased the annual mortgage insurance premiums it charged to 0.9% of the loan balance if the loan-to-value ratio was 95% or higher, and 0.85% of the loan balance if the loan-to-value ratio was below 95%, beginning on October 4, 2010. Beginning on April 18, 2011, FHA raised the annual insurance premiums again, to 1.15% of the loan balance if the downpayment is 5% or less, and to 1.10% of the loan balance if the downpayment is greater than 5%. Increasing the upfront mortgage insurance premium. Congress also sets a statutory cap on the upfront premium that FHA can charge. The statutory cap is currently 3%. FHA raised the upfront premium it charged to 2.25% for loans endorsed on or after April 5, 2010, because it had the flexibility to do so without reaching the statutory cap but could not raise the annual insurance premium at that time (because it was already charging the maximum annual insurance premium allowed by law). However, after P.L. 111-229 was enacted, raising the maximum annual premium that FHA could charge, FHA raised the annual mortgage insurance premium (as described above) and lowered the upfront mortgage insurance premium to 1% for loans endorsed on or after October 1, 2010. Changing downpayment and minimum credit score requirements . FHA proposes to require borrowers with credit scores between 500 and 579 to provide a downpayment of at least 10%. Borrowers with credit scores of 580 or above would continue to be required to comply with the minimum downpayment requirement of 3.5%. These changes can be made administratively; FHA published a Federal Register notice on July 15, 2010, soliciting comments on these changes. Reducing the allowable amount of seller concessions from 6% to 3%. FHA proposes reducing the maximum limit on seller concessions to 3% from its current level of 6%. FHA can also implement this change administratively, and solicited comments on this change through the same Federal Register notice, published on July 15, 2010, that detailed the changes in downpayment and minimum credit score requirements. Increasing oversight and enforcement of requirements for FHA-approved lenders. FHA intends to increase its oversight of FHA-approved lenders. FHA can make some changes to oversight and enforcement administratively, and has already taken some steps to do this. FHA will need Congress to grant it authority to undertake certain additional enforcement actions. A bill that passed by the House, the FHA Reform Act of 2010 ( H.R. 5072 ), would have given FHA the authority to require lenders to indemnify FHA for claims paid on mortgages that were not underwritten in conformance with FHA requirements, and on cases where there was fraud and misrepresentation involved in the origination of the mortgages. The bill would have given FHA broader authority to terminate the approval of lenders that have an excessive rate of early defaults and claims. The bill would also have established within FHA a Deputy Assistant Secretary for Risk Management and Regulatory Affairs. Upon confirmation of the deputy assistant secretary, the current position of FHA chief risk officer would have been abolished. FHA would also have been given authority to contract with outside credit risk analysis sources. For each of FY2010 through FY2014, there would have been authorized appropriations as necessary to provide full-time positions or contracts for staff to review lender performance.", "Through the Section 202 Supportive Housing for the Elderly program and the Section 811 Supportive Housing for Persons with Disabilities program, HUD provides capital grants and rental assistance to nonprofit developers to build or rehabilitate housing units for elderly residents and residents with disabilities. In the Section 202 program, property owners may ensure that residents receive supportive services, though it is not required, while in the Section 811 program, supportive services must be available to residents. HUD capital grants have funded more than 106,000 units of Section 202 housing and more than 30,000 units of Section 811 housing.\nFor FY2011, the President proposed that no new units of Section 202 or Section 811 housing be funded in order to give HUD time to \"redesign\" the programs. (For more information about the proposal to redesign and modernize the Section 202 program, see CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents , by [author name scrubbed].) This proposal would have resulted in reduced funding for both programs. Under the President's proposal, Section 202 and related programs (Service Coordinators and the Assisted Living Conversion program) would have been funded at $274 million, compared to $825 million in FY2010. The Section 811 program would have received $90 million in FY2011, compared to $300 million in FY2010.\nNeither the House-passed appropriations bill ( H.R. 5850 ) nor the Senate committee-passed bill ( S. 3644 ) would have followed the President's recommendations to redesign the programs or to stop producing new units. Both bills would have maintained the same level of funding for Section 202 that was appropriated in FY2010—$825 million. For the Section 811 program, H.R. 5850 would have provided $300 million, the same amount that was appropriated in FY2010, while S. 3644 would have provided $200 million. The difference in proposed funding levels was based on the treatment of Section 811 vouchers. Both H.R. 5850 and S. 3644 would have moved funding for the renewal of Section 811 vouchers to the Section 8 tenant-based rental assistance account. In FY2010, $87 million of the Section 811 appropriation was allocated for the renewal of vouchers; according to HUD FY2011 budget documents, nearly $114 million would be used to renew the vouchers in FY2011. The Senate Appropriations Committee report stated that, as a consequence of removing voucher renewals from the Section 811 account, it provided $100 million less in funding for the Section 811 account.\nUltimately Congress appropriated $400 million for Section 202 and related programs ($399 million after the 0.2% across-the-board rescission) and $150 million for the Section 811 program ( P.L. 112-10 ). Funding to renew Section 811 vouchers was split between the Section 811 and Section 8 tenant-based accounts. Of the $150 million appropriated for Section 811, \"up to\" $32 million was made available to renew voucher contracts entered into prior to 2007. Another $35 million was made available through the Section 8 tenant-based account, for a total of $67 million for Section 811 voucher renewals. This is $20 million less than was used to renew Section 811 voucher contracts in FY2010. Within the funds appropriated for Section 202, approximately $89 million was provided for Service Coordinators and another $39 million was provided for the Assisted Living Conversion program.", "The Section 8 Housing Choice Voucher program is funded through the tenant-based rental assistance account; it is both the largest assistance program administered by HUD as well as the largest account in HUD's budget. Most of the funding provided to the account each year funds the annual renewal funding for the almost 2.3 million vouchers that are currently authorized and being used by families to subsidize their housing. The account also provides funding for the administrative costs incurred by the Public Housing Authorities (PHAs) that administer the program. The account is funded using both current year appropriations and advance appropriations provided for use in the following fiscal year. (For more information about the program, see CRS Report RL34002, Section 8 Housing Choice Voucher Program: Issues and Reform Proposals , by [author name scrubbed].)", "Since FY2004, the level of funding for voucher renewals and how that funding will be allocated to the more than 2,000 PHAs that administer the voucher program have been among the primary sources of debate in the HUD appropriations process each year. Generally, the questions raised in these debates involve whether the proposed funding level is sufficient to fund all of the vouchers under lease and being used by families and whether the proposed funding will be allocated efficiently, allowing PHAs to serve as many families as possible, while containing future costs.\nIn FY2010, Congress provided over $16 billion for voucher renewals and directed HUD to allocate the funding to PHAs based on their voucher costs and utilization from the prior fiscal year. HUD then adjusted each PHA's prior year costs for inflation and other factors to determine how much funding each PHA was eligible to receive in FY2010. The amount provided by Congress in FY2010 was sufficient to fund over 99% of PHAs' formula eligibility. However, PHAs were not using—or leasing—all of their vouchers in FY2009. HUD's Congressional Budget Justifications indicate that PHAs, in aggregate, had about 94% of their vouchers under lease in FY2009. Because CY2010 funding was based on FY2009 utilization, PHAs were not provided enough funding in FY2010 to fund all of their vouchers, only those they had been using. As a result, only PHAs whose costs had decreased or who had extra reserve funding from prior years have been able to increase utilization in CY2010.\nThe President's FY2011 budget requested about $17 billion in new budget authority for voucher renewals. HUD's Congressional Budget Justifications indicated that the amount requested would be sufficient to fund all vouchers in use, which HUD estimates will be about 95% of all vouchers. The President's budget requested that the funding be allocated using a formula similar to that in use in FY2010 (based on prior year costs and utilization, plus inflation), but also that the Secretary be given the authority to reduce allocations to those PHAs with unspent reserve funding and to reallocate funding to PHAs with lower reserves. This would allow PHAs with little or no reserves to receive an increase in funding over those agencies with high reserves, potentially allowing them to increase their utilization and serve additional families. To facilitate additional increases in leasing, the President's budget also requested that Congress lift the ban on \"over-leasing,\" which has been in place since FY2004. A PHA over-leases when it uses excess funding to fund additional vouchers above the number of vouchers it has been allocated by HUD. As in FY2010, the President's FY2011 budget documents purported that the amount requested would be sufficient to maintain existing vouchers in use, but not sufficient to fund the use of all 2.3 million vouchers authorized by Congress.\nThe House bill included about $150 million less for renewals than the amount requested in the President's budget. The committee report accompanying the bill ( H.Rept. 111-564 ) indicated that less renewal funding would be needed because recent inflation estimates have been lower than those anticipated in the President's budget. The committee report indicated the amount included in H.R. 5850 would be sufficient to meet the renewal needs of the program and reiterated the committee's support for funding all vouchers in use.\nThe formula for allocating renewal funding included in H.R. 5850 largely followed the formula requested by the President (and used in the prior year); however, H.R. 5850 did not include the reallocation authority requested by the President. In discussing why the committee did not include the requested authority, the committee report states that the committee believes the program is due for major authorization changes outside of the jurisdiction of the Appropriations Committee. The bill would have maintained the prohibition on over-leasing, but would have changed the funding formula to base PHA funding on prior calendar year spending, rather than prior fiscal year spending. This change is meant to better reflect the program's needs, since the program is funded and managed on a calendar year cycle.\nLike H.R. 5850 , S. 3644 would have funded renewals at less than the President's request, citing revised estimates of need. It would have allocated funding using the same formula as H.R. 5850 , including adjusting the formula to use calendar year spending rather than fiscal year spending. Like the House bill, the Senate bill did not include the reallocation authority requested by the President. The committee report accompanying the bill ( S.Rept. 111-230 ) cites concern that such a policy could lead to rapid and significant increases in costs in the program. The committee report also notes concern about how costs are managed in the program, and directs HUD to report back to the committee on its plans for better monitoring of PHAs' financial management.\nNeither H.R. 1 nor the final FY2011 appropriations law ( P.L. 112-10 ) made any changes to the funding allocation formula from FY2010. Both included less for renewals than requested by the President, but more than was provided in FY2010.", "As noted previously (in the section \" Funding Levels for Housing for the Elderly and Persons with Disabilities \"), the President's budget requested that Congress begin funding the renewal of mainstream vouchers for persons with disabilities in the Section 8 account, rather than through the Housing for Persons with Disabilities account. HUD requested $114 million for this purpose in FY2011. Both the House and Senate bills proposed to adopt the President's request. H.R. 1 did not explicitly include funding in the tenant-based rental assistance account for renewing Section 811 vouchers. The final FY2011 appropriations law ( P.L. 112-10 ) appropriated less than a third of the amount requested by the President for Section 811 renewals. The bill directed that the funds be used to renew vouchers issued since 2007. Renewal funding for vouchers issued prior to FY2007 was provided in the Section 811 account.", "Each PHA has a contract with HUD that identifies how many vouchers it is authorized to administer; in aggregate, there are around 2.3 million authorized vouchers allocated across the PHAs. In some years, Congress creates additional vouchers, which increase that total. Some are replacement vouchers, called tenant protection vouchers, which are given to families who are being displaced from other HUD programs. Others are new, or \"incremental,\" vouchers. In recent years, incremental vouchers have been set aside for specific special populations or purposes. In FY2010, Congress provided $15 million for vouchers for families in the child welfare system and $75 million for vouchers for homeless veterans.\nFor FY2011, the President's budget requested $85 million for new vouchers as part of a demonstration program involving supportive housing for families and individuals at risk of homelessness. The House bill from the 111 th Congress included funding for the President's homelessness demonstration request, along with $75 million for vouchers for homeless veterans through the Veteran's Affairs Supportive Housing (VASH) program and $66 million for vouchers to continue assistance to certain families displaced by the 2005 hurricanes. Like the House bill, the Senate bill from the 111 th Congress would have funded the President's homelessness demonstration, provide $75 million for VASH vouchers, and provide $66 million for families displaced by hurricanes. Additionally, the Senate bill would have provided $16 million for the Family Unification Program (FUP), which would provides vouchers to families involved in the child welfare system. H.R. 1 included no funding for new incremental vouchers, but the final FY2011 appropriations law ( P.L. 112-10 ) provided about $50 million for VASH vouchers.", "The project-based rental assistance account provides funding to administer and renew existing project-based Section 8 rental assistance contracts between HUD and private multifamily property owners. Under those contracts, HUD provides subsidies to the owners to make up the difference between what eligible low-income families pay to live in subsidized units (30% of their incomes) and a previously agreed-upon rent for the unit. No new contracts have been entered into under this program since the early 1980s. When the program was active, Congress funded the contracts for 20- to 40-year periods, so the monthly payments for owners came from old appropriations. However, once those contracts expire, they require new annual appropriations if they are renewed. As more contracts expire, assuming the owners choose to renew, more new appropriations are needed to maintain the subsidies. Further, some old contracts do not have sufficient funding to finish their existing terms, so new funding is needed to complete the contract (referred to as amendment funding).\nIn FY2011, the President requested over $9 billion for the project-based rental assistance account, a 10% increase over the prior year. HUD contends that the funding level requested should be sufficient to provide a full-year's funding for all contracts that require funding and to renew any expiring contracts. Of the amount requested, HUD's Congressional Budget Justifications indicate that an estimated $662 million would be needed to meet amendment needs. Since FY2009, the account has been funded using both current year appropriations and advance appropriations provided for use in the following fiscal year; the President requested that model be continued in FY2011. (Given the complexity of understanding total funding levels when different levels of advanced appropriations are used, Table 5 is provided to display comparable funding levels.)\nBoth the House and Senate bills from the 111 th Congress proposed to adopt the President's requested funding level. H.R. 1 included $100 million less than the President's request and the final FY2011 appropriations law ( P.L. 112-10 ) provided just under $120 million less than the President's request.", "President Obama's FY2011 budget requested $350 million for a new \"Transforming Rental Assistance\" initiative. According to the President's budget documents, the initiative is designed to streamline HUD's multiple rental assistance programs and increase residential mobility options for HUD-assisted tenants. Specifically, the funding would be used to transfer a variety of HUD-assisted housing units with project-based rental assistance from their existing subsidy types to a new form of project-based rental assistance. According to the President's budget documents, this new form of rental assistance will feature tenant mobility, meaning that families living in units receiving this new form of project-based rental assistance would have the option to take their subsidies with them if they choose to move to a new unit of private market housing. The new assistance is modeled after the Section 8 project-based voucher program, which also features tenant mobility.\nThe President's budget identifies three categories of properties as being targeted for transfer to this new form of assistance, with a goal of transferring 300,000 units:\n1. Public housing properties owned by local PHAs that do not currently administer a Section 8 voucher program (150,000 units targeted); 2. Public and multifamily housing properties owned by PHAs that agree to combine their administrative activities with neighboring PHAs (130,000 units targeted); and 3. Multifamily properties with old forms of rental assistance through the Rent Supplement and Rental Assistance Payments (RAP) programs (20,000 units targeted).\nProperties in the first and third categories would be selected by HUD for participation and properties in the second category would compete by submitting plans to HUD.\nMost of the funding, $290 million of the $300 million requested, would be used to make up the difference between the cost of the current subsidy streams attached to each unit and the cost of the new, and presumably higher, subsidy level established under the new program. Another $50 million would be used to offset the cost of combining PHA activities (agencies in the second category listed above) and to fund landlord outreach and other efforts to promote tenant mobility. The final $10 million would be used for technical assistance and program evaluation.\nThe President's budget documents indicated that HUD would submit legislation to Congress to implement the proposal. The draft legislation has been referred to as the Preservation, Enhancement, and Transformation of Rental Assistance Act, and is available on HUD's website.\nNeither H.R. 5850 nor S. 3644 included the funding requested for the President's initiative. In rejecting the proposal, both committees (in H.Rept. 111-564 and S.Rept. 111-230 ) expressed concern that the proposal was not fully developed and that the future costs are unknown and may be substantial.\nFunding for the Transforming Rental Assistance initiative was not included in H.R. 1 or the final FY2011 appropriations law ( P.L. 112-10 ).", "The public housing program provides publicly owned and subsidized rental units for very low-income families. Created in 1937, it is HUD's oldest housing assistance program, and arguably HUD's most well-known assistance program. Although no new public housing developments have been built for many years, Congress continues to provide funds to the more than 3,100 PHAs that own and maintain the existing stock of more than 1.2 million units. Through the operating fund, HUD provides funding to PHAs to help fill the gap between tenants' contributions toward rent and the cost of ongoing maintenance, utilities, and administration of public housing. Through the capital fund, HUD provides funding to PHAs for large capital projects and modernization needs. HOPE VI is a competitive grant program that provides funding to help demolish and/or redevelop severely distressed public housing developments, with a focus on building mixed-income communities.", "The President's FY2011 budget requested an increase in funding for the Public Housing operating fund and a decrease for the public housing capital fund. HUD's Congressional Budget Justifications contend that the amount requested for the operating fund would be sufficient to fund PHAs' full eligibility under the operating fund formula. The Justifications documents indicate that the requested decrease for the capital fund takes into account the nearly $4 billion PHAs received in capital funding from the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), as well as the request for full funding of the operating fund. Since PHAs can transfer up to 20% of their capital funding to cover operating expenses, the Administration contends that fully funding the operating fund will allow more capital funds to be spent on capital needs.\nBoth H.R. 5850 and S. 3644 proposed to fund the operating fund at the President's request and included a $500 million increase over the President's request for the capital fund. The Senate bill included a $50 million set-aside from the capital fund for grants for PHAs to, according to the committee report, \"construct, rehabilitate or acquire facilities to provide quality early childhood education and care to children living in and around public housing.\" It also would have required that at least $10 million be set aside for safety and security measures.\nH.R. 1 proposed to cut the public housing capital fund by over $1 billion and to cut the operating fund by almost $150 million compared to FY2010. The final FY2011 funding law ( P.L. 112-10 ) funded the capital fund higher than H.R. 1 but less than FY2010, and funded the operating fund at about $10 million less than H.R. 1 . The reduced appropriations for the operating fund may be voluntarily offset by PHAs' use of program reserves; a mandatory offset of PHA reserves was proposed by the President as a part of his FY2012 budget request, which was released several months before enactment of the final FY2011 appropriations law.", "As in FY2010, the President's budget requested no new funding for HOPE VI; instead, it requested $250 million for the Choice Neighborhoods Initiative. Choice Neighborhoods was a new Obama Administration proposal in the FY2010 budget. It is modeled after the HOPE VI program, which provides competitive grants to PHAs to revitalize severely distressed public housing. The Choice Neighborhood Initiative would broaden the scope of HOPE VI by offering competitive grants to revitalize severely distressed neighborhoods, not limited to public housing. In addition to PHAs, local governments, nonprofits, and for-profit developers would be eligible to compete for the funding. The funding is primarily aimed at the transformation, rehabilitation, and replacement of HUD public and assisted housing that cannot be funded through current annual formula or contract payments. In FY2010, Congress provided $200 million to the HOPE VI account, but set aside up to $65 million for a Choice Neighborhoods demonstration.\nAs they did in FY2010, the House and Senate in the 111 th Congress took different positions in FY2011 on funding for HOPE VI and Choice Neighborhoods. H.R. 5850 would have provided $200 million for HOPE VI, but no funding for Choice Neighborhoods. S. 3644 would have provided no funding for HOPE VI, but $250 million for Choice Neighborhoods.\nHUD circulated draft authorizing legislation for the Choice Neighborhoods Initiative and the House Financial Services Committee held a hearing in March 2010 on the topic. On July 27, 2010, the House Financial Services Committee ordered reported the Public Housing Reinvestment and Tenant Protection Act of 2010 ( H.R. 5814 ), which included authorization of the Choice Neighborhoods Initiative, although it was not enacted before the end of the 111 th Congress.\nH.R. 1 proposed no funding for either HOPE VI or Choice Neighborhoods. The final FY2011 funding law ( P.L. 112-10 ) provided just under $100 million for HOPE VI and did not modify the $65 million set-aside from FY2010. As a result, the majority of HOPE VI funding may be used for Choice Neighborhoods in FY2011.", "Congress authorized the creation of a national Housing Trust Fund in the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ). The Housing Trust Fund is intended to provide a permanent, dedicated source of funding for affordable housing that will not be subject to the annual appropriations process. Through the Housing Trust Fund, HUD would make grants to states to fund affordable housing activities, with a focus on providing rental housing for extremely low-income families.\nP.L. 110-289 identified contributions from Fannie Mae and Freddie Mac as the dedicated funding source for the new Housing Trust Fund. However, Fannie's and Freddie's contributions to the Housing Trust Fund were indefinitely suspended in November 2008 by their conservator, the Federal Housing Finance Agency, due to Fannie's and Freddie's financial difficulties. The suspension of Fannie's and Freddie's contributions left the Housing Trust Fund without a source of funding. While P.L. 110-289 allowed funding other than the contributions from Fannie Mae and Freddie Mac to be appropriated, transferred, or credited to the Housing Trust Fund, no funding has yet been directed to the fund.\nThe President's FY2011 budget requested $1 billion in mandatory funding for the Housing Trust Fund. This funding is to be fully offset elsewhere in the budget, although the Administration did not identify a source for the proposed funding. The President's FY2010 budget request also included $1 billion for the Housing Trust Fund; however, Congress did not provide any funding in the FY2010 appropriations law ( P.L. 111-117 ).\nNeither H.R. 5850 nor the committee-passed version of S. 3644 included funding for the Housing Trust Fund. The final FY2011 appropriations law ( P.L. 112-10 ) also did not include funding for the Housing Trust Fund.\nAlthough Congress has not provided funding for the Housing Trust Fund to date, there were a number of legislative proposals in the 111 th Congress that would have done so (although none were enacted before adjournment).", "The Transformation Initiative was first proposed in President Obama's FY2010 budget request. The goal of the initiative, according to the President's budget documents, is to strengthen and build HUD's research and technological capacities. The fund may be used for four purposes: (1) research, evaluation, and program metrics; (2) program demonstrations; (3) technical assistance and capacity building; and (4) information technology.\nThe funding request for the initiative involves both appropriations for an initiative targeted at reducing mortgage fraud as well as the authority for the Secretary to transfer up to 1% from most accounts in HUD's budget to a transformation fund.\nIn FY2010, Congress provided the President's requested $20 million appropriation for addressing mortgage fraud and authorized the requested 1% transfer authority, but not from all accounts. If the President's full transfer request had been provided in FY2010, the fund could have received up to about $435 million; because it was restricted, the fund received only $239 million.\nIn FY2011, the President again requested a $20 million appropriation for combating mortgage fraud as well as a broader 1% transfer authority. As shown in Table 7 , under the requested authority the transformation fund could have received almost $470 million in FY2011.\nBoth H.R. 5850 and S. 3644 included the requested $20 million for combating mortgage fraud as well as a more limited version of the President's requested transfer authority. As shown in Table 7 , the House- and Senate committee-passed bills would have limited the total funding available from transfers to well under half of what the President requested.\nBoth the House and Senate bills from the 111 th Congress proposed limits on the department's discretion by giving the department directions regarding how funds should be allocated across the categories of eligible activities. The House report noted\nTransforming HUD, and thus the Transformation Initiative, must be envisioned more broadly than budgetary flexibility. Flexibility, or lack thereof, is not the primary challenge facing HUD. Therefore, the Committee has limited the use of the Transformation Initiative funds to the core needs of the Department.\nAnd the Senate report noted\nWhile the Committee supports making these investments, it also believes that oversight of TI funding is critical. Therefore, the Committee has once again limited the flexibility to use these funds requested by HUD. As it did when funding was provided last year, the Committee is recommending minimum funding levels for IT modernization and technical assistance.\nH.R. 1 did not include the authority to make transfers under the Transformation Initiative. Instead of providing the $20 million requested by the President for combating mortgage fraud, the bill included $71 million for modernizing FHA's systems and for updated computer programs for the Section 8 voucher program.\nThe final FY2011 appropriations law ( P.L. 112-10 ), like H.R. 1 , included $71 million for new FHA and Section 8 voucher computer systems. Unlike H.R. 1 , the law permits HUD the requested transfer authority under the transformation initiative, but, as shown in Table 7 , from a more limited number of accounts than requested by the President.", "The Administration's budget for FY2011 included several community development initiatives intended to transform or restructure the Community Development Block Grant (CDBG) and related programs. The Administration's budget request would have continued to fund CDBG at its FY2010 funding level and would eliminate funding for the Rural Innovation Fund and for two programs that are used for congressionally defined earmarks: the Neighborhood Initiative and the Economic Development Initiative. In addition, the Administration requested funding for two new initiatives—Catalytic Competition Grants and the Capacity Building Clearinghouse—and the Administration's Sustainable Communities Initiative, which was originally funded with the passage of the Consolidated Appropriations Act of FY2010. The budget also proposed revamping the University Community Fund, the Section 108 Loan Guarantee Program, and the Capacity Building for Community Development and Affordable Housing programs.", "The Administration's budget proposed an overall reduction in funding for Community Development Fund (CDF) activities from $4.450 billion in FY2010 to $4.380 billion in FY2011. The $70 million reduction in CDF activities would have been accomplished by defunding Neighborhood Initiative (NI) and Economic Development Initiative (EDI) grants, both of which are used exclusively for congressional earmarks. Savings from those accounts would have been used to fund the Administration's Sustainable Communities Initiative and University Community Fund, both initially funded in FY2010. The Administration also proposed a new initiative—Catalytic Investments Competition Grants—in support of economic development projects in distressed communities. Finally, the President's budget requested no new funding for a related account, the Brownfields Economic Development Initiative Account. The Administration's budget argued the program duplicates other federal programs, including the Environmental Protection Agency's brownfield program. In addition, activities funded under BEDI may also be funded under the regular CDBG program.\nThe House bill, H.R. 5850 , recommended a $4.382 billion appropriation for CDF activities. Contrary to the Administration's budget request, this included $89.3 million for congressional earmarked funds for EDI ($76 million) and NI ($12 million) projects. The Senate Appropriations Committee bill, S. 3644 , recommended a $4.450 billion appropriation for CDF activities. Like its House counterpart, S. 3644 included funding for EDI and NI congressional earmarked projects. Specifically, the Senate bill recommended $193 million in EDI ($171 million) and NI ($22 million) projects.\nBoth the House and Senate bills recommended continued funding of two Administration initiatives—the Sustainable Communities Initiative and University Community Fund—at their FY2010 funding levels of $148.5 million and $24.8 million, respectively. In addition, both the House and Senate bills did not include funding for the Administration's proposed new initiative—Catalytic Investments Competition Grants.\nThe final FY2011 appropriations law, P.L. 112-10 , appropriated $3.501 billion for the CDF account, which is 21.2% less than the $4.450 billion appropriated for FY2010 activities and 20.1% less than requested by the Administration for FY2011. It reduced funding for CDBG formula grants by 16.4%, and for the Sustainable Communities Initiative (SCI), a competitively awarded grant program intended to support a coordinated approach to regional land use, housing, environmental, and transportation planning activities, by 33%. The act did not fund the Brownfield Economic Development Initiative (BEDI) program.", "The CDF account supports activities undertaken through the Community Development Block Grant (CDBG) program. In addition, the CDF has funded other community development-related programs in past years, including the Economic Development Initiatives (EDI) and Neighborhood Initiative (NI) programs. The CDBG program, which was first authorized under Title I of the Housing and Community Development Act of 1974 ( P.L. 93-383 , 42 U.S.C. 5301 et seq. ), is the largest source of federal financial assistance in support of state and local neighborhood revitalization, housing rehabilitation, and economic development activities. For 2010, CDBG formula funds were awarded to approximately 1,151 entitlement communities, the 50 states, Puerto Rico, and the insular areas of Guam, the Virgin Islands, American Samoa, and the Mariana Islands. CDBG assistance may be used to fund eligible activities that meet one of three national objectives:\n1. to principally benefit low- and moderate-income persons; 2. to aid in eliminating or preventing slums or blight; or 3. to address an imminent threat to the health and safety of the public.\nFor FY2011, the Administration proposed freezing funding for the CDBG formula-based component of the program at its FY2010 level of over $3.9 billion. In addition, the budget request included just under $149 million to fund the Administration's Sustainable Communities Initiatives, just under $149 million for Catalytic Competition Grants, and about $140 million for Indian tribes, insular areas, University Partnerships and the agency-wide Transformation Initiative.\nBoth H.R. 5850 and S. 3644 proposed funding the CDBG formula grant program modestly higher than the President's request and the program's FY2010 funding level of $3.943 billion. For a review of the Administration's budget request, House and Senate funding recommendations, and FY2010 funding levels, see Table 8 .\nOn February 19, 2011, the House passed H.R. 1 , the Full Year Continuing Appropriations Act for FY2011. As passed the House, H.R. 1 would have reduced the CDF account by 66.3% below the account's FY2010 funding level of $4.450 billion, and would have prohibited funds from being used for earmarks and the Administration's Sustainable Communities Initiative (SCI). It did not include instructions on how funds were to be allocated among the components of the CDBG program: states and entitlement communities, insular areas, and Indian tribes. The program's governing statute and previous appropriations acts required that 70% of funds be allocated to so-called entitlement communities and 30% to states and Puerto Rico for distribution to nonentitlement communities after specific amounts were set aside for insular areas, Indian tribes, and other programs included in the account. Given the minimal instructions included in the House-passed version of H.R. 1 , figures included in Table 8 assume that funds would have been allocated among the CDBG components based on the same percentage distribution of funds allocated for FY2010, except where noted.\nThe final FY2011 appropriations law appropriated $3.508 billion for activities in the CDF account, including $3.343 billion for CDBG formula funds. The act also included a 0.2% mandatory across-the-board rescission of all appropriated funds and a 1% discretionary transfer from designated HUD funds, including CDF activities to HUD's Transformation Initiative. The mandatory across-the-board cut reduces the CDF account by $7 million to $3.501 billion, while the 1% discretionary transfer moves $35 million from the CDF account to the Department's Transformation Initiative. Table 8 includes the adjusted appropriations for CDF activities taking into account both the 0.2% rescission and the 1% transfer.", "The Administration requested $148.5 million for a new initiative aimed at supporting economic development projects in distressed areas. The proposed Catalytic Competition Grants Program (CCGs) would have used the statutory framework of the CDBG program. Unlike CDBG funds, which are allocated to states and local governments by formula, the CCG program funds would have been awarded competitively to local governments, nonprofit entities, or consortia of public, nonprofit, and for-profit entities, including local governments, states, and community development corporations. Grant funds would have been used to\nreclaim vacant property for reuse in creating green infrastructure and other environmentally and economically sustainable projects; remove property-related obstacles to economic recovery; fund economic activities that support transit-oriented development; assist small- and medium-sized businesses in targeted neighborhoods; and cover administrative costs associated with program activities.\nNeither the House-passed nor the Senate Committee-passed bills included funding for the program. Neither H.R. 1 nor the final FY2011 appropriations law ( P.L. 112-10 ) appropriated funds for this proposal.", "The Administration requested $148.5 million to fund its multipronged Sustainable Communities Initiative (SCI). This is the same amount requested by the Administration and approved by Congress for FY2010, the first year of the SCI. The SCI appropriations are to be used to fund the program's four components:\n1. Regional Integrated Planning Grants. In FY2011, $100 million was requested for competitive awards to regional organizations in metropolitan areas to support efforts to develop effective models that integrate the planning requirements of various disciplines critical to the development of sustainable communities. This component of SCI is done in collaboration with the Department of Transportation, the Environmental Protection Agency, and other federal agencies. According to its FY2011 budget justification, HUD anticipates awarding an average grant amount of $3 million to 25 of the nation's 100 metropolitan areas with populations exceeding 500,000 persons and an average grant amount of $500,000 to 25 of the nation's metropolitan areas with populations of fewer than 500,000 persons. Funds are to be used to support improvements in and coordination of metropolitan-wide housing, transportation, energy, and land use planning activities. 2. Community Challenge Grants (CCGs). As part of SCI, funds are competitively awarded to communities to reform existing building codes and zoning ordinances with the goal of promoting sustainable growth and discouraging inefficient land use patterns. HUD has proposed that the grant awards not exceed $2 million. HUD's budget justification for FY2011 did not identify the amount the Administration is requesting for CCG activities. For FY2010, Congress appropriated $40 million. 3. Housing-Transportation Integration Research. In FY2011 the Administration requested an unspecified amount to fund a joint HUD-Department of Transportation research initiative to quantify and evaluate the benefits and tradeoffs of various efforts. The proposal did specify that a portion of these funds ($2 million) would be used to evaluate the long-term benefits of Regional Integrated Planning Grants and Community Challenge Grants. For FY2010, Congress appropriated $10 million in support of research efforts. 4. Capacity Building Program and Tools Clearinghouse. The administration proposed capacity building as a new component of the SCI. The proposal sought an unspecified amount in support of efforts to improve the technical capacity of regional organizations, local jurisdictions, community-based organizations, developers, and private sector lenders.\nIt should be noted that, as proposed by the Administration, these four initiatives are to be administered through the recently created Office of Sustainable Housing and Communities within HUD.\nBoth H.R. 5850 and S. 3644 proposed continued funding of the Administration's SCI at its FY2010 funding level of $148.5 million. The bills also would have required that at least $25 million of the $40 million set-aside for the Regional Integrated Planning Grant component of the SCI be awarded to metropolitan areas with populations that are less than 500,000.\nAlso, both bills recommended $25 million in funding for the Rural Innovation Fund (RIF) to be used to assist state housing finance agencies, local rural nonprofit organizations, community development corporations, and state and local economic development agencies in addressing housing and poverty-related issues. The bills included provisions that would have set aside $5 million in RIF appropriations for rural Indian tribes to be used to capitalize revolving loan funds and provide technical assistance and business planning activities. The bills also would have provided support for HUD's Transformation Initiative, granting the Secretary the discretionary power to transfer up to 1% of CDF appropriations to the program.\nH.R. 1 specially prohibited the use of Community Development Fund dollars for SCI activities. However, P.L. 112-10 appropriated $99.8 million for SCI activities, including $69.9 million for Regional Integration Planning Grants, and $29.9 million for Community Challenge Grants. The FY2011 funding level represents a 33% reduction below SCI's FY2010 funding level.", "The Section 108 loan guarantee program allows states and entitlement communities to pledge their annual CDBG allocations as collateral in order to help finance redevelopment activities. CDBG entitlement communities and states are allowed to borrow, for a term of up to 20 years, an amount equal to as much as five times their annual CDBG allocations for qualifying activities. As security against default, states and entitlement communities must pledge their current and future CDBG allocations.\nThe Administration's budget proposed doubling the program's loan commitment ceiling from $250 million in FY2010 to $500 million in FY2011. The Administration's budget justifications noted that, given the continued difficulties in the credit markets, the proposed increase in funding will help local governments finance large-scale projects at a rate slightly above Treasury yields. In addition to an increase in the loan commitment ceiling, the Administration proposed revamping the program by charging a fee-based assessment to borrowers accessing the program, which would eliminate the need for an appropriated credit subsidy. This proposal was first made by the Administration in its FY2010 budget, but it was rejected by Congress in favor of maintaining the status quo. Both the House-passed and Senate Committee-passed bills recommended continuing the program as currently structured. H.R. 5850 recommended a loan commitment ceiling of $427 million supported by a credit subsidy of $10 million. S. 3644 recommended a loan commitment ceiling of $275 million supported by a credit subsidy of $6.4 million.\nP.L. 112-10 continued the program at FY2011 commitment level of $275 million supported by a credit subsidy of $5.988 million, excluding $59,880 transferred to the department's Transformation Initiative.", "The Administration's budget for FY2011 proposed to significantly redesign the Capacity Building for Community Development and Affordable Housing Program (capacity building). The capacity building program would have provided technical assistance and funds to local housing and community development organizations through three national intermediaries—the Local Initiative Support Corporation, the Enterprise Community Partners (formerly the Enterprise Foundation), and Habitat for Humanity. Currently a subaccount under the Self-Help and Assisted Homeownership Account, the capacity building program may be used to fund\ntraining and education activities that enhance the technical and administrative capabilities of community development corporations (CDCs) and community housing development organizations (CHDOs); or grants, loans, and other financial assistance to CDCs and CHDOs in support of community development and affordable housing activities benefitting low- and moderate-income persons.\nThe Administration's budget request would have increased funding for capacity building by $10 million, from $50 million to $60 million. The Administration's proposal would have established the capacity building program as a stand-alone account. Grant funds would have been competitively awarded to national and regional intermediaries with local affiliates and partnerships, or consortia of intermediaries with\ndemonstrated expertise in housing and community development; and a successful history of administering technical assistance and capacity building programs.\nUnder the proposal, technical and financial assistance made available through the intermediaries would have been used to assist CDCs, CHDOs, and local governments in developing the capacity to undertake community development and affordable housing activities that benefit low- and moderate-income persons. Assistance would have been used to fund\ntraining and education activities that enhance the technical and administrative capabilities of CDCs, CHDOs, and local governments; loans, grants, or predevelopment assistance; market research and needs assessments; organizational assessments; and other activities as determined by HUD that further the purposes of the program.\nSuccessful grantees would have been required to meet a 3:1 match from private sector sources.\nThe House-passed and Senate Committee-passed bills did not include funding for this new initiative. Both H.R. 5850 and S. 3644 recommended continuing funding of capacity building activities carried out by the Local Initiative Support Corporation, the Enterprise Community Partners, and Habitat for Humanity under a subaccount of the Self-Help and Assisted Homeownership Opportunity Program (SHOP) account. P.L. 112-10 also continued to fund capacity building through SHOP. (See the following section, \" Self-Help and Assisted Homeownership Opportunity Program Account .\")", "The Self-Help and Assisted Homeownership Opportunity Program account funds the Self-Help Homeownership Opportunity Program (SHOP) and two other set-asides. Through SHOP, HUD provides grants to national and regional organizations and consortia that have experience in providing or facilitating self-help homeownership opportunities. Prospective homebuyers, with the assistance of volunteers, provide \"sweat equity\" by contributing labor toward the construction of their homes. In addition, this account funds the Capacity Building for Community Development and Affordable Housing Program (capacity building) and the Housing Assistance Council (HAC). The capacity building program provides technical assistance and funds to local housing and community development organizations through selected national intermediaries. HAC activities are intended to address the housing needs of the rural poor. It supports local organizations involved in developing housing and homeownership opportunities in rural America through the provision of loans, research, and technical assistance.\nThe President's FY2011 budget did not include any funding for the SHOP account. Instead, it noted that all of the activities traditionally funded through SHOP are eligible uses of funds under the HOME Investment Partnerships Program block grant. (See CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by [author name scrubbed] for more information on HOME.) However, the President's budget did request $60 million for a new Capacity Building account that would have provided funding for a variety of capacity-building activities, including those previously funded through this account. (See the previous section, \" Capacity Building .\").\nBoth H.R. 5850 and S. 3644 included a total of $82 million for the SHOP account; this included $27 million for SHOP itself, as well as $50 million for capacity building (of which not less than $5 million was to be made available for rural capacity-building activities) and $5 million for HAC. These are the same levels of funding that these activities received in FY2010. The final FY2011 appropriations law ( P.L. 112-10 ) continued funding for these activities at the FY2010 levels, less the 0.2% across-the-board rescission. Total FY2011 funding for account activities was $81.8 million, including $26.9 million for SHOP; $49.9 million for Section 4 Capacity Building for Community Development and Affordable Housing; and $4.9 million for the Housing Assistance Council. HUD anticipated transferring $818,360 to the department's Transformation Initiative account consistent with the provision that allows HUD, at its discretion, to transfer up to 1% of the account's appropriation to the department's Transformation Initiative..", "Through its Housing Counseling Assistance Program, HUD annually provides competitive grants to HUD-approved housing counseling agencies. These housing counseling agencies provide a range of housing counseling services, including pre-purchase homeownership counseling, post-purchase homeownership counseling, mortgage delinquency counseling, and counseling for renters, the homeless, or seniors seeking reverse mortgages.\nCongress has increased its appropriation for HUD's Housing Counseling Assistance Program in each of the last few years. This increase in funding is due in part to concern about the sharp increase in mortgage default and foreclosure rates that much of the country has experienced since around the middle of 2006. Between FY2003 and FY2007, funding for this program was relatively steady at between $39 million and $42 million. This amount rose to $50 million in FY2008, $65 million in FY2009, and $87.5 million in FY2010. The President's FY2011 budget requested $88 million for the Housing Counseling Assistance Program, just slightly above the level of the FY2010 appropriation.\nIn the 111 th Congress, H.R. 5850 included $88 million for HUD's Housing Counseling Assistance Program, which is the same amount requested in the President's budget. S. 3644 included $100 million for HUD housing counseling assistance, an increase of $12 million over both the President's request and the amount included in the House-passed bill. H.R. 1 , which was passed by the House during the 112 th Congress, did not include funding for HUD's housing counseling program for FY2011.\nThe final FY2011 appropriations law ( P.L. 112-10 ) eliminated funding for this program for FY2011. This is an $87.5 million decrease from FY2010, and an $88 million decrease from the President's FY2011 budget request. Some have argued that HUD housing counseling funding is duplicative of the NeighborWorks National Foreclosure Mitigation Counseling Program funding (NFMCP, described below), although the HUD funding can be used for a wider variety of counseling types than the NFMCP funding. Furthermore, HUD has sometimes been criticized for not distributing housing counseling grants more quickly.", "In addition to appropriating funding for HUD's housing counseling program, Congress has also appropriated separate funding specifically for foreclosure mitigation counseling in each year since FY2008. Instead of appropriating this additional foreclosure mitigation funding to HUD, Congress has appropriated it to the Neighborhood Reinvestment Corporation, commonly known as NeighborWorks America. This funding is now known as the National Foreclosure Mitigation Counseling Program (NFMCP).\nNeighborWorks is an independent, government-chartered nonprofit corporation that usually receives its own annual appropriation from Congress to use for a variety of community reinvestment activities. (NeighborWorks is not part of HUD and is therefore not funded through the HUD budget, but it is usually funded as a related agency in the Transportation-HUD funding bill.) In FY2008, NeighborWorks received a regular annual appropriation of just under $120 million. That was also the first year in which NeighborWorks received funding specifically for mortgage foreclosure counseling activities, for which it received $180 million—50% more than its regular base appropriation in that year. Congress appropriated an additional $180 million to the NFMCP in the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ). Since then, appropriations to the NFMCP have continued, but at a lower amount.\nThe President's budget requested $113 million for the NFMCP in FY2011, which is well above its FY2010 appropriation and the President's FY2010 budget request, both of which were $65 million. H.R. 5850 included $113 million for the NFMCP, the same amount requested in the President's budget. S. 3644 included $125 million for the NFMCP, $12 million more than the President's request and the House-passed bill. In total, S. 3644 included $24 million more for housing activities than either the House-passed bill or the President's budget ($12 million more for HUD's housing counseling program and $12 million more for the NFMCP).\nThe final FY2011 appropriations law ( P.L. 112-10 ) did not make any changes to the funding for the NFMCP, maintaining funding for this program at the FY2010 level of $65 million. Table 9 shows funding levels for the NFMCP in each year since the program was established.\nMany housing counseling agencies play a role in supporting the Administration's primary foreclosure prevention initiative, the Home Affordable Modification Program (HAMP). HAMP provides financial incentives to participating mortgage servicers to lower the monthly mortgage payments of eligible troubled borrowers to an affordable level. HAMP requires housing counseling for a certain subset of homeowners who have high overall debt-to-income ratios; recipients of funding through the NFMCP can use up to 30% of their grants to counsel these borrowers. However, all borrowers who think they may be eligible for HAMP are encouraged to contact housing counselors for assistance, and many housing counseling agencies that receive funding through the NFMCP and HUD's housing counseling program provide counseling to these borrowers. (For more information on HAMP and other federal foreclosure prevention initiatives, see CRS Report R40210, Preserving Homeownership: Foreclosure Prevention Initiatives , by [author name scrubbed].)", "Native American Housing Block Grants (NAHBGs) are formula-based grants for Indian tribes to provide housing assistance primarily to low-income American Indian and Alaskan Native households. In addition to the formula grants to Indian tribes, this account also includes several set-asides for technical assistance and loan guarantees. In FY2010, Congress provided $700 million for the NAHBG account. Of this amount, $4.25 million was set aside for general technical assistance; $3.5 million was set aside for the National American Indian Housing Council (NAIHC) to provide training and technical assistance; and $2 million in credit subsidy was set aside to provide for loan guarantees through the Title VI Loan Guarantee Program.\nThe President's FY2011 budget request included $580 million for Native American Housing Block Grants, a decrease of $120 million from the FY2010 enacted level. Furthermore, the President's budget did not request any set-asides for technical assistance or for the National American Indian Housing Council. Both the House-passed H.R. 5850 and the Senate Committee-passed S. 3644 included $700 million for the NAHBG account, and included the same amounts for set-asides that were provided in FY2010.\nH.R. 1 would have provided $500 million to the NAHBG account, $200 million below the FY2010 enacted level and $80 million below the President's FY2011 request.\nThe final FY2011 appropriations law ( P.L. 112-10 ) provided nearly $650 million to this account, over $50 million below the FY2010 enacted level but nearly $70 million higher than the President's FY2011 budget request. The enacted FY2011 appropriations law also maintained the set-asides within this account at FY2010 levels, less the 0.2% across-the-board rescission.", "FY2011 Budget Resolution\nThe annual budget resolution acts as an agreement between the House and Senate establishing parameters within which Congress can consider legislation dealing with spending and revenue. In addition to setting forth enforceable levels of spending, revenue, and public debt, the budget resolution would have provided spending allocations to House and Senate committees. Once the House and the Senate Appropriations Committees receive a committee allocation in the budget resolution, they divide their allocation among their 12 subcommittees. Each subcommittee is responsible for one of the 12 regular appropriations bills.\nThe House and the Senate budget committees began their consideration of the FY2011 budget resolution when they received the President's budget. As part of the formulation process, the committees receive information from executive branch officials, Members of Congress, and the public, as well as \"views and estimates\" statements from authorizing committees with jurisdiction over spending and revenues. The target date for completion of the budget resolution is April 15.\nOn April 22, 2010, the Senate Budget Committee reported a budget resolution for FY2011 ( S.Con.Res. 60 ). However, no further action was taken by the Senate. The House Budget Committee did not report an FY2011 budget resolution. In the absence of an agreement on a budget resolution, the House and Senate proceeded in different ways. On July 1, 2010, the House adopted a budget enforcement resolution ( H.Res. 1493 ), which established enforceable FY2011 spending levels for the House Appropriations Committee. The Senate did not agree to enforceable spending allocations for the Senate Appropriations Committee, although the committee released \"subcommittee spending guidance\" and moved forward with consideration of FY2011 regular appropriations bills. For more information about the FY2011 budget, see CRS Report R41097, The FY2011 Federal Budget , by [author name scrubbed].\nFinancial Reform and Funding for NSP-3 and EHLP\nThe Dodd-Frank Wall Street Reform and Consumer Protection Act, designed to reform federal financial regulations, included $1 billion in mandatory funding for the Community Development Fund for a third round of Neighborhood Stabilization Program (NSP) grants (Section 1497 of P.L. 111-203 ). The act was signed into law on July 21, 2010, but the funds will be made available beginning October 1, 2010, which means they will be considered FY2011 funds. For more information about the Neighborhood Stabilization Program, see CRS Report RS22919, Community Development Block Grants: Neighborhood Stabilization Program; Assistance to Communities Affected by Foreclosures , by [author name scrubbed] and [author name scrubbed].\nThe act also provided HUD with the authority to provide up to $1 billion worth of mortgage assistance to certain homeowners who are at risk of foreclosure as a result of a decrease in income due to unemployment, underemployment, or a medical emergency. HUD is using this $1 billion in mandatory budget authority for a program it has termed the Emergency Homeowners Loan Program (EHLP). For more information about this program, see CRS Report R40210, Preserving Homeownership: Foreclosure Prevention Initiatives , by [author name scrubbed].\nSupplemental Disaster Funding\nThe Supplemental Appropriations Act, 2010 was signed into law on July 29, 2010 ( P.L. 111-212 ). It included an emergency appropriation of $100 million for the Community Development Fund to provide CDBG disaster relief funding for \"areas affected by severe storms and flooding from March 2010 through May 2010 for which the President declared a major disaster covering an entire State or States with more than 20 counties declared major disasters under title IV of the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1974.\" This emergency funding was provided in FY2010, and is therefore considered emergency FY2010 funding. For additional information on the CDBG disaster recovery assistance, see CRS Report RL33330, Community Development Block Grant Funds in Disaster Relief and Recovery , by [author name scrubbed]." ], "depth": [ 0, 1, 1, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 1, 2, 3, 4, 3, 2, 2, 3, 4, 3, 2, 2, 2, 3, 3, 2, 2, 2, 3, 4, 4, 4, 3, 3, 2, 3, 3, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h1_full", "h0_full h2_title h1_title h3_title", "h0_title h2_title h3_title", "h2_full", "", "h0_full", "h3_full", "h1_title h3_title", "h3_full", "h3_full", "h3_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "What is HUD responsible for?", "How does HUD request funding?", "What jurisdiction does funding for HUD fall under?", "How did appropriations for HUD changed prior to FY2011?", "What caused these changes?", "Why did HUD need more funding?", "How did the President's budget change from FY2010?", "What would offset the requested appropriations?", "What programs were requested to receive large increases?", "What programs did the President's proposed budgets cut funding for?", "Why did the 111th Congress enact continuing resolutions to continue funding at the FY2010 level?", "How did the 111th Congress's continuing resolutions impact the 112th Congress?", "What is H.R. 1?", "What did the final FY2011 appropriations law do?" ], "summary": [ "The Department of Housing and Urban Development (HUD) is the federal agency charged with administering a number of programs designed to promote the availability of safe, decent, and affordable housing and community development.", "The agency submits a budget as a part of the President's formal budget request each year, and then Congress, through the appropriations process, decides how much funding to provide to the agency.", "Funding for HUD is under the jurisdiction of the Department of Transportation, HUD, and Related Agencies subcommittees of the House and the Senate appropriations committees.", "Regular appropriations for HUD (not including emergency supplemental funding) have increased by 57% in the nine years prior to FY2011.", "This increase in the HUD budget has been partly attributable to increased funding for HUD programs, particularly the Section 8 programs, which have had a 70% increase in funding over this period and have grown to account for well over half of HUD's total budget.", "The increase in funding has also resulted from a decrease in the amount of rescissions, collections, and receipts available to offset the cost of the HUD budget.", "For FY2011, the President's budget requested about $45.57 billion in net new budget authority for HUD, a decrease of about 1% from the FY2010 enacted level. However, the requested decrease in net new budget authority would actually include a 3% increase in appropriations for HUD programs in aggregate.", "The overall increase in appropriations requested would be more than offset by a substantial increase in offsetting collections and receipts, which are estimated to come from proposed changes to the Federal Housing Administration (FHA) mortgage insurance programs.", "The two Section 8 rental assistance programs were requested to receive the largest increases, followed by increases for programs for the homeless and for HUD's research and technology needs.", "The President's budget proposed decreased funding for other programs, such as programs providing housing for persons who are elderly or disabled and capital repairs in public housing, and the brownfields redevelopment program would no longer be funded.", "When no appropriations legislation was enacted before the beginning of FY2011, the 111th Congress enacted a series of continuing resolutions (CR) to continue funding at the FY2010 level for most accounts in the federal budget, including all of the accounts in HUD's budget.", "The last CR of the 111th Congress extended funding into the 112th Congress.", "On February 18, 2011, the House approved H.R. 1, a year-long CR which would have resulted in an overall reduction in funding for HUD. H.R. 1 was rejected by the Senate on March 9, 2011.", "The final FY2011 appropriations law cut funding for HUD, relative to FY2010, but not as deeply as proposed in H.R. 1. The act also included a 0.2% across-the-board rescission for all discretionary accounts, including those in HUD's budget." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 0, -1, 0, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 4, 4, 4, 4 ] }
CRS_R45150	{ "title": [ "", "Introduction", "The President's FY2019 Budget Request", "Federal R&D Funding Perspectives", "Federal R&D by Agency", "Federal R&D by Character of Work, Facilities, and Equipment", "Federal Role in U.S. R&D by Character of Work", "Federal R&D by Agency and Character of Work Combined", "Multiagency R&D Initiatives", "Networking and Information Technology Research and Development Program (NITRD)10", "U.S. Global Change Research Program (USGCRP)12", "National Nanotechnology Initiative (NNI)16", "Other Initiatives", "FY2019 Appropriations Status", "Department of Defense20", "Department of Health and Human Services", "National Institutes of Health28", "Department of Energy68", "National Aeronautics and Space Administration69", "National Science Foundation70", "Department of Agriculture78", "Agricultural Research Service", "National Institute of Food and Agriculture", "National Agricultural Statistics Service", "Economic Research Service", "Department of Commerce", "National Institute of Standards and Technology82", "National Oceanic and Atmospheric Administration88", "Department of the Interior100", "U.S. Geological Survey", "Other DOI Components", "Department of Veterans Affairs109", "Department of Transportation111", "Federal Aviation Administration", "Federal Highway Administration", "National Highway Traffic Safety Administration", "Other DOT Components", "Department of Homeland Security114", "Environmental Protection Agency115", "Workforce Reshaping", "General and Administrative Provisions" ], "paragraphs": [ "", "The 115 th Congress continues its interest in U.S. research and development (R&D) and in evaluating support for federal R&D activities. The federal government has played an important role in supporting R&D efforts that have led to scientific breakthroughs and new technologies, from jet aircraft and the internet to communications satellites, shale gas extraction, and defenses against disease. In recent years, widespread concerns about the federal debt, recent and projected federal budget deficits, and federal budget caps have driven difficult decisions about the prioritization of R&D, both in the context of the entire federal budget and among competing needs within the federal R&D portfolio. While these factors continue to exist, increases in the budget caps for FY2018 and FY2019 may reduce some of the pressure affecting these decisions.\nThe U.S. government supports a broad range of scientific and engineering R&D. Its purposes include specific concerns such as addressing national defense, health, safety, the environment, and energy security; advancing knowledge generally; developing the scientific and engineering workforce; and strengthening U.S. innovation and competitiveness in the global economy. Most of the R&D funded by the federal government is performed in support of the unique missions of individual funding agencies.\nThe federal R&D budget is an aggregation of the R&D activities of these agencies. There is no single, centralized source of R&D funds. Agency R&D budgets are developed internally as part of each agency's overall budget development process. R&D funding may be included either in accounts that are entirely devoted to R&D or in accounts that include funding for non-R&D activities. Agency budgets are subjected to review, revision, and approval by the Office of Management and Budget (OMB) and become part of the President's annual budget submission to Congress. The federal R&D budget is then calculated by aggregating the R&D activities of each federal agency.\nCongress plays a central role in defining the nation's R&D priorities as it makes decisions about the level and allocation of R&D funding—overall, within agencies, and for specific programs. Some Members of Congress have expressed concerns about the level of federal spending (for R&D and for other purposes) in light of the federal deficit and debt. Other Members of Congress have expressed support for increased federal spending for R&D as an investment in the nation's future competitiveness. As Congress acts to complete the FY2019 appropriations process, it faces two overarching issues: the amount of the federal budget to be spent on federal R&D and the prioritization and allocation of the available funding.\nThis report begins with a discussion of the overall level of President Trump's FY2019 R&D request, followed by analyses of the R&D funding request from a variety of perspectives and for selected multiagency R&D initiatives. The remainder of the report then provides discussion and analysis of the R&D budget requests of selected federal departments and agencies that, collectively, account for approximately 99% of total federal R&D funding.\nSelected terms associated with federal R&D funding are defined in the text box on the next page. Appendix A provides a list of acronyms and abbreviations.", "On February 12, 2018, President Trump released his proposed FY2019 budget. In addition, on the same day, OMB issued an addendum that includes a request for an additional $12.9 billion in nondiscretionary R&D funding. According to OMB, the request for these additional funds was made possible by changes to spending caps in the Budget Control Act (BCA; P.L. 112-25 ) that were enacted on February 9, 2018, in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ).\nIn FY2018, the Trump Administration began using a new definition for development in its R&D calculations (\"experimental development\"). The new definition excludes some development activities, primarily at the Department of Defense (DOD) and the National Aeronautics and Space Administration (NASA), that had been characterized as development in previous budgets. The new definition (experimental development) is used throughout this report for FY2017 and FY2019, except in the section \" Department of Defense .\" According to OMB, the funds no longer included in the definition of development are, nevertheless, \"requested in the FY 2019 budget request and support the development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year.\" (See box below entitled \"Caveats with Respect to Analysis of the FY2019 Budget Request\" for additional information.)\nSubsequent to the release of the President's budget, Congress enacted the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), appropriating full-year funding for FY2018, rendering the CR levels identified in the budget no longer relevant. Therefore, the analysis of government-wide R&D funding in this report preceding the individual agency analyses compares the President's request for FY2019 to the FY2017 level. As information about the agencies' FY2018 R&D levels becomes available, the agency sections of this report will be updated to reflect that information and to make comparisons to the President's FY2019 request; some agency sections have been updated.\nUnder the new definition of R&D, and including the $12.9 billion proposed in the addendum, President Trump is proposing approximately $131.0 billion for R&D for FY2019, an increase of $5.7 billion above the FY2017 level (4.5%). Adjusted for inflation, the President's FY2019 R&D request represents a constant-dollar increase of 1.2% from the FY2017 actual level.\nThe President's R&D request includes continued funding for existing single-agency and multiagency programs and activities, as well as new initiatives. This report provides government-wide, multiagency, and individual agency analyses of the President's FY2019 request as it relates to R&D and related activities. Additional information and analysis will be included as the House and Senate act on the President's budget request through appropriations bills.", "Federal R&D funding can be analyzed from a variety of perspectives that provide different insights. The following sections examine the data by agency, by the character of the work supported, and by a combination of these two perspectives.", "Congress makes decisions about R&D funding through the authorization and appropriations processes primarily from the perspective of individual agencies and programs. Table 1 provides data on R&D funding by agency for FY2017 (actual) and FY2019 (request). Funding data for FY2018 were not included in the Trump Administration's FY2019 budget because the FY2018 budget had not been completed at the time the FY2019 budget request was released.\nUnder President Trump's FY2019 budget request, eight federal agencies would receive more than 96% of total federal R&D funding: the Department of Defense, 48.4%; Department of Health and Human Services (HHS), primarily the National Institutes of Health (NIH), 20.9%; Department of Energy (DOE), 10.7%; National Aeronautics and Space Administration, 9.0%; National Science Foundation (NSF), 3.5%; Department of Agriculture (USDA), 1.6%; Department of Commerce (DOC), 1.2%; and Veterans Affairs (VA), 1.1%. This report provides an analysis of the R&D budget requests for these agencies, as well as for the Department of Homeland Security (DHS), Department of the Interior (DOI), Department of Transportation (DOT), and Environmental Protection Agency (EPA).\nExcluding the $12.9 billion in R&D funding requested in the addendum, nearly every federal agency would see its R&D funding decrease under the President's FY2019 request compared to their FY2017 levels. The only agencies with increased R&D funding in FY2019 would be DOD (up $7.959 billion, 16.2%), the Patient-Centered Outcomes Research Institute, (up $159 million, 34.3%), and the Smithsonian Institution (up $20 million, 8.0%).\nThe largest declines (as measured in dollars) would occur in the budgets of HHS (down $9.480 billion, 27.7%), DOE (down $2.211 billion, 14.8%), NSF (down $1.761 billion, 29.7%), USDA (down $671 million, 26.0%), and the DOC (down $433 million, 24.1%).", "Federal R&D funding can also be examined by the character of work it supports—basic research, applied research, or development—and by funding provided for construction of R&D facilities and acquisition of major R&D equipment. (See Table 2 .) President Trump's FY2019 request includes $27.341 billion for basic research, down $6.986 billion (20.4%) from FY2017; $31.648 billion for applied research, down $6.500 billion (17.0%); $56.696 billion for development, up $6.333 billion (12.6%); and $2.371 billion for facilities and equipment, down $80 million (3.3%).", "A primary policy justification for public investments in basic research and for incentives (e.g., tax credits) for the private sector to conduct research is the view, widely held by economists, that the private sector will, left on its own, underinvest in basic research from a societal perspective. The usual argument for this view is that the social returns (i.e., the benefits to society at large) exceed the private returns (i.e., the benefits accruing to the private investor, such as increased revenues or higher stock value). Other factors that may inhibit corporate investment in basic research include long time horizons for achieving commercial applications (diminishing the potential returns due to the time value of money), high levels of technical risk/uncertainty, shareholder demands for shorter-term returns, and asymmetric and imperfect information.\nThe federal government is the nation's largest supporter of basic research, funding 44% of U.S. basic research in 2016. Business funded 27% of U.S. basic research in 2016, with state governments, universities, and other nonprofit organizations funding the remaining 29%. For U.S. applied research, business is the primary funder, accounting for an estimated 53% in 2016, while the federal government accounted for an estimated 35%. State governments, universities, and other nonprofit organizations funded the remaining 12%. Business also provides the vast majority of U.S. funding for development. Business accounted for 82% of development funding in 2016, while the federal government provided 16%. State governments, universities, and other nonprofit organizations funded the remaining 2% (see Figure 1 ).", "Federal R&D funding can also be viewed from the combined perspective of each agency's contribution to basic research, applied research, development, and facilities and equipment. ( Table 3 lists the three agencies with the most funding for each character of work classification.) The overall federal R&D budget reflects a wide range of national priorities, including supporting advances in spaceflight, developing new and affordable sources of energy, and understanding and deterring terrorist groups. These priorities and the mission of each individual agency contribute to the composition of that agency's R&D spending (i.e., the allocation among basic research, applied research, development, and facilities and equipment). In the President's FY2019 budget request, the Department of Health and Human Services, primarily NIH, would account for nearly half (44.3%) of all federal funding for basic research. HHS would also be the largest federal funder of applied research, accounting for about 39.0% of all federally funded applied research in the President's FY2019 budget request. DOD would be the primary federal funder of development, accounting for 87.4% of total federal development funding in the President's FY2019 budget request.", "For many years, presidential budgets have reported on multiagency R&D initiatives and have often provided details of agency funding for these initiatives. Some of these efforts have a statutory basis—for example, the Networking and Information Technology Research and Development (NITRD) program, the National Nanotechnology Initiative (NNI), and the U.S. Global Change Research Program (USGCRP). These programs generally produce annual budget supplements identifying objectives, activities, funding levels, and other information, usually published shortly after the presidential budget release. Other multiagency R&D initiatives have operated at the discretion of the President without such a basis and may be eliminated at the discretion of the President. President Trump's FY2019 budget is largely silent on funding levels for these efforts and whether any or all of the nonstatutory initiatives will continue. Some activities related to these initiatives are discussed in agency budget justifications and may be addressed in the agency analyses later in this report. This section provides available multiagency information on these initiatives and will be updated as additional information becomes available.", "Established by the High-Performance Computing Act of 1991 ( P.L. 102-194 ), the Networking and Information Technology Research and Development program is the primary mechanism by which the federal government coordinates its unclassified networking and information technology R&D investments in areas such as supercomputing, high-speed networking, cybersecurity, software engineering, and information management. In FY2018, 21 agencies are NITRD members; non-member agencies also participate in NITRD activities. NITRD efforts are coordinated by the National Science and Technology Council (NSTC) Subcommittee on Networking and Information Technology Research and Development.\nP.L. 102-194 , as reauthorized by the American Innovation and Competitiveness Act of 2017 ( P.L. 114-329 ), requires the director of NITRD to prepare an annual report to be delivered to Congress along with the President's budget request. This annual report is to include, among other things, detailed information on the program's budget for the current fiscal year, previous fiscal year, and proposed for the next fiscal year. The latest annual report was published in August 2018. President Trump is requesting $5,277.6 million for NITRD research in FY2019, $126.1 million (2.4%) more than the estimated FY2018 level. In FY2017, NNI funding was $5,126.4 million.\nAdditional NITRD information can be obtained at https://www.nitrd.gov .", "The U.S. Global Change Research Program coordinates and integrates federal research and applications to understand, assess, predict, and respond to human-induced and natural processes of global change. The program seeks to advance global climate change science and to \"build a knowledge base that informs human responses to climate and global change through coordinated and integrated Federal programs of research, education, communication, and decision support.\" In FY2018, 13 departments and agencies participated in the USGCRP. USGCRP efforts are coordinated by the NSTC Subcommittee on Global Change Research.\nThe Global Change Research Act of 1990 ( P.L. 101-606 ) requires annual reporting to Congress on federal budget and spending by agency on global change research. In almost each of the past 17 years, language in appropriations laws has required the President to submit a comprehensive report to the appropriations committees \"describing in detail all Federal agency funding, domestic and international, for climate change programs, projects, and activities … including an accounting of funding by agency….\" The most recent report was submitted in December 2016 for FY2017. This section will be updated when the USGCRP updates its budget information.\nAdditional USGCRP information can be obtained at http://www.globalchange.gov .", "Launched in FY2001, the National Nanotechnology Initiative is a multiagency R&D initiative to advance understanding and control of matter at the nanoscale, where the physical, chemical, and biological properties of materials differ in fundamental and useful ways from the properties of individual atoms or bulk matter. In 2003, Congress enacted the 21 st Century Nanotechnology Research and Development Act ( P.L. 108-153 ), providing a legislative foundation for some of the activities of the NNI. NNI efforts are coordinated by the NSTC Subcommittee on Nanoscale Science, Engineering, and Technology (NSET). In FY2019, the President's request includes NNI funding for 16 federal departments and independent agencies and commissions with budgets dedicated to nanotechnology R&D. The NSET includes other federal departments and independent agencies and commissions with responsibilities for health, safety, and environmental regulation; trade; education; intellectual property; international relations; and other areas that might affect or be affected by nanotechnology.\nThe 21 st Century Nanotechnology Research and Development Act ( P.L. 108-153 ) requires the NSTC to prepare an annual report to be delivered to Congress at the time the President's budget request is sent to Congress. This annual report is to include detailed information on the program's budget for the current fiscal year and the program's proposed budget for the next fiscal year, as well as additional information and data related to the performance of the program. The latest annual report was published in August 2018. President Trump is requesting $1,395.6 million for NNI research in FY2019, $81.8 million (5.5%) less than the estimated FY2018 level. In FY2017, NNI funding was $1,552.3 million.\nAdditional NNI information can be obtained at http://www.nano.gov .", "Presidential initiatives without statutory foundations in operation at the end of the Obama Administration, but not explicitly addressed in President Trump's FY2018 or FY2019 budgets, include the Advanced Manufacturing Partnership (AMP, including the National Robotics Initiative [NRI] and the National Network for Manufacturing Innovation [NNMI]), the Cancer Moonshot, the BRAIN Initiative, the Precision Medicine Initiative (PMI), the Materials Genome Initiative, and an effort to doubling federal funding for clean energy R&D. Some of the activities of these initiatives are discussed in agency budget justifications and the agency analyses later in this report.", "The remainder of this report provides a more in-depth analysis of R&D in 12 federal departments and agencies that, in aggregate, receive nearly 99% of total federal R&D funding. Agencies are presented in order of the size of their FY2019 R&D budget requests, with the largest presented first.\nAnnual appropriations for these agencies are provided through 9 of the 12 regular appropriations bills. For each agency covered in this report, Table 7 shows the corresponding regular appropriations bill that provides primary funding for the agency, including its R&D activities.\nBecause of the way that agencies report budget data to Congress, it can be difficult to identify the portion that is R&D. Consequently, R&D data presented in the agency analyses in this report may differ from R&D data in the president's budget or otherwise provided by OMB.\nFunding for R&D is often included in appropriations line items that also include non-R&D activities; therefore, in such cases, it may not be possible to identify precisely how much of the funding provided in appropriations laws is allocated to R&D specifically. In general, R&D funding levels are known only after departments and agencies allocate their appropriations to specific activities and report those figures.\nAs of the date of this report, the House had completed action on six of the 12 regular appropriations bills; the Senate had completed action on nine of the bills. Five of the 12 had been enacted as law: the Department of Defense Appropriations Act; Energy and Water Development and Related Agencies Appropriations Act; Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act; Legislative Branch Appropriations Act; and Military Construction and Veterans Affairs, and Related Agencies Appropriations Act. Division C of P.L. 115-245 provides for continuing appropriations for the agencies included in the remaining seven bills until \"the enactment into law of an appropriation for any project or activity provided for in this Act; (2) the enactment into law of the applicable appropriations Act for fiscal year 2019 without any provision for such project or activity; or (3) December 7, 2018.\"\nThis report will be updated as Congress takes additional actions to complete the FY2019 appropriations process.\nIn addition to this report, CRS produces individual reports on each of the appropriations bills. These reports can be accessed via the CRS website at http://www.crs.gov/iap/appropriations . Also, the status of each appropriations bill is available on the CRS web page, Status Table of Appropriations , available at http://www.crs.gov/AppropriationsStatusTable/Index .", "The mission of the Department of Defense is \"to provide the military forces needed to deter war and to protect the security of our country.\" Congress supports research and development activities at DOD primarily through the department's Research, Development, Test, and Evaluation (RDT&E) funding. These funds support the development of the nation's future military hardware and software and the science and technology base upon which those products rely.\nNearly all of what DOD spends on RDT&E is appropriated in Title IV of the annual defense appropriations bill. (See Table 8 .) However, RDT&E funds are also appropriated in other parts of the bill. For example, RDT&E funds are appropriated as part of the Defense Health Program, the Chemical Agents and Munitions Destruction Program, and the National Defense Sealift Fund. The Defense Health Program (DHP) supports the delivery of health care to DOD personnel and their families. DHP funds (including the RDT&E funds) are requested through the Defense-wide Operations and Maintenance appropriations request. The program's RDT&E funds support congressionally directed research on breast, prostate, and ovarian cancer; traumatic brain injuries; orthotics and prosthetics; and other medical conditions. Congress appropriates funds for this program in Title VI (Other Department of Defense Programs) of the defense appropriations bill. The Chemical Agents and Munitions Destruction Program supports activities to destroy the U.S. inventory of lethal chemical agents and munitions to avoid future risks and costs associated with storage. Funds for this program are requested through the Defense-wide Procurement appropriations request. Congress appropriates funds for this program also in Title VI. The National Defense Sealift Fund supports the procurement, operation and maintenance, and research and development associated with the nation's naval reserve fleet and supports a U.S. flagged merchant fleet that can serve in time of need. In some fiscal years, RDT&E funding for this effort is requested in the Navy's Procurement request and appropriated in Title V (Revolving and Management Funds) of the appropriation bill.\nRDT&E funds also have been requested and appropriated as part of DOD's separate funding to support efforts in what the George W. Bush Administration termed the Global War on Terror (GWOT), and what the Obama and Trump Administration have referred to as Overseas Contingency Operations (OCO). In appropriations bills, the term Overseas Contingency Operations/Global War on Terror (OCO/GWOT) has been used; President Trump's FY2019 budget uses the term Overseas Contingency Operations. Typically, the RDT&E funds appropriated for OCO/GWOT activities go to specified Program Elements (PEs) in Title IV.\nIn addition, OCO/GWOT-related requests/appropriations have included money for a number of transfer funds. In the past, these have included the Iraqi Freedom Fund (IFF), the Iraqi Security Forces Fund, the Afghanistan Security Forces Fund, and the Pakistan Counterinsurgency Capability Fund. Congress typically has made a single appropriation into each such fund and authorized the Secretary to make transfers to other accounts, including RDT&E, at his discretion. These transfers are eventually reflected in Title IV prior-year funding figures.\nIt should be noted that the FY2018 enacted funding levels were not known at the time the President's FY2019 budget was prepared, as the budget process had not been completed.\nFor FY2019, the Trump Administration is requesting $92.365 billion for DOD's Title IV RDT&E PEs (base plus OCO/GWOT), $1.783 billion (2.0%) above the enacted FY2018 level. (See Table 8 .) In addition, the request includes $710.6 million in RDT&E through the Defense Health Program (DHP; down $1.329 billion, 65.2% from FY2018), $886.7 million in RDT&E through the Chemical Agents and Munitions Destruction program (up $47.3 million, 5.6% from FY2018), and $1.6 million for the Inspector General for RDT&E-related activities (down $1.2 million, 42.9% from FY2018). The FY2019 budget included no RDT&E funding via the National Defense Sealift Fund, the same as the FY2018 enacted level.\nOn June 28, 2018, the House passed the Department of Defense Appropriations Act, 2019 ( H.R. 6157 ). The bill includes $91.241 billion for Title IV base RDT&E funding and $1.181 billion in OCO/GWOT base RDT&E funding for a total of $92.422 billion. This represents an increase of $1.840 billion (2.0%) over the FY2018 enacted Title IV RDT&E funding level (base and OCO/GWOT), and an increase of $57 million (0.1%) above the request level.\nThe House-passed bill would provide DHP with $1.466 billion in R&D funding for FY2019, $573 million (28.1%) below the FY2018 enacted level and $756 million (106.3%) above the FY2019 request; the Chemical Agents and Munitions Destruction program with $887 million for RDT&E, up $47 million (5.6%) from the FY2018 level and equal to the request; no funding for National Defense Sealift Fund RDT&E, the same as the FY2018 enacted level and the FY2019 request; and $1.6 million for the Inspector General for RDT&E-related work, $1.2 million (42.9%) below the FY2018 enacted level and equal to the FY2019 request.\nOn August 23, 2018, the Senate passed the Department of Defense Appropriations Act, 2019 ( H.R. 6157 , as amended). The bill includes $95.132 billion for Title IV base RDT&E funding and $1.176 billion in OCO/GWOT base RDT&E funding for a total of $96.308 billion. This represents an increase of $5.726 billion (6.3%) over the FY2018 enacted Title IV RDT&E funding level (base and OCO/GWOT), an increase of $3.943 billion (4.3%) above the request, and an increase of $3.885 billion (4.2%) above the House-passed level.\nThe Senate-passed bill would provide DHP with $1.674 billion in R&D funding for FY2019, $365 million (17.9%) below the FY2018 enacted level, $963 million (135.6%) above the request, and $208 million (14.2%) above the House-passed level; the Chemical Agents and Munitions Destruction program with $887 million for RDT&E, up $47 million (5.6%) from the FY2018 enacted level, and equal to the request and House-passed levels; the National Defense Sealift Fund with no funding for RDT&E, the same as the FY2018 enacted level, FY2019 request, and House-passed level; and the Inspector General with $4.0 million for RDT&E-related work, $1.2 million (42.0%) above the FY2018 enacted level, $2.4 million (148.6%) above the request and House-passed levels.\nFor FY2019, Division A of P.L. 115-245 , the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019, provides $94.897 billion for Title IV base RDT&E funding and $1.193 billion in OCO/GWOT base RDT&E funding for a total of $96.090 billion. This represents an increase of $5.508 billion (6.1%) over the FY2018 enacted Title IV RDT&E funding level (base and OCO/GWOT), an increase of $3.725 billion (4.0%) above the request, an increase of $3.668 billion (4.0%) above the House-passed level, and $217 million (0.2%) below the Senate-passed bill.\nFor FY2019, Division A of P.L. 115-245 also provides:\n$2.181 billion for DHP RDT&E, $142 million (6.9%) above the FY2018 enacted level, $1.470 billion (206.9%) above the request, $715 million (48.7%) above the House-passed level, and $507 million (30.3%) above the Senate-passed level;\n$887 million for Chemical Agents and Munitions Destruction program RDT&E, up $47 million (5.6%) from the FY2018 enacted level, and equal to the request, House-passed, and Senate-passed levels;\nno funding for National Defense Sealift Fund RDT&E, equal to the FY2018 enacted, FY2019 request, House-passed, and Senate-passed levels; and\n$4.0 million for Inspector General RDT&E activities, $1.2 million (42.0%) above the FY2018 enacted level, $2.4 million (148.6%) above the request and House-passed levels, and equal to the Senate-passed level.\nThe military departments each request and receive their own RDT&E funding. So do various DOD agencies (e.g., the Missile Defense Agency and the Defense Advanced Research Projects Agency), through the Defense-wide account. The Director, Operational Test and Evaluation (OTE), receives a separate appropriation. For FY2019, Division A of P.L. 115-245 provides:\nthe Army with $11.384 billion in RDT&E funding (base plus OCO/GWOT), $481 million (4.4%) above the FY2018 enacted level, $900 million (8.6%) above the request, $971 million (9.3%) above the House-passed levels, and $247 million (2.2%) above the Senate-passed level;\nthe Navy with $18.678 billion in RDT&E funding (base plus OCO/GWOT), $440 million (2.4%) above the FY2018 enacted level, $29 million (0.2%) above the request, $852 million (4.8%) above the House-passed level, and $482 million (2.5%) below the Senate-passed level;\nthe Air Force with $41.551 billion in RDT&E funding (base plus OCO/GWOT), $3.738 billion (9.9%) above the FY2018 enacted level, $1.059 billion (2.6%) above the request, $320 million (0.8%) above the House-passed level, and $367 million (0.9%) above the Senate-passed level;\nthe Defense-wide account with $24.095 billion in RDT&E funding (base plus OCO/GWOT), $679 million (2.9%) above the FY2018 enacted level, $1.578 billion (7.0%) above the request, $1.365 billion (6.0%) above the House-passed level, and $350 million (1.4%) below the Senate-passed level; and\nOTE with $381 million in RDT&E funding (base plus OCO/GWOT), $170 million (80.7%) above the FY2018 enacted level, $160 million (72.4%) above the request and the House-passed level, and equal to the Senate-passed level.\nRDT&E funding can also be characterized by budget activity (i.e., the type of RDT&E supported). Those budget activities designated as 6.1, 6.2, and 6.3 (basic research, applied research, and advanced technology development) constitute what is called DOD's Science and Technology (S&T) program. Budget activities 6.4 and 6.5 focus on the development of specific weapon systems or components for which an operational need has been determined and an acquisition program established. Budget activity 6.6 provides management support, including support for test and evaluation facilities. Budget activity 6.7 supports the development of system improvements in existing operational systems.\nMany congressional policymakers are particularly interested in DOD S&T program funding since these funds support the development of new technologies and the underlying science. Some in the defense community see ensuring adequate support for S&T activities as imperative to maintaining U.S. military superiority into the future. The knowledge generated at this stage of development may also contribute to advances in commercial technologies. The FY2019 request for Title IV S&T funding (base plus OCO/GWOT) is $13.700 billion, $1.194 billion (8.0%) below the FY2018 enacted level. The House-passed bill would provide $14.648 billion in FY2019 level for Title IV S&T funding, $426 million (2.9%) below the FY2018 level and $768 million (5.6%) above the FY2019 request. The Senate-passed bill would provide $15.441 billion for Title IV S&T funding, $547 million (3.7%) above the FY2018 level, $1.740 billion (12.7%) above the request, and $972 million (6.7%) above the House-passed level. Division A of P.L. 115-245 provides $15.973 billion for Title IV S&T funding in FY2019 (base plus OCO/GWOT), $1.079 billion (7.2%) above the FY2018 enacted level, $2.273 billion (16.6%) above the request, $1.505 billion (10.4%) above the House-passed levels, and $533 million (3.5%) above the Senate-passed level.\nWithin the S&T program, basic research (6.1) receives special attention, particularly by the nation's universities. DOD is not a large supporter of basic research when compared to NIH or NSF. However, over half of DOD's basic research budget is spent at universities, and it is among the largest sources of federal funds for university research in some areas of science and technology, such as electrical engineering and materials science. The Trump Administration is requesting $2.269 billion for DOD basic research for FY2019, $74.0 million (3.2%) below the FY2018 enacted level. The House-passed bill would provide $2.298 billion in FY2019 for DOD basic research, $45 million (1.9%) below the FY2018 level and $29 million (1.3%) above the FY2019 request. The Senate-passed bill would provide $2.798 billion in FY2019 for DOD basic research, $455 million (19.4%) above the request, $529 million (23.3%) above the request, and $500 million (21.8%) above the House-passed level. Division A of P.L. 115-245 provides $2.530 billion in Title IV (base plus OCO/GWOT) FY2019 for DOD basic research, $186 million (8.0%) above the FY2018 enacted level, $260 million (11.5%) above the request, $231 million (10.1%) above the House-passed levels, and $269 million (9.6%) below the Senate-passed level.", "The mission of the Department of Health and Human Services (HHS) is \"to enhance and protect the health and well-being of all Americans ... by providing for effective health and human services and fostering advances in medicine, public health, and social services.\" This section focuses on HHS research and development funded through the National Institutes of Health, an HHS agency that accounts for more than 95% of total HHS R&D funding. Other HHS agencies that provide funding for R&D include the Centers for Disease Control and Prevention (CDC), the Centers for Medicare and Medicaid Services (CMS), the Food and Drug Administration (FDA), the Agency for Healthcare Research and Quality (AHRQ), Health Resources and Services Administration (HRSA), and the Administration for Children and Families (ACF).", "NIH is the primary agency of the federal government charged with performing and supporting biomedical and behavioral research. It also has major roles in training biomedical researchers and disseminating health information. The NIH mission is \"to seek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce illness and disability.\" The agency's organization consists of the NIH Office of the Director (OD) and 27 institutes and centers (ICs).\nThe OD sets overall policy for NIH and coordinates the programs and activities of all NIH components, particularly in areas of research that involve multiple institutes. The ICs focus on particular diseases, areas of human health and development, or aspects of research support. Each IC plans and manages its own research programs in coordination with OD. As shown in Table 9 , separate appropriations are provided to 24 of the 27 ICs, to OD, and to an intramural Buildings and Facilities account. The other three centers, which perform centralized support services, are funded through assessments on the IC appropriations.\nNIH supports and conducts a wide range of basic and clinical research, research training, and health information dissemination across all fields of biomedical and behavioral sciences. About 10% of the NIH budget supports intramural research projects conducted by the nearly 6,000 NIH scientists, most of whom are located on the NIH campus in Bethesda, MD. More than 80% of NIH's budget goes out to the extramural research community in the form of grants, contracts, and other awards. This funding supports research performed by more than 300,000 nonfederal scientists and technical personnel who work at more than 2,500 universities, hospitals, medical schools, and other research institutions.\nFunding for NIH comes primarily from the annual Labor, HHS, and Education (LHHS) appropriations act, with an additional amount for Superfund-related activities from the Interior/Environment appropriations act. Those two appropriations acts provide NIH's discretionary budget authority. In addition, NIH has received mandatory funding of $150 million annually that is provided in the Public Health Service (PHS) Act for a special program on type 1 diabetes research and funding from a PHS Act transfer. The total funding available for NIH activities, taking account of add-ons and transfers, is known as the NIH program level.\nPresident Trump's FY2019 budget requested an NIH program level total of $34.792 billion, a decrease of $2.519 billion (6.8%) from the FY2018 program level of $37.311 billion (see Table 9 ). The FY2019 program level request included $33.847 in discretionary budget authority, $741 million in PHS Act transfers, $150 million in mandatory type 1 diabetes research, and $54 million for Superfund-related research. Under the request, Buildings and Facilities would have received a 55% increase in funding for FY2019 compared to FY2018, and all other ICs would have received a decrease compared to FY2018. (Readers should be aware that final FY2018 appropriations had not been enacted during the period in which the FY2019 President's request was being formulated. While the total request for NIH represented a decrease from FY2018 enacted levels, it represented an increase from FY2017 enacted levels and the FY2018 continuing resolution levels that were in place at the time FY2019 request levels were being determined).\nThe FY2019 NIH budget request proposed the consolidation of other existing HHS research programs to establish three new NIH Institutes: the National Institute for Occupational Safety and Health (NIOSH), the National Institute on Disability, Independent Living, and Rehabilitation Research (NIDILRR), and the National Institute for Research on Safety and Quality (NIRSQ) (formerly the Agency for Healthcare Research and Quality (AHRQ)). The creation of three new NIH Institutes would require an amendment to the Public Health Service Act, considering that a provision in the NIH Reform Act of 2006 ( P.L. 109-482 ; PHS Act §401[d]) states that the number of NIH ICs \"may not exceed a total of 27.\" The budget request would have provided discretionary budget authority for these three new institutes at the levels proposed in Table 9 , with an additional $55 million in mandatory funding also provided for the Energy Employees Occupational Illness Compensation Program Act for NIOSH.\nThe main funding mechanism NIH uses to support extramural research is research project grants (RPGs), which are competitive, peer-reviewed, and largely investigator-initiated. Historically, over 50% of the NIH budget is used to support RPGs, which include salaries for investigators and research staff. The President's FY2019 budget proposal included two initiatives designed to \"stretch available grant dollars\" by placing limits on salaries for investigators. The FY2019 budget proposed to cap the percentage of an investigator's salary that can be paid with grant funds to 90%. It also proposed to cap investigator salaries at $152,000, a 19% reduction from the current $187,000 limit.\nThe FY2019 Trump budget proposed shifting the $150 million in mandatory funding for research on type 1 diabetes authorized under the PHS Act §330B to discretionary funding within the budget of the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK). Additionally, the FY2019 program level request proposed $741 million in funding transferred to NIH by the PHS Program Evaluation Set-Aside, also called the evaluation tap. Discretionary funding for certain programs at NIH and other HHS agencies that are authorized under the PHS Act can be subject to an assessment under Section 241 of the PHS Act (42 U.S.C. §238j). This provision authorizes the Secretary to use a portion of eligible appropriations to study the effectiveness of federal health programs and to identify improvements. Although the PHS Act limits the tap to no more than 1% of eligible appropriations, in recent years, annual LHHS appropriations acts have specified a higher amount (2.5% in FY2018) and have also typically directed specific amounts of funding from the tap for transfer to a number of HHS programs. The assessment has the effect of redistributing appropriated funds for specific purposes among PHS and other HHS agencies. NIH, with the largest budget among the PHS agencies, has historically been the largest \"donor\" of program evaluation funds; until recently, it had been a relatively minor recipient. Provisions in recent LHHS appropriations acts have directed specific tap transfers to NIH, making NIH a net recipient of tap funds.\nThe FY2019 total NIH budget request also included $711 million in resources made available through the 21 st Century Cures Act (see text box below). Per the authorization, $400 million would be transferred to the National Cancer Institute (NCI) for the Cancer Moonshot initiative; $57 million to the National Institute of Neurological Disorders and Stroke (NINDS) and $57 million to the National Institute on Mental Health (NIMH) for the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative; and the remaining $196 million in the Innovation Account for the Precision Medicine Initiative and regenerative medicine research.\nThe House Appropriations Committee-reported version of the FY2019 LHHS appropriations bill ( H.R. 6470 ) would have provided the NIH with a total of $37.411 billion in discretionary budget authority. Adding to this total the amounts for the evaluation tap ($923 million), Superfund-related activities ($80 million), and the mandatory type 1 diabetes program ($150 million), would have brought the program-level total to $38.564 billion (see Table 9 ). The Senate Appropriations Committee-reported version of the FY2019 LHHS appropriations bill ( S. 3158 ) recommended a total of $38.066 billion for NIH in discretionary budget authority. Adding to this total the amounts provided by the evaluation tap ($1.018 billion), Superfund related activities ($78 million), and the mandatory type 1 diabetes program ($150 million) would have brought the NIH program level total to $39.312 billion (see Table 9 ).\nS. 3158 did not receive floor consideration in the Senate, but the text of this bill was substantially similar to the LHHS division that was incorporated into H.R. 6157 for the purposes of initial Senate floor consideration. The Senate passed an amended version of this bill on August 23. None of the amendments adopted at that time affected the amounts to be appropriated to NIH. The bill included a provision indicating that the report accompanying the earlier committee-passed bill (S. 3158; S.Rept 115-289) should be used to guide, where possible, the allocation of funds and the implementation of the bill.\nUltimately, the House and the Senate agreed to resolve differences with regard to H.R. 6157 via a conference committee and both chambers adopted the conference report (H.R. 115-952) that was filed on the bill. The bill was signed into law by President Trump on September 28, 2018 ( P.L. 115-245 ). P.L. 115-245 provides the NIH with $37.937 billion in discretionary LHHS budget authority. Adding to this total, the amounts for the evaluation tap ($1.147 billion), the mandatory type 1 diabetes program ($150 million) and assuming a conservative estimate for Superfund related activities ($78 million) brings the program-level total to an estimated $39.312 billion ( Table 9 ). This program level provides the NIH with $2 billion (5.4%) more than the FY2018 program level and $4.52 billion (13.0%) more than President Trump's budget request for the NIH. This program level is $748 million (1.9%) more than the House committee recommendation, but the same as the earlier Senate-passed program level recommendation.\nAccording to the conference report accompanying P.L. 115-245 ( H.Rept. 115-952 , p. 529), each of the ICs at the NIH would receive a funding increase. For specific research areas and programs, the conference report recommends a $425 million increase (+22%) of funding on Alzheimer's research, a $37 million increase (+7%) for antibiotic resistant bacteria research, a $40 million increase (+40%) to develop a universal flu vaccine, and an $11 million increase (+3%) for the Institutional Development Awards (IDeA) program. Established based on a provision of the National Institutes of Health Revitalization Act in 1993 ( P.L. 103-43 ), the IDeA program supports faculty development and institutional research infrastructure in states that have historically received lower levels of NIH funding. The program includes 23 eligible states along with Puerto Rico. The funding increases for Alzheimer's research, antibiotic resistant bacteria, and for the IDeA program match the funding recommendations from the earlier Senate committee report. The funding increase for the universal flu vaccines exceeds the recommendations from both the House committee report ($30 million) and the Senate committee report ($20 million).\nUntil recently, Congress has not usually specified amounts for particular diseases. Generally, specific amounts are appropriated to each IC; NIH and its scientific advisory panels allocate the funding to various research areas. This allows maximum flexibility for NIH to pursue scientific opportunities that are important to public health. Some bills may propose authorizations for designated research purposes, but previously funding generally remained subject to the NIH peer review process as well as the overall discretionary appropriation to the agency. This pattern has changed in recent years, most notably starting in FY2016 with Alzheimer's disease research, and in FY2017 with the NIH Innovation account established by the 21 st Century Cures Act ( P.L. 114-255 , see text box above).\nThe report accompanying H.R. 6470 stated that the committee did not include the general provision in the budget request to limit the percentage of a researcher's salary that may be paid for using NIH grant funds, as the impact of such a change is unclear. The report stated, \"The Committee requests an analysis of the projected impact of such a policy change on the number and average cost of NIH grants, as well as on academic institutions, in the fiscal year 2020 Congressional Justification.\" The Senate committee report and the conference report did not comment on this proposal from the president's budget request.\nThe report accompanying S. 3158 , stated that \"The Committee rejects the budget's request to create 3 new Institutes at the NIH: (1) the National Institute for Research on Safety and Quality; (2) the National Institute for Occupational Safety and Health; and (3) the National Institute on Disability, Independent Living, and Rehabilitation Research. The Committee also does not move the Energy Employees Occupational Illness Compensation Program from CDC to NIH.\" The House report also rejected the creation of the three new institutes. With regard to NIOSH, it stated \"The Committee does not move NIOSH into NIH, as proposed in the budget request. The Committee believes NIOSH's mission does not align with NIH's focus on biomedical research and is better achieved within CDC.\" The House committee report made a similar statement about NIDILRR, but did not address AHRQ/NIRSQ. The conference report did not address any of the recommendations from the president's budget request to create three new institutes.\nThe enacted law did not include the proposal in President Trump's budget request to shift the $150 million in type 1 diabetes authorized under the PHS Act §330B to discretionary funding within the budget of the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK). Therefore Table 9 includes the type 1 diabetes research mandatory funding for all FY2019 budget columns including the budget request, as displayed in the conference reported NIH budget table.\nThe President's FY2019 budget identified several research priorities for NIH in the coming year. The overview below outlines these priority themes in the budget request. Selected responses from congressional report language are also provided.\n1. Tackling Complex Challenges by Leveraging Partnerships. NIH partners with other government agencies and private entities to collaborate on research. The President's budget proposal stated that \"public-private partnerships can create efficiencies of scale and facilitate development of innovative technologies or treatments, thereby increasing the pace of biomedical research.\" For example, the Accelerating Medicines Partnership is a public-private partnership between NIH, FDA, and several biopharmaceutical companies and nonprofit organizations. With the goal of increasing the number of new diagnostics and therapies for patients, the Partnership aims to jointly identify promising biological targets for therapeutics.\nSince 2014, the Partnership has been addressing Alzheimer's disease, type 2 diabetes, and two autoimmune disorders (rheumatoid arthritis and systemic lupus erythematosus); a new Parkinson's disease initiative was also recently inaugurated. NIH will also enhance existing research efforts using a public-private partnership model to address the opioid crisis. The goal of this endeavor is to develop new formulations of medications to treat opioid misuse and accelerate the development of non-addictive pain therapies The FY2019 budget proposal also called for further dedicated investments in NIH research on opioids, serious mental illness, and pain. The FY2019 conference report ( H.Rept. 115-952 , p. 530) notes that the agreement includes $500 million for NIH research on opioid addiction, development of opioid alternatives, pain management, and addiction treatment. The conference report also notes that this $500 million is in addition to $774 million that NIH is expected to spend in base funding for research on opioid misuse, addiction treatment, and pain research.\n2. Supporting Basic Research to Drive New Understanding of Health and Disease in Living Systems. NIH is the largest funder of basic biomedical research in the United States. As mentioned previously, each year more than half of the NIH budget goes toward basic research, which provides \"a critical research foundation for both the public and private sectors to build upon.\" NIH funds a broad spectrum of basic science research. For example, addressing the opioid crisis requires understanding how pain is sensed and perceived, and how changes in neural circuits create a state of dependency. Basic research on neural pathways in the brain related to pain and substance use may provide an avenue for better treatments for pain, without the potential for addiction. The Senate committee report stated, \"The Committee recognizes that many revolutionary discoveries often come from unexpected, untargeted research. The Committee continues to support these basic advances through the general increase to all Institutes and Centers.\"\n3. Investing in Translational and Clinical Research to Improve Health. NIH builds on the foundation of basic research by supporting translational and clinical research that seeks to convert this basic science knowledge into interventions. Translational research aims to \"translate\" findings from basic science into medical practice to produce meaningful health outcomes. The Senate committee report noted that it \"targets investment towards clinical and translational research that moves basic discoveries from 'bench-to-bedside.'\" Clinical research, which uses human subjects, helps professionals find new and better ways to understand, detect, control, and treat illness. NIH is investing in large population studies to learn more about the similarities and differences among individuals and facilitate integrated understanding of health and disease at all levels, from the molecular to the social. For example, as previously mentioned, NIH would continue to establish a group of 1 million or more volunteers through the Precision Medicine Initiative's All of Us Research Program. This research project involves the collection of health, genetic, environmental, and other data from participants for use in research studies designed to identify novel therapeutics and prevention strategies. Additionally, the conference report directs the National Cancer Institute to design a study on providing navigation and patient expense reimbursement to improve participation of underrepresented and minority communities in clinical research for cancer, and to report its plans to Congress within 90 days of enactment.\nIn addition to the above three priorities, the President's budget also identified the following as goals for FY2019:\nUpdating the infrastructure of NIH facilities . An independent review is currently being conducted of the capital needs of the 281 facilities located on NIH's main campus, including its research hospital, laboratories, and offices. Fostering a diverse and talented research workforce . The FY2019 budget proposal includes $100 million in dedicated funding to the OD for the Next Generation Research Initiative to \"address longstanding challenges faced by researchers trying to embark upon and sustain independent research careers.\" The House committee report recommended the NIH use increases in available grants to target early-stage investigators and investigators seeking first time renewals. Advancing data science. The FY2019 budget would have continued to support the Big Data to Knowledge (BD2K) initiative established in 2012. The FY2019 budget included $30 million for NIH to build on the progress of the BD2K as this initiative enters its final stages. Encouraging innovation through prize competitions . The FY2019 budget proposal would have allocated $50 million for prize competitions to improve health outcomes, particularly for research for which there is potential for significant return on investment.", "The Department of Energy (DOE) was established in 1977 by the Department of Energy Organization Act ( P.L. 95-91 ), which combined energy-related programs from a variety of agencies with defense-related nuclear programs that dated back to the Manhattan Project. Today, DOE conducts basic scientific research in fields ranging from nuclear physics to the biological and environmental sciences; basic and applied R&D relating to energy production and use; and R&D on nuclear weapons, nuclear nonproliferation, and defense nuclear reactors. The department has a system of 17 national laboratories around the country, mostly operated by contractors, that together account for about 40% of all DOE expenditures.\nThe Administration's FY2019 budget request for DOE includes about $11.720 billion for R&D and related activities, including programs in three broad categories: science, national security, and energy. This request is 21.9% less than the enacted FY2018 amount of $15.011 billion. The House bill would provide $15.473 billion. The Senate bill would provide $15.362 billion. (See Table 10 for details.)\nThe request for the DOE Office of Science is $5.391 billion, a decrease of 13.9% from the FY2018 appropriation of $6.260 billion. Within that total, funding for Advanced Scientific Computing Research would increase by $89 million (11.0%), largely to support the DOE-wide Exascale Computing Initiative. The office's other major research programs would all receive decreases. Funding for Fusion Energy Sciences would decrease by $192 million (36.1%), including a decrease to $75 million (from $122 million in FY2018) for the U.S. contribution to construction of the International Thermonuclear Experimental Reactor (ITER), a fusion energy demonstration and research facility in France. Funding for Biological and Environmental Research would decrease by $173 million (25.7%), with reductions concentrated in the Earth and Environmental Systems Sciences subprogram (relative to FY2017; the FY2018 appropriation did not specify an allocation between subprograms). Funding for Science Laboratories Infrastructure, which supports DOE laboratory facilities, infrastructure, and construction, would decrease by 50.7%, from $257 million in FY2018 to $127 million in the FY2019 request.\nThe House bill would provide $6.600 billion for the Office of Science, including $15 million more than the request for Advanced Scientific Computing Research; $250 million more than the request for Fusion Energy Sciences (including $163 million for ITER); $173 million more than the request for Biological and Environmental Research (but again no specified allocation by subprogram); and $290 million for Science Laboratories Infrastructure. The Senate bill would provide $6.650 billion, including $81 million more than the request for Advanced Scientific Computing Research; $85 million more than the request for Fusion Energy Sciences (including $122 million for ITER); $215 million more than the request for Biological and Environmental Research (including $39 million more than the FY2017 amount for Earth and Environmental Systems Sciences); and $302 million for Science Laboratories Infrastructure.\nThe request for DOE national security R&D is $4.268 billion, an increase of 0.5% from $4.249 billion in FY2018. Funding for the Naval Reactors program would increase (up $169 million, 10.4%). In the Weapons Activities account (down $39 million, 1.9%) requested increases for most programs would be offset by a decrease of $126 million (23.1%) for Inertial Confinement Fusion. Within Inertial Confinement Fusion, nearly half of the proposed decrease would be in the Ignition subprogram (down $57 million, 71.8%), and support for the Laboratory for Laser Energetics ($68 million in FY2017, not specified for FY2018, $45 million in the FY2019 request) would be phased out over three years.\nThe House bill would provide $4.371 billion for national security R&D, including the requested amount for Naval Reactors and $33 million more than the request for Weapons Activities. Within Weapons Activities, it would provide $91 million more than the request for Inertial Confinement Fusion, including $68 million for the Omega Laser Facility at the Laboratory for Laser Energetics. The Senate bill would provide $4.182 billion, including the FY2018 amount for Naval Reactors and $47 million more than the request for Weapons Activities. Within Weapons Activities, it would provide $126 million more than the request for Inertial Confinement Fusion, including $80 million for the Omega facility.\nThe request for DOE energy R&D is $2.061 billion, a decrease of 54.2% from $4.502 billion in FY2018. Funding for energy efficiency and renewable energy R&D would decrease by 65.5%, with reductions in all major research areas and a shift in emphasis toward early-stage R&D rather than later-stage development and deployment. Funding for fossil energy R&D would decrease by 30.9%, with reductions focused particularly on coal carbon capture and storage ($40 million, down from $198 million in FY2018) and natural gas technologies ($6 million, down from $50 million in FY2018). Funding for nuclear energy would decrease by 37.2%, with no funding requested for the Integrated University Program ($5 million in FY2018) or the Supercritical Transformational Electric Power (STEP) R&D initiative ($5 million in FY2018) and $60 million requested for fuel cycle R&D (down from $260 million in FY2018). The Advanced Research Projects Agency–Energy (ARPA-E), which is intended to advance high-impact energy technologies that have too much technical and financial uncertainty to attract near-term private-sector investment, would be terminated.\nThe House bill would provide $4.502 billion for energy R&D. This total would include $1.080 billion more than the request for energy efficiency and renewable energy R&D; $283 million more than the request for fossil energy R&D (including $192 million for coal carbon capture and storage and $50 million for natural gas technologies); $589 million more than the request for nuclear energy (including $5 million for the Integrated University Program, $5 million for STEP R&D, and $255 million for fuel cycle R&D); and $325 million for ARPA-E. The Senate bill would provide $4.531 billion, including the FY2018 amount ($1.321 billion more than the request) for energy efficiency and renewable energy R&D; the FY2018 amount ($225 million more than the request) for fossil energy R&D (including $207 million for coal carbon capture and storage and $53 million for natural gas technologies); approximately the FY2018 amount ($449 million more than the request) for nuclear energy (including $5 million for the Integrated University Program, no funding for STEP R&D, and $267 million for fuel cycle R&D); and $375 million for ARPA-E.", "The National Aeronautics and Space Administration (NASA) was created in 1958 by the National Aeronautics and Space Act (P.L. 85-568) to conduct civilian space and aeronautics activities. NASA has research programs in planetary science, Earth science, heliophysics, astrophysics, and aeronautics, as well as development programs for future human spacecraft and for multipurpose space technology such as advanced propulsion systems. In addition, NASA operates the International Space Station (ISS) as a facility for R&D and other purposes.\nBecause final FY2018 funding was not available at the time the FY2019 budget was prepared, requested R&D funding is compared to the FY2017 actual funding.\nThe Administration is requesting about $16.474 billion for NASA R&D in FY2019. This is 1.6% less than the FY2017 level of about $16.743 billion. For a breakdown of these amounts, see Table 11 . NASA R&D funding comes through five accounts: Science; Aeronautics; Exploration Research and Technology (formerly Space Technology); Deep Space Exploration Systems (formerly Exploration); and the ISS, Commercial Crew, and Commercial Low Earth Orbit (LEO) Development portions of LEO and Spaceflight Operations (formerly Space Operations).\nThe FY2019 request for Science is $5.895 billion, an increase of 2.3% relative to FY2017. Within this total, funding for Earth Science would decrease by $124 million (6.5%); funding for Planetary Science would increase by $407 million (22.3%); and funding for Astrophysics would decrease by $167 million (12.3%). The request for Earth Science assumes the termination of three items in the Earth Systematic Missions program: the Pre-Aerosol, Clouds, and Ocean Ecosystem (PACE) mission; the Climate Absolute Radiance and Refractivity Observatory (CLARREO) Pathfinder mission; and the NASA-provided instruments on the Deep Space Climate Observatory (DSCOVR) mission. These were also proposed for termination in the FY2018 budget; Congress funded them for FY2018 in legislation enacted after the release of the FY2019 budget. The proposed increase for Planetary Science includes $90 million in new funding for the Double Asteroid Redirection Test (DART), a mission to demonstrate the redirection of an asteroid for the purpose of planetary defense; and an increase of $199 million to fund a new Lunar Discovery and Exploration program, including public-private partnerships for research using commercial lunar landers. In Astrophysics, a proposed decrease of $265 million for the James Webb Space Telescope (JWST, previously a separate budget item) is consistent with that mission's previous plans; a proposed decrease of $100 million for Exoplanet Exploration reflects the proposed cancellation of the Wide Field Infrared Space Telescope (WFIRST).\nThe FY2019 request for Aeronautics is $634 million, a decrease of 3.4% relative to FY2017. The request includes $88 million (up from $19 million in FY2017) for the Low Boom Flight Demonstrator, intended to demonstrate quiet supersonic flight. This increase would be offset by a decrease of $50 million for the Airspace Operations and Safety program and a $44 million decrease for the Advanced Air Vehicles program.\nThe FY2019 request for Exploration Research and Technology is $1.003 billion, an increase of 21.3% relative to FY2017. This account supports the Space Technology Mission Directorate, the Human Research Program, and certain activities previously in the Advanced Exploration Systems program. Funding for Technology Maturation would increase by $82 million. Funding for Technology Demonstration would increase by $70 million, but within Technology Demonstration, funding for the Restore-L mission and other in-space robotic satellite servicing activities would decrease by $85 million. Funding for the Human Research Program would be the same as in FY2017.\nThe FY2019 request for Deep Space Exploration Systems is $4.559 billion, an increase of 9.0% relative to FY2017. This account funds development of the Orion Multipurpose Crew Vehicle and the Space Launch System (SLS) heavy-lift rocket, the capsule and launch vehicle mandated by the NASA Authorization Act of 2010 for future human exploration beyond Earth orbit. The first test flight of SLS carrying Orion but no crew (known as EM-1) is now expected no earlier than December 2019. The first flight of Orion and the SLS with a crew on board (known as EM-2) is now expected in late 2022 or early 2023. Funding for Orion, the SLS, and related ground systems (collectively known as Exploration Systems Development) would decrease by $259 million relative to FY2017. The account also funds Advanced Exploration Systems, which would increase by $791 million relative to FY2017. That increase would include $504 million in new funding for a platform in lunar orbit (known as the Gateway) to serve as a test bed for deep space human exploration capabilities.\nIn the LEO and Spaceflight Operations account, the request for Commercial Crew is $173 million, a decrease of 85.4% relative to FY2017; the request for the ISS is $1.462 billion, an increase of 0.8%; and the request for Commercial LEO Development, a new program, is $150 million. The reduction in Commercial Crew funding reflects the expected transition of commercial crew activities from development to operations. Boeing and SpaceX are both expected to begin postcertification crewed flights to the ISS in the first half of 2019. The Commercial LEO Development program is intended to stimulate a commercial space economy in low Earth orbit, including the commercial provision of NASA's requirements for research and technology demonstration after the proposed end of direct ISS funding in 2025.", "The National Science Foundation supports basic research and education in the non-medical sciences and engineering. Congress established the foundation as an independent federal agency in 1950 and directed it to \"promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes.\" The NSF is a primary source of federal support for U.S. university research, especially in mathematics and computer science. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support.\nNSF has six appropriations accounts: Research and Related Activities (RRA, the main research account), Education and Human Resources (EHR, the main education account), Major Research Equipment and Facilities Construction (MREFC), Agency Operations and Award Management (AOAM), the National Science Board (NSB), and the Office of Inspector General (OIG). Appropriations are generally provided at the account level, while program-specific direction may be included in appropriations acts, or accompanying conference reports or explanatory statements.\nBecause final FY2018 funding was not available at the time the FY2019 budget request was prepared, requested R&D funding is compared to the FY2017 actual funding. FY2018 funding levels, enacted March 23, 2018, are included for reference. These amounts are available only at the account level; FY2018 R&D breakouts and subaccount funding amounts are not yet available for comparison.\nFunding for R&D is included in the RRA, EHR, and MREFC accounts. (The RRA and EHR accounts also include non-R&D funding.) Together, these three accounts comprise 95% of the total requested funding for NSF. Actual R&D obligations for each account are known after NSF allocates funding appropriations to specific activities and reports those figures. The budget request specifies R&D funding for the conduct of research, including basic and applied research, and for physical assets, including R&D facilities and major equipment. Funding amounts for FY2017 actual and FY2019 requested levels are reported by account, including amounts for R&D conduct and physical assets where applicable, in Table 12 .\nOverall . The Administration is requesting $7.47 billion for the NSF in FY2019, $295.4 million (3.8%) less than the FY2018 enacted amount, and equal to the FY2017 actual amount. The requested amount reflects an additional $2.20 billion provided for NSF in the Addendum to the President's FY19 Budget to Account for the Bipartisan Budget Act of 2018 . The request would decrease budget authority in two accounts relative to the FY2017 enacted level: MREFC by $128.1 million (57.5%) and AOAM by $48.4 million (12.7%). The request would provide slight increases to the RRA (2.4%, $144.1 million), OIG (1.6%, $0.25 million), and NSB (1.2%, $0.05 million) accounts, and no change for the EHR account. Overall, NSF estimates that, under the FY2019 request, agency-wide funding rates (i.e., the percentage of submitted proposals that are successfully awarded funding) would decrease slightly from 23% to 22%, resulting in 300 fewer grants awarded, compared to FY2017.\nAs a proportion of NSF's total funding, R&D activities account for approximately 82%. For FY2019, $6.12 billion is requested for R&D activities, a 3% increase from FY2017 actual funding for R&D of $5.95 billion. The total request includes $5.68 billion (93%) for the conduct of R&D, and $441 million (7%) for R&D facilities and major equipment. Of funding requested for the conduct of R&D, 87% is requested for basic research, and 13% for applied research. Overall funding for R&D facilities and major equipment supports not only the construction and acquisition phases, funded through MREFC ($94.7 million requested), but also the planning, design, and post-construction operations and maintenance, funded through RRA ($346.3 million requested).\nResearch . The Administration seeks $6.151 billion for RRA in FY2019, a $183.8 (2.9%) decrease compared to the FY2018 enacted funding, and a $144.2 million (2.4%) increase compared to FY2017 actual funding. Compared to the FY2017 actual levels, the FY2019 request includes decreases for 7 of the 10 RRA subaccounts. The largest percentage increase would go to Integrative Activities (27%, $116 million increase). The largest percentage decrease would go to Social, Behavioral, and Economic Sciences (SBE, 9.1%, $24.7 million decrease) The FY2019 request also includes $160 million for the RRA Established Program to Stimulate Competitive Research (EPSCoR) program, equal to the $160 million directed in the explanatory statement for FY2017 enacted funding.\nWithin the RRA account, the FY2019 request includes $5.617 billion for R&D, an increase of $162.5 million (3.2%) compared to the FY2017 actual amount. Of this amount, the majority ($5.270 billion, 94%) is requested for the conduct of research, including $4.79 billion for basic research and $483 million for applied research.\nEducation . The FY2019 request for the EHR account is $28.6 million (3.2%) less than the FY2018 amount and equal to the FY2017 actual level of $873.37 million. By program division, the Division of Human Resource Development would receive an increase of $37.7 million (25.5%) over the FY2017 actual level. The divisions of research on learning in formal and informal settings, graduate education, and undergraduate education would receive decreases of 8.8% ($203.0 million requested), 5.0% ($187.2 million requested), and 2.0% ($224.6 million requested), respectively.\nEHR programs of particular interest to congressional policymakers include the Graduate Research Fellowship (GRF) and National Research Traineeship (NRT) programs. The FY2019 request for GRF is $270.7 million, a reduction of $48.8 million (15.3%) from the FY2017 actual level. The FY2019 request for NRT is $52.1 million, a $0.7 million (1.4%) decrease from FY2017.\nWithin EHR, requested funding for R&D is $410 million, which is nearly equal to the FY2017 actual funding amount and accounts for approximately 6.7% of the agency's total R&D request. All of the requested funding would support the conduct of R&D, including $131 million for basic research and $279 million for applied research.\nConstruction . The MREFC account supports large construction projects and scientific instruments, with all of the funding supporting R&D facilities. The Administration is seeking $94.6 million for MREFC in FY2019, $88.2 million (48.2%) less than the FY2018 enacted amount, and $128.1 million (57.5%) less than the FY2017 actual amount.\nRequested MREFC funding would support three main projects, including continued construction of the Large Synoptic Survey Telescope (LSST, $48.8 million requested, 18.9% decrease from FY2017) and the Daniel K. Inouye Solar Telescope (DKIST, $16.1 million requested, 19.4% decrease from FY2017). The request includes $28.7 million for the Regional Class Research Vessels (RCRV) program to build ships to support science in U.S. coastal waters, a decrease of $93.2 million (76.4%) from FY2017, about which NSF notes the following:\nIn FY 2017, P.L. 115-31 appropriated $121.88 million in funding to facilitate the planning and construction of three vessels. In the context of the President's overall fiscal goals intended to maintain spending restraint, this Budget Request supports construction of two vessels.\nOther initiatives . The FY2019 NSF budget request includes funding for three multiagency initiatives. This funding is included in multiple NSF appropriations accounts and R&D amounts are not separately provided. The National Nanotechnology Initiative would receive $385 million, $78 million (17%) less than in FY2017. The Networking and Information Technology Research and Development program would receive $1.152 billion, a decrease of $85.7 million (6.9%). The U.S. Global Change Research Program would receive $238 million, $4.6 million (1.9%) less than in FY2017.", "The U.S. Department of Agriculture (USDA) was created in 1862, in part to support agricultural research in an expanding, agriculturally dependent country. Today, USDA conducts intramural research at federal facilities with government-employed scientists, and supports external research at universities and other facilities through competitive grants and formula-based funding. The breadth of contemporary USDA research spans traditional agricultural production techniques, organic and sustainable agriculture, bioenergy, nutrition needs and composition, food safety, animal and plant health, pest and disease management, economic decisionmaking, and other social sciences affecting consumers, farmers, and rural communities.\nFour agencies carry out USDA's research and education activities, grouped together into the Research, Education, and Economics (REE) mission area. The agencies involved are the Agricultural Research Service (ARS), National Institute of Food and Agriculture (NIFA), National Agricultural Statistics Service (NASS), and Economic Research Service (ERS).\nThe House-reported bill ( H.R. 5961 ) recommends $3,109.0 billion for FY2019, and the Senate-passed bill (S. 6147) is recommending a total for the four agencies of $2,985.7 billion. The FY2018 Omnibus Appropriations Act ( P.L. 115-141 ) provides a total of $3.09.7 billion in discretionary funding for the four research agencies. For FY2019, the Administration requested a total of $2,486.5 billion, a $543.2 million (18.0%) reduction from FY2018 (see Table 1 3 ). In addition to discretionary appropriations, agricultural research is also funded by state matching contributions and private donations or grants, as well as mandatory funding from the farm bill. USDA's FY2018 discretionary appropriations for the four research agencies are profiled below.", "The Agricultural Research Service is USDA's in-house basic and applied research agency. It operates approximately 90 laboratories nationwide with about 6,600 employees. ARS laboratories focus on efficient food and fiber production, development of new products and uses for agricultural commodities, development of effective controls for pest management, and support of USDA regulatory and technical assistance programs. ARS also operates the National Agricultural Library, one of the department's primary information repositories for food, agriculture, and natural resource sciences.\nFor FY2019, the Senate-passed bill recommends $1,301.0 billion for ARS salaries and expenses, a +8.2% increase over FY2018 ($1,202.8 billion). The House-reported bill recommends $1,259.9 billion, a +4.8% increase over FY2018. The Administration had requested $1,019.0 billion for ARS for FY2019. The House-reported bill also provides $136.0 million for buildings and facilities, while the Senate-passed bill provides no appropriation for buildings and facilities, the same as requested by the Administration ( Table 13 ).\nIn FY2019, ARS will assume ownership of the National Bio and Agro-Defense Facility (NBAF) from the Department of Homeland Security (DHS). The FY2018 enacted bill provides $4.0 million for NBAF. For FY2019, the Senate-passed bill recommends $10.6 million for the NBAF to address one-time costs associated with the transfer of the science program from the Plum Island Animal Disease Center to NBAF, and $42 million to address stand-up activities to operate NBAF. The Senate-passed bill also recommends an additional $5 million for ARS to increase research efforts on foreign animal diseases. The Administration requested $53 million for the facility for FY2019.\nWith respect to the pending move to the NBAF, the House committee directs ARS, in collaboration with other USDA agencies and in consultation with DHS, to report to Congress within 120 days of enactment with an estimate of the funding needs for NBAF for each fiscal year FY2019-2023. The committee also directs ARS to include in the report strategic research goals based on NBAF's enhanced research capabilities and for stakeholder engagement.", "The National Institute of Food and Agriculture (NIFA) provides federal funding for research, education, and extension projects conducted in partnership with the State Agricultural Experiment Stations, the State Cooperative Extension System, land grant universities, colleges, and other research and education institutions, as well as individual researchers. These partnerships include the 1862 land-grant institutions, 1890 historically black colleges and universities (HBCUs), established by the Morrill Acts, the 1994 tribal land-grant colleges, and Hispanic-serving institutions. Federal funds enhance capacity at universities and institutions through statutory formula funding, competitive awards, and grants.\nFor FY2019, the House-reported bill recommends $1,452.6 billion in discretionary spending for NIFA activities, an increase of +3.2% over FY2018 ($1,407.8 billion).The Administration's FY2019 request for NIFA is $1,257.6 billion, a reduction of $150.2 million (10.6%) over FY2018. The Senate-passed bill recommends $1,423.2 billion, a +1.1% increase over FY2018 ( Table 13 ). The Senate-passed bill recommends $243.7 million to support Hatch Act funding for 1862 land grant university research and education activities, the same as FY2018 and the same as requested.\nThe House-reported bill recommends $259.0 million for Hatch fund, a +6.3% increase over FY2018. For McIntire-Stennis cooperative forestry research support, the Senate-passed bill recommends $36.0 million, the same as the House-reported bill, and $2 million more than for FY2018. For research at the 1890 HBCUs, the House-reported bill recommends $60.0 million and the Senate-passed bill recommends $54.2 million, the same as enacted for FY2018, and nearly the same as requested ($53.8 million).\nThe Senate-passed bill also recommends $405.0 million for the Agriculture and Food Research Initiative (AFRI)—USDA's flagship competitive research grants program. The House-reported bill recommends $415.0 million. For FY2018, AFRI has an appropriation of $400.0 million. The Administration had requested $25 million less ($375.0 million) for AFRI in FY2019.This budget line currently represents about 28% of the NIFA discretionary budget.\nFor Cooperative Extension support under Smith-Lever Sections (b) and (c) formula funding for FY2019, the House-reported bill recommends a total of $315.0 million, a +5.0% increase over FY2018 ($300 million), and the Senate-passed bill recommends $300 million, the same as enacted for FY2018. The House-reported bill also recommends $180.6 million and the Senate-passed bill would provide $186.7 million to support other Smith-Lever extension activities.", "The National Agricultural Statistics Service conducts the quinquennial Census of Agriculture and provides official statistics on agricultural production and indicators of the economic and environmental status of the farm sector.\nFor FY2019, the Senate-passed bill recommends $174.8 million to NASS, of which $45.3 million is reserved to support data collection for the 2017 Census of Agriculture. The House-reported bill recommends $173.7 million, and also reserves $45.3 million for Census of Agriculture activities. The FY2018 enacted appropriation provides $191.7 million to NASS. The Administration had requested $165.0 million for FY2019.", "The Economic Research Service supports economic and social science analysis about agriculture, rural development, food, commodity markets, and the environment. It collects and disseminates data concerning USDA programs and policies.\nFor FY2019, both House-reported and Senate-passed bill would provide $86.8 million for ERS, the same as enacted for FY2018. The Administration had requested $45.0 million for ERS in FY2019, a 48% decrease.", "Two agencies of the Department of Commerce have major R&D programs: the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration (NOAA).", "The mission of the National Institute of Standards and Technology is \"to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life.\" NIST research provides measurement, calibration, and quality assurance methods and techniques that support U.S. commerce, technological progress, product reliability, manufacturing processes, and public safety. NIST's responsibilities include the development, maintenance, and custodial retention of the national standards of measurement; providing the means and methods for making measurements consistent with those standards; and ensuring the compatibility of U.S. national measurement standards with those of other nations.\nIt should be noted that the FY2018 enacted funding levels were not known at the time the President's FY2019 budget was prepared, as the budget process had not been completed.\nThe President is requesting $629.1 billion in funding for NIST in FY2019, a decrease of $569.4 million (47.5%) from the FY2018 enacted appropriation of $1,198.5 million. (See Table 14 .) NIST discretionary funding is provided through three accounts: Scientific and Technical Research and Services (STRS), Industrial Technology Services (ITS), and Construction of Research Facilities (CRF).\nThe President's FY2019 request includes $573.4 million for R&D, standards coordination, and related services in the STRS account, a decrease of $151.1 million (20.9%) from the FY2018 enacted level.\nThe FY2019 request would provide $15.1 million for the Industrial Technology Services (ITS) account, down $139.9 million (90.3%) from the FY2018 enacted level. Within the ITS account, the request would provide no funding for the Manufacturing Extension Partnership (MEP) program, a reduction of $140.0 million from the FY2018 enacted level; MEP centers in each state would be required to become entirely self-supporting. The request provides $15.1 million provided for Manufacturing USA (also referred to as the National Network for Manufacturing Innovation or NNMI), essentially unchanged from the FY2018 enacted level. Of these funds, $10.0 million would be for continued support of the NIST-sponsored National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL) manufacturing institute, with the balance ($5.1 million) to be used for coordination of the Manufacturing USA network.\nThe President is requesting $40.5 million for FY2019 for the NIST CRF account, down $278.5 million (87.3%) from the FY2018 enacted level.", "The National Oceanic and Atmospheric Administration conducts scientific research in areas such as ecosystems, climate, global climate change, weather, and oceans; collects and provides data on the oceans and atmosphere; and manages coastal and marine organisms and environments. NOAA was created in 1970 by Reorganization Plan No. 4. The reorganization was intended to unify elements of the nation's environmental programs and to provide a systematic approach for monitoring, analyzing, and protecting the environment.\nNOAA's Research Council developed a five-year plan (2013-2017) to guide the agency's R&D efforts. R&D efforts support the long-term goals and enterprise objectives of NOAA's Next Generation Strategic Plan . The strategic plan is organized into four categories of long-term goals including (1) climate adaptation and mitigation, (2) a weather-ready nation, (3) healthy oceans, and (4) resilient coastal communities and economies; and three groups of enterprise objectives including (1) stakeholder engagement, (2) data and observations, and (3) integrated environmental modeling. To achieve the strategic plan's goals and objectives, NOAA has identified gaps in knowledge and capabilities. NOAA's R&D plan attempts to address these gaps by asking key questions. Key questions are used in the plan to frame and organize R&D objectives and to identify tasks associated with achieving these objectives.\nOne of the main challenges identified in the NOAA R&D plan is the need to integrate the diverse perspectives and professional expertise required by the agency's mission. The plan states that \"holistically understanding the earth system is not only understanding its individual components, but understanding and interpreting the way each of the components interact and behave as an integrated composite that is more than the sum of its parts.\"\nFor FY2019, President Trump requested $623.6 million in R&D funding for NOAA, a decrease of $269.5 million (30.2%) below the FY2018 enacted level of $893.1 million. R&D funding for FY2018 consisted of $528.6 million for research (59.2% of total R&D funding), $143.5 million for development (16.1%), and $221.0 million for R&D equipment (24.7%). In FY2018, R&D was 15.1% of NOAA's total discretionary budget of $5.909 billion. The FY2019 request for R&D funding includes $367.1 million for research (58.9% of total R&D funding), $83.2 million for development (13.3%), and $173.3 million for R&D equipment (27.8%). The President's request for R&D is 13.7% of NOAA's total discretionary budget request of $4.553 billion.\nNOAA's administrative structure is organized by five line offices that reflect its diverse mission: the National Ocean Service (NOS); National Marine Fisheries Service (NMFS); National Environmental Satellite, Data, and Information Service (NESDIS); National Weather Service (NWS); and Office of Oceanic and Atmospheric Research (OAR). In addition to NOAA's five line offices, two major funding categories include Mission Support (formerly Program Support) and the Office of Marine and Aviation Operations (OMAO). Mission support is a cross-cutting budget activity, which provides administrative functions related to planning, information technology, human resources, and infrastructure. OMAO is responsible for the agency's ships and aircraft that collect data in support of NOAA's environmental and scientific missions.\nTable 15 provides R&D funding levels for FY2018 enacted and the Administration's FY2019 request for each NOAA office. Most of NOAA's R&D activities are conducted by OAR, and in most years OAR accounts for over half of NOAA's R&D funding. The FY2019 request would provide OAR with $321.7 million for R&D, a decrease of $195.8 million (37.8%) below the FY2018 enacted funding level of $517.4 million.\nOAR conducts research in three major areas: weather and air chemistry; climate; and oceans, coasts, and the Great Lakes. A significant portion of these efforts is implemented through partnerships between NOAA and cooperative research institutes. NOAA supports 16 cooperative research institutes that work with seven NOAA laboratories in all three of the main OAR research areas. The President's FY2019 request would fund the cooperative institutes at $167.4 million, $14.4 million (7.9%) less than the FY2018 enacted funding level of $181.8 million.\nThe President's FY2019 request would also reduce OAR R&D funding for the National Sea Grant Program and Climate Research. The National Sea Grant College Program is composed of 33 university-based state programs. Sea Grant programs support scientific research and engage constituents to identify and solve problems faced by coastal communities. The President's FY2019 request would terminate federal support of the National Sea Grant College Program and Sea Grant Marine Aquaculture Research. In FY2018, the National Sea Grant College Program was funded at $65.0 million and Sea Grant marine aquaculture research was funded at $11.5 million. Climate research includes funding for laboratories and cooperative institutes, regional climate data and information, and competitive research. The President's FY2019 request would provide climate research with $98.6 million, $59.4 million (37.6%) less than the FY2018 enacted funding level of $158.0 million.", "The Department of the Interior was created to protect and manage the nation's natural resources and cultural heritage and to provide scientific and other information about those resources. DOI has a wide range of responsibilities including, among other things, mapping, geological, hydrological, and biological science; migratory bird, wildlife, and endangered species conservation; surface-mined lands protection and restoration; and historic preservation.\nBecause final FY2018 funding was not available at the time the FY2019 budget was prepared, requested R&D funding is compared to the FY2017 actual funding.\nThe Administration is requesting $11.7 billion in net discretionary funding for DOI in FY2019. Of that amount, $758.9 million is requested for R&D funding, $235.5 million below (23.7%) the FY2017 enacted level of $994.3 million. Of the President's FY2019 DOI R&D funding request, 5.3% is for basic research, 76.4% is for applied research, and 18.3% is for development. The U.S. Geological Survey (USGS) is the only DOI component that conducts basic research.\nFunding for DOI R&D is generally included in appropriations line items that also include non-R&D activities. How much of the funding provided in appropriations legislation is allocated to R&D specifically is unclear unless funding is provided at the precise level of the request. In general, R&D funding levels are known only after DOI components allocate their appropriations to specific activities and report those figures.\nAs passed by the House on July 19, 2018, the Interior, Environment, Financial Services and General Government, Agriculture, Rural Development, Food and Drug Administration, and Transportation, Housing and Urban Development Appropriations Act, 2019 ( H.R. 6147 ) would provide $13.118 billion for DOI, a $2.530 billion (23.9%) increase over the FY2019 request and approximately equal to the FY2018 enacted amount. These amounts includes both R&D and non-R&D funding.\nAs passed by the Senate on August 1, 2018, the Interior, Environment, Financial Services and General Government, Agriculture, Rural Development, Food and Drug Administration, and Transportation, Housing and Urban Development Appropriations Act, 2019 ( H.R. 6147 ) would provide $13.171 billion for DOI, a $52.6 million (0.4%) increase over the House-passed level, $2.583 billion (24.4%) above the FY2019 request, and $56.0 million (0.4%) above the FY2018 enacted amount.", "The USGS accounts for more than two-thirds of all DOI R&D funding. A single appropriations account, Surveys, Investigations, and Research (SIR), provides all USGS funding. USGS R&D is conducted under seven SIR activity/program areas: Ecosystems; Climate and Land Use Change; Energy, Minerals, and Environmental Health; Natural Hazards; Water Resources; Core Science Systems; and Science Support.\nThe President's total FY2019 budget request for USGS is $859.7 million. Of this amount, $502.6 million would be for R&D, a decrease of $184.9 million (26.9%) over the FY2017 enacted level of $687.6 million.\nAs passed by the House, H.R. 6147 would provide $1.173 billion for USGS, a $24.6 million (2.1%) increase over the FY2018 enacted amount and $313.4 million (36.5%) more than the FY2019 request. These amounts include both R&D and non-R&D funding.\nAs passed by the Senate, H.R. 6147 would provide $1.148 billion for USGS, $24.6 million (2.1%) below the House-passed amount, $288.8 million (33.6%) above the FY2019 request, and equal to the FY2018 enacted amount. These amounts includes both R&D and non-R&D funding.", "The President's FY2019 request also includes R&D funding for the following DOI components:\nBureau of Reclamation (BOR): $82.5 million in applied research and development funding for FY2019, down $24.5 million (22.9%) from FY2017. Bureau of Ocean Energy Management (BOEM): $84.6 million in applied research and development funding for FY2019, up $12.6 million (17.4%) from FY2017. Fish and Wildlife Service (FWS): $15.4 million in applied research for FY2019, down $17.0 million (52.5%) from FY2017. Bureau of Land Management (BLM): $24.2 million in applied research and development for FY2019, down $2.0 million (7.5%) from FY2017. National Park Service (NPS): $24.0 million in applied research and development for FY2019, down $3.0 million (11.0%) from FY2017. Bureau of Safety and Environmental Enforcement (BSEE): $20.5 million in applied research for FY2019, down $6.2 million (23.1%) from FY2017. Bureau of Indian Affairs (BIA): $5.0 million in applied research for FY2019, down $4.5 million (47.4%) from FY2017. Wildland Fire Management (WFM): No funding requested for R&D for FY2019, down $6.0 million (100.0%) from FY2017. Office of Surface Mining Reclamation and Enforcement (OSMRE): $5.0 million in applied research was requested in FY2017, though no funding was enacted; the office has not requested any R&D funding in FY2019.\nTable 16 summarizes FY2017 enacted R&D funding and the President's FY2019 R&D funding request for DOI components.", "The Department of Veterans Affairs operates and maintains a national health care delivery system to provide eligible veterans with medical care, benefits, and social support. As part of the agency's mission, it seeks to advance medical R&D in areas most relevant to the diseases and conditions that affect the health care needs of veterans.\nBecause final FY2018 funding was not available at the time the FY2019 budget was prepared, requested R&D funding is compared to the FY2017 actual funding.\nThe President is proposing $1.346 billion for VA R&D in FY2019, an increase of $137.1 million (11.3%) from FY2017. (See Table 17 .) VA R&D represents 0.68% of the agency's overall FY2019 budget request and is funded through two accounts—the Medical and Prosthetic Research account and the Medical Care Support account. As the Medical Care Support account also includes non-R&D funding, the amount of funding that will be allocated to R&D through appropriations legislation is unclear unless funding is provided at the precise level of the request. In general, R&D funding levels from the Medical Care Support account are only known after the VA allocates its appropriations to specific activities and reports those figures. The FY2019 request includes $727.4 million for VA's Medical and Prosthetic Research account, an increase of $54 million (8.0%), and $618.3 million in funding for research supported by the agency's Medical Care Support account, an increase of $83.1 million (15.5%).\nAccording to the President's request, VA R&D priorities for FY2019 include efforts to treat veterans at risk of suicide; research to address pain management, opioid addiction, and Gulf War Veterans Illness; an expansion of efforts focused on women veterans' health issues; and the use of the Million Veteran Program—a genomic research program that is collecting genetic samples and detailed health information from one million veterans—to advance precision medicine.\nThe Medical and Prosthetics R&D program is an intramural program managed by the Veteran Health Administration's Office of Research and Development (ORD) and conducted at VA Medical Centers and VA-approved sites nationwide. According to ORD, the mission of VA R&D is \"to improve Veterans' health and well-being via basic, translational, clinical, health services, and rehabilitative research and to apply scientific knowledge to develop effective individualized care solutions for Veterans.\" ORD consists of four main research services each headed by a director:\nBiomedical Laboratory R&D conducts preclinical and clinical research to understand life processes at the molecular, genomic, and physiological levels. Clinical Science R&D supports research, including human subjects research, to determine the feasibility and effectiveness of new treatments such as drugs, therapies, or devices. Health Services R&D conducts studies to identify and promote effective and efficient strategies to improve the quality and accessibility of the VA health system and patient outcomes, and to minimize health care costs. Rehabilitation R&D develops novel approaches to improving the quality of life of impaired and disabled veterans suffering from traumatic amputation, central nervous system injuries, loss of sight or hearing, or other physical and cognitive impairments.\nIn addition to intramural support, VA researchers are eligible to obtain funding for their research from extramural sources, including other federal agencies, private foundations and health organizations, and commercial entities. According to the President's FY2019 budget request, these additional R&D resources are estimated at $570 million in FY2019. However, unlike federal agencies, such as the National Institutes of Health and the Department of Defense, VA does not have the authority to support extramural R&D by providing research grants to colleges, universities, or other non-VA entities.\nOn June 8, 2018, the House passed H.R. 5895 , the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019. H.R. 5895 would provide $732.3 million in funding for the Medical and Prosthetic Research account, an increase of $4.9 million, or 0.7% above the FY2019 request.\nOn June 25, 2018, the Senate passed H.R. 5895 providing the Medical and Prosthetic Research account $779 million, an increase of $51.6 million, or 7.1% above the FY2019 request\nTable 17 summarizes R&D program funding for VA in the Medical and Prosthetic Research and the Medical Care Support accounts. Table 18 details amounts to be spent in Designated Research Areas (DRAs) which VA describes as \"areas of particular importance to our veteran patient population.\" Funding for research projects that span multiple areas may be included in several DRAs; thus, the amounts in Table 18 total to more than the appropriation or request for VA R&D.", "The primary purposes of the research and development activities of the Department of Transportation (DOT) as defined by Section 6019 of the Fixing America's Surface Transportation Act ( P.L. 114-94 ) are improving mobility of people and goods; reducing congestion; promoting safety; improving the durability and extending the life of transportation infrastructure; preserving the environment; and preserving the existing transportation system.\nFunding for DOT R&D is generally included in appropriations line items that also include non-R&D activities. How much of the funding provided by appropriations legislation is allocated to R&D is unclear unless funding is provided at the precise level of the request. In general, R&D funding levels are known only after DOT agencies allocate their final appropriations to specific activities and report those figures, and because of this, the President's FY2019 request is compared to FY2017 actual funding rather than FY2018 enacted levels unless otherwise indicated.\nThe Administration is requesting $836.2 million for DOT R&D activities and facilities in FY2019, a decrease of $103.3 million (11%) from FY2017. (See Table 19 .) Three DOT agencies—the Federal Aviation Administration (FAA), the Federal Highway Administration (FHWA), and the National Highway Traffic Safety Administration (NHTSA)—would account for nearly 90% of DOT R&D under the FY2019 request.", "FAA's R&D activities focus on improving the capacity and safety of the national airspace systems and reducing environmental impacts.\nThe President's FY2018 request of $350.9 million for R&D activities and facilities at FAA would be a decrease of $82 million (18.9%) from FY2017. The request includes $74.4 million for the agency's Research, Engineering, and Development (RE&D) account, a reduction of $102.1 million (57.8%) from FY2017 and $114.5 million (60.6%) below the FY2018 enacted level. Funding within the RE&D account seeks to improve aircraft safety through research in fields such as fire safety, advanced materials, propulsion systems, aircraft icing, and continued airworthiness.\nOn August 1, 2018, the Senate passed H.R. 6147 incorporating the Transportation-HUD and Agriculture appropriations bills. The Senate-passed bill would provide $191.0 million for the RE&D account, $116.6 million (156.7%) above the request, and $2.1 million (1.1%) above the FY2018 enacted level.", "According to the President's budget request,\nInnovations developed and/or advanced through FHWA's R&T [research and technology] program enable and supports achievement and management of a safer and more reliable transportation system that is cost-effective and sustainable, thus improving overall economic competitiveness and quality of life.\nThe President's request of $336.5 million for R&D activities and facilities at FHWA would be an increase of $18.8 million (5.9%) from FY2017. The request includes $85 million for FHWA's Highway Research and Development program which seeks to improve safety, enhance the transportation infrastructure, and reduce congestion. The program supports highway research in such areas as innovative materials, new construction techniques, durability and resilience, and the factors that contribute to death and injury related to roadway design, construction, and maintenance. The request also includes $79 million for research to facilitate the development of a connected, integrated, and automated transportation system under the agency's Intelligent Transportation Systems program.", "The President is requesting $63.7 million in R&D and R&D facilities funding in FY2019 for NHTSA, $5.2 million (7.6%) below FY2017. NHTSA R&D focuses on automation, advanced vehicle safety technology, ways of improving vehicle crashworthiness and crash avoidance, reducing unsafe driving behaviors, and alternative fuels vehicle safety.", "R&D activities are also supported by several other DOT components or agencies (see Table 19 ). The President's FY2019 request includes DOT R&D and R&D facilities funding for\nthe Federal Railroad Administration (FRA), totaling $23.4 million, $20.5 million (46.7%) below the FY2017 level of $43.9 million; the Federal Transit Administration (FTA), totaling $28 million, the same amount as FY2017; the Pipeline and Hazardous Materials Safety Administration (PHMSA), totaling $11.7 million, $9.8 million (45.5%) below the FY2017 level of $21.5 million; the Office of the Secretary (OST), totaling $12.9 million, $4.5 million (25.8%) below the FY2017 level of $17.4 million; and the Federal Motor Carrier Safety Administration (FMCSA), totaling $9.1 million, slightly below the FY2017 level of $9.2 million.\nSources: U.S. Department of Transportation, Fiscal Year 2019 Budget Estimates , https://www.transportation.gov/mission/budget/fy-2019-budget-estimates ; and H.R. 6147 .", "The Department of Homeland Security (DHS) has identified five core missions: to prevent terrorism and enhance security, to secure and manage the borders, to enforce and administer immigration laws, to safeguard and secure cyberspace, and to ensure resilience to disasters. New technology resulting from research and development can contribute to achieving all these goals. The Directorate of Science and Technology (S&T) has primary responsibility for establishing, administering, and coordinating DHS R&D activities. Other components, such as the Countering Weapons of Mass Destruction Office, the U.S. Coast Guard, and the Transportation Security Administration, conduct R&D relating to their specific missions.\nBecause final FY2018 funding was not available at the time the FY2019 budget was prepared, requested R&D funding is compared to the FY2017 actual funding.\nThe President's FY2019 budget request for DHS includes $485 million for activities identified as R&D. This would be a reduction of 28.6% from $678 million in FY2017. The total includes $311 million for the S&T Directorate and smaller amounts for six other DHS components. See Table 20 .\nThe S&T Directorate performs R&D in several laboratories of its own and funds R&D performed by the DOE national laboratories, industry, universities, and others. It also conducts testing and other technology-related activities in support of acquisitions by other DHS components. The Administration's FY2019 request of $311 million for the S&T Directorate R&D account is a decrease of 33.8% from $471 million in FY2017. About half of the $140 million (32.6%) reduction for Research, Development, and Innovation would result from transferring the Cyber Security/Information Analysis thrust area to the National Protection and Programs Directorate. The other thrust areas within Research, Development, and Innovation would all receive decreased funding except Counter Terrorist, which would receive a 3% increase including first-time funding for detection of opioids and fentanyl at ports of entry and mail-handling facilities. Funding for University Programs, which primarily funds the S&T Directorate's university centers of excellence, would decrease by 46.3% as the number of supported centers would drop from seven to five.\nIn addition to its R&D account, the S&T Directorate receives funding for laboratory facilities and other R&D-related expenses through its Operations and Support account (not shown in the table). The FY2019 request for S&T Directorate Operations and Support is $272 million, down 12.6% from $311.1 million in FY2017. Within this account, Laboratory Facilities would receive $111 million, down 17.5% from $134 million in FY2017. The Laboratory Facilities request includes no funding for the National Bio and Agro-Defense Facility (NBAF), as DHS is proposing to transfer operational responsibility for NBAF to the USDA. The request also includes reduced funding for the National Biodefense Analysis and Countermeasures Center (NBACC), as the Federal Bureau of Investigation has agreed to assume 40% of NBACC's operational costs.\nThe request for R&D in the recently established Countering Weapons of Mass Destruction Office is $80 million. Most if not all of this amount would support programs previously funded in the former Domestic Nuclear Detection Office ($155 million for R&D in FY2017).\nThe request for the R&D account of the National Protection and Programs Directorate is $48 million, up from $6 million in FY2017. This increase reflects the transfer of cybersecurity R&D activities from the S&T Directorate. While the $42 million increase is large in percentage terms, it is less than the $71 million that cybersecurity R&D programs in the S&T Directorate received in FY2017.", "The U.S. Environmental Protection Agency (EPA), the federal regulatory agency responsible for administering a number of environmental pollution control laws, funds a broad range of R&D activities to provide scientific tools and knowledge that support decisions relating to preventing, regulating, and abating environmental pollution. Since FY2006, Congress has funded EPA through the Interior, Environment, and Related Agencies appropriations act.\nAppropriations for EPA R&D are generally included in line-items that also include non-R&D activities. Annual appropriations and the accompanying committee reports and explanatory statements do not identify precisely how much funding is allocated to EPA R&D alone. EPA determines its R&D funding levels in operation through the allocation of appropriations to specific activities and reports those amounts.\nThe agency's Science and Technology (S&T) appropriations account funds much of EPA's scientific research activities, which include R&D conducted by the agency at its own laboratories and facilities, and R&D and related scientific research conducted by universities, foundations, and other nonfederal entities that receive EPA grants. The S&T account receives a base appropriation, and a transfer from the Hazardous Substance Superfund (Superfund) account for research on more effective methods to clean up contaminated sites.\nEPA's Office of Research and Development (ORD) is the primary manager of R&D at EPA headquarters and laboratories around the country, as well as external R&D. A large portion of the S&T account funds EPA R&D activities managed by ORD, including research grants. Programs implemented by other offices within EPA also may have a research component, but the research component is not necessarily the primary focus of the program.\nDivision A of H.R. 6147 as passed in the House on July 19, 2018, and the Senate amendment to H.R. 6147 as passed in the Senate on August 1, 2018 ( S.Amdt. 3399 ), includes the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2019. Title II of Division A in House-passed H.R. 6147 would provide $659.3 million for FY2019 for the EPA S&T account including a $7.4 million rescission of unobligated balances within the S&T account and a $15.5 million transfer from the Superfund account. Title II of Division A in the Senate-passed amendment would provide $723.9 million for the S&T account for FY2019 including an account-specific rescission of $11.3 million and a transfer of $17.4 million.\nIncluding a $17.4 million transfer from the Superfund account, the President's FY2019 budget request proposed $466.4 million for EPA's S&T account, $255.6 million (35.4%) less than the $722.0 million FY2018 enacted appropriations (Consolidated Appropriations Act, 2018; P.L. 115-141 ) including a $15.5 million transfer and $7.4 million account-specific rescission. Including account-specific rescissions and transfers, the total FY2019 proposed appropriations for the S&T account in H.R. 6147 as passed in the House would be $62.7 million (8.7%) less than the FY2018 enacted level, and $192.9 million (41.4%) more than the President's FY2019 budget request (including transfers but not rescissions ). The amount included in the Senate amendment to H.R. 6147 as passed would be $1.9 million (0.3%) more than FY2018 enacted and $257.5 million (55.2%) more than the FY2019 request.\nThe $15.5 million transfer from the Superfund account included in H.R. 6147 as passed in the House is the same as enacted for FY2018. The $17.4 million transfer in the Senate-passed amendment, the same as the FY2019 requested transfer, is $1.9 million more than the FY2018 enacted amount which accounts for the difference in the total S&T funding compared to FY2018 enacted after rescissions. The proposed $7.4 million rescission of unobligated balances within the S&T account included in House-passed H.R. 6147 is the same level as included in the FY2018 enacted appropriations for EPA (Title II of Division G in P.L. 115-141 ), and the rescission amount in the Senate amendment as passed is $3.9 million greater than enacted. The President's FY2019 budget request did not specify a rescission within the S&T account.\nTable 21 at the end of this section presents proposed FY2019 funding in H.R. 6147 as passed in the House and the amendment to H.R. 6147 as passed in the Senate for the EPA's S&T account and certain program activities below the account level compared to the President's FY2019 budget request, and FY2018 enacted appropriations.\nConsistent with recent House and Senate Appropriations Committee fiscal year reports and explanatory statements, reports accompanying the FY2019 proposed appropriations did not specify funding for all sub-program areas reported in EPA's budget justification. S&T subprogram areas not reported in congressional reports and statements are noted in the Table 21 as \"NR\" (not reported). Additionally, the President's FY2018 and FY2019 requests and EPA's congressional budget justifications have modified the titles for some of the program areas relative to previous Administrations' budget requests and congressional committee reports presentations. The House and Senate Appropriations Committees have adopted the modified program area titles.\nDuring the House and Senate Committees' on Appropriations hearings regarding the President's FY2019 budget request for EPA, some Members expressed concerns regarding a number of proposed reductions and eliminations of funding for EPA, including those proposed for scientific research programs. Reductions proposed in the FY2019 budget request below the FY2018 enacted levels were distributed across EPA operational functions and activities as well as grants for states, tribes, and local governments.\nAlthough proposed funding for some program areas and activities within EPA's 10 appropriations accounts would increase or remain constant, the FY2019 budget request proposed to reduce funding below the FY2018 enacted levels for 8 of the 10 accounts, including the S&T account. The $6.19 billion FY2019 request for EPA overall was $2.70 billion (30.3%) less than the total $8.89 billion (including rescissions) FY2018 total enacted appropriations for EPA. The FY2019 total request for the S&T account including transfers represents 7.5% of the President's FY2019 total budget request for EPA.\nAs shown in Table 21 , with few exceptions the requested FY2019 amount for the S&T account for individual EPA program area and activity line items would be less than the FY2018 enacted appropriations. Similarly, with respect to House-passed H.R. 6147 program area and activity funding as proposed would be below or the same as the FY2018 enacted levels, but above the FY2019 requested level. For the Senate passed amendment, proposed funding for program areas and activities would be virtually the same as FY2018 enacted with few exception, and above the FY2019 requested amounts.\nIn addition to clarifying certain funding allocations within the S&T account and consistent with the explanatory statement accompanying P.L. 115-141 for FY2018, House and Senate committee reports accompanying the proposed House and Senate FY2019 appropriations include discussion under \"Additional Guidance\" for certain program areas and activities within the S&T account. Topics discussed include:\nAlternative Testing; Computational Toxicology; Enhanced Aquifer Use; Integrated Risk Information System (IRIS); National Air Toxic Trends Station Network; Nanomaterials Research; Innovative Research Partnerships; Intramural Animal Testing; Science to Achieve Results (STAR) Grants; Harmful Algal Blooms; and Water Distribution Systems and Security Test Beds\nThe House and Senate Committee reports also proposed $4.1 million and $5.0 million respectively for \"national priorities\" within the S&T account for FY2019 to fund competitive grants for not-for-profit organizations that focus on \"high-priority water quality and availability research.\" P.L. 115-141 included $4.1 million for FY2018 S&T national priorities, the same level included for FY2017. As in previous Administrations' fiscal year requests, the President's FY2019 budget request did not include funding for these national priorities.", "The largest proposed increase in the FY2019 budget request for a specific S&T program area in terms of dollar amount and percentage is for the \"Operations and Administration\" program area. The FY2019 request for the program area is $74.8 million, a $6.5 million (9.5%) increase above the FY2018 enacted level of $68.3 million. The additional funding is proposed for agency \"Workforce Reshaping\" and efforts to improve the management of EPA's laboratories.\nAs shown in Table 21 House-passed H.R. 6147 would provide the same level funding for FY2019 for this program area requested, the Senate-passed amendment to H.R. 6147 proposed the same level as the FY2018 enacted level. In its report S.Rept. 115-276 as cited in the Senate amendment to H.R. 6147 as passed, the Senate Appropriations Committee specifies that the agreement \"does not include any requested funding for workforce reshaping.\" For FY2018, Congress explicitly did not include funding for workforce reshaping activities as proposed in the FY2018 budget request.\nThe size and structure of the agency's workforce, as was the case during consideration for the FY2018 appropriations, was a topic of debate during the debate regarding EPA's FY2019 appropriations. \"Workforce Reshaping\" was introduced in the FY2018 request described as agency-wide organizational restructuring, \"reprioritization of agency activities,\" and reallocation of resources. According to the FY2019 congressional budget justification, this program area supports EPA's FY2018-FY2022 Strategic Plan Goal \"Improve Efficiency and Effectiveness\" in which the agency will examine statutory functions and practices to \"eliminate and streamline\" it's processes. According to the EPA FY2019 and FY2018 budget justifications, the funding for the workforce reshaping program area would include support for voluntary early-out retirement authority, voluntary separation incentive pay, and costs for relocation of staff associated with realignment of work assignments.\nIn addition to the workforce reshaping and reprioritization efforts described above, EPA's summary under the heading for its \"Reform Plan\" in the FY2019 congressional budget justification includes a discussion under a sub-heading \"Improving Management of EPA Laboratories.\" As presented in the FY2019 congressional budget justification, \"EPA's reform plan represents a series of projects that EPA will complete to implement the goals of Executive Order 13781: Comprehensive Plan for Reorganizing the Executive Branch .\" With respect to EPA laboratories, the FY2019 congressional budget justification proposes an initial effort to identify and implement \"... an enterprise-wide framework to manage laboratory capabilities and capacity to meet the scientific demands associated with achieving the Agency's mission.\"", "Division A of H.R. 6147 as passed in the House proposed a number of \"General Provisions\" in Title IV, many adopted as amendments during floor debate, that generally would restrict or prohibit the use of FY2019 funds by EPA for implementing or proceeding with a number of regulatory actions, including in some instances conducting research to support these actions. Title IV general provisions included in the amendment to H.R. 6147 as passed in the Senate were not as extensive and generally similar to general provisions contained in Title IV of Division G in P.L. 115-141 for FY2018, most of which have been included in previous fiscal year appropriations. Additional proposed directives for the use of FY2019 funds were included in the form of \"administrative provisions\" within Title II of Division A of the House and Senate-passed H.R. 6147 .\nAppendix A. Acronyms and Abbreviations\nAppendix B. CRS Contacts for Agency R&D\nThe following table lists the primary CRS experts on R&D funding for the agencies covered in this report." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 2, 1, 1, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 2, 2, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h0_title h1_title", "", "h0_full h1_full", "h1_title", "", "", "", "h1_full", "h1_full", "", "", "", "", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "h1_full" ] }	{ "question": [ "Why was the final FY2018 funding compiled of various sources?", "How does this report compare the preceding and following year reports?", "How will this report gather the necessary information?", "What is the current status of this report?", "What happened after the President’s budget was released?", "How did OMB change their views on \"development\"?", "For what purpose did this definition change serve?", "How is the current administration reacting to the new definition of R&D?", "How does OMB view the change of definition?" ], "summary": [ "Final FY2018 funding had not been enacted at the time the President's FY2019 budget was prepared; therefore, the budget included the FY2017 actual funding levels, 2018 annualized continuing resolution (CR) levels, and the FY2019 request levels.", "The analysis of government-wide R&D funding in this report preceding the individual agency analyses compares the President's request for FY2019 to the FY2017 level.", "As information about the agencies' FY2018 R&D levels becomes available, the agency sections of this report will be updated to reflect that information and to make comparisons to the President's FY2019 request; some agency sections have been updated.", "As of the date of this report, the House had completed action on 6 of the 12 regular appropriations bills; the Senate had completed action on 9; 5 had been enacted as law. Division C of P.L. 115-245 provides for continuing appropriations for the agencies included in the remaining seven bills until December 7, 2018. This report will be updated as Congress acts to complete the FY2019 appropriations process.", "Subsequent to the release of the President's budget, Congress enacted the Consolidated Appropriations Act, 2018 (P.L. 115-141), appropriating full-year funding for FY2018, rendering the CR levels identified in the budget no longer relevant.", "In FY2018, OMB adopted a change to the definition of development, applying a more narrow treatment it describes as \"experimental development.\"", "This approach was intended to better harmonize the reporting of U.S. R&D funding data with the approach used by other nations. The new definition is used in this report.", "Under the new definition of R&D (applied to both FY2017 and FY2019 figures), and including the estimated $12.9 billion included in the budget addendum, President Trump is requesting approximately $131.0 billion for R&D for FY2019, an increase of $5.7 billion (4.5%) above the FY2017 level.", "OMB notes that under the previous definition, total federal R&D would be $38.7 billion higher, or approximately $170 billion. Adjusted for inflation, the President's FY2019 R&D request represents an increase of 1.2% above the FY2017 level." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2 ] }
GAO_GAO-14-728T	{ "title": [ "Background", "Most FAA Initiatives to Improve Its Aircraft Certification and Approval Process Are on Track", "Most Initiatives Are on Track for Meeting Planned Completion Milestones", "Some Initiatives Will Not Meet or Are at Risk of Not Meeting Planned Milestones", "Most Certification Process Improvement Initiatives Lack Measures of Effectiveness", "FAA Has Made Some Progress in Addressing Recommendations to Improve the Consistency of Its Regulatory Interpretations, but Details Are Unclear", "A Master Source Guidance System", "Instructional Tools for FAA Personnel for Applying Policy and Guidance", "FAA and Industry Training Priorities and Curriculums", "Regulatory Consistency Communications Board", "Clarity in Final Rules", "Challenges that Could Affect Successful Implementation of the Committees’ Recommendations", "Organizational Support", "Commitment to Cultural Change", "Communication with Stakeholders", "Setting Performance Measures", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "Located in FAA’s Office of Aviation Safety (Aviation Safety), the Aircraft Certification Service (Aircraft Certification) and Flight Standards Service (Flight Standards) issue certificates and approvals for new aviation products to be used in the national airspace system as well as for new operators in the system, such as air carriers, based on federal aviation regulations (see fig. 1 below). FAA inspectors and engineers interpret and implement these regulations governing certificates and approvals through FAA policies and guidance, including orders, notices, and advisory circulars. Additionally, FAA also has the authority to use private individuals and organizational entities, known as designees, to carry out many certification activities on behalf of the FAA Administrator in order to enable FAA to better concentrate its limited staff resources on safety- critical functions.\nIn Aircraft Certification, approximately 880 engineers and inspectors issue certifications and approvals to the designers and manufacturers of new aircraft and aircraft engines, propellers, parts, and equipment, including the avionics and other equipment required for modernizing the air traffic control system under the Next Generation Air Transportation System (NextGen). Since 2005, Aircraft Certification has used a project sequencing system to nationally prioritize certification submissions on the basis of available resources. In fiscal year 2013, Aircraft Certification issued 3,496 design approvals, 57 production approvals, and 536 airworthiness certificates.\nIn Flight Standards, approximately 4,000 inspectors issue certificates and approvals allowing individuals and entities to operate in the national airspace system. These include certificates to commercial air carriers, operators of smaller commercial aircraft, repair stations, and flight training schools and training centers. Flight Standards field office managers in over 100 field offices initiate certification projects within their offices on a first-come, first served basis. In fiscal year 2013, Flight Standards issued 259 air operator certificates and 159 air agency certificates.\nWhen FAA receives aviation industry submissions for certificates and approvals, it must determine whether or not resources are available to begin the project. According to FAA, the agency considers its highest priority to be overseeing the continued operational safety of the people and products already operating within the national airspace system. The same staff that provide this oversight are also tasked with other oversight activities, such as processing new certifications and approvals that FAA considers to be lower priority. FAA wait-lists new certification and approval projects when resources are not available to begin the work. Flight Standards, in particular, has historically had difficulty keeping up with its certification workload across its regions and offices, a problem that persists. FAA has considered ways to supplement its annual budget by expanding its sources of funding to deal with its increasing workload and staff shortages. However, FAA has limited options as it cannot levy fees on its customers for most of the services it provides to industry, including aviation product certifications and approvals.\nAttempts have been made to provide FAA with additional funding from industry stakeholders for processing certifications and approvals. In 2007, the administration submitted a reauthorization proposal to Congress that called for major changes to FAA’s funding and budget structure. These changes were intended to provide a more stable, reliable basis for funding in the long term, in part by allowing FAA to impose fees on manufacturers for the various activities and costs related to aircraft certification and approval. Congress has previously authorized other agencies to charge these types of “user fees” for services rendered for processing product certification and approval. For example, the Medical Device User Fee and Modernization Act of 2002 authorized the Food and Drug Administration (FDA) to charge and retain a fee for providing services related to reviewing medical device products. However, this broad authority has not been granted to FAA.", "In May 2012, the Certification Process Committee made six recommendations to Aircraft Certification to streamline and reengineer the product certification and approval processes, improve efficiency and effectiveness within Aircraft Certification, and redirect resources for support of certification. The Certification Process Committee further recommended that FAA develop measures of effectiveness for its activities and a means of tracking its progress. In August 2012, FAA reported its plan to Congress for addressing the Certification Process Committee’s recommendations, and, in July 2013, the agency issued an implementation plan with 14 initiatives. FAA updated this plan in January 2014 and plans to issue further updates on the status of the initiatives periodically.", "Since the January update, Aircraft Certification has continued its efforts to address the recommendations to improve its certification and approval processes and is implementing the 14 initiatives. These initiatives touch on various aspects of Aircraft Certification’s work and, according to FAA several predate the committee’s recommendations and were part of on- going continuous efforts to address long-standing certification issues and to improve the certification process. The initiatives range from developing a comprehensive road map for major change initiatives, to improving the project sequencing process, to reorganizing the small aircraft certification regulation. Figure 2, based on an interim May 2014 update that FAA provided to us, summarizes FAA’s determination of the status of the 14 initiatives.\nAccording to the May 2014 update that FAA provided to us, 1 of the 14 initiatives has been completed, and 10 initiatives are on track for completion within planned time frames. FAA deployed a tracking system to monitor the implementation of the initiatives in June 2013, but the agency indicated it is still finalizing the mechanisms for authorizing staff with the appropriate level of review and approval rights in the system. Also, ten of the initiatives were on track for meeting their planned completion milestones. For example, the initiatives to expand the authority for approving aircraft emissions data and noise compliance under the organization designation authorization (ODA) program are on track to be completed in 2015. In addition, the initiative to expedite rulemaking by, among other things, adopting a rulemaking prioritization tool to update airworthiness standards for special conditions is scheduled to be completed in September of this year. Further, three of the initiatives were in danger of getting off track between 2011 and 2013 and are now back on schedule.", "Although most initiatives are on track, according to FAA’s May 2014 interim update, 2 of the 14 initiatives will not meet planned milestones: Improve effectiveness of the ODA program: FAA and two aviation industry groups—the Aerospace Industries Association and General Aviation Manufacturers Association—developed a plan to improve the effectiveness of the ODA process, which is used to authorize organizations to act on behalf of FAA in conducting some safety certification work. In conjunction with the plan, FAA revised the order that outlines the new ODA procedures. However, this initiative was purposely delayed to provide industry with additional time to adapt to the changes in the ODA procedures. Representatives of three industry associations we interviewed for this testimony supported the use and expansion of ODA by FAA. In contrast, while the Professional Aviation Safety Specialists (PASS) agrees with the concept of ODA, it has concerns related to expanding the program because representatives contend that oversight of the program requires significant FAA resources. PASS also contends that due to current staffing shortages and increased workload, FAA does not have enough inspectors and engineers to provide the proper surveillance of the designees who would be granted this additional delegation authority. On May 14, 2014, the DOT OIG announced a review of FAA’s oversight of the ODA program. The OIG plans to assess FAA’s (1) process for determining staffing levels for ODA oversight and (2) oversight of delegated organizations’ program controls.\nUpdate 14 C.F.R. Part 21: FAA chartered another aviation rulemaking committee in October 2012 to evaluate improvements to the effectiveness and efficiency of certification procedures for aircraft products and parts, along with incorporating new safety management system (SMS) concepts into the design and manufacturing environment. The committee submitted its report to FAA in July 2014. FAA indicated that the government shutdown in October 2013 delayed some of the actions that the agency had planned to move this effort into the rulemaking process, including submission of the application for rulemaking. According to FAA, however, this delay will have no effect on completion of the final rule, which is planned for 2017.\nAccording to FAA’s May 2014 update, 1 of the 14 initiatives was at risk of not meeting planned milestones, which increases the risk that FAA will miss its established implementation time frames for the initiative for addressing its associated recommendation.\nImprove consistency of regulatory interpretations: The May 2014 interim update also indicated that the initiative for improving the consistency of regulatory interpretation is at risk of getting off track or off schedule. This initiative responds to the Regulatory Consistency Committee’s recommendations for improving the consistency of regulatory interpretation within both Aircraft Certification and Flight Standards. However, Aircraft Certification is relying on Flight Standards to complete the implementation plan for addressing the recommendations. Therefore, Aircraft Certification has placed this initiative on hold. (The next section of this statement discusses in more detail FAA’s response to the Regulatory Consistency Committee’s recommendations.)", "As of May 2014, FAA had not developed metrics for measuring the effectiveness of 9 of the 14 initiatives it has undertaken, nor has it determined metrics to measure the effectiveness of its actions as a whole. According to FAA officials, they plan to develop these metrics in three phases. For the first phase, to be included in the July 2014 update of its implementation plan, FAA will include metrics to measure the progress of the implementation of the initiatives. For the second phase, FAA plans to subsequently develop metrics for measuring the outcomes of each initiative. For the third phase, working with the Aerospace Industries Association, FAA plans to develop metrics for measuring the global return on investment in implementing all of the initiatives, to the extent that such measurement is possible. We believe that this plan for establishing performance measures is reasonable.", "Unlike FAA’s efforts to improve the certification process, although FAA has made some progress towards addressing the regulatory consistency recommendations, the details remain unclear about how FAA will structure its efforts. In November 2012, the Regulatory Consistency Committee made six recommendations to Aircraft Certification and Flight Standards to improve (1) the consistency in how regulations are applied and (2) communications between FAA and industry stakeholders. In July 2013, FAA reported to Congress on its plans for addressing the regulatory consistency recommendations, and included its preliminary plan for determining the feasibility of implementing these recommendations. The report also indicated that FAA would develop a detailed implementation plan that would include an implementation strategy, assign responsibilities to offices and staff, establish milestones, and measure effectiveness for tracking purposes. We found in February 2014 that FAA expected to publish such a detailed implementation plan by late June 2014, more than 6 months after its initial target date of December 2013. In June 2014, FAA officials told us that the implementation plan was under review within FAA and estimated that the agency would issue its detailed plan in August 2014.\nUntil this detailed plan is released, the specific initiatives for addressing the recommendations are unknown; thus, we cannot analyze information on the status of any planned efforts similar to the information we provided above for the certification process initiatives. Further, FAA’s July 2013 preliminary plan does not specify how FAA plans to measure the effectiveness of the initiatives. FAA indicated that “although there may not be any baseline for each recommendation against which to compare improvements, FAA intends to consider: (1) identifying metrics, (2) gathering and developing baseline data, and (3) periodically measuring any changes, positive or negative, in rates of completion.” FAA officials provided the following information on how the agency is planning to respond to the six recommendations.", "The Regulatory Consistency Committee recommended that Aircraft Certification and Flight Standards (1) review all guidance documents and interpretations to identify and cancel outdated material and electronically link the remaining materials to its applicable rule, and (2) to consolidate Aircraft Certification’s and Flight Standards’ electronic guidance libraries into a master source guidance system, organized by rule, to allow FAA and industry users access to relevant rules and all active and superseded guidance material and related documents. This recommendation for creating the master source guidance system is the top priority of the Regulatory Consistency Committee. FAA officials indicated that establishing this system will require two main components:\nAs a first step, for linking (mapping) all relevant guidance materials to the regulations, FAA plans to determine which \"guidance\" documents exist across regional and field offices—including orders, notices, and advisory circulars—outside FAA’s electronic guidance libraries, which are being used to answer questions, interpret or analyze regulations, and provide guidance on regulatory matters. In December 2013, Flight Standards sent out a memorandum requesting that staff discontinue using any guidance documents outside those found in the guidance libraries, to be effective January 15, 2014. The memorandum also asked for the staff to submit any unofficial guidance worth preserving to FAA for review. Flight Standards then conducted a review to determine which of the unofficial guidance documents submitted should be added to the guidance libraries. Several members of the Regulatory Consistency Committee responded in an e-mail to FAA to express serious concerns about this approach and stated that the committee did not envision the cancellation of any guidance before FAA developed a methodology to include or exclude such guidance. The committee members further noted that FAA’s memorandum provided no method to allow existing certificate holders to retain certifications that were based on any applied guidance that had been cancelled. Further, these members requested that FAA either withdraw the memorandum or address the issues they raised and extend the date for FAA staff to comply with the memorandum. However, two other Regulatory Consistency Committee members we interviewed considered FAA’s actions to get staff to discontinue the use of unofficial guidance in the field to be an appropriate first step.\nSecond, FAA plans to develop a master source guidance system with the capability to consolidate information from Aircraft Certification’s and Flight Standards’ electronic guidance libraries as well as legal interpretations from the Office of Chief Counsel into a master guidance system to allow FAA and industry users access. Specifically, the Regulatory Consistency Committee recommended that this system be searchable so that FAA and industry users can easily access relevant rules and find the relevant guidance for the rule. FAA officials assessed the possibility of using the existing Aviation Safety Information Management System, but determined that it is not adequate because (1) users cannot search for guidance by word and (2) it is not compatible with other FAA data systems. According to FAA officials, with about $750,000 in approved funding for this project, FAA’s information technology division is in the process of developing a dynamic regulatory system that should provide the needed capabilities. Officials indicated that when users conduct a search for a particular topic in this system, the search results should bring up multiple entries for specific guidance. Initially, Flight Standards plans to use an Excel spreadsheet for storing the guidance and then transition to the new system once it is deployed. Flight Standards hopes to test out a first version of this system within calendar year 2014. However, the officials were unsure of the total cost of developing and deploying the system.\nRepresentatives from four of the committee stakeholders we interviewed for this testimony acknowledged that creating this system is a major effort for FAA because of the volume of FAA guidance that potentially exists across regional and field offices, some of which may not be in Aircraft Certification’s and Flight Standards’ electronic guidance libraries. Representatives of five industry stakeholders we interviewed provided insights on how FAA might devise a plan for creating and populating this system. Three of these noted that FAA will need to ensure that the various types of guidance—such as orders, notices, and advisory circulars—include links to the original federal aviation regulations. One of these stakeholders recommended that FAA develop the system to allow a user looking at FAA guidance to also see all relevant background information on related decisions, and the past actions related to the guidance in question and their relation to the original regulation. Because of the large volume of FAA guidance, some stakeholders also suggested that FAA begin by first choosing a starting date for which any new rules or other new guidance it issues would include links to the relevant original regulations. However, one stakeholder we interviewed noted that FAA should consider prioritizing its effort by first mapping the guidance materials for specific key regulations and then the guidance for less significant regulations.", "The Regulatory Consistency Committee noted multiple instances where FAA guidance appeared to have created inconsistent interpretation and application, and confusion; the Consistency Committee recommended that FAA develop a standardized decision-making methodology for the development of all policy and guidance material to ensure such documents are consistent with adopted regulations. In interviews for this testimony, FAA officials also provided some updates on how the agency will respond to the recommendation to develop instructional tools for its policy staff. FAA officials told us they had not initiated any efforts yet to address this recommendation, but would begin by focusing on developing instructions for policy staff to use for populating the master source guidance system. In August 2014, FAA plans to form an internal work group to establish a document management framework and work processes that can be used by Aircraft Certification’s and Flight Standards’ policy division staffs as they map existing guidance documents to applicable source regulations in the master source guidance system. The officials expected the work group would issue an internal directive for FAA personnel on work processes to be used in populating the guidance system by June of 2015.", "The Regulatory Consistency Committee recommended that FAA, in consultation with industry stakeholders, review and revise its regulatory training for applicable agency personnel and make the curriculum available to industry. FAA officials told us that FAA has begun to develop improved training for its field staff—the third recommendation of the Regulatory Consistency Committee—so that field inspector staffs are better equipped to answer routine compliance-related questions confidently and in a consistent manner. In addition, the officials told us starting in 2015, FAA plans to conduct a gap analysis of existing training for all FAA staff who are responsible for interpreting and applying certification and approval regulations. For this analysis, FAA plans to assess whether existing training can be modified to sufficiently address any gaps. FAA also plans to coordinate with industry to share the results of this review and analysis by the end of 2015.", "The Regulatory Consistency Committee made two similar recommendations for FAA to consider: (1) establish a Regulatory Consistency Communications Board comprising various FAA representatives that would provide clarification on questions from FAA and industry stakeholders related to the application of regulations and (2) determine the feasibility of establishing a full-time Regulatory Operations Communication Center as a centralized support center to provide real- time guidance to FAA personnel and industry certificate/approval holders and applicants. FAA officials also discussed the agency’s conceptual approach and plans for establishing a board—likely by the end of calendar year 2014—to address these two recommendations. The purpose of the board would be to provide a neutral and centralized mechanism with a standardized process for addressing and resolving regulatory compliance issues between FAA and industry. According to the committee, this board would be comprised of representatives from the relevant headquarters policy divisions in FAA to help answer complex regulatory interpretation issues that arise between FAA inspectors and engineers, and industry during the certification and approval processes. FAA officials told us the board’s process, once established, would use a modified version of the agency’s current Consistency and Standardization Initiative (CSI), a process established as a means for industry to appeal FAA decisions and actions.\nAs we found in 2010, resolution through the CSI can be a lengthy process, with the total length of the process depending on how many levels of appeal the industry stakeholder chooses. However, as we also found, industry stakeholders have generally been reluctant to use CSI for initiating appeals and raising concerns with the local field office for fear of retribution. FAA officials told us in interviews that the modified process would help address the retribution issue, because it would rely instead on multiple sources to raise issues—not just solely on industry—and would be the final arbiter for FAA and industry in disagreements on certification and approval decisions. According to FAA officials, the board could also serve the function of the proposed operations center recommended by the committee to be a resource for assisting FAA personnel and industry stakeholders with interpretation queries and establishing consistency in regulatory application. FAA officials indicated that the agency had decided not to establish the communications center because (1) the board could serve a similar function and (2) FAA has limited resources available to staff a communications center.\nSeveral industry stakeholders we spoke with told us they support FAA’s preliminary plans to establish the board and modify the CSI process as part of this effort. For example, several stakeholders told us that they support FAA’s plans to modify the current CSI process. One of these stakeholders noted that a modified process would be more effective if it allowed for industry stakeholders to raise issues anonymously. Also, another stakeholder noted the board would not be beneficial until after FAA has established the master source guidance system because the board should be able to refer to that guidance in demonstrating how it makes decisions.", "The Regulatory Consistency Committee recommended that FAA improve the clarity of its final rules by ensuring that each final rule contains a comprehensive explanation of the rule’s purpose and how it will increase safety. FAA officials told us that this recommendation has been addressed through the work of the Aviation Rulemaking Advisory The officials told Committee’s Rulemaking Prioritization Working Group.us that, as a result of this effort, all final rules, are now well-vetted across FAA. The industry representatives we interviewed had mixed opinions about whether FAA had addressed this recommendation as intended. For example, two stakeholders were in agreement with FAA that the agency had addressed it while two other stakeholders noted that FAA’s new rules are still not as clear as they should be. Two stakeholders also said that it is often not the final rules but the guidance that accompanies or follows the final rules that is unclear and contributes to inconsistent interpretation and application among FAA staff.", "In our previous work on organizational transformations, we noted that implementing large-scale change management initiatives—like those the committees tasked FAA with—are not simple endeavors and require the concentrated efforts of both leadership and employees to realize intended synergies and accomplish new organizational goals. People are at the center of any serious change management initiative because people define the organization’s culture, drive its performance, and embody its knowledge base. The best approach for these types of initiatives depends upon a variety of factors specific to each context, but there has been some general agreement on a number of key practices that have consistently been found at the center of successful change management initiatives. These include, among other things, securing organizational support at all levels, developing clear principles and priorities to help change the culture, communicating frequently with partners, and setting performance measures to evaluate progress. In this final section of this testimony, we discuss challenges for FAA in implementing the committees’ certification and approval and regulatory consistency recommendations that relate to these key practices.", "FAA officials and industry representatives we spoke to noted that shifting priorities as well as declining resources may prohibit FAA from devoting the time and resources needed for completing the initiatives in the planned time frames. They agreed that a primary challenge for FAA will be having the dedicated resources that will be needed to successfully implement the committees’ recommendations. We have previously found that successful organizational transformations and cultural changes require several years of focused attention from the agency’s senior leadership. This lesson is consistent with our previous work on organizational transformation, which indicates that support from top leadership is indispensable for fundamental change. Top leadership’s clear and personal involvement in the transformation represents stability for both the organization’s employees and its external partners. Top leadership must set the direction, pace, and tone for the transformation. Additionally, buy-in and acceptance among the workforce will be critical to successful implementation of the initiatives to address the two committees’ recommendations.\nAdditionally, as we described in our 2010 report, FAA prioritizes ensuring the continued operational safety of the people and products already operating in the national airspace system over processing new certifications and approvals. We reported in the 2010 report that Flight Standards staff had little or no incentive to perform certification work under the system in which their pay grades are established and Other than inspectors involved with overseeing air carriers, maintained.Flight Standards inspectors are typically responsible for a variety of types of certificate holders. Each certificate is allocated a point value based on the complexity of the certificate or operation, and the combined point value for each inspector’s oversight responsibilities must meet or exceed the points allocated for the inspector’s grade. However, not all of the inspectors’ duties—including certification work—receive points in this system, and inspectors are subject to a downgrade if entities in their portfolio relocate or go out of business.", "FAA and industry representatives also cited FAA’s organizational culture as a primary challenge for FAA in successfully implementing these initiatives. They noted that many of the certification process and regulatory consistency initiatives FAA is attempting to implement represent cultural shifts for FAA staff in how regulations, policy, and guidance are applied, and ultimately how certification and approval decisions are made. As we have previously found, the implementation of recommendations that require a cultural shift for employees can be delayed if the workforce is reluctant in accepting such change.", "Further, industry representatives have identified the lack of communication with and involvement of stakeholders as a primary challenge for FAA in implementing the committees’ recommendations, particularly the regulatory consistency recommendations. Successful agencies we have studied based their strategic planning, to a large extent, on the interests and expectations of their stakeholders, and stakeholder involvement is important to ensure agencies’ efforts and resources are targeted at the highest priorities. However, representatives of two industry organizations we interviewed told us that FAA did not provide the opportunity for early input and that outreach is low regarding the certification process recommendations, and representatives of four industry organizations indicated that FAA has not sought their input in responding to the regulatory consistency recommendations. They reported that FAA had neither kept in contact with or advised them of its plans nor engaged the Regulatory Consistency Committee participants in the drafting of the detailed implementation plan that is expected to be published in August. As an example, as previously discussed, when Flight Standards published a memo in December 2013 calling for the cancellation of non-official guidance, several members of the Regulatory Consistency Committee were unaware of the change and expressed surprise and dissatisfaction with the action and offered their assistance. Representatives of one industry group noted that FAA sought their input on addressing the Certification Process Committee’s recommendations for subsequent revisions of its implementation plan.", "FAA has not fully developed performance metrics to ensure that any initiatives it implements are achieving their intended outcomes. We have previously found that agencies that have been successful in assessing performance use measures that demonstrate results and provide useful information for decision making.that FAA had not completed developing performance measures for either the certification improvement or the regulatory consistency initiatives: Earlier in this testimony, we reported\nFAA had developed performance measures for 5 of the 14 certification process initiatives as of May 2014 and plans to further develop measures in three phases. In addition, most of the initiatives are scheduled to be implemented by 2017. Although we have assessed FAA’s plan for developing these metrics as reasonable, the agency may miss an opportunity to gather early data for evaluating the effectiveness of its actions and making any needed corrections.\nThere is no detailed plan for implementing initiatives addressing the consistency of regulatory interpretation recommendations and measuring their outcomes. In recent meetings, FAA officials told us they have had difficulty in determining how to measure the outcomes of its regulatory consistency initiatives and have not been able to determine what specific performance metrics could be used.\nGoing forward, it is critically important that FAA develop outcome-based performance measures to determine what is actually being achieved through the current and future initiatives, thereby making it easier to determine the overall outcomes of each of the initiatives and to hold FAA’s field and headquarters offices and employees accountable for the results. We are not making any new recommendations because the recommendation we made in 2010 for FAA to develop outcome-based performance measures and a continuous evaluative process continue to have merit related to this issue. To its credit, FAA has initiated some efforts and sound planning for addressing the committees’ recommendations. However, it will be critical for FAA to follow through with its initiatives and plans for developing performance metrics to achieve the intended efficiencies and consistencies. As we noted in our October 2013 statement, however, some improvements to the certification and approval processes, will likely take years to implement and, therefore, will require a sustained commitment as well as congressional oversight.\nChairman LoBiondo, Ranking Member Larsen, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions at this time.", "For further information on this testimony, please contact Gerald L. Dillingham, Ph.D., at (202) 512-2834 or [email protected]. In addition, contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this testimony statement include Vashun Cole, Assistant Director; Andrew Von Ah, Assistant Director; Jessica Bryant-Bertail; Jim Geibel; Josh Ormond; Amy Rosewarne; and Pamela Vines. The following individuals made key contributions to the prior GAO work: Teresa Spisak, Assistant Director; Melissa Bodeau, Sharon Dyer, Bess Eisenstadt, Amy Frazier, Brandon Haller, Dave Hooper, Sara Ann Moessbauer, and Michael Silver.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1 ], "alignment": [ "h0_full h3_full h1_full", "h3_full h2_title h4_title h0_title", "h0_full h2_full", "h0_full h4_full", "h0_full", "h3_full h4_full h1_title h0_title", "h4_full h1_full", "", "h3_full", "", "h0_full", "h0_title h2_title h1_title h3_title", "h3_full h2_full", "", "", "h0_full h2_full h1_full", "" ] }	{ "question": [ "How is the Aircraft Certification Service used by the FAA?", "What types of initiatives are Aircraft Certification implementing?", "To what extent are these initiatives expected to be completed on time?", "What challenges do these initiatives face regarding being completed in a timely manner?", "What is GAO doing in order to ensure these initiatives are completed in time and correctly?", "What is a specific plan of the commission to complete these goals?", "What is FAA doing to address their issues resulting from not having performance measures?", "What has FAA done specifically to address this problem?", "What is the proposed plan of the FAA?", "How has Flight Standards directly taken action in pursuit of this goal?", "How is Aircraft Certification and Flight Standards planning to change in the future?", "How will these planned changes demonstrate FAA's business plans?", "What concern regarding the FAA remains for both GAO and the industry?", "What is projected to happen to FAA should they continue to withhold implementing performance measures?", "What kinds of certifications does the FAA have authority to issue?", "How are the FAA's issuing processes critiqued?", "How has the FAA addressed these critiques of its work?", "How did Congress attempt to reform FAA?", "How did the FAA respond to this Act?", "How has the FAA since furthered their mission to address their recurrent issues?", "How does this testimony demonstrate FAA's progress in their effort to implement their new policies?", "What does the testimony project in terms of the issues the FAA will face in the future?", "How does this testimony reflect the FAA and GAO's processes?" ], "summary": [ "The Federal Aviation Administration's (FAA) Aircraft Certification Service (Aircraft Certification) is responsible for addressing the certification and approval process recommendations, and has made progress.", "Aircraft Certification is implementing and has set milestones for completing 14 initiatives, several of which were originally begun as part of earlier certification process improvement efforts. The initiatives range from developing a comprehensive road map for major change initiatives, to improving Aircraft Certification's process for prioritizing requests for certifications and approvals (project sequencing), to reorganizing the small aircraft certification regulation.", "According to an update prepared by FAA in May 2014, one initiative has been completed and most are on track to be completed within 3 years. However, according to this update, two initiatives will not meet planned milestones, including the one for improving FAA's program for delegating authority to organizations to carry out some certification activities. Also, a third initiative for improving consistency of regulatory interpretation was at risk of not meeting planned milestones.", "Two additional initiatives, while on track for meeting planned milestones in May 2014, faced challenges because of opposition by FAA's labor unions, including one for improving Aircraft Certification's project sequencing process. GAO found in October 2013 that Aircraft Certification continued to lack performance measures for many of these initiatives, a condition that persists.", "In 2010, GAO had previously recommended that FAA develop a continuous evaluative process with performance goals and measures. FAA agreed but has not yet fully addressed the recommendation.", "Aircraft Certification officials discussed plans to develop metrics in three phases, beginning in July 2014 and in the future, for measuring (1) the progress of implementing the initiatives throughout FAA, (2) the outcomes of each initiative, and (3) the return on investment for FAA and the industry resulting from implementing the initiatives as a whole.", "FAA's Flight Standards Service (Flight Standards) is responsible for addressing the regulatory consistency recommendations, is finalizing plans to do so.", "FAA has not published a detailed plan with milestones and performance metrics, and officials told GAO that they intend to publish a plan by August 2014.", "Flight Standards officials said they were making progress in addressing the committee's top priority recommendation—mapping all FAA policy and guidance to relevant federal aviation regulations and developing an electronic system that maintains this information and that is accessible by FAA and industry users.", "As part of this effort, officials told GAO that Flight Standards has begun eliminating obsolete guidance and linking existing policy and guidance to the regulations.", "Going forward, Aircraft Certification's and Flight Standards' efforts may face challenges that could affect successful implementation of the committees' recommendations.", "Many of these recommendations represent a significant shift in how FAA normally conducts business, and if the workforce is reluctant to implement such changes, FAA's planned initiatives for addressing the recommendations could be delayed.", "Also, the fact that FAA has not yet implemented performance measures for most of the initiatives is a concern for both GAO and the industry.", "As GAO concluded in October 2013, without performance measures, FAA will be unable to gather the appropriate data to evaluate the success of current and future initiatives.", "Among its responsibilities for aviation safety, FAA issues certificates for new aircraft and parts, and grants approvals for changes to air operations and aircraft, based on federal aviation regulations.", "Various studies, GAO's prior work, and industry stakeholders have raised questions about the efficiency of FAA's certification and approval processes, as well as the consistency of its staff in interpreting aviation regulations.", "Over time, FAA has implemented efforts to address these issues, but they persist as FAA faces greater industry demand and its overall workload has increased.", "The 2012 FAA Modernization and Reform Act required FAA to work with industry to resolve these issues.", "In response, FAA chartered two committees—one to address certification and approval processes and another to address regulatory consistency—which recommended improvements in 2012.", "In 2013, FAA published an implementation plan for addressing the certification and approval process recommendations and promised to publish an implementation plan for addressing the regulatory consistency recommendations at a later date.", "This testimony provides information on FAA's progress in implementing the (1) certification and approval process recommendations and (2) regulatory consistency recommendations.", "It also discusses future challenges industry stakeholders believe FAA will face in implementing these recommendations.", "This testimony is based on GAO products issued from 2010 to 2014, updated in July 2014 through reviews of recent FAA and industry documents and interviews of FAA officials and industry representatives." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 4, -1, 0, -1, -1, -1, 0, 0, -1, -1, 0, 0, -1, 3, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 0, 0, 1, 1, 1 ] }
CRS_R43323	{ "title": [ "", "Most Recent Legislative Action", "Budgetary Context: BCA Spending Caps", "Sequestration Flexibility in FY2014 and FY2013 Experience", "Sequestration Alternatives in FY2014", "Alternatives under Current Law", "Legislative Proposals", "DOD Forecast of FY2014 BCA Impact", "BCA Impact on DOD as FY2014 Begins", "DOD FY2013 Post-Sequester Funding and the FY2014 Request", "FY2014 National Defense Budget Overview32", "FY2014 DOD Base Budget Highlights", "Sustaining Current Strategy", "Military Personnel", "Military Pay and Allowances", "TRICARE Fees", "\"Efficiency\" Initiatives", "Weapons Acquisition Reductions", "Proposed Base Closures", "FY2014 OCO Budget Highlights", "Ship and Aircraft Retirements", "FY2014 National Defense Authorization Act (NDAA): H.R. 1960; S. 1197; H.R. 3304", "NDAA: The Broad Outlines", "Proposed Administration Savings", "Other Congressional Additions", "Military Personnel Issues (Authorization)", "Military Pay Raise", "Sexual Assault Prevention and Treatment", "Provisions Relating to Chaplains Corps and Conscience", "Legal Protection for Religious Expression", "TRICARE", "Assignment of Women in the Military58", "Reserve Component Mobilization Guarantees", "Ground Combat Systems (Authorization)", "Current Generation Vehicles (M-1, Bradley, and others)", "Next Generation Vehicles: GCV, AMPV, MPC, and JLTV", "Naval Systems (Authorization)", "Aircraft Carriers64", "Attack Submarines and Missile Submarines", "Destroyers69", "Littoral Combat Ships70", "Aircraft and Missile Programs (Authorization)", "Long-Range Strike Weapons", "Other Provisions Related to Arms Control", "Carrier-Based UAVs", "Missile Defense (Authorization)", "Ground-Based Missile Defense (GMD)", "Israeli Defenses", "NATO Missile Defense Cost", "Provisions Relating to Wartime Detainees78", "House Floor Amendments", "FY2014 DOD Appropriations Bill", "Overview (H.R. 2397; S. 1429)", "Base Budget", "OCO Funding", "Military Personnel Issues (Appropriations)", "Military Compensation", "Defense Health Program (including TRICARE)", "Ground Combat Systems (Appropriations)", "Naval Systems (Appropriations)", "Submarines", "Destroyers", "Aircraft and Missile Programs (Appropriations)", "Strike Fighters (Joint Strike Fighter and F/A-18)", "Missile Defense Programs (Appropriations)", "Afghanistan Security Forces Fund (OCO)", "House Floor Amendments to FY2014 DOD Appropriations Bills", "Appendix. Selected Program Funding Tables" ], "paragraphs": [ "", "On December 11, 2013, Representative Paul C. Ryan and Senator Patty Murray, chairs of the House and Senate budget committees, respectively, and co-chairs of the group appointed to develop a budget compromise to avoid a sequester in mid-January 2014, introduced the Bipartisan Budget Act of 2013, which raises defense and nondefense budget spending limits under the Budget Control Act (BCA) for FY2014 and FY2015. On December 12, 2013, the House passed the proposal as an amendment to H.J.Res.59, the Continuing Appropriations Act of 2014, by a vote of 332-94. The Senate passed the bill on December 18, 2013, by a vote of 64-36 and President Obama signed it into law on December 26, 2013.\nFor FY2014, the bill raised the original BCA budget limit for National Defense (budget function 050) by $22 billion to a total of $520 billion, or $2 billion above the level set in the Continuing Resolution (CR) of 2014. For the Department of Defense (DOD), the new FY2014 limit was set at $497 billion rather than the current limit of $476 billion, just above the CR. If Congress extended the current CR level for the full year at these new limits, then there would be no sequester in January 2014. For DOD, the new limits would essentially be a nominal freeze, setting DOD spending at $2 billion above the FY2013 post-sequester level. The House and Senate Appropriations Committees are drafting FY2014 funding bills for DOD and other agencies that would conform to the newly revised budget caps.\nFor FY2015, the new budget limit for National Defense would be $523 billion, or $9 billion above the current $512 billion limit. Similarly, for DOD, the new FY2015 limit would be $498 billion compared to $489 billion in current law, or $9 billion higher than the current limit, and $1 billion above the new limit for FY2014. In later years, budget limits would be the same as current levels. Altogether, over the FY2012-FY2021 decade, National Defense spending would total $5.447 trillion, or $32 billion (or 6%) above the current limit. DOD spending would total $5.206 trillion rather than $5.176 trillion, a $30 billion or 6% increase over current limits.\nIn addition to these changes in budget limits, the Bipartisan Budget Act also reduces the cost of living adjustments (COLAs) provided to military retirees under the age of 62 from the Consumer Price Index (CPI) to the CPI less 1% while also increasing contributions to retirement by new federal retirees. Military retirees would receive a \"catch-up\" increase at age 62 that would raise their benefit level to an amount including full CPI adjustments for each year when they received reduced COLAs. and then receive full CPI adjustments after that. According to CBO, this change would save the Department of Defense $6.235 billion over the decade.\nThis CPI adjustment would apply to nearly all military retirees including those receiving military disability benefits and to people receiving survivor benefits. (This provision would not affect \"REDUX\" military retirees who already receive reduced COLAs of the CPI minus 1% in return for receiving a $30,000 bonus at 15 years of service.) Some Members have raised concerns about this reduction in retiree benefits. If enacted, this proposal could be re-considered at a later date since it does not go into effect until December 1, 2015.\nThere are several potential scenarios that Congress may face in January 2014. On January 15, 2014, the current CR ( P.L. 113-46 ) lapses so Congress needs to either extend the current CR or pass individual or an omnibus appropriations act to avoid a government shutdown. To avoid a sequester, Congress needs to appropriate defense spending that complies with BCA limits that are in effect.\nIf the new limits are adopted, and if Congress provides defense spending at the current CR for the full year, then there would be no sequester because the new defense limit matches the CR. According to press reports, the Department of Defense is currently spending at that level. If Congress adopts the new limits but provides defense appropriations that exceed BCA limits, however, then OMB would levy a sequester to ensure compliance with BCA limits.\nUnder current BCA spending limits (without assuming passage of the Bipartisan Budget Act of 2013), a sequester would reduce defense spending by $20 billion, about 3.8% overall in mid-January 2014 to bring appropriations into compliance with the BCA. (The percentage cut to affected accounts, excluding exempted military personnel, would be about 5.8%.) This estimate reflects the amount by which the current CR exceeds the estimated $476 billion cap set in the Budget Control Act. If the new limits are adopted and matched by appropriations, the threat of a sequester would disappear.\nIn other words, to the extent that defense appropriations breach or exceed whatever BCA limits are in effect, OMB must levy a sequester of whatever size is necessary to ensure compliance with BCA limits.\nIn action on the FY2014 National Defense Authorization Act (NDAA), on December 12, 2013, the House, by a vote of 350 to 69, passed H.Res. 441 , which adopted H.R. 3304 , effectively a conference version of the FY2014 National Defense Authorization Act. The Senate passed the bill on December 19, 2013, by a vote of 84-15 and the President signed it into law on December 26, 2013.\nEarlier, on October 17, 2013, the FY2014 Continuing Resolution (CR, P.L. 113-46 ) appropriated funds allowing the DOD and all other federal agencies to resume their normal operations through January 15, 2014, after a 16-day government shutdown went into effect because no FY2014 appropriations had been provided for the new fiscal year. In general, the CR allows DOD and other agencies to spend—during that period—at the rate at which each appropriations account was funded by P.L. 113-6 , the FY2013 Consolidated and Further Continuing Appropriations Act, taking into account the amount sequestered by the March 1, 2013, OMB order mandated by the Budget Control Act, enacted in 2011 ( P.L. 112-25 ). For DOD, the current CR provides about $495 billion.\nBefore passage of the CR, DOD, like most other agencies, was subject to a lapse in appropriations during which agencies are generally required to shut down because Congress had not acted on legislation to fund the federal government in FY2014 prior to the start of the fiscal year on October 1, 2013. The Office of Management and Budget (OMB), however, identified a number of exceptions to the requirement that agencies cease operations, including a blanket exception for activities that \"provide for the national security.\"\nAs a result, during the lapse in appropriations, some DOD personnel were \"excepted\" from furloughs, including all uniformed military personnel and some civilians, while other civilian DOD employees were furloughed and, thus, not permitted to work. Normally, \"excepted\" military and civilian personnel would continue to work but would not be paid until after appropriations are provided by law. Shortly before and during the shutdown, however, Congress passed and the President signed into law two pieces of legislation that appropriated funds to pay all active-duty military and some DOD civilian personnel costs in the absence of an enacted appropriation, and to provide death gratuities:\nThe Pay Our Military Act ( P.L. 113-39 ; H.R. 3210 ), signed by the President on September 30, 2013, provided funds to pay all active-duty military personnel, most DOD civilians and possibly some private sector employees working for DOD; The Honoring the Families of Fallen Soldiers Act, ( P.L. 113-44 ; H.J.Res. 91 ), signed by the President on October 10, 2013, provided funds to pay death gratuities to survivors of military personnel who die while on active duty.\nFor military activities of the Department of Defense that are covered by the FY2014 National Defense Authorization Act (NDAA), the Obama Administration requested authorizations for discretionary budget authority (BA) totaling $632.7 billion, including the following:\n$526.6 billion for the so-called \"base budget\"—that is, for costs not associated with combat activities; $80.7 million for war costs, officially designated overseas contingency operations (OCO); $18.9 billion for defense-related nuclear energy programs conducted by the Department of Energy; and $7.4 billion for other defense-related activities. (See Table 3 ).\nFor DOD's base budget, both the version of the FY2014 NDAA passed by the House ( H.R. 1960 ) and the version of the bill reported by the Senate Armed Services Committee on June 20, 2013, ( S. 1197 ), differ from the President's overall request by less than $50 million. The House bill, passed by a vote of 315-108 on June 14, 2013, would authorize hundreds of millions of dollars more than requested for various purposes, including a military pay raise, shipbuilding, and ballistic missile defense. However, that gross increase was almost entirely offset by several reductions which, according to the House Armed Services Committee, would have no adverse impact on DOD programs because—in each of the affected accounts—previously appropriated funds could be used in lieu of the requested new budget authority.\nFor war costs—designated as OCO— S. 1197 , reported by the Senate committee on June 20, 2013, would make few changes to the Administration's request. The House-passed bill, on the other hand, would add $5.4 billion to the request.\nOn Dec. 26, 2013, the President signed into law H.R. 3304 , a compromise version of the FY2014 NDAA, which authorized nearly the amount originally requested by the Administration. (See Table 1 and Table 9 )\nFor analysis of congressional action on the authorization bill, see the section of this report entitled \" FY2014 National Defense Authorization Act .\"\nFor the FY2014 DOD Appropriations bill, which funds all discretionary DOD military programs except military construction, the Administration requested a total of about $589.5 billion for the base budget and OCO, combined. The version of the bill passed by the House on June 24, 2013, would make a net reduction of about $4.2 billion to the request while the version reported by the Senate Appropriations Committee ( S. 1429 ) would make a net reduction of about $2.2 billion.\nFor analysis of congressional action the defense appropriations bill, see the section of this report entitled \" FY2014 DOD Appropriations Bill .\"", "FY2014 is the third consecutive year for which Congress and the President have had to come to terms with the spending caps that were set in law by the BCA for each year in the decade FY2012-FY2021. Enacted in 2011 to resolve the impasse that summer about raising the debt limit, the BCA required reductions in discretionary spending totaling about $2.1 trillion through FY2021 in return for raising the debt limit by the same amount. A first tranche of reductions amounting to $900 billion—half of which came from National Defense agencies (primarily DOD but also including Department of Energy and other defense-related activities in other agencies)—was reflected in the Administration's FY2013 budget, which complied with initial caps set in the BCA. Additional reductions of $1.2 trillion, also falling equally on defense agencies and nondefense agencies—are to be achieved through a sequester in FY2013 and by automatic reductions to appropriations that would apply each year between FY2014 and FY2021 unless enacted appropriations in any year meet that year's BCA limits. To the extent that annual appropriations exceed or breach the BCA caps, a sequester would reduce funding to the level of the caps by across-the-board cuts.\nPresident Obama sent Congress his FY2014 budget request on April 10, 2013, more than two months later than the legally prescribed date for submission of the budget. Uncertainties surrounding the final outcome of the legislative battle over appropriations for the preceding year accounted for the delay. The FY2013 appropriations for DOD and all other federal agencies were not enacted until March 26, 2013, when the President signed the Consolidated and Further Continuing Appropriations Act of 2013 ( H.R. 933 / P.L. 113-6 ). The amounts specified in that legislation were not final but, rather, were the points of departure for further reductions (by a process of \"sequestration\") required to comply with the Budget Control Act of 2011 (BCA), which was enacted on August 2, 2011 ( P.L. 112-25 ). BCA caps apply only to the defense base budget, not to OCO funding.\nIf current law had not been amended by the Bipartisan Budget Act of 2013 to change the BCA spending caps, the Administration's $552 billion national defense budget request for FY2014 (excluding war costs) would have to be reduced by $53.8 billion (about 9.8%) to a total of $498.1 billion in order to comply with BCA limits. If defense appropriations exceeded the BCA limit, they would have been reduced to the BCA level by an across-the-board sequester to currently appropriated levels that would begin in early to mid-January 2014.\nAlthough the President's FY2014 national defense budget request does not meet the defense limits originally set in the BCA that would avoid a sequester under current law, the Administration argues that the President's budget would achieve—through a combination of revenue increases and reductions to entitlement programs—the $1.2 trillion total reduction through FY2021 that would result from the annual BCA caps. As a part of the Administration's overall program, the BCA would be amended to defer application of the spending caps, thus accommodating the President's FY2014 defense budget request.\nConsistent with the President's budget request, the House-passed FY2014 budget resolution ( H.Con.Res. 25 ) proposed $552 billion for national defense (excluding war costs). Subsequently, the House Appropriations Committee reported—and the House passed—the three appropriations bills that would provide defense funding up to that level: Defense ( H.R. 2397 , passed July 24, 315-109), Energy and Water ( H.R. 2609 , passed July 10, 227-198), and Military Construction-Veterans Administration ( H.R. 2216 , passed June 4, 421-4).\nTo achieve the FY2014 savings mandated by the BCA, the House budget resolution proposes higher cuts to nondefense spending as well as changes to entitlement programs which would bring discretionary spending for the year to $967 billion, the discretionary total allowed by BCA. But, within that total, the BCA establishes separate limits (or caps) for defense and nondefense spending. The House-recommended defense levels exceed the BCA defense cap so, if they were to become law, a 9.8% sequester cut would be levied in January 2014, unless Congress amended the BCA to change the currently binding limits.\nSimilarly, the Senate's FY2014 budget resolution ( S.Con.Res. 8 ) sets the total for national defense at $552 billion—as requested by the President—and the defense-related bills reported by the Senate Appropriations Committee are consistent with this level. Like the House budget resolution, the Senate measure assumes that BCA's limit on overall discretionary spending for FY2014 would be met. In contrast to the House resolution, however, the Senate resolution proposes to compensate for defense spending above the BCA level with a combination of revenue increases and entitlement spending reductions similar to those proposed by the Administration. However, if the level of national defense spending allowed by the Senate resolution were to be enacted, there would have been a $53.8 billion sequester cut to discretionary spending in early January 2014—if the original BCA caps had not been amended by law.", "DOD officials have contended that sequestration would have serious adverse impacts on the services' combat readiness and modernization not only because of the size of the funding cuts required but also because of the relatively arbitrary way in which the reductions are made. In a fiscal year in which a sequester is triggered to reduce spending to the levels enacted in the BCA, by law the reduction must be achieved by cutting a uniform percentage from the \"budgetary resources\" of every program, project, and activity (PPA) in every budget account, except for those budget accounts and PPAs that, by law, either are exempt from a sequester or are subject to a special sequester rule. \"Budgetary resources\" include new budget authority for both the base budget and OCO and budget authority appropriated in previous fiscal years but not yet obligated.\nThe sequestration process allows DOD some flexibility in implementing a sequester in ways that DOD used to limit the impact on readiness, investment accounts, and war funding in FY2013 and which might have similar results if sequestration were to be required for FY2014:\nThe President has authority to exempt the military personnel accounts from a sequester, as he did in FY2013 and as OMB informed Congress on August 9, 2013, he will do, should a sequester occur in FY2014. Exercising this option could allow DOD to avoid involuntary separations of military personnel, but does not reduce the total amount that must be sequestered from DOD funds and, thus, entails correspondingly larger cuts from other DOD accounts. House and Senate conferees on the FY2013 Consolidated and Further Continuing Appropriations Act ( P.L. 113-6 ) defined as a single PPA the entire Operation and Maintenance (O&M) account of each service and reserve component. Therefore, DOD has considerable flexibility in allocating cuts within those relatively large blocks of money. So, DOD could make proportionally larger reductions in some O&M-funded activities—facilities maintenance and training, for example—in order to allow proportionally smaller reductions in other O&M-funded activities such as operational training or support for front-line combat units. DOD could avoid or minimize sequestration cuts in funds for war operations in Afghanistan because, although Congress authorizes and appropriates separate amounts for base budget funding and OCO funding, most funding of both sorts is co-mingled in the PPAs that are subject to sequestration. Thus a service could reduce its O&M funding for OCO by a proportionately smaller fraction provided it was offset by a proportionately larger reduction in the service's base budget O&M spending. DOD did, however, choose to reduce OCO funding by $5.3 billion to meet the FY2013 sequester. This may have reflected a transfer into OCO accounts in mid-May 2013 to meet unanticipated higher needs (see below). In some of DOD's investment accounts, unobligated balances of funds appropriated in earlier budgets were reduced by proportionally larger amounts to allow proportionally smaller reductions to newly appropriated budget authority. Among the 21 procurement accounts, budget authority appropriated for FY2013 was cut by an average of 5.2% while unobligated funds were cut by an average of 11.2%. Since DOD budget authority appropriated for procurement and most other activities expires if not obligated within a certain number of years, sacrificing older budget authority allowed DOD to retain more budget authority that would be available for a longer period. After sequestration, DOD could and did use established reprogramming procedures, which require prior approval by the congressional defense committees in some cases, to shift funds among accounts. In May 2013, the department requested congressional approval of reprogrammings that shifted nearly $9 billion to meet more essential expenses by tapping funds that had been appropriated to other programs. This included shifting some $5.1 billion of OCO funding, about $3.0 billion of which came from cancelled lower priority OCO needs, with the remainder from the base budget.", "In recent months, many observers, including DOD witnesses and some Members of Congress, have raised particular concerns about sequesters, arguing that because they require largely across-the-board cuts to programs, this would not reflect priorities in defense spending. One way to avoid a sequester would be if both houses of Congress passed a budget resolution that amended the BCA caps and achieved savings elsewhere.", "If current budget law is not changed, however, there are still several ways that the Administration and Congress could avoid a sequester in FY2014 or later years of the decade. These include:\nCongress could appropriate amounts for defense that meet the lowered cap of $498 billion for FY2014 before a sequester would go into effect. This could reflect a joint budget resolution passed by both houses of Congress that would presumably be followed by new 302(a) allocations of overall discretionary budget authority and new 302(b) suballocations to individual appropriations subcommittees. With the current CR ( P.L. 113-46 ) slated to expire on January 15, 2014, Congress might pass individual appropriations bills, an omnibus funding bill, or another CR by that time. Section 258B of the Deficit Control Act of 1985 allows the President to submit a report, within five calendar days of the beginning of a new session, detailing an alternative way to meet the defense sequester caps (i.e., a spending plan that would reduce outlays by the same total amount that would result from an across-the board sequester). Congress would consider a resolution approving the alternative plan within five calendar days, under expedited procedures that would preclude a Senate filibuster.", "Bills have been introduced that would provide additional flexibility for DOD (and other agencies, in some cases) to meet lower BCA caps by setting higher transfer caps that DOD could use after a sequester went into effect in order to ensure that its higher priority programs were protected.\nIntroduced by Representatives Cooper and Ryan on July 31, 2013, H.R. 2883 , the Defense Flexibility Act, would permit the Secretary of Defense to transfer funds into an account as necessary to meet \"urgent national priorities\" up to the amount sequestered in that account. The transfer language in the bill states:\n(b) Transfer Authority- In addition to any transfer authority otherwise available, and subject to subsections (c) and (d), of the amounts appropriated to the Department of Defense in any of fiscal years 2014 through 2021, the Secretary of Defense may transfer any appropriation subject in such a fiscal year to reduction under a sequestration order issued pursuant to section 254 of the Balanced Budget and Emergency Deficit Control Act of 1985 between such appropriations, to address an urgent national priority or the consequences of a national emergency resulting from such sequestration, as determined by the Secretary of Defense.\n(c) Limitation- The amount transferred to an appropriation under subsection (b) shall not exceed the amount by which such appropriation is reduced under the sequestration order referred to in such subsection.\nSome Members may raise concerns that this bill would undermine congressional prerogatives to set funding priorities because the amount of transfer authority could be substantially higher than current annual limits for DOD transfers: $4 billion for the base budget and $3.5 billion for OCO spending in FY2013.\nA second alternative, S. 465 , introduced by Senator Collins last March, would give all agencies flexibility to propose an alternative to the FY2013 sequestration that would meet the caps. The bill requires that this \"notice of implementation\" be submitted to their respective authorization and appropriation committees for approval before going into effect. Including such a requirement could be unconstitutional because it would constitute a legislative veto. If agencies voluntarily submitted such proposed changes, as occurs in current reprogramming and transfers, that would be permissible. S. 465 also would give DOD additional flexibility in multiyear contracts and changes in production rates if a CR limiting those changes is still in effect.", "In a July 10, 2013, letter to Senate Armed Services Committee Chairman Carl Levin and senior committee Republican James M. Inhofe, Defense Secretary Chuck Hagel predicted \"serious adverse effects\" on DOD if its FY2014 base budget were reduced by $52 billion from the amount requested to comply with the BCA cap on defense spending for that year.\nIn the letter—written in response to the two Senators' request—Secretary Hagel said his projections assumed that the entire $52 billion reduction would be applied to the $526.6 billion base budget request, with the $79.4 billion OCO request held harmless. The projection also assumed that DOD would be given a free hand to allocate the reduction, rather than applying the sequestration formula of program-by-program cuts. Even making those assumptions, Hagel asserted, \"the cuts are too steep and abrupt to be mitigated by flexibility, no matter how broadly defined.\"\nSecretary Hagel described the five-page document presenting the projected BCA impact as a \"high-level summary\" of an early version of DOD's approach to accommodating lower annual budgets than the Administration had projected. He said it was \"guided by\" inputs from the armed services and by preliminary results of a Strategic Choices and Management Review (SCMR)—a DOD-wide assessment Secretary Hagel had ordered to develop budget projections for FY2015-FY2019 that would try to adhere to the Administration's strategic goals at lower funding levels than those currently projected.\nFollowing are some of the negative consequences that Secretary Hagel predicted if DOD were required to cut the President's FY2014 DOD base budget request by $52 billion—nearly 10%:\nThe reduction in military personnel spending likely would be disproportionately small—that is, appreciably lower than 10%—because the savings in military pay that would result from involuntary separation of military personnel would be largely offset by the cost of severance payments for those with more than six years of service, according to DOD. To cut military personnel costs by 10% would require what Secretary Hagel described as \"an extremely severe package of ... actions\" including halting the intake of any new personnel, ending all transfers from one base to another, and freezing promotions. While DOD would minimize cuts to those operation and maintenance (O&M) costs most directly tied to training and combat readiness, it would impose civilian hiring freezes and reduce scheduled maintenance of facilities, as it had done in FY2013, and would have to consider laying off civilian employees, Secretary Hagel said. Because of the practical difficulties in applying a proportionate reduction to military personnel costs, accounts funding procurement, R&D, and military construction likely would take disproportionately large cuts, with individual projects subject to reductions of 15% or 20%, he said.", "On September 30, 2013, Deputy Defense Secretary Ashton B. Carter said that the department would begin operating in FY2014—starting October 1, 2013—as though its FY2014 budget were limited by the BCA cap and, thus, was more than $50 billion lower than the President's FY2014 request:\nLast year [FY2013], we didn't start the fiscal year executing as though we had sequester, because we were ready to do so, but we didn't want to start until we had to, because operating under sequester is harmful. It wasn't until January [2013], after the Christmas deal collapsed last year, that we began to execute—that is, to curb spending—in recognition of the fact that sequester was then ... likely to kick in.\nOnce again, this year, it's looking like we need to be ready to go. And so our plan is to begin the fiscal year executing at the [BCA] cap levels, because it's much easier to start that way and then ramp up your expenditure later in the year [if the caps are lifted] than it is to go the other way.\nMore recently, after passage of the FY2014 CR setting defense spending levels at the FY2013 level, or some $30 billion below the request but $20 billion above the BCA caps, DOD Comptroller Robert Hale announced that DOD would be spending at—or slightly below—the CR level.\nIn recent testimony to House and Senate committees, DOD witnesses have argued that there could be a variety of negative effects, particularly in terms of readiness and maintaining current planned procurement schedules, if BCA budget caps remained in effect. Witnesses have also raised concerns that a year-long CR, which pegs funding levels to FY2013 levels, would create problems because of year-to-year program changes.", "The FY2013 DOD sequester totaled $37.2 billion, including $32.0 billion cut from its base budget and $5.3 billion from OCO BA. The sequester tapped all available DOD BA except military personnel accounts. Available BA included not only new BA appropriated in FY2013 in the Consolidated and Continuing Appropriations Act of 2013 ( H.R. 933 / P.L. 113-46 ), but also prior year unobligated BA from previous years, reflecting the fact that BA in DOD's investment accounts (procurement, RDT&E, and military construction) can be obligated (or placed on contract) over several years.\nCompliance with budget caps is measured by budget authority (BA) or funding amounts as scored by CBO. Scoring includes all cuts— both reductions to new FY2013 BA and rescissions which cancel unobligated BA from prior years—because it reflects when legislative action is taken. As scored, DOD's FY2013 base funding totaled $495.2 billion after all sequester cuts.\nRescission of prior year unobligated balances, however, cancels BA that was provided for programs in earlier years. Such reductions do not reduce resources available for current fiscal year programs or activities. The total DOD FY2013 sequester to its base budget was $32.0 billion including $26.2 billion in new BA cuts and $5.8 billion in rescissions of prior year unobligated balances. So while DOD's FY2013 post-sequester base budget funding is scored as $495.2 billion (including the full $32.0 billion reduction by sequester), funding available to carry out FY2013 programs and activities totaled $501 billion (excluding the $5.8 billion rescission) (see Table 5 ).\nIf DOD complies with the current FY2014 BCA caps, annual funding would decrease by an additional $20 billion or about 4% from the FY2013 post-sequester level. BCA caps for defense reach their lowest point for the decade in FY2014, increasing by roughly $10 billion annually from FY2015 to FY2021, not quite sufficient to cover expected inflation.\nSome observers would argue that the FY2013 sequester created harmful effects on readiness and investment accounts and that additional spending is necessary to offset those effects. Others might argue that providing for a one-year annual increase in FY2014 would undermine efforts currently underway in the Department of Defense to determine the best way to accomodate lower spending levels evident in the Strategic Choices and Management Review undertaken by Secretary Hagel this summer.", "The Obama Administration's FY2014 budget request, submitted to Congress on April 10, 2013, includes $641.12 billion for National Defense programs (budget function 050), including military operations of the Department of Defense, defense-related nuclear energy programs conducted by the Department of Energy, and other defense-related activities. Of that total, $625.15 billion is requested for programs falling within the scope of the annual National Defense Authorization Act, with the remainder either permanently authorized or falling outside the jurisdiction of the House and Senate Armed Services Committees. (See Table 3 .)\nThe Administration's budget includes $607.36 billion for discretionary DOD budget authority, including $526.64 billion for \"base\" defense budget costs (day-to-day operations other than war costs), and $80.72 billion for OCO—largely in Afghanistan. The Administration's initial FY2014 budget presentation included \"placeholder\" totals for OCO funding. The actual OCO request for that year was submitted to Congress as an addendum in May 2013.\nIncluded in the DOD discretionary budget is $6.68 billion for the annual accrual payment to the fund that underwrites payments from the so-called \"TRICARE for Life\" program to Medicare-eligible military retirees. TRICARE is DOD's medical insurance program.\nAlso included in the $632.74 billion National Defense discretionary total is $17.96 billion for defense-related programs of the Energy Department. This includes funds for renovation of the existing nuclear weapons stockpile, environmental cleanup of past nuclear weapons work, and work related to the development and construction of nuclear powerplants for warships.\nThe remaining $7.41 billion of discretionary funding for National Defense is requested for defense-related activities in other agencies, the largest share of which ($4.80 billion) is for FBI activity, including counterintelligence operations.\nThe Administration's overall National Defense budget for FY2014 also includes $8.40 billion in mandatory spending. The lion's share of this amount—$7.13 billion—is the annual payment into the military retirement fund to cover payments to retirees who have become eligible for additional benefits in recent years as a result of legislation that has narrowed limitations on \"concurrent receipt\" of both military retired pay and disability annuity from the Department of Veterans Affairs.\nWhen President Obama submitted his FY2011 budget request in February 2010, he had projected requesting for DOD's base budget a total of $6.26 trillion in discretionary budget authority over the 10-year period FY2011-FY2020. The Administration reduced its DOD funding projections in each of the three succeeding budgets. (See Figure 1 and Table 4 .)\nThe 10-year plan accompanying DOD's FY2012 budget request incorporated $178 billion of \"efficiencies\" that were to be realized in the first five years of that period. Enactment of the Budget Control Act in 2011, however, created a new frame of reference that has shaped much of the subsequent debate over DOD budgets, with the FY2012 request serving as a baseline against which subsequent reductions have been measured.\nFor the 10-year period from FY2012 to FY2021, the caps set by the BCA would require a reduction in DOD discretionary spending of $977 billion (15.9%) from the total that was projected by the FY2012 DOD 10-year plan (assuming that DOD accounts for the same percentage of the National Defense Budget Function in each year as in the Administration's projected budgets). Under the FY2013 DOD budget plan, funding for the FY2012-FY2021 decade would total $5.65 trillion, a reduction of $487 billion (or 7.9%) compared with the FY2012 plan. Under DOD's FY2014 budget plan, projected spending for that decade would decline by an additional $90 billion, bringing the cumulative total reduction (compared with the FY2012 plan) to $577 billion (or 9.4%).\nTo realize the total reduction in DOD spending for FY2012-FY2021 required by the BCA caps, an additional reduction of $400 billion would be required.\nBased on DOD's sorting of its spending between the base budget and OCO, the base budget—measured in current dollars (i.e., not adjusting for the cost of inflation)—increased at a relatively steady rate between the late 1990s and 2010. After reaching a high point in 2010, the base budget declined in FY2012 and FY2013 because of BCA budget limits. Unless the BCA cap for FY2014 is modified, it would require a further reduction of National Defense spending from the amount requested by the Administration, with DOD's share of the reduced amount estimated to reach $475 billion. From FY2015 through FY2020, the BCA, the President's FY2014 budget projection, and the FY2014 budget resolutions passed by the House and Senate all project a steady increase in DOD funding.\nAllowing for the cost of inflation as estimated by OMB, the Administration's projection of discretionary DOD budget authority thru FY2021 would provide a higher level of \"real\" purchasing power than the department's average annual budget (in FY2014 dollars) for the period since the end of the Vietnam War (FY1976-FY2012). In turn, the average DOD budget for that 36-year period—which included the last 15 years of the Cold War—is higher in real terms than was the department's average budget since the 1991 war with Iraq (FY1992-FY2012). (See Figure 3 )", "According to DOD officials, the Administration's $526.6 billion request for discretionary spending in DOD's FY2014 base budget is intended both to sustain current U.S. strategy and continue down-sizing the Army and Marine Corps as one element of that strategy. It incorporates a range of cost-reduction initiatives and various efforts to restrain the growth of personnel costs. However, the budget request would create relatively few major perturbations of planned weapons acquisition programs. (See Table 5 )\nAt the request of Senate Armed Services Committee Chairman Carl Levin and Senator James M. Inhofe, the committee's ranking minority Member, DOD agreed to present a plan for cutting $52 billion (about 10%) from the FY2014 base budget request, to meet the legally binding BCA spending cap. In addition, Secretary Hagel launched in April a DOD-wide Strategic Choices and Management Review (SCMR) intended to develop three alternative DOD budget plans for FY2015-FY2019: one based on the Administration's current budget projection, a second based on annual funding levels that were 5% lower, and a third based on annual funding levels lower by 10%.", "In January 2012, the Obama Administration issued a new Strategic Guidance document to inform DOD planning and budgeting. Among the premises drawn from that document to underpin the Administration's FY2014 base budget request are the following:\nDOD will maintain a large enough force to win a major conventional war in one region while, concurrently, being able to inflict enough damage on an aggressor in a second region to deter a second attack. DOD will not maintain an active-duty force large enough to conduct large-scale stability operations on a prolonged basis such as recent operations in Iraq and Afghanistan. Those campaigns required a large enough force so that upwards of 100,000 troops at a time could be periodically deployed and then rotated back home for rest and retraining. In a departure from the practice in recent years of having forces concentrate on training for the types of missions being carried out in Iraq and Afghanistan, forces will train for operating across the spectrum of conflict, from major conventional wars to peacekeeping and stability operations. DOD will try to improve its ability to help other countries bolster their own security forces to partner more effectively with U.S. forces in missions of mutual interest. DOD will \"rebalance\" its global posture to emphasize operations in the Asia-Pacific region and the Middle East.", "The Administration's FY2014 budget would continue the ongoing reduction in number of active-component Army and Marine Corps personnel to a planned total of 672,100 personnel by the end of FY2017. At that point, the combined, active-duty end-strength of those two services would exceed by more than 18,000 troops their combined end-strength at the end of FY2001, before the services' post-9/11 expansion. In effect, the plan would remove the 92,000 personnel that were added to the two ground combat-oriented services in 2007. (See Table 6 )\nAs DOD had done in its FY2013 budget request, it proposed to fund in the FY2014 base budget only the \"enduring end-strength\" of the two services—that is, the number of personnel they would have after the drawdown is complete in 2017: 490,000 for the Army and 182,000 for the Marine Corps. On grounds that the additional Army and Marine personnel were a legacy of the expansion of those services to deal with wars in Iraq and Afghanistan—an expansion now being largely reversed—the remaining personnel would be funded out of appropriations to cover war costs (OCO).", "The budget request would provide a 1% raise in military basic pay, which typically accounts for between two-thirds and three-quarters of active-duty services members' cash compensation (the balance of which typically consists of allowances for housing and living costs and various special pays and bonuses intended to attract and retain personnel with certain skills). DOD estimates that this 1% raise would save $540 million in FY2014 (and nearly $3.5 billion through FY2018) compared with the 1.8% increase in basic pay that would occur, automatically, under the terms of 37 U.S.C. 1009, which provides that military basic pay will increase by the same annual percentage as pay in the private sector as measured by the Labor Department in the Employment Cost Index (ECI).\nCongress can, by law, establish a different pay raise than the ECI and the President asserts that he has authority under subsection (e) of 37 U.S.C. 1009 to set an alternative pay adjustment. On August 30, 2013, the President sent a letter to Congress stating, \"I have determined it is appropriate to exercise my authority under 1009(e) of Title 37, United States Code, to set the 2014 monthly basic pay increase at 1.0 percent.\"\nWhen the Obama Administration presented its FY2013 budget request in February 2012, it had announced plans to increase military basic pay at the ECI rate for FY2014 and to begin proposing pay increases below the ECI rate in FY2015.", "As it had done in its FY2013 budget request, the Administration included in its FY2014 DOD budget the creation of some new fees and increases in others for beneficiaries of TRICARE, DOD's medical insurance program. TRICARE covers more than 9.6 million active duty and retired servicemembers as well as their dependents and survivors.\nDOD justifies the proposed increases on the argument that, while the costs to beneficiaries remained largely unchanged between 1996 and 2012, DOD's medical costs grew from $19 billion in FY2001 to a projected $49 billion in FY2014. Congress had rejected most of the fee increases proposed for FY2013, but approved a proposed increase in pharmacy copayments.\nThe TRICARE fee increases proposed for FY2014 would not affect servicemembers currently on active duty except that their dependents would be liable for increased pharmacy copayments. Most of the other proposed fee increases would apply to military retirees under the age of 65, although a proposal to create a new TRICARE for Life enrollment fee was included in the Administration's request for the first time.", "According to DOD, the FY2014 base budget request incorporates some two dozen \"efficiency\" initiatives that would reduce spending by a total of $17.03 billion over the period FY2014-FY2018. Five of those proposals account for about 80% of the projected five-year savings, namely:\n$8.90 billion—more than a quarter of the total reduction—would come from reduced estimates of the cost of DOD's TRICARE medical insurance program, with the cuts based partly on a decline in the rate of medical care cost growth and partly on an Administration plan to reorganize some DOD facilities (FY2014 savings of $1.37 billion); $2.77 billion would be cut from projected payrolls for DOD civilians, partly on the assumption that annual pay raises will be lower than previously projected and partly on the assumption that Congress will approve the closure of some bases and medical facilities (FY2014 savings of $356 million); $1.20 billion would be saved by reducing enlistment bonuses and the budget for recruitment advertising, capitalizing on the improved recruiting environment created by a weak domestic economy (FY2014 savings of $213 million); $625 million would be saved as a result of scaling down Army deployments in the Balkans (FY2014 savings of $106 million); $447 million would be saved by reducing the Navy's projected operation and maintenance budgets on grounds that the service routinely has requested more funding in those accounts than it has spent in recent years (FY2014 savings of $87 million).", "The FY2014 request incorporates reductions in planned acquisition spending for some five dozen weapons programs by a total of $15.62 billion over the period FY2014-FY2018. Some of the reduction would result from the cancellation of some programs and reductions in the number of items that would be purchased, or the rate at which they would be purchased. Still other savings are projected to result from wider use of multi-year procurement contracts.\nMost of the proposed changes would yield savings of less than $150 million each over the five-year period, but 10 of the changes—each projected to save more than $500 million—account for nearly 60% of the projected five-year savings, namely:\n$2.06 billion would come from dropping plans to develop a \"Block IIB\" version of the SM-3 anti-ballistic missile interceptor (FY2014 savings of $216 million); $1.72 billion would come from cancellation of the Precision Tracking Space System, a satellite network intended to provide targeting data on incoming ballistic missiles (FY2014 savings of $270 million); $1.35 billion would be saved by deferring until FY2019 the construction of a new \"IIIB\" version of the Apache attack helicopter (upgrading existing Apaches to that standard, in the meantime) (FY2014 savings of $475 million); $1.09 billion would come from using Atlas rockets for some planned satellite launches instead of more expensive Delta rockets (FY2014 savings of $106 million); $684 million would be saved in the near term by slowing procurement of the Navy's SM-6 anti-cruise missile interceptor until more ships are equipped with a new version of the Aegis weapons control system that is needed to fully exploit the capabilities of the SM-6 (FY2014 savings of $58 million); $683 million would come from a reduction in the overhead cost budgeted for the carrier-launched version of the F-35 Joint Strike Fighter (FY2014 savings of $8 million); $598 million would come from reducing the number of the Navy's F/A-18 fighters that would be rebuilt to like-new condition (FY2014 savings of $48 million); $593 million would be saved by reducing the Marine Corps ammunition inventory consistent with the retirement of one of three flotillas of pre-positioned supply ships carrying supplies and equipment for Marine combat units (FY2014 savings of $229 million); $528 million would come from savings as a result of buying DDG-51-class destroyers on a multi-year contract (FY2014 savings of $67 million); and $526 million would come from savings as a result of buying C-130J cargo planes on a multi-year contract (FY2014 savings of $83 million).", "Over the FY2014-FY2018 period, DOD projects a total reduction in military construction budgets of $4.13 billion compared with previous projections. Some of those cutbacks are slated to result from the closure of some bases and medical facilities as a result of a Base Realignment and Closure Commission (BRAC), which Congress is asked to authorize. Congress rejected a BRAC proposal included in the FY2013 budget request.", "The Administration's $79.44 billion request for war costs (OCO) represents a reduction of about 3% from the amount appropriated by Congress for war costs in FY2013 (after sequestration). (See Table 7 .)\nAlthough the OCO funding request for FY2014 would drop by 3% compared with the pre-sequester FY2013 appropriation, the number of U.S. personnel deployed in Afghanistan would decline by 39% and the total number of personnel supported by the OCO budget (including forces outside Afghanistan that support operations in that country, in the Philippines and in the Horn of Africa) would drop by about 20%. (See Figure 4 )\nAccording to DOD's functional breakdown of the FY2014 OCO budget (see Table 8 ), three components that, in sum, account for more than 80% of the total request would decline by less than 10% compared with the pre-sequester FY2013 appropriation:\n$25.7 billion for U.S. force operations (including force protection); $21.8 billion for activities outside Afghanistan to support operations inside that country; and $8.9 billion to purchase equipment to replace war losses (including 4 Apache attack helicopters and 11 Chinook transport helicopters), replenish ammunition supplies, and refurbish equipment worn out by use in Afghanistan and Iraq.\nAccording to DOD, those costs are declining at a slower rate than U.S. troop levels in Afghanistan because of expenses associated with closing bases in that country and returning thousands of cargo containers, vehicles, and other pieces of equipment to the United States and refurbishing the equipment as necessary.\nAfghanistan's Army, projected to number 195,000 at the end of FY2013, and its National Police, projected to number 157,000 at the end of FY2013, are expected to remain at those levels through FY2014. The OCO budget request would increase U.S. support for those forces by 50% (to $7.7 billion) over the pre-sequester FY2013 appropriation. According to DOD, the increase is associated with the Afghan forces' assumption of responsibility for security as well as continued efforts to improve their operational capabilities.", "The Administration's FY2014 OCO budget request would require $80.7 billion in budget authority. However, the Administration proposes to reduce the budgetary impact of the request by covering part of the costs by rescinding or cancelling $1.3 billion appropriated for FY2013 to retain in service Navy ships and Air Force cargo planes that the Administration's FY2013 budget request would have retired.\nThus, the FY2014 request proposes to reverse Congress's decision to reject the Administration's FY2013 proposals to retire seven Aegis cruisers and two amphibious transport ships and to mothball the fleet of C-27 cargo planes. To fund its FY2014 OCO budget, it would use:\n$486 million that Congress had added to the FY2013 DOD appropriation to keep in service the ships the Administration wanted to retire; $749 million that Congress had added to the FY2013 bill to continue purchasing and operating C-27s; and $44 million that had been appropriated for unspecified R&D program in FY2004.", "H.R. 3304 , the version of the FY2014 National Defense Authorization Act signed into law by President Obama on December 31, 2013,—like Administration's budget request and earlier versions of the NDAA passed by the House ( H.R. 1960 ) and reported by the Senate Armed Services Committee ( S. 1197 )—exceeded by more than $30 billion the cap on national defense spending in FY2014 that was established by the FY2014 Continuing Appropriations Resolution ( H.J.Res. 59 ), which the President also signed into law on December 26, 2013.\nFor DOD's FY2014 base budget, the totals authorized by the final version of the bill ( H.R. 3004 ), the version passed by the House on June 14, 2013, ( H.R. 1960 ), and the version reported by the Senate Armed Services Committee on June 20, 2013, ( S. 1197 ), all come within $228 million of the $526.57 billion requested by the President. (See Table 9 )\nFor OCO funding (or \"war costs\"), H.R. 3304 , like the Senate committee versions of the bill ( S. 1197 ), makes few changes to the Administration's $80.72 billion request. The House-passed bill, on the other hand, would have authorized $5.04 billion more than was requested , including the following increases:\n$1.68 billion for depot maintenance; $1.50 billion to \"reset\" (i.e., rehabilitate, reequip, and retrain) Army units after their deployment in Afghanistan; $535.9 million for higher than budgeted fuel costs; $340.9 million to replace FY2013 OCO funds that were reprogrammed to other OCO uses; and $400.0 million for equipment for National Guard and reserve component units.\nThe enacted version of the bill, authorizing $2.0 million less than the OCO request, dropped about two-thirds of the House-passed increases authorizing an additional $1.10 billion for Army reset, $400.0 for National Guard and reserve equipment; and $130.0 million for depot maintenance.\nBecause neither H.R. 1960 nor S. 1197 had been passed by both chambers, there was no basis for convening a House-Senate conference to reconcile the House-passed and Senate committee-reported versions of the FY2014 NDAA. In lieu of a formal conference report, members of the House and Senate Armed Services Committees, meeting informally, negotiated a compromise version of the bill. To expedite Senate action on that final version of the bill, the negotiated text was passed by the House and Senate as an amendment to a bill ( H.R. 3304 ) that already had been passed by each chamber, but on the specific language of which the House and Senate had not yet come to agreement.\nOn December 12, 2013, the House voted 350-69 to adopt the negotiated NDAA text as an amendment to H.R. 3304 and to pass the amended bill. On December 19, 2013, the Senate concurred in the House action—in effect, passing the negotiated NDAA text—by a vote of 84-15.", "Like the defense authorization act for FY2013 ( H.R. 4310 , P.L. 112-239 ), the final version of the FY2014 NDAA—like the versions of the FY2014 bill that earlier had been passed by the House and reported by the Senate committee—makes relatively few individual additions to the authorization levels proposed by the Administration for specific procurement and R&D programs, compared with the annual defense authorization bills enacted in the first decade of this century. That difference reflects the stringent bars against \"earmarks\" currently observed in both the House and the Senate.", "H.R. 3304 bars an Administration proposal to retire several Navy ships ahead of schedule and to increase some TRICARE fees. Congress had rejected these proposals in the FY2013 budget and that also had been rejected in the House-passed and Senate committee versions of the FY2014 authorization bill.\nThe final FY2014 bill also blocked an Air Force plan to retire its fleet of A-10 ground attack planes as part of its plan to accommodate the anticipated reduction in its FY2014 budget request. The proposal surfaced after the full House and the Senate Armed Services Committee had acted on their respective versions of the bill.\nOn the other hand, the final NDAA—and the two earlier versions—supported several of the Administration's other cost-cutting proposals. Following are actions incorporated in various versions of the FY2014 NDAA related to selected Administration savings. (See Table 10 )", "Both versions of the NDAA would authorize more than was requested for several large O&M accounts in which the Administration's budget assumed costs would be reduced by \"efficiencies.\" The Senate committee-reported S. 1197 would add $1.8 billion to these accounts, while the House-passed H.R. 1960 would add $5.6 billion, of which $4.6 billion was added to the authorization for OCO funding.\nFollowing are actions selected increases to the Administration's DOD budget request that would be authorized by various versions of the FY2014 NDAA. (See Table 11 )", "The final version of the bill, like the versions passed by the House and reported by the Senate committee, incorporate Administration proposals to reduce the statutory ceilings on the number of military personnel at the end of FY2014. That new ceiling on active component personnel is be 1.36 million, a reduction of just over 40,000 from the FY2013 ceiling on \"end-strength\" while the new personnel ceiling for the National Guard and other reserve components is 833,700, a reduction of just over 8,000.\nIn the explanatory statement accompanying H.R. 3304, House and Senate negotiators noted that, because of budgetary constraints, the Army and Marine Corps have accelerated their planned reduction in active-duty personnel and now hope to reduce active component ends-strength by an additional 38,100 troops by FY2015, instead of FY2017. The negotiators supported that plan, but commented:\nWe remain concerned that unfettered reductions in end-strength will have a detrimental impact on force structure and, ultimately, operational mission capability and capacity among the services, and harm the morale of the force,", "The Senate committee's bill included a provision (Section 601) that would have authorized for FY2014 the 1% raise in military basic pay called for by the budget request. On the other hand, the House Armed Services Committee called for a 1.8% military pay raise, as would happen automatically under existing law, which ties the annual raise in military basic pay to the Labor Department's Employment Cost Index (ECI). DOD estimated that the higher raise would increase FY2014 military personnel costs by $540 million.\nH.R. 3304 included no provision setting the FY2014 military pay raise. However, the President asserts that the law that ties pay raises to the ECI also includes a provision giving him authority to specify an alternative pay raise, and he has done so by setting the FY2014 pay raise at 1.0%. In the explanatory statement accompanying the bill, House and Senate negotiators acknowledged the President's action.", "In response to several high-profile cases involving sexual assaults within the Armed Forces, the House-passed and Senate committee-approved versions of the FY2014 NDAA each included several provisions that would address the issue. Some of these provisions would change the provisions of the Uniform Code of Military Justice (UCMJ) pertaining to sexual assault while others would change the rules governing (1) the disposition of sexual assault allegations within the military and (2) the conduct of courts-martial.\nCorresponding provisions of the House and Senate bills differ in some respects, particularly in the types of alleged crimes to which they would apply. H.R. 3304 included compromise versions of most of those provisions. Following are selected aspects of the sexual assault issue that are addressed in the legislation ( Table 12 ).", "As passed by the House, H.R. 1960 included a provision (Section 529) providing that, if a military chaplain were called upon to lead a prayer in some context other than a religious service, he or she would have the right to close the prayer \"according to the traditions, expressions and religious exercises\" of the chaplain's faith tradition. During debate on the bill, the House rejected an amendment that would have authorized the appointment of military chaplains who are endorsed by recognized nontheistic or nonreligious organizations.\nInstead of that House provision, H.R. 3304 includes a provision (Section 534) requiring DOD to conduct a survey of military chaplains to ascertain whether restrictions on their role outside a religious service have prevented them from conforming to the tenets of their faith or interfered with their ability to minister to DOD personnel and their families.\nAnother provision of the House-passed bill (Section 530E) would have required \"advance written notice of any meeting to be held between Department employees and civilians for the purpose of writing, revising, issuing, implementing, enforcing, or seeking advice, input, or counsel regarding military policy related to religious liberty.\" The final version of the bill contained no such provision however, in their explanatory statement, House and Senate negotiators urged DOD and the military services to consult with all faith groups when formulating or change policies that would affect religious freedom or tolerance. They added:\nWe are becoming increasingly concerned over reports that the Department and the services appear more responsive to some religious groups and interests than others.", "Like the House and Senate versions of the NDAA, H.R. 3304 also included a provision (Section 532) amending a provision of law enacted as part of the FY2013 NDAA ( P.L. 112-239 ). Section 533 of the FY2013 act requires the armed forces to \"accommodate the beliefs of a member of the armed forces reflecting the conscience, moral principles, or religious beliefs and, insofar as practicable ... not use such beliefs as the basis of any adverse personnel action....\" The immediately following provision of the act provides that nothing in the preceding provision precludes disciplinary or administrative action for conduct \"that threatens good order and discipline.\"\nIn the enacted version of the FY2014 NDAA, Section 532 amends the existing law to provide that, \"unless it could have an adverse impact on military readiness, unit cohesion, and good order and discipline, the Armed Forces shall accommodate individual expressions of belief,\" and that such \"expression of belief\" shall not be used as the basis for any adverse personnel action.\"", "Like the House and Senate versions of the FY2014 NDAA, H.R. 3304 does not authorize the Administration's proposals to:\nRaise the premiums paid by military retirees to participate in TRICARE, DOD's private-sector health insurance program for active-duty and retired services members, their dependents, and their survivors; Index increases in TRICARE's \"catastrophic cap\"—the maximum annual amount a beneficiary should have to pay—to the National Health Expenditure index, which is a federal government barometer of changes in health care costs; and Introduce enrollment fees for certain TRICARE programs, including TRICARE for Life, the program that covers Medicare-eligible military retirees.\nLike the Senate committee bill, H.R. 3304 would add $218 million to the requested TRICARE authorization for FY2014, which would restore funds the budget request assumed would not be needed because of the proposed fees. The House-passed bill would have added $164 million for this purpose.\nDOD has announced its intention to cut off coverage for TRICARE Prime—a TRICARE option that is similar to an HMO—in certain areas of the United States. The House bill (Section 711) would allow TRICARE beneficiaries who are eligible for TRICARE Prime to enroll in the program, even if they live in those areas in which DOD has barred new TRICARE beneficiaries from enrolling in it. Instead, H.R. 3304 would allow current TRICARE Prime participants to remain in the program, even if they reside in areas in which no new enrollees will be allowed.", "In February 2013, then-Secretary of Defense Leon Panetta rescinded DOD's so-called \"combat exclusion rule,\" which barred the assignment of female military personnel to ground combat units. Panetta also directed the services to open all military assignments to women by January 1, 2016, unless by then they had requested specific exceptions which, in turn, would be subject to approval by the Secretary of Defense and the Chairman of the Joint Chiefs of Staff.\nThe House-passed FY2014 NDAA, H.R. 1960 , includes Section 530D expressing the sense of Congress that by September 2015, the secretaries of the Army, Navy and Air Force \"should develop, review, and validate individual occupational standards, using validated gender-neutral occupational standards, so as to assess and assign members of the Armed Forces to units, including Special Operations Forces.\" In final version of the bill, H.R. 3304 , Section 524 contained the House-passed provision with a technical amendment.\nIn its report on S. 1197 , the Senate Armed Services Committee praised DOD for \"moving toward an assignment system that is gender-neutral and performance-based.\" Moreover, the committee encouraged DOD \"to work toward full integration of women in all military occupations to the maximum extent practicable, consistent with military capabilities required for our nation's defense.\" However, the committee also expressed concern \"that women may not always be afforded the opportunity to serve a full career.\" It directed DOD to submit a report examining:\nretention rates and career progression opportunities for female servicemembers; \"causes of voluntary mid-career separation, especially those related to childbirth\"; and personnel management options that might better accommodate servicemembers' personal and family goals, including the use of temporary assignments to the reserve components.", "Like the House and Senate versions of the bill, H.R. 3304 included a provision triggered by instances in which reserve component units that had been mobilized for deployment overseas had their deployments cancelled on relatively short notice, in some cases causing significant cost and inconvenience to members of the affected units.\nIn the House bill, Section 511 would require the secretaries of the military departments to provide at least 120 days' notice to reserve units or individual reserve component members if they are to be mobilized for deployment in connection with a contingency operation or if, after such notification has been given, the deployment is cancelled or otherwise altered. If such notification is not given, a report would have to be submitted to the House and Senate Armed Services Committees explaining the reasons and providing the names of the affected units or individuals.\nIn the bill reported by the Senate Armed Services Committee, Section 508 would require the Secretary of Defense to personally approve any decision to cancel a planned reserve unit deployment within 180 days of the unit's scheduled deployment if an active duty unit is to be deployed, instead, to perform the same mission. In those cases, the provision also would require notification of the House and Senate Armed Services and Appropriations Committees and the governors of the affected states.\nIn the final version of the bill, Section 513 incorporated the Senate committee provision plus an additional requirement of 120 days prior notice to any reserve component member who is mobilized as an individual (rather than as a member of a unit).", "Congressional action on authorization of funding for selected ground force equipment is summarized in Appendix Table A- 3 . Following are highlights:", "The House bill would increase by $274 million the total authorized for procurement of tanks and other armored combat vehicles. In its report on H.R. 1960 , the House Armed Services Committee said the budget request for armored vehicles was too anemic to sustain the specialized network of suppliers and assembly plants needed to build such equipment.\nWhile a number of armored vehicle programs currently are underway, DOD projects a surge in demand for production capacity in about 2019, when new programs are slated for funding. Until then, the Administration maintains, foreign sales combined with projected DOD purchases will keep the production lines warm. The House committee said reliance on foreign sales to keep the industrial base intact was too risky, and that the additional vehicles for which it would provide authorization could replace older equipment in some units.\nAs passed by the House, H.R. 1960 would add to the budget request authorization a total of $274 million for various armored vehicle programs including $168 million to upgrade M-1 tanks with improved digital communications, night-vision equipment, armor, and transmissions. DOD has not budgeted for this program since FY2012, but Congress funded it in FY2013 in the absence of an Administration request. The House bill also would authorize:\n$186.0 million, $75.0 million more than the $116.0 million requested, for so-called armored recovery vehicles, designed to tow disabled 70-ton tanks off the battlefield; and $94.0 million, $31.0 million more than the $63.0 million requested, to buy assault breacher vehicles, which are M-1 tank chassis equipped with a bulldozer blade and other gear for clearing a path through a minefield.\nThe Senate bill would add no funds to the amounts requested for procurement or major modification of armored combat vehicles.\nThe final bill would add to the request a total of $165 million: $90 million for M-1 upgrades and $75 million for armored recovery vehicles.", "H.R. 1960 and S. 1197 each would authorize the amounts requested to develop four new types of battlefield vehicles for use by the Army and Marine Corps:\n$592.2 million for the Army's Ground Combat Vehicle (GCV) intended to replace some Bradley troop carriers; $116.3 million for the Armored Multi-Purpose Vehicle intended to replace the thousands of Vietnam War-era M-113 tracked vehicles still in use for various Army utility tasks; $137.0 million for the Marines' Amphibious Combat Vehicle, intended to replace the 1970s-designed AAV-7 amphibious troop carrier; and $134.6 million for the Joint Light Tactical Vehicle (JLTV), slated to replace the ubiquitous HMMWV (Humm-Vee).\nSince the Marine Corps has deferred plans to field a simpler armored troop carrier, not designed for amphibious landings, both bills would drop the requested $20.9 million authorization for this program, designated the Marine Personnel Carrier (MPC).\nH.R. 3304 , the final version of the NDAA, authorizes the same amounts for each of those programs except for the Marines' Amphibious Combat Vehicle, for which it would authorize $123 million, a reduction of $14 million, because of delays in the program. The bill also includes a provision (Section 211) requiring the Secretary of the Army to certify the affordability and technical feasibility of the planned new Ground Combat Vehicle and requiring DOD officials—acting independently of the Army—to assess the Army's plan to fund development of the new system using a single contractor (rather than two competing firms).", "In their reports on H.R. 1960 and S. 1197 , respectively, the House and Senate Armed Services Committees each expressed concern that, because of budgetary limits, DOD might not be able to fund the Navy's long-term shipbuilding plan. Each committee highlighted in particular the challenge of replacing the current fleet of Trident missile-launching submarines even within the DOD budgets through FY2021 that were projected by the Obama Administration, let alone within the tighter budgets that might result from the current budget battles. In a House Armed Services Seapower Subcommittee hearing on September 12, 2013, Rear Admiral Richard P. Breckenridge, director of the Navy's Undersea Warfare Division, said that, on top of currently projected shipbuilding budgets, the Navy would need an additional $60 billion over 15 years to replace the missile subs.\nIn its report on H.R. 1960 , the House Armed Services Committee noted that the most recent version of DOD's annual 30-year shipbuilding plan, sent to Congress in April 2013, assumed that during the middle decade of that period (namely, 2024-2033) annual shipbuilding budgets would average nearly $20 billion in constant dollars. The committee directed DOD to submit a 30-year plan that assumed annual shipbuilding budgets of $16 billion (in constant dollars), which the Congressional Budget Office (CBO) says was the average annual shipbuilding budget over the past 30 years.\nCongressional action on authorization of funding for selected naval systems is summarized in Appendix Table A-5 . Following are highlights:", "The House and Senate versions of the NDAA each would authorize a total of $3.48 billion, as requested, to sustain a fleet of 11 nuclear-powered aircraft carriers by the end of this decade. Slightly less than half that total ($1.53 billion) would provide partial funding for two ships currently under construction:\n$944.9 million for the John F. Kennedy (CVN 79), authorized in FY2013 and currently slated for completion in FY2022 at an estimated total cost of $11.33 billion; and $588.1 million for the Gerald R. Ford (CVN 78), authorized in FY2008 and currently slated for completion in FY2015 at an estimated total cost of $12.8 billion.\nThe balance of the carrier-related funding ($1.96 billion) would partially fund major overhauls for two existing ships, about halfway through their projected 50-year service lives. This would entail refueling their nuclear reactors and upgrading key electronic and weapons systems, for which the House and Senate bills would authorize, as requested:\n$1.71 billion for work on the Abraham Lincoln (CVN 72), slated for completion in FY2016 at a total cost of $4.57 billion; and $245.8 million from preliminary work on the George Washington (CVN 73), on which work is scheduled to begin in FY2016.\nBoth bills also would increase the legislative cap on spending for the Ford (CVN 78), raising it from $11.76 billion to $12.90 billion.\nIn the final version of the bill, the only change made to the carrier funding request was a reduction of $22.1 million to the $1.96 billion requested for two refueling overhauls on grounds that those expenses had been covered by previously appropriated funds.", "The House-passed H.R. 1960 and Senate Armed Services Committee-reported S. 1197 each would authorize, as requested, a total of $6.42 million to continue construction of Virginia-class submarines, to design and develop a new ballistic-missile sub to replace the Ohio-class ships currently in service, and to design an enlarged version of the Virginia-class that would greatly increase the ship's payload of Tomahawk land-attack missiles. The House-passed H.R. 1960 would increase the total submarine-related authorization by $492 million to compensate for the amount that the sequestration process cut from the FY2013 appropriation for Virginia-class subs.\nAbout three-quarters of the total amount requested ($5.28 billion) would fund continued construction of the Virginia-class subs, including:\n$2.93 billion to fully fund one sub and to provide about two-thirds of the cost of a second, for which the remaining $953 million will be requested in the FY2015 budget. The House bill added $492 million—the amount of the FY2013 sequester—to this request. $2.35 billion for long lead-time components that would be used in two additional subs for which the bulk of the funding will be included in the FY2015 budget.\nThe remainder of the sub-related funding, endorsed by both bills, is for R&D programs:\n$1.08 billion to continue developing a next-generation ballistic missile sub ($787.6 million) and the associated nuclear powerplant ($296.1 million); and $59.1 million to continue developing the Virginia Payload Module—an extension of the sub's hull by nearly 100 feet to accommodate four large vertical launch tubes, each of which could accommodate seven Tomahawk missiles.\nThe final version of the bill mirrored the House-passed version, adding $492 million to the authorization for new construction, to offset the loss of the same amount from the FY2013 budget as a result of sequestration.", "H.R. 3304 , like the versions of the FY2014 NDAA passed by the House and reported by the Senate committee, would support the budget request for construction of new Navy destroyers. But it also would add to the amounts requested funds that would roughly offset the funds removed by sequester from the destroyer programs in FY2013:\nFor two DDG-51-class ships, the budget requested $1.62 billion; the Senate bill would have increased the authorization by $100 million, while the House bill and the final version added $332 million (which is nearly the amount cut from this program in FY2013 by sequestration); To complete construction of three DDG 1000-class destroyers, authorized in FY2007-FY2009, the Senate bill would have authorized $231.7 million, as requested, while the House bill and H.R. 3304 added $79.3 million, slightly more than was sequestered from the program in FY2013.\nThe DDG-1000 class had been intended to succeed the DDG-51 class, the first of which was commissioned in 1991. But in 2008, DOD announced that only three ships of the new type would be built, while the Navy would resume procurement of DDG-51-class ships, transitioning to procurement of an enlarged, so-called \"Flight III\" version of that design to be equipped with a larger radar, designated the Air and Missile Defense Radar (AMDR), intended to improve the ships' missile defense capability.\nSection 1025 of the final version of the bill, a modified version of a provision in the House-passed bill, requires the Navy to compare the costs and risks of resuming procurement of DDG-1000 type ships rather than the planned Flight III version of the DDG-51 design.\nH.R. 3304 , like the House-passed and Senate committee versions of the NDAA, authorizes $240.1 million, as requested, to continue developing the new AMDR radar, However, in its report on H.R. 1960 , the House Armed Services Committee directed the Secretary of the Navy to submit a report on whether a larger version of AMDR mounted on a larger ship than a destroyer would perform the missile defense mission more effectively than the smaller version that is slated to be installed on DDG-51s.", "The final version of the bill, like H.R. 1960 and S. 1197 , authorizes $1.78 billion, as requested, for procurement of four Littoral Combat Ships (LCSs), which are fast, relatively small ships intended to deal with hostile submarines, minefields, and small attack boats in \"littoral\"—that is, \"near to shore\"—waters. All three versions of the bill also authorize $143.1 million, as requested, to continue acquisition of the interchangeable weapons modules intended to equip the ships for either mine-sweeping, sub-hunting, or surface combat.\nBut H.R. 3304 also incorporates provisions, similar to those in the House and Senate versions of the NDAA, requiring reports on certain aspects of the LCS program:\nSection 124 of H.R. 3304 (elaborating on Section 125 of S. 1197 ) requires a report by the Navy on its plans for how the LCS vessels would be used, how they compare with other U.S. warships and with the ships of potential adversaries in terms of their combat survivability, and how their capability in particular missions compares with the capability of the older equipment they are slated to replace. It also requires DOD organizations outside the Navy to independently assess the ships' suitability for their proposed missions and the adequacy of the testing program intended to verify their capability. Section 325 of the final bill (based on Section 321 of the House version) requires a detailed report by the Navy on its plan to sustain the ships for extended periods in areas far from U.S. shipyards—for example, in Singapore—using private contractors rather than U.S. government personnel for routine maintenance. In its report to accompany H.R. 1960 , the House Armed Services Committee called on the Government Accountability Office to review the Navy's plan for sustainment of the LCS.", "Congressional action on authorization of funding for selected aircraft and long-range missile programs is summarized in Appendix Table A-9. Following are some highlights:", "H.R. 3304 , like the version of the NDAA reported by the Senate Armed Services Committee, approved requests totaling $1.09 billion to sustain and modernize the Air Force's long-range bomber fleet. Including funds for both procurement and R&D, the final bill authorizes:\n$423.7 million to upgrade the 20 B-2 bombers (including $303.5 million to improve the stealth planes' defensive electronics); $151.8 million to modernize B-1s; $135.0 million to upgrade B-52s; and $379.4 million to develop a new, stealthy bomber slated to enter service in the mid-2020s.\nThe House-passed version of the bill would have authorized the requested bomber funding except that it would deny authorization for $500,000 to modify B-52s in accordance with the New START nuclear arms reduction treaty with Russia, approved by the Senate in 2010.\nSimilarly, the final version of the bill, like S. 1197 , authorizes, as requested, a total of $1.47 billion for an ongoing program of refurbishing Trident II nuclear-armed, submarine-launched ballistic missiles by replacing their solid-fuel rocket motors and other aging components. The House bill would have reduced the authorization by $717,000 for activities related to compliance with New START.\nThe final bill, like the House and Senate versions, authorizes, as requested, $65.4 million to continue the Conventional Prompt Global Strike program, aimed at developing a ballistic missile or other vehicle that could strike a distant target with a non-nuclear warhead on short notice. The bill did not include a provision of S. 1197 (Section 211) that would have barred the use of funds to develop a submarine-launched missile for this mission until 60 days after DOD reports to Congress on how it would manage the risk that an adversary might assume that any missile launched from a submarine carried a nuclear warhead. However, in the explanatory statement accompanying H.R. 3304 , House and Senate negotiators directed DOD to submit a report covering not only \"ambiguity\" problem raised by the Senate committee but also several other matters including possible techniques that could verify the non-nuclear character of a submarine-launched missile.", "The House-passed bill would have cut from the budget request a total of $30.2 million for activities to comply with the New START treaty. Nearly half that reduction—$14.7 million—was intended to bar the decommissioning of some ICBM missile silos and the preparation of an associated environmental impact statement.\nThe House bill also included several provisions policy reflecting opposition to the New START treaty and to President Obama's announcement in his 2013 State of the Union Address that he would seek agreement with Russia for additional reductions in nuclear arms.\nThe H.R. 3304 did not incorporate any of the House funding cuts related to compliance with New START. However, the final bill did incorporate provisions dealing with some of the arms control issues addressed in the House-passed version of the bill.", "The FY2014 budget request includes a total of $167.7 million for two Navy R&D programs aimed at developing a fleet of long-range, armed, drone aircraft to fly reconnaissance and attack missions from aircraft carriers. Of that total, the Senate version of the NDAA would have authorized, as requested:\n$21.0 million to conclude the Unmanned Combat Air Vehicle (UCAV) project, which has tested the feasibility of operating large drones off carriers using full-sized, experimental X-47 aircraft, one of which autonomously landed on the carrier George H. W. Bush on July 10, 2013; and $146.7 million for the Unmanned Carrier-launched Airborne Surveillance and Strike (UCLASS) project, which is intended to produce an operational weapon.\nIn its report on H.R. 1960 , the House Armed Services Committee contended that the Navy was acting prematurely in retiring the X-47s before they had been used to explore all the technical challenges that the operators would encounter when the UCLASS drones were deployed. The committee was particularly critical of the Navy's decision to drop a planned effort to refuel an X-47 in midair while the drone was fully under the control of its on-board computers, with no intervention by a human pilot.\nAccordingly, H.R. 1960 would have increased the UCAV authorization by $20.0 million—to $41.0 million—and would have included a provision (Section 217) requiring the Navy to conduct mid-air refueling tests with the X-47. The House bill also would have authorized, as requested, $146.7 million for UCLASS.\nThe enacted version of the bill authorizes for UCAV $21.0 million, as requested, and does not include the House provision requiring that the Navy conduct mid-air refueling tests with the X-47. In the explanatory statement on the bill, House and Senate negotiators acknowledged the Navy's decision to continue testing the aircraft through FY2014 and \"encouraged\" the service to demonstrate drone-to-drone refueling using the X-47.", "The FY2014 budget request included $7.68 billion for the Missile Defense Agency (MDA), the bulk of it for R&D efforts aimed to developing an array of sensors to detect ballistic missiles in flight and weapons to destroy them. The House-passed bill would increase the total MDA authorization by $435.4 million, with most of the additional funding directed to several Israeli defense systems and to the Ground-based Midcourse Defense (GMD) currently deployed in Alaska and California, which is intended to protect U.S. territory against a small number of intercontinental ballistic missiles launched from North Korea or Iran. The Senate committee-reported NDAA would increase the MDA authorization by $150.0 million, directing the additional funds to the same Israeli systems.\nAs enacted, H.R. 3304 would authorize $372 million more than was requested for MDA, with the Israeli systems getting about half the increase and U.S. territorial defense accounting for most of the remainder.\nCongressional action on authorization of funding for selected missile defense programs is summarized in Appendix Table A-1 . Following are highlights.", "The budget request includes $1.03 billion for the GMD system: some of which is intended to pay for refurbishing and upgrading the 30 interceptor missiles currently deployed; some to prepare for deployment of 14 additional interceptors at the existing launch site in Alaska, as the Administration has announced it may do; and some to survey locations for a potential third launch site for missile interceptors on the East Coast. The FY2013 NDAA ( P.L. 112-239 , Section 227) required DOD to develop a plan for deploying interceptors at an East Coast site, on the grounds that it would increase the likelihood that the GMD system could intercept U.S.-bound missiles from Iran or North Korea. The budget also requests $315.2 million for the network of long-range radars on which the GMD system relies for target data.\nAs enacted, H.R. 3304 authorizes $1.13 billion for GMD, including additions to the request of $20.0 million for assessment of a potential third site and $80.0 million to assess the causes of a flight test failure of the system on July 5, 2013. It also includes a provision (Section 235) requiring the deployment of an additional missile-detection radar to cover U.S. territory and authorizes an additional $30 million for that purpose.\nFollowing are highlights of the House-passed and Senate committee-reported and finally enacated versions of the FY2014 NDAA that bear on U.S. territorial missile defense:", "The House and Senate bills each would authorize significantly more than the $98.0 million requested for three Israeli programs intended to intercept short-range and medium-range ballistic missiles. H.R. 1960 would add $173.0 million while S. 1197 would add $150.0 million.\nBoth bills would authorize $220.3 million, as requested, to continue acquiring for Israel a fourth weapons system, dubbed \"Iron Dome,\" designed to intercept short-range rockets and artillery shells. But the House bill also would authorize an additional $15.0 million to gear up for U.S. production of the Iron Dome system (Section 237).\nAs enacted, H.R. 3304 would authorize the increased amounts set by the House bill.", "H.R. 1960 included a provision (Section 238) that would require the President to negotiate with other leaders of NATO, an agreement that the alliance would pay half the cost of deploying and operating a U.S.-designed regional missile defense system intended to protect Europe.\nAs enacted, H.R. 3304 includes a provision (Section 240) directing the Secretary of Defense to report on NATO's share of the cost of projected missile defense programs for Europe as well as the secretary's assessment of areas in which NATO members could make additional \"burden-sharing\" contributions.", "The version of the FY2014 NDAA initially passed by the House and the version reported by the Committee each contained provisions relating to persons captured in the course of hostilities against Al Qaeda and associated forces, including those detained at the U.S. Naval Station at Guantanamo Bay, Cuba. The detainee-related provisions in H.R. 1960 would have continued until December 31, 2014, restrictions regarding the conditions under which detainees can be transferred to other countries (Section 1033) and barring the use of funds to construct or modify facilities in the United States to house detainees (Section 1032). It would also have barred the use of funds to provide new or improved recreational facilities for detainees and barred the transfer of detainees to Yemen through December 31, 2014.\nDuring floor debate on H.R. 1960 , the House rejected by a vote of 200-226 an amendment that would have eliminated indefinite military detention for any detainee held in the United States by requiring an immediate trial in a state or federal court for any person detained under authority of the Authorization for Use of Military Force (AUMF) resolution ( P.L. 107-40 ).\nThe Senate bill ( S. 1197 ) would have relaxed some of the restraints in current law on the treatment of detainees. For example, it would have allowed the expiration of the current prohibition on constructing or modifying facilities in the United States to house detainees currently held at Guantanamo Bay. The bill would also have permitted the transfer of Guantanamo detainees to the United States for continued detention or for trial (Section 1033) and provided greater flexibility for the transfer of detainees to other countries than current law (Section 1031).\nOn November 19, 2013, the Senate rejected two amendments related to detainee issues:\nAmendment 2255 (Senator Ayotte) would have dropped from the bill several committee provisions, thus leaving intact the provisions of current law that bar transfer to any other place of any detainees currently held at Guantanamo; rejected by a vote of 43-55 (with 60 votes required for passage); and Amendment 2175 (Senator Levin) stipulated that any detainee transferred to the United States for trial would be barred from requesting asylum while on U.S. territory; rejected by a vote of 52-46 (with 60 votes required for passage).\nAs enacted, H.R. 3304 retains the strict prohibition on transferring detainees to the United States for any purpose (Section 1034) and the provision barring funding to modify facilities in the United States (Section 1033). Like H.R. 1960 , it would require a report to be submitted to Congress concerning the legal rights that might attach to detainees if they are transferred to the United States .\nThe final version of the bill adopts the Senate approach with respect to transferring detainees to other countries (Section 1035). Specifically, it would permit the transfer of detainees who have been ordered released by a competent U.S. court or who have been assessed by a Periodic Review Board as no longer posing a threat to the United States, provided that the Secretary of Defense determines that the transfer is in the U.S. national security interest and that actions have been or will be taken to substantially mitigate the risk of recidivism. The bill requires the Secretary to consider several factors in making such determinations, but does not require written certification to Congress that identified goals have been achieved as a prerequisite to executing a transfer.\nLike the original House-passed NDAA, H.R. 3304 would require the Executive to report to Congress regarding the capability of Yemen to detain, rehabilitate, or prosecute detainees who might be transferred there. The compromise legislation dispenses with the proposed statutory bar against the transfer of any detainee to Yemen. It adopts a provision similar to one in the original House proposal that would require the Executive to provide information regarding persons held by U.S. forces at the detention facility in Parwan, Afghanistan who have been deemed to constitute an enduring threat to the United States.", "Following are selected amendments on which the House took action during its consideration of H.R. 1960 .", "", "Unlike the more inclusive National Defense Authorization Act, the annual DOD appropriation bill covers only DOD military activities and excludes military construction, which is funded in the annual appropriations bill that also funds the Department of Veterans Affairs and related agencies.\nThe House version of the FY2014 DOD appropriations bill ( H.R. 2397 ), passed on June 24, 2013, by a vote of 315 to 109, would provide $585.1 billion for those activities—including both the base budget and OCO costs—which is nearly $4.4 billion less than the Administration requested. The Senate Appropriations Committee's version of the bill ( S. 1429 ), reported on July 30, 2013, would provide $587.5 billion, which is nearly $2.2 billion less than the request. (See Table 16 .)", "For the FY2014 base budget, H.R. 2397 would add $1.20 billion to the Administration's request to offset what the House Appropriations Committee called the budget's \"unrealistic\" assumptions about the extent to which \"efficiencies\" would reduce the cost of building maintenance, depot overhauls of major weapons, and other routine operations. The House bill also added to the amount requested $536 million in anticipation of higher-than-budgeted fuel costs and several billion dollars for various weapons and R&D programs, including increases of $950 million for a submarine, $923 million to modernize Navy cruisers the budget would retire, and $667 million for medical R&D projects.\nBut those additions would be more than offset by reductions to the base budget request, many of which the House Appropriations Committee said would have no adverse impact on DOD operations. Among these are:\na total of $6.06 billion which the committee deemed to be either in excess of what was required for a particular program or else not adequately justified; a total of $1.10 billion from programs that previously have requested and received more funds for a given year than they spend; and a total of $3.04 billion that would be offset by rescinding the same amount appropriated in prior years, thus reducing the need for new budget authority.\nThe Senate committee's version of the bill would make several relatively large cuts from the base budget, among which are:\na total of $5.06 billion which the committee deemed to be either in excess of what was required for a particular program or else not adequately justified; a total of $1.53 billion from programs that either have relatively large, unspent balances from prior appropriations or have a track record of requesting larger appropriations for a given year than they typically spend; and a total of $578 million that would be offset by rescinding the same amount appropriated in prior years, thus reducing the need for new budget authority.\nBut the Senate committee would largely offset those reductions by additions to the Administration base budget request, including:\na total of $4.19 billion to compensate for assumed efficiencies in the budget request that the Senate committee deemed unrealistic; and $1.16 billion to fund programs the Administration had included in its budget request for OCO funding.", "For FY2014 war costs, the House-passed H.R. 2397 would appropriate $79.34 billion, which is $59.3 million more than the Administration's request. Among the largest increases in the committee bill are:\n$1.50 billion for equipment for National Guard and reserve units; $1.30 billion to accelerate the \"reset\" process for Army units that had been deployed in Afghanistan; and $1.07 billion for a transfer fund from which amounts could be transferred to regular appropriations accounts to cover unforeseen OCO costs.\nAs reported by the House Appropriations Committee, the bill would have added $6.3 billion to the OCO request, but amendments adopted by the House eliminated most of that overall increase:\nH.Amdt. 392 (Representative Mulvaney) reduced the committee-reported OCO amount by $3.5 billion, eliminating all additions to the Administration's request except procurement funds for the National Guard and reserve forces. H.Amdt. 366 (Representative Terry) reduced the amount appropriated for support of the Afghan Army and National Policy by $2.6 billion (from the $7.73 billion requested and approved by the committee) and added $1 billion to Operations and Maintenance accounts to reduce the need to furlough DOD civilian employees.\nThe Senate committee's bill, S. 1429 , would provide $77.62 billion in new budget authority for OCO, which is $1.66 billion less than the Administration's request. Among the largest components of that net reduction are cuts of:\n$1.16 billion for programs the Senate committee funded in the part of the bill that funds DOD's base budget; $782 million cut from the $7.73 billion request for the Afghan Security Forces Fund; $284 million the committee deemed excess to need for Army basic pay; and $227 million for Coast Guard missions in support of the Navy, which the Senate committee said should be funded through the Department of Homeland Security.", "", "The Senate committee-reported version of the FY2014 DOD appropriations bill ( S. 1429 ) would fund, as requested, a 1% raise in military basic pay. The House-passed version ( H.R. 2397 ) includes Section 8126, which would add to the amount requested $580 million to fund a 1.8% basic pay increase, as would be authorized by the House-passed version of the NDAA. On other military personnel funding issues:\nBoth bills would cut the $4.03 billion requested for enlistment and reenlistment bonuses and special pays—the House bill by $145 million, the Senate bill by $156 million—on grounds that, in the current civilian jobs market, it was easier than the budget assumed for the services to recruit and retain talented individuals; Both bills would reduce the $4.76 billion requested for \"Permanent Change of Station\" funding—intended to cover the cost of transferring servicemembers and their dependents from one assignment to another—with the House bill cutting $151 million and the Senate bill cutting $306 million; and Both bills also would add to the request $25 million to expand to all the services the Air Force's Special Victims' Counsel program to provide victims of alleged sex-related offenses with independent legal representation, drawn from outside the military services (see H.R. 2397 , Section 8122; and S. 1429 , Section 8115).", "The FY2014 DOD appropriations bills passed by the House and reported by the Senate Appropriations Committee each would add upwards of $500 million to the $33.1 billion requested in the base budget for DOD's health care system, which serves 9.6 million beneficiaries (active-duty and retired military personnel and their dependents). Nearly half the request ($16 billion) is for TRICARE, DOD's insurance program, to fund contracts for private-sector medical care for active-duty and retired military personnel, their dependents, and their survivors.\nBoth bills would reduce the TRICARE request on grounds that, in recent years, the program has requested more than it spent in a given year. Those reductions were more than offset by additions in each bill to compensate for rejection of proposed TRICARE fee hikes and to provide roughly $600 million for medical R&D projects. The House bill also would add $225.0 million to the amount requested for maintenance and repair of medical facilities.", "Congressional action on authorization of funding for selected ground combat programs is summarized in Appendix Table A- 4 . Following are some highlights:\nIn the reports on their respective versions of the FY2014 appropriations bill, the House and Senate Appropriations Committees each took note of the planned downturn over the next few years in the Army's purchases from the specialized industrial base that builds tanks and other heavily armored combat vehicles. In S. 1429 , the Senate committee added to the request $90.0 million to continue for one more year the conversion of existing M-1 tanks to the M-1A2 SEP variant, with improved digital communications, night-vision equipment, armor, and transmission. The House-passed bill included no additional funds for the tank upgrades but included an additional $75 million for M-88 recovery vehicles—vehicles built on tank chassis that are intended to tow damaged tanks from the battlefield.\nThe House and Senate bills each made some reductions in the set of R&D programs intended to develop a new generation of armored combat vehicles for the Army and Marine Corps:\nFor the Army's Ground Combat Vehicle, envisioned as a replacement for the Bradley armored troop carrier, the House bill would provide $592.2 million, as requested, while the Senate bill would cut $169.0 million; For the Armored Multipurpose Vehicle, a replacement for the 1970s-vintage M-113 tracked vehicle which the Army uses for jobs ranging from mobile command posts to battlefield ambulances, the Senate bill would provide $116.3 million as requested, while the House bill would cut $30.0 million; and Both bills would cut $14.0 million from the Marine Corps request for $137.0 million to develop a new amphibious assault vehicle.", "Congressional action on appropriation of funds for selected naval programs is summarized in Appendix Table A-6 . Following are some highlights:", "Historically, Congress has insisted on full funding for major weapons programs, with limited exceptions for so-called long lead-time components, such as the nuclear power plants of submarines. For aircraft carriers and helicopter carriers, with price tags of several billion dollars apiece, Congress has allowed \"incremental funding\"—that is, spreading the cost of the ship across several budgets. However, it has resisted proposals to use that approach for other types of ships.\nIn a similar vein, Congress has rejected proposals to fund ships and Air Force satellites using \"advance appropriations,\" that is, funding that Congress appropriates in one year's appropriations bill but which will not become available for obligation until a subsequent fiscal year. Nevertheless, the Administration is depending on advance appropriations to fund one of two Virginia-class submarines in the FY2014 budget request.\nOf the projected $5.41 billion total cost of two subs:\n$1.53 billion was appropriated as \"long lead-time\" funding in prior budgets; $2.93 billion is requested in FY2014; and $952.7 million is budgeted as an \"advance appropriation.\"\nUnder DOD's plan, one of the two subs would be \"fully funded\" by a combination of long lead-time funding from prior years and a portion of the funds requested in FY2014. The second sub would be funded by a combination of long lead-time money, the remainder of the FY2014 request and the FY2015 \"advance appropriation\" amount.\nIn its report on H.R. 2397 , the House Appropriations Committee dubbed the advance appropriation proposal a \"funding gimmick\" and added to the bill $950.0 million to fully fund the second FY2014 submarine.\nAs reported by the Senate Appropriations Committee, S. 1429 would add to the amount requested $277.0 million, the purpose of which is to \"maintain critical industrial base\" associated with the Virginia-class subs.\nIn addition, the Senate bill would deny the $59.9 million requested to continue developing the Virginia Payload Module, an additional hull section—reportedly about 94 feet in length—that would be incorporated into future Virginia-class subs carrying four large-diameter, vertical launch tubes that could carry additional Tomahawk cruise missiles or other payloads, such as unmanned underwater vehicles. In its report, the committee objected that the modification would disrupt a smoothly functioning production line for the subs and that DOD had not yet officially approved the change.", "The House and Senate bills each would approve the $1.62 billion requested for a DDG-51-class destroyer. In addition, the House bill would add $100 million to make up for part of a $304 million shortfall in the program's account as a result of the FY2013 sequestration.\nBoth bills would deny a portion of the $240.1 million requested for the Air and Missile Defense Radar (AMDR) program, intended to replace the current DDG-51 radar on a projected new version of the ship with a radar better able to track long-range ballistic missiles and low-flying or stealthy cruise missiles and aircraft. Citing delays in the development program, the House bill would cut $79.8 million while the Senate bill would cut $87.0 million.", "Congressional action on appropriation of funds for selected aircraft and long-range missile programs is summarized in Appendix Table A-10 . Following are highlights:", "The House and Senate bills would make relatively minor reductions to the $5.45 billion requested for procurement of 29 F-35 Joint Strike Fighter, of which there are three versions used by the Navy, Marine Corps, and Air Force, respectively. The House bill would cut $323.4 million while the Senate bill would cut $278.0 million, the reductions being justified, in each case, on grounds of efficiency and sound management.\nWhile both bills thus would fund acquisition of 29 F-35s in FY2014, as requested, the Senate bill also would cut $80.0 million from the $564.8 million requested for long lead-time components with the intention of slowing the planned increase in production for FY2015. In its report on S. 1429 , the Senate Appropriations Committee observed that the DOD budget assumed procurement in FY2014 of 42 F-35s, an increase of 13 planes (about 45%) over the 29 F-35s funded in the FY2014 budget request. By reducing funding for long lead-time components, the Senate bill is intended to reduce the number of F-35s funded in the FY2015 budget request to 36, which would be an increase of about 25% over the number requested in FY2014.\nBoth the House and Senate bills also would add to the amount requested $75.0 million for long lead-time components that would support the purchase in FY2015 of 22 F/A-18E/F Navy fighters, the type of plane the F-35 is slated eventually to replace on Navy carriers. In its report, the Senate Appropriations Committee opposed DOD's decision to end F/A-18E/F production, noting that the plane would be the \"backbone\" of the Navy's carrier air wings for the next 25 years. Keeping the F/A-18E/F in production would maintain the U.S. fighter production base and would hedge against the risk that the F-35 might be delayed, the committee said.", "H.R. 2397 would make a net addition of $323.0 million to the Missile Defense Agency's $7.68 billion FY2014 budget request while S. 1429 would give the agency a net increase over the request of $227.4 million. Each bill would add $173.0 million to the $95.8 million requested for continued development of three Israeli anti-missile systems designed to intercept short-range and medium-range missiles ballistic missiles.\nIn addition, the House bill would add $177.2 million to the $1.03 billion requested for the Ground-based Midcourse Defense (GMD) currently deployed in Alaska and California, which is intended to protect U.S. territory against a small number of intercontinental ballistic missiles launched from North Korea or Iran. Of the additional funds, $107.0 million is intended to accelerate procurement of 14 additional GMD interceptor missiles and $70.2 million is to expedite consideration of deploying additional interceptors at a third site, located on the East Coast.\nThe Senate bill would appropriate a total of $1.03 billion for GMD, as requested. However, within that total, it would shift $142.9 million from the R&D account to the operation and maintenance account.\nFor the Israeli Iron Dome system, designed to intercept short-range rockets and artillery shells, both bills would provide $220.3 million, the amount requested.", "The House bill would provide the $7.73 billion requested for the Afghan Security Forces Fund, which pays for training, equipping, and sustaining the Afghan military and national police.\nBut the Senate bill would cut from the request a total of $781.8 million intended to purchase aircraft for Afghanistan's Air Force, including:\n$365.0 million to purchase Russian-built Mi-17 helicopters from Rosboronexport, a Russian state-owned company that also has supplied arms to Syrian President Bashar al Assad. The bill also includes a general provision (Section 8113) that would bar DOD from doing business with Rosboronexport. $416.8 million to purchase an additional 20 Super Turcano turboprops, ground-attack planes built by the Brazilian firm Embraer, 20 of which had been purchased with FY2012 funds. In its report, the Senate Appropriations Committee said DOD had not identified a requirement for more than the 20 planes initially planned for.", "Following are selected amendments on which the Senate took action during its consideration of H.R. 2397 :", "" ], "depth": [ 0, 1, 2, 2, 2, 3, 3, 2, 3, 2, 1, 1, 2, 2, 3, 3, 2, 2, 2, 1, 2, 1, 2, 3, 3, 2, 2, 3, 3, 4, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 2, 2, 1, 2, 3, 3, 2, 3, 3, 2, 2, 3, 3, 2, 3, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h4_full h1_full h2_title h0_full h3_full", "h0_full h2_full", "", "", "", "", "", "", "", "h4_full", "", "", "", "", "", "", "", "", "", "", "h2_full h4_title", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h4_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How did Congress attend to the FY2014 Authorization and Appropriations?", "How did this bill directly oppose the regulations set by the BCA of 2011?", "How did the President's request violate previous acts of Congress?", "How did the Senate change the original request by the President?", "What would be the result had Congress not amended the BCA?", "What was the result of President Obama's actions regarding FY2014?", "What was the change in the FY2014 budget regarding allocations for the National Defense?", "How would this new limit be received in the original budget?", "What will be the result of the new cap, should Congress approve FY2014?", "How did Congress and the President compromise on the FY2014 authorization?", "What does this compromise allow?", "How does H.R. 3304 resemble the earlier versions of the NDAA?" ], "summary": [ "Congressional action on DOD's FY2014 budget was hobbled by the prevailing uncertainty over the entire federal budget that dissipated only in mid-December, when Congress passed and the President signed H.J.Res. 59, which set binding caps on discretionary spending for defense and nondefense programs in FY2014.", "The bill's defense cap, while about $31 billion below the amount requested for defense programs by President Obama, was more than $20 billion higher than the FY2014 defense cap that had been set by the Budget Control Act (BCA) of 2011 (P.L. 112-25).", "For DOD's base budget, both the version of the FY2014 National Defense Authorization Act passed by the House (H.R. 1960) and the version reported by the Senate Armed Services Committee (S. 1197) also exceeded the BCA cap, differing from the President's request by less than $50 million.", "For war-related operations (\"overseas contingency operations\" or OCO), the Senate committee version of the authorization bill made few changes to the Administration's $80.7 billion request, while the House-passed bill added $5.4 billion.", "If the BCA had not been amended, Congress would have had to cut the Administration's National Defense request by $53.9 billion (about 9.8%) to meet the BCA cap of $498.1 billion.", "But the FY2014 Continuing Resolution (H.J.Res. 59), which President Obama signed into law on December 26, 2013, raised the BCA caps on defense and nondefense discretionary spending for FY2014 and FY2015 in addition to funding the operations of the federal government through January 15, 2014.", "For National Defense, the new FY2014 budget limit is $520 billion rather than the original BCA limit of $498 billion.", "DOD's share of this new, higher total amounts to about $497 billion rather than $476 billion DOD would have been allowed under the original BCA cap.", "If Congress appropriates to these new limits, there would no longer be a need for an additional $20 billion sequester in January 2014.", "On December 26, 2013, the President signed into law H.R. 3304, a compromise version of the FY2014 NDAA.", "It authorizes appropriation of nearly the amount the Administration originally requested for the DOD base budget, taking no account of the new BCA defense spending limit, which it would exceed by more than $30 billion.", "Like the earlier versions of the NDAA passed by the House and reported by the Senate committee, H.R. 3304 also includes provisions bearing on several controversial policy issues including the armed services' handling of sexual assault cases and the treatment of detainees currently held at the U.S. naval base at Guantanamo Bay, Cuba." ], "parent_pair_index": [ -1, 0, -1, 0, -1, -1, -1, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 2, 2, 5, 5, 6, 6, 6, 9, 9, 9 ] }
CRS_R42357	{ "title": [ "", "What Is the \"Farm Bill\"?", "Report Organization and Contributors", "Budget Situation and Outlook", "Farm Economy and International Environment", "Farm Safety Net Programs", "Program Design and Operation", "Commodity Programs", "Crop Insurance", "Disaster Assistance", "Issues and Options", "Budget Considerations", "Effectiveness of the Current Farm Safety Net", "Overlap in Farm Risk Programs", "Commodities Covered Under Safety Net Programs", "Dairy and Sugar", "Program Payment Limits and Farm Size", "Farm Policy Alignment with U.S. Trade Commitments", "Specialty Crops and Organic Production", "2008 Farm Bill Provisions", "Marketing and Promotion", "Domestic Food and Nutrition", "Research and Cooperative Extension", "Conservation", "Other Farm Bill Programs and Selected Issues", "Issues and Options", "Animal Agriculture", "2008 Farm Bill Provisions", "Issues and Options", "Market Competition", "Feed Prices", "Disaster Programs for Livestock and Poultry", "Country-of-Origin Labeling (COOL)", "Animal Welfare", "Agricultural Credit", "Issues and Options", "Agricultural Trade and Export Promotion", "2008 Farm Bill Provisions", "Issues and Options", "Program Effectiveness and Funding", "WTO Compliance", "Conservation and Environment", "Program Design", "Issues and Options", "Funding and Budget Concerns", "Simplifying the Conservation Portfolio", "Environmental Regulation", "Working Lands or Land Retirement", "Compliance Requirements", "Food and Nutrition", "Program Design and 2008 Farm Bill Provisions", "Supplemental Nutrition Assistance Program (SNAP)", "The Emergency Food Assistance Program (TEFAP)", "Commodity Supplemental Food Program", "Other Farm Bill Programs", "Programs in Lieu of SNAP", "Senior Farmers' Market Nutrition Program (SFMNP)", "School and Institution Food Programs", "Community Food Projects", "Issues and Options", "Categorical Eligibility and Asset Limits in SNAP", "SNAP-Eligible Foods and Retailers", "Farm-to-School Programs", "International Food Aid", "2008 Farm Bill Provisions", "Food for Peace (P.L. 480)", "USDA Food Aid Programs", "Issues and Options", "Funding", "Food Aid Quality", "Local and Regional Procurement", "Cargo Preference", "Agricultural Research", "2008 Farm Bill Provisions", "Issues and Options", "Budget Situation", "Funding Mechanisms", "Research Priorities", "Indirect Costs", "Rural Development", "2008 Farm Bill Provisions", "Issues and Options", "Energy", "2008 Farm Bill Provisions", "Issues and Options", "Expiration of Funding in FY2012", "Program Redundancy", "The Blend Wall and Infrastructure Deficiencies", "Unintended Consequences of Rapidly Expanding Corn Ethanol", "Slow Development of Cellulosic Biofuels", "Trade Disputes", "Forestry", "Program Design and Operation", "Issues and Options", "Wildfire Protection", "Woody Biomass for Energy", "Invasive Species", "Markets for Carbon Sequestration and Other Ecosystem Services", "Appendix. Titles and Subtitles of the 2008 Farm Bill (Farm, Conservation, and Energy Act of 2008, P.L. 110-246)" ], "paragraphs": [ "", "Congress periodically establishes agricultural and food policy in an omnibus farm bill. Federal farm commodity price and income support, conservation, food assistance, agricultural trade, marketing, and rural development policies are governed by a variety of separate laws. However, many of these laws are regularly evaluated, revised, and renewed through an omnibus, multi-year farm bill. These policies can be, and sometimes are, modified or overhauled as freestanding authorizing legislation, or as part of other laws. However, periodic farm bills have provided Congress, the Administration, and interest groups with an opportunity to reexamine agriculture and food issues more carefully, and address them more comprehensively.\nThe most recent omnibus farm bill is the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 , the 2008 farm bill), and many of its provisions expire in 2012. Without new legislation, notably in the area of farm commodity support programs, permanent statutes would take effect. Most of these statutes were enacted decades ago and are no longer compatible with current national economic objectives, global trading rules, and federal budgetary or regulatory policies. These largely outdated permanent laws have been kept on the books by Congress in part to compel increasingly urban and suburban future Congresses to pay attention to national agricultural policy. For most other topics addressed in the farm bill, the authority to appropriate funds would end, and in some cases all program authority could terminate.\nTraditionally, the primary focus of every omnibus farm bill has been farm commodity price and income support policy—namely, the methods and levels of support that the federal government provides to agricultural producers. However, farm bills typically include titles on agricultural trade and foreign food aid, conservation and environment, forestry, domestic food assistance, agricultural credit, rural development, agricultural research and education, animal agriculture, and marketing-related programs, among others. In recent farm bills, titles have been added to address emerging issues such as agriculture-based biofuels, specialty crops (fruits and vegetables), and organic agriculture. (See the Appendix at the end of this report for a complete list of titles and subtitles of the 2008 farm bill.)\nThe omnibus nature of the farm bill creates a broad coalition of support among sometimes conflicting interests for policies that, individually, might not survive the legislative process. Among the groups lobbying Congress are farm and commodity organizations; input suppliers; commodity handlers, processors, exporters, retailers, foreign customers, and competitors; universities and scientific organizations; domestic consumers and food assistance advocates; environmentalists; local and regional producers; and rural communities, to name a few. So, for example, farm state lawmakers may seek urban legislators' backing for commodity price supports in exchange for votes on domestic food aid—and vice versa.\nFarm bill titles also are growing increasingly integrated. The conservation title, for example, includes provisions that affect commodity programs, and some of the commodity provisions likewise affect conservation. This integration means that one cannot simply look at a single title for all provisions that affect the topic of the title.\nAs the 112 th Congress considers reauthorization of the next farm bill, it does so in an economic setting of high farm commodity prices and income and an austere federal budget that calls for deficit reduction. This combination of events has drawn into question whether the current farm safety net should be restructured or portions eliminated (e.g., direct payments), with the limited available financial resources possibly redirected to other initiatives. Proponents of the current approach to farm commodity support want a stronger safety net, with many focusing on enhancements to risk management tools. Opponents of the status quo often cite cost and budget concerns. Some point to other competing policy priorities, including equitability concerns across the farm sector, and call for enhanced support for small and medium-sized farms, specialty crops, organic agriculture, local and regional food systems, healthy and nutritious foods, research, conservation, and rural development, among other topics. For more background on the nature of the farm bill and the major provisions in the enacted 2008 farm bill, see CRS Report RS22131, What Is the \"Farm Bill\"? and CRS Report RL34696, The 2008 Farm Bill: Major Provisions and Legislative Action .", "This report begins by reviewing the budget and economic setting for the next farm bill debate, and follows with background on each of the major titles of the current farm bill and a preview of some of the potential issues that could factor into the debate.", "Federal spending is divided into mandatory and discretionary spending. Mandatory spending in the farm bill is primarily authorized for the farm commodity programs, crop insurance, nutrition assistance programs, and some conservation and trade programs. Discretionary spending (i.e., spending subject to annual appropriations) is authorized for essentially everything else, including other conservation programs, most rural development programs, research and education programs, and agricultural credit. Various smaller research, bioenergy, and rural development programs sometimes secure some mandatory funding, but most of their funding is discretionary.\nIn addition to determining the policy direction for farm bill programs, the farm bill also \"pays\" for mandatory spending when it is used. This is done under the jurisdiction of authorizing committees, using resources available under budget rules. On the other hand, discretionary programs that are authorized in the farm bill are paid for separately in annual appropriations bills under the jurisdiction of the appropriations committees.\nThe Congressional Budget Office (CBO) develops baseline projections for mandatory spending (direct spending) under the supervision of the House and Senate Budget Committees within a framework of various budget enforcement laws. This process sets the mandatory budget for the farm bill. The baseline projection is an estimate at a particular point in time of what federal spending on mandatory programs likely would be under current law. From a budget perspective, programs with a continuing baseline are assumed to go on under current law, and have their own funding if policymakers want them to continue. However, some programs may not be assumed to continue in the budget baseline beyond the end of a farm bill, and can continue only if their cost is offset.\nThe baseline thus serves as a benchmark or starting point for the farm bill budget. When new provisions are introduced that affect mandatory spending, their impact (or \"score\") is measured as a difference from the baseline. Increases in cost above the baseline may be subject to budget constraints such as pay-as-you-go (PAYGO) requirements. Reductions from the baseline may be used to offset other provisions or to reduce the deficit.\nThe January 2012 CBO baseline for continuing mandatory farm bill programs is about $994 billion for the 10-year period FY2013-FY2022 ( Figure 1 ). Most of this baseline ($772 billion, or 78%) is for domestic nutrition assistance programs, primarily the Supplemental Nutrition Assistance Program (SNAP). The rest, about $222 billion, is divided among various agriculture-related programs, primarily crop insurance ($90 billion), farm commodity price and income supports ($62 billion), and conservation ($65 billion). These estimates do not include any reductions for sequestration (across-the-board cuts). CBO will issue an updated baseline in March 2012 that will become the official scoring baseline for a potential 2012 farm bill.\nThe budget situation is more difficult and uncertain this year than for past farm bills because of the attention to the federal debt. How much of the above baseline can be used to write a farm bill and how much will remain for 2013 and beyond is unknown, given the uncertainty about deficit reduction that is beyond the control of the agriculture committees and may not be resolved for months. Several high-profile congressional and administration proposals for deficit reduction are specifically targeting agricultural programs with mandatory funding. To date, none of these plans has been enacted ( Table 2 ). Discretionary appropriations for agricultural programs also have fallen in recent years, further affecting farm bill opportunities. The discretionary agriculture appropriation decreased by 14% in FY2011 and another 2% in FY2012.\nMore imminently, given the failure of the Joint Select Committee on Deficit Reduction to enact budget reductions by January 15, 2012, budget sequestration is forthcoming in 2013 under the Budget Control Act of 2011 (BCA; P.L. 112-25 , Sec. 302). The budget sequestration process under the BCA will reduce the future baseline for farm bill programs, even if legislation is not enacted to specifically change or reduce the programs. Certain farm bill programs, such as the nutrition programs and the Conservation Reserve Program, are statutorily exempt from sequestration. Other programs, including prior obligations in crop insurance and marketing loan contracts, may be exempt; however, CBO does not determine the official sequestration amount or the scope of programs included. Those decisions rest with the Office of Management and Budget (OMB) interpretation of the BCA and statutes, and are still forthcoming. No official estimate has been released, but many believe sequestration of mandatory farm bill programs may total about $16 billion over 10 years. This is consistent with CBO estimates of nearly 8% sequestration on nondefense mandatory programs on roughly $200 billion of nonexempt agriculture baseline.\nThe budget picture is further clouded by other factors. While some programs (like most farm subsidies and nutrition assistance) have assumed future funding, other programs (mostly newer ones) do not. Thirty-seven programs that received mandatory funding throughout nearly all titles of the 2008 farm bill do not continue to have assured funding for the next farm bill. Three of these programs—the agricultural disaster assistance program, the Wetlands Reserve Program, and the Biomass Crop Assistance Program—account for about three-fourths of the affected amount. Continuing these programs could cost about $10 billion over five years, an additional cost that would need to be offset from other programs. This could be doubly difficult during a simultaneous contraction from sequestration or deficit reduction. Also, new pay-as-you-go budget rules enacted in 2010 ( P.L. 111-139 ) restrict some of the budget-related maneuvers that were used in past farm bills to offset new spending.\nConsequently, even a \"simple\" extension of the 2008 farm bill may be challenging given the current budgetary pressures. The desire by many to redesign farm policy and reallocate the remaining farm bill baseline—in a post-sequestration and/or post-deficit reduction environment—is driving much of the farm bill debate this year. Political dynamics regarding sequestration and achieving broader deficit reduction goals leave open difficult questions about how much and when the farm bill baseline may be reduced. Thus, in an era of deficit reduction, Congress faces difficult choices about how much total support to provide for agriculture, and how to allocate that support among competing constituencies.", "The U.S. agricultural sector has been thriving economically since the mid-2000s, as rising commodity prices and land values have pushed farm incomes to record levels and reduced debt and debt-to-asset ratios to historically low levels. USDA currently projects that U.S. net farm income reached a record high in 2011 of $100.9 billion, up 28% from 2010, and nearly 19% above the previous record of $87.4 billion in 2004. Prior to 2004, U.S. net farm income had never exceeded $61 billion; since 2004 it has averaged almost $78 billion.\nFarm asset values—which reflect farm investor and lender expectations about long-term profitability of farm sector investments—are expected to rise nearly 7% in 2011 to a record $2,340 billion, following a 6% rise in 2010. As a result, the farm debt-to-asset ratio steadily declined from the 1998 level of 16% to a projected low of 10.4% in 2011. U.S. farmland values also are estimated record high in 2011—an average acre of cropland is valued at $3,030, up over 9% from the previous year's record. Strong farm land cash markets in 2011 suggest that land values will continue to see gains related to strong crop prices in 2012.\nIn contrast to the farm economy, the general U.S. economy slowed again in 2011, with considerable uncertainty heading into 2012. As a result, U.S. consumers have been very cautious in their spending behavior. The major drivers behind the robust farm income projections have been strong U.S. agricultural exports (including the outlook for a record $136.3 billion in 2011, up 18%), and continued growth in the U.S. corn ethanol industry (mandated by federal usage requirements and high petroleum prices). This demand-led surge, aided in part by a weak dollar, has drawn down stocks for major grains and oilseeds to historically low levels in both domestic and global markets, thus supporting higher commodity prices.\nInternational trade remains a bright spot for U.S. agriculture despite the lack of success in the Doha Round of multilateral trade negotiations (conducted under the auspices of the World Trade Organization). U.S. trade officials hope to further expand export opportunities for U.S. agricultural products upon implementation of three free trade agreements (FTAs)—with South Korea, Panama, and Colombia—signed by the President on October 21, 2011.\nRobust economic growth in major global markets (particularly in China) is expected to continue to support strong demand for cotton, feed grains, oilseeds, and livestock products heading into 2012. Meanwhile, continued growth in U.S. corn-based ethanol production and strong livestock prices are expected to support corn and other crop prices near current high levels as they compete for a fixed amount of cropland. These high commodity prices have shut off government payments under price-contingent programs such as the marketing loan program and the counter-cyclical payments program.\nAs a whole, the U.S. agricultural sector remains in a strong financial position relative to the rest of the U.S. economy. However, there is substantial regional variation. In general, increases in feed, fuel, and fertilizer expenses will affect livestock producers more harshly than crop producers. Although cash grain farmers in the Corn Belt and Northern Plains are experiencing record revenues, livestock and poultry feeders are experiencing record-high feed costs that have narrowed profit margins. In addition, a severe drought in the Southwest that extended into the Central Plains and the Southeast during the summer of 2011 limited grazing opportunities and hay production for cattle ranchers in the affected regions and led to substantial herd liquidation. As a result, even if weather returns to normal in the affected regions, the livestock sector will continue to feel the effects of the drought into 2013.", "The federal government supports farm income and helps farmers manage risks associated with variability in crop yields and prices through a collection of programs. The broader farming community often refers to the \"farm safety net\" as (1) farm commodity price and income support programs under Title I of the 2008 farm bill, (2) federal crop insurance (permanently authorized) under the Federal Crop Insurance Act of 1980, and (3) disaster assistance programs under Title XII of the 2008 farm bill. Each of these three components is covered in this section and summarized in Table 3 . The Congressional Budget Office currently estimates the total cost of farm safety net programs for FY2011 at $13.5 billion ($5.7 billion for commodity programs, $6.3 billion for crop insurance, and $1.5 billion for disaster assistance).\nMost of the cost for the farm safety net is attributed to five crops. In FY2011, nearly 90% of commodity program payments and crop insurance subsidies were accounted for by corn (38%), wheat (19%), soybeans (16%), cotton (13%), and rice (3%). For comparison, these five crops accounted for 60% of total crop receipts (including fruits and vegetables) and 33% of total farm receipts (including livestock, dairy, and poultry).\nFarm support began with the 1930s Depression-era efforts to generally raise farm household income when commodity prices were low because of prolonged weak consumer demand. While initially intended to be a temporary effort, the commodity support programs survived, but have been modified away from supply control and commodity stocks management to direct income and price support payments. Federal crop insurance has expanded over the decades, with expanded commodity coverage and increased producer subsidies.\nMany policymakers and farmers consider federal support of farm businesses necessary for financial survival, given the unpredictable nature of agricultural production and markets. In contrast, many environmental groups argue that subsidies encourage overproduction on environmentally fragile land. Others have long argued that farm subsidies are a market-distorting use of taxpayer dollars, or that they encourage large-scale farming at the expense of small or beginning farms.", "", "The commodity provisions of Title I of the 2008 farm bill provide support for 26 farm commodities. Producers of program commodities (food grains, feed grains, oilseeds, upland cotton, peanuts, and pulse crops) and milk are eligible for a variety of payments. Types of payments include \"direct,\" \"counter-cyclical\" or \"Average Crop Revenue Election (ACRE),\" and \"loan deficiency,\" as described in Table 3 . Producers of other so-called \"loan commodities\" (including extra long staple or ELS cotton, wool, mohair, and honey) are eligible only for nonrecourse marketing assistance loans and loan deficiency payments. In the 2008 farm bill, benefits for producers of dry peas, lentils, and chickpeas were expanded to include counter-cyclical payments (but not fixed \"direct\" payments).\nCurrent farm law also mandates that raw cane and refined beet sugar prices be supported through a combination of limits on domestic output that can be sold and nonrecourse loans for domestic sugar, backed up by quotas that limit imports. Dairy product prices are supported by guaranteed government purchases of nonfat dry milk, cheese, and butter at set prices, and quotas that limit imports. Additionally for dairy, Milk Income Loss Contract (MILC) payments are made directly to farmers when farm-level milk prices fall below specified levels.\nIn contrast to producers of traditional farm bill commodities, producers of specialty crops (e.g., fruits, vegetables, and tree nuts) and livestock have generally received little or no direct government support through commodity programs (see section on \"\nSpecialty Crops and Organic Production ,\" below). Instead, the farms may manage risks through business diversification, purchase of federal crop insurance, and participation in federal disaster assistance programs.", "The federal crop insurance program provides risk management tools to address losses in revenue (about 75% of total policy premiums) or crop yield (25%). Federally subsidized policies protect producers against losses during a particular season, with price guarantee levels established immediately prior to the planting season. This is in contrast to commodity programs, where protection levels are specified in statute (e.g., counter-cyclical payments) or use average farm prices from previous years (e.g., ACRE).\nFederal crop insurance has grown in importance as a farm risk management tool since the early 1990s, due in large part to federal subsidy intervention. The federal government pays about 60%, on average, of the farmer's crop insurance premium. Thus, as participation in crop insurance programs has grown over time, so too has the absolute level of federal premium subsidies. CBO projects that the crop insurance program in its current form would cost, on average, $8.9 billion per year through 2022.\nCrop insurance has perhaps the widest commodity and regional coverage. In 2011, crop insurance policies covered 264 million acres. Major crops such as corn, soybeans, wheat, and cotton are covered in most counties where they are grown, and crop insurance covers at least 80% of planted acres for each crop. Crop insurance is also available for over 80 specialty crops. In 2009, specialty crop policies covered more than 7 million acres, which constituted 53% to 75% of specialty crop area, depending on how total area is calculated. In total, policies are available for more than 100 commodities, including fruit trees, nursery crops, dairy and livestock margins, pasture, rangeland, and forage.", "In an attempt to avoid ad-hoc disaster programs that had become almost routine, and to cover additional commodities, the 2008 farm bill included authorization and funding for five new disaster programs. However, these programs were authorized only for losses for disaster events that occurred on or before September 30, 2011, and not through the entire life of the 2008 farm bill (which generally ends on September 30, 2012). As a result of this early expiration, funding for these programs is not included in future baseline budget estimates.\nThe largest of the disaster programs is the Supplemental Revenue Assistance Payments Program (SURE), which is designed to compensate eligible producers for a portion of crop losses not eligible for an indemnity payment under the crop insurance program. The program departs from both traditional disaster assistance and crop yield insurance by calculating and reimbursing losses using total crop revenue for the entire farm (i.e., summing revenue from all crops for an individual farmer).\nThe 2008 farm bill also authorized three new livestock assistance programs and a tree assistance program. The Livestock Indemnity Program (LIP) compensates ranchers for livestock mortality caused by a disaster. The Livestock Forage Disaster Program (LFP) assists ranchers who graze livestock on drought-affected pastureland or grazing land. The Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) compensates producers for disaster losses not covered under other disaster programs. Finally, the Tree Assistance Program (TAP) assists growers with the cost of replanting trees or nursery stock following a natural disaster.", "The current tight federal budget situation and the global economic difficulties since 2008 contrast sharply with the financial success experienced by the U.S. farm sector in recent years. (See \" Farm Economy and International Environment ,\" above.) With this economic backdrop, several critical policy issues and options have emerged that are likely to play a role in shaping the next farm bill.", "The current federal budget situation is likely to limit overall spending on the next farm bill. (See \" Budget Situation and Outlook ,\" above.) Thus, the level of funding in the Congressional Budget Office (CBO) baseline budget for agricultural programs is of paramount importance, and the pool of money for any changes to the farm safety net will likely come from the existing baseline for both the commodity programs and the crop insurance program.\nCBO projects outlays for safety net programs for FY2013-FY2022 at about $150 billion over the 10-year period, or $15 billion per year, excluding outlays of $1.5 billion in 2013 for disaster programs that expired in 2011. With crop prices projected to remain relatively high, counter-cyclical support is expected to remain relatively low. However, direct payments are estimated to be $49.6 billion over the 10-year period. Crop insurance outlays account for the largest share of farm safety net costs (estimated at $89.4 billion over the same period) because high commodity prices increase crop liability and the associated producer subsidies. Combined outlays for farm safety net programs averaged $15.7 billion per year during FY2003 to FY2010, with a high of $20.5 billion in FY2006 and a low of $12.2 billion in FY2008.", "Some producers have criticized farm safety net programs for being too slow to respond to disasters, not being well integrated, or not providing adequate risk protection. In contrast, long-time farm program critics question the need for any farm subsidies, contending that government funding could be better spent advancing environmental goals or improving productivity. Others cite economic arguments against the programs—that they distort production, capitalize benefits to the owners of the resources, encourage concentration of production, harm smaller domestic producers and farmers in lower-income foreign nations, and pay benefits when there are no losses or to high-income recipients.\nSince fall 2011, a wide range of proposals for revising the farm safety net has been circulated by Members of Congress, commodity and farm organizations, and interest groups. Nearly all of these proposals would eliminate direct payments, with some proposals redirecting savings to a new \"revenue program\" that would better address farmer needs with respect to \"shallow losses\" (i.e., those not covered by federally subsidized crop insurance and paid by the producer via the policy deductible). Other proposals would use savings to offer additional crop insurance options designed for shallow losses or for better protecting producers against deep losses and multi-year price declines as a replacement for current counter-cyclical payments.\nFor both supporters and opponents of farm programs, the recent surge in U.S. farm income has brought into question the need for nearly $5 billion in direct payments that are paid to agricultural land owners whether or not a loss was incurred. Many have concluded that, for the safety net to be effective, a loss should be required to trigger a federal farm program payment.", "Farm policy observers have identified apparent overlap among farm safety net programs. For example, the ACRE program and crop insurance both address revenue variability. Also, the current farm program mix has several variations of \"counter-cyclical-style\" payments, including marketing loan benefits, traditional (price) counter-cyclical payments, ACRE (revenue) payments, revenue-type crop insurance, and whole-farm insurance. Some believe that a simplified approach might be more effective and less expensive. Many farm safety net proposals have called for combining common elements of commodity programs, disaster programs, and crop insurance.", "The extent of current commodity coverage of the farm safety net is primarily a result of the historical and evolving nature of farm policy. Producers of major commodities have benefited the most from farm programs because farmers and policymakers representing those commodities shaped the programs from their inception. Since then, other commodity advocates have not had the interest or sufficient political power to add their commodities to the mix. Commodity coverage could be increased by enhancing crop insurance for non-program crops, developing a whole-farm program, or revising the current whole-farm insurance product so it would be more widely accepted by producers.", "Price and income volatility in the dairy industry has motivated producer groups and policymakers to examine new ways to protect incomes for dairy farmers. One proposal ( H.R. 3062 ) would replace current dairy product price supports and the income support program (Milk Income Loss Contract, or MILC) with a new program that delivers farm payments triggered by low margins (milk price minus feed costs). Critics of the bill, including dairy processors and some producers, contend that separate provisions in the bill to reduce milk production when margins are low could adversely affect the competitiveness of the U.S. dairy industry.\nIn contrast to dairy and commodity programs, the sugar program is structured to operate at no cost to the federal government—an objective that has been achieved over the last decade. Since the program records no outlays, its future has not received attention among the proposals submitted for revising the farm safety net. Producers of sugar beets and sugarcane, and the processors of these crops into sugar, favor retaining the current program without change. They highlight the jobs and economic activity created by the domestic sugar sector. Food and beverage manufacturing firms that use sugar in their products advocate program elimination or a transition toward a free market in sugar in the United States. They point to the higher wholesale refined sugar prices now paid (twice the level seen during the 2002 farm bill period) to argue for these changes.", "Payment limits for the farm commodity programs, with the exception of the marketing assistance loan program, either set the maximum amount of farm program payments that a person can receive per year or set the maximum amount of income that an individual can earn and still remain eligible for program benefits (a means test). The payment limits issue is controversial because it directly addresses questions about the size of farms that should be supported, whether payments should be proportional to production or limited per individual, and who should receive payments. Some policymakers want limits to be tightened in order to save money, to respond to general public concerns over payments to large farms, and to reduce the possibility of encouraging expansion of large farms at the expense of small farms. Others say larger farms should not be penalized for the economies of size and efficiencies they have achieved. Crop insurance has no payment limits, a feature that some policymakers say makes crop insurance an attractive centerpiece of farm policy because it helps small and large farms alike, with neither apparently gaining at the expense of the other.", "As a World Trade Organization (WTO) member, the United States faces pressure to modify certain \"trade-distorting\" elements of the commodity programs. This arises from a 2004 WTO dispute settlement finding that marketing loan and counter-cyclical payments made to U.S. cotton producers were inconsistent with WTO commitments, and a 2009 WTO arbitration panel announcement that Brazil could retaliate with trade countermeasures. As part of a 2010 bilateral framework to avoid trade retaliation, the United States is expected to address these concerns in the next farm bill.", "During the past few farm bill debates, specialty crop and organic agricultural producers have argued that their sectors should occupy a larger role in farm bill policy discussions and that some of the benefits supporting major commodity producers should be extended to specialty crop and organic producers, in order to create \"a broader, more equitable farm bill.\" Specialty crops and organically produced commodities are not eligible for support under USDA's farm commodity price and income support programs. In some cases, however, their production may be linked with the major program crops, such as in cases where recipients of direct and counter-cyclical payments can plant crops on their base acres, including certain vegetables for processing. However, specialty crops and organic crops are eligible for other types of USDA programs and support throughout most titles of the omnibus farm bill, including, among others, programs in the nutrition, conservation, research, crop insurance, disaster assistance, and trade titles. Some other federal agencies also play important roles within these sectors.\nIn the farm bill, specialty crops are defined as \"fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture).\" They comprise a major part of U.S. agriculture. In 2007, the value of farm-level specialty crop production totaled $42 billion, representing more than 40% of the value of U.S. crop production, yet accounting for only 3% of all harvested cropland acres. U.S. exports of specialty crops totaled nearly $15.9 billion in 2010, or about 15% of total U.S. agricultural exports. In 2007, there were 248,000 farming operations that grew fruits, tree nuts, vegetables, floriculture, and other horticultural specialties. Sales are focused in California, Florida, Washington, Oregon, North Dakota, and Michigan; however, every state has some commercial specialty crop production within its borders.\nOrganic agriculture accounts for a small but growing share of the U.S. farming sector. USDA reports that farm sales from organic operations totaled $3.2 billion in 2008 (about 1% of all farm-level sales in the United States), spanning an array of plant and animal products. About 40% of all U.S. organic farm-level sales consist of livestock products, followed by vegetables, fruits, and field crops. The Organic Trade Association (OTA) reports that organic food sales totaled $26.7 billion in 2010, accounting for 4% of the surveyed food market. OTA also reports that U.S. exports of all organic products total about $2 billion annually. In 2008, there were 14,540 organic farms and ranches. Organic operations account for a total of 4.1 million acres, or about 1% of total U.S. cropland in farms. Production is focused in California, Florida, Washington, Pennsylvania, Oregon, Texas, and Wisconsin; however, USDA reports organic production in each U.S. state. (The Organic Foods Production Act of 1990 and USDA's National Organic Program regulations require that agricultural products labeled as \"organic\" originate from farms or handling operations certified by a state or private entity that has been accredited by USDA.)", "The 2008 farm bill significantly expanded support and funding for existing specialty crop and organic programs, and created new incentives for producers, under a new bill title, \"Horticulture and Organic Agriculture\" (Title X). In addition to programs and expanded funding provided under Title X, other provisions supporting specialty crop and organic producers are also contained within nearly every other title of the 2008 farm bill. When the 2008 farm bill was enacted, CBO estimated that mandatory outlays for programs authorized in Title X would total $0.4 billion (FY2008-FY2012), a small share—less than one-half of 1%—of total mandatory farm bill spending.\nDespite some shared program interests and a shared farm bill title, there are often significant differences between U.S. specialty crop and organic producers in terms of their overall farm bill priorities and in the types of key farm bill programs each group supports. The U.S. horticulture sector is among the most diverse of U.S. farm sector groups, with advocates spanning a wide range of policy priorities. Among specialty crop growers, the principal groups promoting the sector's farm bill priorities are the Specialty Crop Farm Bill Alliance (SCFBA), the United Fresh Produce Association (UFPA), the Produce Marketing Association (PMA), and the American Fruit and Vegetable Processors and Growers Coalition, as well as regional groups such as Western Growers and various other specialty crop grower groups. The organic sector is more diverse, with wide-ranging priorities, as represented by OTA, the Organic Farming Research Foundation (OFRF), the National Organic Coalition, and the Organic Consumers Association (OCA). Interests among these groups often overlap with other agricultural interests such as those of the National Sustainable Agriculture Coalition (NSAC) and the National Farmer Union (NFU), among other groups representing local and regional food systems and rural development.\nIn general, the types of programs in which many of these groups share a common interest are USDA marketing and promotion programs (including rural development programs), domestic food and nutrition programs, research and cooperative extension programs, and conservation programs, among others. Although USDA historically has not provided direct support for specialty crops and organic production, over the decades Congress has authorized a wide range of programs in these areas that are viewed as facilitating the growth of and benefiting the economic health of fruit and vegetable producers and other sectors of U.S. agriculture. Some of the farm bill programs of particular importance to specialty crop and organic producers follow.", "The Specialty Crop Block Grants Program (SCBGP), administered by USDA's Agricultural Marketing Service (AMS), is perhaps the principal Title X marketing and promotion program supporting the specialty crop industry. This program was first authorized in the Specialty Crops Competitiveness Act of 2004 ( P.L. 108-465 ), providing block grants to states. How each state spends its allocation varies depending on each state's priorities. Another AMS-administered program is the Farmers Market Promotion Program (FMPP), which provides grants to improve and expand farmers' markets, roadside stands, community-supported agriculture (CSA), agri-tourism, and other direct marketing activities. Other related farmers' market programs, such as the WIC Farmers' Market Nutrition Program and the Senior Farmers' Market Nutrition Program, are in other titles of the 2008 farm bill. Title X also contains several programs that provide specific support to organic production, including USDA's National Organic Program (NOP), the National Organic Certification Cost-Share Program, and Organic Production and Marketing Data Collection.\nSpecialty crop and organic producers also generally benefit from the Value-Added Producer Grant Program and other market development grants in the rural development title of the farm bill. Export promotion of specialty and organic crops is also provided for in the farm bill's trade title under the Market Access Program (MAP). MAP is widely used by some specialty crop growers to encourage exports, and the 2008 farm bill also included additional provisions to cover organic products. The trade title also provides for Technical Assistance for Specialty Crops (TASC) to address sanitary and phytosanitary (SPS) and technical barriers to U.S. specialty crop exports.", "Federal cash assistance to schools, child-care centers, and summer food program operators (among others) represents an important source of federal support for fruit and vegetable purchases. In recent years Congress has substantially expanded support for fruits and vegetables within USDA's food and nutrition programsboth in the 2008 farm bill and in the 2010 reauthorization of child nutrition legislation (Healthy, Hunger-Free Kids Act, P.L. 111-296 ). Nutrition title programs providing for increased fruit and vegetable purchases include the Fresh Fruit and Vegetable (Snack) Program in schools; minimum purchase requirements under the Section 32 program; the Department of Defense Fresh Fruit and Vegetable (DoD Fresh) program; and pilot projects in the Supplemental Nutrition Assistance Program (SNAP).", "USDA's research and extension services play an important role in specialty crop and organic production and are contained within the research title of the farm bill. For specialty crop producers, this includes the Specialty Crop Research Initiative (SCRI), intended to address food safety hazards in the production and processing of specialty crops, among other priorities. This program could potentially be used to assist specialty crop growers and processors in complying with food safety requirements under the FDA Food Safety Modernization Act (FSMA, P.L. 111-353 ). USDA research programs specific to organic production include the Organic Agriculture Research and Extension Initiative (OREI) and the Organic Transitions Integrated Research Program. In addition, Title X of the farm bill includes a number of programs intended to enhance USDA's efforts to prevent and eradicate plant pests and diseases of specialty crops under the agency's Animal and Plant Health Inspection Service (APHIS).", "The 2008 farm bill expanded incentives to encourage participation among specialty crop growers in many voluntary conservation programs through cost-sharing and technical assistance programs, and competitive grants. The bill also provided additional assistance to organic producers under some conservation programs, and technical assistance and incentives for organic conservation practices. In addition, some specialty crop and organic producers benefit from other programs intended to assist farmers in developing and implementing sustainable and innovative farming strategies, such as Sustainable Agriculture Research and Education (SARE) grants through USDA research programs, and information services through the National Sustainable Agriculture Information Service (known as the ATTRA project).", "A number of other farm bill programs pertain to specialty crop and organic producers. For example, in the commodities title, the 2008 farm bill authorized a pilot project in selected midwestern states to allow fruits and vegetables for processing to be planted on up to 75,000 acres of cropland enrolled in the farm commodity support programs. This expansion of \"planting flexibility,\" which would allow growers who receive federal payments to also plant fruits and vegetables on acres on which they receive benefits (base acres), is generally opposed by groups representing specialty crop growers, but supported by many food processors. Specialty crop producers are also covered by country-of-origin labeling (COOL) requirements that are often amended in farm legislation. Finally, the 2008 farm bill expanded crop insurance and disaster assistance for specialty crop and organic producers. For orchard crops, the bill increased the maximum payment for tree removal and replacement costs due to damage caused by a natural disaster. For organic producers, the farm bill required USDA to enter into a contract to improve insurance coverage for organic crops. The 2008 farm bill also included an organic credit provision, giving priority to certain producers who use the loans to convert to sustainable or organic agricultural production systems, and to build conservation structures or establish conservation practices.", "Given the perceived increasing importance of fruit and vegetable crops within many varied policy arenas—including the contribution of fruits and vegetables to child nutrition and wellness, concerns about food safety regulations being developed that affect produce growers, and calls for enhanced equity across farm programs—the specialty crop industry is requesting that overall mandatory spending for programs supporting this sector be increased. Similarly, despite concerns about program enforcement, continued demand growth for organic products along with heightened equity concerns are driving calls for increased investment in the organic sector. Within these sectors, however, are concerns that increased attention to local and regional food systems within USDA and at the state and local levels could result in a reduction in resources for certain established program recipients in the specialty crop and organic sectors, as these groups share many similar types of programs.\nFarm bill recommendations proposed by the Specialty Crop Farm Bill Alliance (SCFBA) cover most farm bill titles. SCFBA calls for maintaining funding for each of the primary nutrition programs, including the Fresh Fruit and Vegetable (Snack) Program, minimum purchase requirements under the Section 32 program, and the DoD Fresh program; and also calls for other changes to improve the nutritional status of U.S. food stamp recipients. SCFBA requests expanded funding for Specialty Crop Block Grants, various USDA Animal and Plant Health Inspection Service (APHIS) plant pest and disease programs, and the Specialty Crop Research Initiative (SCRI). SCFBA recommends that the restrictions on planting flexibility discussed above be maintained and that the pilot program established in the 2008 farm bill be eliminated. The American Fruit and Vegetable Processors and Growers Coalition, however, supports removing the planting restriction. SCFBA recommends permanent disaster assistance and increasing payment limitations on tree replacement. Within export promotion, SCFBA requests that current MAP funding be maintained and that funding for TASC be expanded, among other provisions. SCFBA recommends that many of the relevant conservation programs be expanded to assist specialty crop producers, and that AGI limitations not apply to conservation programs. Finally, SCFBA recommends continued funding for the Value-Added Producer Grant Program and recommends changes to H-2A workers under the Rural Development Farm Labor Housing Loans and Grants program.\nFarm bill recommendations promoted by the organic industry are focused on existing programs, including funding for NOP, OREI, other research programs, the National Organic Certification Cost-Share Program, and organic data collection at USDA. In addition, these groups support improving organic producers' access to most USDA conservation programs. Recommendations also concern crop insurance for organic producers, various marketing issues, and potential losses associated with contamination of organic crops from genetically engineered crops.", "Omnibus farm bills traditionally have not provided livestock and poultry producers with price and income support programs like those for major crops such as grains, cotton, and oilseeds. Instead, the livestock and poultry industries look to the federal government for leadership and support in resolving foreign trade disputes; establishing transparent, science-based rules for importing and exporting animal products; and reassuring domestic and foreign buyers that these products are safe, of high quality, and free from pests and diseases. Other long-standing public policy concerns include animal agriculture's obligations with respect to food safety, environmental protection, and animal welfare.", "The 2008 farm bill was the first to include a title (Title XI) that specifically covered livestock and poultry issues. Prior to the enactment of the 2008 farm bill, provisions that were important to livestock and poultry producers were usually included in a miscellaneous title. The livestock title included 17 sections that covered a diverse range of issues. Of the 17 sections, six addressed animal health and diseases, two covered inspection, and two dealt with poultry and swine production contracts. The remaining seven sections covered ongoing issues such as mandatory price reporting and country-of-origin labeling (COOL). The livestock title also included provisions for food safety improvements, a national sheep industry improvement center, an annual report on investigations of possible violations of the Packers and Stockyards Act (7 USC §181 et seq .); redefinitions of \"association of producers\" and \"handler\" for the Agricultural Fair Practices Act (7 U.S.C. §2301 et seq .); and a requirement that USDA conduct a study on the use of manure as fertilizer.", "In farm bill policy discussions, some livestock industry groups have expressed a view that the next farm bill should not include a livestock title. The National Cattlemen's Beef Association (NCBA), one of the largest organizations representing cattle and beef producers, indicated that it would work to eliminate or reduce the livestock title in the next farm bill to minimize federal involvement in cattle production. NCBA cites USDA's proposed rule on livestock and poultry marketing and mandatory country-of-origin labeling (COOL) policies as examples of farm bill initiatives that have not benefited cattle producers. Other groups have indicated that the next farm bill should include a livestock title, especially to address competition issues.", "Substantial market consolidation in the livestock and poultry industries has led past Congresses to propose and debate market competition measures in previous omnibus farm bills. Some of the measures, such as a ban on packer ownership of cattle, were rejected; others were enacted—for example, the production contract provisions in the 2008 farm bill. In June 2010, USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA) published a proposed rule to implement Sections 11005 and 11006 of the 2008 farm bill. The proposed rule would have added new regulations clarifying conduct that violates the Packers and Stockyards Act of 1921 (P&S Act). The P&S Act regulations are used by USDA to ensure fair competition in livestock and poultry markets. USDA's proposed rule was controversial in the livestock and poultry industries, and some Members of Congress expressed their concerns in letters to USDA and in congressional oversight hearings. Supporters believed the rule would make markets more transparent and fair. Opponents argued that the rule would interfere in the day-to-day workings of the market, making it less efficient and leading to increased litigation. Section 721 of the FY2012 Agriculture Appropriations Act ( P.L. 112-55 ), enacted November 18, 2011, prevented USDA from using funds to implement most provisions of the proposed rule. In response, USDA issued a final rule on December 9, 2011, which included only four of the original 13 proposed provisions.\nCongressional concern about competition in the livestock and poultry markets remains. So far in the 112 th Congress, similar bills have been introduced that address competition issues in the livestock market. The Livestock Marketing Fairness Act ( S. 1026 and H.R. 2631 ) would amend the P&S Act to prohibit certain types of forward contracts. As in past farm bill debates, interest likely will continue in addressing some consolidation and competition issues in the livestock and poultry markets. Congress might debate some of the GIPSA provisions that were not finalized in December 2011.", "Feed is the single largest input cost for livestock and poultry producers. With current high feed prices, feed costs account for 50% to 80% of cash operating expenses for livestock and poultry producers. Livestock and poultry producers are concerned about agricultural policies that can raise feed prices. These include commodity support programs, conservation programs that take cropland out of production, and incentives that might shift corn to fuel use, thus bidding up the price of corn, a key feed ingredient.", "The 2008 farm bill authorized three new livestock disaster assistance programs. The Livestock Forage Disaster Program (LFP) assists ranchers who graze livestock on drought-affected pastureland or grazing land. The Livestock Indemnity Program (LIP) compensates ranchers at a rate of 75% of market value for livestock mortality caused by a disaster. The Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) compensates producers for disaster losses not covered under other disaster programs. However, all three of these programs expired on September 30, 2011. Reauthorization might be considered in the next farm bill, but could be difficult since the programs have no baseline funding beyond FY2011.", "Many retail food stores are now required to inform consumers about the country of origin of ground and muscle cuts of beef, pork, lamb, chicken, and goat. The rules are required by the 2002 farm bill ( P.L. 107-171 ), as amended by the 2008 farm bill ( P.L. 110-246 ), and were implemented by USDA in March 2009. In response to COOL's implementation, Canada and Mexico, major suppliers of live cattle and hogs that are fed in U.S. facilities and processed into beef and pork in U.S. meat packing plants, requested consultations with the United States about concerns that COOL would adversely affect their livestock sectors. In November 2009, Canada and Mexico requested that the World Trade Organization (WTO) establish a dispute resolution panel to consider their case. In November 2011, the WTO's dispute settlement panel ruled that COOL violates WTO trade standards. The United States has until March 23, 2012, to decide whether or not to appeal the WTO ruling. If COOL laws are not made WTO-compliant, the United States would be subject to trade retaliation. Compliance with WTO rules is often a concern in farm bill policy debates. Hence, Congress could address the WTO ruling in the context of the next farm bill.", "Farm animals are not covered under the Animal Welfare Act (AWA; 9 U.S.C. §2131 et seq.), which requires minimum care standards for most types of warm-blooded animals bred for commercial sale, used in research, transported commercially, or exhibited to the public. Farm animals are covered by other federal laws addressing humane transport and slaughter, however. Generally, many Members of the House and Senate Agriculture Committees have expressed a preference for voluntary approaches to humane methods of farm animal care. However, increased interest from livestock and poultry producers and Members of Congress in animal welfare for farm animals, such as horse slaughter and cage standards for egg-laying hens, could generate debate about animal production practices and animal welfare in the next farm bill.", "The federal government has a long history of providing credit assistance to farmers. This intervention has been justified over time by many factors, including the presence of asymmetric information among lenders, asymmetric information between lenders and farmers, lack of competition in some rural lending markets, insufficient lending resources in rural areas compared to more populated areas, and the desire for targeted lending to disadvantaged groups such as beginning farmers, small farms, or socially disadvantaged farmers.\nThe agricultural lender with the greatest connection to the federal government is the Farm Service Agency (FSA) in the U.S. Department of Agriculture (USDA). It issues direct loans to farmers who cannot qualify for regular commercial credit, and guarantees the repayment of certain loans made by other lenders. Thus, FSA is called a lender of last resort. FSA also has statutory mandates to target loans to disadvantaged groups, and is therefore sometimes called a lender of first opportunity. Special loan pools are available to beginning farmers and socially disadvantaged groups based primarily on race and gender. Of about $240 billion in total farm debt, FSA provides about 2% through direct loans, and guarantees about another 4%-5% of loans.\nAnother agricultural lender with a statutory connection to the federal government is the Farm Credit System (FCS). It is a cooperatively owned and federally chartered private lender with a statutory mandate to serve only agriculture-related borrowers. FCS makes loans to creditworthy farmers, and is not a lender of last resort, but is a government-sponsored enterprise (GSE) receiving tax benefits, among other preferences, in return for restrictions on its lending base. FCS accounts for about 40% of farm debt. A third agricultural lender with a federal mandate is Farmer Mac, another GSE that is privately held, and provides a secondary market for agricultural loans.\nOther agricultural lenders do not have a government connection. These include commercial banks (about 44% of market share), life insurance companies, and individuals, merchants, and dealers.\nThe statutory authority for FSA, FCS, and Farmer Mac is permanent, but farm bills often make adjustments to eligibility criteria and the scope of operations. For example, the 2008 farm bill increased FSA direct lending limits per farmer, further prioritized lending for beginning and socially disadvantaged farmers, and, among other changes, created Individual Development Accounts for beginning farmers, although the latter have yet to be funded by appropriators.", "Credit issues are not expected to be a major part of the next farm bill, and changes that might occur are not expected to be particularly significant or comprehensive within the scope of agricultural credit statutes. Nonetheless, several issues are likely to arise as legislation develops:\nfurther targeting of Farm Service Agency lending resources to beginning and socially disadvantaged farmers; providing for carve-outs for emerging or \"non-traditional\" parts of the agricultural industry, such as local or regional food systems, organic agriculture, and sustainable production, or providing financing for farmers, cooperatives, and/or food businesses to serve \"food deserts\" or finance urban agriculture; resolving whether existing term limits (a maximum number of years that farmers can qualify) should apply to certain Farm Service Agency loans, or whether some term limits should be suspended (as was the case through 2010); and determining the scope of FCS and/or Farmer Mac lending activities, including the carve-outs mentioned above.", "The federal government provides support for U.S. agricultural exports through three types of programs: export market development, export credit guarantees, and direct export subsidies. Legislative authorizations for agricultural trade programs are included in Title III of the 2008 farm bill. Administered by USDA's Foreign Agricultural Service (FAS), the programs are funded through the borrowing authority of USDA's Commodity Credit Corporation (CCC). One of them, the Market Access Program (MAP), has been targeted for cuts or elimination in a number of deficit reduction proposals.", "Export market development programs, whose primary aim is to assist U.S. industry efforts to build, maintain, and expand overseas markets for U.S. agricultural products, include the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for Specialty Crops Program (TASC). The 2008 farm bill extended authority and funding for these programs until FY2012, made organic products eligible for MAP support, and increased funds available to address sanitary and phytosanitary barriers to U.S. specialty crops.\nThe 2008 farm bill also reauthorizes two FAS-administered export credit guarantee programs: GSM-102 short-term guarantees and Facilities Financing Guarantees. Under these programs, the CCC provides payment guarantees for the commercial financing of U.S. agricultural exports. Two other export guarantees—GSM-103, which guaranteed longer-term (3-10 years) export financing, and the Supplier Credit Guarantee Program (SCGP), which guaranteed very short-term (up to 1 year) financing of exports without bank intermediation—were repealed by the 2008 farm bill . GSM-103 was repealed in response to a World Trade Organization (WTO) dispute panel decision that it violated U.S. export subsidy reduction commitments. SCGP was repealed because the program had a high rate of defaulted obligations and showed evidence of fraud.\nThe 2008 farm bill reauthorized only one direct export subsidy program for agricultural products, the Dairy Export Incentive Program (DEIP). The farm bill repealed authority for the historically largest, but little used, export subsidy program, the Export Enhancement Program (EEP), which mainly subsidized exports of wheat and wheat products.", "", "Federal support for agricultural export promotion invariably raises questions about the appropriateness of government support for private-sector export promotion, and about the effectiveness and impact of these programs. Some argue that MAP and FMDP are forms of corporate welfare in that they fund activities that private firms and industry groups could and should fund themselves. Other critics argue that the principal beneficiaries of export promotion programs are foreign consumers and that funds could be better spent, for example, on educating U.S. firms about how to export and overcome trade barriers. Reauthorization of export promotion programs, eligibility of certain types of organizations and producer groups, and the levels of funding for various programs will all likely be topics of debate as policymakers examine farm bill trade programs for cost savings.", "In response to a WTO dispute settlement in the Brazil-U.S. cotton case, the 2008 farm bill made several changes to the agricultural export credit guarantee programs. The dispute panel found that the favorable terms (i.e., the low interest rate and the long repayment period for borrower countries) provided under U.S. export credit guarantee programs (GSM-102 and GSM-103) were effectively export subsidies inconsistent with the United States' obligations under the WTO's agreement on agriculture. The farm bill's repeal of GSM-103 codified the FAS decision in 2006 to suspend operation of GSM-103. At the Administration's request, Congress lifted the statutory 1% cap on loan origination fees for GSM-102, which the WTO dispute panel had cited as a subsidy element in the operation of the export credit guarantee programs. Despite repeal of GSM-103 and changes to the GSM-102 program made in response to the WTO cotton dispute settlement, Brazil has argued that the U.S. response was inadequate. Farm bill discussion of trade program reauthorization will provide an opportunity to further review U.S. credit guarantee programs in light of U.S. commitments under WTO agreements.\nAgricultural export subsidies are a major issue in the stalled Doha Round of multilateral trade negotiations within the WTO, in which a preliminary agreement has been reached to eliminate all agricultural subsidies by 2013, pending a successful completion of the round. The 2008 farm bill moved the United States closer to the spirit of that agreement by repealing legislative authority for what at one time was the larger of two U.S. export subsidy programs, the Export Enhancement Program (EEP). The last year of significant EEP subsidies was 1995, and there were no EEP subsidies during the period covered by the 2002 farm bill (2002-2007). The farm bill debate may include consideration of the relationships not only of trade programs to WTO commitments but of domestic subsidy programs as well.", "Agricultural conservation began in the 1930s with a focus on soil and water issues associated with production and environmental concerns on the farm. By the 1980s, agricultural conservation policies had broadened to include environmental issues beyond soil and water, especially environmental issues related to production (off the farm). Many of the current agricultural conservation programs were enacted as part of the 1985 farm bill ( P.L. 99-198 , Food Security Act of 1985), which also included for the first time a conservation title. These programs have been reauthorized, modified, and expanded, and several new programs have been created, primarily in subsequent omnibus farm bills. While the number of programs has increased and techniques to address the problems are changing, the basic approach has remained unchanged—voluntary farmer participation encouraged by land rental payments, cost-sharing conservation practices, technical assistance, education, and basic and applied research.", "Since its first inclusion in the 1985 farm bill, the conservation title has been a significant and visible title in the farm bill. As the title has grown in both size and interest, so too have questions and concerns about program funding, policy objectives, individual program effectiveness, comparative geographic emphasis, and the structure of federal assistance. Congress has continued to debate and address these concerns with each omnibus farm bill. The 2008 farm bill was no exception. While almost all existing conservation programs were reauthorized, several programs were modified to address concerns. The 2008 farm bill also created new programs, expanding the range of USDA conservation activities.\nCurrently more than 20 agricultural conservation programs are administered by USDA, mostly by the Natural Resources Conservation Service (NRCS). Starting in 1985, each succeeding farm bill has expanded the range of natural resource problems to be addressed as well as the number of conservation programs and level of funding. In some cases, individual programs are subsets of overarching programs that apply to a specific place or a specific resource, but with unique provisions and eligibility requirements. Though similarities among these programs exist, each is administered with slight differences. Generally, farm bill conservation programs may be grouped into the following categories based on similarities: working land programs, land retirement and easement programs, conservation compliance programs, and other programs and overarching provisions. Other types of conservation programs such as watershed programs and emergency programs are authorized in other legislation and are generally not discussed in the context of a farm bill. For a list of farm bill agricultural conservation programs, see the text box below and CRS Report R40763, Agricultural Conservation: A Guide to Programs .", "Current budgetary constraints continue to drive the debate on conservation in the next farm bill. Most programs authorized in the 2008 farm bill, including conservation programs, will expire on September 30, 2012. Additional issues under discussion include program consolidation, environmental regulation, the balance between land retirement and working lands programs, and conservation compliance.", "During the 2008 farm bill debate, conservation groups and producers found themselves competing with other farming interests for the necessary resources to expand or even continue many conservation programs. In the end, the conservation title was one of the few titles within the 2008 farm bill that received an increase in funding. Most conservation supporters saw this as a victory for conservation. Since passage of the 2008 farm bill, conservation program funds have been repeatedly reduced through annual appropriations, many times at the request of the Administration. Advocates for these programs contend that these reductions significantly change the intent of the farm bill, compromise the ability of the programs to benefit producers and the environment, and increase the backlog of applications awaiting funding each year. Others, including those interested in reducing agricultural expenditures or redirecting funds to other agricultural purposes, counter that, even with the reductions, overall funding for conservation has not been reduced.\nWhile most conservation advocates criticize reduced funding for any fiscal year, additional emphasis was placed on reductions proposed in FY2012. Most farm bill program authority expires at the end of FY2012. Because CBO uses the last year of authorization to determine the 10-year funding baseline for the farm bill reauthorization, a reduction in the last year's authorized level could exponentially affect the overall farm bill baseline. To address this concern, the FY2012 Agriculture Appropriations Act ( P.L. 112-55 ) extends the expiration date of selected farm bill conservation programs to FY2014. This allows appropriators to score savings in FY2012, but not affect the overall farm bill baseline because the last year of program authority for many of the reduced programs becomes 2014. Those concerned about conservation funding in the next farm bill point out that savings from reducing mandatory conservation programs through appropriations is not typically used for other conservation or environmental benefits. Therefore, maintaining the conservation program baseline for the next farm bill does not guarantee that those funds will continue to support conservation programs. Additionally, some conservation programs do not have a baseline beyond 2012 and reauthorization would require additional funding offsets or cuts elsewhere.", "Before the 1985 farm bill, few conservation programs existed, and only two would be considered large by today's standards. The current conservation portfolio includes more than 20 distinct programs with annual spending over $5 billion. The differences and number of programs can create confusion about the purpose, participation, and policies of the programs. Discussion frequently arises during farm bill reauthorization about simplifying or consolidating conservation programs to reduce overlap and duplication and generate savings. Prior to the 2008 farm bill, USDA proposed a major consolidation of several conservation programs. While the 2008 farm bill did eliminate some conservation programs, it also created several more. In light of current funding constraints, program consolidation to generate potential savings could be viewed favorably during reauthorization. On the other hand, program consolidation could remove the geographic or issue-specific emphasis that was originally created by Congress to address identified priorities.", "Farm bill conservation programs are a voluntary federal policy to address environmental impacts related to agriculture. Another way for the federal government to address environmental impacts is through regulation. Increasingly, conservation programs are called upon to prevent or reduce the need for environmental regulation. While the farm bill debate will not likely focus specifically on environmental regulations because most environmental law originates outside the House and Senate Agriculture Committees, debate could focus on strengthening the voluntary response to environmental issues through conservation programs. This, in turn, could influence the funding debate and the portion of the overall farm bill budget made available for conservation programs.", "Land retirement programs, such as the CRP, began with a soil conservation and commodity-reduction purpose, during a time of economic downturn in the farm sector. As the conservation effects of these programs were identified, the potential emerged for generating multiple environmental benefits beyond soil conservation, including benefits to wildlife habitat, air and water quality, and carbon sequestration. For producers, land retirement programs are attractive because they receive rental payments at acceptable levels. However, with high commodity prices and incentives to plant crops, producer interest in land retirement may be declining. Some predict that high commodity price levels may continue for the foreseeable future, thus shrinking farmer interest in land retirement for some time. Also, increased commodity prices can lead to increased land rental rates, which in turn increases the cost of land retirement programs. These factors could signal a shift in farm bill conservation policy away from the traditional land retirement programs toward conservation working lands programs—programs that keep land in production while encouraging conservation practices to address natural resource concerns. Most conservation and wildlife organizations support both land retirement and working lands programs; however, the appropriate \"mix\" continues to be debated. With any proposal, it is likely that environmental interests will not support a reduction in one without an increase in the other.", "The 1985 farm bill created the highly erodible lands (HEL) conservation and wetland conservation compliance programs, which tied various farm program benefits to conservation standards. The provision has since been amended numerous times to remove certain benefits and add others. Most notably, the 1996 farm bill ( P.L. 104-127 ) removed crop insurance premium subsidies as a program benefit that could be denied and added production flexibility contracts—the precursor to what is now referred to as direct payments. The debate surrounding this decision centered on the desire to encourage producers to purchase crop insurance and to respond to farmer concerns that compliance requirements were intrusive.\nCurrently, the major farm program benefits that could be affected by compliance requirements are counter-cyclical payments, direct payments, and conservation programs. Presently, high commodity prices have resulted in few or no counter-cyclical payments. Conservation program participation and direct payments are the remaining major benefits that could be affected by compliance. The current financial climate has caused direct payments under the farm commodity support programs to come under considerable scrutiny. Many believe that these payments could be reduced or eliminated in the next farm bill as a budget saving measure. Conservation advocates are concerned that without direct payments producers will have little incentive to meet conservation compliance and wetland conservation requirements. Many are advocating for crop insurance premium subsidies to again be included as a program benefit that could be denied if a producer is in violation of conservation compliance requirements. Industry organizations counter that the recouping of crop insurance premium subsidies due to noncompliance could result in fewer producers willing to purchase crop insurance.", "According to the Congressional Budget Office's March 2011 baseline, domestic nutrition programs make up nearly 80% of spending in the farm bill (see Figure 1 , above). Domestic nutrition assistance programs reauthorized in the farm bill include the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), the Emergency Food Assistance Program (TEFAP), the Commodity Supplemental Food Program (CSFP), the Food Distribution Program on Indian Reservations (FDPIR), and other programs. The SNAP program accounts for the vast majority of the spending in Title IV. At the time of enactment, the nutrition title of the 2008 farm bill had a projected new cost of about $3 billion over five years (FY2008-FY2012) and well over $9 billion over ten years (FY2008-FY2017). The major share of this new spending was due to changes in the SNAP program.\nMost farm bill domestic nutrition assistance programs, except for the CSFP, the FDPIR, and the administrative and distribution-cost component of TEFAP, generally are treated as mandatory entitlements for budget purposes. For SNAP, this means that eligibility, benefits, or other program rules must be changed in order to affect costs, although, as an appropriated entitlement, SNAP is limited to spending those funds that are specifically appropriated. Discretionarily funded programs in the farm bill are CSFP, the administrative and distribution cost component of TEFAP, and the amount set aside for the FDPIR.\nThe Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the National School Lunch Program, the National Breakfast Program, the Child and Adult Care Food Program, the Special Milk Program, and other programs located in the Child Nutrition Act of 1966 and the Russell National School Lunch Act are not reauthorized in the farm bill. These programs were most recently reauthorized in December 2010, in P.L. 111-296 , the Healthy, Hunger-Free Kids Act of 2010.", "", "Formerly known as the Food Stamp Program, SNAP provides benefits to low-income, eligible households on an electronic benefit transfer (EBT) card. Benefits can be exchanged for eligible foods at authorized retailers. In FY2011, the average monthly participation in the SNAP program was 44.7 million individuals. Federal spending for FY2011 totaled approximately $75.3 billion. The vast majority of the spending was the cost of benefits themselves, which are 100% federally financed.\nSNAP provides eligibility to households based on low income and limited assets. Households must have net income (income after specified deductions) below 100% of the federal poverty guidelines. In addition, federal rules provide that households without an elderly or disabled member must have gross income (income before deductions) below 130% of the federal poverty guidelines. Additionally, the regular eligibility rules provide that a household must have liquid assets below a specified level (in FY2011, a household's liquid assets must be below $2,000, and below $3,000 in the case of households with an elderly or disabled member). Federal law also makes households categorically, or automatically, eligible for SNAP when all members are either eligible for or receive benefits from the Temporary Assistance for Needy Families (TANF) program, Supplemental Security Income (SSI), and state-financed General Assistance (GA) programs.\nThe enacted 2008 farm bill made many changes to SNAP, including changing the program name from the Food Stamp Program to SNAP. The 2008 law increased benefits (and, to a limited degree, liberalized income eligibility standards) for most households by raising and then indexing the minimum amount of household monthly income (the standard deduction ) that is disregarded when calculating household benefits (and, to a limited degree, income eligibility). It also increased minimum benefits for recipient households near the income eligibility limits by calculating minimum benefits as 10% of the (indexed) maximum monthly benefit for a one-person household. The 2008 farm bill also included several policies related to program integrity allowing for participant disqualification . The law gives states the authority to provide \"transitional\" SNAP benefits to households that stop receiving cash assistance. Indexing for inflation was added to the asset limit , and tax-recognized retirement and education savings were excluded from asset calculation. It included multiple changes to the systems and processes by which state agencies issue benefits and update eligibility; this includes expanding the application of simplified reporting rules to include the use of telephonic signatures. If an over-issuance of benefits is due to the state's \"major systemic error,\" USDA was given the authority to recoup the over-issuance from the state instead of the recipient. The 2008 farm bill also authorized pilot projects designed to improve the health status of participants, including $20 million for \"point of purchase incentive\" projects. Since then, the Healthy Incentives Pilot in Hampden County, Massachusetts, has been instituted.", "Under TEFAP, the federal government provides food commodities to states. This assistance supplements other sources of food aid for needy persons and often is provided in concert with food bank and homeless shelter projects, either as food packages or meals. Eligibility decisions for TEFAP assistance are made by states, and they choose local administering agencies. National emergency provider and food bank networks (like Feeding America) also are heavily involved. In addition to state allocations in entitlement commodities, each state receives a share of discretionary money to fund expenses of administration and distribution (storage, transportation) of the commodities. Moreover, state entitlements to TEFAP commodities are supplemented with bonus commodities (about $150 million in FY2005) that USDA has acquired in its agriculture support programs.\nThe 2008 farm bill increased mandatory funding for TEFAP commodities. For FY2008, an immediate infusion of $50 million was directed. For FY2009, $250 million in TEFAP commodities was mandated, up from $140 million under prior law. For FY2010 through FY2012, the $250 million provided in FY2009 was adjusted for food-price inflation. The farm bill also increased the annual authorization of appropriations for TEFAP administrative and distribution costs to $100 million.", "The CSFP provides supplemental foods to low-income elderly persons and low-income pregnant, postpartum, and breastfeeding women, infants, and children through over 140 projects in 35 states and the District of Columbia, and on two Indian reservations. For elderly participants, eligibility is limited to those with income below 130% of the federal poverty income guidelines; for households composed of women, infants, and children, the income ceiling is higher (185% of the poverty guidelines). The vast majority of CSFP participants are elderly; for FY2010, 96% of CSFP's 518,000 participants were elderly (statutorily defined as 60 years of age or older). The foods are purchased by USDA and distributed to grantees, and food packages received and distributed by CSFP projects are specific to the nutritional needs of participants. CSFP grantees also receive funding for administrative costs. Commodities and administrative funding generally are apportioned by the number of persons served in the prior year; if new money is appropriated or if allocated \"slots\" are not used, new projects can be added. The 2008 farm bill barred USDA from requiring that CSFP projects prioritize assistance among the elderly or women, infants, and children; all of those groups remain eligible.", "", "Puerto Rico, American Samoa, and the Northern Marianas Islands do not participate in the SNAP program. Instead they receive a nutrition assistance block grant, under which they administer a nutrition assistance program with service delivery unique to each territory. Indian tribal organizations may choose to operate the Food Distribution Program on Indian Reservations (FDPIR), instead of having the state offer regular food stamp benefits; the full cost of benefits and most administrative expenses are covered by the federal government. This option operates on over 250 Indian reservations in 22 states.", "Under the SFMNP, low-income seniors receive vouchers that they can redeem at farmers' markets and roadside stands for fresh produce. The 2008 law increased mandatory funding from $15 million to $20.6 million per year.", "As discussed above, the school meals programs are reauthorized in legislation separate from the farm bill; however, the 2008 farm bill did include several provisions and resources that pertain to the child nutrition programs.\nFre sh Fruit and Vegetable Program . Sometimes called the \"snack program,\" the Fresh Fruit and Vegetable Program provides funds allowing schools to purchase fresh fruits and vegetables as snacks. The original pilot program, which operated in some of the states, was replaced and expanded to all states in the 2008 farm bill. Formula-based funding is made available through provisions in Title XIV (\"Section 32\") of the enacted law. Money is allocated to states under a formula. Priority is given to schools that have high proportions of low-income students; funding was included for evaluation and administrative costs. Additional purchases of fruits, vegetables, and nuts . The 2008 law provides that, in addition to the minimum ($200 million per year) acquisition of fruits, vegetables, and nuts for use in domestic food assistance programs required under the 2002 farm bill, USDA will purchase additional fruits, vegetables, and nuts for use in these programs. Geographic preference . The 2008 law requires that USDA allow schools and other institutions receiving funds under the National School Lunch and Child Nutrition Acts (and the Defense Department, acting as a fresh fruit and vegetable buying agent) to use geographic preference for the procurement of \"unprocessed agricultural products, both locally grown and locally raised.\"", "In the 1996 farm bill, Congress established a program of assistance for community food projects, intended to promote innovative local self-help initiatives to meet nutrition and farm needs. The 2008 farm bill required a grant to a nonprofit organization to establish and support a \"healthy urban food enterprise development center\" to increase access to healthy affordable foods (including locally produced food) in \"underserved communities.\" The grant has since been awarded to the Wallace Center at Winrock International. It also authorized a new pilot program to provide grants to high-poverty schools for initiatives in hands-on gardening; funds have not been appropriated to implement these grants.", "While the 2008 farm bill included such changes as new expanded SNAP policies and a larger mandatory commitment to TEFAP, current farm bill discussions come at a time of increased interest in the Budget Control Act's statutory framework for deficit reduction. Also, presumably due in part to the consumer purchasing power of the nutrition programs, local nutrition and producer groups are pursuing policies to increase their share of program funding and participation.", "In the 112 th Congress thus far, there has been an interest in changing categorical eligibility (i.e., the eligibility of SNAP applicants based on their receipt of benefits from other low-income programs). In current law, SNAP eligibility is available to applicants that are already receiving benefits from low-income programs, including Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), and state-financed General Assistance (GA) programs. As of October 2011, 43 states allow for \"broad-based\" categorical eligibility through a TANF-funded benefit, many of which do not include a test for liquid asset holdings. S. 1658 and H.R. 3111 include limitations to categorical eligibility in SNAP. An amendment ( S.Amdt. 810 ) to the FY2012 Agriculture appropriations bill would have prohibited the use of FY2012 funds for categorical eligibility in SNAP, but was defeated. Asset limits in SNAP are related to categorical eligibility. Within the last year, Pennsylvania and Michigan, for instance, added an asset limit to their programs. Because of categorical eligibility, many states are able to deem applicants eligible without conducting an assessment of applicants' assets. As these policies are considered, possibly in the next farm bill, so may be the role of asset tests in general.", "In recent years, media attention has focused on what SNAP benefits can be used to purchase—in particular on SNAP use at fast food restaurants and SNAP benefits for soda (or other perceived \"junk food\"). The next farm bill may offer policymakers the opportunity to revisit either the eligible foods or the eligible retailers for SNAP benefits.\nSince the start of the modern SNAP program, a state restaurant option has existed, whereby states may choose restaurants to serve those that have difficulty preparing food, primarily the elderly, homeless, and disabled populations. FY2010 data indicate that approximately $20 million, or 0.03% of SNAP benefits, were redeemed at \"meal delivery/private restaurants.\"\nIn August 2011, USDA denied New York City's waiver application asking to disallow the use of SNAP benefits to purchase soda, prompting editorial discussion on the strengths and weaknesses of the SNAP program and challenges of balancing the goals of reducing food insecurity with preventing obesity. The evaluation of the Healthy Incentives Pilot (mentioned above) may play a role in policy options, although it is unclear if evaluation results will be complete at the time of farm bill formulation.\nPolicymakers also see SNAP as an opportunity to improve access to healthy foods and/or an opportunity to bolster the local farm economy. In the 112 th Congress, bills have been introduced that seek to expand a wide array of farm-to-consumer retailers' access to wireless EBT machines, enabling farm-to-consumer retailers like roadside stands and green carts to accept benefits more easily. Policies such as these could potentially grow the business of local farmers and increase low-income community access to fresh foods.", "As with the local preference provision in the 2008 farm bill, interest exists in encouraging schools to purchase local crops and foods. Ideas may include procurement policies that build on the local preference provision in the last farm bill, or ways in which USDA commodity food distribution might either include more locally grown options or give schools the opportunity to redeem their commodities entitlements for local goods. Bills in this area have been introduced in the 112 th Congress.", "The United States provides U.S. agricultural commodities, procured by USDA, as the primary form of emergency and economic development assistance in response to food security problems in developing countries. Title III of the 2008 farm bill reauthorized food aid programs established by the Food for Peace Act (formerly known as P.L. 480, the Agricultural Trade and Development Assistance Act of 1954); the Food for Progress Act of 1985; the McGovern-Dole International Food for Education and Child Nutrition Program (authorized in the 2002 farm bill); and the Bill Emerson Humanitarian Trust. The 2008 farm bill also established a four-year pilot program of Local and Regional Food Aid Procurement Projects (LRP).\nFood for Peace Act Title II, Emergency and Private Assistance Programs, is the primary vehicle for U.S. international food aid. Title II of Food for Peace, administered by the U.S. Agency for International Development (USAID), has averaged about $2 billion annually over the span of the 2002 and 2008 farm bills. Title II provides donations of U.S. agricultural commodities to respond to emergency food needs or to be used in development projects. All other food aid programs are administered by USDA's Foreign Agriculture Service (FAS). For USDA-administered international food aid programs, the annual average funding between FY2008 and FY2010 was $341 million.", "", "The 2008 farm bill made several changes to the food aid programs authorized under P.L. 480, including changing the name of the underlying legislation to the Food for Peace Act; changing the policy objectives of the programs to focus exclusively on providing humanitarian assistance and promoting global food security; deleting export market development as a program goal; increasing authorized funding levels to $2.5 billion; and setting a minimum amount of available food aid resources for non-emergency (development) projects that has come to be known as the \"safe box.\" The 2008 farm bill also increased funding for the use of shelf-stable, prepackaged foods and prepositioning of commodities overseas, both innovations that are aimed at improving the cost-effectiveness and timeliness of food aid delivery. In addition, the 2008 farm bill reauthorized the Farmer-to-Farmer program of voluntary technical assistance in agriculture, and established the four-year, $60 million, LRP pilot program.", "The 2008 farm bill extended authority for the Food for Progress (FFP) program, without changes, through the end of FY2012. FFP provides for the donation of U.S. agricultural commodities to developing countries committed to introducing or expanding free enterprise. The 2008 farm bill reauthorized the McGovern-Dole program, which provides commodities and financial and technical assistance to implementing partners to carry out school feeding and child nutrition programs in developing countries, and established USDA as the permanent home for the program. In addition, the farm bill extended the authority for the Bill Emerson Humanitarian Trust (BEHT) through FY2012. The BEHT is a reserve of commodities and cash used to meet unanticipated food aid needs or to meet food aid commitments when U.S. domestic supplies are short.", "The 2008 farm bill debate over U.S. international food aid programs focused primarily on how to make the delivery of food aid more efficient and effective. Debate during the upcoming farm bill will also likely include discussions about overall funding levels and strategic program priorities, given current fiscal constraints. Farm bill debate might focus on improving the quality of food aid, the future of local and regional procurement, and the costs and benefits of cargo preference requirements.", "The 2008 farm bill increased the annual authorization level for Title II Food for Peace programs to $2.5 billion—about $500 million more annually than levels provided in each fiscal year for Title II under the previous farm bill. Annual appropriations for Title II, however, have fallen short of this maximum authorized level in every year since the enactment of the 2008 farm bill. Given current efforts to rein in federal spending, the level of funding for international food aid is likely to be a subject of considerable debate in the next farm bill.\nIn addition, the future of the so-called \"safe box\" for funding of development (non-emergency) food aid projects under Title II is likely to be a topic of debate. Over the past decade, emergency food aid has been about three-quarters of the total funds available, while non-emergency food aid accounts for the balance. The argument made by advocates of the safe box (many private voluntary organizations and cooperatives) is that it provides assurances of funding for development projects when they monetize (sell) the commodities for cash to finance projects. During the 2008 farm bill debate, the Bush Administration expressed concerns about the adequacy of food aid resources to respond to emergencies. Organizations such as Oxfam and others share this concern and argue that the safe box effectively reduces the amount of available resources for emergency and humanitarian assistance and limits the flexibility of the USAID Administrator to respond to global crises. The role and level of the safe box for development food aid might be discussed in the context of the next farm bill.", "USAID projects that the demand for emergency food assistance will increase globally by 50% over the next 20 years. Given the current fiscal situation, it is not likely that funding for food aid will increase commensurately, so, many argue, there is a need to improve the efficiency and cost-effectiveness of the programs with a focus on the nutritional quality of the products provided. Proponents of improving food aid quality point out that food technologies, products, and logistics have evolved along with food aid objectives over the past few decades. Nutrition science has improved, new innovations and technologies have resulted in the development of a wide range of food products, and recent innovations in supply chain management, including increases in number of prepositioning sites, have all increased the potential to improve food aid quality. These issues will likely be an important part of farm bill discussions, especially in light of the recent release of comprehensive reports identifying issues and recommending areas of improvement in food aid programs.", "One of the most contentious issues during the 2008 farm bill debate was the proposal to use appropriated Food for Peace (P.L. 480) funds to purchase commodities locally or regionally overseas, rather than to procure U.S. commodities for direct use in international food aid programs. While the United States is the largest donor of food assistance in the world, it provides almost all international food aid in the form of U.S. commodities. Other donors, such as the EU, Japan, and Canada, provide most if not all of their food assistance in the form of cash and technical assistance. The Bush Administration proposed using some P.L. 480 funds to carry out local and regional procurement (LRP) to respond to emergencies and disasters abroad as a tool to provide emergency food aid in a more timely, cost-effective way. Many, though not all, of the private voluntary organizations and cooperatives that use U.S. commodities for development projects opposed this idea and successfully argued for a pilot project for local or regional purchases of commodities instead. As a result, the 2008 farm bill included a compromise that authorized $60 million of CCC funds (not Title II Food for Peace appropriations) over four years for a pilot project to assess the effects of local and regional purchases of food aid for emergency relief. The future of the LRP pilot, which expires in 2012, and the use of Food for Peace funds for LRP may be discussed in the next farm bill.", "U.S. cargo preference laws require that certain government-owned or government-financed cargo shipped internationally be carried on U.S.-flag vessels, with the primary objectives of supporting the U.S. merchant marine and U.S. commercial sealift capability if ever needed in times of war and national emergency. Cargo preference regulations require that 75% of all U.S. food aid commodities be shipped on U.S.-flag vessels. Because U.S.-flag vessels are given priority handling for U.S. food aid freight contracts, which effectively reduces competition, cargo preference results in considerably higher shipping costs. According to several independent studies, including a recent report issued by the Government Accountability Office (GAO), the U.S. government spends hundreds of millions of dollars in excess shipping costs annually for the U.S. food aid programs. The U.S. Maritime Administration (MARAD) compensates USAID and USDA for a portion of the costs of cargo preference compliance, called the ocean freight differential. Cargo preference might be discussed in the next farm bill as a potential area for cost reduction.", "Congress first authorized federally supported agricultural research in 1862. The scope of USDA's Agricultural Research, Education, and Extension programs has been expanded and extended many times since then. Four agencies carry out USDA's research, education, and economics (REE) mission: The Agricultural Research Service (ARS), USDA's intramural science agency, which conducts research on food and agriculture issues of national and regional importance; the National Institute of Food and Agriculture (NIFA), its extramural science agency, which distributes federal funds to land-grant universities and other outside partners for state- and regional-level research, education, and extension activities; the Economic Research Service (ERS), which provides economic analysis of issues regarding public and private interests in agriculture, natural resources, food, and rural America; and the National Agricultural Statistics Service (NASS), which collects and publishes current national, state, and county agricultural statistics.", "Title VII of the 2008 farm bill contained the major provisions dealing with federally supported and USDA-administered agricultural research, education, and extension activities. Funds for REE programs are allocated through several mechanisms, including by statutory formula (the \"formula fund\" programs) and through competitive grant mechanisms, such as the Agriculture and Food Research Initiative, USDA's flagship competitive grants program for agricultural research. Farm bills typically authorize, extend, amend, and/or repeal the major existing authorities for REE programs and policies. At the same time, most of the $2.7 billion REE program funding levels are determined through the discretionary appropriations process.\nThe 2008 farm bill instituted significant changes in the structure and organization of the REE mission area, and extended, amended, or repealed the primary existing authorities for REE programs and policies . Title VII of the 2008 farm bill created an umbrella coordinating entity known as the Research, Education, and Extension Office (REEO) in the Office of the Under Secretary for Research, Education, and Economics, and designated the Under Secretary as the Chief Scientist of USDA. The 2008 farm bill also called for the establishment of a new agency to oversee extramural research, the National Institute of Food and Agriculture (NIFA), which effectively replaced the Cooperative State Research, Education, and Extension Service (CSREES). CSREES previously administered extramural research funding and programs and its authorities were repealed by the 2008 farm bill. USDA officially launched NIFA in October 2009.\nThe 2008 farm bill authorized the Agriculture and Food Research Initiative (AFRI), a new competitive grants program for basic and applied research, which is administered by NIFA. AFRI expanded and replaced the USDA National Research Initiative (NRI) Competitive Grants Program, and incorporated and replaced the former Initiative for Future Agriculture and Food Systems (IFAFS). Both grant programs were repealed by the 2008 farm bill. In addition, Title VII authorized the creation of several new research initiatives related to specialty crops, organic agriculture, nutrition, bioenergy, and pollinators. It also increased funding authorization for \"1890 institutions\" and broadened eligibility for federal grants for agricultural research, education, and extension, specifically for Hispanic-serving institutions.\nIt should also be noted that the 2008 farm bill included a few research provisions in other farm bill titles. These include agricultural biosecurity planning, preparedness, and response activities, and agricultural biosecurity grants, both found in Title XIV (Miscellaneous Provisions), and biomass research and development activities in Title IX (Energy).", "", "The current fiscal situation and ongoing pressure in Congress to achieve greater deficit reduction are some of the most important factors that will affect agricultural research in the next farm bill.\nWhile the 2008 farm bill provided a significant funding boost for agricultural research, relatively speaking, it is unclear whether budgetary resources and political will can sustain funding for agricultural research and related activities. Several mandatory programs that were authorized in the 2008 farm bill do not have a budget baseline that extends beyond the end of the 2008 farm bill (September 30, 2012). If policymakers want to continue these programs in the next farm bill, they will need to pay for them with other offsets. Of the 37 mandatory farm bill programs that have no budget baseline after the 2008 farm bill expires, three were authorized in the research title: the Specialty Crop Research Initiative ($230 million over five years), the Organic Agriculture Research and Extension Initiative ($78 million over five years), and the Beginning Farmer and Rancher Development Program ($75 million over five years). In addition, eight mandatory programs in the energy title (Title IX), totaling about $1.9 billion over five years, also do not have budget baseline going into the next farm bill. Some of these programs, such as the Biomass Research and Development Program, have research objectives and are administered by NIFA. (See \" Energy ,\" below.)", "As stated above, USDA provides federal funding support for both intramural research and extramural research and related activities. Federal funds for extramural agricultural research, education, and extension activities have historically been distributed to regional, state, and local agencies and partners in the form of (1) block grants (the so-called \"formula funds,\" which are divided among states according to formulas in authorizing legislation); (2) competitive grants (awarded by peer review panels); and (3) congressional earmarks.\nProposals to alter the funding composition using the above mechanisms have been offered in the past, and proposals to redirect federal formula funds to competitive grants may again resurface in the next farm bill. While the State Agricultural Experiment Stations (SAESs) were originally established with federal formula funding only, federal funding of the SAESs has fallen substantially over the past few decades, and as a result the SAES system has become relatively diversified in its funding sources over time. At the same time, USDA has placed an increasing emphasis on competitive grant funding, as exemplified by changes in the 2008 farm bill. Supporters of maintaining strong levels of formula funding argue that formula funds' research priorities and scientists are typically chosen by state and local entities, oversight is local, and funding is relatively stable and recurring. Formula funds also ensure that every state and territory will receive some minimal level of support for research, education, and training. Competitive grant funding, on the other hand, is allocated to programs with areas of identified priority by USDA, only a small share of submitted proposals are typically funded, and there is no guarantee of funding continuation after the initial grant period. On the other hand, proponents of competitive research funding argue that peer review improves the quality of research and its impact, allows USDA to coordinate its overall research objectives for the greater good of the sector, and incentivizes an agricultural research system that is not heavily dependent on one source of funding.\nUSDA differs from most other federal science agencies in allocating a significant proportion (more than half) of its annual research appropriation to intramural research agencies, including ARS, ERS, and NASS. During the last farm bill, there were some criticisms about the lack of coordination between intramural and extramural research objectives and activities, and about the potential need to improve the efficiency and impact of USDA's intramural research agencies, particularly ARS.", "In the 2008 farm bill, Congress specified that the newly authorized Agriculture and Food Research Initiative (AFRI) competitive grants program should focus on six core themes: (1) plant health and production; (2) animal health and production; (3) food safety, nutrition, and health; (4) renewable energy, natural resources, and environment; (5) agriculture systems and technology; and (6) agriculture economics and rural communities. While USDA has allocated about 30%-40% of AFRI funding to these six areas combined over the past few fiscal years, the remaining funding has gone to new and expanded research areas, as determined by the Secretary, including global food security, childhood obesity prevention, food safety, sustainable bioenergy, and climate change. In the next farm bill, Congress may take steps to address the priorities and focus of USDA REE programs.", "With most research programs, a portion of grant funds cover the indirect, or overhead, costs of the research institution, such as administration and facilities. The 2008 farm bill raised the cap on indirect costs for all competitive and noncompetitive USDA grants from 19% to 22%. There is some discussion that the next farm bill may raise the indirect cost limitation even further, potentially to 30%. USDA indirect costs are low relative to other federal agencies that make scientific grants, such as the National Science Foundation and the National Institutes of Health, and some say this prevents USDA programs from attracting the best, brightest, and most diverse talent pool to its grant competitions. At the same time, any increase in the indirect cost allowance would likely result in increased program costs, and potentially fewer and/or smaller grants made for a given grant program.", "Since 1973, omnibus farm bills have included a rural development title. The most recent is Title VI of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246). How to create and support new competitive advantage in rural areas so these areas can better compete in a global economic environment is a key issue framing current debates about the future of rural America. The issue is evolving in the context of policymakers' understanding that current policies and programs have had a decidedly mixed record of success. While the search for new sources of rural economic development is part of the policy equation, also increasingly appreciated is the need to develop new approaches for federal assistance to rural areas that go beyond the largely piecemeal, uncoordinated programming that has long characterized rural economic development policy.\nThe rural development title of farm bills generally supports (1) the infrastructure of rural areas, with traditional assistance for housing, electrical generation and transmission, water and wastewater, and community capacity, and (2) rural business creation and expansion. In the past two farm bills, policymakers also have supported innovative and alternative business development (e.g., bioenergy, value-added production, local food production), and innovative mechanisms to finance it (e.g., the Rural Microentrepreneur Assistance Program). Pressure for such alternative approaches is expected to continue as policymakers recognize the great diversity among rural communities, with some rural areas growing and prospering, and others falling further behind as their primary industries (including agriculture) decline, and population outmigration continues, particularly among younger, educated residents.", "Title VI of the 2008 farm bill expanded broadband access in rural areas, created a new micro-entrepreneurial assistance program and a new rural collaborative investment program, and authorized three new regional economic development authorities.\nThe 2008 farm bill modified the 2002 definition of \"rural\" to include the category of \"areas rural in character.\" This latter designation gives the USDA Undersecretary for Rural Development discretion to make eligible certain rural areas that otherwise might be excluded from eligibility for USDA loans and grants. The provision further modified the definition of \"rural\" to establish criteria for defining rural areas that are contiguous to urban areas. Other new provisions in the rural development title included the following programs:\nloans and loan guarantees though the Business and Industry Loan Guarantee Program for locally or regionally produced agricultural food products; a Rural Microentrepreneur Assistance Program to target rural entrepreneurs who could compete in the private sector, but who have been stymied because of lack of credit opportunities and limited equity capital options; a Rural Collaborative Business Investment Program to increase the availability of equity capital in rural areas (the provision authorizes Regional Investment Strategy Grants, Rural Innovation Grants, and a Rural Endowment Loan Program); and three new regional economic development commissions: the Northern Border Regional Commission, the Southeast Crescent Regional Commission, and the Southwest Border Regional Commission.\nThese various provisions have not all been implemented or, if implemented, have not all been funded at their authorized levels. The Rural Collaborative Business Investment Program has not been implemented. Only the mandatory spending authorization for the Rural Microentrepreneur Assistance Program was permitted in the FY2011 appropriations act. In the FY2012 Agriculture Appropriations Act (P.L. 112-55), the mandatory funding for the program was zeroed out. Of the regional commissions, only the Northern Border Regional Commission has had a director appointed. While the House-passed version of the FY2012 appropriations bill included language suggesting little support for local and regional food production efforts, the issue continues to draw support as various groups have begun to see local production as a means of improving access to fresh fruits and vegetables in underserved, low-income urban areas. Some local producers also see this as a potential new market for their agricultural products. Secretary Tom Vilsack's recently announced Regional Innovation Initiative is built around five \"pillars\" for economic development: broadband, biofuels and biobased economic development, linkages between local and regional food production, ecosystem markets development, and forest restoration and land conservation. The House-passed FY2012 Agriculture appropriations bill included language prohibiting USDA from funding the initiative. This language was not incorporated in the enacted version (P.L. 112-55).", "Some policymakers contend that current farm policies, which rely heavily on commodity support for a few production sectors, play only a small role in the vitality of most rural areas. Rural manufacturing, which tends to be lower-skilled and lower-waged, continues to lose out to foreign competition. While transformation to a service economy continues in rural America, service employment in many rural areas also tends to be in lower-wage personal services rather than business and producer services.\nEconomic development efforts in some areas have targeted entrepreneurial strategies and microenterprise development, including new markets for value-added agricultural products. Rather than simply seeking to attract relocating businesses, these approaches attempt to capitalize on a particular area's distinctive social, economic, and environmental assets and advantages to build endogenously on existing local and regional strengths. Developing a local and regional entrepreneurial culture seems to be an important approach in these efforts.\nThe mixed success of these and past efforts, as helpful to rural areas as they may be, suggests to many rural development experts and policymakers that the current structure of federal assistance to rural areas needs to be thoroughly reexamined. For example, regularly tweaking the definition of \"rural\" to determine eligibility for certain programs seems unlikely to produce significantly improved economic development outcomes. A greater emphasis on the socioeconomic relations between rural communities and urban areas within a regional context could lay the foundation for more successful rural (and regional) development outcomes. While both the 2002 and 2008 farm bills provided a greater emphasis on regional efforts, some policymakers believe that redesigning existing programs to better target regional efforts could yield positive results.\nApplication processes for program loans and grants can be a barrier for many rural projects, especially those in smaller, poorer rural areas. The way assistance is currently provided (mostly through direct and guaranteed loans) has limitations because it is too often driven by individual projects, rather than integrated into an overall development strategy. Very limited funding for rural and regional planning efforts can weaken the development outcomes of projects. Many rural communities may benefit from technical assistance support for strategic planning. Interagency coordination among federal agencies that target rural areas (e.g., Department of Housing and Urban Development, Department of Health and Human Services) is haphazard at best and could be significantly improved.\nThese are not so much new concerns about federal assistance to rural areas as they are continuing issues identified by rural development experts and rural policymakers. In the current budget environment, it may be difficult to advance substantively new approaches to rural development in the next farm bill. However, with many in Congress concerned that current federal approaches to rural development need to be reexamined and programs better targeted to overall development strategies, the new farm bill will remain the major legislative vehicle to address these issues.", "Interest in renewable energy has grown rapidly since late 2005, due in large part to a strong rise in domestic and international fuel prices and a dramatic acceleration in domestic biofuel production (mostly ethanol). Many policymakers view agriculture-based biofuels as both a catalyst for rural economic development and a response to growing energy import dependence. USDA renewable energy programs have been used to incentivize adoption of renewable energy projects including solar, wind, and anaerobic digesters. However, the primary focus of USDA renewable energy programs has been to promote U.S. biofuels production and use—including corn-starch-based ethanol, soybean-based biodiesel, and cellulosic ethanol.\nMany of the federal programs that currently support renewable energy production are outside the purview of USDA and have legislative origins outside of the farm bill. The 2002 farm bill (Farm Security and Rural Investment Act of 2002, P.L. 107-171) was the first omnibus farm bill to explicitly include an energy title (Title IX). The energy title authorized grants, loans, and loan guarantees to foster research on agriculture-based renewable energy, to share development risk, and to promote the adoption of renewable energy systems. The 2002 farm bill was followed by two major energy bills (the Energy Policy Act of 2005, P.L. 109-58; and the Energy Independence and Security Act of 2007, P.L. 110-140), which established and expanded a national biofuels mandate along with several other renewable energy programs.", "The 2008 farm bill built on the 2002 farm bill, but refocused biofuels policy initiatives in favor of non-corn feedstocks, especially cellulosic-based feedstocks, in response to growing concerns about the emerging spillover effects of increased corn use for ethanol production. Like the 2002 farm bill, the 2008 farm bill contained a distinct energy title (Title IX) that significantly expanded the number and types of programs available to support renewable energy production and use. In addition, new renewable-energy provisions were included in the rural development (Title VI), research (Title VII), livestock (Title XI), and tax (Title XV) titles of the 2008 farm bill.\nKey biofuels-related provisions in the enacted 2008 farm bill included:\nexpansion of the Biobased Markets Program (to encourage federal procurement of biobased products) and the federal Bioproducts Certification Program; additional support for biorefinery development in the Biorefinery Assistance Program (BAP), which provides grants and loan guarantees for construction and retrofitting of biorefineries for the production of advanced biofuels; restructuring of the Repowering Assistance Program (RAP) to focus on converting fossil fuel-burning plants to retrofit to biomass or some other renewable fuel source for processing energy; a new Bioenergy Program for Advanced Biofuels (BPAB) to provide grants and loan guarantees for advanced biofuels (especially cellulosic) production; extension of the Biodiesel Fuel Education Program to award competitive grants for an education program to promote the use and understanding of biodiesel; a new Rural Energy for America Program (REAP) to provide grants, loans, and loan guarantees in support of rural energy efficiency and self-sufficiency and biofuels marketing infrastructure; reauthorization of the Biomass Research and Development Initiative (BRDI) to support renewable energy research programs within USDA and the Department of Energy (DOE); a new program—the Biomass Crop Assistance Program (BCAP)—to provide financial assistance to producers for growing and marketing biomass crops and for developing conversion facilities; and reauthorization of Sun Grant Initiative programs that coordinate research on advanced biofuels at land-grant universities and federally funded laboratories.\nThe major grant, loan, and loan guarantee programs—BAP, RAP, BPAB, and REAP—are administered by the Rural Business-Cooperative Service within USDA's Rural Development Agency. In contrast, BCAP is administered by USDA's Farm Service Agency, and BRDI is administered by USDA's National Institute of Food and Agriculture.\nThe 2008 farm bill authorized $1.1 billion in mandatory funding for energy programs for FY2008 through FY2012. Cumulative mandatory authorization in the 2008 farm bill includes $320 million to BAP, $300 million to BPAB, and $255 million to REAP. BCAP is authorized to receive such sums as necessary (i.e., funding is open-ended and depends on program participation). In addition to the mandatory funding, the 2008 farm bill also authorized $1.7 billion (including $600 million for BAP) in discretionary funds. However, all discretionary program funding is subject to the annual appropriations process, which may or may not be made available due to budget constraints. Actual discretionary appropriations to Title IX energy programs have been substantially below authorized levels through FY2012.", "", "All 13 bioenergy programs and initiatives in Title IX—with the exception of the Feedstock Flexibility Program for Bioenergy Producers—are authorized only for the life of the 2008 farm bill, FY2008 through FY2012, and do not have a baseline budget beyond FY2012. Because of the current tight budget situation, the most likely way that any expiring energy programs can survive into the next farm bill is to offset their projected costs with reductions in other mandatory programs.", "Although each of the various Title IX programs has somewhat different policy goals, most of them end up funding very similar types of projects—anaerobic digesters, wind turbines, solar panels, and biofuels. This is particularly true for the BPAB- and REAP-funded projects, as well as DOE-funded projects under its 1703 and 1705 loan guarantee programs. Also, research projects focused on renewable energy that are funded under USDA's REAP and BRDI, as well as certain programs funded through DOE's Office of Energy Efficiency and Renewable Energy, appear to have some potential for overlap. To actually measure the extent of overlap or similarity would require a project-by-project comparison. In general, USDA programs tend to focus on the primary energy source or feedstock, whereas DOE projects tend to focus on the conversion or processing technology; however, the difference often appears subtle to a layperson. As a result, some policymakers suggest that some energy programs could be merged or eliminated to counter possible redundancy, whereas others (particularly those whose districts benefit from specific programs) are quick to argue the merits of the individual programs.", "Ethanol-blended fuels burn hotter than regular gasoline fuels, placing additional stress on motors and motor parts. All automakers that produce cars and light trucks for the U.S. market warranty their vehicles to run on gasoline with up to 10% ethanol (E10). As a result, this 10% blend represents an upper bound (referred to as the \"blend wall\") to the amount of ethanol that can be introduced into the gasoline pool. If most or all gasoline in the country contained 10% ethanol, this would allow only for roughly 14 billion gallons, far less than the Renewable Fuel Standard mandates established in the Energy Independence and Security Act of 2007 ( P.L. 110-140 ), which grow to 36 billion gallons by 2022. The Environmental Protection Agency (EPA) has issued waivers to allow ethanol blending of up to 15% for use in model year 2001 and newer light-duty motor vehicles. However, the limitation to newer vehicles, coupled with infrastructure issues (e.g., the lack of flex-fuel vehicles, which can use blend ratios of up to 85% ethanol, and the number and availability of high-blend-ratio retail pumps) are likely to limit rapid expansion of blending rates. To address this obstacle, USDA announced in 2011 a goal of installing 10,000 blender pumps by 2016, and began using REAP funds to spur blender pump development. This strategy will be put on hold by the expiration of REAP funding with the 2008 farm bill, and may help shape REAP funding discussions in the next farm bill.", "As U.S. ethanol production expands, it has consumed an increasing share of the annual corn crop (40% by 2010). The strong, steady growth in ethanol demand for corn has had an important effect, not just on the price of corn, but in other agricultural markets including food, feed, fuel, and land. It also has fueled a \"food-versus-fuel\" debate about potential tradeoffs resulting from continued expansion in corn use for ethanol. This concern was paramount in the 2008 farm bill's refocus towards non-corn (i.e., cellulosic) biofuels, and is again likely to play an important role in shaping the next farm bill's energy debate.", "Substantial uncertainties exist regarding the costs of producing both cellulosic feedstocks and the biofuels made from those feedstocks. These uncertainties, coupled with limited investment dollars, have slowed the development of commercial cellulosic biofuels production and raised concerns about the industry's ability to meet large federal usage mandates. EPA has been compelled to waive the cellulosic biofuels mandate for each of the first three years of the program (2010, 2011, and 2012). These waivers have themselves contributed to a cycle of slow investment in and development of the sector, thus raising the potential for future EPA waivers of mandated cellulosic biofuels volumes. Also, renewable biofuels advocates have expressed concern that a substantial diminution of support for BCAP could severely impede further progress in kick-starting the cellulosic ethanol industry, while additional REAP funding is needed to help overcome the \"blend wall\" infrastructure shortcomings.", "Ethanol production, supported by high petroleum prices and generous federal support, has been profitable for most of the past six years. However, the \"blend wall\" has become an obstacle to domestic consumption and is a primary reason for surging exports of U.S. ethanol and its byproducts (e.g., distillers dried grains and solubles (DDGS)) since late 2010. Such exports bring into question the policy goal of energy security. In addition, two major trading partners have initiated anti-dumping (AD) and countervailing duty (CVD) investigations, including European Union AD/CVD proceedings against U.S. ethanol and a Chinese AD/CVD investigation of U.S. DDGS. Negative findings against the United States, if realized, could slow further development of the U.S. biofuels sector.", "Forestlands in the United States total nearly 751 million acres, about a third of all land in the country. These lands provide wood for lumber, plywood, paper, and other materials, as well as a host of environmental and ecological services, including recreation, clean water, wildlife habitat, and more. The federal government owns about a third of the total, and the USDA Forest Service (with nearly 147 million acres, 20% of all U.S. forestlands) is the principal federal forest management agency. In addition to administering the National Forest System, the Forest Service provides technical and financial assistance, directly and through state forestry agencies, to non-industrial private landowners (private owners who do not own wood processing facilities), who own nearly 285 million acres of U.S. forestlands (38% of the total).\nFour of the past five farm bills have contained separate forestry titles. Traditionally, farm bills address forestry assistance programs, but federal forest management and protection and forestry research also are within the jurisdiction of the House and Senate Agriculture Committees. The next farm bill may include a forestry title to modify existing programs and possibly establish new options for forestry research and forest land management and protection.", "Forestry assistance programs are managed primarily by the State and Private Forestry (S&PF) branch of the Forest Service. Funding is provided in annual Interior, Environment, and Related Agencies appropriations acts. There are three groups of forestry assistance programs. Forest Health Management includes programs to survey and control forest pests and pathogens (including invasive species) on federal and nonfederal (cooperative) lands. Cooperative Fire Assistance includes equipment, financial, and technical assistance to states and volunteer fire departments. Cooperative Forestry Assistance programs include the following:\nForest Stewardship —financial and technical assistance to states for forestry programs, with funds allocated based on priorities and assessments as required by the 2008 farm bill. Forest Legacy/Community Open Space and Forest Conservation —federal, state, or other acquisition of lands or easements on lands threatened with conversion to non-forestry use (the latter program was created in the 2008 farm bill). Urban and Community Forestry —financial and technical assistance for forestry activities in urban and community settings. Economic Action —financial and technical assistance for diversifying forest-dependent rural communities.\nNo forestry-specific cost-share assistance programs exist for forestry practices in private forests. Forestry is, however, an accepted practice for almost all farmland conservation programs. (See \" Conservation and Environment ,\" above.) Two smaller programs include International Forestry and Forest Inventory activities.", "", "The threat of wildfires to forests and to communities and homes in the wildland-urban interface seems to have grown. The 2002 farm bill authorized a new community wildfire protection program, but the program has been funded only as part of state fire assistance. In addition, many see removing excess woody biomass from overgrown forests as a way to reduce wildfire threats while providing an environmentally sound source of energy. New programs to enhance wildfire protection might be considered in a new farm bill.", "Interest in producing energy from woody biomass and other renewable sources (as discussed above) derives from both supply and demand. Supply could come from efforts to reduce wildfire threats and to control invasive species. Demand is likely to be driven by state and federal requirements for renewable transportation fuels and possibly for electricity production. Numerous programs exist to induce or assist biomass energy production, including programs in the 2008 farm bill. As stated in the \" Energy \" section, above, all of these energy programs face budgetary challenges, and a new farm bill might extend, expand, alter, or terminate these programs, or possibly replace them with alternative approaches.", "Invasive species, typically exotic plants and animals, are increasingly displacing or harming native plants and animals in the United States and worldwide. Invasive species have been described as one of the four major threats to the nation's forests and rangelands. Options and opportunities to prevent and control the spread of invasive species, especially forest pests and especially on private forestlands, might be a farm bill issue.", "Forests produce many ecosystem services—carbon sequestration, clean air and water, wildlife habitats, pleasant scenery, and more—for which landowners are generally not compensated, because these services are not typically bought and sold in markets. Many interests have considered how to compensate landowners for continuing to provide these services. One option would be to develop markets for ecosystem services. A provision in § 2709 of the 2008 farm bill was intended to facilitate such market development. A new farm bill might extend, expand, alter, or terminate this provision, or possibly replace it with an alternative approach such as \"green payments\" to directly reward farmers and other landowners for environmentally desirable practices.", "" ], "depth": [ 0, 1, 1, 1, 1, 1, 2, 3, 3, 3, 2, 3, 3, 4, 4, 4, 4, 4, 1, 2, 3, 3, 3, 3, 3, 2, 1, 2, 2, 3, 3, 3, 3, 3, 1, 2, 1, 2, 2, 3, 3, 1, 2, 2, 3, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 4, 4, 4, 4, 2, 3, 3, 3, 1, 2, 3, 3, 2, 3, 3, 3, 3, 1, 2, 2, 3, 3, 3, 3, 1, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 3, 1, 2, 2, 3, 3, 3, 3, 4 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "", "h1_full", "", "h0_title h2_full", "h2_title", "h2_full", "", "", "h0_title", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How does Congress address agricultural policy?", "What will Congress do to address the current bill which addresses agricultural policy?", "What was the extent of the 2008 agricultural bill?", "How has modern agriculture spurred change to how Congress addresses agricultural policy?", "How do those with agricultural interest react to this growing breadth?", "What is spurring such a debate of agricultural policy?", "How is congressional spending on agriculture projected to continue in the near future?", "Why doesn't Congress simply draft an agricultural bill for the upcoming years, given this information?", "How is agriculture being targeted by other sectors looking for federal funding?", "Why does Congress tend to pass omnibus agricultural bills?", "How did the 2008 farm bill allocate congressional funds to farmers?", "What is the argument of those who support sticking to the status quo when it comes to congressional agricultural policy?", "What is the argument of those who oppose this status quo?", "How do others criticize specifics of the status quo of agricultural policy?" ], "summary": [ "Congress periodically establishes agricultural and food policy in an omnibus farm bill.", "The 112th Congress faces reauthorization of the current five-year farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246) because many of its provisions expire in 2012.", "The 2008 law contained 15 titles covering farm commodity support, horticulture, livestock, conservation, nutrition assistance, international food aid, trade, agricultural research, farm credit, rural development, bioenergy, and forestry, among others.", "The breadth of farm bills has steadily grown in recent decades to include new and expanding food and agricultural interests. The omnibus nature of the bill can create broad coalitions of support among sometimes conflicting interests for policies that individually might not survive the legislative process.", "This breadth also can stir fierce competition for available funds, particularly among producers of different commodities, or between those who have differing priorities for farm subsidies, conservation, nutrition, or other programs.", "One of the principal drivers of the farm bill debate will be the federal budget, which is more uncertain and difficult to predict than for past farm bills because of the congressional attention to deficit reduction.", "According to Congressional Budget Office estimates, if ongoing programs were to continue under current law, mandatory farm bill spending would be $994 billion over 10 years, with domestic nutrition assistance accounting for more than three-fourths of the total and the rest primarily for the farm safety net (commodity support and crop insurance) and conservation.", "How much of this baseline can be used to write a farm bill is unknown, given the uncertainty about deficit reduction that is beyond the control of the authorizing committees and may not be resolved for months.", "Several high-profile congressional and Administration proposals for deficit reduction are specifically targeting agricultural programs with mandatory funding, and the possibility of budget sequestration early next year further clouds the budget picture. Also, disaster assistance, most bioenergy programs, and some conservation programs expire without any baseline beyond their expiration date.", "Traditionally, the primary focus of omnibus farm bills has been farm commodity price and income support policy—namely, the methods and levels of support that the federal government provides to agricultural producers.", "The 2008 farm bill combined counter-cyclical support with direct payments available primarily to growers of grains, cotton, and peanuts, regardless of farm commodity market prices.", "Proponents of the current approach to farm commodity support want a stronger safety net, with many focusing on enhancements to risk management tools such as crop insurance as a substitute for direct payments.", "Some opponents of the status quo cite the thriving farm economy as a reason for reducing federal support.", "Others point to competing policy priorities, including equitability concerns across the farm sector, and call for enhanced support for small and medium-sized farms, specialty crops, organic agriculture, local and regional food systems, healthy and nutritious foods, research, conservation, and rural development, among others." ], "parent_pair_index": [ -1, 0, -1, -1, 3, -1, -1, 1, -1, -1, 0, -1, 2, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }
CRS_R43361	{ "title": [ "", "Introduction", "Legislative Background", "Comparison of Current Laws", "Leahy Vetting in Practice22", "The Vetting Process", "U.S. Embassy Procedures", "Headquarters Level", "Additional Review and Conclusion", "Vetting Results and Their Use", "Vetting Personnel", "Vetting Funding", "Vetting System Improvement Initiatives", "Issues for Congress", "Should the FAA and DOD Leahy Laws Be Made Consistent?", "Should the FAA and DOD Remediation Standards Be the Same?", "Should Other Differences Be Aligned?", "What Level of Resources Are Adequate to Conduct Vetting?", "Funding", "Technology", "Training and Oversight", "Should Implementation Practices and Procedures Be Standardized?", "What Challenges May the Expanded DOD Scope Present?", "Conclusion" ], "paragraphs": [ "", "The increasing Department of Defense (DOD) emphasis on expanding U.S. partnerships and building partnership capacity with foreign military and other security forces has refocused congressional attention on two long-standing human rights provisions affecting U.S. security assistance policy. Sponsored in the late 1990s by Senator Patrick Leahy (D-VT), and often referred to as the \"Leahy amendments\" or the \"Leahy laws,\" one is Section 620M of the Foreign Assistance Act of 1961, as amended (FAA, P.L. 87-195, made permanent law by its codification at 22 U.S.C. 2378d) and the other is a recurring provision in annual defense appropriations. FAA Section 620M prohibits the furnishing of assistance authorized by the FAA and the Arms Export Control Act, as amended (AECA, P.L. 90-629), to any foreign security force unit that is credibly believed to have committed a gross violation of human rights. The other provision, inserted annually in DOD appropriations legislation, for years prohibited the use of DOD funds to support any training program (as defined by DOD) involving members of a unit of foreign security or police force if the unit had committed a gross violation of human rights. For FY2014, the prohibition has been expanded to also include \"equipment, or other assistance.\"\nAs two of the many laws that Congress has enacted in recent decades to promote respect for human rights, which has become widely recognized as a core U.S. national interest, the Leahy laws have been the subject of long-standing debate. Policy makers, practitioners, and advocacy groups continue to deliberate overarching questions regarding their utility and desirability, as well as specific questions regarding their appropriate scope and problems in implementation. For many, the Leahy laws are important U.S. foreign policy tools not only because of their potential to promote human rights but because they may help safeguard the U.S. image abroad by distancing the United States from corrupt or brutal security forces. Some, however, raise concerns that these laws limit the Administration's flexibility to balance competing national interests and may constrain the United States' ability to respond to national security needs. Central to this debate are overarching questions that are difficult to answer given the lack of systematic study of Leahy law results. Have these laws indeed been effective in promoting human rights? To what extent have these laws impeded or advanced other key U.S. objectives, such as countering terrorism, preventing violence, or stabilizing territory? Do the laws lead other nations to choose competitors for foreign influence as the source of military materiel and training? Will the United States be able to control down-range effects as it outsources military training through third-party nations? Competing perceptions of these overarching issues underlie perspectives on specific proposals for congressional action.\nIn the 113 th Congress, an illustration of the enduring debate surrounding the Leahy laws is deliberation on a provision in the Senate Appropriations Committee (SAC) version of the FY2014 DOD Appropriations bill (Section 8057 of S. 1429 ), a modified version of which is now contained in the Consolidated Appropriations Act, 2014 (Division C, Section 8057, P.L. 113-76 , signed into law January 17). This provision expanded the scope of the DOD Leahy law by extending the FY2013 (and prior fiscal year) prohibition on training to all DOD assistance. Further action in the 113 th Congress may occur during consideration of FY2015 foreign aid appropriations, which may include proposals to fund implementation of the laws.\nThis report provides background on the Leahy laws, including a brief history of their legislative development; an overview guide to the standards and processes used to \"vet\"—that is, review and clear—foreign military and other security forces for gross violations of human rights; and a brief review of salient issues regarding the provisions of the laws and their implementation. Two of these issues concern debate over the consistency of the language of the two laws: whether the scope of the DOD provision should be expanded or altered to bring it closer to the FAA version, and whether the FAA and DOD \"remediation standards\" (the conditions for clearing units found guilty of a gross violations of human rights in order to provide aid) should be made consistent. Two others concern debate over implementation: whether the resources to conduct vetting are adequate, and whether implementation practices and procedures should be standardized. Several text boxes provide information on security assistance subject to the Leahy laws, the types of acts defined as gross violations of human rights, the language of the FAA and DOD Leahy laws and key differences between them, a discussion of the \"credible information\" standard for denying assistance, and a case study on Colombia. A concluding section offers further observations for Congress.", "Since Congress first enacted the two \"Leahy laws\" in the late 1990s, these laws have been regarded as a key element of U.S. human rights policy. Beginning in the 1970s, Congress passed many conditions on U.S. assistance to foreign governments seeking to promote respect for human rights. Most were—and continue to be—attached to legislation for an individual country or region.\nA major precursor to the Leahy laws was the broad legislative provision passed in 1974, known as \"Section 502B,\" which prohibits security assistance to any country found to engage in a \"consistent pattern of gross violations of internationally recognized human rights.\" This legislation provides the basis for the standard definition of human rights used for U.S. government purposes, including for Leahy law vetting, but has been rarely if ever invoked. In 1997, Congress enacted a condition on counternarcotics (CN) assistance similar to the current Leahy laws, prohibiting the use of FY1998 State Department CN appropriations for foreign security forces where there was credible evidence that a unit had committed gross violations of human rights.\nIn 1998, Congress passed the first of what are now known as the Leahy laws, extending the scope of the CN condition to all assistance provided by foreign operations appropriations. The expanded provision was thereafter included in annual foreign operations appropriations acts until 2008, when that condition was codified in permanent law first as FAA Section 620J, now FAA Section 620M (22 U.S.C. 2378d), applying to all assistance authorized by the FAA and AECA, unless exempted by a notwithstanding provision.\nIn 1998, for FY1999, Congress placed a similar condition in the DOD appropriations bill. This condition prohibited the use of DOD funds to train units of foreign military and other security forces if there was credible information that a member of a unit had committed a gross violation of human rights. (Unlike the FAA version, the DOD Leahy law, as contained in DOD FY2013 and prior DOD appropriations, pertained only to training, but not to any other form of assistance and activities—such as equipment, support services, grants, loans and cash transfers, and exercises—that might be provided under a variety of DOD authorities.) DOD defines military training of foreign personnel as the \"instruction of foreign security force personnel that may result in the improvement of their capabilities.\" This condition has been retained in all subsequent DOD appropriations legislation, with two changes. In 2000, the reference to a \"member\" of a unit was deleted, and in 2013 the words \"or police\" were added.\nIn 2011, Congress amended the FAA provision (and renumbered it as Section 620M of the FAA) with three word changes to align it more closely with the DOD language. First, the requirement invoking \"gross violations\" of human rights was changed from the plural to the singular \"a gross violation\" of human rights. Second, Congress modified the standard to resume aid to require that the government take \"effective steps\" (rather than \"effective measures\") to bring responsible members of the foreign security unit to justice. Finally, the standard of proof was changed from \"credible evidence\" to \"credible information,\" a term that expresses Congress's intent that the standard not require a level of substantiation that would be admissible in a U.S. court. Congress also added seven procedural requirements to the provision.\nIn January 2014, Congress expanded the scope of the DOD provision, making it equivalent in scope to the FAA provision. The Consolidated Appropriations Act, 2014 (P.L. 113-76), contains a provision extending the FY2013 (and earlier) prohibition on any support for training where a gross violation of human rights occurred to \"any training, equipment, or other assistance for the members of a unit of a foreign security force if the Secretary of Defense has credible information that the unit has committed a gross violation of human rights.\" An exception is made for disaster and humanitarian assistance.\nDepending on the legal interpretation, this provision applies to many of the DOD programs and activities conducted with foreign military and other security forces under a wide variety of DOD authorities. These may include counternarcotics, coalition, and logistics support and assistance, including equipment; services such as transportation and logistics, maintenance and operation of equipment; and grants and loans to procure goods and services in support of security forces, as well as cash transfers of funds. They may also include some types of military-to-military contacts, including advising and mentoring. Not all military activities with foreign forces would necessarily constitute assistance, however.\nAs contained in P.L. 113-76 , the expanded provision would not apply to DOD-funded foreign disaster assistance and other humanitarian assistance, where the ultimate beneficiaries are foreign populations but where U.S. military personnel often work with or support foreign military or other security forces in delivering assistance.", "The FAA and DOD appropriations Leahy laws both prohibit assistance to foreign military and other security units credibly believed to be involved in a gross violation of human rights. After the FY2014 change, three differences remain. First, in the FAA language, the prohibition does not apply if the Secretary of State \"determines and reports\" to specified congressional committees \"that the government of such country is taking effective steps to bring the responsible members of the security forces unit to justice.\" The DOD appropriations language states that the prohibition applies \"unless all necessary corrective steps have been taken.\" These provisions establish the basis for \"remediating\" units, making them eligible for assistance, but neither remediation standard is defined. Second, the DOD version provides for a waiver by the Secretary of Defense in consultation with the Secretary of State in extraordinary circumstances; the FAA contains no corresponding provision. Third, the FAA legislation includes a \"duty to inform\" provision requiring the Secretary of State to promptly inform a foreign government of the basis for withholding assistance and to help that government, to the extent practicable, take effective measures to bring the responsible members of the security forces to justice.\n(See Table 1 , below, which summarizes these key differences.)", "The State Department and U.S. embassies worldwide have developed a system that seeks to ensure that no applicable State Department assistance or DOD-funded training is provided to units or individuals in foreign security forces who have committed any gross violations of human rights. This procedure, designed to comply with the Leahy laws, is known as \"vetting\" or \"Leahy vetting.\" Primarily a State Department responsibility with input from other agencies, Leahy vetting is a multi-step process that involves staff at U.S. embassies abroad; the State Department Bureau for Democracy, Human Rights, and Labor (DRL) in Washington, DC, which is the lead State Department bureau for vetting; State Department regional bureaus; and other government agencies as required. The State Department policy provides for two separate processes, one for training and one for equipment and other non-training assistance.\nFor DOD and State Department-funded training (and in some cases the provision of equipment related to training), the process has evolved from a \"cable-based\" system when the State Department began to vet foreign security forces in 1997 to a computerized process through the International Vetting and Security Tracking (INVEST) system. Gradually put in place between April 2010 and February 2011, INVEST is the current official system for Leahy vetting for training. At some posts INVEST is also used for equipment provided in conjunction with training, but this is not mandatory.\nFor State Department-funded equipment and other non-training assistance, the State Department generally approves potential recipients through a memorandum and clearance process generated by the Bureau of Political-Military Affairs at the time funding is allocated to beneficiary countries. (The GAO recommended in November 2011 that the State Department vet individuals and units receiving equipment through the INVEST system, but the State Department has not developed such a policy. In some cases, however, equipment and non-training assistance is vetted through INVEST even though this is not mandatory.)\nUnder the INVEST system, the State Department to date has vetted approximately 400,000 \"candidates\" for training, a figure that includes both individuals and units. Since its adoption, INVEST has averaged about 130,000 discrete new vettings a year, and the pace seems to be increasing. In FY2012, the State Department reported vetting nearly 165,000 individuals and units. According to some vetters, the 2011 amendments to the FAA Leahy law requiring that, in the case of individual training candidates, the candidate's unit as well as the individual candidate be vetted each time the candidate is named as a potential recipient of assistance have increased their work load. In some embassies, however, vetters had already interpreted the vetting requirements to cover both individuals and their units.", "Leahy vetting is a multi-stage process that begins in U.S. embassies abroad and concludes with action at State Department headquarters in Washington, D.C. Vetting procedures generally utilize a dedicated online tracking system for vetting candidates—both units and individuals—for training and the exchange of memoranda for other forms of assistance.", "U.S. embassy staff initiates each vetting request. (For a diagram of the process see Figure 1 , below.) The State Department recommends that each embassy have its own Standard Operating Procedures (SOPs) that define country-specific requirements for initiating and completing vetting requests such as the lead time needed for turning around a request. Representatives of relevant U.S. departments and agencies at U.S. embassies submit vetting requests to staff conducting the vetting. The subjects of these vetting requests typically are members of the country's military or civilian police, but they may also include prison guards, armed game wardens, and coast guards, as well as customs, border, and tax enforcement personnel. Civilian government officials, including those representing foreign defense ministries, are typically not required to be vetted. Exceptions to this general rule do exist. For example, the DOD Regional Counterterrorism Fellowship Program (CTFP) vets all participants as a matter of policy.\nAs part of the vetting process under INVEST, individuals proposed for receiving U.S. assistance as part of a single event, equipment issuance, or training are grouped together in a \"batch.\" Input of the initial data is just one of the functions that are completed at the embassy. Once a batch of candidates has been identified, embassy personnel check their names as well their units against a variety of sources for derogatory information. (See the textbox below regarding the standard for judging derogatory information to be credible enough to disqualify candidates for U.S. assistance.) Sources include local and U.S. government databases and reports, as well as a range of civil society and non-governmental organizations (NGOs).\nThe vetting at the embassy stage is completed with one of four determinations: to approve, reject, or suspend candidates, or to request further guidance from State Department headquarters. Once the suspended or rejected cases are removed from an INVEST batch, the remaining candidates are sent on to State Department headquarters for further vetting.", "In Washington, DRL and the State Department regional bureaus further vet approved individuals in the batch. DRL and the relevant regional bureau work independently, although the two offices stay in communication as the vetting process proceeds. If the regional bureau and the DRL vetters agree that no derogatory information was found, then the individual is deemed approved and the embassy vetting staff is notified of the positive determination. One exception to this process involves vetting candidates from \"Fast Track\" countries, determined by the State Department to be functional democracies without a record of human rights abuse. Candidates from Fast Track countries are vetted only at the embassy and not in Washington.", "If further review is deemed required, DRL convenes a \"broader team of State Department representatives\" who may request further information from the relevant embassy to evaluate the credibility of derogatory information. Until the team reaches consensus, the assistance or training is kept on hold. Except for Fast Track countries, Leahy vetting is complete when the final determination is recorded in INVEST.", "By and large, most vettings filed through the INVEST system conclude with an approval. Vettings recently have ended in denial around 1% or less of the time, and a suspension about 9% of the time, according to figures provided in news reports. CQ Weekly reports that training was withheld \"for a variety of reasons, including the possibility that there was credible information that the person or unit involved had committed a gross violation of human rights,\" and for administrative difficulties. In some cases, training was suspended if derogatory information other than a human rights violation was found, as candidates may be excluded for other undesirable behavior. In the many cases where training was suspended for administrative reasons, it was subsequently rescheduled once the problem was resolved, according to that source.\nIn general, vetting results are used to determine who will receive U.S. assistance or training. They also form the basis for reporting to foreign governments under the FAA \"duty-to-inform\" provision when members and units of their security forces fail vetting and assistance is denied. According to some U.S. policy makers, even though only the FAA contains the \"duty-to-inform\" requirement, in practice the provision should extend also to DOD-funded cases. The logic of this requirement is to garner cooperation with the law, encourage improved compliance by host governments with human rights standards, and make clear that U.S. assistance will not be provided to human rights violators. In addition, the FAA provides that the State Department should offer assistance to a foreign \"host\" government to investigate and prosecute suspected human rights violators who have been identified through the vetting process.", "The number of embassy staff involved in Leahy vetting may differ based on work flows, request volumes, funding levels, and other conditions that vary across U.S. embassies. Some embassy operations are quite limited, according to embassy inspection reports by the State Department's Office of the Inspector General (OIG). Some advocates for strengthening implementation of the Leahy law conditions maintain that some vetting operations are underfunded and this has resulted in \"thin\" to nonexistent efforts at some embassies.", "In recent years, Congress has supported Leahy vetting operations through a directed allocation of funds to DRL in the Diplomacy and Consular Programs (D&CP) account. In FY2008, for example, DRL received $2.65 million in appropriations for Leahy vetting. Much of this funding was used to develop and establish the INVEST system, an online tool to track and process vetting requests. Subsequently, Congress directed DRL to allocate approximately $2 million for Leahy vetting, which the State Department has made a regular practice. (The joint explanatory statement to the Consolidated Appropriations bill for FY2014 [ H.R. 3547 , Division K] states that State Department Diplomatic and Consular Affairs funding in the bill contains $2.75 million to implement the FAA Leahy law.) According to State Department officials, the $2 million in recent years has supported several regional bureau vetting positions, and a few contract positions to carry out vetting and support running the INVEST system. The number of completed vettings has become a performance indicator for the DRL bureau. In its annual congressional budget justification, the DRL bureau reports completed vettings and sets targets for the future.\nIn the field, vetting-related activities, including personnel costs, are typically funded out of embassy administrative budgets. The State Department generally gives the embassies wide latitude in staffing and financing their operations. There does not appear to be formal guidance on how U.S. embassies should allocate resources and funds for Leahy vetting. As a result, each embassy plans and budgets for Leahy vetting operations differently. Some embassies, for example, receive assistance from the State Department's International Narcotics and Law Enforcement (INL) bureau, through its International Narcotics Control and Law Enforcement (INCLE) account. U.S. Embassy Mexico City, which conducts the second-largest number of vettings worldwide, reportedly draws funds from the Mérida Initiative, a multi-year counternarcotics and anticrime assistance program that is funded largely through the State Department's Foreign Military Financing (FMF) and INCLE accounts.\nSome embassies with large volumes of vetting requests have one or more full-time positions dedicated to the vetting process. Many embassies, however, are very lightly staffed and the data entry into the INVEST system is frequently a part-time duty. Increased workloads resulting from the 2011 amendments to the Leahy law in the FAA have raised concerns at some embassies, among them those that are small and understaffed or those with the heaviest Leahy vetting demands. In the absence of dedicated Leahy vetting funding, such embassies maintain they have inadequate staff to handle the increased demand on their operations.", "The State Department and DOD are discussing ways to improve the vetting process by increasing DOD participation. (After DOD personnel in each embassy's security assistance organization forward nominees for security assistance to embassy Leahy vetters, DOD generally has no further role in the Leahy vetting process.) One step would be to improve the lines of communication between the State Department and DOD, and creating greater communication within DOD, when the INVEST system identifies potential human rights violations or other obstacles to approving assistance. A related step would be to lengthen the timeline between the embassy's submission of a vetting request to State Department headquarters and the conclusion of the vetting process. This change would allow time for DOD headquarters officials to coordinate a response with the geographic Combatant Commands that might avert the suspension of activities for non-substantive reasons. A third step would be to improve training on how to conduct vetting. DOD is also looking into updating its own guidance on Leahy vetting as last articulated in the DOD 2004 Joint Staff policy message.\nDRL recently broadened its outreach to human rights organizations, increasing dialogue through meetings and developing an Internet-based \"portal.\" DRL has received Leahy-relevant information from NGOs through face-to-face meetings and email, and encouraged U.S.-based NGOs to communicate with the relevant country desk officers in DRL and NGOs outside the United States to communicate with the designated human rights officer in each U.S. embassy. The portal is an online website designed to facilitate the anonymous and confidential reporting of accusations and evidence of human rights abuses. The State Department hopes the portal, scheduled to go online in early 2014, will encourage human rights and other NGOs to post credible information about violations of human rights without fear they are further endangering victims. The portal will augment the current processes by which NGOs can report information through written correspondence, meetings, or briefings with State Department personnel. (Additionally, all written communication to the State Department and embassies is reviewed by desk officers.) Some practitioners and analysts warn that an anonymous reporting system has to be carefully designed or it has the potential to be manipulated or \"gamed\" by those who might seek to discredit units and block their receipt of U.S. assistance by submitting false reports.", "The Leahy laws raise many potential policy questions. At the broadest level, questions remain about the extent to which the promotion of human rights abroad and the pursuit of other U.S. national security objectives are mutually reinforcing and the circumstances in which they might diverge. More narrowly, some in Congress question whether the Leahy laws should be further modified and how implementation of those laws might be improved. The following discussion first addresses questions of law: specifically, should the FAA and DOD remediation standards and other remaining differences be made consistent, and should implementation practices be standardized? It then discusses questions of implementation, specifically resource availability and standardization. It concludes with a discussion of the possible challenges presented by Congress's recent expansion of the scope of the DOD law.", "Over time, Congress has aligned the State Department and DOD Leahy language for greater consistency, most recently by extending the scope of the DOD law in the Consolidated Appropriations Act, 2014. Three differences remain —the difference in remediation standards between the laws, DOD the waiver provision, and the FAA requirement to report the reasons for the denial of assistance to the foreign government. Policymakers and those in the human rights and international security communities debate whether U.S. interests are best served by maintaining, modifying, or eliminating these differences. Some view these differences as inconsistencies that undermine U.S. policy goals related to the promotion of human rights; others view them as providing the United States with flexibility to balance potentially competing interests, or to respond to an emerging threat or disaster in a timely manner. The following explores these perspectives.", "The differing FAA and DOD language on remediation standards—the criteria that a foreign government must meet before aid can be provided or resumed to units that have been denied funding due to human rights abuses—leaves much open to interpretation. Questions have been raised as to whether these remediation standards are appropriate, given that few if any units appear to have been cleared for aid after they have been denied assistance. The \"taint\" remains even years later after membership in a unit may have substantially or even entirely changed. Questions are also raised about the degree to which these standards actually differ in practice, given that the State Department makes the decision to deny assistance, and whether they should be aligned.\nIf FAA or AECA assistance is withheld, a foreign government must \"take effective steps to bring responsible members of the security forces unit to justice\" before assistance can be provided to that unit. Congressional intent regarding the FAA language was expressed in the conference report on the original (1998) legislation, where the conferees stated that \"effective steps\" required the government to \"carry out a credible investigation and that the individuals involved face appropriate disciplinary action or impartial prosecution in accordance with local law.\" This was echoed in the conference report for subsequent legislation. It is similar to State Department guidance which, according to GAO, states that effective steps \"means that the foreign government must carry out a credible investigation and take steps so that individuals who are credibly alleged to have committed gross violations of human rights face impartial prosecution or appropriate disciplinary action.\" The DOD remediation provision requires that \"all necessary corrective steps\" be taken before aid can be resumed. There has been no statement of intent in documents accompanying annual DOD appropriations measures. In 1999, Senator Leahy wrote to then Secretary of Defense William Cohen that the FAA and DOD standards were intended to be the same. Secretary Cohen differed, and since then DOD has held that, in the words of the 2013 GAO report, necessary corrective steps \"could include removing the identified violator or violators from the unit to be trained, providing human rights training and law-of-war training, or some other combination of steps.\" Despite this position, according to DOD officials, DOD has never proceeded with DOD-funded training to an otherwise ineligible unit on the basis that \"all necessary corrective steps\" have been taken by a foreign government.\nIn practice, according to State and DOD officials, the same remediation standards have been applied to potential recipients of DOD and State Department assistance. Some Members would favor incorporating that practice into law as a means of increasing the consistency of U.S. human rights policy and the message sent to foreign governments. Standardization of remediation steps is necessary, they affirm, because the purpose of DOD and FAA Leahy provisions is the same—to promote human rights and protect the U.S. government against the stigma of supporting human rights violators. In addition to expanding the scope of the DOD Leahy law, the SAC version of the FY2014 DOD appropriations bill, S. 1429 , would have made the DOD language on remediation the same as that of the FAA. This provision was not retained in action on the final DOD appropriations measure included in the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ).\nOn the other hand, given that few, if any, units have been cleared once aid has been denied, some practitioners argue that the State Department standard may set too high a bar and may be perceived as unattainable by a host government. In addition, some analysts argue that the FAA's standard for remediation—punishing all members of a unit for the transgressions of some members of a unit—is inequitable. Some critics view the remediation measures set forth by DOD—removing individuals who have committed abuses from units rather than making all in the unit guilty of their transgressions—as a more realistic standard. In addition, some perceive as an internal contradiction of the Leahy laws that they block even human rights training to \"tainted\" units whose members, they argue, would potentially most benefit from such training. Some point to the Senate floor colloquy between Senators Graham and Leahy in 1997, regarding the Leahy human rights provision affecting counternarcotics assistance, as evidence that the legislative intent was not meant to permanently bar assistance to \"tainted\" units after offending individuals were removed, although others caveat that the meaning of the colloquy would depend on the circumstances of the removal.\nIn contrast, those who believe that holding a unit responsible is an appropriate standard point out that it often is difficult to ascertain actions of individuals, and that sanctioning the entire unit may be the only way of ascertaining that U.S. assistance is not provided to human rights violators. In addition, holding units responsible for the actions of their members may serve as a means to promote a \"self-cleansing\" mechanism, where individuals who feel they are being unfairly denied training will cooperate with or put pressure on authorities to cleanse the unit, promoting an ethos among members of a unit that does not tolerate human rights abuse.", "In addition to the differences in remediation standards, discussed above, two other differences between the FAA and the DOD Leahy provisions remain: the DOD waiver and the FAA \"duty to inform. Neither has a corresponding provision in the other legislation. To some analysts, the DOD waiver seems dispensable, given its historic lack of use. According to DOD officials, the waiver has never been exercised. Others would argue the waiver provides DOD with needed flexibility to act in urgent circumstances where important U.S. security interests are at stake; alternatively, notwithstanding language might be added to authorities that are used in such circumstances. The FAA \"duty to inform\" requirement for the Secretary of State to \"promptly inform the foreign government of the basis\" for withholding aid is a precursor to assisting the government in bringing responsible members of the security forces to justice. Some who view this provision as central to promoting reform among foreign security forces would include it in the DOD law.", "The level of funding available to implement Leahy vetting is determined by Congress (through appropriations measures) and by the State Department (through its internal allocation of resources and personnel positions at embassies). Financial and personnel resources can directly affect the Leahy vetting process. Resource-related questions concerning Leahy implementation include the following and are discussed below. Are Leahy vetting operations adequately funded? Do vetting activities at State Department headquarters and U.S. embassies worldwide receive enough technological support to be successful, and if not, where are the biggest resource deficits? Are those who conduct the vetting adequately trained, and is there sufficient oversight by State Department headquarters of vetting operations at the embassies?\nThe recent expansion of the scope of the DOD Leahy law to cover all DOD assistance, not just training, may present extensive challenges for the current vetting system. Some practitioners have voiced concern that the number of additional vettings required each year could overload the State Department's arguably already overstretched vetting system.", "Some advocates for strengthening implementation of the Leahy conditions maintain that some vetting operations are underfunded. Indeed, some practitioners consider the vetting requirements an \"unfunded mandate\" placed on the State Department and its embassies by Congress. Several advocates who promote more vigorous enforcement of the Leahy conditions suggest that leadership from State Department's DRL bureau has improved headquarters vetting operations and they commend DRL for strengthening its outreach to in-country and international human rights organizations. Nevertheless, the quality and capacity of U.S. embassies abroad to carry out Leahy vetting requirements remain mixed; some advocates suggest that this is in part due to the lack of consistent and dedicated funding for vetting operations at post.\nSome have proposed that vetting be paid for with a dedicated funding source that is proportional to the size of U.S. security assistance expenditures on a global basis. In the 113 th Congress, a variation of this idea was put forth by the Senate Appropriations Committee in its version of the FY2014 Department of State and Foreign Operations appropriations measure ( S. 1372 , S.Rept. 113-81 ) to fund DRL to carry out the amended FAA prohibition, Section 620M. Acknowledging \"the technological challenges and staff time involved in the vetting process\" in its report, the Committee would provide not less than 0.1% of funds appropriated in the FMF account \"for assistance for the security forces of foreign countries\" to fund DRL to carry out Section 620M. This would amount to over $5 million in FY2014, depending on the final level of appropriation for FMF, which would be a significant increase over the roughly $2 million that DRL has received for Leahy vetting in recent appropriations. Neither the House version of the FY2014 Department of State and Foreign Operations appropriations bill ( H.R. 2855 , H.Rept. 113-185 ), nor the Consolidated Appropriations Act, FY2014 ( P.L. 113-76 ) makes reference to funding for Leahy vetting.", "Another resource challenge for carrying out the Leahy conditions concerns developing adequate databases and applying technology to better implement vetting. Some observers maintain that information about the Leahy vetting requirements provided on embassy websites remains limited. One potential consequence of this limitation is that local NGOs that might report alleged human rights abuse are unaware of U.S. requirements and their opportunities to assist the vetting process. Some advocates maintain that many embassy databases are inadequate, and that many do not take advantage of technological tools to gather data and documentation about human rights abuses. Such tools could include those that compile and analyze video images and aerial photography, and that have audio capabilities to facilitate voice and facial recognition of alleged abusers.", "Concern about the adequacy of resources extends to whether personnel and time are made available to train and oversee those at U.S. embassies who conduct the vetting. The State Department provides training at its Foreign Service Institute and DOD provides training through the Defense Institute for Security Assistance Management (DISAM).\nIn its September 2013 report, GAO found that the State Department offers training to human rights vetting personnel by various means. These include two web-based training courses; modules in Foreign Service Institute (FSI) courses; a specially developed briefing that provides an overview of State and DOD Leahy laws and explains State's policies and processes (now available online through http://www.humanrights.gov ); and other outreach efforts. Vetting personnel also receive on-the-job training. At the time, GAO found that the web-based courses were out-of-date, lacking changes mandated in the 2011 law, but DRL officials report that the courses were subsequently updated and are now available to everyone in the State Department through the FSI online learning website. DOD personnel assigned to work on security assistance at U.S. embassies and at the geographic combatant commands receive an instructional module on human rights training at DISAM that includes instruction on Leahy vetting. DISAM statistics indicate, however, that while most military personnel destined for security assistance organization posts at U.S. embassies take the three-week training course, some 15% do not.", "Although there are not many studies of how the Leahy laws are implemented worldwide, a few reports point to an inconsistent application of the laws. For example, a September 2013 non-government publication on trends in security assistance in Latin America and the Caribbean found that the Leahy provisions have been \"applied with varying degrees of rigor by U.S. embassies around the world.\" This report noted, for example, that \"while the U.S. Embassy in Colombia had [in 2012] a substantial system in place, the U.S. Embassy in Honduras's system was far less developed.\" Recently, GAO has identified other implementation inconsistencies across countries.\nIn its September 2013 report, GAO found after examining implementation practices in eight countries that the Standard Operating Procedure (SOP) guides of those embassies \"contained inconsistent information on how to address\" the part of the duty-to-inform requirement that directs State to inform foreign governments when funds are withheld because of human rights violations. GAO's three recommendations were for the State Department to (1) \"provide clarifying guidance for implementing the duty-to-inform requirement of the State Leahy law\" added in December 2011; (2) ensure that all U.S. embassies have human rights vetting standard operating procedures that address the requirements in the Leahy law;\" and (3) update the web-based training for personnel who conduct human rights vetting to reflect December 2011 changes. According to GAO, State agreed with all three of its recommendations, but said that the steps State planned regarding the need for standard operating procedures \"do not directly address our recommendation.\" The GAO recommended that the State Department take further steps to implement its recommendations on SOP guides.\nTo many analysts, standardizing practices and procedures seems a self-evident means to ensure a more rigorous compliance with the Leahy laws. However, others might argue that given the divergent circumstances under which the laws are applied from country to country—including levels and types of training and equipment provided, whether a country's human rights practices are a matter of concern, and whether the United States regards other matters as more pressing than human rights practices in a given country—a certain degree of flexibility in the application of the laws may be desirable.", "The recent expansion of the scope of the DOD Leahy law in the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), to include not only training but also DOD \"equipment and other assistance\" is a step toward institutionalizing human rights promotion in U.S. law, according to some analysts. From this perspective, the lack of consistency in scope between the DOD and FAA Leahy laws muddled the intended message regarding the importance of U.S. human rights policy, a problem intensified by the perception that DOD is increasingly providing security assistance and directing security assistance programs under an expanding array of DOD authorities.\nNevertheless, the expansion of scope of the DOD prohibition presents the State Department and DOD with a number of challenges. These challenges include the following:\nDefining what constitutes DOD \"assistance\" as intended by the law may be one challenge. DOD conducts a wide range of activities that it categorizes as \"security cooperation\" with no agreement which among them constitute \"assistance.\" The FY2014 expansion in scope seems to require a specific definition of assistance for the purposes of the DOD Leahy law. Determining whether additional resources are needed to implement Leahy vetting may be another challenge. A lack of resources may hinder the United States' ability to thoroughly vet prospective participants in a timely manner and may result in a failure to disqualify ineligible participants or lead to withholding aid from eligible participants. Determining whether DOD vetting will be conducted through a system compatible with the State Department's current two-track system using the INVEST database and memos, or a new, unique DOD-specific system. Whatever the choice, DOD and the State Department may find it necessary to proactively collect information on foreign military units and individuals who may be potential recipients of DOD assistance to expedite the vetting process. Implementing the broadened scope of DOD Leahy vetting may present possible diplomatic challenges. Some practitioners already note that explaining to foreign military and political leaders why U.S. assistance is being withheld can be difficult and disrupt other aspects of a bilateral relationship. Some express concern that the new scope of the DOD Leahy law, even without the express \"duty to inform\" found in the FAA law, may further complicate diplomatic and military-to-military relations. In some cases, some analysts suggest that the new DOD provision may put at risk U.S. efforts to advance bilateral relations or to achieve other national security priorities.", "More than a decade after the passage of the Leahy laws, their implementation remains a work in progress, and overarching questions on their utility and desirability persist. Congress continues to deliberate whether and how to strengthen their application, as represented by recent debate over expanding the scope of the DOD law through the omnibus FY2014 appropriations bill ( P.L. 113-76 ), and by proposals to increase available resources, such as the one contained in the Senate Appropriations Committee version of State Department and foreign operations appropriations bill ( S. 1372 ) but not in P.L. 113-76 . Many may judge that an expansion of the scope of the DOD law, which may require extensive additional vetting, could also require substantial new resources.\nGiven that foreign aid appropriations have declined in recent years, an important issue for consideration of FY2015 foreign operations appropriations may be whether existing Leahy vetting requirements receive sufficient funds to be carried out effectively. In hearings and other consideration of the FY2015 budget, Congress may wish to question the quality and effectiveness of Leahy law vetting, and request information about current State Department and DOD efforts to improve procedures, practices, and standards. Congress may wish to be informed of new technologies and methodologies that may require additional resources but could improve data collection as well as the monitoring and assessment of the activities of foreign units. A related question is whether and how to establish metrics or compile standardized narratives; although such measures could involve extra costs, they might provide greater insight to the Leahy laws' utility in advancing foreign policy goals and national security interests.\nEvolving global conditions and circumstances may warrant ongoing consideration of when and how the Leahy law provisions should be applied. One national security trend raising questions about the utility of the Leahy provisions is the \"outsourcing\" of U.S. military training—with the United States funding other military forces to train third parties. And, as the United States faces competition in the international security arena in developing relationships with foreign militaries, Congress may wish to stay apprised of whether the Leahy laws are a significant factor leading some foreign militaries to choose other countries as providers of military training and equipment. In addressing the overarching issues of utility and desirability, Congress may wish to question the Obama Administration about the laws' effectiveness.\nSome questions may target potential indicators of success. For example: Where has the application of the Leahy laws resulted in the United States withholding assistance from units and individuals credibly believed to have committed gross violations of human rights? How have the human rights practices of partner nation security forces improved as a result of the application of the Leahy laws? Do foreign governments and populations view the United States more favorably as a result of the Leahy laws? Other questions may target possible instances of negative effects: Where has application of the Leahy vetting process precluded or significantly delayed a U.S. engagement that in retrospect would have been important for U.S. national security? To what extent might such engagement have been possible if different standards or procedures were in place?\nCongress may wish to address such questions to the State Department and DOD in hearings, or request that they be examined in the context of the Obama Administration's ongoing review mandated by its April 5, 2013, Presidential Policy Decision (PPD) 23, U.S. Security Assistance Policy , which identifies promoting universal values, including respect for human rights, as a goal." ], "depth": [ 0, 1, 1, 2, 1, 2, 3, 3, 3, 2, 2, 2, 2, 1, 2, 3, 3, 2, 3, 3, 3, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "h1_full", "", "h2_full", "", "", "", "", "", "", "h2_full", "", "h1_title", "h1_full", "", "h1_full", "", "", "", "", "", "h1_full", "" ] }	{ "question": [ "How has Congress' interest in foreign human rights changed in recent years?", "What has Congress done to implement policy on foreign human rights?", "How were the Leahy laws first sponsored?", "What does the first Leahy amendment stipulate?", "What does the second Leahy law specify?", "Why are there two Leahy provisions if they appear to enact similar laws?", "How have the Leahy amendments changed over time?", "How is Leahy vetting implemented for foreign security personnel?", "How does Congress fund the Leahy vetting process?", "How has the State Department adapted their vetting process with technology?", "What do the Leahy laws legislate?", "How do the Leahy laws specifically address these congressional interests?", "How are the Leahy laws critiqued, and what is the main debate?" ], "summary": [ "Congressional interest in the laws and processes involved in conditioning U.S. assistance to foreign security forces on human rights grounds has grown in recent years, especially as U.S. Administrations have increased emphasis on expanding U.S. partnerships and building partnership capacity with foreign military and other security forces.", "Congress has played an especially prominent role in initiating, amending, supporting with resources, and overseeing implementation of long-standing laws on human rights provisions affecting U.S. security assistance.", "First sponsored in the late 1990s by Senator Patrick Leahy (D-VT), the \"Leahy laws\" (sometimes referred to as the \"Leahy amendments\") are currently manifest in two places.", "One is Section 620M of the Foreign Assistance Act of 1961 (FAA), as amended, which prohibits the furnishing of assistance authorized by the FAA and the Arms Export Control Act to any foreign security force unit where there is credible information that the unit has committed a gross violation of human rights.", "The second is a recurring provision in annual defense appropriations, newly expanded by the FY2014 Department of Defense (DOD) appropriations bill as contained in the Consolidated Appropriations Act, 2014 (P.L. 113-76), to align its scope with that of the FAA provision. (Prior DOD appropriations measures had applied the prohibition to support for any training program, as defined by DOD, but not to other forms of DOD assistance.)", "As they currently stand, the FAA and DOD provisions are similar but not identical.", "Over the years, they have been subject to changes to more closely align their language, most recently with the expansion of scope enacted in the FY2014 DOD appropriations law. Nevertheless, some differences remain.", "Implementation of Leahy vetting involves a complex process in the State Department and U.S. embassies overseas that determines which foreign security individuals and units are eligible to receive U.S. assistance or training.", "Congress supports Leahy vetting operations through a directed allocation of funds in State Department appropriations.", "Beginning in 2010, the State Department has utilized a computerized system called the International Vetting and Security Tracking (INVEST) system, which has facilitated a major increase in the number of individuals and units vetted (some 160,000 in FY2012).", "The Leahy laws touch upon many issues of interest to Congress.", "These range from current vetting practices and implementation (involving human rights standards, relations and policy objectives with specific countries, remediation mechanisms, and inter-office and inter-agency coordination, among other issues), to legislative efforts to increase alignment between the Foreign Assistance Act and DOD restrictions, to levels and forms of resources dedicated to conduct vetting.", "More broadly, overarching policy questions persist about the utility and desirability of applying the Leahy laws, and whether there is sometimes a conflict between promoting respect for human rights and furthering other national interests." ], "parent_pair_index": [ -1, 0, -1, 0, 0, -1, -1, -1, 0, -1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }
CRS_RL33246	{ "title": [ "", "Introduction1", "Implementation Status", "Implementation Issues", "Reading First Implementation Evaluation: Interim Report", "Center on Education Policy Reports", "February 2007 GAO Report16", "Scientifically Based Research and Reading First", "Scientifically Based Research Requirements in the No Child Left Behind Act", "SBRR Implementation Issues", "Application of Scientifically Based Reading Research to the Reading First Program", "Implementing SBRR", "Limitations of Existing Research", "Identifying Relevant Resources", "Local Control", "Office of the Inspector General Audits", "OIG Final Inspection Report: The Reading First Program's Grant Application Process", "OIG Final Audit Report: The Department's Administration of Selected Aspects of the Reading First Program", "OIG Final Audit Report: RMC Research Corporation's (RMC) Administration of the Reading First Program Contracts", "Congressional Oversight and Legislation" ], "paragraphs": [ "", "The Reading First program was authorized as part of the Elementary and Secondary Education Act (ESEA) through the No Child Left Behind Act of 2001 (NCLBA). The NCLBA was signed into law on January 8, 2002, and will expire at the end of FY2008 (including the automatic General Education Provisions Act one-year extension). It is expected that the 110 th Congress will consider legislation to extend the authorization of the ESEA as amended by the NCLBA.\nThe NCLBA included three new reading programs: Reading First, Early Reading First, and Improving Literacy Through School Libraries. The NCLBA also reauthorized the William F. Goodling Even Start Family Literacy Programs. This report focuses on the Reading First program.\nReading First was drafted with the intent of incorporating scientifically based research on what works in teaching reading to improve and expand K-3 reading programs to address concerns about student reading achievement and to reach children at younger ages.\nThe Reading First program includes both formula grants (states are allocated funds in proportion to the estimated number of children, aged 5 to 17, who reside within the state from families with incomes below the poverty line) and targeted assistance grants to states. For the first two years of the program, 100% of funds, after national reservations, was allocated to states as formula grants. States then competitively award grants to eligible local educational agencies (LEAs). LEAs that receive Reading First grants shall use those funds for the following purposes:\nselecting and administering screening, diagnostic, and classroom-based instructional reading assessments; selecting and implementing a learning system or program of reading instruction based on scientifically based reading research that includes the essential components of reading instruction; procuring and implementing classroom instructional materials based on scientifically based reading research; providing professional development for teachers of grades K-3, and special education teachers of grades K-12; collecting and summarizing data to document the effectiveness of these programs; and accelerating improvement of reading instruction by identifying successful schools; reporting student progress by detailed demographic characteristics; and promoting reading and library programs that provide access to stimulating reading material.\nLEAs may use Reading First funds for the Prime Time Family Reading Time program; for training parents and other volunteers as reading tutors; and for assisting parents to encourage and provide support for their child's reading development.", "The Reading First program required significant start up time on the part of states. Because the program is complex and many of its requirements are new, it took time for states and LEAs to put together the necessary staff, curriculum, assessment, and evaluation components for the program. By the end of October 2003, all states and the District of Columbia had received their FY2002 and FY2003 Reading First awards. The Virgin Islands received its first Reading First funds in September of 2004. Reading First state grants are awarded for a six-year period, pending a satisfactory midterm review. According to the U.S. Department of Education (ED), only two states were able to distribute Reading First money to LEAs for the 2002-03 school year. Twenty-seven states conducted their first distribution of Reading First funds to LEAs for the 2003-04 school year, and for the 2004-05 school year, 24 additional states awarded their first Reading First grants to LEAs. The Virgin Islands awarded its first grants for the 2005-06 school year. Puerto Rico's situation is unique because it did not spend the first Reading First funds it received (for FY2003), and it declined funds for FY2004 because of disagreements with ED over instruction and methods to be employed. Puerto Rico's application for FY2005 funds was not found acceptable by ED. Puerto Rico reapplied for FY2006 funds; however, its application was not approved. Puerto Rico received the Reading First Advisory Committee's comments on its FY2006 application in November of 2007. ED has notified Puerto Rico that it may revise its application to incorporate responses to the Committee's comments and resubmit it for FY2007 funds.\nThe NCLBA specifies that a midterm peer review of states' performance in the Reading First program be conducted after the completion of the program's third grant period (which would mean a review would have occurred in the fall of 2005). Because of the time involved in initial implementation of the program, ED made adjustments to the timeline to provide states with sufficient time to have participated in three grant cycles as envisioned by the statute, before undergoing a midterm review. ED established November 2006 as the deadline for states' submission of their midterm progress reports. These state reports are being reviewed by the Reading First Advisory Committee. On the basis of the Committee's comments, ED will determine whether states have made sufficient progress to continue receiving their Reading First grant funds.\nThe awarding of the first targeted assistance grants was delayed so that there would be more states meeting the requirement of having one year of baseline data and two years of follow up data showing improvement. States that wished to be considered for one of the first round of targeted assistance grants were required to have submitted an application by July 30, 2005. The first Reading First targeted assistance award (of approximately $3 million) was awarded to Massachusetts in September of 2005 (out of FY2004 funds). The second round of targeted assistance applications was due to ED by July 30, 2006. Tennessee was the only state to receive an FY2005 targeted assistance grant; it received $4.8 million. FY2006 awards were given to Massachusetts ($950 thousand), Tennessee ($1.4 million), and Virginia ($1.2 million).\nThe Reading First program is required to meet relatively extensive standards. In addition to midterm reviews of states' performance, LEAs are required to track the progress of individual students, and states are required to submit annual evaluations to ED with data on overall school, LEA and state progress. ED has also contracted to have several evaluations of Reading First conducted. These evaluations include an impact study of Reading First's effect on student achievement. The first report from this study, which is being conducted by Abt Associates and MDRC, is expected to be available in early 2008. In addition, ED has contracted with Abt Associates for an implementation study of Reading First based on a nationally representative sample of schools participating in Reading First. The interim implementation report was issued in July of 2006 (discussed in more detail below); the final implementation report is expected to be issued in the summer of 2008. There will also be a follow-up evaluation of the implementation of RF; data collection will occur in the 2008-2009 school year. ED is also conducting a descriptive study of the relationship between a school's receipt of Reading First funds and its rate of learning disabilities. It is anticipated that a report from this study will be issued in 2008. Another study is investigating how well prospective teachers are prepared to teach the essential components of reading instruction—a report from this study is anticipated in the summer of 2008. Finally, ED contracted with RMC Research Corporation to sample grades K-3 in 20 states to see how well reading standards are aligned with the five essential components of reading delineated in Reading First. RMC issued its report in December of 2005.", "Information from ED's April 2007 report on state performance data, a 2007 Center on Education Policy report, Reading First: Locally Appreciated, Nationally Troubled , and a 2007 GAO report have all provided relatively positive information about states and local school districts opinions of the impact of Reading First on student achievement. However, state assessment measures and cut-off scores for determining reading proficiency vary from state to state, making it difficult to draw definitive conclusions on Reading First's performance from these data.\nED's report— The Reading First Annual Performance Report Data , based on state data, found improvements in the percentages of students reaching proficiency in reading fluency and comprehension on state measures. According to these data, on average, between 2004 and 2006, the 26 states with baseline data increased the performance of students meeting or exceeding proficiency on fluency outcome measures by 16% for 1 st graders, 14% for 2 nd graders, and 15% for 3 rd graders. In addition, these 26 states also increased the performance of students meeting or exceeding proficiency on comprehension outcome measures by 15% for 1 st graders, 6% for 2 nd graders, and 12% for 3 rd graders.", "The first of two implementation reports, prepared for ED by Abt Associates, was issued in 2006. The Reading First Implementation Evaluation: Interim Report (Interim Report) was based on data collected during the 2004-2005 school year through surveys of teachers, principals, and reading coaches chosen from a nationally representative sample of Reading First and non-Reading First Title I schools; and through interviews of Reading First state coordinators and a review of states' Reading First applications. The report also drew on other existing data sources. The interim report addressed two questions—how Reading First is being implemented by LEAs and schools, and whether instruction in Reading First schools is different from that of non-Reading First schools. Questions related to student achievement in Reading First schools will be addressed in the final implementation report, after a second round of data has been collected. Overall, the interim report found that Reading First was being properly implemented (as intended by the NCLBA) by schools, and that there are differences between Reading First schools and non-Reading First schools (such as the presence of reading coaches) that have the potential to improve student achievement in reading. The Interim Report summarized its key findings as the following.\nReading First schools appear to be implementing the major elements of the program as intended by the legislation. Reading First schools received both financial and nonfinancial support from a variety of external sources. Classroom reading instruction in Reading First schools is significantly more likely to adhere to the Reading First legislation than classroom reading instruction in Title I schools. Reading First teachers in three grades (kindergarten, second, and third) were significantly more likely than their counterparts in other Title I schools to place their struggling students in intervention programs. Assessment plays an important role in reading programs in both Reading First and non-Reading First Title I schools. Principals in Reading First schools were significantly more likely to report having a reading coach than were principals of non-RF Title I schools. RF staff received significantly more professional development than did Title I staff.", "Information from an October 2007 Center on Education Policy (CEP) report on Reading First indicates that many states and districts believe that the professional training, reading instruction, and assessments provided through Reading First have been important causes of increases in student achievement. However, the CEP report notes that \"these responses represent the views of state and district officials, rather than a cause and effect relationship between Reading First and achievement.\"\nThe 2007 CEP report is based on annual surveys of states and districts, and on in-depth case studies. According to the CEP report, in 2006, 82% percent of states indicated that Reading First professional development was very or moderately effective in increasing achievement in reading. The percentage of states indicating that Reading First curriculum and assessments were very or moderately effective in increasing student achievement in reading equaled 78% in 2006.\nOf districts reporting increases in reading achievement, 69% indicated that Reading First assessments were an important or very important factor, and 68% indicated that Reading First instruction was an important or very important factor.\nThe CEP report also noted that 80% of states and 75% of districts indicated that they coordinated Reading First and Title I. In addition, more than half of Reading First districts indicated that they used elements of Reading First in non-Reading First schools.\nA June 2005 CEP study examined ED's administration of the state application process for Reading First grants, among other things. The 2005 report is based on a review of all state Reading First applications, an in depth review of 15 randomly selected state applications and a review of revisions to state applications based on 10 representative states; in addition to state and district surveys and case studies. The CEP found that many states were required to revise their initial application for Reading First grants one or more times before ultimately having their application accepted. In addition, it found that \"states are remarkably consistent in their selection of specific instruments for assessing students' reading progress.\" It noted that in their final applications, almost all states included the Dynamic Indicators of Basic Early Literacy Skills (DIBELS) in their list of approved assessments, and used A Consumer ' s Guide to Evaluating a Core Reading Program Grades K-3: A Critical Elements Analysis ( Consumer ' s Guide) to evaluate and choose a reading curriculum. CEP analysis of a sample of original and final applications from 10 states found that some modified their original applications to adopt these specific instruments:\nIn each case, 4 of the 10 states added DIBELS and the Consumer's Guide to their applications after initial review, and none dropped either item. In all, 9 of 10 states are using DIBELS and 8 of 10 are using the Consumer Guide.\nAdditionally, the CEP study found that state recommendations of specific reading programs appear to have influenced districts' choice of reading programs. The survey of districts receiving Reading First funds indicated that half changed the reading programs used by the district to qualify for a grant from their state.", "GAO focused on three Reading First issues:\nwhether there have been changes in reading instruction as a result of Reading First; the criteria used by states to award subgrants and the difficulties states have had in implementing Reading First; and the guidance, assistance, and oversight provided to states by ED and its contractors.\nThe GAO report was written in response to a September 23, 2005, Senate Committee on Health, Education, Labor, and Pensions request for an investigation of questions related to the implementation of the Reading First program. The GAO report was based on ED data, a web survey of 50 states' and the District of Columbia's Reading First Directors, 12 in-depth interviews, and four site visits. In addition, GAO interviewed federal, state, and local education officials as well as Reading First Technical Assistance Center administrators and providers of reading programs and assessments. GAO's findings generally support the findings of ED's performance report data, the CEP study, and the interim Reading First evaluation.\nThe GAO report included information on state responses to a variety of Reading First implementation issues.\nForty-eight states reported that ED staff were helpful or very helpful in addressing their implementation-related questions. Thirty-nine states reported that ED staff were helpful or very helpful in addressing their application-related questions. Ten states reported receiving suggestions that they eliminate specific programs or assessments, and four received suggestions to adopt specific programs or assessments. Forty-eight states modified their Reading First grant applications at least once. Most states reported changing the assessments they used, and most indicated that they had included multiple assessment tools on their approved list. DIBELS was the assessment program most frequently listed on states' (48 states) approved list. Twenty-two states developed a state-approved list of Reading programs for districts to select from.\nGAO reported the following findings on Reading First.\nStates reported changes and improvements in reading instruction, including more emphasis on the five key components of reading, assessments, and professional development. Reading First schools made more use of reading coaches and increased the amount of time devoted to reading. Sixty-nine percent of states reported great or very great improvement in reading instruction. Eighty percent of states reported great or very great improvement in professional development, and approximately 75% reported an increase in resources for this purpose. However, GAO also found the ED had not developed written policies and procedures to guide ED officials and contractors in dealing with the states, districts, and schools to ensure compliance with statutory requirements regarding local control of curriculum. In addition, GAO found that ED had not developed written procedures governing its monitoring visits, which caused confusion among states regarding monitoring procedures, timelines, and expectations for taking corrective actions.\nGAO recommended that ED take the following actions.\nEstablish control procedures to guide ED officials and contractors in their interactions with states, districts, and schools. Develop and distribute guidelines regarding its monitoring procedures so that states and districts are made aware of their roles, responsibilities, and timelines.", "There has been considerable debate in the field of education research on the value of different research methodologies, and on what types of research should receive priority for federal dollars. Many researchers argue that the type of research that is appropriate varies with the question that is being asked. However, many have also argued that scientifically-based research (SBR), and randomized controlled trials (RCTs) in particular, are the \"gold standard\" in research. RCT research protocol requires random assignment—with participants assigned randomly to either an experimental group that receives the treatment under investigation, or a control group that does not. RCTs are viewed by many as the most credible way to verify a cause-effect relationship, when the RCT study employs a well designed and implemented methodology with a large sample size. Nevertheless, RCT studies do not necessarily provide a one-size-fits all solution to all educational research needs. A CRS report analyzing RCTs included a summary of some of the potential limitations of putting too much emphasis on RCTs:\n... RCTs are occasionally seen as impractical, unethical, requiring too much time, or being too costly compared to other designs that also seek to assess whether a program causes favorable outcomes. Finally, there is wide consensus that RCTs are particularly well suited for answering certain types of questions, but not others, compared to other evaluation research designs. For example, RCTs typically do not assess how and why impacts occur, how a program might be modified to improve program results, or a program's cost-effectiveness. RCTs also typically do not provide a full picture of whether unintended consequences may have resulted from a program or indicate whether a study is using valid measures or concepts for judging a program's success. Many of these kinds of questions have been considered to be more appropriately addressed with observational or qualitative designs.", "The NCLBA has endorsed the use of SBR in funded activities, including over 100 references to the use of SBR in choosing instructional and assessment programs, as well as for professional training programs, and other NCLBA funded activities. The emphasis is on experimental research, particularly RCTs.\nPrograms in the NCLBA affected by the requirement that funded educational interventions be based on SBR include Title I, Part A, grants for the education of the disadvantaged, Reading First, Early Reading First, Even Start, Literacy Through School Libraries, Comprehensive School Reform, Improving Teacher Quality State Grants, Mathematics and Science Partnerships, English Language Acquisition State Grants, and Safe and Drug-Free Schools and Communities. This discussion focuses on the application of SBR to the Reading First program.\nThe NCLBA language authorizing Reading First makes clear that the intent of the program is to require recipients of Reading First funds to implement programs which are based on scientifically based reading research (SBRR). The definition of SBRR in the NCLBA, is as follows:\nThe term \"scientifically based reading research\" means research that\n(A) applies rigorous, systematic and objective procedures to obtain valid knowledge relevant to reading development, reading instruction, and reading difficulties; and (B) includes research that (I) employs systematic, empirical methods that draw on observation or experiment; (ii) involves rigorous data analyses that are adequate to test the stated hypotheses and justify the general conclusions drawn; (iii) relies on measurements or observational methods that provide valid data across evaluators and observers and across multiple measurements and observations; and (iv) has been accepted by a peer-reviewed journal or approved by a panel of independent experts through a comparably rigorous, objective, and scientific review.\nED's application of SBRR to the Reading First program draws extensively on the work conducted by the National Reading Panel (NRP). In 2000, the NRP issued a report, Teaching Children to Read. The NRP was convened by the National Institute of Child Health and Human Development (NICHD) in consultation with ED in response to a congressional charge to review the literature on reading and use it to assess the effectiveness of different techniques for teaching reading, and whether these techniques were ready to be applied to classroom settings. Based on the NRP's research, the NCLBA incorporated five essential components of reading as requirements for reading instruction funded under the Reading First program. These essential components are defined in the NCLBA as\n... explicit and systematic instruction in—(A) phonemic awareness; (B) phonics; (C) vocabulary development; (D) reading fluency, including oral reading skills; and (E) reading comprehension strategies.", "", "This section summarizes major implementation issues that have arisen regarding the application of SBRR to the Reading First program. Issues discussed here include ED's implementation of SBRR requirements, and the implications of the current state of SBRR for states and LEAs trying to navigate and apply existing research and resources to their educational programs as well as maintain local autonomy in choosing curricula.", "Some criticisms have been raised regarding ED's application of SBRR to the Reading First Program. For example, Robert Slavin, of the Success for All Program, has argued that the NCLBA's requirement that interventions be based on SBR does not differentiate between programs that have themselves been rigorously evaluated and those programs that have not been rigorously evaluated for efficacy, but can cite SBR that supports their interventions.\nThe Success for All Foundation also argues in a letter to the Office of the Inspector General of the U.S. Dept. of Education (OIG), that ED has inappropriately narrowed the definition of scientifically based research in its implementation of the Reading First program:\nIn essence, through the implementation of Reading First, the U.S. Department of Education has narrowed the definition of SBRR to the five \"essential components\" of reading as identified by the National Reading Panel. Research on program efficacy has been ignored. Because Reading First was so closely managed by the U.S. Department of Education, and because it contains such a strong focus on the use of scientifically based research, it is paving the way for how states, districts and schools are coming to understand the meaning of SBR, and how they will apply it to other Federal programs.\nAs a consequence of the alleged \"narrowing\" of the definition of SBRR, states have been unnecessarily limited in their choices of reading programs, assessments and professional development packages, according to critics of ED's implementation of Reading First.", "Some of the controversies that have surrounded implementation of SBRR in the Reading First program reflect the current state of SBRR and the difficulties of applying existing research to concrete educational interventions. Some observers have noted that there are many areas of education research with few if any RCT studies to draw upon. Robert Boruch, who served on the National Research Council that produced the book Scientific Inquiry in Education , stated in an interview with Education Week that \"One cannot just demand controlled experiments ... That's akin to asking people to levitate.\"\nSome have argued that navigating the existing array of resources is difficult for states and LEAs because much of the research is academic. In addition, although there is more user-friendly material available than ever before, evaluations of the application of SBRR to concrete educational interventions is still limited, and there is no single federal website or resource that currently catalogs and evaluates all the available user-friendly resources. The following discussion summarizes some of the resources that are currently available.", "There are a variety of federally funded offices and resources that provide information, and/or technical assistance offering guidance on SBR to states and LEAs. There are also guides intended to provide user-friendly information on SBR, that states and LEAs can access through ED websites and publications. Online resources include a NCLBA website with information on SBR and related resources, a searchable ERIC database on education research, and access to educational statistics and National Assessment of Educational Progress (NAEP) data on ED's National Center for Educational Statistics website. The Institute of Education Sciences (IES) has made publications and other resources available on SBR. In December of 2003 IES published a report, Identifying and Implementing Educational Practices Supported by Rigorous Evidence: A User Friendly Guide .\nIn addition, ED has awarded 20 five-year grants to comprehensive centers to provide advice to states and LEAs on meeting the requirements of the NCLBA. There are also ten regional centers with functions defined in the Education Sciences Reform Act of 2002. One of these centers, the Mid-continent Research Center for Education and Learning, in conjunction with the Education Commission on the States (ECS), published a February 2004 publication, A Policymaker ' s Primer on Education Research: How to Understand, Evaluate and Use it. ECS has also published user-friendly guides on teacher issues and maintains a 50 state database on teacher preparation, recruitment, and retention. Another of the regional centers funded by ED, the North Central Regional Education Laboratory, published a report in its Spring 2003 edition of Learning Point, A Call for Evidence: Responding to the New Emphasis on Scientifically Based Research.\nThese resources are however, not all centralized in one location, and relatively few provide analysis of specific educational instruction or assessment packages that might meet the SBR requirements of the NCLBA. It can be difficult for states and LEAs to sift through the volume of information that is available and find what they need to chose effective curriculum and assessment programs. Ellen Lagemann was interviewed by Education Week on the topic of SBR while working for the Spencer Foundation. She stated\nWe have tended to think that if you do research and get results, that will be useful to practitioners. There's an intermediary step. You have to take the results of research and build it into toys, tools, tests, and texts. You have to build it into things that practitioners can use. They can't use the conclusions of a study.\nED's IES created a What Works Clearinghouse (WWC) to address this need for clear user-friendly information on SBR, including evaluations of specific educational interventions. The WWC publishes reviews of educational interventions that have SBR to back up their efficacy claims on education topics that the WWC has identified as priorities. Initially the WWC intended to issue only topic reports, but in May of 2006, the WWC modified its website to include new intervention reports. These intervention reports have been introduced so that potentially useful information can be made available as quickly as possible. After an intervention that meets WWC standards is reviewed, an intervention report will be posted on the website. After all such interventions on a specific topic have been reviewed, a topic report will be posted on the website. The information provided in intervention reports includes program descriptions, costs of implementing the programs, and ratings of program effectiveness—including a category of \"potentially positive\" for promising results.\nResources on SBRR specifically targeted to the Reading First program have also been provided by ED. These include information and links to additional resources provided in the Reading First and NCLBA websites. ED sponsored Reading First Leadership Academies to assist states with understanding and applying for Reading First grants, and it has issued nonregulatory guidance on Reading First. In addition, ED established a National Center for Reading First Technical Assistance to provide training to states and districts to assist with Reading First. According to ED in its March 1, 2004, issue of the Achiever,\nAdministrators and teachers will receive training in scientifically based reading research and instruction; assistance in reviewing reading programs and assessments; critiques of Reading First sub-grant applications and methods of scoring them; and training in using assessment data to improve student reading performance.... Technical assistance will be provided through a range of learning opportunities, including national and regional conferences, institutes and seminars; training and professional development; on-site, telephone and e-mail consultations; and links to national reading experts.\nThe National Institute for Literacy (NIFL) is charged with the mission of disseminating information on SBRR as it relates to children, youth, and adults. NIFL is also to disseminate information on specific reading programs supported by SBR and information on effective classroom reading programs that have been implemented by states and LEAs. NIFL publications are available for downloading on their website.", "Perhaps in part because of the difficulties in finding specific information on SBRR based educational interventions that meet the requirements of the NCLBA, many states have chosen to rely upon a limited number of instructional, assessment and professional training programs. This has raised concerns by some about what they call the \"overprescriptiveness\" of ED's application of SBRR to Reading First and the potential infringement on states' and LEAs' ability to choose curricula. Some argue that this \"overprescriptiveness\" is not consistent with section 9527 of the No Child Left Behind Act. This section states the following:\n(a) GENERAL PROHIBITION—Nothing in this Act shall be construed to authorize an officer or employee of the Federal Government to mandate, direct, or control a State, local educational agency, or school's curriculum, program of instruction, or allocation of State or local resources, or mandate a State or any subdivision thereof to spend any funds or incur any costs not paid for under this Act.\n(b) PROHIBITION ON ENDORSEMENT OF CURRICULUM.—Notwithstanding any other prohibition of Federal law, no funds provided to the Department under this Act may be used by the Department to endorse, approve, or sanction any curriculum designed to be used in an elementary school or secondary school.\nThe 2005 CEP study discussed earlier in this report did find that states were \"remarkably consistent\" in their choice of programs. For example, the 2005 CEP study found that many states were required to revise their initial application for Reading First before it was accepted. CEP found that in their final accepted applications, almost all states included DIBELS on their list of approved assessments, and used the Consumer ' s Guide to evaluate and choose a reading curriculum. Additionally, the CEP study found that state recommendations of specific reading programs appear to have influenced districts' choice of reading programs. The survey of districts receiving Reading First funds found that half changed the reading programs used by the district to qualify for a grant from their state.", "Three groups representing different reading programs filed separate complaints with ED's OIG, asking that the Reading First program be investigated. The three groups that filed complaints are Dr. Cupp's Readers and Journal Writers, Success For All, and the Reading Recovery Council of North America. In response, the OIG has conducted several audits of the Reading First program. It issued its first report on the federal Reading First program, specifically on Reading First's grant application process, in September of 2006. In addition, several audits of state Reading First programs have been issued, and audits have been conducted on ED's administration of the Reading First program and on the RMC Research Corporation's Reading First Contract. These three reports essentially validated many of the concerns that had been raised in complaints filed with the OIG. ED concurred with the OIG's recommendations in all three reports and has addressed the recommendations.", "The OIG report on the Reading First application process was highly critical of ED's implementation of the Reading First program. The major findings included in this report are summarized below.\nThe OIG found that the expert review panel that reviewed state applications for Reading First grants was not selected as required by the NCLBA. Section 1203(c)(2)(A) of the NCLBA requires the peer review panel to include at a minimum, three individuals selected by each of the following agencies: the Secretary of the U.S. Department of Education, the National Institute for Literacy (NIFL), the National Research Council of the National Academy of Sciences (NAS), and three individuals selected by the National Institute of Child Health and Human Development. ED created 16 subpanels to review state applications, and according to the OIG, a majority of the panelists on 15 out of the 16 subpanels had been nominated by ED. In addition, none of the subpanels included a nominee from each of the other organizations specified in Section 1203(c)(2)(A) of the NCLBA. And the OIG found no evidence that the subpanels met to review applications as a whole before recommending that the Secretary approve or disapprove a state's application. The OIG's report states that \"Because the Department did not meet the requirements at Sections 1203(c)(2)(A), it raises the question of whether any of the applications were approved in compliance with the law.\" Although not required to do so by law, ED screened potential panelists for conflicts of interest. However, the screening process used was ineffective, according to the OIG. The OIG reviewed resumes provided to ED by 25 Reading First panelists, and found that six of the panelists had significant professional connections to a specific reading program. ED failed to follow its own guidance ( Reviewer Guidance for the Reading First Program ) for conducting the peer review process. The OIG found that the review panelists provided constructive comments in the Panel Chair Summaries submitted to ED that would have been useful to states whose applications were not approved, in making needed modifications to their applications. However, ED did not share these panel summaries with the states; instead, the Reading First director and his assistant used these panel summaries to write their own reports, which were then provided to states. According to the OIG, these reports did not always accurately reflect the Panel Chair summaries—sometimes the Reading First director and his assistant changed or omitted panelists' comments, and sometimes they added their own comments. As a consequence, states sometimes lacked adequate information to correct their applications and were required to submit amended applications several times before they were approved. In addition, the OIG found that five state applications were approved without documentation that these states had met the required criteria, or that the subpanels had approved these applications. Some of the criteria required by the department for panelists to approve a state's application were not based on requirements included in the NCLBA. ED provided panelists with 25 criteria to be rated in each state application ( Reading First: Criteria for Review of State Applications ). Three rating categories were established for each criterion: \"Exemplary,\" \"Meets Standard,\" and \"Does Not Meet Standard.\" The \"Meets Standard\" category was the bar all states were expected to meet for application approval. The \"Exemplary\" category was applied to conditions above and beyond \"Meets Standard\" that were believed would result in the highest-quality programs. However, the OIG found that some of requirements in the \"Meets Standard\" category were not requirements contained in the NCLBA, and as a consequence, \"State applications were reviewed based upon standards that were not required by statute.\" Finally, the OIG found that \"program officials tried to purposely obscure the content of the statute ( the ESEA ) and otherwise took actions to disregard Congress' direction and intent.\" The OIG also found that ED's \"actions demonstrate that the program officials failed to maintain a controlled environment that exemplifies management integrity and accountability.\" Further, the OIG found that ED's actions may have violated prohibitions in the Department of Education Organization Act (DEOA) and the ESEA against federal endorsement of particular curricula.\nThe OIG recommended that the Assistant Secretary of ED's Office of Elementary and Secondary Education (OESE) take the following actions.\nImplement procedures to ensure OESE staff know when to solicit advice from the Office of the General Counsel (OGC); as well as procedures to resolve disputes that might arise between OESE staff and the OGC to \"ensure that programs are managed in compliance with applicable laws and regulations.\" In consultation with the OGC, make improvements to strengthen procedures for evaluating potential conflicts of interest in panel review processes. Review all Reading First applications to ensure all necessary criteria were met. Make changes, as appropriate, to the management and staff structure of the Reading First program to ensure that Reading First's implementation is consistent with NCLBA requirements. Ask the OGC to provide guidance on what is prohibited by Section 3403(b) of the Department of Education Organization Act. Rely upon an internal advisory committee (which includes representatives from OESE programs, the OGC, and ED's Risk Management Team) to ensure that future initiatives are appropriately implemented and coordinated with other ED programs. Request that the internal advisory committee evaluate whether \"the implementation of Reading First harmed the Federal interest,\" and whether any remedial actions are required. In addition, request that the internal advisory committee ensure that ED has internal controls in place so that future programs do not have problems similar to those that occurred with Reading First. Establish a discussion with state and local education representatives \"to discuss issues with Reading First as part of the reauthorization process.\"\nThe Secretary of the U.S. Department of Education (ED) responded in writing that she agreed with all of the recommendations of the OIG, and would take immediate action to implement these recommendations. However, ED also responded that it did not agree with all of the findings reached by the OIG. ED noted that it has no information to indicate that its peer review process adversely affected any state. It also noted that screening for conflicts of interest was not required—but it took this extra effort and made reasonable efforts to adapt conflict-of-interest procedures to the Reading First program. Regarding its screening of panelists, ED stated that \"We know that while additional steps could have been taken, the steps we took were effective and more than what was required by law.\" ED also indicated that the statute did not specify the role of peer review comments, and that it had not replaced a process required by the NCLBA. In addition, its further review of Reading First staff summaries of these comments found that, overall, \" the summaries did not deviate significantly from the reviewers' comments.\" ED also stated that the peer review panel was advisory, and that it was not practical to have the panel review every resubmitted state application. In addition, ED noted that the Reading First criteria it issued to panelists was intended to \"encourage high-quality projects that go beyond the minimum standards of the statute.\" ED stated that \"Overall, the Reading First guidance has proven to be helpful and it is consistent with the law, and consistent with helping ensure the submission of high quality applications.\" Finally, ED stated that \"We are not aware of information showing inappropriate actions to require particular programs or approaches.\"", "This audit focused on ED's administration of several aspects of the Reading First program: the Reading First Leadership Academies (RLAs) held in January and February of 2002; the Reading First website; ED's April 2007 Guidance for the Reading First Program ; and ED's monitoring of conflicts of interest in its technical assistance contracts. The major findings included in the OIG's report are summarized below.\nThe April 2007 Guidance for the Reading First Program and ED's administration of its Reading First website were consistent with the law. ED did not ensure that the RLAs complied with curriculum provisions contained in the Department of Education Organization Act (DEOA) and the NCLBA. In particular, the Theory to Practice sessions provided during the RLAs focused on a select number of reading programs, and the RLA Handbook and Guidebook appeared to promote DIBELS. ED did not adequately address issues regarding bias and objectivity when hiring technical assistance providers.\nThe OIG recommended that the Assistant Secretary of ED's Office of Elementary and Secondary Education take the following actions:\nEstablish controls to ensure that ED complies with all DEOA and NCLBA curriculum requirements in department-sponsored events. Establish controls to ensure that ED does not promote (or appear to promote) any specific curriculum in department-sponsored conference materials. In consultation with ED's Chief Financial Officer, establish procedures to ensure that all department contractors have been adequately assessed for bias and objectivity.\nThe Secretary of the U.S. Department of Education responded in writing that she agreed with all of the recommendations of the OIG, and would take immediate action to implement the recommendations. However, ED also responded that it did not agree with all of the findings reached by the OIG. ED said that the OIG report did not provide a balanced perspective of the activities discussed, and failed to mention the positive elements of these activities. ED argued that it was necessary to discuss specific reading programs in the Theory to Practice sessions held at the RLAs in order for these sessions to be useful to participants. Furthermore, ED noted that participants at the RLAs were told that the purpose of the sessions was not to endorse any particular reading program. In addition, ED noted that simply having expertise in a particular program should not disqualify an individual from serving as a provider of technical assistance, so long as the individual does not have a financial interest in the areas for which he or she provides advice.", "This audit focused on RMC's Reading First technical assistance contracts. RMC was issued three contracts by ED. The first two contracts were to provide technical assistance to SEAs to assist them in preparing their Reading First applications and to transition to program implementation. The third contract was for RMC to manage three regional technical assistance centers to assist in providing technical assistance to SEAs and LEAs in the program implementation phase. The OIG's major findings are summarized below.\nRMC did not adequately monitor its staff and its subcontractors' staff to ensure that there were no conflicts of interest or potential bias. In two instances, a particular assessment may have been inappropriately promoted to SEAs. RMC did not include ED's required conflict-of-interest clause in its contracts, and it did not adequately screen the technical assistance providers it used for affiliations with particular reading programs.\nThe OIG recommended that the Assistant Secretary of ED's OESE require RMC to work with the department to take the following actions.\nImplement formal conflict-of-interest procedures to be applied to all current and future contracts with the ED. Investigate and try to remedy any instances of bias on the part of TA providers on the National Technical Assistance Center contract. Develop and implement a conflict-of-interest certification form for all technical assistance providers.\nRMC concurred with the OIG recommendations, and has consulted with ED and taken action to improve and strengthen conflict-of-interest requirements.", "The House Committee on Education and Labor has held two oversight hearings on Reading First. The first hearing was held on April 20, 2007. Witnesses at the hearing included ED's Inspector General, John Higgins; the Director of the Reading First program (until September, 2006), Chris Doherty; and three members of the Committee on Reading Assessments (Roland Good, Edward Kame'enui, and Deborah Simmons). The focus of the hearing was on the administration of Reading First under Doherty's leadership and on connections of the three panelists who had served on the Committee on Reading Assessments to the DIBELS assessment program. The purpose of the second hearing, held on May 10, 2007, was to receive testimony from the Secretary of the U.S. Department of Education, Margaret Spellings, on the Reading First program and on the student loan program.\nOn May 9, 2007 the Senate Committee on Health, Education, Labor and Pensions issued a report indicating that four out of five Reading First Technical Assistance (TAC) directors had financial ties with publishers while serving as TAC directors. In its conclusion, the report notes that\nThe Chairman's investigation reveals that four Reading First Technical Assistance Center directors—subcontractors to the Department—had substantial financial ties to publishing companies while simultaneously being responsible for providing technical assistance to states and school districts seeking guidance in selecting reading programs that would help them secure federal grants. These findings are troublesome because they diminish the integrity of the Reading First program. Congress should act to ensure that future conflicts of interest are identified and addressed.\nThe report agreed with all of the OIG recommendations. In addition, it recommended that Congress adopt new requirements regarding financial disclosure to prevent future conflicts of interest by federal employees and others involved in the administration or implementation of K-12 education programs, as well as those providing technical assistance.\nH.R. 1939 (McKeon), the Reading First Improvement Act, was introduced on April 19, 2007, and referred to the House Committee on Education and Labor. This legislation establishes procedures for setting up a Reading First Advisory Committee and potential subcommittees. It would prohibit one entity or individual from nominating a majority of the committee or subcommittee members. The bill would also require ED to establish stronger conflict-of-interest procedures and provide guidance on how the advisory committee and any subcommittees are to review and provide feedback on state applications, as well as ensure decisions are well-documented and available to the public. The legislation would also prohibit ED from providing a contract or subcontract for program evaluation to any entity that received a contract or subcontract to implement any aspect of Reading First. Additionally, it would require conflict-of-interest screening by contractors and subcontractors of all employees involved in the contract or subcontract." ], "depth": [ 0, 1, 2, 2, 3, 3, 3, 1, 2, 2, 3, 4, 3, 3, 4, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h0_full h2_full", "h0_full", "", "", "", "h1_title", "", "h1_title", "h1_title", "h1_full", "", "", "", "h2_full h1_full", "h2_full", "", "h1_full", "" ] }	{ "question": [ "Why was the Reading First program created?", "What was the extent of the progress of the program across the United States in the early years of the program's implementation?", "How are the results of the Reading First program seen as positively impacting education in the United States?", "Why is the government's current method of measuring success imperfect?", "How is Reading First a controversial program?", "How have the SBRR requirements affected Reading First's reception?", "What has been done to protest Reading First's programs?", "How did the Office of the Inspector General react to the controversies surrounding the Reading First program?", "How did the OIG overview the actions of the program?", "What was the reaction of the OIG once it reported its findings on the program?", "What did the government do in response to the findings of the OIG?", "How did the administration react to the funding cut in 2009?" ], "summary": [ "Reading First was drafted with the intent of incorporating scientifically based reading research (SBRR) on what works in teaching reading to improve and expand K-3 reading programs to address concerns about student reading achievement and to reach children at younger ages.", "By the end of October 2003, all states and the District of Columbia had received their FY2002 and FY2003 Reading First awards.", "Information from the U.S. Department of Education's (ED) April 2007 report on state performance data; a February 2007 Government Accountability Office report, and a 2007 Center on Education Policy report, Reading First: Locally Appreciated, Nationally Troubled, have all provided relatively positive information about states' and local school district's opinions of the impact of Reading First on student achievement.", "However, state assessment measures and cut-off scores for determining reading proficiency vary from state to state, making it difficult to draw definitive conclusions on Reading First's performance from these data.", "There have, however, been criticisms of the program that centered on the perceived \"overprescriptiveness\" of the program as it has been administered, perceptions of insufficient transparency regarding ED's requirements of states, and allegations of conflicts of interest between consultants to the program and commercial reading and assessment companies.", "Controversies have also arisen regarding the application of the SBRR requirements in the NCLBA to the Reading First program.", "Three groups representing different reading programs filed separate complaints with ED's Office of Inspector General (OIG), asking that the program be investigated.", "In September of 2006, the OIG issued a report on Reading First's grant application process.", "Subsequent OIG audit reports were issued on ED's administration of selected aspects of the program, on the RMC Research Corporation's Reading First contracts, and on several states' administration of the program.", "The OIG reports were highly critical of ED's implementation of the Reading First program, and essentially validated many of the concerns that had been raised in complaints filed with the OIG.", "In response to the controversy surrounding Reading First, the program's funding was cut from $1 billion in FY2007 to $393 million in FY2008.", "The Administration has requested that the program's funding be restored to $1 billion for FY2009." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, 0, 0, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3 ] }
CRS_R41345	{ "title": [ "", "Status of Legislation", "Continuing Appropriations", "Appropriation", "National Defense Authorization", "Title I: Department of Defense", "Military Construction", "Key Budget Issues", "Planning Future Construction: the Quadrennial Defense Review", "Base Realignment and Closure (BRAC): the Cost of Implementation", "Overseas Installations: the Guam Redeployment", "Incremental vs. Phased Construction Funding", "Other Issues", "Piñon Canyon, CO, Maneuver Training Area (PCMTA)", "School Construction", "Title II: Department of Veterans Affairs", "Agency Overview", "Key Budget Issues", "", "Title III: Related Agencies", "American Battle Monuments Commission", "U.S. Court of Appeals for Veterans Claims", "Department of Defense: Civil (Army Cemeterial Expenses)", "Armed Forces Retirement Home (AFRH)", "Title IV: Overseas Contingency Operations", "Temporary Contingency Construction Authority", "Permanent Construction Authorities", "The Use of CCA for Construction", "Creation of Title IV" ], "paragraphs": [ "", "", "Because no regular military construction/veterans affairs appropriations were enacted before the end of FY2010, Congress sought to pass legislation to continue funding for operations into FY2011. The vehicle chosen was an appropriations bill that had made its way partially through the legislative process during the first session of the 111 th Congress.\nH.R. 3081 , the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010, had been passed by the House on July 9, 2009. The Senate received the bill on July 13, but it had lain dormant on the chamber's Legislative Calendar (General Orders, Calendar No. 107) ever since. On September 24, 2010, the Majority Leader, Sen. Harry Reid (NV) moved to consider the bill and sent to the desk a cloture motion ( Congressional Record S7454). The Senate invoked cloture on the motion to proceed by Yea-Nay vote (84-14, Record Vote No. 243, CR S7585) on September 28. On September 29, the Senate amended the bill, renamed it as the Continuing Appropriations Act, 2011, and passed it by Yea-Nay vote (69-30, Record Vote No. 247). The House took up the appropriate rule ( H.Res. 1682 ) late that same evening, passed the rule, and moved to accept the Senate amendments. The House agreed to the amendments early on September 30 by recorded vote (228-194, Roll No. 564), making funds available through December 3, 2010.\nThe measure appropriated funds, according to Sec. 101, in\nsuch amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2010 and under the authority and conditions provided in such Acts, for continuing projects or activities ... that are not otherwise specifically provided for in this Act, that were conducted in fiscal year 2010, and for which appropriations, funds, or other authority were made available ....\nNevertheless, Sec. 104 of the bill added\nExcept as otherwise provided ..., no appropriation of funds made available or authority granted ... shall be used to initiate or resume any project or activity for which appropriations, funds, or other authority were not available during fiscal year 2010.\nThe impact this will have on military construction projects requested by the President for FY2011 appears to depend on whether an individual project is a standard military construction project or a construction required to implement a recommendation of the 2005 Defense Base Closure and Realignment (BRAC) Commission. Standard military construction projects are both individually appropriated for in the various military construction accounts and individually authorized in the annual National Defense Authorization Act, and the necessary authorization legislation has not yet been enacted for FY2011. Therefore, standard construction projects for which no appropriation of funds or authority was available in 2010 may not be initiated under the Continuing Appropriations Act. Nevertheless, funding for BRAC 2005 implementation is appropriated at the account, not the project, level, and both authority and appropriations funds for that activity were available during FY2010.\nSec. 135 of the bill reduced the amounts available to the BRAC 2005 from the rate available for FY2010 (where $7.95 billion had been appropriated) to an annual rate of operations of $2.35 billion, the amount requested for FY2011 by the President and recommended by both appropriations committees.", "President Barack Obama submitted a detailed appropriations request for Fiscal Year (FY) 2011 on February 1, 2010. In it, he requested $18.7 billion in new budget authority for regular military construction and military family housing construction and operation, plus an additional $1.3 billion for construction in support of ongoing military contingency operations overseas, primarily in Afghanistan. The committees on appropriations subsequently recommended to their respective chambers that Congress appropriate funds equal to the president's request, though each committee's allocation of funds among the various subaccounts differed in detail.\nSenator Tim Johnson (South Dakota), chair of the Senate Committee on Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, introduced an original measure, S. 3615 ( S.Rept. 111-226 ), to the Senate on July 19, 2010, where it was placed on the Senate Legislative Calendar under General Orders (Calendar No. 469).\nRepresentative Chet Edwards (TX/17), chair of the House Committee on Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, reported an original measure, H.R. 5822 ( H.Rept. 111-559 ), to the House on July 22, 2010. The bill was placed on the Union Calendar (Calendar No. 320). The House Committee on Rules met on July 27 to draft a rule for the consideration of H.R. 5822 . The Rules Committee adopted a structured rule ( H.Res. 1559 ) the same day, submitting H.Rept. 111-570 . The House passed the rule on July 28 and took up the bill, considering a total of 14 amendments. Of these, eleven were adopted before passing the amended bill on the Yeas and Nays (411-62, CR H6228-H6235, Roll No. 482).\nDetailed, appropriations account-level data on the appropriations bills, including enacted amounts for prior years, are displayed in Table 4 (Department of Veterans Affairs), Table 6 (Related Agencies), and Table A -1 (Military Construction and Family Housing) and Table A -2 (Overseas Contingency Operations Military Construction).", "Representative Ike Skelton (MO/04) introduced H.R. 5136 , the National Defense Authorization Act for 2011, on April 26, 2010, when it was referred to the House Committee on Armed Services (HASC). The committee referred parts of the bill, including the authorization request for the FY2011 military construction appropriation, to its various subcommittees on May 11 and reported the bill ( H.Rept. 111-491 ) on May 21. The House took up the bill on May 27, adopted several amendments, and passed an amended version on recorded vote (Roll No. 336) on May 28, 2010. The bill was received in the Senate on June 9 and placed on the Legislative Calendar under General Orders (No. 423). On June 24, the Senate, at the other chamber's request ( H.Res. 1467 ), returned the papers to the House by Unanimous Consent. H.R. 5136 was again received in the Senate on June 28 and placed on the Legislative Calendar under General Orders (No. 447).\nThe Senate's version of the defense authorization bill, S. 3454 , was introduced to that chamber by the chair of the Senate Committee on Armed Services (SASC), Senator Carl Levin (MI), as an original measure on June 4, 2010 ( S.Rept. 111-201 ). The measure was placed on the Legislative Calendar under General Orders (No. 414).\nTable 1 and Table 2 track the progress of the appropriations and authorization acts, respectively.\nThe remainder of this report is organized in parallel with the appropriations bills.", "", "The military construction appropriations account includes a number of appropriations subaccounts:\nMilitary Construction accounts provide funds for new construction, construction improvements, planning and design, and host nation support of active and reserve military forces and DOD agencies. The North Atlantic Treaty Organization Security Investment Program (NSIP) is the U.S. contribution to a common fund in which all NATO members participate to defray the costs of construction (airfields, fuel pipelines, military headquarters, etc.) needed to support major NATO commands. Family housing accounts fund new construction, construction improvements, federal government costs for family housing privatization, maintenance and repair, furnishings, management, services, utilities, and other expenses incurred in providing suitable accommodation for military personnel and their families where needed. The DOD Housing Improvement Fund is the vehicle by which DOD provides the seed money, both directly appropriated and transferred from other accounts, needed to initiate public-private arrangements for the privatization of military housing. The Homeowners Assistance Fund aids federal personnel stationed at or near an installation scheduled for closure or realignment who are unable to sell their homes by allowing the Secretary of Defense to subsidize the sale or to purchase homes outright. The Chemical Demilitarization Construction, Defense-Wide , account provides for the design and construction of disposal facilities required for the destruction of chemical weapons stockpiles, as required under international treaty. The Base Realignment and Closure Account 1990 funds the remaining environmental remediation requirements (including the disposal of unexploded ordnance) arising from the first four base realignment and closure (BRAC) rounds (1988, 1991, 1993, and 1995). The Base Realignment and Closure Account 2005 provides funding for the military construction, relocation, and environmental requirements of the implementation of both the 2005 BRAC round and the DOD Integrated Global Presence and Basing Strategy/Global Defense Posture Realignment (military construction only).\nFunding of the various accounts included under Title I (Department of Defense) and Title IV (Overseas Contingency Construction) is listed in Appendix A to this report.", "", "Congressional committees with jurisdiction over military construction appropriations and appropriation authorizations require the Secretary of Defense to justify in detail the construction projects requested for the upcoming fiscal year. In addition, in order to anticipate upcoming construction requirements, Congress requires the Secretary to regularly project its future budget plans and to review its national defense strategy. One important document in that planning process is the statutorily mandated Quadrennial Defense Review (QDR).\nSince the dissolution of the Soviet Union, Congress has required DOD to periodically reassess its strategic objectives and potential military threats to national defense. The Department published its fourth such exercise, the 2010 QDR, in February 2010.\nIn recent QDRs, DOD expressed its intention to reevaluate its \"global footprint,\" the network of permanent garrisons stationed on foreign soil, with an eye toward concentrating a greater percentage of troops on U.S. territory, ready to deploy to temporary sites overseas where and as needed. In the 2010 QDR, DOD appeared to reevaluate its position, stating its intention to extend \"a global defense posture composed of joint, ready forces forward-stationed and rotationally deployed to prevail across all domains, prepositioned equipment and overseas facilities, and international agreements.\"\nThe Senate appropriations committee noted that DOD had initiated several QDR-inspired reviews of its basing policies and encouraged the Department to focus its installations planning on U.S. European Command (USEUCOM) and Pacific Command (USPACOM), the geographic commands with the most extensive basing establishments. While awaiting results of the DOD reviews, the committee recommended deferring $464.6 million of the FY2011 presidential request for military construction in Djibouti, Germany, Guam, Honduras, Japan, and the Republic of Korea. The House committee also noted basing uncertainties in the 2010 QDR, including references to the need for U.S. military forces to have \"access to networks of bases and supporting infrastructures that are more resilient than today's in the face of attacks by a variety of means,\" and the \"normalization\" of duty tours in locations such as the Republic of Korea. The House committee directed DOD to include a report with its FY2012 budget submission detailing how it intends to fund the construction needed to implement a revised overseas basing plan.", "In the detailed documentation submitted by DOD to accompany the President's FY2011 appropriations request, DOD estimated that its one-time implementation costs for BRAC 2005 will total $34.5 billion.\nThese cost estimates have increased over time as the military departments and DOD have developed plans to carry out the various required BRAC actions. In requesting military construction funds for FY2007, the first submission after the list of BRAC recommendations was created, DOD estimated the total one-time implementation cost to implement the 2005 BRAC round (the realignment and closure of a number of military installations on United States territory) and to redeploy approximately 70,000 troops and their families from overseas garrisons to bases within the United States at $17.9 billion. Between the submission of the FY2007 request in February 2006 and the FY2008 request the next year, DOD estimates had matured considerably, causing the estimate of one-time implementation cost to rise to more than $30.7 billion. The same estimate made by DOD in February 2008 for the FY2009 appropriations request rose again, to $32.0 billion. DOD's FY2010 estimate for one-time implementation costs over the FY2006-2011 period reached $34.2 billion.\nFY2011 is the final year of BRAC 2005 implementation, which by statute must be complete by September 15, 2011, and the estimate for total new budget authority required to complete the process has now been set by DOD at $34.5 billion. The President has requested $2.4 billion as the final implementation installment. Both House and Senate committees have recommended full funding of the President's request.\nFigure 1 displays the progression of DOD cost estimates.", "The President has requested $426.9 million for construction to support the relocation of approximately 8,000 Marines and an estimated 10,000 members of their families from installations in the Prefecture of Okinawa to the U.S. Territory of Guam and an additional $139.3 million for construction associated with the forward deployment of other military units. Relocation funding is to be shared between the governments of Japan and the United States. Associated with the Guam relocation is the construction of a replacement facility on Okinawa for the Marine Corps air station at Futenma and a redeployment of units to Camp Schwab, Okinawa.\nIn its report to the House, the Committee on Appropriations wrote of its concerns over the ability of DOD to fully utilize this amount, citing an inadequate Navy Draft Environmental Impact Statement on the proposed construction, lack of apparent progress in upgrading civil infrastructure \"outside the fence line\" (such as roads, sewage treatment, water supplies, etc.), and the uncertain impact of the 2010 QDR's concept of installation \"resiliency\" on future construction planning. The Senate committee also pointed out the absence of a definite DOD global basing strategy, citing the Guam and the Okinawa relocations as cases in point. The Senate committee drew attention to the \"cost and magnitude of the construction program, the potential environmental impact on Guam, and the timeline to complete the realignment.\" In the end, of the $566.2 million requested by the President for construction on Guam, the House committee recommended appropriating $393.2 million, and the Senate committee recommended $246.0 million.", "Major construction projects often require several years to complete. In their planning and execution, military departments and defense agencies have developed the practice of requesting authorization and appropriations in discrete phases, each of which is considered to be independent of another.\nA \"military construction project\" is defined in statute to include \"all … work … necessary to produce a complete and usable facility or a complete and usable improvement to an existing facility.\" Thus, as each phase of construction is presented as its own project, each must result in a facility that can be placed in service.\nEach approach presents certain advantages and distinct disadvantages. Phased construction considers each portion of a major construction project to be a discrete undertaking, fully funded and presenting a usable edifice at its conclusion. Under phased funding, DOD and Congress are committed to even large-scale construction for only a limited period and either body could, at the end of a phase, halt continued construction. Incremental funding would break large projects into two legislative tracks – a single authorization for the entire construction and repeated appropriations to carry the construction through to completion. By authorizing a project through the incremental funding mechanism, Congress could commit itself, and potentially future congresses, to its support for a number of years.\nPhased funding could lead to inefficient construction in certain large projects because each phase must be planned and executed as if it was discrete. Incremental funding may commit subsequent congresses to the support of an already authorized construction project.", "", "During the 1980s, the Department of the Army acquired approximately 250,000 acres near Ft. Carson, CO, for use as a troop maneuvering area. Half of the land was purchased via open sale, with the remainder bought through the use of condemnation proceedings.\nWhen the Department announced that the number of soldiers stationed at Ft. Carson would increase substantially, it initiated an effort to add an additional 450,000 acres to the PCMTA. Local land owners expressed concern that public condemnation might again be invoked to acquire the new land.\nAn amendment to the bill appropriating military construction funds for FY2008 ( P.L. 110-161 ) forbade the use of those funds for the Piñon Canyon expansion. Identical language appeared in the military construction appropriations acts for FY2009 and FY2010. This restriction is continued in Section 126 of the Administrative Provisions in Title I of H.R. 5822 , the House version of the appropriations bill, but is not reflected in its companion bill, S. 3615 .", "A number of military installations will gain a significant number of military and civilian personnel during the next several years due to force shifts associated with base realignments, military end strength increases, and the redeployment of military units from overseas to domestic garrisons. Most school-age children of military personnel attend public schools operated by local school agencies.\nFederal property is exempt from the local taxation that normally supports school systems, and an important federal support for school attendance takes the form of Impact Aid Program payments to local school districts. Nevertheless, impact aid is retroactive, depending on an annual census of military family school children. This has presented a challenge for jurisdictions to prepare for a large influx of students as military units move to nearby installations.\nSec. 2815 of H.R. 5136 , the House version of the National Defense Authorization Act for FY2011, may offer an alternative path for DOD assistance in helping local jurisdictions cope with expanded installation populations. The proposed language would amend 10 U.S.C. 2391, the statute under which DOD offers economic adjustment and diversification assistance to communities impacted by installation closure or realignment under BRAC. The amendment states\nIf the proposed or actual establishment or expansion of a military installation would otherwise qualify a State or local government for assistance under this paragraph and is the result of base realignment and closure activities authorized by the Defense Base Closure and Realignment Act of 1990 (10 U.S.C. 2687 note), the Secretary may make grants, conclude cooperative agreements, and supplement funds available under Federal programs administered by agencies other than the Department of Defense in order to assist the State or local government with development of the public infrastructure (including construction) required by the proposed or actual establishment or expansion.", "", "The Department of Veterans Affairs (VA) administers directly, or in conjunction with other federal agencies, programs that provide benefits and other services to veterans and their spouses, dependents and beneficiaries. The VA has three primary organizations to provide these benefits: the Veterans Benefits Administration (VBA), the Veterans Health Administration (VHA), and the National Cemetery Administration (NCA). Benefits available to veterans include service-connected disability compensation; a pension for low-income veterans who are elderly or have a nonservice-connected disability; vocational rehabilitation for disabled veterans; medical care; life insurance; home loan guarantees; burial benefits; and educational and training benefits to help in the transition of active servicemembers to civilian life. As shown in Table 3 , VA appropriations for benefits and services has increased from $61.84 billion in FY2004 to $109.61 billion in FY2010.", "The FY2011 budget submitted by the Administration called for funding the VA at a level of $120.79 billion for FY2011 (see Table 4 ). This is an increase of $11.18 billion, or 10.2%, over the FY2010 appropriation.\nThe largest dollar increases in funding for the VA between FY2010 and FY2011 in the Administration request, the House Appropriations Committee recommendation ( H.R. 5822 ) and the Senate Appropriations Committee recommendation ( S. 3615 ) are for disability compensation and pension benefits, and readjustment benefits, where the largest component is for education benefits.\nAs shown in Table 4 , the Administration request, H.R. 5822 and S. 3615 would provide $53.49 billion in disability compensation and pension benefits, an increase of $6.10 billion or 12.9% more than the FY2010 appropriation. The Administration request, H.R. 5822 , and S. 3615 would also provide $10.44 billion in readjustment benefits, an increase of $1.21 billion or 13.1% more than the FY2010 appropriation.\nThe Administration request is for $120.79 billion in FY2011 funding for the VA, and $50.61 billion in advance FY2012 funding for VA medical care. H.R. 5822 provides total funding for the VA of $120.81 billion for FY2011 (of which $48.18 was advance funding), and advance funding for FY2012 of $50.61 billion. H.R. 5822 provides higher funding overall for general departmental administration including increases in operating expenses, the Office of the Inspector General, and construction, and a decrease for information technology compared to the Administration request.\nS. 3615 would provide, as shown in Table 4 , $120.84 billion in FY2011 funding for the VA (of which $48.18 was advance funding), and $50.61 billion in advance FY2012 funding for VA medical care. Unlike the Administration request and H.R. 5822 , S. 3615 would provide additional funding, beyond the prior advance funding for FY2011, for medical services and medical facilities. S. 3615 would also provide higher funding overall for general departmental administration, with increases in operating expenses, the Office of the Inspector General, and construction, and a decrease for information technology compared to the Administration request.\nAs shown in Table 5 , there is an almost equal split between mandatory and discretionary funding for the VA. In the FY2010 appropriation, mandatory funding was only slightly higher than discretionary funding. The Administration request, H.R. 5822 , and S. 3615 for FY2011 would provide discretionary funding that is less than mandatory funding. For FY2012, all of the advance funding provided by H.R. 5822 and S. 3615 is discretionary funding.", "", "", "The American Battle Monuments Commission (ABMC) is responsible for the maintenance and construction of U.S. monuments and memorials commemorating the achievements in battle of U.S. armed forces since the nation's entry into World War I; the erection of monuments and markers by U.S. citizens and organizations in foreign countries; and the design, construction, and maintenance of permanent cemeteries and memorials in foreign countries. The Commission maintains 24 cemeteries and 25 memorials in either foreign countries or on U.S. soil.", "The U.S. Court of Appeals for Veterans Claims was established by the Veterans' Administration Adjudication Procedure and Judicial Review Act of 1988 ( P.L. 100-687 ). The Court is an independent judicial tribunal with exclusive jurisdiction to review decisions of the Board of Veterans' Appeals. It has the authority to decide all relevant questions of law; interpret constitutional, statutory, and regulatory provisions; and determine the meaning or applicability of the terms of an action by the VA. It is authorized to compel action by the VA. It is authorized to hold unconstitutional or otherwise unlawful and set aside decisions, findings, conclusions, rules and regulations issued or adopted by the VA or the Board of Veterans' Appeals.\nThe Court currently occupies leased facilities near Judiciary Square in the District of Columbia and is searching for a permanent location as the current lease expires in September 2010. The Administration request and H.R. 5822 provide $62 million in funds for a transfer to the General Services Administration related to construction of a new courthouse. S. 3615 provides $25 million, as the first funding increment, for the construction of a new courthouse.", "The Secretary of the Army is responsible for the administration, operation and maintenance of Arlington National Cemetery and the Soldiers' and Airmen's Home National Cemetery. In addition to its principal function as a national cemetery, Arlington is the site of approximately 3,100 non-funeral ceremonies each year and has approximately 4,000,000 visitors annually.\nH.R. 5822 and S. 3615 provide additional funding and reporting requirements, in light of the recent reports of mismanagement at Arlington National Cemetery.", "The Armed Forces Retirement Home Trust Fund provides funds to operate and maintain the Armed Forces Retirement Home in Washington, DC (also known as the United States Soldiers' and Airmen's Home) and the Armed Forces Retirement Home in Gulfport, Mississippi (originally located in Philadelphia, PA, and known as the United States Naval Home). These two facilities provide long-term housing and medical care for approximately 1,600 needy veterans. The Gulfport campus, encompassing a 19-story living accommodation and medical facility tower, was severely damaged by Hurricane Katrina at the end of August, 2005, and is not currently in use. Residents of the facility were transferred to the Washington, DC, location immediately after the storm. A Memorandum of Understanding (MOU) was signed between the AFRH and the General Services Administration (GSA) for the rebuilding of the Gulfport facility, with a targeted completion date in 2010. The facility is scheduled to be completed this summer, with residents being able to return in October 2010.\nThe appropriation for the AFRH facilities is from the Armed Forces Retirement Home Trust Fund. The trust fund is maintained through gifts, bequests, and a $0.50 per month assessment on the pay of active duty enlisted military personnel and warrant officers.\nTable 6 shows the FY2010 enacted appropriations, and the Administration request, the House Appropriations Committee recommendations ( H.R. 5822 ) and the Senate Appropriations Committee ( S. 3615 ) funding for FY2011 for each of the related agencies.", "", "Construction of facilities in a fast-changing theater of war has presented DOD with an extraordinarily complicated problem. In the normal appropriations and authorization process, plans for construction projects are drafted a year or more in advance of the date construction is to begin. Experience on the ground in both Iraq and Afghanistan has shown that even the best of plans is likely to become outdated by the time the necessary legislation is passed and enacted.\nSince FY2004, in order to provide timely assistance to commanders in the field, Congress has used the annual National Defense Authorization Act to grant DOD a temporary authorization, \"Contingency Construction Authority\" (CCA), to permit the use of a limited amount of already appropriated operations and maintenance (O&M) funds from the defense appropriation for construction. Reviewed and reauthorized every year since, the geographic areas where the CCA may be employed, the purposes to which the funds may be put, and the ceiling imposed on the amount available have varied.\nUnder its current authority, DOD may use up to $200 million of O&M appropriations in U.S. Central Command (USCENTCOM), including those portions of U.S. Africa Command (USAFRICOM) once part of USCENTCOM, for construction. If the Secretary of Defense certifies the need, he may use up to an additional $300 million for construction within Afghanistan.", "The Secretary of Defense has long held authority to initiate military construction projects without waiting for specific authorization and appropriation. 10 U.S.C. §2804 permits the Secretary to begin construction using already appropriated funds if he \"determines that deferral of the project for inclusion in the next Military Construction Authorization Act would be inconsistent with national security or national interest\" and notifies Congress of his action within a specified period. This section of Title 10 is titled \"Contingency Construction,\" but is permanent and distinct from the temporary authority mentioned above and should not be confused with it. 10 U.S.C. §2805 (\"Unspecified Minor Construction\") permits the Secretary to make very limited use of O&M funds for small construction projects. 10 U.S.C. §2808 allows the Secretary to initiate construction projects not otherwise authorized, using funds appropriated for military construction, after a declaration of war or of national emergency requiring the employment of armed forces.", "In H.Rept. 111-559 , the House committee noted that the use of the temporary CCA has given commanders in the field added flexibility to address urgent construction requirements and that almost $1.4 billion in O&M funding has been obligated under it to date. The committee also noted the O&M appropriations account is part of the defense appropriation, not the military construction appropriation, and its oversight lies with a subcommittee not responsible for defense construction. The committee also pointed out that O&M funds are appropriated for other uses, such as meeting operational requirements of armed forces in the field and, to the extent they are expended on construction, they are unavailable for those ends to which they were intended.", "Before FY2010, construction projects in an active military area of operations would have been requested in one or more requests for emergency supplemental appropriations. FY2010 marked the first year that all such construction was included in the regular annual appropriation request as the Obama Administration migrated planned war-related construction costs away from emergency supplemental appropriations into the regular appropriations process. FY2011 marks the first year that a \"Title IV: Overseas Contingency Operations\" has been included in this appropriations bill and appears to be a vehicle through which Congress may address concerns for both flexibility and oversight.\nThe House committee recommended that all military construction funding for Overseas Contingency Operations (OCO) be considered emergency appropriations. The Senate committee amended the list of projects for which it recommended funding to reflect changes requested by DOD since its original FY2011 request and increased the amount dedicated to unspecified minor construction in order to enhance commanders' ability to meet emerging needs. The committee also moved all construction requested for Afghanistan, whether included in regular military construction or in OCO submissions, into Title IV.\nFunding levels for the various appropriations accounts in Title IV are presented in Table A -2 in Appendix A .\nAppendix A. DOD Military Construction Accounts\nAdditional Resources\nBudget\nCRS Report RL30002, A Defense Budget Primer , by [author name scrubbed] and [author name scrubbed] (pdf).\nCRS Report 98-720, Manual on the Federal Budget Process , by [author name scrubbed] and Allen Schick (pdf).\nDefense\nCRS Report R41254, Defense: FY2011 Authorization and Appropriations , coordinated by [author name scrubbed].\nCRS Report R41250, Quadrennial Defense Review 2010: Overview and Implications for National Security Planning , by [author name scrubbed].\nCRS Report R40156, War in Afghanistan: Strategy, Military Operations, and Issues for Congress , by [author name scrubbed] and [author name scrubbed].\nVeterans Affairs\nCRS Report R41343, Veterans Medical Care: FY2011 Appropriations , by [author name scrubbed].\nCRS Report RL33991, Disability Evaluation of Military Servicemembers , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS22483, Health Care for Dependents and Survivors of Veterans , by [author name scrubbed].\nCRS Report RS20533, VA-Home Loan Guaranty Program: An Overview , by [author name scrubbed].\nCRS Report RL33704, Veterans Affairs: The Appeal Process for Veterans' Claims , by [author name scrubbed].\nCRS Report RL33113, Veterans Affairs: Basic Eligibility for Disability Benefit Programs , by [author name scrubbed].\nCRS Report RL33323, Veterans Affairs: Benefits for Service-Connected Disabilities , by [author name scrubbed].\nCRS Report RL34370, Veterans Affairs: Health Care and Benefits for Veterans Exposed to Agent Orange , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS22897, Veterans Affairs: Historical Budget Authority, Fiscal Years 1940 Through 2008 , by [author name scrubbed].\nCRS Report RS22561, Veterans Affairs: The U.S. Court of Appeals for Veterans Claims—Judicial Review of VA Decision Making , by [author name scrubbed].\nCRS Report RS22666, Veterans Benefits: Federal Employment Assistance , by [author name scrubbed].\nCRS Report RL33985, Veterans' Benefits: Issues in the 110th Congress , coordinated by [author name scrubbed].\nCRS Report RL33992, Veterans Benefits: Merchant Seamen , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS22902, Veterans Benefits: An Overview , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report RL34626, Veterans' Benefits: Benefits Available for Disabled Veterans , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS22804, Veterans' Benefits: Pension Benefit Programs , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL34627, Veterans' Benefits: The Vocational Rehabilitation and Employment Program , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL33993, Veterans' Health Care Issues , by [author name scrubbed].\nSelected Websites\nHouse Committee on Appropriations http://appropriations.house.gov/\nSenate Committee on Appropriations http://appropriations.senate.gov/\nHouse Committee on Armed Services http://www.house.gov/hasc/\nSenate Committee on Armed Services http://armed-services.senate.gov/\nHouse Committee on Veterans Affairs http://veterans.house.gov/\nSenate Committee on Veterans Affairs http://veterans.senate.gov/\nCRS Appropriations Appropriation s Status Table http://www.crs.gov/Pages/appover.aspx\nCongressional Budget Office http://www.cbo.gov/\nDefense Base Closure and Realignment Commission (BRAC Commission) http://www.brac.gov\nGovernment Accountability Office http://www.gao.gov/" ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 4, 4, 1, 2, 2, 1, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "h1_title", "h1_full", "h1_full", "", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "", "", "", "", "", "", "", "h0_title", "", "", "", "h0_full" ] }	{ "question": [ "What is the Military Construction, Veterans Affairs, and Related Agencies appropriations bill responsible for?", "How does the bill assist with military family housing?", "How does the Military Construction, Veterans Affairs, and Related Agencies appropriations bill assist with health care?", "What is another function of the Military Construction, Veterans Affairs, and Related Agencies appropriations bill regarding overseas military operations?", "How did the chambers of congress submit their requests for the FY2011 appropriations?", "How did the Senate propose their bill?", "How did the House of Representatives propose their version of the bill?", "What did the Senate do with the House's version of the bill once it passed to their chamber?", "How did the Senate compromise on passing the House's bill?", "What did the House of Representatives do in response?" ], "summary": [ "The Military Construction, Veterans Affairs, and Related Agencies appropriations bill provides funding for the planning, design, construction, alteration, and improvement of facilities used by active and reserve military components worldwide.", "It capitalizes military family housing and the U.S. share of the NATO Security Investment Program, and finances the implementation of installation closures and realignments.", "It underwrites veterans benefit and health care programs administered by the Department of Veterans Affairs, provides for the creation and maintenance of U.S. cemeteries and battlefield monuments within the United States and abroad, and supports the U.S. Court of Appeals for Veterans Claims, Armed Forces Retirement Homes, and Arlington National Cemetery.", "The bill also funds construction supporting military operations overseas (known as Overseas Contingency Operations, or OCO), a function previously carried out through emergency supplemental appropriations, and advance appropriations for veterans medical services.", "The appropriations subcommittees in both chambers reported their versions of the bill (S. 3615) on July 14, 2010.", "The Senate introduced S. 3615 and placed it on the Legislative Calendar (Calendar No. 469) on July 19.", "The House introduced H.R. 5822 on July 22, took it up on July 28, and passed it with amendments.", "The Senate received H.R. 5822 on July 29 and placed it on the Legislative Calendar under General Orders (Calendar No. 494).", "On September 29, the Senate revived H.R. 3081, a bill that had lain dormant since July 13, 2009, amended it to form a Continuing Appropriations Act that expires not later than December 3, 2010, and passed the measure.", "The House followed suit early on September 30." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, -1, 4 ], "summary_paragraph_index": [ 0, 0, 0, 0, 5, 5, 5, 5, 5, 5 ] }
CRS_R45015	{ "title": [ "", "Introduction", "Agency Origins and Authority: A Brief History", "E.O. 11625—Expanding Agency Role", "Rebranding the Agency", "Evolving Delivery System", "Global Competitiveness", "Current Programs and Funding Structure", "Business Center Program", "Funding History", "FY2018 Appropriations", "Trump Administration Budget Request", "House-Passed Bill", "Senate Appropriations Committee Bill", "Continuing Resolution", "Agency Performance and Accomplishments", "Assessments and Evaluations", "PART Evaluation 2007", "Office of Inspector General Reports", "Legislative Proposals", "Current Issues and Recommendations for Reform", "Duplication of SBA Activities", "Absence of Enabling Legislation" ], "paragraphs": [ "", "The Department of Commerce's Minority Business Development Agency (MBDA) is the lead federal agency dedicated to supporting the development and expansion of the minority business community. Numerous congressional hearings, undergirded by historical and current academic research, have documented that members of minority groups confront disparities and disadvantages in creating new businesses or expanding markets and opportunities for existing minority business enterprises. These barriers include difficulty in accessing capital, a lack of capacity or expertise, and exclusion from business networks. Given these difficulties, Congress and successive presidential administrations since the Nixon Administration have supported national policies intended to address these disparities through the MBDA.\nThe MBDA's primary mission is to assist minority businesses in achieving entrepreneurial participation and parity in the nation's free enterprise system and in overcoming social and economic disadvantages that have limited their participation in the past. To these ends, the MBDA is charged with formulating and coordinating federal policies and programs in support of minority business enterprises by providing technical and managerial expertise, support, and resources through a network of local business development centers. This report includes\na discussion of the agency's origins and authority; a brief history of its efforts to meet its mandate and mission; the agency's funding history, including Administration requests and final appropriations; a review of the agency's recent performance and accomplishments; a review of selected assessments and reviews of the agency's performance; and a review of current issues and recommendations for reform.\nAlthough Congress has never enacted a statutory authorization for the agency, it has appropriated funding for MBDA for the past 48 years. The Trump Administration has proposed reducing the agency's funding from $34 million in FY2017 to $6 million for FY2018, with the intent of terminating the agency. The House Appropriations Committee reported a bill ( H.R. 3267 ) that was incorporated into the House-passed version of H.R. 3354 , which would provide an appropriation of $34 million for FY2018. The Senate Appropriations Committee also reported a bill ( S. 1662 ) that recommends an appropriation of $34 million for FY2018.", "The MBDA was originally established as the Office of Minority Business Enterprises (OMBE) by President Richard Nixon with the signing of Executive Order (E.O.) 11458 on March 5, 1969. During the 1968 presidential campaign, then Republican candidate Nixon embraced the idea of \"Black Capitalism,\" which promoted increasing minority participation in the U.S. economy as owners and managers as a means of not only promoting economic advancement and parity, but political power as well. Eager to demonstrate his commitment to these goals and pressed by civil rights advocates to fulfill his campaign promise, President Nixon chose to bypass Congress and the legislative process, instead opting to establish a cabinet level committee on minority enterprise. Within the first 100 days of his administration, President Nixon had established the OMBE as a policy prescription for issues of racial inequality and social injustice.\nThe mission of the OMBE, as outlined in the E.O. 11458, was threefold:\nencourage the coordination of the plans, operations and programs of the federal government in ways that strengthen participation of minority businesses in the activities of federal agencies; promote the deployment of the resources of state and local governments, businesses, trade associations and other nongovernmental entities in support of minority businesses; and establish a clearinghouse that would identify and disseminate information in support of successful operation of minority business enterprises (MBEs).\nE.O. 11458 also established an Advisory Council on Minority Enterprise (ACME), charging it with advising and supporting the Secretary of Commerce on matters affecting the success of minority businesses, including recommendations for further actions. During the first two years, the ACME played a significant role in shaping the OMBE's agenda. The ACME helped develop efforts to increase minority participation in franchises.\nStymied by organizational difficulties, including a lack of cooperation from other cabinet level departments, an inexperienced staff, and the absence of a dedicated budget, the OMBE struggled during its first years of operation. It was also handicapped in pursuing its mission by the Commerce Secretary's decision \"not to become involved in individual cases or with programs at the operational level and not to seek to encroach upon existing programs functions of other federal agencies.\"", "To address concerns raised during the initial two years of the OMBE's operations, President Nixon, on October 13, 1971, signed E.O. 11625, Prescribing Additional Arrangements for Developing and Coordinating a National Program for Minority Business Enterprise . The new E.O. was intended to clarify and strengthen the role of OMBE. In remarks made when the new E.O. was issued, President Nixon noted the following:\nThis order gives the Secretary a clear mandate to establish and carry out Federal policy concerning minority enterprise and to coordinate the related efforts of all Federal departments and agencies. It also directs the departments and agencies to develop systematic data collection processes concerning their minority enterprise programs and to cooperate in expanding the overall Federal effort.\nIn addition to reinforcing the objectives of the original E.O., the new E.O. called for the OMBE to create a network of minority business centers. These centers would be charged with providing managerial and technical assistance to minority businesses and conducting special projects, including providing direct financial assistance to minority businesses. This development marked the agency's evolution from one of an advisory role undertaken principally through the ACME to one actively supporting the development of minority business enterprises using public-private partnerships.", "During the Carter Administration, Congress considered, but did not pass, enabling legislation authorizing the agency and its mission. However, in 1979, the Carter Administration reorganized and renamed the agency the Minority Business Development Agency. The reorganization was, in part, a response to reports that characterized the agency efforts in support of minority enterprises as fragmented, heavily focused on small businesses, and favoring the number of firms assisted rather than the quality of assistance provided. The Carter Administration efforts were intended to refocus the agency on assisting \"minority businesses develop into medium- and large-size firms in growth industries that produced jobs, stabilized communities, and improved the overall economy.\"", "Successive Administrations since the Carter Administration have continued to support the mission of the MBDA by refining the agency's focus and reorganizing the delivery of assistance and services. In 1981, the Reagan Administration established the Minority Business Development Center program (MBDC), which became the MBDA's primary method for delivering technical and management services to minority businesses. The approximately 100 centers, located in metropolitan areas, served as one-stop service centers intended to address the needs of minority entrepreneurs. The centers focused on recruiting and encouraging private corporations to do business with minority firms, including creating a directory of minority firms and their capabilities. President Ronald Reagan also issued E.O. 12432, Minority Business Enterprise Development , which required federal agencies with substantial procurement and grant-making authority to develop plans that encourage minority business participation in federal procurement, contracts, and grants. President George H.W. Bush proposed eliminating the agency and transferring its mission to the Small Business Administration (SBA), but ultimately continued the agency as an entity within the Department of Commerce.\nIn 1994, President Clinton issued E.O. 12928, Promoting Procurement with Small Businesses Own ed and Controlled by Socially and Economically Disadvantaged Individuals, Historically Black Colleges and Universities, and Minority Institutions . Although E.O. 12928 did not directly reference E.O. 11625, it reiterated support for expanding access to federal procurement contracts for businesses owned by socially and economically disadvantaged individuals, black colleges and universities, and other minority institutions. The Clinton Administration supported substantial increases in the agency's budget. In seeking to expand the reach and capacity of the MBDA, the Clinton Administration sought increases to fund the establishment of Rural Business Development Centers, and the activities of the MBDCs and Minority Business Opportunity Committees (MBOC).\nIn 1996, the agency announced the initiation of a pilot program, the Community Based Enhancement Services (CBES). According to the Federal Register Notice on March 6, 1996, the goal of the CBES was \"to enable MBDA to enter into strategic alliances, coordinating the delivery of its services with those of other entities capable of assisting in minority and/or small and disadvantaged business development in a particular market.\"\nAn audit of the pilot program found significant deficiencies in MBDA's administration of the pilot project, noting that MBDA failed to monitor and assess the grantees' performance in accord with its own handbook. The report recommended that MBDA develop project-specific performance measures to reflect the nature of the project, assign staff with adequate technical and business expertise to monitor project activities, and undertake timely and thorough evaluation to determine program effectiveness.\nThe MBDA, under the George W. Bush Administration, continued efforts to coordinate its programs with the programs of the SBA supporting minority and disadvantaged firms. The Bush Administration, based on research findings, pledged to focus its resources on minority firms with $500,000 or more in annual revenues. A report, The State of Minority Business Enterprise , concluded that minority firms with gross annual receipts of $500,000 or more generated a much larger percentage of all minority revenues and paid employees compared to minority firms with annual gross receipts under $500,000.\nThe agency funded programs and services include\nNational Enterprise Centers staffed by MBDC personnel who provided support services, including referrals and marketing services, to business entities of significant size and capacity; MBDCs, which provided consultant services to firms with significant growth potential; and MBOCs that provided consulting services, including identifying potential sources of equity and working capital; assisting minority entrepreneurs gain access to profitable markets.\nThe agency also funded a number of projects intended to address communities with special needs (Special Projects). Other activities included supporting youth entrepreneurship (Emerging Minority Business Leaders Program), improving access to capital (Equity Capital Access Committee), and the continued development of an online database of potential procurement and contracting opportunities.", "Starting in the 1990s, the agency began to focus on assisting minority firms to enter and compete in the global economy. A 2003 MBDA study explored issues and opportunities for minority businesses seeking international opportunities. The preliminary study's key findings included the following observations:\nMinority businesses may not be able to compete directly with massive U.S. companies that have already established a multinational presence in developed economies. However, by capitalizing on their unique competitive strengths, especially in developing countries, minority-business enterprises (MBEs) can compete with larger multinational companies. A secondary conclusion is that the quality of information about MBE interaction with the international economy is badly outdated, and further research must be conducted. Given the need to design successful policies and programs to support MBE international expansion, this lack of data is a critical hurdle that must be overcome.\nDuring the Obama Administration, in addition to a focus on facilitating entry or expansion of minority firms into the global market place, increased emphasis was placed on quantifying the impact of MBDA activities, increasing the efficient delivery of services to minority business communities, and increasing coordination with other federal agencies. Federal agencies that have partnered with MBDA include the SBA, the International Trade Administration, the Import-Export Bank, the National Institute of Standards and Technology, and the Economic Development Administration.", "Although the agency provides services to minority businesses of any size, the MBDA primarily focuses its services on businesses with revenues of at least $1 million annually, in high-growth areas, or with rapid growth potential in such areas as technology and bio-medicine. The agency provides a number of services principally through a network of business centers located in areas with the largest concentration of minority populations and the largest number of minority businesses.", "Located in areas with the largest concentration of minority populations and the largest number of minority businesses, MBDA business centers provide a range of services to minority-owned firms seeking to expand to new markets, both foreign and domestic. The range of technical assistance and business services provided include business consulting, private equity and venture capital opportunities, facilitating joint ventures and strategic partnerships. The services are provided on a fee-for-services basis to qualified minority business enterprises by MBDA business center operators.\nApplicants eligible to compete to operate an MBDA business center include nonprofit organizations, for-profit businesses, state and local governments, institutions of higher education, and Native American tribal entities. The minimum annual MBDA award to operate a center is $250,000 a year with a location adjustment for high-cost areas. The contract period typically runs for three years, with an option for two additional years. Operators are expected to contribute 33% of the MBDA grant award.\nCurrently the MBDA funds 31 Business Centers and10 Specialty Centers, including four centers dedicated to exports; four centers focused on manufacturing; one center focused on capital formation; and one center dedicated to procurement.\nThe range of services currently offered by MBDA is identified in Table 1 .", "Despite efforts to provide a statutory mandate for the mission of the MBDA, Congress has not enacted enabling legislation during the agency's 48-year history. Instead, Congress has continued to provide appropriations in support of the agency's mission even as various Administrations have reorganized and reoriented the agency and its mission or considered defunding the agency's activities and merging its mission with that of the SBA.\nSince its inception as OMBE, appropriations in support of the agency's activities and operations have totaled over $1.8 billion dollars. Since 1996, the agency's annual appropriations have remained relatively unchanged, fluctuating between $25 million and $31.5 million in nominal, noninflation adjusted dollars. Figure 1 is a graphic representation of OMBE/MBDA appropriations history from FY1970 to FY2017 as detailed in Table 2 .\nDuring the agency's 48-year history Congress has appropriated approximately $1.8 billion in support of the agency's mission, as shown in Table 2 .", "", "The Trump Administration's proposed budget for FY2018 requested $6 million for MBDA. This amount is significantly less than the $34 million appropriated for FY2017. This amount, moreover, would be used to facilitate the termination of the agency and the orderly closeout of its activities beginning in 2018. According to budget documents, the Administration supports the termination of the MDBA and its programs as part of its wider efforts to reduce federal spending and to redefine the role of the federal government in domestic affairs. MBDA and its activities are among a number of federal programs that support private sector job creation. The Administration's opposition may be rooted in a view of federalism which argues that these kinds of activities are rightly the responsibilities of state and local governments and the private and nonprofit sectors, not the federal government. Supporters of the MBDA contend that the agency's mission is critical to the nation's economic future and that the agency's programs and services address a number of deficiencies and impediments faced by minority entrepreneurs.", "On July 13, 2017, the House Appropriations Committee approved the FY2018 Commerce, Justice, Science and Related Agencies (CJS) appropriations bill ( H.R. 3267 ) by a vote of 31-21. This bill would provide an appropriation of $34 million for the MBDA activities and expenses for FY2018. The report accompanying the bill ( H.Rept. 115-231 ) includes language that would direct the MBDA to allocate at least 50% ($17 million) of its appropriation through cooperative agreements, external awards, and grants. Report language would also direct the MBDA to submit a report to the Committee on the state of minority businesses, including an evaluation of their access to capital. This report is to be submitted to the Committee within 180 days after enactment of the bill. The language of the bill was incorporated into an FY2018 omnibus appropriation measure, H.R. 3354 , which passed the House on September 14, 2017.", "On July 27, 2017, the Senate Appropriations Committee reported ( S.Rept. 115-139 ) its version of FY2018 CJS appropriations bill ( S. 1662 ). The committee-reported bill recommends $34 million for MBDA activities. This is the same amount appropriated for MBDA activities in FY2017. The report accompanying the bill acknowledges the unique role MBDA plays as the only federal agency dedicated exclusively to promoting and assisting minority owned businesses, and encourages the agency to submit an annual report to Congress, including recommendations on improving minority businesses access to capital. For a review of FY2018 budget request and recommendations see Table 3 .", "Congress did not complete the FY2018 appropriations process for CJS, including MBDA, before the beginning of fiscal year. On September 8, 2017, Congress passed the Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017, P.L. 115-56 . The act funds MBDA at the same rate provided in the Consolidated Appropriation Act for FY2017, P.L. 115-31 , minus a 0.6791% rescission, until December 8, 2017, or until the FY2018 CJS appropriations are signed into law.", "The MBDA measures its effectiveness using a number of performance measures. According to the latest data available, FY2015, the MBDA reported 26,896 jobs were created or retained with the assistance of MBDA resources. MBDA jobs created or retained included the number of new full-time and/or part-time positions reported on the client's payroll, and positions MBDA clients would have eliminated without the contract and/or financing obtained with the help of MBDA. Nearly 100,000 jobs were created or retained from FY2012 through FY2015. (See Table 4 .)\nThe source of data regarding contracts, financial transactions, and jobs created/retained are reported by MBDA Business Centers and are verified by MBDA headquarters staff. The performance data date of retrieval was January 21, 2015.\nThe total dollar value of contracts awarded to, and capital secured by minority businesses with the assistance of MBDA for FY2015 totaled $5.9 billion, with $4.3 billion in private sector capital and contracts representing 72% of the total (see Figure 2 ). At 14.7%, federal contracts and capital awarded to minority firms in FY2015 accounted for the second highest sector (see Table 5 ).\nAs detailed in Table 6 , Return on Taxpayer Investment (ROI) is intended to measure the effectiveness of MBDA annual appropriations in leveraging or attracting other investments. To calculate ROI the total value of contracts and capital obtained by clients as a result of their work with MBDA is divided by the Agency's fiscal year budget appropriation. In FY2014, $247.6 in total investments was generated by every $1 in MBDA funds appropriated. In FY2015, the ratio declined to $197.4 for every $1 in funds appropriated.", "During its 48-year history, MBDA has been the subject of numerous critical reports. These reports have examined the agency's efficacy in creating and assisting minority businesses, performance measures used to gauge progress in achieving agency objectives, and program management and duplication issues.", "Starting in 2002, the George W. Bush Administration initiated its Program Assessment Rating Tool (PART) as a means of evaluating the effectiveness of federal programs. The PART instrument was a set of questionnaires focused on four elements: purpose and design; strategic planning; program management; and program outcomes. A PART evaluation of the agency conducted in 2007 found MBDA performance to be Adequate with high marks for program purpose and design (80%); strategic planning (75%); and program management (100%). Among the highlights, the evaluation noted the following:\nThe program has developed appropriate annual and long-term measures that focused on the direct impact of its assistance on business clients. However, more research and evaluation needs to be conducted on the long-term impact of MBDA assistance. The program has strong management. It awards grants using a competitive process, and provides sufficient oversight of grant activities, including tracking of progress towards meeting performance goals. While MBDA is focused on minority small businesses, there are many other sources of business assistance and support at the federal, state, and local level. At the federal level, the SBA provides similar assistance through its entrepreneurial development programs.", "Past reports of the Commerce Department's Office of Inspector General (IG) examined various aspects of the agency and its operations. Two of the reports are summarized below.\nA 2006 report by the Department of Commerce IG found that MBDA performance measures were undermined by inappropriately combining results for three different programs and unreliable performance data. The report was initiated after the agency reported a 300% increase in the number of clients assisted during the 2004 program year by MBOCs despite a decrease in FY2004 appropriations. The report found that MBDA, in reporting FY2004 results, inappropriately combined results for MBOCs with two other programs (Business Development Centers and the Phoenix program), resulting in the inflation of the number of clients served by MBOCs. The MBDA director concurred with the recommendations of the report, which directed MBDA to define clearly key performance measures and the types of actions that may be counted toward measuring the \"dollar value of contract awards obtained,\" and report performance measures of its programs separately. A 1998 audit report by the IG identified deficiencies in the process MBDA used to monitor the performance of a pilot project that would test the viability of the Community-Based Enhancement Services initiatives as an alternative to the Minority Business Development Center. The IG report found that MBDA monitoring of the pilot project failed to follow the agency's written policies and procedures and thus was ineffective in its assessment of the program. The MBDA concurred with the findings of the report and voiced a commitment to: incorporating the recommendations put forth by the report, which included assigning staff with appropriate expertise who will follow MBDA policies and procedures; and developing project specific performance measures and specific reporting requirements to reflect the specific nature of the project.", "After promulgating E.O. 11458, creating the MBDA, the Nixon Administration announced on a number of occasions its intention to introduce legislation that would have provided statutory authority for the activities of the newly created OMBE. Despite these pronouncements, the Nixon Administration did not propose enabling legislation. Since its inception, a number of bills have been introduced that would have provided statutory authority for the agency and its mission. The following is a list of bills introduced in past Congresses that would have established statutory authority for the agency and its activities. No bills were introduced during the 114 th Congress that would authorize the MBDA.\n1. The 96 th Congress considered, but did not pass, legislative proposals that would have provided a statutory mandate for the agency and its mission. The House Committee on Small Business held hearings on bills ( H.R. 6904 and S. 2565 ) that would have established a permanent MBDA within the Department of Commerce. The House bill, introduced by Representatives Parren Mitchell and Joseph Addabbo, would have granted the agency the authority to engage in a number of activities in support of the agency's mission, including equity financing of minority business; financial and technical assistance in penetrating domestic and foreign markets; and minority business management education. A Senate bill, S. 2565 , introduced by Senator Abraham Ribicoff and backed by the Carter Administration, would have authorized the creation of a Minority Business Development Agency focused on the provision of technical assistance to minority firms. The Senate bill included much of the language of E.O. 11625. 2. During the 99 th Congress, Representative Parren Mitchell introduced H.R. 4632 , a bill that would have denied any appropriations to the MBDA to avoid potential duplication of services with the SBA's Associate Administrator for Minority Small Business and Capital Ownership Development. The activities of the MBDA, as well as any unexpended balances, would have been transferred to the SBA Associate Administrator for Minority Small Business and Capital Ownership Development. 3. During the 101 st through the 104 th Congress, Representative Kweisi Mfume introduced legislation ( H.R. 1769 , H.R. 373 , H.R. 278 , H.R. 114 , respectively) that would have re-designated MBDA as the Minority Business Development Administration. The bill would have directed the MBDA to assist disadvantaged businesses penetrate domestic and foreign markets; encourage firms to form joint ventures to increase their share of the market; provide financial assistance to public and private entities in support of the mission of MBDA; conduct pilot projects that would assist disadvantaged businesses obtain and expand access to capital; support management education efforts; and conduct research aimed at advancing the nation's understanding of the issues and opportunities surrounding minority business enterprises. 4. During the 111 th Congress, Senator Bob Casey introduced S. 4026 , the Minority Business Development Improvements Act of 2010. This bill would have required that the MBDA establish the Minority Business Development Program and charged it with providing qualified minority businesses with technical assistance and contract procurement assistance. This bill would have also outlined minority business qualification requirements for the program. It would have required that (1) not less than 51% of the qualified minority business is directly and unconditionally owned or controlled by historically disadvantaged individuals; and (2) each officer or other individual exercising control over regular operations would meet the definition of a historically disadvantaged individual. Additionally, the bill would have authorized the program to provide technical assistance to qualified disadvantaged businesses and support efforts to expand federal procurement opportunities for disadvantaged businesses. Also during the 111 th Congress, Representative Bobby L. Rush introduced H.R. 4343 , the Minority Business Development Improvements Act of 2009, which would have required the National Director of the Minority Business Development Agency to establish and administer a Minority Business Development Program focused on providing loan guarantees, technical assistance, and contract procurement assistance to qualified minority businesses. The bill would have defined a qualified minority business as an entity in which 51% of the entity is directly owned and controlled by historically disadvantaged individuals. In addition, the net worth of each principle of the minority business entity did not exceed $2 million. The bill would have directed the National Director of MBDA to: (1) establish a database to assist prime contractors in identifying historically disadvantaged firms for subcontracting, (2) enter into agreements to provide set-aside contracting opportunities to minority businesses, and (3) terminate a minority business from the program for specified violations. Representative Rush also introduced H.R. 4929 , Expanding Opportunities for Main Street Act of 2010. This bill included a provision that would have required MBDA to establish a Minority Business Development Program with the objective of providing technical assistance, loan guarantees, and contract procurement assistance to minority businesses. This bill would have also authorized MBDA to (1) enter into agreements to provide set-aside contracting opportunities to minority businesses; and (2) terminate a minority business from the program for specified violations. This bill would have also required MBDA to establish a database to assist prime contractors in identifying historically disadvantaged firms for subcontracting. 5. During the 112 th Congress, Senator Udall introduced S. 1334 , Expanding Opportunities for Main Street Act of 2011. An identical bill ( H.R. 2424 ) was introduced by Representative Rush. Both bills' MBDA provisions are identical to provisions included in H.R. 4929 , introduced by Representative Rush during the 111 th Congress. 6. During the 113 th Congress, Representative Bobby Rush introduced H.R. 2551 , Expanding Opportunities for Main Street Act. Title II of the bill deals exclusively with the MBDA and include same provisions included in H.R. 4343 , introduced during the 111 th Congress.", "In 2012, the National Advisory Council on Minority Business Enterprise (NACMBE) released a set of recommendations aimed at improving MBDA's effectiveness. The NACMBE, which was created by the Obama Administration in 2010, is a voluntary body comprised of representatives from business and nonprofit sectors. The 2012 recommendations included the following:\ncentralizing and consolidating minority business development efforts of the federal government into one single well-funded agency; assisting minority-owned businesses' development long-term contractual relations with larger business enterprises that would facilitate integration; expanding access to capital by establishing new sources of capital through the use of tax credits in exchange for equity capital investments in minority-owned businesses or by an enterprise bond fund; establishing an MBE Academy that would provide ongoing education to minority business owners through a public private partnership; and building a comprehensive longitudinal database that supports long-term policy analysis of the issues and opportunities.", "Whether the MBDA complements or duplicates the activities of SBA programs targeted to the socially and economically disadvantaged has been a perennial issue. Although there have been several calls for the termination of the MBDA and the transfer of its activities to the SBA, there have also been suggestions put forth that SBA programs that support minority business development should be transferred to MBDA. Proponents of the MBDA have consistently argued that the agency focus complements rather than conflicts with the goals of SBA. The MBDA focuses on enhancing the capacity and reach of medium and large scale minority firms, while leaving primary support for small and startup minority firms to the SBA.", "The MBDA's creation by executive order means that the agency's continued existence or termination is the decision of each new President. Though there have been a number of past proposals that would have provided statutory authority for the MBDA, none of these proposals have been passed. Absent specific statutory requirements, the President may exercise authority to effectively terminate the discretionary activities of the agency at any time without congressional consultation or consent. Nevertheless, Congress may choose to appropriate funds specifically to carry out such purposes, and potentially supersede Presidential discretion. In addition, Congress may act to revoke or modify the executive order. It may also act to support the executive order by codifying its provisions." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 1, 2, 1, 1, 2, 2, 2, 2, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h0_full h1_title", "", "h1_full", "h1_full", "h1_full", "h2_full", "", "", "h2_title", "", "h2_full", "", "", "", "", "", "", "h1_full", "", "", "" ] }	{ "question": [ "What is the Minority Business Development Agency (MBDA) responsible for?", "How was the MBDA originally established?", "What is the overall mission of the MBDA?", "How does the MBDA carry out their mission?", "How does the government divide power over the MBDA, and why is this the case?", "Why did the name of the agency change?", "How has the mission of the MBDA been supported since the Carter Administration?", "How did the George H.W. Bush administration react to the agency?", "What did the Clinton administration do with the agency's budget?", "What did George W. Bush's administration do with the MBDA?", "How did the Obama Administration handle the MBDA?", "What does the MBDA do presently in the US?", "How did the Trump administration propose changes to the agency for FY2018?", "Why did the administration request such a dramatic decrease in the agency's funding?", "How was the Trump administration’s proposed budget cut unsuccessful?", "How did the Senate's appropriation committee respond to the administration's request?" ], "summary": [ "The Department of Commerce's Minority Business Development Agency (MBDA) is the lead federal agency dedicated to supporting the development and expansion of the minority business community.", "President Richard Nixon originally established this agency as the Office of Minority Business Enterprises (OMBE), with the signing of Executive Order 11458.", "The MBDA's mission is to assist medium and large-scale minority businesses, specifically, but not exclusively, in overcoming social and economic disadvantages that have limited their participation in the nation's free enterprise system.", "Through a network of local business development centers, the MBDA carries out this mission by providing technical and managerial expertise, support and resources as well as advocacy and research on behalf of minority-controlled business enterprises.", "Because the MBDA, and its predecessor OMBE, were created by executive order, the MBDA's continued survival has rested with each President, in the absence of Congress passing authorizing and enabling legislation.", "The Carter Administration renamed the agency and refocused its efforts on medium and large-scale businesses, particularly in growth industries.", "Successive administrations since the Carter Administration have continued to support the mission of the MBDA by refining the agency's focus and reorganizing the delivery of assistance and services. For example, in 1981, the Ronald Reagan Administration established the Minority Business Development Center program, which became the MBDA's primary method for delivering technical and management services to minority businesses.", "The George H.W. Bush Administration proposed eliminating the agency and transferring its mission to the Small Business Administration (SBA), but ultimately continued the agency as an entity within the Department of Commerce.", "The Clinton Administration supported substantial increases in the agency's budget to fund the establishment of Rural Business Development Centers, and the activities of the Minority Business Development Centers and Minority Business Opportunity Committees.", "The George W. Bush Administration continued efforts to coordinate the MBDA's programs with the programs of the SBA, pledged to focus its resources on minority firms with at least $500,000 or more in annual revenues, and to increase their presence in the global economy.", "The Obama Administration placed increased emphasis on quantifying the impact of MBDA activities, increasing the efficient delivery of its services to minority business communities, and increasing coordination with other federal agencies.", "Currently, the MBDA provides a number of services principally through a network of business centers located in areas with the largest concentration of minority populations and the largest number of minority businesses.", "The Trump Administration's budget request for FY2018 proposes to reduce the agency's appropriation from $34 million appropriated for FY2017 to $6 million for FY2018.", "The proposed funds would be used to cover the cost of terminating the agency and its activities.", "Contrary to the Administration's request, the House Committee on Appropriations approved a Commerce, Justice, Science and Related Agencies Appropriations bill (H.R. 3267), which was later incorporated into H.R. 3357 that the House passed on September 14, 2017, and would provide $34 million for MBDA.", "On July 27, 2017, the Senate Committee on Appropriations approved S. 1662, its version of the Commerce, Justice, Science and Related Appropriations bill for FY2018. The bill also recommended an appropriation of $34 million for MBDA." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, -1, -1, -1, -1, -1, -1, 1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }
GAO_GAO-13-696T	{ "title": [ "Background", "Historical Challenges EPA Has Faced Regulating Chemicals under TSCA", "Obtaining Adequate Information on Chemical Toxicity and Exposure", "Banning or Limiting Chemicals", "Disclosure of Chemical Data", "EPA Has Made Progress to Implement Its New Approach to Managing Chemicals, but Some Challenges Persist", "EPA Has Increased Efforts to Collect Data on Toxicity and Exposure, but It May Take Several Years to Produce Results", "EPA Has Begun Assessing Chemical Risks, but It Is Too Early to Tell What, If Any, Risk Management Actions Will Be Taken", "EPA Has Taken Actions That May Discourage the Use of Certain Chemicals, but It Is Too Early to Tell Whether These Actions Will Reduce Chemical Risk", "It Is Unclear Whether EPA’s New Approach Will Position the Agency to Achieve Its Goal of Ensuring the Safety of Chemicals", "GAO Contact and Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Federal laws have been enacted over the years to determine the health and environmental hazards associated with toxic chemicals and to address these problems. Even with the existence of media-specific environmental laws enacted in the early 1970s, such as the Clean Air Act and the Clean Water Act, problems with toxic chemicals continued to occur. In addition, Congress became increasingly concerned about the long-term effects of substantial amounts of chemicals entering the environment.\nTSCA was enacted to authorize EPA to collect information about the hazards posed by chemical substances and to take action to control unreasonable risks by either preventing dangerous chemicals from making their way into use or placing restrictions on those already in commerce. Under the act, EPA can control the entire life cycle of chemicals from their production, distribution in commerce, and use to their disposal. Other environmental and occupational health laws generally control only disposal or release to the environment, or exposures in the workplace. The scope of TSCA includes those chemicals manufactured, imported, processed, distributed in commerce, used, or disposed of in the United States but excludes certain substances regulated under other laws. TSCA also specifies when EPA may publicly disclose chemical information it obtains from chemical companies and provides that chemical companies can claim certain information, such as data disclosing chemical processes, as confidential business information.\nEPA’s authority to ensure that chemicals in commerce do not present an unreasonable risk of injury to health or the environment is established in five major sections of TSCA. The purpose and application of these sections are shown in table 1 and described in further detail below.\nUnder the provisions for chemical testing in section 4 of TSCA, EPA can promulgate rules to require chemical companies to test potentially harmful chemicals for their health and environmental effects. However, EPA must first determine that testing is warranted based on some toxicity or exposure information. Specifically, to require such testing, EPA must find that a chemical (1) may present an unreasonable risk of injury to human health or the environment or (2) is or will be produced in substantial quantities and that either (a) there is or may be significant or substantial human exposure to the chemical or (b) the chemical enters or may reasonably be anticipated to enter the environment in substantial quantities. EPA must also determine that there are insufficient data to reasonably determine or predict the effects of the chemical on health or the environment and that testing is necessary to develop such data.\nUnder the provisions for new chemical review and significant new use rules in section 5 of TSCA, chemical companies are to notify EPA at least 90 days before beginning to manufacture a new chemical (premanufacture notice review). Section 5 also allows EPA to promulgate significant new use rules, which require companies to notify EPA at least 90 days before beginning to manufacture a chemical for certain new uses or in certain new ways (significant new use notice review). Such rules require existing chemicals to undergo the same type of review that new chemicals undergo. For example, EPA may issue a significant new use rule if it learns that a chemical that has previously been processed as a liquid is now being processed as a powder, which may change how workers are exposed to the chemical. Section 5 of the act also authorizes EPA to maintain a list of chemicals—called the chemicals of concern list—that present or may present an unreasonable risk of injury to health or the environment.\nUnder the provisions for chemical regulation in section 6 of TSCA, EPA is to apply regulatory requirements to chemicals for which EPA finds a reasonable basis exists to conclude that the chemical presents or will present an unreasonable risk of injury to health or the environment. To adequately protect against a chemical’s risk, EPA can promulgate a rule that bans or restricts the chemical’s production, processing, distribution in commerce, disposal, or use or requires warning labels be placed on the chemical. Under TSCA, EPA must choose the least burdensome requirement that will adequately protect against the risk.\nUnder the provisions for industry reporting of chemical data in section 8(a), EPA is to promulgate rules under which chemical companies must maintain records and submit such information as the EPA Administrator reasonably requires. This information can include, among other things, chemical identity, categories of use, production levels, by-products, existing data on adverse human health and environmental effects, and the number of workers exposed to the chemical, to the extent such information is known or reasonably ascertainable. Under section 8(a), EPA issues rules to update the TSCA inventory. For example, in August 2011, EPA finalized its TSCA Chemical Data Reporting rule (previously referred to as the Inventory Update Reporting Modifications Rule); the rule requires companies to report, among other things, exposure-related information, such as production volume and use data, on chemicals manufactured or imported over a certain volume per year. In addition, section 8(d) provides EPA with the authority to promulgate rules under which chemical companies are required to submit lists or copies of existing health and safety studies to EPA. Section 8(e) generally requires chemical companies to report any information to EPA that reasonably supports a conclusion that a chemical presents a substantial risk of injury to health or the environment.\nUnder the provisions for disclosure of chemical data in section 14, EPA may disclose chemical information it obtains under TSCA under certain conditions. Chemical companies can claim certain information, such as data disclosing chemical processes, as confidential business information. EPA generally must protect confidential business information against public disclosure unless necessary to protect against an unreasonable risk of injury to health or the environment. Other federal agencies and federal contractors can obtain access to this confidential business information to carry out their responsibilities. EPA may also disclose certain data from health and safety studies.", "We have previously reported that EPA has historically faced challenges implementing many of the provisions of TSCA, in particular (1) obtaining adequate information on chemical toxicity and exposure through testing provisions; (2) banning or limiting chemicals; and (3) disclosing chemical data and managing company assertions of confidentiality.", "EPA has found it difficult to obtain adequate information on chemical toxicity and exposure because TSCA does not require companies to provide this information and, instead, requires EPA to demonstrate that chemicals pose certain risks before it can ask for such information.\nSpecifically, we reported in 2005 that under section 4—provisions for chemical testing—EPA has found its authority to be difficult, time- consuming, and costly to use. The structure of this section places the burden on EPA to demonstrate certain health or environmental risks before it can require companies to further test their chemicals. While TSCA authorizes EPA to review existing chemicals, it generally provides no specific requirement, time frame, or methodology for doing so. Instead, EPA conducts initial reviews after it receives information from the public or chemical companies that a chemical may pose a risk. As a result, EPA has only limited information on the health and environmental risks posed by these chemicals. In our June 2005 report, we suggested that Congress consider amending TSCA to provide explicit authority for EPA to enter into enforceable consent agreements under which chemical companies are required to conduct testing, and give EPA, in addition to its current authorities under section 4 of TSCA, the authority to require chemical substance manufacturers and processors to develop test data based on substantial production volume and the necessity for testing.\nIn addition, we reported in June 2005 that under section 5—provisions for new chemical review—TSCA generally requires chemical companies to submit a notice to EPA (known as a “premanufacture notice”) before they manufacture or import new chemicals and to provide any available test data. EPA estimated that most notices do not include any test data and that about 15 percent of them included health or safety test data. These tests may take over a year to complete and cost hundreds of thousands of dollars, and chemical companies usually do not perform them voluntarily. However, chemical companies are not generally required under TSCA to limit the production of a chemical or its uses to those specified in the premanufacture notice or to submit another premanufacture notice if changes occur. For example, companies may increase production levels or expand the uses of a chemical, potentially increasing the risk of injury to human health or the environment.", "EPA has had difficulty demonstrating that chemicals should be banned or have limits placed on their production or use under section 6—provisions for controlling chemicals. Specifically, we reported, in June 2005, that since Congress enacted TSCA in 1976, EPA has issued regulations under section 6 to ban or limit the production or restrict the use of five existing chemicals or chemical classes out of tens of thousands of chemicals listed for commercial use on the agency’s TSCA inventory.\nEPA’s 1989 asbestos rule illustrates the difficulties EPA has had in issuing regulations to control existing chemicals. In 1979, EPA started considering rulemaking on asbestos. After concluding that asbestos was a potential carcinogen at all levels of exposure, EPA promulgated a rule in 1989 prohibiting the future manufacture, importation, processing, and distribution of asbestos in almost all products. Some manufacturers of asbestos products filed suit against EPA, arguing, in part, that the rule was not promulgated on the basis of substantial evidence regarding unreasonable risk. In 1991, the Fifth Circuit Court of Appeals ruled for the manufacturers and returned parts of the rule to EPA for reconsideration. In reaching this conclusion, the court found that EPA did not consider all necessary evidence and failed to show that the control action it chose was the least burdensome reasonable regulation required to adequately protect human health or the environment. Since the court’s 1989 decision, EPA has only exercised its authority to ban or limit the production or use of an existing chemical once—for hexavalent chromium, a known human carcinogen widely used in industrial cooling towers—in 1990.", "EPA has limited ability to publicly share the information it receives from chemical companies under TSCA. Specifically, as we reported in 2005, EPA has not routinely challenged companies’ assertions that the chemical data they disclose to EPA under section 14—disclosure of chemical data—are confidential business information, citing resource constraints. TSCA requires EPA to protect trade secrets and privileged or confidential commercial or financial information against unauthorized disclosures. When information is claimed as confidential business information, it limits EPA’s ability to expand public access to this information—such as sharing it with state environmental agencies and foreign governments, which potentially limits the effectiveness of these organizations’ environmental risk programs.\nBecause EPA has not routinely challenged these assertions, the extent to which companies’ confidentiality claims are warranted is unknown. We recommended, in June 2005, that EPA revise its regulations to require that companies periodically reassert claims of confidentiality.not disagree with our recommendation but has not revised its regulations. EPA has explored ways to reduce the number of inappropriate and over- broad claims of confidentiality by companies that submit data to EPA.", "In March 2013, we reported on progress EPA has made implementing its new approach to manage toxic chemicals under its existing TSCA authority—particularly by increasing efforts to (1) obtain toxicity and exposure data, (2) assess risks posed by chemicals, and (3) discourage the use of some chemicals. However, the results of EPA’s activities, in most cases, have yet to be realized. We also reported that it is unclear whether EPA’s new approach will position the agency to achieve its goal of ensuring the safety of chemicals.", "EPA has increased its efforts to collect toxicity and exposure data, but because rules can take years to finalize and additional time for companies to execute, these efforts may take several years to produce results. Even with these efforts, EPA has not pursued all opportunities to obtain chemical data.\nWe reported, in March 2013, that EPA has made progress by taking the following actions but continues to face challenges in collecting such data, specifically:\nSince 2009, EPA has proposed or promulgated rules to require chemical companies to test 57 chemicals. Specifically, EPA has required companies to test 34 chemicals and provide EPA with the resulting toxicity and other data. In addition, EPA announced, but has yet to finalize, plans to require testing for 23 additional chemicals.\nHowever, requirements under TSCA place the burden of developing toxicity data on EPA. Because rulemaking can take years, EPA has yet to obtain much of the information it has been seeking. According to EPA officials, it can take, on average, 3 to 5 years for the agency to promulgate a test rule and an additional 2 to 2 ½ years for the companies to provide the data once EPA has requested them. In addition, the toxicity data eventually obtained on the 57 chemicals may not be sufficient for EPA to conduct a risk assessment (i.e., characterize risk by determining the probability that populations or individuals so exposed to a chemical will be harmed and to what degree). Specifically, EPA may obtain data that are considered to be “screening level” information. Screening level information is collected to identify a chemical’s potential hazards to human health and the environment, but it was not intended to be the basis for assessing whether a chemical poses an unreasonable risk of injury to human health or the environment, according to agency documents describing the program.\nIn August 2011, EPA revised its periodic chemical data reporting requirements to obtain exposure-related information for a greater number of chemicals. Under the revised requirements, EPA (1) lowered the reporting thresholds, in some cases, which will allow it to look at exposure scenarios for a larger number of chemicals than in the past and (2) shortened the reporting cycle from every 5 years to every 4 years. In addition, starting in 2016, the revised requirements for reporting will be triggered when companies exceed applicable production thresholds in any year during the 4-year reporting cycle.\nEven with the increased efforts EPA has taken to collect toxicity and exposure data, in March 2013, we reported that EPA has not pursued all opportunities to obtain such data. For example, EPA has not sought toxicity and exposure data that companies submit to the European Chemicals Agency on chemicals that the companies manufacture or process in, or import to, the United States.chemicals legislation, the European Chemicals Agency may share information it receives from chemical companies with foreign governments in accordance with a formal agreement concluded between the European Community and the foreign government, but EPA has not pursued such an agreement. In addition, EPA has not issued a rule under section 8 of TSCA requiring companies to provide EPA with the information provided to the European Chemicals Agency. EPA officials told us that the agency has not sought to obtain chemical data—from either the European Chemicals Agency or companies directly—because it does not believe that this would be the best use of EPA or industry resources. They also said that it is unclear whether these data would be useful to EPA. EPA officials believe it is a more effective use of resources to gain access to data, as needed, on a case-by-case basis from chemical companies. As a result, we recommended that EPA consider promulgating a rule under TSCA section 8, or take action under another section, as appropriate, to require chemical companies to report chemical toxicity and exposure-related data they have submitted to the European Chemicals Agency. In its written comments on a draft of our March 2013 report, EPA stated that it intends to pursue data submitted to the European Chemicals Agency from U.S. companies using voluntary or regulatory means as necessary but did not provide information on its planned approach to pursue such data. Consequently, the extent to which EPA plans to continue to rely on voluntary efforts to obtain the needed data is unclear.", "EPA has increased its efforts to assess chemical risks, but because EPA does not have the data necessary to conduct all risk assessments, it is too early to tell what, if any, risk management actions will be taken. Even with these efforts, it is unclear how EPA is going to obtain the data necessary to continue to conduct all risk assessments.\nWe reported, in March 2013, that EPA has made progress to assess chemical risks by taking the following actions but continues to face challenges. Specifically, in February 2012, EPA announced a plan that identified and prioritized 83 existing chemicals for risk assessment— known as the TSCA Work Plan. From this list of 83 chemicals, EPA’s Office of Pollution Prevention and Toxics—the office responsible for implementing TSCA—initiated risk assessments for 7 chemicals in 2012—5 of which were released for public comment—and announced plans to start risk assessments during 2013 and 2014 for 18 additional chemicals. EPA officials told us that they expect that all 7 risk assessments will be finalized early in 2014. However, it may be years before EPA initiates regulatory or other risk management actions to reduce any chemical risks identified in these assessments. Before EPA can determine such actions are warranted, the agency would need to consider other factors—such as costs and benefits of mitigating the risk, technological information, and the concerns of stakeholders—which could require additional time and resources. Moreover, assuming EPA meets its 2014 target for completing these 7 assessments and initiating new assessments, at its current pace, it would take EPA at least 10 years to complete risk assessments for the 83 chemicals in the TSCA Work Plan.\nAs we reported, in March 2013, even with these increased efforts, it is unclear whether EPA can maintain its current pace given that it currently does not have the toxicity and exposure data it will need to conduct risk assessments for all of the 83 chemicals in its TSCA Work Plan. According to EPA officials and agency documents, the agency has started or plans to start risk assessments on the 25 chemicals for which it has well- characterized toxicity and exposure data. However, before EPA can initiate risk assessments for the remaining 58 chemicals, the agency will need to identify and obtain toxicity and exposure data. According to agency officials, to obtain the toxicity data needed, EPA may need to promulgate rules to require companies to perform additional testing on some of these chemicals. However, EPA has not clearly articulated how or when it plans to obtain these needed data. Moreover, without exposure-related data, such as those potentially available from chemical processors, EPA may still be missing the data necessary to conduct risk assessments. To better position EPA to ensure chemical safety under existing TSCA authority, in our March 2013 report we recommended that EPA develop strategies for addressing challenges associated with obtaining toxicity and exposure data needed for risk assessments. However, based on EPA’s written response to a draft of our 2013 report, it is unclear what action, if any, EPA intends to pursue.", "EPA has taken actions that may discourage the use of certain chemicals, but because many of these actions have yet to be finalized, it is too early to tell whether they will reduce chemical risk. We reported in March 2013 that, given the difficulty that EPA has faced in the past using section 6 of TSCA to ban existing toxic chemicals or place limits on their production or use, the agency generally considers using this authority only after exhausting all other available options. Since 2009, EPA has made progress by increasing its use of certain options, including (1) making greater use of significant new use rules under section 5 and (2) proposing actions that use its TSCA authority in new ways as follows:\nEPA is making greater use of significant new use rules under section 5 to control new uses of existing chemicals. Our analysis of TSCA rulemaking from 2009 to 2012 shows that EPA has quadrupled its issuance of significant new use rules since 2009. From 2009 to 2012, EPA issued significant new use rules affecting about 540 chemicals, about 25 percent of all 2,180 chemicals subject to significant new use rules issued by EPA since 1976. EPA officials told us that EPA typically recommends that companies submit testing information when they notify EPA of their intent to manufacture or process chemicals, which enables EPA to better evaluate the potential risks associated with the new use. According to EPA officials, this approach allows the agency to “chip away” at chemicals that may pose risks to human health and the environment. Such recommendations may discourage companies from pursuing new uses of existing chemicals that may pose health or environmental risks either because testing itself can be expensive, or because the testing recommendation suggests that the agency may consider banning or limiting the manufacture or production of the chemical on the basis of that testing.\nEPA has also proposed actions that use its TSCA authority in new ways including the following:\nCreating “chemicals of concern” list. In May 2010, EPA announced that it intended to create a list of chemicals that present or may present ‘‘an unreasonable risk of injury to health or the environment.’’ EPA has had the authority to create such a list under section 5 of TSCA since its enactment in 1976 but has never attempted to use this authority. EPA submitted the list, which consists of three groups of chemicals, for review by the Office of Management and Budget (OMB) in May 2010, and as of May 2013, EPA’s proposed “chemicals of concern” list has been under review at OMB for over 1,000 days and remains listed as pending review by OMB.\nPairing of test and significant new use rules. In December 2010, EPA submitted to OMB for review a proposal to pair testing rules with significant new use rules for the first time. Specifically, EPA has proposed single rules that combine provisions requiring companies to develop toxicity and other data with provisions requiring companies to provide data for new uses of chemicals. EPA has proposed using this approach in two cases. In one case, for example, EPA proposed this approach for certain flame retardants that are being voluntarily phased out, effective December 2013. Under the proposed rule, any new use of the chemical after it has been phased out would qualify as a significant new use, triggering a testing requirement. According to EPA officials, the pairing of these types of rules is intended to discourage new uses of certain chemicals that may pose a risk to human health or the environment and create a disincentive for companies to continue current use of the chemical—something EPA has not done before. OMB’s review of this proposal took 422 days and was completed on February 15, 2012.\nExtending significant new use rules to articles. Since 2009, EPA has made increasing use of its ability to subject chemicals contained in certain products, or “articles,” such as furniture, textiles, and electronics, to significant new use rules. Generally, those who import or process a substance as part of a product are exempted from compliance with a significant new use rule. EPA’s proposals would eliminate this exemption for certain chemicals.\nHowever, it is too early to assess the impact of EPA’s proposed actions because they have yet to be finalized. In addition, in some cases, OMB has not met the established 90-day time for reviewing EPA’s proposed actions—which has increased the time frames for formally proposing and finalizing them. limited by executive order to 90 days, although it can be extended.", "Any rules that EPA plans to issue under TSCA that are considered significant regulatory actions, as defined by Executive Order 12866, are subject to review by the Office of Information and Regulatory Affairs, an office within OMB, prior to being proposed in the Federal Register. Among other things, a significant regulatory action may have an annual effect on the economy of $100 million or more or raise novel legal or policy issues. case-by-case basis from chemical companies. However, the agency’s strategy does not discuss how EPA would execute these plans or how the data obtained would be used to inform the agency’s ongoing or future risk assessment activities, if at all.\nBanning or limiting the use of chemicals. EPA’s strategy does not articulate how the agency would overcome the regulatory challenges it experienced in the past. In particular, EPA officials told us that, even if EPA has substantial toxicity and exposure data, the agency is challenged in meeting the statutory requirement under section 6 of TSCA to limit or ban chemicals.\nFurther, EPA’s strategy does not identify the resources needed to meet its goal of ensuring chemical safety. For example, EPA’s strategy does not identify the resources needed to carry out risk assessment activities, even though risk assessment is a central part of EPA’s effort to manage chemicals under its new approach. Specifically, EPA does not identify roles and responsibilities of key staff or offices—for example which office within EPA will develop the toxicity assessments needed to support its planned risk assessments—or identify staffing levels or cost associated with conducting its risk assessment activities. Without a clear understanding of the resources needed to complete risk assessments and other activities identified in its strategy, EPA cannot be certain that its current funding and staffing levels are sufficient to execute its new approach to managing chemicals under existing TSCA authorities.\nWhen developing new initiatives, agencies can benefit from following leading practices for federal strategic planning. Of these leading practices, it is particularly important for agencies to define strategies that address management challenges that threaten their ability to meet long- term goals. In our March 2013 report, we stated that without a plan that incorporates leading strategic planning practices—particularly a plan that clearly articulates how EPA will address management challenges—EPA cannot be assured that it its new approach to managing chemicals, as described in its Existing Chemicals Program Strategy, will provide a framework to effectively guide its efforts. Consequently, EPA could be investing valuable resources, time, and effort without being certain that its efforts will bring the agency closer to achieving its goal of ensuring the safety of chemicals. As a result, we recommended that the EPA Administrator direct the appropriate offices to develop strategies for addressing challenges that impede the agency’s ability to meet its goal of ensuring chemical safety to better position EPA to ensure chemical safety under its existing TSCA authority. In its written response to our March 2013 report, EPA’s Acting Assistant Administrator stated that change is needed in every significant aspect of the program, and, while strategic planning is a useful exercise it cannot substitute for the basic authorities needed for a modern, effective chemicals program. Moreover, the Acting Assistant Administrator stated that it is EPA’s position that, absent statutory changes to TSCA, the agency will not be able to successfully meet the goal of ensuring chemical safety now and into the future.\nChairman Shimkus, Ranking Member Tonko, and Members of the Subcommittee, this concludes my prepared statement. I would be happy to respond to any questions that you or Members of the Subcommittee may have at this time.", "If you or your staff members have any questions about this testimony, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals who made key contributions include Diane LoFaro, Assistant Director; Diane Raynes, Assistant Director; Elizabeth Beardsley; Richard Johnson; Alison O’Neill; and Aaron Shiffrin.", "Toxic Substances: EPA Has Increased Efforts to Assess and Control Chemicals but Could Strengthen Its Approach, GAO-13-249 (Washington, D.C.: Mar. 22, 2013).\nChemical Regulation: Observations on Improving the Toxic Substances Control Act. GAO-10-292T. Washington, D.C.: December 2, 2009.\nChemical Regulation: Options for Enhancing the Effectiveness of the Toxic Substances Control Act. GAO-09-428T. Washington, D.C.: February 26, 2009.\nHigh-Risk Series: An Update. GAO-09-271. Washington, D.C.: January 22, 2009.\nToxic Chemicals: EPA’s New Assessment Process Will Increase Challenges EPA Faces in Evaluating and Regulating Chemicals. GAO-08-743T. Washington, D.C.: April 29, 2008.\nChemical Regulation: Comparison of U.S. and Recently Enacted European Union Approaches to Protect against the Risks of Toxic Chemical. GAO-07-825. Washington, D.C.: August 17, 2007.\nChemical Regulation: Actions Are Needed to Improve the Effectiveness of EPA’s Chemical Review Program. GAO-06-1032T. Washington, D.C.: August 2, 2006.\nChemical Regulation: Approaches in the United States, Canada, and the European Union. GAO-06-217R. Washington, D.C.: November 4, 2005.\nChemical Regulation: Options Exist to Improve EPA’s Ability to Assess Health Risks and Manage Its Chemical Review Program. GAO-05-458. Washington, D.C.: June 13, 2005.\nToxic Substances: EPA Should Focus Its Chemical Use Inventory on Suspected Harmful Substances. GAO/RCED-95-165. Washington, D.C.: July 7, 1995.\nToxic Substances Control Act: Legislative Changes Could Make the Act More Effective. GAO/RCED-94-103. Washington, D.C.: September 26, 1994.\nToxic Substances: EPA’s Chemical Testing Program Has Not Resolved Safety Concern. GAO/RCED-91-136. Washington, D.C.: June 19, 1991.\nToxic Substances: EPA’s Chemical Testing Program Has Made Little Progress. GAO/RCED-90-112. Washington, D.C.: April 25, 1990.\nEPA’s Efforts To Identify and Control Harmful Chemicals in Use. GAO/RCED-84-100. Washington, D.C.: June 13, 1984.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h3_full", "h3_full h4_title h0_title", "h4_full", "h0_full", "", "h0_title h2_full h4_title h3_full h1_title", "h4_full", "h1_full", "h3_full h4_full", "h0_full h2_full", "h4_full", "" ] }	{ "question": [ "Why does the EPA have a limited number of banned chemicals?", "What is the extent of the agency's power in terms of banning dangerous chemicals?", "What is an example of the EPA's difficulties?", "Why is it not certain that the EPA will take the necessary steps to identify all of the dangerous chemicals in commercial use?", "How has the EPA addressed this issue in the past?", "Why can't the EPA simply repeat this process today?", "What is the future of the EPA's success in managing dangerous chemicals?", "What is the problem with the EPA's current strategy?", "Why is this a major issue within the agency?", "What is the history of the EPA's authority to control toxic substances?", "Why has the EPA had difficulty implementing the TSCA?", "How did the EPA attempt to make TSCA more effective?", "What else did the EPA do to make it easier to manage toxic substances?", "How is GAO responding to the Toxic Substances Control Act and EPA implementation?", "How did GAO respond to previous government regulations?", "What does GAO typically recommend of the EPA in order to address chemical regulation?", "How does EPA respond to GAO's recommendations?" ], "summary": [ "EPA has had difficulty demonstrating that chemicals should be banned or have limits placed on their production or use under section 6--provisions for controlling chemicals.", "The agency issued regulations to ban or limit production or use of five existing chemicals, or chemical classes, out of tens of thousands of chemicals listed for commercial use.", "A court reversal of EPA's 1989 asbestos rule illustrates the difficulties EPA has had in issuing regulations to control existing chemicals.", "EPA has increased efforts to assess chemical risks, but because EPA does not have the data necessary to conduct all risk assessments, it is too early to tell what, if any, risk management actions will be taken.", "In February 2012, EPA announced a plan that identified and prioritized 83 existing chemicals for risk assessment; the agency initiated assessments for 7 chemicals in 2012 and announced plans to start 18 additional assessments during 2013 and 2014.", "At its current pace, it would take EPA at least 10 years to complete risk assessments for the 83 chemicals.", "In addition, it is unclear whether EPA's new approach to managing chemicals will position the agency to achieve its goal of ensuring the safety of chemicals.", "EPA's Existing Chemicals Program Strategy, which is intended to guide EPA's efforts to assess and control chemicals in the coming years, does not discuss how EPA will address identified challenges.", "Consequently, EPA could be investing valuable resources, time, and effort without being certain that its efforts will bring the agency closer to achieving its goal of ensuring the safety of chemicals.", "In 1976, Congress passed TSCA to give EPA the authority to obtain more health and safety information on chemicals and to regulate chemicals it determines pose unreasonable risks of injury to human health or the environment.", "GAO has reported that EPA has found many of TSCA's provisions difficult to implement.", "In 2009, EPA announced TSCA reform principles to inform ongoing efforts in Congress to strengthen the act.", "At that time, EPA also initiated a new approach for managing toxic chemicals using its existing TSCA authorities.", "GAO is not making new recommendations in this testimony.", "In prior reports, GAO suggested that Congress consider statutory changes to TSCA to give EPA additional authorities to obtain information from the chemical industry and shift more of the burden to chemical companies for demonstrating the safety of their chemicals.", "In these reports, among other things, GAO recommended that EPA require companies to provide chemical data they submitted to foreign governments, require companies to reassert confidentiality claims, and develop strategies for addressing challenges that impeded EPA's ability to ensure chemical safety.", "EPA's responses to these recommendations have varied." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, 1, -1, 0, -1, 2, -1, 0, -1, 2 ], "summary_paragraph_index": [ 5, 5, 5, 9, 9, 9, 10, 10, 10, 0, 0, 0, 0, 2, 2, 2, 2 ] }
GAO_GAO-17-384	{ "title": [ "Background", "VA Relies Extensively on IT", "VHA Has Responsibility for the Identification of Its IT Needs", "VA’s and VHA’s IT Environment Faces Challenges", "Key IT Management Processes Are Partially Consistent with Leading Practices", "IT Strategic Plans Identify Goals, but Lack Performance Metrics That Are Needed to Track Progress", "VHA’s IT Investment Management Process Is Consistent with Leading Practices, but a Department-level Board Has Been Inactive and Clear Investment Selection Criteria Have Not Been Defined", "VHA’s Business Architecture Defines Its Core Business Functions, but Measurement of the Extent to Which Functions Are Supported Is Incomplete", "VHA’s Core Business Functions Are Not Fully Supported by Current IT Systems", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Veterans Affairs", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "VA’s mission is to promote the health, welfare, and dignity of all veterans in recognition of their service to the nation by ensuring that they receive medical care, benefits, social support, and lasting memorials. In addition to its central office located in Washington, D.C., VA has field offices located throughout the United States, as well as the U.S. territories and the Philippines.\nThe department’s three major components—VHA, the Veterans Benefits Administration (VBA), and the National Cemetery Administration (NCA)— are primarily responsible for carrying out its mission. More specifically, VHA provides health care services, including primary care and specialized care, and it performs research and development to improve veterans’ needs. VBA provides a variety of benefits to veterans and their families, including disability compensation, educational opportunities, assistance with home ownership, and life insurance. Lastly, NCA provides burial and memorial benefits to veterans and their families.", "The use of IT is critically important to VA’s efforts to provide benefits and services to veterans. As such, the department relies extensively on IT to meet the day-to-day operational needs of its medical centers, provide veteran-facing systems, and otherwise support the department’s mission. According to OI&T data as of October 2016, there were 576 active or in- development systems in VA’s inventory of IT systems. These systems are intended to be used for the determination of benefits, benefits claims processing, and access to health records, among other services.\nVHA is the parent organization for 319 of these systems. Of the 319 systems, 244 were considered mission-related and provide capabilities related to veteran health care delivery. VHA’s systems provide, for example, capabilities to support electronic health records that health care providers and other clinical staff use to view patient information in inpatient, outpatient, and long-term care settings, as well as patient admission to hospitals and clinics, and patient care through telehealth. The remaining systems support corporate or non-mission related IT functions.\nFor fiscal year 2017, the department’s budget request included nearly $4.28 billion for IT. Specifically, VA requested approximately $2.53 billion for sustainment, approximately $1.27 billion for payroll and administration, and approximately $471 million for new systems development or modernization efforts.\nAccording to OI&T, of the $471 million requested for VA development and modernization, approximately $166.6 million (about 35 percent) was requested to support VHA development projects such as the Veterans Health Information Systems and Technology Architecture, known as VistA Evolution, and other clinical systems development. In addition, $276.7 million (about 11 percent) of the $2.53 billion in sustainment funding was allocated to VHA-specific projects to support existing systems. The remaining amounts of requested funds support the other VA administrations as well as overall IT infrastructure that are not necessarily aligned to any single administration. Figure 1 provides the breakdown of VA’s proposed IT budget for fiscal year 2017.\nSince 2007, VA has been operating a centralized organization in which most key functions intended for effective management of IT are performed by OI&T and led by the Assistant Secretary for Information and Technology/Chief Information Officer (CIO). Figure 2 presents a simplified organizational chart for VA.\nOI&T has responsibility for managing the majority of VA’s IT-related functions. The office provides strategy and technical direction, guidance, and policy related to how IT resources are to be acquired and managed for the department. According to VA, OI&T’s mission is to collaborate with its business partners (such as VHA) and provide a seamless, unified veteran experience through the delivery of state-of-the-art technology.\nThe CIO serves as the head of OI&T and is responsible for providing leadership for the department’s IT activities. The CIO reports to the Office of the Secretary of Veterans Affairs through the Deputy Secretary and advises the Secretary regarding the execution of the IT appropriation. In addition, the CIO is expected to serve as the principal advisor to top management officials, such as the Under Secretaries of each of the three administrations, on matters relating to IT management in the department. This official is also tasked with reviewing and approving investments, as well as overseeing the performance of IT programs and evaluating them to determine whether to continue, modify, or terminate them.\nAlthough VA centralized its key IT functions in order to maintain better control over resources, we have previously reported that the office has faced challenges in fully implementing and managing IT under its centralized organizational structure. In addition, independent assessments of the department’s efforts in 2013 and 2015 showed that OI&T has had difficulty in preventing IT activities from occurring outside its control. According to the assessments, it has also been challenged in effectively collaborating with the department’s various business units and in efficiently and cost-effectively delivering new IT capabilities.\nRecognizing these challenges, the CIO initiated an effort in January 2016 to transform OI&T focus and functions. Among other things, the transformation focused on reorganizing the units within OI&T. Beginning in April 2016, VA established five organizational units within OI&T with responsibility for performing and managing specific IT-related functions.\nEnterprise Program Management Office. This office began initial operations in April 2016, and is intended to serve as OI&T’s portfolio management and project tracking organization. According to OI&T, its goals are to align IT portfolios with the department’s strategic objectives; enhance visibility and governance; analyze and report on portfolio performance metrics; ensure the overall health of the IT portfolio; and optimize resources for projects, people, and timelines. The Enterprise Program Management Office includes the following six functional areas: (1) Intake and Analysis of Alternatives is to work with the VA administrations and other staff offices to develop requirements to meet the needs of veterans, provide analysis of alternative approaches to meeting those requirements, and integrate information security; (2) IT Portfolios is to consolidate programs and projects under five portfolios (Health, Benefits, Cemeteries, Corporate, and Enterprise services); (3) Project Special Forces is to mitigate issues that put projects at risk of failure; (4) Demand Management is responsible for metrics gathering and analysis, development of process tools, human resources, and training; (5) Transition Release and Support is to manage OI&T’s integrated calendar supporting VA’s Veteran-focused Integration Process; and (6) Application Management is responsible for IT implementation efforts, including testing, design, and data management.\nAccount Management. This function, led by four account managers, is responsible for managing the IT needs of OI&T’s business partners—VA’s administrations and staff offices, including VHA. Account managers are to interface directly with their customers to understand their needs, help identify and define the solutions to meet those needs, and represent their interests by reporting directly to the CIO. In this regard, account managers are to submit their customers’ IT requirements to the Enterprise Program Management Office, ensure that their business needs are understood by OI&T, and ensure that business solutions are designed to meet their customers’ specifications. This function is also tasked with advocating for the customers in the budget process. OI&T intends for this function to address the challenge of effectively collaborating with business units. As of December 2016, all four account managers were in place.\nQuality and Compliance. This function is responsible for establishing effective policy governance and standards and ensuring adherence to the policies and standards. In addition, the quality and compliance function is charged with identifying, monitoring, and measuring risks across OI&T.\nData Management Organization. The organization is intended to improve both service delivery and the veteran experience by engaging with data stewards to ensure the accuracy and security of the information collected by VA. The organization is to institute a data governance strategy; engage with VA staff to ensure the accuracy and security of collected data; analyze data sources to form an enterprise data architecture; and establish metrics for data efficiency, access, and value. OI&T also intends for the organization to identify trends in the data collected on each veteran that could improve their health care by providing predictive care and anticipating needs.\nStrategic Sourcing. This function is responsible for establishing an approach to fulfilling the department’s requirements with vendors that provide solutions to those requirements, managing vendor selection, tracking vendor performance and contract deliverables, and sharing insights on new technologies and capabilities to improve the workforce knowledge base.", "The VA Under Secretary for Health is the head of VHA and is supported by the Principal Deputy Under Secretary for Health, four Deputy Under Secretaries for Health, and nine Assistant Deputy Under Secretaries for Health. Among these, the Deputy Under Secretary for Health for Policy and Services oversees the work of the Assistant Deputy Under Secretary for Health for the Office of Informatics and Information Governance within VHA.\nThe Strategic Investment Management office, a division of the Office of Informatics and Information Governance, was established to support the IT needs of VHA by providing information on health-related information systems that senior managers need to make sound decisions. There are four organizational services within this office: Business Architecture, Investment Governance Services, Open Source Management, and Requirements Development and Management. Among other things, this office advocates for VHA’s IT needs within the Planning, Programming, Budgeting, and Execution process and coordinates with VHA business owners and other VA organizations to support, document, analyze, and evaluate clinical and business needs and requirements for IT development.\nThe Strategic Investment Management office works closely with business owners and program offices within VHA to assist with the IT governance and budgeting processes, IT needs identification, requirements development, and investment oversight. For example, the Strategic Investment Management office works with program offices such as Pharmacy Benefits Management Services, Veterans Access to Care (scheduling and consults), and Community Care. These offices are responsible for key functions and IT systems related to health service delivery:\nPharmacy Benefits Management Services. This program office is responsible for providing organizational guidance on a broad range of pharmacy activities to the 260 pharmacies located in VA’s medical centers and outpatient clinics. The office also has operational responsibility for all aspects of the department’s seven consolidated mail outpatient pharmacies, with the exception of IT. The Executive Director of this office is responsible for identifying functional needs for medical center pharmacies and consolidated mail outpatient pharmacies and communicating those needs to OI&T for prioritization and planning to acquire pharmacy IT capabilities.\nVeterans Access to Care (scheduling and consults). This program office is responsible for standardizing and coordinating system-wide administrative clinic operations and management. Specifically, the Executive Director serves as VHA’s business owner and manager in collaboration with OI&T on matters regarding scheduling, including the department’s electronic outpatient scheduling system.\nCommunity Care. This program office is responsible for overseeing all VHA community care programs and business processes, such as determining veterans’ eligibility to receive health care benefits and purchasing care from non-VA providers. Specifically, it is structured around six functional areas: eligibility, referral and authorization, a tiered network of community providers, care coordination, provider payment, and customer service.", "As previously mentioned, an independent assessment recently noted that VHA and OI&T faced a number of challenges in collaborating to execute health IT improvements and developing new and modernized capabilities. Specifically, in response to The Veterans Access, Choice, and Accountability Act of 2014 (Choice Act), the assessment was released in September 2015, stating that VHA and OI&T did not collaborate effectively. The assessment found that VHA and OI&T often did not agree on priorities for executing their strategic plans and have struggled to identify, prioritize, and translate clinical goals and strategic initiatives reflected in the department’s overarching planning documents into buildable, testable health IT requirements that resulted in measurable health care outcomes for the veteran. In addition, the report stated that VA’s ability to deliver new capabilities for VistA had stalled and as a result the VA health care system was in danger of becoming obsolete.\nThe Choice Act also established the Commission on Care (the Commission). This independent entity evaluated veterans’ access to VA health care and assessed how veterans’ care should be organized and delivered during the next 20 years. In its final June 2016 report, the commission acknowledged that, although VHA provided health care that was, in many ways, comparable or better in clinical quality to that generally available in the private sector, the care was inconsistent from facility to facility. According to the commission, health care also could be compromised by poorly functioning operational systems and processes. The commission’s recommendations were intended to serve as a foundation for organizational transformation at VA.\nWe have also issued numerous reports that highlighted challenges facing VA’s efforts to improve IT management. For example, in May 2010, we reported that, after spending an estimated $127 million over 9 years on its outpatient scheduling system project, VA had not implemented any of the planned system’s capabilities and was essentially starting over by beginning a new initiative to build or purchase another scheduling system. We also noted that VA had not developed a project plan or schedule for the new initiative; department officials stated that VA intended to do so after determining whether to build or purchase the new application. We recommended that the department take six actions to improve key systems development and acquisition processes essential to the second outpatient scheduling system effort. The department generally concurred with our recommendations, but has not provided information about its actions to implement four of the six recommendations.\nIn May 2016, we reported that VA’s expenditures for its care in the community programs, the number of veterans for whom VA has purchased care, and the number of claims processed by VHA have all grown considerably in recent years. Due to recent increases in utilization of VA care in the community, the department has had difficulty processing claims in a timely manner. We reported that VA officials and claims processing staff had indicated that IT limitations, manual processes, and staffing challenges delayed claims processing. The department had implemented interim measures to address certain system challenges, but did not expect to deploy solutions to address all challenges, including those related to IT, until fiscal year 2018 or later. Further, VA did not have a sound plan for modernizing its claims processing system, which we recommended it develop. The department concurred with this recommendation and stated that it intended to address the recommendation through the planned consolidation of its care.\nWe have also recently reported on VHA’s efforts to provide outpatient pharmacy services to approximately 6.7 million veterans. Specifically, in June 2017, we reported that pharmacists cannot always efficiently view and share necessary patient data among VHA medical sites and cannot transfer prescriptions to other VHA pharmacies or process prescription refills received from other VHA medical sites through the system. As a result, pharmacists do not have the necessary data to efficiently make clinical decisions about prescriptions, which could negatively affect patient safety. In addition, we noted that VA’s pharmacy system lacks certain capabilities, such as the capability for exchanging prescriptions with non-VHA providers; the system also does not maintain a perpetual inventory capability. Among other actions, we recommended that VA update its pharmacy system to view and receive complete medication data, assess the impact of interoperability, and implement additional industry practices. VA generally concurred with our recommendations.", "VA has established IT management processes that are partially consistent with leading practices. For example, the department has developed multiple IT strategic plans and related documents that identify its goals. However, these plans and documents do not include performance metrics that the department could use to track progress toward achieving its goals. Additionally, although VHA has an IT investment management process that is consistent with leading practices, VA’s department-level IT investment board has been inactive and investment selection criteria have not been defined. Further, while VHA has defined a business architecture that identifies its core business functions, measurement of the extent to which those functions are supported by IT investments is incomplete.", "Strategic planning is essential to help an organization define what it seeks to accomplish and identify the strategies it will use to achieve desired results. Our research and experience at federal agencies has shown that an agency must align IT goals with its strategic goals as part of an institutionalized set of management capabilities. An IT strategic plan outlines the agency’s goals and identifies performance metrics that permit the agency to determine whether IT is making a difference in improving performance. The resulting plan effectively guides modernization efforts by serving as an agency’s vision, or road map, and helps align its information resources with its business strategies and investment decisions.\nOMB has issued guidance for agencies to use in developing and maintaining a strategic plan that describes the agency’s technology and information resource goals, defines the level of performance to be achieved, and demonstrates how the goals align with the agency’s mission and organizational priorities. VA has also issued a directive that requires IT strategic planning to include outcome-oriented performance measures.\nIn accordance with leading practices, the department has produced multiple strategic plans, road maps, and supplementary guidance that describe the strategic direction for IT across the department. For example, OI&T has issued the following documents and guidance, which describe, among other things, the strategic goals and objectives, transformation priorities, and the future vision for VA IT.\nThe Fiscal Year 2013 through 2015 Information Resources Management (IRM) Strategic Plan and an associated Enterprise Roadmap. Together, these documents describe the department’s IT strategic goals and objectives. VA has taken steps to show alignment between the IT strategic goals and objectives and the VA Strategic Plan. For example, the objectives in the IRM Strategic Plan include, among other things, managing the IT portfolio and utilizing performance metrics for informed decision making. In addition, the Enterprise Roadmap describes additional OI&T goals and priorities, as well as select programs that are intended to support those priorities between 2016 and 2018. For example, the roadmap identifies health care modernization as one of VA’s key IT investments.\nEnterprise Technology Strategic Plan, Fiscal Years 2017 through 2021. OI&T has issued a strategy to achieve VA’s IT vision, which is to lead the department as “a world-class organization that provides a seamless, unified veteran experience through the delivery of state-of- the-art technology.” It sets priorities that are intended to guide decision making at the department. According to the plan, its priorities are in alignment with the MyVA continuous improvement initiative.\nFurther, the plan describes the current technical environment. It also details a vision for a future IT environment that plans to utilize new and emerging technologies to improve information availability, information security, reusable shared services, modern applications, and scalable infrastructure.\nMulti-Year Programming guidance. OI&T has issued annual guidance for the IT Multi-Year Programming process, which is intended to ensure that the IT appropriation is being directed to those investments that satisfy the most pressing mission requirements of the department. This guidance describes a number of strategic challenges faced by OI&T. For example, the guidance from recent years noted that the retirement of legacy systems and the increasing cost of sustaining those systems were two challenges that should be taken into consideration during the Multi-Year Programming cycle for decisions on IT investments.\nWhile OI&T produced these strategic plans, road maps, and supplementary guidance related to IT, none of the documents includes specific results-oriented performance metrics that are called for by VA’s IT strategic planning directive and leading practices. For example, while the IRM Strategic Plan includes a strategic objective related to aligning investments with mission needs, it does not describe or point to a specific target to be achieved, and related performance metrics for how progress against this target will be measured.\nIn addition, VHA has taken steps to define a strategic direction for health IT by issuing its Health Information Strategic Plan for Veterans Health Administration Supporting VA Health Care Version 4.3 (HISP). According to the HISP, this strategy is to inform OI&T’s IRM Strategic Plan. The HISP identifies strategic goals and objectives related to health IT within VHA. For example, one strategic goal included in the plan is to enhance health information processes and practices to ensure that VA health systems are efficient and cost effective, and have the capability needed to deliver quality medical care to veterans. According to the plan, two objectives for achieving this goal are to implement IT innovations that support efficiency in business operations, such as digitalization of business processes through the use of sensors or other monitoring and automation systems, and to implement a performance measurement capability to monitor and drive a culture of quality and safety.\nHowever, VHA’s HISP does not identify corresponding performance targets and metrics for strategic goals and objectives identified in the plan. Further, this lack of performance targets and metrics has been a longstanding issue. For example, a previous version of the plan stated that a workgroup was established in October 2012 to identify performance goals and to create an initial report by May 2013. According to VHA officials, while VHA established a workgroup in October 2012 to identify performance metrics, the workgroup’s recommendations were not adopted.\nOI&T officials acknowledged that the department’s strategic plans and related documents do not contain performance targets and metrics, but said that VA does report outcome-based operational performance metrics for each major IT investment to OMB’s IT Dashboard. However, these metrics are not specific to the IT goals and objectives outlined in the IRM Strategic Plan and, thus, do not help report how VA is progressing toward achieving its strategic goals and objectives.\nFurther, according to VHA officials, VHA offices are not staffed to identify, track, and report on IT performance measures. Because VA’s IT strategic plans do not identify performance metrics that could be used to track progress toward strategic goals and objectives, VA and VHA lack the ability to accurately track progress toward providing IT systems that address VHA’s business needs and support the performance of its mission.", "According to leading practices for IT investment management, establishing and following a systematic and organized approach to investment management helps lay the foundation for successful, predictable, and repeatable investment decisions. Critical elements include instituting an IT investment board and ensuring that an organization develops the process by which IT investments are selected, reselected, and integrated with the process of identifying projects for funding. Depending on its size, structure, and culture, an organization may have more than one IT investment board and each investment board may operate in accordance with its assigned authority and responsibility. In addition, the investment selection process should include structured reviews of IT proposals, the use of predetermined criteria for analyzing and prioritizing proposals, and analysis and documentation of decisions made to fund some proposals and not others.\nVA has taken steps to establish a systematic and organized approach to IT investment management. Specifically, the department has integrated its investment management approach with its IT Multi-Year Programming cycle, which is the process used by OI&T to identify and prioritize business needs over a 5-year programming horizon. With the VA budget submission and data collected from the prior Multi-Year Programming cycle as the starting point for the annual process, OI&T uses the list of priorities from VHA, VBA, and NCA to develop an initial IT Program. VA has also instituted multiple levels of investment management, including establishing IT governance and a selection approach in VHA, in addition to department-level IT investment review boards.\nWithin VHA, the administration has developed a governance structure for prioritizing business needs and selecting its IT investments based on those needs. This structure, formally established in November 2015, includes the following components.\nCapability management boards: These four boards generally meet monthly to engage with program offices and assess and rank the priority of various business needs by scoring them with weighted criteria related to, for example, how the proposal aligns with VHA mission priorities and the expected benefits as well as the impact of risk to VHA, the maturity of requirements, the complexity of the issue, and the dependencies between individual investments.\nIntegration Board: The co-chairs of each of the capability management boards generally meet monthly as the Integration Board to ensure that the prioritized lists submitted by each capability management board are consistent and that dependencies between the proposals are assessed. The Integration Board begins to incorporate cost estimates into the process, develops alternative scenarios for prioritization that anticipate OI&T budget allocations, and recommends a consolidated list of investment priorities to the IT Committee.\nIT Committee: This committee is charged with setting VHA’s IT strategic direction, overseeing its IT governance and needs prioritization process, and advocating for VHA’s IT funding. Further, this committee is part of the National Leadership Council and is responsible for coordinating with the Council’s other committees to ensure that IT needs are appropriately supported with funding that is consistent with VHA goals, and resolves issues in the execution of the budget to include reprogramming, as appropriate. The committee provides a final list of prioritized investments to the National Leadership Council as part of the Multi-Year Programming process.\nNational Leadership Council and Under Secretary for Health: The National Leadership Council is VHA’s advisory body for decision making and is comprised of senior VHA leaders, including those within the Office of the Under Secretary for Health. This body is responsible for endorsing the VHA-related IT investment decisions that are submitted to OI&T. According to VHA officials, the administration negotiates with senior executives such as the Deputy Secretary of VA and the CIO in building the budget request that goes to OMB.\nVHA’s Architecture and Requirements Investment Work Group supports these governance boards by, for example, normalizing and analyzing the submitted IT needs and providing data and cost estimates to help the governance bodies make informed decisions. (See figure 3 for a depiction of VHA’s IT governance structure.)\nFor its part, VA’s department-level IT governance is comprised of two boards that are assigned the responsibility of combining the business needs from VHA and the other business partners and formulating a final IT budget according to department-wide priorities. According to OI&T’s IT Multi-Year Programming guidance, the initial list of programs and their associated funding levels proceeds through these boards for additional review, adjustment, and approval.\nIT Leadership Board: According to its charter, VA’s highest level IT investment board is responsible for, among other things, aligning IT resources with business needs, managing the projects, and developing and approving the IT budget.\nIT Planning, Programming, Budgeting and Execution Board: The charter for this board states that it is to help facilitate the Multi-Year Programming process, monitor budget execution, and make recommendations to the IT Leadership Board regarding overall long- term plans. According to VA officials, this board also is to make determinations on what projects are eligible for funding with the IT appropriation.\nHowever, the IT Leadership Board has not met since July 2015 and is not currently functioning as the department-level IT investment board. Further, VA has not documented criteria that the board could have used to weigh tradeoffs between investments, determine whether one investment is funded over another, or identify how investments are reselected once they are operational.\nBecause the board has not met, OI&T officials stated that an ad hoc group of senior executives was delegated responsibility for making IT investment decisions for the fiscal years 2017-2021 Multi-Year Programming cycle. However, VA did not document the criteria that these groups used to make decisions, nor did the groups document their decisions. For example, there was no documentation of the department’s decision to not approve VHA’s high-priority request for $45.8 million in proposed development funding to improve pharmacy IT capabilities in the fiscal year 2017 cycle.\nAccording to OI&T officials, VA has been working to change its approach to department-level IT governance and investment selection as part of the ongoing transformation that has been occurring since January 2016. Among these changes, OI&T chartered 11 new governance boards by October 2016 that are to focus on various aspects of IT strategy, solutions, and standards. One of these boards—the Portfolio Investment Management Board—has been identified by its charter as the department-level IT investment review board to be responsible for integrating IT investment decisions with VA’s mission, strategic plan, budget, and enterprise architecture.\nWhile the Portfolio Investment Management Board has been defined as the department-level decision-making body, officials said more time is needed to determine how the board’s responsibilities will be carried out in relationship to the other 10 boards, which also are responsible for various aspects of IT projects, planning, and budgets. In addition, the Portfolio Investment Review Board and OI&T have not issued additional guidance or other documentation related to how the new IT governance structure will work to oversee management of IT across the department.\nWhile the transformation of OI&T has the potential to improve the selection of IT investments going forward, the department has not yet documented criteria related to how decisions and tradeoffs will be made or fully demonstrated how the new structure will work. According to OI&T officials, the transformation of IT governance is an evolving process and they plan to continue to improve the process for selecting IT investments and the budgeting process as the department builds the upcoming fiscal year 2019 through fiscal year 2023 budget submissions. However, without using a department-level board to govern IT investments and criteria for selecting them, the department risks wasting limited resources and funding investments that may not fully support VHA’s most important business functions and priorities.", "Leading enterprise architecture and investment management practices maintain that enterprise architecture can be used to link the organization’s strategic mission value (performance results and outcomes) to its technical resources. As such, organizations should implement a methodology for ensuring that IT investments meet business needs and comply with the architecture. In addition, the extent to which mission value is actually realized indicates progress toward the desired state defined in the architecture and should be periodically measured and reported.\nVHA has employed a methodology to identify its core business functions in its enterprise architecture and has documented guidance for aligning or mapping IT needs and investments to those functions. These activities are performed to ensure that there is a link between what is reviewed during the investment-selection process and the business needs of the organization. Specifically, according to administration officials, the VHA Business Function Framework is the architectural model that describes the core business functions that are necessary to the mission of delivering health care services and supporting the needs of veterans, health care providers, and resource partners. This framework defines a total of 262 core business functions as part of the VHA business architecture. For example, one line of business described by the framework is “Deliver Health Care.” Under this line of business, there are 86 supporting functions, such as “Provide Clinical Decision Support” and “Provide Nursing Services,” which identify at a high level the core business functions necessary to deliver health care at VA.\nAccording to VHA, the Business Function Framework is primarily used to show how business functions map to new service requests, requirements, and IT systems, the results of which are input into the NSR database and VASI. For example, VHA maps IT needs and investments (which can include multiple systems) to the Business Function Framework. VHA officials noted that every IT need and system is intended to be mapped to one or more of the defined business functions.\nVHA has also taken steps toward measuring and reporting the extent to which mission value is actually realized. Specifically, the administration has mapped core business functions to existing clinical, operational, and outcome measures. According to the VHA Business Architecture team, available performance metrics were aligned to a number of core business functions for the fiscal years 2017 and 2018 reviews and the results were provided to VHA capability management boards and could be viewed by board members. In instances where a metric indicated poor performance, proposed investments were assessed for their potential to help VHA improve its performance.\nNevertheless, measurement of the extent to which business functions are supported is incomplete. Specifically, VHA has aligned existing metrics with 65 of the 262 core business functions for the fiscal year 2017 Multi- Year Programming cycle. For fiscal year 2018, the team reported that it aligned metrics to 64 of the core business functions. According to VHA officials, the Business Architecture team would like to identify additional operational metrics used by VHA. However, the officials stated that the Business Architecture team is not staffed to identify, track, trace, and report on IT performance metrics and that IT metrics are OI&T’s responsibility. Without aligning additional metrics to all core business functions, VHA is not positioned to effectively gauge the extent to which IT systems address its business needs and support the performance of its mission.", "VA’s IT systems are generally aligned to VHA core business functions, but the administration has unaddressed needs that indicate current IT systems do not fully support the functions. To have an effective internal control system, an organization should design its information systems to achieve its objectives. The management processes discussed in this report (i.e., strategic planning, investment management, and enterprise architecture) are intended to help ensure that the department’s investment decisions for IT systems address VHA’s strategic and functional needs. VASI shows that the vast majority of VHA’s 262 core business functions are supported by the department’s current IT systems or, according to department officials, do not have a need for system support.\nHowever, our review of new service requests, which are requests in the NSR database for identified IT needs submitted by VHA programs and business owners, determined that VHA’s core business functions are not fully supported by systems. The NSR database contains needs that have been submitted over time that have not been addressed by an IT system and provide an indication of functions that are not fully supported by systems. In this regard, as of October 2016, VHA had 2,772 requests for IT needs documented in the NSR database since 1998. Of these, approximately 817 were open requests—IT needs identified throughout VHA that had not been met. Further, 316, or about 39 percent, of these open needs are long-standing—they have been open for more than 5 years. Figure 4 provides a breakdown of new service requests as of October 2016.\nAccording to department officials, requests are not of equal weight and vary in level of impact and work effort required. For example, the NSR database consists of requests ranging from the creation or modification of reports to the development of new systems. Nonetheless, these requests represent business needs that have not been met, which means there is functionality that is not being provided.\nThe fact that business functions are not fully supported is further illustrated when reviewing needs associated with three program areas— pharmacy benefits management, scheduling, and community care— which all have open requests that represent long-standing, unmet IT needs. These programs are responsible for key functions and IT systems related to health service delivery.\nPharmacy Benefits Management Services. As of November 2016, the program office tracked more than 280 open requests to meet IT needs, approximately 38 percent of which were identified 5 or more years ago. For example, the office had a request from 2000 for the development of an inpatient pharmacy order interface to share pharmacy order information with external and commercial systems. In addition, the office had a 2013 request related to a project intended to enhance and modernize VistA Evolution Pharmacy. It also had two requests from 2014 related to a project intended to develop the ability to receive inbound electronic prescriptions and a project intended to address known patient safety issues.\nVeterans Access to Care (scheduling and consults). As of late September 2016, the program office had more than 20 open requests. Approximately 32 percent of these requests were entered into the NSR database more than 5 years ago. For example, the program office tracked two requests from 2006 related to recommendations made by a VHA Consult Task Force group. The group was created in August 2004 to address disconnects among the consult package, the scheduling package, and the electronic wait list. In addition, the office continues to track a request made in 2007 for the development of a scheduling application to address deficiencies including wait times, resource management, and user satisfaction in order to improve coordination of patient care. This significant long-standing request remains open after a decade without plans for when and how an IT solution will be developed to address this business need.\nCommunity Care. The program office, which has been established more recently than pharmacy benefits management or scheduling, was tracking more than 50 open requests as of late September 2016. Approximately 30 percent of these requests were entered into the NSR database more than 5 years ago but were still considered relevant to the community care program. For example, the office tracked a request from 2006, related to the IT solution for flagging emergency care claims. This request had been unaddressed for more than 10 years and the absence of such a system resulted in labor-intensive and error-prone manual processes. Program officials stated that an IT solution to address this is scheduled for release by the end of 2017.\nMultiple factors have contributed to VHA’s core business functions not being entirely supported by the department’s IT systems. VA spends a significant amount of money on sustaining existing systems, which department officials said has limited the funds available for enhancing or modernizing those systems or acquiring new systems to address VHA’s unmet needs. Furthermore, according to department officials, VHA is challenged because the administration has more business needs than available resources and funding.\nAdditionally, weaknesses in IT strategic planning, investment management, and enterprise architecture processes previously discussed in this report have contributed to a lack of understanding of the extent to which VHA’s business functions require additional IT system support to meet the needs and strategic goals of the administration. As a result, the department risks continuing to make investment decisions and tradeoffs that may fail to address gaps in IT support within its resource limits and may hinder the progress VHA is able to make in improving delivery of health care services to veterans.", "To VA’s credit, the department’s IT strategic plans describe a vision and identify goals and objectives related to IT in general and to health IT within VHA. VHA and OI&T also have established a governance structure responsible for prioritizing the administration’s business needs and reviewing IT investments for inclusion in the budget. In addition, VHA’s core business functions are documented in its enterprise architecture and used to align business needs to IT investments as part of selecting investments.\nHowever, VA’s partial implementation of effective IT strategic planning, investment management, and enterprise architecture has put the department at risk of being unable to fully support VHA with the information systems it needs to perform its mission of providing high- quality health care to veterans. Weaknesses in key processes leave VA unable to gauge the extent to which it is providing information systems that meet VHA’s needs. Specifically, the department has not assigned targets or established metrics for measuring performance toward achieving its strategic planning objectives. In addition, VA’s department- level IT investment management activities have lacked implementation of governance boards, application of selection criteria, and documentation of investment decisions. Also, VHA has only aligned metrics with about one quarter of the core business functions identified in its enterprise architecture. According to OI&T officials, ongoing transformation of IT governance is intended to improve the process by which investments are made. However, the results of this transformation have yet to be fully documented and demonstrated. Thus, VA is not well positioned to meet VHA’s information system needs.\nNot surprisingly, VHA’s IT systems fall short of meeting the needs of clinicians and the veterans they are to serve. While the administration’s core business functions have been aligned to at least one of the department’s current information systems, unaddressed business needs remain and indicate that the functions are not fully supported. Further, within three VHA program areas—pharmacy benefits management, scheduling, and community care—many identified IT needs have been unresolved or unfunded for 5 or more years. Thus despite identifying and prioritizing needs, VHA’s core business functions have not been fully supported by the department’s current information systems and may remain unaddressed for a considerable amount of time. Until the department fully implements IT management processes in accordance with leading practices, it will lack assurance that its information systems fully support VHA’s core business functions and delivery of health care services to veterans.", "To assist VA in improving key IT management processes to ensure that investments support the delivery of health care services, we recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health and the Chief Information Officer to take the following four actions: Identify performance metrics and associated targets for the goals and objectives in the department’s IT strategic plans, including the Information Resources Management strategic plan and the Health Information Strategic Plan, as they relate to the delivery of health IT and the VHA mission.\nEnsure that the department-level investment review structure is implemented as planned and that guidance on the IT governance process is documented and identifies criteria for selecting new investments, and reselecting investments currently operational at VHA.\nIdentify additional performance metrics to align with VHA’s core business functions, and then use these metrics to determine the extent to which the department’s IT systems support performance of VHA’s mission.\nEnsure that unmet IT needs identified by key program areas— pharmacy benefits management, scheduling, and community care— are addressed appropriately and that related business functions are supported by IT systems to the extent required.", "In written comments on a draft of this report (reprinted in appendix II), VA agreed with our four recommendations. The department also provided information on actions it has taken or planned to implement our recommendations, including target completion dates for those actions.\nFor example, in its comments, VA asserted that it has taken steps that fully addressed our recommendation to ensure that its department-level investment review structure is implemented as planned, and that guidance on the IT governance process is documented and identifies criteria for selecting new investments and reselecting investments that are currently operational at VHA. Specifically, the department noted that it had established a new governance process in October 2016 and implemented it as planned. Further, the department provided, as an attachment to its comments, an updated charter for the Portfolio Investment Management Board (dated March 28, 2017) as additional evidence of the board’s process for evaluating IT investments. In our follow up on the department’s implementation of our recommendations, we will assess whether the actions noted are fully responsive to this recommendation.\nThe department also discussed planned actions for addressing our recommendation related to identifying performance metrics and targets for the goals and objectives in VA’s IT strategic plans. Specifically, the department described its intention to develop or revise and maintain performance metrics that align with strategic and health IT goals and objectives.\nVA also outlined steps the department intends to take in response to our recommendation that it identify additional metrics to align with VHA’s core business functions and then use these metrics to determine the extent to which the department’s IT systems support VHA’s mission. These steps include developing a set of core metrics to provide continuous input into investment portfolio decisions and establishing a methodology for ensuring that IT investments are aligned to business needs and that expected outcomes are defined prior to making the investments.\nFurther, in response to our recommendation that it ensure that unmet IT needs for the pharmacy benefits management, scheduling, and community care program areas are addressed appropriately, the department stated that VHA leadership has recently reviewed all outstanding requests from these program areas to confirm their validity. In addition, the department stated that it plans to include the outstanding needs of these key program areas in its VHA IT Requirements Governance Process during fiscal year 2018 to ensure the needs are addressed in this multi-year planning review.\nAccording to VA, its actions in response to our recommendations are expected to be completed by the end of fiscal year 2018. If the department ensures that these and other activities it identified are appropriately documented and effectively implemented, then VA should be better informed to make IT investment decisions that improve the delivery of health care services to veterans.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Veterans Affairs, the Under Secretary for Health, the Chief Information Officer, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov If you or your staffs have any questions on matters discussed in this report, please contact me at (202) 512-9286 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "The objectives of this study were to determine the extent to which the Department of Veterans Affairs’ (VA) (1) information technology (IT) management processes are consistent with leading practices and (2) current IT systems support the Veterans Health Administration’s (VHA) core business functions.\nTo address the first objective, we compared VA’s IT management processes for IT strategic planning, investment management, and enterprise architecture to leading practices that federal statutes, prior GAO reports, and the Office of Management and Budget (OMB) have identified to assist organizations with improving the management processes. This comparison focused on the specific aspects of the processes that are intended to ensure that IT investments meet the business needs of the VHA organization. For example: IT strategic planning: We identified the strategic plans and related planning guidance issued by the Office of Information and Technology (OI&T) and VHA that focused on IT systems and health care IT at VA. We reviewed the department’s assertions in these plans for how IT strategic goals align to the goals of the VA Strategic Plan. Then, we compared the contents of the plans to leading practices identified from federal statutes, prior GAO reports, guidance from OMB related to IT strategic planning, and a relevant VA directive. In particular, we determined whether VA had taken steps to include strategic goals and objectives that define the levels of performance to be achieved as they relate to ensuring that IT supports the mission needs of the department and VHA; and established related metrics that are specific, verifiable, and measurable.\nIT investment management: We analyzed charters and meeting minutes establishing and demonstrating the implementation of governance structures responsible for IT investments at VHA and the department level. We then compared the existing governance structure to critical processes and activities related to governance described in GAO’s IT Investment Management framework. We also analyzed department documentation and guidance related to how business needs are identified and prioritized by VHA and selected to be part of the budget for IT investments by OI&T. We examined results of this process for the fiscal year 2017 budget formulation process. We compared our analysis to critical processes related to investment selection described in GAO’s framework. In addition, we interviewed officials familiar with the VHA prioritization process and OI&T investment management and budget formulation processes to clarify department policies and guidance.\nEnterprise architecture: We analyzed department documentation and interviewed cognizant officials about the steps taken to ensure that IT investments support the department’s business needs and compared our findings to key elements described in GAO’s Enterprise Architecture Management Maturity Framework and IT Investment Management. Further, we compared the number of metrics that were aligned to business functions by VHA to the list of all business functions identified in the enterprise architecture to determine the extent to which the functions have associated metrics available to inform the investment management process.\nTo address the second objective, we examined department data to understand how VA might demonstrate that its IT systems are designed to meet its objectives. First, we analyzed the VHA Business Function Framework (Version 2.11), which documents the VHA functional operations within the business architecture, to compile a list of all core business functions that VHA has determined are necessary to deliver health care. This framework provides the basis by which the department shows relationships between various components of the enterprise architecture and is used to help view, organize, and prioritize VHA’s business activities.\nWe then compared this list of core business functions to data in the VA Systems Inventory (VASI) database, which identifies VA’s current inventory of IT systems and how they are mapped to the VHA core business functions. VHA officials noted that VASI is the authoritative source for business function mapping. We assessed the reliability of data from VASI and determined that the data were reliable for the purposes of our reporting objectives.\nFor any core functions initially not aligned to a current IT system, we reconciled the differences with cognizant VA officials. There were 5 functions (from a total of 262 functions) that could not be reconciled. We determined that this number, which represented less than 2 percent of the total number of functions, was not significant to our findings. While the results of this alignment showed a relationship between many current IT systems and VHA’s core business functions can be demonstrated, the results did not provide insight into how well the functions are being supported by those IT systems.\nWe then analyzed data from VHA’s new service request (NSR) database, which captures information related to business needs such as IT enhancements submitted throughout the department. We analyzed data from the NSR database to identify the number of requests in the database, when requests were entered, and the number of requests that remain open. Our analysis allowed us to describe the number of open requests, but could not provide insight into the depth of work required for requests themselves, nor the weight the business owners assigned to each open need, because the NSR database does not include data on the importance, level of impact, and work effort required to address each request.\nWe found the VA data from VASI and the NSR database to be sufficiently reliable for the purposes of our reporting objectives and used the data as evidence to support our findings, conclusions, and recommendations. For each data set, we reviewed documentation related to the databases, such as the data dictionary, tested the data sets to look for duplicate records and missing data in key fields, and examined the relationship between data elements. We also interviewed department officials about data reliability and internal controls procedures for the database and interviewed knowledgeable officials on the results of our findings.\nWe conducted additional analyses of three programs related to health service delivery on which we have previously reported—Pharmacy Benefits Management Services, Veterans Access to Care (scheduling and consults), and Community Care. Our review of NSRs for the aforementioned program offices included verifying the open NSRs assigned to each program office and interviewing cognizant officials from VHA regarding the IT systems used by the three programs, the needs identification and management process to understand the extent to which VHA business needs are being addressed, and about the extent to which current systems supporting VHA core business functions in their respective areas. The results of this analysis are not generalizable to all functional areas, but provide insight into the extent of IT support for the three specific programs.\nWe conducted this performance audit from December 2015 to June 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "David A. Powner, (202) 512-9286 or [email protected].", "In addition to the contact named above, Mark Bird (Assistant Director), Jennifer Stavros-Turner (Analyst in Charge), Chris Businsky, Rebecca Eyler, Jacqueline Mai, Dwayne Staten, and Charles Youman made key contributions to this report." ], "depth": [ 1, 2, 3, 3, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_full", "h1_full", "", "", "", "", "", "", "h0_full", "h1_full", "", "", "h1_full", "", "", "", "" ] }	{ "question": [ "What did GAO's review reveal?", "Why have VA business needs remained unresolved?", "Why is it important for the VA to address their business needs?", "What services does VHA provide?", "What budget resources does the VHA manage?", "What aspects of VHA did GAO review?", "How did GAO collect data for this review?" ], "summary": [ "GAO's review of the business needs identified in three key program areas—Pharmacy Benefits Management, Veterans Access to Care, and Community Care—showed a number of long-standing needs.", "According to VA officials, their need to balance the resources for IT needs across the department is a reason that business needs have remained unresolved.", "Until VA prioritizes resources to address these needs, VHA's programs may not be well supported by IT systems capable of delivering health care services consistent with its objectives.", "VHA, an administration within VA, provides a broad range of primary care, specialized care, and related medical and social support services to veterans. In doing so, VHA operates one of the nation's largest health care systems through 168 VA medical centers and more than 1,000 outpatient facilities.", "The administration managed total budget resources reported at nearly $91 billion in fiscal year 2016.", "Based on interest in VHA's ability to oversee its health care system and provide timely care, GAO reviewed IT management at VHA. Specifically, GAO determined the extent to which VA's (1) IT management processes are consistent with leading practices and (2) current IT systems support VHA's core business functions.", "To do so, GAO analyzed documentation and interviewed officials about VA's approach to IT management processes related to strategic planning, investment management, and enterprise architecture, and compared VA's processes to leading practices. In addition, GAO reviewed data related to VA's IT systems and VHA's IT business needs. GAO further reviewed IT needs from three key VHA program areas." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 0, 0, 0, 0 ] }
CRS_R45310	{ "title": [ "", "Introduction", "Tariffs as the Origin of the Trade Aid Package", "Trade Aid Package Authority", "Trade Aid Package Implementation", "Market Facilitation Program", "Who Qualifies for a Payment?", "USDA Determination of MFP Per-Unit Payment Rates", "How Will Farm-Level MFP Payments Be Determined?", "MFP Payment Limit", "WTO Compliance of Trade Retaliation Assistance Payments", "Industry Response to MFP Payment Allocation", "Food Purchase and Distribution Program", "Agricultural Trade Promotion Program", "Conclusion" ], "paragraphs": [ "", "In early 2018, the Trump Administration—citing concerns over national security and unfair trade practices—imposed increased tariffs on certain imported products in general and on U.S. imports from China in particular. Several of the affected foreign trading partners responded to the U.S. tariffs with their own retaliatory tariffs targeting various U.S. products, especially agricultural commodities.\nOn July 24, 2018, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would be taking several temporary actions to assist farmers in response to trade damage from what the Administration has characterized as \"unjustified retaliation.\" Specifically, USDA would authorize up to $12 billion in financial assistance—referred to as the \"trade aid\" package—for certain agricultural commodities under Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. 714c). The Secretary said that most of the funding would go to agricultural commodities most directly affected by the trade retaliation—corn, cotton, soybeans, sorghum, wheat, hogs, and dairy (sweet cherries and almonds were added to this list in September)—but that some funding would also be used for the purchase, distribution, and trade promotion of a variety of affected commodities.\nThe trade-aid package includes a Market Facilitation Program (MFP) of direct payments to affected producers, a Food Purchase and Distribution Program, and an Agricultural Trade Promotion (ATP) program. Payments under the MFP program would be made in two rounds: a first round announced on August 27, 2018, initially valued at $4.7 billion; and an equivalent-valued second round announced on December 17, 2018. Secretary Perdue stated that there would not be further trade-related financial assistance beyond this $12 billion package as producers would be able to adjust their production activities in 2019 to reflect market conditions related to the trade dispute.\nThis report provides background on the trade dispute that triggered the trade-aid package as well as the authority used by USDA to respond to the trade dispute with financial assistance. Then the report describes the three components of the trade-aid package with details on their implementation.", "In March 2018, the Trump Administration began applying a 25% tariff to U.S. steel imports and 10% tariff to U.S. aluminum imports from certain countries, citing national security concerns. In April, in response to alleged unfair trade practices by the Chinese government, the Administration placed additional tariffs on a number of Chinese products that are exported to the United States. China, Canada, Mexico, the European Union, and Turkey subsequently enacted retaliatory tariffs on U.S. food and agricultural products, in addition to other goods, in response to the U.S. actions. The retaliatory tariffs from those countries now apply to more than 800 U.S. food and agricultural products across meats, grains, dairy products, specialty and horticultural crops, seafood, and alcoholic beverages. The export value for the targeted products to the retaliating countries totaled about $26.9 billion in 2017—about 18% of total U.S. agricultural exports.\nChina, which is subject to the largest set of U.S. tariff increases—including both the U.S. steel and aluminum tariffs and the U.S. tariffs in response to unfair trade practices—also has the most expansive list of retaliatory tariffs. All told, China, which was the second-leading export market by value for U.S. food and agriculture products in 2017, has levied retaliatory tariffs on about 800 U.S. food and agricultural products that were worth about $20.6 billion in exports to that country in 2017. Among China's retaliatory tariffs is a 25% tariff on soybeans, its top agricultural product import by value from the United States. China imported about $12 billion worth of U.S. soybeans in 2017, accounting for 57% of the value of all U.S. soybean exports that year. With the higher tariffs in place, China is now purchasing more soybeans from Brazil and elsewhere to meet its demand. China has also targeted other key U.S. products, including sorghum, wheat, pork and pork offal, dairy products, fruits and nuts, seafood, and whiskey.\nAmong other countries, Canada—the leading export market for U.S. agriculture and food products in 2017—has imposed retaliatory tariffs of 10% on about 20 food and agricultural products, mostly processed foods. U.S. exports of those products to Canada in 2017 were valued at $2.6 billion. Mexico, the third-leading export market for U.S. agriculture and food products by value in 2017, has imposed tariffs ranging from 15% to 25% on cheese, pork, and some prepared foods. U.S. exports of those products to Mexico were valued at about $2.5 billion in 2017. The European Union has levied tariffs on a small number of U.S. prepared foods, corn, and rice, which were worth about $1 billion in 2017. Turkey has imposed retaliatory tariffs on U.S. nuts, rice, and some prepared foods, imports of which amounted to some $250 million in 2017.\nU.S. agriculture and food products have been targeted with increased tariffs by foreign nations for several reasons. First, the United States exports a large amount of agriculture and food products, so many countries have the choice of retaliating against those goods. Second, agricultural commodities are easily substituted from among potential suppliers, so curbing imports from one country would not necessarily limit an importing country's access to the commodity. For example, China has turned primarily to Brazil for more of its soybean imports. Third, given the geographic nature of the production of some agriculture and food products, countries can target certain goods in order to negatively and disproportionately affect the constituents of specific U.S. lawmakers. For example, all of the retaliating countries have imposed retaliatory tariffs on whiskey, some specifically on Bourbon whiskey, which is largely produced in Kentucky, rather than on all distilled beverages or alcohol more generally.", "The primary authority for the trade aid package is the Secretary of Agriculture's discretion to use the general powers of the CCC. The CCC is a wholly government-owned entity that exists solely to finance authorized programs that support U.S. agriculture. It is federally chartered by the CCC Charter Act of 1948 (P.L. 80-806; 15 U.S.C. 714 et seq. ), as amended. Most CCC-funded programs are classified as mandatory spending programs and therefore do not require annual discretionary appropriations in order to operate. The CCC instead borrows from the U.S. Treasury to finance its programs consistent with its permanent, indefinite authority to borrow up to $30 billion. Congress replenishes the CCC borrowing authority by appropriating funding to cover the CCC's net realized losses.\nTypically, Congress passes laws, such as omnibus farm bills, that specifically direct USDA on how to administer CCC activities and in what amounts to fund them. The underlying authorization for the CCC, however, also provides the Secretary with general powers to take certain actions in support of U.S. agriculture at the discretion of the Secretary. This discretionary use has historically been somewhat intermittent and limited in its scale, but it is the basis of the MFP and ATP announced by the Administration.\nUSDA also has discretionary authority to purchase U.S. agricultural commodities under a provision known as Section 32. The name refers to its authorization in Section 32 of the act of August 24, 1935 (P.L. 74-320; 7 U.S.C. 612c), as amended. Most of Section 32's mandatory funding is transferred to the USDA's child nutrition account, but the Secretary has broad discretion in how to spend the remaining unallocated funding—some of which is used to purchase agricultural commodities. The premise is that removing products from normal marketing channels helps to reduce supply and thereby increase prices and farm income. Purchased commodities are diverted to domestic food assistance programs as discussed below (see \" Food Purchase and Distribution Program \").\nThe Administration's trade aid announcement does not specify whether the CCC or Section 32 authority is being used to make the purchases under the announced Food Purchase and Distribution Program. However, the scale of the $1.2 billion program indicates that the CCC is most likely the source since the typical annual amount of funding available in Section 32 for purchases is rarely more than half of this amount. Whether from the CCC or Section 32, the Administration's purchases appear to use distribution channels similar to those under Section 32.", "On August 27, 2018, Secretary Perdue announced the first round of trade assistance. As part of the August 27 announcement, Secretary Perdue provided details on each of the three trade aid package components, including an initial tranche of $6.1 billion in designated outlays out of a potential $12 billion in total program spending. The MFP was to provide initial estimated direct payments of $4.7 billion to qualifying agricultural producers. A Food Purchase and Distribution Program is to undertake $1.2 billion in government purchases of excess food supplies. The ATP program, funded with an additional $200 million, is to help finance foreign market development for affected agricultural products. On December 17, 2018, Secretary Perdue revised the first round of MFP outlays upward slightly to $4.8 billion, and announced an equivalent $4.8 billion in potential second-round outlays.", "The MFP provides direct financial assistance to producers of commodities that are significantly impacted by actions of foreign governments resulting in the loss of traditional exports. USDA initially determined that qualifying commodities include corn, upland cotton, extra-long-staple cotton, sorghum, soybeans, wheat, dairy, and hogs. On September 21, 2018, USDA announced that fresh sweet cherries and shelled almonds are also eligible for MFP payments.\nUSDA's Farm Service Agency (FSA) is to administer the MFP by providing payments in two potential tranches. However, producers need only sign up once for the MFP to be eligible for first and second payments. Under the sign-up period, producers can submit MFP applications beginning on the following dates: September 4, 2018, for producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs; and September 24, 2018, for producers of shelled almonds and fresh sweet cherries. Eligible producers should apply after their harvest is complete. Initially, producers were given a deadline of January 15, 2019, to complete an application. However, USDA extended the deadline to February 14 due to a partial shutdown of the federal government. The current deadline for producers to certify their 2018 production is May 1, 2019.\nUSDA used 2017 production data to estimate that approximately $9.6 billion would be distributed in MFP payments for corn, cotton, sorghum, soybeans, wheat, dairy, hogs, fresh sweet cherries, and shelled almonds, with over three-fourths ($7.3 billion) of MFP payments provided to soybean producers ( Table 1 ).", "U.S. producers of corn, cotton, sorghum, soybeans, wheat, dairy, hogs, fresh sweet cherries, and shelled almonds are eligible for MFP payments at this time. Eligible applicants must\nhave an ownership interest in the commodity and be actively engaged; have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000 per year; comply with the provisions of the \"Highly Erodible Land and Wetland Conservation\" regulations, often called the conservation compliance provisions.", "USDA determined MFP payments based on its estimated \"direct trade damage\"—that is, the difference in expected trade value for each affected commodity with and without the retaliatory tariffs ( Table A-3 ). The estimated \"trade damage\" for each affected commodity was then divided by the crop's production in 2017 to derive a per-unit payment rate. Indirect effects—such as any decline in market prices and resultant \"lost value\" for many of the affected commodities—are not included in the payment calculation (see Appendix B ).\nUSDA's trade-aid package is thus linking MFP commodity payments only to the trade loss associated with each identified MFP commodity. Neither final trade effect, with or without retaliatory tariffs, is observable because much of the affected agricultural production had yet to be harvested and sold at the time the payment rates were calculated, and markets had yet to fully adjust to whatever new trade patterns would emerge from the trade dispute. As a result, USDA estimated both export values (with and without retaliatory tariffs) using a global trade model that took into account the availability of substitute supplies from export competitors, and the availability of demand for U.S. agricultural exports from alternate importers.", "MFP payments are tied directly to a producer's actual level of production of eligible commodities in 2018. A producer's total potential MFP payment for an eligible commodity equals the announced payment rate per unit (see column two of Table 1 ) times the harvested (and certified) production during 2018 or in the case of hogs, the inventory during the period of July 15 to August 15, 2018. During the first payment period (announced by USDA on September 27), MFP payments were set equal to the announced MFP payment rate times 50% of a producer's harvested (and certified) production. The second payment rate (announced on December 17) applied to the remaining 50% of the producer's production.\nThe MFP is separate from and in addition to the current safety net support provided by the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) support programs or crop insurance coverage where revenue insurance protects against low prices, low yields, or a combination of both. Furthermore, by coupling the payments directly to production, those regions of the country where drought or other yield-reducing factors have negatively impacted production during 2018 may receive less aid through MFP than other regions.\nAccording to USDA, as of February 7, 2019, $6.4 billion in payments have been made to farmers. FSA offices closed on December 28, 2018, due to a lack of funding under the government shutdown. Producers who have not yet applied for payments or certified their 2018 production must wait for FSA offices to reopen before receiving MFP payments. However, USDA has said that producers that have already applied and certified their 2018 production will continue to receive MFP payments during the government shutdown.", "USDA announced that MFP payments are capped on a per-person or per-legal-entity basis under three separate payment limits: a combined $125,000 for eligible crops (corn, cotton, sorghum, soybeans, and wheat), a combined $125,000 for livestock (dairy production and hogs), and a combined $125,000 for eligible specialty crops (fresh sweet cherries and shelled almonds). Furthermore, MFP payments do not count against other 2014 farm bill payment limitations. There are no criteria in place to calculate whether losses covered under revenue support programs (e.g., ARC and PLC) of the 2014 farm bill might be duplicated by MFP. As a result, the same program acres that are eligible for ARC or PLC payments may be eligible for MFP payments.", "Due to its potential price tag ($12 billion) and the coupled nature of the MFP payments, there is considerable interest from policymakers and market observers about whether these payments will be fully compliant with World Trade Organization (WTO) commitments. It would appear that, if the United States restricts MFP payments to $12 billion or less, and its other amber box payments adhere to the recent annual average of $4.9 billion since 2010, then total U.S. amber box payments would be below its $19.1 billion limit on trade-distorting farm subsidies at the WTO. However, several economists have suggested there is considerable uncertainty in how much the eventual MFP payments will be. For example, Darci Vetter, former chief U.S. agricultural negotiator at the Office of the U.S. Trade Representative, said that current low agricultural commodity prices cause her to worry that billions of dollars in \"additional payments will put us over our [amber box] $19 billion cap,\" exposing the United States to a potential legal challenge. Joe Glauber, a former USDA chief economist, stated, \"I would be very hesitant to say categorically, 'No, we're not going to hit our $19.1 [billion ceiling].'\"", "While soybean growers and most farm-advocacy groups have generally been supportive of the payments, some commodity groups—most notably associations representing corn, wheat, and milk—contend that the MFP payments are insufficient to fully compensate their industries (see Table A-4 and Appendix B for a comparison of \"trade loss\" and \"market loss\"). The National Corn Growers Association claims that recent trade disputes have lowered corn prices by $0.44/bu. for a loss of $6.3 billion on the projected 2018 harvest. Similarly, the National Association of Wheat Growers estimates that a $0.75/bu. price decrease will result in nearly $2.5 billion in lost value, while the National Milk Producers Federation calculates that milk prices are now estimated to be $1.10/cwt. lower than just prior to the trade retaliation, causing over $1.2 billion in losses based on milk futures prices.\nMany specialty crop groups similarly contend that their interests are not being fully compensated for tariff-related export losses by the USDA trade aid programs. For example, a recent study suggests that, in California alone, specialty crops may suffer trade-related losses of over $3.3 billion this year.", "The Administration is allocating about $1.2 billion of its trade aid package to purchasing various agricultural commodities and distributing them through domestic nutrition assistance programs. USDA typically purchases agricultural commodities for domestic distribution in two ways: (1) \"entitlement purchases\" for the mandated, preplanned needs of a feeding program; and (2) \"contingency purchases\" (also called \"bonus buys\") that are usually triggered as a surplus removal mechanism to raise market prices of a commodity without displacing normal demand.\nThe new $1.2 billion of purchases is under the second category of contingency purchases. Contingency purchases are statutorily authorized under the Secretary's discretion to support agriculture by making purchases under the CCC or Section 32 as discussed above. These are mandatory funds and do not need to be appropriated.\nWhen USDA purchases commodities, especially for distribution to nutrition assistance programs, the Agricultural Marketing Service (AMS) announces its purchasing intentions with product specifications. Vendors who are approved to sell to USDA may submit offers. The purchased products would be distributed through regular USDA nutrition assistance channels that provide in-kind assistance, such as food banks participating in the Emergency Food Assistance Program, the Commodity Supplemental Food Program, child nutrition programs such as the National School Lunch Program, and the Food Distribution Program on Indian Reservations. However, not all of these programs have the authority to accept contingency/bonus purchases.\nThe Administration's August 27 announcement listed 29 commodities targeted for purchases totaling $1.2 billion ( Table A-1 ). It also mentions two additional commodities (sweet cherries and almonds) that total $175 million, with program details to be determined ( Table A-2 ). The announced purchase values were set for each affected commodity using the same gross trade damage formula that was used to calculate the MFP per-unit payment rate described earlier.\nThe largest purchases that were announced include pork ($559 million), apples ($93 million), dairy ($85 million), and pistachios ($85 million). USDA said that the breadth of commodities and scale of purchases was based on economic analyses of the effect of tariffs. Purchasing orders and distribution activities are to be adjusted based on the demand by the recipient food assistance programs geographically. As of December 17, 2018, USDA had procured some portion of 16 of the 29 commodities included in the program, totaling more than 4,500 truckloads of food. USDA's AMS will continue purchasing commodities for delivery throughout 2019.\nIn FY2017, the AMS purchased $2.2 billion of commodities for distribution for domestic nutrition assistance. Of this total, $735 million was from Section 32 ($270 million in contingency purchases that are most similar to those under the trade aid package and $465 million in entitlement purchases), and $1.5 billion was entitlement purchases from the USDA's Food and Nutrition Service budget. No purchases were made with CCC funds. Thus, the new program of contingency purchases is several times larger than a typical annual amount and a relatively large increase in the amount distributed through nutrition programs.", "The third and smallest element of the trade aid package is the ATP program. The Administration is allocating $200 million of the trade aid package to boost trade promotion efforts of USDA's Foreign Agricultural Service (FAS). The program is to operate in a manner similar to FAS's Market Access Program (MAP) and Foreign Market Development Program (FMDP). These funds are to provide cost-share assistance to eligible U.S. agricultural organizations to promote U.S. food and agricultural goods overseas and develop new markets to help offset the adverse effects of the retaliatory tariffs. The money—which would nearly double the amounts made available annually for the MAP and FMDP trade promotion programs for one year—can be used for such activities as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance. Further, ATP money is not limited to certain commodities and is to be available to all sectors of agriculture.\nWhile the $200 million for ATP is considerably less than the other programs in the trade aid package, it is a notable increase for USDA's trade promotion programs, which are authorized at $234 million annually. Though all sectors of agriculture can apply for ATP funding through eligible U.S. organizations, it is unclear whether USDA intends to give preference to certain commodities—such as those that are not eligible for other programs under the trade aid package or those most impacted by the tariffs.\nThe application period for ATP closed in November 2018 with more than $600 million in requested activities from more than 70 organizations. On January 31, 2019, USDA's FAS announced the full $200 million in ATP funding awards.", "The broad discretionary authority granted to the Secretary under the CCC Charter Act to implement the trade aid package also allows the Secretary to determine how the aid is to be calculated and distributed. Using this authority is not without precedent, but the scope and scale of its use for the trade aid package has increased congressional and public interest. USDA has declared this trade aid package to be a temporary, one-time response to foreign tariffs imposed on selected U.S. commodities.\nMost farm commodity and advocacy groups have been supportive of the trade aid package even as they have called for solutions that restore export activity.\nHowever, some stakeholders have begun to question the equity of the distribution of MFP payments due to difficulties in isolating specific market effects and the initial lack of transparency around the formulas for determining MFP payment rates. Now that the formulas are public, several commodity groups question the rationale for determining MFP payments based on \"trade damage\" rather than the broader \"market loss\" measure.\nSome trade economists and market watchers have suggested that the potential effects of the trade aid package and the imposition of tariffs and retaliatory tariffs could be longer lasting because they have created uncertainty about U.S. trade policy behavior and have called into question U.S. reliability as a trading partner. Further, the use of CCC authority to mitigate tariff-related losses may establish a precedent for future situations.\nAppendix A. Food Purchases in the Trade Aid Package\nAppendix B. Trade Loss versus Opportunity Cost\nUSDA has elected to base MFP payments strictly on estimated trade loss. In contrast, several commodity groups have calculated the \"lost market value\" and view it as a better measure of the economic damage from the retaliatory tariffs (see \" Industry Response to MFP Payment Allocation \"). These two \"loss\" measures are described here.\nTrade Loss\nTrade loss is the value of lost export sales due to a change in foreign demand ( Table A-3 ). With respect to retaliatory tariffs, it is the difference in U.S. agricultural exports with and without the tariffs. It also appears in USDA export forecasts. For example, in May 2018, USDA forecast U.S. agricultural export sales to China for FY2018 of $21.6 billion; by August 2018, USDA had revised its forecast down to $19 billion and initially projected agricultural export sales to China in FY2019 of only $12 billion. Thus, from May to August the U.S. agricultural export outlook to China had declined by $2 billion, while the FY2019 forecast had fallen by as much as $9 billion.\nLost Market Value (or the Opportunity Cost of Missed Sales)\nLost market value describes the opportunity cost of missed sales associated with a drop in market prices. For example, if soybean prices were $10.00 per bushel in March and $8.00 per bushel in October, the opportunity cost of not selling in March (whether from on-farm stocks or by forward contracting the crop in the field) but instead waiting to sell after harvest in October would be $2.00 per bushel. All physical quantities of a commodity available on the farm—including commodities in storage as well as in the field—are potentially subject to a missed sales opportunity. Furthermore, until the producer actually sells the commodity, the realized market value and true opportunity cost remain unknown.\nWhat Is the Correct Cost?\nIf a trade dispute contributes to a drop in the market price of a commodity, then the associated \"lost market value\" would affect all quantities of the affected commodity, whether exported or used domestically. This appears to be the type of \"loss\" being measured by most U.S. commodity groups. However, the retaliatory tariffs are only one of a number of factors that influence market prices. In particular, the outlook for record U.S. soybean and near-record corn harvests in 2018 has likely had an important effect on pressuring market prices lower during the May to September period. This production effect should be excluded from any estimate of trade-based market loss.\nChanges in USDA's monthly price forecasts from May to September may provide an upper-bound estimate of the trade impacts ( Table A-4 ), since this period coincides with the escalating trade conflicts when the retaliatory tariffs were applied. However, they include the production effect and thus likely overstate any trade impact. According to USDA, during the May-September period, farm prices for MFP commodities declined 18% for soybeans, 8% for sorghum, and 8% for corn but rose 2% for wheat and 15% for cotton. At first glance, these price changes seem out of sync with the MFP payment rates. Sorghum could receive a payment rate that is nearly three times as large as its estimated price decline from May to September. In contrast, corn—which has experienced a price decline identical to sorghum—could receive a payment rate that amounts to 3% of the price decline that corn prices experienced over this same period.\nHowever, given the number of factors influencing market prices over this period, it may not be possible to establish with confidence what market prices would have been in the absence of the retaliatory tariffs. Any viable estimate would have to be generated from a global economic model featuring all major agricultural commodities that compete for land and other inputs in production; may substitute for each other in alternative uses; and captures the interactions of all relevant market factors such as policy, technology, and expected prices, production, and demand. For example, wheat and cotton are to receive per-unit MFP payment rates while experiencing an increase in farm prices during the May-September period. However, 2018 has been a year of poor international wheat harvests, and it could be that wheat prices might have moved to much higher levels in the absence of retaliatory tariffs." ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 3, 3, 3, 3, 3, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "h0_title h2_title h1_title", "h2_title h1_full", "h1_full", "h2_full", "", "", "", "", "", "h0_full", "h2_full" ] }	{ "question": [ "How has USDA helped farmers with trade damages?", "What assistance did USDA provide?", "What is the goal of this aid package?", "What does the aid package consist of?", "How will the MFP be administered?", "How can producers become eligible for the payments?", "How can producers sign up?", "What eligibility restrictions exist for producers?", "What is the optimal time for producers to apply?", "To what extent has the USDA used discretionary authority to make direct payments?", "To what extent does the scale of the trade aid package have precedent?", "What questions have been raised regarding equitable treatment for commodities?", "How did the USDA determine MFP payments?", "How were indirect effects included in pricing calculations?" ], "summary": [ "On July 24, 2018, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would be taking several temporary actions to assist farmers in response to trade damage from what the Administration has characterized as \"unjustified retaliation.\"", "Specifically, the Secretary said that USDA would authorize up to $12 billion in financial assistance—referred to as a trade aid package—for certain agricultural commodities using Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. 714c).", "USDA intends for the trade aid package to provide short-term assistance in response to the ongoing trade disputes.", "The aid package includes (1) a Market Facilitation Program (MFP) of direct payments (valued at up to $10 billion) to producers of soybeans, corn, cotton, sorghum, wheat, hogs, and dairy who are most affected by the trade retaliation (sweet cherries and almonds were added to this list in September); (2) a Food Purchase and Distribution Program to partially offset lost export sales of affected commodities ($1.2 billion); and (3) an Agricultural Trade Promotion (ATP) Program to expand foreign markets ($200 million).", "USDA's Farm Service Agency will administer the MFP by providing payments in two potential tranches: a first round announced on August 27, 2018, initially valued at $4.7 billion; and an equivalent-valued second round announced on December 17, 2018.", "However, producers need only sign up once for the MFP to be eligible for first and second payments.", "The sign-up period for soybeans, corn, cotton, sorghum, wheat, hogs, and dairy started September 4, 2018. The sign-up period for fresh sweet cherries and shelled almonds started on September 24.", "To be eligible, a producer must have an ownership share in the commodity, be actively engaged in farming, and be in compliance with adjusted gross income restrictions and conservation provisions.", "Eligible producers should apply after their harvest is complete.", "USDA's use of its discretionary authority under the CCC Charter Act to make direct payments without further congressional action has historically been somewhat intermittent and limited in its scale.", "While the use of this authority is not without precedent, the scope and scale of this trade aid package has increased congressional and public interest.", "Furthermore, the significant variation in the announced MFP payment rates for affected commodities has elicited questions about equitable treatment among affected commodities.", "On September 13, USDA released a description of its MFP payment methodology, which is based strictly on the estimated direct trade \"damage\"—that is, export losses resulting from retaliatory tariffs.", "Indirect effects—such as the decline in market prices and resultant \"lost value\" for many of the affected commodities—were not included in the payment calculation." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, 1, 1, 1, -1, 0, 0, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 6, 6, 6, 6, 6 ] }
CRS_R40803	{ "title": [ "", "Introduction", "Background", "Process Patents", "Case Law Concerning Patentable Subject Matter", "Bilski v. Kappos", "The Federal Circuit's Opinion", "The Supreme Court's Opinion", "The Opinion of the Court", "Bilski's Process Claims Are Unpatentable", "Machine-or-Transformation Test is Not the Sole Test for the § 101 Analysis", "No Categorical Exclusion for Business Method Patents", "Justice Kennedy's Plurality Opinion", "Justice Stevens' Concurrence", "Justice Breyer's Concurrence", "Reactions to Bilski", "Bilski's Potential Impact", "Conclusion" ], "paragraphs": [ "", "This report provides an overview of Supreme Court and Federal Circuit cases concerning patentable subject matter, including the Court's recent June 2010 decision, Bilski v. Kappos .", "The U.S. Patent and Trademark Office (PTO) issues a patent to an inventor after PTO examiners approve the submitted patent application for an allegedly new invention. An application for a patent consists of two primary parts: (1) a \"specification,\" which is a written description of the invention enabling those skilled in the art to practice the invention, and (2) one or more claims that define the scope of the subject matter which the applicant regards as his invention. Therefore, these claims define the scope of the patentee's rights under the patent.\nBefore a patent may be granted, the PTO examiners must find that the new invention satisfies several substantive requirements that are set forth in the Patent Act. For example, one of the statutory requirements for patentability of an invention is \"novelty.\" For an invention to be considered \"novel,\" the subject matter must be different than, and not be wholly \"anticipated\" by, the so-called \"prior art,\" or public domain materials such as publications and other patents. Another statutory requirement is that the subject matter of an alleged invention must be \"nonobvious\" at the time of its creation. A patent claim is invalid if \"the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.\" Finally, the invention must also be \"useful,\" which means that the invention provides a \"significant and presently available,\" \"well-defined and particular benefit to the public.\"\nAccording to section 101 of the Patent Act, one who \"invents or discovers any new and useful process, machine, manufacture, or any composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.\" Even if an invention satisfies the novelty, nonobviousness, and utility requirements described above, it may not qualify for patent protection if it does not fall within one of the four statutory categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter. Indeed, whether the discovery is patentable subject matter is a threshold inquiry that \"must precede the determination of whether that discovery is, in fact, new or obvious.\" The statutory scope of patentable subject matter under § 101 of the Patent Act is quite expansive—the U.S. Supreme Court once observed that the legislative history describing the intent of § 101 was to make patent protection available to \"anything under the sun that is made by man.\"\nNotwithstanding the breadth of patentable subject matter, the Supreme Court has articulated certain limits to § 101, stating that \"laws of nature, natural phenomena, and abstract ideas\" may not be patented. The Court has elaborated on this restriction in several cases, including the following explanation:\n[A] new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc 2 ; nor could Newton have patented the law of gravity. Such discoveries are \"manifestations of ... nature, free to all men and reserved exclusively to none.\"", "Process patents (also called method patents) involve an act, or series of steps, that may be performed to achieve a given result. They are often classified as either a \"method of using\" or \"method of making\" a particular article. The Patent Act defines a \"process\" to mean a \"process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.\" However, the U.S. Court of Appeals for the Federal Circuit, which has exclusive appellate jurisdiction in patent cases, has noted that this statutory definition is not particularly illuminating \"given that the definition itself uses the term 'process.'\" It has thus been up to the courts to interpret the scope of patentable processes under § 101 of the Patent Act.", "In the 1972 case Gottschalk v. Benson , the Supreme Court held that the discovery of a mathematical formula, though it is novel and useful, may not be patented. The Court rejected patent claims for an algorithm used to convert binary code decimal numbers to equivalent pure binary numbers (in order to program a computer), because such claims \"were not limited to any particular art or technology, to any particular apparatus or machinery, or to any particular end use.\" A patent on such claims, according to the Court, \"would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.\" The Benson Court then pronounced that \"[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.\"\nSix years after Benson , the Supreme Court in Parker v. Flook recognized that \"[t]he line between a patentable 'process' and an unpatentable 'principle' is not always clear.\" The Flook Court rejected patent claims that described a method for computing an \"alarm limit,\" which is a number that may signal the presence of an abnormal condition in temperature, pressure, and flow rates during catalytic conversion processes. The Court criticized the patent claims, as follows:\nThe patent application does not purport to explain how to select the appropriate margin of safety, the weighting factor, or any of the other variables. Nor does it purport to contain any disclosure relating to the chemical processes at work, the monitoring of process variables, or the means of setting off an alarm or adjusting an alarm system. All that it provides is a formula for computing an updated alarm limit.\nThe Flook Court then concluded that \"a claim for an improved method of calculation, even when tied to a specific end use, is unpatentable subject matter under § 101.\"\nIn 1980, the Supreme Court in Diamond v. Chakrabarty held that § 101 of the Patent Act allowed the patenting of genetically altered micro-organisms. The case involved a human-made, genetically engineered bacterium that is capable of breaking down multiple components of crude oil, an invention that would help in the control and treatment of oil spills. The Chakrabarty Court observed that Congress, in drafting § 101, used \"expansive terms as 'manufacture' and 'composition of matter,' modified by the comprehensive 'any',\" thus reflecting Congress's intent to permit a broad range of patentable subject matter. The Court found that the bacterium sought to be patented was a nonnaturally occurring manufacture or composition of matter; thus, because the discovery was not the result of \"nature's handiwork,\" it could be patented.\nA year after Chakrabarty, the Supreme Court once again had an opportunity to examine statutory subject matter under § 101 in Diamond v. Diehr. The case involved a patent application that sought to claim a process for producing cured synthetic rubber products. The Diehr Court upheld the process patent, stating:\n[A] physical and chemical process for molding precision synthetic rubber products falls within the § 101 categories of possibly patentable subject matter. That respondents' claims involve the transformation of an article, in this case raw, uncured synthetic rubber, into a different state or thing cannot be disputed. The respondents' claims describe in detail a step-by-step method for accomplishing such, beginning with the loading of a mold with raw, uncured rubber and ending with the eventual opening of the press at the conclusion of the cure. Industrial processes such as this are the types which have historically been eligible to receive the protection of our patent laws.\nThe fact that several of the process's steps involved the use of a mathematical formula and a programmed digital computer did not pose a barrier to patent eligibility. The Diehr Court explained:\n[T]he respondents here do not seek to patent a mathematical formula. Instead, they seek patent protection for a process of curing synthetic rubber. Their process admittedly employs a well-known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process.\nDiehr was decided in 1981 and was the last case in which the Supreme Court issued an opinion concerning § 101 of the Patent Act.\nSince Diehr, the Federal Circuit Court of Appeals has decided several cases concerning patent-eligible subject matter. In a 1994 en banc decision, In re Alappat, the Federal Circuit considered a means for creating a smooth waveform display in a digital oscilloscope. In upholding the patentability of computer programs, the Federal Circuit stated:\nAlthough many, or arguably even all, of the means elements recited in claim 15 represent circuitry elements that perform mathematical calculations, which is essentially true of all digital electrical circuits, the claimed invention as a whole is directed to a combination of interrelated elements which combine to form a machine for converting discrete waveform data samples into anti-aliased pixel illumination intensity data to be displayed on a display means. This is not a disembodied mathematical concept which may be characterized as an \"abstract idea,\" but rather a specific machine to produce a useful, concrete, and tangible result.\nIn 1998, the Federal Circuit issued another decision regarding patent-eligibility of process claims, State Street Bank & Trust Co. v. Signature Financial Group. This decision is widely credited with opening the doors to the allowance of patents on methods of doing or conducting business in a variety of fields, including management, finance, legal, and e-commerce. State Street Bank involved a data processing system consisting of software for managing a stock mutual fund. The system allowed individual mutual funds (\"Spokes\") to pool their assets in an investment portfolio (\"Hub\") organized as a partnership. The Federal Circuit found the system patentable:\nToday, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces \"a useful, concrete and tangible result\"—a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.\nIn response to the State Street Bank decision, Congress passed the American Inventors Protection Act of 1999, which, among other things, allowed an earlier inventor of a \"method of doing or conducting business\" that was maintained as a trade secret, to assert a defense to patent infringement in the event that the business method was later patented by another. The legislative concern was that because State Street Bank would allow business methods to be patented, companies and individuals who had maintained business methods as trade secrets may be potentially subject to liability for patent infringement. This defense to patent infringement is known as \"prior user rights.\"\nThe Supreme Court had an opportunity to revisit § 101 subject matter patentability in the 2006 case, Laboratory Corporation v. Metabolite Labs . The patent at issue in the case involves a way of detecting a deficiency in two B vitamins, cobalamin and folate, in the human body. Low levels of these vitamins can cause serious illnesses in humans. The patented method requires two separate steps: first, measuring a body fluid for elevated levels of a particular amino acid (homocysteine), and second, noticing that an elevated level of this amino acid correlates with a deficiency in the two B vitamins. The question presented on which the Supreme Court granted certiorari in the case was: \"Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to 'correlat[e]' test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.\"\nHowever, after hearing oral argument in the case, the Court dismissed Laboratory Corporation , stating only that the writ of certiorari was improvidently granted. Three justices dissented to the dismissal of the writ. Justice Stephen Breyer, writing for himself, Justice John Paul Stevens, and Justice David Souter, opined that \"those who engage in medical research, who practice medicine, and who as patients depend upon proper health care, might well benefit from this Court's authoritative answer.\" Justice Breyer explained that he would have held the patent invalid because \"[t]here can be little doubt that the correlation between homocysteine and vitamin deficiency ... is a 'natural phenomenon'\" that is not patentable. Furthermore, Justice Breyer offered insight into his views regarding the legal correctness of the Federal Circuit's State Street Bank decision. Justice Breyer expressly criticized the State Street Bank ruling that relied on the \"useful, concrete and tangible result\" test first articulated by In re Alappat :\nNeither does the Federal Circuit's decision in State Street Bank help respondents. That case does say that a process is patentable if it produces a \"'useful, concrete and tangible result.\" ... But this Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary.\nIn a 2006 opinion involving a business method patent, eBay, Inc. v. MercExchange, Justice Kennedy wrote a concurrence, joined by Justices Stevens, Souter, and Breyer, in which he criticized the \"potential vagueness and suspect validity\" of \"the burgeoning number of patents over business methods.\"", "The patent application at issue in Bilski v. Kappos contained claims that relate to a method of hedging risk in the commodities trading field. Specifically, the patent application claimed the following method:\nA method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:\n(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;\n(b) identifying market participants for said commodity having a counter-risk position to said consumers; and\n(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.\nThe PTO examiner rejected the application on the basis that the claims were not directed to patent-eligible subject matter under § 101 of the Patent Act, a determination that was upheld by the Board of Patent Appeals and Interferences (\"Board\"). The Board held that the transformation of \"non-physical financial risks and legal liabilities of the commodity provider, the consumer, and the market participants\" is not patentable subject matter. In addition, the Board found that the claimed process did not produce a \"useful, concrete and tangible result.\"\nThe applicants, Bernard L. Bilski and Rand A. Warsaw, appealed the final decision of the Board to the Federal Circuit. Before a panel of the Federal Circuit was able to rule on the appeal, the Federal Circuit sua sponte ordered en banc review of the case.", "On October 30, 2008, the Federal Circuit issued an opinion in the case, in which it affirmed the Board's decision. More importantly, the appellate court's decision clarified the standards concerning patentability of process claims. In so doing, the Federal Circuit expressly overruled In re Alappat, State Street Bank & Trust Co. v. Signature Financial Group, and its other prior decisions that relied on the \"useful, concrete and tangible result\" test for process patent eligibility. The Federal Circuit stated:\nTo be sure, a process tied to a particular machine, or transforming or reducing a particular article into a different state or thing, will generally produce a \"concrete\" and \"tangible\" result as those terms were used in our prior decisions. But while looking for \"a useful, concrete and tangible result\" may in many instances provide useful indications of whether a claim is drawn to a fundamental principle or a practical application of such a principle, that inquiry is insufficient to determine whether a claim is patent-eligible under § 101. ... Therefore, we ... conclude that the \"useful, concrete and tangible result\" inquiry is inadequate.\nInstead, the Federal Circuit announced a different test that it believed is drawn directly from Supreme Court precedent. The appellate court examined the last Supreme Court opinion concerning § 101, Diehr, and found what it claimed were several instructive passages. First, the court observed that the Diehr Court had drawn a distinction between fundamental principles (unpatentable) and applications of a law of nature or mathematical formulas (may be patentable). Furthermore, according to the Federal Circuit, the Diehr Court would deny patent protection for any claims that pre-empted substantially all uses of a fundamental principle, while it would allow claims that only foreclose others from using a particular application of that fundamental principle.\nThe Federal Circuit asserted that the Supreme Court:\nhas enunciated a definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself. A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.\nThe appellate court derived this two-branched \"machine-or-transformation\" test from the Benson opinion, which had stated: \"Transformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines.\" Furthermore, the Federal Circuit asserted that the Diehr Court had reaffirmed this test, and rejected Bilski's argument that the Supreme Court did not intend the \"machine-or-transformation\" test to be the sole and exclusive governing test for determining patent eligibility for a process under § 101:\nWe believe that the Supreme Court spoke of the machine-or-transformation test as the \"clue\" to patent-eligibility because the test is the tool used to determine whether a claim is drawn to a statutory \"process\"—the statute does not itself explicitly mention machine implementation or transformation. We do not consider the word \"clue\" to indicate that the machine-or-implementation test is optional or merely advisory. Rather, the Court described it as the clue, not merely \"a\" clue.\nThe Federal Circuit noted that \"an applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article.\" Because Bilski's claims did not involve a specific machine or apparatus, the Federal Circuit expressly left \"to future cases the elaboration of the precise contours of [the machine implementation part of the test], as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.\" However, the Bilski opinion set forth several instructive principles concerning the \"machine-or-transformation\" test:\nThe use of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility. The involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity. A claimed process is patent-eligible if it transforms an article into a different state or thing. This transformation must be central to the purpose of the claimed process. The transformation may involve physical articles or electronic signals and electronically manipulated data if such data represents physical and tangible objects or the data is transformed into a visual depiction. However, manipulation of legal obligations, organizational relationships, and business risks are \"abstract constructs\" that fail the test because they are not physical objects or substances. The addition of a data-gathering step to an algorithm is insufficient to convert that algorithm into a patent-eligible process. At least in most cases, gathering data would not constitute a transformation of any article.\nIn applying the \"machine-or-transformation\" test to the facts in Bilski, the Federal Circuit held that Bilski's process claim failed to satisfy the new legal standard:\nWe hold that the Applicants' process as claimed does not transform any article to a different state or thing. Purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances. ... Given its admitted failure to meet the machine implementation part of the test as well, the claim entirely fails the machine-or-transformation test and is not drawn to patent-eligible subject matter.\nNevertheless, the Federal Circuit acknowledged that \"the Supreme Court may ultimately decide to alter or perhaps even set aside this test to accommodate emerging technologies,\" such as the widespread use of computers and the Internet, that may present challenges to the \"machine-or-transformation\" test. On June 1, 2009, the Supreme Court granted certiorari in Bilski to consider two questions:\nWhether the Federal Circuit erred by holding that a \"process\" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (\"machine-or-transformation\" test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for \"any\" new and useful process beyond excluding patents for \"laws of nature, physical phenomena, and abstract ideas.\" Whether the Federal Circuit's \"machine-or-transformation\" test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear congressional intent that patents protect \"method[s] of doing or conducting business.\" 35 U.S.C. § 273.", "All nine members of the Supreme Court were unanimous in affirming the Federal Circuit's judgment that Bilski's claimed process was unpatentable, but they disagreed about the legal reasoning behind their decision. Justice Kennedy wrote the opinion of the Court, which was joined in full by Chief Justice Roberts and Justices Thomas and Alito. Justice Scalia joined most of Kennedy's opinion, but he did not support two subparts of it. Therefore, Kennedy's opinion, with the exception of two subparts, constitutes the \"majority\" opinion of the Court in Bilski . Justice Stevens filed an opinion concurring in the judgment, but disagreeing with the approach taken by the Court in deciding the case. Justices Ginsburg, Breyer, and Sotomayor joined the Stevens opinion. Justice Breyer wrote a separate concurrence that identified what he believed were four points of agreement among the members of the Court on the fundamental issues of patent law raised by this case, in an attempt to harmonize the opinion of the Court and Justice Stevens' opinion. Justice Scalia joined part of Breyer's opinion.", "At the outset, Justice Kennedy identified three potential bases upon which Bilski's patent application could be rejected: (1) it is not tied to a machine and does not transform an article; (2) it involves a method of conducting business; and (3) it is an abstract idea.", "Justice Kennedy first addressed the \"abstract idea\" test for assessing whether a claimed process is unpatentable. He noted that the Court's precedents provide three specific exceptions to subject matter that may be patented under the Patent Act: \"laws of nature, physical phenomena, and abstract ideas.\" He explained that \"[w]hile these exceptions are not required by the statutory text, they are consistent with the notion that a patentable process must be 'new and useful.'\" He further argued that \"these exceptions have defined the reach of the statute as a matter of statutory stare decisis going back 150 years.\"\nRelying on the Court's earlier decisions in Benson, Flook, and Diehr , all members of the Court agreed that Bilski's patent application is not a patentable \"process\" under § 101 because it attempts to patent abstract ideas:\nThe concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook. Allowing petitioners to patent risk hedging would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.\nThe remainder of the majority opinion explored the other two approaches of evaluating the patentability of processes under § 101: the Federal Circuit's \"machine-or-transformation\" test, and the argument that \"business methods\" are categorically excluded from patent protection.", "Turning to the \"machine-or-transformation\" test, Justice Kennedy observed that the Supreme Court has \"more than once cautioned that courts should not read into the patent laws limitations and conditions which the legislature has not expressed.\" He then emphasized one basic principle of statutory construction that \"[u]nless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.\" He acknowledged, however, the one deviation from the \"ordinary meaning\" rule as it applies to the Patent Act—the \"well-established\" exceptions for laws of nature, physical phenomena, and abstract ideas that the Supreme Court has imposed on § 101, which are found nowhere in the statutory text. Nevertheless, the existence of these particular judicially crafted exceptions does not mean that federal courts have \" carte blanche to impose other limitations that are inconsistent with the text and the [Patent Act]'s purpose and design.\"\nThe Court held that the Federal Circuit, in adopting the \"machine-or-transformation\" test as the sole test for what constitutes a patentable \"process,\" violated the \"ordinary meaning\" rule of statutory construction:\nSection 100(b) provides that \"[t]he term 'process' means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.\" The Court is unaware of any ordinary, contemporary, common meaning of the definitional terms \"process, art or method\" that would require these terms to be tied to a machine or to transform an article.\nThe Court determined that the Federal Circuit was erroneous in concluding that the Supreme Court has endorsed the \"machine-or-transformation\" test as the exclusive test for process patent eligibility under § 101. However, the Court recognized that its precedents have found that the \"machine-or-transformation\" test is \"a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101.\" Thus, the Court did not invalidate the \"machine-or-transformation\" test, but rather reversed the Federal Circuit's requirement that the test be the only standard by which courts may examine a process for patent eligibility under § 101.", "Justice Kennedy next addressed the question of whether business methods are categorically excluded from the scope of subject matter eligibility under § 101. Applying the ordinary meaning rule, he observed that \"the term 'method,' which is within § 100(b)'s definition of 'process,' at least as a textual matter … may include at least some methods of doing business.\" He further explained that \"[t]he Court is unaware of any argument that the ordinary, contemporary, common meaning of \"method\" excludes business methods.\" In addition to this conclusion based upon the ordinary meaning rule, Justice Kennedy observed that \"federal law explicitly contemplates the existence of at least some business method patents,\" citing the American Inventors Protection Act of 1999 that had added § 273 to the Patent Act and created the \"prior user rights\" defense to patent infringement, described earlier in this report:\n[B]y allowing this defense the statute itself acknowledges that there may be business method patents. Section 273's definition of \"method,\" to be sure, cannot change the meaning of a prior-enacted statute. But what § 273 does is clarify the understanding that a business method is simply one kind of \"method\" that is, at least in some circumstances, eligible for patenting under § 101. A conclusion that business methods are not patentable in any circumstances would render § 273 meaningless. This would violate the canon against interpreting any statutory provision in a manner that would render another provision superfluous.\nFinally, Justice Kennedy explained that the Court would not announce or adopt \"categorical rules that might have wide-ranging and unforeseen impacts\" in deciding this case. Instead, courts that evaluate what constitutes a patentable \"process\" under § 101 must adhere to the statutory definition of \"process,\" follow the Benson, Flook, and Diehr trilogy of Supreme Court cases , and refrain from placing limits on the Patent Act that are not required by the act's text.\nThe Court explained that nothing in its decision \"should be read as endorsing\" the way in which the Federal Circuit may have interpreted § 101 in the past, including the State Street Bank opinion (while it was not endorsing it, the Court did not expressly reject State Street Bank either). However, Justice Kennedy encouraged the Federal Circuit to continue to develop and articulate \"other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.\"", "Because Justice Scalia did not join two subparts of the Court's opinion, those subparts represent only a plurality of the Court (and is thus not controlling). In the first subpart, Justice Kennedy expressed concern that the \"machine-or-transformation\" test may negatively impact the Information Age:\nThe machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age – for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.\nHe suggested that \"in deciding whether previously unforeseen inventions qualify as patentable 'process[es],' it may not make sense to require courts to confine themselves to asking the questions posed by the machine-or-transformation test. Section 101's terms suggest that new technologies may call for new inquiries.\"\nIn the other subpart, Justice Kennedy echoed his sentiment from the Court's 2006 eBay case, that \"some business method patents raise special problems in terms of vagueness and suspect validity.\" He explained that the Court's precedents on the unpatentability of abstract ideas could serve as a useful limiting principle in considering such patent applications; however, he offered no further guidance on this point beyond identifying this limitation. He also noted that the Patent Act's other statutory requirements for patentability (novelty, non-obviousness, and particular description), \"serve a critical role in adjusting the tension, ever present in patent law, between stimulating innovation by protecting inventors and impeding progress by granting patents when not justified by the statutory design.\"", "In a lengthy concurring opinion that was joined by Justices Ginsburg, Breyer, and Sotomayor, Justice Stevens agreed with the Court's determinations that the \"machine-or-transformation\" test was not the sole test for what constitutes a patentable process. He also agreed that Bilski's patent claim is not a \"process\" within the meaning of § 101. However, he objected to the Court's disposition of the case that relied to a great extent on the ordinary meaning rule. He criticized the Court's approach to interpreting the Patent Act's terms \"as lay speakers use those terms,\" rather than the way that the terms have been traditionally understood in the context of patent law. Such interpretation of § 101 could lead to absurd results, in his view:\nAlthough this is a fine approach to statutory interpretation in general, it is a deeply flawed approach to a statute that relies on complex terms of art developed against a particular historical background. Indeed, the approach would render § 101 almost comical. A process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds – all would be patent-eligible. I am confident that the term \"process\" in § 101 is not nearly so capacious.\nJustice Stevens pointed out the inconsistency of the Court in adhering to the \"ordinary, contemporary, common meaning\" rule, when it accepts the \"atextual\" \"machine-or-transformation\" test as one way to evaluate patent eligibility of processes; furthermore, he notes that the Court excludes \"laws of nature, natural phenomena, and abstract ideas\" from the kind of \"processes\" that are patentable under § 101, despite the fact that they could be colloquially described as such.\nInstead, Justice Stevens would have rejected Bilski's patent application because his method \"describes only a general method of engaging in business transactions—and business methods are not patentable.\" Therefore, in the view of Justice Stevens and the other three justices who joined his concurrence, business methods do not qualify as a \"process\" eligible for patenting under § 101. Justice Stevens reached this conclusion by finding \"strong historical evidence\" in patent case law and legislative history, that suggested that business methods are not patentable. He explained that \"[f]or centuries, it was considered well established that a series of steps for conducting business was not, in itself, patentable.\" He expressed concern that business methods may stifle technological progress (and legitimate business competition and innovation) rather than promote it. He opined that \"patents on business methods are patents on business itself. Therefore, unlike virtually every other category of patents, they are by their very nature likely to depress the dynamism of the marketplace.\"\nUnlike the opinion of the Court, Justice Stevens explicitly rejected State Street Bank 's declaration that anything with a \"useful, concrete and tangible result\" may be patented. He also disagreed with the Court's reliance on the existence of § 273 of the Patent Act as evidence that Congress contemplated that some business methods may qualify as a \"process\" under § 101:\nIn 1999, following a Federal Circuit decision that intimated business methods could be patented, see State Street , 149 F.3d 1368, Congress moved quickly to limit the potential fallout. Congress passed the 1999 Act, codified at 35 U.S.C. § 273, which provides a limited defense to claims of patent infringement, see § 273(b), regarding certain \"method[s] of doing or conducting business,\" § 273(a)(3).\nIt is apparent, both from the content and history of the Act, that Congress did not in any way ratify State Street (or, as petitioners contend, the broadest possible reading of State Street ). The Act merely limited one potential effect of that decision: that businesses might suddenly find themselves liable for innocently using methods they assumed could not be patented. The Act did not purport to amend the limitations in § 101 on eligible subject matter.", "In a brief concurring opinion, joined in part by Justice Scalia, Justice Breyer explained that he wished to highlight the areas of substantial agreement among the members of the Court on several of the fundamental issues of patent law raised by the Bilski case. He identified four points that he believed are consistent with the Court's opinion and with Justice Stevens' concurring opinion:\n1. While the text of § 101 is broad, it is not without limit. 2. The \"machine-or-transformation\" test has been repeatedly helpful to courts in identifying what is a patentable \"process.\" 3. Although the \"machine-or-transformation\" test has always been a \"useful and important clue\" for determining patentability of processes, it has never been the \"sole test.\" 4. State Street Bank 's determination that anything which produces a \"useful, concrete, and tangible result\" is patentable is not valid. Such an approach allowed the granting of patents that \"ranged from the somewhat ridiculous to the truly absurd.\"", "The business community, patent practitioners, legal scholars, and policymakers were eagerly awaiting the issuance of the Court's Bilski decision, desiring to receive clear guidelines regarding what types of business methods could or could not qualify for patent protection. Some parties (existing business method patent holders) had feared and other parties (Internet companies that are often the target of business method patent infringement lawsuits) had hoped that the Bilski decision would pronounce an outright ban on business method patents—which very nearly happened, as four justices supported that view. Although the Bilski opinion did not strike down business methods, nor did it reject the \"machine-or-transformation\" test, the lack of additional guidance from the Court may have disappointed many observers. Indeed, Justice Stevens was critical of the Court opinion's lack of substance:\nThe Court, in sum, never provides a satisfying account of what constitutes an unpatentable abstract idea. Indeed, the Court does not even explain if it is using the machine-or-transformation criteria. The Court essentially asserts its conclusion that petitioners' application claims an abstract idea. This mode of analysis (or lack thereof) may have led to the correct outcome in this case, but it also means that the Court's musings on this issue stand for very little.\nOne observer argued that the Bilski decision \"does little to quiet a fierce debate on the value and harm of [business method] patents raging in both the business and academic worlds.\" A prominent patent law scholar lamented that \" Bilski is a remarkably inconclusive contribution to the law on patent eligible subject matter.\" He continued:\nThe Court's characterization of the claims as \"abstract ideas\" is palpably unsatisfying. The claims were to a series of specified steps a human can take (e.g., \"identifying market participants\" and \"initiating a series of transactions\"). The claimed subject matter may have been very obvious in view of the state of the art or possibly unduly vague, but to characterize it as an \"abstract idea\" stretches the meaning of \"abstract\" and \"idea\" beyond recognition.\nOthers expressed relief at the ruling, noting that \"there was a big possibility that the patent system was going to get gutted, that the court would go too far and put up too many hurdles to getting anything patented.\"\nFormer chief judge of the Federal Circuit Paul R. Michel (the author of that court's en banc In Re Bilski decision) observed that the Supreme Court did not \"impose any radical change\" in patent eligibility jurisprudence; however, he expressed his concern that Bilski, which emphasized the use of the judicially recognized \"abstract idea\" exception to patentability but provided no additional definition of \"abstractness,\" \"will make litigation more difficult and outcomes less predictable.\"", "The legal impact of Bilski is that a process may be eligible for patenting under § 101 if the patent applicant can show that it is more than a law of nature, natural phenomena, or abstract idea; by satisfying the \"machine-or-transformation\" test, the applicant can likely demonstrate patent eligibility. However, because the Bilski court had determined that the \"machine-or-transformation\" test is not the sole test for process patent eligibility, it is possible that a process could still be eligible for patenting if it fails to meet the \"machine-or-transformation\" test (and is neither a law of nature, natural phenomena, nor an abstract idea). Nevertheless, it remains to be seen how many processes would fall into this category; as Justice Breyer in his concurring opinion suggested, not many patentable processes lie beyond the reach of the \"machine-or-transformation\" test.\nThe opinion of the Court did not directly address the degree to which patent protection is available for software, medical diagnostics, and e-commerce techniques (although Justice Kennedy's plurality opinion suggests that such \"inventions in the Information Age\" may qualify for patent protection). Nevertheless, by finding that the Patent Act's definition of \"method\" does not categorically exclude business methods, the Court did not outright invalidate the patents that have already been issued in the financial services, biotechnology, and Internet fields; furthermore, by rejecting the use of the \"machine-or-transformation\" test as the exclusive test, Bilski requires courts and PTO examiners to follow a more flexible approach in determining patent eligibility of processes.\nIn addition, a majority of the Court specifically rejected the State Street Bank \"useful, concrete, and tangible result\" standard that had been the basis for finding patent eligibility of many business methods in the years prior to the Federal Circuit's In Re Bilski decision. Thus, patents that had been obtained on business methods under that standard may be more easily subject to challenge by defendants accused of infringing them.\nIn response to Bilski , the U.S. Patent and Trademark Office issued guidelines to its examiners for patent application examination under § 101:\nIf a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under § 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under § 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.", "The Bilski decision leaves unanswered several important questions (in particular, the definition of \"abstract idea\" and \"business method\"), and the Court's opinion arguably \"negated over twenty-five years of the Federal Circuit's attempts at doctrine\" regarding patent-eligibility of process claims. Therefore, going forward, the district courts, PTO examiners, and the Federal Circuit will likely have to determine, on a case-by-case basis, what constitutes an \"abstract idea\" and whether particular business methods, diagnostic methods, or other inventions are too abstract to be patentable." ], "depth": [ 0, 1, 1, 2, 1, 1, 2, 2, 3, 4, 4, 4, 3, 3, 3, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h1_full", "h0_full h1_full", "", "h0_full", "h0_title h2_title", "h0_full", "h0_full h2_title", "h0_title h2_title", "", "h0_full h2_full", "h2_full", "", "h0_full", "", "h1_full", "h0_full", "" ] }	{ "question": [ "What is the origin of federal patent law?", "What is eligible for patent protection?", "How has the scope of eligibility been expanded?", "How did the Federal Circuit's Bilski opinion alter this definition?", "What criticisms have been raised about this standard?", "How has the Supreme Court ruled on the scope of patentable subject matter?", "To what extent did the Court uphold its precedents?", "Why did the Court reject Bilski's patent application?", "What was the Court's ruling regarding the Federal Circuit's test?", "To what extent did this affect the validity of the test?", "What did the Court provide in place of the Circuit's test?", "What did the Court decide regarding additional patentability tests?" ], "summary": [ "The source of federal patent law originates with the Patent Clause of the U.S. Constitution, which authorizes Congress: \"To promote the Progress of ... useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their respective ... Discoveries.\"", "Section 101 of the Patent Act describes the subject matter that is eligible for patent protection, which may be divided into four categories: processes, machines, manufactures, and compositions of matter.", "The U.S. Court of Appeals for the Federal Circuit issued two decisions in the 1990s, In re Alappat and State Street Bank & Trust Co. v. Signature Financial Group, that had expanded the scope of patent-eligible subject matter to include any process that produces a \"useful, concrete and tangible result.\"", "In October 2008, the Federal Circuit issued an en banc opinion, In re Bilski, that expressly overruled those earlier decisions. The Federal Circuit's Bilski opinion articulated a new legal standard governing the eligibility of process claims for patent protection under § 101 of the Patent Act: if the process is tied to a particular machine or apparatus, or if it transforms a particular article into a different state or thing.", "Some observers and patent practitioners criticized this \"machine-or-transformation\" standard as being too rigid and not in compliance with Supreme Court precedent concerning patentable subject matter eligibility. They raised concerns that the test potentially restricts patent protection for new innovations in business methods and software, and that it called into question the validity of already-issued patents that claim information-based and computer-managed processes.", "On June 28, 2010, the Supreme Court issued its opinion in Bilski v. Kappos, representing the first time that the Court has ruled on the scope of patentable subject matter since its last decision on this topic, the 1981 decision Diamond v. Diehr.", "At the outset of the opinion, the Court emphasized that its precedents already provide limits to patent eligibility under § 101—laws of nature, physical phenomena, and abstract ideas may not be patented.", "Indeed, the Supreme Court rejected Bilski's patent application (regarding a commodities trading risk-hedging method) without using any \"test\" that may have been developed by the Federal Circuit; rather, the Court relied on its precedents in declaring that the processes that were claimed in Bilski's patent application are unpatentable abstract ideas.", "The Court ruled that the Federal Circuit was incorrect in holding that the \"machine-or-transformation\" standard is the sole test for showing patent eligibility of process claims; however, the Court acknowledged that the test is a \"useful and important clue, an investigative tool,\" for determining whether a particular process is patentable.", "Thus, the Court did not invalidate the test, but rather rejected the Federal Circuit's conclusion that the test is the exclusive one that governs the analysis for process patent eligibility under § 101 of the Patent Act.", "However, the Court did not articulate a different test or adopt new categorical rules for process patent eligibility, nor did it provide much guidance to the lower courts on this matter.", "Instead, the Court invited the Federal Circuit to develop additional tests and other limiting criteria regarding what constitutes a patentable process." ], "parent_pair_index": [ -1, 0, -1, 2, 3, -1, 0, 0, -1, 0, 0, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2 ] }
CRS_R40435	{ "title": [ "", "What are Deficits?", "Understanding Deficit Projections in the CBO Baseline", "Current Conditions", "Recent Policies and Their Effects on the Deficit", "Economic Stimulus Act of 2008", "Housing and Economic Recovery", "Troubled Assets Relief Program", "Extension of Unemployment Benefits", "American Recovery and Reinvestment Act of 2009", "Other Actions", "CBO's Baseline Deficit Projections", "Current Policies Not Included in the CBO Baseline", "The Deficit in President Obama's Budget Outline", "Future Expectations", "Appendix. An Analysis of Deficit Movements over the Last Decade" ], "paragraphs": [ "The nation's budget situation is challenging. In fiscal year (FY) 2008, the budget deficit reached $455 billion or 3.2% of gross domestic product (GDP), up from $161 billion or 1.2% of GDP in FY2007. New deficit projections provide a picture of what the United States faces over the next decade. In February 2009, the Congressional Budget Office (CBO) projected that the deficit in FY2009 will reach more than $1.4 trillion, which includes the deficit impact of the American Recovery and Reinvestment Act (ARRA; H.R. 1 , P.L. 111-5 ). Between FY2010 and FY2019, cumulative deficits could reach as high as $10 trillion. CBO projects deficits in each fiscal year of this period.\nThese deficits are largely a result of federal financial intervention and fiscal stimulus legislation designed to alleviate the credit crunch and to bolster the economy. Current economic conditions have also led to increases in outlays for certain government social programs and declines in revenue collections, leading to further deterioration in the budget balance.\nEconomists generally agree that when an economy is in recession, running deficits by increasing government spending or cutting taxes can stimulate growth. However, once growth returns, they advise paying down debt. Though the economy is currently in recession and running deficits may be appropriate, the accumulated deficits will increase federal debt held by the public and will generally increase the portion of the budget devoted to future interest payments. Larger deficits today and in the future would add additional pressure to the long-term budget outlook, hampering the ability of Congress and the President to address other priorities like healthcare and entitlement reform.\nThis report will define deficits and will explain the appropriate way to measure them. It will also describe how current economic conditions and federal financial interventions have increased the deficit over time.", "Deficits can serve as a powerful instrument of fiscal policy. Differences between revenues and outlays determine whether or not the budget is in surplus or deficit, which often serves as a measure of the federal government's fiscal health. Annual budget deficits or surpluses determine, over time, the level of federal debt and affect the amount of annual interest paid to finance the debt. Occasional deficits, in and of themselves, are not necessarily problematic. Deficit spending allows governments to smooth outlays and taxes to shield taxpayers and program beneficiaries from abrupt economic shocks. Persistent deficits, on the other hand, lead to growing accumulations of federal debt that may lead to higher interest payments, tax increases, or spending cuts.\nChanges in economic conditions can cause movements in outlays (spending) or revenues and can lead to changes in the budgetary outlook. These can occur simultaneously or as a result of each other. Economic growth can stimulate employment and individual income, generally reducing certain types of spending and increasing revenue levels. During a recession reductions in consumption and increased reliance on government programs have the opposite effect. For example, in a strong economy, new jobs are often created. If the unemployed become employed and earn higher incomes, additional tax revenue would be generated. In contrast, in a weak economy, people may lose their jobs, which could lower tax revenue and increase government expenditures on programs such as unemployment insurance and food stamps. Economists refer to these changes as automatic stabilizers. Policy changes by the federal government to change spending or revenue levels (i.e., through the creation of new programs or through tax cuts) would also affect the size of the deficit.\nThe dollar value of the budget deficit (or surplus), however, may give a partial and potentially misleading picture of the government's true fiscal condition. Deficits and debt levels are often measured as a percentage of GDP, rather than in dollar amounts. Measurement of deficits and debt as a percentage of GDP provides adjustments for inflation and relates the size of the deficit or debt to the size of the economy.", "The CBO baseline is an estimate of federal spending and receipts and resulting levels of surplus or deficit during a fiscal year, under existing law. Congress set forth specific rules for calculating direct spending, receipts, and discretionary spending baselines in Section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177 ), as amended. A baseline provides a benchmark for comparing proposed budget policy changes to existing policies and indicating changes that may be necessary to meet certain budgetary goals. Therefore, the calculation of a baseline can be instrumental to the evaluation of budget policies.\nHowever, there are numerous uncertainties surrounding the baseline projections, especially in the out-years, and they cannot be thought of as absolute certainty of the government's fiscal condition. According to CBO, \"[t]he baseline is intended to provide a neutral, nonjudgmental foundation for assessing policy options. It is not 'realistic,' because tax and spending policies will change over time. Neither is it intended to be a forecast of future budgetary outcomes.\" The proper way to use a baseline is as a rule-of-thumb estimate for the budgetary ramifications of current policy. This offers the policymaker a means to measure the relative effects of proposed legislation in the context of the overall budget.", "The deficit in FY2008 was $455 billion, or 3.2% of GDP, sharply higher than the FY2007 deficit of $162 billion (1.2% of GDP). In January 2009, CBO projected that the deficit would reach nearly $1.2 trillion (8.3% of GDP) in FY2009, which did not include the effects of the American Recovery and Reinvestment Act of 2009 (ARRA). At the request of Speaker of the House Nancy Pelosi and House Budget Committee Chairman Spratt, CBO released three alternative budget scenarios in February 2009. Under all of the scenarios, CBO projected a deficit of $1.4 trillion in FY2009, with the majority of the deficit increase from the January to February projections occurring as a result of ARRA. CBO also projected the continuation of deficits well into the future. This budgetary outlook is largely attributed to the effects of the economy as well as the significant federal financial interventions and stimulus legislation already passed by Congress. Additional actions may increase the deficit further.\nCBO also projects that the recession, probably the longest and deepest since World War II (WWII), will likely last well into 2009. The current condition of the economy will likely result in increases in outlays for mandatory programs, such as food stamps and unemployment benefits, also known as \"automatic stabilizers,\" and increases in the deficit. Revenue collection is also projected to be lower largely due to declines in personal incomes and corporate profits. The deficit impact of these increases in outlays and decreases in revenues is accounted for in the CBO baseline.\nThe projected deficit for FY2009 is high relative to historic standards. The deficit reached its peak in 1943 at 30.3% of GDP. After WWII, deficits remained relatively low until the mid-1980s. In FY1985, the deficit reached 6.0% of GDP. If the deficit in FY2009 reaches the projected level, it will likely be the highest deficit as a percentage of GDP since FY1946.", "Several significant federal financial interventions were enacted in 2008 and early 2009 in an effort to relieve the credit crisis and mitigate the economic affects of the recession on Americans. These include the enactment of economic stimulus in early 2008, the Housing and Economic Recovery Act (HERA) in July 2008, the Troubled Assets Relief Program (TARP) and its components in October 2008, the extension of unemployment benefits in November 2008, and the American Recovery and Reinvestment Act (ARRA) in February 2009. Other actions, such as interventions by the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC), have largely utilized existing or expanded authority. The long-term impact of these programs on the budget deficit is somewhat uncertain.\nThe size, variety, and complexity of federal responses to financial and economic turmoil present many challenges to budget analysis. The ultimate costs of these responses will depend on how the economy recovers, how well firms receiving federal assistance weather future financial shocks, and whether or not the government receives positive returns on its asset purchases. Estimating how much these responses will cost the federal government is difficult, both for conceptual and operational reasons.", "In February 2008, Congress enacted the Economic Stimulus Act of 2008 ( P.L. 110-185 ) aimed at promoting consumption and investment by sending rebates to taxpayers and allowing firms to depreciate new capital investments more quickly. The costs of these provisions increased the deficit by $152 billion in FY2008 and by an estimated $16 billion in FY2009.", "The Housing and Economic Recovery Act (HERA, P.L. 110-289 ) provided new authority to address issues in the mortgage markets by allowing banks to write down the balance of existing loans so that borrowers can refinance and avoid foreclosure. The act also contained other provisions to help local communities acquire and redevelop vacant and foreclosed properties and created a new regulator for the government-sponsored enterprises (GSEs), Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. The act gave Treasury the temporary authority to purchase debt and equity securities of the GSEs. The provisions of HERA increased the deficit by $1.4 billion in FY2008 and are expected to increase the deficit by $36.7 billion in FY2009 and $3.6 billion in FY2010.\nCBO's deficit estimate for FY2009 includes the addition of Fannie Mae and Freddie Mac, previously not accounted for in the budget. They have been included by CBO in their budget baseline because they were placed under direct control of the federal government on September 6, 2008. This action added $238 billion to the deficit in FY2009, an amount which represents CBO's estimate of the net present value of the current outstanding obligations and securities of the GSEs. These transactions are being recorded by CBO on a net present value basis rather than a cash basis. The net present value reflects the asset purchase price, less the present value of future asset income, plus an adjustment for market risk. In subsequent years, the effect on the budget is projected to be much smaller, $66 billion between FY2010 and FY2019, because the subsidy cost would only relate to the net present value of new business. Even if Fannie Mae and Freddie Mac are excluded from the FY2009 deficit calculation, the FY2009 deficit would still reach a post-WWII high.", "On October 3, Congress passed the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 ), which, among other provisions, authorized the Treasury Secretary to use $700 billion (subject to certain Congressional restrictions and notifications) to intervene in financial markets. While former Treasury Secretary Henry Paulson first proposed using TARP funds to buy mortgage-related securities, those plans were later dropped. Instead, the Treasury Department used TARP funds to recapitalize banks and financial institutions by acquiring preferred shares. On November 12, Paulson announced that a portion of TARP would fund a new Federal Reserve collateralized lending program, the Term Asset-Backed Securities Loan Facility (TALF), which would take in securities based on \"newly and recently originated\" loans, such as for education, automobiles, and credit cards. In addition, TARP funds were also loaned to automakers and used to purchase equity in and guarantee assets of numerous financial institutions. As of December 31, 2008, the Treasury Secretary had disbursed or committed $350 billion in TARP money. The release of the remaining $350 billion was made available after certification in January.\nCBO estimates a deficit increase as a result of TARP outlays of approximately $180 billion in FY2009 and $5 billion in FY2010. This amount differs from actual TARP outlays due to the 1990 Federal Credit Reform Act and due to provisions of EESA, which require these transactions to be recorded by CBO on a net present value basis with an adjustment for market risk rather than on a cash basis. CBO projects a cost of $180 billion based on assumption of a 25% average subsidy rate for these purchases (i.e., the rate used to calculate the net present value). If these asset purchases were accounted for in the budget estimates solely based on the purchase price, the estimated deficit would be substantially higher in the near term. These costs would be recovered for budgetary purposes when the assets are sold in the future, essentially creating negative outlays at that time. Though CBO estimates the budgetary impact to be much lower than the purchase price, the Treasury Department must still raise enough money by selling debt to make the purchases in the first place.", "On November 21, 2008, President Bush signed the Unemployment Compensation Extension Act of 2008 ( P.L. 110-449 ) into law, which expanded the potential duration of unemployment benefits up to a maximum of an additional 20 weeks. It also created a second tier of benefits for workers in states with high unemployment of up to a maximum of an additional 13 weeks. This additional coverage helps those workers who have exhausted the traditional 26 week benefit period. CBO estimated the impact on the deficit of these provisions at $9 billion for FY2009.", "On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA; H.R. 1 , P.L. 111-5 ), which included $501 billion in new outlays and $286 billion in net tax cuts for a variety of activities in an attempt to stimulate the economy. Provisions include Medicaid funding assistance for states, funding for infrastructure projects, tax incentives for small businesses, and expanded tax credits for individuals and families. CBO estimates that this economic stimulus legislation will increase the deficit by $185 billion in FY2009, $399 billion in FY2010, $134 billion in FY2011, and $787 billion over the FY2009 through FY2019 period.", "The Federal Reserve (Fed) has also played a major role throughout the economic downturn in limiting systemic risk. Through its various programs, the Fed has provided direct financial assistance of $1 trillion to borrowers. Though the activities of the Fed do not directly impact the federal budget, its profits are remitted to Treasury and recorded as revenues in the budget. Over the longer term, these actions may alter the level of remittances to the Treasury, thereby increasing or decreasing federal revenues.\nUnlike all other institutions, currency (Federal Reserve notes) is the Fed's primary liability. Along with its holdings of Treasury securities, its assets are the loans it makes and the private assets it holds. Its loans and asset purchases are financed by increasing its liabilities (Federal Reserve notes), and does not inherently impose any cost to the Treasury. Indeed, if the loans are repaid, they would increase the profits of the Fed, which in turn would increase the Fed's remittances to the Treasury. Even if the loans are not repaid, they are fully collateralized (in some cases, over-collateralized), so the Fed would not suffer losses unless the collateral loses value. In addition, some of the loans are made with recourse, which means that the firms are liable if the collateral loses value.\nThe Treasury Department has made large cash deposits at the Fed to try to offset some of the potential inflationary effects of the Fed's actions through a new program called the Treasury Supplementary Financing Program. To finance these deposits, the Treasury has significantly increased the national debt. According to CBO, the Treasury Supplementary Financing Program increased the national debt by $296 billion in 2008. Eventually, it is expected that these funds will no longer be needed and the additional debt will be paid off. CBO projects that the additional debt will be paid off in 2009, although that is unlikely to occur until the Fed withdraws its emergency assistance to the financial sector, which has not occurred to date. This program is not counted toward the deficit since it does not affect government outlays or revenues; as a result, 2008 was a rare occasion when changes in the debt did not mirror the budget deficit.\nThe FDIC has also taken a number of actions aimed at supporting the housing and financial markets. These actions include a temporary increase to deposit insurance for individual accounts from $100,000 to $250,000, the creation of a Temporary Liquidity Guarantee Program (TLGP), and efforts to reduce foreclosures. The TLGP is intended to strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued senior unsecured debt of banks, thrifts, and certain bank holding companies. The FDIC has also sought buyers for distressed banks. However, since the FDIC has increased its guarantees to individuals and banks, the pressure on its deposit insurance fund has grown. If financial distress causes these guarantees to be called upon, the FDIC may require additional funds from the Treasury to meet FDIC obligations, thereby increasing the budget deficit.", "Table 1 illustrates how the programs described above have and are expected to alter the deficit situation over the next 10 years. The legislation included in this table has been enacted since CBO's January 2008 baseline estimates. As Table 1 shows, legislative activity will have the greatest impact on increasing the deficit in FY2009. As a result of the TARP legislation, the deficit is estimated to increase by $184 billion, on a net present value basis, in FY2009 and $5 billion between FY2010 and FY2018. In addition, ARRA will add $185 billion to the deficit in FY2009 and $603 billion between FY2010 and FY2018. In subsequent years, legislative, economic, and technical changes will contribute nearly the same amounts towards increasing the deficit. With the passage of the stimulus legislation, legislative changes will contribute even more to the increases in the deficit, particularly in FY2010 and FY2011.\nThe Appendix to this report details how the baseline changed from projected surpluses to deficits as a result of legislative policy and other conditions between January 2001 and January 2009.\nAfter legislative changes and the estimated effects of the economy are accounted for, the remaining difference between the original projection and actual result is classified as a technical change. These changes occur because CBO's projections of revenues and mandatory spending are also based on other technical assumptions unrelated to the state of the economy, creating differences between the actual results and original assumptions. For example, mandatory spending levels depend on actual program participation rates rather than the projected participation rates, which may be different. Similarly, tax revenues will depend not only on the growth in income, but how quickly tax liability rises as income rises and how income growth is distributed across taxpayers. Most technical changes tend to be on the revenue side rather than the spending side of the budget.\nTechnical changes in FY2009 largely stem from the decision to include the net present value of Fannie Mae and Freddie Mac's existing assets and liabilities, as discussed earlier. Second, economic conditions have led to downward revisions in revenue projections due to lower projections of nominal GDP and the components of taxable income. Some of these declines have been offset by lower interest payments on the federal debt due to lower interest rates on current borrowing. Over the longer term, the deficit estimates may change depending on the actual pace of economic recovery and whether or not additional legislation affecting outlays or revenues in response to the economic slowdown is enacted.", "Under the baseline, deficits continue to fall over the next ten years. This pattern occurs due to the traditional practices employed by CBO with regard to baseline budget estimation and projection, which assume the continuation of current policy. Therefore, if certain tax or spending provisions are scheduled to expire (although widely expected to be extended), the costs of these provisions are not included in the CBO baseline. Their inclusion would likely lead to further increases in the deficit. Policies currently being excluded from the baseline but which some believe are likely to be continued in some form include extension of the alternative minimum tax \"patch\" to adjust for inflation, additional war financing costs, and increases in discretionary spending over and above the current baseline estimates. The baseline also assumes that the 2001 and 2003 Bush tax cuts will expire at the end of FY2010, resulting in an increase in revenues. According to President Obama's budget outline, he proposes to extend some of these tax cuts. Actual effects on spending and revenues as a result of these issues could vary depending on numerous factors.", "On February 25, 2009, President Obama released his budget proposal, which \"accounts for items that under the old rules could have been left out ... \" Below, Table 2 illustrates how the costs accounted for under the Obama Administration's baseline budget will affect the deficit over the next ten years. Between FY2009 and FY2019, cumulative deficits are expected to reach over $10.7 trillion. The most costly provisions include extending the 2001 and 2003 tax cuts as well as including the full year cost of financing overseas operations. Previous budgets had assumed that the tax cuts would expire at the end of FY2010, which would result in revenue increases starting in FY2011 and did not include the costs of financing the wars in Iraq and Afghanistan, which were usually funded through annual supplemental appropriations. The Administration also includes a placeholder line item for an additional $250 billion in future financial market stabilization efforts.\nIn his budget proposal, President Obama also outlined specific policies he hopes to implement, which include significant new agendas with regard to energy, health care, and education. If all of these provisions are enacted, the President's budget proposal would result in an FY2009 deficit of $1.8 trillion or 12.3% of GDP. Over the longer term, the Administration's proposal projects a deficit of $570 billion (3.1% of GDP) in FY2014 and $712 billion (3.1% of GDP) in FY2019.", "Deficits that exceed growth in the economy are not sustainable in the long-run. To eventually reduce the deficit would require less spending, increased taxes, faster than average economic growth, or a combination of these things. Over the long-term, entitlement spending, especially as it relates to rising health care costs, is projected to increase rapidly. The nation's aging population, combined with rising health care costs per beneficiary, seems likely to keep federal health costs rising faster than per capita GDP. CBO has concluded that \"under any plausible scenario, the federal budget is on an unsustainable path,\" over the long run. The Government Accountability Office and the Office of Management and Budget reach similar conclusions.\nAccording to CBO projections, keeping future federal outlays at 20% of GDP, approximately its current share, and leaving fiscal policies unchanged would require drastic reductions in all spending other than that for Medicare, Social Security, and Medicaid. A former CBO Acting Director stated that, \"by 2030 ... spending for those programs [Medicare, Social Security, and Medicaid] is projected to reach roughly 15 percent of GDP.... If that increase happened ..., the rest of the budget would have to be cut by more than half\" to keep overall spending close to its current level. The Administration indicated similar concerns about the outlook for the budget over the long term in the President's FY2009 budget.", "In January 2001, CBO projected budget surpluses through FY2011, the entire 10-year projection window. However, in each fiscal year completed since that time, federal spending has accounted for approximately a fifth of the economy (as measured by gross domestic product—GDP) and federal revenues have ranged between just under a sixth and just over a fifth of GDP, resulting in budget deficits. Table A-1 shows the differences between the 2001 baseline CBO projections and the actual budget balance between FY2001 and FY2008 by attributing the deficit increases to the legislative, economic, and technical categories.\nIn addition to the direct effect of new legislation on the budget, some determinants of spending and revenues are not directly controlled by Congress. As discussed earlier, changing economic conditions can affect spending and revenue levels through automatic stabilizers as well as shifting the size of the tax base.\nAfter legislative changes and the estimated effects of the economy are accounted for, the remaining difference between the original projection and actual results is classified as a technical change. As explained previously, these changes occur because CBO's projections of revenues and mandatory spending are also based on other technical assumptions unrelated to the state of the economy, creating differences between the actual results and original assumptions. Some technical changes are the result of legislative changes. The cost of the legislative changes are ex ante projections of their cost (as scored by CBO and the Joint Committee on Taxation) made at the time the policy was enacted. If policies turned out to be more (less) expensive than the official score, this would appear in the table as a negative (positive) technical change.\nCBO projected an FY2008 budget surplus of $635 billion under the policies in place in January 2001. The actual budget deficit was $455 billion, a difference of more than $1 trillion between the projection and the actual outcome. The FY2008 deficit marked the greatest difference to date between the surplus projections and the actual result.\nDeficit Responses to Legislative Changes\nLegislative changes have resulted in lower revenues and increased spending because, as expected, policy has changed since CBO made its projection in 2001. Overall, legislative changes accounted for almost three-quarters of the cumulative shift from surplus to deficit over the past eight years. The legislative changes that increased the deficit the most were the tax cuts (the largest of which were P.L. 107-16 and P.L. 108-27 ), the increase in military and related spending in Iraq and Afghanistan, and the recent economic stimulus and recovery legislation ( P.L. 110-185 , P.L. 110-289 , and P.L. 110-185 ). Tax cuts accounted for nearly half of all legislative changes and military spending accounted for about 30%, with the remaining being caused by higher mandatory and non-military discretionary spending (including the 2008 stimulus) for the total increase in the deficit between 2001 and 2008.\nComparing legislative changes to the baseline surplus projection made in 2001 demonstrates that, even if there had been no economic downturn or any other projection error, legislative changes alone would still have caused a budget deficit in each year from 2003 to 2008. The contribution of legislative changes to deficit has grown each year since 2001. Because economic and technical changes became smaller, the overall deficit declined between 2004 and 2007. The deficit rose in 2008 primarily due to legislative changes, which were responsible for 92% of the increase in the deficit in that year.\nThese legislative changes helped move federal revenues as a share of gross domestic product (GDP) from a 50-year high in 2000 to a 45-year low in 2004. The subsequent rise in revenues brought revenues slightly above the 50-year average share of GDP in 2007. Meanwhile, federal spending as a share of GDP rose from its lowest level in 35 years in 2000 to a level about equal to the 50-year average in 2004, where it remained in 2007. In 2008, as a share of GDP, revenues fell to their lowest levels since 2005, while spending reached its highest level since 1994. Legislation enacted in 2008, including TARP and investments in other economic recovery programs, are projected to cause increases in the deficit in future fiscal years.\nOf course, an estimate of how much higher spending contributed to the shift to deficit depends on one's baseline definition of spending under current policy. Because discretionary spending is largely determined on an annual basis and not bound by previous year law, there is no obvious definition of current policy for discretionary spending. CBO's mandated definition of current policy is that discretionary spending grows at the same rate as inflation. Many analysts have criticized this definition as being too low because it would have consistently under-predicted spending historically. If a higher rate of spending growth (i.e., a rate equal to GDP growth) was assumed to represent current policy, then CBO's original estimates of future surpluses in 2001 would have been smaller, and higher spending would have subsequently accounted for a smaller proportion of the shift to deficit.\nDeficit Responses to Economic Conditions\nEconomic conditions also affected revenues and spending, contributing to changes in the deficit since CBO's 2001 projection through \"automatic stabilizers,\" higher than expected inflation, and lower than expected interest rates. These are shown as economic changes in the table. The economic recession of 2001 was an important cause of the deficit in 2002 and 2003. Beginning in 2004, economic conditions had little effect on the shift to deficit. Towards the end of 2008, deteriorating economic conditions began affecting the deficit once again, however the full magnitude will likely be felt in later years. Between 2002 and 2008, economic changes accounted for about 4% of the shift to deficit.\nDeficit Responses to Technical Changes\nTechnical changes peaked as a cause of the shift to deficit at $259 billion in 2003, and have declined somewhat since then. For the last eight years overall, technical changes accounted for just over one-fifth of the shift from surplus to deficit. Large economic and technical changes point to the significant uncertainty behind budget projections, even over short periods of time. For example, holding policy constant, the 2001 surplus was $72 billion smaller ($37 billion due to economic changes, $35 billion due to technical changes) than CBO's projection made only nine months earlier.\nSome technical changes are the result of legislative changes. There has been recent discussion of whether the 2007 deficit was smaller than anticipated because the tax cuts partly \"paid for themselves\" through higher economic growth, an effect that was not included in their original score. Table A-1 suggests otherwise—although the 2007 deficit was smaller than anticipated in projections made in 2004 and 2005, when CBO was extremely pessimistic about future revenues, the deficit was much larger than anticipated in projections made before 2004. The 2001 projection of the state of the economy in 2007—made before the tax cuts were enacted—turned out to be extremely close to the actual state of the economy in 2007. In other words, the actual performance of the economy after the tax cuts was almost identical to how CBO expected the economy to perform had there been no tax cuts. For example, CBO projected in 2001 that economic growth (without tax cuts) would average 3.1% between 2003 and 2008 (on a fiscal year basis); actual growth in those years equaled 3.0%. Furthermore, there were extremely large technical revisions from 2002 to 2006, mostly because tax revenue turned out to be lower than expected (after taking the tax cuts into account) each year. If anything, this would suggest that tax cuts cost more in reality than the original score had anticipated, rather than less." ], "depth": [ 0, 1, 2, 1, 2, 3, 3, 4, 4, 4, 4, 2, 3, 2, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "", "h0_full h2_full", "h0_full", "", "", "", "", "", "", "h2_full", "", "h0_full", "h3_full h2_title h0_title", "h0_full h3_full h2_full" ] }	{ "question": [ "How did the national budget deficit change in FY2008?", "What was the projected deficit in FY2009?", "What were projected deficits for future years?", "What are the causes of these expanded deficits?", "How can deficits affect fiscal policy?", "How do governments make use of deficit spending?", "How can deficit spending become problematic?", "What factors can lead to deviations from deficit projections?", "To what extent do projected deficits align with actual outcomes?", "How will legislative policy changes affect the FY2009 deficit?", "How will federal technical changes affect the FY2009 deficit?", "What approaches might Congress take after the current economic downturn?", "What factors complicate budget balancing efforts?", "What has CBO concluded regarding the federal budget?" ], "summary": [ "In fiscal year (FY) 2008, the nation's budget deficit reached $455 billion or 3.2% of gross domestic product (GDP), up from $161 billion or 1.2% of GDP in FY2007.", "In February 2009, the Congressional Budget Office (CBO) projected that the deficit in FY2009 will reach more than $1.4 trillion.", "Between FY2010 and FY2019, cumulative deficits could reach as high as $10 trillion.", "These deficits are largely a result of enacted federal financial intervention and fiscal stimulus legislation designed to alleviate the credit crunch and to bolster the economy. Current economic conditions have also led to increases in outlays for certain government social programs and declines in revenue collection, leading to further deterioration in the budget balance.", "Deficits can serve as a powerful instrument of fiscal policy and are not necessarily problematic.", "Governments use deficit spending to smooth outlays and taxes so that taxpayers and program beneficiaries are shielded from abrupt economic shocks and to mitigate the size of those shocks.", "However, persistent deficits lead to growing accumulations of federal debt that may lead to higher interest payments, tax increases, or spending cuts.", "Over time, deviations from baseline deficit projections can be attributed to three broad causes: legislative, economic, and technical changes.", "Projected fiscal balances can differ significantly from actual outcomes.", "Changes in legislative policy between January 2008 and January 2009 are likely to more than double the FY2009 deficit according to revisions to the CBO baseline over that period.", "Further, technical changes, largely attributed to the government placing Fannie Mae and Freddie Mac into conservatorship, will add hundreds of billions of dollars to the FY2009 deficit.", "When the economy recovers from the current downturn, Congress may choose to focus more effort on balancing the budget and reining in debt by spending less, increasing taxes, or a combination of these things.", "Over the long-term, balancing the budget is further complicated by significant issues regarding entitlement spending, especially as it relates to rising health care costs.", "CBO has concluded that \"under any plausible scenario, the federal budget is on an unsustainable path.\"" ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, 1, -1, 0, -1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 3, 3, 3, 3, 5, 5, 5 ] }
CRS_R44467	{ "title": [ "", "Introduction", "What are Drug Courts?", "Expansion of Drug Courts", "Federal Drug Courts", "Federal Drug Courts and the 21st Century Cures Act", "Veterans Treatment Courts", "Federal Support for Drug Courts", "Drug Court Discretionary Grant Program", "Grants for Veterans Treatment Courts", "Other Grant Support", "Impact of Drug Courts", "Selected Issues for Congress", "The Opioid Epidemic", "Inclusion of Violent Offenders" ], "paragraphs": [ "", "The United States has gradually shifted its formal drug policy from a punishment-focused model toward a more comprehensive approach—it is now one that focuses on prevention, treatment, and enforcement. The Obama Administration stated that it coordinated \"an unprecedented government-wide public health and public safety approach to reduce drug use and its consequences.\" In its FY2018 budget request, the Trump Administration requested funds for both public health and public safety efforts to combat the opioid epidemic.\nThe proliferation of drug courts in American criminal justice fits this new comprehensive model. Broadly, these specialized court programs are designed to divert some individuals away from traditional criminal justice sanctions such as incarceration. Many drug courts offer a treatment and social service alternative for those who otherwise may have faced traditional criminal sanctions for their offenses. In some drug courts, individuals that have been arrested are diverted from local courts into special judge-involved programs; these courts are often viewed as \"second chance\" courts. Other drug court programs offer reentry assistance after an offender has served his or her sentence. According to some research, these courts help save on overall criminal justice costs, provide treatment for defendants/offenders with substance abuse issues, and help offenders avoid rearrest.\nThis report will explain (1) the concept of a \"drug court,\" (2) how the term and programs have expanded to include wider meanings and serve additional subgroups, (3) how the federal government supports drug courts, and (4) research on the impact of drug courts on offenders and court systems. In addition, it briefly discusses how drug courts might provide an avenue for addressing the opioid epidemic and other emerging drug issues that Congress may consider.", "The term \"drug courts\" refers to specialized court programs that present an alternative to the traditional court process for certain criminal defendants and offenders. Traditionally, these individuals are first-time, nonviolent offenders who are known to abuse drugs and/or alcohol. While there are additional specialized goals for different types of drug courts (e.g., veterans drug courts, tribal drug courts, and family drug courts), the overall goals of adult and juvenile drug courts are to reduce recidivism and substance abuse.\nDrug court programs may exist at various points in the justice system, but they are often employed postarrest as an alternative to traditional criminal justice processing. Figure 1 illustrates a deferred prosecution, pretrial drug court model where defendants are diverted into drug court prior to pleading to a criminal charge. In many drug court programs, participants have the option to participate in the program.\nFigure 2 illustrates a postadjudication model where defendants must plead guilty to charges (as part of a plea deal) in order to participate in the drug court program. Upon completion of this type of program, their sentences may be amended or waived, and in some jurisdictions, their offenses may be expunged.\nThese diagrams illustrate two common models of drug courts, but other models (or variations on the above) have been developed around the country. For example, some drug court referrals may come as a condition of probation. Many drug courts, including some federal drug court programs, are actually reentry programs that assist a drug-addicted prisoner with reentering the community while receiving treatment for substance abuse.\nWhile drug courts vary in composition and target population, they generally have a comprehensive model involving\noffender screening and assessment of risks and needs, judicial interaction, monitoring (e.g., drug and alcohol testing) and supervision, graduated sanctions and incentives, and treatment and rehabilitation services.\nDrug courts are usually managed by a team of individuals from (1) criminal justice, (2) social work, and (3) treatment service.\nDrug courts typically utilize a multiphase treatment approach including a stabilization phase, an intensive treatment phase, and a transition phase. The stabilization phase may include a period of detoxification, initial treatment assessment, and education, as well as additional screening for other needs. The intensive treatment phase typically involves counseling and other therapy. Finally, the transition phase could emphasize a variety of reintegration components including social integration, employment, education, and housing.", "A group of criminal justice professionals established the first drug court in Florida in 1989; they are credited with sparking a national movement of problem-solving courts that address specific needs and concerns of certain types of offenders. There are around 3,000 drug courts (of various types) operating in the United States. Drug courts have diversified to serve specialized groups including veterans, juveniles, and college students. Many drug courts are hybrid courts and address issues beyond drug abuse including mental health and alcohol-impaired driving. In some ways, the term \"drug courts\" appears to be a catch-all phrase for specialized programs for addicted defendants and offenders at various points in the criminal justice process.", "While the Judicial Conference of the United States has long opposed the creation of specialized federal courts, there has been growing support within the federal court system and the Department of Justice (DOJ) for reentry programs that incorporate some features of drug courts. While some federal district courts have created special programs for drug-involved offenders—these programs are sometimes referred to as \"drug courts\"—they are largely reentry programs that manage an inmate's reintegration to the community. A few federal drug court programs, however, manage offenders with \"front end\" diversion options. There have been questions about the effectiveness of drug court programs at the federal level due to the nature of federal crimes and the individuals who are arrested for allegedly committing them.\nFederal district courts fund these specialized programs from decentralized allotments given to the districts for general treatment and supervision of offenders. As federal districts have budget autonomy, they may elect to establish these specialized court programs.\nOf note, in 2017 the President's Commission on Combating Drug Addiction and the Opioid Crisis recommended that DOJ establish a federal drug court in every federal judicial district.", "Enacted in 2016, Section 14003 of the 21 st Century Cures Act (the Cures Act; P.L. 114-255 ) required DOJ to establish a pilot program to determine the effectiveness of federal drug and mental health courts. Within one year of enactment, DOJ, with assistance from the Administrative Office of the United States Courts and the United States Probation Offices, must establish a pilot program in at least one U.S. judicial district that will divert certain offenders with mental illness or intellectual disabilities from federal prosecution, probation, or prison and place the offenders in these specialized courts. As of January 2018, this pilot program is still in the planning stages.", "Postdeployment, many veterans face unique challenges in readjusting to civilian life, and these challenges may contribute to involvement with the criminal justice system. According to the Bureau of Justice Statistics' (BJS's) National Inmate Survey from 2011 to 2012, approximately 8% (181,500) of the total incarcerated population in the United States are veterans. For approximately 14% (25,300) of these incarcerated veterans, the most serious offense that led to their incarceration was a drug offense, and for approximately 4% (7,100), their most serious offense was driving while intoxicated or impaired. Older BJS survey data indicate that 43% of veteran state prisoners and 46% of veteran federal prisoners met the criteria for drug dependence or abuse in 2004, as opposed to 55% of nonveteran state prisoners and 45% of nonveteran federal prisoners. While veterans in state prison reported lower levels of past drug use than nonveterans, a larger percentage of veterans (30%) than nonveterans (24%) reported a \"recent history of mental health services.\"\nIn 2008, the first veterans court was created in Buffalo, NY, in response to the combined mental health and substance abuse treatment needs of justice system-involved veterans. These court programs are a hybrid model of drug treatment and mental health treatment courts. As of June 2015, there were approximately 306 veterans treatment courts and 6 federal veterans courts.", "The federal government has demonstrated growing support for the drug court model primarily through financial support of drug court programs, research, and various drug court initiatives.", "The Department of Justice (DOJ) supports research on drug courts, training and technical assistance for drug courts, and grants for their development and enhancement. The primary federal grant program that supports them is the Drug Court Discretionary Grant Program (Drug Courts Program). DOJ's Office of Justice Programs (OJP), Bureau of Justice Assistance (BJA) jointly administers this competitive grant program along with the Substance Abuse and Mental Health Administration (SAMHSA) within the Department of Health and Human Services (HHS). Grants are distributed to state, local, and tribal governments as well as state and local courts themselves to establish and enhance drug courts for nonviolent offenders with substance abuse issues. See Table 1 for a five-year history of DOJ appropriations for the Drug Courts Program.\nDrug courts funded through this program may not use federal funding and matched funding to serve violent offenders. Offenders may be characterized as \"violent\" according to current or past convictions as well as current charges. Of note, an exception to the violent offender restriction is made for veterans treatment courts that are funded through the Drug Courts Program.", "Since FY2013, BJA has funded the Veterans Treatment Court Program through the Drug Courts Program using funds specifically appropriated for this purpose (see amounts in Table 1 ). As mentioned, these amounts are not subject to the violent offender exclusion according to BJA. The purpose of the Veterans Treatment Court Program is \"to serve veterans struggling with addiction, serious mental illness, and/or co-occurring disorders.\" Grants are awarded to state, local, and tribal governments to fund the establishment and development of veterans treatment courts. While veterans treatment court grants have been part of OJP's Drug Courts Program for several years, the Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198 ), authorized DOJ to award grants to state, local, and tribal governments to establish or expand programs for qualified veterans, including veterans treatment courts, peer-to-peer services, and treatment, rehabilitation, legal, or transitional services for incarcerated veterans.\nBased on a review of program activity at the Department of Veterans Affairs (VA), the VA does not offer funding for veterans treatment courts; however, the VA operates a Veterans Justice Outreach (VJO) program, which provides outreach and linkage to VA services for justice system-involved veterans, including those involved with veterans courts or drug courts.", "Other DOJ grants, including the Edward Byrne Memorial Justice Assistance Grants (JAG) and Juvenile Accountability Block Grants (JABG), may be used to fund drug courts. One of the broader purpose areas of the JAG program is to improve prosecution and courts programs as well as drug treatment programs. The JABG program includes a purpose area to establish juvenile drug courts. Of note, the last time JABG received an appropriation was in FY2013, and it has been unauthorized since it expired in FY2009.\nThe Office of National Drug Control Policy (ONDCP), under its Other Federal Drug Control Programs account, offers drug court training and technical assistance grants, as well as support for other initiatives.\nAs mentioned, SAMHSA jointly administers the Drug Courts Program with BJA. In addition, SAMHSA administers other grants that support drug courts. Grants go toward the creation, expansion, and enhancement of adult and family drug courts and treatment drug courts. For FY2016, SAMHSA funded 122 drug court continuations, 60 new drug court grants, and four contracts. In FY2017, SAMHSA planned to fund 103 drug court continuations, 71 new drug court grants, and two contracts.", "Jurisdictions have sought to utilize drug courts to treat individuals' drug addictions, lower recidivism rates for drug-involved offenders, and lower costs associated with processing these defendants and offenders. Since the inception of drug courts, a great deal of research has been done to evaluate their effectiveness and their impact on offenders, the criminal justice system, and the community. Much of the research yields positive outcomes.\nOver the last decade, the National Institute of Justice, through its CrimeSolutions.gov evaluation program, has evaluated 21 drug court programs and found that 19 of them had either \"effective\" or \"promising\" ratings while two had ratings of \"no effects.\" Most reported positive results for recidivism outcomes. For cost evaluations, only some programs had these data and these evaluations showed mixed results. Some programs showed significant cost savings while others had insignificant findings for cost impacts.\nSeveral studies have demonstrated that drug courts may lower recidivism rates and/or lower costs for processing defendants and offenders compared to traditional criminal justice processing. For example, one group of researchers examined the impact of a drug court over 10 years and concluded that treatment and other costs associated with the drug court (investment costs) per offender were $1,392 less than investment costs of traditional criminal justice processing. In addition, savings due to reduced recidivism (outcome costs) for drug court participants were more than $79 million over the 10-year period. A collaboration of researchers conducted a five-year longitudinal study of 23 drug courts from several regions of the United States and reported that drug court participants were significantly less likely than nonparticipants to relapse into drug use and participants committed fewer criminal acts than nonparticipants after completing the drug court program.\nStill, some are skeptical of the impact of drug courts. The Drug Policy Alliance has claimed that drug courts help only offenders who are expected to do well and do not truly reduce costs. This organization also has criticized drug courts for punishing addiction because drug courts dismiss those who are not able to abstain from substance use.", "", "Congress has long been concerned over illicit drug use and abuse in the United States. Recently, Congress has given attention to opioid abuse, and especially overdose deaths involving prescription and illicit opioids. In 2015, there were 52,404 drug overdose deaths in the United States, including 33,091 (63.1%) that involved an opioid. Also, in 2016 SAMHSA estimated that 329,000 Americans age 12 and older were current users of heroin and approximately 3.8 million Americans were current \"misusers\" of prescription pain relievers. Policymakers may debate whether drug courts are an effective tool in the package of federal efforts to address the opioid epidemic. Policy options include, but are not limited to, increasing federal funding for drug courts, expanding federal drug court programs, and amending the Drug Courts Program to possibly include a broader group of offenders, among other potential changes.", "As discussed, grant recipients of the federal Drug Courts Program, with the exception of veterans treatment courts, must exclude violent offenders; however, some argue that drug courts should include violent offenders. One group of researchers compared the outcomes for violent and nonviolent offenders and concluded that courts should consider the current charge rather than the offender's history of violence, and the type and seriousness of the offender's substance abuse problem when selecting individuals for drug court programs. They found that while it appeared that individuals with a history of violence (defined as at least one violent charge before entering drug court) were more likely to fail the program than those who never had been charged with a violent crime, the relationship between history of violence and drug court success disappeared when controlling for total criminal history. More serious offenders are less likely than low-level or first-time offenders to abstain from crime, and some argue that drug courts may be the best option for these individuals.\nSubstance abuse and crime have long been linked, and diversion and treatment may assist some individuals in avoiding criminal behavior. Congress may wish to maintain the exclusion of violent offenders from the Drug Courts Program, or it may consider broadening the pool of eligible offenders that may participate in BJA-funded drug court programs to include certain violent offenders." ], "depth": [ 0, 1, 1, 2, 2, 3, 2, 1, 2, 3, 2, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h1_full", "", "", "", "", "h2_full h3_title", "h3_full h2_full", "", "", "", "h3_title", "h3_full", "h3_full" ] }	{ "question": [ "How has the formal drug policy of the United States changed?", "How does this relate to the proliferation of drug courts?", "What are the goals of drug courts?", "What are drug courts?", "What are the goals of drug courts?", "How are drug courts used in the justice system?", "To what extent does the federal government support the drug court model?", "How are drug courts funded?", "To what extent are drug courts effective in addressing opioid abuse?", "How might drug courts be used to combat opioid abuse?", "What actions may Congress take regarding this issue?" ], "summary": [ "The United States has gradually shifted its formal drug policy from a punishment-focused model toward a more comprehensive approach—one that focuses on prevention, treatment, and enforcement.", "The proliferation of drug courts in American criminal justice fits this more comprehensive model.", "These specialized court programs are designed to divert certain defendants and offenders away from traditional criminal justice sanctions such as incarceration while reducing overall costs and helping these defendants and offenders with substance abuse issues.", "Drug courts present an alternative to the traditional court process for some criminal defendants and offenders—namely those who are considered nonviolent and are known to abuse drugs and/or alcohol.", "While there are additional specialized goals for certain types of drug courts, the overall goals of adult and juvenile drug courts are to reduce recidivism and substance abuse among nonviolent offenders.", "Drug court programs may exist at various points in the justice system, but they are most often employed postarrest as an alternative to traditional criminal justice processing.", "The federal government has demonstrated growing support for the drug court model primarily through financial support of drug court programs, federal drug courts, research, and various drug court initiatives.", "For example, each year, the Bureau of Justice Assistance (BJA) and Substance Abuse and Mental Health Administration (SAMHSA) distribute grants to states and localities to support the creation and enhancement of drug courts. In FY2017, over $100 million in federal funding was appropriated for drug courts.", "As the opioid epidemic continues, policymakers may debate whether drug courts could be an effective tool in efforts to address opioid abuse.", "Policy options include, but are not limited to, increasing federal funding for drug courts and reauthorizing (with or without amendments) the Drug Court Discretionary Grant Program (Drug Courts Program).", "Further, Congress may wish to maintain the exclusion of violent offenders from the Drug Courts Program, or, conversely, broaden the pool of eligible offenders that may participate in BJA-funded drug court programs to include some violent offenders." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, -1, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 3, 3, 3 ] }
CRS_R42941	{ "title": [ "", "Introduction", "The Federal Medical Assistance Percentage", "How FMAP Rates Are Calculated", "Data Used to Calculate State FMAP Rates", "Factors that Affect FMAP Rates", "FY2014 Regular FMAP Rates", "FMAP Exceptions", "Recent Issues", "FMAP Changes in the ACA", "Federal Deficit Reduction", "Reduce the FMAP Floor", "Disaster-Recovery Adjusted FMAP Rate", "Conclusion", "Appendix. Regular FMAP Rates for Medicaid, by State" ], "paragraphs": [ "", "Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term care. Medicaid is jointly funded by the federal government and the states. Participation in Medicaid is voluntary for states, though all states, the District of Columbia, and the territories choose to participate. Each state designs and administers its own version of Medicaid under broad federal rules. While states that choose to participate in Medicaid must comply with all federal mandated requirements, state variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered. Historically, eligibility was generally limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities; however, recent changes will soon add coverage for individuals under the age of 65 with income up to 133% of the federal poverty level. The federal government pays a share of each state's Medicaid costs; states must contribute the remaining portion in order to qualify for federal funds.\nThis report describes the federal medical assistance percentage (FMAP) calculation used to reimburse states for most Medicaid expenditures, and it lists the statutory exceptions to the regular FMAP rate. In addition, this report discusses other FMAP-related issues, including FMAP changes in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 as amended), federal deficit reduction proposals that would amend the FMAP rate, and the disaster-recovery FMAP adjustment.", "The federal government's share of most Medicaid service costs is determined by the FMAP rate, which varies by state and is determined by a formula set in statute. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services.\nAn enhanced FMAP (E-FMAP) rate is provided for both services and administration under the State Children's Health Insurance Program (CHIP), subject to the availability of funds from a state's federal allotment for CHIP. When a state expands its Medicaid program using CHIP funds (rather than Medicaid funds), the E-FMAP rate applies and is paid out of the state's federal allotment. The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%.\nThe FMAP rate is also used in determining the phased-down state contribution (\"clawback\") for Medicare Part D, the federal share of certain child support enforcement collections, Temporary Assistance for Needy Families (TANF) contingency funds, a portion of the Child Care and Development Fund (CCDF), and foster care and adoption assistance under Title IV-E of the Social Security Act.", "The FMAP formula compares each state's per capita income relative to U.S. per capita income. The formula provides higher reimbursement to states with lower incomes (with a statutory maximum of 83%) and lower reimbursement to states with higher incomes (with a statutory minimum of 50%). The formula for a given state is:\nFMAP state = 1 - ( (Per capita income state ) 2 /(Per capita income U.S. ) 2 * 0.45)\nThe use of the 0.45 factor in the formula is designed to ensure that a state with per capita income equal to the U.S. average receives an FMAP rate of 55% (i.e., state share of 45%). In addition, the formula's squaring of income provides higher FMAP rates to states with below-average incomes (and vice versa, subject to the 50% minimum).\nThe Department of Health & Human Services (HHS) usually publishes FMAP rates for an upcoming fiscal year in the Federal Register during the preceding November. This time lag between announcement and implementation provides an opportunity for states to adjust to FMAP rate changes, but it also means that the per capita income amounts used to calculate FMAP rates for a given fiscal year are several years old by the time the FMAP rates take effect.\nIn the Appendix to this report, Table A-1 shows regular FMAP rates for each of the 50 states and the District of Columbia from FY2006-FY2014.", "As specified in Section 1905(b) of the Social Security Act, the per capita income amounts used in the FMAP formula are equal to the average of the three most recent calendar years of data available from the Department of Commerce. In its FY2014 FMAP calculations, HHS used state per capita personal income data for 2009, 2010, and 2011 that became available from the Department of Commerce's Bureau of Economic Analysis (BEA) in September 2012. The use of a three-year average helps to moderate fluctuations in a state's FMAP rate over time.\nBEA revises its most recent estimates of state per capita personal income on an annual basis to incorporate revised and newly available source data on population and income. It also undertakes a comprehensive data revision—reflecting methodological and other changes—every few years that may result in upward and downward revisions to each of the component parts of personal income (as defined in BEA's national income and product accounts, or NIPA). These components include:\nearnings (wages and salaries, employer contributions for employee pension and insurance funds, and proprietors' income); dividends, interest, and rent; and personal current transfer receipts (e.g., government social benefits such as Social Security, Medicare, Medicaid, state unemployment insurance).\nAs a result of these annual and comprehensive revisions, it is often the case that the value of a state's per capita personal income for a given year will change over time. For example, the 2009 state per capita personal income data published by BEA in September 2011 (used in the calculation of FY2013 FMAP rates) differed from the 2009 state per capita personal income data published in September 2012 (used in the calculation of FY2014 FMAP rates).\nIt should be noted that the NIPA definition of personal income used by BEA is not the same as the definition used for personal income tax purposes. Among other differences, NIPA personal income excludes capital gains (or losses) and includes transfer receipts (e.g., government social benefits), while income for tax purposes includes capital gains (or losses) and excludes most of these transfers.", "Several factors affect states' FMAP rates. The first is the nature of the state economy and, to the extent possible, a state's ability to respond to economic changes (i.e., downturns or upturns). The impact on a particular state of a national economic downturn or upturn will be related to the structure of the state economy and its business sectors. For example, a national decline in automobile sales, while having an impact on all state economies, will have a larger impact in states that manufacture automobiles as production is reduced and workers are laid off.\nSecond, the FMAP formula relies on per capita personal income in relation to the U.S. average per capita personal income . The national economy is basically the sum of all state economies. As a result, the national response to an economic change is the sum of the state responses to economic change. If more states (or larger states) experience an economic decline, the national economy reflects this decline to some extent. However, the national decline will be lower than some states' declines because the total decline has been offset by states with small decreases or even increases (i.e., states with growing economies). The U.S. per capita personal income, because of this balancing of positive and negative, has only a small percentage change each year. Since the FMAP formula compares state changes in per capita personal income (which can have large changes each year) to the U.S. per capita personal income, this comparison can result in significant state FMAP rate changes.\nIn addition to annual revisions of per capita personal income data, comprehensive NIPA revisions undertaken every four to five years may also influence regular FMAP rates (e.g., because of changes in the definition of personal income). The impact on FMAP rates will depend on whether the changes are broad (affecting all states) or more selective (affecting only certain states or industries).", "Regular FMAP rates for FY2014 (the federal fiscal year that begins on October 1, 2013) were calculated and published November 30, 2012, in the Federal Register . In the Appendix to this report, Table A-1 shows regular FMAP rates for each of the 50 states and the District of Columbia for FY2006 through FY2014. Figure 1 shows the state distribution of regular FMAP rates for FY2014. Fifteen states will have the statutory minimum FMAP rate of 50.00% (Rhode Island is very close at 50.11%), and Mississippi will have the highest FMAP rate of 73.05%.\nAs shown in Figure 1 , from FY2013 to FY2014, the regular FMAP rates for 36 states will change, while the regular FMAP rates for the remaining 15 states (including the District of Columbia) will remain the same.\nFor most of the states experiencing an FMAP rate change from FY2013 to FY2014, the change will be less than one percentage point. The regular FMAP rate for 12 states will increase by as much as one percentage point, and the FMAP rate for 16 states will decrease by as much as one percentage point.\nFor states that will experience an FMAP rate change greater than one percentage point from FY2013 to FY2014, two states will experience an FMAP rate increase of greater than one percentage point, and six states will experience an FMAP rate decrease of greater than one percentage point. Nevada will have the largest FMAP rate increase with a 3.36 percentage point increase, and South Dakota will have the largest FMAP rate decrease with a 2.65 percentage point decrease.\nTwo states will have FY2014 FMAP rates that are not calculated according to the regular FMAP formula: the District of Columbia and Louisiana. The FMAP rate for the District of Columbia has been set in statute at 70% since 1998, and Louisiana will receive a disaster-recovery FMAP adjustment (discussed in further detail below) increase over its FY2014 regular FMAP rate.", "Although FMAP rates are generally determined by the formula described above, Table 1 lists exceptions that have been added to the Medicaid statute over the years. Table 1 identifies whether the exception is a current (i.e., the exception currently applies), future (i.e., the exception will apply beginning at the specified date), or past (i.e., the exception no longer applies) FMAP rate exception.", "Some recent issues related to the FMAP rate include FMAP changes in the ACA, federal deficit reduction proposals impacting the FMAP rate, and the disaster-related FMAP adjustment.", "The Medicaid provisions in ACA represent the most considerable reform to Medicaid since its enactment in 1965. The most noteworthy change begins in 2014, or sooner at state option, when the ACA expands Medicaid to include a new mandatory eligibility group: all adults under age 65 with income up to 133% of the federal poverty level (FPL) (effectively 138% FPL with the Modified Adjusted Gross Income or MAGI 5% FPL income disregard). Originally, it was assumed that all states would implement the ACA Medicaid expansion in 2014 as required by statute because implementing the ACA Medicaid expansion was required in order for states to receive any federal Medicaid funding. However, on June 28, 2012, the United States Supreme Court issued its decision in National Federation of Independent Business (NFIB) v. Sebelius finding that the federal government cannot terminate the federal Medicaid funding a state receives for its current Medicaid program if a state refuses to implement the ACA Medicaid expansion. If a state accepts the new ACA Medicaid expansion funds, it must abide by the new expansion coverage rules. However, based on the Court's opinion, it appears that a state can refuse to participate in the ACA Medicaid expansion without losing any of its current federal Medicaid matching funds.\nWhile not all states are expected to implement the ACA Medicaid expansion, the Congressional Budget Office (CBO) estimates the Medicaid expansion will increase Medicaid enrollment by 7 million in FY2014, which is a 20% increase over the Medicaid enrollment estimated for FY2014 without the ACA Medicaid expansion. As a result, the expansion will significantly increase Medicaid expenditures, and the federal government will cover a vast majority of the costs for individuals who are \"newly eligible\" due to ACA.\nACA contains a number of provisions that affect FMAP rates, such as the \"newly eligible\" FMAP rates, the \"expansion state\" FMAP rates, and other FMAP rate changes discussed below.\n\"Newly Eligible\" FMAP Rates . An increased FMAP rate will be provided for \"newly eligible\" individuals who will gain Medicaid eligibility due to the ACA Medicaid expansion. The \"newly eligible\" are defined as nonelderly, nonpregnant adults with family income below 133% FPL who would not have been eligible for Medicaid in the state as of December 1, 2009, or were eligible under a waiver but not enrolled because of limits or caps on waiver enrollment. States will receive 100% FMAP rate for the cost of providing benchmark or benchmark-equivalent coverage to \"newly eligible\" individuals, from 2014 through 2016. For \"newly eligible\" individuals, the FMAP rate will phase down to 95% in 2017, 94% in 2018, 93% in 2019, and 90% afterward (See Table 2 ).\n\"Expansion State\" FMAP Rates. Although Medicaid eligibility has generally been limited to certain categories of individuals, some states provide health coverage for all low-income individuals using Medicaid waivers. As a result, they have few or no individuals who will qualify for the \"newly eligible\" FMAP rate. As of CY2014, these states will receive an increased FMAP rate, which is referred to as the \"expansion states\" FMAP rate.\n\"Expansion states\" are defined as those that, as of March 23, 2010 (ACA's enactment date), provided health benefits coverage meeting certain criteria statewide to parents and nonpregnant childless adults at least through 100% FPL. Although HHS will make the official determination, one source suggests that 11 states (Arizona, Delaware, Hawaii, Maine, Massachusetts, Minnesota, New York, Pennsylvania, Vermont, Washington, and Wisconsin) and the District of Columbia might meet the definition of an \"expansion state.\"\nThe \"expansion state\" FMAP rate will be available for individuals in \"expansion states\" who were eligible for Medicaid on March 23, 2010 and are in the new eligibility group for nonelderly, nonpregnant adults at or below 133% FPL. The formula used to calculate the \"expansion state\" FMAP rates is based on a state's regular FMAP rate, so the \"expansion state\" FMAP rates will vary from state to state until CY2019, at which point the \"newly eligible\" FMAP rates and the \"expansion state\" FMAP rates will both be equal (see Table 2 ).\n\"Expansion states\" are not excluded from receiving the \"newly eligible\" FMAP rates. Populations in an \"expansion state\" that meet the definition for the \"newly eligible\" FMAP rate will receive the \"newly eligible\" FMAP rate. For example, an \"expansion state\" that currently provides Medicaid coverage to childless adults and parents up to 100% FPL that chooses to implement the ACA Medicaid expansion will receive the higher \"newly eligible\" FMAP rate for individuals between 100% and 133% FPL. Also, \"expansion states\" will receive the \"newly eligible\" FMAP rate for individuals who received limited Medicaid benefits. In addition, \"expansion states\" that provided state-funded health benefits coverage will receive the \"newly eligible\" FMAP rate for individuals previously covered by the state-only program.\nAdditional FMAP Increase for Certain \"Expansion States.\" During CY2014 and CY2015, an FMAP rate increase of 2.2 percentage points is available for \"expansion states\" that (1) the Secretary of HHS determines will not receive any FMAP rate increase for \"newly eligible\" individuals and (2) have not been approved to divert Medicaid disproportionate share hospital funds to pay for the cost of health coverage under a waiver in effect as of July 2009. The FMAP rate increase applies to those who are not \"newly eligible\" individuals as described in relation to the new eligibility group for nonelderly, nonpregnant adults at or below 133% FPL. It appears that Vermont meets the criteria for this increase.\nAdditional Medicaid Changes . As noted in Table 1 , ACA also provides—subject to various requirements—an increased FMAP rate for certain disaster-affected states, primary care payment rate increases, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, health home services for certain people with chronic conditions, home and community-based attendant services and supports, and state balancing incentive payments. Three of these FMAP provisions went into effect on January 1, 2013: primary care payment rate increases, specified preventive services and immunizations, smoking cessation services for pregnant women. The other provisions have been in place for the past few years.\nCHIP. Prior to ACA, federal CHIP allotments were provided through FY2013 and states received reimbursement for CHIP expenditures based on the E-FMAP rate described at the beginning of this report. Under ACA, the E-FMAP rate for CHIP expenditures in FY2016-FY2019 will be increased by 23 percentage points, up to 100%. ACA also provides new federal CHIP allotments for FY2014 and FY2015. However, no federal CHIP allotments are provided during the period in which the 23 percentage point increase in the E-FMAP rate is slated to be in effect.", "In a typical year, the federal government funds roughly 57% of the total cost for Medicaid, and federal Medicaid expenditures account for almost 8% of all federal spending. In FY2013, federal Medicaid payments to states are estimated to amount to $276 billion. Federal Medicaid payments are anticipated to grow significantly beginning in FY2014 due to the expansion of Medicaid eligibility provided in the ACA. As a percentage of gross domestic product (GDP), federal Medicaid expenditures are expected to increase from about 1.7% of GDP in FY2013 to 2.4% of GDP in FY2022. As a result, controlling federal Medicaid spending has been a focus of federal deficit reduction proposals, and amending the FMAP structure has been identified as a way to reduce federal Medicaid spending by a reduction to the statutory FMAP floor.", "As mentioned above, the FMAP has a statutory maximum of 83% and a statutory minimum of 50%. In its Choices for Deficit Reduction report, CBO provided estimates for a series of options that Congress may choose to examine as it considers deficit reduction. One such option would reduce federal Medicaid spending by reducing the statutory FMAP floor, and CBO estimates this option would save $20 billion in federal Medicaid expenditures in FY2020.\nRegular FMAP rates for FY2014 range from 50% (15 states) to 73% (Mississippi). If this option were in place for FY2014, it would impact the 15 states that have FMAP rates of 50%. The other 35 states and the District of Columbia would not be impacted by this option.", "The ACA added a disaster-recovery FMAP adjustment for states that have experienced a major, statewide disaster. This adjustment was available to states beginning the fourth quarter of FY2011.\nThere are two criteria for states to qualify for the disaster-recovery FMAP adjustment. First, during the preceding seven years, the President must have declared a major disaster under the Stafford Act in the state where every county in the state was eligible for public assistance from the federal government. Second, the state's regular FMAP rate must have declined at least three percentage points from the prior year's FMAP rate.\nIn the first year a state qualifies for the disaster-recovery adjusted FMAP rate, the FMAP rate shall be equal to the regular FMAP rate as determined for the fiscal year, plus 50% of the difference between the current year's regular FMAP rate and the preceding year's FMAP rate. For the second and subsequent years a state qualifies for the adjustment, the FMAP rate shall be equal to the state's regular FMAP rate for that year plus 25% of the difference between the current year's regular FMAP rate and the preceding year's disaster-recovery adjusted FMAP rate.\nOriginally (i.e., as enacted by the ACA), for the second and subsequent years, the FMAP increase was applied to the prior year's disaster-recovery adjusted FMAP. However, this caused the state's FMAP rate to increase, rather than phase down as intended, each year a state qualifies for the adjustment. As a result, Section 3204 of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) revised the formula so that for the second and subsequent years the increase will be applied to the regular FMAP as determined for the fiscal year. This provision had an effective date of October 1, 2013. The effective date was later amended by Section 100123 of the Moving Ahead for Progress in the 21 st Century Act (MAP-21, P.L. 112-141 ) to October 1, 2012. In addition, MAP-21 amended the formula for FY2013 by changing the adjustment factor from 25% to 50% for only FY2013.\nLouisiana was the only state that met both requirements for FY2011, FY2012, FY2013, and FY2014. Table 3 shows the calculation for Louisiana's disaster-recovery adjusted FMAP rate for each of those years.\nIn the fourth quarter of FY2011, Louisiana met the Stafford Act criteria (due to Hurricane Katrina and Hurricane Gustav), and its regular FY2011 FMAP rate (63.61%) was at least three percentage points less than its regular FY2010 FMAP rate plus hold harmless from the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) temporary FMAP rate increase (72.47%). As shown in Table 3 , Louisiana's regular FMAP rate was adjusted 4.43 percentage points for a total FMAP rate of 68.04% for the fourth quarter of FY2011.\nFor FY2012, Louisiana met the Stafford Act criteria (due to Hurricane Katrina and Hurricane Gustav), and its regular FY2012 FMAP rate (61.09%) is at least three percentage points less than its FY2011 disaster-recovery adjusted FMAP rate (68.04%). As shown in Table 3 , Louisiana's FY2012 disaster-recovery FMAP adjustment is 3.48 percentage points, which was applied to the FY2011 disaster-recovery adjusted FMAP rate for a total FMAP rate of 69.78%.\nFor FY2013, Louisiana meets the Stafford Act criteria (due to Hurricane Gustav), and Louisiana's regular FMAP rate for FY2013 (61.24%) is more than three percentage points lower than Louisiana's disaster-recovery adjusted FMAP rate for FY2012 (69.78%). As shown in Table 3 , Louisiana's FY2013 regular FMAP rate is increased by 4.27 percentage points for a total FMAP rate of 65.51%.\nFor FY2014, Louisiana will meet the Stafford Act criteria (due to Hurricane Gustav), and Louisiana's regular FMAP rate for FY2014 (60.98%) is more than three percentage points lower than Louisiana's disaster-recovery adjusted FMAP rate for FY2012 (65.51%). As shown in Table 3 , Louisiana's FY2014 regular FMAP rate will be increased by 1.13 percentage points for a total FMAP rate of 62.11%.", "The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures. In FY2014, 15 states will have the statutory minimum FMAP rate of 50%, and Mississippi will have the highest FMAP rate of 73.05%. From FY2013 to FY2014, the regular FMAP rates for 36 states will change, while the regular FMAP rates for the remaining 15 states (including the District of Columbia) will remain the same.\nExceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. The ACA added a number of exceptions to the FMAP for \"newly eligible\" individuals, \"expansion states,\" disaster-affected states, primary care payment rate increases, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, health home services for certain people with chronic conditions, home and community-based attendant services and supports, and state balancing incentive payments.\nSince federal Medicaid expenditures are a large and growing portion of the federal budget, controlling federal Medicaid spending has been a focus of federal deficit reduction proposals. Amending the FMAP structure has been identified as a way to reduce federal Medicaid spending by reducing the statutory FMAP floor.", "Table A-1 shows regular FY2006-FY2014 FMAP rates calculated according to the formula described in the text of the report (see \" How FMAP Rates Are Calculated \"). In FY2014, FMAP rates range from 50% (15 states) to 73% (Mississippi). From FY2013 to FY2014, regular FMAP rates will decrease for 22 states, increase for 14 states, and remain the same for 14 states and the District of Columbia. All of the 14 states for which the FMAP rates do not change have the statutory minimum FMAP rate of 50%, and the FMAP rate for the District of Columbia is statutorily set at 70%." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 3, 2, 1, 2 ], "alignment": [ "h0_title h1_title", "", "h0_full", "h0_full", "", "", "", "", "h0_title h1_title", "", "h0_title", "h0_full", "h1_full", "h0_title", "h0_full" ] }	{ "question": [ "What is the purpose of the FMAP formula?", "What was the range for FMAP rates in FY2014?", "How are FMAP rates used?", "How does the ACA address major disasters?", "To what extent has this provision been used?", "How has the formula for disaster-recovery adjusted FMAP been modified?" ], "summary": [ "Generally determined annually, the FMAP formula is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes).", "For FY2014, regular FMAP rates range from 50.00% to 73.05%.", "The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services.", "The ACA included a provision providing a disaster-recovery FMAP adjustment for states that have experienced a major, statewide disaster.", "Louisiana is the only state that has been eligible for the disaster-recovery adjusted FMAP since the fourth quarter of FY2011 (when the adjustment was first available).", "Both the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96) and the Moving Ahead for Progress in the 21st Century Act (MAP-21, P.L. 112-141) amended the formula for the disaster-recovery adjusted FMAP." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 5, 5, 5 ] }
CRS_R40910	{ "title": [ "", "Overview", "Background", "Two Tracks on the Way to Copenhagen: One Agreement or Two?", "Key Topics Under Negotiation", "A Shared Long-Term Vision to 2050", "Obligations to Mitigate GHG Emissions", "Mid-Term Targets for GHG Reductions", "Common but Differentiated Commitments", "Proposals for Quantified GHG Targets", "Annex I Parties' Views", "Non-Annex I Parties' Views", "Adapting to Impacts of Climate Change", "Financial Assistance to Low-income Countries", "Amounts of Financing", "Public versus Private Financing", "Mechanisms for Financing", "U.S. Positions on Financing", "Technology Development and Transfer", "Enhancing Carbon Sequestration in Forests", "Measuring, Reporting, and Verification (MRV)" ], "paragraphs": [ "", "The United States and almost 200 other countries are negotiating under the United Nations Framework Convention on Climate Change (UNFCCC) to address climate change cooperatively beyond the year 2012. Parties agreed to complete those negotiations by the 15 th meeting of the Conference of the Parties (COP-15), held December 7-18, 2009, in Copenhagen. President Obama and leaders of many other nations are attending, hoping to produce \"a comprehensive and operational accord.\" Rather than a new treaty containing quantitative, legally binding GHG obligations, many predict the outcome will be a political mandate for pursuit of a later, more inclusive and enforceable agreement.\nPivotal discussions include:\nwhether measurable commitments to reduce greenhouse gas (GHG) emissions will include all major emitting countries and how deep reduction commitments would be; whether countries will agree to transparency and accountability regarding their commitments through robust measuring, reporting, and verification (MRV) requirements; how much financing may be available for capacity building, GHG reductions, avoiding deforestation and forest degradation, technology cooperation, and adaptation to climate change in developing countries through private sector mechanisms and public finance, and what institutions may oversee such flows; what means of technology cooperation would help to develop and deploy advanced, low- or no-emitting technologies, as well as to assist adaptation to climate impacts; and what mechanisms and resources would assist the most vulnerable countries to adapt to projected climate change.\nNegotiations had lagged through 2008. In December 2008, the then-incoming Obama Administration stated its policy to reduce U.S. emissions to 14% below 2005 levels by 2020. Optimism among many grew that the U.S. Congress would pass GHG control legislation before the Copenhagen meeting, providing guidance to the executive branch negotiators regarding the elements of a treaty that the Senate would ultimately consent to ratify.\nThe Obama 14% reduction policy and passage by the U.S. House of Representatives of H.R. 2454 (the American Clean Energy and Security Act (ACES), or the \"Waxman-Markey\" bill) have led to reinvigorated hopes of some people that consensus among countries could be found by December 2009 on a comprehensive Copenhagen agreement with quantified commitments. As the Copenhagen meeting opened, the United States had formally offered neither a GHG target nor specific amounts of financial assistance, although on the eve of the conference, the White House announced that President Obama intends to offer a \"provisional\" GHG target for the United States of 17% below 2005 levels by 2020, ultimately to be brought \"in line\" with energy and climate legislation, if passed. China also announced a voluntary, domestic goal of reducing its carbon intensity (carbon dioxide emissions per unit of economic output) by 40%-45% below 2005 levels by 2020, which could hold emissions approximately to current levels. India followed suit with a domestic goal to reduce its emissions intensity by 20-25% below 2005 levels by 2020. Some stakeholders consider that neither the U.S. target nor the Chinese and Indian approach is sufficiently aggressive. It also is unclear that several major non-Annex I country emitters would agree within an international accord to verifiable and significant GHG reduction commitments—which they have strongly resisted.\nSmaller countries, concerned about the impacts of climate change on their welfare and economies, and looking to the United States and other large, wealthy countries for leadership on climate change, have become increasingly frustrated. Lack of strong political agreements has led to recent demonstrations in as many as 4,500 locations in 170 countries. More are planned during the Copenhagen meeting.\nIt has become increasingly uncertain whether it will be possible in Copenhagen to reach comprehensive and detailed agreement to address climate change in the period beyond 2012, when the Kyoto Protocol's first period of GHG commitments expires (discussed in \" Background \" below). Without a new detailed accord, alternative outcomes are possible. One alternative could be a \"framework\" decision among high-level officials that spells out a plausible mandate for a future treaty—an outline more likely than the current one to gain broad consensus among nations. Another alternative could be a breakdown of negotiations. While all Parties may contribute to a potential breakdown, many people would blame the United States. Resulting anger could spill over into other international issues, influencing other U.S. foreign policy objectives.\nThe climate change issue has become politically significant internationally and domestically, with major legislation to control greenhouse gases passed by the House ( H.R. 2454 ) and under development in the Senate ( S. 1733 among others). Domestic legislation will interplay with any commitments made internationally, and actions taken by other countries to address climate change will likely have an impact on the United States.\nCongress will decide whether the United States becomes a Party to any agreement. If the President submits an agreement as a treaty, the Senate must give its consent to ratification for the treaty to be legally binding on the United States. Alternatively, both chambers of Congress would have to approve any agreement that the President submits before such agreement becomes binding on the United States. Consequently, the U.S. Congress has taken an interest in what the U.S. delegation may offer and oppose in Copenhagen. Members may also have interest in how the United States and its allies handle diplomatic and public reactions coming out of the Copenhagen meeting, whatever its outcome.", "The UNFCCC was adopted in 1992 and has been ratified by 192 countries, including the United States. Its objective is \" stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system .\" The UNFCCC contained many commitments of all Parties, though few were quantified and there were no sanctions for failing to meet commitments.\nMost Parties conclude the objective requires avoiding a 2 o Celsius increase of global mean temperature from pre-industrial values and reducing GHG emissions by 50% by 2050 from 1990 levels. Many argue that the industrialized countries' share should be an 80-95% reduction by 2050 from 1990 levels. The UNFCCC principle of \"common but differentiated responsibilities\" among Parties permeates debate about obligations of different forms, levels of effort, and verifiability.\nBecause nations agreed the UNFCCC objective could not be met by voluntary efforts alone, the 1997 Kyoto Protocol established enforceable, quantified GHG reductions for Parties listed in Annex I of the UNFCCC in the period 2008 to 2012. The United States signed the Kyoto Protocol in 1997, but President Clinton never submitted it to the Senate for consent. President Bush in 2001 announced that the United States would not become a party to the Kyoto Protocol, because of (1) uncertainty of the science; (2) potentially high cost of GHG abatement; and (3) lack of GHG commitments from non-Annex I countries. The first \"commitment period\" for meeting GHG emission targets runs from 2008 to 2012. It had been envisioned that GHG commitments for one or more subsequent periods would be made before 2008. But commitments beyond 2012 have been delayed, in part because the United States is neither a Party to the Kyoto Protocol nor has shown interest in engaging in future commitments under it, in part because of difficulty in gaining a mandate for negotiations among all UNFCCC Parties. A mandate to negotiate among all Parties was achieved in 2007 in the \"Bali Action Plan.\"", "The negotiations currently are running on two tracks, one under the Kyoto Protocol and the other under the UNFCCC's \"Bali Action Plan\" of 2007. The Kyoto Protocol's first commitment period runs from 2008 to 2012, during which wealthier (\"Annex I\") countries agreed to reduce their GHG emissions to an average of 5% below 1990 levels. In 2007, Kyoto Protocol Parties (not the United States) began negotiating under the Kyoto Protocol on what commitments would ensue beyond 2012. This is the \"Kyoto Protocol\" track.\nHowever, because neither the United States nor developing (non-Annex I) countries are bound to measurable GHG reduction commitments under the Kyoto Protocol, another negotiating mandate was established to include the United States and to address several broader commitment issues. Under the 2007 \"Bali Action Plan,\" all countries seek to reach agreement in Copenhagen on (1) a \"shared long-term vision\" (aggregate GHG targets for 2050); (2) GHG mitigation (GHG targets for each major Party for 2020 or earlier); (3) adaptation to climate change; (4) financial assistance; (5) technology cooperation; and (6) enhancing carbon sequestration in forests. This became the \"Long-Term Cooperative Agreement\" track. Each issue is described in later sections. One current dispute is whether the two negotiating tracks should result in two accords or converge into a single treaty.\nThe European Union (EU) and other Annex I countries do not want to amend the Kyoto Protocol without including U.S. commitments, though the United States is unlikely to agree to join the Kyoto Protocol. The Kyoto Protocol Parties also do not wish to abandon their agreement and the progress they made in establishing implementing rules and procedures (e.g., reporting requirements and compliance reviews) under the Protocol. Nonetheless, the Annex I countries have all urged that these two tracks converge by Copenhagen into one agreement that includes commitments of all Parties.\nMost non-Annex I Parties believe certain advantages exist in maintaining the Kyoto Protocol and a separate agreement for them. They argue that the Kyoto Protocol is for quantified, enforceable GHG obligations for developed countries only. The G-77 and China have so far blocked even discussion of accession of current non-Annex I Parties to quantified GHG commitments under the Kyoto Protocol track. They maintain that non-Annex I commitments should be of a different form and legal nature, embodied in the Bali Action Plan track, and resist any disaggregation of non-Annex I Parties. They perceive any proposal to disaggregate \"developing\" countries into smaller sub-groupings, based on magnitude of emissions or financial capacity, as an effort to pull additional countries onto a track of quantifiable GHG commitments. Despite the stating of voluntary domestic emissions targets in some countries, the G-77 and China have, thus far, successfully blocked any formal discussion of how this could happen; some delegations walked out of the Bangkok negotiations in October 2009 after a proposal was articulated to merge the negotiations onto one track.\nIn the UNFCCC, all Parties agreed to \"common but differentiated\" responsibilities, with differentiation based on a number of implied factors, including financial and technical capacity, and historical responsibility for climate change. The differentiation has been made primarily, though not exclusively, between Annex I (wealthier) and non-Annex I (less wealthy) countries, with quantified GHG reductions so far spelled out only for the Annex I Parties. The UNFCCC also spelled out that commitments from non-Annex I Parties would depend on leadership from the wealthiest (\"Annex II\") Parties to meet GHG and financial commitments. Circumstances have evolved since the UNFCCC was signed in 1992, especially with the growth of China and other large emerging economies. Recognition has crystallized that the objective to halt growth of GHG concentrations in the atmosphere requires slowing then reversing growth of GHG emissions by all major countries. Despite these facts, most countries argue that the Annex I countries have not fully met their UNFCCC and Kyoto Protocol obligations to reduce GHG emissions and assist developing countries (with the United States especially criticized). Although non-Annex I Parties now discharge most of current GHG emissions, the Annex I Parties continue to be responsible for the majority of the increase since the Industrial Revolution of atmospheric GHG concentrations linked to climate change. Thus, most countries argue, the wealthiest countries continue to have the greatest historic responsibility to cut GHG emissions.\nAs the Copenhagen meeting opens, it remains unclear whether the fundamental obstacle of the number and form of agreement(s) can be surmounted. At the negotiations held in Bangkok in early October, \"substantial\" progress was made in reducing text on the negotiating table and on certain topics: adaptation, technology cooperation, and capacity building. Nonetheless, negotiators in Copenhagen face many contentious issues regarding substantive commitments, described below. Many hope that major changes in stance by key negotiators could change the dynamic and lead to a \"dominoes\" chain of responses by other negotiators, permitting resolution of remaining issues.", "On November 26, 2009, the Secretariat of the UNFCCC released a document as the foundation for further negotiations by the Ad Hoc Working Group on Long-Term Cooperation (AWG-LCA). It presents the ideas of the Chair, including that possibilities of agreement are emerging on a shared long-term vision, adaptation, technology cooperation and capacity-building, and (to a lesser degree) on financial resources and investment. The Chair notes less \"clarity\" on enhanced action on GHG mitigation. He notes in particular that connections need better articulation between actions and support on GHG mitigation and adaptation. He also notes a need to clarify the role of market mechanisms in this track of negotiations under the Bali Action Plan. Finally, the Chair notes that there remains a wide range of views on the legal form that the AWG-LCA outcomes should take, from a package of decisions by the COP to adoption of a new legally binding instrument, and proposed that by December 15 the products be delivered to the COP as a \"comprehensive and balanced set\" of COP decisions, without prejudice to the form and legal nature of the COP outcome. Each of the topics of the Bali Action Plan is summarized below.", "The Bali Action Plan provided for negotiation of a vision (i.e., to 2050) for long-term cooperative action (LCA) among Parties. Many countries viewed this as the setting of a long-term target for avoiding global temperature increases, stabilizing atmospheric GHG concentrations, and/or setting global GHG reduction targets relative to a base year (typically 1990 or 2005). Some Parties have not viewed this as a major element in the negotiations, and some have opposed any kind of quantified vision. Other Parties have viewed a quantified vision as a hook for pulling all Parties into a common, global commitment to reduce GHG emissions.\nThe EU and many Parties have proposed cutting global GHG emissions to 50% below 1990 levels by 2050, to limit global warming to 2 o C. Avoiding 2 o C of global warming has been estimated by some as consistent with stabilizing GHG atmospheric concentrations at 450 parts per million (ppm). Some scientists, activists, and vulnerable countries call for a long-term target below 350 ppm. Others consider the 350 ppm target to be politically, and possibly economically, infeasible.\nThe EU further proposes that Annex I countries should cut their GHG emissions by 80%-95% by 2050 to meet the 450 ppm vision, and that global emissions drop by 50% from 1990 levels. President Obama's policy is that the United States should reduce its emissions by 80%-83% from 2005 levels by 2050 and support the 50% global emission reduction. These have not been offered as legally binding commitments in the Copenhagen negotiations, however. In the recent Barcelona negotiations, the U.S. delegation called on China to halve its GHG emissions by 2050, which would allow modest growth for poorer countries. China, among others, has blocked an explicit long-term and global target, although it recently pledged a voluntary, domestic target. World-wide emission targets consistent with, for example, 450 ppm, would require China to reduce its emissions strongly from past growth trajectories, as well as from current levels over several decades.", "Mitigation obligations remain among the most contentious topics of the negotiations. Aspects of mitigation include the forms and depth of commitments for Annex I and non-Annex I Parties, mechanisms to promote compliance with mitigation commitments, methods to address deforestation emissions, options for sectoral or other sub-national targets, and GHG trading schemes or other \"cost-containment,\" and financing mechanisms.", "", "All Parties to the UNFCCC agreed to the principle of \"common but differentiated\" responsibilities. They also agreed that the Annex I Parties should demonstrate the lead, as most have under the Kyoto Protocol (but not the United States or Canada). The two primary negotiating questions regarding mitigation for Copenhagen are (1) when and how additional countries will take on specific GHG mitigation commitments, and (2) how to \"differentiate\" the commitments among Parties (\"comparability\"). So far, China and most other non-Annex I Parties have blocked discussion of new commitments for them, though Mexico and South Africa have announced their own quantitative and conditioned targets. While China has pledged a quantified domestic target to reduce the growth of GHG emissions, its negotiating position has firmly opposed discussing any quantitative commitment internationally. The EU proposes that developing countries set and quantify \"low carbon development strategies\" as a prerequisite to financial assistance. Such strategies would need to be measured, reported and verified (MRV).", "Climate activists and some Parties especially vulnerable to climate change have called for Annex I countries to reduce their GHG emissions to 25%-40% below 1990 levels by 2013-2017. The EU has passed a law to reduce its GHG emissions by 20% below 1990 levels by 2020, or by 30% if other countries make comparable commitments. Japan's new president has pledged a commitment of 25% below 2005 levels by 2020, while the Australian legislature may pass a bill to achieve as much as 25% below 2000 levels by 2020. In late May, China called for developed country Parties to take on targets of 40% below 1990 levels by 2020—at the most stringent level of the range it had previously advocated—although many observers consider the Chinese statement to be positioning in the negotiations as it comes under greater pressure to take on a quantified target. Other countries, including Canada, continue to emphasize that the EU's and non-Annex I countries' proposals are too stringent and do not consider costs or other circumstances. The United States has also indicated that these proposals are not under consideration nationally.\nThe Obama Administration in November 2009 stated that it is prepared to offer to reduce U.S. GHG emissions to around 17% below 2005 levels by 2020, to be made consistent with future energy and climate legislation (e.g., S. 1733 and H.R. 2454 ). This would be equivalent to approximately 4% below 1990 GHG emission levels. Some Obama Administration officials have suggested that the former Obama -14% target and the EU proposals were comparable, in that both Parties would reduce emissions approximately 1.4% annually through 2020.\nTable 1 provides a summary of some proposals for GHG reduction targets, unilateral or for groups of countries, by 2020. Only the EU's target has been enacted into law. Many targets are proposed unilateral commitments by Parties for themselves, sometimes conditioned on what other Parties would commit. Most proposals are for 2020, although a few Parties propose a commitment period of 2013-2017 or 2013-2020. Some commitments would be contingent on technical issues regarding creditable GHG reductions regarding land use emissions, flexibility mechanisms, and others.\nOne issue raised frequently by the European Union is the question of whether Russia and other former Soviet and Eastern European countries would be allowed surplus \"assigned amounts\" (AAUs), which are GHG targets higher than their actual emissions. These surplus AAUs were accepted under the Kyoto Protocol as an incentive to participation by those countries, although some in the EU have often referred to them as \"hot air\" and argued that they undermine the environmental integrity and fair burden-sharing of the international framework. Russia and several other countries seek to retain and expand their surplus of AAUs in a new agreement beyond 2012.", "The United States, the EU, and many other Annex I countries insist that a Copenhagen outcome be a comprehensive framework for action by all Parties. They propose alternate versions of differentiated, quantified emission limits for Annex I Parties, with key issues including the form, nature and depth (\"comparability\") of GHG mitigation commitments. Furthermore, Annex I Parties propose differentiated commitments for non-Annex I Parties to establish strategies that would reduce their current GHG growth trajectories, as well as Nationally Appropriate Mitigation Actions (NAMAs), to delineate specific actions that they would submit to be inscribed into an internationally measured schedule or registry. Eligibility for countries to receive financial or technological assistance would be incumbent upon taking and reporting such GHG mitigation programs.", "The Bali Action Plan included ambiguous language regarding mitigation commitments by developing countries. Its key phrase was:\nconsideration of mitigation actions that would include: ... (ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measurable, reportable and verifiable manner;\nChina and many large developing countries continue to resist the idea that any non-Annex I countries might take on quantitative and enforceable commitments. Though China, India and other non-Annex I Parties have announced voluntary, domestic GHG goals, few have shown willingness even to discuss embedding these in an international agreement or registry or to submit progress toward them to independent review. By mid-2009, however, some non-Annex I countries favored beginning to differentiate among the non-Annex I country Parties. Uganda, speaking for the Least Developed Countries (LDCs), expressed the position that all countries will need to take actions, including the LDCs.\nSuch proposals, and those of the United States and EU, are strongly opposed by many non-Annex I countries, especially Brazil, India and China—among the non-Annex I Parties most pressured to take on quantified GHG commitments in an international agreement. They contend that these proposals seek to erase the differentiation between Annex I and developing countries embodied in the UNFCCC. These countries also oppose \"Measuring, Reporting, and Verification\" (MRV) proposals that would make all countries more accountable for their mitigation commitments.", "For low-income countries, many of which have the populations most vulnerable to climate and climate change, near-term assistance to adapt is as high a priority as mitigating long-term climate change. Key issues include how much financial assistance might be provided; how to measure, report and verify (MRV) whether wealthier countries meet their commitments; and through what mechanisms financial aid would flow.\nThe G-77/China and Africa Groups wish to establish quantified commitments for financial transfers by the wealthier countries. Some argue for payments as \"compensation\" for unavoidable climate change impacts, though the UNFCCC mentions only \"consideration\" of actions (not compensation). Non-Annex I countries voice concern over access to financing, conditions imposed on receiving assistance, criteria to judge \"vulnerability,\" and the burdens of processes and mechanisms, among additional issues.\nThe United States has proposed a framework for adaptation action, with the UNFCCC acting as catalyst and the countries as key implementers, assisted by a variety of international institutions. In this plan, adaptation action would be common among all Parties, but roles would be differentiated among countries.", "The United States and all other Parties to the UNFCCC committed to promoting adaptation, cooperation to develop and deploy new technologies, and a host of additional but unquantified obligations. The wealthier countries (including the United States) also committed to provide financial and technical assistance to underpin developing countries' efforts to meet their obligations. In the current negotiations, developing countries are calling for financial resources that will be \"new, additional, adequate, predictable and sustained,\" for mitigation, adaptation, and development and transfer of technologies, to flow through UNFCCC specialized funds. They call for the resources to be publicly financed (not private) and to be provided on a grant or concessional basis. In addition, some are proposing new \"monitoring, reporting, and verification\" mechanisms to apply to financial obligations as well, beyond the reporting already required for Annex I Parties' national communications. One of the more likely outcomes of the Copenhagen meeting is agreement on \"quick start\" funding for the period from 2010 until any new agreement—and its financial provisions—takes effect. (The Obama budget request for FY2010 included $1.2 billion for international financing.)\nFinancial assistance—its amount, predictability, and \"conditionality\"—ties into all other aspects of the Copenhagen negotiations. Deep divisions exist among Parties over four proposals now in the negotiating text:\none or more funds established under the UNFCCC Conference of the Parties (COP), managed by one or more Trustees, with funds generated through levies on international maritime transport and aviation; a share of proceeds from accessing international emissions trading; assessed contributions from Parties; and voluntary contributions from Parties and other donors; OR assessed contributions from Annex I Parties as a percent of Gross National Product; a World Climate Change Fund or Green Fund under the authority and guidance of the UNFCCC COP, administered by an existing financial institution, with funding from assessed contributions from all Parties except the Least Developed Countries (LDCs); a Global Fund for Climate (U.S. proposal) as an operating entity of the (existing) financial mechanism (the World Bank's Global Environment Facility), funded by multiyear, voluntary contributions of all Parties except LDCs; and use of existing financial institutions, such as the Global Environment Facility (GEF), multilateral development banks, etc., with a Facilitative Platform under the authority and Guidance of the COP to register and link needs to support, and to monitor and evaluate the information in the registry.", "A variety of international institutions and non-governmental organizations have tried to estimate the costs of adaptation to developing countries and the associated needs for public funding. Definitions and scopes of adaptation in these studies vary, accounting for some of the differences. In particular, some studies consider \"all\" costs of adaptation to climate change and remaining damages (although none are comprehensive); some include just large-scale adaptation costs (i.e., not most private measures taken by individuals); and some try to discern just the need for public financing for adaptation. As a result, figures range from $4 billion to several hundreds of billions of dollars annually by the year 2030. The United Nations Development Programme estimated that an additional US$86 billion per year would be needed in 2015; the UNFCCC Secretariat estimated that US$29 billion per year would be needed in 2030. For adaptation alone, the World Bank updated a previous study in September 2009, now estimating the average adaptation cost from 2010 to 2050 to be $75 billion to $100 billion annually. For GHG mitigation, the International Energy Agency's World Energy Outlook 2009 concludes that, in a scenario to stabilize atmospheric GHG concentrations at 450 ppm, \"the energy sector in non-OECD countries would need around $200 billion of additional investment in clean energy and efficiency in 2020—including $70 billion for nationally appropriate mitigation actions (NAMAs) and a similar amount to achieve sectoral standards in transport and industry.\" The extra investments would be more than offset in the industry, transport, and buildings sectors, says IEA, by savings from energy efficiency improvements. Differences among scopes and methods for estimating incremental financial needs explain part of the range among estimates; no study has been considered definitive.\nHeads of State in the European Union (the European Council) propose that 5 to 7 billion euros of public financing, particularly for least developed countries, should be provided in each year of 2010 to 2012, as a \"fast-start\" in the context of a Copenhagen agreement. The European Council has concluded that 100 billion euros annually by 2020 will be necessary to help developing countries to mitigate and adapt to climate change.\nSome non-Annex I countries (e.g., China) call for amounts of public financing that many view as unrealistic—up to 1% of GDP on top of other Overseas Development Assistance.", "Countries differ on the appropriate sources of funds. The G-77 and China argue that developed nations' governments should provide public funds as the main source of climate change financing for mitigation, adaptation, technology cooperation, and capacity building. Annex I nations, however, underscore the importance of private sector finance through GHG trading mechanisms and other investments, with public funds as smaller and more targeted shares. The United States and the EU agree that some public financing should be provided, in particular for capacity building and adaptation, but seek mechanisms for most of the financing to flow from the private sector through market incentives. (For example, GHG \"offsets\" that would be authorized by S. 1733 , the Clean Energy Jobs and American Power Act, the \"Kerry-Boxer\" bill.)\nEuropean Union heads of state concluded that the net incremental costs of up to 100 billion euros by 2020 in developing countries should be met through a combination of non-Annex I countries' own efforts, the international carbon market and international public finance. They propose that the international public finance portion may be in the range of 22 to 50 billion euros per year, but subject to a \"fair burden sharing\" among Parties to the UNFCCC, agreement on how to manage the funds, and application of the funds to \"specific mitigation actions and ambitious Low Carbon Development Strategies/Low Carbon Growth Plans.\" (See section on mitigation commitments of non-Annex I countries.) They conclude that all Parties except the least developed should contribute to the public financing, with assessments based heavily on emission levels, as well as on Gross Domestic Product. EU leaders have stated they will provide their \"fair share\" of this amount, though they have not specified a precise amount. Their contribution will be conditioned on other countries' offers.\nPublic finances have been proposed to come from a variety of levies, including charges on maritime and aviation fuels, a percentage of GHG offsets internationally (such as exists now under the Kyoto Protocol's Clean Development Mechanism), contribution of a share of national allowances to auction, etc.\nTo support private sector financing, proposals diverge on whether to retain and revise existing GHG trading mechanisms as vehicles for private investment in GHG mitigation: The non-Annex I countries seek to retain the mechanisms of the Kyoto Protocol, while the EU and United States press for new, more efficient mechanisms than, for example, the Clean Development Mechanism has thus far been. Many different proposals for new mechanisms have surfaced, including crediting for GHG reductions in Nationally Appropriate Mitigation Actions (NAMAs) below business-as-usual trajectories (Korea); NAMA-based emissions trading (New Zealand); and sectoral crediting and trading (EU).", "Besides the magnitude and terms of financing available, substantial disagreement continues over appropriate mechanisms that would manage publicly provided financing under a new agreement. Much assistance passes through bilateral arrangements, although some countries complain that these are difficult to verify and may represent a shift in funding, not additional funding. Multilaterally, an array of mechanisms is available to help finance capacity building, technology cooperation, GHG mitigation policy development and measures, and adaptation analysis, planning, and actions. Such mechanisms include the Global Environment Facility (GEF) as the financial mechanism of the UNFCCC; the Special Climate Change Fund; and funds for specialized activities (e.g., the Adaptation Fund of the Kyoto Protocol) or groups of countries (e.g., the Least Developed Countries Fund of the Kyoto Protocol). In 2008, multilateral development banks with several governments and stakeholders established the Climate Investment Funds (CIF) under management of the World Bank. Many additional sources of funding, such as through other MDBs, are active. Their processes, terms, and responsiveness vary.\nSome countries are concerned about the plethora of funds, administrative and management costs, and strategic provision of funds to maximize the effectiveness of the monies. Many non-Annex I countries complain that much financing is managed bilaterally or through the Multilateral Development Banks, particularly the World Bank, which some believe are not as responsive to the priorities of the recipient countries. These critics prefer financing to be managed by institutions created under the UNFCCC, in which they have \"one-country, one-vote,\" or at least equal regional representation as the industrialized nations. Also, while Annex I Parties generally prefer and promote means for the private sector to finance mitigation and adaptation investment, many non-Annex I countries prefer more \"predictable\" public sector flows.\nThe four proposals in the current negotiating text contain the main alternatives for mechanisms for publicly provided financing: one or more funds managed by one or more Trustees of the UNFCCC Conference of the Parties (COP); a new fund under the authority and guidance of the COP but managed by an existing international institution; a new fund under the authority and guidance of the COP but managed by the existing financial mechanism of the UNFCCC (i.e., the GEF); and the use of existing financial institutions (i.e., no new mechanisms). On December 7, 2009, U.S. officials indicated that they would support a new fund, likely to operate under the World Bank, because of its existing expertise, operating standards, and internal oversight of financial operations. The fund would have its own governance structure, however. The fund would receive public financing and leverage private and other public sector investments in energy efficiency, regulate electricity, improve institutional capacity, and adaptation to climate change, and an array of other possible projects. It would not be the exclusive mechanism for financial flows under an agreement.\nThe issue of mechanism may not be among the most difficult to resolve in the negotiations.", "Although the U.S. delegation provided a proposal for a new financing mechanism in the October 2009 negotiations in Bangkok, it has proposed neither overall multilateral levels of funding under a new agreement nor an amount that the United States might offer. Some Members of Congress and U.S. constituents have pressed for provisions in climate change legislation to provide for funding to assist adaptation in developing countries, and to support cooperation on clean technology and capacity building.\nIn June 2009, the House passed H.R. 2454 , the American Clean Energy and Security Act, with provisions to allow up to 1 billion emissions offsets to come from international sources, which could provide a many-billion-dollar stream of private finance for projects in developing countries. The bill also would provide funds internationally to help tropical deforestation prevention, capacity building, clean technology cooperation, and international adaptation. A parallel bill, S. 1733 and the Chair's Mark, contains similar provisions. Some Members of Congress and advocates have sought to increase allocation of allowances and/or appropriations, to $2 billion to $38 billion for international adaptation as well. A new U.S. coalition of religious organizations has called for at least $3.5 billion per year to help poor populations respond to potential floods, natural disasters and droughts associated with warming temperatures.\nThe United States participates in the financing deliberations with impaired credibility, being almost $170 million in arrears for its assessed contribution to the Global Environment Facility (the financial mechanism of the UNFCCC and other treaties). The Bush Administration helped establish a new Clean Technology Fund under the World Bank, but the U.S. Congress declined to appropriate the first payment of $400 million requested for FY2009. Treasury requested $500 million for FY2010. The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) permitted up to $10 million for the Least Developed Countries Fund, under the UNFCCC, to support grants for climate change adaptation programs. To receive the funds, the Global Environment Facility (GEF) must annually report on the criteria it uses to select programs and activities that receive funds, how funded activities meet such criteria, the extent of local involvement in these activities, the amount of funds provided, and the results achieved.\nIn the House appropriations bill for foreign operations for FY2010 ( H.R. 3081 , as placed on the Senate calendar), $75 million would be appropriated for the multilateral Strategic Climate Fund, $225 million for the Clean Technology Fund, $86.5 million for the GEF (a minor portion of which supports the UNFCCC), $180 million for bilateral GHG mitigation programs under U.S. Agency for International Development, as well as other monies that could be used to support GHG mitigation and climate change adaptation.\nThe United States is constrained in offering a quantitative financial pledge, including the proposed increases, without a legislated means to assure predictable private and public financing for international assistance (e.g., by GHG trading mechanisms for private flows, and allocation of GHG allowances for public funds). This has frustrated most other delegations, and may weaken U.S. leverage regarding the financial mechanisms.", "Because achieving deep GHG reductions would require radical technological change from current patterns, Parties generally agree to cooperate to advance and deploy new technologies. The United States and the EU agree that some public financing for technology is needed but that the private sector is better able to achieve the necessary advances and deployment. Many non-Annex I countries consider private investment too unreliable and not necessarily in their developmental interests. They want most funding to be public and managed by a new organization directed by the UNFCCC.\nAfter years of stalled talks regarding technology cooperation, Bangkok saw discussions open up on a wide range of issues including enhanced action on technology, capacity building and enabling environments; greater cooperation on research, development, demonstration, and deployment (RDD&D); technology innovation centers and other institutional arrangements; and financing. Divisions remain among Parties. Annex I Parties call for enhanced action among all Parties to implement the Convention's provisions. The European Union resists creation of any new institutions, calling for reliance on existing financial organizations. The United States proposes a new voluntary fund to which all Parties but the least developed would contribute, and from which all could draw. The G-77 countries and China propose creation of new institutional arrangements, funded by the wealthiest Parties for any of the non-Annex I Parties to use. Some convergence may be evolving around uses for RDD&D, capacity building, policy frameworks and enabling environments. Three components articulated as critical by some Parties are accelerated global openness to environmentally sound technologies; increased access to technology information and know-how; and high-quality technology roadmaps for low-carbon economic growth.\nIn October 2009, the U.S. delegation proposed a \"hub and spokes\" framework (now \"hub and corps\") as a new mechanism to support technology cooperation. It would rely on regional centers of excellence, linked through a professional Climate Technology Corps, to a Climate Technology Hub. The U.S. delegation indicates this would increase availability, capacity, and information exchange related to technology. The Hub would be staffed by full-time clean technology experts who would develop and maintain critical analytic tools. The Corps would consist of modeling, policy, finance, system design, and workforce training experts drawn from national development agencies, Multilateral Development Banks, and academia, to assist country-driven programs. The proposal seemed to straddle the competing ambitions of various Parties by directly responding to the stated interest for new institutions while offering a possible way forward in negotiations.\nOne remaining challenge is the handling of intellectual property rights (IPR). Common arguments arise between the importance of IPR as incentives to innovate versus barriers to technology transfer. Four options regarding IPR, covering a wide range of views, remain in the negotiating draft:\nTechnology development, diffusion and transfer would occur cooperatively with patent sharing and/or intellectual property free for renewable energy and energy efficiency technologies. Financial support would be provided to buy down the full or partial cost of technologies for developing country Parties, taking into account the ability to pay, and provided by the financial mechanism under the UNFCCC. Negotiation to constrain limits on access to technologies that help mitigation and adaptation by establishing \"global technology pools,\" and using the full flexibilities contained in the World Trade Organization's agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), differential pricing, limited or time restricted patents, etc. Compulsory licensing of specific technologies for mitigation and adaptation to climate change, where it can be demonstrated that those patents and licenses act as a barrier to technology transfer and prevent the deployment or diffusion of that technology in a specified country. Immediate exclusion of new—and revocation of existing—patents in developing countries on essential technologies required to address mitigation and adaptation.\nSome of these options are non-negotiable for the U.S. and other delegations.", "Deforestation accounts for about one-fifth of global carbon dioxide emissions, and poses further ecological risks. Until recently, most non-Annex I countries and many environmental groups opposed addressing forests or giving credits for improving resource management: many feared it was a distraction from abating fossil fuel emissions, while others focused on the environmental integrity challenges of credible measurement and monitoring of GHG reductions in the forest and resource sectors. Forested countries also feared any undermining of national sovereignty, including their management of resources. Widespread agreement has emerged to address carbon sequestration in forests, but with differences over how financial assistance for measures should be provided—through public funding or through GHG trading, or both.\nThere is no G-77 coordinated position on how to reduce deforestation and forest degradation, as well as improved conservation of natural resources (\"REDD+\"). Disagreements are apparent over the level of safeguards and the definition of what would be considered \"sustainable management of forests.\" Nevertheless, most see value in ensuring that all land use activities are recognized as viable mitigation options for both Annex I and non-Annex I countries. The U.S. remains prepared to press for REDD to be integrated into developing country NAMAs and low carbon strategies. The European Union generally agrees, and emphasizes performance-based mechanisms that recognize verified emission reductions.", "Measuring, reporting and verification (MRV) responsibilities would provide transparency and accountability for other commitments undertaken in a Copenhagen agreement. The practice of measurement, reporting, and verification also assists Parties in building their indigenous capacities and fulfilling their commitments. The UNFCCC included commitments from all Parties to certain actions that would be included under effective MRV provisions, including national GHG inventories, reporting (\"national communications\") of national plans and actions taken, modeling of GHG results, etc. Only Annex I Parties, however, have agreed to annual GHG inventories according to UNFCCC guidance and to periodic national communications, while some non-Annex I Parties (notably China) have resisted rules that would regularize their reporting. Given concerns about capacities, transparency, and confidence among Parties, MRV is arguably an essential part of the multilateral architecture under negotiation.\nUnder the Bali Action Plan, Parties agreed to paragraphs 1b(i) and 1b(ii):\n(b) Enhanced national/international action on mitigation of climate change, including, inter alia, consideration of:\n(i) Measurable, reportable and verifiable nationally appropriate mitigation commitments or actions, including quantified emission limitation and reduction objectives, by all developed country Parties, while ensuring the comparability of efforts among them, taking into account differences in their national circumstances;\n(ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner (UNFCCC, 2007a).\nWhile the current negotiations include some dispute about appropriate interpretation of that language, most Parties agree that \"measurable, reportable, and verifiable\" should apply to three sets of actions:\n(1) GHG actions and quantified commitments by developed country Parties;\n(2) Nationally appropriate mitigation actions (NAMAs) by developing country Parties; and\n(3) technology, financing, and capacity building for developing country Parties (although it is unclear whether MRV would regard the receipt of these, or the provision of these, the effects of these or all of these options).\nAdditionally, MRV is part of negotiations to reduce emissions from deforestation and forest degradation, and conservation (REDD+) in developing countries.\nMost Parties agree that new commitments should build on the existing frameworks under the UNFCCC and, when appropriate, the Kyoto Protocol. MRV proposals under negotiation toward Copenhagen include:\nreporting of all nationally appropriate mitigation actions by developing countries, or only those that receive international support; requirements for all Parties to provide comparable information and detail in their reporting; mechanisms and magnitude of financial and technical assistance to countries that are not (yet) capable of meeting the requirements; setting out timing, according to each Party's circumstances, for annual GHG inventory and regular national communications obligations to become binding; results-based mechanisms for distributing available resources to improve MRV in developing countries; mechanisms for transparency and independent review of reports, whether through international expert panels (as in place under the UNFCCC for Annex I Parties) or through agreed, independent mechanisms within Parties; rules and procedures for MRV in Parties that allow them to take part in GHG trading mechanisms (including project-based offsets) to protect environmental integrity; linkages between the quality of MRV of a Party and crediting of GHG reductions; and methods for quantifying \"technology, financing, and capacity-building\" provided by Annex I countries and received by developing countries, and for reporting outcomes and effectiveness.\nSome non-Annex I Parties likely resist proposals because MRV ties them into more rigorous compliance assurance systems under the international regime. There are a number of multilateral and bilateral initiatives that have demonstrated progress in improving developing countries' capacities and willingness to report and have their reporting independently verified. (As examples, the United States supported dozens of \"Country Studies\" aimed at this in the early to mid-1990s; the World Bank has financed and assisted many Parties' communications; and Australia, for instance, has assisted Indonesia to design and begin to establish a national system for MRV of REDD.) Most observers conclude that the efforts have yielded useful results, but that the level and consistency of resources have constrained more widespread progress.\nThe U.S. delegation has indicated that its position builds on the commitments of all Parties under the UNFCCC. It argues that MRV is required of all Parties. New requirements would cover (1) enhanced reporting (annually for all but the Least Developed Countries); development, implementation, and reporting of low carbon strategies and of actions that would be \"inscribed internationally,\" (2) independent expert reviews; and (3) public peer reviews conducted in sessions with all Parties, to promote transparency and accountability. Sub-elements of the MRV system would, however, apply differently to countries, such as to the Least Developed Countries versus those non-Annex I Parties with greater responsibilities and capabilities. The U.S. proposal would include financial support to countries that are not capable of carrying the costs of their MRV obligations.\nSome non-Annex I Parties have protested that the U.S. proposal does not include enough differentiation among Parties. Some of the Parties to the Kyoto Protocol have indicated that they seek a stronger compliance and enforcement system, potentially retaining the procedures agreed under the Kyoto Protocol." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 3, 4, 4, 4, 4, 2, 2, 3, 3, 3, 3, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h1_full", "h0_full", "h2_title h1_title", "", "", "", "", "", "", "", "", "h2_title", "", "", "h2_full", "h2_full", "h1_full", "", "" ] }	{ "question": [ "How are nations addressing climate change cooperatively?", "How were these negotiations supposed to end?", "What will the role of the Copenhagen outcome be?", "What are the goals of the negotiations?", "What steps are required to meet the objectives?", "How does the principle of common but differentiated responsibilities affect negotiations?", "How do domestic climate change negotiations affect the Copenhagen negotiations?", "What GHG targets has the Obama Administration introduced?", "What challenges does the U.S. delegation face?", "What factors may affect U.S. influence in the negotiations?" ], "summary": [ "The United States and almost 200 other countries are negotiating under the United Nations Framework Convention on Climate Change (UNFCCC) to address climate change cooperatively beyond the year 2012.", "Parties agreed to complete the negotiations by the 15th meeting of the Conference of the Parties (COP-15) from December 7-18, 2009, in Copenhagen.", "However, some nations' leaders have indicated that the Copenhagen outcome is likely to be a political agreement providing a mandate for a later legally binding, comprehensive agreement.", "The negotiations are intended to decide the next steps toward meeting the objective of the UNFCCC, to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.", "Most Parties conclude the objective requires avoiding a 2oCelsius increase of global mean temperature from pre-industrial values and reducing global greenhouse gas (GHG) emissions by 50% by 2050 from 1990 levels, with industrialized countries' share to be an 80-95% reduction.", "The UNFCCC principle of common but differentiated responsibilities among Parties permeates debate about obligations of different forms, levels of effort, and verifiability.", "Many delegations, including the United States, approach Copenhagen with unresolved climate agendas at home.", "President Obama has announced an intention to offer a \"provisional\" GHG target for the United States in the range of 17% below 2005 levels by 2020, ultimately to be brought \"in line\" with energy and climate legislation.", "The U.S. delegation negotiates without clear signals as to what the Congress would support.", "U.S. influence in the negotiations may also be impaired by having signed but not ratified the Kyoto Protocol, and by being almost $170 million in arrears in contributions to the multilateral Global Environment Facility." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 3, 3, 3, 3 ] }
CRS_R44319	{ "title": [ "", "Introduction", "Scope of the Report", "A Note on Terminology", "Why Campaign Finance Enforcement Might Matter to Congress", "Latest Congressional Activity", "The FEC: A Brief Overview", "The Enforcement Process in Brief", "Overview and Initial Steps", "Timing and Votes", "Selected Major Topics of Debate in Enforcement", "Transparency and the Enforcement Process", "Recent Congressional Oversight and FEC Enforcement Processes", "Relationships with Other Agencies", "Enforcement Outreach and FEC Processes", "Deadlocked Votes", "Timing and Penalties", "Vacancies Among Senior Enforcement Staff", "Potential Considerations for Congress and Concluding Comments" ], "paragraphs": [ "", "Even as Congress finalized legislation creating the FEC in 1974, some Members of the House and Senate disagreed over how the agency should be constituted, what powers it should have, and how broad its enforcement authority should be. Perhaps unsurprisingly, almost immediately, the FEC's enforcement activities generated controversy. Fo r some, they were too vigorous; for others, too lax. Partially due to enforcement controversies, Congress has occasionally considered restructuring the agency. In the 114 th Congress, H.R. 2931 would replace the current six-member body with a five-member commission, including a chairperson with enhanced enforcement powers. Recent Congresses have also engaged in oversight concerning the FEC's enforcement practices and transparency.\nThe controversy surrounding the FEC's enforcement of campaign finance law and regulation continues. During 2015, as the FEC marked its 40 th anniversary, prominent media accounts and opinion pieces chronicled tense relations among commissioners and stalemates over new regulations and enforcement. In recent years, commissioners have sparred at open meetings and in the media about whether the agency's enforcement activities are inadequate or overzealous. The debate over enforcement is not merely about internal agency disagreements. Rather, it represents broader controversies about what the FEC does and what it should do, and what federal campaign finance policy is and should be. Some also contend that enforcement establishes the boundaries of permissible campaign behavior. This report is not about the FEC's individual enforcement controversies, but, rather, about why controversies surrounding the enforcement process might matter to Congress as it provides the agency with overall direction and shapes campaign finance policy generally.", "This report highlights examples of FEC or congressional attention to enforcement topics, but it is not intended to provide comprehensive discussion of particular enforcement matters. Rather, it discusses selected major issues that appear to be most consequential for Congress. Other topics might be relevant for practitioners or agency officials but are generally not addressed here. Unless otherwise noted, the report does not address criminal enforcement handled by the Justice Department or activities regulated by agencies such as the Internal Revenue Service (IRS). The report is not a legal analysis of commission activity. Other CRS products cited throughout this report provide additional information about related topics. In particular, another CRS product provides an overview of the FEC. Finally, the report does not provide compliance guidance to those regulated by FECA or FEC rules.", "This report uses the terms \"FEC,\" \"commission,\" and \"agency\" interchangeably. Some discussions of the FEC's authority, which are generally beyond the scope of this report, use the term \"commission\" to denote members of the FEC as opposed to agency staff. This distinction is not central to this report but is relevant for some material in the \" Transparency and the Enforcement Process \" section.", "Members of Congress have a dual stake in campaign finance policy: as regulators and as the regulated. By enacting legislation, appropriating funds, and conducting oversight, Congress establishes the rules that campaigns—including their own—must follow and provides resources for ensuring compliance. More generally, enforcement is one of the most prominent topics in federal campaign finance policy. Policy debates often characterize enforcement as an indicator of other issues, such as the health of the FEC or the extent of government regulation of political speech. Enforcement can also indicate to what extent emerging campaign practices will be permitted, as the FEC considers how existing law and regulation might apply to new circumstances. Proposals to restructure the FEC typically have enforcement implications. For all these reasons, even a basic understanding of enforcement can enhance familiarity with campaign finance policy overall. As noted elsewhere in this report, Congress has regularly considered legislation and held hearings that could affect the FEC's enforcement duties.", "Congress has considered various campaign finance legislation, and conducted FEC oversight, for decades. Much of that activity has addressed campaign finance policy generally rather than FEC enforcement specifically. The same is true of more current legislation and hearings. Recent developments particularly relevant for enforcement include the following.\nIn the 114 th Congress, H.R. 2931 would replace the current six-member FEC with a five-member commission, including a chairperson with enhanced enforcement powers. The 113 th Congress extended until 2018 operating authority for the FEC's Administrative Fine Program (AFP). The legislation also expanded the program to cover late reports filed by non-candidate committees and for independent expenditures. During the 113 th Congress, a Senate Judiciary Committee subcommittee held a hearing on criminal enforcement of campaign finance law. The hearing included witnesses from the Department of Justice, Internal Revenue Service, and interest groups, but did not focus on the FEC. During the 112 th Congress, the Committee on House Administration, Subcommittee on Elections, examined FEC enforcement through an oversight hearing. Subsequently, the FEC released additional information about its enforcement activities.", "The FEC is a six-member independent regulatory agency. Commissioners are appointed by the President and subject to Senate confirmation. The Senate most recently confirmed commissioners in 2013 (the 113 th Congress), as shown in Table 1 . Another CRS report provides additional detail about the commission.", "Three major enforcement options are at the commission's disposal: (1) what the agency has termed the \"general enforcement process\" established in FECA; (2) the Alternative Dispute Resolution (ADR) Program; and (3) the Administrative Fine Program (AFP). The first category includes the most complex and sometimes controversial matters that the commission might handle, designated as \"Matters Under Review\" (MURs). They may entail lengthy investigations or audits, protracted negotiations between the commission and H.R. 3487 respondents, substantial civil penalties, or litigation—although the pace can vary depending on individual circumstances. By contrast, matters handled under the AFP and ADR programs typically are simpler and less controversial. ADR cases can involve various issues; the program is designed to facilitate negotiation that leads to relatively speedy resolution of fairly simple matters. AFP cases are limited to straightforward matters involving late filings. A five-year statute of limitations applies to campaign finance enforcement matters.", "The enforcement process typically begins when one of four entities files a complaint or makes an internal referral to the FEC. These include the following:\na complaint from an individual or other group (e.g., an opposing campaign); a referral from another government agency (e.g., Department of Justice); a referral from the FEC Audit Division or Reports Analysis Division (RAD); or a violation that is self-reported by a political committee or other regulated entity (a sua sponte submission).", "The details of processing and resolving complaints vary based on whether the matter is handled through the MUR, ADR, or AFP methods. In general, once complaints or referrals are complete,\nthe commission notifies the respondent (the subject of the complaint or referral) of the receipt or referral; the respondent has an opportunity to reply to the complaint and may choose to be represented by an attorney; and the commission determines which enforcement method, if any, to pursue: the MUR, ADR, or AFP processes.\nRegardless of the enforcement mechanism, FECA dictates much of how the process must unfold and how long it takes. In particular, FECA specifies how complaints must be filed and, except for AFP cases, that the commission must seek voluntary compliance before imposing a penalty. FECA also requires commissioners to vote on key enforcement decisions throughout the process. In particular, affirmative votes from at least four commissioners are required to\nfind \"reason to believe\" (RTB) that a violation has occurred or is about to occur, which commences additional action (e.g., an investigation); find probable cause that a violation has occurred or is about to occur; resolve a matter (e.g., through a conciliation agreement, penalties, etc.); and authorize filing a lawsuit if a matter cannot otherwise be resolved.\nWithout an affirmative vote from at least four commissioners in each of these instances, substantive action stops. The \" Deadlocked Votes \" section contains additional detail.\nTable 2 below lists the major steps and potential timelines required for cases routed through the MUR process, typically the most complex and consequential enforcement cases. The table excludes optional steps, such as hearings or presentation of legal questions to the commission, which require additional time.", "", "At least two transparency issues are central to the enforcement process. First, FECA bars the FEC or its personnel from releasing any information about individual enforcement matters until after cases are closed. This confidentiality requirement was designed to prevent competing campaigns from using complaints as political weapons. Nonetheless, campaigns and other political actors routinely publicize complaints they have filed, even if the commission cannot comment. Second, Congress has dedicated some recent oversight activities to agency transparency concerning enforcement. Apparently both on its own initiative and in response to congressional interest, in recent years, the FEC has reexamined how it provides enforcement information to the public or those regulated by campaign finance law and commission rules. Highlights appear below.", "As noted previously, in November 2011, during the 112 th Congress, the Committee on House Administration, Subcommittee on Elections, held an FEC oversight hearing. Much of that hearing emphasized transparency surrounding the FEC's enforcement process. After the November 2011 hearing, negotiations between the committee and commission appear to have resulted in the ongoing effort to approve and publicly release a new FEC enforcement manual. In May 2012, the FEC released on its website more than 1,200 pages of documents concerning its enforcement and audit procedures. During the summer of 2013, controversy developed concerning an Office of General Counsel (OGC) draft of the enforcement manual and proposed revisions to that draft from some commissioners. A major source of controversy appeared to be the extent to which OGC staff should be restricted from sharing information with other agencies (particularly the Justice Department), or from conducting research that might constitute an \"investigation\" as contemplated in FECA, without specific commission authorization. Although the manual was scheduled for consideration at FEC open meetings at least as early as June 2013, it was held over due to disagreements among commissioners about whether a vote should occur, and if so, when. Debate over the matter continued at the FEC, sometimes including acrimonious public meetings among commissioners. In a June 17, 2013, memorandum to the commission, then-FEC General Counsel Anthony Herman called aspects of a proposal to restrict staff interactions with other agencies without commissioners' approval \"troubling\" and \"unprecedented.\" He suggested that proposed additional requirements for subpoenas or commissioner approval for information-sharing could \"increase administrative burden and legal risk for the Commission\" and \"would expose the Commission to allegations that politics and partisanship motivate its case-by-case decisions.\" Then-Vice Chairman Donald McGahn disputed Herman's characterization and contended that FECA vested relevant decisionmaking authority only in the commissioners and that, in some cases, \"staff viewed the Commission as an obstacle to be overcome, and not the deliberative body vested with decision-making authority that [FECA] contemplates.\" Amid apparent stalemate among commissioners, Herman resigned as general counsel effective July 5, 2013. Proposed changes to information-sharing policies reportedly remain under consideration. The general counsel position remained vacant for more than two years. As noted elsewhere in this report, in August 2015 the FEC appointed an acting general counsel.", "The FEC's relationships with other federal agencies that might share enforcement interests appear to have varied over time. The current state of those relationships does not appear to be a major component of the public record. In July 2011, the FEC submitted written responses to questions from the Committee on House Administration, Subcommittee on Elections, explaining that the agency's memorandum of understanding (MOU) with the Justice Department became \"somewhat outdated\" after Congress enacted the 2002 Bipartisan Campaign Reform Act (BCRA). The commission noted that \"[a]lthough several draft proposals were exchanged\" between the FEC and DOJ, \"those negotiations did not ultimately lead to a revised MOU, and those discussions have not yet been revived.\" One 2015 media account reported that the MOU had not been updated and that commission referrals to DOJ for alleged \"knowing and willful\" FECA violations were rare.", "The FEC appears to have interpreted its confidentiality obligations differently over time. In brief, areas of debate have concerned which documents the commission releases and, in particular, whether documents that informed the commission's consideration but were not final (such as interim OGC reports) should be released. Litigation, which is beyond the scope of this report, has shaped some of the agency's disclosure policies. As of this writing, activity at recent FEC open meetings suggests that commissioners are attempting to negotiate mutually agreeable revisions to Directive 68, the agency's internal policy regarding how and when respondents and the commission receive status reports on pending cases. In 2007, the FEC established probable cause hearings permitting respondents to address findings in certain OGC briefs. The FEC established a pilot program for conducting audit hearings in 2009. The FEC held hearings on its enforcement procedures in 2003 and 2009. The agency also solicited public comments in 2013. The FEC has substantially revised its website in recent years to include a variety of additional information about the agency's processes and campaign finance data, including some enforcement information. Since 2013, the FEC has permitted those with \"a material dispute on a question of law\" arising during Audit Division and Reports Analysis Division referrals to ask the commission to consider the disputed legal question before proceeding with an enforcement matter.", "Throughout its history, the commission has been criticized for failing to reach consensus on some key policy and enforcement issues, resulting in what are commonly termed \"deadlocked\" votes. Affirmative votes from at least four commissioners are required to authorize most consequential agency activity, including making, amending, or repealing rules; issuing advisory opinions (AOs); and approving enforcement actions and audits. Unlike matters that a majority of the commission has definitively approved or rejected, actions without at least four votes for or against can have the effect of leaving questions of law, regulation, or enforcement unresolved. In these cases, deadlocked votes essentially halt substantive commission action on the matters in question.\nThe FEC does not regularly compile and release summary deadlocks data. Most recently, the commission appears not to have produced an official, publicly available statistical summary since 2009. Using those data, CRS found that in 2008-2009, the FEC deadlocked on approximately 13% of closed MURs. A CRS analysis of more recent FEC vote tallies found that in calendar year 2014, commissioners deadlocked on 24.4% of closed MURs. Results from other analyses vary based on methodology, time period, and the types of votes studied.\nDeadlocks in some recent matters have fostered debate about what split votes suggest about agency enforcement. For some, deadlocks represent a failure to enforce campaign finance law. For others, they signal that the commission is carefully considering what the law permits and prohibits.\nOverall, deadlocked votes might or might not reflect the overall functioning of the enforcement process. In particular, even MURs without deadlocks can be controversial, while those with deadlocks can include agreement on some questions. In one 2014 example, MUR 6660, the commission avoided deadlock, but commissioners released competing statements explaining the implications of their votes. Similarly, in two other MURs closed in 2014 (6722 and 6723), the commission considered allegations of impermissible coordination between political committees. On February 25, 2014, the commission voted unanimously that there was \"no reason to believe\" that impermissible coordination had occurred. In explaining their votes, however, three commissioners stated that \"[S]ome activity that is plainly 'coordination' under the statute is not squarely covered by the Commission's coordination communications regulation,\" suggesting that substantive differences remained despite the agreeing votes. Finally, particularly when votes occur on multiple motions affecting a MUR, substantive decisions can occur on some issues even when deadlocks preclude decisions on others.\nCongress appears to have anticipated that the commission might be unable to reach consensus in some controversial cases, and perhaps intended for deadlocks to occur. According to one analysis, \"In order to ensure that the Commission would not become a vehicle for partisan purposes, the Congress created an unusual conflict within the FEC\" through the six-member structure. Commenting on the four-vote requirement, former Commissioner Scott E. Thomas and his executive assistant, Jeffrey H. Bowman, continued, \"These provisions were specifically designed to ensure that formal action on a matter before the commission could go forward only on the affirmative vote of a mixed majority of Commission members.\" In addition, deadlocks might be viewed positively if enforcement actions being considered are perceived as unwarranted or excessive. Nonetheless, deadlocks mean that the commission has been unable to reach consensus about some element of law or regulation. As a result, at least in specific circumstances, deadlocks prevent campaign finance law from being enforced or preclude those seeking guidance from clearly knowing whether their planned activities will run afoul of the law. Another CRS report contains additional analysis of deadlocks generally.", "As Table 2 above shows, at minimum, resolving a MUR enforcement case could take months. In practice, resolution often takes longer. In some cases, the commission may be unable to resolve an enforcement action before the five-year statute of limitation expires.\nIn March 2015, citing FEC data, one account reported that the FEC had \"a backlog of 191 serious enforcement cases, with more than a quarter of these still unresolved more than two years after allegations of campaign finance violations were first filed.\" Some protracted enforcement cases appear to be the result of disagreement among commissioners—including on whether pending enforcement matters constitute a \"backlog\" or necessary deliberation. In other instances, factors such as the complexity of the issues in question, the need for comprehensive audits, replies from and negotiations with respondents, and other factors explain timing. Recently, some commissioners have proposed that the FEC revise its policies concerning how quickly cases are handled and when the commission or the public is informed about enforcement progress. Some commissioners have also proposed meeting more frequently to address enforcement matters.\nThe FEC has noted that, except for AFP matters, the agency \"does not impose fines,\" but instead \"seeks the payment of civil penalties through voluntary settlements (called 'conciliation agreements') with respondents.\" Those amounts are typically modest, as shown in Figure 1 below. In 2014, for example, the commission assessed less than $600,000 in penalties in all closed enforcement cases—the smallest amount since before FY2000. Financial penalties peaked in the mid-2000s, likely the result of large assessments on some organizations that operated under Section 527 of the Internal Revenue Code (IRC) in the early 2000s while taking the position that they were not political committees subject to FECA. The decline in penalties since that time has generated controversy, with some advocates claiming that lower amounts reflect lax enforcement, a scenario that is possible. It is also possible that decreased penalty amounts reflect better compliance. Particularly amid recent debate about whether the commission should publicize a penalty schedule, commissioners have debated whether existing penalties are sufficient and whether providing more information about how penalties are calculated would essentially publicize a \"cost of doing business\" for violating law or regulation. In addition, although monetary penalties are the most prominent component of FEC enforcement tools, the commission also could assess other forms of corrective action, such as requiring violators to attend training seminars.", "As noted in Figure 2 below, high-profile vacancies have occurred in some FEC senior staff positions. As of this writing, these include vacancies or acting appointments in the general counsel position, as well as the associate general counsel for enforcement. Amid a reported stalemate over how to fill the position, and reportedly reflecting other commissioners' divisions over enforcement, the general counsel position was vacant for more than two years between July 2013 and August 2015. The commission appointed FEC attorney Daniel Petalas acting general counsel in August 2015.", "Enforcement is important not only for encouraging compliance with law and regulation or correcting non-compliance, but also for what it represents about the state of campaign finance policy overall. For some, the FEC's enforcement process is unnecessarily complex and insufficiently transparent. For others, it is too lax to be effective. Whether observers prefer more vigorous, more limited, or unchanged campaign finance enforcement, there is general consensus that a clear, consistent enforcement process matters. Without transparent and consistent enforcement, political actors lack guidance about what they can and cannot do, when, and how.\nIf Congress wants to provide more direction surrounding enforcement, it could pursue legislation to clarify those issues on which policy stalemates have occurred. Nonetheless, pursuing legislative clarity on controversial issues might not be practically attainable in all circumstances. In addition, legislating individual policy issues would not necessarily address the fact that the commission routinely deadlocks on a variety of issues, which suggests that structural reform could be a more expedient route to curtailing split votes.\nAs such, some contend that more vigorous enforcement of campaign finance law requires restructuring the FEC. Most prominently, critiques typically propose eliminating the even-number commissioner structure to make deadlocks less likely. For some, in choosing the current bipartisan structure, Congress intentionally made the FEC \"weak\" with the agency being \"designed to promote deadlock along party lines on issues that really mattered.\" Other observers warn that an odd number of commissioners could invite politicized enforcement. As one analysis explains, \"The FEC's bipartisan design ... allows its regulations to carry weight. If not for this bipartisan design, every FEC action would be tinged with politics and viewed by some as illegitimate.\"\nSeveral questions could be relevant as the House and Senate examine how they want the FEC to enforce campaign finance law and regulation—if they choose to make any change at all. Potential questions include the following:\nHow does Congress want the FEC to prioritize enforcement compared with other duties, such as disclosure? What relationships does Congress want the FEC to have with other enforcement agencies, and for which areas of law and regulation should the FEC be responsible? Does the commission have a unified understanding of what the agency's enforcement priorities are and should be? Does Congress want to clarify its expectations in these areas through oversight, legislation, or both? Does the commission have adequate appropriations to carry out enforcement duties? Does the commission have adequate personnel to carry out enforcement duties? Does the commission have adequate statutory authority to carry out enforcement duties? To what extent should the commission wait for relevant pending litigation to resolve before reaching a determination in enforcement cases? Does Congress want to leave that determination to the commission or to specify a standard? If so, what? Do FECA's civil-enforcement requirements sufficiently reflect current needs? For example: Do prohibitions on sharing information about open enforcement matters limit the potential for filing frivolous complaints for publicity; do they limit the commission from informing the public about its enforcement activities; or neither or both? Do the required time frames (e.g., as shown in Table 2 ) allow for sufficient consideration by the commission and are they reasonable for respondents? Do those time frames, commission practices, or both or neither affect what is sometimes regarded as long delay in pending enforcement matters? Does the requirement that the commission attempt to negotiate compliance undermine enforcement? Does Congress want to clarify which investigation and enforcement activities FEC staff can initiate versus those that require commissioner actions? Specifically, does Congress want to revisit the authorities of the commission versus those of the OGC or other enforcement staff? Does Congress want to reestablish the FEC's authority to conduct random audits? Does Congress want to amend FECA (or enact another statute) to provide either greater flexibility or limitations in the enforcement process?\nThe FEC can determine how to prioritize enforcement activities, fill relevant staff vacancies, and whether or not commissioners can agree on enforcement actions. Much of the enforcement process, however, is set in statute and therefore beyond the agency's control. As long as campaign finance policy remains controversial, history suggests that so, too, will be enforcement." ], "depth": [ 0, 1, 2, 2, 1, 2, 1, 1, 2, 2, 1, 2, 3, 3, 3, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h1_full", "h1_full", "", "h1_title", "h1_full", "", "", "", "", "h0_title h1_title", "", "", "", "", "h0_full", "", "h1_full", "h0_full h1_full" ] }	{ "question": [ "What responsibilities does the FEC have?", "To what extent are the agency's actions controversial?", "Why is enforcement critical?", "To what extent is FEC enforcement effective?", "What debates have arisen over enforcement issues?", "How well-staffed are FEC enforcement positions?", "What oversight exists over FEC activities?", "How has Congress proposed altering the FEC?" ], "summary": [ "The Federal Election Commission (FEC) is responsible for civil enforcement of the Federal Election Campaign Act (FECA) and other campaign finance statutes.", "Enforcement, one of the FEC's principal functions, is perhaps the most controversial thing the agency does.", "Enforcement matters not only for encouraging compliance with law and regulation, but also for what it represents about the state of campaign finance policy overall.", "Some agency critics argue that modest fines, protracted processes, and deadlocked commission votes demonstrate that the FEC cannot effectively enforce campaign finance law. Others contend that Congress designed the FEC, which includes six commissioners who typically represent the two major political parties, to be deliberate and driven by consensus so that enforcement would not be politicized.", "Enforcement has drawn attention inside and outside the agency. In recent years, commissioners have sparred at open meetings and in the media about whether the agency's enforcement activities are inadequate or overzealous.", "The commission has struggled to staff some senior enforcement positions.", "Through oversight hearings, recent Congresses have monitored the FEC's enforcement activities and, in some cases, criticized the transparency surrounding those processes.", "Congress occasionally has considered legislation to restructure the agency, particularly to change the number of commissioners, thereby reducing possibilities for deadlocked votes. H.R. 2931 in the 114th Congress is the latest such proposal." ], "parent_pair_index": [ -1, -1, 1, 2, -1, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1 ] }
CRS_R40834	{ "title": [ "", "Introduction", "How the Health Insurance Industry Developed", "How the \"Blues\" Began", "Tax Advantages For Employer-Provided Health Insurance Benefits", "Commercial Insurers Enter", "Introduction of Medicare and Medicaid", "The Rise of Managed Care", "Blurring Distinctions Between \"Blues\" and Commercial Insurers", "Description of the Health Insurance Market", "Intermediaries Play Key Roles in Health Care", "Demand for Health Insurance", "Sources of Health Insurance Coverage", "What People Know Differs: Information Problems in Insurance Markets", "Adverse Selection", "Cancellation, Renewal, and Incentives", "Moral Hazard", "The Principal-Agent Problem", "Information Problems and the Structure of Health Care Finance", "Price Effects", "Tax Benefits", "Supply of Health Insurance", "Risk-Sharing", "Administration", "Types of Health Plans", "Types of Insurance Companies", "Role of Employers", "Regulation of Health Insurers", "Market Concentration Among Health Insurance", "Measures of Market Concentration", "DOJ-FTC Merger Guidelines", "Market Concentration Among Health Insurers", "Market Concentration and Market Power", "Possible Causes of Concentration in the Health Insurance Market", "The Spread of Managed Care", "Countervailing Power", "Economies of Scale", "Marketing and Brand Management", "Competitive Environment", "Health Insurance Company Profitability", "Financial Results and Ratios", "Comparing Profitability By Industry", "", "Profitability Measures Reported by the A.M. Best Company", "Profitability Measures Reported by the Sherlock Company", "Options for Congress", "More Aggressive Antitrust Enforcement", "Stronger Regulatory Measures", "Regulation of Medical Underwriting", "Minimum Loss Ratio Requirements", "Individual and Employer Health Insurance Mandates", "Health Insurance Exchanges", "Lessons from the Massachusetts Connector", "What Role Would Exchanges Play: Traffic Cops vs. Gatekeepers", "The Public Option", "Cooperatives", "Other Options", "Concluding Remarks", "Additional Indicators of Health Insurers' Profitability" ], "paragraphs": [ "", "In March 2010, after more than a year of legislative deliberation, Congress passed a pair of measures designed to reform the U.S. health care system and address the twin challenges of constraining rapid growth of health care costs and expanding access to high-quality health care. On March 21, the House passed the Patient Protection and Affordable Care Act (PPACA; H.R. 3590 ), which the Senate had approved on Christmas Eve, as well as the Health Care and Education Reconciliation Act of 2010 ( H.R. 4872 ). President Obama signed the first measure ( P.L. 111-148 ) on March 23 and the second on March 30 ( P.L. 111-152 ).\nOther health reform proposals were also put forth, such as the Healthy Americans Act ( S. 391 ), introduced by Senators Ron Wyden and Robert Bennett, and the Empowering Patients First Act ( H.R. 3400 ), introduced by Representative Tom Price. On November 2, 2009, the House Judiciary Committee reported out the Health Insurance Industry Antitrust Enforcement Act of 2009 ( H.R. 3596 ), which would limit antitrust exemptions provided by the McCarran-Ferguson Act (P.L. 79-15). On February 24, 2010, the House passed the Health Insurance Industry Fair Competition Act ( H.R. 4626 ) on a 406–19 vote, which would amend the McCarran-Ferguson Act to enable more robust antitrust enforcement.\nHealth care costs in the United States, which have risen rapidly in real terms in the last few decades, have strained state and federal budgets. Future growth in health care costs is projected to threaten the fiscal position of state and federal governments unless major policy changes occur. Additionally, for many Americans, the lack of health insurance coverage complicates access to health care. According to the U.S. Census Bureau, 46.3 million or 15.4% of the people in the United States lack health insurance coverage. Furthermore, even families with health insurance may become vulnerable to the financial burdens of a serious health condition or illness either because of the narrowness of plan benefits or the unpredictability of decisions about what care is covered. Increases in health insurance premiums, according to some research, has degraded access to health care.\nHealth insurance markets are often highly concentrated with one insurer accounting for over 50% of the market. Concerns about concentration in health insurance markets are linked to wider concerns about the cost, quality, and availability of health care. The market structure of the health insurance and hospital industries may have played a role in rising health care costs and in limiting access to affordable health insurance and health care. Some argue market concentration has led to higher health care prices. Higher prices for health care or health care insurance may then make health care less affordable and thus less accessible for some families. Consumers in the individual and small group markets typically face particularly challenging conditions.\nOthers, however, contend that health insurers with strong bargaining leverage might help constrain health providers' ability to raise prices, and that the benefit of lower premiums resulting from that ability to bargain may be passed along to consumers. Some industry analysts have described competition among major health insurers as robust, and some pricing trends indicate that competition has strongly affected insurers' market strategies. Moreover, some contend that economies of scale along with state and federal regulation have contributed to the rising levels of concentration in health insurance markets.\nThe Obama Administration made reform of the American health insurance and health care system a top policy priority. PPACA, according to the Administration, will broaden access to health care by increasing the number of Americans with health insurance coverage, by lowering the cost of insurance faced by individuals, by providing stronger incentives for individuals to acquire health insurance, and by restructuring parts of the health insurance market. PPACA contains some measures intended to slow the growth of health care costs, although some policy analysts are uncertain whether those initiatives are likely to accomplish that goal. Some argue that a more fundamental reform of the health care sector and the health insurance market would be needed to change the projected trajectory of health care costs.\nThis report discusses whether or not the current health insurance market structure hinders the U.S. health system's ability to reach the policy goals of expanding health insurance coverage and containing health care costs. The report describes the forces that have shaped the health insurance industry, including its historical evolution, characteristics of health care and health insurance, determinants of supply and demand for health insurance, and the nature of competition among health insurers. Reasons for high market concentration are discussed, along with profitability measures for the industry. Finally, options for Congress regarding the health insurance industry are analyzed.", "The market structure of the modern U.S. health insurance industry not only reflects the complexities and uncertainties of health care, but also its origins in the 1930s and its evolution in succeeding decades. The first commercial health insurance policies were offered in 1847 in Philadelphia, although those plans soon failed. A few private insurers began to offer individual accident insurance in the 1860s. In the last quarter of the 19 th century some railroad, mining, and timber firms began to offer workplace health benefits. In the 1890s, burial and sickness policies became more popular, and the first group accident and health plans were developed.\nAs population shifted from rural agricultural regions to industrialized urban centers, workers were exposed to risks of occupational accidents, but had less support from extended family networks that provided informal insurance benefits. Many workers obtained accident or sickness policies through fraternal organizations, labor unions, establishment plans, or private insurers. Economic historian John Murray estimated that roughly one-third of World-War-I-era male industrial workers had some form of accident, health, or burial insurance. These policies were often indemnity plans, that would pay a set cash amount in the event of a serious accident or health emergency. Social surveys at the turn of century spotlighted the link between industrial accidents and poverty, leading Progressive-era reformers and labor unions to push for compulsory social insurance, which helped lead to workers' compensation programs. Progressive movement reformers, however, were unable to convince unions, employers, and politicians to institute German- or United Kingdom-style health insurance programs.", "The modern health insurance industry in the United States was spurred by the onset of the Great Depression. In 1929, the Baylor University Hospital in Dallas created a pre-paid hospitalization benefit plan for school teachers after a hospital executive discovered that unpaid bills accumulated by local educators were a large burden on hospital finances as well as on the teachers themselves. Unlike earlier health insurance policies, subscribers were entitled to hospital care and services rather than a cash indemnity. While the plan did not cover physician bills, it did improve enrollees' ability to pay those charges.\nThe Baylor Plan was soon extended to other groups. Other hospitals in Dallas quickly followed suit with their own group hospitalization plans as a means of ensuring a steady revenue source in difficult economic times. For individuals, these plans offered a way to obtain hospital care at a reasonable and predictable cost. In 1932, local hospitals in Sacramento, CA, created a joint plan for group hospitalization benefits, and in 1933, hospitals in Essex County, New Jersey, offered a similar plan. Community-based plans in St. Paul, MN, Washington, DC, and Cleveland were created soon afterwards. The Blue Cross emblem, first used by the St. Paul plan, was widely adopted by other prepaid hospital benefit plans adhering to American Hospital Association (AHA) guidelines.\nThe AHA's 1933 guidelines required prepaid group hospitalization plans using the Blue Cross symbol to stress the public welfare, limit benefits to hospital charges, organize as a non-profit, and run on a sound economic basis. While many of the early group hospitalization plans were organized by community leaders, voluntary hospitals controlled Blue Cross because they provided the key resources in most cases and because they were responsible for underwriting the policies. Through the 1930s, the number of Blue Cross plans grew and enrollments expanded. By 1937, 1 million subscribers were covered, and by 1939, 25 states had passed legislation to enable hospitalization plans. Many state laws deemed Blue Cross plans charitable community organizations that were exempted from certain insurance regulations and taxes.\nThe health insurance market in the United States, according to many historians, was originally structured to avoid competition among providers. The earliest plans tied benefits to a single sponsoring hospital; each hospital plan competed with others. Groups or individuals with the option to negotiate with specific hospitals might have been able to exert bargaining power. Hospital and professional groups, however, soon pushed for joint plans that required \"free choice of physicians and hospital,\" rather than plans offered by individual hospitals. Joint plans dampened incentives for local hospitals to compete on the basis of price or generosity of plan benefits. The American Hospital Association strongly favored joint plans that allowed a subscriber to obtain care from any licensed local hospital and viewed single-hospital plans as a threat to the economic stability of community hospitals. Furthermore, in 1937, the AHA required Blue Cross plans to have exclusive territories so that they would not compete against each other.\nHospital and physician groups' opposition to competition in health care and health insurance dovetailed with more general criticism of \"destructive competition\" that was widespread in the early 1930s. Some business leaders and New Deal policymakers viewed heightened competition as the cause of sharp cuts in wages, which in their view reduced consumer buying power and drove price deflation and market instability during the early years of the Great Depression. Most economists believe measures to reduce market competition imposed during the Great Depression actually retarded economic recovery. Competition in health insurance markets, however, raises issues that do not apply in most markets. If health insurers adopt different underwriting standards, competition can make pooling risks more difficult, an issue discussed in more detail below.\nInsurance coverage of physician services lagged behind the growth of Blue Cross hospital plans due to opposition from the American Medical Association (AMA) and restrictive state laws. In several states, however, medical societies set up prepaid service plans to preempt proposed state or federal plans, which evolved into Blue Shield plans. In most states, Blue Shield was absorbed into Blue Cross plans, although some retained separate governing boards.\nBlue Cross plans accelerated their growth during World War II and extended to almost all states by 1946. Wartime wage and price controls authorized in October 1942 excluded \"reasonable\" insurance and pension benefits. As industries struggled to expand war production, many employers used health insurance and other fringe benefits to attract new workers. In the late 1940s, the National Labor Relations Board (NLRB) successfully sued employers that refused to bargain collectively over fringe benefits, opening the way for unions to negotiate with employers over health insurance, which further helped boost enrollments in health insurance plans.", "Prior to 1954, no explicit statutory provision excluded health insurance benefits from federal income taxation. The IRS, however, had indicated in 1943 that group health insurance premiums paid by a firm for its employees would be considered an \"ordinary and necessary\" business expense rather than as taxable income received by the employee. A major overhaul of the Internal Revenue Code of 1954 included Section 106, which explicitly excluded employer contributions for health insurance from employees' taxable income. The tax exclusion for employer-provided health care made health insurance cheaper than non-tax-advantaged forms of consumption for individuals. One study found that health insurance coverage following the 1954 tax changes expanded more rapidly among employees with higher incomes, who generally had marginal tax rates, which could indicate that the tax exclusion led workers to demand more extensive or generous plans. Other factors, such as rising income levels, competition for workers, and rising medical costs, also spurred growth in employer-provided health benefits.", "Before World War II, many commercial insurers doubted that hospital or medical costs were an insurable risk. Insurers traditionally considered a risk insurable only if the potential losses were definite, measurable and not subject to control by the insured. The financial risks linked to illness or injury, however, could vary depending on the judgment of medical personnel, and behavior of the insured could affect the probability of ill health in many ways. After the rapid spread of Blue Cross plans in the mid-1930s, however, several commercial insurers began to offer similar health coverage. By the 1950s, commercial health insurers had become potent competitors and began to cut into Blue Cross's market share in many parts of the country. The large-scale entry of commercial insurers into the health insurance market changed the competitive environment in two ways. First, Blue Cross organizations, which had been sheltered from competition by exclusive territory and free-choice-of-hospital rules, were now engaged in head-to-head competition with commercial rivals.\nSecond, the commercial health insurers were not bound to set premiums using the Blue Cross community rating principle, which linked premiums to average claims costs across a geographic area rather than to the claims experience of particular groups or individuals. Therefore, commercial insurers using an \"experience rating\" approach were able to underbid Blue Cross for firms that employed healthier-than-average individuals, which on average were cheaper to insure. The loss of healthier groups then raised average costs among remaining groups, which hampered Blue Cross organizations' ability to compete with commercial insurers on price. Competition from commercial insurers compelled Blue Cross to adopt experience rating in the 1950s, although most Blue Cross plans continued to support efforts to broaden risk pools. The shift toward experience rating changed the nature of competition in the health insurance market. Insurers could cut costs by shifting risks to others, by recruiting firms whose employees and their families were healthier than average, rather than finding more efficient ways of managing risks for a given pool of subscribers.", "By the late 1950s, health insurance benefits had become a standard part of compensation packages among most major employers. In 1959, Congress created the Federal Employees' Health Benefit Plan (FEHBP), which provided Blue Cross and Blue Shield benefits to federal workers across the country. During the late 1950s, hospital costs rose sharply in many parts of the United States due to new hospital construction, the increasing capital intensity of inpatient care, the replacement of flat-rate per diem reimbursement for hospitals with retrospective full-cost payment, and the spread of health insurance benefits that increased patients' ability to pay. Those cost increases led many Blue Cross affiliates to request large premium increases, which raised public concern and resistance from many state insurance regulators. These pressures, according to some historians, led Blue Cross affiliates and voluntary hospitals to push states to enact certificate of need (CON) regulations in the mid-1960s to deflect more stringent cost control measures while raising barriers to entry to newer and proprietary hospitals.\nWhile Blue Cross/Blue Shield and commercial insurance plans covered a large portion of employees and their dependents at the end of the 1950s, many low-income and elderly people had trouble obtaining affordable health insurance or paying for health care. Congress in the 1950s began to provide federal aid to states that chose to cover health care costs of these groups. Social Security was extended to pay providers to cover certain medical costs incurred by aged, blind, and disabled beneficiaries starting in 1950. The Kerr-Mills Act of 1960 (P.L. 86-778), a forerunner of Medicaid, supported state programs that paid providers for health care of the \"aged, blind, or permanently and totally disabled,\" as well as low-income elderly individuals. State governments, subject to certain federal requirements, retained substantial discretion over benefit levels and income limits, which were typically linked to welfare assistance programs. By 1965, 40 states had implemented Kerr-Mills programs, and three more had authorized plans. Less than 2% of the elderly, however, were covered by Kerr-Mills programs in 1965.\nIn 1965, the Johnson Administration worked with Ways and Means Committee Chairman Wilbur Mills to create the Medicare program, which provided health insurance for nearly all Americans over age 65. Medicare combined a compulsory hospital insurance program (Part A) with a voluntary physician services plan (Part B). While some had worried that Medicare would displace private insurers, Blue Cross organizations became fiscal intermediaries for Medicare, responsible for issuing payments to providers and other back office operations. Medicaid, created in the same 1965 act, is a means-tested program financed by federal and state funds. Each state designs and administers its own program under federal rules. Over time, Medicaid eligibility standards and federal requirements have become more complex.\nPrivate health insurance companies play an important role in several federal health programs. Many insurers run Medicare Advantage (Part C) and prescription drug benefit plans (Part D), and some help provide CHIP (Childrens' Health Insurance Program, previously known as SCHIP) benefits.", "In some parts of the country, plans combining insurance with the direct provision of health care evolved into important players in local markets despite the strong opposition of the AHA and AMA. A health plan designed for southern California construction workers in the mid-1930s eventually became the Kaiser Health Plan. Some physicians set up group practices and clinics in the 1920s and 1930s. Many health care cooperatives were formed by employers, employee groups, and the federal governments during the 1930s and 1940s. While some of these plans prospered locally or regionally, they did not achieve national reach until the 1970s.\nIn 1971, President Nixon announced a program to encourage prepaid group plans that joined insurance and care functions as a way to constrain the growth of medical care costs, which had risen sharply in the years following the startup of the Medicare and Medicaid programs, and to enhance competition in the health insurance market. Advocates claimed that health maintenance organizations (HMOs), which integrate health care and health insurance functions, would have a financial motive to promote wellness and would lack incentives to overprovide care. The Health Maintenance Organization Act of 1973 ( P.L. 93-222 ) provided new grants, loans and loan guarantees to expand the number of HMOs, which then only numbered about 30, so that 90% of the country would have access to HMOs in 10 years.\nWhile this ambitious goal was not reached in the 1970s, by the late 1980s policymakers and businesses began to view greater use of managed care organizations such as HMOs and similar organizations as a key strategy for controlling health care costs. In the mid-1990s, the broader use of more restrictive forms of managed care (such as stringent gatekeeper, second medical opinion, and pre-approval requirements) sparked strong consumer resistance, which forced an industry retreat from some of those strategies. Networks of providers, known as preferred provider organizations (PPOs), grew rapidly in the late 1980s and early 1990s. PPOs, often owned by hospital systems and other providers, typically contract with insurers or self-insured firms and offer discounted fee-for-service (FFS) rates. PPO enrollees who receive care outside of the network typically must obtain plan approval or pay more. Thus, a PPO plans provided patients with more flexibility than staff-model HMOs, which generally did not cover care provided outside of the HMO. As various types of managed care plans such as HMOs and PPOs became widespread, more employers offered choices among competing health plans to let workers willing to pay higher premiums avoid restrictive plans.", "By the 1980s, health researchers and policymakers had begun to view the differences between Blue Cross/Blue Shield insurers, which were organized as non-profit organizations, and for-profit commercial health insurers as having narrowed. The Internal Revenue Service regulations had regarded Blue Cross organizations as tax exempt community service organizations since their inception in the 1930s. The Tax Reform Act of 1986 ( P.L. 99-514 ) removed Blue Cross/Blue Shield plans' tax exemption because Congress believed that \"exempt charitable and social welfare organizations that engage in insurance activities are engaged in an activity whose nature and scope is inherently commercial rather than charitable,\" and that \"the tax-exempt status of organizations engaged in insurance activities provided an unfair competitive advantage.\" The 1986 act retained some limited tax advantages to reflect Blue Cross/Blue Shield plans' provision of community-rated health insurance, especially in the individual and small-group markets.\nIn the 1990s, many health insurers struggled with rising health care costs and sharper criticism of industry practices. Blue Cross/Blue Shield of West Virginia went bankrupt and several other Blue Cross/Blue Shield affiliates faced serious financial difficulties. In 1994, Blue Cross/Blue Shield guidelines were amended to let affiliates reorganize as for-profit insurers, leading the way for more than a dozen Blue Cross/Blue Shield affiliates to convert to for-profit status. Other Blue Cross/Blue Shield insurers bought other insurers, merged, or restructured in other ways. At the same time, private insurers acquired HMOs and other managed care organizations. Consolidations reduced both the number of commercial and Blue Cross/Blue Shield organizations, leading to the emergence of a small number of very large insurers with strong market positions across the country. For example, the commercial insurer Anthem acquired Blue Cross/Blue Shield affiliates located in Colorado, Connecticut, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, Ohio, Virginia, and Wisconsin. In 2004, Anthem bought WellPoint Inc., which had acquired Blue Cross/Blue Shield plans in California, Georgia, and New York, and now operates under the WellPoint name. Table 1 lists the top 30 health insurers ranked by total medical enrollment at the end of 2008. Commercial health plan enrollments for fully insured health plans in 2007 totaled 168.2 million enrollees.\nIn the 1990s, proponents of \"consumer-directed\" health care proposed measures intended to make consumers more sensitive to medical care costs. In 1996, Congress enacted legislation to create Archer Medical Savings Accounts (MSAs), which were superseded in 2003 when Congress passed legislation to allow consumers with high-deductible health insurance plans to set up Health Savings Accounts (HSAs) that allow people to pay for out-of-pocket expenses through a tax-advantaged medical savings account. By early 2009, HSA-qualified high-deductible plans covered an estimated 8 million consumers.", "Individuals and families typically buy insurance to avoid risks by paying a known premium in order to receive benefits if an adverse event were to occur during the insurance policy's term. Most individuals are willing to pay an insurer to assume the bulk of financial risks associated with unpredictable health outcomes of uncertain severity. Health insurance is a method of pooling risks so that the financial burden of medical care is distributed among many people. Some insured people will become sick or injured and incur significant medical expenses. Most people, however, will remain relatively healthy, thus incurring little or no medical expenses. While it is difficult to predict who will incur high expenses, the average medical expense among a large group of people is more predictable. Insurance pools the medical expenses of the insured, who pay for the expenses through their premiums. In essence, money is shifted from those who remain healthy to those who become sick or injured.\nThe health insurance market is tightly interrelated with other parts of the health care system. Consequently, many parties play a role in the health insurance market. Health insurers are intermediaries in the transaction of the provision of health care between patients and providers—health insurers are a third-party who reimburse providers on behalf of patients. Health insurers not only reimburse providers, but also typically have some control over the number and types of services covered and negotiate contracts with providers on the payments for health services—most health insurance plans are managed care plans (HMOs, PPOs) rather than indemnity or traditional health insurance plans that provide unlimited reimbursement for a fixed premium. Other parties involved in the health insurance market include employers (most private health insurance is obtained through an employer), federal, state and local governments, and health care providers. The federal government directly provides health insurance through Medicare. The Department of Veterans Affairs (VA) health system provides health care benefits, and military health systems provide both health insurance and health care benefits. States and the federal government share responsibility for Medicaid and private health insurance industry regulation.\nThe health insurance market has many features that push it far from the economic benchmark of perfect competition. Perfectly competitive markets, according to economic theory, allocate goods and services efficiently if certain conditions are met. Markets allocate goods and services efficiently when the social cost of the resources (e.g., labor, buildings, machinery, raw materials) used to make the last unit sold equals the social benefit of consuming that unit. Conditions required to ensure the efficiency of competitive markets include the following:\nmany buyers and sellers—each participant is small in relation to the market and cannot affect the price through its own actions; neither consumption nor production generates spillover benefits or costs; free entry and exit from the market—new firms can open up shop and existing firms can costlessly leave the market as conditions change; symmetric information—all market participants know the same things so that no one has an informational advantage over others; no transaction costs—the buyers and sellers incur no additional cost in making the transaction, and the complexity of decisions has no effect on choices; and firms maximize profits and consumers maximize well-being.\nCompetitive markets may allocate goods inefficiently if those conditions are not met. Most of these conditions often fail to hold in the health insurance market. Departures from these conditions can hinder markets and lead to inefficient outcomes. Reforms are most likely to be effective, according to some economists, when they are tied to underlying structural causes of poor market performance. The lack of symmetric information plays a particularly important role in the health insurance market; most consumers rely heavily on the specialized knowledge and expertise of intermediaries such as insurers, employers, labor unions, physicians, and others.", "Quality of health care is hard to evaluate. Consequently, consumers typically set up relationships with various intermediaries in advance. This can provide benefits as well as limit consumer choice. Health insurers (public and private) make the bulk of health care payments. As Figure 1 shows, national health expenditures paid through federal, state and local, and private insurance as a proportion of gross domestic product (GDP) have increased since 1960, while the proportion paid by consumers out of pocket has slightly decreased. In other words, over the past 40 years consumer out-of-pocket spending in real (i.e., inflation-adjusted) terms has grown slightly more slowly than the U.S. economy, while health expenditures paid through other sources have grown faster than the U.S. economy.\nHow insurers design health care networks influences how consumers use health care. Consumers typically choose a primary physician who selects tests and treatments and makes referrals to medical specialists. Employers negotiate with insurers on behalf of their workers, and labor unions negotiate with employers over health benefits on behalf of their members. Health insurers, in turn, negotiate contracts with providers and handle payments for individual services. A primary physician's admitting privileges typically determine where his patient goes for non-emergency hospital care. Patients must go through a physician to obtain most medical tests and pharmaceuticals. Health care consumers typically rely on these intermediaries instead of interacting directly with other parts of the health care system. This heavy reliance on intermediaries is a key characteristic of the current health care market.\nConsumers benefit from the specialized expertise of intermediaries, such as employers, insurers, and physicians, as they navigate the health care system. Consumers also may benefit from the bargaining power of their employer or health insurer, in much the same way as they may benefit from the market power of a very large retailer (such as Walmart or Costco) when they buy ordinary consumer goods. Intermediaries may also help patients navigate the fragmented and complex structure of the U.S. health care system. Patients may depend on physicians and health insurers to intermediate with a highly diverse array of health care providers, such as imaging centers, specialized surgery centers, public health clinics, hospice organizations, home health care providers, nursing homes, as well as other health care providers.\nUsing intermediaries such as health insurers protects consumers from financial risks linked to serious medical problems, but also insulates consumers from information about costs and prices for specific health care goods and services. When a third-party, such as a private insurer or a government, pays for the bulk of health care costs, consumers may demand more care and providers may wish to supply more care. Links among intermediaries and providers can also limit consumers' choices. For example, a person's job may limit her health insurance choices, and another person's choice of physician may limit choices among hospitals.\nSome families and individuals lacking these intermediaries must navigate the health insurance and health care system themselves, which may be a serious challenge. People without health insurance coverage are not only vulnerable to the financial risks accompanying serious medical problems, but may also pay higher prices for care because they lack the bargaining leverage of insurers. Hospitals and physicians have charged individuals who pay their own bills far more than they charge insurance companies and public health programs. Generous tax advantages for employer-sponsored plans do not help those who buy health insurance in the individual market. Those without a regular primary care physician may struggle to find an appropriate care setting.\nFinally, how intermediaries interact has important consequences in the health care market. For instance, employers and health insurers, which both intermediate on behalf of individuals, interact through negotiations over insurance benefits packages. Politicians can also act as intermediaries for their constituents by helping determine reimbursement rates for public insurance programs and by changing the regulatory environment facing health insurers. The interaction of intermediaries in the health care market can improve or impede efficiency, cost control, and quality of service.", "Demand for health insurance, according to economic theory, depends on a person's attitudes towards risk, the variability of medical expenses, the effectiveness of health care covered by insurance, income, and the level of premiums. In a simplified case, an insurance policy is characterized by the premiums charged, medical services covered, and cost sharing (deductibles, coinsurance, and copayments). The insurance premium equals the expected benefits the insurance company will pay out, which equals the average price of medical care multiplied by the average quantity of medical care provided, plus a loading fee to cover administrative expenses and profits. The loading fee acts as a \"price\" of insurance: other things equal, higher loading fees reduce demand for insurance coverage.\nThe average price of medical care may depend on the complexity of services, the relative bargaining power of providers and insurers, and the cost structure of the providers. The average quantity depends on consumers' demand for health care, providers' willingness to supply care at prevailing prices, and managed care controls of the insurer. The size of the load factor depends on the insurers' administrative costs, costs of capital, and the ability of insurers to pass along higher premiums to employers and consumers.\nIn this simple example, providers gain when medical care prices are higher and when quantities are higher, so long as prices exceed their unit costs and so long as prices do not reduce demand too much. Consumers within a given plan benefit when quantities are higher (so long as the benefits of health care exceed out-of-pocket costs and non-monetary costs such as pain and inconvenience) and when prices are lower, so long as providers are willing to supply care. Higher cost-sharing rates and stricter managed care requirements may lead to higher out-of-pocket costs, but lower premiums. Insurers gain when the load factor and cost-sharing rates rise, so long as these do not reduce demand for health insurance too much. If competitive pressure is high, so that employers and consumers can resist higher premiums, insurers will face pressure to lower load factor, cost-sharing rates, prices, and quantities. Factors affecting competition in the health care market are discussed below.", "Employer-sponsored health insurance covers the majority of the nonelderly U.S. population (see Table 2 ). Individuals, in general, pay only a fraction of the total premiums of employer-sponsored plans, while employers pay the balance. Research has found, however, that employers generally pass their share of the financial burden onto the employees through reduced compensation.", "When market participants do not share the same information, so that some have information advantages over others, markets may fail to generate efficient outcomes. Insurance analysts have long focused on two basic concepts of information asymmetry: adverse selection , which occurs when some have risk characteristics hidden from others, and moral hazard , which occurs when insurance status alters behavior. Information asymmetries between a consumer and an intermediary (principal-agent problems) can also create inefficiencies. These concepts are discussed below. Other, more complex information problems affect insurance markets as well.", "Differences in what buyers of insurance and insurers know is a central problem in the health insurance market. Buyers of insurance may know more about individual health risk factors than the insurance company. Therefore, an insurer may be unable to distinguish a less healthy applicant, who derives a greater benefit from more generous insurance plans, from healthier applicants. Consequently, the insurance company could offer an insurance plan that would break even if it covered a representative sample of buyers in the market, but would bankrupt the insurer if it attracted a subset of the population with very high health care needs. This is known as adverse selection, a problem that could be especially severe in the individually purchased health insurance market. Adverse selection can force insurers to charge very high premiums, which then can drive healthier buyers out of the voluntary insurance market. Three decades of research suggest that adverse selection is quantitatively large.\nFirms typically pay a large portion of the costs of employer-sponsored health insurance plans, which economic research suggests is passed along to employees via lower wages and salaries. Substantial tax advantages and employer cost-sharing of premiums supports high health plan participation, which allows the insurer to attract a group of individuals who are healthy enough to work and who participate in the plan for reasons other than buying health insurance. This reduces the extent of adverse selection, although it also makes employees less sensitive to health insurance costs. Firms' ability to self-insure, however, may raise other adverse selection issues.\nGroup plans typically charge the same premiums to individuals with differing characteristics (e.g., sex, age, and other health risk factors). This contrasts with risk-rated premiums where younger, healthier individuals are charged lower rates due to their lower expected claims. When premiums are not adjusted for individual characteristics and when consumers can opt in or out of insurance plans, risk pools can splinter, leading to an \"adverse selection death spiral.\" If the proportion of older, sicker individuals increases in the insurance pool, the rates charged will increase in response to the higher costs (claims). Some of the younger, healthier individuals will respond by dropping coverage (either dropping health coverage altogether or moving to a less expensive plan). This could cause costs to rise further, leading to higher rates and, consequently, more younger, healthier individuals dropping their coverage in the plan. In the extreme, only older, sicker individuals will be left in the plan. Studies have documented that an adverse selection death spiral can occur when an employer offers a choice of health insurance plans. Other researchers find that a common premium need not result in a death spiral.\nThe splintering of health insurance pools into narrower risk categories in the small group and individual insurance markets has raised congressional concern about the availability and affordability of coverage for individuals who lack employer-sponsored health insurance coverage and who are ineligible for public insurance programs. Individual mandates that would require more people to obtain health insurance coverage, according to proponents, could mitigate some adverse selection risks.", "The insurance benefit of a policy is reduced if the insurance carrier can cancel it when adverse events occur or are anticipated. Similarly, if insurers can change conditions and premiums for a policy renewal once an adverse event occurs, which would make renewal unaffordable or unattractive for the enrollee, then insurance plans become a less effective means of spreading risks. Conversely, insurers suffer losses due to adverse selection if uninsured individuals can enroll once they anticipate an adverse event. For this reason, some group health insurance plans have limited open enrollment seasons for large group insurance and impose preexisting conditions limits on individual or small-group insurance. In the individual health insurance market, the lack of guaranteed renewal at average-risk rates can limit effective risk pooling.\nWhen individuals can switch insurers, insurers may lack sufficient incentives to make long-term investments in an individuals' health. For example, an insurer may hesitate to cover wellness benefits that lower health costs in future years if enrollees can switch plans in coming months.", "Moral hazard, which occurs when insurance status changes behavior, is another problem in the health insurance market. Moral hazard occurs if an insured individual consumes more medical services than she would have had she been uninsured. For example, having health insurance could induce someone to seek medical care for minor conditions (e.g., a sore throat), choose a high-amenity health care setting (e.g., a more hotel-like hospital), or neglect his health (e.g., by eating fatty foods). Consequently, moral hazard leads the insurer to pay providers more for an insured person's medical services than that person would have paid out of his own pocket had he not been insured. Of course, non-monetary costs, such as the pain and inconvenience of obtaining unnecessary medical care, may help limit moral hazard among patients.\nInsurers typically react to moral hazard by raising premiums to cover the costs of additional services and by limiting care, either directly (e.g., through prior approval requirements) or through cost-sharing measures such as copayments and deductibles. Research has shown that the extent of cost-sharing does have a significant impact on health care spending. The lack of transparency in the pricing of medical services contributes to this problem—most people do not know the cost of medical services (both what the provider normally charges and what the insurance company reimburses the provider).", "A patient (here, a principal ), as noted above, typically relies on a physician (an agent ) for care and advice. The physician, or other intermediary, might face incentives to act to further their own interests, rather than those of the patient, by providing a higher quantity or lower quality of care than would be appropriate for a patient.\nWhen someone uses an intermediary (agent) with special knowledge or expertise, the principal often has trouble evaluating or monitoring the quality or appropriateness of the agent's work. When the aims of the principal and agent do not fully coincide, payment and incentive systems may mitigate conflicts of interests. Professional standards and professional organizations may also help mitigate those conflicts. Fixed fees and a system of professional standards and licensing may be seen as one response to the principal-agent problem between patients and physicians.\nWhile that arrangement may avoid some problems, it may not solve others. In fee-for-service (FFS) arrangements, physicians and other providers may face financial incentives to provide more care than would best suit the patient's interests. When insurance pays most of the costs associated with health care, providers have little financial incentive to control costs and may overprovide health care services. One study randomly selected doctors into a salary group and a fee-for-service group during a nine-month study. The results show that doctors in the fee-for-service group scheduled more office visits than salaried doctors and almost all of the difference was due to the fee-for-service doctors seeing well patients rather than sick patients. Defensive medicine, in which physicians or other providers order tests that may reduce the probability of medical malpractice litigation but which provide limited therapeutic benefits to the patient, presents a similar problem.", "Responses to adverse selection, moral hazard, and principal-agent problems affect the structure of the health financing system. Health insurers, as noted above, use coinsurance and pre-approval requirements to limit potential moral hazard among patients. Health insurers concerned about moral hazard and principal-agent problems among providers design incentive systems to limit overprovision of care. For example, the rapid transition to managed care in the 1990s might be seen as an attempt to control costs due to moral hazard. In addition, research and development (R&D) decisions made by medical technology and pharmaceutical firms may be indirectly guided by how health insurance coverage affects choices of providers and patients. Reforms that change the health financing system without taking into account potential moral hazards that previous structures and practices were designed to mitigate could encounter unanticipated problems.", "How price affects the demand for health insurance is an important piece of information given the extent of current tax subsidies for health insurance, proposals to change this tax treatment, and proposals to further subsidize the purchase of health insurance. Consumers' price sensitivity is usually measured in terms of price elasticity. A price elasticity is the percentage change in market demand for a good resulting from a 1% increase in its price. Many older studies (published before 1995) estimated price elasticities for health insurance that are quite large, ranging from -1.0 to -2.0; that is, a 1% increase in price would lead to a 1% to 2% reduction in the number of people buying health insurance. This suggests that a small price reduction could lead to moderately large increases in health insurance coverage. With improved data and empirical methods, more recent studies find elasticities in the range of 0.0 to -0.1. This research, however, applies to workers who are offered group health insurance; workers who are not offered employer-sponsored insurance (about three-quarters of the uninsured) might react differently to price changes. One study examining the group of uninsured not offered employer-sponsored insurance estimates an elasticity in the range of -0.3 to -0.4. Lastly, a recent study using time-series data estimates a price elasticity in the range of -0.2 to -0.3. Overall, the recent studies estimate that a 1% increase in price would lead to a 0% to 0.4% reduction in participation in health insurance. These recent results suggest that subsidies, by themselves, would have to be quite large to increase health insurance coverage. Moreover, cost-effective targeting health insurance subsidies to this group (employees not offered health insurance) is difficult, which could increase the public costs of such subsidy programs.", "Health insurance is subsidized through the tax system in several ways. First, workers pay no income or payroll tax on the portion of the health insurance premium paid by the employer on behalf of covered workers. The Joint Committee on Taxation (JCT) estimates the federal government forgoes about $230 billion annually in tax revenue because of this exclusion. Second, the self-employed may deduct the full amount paid for health insurance and long-term care insurance, which JCT estimated led to a revenue loss of $4.4 billion in 2008. Third, some taxpayers may deduct their own contributions to health savings accounts, which leads to an estimated revenue loss of $500 million in 2008.", "The basic tasks of insurers are to bear risks, which are pooled to reduce overall risks, and to administer plans, by paying claims, providing customer support, and negotiating with providers.", "While the medical expenses of an insured group may be somewhat predictable, a group's expenses could be extraordinarily high or low. This variability, however, declines as the number of people in the insured pool increases. Insurance risk is inversely related to group size. In other words, according to the law of large numbers, average expenses for larger and larger groups will become less and less variable―and thus less risky. Some experts believe that a financially sound health insurer would need a minimum insurance pool size of about 25,000 policies, which would cover about 50,000 individuals, along with appropriate surplus or stabilization funds. Even very large employer pools, such as the Federal Employee Health Benefit (FEHP) program, can experience year-to-year random fluctuations in expenses. Many individual and small-group insurance pools, by contrast, are much smaller. Higher expense variability and adverse selection risks may explain, in part, why premiums in the individual and small-group market are high relative to large-group premiums.", "The administrative tasks of insurance companies include underwriting, processing claims, making payments to providers, and negotiating agreements with providers. The main components of this production process are people, computers, and buildings. These costs are covered by the loading fees, which are included in premiums charged by the insurance company. Insurance companies also earn a return on investments. Premiums are usually collected at the beginning of the policy period, but claims are paid throughout the policy period or afterwards. Because of this timing difference, the insurance companies hold and invest premiums until needed to pay claims. The lag between premium collection and claims payments, however, may be shorter than for some other types of insurance.", "The predominant type of health insurance plan has changed dramatically over the past 25 years. Over 90% of the privately insured were covered by an indemnity or traditional \"unmanaged\" health insurance plan in 1980; now the share is less than 10%. Today, most people covered by private insurance are covered by some kind of managed care plan ranging from a managed indemnity plan (e.g., PPOs, where the insurers negotiate fees with providers) to a staff HMO (the insurer and the provider are the same, and patients see physicians who are on salary). With managed care, the health insurers and the providers are vertically integrated to some extent.\nMost major health insurers offer administrative service only (ASO) support to self-insured plans, which in some ways resembles a specialized type of outsourcing. The characteristics of the ASO market differ in some important ways from more traditional health plans that combine risk-bearing and administration, which is discussed in more detail below.", "Health insurers are a diverse group of organizations. Health insurers may be commercial insurance firms, for-profit or non-for-profit Blue Cross/Blue Shield plans, or HMO-type organizations such as Kaiser Permanente. Established health insurance companies can be either non-profit organizations or for-profit companies.\nThese non-profit organizations have limited tax advantages and often face less state regulation (depending on the state) than their for-profit rivals. The \"Blues\" (Blue Cross/Blue Shield) have been the most prominent example of non-profit health insurers, although Blue Cross/Blue Shield organizations have been allowed to convert to for-profit status since 1994. These organizations were originally organized on a state or substate level, which may have prevented them from taking advantage of possible economies of scale that larger multi-state insurers can capture. Many Blue Cross/Blue Shield plans are now part of large national insurers, such as WellPoint.\nEmployers that self-insure take on some or all of the functions of an insurance company, such as bearing risk and paying the claims of its employees. Self-insuring employers mostly contract with an established insurance company for administrative services. The Employee Retirement and Income Security Act of 1974 (ERISA, P.L. 93-406 ) provides some advantages to large multi-state firms that self-insure by preempting state regulation and establishing federal standards, which ensures that the firm's employee benefits are subject to the same benefit law across all states. ERISA, which exempts firms from certain benefit mandates and premium taxes, also benefits firms that operate in a single state.\nFor-profit insurers play an increasingly prominent role in the health insurance market. Many offer a wide variety of plans tailored for different firms or market segments. These insurers have an obligation to their shareholders to maximize profits. Many operate in several states or nationwide and often offer other lines of insurance, such as life or disability coverage.", "Most private health insurance is offered through employers. With employer-sponsored plans, employers may simply offer health benefit plans through an insurance company for a negotiated price and bear no insurance risk. At the other extreme, the employer may self-insure and handle the plan itself, thus bearing all of the insurance risk and the administrative burden of the plan. Often the extent of employer involvement depends on the number of employees. Research has found that 80% of large employers (500 or more employees) choose to self-insure rather than purchase coverage from a health insurer.\nTable 3 presents data on characteristics of establishments offering health insurance that have chosen to self-insure at least one health plan.\nAdditionally, choice of insurance options also differs by firm size. Among small firms (fewer than 200 employees) offering health benefits, 86% offer only one plan to their employees. Among very large firms (5,000 or more employees), 72% offer two or more plan choices to their employees. Research evidence suggests that plan choice is associated with higher levels of employer-sponsored health coverage and health care satisfaction.\nHealth insurance premiums have increased dramatically over the past nine years. Between 1999 and 2008, the average worker contribution for employer-sponsored health insurance increased by 80% in real (inflation-adjusted) terms while the employer's contribution increased by 83%. Nonetheless, evidence suggests that employer's health insurance decisions are fairly unresponsive to price with estimated elasticities in the range of -0.1 to -0.25. As noted above, employer cost sharing, which covers about 75% of premiums on average, along with the large tax exemption for employer-provided health insurance, helps insulate employees from the price of health insurance.", "Health insurance is primarily regulated at the state level, although some federal standards apply. Regulation seeks to promote a variety of social goals including assuring the financial solvency of insurance companies, protecting consumers from insurance fraud, and ensuring promised benefits are paid. While all states require insurers to be solvent and pay claims, state regulations pertaining to health insurance access, minimum acceptable ratings, and covered benefits vary. Large employers that self-insure are exempt from many state regulations under ERISA. State laws still apply to these firms for issues involving the \"business of insurance.\" Longstanding debates and litigation continue, however, over the scope of the ERISA preemption.\nFederal standards were generally set in two pieces of legislation. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA, P.L. 99-272 ) gives workers who lost their jobs a right to pay for continued job-based coverage of their dependents and themselves under certain circumstances. The Health Insurance Portability and Accountability Act of 1996 (HIPAA, P.L. 104-191 ) improved access to health insurance by restricting exclusions for pre-existing conditions and prohibiting discrimination against certain people with medical needs and limited the use of preexisting condition restrictions. HIPAA, however, does not guarantee that consumers can renew their policies at rates that reflect pool characteristics, which some contend limits the act's effectiveness. Moreover, while HIPAA can help ensure continuity and portability of insurance coverage when a person changes from employer-provided group insurance to individual coverage, HIPAA does not cover certain other transitions.", "The health insurance market, according to many researchers, is highly concentrated in much of the United States. If large health insurers in highly concentrated markets exercised market power when selling insurance, prices would be distorted and an inefficiently low level of health insurance coverage would be provided. In simple economic models, firms with market power in product markets raise prices above and reduce output below competitive levels. Firms that exercise market power when buying from suppliers (i.e., hiring labor and buying inputs) can lower payments and reduce output below competitive levels. Firms' profitability depends on market interactions with both consumers and suppliers. For instance, a firm with a market position relative to its suppliers may be forced to pass along savings by strong competitive forces in the consumer market. A buyer that exercises market power to lower supplier prices below competitive levels, however, reduces economic efficiency, whether or not gains are retained by the firm or passed onto consumers.", "Measures of market concentration are intended to reflect the potential for firms within a specific market to exercise market power by raising prices. Market concentration is typically measured by analyzing market shares of firms that supply a specific good or service within a particular geographic area. Factors other than market share may also affect a firm's ability to exercise market power. A firm with a strong brand, obtained through successful advertising and marketing or through a reputation for higher quality and reliability, may possess more market power than indicated by concentration measures based on market share data. Potential entry by new firms, or by firms in related markets, may constrain firms from exerting market power.\nTwo common measures are N-firm concentration ratios and the Hirschman-Herfindahl index (HHI), which are based on market shares of firms that sell products competing within a geographic area. An N-firm concentration ratio (CR) is the simple sum of the market shares of the top N firms. For example, a CR-3 is just the total market share of the top three firms in a market. The Hirschman-Herfindahl index is calculated by summing the squares of the percentage market share of all firms in the market. For instance, the HHI for an market with two firms with equal market shares would be 50 2 +50 2 = 5000. A market with 100 firms with equal market shares would have a HHI of 100∙1 2 = 100. Thus, a higher HHI indicates a greater degree of market concentration. The HHI measure has the advantage of reflecting the market shares of all firms in the market and is commonly used in antitrust and merger analysis.", "The U.S. Department of Justice (DOJ) first incorporated the HHI into its horizontal merger guidelines in 1982. The guidelines included detailed requirements for defining product markets and geographic market areas. The merger guidelines have been revised several times by the Department of Justice and Federal Trade Commission since 1982, most recently in 1997.\nThe merger guidelines were intended to provide a clearer indication of which corporate mergers or acquisitions the U.S. Department of Justice or Federal Trade Commission would be likely to oppose by specifying HHI thresholds. Markets with an HHI below 1,000 were deemed \"unconcentrated,\" those with an HHI between 1,000 and 1,800 were deemed \"moderately concentrated,\" and those with an HHI above 1,800 were deemed \"highly concentrated.\" The guidelines stated that mergers in unconcentrated or moderately concentrated markets were unlikely to face federal opposition unless the merger significantly raised the HHI.\nThe 1982 merger guidelines reflected new research that suggested that economies of scale and economies of scope (that is, efficiencies made possible by combining related lines of business within one firm) could play important roles in shaping market structure and in serving consumers. Moreover, some industrial organization researchers argued that the success of leading firms, who might possess superior management or better technologies, could lead to high levels of market concentration, but still benefit consumers. For these reasons, industrial organization economists note that an industry concentrated due to forces that promoted economic efficiency (e.g., a firm with a superior technology) could easily resemble an industry that was concentrated because of anticompetitive consolidation strategies. The 1982 merger guidelines and subsequent updates reflected those views and allowed a wider role for \"efficiency defenses\" in antitrust policy.\nConcentration measures are sensitive to how a market is defined in terms of product lines and geographic area. If a market is defined to include a broader variety of products, more firms will be counted as competing in the market, which tends to lower measured market concentration. Similarly, if the geographic area of a market is large, more firms will be included, which will tend to produce lower measures of market concentration. For example, Coca Cola, responding to a Federal Trade Commission (FTC) antitrust challenge to carbonated soft drink producers, argued that the relevant market should include all beverages, including coffee, tea, and milk, and the geographic scope of the market extended throughout the United States. Market concentration computed using that market definition was sharply lower compared with measures that defined the relevant market as carbonated soft drinks within local metropolitan areas. Thus, defining markets by product category and by geographic area so that they reflect a reasonable set of alternatives available to consumers is crucial to obtaining a valid measure of market concentration.", "Health insurance markets in most parts of the country, according to data published by the American Medical Association (AMA) and others, are highly concentrated. In 2007, according to the AMA, 295 out of 314 metropolitan statistical areas (MSAs) had HHIs over 1800 for the combined HMO and PPO market, a range that the DOJ/FTC merger guidelines deem \"highly concentrated\" (that is, if the AMA market and product definitions are accepted). The percentages for the HMO and PPO markets considered separately were higher. The Government Accountability Office (GAO) found that in 2004, markets for private small group health insurance coverage were highly concentrated in most states.\nThe AMA market share statistics underlying the concentration measures are based on commercial health insurance data on enrollments in managed care organizations. Those enrolled in public insurance plans such as Medicare and the State Children's Health Insurance Plan are excluded. In addition, some enrolled in self-insured employer plans are also excluded. Because some might consider that HMO plans and PPO type plans belong to distinct market segments, the AMA report calculates concentration statistics for the HMO market, the PPO market, and the combined HMO and PPO market. If most consumers view HMO and PPO plans as substitutes competing in the same market segment, then the market will be more competitive than if the market for each type of plan were considered separately. Differences between HMO and PPO plans have blurred over the last two decades to the point that a significant minority of consumers do not know which type of plan they have. This suggests that HMO and PPO plans no longer occupy distinct market segments.\nCounting employees in fully or partially self-insured employer plans as enrollees of health insurers who administer such plans, however, could arguably overstate the effective market shares of those insurers if the market for administrative services to self-insured firms was more competitive than the standard commercial insurance market. Industry analysts note that many large employers have responded to rising premiums by shifting to self-insured plans. The bulk of administrative service only (ASO) contracts with self-insured firms are held by large health insurers. Some evidence, discussed below, suggests that profit margins on ASO contracts are lower than on standard commercial health plans. Of course, firms with ASO contracts bear risks and some administrative costs that would be borne by insurance companies in a standard plan.\nMarket share data collected on the consumer side of the health insurance market might not reflect important factors that affect the potential for health insurers to exert market power on the supply side of the market. Many health care providers and health insurers are deeply involved in public health insurance programs such as Medicare Advantage (MA), Medicare drug benefit plans, the State Childrens' Health Insurance Program (CHIP; formerly known as SCHIP), and Medicaid. Most hospitals derive a large share of their revenues from Medicare Part A. A few health care providers derive significant shares of their revenue from self-paying individuals. To the extent that providers and insurers can enter or leave specific market segments, concentration measures based on consumer shares in the private health insurance market may underestimate the competitiveness of the supply side.", "Market concentration, as noted above, might not translate into the ability to use market power to raise prices or lower output or quality for several reasons. First, concentration measures may be computed in ways that overlook the range of alternatives available to consumers and employers. Second, potential entrants may curb incumbent firms' ability to raise prices. For instance, other types of insurers with extensive contacts with firms could potentially enter the health insurance business, and some firms may choose to offer health insurance benefits through self-insured plans. Market concentration could be overestimated in areas where employer self-insured plans not included in AMA data have significant enrollments.\nThird, firms in concentrated industries might choose not to exercise what market power they may possess, perhaps because their governance and organizational structure is designed to pursue other goals. For instance, some contend that non-profit health insurers act differently than for-profit insurers and may choose not to exercise their market power. On the other hand, others have expressed skepticism that non-profit and for-profit health care providers and insurers act in substantially different ways.\nWhether market concentration allows firms to enhance profitability by exercising market power has fueled controversy among economists and industry analysts. Many economists have pointed to strong correlations between market concentration levels and elevated profit levels across industries. Those correlations led some economists to argue that market concentration enables firms to exercise market power through enhanced pricing power. While prices elevated above competitive levels increase firms' profitability, they reduce economic efficiency by reducing output levels below optimal levels. Others point out that other factors, such as successful innovation, could both promote economic efficiency and market concentration.\nSeveral recent studies have examined the effects of market concentration in the health insurance market. One study found evidence that private health insurers charge higher premiums to more profitable firms, indicating that health insurers have exercised market power. Furthermore, this effect was estimated to be stronger where health insurance markets were more concentrated. A related study estimated that the increase in health insurance market concentration between 1998 and 2006 led to a 2% average increase in inflation-adjusted premiums over that period, after controlling for many employee and employer characteristics. Moreover, the study found that increased market concentration was linked to lower job and earnings growth for physicians, but higher job and earnings growth for nurses. That finding supports claims of some provider groups that assert many health insurers exert their market power to lower prices paid to providers below efficient levels.\nThe exertion of insurer market power, however, could affect various provider types in different ways. Another recent study found that hospitals in areas where health insurance markets were more concentrated provided more inpatient days of service, which the authors contend shows that concentration among health insurers enhances provider efficiency. One health economist has contended that some health insurers with a dominant market position use high physician reimbursement rates to deter entry by potential rivals. In October 2010, the U.S. Department of Justice and the State of Michigan accused Blue Cross/Blue Shield of Michigan of using \"most-favored-nation\" (MFN) or most-favored pricing clauses to prevent hospitals and other providers from offering competitive prices to other insurers. Internal emails, according to some, suggest that Blue Cross/Blue Shield of Michigan and some providers coordinated ways to exclude insurgent providers that offered lower cost services. Blue Cross/Blue Shield of Michigan, moving to dismiss charges, asserts that MFN clauses do not violate antitrust laws.\nMany economists who studied the effects of industrial structure in the 1960s and 1970s viewed market structure as a primary determinant of firm behavior, including pricing and output policies. Firms' choices, in this view, in turn determined the performance of the industry as a whole, as reflected in market prices and aggregate output, the rate of technical progress, and the success in meeting consumer needs while minimizing production costs. In this view, market concentration led to higher output prices and profits, as well as lower output levels and product quality.\nMore recently, economists who study the structure of industries and markets emphasize deeper causes of market concentration, while allowing a role for historical factors in some types of industries. More modern theories of market competition have focused on cost structures such as economies of scale and the intensity of competition as influencing market structures. For example, industries with strong economies of scale, such as those that manage networks, will tend to be highly concentrated because larger firms can reduce costs more than smaller firms. In other industries in which branding strategies can be effective, market structure may reflect leading firms' past strategic choices. Other economists note that regulation and legislative barriers to entry, which might also reflect policy responses structural factors such as economies of scale, can also promote highly concentrated market structures. Factors that may affect market concentration are discussed in more detail in the following section.", "The causes of market concentration in the health insurance market are complex, and reflect historical elements as well as forces related to the special characteristics of health insurance and health care. Historically, the original structure of Blue Cross plans was designed to avoid competition by requiring exclusive territories and barring plans linked to specific hospitals. Those requirements may have been aimed at supporting community rating policies and broadly based risk pools, which may have benefited many consumers. Regulators and policymakers at times have also made decisions that were intended to avoid splintering of risk pools, which may have tended to encourage higher levels of market concentration. As commercial insurers and managed care strategies became more prominent, market forces along with merger and acquisition strategies have helped reshape the health insurance market. Some insurers may have engineered mergers and acquisitions to enhance their market power; the success of that strategy depends on underlying factors that determine the structure of the market.\nThe nature of employment-based health benefits and the market structure of health care providers may strongly affect the structure of the health insurance market. In addition, state and federal regulations and tax policy have helped shape the health insurance market. Moreover, the federal government's involvement in health markets through Medicare, Medicaid, and other programs has profoundly affected U.S. health care markets, and may have important indirect effects on the private health insurance market. Federal antitrust policy has affected the market structure of many industries, but at times federal enforcement agencies have had trouble persuading courts to apply antitrust remedies to health care and health insurance markets.\nThe following sections discuss possible causes of market concentration. Determining which factors have been most important in promoting market concentration among health insurance markets may be difficult, but such analysis is critical to the assessment of the likely consequences of proposed reforms of the health insurance industry.", "During the 1980s and 1990s, as noted above, the spread of managed care transformed the American health care system. Rising health care costs put pressure on insurers to find ways to control the growth of premiums by limiting utilization or by holding down medical costs. Many traditional insurers, according to some analysts, had difficulty implementing managed care techniques successfully. Not all insurers were able to balance the demands of managing care, maintaining consumer satisfaction, and responding to changing market conditions. This led some insurers to acquire or merge with existing health maintenance organizations or similar types of organizations as a way to gain the management capability to run managed care health plans. While the spread of managed care might help explain increases in market concentration in the 1990s, it is less clear that it can explain changes in market structure once managed care strategies become more widespread and standardized.", "High levels of market concentration among health insurers may be a response to the market power of hospitals and other health care providers. Both hospitals and insurers may want to acquire \"countervailing power\" to enhance their bargaining strength. In many geographic areas, market concentration among hospitals has steadily increased over the past few decades. Many hospitals banded together to create exclusive networks of providers, in part to increase in part bargaining power in negotiations with insurers. Some hospitals viewed the hospital chain Columbia/HCA, which had expanded its networks rapidly in the early 1990s and had used aggressive business practices, both as a model and a potential competitive threat to independent hospitals. Moreover, the introduction of Medicare's inpatient prospective payment system (IPPS) and the adoption of similar systems by private insurers in the early 1990s reduced average hospital lengths of stays and occupancy rates. Some hospitals viewed mergers as an easier way to eliminate excess capacity compared with other strategies. Some physicians also formed groups, which may have been, in part, motivated by the desire to enhance bargaining power in negotiations with payors.\nIncreasing market concentration or strategic coordination among providers and insurers may create distortions that can lead to the misallocation of resources and suboptimal health access or availability. While both insurers or providers may employ market strategies to build up countervailing power in response to increasing concentration on the opposite side of the market, many economists believe those measures weaken market competition and are likely to reduce consumer well-being and possibly reduce the availability of certain services.", "Economies of scale play an important role in many industries. If larger firms can produce more cheaply than smaller rivals, then markets will be composed of a smaller number of large firms. In health insurance, economies of scale could be captured in claims processing, building compliance regimes, designing software systems, or negotiating provider networks. While larger employer groups are cheaper to administer than smaller ones, there is little relation between the size of major insurers and administrative costs, according to some industry analysts. This suggests that the largest health insurers do not enjoy substantial scale economies unavailable to their smaller rivals and that economies of scale in administrative functions plays little role in explaining market concentration among health insurers. As noted above, some experts believe that a financially sound insurer would need a risk pool with about 25,000 policies covering about 50,000 people. Actuarial gains due to risk sharing across wider coverage pools may taper off above that point.\nIf indeed the health insurance industry lacks of economies of scale above a certain minimum point, then a public option might not achieve administrative cost efficiencies by simply being larger. It also suggests that efficiency losses would be small if incumbent firms were forced to contract the scale of their operations.\nSome economists and financial analysts believe that in some industries that lack scale economies (above some minimal level), firms may seek to grow, not because they can become more efficient or more profitable, but because senior managers may obtain more benefits by leading a larger firm. According to this view, weak corporate governance, that prevents shareholders from focusing management attention on profits rather than perquisites, may motivate corporate growth.", "The ability of firms to use marketing strategies to heighten customer loyalty can affect market structure and market concentration if the creation of strong brand identities hinders entry of potential rivals or changes the nature of competition with existing rivals. For instance, the Blue Cross emblem has proved a potent marketing tool in the health insurance market. Marketing plays a larger role in the health insurance market and may complicate or retard the entry of new firms. Advertising and other marketing strategies can also provide potential consumers with information to help them choose among insurers. Where employees have had expanded choices among health plans, insurers have stepped up marketing efforts.\nHealth insurers spend considerable sums on marketing. According to one estimate, commercial health plans spent 4.6% of total premium revenues on marketing in 2007. By contrast, marketing expenses for employers' self-insured plans administered by commercial insurers (administration services only [ASO] plans) were only 1.0% of total premium income in 2007. Marketing directed towards employers' human resources departments, who help select plans or design self-insured plans, may be more focused and therefore cheaper than marketing aimed at individuals.", "The nature of competition in the health insurance market may also affect market structure. Because most nonelderly Americans obtain health insurance coverage through their employers, insurers must compete for the business of both employers and employees.\nSome aspects of health insurance promote competition. Many, but not all, employers allow workers to choose among different insurers. Those buying coverage on the individual market can use websites such as eHealthInsurance.com to compare plans. Consumers generally must decide which insurer to choose well in advance of the need to use health care. Many insurers provide detailed information about policies and procedures. On the other hand, even detailed plan brochures may omit important details, and comparing competing plans can be difficult even for sophisticated health care consumers.\nOther aspects of health insurance can reduce the sharpness of competition. Employers are typically reluctant to switch insurers, which could require a major overhaul of human resources department procedures and a reorientation of employees. Health insurance policies are often difficult to compare, and information on some important aspects of policies, such as promptness and fairness of claim handling, prompt and convenient access to plan representatives, and willingness to approve certain medical or surgical procedures, are often unavailable.\nSome researchers have found underwriting cycles in some health insurance markets, suggesting that at times health insurers have engaged in aggressive price competition. Underwriting cycles are said to occur when insurers compete to gain market share by offering attractive premiums and then when investment or premium income threatens to fall short of claim costs, raise premiums. Some health insurance executives in 2004 said that better cost monitoring techniques and market consolidation would let health insurers link medical cost increases and premium growth more closely, making sharp price competition and large swings in premiums less likely in the future.", "Many have expressed concern about the rapid growth of health insurance premiums during the past half century. Rising premiums are linked to the growth of medical and other health care costs, which now make up about four-fifths of health insurance premium income. Many economists believe the extent of health insurance coverage has encouraged providers to increase the quantity of health care services, and over the longer term has led to higher prices for health care. The portion of premiums not paid out as claims, often called the loading costs, includes administrative costs, taxes, and profits. Administrative costs include employee salaries, business overhead, marketing expenses, and other expenditures necessary to running an insurance firm. The rest of this section discusses trends in health insurance companies' profitability.\nEvaluating the profitability of health insurers is complicated because insurers earn part of their profits from the difference between total premiums and total claims paid, and another part of their profits from the \"float,\" that is, the lag between the payment of premiums and the payment of claims. Because claims lag premium payments, insurance companies can invest funds gathered from premiums until the claims are paid, thus allowing the insurer to collect investment income. This lag is generally shorter for health insurers than for many other lines of insurance. Some insurers suffered sharp declines in investment income in 2007 and 2008 due to lower interest rates on bonds and other fixed income securities as well as to steep declines in asset values in the wake of the economic recession. Profitability data for those years may therefore be atypical.\nInsurers typically participate in multiple segments of the health insurance market (large group, small group, individual, public insurance programs), but each segment differs in important ways. While most policies are issued through employer-provided plans, some insurers obtain a significant portion of their earnings from public programs such as Medicare Advantage, the Medicare Part D prescription drug program, and the State Children's Health Insurance Program (CHIP). Medicare Advantage (MA) may play a particularly important role in insurers' profitability. The Medicare Payment Advisory Commission (MedPAC) has calculated that MA plan costs are 18% higher than traditional fee-for-service (FFS) Medicare plan costs, in part because MA enrollees tend to be healthier than FFS enrollees. Generous reimbursement policies, in turn, have helped encourage insurers to grow MA enrollments.\nSome research has found that high market concentration in health insurance markets tends to accelerate increases in premiums on the consumer side, although one study found that HMO merger did not tend to higher premium growth rates. Another study failed to find evidence that higher HMO market concentration reduced physician reimbursement rates, although a different study found an association between HMO concentration rates and lower hospital reimbursement rates. Some economists believe that more empirical research is needed to explore links between health insurance market concentration and economic outcomes.", "Insurance companies typically report financial data that include widely used measures of profitability such as net income, the medical loss ratio, return on revenues, and return on equity. Typically, analysts rely on several sources of financial data and various financial ratios to assess the profitability of a firm or industry.\nFinancial data for the health insurance industry can be sensitive to firms' accounting and financial reporting―accounting in the insurance industry can be complex because of the nature of the business. Insurance companies take in premiums from customers when a policy is issued and at some later time may pay claims on that policy. Insurers will make a profit if total premiums and investment income exceed total claims and operating expenses. In addition, because of the lag between the collection of a premium and the payment of a claim, insurers can invest funds in stocks, bonds, or direct investments that yield earnings.\nInsurers typically keep three sets of books, so financial data reported for one purpose may differ from data reported for a different purpose. First, insurers use statutory accounting practices to compile reports to state regulators who monitor solvency of insurance companies or subsidiaries that write policies. Statutory accounting standards are issued by the National Association of Insurance Commissioners (NAIC). Second, insurers use generally accepted accounting principles (GAAP) to present financial data for investors in documents such as 10-Ks filed with the Securities and Exchange Commission (SEC). Third, insurers also keep a separate book for tax accounting, which is governed by state and federal tax rules. What insurers report as net income, a common measure of profitability, can depend on which accounting standards are used as well as accounting and actuarial judgments regarding investment cash flows and insurance reserves, although these are generally subject to state insurance regulation. In particular, the link between data in state insurance filings for separate legal entities and financial results reported on a consolidated group basis by major insurers consisting of many subsidiaries is often unclear.\nFinancial indicators from three sources (Fortune magazine, the A.M. Best Company and the Sherlock Company) are discussed below. Because financial data presented below derive from different sources and may be calculated using different procedures, results may vary.", "Table 4 presents two indicators of profitability by major industrial sector. A third indicator, profits as a percentage of shareholder equity, is presented in Table A-3 . For each industry, simple averages (means), weighted averages, and medians are presented.\nProfits as a percentage of revenues is widely used to compare performance of retail-oriented industries. This measure is sensitive to what funds pass through a firm as revenues. For example, for traditional commercial coverage, the insurer collects premiums (which are booked as revenues) and pays claims. When self-insured employers outsource health plan administration and claims processing to an insurer via an ASO plan, the insurer does not book premiums paid by workers as revenue, but instead collects administrative service fees. While the insurer may offer substantially the same services (apart from differences in risk-bearing) for both types of plans, profits as a percentage of revenues will generally be much lower for traditional commercial risk coverage than for ASO plans because those revenues include full premiums, not just administrative fees. For example, Figure 2 shows how net margins for major health insurance companies vary depending on ASO plan enrollments as a share of total enrollments. In general, insurers with higher shares of ASO enrollments earn higher net margins.\nProfits as a percentage of assets reflects an industry's profitability with its capital intensity. Profits as a percentage of equity indicates returns to stock investors. Return-on-equity ratios, unlike return-on-revenue, depend on how a firm raises its capital, and may change abruptly due to changes in corporate structures such as mergers and acquisitions. A firm that relies more on equity, rather than debt, may be less vulnerable to bankruptcy. Comparisons of profitability ratios across industries requires some caution, as each industry has a different cost structure and each faces a particular set of risks and opportunities. Industry profitability is also affected by temporary economic shocks and broader social trends. Individual firms, of course, vary from the industry averages, with some performing better on profit measures, and with others performing less well.\nNeither of the two health insurance sectors (Health Care: Insurance & Managed Care; and Insurance: Life, Health [stock]) are in the top 20 industries on either of the two profitability measures for 2009 presented in Table 4 , nor among the top 20 industries in terms of profits as percentage of shareholder value (see Table A-3 ).", "", "The A.M. Best Company provides ratings and analysis for the insurance industry, including GAAP financial indicators for major health insurers. Which companies A.M. Best lists varies over time due to mergers, acquisitions, and the growth of smaller firms.\nTable 5 presents medical loss ratios for major health insurers over the period 2000-2008. Two other measures of profitability the health insurance industry, return on equity and return on revenues, are presented in Table A-1 and Table A-2 .\nThe medical loss ratio, defined as total health benefits paid divided by premium income, is a commonly used, albeit rough, indicator of profitability and administrative efficiency. The proportion of premium revenues not paid through benefits is used to cover administrative costs, taxes, interest payments, and profits. Investment income, which can be much more volatile than premium income due to occasional rapid price changes in asset markets, is excluded. To industry analysts, the medical loss ratio reflects how well premiums are keeping up with increases in medical costs. To consumers, the medical loss ratio shows what proportion of premiums, on average, are returned through benefits. State insurance regulators typically monitor health insurers' medical loss ratios to ensure adequate benefits are paid out and that premiums do not rise much more quickly than claims expenses. Some financial analysts perceive that lower medical loss ratios signal profit potential. Some have proposed stricter federal requirements on medical loss ratios (see below). Medical loss ratios typically do not include data from ASO plans used by self-insured plans, which make up the bulk of enrollments for larger firms (see Table 3 ).\nSome contend that the medical loss ratio is a seriously flawed measure of administrative costs, profitability, and plan efficiency, and argue that customer satisfaction and cost-per-covered-person-per-month data on specific health insurance market segments would be more informative. Medical loss ratios can differ by market segment. For instance, administrative costs are typically higher, and medical loss ratios are therefore generally lower, for individual plans than for large group plans. Medical loss ratios are typically higher when health insurers shift insurance risks to consumers through cost-sharing or to providers through capitation arrangements. The allocation of overhead costs, which is inherently arbitrary to some degree, will typically depend on accounting judgments, which may vary from insurer to insurer, although computation of medical loss ratios is generally constrained by some state regulators and by generally accepted accounting principles. While many insurance companies and some large employers use those data to track health plan performance, those data are typically considered proprietary. A more stringent limit on medical loss ratios might require careful attention to how those ratios are defined.\nIn 2008, medical loss ratios among major insurers range from a low of 70.7% to almost 89%. Some major commercial insurers have had significant decreases in medical expense ratios in the past decade. For example, CIGNA HealthCare's medical loss ratio, 86.3% in 2001, fell to 70.7% in 2008, according to A.M. Best reports. In general, medical loss ratios are somewhat volatile and can change dramatically from one year to the next. Such swings may be explained by aggressive pricing intended to increase market share or by unexpectedly high medical costs.\nTrends in medical loss ratios may also reflect changes in insurers' administrative costs. A major component of insurers' administrative costs is linked to processing of claims and running call centers, which are both closely linked to information technology. While many other businesses saw rapid productivity advances in the 1990s due to better and cheaper information technology, some evidence suggests that productivity in the insurance industry grew less rapidly. While productivity in the finance industry (in value added terms) grew by 1.3% per year in the first half of the 1990s and by 4.9% in the second half, according to one estimate, productivity in the insurance industry fell by 1.5% in the first half of the 1990s and fell by 0.06% in the second half of that decade. In recent years, some insurers have claimed that better information technology management has helped constrain administrative costs. Finally, as noted above, health insurers in some market segments have significant marketing expenses. Trends in marketing costs may therefore affect medical loss ratios.", "The Sherlock Company tracks administrative expenses for health insurance companies by collecting financial and operating data from a large number of health insurance firms. These data are checked and compiled in a consistent manner. Sherlock Company estimates are widely used in the industry. The Sherlock data are not drawn by random sample; therefore, if firms not cooperating with the Sherlock Company's data collection were more profitable than average, the profitability measures would be skewed downwards.\nThe tables below present Sherlock Company data for 2007 and 2008. Profit margins for 2007 and 2008 in the health insurance industry may reflect substantial job losses, which reduce the number of employees covered by employer plans. Losses due to asset price declines following the turmoil in financial markets in late 2007 and 2008 have also adversely affected some insurers' profits. Thus, profitability measures for 2007 and 2008 might be atypical for the insurance industry.\nProfit margins in the health insurance industry for 2007 appear to be lower than profit margins reported for other parts of the health sector, such as the pharmaceutical industry, reflecting different investment, risk, and opportunities in each industry. Table 6 presents data for 2007 on profit margins for standard commercial plans and administrative service only (ASO) plans used by firms that self insure. Within each category, unweighted averages (means), medians, and weighted averages are presented. These profit margin estimates exclude investment income as well as interest expenses and many taxes. Results for 2007 presented in Table 6 suggest that standard commercial plans were more profitable than ASO plans. When the weighted average margins are higher than the unweighted mean, it suggests that larger firms in 2007 tended to be more profitable than smaller firms.\nTable 6 includes an adjustment that helps make profit margins on standard and ASO plans more comparable. Insurers that run ASO plans charge firms fees, but the firms pay claims themselves (aside from any reinsurance provisions) out of funds collected from employees. For example, out of every $100 of employee health insurance funds, a hypothetical firm might pay $90 in benefits and pay an insurance firm $10 to administer the program. In standard plans, firms pass on premiums from employees to insurers, who then pay claims. Thus, for an ASO plan the insurance firm would receive $10, but would get $100 in premium income in a standard plan. Therefore, calculating ASO profit margins by using premium equivalents in the denominator puts profit margins on ASO and standard plans on a more comparable basis.\nTable 7 presents profit data for all Blue Cross/Blue Shield plans in 2008 taken from publicly reported data, such as filings with the Securities and Exchange Commission (SEC). Unlike the profit data in Table 6 these data include investment income and may include income from other lines of insurance. The adjustment for ASO plans used for profit margins presented in Table 6 is not included in margins reported in Table 7 .\nTable 8 shows profit margins for the six largest national commercial insurers in 2008 (Aetna, CIGNA, Coventry, Health Net, Humana and UnitedHealth), whose plans covered 73 million members. Profit margins in Table 8 were computed in the same way as in Table 7 . These data suggest that large commercial insurers enjoyed higher profit margins in 2008 than Blue Cross/Blue Shield plans. To the extent that the 2007 data reported in Table 6 is similar to 2008 profit data, the profit margins reported in Table 7 and Table 8 suggest that investment income is a significant source of insurer's profits.\nMany insurers are active in many different segments of the health insurance market. Table 9 shows profit margins for the individual market, the small group insurance market, and the ASO market. These markets, according to these data, were less profitable in 2008 than standard commercial plans. Health insurers on average had negative profit margins in the small group and commercial ASO markets, but had positive margins in the individual market. That the weighted mean margin for the individual market is less than the unweighted mean suggests that smaller insurers in 2007 tended to have higher profit margins in that market segment.", "In the wake of health care reform measures enacted in March 2010, congressional concern over health insurance policy is likely to persist, even if health reform takes a less central role in legislative deliberations. Congress could take several further actions to affect the behavior and structure of health insurance markets. Important policy details remain to be resolved through federal rule-making, agency actions, and possibly through further legislation. The remainder of this section discusses some possible policy responses to perceived problems in the health insurance market.", "More aggressive antitrust enforcement is one potential response to perceived problems resulting from high levels of market concentration among health insurers. Federal agencies with antitrust enforcement responsibilities have been active in health care markets, opposing many hospital mergers and putting restrictions on some health insurance mergers. The U.S. Department of Justice and the Federal Trade Commission issued a major report on competition, antitrust policy, and the health care sector in 2004, which urged policies to enhance competition in the health care and health insurance markets. State governments, which generally have primary responsibility for insurance regulation, also have antitrust enforcement capabilities. Some have argued that the McCarran-Ferguson Act, which delineates federal and state responsibilities for insurance regulation, has hindered effective antitrust enforcement. One former FTC official contends that modifying the McCarran-Fergusson Act (P.L. 79-15) and removing other impediments could strengthen federal antitrust policy in the health care market. Congress could amend antitrust laws to facilitate stronger pro-competition policies among health insurers. On November 2, 2009, the House Judiciary Committee reported out the Health Insurance Industry Antitrust Enforcement Act ( H.R. 3596 ), which would limit antitrust exemptions provided by the McCarran-Ferguson Act (P.L. 79-15). On February 24, 2010, the House passed the Health Insurance Industry Fair Competition Act ( H.R. 4626 ) on a 406–19 vote, which would amend the McCarran-Ferguson Act to enable more robust antitrust enforcement. The Obama Administration supports passage of H.R. 4626 , and has promised stronger antitrust action in healthcare markets.\nStrong antitrust action is preferable to allowing both health insurers and providers to build up countervailing power, according to some economists who argue that a more fully competitive market would better protect consumers. Such antitrust remedies may be most effective in promoting economic efficiency if applied to both the health insurance market and key health care provider markets.\nOn the other hand, the federal government in the past has had trouble using antitrust remedies to increase the competitiveness in the health sector. The federal government lost many antitrust cases intended to promote competition among hospitals. While federal antitrust authorities have forced alterations of some health insurance mergers, federal antitrust policies do not appear to have had a determining influence on the structure of health insurance markets.\nOther measures could also inject greater competition into health insurance markets. Some analysts contend that simplifying regulatory policies encourages new entrants. Standardization of claims processes and payment mechanisms could also lower barriers to entry. Other policies might allow insurers in related lines of business, such as life and disability insurance, to provide more competition in ASO markets for firms that self-insure.", "Congress could adopt more stringent regulatory measures designed to improve performance in private health insurance markets. This may require a realignment of regulatory responsibilities with state governments, which now play the leading role in insurance regulation. Congress has taken some steps in the past to regulate health insurance. For example, the Health Insurance Portability and Accountability Act of 1996 (HIPAA; P.L. 104-191 ) imposed several federal requirements on health insurance plans. Although HIPAA provided uniform federal standards on certain aspects of insurance plans, some contend that HIPAA had only limited effects on health insurance markets. Legislative changes to the Employee Retirement Income Security Act (ERISA), which provides a federal exemption to many state health insurance requirements, could also have important consequences in the health insurance market. Many large corporations, which typically operate in many states, oppose changes in ERISA.", "The Protection and Affordable Care Act ( H.R. 3590 ; P.L. 111-148 ) bars some medical underwriting practices, which may change how health insurance companies compete. The practice of medical underwriting, which consists of offering better prices and conditions to the healthy, rearranges the cost burden of health care but has little or no effect on overall costs. Although an individual insurer earns higher profits by attracting a healthier risk pool via medical underwriting, total costs to society are not reduced. Because underwriting consumes real resources, a system with extensive medical underwriting may have higher administrative costs, which provide little social benefit.\nIndividual firms, however, could face major financial risks by unilaterally dropping medical underwriting practices. The health insurers' trade association, America's Health Insurance Plans (AHIP), had said it would accept limitations of pre-existing condition exclusions, but only if individuals are required to purchase coverage, so that not just the sick enroll.\nRegulations barring medical underwriting practices, such as limiting coverage of those with preexisting conditions, could change the nature of competition in health insurance markets. If those regulations motivated health insurers to compete on the basis of how well they served consumers rather than on the ability to shift risks to others, economic efficiency could be enhanced. Even with limits on medical underwriting, however, health insurers may affect the composition of their risk pools through marketing, customer service practices, and by other means. The implementation of individual mandate provisions that encourage purchase of health insurance may have important interactions with management and marketing decisions of health insurers.", "Some critics of the health insurance industry contend that medical loss ratios (defined as total claims divided by premium income) are too low, which in their view has helped push health insurance premiums up. Health insurance industry analysts argue that high medical loss ratios could undermine insurers' ability to raise capital and could lead to cuts in cost of care coordination activities, chronic disease management activities and quality assurance programs. A few states have minimum medical loss ratio requirements for some segments of the health insurance market.\nThe Protection and Affordable Care Act ( H.R. 3590 ; P.L. 111-148 , Sec. 1331(b)(3)) requires that plans offered through state health insurance exchanges (which are to be operational at the beginning of 2014) have a medical loss ratio of at least 85%. The act also will require large group health insurance plans to have a medical loss ratio of at least 85%. Small-group and individual plans will have to satisfy an 80% threshold, although the Secretary of the Department of Health and Human Services can waive that requirement if it would destabilize an insurance market. The State of Maine has requested a waiver of the 80% threshold for individual insurance policies until 2014.\nThat requirement may require the Secretary of the Department of Health and Human Services to specify how medical loss ratio will be calculated, and how that requirement will interact with state-level insurance regulation. A 30-day request for comments on defining medical loss ratios was issued in April 2010. AHIP and NAIC, along with many other trade groups and interested parties, submitted detailed responses.", "Individual or employer mandates could affect the health insurance market in important ways. An individual mandate would require individuals to offer proof of health insurance either to avoid financial penalties or to qualify for certain tax benefits. An individual health insurance mandate in some ways would resemble the individual mandate most states impose on automobile drivers that require either minimum insurance coverage levels or proof of financial responsibility. The aim of these mandates is to widen the insurance risk pool as broadly as possible and to discourage individuals from forgoing insurance and then transferring the costs of an accident or illness onto others. Of course, enforcing a health insurance mandate would likely require different administrative mechanisms than an automobile insurance mandate.\nCritics note that an individual mandate could compel purchase of an insurance policy that in the individual's view would cost more than its expected benefits. In particular, if premiums were not adjusted for age and other relevant risk factors, an individual mandate could be seen as helping transfer economic resources from younger and healthier people to older and sicker people. In Massachusetts, the individual health insurance mandate was tied to the availability of \"affordable\" policies, which required a state panel to judge what \"affordable\" meant.\nAn employer mandate would require certain firms to offer qualifying health insurance to their employees or pay some amount into a government health fund or alternatively, face the loss of some tax benefits. Some argue that health costs of uncovered employees are to some degree borne by those with private insurance coverage because providers shift some costs of uncompensated care onto others. Some argue that imposing a employer mandate would level the playing field among larger firms, who are more likely to offer health insurance benefits, and smaller firms, which are most likely not to offer those benefits. On the other hand, an employer mandate could force some firms to lower wages and other benefits. Some employees may value those forgone wages and benefits more than new health benefits.\nEmployer mandates would affect the health insurance market more broadly as well. The number and proportion of American workers receiving employer-provided health insurance has been declining over time. Imposing an employer mandate would probably slow or even reverse that trend.\nEmployer-provided health care has important advantages and disadvantages. As noted above, employer-provided health insurance coverage can be administratively efficient and helps mitigate adverse selection problems that could lead to splintering of risk pools. On the other hand, tying health benefits to employment can reduce job mobility and hinder efficient matching of workers to positions that make the best use of their skills. Making the individual health insurance market more attractive (see discussion of Wyden-Bennett plan below) or providing health coverage on the basis of citizenship, as do many other advanced industrial countries, could enhance job mobility.", "Some proposals that Congress considered contained measures partially intended to heighten competition in the market for health care. For example, H.R. 3200 proposed creation of a \"Health Insurance Exchange\" that would provide an alternative to employer-based health coverage for groups that have had difficulty obtaining affordable health insurance. The Health Insurance Exchange proposed in H.R. 3200 includes a \"public option\" insurance plan intended to spur greater competition among health insurers. Critics of H.R. 3200 expressed concern that a federally financed public option would enjoy special advantages unavailable to private health insurers and that creation of a public option might be a first step towards a much broader federal role in health care finance.\nThe Affordable Health Choices Act ( S. 1679 ), approved by the Senate Health, Education, Labor, and Pensions (HELP) Committee on July 15, 2009, proposes new federal private health insurance standards and the creation of an \"Affordable Health Benefit Gateway\" in each state, along with a public option plan called the \"Community Health Insurance Plan.\" On September 16, 2009, the Chairman of the Senate Finance Committee, Senator Baucus, released a chairman's mark of the America's Healthy Futures Act of 2009, which also included new federal health insurance standards and health insurance exchanges, but does not include a public option plan. On November 19, Senator Reid proposed a measure that melded provisions of the HELP and Finance Committee bills, which allowed states to include a public option in health insurance exchanges. The version of H.R. 3590 that passed the Senate on December 24, 2009, however, omitted the public option.", "The proposed Health Insurance Exchange in some ways resembles the Massachusetts Connector created in 2006 and implemented at the end of 2007. Both the proposed federal Health Insurance Exchange and the Massachusetts Connector act as an intermediary between insurance companies and eligible enrollees, playing a similar role to employers who act as health insurance intermediaries for most Americans. Massachusetts mandates that individuals have health insurance (as long as \"affordable\" insurance options are available) or face financial penalties. All but the smallest firms (fewer than 10 employees) that offer no (qualifying) health insurance benefits must pay an annual penalty of $295 per full-time employee. The program has roughly halved the number of uninsured people in the state.", "The role played by a Health Insurance Exchange could have important effects. The exchange could act as a \"traffic cop\" that imposed minimal requirements on plans, in order to allow a large number of insurers to offer coverage to eligible individuals. Alternatively, the exchange could act as a \"gatekeeper,\" as most large employers do, and preselect a limited number of alternatives. In Medicare Part D, which offers prescription drug coverage, the Center for Medicare and Medicaid Services (CMS) acts more like a traffic cop, allowing a wide range of insurers to enter that market. This policy allows Medicare beneficiaries to choose among a wide array of plans. Prices for actuarially equivalent plans, however, are widely dispersed, which suggests that market competition has been ineffective in weeding out plans that offer less value for the money.\nAlternatively, an exchange could also play a more active \"gatekeeper\" role. Many employers have played a very active role in designing health insurance offerings. The exchange could either select a limited number of plans judged to be more attractive or impose stricter requirements on plans. Some economists have found that consumers have difficulty choosing among plans when alternatives are numerous and when differences among plans are difficult to compare. Congress arguably acted as a gatekeeper by requiring standardization of Medigap policies in order to encourage more effective competition among insurers.", "Creation of a public option within the proposed Health Insurance Exchanges would have arguably been one way to expand health insurance coverage and control the growth of health insurance costs. The public option proposals responded to concerns about high levels of market concentration and the exercise of market power in health care markets, as well as to concerns about some industry practices in the individual and small-group market segments. Proponents of the public option argued that it would help limit costs in two ways. First, a public option plan could institute administrative efficiencies. Second, some argued that a public plan could negotiate better discounts with providers.\nGovernment intervention in the market motivated by concerns about market concentration and the exercise of market power could have unintended consequences if the determinants of market structure are not well understood. The bargaining power of a public option could enhance economic efficiency by counteracting monopoly power exerted by providers, thus lowering prices and increasing output. But if providers are operating efficiently, then increased bargaining power by insurers could lead to economic inefficiency in the health care market. Evidence suggests, however, that many providers are not operating efficiently.\nWithout further regulation, however, a public plan would have likely attracted high-cost individuals—those who, because of health or age, can only buy insurance for very high premiums, or who are medically uninsurable because of pre-existing conditions. This adverse selection would have threatened the viability and stability of a public option. As an example, many states have high-risk health insurance pools (HRPs) to cover these high-cost individuals. But state HRPs typically charge premiums higher than premiums charged by private plans offered to healthier individuals and all operate at a loss. To avoid or mitigate adverse selection problems, most public option proposals mandated health insurance coverage by all, require community rating, and prohibit denial of insurance based on health or pre-existing conditions by private insurance plans.", "Some proposed creation of health insurance cooperatives as an alternative to a public plan. Cooperative health insurance policies would be available to eligible individuals through health insurance exchanges created by health insurance reform legislation. Proponents argued that cooperative-run plans would increase competition in the health insurance market without requiring more direct federal involvement. Others contended that cooperatives would be unable to improve performance of the health insurance industry.\nSome medical cooperatives were created in the 1930s, such as the Group Health Association in Washington, DC, and the Group Health Cooperative of Puget Sound. The AMA and local medical societies, however, vigorously opposed medical cooperatives and succeeded in driving many of them out of business. The Farm Security Administration (FSA) created several programs to provide medical care to low-income rural households, which included cooperatives that at their peak reached 600,000 people. Some historians argue the success of these cooperatives was limited by the lack of clear direction from FSA administrators and opposition from traditional farm groups. These programs were discontinued starting in 1946. The United Mine Workers' Welfare and Retirement Fund, created in the 1940s, might provide another model of a health cooperative.\nThe early history of Blue Cross may be instructive. The Blue Cross idea, incorporated through a stream of new organizations, spread rapidly across the country during the 1930s and 1940s, demonstrating that a suitable design with support from existing organizations could transform the American health finance system. Blue Cross was able to piggyback on local hospitals and the AHA, and Blue Shield initially piggybacked on local medical societies. Links between hospitals and Blue Cross had profound effects on the governance and structure of Blue Cross. Though the modern health care sector is very different than when Blue Cross began, the strategy of linking new structures, such as cooperatives, to existing organizations could accelerate implementation. Those organizations would likely have a strong imprint on how proposed health insurance cooperatives were run.\nBlue Cross, in its earliest days, was originally strongly community oriented. This, in part, reflected the ideals of the \"voluntary hospital\" movement. Yet while charity and altruism have played important roles in the hospital industry, business-like behavior has also been prominent. By 1986, Congress concluded that Blue Cross organizations did not act much differently than commercial insurers. Competitive pressures on cooperatives may also be strong enough to motivate them to act much like other insurers.", "Some have proposed more fundamental reforms of the health care sector. Senators Wyden and Bennett have introduced a medical voucher proposal, the Healthy Americans Act, which was introduced in the 110 th Congress as S. 334 and in the 111 th Congress as S. 391 . The Wyden-Bennett plan would mandate that individuals carry private health insurance and would create state-run pools to restructure the individual health insurance market. The federal government would support the plan by providing subsidies to certain individuals.\nThe Empowering Patients First Act ( H.R. 3400 ), introduced by Representative Tom Price on July 30, 2009, would provide additional tax incentives to individuals and employers to maintain or expand health insurance coverage; modify federal regulations governing insurance pools for individual purchasers; would take steps to ease purchase of individual insurance policies across state lines; would modify remedies for alleged medical malpractice; and would ban certain applications of comparative effectiveness research data in health care.\nOthers have proposed more limited reforms that would reintroduce cash indemnity payments under certain circumstances. For example, one proposal would allow patients in end-of-life care to choose between standard care or a package of palliative care and a cash payment that could be used for other purposes. The option of indemnity benefits could make providers more conscious of the costs and benefits of the care they deliver.", "Evidence suggests that health insurance markets in many local areas are highly concentrated. Many large firms have reacted to market conditions by self-insuring, which may provide some competitive pressure on insurers, although this is unlikely to improve market conditions for other consumers. The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output—high premiums and limited access to health insurance—combined with high profits. Many other characteristics of the health insurance markets, however, also contribute to rising costs and limited access to affordable health insurance.\nSome evidence suggests that insurance companies' profits are not large, especially during the current economic recession; although some of those estimates exclude investment income. Even if health insurers were highly profitable, it is unclear how much reducing insurance industry profits would do to reduce total health care costs or even reduce administrative costs. Nor is it clear that more vigorous enforcement of antitrust laws and regulations would succeed in courts or would significantly reduce health insurance premiums or expanded health insurance coverage.\nHealth insurance is intertwined with the whole health care system. Health costs appear to have increased over time in large part because of complex interactions among health insurance, health care providers, employers, pharmaceutical manufacturers, tax policy, and the medical technology industry. Reducing the growth trajectory of health care costs may require policies that affect these interactions. Policies focused on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and problems of limited access to health care if other parts of the health are left unchanged.", "This appendix presents two indicators of health insurer profitability for the period 2000-2008, and profits as a percentage of shareholder equity for Fortune 1000 firms by industry in 2008.\nTable A-1 presents return-on-equity figures for major publicly traded health insurers over the period 2000-2008. Return on equity measures a company's overall after-tax profitability from underwriting and investment activity, and is defined as the sum of after-tax net income and unrealized capital gains divided by equity. Return on equity provides a useful comparison to profits in other lines of business, but can be volatile, especially when accounting changes require adjustments of equity levels. Firms obtain capital through equity (typically through the sale of shares that entitle shareholders to dividend payments and certain voting rights) and debt (typically through loans or bonds that require fixed or specified interest payments). Firms can increase return on equity by increasing their debt-to-capital ratio, but at an increased risk of bankruptcy in the event of adverse business conditions that make interest payments to debt holders hard to sustain.\nTable A-2 presents return-on-revenue figures for major publicly traded health insurers over the period 2000-2008. Return-on-revenue ratios are roughly analogous to return-on-sales figures in other industries. Return-on-revenue figures, unlike return-on-equity, measures profitability independently of how a firm raises its capital.\nTable A-3 presents profits as a percentage of shareholder equity for Fortune 1000 firms by industry in 2008, which complements other profitability measures presented in Table 4 . Shareholder equity can change dramatically when a firm's capital structure changes, and can be affected by the timing of major writedowns on a firm's financial statements.\nAs in Table 4 , which presented profits as a percentage of revenues and as a percentage of assets, neither of the two health insurance sectors listed (Health Care: Insurance & Managed Care; and Insurance: Life, Health [stock]) are in the top 20 industries in terms of profits as a percentage of shareholder value for 2008." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 4, 4, 4, 4, 4, 3, 3, 2, 3, 3, 3, 3, 3, 3, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 1, 2, 2, 3, 3, 2, 2, 3, 3, 2, 2, 2, 1, 2 ], "alignment": [ "h0_title", "", "h0_full", "", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "What does the market structure of the U.S. health insurance industry reflect?", "What did many commercial insurers doubt before World War II?", "Why did commercial health insurers begin offering health coverage?", "How had the market changed by the 1950s?" ], "summary": [ "The market structure of the U.S. health insurance industry not only reflects the nature of health care, but also its origins in the 1930s and its evolution in succeeding decades.", "Before World War II, many commercial insurers doubted that hospital or medical costs were an insurable risk.", "But after the rapid spread of Blue Cross plans in the mid-1930s, several commercial insurers began to offer health coverage.", "By the 1950s, commercial health insurers had become potent competitors and began to cut into Blue Cross's market share in many regions, changing the competitive environment of the health insurance market." ], "parent_pair_index": [ -1, -1, 1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2 ] }
GAO_GAO-16-31	{ "title": [ "Background", "Characteristics of Dual- Eligible Beneficiaries", "Past Initiatives to Coordinate Care for Dual- Eligible Beneficiaries", "Financial Alignment Demonstration: Design and Implementation, Care Coordination, and Sources of Potential Savings", "Design and Implementation of the Demonstration", "Organizations Participating in CMS’s Financial Alignment Demonstration Implemented Care Coordination in a Variety of Ways", "Care Coordinator", "Health Risk Assessment", "Organizations Described Challenges in Coordinating Care, and the Extent to Which Care Coordination Occurs in the Demonstration Is Not Fully Known", "Organizations Described Challenges That Affected Their Ability to Coordinate Care", "Locating Beneficiaries", "Engaging Beneficiaries and Primary Care Providers", "Communicating with Beneficiaries about the Demonstration", "CMS Has Established a Framework of Monitoring Activities to Oversee the Demonstration", "CMS Collects Information that Assesses the Extent to which Care Coordination Is Occurring in the Demonstration, but Not All of This Information is Comparable", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Centers for Medicare & Medicaid Services’ (CMS) State-Specific Measures for the Financial Alignment Demonstration, by State", "State-specific measure Access", "State-specific measure Enrollee protections", "Appendix II: Comments from the Department of Health and Human Services", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Dual-eligible beneficiaries are a particularly vulnerable group. In general, these individuals are among the poorest and sickest beneficiaries enrolled in Medicare and Medicaid. For example, compared to other Medicare beneficiaries, they are more likely to be disabled; report poor health status and limitations in their activities of daily living, such as bathing and toileting; and have cognitive impairments, mental disorders, and certain chronic conditions, such as diabetes and pulmonary disease. Therefore, dual-eligible beneficiaries tend to have higher rates of service use and consequently, higher spending, compared to other Medicare and Medicaid beneficiaries. (See fig. 1.)\nAlthough dual-eligible beneficiaries have a higher rate of service use compared to other Medicare and Medicaid beneficiaries, as a group, they vary in terms of their need for health care services, reflecting differences in the prevalence of disabilities and other health conditions. Under Medicare, dual-eligible beneficiaries have coverage for most acute care services, such as care provided by physicians or inpatient hospitals, post- acute skilled nursing facility care, and prescription drugs. Under state Medicaid programs, dual-eligible beneficiaries also have coverage for long-term nursing facility care and home and community-based services. These beneficiaries may also qualify for payment of Medicare premiums and cost sharing. Medicaid is the health care payer of last resort, meaning that Medicare pays to the extent of its liability before Medicaid makes any payments. Because dual-eligible beneficiaries receive care through separate programs with different benefits and payment processes, they are likely to be treated by many different health care providers that may not coordinate their care, which can lead to increased costs and poorer patient outcomes.", "Prior to the implementation of the Financial Alignment Demonstration in 2013, the Medicare and Medicaid programs were separately responsible for covering certain services for most dual-eligible beneficiaries, and there may not have been an incentive for one program to help control costs in the other program. As we previously reported, any savings that were achieved often resulted from services that were largely paid for by Medicare, such as reductions in the number and length of hospital stays, and therefore accrued to the Medicare program. Therefore, state Medicaid programs did not have an incentive to better coordinate care or reduce spending since they did not benefit from any savings that were achieved. However, increasingly there have been efforts to try to improve integration of care between these two programs. For example, one specific effort to integrate care for dual-eligible beneficiaries was the establishment of dual-eligible special needs plans (D-SNP) in 2003. D- SNPs are a type of Medicare Advantage plan exclusively for dual-eligible beneficiaries that provide specialized services targeted to the needs of their beneficiaries, including a health risk assessment and an ICT for each enrolled beneficiary. About 1.9 million of the dual-eligible population was enrolled in D-SNPs in 2014.", "", "CMS’s goal for the Financial Alignment Demonstration is to integrate Medicare and Medicaid services and financing and improve care coordination for beneficiaries, therefore resulting in improved care and savings to Medicare and Medicaid. CMS gave the states flexibility in designing their demonstrations because of the different needs of their target populations, the geographic coverage areas, and the number of eligible beneficiaries. For example, while Massachusetts chose to limit its target population to dual-eligible beneficiaries from age 21 through 64, California, Illinois, and Virginia chose to include all dual-eligible beneficiaries aged 21 and older as their target populations. CMS required states to involve dual-eligible beneficiaries and other stakeholders, such as beneficiary advocacy groups, in the development of their demonstrations to help design a person-centered system of care.\nBefore any state’s demonstration becomes operational, CMS oversees a multistep approval process of the state’s demonstration design. First, states interested in participating in the demonstration submit proposals to CMS that provide a description of the demonstration’s design. CMS then reviews the proposals and works with the states to develop a memorandum of understanding that further outlines the parameters of the demonstration, which both the state and CMS sign.\nAs part of their proposals, states generally opted to test one of two models—the capitated or managed fee-for-service (MFFS) models. Under the demonstration’s capitated model, following CMS approval of the memorandum of understanding, the states work with CMS to select qualified integrated care organizations to participate in the demonstration. Then, the state, CMS, and an integrated care organization enter into a three-way contract, and the integrated care organization receives a prospective blended capitated payment, which includes both Medicare and Medicaid payments, to provide coordinated care across both programs. CMS reduces payment rates to organizations up front each year based on a predetermined Medicare and Medicaid savings estimate, with the amount of savings increasing each year, typically from 1 percent in the first year to 4 percent in the third year of the demonstration. For example, in Massachusetts, contracted managed care health plans provide care coordination services and integrate care between the two programs and receive one combined payment from both Medicare and Medicaid for each enrollee. For states opting for the MFFS model, following CMS approval of the memorandum of understanding, the state and CMS enter into an agreement by which providers continue to receive fee-for-service reimbursement for both Medicare and Medicaid services. The state is then eligible for a portion of any retroactive savings resulting from state initiatives designed to improve quality and reduce spending for dual-eligible beneficiaries. One state, Washington, is using Medicaid health home agencies to coordinate Medicare and Medicaid services among existing fee-for-service providers for dual-eligible beneficiaries.\nThe organizations in the capitated model, and the states in the MFFS model, then undergo a CMS review to ensure they are prepared to begin enrolling dual-eligible beneficiaries. Once they have passed CMS’s review, they can begin enrolling beneficiaries. In general, under the capitated model, eligible beneficiaries—those dual-eligible beneficiaries who meet the state’s age, geographic residency, and other requirements for the demonstration—can enroll voluntarily into the demonstration and choose a participating integrated care organization. Dual-eligible beneficiaries who choose not to enroll voluntarily can be assigned by the state Medicaid agency to a participating organization, in a process known as “passive enrollment.” Once a beneficiary is enrolled into the demonstration, the state will send the beneficiary’s contact information to the relevant integrated care organization. The state or CMS may also provide Medicaid or Medicare claims data, medical history, hospitalizations, and pharmacy use for the beneficiaries. The organization then typically assigns a care coordinator and begins coordinating the beneficiary’s care. In the MFFS model, beneficiaries are automatically enrolled in the demonstration, and following enrollment, the care coordinator will perform outreach to the beneficiary and give the beneficiary the option to elect to receive care coordination services. Under both models, beneficiaries can opt out of the demonstration at any time.\nImplementation of the Financial Alignment Demonstration began in July 2013 when the first state, Washington, began enrolling beneficiaries. Since then, CMS has approved 12 other state demonstrations and all but one of these states has begun enrolling beneficiaries. Two states— Connecticut and New York—had proposals pending approval from CMS as of September 2015. (See fig. 2 for a demonstration map.) The agency is no longer accepting new proposals from states.\nOne of the key goals of the demonstration is to improve care coordination for beneficiaries using a person-centered care delivery model based on the preferences and needs of the beneficiary, which CMS anticipates will improve the quality of care and reduce costs. CMS requires states and organizations participating in the demonstration to incorporate a care coordinator role, a health risk assessment, an ICP, and an ICT into their care delivery model for the demonstration. (See table 1.)\nUnder the demonstration, any savings will be shared equally by Medicare and Medicaid, regardless of whether the savings were achieved primarily by Medicare or Medicaid. Although CMS projects that approximately 60 to 70 percent of savings from the demonstration will come from reductions in costly Medicare-covered services, such as fewer hospital admissions (including readmissions), and approximately 1 to 5 percent of savings will come from fewer emergency room visits, the agency requires that as part of a more integrated approach, both the Medicare and Medicaid programs adjust their payment rates to plans based on aggregate savings percentages.", "Organizations in the five states in our review used state- and CMS- required care coordinators, health risk assessments, ICPs, and ICTs to coordinate care. Due to the flexibility states have in designing these elements in their demonstrations, implementation varied among the organizations in these five states.", "Staff from organizations in our review reported different ways that they assigned care coordinators to beneficiaries. Some organizations assigned care coordinators on the basis of geographic proximity to the beneficiary or the beneficiary’s primary care provider. Others assigned care coordinators a mix of low-, moderate-, and high-risk beneficiaries, or assigned care coordinators based on the coordinator’s qualifications and areas of expertise.\nCare coordinators varied in their qualifications and backgrounds, and in the types of care they coordinated. Organization staff said care coordinators had degrees or licensures in fields such as nursing, social work, or behavioral health. Staff from the organizations said they hired care coordinators with backgrounds in care management and assessment, and who were comfortable reaching out to and engaging with beneficiaries. In addition, some organizations had separate care coordinators assigned to handle medical needs versus behavioral health needs, but others had care coordinators who were responsible for coordinating care across medical, behavioral, and social realms.\nCare coordinators for the organizations in our review reported interacting with beneficiaries, using a range of methods and in a variety of settings, to conduct health risk assessments, develop ICPs, and lead ICTs. Care coordinators we spoke with reported interacting with beneficiaries by mail, e-mail, telephone, and in person, but most care coordinators said they interacted with beneficiaries by telephone or in person. Some care coordinators told us they interacted by telephone regardless of a beneficiary’s risk level, while others used a mix of telephone and in person methods depending on the beneficiary’s risk level and needs. Some care coordinators in the latter group used in person interactions for higher-risk beneficiaries and telephone interactions for low-risk beneficiaries. Locations of the in-person visits also differed; while in- person visits were often conducted in a beneficiary’s home, care coordinators described meeting beneficiaries in other settings as well, such as parks, libraries, homeless shelters, clothing drives, and provider’s offices.", "The organizations in the five states we reviewed differed in how they conducted the health risk assessment. For example, they differed in how they identified high- and low-risk beneficiaries, a process that typically occurs when the beneficiary is enrolled in the demonstration, but before the health risk assessment is conducted. Staff at some of these organizations said they confirm or adjust the initial risk category assigned by the state through the health risk assessment process. Conversely, staff at organizations in states that do not assign an initial risk category said they begin their health risk assessment process by identifying high- and low-risk beneficiaries through an initial health screening and then administering the health risk assessment.\nAdditionally, based on our interviews, we found that organizations in the five states varied in their methods for conducting the assessment. Not all of these organizations used their own staff and instead contracted with a vendor to conduct the assessments. For the organizations conducting their own assessments, the staff responsible also differed depending on the organization. For example, some organizations had the beneficiary’s care coordinator conduct the assessment, while others used other types of staff, such as assessment coordinators.\nThe organizations we reviewed also used different health risk assessment tools. For example, the Illinois demonstration required organizations to use a tool that must assess the beneficiary’s medical, psycho-social, functional and cognitive needs, and medical and behavioral health, while the Massachusetts demonstration required organizations to use a tool that not only assesses these needs but also assesses needs related to housing, employment status, and food security. Staff at some of these organizations also said they used a supplemental assessment in addition to the health risk assessment to further identify the needs of their beneficiaries.\nBased on our interviews, we found that the ICP templates varied by organization in the five states and therefore differed in length, complexity, and focus. Some organizations used ICP templates from the state and others developed their own templates. The ICPs varied in length, from shorter plans containing three to five goals to longer plans containing many goals. Staff who used the shorter ICPs explained they did so to avoid losing the beneficiary’s interest. The complexity of the ICP also depended on the organization. For example, staff at some organizations described ICPs that contained goals for the beneficiaries as well as strategies, timelines, and barriers to meeting those goals. Additionally, some organizations created ICPs with a mix of short- and long-term goals, while other organizations said their ICPs contained a small number of meaningful and achievable goals. Some organizations tailored their ICPs to focus on the risk level of the beneficiary, with ICPs for low-risk beneficiaries containing basic educational information on common health issues such as asthma or diabetes, while ICPs for high-risk beneficiaries were tailored to identify gaps in their care. Staff at one organization said the ICPs were not clinical plans but focused on home and community- based services, such as referrals to transportation services.\nCare coordinators said they developed the ICP with the beneficiary either in conjunction with the health risk assessment or after the completion of the health risk assessment. Some care coordinators used a standard ICP outline auto-populated with results from the beneficiary’s health risk assessment as the basis for developing the ICP with the beneficiary.\nWe also found that implementation of the ICT process varied by organization in the five states. Specifically, these organizations said that the frequency and format of ICT meetings depended on the needs of the beneficiary. Some meetings took place only once, when a beneficiary first enrolled in the organization, while others took place on a regular basis for on-going health needs or only in the case of acute events such as hospitalizations. Additionally, staff from some organizations in our review said that ICT meetings do not occur for every beneficiary, particularly low- risk beneficiaries, because their health needs may not be complex and thus they may not need to meet with their ICT. Staff also commented that communication and meetings among ICT members took place in different ways. For example, staff at one organization told us they consider conversations between the organization’s medical director and the beneficiary’s primary care provider to be a form of ICT communication, and staff at another organization said ICT meetings can take place between the care coordinator, the beneficiary, and the beneficiary’s primary care provider during the beneficiary’s medical appointments. While we observed some ICT meetings that included the care coordinator, the beneficiary, and another member of the care team, we also observed group meetings that covered multiple beneficiaries, which the organizations also considered to be ICT meetings. Staff from organizations in our review said that these regularly scheduled in-person group meetings discussed recently hospitalized beneficiaries or beneficiaries with health issues, and they typically involved the organizations’ medical directors, care coordinators, social workers, pharmacists, and network operations staff. During these types of ICT meetings, care coordinators summarized a beneficiary’s health status and meeting participants provided input on how to address the beneficiary’s needs.", "Organization staff in the five states in our review described challenges that affected their ability to coordinate care for beneficiaries. Specifically, these organizations reported challenges related to locating beneficiaries, engaging beneficiaries and primary care providers, and communicating with beneficiaries about the demonstration. CMS has established an oversight framework for the demonstration that includes monitoring activities. However, while the agency collects information that assesses the extent to which care coordination is occurring in the demonstration, not all of this information is comparable.", "", "Organization staff said it was a challenge locating beneficiaries to initiate care coordination services because the characteristics of some dual- eligible beneficiaries make it difficult to develop and maintain accurate contact information. Some dual-eligible beneficiaries are transient because they are homeless or live in temporary accommodations, such as a hotel or with relatives. Many may be unreachable by telephone because they have no or limited access to a telephone. Additionally, staff told us that behavioral health issues, such as substance abuse, are prevalent and may affect an individual’s ability to remain in touch with providers or organizations. Further, organizations have difficulty locating beneficiaries if the states do not have accurate beneficiary contact information. Staff from some organizations in our review also told us that dual-eligible beneficiaries enrolled via the passive enrollment process were harder to locate, and some beneficiaries were unaware they were enrolled. Organization staff told us they devoted time and staff resources trying to locate beneficiaries, some increasing staff or hiring a vendor to help locate beneficiaries. Furthermore, some organization staff told us they conducted outreach efforts to community-based organizations that have prior relationships with dual-eligible beneficiaries and know how to locate them. Some organizations reported that they had developed strategies for finding beneficiaries. CMS and some states have discussed and developed best practices for finding beneficiaries.\nWhen organizations are unable to locate beneficiaries, it can be challenging for the organizations to coordinate their care, which is one of the key goals of the demonstration and one that CMS views as essential to the successful integration of care between Medicare and Medicaid. For example, staff at some organizations in California told us that, in order to address the challenge of coordinating services for the beneficiaries they could not reach, they used a standard ICP outline auto-populated with any information they had about the beneficiary. We also found that advocacy groups in four of the five states we reviewed had concerns about the extent to which care coordination is being provided in the demonstration. These advocacy groups noted that some of the beneficiaries with whom they interacted said that they had not been assigned a care coordinator, participated in an ICT meeting, or worked with their care coordinator to develop an ICP. One advocacy group told us that it had worked with a high-risk beneficiary who had been enrolled in the demonstration for a year but had not yet been contacted by a care coordinator. Our findings are consistent with the results of a 2015 study by the Medicaid and Children’s Health Insurance Program Payment and Access Commission (MACPAC), which found that many of the beneficiaries who participated in focus groups across three capitated model states said they did not have a care coordinator and had not experienced these required components of care coordination.", "Organization staff in the five states in our review said that it is a challenge to engage beneficiaries to coordinate their care in the demonstration. Care coordinators pointed out that the demonstration requires effort on the part of the beneficiary—a willingness to engage with the care coordinator to use the services available. However, beneficiaries may not understand how the demonstration can benefit them, and may not be aware of services available. A beneficiary advocacy group in Massachusetts said that one goal of the demonstration is to have a beneficiary-driven care system, but if beneficiaries cannot advocate for themselves, or are not aware of their options, then they cannot benefit from the demonstration. Additionally, organization staff said that some beneficiaries are not interested, while others may be distrustful of the health care system in general and not comfortable answering questions about their health from individuals they do not know. Lack of engagement and understanding of available care options can affect the provision of care coordination services, including participation in ICTs. For example, staff we spoke with at a few organizations said that not all beneficiaries want to participate in their ICT because, for example, they are not comfortable having their health care discussed in a team setting. CMS officials said that ICTs are built on the health needs and specific preferences of the beneficiary and that, while all beneficiaries are to have access to an ICT, there are no requirements for beneficiaries to participate in ICT meetings. During our observations of ICT meetings, we found that not all beneficiaries participated. Specifically, over 17 beneficiaries were discussed during the 9 ICT meetings we observed and only 8 beneficiaries joined the meetings by phone. CMS officials said that the beneficiary does not need to be involved every time ICT members communicate, but should at least be aware of the meetings if he or she is not participating in them.\nOrganization staff we spoke with said that engaging primary care providers in the demonstration has also been a challenge. While primary care providers are considered a core member of the ICT in the demonstrations, six of the seven providers we interviewed had never participated in an ICT meeting and two had never reviewed an ICP. Organization staff we spoke with said that the busy schedules of primary care providers, and their varying levels of interest in the demonstration, made it difficult to engage them in the ICTs. In fact, in many of the ICT meetings we observed, the beneficiary’s primary care provider was not present; however, the organization’s medical director was present and was an active participant in the discussion. Organization staff also said that a provider’s knowledge of the demonstration can affect his or her willingness to engage with care coordination activities. Organization staff and primary care providers said that providers caring for a beneficiary with multiple health issues are more likely to engage with care coordinators. Staff of some organizations said they were trying to increase provider engagement through provider education and provider incentives, as well as by sending them completed ICPs and results of ICT meetings, and by scheduling ICT meetings to accommodate providers’ schedules.", "Some organizations and beneficiary advocacy groups we spoke with said that beneficiaries have had difficulty with communication about the demonstration. Some organizations and beneficiary advocates said enrollment materials that beneficiaries received from the state were overwhelming for the beneficiary because of the volume of information in the materials and because the information was not easy to understand. Additionally, some organizations and advocates said that enrollment materials sent by mail often do not get opened. CMS officials said that in response to this challenge states have attempted to streamline their enrollment materials by focusing on which materials are most applicable to beneficiaries in that state. CMS officials added that they are encouraging the states to test their enrollment materials with a sample of beneficiaries before distributing them to all beneficiaries, and several states have opted to do so.\nAdditionally, staff we spoke with at some organizations said that the information beneficiaries receive from outside of the organization creates confusion and anxiety, and may lead to some beneficiaries opting out of the demonstration. An organization in California said that private entities sponsored newspaper advertisements that encouraged beneficiaries to opt out of the demonstration, which created confusion among beneficiaries. Staff at some organizations said they would like to reach out to beneficiaries before their effective enrollment date to communicate with them about the demonstration.", "To oversee the coordination of care provided in the demonstration, CMS has established a framework of monitoring activities. The agency has established contract management teams (CMT) in the capitated states that are responsible for monitoring the demonstration on a day-to-day basis by providing technical assistance and overseeing contract compliance. These teams allow for collaboration between CMS and the states and comprise, at a minimum, officials from the CMS central office, the CMS regional office, and the state Medicaid office, but may include other entities, depending on the state. CMTs have a number of required responsibilities outlined in CMS guidance to ensure that organizations comply with their contracts, such as monitoring the organizations’ performance in meeting measures and tracking complaints. In addition, the CMTs are required to meet regularly with participating organizations to discuss various topics including compliance, enrollment, and beneficiary issues. If an organization is found to be out of compliance with its contract, the CMTs can impose a range of enforcement actions increasing in severity from an initial notice of noncompliance to a warning letter, and finally to a formal corrective action request.\nAccording to CMS officials, the key difference in oversight provided is that CMS primarily oversees the organizations under the capitated model while it oversees the states under the MFFS model. Specifically, in states using an MFFS model, the state itself is primarily responsible for the day- to-day monitoring of the demonstration, and the CMS regional office is responsible for overseeing the state’s compliance with the terms of its demonstration as well as tracking its required data reporting for the demonstration.\nOne key component of CMS’s oversight is monitoring of core and state- specific measures that the organizations, for the capitated model, and states, for the MFFS model, are contractually required to report. The measures include established quality measures from organizations like the National Quality Forum, as well as demonstration-specific measures developed by CMS, in collaboration with the states, to assess the demonstration. The organizations in the capitated states use a common set of core measures. Similarly, the MFFS states adhere to a common set of core measures. However, the sets of core measures differ between the two models. (See table 2.) CMS officials said that they did not deliberately design the two models to have different sets of core measures, but that the differences were the result of data that organizations and states collected prior to the demonstration. Specifically, they said that many of the demonstration-specific measures in the capitated states were adapted from existing Medicare Part C and Part D measures; in contrast, the MFFS states were not collecting these types of measures prior to the demonstration. In both capitated and MFFS model states, CMS supplements these core measures with required, state- specific measures. (See app. I for the state-specific measures for the five states that we reviewed.)\nCMS designated a subset of the core and state-specific measures for the capitated states as quality withhold measures, meaning that, on an annual basis, CMS and a state’s Medicaid program each withhold a percentage of an organization’s capitated rate, which is later adjusted and repaid based on the organization’s performance. Two of the 10 core measures were quality withhold measures during this first year of the demonstration, with additional state-specific measures also designated as quality withhold measures in each state. The CMTs in the capitated states are required to review an organization’s performance on the remaining core and state-specific measures, provide feedback to the organizations, investigate any areas of poor performance, and issue enforcement actions if organizations are out of compliance. Of the 11 organizations in the four capitated states that we reviewed, 1 had received a formal enforcement action—a notice of noncompliance—from CMS related to its performance on core measures, as of April 2015. In contrast, MFFS states can earn a retrospective performance payment annually that is based, in part, on their performance compared to benchmarks for all of their core and state-specific quality measures, which is intended to incentivize high performance. States receive a portion of their total performance payment if they meet the minimum performance threshold and can qualify to receive additional payments based on how well they performed on individual measures. Therefore, poorly performing MFFS states that do not meet the minimum threshold would not earn a performance payment. The timing of our review was too early in the implementation process for CMS to have paid a retrospective performance payment to either of the two MFFS states, but one of the states—Washington—had recently submitted its first set of annual data.\nThese core and state-specific measures are outlined in CMS technical guidance, which includes specific instructions for how organizations and the states should report the data to CMS. The organizations in the capitated states are to generally submit their data to CMS on a quarterly, semiannual, or annual basis, depending on the measure, through a contractor-administered website. CMS officials told us the contractor then synthesizes the data and shares them with CMS headquarters and the CMTs for further analysis. The CMTs may then discuss the results during regular meetings with the organizations. In contrast, in the MFFS model, states are responsible for collecting data from the integrated care organizations annually and submitting it to CMS through a contractor- administered website.\nIn addition, CMS requires organizations, for the capitated model, and the states, for the MFFS model, to report data annually from the Consumer Assessment of Healthcare Providers and Systems (CAHPS), which is a patient survey developed by another HHS agency, the Agency for Healthcare Research and Quality. Agency officials told us in early November 2015 that they expect to receive CAHPS results by the end of the month for the first capitated states that implemented the demonstration, and they expect to complete their analysis of the results and make them available by spring 2016. The MFFS states—Washington and Colorado—completed the survey by November 2015, and CMS anticipates the results will be available in spring 2016. CMS officials told us that they worked with a contractor to adapt a version of the CAHPS survey for the MFFS states, which is different from the CAHPS survey used by the organizations in the capitated states. Specifically, the organizations in the capitated states use the survey that must be completed by all Medicare managed care plans. In commenting on our draft report, HHS provided us with new information indicating that CMS had added 10 demonstration-specific supplemental questions to the capitated CAHPS survey. In addition, because the organizations in the capitated model are also Medicare managed care plans, they must report data annually from the Healthcare Effectiveness Data and Information Set (HEDIS). HEDIS, which is developed by the National Committee for Quality Assurance and helps consumers compare the performance of health plans in providing selected services, and the Medicare Health Outcomes Survey (HOS), which is a patient-reported outcomes survey, are measures that must also be reported by Medicare managed care plans to CMS. Agency officials told us they received the first HEDIS results in November 2015 and they expect HOS results in spring 2016. Organizations in the capitated states are also required to regularly report encounter data to CMS, which contain information on the services and items furnished to beneficiaries.\nCMS has also hired a contractor—RTI International—to assess the implementation of the demonstration and evaluate its impact on beneficiary experience, quality, utilization, and cost. RTI International will conduct annual and final aggregate evaluations of each state’s demonstration program, as well as an overall evaluation across the states that will use both qualitative and quantitative data analysis. Specifically, the contractor will analyze enrollment, encounter, and claims data and conduct site visits, focus groups, and interviews. CMS officials said that the first annual state evaluation is anticipated to be completed in winter 2016 and the final aggregate evaluation is expected in 2018, at the earliest.", "CMS collects different sets of core measures for the capitated and MFFS model states. Two out of 10 core measures in the capitated model provide information on the extent to which care coordination is occurring, while no core measures in the MFFS model examine this area. The core measures for the capitated states examine the percentage of health risk assessments completed within 90 days of enrollment and the percentage of reassessments that are completed annually. CMS does not collect any other core measures in either the capitated states or the MFFS states that assess key aspects of care coordination, such as whether care coordinators were meeting with beneficiaries, whether ICPs were being developed, or whether ICT meetings are occurring—components of the demonstration that, like the health risk assessments, are required by CMS under the demonstration.\nCMS also collects some state-specific measures that examine the extent to which care coordination is occurring; however, these measures are not collected consistently across the states, or for the two types of models in the demonstration. For example, Washington (an MFFS state), Massachusetts (a capitated state), and Illinois (a capitated state) have state-specific measures that examine whether beneficiaries have completed an ICP within 90 days of enrollment. While the other two capitated states in our review have a similar measure, they differed from the ICP measures in Washington, Massachusetts, and Illinois. For example, while California has a state-specific measure assessing whether an ICP was completed, there is no time period specified for doing so, and it has additional measures that separately examine whether high- and low-risk beneficiaries had an ICP completed within 30 working days of their health risk assessment. We also noted that all the capitated states in our review had a state-specific measure that examined whether beneficiaries had a documented discussion of care goals, but the MFFS state in our review, Washington, did not have this measure.\nIn addition, CMS officials told us they plan to assess care coordination through the forthcoming results of the CAHPS survey (for both the capitated and MFFS models). CMS adapted the CAHPS survey for the demonstration in the MFFS states and, in commenting on our draft report, HHS provided us with new information indicating that CMS had added demonstration-specific supplemental questions to the CAHPS survey in the capitated states. These surveys contain two questions specific to care coordination that are consistent across all states in the demonstration. Specifically, the MFFS and capitated CAHPS surveys both contain questions about whether anyone from the organization helped to coordinate the beneficiaries’ care and how satisfied beneficiaries were with the help they received to coordinate their care. While the results of the capitated and MFFS surveys are still forthcoming, these questions may be able to provide CMS with important information about whether beneficiaries are meeting with their care coordinators. However, while the MFFS CAHPS survey also contains questions related to developing an ICP and meeting with an ICT, these questions are not included in the capitated CAHPS survey. There were no questions on either survey related to the completion of the health risk assessment.\nWe and others have noted the importance of a common set of comparable measures across the states. In a 2012 report, we recommended that CMS systematically evaluate performance in its D- SNP program for dual-eligible beneficiaries and noted that without standard measures it would not be possible for CMS to fully evaluate the relative performance of the D-SNPs. In addition, the Commonwealth Fund noted that, while varying the Financial Alignment Demonstration’s quality measures from state to state may be necessary because the demonstrations differ across all the states, researchers and policymakers will need a common set of comparable measures in order to make useful cross-state comparisons. While CMS has developed two core measures related to care coordination that are consistent across the capitated states in the demonstration, these measures are not core measures in the MFFS model and are therefore not comparable across both demonstration models. Moreover, while CMS collects some state-specific measures that examine this area, they are not comparable across the states. However, CMS has included two questions in its CAHPS survey that are consistent across the demonstration states in both the capitated and MFFS models, and the agency anticipates using these forthcoming results to assess care coordination.\nInternal control standards for the federal government specify that monitoring should be designed to help an agency accomplish its goals. Because not all of the information that CMS collects to examine the extent to which care coordination is occurring is comparable across the demonstration, the agency does not fully know whether it has achieved its goal of improving care coordination for dual-eligible beneficiaries. Further, CMS does not have all of the data necessary to identify and correct potential problems in the demonstration. CMS officials told us that any issues related to care coordination would be identified in the forthcoming results of the CAHPS survey and discussed during the regular CMT meetings with the organizations. CMS officials also noted that some of their existing core measures would indicate whether care coordinators are effectively coordinating care for patients, such as a core measure in the capitated model examining nursing facility diversion, that is, the percentage of beneficiaries living in the community who require an institutional level of care but who did not reside in a nursing home for more than 100 days. CMS officials told us that they believe these types of outcome-oriented measures provide more valuable information than process-oriented measures because they assess whether care coordination is effectively improving the health of beneficiaries. While we believe outcome measures are important for assessing care coordination in the demonstration, process measures are also needed to determine whether the demonstration is being implemented as intended. If process measures are not in place across the states participating in the demonstration to identify and correct potential problems, we believe that outcome measures cannot be reliably assessed.", "CMS’s Financial Alignment Demonstration has the potential to improve the quality of care for dual-eligible beneficiaries and to reduce spending in the Medicare and Medicaid programs. A growing consensus suggests that coordination of care is an important strategy for achieving these goals. Dual-eligible beneficiaries, who often have extensive health care needs, typically receive their benefits separately through the Medicare and Medicaid programs. Improving care coordination is a key goal for CMS’s demonstration and will ultimately influence whether the program is successful. Our work identified multiple challenges in locating and communicating with beneficiaries as well as difficulties in engaging providers in fundamental care coordination activities. Similarly, our interviews with beneficiary advocacy groups and providers called into question the extent to which care coordination is occurring in the demonstration.\nCMS collects information about the extent to which care coordination is occurring in the demonstration, but not all of this information is comparable across the states. Therefore, it cannot reasonably determine whether health risk assessments are being completed, ICPs are being developed, and ICT meetings are occurring—all aspects of care coordination that CMS requires organizations to provide to beneficiaries. By not having data that are consistently available from all states across the demonstration that examine these aspects of care coordination, CMS does not fully know whether it has achieved its goal of providing coordinated care to dual-eligible beneficiaries. CMS has included measures in its CAHPS survey for both the capitated and MFFS states that examine whether beneficiaries have had their care coordinated among different health care providers. However, we believe that establishing additional measures that would allow CMS to obtain these data from all states and organizations participating in the demonstration could help it better understand the reasons why care coordination is or is not occurring and thus help the agency to strengthen the demonstration. Given the potential for the demonstrations to be expanded across the United States, it is important that CMS expediently collect this information to inform whether it is achieving its goal.", "To strengthen oversight of the provision of care coordination services in the Financial Alignment Demonstration, we recommend that the Secretary of Health and Human Services direct the Administrator of CMS to take the following two actions:\nExpediently develop and require organizations in the capitated model, and the states in the MFFS model, to report comparable core data measures across the demonstration that measure the following: the extent to which ICT meetings are occurring, and for MFFS states, the extent to which health risk assessments are completed.\nAlign CMS’s existing state-specific measures regarding the extent to which ICPs are being developed across the capitated and MFFS states to make them comparable and designate them as a core reporting requirement.", "HHS reviewed a draft of this report and provided written comments, which are reprinted in appendix II. In its comments, HHS did not specifically state whether it agreed or disagreed with our first recommendation, but it concurred with our second recommendation. HHS also provided us with technical comments, which we incorporated in the report as appropriate.\nRegarding our first recommendation that HHS require organizations to report comparable core data measures across the demonstration, HHS provided us with new information that it had not previously provided, which caused us to reconsider one of our findings and a related recommendation. Specifically, HHS noted that that the CAHPS surveys for both the capitated and MFFS models contain supplemental questions for the demonstration that are specific to care coordination, whereas they had previously provided us with information indicating that only the MFFS model CAHPS survey contained these questions. Given the new information HHS provided, we updated our report to reflect CMS’s plan to use the forthcoming results of the CAHPS survey to assess care coordination across the demonstration. In addition, we modified the recommendation contained in our draft report that CMS require organizations in the capitated model, and the states in the MFFS model, to report comparable core data measures across the demonstration regarding the extent to which care coordinators are meeting with beneficiaries. In addition, HHS noted in its comments that it has comparable risk assessment completion rate measures in both the MFFS and capitated models and said the variances between the health risk assessment measures in the two demonstrations reflect different design elements. However, we found that there were no core measures in the MFFS model examining the health risk assessment completion rate. HHS also described steps that it has been taking that may, in the future, help to address the findings in this report. For example, HHS noted that it is developing a set of care coordination measures to supplement data obtained from the CAHPS surveys. HHS also stated that the timeline for measurement development may not align with the current three-year demonstration period, such that the inclusion of any additional new measures would have to be considered for potential future extension or expansion of the initiative. Given the potential for the demonstrations to be expanded across the United States, we believe it is important that CMS expediently collect this information to inform whether care coordination in the demonstration is being implemented as intended. HHS stated that it recently entered into a contract to support measure development, which should better equip HHS to evaluate the extent to which care coordination is occurring in the demonstration, among other things.\nHHS concurred with our second recommendation to make CMS’s existing state-specific measures comparable and designate them as a core reporting requirement. HHS stated it would examine the feasibility of designating ICPs as a core reporting requirement as the demonstration progresses. However, it noted that it currently monitors the timely completion of ICPs in both models using different state-specific measures rather than uniform core reporting measures in order to reflect differences in the demonstration parameters across the states. We believe that aligning existing state-specific measures regarding ICP development to make them comparable and designating them as a core reporting requirement would help CMS better understand the extent to which care coordination is occurring across the demonstration and thus help the agency strengthen the demonstration as it progresses.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of Health and Human Services and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "", "", "X effective as of January 1, 2014, Virginia’s measures were effective as of April 1, 2014, and Washington’s measures were effective as of July 1, 2013.", "", "", "", "In addition to the contact name above, Catina Bradley, Assistant Director; Giselle Hicks; Maggie Holihan; Sarah-Lynn McGrath; Beth Morrison; Ann Tynan; and Emily Wilson made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 3, 1, 2, 2, 1, 2, 3, 3, 3, 2, 2, 1, 1, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title", "h2_full", "", "h0_title h2_title", "h0_full h2_full", "h0_title", "h0_full", "", "h3_full h1_full", "h1_title", "h1_full", "", "", "h3_full", "h3_full", "h1_full", "h2_full", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How were the integrated care organizations interviewed by GAO in several states able to implement care coordination in a variety of ways?", "How did these organizations assign care coordinators to beneficiaries?", "How did care coordinators communicate with beneficiaries?", "What did the organizations' challenges make it difficult for them to do?", "Why is it difficult for the organizations GAO interviewed to coordinate their care?", "What did GAO’s interviews raise questions about?", "How is a dual-eligible beneficiary designated?", "What is unique about these beneficiaries?", "How is CMS tackling the dual-eligible beneficiary issue?", "How did GAO examine care coordination?", "At what point did GAO interview state officials?", "What did GAO review in the making of this report?" ], "summary": [ "Due to the flexibility that states have in designing their Financial Alignment Demonstrations, the integrated care organizations that GAO interviewed in California, Illinois, Massachusetts, Virginia, and Washington implemented care coordination for dual-eligible Medicare and Medicaid beneficiaries in a variety of ways.", "For example, these organizations assigned care coordinators to beneficiaries using different approaches, such as assigning them by geographic proximity to the beneficiary or to the beneficiary's primary care provider.", "Care coordinators also used a range of interactions with beneficiaries in order to coordinate care, including by mail, e-mail, telephone, or in person.", "The organizations GAO interviewed described facing challenges that affected their ability to coordinate care, such as difficulties in locating beneficiaries.", "Specifically, organizations noted that certain characteristics of dual-eligible beneficiaries, such as high levels of transience, can make it challenging to coordinate their care—one of the key goals of the demonstration.", "GAO's interviews with beneficiary advocacy groups and providers raised questions about the extent to which care coordination is actually occurring.", "The Medicare and Medicaid programs spent an estimated $300 billion on dual-eligible beneficiaries—those individuals who qualify for both programs—in 2010.", "These beneficiaries often have complex health needs, increasing the need for care coordination across the two programs.", "In 2013, CMS began the Financial Alignment Demonstration, with the goal of integrating Medicare and Medicaid services and financing and improving care coordination.", "GAO examined (1) how integrated care organizations—which are health plans or other entities—are implementing care coordination and (2) what, if any, challenges organizations have encountered in implementing care coordination and the extent to which CMS oversees these care coordination activities.", "GAO interviewed officials from CMS and, during site visits to a nongeneralizable sample of the first five states to implement the demonstration, interviewed state officials, organizations, advocacy groups, and providers.", "GAO also reviewed CMS guidance outlining CMS's oversight role and the measures it uses to monitor the demonstration." ], "parent_pair_index": [ -1, 0, 1, -1, 0, -1, -1, 0, 0, -1, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }
CRS_RL32165	{ "title": [ "", "Introduction", "U.S. Concerns Over China's Currency Policy and Recent Action", "Most Recent Events", "Treasury Department Reports on Exchange Rates", "China's Concerns Over Changing Its Currency Policy", "The Economics of Fixed Exchange Rates", "A Critique of Various Estimates of the Yuan's Undervaluation", "Estimates Based on Fundamental Equilibrium Exchange Rates", "Estimates Based on Purchasing Power Parity", "Treasury Department Assessment of Economic Models", "Trends and Factors in the U.S.-China Trade Deficit", "Economic Consequences of China's Currency Policy", "Implications for China's Economy", "Implications for the U.S. Economy", "Effect on Exporters and Import-Competitors", "Effect on U.S. Borrowers", "Effect on U.S. Consumers", "U.S.-China Trade and Manufacturing Jobs", "Net Effect on the U.S. Economy", "The U.S.-China Trade Deficit in the Context of the Overall U.S. Trade Deficit", "The Value of the Yuan in the Context of the Falling Dollar", "Policy Options for Dealing with China's Currency Policy", "Tighten Requirements on Treasury Department's Report on Currency", "Intensify Diplomatic Efforts", "Raise Tariffs or Other Trade Sanctions", "Utilize the Dispute Resolution Mechanism in the WTO", "Apply U.S. Countervailing Trade Laws to Non-Market Economies", "Apply Estimates of Currency Undervaluation to U.S. Antidumping Measures", "Utilize Special Safeguard Measures", "Other Bilateral Commercial Considerations", "China's Holdings of U.S. Federal Debt Instruments", "Changes to the Current Currency Policy and Potential Outcomes", "Conclusion", "Legislation in the 110th Congress", "Appendix. Legislation in the 109th Congress" ], "paragraphs": [ "", "From 1994 until July 21, 2005, China maintained a policy of pegging its currency to the U.S. dollar at an exchange rate of roughly 8.28 yuan to the dollar. The Chinese central bank maintained this peg by buying (or selling) as many dollar-denominated assets in exchange for newly printed yuan as needed to eliminate excess demand (supply) for the yuan. As a result, the exchange rate between the yuan and the dollar basically stayed the same, despite changing economic factors which could have otherwise caused the yuan to either appreciate or depreciate relative to the dollar. Under a floating exchange rate system, the relative demand for the two countries' goods and assets would determine the exchange rate of the yuan to the dollar. Many economists contend that for the first several years of the peg, the fixed value was likely close to the market value. But in the last few years of the peg, economic conditions changed such that the yuan would likely have appreciated if it had been floating.\nThe Chinese government modified its currency policy on July 21, 2005. It announced that the yuan's exchange rate would become \"adjustable, based on market supply and demand with reference to exchange rate movements of currencies in a basket,\" (it was later announced that the composition of the basket includes the dollar, the yen, the euro, and a few other currencies), and that the exchange rate of the U.S. dollar against the yuan would be immediately adjusted from 8.28 to 8.11, an appreciation of about 2.1%. Unlike a true floating exchange rate, the yuan would (according to the Chinese government) be allowed to fluctuate by 0.3% (later increased to 0.5%) on a daily basis against the basket, it remained not fully convertible in international markets, and China continued tight restrictions and controls over capital transactions. The current situation might be best described as a \"managed float\"—market forces are determining the general direction of the yuan's movement, but the government is retarding its rate of appreciation through market intervention.\nSince July 2005, China has allowed the yuan to appreciate steadily, but slowly. It has continued to accumulate foreign reserves at a rapid pace, which suggests that if the yuan were allowed to freely float, it would appreciate more rapidly. China's foreign exchange reserves grew from $403 billion at the end of 2003 to $1.7 trillion at the end of March 2008, and China's large trade surplus totaled $262 billion in 2007. Since the 2005 reforms, there has been a significant shift in the economic environment in China and the United States. The yuan has risen 16% against the dollar—far more than the Japanese yen during the same period, for example. The overall value of the dollar has fallen significantly, to the point where some economists and policymakers fear that a further fall could be destabilizing to the U.S. economy. (By definition, any rise in the yuan is equivalent to a fall in the dollar.) Partly as a result of the falling dollar, total U.S. exports are the fastest growing sector of the economy, and the growth rate of imports from China appears to have slowed recently.\nNevertheless, the increase in the value of the yuan to date has done little to ease concerns raised in the United States. But China, with concerns about its own economy, has been reluctant to make significant changes to their currency. This paper reviews the various economic issues raised by China's present currency policy. Major topics surveyed include\nThe economic concerns raised by the United States over China's currency policy and China's concerns over changing that policy. How China's fixed exchange rate regime works and the various economic studies that have attempted to determine China's real, or market, exchange rate. Trends and factors in the U.S.-China trade imbalance. (What is causing it? Is China's currency policy to blame?) Economic consequences of China's currency policy for both China and the United States. China's massive accumulation of foreign exchange reserves and purchases of U.S. federal debt instruments. Policy options on how the United States might induce China to reform its present currency policy, including current legislation introduced in Congress.", "Many U.S. policymakers, business people, and labor representatives have charged that China's currency is significantly undervalued vis-à-vis the U.S. dollar by as much as 40%, making Chinese exports to the United States cheaper, and U.S. exports to China more expensive, than they would be if exchange rates were determined by market forces. They further argue that the undervalued currency has contributed to the burgeoning U.S. trade deficit with China, which has risen from $30 billion in 1994 to $256 billion in 2007, and has hurt U.S. production and employment in several U.S. manufacturing sectors (such as textiles and apparel and furniture) that are forced to compete domestically and internationally against \"artificially\" low-cost goods from China. Furthermore, many analysts contend that China's currency policy induces other East Asian countries to intervene in currency markets in order to keep their currencies weak against the dollar to remain competitive with Chinese goods. Several groups are pressing the Bush Administration to pressure China either to revalue its currency or to allow it to float freely in international markets. These issues are addressed in more detail later in the report.\nPresident Bush and Administration officials have criticized China's currency policy on a number of occasions, stating that exchange rates should be determined by market forces. Initially, the Bush Administration rejected calls from several Members of Congress to apply direct pressure on China to force it to abandon its currency peg. Instead, the Administration sought to encourage China to reform its financial system—under the auspices of a joint technical cooperation program agreed to on October 14, 2003, for example—and take other measures that would pave the way toward adopting a more flexible currency policy.\nThe Administration's position on China's currency peg appears to have toughened beginning around April 2005 when then-U.S. Treasury Secretary John Snow asserted at a G-7 meeting (on April 16, 2005) that \"China is ready now to adopt a more flexible exchange rate.\" This was likely driven in part by growing complaints from Members over China's currency policy and the introduction of numerous currency bills. For example, during the 109 th congressional session, the Senate on April 6, 2005, failed (by a vote of 33 to 67) to reject an amendment ( S.Amdt. 309 ) attached by Senator Schumer to S. 600 (a foreign relations authorization bill), which would have imposed a 27.5% tariff on Chinese goods if China failed to substantially appreciate its currency to market levels. In response to the outcome of the vote, the Senate Republican leadership negotiated an agreement with the supporters of the bill to allow a vote on S. 295 (which was sponsored by Senator Schumer and which has same language as S.Amdt. 309 ) at a later date as long as the sponsors of the amendment agreed not to offer similar amendments to other bills for the duration of the 109 th Congress. Supporters of S. 295 threatened to bring the bill up a vote on the bill on two separate occasions in 2006, but were convinced not to by Administration and Chinese officials. Numerous other currency bills were introduced as well.", "Over the past year, some of the most significant events concerning China's currency policy have included the following:\nOn May 13, 2008, the U.S. Bureau of Labor Statistics reported that, from April 2007 to April 2008, import prices from China increased 4.1%—the largest 12-month increase recorded since the index was first published in December 2003. On May 9, 2008, the U.S. Census Bureau reported that U.S. imports from China over the first three months of 2008 had risen by only 1.8% over the same period in 2007. On May 8, 2008, the Bank of China reported that the exchange rate with the dollar was 7.00 yuan, an appreciation of 15.9% since the July 2005 were introduced. On April 14, 2008, the Bank of China reported that China's foreign exchange reserves reached $1.68 trillion at the end of March 2008. On September 29, 2007, the Chinese government officially launched the China Investment Corporation (CIC), stating that the new entity was created to better manage its foreign exchange reserves. With an initial capitalization of $200 billion, CIC is one of the world's largest state-owned funds. On December 15, 2007, the CIC announced it would invest $5 billion in Morgan Stanley. On August 13, 2007, China's Xinhua News Agency reported that China had no plans to sell off its dollar assets. The statement appeared to be in response to an article that appeared in the Daily Telegraph (August 10, 2007) in which high level Chinese government officials reportedly claimed that China would sell off its dollar assets if the United States imposed sanctions against China over its currency policy. In addition, the government announced the elimination of regulations requiring domestic firms to convert part of their current-account foreign exchange holdings into yuan. In June 2007, the International Monetary Fund clarified its definition of currency manipulation as \"engaging in policies that are targeted at—and actually affect—the level of the exchange rate...in order to increase net exports.\" To discourage currency manipulation, the IMF announced it \"must be prepared to deliver clear and sometimes difficult policy messages to members....\" On May 17, 2007, 42 House Members filed a Section 301 petition with the U.S. Trade Representative's office over China's currency practices and requested that a trade dispute case be brought to the World Trade Organization (WTO). On June 13, 2007, the USTR's office announced that it had declined the petition.", "The 1988 Omnibus Trade and Competitiveness Act requires the Treasury Department to annually report on the exchange rate policies of foreign countries that have large global current account surpluses and large trade surpluses with the United States and to determine if they \"manipulate\" their currencies against the dollar in order to prevent \"effective balance of payment adjustments\" or to gain an \"unfair competitive advantage in international trade.\" If currency manipulation is found, Treasury is required to negotiate an end to such practices. Over the past several years, Treasury has issued a Report on International Economic and Exchange Rate Policies on a semi-annual basis, focused mainly on major U.S. trading partners. China was cited under this report for manipulating its currency five times from May 1992 to July 1994, largely because of its use of a dual exchange rate system (which it unified in early 1994) and restrictions that were imposed on access to foreign exchange by domestic firms. Neither China nor any other country has been designated as a currency manipulator since 1994. However, over the past few years, the Treasury Department reports have increased their focus on China and have stepped up criticism of China's currency policy and the pace of its reforms. Since China reformed its currency in July 2005, Treasury has made the following observations:\nThe November 28, 2005 report praised China's July 2005 currency reforms, but stated that it had failed to fully implement its commitment to make its new exchange rate mechanism more flexible and to increase the role of market forces to determine the yuan's value. The report further stated that China's new managed float exchange rate regime, which Chinese officials described as \"based on market supply and demand with reference to a basket of currencies,\" did not appear to play a significant role in determining the daily closing level of the yuan, and that trading behavior since the reforms strongly suggested that \"the new mechanism remains, in practice, a tightly managed currency peg against the dollar.\" However, Treasury stated that it decided not to cite China as a currency manipulator under U.S. trade law because of assurances it had received from Chinese officials that China was committed to \"enhanced, market-determined currency flexibility\" and that it would put greater emphasis on promoting domestic sources of growth, including financial reform. The Treasury Department's June 2007 report stated that although China's central bank continued to heavily intervene in currency markets and that China's currency was significantly undervalued, it did not meet the technical requirements under U.S. law regarding currency manipulation. However, the report stated that \"Treasury forcefully raises the Chinese exchange rate regime with Chinese officials at every available opportunity and will continue to do so.\" The Treasury Department's December 2007 report stated that China should significantly accelerate the appreciation of the RMB's effective exchange rate in order to minimize the risks that are being created for China itself as well as the world economy.\nMany Members have been critical of Treasury's decision (since 1994) not to cite China as a currency manipulator, despite its large scale currency interventions to control the exchange rate with the dollar, its large global current account surpluses, and large and growing trade surpluses with the United States. Many Members have called for enactment of legislation to revise the criteria Treasury uses to make its currency manipulation determination or to require it to estimate the level of the yuan's misalignment against the dollar (see the \" Legislation in the 110 th Congress \" section below).", "Chinese officials argue that its currency policy is not meant to promote exports or discourage imports. They claim that China adopted its currency peg to the dollar, a policy that is practiced by a variety of developing countries, in order to foster economic stability and investor confidence. Chinese officials have expressed concern that abandoning the current currency policy could spark an economic crisis in China and would especially be damaging to its export industries at a time when painful economic reforms (such as closing down inefficient state-owned enterprises and laying off millions of workers) are being implemented. In addition, Chinese officials also appear to be worried about the rising level of unrest in the rural areas, where incomes have failed to keep up with those in urban areas and public anger has spread over government land seizures and corruption. Chinese officials contend that appreciating the currency could reduce domestic food prices (because of increased imports) and agricultural exports (by raising prices in overseas markets), thus lowering the income of farmers and further raising tensions. They further contend that the Chinese banking system is too underdeveloped and burdened with heavy debt to be able to deal effectively with possible speculative pressures that could occur with a fully convertible currency, which typically accompanies a floating exchange rate.\nThe combination of a convertible currency and poorly regulated financial system is seen to be one of the causes of the 1997-1998 Asian financial crisis. Prior to the crisis, Chinese officials were reportedly considering moving towards reforming their currency policy, but the severe negative economic impact among several East Asian countries that had a floating currency appears to have convinced officials that China's currency peg was one of the main reasons why China's economy was relatively immune from crisis, and that gradually implementing reforms to make the currency more flexible was the best way to maintain stable economic growth.\nU.S. officials counter that they are not asking China to immediately adopt a floating currency system, but to move more quickly to reform the financial sector and to make the currency more flexible (including allowing faster appreciation of the yuan, widening the band, and decreasing the level of intervention in international currency markets).", "Fixed exchange rates have a long history of use, including the Bretton Woods system linking the major currencies of the world from the 1940s to the 1960s and the international gold standard before then. To understand how China's currency policy works, it is easiest to start with an explanation of how a fixed exchange rate works, which China operated until July 2005. Under the fixed exchange rate, the Chinese central bank bought or sold as much currency as was needed to keep the yuan-dollar exchange rate constant at level (formerly about 8.28 yuan per dollar). The primary alternative to this arrangement would be a floating exchange rate, as the United States maintains with economies like the Euro area, in which supply and demand in the marketplace causes the euro-dollar exchange rate to continually fluctuate. Under a floating exchange rate system, the relative demand for the two countries' goods and assets determines the exchange rate of the euro to the dollar. If the demand for Euro area goods or assets increased, more euro would be demanded to purchase those goods and assets, and the euro would rise in value (if the central bank kept the supply of euro constant) to restore equilibrium.\nWhen a fixed exchange rate is equal in value to the rate that would prevail in the market if it were floating, the central bank does not need to take any action to maintain the peg. However, over time economic circumstances change, and with them change the relative demand for a country's currency. If the Chinese had maintained a floating exchange rate, appreciation would likely have occurred in the past few years for a number of reasons. For instance, productivity and quality improvements in China may have increased the relative demand for Chinese goods and foreign direct investment in China. For the exchange rate peg to be maintained when economic circumstances have changed requires the central bank to supply or remove as much currency as is needed to bring supply back in line with market demand, which it does by increasing or decreasing foreign exchange reserves. This is shown in the following accounting identity, used to record a country's international balance of payments:\nNet investment income and net unilateral transfers between the United States and China are relatively small, so the current account balance is close to the trade balance (exports less imports). Thus, anytime net exports (exports less imports) or net private capital inflows (private capital inflows less outflows) increase, foreign exchange reserves must increase by an equivalent amount to maintain the exchange rate peg.\nFor the past several years, there has been excess demand for yuan (equivalently, excess supply of dollars) at the prevailing exchange rate peg. The central bank maintained the peg through 2005 by increasing its foreign reserves by buying dollars from the public in exchange for newly printed yuan. Rather than hold U.S. dollars, which earn no interest, the Chinese central bank mostly holds U.S. financial securities—primarily U.S. Treasury securities, but also U.S. Agency securities (e.g., the obligations of Fannie Mae and Freddie Mac). A peg can be maintained as long as the central bank is willing to accumulate more foreign exchange reserves.\nSince July 2005, China has continued to accumulate foreign reserves at a rapid pace (see Figure 1 ), and in 2006, China overtook Japan to become the world's largest holder of foreign exchange reserves. As seen in Table 1 , foreign reserves grew from $75 billion in 1995 to $168 billion in 2000 to $1.53 trillion in 2007. From 2006 to 2007, China's foreign exchange holdings rose by $463 billion, or 43%. But, unlike a fixed exchange rate regime, it has no longer purchased enough foreign reserves to entirely prevent the yuan from appreciating against the dollar. After an initial revaluation of 2% in July 2005, the yuan has appreciated steadily. By the end of April 2008, it had appreciated by about 16% to 7 yuan per dollar (see Figure 2 ). The current situation might be best described as a \"managed float\"—market forces are determining the general direction of the yuan's movement, but the government is retarding its rate of appreciation through market intervention (and thus, to some extent, is still pegging the yuan to the dollar). Some of China's neighbors also maintain managed floats (such as Malaysia) or have intervened in currency markets from time to time to keep its currency low against the dollar (such as Japan from 1998-2004). The continued rapid accumulation of foreign reserves suggests that if the yuan were allowed to freely float, it would appreciate more rapidly.\nPreventing the yuan from appreciating against the dollar is not the only reason the Chinese government could be accumulating foreign exchange reserves. Foreign exchange reserves are necessary to finance international trade (in the presence of capital controls) and to fend off speculation against one's currency. A country would be expected to increase its foreign reserves for these purposes as its economy and trade grew. However, Table 1 illustrates that the increase in foreign exchange reserves in China has significantly outpaced the growth of GDP or imports in the last few years. When China accumulates foreign reserves that are non-U.S. assets, it does not influence the yuan's value against the dollar. Little public information is available on the nature of China's foreign reserves, so it is not known what share of China's reserves are held in U.S. assets. It is also not known what share of the annual increase in reserves is due to new accumulations, as opposed to valuation changes, exchange rate effects, or the reinvestment of earnings.\nEconomic activity, including the level of imports and exports, is not determined by the nominal exchange rate, but by the real (inflation-adjusted) exchange rate. Because the United States and China had roughly similar increases in the overall price levels from 1994 to 2003 (39% in China vs. 31% in the United States), the difference between the real and nominal rate was small. However, China had much higher inflation than the United States from 1994 to 1997, so the real and nominal exchange rates diverged considerably during that time. The real exchange rate appreciated from China's perspective, making their exports more expensive and U.S. imports cheaper. From then until 2003, the real and nominal exchange rates converged because China's inflation rate was lower than U.S. inflation. This can be seen in Figure 3 . In 2003, the Chinese exchange rate reached its lowest level since 1994 in real terms, from the Chinese perspective, making their exports progressively less expensive since 1997. Since then, the value of the yuan has risen. Appreciation in the nominal exchange rate has brought the yuan almost back to its 1998 level in real terms.\nIn the long run, real (inflation-adjusted) exchange rates return to their market value whether they are (nominally) fixed or floating. Imagine that the demand for Chinese goods and services were to increase. If the yuan were floating, it would appreciate, as more yuan were acquired to purchase Chinese goods. It would continue to appreciate until the excess demand for Chinese goods was exhausted (since they are now more expensive in terms of foreign currency), at which point the trade balance would return to its equilibrium level. With a fixed exchange rate, the real exchange rate returns to its market value through price adjustment instead, which takes time. If the exchange rate were fixed below the level that would prevail in the market, Chinese exports would be relatively inexpensive and U.S. imports would be relatively expensive. As long as this situation prevailed, the trade surplus with the United States would persist. The trade surplus (plus net remittances) is equal to the capital flowing from China to the United States. Part of this capital consists of the purchase of U.S. assets by private Chinese citizens. The other portion consists of the accumulation of dollar reserves by the Chinese central bank. By increasing its dollar reserves, the central bank is also increasing the supply of yuan. This causes the inflation rate in China to rise, all else equal. Over time, as prices rise, exports will become more costly abroad and imports less costly. At that point, the trade surplus will return to its equilibrium value. Although the nominal exchange rate never changed, because of the rise in prices, the real exchange rate would now equal the market rate that would prevail if the exchange rate had been floating. Thus, undervaluing a fixed exchange rate does not confer any permanent competitive advantage for a country's exporters and import-competing industries. However, because price adjustment takes time, floating exchange rates return to the equilibrium value much more quickly than fixed exchange rates.\nThus, when a country uses its monetary policy to influence the value of it currency, it can no longer use its monetary and fiscal policy to counteract changes in the business cycle (the U.S. loses no policy flexibility from China's peg). For example, a peg would prevent a country from lowering its interest rates to offset an economic downturn. If it did, capital would flow out of the country to assets with higher interest rates in the rest of the world, and the country would find its currency peg under pressure (since investors would sell the country's currency and buy foreign currency to transfer their capital abroad) until it raised its interest rates.\nThis loss of monetary autonomy is relatively unimportant for small countries that fix their exchange rate to large neighbors that share the same business cycle, since the large neighbor would also likely be affected by the downturn and lower its interest rates. But the loss in autonomy is costly when a country is tied to a partner to whom it is not closely linked and does not experience similar business cycles, as is arguably the case between the United States and China.\nHowever, China loses less monetary autonomy than most countries with a fixed exchange rate through its use of capital controls (legal barriers restricting access to foreign currency). The currency is convertible on a current account basis (such as for trade transactions), but not on a capital account basis (for various types of financial flows, such as portfolio investment). In addition, nearly all Chinese enterprises are required to turn over their foreign currency holdings to China's state bank in exchange for yuan, and purchases of foreign exchange by individuals and firms in China are closely regulated. Because capital cannot easily leave China when interest rates are lowered, China retains some flexibility over its monetary and fiscal policy despite the fixed exchange rate.", "Although it is certain that the yuan would appreciate if the central bank were not increasing its foreign reserves, since the value of the yuan has changed little since 1994, there is no direct way to determine how much it would appreciate—even if there was a consensus about what China's current account balance should be, there are no observations until June 2005 to estimate how sensitive its imports and exports would be to changes in the exchange rate. Estimates of the extent of the yuan's undervaluation have been cited in many articles and interviews. This report attempts to evaluate only those estimates in which the author explains how the estimate was derived. It should be noted that many of the estimates were made some time ago, when the value of the yuan and China's trade surplus were lower, so the yuan may be more or less undervalued at this point. The estimates are grouped below into two broad methodological categories: the \"fundamental equilibrium exchange rate\" method and the \"purchasing power parity\" method.", "One method for estimating misalignments in exchange rates is referred to as the fundamental equilibrium exchange rate (FEER) method. It is based on the belief that current account balances at the present are temporarily out of line with their \"fundamental\" value, either because of unsustainable forces in the economy or government intervention. Once an estimate has been made of what the fundamental current account balance should be, one can calculate how much the exchange rate must change in value to achieve that current account adjustment. As will be discussed below, this is not an uncontroversial method. Many economists would reject the notion that current account balances worldwide are misaligned, or that economists can predictably determine how much they must be adjusted to come back into alignment. Thus, the following estimates are only valid if one accepts the assumptions underlying them.\nErnest Preeg, senior fellow at the Manufacturers' Alliance, estimated that the yuan was undervalued by 40% in 2003. While this claim is not based on any formal analysis, he uses several rule-of-thumb estimates to reach this conclusion. His first observation is that the increase in Chinese foreign exchange reserves equaled 100% of the Chinese trade surplus less net foreign direct investment (FDI) flows in the first six months of 2002. He concludes that the entire trade surplus less net foreign direct investment would be zero in the absence of the increase in foreign exchange reserves. His second observation is a rule-of-thumb estimate that a 1% decline in the dollar leads to a $10 billion decline in the trade deficit in the United States He then observes that the dollar would need to decline by 40% according to that rule of thumb to eliminate the trade deficit since the U.S. trade deficit equaled about $400 billion in 2002. Since the Chinese trade surplus plus net FDI flows equaled 100% of the increase in foreign exchange reserves, he concludes that if the central bank no longer increased its foreign exchange reserves by letting the yuan float, the surplus less FDI would be zero and the yuan would appreciate by 40%, based on the U.S. ratio.\nThe Institute for International Economics (IIE) estimates that the yuan was 15%-25% undervalued in 2003. It argues that the \"underlying\" current account surplus was 2.5%-3% of GDP in 2003, larger than the actual surplus (1.5%) (it does not explain why). It then argues that the surplus should be reduced by $50 billion (or 4% of GDP) to return to equilibrium, which would leave China with a deficit of 1%-1.5% of GDP in equilibrium. It believes that the revaluation required to achieve this reduction in the current account surplus is unusually large because of the extensive use of imports in the production of Chinese exports. IIE Fellow Morris Goldstein testified that\nThese estimates of [yuan] misalignment can be obtained either by solving a trade model for the appreciation of the RMB that would produce equilibrium in China's overall balance of payments, or by gauging the appreciation of the RMB that make a fair contribution to the reduction in global payment imbalances, especially the reduction of the U.S. current-account deficit to a more sustainable level.\nGoldman Sachs Economic Research Group has estimated that the yuan was 9.5%-15% undervalued in 2003. They argue that the current account less FDI should be zero in equilibrium (which means that China would have a current account deficit equal to FDI), which could be accomplished with a 9.5%-15% revaluation. This is based on their elasticity (i.e., the degree to which demand changes due to price changes) estimates that exports would fall 0.2% and imports would rise 0.5% when the exchange rate rose 1%.\nVirginie Coudert and Cecile Couharde use the most sophisticated analysis to estimate their parameters. They argue that China has an underlying current account deficit of between 1.5% and 2.8% of GDP. The smaller number comes from a cross-country regression of the current account balance based on variables such as per-capita income, demographics, and the budget deficit; the larger number is an estimate of the largest current account deficit that would stabilize China's debt-to-GDP ratio. They estimate that the yuan was 44%-54% undervalued against the dollar in 2003.\nAll of these estimates are based on a similar logic, so a few general observations can be made about all of them. First, none of the estimates are the product of theoretically grounded, econometrically estimated economic models. Rather, they are \"back of the envelope\" estimates based on a few simple \"rule of thumb\" assumptions. \"Rules of thumb\" such as the Preeg 10%-$1 billion estimate or the Goldman Sachs import and export elasticities may not be accurate over time or over large changes in the exchange rate.\nThe main source of contention in all of the estimates of the yuan's undervaluation is the definition of an \"equilibrium\" current account balance. All of the estimates are based on the appreciation that would be required for China to attain \"equilibrium\" in the current account balance. But there is no consensus based on theory or evidence to determine what equilibrium would be; rather, the authors base equilibrium on their own personal opinion, with some using arbitrary assumptions and others more sophisticated ones. Yet this assumption is crucial—Dunaway et al. demonstrate that changing the assumed equilibrium current account balance by 2 percentage points of GDP changes the estimated undervaluation by as much as 25 percentage points. Some economists argue that the current account balance would always be close to zero in equilibrium, but this neglects the fact that countries with different saving and investment rates may willingly lend to and borrow from one another for long periods of time.\nIn fact, the Preeg, IIE, and Goldman Sachs estimates use an assumption of equilibrium less favorable to China than the current account balance. These studies actually call for balance only in official and portfolio borrowing. They still allow for foreign direct investment (FDI) inflows, which means their estimate of China's overall \"equilibrium\" current account position is actually a deficit. If they had chosen balance (the traditional \"equilibrium\" measure with a fixed exchange rate) instead of a deficit as their equilibrium benchmark, their estimates of the yuan's undervaluation would have been smaller. Even if portfolio flows are essentially limited by capital controls at present, it is not clear why requiring the Chinese to borrow from the rest of the world is any less unsustainable than the current arrangement where China is lending to the rest of the world. With capital controls and net FDI inflows, increasing foreign reserves is the only way that China can keep its net foreign indebtedness from increasing. And all measures rule out any accumulation of foreign official reserves for reasons other than to influence the exchange rate.\nIt is particularly difficult to determine the equilibrium current account balance in China because of the presence of capital controls. If China were to maintain capital controls after currency reform (if, for example, they revalued the peg rather than let the yuan float), current account balance may be a reasonable assumption. But if capital controls were eliminated, as is typically the case with a floating exchange rate, the economic situation would change entirely—\"equilibrium\" could now involve persistent borrowing from or lending to the rest of the world by private Chinese citizens, which would result in a corresponding persistent trade deficit or surplus, respectively. If private citizens lent as much to the United States in equilibrium as the Chinese central bank is currently lending (and U.S. lending to China remained unchanged), then the equilibrium market exchange rate would be equal to the current fixed rate, and the trade deficit would remain unchanged. If private capital outflows exceeded the current increase in foreign reserves, the yuan would depreciate. Since China is a country with both a high national saving rate and a high investment rate, it is not clear whether China would be a net borrower (in which case it would run a current account deficit) or lender (current account surplus) if their currency floated and capital controls were abolished. This issue is particularly relevant when the equilibrium exchange rate is defined as \"market determined,\" since capital controls currently prevent portfolio investment flows from being market determined. Bosworth argues that China's high internal saving rate is more than sufficient to finance its investment, so it makes sense for China to offset FDI inflows with official outflows in the form of foreign reserve accumulation rather than run a current account deficit. Therefore, he argues, foreign reserve accumulation should not be considered proof of undervaluation. Wang argues that, based on estimates derived from other developing economies, China's equilibrium current account surplus may be even larger than the actual surplus, so the yuan is overvalued.\nThe FEER approach is also based on a belief that the overall U.S. trade deficit is unsustainable, and revaluing the yuan would reduce it. This goes beyond an argument that China has fixed the yuan at an artificially low level, and argues that the dollar, which is market determined against most of its trading partners, is incorrectly valued. For example, the Coudert and Couharde estimate that the yuan is 54% undervalued is based on a corresponding estimate that the dollar was 35% overvalued, the yen 37% undervalued, and the euro 27% undervalued in 2003. If trade and financial markets are rational over the medium run, then the value of the dollar and the size of the trade deficit are never unsustainable—if they were, investors would be unwilling to hold U.S. assets and would sell the dollar, and the trade deficit would decline. There is no widely accepted theoretical approach to determining trade deficit sustainability, and prima facie evidence does not suggest the U.S. trade deficit is unsustainable over the next few years—it has lasted several years, it did not prevent the U.S. economy from achieving record growth and low unemployment in the late 1990s, U.S. investment income paid to foreigners is not large, and there have not been any unusually large or sudden declines in the dollar since the trade deficit emerged.\nFurther, if the Chinese central bank stopped buying U.S. assets, and hence reduced its bilateral trade deficit with the United States, it is unlikely that the overall U.S. trade deficit would fall by a corresponding amount. Other foreigners would still be free to lend to the United States, which could cause its other bilateral trade deficits to widen. Thus, it is not clear that a \"fair share\" of a reduction in the U.S. trade deficit can be apportioned to China. And even if China's overall trade surplus were eliminated, it might still run a bilateral trade surplus with the United States. Even countries with overall trade deficits, including the United States, have some trading partners with whom they run surpluses and some with whom they run deficits.\nDoes international experience suggest what the Chinese current account balance would be in equilibrium? The closest comparison is probably to other East Asian countries, which also grew rapidly and maintained high saving rates in recent decades. The experience of these countries is mixed. From 1980 to 1997, South Korea, Malaysia, Philippines, Indonesia, and Thailand typically ran current account deficits, while Hong Kong, Singapore, Taiwan, and Japan (which had already industrialized) typically ran current account surpluses. Since the Asian financial crisis in 1997, all of these countries have run large current account surpluses. This may suggest that the current economic environment is not conducive to developing world borrowing.\nAs seen in Table 2 , the same combination of large foreign exchange reserves and a large current account surplus can be seen in several other countries in the region, even though these countries range in their exchange rate regimes from a float (Japan and South Korea) to a currency board (Hong Kong). Although large compared to other regions, China's current account balance does not seem out of line with its neighbors.", "There are other estimates of the yuan's undervaluation based on the theory of purchasing power parity (PPP)—the theory that the same good should have the same price in two different countries. If it did not, then arbitrageurs could buy it in the cheaper country and sell it in the more expensive country until the price disparity disappeared.\nOne of the simplest estimates based on PPP is the Economist magazine's Big Mac Index, which estimated that China's currency was undervalued by 56% in February 2007. The Economist portrays the Big Mac Index as a \"light hearted guide\" to exchange rates, and there are important drawbacks to relying too heavily on it. The Big Mac Index compares the price of a McDonald's Big Mac in China and the United States. Since a Big Mac in China was 56% cheaper than in the United States, the index concludes that the yuan is undervalued by that much. But purchasing power parity only applies to tradeable goods, and a Big Mac is not tradeable. In fact, Li Ong estimates that 94% of the value of a Big Mac comes not from the hamburger itself, but the services associated with the hamburger. These include the wages of employees serving the Big Mac and the rent of the restaurant in which it is eaten, both of which are determined by local factors. Since the hamburger itself is the only tradeable portion of the Big Mac, only a small fraction of the Big Mac's value should be determined by purchasing power parity. As a result, a Big Mac in New York City is more expensive than a Big Mac purchased in the U.S. rural south. Taken literally, the Big Mac Index would imply that a dollar in the rural south is undervalued compared to a dollar in New York City.\nWhile PPP is a simple idea that is powerful in theory, it has been proven to be unreliable in reality: prices are consistently lower in developing countries than industrialized countries. Some economists have tried to estimate what the yuan's value would be by attempting to control for predictable divergences from PPP. Still, these estimates should be considered with caution—even when sophisticated modifications have been made, PPP has been shown to help predict exchange rates only over the long run. Estimates based on PPP would identify any country's currency as overvalued or undervalued, except the country to which it is being compared. Another drawback to the PPP approach is that the estimate will not tend to change much over time (if prices are relatively stable), even if the trade deficit is significantly changing.\nEconomist Jeffrey Frankel argues that income level can be regressed on the exchange rate using a cross-sample of countries to find a predictable relationship between a country's income level and its equilibrium exchange rate based on PPP. By this measure, he estimates that China's exchange rate was undervalued by 36% in 2000. He speculates that, if anything, the undervaluation has increased since then. Coudert and Couharde make a similar calculation for 2003 and estimate the yuan to be undervalued by 41%-51%, depending on what countries are included in their sample. Frankel acknowledges a number of caveats to this analysis. First, PPP only holds over the long run, at best, and financial flows can cause even market-determined exchange rates to significantly diverge from PPP for several years. Second, the regression does not control for other factors and only explains 57% of the variation in the data. Third, he argues that any adjustment in the exchange rate should be gradual so as not to be economically disruptive. He also warns that \"It is not even true that an appreciation of the renminbi against the dollar would have an immediately noticeable effect on the overall U.S. trade deficit or employment....\"\nThere should be some theoretical rationale for linking income levels to exchange rate values; otherwise, the results may represent nothing more than spurious correlation. One rationale is called the \"Balassa-Samuelson\" effect: as countries get richer, their exchange rates are predicted to appreciate because productivity growth will be more rapid for tradeable goods than non-tradeable goods. Since these differences in productivity growth cannot easily be measured directly, income levels can be used as a proxy. But if the proxy is not an accurate one, then neither will be the results. Another proxy is the ratio of the consumer price index to the producer price index. When Coudert and Couharde used this proxy over time with a smaller sample, they estimated that the yuan was 18% undervalued in 2003. Benassy-Quere et al. regressed this proxy and net foreign assets on a panel of the G20 countries and found the yuan to be undervalued by 47% in 2003. Wang also uses this proxy (for China only), as well as net foreign assets and openness to trade, in a regression, and finds evidence that the yuan was only modestly undervalued in 2003. However, the authors cautioned that the price index proxy could be inaccurate for China since many consumer prices are not market determined. In addition, they observed that restrictions on the mobility of labor and capital in China may interfere with the Balassa-Samuelson effect.\nCheung et al. are able to replicate others' results that the yuan is significantly undervalued, but point out that these estimates do not meet generally accepted standards of statistical inference. Specifically, the undervaluation estimates are not statistically significant, which means that the results are not robust enough to be sure that the yuan is undervalued at all. Moreover, when they adjust their specification to take into account serial correlation (the fact that this year's exchange rate is influenced by last year's), the estimated undervaluation becomes much smaller. Dunaway et al. demonstrate that when additional explanatory variables are added to the PPP model, such as openness to trade, the estimated undervaluation becomes much smaller. They also show that the estimate changes greatly when seemingly insignificant changes are made to the model, such as changing the time period or omitting one country from the sample.", "The Treasury Department's December 2006 report on exchange rates discusses the use of economic models and methodology to estimate a currency's \"misalignment\" or what the fair market rate exchange rate should be. The report noted that there is no single model that accurately explains exchange rate movements, that such models rarely, if ever, incorporate financial market flows, and that their conclusions can vary considerably, based on the variables used. However, Treasury stated that examining such models can produce useful information in understanding exchange rate movements if they: focus only on serious misalignments; use real effective, not bilateral, exchange rates; utilize several different models, recognizing that no one model will provide precise answers; focus only on protracted misalignments where currency adjustments are not taking place; supplement judgments about misalignment with analysis of empirical data, indicators, policies and institutional factors; and verify whether there are any market-based reasons for a currency's misalignment. Treasury points out that most models (including the two classes analyzed above) estimate equilibrium exchange rates in terms of trade flows, while in reality trade flows are swamped by financial flows.", "Critics of China's currency peg often point to the large and growing U.S.-China trade imbalance as proof that the yuan is significantly undervalued and constitutes an attempt to gain an unfair competitive advantage over the United States in trade. However, bilateral trade balances reflect structural causes as well as exchange rate effects. There are a number of other factors at work that are also important to consider when analyzing the bilateral trade deficit.\nFirst, although China (according to U.S. statistics) had a $256 billion merchandise trade surplus with the United States in 2007, its overall trade surplus was $262 billion (Chinese data), indicating that China had a small ($6 billion) trade surplus in its trade with the world excluding the United States (see Table 3 ). If the yuan is undervalued against the dollar, it should also be undervalued against other currencies, yet China runs trade deficits with several countries. For example, according to Chinese data, it had a $77.5 billion trade deficit with Taiwan, a $47.9 billion deficit with South Korea, and a $38.1 billion deficit with Japan.\nSecond, the sharp rise in the U.S. trade deficit with China diverts attention from the fact that, while U.S. imports from China have been rising rapidly, U.S. exports to China have been increasing sharply as well. Table 4 lists U.S. exports to its top 10 major export markets in 2007. These data indicate that U.S. exports to China from 2001-2007 rose significantly faster than those to any other major U.S. trading partner. In 2007, total U.S. exports rose 18.1% over the previous year (they increased by 32.0% in 2006). In 2007, China overtook Japan to become the third largest U.S. export market.\nFinally, there is strong evidence to suggest that a significant share of the growing level of imports (and hence U.S. trade deficit) from China is coming from export-oriented multinational companies, especially from East Asia, that have moved their production facilities to China to take advantage of China's abundant low-cost labor (among other factors). Chinese data indicate that the share of China's exports produced by foreign-invested enterprises (FIEs) in China has risen dramatically over the past several years. As indicated in Table 5 , in 1986, only 1.9% of China's exports were from FIEs, but by 1996, this share had risen to 40.7%, and by 2007 it had risen to 57.1% A similar pattern can be seen with imports: FIEs accounted for only 5.6% of China's imports in 1986, rose to 47.9% by 2000, and to 58.5% in 2007. FIEs import raw materials and components (much of which come from East Asia) for assembly in China, after which point, much of the final product is exported. As a result, China tends to run trade deficits with East Asian countries and trade surpluses with countries with high consumer demand, such as the United States. These factors have led many analysts to conclude that much of the increase in U.S. imports (and hence, the rising U.S. trade deficit with China) is a result of China becoming a production platform for many foreign companies (who are the largest beneficiaries from this arrangement), rather than unfair Chinese trade policies. The rising importance of FIEs may represent a fundamental change in trade between China and the United States that could affect the bilateral trade deficit independently of the exchange rate regime.\nThe sharp rise in the share of China's trade by FIEs appears to be strongly linked to the rapid growth in foreign direct investment (FDI) in China, which grew from $1.9 billion in 1986 to $74.8 billion in 2007, much of which went to export-oriented manufacturing, a large share of which was exported to the United States. Table 5 indicates that the U.S. trade deficit with China began to increase rapidly beginning in the early 1990s; a significant rise in FDI and exports by FIEs in China occurred at roughly the same time. By comparing exports and imports in Table 5 , one can see that FIEs have little effect on China's overall trade balance, since the FIEs import roughly 80% as much as they export.\nTable 6 provides an illustration of how foreign multinational companies have shifted a significant level of production from other (mainly) East Asian countries to China in one industry. In 2000, Japan was the largest foreign supplier of U.S. computer equipment (with a 19.6% share of total shipments), while China ranked 4 th (with a 12.1% share). In just seven years, Japan's ranking fell to 4 th , the value of its shipments dropped by over half, and its share of shipments declined to 7.0% (2007). China was by far the largest foreign supplier of computer equipment in 2007 with a 51.5% share of total U.S. imports. While U.S. imports of computer equipment from China rose by 436% over the past seven years, the total value of U.S. imports from the world of these commodities rose by only 26%. A large share of the increase in Chinese computer production has reportedly come from foreign computer companies that have moved manufacturing facilities China.", "If the yuan is undervalued against the dollar, as many critics charge, then there are benefits and costs of this policy for the economies of both China and the United States.", "If the yuan is undervalued, then Chinese exports to the United States are likely cheaper than they would be if the currency were freely traded, providing a boost to China's export industries (which employ millions of workers and are a major source of China's productivity gains). An undervalued currency also increases the attractiveness of China as a destination for foreign investment in export-oriented production facilities, much of which comes from U.S. firms. Foreign investment is an important source of technology transfers, which contribute to economic development. However, an undervalued currency makes imports more expensive, hurting Chinese consumers and Chinese firms that import parts, machinery, and raw materials. Such a policy, in effect, benefits Chinese exporting firms (many of which are owned by foreign multinational corporations) at the expense of non-exporting Chinese firms, especially those that rely on imported goods. This may impede the most efficient allocation of resources in the Chinese economy in the long run.\nIn the short run, a revaluation of the yuan could reduce aggregate spending in China by raising imports and reducing exports. Whether this would be desirable depends on the current state of the Chinese economy. Some observers argue that the Chinese economy is currently overheating, and revaluation would help place it on a more sustainable path and prevent inflation from rising. Others argue that there is a large pool of underemployed labor in rural China that the undervalued yuan is helping to absorb. In this view, revaluation could be economically and socially disruptive.\nMany economists note that China's currency policy essentially denies the government the ability to use monetary policy (such as interest rates) to promote stable economic growth (e.g., fighting inflation). Secondly, they contend that the currency policy has skewed the economy into becoming overly dependent on fixed investment and net exports for economic growth, which, in the long run can not be sustained. Thirdly, they maintain that China's currency policy may actually be undermining the financial viability of the banking system by expanding the level of easy credit, which has made the banks more prone to extend loans to risky and/or speculative ventures, and thus may increase the level of bank-held non-performing loans. In addition, the policy has contributed to an inflow of \"hot money\" into short-term speculative ventures (such as real estate and the stock market) by investors hoping to cash in on future appreciation of the currency. Banks are restricted from using interest rate policies to better regulate investment decisions because raising interest rates beyond a certain level could increase flows of foreign capital into the country. Keeping interest rates low in a booming economy may prevent the most efficient allocation of capital and could lead to overproduction in some sectors.\nThe accumulation of large foreign exchange reserves by China may make it easier for Chinese officials to move more quickly toward adopting a fully convertible currency (if the government feels the reserves could defend the currency against speculative pressures). However, the accumulation of large foreign exchange reserves also entails opportunity costs for China: such funds could be used to fund China's massive development needs (such as infrastructure improvements and pollution control), improvements to China's education system and social safety net, and recapitalization of financially shaky banks. These alternatives may have higher rates of return to the economy than U.S. Treasuries or Chinese bonds held by banks to sterilize the effects of exchange rate intervention.", "", "When a foreign reserve accumulation causes the yuan to be less expensive than it would be if it were determined by market forces, it causes Chinese exports to the United States to be relatively inexpensive and U.S. exports to China to be relatively expensive. As a result, U.S. exports and the production of U.S. goods and services that compete with Chinese imports fall, in the short run. Many of the affected firms are in the manufacturing sector, as will be discussed below. This causes the U.S. trade deficit to rise and reduces aggregate demand in the short run, all else equal.\nChina has become the United States's second largest supplier of imports (2006 data). A large share of China's exports to the United States are labor-intensive consumer goods, such as toys and games, textiles and apparel, shoes, and consumer electronics. Many of these products do not compete directly with U.S. domestic producers—the manufacture of many such products shifted overseas several years ago. However, there are a number of U.S. industries (many of which are small and medium-sized firms), including makers of machine tools, hardware, plastics, furniture, and tool and die that are expressing concern over the growing competitive challenge posed by China. An undervalued Chinese currency may contribute to a reduction in the output of such industries.\nOn the other hand, U.S. producers also import capital equipment and inputs to final products from China. For example, U.S. computer firms use a significant level of imported computer parts in their production, and China was the largest foreign supplier of computer equipment to the United States in 2007. An undervalued yuan lowers the price of these U.S. products, increasing their output and competitiveness in world markets. And many imports from China are produced by U.S.-invested enterprises (as discussed above), which benefit from an undervalued exchange rate.", "An undervalued yuan also has an effect on U.S. borrowers. When the United States runs a current account deficit with China, an equivalent amount of capital flows from China to the United States, as can be seen in the U.S. balance of payments accounts. This occurs because the Chinese central bank or private Chinese citizens are investing in U.S. assets, which allows more U.S. capital investment in plant and equipment to take place than would otherwise occur. Capital investment increases because the greater demand for U.S. assets puts downward pressure on U.S. interest rates, and firms are now willing to make investments that were previously unprofitable. This increases aggregate spending in the short run, all else equal, and also increases the size of the economy in the long run by increasing the capital stock.\nPrivate firms are not the only beneficiaries of the lower interest rates caused by the capital inflow (trade deficit) from China. Interest-sensitive household spending, on goods such as consumer durables and housing, is also higher than it would be if capital from China did not flow into the United States. In addition, a large proportion of the U.S. assets bought by the Chinese, particularly by the central bank, are U.S. Treasury securities, which fund U.S. federal budget deficits. According to the U.S. Treasury Department, China held $397 billion in U.S. Treasury securities (as of September 2007), making it the second largest foreign holder of such securities (after Japan). If the U.S. trade deficit with China were eliminated, Chinese capital would no longer flow into this country on net, and the U.S. government would have to find other buyers of its U.S. Treasuries at higher interest rates. This would increase the government's interest payments, increasing the budget deficit, all else equal.", "A society's economic well-being is usually measured not by how much it can produce, but how much it can consume. An undervalued yuan that lowers the price of imports from China allows the United States to increase its consumption of both imported and domestically produced goods through an improvement in the terms-of-trade. The terms-of-trade measures the terms on which U.S. labor and capital can be exchanged for foreign labor and capital. Since changes in aggregate spending are only temporary, from a long-term perspective the lasting effect of an undervalued yuan is to increase the purchasing power of U.S. consumers. The rise of the yuan against the dollar (and other factors, such as rising prices for raw materials) may be beginning to impact the price of Chinese products sold in the United States. The U.S. Bureau of Labor Statistics reported that, from April 2007 to April 2008, import prices from China increased 4.1%—the largest 12-month increase recorded since the index was first published in December 2003. In addition, from January to March 2008, U.S. imports from China rose by only 1.8% over the previous period in 2008 (they rose by 11.7% from 2006-2007).", "Critics of China's currency policy argue that the low value of the yuan has had a significant effect on the U.S. manufacturing sector, where 2.7 million factory jobs have been lost since July 2000. While job losses in the U.S. manufacturing sector have been significant in recent years, there is no clear link between job losses and imports from China. First, only some manufacturers export to China or compete with Chinese imports. Second, manufacturing output has reached an all-time high; manufacturing employment has fallen over this time because of productivity growth, not a decline in output. Third, the growing trade deficit has not been limited to China; the overall trade deficit is still increasing.\nFinally, there is a long-run trend that is moving U.S. employment away from manufacturing and toward the service sector. U.S. employment in manufacturing as a share of total nonagricultural employment has fallen from 31.8% in 1960 to 22.4% in 1980, to 10.7% in 2005, to 10.5% in 2006, to 10.2% in 2007. This trend is much larger than the Chinese currency issue, and is caused by changing technology (which requires fewer workers to produce the same number of goods) and comparative advantage. With increasing globalization, comparative advantage predicts the United States will produce knowledge- and technology-intensive goods that it is best at producing for trade with countries, such as China, who are better at producing labor-intensive goods. Since the production of some manufactured goods is labor-intensive and some services cannot be traded, trade leads to more manufacturing abroad, and less in the United States. Over time, it is likely that the trend shifting manufacturing abroad will continue regardless of China's currency policy.\nAlan Greenspan, former Chairman of the Federal Reserve, testified in 2005 that \"I am aware of no credible evidence that ... a marked increase in the exchange value of the Chinese renminbi relative to the dollar would significantly increase manufacturing activity and jobs in the United States.\"", "In the medium run, an undervalued yuan neither increases nor decreases aggregate demand in the United States. Rather, it leads to a compositional shift in U.S. production, away from U.S. exporters and import-competing firms toward the firms that benefit from the lower interest rates caused by Chinese capital inflows. In particular, capital-intensive firms and firms that produce consumer durables would be expected to benefit from lower interest rates. Thus, it is expected to have no medium- or long-run effect on aggregate U.S. employment or unemployment. As evidence, one can consider that while the trade deficit with China (and overall) has widened, the overall unemployment rate has fallen from 6.3% in 2003 to around 5% in 2008. However, the gains and losses in employment and production caused by the trade deficit will not be dispersed evenly across regions and sectors of the economy: on balance, some areas will gain while others will lose.\nAlthough the compositional shift in output has no negative effect on aggregate U.S. output and employment in the long-run, there may be adverse short-run consequences. If output in the trade sector falls more quickly than the output of U.S. recipients of Chinese capital rises, aggregate spending and employment could temporarily fall. If this occurs, then there is likely to be a decline in the inflation rate as well (which could be beneficial or harmful, depending if inflation is high or low at the time). A fall in aggregate spending is more likely to be a concern if the economy is already sluggish than if it is at full employment. Otherwise, it is likely that government macroeconomic policy adjustment and market forces can quickly compensate for any decline of output in the trade sector by expanding other elements of aggregate demand.\nBy shifting the composition of U.S. output to a higher capital base, the size of the economy would be larger in the long run as a result of the capital inflow/trade deficit. U.S. citizens would not enjoy the returns to Chinese-owned capital in the United States. U.S. workers employing that Chinese-owned capital would enjoy higher productivity, however, and correspondingly higher wages.", "While China is a large trading partner, it accounted for only about 17% of U.S. imports in 2007 and 29.0% of the sum of the bilateral trade deficits (or 32% of the total U.S. trade deficit, including countries where the United States has a trade surplus). Over a span of several years, a country with a floating exchange rate can run an ongoing overall trade deficit for only one reason: a domestic imbalance between saving and investment. This has been the case for the United States over the past two decades, where saving as a share of gross domestic product (GDP) has been in gradual decline. On the one hand, the United States has high rates of productivity growth and strong economic fundamentals that are conducive to high rates of capital investment. On the other hand, it has a chronically low household saving rate, and recently a negative government saving rate as a result of the budget deficit. As long as Americans save little, foreigners will use their saving to finance profitable investment opportunities in the United States; the trade deficit is the result. The returns to foreign-owned capital will flow to foreigners instead of Americans, but the returns to U.S. labor utilizing foreign-owned capital will flow to U.S. labor.\nChina's situation is very different. As Table 7 shows (based on 2006 data), China's gross national saving as a percent of GDP (51.3%) is nearly five times greater than the U.S. level (13.5%). Conversely, the rate of private consumption as a percent of GDP is significantly higher in the United States (70%) than it is in China (36.8%). China maintains a higher rate of gross fixed investment as a percent of GDP than does the United States (42.8% versus 20.0%). Finally, China's gross national saving as a percent of its gross national investment is equal to 118% versus 68% in the United States. Thus, the United States must borrow from abroad to fund its investment needs while China has excess saving that it can invest overseas. The net result of these differences can be seen in the data on current account balances as a percent of GDP: 9.0% for China compared with -6.2% for the United States. These data imply that both China and the United States would need to make fundamental changes to their saving/investment patterns to reduce the overall U.S. trade deficit and China's overall trade surplus in the long run.\nSome analysts contend that China is moving in this direction, based on a number of statements by high level officials that China plans to boost consumer spending. The Treasury Department's November 2005 report on International Economic and Exchange Rate Policies stated that a key factor in Treasury's decision not to designate China as a country that manipulates its currency was \"China's commitment to put greater emphasis on sustainable domestic sources of growth, including by modernizing the financial sector....\" However, others contend that it will take several years for China to switch its reliance on exports and domestic investment to consumption for much of its GDP growth, and government policy can, at best, only indirectly alter long run consumption patterns.\nEconomists generally are more concerned with the overall trade deficit than bilateral trade balances. Because of comparative advantage, it is natural that a country will have some trading partners from which it imports more, and some trading partners to which it exports more. For example, the United States has a trade deficit with Austria and a trade surplus with the Netherlands even though both countries use the euro, which floats against the dollar. Of concern to the United States from an economic perspective is that its low saving rate makes it so reliant on foreigners to finance its investment opportunities, and not the fact that much of the capital comes from China. If the United States did not borrow heavily from China, it would still have to borrow from other countries.", "From January 2002 to January 2008, the dollar fell in value by 24% in nominal terms and 22% in inflation-adjusted terms against the Federal Reserve's broad index of currencies. Its depreciation against the euro, pound, Canadian dollar, and other currencies with floating exchange rates has been larger. A gradually declining dollar would not be expected to disrupt economic activity since it would stimulate U.S. exports and reduce the demand for foreign imports. But some economists fear that there is a possibility that the dollar could suddenly plummet in value, and that this would cause severe dislocations for the U.S. economy. The scenario through which they envision this occurring is based on the size of the trade deficit. The trade deficit is unsustainably large, in the sense that if it were to persist at current levels, the net debt owed to foreigners would grow without bounds. Therefore, it must eventually shrink, presumably through further dollar depreciation. Some economists worry that this adjustment could happen suddenly and rapidly if investors suddenly came to realize that significant dollar depreciation was inevitable, and fled dollar assets in an attempt to avoid these losses. If this occurred, there could be significant dislocations in U.S. financial markets that could interfere with efficient financial intermediation. This scenario is seen by most economists to be highly unlikely. Since the scenario would be so costly to the economy, it may be worth guarding against in spite of its improbability, however.\nThe primary reason that the dollar has not depreciated more rapidly since 2002 has been because central banks in China and many other developing countries (mainly Asian and oil producing countries) have accumulated foreign reserves at times to retard the appreciation of their currency against the dollar. (By definition, any rise in the value of the yuan is matched by a fall in the dollar.) Other Asian countries may feel compelled to continue this policy as long as China does, since they view their exports as competing directly with China. The commitment by China and other developing countries to support the value of the dollar may be one reason that private investors have felt secure investing in U.S. assets despite its large trade deficit. Were China and these other countries to cease intervening in currency markets, it is possible that the dollar would fall significantly in a short time. A sudden decline in the dollar could trigger the currency crisis scenario described above.", "The United States could utilize a number of options to try to put more pressure on China to make further reforms to its exchange rate policy if U.S. policymakers desired. Options for currency reform include making the yuan fully convertible, allowing the currency to appreciate by a certain amount (immediately or gradually), lessening China's intervention in currency markets, widening the band in which the currency is allowed to fluctuate, and furthering reforms to the financial sector to enable greater currency flexibility.\nDetermining the best approach to achieving these outcomes has sparked a lively policy debate. Options to induce China to reform its exchange rate regime (including proposed legislation) are listed below (see also section on legislation in the 110 th Congress):", "Several Members of Congress have expressed frustration over the Treasury Department's failure to designate China as a currency manipulator (since 1994) in its semi-annual exchange rate policies report. They contend that such a designation would itself increase pressure on China to reform its currency. (From a practical perspective, such a designation would require Treasury to negotiate with China to end such practices, something Treasury is already doing.) According to the Treasury Department's November 2005 currency report: \"Reaching judgments about countries' currency practices and their relationships to the terms of the Act (i.e., currency manipulation) for the purpose of designation is inherently complex, and there is no formulaic procedure that accomplishes this objective.\" H.R. 782 , H.R. 2942 , S. 796 , and S. 1607 (110 th Congress) would require Treasury to identify \"fundamentally misaligned currencies\" rather than manipulated currencies. S. 1677 would require to Treasury to cite a country for currency manipulation regardless of the \"intent\" of its currency policy. These bills would increase the likelihood that China would be designated, which, some observers claim, would increase pressure on Treasury to make greater efforts to induce China to reform its currency and might make China more willing to boost reform efforts to avoid being designated. Ultimately, the discretion to label the yuan as misaligned with the dollar would still rest with the Treasury, however.", "The U.S. government could attempt to persuade China through direct negotiations to change or reform its exchange rate policy. President Bush and Administration officials have contended that China's currency policy is bad for China's economy, as well as that of its trading partners and world growth as a whole. The United States has attempted to assist China in reforming its financial sector to provide a foundation for further currency reforms. In addition, the United States has sought to utilize high level talks, such as the Strategic Economic Dialogue and the U.S.-China Trade Promotion Coordinating Committee to encourage (and assist) China to adopt policies to promote greater domestic consumption and lessen its dependence on exports and fixed investment.\nIn recognition of its growing importance as a major world economy, China (since 2004) has been invited to attend G-7 (group of seven largest economies) finance meetings. China's currency policy has been a major topic in these discussions, and the United States has sought to use the forum to bring pressure on China to quicken steps to make the currency more flexible. A February 10, 2007 joint statement of G-7 finance ministers and central bank governors stated that \"In emerging economies with large and growing current account surpluses, especially China, it is desirable that their effective exchange rates move so that necessary adjustments will occur.\" The United States could attempt to build a greater consensus within the G-7 to put more pressure on China to reform its currency policy, including by linking China's possible future membership in the G-7 to such reforms.\nAlternatively, the United States could attempt to persuade China to participate in talks with other East Asian economies (that are viewed as intervening in currency markets) in order to reach a consensus on exchange rate policy. Proponents of this approach argue that, because of China's size, other East Asian countries are afraid that their exports would be uncompetitive if they made any unilateral change in their currency's value that was not matched by a similar change by China. Finally, the United States could press the International Monetary Fund to become more active in working with China to help it understand the long-term economic risks of over-relying on exports and domestic investment for much of its growth, and promote the development of policy tools that lead to more balanced economic growth (such as more domestic consumption). A key factor in any negotiations would be to convince China that liberalization of its exchange rate system would serve China's long term economic interests and not lead to economic instability.", "The U.S. government could attempt to pressure China by threatening to impose unilateral trade sanctions if it did not change its currency regime. Some Members support legislation, such as H.R. 1002 , that would impose additional tariffs of 27.5% on imports from China unless it appreciates its currency to fair market levels. Proponents of such legislation contend that congressional threats to sharply increase tariffs on Chinese goods were instrumental in moving China to reform and appreciate its currency policy in July 2005 and hence should be further utilized to press China for greater action to reform and appreciate its currency. Opponents of such legislation contend that imposing sanctions against China would violate WTO rules, and that threats of sanctions may backfire because Chinese officials would be less likely to reform its currency if they felt that such moves were seen as resulting from U.S. political pressure. Some proposals seek to impose sanctions on currency policy that would avoid violating WTO rules. For example, S. 1607 would deny certain designated countries with misaligned policies access to U.S. government procurement, direct U.S. officials to vote against any new multilateral bank loans for such countries, and cut off any new financing by the U.S. Overseas Private Investment Corporation (OPIC).", "Some critics have charged that China's currency policy violates WTO rules. The United States could file a case before the WTO's Dispute Settlement Body (DSB) against China's currency peg. If the DSB ruled in favor of the United States, it would direct China to modify its currency policy so that it complies with WTO rules. If China refused to comply, the DSB would likely authorize the United States to impose trade sanctions against China. The advantage of using the WTO to resolve the issue is that it involves a multilateral, rather than unilateral, approach, although there is no guarantee that the WTO would rule in favor of the United States.\nFor example, it could threaten to initiate a Section 301 case, a provision in U.S. trade law that gives the U.S. Trade Representative authority to respond to foreign trade barriers, including violations of U.S. rights under a trade agreement, and unreasonable or discriminatory practices that burden or restrict U.S. commerce. U.S. obligations in the WTO would likely require the United States to pursue a Section 301 case with the WTO. If the United States failed to use the WTO dispute resolution procedures and instead imposed unilateral trade sanctions under Section 301, China might file a WTO case against the United States.\nIn 2004, the Bush Administration rejected two Section 301 petitions on China's exchange rate policy: one by the China Currency Coalition (a group of U.S. industrial, service, agricultural, and labor organizations) and one filed by 30 Members of Congress. Both petitions sought to have the United States bring a case before the WTO against China in the hope that the WTO would rule that China's currency peg violated WTO rules. On May 17, 2007, 42 House Members filed a Section 301 petition with the USTR's office over China's currency practices and requested that a trade dispute case be brought to the WTO. However, the USTR declined the petition in June. The Bush Administration has expressed doubts that the United States could win such a case in the WTO and contends that such an approach would be \"more damaging than helpful at this time.\" H.R. 321 , H.R. 782 , H.R. 2942 , S. 796 , S. 1607 , and S. 1677 contain provisions that would require U.S. officials (under certain circumstances) to bring a case against China over its currency policy, and H.R. 321 also calls on the United States to work within the WTO to modify and clarify rules regarding currency manipulation for trade advantage to reflect modern day monetary policy not envisioned at the time current rules were adopted in 1947.", "U.S. countervailing laws allow U.S. parties to seek relief (in the form of higher duties) from imported products that have been subsidized by foreign governments. For many years, the Commerce Department contended that countervailing laws could not be applied to non-market economies, such as China, because it would be nearly impossible to identify a government subsidy in an economy that was not market based. However, in November 2006, the Commerce Department decided to pursue a countervailing case against certain imported Chinese coated free sheet paper products. On March 30, 2007, the Commerce Department issued a preliminary ruling to impose countervailing duties (ranging from 11 to 20%) against the products in question. Commerce contends that, while China is still a non-market economy for the purposes of U.S. trade laws, economic reforms in China have made several sectors of the economy relatively market based, and therefore it is possible to identify the level of government subsidies given to the Chinese paper firms in question.\nSome Members contend that China's currency policy constitutes a form of export subsidy that should be actionable under U.S. countervailing laws. H.R. 782 , H.R. 2942 , S. 364 , and S. 796 would apply U.S. countervailing laws to non-market economies and would also specify that currency misalignment or manipulation be actionable under those laws. Several Members contend that such legislation would be consistent with WTO rules (which allows countries to utilize countervailing duty procedures). However, critics contend that it would be difficult to determine the subsidy level conveyed by China's currency, and possible U.S. countervailing measures applied against China over its currency could be challenged in the WTO.", "U.S. antidumping laws allow U.S. parties to seek relief (in the form of increased duties) from imports that are sold at less than fair value and injure U.S. industries. Many critics of China's currency policy contend that undervaluing the yuan is a major factor affecting the price of Chinese exports to the United States and that this has harmed many U.S. industries. For example, H.R. 2942 and S. 1607 would require the government to factor in the impact of certain fundamentally misaligned currencies on export prices when determining the level of antidumping duties that should be applied. Critics of this approach contend that it would be very difficult to come up with a precise figure on how much a country's currency is undervalued, and it is not clear whether such a method would be compatible with WTO rules on trade remedies.", "Another option might be to utilize U.S. trade remedy laws relating to special provisions that were part of China's accession to the WTO. For example, the United States could invoke safeguard provisions (under Sections 421-423 of the 1974 Trade Act, as amended) to impose restrictions on imported Chinese products that have increased in such quantities that they have caused, or threaten to cause, market disruption to U.S. domestic producers. This option could be used to provide temporary relief for U.S. domestic firms that have been negatively affected by a surge in Chinese exports to the United States (regardless of its cause). The sharp increase in textile and apparel imports from China over the past few years led the Bush Administration on a number of occasions to invoke the special China textile and apparel safeguard to restrict imports. Eventually, the Administration sought and obtained (in November 2005) an agreement with China to limit the level of certain textile and apparel exports to the United States through the end of 2008. However, the Bush Administration on six different occasions has chosen not to extend relief to various industries under the China-specific safeguard. H.R. 782 and S. 796 would require that exchange rate misalignment by China be considered a factor in making determinations of market disruption under the China-specific safeguard.", "A number of policy analysts have argued against pushing China too hard on its currency policy, either because it would not serve U.S. economic interests, or because U.S. pressure would likely be ineffective as long as the Chinese government believed changing the peg would damage China's economy. Such analysts argue that U.S. policymakers should address China's currency policy as part of a more comprehensive U.S. trade strategy to persuade China to accelerate economic and trade reforms and to address a wide range of U.S. complaints over China's trade practices. This appears to be the Administration's policy in the SED talks. U.S. officials have urged China to boost domestic consumption while making its currency policy more flexible as part of a long-term solution to global trade imbalances.\nSome policymakers contend that the more immediate focus of U.S. trade policy should be on pressing China to comply with its WTO commitments. Major WTO-related issues of concern to the United States include market access, inadequate protection of U.S. intellectual property rights (IPR), industrial policies that promote domestic content over imports, and indirect subsidization of Chinese state-owned enterprises by China's banking system. Because China's WTO commitments are clear and binding, and there is a legal process within the WTO to seek compliance with trade agreements, the United States is in a stronger position to get China to liberalize its economy and open its markets than it would be if it tried to push China to reform its currency regime (where multilateral rules and options on the issue are less clear). Finally, supporters of this policy argue that China's leaders are more likely to respond to pressures to adhere to international rules of conduct than to perceived direct U.S. pressure.", "Many U.S. policymakers have expressed concern over China's large holdings of U.S. federal debt, claiming that China could use it as a political tool against the United States. A recent article in the Telegraph ,\"China Threatens 'Nuclear Option' of Dollar Sales,\" cited interviews with officials from two leading Chinese government think tanks who reportedly stated that China had the power to make the dollar collapse (if it chose to do so) by liquidating large portions of its U.S. Treasuries holdings if the United States imposed trade sanctions to force a yuan revaluation, and that the threat to do so could be used as a \"bargaining chip.\" The article prompted concern among many U.S. policymakers, including Senator Charles Grassley, who, in an August 9, 2007 letter to the Chinese ambassador to the United States, asked the Chinese government to confirm that \"the comments do not reflect the official position of the Chinese government.\" In response, the Chinese ambassador to the United States wrote to Senator Grassley on August 13 that \"China does not have a plan to drastically adjust the structure of its foreign reserves.\" In addition, in an article in the Xinhua News Agency on August 13, an unnamed official at the People's Bank of China was quoted as saying that \"dollar-denominated assets, including U.S. government securities, are an important component in China's foreign exchange reserve investment portfolio,\" and that China was \"a responsible investor.\"\nAlthough a move by China to liquidate a large portion of its dollar-denominated assets would likely have a significant impact on the value of the dollar in international currency markets, it is unlikely China would make such a move. Doing so would likely cause a sharp appreciation of the yuan against the dollar, which would result in a capital loss for China on the sale of Treasuries, lower the value of its remaining U.S. assets, and increase the cost of its exports to the United States. Secondly, such a move could reduce economic growth in the United States (especially if other foreign investors sold their U.S. asset holdings, and the U.S. was forced to raise interest rates in response), which would diminish U.S. demand for imports, including those from China.\nOn September 29, 2007, the Chinese government officially launched the China Investment Corporation (CIC) in an effort to better manage its foreign exchange reserves. It reportedly will initially manage over $200 billion, making it one of the world's largest state-owned funds. Some contend China might try to diversify away from dollar denominated assets, such as Treasury securities. (Since 2007, China's holding of Treasury securities have increased very little.) It is not clear to what degree such diversification, should it occur, might affect U.S. interest rates.", "If the Chinese were to allow their currency to be determined by private actors in the market based on the supply and demand for Chinese goods and assets relative to U.S. goods and assets. If the yuan appreciated as a result, this would boost U.S. exports and the output of U.S. producers who compete with the Chinese. The U.S. bilateral trade deficit would likely decline (but not necessarily disappear). At the same time, the Chinese central bank would no longer purchase U.S. assets to maintain the peg. U.S. borrowers, including the federal government, would now need to find new lenders to finance their borrowing, and interest rates in the United States would rise. This would reduce spending on interest-sensitive purchases, such as capital investment, housing (residential investment), and consumer durables. The reduction in investment spending would reduce the long-run size of the U.S. capital stock, and thereby the U.S. economy. In the present context of the falling dollar, some analysts fear that a sudden decline in Chinese demand for U.S. assets (if China was no longer purchasing assets to influence the exchange rate) could lead to a drop in the value of the dollar that could potentially destabilize the U.S. economy. Another concern is that, with inflation rising in the United States, a rise in the value of the yuan could cause import prices to rise and add to inflationary pressures.\nIf the relative demand for Chinese goods and assets were to fall at some point in the future, the floating exchange rate would depreciate, and the effects would be reversed. Floating exchange rates fluctuate in value frequently and significantly.\nA move to a floating exchange rate is typically accompanied by the elimination of capital controls that limit a country's private citizens from freely purchasing and selling foreign currency. Capital controls exist in China today, and arguably one of the major reasons China opposes a floating exchange rate is because it fears that the removal of capital controls would lead to a large private capital outflow from China. This might occur because Chinese citizens fear that their deposits in the potentially insolvent state banking system are unsafe. If the capital outflow were large enough, it could cause the floating exchange rate to depreciate rather than appreciate. If this occurred, the output of U.S. exporters and import-competing firms would be reduced below the prevailing level, and the U.S. bilateral trade deficit would expand. In other words, the United States would still borrow heavily from China, but it would now be private citizens buying U.S. assets instead of the Chinese central bank. China could attempt to float its exchange rate while maintaining its capital controls, at least temporarily. This solution would eliminate the possibility that the currency would depreciate because of a private capital outflow. While this would be unusual, it might be possible. It would likely make it more difficult to impose effective capital controls, however, since the fluctuating currency would offer a much greater profit incentive for evasion.\nAnother option is to maintain the status quo. Although the nominal exchange rate may continue to rise only slowly in this case, over time the real rate would adjust as inflation rates in the two countries diverged. As the central bank exchanged newly printed yuan for U.S. assets, prices in China would rise along with the money supply until the real exchange rate was brought back into line with the market rate. This would cause the U.S. bilateral trade deficit to decline and expand the output of U.S. exporters and import-competing firms. This real exchange rate adjustment would only occur over time, however, and pressures on the U.S. trade sector would persist in the meantime.\nNone of the solutions guarantee that the bilateral trade deficit will be eliminated. China is a country with a high saving rate, and the United States is a country with a low saving rate; it is not surprising that their overall trade balances would be in surplus and deficit, respectively. At the bilateral level, it is not unusual for two countries to run persistently imbalanced trade, even with a floating exchange rate. If China can continue its combination of low-cost labor and rapid productivity gains, which have been reducing export prices in yuan terms, its exports to the United States are likely to continue to grow regardless of the exchange rate regime. As evidence, consider that the significant appreciation of the yuan since 2005 has not led to any reduction in the trade deficit.", "The current debate among U.S. policymakers over China's currency policy has been strongly linked to concerns over the growing U.S. trade deficit with China, the sharp decline in U.S. manufacturing employment over the past few years, and the rise of China as a major economic power. Since 2005, China's exchange rate has appreciated slowly, but the cumulative change since then has been significant. Most economists agree that China's currency would likely appreciate against the dollar initially if allowed to float (barring any disruption in China's financial sector), although market forces could drive it up or down in the long run as conditions change. But the failure of the bilateral trade deficit to fall in response to the appreciation that has occurred thus far suggests that it is caused by more than just the value of the yuan.\nIf the yuan were to appreciate, there is considerable debate over the net effects this policy would have on the U.S. economy since it may benefit some U.S. economic sectors and harm other sectors, as well as consumers. The trade deficit with China has not prevented the United States from reaching full employment. In addition, U.S. trade with China is only one of a number of factors affecting manufacturing employment, including increased productivity growth, employment shifts to the service sector, and the overall trade deficit. It is also not clear to what extent production in certain industrial sectors has shifted to China from the United States, as opposed to shifting to China from other low-wage countries, such as Mexico, Thailand, and Indonesia. The extensive involvement of foreign multilateral corporations in China's manufactured exports further complicates the issue of who really benefits from China's trade, as well as the implications of a rising U.S. trade deficit with China (since a large share of U.S. imports are coming from foreign firms, including U.S. firms, that have shifted production from one country to China). The effects of an appreciating yuan can also be considered in the broader context of concerns about the potentially destabilizing effects of the falling dollar. By definition, increases in the value of the yuan are equivalent to decreases in the value of the dollar, so China's accumulation of U.S. assets retards the rate at which the dollar falls. Thus, there is considerable debate over what policy options would promote U.S. economic interests since changes to the current system would produce both winners and losers in the United States (as well as in China).\nChinese officials have stated they plan to make the currency more flexible in the near term and to eventually adopt a floating currency in the long run, but they insist that reforms should be gradual in order to avoid disruptions to the economy. For example, they claim they need to first implement further reforms to the banking system and to reduce the level of non-performing loans. Yet the present currency policy may be undermining these efforts by expanding the money supply (as a result of the accumulation of foreign reserves). A rising money supply promotes easy credit policies by the banks—which could result in more non-performing loans. Efforts to limit bank loans in booming sectors of the economy have mainly been the result of government administrative directives rather than market forces, which may undermine the ability to establish a market-based financial system where monetary policy is used to halt inflation and bank loans are extended to ventures that offer the highest rate of return. In addition, China's currency policy constitutes a de facto subsidy, which, while benefitting some export industries, undermines other sectors, and prevents the most efficient distribution of resources in the economy.\nWhile U.S. officials acknowledge China's concerns over exchange rate reforms, they contend that China's exchange rate reforms are overly cautious. They further contend that China's currency policy is preventing adjustments in global trade imbalances, especially in the United States, and that this could eventually undermine world economic growth. This would hurt China's economy, given its dependence on exports. Both U.S. and Chinese officials publicly agree that China needs to undertake major economic reforms to boost domestic consumption and to obtain more even growth, and that the United States must do more to boost its level of domestic saving. China officials have stated their intention to boost economic development in the hinterland and expand spending on social security, health care, and education. However, this will likely take many years to implement.", "Currency legislation in the 110 th Congress on China's currency policy include the following:\nH.R. 321 (English) would require the Treasury Department to determine if China has manipulated its currency and to estimate the rate of that manipulation (if such a determination were made), which then would require the imposition of additional tariffs on Chinese products (equal to the estimated rate of manipulation). The bill also calls on the United States to file a WTO case against China over its currency policy and to work within the WTO to modify and clarify rules regarding currency manipulation. H.R. 782 (Tim Ryan)/ S. 796 (Bunning) would apply U.S. countervailing laws (dealing with government subsidies) to products imported from non-market economies (such as China) and would establish an alternative methodology for estimating the amount of government subsidy benefit provided if information is not available on the amount of subsidies given to various industries in that country. The bills also make exchange rate misalignment actionable under U.S. countervailing law, require the Treasury Department to determine whether a currency is misaligned in its semi-annual reports to Congress on exchange rates, prohibit the Department of Defense from purchasing certain products imported from China if it is determined that China's currency misalignment has disrupted U.S. defense industries, and would include currency misalignment as a factor in determining (China-specific) safeguard measures on imports of Chinese products that cause market disruption. H.R. 1002 (Spratt) would impose 27.5% in additional tariffs on Chinese goods unless the President certifies that China is no longer manipulating its currency. H.R. 2942 (Tim Ryan) would apply countervailing laws to nonmarket economies, make an undervalued currency a factor in determining antidumping and countervailing duties, require Treasury to identify fundamentally misaligned currencies and to list those meeting that criteria for priority action. If consultations fail to resolve the currency issues, the USTR would be required to take action in the WTO. S. 364 (Rockefeller) would apply U.S. countervailing laws on non-market economies and would make exchange rate manipulation actionable under such laws. S. 1607 (Baucus) would require the Treasury Department to identify currencies that are fundamentally misaligned and to designate such currencies for priority action under certain circumstances in its semi-annual reports to Congress on exchange rates. If after consultations the country maintaining the designated currency policy fails to adopt appropriate policies within 180 days, the U.S. would make currency undervaluation a factor in determining antidumping duties, ban federal procurement of products or services from the designated country, bar financing by the U.S. Overseas Private Investment Corporation (OPIC), and would require U.S. officials to oppose multilateral financing for that country. If the designated country failed to take appropriate measures, the USTR would be required to file a case in the WTO, and the Treasury Department would be directed to consider taking remedial intervention in international currency markets. A modified version of the bill passed the Senate Finance Committee on July 31, 2007. S. 1677 (Dodd) requires the Treasury Department to identify countries that manipulate their currencies regardless of their intent and to submit an action plan for ending the manipulation; and gives Treasury the authority to file a case in the WTO. The bill was approved by the Senate Banking Committee on August 1, 2007. S. 2813 (Bunning) would also require the Treasury Department to identify currency manipulators, submit an action plan to end the manipulation, and to consult with the IMF.\nA side-by-side comparison of five major currency bills: S. 1607 (as introduced), S. 1677 , H.R. 782 , and S. 796 (which are identical), and H.R. 2942 ) follows ( Table 8 ).", "Several bills were introduced in the 109 th Congress to deal with foreign exchange rate policies. This section offers a summary of bills that saw legislative action.\nS.Amdt. 309 (Schumer) to S. 600 would impose a 27.5% tariff on Chinese goods if China failed to substantially appreciate its currency to market levels. On April 6, 2005, the Senate failed (by a vote of 33 to 67) to reject the amendment, In response to the vote, the Senate leadership moved to allow a vote on S. 295 (which has same language as S.Amdt. 309 ) no later than July 27, 2005, as long as the sponsors of the amendment agreed not to sponsor similar amendments for the duration of the 109 th Congress. However, on June 30, 2005, Senator Schumer and other sponsors of S. 295 agreed to delay consideration of the bill after they received a briefing from Administration officials and were told that China was expected to make significant progress on reforming its currency over the next few months. Disappointment over China's July 2005 currency reforms led Senator Schumer to push for consideration of S. 295 (under the previous compromise). On November 16, 2005, the Senate agreed to consider the bill no later than March 31, 2006. On March 28, 2006, Senators Schumer and Graham stated that they would move to delay taking up S. 295 in the Senate, based on their assessment during a trip to China that the Chinese government was serious about reforming its currency policy. However, on September 14, 2006, Senator Schumer stated that he was disappointed with China's movement to date on currency flexibility, and requested the Senate to take up S. 295 . On September 28, 2006, Senators Schumer and Graham announced that they had been persuaded by President Bush not to pursue a vote on S. 295 in order to give Secretary of Treasury Henry Paulson more time to negotiate with China on its currency policy. H.R. 3283 (English) would (among other things) apply U.S. countervailing laws (dealing with foreign government subsidies) to non-market economies (such as China); and require the Treasury Department to define \"currency manipulation,\" describe actions that would be considered to constitute manipulation, and report on China's new currency regime. The bill passed (255 to 168) on July 27, 2005. A similar bill was introduced in the Senate, S. 1421 (Collins)." ], "depth": [ 0, 1, 1, 2, 2, 1, 1, 2, 3, 3, 3, 1, 1, 2, 2, 3, 3, 3, 3, 3, 3, 3, 1, 2, 2, 2, 2, 2, 2, 2, 2, 3, 2, 1, 1, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "h0_full h1_full", "h1_full", "", "", "h0_title", "h0_title", "h0_full", "", "", "", "h1_full", "h1_full", "h1_title", "h1_full", "h1_full", "h1_full", "", "h1_full", "", "", "h1_title", "", "", "", "", "", "", "", "", "", "h1_full", "h0_full h1_full", "", "" ] }	{ "question": [ "What has led Members to call for a more aggressive U.S. stance against certain Chinese trade policies?", "How does China’s currency factor into this discussion?", "What did China do with its currency in 2005?", "What has happened to the yuan since 2005?", "What is the goal of numerous introduced bills regarding China and its currency?", "What happens to the U.S. economy if the yuan is undervalued?", "How would the undervaluing of the yuan affect imported goods from China?", "What detrimental effects does the undervaluing of the yuan incur?", "What happens when the U.S. runs a trade deficit with the Chinese?", "In the long run, what can trade affect?", "What do U.S. data from 2008 indicate?", "What could become economically destabilizing for the U.S.?" ], "summary": [ "The continued rise in China's trade surplus with the United States and the world, and complaints from U.S. manufacturing firms and workers over the competitive challenges posed by Chinese imports have led several Members to call for a more aggressive U.S. stance against certain Chinese trade policies they deem to be unfair.", "Among these is the value of the China's currency (the renminbi or yuan) relative to the dollar.", "On July 21, 2005, China announced it would let its currency immediately appreciate by 2.1% and link its currency to a basket of currencies (rather than just to the dollar).", "Although the yuan has appreciated 16% since 2005, many Members complain that China continues to \"manipulate\" its currency in order to gain an unfair trade advantage, resulting in U.S. job loss.", "Numerous bills have been introduced to induce China to adopt a more flexible currency policy.", "If the yuan is undervalued against the dollar (as many analysts believe), there are likely to be both benefits and costs to the U.S. economy.", "It would mean that imported Chinese goods are cheaper than they would be if the yuan were market determined. This lowers prices for U.S. consumers and dampens inflationary pressures. It also lowers prices for U.S. firms that use imported inputs (such as parts) in their production, making such firms more competitive.", "On the negative side, lower priced goods from China may hurt U.S. industries that compete with those products, reducing their production and employment. In addition, an undervalued yuan makes U.S. exports to China more expensive, thus reducing the level of U.S. exports to China and job opportunities for U.S. workers in those sectors.", "When the U.S. runs a trade deficit with the Chinese, this requires a capital inflow from China to the United States, such as Chinese purchases of U.S. Treasury securities. This, in turn, lowers U.S. interest rates and increases U.S. investment spending.", "However, in the long run, trade can affect only the composition of employment, not its overall level.", "U.S. data indicate that in 2008, imports from China have slowed significantly and that import prices have risen sharply.", "Some economists are now concerned that the overall fall in the dollar, which a stronger yuan would exacerbate, could become economically destabilizing." ], "parent_pair_index": [ -1, 0, 1, 2, 1, -1, 0, 0, -1, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 1 ] }
GAO_GAO-16-249	{ "title": [ "Background", "ONCRC Has Taken Various Actions to Help Improve Emergency Communications Interoperability in the NCR", "The ONCRC’s Ability to Coordinate with Federal Agencies to Help Improve Emergency Preparedness, Including Communications Interoperability, in the NCR is Currently Limited", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: DHS Management Response", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Emergency communications interoperability refers to the ability of first responders and emergency preparedness and management officials to use their radios and other equipment to communicate with each other across agencies and jurisdictions when needed and as authorized, as shown in our hypothetical example of response to a fire in a federal building in figure 1.\nAccording to DHS’s NECP, emergency communications interoperability is one of the components of an effective emergency preparedness and management structure. DHS’s Interoperability Continuum states that first responders need interoperability during day-to-day incidents as well as large scale emergencies. For example, interoperability is important in responding to localized emergency incidents, such as a vehicle collision on an interstate highway, and in regional incident management, such as in responding to a disaster. It also facilitates first responder communications during planned events such as sporting events, State of the Union addresses, or presidential Inaugurations that involve multiple responding agencies.\nThe NCR is a legally-designated geographic region that includes the District, and local jurisdictions in the state of Maryland and the Commonwealth of Virginia, as shown in figure 2.\nThere is no single operational authority for emergency response in the NCR because the responsibilities reside with state and local jurisdictions. Instead, the NCR is supported by a network of committees that were created by the jurisdictions and include representatives from the District, Maryland, Virginia, as well as the federal government, and private and nonprofit entities such as MWCOG. These committees work together to improve the region’s ability to prepare for, respond to, and recover from hazards. For example, key committees include:\nThe Senior Policy Group which is comprised of senior emergency management officials from the District, Maryland, Virginia, and the ONCRC and coordinates efforts to increase regional preparedness, mitigation, and response capabilities in the NCR. The Senior Policy Group also oversees the allocation and implementation of UASI funding and determines priority actions for increasing the region’s preparedness and response capabilities as well as reducing vulnerability to terrorist attacks.\nThe Emergency Preparedness Council (Council) which is an advisory body of representatives from the District, Maryland, Virginia, and private, and non-profit entities that reports to the MWCOG Board of Directors. This Council provides oversight of the regional emergency coordination and strategic plans to identify and address gaps in readiness in the NCR. It also is the federally-required working group with oversight responsibility for the UASI grant program. In this capacity, the Council coordinates with the Senior Policy Group with the aim of ensuring that grant funds are used to support projects that will build an enhanced and sustainable capacity to prevent, protect against, and recover from threats or acts of terrorism. The UASI grant funds can be used to invest in technology, equipment, training, exercises, and management.\nGAO, Emergency Communications: Various Challenges Likely to Slow Implementation of a Public Safety Broadband Network, GAO-12-343 (Washington, D.C.; Feb. 22, 2012). handheld portable radios (typically carried by emergency responders); mobile radios (often located in vehicles); base station radios (located in a fixed position such as a dispatch repeaters (towers that increase the communication range of handheld portable radios and base station radios by retransmitting received signals).\nLMR systems are designed to provide rapid voice call set-up and group- calling capabilities. Group calling is important for first responders because it enables one individual to simultaneously communicate to every member of a group, such as all firefighters in the interior of a burning building. According to DHS’s 2014 NECP, because LMR systems will remain the primary tool for mission critical voice communications for many years to come, they have to meet a high standard for reliability, redundancy, capacity, and flexibility. Thus, according to the 2014 NECP, for many public safety agencies maintaining their LMR systems and improving interoperability continues to be their top communications priority.\nAccording to the Homeland Security Act of 2002 (HSA), the ONCRC, located within DHS’s Federal Emergency Management Agency (FEMA), is required, among other things, to: coordinate the activities of DHS relating to the NCR; coordinate on terrorism preparedness with federal, state, local, and regional agencies, and private sector entities in the NCR to ensure adequate planning, information sharing, training, and execution of domestic preparedness activities among these agencies and entities; serve as a liaison between the federal government and state, local, and regional authorities, and private sector entities in the NCR to facilitate access to federal grants and other programs; and provide state, local, and regional authorities in the NCR with regular information, research, and technical support to assist the efforts of state, local, and regional authorities in securing the homeland.\nThe HSA also requires that the ONCRC to submit an annual report to Congress that includes: identifying resources required to fully implement homeland security efforts in the NCR; an assessment of the progress made by the entities in implementing homeland security efforts (including emergency communications interoperability); and recommendations to Congress regarding the additional resources needed to fully implement homeland security efforts.\nThe Director of the ONCRC is also a member of the NCR’s Senior Policy Group. In fiscal year 2015, ONCRC’s budget was $3.4 million, and it is currently authorized at 20 full- time equivalent staff in Washington, D.C.\nDHS’s Office of Emergency Communications (OEC) was, established pursuant to statute in 2006, in response to the September 11th terrorist attacks and the 2005 Hurricane Katrina. The OEC’s mission is to support and promote communications systems used by first responders and government officials to keep America safe, secure, and resilient. Among other things, OEC is responsible for leading the nation’s interoperable public safety, national security, and emergency-preparedness, and communications efforts. The OEC also is responsible for providing training, workshops, and guidance to help federal, state and local agencies and the private sector develop their emergency communications efforts.", "The ONCRC has worked with both state and local entities and other DHS components on various efforts aimed at improving emergency preparedness in the NCR, including emergency communications interoperability. In particular, the ONCRC’s 2013 report to Congress notes that one of its principal mechanisms to assist state and local agencies in the region with emergency communications interoperability is through its participation on several committees that are involved in planning and carrying out efforts to build and sustain preparedness capabilities. For example, ONCRC staff helped revise the NCR’s 2013 Homeland Security Strategic Plan (NCR Strategic Plan). The NCR Strategic Plan represents the region’s strategy for improving preparedness to address various hazards. According to the Director of ONCRC, the ONCRC works with state and local agencies in the NCR to support their activities aimed at achieving the plan’s goals. One of the goals of the plan is to ensure interoperable communications capabilities. The plan identified a number of NCR’s initiatives to achieve this goal including: ensuring communications interoperability across agencies, managing and coordinating radio upgrades across jurisdictions, maintaining a cache of extra radios, conducting training to improve the ability of all NCR partners to access and use communications systems effectively, and encourage participation in biannual communication exercises that test all regional communication platforms.\nIn addition, the ONCRC has worked with NCR agencies to continue developing the National Capital Region Network (NCRNet) which is a secure, non-commercial, fiber optic network. As part of the interoperable communications infrastructure, the NCRNet is designed to address the NCR’s need for a web-based capability for secure data communications and should allow for more efficient, flexible, and secure data exchange particularly among state and local jurisdictions within the NCR. According to the ONCRC’s 2014 report to Congress, most of the local jurisdictions in the region are connected via the NCRNet, but other NCR agencies are not. In comments on a draft of this report, ONCRC officials said that, as of December 2015, all of the jurisdictions in NCR are connected to NCRNet and efforts are underway to include federal agencies in the NCRNet.\nAccording to the Director of ONCRC, although NCR agencies and entities are not required to implement the NCR’s Strategic Plan, they are committed to implementing it because they helped develop the plan and are stewards of public trust and resources. In its 2014 and 2015 reports to Congress, the ONCRC states that, as a result of the NCR’s Strategic Plan, state and local agencies have a framework for sustaining current emergency communications capabilities, such as interoperability, and building new ones. The reports also noted that achieving the plan’s goals will improve the region’s preparedness to address critical risk in the NCR.\nAs noted previously, one of the ONCRC’s responsibilities is to serve as a liaison with entities in the NCR to facilitate access to federal grants. The ONCRC officials told us that the ONCRC (as a member of the Senior Policy Group) has collaborated with the NCR’s Emergency Preparedness Council to facilitate state and local agencies access to the DHS’s UASI grant program. The UASI grant program is the primary source of federal homeland security funding for the NCR. In fiscal year 2014, DHS allocated $53 million through the UASI grant program to the NCR to enhance the region’s homeland security and preparedness capabilities. Almost $7 million of the $53 million was to fund projects aimed at the NCR Strategic Plan’s goal to ensure interoperable communications capabilities, such as purchasing radios and other equipment as well as developing a strategic plan for radio encryption. Regarding other types of grants for homeland security, we found in 2013 that officials in the NCR do not have access to comprehensive information on federal-funding sources for homeland security and emergency-management capabilities other than UASI grants and recommended that the ONCRC collect and maintain information on all such federal funding sources for NCR jurisdictions. Although the ONCRC initially agreed with this recommendation, officials currently state they do not plan to implement it, in part, because it is the responsibility of the NCR’s Project Management Office.\nThe ONCRC also helps support emergency communications interoperability in the NCR by coordinating with FEMA’s Region III’s Regional Emergency Communications Coordination Working Groups to share information with NCR agencies about interoperability, including lessons learned and best practices such as from the 2015 papal visit, the 2010 earthquake, and snowstorms in the NCR. In addition, the ONCRC staff said that, in 2008, when the FCC directed reconfiguration of the 800 MHz band radios—used by police, firefighters, and emergency service personnel— the ONCRC assisted federal agencies in the NCR with ensuring that their 800 MHz band radios were included as part of the local jurisdictions’ reconfiguration plans. Further, according to ONCRC officials, FEMA maintains a cache of extra radios that can be distributed during an emergency to other NCR agencies’ first responders whose radios may not be interoperable with each other. For example, when the U.S. Capitol Police requested additional radios during the 2013 State of the Union address, the ONCRC issued the radios to them, according to ONCRC officials.\nThe ONCRC has coordinated with a number of other DHS’s components in their efforts to improve emergency communications interoperability across the country, including in the NCR, according to ONCRC officials. For example, officials noted that the ONCRC worked closely with DHS’ OEC in the development of DHS’s 2014 National Emergency Communications Plan (NECP) which establishes a national strategy for improving emergency communications (including interoperability) across all levels of government and increasing coordination across the emergency response community. In the 2014 NECP, the Secretary of Homeland Security, states that ensuring interoperable communications among responders during all threats and hazards is paramount to the safety and security of all Americans. The 2014 NECP aims to improve communications capabilities of first responders’ at all levels of the government and states that one of DHS’s top priorities is to identify and prioritize areas for improvement in first responders LMR systems. To do so, the NECP has five goals that include enhancing decision making, coordination, and planning for emergency communications and improving first responders’ ability to communicate through training and exercise programs.\nThe ONCRC also coordinated with OEC to develop the Interoperability Continuum (Continuum), which is designed to assist first responders and policy makers across the country with planning and implementing interoperability solutions for emergency communications. For example, the Continuum identifies the five elements that public safety agencies should address to achieve interoperability. The five elements are to: establish a governance structure; develop standard operating procedures; acquire and implement technology that meets user needs; provide training and exercise programs; and ensure that interoperable communications technologies are used.\nThe Interoperability Continuum can also be used by jurisdictions to track progress in strengthening interoperable communications. While the Interoperability Continuum is guidance, emergency management officials from the District, Maryland, and Virginia have incorporated the Interoperability Continuum’s five elements in their 2013 Statewide Communications Interoperability Plans (SCIP). Specifically, the District, Maryland, and Virginia’s 2013 SCIP have aligned their strategic goals for interoperability—governance, standard operating procedures, technology, training and exercises, and usage— with the Interoperability Continuum’s five elements. The SCIPs identified several initiatives aimed at achieving these goals. For example, regarding governance, Maryland states that one of its initiatives is to codify its existing governance structure through legislation. The District and Virginia plans note that refining the purpose and membership of their statewide interoperability executive committees is one of their initiatives related to governance. To ensure that first responders’ technological needs are met the District, Maryland, and Virginia plan to add nationwide interoperability channels, conduct vulnerability assessments of critical communications infrastructure, and maintain and upgrade existing technologies.\nFurthermore, the ONCRC worked closely with OEC on developing emergency communications grants guidance, according to ONCRC officials. The guidance aims to provide state and local grant recipients with information on emergency communications policies, eligible costs, best practices, and technical standards for investing federal funds in emergency communications projects. The guidance also recognizes the need to sustain current LMR systems and encourages grant recipients to participate, support, and invest in planning activities that will help them prepare for deployment of new emergency communications systems or technologies. For example, grant recipients should continue developing plans and standard operating procedures, conducting training and exercises, and investing in standards-based equipment to sustain LMR capabilities.\nOverall, emergency management officials in the District, Maryland, and Virginia we spoke to were generally satisfied with ONCRC’s efforts to coordinate with them to help ensure interoperability of emergency communications. However, these officials also said that achieving interoperability of emergency communications among all NCR agencies and entities when needed will continue to be a challenge, in part, because of the size and complexity of the region.\nAs noted previously, the ONCRC is required to report to Congress annually on the progress of emergency preparedness in the region, including the state of emergency communications interoperability. In the 2014 and 2015 reports to Congress, the ONCRC states that achieving the goals in the NCR’s Strategic Plan will improve the region’s preparedness to address risk in the NCR. However, these reports do not include performance measures that would indicate the extent to which those goals have been achieved. We found in 2013 that, while NCR agencies had taken steps to develop measures to assess the region’s performance in improving emergency preparedness, more could be done to assist in these efforts. We recommended that the ONCRC assist NCR agencies in developing performance measures to better assess the implementation of the NCR’s Strategic Plan. ONCRC agreed with this recommendation and ONCRC officials told us that they are working on implementing it but did not provide a timeframe for completion. In the interim, without performance measures as we recommended for monitoring and assessing regional efforts to enhance interoperability, ONCRC’s ability to provide Congress with comprehensive information on the extent to which first responders in the NCR have emergency communications interoperability when needed and authorized is hampered. For example, in the 2013 through 2015 reports to Congress, the ONCRC reports that NCR agencies continue to make progress towards achieving interoperable communications, but does not report on the extent to which emergency communications interoperability exists in the region.", "As discussed in the previous section, the ONCRC coordinates with state and local agencies in the NCR primarily through its participation on NCR committees including the Senior Policy Group and the Emergency Preparedness Council. However, the ONCRC currently does not have a formal mechanism in place to coordinate with federal agencies and is making some effort to improve how it coordinates with them. According to ONCRC’s 2015 report to Congress, over 270 federal agencies exist in the NCR, and ONCRC officials are trying to identify those that should be involved in these coordination efforts. For example, as demonstrated in examples cited previously, federal entities—such as DHS, the Navy, and the U.S. Capitol Police—have responsibilities related to emergency preparedness and incident response in the NCR. We noted in 2012 that many of the meaningful results that the federal government seeks to achieve—such as those related to providing homeland security—require the coordinated efforts of more than one federal agency.\nFrom the establishment of the ONCRC in 2002 through 2014, the Joint Federal Committee (JFC) was the ONCRC’s primary means of coordinating federal efforts with state and local agencies in the NCR. The JFC’s charter states that it was established to provide a forum for policy discussions, information sharing, and issue resolution regarding federal preparedness activities in the NCR. It was chaired by the Director of ONCRC who was to preside over all meetings, ensure the development of a meeting agenda, and ensure that the JFC’s responsibilities and activities were carried out. Membership in the JFC was open to all federal departments and agencies with offices in the NCR and meetings were to be held at least quarterly. However, the ONCRC officials said that the JFC has not convened since 2014. In its 2014 report to Congress, the ONCRC stated that the JFC is not operating effectively and efficiently to accomplish its mission and would be restructured. The report also noted that federal agencies commented that the JFC lacked the authority, organization, and ability to focus on specific issues to be effective.\nAccording to ONCRC officials, during its existence, the JFC focused on information sharing, and they plan to restructure it into a federal coordinating body that will assist in the interagency and intergovernmental coordination of homeland security within the NCR. In addition, they said that once restructured, the JFC would produce guidance (such as standard operating procedures) and identify lessons learned. The Director of the ONCRC told us that in the absence of the JFC, the ONCRC has held informal meetings with some federal agencies in the NCR, such as the Secret Service during the 2015 papal visit, but said that this was not a sufficient mechanism for coordinating with federal agencies in the NCR. The Director also stated there is value to having a coordination mechanism in the NCR, such as the JFC, in part, because it would help federal agencies in the NCR to better coordinate the federal response to future incidents in the region. The Director said that the ONCRC was in the early stages of restructuring the JFC and estimated that it should be reconvened by 2017. However, according to ONCRC officials, written plans or documents for the specific elements of the restructuring were not available.\nFor many years, we have reported about the importance of collaboration between and among federal agencies. For example, we have noted that interagency mechanisms or strategies to coordinate programs that address crosscutting issues may reduce potentially duplicative, overlapping, and fragmented efforts. When the JFC existed, it did not fully operate in a manner that was consistent with key considerations for implementing interagency collaboration mechanisms that we have previously identified. According to our prior work on collaboration, agencies can strengthen their commitment to working collaboratively by having written agreements. Our work has also shown that when implementing collaborative mechanisms, clearly articulating agency roles and responsibilities and how agencies will collaborate, including how they will operate across agency boundaries, into a written document can be a powerful tool for collaboration and doing so can provide a clear understanding of those roles and responsibilities. Our body of work has also shown that written agreements are most effective when they are regularly updated and monitored. The JFC did not have a written agreement that defined the general processes and procedures it used to carry out its responsibilities. Instead, the JFC had a high level charter which was last updated in 2009. The charter stated that membership shall be open to all departments and agencies of the three branches of the federal government. However, the charter did not provide information on (1) the roles, responsibilities, structure, and functions of its members; or (2) how its members were to work together across agency boundaries. It may be difficult for the JFC, once restructured, to enhance interagency understanding, coordination, and collaboration among federal agencies in the NCR without such a written agreement. Addressing the above key considerations for implementing collaborative mechanisms in the planned restructuring of the JFC could provide greater clarity to its members on their roles and responsibilities, particularly when responding to incidents, as well as improve the ONCRC’s ability to carry out its statutory responsibilities for coordinating federal homeland security and emergency-management activities in the NCR.", "The ONCRC’s statutory responsibility for overseeing and coordinating emergency preparedness, including emergency communications interoperability in the NCR is important for helping to ensure that federal, state, and local agencies can communicate and share information with each other across agencies and jurisdictions when needed and as authorized. However, until the ONCRC implements our recommendation—to assist NCR agencies in developing performance measures to better assess the implementation of the NCR Strategic Plan—the ONCRC has limited ability to monitor and report to Congress on progress in achieving emergency communications interoperability in the region. Moreover, the ONCRC’s primary means of coordinating with federal agencies in the NCR (the JFC) has not convened since 2014 and was not operating in a manner that is fully consistent with some of our key considerations for implementing interagency collaborative mechanisms, such as clearly articulating roles and responsibilities into a written document. According to the Director of ONCRC, efforts are underway to restructure the JFC. Incorporating these key considerations would be an important step toward improving interagency collaboration, particularly among federal agencies, in the NCR. In particular, revising the JFC’s charter to describe in general how the JFC will operate and, in particular, each member’s role and responsibilities would better enable the JFC to assist the ONCRC with coordinating federal agencies’ efforts to help enhance emergency preparedness, including interoperability in the NCR.", "To further build on the efforts to improve emergency communications interoperability in the NCR, we recommend that the FEMA Administrator direct the Director of ONCRC to take the following action: as part of its efforts to restructure the JFC, clearly articulate in a written agreement the roles and responsibilities of the participating agencies and specify how these agencies are to work together across agency boundaries.", "We provided a draft of this report to DHS for comment. On March 2, 2016, DHS provided written comments, which are reprinted in appendix I and provided technical comments, which we incorporated as appropriate. DHS concurred with our recommendation and described action under way to address it. Specifically, the ONCRC has formed a temporary working group comprised of volunteers from various federal agencies. That group, among other things, will be responsible for determining the JFC’s mission, functions, deliverables, and membership requirements as well as drafting a new charter to clearly state members’ roles and responsibilities. The ONCRC estimated a completion date of March 31, 2017.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Homeland Security, the Administrator of FEMA, the Director of ONCRC, and other interested parties. In addition, this report is available at no charge on the GAO website at http://www/gao.gov.\nIf you or your staff has any questions about this report, please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Tammy Conquest, Assistant Director; Melissa Bodeau; Antoine Clark; Sharon Dyer; Rich Hung; Sara Ann Moessbauer; Josh Ormond; Cheryl Peterson; and Lisa Shibata made key contributions to this report." ], "depth": [ 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_full", "h0_full h3_full h4_full h1_full", "h2_full", "", "", "", "", "", "", "" ] }	{ "question": [ "What is the purpose of the committees the ONCRC participates in?", "Specifically, what is the Director of the ONCRC a part of?", "What did the staff of the ONCRC help develop in 2013?", "What was one goal of the Homeland Security Strategic Plan?", "How does the Strategic Plan achieve its goal?", "What have the ONCRC and the NCR’s Emergency Preparedness Council collaborated to do?", "What quantity of money did DHS allocate in 2014 to the NCR for homeland security and preparedness capabilities?", "How was the NCR grant spent to enhance security and preparedness?", "What is a key role of the ONCRC?", "What formal mechanism, which would help with this role, is currently lacking?", "How did the ONCRC coordinate with the NCR?", "What problems did officials explain regarding the JFC?", "What concerns existed regarding the time when the JFC existed?", "Why is addressing interagency collaborative mechanisms so important?", "For what is the NCR considered high risk?", "What is emergency communications interoperability?", "How did the federal action improve interoperability in the NCR?", "What was asked of the GAO?", "What did the GAO's federal effort review of the NCR focus on?", "What documentation did GAO review while working on this report?" ], "summary": [ "The ONCRC participates in several committees that are involved in planning and carrying out efforts to build preparedness and response capabilities of the region.", "In particular, the Director of the ONCRC is a member of the NCR's Senior Policy Group, which coordinates these efforts.", "The ONCRC staff helped develop the NCR's 2013 Homeland Security Strategic Plan .", "One of the goals of the plan is to ensure interoperable communications capabilities.", "The Strategic Plan identified a number of NCR initiatives to achieve this goal, including supporting the establishment and maintenance of radio interoperability and managing and coordinating radio upgrades across jurisdictions.", "As part of the responsibility to serve as a liaison with entities in the NCR, the ONCRC has collaborated with the NCR's Emergency Preparedness Council (an NCR advisory body) to facilitate state and local agencies access to the DHS's Urban Area Security Initiative grant program—the primary source of federal homeland security funding for the NCR.", "In fiscal year 2014, DHS allocated $53 million in grant funding to the NCR to enhance the region's homeland security and preparedness capabilities.", "Almost $7 million of this amount was to fund activities, such as purchasing radios and other equipment, aimed at achieving the NCR Strategic Plan's goal to ensure interoperable communications capabilities.", "A key role of the ONCRC is to coordinate with federal, state, and local NCR entities on emergency preparedness and homeland security activities.", "However, the ONCRC currently does not have a formal mechanism in place to coordinate with federal agencies.", "From 2002 through 2014, the Joint Federal Committee (JFC) was the ONCRC's primary means of coordinating with federal agencies in the NCR.", "The ONCRC has not convened the JFC since 2014 and plans to restructure it. Officials explained that the JFC was not efficient and effective as a coordinating body and that they plan to strengthen its coordination capabilities.", "When the JFC existed, its operation was not fully aligned with interagency collaboration mechanisms that GAO has identified. In particular, the JFC's charter did not specify the roles and responsibilities of participating agencies or how they were to work together across agency boundaries.", "Addressing these interagency collaborative mechanisms in the planned restructuring of the JFC could provide greater clarity on roles and responsibilities and enhance its ability to coordinate federal efforts in the region.", "The NCR is considered at high risk for various threats and hazards.", "Federal, state, and local agencies in the NCR continue to face challenges with emergency communications interoperability—that is, the ability to use radios to communicate across entities when needed.", "The federal government has taken actions to improve interoperability in the NCR including allocating almost $720 million through a DHS grant program to enhance regional preparedness since fiscal year 2002, and establishing the ONCRC to coordinate NCR entities on homeland security activities, including interoperability.", "GAO was asked to review federal efforts to improve emergency communications interoperability in the NCR.", "This report examines (1) actions the ONCRC has taken to help improve emergency communications interoperability in the NCR and (2) status of the ONCRC's efforts to coordinate with federal agencies to help improve emergency preparedness in the NCR, including communications interoperability.", "GAO reviewed documentation from the ONCRC and interviewed DHS officials and emergency managers from the District of Columbia, Maryland, and Virginia." ], "parent_pair_index": [ -1, 0, 0, 2, 3, -1, -1, 1, -1, 0, -1, 2, 2, 4, -1, -1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 5, 5, 0, 0, 0, 1, 1, 1 ] }
GAO_GAO-12-515T	{ "title": [ "Background", "The CFATS Rule", "Senior ISCD Leaders Developed the ISCD Memorandum to Highlight Various Challenges Hindering CFATS Implementation", "ISCD’s Memorandum Based Largely on Observations of Senior ISCD Managers", "ISCD Director Was Concerned That Challenges Place the CFATS Program at Risk", "ISCD Has Begun to Take Various Actions Intended to Address Challenges Identified", "ISCD’s Action Plan Includes Time Frames for Completing Action Items and Appears to Be a Catalyst for Addressing Some Legacy Issues", "ISCD’s June 2012 Plan Update Showed 38 Action Items Completed", "Almost Half of ISCD’s Action Item Completion Dates Have Been Extended since April 2012", "Action Plan Performance Measures Could Help Gauge Progress", "ISCD Officials Stated That Almost Half of the Action Items Require Collaboration with or Action by NPPD or IP", "Conclusions", "Recommendation for Executive Action", "Agency Comments and our Evaluation", "GAO Contact and Staff Acknowledgements", "Appendix I: Objectives, Scope and Methodology", "Appendix II: ISCD Organizational Structure within NPPD and IP as of June 2012", "Appendix III: Summary of ISCD Action Plan by Issue and Subcategory, and Status", "Related GAO Products" ], "paragraphs": [ "The CFATS program is intended to secure the nation’s chemical infrastructure by identifying and protecting high-risk chemical facilities. Section 550 of the DHS appropriations act for fiscal year 2007 requires DHS to issue regulations establishing risk-based performance standards for security of facilities that the Secretary determines to present high levels of security risk. The CFATS rule was published in April 2007 and Appendix A to the rule, published in November 2007, listed 322 chemicals of interest and the screening threshold quantities amount for each. According to the CFATS rule, any facility that possesses (or later comes into possession of) any of these chemicals in quantities that meet or exceed the threshold is required to submit certain information to DHS for screening. According to the rule, if DHS preliminarily determines that a facility is high risk—that is, the facility presents a high risk of significant adverse consequences for human life or health, national security, or critical economic assets if subjected to terrorist attack, compromise, infiltration, or exploitation—the facility must submit a security vulnerability assessment to DHS that identifies security vulnerabilities at the site, among other things. After reviewing the security vulnerability assessment, DHS then makes a final decision as to whether the facility is high-risk and, if so, assigns the facility to a final tier. The rule then requires facilities that have been finally determined to be high-risk to develop and submit for DHS approval site security plans that generally show how they are to address the vulnerabilities identified in the vulnerability assessment, including measures that satisfy applicable risk-based performance standards. In addition, the rule requires that DHS implement a compliance inspection process to ensure that covered facilities are satisfying DHS’s performance standards consistent with their approved site security plans.\nISCD has direct responsibility for implementing DHS’s CFATS rule, including assessing potential risks and identifying high-risk chemical facilities, promoting effective security planning, and ensuring that final high-risk facilities meet the applicable risk-based performance standards though site security plans approved by DHS. ISCD is managed by a Director and a Deputy Director and operates five branches that are, among other things, responsible for information technology operations, policy and planning; providing compliance and technical support; inspecting facilities and enforcing CFATS regulatory standards; and managing logistics, administration, and chemical security training. ISCD receives business support from NPPD and IP for services related to human capital management and training, budget and finance, and acquisitions and procurement. Figure 1 shows ISCD’s current organizational structure within NPPD and IP. Appendix II provides a more detailed organization chart showing the various ISCD divisions.\nFrom fiscal years 2007 through 2012, DHS dedicated about $442 million to the CFATS program. During fiscal year 2012, ISCD was authorized 242 full-time-equivalent positions. For fiscal year 2013, DHS’s budget request for the CFATS program was $75 million and 242 positions.", "DHS’s CFATS rule outlines a specific process for administering the program. Any chemical facility that possesses any of the 322 chemicals in the quantities that meet or exceed the threshold quantity outlined in the rule is required to complete an initial screening tool (referred to by DHS as the Top Screen) whereby the facility provides DHS various data, including the name and location of the facility and the chemicals and their quantities at the site. DHS is to use this information to initially determine whether the facility is high risk. If so, DHS is to notify the facility of its preliminary placement in one of four risk-based tiers—tier 1, 2, 3, or 4.\nFacilities preliminarily placed in any one of these tiers are considered to be high risk, with tier 1 facilities considered to be the highest risk. Facilities that DHS initially determines to be high risk are required to complete a security vulnerability assessment, which includes the identification of potential critical assets at the facility and a related vulnerability analysis. DHS is to then review the security vulnerability assessment and notify the facility of DHS’s final determination as to whether or not it is considered high risk, and if the facility is determined to be a high-risk facility about its final placement in one of the four tiers. Once this occurs, the facility is required to submit a site security plan or participate in an alternative security program in lieu of a site security plan. The security plan is to describe the security measures to be taken to address the vulnerabilities identified in the vulnerability assessment, and identify and describe how security measures selected by the facility will address the applicable risk-based performance standards. DHS then is to do a preliminary review of the security plan to determine whether it meets the regulatory requirements. If these requirements appear to be satisfied, DHS issues a letter of authorization for the facility’s plan. DHS then conducts an authorization inspection of the facility and subsequently determines whether to approve the security plan. If DHS determines that the plan does not satisfy CFATS requirements (based on its preliminary review after an authorization inspection), DHS then notifies the facility of any deficiencies and the facility must submit a revised plan correcting those deficiencies. If the facility fails to correct the deficiencies, DHS may then disapprove the plan. Following approval, DHS may conduct further inspections to determine if the facility is in compliance with its approved security plan. Figure 2 illustrates the CFATS regulatory process.\nIn July 2007, DHS began reviewing information submitted by approximately 40,000 facilities. By January 2012, DHS had preliminarily determined that approximately 4,500 of these facilities were high risk and preliminarily placed each in one of the four tiers. Each of these approximately 4,500 facilities was to complete a security vulnerability assessment, and those facilities that DHS finally determined to be high risk were to submit a site security plan. According to ISCD officials, the vulnerability assessment process prompted over 1,600 facilities to remove chemicals of interest from their sites, thereby enhancing their security posture and removing them from CFATS coverage. Also, according to division officials, as of February 2012, ISCD had worked with facilities to complete 925 compliance assistance visits whereby division inspectors visit high-risk facilities to provide knowledge of and assistance in complying with CFATS, particularly facilities that were in the process of preparing their security plans.", "", "Our review of the ISCD memorandum and discussions with ISCD officials showed that the memorandum was developed during the latter part of 2011 and was developed primarily based on discussions with ISCD staff and the observations of the ISCD Director in consultation with the Deputy Director. In July 2011, a new Director and Deputy Director were appointed to lead ISCD and, at the direction of NPPD’s Under Secretary, began a review of the CFATS program goals, challenges, and potential corrective actions. In November 2011, the Director and Deputy Director provided the Under Secretary the ISCD memorandum entitled “Challenges Facing ISCD, and the Path Forward.” These officials stated that the memorandum was developed to inform leadership about the status of ISCD, the challenges it was facing, and the proposed solutions identified to date. In transmitting a copy of the memorandum to congressional stakeholders following the leak in December 2011, the NPPD Under Secretary discussed caveats about the memorandum. He stated that the memorandum was not a formal compliance audit or program review and in several instances it lacked useful, clarifying context. He stated that the ISCD memorandum was not intended for wider internal or external dissemination beyond the Under Secretary’s office. He further explained that it had not undergone the normal review process by DHS’s Executive Secretariat and contained opinions and conclusions that did not reflect the position of DHS. He also noted that the memorandum did not discuss the “significant progress” ISCD had made to date reaching out to facilities of concern to improve their security posture. For example, senior division officials told us that the memorandum did not note the positive impact of ISCD’s initial screening of facilities, which resulted in many facilities reducing their holdings of regulated materials so that they would no longer be subject to the rule.\nThe ISCD Director confirmed that she was the primary author of the ISCD memorandum, in consultation with the Deputy Director, and said that the memorandum was intended to be used as an internal management tool. The Director stated that when she was brought onboard, the Under Secretary tasked her to look at CFATS from an outsider’s perspective and identify her thoughts on the program relative to other regulatory regimes, particularly in light of growing concerns about possible human capital issues and problems tiering chemical facilities covered by CFATS. She confirmed that the memo was intended to begin a dialog about the program and challenges it faced. The Director also confirmed that she developed the memorandum by (1) surveying division staff to obtain their opinions on program strengths, challenges, and recommendations for improvement; (2) observing CFATS program operations including the security plan review process; and (3) analyzing an internal DHS report on CFATS operations, which, according to the Director, served as a basis for identifying some administrative challenges and corrective action. The Director told us that senior ISCD officials, including branch chiefs, were given an opportunity to review an initial draft of the memorandum and provided feedback on the assumptions presented. ISCD branch chiefs— the officials responsible for taking corrective actions—confirmed that they were given the opportunity to provide comments on a draft of the memorandum. However, they said that after the leak, almost all of the senior ISCD officials, including branch chiefs, did not have access to the final memorandum per the instruction of the Under Secretary for Management. The senior ISCD and NPPD officials we contacted said that they generally agreed with the material that they saw, but noted that they believed the memorandum was missing context and balance. For example, one NPPD official stated that that the tone of the memorandum was too negative and the problems it discussed were not supported by sound evaluation. The official expressed the view that the CFATS program is now on the right track.", "The ISCD memorandum discussed numerous challenges that, according to the Director, pose a risk to the program. The Director pointed out that, among other things, ISCD had not approved any site security plans or carried out any compliance inspections on regulated facilities. The Director attributed this to various management challenges, including a lack of planning, poor internal controls, and a workforce whose skills were inadequate to fulfill the program’s mission and highlighted several challenges that have an impact on the progress of the program. In addition, the memorandum provided a detailed discussion of the issues or problems facing ISCD. One group of issues focused on human capital management, problems the author categorized as team issues. According to the Director, these included issues arising out of poor staffing decisions; difficulty establishing a team culture that promotes professionalism, respect, and openness; a lack of measurable employee performance goals and unclear performance and conduct standards; and potential delays associated with notifying ISCD inspector union over policies, procedures, and processes. A second group focused on mission issues, including what the author found to be the slow pace of the site security plan approval process, the lack of an established inspection process, and the ISCD’s inability to perform compliance inspections 5 1/2 years after enactment of the CFATS statute, and the lack of an established records management system to document key decisions. A third group focused on administrative issues, particularly those the Director regarded as a lack of infrastructure and support, both within ISCD and on the part of NPPD and IP. They included the aforementioned concern about over-reliance on contractors, insufficient and inconsistent support by NPPD and IP with regard to human capital needs—including support on the aforementioned staffing issues—and insufficient controls regarding the use of inspector vehicles, purchase cards, and travel.\nAdditional details on the human capital, mission, and administrative issues identified in the ISCD memorandum are considered “for official use only.”", "", "ISCD is using an action plan to track its progress addressing the challenges identified in the memorandum, and, according to senior division officials, the plan may be helping them address some legacy issues that staff were attempting to deal with before the memorandum was developed. As discussed earlier, the ISCD memorandum was accompanied by a proposed action plan that, according to the director, was intended to provide proposed solutions to the challenges identified. The January 2012 version of that plan listed 91 actions to be taken categorized by issue—human capital management issues, mission issues, or administrative issues—that, according to the ISCD Director, were developed to be consistent with the ISCD memorandum. Each action item also listed the coordinator, or individual or unit responsible for the action, and discussed the status of the action, including whether the item was complete or in progress. For example, in the human capital/staffing issues area, one action item was intended to engage ISCD leadership to develop an integration plan for newly hired employees. The IP Business Support Team, which is co-located with ISCD, was responsible for coordinating this action, and at the time the plan was prepared, the action was in progress. According to the plan, a 3-day ISCD 101 course had been developed and a more comprehensive process for acclimating new employees to ISCD was under development. However, the January 2012, version of the action plan did not provide information on when the action was started or to be finished.\nIn February 2012, ISCD developed a version of the action plan that included the same information as the January 2012, plan. However, it also included quarterly projected completion dates. Since then the division’s action plan has evolved into a more detailed plan containing 94 items. Like the February 2012 plan, March and June 2012 updated versions of the plan contained information on the coordinator, the action to be taken, and the status of each item. However, unlike the February 2012 version of the plan, the March and June versions of the plan provided detailed milestones and timelines for completing action items including calendar dates, and interim actions leading to completion— essentially a road map for managing each action item according to particular dates and milestones. This approach is consistent with The Standard for Program Management, which calls for organizations to develop plans with milestones and time frames to successfully manage programs and projects.\nEleven of the 12 ISCD managers (those other than the Director and Deputy Director) assigned to work as the coordinators of the individual action items told us that even though they were not given the opportunity to view the final version of the ISCD memorandum, the Director provided them the sections of the action plan for which they were responsible to help them develop and implement any corrective actions. They said that they agreed that actions being taken in the plan were needed to resolve challenges facing ISCD. Our discussions with these officials also showed that about 39 percent (37 of 94) of the items in the March and June 2012 action plans addressed some legacy issues that were previously identified and, according to these officials, corrective actions were already under way for all 38 of these action items. For example, one action item called for ISCD to maintain better relations with industry, Congress, and other key stakeholders. ISCD officials said that the ISCD Policy Branch had already begun working on this strategy prior to the development of the memorandum and action plan and that this strategy was given more attention and a higher priority because of the associated action item. An ISCD official expressed the view that the ISCD memorandum and action plan encouraged ISCD to address these and other items sooner than they otherwise might have been addressed.", "Our analysis of the June 2012 version of the ISCD action plan showed that 40 percent of the items in the plan (38 of 94) had been completed. The remaining 60 percent (56 of 94) were in progress. Our analysis of the 38 completed items showed that 32 of the 38 items were associated with human capital management and administrative issues, including those involving culture and human resources, contracting, and documentation. For example, one human capital management issue that is complete called for ISCD to survey staff to obtain their opinions on program strengths and challenges and recommendations for program improvements. According to the June 2012 action plan, the survey was completed and ISCD’s action plan showed the item as completed on January 10, 2012. Another completed human capital action item— categorized by ISCD as a cultural issue—called for ISCD management to hold a series of meetings with employees to involve them in addressing program challenges, clarify program priorities related to its mission, and implement changes in ISCD culture. The June 2012 version of the action plan shows the item as completed on January 10, 2012, but noted that this activity will continue going forward. The remaining 6 of 38 action items categorized by ISCD as completed were associated with mission issues such as 1 action item calling for ISCD to establish a quality control function for compliance and enforcement activities. According to ISCD’s action plan, this item was completed in April 2012, based on development of a proposal to form the quality control section within the division. Figure 3 shows the status of action items by each of the three categories— human capital management issues, mission issues, and administrative issues, as of June 2012. Appendix III provides an overview of the items in the action plan and their status (completed or in progress) by issue (human capital management, mission issues, and administrative issues) and subcategory.\nFor the remaining 56 items that were in progress, 40 involved human capital management and administrative issues. According to ISCD officials, these 40 issues generally involved longer-term efforts—such as organizational realignment—or those that require approval or additional action on the part of IP or NPPD. For example, ISCD reported that there are 13 action items that are directly or indirectly associated with the division’s realignment efforts, including items that require approval by NPPD and IP. The overall realignment effort related to these action items is intended to address concerns, highlighted in the memorandum, that ISCD’s organizational structure was “stovepiped” and compartmentalized. The plan, which, as of June 2012, was in draft, would, according to officials, reorganize ISCD to “integrate more fully certain functions to enhance the collaborative nature of the work that needs to be performed” and would entail creating new offices, moving and integrating others, and centralizing some functions that are now dispersed throughout the division. In accordance with the affected action items, ISCD and a contractor developed the several elements of the realignment plan for review, and ISCD was awaiting input or guidance from NPPD and IP before associated action items can be completed.\nSixteen of 56 remaining actions items in progress covered mission issues that will likely also require long-term efforts to address. For example, 1 of these mission-related action items entails the development of requirements for an information technology platform to support inspection activities. Another entails the development of plans to improve ISCD’s site security plan review process. Regarding the latter, ISCD encountered delays approving security plans because, according to ISCD officials, the quality of the plans submitted was inconsistent and ISCD did not have dedicated staff with the skills needed to work with facilities to review and approve them. As noted in the ISCD memorandum, the site security plan review process was overly complicated, did not leverage available resources, and created bottlenecks and clearing the backlog of security plan’s was ISCD’s highest priority. To address these concerns, ISCD developed an interim review process to clear the backlog of tier 1 security plans with a goal of completing reviews of those plans by the end of the calendar year. ISCD began to track the action item intended to develop a plan for introducing a new security plan review process, which, according to the June 2012 action plan, is supposed to be completed in July 2012. The development of a new security plan review process may be critical to the effective implementation of the CFATS program. According to an ISCD official, compliance inspections cannot begin until ISCD reviews and approves a facility’s site security plan. In March 2012, the official estimated that it could take at least 18 months for ISCD to complete its first compliance inspections. In commenting on our draft statement, ISCD officials stated that inspections for all of the approximately 4,500 tiered facilities could take several years, contingent upon available resources.", "Our analysis of the April and June versions of the plan shows that the division had extended the estimated completion dates for nearly half of the action items. Estimated completion dates for 52 percent (48 of 93 items) either did not change (37 items) or the date displayed in the June 2012 plan was earlier than the date in the April 2012 version of the plan (11 items). Conversely, 48 percent (45 of 93) of the items in the June 2012 version of the plan had estimated completion dates that had been extended beyond the date in the April 2012 plan. For example, in the April 2012 plan, ISCD was to work with NPPD and IP on identifying job skills, the correct job series, and job descriptions, action that was estimated to be completed in July 2012. However, the June 2012 plan shows that the completion date for this action item was extended to August 2012, more than 30 days beyond the date estimated in April 2012. Figure 4 shows the extent to which action plan items were completed earlier than planned, did not change, or were extended, from April 2012 through June 2012, for the human capital management, mission, and administrative issues identified in the plan.\nISCD officials told us that estimated completion dates have been extended for various reasons. They said that one reason for moving these dates was that the work required to address some items was not fully defined when the plan was first developed and as the requirements were better defined, the estimated completion dates were revised and updated. In addition, ISCD officials also stated that timelines have been adversely affected for some action items because staff have been reassigned to work on higher-priority responsibilities, such as moving staff from their assigned duties to work on efforts to reduce the backlog of security plans under review. ISCD officials also told us that some dates have been extended because the division is awaiting actions within ISCD or by NPPD or IP.", "ISCD, through its action plan, appears to be heading in the right direction toward addressing the challenges identified, but it is too early to tell if the action plan is having the desired effect because (1) the division has only recently completed some action items and continues to work on completing more than half of the others, some of which entail long-term changes, and (2) ISCD has not developed an approach for measuring the results of its efforts. ISCD officials told us that they had not yet begun to plan or develop any measures, metrics, or other documentation focused on measuring the impact of the action plan on overall CFATS implementation because they plan to wait until corrective action on all items has been completed before they can determine the impact of the plan on the CFATS program. For the near term, ISCD officials stated that they plan to assess at a high level the impact of the action plan on CFATS program implementation by comparing ISCD’s performance rates and metrics pre-action plan implementation and post-action plan implementation. However, because ISCD will not be completing some action items until 2014, it will be difficult for ISCD officials to obtain a complete understanding of the impact of the plan on the program using this comparison only.\nNow that ISCD has begun to take action to address the challenges identified, ISCD managers may be missing an opportunity to measure the effects or results of some of the actions taken thus far, particularly actions that are either in the early stages of implementation or are in the formative stages. Measuring results associated with particular action items would be consistent with Standards for Internal Control in the Federal Government, which calls for the establishment and review of performance measures and indicators to monitor activities and compare actual performance with planned or expected results throughout the organization and analyze significant differences. We recognize that it might not be practical to establish performance measures for all action items, for example; 1 of the 94 items calls for ISCD to initiate the hiring process for an economist. However, other action items may be candidates for performance measurement because they focus on organizational changes or mission-related issues. For example, once ISCD gets approval to move forward with a plan to reorganize, it could develop interim plans and measures to monitor the progress of integrating various functions and use the information to identify barriers, if any, for completing this effort. Likewise, once ISCD makes the decision to revise its site security plan review process, it could develop measures for implementing those revisions and consider what measures might be appropriate for gauging its success in streamlining the process and completing security plan reviews. By looking for opportunities to develop performance measures covering the various action items and developing such measures, ISCD managers would be better positioned to identify any gaps in their efforts to address the challenges and have tools available to measure and monitor performance in the future. ISCD would also have a framework for providing continuity of operations when new managers or staff are hired, managers move from position to position, or as the program changes. Furthermore, ISCD would be better equipped to inform stakeholders of its progress as the organization moves toward resolving the challenges identified in the ISCD memorandum.", "According to ISCD officials, almost half of the action items included in the June 2012 action plan either require ISCD to collaborate with NPPD and IP or require NPPD and IP to take action to address the challenges identified in the ISCD memorandum. NPPD, IP, and ISCD officials have been working together to identify solutions to the challenges the memorandum identified and to close pertinent action items.\nOne of the issues identified in the ISCD memorandum was the level of NPPD and IP communication and support. According to ISCD officials, at the time the program was established, NPPD and IP communication and support were not adequate for the division to implement the CFATS program within the statutory time frames (which was 6 months following the passage of the CFATS statute). Regarding the ISCD memorandum and the action plan, NPPD, IP, and ISCD officials have been working together to identify solutions to these human capital and administrative challenges. According to division officials, 46 of the 94 action items included in the June 2012 action plan require either action by NPPD and IP or collaboration with NPPD and IP. This includes collaborating with NPPD officials representing the NPPD human capital, facilities, and employee and labor relations offices, among others, and with IP’s Directorate of Management Office.that require action by or collaboration with NPPD or IP are complete; 33 of 46 are in progress.\nAs of June 2012, 13 of the 46 items With regard to completed items, these focused largely on human capital and administrative issues. For example, 1 completed item required ISCD leaders to establish regular meetings with NPPD and IP human capital officials to ensure better communication and visibility on human capital issues. Our discussions with ISCD and NPPD officials confirmed that this action item was closed because meetings covering human capital issues have begun and are held on a weekly and recurring basis. NPPD, IP, and ISCD told us that one of the topics of discussion during the weekly meetings is the hiring of specialists so that the division has assurance that the CFATS reviews and inspection process properly include their expertise. According to these officials, hiring certain types of specialists is a difficult challenge given that ISCD is competing with other organizations, including organizations within DHS, for individuals that possess these specialized skills. These officials also stated that these weekly meetings provide NPPD, IP, and ISCD an opportunity to discuss human capital issues as they come up and ensure that the division’s hiring process runs smoothly. To further assist with ISCD’s hiring efforts, IP officials said that one IP human capital staff member is moving to be co-located with the division with the intent that this co-located staff member will be an important accelerator to the hiring process and help keep ISCD hiring on track. Another related action item required similar meetings between ISCD and NPPD’s Office of Employee and Labor Relations to discuss union-related issues. This item was closed because these NPPD staff members meet weekly with ISCD senior leaders to discuss how the union operates and how they should work with the union, and help them understand and properly address the division’s obligations to the union.\nWith regard to the 33 of 46 actions items requiring collaboration with NPPD and IP that are in progress, 23 require NPPD or IP to review and approve work completed by ISCD or make policy decisions before the division can list the action item as complete. For example,\nTwelve of the 33 action items involve ISCD’s development of the aforementioned realignment plan. As of June 2012, ISCD had forwarded the realignment plan to NPPD and IP for review and was awaiting approval so that the plan could be forwarded to DHS for review and comment.\nAnother action item requires ISCD to develop a human capital strategic plan. According to the June 2012 action plan, ISCD is waiting for NPPD to release its Human Capital Strategic Plan to finalize this action item and plans to use the guidance provided in the NPPD plan to develop an ISCD Strategic Human Capital Plan.\nISCD continues to work on the remaining 10 of the 33 in-progress action items that require NPPD or IP action or division collaboration with NPPD and IP. According to the June 2012 action plan, completion of these action items is dependent upon ISCD staff completing an internal review of an ISCD-drafted set of standard operating procedures or memorandum, or an analysis of an existing ISCD procedure. Once ISCD finalizes these 10 action items, the outputs are to be forwarded to NPPD and IP for review, comment, and approval, where appropriate.\nAdditional details on action items that require collaboration with or action by NPPD or IP are considered “for official use only.”", "ISCD has identified numerous challenges it has encountered implementing the CFATS program and has developed an action plan that is intended to help address these challenges. This appears to be a step in the right direction as officials continue their efforts to better manage the program and establish a viable process consistent with the statute and the CFATS rule. Because of the scope and breadth of the action plan and given that that many of the action items were recently completed (38 of 94 action items) or are in progress (56 of 94 action items), it is too early to tell whether they will have the effect of helping ISCD overcome and resolve all the problems it has identified. However, ISCD, working with NPPD and IP, may be better positioned to understand and report on its progress by looking for opportunities to measure the effect of efforts to implement key action items, especially since many of the action items are either recently completed or in their formative stages. By developing performance measures, where practical, ISCD, IP, and NPPD would be better equipped to identify any gaps between actual and planned or expected results and take corrective action, where necessary, consistent with Standards for Internal Control in the Federal Government.\nFurthermore, ISCD, IP, and NPPD would be better positioned to report on their progress developing a viable CFATS program to key stakeholders, including Congress.", "To better ensure that DHS can better understand the effect of its actions as it moves forward with its efforts to address the challenges facing ISCD as it implements the CFATS program, we recommend that the Secretary of Homeland Security direct the Under Secretary for NPPD, the Assistant Secretary for IP, and the Director of ISCD, in conjunction with the development of ISCD’s strategic plan, to look for opportunities, where practical, to measure results of their efforts to implement particular action items, and where performance measures can be developed, periodically monitor these measures and indicators to identify where corrective actions, if any, are needed.", "We provided a draft of this statement to the Secretary of Homeland Security for review and comment. The Deputy Under Secretary for NPPD and the Assistant Secretary for Infrastructure Protection provided oral comments on July 23, 2012, and stated that NPPD agreed with our recommendation. NPPD officials said that they intend to provide an updated action plan that includes a new action item to “develop metrics for measuring, where practical, results of efforts to implement action plan items, including processes for periodic monitoring and indicators for corrective actions.” The Deputy Under Secretary also noted that these new measures would be in addition to the program metrics NPPD uses to measure the overall progress of the CFATS program.\nDHS also provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, we will continue to review the CFATS program and review ISCD’s efforts to manage the mission aspects of the program. This will include ISCD efforts to determine chemical facility risk; manage the process used to assess vulnerabilities, review security plans, and perform inspections; and work with owners and operators of high-risk chemical facilities. We expect to report the results of these efforts early in 2013.\nChairman Aderholt, Ranking Member Price, and members of the subcommittee, this completes my prepared statement. I would be happy to respond to any questions you may have at this time.", "For information about this statement please contact Stephen L. Caldwell, Director, Homeland Security and Justice, at (202) 512-8777 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals making key contributions include John F. Mortin, Assistant Director; Ellen Wolfe, Analyst-in-Charge; Charles Bausell; Jose Cardenas; Andrew M. Curry; Michele Fejfar; Tracey King; Marvin McGill; Mona E. Nichols-Blake; and Jessica Orr.", "This statement discusses how the internal Infrastructure Security Compliance Division’s (ISCD) memorandum (the ISCD memorandum) was developed and what challenges were identified, what actions are being taken to address the challenges identified, and the extent to which ISCD’s planned actions and proposed solutions require collaboration with National Protection and Programs Directorate (NPPD) or the Office of Infrastructure Protection (IP).\nTo determine how the ISCD memorandum was developed and the challenges outlined in the memorandum, we reviewed and analyzed the memorandum to determine the various Chemical Facility Anti-Terrorism Standards (CFATS) program challenges as identified by the memorandum’s author—i.e., the ISCD Director, who was the primary author, in consultation with the Deputy Director. As a part of our analysis, we grouped the challenges into overarching categories—human capital management issues, mission issues, and administrative issues—and used the sub-categories developed by the author of the ISCD memorandum to summarize the types of challenges or problems described in the ISCD memorandum. We also interviewed 14 ISCD senior officials (including the ISCD Director and Deputy Director) to confirm our understanding of the challenges identified, determine how the memorandum was developed, and obtain ISCD officials’ views on what may have created the CFATS program challenges.\nTo determine what actions ISCD is taking to address the challenges identified in the memorandum, we analyzed and compared the various action plans that were prepared by ISCD senior officials between January 2012 and June 2012. We developed a list of the 94 action items included in the June plan and determined the status of each action item (completed or in progress), the extent to which the ISCD officials responsible for leading efforts for the action item agreed that the action item addressed an existing problem, and the extent to which the activities related to the action item were in progress prior to the ISCD memorandum’s release. Where possible, we obtained and reviewed documentation (e.g., standard operating procedures and ISCD memos) relevant to each action item to support ISCD officials’ views that the status of the action item was accurate and whether the work on the action item was in progress before the development and release of the ISCD memorandum. We also compared the results of our analysis of the action plans and our discussions with program officials with various criteria, including the CFATS law and regulations; Department of Homeland Security (DHS) policies, procedures, and reports; Standards for Internal Control in the Federal Government; and The Standard for Program Management.\nTo determine the extent to which ISCD’s planned actions and proposed solutions require collaboration with or action by NPPD or IP officials, we interviewed 11 NPPD and 9 IP officials identified by ISCD officials who are to work with ISCD to implement corrective actions. Using the results of these interviews and our analysis of the ISCD memorandum and action plan, we determined the extent to which collaboration among ISCD, NPPD, and IP is required to implement corrective action, if at all. Where available, we obtained and reviewed NPPD, IP, and ISCD documentation (e.g., policies, standard operating procedures, and internal memos) relevant to each action item that requires NPPD or IP support or action in working with ISCD to overcome those challenges.\nWe identified three limitations that should be considered when using our results. First, ISCD’s memorandum is largely based on the efforts of the ISCD Director in consultation with the ISCD Deputy Director and may not be representative of the views of other senior officials within the CFATS program. Furthermore, the conclusions reached in the memorandum were not obtained by using a formal compliance audit or program review procedures, nor were the assumptions validated. Second, our results are based on the status of the action plan as of June 2012, so these results are valid only up until this point in time. Third, documentary evidence about the development of the CFATS program and the causes for the issues identified in the ISCD memorandum is, for the most part, not available. Program officials did not maintain records of key decisions and the basis for those decisions during the early years of the program. During preliminary discussions, the members of current management team qualified that much of their knowledge about program decisions during the early years of the program is their best guess of what happened and why.\nWe conducted this performance audit from February 2012 to July 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our analysis based on our audit objectives.", "This appendix provides the organizational structure used to manage the Chemical Facility Anti-Terrorism Standards program within the Infrastructure Security Compliance Division. ISCD has direct responsibility for implementing DHS’s CFATS rule, including assessing high-risk chemical facilities, promoting collaborative security planning, and ensuring that covered facilities meet DHS’s risk-based performance standards. ISCD is managed by a Director and a Deputy Director and operates five branches that are, among other things, responsible for information technology operations; policy and planning; providing compliance and technical support; inspecting facilities and enforcing CFATS regulatory standards; and managing logistics, administration, and chemical security training. ISCD receives business support from the National Protection and Programs Directorate and the Office of Infrastructure Protection for services related to human capital management and training, budget and finance, and acquisitions and procurement. Figure 5 shows the organizational structure of NPPD, IP, and ISCD.", "This appendix provides a summary of the status and progress of action items grouped by issue and sub-category. The Infrastructure Security Compliance Division is using an action plan to track its progress in addressing the challenges identified in the November 2011 ISCD memorandum prepared by the ISCD Director in consultation with the Deputy Director. The ISCD memorandum was accompanied by an action plan that, according to the authors of the memorandum, was intended to provide solutions to addressing the challenges identified. Table 1 provides an overview of the items in the action plan and their status (completed or in progress) by issue (human capital management, mission issues, and administrative issues) and subcategory.", "Critical Infrastructure Protection: DHS Could Better Manage Security Surveys and Vulnerability Assessments. GAO-12-378, Washington, D.C.: May 31, 2012.\nCritical Infrastructure Protection: DHS Has Taken Action Designed to Identify and Address Overlaps and Gaps in Critical Infrastructure Security Activities. GAO-11-537R. Washington, D.C.: May 19, 2011.\nCritical Infrastructure Protection: DHS Efforts to Assess and Promote Resiliency Are Evolving but Program Management Could Be Strengthened. GAO-10-772. Washington, D.C.: September 23, 2010.\nCritical Infrastructure Protection: Update to National Infrastructure Protection Plan Includes Increased Emphasis on Risk Management and Resilience. GAO-10-296. Washington, D.C.: March 5, 2010.\nThe Department of Homeland Security’s (DHS) Critical Infrastructure Protection Cost-Benefit Report. GAO-09-654R. Washington, D.C.: June 26, 2009.\nInformation Technology: Federal Laws, Regulations, and Mandatory Standards to Securing Private Sector Information Technology Systems and Data in Critical Infrastructure Sectors. GAO-08-1075R. Washington, D.C.: September 16, 2008.\nRisk Management: Strengthening the Use of Risk Management Principles in Homeland Security. GAO-08-904T. Washington, D.C.: June 25, 2008.\nCritical Infrastructure Protection: Sector Plans Complete and Sector Councils Evolving. GAO-07-1075T. Washington, D.C.: July 12, 2007.\nCritical Infrastructure Protection: Sector Plans Complete and Sector Councils Continue to Evolve. GAO-07-706R. Washington, D.C.: July 10, 2007.\nCritical Infrastructure: Challenges Remain in Protecting Key Sectors. GAO-07-626T. Washington, D.C.: March 20, 2007.\nHomeland Security: Progress Has Been Made to Address the Vulnerabilities Exposed by 9/11, but Continued Federal Action Is Needed to Further Mitigate Security Risks. GAO-07-375. Washington, D.C.: January 24, 2007.\nCritical Infrastructure Protection: Progress Coordinating Government and Private Sector Efforts Varies by Sectors’ Characteristics. GAO-07-39. Washington, D.C.: October 16, 2006.\nInformation Sharing: DHS Should Take Steps to Encourage More Widespread Use of Its Program to Protect and Share Critical Infrastructure Information. GAO-06-383. Washington, D.C.: April 17, 2006.\nRisk Management: Further Refinements Needed to Assess Risks and Prioritize Protective Measures at Ports and Other Critical Infrastructure. GAO-06-91. Washington, D.C.: December 15, 2005.\nProtection of Chemical and Water Infrastructure: Federal Requirements, Actions of Selected Facilities, and Remaining Challenges. GAO-05-327. Washington, D.C.: March 28, 2005.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1 ], "alignment": [ "h2_full", "h2_full", "h0_title h2_title h1_title", "h2_full", "h0_full h1_full", "h1_title", "h1_full", "h1_full", "", "h1_full", "", "", "", "", "h2_full", "h0_full h2_full", "h0_full", "", "h2_full" ] }	{ "question": [ "What did the November 2011 memorandum discuss?", "What was the memorandum supposed to highlight?", "What sorts of challenges have been facing ISCD?", "What aspects do these challenges center on?", "What situations is ISCD attempting to address through various actions?", "What have managers said about the plan?", "As of June of 2012, how had the ISCD done on finishing the 94-item action plan?", "What parts of the plan were achieved?", "What parts of the plan remain to be completed?", "It is too early to tell what regarding the ISCD?", "What would be helpful as the ISCD moves forward?", "How could ISCD implement these ideas as it develops a new security plan review process?", "How did the events of September 11, 2001 affect the security of hazardous waste facilities?", "Why was the CFATS program established?", "Why does ISCD have concerns about the management of the CFATS program?", "What is the purpose of this testimony?", "How did GAO gather information for this report?" ], "summary": [ "The November 2011 memorandum that discussed the management of the Chemical Facility Anti-Terrorism Standards (CFATS) program was prepared based primarily on the observations of the Director of the Department of Homeland Security’s (DHS) Infrastructure Compliance Security Division (ISCD), a component of the Office of Infrastructure Protection (IP) within the National Protection and Programs Directorate (NPPD).", "The memorandum was intended to highlight various challenges that have hindered ISCD efforts to implement the CFATS program.", "According to the Director, the challenges facing ISCD included not having a fully developed direction and plan for implementing the program, hiring staff without establishing need, and inconsistent ISCD leadership—factors that the Director believed place the CFATS program at risk.", "These challenges centered on human capital issues, including problems hiring, training, and managing ISCD staff; mission issues, including overcoming problems reviewing facility plans to mitigate security vulnerabilities and performing compliance inspections; and administrative issues, including concerns about NPPD and IP not supporting ISCD’s management and administrative functions.", "ISCD has begun to take various actions intended to address the human capital management, mission, and administrative issues identified in the ISCD memorandum and has developed a 94-item action plan to track its progress.", "According to ISCD managers, the plan appears to be a catalyst for addressing some of the long-standing issues the memorandum identified.", "As of June 2012, ISCD reported that 40 percent (38 of 94) of the items in the plan had been completed.", "These include (1) requiring ISCD managers to meet with staff to involve them in addressing challenges, clarifying priorities, and changing ISCD’s culture and (2) developing a proposal to establish a quality control function over compliance activities.", "The remaining 60 percent (56 of 94) that were in progress include those requiring longer-term efforts--—i.e., streamlining the process for reviewing facility security plans and developing facility inspection processes; those requiring completion of other items in the plan; or those awaiting action by others, such as approvals by ISCD leadership.", "ISCD appears to be heading in the right direction, but it is too early to tell if individual items are having their desired effect because ISCD is in the early stages of implementing corrective actions and has not established performance measures to assess results.", "Moving forward, exploring opportunities to develop measures, where practical, to determine where actual performance deviates from expected results, consistent with internal control standards could help ISCD better identify any gaps between actual and expected results so that it can take further action, where needed.", "For example, as ISCD develops a new security plan review process, it could look for ways to measure the extent to which the time to do these reviews has been reduced as compared with the time needed under the current review process.", "The events of September 11, 2001, triggered a national re-examination of the security of facilities that use or store hazardous chemicals in quantities that, in the event of a terrorist attack, could put large numbers of Americans at risk of serious injury or death. As required by statute, DHS issued regulations that establish standards for the security of high-risk chemical facilities.", "DHS established the CFATS program to assess the risk posed by these facilities and inspect them to ensure compliance with DHS standards.", "ISCD, a component of IP, manages the program. A November 2011 internal ISCD memorandum, prepared by ISCD senior managers, has raised concerns about the management of the program.", "This testimony focuses on (1) how the memorandum was developed and any challenges identified, (2) what actions are being taken in response to any challenges identified, and (3) the extent to which ISCD’s proposed solutions require collaboration with NPPD or IP.", "GAO’s comments are based on recently completed work analyzing the memorandum and related actions. GAO reviewed laws, regulations, DHS’s internal memorandum and action plans, and related documents, and interviewed DHS officials." ], "parent_pair_index": [ -1, 0, 1, 2, -1, 0, -1, 2, 2, -1, 5, 6, -1, 0, 1, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0 ] }
CRS_RL34031	{ "title": [ "", "Most Recent Developments", "Introduction to the Legislative Branch Appropriations Bill", "Changes in Structure of Legislative Branch Appropriations Effective in FY2003", "Activities and Programs Related to the Legislative Branch but Not Funded in the Legislative Branch Appropriations Bill", "Reestablishment of House Subcommittee on Legislative Branch for the 110th Congress", "Status of FY2008 Appropriations", "Action on the FY2008 Legislative Branch Appropriations Bill", "Submission of FY2008 Budget Request on February 5, 2007", "Congressional Caps on FY2008 Legislative Branch Discretionary Funds", "Senate and House Hearings on FY2008 Budget", "House Appropriations Committee Markup and Report (FY2008)", "House Passage of the FY2008 Bill (H.R. 2771)", "Senate Markup and Report of FY2008 Bill (S. 1686)", "Action on FY2007 Supplemental Appropriations", "FY2008 Legislative Branch Funding Issues", "Capitol Complex Security—U.S. Capitol Police", "Funding Issues", "Administrative Issues", "Architect of the Capitol", "Overall Funding Levels", "Capitol Visitor Center (CVC)24", "Capitol Power Plant Utility Tunnels", "Administrative Provisions", "House of Representatives", "Overall Funding", "House Committee Funding", "Members' Representational Allowance", "Senate", "Overall Funding", "Senate Committee Funding", "Senators' Official Personnel and Office Expense Account", "Support Agency Funding", "Congressional Budget Office (CBO)", "Highlights of House and Senate Hearings on FY2008 Budget of the CBO", "Library of Congress (LOC)", "Highlights of the House and Senate Hearings on FY2008 Budget of the LOC", "Congressional Research Service (CRS)", "Government Accountability Office (GAO)", "Highlights of House and Senate Hearings on FY2008 Budget of the GAO", "Government Printing Office (GPO)", "Additional Provisions", "Highlights of House and Senate Hearings on FY2008 Budget of the GPO", "Other Funding", "Office of Compliance", "Open World Leadership Center", "John B. Stennis Center for Public Service Training and Development", "For Additional Reading", "CRS Report", "Selected Websites" ], "paragraphs": [ "", "The FY2008 Consolidated Appropriations Act, which was enacted on December 26, 2007, provides $3.97 billion in new budget authority for the legislative branch. This total includes an across-the-board rescission of 0.25% which was applied to accounts within the legislative branch division of the act.\nFrom the beginning of the fiscal year on October 1, until the enactment of the consolidated bill ( H.R. 2764 ), the legislative branch was funded by a series of continuing appropriations resolutions. On September 29, 2007, the President signed into law P.L. 110-92 . The law provided for continued funding for most federal activities, including the legislative branch, at FY2007 levels through November 16, 2007. P.L. 110-116 , which was enacted on November 13, continued this funding through December 14, 2007. P.L. 110-137 , enacted on December 14, 2007, and P.L. 110-149 , enacted on December 21, 2007, also provided continuing funding for the legislative branch prior to the enactment of the Consolidated Appropriations Act. These laws also provided gratuity payments to the survivors of a total of four deceased Members.\nPrior to the consideration of the consolidated appropriations measure, both the Senate and House of Representatives considered separate legislation funding the legislative branch for FY2008. S. 1686 , the Senate version of the FY2008 Legislative Branch Appropriations Bill, was reported to the Senate on June 25, 2007. The bill, which proposed nearly $2.78 billion in new budget authority (not including House items), had been marked up by the Senate Committee on Appropriations on June 21. At the markup, the committee voted unanimously to report the bill without amendment.\nH.R. 2771 , the House version of the FY2008 Legislative Branch Appropriations Bill, was introduced on June 19, 2007, following the House Committee on Appropriations markup on June 12 and the subcommittee markup on June 6. The House bill would have provided $3.1 billion in new budget authority (not including Senate items). The bill, with two amendments, passed the House on June 22 with a roll call vote of 216-176.", "Since FY2003, the annual legislative branch appropriations bill has usually contained two titles. Appropriations for legislative branch agencies are contained in Title I. These entities, as they have appeared in the annual appropriations bill, are the Senate; House of Representatives; Joint Items; Capitol Police; Office of Compliance; Congressional Budget Office; Architect of the Capitol, including the Capitol Visitor Center; Library of Congress, including the Congressional Research Service; Government Printing Office; Government Accountability Office; and Open World Leadership Program.\nTitle II contains general administrative provisions and, from time to time, appropriations for legislative branch entities. For example, Title II of the FY2003 Act, P.L. 108-7 , contained funds for the John C. Stennis Center for Public Service Training and Development and for the Congressional Award Act.\nOn occasion the bill may contain a third title for other provisions. For example, Title III of the FY2006 legislative branch appropriations act, P.L. 109-55 , contained language providing for the continuity of representation in the House of Representatives in \"extraordinary circumstances.\"", "Prior to enactment of the FY2003 bill, and effective in FY1978, the legislative branch appropriations bill was structured differently. Title I, Congressional Operations, contained budget authority for activities directly serving Congress. Included in this title were the budgets of the Senate; House of Representatives; Joint Items; Office of Compliance; Congressional Budget Office; Architect of the Capitol, except funds for Library of Congress buildings and grounds; Congressional Research Service, within the Library of Congress; and congressional printing and binding activities of the Government Printing Office.\nTitle II, Related Agencies, contained budget authority for activities considered by the Committee on Appropriations not directly supporting Congress, including those for the Botanic Garden; Library of Congress (except the Congressional Research Service, which was funded in Title I); Library of Congress buildings and grounds maintained by the Architect of the Capitol; Government Printing Office (except congressional printing and binding costs, which were funded in Title I); and Government Accountability Office, formerly named the General Accounting Office. Occasionally, from FY1978 through FY2002, the annual legislative appropriations bill contained additional titles for such purposes as capital improvements and special one-time functions.", "In addition to activities funded in the annual legislative branch appropriations bill, funds are contained in the legislative branch section of the U.S. Budget for other programs and entities. These include permanent budget authority for both federal funds and trust funds and for non-legislative entities.\nPermanent federal funds and permanent trust funds are available as the result of previously enacted legislation and do not require annual action. Permanent federal funds and trust funds are included in the U.S. Budget, prepared by the Office of Management and Budget. The U.S. Budget also contains non-legislative entities within the legislative branch budget. They are funded in other appropriation bills, but are counted as legislative branch funds by the Office of Management and Budget for bookkeeping purposes.\nFor another picture of the legislative branch budget, the total legislative branch request of $4.8 billion in the FY2008 U.S. Budget must be adjusted. When reflecting only items contained in the annual legislative branch appropriation bill, the funding request for the legislative branch is $4.3 billion.", "Prior to the 109 th Congress, the legislative branch appropriations bill was handled by the House Subcommittee on Legislative Branch, Committee on Appropriations. Under a House Appropriations Committee reorganization plan released on February 9, 2005, the subcommittee was abolished and its jurisdiction assumed by the full Appropriations Committee. Although changes were made in the structure of the Senate Committee on Appropriations, announced in March 2005, the Subcommittee on Legislative Branch was retained. Under a reorganization plan announced by the House Appropriations Committee on January 4, 2007, the House Subcommittee on Legislative Branch was reestablished for the 110 th Congress.", "", "", "The FY2008 U.S. Budget contained a request for $4.3 billion in new budget authority for legislative branch activities, an increase of 14% from FY2007 levels. A substantial portion of the increase requested by legislative branch entities is to meet (1) mandatory expenses, which include funding for annual salary adjustments required by law and related personnel expenses, such as increased government contributions to retirement based on increased pay, and (2) expenses related to increases in the costs of goods and services due to inflation. Amendments to the request were transmitted to Congress by the President on June 8, 2007.", "As required by law, both houses are considering separate 302(b) budget allocations for legislative branch discretionary and mandatory funds in FY2008. The House has allocated $4.150 billion in total budget authority for the legislative branch, and the Senate allocation is $4.177 billion.", "The House Subcommittee on Legislative Branch held budget hearings on March 1 for the Architect of the Capitol, on March 8 for the U.S. Capitol Police, on March 22 for the Library of Congress and the Open World Leadership Program, on March 27 for the Government Printing Office, on March 29 for the House of Representatives, on April 19 for the Government Accountability Office, and on April 26 for the Office of Compliance and Congressional Budget Office. Public witnesses were heard from on May 1. The subcommittee also held additional hearings during these months to conduct oversight and discuss long-range planning requirements and challenges.\nThe Senate Subcommittee on Legislative Branch held hearings on the FY2008 budget requests on March 2 for the Architect of the Capitol; on March 16 for the Government Accountability Office, the Government Printing Office, the Congressional Budget Office, and the Office of Compliance; on March 30 for the Office of the Senate Sergeant at Arms and Doorkeeper and the U.S. Capitol Police; and on May 3 for the Secretary of the Senate and the Library of Congress.", "The House Subcommittee on Legislative Branch held a markup on the FY2008 bill on June 6, and the full committee marked up and reported the FY2008 bill on June 12. Major issues considered at both markups included efforts to rename the Great Hall of the Capitol Visitor Center \"Emancipation Hall,\" the future of the Open World Leadership Program, and the use of funds to renovate an FDA building proposed for use as swing space for House offices. The House Committee on Appropriations issued its report ( H.Rept. 110-198 ) on June 19, 2007.", "On June 22, the House passed H.R. 2771 by a vote of 216-176 (Roll call #548). Floor consideration followed adoption of the rule on the bill, H.Res. 502 ( H.Rept. 110-201 ), earlier that day by a vote of 222-179 (Roll call #544). The rule waived all points of order against the bill and made in order only those amendments specified in the committee report, which included\nan amendment to be offered by Representative Jane Harman of California preventing the funds made available in the act from being used to purchase light bulbs unless the light bulbs have an \"energy star\" or \"Federal Energy Management Program\" designation, an amendment to be offered by Representative Jeff Flake of Arizona reducing the amount available for the Government Printing Office (GPO) Congressional Printing and Binding account by $3.2 million, and an amendment to be offered by Representative Jim Jordan of Ohio requiring an across-the-board reduction of 4% for funds appropriated in this act.\nDuring floor consideration of the bill on June 22, the first amendment was agreed to, although some Members expressed concerns about adapting this provision to account for the historical lighting in the Capitol Complex.\nThe second amendment, which reduced the House committee's recommended appropriation for the Government Printing Office by $3.2 million, was agreed to with a roll call vote of 218-191. Supporters argued that this amendment would reduce the number of copies of the Congressional Record printed for Congress each day, while opponents argued this would add to the GPO budgetary shortfall and that any reduction in copies should be achieved through the authorizing committee.\nThe House voted against the third amendment in a roll call vote of 177-231.", "The Senate Appropriations Committee marked up and reported its version of the legislative branch appropriations bill on June 21. Senator Mary Landrieu of Louisiana, chairman of the Subcommittee on the Legislative Branch during the 110 th Congress, noted that the committee's bill would provide nearly $2.8 billion in new budget authority (not including House items), a 5% increase ($138.65 million) over the FY2007 budget and $289 million below agency requests.\nBoth Senator Landrieu and Senator Wayne Allard of Colorado, the ranking minority member of the Subcommittee on the Legislative Branch, voiced their concern over using this bill to change the name of the main hall of the Capitol Visitor Center, as proposed by the House, and noted that the Senate version of the bill contains language to effectuate the merger between the U.S. Capitol Police and the Library of Congress Police.\nNo amendments were considered, and the committee voted 29-0 to report the bill. Senator Landrieu reported an original measure ( S. 1686 ) to the Senate on June 25, with a report ( S.Rept. 110-89 ).", "While the House and Senate Appropriations Committees were considering requests for FY2008, Congress also considered bills providing supplemental appropriations for FY2007. H.R. 1591 was reported as an original measure by the House Appropriations Committee on March 20, 2007. S. 965 was introduced as an original measure by the Senate Appropriations Committee on March 22, 2007.\nThe House passed its bill on March 23 by a vote of 218-212. The Senate then called up the House-passed bill, inserted the text of the Senate Appropriations Committee version of the bill, amended it, and passed it March 29 by a vote of 51-47. As agreed to by the House and Senate, the legislative branch chapters of the bill included $6.4 million in new budget authority for the House of Representatives for business continuity and disaster recovery, an additional $374,000 for the Government Accountability Office, a gratuity payment to the widow of a deceased Member, and $50 million for Capitol Power Plant repairs. The President vetoed H.R. 1591 on May 1, 2007. A veto override attempt in the House failed on a 222-203 vote.\nA new supplemental appropriations measure, H.R. 2206 , was introduced in the House on May 8. The House passed the bill two days later by a roll-call vote of 221—205. The Senate amended and passed the measure with an amendment by voice vote on May 17, 2007. After the House and Senate resolved their differences through amendments between the houses, the bill was signed into law by the President on May 25, 2007. In addition to the appropriations proposed in H.R. 1591 , as passed by both chambers, P.L. 110-28 contained $10 million for a radio modernization program for the U.S. Capitol Police. The measure provided two gratuity payments for the surviving spouses of two Representatives. The measure also established within the Office of the Architect of the Capitol the position of Chief Executive Officer for Visitor Services. The official, who will be appointed by the Architect and compensated at the rate of the Chief Operating Officer of the Office of the Architect, will be responsible for the operation and management of the Capitol Visitor Center.", "", "", "The Consolidated Appropriations Act, 2008 provides $281 million for the Capitol Police, an increase of 5.8% over the $265.6 million (including supplemental appropriations) provided in FY2007. It is 6.4% less than the $299.07 million requested for FY2008. The House bill, as passed on June 22, would have provided $286 million for the U.S. Capitol Police (USCP). The House proposal was $20.4 million (7.7%) more than the FY2007 level. The Senate bill, as reported by the Committee on Appropriations, would have provided $284 million in new budget authority, an increase of nearly 7% over FY2007 funds.\nAppropriations for the police are contained in two accounts—a salaries account and a general expenses account. The salaries account contains funds for the salaries of employees, including overtime; hazardous duty pay differential; and government contributions for employee health, retirement, Social Security, professional liability insurance, and other benefit programs. The general expenses account contains funds for expenses of vehicles; communications equipment; security equipment and its installation; dignitary protection; intelligence analysis; hazardous material response; uniforms; weapons; training programs; medical, forensic, and communications services; travel; relocation of instructors for the Federal Law Enforcement Training Center; and other administrative and technical support, among other expenses. A second appropriation relating to the Capitol Police appears within the Architect of the Capitol account for Capitol Police buildings and grounds.\nThe Consolidated Appropriations Act provides $232.2 million for salaries and $48.8 million for general expenses. The total for salaries is $7.7 million more than the $224.5 million provided in the House-passed bill ( H.R. 2771 ) and $6.3 million more than the $225.9 million recommended by the Senate Committee on Appropriations ( S. 1686 ). The new budget authority for general expenses is $12.7 million less than the figure from the House bill and $9.3 million less than the Senate committee recommendation.\nThe Capitol Police request would have allowed for an additional 30 civilian FTEs (full-time equivalent employees), increasing the civilian level to 444 FTEs and the total department FTE level to 2,125. The House Appropriations Committee, in its report, stated that its recommendation supports a total of 1,681 sworn and 439 civilian FTEs. The Senate report stated that the level recommended by the Senate Appropriations Committee would support the \"current sworn staffing of 1,681 officers, and 10 new officers associated with Library of Congress police attrition\" and \"new positions in financial management, security service, information system and facilities management.\" The statement issued by Chairman Obey and inserted into the Congressional Record states that the funding provided in the Consolidated Appropriations Act supports 1,702 sworn personnel and 391 civilian personnel.", "Both the House and Senate reports reference the merger of the U.S. Capitol Police and Library of Congress Police, an issue which was addressed in hearings in both chambers during consideration of the FY2008 bill. Language requiring the merger was contained in the FY2003 Consolidated Appropriations Resolution. A separate bill implementing the merger, H.R. 3690 , was introduced in the House on September 27, 2007. The House Administration Committee held a markup and ordered the bill reported on November 7, 2007. The House passed the bill on December 5, 2007, and the Senate passed the bill with an amendment on December 17, 2007. The House agreed to the Senate amendment the following day with a vote of 413-0. The legislation became P.L. 110-178 on January 7, 2008. The FY2008 Consolidated Appropriations Act also contained language requiring the merger.", "The AOC is responsible for the maintenance, operation, development, and preservation of the United States Capitol Complex, which includes the Capitol and its grounds, House and Senate office buildings, Library of Congress buildings and grounds, Capitol Power Plant, Botanic Garden, Capitol Visitors Center, and Capitol Police buildings and grounds. The Architect is responsible for the Supreme Court buildings and grounds, but appropriations for their expenses are not contained in the legislative branch appropriations bill.", "Operations of the Architect are funded in the following ten accounts: general administration, Capitol building, Capitol grounds, Senate office buildings, House office buildings, Capitol power plant, Library buildings and grounds, Capitol Police buildings and grounds, Capitol Visitor Center, and Botanic Garden.\nThe FY2008 Consolidated Appropriations Act provides $414.3 million in new budget authority for the Architect of the Capitol. The House-passed bill ( H.R. 2771 ) would have provided $348.38 million (not including Senate items), and the Senate bill ( S. 1686 ), as reported from the Committee on Appropriations, would have provided $352.5 million (not including House items). The Architect had requested $481.7 million.", "The Architect's FY2008 budget request included $20.0 million for the CVC project. An additional $13.9 million was requested for Capitol Visitor Center operational costs. The requested funding was addressed in both House and Senate hearings this year. Some of the questions posed by Members of the legislative branch subcommittees have related to the final cost of the project, its estimated completion and occupancy date, and the center's daily administration after it is opened to the public. The FY2008 Consolidated Appropriations Act provides $20.2 million for the CVC project and $8.5 million for operational costs.", "The condition of the Capitol Power Plant utility tunnels, and the funds necessary to repair them, have been of interest to appropriators during the FY2006, FY2007, and FY2008 appropriations cycles. The funding for repairs follows a complaint issued February 28, 2006, by the Office of Compliance regarding health and safety violations in the tunnels. The Office of Compliance had previously issued a citation due to the condition of the tunnels on December 7, 2000. On November 16, 2006, the Government Accountability Office (GAO) wrote a letter to the Chair and Ranking Minority Members of the Senate Committee on Appropriations, Subcommittee on the Legislative Branch, and the House Committee on Appropriations, examining the conditions of the tunnels, plans for improving conditions, and efforts to address workers' concerns. Potential hazards identified by the Office of Compliance and GAO include excessive heat, asbestos, falling concrete, lack of adequate egress, and insufficient communication systems. In May 2007, the Architect of the Capitol and the Office of Compliance announced a settlement agreement for the complaint and citations.\nSteps necessary to remedy the situation, as well as the actions and roles of the Architect of the Capitol and the Office of Compliance, have been discussed at multiple hearings of the House and Senate Appropriations Committees in 2006 and 2007. Other committees have also expressed concern about the utility tunnels and allegations of unsafe working conditions. For example, the Senate Committee on Health, Education, Labor and Pensions, Subcommittee on Employment and Workplace Safety, heard testimony on tunnel safety during a March 1, 2007, hearing on the effects of asbestos.\nFollowing the complaint by the Office of Compliance, Congress provided $27.6 million in FY2006 emergency supplemental appropriations to the Architect of the Capitol for Capitol Power Plant repairs, and an additional $50 million was provided in emergency supplemental appropriations for FY2007. The Architect of the Capitol had requested $24.77 million for FY2008. This request, which was submitted prior to the provision of funds in the May 2007 emergency supplemental appropriations act, was not supported by either the House or Senate Appropriations Committee.", "The FY2008 Consolidated Appropriations Act contains language establishing a statutory Office of the Inspector General for the Architect of the Capitol. Both the House-passed and the Senate-reported bills had included provisions establishing this position.\nThe House-passed bill also included language designating the main hall of the CVC \"Emancipation Hall.\" Separate legislation changing the name was introduced in the Senate (S. 1679) on June 21, 2007, and in the House ( H.R. 3315 ) on August 2, 2007. The Subcommittee on Economic Development, Public Buildings and Emergency Management of the House Committee on Transportation and Infrastructure held a hearing on the House bill on September 25, 2007. The bill was reported by the committee, before being considered in the House under suspension of the rules, where it was agreed to by a vote of 398-6 on November 13, 2007. The Senate passed its bill renaming the space by unanimous consent on November 15, 2007. H.R. 3315 passed the Senate on December 6 and became P.L. 110-139 on December 18, 2007.", "", "The FY2008 Consolidated Appropriations Act provides $1.183 billion for the internal operations of the House. The House requested $1.24 billion, an increase of 8.5% from the FY2007 level, and the House-passed bill would have provided $1.199 billion in new budget authority.", "Funding for House committees—for which $162.4 million was provided in the Consolidated Appropriations Act—is contained in the appropriation heading \"committee employees,\" which comprises two subheadings. This level is $5.6 million more than the $156.8 million requested, and $0.4 million less than $162.8 million agreed to by the House in H.R. 2771.\nThe first subheading contains funds for personnel and nonpersonnel expenses of House committees, except the Appropriations Committee, as authorized by the House in a committee expense resolution. The FY2008 request of $129.7 million, an increase of 4.2%, included funds for investigations. The House-passed bill would have provided $133 million in new budget authority for this subheading. The Consolidated Appropriations Act provides $132.7 million.\nThe second subheading contains funds for the personnel and nonpersonnel expenses of the Committee on Appropriations, for which $27.1 million was requested, a 4.8% increase. The House-passed bill would have provided $29.8 million in new budget authority. The Consolidated Appropriations Act provides $29.7 million in new budget authority.", "The Members' Representational Allowance (MRA) is available to support Members in their official and representational duties. It provides for personnel, official office expenses, and official (franked) mail. A total of $610.6 million, an increase of 10% over the $554.7 million provided in FY2007, was requested for the overall MRA heading. The House-passed bill would have provided $581 million (an increase of 4.7%). The Consolidated Appropriations Act provides $579.5 million (an increase of nearly 4.5%) for the MRA.", "", "The Consolidated Appropriations Act provides $831.8 million for the Senate's internal operations, an increase of 3.5% over the prior year funding level. The Senate had requested $893.3 million, an increase of 11%.", "Appropriations for Senate committees are contained in two accounts:\nthe inquiries and investigations account , contains funds for all Senate committees except Appropriations. $138.6 million was requested (a 14.9% increase). The Senate Appropriations Committee recommended $129 million, which was subsequently included in the Consolidated Appropriations Act (a 6.9% increase); and the Committee on Appropriations account, for which $14.9 million was requested (an increase of 7.5%) and $14.6 million was recommended by the Senate Appropriations Committee (an increase of 5.2%). The Consolidated Appropriations Act provides $14.2 million (an increase of 2%).", "The Senators' Official Personnel and Office Expense Account provides each Senator with funds to administer an office. It is comprised of an administrative and clerical assistance allowance, a legislative assistance allowance, and an official office expense allowance. The funds may be interchanged by the Senator, subject to limitations on official mail. A total of $396.1 million was requested for this account (an increase of 8.4% over FY2007 funds), with $379.1 million recommended by the Senate Appropriations Committee (an increase of 3.7%). The Consolidated Appropriations Act provides $373.6 million (an increase of 2.2%).", "", "CBO is a nonpartisan congressional agency created to provide objective economic and budgetary analyses required by law and by members of the House and Senate Committees on Budget and Committees on Appropriations, House Committee on Ways and Means, and other committees, and by Members of Congress.\nThe Consolidated Appropriations Act provides $37.3 million for the Congressional Budget Office, an increase of $2.1 million (nearly 6%) over its FY2007 funding. CBO requested $37.97 million, an increase of $2.8 million (7.9%) over its FY2007 funding, most of which would meet mandatory pay and related costs. The House-passed bill contained $37.8 million, and the Senate Appropriations Committee recommended $38.5 million.", "CBO Director Peter R. Orszag testified before the House legislative branch subcommittee that personnel expenses account for approximately 91% of CBO's budget. He indicated his desire to expand CBO's capacity in the area of health economics. Subsequently, the House Appropriations Committee, in its report, stated that its recommended funding would provide for one additional full-time equivalent employee (FTE) in this area; and the Senate report stated that the committee had \"included $538,000 for CBO to expand its ability to assist the Congress in identifying and analyzing potential ways to address projected growth in health care spending.\"", "The Library of Congress provides research support for Congress through a wide range of services, from research on public policy issues to general information. Among its major programs are acquisitions, preservation, legal research for Congress and other federal entities, administration of U.S. copyright laws by the Copyright Office, research and analyses of policy issues by the Congressional Research Service, and administration of a national program to provide reading material to the blind and physically handicapped. The Library also maintains a number of collections and provides a range of services to libraries in the United States and abroad.\nThe FY2008 Consolidated Appropriations Act provides $562.5 million for the Library of Congress. The House-passed bill contained $572.5 million in new budget authority, and the Senate-reported bill proposed $576.9 million. These figures do not include additional authority to spend receipts.\nThe Library had requested (1) a net appropriation of $661.6 million, and (2) authority to use $41.7 million in funds generated from Library receipts. Most of the increase, $45.9 million, was requested to meet mandatory pay and price level increases to maintain current services. Also included in the request was $28.1 million in program increases. The requested funding would support a staff level of 4,244 FTEs, a net decrease of 58 FTEs from the FY2007 level of 4,302.\nFY2008 new budget authorities for the Library's accounts are\nsalaries and expenses—The Consolidated Appropriations Act provides $388.5 million. The House-passed bill would have provided $394.65 million, while $401.5 million was contained in the Senate-reported bill. $461.1 million was requested. These totals do not include authority to spend $6.35 million in receipts; Copyright Office—The Consolidated Appropriations Act provides $5.3 million (not including authority to spend $44.2 million in receipts). The House-passed bill would have provided $5.6 million (not including authority to spend $44.2 million in receipts), while $4.9 million was contained in the Senate-reported bill (not including authority to spend $45.2 million in receipts). $16.2 million was requested (not including authority to spend $35.4 million in receipts); Congressional Research Service—The Consolidated Appropriations Act provides $102.3 million. The House-passed bill would have provided $104.5 million, while $102.9 million was contained in the Senate-reported bill. $108.7 million was requested; and Books for the Blind and Physically Handicapped—The Consolidated Appropriations Act provides $66.9 million. The House-passed and Senate reported bills that would have provided approximately $67.7 million. $75.6 million was requested.\nThe total request included $43.9 million, to be transferred to the Architect of the Capitol, for the construction of the Library of Congress Fort Meade Logistics Center. In FY2007, $54.2 million was requested, but not provided, for this project in the Architect's Library Buildings and Grounds account.\nAn additional $42.8 million was contained in the Architect's FY2008 request for Library Buildings and Grounds. The Consolidated Appropriations Act provides $27.5 million in new budget authority for Library Buildings and Grounds. The House-passed bill contained $31.6 million, and the Senate-reported bill recommended $28.06 million.", "The Library's concern over the rescission of nearly $50 million in funding in the FY2007 appropriations act was discussed at both the House and Senate hearings. Both hearings also discussed funding for the Books for the Blind program and efforts to update the technology that the \"talking book\" program currently uses. The House subcommittee also discussed reasons for the inclusion of the funds for the Fort Meade Logistics Center in the Library request and not that of the Architect of the Capitol. Librarian of Congress James H. Billington expressed his desire to prioritize this project.", "CRS works exclusively for Members and committees of Congress to support their legislative and oversight functions by providing nonpartisan and confidential research and policy analysis.\nThe FY2008 Consolidated Appropriations Act provides $102.3 million for CRS. The agency's request of $108.7 million represented a 7.85%, or $7.9 million, increase over FY2007 funds, which covers only mandatory pay and related costs and price level changes. The request did not contain funds to support program growth. The House-passed bill contained $104.5 million in new budget authority and the Senate-reported bill recommended $102.89 million.", "GAO works for Congress by responding to requests for studies of federal government programs and expenditures. GAO may also initiate its own work. Formerly the General Accounting Office, the agency was renamed the Government Accountability Office effective July 7, 2004.\nThe FY2008 Consolidated Appropriations Act provides $499.7 million in new budget authority for the GAO, which had requested $522.8 million (figures do not include an additional $7.5 million from offsetting collections). The House-passed bill would have provided $503.3 million in new budget authority for GAO, an increase of 4.6% over FY2007 funding. The House Appropriations Committee, in its report, states that this amount would provide for 3,217 FTEs, an increase of 57 FTEs above the FY2007 levels. The Senate-reported bill recommended $510.3 million in new budget authority. The Senate Appropriations Committee, in its report, stated that this amount would allow for 3,221 FTEs and recommended \"$750,000 and four full-time equivalent employees to establish a permanent technology assessment function in the Government Accountability Office.\"", "The issue of GAO's possible role in providing technology assessments was addressed during Senate hearings this year. In response to a question, Comptroller General David M. Walker testified before the Senate that GAO could assume this role, formerly handled by the Office of Technology Assessment, and indicated that, in his opinion, such action would be more cost-effective than establishing a new agency. Chairman Obey's statement indicated that the Consolidated Appropriations Act includes up to $2.5 million for technology assessment studies.", "The FY2008 Consolidated Appropriations Act provides $124.7 million in new budget authority for the Government Printing Office. GPO had requested $181.98 million, or an increase of 49% over the $122.1 million made available for FY2007.\nGPO's budget authority is contained in three accounts: (1) congressional printing and binding, (2) Office of Superintendent of Documents (salaries and expenses), and (3) the revolving fund. FY2008 requests for these accounts are\ncongressional printing and binding—The Consolidated Appropriations Act provides $89.8 million. Previously, the House Appropriations Committee had recommended $87.89 million, which was reduced by $3.2 million through an amendment adopted on the Houses floor. The Senate Appropriations Committee recommended $95.37. $109.5 million was requested; Office of Superintendent of Documents (salaries and expenses)—The Consolidated Appropriations Act provides $34.9 million. The House-passed bill would have provided $35.4 million, while $38.2 million was included in the Senate-reported bill. $45.6 million was requested; and revolving fund—The Consolidated Appropriations Act provides no additional funding for the revolving fund. The House-passed bill would have provided $2.45 million, while $5 million was recommended by the Senate Appropriations Committee. $26.8 million was requested.\nThe congressional printing and binding account pays for expenses of printing and binding required for congressional use, and for statutorily authorized printing, binding, and distribution of government publications for specified recipients at no charge. Included within these publications are the Congressional Record ; Congressional Directory ; Senate and House Journals; memorial addresses of Members; nominations; U.S. Code and supplements; serial sets; publications printed without a document or report number, for example, laws and treaties; envelopes provided to Members of Congress for the mailing of documents; House and Senate business and committee calendars; bills, resolutions, and amendments; committee reports and prints; committee hearings; and other documents.\nThe Office of Superintendent of Documents account funds the mailing of government documents for Members of Congress and federal agencies, as statutorily authorized; the compilation of catalogs and indexes of government publications; and the cataloging, indexing, and distribution of government publications to the Federal Depository and International Exchange libraries, and to other individuals and entities, as authorized by law.\nGPO requested $26.8 million for its revolving fund to support the agency's acquisition of information technology infrastructure and security enhancements, workforce retraining and restructuring efforts, and facilities maintenance and repairs. This is an increase of $25.8 million over the $1 million provided in FY2007. Of the requested amount, $10.5 million was proposed for the completion of the development of GPO's Future Digital System, while $9.4 million would cover the replacement of a 30-year-old automated composition system. The House committee report stated that the recommended level of $2.45 million would provide funds for elevator repairs, the GPO fire alarm systems, and workforce retraining. The Senate committee report stated that the recommended level of $5 million would support \"Release 2 of the 'Future Digital System' [FDSys].\" The Consolidated Appropriations Act did not provide funding for the revolving fund.", "The House Committee on Appropriations, in its report, expressed its concern about possible security lapses at the GPO facilities and required a report on security staffing plans. Language in the Consolidated Appropriations Act requires GPO police officers, and not contracted security services, to be responsible for security at the D.C. passport facility.", "Acting Public Printer William H. Turri, in his written testimony, discussed recent efforts to transform GPO's operations for the digital age.", "", "The Office of Compliance is an independent and nonpartisan agency within the legislative branch. It was established to administer and enforce the Congressional Accountability Act, which was enacted in 1995. The act applies business and federal government employment and workplace safety laws to Congress and certain legislative branch entities.\nThe FY2008 Consolidated Appropriations Act provides $3.3 million for the Office of Compliance, an increase of 6.5% over the $3.1 million made available in FY2007. The act also contained language authorizing an increase in the compensation for members of the board of directors and officers of the Office of Compliance. The House-passed bill ( H.R. 2771 ) would have provided $3.8 million, an increase of nearly 23%. The Senate-reported bill ( S. 1686 ) also recommended $3.8 million in new budget authority.\nThe Office of Compliance had requested $4.1 million. In her prepared testimony, Tamara E. Chrisler, the acting executive director, stated that $280,000 of the requested increase was related to the office's required monitoring of asbestos abatement in the Capitol Power Plant utility tunnels.\nThe House bill contained a provision requiring legislative agencies to reimburse the Treasury, from existing funds, for the payment of an award or settlement under the Congressional Accountability Act. Since the passage of the act in 1995, \"only funds which are appropriated to an account of the Office in the Treasury of the United States for the payment of awards and settlements may be used for the payment of awards and settlements.\" In response to a question for the record posed during the House Appropriations Committee hearing on the budget request of the Office of Compliance, the Office provided a list of amounts paid on behalf of each legislative branch agency from this account since FY1997, and indicated that the total equals slightly less than $7.5 million. In its report, the House Appropriations Committee stated its belief that the administrative provision would \"enhance accountability, encourage issues to be solved at a lower level, encourage work place fairness, and require periodic training of managers regarding their responsibility under the Congressional Accountability Act.\" The Senate-reported bill did not contain this provision.\nThe Senate-reported bill included language that would have permitted an employee of the Office of Compliance to be appointed to the positions of Executive Director or General Counsel and would have authorized an increase in the statutory pay cap for these positions. Under the law creating the office, these positions can not be held by most individuals who have held positions within the legislative branch during the previous four years. The original language would have precluded certain promotions from within the office, for example, from deputy executive director to executive director. In a statement, the office's Board of Directors indicated that \"since the Board could be actively contemplating such a promotion, we have an immediate interest in changing the prohibitive section of the CAA.\" Support of the Board for language permitting internal promotions was voiced at the Senate budget request hearing on March 16, 2007, by Barbara Camens, who represented the Board. Separate legislation permitting individuals who have served as employees of the Office of Compliance to serve in appointed positions in the office was introduced in the House on September 18, 2007. The House agreed to that bill, H.R. 3571 , by voice vote on October 2, 2007. It passed the Senate without amendment on December 19 and became P.L. 110-164 on December 26, 2007.", "The center administers a program that supports democratic changes in other countries by giving their leaders opportunity to observe democracy and free enterprise in the United States. The first program was authorized by Congress in 1999 to support the relationship between Russia and the United States. The program encouraged young federal and local Russian leaders to visit the United States and observe its government and society.\nEstablished at the Library of Congress as the Center for Russian Leadership Development in 2000, the center was renamed the Open World Leadership Center in 2003, when the program was expanded to include specified additional countries. In 2004, Congress further extended the program's eligibility to other countries designated by the center's board of trustees, subject to congressional consideration. The center is housed in the Library and receives services from the Library through an inter-agency agreement.\nFollowing discussion at both the subcommittee and full committee levels regarding the funding and location of this program, the House Appropriations Committee recommended $6 million for Open World. The committee report stated that an additional $6 million would be provided for transfer to the program in the FY2008 State, Foreign Operations, and Related Programs appropriation. The House-passed bill, which retained the committee-recommended funding level, also contained an administrative provision transferring the Open World Leadership Center to the Department of State effective October 1, 2008.\nThe Senate-reported bill had provided $13.5 million in new budget authority for Open World.\nThe FY2008 Consolidated Appropriations Act provides $8.98 million for Open World. The act also requires the center to examine options for transfer to the executive branch and report its findings to the House and Senate Committees on Appropriations not later than March 31, 2008.\nOpen World had requested $14.4 million for FY2008. The request was equal to the amount requested in FY2007 and would have represented an increase of 3.9% from the $13.86 million provided in FY2007 and FY2006.", "The center was created by Congress in 1988 to encourage public service by congressional staff through training and development programs. The FY2008 Consolidated Appropriations Act provides $429,000 for the center. The House-passed bill and the Senate-reported bill both had provided $430,000 for the center, which is equal to the FY2008 request and the same as provided in FY2007.", "", "CRS Report RL33379, Legislative Branch: FY2007 Appropriations , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL32819, Legislative Branch: FY2006 Appropriations , by [author name scrubbed].", "These sites contain information on the FY2007 and FY2008 legislative branch appropriations requests and legislation, and the appropriations process.\nHouse Committee on Appropriations http://appropriations.house.gov/\nSenate Committee on Appropriations http://appropriations.senate.gov/\nCRS Appropriations Products Guide http://www.crs.gov/products/appropriations/apppage.shtml\nCongressional Budget Office http://www.cbo.gov\nGovernment Accountability Office http://www.gao.gov\nOffice of Management & Budget http://www.whitehouse.gov/omb/" ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 3, 3, 3, 3, 3, 3, 2, 1, 2, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "", "", "", "", "h2_title h1_title", "h2_title h1_title", "h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How was funding for the legislative branch provided at the end of 2007?", "How did the first measure provide funding?", "How did additional measures provide subsequent funding?", "How was the FY2008 appropriations bill introduced?", "How did the bill appropriate funds?", "How does this appropriation amount compare to the previous year?", "How was the FY2008 appropriations bill brought to the Senate?", "How would the bill have appropriated funds?", "How does this appropriation amount compare to the previous year?" ], "summary": [ "From beginning of the fiscal year on October 1, 2007, until the enactment of the Consolidated Appropriations Act on December 26, 2007, funding for the legislative branch was provided through a series of interim continuing appropriations measures.", "The first, which was signed by President Bush on September 29, 2007, provided funding at FY2007 levels through November 16, 2007.", "Three additional continuing appropriations measures were enacted on November 13, December 14, and December 21, 2007.", "Legislative branch entities requested $4.3 billion in new budget authority for FY2008. The House version of the FY2008 Legislative Branch Appropriations Bill, H.R. 2771, was introduced on June 19, 2007.", "The bill proposed $3.1 billion in new budget authority for the legislative branch for FY2008, not including Senate items.", "This amount reflects a 4.1% increase over the $2.98 billion (including the FY2007 supplemental but not including Senate items) approved by Congress for FY2007 and less than the 13% increase requested.", "The Senate version of the FY2008 Legislative Branch Appropriations Bill, S. 1686, was reported to the Senate on June 25, 2007.", "The bill would have provided approximately $2.78 billion in new budget authority, not including House items.", "This amount reflects an increase of 5.2% over the nearly $2.65 billion (including the FY2007 supplemental but not including House items) approved by Congress for FY2007 and less than the 16% increase requested." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, -1, 0, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2 ] }
CRS_R43413	{ "title": [ "", "Introduction", "Estimating the Costs of Government Interventions", "Troubled Asset Relief Program", "Capital Purchase Program and Capital Assistance Program", "Community Development Capital Initiative", "Public Private Investment Program", "Legacy Securities Program", "Section 7(a) Securities Purchase Program", "U.S. Automaker Assistance25", "", "Federal Reserve", "Term Auction Facility", "Term Securities Lending Facility", "Primary Dealer Credit Facility", "Commercial Paper Funding Facility and Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility", "Bear Stearns", "Federal Deposit Insurance Corporation", "Temporary Liquidity Guarantee Program", "U.S. Department of the Treasury", "Money Market Mutual Fund Guarantee Program", "Joint Interventions", "Term Asset-Backed Securities Loan Facility", "American International Group", "Government-Sponsored Enterprises61", "Citigroup", "", "Bank of America", "Conclusion", "Appendix. Historical Financial Interventions" ], "paragraphs": [ "", "In August 2007, asset-backed securities (ABS), particularly those backed by subprime mortgages, suddenly became illiquid and fell sharply in value as an unprecedented housing boom turned into a housing bust. Losses on the many ABS held by financial firms depleted their capital. Uncertainty about future losses on illiquid and complex assets led to firms having reduced access, sometimes catastrophically, to the private liquidity necessary to fund day-to-day activities.\nIn September 2008, the crisis reached panic proportions. Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) that supported a large proportion of the mortgage market, were taken into government conservatorship. Lehman Brothers, a major investment bank, declared bankruptcy. The government acquired most of the equity in American International Group (AIG), one of the world's largest insurers, in exchange for an emergency loan from the Federal Reserve (Fed). These firms were seen by many, either at the time or in hindsight, as \"too big to fail\" firms whose failure would lead to contagion that would cause financial problems for counterparties or would disrupt the smooth functioning of markets in which the firms operated. One example of such contagion was the failure of a large money market fund holding Lehman Brothers debt that caused a run on many similar funds, including several whose assets were sound.\nThe federal government took a number of extraordinary steps to address widespread disruption to the functioning of financial markets. Initially, the government approach was largely an ad hoc one, attempting to address the problems at individual institutions on a case-by-case basis. The panic in September 2008 convinced policymakers that a larger and more systemic approach was needed, and Congress passed the Emergency Economic Stabilization Act (EESA) to create the Troubled Asset Relief Program (TARP) in October 2008. In addition to TARP, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) implemented broad lending and guaranty programs. Because the crisis had so many causes and symptoms, the response tackled a number of disparate problems, and can be broadly categorized into programs that\nincreased institutions' liquidity (access to cash and easily tradable assets), such as direct lending facilities by the Federal Reserve or the FDIC's Temporary Liquidity Guarantee Program (TLGP); provided financial institutions with equity to rebuild their capital following asset write-downs, such as the Capital Purchase Program (CPP); purchased illiquid assets from financial institutions in order to restore confidence in their balance sheets in the eyes of investors, creditors, and counterparties, such as the Public-Private Partnership Investment Program (PPIP); intervened in specific financial markets that had ceased to function smoothly, such as the Commercial Paper Funding Facility (CPFF) and the Term Asset-Backed Securities Lending Facility (TALF); used public funds to prevent the failure of troubled institutions that were deemed by some \"too big to fail\" (TBTF) because of their systemic importance, such as AIG, Fannie Mae, and Freddie Mac.\nOne possible schematic for categorizing the programs discussed in this report into these categories is presented in Table 1 .\nThese programs all stopped extending credit years ago, soon after financial conditions normalized, and most have been wound down. A few still have legacy principal outstanding that has not yet been repaid, however.\nAlthough many arguments could be made for one particular form of intervention or another, the position could also be taken that the form of government support was not particularly important as long as it was done quickly and forcefully because what the financial system lacked in October 2008 was confidence, and any of several options might have restored confidence if it were credible. Some critics dispute that view, arguing that the panic eventually would have ended without government intervention, and that some specific government missteps exacerbated the panic.\nCongress exercises oversight responsibilities for the government's crisis response, through existing oversight committees and newly created entities such as a Special Inspector General for the TARP (SIGTARP), a Congressional Oversight Panel, and a Financial Crisis Inquiry Commission. The Congressional Budget Office (CBO) and the Government Accountability Office (GAO) were also tasked by statute with reporting on various aspects of the crisis response.\nThis report reviews the costs of new programs introduced, and other actions taken, by the Treasury, Fed, and FDIC. Figure 1 presents the programs discussed in this report by organization, with programs in the overlapping circles denoting joint programs. It does not cover long-standing programs, such as the Fed's discount window, mortgages guaranteed and securitized by the Federal Housing Administration (FHA) and Ginnie Mae, respectively, or FDIC deposit insurance and receivership of failed banks.", "The primary goal of the various interventions was to end financial panic and restore normalcy to financial markets. In this sense, the programs were arguably a success—based on traditional measures of market turbulence, such as the \"TED Spread\" (the difference between the 3-month LIBOR [London Interbank Offer Rate] and the 3-month Treasury rates), overall financial conditions significantly improved in late 2008 and returned to precrisis levels by mid-2009, although some specific markets took longer to rebound. The goal of intervening at zero cost to the taxpayers was never the best measure of success because nonintervention would likely have led to a much more costly loss of economic output that indirectly would have worsened the government's finances. Further, the goal of maximizing return (or minimizing risk) to the government could work at odds with other policy goals, such as restoring investor confidence in the programs' recipients and encouraging voluntary participation in the government programs. Nevertheless, an important part of evaluating the government's actions is evaluating whether financial normalcy was restored at a minimum cost to the taxpayers.\nOne can distinguish in the abstract between funds provided to solvent companies and those provided to insolvent companies. For insolvent firms with negative net worth at the time of intervention, the government's chances of fully recouping losses are low. For solvent firms, it should be possible, in principle, to provide funds at a low ultimate cost, or even profit, to the taxpayers. In a panic, investors typically refuse to provide funds to firms because they are unable to distinguish between healthy and unhealthy firms, and so they err on the side of caution. For those private investors who perceive profitable opportunities to lend or invest, not enough liquidity may be available to do so. In this situation, the government can theoretically provide those funds to healthy firms at what would normally be a profitable market rate of return. In practice, the challenge is that the government is arguably no more able to accurately distinguish between healthy firms and unhealthy firms than private individuals are, so some widely available lending facilities are likely to be accessed by firms that will ultimately prove to be insolvent, and this is a possible source of long-term cost for a widely available facility.\nAt different times, news sources put the \"potential cost to taxpayers,\" \"amount taxpayers are on the hook for,\" and \"taxpayer exposure\" as a result of the financial crisis as high as $23.7 trillion. These totals were reached by calculating the maximum potential size of programs or using the total size of markets being assisted when the programs have no announced potential size, and by further ignoring that at least some of the money that the government outlaid would eventually be paid back. Even official estimates that accounted for expected future repayment initially projected large losses. For example, in March 2009, CBO projected that the government would ultimately pay a subsidy of $356 billion on TARP funds.\nActual financial results were quite different from these headlines and from the more sober early estimates; unlike typical government programs, outlays in most of the programs countering the financial crisis were paid back in full with interest. Altogether, the financial crisis programs covered in this report brought back more in principal repayments and income than was paid out. The vast majority of individual programs, including all Federal Reserve facilities, have already taken in more money than was paid out by the government (see Table 2 ). Even in those programs where losses were realized on specific transactions, such as the Capital Purchase Program, income from other transactions was more than sufficient to absorb those losses and still produce a net gain for the government. Programs in Table 2 include both broadly based liquidity programs that could conceptually be structured to minimize the potential for losses, such as Fed lending facilities, and direct assistance to troubled companies, such as AIG, that were expected to generate losses.\nFour programs still have assistance outstanding. Of those four programs, three (GSE preferred shares, CPP, and GSE debt purchases) have already generated net income in excess of remaining principal outstanding (see Table 2 ). In other words, even if the value of all outstanding principal were written down to zero, these programs would still generate positive net income to the government. The GSE assistance remains outstanding because their government conservatorship, initiated in September 2008 in response to their financial difficulties, has not yet been addressed. The other program, the Treasury's Community Development Capital Initiative, may ultimately generate positive net income for the government, but to date, the net income does not exceed the outstanding principal (see Table 3 ).\nThree programs realized net losses when assistance was exhausted (see Table 4 ). Note that while two of those recipients (GM and Chrysler) failed during the financial crisis and received funding through emergency financial programs, they were not financial institutions. Thus, when limited to programs to aid the financial sector, only one program has realized losses for the government, whereas 19 have realized gains. Altogether to date, realized gains across the various programs exceed realized losses by tens of billions of dollars.\nNote that generating positive net income does not necessarily mean that these programs made an economic profit for the government. The government had to borrow, incurring interest payments, to finance these programs. For this reason, for example, $1 lent out in 2008 was worth more than $1 repaid later would be, which Tables 1 , 2 , and 3 do not account for. The government also faced significant risks at the time that money would not be fully repaid, even if it turned out after the fact that money was repaid. An economist would determine whether government programs generated economic profits by comparing the government's terms to what a private investor would require for the same investment. Making these adjustments would reduce the gains to the taxpayer shown in Table 1 , and could even show losses on certain programs—although it is fair to question what terms should be used for a hypothetical private investor in the depths of the financial crisis, when private credit markets were not functioning. CBO, which adjusts for borrowing costs and risk, estimated in March 2018 that the nonhousing programs in TARP would approximately break even. This compares to a cash accounting gain of approximately $13.4 billion. There are no up-to-date official estimates for the other programs covered in this report.\nAnother long-term, and more amorphous, cost may be an increased likelihood of future rescues due to increased private-sector risk-taking brought on by the expectation that the government will provide a rescue again. In economic terms, this is referred to as \"moral hazard,\" and the problem is particularly acute when assistance is provided to insolvent firms, at below market rates, or on similar terms to both risky and prudent firms.\nFor each program below, the Congressional Research Service (CRS) reports the latest data on government holdings or guarantees of assets or loans; the peak amount for the same measure; income earnings of the program from dividends, interest, or fees; estimates of the program's profits or losses; the dividend or interest rate charged by the program; warrants received in the transactions; subsequent modifications to the assistance (if any); and the expiration date for the program.", "Treasury reacted quickly after the enactment of EESA, announcing the TARP Capital Purchase Program on October 14, 2008; several other programs followed. Listed below are the programs that were run primarily under TARP.\nCapital Purchase Program (CPP). Unlike the plan most commonly envisioned in the TARP legislative debate, the CPP did not purchase the mortgage-backed securities that were seen as toxic to the system, but instead purchased preferred shares in banks. The resulting addition of capital, it was hoped, would allow banks to overcome the effect of the toxic assets while the assets remained on bank balance sheets. The CPP is now closed with no additional disbursements possible under the current program. Of the approximately $205 billion disbursed, $0.04 billion remains outstanding, $5.2 billion has been written off or recognized as a loss, and $27.1 billion in income has been received. Community Development Capital Initiative (CDCI ). The CDCI provided for lower dividend rates on preferred share purchases from banks that target their lending to low-income, underserved communities and small businesses. Many of the participants in the CDCI converted into the program from the CPP. This program is closed, with no additional disbursements possible under the current program. Of the $0.57 billion disbursed, $0.06 billion is still outstanding, $0.03 billion has been written off or recognized as a loss, and $0.07 billion in income has been received. Public-Private Investment Program (PPIP). This program provided funds and guarantees for purchases of mortgage-related securities from bank balance sheets. Purchases and management of the securities were done by private investors who have provided capital to invest along with the TARP funds. All of the $18.6 billion in disbursed PPIP funds have been repaid with $3.85 billion in income received and no realized losses. Section 7(a) Securities Purchase Program . This program supported the Small Business Administration's (SBA's) Section 7(a) loan program through purchases of pooled SBA guaranteed securities to increase credit availability for small businesses. It is now closed with $0.36 billion repaid out of the $0.37 billion in disbursed funds and $0.01 billion in income received. Automobile Industry Support. This program initially provided loans to support General Motors (GM) and Chrysler and later included preferred share purchases from the auto financing company GMAC (since renamed Ally Financial) and a loan for Chrysler Financial. The program ultimately resulted in majority government ownership of GM (60.8%) and GMAC/Ally Financial (74%), and minority government ownership of Chrysler (9.9%). The U.S. government's ownership stake in GM was sold to GM itself and to the public between December 2010 and December 2013. The ownership stake in Chrysler was sold to Fiat in May 2011. The government's stake in GMAC/Ally Financial was sold to the public in 2014. No outstanding amount is left of the $79.7 billion total in disbursed funds. The automobile industry support program combined resulted in $16.6 billion in recognized losses and $7.4 billion in income received. Housing Assistance Programs . These programs are unlike the other TARP programs in that they do not result in income-generating assets with resale value in return for the TARP funding and thus will not be a focus of this report. A total of $28.4 billion has been disbursed out of $33.4 billion obligated.\nAs of August 1, 2018, Treasury reported obligations under TARP totaling $450.5 billion authorized, with $440.1 billion disbursed. Of that total, $376.4 billion of funds paid out have been returned to the Treasury and $35.3 billion have been written off or recognized as lost. $0.1 billion is still outstanding. TARP was originally authorized to outlay up to $700 billion; however, this amount was reduced to $475 billion by Congress in July 2010. Authorization to take on new commitments under TARP expired on October 3, 2010; however, outlays can continue under then-existing commitments and Treasury has indefinite authority to continue to hold and manage assets acquired under TARP.\nSetting aside the housing assistance, TARP overall generated positive net income, as income received ($48.7 billion) exceeds recognized losses ($35.3 billion) and remaining outstanding funds ($0.1 billion). As noted above, this outcome was not anticipated when the legislation authorizing TARP was debated. Table 5 provides a breakdown of the overall TARP results.\nPrograms consisting solely of TARP funds are discussed immediately below, and those involving other agencies, such as the Federal Reserve and FDIC, are discussed under the heading \" Joint Interventions .\"", "Under the Capital Purchase Program (CPP), $125 billion in capital was immediately provided to the nine largest banks (which became eight after a merger), with up to another $125 billion reserved for smaller banks that might wish to apply for funds through their primary federal banking regulator. This capital was provided in the form of preferred share purchases by TARP under contracts between the Treasury and banks. The initial contracts with the largest banks prevented these banks from exiting the program for three years. The contracts included dividend payments to be made on the preferred shares outstanding and the granting of warrants to the government that give it the option of acquiring the banks' common stock at a future date. By the end of 2008, the CPP had 214 participating banks with approximately $172.5 billion in share purchases outstanding.\nThe Obama Administration and the 111 th Congress implemented changes to the CPP. EESA was amended, placing additional restrictions on participating banks in the existing CPP contracts, but also allowing for early repayment and withdrawal from the program without financial penalty. With the advent of more stringent executive compensation restrictions for TARP recipients, many banks began to repay, or attempt to repay, TARP funds. According to Treasury reports, by June 30, 2009, $70.1 billion of $203.2 billion CPP funds had been repaid; by December 31, 2009, $121.9 billion of $204.9 billion had been repaid; and by December 31, 2010, $167.93 billion of $204.9 billion had been repaid.\nThe incoming Obama Administration also announced a review of the banking system, in which the largest participants were subject to stress tests to assess the adequacy of their capital levels. Satisfactory performance in the stress test was one regulatory requirement for large firms that sought to repay TARP funds. Large firms that appeared too fragile in the stress test would be required to raise additional capital, and the firms would have the option of raising that capital privately or from the government through a new Capital Assistance Program using TARP funds. No funding was provided through the Capital Assistance Program, although GMAC, formerly General Motors' financing arm, received funding to meet stress test requirements through the Automotive Industry Financing Program (discussed below). In addition, Citigroup, one of the initial eight large banks receiving TARP funds, agreed with the government to convert its TARP preferred shares into common equity to meet stress test requirements (see discussion in \" Citigroup \" section below).\nBeginning in 2012, Treasury began selling off some of its remaining CPP shares to the public through auctions to expedite the wind down of the program. In most cases, shares were sold at a discount to face value, resulting in a realized loss for TARP. Depending on each bank's financial condition and prospects, this outcome may or may not have maximized the return to the taxpayer compared with continued government investment, but it contributed to the separate policy goal of minimizing the government's intervention in financial markets during normal conditions.\nTreasury has not generally exercised warrants to take common stock in CPP recipients. Following the contracts initially agreed upon, Treasury has allowed institutions to purchase their warrants directly upon repayment of preferred shares, as long as both sides can reach an acceptable price. To reach an initial offering price, Treasury has used complex option pricing models to price the warrants that require assumptions to be made about future prices and interest rates. Because these pricing models are by their nature uncertain, some critics urged Treasury to auction the warrants on the open market (allowing the issuing firm to bid as well) to ensure that Treasury receives a fair price for them. Open auctions have been used, but only when an agreement between the Treasury and the firms cannot be reached.\nCPP investments also earn income from dividends with a rate of 5% for the first five years and 9% thereafter. (For S-Corp banks, the dividend rate is 7.7% for the first five years and 13.8% thereafter.) Because most of the preferred shares were purchased in late 2008 or 2009, the increase in dividend rates has already occurred for the small amount of outstanding shares.\nCPP gains stem from dividend payments and warrants received from recipients, and capital gains in limited cases when shares are sold for more than face value (typically, when banks exit TARP, they repurchase CPP shares at par value). Losses stem from the institution's failure, restructuring of the investment in an attempt to avoid failure, or sales of CPP shares to the public at less than par value.\nRealized losses to date on the CPP preferred shares have been relatively small. As of August 1, 2018, Treasury reported $5.2 billion in write-offs and realized losses from the CPP. The largest portion of this amount was due to the failure of CIT Group, which had $2.3 billion in TARP shares outstanding when it failed.\nThe four banks remaining in the CPP are all small, and the government's remaining holdings of CPP shares ($0.04 billion as of August 1, 2018) are a small fraction of its original holdings. To date, income in the form of dividend payments, capital gains, and warrant proceeds ($27.1 billion) has exceeded losses ($4.7 billion), to the extent that even if the value of all remaining outstanding funds were written down to zero, the program would yield positive cash flow on net. Of the $27.1 billion in total income, $6.9 billion comes from gains on Citigroup stock alone (see the \" Citigroup \" section below). Table 6 summarizes the CPP, including current and peak asset holdings, losses or gains, and conditions of the program.", "The Community Development Capital Initiative (CDCI) operated somewhat like the CPP in that it purchased preferred shares from financial institutions; in some cases, institutions were permitted to convert previous CPP preferred shares to CDCI preferred shares. The program was specifically focused on institutions that serve low-income, underserved communities and small businesses. Treasury purchased preferred shares from institutions that qualified for the CDCI up to an amount equal to 5% of the institutions' risk-weighted assets for banks and thrifts or 3.5% of total assets for credit unions. These preferred shares paid an initial dividend rate of 2%, compared with 5% for the CPP, which increased to 9% after eight years. Unlike the CPP, no warrants in the financial institutions were included. Purchases under the program were completed in September of 2010 with approximately $210 million in new shares purchased. In addition, approximately $360 million of shares were converted from CPP shares. Eighty-four banks and credit unions received funds, of which 28 had previously participated in CPP. As of August 2018, 15 institutions remain in the CDFI. Table 7 summarizes the CDFI, including current and peak asset holdings, losses or gains, and conditions of the program.", "On March 23, 2009, Treasury announced the Public Private Investment Program (PPIP). PPIP as envisioned consisted of two asset purchase programs designed to leverage private funds with government funds to remove troubled assets from bank balance sheets. Perhaps closer to the original conception of TARP than other TARP programs, PPIP dedicated TARP resources as equity to (1) acquire troubled loans in a fund partially guaranteed by the FDIC and (2) acquire troubled securities in a fund designed to be used with loans from the Federal Reserve's TALF program or TARP. Both funds would match TARP money with private investment, and profits or losses would be shared between the government and the private investors. Unlike the original conception of TARP, private investors would choose the assets to purchase and manage the funds and the day-to-day disposition of assets. The legacy loan portion of PPIP never advanced past a single pilot sale reported by the FDIC on September 30, 2009. Treasury originally envisioned asset purchases through PPIP would be as high as $1 trillion (using as much as $200 billion in TARP funds), but a maximum of $22.4 billion was committed to the legacy securities portion of the program.", "The PPIP Legacy Securities Program was designed to remove existing mortgage-related securities on bank balance sheets. Private investment fund managers applied to Treasury to prequalify to raise funds to participate in the program. Approved fund managers that raised private equity capital received matching Treasury capital and an additional loan to the fund that matched the private capital (thus, for example, a fund that raised $100 had a total of $300 available to invest). In addition to this basic transaction, Treasury had the discretion to allow another matching loan so that a fund raising $100 could have made a total of $400 available for investment. The funds were to be used to invest in nonagency MBS that originally received the highest credit rating (e.g., AAA). (Agency MBS refer to loans issued by GSEs, such as Fannie Mae and Freddie Mac, and nonagency MBS refers to mortgage-related securities issued by private financial institutions, such as investment banks.)\nNine funds were prequalified by the Treasury in June 2009. In early January 2010, however, one of the funds reached a liquidation agreement with Treasury and was wound down. By March 31, 2013, another five of the funds had been effectively wound down and all $18.6 billion of the disbursed funds had been returned. The program experienced no losses and earned the Treasury income of $3.9 billion. Table 8 summarizes the PPIP, including current and peak asset holdings, losses or gains, and conditions of the program.", "This program supported the Small Business Administration's (SBA's) Section 7(a) loan program through purchases of pooled SBA guaranteed securities backed by private loans to small businesses. Beginning in March 2010, Treasury purchased a total of $368 million in securities guaranteed by the SBA. Purchases ended in October 2010 with the expiration of the TARP authority and all securities have been sold or matured. Over the life of the program, income exceeded losses. Table 9 summarizes the SBA Section 7(a) Securities Purchase Program, including current and peak asset holdings, losses or gains, and conditions of the program.", "In addition to financial firms, nonfinancial firms also sought support under TARP, most notably U.S. automobile manufacturers. EESA specifically authorized the Secretary of the Treasury to purchase troubled assets from \"financial firms\"; the legislative definition of this term did not mention manufacturing companies. After separate legislation to provide federal funds to the automakers failed to clear Congress, the Bush Administration turned to TARP for funding.\nOn December 19, 2008, the Bush Administration announced it was providing support through TARP to General Motors and Chrysler under the Automotive Industry Financing Program (AIFP). The initial package included up to $13.4 billion in a secured loan to GM and $4 billion in a secured loan to Chrysler. In addition, $884 million was lent to GM for its participation in a rights offering by GMAC as GM's former financing arm was becoming a bank holding company. On December 29, 2008, the Treasury announced that GMAC also was to receive a $5 billion capital injection through preferred share purchases.\nAfter January 21, 2009, the Obama Administration continued assistance for the automakers. This included indirect support such as a warranty program under the AIFP (so that consumers would not be discouraged from purchasing cars during the restructuring), and assistance for third-party suppliers to the automakers (the Automotive Supplier Support Program). Additional loans for GM and Chrysler were made before and during the two companies' bankruptcies, and GMAC received additional capital through preferred share purchases as well. At the end of 2009, GM had received approximately $50.2 billion in direct loans and indirect support; Chrysler had received $10.9 billion in loans and indirect support; GMAC had received $17.2 billion in preferred equity purchases and indirect support; and Chrysler Financial had received $1.5 billion in loans.\nAll of the auto industry assistance has been repaid or recognized as a loss by the Treasury. As of August 1, 2018, TARP support for the auto industry totaled approximately $79.7 billion disbursed, with $63.1 billion repaid and $8.4 billion in income. Approximately $16.6 billion was written off or taken as a realized loss. Table 10 summarizes the TARP assistance for U.S. automakers, including current and peak asset holdings, losses or gains, and conditions of the program.", "", "Beginning in December 2007, the Federal Reserve introduced a number of emergency credit facilities to provide liquidity to various segments of the financial system. Most, but not all, of these facilities made short-term loans backed by collateral that exceeds the value of the loan, with recourse to the borrower's other assets if the borrower defaults. These facilities were widely available to all qualified participants. (Fed assistance to individual companies is discussed separately below.) Since the Fed's creation 100 years ago, the Fed has always made short-term collateralized loans to banks through its discount window. In the years before the crisis, loans outstanding through the discount window were consistently less than $1 billion at any time. At the peak of the crisis, total assistance outstanding would peak at more than $1 trillion. Another attribute that distinguished these new facilities from the Fed's traditional lending was the fact that many served nonbanks that were not regulated by the Fed.\nProfits or losses on Fed lending accrue to the taxpayer similar to if the loans had been made by the Treasury. The Fed generates income from its assets (securities and loans) that exceed its expenses. Any income that remains after expenses, dividends, and additions to its surplus is remitted to the Treasury. If its profits rise because a lending facility is more profitable than alternative uses of those funds, more funds would be remitted to the Treasury. If it suffers losses on a facility, its remittances to the Treasury would fall. The risk to most of the Fed's broad credit facilities was relatively low since the loans are short-term, collateralized, and the Fed had the right to refuse borrowers it deemed to be not credit-worthy. (As discussed below, the Fed's assistance to firms deemed \"too big to fail\" was significantly riskier.) Fed remittances to the Treasury have risen from $35 billion in 2007 to more than $75 billion annually since 2010. In that sense, taxpayers have profited from the creation of the Fed's lending facilities, although that was not their purpose and those facilities were not risk free.\nThe Fed has standing authority to lend to banks and buy certain assets, such as GSE-issued securities. For many new programs, the Fed relied on broad emergency authority (Section 13(3) of the Federal Reserve Act) that had not been used since the 1930s. The Fed is self-financing and does not receive any appropriated funds to finance its activities.\nAll credit outstanding under these facilities has been repaid, most as soon as financial firms could return to private sources of funding once financial conditions improved. Most emergency facilities expired on February 1, 2010, after multiple extensions, and most had no outstanding balance after that point. The Fed reported no losses and positive income on all of these facilities.\nEstimating a subsidy rate on Fed lending is not straightforward, and some would argue is not meaningful. The Fed's loans are usually made at some modest markup above the federal funds rate; in that sense they can be considered higher than market rates—whether the markup is high enough to avoid a subsidy depends on the riskiness of the facility. But the Fed controls the federal funds rate, even though it is a private market for overnight interbank lending. During the crisis, the Fed drove the federal funds rate gradually down from 5.25% in September 2007 to nearly zero in December 2008 by creating the liquidity needed to avert a crisis; as a result, its direct loans were made at a very low rate. Because the purpose of the Fed is to supply financial markets with adequate liquidity, which has some characteristics of what economists call a \"public good\" that cannot always be provided by the private sector, it is not clear that reducing the federal funds rate should be classified as a subsidy. Further, the Fed would argue that it was only providing credit because there was no private sector alternative during the crisis, and borrowing from the Fed fell relatively quickly in 2009 once financial conditions began to normalize.\nThe Fed reports extensive data on its activities. Outstanding balances for each facility are available on a weekly basis from the H.4.1 data release, Factors Affecting Reserve Balances of Depository Institutions . Detailed information on the number of borrowers, concentration of loans, types of collateral, and overall earnings for each facility is available on a monthly basis in the Federal Reserve System Monthly Report on Credit and Liquidity Programs and the Balance Sheet . The Fed disclosed details of specific transactions, notably the identities of recipients and specific collateral posted, on December 1, 2010, as required by the Dodd-Frank Act ( P.L. 111-203 ). In addition, oversight reports have been produced by the Government Accountability Office and the Fed's Inspector General.", "In December 2007, the Fed created its first facility in response to financial conditions, the Term Auction Facility (TAF). This facility auctioned reserves to banks in exchange for collateral. Economically and legally, this facility was equivalent to the discount window, and was created primarily out of a concern that banks were not accessing the discount window as much as needed as a result of the stigma associated with discount window lending. Since this facility was not created with emergency authority, it need not be temporary, but the Fed has held no auctions since March 8, 2010.\nAny depository institution eligible for discount window lending could participate in the TAF, and hundreds at a time accessed the TAF and the discount window since its inception. The auction process determined the rate at which those funds were lent, with all bidders receiving the lowest winning bid rate. The winning bid could not be lower than the prevailing federal funds rate. Auctions through the TAF were held twice a month beginning in December 2007. The amounts auctioned greatly exceeded discount window lending, which averaged in the hundreds of millions of dollars outstanding daily before 2007 and more than $10 billion outstanding during the crisis. Loans outstanding under the facility peaked at $493 billion in March 2009, and fell steadily until reaching zero when the facility expired in March 2010. Between the discount window and the TAF, banks were consistently the largest private sector recipient of Fed assistance since 2007.\nRisks to the Fed were limited by collateral requirements, the short duration of the loans, and recourse requirements. TAF loans matured in 28 days—far longer than overnight loans in the federal funds market or the typical discount window loan. (In July 2008, the Fed began making some TAF loans that matured in 84 days.) Like discount window lending, TAF loans must be fully collateralized with the same qualifying collateral accepted by the discount window. Loans previously made by depository institutions and asset-backed securities were the most frequently posted collateral. Although not all collateral has a credit rating, those that are rated typically had the highest rating. Most borrowers borrowed much less than the posted collateral. Over the life of the program, the Fed experienced no losses and earned income of $4.1 billion from the TAF. Table 11 summarizes the TAF, including current and peak loans, losses or gains, and conditions of the program.", "Shortly before Bear Stearns suffered its liquidity crisis in March 2008 (see \" Bear Stearns \"), the Fed created the Term Securities Lending Facility (TSLF) to expand its securities lending program for primary dealers. Primary dealers are financial firms that the Fed conducts transactions with for purposes of open market operations and include investment banks that were ineligible to access the Fed's lending facilities for banks. The proximate cause of Bear Stearns' crisis was its inability to roll over its short-term debt, and the Fed created the TSLF and the Primary Dealer Credit Facility (discussed below) to offer an alternative source of short-term liquidity for primary dealers.\nUnder the TSLF at its peak, each week primary dealers could borrow up to $200 billion of Treasury securities for 28 days instead of overnight. Access to Treasury securities is important for primary dealers because of their use in repurchase agreements (\"repos\") that are an important source of short-term financing. Loans could be collateralized with private-label MBS with an AAA/Aaa rating, agency commercial mortgage-backed securities, and agency collateralized mortgage obligations. On September 14, 2008, the Fed expanded acceptable collateral to include all investment-grade debt securities. No securities were borrowed through the TSLF after August 2009, and the facility expired February 1, 2010. It experienced no losses and earned income of $781 million over the life of the program. Table 12 summarizes the TSLF, including current and peak loans, losses or gains, and conditions of the program.", "Shortly after Bear Stearns' liquidity crisis, the Fed created the Primary Dealer Credit Facility (PDCF), which can be thought of as analogous to a discount window for primary dealers. Loans were made at the Fed's discount rate, which was set slightly higher than the federal funds rate during the crisis. Loans were made on an overnight basis, with recourse, and fully collateralized, limiting their riskiness. Acceptable collateral initially included Treasuries, government agency debt, and investment grade corporate, mortgage-backed, asset-backed, and municipal securities. On September 14, 2008, the Fed expanded acceptable collateral to include certain classes of equities. The Primary Dealer Credit Facility expired on February 1, 2010.\nBorrowing from the facility was sporadic, with average daily borrowing outstanding above $10 billion in the first three months, and falling to zero in August 2008. Much of this initial borrowing was done by Bear Stearns, before its merger with J.P. Morgan Chase had been completed. Loans outstanding through the PDCF picked up again in September 2008 and peaked at $148 billion on October 1, 2008. After May 2009, outstanding loans through the PDCF were zero, presumably because the largest investment banks converted into or were acquired by bank holding companies in late 2008, making them eligible to access other Fed lending facilities. The PDCF experienced no losses and earned interest income of $0.6 billion over the life of the program. Table 12 summarizes the PDCF, including current and peak loans, losses or gains, and conditions of the program.", "To meet liquidity needs, many large firms routinely issue commercial paper, which is short-term debt purchased directly by investors that matures in less than 270 days, with an average maturity of 30 days. There are three broad categories of commercial paper issuers: financial firms, nonfinancial firms, and pass-through entities that issue commercial paper backed by assets. The commercial paper issued directly by firms tends not to be backed by collateral, as these firms are viewed as large and creditworthy, and the paper matures quickly.\nIndividual investors are major purchasers of commercial paper through money market mutual funds and money market accounts. A run on a money market fund on September 16, 2008, greatly decreased the demand for new commercial paper. Firms rely on the ability to issue commercial paper to roll over maturing debt to meet their liquidity needs.\nFearing that disruption in the commercial paper markets could make overall problems in financial markets more severe, the Fed announced on September 19, 2008, that it would create the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF). This facility made nonrecourse loans to banks to purchase asset-backed commercial paper. Because the loans were nonrecourse, the banks had no further liability to repay any losses on the commercial paper collateralizing the loan. At its peak in early October 2008, there were daily loans of $152 billion outstanding through the AMLF. The AMLF would soon be superseded in importance by the creation of the Commercial Paper Funding Facility, and lending fell to zero in October 2009. It experienced no losses and earned income of $0.5 billion over the life of the program. The facility expired on February 1, 2010.\nOn October 7, 2008, the Fed announced the creation of the Commercial Paper Funding Facility (CPFF) to purchase all types of three-month, highly rated U.S. commercial paper, secured and unsecured, from issuers. The interest rate charged by the CPFF was set at the three month overnight index swap rate plus 1 percentage point for secured corporate debt, 2 percentage points for unsecured corporate debt, and 3 percentage points for asset-backed paper. The CPFF could buy as much commercial paper from any individual issuer as that issuer had outstanding in the year to date. Any potential losses borne by the CPFF would ultimately be borne by the Fed. At its peak in January 2009, the CPFF held $351 billion of commercial paper, and holdings fell steadily subsequently. The facility expired February 1, 2010. It earned income of $6.1 billion over the life of the program and suffered no losses.\nIn the case of the AMLF, the banks were not intended recipients of assistance, but rather were meant to be the intermediary through which assistance flowed to the commercial paper market. The CPFF essentially removed the role of banks as intermediary and provided Fed assistance directly to CP issuers.\nOn October 21, 2008, the Fed announced the creation of the Money Market Investor Funding Facility (MMIFF), and pledged to lend it up to $540 billion. The MMIFF was planned to lend to private sector special purpose vehicles (SPVs) that invest in commercial paper issued by highly rated financial institutions. Each SPV would have been owned by a group of financial firms and could only purchase commercial paper issued by that group. The intent was for these SPVs to purchase commercial paper from money market mutual funds and similar entities facing redemption requests to help avoid runs such as the run on the Reserve Fund. The MMIFF was never accessed, and the facility expired on October 30, 2009. Table 14 and Table 15 summarize the Fed's commercial paper facilities, including current and peak loans, losses or gains, and conditions of the program", "Unable to roll over its short-term debt as a result of investor concerns about its mortgage-related losses, the investment bank Bear Stearns faced bankruptcy. Fearing that Bear Stearns was \"too big to fail\" and posed systemic risk, the Fed stepped in to broker a merger. On March 16, 2008, JPMorgan Chase agreed to acquire Bear Stearns. As part of the agreement, the Fed agreed to lend $28.82 billion to Maiden Lane I, a Delaware limited liability corporation (LLC) that it created, to purchase financial securities at current market value from Bear Stearns. These securities were largely mortgage-related assets that were too illiquid for JPMorgan Chase to be willing to acquire.\nInterest and principal was to be repaid to the Fed by Maiden Lane I using the funds raised by the sale of the assets, not by JP Morgan Chase. JPMorgan Chase took a first loss position through a subordinated loan of $1.15 billion, and received an interest rate of 4.5% above the discount rate on that position, compared with an interest rate of 2.5% above the discount rate on the Fed's loan. Any additional losses would be borne by the Fed, and any profits in excess of the loans would accrue to the Fed. Profits or losses for the Fed and JPMorgan Chase were dependent on whether the market value of those assets rose or declined after Maiden Lane I acquired them.\nBy November 2012, proceeds from the sale or maturation of Maiden Lane I assets were sufficient to fully repay principal and accrued interest to the Fed ($765 million) and JPMorgan Chase. As of December 30, 2017, the value of remaining assets held by Maiden Lane I was $1.7 billion. Once those remaining assets are sold or have matured, the Fed will realize capital gains that would be greater or less than $1.7 billion (less expenses), depending on whether the value of those assets subsequently rises or falls. Table 16 summarizes the support for Bear Stearns, including current and peak loans, losses or gains, and conditions of the program", "The FDIC has undertaken a significant role in the financial crisis through its standing authority to resolve failed banks and administer the federal guarantees on individual deposits (actions that are beyond the scope of this report). In addition, the FDIC has carried out several exceptional measures, including a broad guarantee program on debt issued by banks and supporting combined interventions in Citigroup and Bank of America (see \" Joint Interventions \").", "On October 14, 2008, the FDIC announced the creation of the Temporary Liquidity Guarantee Program (TLGP), consisting of a Debt Guarantee Program (DGP) and a Transaction Guarantee Program (TAG), to support liquidity and discourage runs in the banking system. This program was not specifically authorized by Congress; it was authorized under the FDIC's standing systemic risk-mitigation authority. Financial institutions eligible for participation in the TLGP program included entities insured by the FDIC, bank holding and financial holding companies headquartered in the United States, and savings and loan companies under Section 4(k) of the Bank Holding Company Act. Although the TLGP was a voluntary program, eligible financial institutions were automatically registered to participate unless they had opted out by November 12, 2008.\nThe Debt Guarantee Program guaranteed bank debt, including commercial paper, interbank funding debt, promissory notes, and any unsecured portion of secured debt. The program originally applied to debt issued before June 30, 2009, but was extended in March 2009 to apply to debt issued before October 31, 2009. The guarantee remained in effect until December 31, 2012. Fees for the guarantees were up to 1.1% of the guaranteed debt on an annualized basis with additional surcharges of up to 0.5%, depending on the maturity length of the debt and whether or not the institution is FDIC insured.\nUpon the expiration of the Debt Guarantee Program the FDIC established a limited successor program to \"ensure an orderly phase-out\" of the program. This six-month emergency guarantee facility was limited to certain participating entities, who must apply to the FDIC for permission to issue FDIC-guaranteed debt during the period starting October 31, 2009, through April 30, 2010. The fee for issuing debt under the emergency facility was to be at least 3%. The FDIC has not separately reported any use of the emergency guarantee program.\nThe Transaction Account Guarantee insured all non-interest-bearing deposit accounts, extending FDIC insurance beyond the $250,000 deposit insurance limit. The accounts primarily benefiting from TAG were accounts used by businesses and local governments, such as payroll processing accounts. In June 2010, the FDIC extended the TAG portion of the TLGP through December 31, 2010.\nTAG was not further extended due to the provisions in the Dodd-Frank Act which provided for full deposit insurance coverage for noninterest-bearing transaction accounts for two years, without opt outs or a specified funding source. (This program is also often popularly referred to as TAG, however.) The FDIC reported guaranteed deposits of $1.5 trillion, but did not report fees or losses, under this program. Insurance coverage pursuant to the Dodd-Frank Act expired on December 31, 2012.\nParticipation in the TGLP was widespread at its peak, with almost 90% of FDIC-insured institutions participating in TAG and more than half in DGP. At its peak, the DGP guaranteed $345.8 billion in debt and the TAG guaranteed $834 billion in deposits in 2009. Over its life, the TAG program collected $1.2 billion in fees, insufficient to cover $1.5 billion in losses. By contrast, the DGP collected $10.4 billion in fees, more than offsetting $0.2 billion in losses. Table 17 summarizes the TLGP, including current and peak debt guaranteed, losses or gains, and conditions of the program.", "Prior to the passage of EESA and the implementation of TARP, the Treasury had comparatively little authority to intervene in financial markets. It did, however, implement one program intended to end the money market run.", "On September 16, 2008, a money market mutual fund called the Reserve Fund \"broke the buck,\" meaning that the value of its shares had fallen below par value of $1. This occurred because of losses it had taken on short-term debt issued by Lehman Brothers, which filed for bankruptcy on September 15, 2008. Money market investors had perceived \"breaking the buck\" to be highly unlikely, and its occurrence set off a generalized run on money market funds, as investors simultaneously attempted to withdraw an estimated $250 billion of their investments—even from funds without exposure to Lehman.\nTo stop the run, Treasury announced an optional program to guarantee deposits in participating money market funds. Treasury would finance any losses from this guarantee with assets in the Exchange Stabilization Fund (ESF), funds intended to protect the value of the dollar. Treasury announced this program without seeking specific congressional authorization, justifying the program on the grounds that guaranteeing money market funds would protect the value of the dollar. After the fact, Congress addressed the money market guarantee in Section 131 of EESA, reimbursing the ESF from EESA funds, but also forbidding the future use of the ESF to provide such a guarantee. The program expired after one year in September 2009. Over the life of the program, Treasury reported that no guaranteed funds had failed, and $1.2 billion in fees had been collected. More than $3 trillion of deposits were guaranteed and, according to the Bank for International Settlements, 98% of money market mutual funds were covered by the guarantee, with most exceptions being funds that invested only in Treasury securities.\nDepositors in the Reserve Fund were not covered by this program, but the ESF was used to purchase its $3.6 billion holdings of GSE securities in order to increase its liquidity. Table 18 summarizes the Money Market Mutual Fund Guarantee Program, including current and peak deposits guaranteed, losses or gains, and conditions of the program.", "", "In November 2008, the Fed created the Term Asset-Backed Securities Loan Facility (TALF) in response to problems in the market for asset-backed securities (ABS). According to the Fed, \"new issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums.\" Data support the Fed's view: issuance of nonresidential mortgage asset-backed securities fell from $902 billion in 2007 to $5 billion in the fourth quarter of 2008, according to the Securities Industry and Financial Markets Association. The Fed feared that if lenders could not securitize these types of loans, less credit would be extended to consumers, and eventually households would be forced to reduce consumption spending, exacerbating the economic downturn.\nRather than purchase ABS directly, the Fed made nonrecourse loans to private investors to purchase recently issued ABS receiving the highest credit rating, using the ABS as collateral. The minimum loan size was $10 million. Eligible collateral included new securities backed by auto loans, student loans, small business loans, and credit card loans. TALF was later expanded to include \"legacy\" commercial mortgage-backed securities as part of the Public Private Investment Program discussed above (see \" Public Private Investment Program \"). The loans have a term of up to three years for most types of assets (and up to five years for some types of assets). Interest rates were set at a markup over different maturities of the London interbank offered rate (LIBOR) or the federal funds rate, depending on the type of loan and underlying collateral.\nIf the ABS lose value, because the loans were nonrecourse, the losses would be borne by the Fed and the Treasury (through TARP) instead of by the borrower—an unusual feature that makes TALF riskier for taxpayers than typical Fed lending facilities. The Fed lent less than the current value of the collateral, so the Fed would not bear losses on the loan until losses exceed the value of this reduction or \"haircut\" (different ABS receive different haircuts). In addition, Treasury initially set aside $20 billion of TARP funds to cover any losses. Any profits were to be divided 90% to Treasury and 10% to the Fed.\nTALF turned out to be a relatively small program compared to the $200 billion program envisioned by the Fed or the $1 trillion program later envisioned by Treasury. In part, this was because the issuance of assets eligible for TALF has remained low, which reflected the continuing depressed state of securitization markets and may imply that TALF has been unable to overcome current investor aversion to ABS. (While TALF was in operation beginning in March 2009, a sizable share of ABS issued were used as collateral for TALF loans. Thus, issuance might have been even lower without the presence of TALF.)\nThe facility stopped making new loans at the end of June 2010 for loans using newly issued CMBS as collateral and in March 2010 for loans using other assets. Unlike most other Fed lending facilities, the amount outstanding under TALF steadily rose through 2009.\nOn October 29, 2014, the last outstanding TALF loan was repaid and the facility was closed. All TALF loans were repaid with interest over the life of the program. Net income was $0.7 billion to Treasury and $1.6 billion to the Fed. Table 19 summarizes the TALF, including current and peak loans, losses or gains, and conditions of the program.", "In the fall of 2008, American International Group (AIG) was a federally chartered thrift holding company regulated by the Office of Thrift Supervision (OTS) at the holding company level, with a broad range of businesses, primarily insurance subsidiaries, which are state-chartered and state-regulated. Facing losses on various operations, AIG experienced a significant decline in its stock price and downgrades from the major credit rating agencies. These downgrades led to immediate demands for significant amounts of collateral (approximately $14 billion to $15 billion in collateral payments, according to contemporary press reports). As financial demands on the company mounted, bankruptcy appeared a possibility, as had occurred with Lehman Brothers on September 15, 2008. Many feared that AIG was \"too big to fail\" due to the potential for widespread disruption to financial markets resulting from such a failure.\nOn September 16, 2008 (prior to the existence of TARP), the Fed announced that it was taking action to support AIG in the form of a secured two-year, high-interest line of credit with a value of up to $85 billion. In addition, the government received warrants to purchase up to 79.9% of the equity in AIG. On October 8, 2008, the Fed announced that it would lend AIG up to an additional $37.8 billion against securities held by its insurance subsidiaries.\nIn early November 2008 (following the creation of TARP), the financial support for AIG was restructured. The restructured financial support consisted of (1) reducing the size of the Fed loan to up to $60 billion, with the term lengthened to five years and the interest rate reduced by 5.5%; (2) purchasing of $40 billion in preferred shares through TARP; and (3) replacing the $37.8 billion loan, with up to $52.5 billion total in asset purchases by the Fed through two limited liability corporations known as Maiden Lane II and Maiden Lane III. The 79.9% equity position of the government in AIG remained essentially unchanged after the restructuring of the intervention.\nIn March 2009, the assistance was restructured further through (1) a partial payback of the Fed loan through a swap of debt for equity in two AIG subsidiaries worth approximately $25 billion, reducing the maximum to $35 billion; and (2) commitments for additional future TARP purchases of up to $29.8 billion in preferred shares at AIG's discretion, and the conversion of existing shares into shares with optional dividend payments. The Maiden Lane LLCs continued operating under the previous terms, with the actual loans extended to the LLCs totaling $43.9 billion at their peak of the possible $52.5 billion.\nIn September 2010, AIG and the government announced another restructuring of the government's assistance. This restructuring closed on January 14, 2011. The expressed goal was to simplify the government's interest in AIG and provide for a path for the divestment of the government's stake in AIG. The essence of the plan called for (1) ending the Fed's involvement with AIG through loan repayment and transfer of the Fed's equity interests to the Treasury and (2) converting the government's $49.1 billion in existing preferred shares into common shares, which can then be sold to the public over time. The specific steps involved several interlocking transactions, including the initial public offering (IPO) of a large AIG subsidiary, the sale of several other AIG subsidiaries, and the use of up to approximately $20 billion in TARP funds to transfer equity interests from the Fed to the Treasury. Once these transactions closed, the Treasury held 92% of AIG's common equity (1.66 billion shares) and equity interests in AIG's subsidiaries worth approximately $20.3 billion.\nTreasury sold the AIG equity over time, completing sales in December 2012. All of the Federal Reserve loans have been repaid and the assets held in the Maiden Lane LLCs have been sold. The last government-held assets relating to the AIG intervention were TARP warrants which were sold in January 2013.\nTable 20 summarizes the support received by AIG from both TARP and the Fed, including current and peak asset holdings, losses or gains, and conditions of the support. Although TARP realized losses on its AIG holdings, these losses were more than offset by income that the Fed earned on its AIG transactions.", "In the summer of 2008, the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were experiencing rising yields on debt they were rolling over as a result of investors' concerns about the potential scope of losses on mortgage-backed securities (MBS) they held or guaranteed. Congress enacted the Housing and Economic Recovery Act of 2008 (HERA) in response. HERA created a new regulator, the Federal Housing Finance Agency (FHFA), for Fannie Mae and Freddie Mac. It also included enhanced authorization for the government to take the companies into conservatorship or receivership in case of financial distress, as well as temporary authority to provide unlimited funds to Fannie Mae and Freddie Mac as necessary. There were no specific dollar limits to these purchases or loans, but because the government would borrow to provide the funds, they were in effect subject to the statutory limit on the federal government's debt.\nThe continued deterioration of Fannie Mae's and Freddie Mac's financial condition led FHFA to place them in government conservatorship on September 7, 2008. FHFA defines conservatorship as \"the legal process in which a person or entity is appointed to establish control and oversight of a Company to put it in a sound and solvent condition. In a conservatorship, the powers of the Company's directors, officers, and shareholders are transferred to the designated Conservator.\"\nAs part of conservatorship, the firms signed contracts to issue new senior preferred stock to the Treasury, which agreed to purchase up to $100 billion of this stock from each of them to cover realized shortfalls between the GSEs' assets and liabilities. The authority to enter into contracts to provide funds expired on December 31, 2009, but additional funds could be (and were) provided under existing contracts after that date. This $100 billion limit was later raised to $200 billion, and, a week before the authority to sign new contracts expired, the contracts were amended to remove the cap between 2010 and 2012. In exchange, Treasury received 10% dividends on the preferred shares, an undetermined quarterly commitment fee beginning at the end of the first quarter of 2010 (the commitment fee was always waived), warrants giving Treasury the option to purchase 79.9% of the companies' common stock at a nominal cost, and $1 billion of \"liquidation preference shares.\" Upon execution, the warrants would dilute the holdings of existing private common stockholders.\nTreasury purchased $187.5 billion of preferred shares through the first quarter of 2012. Since then, the GSEs' assets have matched their liabilities and no further preferred share issuance were needed until the GSEs drew another $4 billion from Treasury in 2017 because of tax changes.\nUnder the original preferred share agreement, the GSEs' profits (after dividend payments) would have accumulated in their coffers. Treasury announced in August 2012 that, \"(a)cting upon the commitment ... that the GSEs will be wound down and will not be allowed to retain profits, rebuild capital, and return to the market in their prior form,\" the preferred share agreements had been amended to replace the dividend and commitment fee with a \"net income sweep\" that would remit all profits to the Treasury. Regardless of the amount remitted, the terms of the sweep do not allow for a reduction in the preferred shares outstanding.\nUntil 2013, it was considered doubtful that Treasury would ever receive more from the GSEs than what was outlaid due to the GSEs' \"legacy losses\" stemming from their concentrated financial exposure to the housing crash. For example, as of the end of FY2012, Treasury had written down the market value of its preferred shares and warrants to $109.3 billion, and booked a $9 billion contingent liability for potential losses on existing business that had not yet been realized. Since then, the financial performance of the GSEs has improved markedly as a result of new business that has yielded lower defaults and higher fees, resulting in quarterly surpluses instead of deficits. Altogether, the GSEs received $191.5 billion in exchange for preferred shares and have paid $279.7 billion in income on those shares, as of June 2018. One issue in the ongoing debate on GSE reform is how to maximize the return on the outstanding government support were the GSEs to be wound down or some of their business or assets transferred to a new private company.\nPolicymakers have taken other steps to support the mortgage market, and more indirectly the GSEs. Between December 2008 and March 2010, the Fed purchased $172.1 billion of bonds issued by the GSEs (of which, $67 billion were issued by Freddie Mac, $67 billion were issued by Fannie Mae, and $38 billion were issued by the Federal Home Loan Banks) as part of its \"Large Scale Asset Purchases\" (popularly known as quantitative easing). The asset purchases had two goals—to provide support to mortgage markets and to stimulate overall economic conditions. Another effect of these purchases is to reduce the GSEs' borrowing costs, all else equal. As these assets have matured, the Fed has replaced them with Treasury securities or MBS, so its holdings have declined over time, to $57.2 billion as of December 31, 2013. The Fed faces no default risk on its GSE holdings as long as the Treasury continues to stand behind the GSEs, and will not experience capital losses (or gains) as long as it continues to hold the securities to maturity. Through the third quarter of 2013, it had earned $12.9 billion in interest from these securities.\nThe Federal Reserve and Treasury have also bought MBS guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae (a government agency) since 2008. Between September 2008 and December 2009, Treasury purchased $220.8 billion of MBS, with peak holdings of $197.6 billion in December 31, 2009. From March 2011 to April 2012, it reduced those holdings to zero. Over the life of the program, Treasury reports that it earned $12 billion in profits, net of expenses. As part of its Large Scale Asset Purchases (also called \"quantitative easing\"), the Fed purchased $1.25 trillion in MBS between January 2009 and March 2010, and began to purchase MBS again in September 2012. The Fed stopped adding to its MBS holdings in 2014, and has gradually reduced its holdings as the MBS have matured since 2017. Unlike purchases of GSE preferred stock or bonds, MBS purchases convey no direct benefit to the GSEs (and are therefore not included in Table 21 ), although they indirectly benefit from Treasury and Fed purchases because they are major holders of MBS and the purchases would be expected to cause the value of the MBS to rise, all else equal.", "On November, 23, 2008, the Treasury, Federal Reserve, and FDIC announced a joint intervention in Citigroup, which had previously been a recipient of $25 billion in TARP Capital Purchase Program funding. This exceptional intervention to \"[support] financial stability\" consisted of an additional $20 billion purchase of preferred shares through the TARP Targeted Investment Program and a government guarantee for a pool of $306 billion in Citigroup assets (reduced to $301 billion when the guarantee was finalized on January 16, 2009) through the TARP Asset Guarantee Program, the FDIC, and the Federal Reserve. Citigroup paid the federal government a fee for the guarantee in the form of $4 billion in trust preferred securities paying an 8% dividend rate. The Treasury also received warrants for the purchase of common stock in both of these transactions.\nOn February 27, 2009, Citigroup and Treasury officials agreed that the Treasury Department would convert $25 billion of its TARP CPP investment in Citigroup preferred stock into Citigroup common stock and cancel the warrants taken by Treasury under the CPP. After this conversion, the U.S. government owned approximately 33.6% (7.7 million shares) of Citigroup common stock. The conversion of preferred shares to common stock worsened the government's priority on Citigroup's assets in the event of liquidation, while improving certain capital ratios for the company and relieving it of the obligation to pay dividends to the government, which it had with the preferred shares. The conversion exposed the government to more potential risk as well as to potential upside reward. The government's preferred shares could only be redeemed at par value, regardless of the performance of the company, while the government's holdings of common stock rose and fell in value based on the market valuation of the company.\nIn December 2009, Citigroup and the Treasury reached an agreement to repay the outstanding $20 billion in preferred securities and to cancel the asset guarantee. As part of this agreement, Treasury agreed to cancel $1.8 billion worth of the $4 billion in trust preferred securities originally paid as a fee for the guarantee. Citigroup repurchased the outstanding AGP trust preferred securities on September 30, 2009. While the asset guarantee was in place, no losses were claimed and no federal funds were paid out.\nIn April 2010, the Treasury began selling its common share holdings in Citigroup. The shares were sold in tranches through 2010, with the completion of the sales early in December 2010. The average sales price for the Treasury shares was $4.14 per share compared with an initial conversion price of $3.25 per share. The gain from the common stock sales was approximately $6.9 billion. Other gains from the Citigroup assistance included (1) $2.2 billion from the sales of the remaining TARP trust preferred securities granted as a fee from the AGP; (2) $3.1 billion in interest and dividends, (3) $0.3 billion from the sale of warrants; (4) $0.9 billion for the sale of subordinated notes resulting from the FDIC portion of the asset guarantee; and (5) a $50 million termination fee to the Fed for the asset guarantee for a total nominal gain (i.e., not discounted for market risk) from the Citigroup intervention of approximately $13.4 billion. Table 18 summarizes the support for Citigroup, including current and peak asset holdings, losses or gains, and conditions of the program.", "", "On January 16, 2009, the Treasury, the Federal Reserve, and the FDIC announced a joint intervention in Bank of America, which had previously been a recipient of $25 billion in TARP Capital Purchase Program funds. \"[A]s part of its commitment to support financial market stability,\" this exceptional assistance included the purchase of an additional $20 billion of Bank of America preferred shares through the TARP Targeted Investment Program and a joint guarantee on a pool of up to $118 billion of certain Bank of America assets (largely those acquired through its merger with Merrill Lynch). The announced guarantee was to remain in place for 10 years for residential mortgage-related assets and five years for all other assets. Bank of America would have borne up to the first $10 billion of losses on the assets, with subsequent losses split 90% to the government and 10% to Bank of America. Within the government, the losses were to be split between the TARP Asset Guarantee Program, the FDIC, and the Fed. Bank of America was to pay the federal government a fee for the guarantee in the form of $4 billion in preferred stock with an 8% dividend rate and warrants to purchase common stock worth $2.4 billion at the time of the agreement.\nAlthough the asset guarantee was announced in January 2009, a final agreement was never signed. On September 21, 2009, Bank of America announced that it had negotiated a $425 million termination fee that allowed it to withdraw from the Asset Guarantee Program, canceling the warrants and preferred shares issued for the program.\nOn December 9, 2009, Treasury announced that Bank of America had repurchased the $45 billion in preferred stock previously purchased under TARP. The warrants issued under the CPP and the TIP were sold at auction by the government in March 2010 for approximately $1.6 billion. No government assistance to Bank of America remains outstanding.\nTable 23 summarizes the support for Bank of America, including current and peak asset holdings, losses or gains, and conditions of the program.", "Interventions to stem the 2007-2009 financial crisis were undertaken by the Treasury, the Federal Reserve, and the FDIC, separately and jointly. Because the crisis had many causes and symptoms, the response tackled a number of disparate problems, and can be broadly categorized into programs that increased institutions' liquidity, provided financial institutions with equity to rebuild their capital, purchased illiquid securities, intervened in specific financial markets that had ceased to function smoothly, or prevented the failure of large troubled institutions that some deemed \"too big to fail.\"\nThe primary goal of the various interventions was to end the financial panic and restore normalcy to financial markets. In this sense, the programs were arguably a success. A goal of intervening at zero cost to the taxpayers was never the best measure of success, because nonintervention would likely have led to a greater loss of economic output that indirectly would have worsened the government's finances. Nevertheless, an important part of evaluating the government's performance is whether financial normalcy was restored at a minimum cost to the taxpayers.\nIn exchange for its outlays, the government generally received some combination of financial assets, warrants, and loans that could be sold or require repayment in the future and that generated income to the government in the form of dividends, fees, and interest. Measuring the cost of the program by the government's cash outlay to initially acquire the financial asset (whether it be a common stock, preferred share, or loan) is misleading because it does not take into account the value of the asset that the government receives in exchange, which gives the government legal claims on the future earnings of the company. The true net cost to the government of these programs is the difference in present value between the initial outlay to acquire or guarantee the asset or make the loan, and the money recouped by the government from income payments and subsequent sale or repayment, taking into account the risks that the government was exposed to in the transaction. Ultimately, the cost to the government will be much smaller than the initial outlay, and if the income payments or the asset's resale price is high enough, the government could ultimately make a profit on these outlays (i.e., the present value of revenues could exceed initial outlays).\nAlthough estimates of the economic profits or losses accruing to the government are not consistently available, on a cash-flow basis, most government interventions—including all Federal Reserve programs—generated positive net income for the taxpayers over the life of the program. Only three interventions generated net losses for the government, two of which were assistance to companies that were not financial firms (the automakers). For most programs where principal is still outstanding (including TARP's Capital Purchase Program and assistance to the GSEs), net income has already exceeded, or is expected to eventually exceed, initial outlays. Altogether, these interventions have yielded tens of billions of dollars of net income for the taxpayers on a cash-flow basis, comp ared with initial estimates that they would cost taxpayers hundreds of billions of dollars.\nAnother long-term, and more amorphous, cost may be a greater expectation that the government will provide rescues in response to financial instability again. Perversely, economic theory predicts that this expectation—whether or not it is warranted—would result in increased private sector risk-taking that would lead to an increased risk that systemically disruptive financial difficulties at firms occur again. In economic terms, this is generally referred to as \"moral hazard,\" and the problem is particularly acute when assistance is provided to insolvent firms, is provided at below market rates, or is provided on similar terms to both risky and prudent firms.", "Table A-1 presents a brief summary of selected government interventions to assist private firms in past crises, and includes information on the type of assistance, initial outlay, and final cost to the Treasury. The table does not include all historical bank or thrift resolutions that required the use of government funds." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 3, 2, 2, 1, 1, 2, 2, 2, 2, 2, 1, 2, 1, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full", "h3_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title h3_title", "", "", "h3_full h2_full", "", "", "", "h0_full h3_full h2_full h1_full", "" ] }	{ "question": [ "How did the original government approach work?", "How did the panic in September 2008 affect this approach?", "How did other government agencies respond to the panic?", "Why did the crisis response tackle disparate problems?", "What was the goal of the interventions?", "How can government success be evaluated?", "How did the government perform considering impact on taxpayers?", "Why are initial government outlays a poor indicator of taxpayer exposure?", "How are broadly available facilities affected by risk of default?", "What is the status of the investments of the programs in this report?", "What is the purpose of this report?", "How did the programs perform in terms of principal repayment and investment income?", "What was unique in two out of three of the programs that lost money?", "Why were more sophisticated estimates not used?", "How does net income compare to initial outlays regarding Fannie Mae and Freddie Mac investments?" ], "summary": [ "Initially, the government approach was largely ad hoc, addressing the problems at individual institutions on a case-by-case basis.", "The panic in September 2008 convinced policymakers that a system-wide approach was needed, and Congress created the Troubled Asset Relief Program (TARP) in October 2008.", "In addition to TARP, the Treasury, Federal Reserve (Fed), and Federal Deposit Insurance Corporation (FDIC) implemented broad lending and guarantee programs.", "Because the crisis had many causes and symptoms, the response tackled a number of disparate problems and can be broadly categorized into programs that (1) increased financial institutions' liquidity; (2) provided capital directly to financial institutions for them to recover from asset write-offs; (3) purchased illiquid assets from financial institutions to restore confidence in their balance sheets and thereby their continued solvency; (4) intervened in specific financial markets that had ceased to function smoothly; and (5) used public funds to prevent the failure of troubled institutions that were deemed systemically important, popularly referred to as \"too big to fail.\"", "The primary goal of the various interventions was to end the financial panic and restore normalcy to financial markets, rather than to make a profit for taxpayers.", "In this sense, the programs were arguably a success. Nevertheless, an important part of evaluating the government's performance is whether financial normalcy was restored at a minimum cost to taxpayers.", "By this measure, the financial performance of these interventions was far better than initial expectations that direct losses to taxpayers would run into the hundreds of billions of dollars.", "Initial government outlays are a poor indicator of taxpayer exposure, because outlays were used to acquire or guarantee income-earning debt or equity instruments that could eventually be repaid or sold, potentially at a profit.", "For broadly available facilities accessed by financially sound institutions, the risk of default became relatively minor once financial markets resumed normal functioning.", "Of the 23 programs reviewed in this report, about $280 billion combined remains invested in preferred shares and bonds through two programs related to the housing government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, and about $0.1 billion remains invested in two TARP programs. All other programs have been wound down entirely.", "This report summarizes government assistance programs and presents how much the programs ultimately cost (or benefited) the taxpayers based on straightforward cash accounting as reported by the various agencies.", "Of the 23 programs reviewed in this report, principal repayment and investment income exceeded initial outlays in 19, principal repayment and income fell short of initial outlays in three, and it is too soon to tell for the remaining one. Altogether, realized gains across the various programs exceed realized losses by tens of billions of dollars.", "Of the three programs that lost money, two assisted automakers, not financial firms.", "More sophisticated estimates that would take into account the complete economic costs of assistance, such as the time value of the funds involved, are not consistently available. In this sense, cash flow measures overestimate gains to the taxpayers.", "Although investments in Fannie Mae and Freddie Mac remain outstanding, net income from those investments already exceeds initial outlays." ], "parent_pair_index": [ -1, 0, 1, -1, -1, 0, 1, -1, 0, -1, -1, 0, 1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4 ] }
CRS_R42378	{ "title": [ "", "Introduction", "Major Findings", "Children in, or Formerly in, Foster Care", "Health Care Needs of Children in Foster Care", "Child Welfare Programs: Overview", "Child Welfare Policies Addressing the Health Care Needs of Children in Foster Care and Those Aging Out of Foster Care", "Health Care Records", "Health Care Oversight and Coordination Planning", "Health Care Power of Attorney", "Medicaid Program: Overview of Benefits and Eligibility", "Benefits", "Eligibility", "Medicaid Benefits for Children in, or Formerly in, Foster Care", "Early Periodic, Screening, Diagnostic, and Treatment (EPSDT) Services", "Limitations in Understanding Medicaid Spending for Foster Care Children", "Varying Definitions of Children in Foster Care", "Type of Service Provided Not Reported for All Spending", "CRS Analysis of Medicaid Spending For Foster Care Children", "Overall Medicaid Service Spending for \"Foster Care\" Children", "Managed Care", "Fee-for-Service", "Medicaid Eligibility for Children and Families with Current or Past Child Welfare Involvement", "ACA Income Counting Rule, Protections for Children, and Exemptions", "Transitioning to MAGI Income Counting Rule", "Determining Who to Include in a Child's Household", "Exemptions", "Children in Foster Care", "Mandatory Pathways", "Optional Pathways", "Medicaid Eligibility for Foster Care Children in Practice", "Young Adults Who Were Formerly in Foster Care", "Mandatory Pathways", "Optional Pathway", "Implementing the New Eligibility Pathway for Former Foster Youth", "Medicaid Eligibility in Practice Under the Chafee Option", "Children Who Leave Foster Care for Adoption or Guardianship", "Mandatory Pathway", "Adoption Assistance", "Kinship Guardianship Assistance", "Optional Pathways", "Interstate Application", "Possible Coverage for Child Welfare-Involved Families", "Children and Families Served in the Home", "Families of Children Entering Foster Care", "Private Health Insurance Reforms Affecting the Child Welfare Population", "Selected Private Health Insurance Reforms under the ACA", "Accessing Private Health Insurance" ], "paragraphs": [ "", "Children who are placed in foster care are at a higher risk of having a medical, social, or behavioral disability than children in the general population. The abuse or neglect most experience before entering foster care can create physical and mental health issues, and the trauma of being removed from their parents may also incline children in foster care to social or behavioral health concerns. The Social Security Act addresses some of the health care needs of children in foster care—through provisions in titles pertaining to child welfare (Titles IV-B and IV-E) and those in the title pertaining to the Medicaid program (Title XIX). Federal child welfare policy expects state child welfare agencies to maintain health care records of children in foster care and to develop a strategy that addresses the health care needs of each child. States must provide Medicaid coverage to children who are eligible for the Title IV-E federal foster care program or, if applicable, eligible through other Medicaid eligibility pathways.\nEffective January 1, 2014, the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) created a new mandatory Medicaid pathway for young adults up to age 26 if they were in foster care at age 18 and were receiving Medicaid. This new mandatory coverage category for youth aging out of foster care is distinct from the ACA Medicaid expansion requirements in Section 2001 of the ACA that are related to coverage for most non-elderly adults with annual incomes below 133% of the federal poverty level. For that group, the U.S. Supreme Court's 2012 decision in National Federation of Independent Business (NFIB) v. Sebelius effectively made state participation in ACA Medicaid expansion voluntary. However, the Supreme Court's decision leaves enforcement of other provisions of the ACA intact, including the new coverage group created by the ACA for youth aging out of foster care. Accordingly, all states were expected to comply with the new mandatory coverage category for youth who have aged out of foster care as of January 1, 2014. The ACA made additional changes outside of Medicaid to assist adults in obtaining private health insurance, which may benefit young adults who age out of foster care and families who are served by child welfare agencies.\nThis report begins with a discussion of major findings. It then briefly describes the foster care population and their unique health-related issues. Next is an overview of the federal programs and policies in three areas—child welfare, Medicaid, and private health insurance—that directly or indirectly address some of the health care needs of such children and young adults. Appendix A discusses selected research on the health care needs of children in foster care and those who leave foster care due to age or placement in a permanent adoptive family. Appendix B shows Medicaid services spending, in selected years, for \"foster care\" children (as that group is defined in Medicaid eligibility and claims data). Appendix C summarizes the major mandatory and optional Medicaid eligibility pathways for current and former foster children.", "Approximately 35% to 60% of children placed in foster care have at least one chronic or acute physical health condition that needs treatment, including growth failure, asthma, obesity, vision impairment, hearing loss, neurological problems, sexually transmitted diseases, and complex chronic illnesses. As many as one-half to three-fourths show behavioral or social competency problems that may warrant mental health services. Studies indicate that many health and mental health care issues persist and that—relative to their peers in the general population—children who leave foster care for adoption and those who age out of care continue to have greater health care needs. (For more information, see \" Health Care Needs of Children in Foster Care \" and Appendix A .) Federal child welfare policy includes health-related provisions. For example, child welfare agencies must ensure that the health care records of children in foster care are periodically reviewed and updated. In addition, states must develop a strategy that addresses the health care needs of each child in foster care including, among other things, health care screenings and oversight of prescription medicines. States must also ensure that young people aging out of foster care are provided a copy of their health records, and information about health insurance options and designating other individuals to make health care decisions on their behalf in the event that they are unable to do so. (For more information, see \" Child Welfare Policies Addressing the Health Care Needs of Children in Foster Care and Those Aging Out of Foster Care .\") Federal child welfare law requires cooperation between state child welfare and Medicaid agencies to ensure that the health needs of children in foster care are properly identified and treated. Given the distinct roles played by the child welfare and Medicaid agencies, understanding precisely what cooperation means and how it should occur remains a question. To date, federal guidance on this matter has primarily focused on monitoring psychotropic medication use and improving access to psychosocial mental or behavioral health screening and services. (For more information, see \" Child Welfare Policies Addressing the Health Care Needs of Children in Foster Care and Those Aging Out of Foster Care .\") State child welfare and state Medicaid agencies refer to different, albeit overlapping, populations when describing who is in foster care. For child welfare agencies, children in foster care include all those under the state agency's care and placement responsibility (on a round-the-clock basis) without regard to whether they are eligible for Title IV-E foster care assistance. By contrast, the state Medicaid agency principally counts as a \"foster care\" child any individual eligible for Title IV-E assistance (whether foster care maintenance payments, adoption assistance, or kinship guardianship assistance). For policy makers and researchers this difference in who is counted as being in foster care makes it difficult to understand the type and level of Medicaid services provided to children currently living in foster care versus those who have left foster care for new permanent homes. The difference in meaning of the same term may also introduce challenges for administrators seeking to work across agencies to ensure access to appropriate services for children in foster care. (For more information, see \" Varying Definitions of Children in Foster Care .\") Analysis of state-reported Medicaid claims shows that fee-for-service remains the most common form of payment arrangement for Medicaid services provided for \"foster care\" children. However, there has been strong growth in the use of managed care arrangements to provide Medicaid services to \"foster care\" children (as described by the Medicaid agency). The share of Medicaid services spending provided through managed care arrangements increased from a little more than 5% of total Medicaid services spending for \"foster care\" children in FY2001 to close to 18% in FY2010. Among Medicaid services provided on a fee-for service basis, spending on \"prescribed drugs\" generally grew from FY2001 through FY2008 but appears to have leveled off since that time. Several other fee-for-service categories have been consistently important for Medicaid \"foster care\" children across the FY2001-FY2010 time period. These are \"other services\" (which includes support for certain home and community based waiver services and other items), \"clinic services,\" \"inpatient mental health facilities,\" \"inpatient hospital services,\" and \"rehabilitative services.\" (For more information, see \" CRS Analysis of Medicaid Spending For Foster Care Children .\") As of January 1, 2014, the modified adjusted gross income (MAGI) rule is used in determining eligibility for most of Medicaid's non-elderly and non-disabled populations. In transitioning to MAGI, the ACA directed states to establish income eligibility thresholds for children that are not lower than the effective income eligibility levels that were applicable in the state on the date of enactment of the ACA. Several policies work to ensure that children who would have been eligible prior to the ACA, including those in foster care or those who left foster care for adoption, legal guardianship, or via aging out, do not lose access to Medicaid. (For more information, see \" ACA Income Counting Rule, Protections for Children, and Exemptions .\") The ACA created a new mandatory Medicaid pathway (beginning January 1, 2014) for young adults up to age 26 if they were in foster care at age 18 and were receiving Medicaid. Unlike most Medicaid eligibility pathways, eligibility for former foster youth who aged out of care must be provided without regard to the youths' income and assets. In addition, states may not require mandatory enrollment in Medicaid alternative benefit plans for these individuals, but former foster care youth may be subject to premiums and cost-sharing. Proposed regulations interpret the law to mean that a youth must be enrolled in Medicaid at the time he or she ages out of foster care (as opposed to at any time while the child was in foster care). In addition, proposed regulations and subsequent guidance do not require states to cover eligible foster youth who aged out of care in another state, but permit states to do so. Final regulations on these issues are pending. (For more information see, \" Young Adults Who Were Formerly in Foster Care \" and \" Implementing the New Eligibility Pathway .\") As of January 1, 2014, the ACA requires states to extend Medicaid coverage to certain non-elderly adults with annual income up to 133% of the federal poverty level (i.e., the ACA Medicaid expansion group). However, in June 2012 the U.S. Supreme Court held in NFIB vs. Sebelius that the federal government cannot terminate current Medicaid federal matching funds if a state refuses to expand its Medicaid program to include the ACA Medicaid expansion group. The Supreme Court's ruling effectively allows states to choose whether or not to provide Medicaid coverage to this new eligibility group. As of August 2014, a total of 27 states and the District of Columbia have chosen to do this. More states may choose to do so at any time. In states that elect to include the ACA Medicaid expansion group in their Medicaid state plans, the expansion may enable more family members with children in foster care—or otherwise involved with child welfare—to qualify for Medicaid. (For more information, see \" Eligibility \" and \" Possible Coverage for Child Welfare-Involved Families .\") The ACA made additional changes outside of Medicaid to assist childless adults and children and their families (e.g., children in foster care who are vulnerable to losing Medicaid upon returning home) in obtaining and maintaining Medicaid eligibility, and in obtaining private health insurance. The ACA includes private health insurance reforms that prohibit insurance industry practices such as denying health insurance based on health factors and excluding coverage for preexisting health conditions. These and other provisions are designed to provide protection to potentially vulnerable groups with a high prevalence of preexisting conditions, which could include youth previously in foster care. (For more information, see \" Selected Private Health Insurance Reforms under the ACA .\") The ACA also requires the establishment of health insurance exchanges, which are currently in operation in every state and the District of Columbia. Exchanges provide qualified individuals and small businesses access to private health insurance plans. In general, the exchange plans provide comprehensive coverage and meet all applicable market reforms specified in the ACA. To make exchange coverage more affordable, eligible individuals may receive financial assistance in the form of premium tax credits and cost-sharing subsidies. These ACA provisions may provide additional options to young adults who age out of foster care and/or families who are served by child welfare agencies to access private health insurance. (For more information, see \" Selected Private Health Insurance Reforms under the ACA .\")", "Children in foster care are children that the state has removed from their homes and placed in another setting that provides round-the-clock care (e.g., foster family home, group home, child care institution). Placement in foster care means that a judge has determined that the child's removal from his or her home was necessary because the home was \"contrary to the welfare\" of the child and, accordingly, the judge has given responsibility for the child's \"care and placement\" to the state child welfare agency. The large majority of children enter foster care because of neglect or abuse at the hands of their parents. However, in some instances a child's behavior may also be a reason for entry into foster care; this is more often true for older children.\nDuring FY2013, some 641,000 children spent at least one day (24 hours) in foster care and 238,000 left the system, resulting in more than 402,000 of those children remaining in care on the last day of that fiscal year. Although there is variation at the state level, the national foster care caseload has generally been in decline for more than a decade. Across the nation, there were 122,000 fewer children in foster care on the last day of FY2013 as compared to the last day of FY2002 (when 524,000 were in care).\nFoster care is intended to be a temporary placement for children, and a primary goal of child welfare agencies is to expeditiously find a permanent family for them. For most children who enter foster care, permanency is achieved through returning to their parents (after services have been provided to make this a safe and appropriate permanency home for the child). When reunification is not possible or appropriate, however, children must remain in care until a new permanent adoptive family, legal guardian, or \"fit and willing\" relative can be identified. For some children, no new permanent family is identified. These children, who leave foster care when they reach the state's age of majority, are said to have \"aged out\" of care. This typically occurs at age 18 but may occur a year or more later (usually no later than age 21) if the state chooses to extend foster care custody.\nOf the approximately 238,000 children who left foster care custody during FY2013, most—almost six out of every 10 (59%)—returned to their biological parents or went to live with another \"fit and willing\" relative while another 29% (131,000) left care for new permanent homes via adoption or legal guardianship. However, another 10% (23,000) aged out of foster care custody without reunification or placement in a new permanent family. The number of youth who age out of foster care each year initially increased over the past decade, rising from 19,000 in FY2002 to nearly 31,000 in FY2009, as the share of foster care exits attributable to aging out grew to 11%. The number of children aging out of foster care may have stabilized in recent years due to an expected decrease in the number of children in foster care ages 10 through 17.", "Among a national sample of children who were in families investigated for child abuse and neglect (during 2008-2009), between 31% and 49% were reported by their caregivers to have chronic health conditions. This is more than one and a half times the prevalence of chronic health conditions among the general population of children and is roughly consistent with earlier, mostly smaller-scale studies that found between 35% and 60% of children and youth entering foster care had at least one chronic or acute physical health condition that needs treatment. For example, chronic problems include growth failure, asthma, obesity, vision impairment, hearing loss, neurological problems, gastro-esophageal reflux, sexually transmitted diseases, and complex chronic illnesses.\nChildren in families investigated for abuse and neglect were more often found to have social competency and behavioral problems that may warrant mental health services than children in the population generally and this was especially true for children who, after the investigation, were placed in non-relative foster care or group/residential settings and for children who were living in foster care (or other out-of-home placement setting) three years after the initial child abuse and neglect investigation.\nChildren who leave foster care often carry with them significant health and mental health needs. A national survey of children adopted from foster care found that 54% had special health care needs, which means they have one or more conditions (expected to last 12 months or more) that required ongoing need for more medical, mental health, or educational services than is usual for most children of the same age. Other research has found that young adults who aged out of foster care at age 18 or soon thereafter were more likely than their peers generally to report having a health condition that limits their daily activities and to participate in psychological and substance abuse counseling. They were also less likely to have health insurance. (Research on the health care needs of children who have aged out of foster care, and those who have left foster care for adoption is described further in Appendix A .)", "The majority of federal child welfare policy and funding is provided via programs authorized in Title IV-B and Title IV-E of the Social Security Act.\nUnder two formula grant programs included in Title IV-B—the Stephanie Tubbs Jones Child Welfare Services program and the Promoting Safe and Stable Families program—the federal government provides funds to state child welfare agencies for provision of a wide range of child welfare-related services to children and families. Overall, the focus of those services is to support and strengthen families (whether biological, adopted, or extended) in ways that ensure children's safety, permanence (with a stable family), and well-being. Funding is provided on a discretionary or capped entitlement basis and states may generally choose to serve any child or family they believe would benefit from these services. The exact number of children and families served via these programs is not known. However, most are believed to access services following an investigation or other child protection agency response to an allegation of child abuse or neglect. In FY2012, state child protection agencies conducted some 2.1 million child abuse and neglect investigations or assessments, involving some 3.8 million children. Many states mandate that services be provided during the investigation as needed. In addition, roughly 1.2 million of these children received services after the conclusion of the investigation—either in the home (79% of those receiving post-investigation services) or via removal to foster care (21%).\nThe Title IV-E program has three main components: foster care, adoption assistance, and kinship guardianship assistance. States that choose to operate a Title IV-E program (all states do) must provide foster care maintenance payments to each eligible child in foster care and must enter into an adoption assistance agreement with parents of each eligible adopted child. States are not required to provide kinship guardianship assistance to eligible children who leave foster care for placement with a legal (relative) guardian. However, states may elect to offer this assistance (in which case any child eligible for kinship guardianship, as defined in the state's Title IV-E plan, must be served). Not all children in foster care and not all those leaving care for guardianship or adoption are eligible for federal assistance under Title IV-E, and eligibility for Title IV-E varies by each of these components. (The various Title IV-E eligibility criteria are summarized in the context of Medicaid eligibility in a subsequent discussion.) Funding for the Title IV-E program is authorized as an open-ended entitlement; states are entitled to federal reimbursement for a part of each eligible cost incurred on behalf of an eligible child. In FY2013, close to 608,000 children received Title IV-E assistance on an average monthly basis, and more than two-thirds of these children (71%) had exited foster care for adoption and were receiving adoption assistance.\nFinally, under the Chafee Foster Care Independence Program (Section 477, Title IV-E of the Social Security Act) state child welfare agencies receive funds to provide independent living services—such as mentoring, tutoring, substance abuse prevention, and preventive health services—to youth who are expected to age out of foster care (without placement in a new permanent family), those who have recently aged out, and those who left foster care for adoption or kinship guardianship at age 16 or older. Services are intended to improve these youths' ability to transition from foster care custody to successful adulthood. Funding is provided on a discretionary and capped entitlement basis.\nEach of these child welfare programs is jointly funded by the state and the federal government, and many program details are determined at the state level. The Children's Bureau within the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), Administration on Children, Youth, and Families (ACYF), administers these child welfare programs at the federal level; individual state child welfare agencies administer them on a day-to day basis.", "As a condition of receiving federal funds dedicated to child welfare purposes, states must meet federal requirements related to planning for and administering services to children and families, and they must provide certain protections for children in foster care. Child welfare policy does not permit states to use federal child welfare program funds (under Title IV-B or Title IV-E) to pay medical expenses of children in care or those who leave foster care due to their age. However, federal child welfare policy requires child welfare agencies to respond to certain health-related requirements.", "Federal law requires that the state child welfare agency have a written plan for each child in foster care, including certain health-related records. These records must include the names and addresses of the child's health care providers, a record of the child's immunizations, information about the child's medication, and any other relevant health information concerning the child. These records must be reviewed, updated, and supplied to a child's foster care parent or provider at the time of each foster care placement. Additionally, a copy of the record must be provided to a youth at the time he/she leaves care due to age.", "As part of the requirements that demonstrate compliance with the Stephanie Tubbs Jones Child Welfare Services Program (Title IV-B, Subpart 1), states must develop and submit to HHS a plan for the ongoing oversight and coordination of health care services, including mental health and dental health services, for each child in foster care. This coordinated strategy and oversight plan must be developed via a collaborative effort between the state child welfare agency and the state agency that administers Medicaid, in consultation with pediatric and other health care experts, as well as experts in, or recipients of, child welfare services.\nThe requirement for states to develop a coordinated strategy and health care oversight plan for children in foster care is relatively new. It was added to the law in 2008 and has been revised twice since then. (In 2010 to include planning related to youth aging out of foster care, and in 2011 to require protocols for use of psychotropic medication and to focus on screening and responding to emotional trauma experienced by children.) Initial federal guidance on meeting this requirement offered states flexibility on how to administer the ongoing oversight while re-iterating the need to include a regular schedule of physical, mental, and dental health screenings, as well as standards of care, that follow existing professional guidelines. In 2014 state child welfare agencies were instructed to provide HHS with a new health care oversight and coordination plan that \"reflect[s] lessons learned since development of the prior plan and continue[s] to strengthen activities to improve the health care and oversight of children and youth in foster care.\"\nThrough early fall 2014 most federal guidance and activities related to meeting this requirement have focused on specific aspects of the plan—developing protocols on the use of psychotropic medication, as well as screening for and meeting the behavioral and mental health needs of children in foster care—and have sought to facilitate cross-agency collaboration on these issues.\nAlthough evidence of their clinical safety and effectiveness for children is often lacking, psychotropic medications are typically prescribed to address mental, emotional, or behavioral issues ascribed to children in foster care. A national study found that between 16% and 23% of children in foster care received psychotropic medication (depending on their length of time in care) while the comparable percentage for all children in Medicaid (based on several statewide studies) was 5% to 6%. Studies that estimated use of psychotropic medication for some part of a child's stay in foster care showed that the medicines were being prescribed to much higher percentages of these children compared to other Medicaid-enrolled children or other children who have had contact with child welfare but were not in an out-of-home placement.\nIn keeping with these efforts, HHS, as part of its FY2015 budget request, proposes a joint agency endeavor (between ACF and CMS) to encourage use of evidence-based psychosocial interventions to address children's mental and behavioral needs and reduce over-prescription of psychotropics among children in foster care. More specifically, the Administration seeks legislative authority and funding to allow ACF to make competitive grants to improve and grow capacity to offer psychosocial interventions, including through multi-agency collaboration, and to allow CMS to provide incentive payments to states that demonstrate measured improvements.", "One of the health care oversight provisions directs states to ensure that each young person aging out of foster care is provided information about designating other individuals to make health care decisions on their behalf in the event that they are unable to do so themselves, and about how to execute what is known as a power of attorney document.\nA health care power of attorney (or health care proxy) is a document that lays out the circumstances under which health care decisions can be made for a person if he or she is unable to make or communicate those decisions. The document designates an individual (sometimes referred to as an \"agent\") who can make decisions on that person's behalf. The agent can be anyone that the individual chooses; the agent does not have to be a relative. The power of attorney form can be tailored to an individual's circumstances, although states have generic forms that can be used.\nThe health care oversight provision on health care power of attorney references the transition planning requirement under Title IV-E of the foster care program. The transition plan requirement directs states to develop a plan for (and with) any youth in foster care for whom the state's responsibility is expected to end because the youth has reached the state's age of majority (i.e., age 18 or a later age, up to 21, at state option). The plan must be developed during the 90-day period immediately prior to the date on which the youth is expected to age out of foster care, and it must include specific options on housing, health insurance, education, local opportunities for mentors and continuing support services, and workforce supports and employment services.\nAs of FY2011, the transition plan must include information about the importance of designating another individual to make health care treatment decisions on behalf of the youth if he or she becomes unable to participate in these decisions and does not have a relative who would be authorized to make these decisions under state law, or he or she does not want that relative to make those decisions. In addition, the transition plan must provide the youth with the option to execute a health care power of attorney, health care proxy, or other similar document recognized under state law. States must meet related requirements under the Title IV-E Chafee Foster Care Independence Program (CFCIP). As part of their application for these funds, states must certify that they meet requirements pertaining to health care power of attorney.\nA health care power of attorney may be especially important for young people aging out of care when they do not have a relative upon whom they can rely to make decisions if they become incapacitated. Even if former foster youth maintain relationships with kin, these relationships may be tenuous. A prospective study that is tracking young people who emancipated from care in three Midwest states found that at ages 25 or 26, roughly one-third to one-half of the former foster youth surveyed reported being \"very close\" or \"somewhat close\" to their biological mother (52%), biological father (31%), grandparents (46%), or \"other relatives\" (39%). (Comparable data were not reported for youth generally.) This suggests that a significant share of former foster youth in the study did not have strong relationships with at least some of their relatives after having been out of care for at least a few years.", "Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term care, covering more than 58 million people in FY2013. The Medicaid program is jointly funded by states and the federal government and many program details are determined at the state level. The Centers for Medicare and Medicaid Services (CMS) within the U.S. Department of Health and Human Services (HHS) is responsible for Medicaid program administration at the federal level, but individual state Medicaid agencies administer their own programs on a day-to-day basis.", "In general, states must provide services described in federal law as mandatory. These include, for example, inpatient hospital services; early and periodic screening, diagnostic and treatment (EPSDT) services (described in more detail later in this report); physician services; and pregnancy-related services. Further, each state must provide coverage for any service described in federal law as \"optional\" if the state has opted to and includes this benefit in its Medicaid state plan. These services include, for example, prescribed drugs, routine dental care, case management services, and inpatient psychiatric care for the elderly and individuals under age 21. These mandatory and selected optional services are referred to as \"traditional\" Medicaid state plan benefits. States define the specific features of each covered benefit within broad federal guidelines. For example, states may place different limits on the amount of inpatient hospital services a beneficiary can receive in a year (e.g., up to 15 inpatient days per year in one state versus unlimited inpatient days in another state). For these reasons, there is great variability across states in terms of their Medicaid benefit coverage.\nAs an alternative to providing all of the mandatory and selected optional benefits under traditional Medicaid, states are permitted to offer Alternative Benefit plans (ABPs). ABPs are a Medicaid benefit structure that has different requirements than the traditional Medicaid benefits. For example, under ABPs states may waive coverage requirements concerning \"statewideness\" and \"comparability\" that otherwise would apply under traditional Medicaid. This flexibility permits the state to define populations that will be served and the specific benefit packages that will be available. In general, ABPs allow states to offer less coverage (fewer benefits) than under traditional Medicaid. However, like traditional Medicaid, ABPs are required to cover EPSDT services, family planning services and supplies, and both emergency and non-emergency transportation to and from providers. This array of benefits might make them more generous than private insurance.", "Eligibility for Medicaid is determined by both federal and state law. While states set eligibility criteria for individuals they serve they must do this within federal minimum standards. Some eligibility groups defined in federal law are mandatory; others are optional. For most groups (mandatory or optional) to qualify for coverage, applicants' incomes, and sometimes their resources or assets, must meet Medicaid financial requirements. Historically, in addition to low-income criteria, Medicaid eligibility was generally limited to certain groups (or categories) of individuals, including those with disabilities, the elderly, children, adults in families with dependent children, and pregnant women. However, with enactment of the ACA, Congress moved away from eligibility restrictions based on these categories and moved toward broader Medicaid eligibility for low-income individuals (under age 65).\nSpecifically, Section 2001 of the ACA added a new eligibility group to the Medicaid statute to include individuals under the age of 65 with income at or below 133% of the federal poverty level provided, generally, that they were not already eligible for Medicaid. Coverage for this new eligibility group—referred to as the ACA expansion group—was to be extended in all states no later than January 1, 2014. However, in its June 28, 2012 decision, National Federation of Independent Business v. Sebelius, the U.S. Supreme Court held that the federal government cannot terminate current Medicaid federal matching funds if a state refuses to expand its Medicaid program to include the ACA Medicaid expansion group. This effectively makes state participation in the expansion voluntary because it limits the ability of the Secretary of HHS to enforce coverage of the expansion group through withholding of federal funds. At the same time, the Court's decision did not specifically affect, change, or limit any other Medicaid or ACA provisions. Further, if a state chooses to accept ACA Medicaid expansion funds (tied to providing coverage to the ACA Medicaid expansion group), it must abide by all the coverage rules related to this new eligibility group. As of early fall 2014, 27 states and the District of Columbia have adopted the ACA Medicaid expansion.", "States have the option to impose premiums or other cost sharing requirements for some Medicaid beneficiaries and to enroll some in Medicaid alternative benefit plans (ABPs), which typically cover fewer services than traditional Medicaid benefit packages. However, children who are in foster care (like most non-disabled children who are Medicaid eligible) and those who leave foster care for adoption or legal guardianship (provided they are Title IV-E eligible) must remain free of any beneficiary cost-sharing requirements. Additionally states are not permitted to require mandatory enrollment of these children in Medicaid ABPs. Federal policy differs somewhat for youth who are eligible under the new mandatory Medicaid pathway for former foster youth who have aged out of care. While states may not require their mandatory enrollment in Medicaid ABPs, former foster youth who aged out of care may be subject to alternative premiums and cost-sharing.", "The EPSDT program is a required benefit for nearly all children (under age 21) who are enrolled in Medicaid. This includes former foster youth under the new mandatory Medicaid eligibility pathway, but like other Medicaid enrollees, only until their 21 st birthday. It covers health screenings and services, including assessments of each child's physical and mental health development; laboratory tests (including lead blood level assessment); appropriate immunizations; health education; and vision, dental, and hearing services. The screenings and services must be provided at regular intervals that meet \"reasonable\" medical or dental practice standards. States are required to provide all federally allowed treatment to correct problems identified through screenings, even if the specific treatment needed is not otherwise covered under a given state's Medicaid plan.\nTracking receipt of EPDST covered services is complicated by the diverse range of licensed providers (e.g., medical doctor, nurse practitioner, dentists, and others) that may offer the services, as well as the wide range of locations in which the screenings or other services may be provided (ranging from well-child clinics to Head Start programs and many other locations). Further, the primary data source on use of EPSDT services is separate from the overall Medicaid claims data reported to CMS and does not include information received by specific eligibility groups.\nAt the same time, EPSDT is clearly a critical benefit for children covered by Medicaid and available information indicates receipt of EPSDT services by Medicaid children, including those in foster care, is not always complete. An early 2000s investigation by the HHS Office of Inspector General (OIG) found inconsistent receipt of basic health care services for children in foster care. Further, the HHS OIG reported in 2010 that many Medicaid-eligible children did not receive all required EPSDT services. In a follow up study conducted in 2013, the HHS OIG found that CMS had taken steps to encourage greater participation in EPSDT screenings and treatments. However, citing data that showed a national participation rate for EPSDT screenings of 63% in FY2013 (well below the HHS goal of 80% participation), it stated that the \"underutilization of medical screenings is an ongoing concern.\"\nDespite this finding that children in foster care may not be receiving all screening or treatments for which they are eligible under EPSDT, researchers have repeatedly shown that per child Medicaid expenditures for beneficiaries counted as \"foster care\" children exceed the per child expenditures for other Medicaid beneficiaries who, like \"foster care\" children, are categorized in the Medicaid data set as \"non-disabled children.\" It is possible that the higher than average costs for foster care children are tied to a relatively small number of children in that population with very high (usually mental health-related) service needs. Additionally, some research suggests that children in foster care with less high-end needs may not always be coded as \"foster care\" children while those with higher needs (and generally longer stays in foster care) are included in the foster care eligibility category.", "Data used by researchers to determine Medicaid spending per foster care child nationally are generally based on eligibility and expenditure claims data submitted to the federal government by state Medicaid agencies via the Medicaid Statistical Information System (MSIS). CRS identified several limitations with regard to what the MSIS data can indicate about spending for children in foster care. These include differences in who is counted as a child in foster care for purposes of Medicaid data (as compared to child welfare data) and incomplete information on types of services provided.", "Both Medicaid and the child welfare programs authorized under Title IV-B and Title IV-E of the Social Security Act are federal-state programs with separate federal policy and data reporting requirements. Currently \"foster care\" children are described differently in these two reporting systems. Consequently the type and amount of Medicaid spending for \"foster care\" children, as reported in MSIS, may vary from the type and amount of Medicaid spending for children in foster care as understood (and counted) by the child welfare agency.\nState child welfare agencies must report data on the demographics and other characteristics of each child in foster care via the Adoption and Foster Care Analysis Reporting System (AFCARS). In this reporting system, a child in foster care generally means a child for whom a court has given the state child welfare agency 24-hour care and placement responsibility. Such a child must be counted in foster care with or without regard to whether the child is eligible for federal foster care assistance under the Title IV-E program. Once the court relieves the state child welfare agency of that responsibility—either because the child with court sanction leaves foster care for a permanent home via adoption, legal guardianship, or reunification; or because the child reaches the state age of majority and is \"emancipated\" by the court (ages out)—the child is no longer considered as a child in foster care.\nBy contrast, for purposes of Medicaid (MSIS) reporting children are counted as \"foster care\" children primarily based on whether or not they are eligible to receive Title IV-E foster care, adoption assistance, or kinship guardianship assistance. This IV-E eligible group includes (1) children counted by the child welfare agency as in foster care, but only if they are eligible for federal (Title IV-E) foster care maintenance payments; (2) the majority of children who have left foster care for adoption; and (3) some children who left foster care for legal guardianship. Further, until July 1, 2014, state Medicaid agencies were instructed to code certain youth beneficiaries who aged out of foster care as \"foster care\" children as well. As of that date states are required to submit Medicaid program data via a revised reporting system. In this new system (T-MSIS) former foster youth who aged out of care are counted separately from children who are in foster care. However, children who leave foster care for adoption or kinship guardianship are expected to continue to be included in the Medicaid \"foster care\" children population.\nThe mismatch in definition of \"foster care\" children makes it impossible for researchers and policy makers to know with certainty the type and level of Medicaid services children currently in foster care receive. In the first place, the Medicaid (MSIS) services data for \"foster care\" children do not clearly include children in foster care who are made eligible for Medicaid through a pathway other than the Title IV-E eligibility group (e.g., low-income or SSI children). Further, children receiving Title IV-E adoption assistance represent the large majority of all Title IV-E children (close to 71% of all children who received Title IV-E assistance in FY2013) and those adoptees are counted as \"foster care\" children for Medicaid purposes. Title IV-E eligible adoptees must by definition have \"special needs\" and may, in general, have somewhat greater health care needs than children in foster care generally. Apart from this concern for researchers and policy makers trying to understand Medicaid services to children in foster care, the mismatched definitions could affect the ability of state Medicaid agencies to administer requirements applicable to children in foster care or otherwise meet the unique needs of children in care. The inability of Medicaid data to accurately identify children served by the program and who were in foster care was a key concern identified in a demonstration project that sought to improve access to and services provided to children in foster care.", "As mentioned, Medicaid data reporting does not allow the amount of spending on foster care children that is provided under the EPSDT benefit to be determined. (T-MSIS will eventually allow for more detailed analysis of EPSDT service use.) Additionally, as discussed in the next section of the report, \"other services\" represents the largest single category of Medicaid services spending on behalf of \"foster care\" children. Although this category includes some discreet items (i.e., eyeglasses, optician fees, and prosthetic devices), it is defined to include certain home and community-based waiver services that cannot be included in any other fee-for-service category. As a fee-for-service category then, it gives limited information about the types of services provided to foster care children with Medicaid dollars.\nFinally, Medicaid (MSIS) data on specific types of services provided are only available if the service provider is paid under a fee-for-service arrangement. Under fee-for-service, state Medicaid agencies pay providers directly for each covered service received by the Medicaid beneficiary. Most Medicaid benefits for \"foster care\" children are paid through this arrangement. However, as discussed in the next section, an increasing share of Medicaid benefits—including those paid to foster care children—are paid under managed care arrangements. Under managed care, in general, state Medicaid agencies typically pay a monthly fee to a managed care plan for each person enrolled in the plan. The managed care plan then pays providers for the Medicaid services an enrollee receives that are covered in the plan's contract. For purposes of reporting to MSIS, the state Medicaid agency simply notes total spending for beneficiaries under managed care plans (and most of this spending is referred to as \"capitated\" spending).", "Despite these limitations, analysis of MSIS data does provide an important picture of Medicaid spending for a broad range of children who were previously in foster care or who are currently in foster care. To determine Medicaid spending for these \"foster care\" children, CRS reviewed, for selected years, the amount of Medicaid spending by type of service (MSIS claims data) for children coded as \"foster care\" children (under MSIS eligibility categories). Analysis of FY2010 total spending in Medicaid found that while children coded as \"foster care\" children represented only 3% of all nondisabled Medicaid child recipients in that year, they accounted for approximately 10% of expenditures for all non-disabled children. FY2010 per capita Medicaid service spending for a \"foster care\" child was $6,188, compared to $1,999 per nondisabled child recipient and $14,690 per disabled child recipient.", "For FY2010, the most recent year for which data were available for this analysis from all states, state Medicaid agencies reported spending $5.754 billion on services for children in foster care. Of this amount $1.033 billion (18%) was spent under managed care arrangements (also referred to as capitated payments) and the remaining $4.721 billion (82%) was spent on fee-for-service benefits. State Medicaid agencies report service spending in multiple \"types of service\" categories, including at least three managed care categories and 26 fee-for-services categories.\nFrom FY2001 through FY2010, use of managed care to provide Medicaid services to \"foster care\" children increased from roughly 9% of Medicaid service spending for \"foster care\" children in FY2001 to close to 18% in FY2010. Although this represents significant growth, use of managed care for \"foster care\" children remains far less common than for other non-disabled children served by Medicaid. (In FY2010, 44% of Medicaid services spending for non-disabled children was paid under managed care arrangements.)\nAcross the same time period, combined spending on six Medicaid fee-for-service spending categories accounted for more than $6 of every $10 in Medicaid service spending for \"foster care\" children. These six categories are \"other services\" (which includes spending on some home and community-based waiver services, as well as spending for prosthetic devices, eyeglasses and optician fees), \"clinic services,\" \"prescribed drugs,\" \"inpatient hospital services,\" \"inpatient mental health facilities (for individuals under age 21),\" and \"rehabilitative service.\" (For more information on spending by each Medicaid services category see Appendix B .)\nFigure 1 shows (in constant FY2010 dollars) trends in spending by each of the six fee-for-service spending categories, as well as for a seventh, \"targeted case management\" (which has historically been important for children in foster care). Further, it shows trends in spending for two major managed care categories: \"HMO-capitated\" and \"PHP-capitated.\" (These trends, and each of these Medicaid service spending categories (managed care and fee-for-service) are described in the subsequent pages.)", "As mentioned previously, managed care typically involves state Medicaid agencies paying a monthly fee to a managed care provider for each person enrolled in the managed care plan. Before 1997, use of managed care service delivery for Medicaid beneficiaries who were foster care children was not permitted outside of waiver authority. The Balanced Budget Act of 1997 loosened the Medicaid managed care requirements generally. However, children under age 19 with special needs (including children receiving foster care or adoption assistance under Title IV-E and foster care children in out-of-home placements) are protected groups in that such children are exempt from mandatory enrollment in managed care. As of FY2010, 35 states enrolled at least some of their Medicaid foster care populations in managed care programs.\nThere are two major types of managed care spending: HMO-capitation and prepaid health plans (or PHP-capitation). As shown in Figure 1 , the largest growth in managed care spending for foster care children is in \"HMO-capitation.\" In this managed care arrangement, the HMO (health maintenance organization), under a contract with the state Medicaid agency, receives a \"capitated\" (fixed) fee to provide a comprehensive set of services. Spending increased in this category from 5.3% of all Medicaid service spending for \"foster care\" children in FY2001 ($240 million in constant FY2010 dollars) to 17.9% in FY2010 ($696 million). Growth in \"prepaid health plans\" (shown as \"PHP-Capitation\" in Figure 1 ) has been less dramatic and, since FY2008, appears to have stalled or at least slowed. In the PHP-capitation model of managed care, state Medicaid agencies contract with physicians, physician groups, clinics, or other entities to provide a limited range of services (e.g., mental health, transportation) for a fixed fee. Spending under the PHP-capitation model represented 4.2% of Medicaid services spending for foster care children in FY2001 ($196 million in constant FY2010 dollars) and had risen to 5.7% of this spending in FY2010 ($326 million).\nSome states also use a third model of managed care, referred to as primary care case management (or PCCM capitation in MSIS). Under the PCCM model, the managed care provider receives a monthly fee to act as a care coordinator and/or gatekeeper to the services specified under the managed care contract. However, services provided are generally paid by the state Medicaid agency through the fee-for-service delivery system. Use of this managed care model appears limited for Medicaid foster care children, with just $2 million in reported spending on this model in FY2001 (constant FY2010 dollars) and $8 million in FY2010. (These data are not shown in Figure 1 .)\nTraditionally some advocates have been concerned that use of managed care for such a high-need and high-risk population could restrict services provided to foster care children and some research found that children in counties with managed care for behavioral health care had lower odds of inpatient mental health service use. However, other researchers and advocates argue that properly structured managed care can improve access to services and coordination of health care for children in foster care.", "Under a fee-for-service model, states pay providers directly for each covered service received by the Medicaid beneficiary. MSIS includes some 26 fee-for-service service type categories. Across the decade (FY2001-FY2010), spending on six Medicaid fee-for-service categories represented between 67% (FY2005) and 63% (FY2010) of all Medicaid services spending for children in foster care (including managed care spending). These top fee-for-service categories (and spending for them in FY2010) are\n\"other\" services, which include prosthetic devices, eyeglasses, and certain Home and Community-Based waiver activities, provided those waiver activities could not be reported in any other type of service category provided in MSIS ($903 million); prescribed drugs ($743 million); clinic services, which include preventive, diagnostic, therapeutic, rehabilitative, or palliative items or services provided in a facility for outpatients ($517 million); mental health facility (inpatient) for individuals under 21 ($513 million); inpatient hospital services ($462 million); and rehabilitative services, which include medical or remedial services recommended by a physician or other licensed practitioner of the healing arts for a maximum reduction of physical or mental disability and restoration for a recipient to his/her best possible functional level ($463 million).\nAs shown in Figure 1 , across FY2001-FY2010 Medicaid fee-for-services spending for \"foster care\" children (on an aggregate basis) held constant or showed some decline for most categories with the largest spending. One notable exception is \"prescribed drugs,\" which saw increases in spending that took it from the sixth largest Medicaid services spending category for \"foster care\" children in FY2001 to the second largest such category by FY2008. Between FY2008 and FY2010, Medicaid spending on prescribed drugs for \"foster care\" children appears to have stabilized. Separately, spending on \"other services,\" which ranked as the largest services spending category across all the years studied, showed an initial spike before declining.\nFinally, of the categories with declines in aggregate spending, among the most noticeable decreases were spending for \"rehabilitative services,\" (which ranked second among all Medicaid services spending categories for \"foster care\" children in FY2001 and sixth in FY2010), and in \"targeted case management\" (TCM), (which ranked sevnth among all fee-for-services spending categories in FY2001 and eleventh in FY2010). Both TCM—which may be used to help individuals within specific populations or areas of a state gain access to needed medical, social, educational, and other services—and \"rehabilitative services\"—which are medical or remedial services used to reduce disability and restore an individual to his or her best possible level of functioning—are optional Medicaid benefits that have consistently been used to help meet needs of children in foster care. Additionally, both have been the subject of legislative and/or regulatory activity in the past decade. Although Congress (and the Obama Administration) generally acted to preserve access to these benefits for foster care children, the MSIS data suggests some decline in Medicaid services spending on \"foster care\" children in both of these categories.\nA recent survey of state child welfare administrators found that child welfare agencies were spending fewer dollars to provide the non-federal share of Medicaid spending for rehabilitative services and TCM. However, some child welfare agency administrators suggested that these declines had more to do with changes in the entity responsible for providing these Medicaid benefits for children served by the child welfare agency, rather than a decline in access to the service for these children. They pointed to this explanation especially with regard to rehabilitative services, but suggested real declines in the use of TCM for the population.", "The major Medicaid eligibility pathways available to children and youth currently or formerly in foster care are the focus of this section. Notably, four pathways are specifically available for this population—a mandatory pathway for children if they qualify for the Title IV-E program (whether in foster care or after leaving foster care for adoption or legal guardianship); an optional pathway for certain children who are adopted (primarily from foster care) and who receive adoption assistance funded wholly by the state; as of January 1, 2014, a mandatory pathway for young adults up to the age of 26 who \"aged out\" of foster care at age 18 (or 19, 20, or 21 years of age if the state extends federal foster care to that older age); and an optional pathway for \"independent foster care adolescents\" up to the age of 21 who were in foster care at age 18. Current and former foster children and youth may also qualify for Medicaid through other mandatory and optional pathways that are available to eligible individuals based primarily, but not exclusively, on disability or income. A number of eligibility groups that existed in Medicaid statute and regulations prior to the enactment of the ACA were consolidated in 2014 as a result of the transition to the ACA income counting rule.\nImplementation of the ACA income counting rules as they relate primarily to children in or formerly in foster care are discussed first in this section. This is followed by a look at each of the Medicaid eligibility pathways available for these children and youth, including those that were consolidated beginning in 2014 and the applicable income counting rules. (For additional information on those pathways see Table C-1 of Appendix C .) Finally, this section addresses possible Medicaid coverage for the families who come into contact with child welfare services.", "The ACA established the Modified Adjusted Gross Income (MAGI) income counting rule, which draws on federal income tax rules to establish uniform standards for what income to include or disregard in determining Medicaid eligibility for most non-elderly and non-disabled people. Medicaid's MAGI income counting rule is set forth in law and regulation. In addition to specifying the types of household income that must be considered during eligibility determinations, the policies also define \"household.\" The income of any person defined as a part of an individual's household must be counted when determining that individual's income level for purposes of a Medicaid eligibility determination.\nThe ACA required states to transition to the MAGI income counting rule no later than January 1, 2014. In transitioning to the new income counting rule, states were required to establish income eligibility thresholds no less than the effective income eligibility levels that were applicable in the state on the date of enactment of the ACA (i.e., March 23, 2010). The ACA also included maintenance of effort (MOE) provisions, under which states were required to maintain their Medicaid programs for adults with no more restrictive eligibility standards, methodologies, and procedures through December 31, 2013 (i.e., until the exchanges were operational), and for Medicaid-eligible children up to age 19 until September 30, 2019. (Failure to comply with the ACA MOE requirements means a state loses all of its federal Medicaid matching funds.) The purpose of these policies was to ensure that individuals who were eligible for Medicaid prior to 2014 could maintain coverage in 2014 under the MAGI-equivalent income standards. Additionally, through December 31, 2013, states were permitted to establish more expansive income eligibility policies (within federal parameters). As of January 1, 2014, states are no longer permitted to expand eligibility standards to higher income levels through the adoption of income disregards.\nAs with other Medicaid-eligible populations, these transition policies helped ensure child welfare-involved children and their families, including those in foster care or those formerly in foster care, did not lose Medicaid coverage. Several additional policies under the MAGI income counting rule have special significance for children in foster care, and those who left for adoption, legal guardianship, or via \"aging out.\" These include regulatory exceptions to how household is defined, which effectively ensure that the income of a child's foster parent or legal guardian (relative or non-relative) is not included in the determination of a child's income level; and specific statutory exemptions from the MAGI counting rules for certain eligibility groups (including those eligible for Medicaid because they are receiving Title IV-E assistance or Supplemental Security Income, SSI). Special relevance of these and the MAGI transition policies to certain children in foster care, as well as those leaving for adoption, legal guardianship, or via aging out, is briefly discussed next.", "States have long been allowed to establish \"reasonable categories\" of children who are eligible for Medicaid (e.g., children in foster care receiving state support only) and under pre-ACA law states could choose to disregard any or all income of children in these groups when determining their eligibility for Medicaid. In developing a plan to transition to MAGI counting rules, states—as described already—were required to maintain income eligibility standards that existed on the date of ACA enactment, March 23, 2010, or under the transition-to-MAGI guidance at state option (and provided the standards were not more restrictive), December 31, 2013. If as of that date the state had chosen to disregard all income for children in state-funded foster care (i.e., for this \"reasonable category\" of children), the equivalent income standard for coverage of these children under the MAGI income counting rule (effective January 1, 2014) is to apply no income test. If as of that date the state had chosen not to include a full income disregard for children in state-funded foster care (i.e., for this \"reasonable category\" of children), the equivalent income standard (expressed as a percent of the federal poverty level) for coverage of these children under the MAGI income counting rule (effective January 1, 2014) is the MAGI-equivalent income standard, which takes into account any income disregards that were applied as of that date.", "In general, the Medicaid MAGI counting rule provides that (for purposes of determining Medicaid eligibility based on income) a child's income level is determined by the household income of the tax filer who claims the child as a dependent on his or her tax return. However, the MAGI counting rules include some exceptions to this general rule. Specifically, for children living with someone who expects to claim them as a dependent on their tax return and who is not their parent (biological, adoptive, or step), as well as for individuals who do not need to file an income tax return and do not expect to be claimed as a dependent on any individual's tax form, \"household income\" is based on the child's income alone . (Or, if the child is living with a sibling(s) who is also under age 19, or, if elected by a state, a fulltime student under age 21, the child's income and income of any sibling(s) with whom he or she lives is countable income.) Among other things, this rule is meant to ensure that the income of a child's foster parent, legal guardian (relative or non-relative), or other kinship caregiver is not included when counting a child's income for purposes of determining Medicaid eligibility.", "Further, under the ACA certain groups are exempt from the MAGI income counting rule. For MAGI exempted groups, pre-ACA income determination rules under Medicaid will continue to apply. These include children who are categorically eligible for Medicaid based on their receipt of foster care, guardianship, or adoption assistance payments under the Title IV-E program, as well as certain disabled individuals, including those receiving SSI payments. Also, as described previously, pre-ACA Medicaid income counting rules apply for children eligible under an optional eligibility group for children receiving state foster care payments or in state-funded foster care if the state covers such optional groups and does not apply an income test. Finally, there are no income eligibility criteria for the new mandatory Medicaid eligibility pathway for certain youth who age out of foster care. Therefore, the MAGI income counting rule does not apply to this group.", "", "The primary mandatory Medicaid eligibility pathway for children in foster care applies only to those children who qualify for assistance under the Title IV-E program. To qualify for Title IV-E foster care assistance, the state child welfare agency must determine that the child in foster care (1) met income/assets tests and family structure rules in the home he/she was removed from; (2) had specific judicial determinations made regarding the reasons for the child's removal from that home and placement in foster care; (3) is living in an eligible licensed setting with an eligible provider(s); and (4) is under the age of 18, or, if the state the youth resides in has elected this option, age 19, 20, or 21 (provided a youth of this age meets certain education, work, or other specified requirements). Individuals in this eligibility group are automatically eligible for Medicaid without a separate income test performed by the Medicaid program and this eligibility category is exempt from the MAGI income counting rules.\nOther mandatory pathways available to children in foster care who are not eligible for Medicaid under the Title IV-E category primarily require a child to meet certain income eligibility criteria and as of January 1, 2014, all states must count income under these mandatory pathways using the MAGI rule. Under the Medicaid eligibility pathway described by CMS as the \"consolidated group for children\" any child (under age 19) who is considered to have countable income of 133% of federal poverty level is eligible, although in some instances (and with variation across states) a child with higher countable income would be eligible. Under prior income counting rules, a child in state-funded foster care may have been considered a \"family of one\"—meaning only the child's income could be counted against an income eligibility test. Under MAGI counting rules this same policy is effectively continued.\nFor young adults ages 19 through 20 who are in foster care, but are not receiving Title IV-E assistance, the mandatory Medicaid eligibility pathways that are available to adults generally, including pregnant women with income at or below 133% federal poverty level, are available. These eligibility pathways are subject to MAGI income counting rules.\nFinally, children in care, including those who are age 18, may also be eligible under the Supplemental Security Income (SSI) eligibility pathway for certain individuals (any age) with severe disabilities. These \"disabled\" children are not subject to MAGI rules.", "A child in foster care who is not eligible for a mandatory pathway may be covered under several optional Medicaid eligibility groups. The major coverage option is known as the Ribicoff pathway, named for the late Senator Abraham Ribicoff. The Ribicoff pathway allows the state to extend Medicaid eligibility to children under the age of 21 (or under the age of 20, 19, or 18 as the state may choose) who meet a state-specific income test that (prior to January 1, 2014) was linked to the former cash assistance program known as Aid to Families with Dependent Children (AFDC). Under this pathway, states are allowed to choose to cover all children who meet those income criteria, or they may choose to cover \"reasonable categories\" of eligible children, such as those residing in institutions or children or youth in foster care placements or adoptive homes who are not eligible to receive Title IV-E assistance. As of January 1, 2014, eligibility under this pathway must be determined via MAGI income counting rules. States that provided eligibility through this pathway as of March 23, 2010, must continue to provide coverage up to an income standard (percentage of the federal poverty level) that is equivalent to the effective income standard as of that date. (The effective income standard must take into account any income disregards that applied at that time.) Further, if the state provided coverage at a higher effective income standard as of December 31, 2013, the state may continue to provide coverage under this pathway up to that higher income standard.\nAccording to CMS, as of December 31, 2013, 20 states used this Medicaid eligibility pathway to cover non-Title IV-E foster care children as a \"reasonable category\" of children. Of these 20 states, 10 states covered these children with no income test (and thus will not have an income test for these groups under MAGI), and 10 states covered them with an income test.\nStates may also use other optional pathways that are available to children and adults generally to provide Medicaid coverage to children in foster care. One such pathway is available to infants (and pregnant women) in families with incomes between 133% and 185% of the federal poverty level. States can also take up what are known as Medicaid expansions under the State Children's Health Insurance Program (CHIP) that provide coverage to infants and children through age 18 in families with higher incomes. MAGI income counting rules apply for these groups. Another optional pathway is for children with high medical expenses that can be deducted from income. Such deductions allow them to meet applicable Medicaid financial requirements. This is referred to as the \"medically needy\" pathway—the MAGI-income counting rules do not apply for this group. Any state that opts to provide medically needy coverage is required to extend that coverage to children under age 18, pregnant women, certain newborns, and certain other specified, protected persons. Other groups can be included as well, such as children ages 18 through 20. Finally, states that want to provide coverage to adult groups beyond what the law allows may seek approval from the Centers for Medicare & Medicaid Services (CMS) for Section 1115 waivers. This coverage may provide access to a more limited set of benefits than what would be available under Medicaid state plan services. Section 1115 waivers could be available to former foster care youth ages 18 through 20 who do not otherwise qualify for Medicaid and are subject to the income counting rules specified in the waiver Special Terms and Conditions.", "According to a national study conducted in the early 2000s, more than 99% of children in foster care were eligible for Medicaid. Most (76%) were believed to be eligible under a mandatory pathway and about 23% based on optional eligibility pathways selected by the state. Among those children eligible on a mandatory basis, the survey respondents estimated about three-fourths were eligible because they received Title IV-E assistance, close to 11% under the SSI eligibility pathway, and about 14% based on the very low income of their biological families from which they were removed.\nNearly all respondents in this study (state and county health and child welfare officials) reported that there were mechanisms in place to ensure that children received health care coverage immediately upon entering foster care. Most (93%) reported that Medicaid eligibility could be established through presumptive eligibility. Other mechanisms for minimizing delays in Medicaid enrollment included minimizing the time required to initiate the Medicaid application by child welfare staff (80%); a computer link between the child welfare and Medicaid agencies (70%); trained child welfare staff to certify for eligibility (57%); and uniform intake applications for child welfare and Medicaid (50%).\nThis study also examined timing of application for coverage and recertification of eligibility. Officials reported that applications for Medicaid were made immediately for 36% of children entering foster care (even though nearly all of these respondents also reported that mechanisms were in place to ensure immediate coverage upon entering care). Applications were made for 33% of children within seven days of entering foster care; and applications were made for the remaining 31% of children seven days or more after entering care. With regard to the frequency of redetermination for Medicaid eligibility, 64% of respondents reported that recertification happens annually without regard to the child's foster care placement setting; approximately one-fifth reported recertification every six months.", "", "As of January 1, 2014, certain former foster youth are eligible for Medicaid under a specific mandatory pathway created for this population in the ACA. Former foster youth are eligible if they meet the following requirements:\nare under 26 years of age; were not eligible or enrolled under existing Medicaid mandatory eligibility groups, or described in any of the existing Medicaid mandatory eligibility groups, but have income that exceeds the upper income eligibility limit established under any such group; were in foster care under the responsibility of the state on the date of attaining 18 years of age (or 19, 20, or 21 years of age if the state extends federal foster care to that older age); and were enrolled in the Medicaid state plan or under a waiver while in foster care.\nThe ACA specifies that income and assets are not considered when determining eligibility for the new eligibility group of former foster care youth. Therefore, the MAGI income counting rules do not apply to this group. In addition, federal reimbursement (matching) for a part of the cost of providing services to individuals in this new mandatory eligibility group for former foster care youth is available at the state's regular Federal Medical Assistance Percentage (FMAP) rate.\nYouth age 18 and older who were formerly in care and do not qualify under the pathway for former foster youth may be eligible for Medicaid under other mandatory pathways available to adults generally. For example, if former foster youth meet certain income and other criteria, they may qualify under the pathways available to low-income pregnant women and adults with disabilities who are eligible for SSI. MAGI counting rules do not apply to youth eligible via SSI but may apply under other pathways.", "In states that utilize the \"Chafee option\"—named for the late Senator John H. Chafee—youth who meet the definition of \"independent foster care adolescent\" may be eligible for Medicaid. The law defines an \"independent foster care adolescent\" as someone who is under the age of 21, was in foster care under the responsibility of the state on his or her 18 th birthday, and meets the income or resource criteria established by a state (if any). States that elect to provide Medicaid through the Chafee option may further restrict such eligibility based on any \"reasonable\" criteria, including whether or not the youth had received Title IV-E funding.\nAs of 2012, most states that provided Medicaid eligibility under the Chafee option (25 out of 30) did not apply an income test. Under the MAGI counting rule, states must maintain an income standard that is no lower than the standard in place in the state as of the date of ACA enactment (March 23, 2010) or at state option, December 31, 2013. For states that applied no income test to the Chafee eligibility pathway as of that date, the MAGI-equivalent income standard would be to apply no income test when determining a youth's Medicaid eligibility under this pathway. In states that did apply an income test, the effective income standard to be used when applying the MAGI counting rules must be no lower than the test that was in place as of that date.\nThe new mandatory Medicaid pathway for former foster youth who have aged out of care does not completely supersede the optional Chafee pathway. For example, states may continue to use the Chafee pathway to cover any youth who turned age 18 in foster care and was not enrolled in Medicaid at that time. However, because more than 99% of children in foster care are estimated to be enrolled in Medicaid this circumstance may not occur often.", "The mandatory Medicaid eligibility pathway for former foster youth who aged out of foster care is distinct from the eligibility pathway sometimes referred to as the \"ACA expansion group.\" While the Supreme Court's decision in National Federation of Independent Business (NFIB) v. Sebelius effectively allows states to choose whether to provide Medicaid coverage to the ACA expansion group, it did not have this effect on the new eligibility category for former foster youth. Accordingly, all states were expected to comply with new mandatory coverage category for youth who have aged out of foster care as of January 1, 2014.\nAs of early fall 2014, CMS had not issued a final rule with regard to the new Medicaid eligibility group for former foster youth who aged out of foster care. However, in January 2013 it proposed rules for this group and in December 2013 it provided some clarifying guidance. This guidance notes that any youth who was in foster care—as that term is defined in federal child welfare regulations—may qualify for the new former foster youth Medicaid eligibility group. This includes youth who were in the care and placement responsibility of a state or tribal child welfare agency without regard to whether the youth received Title IV-E assistance or were placed in licensed or unlicensed foster care living arrangements. Additionally, the proposed rule interpreted the law to mean that a youth must be enrolled in Medicaid at the time he or she ages out of foster care (as opposed to at any time while the child was in foster care). Subsequent guidance also explained that states have flexibility in determining the process for verifying that youth were in foster care receiving Medicaid at age 18 (or a later age if applicable), and may allow youth to attest to this themselves. Separately, the subsequent guidance clarified that individuals who would qualify for Medicaid under both the new group for former foster and the new low-income adult category must be enrolled under the group for former foster youth.\nAs first described in the January 2013 proposed rule, CMS interprets the law to mean that a state is not required to cover former foster youth who would otherwise be eligible under this pathway if the youth aged out of care in a different state. At the same time, the proposed rule notes that states would be permitted to provide this coverage and, pending final regulations, the agency has instructed states that it will approve Medicaid state plan amendments from states opting to provide coverage to such former foster youth. As of mid-October 2014, as many as 12 states extended this coverage (CA, GA, KY, LA, MA, MI, MT, NY, PA, SD, WI, and VA).\nCMS explicitly sought comment on its interpretation of the law, which could mean former foster youth who move across state lines between ages 18 and 26 lose access to this Medicaid coverage. In a letter to HHS, some Members of Congress noted that young people who (under the ACA) receive health insurance coverage through their parents' plans until age 26 do not have a comparable residency requirement. The letter also asserted that former foster youth need access to quality health coverage, regardless of state of residency, because of their relatively negative outcomes across a number of health and other domains. Some stakeholders have asserted that providing coverage to youth under the new pathway can help to reduce costs in the future because youth will presumably receive routine and preventive services. Legislation introduced in the 113 th Congress ( S. 2461 and H.R. 5364 ) seeks to ensure that Medicaid coverage is available for former foster youth under this pathway regardless of where they reside.\nA separate issue with regard to scope of coverage under this new eligibility pathway for former foster youth concerns the age at which youth may qualify for this pathway. Specifically, any youth who ages out of foster care prior to reaching age 18—such as the approximately 1,000 to 2,000 foster youth who emancipate at age 17 each year —are not eligible for the new mandatory pathway. The law requires that youth must have been in foster care under the responsibility of the state at age 18 (or a later age as elected by the state under its Title IV-E plan). These youth would also not be eligible for the Chafee pathway, which requires them to have been in foster care on their 18 th birthday. States may consider taking steps to inform such youth that they would be ineligible for Medicaid coverage under these pathways if they are formally \"emancipated\" (age out) from care before age 18.\nFor those youth who are eligible for the new Medicaid eligibility pathway, another implementation question has to do with the extent to which youth can be enrolled and maintain enrollment under the mandatory Medicaid pathway when they age out of foster care. Current child welfare law provides that as part of a transition planning process for youth aging out of foster care, each youth must be made aware of specific health insurance options. This planning process, which is to occur within 90 days of a youth's aging out of care, might be used to inform youth about Medicaid eligibility and enrollment. CMS has highlighted that at least one state, Idaho, is using the state child welfare independent living coordinator to reach out to former foster youth.\nA 2012 HHS-supported study on state implementation of the Chafee optional pathway for former foster youth suggests that Medicaid administrators, child welfare staff, and the youth themselves may need to be educated about the new eligibility pathway for former foster youth. This is, in part, because youth aging out of foster care make up a very small share of Medicaid recipients, and few Medicaid staff may be knowledgeable about the new pathway. Further, Medicaid and child welfare agencies may lose contact with the youth when they are no longer involved in foster care and/or lack stable housing. Indeed some state Medicaid administrators have raised concerns about the costs of tracking, identifying, and confirming eligibility for this population. Some stakeholders have suggested that the federal government could help facilitate data sharing to ensure that states are aware of other state policies for providing coverage, including how states verify that youth aged out in these other states.", "Under the optional Chafee pathway, Medicaid eligibility for youth formerly in foster care varies significantly by state. As of 2012 (the most recent year available), 30 states had extended the Chafee option to eligible youth. As required in the authorization legislation, youth covered under the Chafee pathway must have been in foster care on their 18 th birthday. Some states reported having explicit definitions of what it means to be in care on a youth's 18 th birthday. For example, some states required these youth to be in certain types of placements. The authorizing law allowed states to impose income and resource requirements; however, few states had opted to include these requirements. All states reported requiring youth to be residents of the state while covered under the Chafee option, and most states required youth to have been in foster care in that state on their 18 th birthday to qualify under Chafee. Nearly all states automatically enrolled youth (27 states), sometimes with the youth's involvement (11 of these 27 states). Just over half of the states (17 states) reported that they do not require annual recertification of eligibility or require recertification that is \"passive,\" whereby the state sends out notifications or letters to check for changes to the youth's eligibility status but the youth are not required to respond.", "", "Children who leave foster care for placement in a new permanent home—via adoption or legal guardianship with a relative—and who receive Title IV-E adoption or kinship guardianship assistance are eligible for Medicaid under the mandatory Title IV-E pathway. MAGI income counting rules do not apply to these children. Instead, Title IV-E eligibility is determined by the state child welfare agency. The state Medicaid agency must enroll children found to be Title IV-E eligible by the state child welfare agency and it must not apply any income or resources test to the adoptive parents or relative guardians.\nFurther, children moving from receipt of a Title IV-E foster care maintenance payment to coverage under a Title IV-E adoption assistance agreement or receipt of Title IV-E kinship guardianship assistance payments must not be required to submit a new application for Medicaid eligibility, and they remain eligible for Medicaid (without redetermination) for as long as a Title IV-E adoption assistance agreement on their behalf remains in effect or for as long as they are receiving Title IV-E kinship guardianship assistance payments. In general, once it is established, a state child welfare agency must maintain a Title IV-E adoption assistance agreement until a child's 18 th birthday or (at state option, or on a case-by case basis) up to age 19, 20, or 21—assuming, in either case, that the adoptive parent(s) remain legally responsible for the child and are providing support to the child. The same age provisions apply with regard to Title IV-E kinship guardianship payments (again, providing that a relative guardian continues to have legal responsibility for the child and is providing support to the child).", "States that operate a Title IV-E program are required to enter into an adoption assistance agreement with the adoptive parent of each child who is determined by the state to have \"special needs.\" No child may be eligible for Title IV-E adoption assistance unless the state determines the child to have special needs. Additional eligibility rules for Title IV-E adoption assistance (related primarily to the income and resources of the home from which the adopted child was previously removed to foster care) are being phased out (based primarily on the age of the child at the time of adoption). However, those income and resource rules, which are applied by the state child welfare agency to determine Title IV-E eligibility, will continue to apply to some children until the first day of FY2018 (October 1, 2017). As noted previously, this group is exempt from the MAGI income counting rules.\nA \"special needs\" determination by the state child welfare agency must include findings that the child cannot be returned to his/her parents and that there is a factor or condition specific to the child—such as the child's age; membership in a sibling group; race and ethnicity, medical condition; or a physical, emotional, or mental disability—that makes it \"reasonable to conclude\" that the child will not be adopted without provision of adoption assistance and/or medical assistance. Finally, unless it is not in the child's best interest (for instance, because of significant bonding with foster parents), the state must also determine that reasonable but unsuccessful efforts to place the child for adoption without such assistance have been made.", "States that operate a Title IV-E program are not required to provide kinship guardianship assistance but may choose to do so. To be eligible for Title IV-E kinship guardianship assistance, a child must have been eligible to receive Title IV-E foster care maintenance payments while in foster care and been living (for at least six consecutive months) with the prospective relative guardian. (The requirement that the child be eligible for Title IV-E foster care assistance effectively means the child must meet an income and asset test, which is generally tied to the biological home the child lived in before entering foster care.) Further, the state child welfare agency must have determined that neither returning home (to biological parents) nor placement for adoption are appropriate permanency plans for the child; the child has a strong attachment to the relative guardian; and the relative guardian has a strong commitment to providing permanent care for the child. As noted previously, this group is exempt from the MAGI income counting rules.", "Federal child welfare policy requires states to provide health insurance coverage (either Medicaid or another program with comparable benefits) to any child on whose behalf they have in place a (state-funded) adoption assistance agreement. These are adopted children who meet the state definition of \"special needs\" but do not meet other Title IV-E eligibility criteria (e.g., income or asset rules tied to their biological family). States may use a variety of the optional pathways similar to those available for children in foster care to provide Medicaid or CHIP coverage to these adopted children. However, under these pathways the income and resources of the adoptive parents or guardian would generally be counted in determining eligibility and MAGI income counting rules apply.\nOne notable exception is available to a child (1) for whom the state child welfare agency has entered into an adoption assistance agreement with his/her adoptive parent or parents; (2) for whom the state child welfare agency has determined there is a pre-existing need for special or medical rehabilitative care that would preclude the child's adoption absent medical assistance; and (3) who at the time the adoption assistance agreement was made, was eligible for Medicaid. In states that elect to provide this optional coverage, children who receive wholly state-funded adoption assistance are Medicaid eligible without regard to the income or resources of their adoptive parents. Although the MAGI income counting rule applies to this group, no income test is required (beyond initial eligibility for Medicaid at the time of the adoption assistance agreement). Therefore application of MAGI would not appear to affect any child's eligibility under this pathway.\nOnly one state (New Mexico) has not taken the specific Medicaid optional pathway offered for state-funded adoptions. It appears this optional eligibility pathway may largely be supplanted by the mandatory Title IV-E pathway as of FY2018. That is the year in which new Title IV-E adoption assistance eligibility criteria included in the Fostering Connections to Success and Increasing Adoptions Act of 2008 ( P.L. 110-351 ) will be fully phased in. Those new eligibility criteria provide that Title IV-E assistance is available to any adopted child for whom the state determines there are \"special needs.\"", "A Title IV-E adoption assistance or kinship guardianship assistance agreement remains in effect between a state child welfare agency and the adoptive parents (or relative guardian) even if the adoptive family (or relative guardian) moves out of state and the Title IV-E (child welfare) agency in the state that originally entered into the agreement continues to be responsible for providing any adoption or guardianship assistance promised in that agreement. By contrast, a child for whom a Title IV-E adoption assistance agreement is in effect is eligible for Medicaid coverage in the state where the child is residing. For example, if a child is placed out-of-state in a residential facility, the state where that facility is located becomes responsible for Medicaid coverage of the child, while the state where the child's adoptive parents live continues to be responsible for any payments under the Title IV-E adoption assistance agreement. The Interstate Compact on Adoption and Medicaid Assistance, which has been adopted by 49 states and the District of Columbia, governs procedures by which Medicaid coverage of adopted children may be transferred between states.\nWhile continued Medicaid coverage of Title IV-E eligible children who move across state lines is required under federal law, children who are Medicaid eligible under a state-funded adoption assistance agreement are not automatically assured Medicaid coverage if they move to another state. However, some states do offer this coverage to some or all children with state-funded adoption assistance agreements who move out of state.", "The ACA's attention to health insurance coverage and enrollment could affect other populations served by the child welfare agency. States will likely vary in how they implement the required and optional changes to Medicaid law. Therefore, it is not entirely clear how states will address health insurance coverage for children who come in contact with child welfare services—even if they are not removed from their homes—and their families. The following brief discussion highlights some areas that may provide new opportunities for serving child welfare-involved children and their families.", "Child welfare agencies—principally through investigations or other assessments related to alleged child abuse or neglect—come into contact with many more children beyond those who enter foster care. The prevalence of chronic health care conditions among this larger child welfare-involved group is one and a half times greater than that of the general public and is not significantly different between children who remain living at homes after the investigation of child abuse and neglect and those who are placed out of the home (e.g., foster care). These children also had \"extensive\" service needs related to identified developmental, cognitive, emotional/behavioral, and substance use concerns.\nChildren who come into contact with the child welfare agency often live in homes with little income. Close to 60% were in homes with income below the poverty level. The parents or caregivers of children who remain in the home following a child welfare investigation also had significant health and mental health needs. In fact, such caregivers were less likely to report having excellent or very good health (45% versus 68%) than adults generally, including caregivers of children who were removed from the home. Although these caregivers mostly had mental health outcomes similar to adults in the general population, they were more likely to have major depression within the past 12 months (25% versus 7%).\nAt the same time, children in families who come into contact with child welfare services but are not placed in foster care are less likely to be enrolled in Medicaid than those children who are placed in foster care. In a related study, researchers found that of the children who remained in their own homes following an investigation of abuse or neglect, about 66% were covered under mandatory Medicaid eligibility pathways and another 18% were covered through optional Medicaid pathways. Approximately 16% were ineligible for Medicaid. The study also found that less than 1% of children in foster care were ineligible for Medicaid.\nThe emphasis in health care reform on enrollment of all individuals, including low-income families who do not qualify for Medicaid or CHIP, may provide new opportunities for child welfare agencies to ensure access to health insurance coverage for a greater share of the children and adults they serve. For example, families could gain access to counseling through Medicaid, which may in turn strengthen these families, reduce the risk of abuse and neglect, and reduce other potential costs tied to that abuse. The MAGI counting rule applies for children and their families who seek Medicaid coverage based on their income.", "The ACA may also provide greater opportunities for a child welfare agency to provide mental health or other Medicaid-supported services to the parents of children entering foster care. These services may be required so that the child and parents can be reunited. However, under Medicaid policy in place prior to implementation of the ACA Medicaid expansion group, parents whose children are placed out-of-home might be vulnerable to loss of Medicaid eligibility. As discussed in a previous section, this is because mandatory eligibility rules for Medicaid generally provided that in addition to having low income, applicants must have been living with their children (or be pregnant, disabled, or elderly). Thus, a child's placement in foster care could mean a potential loss of Medicaid for the parent and a loss of access to services that may be needed to allow the child(ren) to return to living with the parent. Prior to the ACA, states could opt to cover \"childless\" adults (i.e., adults with no children living with them) under Section 1115 demonstration waivers. Otherwise, \"childless\" adults were ineligible for Medicaid. States that implement the new ACA expansion pathway for certain low-income adults under age 65 can thus ensure an eligibility pathway remains open for any low-income adult—regardless of whether that adult's child lives with his or her parent or is placed in foster care. For children and their families who seek Medicaid coverage based on their income, the MAGI counting rule applies.", "According to a national survey of children in families who come into contact with the child welfare system, approximately 63% of those who were insured had Medicaid coverage and another 26% had private insurance. The remaining children (10%) were uninsured. At the three-year follow-up, those with private insurance remained at 26%, those with Medicaid coverage increased slightly to 67%, and those without insurance declined to 6%.\nPrivate health insurance also plays a significant role for children who are adopted or who age out of foster care. With respect to adopted children who were previously in foster care, a survey of adoptive parents found that 94% were continuously insured for the prior 12 months, with 37% through private health insurance. A separate study of former foster youth in three states showed that by age 26, nearly six out of 10 had health insurance. Of those who had coverage, just over 20% had private insurance from an employer or through the individual health insurance market (see Table A-1 in Appendix A ).\nFurthermore, the research literature has found that individuals with a child welfare history may struggle to maintain health insurance or have medical conditions that limit their ability to obtain insurance. The prevalence of chronic conditions in persons that have been in foster care has been estimated to be between 44% and 82%. A study of such youth ages 18 through 20 in eight Midwestern counties found that 67% lost health insurance coverage within an average of three months of leaving foster care and only about one-fourth of those regained coverage after an average period of eight months. Separately, HHS is tracking health and other outcomes of youth who were in foster care at age 17. In FY2013, when the first cohort of surveyed youth had reached age 19, nearly nine out of ten had health insurance (primarily through Medicaid); however, youth who were no longer in foster care were less likely than youth who remained in care at age 19 to have coverage (80% versus 99%).\nGiven the role private insurance plays in the lives of many individuals with experience in the child welfare system, the rules governing that market for health insurance are relevant to this population, especially those with physical and/or mental health care needs. Prior to the ACA, the ability of many individuals to gain and maintain coverage in the private market was limited to some degree by the health status of the individual. For example, prior to health care reform, some insurance applicants with a preexisting condition could be denied coverage altogether; be issued coverage that excluded benefits that would treat the preexisting condition; or be charged more in premiums because of that condition.", "The ACA establishes federal requirements that apply to private health insurance, among other provisions. The reforms affect insurance offered to groups and individuals, impose requirements on sponsors of coverage, and, collectively, establish a federal floor with respect to access to coverage, premiums, benefits, cost-sharing, and consumer protections. The ACA insurance reforms discussed in this section may be particularly relevant for young adults who were formerly in foster care, children who leave care and are reunited with their families, parents of children who are or were in foster care, and parents of children who are adopted from foster care.\nChildren age 18 and older who were formerly in foster care, including those who are adopted, may have expanded private insurance coverage opportunities through the health plan of an insured parent. The ACA requires health plans that provide dependent coverage to extend that existing coverage to children under age 26. ACA regulations further clarified that a health plan may not deny or restrict coverage for a child who has not attained age 26 \"based on the presence or absence of the child's financial dependency (upon the participant or any other person), residency with the participant or with any other person, student status, employment, or any combination of those factors.\" Moreover, health plans \"may not limit dependent coverage based on whether a child is married.\" Still, young adults who leave foster care (and are otherwise ineligible under Medicaid) may not necessarily gain coverage under this reform measure, given that some of these young people may not have relationships (or may have strained relationships) with their parents or their parents may not have access to health insurance.\nHealth insurance exchanges (\"marketplaces\") operate in every state and the District of Columbia (DC), per the ACA statute. Essentially, exchanges are designed to sell health plans to individuals (and small businesses) interested in obtaining private health insurance. In general, exchange plans provide comprehensive coverage and meet all applicable market reforms specified in the ACA. Given that nearly all individuals are allowed to purchase insurance in the exchanges, parents of children who return home from foster care and of children adopted from care, as well as individuals that have aged out, may possibly access coverage this way (as long as they meet the eligibility criteria).\nIn tandem with these exchanges, the ACA established new federal tax credits. Currently, certain low-to-middle income individuals and families may qualify for these credits to make exchange coverage more affordable. In addition, some of those tax credit recipients will receive subsidies to reduce their out-of-pocket spending on medical expenses. Such financial assistance may be particularly relevant to youth who age out and the parents of children who return home from foster care or are adopted from care.\nA number of the ACA's insurance reforms are designed to provide protection to potentially vulnerable groups with a high prevalence of preexisting conditions, such as youth previously in foster care. Among the ACA's reforms are provisions that will subject many health plans to the following requirements:\nThe ACA requires certain types of coverage to be offered on a guaranteed issue basis. In general, \"guaranteed issue\" in health insurance is the requirement that a plan accept every applicant for health coverage as long as the applicant agrees to the terms and conditions of the insurance offer (such as the premium). The ACA prohibits plans from basing eligibility or coverage on health status-related factors. Such factors include health status, medical condition (including both physical and mental illness), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), disability, and any other health status-related factors determined appropriate by the Secretary of HHS. The ACA prohibits plans from excluding coverage for preexisting health conditions. In other words, plans may not exclude benefits based on health conditions for any individuals. A preexisting health condition is a medical condition that was present before the date of enrollment for health coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. The ACA imposes adjusted (or modified) community rating rules on the determination of premiums. Adjusted community rating rules prohibit plans from pricing health insurance products based on health factors but allow it for other key characteristics such as age. The ACA's rating rules restrict premium variation to the following factors: coverage for individual or family, geography, and limited premium variation allowed for age and tobacco use.", "The vast majority of the ACA's reforms to the private health insurance market are currently in effect. At the same time, individuals who were formerly in foster care or who have otherwise been in contact with the child welfare system may still face barriers to obtaining private health insurance. While individuals may no longer be denied insurance due to health factors or be offered coverage that excludes treatments for preexisting health conditions, the cost of purchasing and using private insurance may still be high for some, even if such individuals qualify for the premium tax credits and cost-sharing subsidies established under the ACA. On the other hand, the exchanges and insurance market reforms provide options for private health insurance that may not have existed for some individuals prior to ACA enactment. Moreover, former foster youth who are no longer eligible for Medicaid may possibly avail themselves of the financial assistance provided through the exchanges, thus giving them another source of subsidized coverage.\nThe complexity of the private insurance market may lead to difficulties for this population to assess all the insurance options potentially available to them. The ACA provides consumer assistance for prospective enrollees in exchanges. Specifically, the ACA requires exchanges to perform outreach to help individuals (and small businesses) make informed decisions about their insurance options, including the operation of \"navigator\" programs. Navigators carry out public education activities; provide information to prospective enrollees about insurance options and federal assistance; and examine enrollees' eligibility for other federal or state health care programs, such as Medicaid. A variety of organizations may become navigators, including labor unions, trade associations, chambers of commerce, and other entities; however, it is not immediately clear which entities are best suited to assist this population. Finally, staff in child welfare and Medicaid agencies and those who run the exchanges must be trained to understand the ACA and its implementation in their state to enable them to best assist applicants in obtaining insurance.\nAppendix A. Research on the Health Needs of Certain Children and Youth Formerly in Foster Care\nAs discussed in the body of this report, health care needs of children in foster care are considerable. Research on health care needs of children who age out of foster care and those who leave foster care for adoption are discussed in greater detail in the following section. Many of these former foster care children and youth are counted as \"foster care\" children under the Medicaid data reporting system. Thus, the type and prevalence of their health care needs affects our understanding of Medicaid use by \"foster care\" children. As of July 1, 2014 states are required to submit Medicaid program data via a revised reporting system. In this new system (T-MSIS) former foster youth who aged out of care are counted separately from children who are in foster care. However, many children who leave foster care for adoption are expected to continue to be included in the Medicaid \"foster care\" children population.\nYoung Adults Who Were Formerly in Foster Care\nThe research literature regarding children who age out of foster care shows that physical and mental health problems persist into adulthood. Two studies—the Northwest Foster Care Alumni Study and the Midwest Evaluation of the Adult Functioning of Former Foster Youth—have tracked outcomes for a sample of youth across several domains, either prospectively (following youth in care and as they age out) or retrospectively (examining current outcomes for young adults who were previously in care and comparing these outcomes to those of young people in the general population).\nResearchers with the Northwest Foster Care Alumni Study interviewed and reviewed the case files of 479 foster care youth who were in public or private foster care any time from 1988 to 1998 in Oregon or Washington. The study compared the mental health status and education and employment outcomes for the foster care alumni to those of the general population. Over 54% of foster care alumni had at least one mental health problem—depression, social phobia, panic disorder, and post-traumatic stress disorder, among others—compared to 22.1% of the general population. About one-quarter of the alumni experienced post-traumatic stress disorder (PTSD). This figure is greater than the occurrence of PTSD among Vietnam or Iraq War veterans, which is about 15%. Foster care alumni tended to have recovery rates similar to their counterparts in the general population for major depression, panic syndrome, and alcohol dependency, but lower rates of recovery for other disorders such as generalized anxiety disorder, PTSD, social phobia, and bulimia.\nFew foster care alumni studies are prospective, meaning that they follow youth while in care through the time they leave care and beyond. The Midwest Evaluation is an ongoing study that tracks approximately 600 former foster youth in three states—Illinois, Iowa, and Wisconsin. Table A-1 displays the physical health and mental health outcomes for alumni at ages 25 and 26 compared to their same-age peers in the general population. Overall, youth formerly in foster care reported having more negative health outcomes than their general population peers and participating in counseling and substance abuse treatment more often. They were also less likely than their peers to be covered by employers' health care plans, and more likely to have public health insurance.\nSeparately, HHS data of current and former foster youth at age 19 show differences in health insurance coverage depending on whether the youth was still in foster care. Among 19-year-olds who were still in care in FY2013, 99% had Medicaid coverage. This is compared to 80% of youth who were no longer in foster care.\nChildren Adopted from Foster Care\nChildren adopted from foster care are those children who were removed from their biological parents – typically because of abuse or neglect – and for whom reuniting with those biological parents was determined not possible or not in the child's best interest. Roughly 50,000 to 55,000 children leave foster care for a permanent adoptive family each year. The large majority of these children (84% in FY2013) were determined by the state to have \"special needs\" that made it \"reasonable\" for the state to conclude the child would not be adopted without provision of an adoption subsidy and/or medical assistance.\nGreater Health and Mental Health Needs\nA nationally representative survey conducted in 2007 found children who were adopted – whether from foster care, domestically by private arrangement, or from another country – tended to have greater health and mental health needs than children in the general population. Further, among all adopted children, those who were adopted from foster care had the greatest needs. For example, 19% of all children in the nation were reported by their parents as having special health care needs in 2007, compared to 39% of all children who were adopted and 54% of children adopted from foster care. Additionally, among children ages 6 through 17, about 1 in 10 (10%) in the general population had been formally diagnosed with attention deficit disorder (ADD) or attention deficit hyperactivity disorder (ADHD) at some point and, at the time of the 2007 survey, the parents of about 1 in 25 children (4%) considered their child's diagnosed ADD/ADHD condition to be moderate or severe. The comparable rates among all adopted children in this age range was more than 1 in 4 ever diagnosed (26%) and roughly 1 in 8 with a current moderate or severe condition (14%); for those in this age range who were adopted from foster care, more than 1 in 3 had ever received an ADD/ADHD diagnosis (37%) and fully 1 in 5 (20%) had a current moderate or severe condition as reported by their adoptive parents.\nThe 2007 survey also found that 2% of all adopted children (ages 8 through 17) had spent some time in a residential psychiatric facility or hospital following their adoption; the comparable share reported for children adopted from foster care was 7%. (Because this question is linked specifically to services provided after a child was adopted there is no comparable percentage for children in the general population.) Table A-2 shows these and additional data on the health and mental health needs of children adopted from foster care compared to all adopted children and children generally.\nMore Likely to Have Insurance Coverage\nAt the same time, children who are adopted are more likely to have had continuous (over past 12 months) health insurance coverage than children in general. The 2007 survey of adopted parents found that 85% of all children had this continuous coverage, compared to 91% among all adopted children and 94% of children adopted from foster care. Federal law provides that the children adopted from foster care who have \"special needs\" (which may be but are not necessarily related to health or mental health needs) are eligible for Medicaid (or a comparable state benefit plan). Not surprisingly then, public health insurance is the most common form of coverage among children adopted from foster care. Nearly 6 in 10 (59%) were reported by their adoptive parent as covered by Medicaid or CHIP – roughly double the 3 in 10 (29%) children generally who were covered by those public programs.\nAlthough 37% of children adopted from foster care were covered by private insurance coverage, some of these privately insured children were also enrolled in Medicaid. Parents of children adopted from foster care reported that 65% had ever received a Medicaid benefit, over half (55%) used Medicaid for dental care, and nearly one out of three (32%) used Medicaid to pay for mental health services. In those instances where a child is covered by both Medicaid and private insurance, the law provides that Medicaid is the payer of last resort. This means that the private insurer must pay any covered benefits first. However, Medicaid coverage could supplement those benefits (if the private insurance benefits are exhausted) and it might wholly fund services not covered by the adopted children's private insurance carriers (e.g., many private insurers do not cover residential psychiatric treatment).\nAppendix B. Medicaid Services Spending for \"Foster Care\" Children\nChildren for whom these spending data are reported in the Medicaid Statistical Information System (MSIS) include those determined to be a \"foster care\" child under MSIS based on their Medicaid eligibility pathway. These children principally include those who are eligible for federal Title IV-E assistance whether they are in foster care or have left that care for adoption or legal guardianship. They may also include children who are receiving state-funded adoption assistance as well as some children who have aged out of foster care. Children who are in foster care but who are not eligible for Title IV-E assistance do not appear to be included in this category.\nAppendix C. Medicaid Eligibility for Current and Former Foster Children and Youth" ], "depth": [ 0, 1, 1, 1, 2, 1, 2, 3, 3, 3, 1, 2, 2, 1, 2, 2, 3, 3, 2, 3, 3, 3, 1, 2, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 4, 4, 3, 3, 2, 3, 3, 1, 2, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h4_full h1_full", "h0_full h1_full", "h0_full", "h0_full", "h2_title h1_title", "h2_full h1_title", "h1_full", "", "", "", "", "", "h2_title", "", "", "", "", "h2_title", "h2_full", "", "", "h4_full h5_title h2_title h0_title h3_title", "h5_full", "", "", "", "h2_title h4_title h3_title", "h3_full", "h3_full h2_full h4_full", "", "", "", "", "", "", "h3_title", "h3_full", "", "", "h3_full", "", "h0_title", "h0_full", "", "h4_title", "h4_full", "" ] }	{ "question": [ "Why do the majority of children enter foster care?", "What are common special health needs exhibited by foster care children?", "What percentage of children adopted from foster care have special health care needs?", "How common are mental health issues among foster youth?", "How do youth who aged out of foster care compare to their peers?", "What quantity of children spend some time in foster care each year?", "What is the purpose of the Social Security Act?", "What must the state child welfare agency's plan for a child include under the child welfare law?", "How are the health needs of children addressed?", "What happens to an individual once they age out of foster care?", "What conditions disallow the State from using child welfare programs funds to pay for the medical expenses of former foster care children?", "Why can states still pay partially for these children's medical expenses?", "In FY2010, what amount of money did Medicaid agencies report spending to provide services to foster care children?", "What basis is most Medicaid spending for foster care children?", "What government program are most foster care children eligible for?", "Children in foster care who are not eligible under mandatory pathways generally still qualify for Medicaid how?", "In what cases are adopted children/those who leave foster care for legal guardianship still eligible for Medicaid?", "What are states required to provide to children who age out of foster care?", "What act added this to the law?", "How is this act similar to the ACA's requirement for health insurance companies?", "What does a different optional pathway allow states to provide to young aging out of foster care?", "What do youth not need to have received previously under this pathway?", "What is the rule established by the ACA on January 1, 2014?", "How does this rule draw on federal income tax rules?", "What were states required to do while transitioning to this new rule?", "What other protections are in place beside the transition policy?" ], "summary": [ "Most enter care because they have experienced neglect or abuse by their parents.", "Between 35% and 60% of children entering foster care have at least one chronic or acute physical health condition that needs treatment. As many as one-half to three-fourths show behavioral or social competency problems that may warrant mental health services.", "A national survey of children adopted from foster care found that 54% had special health care needs.", "As many as one-half to three-fourths show behavioral or social competency problems that may warrant mental health services.", "Research on youth who aged out of foster care shows these young adults are more likely than their peers to report having a health condition that limits their daily activities and to participate in psychological and substance abuse counseling.", "Approximately 641,000 children spend some time in foster care each year.", "The Social Security Act addresses some of the health care needs of children in, or formerly in, foster care through provisions in the titles pertaining to child welfare (Titles IV-B and IV-E) and to the Medicaid program (Title XIX).", "Under child welfare law, state child welfare agencies are required to have a written plan for each child in foster care that includes, among other items, the child's regularly reviewed and updated health-related records.", "In addition, state child welfare agencies, in cooperation with state Medicaid agencies, must develop a strategy that addresses the health care needs of each child in foster care.", "Upon aging out of foster care, youth must receive from the state child welfare agency a copy of their health record and information about health insurance options and designating other individuals to make health care decisions on their behalf if they are unable to do so on their own.", "States are not permitted to use federal child welfare program funds to pay medical expenses of children in care or those who left foster care due to their age or placement in a new permanent family.", "However, states can (and do) receive federal support through Medicaid to pay a part of the medical expenses, including well-child visits, dental care, and other services for many of these children and youth.", "In FY2010, the most recent year for which these data were available from all states, Medicaid agencies reported spending $5.754 billion to provide services to foster care children.", "Most of this Medicaid services spending was provided on a fee-for-services basis (82%) with the remainder provided through managed care arrangements.", "Most children in foster care are eligible for Medicaid under mandatory eligibility pathways, meaning that states must provide coverage because these children receive assistance under the Title IV-E program, or, because they meet other eligibility criteria such as low income, or receipt of Supplemental Security Income (SSI).", "Children in foster care who are not eligible under mandatory pathways generally qualify for Medicaid because the state has implemented one or more optional eligibility categories allowing coverage.", "Further, children who leave foster care for legal guardianship and nearly all children with state-defined \"special needs\" who leave foster care for adoption retain mandatory eligibility for Medicaid provided they receive Title IV-E assistance. Additionally, special needs adoptees who receive state-funded support may also be eligible under an optional Medicaid eligibility pathway specifically for them.", "Separately, as of January 1, 2014, states are required to continue Medicaid coverage to youth who age out of foster care on their 18th (or later) birthday.", "This Medicaid coverage was added to the law by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), must be available until the youth reaches age 26, and unlike most Medicaid pathways must be provided without regard to the youth's income and assets.", "This new pathway for youth who age out of care without return to their parents or placement with a new permanent family parallels another ACA requirement that directs health insurance companies to continue coverage of children up to age 26 who are enrolled in their parents' private health care plans.", "Additionally, under a separate eligibility pathway states continue to have the option of providing Medicaid to youth aging out of foster care (up to the age of 21).", "Under this optional pathway, and unlike the newer mandatory pathway, a youth does not need to have received Medicaid while in foster care to be eligible for the coverage.", "Effective January 1, 2014, the ACA established the Modified Adjusted Gross Income (MAGI) income counting rule.", "MAGI draws on federal income tax rules (with certain revisions defined in Medicaid law and regulation) to establish uniform standards for what income to include or disregard in determining Medicaid eligibility for most non-elderly and non-disabled people.", "In transitioning to the new MAGI income counting rule, states were required to establish income eligibility thresholds no less than the effective income eligibility levels that were applicable in the state on the date of enactment of the ACA (i.e., March 23, 2010).", "In addition to this transition policy, several additional protections ensure that children in, or formerly in, foster care retain eligibility under the new counting rules." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, -1, -1, 1, -1, -1, 0, -1, 2, -1, 0, -1, -1, 0, 0, -1, 3, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 5 ] }
GAO_GAO-13-231	{ "title": [ "Background", "OFPP and FAI Provide Policy, Guidance, and Assistance to Help Improve Government-wide Training Efforts", "OFPP Promotes Government-wide Practices for Acquisition Workforce Training and Development", "Agencies Generally Use External Sources for Acquisition Training and Face Similar Workforce Training Challenges", "Agencies Generally Rely on External Training Sources", "Agencies Face Challenges with Having Adequate Training Resources, Identifying the Acquisition Workforce, and Staff Having Time to Attend Training", "Lack of Comparable Cost Data and Limited Insights On Benefits of Training Hinder Efforts to Maximize Resources Government-wide", "Government-wide Training Cost Data Reported Is Not Comparable", "Agencies Gather Limited Information on Benefits of Acquisition Workforce Training Investment", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Summary of Agencies’ Response to GAO Questionnaire on Civilian Acquisition Workforce Training", "In July 2012, GAO administered a government-wide survey of the 23 civilian CFO Act agencies designed to gather information regarding the training approach and methods, staffing and budgetary resources, and costs associated with providing acquisition training—including the operation of facilities dedicated to training the acquisition workforce. We received responses from 100 percent of the agencies, although not every agency responded to each question. A summary of the number of agencies’ who responded to each question is provided below. We removed the open-ended narrative responses, but included the ranges of open-ended data. Details of our survey methodology are provided in appendix II.", "Appendix III: GAO Contact and Staff Acknowledgements", "GAO Contact", "Staff Acknowledgements" ], "paragraphs": [ "The Office of Personnel Management, as the federal government’s human capital manager, provides leadership and guidance on establishing and operating efficient federal training and development programs throughout the government. It provides advice and assistance to agencies on training and development programs so that those programs support strategic human capital investment.\nGAO, Federal Training Investments: Office of Personnel Management and Agencies Can Do More to Ensure Cost-Effective Decisions, GAO-12-878 (Washington, D.C.: Sept. 17, 2012).\nOFPP has specific responsibilities related to acquisition workforce training to help ensure that the skills needed to handle the complexities of acquisition programs and contracts are maintained. The Office of Federal Procurement Policy Act requires executive agencies and the OFPP Administrator to establish management policies and procedures for the effective management of the acquisition workforce—including education, training, and career development.4 In 2005, OFPP defined the civilian acquisition workforce to include, at a minimum, professionals serving in the contracting series (GS-1102), Contracting Officers, Purchasing series (GS-1105), Program/Project Managers (P/PM), and Contracting Officer’s Representatives (COR) or the equivalent, and additional positions identified by the agency. Participation in the acquisition workforce may be on a full-time, part-time, or occasional basis.\n41 U.S.C. § 1703. 41 U.S.C. § 1703(c)(2).\nThe Federal Supply Schedules program consists of contracts awarded by the General Services Administration or the Department of Veterans Affairs for similar or comparable goods or services, established with more than one supplier, at varying prices. Federal Acquisition Regulation (FAR) § 8.401 and § 8.402. The Schedules offer a large group of commercial products and services ranging from office supplies to information technology services. Governmentwide Acquisition Contracts (GWAC) are considered multi-agency contracts but, unlike other multi-agency contracts, are not subject to the same requirements and limitations, such as documentation that the contract is in the best interest of the government as set forth under the Economy Act. GWACs are contracts for information technology established by one agency for government-wide use that are operated—(1) by an executive agent designated by the Office of Management and Budget pursuant to 40 U.S.C. § 11302(e); or (2) under a delegation of procurement authority issued by the General Services Administration (GSA). FAR § 2.101. The Clinger-Cohen Act of 1996 authorized GWACs to be used to buy information technology goods and services. Pub. L. No. 101-510, § 1202 (1996), (codified at 40 U.S.C. § 11314(a)(2)). All agencies can order goods and services directly through the Schedules contracts and GWACs.\nBoard of Directors, works closely with OFPP as well as the DAU to collaborate on many issues involved with training and developing the federal acquisition workforce. The Defense Acquisition Workforce Improvement Act required the Secretary of Defense to establish and maintain DAU in order to provide training for the DOD acquisition workforce.8 FAI differs notably from DAU, however, in that it shares much of the responsibility for training the civilian acquisition workforce with the agencies and has fewer budgetary and staffing resources. For example, FAI currently has 12 staff, while DAU has over 700 faculty and staff.\nThe Administrator of OFPP is also required to ensure that agencies collect and maintain standardized information on the acquisition workforce. Agencies, in consultation with OFPP, can structure their management and oversight of training for their acquisition workforce in such a manner as best supports the agency. Key agency positions involved in managing the acquisition workforce within the agencies are described in table 1.\nAcquisition training-related responsibilities Responsible for developing and maintaining an agency acquisition career management program to ensure an adequate professional acquisition workforce. Participates in the strategic planning and performance evaluation process to develop strategies and specific plans for training to rectify deficiencies in the skills and abilities of the acquisition workforce. Responsible, in consultation with the Acquisition Career Manager, for reporting acquisition workforce data to the Human Capital Office for the agency’s human capital plan. Responsible for providing management direction of an agency’s procurement system. In some agencies, CAOs oversee or assume this role to help ensure implementation of agency acquisition workforce policy. Responsible for identifying training and development needs of the acquisition workforce. Leads an agency’s acquisition career management program and ensures that its acquisition workforce meets the skills and capabilities required in OMB, OFPP, and agency policies.\n10 U.S.C. § 1746. provided by the agency, which may be taught using in-house staff or contractor employees; (2) government entity training provided by another federal agency, FAI, or the DAU; and (3) vendor training provided by a commercial sector company, which is generally available to multiple agencies at the same time. For the purposes of this report we refer to government entity and vendor training as external sources.", "OFPP sets standards and policies for the training and development of the federal acquisition workforce. Its efforts include strengthening workforce planning requirements and setting standards for core acquisition training by establishing certification requirements. FAI conducts activities that support and assist civilian agencies in training and development of their acquisition workforces. FAI efforts include: improving the collection and management of training information, including cost data and course evaluations; streamlining the communication of acquisition training guidance; and coordinating efforts to maximize acquisition workforce training investments government-wide.", "The Federal Acquisition Certification requirements were issued in 2005 for contracting professionals and 2007 for Contracting Officer’s Representatives and Program/Project Managers. provided in the agencies’ plans to develop a government-wide snapshot of the acquisition workforce and to identify practices for sharing throughout the government. Table 2 provides an overview of OFPP’s legislative responsibilities related to acquisition workforce training.\n41 U.S.C. § 1201(a)(1). workforce. FAI reported that while its spending plan for fiscal year 2012 could provide $3 million for courses, training requests submitted by the agencies totaled in excess of $18 million.\nFAI is working with a number of vendors who provide acquisition workforce training to establish government contracts that would provide uniform costs for standardized training courses needed for the FAC programs. FAI plans to have contracts in place in 2013 that would be available for agencies to use to provide fiscal year 2014 training.\nAssisting federal agencies with their acquisition human capital FAI offers guidance and direction on human capital planning through its instructions for agencies’ annual AHCP submissions. Beginning in 2010, OFPP has required agencies to submit an annual AHCP each March that provides the agency’s strategies and goals for increasing both the capacity and capability of the acquisition workforce. To assist the agencies in preparing each submission, FAI provides them with a report template that includes specific topics to be included. We observed that the fiscal year 2012 AHCP submissions provided information on the agencies’ goals for strengthening the acquisition workforce, including certification goals, and planned training initiatives for the current and future fiscal years.\n41 U.S.C. § 1201(a)(11). 41 U.S.C. § 1201(a)(3).\nFAI recently upgraded the government-wide acquisition career information management system it maintains for all agencies. In 2011, FAI replaced the Acquisition Career Management Information System (ACMIS) with the FAI Training Application System (FAITAS), which allows registration for courses, tracking of individuals’ training records, and other information management tools. For example, agencies can now manage the certification approval process, track an individual’s continuous learning progress, and search for courses offered by FAI and other agencies that use FAITAS to enroll participants in their courses. FAI reports that five agencies currently use the FAITAS registration function to alert other agencies to unfilled seats within a specific agency’s training course. Additional features of the system include a course scheduling module; a business intelligence tool for agencies to identify training locations and course availability; and a communication tool for broader outreach to the acquisition workforce. For example, an OFPP official explained that FAITAS can be used to send e-mail updates on OFPP policy, guidance, or other OFPP or FAI initiatives to all individuals registered in the system.\nFAI conducts periodic surveys of agencies to collect data about the acquisition workforce for OFPP. For example, FAI conducts the bi- annual Acquisition Workforce Competency Survey to collect information on agency acquisition workforces’ skills and abilities and to identify competency gaps within and across agencies. FAI officials explained that the survey results provide a government-wide view of which courses are in demand that informs their efforts to achieve economies of scale when providing training.\nFAI reports an annual count of the acquisition workforce as it has done for more than the past decade; however, its count has been limited to professionals serving in four job series—General Business and Industry (GS-1101), Contracting (GS-1102), Purchasing (GS- 1105), and Procurement Clerical and Assistance (GS-1106). FAI began gathering data on CORs and P/PMs as part of the acquisition workforce count in fiscal year 2007. In its recent report on the acquisition workforce count, FAI reported that 33,271 personnel were employed in the acquisition workforce’s four main job series in fiscal year 2010, and an additional 47,959 and 4,186 personnel were identified as CORs and P/PMs, respectively, by the agencies in their AHCPs—which represents about 85,000 individuals in the civilian acquisition workforce for fiscal year 2010. FAI does not directly collect data for the workforce count, and has acknowledged that agencies have some problems identifying CORs and P/PMs but the data have been improving.\nFacilitating interagency intern and training programs, as According to officials, FAI also conducts outreach and leverages training courses government-wide. In 2012, FAI met with officials from each agency to discuss training efforts and locate training spaces that could be used by FAI and others when supplying courses through vendors. FAI officials reported that these agency visits provided insights regarding how the agencies’ training programs varied in terms of their organization and resources and identified duplicative training efforts.\nIn addition, FAI provides opportunities to share information across the acquisition workforce community. FAI began providing webinars on current acquisition issues in fiscal year 2012, and launched a newsletter for the acquisition workforce community in December 2012. According to officials, the newsletter will provide more in-depth information on policy changes, human capital initiatives, and tools and technology enhancements.\nFAI hosts, coordinates, and participates in roundtables at the Interagency Acquisition Career Management Committee meetings to foster discussion among agencies and share information on their training or educational challenges and needs. According to FAI officials, these meetings provide opportunities to share leading practices, identify challenges, and discuss potential initiatives. Recent discussion topics included plans to hold a competency-based certification workshop, roll out of additional FAITAS workforce management tools, and results of FAI’s bi-annual Acquisition Workforce Competency Survey.\nIn July 2012, FAI established the Federal Acquisition Council on Training to help share information on agencies’ training efforts and standardize acquisition training throughout the government. According to FAI officials, the council’s goal is to help ensure no acquisition workforce training seat, whether offered by FAI or another agency, goes unfilled. Agencies are asked to open up unfilled training seats to other agencies whenever available, and to use FAITAS as the official course registration system to communicate available training seats and enroll participants for courses to reduce overhead and administrative costs for agencies.\nPeriodically analyzing acquisition career fields and evaluating the effectiveness of training and career development programs for acquisition personnel14 According to officials, FAI has efforts underway to standardize the end-of-course participant evaluations administered by the vendors who provide FAI-sponsored courses. According to FAI officials, course participants will not receive their course completion certifications until they complete the course evaluation. Currently FAI does not analyze course evaluations administered by the vendors; however, officials commented that the use of standardized evaluations could enable them to work with vendors to improve the consistency of the information provided in training courses. A pilot is underway using standard evaluations for FAI courses taught by vendors being provided to one agency, and FAI plans to extend the pilot to other agencies early in 2013.", "Most agencies approach acquisition workforce training through classroom courses taught by external sources—vendors, FAI, DAU, or other agencies. While all agencies have meeting spaces for training, three operate permanent centers with dedicated resources that train the agency’s acquisition workforce. The agencies’ current training focus is to provide courses through which their acquisition workforces may attain or maintain their FAC certifications. Agencies reported facing several challenges in providing acquisition-related training. The areas reported as being the most challenging are related to staffing and budgetary resources. Some agencies also reported challenges with the identification of their acquisition workforce, which is a fundamental step needed for managing the workforce and its training. Agencies also reported that additional assistance from OFPP and FAI would help their acquisition workforce training efforts. In addition, the agencies reported that their acquisition workforces are challenged in finding time in their workload to attend training. For more details on the approaches, budgetary and staffing resources, and other challenges faced by the agencies, see appendix I for a summary of the 23 agencies’ responses to the questionnaire we administered.\n41 U.S.C. § 1201(a)(4) and 41 U.S.C. § 1201(a)(7).", "Agencies provide acquisition workforce training predominantly through external sources—government entities or vendors. In fact, 17 agencies reported that the majority of their acquisition workforce training comes from having their workforce attend training provided by external sources rather than from their agency. The other government entities may provide training to an agency without seeking additional reimbursement, as is the case with FAI, DAU, and some federal agencies; however, others, such as the VA, charge a fee to attend their training to recoup their costs.15 Of the remaining 6 agencies, 5 reported that they hold agency-sponsored courses to provide the majority, if not all, of their acquisition workforce training, and one agency did not report. Some agencies use contractor personnel to instruct a portion of their agency-sponsored training. Figure 1 illustrates the sources of training that agencies reported using to provide training to their acquisition workforce in fiscal year 2011.\nAlthough FAI does not seek reimbursement for individual classes, civilian agencies “pay” for the courses since they provide the funding for FAI’s operations through the mandatory fee paid equal to five percent of the dollar amount of acquisitions the agency makes through the Federal Supply Schedule and the Governmentwide Acquisition Contracts.\nThe Department of Transportation provided data that does not total 100 percent due to its averaging of the responses from its bureaus.\nThe Department of Justice data is an average of the responses submitted by 4 procurement offices— headquarters and 3 bureaus.\nA leading training investment practice involves agencies taking steps to identify the appropriate level of investment to provide for training and development efforts and to prioritize funding so that the most important training needs are addressed first.16 The four agencies we selected illustrate that agencies use different approaches to manage and provide acquisition workforce training, due to such factors as the size of their workforce, the need for certification training, and the resources dedicated to training. Three agencies—DHS, Treasury, and VA—chose to have permanent training facilities dedicated to providing courses to the acquisition workforce. These three agencies differed, however, in the percentage of courses they provided to meet their acquisition workforce needs. DHS manages its entire acquisition workforce training at the department level and recently expanded the number of courses provided by the agency. However, part of DHS’s strategy is to make use of DAU and FAI courses that address its needs, which can be obtained at no additional charge. VA also manages all of its training at the department level and in 2008 established a training academy, the VA Acquisition Academy, to provide all acquisition-related courses to agency personnel who need it. Alternately, Treasury built its training program on an existing training institute within the Internal Revenue Service, which employs the majority of Treasury’s acquisition workforce, to provide agency courses available to all of its bureaus and to other agencies. Of the three dedicated training facilities, VA is the only one to provide agency- sponsored training for 100 percent of its acquisition training courses. VA, DHS, and Treasury all reported using contractors to instruct the agency- provided training at their respective facilities. Education does not have a dedicated facility and reported that it provides only about 10 percent of its acquisition workforce training via agency-sponsored courses, obtaining about 90 percent of needed training through external sources.\nGAO-12-878. training needs. In their responses to our questionnaire, the agencies did not explain how effectiveness is determined. As we discuss later in this report, based on a subsequent data call we found that the agencies have limited insight into the effectiveness of their acquisition workforce training courses. Figure 2 illustrates the factors and number of agencies that reported them as influencing their training source selections.\nAgencies’ current focus is to provide courses that allow their acquisition workforces to attain or maintain their FAC certification. In response to our questionnaire, most agencies—17 of 23—reported that they are able to find sufficient courses to do this. In their AHCP submission for fiscal year 2011, most agencies (15) reported certification rates of more than 75 percent for their contracting staff, but 3 agencies reported over 90 percent of their contracting staff were certified. The majority of the 23 agencies reported that more than 90 percent of their CORs and P/PM staff had obtained their basic FAC certifications—with many reaching 100 percent. Agency officials explained that the agency’s certification rates fluctuate due to changes in the workforce—including experienced staff leaving the agency and less experienced staff being in the process of obtaining certifications. Table 3 shows the certification rates reported by agencies for fiscal year 2011.\nOfficials from three of the four selected agencies—DHS, Treasury, and VA—explained that they prioritize their training funding based on the need for acquisition staff to be certified. Education, where the majority of the acquisition workforce has attained their certifications already, reported it is focusing on courses that meet staff needs to maintain certifications or develop expertise.", "The top challenges reported by agencies in obtaining training for their acquisition workforces were having sufficient resources—both staffing to manage the training program and budgetary resources—to provide training. Specifically, 20 agencies reported that obtaining adequate funding is a challenge, and 19 reported that obtaining sufficient staff to manage the acquisition workforce training is a challenge. As for determining the appropriate level of investment, we have previously reported that when assessing opportunities for training, the agency should consider the competing demands confronting the agency, the limited resources available, and how these demands can best be met with available resources. Figure 3 provides a summary of the number of agencies that reported challenges involved in obtaining sufficient acquisition workforce training.\nAlthough almost all agencies reported that obtaining an adequate level of funding is challenging, less than half—10 of 23—reported that their current acquisition training budgets are insufficient to meet their training needs. The acquisition workforce training budgets for fiscal year 2012 reported by 22 of the agencies ranged from $0 to $39,598,000 for an agency with its own acquisition workforce training facility. These budgets correspond to acquisition workforces that ranged in size from 186 to 11,867 employees for fiscal year 2010 that handled anywhere from about 900 to 1.4 million contracting actions with obligations ranging from $132 million to $25 billion in fiscal year 2011.\nAlmost all the agencies—20 of 23—reported that they would like additional FAI assistance to help their acquisition workforce members attain federal certification by providing more course offerings or additional topics. In addition, to accommodate travel restrictions and budget constraints, some agencies would like FAI to provide more virtual courses for personnel that are geographically dispersed. FAI has some efforts underway that may somewhat address these issues, but their results are still uncertain as they are just beginning. FAI officials noted that while agencies want more offerings, FAI still has under-attended classes that have to be canceled. FAI officials also commented that developing on-line courses can also be very expensive and the cost to maintain currency of information is an often times overlooked cost.\nGAO-11-892. personnel are dispersed throughout many organizations, come from a variety of career fields, and are often involved in acquisitions as a secondary and not a primary duty. The agencies’ Acquisition Career Managers told us that they face similar challenges in identifying CORs and other personnel with acquisition-related responsibilities. Three of the four agencies selected for further insight—DHS, Education, and VA— acknowledged that they continue to be challenged by identifying some members of their acquisition workforces.\nA majority of the agencies—15 of 23—reported that they would like additional assistance from OFPP to improve their acquisition workforce training by either of two ways. Thirteen agencies supported the idea of OFPP creating separate job series for additional acquisition workforce categories, such as P/PMs. Twelve agencies supported the idea of OFPP maintaining a government-wide database to identify and track members. According to FAI and OFPP officials, they are sympathetic to agency concerns about identifying the total acquisition workforce. As for creating separate job series to more easily identify members of the acquisition workforce, OFPP notes that any changes would need to be made by the Office of Personnel Management and that some acquisition positions, such as CORs, may not lend themselves to becoming a unique job series because the work is performed as a collateral duty. As for maintaining a government-wide database to identify and track acquisition workforce members, FAI officials noted that agencies are encouraged to use the FAITAS registration system to track their workforce’s individual training records and certifications. However, registration into the system is currently voluntary.\nAgencies also reported that their acquisition workforces are challenged in finding time in their workload to attend training. Most agencies—14 of 23—considered the ability to find time as extremely or very challenging. Figure 4 provides a summary of the number of agencies that reported challenges to their staff accessing and attending acquisition-related training.", "Agencies collect some training cost data and limited information about the benefits of their acquisition workforce training. Based on responses to our questionnaire, a supplemental data request, and discussions with agencies’ and FAI officials, we found that many agencies do not collect data on the costs of training provided to their acquisition workforce that can be used to inform agency and government-wide training resource investment decisions. In addition, some agencies do not have metrics to assess the effectiveness of their training.", "GAO-12-878 and GAO-04-546G. data eventually provided by the agencies included different cost components, which did not lend themselves to comparative analysis. For example, some agencies provided data on the cost per seat of specific courses, while others provided the total costs for delivery of each course. Some agencies provided the costs associated with the development of an in-house course, while others included development costs with delivery costs as a total cost of obtaining the course from a vendor. Although the data do not allow direct comparisons among agencies, the data show a range of costs for similar courses. For example, five agencies provided a per seat cost for a COR Refresher course, which ranged from $97 to $363 per seat. In addition, five agencies provided a per seat cost for a Cost Analysis and Negotiation Techniques course, which ranged from $282 to $925 per seat. However, a number of factors can produce the variation in the agency-reported costs and these factors, along with the agencies’ data collection methods, can limit the ability to make government-wide decisions on acquisition workforce training investments. According to agency officials, the costs of individual acquisition workforce training courses can vary greatly among agencies due to a variety of factors, including: the number of times per year the course is provided, actual attendance numbers, location of training, and whether courses are tailored with agency-specific information.\nFAI officials reported that they also received limited responses to their request for training cost data in the agencies’ latest AHCPs, which made it impossible for them to complete their planned comparative analyses. The instructions for the FAI data request did not include definitions of the cost components to be reported, which are important to help ensure consistent reporting. Due to the limited response on cost data, FAI initiated a subsequent data call. As of November 2012, FAI had received responses from 20 of the 23 agencies, but again was unable to perform a comparative analysis of the cost data due to various limitations in the data it received. FAI officials noted that collecting cost data from agencies is an evolving process and that having comparable training cost data is important to help FAI in its efforts to maximize the use of acquisition workforce training dollars government-wide. FAI plans to request cost data annually with the AHCPs; however, the guidance for completing the next submission does not include definitions of the cost data to be reported, which may again yield data that cannot be compared across agencies. Improved reporting of cost data could assist FAI as it moves forward with its plans to award government-wide contracts for acquisition workforce training in 2014 by allowing FAI to obtain insight into the agencies’ training costs when obtaining training from a variety of external sources.", "About half of the agencies—12 of 23—did not have insight into whether their acquisition workforce training investment is improving individual skills or agency performance. In particular, in response to our questionnaire and subsequent data request 7 of 23 agencies reported having no metrics to monitor or assess the effectiveness of their acquisition workforce training efforts, a measure of whether the training investment is improving individual skills or agency performance. Five agencies did not provide information to support use of metrics to measure the training benefits, either improving individual skills or agency performance, of acquisition training in response to our supplemental data request.\nWe have previously reported that training programs can be assessed by measuring (1) participant reaction to the training program, (2) changes in employee behavior or performance, and (3) the impact of the training on program or organizational results, which may include a return on investment assessment that compares training costs to derived benefits. Of the 11 agencies that provided information to support their use of metrics, 3 reported using end-of-course evaluations to measure participants’ reaction, one reported using end-of-course tests to measure changes in employees’ knowledge, and one reported using post-course surveys to supervisors or participants to measure if what was learned affected the participants’ behavior. The other 6 agencies reported measures aimed at determining the impact of training on the agency’s mission. Furthermore, DHS officials said that they plan to begin using post-course surveys of participants and supervisors in fiscal year 2013, and they are pursuing the development of additional measures to evaluate the impact of training on the agency. VA is also pursuing the development of additional metrics, such as proxy measures for return on investment, to evaluate the impact of training on the agency. Participant evaluations offer limited insight into improvements in individual and agency performance; however, we recognize that higher levels of evaluation (such as evaluating the impact on organizational performance or comparing training costs to derived benefits) can be challenging to conduct because of the difficulty and costs associated with data collection and the complexity in directly linking training and development programs to improved individual and organizational performance.\nOfficials at some of the selected agencies told us that when the course is provided by an external source, such as FAI or DAU, they rely on the external source to provide end-of-course evaluations to the participants. As we noted earlier, 17 of 23 agencies obtain the majority of their acquisition training from external sources. In particular, some agencies noted that they do not collect or assess the end-of-course evaluations, relying solely on the external source to use the evaluations as they believe appropriate. FAI officials noted that if the agencies do not review the evaluations themselves, they are missing the opportunity to ensure that the courses are effective in training their acquisition personnel. We have previously reported that it is increasingly important for agencies to be able to evaluate their training programs and demonstrate how these efforts help develop employees and improve the agencies’ performance because it can aid decision makers in managing scarce resources and provide credible information on how training has affected individual and organizational performance.22 Although FAI has an initiative underway to standardize the evaluations provided for its courses, its impact may be limited if agencies do not obtain the evaluation results and use them to evaluate the effectiveness of the training.", "GAO-12-878 and GAO-04-546G. to ensure that every training seat is filled—to assist agencies in meeting OFPP requirements and leveraging federal government training resources, these efforts face significant obstacles. Agencies, FAI, and OFPP lack data on the acquisition workforce itself and the benefits of training, as well as cost data that can be used to make comparisons. These limitations hinder government-wide efforts to share information during these times of constrained budgets. OFPP, FAI, and the agencies need basic information on how much agencies are spending to train the acquisition workforce. Providing definitions and guidance about the elements of costs agencies should include in their annual acquisition human capital plans will help OFPP and FAI in their efforts to collect comparable data across agencies. FAI can then analyze and share information to help agencies make choices regarding how best to dedicate resources to effectively train the acquisition workforce. Additionally, comparable costs data will be helpful to inform FAI efforts to award government-wide contracts for standard acquisition workforce certification training.\nCurrently, the main focus of monitoring and tracking acquisition workforce training efforts in agencies is on completion of training to attain and maintain the FAC certifications. Although the higher levels of evaluation (such as evaluating the impact on organizational performance or comparing training costs to derived benefits) can be challenging to conduct due to costs and complexity, agencies should, at a minimum, evaluate participant reaction to the training program through end of course evaluations. However, this is a basic measure that some agencies are lacking because the evaluations currently being administered go to the provider of the class and not the agency paying for the training. Therefore, these agencies have little insight into how the workforce perceives the training they received. We note that FAI has initiatives underway to standardize the course evaluations for the courses it provides and to make completion of the course evaluations mandatory to receive course credit. At present, this effort only applies to FAI-sponsored courses and will not include agencies that use other vendors, and does not guarantee that agencies will analyze the results; it is important for all agencies to collect and analyze this basic information.", "To help ensure that agencies collect and report comparable cost data and perform a minimal assessment of the benefits of their acquisition training investments to aid in the coordination and evaluation of the use of resources government-wide, we recommend the Director of the Office of Management and Budget direct the Administrator of the Office of Federal Procurement Policy, in consultation with the Director of the Federal Acquisition Institute, to take the following two actions: provide further guidance, including definitions, on the types of costs that agencies should include in their Acquisition Human Capital Plan submission to help determine total training investment; and require all agencies, at a minimum, to collect and analyze participant evaluations of all acquisition workforce training as a first step to help assess the effectiveness of their training investment.", "We provided a draft of this report to OFPP, FAI, and the selected agencies—DHS, Education, Treasury, and VA. OFPP and FAI concurred with our recommendations in oral comments and e-mail responses. Education and Treasury responded via e-mail with no comments. DHS and VA provided technical comments, which we incorporated as appropriate.\nIn oral comments, OFPP and FAI agreed with our recommendations and noted that they have begun drafting guidance to federal agencies. Consistent with our report, OFPP and FAI emphasized the importance of acquisition workforce management tools that improve the government’s ability to leverage acquisition resources especially during this time of budgetary constraints. These officials highlighted FAITAS, which can serve as a workforce management tool and training application system. Currently, use of this system is voluntary and some agencies use the system to enroll participants in FAI courses, communicate available training seats within a specific agency’s training course, and track their workforce’s individual training records and certifications. Recognizing the potential benefits of this system in helping to coordinate and evaluate the use of training resources government-wide, OFPP stated that it is considering making FAITAS reporting mandatory for civilian agencies.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Administrator of OFPP, the Director of FAI, and the Secretaries of DHS, Education, Treasury, and VA. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "", "The objectives of this review were to evaluate the training approaches of federal agencies, other than the Department of Defense, for the acquisition workforce. Specifically, this report addresses the (1) role of the Office of Federal Procurement Policy (OFPP) and the Federal Acquisition Institute (FAI) in promoting Federal Acquisition Certification (FAC) standards and assisting agencies in meeting acquisition workforce training requirements; (2) approaches agencies use to provide training to their acquisition workforces; and (3) the extent to which agencies track information on the costs and benefits of their acquisition training.\nTo identify the roles of OFPP and FAI in promoting FAC standards, we analyzed legislation on their authority, the OFPP acquisition workforce strategic plan, and relevant guidance provided by them to agencies. We interviewed officials at OFPP and FAI about efforts to (1) provide oversight and assist agencies in meeting training requirements; (2) leverage government-wide resources; and (3) share leading practices. Since FAI’s initiatives are in various stages of implementation, we did not evaluate their effectiveness; however, in several instances, we note our initial observations of the efforts.\n31 U.S.C. § 901. used a standard set of questions to obtain data about their training approaches, including the sources for course offerings (in particular whether courses were provided by the agency, a commercial sector vendor, FAI, the Defense Acquisition University, or another agency), facilities, budgetary and staffing resources, methods of training, and challenges faced in providing acquisition training. Because this was not a sample survey, it has no sampling errors. However, the practical difficulties of conducting any survey may introduce errors, commonly referred to as nonsampling errors. For example, difficulties in interpreting a particular question, sources of information available to respondents, or entering data into a database or analyzing them can introduce unwanted variability into the survey results. We took steps in developing the questionnaire, collecting the data, and analyzing them to minimize such nonsampling error. After we drafted the questionnaire, we asked for comments from federal officials knowledgeable about acquisition workforce and training issues and from independent GAO survey professionals. We conducted pretests to check that (1) the questions were clear and unambiguous, (2) terminology was used correctly, (3) the questionnaire did not place an undue burden on agency officials, (4) the information could feasibly be obtained, and (5) the survey was comprehensive and unbiased. We chose the two pretest sites to include perspectives from agencies with robust acquisition workforce training programs and training facilities. We made changes to the content and format of the questionnaire after both reviews and after each of the pretests, based on the feedback we received. We sent the questionnaire by e-mail in an attached Microsoft Word form that respondents could return electronically after marking checkboxes or entering responses into open answer boxes on July 5, 2012. We sent the questionnaire jointly to the Chief Acquisition Officer, Acquisition Career Manager, and Chief Learning Officer of each agency, asking for a consolidated agency response. After two weeks, we sent a reminder to everyone who had not responded. All questionnaires were returned by August 10, 2012. We received questionnaire responses from 100 percent of the agencies, although not all agencies answered every question. The Department of Justice provided four responses—one from its headquarters procurement office and three from bureau procurement offices. We consolidated the information from the four surveys to ensure the tabulations eliminated duplicative counting of the agency and to provide averaged data, as appropriate. In questions regarding the agency’s opinions regarding challenges faced, we deferred to the response of the headquarters procurement office.\nTo confirm our understanding of the variety of issues addressed and obtain additional insights on the agencies’ responses to our questionnaire, we discussed our preliminary results with representatives from the 23 agencies at meetings of the Chief Acquisition Officers Council, Interagency Acquisition Career Management Committee, and the Chief Learning Officers Council. Table 4 provides a summary of the functions of these councils as related to government-wide efforts for training the acquisition workforce.\nWe also reviewed the agencies’ annual Acquisition Human Capital Plans (AHCP) due March 31, 2012, to collect information on certification rates, and corroborate information agencies provided in response to the questionnaire on acquisition workforce size and training approaches.\nTo determine the information agencies track on the costs and benefits of the training provided, we supplemented the questionnaire responses by soliciting additional cost and metrics data from the agencies using a data collection instrument. We developed our data collection instrument based on cost information provided from agencies in response to our questionnaire. We sent agency-tailored data collection instruments by e- mail in an attached Microsoft Excel spreadsheet that respondents could return electronically after updating or providing new data on October 15, 2012. We pre-populated each agency’s spreadsheet with any data previously provided by the agency, and sent the data collection instrument to the Acquisition Career Manager and the official who provided the response to the questionnaire. After two weeks, we sent a reminder to everyone who had not responded. The data collection instruments were returned by November 28, 2012. We received data collection instruments from 91 percent of the agencies.\nTo gather illustrative examples and more detailed explanations regarding training approaches and data tracked related to costs and benefits, we selected four agencies—the Departments of Education (Education), Homeland Security (DHS), the Treasury (Treasury), and Veterans Affairs (VA)—for further review. DHS, Treasury, and VA are agencies that operate dedicated acquisition workforce training facilities—permanent centers with dedicated resources that provide training specifically for the agency’s acquisition workforce. Education, which is one of the smallest agencies, has no dedicated facility and has reported issues with access to acquisition workforce training courses. We interviewed agency officials to determine the extent to which they were aware of and using the leading training investment practices that the Office of Personnel Management and experts agreed should be implemented by agencies to support effective training investment decisions.3 Table 5 provides a summary of these leading practices.\nOf the eight leading practices GAO identified, we focused on the four practices dealing primarily with determining costs and effectiveness of training: (practice 1) identifying the appropriate level of investment to provide for training and development efforts and prioritize funding so that the most important training needs are addressed first; (practice 4) having criteria for determining whether to design training and development programs in-house or obtain these services from a contractor or other external source; (practice 6) tracking the cost and delivery of its training and development programs agency-wide; and (practice 7) evaluating the benefits achieved through training and development programs, including improvements in individual and agency performance.\nWe conducted this performance audit from February 2012 to March 2013, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "In addition to the contact name above, Penny Berrier (Assistant Director); R. Eli DeVan; Mya Dinh; Jean McSween; Aku Pappoe; Kenneth Patton; Carol D. Petersen; Sylvia Schatz; and Suzanne Sterling made key contributions to this report." ], "depth": [ 1, 1, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 1, 2, 2 ], "alignment": [ "h0_full", "h0_full", "h0_full", "h1_title h3_title", "h3_full h1_full", "h1_full", "h2_full", "h2_full", "h2_full", "", "", "", "h1_title h3_title", "h3_full h1_full", "", "", "" ] }	{ "question": [ "What are the responsibilities of the OFPP in the acquisition workforce?", "How do DOD certification standards compare to those of OFPP?", "What are the responsibilities of the FAI?", "Why do most agencies provide the majority of their acquisition training using external sources?", "What does the Department of Homeland Security operate a permanent center for?", "How is Education different from most federal agencies?", "What are the top challenges reported by agencies in obtaining training for their acquisition workforce?", "What did almost half the agencies report regarding identifying the acquisition workforce?", "Why do agencies have limited information on the benefits of their acquisition workforce training investments?", "What has FAI’s efforts to collect training cost data met with?", "What were some of the cost components studied while researching training cost data in 2012 by GAO and FAI?", "Why are comparable training cost data important?", "Why does a lack of metrics make studying the benefits of acquisition workforce training difficult?", "Why is the acquisition workforce important?", "What was identified in the GAO review?", "How did the GAO determine OFPP and FAI roles?", "How did GAO utilize its questionnaire and data call?" ], "summary": [ "The Office of Federal Procurement Policy (OFPP) sets standards and policies for the federal acquisition workforce, and has established certification requirements, including minimal training, for the three main acquisition roles--contracting staff, Contracting Officer's Representatives, and Program/Project Managers--to promote the development of government-wide core acquisition competencies and facilitate mobility across agencies.", "DOD follows separate certification standards.", "The Federal Acquisition Institute (FAI), which is responsible for fostering and promoting the training and development of the acquisition workforce, works closely with OFPP and has initiatives underway to improve the collection and management of training information, including cost data and course evaluations; streamline communication of acquisition training guidance; and coordinate efforts to leverage acquisition workforce training resources throughout the government.", "To support efforts for the acquisition workforce to attain and maintain federal certification requirements, most agencies (17 of 23) provide the majority of their acquisition training using external sources--vendors, FAI, the Defense Acquisition University, or other agencies.", "The Departments of Homeland Security (DHS), the Treasury, and Veterans Affairs (VA) operate their own permanent centers with dedicated resources that train the agency's acquisition workforce.", "Education reported using a different approach to providing acquisition training--it gets most of its training from other government entities.", "Federal agencies face similar challenges in providing training to their acquisition workforce. The top challenges reported by agencies in obtaining training for their acquisition workforce involved having sufficient resources. Twenty of 23 agencies identified obtaining adequate funding and 19 of 23 identified obtaining sufficient staff to manage training as challenging.", "In addition, almost half of the agencies reported that the fundamental step of identifying the acquisition workforce is a challenge especially when members of the workforce are involved in acquisitions as a secondary and not primary duty.", "The training cost data that agencies collect is not comparable and agencies have limited information on the benefits of their acquisition workforce training investments. Although almost all agencies provided some cost data in response to GAO's questionnaire and subsequent data call, the agencies' cost data did not allow for government-wide assessment of their training investment.", "To date, FAI's efforts to collect training cost data has also met with limited success.", "Cost data collected in 2012 by GAO and FAI included different cost components-- such as facilities, travel, and instructors--which do not allow for government-wide analysis.", "Having comparable training cost data are important to inform FAI efforts to establish government-wide contracts for training.", "As for determining benefits of training, 7 of 23 federal agencies reported having no metrics, not even basic endof- course evaluations. Without basic data, agencies do not have insight into the benefits of their acquisition workforce training efforts.", "The acquisition workforce manages and oversees billions of dollars in acquisition programs and contracts to help federal agencies get what they need, at the right time, and at a reasonable price; therefore, it is important that agencies provide adequate training to this workforce.", "In this review, GAO identified (1) the role of OFPP and the FAI in assisting agencies in meeting certification requirements; (2) agencies' approaches to providing training; and (3) the extent to which agencies collect information on the costs and benefits of their acquisition training.", "To determine OFPP and the FAI roles, GAO analyzed relevant legislation. GAO obtained information from 23 federal agencies on their training approaches through a questionnaire, and selected 4 agencies--the Departments of Education and the Treasury, DHS, and VA--to provide illustrative examples.", "GAO used its questionnaire and a subsequent data call to obtain information on how agencies collect information on the costs and benefits of their training." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, -1, 3, -1, -1, 1, -1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0 ] }
CRS_R40102	{ "title": [ "", "Introduction", "Brief History of Modern U.S. Foreign Aid", "Implementation of the F Bureau", "Criticisms of the F Bureau and U.S. Foreign Aid Overall", "History of Modern Legislative Efforts to Reform Foreign Aid4", "Key Recommendations Included in Selected Foreign Aid Reform Studies", "Rewrite the Foreign Assistance Act of 1961", "Elevate Development to the Level of Diplomacy and Defense", "Establish a National Strategy for U.S. Foreign Aid", "Create a Cabinet-Level Agency for Foreign Aid", "Give Department of State Lead Authority for Foreign Aid", "Build on the F Process", "Enhance Resources in Civilian Agencies", "Improve Policy and Agency Coordination", "Increase Input from the Field, Rather than in Washington", "Create a Unified Budget", "Provide Greater Emphasis on Needs-Driven Aid", "Provide Multiyear Aid Funding", "Balance Long-Term Aid Against Short-Term Aid", "Increase Participation in Multilateral Foreign Assistance Efforts", "Monitor Aid Impact", "Address Role of Congress in Foreign Aid Policy", "Conclusions" ], "paragraphs": [ "", "There is continued interest among Members of Congress, the Obama Administration, and Nongovernmental Organizations (NGOs) to reform U.S. foreign aid. This section provides background information concerning the history of modern U.S. foreign aid. It continues with an explanation of the 2006 creation of the State Department's \"F Bureau\" and the position of Director of Foreign Assistance (DFA), who heads that bureau and serves as administrator of the United States Agency for International Development (USAID). Next, the introduction discusses certain perceived problems with the so-called \"F process.\" Finally, this section provides an overview of Congress's involvement in modern U.S. foreign aid.", "Modern U.S. foreign assistance programs had their beginnings shortly after World War II when the United States government responded to the potential spread of communism in postwar Europe by providing aid to vulnerable populations and governments for reconstruction and economic development. Beginning in 1947, when Great Britain could no longer afford to support governments in Greece and Turkey, the United States stepped in with economic assistance to stabilize those two governments and prevent communism from taking hold. Soon thereafter, the Marshall Plan, from 1948 to 1951, provided a total of $13.3 billion for economic recovery support to 16 Western European countries to bolster their governments, stem the spread of communism to those European countries, and strengthen potential trade capabilities.\nOver the years since the Marshall Plan, underlying reasons for U.S. foreign assistance have varied in response to world events. After the Marshall Plan ended, U.S. assistance focused on Southeast Asia to counter Soviet and Chinese influence. Under President Kennedy, with the Alliance for Progress program in Latin America and assistance to newly independent states in Africa, foreign aid rose to its highest historic amount (measured as a percentage of national income) since the Marshall Plan. Aid spending leveled off in the 1970s, even with spending for Middle East peace initiatives, and then rose again in the 1980s to address famine in Africa, continuing peace efforts in the Middle East, and the U.S. response to insurgencies in Central America. The 1990s saw U.S. aid fall to its lowest level, averaging approximately 0.14% of national income, partly due to the end of the anti-communism rationale for U.S. foreign assistance with the end of the Cold War.\nAfter the terrorist attacks of September 11, 2001, the Bush Administration elevated the significance of foreign assistance as a foreign policy tool. President George W. Bush elevated global development as a third pillar of national security, with defense and diplomacy, as articulated in the U.S. National Security Strategy of 2002, and reiterated in 2006. In the FY2009 budget request, the Bush Administration reiterated the importance of the Department of State and U.S. Agency for International Development (USAID) by saying that the FY2009 budget \"reflects the critical role of the Department of State and the U.S. Agency for International Development in implementing the National Security Strategy.... \" At the same time that foreign aid is being recognized as playing an important role in U.S. foreign policy and national security, it also is coming under closer scrutiny by Congress, largely in response to a number of presidential initiatives (such as implementing the F process and creating the Millennium Challenge Account, or \"MCA\" ), and by critics who argue that the U.S. foreign aid infrastructure is cumbersome and fragmented, and without a coherent aid strategy. Furthermore, foreign aid experts and some lawmakers assert that Congress needs to dramatically update or rewrite completely the primary statute for U.S. foreign aid, the Foreign Assistance Act of 1961 (FAA), as amended (P.L. 87-195; 22 U.S.C. 2151 et seq.), which has not been comprehensively amended since 1985 and takes what many view to be a Cold War approach that is outdated for U.S. foreign aid in the 21 st century.", "In January 2006, Secretary of State Rice announced the \"transformational development\" initiative, or \"F process,\" to foster greater aid program coordination and to achieve specified objectives. The Secretary created a new State Department Bureau of Foreign Assistance (the F Bureau) headed by the Director of Foreign Assistance (DFA) who also serves concurrently as Administrator of the U.S. Agency for International Development. In 2006 the F Bureau developed a Strategic Framework for Foreign Assistance (FAF) to align U.S. aid programs with American strategic objectives. The FAF is designed as a tool to help policy makers with strategic choices on the distribution of funds and to ensure that U.S. foreign assistance advances the Administration's foreign policy objectives. The FAF identifies as the ultimate goal \"to help build and sustain democratic, well-governed states that respond to the needs of their people, reduce widespread poverty and conduct themselves responsibly in the international system.\" Five transformational development objectives organize funding and programs to achieve that goal. The objectives are Peace and Security, Governing Justly and Democratically, Investing in People, Economic Growth, and Humanitarian Assistance. This Framework heavily guided the writing of the FY2008 and FY2009 budgets and the FY2010 budget request.", "While many today say that the F process was an important first step in coordination of U.S. foreign assistance, several criticisms have surfaced. Some say that the F Bureau covers only those aid programs controlled by the Department of State and USAID with no mention of coordinating the other numerous agencies involved with foreign aid. Others claim that Congress was not involved in shaping the F process. Many assert that the process does not incorporate leveraging U.S. assistance to multilateral organizations. Some commentators also criticize the F process for emphasizing Washington decision making over relying on expertise in the field.\nBeyond the F process in particular, many foreign aid experts perceive a number of ongoing problems with the overall organization, effectiveness, and management of U.S. foreign aid that, they believe, need to be reformed. Problems most commonly cited include the lack of a national foreign assistance strategy; failure to elevate the importance and funding of foreign aid to be on par with diplomacy and defense as a foreign policy tool; the FAA's outdated organization and strategic goals of foreign aid programs; a lack of coordination among the large number of cabinet-level departments and agencies involved in foreign aid, as well as fragmented foreign aid funding; and a need to better leverage U.S. multilateral aid to influence country or program directions. Furthermore, some express concern that very little monitoring of aid and its effectiveness has been done over the years to determine if goals and objectives have been met and if money has been well spent.", "In general, Congress has the responsibility to authorize, appropriate funds for, and oversee U.S. foreign aid programs and related activities. Most appropriations for foreign aid are located in the provisions of annual foreign operations appropriations acts, which often have been combined with appropriations for related expenditures, such as Department of State diplomatic programs, and export financing. The Department of State, Foreign Operations, and Related Programs Appropriations, 2009 (Division H of P.L. 111-8 ), contains the most recent set of foreign aid appropriations provisions. Although Congress has passed regular legislation appropriating funds for foreign aid, it has not passed annual foreign aid authorization legislation since 1985. Instead of independent authorization legislation, Congress provides its guidance for U.S. foreign aid activities through earmarks and other directives dictating or limiting uses of funds included in the yearly foreign operations appropriations acts. Congress has nonetheless passed a number of acts providing new authorizations for foreign assistance programs since 1985, including the Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992 (FREEDOM Support Act) ( P.L. 102-511 ), the Support for East European Democracy (SEED) Act of 1989 ( P.L. 101-179 ), the Millennium Challenge Act of 2003 (division D of P.L. 108-199 ), and recent Security Assistance Acts for 2002, 2000, and 1999 (division B of P.L. 107-228 ; P.L. 106-280 ; Title XII of H.R. 3427 , enacted by reference in P.L. 106-113 , respectively).\nCongress has undertaken reform of foreign assistance at various points since the authorization of the Marshall Plan through the Economic Cooperation Act in 1948. After the Marshall Plan ended in 1951, Congress passed the Mutual Security Act of 1951, which coordinated military and economic assistance with technical assistance programs. The Mutual Security Act of 1954 and its 1957 revisions contained the concepts of security and development assistance, and instituted authority central to providing loans to developing countries.\nThese acts, however, did not create a long-term structure for U.S. foreign assistance. The historic passage of the Foreign Assistance Act of 1961 (FAA) provided the legislative vehicle for the core organization of U.S. foreign assistance that remains in effect to this day. The successful reform effort that resulted in passage and implementation of the FAA enjoyed both the ardent advocacy of President Kennedy from the time he came to office, as well as the solid support of Congress; Congress passed the legislation in the first year of the Kennedy Administration. This effort represents the most far-reaching and long-lasting reform of U.S. foreign aid, as the FAA originally organized disparate U.S. foreign aid efforts into a coherent whole, and authorized the President to choose an agency to implement the provisions of FAA. In November 1961, President Kennedy created via executive order the Agency for International Development, which later came to be known as USAID.\nThe most recent successful major overhaul of foreign aid and the FAA occurred in 1973, when Congress passed the Foreign Assistance Act of 1973 ( P.L. 93-189 ). This Act restructured development aid programs, shifting emphasis from a \"top-down\" approach concentrating on aid to governments to develop infrastructure and fund large development projects, to a \"basic human needs\" strategy that directly targeted the poorer segments of the population in developing countries. It reorganized foreign assistance into sectors including agriculture, education, and population, and certain development activities such as energy and environment.\nAdministrations have undertaken numerous other foreign aid reform attempts over the years, receiving various degrees of congressional support. In 1969, President Nixon formed the Task Force on International Development, chaired by Rudolph A. Peterson. The Peterson Commission, which was made up of private individuals, examined U.S. foreign assistance as a whole, and made recommendations in 1970, which were turned into legislation proposed by the Administration. Congress did not support this legislation, however, and instead focused on passage of the 1973 reforms discussed above.\nIn 1977, Senator Hubert Humphrey pushed legislation to elevate the importance of development in U.S. foreign policy and to coordinate the efforts of the multitude of government agencies involved in foreign assistance. The proposal did not become law, but in 1979 President Carter created an overarching agency for foreign assistance coordination called the International Development Cooperation Agency (IDCA) based on Humphrey's ideas. The IDCA was under-resourced from the outset, and the Reagan Administration effectively abandoned the IDCA, providing no staff to the organization. The IDCA ultimately failed to effectively coordinate aid authorized under the FAA. The Executive Order that created the entity was not rescinded, however, and the IDCA remained a dormant part of the foreign assistance structure until it was abolished in 1999.\nIn his first term, President Reagan formed the Commission on Security and Economic Assistance, chaired by Deputy Secretary of Defense Frank Carlucci, to examine the role of security aid in relation to development assistance, the dissatisfaction of both Congress and the executive branch with foreign aid programs, and the distrust concerning foreign aid between the two. Although the Carlucci Commission issued recommendations in 1983, the effort did not lead to legislation.\nIn 1987 the House Foreign Affairs Committee appointed Representatives Lee Hamilton and Ben Gilman to lead an effort to rewrite foreign assistance law to reflect new international political realities and to define core objectives of U.S. foreign aid. The Hamilton-Gilman Task Force also sought to simplify foreign aid legislation and remove the maze of congressional restrictions on the administration of aid programs. It was hoped that this restructuring would improve congressional attitudes toward foreign aid programs and congressional-executive relations regarding cooperation on foreign aid. The Committee endorsed the legislation incorporating the Task Force's recommendations, but Representative Gilman and other members disagreed with many of the measures suggested, and the effort did not result in substantive reforms.\nPresident Clinton appointed Deputy Secretary of State Clifford Wharton to head a review of foreign aid that would restructure aid after the Cold War and reform USAID. Wharton resigned before his report was released, but the Clinton Administration introduced legislation based on the report in late 1993. The Peace, Prosperity, and Democracy Act ( H.R. 3765 , 103 rd Congress; S. 1856 , 103 rd Congress), however, did not move forward after being introduced in the Senate, and the Administration did not resubmit the bill after the Republicans took control of Congress in 1994.\nLater, the Clinton Administration proposed a reorganization of foreign affairs functions that included retaining USAID as an independent agency but placing USAID under the direct authority of the Secretary of State. Congress passed the Foreign Affairs Reform and Restructuring Act of 1998 (division G of P.L. 105-277 ), which contained the provisions extending the Secretary of State's authority over USAID. The Secretary of State subsequently delegated authority to the administrator of USAID in order for the administrator to carry out the mission of the Agency (State Department Delegation of Authority No. 145, as revised on March 31, 1999).\nThe 111 th Congress has introduced legislation that contains elements reforming foreign aid, such as directing the President to develop and implement a national strategy for foreign aid; requiring the President to conduct a quadrennial review for diplomacy and development, similar to the Department of Defense's QDR; and identifying improvements in aid coordination and evaluation.", "While U.S. foreign assistance throughout its history often has been of keen interest to the executive branch, Congress, and NGOs, a renewed vigor in the debate on foreign aid policy and structure has surfaced in post-9/11 years regarding foreign aid's role in meeting U.S. foreign policy and national security goals. As a result, several studies have been published since 2001 that have called for reform to improve the foreign aid structure in Washington and aid effectiveness in the field. To this end, these studies have heightened congressional interest in, and encouraged a re-examination of, U.S. foreign assistance policies, programs, funding, and organizational structure. The 14 studies assessed in this report are often referred to in aid reform discussions, and deal primarily with foreign aid reform issues; they include books, Senate committee reports, think-tank studies, NGO reports, and journal articles. Most of the studies considered present comprehensive approaches for foreign aid reform. CRS could not include every study and other publication related to such reform; it believes, however, that these 14 studies contain a representative range of viewpoints and recommendations from the foreign aid community.\nTable 1 presents a matrix of foreign aid reform recommendations in the studies and other publications reviewed for this report. The 14 documents, listed in alphabetical order by their respective short forms (identified above and in Appendix A and Appendix B below) appear along the left side of the matrix from top to bottom. CRS identified 16 key recommendations which appear in more than one of the studies. The recommendations are located at the top of the matrix. They range from a complete replacement of the basic authority of the U.S. government to provide most types of aid, namely, the Foreign Assistance Act of 1961, to various degrees of restructuring the foreign assistance apparatus and organization within the executive branch, to new ideas and methods of funding, allocating, and evaluating the effect of foreign assistance. While recommendations have been divided into discrete categories, CRS notes that each study's support of any given recommendation may contain slight variations from the same recommendation supported by another study. A general discussion of the 16 key recommendations follows.", "The Foreign Assistance Act of 1961 (FAA), as amended (P.L. 87-195), contains a multitude of goals and outdated priorities and directives, many of which have been appended piecemeal to the original Act. In addition, Congress has enacted over 20 other pieces of legislation establishing foreign aid authorities outside the FAA, adding to the diffusion of aid responsibility and initiatives within U.S. foreign policy overall. Several of the studies claim that the FAA needs to be rewritten in order to streamline and add coherence to a piece of legislation that has been amended frequently since its enactment nearly 50 years ago.\nRecommendations calling for rewriting the FAA include stripping foreign aid legislation of fragmentary earmarks, aid restrictions, and aid procurement rules; refocusing aid on the core mission of poverty reduction; and restructuring aid legislation to set development goals based not on outdated Cold War-era policy, but instead on the realities facing the United States in a post-9/11 environment. The Oxfam study, Smart Development, Why U.S. foreign aid demands major reform , specifically cites the need for effective congressional-executive cooperation to accomplish rewriting the FAA itself. Modernizing Foreign Assistance for the 21 st Century: An Agenda for the Next U.S. President , the study from the Center for Global Development, calls for renewing the congressional-executive relationship in foreign aid policy implementation, by passing foreign aid legislation that provides substantially greater flexibility to the executive branch for aid delivery and development activities, while at the same time beefing up accountability of the executive branch to Congress via enhanced real-time oversight mechanisms. While these studies acknowledge the need for changes to the FAA, however, they also agree that a full rewrite of the Act would be very difficult to accomplish.", "The 2006 U.S. National Security Strategy endorses raising the importance of international economic development within overall U.S. foreign policy and national security: \"Development reinforces diplomacy and defense, reducing long-term threats to our national security by helping to build stable, prosperous, and peaceful societies.\" Many commentators have taken up this newly iterated support for development to create the so-called \"3D,\" or three pillars, approach to national security, with development elevated to equal partner status with defense and diplomacy. A majority of the studies directly recommend the establishment of co-equal status for development alongside defense and diplomacy in the U.S. national security framework. Certain studies emphasize that the government must reorganize the international affairs functions of the government to prioritize development as a principal instrument of national security, not just as a secondary tool to \"reinforce\" defense and diplomacy.", "U.S. foreign assistance policy is not currently based on any unified national strategy document. A strategy that encompasses all foreign aid activities and guides the decisions of U.S. policy makers would provide much-needed coherence to the currently fragmented system of foreign assistance and would help link U.S. foreign assistance with U.S. foreign policy goals, several studies argue. Some of the studies suggest that such a national foreign assistance strategy could explain and integrate foreign aid goals to strengthen U.S. national security by mitigating poverty and desperation that often leads to instability and conflict, and to fulfill a moral obligation to assist those in need by providing humanitarian aid and encouraging long-term overseas development. The CSIS study, Integrating 21 st Century Development and Security Assistance , recommends an overall cross-agency strategy for security assistance in particular, to ensure proper distribution of authorities and responsibilities among defense and civilian actors, and the Oxfam study calls for a national development strategy that would balance short-term political and security goals with long-term development goals.\nSome of these studies place importance on national strategies that focus not just on foreign aid coherence but also on utilizing such policy coherence to meet the previously discussed goal of elevating development within overall U.S. foreign policy and national security. The CGE study, Smart Power: Building a Better, Safer World—A Policy Framework for Presidential Candidates , for instance, links creation of a coherent foreign assistance strategy with the institution of an overall national security strategy that fully integrates development with diplomacy, economic policy, defense, and intelligence.", "To address perceived shortfalls in managing foreign aid, most of the documents considered in this report call for better integration of government actors involved in providing foreign assistance. In her testimony before the Subcommittee on State, Foreign Operations, and Related Programs of the House Appropriations Committee, Lael Brainard of the Brookings Institution has asserted, \"Instead of the current spread of 50 offices managing aid, we should have one capable operational agency.\" Half of the studies call specifically for a new cabinet-level agency to achieve this integration and ensure the importance of foreign assistance in relation to other foreign policy priorities. The joint Brookings-CSIS study, Security by Other Means: Foreign Assistance, Global Poverty, and American Leadership , for example, argues that a new cabinet-level department of global development is the only organizational reform that will meet the challenges facing the U.S. foreign assistance structure, including ensuring coherent policy, increasing aid effectiveness, and integrating foreign aid actors across the U.S. government. A cabinet-level department for foreign assistance could also encourage a balance between short-term political and security goals and long-term development objectives, the Oxfam study suggests. It argues that a new department with the requisite stature would not be overrun by State and Defense Department interests.", "While the State Department retains primary formal authority over U.S. foreign assistance, concerns have arisen in recent years over the perceived erosion of the Department's lead foreign aid role, especially as compared to DOD's expanding role in assistance. The two reports from the Senate Foreign Relations Committee, Embassies as Command Posts in the Anti-terror Campaign (SFRC1), and Embassies Grapple to Guide Foreign Aid (SFRC2), as well as the Department of State's Advisory Committee on Transformational Diplomacy: Final Report of the State Department in the 2025 Working Group (State), all support a strong leadership role for the State Department for U.S. foreign assistance in general. The Committee reports contain focused recommendations concerning the authority of the State Department in relation to DOD regarding security assistance. Both Committee reports support the State Department's primary authority for Function 150 and 050 foreign assistance. These reports also state that authority for the security assistance budget, including security assistance provided under Section 1206 of the National Defense Authorization Act for Fiscal Year 2006 ( P.L. 109-163 ), should remain with the State Department, with the DOD responsible only for implementation of security assistance policy and programs in limited areas. The SFRC2 report explained that State Department security-assistance authority should not be allowed to migrate from the State Department to DOD, and warned against annual State Department budget requests to Congress for security assistance that are inadequate to meet policy implementation goals.\nThe State working group study recommends that it should have the lead authority regarding foreign aid policy. It calls for the integration of State Department and USAID functions and organizations that currently overlap, with such integration resulting in a concentration of foreign aid decision making being located in the State Department.", "Secretary Rice's Transformational Development created within the State Department the Office of the Director of Foreign Assistance and the Foreign Assistance Framework (FAF, or F process), which is intended to provide coherence to U.S. foreign assistance policy, provide budget transparency, and allow for monitoring and evaluation of the effectiveness of foreign assistance programs. Three of the studies considered in this report endorse the enhancement and improvement of the Office of the Director of Foreign Assistance (F) within the Department of State. Gordon Adams's article, \"Don't Reinvent the Foreign Assistance Wheel\" (Adams), discusses several criticisms of the F process, including a fear that the F Bureau concentrates too much power within the State Department and creates a Washington-focused, non-transparent, top-down foreign aid structure. Despite these perceived shortcomings, the article claims that the alternatives to the F process are even less attractive. Among other negative consequences, restoring independent status to USAID would simply reinvigorate past USAID-State Department clashes over foreign assistance; and a new cabinet-level foreign assistance department would weaken foreign assistance overall because it would place foreign assistance in direct policy battles with the State and Defense Departments, both of which would likely remain stronger than the new foreign assistance department.\nThe Adams article calls for improvement of the F process through increasing the importance of the DFA, which it argues should be elevated to a Second Deputy Secretary of State position; continuing to establish capabilities within USAID and the regional bureaus within the State Department to increase F process effectiveness; and requiring F to link resource needs to strategic goals in the long-term. The three studies generally commend the institution of the F process and call for the process to extend its authority to include all U.S. foreign assistance actors, programs, and policies not currently covered. These changes would promote better coherence for U.S. foreign assistance as a whole, according to these materials. In addition, the State Department should make the F process more transparent concerning both the criteria for aid eligibility and how resources are allocated, one commentator argues, in order to encourage long-term development over short-term political gains, which are more prevalent under the current FAF.", "There is widespread consensus, both within the U.S. government and among foreign aid experts, that overall capacity to carry out foreign assistance programs is compromised due to underfunded and understaffed civilian aid agencies. All of the studies called for an increase in resources for civilian agencies involved in foreign assistance, often as a means to effecting other reforms. Some of the studies focus on the steep decline in personnel, expertise, and capabilities of USAID in recent years, and the reliance on outsourcing stabilization and reconstruction program implementation through \"megacontracts\" with private contractors. They claim that increasing resources in USAID and other civilian agencies will increase expert institutional capability within government to meet foreign assistance challenges. Certain recommendations call for employment of so-called \"smart power,\" which would make foreign assistance provided through civilian agencies central to national security strategy, requiring greater funding than is currently provided. Others cite the increasing role and authority of the Department of Defense in provision of foreign assistance, and contend that responsibility for such assistance should be returned to civilian agencies with enhanced capabilities. These recommendations focus on increasing capacity and capability in the civilian foreign assistance agencies through funding for personnel increases, training, and expertise attraction and retention; and investing in core foreign assistance competencies including management, resource planning (including one call for a new operations budgeting bureau within State), monitoring and evaluation, human resources, procurement, and emergency response.", "A majority of the studies argue that integration and coordination among foreign assistance actors within the U.S. government is essential to improving aid effectiveness. Some recommend policy and agency integration that would surpass the limited coordination of foreign assistance under the F process. Other studies, however, focus on integration between the State Department and USAID, the two primary actors currently participating in the F process. Certain studies recommend in addition that agencies involved in foreign assistance align their policy and programs with foreign trade, investment, technical assistance, debt relief, financial stabilization, and economic sanctions policy to create a seamless web of engagement with foreign countries that prevents U.S. government actors from implementing individual foreign assistance programs in isolation. Specially reserved funding structures requiring interagency cooperation prior to disbursement could incentivize such integration, some of the studies argue.\nOther studies focus specifically on foreign assistance related to security. These studies recommend maintaining civilian leadership for foreign assistance in the face of increased DOD involvement in aid delivery through establishing a defined, limited role for DOD foreign assistance activities; increasing State Department capacity for stabilization and reconstruction assistance; and integrating security assistance strategy government-wide.\nIn addition to recommendations for better coordination of foreign assistance, policies and activities, many studies call for coordination among foreign assistance, trade, foreign investment, debt relief, financial stabilization, and economic sanctions policies in order to stop different agencies implementing strategies that work at cross-purposes, hindering the effectiveness of U.S. international development efforts. Lael Brainard of the Brookings Institution has testified before the Subcommittee on State, Foreign Operations, and Related Programs of the House Appropriations Committee that \"[t]he United States could wield greater influence per aid dollar spent than any other nation simply by deploying its influence in trade, investment, debt, and financial policies in a deliberate manner as a force multiplier.\"", "There are concerns in the foreign aid community about the degree of interaction between policymakers in Washington and those implementing foreign aid programs in the field, as well as the level of feedback from the field in forming foreign aid policy. Four of the studies recommend increased input from the field concerning foreign assistance, arguing that policy formulation under the F process is centered too much in Washington. One study calls for creating a systematic, routinized structure of engagement between Washington and foreign assistance actors in the field. This structure would be based in the regional bureaus and country desks within the State Department, which would increase their foreign aid programming and budgeting expertise in order to properly evaluate and set aid priorities from reports and requests from the field.", "Currently, budgeting for foreign assistance primarily resides in the foreign affairs and defense budgets (and possibly in other appropriations), and budget determinations for foreign aid are not unified across the government. Three studies call for changes to budgets the President presents to Congress regarding foreign assistance funding requests. One calls for unifying all foreign assistance spending across government agencies and assistance types, including economic, development, humanitarian, security, and military assistance. A comprehensive foreign assistance budget would disburse funds solely from the current foreign assistance accounts administered by the State Department. Another recommendation suggests creating an overall national security budget to parallel a more comprehensive national security strategy. This national security budget would integrate diplomacy, economic policy, defense, development, and intelligence spending to encourage a smart power approach to U.S. national security.", "Many observers criticize the current system of aid funding because it is based on restrictive funding categories that limit long-term development programs for developing countries. Instead of providing aid based on short-term political objectives, which results in a disproportionate percentage of aid being allocated to middle-income countries, aid recipient country needs should drive aid allocation, a majority of studies say. Many of these recommendations would place greater reliance on the unique circumstances of each country receiving aid. Assistance, they argue, should be tailored to fit the individual needs of each country, whether they be humanitarian- or development-based, short-term or long-term, in stable situations or in latent- or post-conflict situations. Levels of aid could also depend not only on needs but also on the commitment level to development that the recipient country has shown. In addition, direct aid to recipient governments should be increased when they show their ability to implement transparent, credible development strategies. Certain studies stress the importance of close, consistent coordination with the recipient country to ensure that the United States is providing the most effective combination of assistance to meet recipient country needs and also encourage local ownership of aid plus any ensuing benefits toward recipient country development.", "Congress currently approves foreign assistance budgets on a year-to-year basis and, during the George W. Bush Administration, through emergency supplemental appropriations. Four of the studies call for multiyear budgeting for foreign assistance that supports long-range strategic foreign assistance goals. Longer-term budgeting, some argue, would bring several benefits: it would ensure that an administration would define resource requirements for foreign assistance and align them with strategy and policy; it would provide aid predictability to both U.S. foreign assistance agencies and recipient countries; and it would balance long-term aid provided to countries in need of development with aid to countries with immediate humanitarian needs. One study suggests that this long-range budgeting process should be mandated by the President, and executed by the Director of Foreign Assistance at the State Department through the F process, in cooperation with the National Security Council and the Office of Management and Budget. Another calls for such multiyear budgeting to reside within a formal quadrennial foreign assistance review, which would encourage improvement of foreign assistance strategy with long-range budgeting as a key component. In general, these four studies argue that long-range aid budgeting would improve the effective allocation of U.S. foreign assistance and, hence, the likelihood of reaching overall U.S. strategic goals.", "Observers of U.S. foreign assistance have described an overemphasis on short-term assistance goals that detracts from the ability of the U.S. government to undertake and sustain effective long-term development programs. Several of the studies identify balancing short-term and long-term aid as a priority in their calls for U.S. foreign aid reform. They assert that the short-term nature of national security and foreign policy imperatives, the central purviews of the Department of Defense and the Department of State, respectively, overwhelm and subsume the government's long-term development goals. Recent reliance on narrow aid initiatives, such as programs targeting HIV/AIDS, while high-profile and measurable, arguably detract from development objectives designed to bring permanent benefits to foreign societies. To remedy the problem, one study claims, the Economic Support Fund (ESF) account should be used exclusively for funding immediate economic needs, and remain separate from the Development Assistance (DA) account, whose funding for longer-horizon development programs should be isolated and protected. Different studies call for various approaches to balancing short-term and long-term aid. The 2005 OECD report, Development Assistance Committee Peer Review of the United States , argues that the U.S. government should increase long-term development aid to stable countries to counterbalance the increase in humanitarian and other short-term assistance to crisis countries. J. Brian Atwood, M. Peter McPherson, and Andrew Natsios, in an article entitled \"Arrested Development, Making Foreign Aid a More Effective Tool,\" call as well for a balance of short-term assistance and development assistance within individual country aid plans, to address immediate needs whilst building the capacity of such countries to sustain themselves.", "A report from the OECD in 2005, Development Assistance Committee Peer Review of the United States , explains that the U.S. official development assistance (ODA) to multilateral organizations had fallen significantly as a percentage of total U.S. ODA. Two studies recommend an increase in funding for, and participation in, multilateral institutions that provide foreign assistance, and call for multilateral forms of aid to rise in priority within U.S. foreign assistance strategy. These studies claim the United States is missing a prime opportunity to shape global foreign assistance activities and strategies, as it wields more influence than any other country in multilateral institutions, and encourages greater aid contributions from other countries through its participation in such institutions. They state that the United States can better leverage the effectiveness of its foreign assistance funds by utilizing existing aid delivery and system capacity possessed by multilateral organizations and by pooling funds with other donor nations. One study suggests that increased U.S. participation in multilateral aid organizations would reduce the burden on recipient countries of meeting different aid eligibility requirements by reducing the number of donors.", "Many foreign aid experts view the U.S. government evaluation of the effectiveness of foreign aid programs to be inadequate. Eight of the reports call for better monitoring and evaluation of U.S. foreign assistance. These authors argue that assessment of foreign assistance should be based not on outputs, but on measurable impact affecting strategic goals and aid recipients. They recommend that any new system of assessment should be comprehensive and unified across foreign assistance programs and agencies to provide a results-based evaluation of the connection between strategic aid goals and aid funding. Two studies suggest adopting international standards evaluating aid, including those of the International Initiative for Impact Evaluation and the Paris Declaration on Aid Effectiveness. Others suggest involving Congress specifically in the evaluation process, by linking benchmarks and metrics measuring programs' recent effectiveness to subsequent budget requests in the case of security assistance, and by requiring biennial strategic planning and annual state-of-affairs reports to Congress concerning humanitarian aid. One report calls for increased assessment training for USAID and State Department personnel.", "Congress's role in foreign aid is exercised primarily through the power of the purse. Half of the 14 studies recommend increasing the role of Congress in U.S. foreign assistance decision making. In general, these studies call for a more robust role for Congress through a renewed relationship with the executive branch on foreign assistance issues, increased oversight powers in exchange for greater flexibility for the executive branch, and consistent, sustained involvement in guiding foreign assistance strategies and spending. Recommendations include resuming the passage of annual foreign assistance authorization legislation, with new foreign assistance appropriations tied directly to current authorizations, abolishing restrictive agency operating accounts, restoring a presidential foreign aid contingency fund, and improving efficiency and accountability of reprogramming for foreign aid funds. Some studies recommend greater oversight through requiring comprehensive cross-agency foreign assistance budgets to be submitted to Congress, as well as through creating congressional select committees on national security, with membership from all committees involved in foreign assistance, to promote an all-inclusive assessment of foreign assistance programs. Others call for establishing new permanent funds for humanitarian aid and for aid in response to sudden crises.", "Most development and foreign policy experts view U.S. foreign assistance as a valuable activity that addresses many important policy goals, including alleviating poverty and hunger overseas, acquiring a sense of self-worth by the American people, attaining a favorable image around the world, and promoting broader U.S. foreign policy and national security goals. While the 14 studies surveyed by CRS emphasize different aspects of the importance of U.S. foreign assistance, all agree that foreign assistance must be reformed to improve its effectiveness. Only one of the recommendation categories—enhancing civilian agency resources—has the support of all of the studies covered in this report. The next two most-often cited recommendations are (1) raising development to equal status with diplomacy and defense; and (2) increasing the emphasis of U.S. foreign aid to be more needs-based, with recipient governments taking ownership of both identifying needs and taking responsibility for using aid to meet them. While these 14 studies do not heavily dwell on DOD's growing role in U.S. foreign assistance, many of them refer to that issue, which some see as an undesirable \"militarization of foreign aid.\"\nThe role of Congress in foreign aid should expand, according to half of the studies reviewed. In addition to holding more foreign aid hearings, holding them earlier in the legislative process, and conducting greater oversight to encourage more effective coordination of policy and programming, some say Congress should become involved early in the budget process, negotiating with the executive branch on funding levels before the budget arrives on Capitol Hill early each year. Some of the recommendations can be carried out by the executive branch with little or no congressional involvement, such as establishing a national foreign aid strategy, building on the F process, emphasizing needs-based aid, and monitoring aid impact. Most, however, would require congressional action. For example, rewriting FAA, creating a cabinet-level department for foreign aid, enhancing resources to civilian agencies, creating a unified budget, and increasing multilateral aid, among other options, would all require legislation.\nSome of the recommendation costs could become burdensome, such as creating a cabinet-level department for foreign assistance. Others could have minimal costs, such as increasing field versus D.C. input; and some recommendations, such as creating a unified budget and improving agency coordination, could result in savings. Still other recommendations could encourage greater aid effectiveness, such as monitoring aid impact, balancing long-term versus short-term aid, increasing needs-driven aid and local ownership of aid programs, and multiyear funding.\nSince these studies were written for the purpose of making recommendations to reform U.S. foreign aid, it is not surprising that none of them recommend maintaining the status quo. The 111 th Congress is considering the wide array of foreign aid reform possibilities and will decide which path it thinks U.S. foreign aid should take. It should be noted, however, that given the current economic environment and budget constraints along with the numerous other major concerns, such as two wars, health care, energy policy, and global warming, some Members in the 111 th Congress may prefer a continuation of the existing foreign aid structure with minor modifications and increased or adjusted resources where possible.\nAppendix A. CRS Summaries of Reports\nAdams —Adams, Gordon, \"Don't Reinvent the Foreign Assistance Wheel,\" Foreign Service Journal , March 2008.\nMr. Adams, Distinguished Fellow with the Henry L. Stimson Center, writes that establishing the F bureau is good and should be built upon. Adams identifies some concerns about the F process, including that 1) regional desk officers are concerned that aid funding they hope for would go somewhere else; 2) embassies feel left out of the process and demand greater transparency; 3) USAID worries that development funds would migrate to different strategic purposes in the Department of State; 4) everyone feels F bureau's creation was rushed, the system is too top-down, and transparency is inadequate; and 5) the relevant committees in Congress believe that they were not consulted early on in the creation of the F bureau and have had to figure out how the new structure fit the budget accounts established by legislation.\nHe critiques some recommendations of others. For example, he states that reviving and beefing up USAID would just take us back to those days when USAID and State bickered on a regular basis. One side doesn't understand development; the other side doesn't understand strategic purposes, he writes. In addition, a cabinet-level Department of Development would worsen the problem by elevating disputes about assistance to senior policymakers, with State and Defense likely to carry more weight—the new agency would further disperse the civilian tools of our overseas engagement, as more entities vie to have input on policy direction and control resources; and foreign aid programs that have no or only partial development component, such as Economic Support Funds (ESF), targeted assistance to the Former Soviet Union, counternarcotics programs, counterterrorism, HIV/AIDS prevention and treatment, and peacekeeping training. Furthermore, development assistance does not have the heft and popularity among constituents and U.S. taxpayers. The result of creating a separate department could be the exact opposite of the goal—a dwindling away of development assistance, rather that its growth, according to Adams.\nThe author asserts that implementing no reform could lead us backward and lead, instead, to enhancing the role of the DOD in delivering foreign assistance. He says there is a need for more integrated, long-term strategic vision for our diplomacy and foreign assistance. His recommendations follow:\nThe State Department's best option is to build on F; State and USAID need to focus on making the process work better by assigning personnel who think strategically to the Office of Civil and Foreign Service and giving them training in planning, budgeting, and program management and evaluation; There needs to be structured, systematic engagement between Washington and the field with regional bureaus and country desks exercising their skills in programming and budgeting to review requests and set priorities. This could include a pilot project; and State and USAID need to work with Congress before submitting budgets.\nThe State Department needs to take further steps to:\nMake the Director of Foreign Assistance a second Deputy Secretary of State, conferring clout to the position. The authority to implement this already exists in law, Adams says, but the State Department has not acted on it; Transfer responsibility for operational budgeting to one who can be a Deputy Secretary of State for Operations. This move would give Congress better oversight and accountability, increasing its confidence and willingness for cooperation. (This responsibility is currently divided between the Under Secretary for Management and the Resource Management Bureau, which lost its assistance budget function when F was created); Begin a pilot project in long-range strategic planning and budgeting, looking out over five years or more and defining resource requirements connected to long-term strategic objectives, something the F bureau does not do now. The White House should mandate a foreign assistance strategic planning and budget planning process, based in F and connected to senior officials at the National Security Council (NSC) and the Office of Management and Budget (OMB); and Beef up the resource planning capabilities inside the regional bureaus so that each has a robust capability to interact with the F process.\nSuch steps will help State become a more effective foreign relations department, one in which development, public diplomacy, and humanitarian assistance all have equal standing with political and strategic relations as tools with which to engage the world.\nAMN —Atwood, J. Brian, M. Peter McPherson, and Andrew Natsios. \"Arrested Development, Making Foreign Aid a More Effective Tool.\" Foreign Affairs , Vol. 87, no. 6 (November/December 2008), pp. 123-132.\nThis journal article by three former USAID Administrators argues that while U.S. foreign aid has increased from $10 billion in 2000 to $22 billion in 2008, the organizational structure and statutes governing U.S. foreign aid policy have become \"chaotic and incoherent due to 20 years of neglect.\" The article emphasizes the need to either create a cabinet-level agency for U.S. foreign aid or restore USAID's autonomy. Either measure would afford greater stature to the U.S. foreign assistance structure in order to influence U.S. trade, investment, and environmental policy, and budgetary independence. Woven throughout, the article suggests:\npossibly using the provisions of the Millennium Challenge Act of 2003 as a basis for broader aid eligibility provisions, and rewriting the Foreign Assistance Act of 1961, as it is a \"Cold War artifact that has become obsolete\"; there is value in having development raised to the level of defense and diplomacy, which the Bush Administration did theoretically, but not in practice; creating a cabinet-level agency for development or recreating such stature in USAID, via increased authority and resources; giving USAID the authority to devise overall strategy on humanitarian and development assistance and coordinate activities of other agencies; increasing field office input rather than centralizing aid programs in Washington will improve effectiveness of aid programs; customizing aid to the recipient countries to improve potential for success; preventing funding of narrow, short-term aid programs at the expense of long-term development aid; and increasing Congress's role to include a mandate to establish a new USAID, make the executive branch accountable for results, and provide a new framework for legislators to earmark funds for specific purposes.\nBRK —Brookings Institution, Foreign Assistance: Reinventing Aid for the 21 st Century , Testimony by Lael Brainard, Senior Fellow and Vice President and Director, Global Economy and Development, before the House Subcommittee on State, Foreign Operations, and Related Programs, January 23, 2008.\nMs. Brainard's testimony states that U.S. foreign aid is a critical tool for not only helping the world's poor, but also promoting U.S. national security, interests, and values. The witness describes the outdated aid infrastructure and how it is based on Cold War thinking. The more than \"fifty separate units sharing responsibility for aid planning and delivery in the executive branch, fifty objectives, along with poor communication and coordination,\" Ms. Brainard argues, produce inefficiencies, overlap, and result in units working at cross-purposes. The witness provides the following recommendations to reform U.S. foreign aid and concludes that conditions are favorable now for fundamental aid reform.\nelevate the development mission; invest in civilian capabilities; support country ownership; achieve coherence across policies (similar to that of U.K.'s cabinet-level Department for International Development); reduce the number of agencies involved in foreign aid and clarify the remaining agencies' missions; create a cabinet-level voice for development (merging USAID into State would subordinate development to diplomacy).\nShe also asserts that Congress has an integral role to play in holding hearings, mandating independent analysis of current operations, and seeking expert input on alternative organizational structures.\nBRK-CSIS— Brookings-CSIS Task Force. Security by Other Means: Foreign Assistance, Global Poverty, and American Leadership edited by Lael Brainard, 2007.\nSecurity by Other Means contains 11 chapters that together provide an overall review of the current state and the history of U.S. foreign assistance from multiple authors and through several different analytical approaches. Chapter topics include organizing and unifying U.S. foreign assistance efforts, strengthening development assistance, examining humanitarian and HIV/AIDS assistance and the U.S. assistance role, providing assistance in areas of current or potential conflict, analyzing security and strategic assistance, creating a more effective congressional-executive relationship for U.S. foreign assistance, and providing historical analysis of previous U.S. attempts at foreign aid reform, as well as the experience of reform in the United Kingdom. The book closes with a chapter containing conclusions and recommendations. The chapter states that U.S. hard power assets are currently stretched thin, requiring the use of soft power and foreign assistance to meet the security challenges facing the country. The foreign assistance structure, however, lacks effectiveness due to fragmentation and incoherence, according to the author, despite massive increases in overall foreign assistance funding largely due to the wars and reconstruction in Iraq and Afghanistan.\nIn this last chapter, the Brookings-CSIS Task Force makes several recommendations to create a unified framework for U.S. foreign assistance and to organize it for effectiveness. It first calls for a unified framework that combines two concepts of foreign assistance across pertinent government actors, policy, and aid delivery: (1) a soft power tool to meet diplomatic and strategic ends, and (2) a development tool allocated according to policy effectiveness and human needs. This framework would integrate different types of assistance—including aid to deal with security threats, development goals, humanitarian needs, and transnational threats such as the global HIV/AIDS epidemic—to ensure that they are not implemented in isolation, but are provided as a coherent whole, tailored to the needs and objectives in each recipient country. Necessary support for repressive regimes in order to combat security threats would be integrated within a comprehensive country assistance package that also addresses economic and political issues. Foreign assistance policy and programs would be carried out through coordinated interagency action, with a fully funded and operational Office of the Coordinator for Stability and Reconstruction, and an engaged National Security Council, leading the multi-agency effort. Under the framework, Congress would integrate its committees that deal with the armed forces and foreign aid through joint hearings and other vehicles to allow for coherent policy and funding. It would also extend oversight over foreign assistance programs in exchange for greater flexibility for State, DOD, and USAID to adapt aid to changing conditions in the field.\nThe book next provides recommendations for improving effectiveness of U.S. foreign assistance through better governmental organization of foreign assistance agencies and authorities, and an effective executive branch relationship with Congress. The final chapter identifies six central challenges to organizing foreign assistance within the executive branch:\nProliferation of stand-alone initiatives and foreign aid authority resting with over 50 separate government units requires rationalization of agencies, improved coordination, and mission clarification. Restructuring program design must be driven by objectives and needs, not restrictive funding categories. The United States must speak with one voice on foreign aid. Government must incentivize interagency cooperation and create a seamless web of foreign assistance, trade and investment, technical assistance, debt relief, and financial stabilization for coherence across all policies affecting poor countries. The United States must invest in core foreign assistance competencies, including infrastructure and stabilization and reconstruction, rather than relying on megacontracts with private companies that fail to draw on institutional knowledge and experience. The United States must truly elevate development alongside defense and diplomacy.\nThis chapter lays out four possible options for reorganizing U.S. foreign assistance: improving coordination while retaining decentralization, positioning USAID as an implementing arm of the State Department, merging USAID into State, or creating a new department for global development. This chapter recommends:\nCreating a new department, as it is the only solution that can meet all the challenges identified for aid reform, the Task Force argues. Congress pass annual foreign assistance authorization legislation instead of relying on narrow earmarks, and tie detailed, transparent appropriations to authorizations or recommendations from authorizing committees. Increasing flexibility for the use of appropriated funds, by abolishing restrictive operating accounts, restoring a small presidential contingency fund, and rationalizing the funds reprogramming process to make it accountable and efficient.\nCGD— Center for Global Development. Modernizing Foreign Assistance for the 21 st Century: An Agenda for the Next U.S. President . March 2008.\nThis article by the Center for Global Development, a think-tank established in 2001 with a mission to reduce global poverty and inequality, states that the world has undergone significant changes since the post-World War II era, when modern foreign assistance programs first emerged as a foreign policy tool. It says that while the George W. Bush Administration took several steps toward increasing foreign assistance funding and establishing new programs, such as the President's Emergency Plan for AIDS Relief (PEPFAR) and the Millennium Challenge Account (MCA), these changes are not enough. The author recommends that the next President:\nDevelop a national foreign assistance strategy that elevates global development as critical to our national interest and lays out the principal missions and mandates for foreign assistance; Reform the organizational structure by merging most foreign assistance programs and related development policy instruments into a new cabinet-level department and strengthen the organization by expanding and deepening the professional staff, revamping delivery mechanisms, and building a serious monitoring and evaluation system; Rewrite the Foreign Assistance Act of 1961 to streamline procurement rules, earmarks, and restrictions, and to re-establish a strong partnership between the executive branch and Congress that allows greater flexibility to executive aid agencies provided there is greater accountability and responsiveness to Congress; Place a higher priority on multilateral channels of assistance; and Increase the quantity and improve the allocation of assistance, because, even with recent increases, U.S. foreign assistance is not great enough or unencumbered enough to meet our foreign policy goals.\nThe article goes on to assert that U.S. foreign assistance can be strengthened by improving the allocation of funding. The study says that typically 44% of U.S. foreign assistance goes to just six countries, all allies in the war on terror or the war on drugs. The other 56% of U.S. foreign aid goes to nearly 100 other countries, according to the author. \"One of the most striking patterns is that the United States provides 40% of its assistance to middle-income countries and just 34% to low-income countries. On average other donors do the reverse.... \"\nCGE— Center for U.S. Global Engagement. Smart Power: Building a Better, Safer World—A Policy Framework for Presidential Candidates . July 2007.\nThis policy framework, intended for presidential candidates, asserts that the United States must work to build a \"better, safer world\" because U.S. national security, economic growth, and moral leadership are directly tied to conditions in developing countries and countries in crisis. The United States must employ an integrated, \"smart power\" approach that would include all the tools of statecraft, including diplomacy, development, economic policy, defense, and intelligence capabilities.\nCGE explains that the United States first must invest in the smart power approach, which foremost involves increasing diplomacy and foreign assistance capacity and resources. It asserts that current smaller investments in diplomacy and foreign assistance have already yielded important benefits, and that with increased resources and capabilities these benefits would grow. The smart power framework proposes that the United States use an improved diplomatic capacity to develop more highly integrated relationships with other countries and institutions to effectively meet challenges of development and security, while at the same time placing the United States in a strong position of leadership on these issues. Cultural and exchange programs, as well as the Peace Corps, should be expanded, and cooperation with non-governmental organizations (NGOs), universities, and the private sector should be strengthened. CGE recommends that the Administration:\nreorganize national foreign policy that currently is not integrated, and the pieces of which often either act at cross purposes or duplicate work; authorize the President to develop a national security strategy that integrates diplomacy, development, economic policy, defense, and intelligence capabilities. An overall national security budget should reflect this new integration in yearly appropriations requests; elevate development to the level of defense and diplomacy in policy priority, and create a coherent foreign assistance strategy under the control of a new cabinet-level department, or other unifying innovation; create a flexible and agile diplomatic and foreign assistance corps that possesses the language, technical, cultural, and managerial skills needed to implement programs and build alliances effectively in the field; restructure the Foreign Service to align and cooperate better with regional military commands; increase foreign assistance funding to address stability in latent- and post-conflict states and other concerns, including health, education, and democracy-building; streamline the foreign assistance bureaucracy to make it flexible and able to meet challenges and crises as they arise; amendments to the Foreign Assistance Act should be made to implement this goal; align trade and agricultural subsidy policies with foreign assistance strategies to avoid conflicts and inefficiencies; and institute a quadrennial foreign assistance strategy review to articulate objectives and align them with budgets.\nCSIS —Center for Strategic and International Studies. Integrating 21 st Century Development and Security Assistance . January 2008.\nThis final report of the CSIS Task Force on Nontraditional Security Assistance analyzes recent increased Department of Defense involvement in the provision of foreign assistance, specifically nontraditional security assistance including counter-terrorism capacity building, post-conflict reconstruction and stabilization, and humanitarian assistance. The Task Force discusses DOD's authority to provide foreign assistance, and the role of the new United States Africa Command (AFRICOM) in providing an opportunity for a new approach to the military's role in foreign assistance. The report finds primarily that DOD's involvement in nontraditional security assistance has skyrocketed while the Department of State's and USAID's abilities to provide foreign assistance have eroded. The Task Force recommends:\nAn overall strategy—that DOD continue to provide assistance for short-term contingency situations, but that an overall cross-agency strategy for security assistance be led by the State Department (namely, a fully-funded Coordinator for Reconstruction and Stabilization in the Office of the Secretary of State (S/CRS)) with the DOD role clearly defined and closely integrated into this overall strategy; Increased funding—as part of the overall strategy, State and USAID capabilities would be built up through increased funding to restore a balance among DOD, the State Department, and USAID; and Transparent plans and budgeting—providing cross-agency security assistance plans to Congress in order to ensure effective oversight and development of efficient budgeting models for comprehensive assistance funding, as well as benchmarks and metrics for assessment of assistance programs.\nHELP— The HELP Commission Report on Foreign Assistance Reform , Beyond Assistance , December 7, 2007.\nThis bipartisan, congressionally mandated commission interviewed many of the world's foremost experts on foreign assistance. \"Not one person appeared before this Commission to defend the status quo,\" according to the report. The Commission states that it is in America's best interest to provide foreign aid, but it says the U.S. foreign assistance system is broken. Along with emphasizing long-term development as a valuable objective, the HELP Commission recommends:\nCongress and the White House should work together to rewrite the Foreign Assistance Act of 1961, reflecting new development goals and programs and aligning it with the post-9/11 world; More assistance targeted to private sectors in developing countries, because business should be the engine of growth in the developing world; A new business model to engage new non-governmental partners—U.S. foreign aid should be conducted in concert with local private or public partners that are committed to development; Alignment of America's trade and development policies, which often conflict. For example, countries that are eligible for Millennium Challenge Corporation funding often pay more in tariffs than they receive in aid; Strengthened management capacity of U.S. assistance agencies. The United States should improve monitoring and evaluation, human resources, and procurement and contracting capabilities of agencies involved with foreign aid to improve the effectiveness of taxpayer dollars. Also, while the workload of foreign aid agencies has gone up, the staff has been cut, which hurts effectiveness of the programs; Reorganization of all U.S. international affairs functions to elevate foreign aid and development to equal status with defense and diplomacy. A new department would include USAID and all other U.S. development agencies, or a newly reorganized Department of State could include USAID; and Funding from the bottom up, based on the needs and commitment of developing countries and on the national and security interests of the United States.\nTo support its key findings, the Commission also urges:\nforging a new executive/legislative branch relationship acknowledging the need for flexibility and accountability; bolstering humanitarian efforts and establishing a $500 million humanitarian fund as a permanent facility; creating a permanent $500 million foreign crisis fund; simplifying the funding account structure for more clearly defined responsibility and authority; clarifying DOD's role in development assistance; using public diplomacy and branding more effectively; and emphasizing the importance of local infrastructure and agriculture.\nInterAction — Why the U.S. Needs a Cabinet-level Department for Global and Human Development , InterAction Policy Paper, June 2008.\nThis policy paper discusses the haphazard evolution of U.S. foreign assistance and asserts that nearly five decades after the beginning of modern U.S. foreign aid, it is badly broken and needs to be repaired. Within the context of its primary recommendation to create a Cabinet-level Department for Global and Human Development that would elevate development to the level of defense and diplomacy, the report weaves other recommendations in, such as:\nemphasis on collaboration and cooperation, both with the recipient country, but also among other U.S. government foreign aid agencies and programs; achievement of long-term objectives, which should not be sidetracked for short-term political agendas; a rewriting of the Foreign Assistance Act of 1961 to re-emphasize poverty reduction; promotion of local self-sufficiency by providing needs-based aid and building local capacity; and an increase in recruiting and training human resources to meet shortages, particularly in USAID.\nOECD— Organization for Economic Co-Operation and Development. Development Assistance Committee Peer Review of the United States . December 2006.\nThis OECD report provides an overview of U.S. foreign assistance, noting new initiatives such as the \"3D\" concept for U.S. foreign policy, Transformational Diplomacy at the State Department, the new Director of Foreign Assistance (DFA) position and Foreign Assistance Framework (FAF), and the growing role of the Defense Department in providing foreign aid. The report commends U.S. increases in overall official development assistance (ODA) and the U.S. status as the largest donor of official humanitarian assistance. The report notes the increase in ODA, however, has been concentrated in assistance to Iraq and Afghanistan, and does not represent growing predictability in U.S. aid. The OECD Development Assistance Committee (DAC) also finds deficiencies in many areas of the U.S. foreign assistance framework and strategy, including continuing organizational fragmentation and a lack of development policy coherence, as well as underutilization of multilateral avenues for delivery of assistance and coordination of development efforts. A reduction in the prominence of USAID in the provision of ODA, the diminishing importance of funding for economic development, and insufficient reliance upon results-based monitoring also figure among the report's concerns. With regard to the role of Congress, the report criticizes the current legislative web of earmarks and other directives, such as requiring use of U.S. products and services for aid (so-called \"tied aid\"), which reduce assistance flexibility and the ability to cooperate with multilateral institutions and international assistance partners.\nThe DAC recommends several steps to improve U.S. foreign assistance overall:\nraise development to an equal level with diplomacy and defense within U.S. foreign policy; broaden the Foreign Assistance Framework and the role of the DFA to oversee all government development actors, and improve public awareness of the importance of development programs; improve U.S. aid volume and distribution efforts by creating a long-term plan for ODA creating predictability and strategic allocation; balance aid for crisis countries and countries requiring long-term development assistance; play a stronger role in the multilateral assistance sphere; adopt a long-term plan for humanitarian assistance, increasing coherence in humanitarian aid policy, reforming food aid, and integrating humanitarian aid with longer-term development activities; and adopt a unified, results-based management approach, based on principles of the Paris Declaration on Aid Effectiveness for improved aid effectiveness.\nOxfam —Oxfam America, Smart Development, Why U.S. foreign aid demands major reform, February 2008.\nThis report asserts that reform is necessary for two primary reasons. First, as development has become part of U.S. national security strategy, it has been increasingly integrated under military control in order to achieve short-term political and security goals. Short-term policy interests often are at the expense of longer-term development of the recipient country. Second, revamping U.S. foreign aid to strengthen recipient states and empower their citizens to free themselves from poverty and injustice will, in turn, make America safer. \"A more prosperous world with effective states accountable to their citizens is likely to be safer.\" The report discusses \"the securitization of aid\" saying, \"The new U.S. Army/Marine Corps Counterinsurgency Field Manual argues for a radical shift in strategy where the primary objective of any counterinsurgency operation 'is to foster development of effective governance by a legitimate government.'\" The report discusses the increasingly military organization of aid, such as AFRICOM, and the heightened emphasis on security assistance in the budget, reflecting the increasing imbalance between short-term security and long-term development goals.\nThe study recommends the following reform actions:\nprioritize development as a principal, rather than subordinate, element of our national security alongside defense and diplomacy; enact a new Foreign Assistance Act; create a new Department of Foreign Assistance; create a national development strategy; rebuild USAID or create a new foreign aid agency; increase nonproject aid to developing country governments that have credible and transparent and coherent development strategies; allow for multiyear U.S. foreign aid commitments so countries can make plans for future; and untie U.S. foreign aid.\nSFRC1 —Senate Foreign Relations Committee, Embassies as Command Posts in the Anti-terror Campaign, December 15, 2006.\nPoints made in this committee report include:\nAmong other measures to strengthen U.S. Embassies around the world, this report recommends that Ambassadors should be charged with the decision whether to approve all humanitarian and development assistance, and other related programs, as well as all military-related programs implemented in-country, including assistance provided under the enlarged authority in Section 1206 of the National Defense Authorization Act for Fiscal Year 2006 ( P.L. 109-163 ) for DOD to provide security assistance. Some countries receive between a quarter and half of their U.S. assistance in the form of security assistance, and Section 1206 does not address immediate threats to the United States that cannot be included in the normal budget process. Therefore, the Secretary of State should insist that all security assistance, including Section 1206 funding, be included under the Secretary of State's authority in the new process for rationalizing and prioritizing foreign assistance. Country team meetings organized by the Director of Foreign Assistance should include military representatives in cases where the country is a recipient or potential recipient of military funding in order to get the civilian/military balance. Congress should fund the civilian foreign affairs agencies (DOS and USAID, in particular) at a minimum to the level requested by the President. The current 12:1 ratio of military to civilian foreign aid agencies risks the further encroachment of the military into areas where civilian leadership is more experienced. The Administration should develop a comprehensive budget for foreign assistance that incorporates economic, development, humanitarian, security and military assistance. All foreign assistance programs should be funded through the foreign assistance accounts, as administered by the Department of State. The Secretary of State should retain primary authority over its planning and implementation of both Function 150 and Function 050 assistance.\nSFRC2 —Senate Foreign Relations Committee, Embassies Grapple to Guide Foreign Aid , November 16, 2007.\nThis report finds that the United States has failed as a government to agree on the importance or strategy of U.S. foreign assistance. It claims that overall agreement on foreign assistance between Washington and overseas posts is lacking, and field complaints on the F process center on a lack of transparency, extra paperwork, differing priorities, and inconsistent demands with an underlying problem about money. Despite these concerns, embassy officials believe they are coping well and welcome new programs that bring additional funding to the host country. The report recommends:\nThe President should design a national foreign assistance strategy that explains both the national security requirement and the humanitarian imperative that drive the U.S. government's investment in foreign aid; The President should task the Secretary of State to work closely with the Administrator of USAID to implement the President's foreign assistance strategy, giving the Secretary of State explicit authority to ensure that all foreign aid is in the foreign policy interest of the United States; The Secretary of State, working with the USAID Administrator, should garner the foreign assistance funds necessary to carry out the President's strategy; The Secretary of State should provide strategic direction, transparency, and overall accountability to foreign assistance. The report states that her efforts to do so through the \"F\" process have been flawed in implementation; USAID should be recognized for the indispensable role it plays in the effectiveness of U.S. development policy and should be strengthened and given resources to attract the world's best development experts; Ambassadors should take responsibility for the implementation of the President's foreign aid strategy, making certain that assistance is balanced and spent effectively in coordination with the host country and other donors; The President should continue to request and Congress should continue to provide funding for security assistance in the foreign affairs budget with some implementation by DOD; foreign assistance functions and authorities should not be migrated to DOD due to inadequate budget requests for funding in the proper account; and Congress should play an important role in ensuring that foreign aid is well spent.\nState —Department of State, Advisory Committee on Transformational Diplomacy: Final Report of the State Department in the 2025 Working Group , January 28, 2008.\nThe State 2025 Working Group expects that the world will radically change in the coming years and will require U.S. overseas presence, skilled personnel, knowledge, and policy insights as never before from the Department of State. The scale and complexity of anticipated global challenges and opportunities will demand a Department that is significantly more robust, better resourced, and more strategically focused. Among the 10 recommendations in the report, those regarding U.S. foreign aid include:\nThe State Department should work with the USAID and other U.S. government agencies, other nations, and multilateral organizations. Specifically, it should integrate planning offices and technology infrastructures of State and USAID, merge overlapping bureaus and functions, and co-locate related offices and personnel in Washington, D.C. to bring strategies and operations into alignment. Further, State should establish a senior-level responsibility and interagency authority for reconstruction and stabilization activities and fully develop State's planning and execution capacities in these areas. Both State and USAID should expand U.S. global presence, critical training and rotations, and improve their capacity to deploy integrated teams on short notice for short-term assignments. Specifically, among other things, the report recommends increasing the number of State's Foreign Service and Civil Service staff by 100% over 10 years, and increasing USAID's deployable staff resources by 100% in 3 years.\nAppendix B. Bibliography\n(Adams) Adams, Gordon, \"Don't Reinvent the Foreign Assistance Wheel.\" Foreign Service Journal , vol. 85, no. 3 (March 2008), pp. 41-50.\n(AMN) Atwood, J. Brian, M. Peter McPherson, and Andrew Natsios. \"Arrested Development, Making Foreign Aid a More Effective Tool.\" Foreign Affairs , vol. 87, no. 6 (November/December 2008), pp. 123-132.\n(BRK) Witness statement of Lael Brainard, Brookings Institution. U.S. Congress. House. Committee on Appropriations. Subcommittee on State, Foreign Operations, and Related Programs. Hearing on Foreign Aid Reform . 110 th Congress, 2 nd session, January 23, 2008. At http://www.cq.com/display.do?dockey=/cqonline/prod/data/docs/html/testimonychild/110/testimonychild110-000002661004.html@allchild&metapub=CQ-TESTIMONYCHILD&searchIndex=1&seqNum=4 .\n(BRK-CSIS) Brainard, Lael, ed. Security by Other Means: Foreign Assistance, Global Poverty, and American Leadership . Washington: Brookings Institution Press and Center for Security and International Studies, 2006.\n(CGD) Center for Global Development. Modernizing Foreign Assistance for the 21 st Century: An Agenda for the Next U.S. President . March 2008. At http://www.cgdev.org/content/publications/detail/15561/ .\n(CGE) Center for U.S. Global Engagement. Smart Power: Building a Better, Safer World—A Policy Framework for Presidential Candidates . July 2007. At http://www.usglobalengagement.org/portals/16/ftp/Center_for_US_Global_Engagement_Policy%20Framework.pdf .\n(CSIS) Center for Strategic and International Studies. Integrating 21 st Century Development and Security Assistance . January 2008. At http://www.csis.org/media/csis/pubs/080118-andrews-integrating21stcentury.pdf .\n(HELP) United States Commission on Helping to Enhance the Livelihood of People Around the Globe. Beyond Assistance: the HELP Commission Report on Foreign Assistance Reform . December 7, 2007. At http://www.helpcommission.gov/portals/0/Beyond%20Assistance_HELP_Commission_Report.pdf .\n(InterAction) American Council for Voluntary International Action (InterAction). Why the U.S. Needs a Cabinet-level Department for Global and Human Development . InterAction Policy Paper. June 2008. At http://www.interaction.org/files.cgi/6305_Cabinet-level_rationale_paper.pdf .\n(OECD) Organization for Economic Co-Operation and Development. Development Assistance Committee Peer Review of the United States . December 2006. At http://www.oecd.org/dataoecd/61/57/37885999.pdf .\n(Oxfam) Oxfam America. Smart Development, Why U.S. foreign aid demands major reform . February 2008. At http://www.oxfamamerica.orgnewsandpublications/publications/briefing_papers/smart-development/smart-development-may2008.pdf .\n(SFRC1) U.S. Congress. Senate. Committee on Foreign Relations. Embassies as Command Posts in the Anti-terror Campaign . Committee print. 109 th Congress, 2 nd session, December 15, 2006. S.Prt. 109-52. Washington: GPO, 2006.\n(SFRC2) U.S. Congress. Senate. Committee on Foreign Relations. Embassies Grapple to Guide Foreign Aid . Committee print. 110 th Congress, 1 st session, November 16, 2007. S.Prt. 110-33. Washington: GPO, 2007.\n(State) Department of State, Advisory Committee on Transformational Diplomacy: Final Report of the State Department in the 2025 Working Group , January 28, 2008. At http://www.state.gov/documents/organization/99879.pdf ." ], "depth": [ 0, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_title", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full" ] }	{ "question": [ "What is the purpose of the \"transformational development\" initiative?", "How did Rice do this?", "Why did F Bureau develop an F process?", "What was the impact of this Framework?", "What do the 14 studies surveyed by the CRS all agree on?", "What is the only recommendation category that has the support of all of the studies covered in this report?", "What are the next two most-often cited recommendations?", "What do half of the studies urge?" ], "summary": [ "In January 2006, Secretary of State Rice announced the \"transformational development\" initiative to bring coordination and coherence to U.S. aid programs.", "She created a new Bureau of Foreign Assistance (F Bureau), led by the Director of Foreign Assistance (DFA), who also serves as Administrator of the U.S. Agency for International Development.", "F Bureau developed a Strategic Framework for Foreign Assistance (Framework, or F process) to align aid programs with strategic objectives.", "The Framework became a guiding force in the FY2008 and FY2009 budgets, as well as the FY2010 budget request.", "While the 14 studies surveyed by the Congressional Research Service (CRS) emphasize different aspects of the importance of U.S. foreign assistance, all agree that foreign assistance must be reformed to improve its effectiveness.", "Of the 16 recommendation categories CRS identifies, only enhancing civilian agency resources has the support of all of the studies covered in this report.", "The next two most-often cited recommendations are raising development to equal status with diplomacy and defense, and increasing needs-based foreign aid, while encouraging recipient-government ownership of aid effectiveness.", "Half of the studies urge a greater congressional role in foreign aid budgeting and policy formulation." ], "parent_pair_index": [ -1, 0, 1, 0, -1, -1, 1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 4, 4, 4, 4 ] }
GAO_GAO-13-13	{ "title": [ "Background", "FMCSA Controls for Commercial Drivers Include Medical Exams, Drug and Alcohol Testing, and Roadside Inspections", "Medical Exams Are Used to Determine Drivers’ Physical Fitness to Operate a Commercial Motor Vehicle", "Drug and Alcohol Testing by Employers Is Designed to Identify Unqualified Drivers", "States and FMCSA Conduct Roadside Inspections to Identify Impaired Drivers and Perform Safety Checks", "Examples of Commercial Drivers with Disqualifying Impairments Related to Epilepsy, Drugs, or Alcohol", "Drivers Operated Commercial Vehicles Despite Medical Impairments Related to Epilepsy", "CDLs Were Issued or Reissued to Drivers with Impairments Related to Epilepsy, Drugs, and Alcohol", "States Could Not Provide Medical Examination Certificates", "Agency Comments and Our Evaluation" ], "paragraphs": [ "FMCSA establishes regulations for the physical and medical qualifications of CDL holders, develops standards to test and license commercial motor vehicle drivers, and enforces commercial motor vehicle safety regulations. Commercial drivers must be 21 years old to operate in interstate commerce, read English, have successfully completed a driver’s road test, be physically qualified to drive if operating in nonexcepted interstate commerce, and hold a current and valid CDL. Commercial drivers in intrastate commerce may operate commercial vehicles at 18 years old, if permitted by state law. They must also have no mental disease or psychiatric disorder that would interfere with their ability to safely drive a commercial vehicle, not use a controlled substance or habit-forming drug, and have no current clinical diagnosis of alcoholism. A commercial driver may use a legal non-Schedule I drug or substance if the drug or substance is prescribed by a licensed medical practitioner who is familiar with the driver’s medical history, and has advised the driver that the prescribed substance or drug will not adversely affect the driver’s ability to safely operate a commercial motor vehicle.\nViolations for impaired drivers can result in a range of penalties against CDL holders. For example, a first conviction of driving under the influence of alcohol or a controlled substance, regardless of whether it occurs in a commercial or personal vehicle, results in immediate CDL suspension by the issuing state for 12 months. A second results in permanent suspension. Licensing states are required to maintain driver records showing convictions for disqualifying federal violations and are to disqualify commercial drivers convicted of those violations while driving a commercial vehicle. Information on CDL holders must be exchanged among states through a nationwide system. The CDLIS is a nationwide computer system that, among other things, enables state driver-licensing agencies to ensure that each commercial driver has only one driver’s license and one complete driver record. State driver-licensing agencies use CDLIS to complete various procedures, including transmitting out-of- state convictions and transferring the driver record when a commercial driver’s license holder moves to another state.", "FMCSA has established a number of key controls that are designed to prevent CDL holders from operating commercial vehicles while impaired that generally cover three areas. First, drivers are required to undergo regular medical exams by a certified medical examiner to determine if a driver is physically qualified to operate a commercial vehicle. Second, employers are responsible for drug testing employees at various points of employment. Independent self-employed commercial vehicle operators are required to meet drug testing requirements by being enrolled in a random testing pool that includes other drivers and is managed by a consortium or third-party administrator that provides drug or alcohol testing services to DOT-regulated employers. Third, state and federal roadside-inspection programs are intended to identify impaired drivers and perform other safety checks. While our review did not evaluate whether these controls were working as intended, in prior work we have found that these controls were vulnerable to abuse or manipulation. With the enhanced statutory authority and direction provided by the MAP-21 Act, DOT may be able to address some of these vulnerabilities. DOT is required to issue implementing regulations by July 2014.", "FMCSA has established regulatory standards that require interstate commercial drivers to be examined and certified by a licensed medical examiner. The exams assess whether a driver meets minimum physical qualifications before obtaining a CDL. The exams are generally repeated at least every 2 years. Medical examiners must review the driver’s medical history; perform vision, hearing, blood pressure, and other such tests; and conduct a physical exam. The medical examiner must also determine that the driver does not use any drugs or controlled substances identified as a Schedule I drug. A CDL driver cannot use any non- Schedule I drug or controlled substance except when the drug or substance has been prescribed by a licensed medical provider who is familiar with the driver’s medical history and has determined that its use would not adversely affect the driver’s ability to operate a commercial vehicle. According to DOT, medical examiners do not give drivers drug or alcohol tests and largely base determinations on the physical examination and driver identification of prescribed medications, alcohol, or illegal drug use information included in the examination form.\nIf a medical examiner deems a driver fit to drive, the examiner must sign and date a medical certificate. The medical examiner also keeps a paper copy of the signed certificate and may provide another copy to the driver’s employer if requested. As of January 30, 2012, individuals renewing or applying for a CDL must submit a copy of their current medical certificate to their state licensing agency, making state licensing agencies responsible for ensuring that drivers have current medical certificates on file. FMCSA does not maintain a copy or record of the medical certificates.\nGAO, Certification Process for Drivers with Serious Medical Conditions, GAO-08-826 (Washington, D.C.: June 30, 2008). the medical certification information on the electronic driving record. The medical certificate information could then be reviewed during a roadside inspection via a check of the driving record, such as through the CDLIS. In the instance of a driver who fails to renew his medical certificate on time, the States are required to downgrade the individual’s CDL so that he must not operate a commercial motor vehicle until a valid medical certificate has been submitted to the State licensing agency.\nIn April 2012, FMCSA published a final rule establishing a National Registry of Certified Medical Examiners. The 2012 final rule provides requirements for all healthcare professionals responsible for issuing medical certificates for interstate truck and bus drivers to complete a training course on the Federal physical qualifications rules and to pass an examination to assess the examiners ability to apply the rules, and advisory criteria in a consistent manner when making the determination whether a driver meets the qualification standards.\nFMCSA has announced its plans to initiate a new rulemaking that would enable the agency to require medical examiners on the National Registry to submit to the agency the medical certificate information on each individual who applies for a medical certificate. The agency would then have the ability to transmit to the state driver licensing agency the medical certificate. This process will significantly decrease the likelihood of drivers being able to falsify medical certificates.\nWhen implemented, these requirements could help improve the control vulnerabilities identified in our prior work by ensuring that proper medical reviews are conducted and medical certificates are prepared by qualified medical examiners. However, additional work would need to be conducted to assess their effectiveness.", "FMCSA regulations also require CDL holders to undergo periodic drug and alcohol testing to identify unqualified drivers. Employers must test all CDL holders during preemployment screening; upon reasonable suspicion; randomly on a specific percentage; after a serious accident in which the driver was issued a traffic citation; and for all fatal accidents. In addition, according to DOT, employers must request a wide range of information from drivers’ previous employers as disclosed by the driver on his or her application for employment and pertaining to the driver’s history in the DOT drug and alcohol testing program.\nEach year, employers are also required to conduct random alcohol tests for at least 10 percent of their average number of driver positions, and random controlled substance or drug testing for at least 50 percent of their average number of driver positions. According to DOT, FMCSA may increase or decrease these percentages on the basis of self-reported drug and alcohol testing information from a sample of 2,000 employers.\nFMCSA regulations follow Department of Health and Human Services (HHS) employee drug testing requirements according to the Omnibus They use urine tests Transportation Employee Testing Act of 1991.covering five categories of drugs: marijuana, cocaine, amphetamines (dexadrine, adderall), opiates (heroin, morphine, codeine), and phencyclidine (PCP). Each year, employers must conduct alcohol tests equal to at least 10 percent of the average number of CDL drivers. Alcohol tests of either the driver’s breath or saliva must be performed immediately before, during, or after the driver’s performance of safety- sensitive duties such as operating a commercial vehicle. Drug tests are required to be analyzed by HHS-certified labs. All test results must be reviewed by a board-certified medical review officer (MRO) before being reported to the driver’s employer. The MRO will interview the driver to determine if there is a medical explanation for the driver’s use of the prohibited substance. If the driver provides appropriate documentation and the MRO determines that the driver has a legitimate medical reason for using the prohibited substance, the result is reported as negative to his or her employer. The MRO is required to report any safety concerns to the driver’s employer with regard to drug abuse and discuss the driver’s use of any prohibited substances with the prescribing physician.\nAccording to FMCSA regulations, the driver must be removed from safety-sensitive duty if the MRO reports a positive drug or alcohol test result to the driver’s employer. The driver cannot return to a safety- sensitive function, such as operating a commercial vehicle, until he or she has completed the return-to-duty process, which includes being evaluated by a substance-abuse professional, successfully complying with prescribed education or treatment, and passing a return-to-duty alcohol or drug test. FMCSA officials stated that follow-up testing to monitor the driver’s continued abstinence from drug use is also required. FMCSA regulations state that any driver, including independent self-employed operators who refuse to submit to a drug or alcohol test are not permitted to perform safety-sensitive functions until they complete a return-to-duty process.\nFMCSA officials stated that the results of drug tests are not directly reported to FMCSA, but rather processed and maintained by the current employers. Officials noted that FMCSA audits CDL employers for compliance with FMCSA testing regulations.\nIn 2008, we reported examples of job hopping by commercial drivers who failed a drug test. After losing employment for a positive test, job- hoppers then test negative on a preemployment test for another carrier and return to duty. In each of the 19 cases of job hopping we reported in our 2008 report, the second employer stated that knowledge of a previous positive drug test would have disqualified the driver. Some of the19 drivers operated trucks carrying hazardous materials for periods of a month to over a year. These 19 cases were not generalizable to the population of CDL holders.\nThe MAP-21 Act could help improve the control vulnerabilities identified by our prior work. Specifically, the law requires DOT to establish, operate, and maintain a national clearinghouse with records relating to the results of positive drug and alcohol tests of commercial drivers or instances of refused tests. Once the clearinghouse has been established, employers must request and review their CDL drivers’ records from the clearinghouse annually. The MAP-21 Act also requires DOT to develop a method to electronically notify an employer of each additional positive test result or other noncompliance.", "FMCSA also conducts commercial vehicle and driver inspections as part of its roadside vehicle-inspection program. States can apply for Motor Carrier Safety Assistance Program grant funds for financial assistance in reducing the number and severity of crashes, injuries, and fatalities involving commercial vehicles. According to DOT, as a condition of receiving these funds, states must conduct these types of inspections. A software program is made available by FMCSA to identify which drivers or vehicles are recommended for inspection.\nDuring an inspection, a FMCSA or state officer will generally examine the vehicle and its equipment, as well as the driver’s license, medical certificate, and whether the driver is under the influence of alcohol or a prohibited drug. According to DOT, enforcement officials may demand to see a driver’s medical certificate; however, they would not be able to make an independent assessment of the driver’s medical condition absent any obvious indications of a problem. The roadside inspector would also only be able to address epilepsy or drugs and alcohol if the driver exhibited certain signs. FMCSA officials stated that drivers found to be using or possessing drugs or alcohol are reported into the MCMIS system, and additional actions (such as arrests or “out of service” indications in which the driver is immediately placed out of service and prohibited from operating the vehicle) may occur. In fiscal year 2011, over 3.5 million roadside inspections were conducted in which over 7 million violations were recorded, and of those violations, approximately 14 percent resulted in an out-of-service violation in which the driver, motor vehicle, or motor carrier was placed out of service because of safety issues.\nIn addition to the roadside-inspection program, FMCSA conducts annual drug and alcohol strike-force sweeps. During the 2012 2-week sweep, FMCSA identified 287 commercial drivers who did not adhere to federal drug and alcohol regulations and who now face possible monetary fines and disqualification from operating a commercial vehicle. FMCSA also identified 128 truck and bus companies who now face possible enforcement actions for violations such as hiring drivers who had tested positive for illegal drugs and not implementing a drug and alcohol testing program. By conducting these sweeps, FMCSA has taken positive steps to help remove drivers that pose a risk to public safety from the road.", "We identified instances of drivers who operated—and sometimes crashed—commercial vehicles despite having medical conditions such as epilepsy. Epilepsy is a chronic disease characterized by seizures, loss of bodily control, and unconsciousness. We also found instances of state licensing agencies issuing or reissuing CDLs to commercial drivers with epilepsy or drug or alcohol dependence noted in their medical histories. FMCSA recommendations state that a person with an established history or clinical diagnosis of epilepsy is not physically qualified to drive a commercial vehicle for interstate commerce if he or she is taking antiseizure medication or has had a history of epilepsy or seizures within the past 10 years. These recommendations also state that individuals who use a controlled substance or habit-forming drug or who have a clinical diagnosis of alcoholism are not physically qualified to drive a commercial vehicle. The MAP-21 Act requires medical-certificate information to be transmitted to DOT on a monthly basis and mandates that states establish and maintain the capability to receive an electronic copy of a medical examiner’s certificate for each CDL holder licensed in that state.", "Out of millions of CDL holders, we identified 230 individuals who were in an accident or had a roadside inspection in a commercial motor vehicle at some point between 2008 and 2011, after they started receiving SSA disability benefits for epilepsy. Thirty-one of the 230 individuals we identified were involved in accidents while driving a commercial vehicle during this time. However, because DOT’s database of crashes does not identify whether the driver’s medical condition may have contributed to the accident, we could not determine the extent to which the epilepsy impairment actually caused the accident. We plan to refer these 230 individuals to DOT for appropriate action as warranted. We randomly selected for further investigation 5 of the individuals involved in commercial vehicle accidents and 4 of the 199 drivers selected for an FMCSA roadside inspection to confirm that they were driving commercial vehicles.\nEight of these 9 drivers selected for further investigation obtained CDLs after their epilepsy impairment date, with at least 6 of the 8 drivers obtaining their license within 10 years of having a seizure, a physical disqualification for obtaining a CDL.entitled to SSA benefits for epilepsy because SSA continued to determine that they could not work due to their impairment. In two of the cases that resulted in an accident, a health-care professional had noted in SSA documentation that the individual should not be driving. Because state driver’s license agencies nationwide only began requiring applicants’ presentation of a medical certificate after January 30, 2012, we were unable to obtain medical examination reports from all states or drivers and do not know whether their medical examiners were aware of their conditions. We plan to refer these 9 individuals to their state driver’s licensing agency for appropriate action as warranted.\nEight of the drivers were still Examples of individuals who were driving commercial vehicles after being diagnosed with epilepsy include the following:\nCrash after epilepsy impairment. According to SSA documentation, this individual suffered from epilepsy, seizures, blackouts, memory loss, vision problems, substance abuse, and affective mood disorder. Holding an active CDL, he was approved for SSA disability benefits in December 2007. He informed SSA that he had been involved in an auto accident but had no idea how it occurred, and that he could no longer drive due to his condition. He added that he had been a truck driver since 1977, but due to his confusion, his employer had sent drivers after him on three different occasions. We did not receive a medical examination form or certificate for this individual from the state that issued his CDL and thus were unable to determine whether a medical examiner considered or was aware of the driver’s condition or whether a medical examination occurred. According to medical records contained in SSA documentation, medical professionals informed this individual in 2009 that he should not be driving and that it was unsafe to hold a job. However, he successfully renewed his CDL in August 2010. DOT records show that he was involved in a crash with a commercial vehicle 4 months later in December 2010. Because DOT’s database did not identify whether the driver’s medical condition may have contributed to the accident, we could not determine the extent to which the epilepsy impairment actually caused the accident.\nNumerous accidents after epilepsy impairment. A Washington state agency noted in 1989 that this driver’s seizure disorder made it unsafe for him to drive any vehicle, commercial or otherwise. In 1990, SSA determined this individual was disabled due to epilepsy and organic brain syndrome, which is a decreased mental function due to a medical disease other than a psychiatric illness. According to a medical evaluation in this driver’s SSA disability file, he began suffering from seizures and blackouts after an auto accident in 1976 but did not report them so he could continue driving tractor trailers. In 2000, the driver reported to SSA that medication did not prevent his weekly seizures. Despite this, Washington state issued him a CDL in 2002, 2005, and 2007. Washington state driving records reveal that he was involved in collisions in his commercial vehicle in 2005, 2006, and 2009. In 2009, a representative from this driver’s employer informed SSA that the individual had been driving a truck for 4 years, but was fired for being involved in too many accidents. SSA suspended this individual’s disability benefits from 2006 to 2009 while he was earning employment income. This individual surrendered his CDL in January 2012. Because DOT’s database did not identify whether the driver’s medical condition may have contributed to the accident, we could not determine the extent to which the epilepsy impairment actually caused the accidents.", "From our random selection of 100 CDL holders, we identified 22 CDL holders who received SSA disability benefits where epilepsy, alcohol addiction, or drug dependence was a listed medical impairment and had CDLs issued or renewed after becoming eligible for those benefits. Specifically, according to SSA’s disability database, 10 of the 22 individuals had epilepsy or a seizure disorder identified as a medical impairment in their disability records. The remaining 12 had alcohol or drug dependence noted in their disability records. According to DOT, FMCSA and the states do not obtain complete information on whether individuals are driving on the road, and we were not able to determine whether all of these individuals were actually driving a commercial vehicle after their CDLs were issued or renewed. We are referring any cases where an individual had a disqualifying impairment yet still had an active CDL to the state driver’s licensing agency for appropriate action as warranted.\nExamples of individuals who obtained or renewed a CDL license after SSA determined they were eligible for disability benefits include the following:\nCDL issued despite epilepsy impairment. This driver reported to SSA that he suffered from sudden seizures, sometimes daily, beginning in 1999. The driver reported having seizures as often as three times a week, taking 20 minutes to 2 hours to recover from each episode. According to medical documentation in the claimant’s SSA disability file, he was also resistant to antiseizure medication. According to SSA documentation, the driver reported suffering from seizures as recent as 2008. The driver stated that he was unable to stand, walk, or sit for extended periods and that he suffered from memory loss, fatigue, and difficulty breathing. The driver was issued a new CDL by the state in November 2011 with endorsements allowing him to operate, among other things, school buses and passenger vehicles. To obtain this CDL, the driver certified to the state driver’s licensing agency that he did not have a physical condition preventing him for exercising reasonable and ordinary control of a motor vehicle. This individual continues to receive SSA disability benefits for epilepsy while holding an active CDL. We did not receive a medical examination form or certificate for this individual from the state that issued his CDL and thus were unable to determine whether a medical examiner considered or was aware of the driver’s condition or whether a medical examination occurred.\nCDL issued and renewed despite epilepsy impairment. According to SSA documentation, this individual began receiving disability benefits for a seizure disorder in 2001 and informed SSA that he stopped driving when his seizures began in 1999. He suffered from seizures and unconsciousness. For example, according to SSA documentation he passed out while driving a truck and awoke while walking in the street with no recollection of what had occurred. SSA documents included a physician’s note stating that the driver was medically disabled from any form of gainful occupation due to a diagnosis of intractable seizure disorder. Despite his medical history, he was issued a first-time CDL in 2005, which was renewed in 2009. When applying for his CDL, he certified to the state driver’s licensing agency that he did not have a condition that could cause a loss of consciousness. He continues to receive SSA disability benefits for seizures. We did not receive a medical examination form or certificate for this individual from the state that issued his CDL and thus were unable to determine whether a medical examiner considered or was aware of the driver’s condition or whether a medical examination occurred.\nCDL issued despite drug dependence. In 2005, this individual’s personal driver’s license was suspended for 12 months after a Driving While Intoxicated (DWI) conviction. According to SSA documentation, in 2007 he was diagnosed with psychosis, a history of alcohol abuse, and cannabis abuse following a mental-health hospitalization. He stated that his illness began to interfere with his work in 2006 and that he became unable to work in 2009. He began receiving SSA disability benefits the following year for functional psychiatric disorders. Drug dependency was also noted in his file. SSA documentation states that in January 2009, a physician noted that this individual was unable to participate in employment or training activities in any capacity due to paranoid schizophrenia. However, this individual obtained a CDL from Virginia in June 2010. We did not receive a medical examination form or certificate for this individual from the state that issued his CDL and thus were unable to determine whether a medical examiner considered or was aware of the driver’s condition or whether a medical examination occurred. In October 2010, he refused to submit to an alcohol test while operating a commercial motor vehicle. This refusal led to a DWI conviction and permanent CDL suspension in February 2011.", "Since most state driver’s licensing agencies do not require a medical examination report to be presented to them, according to DOT, they were unable to provide these reports or medical certificates that we requested for 29 of the 30 individuals who had CDLs issued or renewed after becoming eligible for SSA benefits. We were therefore unable to determine whether medical examiners considered or were aware of each driver’s conditions or whether a medical examination occurred for these individuals. While FMCSA regulations are meant to prevent an individual with these conditions from receiving or renewing a CDL, states were not required to obtain and maintain medical certifications or medical examination reports at the time of our review. According to DOT, only a few states on their own authority required CDL holders to provide either a medical examination report or medical certificate. As mentioned earlier, as of January 30, 2012, FMCSA requires states to electronically store medical certificates for new and renewing CDL applicants and are required to electronically post this information for all CDL holders to the state’s CDLIS driver records. States will also be required to report the date of the medical certification to the state’s CDLIS driver record. In addition, the MAP-21 Act requires medical certificate information to be transmitted to DOT on a monthly basis and mandates that states establish and maintain the capability to receive an electronic copy of a medical examiner’s certificate for each CDL holder licensed in that state who operates or intends to operate in interstate commerce. If these requirements are properly implemented and followed, they should help to prevent situations similar to these case studies from recurring.", "We provided a draft copy of this report to SSA and DOT. SSA did not have any comments. DOT’s Director of Audit Relations, Office of the Secretary of Transportation, provided technical comments on the report, which have been incorporated as appropriate.\nWe are sending copies of this report to interested congressional committees, the Secretary of Transportation, the Commissioner of the Social Security Administration and other interested parties. In addition, this report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you have any questions concerning this report, please contact me at (202) 512-6722 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 2 ], "alignment": [ "h2_full", "h0_full h3_title", "h3_full", "h0_full", "", "h3_full h2_title h1_title h0_title", "h3_full h1_full", "h3_full h1_full", "h0_full h2_full", "h3_full" ] }	{ "question": [ "What has the FMCSA done to prevent CDL holders from operating commercial vehicles while impaired?", "What are the key controls intended to identify commercial drivers not capable of driving safely?", "Why does the GAO say these key controls are flawed?", "What act is intended to address some of these vulnerabilities?", "What is an example of one of these additional measures?", "What has the DOT done to prevent CDL holders from operating commercial vehicles while impaired?", "How does epilepsy affect commercial drivers?", "What is the evidence for the threat to public safety posed by medically impaired drivers?", "In what other ways have commercial drivers been allowed to drive while potentially impaired?", "Why is it unlikely that states knew of the drivers’ conditions when the CDL's were issued?", "How are states reacting to the issue?", "What is the effect of these new requirements?", "How did the GAO identify key controls?", "What basis were these cases identified on?", "What was the result of GAO's analysis?" ], "summary": [ "The Federal Motor Carrier Safety Administration (FMCSA), part of the Department of Transportation (DOT), has established a number of key controls designed to prevent commercial driver’s license (CDL) holders from operating commercial vehicles while impaired.", "First, drivers are required to undergo regular medical exams by a certified medical examiner. Second, employers are responsible for drug testing employees at various points of employment. Third, state and federal roadside-inspection programs are in place to identify impaired drivers and perform other safety checks. If these key controls are operating effectively, they will help identify commercial drivers who are not capable of driving safely.", "However, GAO’s prior work has found that these controls were vulnerable to abuse or manipulation.", "The Moving Ahead for Progress in the 21st Century Act, enacted in July 2012, will require additional measures to ensure that disqualified drivers do not operate commercial vehicles, and could help address some of these vulnerabilities.", "For example, the law requires DOT to implement a national clearinghouse of commercial-driver controlled-substance and alcohol test results by July 2014.", "DOT has also taken some actions, and now requires CDL holders to provide a copy of their medical certificates to the State licensing agency.", "Matching CDL holders with Social Security Administration (SSA) disability files produced 204 commercial drivers who drove a commercial vehicle as recently as 2011 despite having epilepsy, a disqualifying medical condition characterized by sudden seizures and unconsciousness.", "Thirty-one of these drivers were involved in accidents, demonstrating the threat to public safety posed by medically impaired drivers.", "GAO also identified 23 cases where state licensing agencies issued or renewed CDLs for drivers after they were, according to SSA records, diagnosed with epilepsy or had drug or alcohol dependence noted, which could also disqualify them from driving under DOT regulations.", "However, because DOT did not require state licensing agencies to maintain drivers’ medical certifications at the time of GAO’s review, it is unlikely that states knew of the drivers’ conditions. In fact, they were unable to provide medical certifications for any of the 23 individuals.", "States are now required to electronically store medical certificates for new and renewing CDL applicants and will be required to electronically maintain this information for all CDL holders by January 2014.", "Doing so could help prevent ineligible drivers from obtaining or renewing CDLs in the future.", "To identify key controls, GAO reviewed FMCSA policies and regulations, and interviewed officials.", "Cases were identified on the basis of FMCSA roadside-inspection data, DOT’s Commercial Driver License Information System (CDLIS), a national database of all commercial drivers, and SSA disability insurance files.", "From this analysis, GAO identified commercial drivers who were driving with an epilepsy diagnosis. GAO also randomly selected 100 individuals to determine whether the driver was receiving SSA disability benefits when the state issued or renewed the driver’s CDL. These cases cannot be generalized beyond those presented." ], "parent_pair_index": [ -1, 0, 0, 0, 3, -1, -1, 0, -1, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 4, 4, 5, 5, 5, 6, 6, 6, 2, 2, 2 ] }
GAO_GAO-15-478	{ "title": [ "Background", "USAID Administers the F2F Program through Cooperative Agreements", "Partners Are Generally Consistent in Implementing F2F, but Most Do Not Screen Volunteers against Terrorist Watch Lists and Some Inconsistencies and Information Gaps Exist", "Partners Generally Follow Consistent Practices to Design Volunteer Assignments, Recruit Volunteers, and Manage Volunteer Assignments", "Most Partners Do Not Screen against Terrorist Watch Lists and Follow Inconsistent Practices for Conducting Other Background Checks on Volunteer Candidates", "Implementing Partners Lack Systematic Information about Repeat Volunteer Candidates", "USAID Used a Program-wide Evaluation to Adjust F2F, but Does Not Obtain Information on a Key Aspect of Program Implementation", "USAID Used a Program- wide Evaluation to Adjust F2F", "USAID Conducts Ongoing Performance Monitoring and Evaluation but Does Not Obtain Information on a Key Aspect of Program Implementation", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: USAID Missions Independently Administer Related Programs through Farmer-to-Farmer Partners", "Appendix III: Comments from the U.S. Agency for International Development", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Congress first authorized the F2F program in the 1985 Farm Bill to provide for the transfer of knowledge and expertise of U.S. agricultural producers and businesses to middle-income countries and emerging democracies on a voluntary basis. Most recently, Congress reauthorized the program in the 2014 Farm Bill. Congress has authorized the F2F program to provide a broad range of U.S. agricultural expertise using U.S volunteers. The 2- to 4-week volunteer assignments are designed, among other things, to improve farm and agribusiness operations and agricultural systems, field crop cultivation, fruit and vegetable growing, livestock operations, marketing, and the strengthening of cooperatives and other farmer organizations (see fig. 1).\nUSAID promotes a secondary goal not specifically noted in the authorizing legislation: to increase the American public’s understanding of international development issues and programs and international understanding of the United States and U.S. development programs. The volunteer nature of the program’s activities provides the opportunity for people-to-people cultural and technical exchange. USAID and its implementing partners give volunteers guidance about their responsibility for conducting public awareness activities about their experiences to promote better understanding of international development issues and objectives upon their return home.\nFor the program’s first 6 years, annual amounts provided to F2F were below $2 million. However, with the dissolution of the Soviet Union, USAID initiated F2F program activities in the newly independent countries, including conducting a substantial number of volunteer assignments in Russia. The additional funding for these countries significantly increased the size of the F2F program. In the 2008 Farm Bill, Congress required that a minimum of $10 million be used to carry out the F2F program for each of the fiscal years 2009 through 2013. Over the fiscal years 2009 through 2013 period, USAID obligated an average of $11.5 million annually to the F2F program, and the program disbursed a total of $57.7 million for that program cycle. In the 2014 Farm Bill, Congress increased the minimum annual F2F funding requirement to $15 million.\nDuring the fiscal years 2009 through 2013 F2F program cycle, implementing partners under eight cooperative agreements and one contract made 2,984 volunteer assignments, most to 28 core countries (see fig. 2). Cooperative agreements with each partner typically include work in 2 to 5 core countries where the majority of volunteer assignments will occur. Beginning with the 2009 through 2013 F2F program cycle, USAID missions also began making separate Associate Awards to F2F partners to implement related programs (see app. II for more information on these awards). In addition, the cooperative agreements allowed for “flexible” volunteer assignments outside the core countries. F2F currently limits these flexible assignments to approximately 15 percent of the volunteer assignments for a given partner.\nUSAID is implementing the fiscal years 2014 through 2018 F2F program through a total of nine cooperative agreements. In fiscal year 2014, the program had 296 volunteer assignments in 32 countries.", "USAID’s Bureau for Food Security administers the F2F program using a funding mechanism known as a Leader with Associate Award Cooperative Agreement. These agreements are global in nature, with core countries identified within defined geographical regions. USAID awards these agreements to implementing partners, typically U.S. nongovernmental organizations, universities, private volunteer organizations, or contractors, for a 5-year funding cycle. USAID uses the agreements to establish objectives, tasks, and responsibilities for the implementing partners. In this way, USAID provides program-wide direction and administration for F2F while relying on implementing partners to manage on-the-ground operations and execution of program activities. In the current program cycle, USAID awarded nine cooperative agreements to seven implementing partners. USAID awarded one of these cooperative agreements to a nongovernmental organization for a F2F Special Program Support project. That partner provides program- wide technical support services for the volunteer programs and finances specialized F2F volunteer projects to bring in smaller implementing organizations, test new approaches, and identify new sources of volunteers. Implementing partners are expected to collaborate with the Special Program Support project when appropriate. F2F has two USAID headquarters staff to handle the daily operations and oversight of the program and the implementing partners.\nAt the beginning of each 5-year cycle, USAID uses a solicitation process and corresponding request for assistance (RFA) to provide a description of the program’s needs and how USAID will evaluate the applicants. In response, implementing partners describe the key components of their proposals, such as the intended country and regional focus, recruitment strategy, and agricultural sector focus. USAID specifies in the RFAs the areas in which USAID will have “substantial involvement” in implementation decisions, such as approval of implementing partners’ annual work plans, key personnel, and the monitoring and evaluation plan. In the most recent RFA, USAID determined the countries that were eligible within prescribed geographic regions. USAID also used the RFA to build in a minimum level of geographical overlap and coordination with U.S. foreign assistance programs. This was accomplished most notably with the U.S. global hunger and food security initiative, Feed the Future, by directing partners to include at least two Feed the Future focus countries within each region. After the competitive award process is completed, USAID continues to inform and approve partners’ annual work plans, which detail specific activities and objectives for each country in which the partner operates.\nUSAID provides further guidance to its implementing partners through a manual, Managing International Volunteer Programs: A Farmer-to-Farmer Program Manual. USAID led the development of this manual in conjunction with implementing partners to collect lessons learned and best practices based on 20 years of F2F program experience and published the manual in 2005. According to the manual, its purpose is to serve as a reference for partners managing international volunteer programs, specifically F2F. It describes best practices on program management, volunteer assignment development and implementation, and public outreach. According to USAID, the F2F program provides this manual to all of its implementing partners. According to USAID officials, the Special Program Support project will assist USAID and the current implementing partners to update the manual later in this program cycle.\nImplementing partners identify agriculture sectors to focus on, such as horticulture, staple foods, and aquaculture, for individual countries with USAID input. According to USAID, partners consult with the F2F program office and the relevant missions to get their input, review, and approval on F2F activities before the partners begin activities in that country. USAID also said that partners consult with local stakeholders, F2F guidance, and other USAID program documents, such as Feed the Future’s sector analyses to develop these program activities and subsequent volunteer assignments. As the partners implement the program, they continue to work with the missions. However, each mission’s level of involvement can vary, depending on its portfolio of activities and interest.", "Implementing partners in the current F2F program cycle generally follow consistent practices for designing volunteer assignments, recruiting volunteers, and managing volunteer assignments. All partners work with hosts to develop a scope of work for each assignment, interview candidates, and assess the volunteers’ performance. However, they have inconsistent practices for screening volunteer candidates against terrorist watch lists and do not have a means to systematically report negative assessments of volunteers to USAID or each other.", "We found that the implementing partners that send volunteers follow consistent practices to design volunteer assignments, recruit volunteers, and manage volunteer assignments, which are outlined in USAID’s F2F program manual.\nDesigning volunteer assignments: Implementing partners’ field staff identify host organizations (hosts) to potentially receive technical assistance through a variety of means, including networking with local government officials, consulting with the USAID mission, and visiting agricultural cooperatives and farming groups. To select hosts, field staff conduct in-depth interviews with potential hosts and assess them against predetermined criteria, such as the potential host’s ability to contribute resources to a volunteer assignment. Afterwards, field staff work with each selected host to assess its needs and identify how a volunteer might be able to provide assistance. They then work with the host to develop a scope of work for a single assignment that identifies the issue to be addressed, the assignment’s objectives, the host’s contributions, and the conditions under which the volunteer will be living and working. If a host would benefit from more than one assignment, field staff work with the host to develop a strategic plan for the multiple assignments.\nRecruiting for volunteer assignments: To solicit volunteers for assignments, each implementing partner conducts networking activities and posts information about its volunteer assignments on its respective website. Each of the partners employs web-based application forms to collect information about volunteer candidates and manage the information in its database. Field staff send scopes of work to the implementing partner recruiters in the United States as early as 3 months before the start of a volunteer assignment. Recruiters search their databases for candidates based on skills and narrow down candidates based on their dates of availability. They then interview candidates to assess whether their technical expertise matches the assignment’s needs and whether the candidates can adapt to the environment and culture. As part of the interview process, partners contact professional references for all candidates who are new to their program. Recruiters present finalist information to field staff who discuss the candidates with the hosts, and the host then select the volunteer.\nManaging volunteer assignments: Before the volunteer’s arrival, the field staff, the host, and the volunteer make any adjustments needed to the scope of work and establish an assignment schedule. Field staff provide the volunteer with an in-country orientation, introduce the volunteer to the host, and monitor the volunteer through regular communication during the 2- to 4-week assignment. Upon completion of the assignment, the partners require the volunteer to provide recommendations to the host organization, debrief field staff, and complete a summary trip report. In addition, each implementing partner requires its field staff and hosts to assess the volunteer’s performance and indicate whether they would recommend the volunteer for another assignment.", "We found that only two of the six partners screen volunteers against terrorist watch lists specified in a standard provision of their cooperative agreements and that the partners follow inconsistent practices for conducting other background checks on F2F volunteer candidates. This standard provision of the cooperative agreements prohibits implementing partners from engaging in transactions with, or providing resources or support to, individuals associated with terrorism, including those individuals or entities that appear on the Department of the Treasury’s Specially Designated Nationals and Blocked Persons List and the United Nations Security designation list. USAID officials stated that this provision applies to volunteers and they expect implementing partners to screen volunteers against these lists. However, USAID’s F2F program manual states only that implementing partners generally check “several references.”\nWe found that two of the six partners screen volunteers against the two watch lists noted in the standard provision, in addition to screening against several other lists and checking professional references. We also found that a third partner conducts another form of background check on all volunteer candidates, in addition to contacting professional references. Specifically, that partner checks to see if candidates’ names are in the U.S. government’s System for Award Management, a free consolidated database of firms and individuals that are ineligible to receive contracts (or similar types of mechanisms) from the U.S. government. If the volunteer candidate has worked with the partner before, two of these three partners said they do not always screen the candidate again; the third partner said it rescreens the candidate if over a year has passed since his or her last assignment. All three of these implementing partners use software or web-based programs to screen candidates against the various watch lists, a process they stated takes a minute or less to complete.\nAccording to these three partners, they screen candidates against watch lists because they believe they are required to do by U.S. government regulations and that doing so is critical to their reputations as organizations. The three partners also said that this type of background check is important to reduce the risk of a volunteer engaging in criminal or any other activities that would cause the program to be seen negatively. Specifically, these partners said the volunteer’s character and conduct could affect the volunteer’s ability to achieve the objectives of his or her assignment, an outcome that could undermine the program’s goals, hurt relationships with host organizations, and undermine the program’s reputation.\nThe remaining three implementing partners do not screen candidates against watch lists. They said they believed that USAID does not require them to do so. They also noted that they believed that professional reference checks and Internet research provide them with enough insight into a candidate’s character and conduct.\nVarious forms of background checks are important because they provide recruiters with additional information that the candidate may not have reported, or is not publicly available, and because these checks are a means to verify information that the candidate provided. As a result, partners that do not run the background checks may risk fielding volunteers who could harm the program’s reputation and goals.", "We found that implementing partners do not have a systematic means of reporting or obtaining information from assessments of repeat volunteer candidates. As a result, partners can be unaware of assessments indicating that another partner would not recommend the volunteer for another assignment. For the fiscal years 2009 through 2013 program cycle, USAID reported that 41 percent of the volunteers were repeat volunteers. According to GAO’s Internal Control Management and Evaluation Tool, internal and external information should be obtained and provided to management as a part of reporting on operational Specifically, information performance relative to established objectives.critical to achieving the agency’s objectives, including information relative to critical success factors, should be identified and regularly reported to management and be used to inform future decisions such as selecting volunteers.\nWhile USAID’s F2F program manual encourages implementing partners to share information and contacts for volunteer recruitment, the manual could discourage implementing partners from reporting negative volunteer performance assessments to each other or to USAID. Specifically, with regards to volunteer program evaluation, the manual states: “Due to the fact that volunteers by nature offer their specialized services free of charge, a publicized negative performance evaluation has the potential to be a public relations disaster, damaging future recruitment efforts and perhaps work with hosts. Thus, evaluations of individual volunteers are not performed or reported systematically. Problems are generally identified in regular performance monitoring and management processes, and kept internal to the implementing organization.”\nAs mentioned earlier in this report, all six partners assess the volunteer’s performance upon completion of the assignment and consult with host organizations as part of the assessment. Four of the six use a rating scale to assess a volunteer’s performance, including rating factors such as technical ability, quality of deliverables, and cultural sensitivity. All of the partners indicated that they kept information internally in their electronic databases on whether they would field the volunteer on another assignment. The partners also said that they contact other implementing partners for references on candidates who were previous volunteers. However, the partners said they do not systematically report this information to USAID or each other, and only share the results of assessments only when specifically requested.\nWithout systematic collection and sharing of information, USAID cannot know whether the volunteers received negative assessments on their performance. Given that the volunteers provide the program’s primary input—technical assistance—ensuring the quality of the volunteer’s performance is critical to the success of the program’s goals and reputation. In addition, partners risk fielding volunteers who received negative assessments on assignments with other implementers, which could undermine the program’s goals and reputation. For example, in one instance, a partner told us that it removed a volunteer because of conduct issues and determined not to field that volunteer on another assignment. However, another partner selected that volunteer for an assignment that started shortly after the first assignment. During the second assignment, that partner also had to recall the volunteer because of similar conduct issues.", "USAID used a program-wide evaluation to adjust the program and conducts ongoing monitoring and evaluation, but USAID does not obtain information on a key aspect of the program’s implementation. After a 2012 program-wide evaluation, USAID revised program indicators, established a committee to discuss best practices, and increased training for implementing partner staff. USAID uses semiannual and annual formal reports and other means to conduct ongoing monitoring and evaluation activities. However, USAID is not collecting information on the extent to which volunteers are successfully completing the specific tasks and objectives that are assigned to them in scopes of work.", "Since 2003, USAID has conducted three program-wide evaluations of F2F. USAID’s most recent evaluation, in May 2012, found inefficiencies in the program’s data collection and reporting processes. Among other things, the evaluation recommended that USAID revise the list of required program indicators and reduce those less relevant for program management. In response, USAID revised the F2F standard program indicators and their definitions with extensive input from implementing partners and other stakeholders. USAID uses these indicators to track progress and report on changes along the cause-and-effect theory of the program’s development plan—leading from inputs and activities to outputs, outcomes, and impacts. According to USAID, another important use of the indicators and reporting is to maintain the implementing partners’ focus on achieving results. The revised indicators are intended to standardize F2F program reporting. Nevertheless, a challenge for USAID in developing effective F2F monitoring and evaluation indicators is the variety of volunteer assignments. While the F2F program’s primary input for all volunteer assignments is always short-term technical assistance, the type of the technical assistance and the outputs expected can vary significantly among assignments. For example, volunteer assignments range from developing a business plan for an agriculture cooperative to training farmers on practices for soybean cultivation.\nThe 2012 evaluation also recommended that USAID increase support to train implementing partner staff on the appropriate use of the indicators so they can better track indicator data and impacts across the program. In response, USAID formed a working committee, led by F2F’s two program staff and made up of implementing partners, to (1) discuss issues with data collection and data quality and (2) develop and disseminate best monitoring and evaluation practices. Additionally, USAID held a workshop in early 2014 for all F2F implementing partners (including headquarters and field staff) and provided opportunities for training and discussion sessions on all aspects of F2F implementation. Monitoring and evaluation procedures, indicators, issues, and best practices were a particular focus. In addition, F2F Implementing Partners’ Meetings are held each year and, according to USAID, include additional opportunities to cover program topics, including monitoring and evaluation issues. According to implementing partners, the training and workshops helped field staff better understand how to use the indicators consistently. USAID officials told us that the training and workshops also stressed the importance of thoroughly and accurately collecting initial, or baseline, data on host organizations.", "The F2F office conducts ongoing performance monitoring and evaluation formally through semiannual and annual reports and informally, through ongoing communication with implementing partners. USAID tracks implementation pace, progress, and performance through the following indicators that implementing partners report on in semiannual and annual reports: inputs, such as the number of volunteer assignments, number of volunteer scopes of work, and number of days of volunteer service; outputs, such as the number of persons trained, number of host organizations assisted, and number of volunteer recommendations; outcomes, such as the number of volunteer recommendations adopted and value of resources leveraged by volunteers in the United States; and impacts, such as the value of annual gross sales and value of rural and agricultural lending and the area under improved environmental and natural resource management.\nUSAID aggregates this information for its program-wide analyses. The goal of these monitoring and evaluation processes is to provide F2F management information it can use to guide program design and better target agricultural sectors, thereby increasing the program’s effectiveness.\nWe found that USAID does not systematically obtain information on a key aspect of the program’s implementation. Specifically, USAID does not review information on the extent to which volunteers meet the objectives identified in the scopes of work. According to GAO’s Internal Control Management and Evaluation Tool, information should be obtained and provided to management as a part of reporting on operational performance relative to established objectives.\nKey to achieving F2F’s goals is the program’s primary input—the technical assistance a volunteer provides while on assignment. F2F guidance states that the scopes of work should translate program plans into specific tasks for volunteers. The guidance also states clearly that written scopes of work make it easier for the partner to recruit and guide volunteers and assess the success of the volunteer assignment. According to USAID officials and implementing partner staff, detailed and focused scopes of work are part of the essential foundation for successful volunteer assignments, and implementing partners give much time and consideration to their development. These scopes of work include the set of objectives and activities that the volunteer is to accomplish while on assignment. According to the six implementing partners, achievement of an assignment’s objectives, as described under the scope of work, contributes to the program’s desired outputs, outcomes, and impacts.\nAll implementing partners require their volunteers to prepare trip reports that summarize the extent to which they achieved the specified objectives and completed activities listed in the scope of work. According to implementing partners, the reasons for not achieving an objective or completing an activity may vary and can be attributed to circumstances outside of the implementing partner staff or volunteer’s control. While conducting our fieldwork, we found an instance in which a volunteer’s objectives were not achieved. Specifically, in that case, the volunteer was unable to oversee the installation of a machine—an objective listed in the scope of work—because required parts needed for its assembly were not delivered by a third-party contractor to the host organization. However, the volunteer productively used his time to improve the output of a grain- processing machine. According to the implementing partners, volunteer trip reports and debriefings are to include information on the extent to which activities and objectives were accomplished. However, we found that none of the partners track the frequency of assignments when the activities in scopes of work are changed or whether the volunteers were unable to accomplish them during an assignment. While USAID obtains some statements of work and volunteer trip reports, it does not review the extent to which volunteers are able to accomplish the objectives specified in their assignments. Reviewing selected trip reports against scopes of work for this information throughout the program cycle could improve USAID’s understanding of the performance of its primary input—the volunteer technical assistance. This information could provide additional insight on the extent to which volunteers achieve established objectives and therefore whether volunteers are being effectively used.", "The success of the F2F program largely depends on implementing partners that work with hosts to develop appropriate scopes of work and then find volunteers with the technical expertise and skill sets to complete them. Although recruitment efforts focus largely on the volunteer’s skill set and experience, partners are inconsistently screening volunteer candidates to verify information about them. Specifically, four partners do not conduct any screening against terrorist watch lists as expected by USAID. Assessment information on repeat volunteers—especially information on negative assessments—could provide important insights into the volunteer’s ability to execute another F2F assignment. By implementing a consistent process to screen volunteers and by systematically sharing negative volunteer assessments, USAID and its partners could enhance their ability to ensure that volunteers execute their scopes of work without undermining the program’s goals and reputation.\nUSAID took important steps to improve its ability to monitor program performance and evaluate program impact after the most recent evaluation, in 2012. However, USAID is not reviewing information on a key aspect of the program’s performance—the extent to which the specified objectives and activities in scopes of work are accomplished. Achievement of an assignment’s objectives, as described under the scope of work, contributes to the program’s desired outputs, outcomes, and impacts. With this information, USAID could enhance its ability to make better, evidenced-based management decisions.", "To enhance USAID’s oversight of the program, we recommend that the Administrator of USAID take the following four actions: ensure F2F implementing partners screen volunteer candidates against terrorist watch lists, as described in their cooperative agreements and USAID guidance; develop guidance for the implementing partners on the types of background checks they should perform as they screen volunteer candidates; update the F2F program manual to ensure that implementing partners systematically share negative volunteer assessment information with USAID and each other; and further develop its monitoring process to review the extent to which volunteers accomplish objectives and activities specified in the scopes of work.", "We provided a draft of this report for comment to USAID.\nIn its written comments, reproduced in appendix III, USAID concurred with our recommendations. USAID expressed appreciation for F2F volunteers, noting that they give generously of their time and expertise. USAID also outlined the steps it plans to take in response to each recommendation, noting that the changes should strengthen the management of F2F.\nWe are sending copies of this report to the appropriate congressional committees, the Administrator of USAID, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (202) 512-9601 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "For this report, we examined (1) how the U.S. Agency for International Development (USAID) administers the John Ogonowski and Doug Bereuter Farmer-to-Farmer (F2F) program, (2) how partners implement volunteer assignments and screen volunteers for the F2F program, and (3) the extent to which USAID uses monitoring and evaluation to manage the F2F program. To address our objectives, we reviewed program documents and information from the previous and current program cycles covering fiscal years 2009 through 2013 and 2014 through 2018, respectively.\nTo determine how USAID administers the F2F program, we analyzed USAID and implementing partner documents such as requests for applications, cooperative agreements, and country program descriptions. We also reviewed USAID’s F2F program manual. In addition, we reviewed USAID data on the number of volunteer assignments. Our analysis of these data found some inconsistencies, but we found the data sufficiently reliable to generally enumerate the number of volunteer assignments by country. We divided those countries into four roughly even groups. We met with officials from USAID’s Bureau of Food Security F2F program in Washington, D.C., to understand their role in administering the program. We also met with the headquarters officials for implementing partners of the current program cycle, either in Washington, D.C., or via teleconference.\nGAO, Internal Control Standards: Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001). addition, we conducted fieldwork in Ghana and Uganda, meeting with USAID mission officials, implementing partner field staff, F2F volunteers, and beneficiary host organizations. In selecting countries for fieldwork, we considered various factors, including the number of volunteers assigned, the implementing partner’s experience with the program and whether Associate Award activities occurred in either the previous or current cycle.\nTo determine the extent to which USAID uses monitoring and evaluation to manage the program, we reviewed documents such as the implementing partner’s semiannual and annual reports, USAID’s 2012 midterm evaluation of the program, and USAID’s list of performance indicators and their definitions. We also reviewed GAO’s Internal Control Management and Evaluation Tool. In addition, we met with officials from USAID’s Bureau of Food Security F2F program in Washington, D.C., and with an implementing partner while conducting fieldwork to understand how the program’s monitoring and evaluation process has changed and the indicators on which the implementing partners currently report.\nWe conducted this performance audit from May 2014 to April 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings conclusions based on our audit objectives.", "U.S. Agency for International Development (USAID) missions can leverage the Farmer-to-Farmer (F2F) program by making separate awards to F2F partners to implement agricultural programs. According to USAID guidance, a mission can make one or more of these awards, known as Associate Awards, to the recipient of an already existing Leader with Associate Award Cooperative Agreement (LWA) without going through an additional competitive proposal process. Therefore, missions, in consultation with implementing partners and the F2F office, can design and propose programs to implement under the Associate Award mechanism. Mission staff independently administer the Associate Award program and are responsible for financial oversight, monitoring and evaluation, and all other reporting requirements. Nevertheless, according to USAD officials, Associate Award programs are required to report the number of volunteers used in their programs to the F2F office to ensure that volunteers are incorporated into Associate Award programming.\nAccording to USAID guidance, F2F Associate Awards must be in alignment with the original program’s purpose and goals. Associate Awards may provide for (1) additional volunteer services in a F2F country or another country, (2) complementary support for F2F projects (i.e., grants, training, equipment and facilities, or other inputs) that can improve F2F program outreach and impact, or (3) volunteer services and complementary support for agricultural projects addressing a specific F2F development objective. Although F2F limits its activities to the provision of volunteer technical assistance, Associate Award programs use other funding sources and may implement other types of development activities in addition to volunteer assistance. LWAs and Associate Awards are considered separate obligating mechanisms; thus, funds from one award cannot be transferred to another.\nAccording to USAID officials, the Associate Award process is relatively fast and streamlined because it does not require any further competition. Mission officials noted that Associate Awards are an attractive option when considering funding mechanisms available for agriculture-related programs. During the fiscal years 2009 through 2013 cycle, USAID awarded 15 Associate Awards to three implementing partners, totaling $125 million. For example, a $32 million Associate Award was granted to an agriculture-related program in Ghana. In the current cycle, USAID has awarded 2 Associate Awards, 1 in Burma for $27 million and another in Ethiopia for approximately $3 million.", "", "", "", "In addition to the contact named above, Valérie L. Nowak (Assistant Director), Brian Tremblay (Analyst-in-Charge), Tina Cheng, Lynn Cothern, Martin De Alteriis, Mark Dowling, and Sushmita Srikanth made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_full", "h0_title h1_full", "h0_full", "h1_full", "h1_full", "h2_full", "", "h2_full", "", "", "", "h3_full", "", "", "", "", "" ] }	{ "question": [ "How is the USAID F2F program administered?", "How does USAID interact with its partners?", "How does the USAID use the F2F agreements?", "What do the plans created by partners for USAID's approval describe?", "What do USAID's partners have inconsistent practices regarding?", "How are candidates screened by partners?", "What other reporting barriers do partners face?", "What is the risk associated with not conducting required checks and providing information on prior negative assessments?", "How does USAID adjust the F2F program?", "How did USAID respond to a program-wide evaluation?", "How does USAID deal with information regarding volunteers meeting their objectives?", "How could USAID's understanding of the volunteers' performance be improved?", "What did Congress mandate with the 2014 Farm Bill?", "What 3 objectives did the GAO review have in their examination?", "How did GAO address these objectives?" ], "summary": [ "The U.S. Agency for International Development's (USAID) Bureau for Food Security administers the Farmer-to-Farmer (F2F) program through implementing partners under 5-year cooperative agreements.", "USAID provides overall direction, but relies on partners to execute program activities.", "USAID uses the agreements to establish the partners' objectives, tasks, and responsibilities.", "Once selected, partners create work plans for USAID's approval that describe potential volunteer assignments, such as providing expertise on grain processing and storage or groundnut production.", "USAID's partners follow consistent practices to implement volunteer assignments, but they have inconsistent practices for screening volunteer candidates against terrorist watch lists.", "All partners develop a scope of work for each assignment, interview candidates, and assess the volunteer's performance. However, only two partners screen candidates against the terrorist watch lists as expected by USAID. These partners and one other partner screen candidates against other watch lists.", "In addition, partners do not have a means to systematically report negative volunteer assessments to USAID or each other, even though 41 percent of volunteers in the last program cycle were repeat volunteers.", "Without conducting required checks and providing information on prior negative assessments, partners risk selecting volunteers who could undermine F2F's goals and reputation.", "USAID uses its monitoring and evaluation process to adjust the program, but does not review information on a key aspect of the program's implementation.", "In response to a program-wide evaluation, USAID revised performance indicators, established a committee that discusses best practices, and increased training for implementing partner staff.", "However, USAID does not systematically review information on the extent to which volunteers meet the objectives identified in the scopes of work.", "Reviewing volunteer trip reports against scopes of work could improve USAID's understanding of the volunteers' performance and provide additional insight on implementation progress and whether volunteers are being effectively used.", "In the 2014 Farm Bill, Congress mandated that GAO conduct a review of the F2F program.", "GAO examined (1) how USAID administers the program, (2) how partners implement volunteer assignments and screen volunteers, and (3) the extent to which USAID uses monitoring and evaluation to manage the program.", "To address these objectives, GAO reviewed program documents and met with USAID F2F officials and current implementing partners. In addition, we conducted fieldwork in two countries that we selected based on factors, including the number of volunteers assigned." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, -1, -1, -1, 1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 4, 4, 4, 4, 5, 5, 5, 5, 1, 1, 1 ] }
CRS_RS22506	{ "title": [ "", "Background on Insurance Regulation1", "Regulation of Surplus Lines Insurance", "The Surplus Lines Marketplace", "Legislation", "109th Congress", "The National Insurance Act of 2006 (S. 2509/H.R. 6225)", "The Nonadmitted and Reinsurance Reform Act of 2006 (H.R. 5637)", "110th Congress", "The Nonadmitted and Reinsurance Reform Act of 2007 (H.R. 1065/S. 929)", "The National Insurance Act of 2007 (S. 40/H.R. 3200)", "111th Congress", "The Nonadmitted and Reinsurance Reform Act of 2009 (H.R. 2571/S. 1363/H.R. 4173/S. 3217/P.L. 111-203)", "The National Insurance Consumer Protection Act (H.R. 1880)" ], "paragraphs": [ "", "Insurance is regulated almost exclusively at a state level, unlike the other primary sectors of the financial services industry, banking and securities. Although the Supreme Court has ruled that Congress has the power to regulate insurance, the 1945 McCarran-Ferguson Act devolved this power to the individual states, and this was specifically reaffirmed in the 1999 Gramm-Leach-Bliley Act. It has long been recognized that some uniformity in insurance regulation is desirable as it allows greater efficiencies in the insurance market. This argument has grown stronger as insurers compete more with banks and securities firms, who do have uniform regulation, and as capital markets have become more globalized. Insurers rely increasingly on global capital markets both as a place to invest premiums that are not quickly paid out in claims and as a source of funding, particularly after a catastrophe that causes large losses.\nRecognizing the need for relatively standardized regulation, the individual states have developed model rules and regulations through the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL). Harmonization efforts by the states, however, have been hampered by the lack of authority invested in either the NAIC or NCOIL. Although both are made up of public officials, the organizations themselves are voluntary, non-governmental associations and cannot require that any states enact their models. As a consequence, there is significant variation in how different states regulate insurance and there have been various calls for Congress to act through a federal charter or some other kind of federal intervention. The recent financial crisis added an additional argument for increased federal attention to the regulation of insurance, particularly with the failure of AIG, a company that happened to be the largest surplus lines insurer in the United States.", "Surplus lines insurance regulation differs from other insurance regulation both in substance and in the primary focus. In regulating regular insurance transactions, much of the state's focus is on the insurer itself. States have specific requirements for financial solvency, including how much capital an insurer must hold, and how the insurer can invest this capital. In cases of insolvency, states have established guaranty funds, funded by the rest of the insurers in the marketplace, to pay off the insolvent insurer's claims. The states also regulate both the substance of an insurance policy and the price of that policy, with many states requiring specific state approval before policy terms or prices can be changed. In surplus lines insurance, states have some oversight on the solvency of insurers, generally requiring that financial information be filed by surplus lines insurers to judge whether the insurers are sufficiently capitalized. There is, however, no participation in state guaranty funds by surplus lines insurers, nor state oversight of policy terms and prices charged.\nMost surplus lines transactions revolve around an intermediary, typically an insurance broker, who may specialize in the unusual risks that require such coverage. Because they have relatively little oversight on surplus lines insurers themselves, the states generally focus their attention on these intermediaries in regulating surplus lines insurance. To operate as a surplus lines broker, most states require an additional license on top of the license required for insurance brokers in general. To retain this license, surplus lines brokers are required to take various steps with surplus lines transactions that are not required in regular insurance.\nThe first step in a surplus lines transaction is generally a state-required \"diligent search\" of the regular insurance marketplace to establish that there is no licensed insurer available to offer the required coverage. Typically, this requirement is satisfied by having some number, usually three to five, licensed insurers decline to offer coverage with the broker being responsible for an affidavit describing the search and certifying that no coverage is available in the licensed market. In some cases, states have established lists of coverages that are almost always placed in the surplus lines market and thus are exempt from the diligent search requirements.\nOnce the consumer's eligibility to use the surplus lines marketplace is established following whatever state rules are in place, the broker would then approach various surplus lines insurers seeking the desired coverage at a suitable price. At this point, while the consumer is outside of the regular insurance market, the states generally continue to establish standards to protect consumers against surplus lines insurers who might be unable to pay claims that are made. Some states establish a list of eligible surplus lines insurers, and state-licensed brokers are only allowed to transact with insurers on that list. Others take the opposite approach and issue a list of ineligible insurers that may not be used by state-licensed brokers. A third approach is to make the brokers responsible if a surplus lines insurer refuses or is unable to pay legitimate claims; this is seen as causing the broker to be more cautious as to which insurance companies are used. States also generally require that brokers provide specific disclosure statements to clients purchasing surplus lines insurance detailing that the insurance is not subject to the same regulatory oversight as insurance bought from state licensed insurers.\nAll states levy specific premium taxes on insurance and generally require a licensed insurer to collect and remit these taxes as a condition of licensure. With the absence of licensure requirements on surplus lines insurers, the requirement to remit taxes is placed on the state-licensed broker. The precise amount of the tax depends on individual state laws. The situation becomes somewhat unclear, however, when the consumer, the broker, or the insured property are in different states. Such a multi-state situation requires apportioning the premium taxes among the different states. State laws, however, differ significantly not only on the amount of such taxes but also on what exactly is to be taxed and how that tax should be apportioned among the multiple states.", "The property/casualty insurance market has been marked by the so-called insurance cycle, a tendency to have alternating periods of high prices and short supply (\"hard markets\") with periods of low prices and plentiful supply (\"soft markets\"). The size of the surplus lines market has been significantly affected by these cycles, with surplus lines growing faster than the entire market in hard markets and more slowly in soft markets. In the past 30 years, there have been generally hard markets in four periods: the late 1970s, the middle 1980s, the early 1990s, and the early 2000s. Growth in net premiums for U.S. professional surplus lines insurers in three of these four periods has reached 70% at the peak and then dropped to nearly zero or below within a few years afterwards. In 2008, surplus lines direct premiums totaled $34.4 billion, 13.8% of the total commercial lines premiums of $249.3 billion. The surplus lines market in the United States has two large groups, AIG and Lloyd's of London, which had 23.5% and 19.7% of the market respectively. The next largest is Zurich Financial with 5.0% market share, which was followed by a number of companies in the 2% to 4% range. The 10 th -largest company had a 2.1% share, whereas the 20 th had a 1.1% market share.", "", "", "Senators John Sununu and Tim Johnson introduced S. 2509 on April 5, 2006, and it was referred to the Senate Banking, Housing, and Urban Affairs Committee. The committee held two hearings on general insurance regulation in July 2006 where the bill was discussed, but it did not take other action on S. 2509 . Although not directly addressing surplus lines insurance, the bill could potentially have had a significant impact on the operation of the current surplus lines market. S. 2509 would have created a federal charter for insurers and insurance intermediaries and given them the choice of operating under the federal system instead of the state system. Holders of a federal license would have been able to operate throughout the United States without separate state insurance licenses. In addition, the National Insurance Act would have preempted state laws requiring product and price approvals for federally chartered insurers. A federal charter as envisioned in S. 2509 would thus offer many of the same freedoms currently enjoyed by surplus lines insurers, namely, the ability to sell insurance across the country without individual state licenses and with product and rate flexibility. At the same time, S. 2509 would have offered the possibility of avoiding the conflicting state regulatory system that surplus lines insurers currently point to as a significant burden.\nRepresentative Ed Royce introduced H.R. 6225 on September 28, 2006. It was jointly referred to the House Committees on Financial Services and on the Judiciary. Although not identical to S. 2509 , the bill was essentially similar and would have created the same dual regulatory system with both federal and state charters available for insurers and insurance intermediaries. No committee hearings were held on H.R. 6225 .\nPassage of either version of the National Insurance Act of 2006, however, would not have offered a uniformly positive federal option from the viewpoint of surplus lines insurers. Unlike current state laws for surplus lines insurers, insurers with a federal charter would have been required to participate in state guaranty funds. In addition, federally chartered insurers would likely have had more stringent financial oversight than the states currently undertake with surplus lines insurers. It is difficult to predict whether large numbers of surplus lines insurers would actually opt out of the state system until the details of a federal chartering system were put in place. The largest surplus lines insurer, AIG, would seem very likely to become a national insurer, as its then-chairman testified before Congress supporting an optional federal charter in 2002. A.M. Best's 2006 survey of the surplus lines industry concluded, however, that \"whether or not the National Insurance Act becomes a reality, surplus lines insurers will continue to play a major role in providing specialty coverage to commercial insurance consumers.\"", "Representative Ginny Brown-Waite, along with 16 cosponsors, introduced H.R. 5637 on June 19, 2006. It was referred to the House Financial Services Committee where hearings were held and the bill amended and reported on to the full House ( H.Rept. 109-649 ). H.R. 5637 was jointly referred to the House Judiciary Committee which held a subcommittee hearing on the bill, but took no further action. On September 27, 2006, the full House took up the bill under Suspension of the Rules and passed it 417-0. The Senate received the bill and referred it to the Banking, Housing, and Urban Affairs Committee, but took no further action.\nH.R. 5637 was a relatively narrow bill, aimed directly at streamlining and addressing inconsistencies in state regulation in the surplus lines insurance market. It would have done this primarily through preempting various state laws. It generally would not, however, have replaced the preempted state laws with federal standards, but instead would have done so with laws from other states or model laws of the NAIC. The bill's first two sections would have given preeminent regulatory and tax authority to the home state of the insured, preempting the tax and regulatory laws of other states who might have a claim on the insurance transaction such as the home state of the broker or the location of some of the insured risk. Thus, for example, if a company in one state were purchasing a surplus lines policy that covered some risks in another state, the only state that could collect taxes on that transaction would be the home state of that company. The bill would, however, have allowed states to require reports detailing risks that may be covered by policies from other states as well as encouraged the creation of an interstate compact to develop a uniform formula to allocate surplus lines taxes among the states. H.R. 5637 also would have preempted state laws on eligibility requirements. In general, it would have preempted any state laws that are different from the NAIC's model law on nonadmitted insurance and required states to follow the NAIC's listing of alien insurers in allowing brokers to place insurance with companies from outside of the United States. It also specifically would have preempted state diligent search requirements for surplus lines purchases by \"exempt commercial purchasers\" as defined in the bill.\nH.R. 5637 addressed reinsurance as well as surplus lines insurance. As with the surplus lines provisions, the reinsurance provisions had a similar \"home state\" approach to addressing inconsistencies of state regulation of reinsurance. The bill would have given preeminence to the home state of the insurer purchasing reinsurance with regard to the regulation of credit for reinsurance and other aspects of the reinsurance contract, while the home state of the reinsurer was given authority for the regulation of solvency of the reinsurer. In order for the home state to be given this primacy, the bill would have required the home state to follow NAIC standards with regard to reinsurance credit and reinsurer solvency.", "", "Representative Dennis Moore, along with 43 cosponsors, introduced H.R. 1065 on February 15, 2007; Representative Moore was a lead cosponsor of H.R. 5637 in the 109 th Congress. Representative Ginny Brown-Waite, the sponsor of H.R. 5637 , was a lead cosponsor of the H.R. 1065 . H.R. 1065 was nearly identical to the bill that passed the House in the previous Congress. The only change was to the credentials necessary to be considered a \"Qualified Risk Manager,\" which would be required for a company to be considered an \"exempt commercial purchaser.\" The bill was considered under Suspension of the Rules on June 25, 2007, and passed the House by voice vote.\nS. 929 also entitled the Nonadmitted and Reinsurance Reform Act of 2007, was introduced in the Senate on March 20, 2007, by Senators Mel Martinez and Bill Nelson. S. 929 was identical to H.R. 5637 as passed by the House during the 109 th Congress. It was referred to the Senate Banking, Housing, and Urban Affairs Committee as was H.R. 1065 once it was received in the Senate. Neither bill was acted on by the Senate in the 110 th Congress.", "Senators John Sununu and Tim Johnson introduced S. 40 on May 24, 2007, whereas Representative Melissa Bean and Ed Royce introduced H.R. 3200 on July 26, 2007. S. 40 / H.R. 3200 were substantially similar to S. 2509 / H.R. 6225 from the 109 th Congress. They would have created an optional federal charter for the insurance industry, potentially offering surplus lines insurers the choice of continuing to operate under the state system or to do so under the new federal system. Although S. 2509 / H.R. 6225 did not specifically address surplus lines insurance, S. 40 / H.R. 3200 included provisions doing so. In particular, S. 40 / H.R. 3200 included surplus lines insurance under the definition of an \"insurance producer\" and would have allowed a national agency to sell surplus lines insurance. Thus, under S. 40 / H.R. 3200 , an individual surplus lines broker or an agency specializing in surplus insurance could hold a national license and be exempt from the various requirements, such as diligent search, placed by the states on surplus lines brokers or agencies. In addition, S. 40 / H.R. 3200 would have allowed only the state in which an insured resides or maintains its principal place of business to tax a surplus lines transaction. S. 40 / H.R. 3200 would have also specifically exempted surplus lines insurers from a national guaranty fund should one be created. These bills were referred to committee, but no action was taken on them.", "", "Representative Dennis Moore introduced H.R. 2571 on May 21, 2009, along with 20 cosponsors, including lead cosponsor Representative Scott Garrett. H.R. 2571 is substantially similar to H.R. 1065 , which passed the House in the 110 th Congress. It was referred to the House Financial Services Committee and Judiciary Committee. Although neither committee marked up the bill, the House took up H.R. 2571 on September 9, 2009, under suspension of the rules and passed the bill by voice vote. Representatives Moore and Garrett also offered the language of H.R. 2571 as a floor amendment to the Wall Street Reform and Consumer Protection Act of 2009 ( H.R. 4173 ). This language was included in an en bloc amendment by Representative Barney Frank ( H.Amdt. 529 ) that passed by voice vote on December 10, 2009. H.R. 4173 passed the House on a vote of 223-202 on December 11, 2009, with the language included as Title IX.\nS. 1363 , which is identical to H.R. 2571 , was introduced in the Senate on June 25, 2009, by Senator Mel Martinez with three cosponsors. It was referred to the Senate Banking, Housing, and Urban Affairs Committee, which has not acted on this bill. The committee did, however, markup and order reported the Restoring America's Financial Stability Act of 2010 on March 22, 2010. Title V, Subtitle B of this bill is entitled the Nonadmitted and Reinsurance Reform Act of 2010 and contains language nearly identical to S. 1363 . The bill was reported as S. 3217 on April 15, 2010; after various floor amendments, none of which altered Title V, Subtitle B, the Senate inserted the language of S. 3217 into H.R. 4173 and passed the amended bill on a vote of 59-39.\nThe conference report on H.R. 4173 , now titled the Dodd-Frank Wall Street Reform and Consumer Protection Act, included the Nonadmitted and Reinsurance Reform Act as Title V, Subtitle B. The House agreed to the conference report on June 30, 2010, by a vote of 237-192 and the Senate agreed to the conference report on July 15, 2010, by a vote of 60-39. President Obama signed the legislation into law as P.L. 111-203 on July 21, 2010.", "H.R. 1880 was introduced by Representatives Melissa Bean and Edward Royce on April 2, 2009. It was referred to the House Financial Services Committee, Judiciary Committee, and Energy and Commerce Committee. This bill includes language similar to the previous National Insurance Act of 2007 that would (1) include surplus lines insurance under the definition of an \"insurance producer\" and allow a national agency to sell surplus lines insurance and (2) allow only the state in which an insured party resides or maintains its principal place of business to tax a surplus lines transaction. Like previous bills, H.R. 1880 allows for the federal chartering of insurers and insurance producers and loosens some restrictions on insurance rate and form regulation, so it might have an impact on surplus lines insurance as some insurers and producers may choose to become federally chartered, rather than remaining state-chartered surplus lines insurers. The specific provisions of H.R. 1880 , however, are different than the previous National Insurance Acts, including the creation of a systemic risk regulation and the provision that some insurers might be required to become federally chartered if judged to be systemically significant." ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 3, 2, 3, 3, 2, 3, 3 ], "alignment": [ "h0_title h1_title", "", "h0_full", "", "h0_title h1_title", "h1_title", "h1_full", "", "h0_title h1_title", "h0_full h1_full", "", "h0_title h1_title", "h0_full", "h1_full" ] }	{ "question": [ "How is surplus lines insurance regulated?", "Why is there demand for the harmonization of regulations?", "How is the Nonadmitted and Reinsurance Reform Act of 2009 related to this harmonization?", "How was the Nonadmitted and Reinsurance Reform Act of 2009 passed?", "What actions have past Congresses taken regarding this issue?", "How far did past bills proceed in Congress?", "How would the National Insurance Act of 2007 have impacted surplus lines regulations?" ], "summary": [ "The sale of this insurance is regulated and taxed by the states largely through requirements placed on the brokers who usually facilitate the insurance transactions.", "The varying state requirements for surplus lines insurance have led to calls for greater harmonization between the states' laws and for federal intervention to promote uniformity.", "Such federal intervention is the central focus of the Nonadmitted and Reinsurance Reform Act of 2009 (H.R. 2571/S. 1363), which passed the House by voice vote on September 9, 2009.", "The Nonadmitted and Reinsurance Reform Act language was included in the H.R. 4173 conference report, which was agreed to by the House on June 30, 2010, and by the Senate on July 15, 2010. President Obama signed the legislation, now P.L. 111-203, on July 21, 2010.", "Past Congresses have also taken up legislation on surplus lines insurance.", "Versions of the Nonadmitted and Reinsurance Reform Act were passed by the House in both the 109th and 110th Congresses, but the Senate did not act on surplus lines legislation in either case.", "Provisions on surplus lines insurance similar to those in H.R. 1880 were included in the National Insurance Act of 2007, but that bill was not acted on in the 110th Congress." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 3, 3, 3 ] }
CRS_R43171	{ "title": [ "", "Introduction", "DRS Background", "The 2007 Reauthorization Law", "Secretary's Advisory Committee on Re-designation", "Notice of Proposed Rulemaking", "DRS Final Rule", "Indicators/Triggers", "Differences from the NPRM", "Tribal Consultations", "How Are Deficiencies Identified?", "What Is the CLASS: Pre-K?", "DRS Implementation", "Competition Process", "Competition Results", "Additional DRS Issues", "Final Decisions and Appeals", "Legal Challenges35", "Evaluation of the DRS" ], "paragraphs": [ "", "Head Start is a federal program that has provided comprehensive early childhood development services (e.g., education, health, nutrition, and social services) to low-income children and their families since 1965. These services are intended to promote the school readiness of children by enhancing their cognitive, social, and emotional development. Most children served in Head Start programs are three- and four-year-olds, but in the mid-1990s Head Start was expanded to include Early Head Start programs targeted to infants, toddlers, and expectant parents. In this report, the term Head Start is inclusive of the Early Head Start program, unless otherwise specified.\nAt the federal level, the Head Start program is administered by the Office of Head Start (OHS) within the Administration for Children and Families (ACF) at the U.S. Department of Health and Human Services (HHS). HHS provides federal Head Start funds directly to local public and private non-profit and for-profit agencies (called \"grantees\"), rather than through states. Head Start programs are locally designed and are administered by roughly 1,600 grantees.\nSince the program's inception, Head Start grantees have generally been given grant awards for indefinite periods (i.e., awards with no end date). However, the 2007 Head Start reauthorization law ( P.L. 110-134 ) changed this by instituting a five-year designation period for Head Start grantees. Under the new law, at the end of its five-year designation period, a grantee must demonstrate that it is delivering high-quality and comprehensive services, or else the grant is to be opened for re-competition. The law refers to the process of identifying grantees for re-competition as the Designation Renewal System (DRS). HHS was tasked with establishing the DRS, based on certain parameters specified within the law.\nThis report provides an overview of the major milestones leading up to the early implementation of the DRS. Table 1 outlines a chronology of these milestones and serves as a preview to the remainder of the report, which discusses these events and activities in greater detail. The bulk of the report is focused on the DRS itself, including the indicators used to identify grantees for re-competition and the status of competitions to date. The report concludes with a discussion of additional issues related to the DRS, including legal challenges and evaluation plans.", "In the years leading up to the 2007 reauthorization law, Congress demonstrated a growing interest in introducing more competition to the Head Start program. A Government Accountability Office (GAO) report published in February 2005 recommended that HHS begin re-competing grants in cases where a grantee had failed to meet program, financial management, or other requirements. In response, HHS expressed concerns over the legal authority for entering into such competitions and GAO suggested that Congress may wish to \"clarify\" these authorities. Subsequently, the idea of limiting grantee designation periods to five years and requiring \"low performing\" grantees to re-compete was raised at congressional hearings and in various draft reauthorization bills throughout the 109 th and 110 th Congresses. However, it was not until December 2007 that Congress ultimately enacted legislation requiring HHS to carry out these activities.", "The Improving Head Start for School Readiness Act of 2007 ( P.L. 110-134 ) reauthorized Head Start through the end of FY2012. This law significantly amended the existing Head Start Act. A seminal component of the reauthorization law was the requirement that HHS develop a \"Designation Renewal System\" to identify low performing grantees for re-competition.\nUnder the law, the stated purpose of the DRS is to \"determine if a Head Start agency is delivering a high quality and comprehensive Head Start program that meets the educational, health, nutritional, and social needs of the children and families it serves, and meets program and financial management requirements and standards.\" Section 641(c) of the amended Head Start Act tasked the Secretary of HHS (the Secretary) with developing the DRS, in consultation with a panel of experts, and specified that the DRS must base determinations of program quality on\nannual budget and fiscal management data; program monitoring reviews (which must occur at least once every three years according to requirements set forth in Section 641A(c) of the Head Start Act); annual audits (as required by Section 647 of the Head Start Act); classroom quality (as measured under Section 641A(2)(F) of the Head Start Act, which calls for the use of a \"valid and reliable research-based observational instrument, implemented by qualified individuals with demonstrated reliability, that assesses classroom quality, including assessing multiple dimensions of teacher-child interactions that are linked to positive child development and later achievement\"); and Program Information Reports (annual reports submitted by all Head Start grantees and delegate grantees, which provide comprehensive data on staff and services, as well as children and families served).\nThe conference report ( H.Rept. 110-439 ) accompanying the 2007 reauthorization law stated that the DRS was not expected to require the majority of Head Start programs to re-compete: \"The Conferees strongly believe the majority of Head Start programs are delivering high quality services, and therefore do not intend for this new designation system to result in competition for designation for the majority of Head Start programs.\" The conference report went on to express the belief that having low-performing grantees compete for funding would improve overall program performance.", "The 2007 reauthorization law called for the Secretary of HHS to convene an expert panel to make recommendations on the development of a \"transparent, reliable, and valid\" system for designation renewal. To this end, the Secretary chartered an advisory committee in January 2008. Twelve months later, in December 2008, the advisory committee released a report with formal recommendations for implementing the DRS.\nThe advisory committee recommended that the DRS include a combination of automatic indicators and key quality indicators. Under the committee's proposal, the automatic indicators would be used for problems of \"such a serious nature that a single occurrence would automatically require a grantee to compete for renewal.\" The committee suggested that this include cases in which a grantee had declared bankruptcy, been debarred from receiving federal funds, had a license revoked, or had a \"high number\" of deficiencies identified in a program monitoring review (where \"high number\" was defined as two standard deviations from the mean). Meanwhile, key quality indicators would require competition \"when a pattern of poor performance on multiple indicators is present.\" The advisory committee recommended the development of key quality indicators in four broad areas (program management, education, comprehensive services, and financial management) and called for the Secretary to establish a threshold for each indicator such that a meaningful distinction would be made between programs providing high-quality services and those not providing high-quality services.", "In September 2010, HHS released a Notice of Proposed Rulemaking (NPRM) on designation renewal and re-competition based, in part, on the advisory committee's recommendations. The NPRM proposed re-competing at least 25% of all Head Start and Early Head Start grantees participating in monitoring reviews in a given year. (Monitoring reviews are largely triennial, so roughly one-third of all grantees participate in monitoring reviews each year.) Under the proposal, grantees would be identified for re-competition based on performance on seven proposed indicators addressing varied aspects of program quality, licensing and operations, and fiscal and internal controls. (The seven indicators proposed in the NPRM serve as the basis for the seven indicators included in the final rule, with some adjustments. For a more robust discussion of these indicators, see the \" DRS Final Rule \" section of this report.)\nThe NPRM proposed requiring automatic re-competition for any grantee that failed to meet standards set by one or more of the seven indicators. In the event fewer than 25% of grantees were to trigger re-competition in a given year, the NPRM proposed using \"objective criteria\" to identify additional low performing grantees for re-competition. The NPRM did not identify these objective criteria, but solicited feedback from stakeholders on what they should be. Ultimately, the final rule eliminated the 25% requirement altogether (see related discussion in the section on \" Differences from the NPRM \").\nThe NPRM gave the public 90 days to comment on the proposed rule (i.e., until December 21, 2010). During that time, HHS received approximately 16,000 comments on the NPRM from Head Start grantees, parents, teachers, state associations, national organizations, academic institutions, and legal entities. HHS took these comments into consideration before publishing a final rule on the DRS in November 2011.", "HHS published the DRS final rule on November 9, 2011. Under the terms of the final rule, the DRS became effective on December 9, 2011, thirty days after the rule was published in the Federal Register . This section of the report explores the contents of the final rule, with emphasis on the indicators selected for identifying grantees for re-competition.", "The final rule established seven indicators for identifying programs that are not providing \"high-quality and comprehensive services.\" Any Head Start grantee that fails to meet the minimum quality standards established by one or more of the seven indicators listed below (and described in greater detail in Table 3 at the end of this report) is automatically required to compete for continued funding. This does not mean the grantee will automatically lose its funding. Rather, it means the grantee will have to successfully compete against other interested applicants to continue to receive funding.\nDRS Triggers for Re-competition:\n1. The grantee has had one or more deficiencies identified in a single monitoring review. 2. The grantee has failed to establish and use goals for improving school-readiness (including analysis of aggregate and individual child-level assessment data). 3. The grantee has received a low score on one or more domains of the CLASS: Pre-K , an observational assessment tool used to measure classroom quality. (This indicator does not apply to Early Head Start programs or those using only the home-based program option.) 4. The grantee has had its license revoked by a state or local authority. (An exception is made if the revocation is overturned or withdrawn before the competition is announced.) 5. The grantee has had operations suspended by HHS. (An exception is made if the suspension has been overturned or withdrawn, or the grantee has appealed the suspension and has not had a chance to show cause as to why it should be lifted or not be imposed.) 6. The grantee has been debarred from receiving funds from any federal or state agency or disqualified from participating in the Child and Adult Care Food Program (CACFP). 7. The grantee has been determined to be at risk of ceasing to be a \"going concern\" by HHS based on an audit or other investigation within the 12 month period preceding the decision on whether a grantee must compete for funding.\n(Additional details about the seven indicators are provided in Table 3 at the back of this report.)", "The main difference between the proposed rule and the final rule is that the final rule eliminated a provision from the NPRM that would have required at least 25% of grantees reviewed in each round to compete for continued funding. The final rule included no such provision, but rather expanded provisions related to the CLASS: Pre-K assessments, such that grantees are required to compete if they fail to meet a minimum quality threshold on any CLASS domain or if they receive a CLASS score that falls within the bottom 10% on any domain (unless a grantee scoring in the bottom 10% received a score indicative of an \"exceptional\" level of quality). Based on changes in the final rule, HHS estimated that about one-third of all programs would be designated for re-competition.", "Pursuant to requirements in the law, the final rule includes a special provision for American Indian and Alaska Native (AIAN) Head Start and Early Head Start programs. When such programs fail to meet the minimum standards established by one or more of the seven quality indicators, HHS is to engage in a government-to-government consultation with the appropriate tribal government(s) to develop a quality improvement plan for the grantee. This plan must be implemented within six months of the DRS determination. Not more than six months after the implementation of the quality improvement plan, HHS is to re-evaluate the performance of the grantee. If the grantee is still not delivering a high-quality and comprehensive program, then HHS is to hold a competition for the area served by the grantee. In general, a non-AIAN Head Start or Early Head Start agency is not eligible to win such a competition unless there is no AIAN Head Start or Early Head Start agency available. In such cases, a non-AIAN Head Start or Early Head Start program may receive the grant until such time as an AIAN Head Start or Early Head Start agency becomes available.", "Separate from the DRS, the Head Start Act requires HHS to conduct a program monitoring review for each grantee at least once every three years. (New grantees are subject to a full review immediately upon completion of their first program year, but while data from first-year reviews are used for general program oversight, they are exempt from consideration as part of the DRS.) Monitoring reviews are used to determine whether or not grantees are meeting applicable standards for program, administrative, financial management, and other requirements. The law requires follow-up visits for any agency determined, based on findings from a monitoring review, to have one or more deficiencies or significant areas of noncompliance. The law allows for unannounced site inspections of Head Start centers, as appropriate.\nIn this context, a deficiency represents (1) a systemic or substantial material failure on the part of a grantee to meet Head Start program performance standards (as specified in law and regulation), (2) a systemic or material failure of the governing body of an agency to fully exercise its legal and fiduciary responsibilities, or (3) an unresolved area of noncompliance. In practice, this may mean that a grantee has, for instance, misused its federal Head Start funds or failed to minimize threats to the health, safety, or civil rights of children or staff. (See Table 3 for more specifics.) The law requires HHS to notify grantees in writing when a deficiency has been identified and to indicate whether the deficiency is to be corrected immediately or pursuant to a Quality Improvement Plan. Failure to correct a deficiency in a timely manner (to be not more than one year) constitutes a material failure by a grantee to comply with the terms and conditions of its funding award. This means that—separate from the DRS—grantees who fail to correct deficiencies in a timely manner are at risk of termination or denial of refunding.\nUnder the DRS final rule, the issuance of one or more deficiencies within a grantee's DRS review period will trigger re-competition, regardless of how quickly the grantee corrects the deficiency. According to HHS, the correction of a deficiency is \"required in order to avoid termination, but is not considered in determinations made under the Designation Renewal System.\" In FY2009, a total of 22 grantees (4.6% of all grantees who underwent first year or triennial reviews) were found to have one or more deficiencies. The majority of these deficiencies were based on threats to the health and safety of children or staff (e.g., failure to conduct criminal background checks, failure to keep premises clean and free of undesirable or hazardous materials).", "The Classroom Assessment Scoring System (CLASS) is an observational assessment tool used to measure classroom quality. The CLASS: Pre-K is specifically designed to assess the interactions of preschool children, ages 3-5, in classroom settings. The CLASS: Pre-K is organized around three domains: (1) Emotional Support, (2) Classroom Organization, and (3) Instructional Support. The Emotional Support domain examines positive and negative climate in a classroom, as well as teachers' sensitivity and regard for student perspectives. The Classroom Organization domain explores behavior management, productivity, and learning formats. The Instructional Support domain assesses the use of curriculum in promoting cognitive and language development.\nCLASS observations are conducted by trained and certified \"CLASS Observers,\" who have passed a reliability test. CLASS reviewers must be recertified on an annual basis. CLASS Observers code classroom interactions across domains using a 7-point scale. For the DRS, minimum quality thresholds differ by domain. Grantees will trigger re-competition by scoring below 4 on Emotional Support, below 3 on Classroom Organization, below 2 on Instructional Support, or in the lowest decile (i.e., bottom 10%) on any CLASS domain.\nTable 2 compares the average scores for Head Start grantees in FY2012 with the minimum quality thresholds for the DRS.\nUnder the terms of the final rule, the CLASS: Pre-K component of the DRS does not apply to Early Head Start programs (which serve infants, toddlers, and expectant parents) or programs operating only a home-based option. This is because the CLASS: Pre-K is not designed to assess the quality of home-based programs or programs serving infants and toddlers. According to the preamble to the final rule, HHS will \"consider incorporating a valid and reliable measure of teacher-child interaction in Early Head Start and in the Home-based program option when such a tool becomes available\" and will implement such a tool only after \"soliciting public input through an NPRM.\"", "Under the final rule, any new grant awarded after the rule's effective date (December 9, 2011) is to be designated for a five-year period, instead of an indefinite period. For existing grantees, the final rule called for the DRS to be phased-in over a three-year transition period (i.e., December 9, 2011, to December 9, 2014).\nDuring the first year of the transition period, HHS reviewed all existing grantees against five of the seven indicators (school readiness goals/data and CLASS: Pre-K scores were excluded). During the following two years, HHS planned to evaluate any grantees that had not triggered re-competition in the first year against all seven DRS indicators. At some point prior to the end of the three-year transition period, any grantee that has not triggered re-competition is to be notified that they have been deemed eligible for five years of renewed funding without competition.", "Thus far, HHS has announced the first two cohorts of grantees required to re-compete:\nCohort 1: In December 2011, based on an assessment of five of the seven DRS indicators, HHS notified 131 grantees that they would be required to re-compete for funding. Cohort 2: In January 2013, based on an initial review of the full seven indicators, HHS notified 122 grantees that they would be required to re-compete for funding.\nOnce a grantee has been designated for re-competition, the next step is to announce the availability of funding and to hold a competition. HHS began posting Funding Opportunity Announcements for DRS competitions in 2012. Funding opportunities made available as part of the DRS are generally opened only to applicants looking to serve families within the same service areas currently served by grantees who triggered re-competition. Federal regulations define a service area as the \"geographic area identified in an approved grant application within which a grantee may provide Head Start services.\" As a rule, service areas are unique to individual grantees (i.e., there is no overlap), meaning that HHS must hold individual competitions for each grantee's slot to ensure coverage for each service area affected by the DRS. In some cases, DRS competitions may result in larger service areas being broken into smaller service areas based on the interest and capacity of applicants (and the quality of applications).\nTo support agencies applying for these competitions, HHS established a grant application toolkit. The toolkit provides explanatory information about Head Start, links to funding opportunities, and a number of resources to support agencies in completing their applications (e.g., details on how to apply, the criteria by which applicants will be evaluated, and answers to frequently asked questions). All applications are reviewed by a panel of independent early childhood professionals and assessed for viability by Certified Public Accountants.", "On July 2, 2013, HHS announced that grants would be awarded to roughly 153 successful applicants from Cohort 1 competitions. The announcement indicated that in some cases the selection panel had determined an existing grant would be more effective if split among multiple agencies. The July 2013 announcement followed a preliminary press release from April 2013, in which HHS had indicated that, based on preliminary competition results, roughly 80 of the original Cohort 1 grantees would continue to receive funding, 25 of the original grantees would be replaced, and 14 of the original grantees would see their grants split up between new and existing providers. These numbers suggest that roughly three-quarters of the Cohort 1 grantees who have undergone re-competition will retain their grants (in part or in full). The April 2013 announcement also stated that some of the Cohort 1 competitions had no successful applicants, meaning that HHS will have to hold a new series of competitions for grants in these service areas. In addition, a few Cohort 1 grantees have not yet been re-competed, as six of these grants were slated for inclusion in the Birth-to-Five Pilot competition currently underway. Meanwhile, funding opportunity announcements for many Cohort 2 grantees were issued on July 25, 2013.", "", "Under the terms of the final rule, grantees designated for re-competition do not have the right to appeal, meaning that all DRS decisions are final. Some comments on the NPRM requested that the final rule include procedures for these decisions to be appealed, but HHS did not adopt this policy. HHS addressed this decision in the preamble to the final rule, noting that the 2007 reauthorization law had not required an appeals procedure for DRS decisions. HHS noted that provisions elsewhere in the Head Start Act require appeals procedures to be in place for specified circumstances. For instance, the law states that grantees must be able to appeal decisions by HHS to terminate or reduce a grant award or to suspend a grantee for more than 30 days.", "Following publication of the DRS final rule, several non-profit associations filed a lawsuit challenging the lawfulness of the \"single deficiency trigger\" in the final regulations. In Ohio Head Start v. Dep't. Health and Human Serv. , the plaintiffs, three separate associations whose membership included some Head Start agencies required to compete for new five-year Head Start grants because of one or more deficiency findings, argued that the single deficiency trigger was invalid on several grounds: (1) it was impermissibly retroactive because it applied to groups that had already received funding; (2) it deprived grantees of their protected property and liberty interests in grant renewals without due process; and (3) it was arbitrary and capricious under the Administrative Procedure Act.\nThe federal district court dismissed the challenges on summary judgment, concluding that the Head Start associations failed on all claims. The court first noted that the DRS applies to future grants, not current grants, so it is not retroactive. As to due process, the court ruled that the plaintiffs did not identify a protected property or liberty interest that needed to be protected, and even if they had, the agency provides sufficient constitutional due process. Finally, under the administrative challenge, the court held that the rule was not arbitrary or capricious because, while the Secretary had to provide a reasonable explanation for why the agency decided not to follow the recommendation of the HHS Secretary's Advisory Committee regarding deficiencies (i.e., to re-compete programs with deficiencies equal to or exceeding two standard deviations from the mean), it was not foreclosed from going with a single deficiency trigger instead.\nFollowing this decision, the plaintiffs filed for an injunction to stop HHS from implementing the DRS pending appeal. The district court denied the injunction on the grounds that the plaintiffs failed to show any likelihood of success on the merits. The court also held that the plaintiffs could not show that they would suffer irreparable harm if they were not granted the injunction. In addition, the delay would require HHS to expend significant additional resources, and would require a new round of applications and reviews. The plaintiffs appealed the ruling of the district court, and on May 21, 2013, a three judge panel of the District of Columbia Court of Appeals affirmed the lower court's ruling without an opinion.", "HHS has undertaken (via contract) an evaluation of the DRS to explore how and whether it is meeting goals of \"transparency, validity, reliability,\" and \"overall program quality improvement.\" The evaluation will examine the effectiveness of the DRS in differentiating between higher and lower performing grantees and in improving the overall quality of Head Start programs by the introduction of competition. HHS awarded the evaluation contract in 2012. The evaluation is slated to run through 2015." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h2_title h1_title", "", "h1_full", "h2_full h1_full", "h3_full h2_title", "h2_full", "", "", "", "", "h3_title", "h3_full", "h3_full", "", "", "", "" ] }	{ "question": [ "What is Head Start?", "How do these services promote the school readiness of children?", "How is Head Start administered?", "How is Head Start funded?", "How did HHS review the re-designation process of Head Start grantees?", "How has HHS made use of these recommendations?", "How did HHS collect feedback on the proposed rule?", "How did HHS make use of this feedback?", "What did the DRS final rule establish?", "What do these indicators address?", "How will the indicators be used to identify grantees?", "What were the immediate effects of the DRS?", "What other grantees were required to re-compete?", "How many grants has HHS awarded through DRS competitions?" ], "summary": [ "Head Start is a federal program that has provided comprehensive early childhood development services (e.g., education, health, nutrition, and social services) to low-income children and their families since 1965.", "These services are intended to promote the school readiness of children by enhancing their cognitive, social, and emotional development.", "At the federal level, Head Start is administered by the Office of Head Start within the Administration for Children and Families at the U.S. Department of Health and Human Services (HHS).", "Federal Head Start funds are provided directly to local public and private nonprofit and for-profit agencies (called \"grantees\"), rather than through states.", "In January 2008, HHS convened an Advisory Committee on Re-designation of Head Start Grantees. Twelve months later, the advisory committee released a report with formal recommendations for implementing the DRS.", "In September 2010, HHS published a Notice of Proposed Rulemaking (NPRM) on the DRS based, in part, on the advisory committee's recommendations.", "HHS received approximately 16,000 comments on the proposed rule from Head Start grantees, parents, teachers, state associations, national organizations, academic institutions, and legal entities.", "HHS took all comments into consideration before publishing a final rule on the DRS in November 2011.", "The DRS final rule established seven indicators for identifying Head Start grantees that are not providing \"high-quality and comprehensive services.\"", "The indicators address various aspects of program quality, licensing and operations, and fiscal and internal controls.", "Any grantee that fails to meet the minimum quality standards set by one or more of the seven indicators will automatically be required to compete for continued funding.", "Under the terms of the final rule, the DRS became effective on December 9, 2011. That month, HHS announced the first cohort of grantees required to re-compete.", "A second cohort of grantees designated for re-competition was announced in January 2013.", "As of July 2013, HHS had awarded roughly 153 grants through DRS competitions." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, 2, -1, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4 ] }
GAO_GAO-13-268	{ "title": [ "Background", "APHIS Currently Does Not Fully Recover Program Costs", "In Fiscal Year 2011 There Was a Nearly 40 Percent Gap Between Total Identified AQI Costs and Collections", "The Fees Currently under Consideration Would Not Fully Recover Costs for All Pathways nor Directly Charge the Users of Certain Services", "APHIS Might Remove Caps on Commercial Rail and Vessels but Not Trucks, Leaving a Revenue Gap", "The Fees Currently under Consideration Might Include Some, But Not All, Imputed Costs", "The Distribution of Fee Collections among CBP, APHIS, and the AQI Reserve Is Misaligned with AQI Costs", "APHIS’s and CBP’s Shares of Fee Revenues Are Misaligned", "APHIS and CBP Do Not Ensure that All AQI Fees Due are Collected", "APHIS Does Not Collect AQI Railcar Fees Consistent with Its Regulations", "CBP Does Not Verify Payment for Commercial Truck, Private Vessel, and Private Aircraft Fees", "Conclusions", "Matters for Congressional Consideration", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Fees Charged for Arrival Inspections", "Appendix III: Comments from the U.S. Department of Agriculture", "Appendix IV: Comments from the Department of Homeland Security", "Appendix V: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The AQI program provides for inspections of imported agricultural goods, products, passenger baggage, and vehicles, including commercial aircraft, ships, trucks, and railcars, to prevent the introduction of harmful agricultural pests and diseases. CBP has responsibility for inspection activities at ports of entry, including reviewing passenger declarations and cargo manifests and targeting high-risk passengers and cargo shipments for agricultural inspection; inspecting international passengers, luggage, cargo, mail, and means of conveyance; and holding suspect cargo and articles for evaluation of plant and animal health risk in accordance with USDA regulations, policies, and guidelines.\nInspection procedures vary somewhat depending on what pathway is being inspected (e.g., passengers, cargo, vessels, etc.) but, generally, CBP officers conduct a combined primary inspection for agriculture, customs, and immigration issues, and, as needed, make referrals to CBP agriculture specialists who conduct more detailed secondary inspections.\nAPHIS has responsibility for other AQI program activities, including providing training; providing pest identification services at plant inspection stations and setting AQI user fee rates and administering the collected fees; setting inspection protocols; applying remedial measures other than destruction and re-exportation, such as fumigation, to commodities, conveyances, and passengers.\nAPHIS lacks the authority to recover the full costs of the AQI program through fees. Section 2509(a) of the Food, Agriculture, Conservation, and Trade (FACT) Act of 1990 authorizes APHIS to set and collect user fees sufficient to cover the cost of providing and administering AQI services in connection with the arrival of commercial vessels, trucks, railcars, and aircraft, and international passengers. APHIS does not have the authority to charge AQI fees to pedestrians or military personnel and their vehicles, nor to recover the costs of these inspections through the fees assessed on others (see fig. 1). AQI fee collections are divided between CBP and APHIS. Gaps between AQI fee collections and program costs are generally covered by CBP using its Salaries and Expenses appropriation, which is authorized for necessary expenses related to agricultural inspections, among other activities.\nIn fiscal year 2012, AQI fee revenues totaled approximately $548 million (see fig. 2). As authorized by the FACT Act, these funds remain available without fiscal year limitation and may be used for any AQI-related purpose without further appropriation. When funds are available until expended, agencies may carry forward unexpended collections to subsequent years and match fee collections to average program costs over more than 1 year. Such carryovers are one way agencies can establish reserve accounts, that is, revenue to sustain operations in the event of a sharp downturn in collections. APHIS uses some of the AQI fee collections in this way. We have previously reported that a reserve can be important when fees are expected to cover program costs and program costs do not necessarily decline with a drop in fee revenue.\nAPHIS maintains two types of reserves. APHIS refers to the first reserve as the “shared reserve” because it is meant to cover both APHIS and CBP needs in the event that fee collections decline unexpectedly. The second reserve is an “APHIS-only” reserve, and is funded from APHIS’s portion of total AQI collections. The APHIS-only reserve is intended to provide APHIS with budgetary flexibility. Between the two reserves, APHIS aims to maintain a total reserve balance equal to 3 to 5 months of AQI program costs.\nAs previously mentioned, in 2010, APHIS engaged a contractor to conduct a thorough review of AQI program costs and options for redesigning AQI fees. In addition, APHIS contracted for an economic analysis to ensure that the proposed fees would not have unintended consequences. In reviewing the AQI fees, the contractor identified the direct and indirect costs of the AQI program for both APHIS and CBP by pathway, to the extent the agencies captured these costs for fiscal year 2010. The contractor also conducted activity-based costing to serve as the basis for future fee setting. These practices are consistent with federal cost accounting standards.\nThe contractor assumed the accuracy of the data provided from both APHIS and CBP. Our recent work reported that data quality is an ongoing issue with AQI data systems, including the Work Accomplishment Data System (WADS), one of the data sources used by the contractor. However, Office of Management and Budget Circular A- 25 states that when reviewing user fees, full cost should be determined or estimated using the best available records of the agency, and new cost accounting systems do not need to be established solely for the purpose of rate-setting. The contractor also solicited input from stakeholders as part of the fee review process, a practice consistent with our User Fee Design Guide.\nAPHIS is using the AQI cost model developed by the contractor as well as the findings from the fee review to update the AQI fee schedule. According to APHIS officials, as of February 2013, APHIS and CBP are considering staff recommendations for a new fee structure, including new fee rates. Pending approval from both USDA and DHS, APHIS expects to publish a notice in the Federal Register with a proposed new fee schedule in the fall of 2013. As such, it is important to note that the current staff recommendations for AQI fees are subject to change and that the fee structure and rates APHIS establishes will be informed by many factors, including public comments through the rulemaking process.", "", "In fiscal year 2011—the most recent year for which data were available— AQI fee collections covered 62 percent of total identified AQI program costs, leaving a gap of more than $325 million between total AQI costs and total AQI collections. This gap was covered with funds from CBP’s Salaries and Expenses appropriation and by funds from other agencies to cover imputed costs. Although the AQI program is often referred to as a fully fee-funded program, it is not. Fees assessed on individual pathways are to be set commensurate with the costs of services with respect to a particular pathway. For passenger fees, the costs of services include the costs of related inspections of the vehicle. Once revenue is earned from one pathway, however, it may be spent on any AQI-related program cost. For example, revenue earned from commercial airline passenger inspections may be spent on private air passenger inspection activities. However, as shown in table 1, APHIS has chosen not to charge some classes of passengers, and the collections of the AQI program as a whole do not equal total identified program costs.\nSeveral other factors also compound the gap between AQI program costs and total AQI fee collections, as discussed below. Specifically, CBP’s AQI costs are understated, AQI fee rates do not reflect imputed costs, and CBP and APHIS do not fully recover the costs of AQI-related reimbursable overtime services.\nCBP does not capture all time spent on agriculture activities in its Cost Management Information System (CMIS)—the system in which CBP tracks its activities and determines personnel costs. Both to accurately set AQI fee rates to recover program costs and to allocate fee revenues between APHIS and CBP proportionate with each agency’s program costs, CBP must accurately track its expenses related to the AQI program. In 2005, CBP agreed to report its AQI-related expenses to APHIS quarterly. CBP officers’ and agriculture specialists’ time is generally charged to a mix of CMIS codes to represent the variety of activities they perform. Although this mix of codes will understandably vary, CBP guidance specifies that time spent by officers conducting primary inspections—which, as previously discussed, include aspects of agriculture, customs, and immigration inspections—is to be attributed to a mix of CMIS codes representing each of these three functions. We found, however, that at 31 ports and other locations, CBP did not charge any primary inspection time to agriculture-related CMIS codes for all or a portion of fiscal year 2012, which means that AQI costs at these ports are being understated. Further, CBP officers at ports we visited described different procedures for using CMIS codes and wide variation in the extent to which they verify that CMIS codes accurately capture work activities. Because CBP’s AQI costs are underreported by some unknown amount in CMIS, APHIS does not have complete information about CBP’s AQI-related costs and therefore is unable to consider total program costs when setting AQI fee rates.\nCBP headquarters oversees ports’ use of CMIS to track AQI expenses by providing guidance and training, and by annually reviewing CMIS data from about 50 of the highest-volume ports. In addition, CBP field offices review CMIS codes for ports in their jurisdiction on a quarterly basis. CBP headquarters also produces CMIS guidance, which includes a CMIS code dictionary and a notice that the time officers spend on primary inspection should be charged to customs, immigration, and agriculture codes. Instructions for reviewing the use of CMIS codes are also provided to ports. Although the instructions provide brief examples, they do not specify how ports should determine the appropriate mix of codes to use or the frequency with which ports should conduct work studies. At some locations we visited, CBP officials said that headquarters does not provide sufficient CMIS guidance to enable accurate and consistent reporting of staff activities. CBP headquarters officials told us that they provide semiannual training which is intended to ensure correct CMIS use at ports. However, attendance at these training sessions is not required and officials said there is high turnover among CMIS practitioners at the ports and field offices.\nThe current AQI fee rates do not cover imputed AQI program costs. APHIS estimated that these costs were about $38 million in fiscal year 2011, the most recent year for which data were available. In 2008 we recommended that the Secretary of Agriculture include these costs when setting AQI fees consistent with federal accounting standards, OMB Circular No. A-25 guidance, and USDA policy. APHIS agreed with the recommendation and, as we will discuss more fully later on in this report, has included some, but not all, of these costs in its recent analysis of AQI costs. Because APHIS is authorized to set AQI fees to recover the full cost for each pathway, it is important that the agency accurately captures full program costs.\nThe AQI program does not fully recover costs for reimbursable overtime agriculture inspection services in part because (1) the reimbursement rates paid by users are set by APHIS regulations and do not cover the agencies’ overtime costs, (2) CBP does not consistently charge for these services, and (3) when CBP does charge it does not timely collect payments for these services. CBP is authorized to charge for overtime for agriculture inspection and related services in some situations, known as reimbursable overtime. When a CBP officer or agriculture specialist performs an inspection service on a Sunday or holiday or while the employee performing the inspection is on overtime, CBP is to bill the user for the service. This can happen, for example, when an importer requests an inspection of agricultural produce outside of normal duty hours.\nReimbursable overtime collection rates are not aligned with the agencies’ current staff costs, which means any reimbursable overtime collections do not fully cover costs to perform these services. APHIS has the authority to set reimbursable charges to recover the full costs of overtime services, but the reimbursement rates have not been adjusted since 2005. Under the APHIS regulations, CBP may charge $51 per hour for agriculture- related overtime Monday through Saturday and holidays, and $67 per hour on Sunday. When we asked CBP officials for their average annual costs for overtime agriculture inspections they told us that they have not calculated these costs. However, CBP was able to create such an analysis for us using August 2012 as an example. CBP estimated that its average salary cost for overtime agricultural inspections in August 2012 was approximately $85 per hour, and it billed approximately $55 per hour for those services. They further estimated that for that month, reimbursable agriculture overtime services cost the agency approximately $58,000, while the agency only billed approximately $37,000 for those services—or about 64 percent of the cost. APHIS’s rates for reimbursable agriculture overtime services are similarly misaligned with its costs. APHIS and CBP officials worked together to develop a draft proposed rule to update the overtime rates, but according to APHIS officials it has been on hold since summer 2011.\nCBP headquarters encourages ports to charge for reimbursable overtime services and provides guidance clarifying how they should do so. This practice is consistent with effective fee design principles; as we have previously reported, if a service primarily benefits identifiable users, users However, CBP personnel at some ports told should pay for that service. us they do not charge for reimbursable agriculture services provided because their port does not get to keep the reimbursable overtime funds. In addition, officials at three ports said it is administratively burdensome to process the reimbursable overtime forms.\nCBP does not ensure that reimbursable overtime is collected when charged. APHIS regulations require that agriculture-related reimbursable overtime be paid for in advance and that overtime services be denied to anyone whose account is more than 90 days delinquent.according to CBP data, as of August 31, 2012, the agency had more than $200,000 in past-due overtime agriculture inspection bills, of which more than $160,000 is more than a year past-due. Some bills are as old as 2004, and one company has more than $9,000 in past-due bills that were issued from 2004 through 2012. Although CBP can and does assess interest for past-due reimbursable overtime bills, it does not consistently deny overtime services to entities with accounts more than 90 days delinquent.", "", "APHIS is considering new or updated fees for AQI services. However, the fees might not recover the costs of all commercial trucks. APHIS lost $85 million in revenue in fiscal year 2010 due to capping the annual amount of AQI fees paid by commercial rail, vessels, and trucks, but as of February 2013, the staff recommendations APHIS is considering would remedy only the revenue loss for commercial rail and vessels. According to APHIS data, in fiscal year 2010, the caps on rail and vessel fees resulted in a combined revenue loss of about $46 million, while the caps on truck entries resulted in a $39 million loss for that year. These revenue losses are currently covered by CBP through its annual appropriation or by AQI user fees collected from other pathways. As we have previously reported, charging users the full cost of the inspection they are receiving can promote economic efficiency and equity by assigning costs to those who both use and benefit from the services being provided.\nCommercial trucks seeking entry into the United States can either pay the $5.25 AQI fee each time they cross the border, or they can pay a one- time flat AQI fee of $105 each calendar year. To pay the annual AQI fee, trucks must use an electronic transponder which must be purchased in advance. Although the $105 annual AQI truck transponder fee is equivalent to paying for 20 arrivals each year, according to APHIS data, in 2010, trucks with a transponder cross the border 106 times a year on average. In Otay Mesa, California, for example, we observed trucks which CBP officers told us typically make up to three to four border crossings a day, dropping off their cargo nearby and returning for another shipment.\nAPHIS is considering raising the per-entry truck fees to more closely align fees with costs. To encourage use of truck transponders, APHIS is considering setting the fee rate for transponders at a rate equivalent to the price of 40 arrivals but still well below the average number of arrivals for trucks with transponders. In this way, APHIS hopes to provide a financial incentive to use transponders to both minimize CBP’s administrative burden (by reducing the number of fee collection transactions at the border) and to reduce wait times at border crossings. According to a CBP estimate, trucks with transponders save at least 10 minutes when crossing the border because they do not have to pay the fee at the time of crossing, benefiting trucking firms and shippers. This time savings is, in and of itself, another incentive for truck transponder use. Shorter wait times at the border also support the CBP mission to foster international trade.\nThe contractor assisting APHIS with its fee review did not propose a way for APHIS to better align truck fees with the full cost of truck inspections while still incentivizing the use of transponders, but noted that for the long term, APHIS should look into other possible alternatives, including examining the feasibility of implementing toll-based transponders, which would allow trucks to pay for each crossing while still retaining a low administrative burden for CBP and time savings of the current transponder system. Table 2 demonstrates, for illustrative purposes only, various combinations of per-entry and annual transponder fee rates to more closely align commercial truck fees with costs under the current system. For example, one example adds a portion of the cost of inspecting trucks with transponders to the per-arrival fee for trucks, which would provide an incentive for the use of transponders (see table 2). In another example, trucks could purchase different “packages” of arrivals at a discounted rate (50 arrivals, 100 arrivals, 200 arrivals, etc.). In commenting on a draft of this report, APHIS officials said that because the distribution around the mean number of arrivals is unknown, it would be difficult to determine the effects of a change in truck transponder pricing.\nAs previously discussed, although APHIS has authority to charge AQI fees to all international passengers, it currently only charges fees to international commercial air passengers.not considering fees for international passengers aboard private aircraft, private vessels, buses, and railcars, citing administrative burdens and anticipated challenges relating to collecting these fees. Because APHIS does not currently charge fees to inspect these passengers, these costs are covered by CBP’s annual appropriations or AQI fees paid by other users. This reduces economic efficiency and equity of the fees because As of February 2013, APHIS is the costs of the inspections are not assigned to those who both use and benefit from them.\nAPHIS’s authority permits it to charge all passengers for the cost of inspecting both passengers and the vehicle in which they arrive, but does not always permit APHIS to do the reverse; that is, to include in the vehicle AQI fees the cost of inspecting the passengers arriving in the vehicle. Charging the cost of inspecting bus, private aircraft, private vessel, and rail passengers and the vehicles in which they arrive to the passengers themselves would be administratively burdensome because there is no existing mechanism for collecting fees from these classes of passengers. However, in several instances, CBP can and does charge customs fees—fees collected to help offset the costs of customs inspections—to private vehicles rather than the passengers. If APHIS had statutory authority to charge all vehicles in which passengers travel, rather than only the passengers themselves, then APHIS could leverage existing customs fee collection mechanisms to minimize administrative burden in collecting AQI fees. We previously recommended that USDA and DHS develop a legislative proposal, in consultation with Congress, to harmonize customs, immigration, and AQI fees. To date, a proposal to harmonize these three fees has not been introduced.\nBus passengers. The cost of bus passenger inspections totaled about $23 million, or about $4 per passenger, in fiscal year 2011. CBP officials told us that it would be difficult to collect the fee from individual passengers. In June 2012, our limited observations of the inspection process for bus passengers at San Ysidro, California, revealed logistical challenges consistent with these concerns. In this port, bus passengers get off the bus and are processed along with pedestrians crossing the border, which would make it difficult to properly separate out and charge a fee only to bus passengers.\nTo avoid these kinds of logistical challenges, bus passenger fees could be collected using the air passenger fee model in which the fee is collected by the airline and then remitted to APHIS periodically. However, APHIS’s fee review noted that barriers to entry for the bus passenger industry are lower than air and cruise vessel industries—which could mean a large and changing list of bus companies from which APHIS would need to collect fees. Because of this, an APHIS official stated, this type of remittance model could be burdensome to maintain and audit. The official also told us that APHIS has discussed both a possible transponder approach to collect fees for buses, and an approach in which buses with over 15 seats and buses with fewer than 15 seats pay different fee rates. In commenting on a draft of this report, APHIS officials said that due to logistical challenges, they would have to seek new legislative authority to allow for the collection of fees for the bus rather than charging a fee for the individual passenger.\nPrivate aircraft and private sea vessels. The total cost of inspecting private aircraft passengers in fiscal year 2011 was about $11 million, which equates to approximately $34 per passenger or $93 per aircraft for each arrival. The cost of inspecting private vessel sea passengers for fiscal year 2011 was about $4.9 million, which equates to approximately $20 per passenger or $61 per vessel for each arrival. As stated above, AQI’s statute authorizes it to charge passengers, but not the private aircraft or vessels in which those passengers arrive. However, CBP charges a customs fee of $27.50 per year for each private plane and vessel at least 30 feet long. Absent a change in APHIS’s statutory authority allowing it to charge private aircraft and vessels for AQI services, APHIS and CBP cannot leverage the CBP infrastructure already used to collect customs inspections fees for private aircraft and vessels.\nAPHIS considered the effect of charging new fees for private aircraft and vessels, but as of February 2013, the fees APHIS is considering might not recover the costs of AQI services for these users. APHIS’s fee review noted that it would be relatively easy to administer an annual fee on private aircraft or vessels using CBP’s current process, but concluded that the potential revenue would be very small. However, the potential revenue from such a fee would be greater than the AQI fees currently assessed on freight rail.\nIt is also worth noting that even if an AQI vessel fee was piggybacked onto the customs vessel fee, vessels presenting similar agriculture risks may not all be subject to an AQI fee. As mentioned above, CBP’s customs fee applies to private vessels that are at least 30 feet long. However, one CBP official told us that many private vessels arriving at his port are only about 20 feet long and thus are not required to pay the customs fee, but that these vessels still present agriculture risks similar to larger vessels because 20-foot vessels are large enough to store food. According to APHIS officials, APHIS has not assessed the agricultural risks posed by smaller vessels and said that the risks would likely vary at each port.\nRail passengers. Rail passenger inspections cost the AQI program about $1.6 million in fiscal year 2011, or almost $6 per passenger. As stated previously, AQI’s statute authorizes it to charge rail passengers seeking to enter the country for the costs of inspecting the passengers as well as the railcar in which they are riding. CBP charges a customs inspection fee for each passenger railcar, but APHIS does not charge an AQI fee. Absent a change, APHIS and CBP cannot leverage the infrastructure used for a per-car fee for customs inspections currently charged for the arrival of each railroad car carrying passengers.\nIn 2005 APHIS set AQI commercial vessel fees—which are levied on cruise and cargo vessels alike—to cover the costs of inspecting vessel passengers. According to its authorizing statute, APHIS may set fees to cover the costs of AQI services for arriving international passengers, and commercial aircraft, trucks, vessels, and railcars. The amount of the fee must be commensurate with the costs of AQI services for each pathway (i.e., class of passengers or entities paying the fees), preventing cross- subsidization of costs between users in setting the fee rates. The way the fees are currently set, the vessel fee includes the cost of inspecting vessel passengers, such as passengers arriving on cruise ships. APHIS is considering replacing the cruise vessel fee with a sea passenger fee that would recover the costs of inspecting both sea passengers and the cruise vessels. The cost of inspecting cruise passengers for fiscal year 2011 was about $17.9 million. Charging an inspection fee to sea passengers would not require a new collections infrastructure because commercial vessel passengers currently pay user fees for customs inspections, which are remitted to CBP by the party—such as the cruise line—issuing the ticket or travel document. As we mentioned previously, in 2008 we recommended that DHS develop a legislative proposal, in consultation with Congress, to harmonize the customs, immigration, and AQI fees. To date, a proposal to harmonize these three fees has not been introduced. In addition, we previously reported that existing collection mechanisms can be leveraged to minimize administrative burden in collecting fees.\nAPHIS is considering a new fee for treatments and monitoring but might not change current AQI policy for two other specialized AQI services— permits for importing commodities and monitoring of garbage compliance agreements—that benefit only a limited set of users yet the costs are borne by other AQI fee payers. By continuing to include the costs of these specialized services in the regular AQI fees for each pathway, the users that benefit most from these services do not know how much they are paying for these services—which may encourage overuse of these services—while other fee payers are paying for services they do not use. As we have previously reported, a more tailored, user-specific approach to fee-setting better promotes equity and economic efficiency by assigning costs to those who use or benefit from the services.\nAPHIS does not track costs separately for conducting and monitoring of treatments, so it cannot identify the specific costs related to each activity. The contractor’s report recommended that they do so. monitors these treatments, generally at no additional costs to the importer, to ensure compliance with APHIS policies and procedures. Second, and less commonly, in certain instances APHIS provides both treatment and monitoring services for certain commodities, generally at no additional cost to the importer. Because the cost of treatment and monitoring provided by APHIS is bundled into the AQI fees for air cargo, maritime cargo, commercial trucks and rail cargo, these services— including those for repeat offenders who require treatments regularly— are subsidized by other shippers. Further, importers may not be aware of the costs being incurred for APHIS’s treatment and monitoring services. Directly charging importers for these services may encourage importers to work with growers whose products do not regularly require treatment because importers would directly incur the costs of the treatments. In keeping with basic economic principles, this may also improve the economic efficiency of the fees.\nImport commodity permits. Permits are required to import and transport certain agricultural commodities. Although APHIS has authority to charge for permits, under the current system these services are paid for indirectly through the AQI fees. In fiscal year 2011, APHIS issued 12,152 permits for the import of commodities such as wood products, plants, and soil. Multiple commodities can be listed on a single permit, which is valid for that importer for a year. APHIS spent about $13 million in fiscal year 2011 on permit-related activities; as mentioned previously, the cost of these permits is included in the regular inspection fees for air cargo, maritime cargo, trucks, and rail cargo. As such, importers may not be aware of the cost incurred for their permit application and adjudication, which may lead to inefficient use of APHIS resources if importers “overpurchase” permit applications. According to APHIS officials, importers sometimes obtain permits that they do not use. The contractor’s report proposed a charge of $1,075 for each commodity permit and $1,775 for each pest permit. However, APHIS officials were concerned that charging for permits may create an unintended barrier to trade and retaliatory actions by other countries with which we trade.\nMonitoring of compliance agreements for regulated garbage. Costs related to monitoring compliance with regulated garbage agreements were projected to be about $36 million in fiscal year 2013. CBP monitors compliance agreements for disposal of regulated international garbage but does not currently charge additional fees for these services. APHIS guidance requires that agriculture specialists monitor all facilities with compliance agreements quarterly—generally airports and seaports that serve international travel. In addition, officials stated that certain ships, such as cruise ships, have compliance agreements and the disposal of their garbage is regularly overseen by CBP agriculture specialists. APHIS might continue to include these costs in inspection fees for air, maritime, truck, and rail cargo rather than capture them under a separate fee for monitoring compliance agreements.", "The fees APHIS is considering would recover imputed costs paid by the Office of Personnel Management and the Department of Labor on behalf of APHIS and CBP and attributable to the AQI program. By incorporating some imputed costs in its analysis of AQI program costs, APHIS makes progress in implementing our 2008 recommendation. However, APHIS’s analysis does not include costs of processing AQI collections borne by the Department of the Treasury (Treasury) for costs related to collecting, depositing, and accounting for certain AQI fee collections. We previously reported that agencies authorized to charge full-cost recovery fees could include the Treasury’s cost of collections in their fee rates and deposit these funds into the Treasury. APHIS officials told us that Treasury has not yet provided APHIS with a statement of these costs. However, federal accounting standards specify that when such costs are unknown, a reasonable estimate may be used.", "", "CBP’s share of AQI fee revenue is significantly lower than its share of program costs. For example, in fiscal year 2011 (the most recent year for which APHIS could provide this data), CBP incurred 81 percent of total AQI program costs, but received only 60 percent of fee revenues; APHIS incurred 19 percent of program costs but retained 36 percent of the revenues, as shown in table 3. Further, although AQI costs exceeded AQI fee revenues by more than $288 million in fiscal year 2011—a gap that was bridged in part using amounts from CBP’s annual Salaries and Expenses appropriation—APHIS used more than $25 million of the AQI fee collections to increase the AQI reserve balance that year.\nIn 2005, CBP and APHIS agreed that user fee collections should be allocated based on each agency’s expected annual costs. Each fiscal year, APHIS and CBP agree to an estimate of total AQI revenues for that year and how those funds will be allocated between the agencies. For 2006, the agencies agreed on a 61/39 percent split for CBP and APHIS, respectively. Table 4 shows the planned division of revenues between CBP and APHIS for 2010 to 2013. The 63/37 percent split has changed little since the 2006 distribution.\nAlthough the 2005 agreement states that AQI funds will be distributed between CBP and APHIS in proportion to each agency’s AQI-related costs, this does not happen in practice. Rather, the 63/37 percent split means that APHIS retains AQI fee revenues sufficient to cover all of its estimated AQI costs—including costs attributable to AQI services for which no fees are authorized or charged—and transfers the remainder of the estimated fee revenues to CBP. In other words, APHIS covers all its AQI costs with AQI fee revenues, while CBP does not. To bridge the resulting gap, CBP uses its annual appropriation.\nBecause the 63/37 percent split is based on estimated revenues, APHIS and CBP developed an adjustment process for when actual AQI fee collections differ from the amount that was expected. When total actual fee collections for the year exceed (or fall short of) the estimate, the difference is added to (or taken from) the shared reserve. As previously mentioned, the shared reserve is money that is carried over each year and is meant to cover both APHIS and CBP needs in the event that fee collections decline unexpectedly. If, however, APHIS’s costs are greater or less than the estimated 37 percent, the difference is added to or taken from a second reserve; as mentioned previously, this is known as the APHIS-only reserve. For example, according to APHIS officials, a USDA hiring freeze has resulted in lower-than-expected APHIS AQI spending in recent years. Specifically, because APHIS costs were lower than the estimated 37 percent in fiscal year 2012, APHIS took a portion of the 37 percent allocated to it and put some of those funds into this second reserve. Figure 3 shows the total actual distribution of AQI program funding among CBP, APHIS, and both reserve funds in fiscal year 2011.\nAPHIS and CBP also adjust the 63/37 percent split as they see how actual revenues compare with estimates. For example, in fiscal year 2011, fee revenues were higher than estimated and APHIS and CBP each received distributions of $1 million more than the initial estimate. Table 5 shows the distributions and obligations of actual AQI fee revenues for recent years.\nWe have previously reported that maintaining a reserve balance is important for fee programs to ensure that program operations can be sustained in case fee revenues decline but workload does not. According to APHIS officials, APHIS’s target balance for the total reserve is 3 to 5 months worth of AQI costs. Officials told us that this level would ensure the stability of the program in case of potential fluctuations in fee volumes, bad debts, unanticipated crises, or the need for one time capital expenditures. The upper end of the target—5 months—is the amount APHIS officials estimate would be needed to completely shut down the inspection program if it were to cease. However, a maximum target balance aligned with more realistic program risks would also allow for lower reserve levels. The rationale for maintaining a reserve balance as a buffer against a complete program shutdown is not as compelling when a fee-funded program also has access to annual appropriations from the general fund, as Congress has an opportunity to weigh its funding priorities on an annual basis.\nMoreover, our analysis of APHIS’s cost and collection projections shows a higher total reserve balance than the 3- to 5-month target. The total reserve balance was approximately $107 million at the end of fiscal year 2012, which represents about 2.4 months of the AQI program costs paid with AQI fee revenues that year. Our analysis of APHIS data shows that the balance in the total AQI reserve would grow by an estimated $55 million, $75 million, and $96 million in fiscal years 2013, 2014, and 2015, respectively. This would bring the reserve balance to approximately $333 million—or more than triple the fiscal 2012 balance. To further put this amount in perspective, $333 million would have paid more than 7 months of AQI costs paid with fee revenues in fiscal year 2012. An unnecessarily high total reserve balance means that monies that could be used to pay for AQI program costs would instead be carried over for possible future needs. This strategy would increase reliance on CBP’s annual appropriation to pay for current AQI-related costs.\nAPHIS’s projected level for the shared reserve fund exceeds the historical use of the fund (see figure 4). In past crises, APHIS and CBP used much less than APHIS’s total reserve balance target of 3 to 5 months worth of AQI costs. During the financial crisis in fiscal year 2009, AQI collections dropped by more than $46 million compared to the prior year and the reserve fund dropped by about $50 million, reducing the reserve from 2.3 months of fiscal year 2008 costs paid with fee revenues to 1.1 months of fiscal year 2009 costs paid with fee revenues, as shown in figure 4. In addition, after the events of September 11, 2001, the reserve fund dropped from approximately $68 million on October 1, 2001, to just less than $45 million on September 30, 2002, reducing the reserve to about 2.5 months of fiscal year 2002 costs paid with fee revenues.", "", "APHIS’s collection practices for the AQI fees assessed on railcars are not consistent with APHIS regulations. According to the APHIS fee regulations, railcars seeking to enter the United States may pay AQI fees in one of two ways. First, they can pay a $7.75 fee for each arrival of a loaded commercial railcar. Second, they can prepay a flat fee of $155 annually for a specific railcar. The $155 annual fee is equal to the cost of 20 individual arrivals. According to APHIS officials, no railcar companies choose the $155 flat fee; rather, all choose to pay the $7.75 per arrival fee. However, rather than collecting this fee for each arrival of a loaded railcar (as required by APHIS regulations), APHIS only collects fees for the first 20 arrivals a railcar makes each year. Because of this, in fiscal year 2010, APHIS lost $13.2 million in railcar fee revenue because about 1.7 million railcar arrivals did not pay a fee even though a fee was due.", "CBP does not verify that it collects applicable user fees for every commercial truck, private aircraft, and private vessel for which the fees are due, resulting in an unknown amount of lost revenue. We have previously reported that internal controls should generally be designed to assure that ongoing monitoring occurs in the course of operations.APHIS and CBP regulations, commercial trucks entering the United States must pay AQI and customs user fees by purchasing an annual transponder or paying the fees upon each arrival. Trucks without transponders pay fees upon arrival by cash, check, or credit card. CBP personnel at ports we visited compared the amount of cash deposited for AQI and customs user fees to the number of cash register transactions to ensure against theft, but did not verify that all trucks that were supposed to pay the fees actually paid the fees. In other words, CBP cannot be sure that it collected these fees from all trucks required to pay them. The Automated Commercial Environment system alerts CBP when an arriving truck does not have a transponder and therefore owes the fee at the time of crossing, but CBP does not require officers to record in the system that the truck has paid the fee, or review this information to verify whether all trucks paid the fees.\nSimilarly, CBP does not consistently verify that all arriving private aircraft and private vessels have a customs user fee decal, as required. As we stated previously in this report, per CBP regulations, private aircraft and private vessels more than 30 feet long arriving in the United States must pay an annual $27.50 customs user fee. As proof of payment, these aircraft and vessels receive a customs user fee decal.review noted, the customs decal could provide an administratively simple mechanism on which to piggyback an AQI fee for private aircraft and vessels. However, absent more rigorous oversight of proper payment for customs decals this strategy would not be as effective as it otherwise could be.\nAs APHIS’s fee For private aircraft, the Advanced Passenger Information System (APIS) can show the customs user fee decal number before arrival. However, APIS neither requires that the decal number be entered nor flags aircraft for which decal numbers are not entered. For private vessels, the Pleasure Boat Reporting System and the Small Vessel Arrival System both include a field for the customs user fee decal number. However, the decal number is not a required field in either system and the systems do not link to the Decal and Transponder Online Procurement System to provide an automated mechanism to verify the decal number. According to CBP officials, CBP officers are to physically verify the decal during their inspection of the aircraft or vessel upon arrival. However, CBP does not verify that this actually occurs, nor are procedures in place nationwide to ensure that CBP officers collect the decal user fee as required if arriving vessels and aircraft lack a valid decal. Further, on one of our site visits to a small airport, the CBP officers conducting the inspections were unfamiliar with the process they should follow if an aircraft arrived without a decal; port records showed that the last time a customs user fee decal had been sold at that airport was in 2010. Later that day, port officials informed us that shortly after our visit an aircraft arrived without a decal and the officers collected the decal fee. We also observed inspections of private vessels that arrived without customs decals; the CBP officer conducting the inspections did not collect the decal user fees, but instead informed the vessel owners of the requirement to get a decal.", "The AQI program is a key component in the nation’s efforts to protect against exotic diseases and pests and the billions of dollars in damage they can cause. Analyzing and understanding the costs of providing these important services—for which CBP and APHIS have joint responsibility— are important so that the agencies and Congress have the best possible information available to them when designing, reviewing, and overseeing AQI fees and operations. This is especially true given the increasing need for fiscal restraint in an environment of tightening discretionary budgets. By conducting a thorough review of AQI program costs and options for redesigning AQI fees, APHIS has taken important steps in identifying and strengthening the link between AQI program costs and fee collections. However, the current AQI fee structure does not (1) recover full costs from some users, as authorized; (2) charge fees to some passengers that APHIS is authorized to charge but chooses not to for policy reasons; and (3) align fees with the program costs to maximize economic efficiency and equity. As of February 2013, the fees APHIS is considering would not fully remedy these issues (partly because of gaps in AQI’s statutory authority and partly because APHIS chooses not to fully exercise the AQI fee authorities), thus requiring APHIS and CBP to continue to rely on appropriated funds to bridge the historical gap of nearly 40 percent between AQI program costs and collections. Similarly, because the reimbursable overtime rates for agriculture inspections are not aligned with personnel costs to perform the inspections and because not all ports consistently charge for those reimbursable services or collect payment in a timely way, a portion of those costs are subsidized by CBP’s appropriation.\nAbsent authority to either charge all pathways for AQI services or to permit cross-subsidization among pathways when setting fees—that is, allowing fees paid by some users to be set to recover the costs of services provided to other users—the AQI program cannot recover its full costs and must continue to rely on appropriated funds. Furthermore, APHIS does not charge fees in all instances in which the authority exists to do so because administrative costs for collecting fees from certain passengers would be high and the statutory authority limits the recovery of such costs through fees assessed on vehicles in which passengers travel (a method CBP uses for some other inspection fees).\nRegular, timely, and substantive fee reviews are especially critical for programs—like AQI—that are mostly or solely fee funded to ensure that fee collections and program costs remain aligned. Although APHIS is to be commended for its in-depth review of the AQI user fees and program costs, until APHIS includes all imputed costs when setting fee rates and CBP ensures that its CMIS cost data accurately reflect program costs at all ports, APHIS will not be able to set fees to recover the full costs of AQI services.\nBecause the fee revenues distributed to each agency are not aligned with costs and funding of the AQI reserve is greater than the level needed to address realistic program risks, CBP relies more heavily on its appropriation to fund AQI costs that could otherwise be funded with AQI fee revenues. APHIS and CBP have not followed their 2005 agreement to allocate fee collections based on each agency’s costs, essentially overfunding APHIS and underfunding CBP.\nFinally, the AQI program is forgoing revenues because CBP and APHIS do not ensure that all fees due are collected. APHIS does not collect railcar fees for the arrival of all railcars in accordance with regulations, and CBP does not use available controls to verify that commercial trucks have paid the AQI fee. Similarly, because CBP does not use available information to verify that all arriving private aircraft and private vessels have valid customs decals, the agency does not have assurance that it is collecting all fees that are due. Until APHIS and CBP improve oversight of these collection processes, they will continue to forgo revenue due the government, which will increase reliance on appropriated funds to cover program costs.", "In light of declining discretionary budgets, to reduce or eliminate the reliance of the AQI program on taxpayer funding, Congress should consider allowing USDA to set AQI fees to recover the aggregate estimated costs of AQI services—thereby allowing the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program.\nCongress should consider amending USDA’s authorization to assess AQI fees on bus companies, private vessels, and private aircraft and include in those fees the costs of AQI services for the passengers on those buses, private vessels, and private aircraft.", "To help ensure that USDA considers full AQI program costs when setting AQI fee rates, we recommend that the Secretary of Agriculture include all imputed costs borne by other federal agencies and attributable to the AQI program, and the Secretary of Homeland Security direct CBP to update and widely disseminate comprehensive guidance to ports on the correct use and review of CMIS codes. Specifically, the guidance should reiterate that a portion of CBP officers’ primary inspection time should be charged to agriculture and cover how, and with what frequency, ports should conduct work studies to determine the correct allocation of staff time.\nCBP should also consider making CMIS training mandatory for CMIS practitioners.\nTo help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, we recommend that the Secretary of Agriculture establish an AQI cruise passenger fee aligned with the costs of inspecting cruise passengers and vessels and collected using the existing processes for collecting cruise passenger customs fees; establish a fee for passenger railcars aligned with the costs of inspecting rail passengers and railcars and collected using the existing processes for collecting passenger railcar customs fees; eliminate caps on the commercial vessel and commercial rail AQI fees; set truck fee rates to recover the costs of AQI services for trucks while maintaining a financial incentive for trucks to use transponders; and recover the costs of AQI services for buses and bus passengers by either establishing a bus passenger fee that is remitted by the bus companies or seeking legislative authority to establish a bus fee that covers the costs of bus passenger inspections.\nTo align reimbursable overtime revenues with the costs of those agriculture inspections, we recommend that the Secretaries of Agriculture and Homeland Security work together to amend overtime regulations for agriculture services so that reimbursable overtime rates that CBP and APHIS charge are aligned with the costs of those services; and the Secretary of Homeland Security ensure that ports consistently charge for agriculture overtime services that are eligible for reimbursement and deny agriculture-related reimbursable overtime inspection services to entities with bills more than 90 days past due, consistent with APHIS regulations.\nTo help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, we recommend that the Secretary of Agriculture charge user fees for AQI permit applications; charge user fees for treatment services; and charge user fees for the costs of monitoring compliance agreements for regulated garbage.\nTo better align the distribution of AQI fee revenues with AQI costs, we recommend that the Secretaries of Agriculture and Homeland Security work together to allocate AQI fee revenues consistent with each agency’s AQI costs, and the Secretary of Agriculture establish an AQI reserve target that is more closely aligned with program needs and risks, based on past experience.\nTo ensure that inspection fees are collected when due, we recommend that the Secretary of Agriculture revise its processes for collecting AQI railcar fees to conform to USDA regulation and the Secretary of Homeland Security establish internal controls to alert personnel when fees are not paid, and use available information to verify that arriving trucks, private aircraft, and private vessels pay applicable inspection user fees.", "We provided a draft of this report to the Secretaries of Agriculture and Homeland Security for their review and comment. We received written comments from USDA and DHS, which are reprinted in appendixes III and IV, respectively. In addition, both agencies provided technical comments, which we incorporated as appropriate.\nDHS concurred with our recommendations and described corrective actions the agency plans to take to implement them.\nUSDA agreed with the majority of the recommendations we made to the Secretary of Agriculture. However, USDA said that with respect to nine of the recommendations, the agency is preparing to initiate notice and comment rulemaking regarding the AQI fees. Therefore, USDA stated, it would be inappropriate to firmly commit to any particular component or a specific amount of fees at this time. USDA commented that, at this time, they cannot agree with our recommendation to establish a fee to recover the costs of AQI services for buses and bus passengers, but that they would work with CBP to assess whether USDA should seek authority to establish a bus fee that covers the cost of bus passenger inspections and whether such a fee would be practical. As we stated in our report, we recognize that USDA may not currently have the authority to assess this fee on the vehicles rather than the passenger. We continue to believe that APHIS should recover the costs of AQI services for bus passengers, as authorized, or seek legislative authority to establish a bus fee that covers the costs of bus passenger inspections. We continue to encourage APHIS and CBP to explore options for implementing such a fee in a way that would minimize the administrative burden of the fee.\nUSDA disagreed with our recommendation to charge user fees for the costs of monitoring compliance agreements for regulated garbage, stating that compliance agreements save money because the agency does not need to provide a service, and that charging a fee to those that provide the service would be a disincentive to enter into such an agreement. However, APHIS regulations state that any person engaged in the business of handling or disposing of garbage must first enter into a compliance agreement with APHIS. USDA further asserted that recovering the costs of compliance agreements through the current AQI fees is fair and simple. However, the costs of compliance agreements being paid through AQI fees assessed on cargo pathways (air, vessels, trucks, and rail) benefit entities that handle garbage for users that do not pay AQI fees, including private aircraft and private vessels. We continue to believe that the users of these specialized services should be charged directly, consistent with Circular A-25, promoting efficiency and equity by ensuring that the beneficiaries of the service pay for the service.\nWe are sending copies of this report to the Secretaries of Agriculture and Homeland Security, the appropriate congressional committees, and other interested parties. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov.\nShould you or your staff have any questions about this report, please contact me on (202) 512-6806 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix V.", "To analyze the Agricultural Quarantine Inspection (AQI) fees, we assessed (1) the AQI fees currently charged and how, if at all, the proposed revisions would improve efficiency, equity, and revenue adequacy, and reduce administrative burden; (2) how, if at all, changes to the allocation of fee revenues between the Department of Agriculture (USDA) and the Department of Homeland Security (DHS) could improve efficiency, equity, and revenue adequacy, and reduce administrative burden; and (3) the extent to which Animal and Plant Health Inspection Service (APHIS) and U.S. Customs and Border Protection (CBP) fee collection processes provide reasonable assurance that all AQI fees due are collected.\nTo address these objectives we analyzed the AQI fees using principles of effective user fee design—specifically, efficiency, equity, revenue adequacy, and administrative burden—on which we previously reported. These principles draw on various laws and federal guidance. To assess the current AQI fees and proposed revisions, we examined documentation provided by APHIS related to the activity-based cost model APHIS and the contractor used to analyze AQI costs and the AQI fee structure; observed a demonstration of CostPerform, the software used for the activity-based costing; and analyzed cost and fee revenue data and documentation provided by both APHIS and CBP. We also interviewed APHIS officials responsible for the review and fee-setting process. To assess the reliability of data from the activity-based costing model, we reviewed whether costs were ascribed to activities in a logical manner and discussed the reliability of the data with knowledgeable agency officials. Based on these assessments, we determined that the AQI cost data from the activity-based costing model were sufficiently reliable for our purposes. We reviewed the analysis of the economic impact of proposed changes to fee rates, which was performed as part of the fee review. This analysis evaluated the economic impact of proposed fee scenarios on both the U.S. economy and selected industries to determine if any fee scenarios considered would create an unreasonable burden on these industries or consumers. Specifically, a contractor analyzed short and long-run economic impacts by evaluating the impact on the price of individual goods and services, corresponding changes in U.S. consumer purchases, and the resulting impact throughout the U.S. economy. All scenarios showed economic impacts that were very small relative to the size of the affected sectors and had an overall minimal impact on the national economy. Because the contractor found the effects to be minimal, it did not apply behavioral responses to changes in fee prices to the proposed fees.\nTo examine how changes to the allocation of fee revenue could improve efficiency, equity, and revenue adequacy, and reduce administrative burden, we compared the existing and proposed fee structures to applicable statutes and regulations and to criteria from GAO’s User Fee Design Guide. We used APHIS and CBP data to analyze AQI costs and fee collections. We also discussed fee design options with APHIS and CBP officials. Further, we analyzed the extent to which CBP attributes a portion of primary inspection time to agriculture-related cost accounting codes by analyzing data from CBP’s cost management information system. In addition, to examine how APHIS and CBP fee collection processes have ensured that all AQI fees are collected, we interviewed APHIS and CBP officials, examined documents related to fee collection procedures, and observed fee collection processes at ports of entry. To assess the reliability of the CBP and APHIS data, we analyzed the data for internal consistency and discussed the data with CBP and APHIS officials. We also compared the APHIS data on collections and obligations of AQI fee revenue and AQI reserve balances to another published source of this information and found them to be consistent. Based on these assessments, we determined that the CBP and APHIS data were sufficiently reliable for our purposes.\nTo address all of these objectives, we visited a nonprobability sample of seven ports of entry to observe CBP inspection procedures and discuss issues related to AQI user fees. We determined that, for our purposes and considering resource constraints, seven is a sufficient number of site visit ports. We visited the ports of Blaine, Washington; Miami, Florida; Otay Mesa in San Diego, California; Port Huron, Michigan; San Diego, California; San Ysidro, California; and Seattle, Washington. We selected these ports of entry based on entry pathways, particularly those that charge fees, such as commercial rail and commercial vessels; volume of entries; diversity of inspection challenges; and geographic proximity to each other. We also visited APHIS Plant Protection and Quarantine (PPQ) offices in Miami, San Diego, and Seattle to understand the AQI- related work being conducted by APHIS in the field. We determined that a nonprobability sample was sufficient for our purposes because we used the site visit information to understand commonalities and differences in inspection practices and fee collection processes at various ports and for illustrative examples of how fee design and implementation affect equity, efficiency, revenue adequacy, and administrative burden. Because we used a nonprobability sample, the information we obtained from these visits cannot be generalized to other CBP ports of entry. On the site visits, we interviewed CBP and APHIS officials and observed agriculture inspections and AQI fee collection processes. We also interviewed AQI program stakeholders, including ship agents and customs brokers. We conducted a content analysis on our site visit interviews and observations to identify common themes.\nWe conducted this performance audit from April 2012 to March 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "", "", "In addition to the contact named above, Jacqueline M. Nowicki, Assistant Director, and Susan Etzel, Senior Analyst in Charge, managed all aspect of this assignment. Laurel Plume and Alexandra Edwards made key contributions to this report. Michelle Cooper, Kate Lenane, Felicia Lopez, Mary Denigan-Macauley, Rebecca Gambler, Sarah McGrath, Donna Miller, Cynthia Saunders, Anne Stevens, and Jack Warner also made important contributions." ], "depth": [ 1, 1, 2, 2, 3, 2, 1, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_title h2_title h3_title", "h0_full h3_full h2_full", "", "", "h0_full", "h1_title", "h1_full", "h2_title", "h2_full", "h2_full", "h2_full h1_full", "h4_full", "", "h4_full", "h0_full h3_full h2_full h4_full", "", "", "", "", "", "" ] }	{ "question": [ "What did GAO's analysis of AQI fee and cost data reveal?", "What is the cause of this gap?", "How is APHIS considering changing their fee structure?", "How can APHIS and CBP remedy this revenue gap?", "To what extent is the CBP-APHIS fee collection agreement working as intended?", "What was the fee distribution agreement?", "How does CBP make up for the difference in costs?", "How does APHIS use AQI collections to sustain a fee reserve?", "Why is the 5-month maximum target unrealistic?", "How effective are APHIS's and CBP's collection processes?", "What is a flaw in APHIS's collection process regarding railcars?", "What is a flaw in CBP's collection process?", "How do these flaws negatively affect the program goals?", "How does the AQI program guard against agricultural threats?", "How is the AQI program funded?", "What was GAO asked to examine?", "What does this report cover?", "How did GAO source their data for this report?", "What recommendations is GAO making?", "What did GAO recommend regarding Congressional action?", "To what extent did USDA and DHS agree with the recommendations?" ], "summary": [ "GAO's analysis of the Agricultural Quarantine Inspection (AQI) fee and cost data revealed a more than $325 million gap between fee revenues and total program costs in fiscal year 2011, or 38 percent of AQI program costs.", "The program, which is co-administered by the Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) and Department of Homeland Security (DHS) Customs and Border Patrol (CBP), has a gap for several reasons: 1) APHIS's authority does not permit it to charge all persons seeking entry to the United States (e.g., pedestrians) and does not permit it to charge the costs of those inspections to others; 2) APHIS has chosen not to charge some classes of passengers, citing administrative fee collection difficulties; 3) CBP does not charge a portion of all primary inspections to agriculture functions, as required by CBP guidance; 4) APHIS does not consider all imputed costs (that is, costs incurred by other agencies on behalf of the AQI program) when setting fees; and 5) the allowable rates for overtime services are misaligned with the personnel costs of performing those services.", "APHIS is considering fees that would better align many, but not all, AQI fees with related inspection activity costs.", "APHIS and CBP can take additional steps to better align fees with costs; however, additional authority will be needed to fully recover all program costs.", "Contrary to APHIS-CBP agreements and APHIS policy, the distribution of fee collections between CBP and APHIS is significantly misaligned with AQI costs.", "In 2005, CBP and APHIS agreed to divide AQI collections in proportion to each agency's share of AQI costs.", "CBP bridges the gap between its AQI costs and its share of the fee revenues with its annual appropriation.", "In keeping with its authorities and with good practices for fee-funded programs, APHIS carries over a portion of AQI collections from year to year to maintain a shared APHIS-CBP reserve to provide a cushion against unexpected declines in fee collections. APHIS's stated goal is to maintain a 3- to 5-month reserve but the preliminary fee proposal would fund the reserve at a level higher than the 5 month maximum.", "Further, the 5-month maximum target balance is the amount officials say they would need to completely shut down the program, and therefore does not reflect realistic program risks. Further, this is more than the amount required to cover shortfalls during both the 2009 financial crisis and the events of September 11, 2001, and would increase reliance on appropriated funds to cover current program costs.", "APHIS's and CBP's collection processes do not provide reasonable assurance that all AQI fees due are collected.", "Specifically, APHIS does not collect AQI fees for railcars consistent with its regulations, resulting in a revenue loss of $13.2 million in 2010.", "Further, CBP does not verify that it collects fees due for every commercial truck, private aircraft, and private vessel, resulting in an unknown amount of revenue loss annually. CBP has tools available to help remedy these issues but does not require their use.", "Until APHIS and CBP improve oversight of these collection processes, they will continue to forgo revenue due the government, which will increase reliance on appropriated funds to cover program costs.", "The AQI program guards against agriculture threats by inspecting international passengers and cargo at U.S. ports of entry, seizing prohibited material, and intercepting foreign agricultural pests.", "The program, which cost $861 million in 2011, is funded from annual appropriations and user fees. GAO has reported several times on the need to revise the fees to cover program costs as authorized.", "GAO was asked to examine issues related to the AQI fees.", "This report examines 1) the fees currently charged and proposed revisions; 2) how fee revenues are allocated between the agencies; and 3) the extent to which fee collection processes provide reasonable assurance that all AQI fees due are collected.", "To do this, GAO reviewed AQI fee and cost data, and relevant laws, regulations, and policies; observed inspections at ports of entry; and interviewed APHIS and CBP officials.", "GAO is making a number of recommendations aimed at more fully aligning fees with program costs, aligning the division of fees between APHIS and CBP with their respective costs, and ensuring that fees are collected when due.", "Further, GAO suggests Congress amend the AQI fee authority to allow the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program.", "USDA and DHS generally agreed with the recommendations." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 1, -1, 3, -1, 0, 0, -1, -1, -1, -1, 2, 3, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0, 0, 4, 4, 4 ] }
CRS_RL34665	{ "title": [ "", "Recent Developments", "Background", "Overview of the International Criminal Court", "The U.S. Position on the ICC", "The ICC and Other International Courts and Tribunals", "Congressional Interest in ICC Activities in Africa", "ICC Cases and Investigations in Africa", "Libya", "Kenya", "Background on ICC Involvement", "U.S. Reactions", "Sudan", "The U.S. Position on U.N. Security Council Resolution 1593", "Ahmad Muhammad Harun and Ali Kushayb", "Darfur Rebel Commanders", "The Case Against Bashir", "Genocide Accusations63", "Sudanese Reactions", "Regional Reactions", "U.S. Reactions", "Potential Deferral of the Bashir Prosecution and Security Council Considerations in July 2008: Context and Background", "Uganda: The Lord's Resistance Army", "Democratic Republic of Congo (DRC)", "Thomas Lubanga Dyilo", "Germain Katanga and Mathieu Ngudjolo Chui", "Bosco Ntaganda", "Callixte Mbarushimana", "Central African Republic (CAR)", "Jean-Pierre Bemba Gombo", "Issues Raised by the ICC's Actions in Africa", "African Union Objections", "Impact on Deterrence", "Accusations of Bias", "Justice vs. Peace?", "Appendix. African States That Are ICC Parties and Have Concluded an \"Article 98 Agreement\" with the United States" ], "paragraphs": [ "", "On June 27, ICC judges issued arrest warrants for Libyan leader Muammar al Qadhafi, his son Sayf al Islam al Qadhafi, and intelligence chief Abdullah al Senussi, having found \"reasonable grounds\" to believe that they are responsible for crimes against humanity, including murder and \"persecution.\" (See \" Libya ,\" below.) The trial of Congolese militia leader Thomas Lubanga Dyilo, in ICC custody since 2006, is expected to bring the Court's first final verdict before year's end. The six Kenyan suspects sought by the ICC, most of them senior government officials, appeared voluntarily before the Court in April 2011. Charges against them have not yet been confirmed by ICC judges. In March 2011, ICC judges confirmed war crimes charges sought by the Prosecutor against two Darfur rebel commanders, paving the way for a trial (see \" Darfur Rebel Commanders ,\" below). On June 23, 2011, the ICC Prosecutor requested authorization from ICC judges to open a formal investigation into war crimes and crimes against humanity following Côte d'Ivoire's disputed presidential run-off vote in November 2010. A U.N. investigation concluded in June that \"serious violations of human rights and international humanitarian law were committed by different actors,\" potentially amounting to crimes under ICC jurisdiction. Côte d'Ivoire is not a state party, but its government submitted it to ICC jurisdiction in 2003. The government of newly inaugurated President Alassane Ouattara has also accepted ICC jurisdiction, and signed a cooperation agreement with the ICC on June 28.", "", "The Statute of the ICC, also known as the Rome Statute (the Statute), entered into force on July 1, 2002, and established a permanent, independent Court to investigate and bring to justice individuals who commit war crimes, crimes against humanity, and genocide. The ICC's jurisdiction extends over crimes committed since the entry into force of the Statute. The ICC is headquartered in The Hague, Netherlands. As of March 2010, 111 countries were parties to the Statute. The United States is not a party to the ICC. The ICC's Assembly of States Parties provides administrative oversight and other support for the Court, including adoption of the budget and election of 18 judges, a Prosecutor (currently Luis Moreno-Ocampo from Argentina), and a Registrar (currently Bruno Cathala from France).\nAs outlined in the Statute, situations may be referred to the ICC in one of three ways: by a state party to the Statute, the ICC Prosecutor, or the United Nations (U.N.) Security Council. Currently, four situations have been publicly referred to the Prosecutor. The governments of three countries (all parties to the ICC)—Uganda, the Democratic Republic of Congo, and the Central African Republic—have referred situations to the Prosecutor. The U.N. Security Council has referred one situation (Darfur, Sudan) to the Prosecutor. One situation, Kenya, is under investigation following an application by the ICC Prosecutor. At least six others remain under consideration.\nThe ICC is considered a court of last resort—it will only investigate or prosecute cases of the most serious crimes perpetrated by individuals (not organizations or governments), and then, only when national judicial systems are unwilling or unable to handle them. This principle of admissibility before the Court is known as \"complementarity.\" Although many domestic legal systems grant sitting heads of state immunity from criminal prosecution, the Statute grants the ICC jurisdiction over any individual, regardless of official capacity.", "The United States is not a party to the Rome Statute. The United States signed the Statute on December 31, 2000, but at the time, the Clinton Administration had objections to it and said it would not submit it to the Senate for its advice and consent to ratification. The Statute was never submitted to the Senate. In May 2002, the Bush Administration notified the United Nations that it did not intend to become a party to the ICC, and that there were therefore no legal obligations arising from the signature. The Bush Administration opposed the Court and renounced any U.S. obligations under the treaty. Objections to the Court were based on a number of factors, including\nthe Court's assertion of jurisdiction (in certain circumstances) over citizens, including military personnel, of countries that are not parties to the treaty; the perceived lack of adequate checks and balances on the powers of the ICC prosecutors and judges; the perceived dilution of the role of the U.N. Security Council in maintaining peace and security; and the ICC's potentially chilling effect on America's willingness to project power in the defense of its interests.\nThe Bush Administration concluded bilateral immunity agreements (BIAs), known as \"Article 98 agreements,\" with most states parties to exempt U.S. citizens from possible surrender to the ICC. These agreements are named for Article 98(2) of the Statute, which bars the ICC from asking for surrender of persons from a state party that would require it to act contrary to its international obligations.\nThe U.S. government is prohibited by law from providing material assistance to the ICC in its investigations, arrests, detentions, extraditions, or prosecutions of war crimes, under the American Servicemembers' Protection Act of 2002, or ASPA ( P.L. 107-206 , Title II). The prohibition covers, among other things, the obligation of appropriated funds, assistance in investigations on U.S. territory, participation in U.N. peacekeeping operations unless certain protections from ICC actions are provided to specific categories of personnel, and the sharing of classified and law enforcement information. Section 2015 of ASPA (22 U.S.C. 7433, known as the \"Dodd Amendment\"), however, provides an exception to these provisions:\nNothing in this title shall prohibit the United States from rendering assistance to international efforts to bring to justice Saddam Hussein, Slobodan Milosevic, Osama bin Laden, other members of Al Qaeda, leaders of Islamic Jihad, and other foreign nationals accused of genocide, war crimes or crimes against humanity.\nIn her confirmation hearing as Secretary of State before the Senate Foreign Relations Committee in January 2009, Hillary Clinton said, \"Whether we work toward joining or not, we will end hostility toward the ICC and look for opportunities to encourage effective ICC action in ways that promote U.S. interests by bringing war criminals to justice.\" Speaking in Nairobi, Kenya, in August 2009, Secretary of State Clinton said that it was a \"great regret\" that the United States was not a party to the ICC, but that the United States has supported the Court and \"continue[s] to do so.\" Obama Administration officials have recently indicated, amid a wider review of U.S. policy toward the Court, that the Administration is \"considering ways in which we may be able to assist the ICC, consistent with our law, in investigations involving atrocities.\" A January 2010 review by the Department of Justice concluded that diplomatic or \"informational\" support for \"particular investigations or prosecutions\" by the ICC would not violate existing laws.\nIn November 2009, the United States began formally attending meetings of the ICC's Assembly of States Parties as an observer nation, and in May 2010 sent a delegation led by Ambassador-at-Large for War Crimes Issues Stephen Rapp and State Department Legal Advisor Harold Koh to the Review Conference of the Rome Statute in Kampala, Uganda. Administration officials reiterated at the Conference the United States' intention to support current cases before the ICC. In addition, Rapp stated that Administration officials had \"renewed our commitment to the rule of law and capacity-building projects in which we have ongoing in each\" African country in which ICC prosecutions are taking place. At the same time, Rapp averred that the Administration was \"nowhere near that point\" of submitting the Rome Statute for ratification. The United States voted in favor of U.N. Security Council Resolution 1970, referring the situation in Libya to the ICC, the first time it has done so.", "The post-World War II Nuremberg and Tokyo tribunals to prosecute Nazi and Japanese leaders for crimes against peace, war crimes, and crimes against humanity established precedent for other ad hoc international courts and tribunals, such as the International Criminal Tribunals for the former Yugoslavia and for Rwanda. In addition, the United Nations authorized the creation of a Special Court for Sierra Leone (SC-SL) to prosecute those with the greatest responsibility for serious violations of international humanitarian law and domestic law committed in the territory of Sierra Leone since November 30, 1996. Separate judicial mechanisms have also been set up for cases involving East Timor (Timor-Leste) and Cambodia. Further, the U.N. Security Council authorized establishment of a Special International Tribunal for Lebanon in 2007, which began functioning in March 2009.\nThese courts and tribunals are distinct from the ICC. While established by the U.N. Security Council to address allegations of crimes against humanity in various countries, these tribunals were case-specific, limited in jurisdiction, and temporary. By contrast, the ICC was established by multilateral treaty and is a permanent, international criminal tribunal. It is not a U.N. body.\nThe International Court of Justice (ICJ), also located in The Hague, is the principal judicial organ of the United Nations. The ICJ does not prosecute individuals; its role is to settle, in accordance with international law, legal disputes submitted to it by states. Only states may submit cases for consideration, although the ICJ will also give advisory opinions on legal questions when requested to do so by authorized international organizations.", "Members of Congress have taken a range of positions on the ICC with regard to Africa. Many in Congress are concerned about massive human rights violations on the continent, and some see the ICC as a possible means of redress for these crimes. At the same time, many Members oppose the Court on jurisdictional and other grounds. For example, several pieces of draft legislation introduced during the 111 th Congress, such as H.R. 5351 (Ros-Lehtinen), S.Con.Res. 59 (Vitter), and H.Con.Res. 265 (Lamborn), expressed broad objections to the ICC and to U.S. cooperation with it. S.Con.Res. 71 (Feingold) stated that it is in \"the United States national interest\" to help \"prevent and mitigate acts of genocide and other mass atrocities against civilians,\" but did not explicitly reference the ICC.\nIn the 112 th Congress, S.Res. 85 (Menendez), agreed to in the Senate on March 1, 2011, welcomes the U.N. Security Council referral of Libya to the ICC. Draft legislation introduced during the 111 th Congress referenced the ICC in connection with human rights abuses committed in the Democratic Republic of Congo and by the Lord's Resistance Army in central Africa, and in connection with the global use of child soldiers. Additionally, there has been particular congressional interest in the ICC's work related to Darfur.", "The ICC Prosecutor has opened cases against 26 individuals in connection with five African countries. Twenty-five of these remain open; the 26 th , against Darfur rebel leader Bahar Idriss Abu Garda, was dismissed by judges, though the prosecutor may attempt to submit new evidence in an attempt to re-open it. The cases stem from investigations into violence in Libya, Kenya's post-election unrest in 2007-2008, rebellion and counter-insurgency in the Darfur region of Sudan, the Lord's Resistance Army insurgency in central Africa, civil conflict in eastern Democratic Republic of Congo (DRC), and a 2002-2003 conflict in the Central African Republic. The Prosecutor is also examining 2010-2011 violence in Côte d'Ivoire, a 2009 military crackdown on opposition supporters in Guinea, and inter-communal violence in central Nigeria, but has not opened formal investigations or opened cases with regard to these situations.\nUganda, DRC, CAR, Kenya, Nigeria, and Guinea are states parties to the ICC. Sudan, Libya, and Côte d'Ivoire are not. ICC jurisdiction in Sudan and Libya stems from U.N. Security Council actions, while jurisdiction in Côte d'Ivoire was granted by virtue of a declaration submitted by the Ivorian Government on October 1, 2003, which accepted the jurisdiction of the Court as of September 19, 2002. Five suspects—four Congolese nationals and one Rwandan—are currently in ICC custody. The ICC Prosecutor has sought summonses, rather than arrest warrants, in connection with attempted prosecutions of Darfur rebel commanders and of Kenyan suspects. The Prosecutor has not secured any convictions to date.", "On June 27, ICC judges issued arrest warrants for Libyan leader Muammar al Qadhafi, his son Sayf al Islam al Qadhafi, and intelligence chief Abdullah al Senussi, having found \"reasonable grounds\" to believe that they are responsible for crimes against humanity, including murder and \"persecution.\" In his application for the warrants, filed on May 16, the Prosecutor alleged that Qadhafi \"conceived and implemented, through persons of his inner circle\" such as Sayf al Islam and Al Senussi, \"a plan to suppress any challenge to his absolute authority through killings and other acts of persecution executed by Libyan Security Forces. They implemented a State policy of widespread and systematic attacks against a civilian population, in particular demonstrators and alleged dissidents.\" The ICC Prosecutor has subsequently suggested he may seek additional charges related to sexual assault. Some observers have argued that the warrants make it less likely that Qadhafi will agree to relinquish power, while others argue that they could deter further abuses. The Qadhafi government has denied accusations of rights abuses.\nOn February 26, 2011, U.N. Security Council Resolution 1970 referred the situation in Libya since February 15, 2011, to the ICC. This action provides the ICC with jurisdiction over war crimes, crimes against humanity, and genocide occurring in Libya since that date, even though Libya is not a state party to the Court. The United States voted in favor of the resolution, the first time it has done so in referring an issue to the ICC. The Prosecutor indicated in opening a formal investigation in March that he would focus on the role of the government and security forces in ongoing violence, but warned that members of armed opposition groups could also be held criminally liable for abuses.\nICC President Sang-Hyun Song suggested in April that the Libya investigation had placed significant pressure on the Court's budget, which could potentially impede the Court's ability to advance its existing prosecutions or examinations of new situations.", "The Prosecutor's request to open an investigation in Kenya was approved by ICC judges in March 2010. Kenya is a party to the ICC, but it was the first instance in which ICC judges authorized an investigation based on a recommendation from the Prosecutor, as opposed to a state referral or U.N. Security Council directive. The investigation was related to post-election violence in Kenya in 2007-2008, in which over 1,000 individuals were killed, hundreds of thousands displaced, and a range of other abuses, including sexual violence, allegedly committed. A government of national unity was formed following the disputed elections, and the issue of accountability for abuses has remained a sensitive one in Kenyan politics. The Prosecutor contends that high-ranking officials planned and instigated large-scale abuses, a view supported by independent investigations into the violence.\nOn December 15, 2010, the Prosecutor presented two cases, against a total of six individuals, for alleged crimes against humanity. The Prosecutor applied to ICC judges for summonses, rather than arrest warrants, stating that summonses would sufficient to ensure the suspects' appearance before the Court. Judges issued the summonses in March 2011, and in April the six suspects appeared voluntarily before the court, where they each denied the accusations against them.\nThe suspects named in the first case are William Ruto, Member of Parliament and former Minister of Education; Henry Kosgey, Minister of Industrialization; and Joshua Arap Sang, a radio journalist. They are each accused of three counts of crimes against humanity, related to murder, forcible population transfers, and \"persecution.\" Those named in the second case are Francis Muthaura, head of the public service, secretary to the Cabinet, and chairman of the National Security Advisory Committee; Uhuru Kenyatta, deputy prime minister and minister of finance (and the son of Kenya's founding leader Jomo Kenyatta); and Mohamed Hussein Ali, former commissioner of the Kenyan police. They are each accused of five counts of crimes against humanity, related to murder, forcible population transfers, rape, \"persecution,\" and \"other inhumane acts.\"\nThe suspects in the first case are associated with Prime Minister Raila Odinga, while those in the second case are associated with President Mwai Kibaki. The prosecutions, which have targeted the upper echelons of political power, are an extremely sensitive issue in Kenya with potential implications for the country's stability, inter-ethnic relations, and elections scheduled for 2012. The ICC Prosecutor appeared to acknowledge this sensitivity by naming suspects of different ethnic groups and political loyalties. Polls indicate that a majority of Kenyans support ICC prosecutions over domestic trials. Still, the case has sparked a backlash within Kenya's political class despite earlier support for ICC involvement. Although Odinga has repeatedly encouraged the ICC to pursue its cases (which are widely viewed as more detrimental to his potential political rivals than to him), President Kibaki has criticized the ICC cases and called for trials to be held within Kenya instead. To date, none of the suspects targeted by the ICC have been charged in Kenya, though they were reportedly questioned by public prosecutors in July 2011. In December 2010, parliamentarians passed legislation urging Kenya to withdraw from the Court. (According to some legal analysts, a withdrawal would not necessarily preclude ICC jurisdiction over crimes committed during the period when Kenya was a state party.) Efforts by Kenya's government and the African Union (AU) to push for a deferral of ICC prosecutions by the U.N. Security Council in the interest of peace and security have been unsuccessful to date. Kenyan government legal filings to ICC judges that challenge the cases' admissibility have been similarly unsuccessful.\nThe Kenyan government initially pledged to cooperate with ICC actions, although senior officials have been accused by some observers and the ICC Prosecutor as attempting to stonewall investigations. Some Kenyans are reportedly concerned that prosecutions could stir up the same ethnic tensions that led to the post-election turmoil, while others fear that a lack of prosecutions could lead to future electoral violence. Other concerns center around the protection and relocation of witnesses and victims, who have already reportedly been subjected to intimidation and threats. In August 2010, Kenya was criticized by ICC advocates when it welcomed Sudanese President Bashir (see \" The Case Against Bashir ,\" below) to a celebration of the country's adoption of a new constitution.", "ICC involvement in Kenya follows protracted domestic wrangling over how to ensure justice for victims of the electoral violence without upsetting the government's fragile power-sharing agreement. An official investigation into the post-election violence, known as the Waki Commission, identified potential suspects and recommended the establishment of an independent Kenyan tribunal with international participation. In December 2008, the government accepted the Waki Commission's findings and agreed that it would refer the situation to the ICC if the Commission's recommendations were not implemented. Donors, including the United States and the European Union, expressed support for an independent domestic tribunal, and the Kenyan parliament was expected to pass legislation establishing such a tribunal by March 2009. In July 2009, however, legislation had yet to be passed, prompting chief mediator Koffi Annan, the former U.N. Secretary-General, to submit a list of individuals suspected of orchestrating the violence to the ICC. The Kenyan Cabinet subsequently announced that it would not establish a special tribunal, but would instead convene a Truth, Justice and Reconciliation Commission (TJRC) which would not prosecute suspects but rather to oversee reforms in the judiciary, police, and other investigatory bodies that may, in turn, deal with the issue.", "The United States initially expressed support for domestic prosecutions of suspects in post-election violence, but has supported ICC involvement in the absence of domestic action. Upon the Prosecutor's announcement of six suspects, President Obama stated, \"I urge all of Kenya's leaders, and the people whom they serve, to cooperate fully with the ICC investigation and remain focused on implementation of the reform agenda and the future of your nation.\" In February, U.S. Deputy Secretary of State James Steinberg said, \"We are very committed to the principle of accountability and the avoidance of impunity and right now the only mechanism to pursue that is through the ICC.\" He added, \"That is the choice the Kenyan government made when both the executive branch and the legislature chose not to pursue a domestic approach.\" The United States opposed U.N. Security Council deferral of the ICC prosecutions in Kenya.", "ICC jurisdiction in Sudan was conferred by the U.N. Security Council, as Sudan is not a party to the Court. U.N. Security Council Resolution 1593, in 2005, referred the situation in Darfur, dating back to July 1, 2002, to the ICC Prosecutor. The Resolution was adopted by a vote of 11 in favor, none against, and with four abstentions—the United States, China, Algeria, and Brazil. While Sudan is not a party to the ICC and has not consented to its jurisdiction, the Court argues that the Resolution is binding on all U.N. member states, including Sudan. Under the ICC Statute, the ICC was authorized, but not required, to accept the case.\nThe Security Council had previously, in September 2004, established an International Commission of Inquiry on Darfur under Resolution 1564, maintaining that the Sudanese government had not met its obligations under previous Resolutions. In January 2005, the Commission reported that it had compiled a confidential list of potential war crimes suspects and \"strongly recommend[ed]\" that the Security Council refer the situation to the ICC. Following the Council's referral, the ICC Prosecutor received the document archive of the Commission of Inquiry and the Commission's sealed list of individuals suspected of committing serious abuses in Darfur, though this list is not binding on the selection of suspects. The Office of the Prosecutor initiated its own investigation in June 2005. The Sudanese government also created its own special courts for Darfur in an apparent effort to stave off the ICC's jurisdiction; however, the courts' efforts were widely criticized as insufficient.", "In statements made in July and September 2004, respectively, Congress and the Bush Administration declared that genocide was taking place in Darfur. The Administration supported the formation of the International Commission of Inquiry for Darfur. However, the Bush Administration preferred a special tribunal in Africa to be the mechanism of accountability for those who committed crimes in Darfur. It objected to the U.N. Security Council referral to the ICC because of its stated objections to the ICC's jurisdiction over nationals of states not party to the Rome Statute. Still, the United States had at one time supported a version of the Rome Statute that would have allowed the U.N. Security Council to refer cases involving non-states parties to the ICC, but would not have allowed other states or the Prosecutor to refer cases.\nThe United States abstained on Resolution 1593 (which is not equivalent to a veto in the Security Council) because the Resolution included language that dealt with the sovereignty questions of concern and essentially protected U.S. nationals and other persons of non-party States other than Sudan from prosecution. The abstention did not change the fundamental objections of the Bush Administration to the ICC. At the same time, the Bush Administration supported international cooperation to stop atrocities occurring in Darfur.", "In May 2007, the ICC publicly issued arrest warrants for former Interior Minister Ahmad Muhammad Harun and Ali Muhammad Ali Abd-Al-Rahman (Ali Kushayb), an alleged former Janjaweed leader in Darfur. They were each accused of over 40 counts of war crimes and crimes against humanity in connection with abuses allegedly committed in Darfur in 2003 and 2004. The Sudanese government refused to comply with either warrant. Although news reports suggest Sudanese authorities arrested Kushayb in October 2008, Sudanese officials stated they would conduct their own investigation into his alleged crimes in Darfur, and did not indicate that they planned to turn him over to the ICC. In May 2009, Harun was appointed governor of South Kordofan State. In June 2010, the ICC Pre-Trial Chamber informed the U.N. Security Council that \"the Republic of Sudan is failing to comply with its cooperation obligations stemming from Resolution 1593 (2005) in relation to the enforcement of the warrants of arrest issued by the Chamber against Ahmad Harun and Ali Kushayb.\"", "In December 2007, the ICC Prosecutor announced the opening of a new investigation into the targeting of peacekeepers and aid workers in Darfur. In November 2008, the Prosecutor submitted a sealed case against three alleged rebel commanders in Darfur whom he accused of committing war crimes during an attack on the town of Haskanita on September 29, 2007. Twelve African Union peacekeepers were allegedly killed and eight injured in the attack.\nIn May 2009, ICC pretrial judges issued a summons to one of the three suspects, Bahar Idriss Abu Garda, to appear before the Court. Abu Garda reported to The Hague voluntarily, where he denied the accusations of involvement in the Haskanita incident. In February 2010, ICC judges declined to confirm the Prosecutor's case against Abu Garda, contending that there was insufficient evidence to establish that he could be held criminally responsible for the attack on peacekeepers.\nIn June 2010, two other rebel commanders sought by the Prosecutor, Abdallah Banda Abakaer Nourain and Saleh Mohammed Jerbo Jamus, voluntarily surrendered to the Court. Their names had not previously been made public. Banda, a former military commander in the rebel Justice and Equality Movement (JEM), and Jerbo, a former leader in the Sudan Liberation Movement (SLM)-Unity faction, each face three counts of war crimes related to \"violence to life,\" intentionally directing attacks against a peacekeeping mission, and pillaging. On March 7, 2010, ICC judges confirmed the charges against Banda and Jerbo, paving the way for a trial.", "On March 4, 2009, ICC judges issued an arrest warrant for Sudanese President Omar Hassan al Bashir. The warrant holds that there are \"reasonable grounds\" to believe Bashir is criminally responsible for five counts of crimes against humanity and two counts of war crimes, referring to alleged attacks by Sudanese security forces and pro-government militia in the Darfur region of Sudan during the government's six-year counter-insurgency campaign. The ICC warrant states that there are reasonable grounds to believe attacks against civilians in Darfur were a \"core component\" of the Sudanese government's military strategy, that such attacks were widespread and systematic, and that Bashir acted \"as an indirect perpetrator, or as an indirect co-perpetrator.\" In his application for an arrest warrant, filed in July 2008, the ICC Prosecutor affirmed that while Bashir did not \"physically or directly\" carry out abuses, \"he committed these crimes through members of the state apparatus, the army, and the Militia/Janjaweed\" as president and commander-in-chief of the Sudanese armed forces.\nThe arrest warrant is not an indictment; under ICC procedures, charges must be confirmed at a pre-trial hearing. The decision to issue a warrant is expected to take into account whether there are reasonable grounds to believe that a suspect committed crimes as alleged by the Prosecutor and whether a warrant is necessary to ensure the suspect's appearance in court. Although many domestic legal systems grant sitting heads of state immunity from criminal prosecution, the Rome Statute grants the ICC jurisdiction regardless of official capacity.\nHuman rights organizations hailed the warrant, the first issued by the ICC against a sitting head of state, as an important step against impunity. Many governments, including France, Germany, Canada, the United Kingdom, and Denmark, and the European Union, called on Sudan to cooperate. Reactions by African and Middle Eastern governments were more critical, with many condemning the ICC or calling for the prosecution to be deferred. The governments of Russia and China also expressed opposition.\nThe ICC urged \"all States, whether party or not to the Rome Statute, as well as international and regional organizations,\" to \"cooperate fully\" with the warrant. However, most observers agree that there is little chance of Bashir being arrested in Sudan. One analysis noted that while Bashir may risk arrest if he travels overseas, \"no one expects Sudan to hand over Bashir, who has been executive ruler of the country for more than 15 years, absent major political changes in the country.\" Sudanese government officials have rejected the ICC's jurisdiction, though some legal experts argue that Sudan is obligated as a U.N. member state to cooperate because the warrant stems from a U.N. Security Council resolution under Chapter VII. In June 2011, the ICC Prosecutor argued in an appearance before the Security Council that \"crimes against humanity and genocide continue unabated in Darfur\" at Bashir's behest.", "In his application for an arrest warrant in July 2008, the ICC Prosecutor accused Bashir of three counts of genocide, making the Sudanese president the first individual to be accused of this crime before the Court. The Prosecutor alleged that Bashir \"intends to destroy in substantial part the Fur, Masalit and Zaghawa ethnic groups as such\" through coordinated attacks by government troops and Janjaweed militia. In 2009, ICC judges found, by a ruling of two-to-one, that the Prosecutor had \"failed to provide reasonable grounds to believe that the Government of Sudan acted with specific intent\" to destroy these groups. The Prosecutor appealed, and on July 12, 2010, ICC judges issued a second warrant for Bashir, this time citing three counts of genocide. The second warrant does not replace, revoke, or otherwise alter the first warrant, which also remains in effect.\nMany human rights advocates welcomed the attempt to bring genocide charges. However, the formulation of the Prosecutor's accusation has drawn some criticism. The U.N. Commission of Inquiry concluded in its January 2005 report that the violence in Darfur did not amount to genocide, although \"international offences such as the crimes against humanity and war crimes that have been committed in Darfur may be no less serious and heinous than genocide.\" Some Darfur activists accused the Commission of allowing political considerations to affect its conclusions. However, some critics contend that the Prosecutor's application concerning genocide did not sufficiently establish intent or Bashir's alleged role.", "The Bashir Administration has rejected ICC jurisdiction over Darfur as a violation of its sovereignty and an instrument of Western pressure for regime change, and accused the Court of being part of a neocolonialist plot against a sovereign African and Muslim state. The Bashir administration has repeatedly denied that genocide or ethnic cleansing is taking place in Darfur and has accused the Prosecutor of basing his investigation on testimony by rebel leaders and \"spies\" posing as humanitarian workers. The government has barred ICC personnel from speaking to Sudanese officials, and authorities have taken a hard-line stance against Sudanese suspected of sympathizing with the ICC prosecution attempt. The government also responded by expelling over a dozen international aid organizations that it accused of collaborating with the ICC. In July 2010, when a second ICC warrant was issued for Bashir, Sudan expelled two senior humanitarian officials from Darfur. In November, Sudanese security forces attempted to shut down an independent radio station operating in Darfur whose staff they accused of working for the ICC and Darfur rebels.\nA New York Times analysis noted that while many advocates hope the arrest warrant will weaken Bashir's hold in power, \"Sudanese resentment of the court's actions could have the reverse effect and rally the nation to his side. After the court's prosecutor first announced that he was seeking a warrant for Mr. Bashir, some of the president's political enemies closed ranks behind him.\" Analysts disagree over whether the warrant has intensified Bashir's international isolation. The Sudanese leader has engaged in aggressive diplomatic outreach to allied states, traveling to multiple friendly countries in the weeks following the warrant's issuance.", "The Sudanese government has rallied support from many Arab and African leaders, and among regional organizations such as the African Union (AU), the Arab League, the Community of Sahel-Saharan States (CEN-SAD), and the Organization of the Islamic Conference (OIC), all of which have criticized the ICC and called (unsuccessfully to date) for a deferral of prosecution by the U.N. Security Council. The decision to prosecute an African head of state has notably sparked a backlash among African governments, and the African Union has resolved not to cooperate wiht the ICC in carrying out the arrest warrant (see \"African Union Objections,\" below). Some African and Middle Eastern commentators and civil society groups have praised the decision to pursue Bashir as a step against impunity in the region, while others expressed concern that the move displayed bias or a neocolonial attitude toward Africa. In October 2009, an AU panel on Darfur led by former South African President Thabo Mbeki concluded that a special \"hybrid\" court, consisting of Sudanese and international judges, should try the gravest crimes committed in Darfur, but did not take a position on whether such a court would seek to try cases currently before the ICC. (This proposal has not been carried out to date.)\nBashir has traveled to numerous countries in the region since the first ICC warrant was issued in 2009, including Egypt, Ethiopia, Libya, Qatar, Saudi Arabia, and Zimbabwe, none of which are parties to the ICC. He also traveled to China, not a party to the court, in June 2011. In July 2010, Bashir traveled to neighboring Chad, his first trip to an ICC state party; although Chad had previously publicly supported the ICC prosecution, authorities declined to arrest him amid a broader attempt to improve historically strained bilateral relations between the two states. In August 2010, Bashir traveled to Kenya—also an ICC state party, and one in which prosecutions have been initiated—and Kenyan authorities likewise declined to effect an arrest. In May 2011, Bashir traveled to Djibouti, also a state party. Still, the warrants appear to have had some impact on Bashir's international movements, and reports suggest that he has chosen not to visit the Central African Republic, Libya, and Malaysia at various times due to diplomatic pressures.", "The Obama Administration has expressed support for the ICC investigation and prosecution of war crimes in Sudan, and Administration officials have repeatedly stated that those responsible for serious crimes in Darfur should be held accountable. In July 2009, the Obama Administration's Special Envoy on Sudan, retired General J. Scott Gration, stated that U.S. engagement with Sudan in the context of peace negotiations \"does not mean that [Bashir] does not need to do what's right in terms of facing the International Criminal Court and those charges.\" In response to a question at an August 2009 press conference in Nairobi, Kenya, Secretary of State Hillary Clinton said, \"The actions by the ICC sent a clear message that the behavior of Bashir and his government were outside the bounds of accepted standards and that there would no longer be impunity.... The United States and others have continued to support the need to eventually bring President Bashir to justice.\" In July 2010, Gration nonetheless suggested that the ICC's decision to issue a second arrest warrant for Bashir \"will make my mission more difficult and challenging.\" President Obama subsequently stated in an interview that \"it is a balance that has to be struck. We want to move forward in a constructive fashion in Sudan, but we also think that there has to be accountability, and so we are fully supportive of the ICC.\" In August, Obama expressed \"disappointment\" that Kenya had hosted Bashir \"in defiance of International Criminal Court arrest warrants.\" Following Bashir's trip to China in June 2011, Secretary of State Hillary Clinton stated that \"countries should not be welcoming the Sudanese president because of outstanding charges against him from the international criminal court... I hope that other countries will not offer the opportunity for a visit.\"\nAdministration officials have at times appeared to express divergent characterizations of the situation in Darfur. In June 2009, Special Envoy Gration suggested at a press briefing that the Sudanese government was no longer engaged in a \"coordinated\" genocidal campaign in Darfur, contending that ongoing violence represented \"the remnants of genocide\" and ongoing fighting between rebel groups, the Sudanese government, and Chadian actors. Previously, U.N. Ambassador Susan Rice had characterized Darfur as a \"genocide.\" In response to questions following Gration's remarks, a State Department spokesman stated, \"I think there is no question that genocide has taken place in Darfur. We continue to characterize the circumstances in Darfur as genocide.\" In July 2009, President Obama referred to Darfur as a \"genocide,\" calling it a \"millstone around Africa's neck.\"\nMembers of the 111 th Congress expressed a range of positions with regard to the warrant for Bashir. Senator Russell Feingold urged the Administration not to defer the ICC prosecution, stating, \"If there is significant progress made toward ending violence on the ground in Darfur, it may be appropriate to consider a suspension at that time.\" Senator John Kerry stated the warrant \"complicates matters,\" but should not stop U.S. efforts to resolve the conflict in Darfur. In remarks on behalf of the Congressional Black Caucus, Congresswoman Barbara Lee commented, \"it's so important to do the right thing now, which is to support the International Criminal Court in its efforts to hold Sudan's President Bashir accountable for his crimes against humanity.\" Several pieces of draft legislation introduced during the 111 th Congress expressed support for ICC prosecutions in connection with Darfur.", "The ICC Prosecutor's request for an arrest warrant for Bashir on July 14, 2008, occurred during the time that the U.N. Security Council was considering extension of the Council mandate for the African Union-United Nations Hybrid Operation in Darfur (UNAMID). The Council had before it the report of the U.N. Secretary-General on the deployment of the operation, dated July 7 and covering the period April to June 2008. It was expected that this mandate, which was to expire July 31, would be extended, albeit with some discussion of UNAMID-related issues. Council considerations were significantly impacted by the ICC Prosecutor's announcement.\nAmong the issues engaging Council members after the July 14 action was the suggestion that the Council include in its resolution a request, under Article 16 of the Rome Statute, for a deferral or suspension of further ICC action on the case for up to 12 months in the interest of facilitating efforts toward a peaceful settlement of the situations in Darfur and South Sudan. Some governments expressed concerns that a positive ICC response to the Prosecutor's request for an arrest warrant would exacerbate the situation on the ground in Darfur, making both peacekeepers and humanitarian workers subject to further attacks.\nArticle 16 of the ICC Statute is entitled Deferral of investigation or prosecution and provides that\nNo investigation or prosecution can be commenced or proceeded with under this Statute for a period of 12 months after the Security Council, in a resolution adopted under Chapter VII of the Charter of the United Nations, has requested the Court to that effect; that request may be renewed by the Council under the same conditions.\nThus, if the U.N. Security Council, acting under Chapter VII of the Charter, adopts a resolution requesting the ICC to suspend or defer any further investigation or prosecution of the case against Bashir, the ICC, including the Prosecutor, would be obliged to cease its investigation in that particular situation and the Pre-Trial Chamber, before which the warrant request is pending, would have to suspend its considerations. The Council request would be applicable for 12 months and would be renewable.\nDavid Scheffer, who headed the U.S. delegation to the conference that drafted the ICC Statute, in an August 20, 2008, Op-ed in Jurist , noted that the \"negotiating history of Article 16 should be instructive to how the Council currently examines the Darfur situation.\" Scheffer alleged that Article 16 was drafted and adopted to enable the U.N. Security Council to suspend or defer an ICC investigation or prosecution of a situation \" before either is launched if priorities of peace and security compelled a delay of international justice.\" He stated that \"the original intent behind Article 16 was for the Security Council to act pre-emptively to delay the application of international justice for atrocity crimes in a particular situation in order to focus exclusively on performing the Council's mandated responsibilities for international peace and security objectives.\" This was a tool to be employed by the Council in instances of \"premature State Party or Prosecutor referrals.\" In addition, Scheffer claimed that if the current proposals for Council suspension of further ICC action on a situation referred to the ICC by the Council had been foreseen, \"Article 16 never would have been approved by the ... majority of governments attending the U.N. talks on the Rome Statute for it would have been viewed as creating rights for the Security Council far beyond the original intent of the Singapore compromise.\"\nScheffer noted, \"Nonetheless, one plausibly may argue that the language of Article 16 of the Rome Statute technically empowers the Security Council to intervene at this late date and block approval of an arrest warrant against President Bashir or even suspend its execution following any approval of it by the judges.\"\nU.N. Security Council Resolution 1828 (2008), adopted on July 31, 2008, by a vote of 14 in favor and with the United States abstaining, extended UNAMID for a further 12 months. In abstaining on the vote rather than voting against it, the United States supported renewal of the UNAMID mandate but noted that the language in preambular paragraph 9 \"would send the wrong signal to President Bashir and undermine efforts to bring him and others to justice.\" The paragraph referred to the July 14 arrest warrant application by the ICC prosecutor and the possibility of a Council request for deferral of further consideration of ICC consideration of that case. In remarks with the press following the vote, U.S. Deputy Permanent Representative Alejandro Wolff stated:\nThe reason for our abstention ... had to do with one paragraph that would send the wrong signal at a very important time when we are trying to eliminate the climate of impunity, to deal with justice, and to address crimes in Darfur, by suggesting that there might be a way out. There is no compromise on the issue of justice. The ... United States felt it was time to stand up on this point of moral clarity and make clear that this Permanent Member of the Security Council will not compromise on the issue of justice.\nSome observers maintain that under the Bush Administration, the United States moved toward a policy that recognized that under certain circumstances, the ICC might have a role, as evidenced in its abstentions in the 2005 and 2008 Council votes. Others have pointed out, however, that any perceived moderation in U.S. views toward the Court did not affect its overall position not to become a party to the ICC Statute.", "The government of Uganda, a party to the ICC, referred \"the situation concerning the Lord's Resistance Army\" to the ICC in 2003. The Lord's Resistance Army (LRA) is a rebel group that has fought for over two decades in northern Uganda. In October 2005, the ICC unsealed arrest warrants—the first issued by the Court—for LRA leader Joseph Kony and commanders Vincent Otti, Okot Odhiambo, Dominic Ongwen, and Raska Lukwiya. The LRA is accused of establishing \"a pattern of brutalization of civilians,\" including murder, forced abduction, sexual enslavement, and mutilation, amounting to crimes against humanity and war crimes. None of the suspects are in custody. Lukwiya and Otti have reportedly been killed since the warrants were issued, while other LRA commanders are thought to be in neighboring countries. Ugandan military operations, supported by the United States, to kill or capture senior LRA leaders in Congo, South Sudan, and Central African Republic are ongoing. The Prosecutor is also reportedly investigating actions by the Ugandan military in northern Uganda.\nAlthough LRA atrocities have been widely documented, ICC actions in Uganda have met with some domestic and international opposition due to debates over what would constitute justice for the war-torn communities of northern Uganda and whether the ICC has helped or hindered the pursuit of a peace agreement. Some observers argue that ICC arrest warrants were a crucial factor in bringing the LRA to the negotiating table in 2006 for peace talks brokered by the Government of South Sudan. In August 2006, rebel and government representatives signed a landmark cessation of hostilities agreement; in February 2008, the government and the LRA reached several significant further agreements, including a permanent cease-fire. However, the LRA has demanded that ICC arrest warrants be annulled as a prerequisite to a final agreement, and threats of ICC prosecution are considered by many to be a stumbling block to achieving an elusive final peace deal.\nThe Ugandan government has offered a combination of amnesty and domestic prosecutions for lower-and mid-ranking LRA fighters, and is reportedly willing to prosecute LRA leaders in domestic courts if the rebels accept a peace agreement. In March 2010, the Ugandan parliament passed legislation known as the International Criminal Court Bill, which creates provisions in domestic law for the punishment of genocide, crimes against humanity, and war crimes. Ugandan attempts to prosecute the LRA leaders domestically could entail challenging the LRA cases' admissibility before the ICC under the principle of complementarity; however, only the ICC's Pre-Trial Chamber has the authority to make a decision on admissibility, and only the ICC Prosecutor can move to drop the case.", "The DRC government referred \"the situation of crimes within the jurisdiction of the Court allegedly committed anywhere in the territory of the DRC\" to the Prosecutor in April 2004. Despite the end of a five-year civil war in 2003 and the holding of national elections in 2006, DRC continues to suffer from armed conflict, particularly in the volatile eastern regions bordering Rwanda, Uganda, and Burundi. The ICC has issued four arrest warrants in its first DRC investigation, which focuses on the eastern Congolese district of Ituri, where an inter-ethnic war erupted in June 2003 with reported involvement by neighboring governments. Three suspects are in custody, while a fourth remains at large. A second investigation focuses on sexual crimes and other abuses committed in the eastern provinces of North and South Kivu. One case has been made public in connection with the Kivus investigation; the suspect was arrested in France in October 2010 and transferred to ICC custody.", "The ICC issued a sealed arrest warrant in February 2006 for Thomas Lubanga Dyilo, the alleged founder and leader of the Union of Congolese Patriots (UPC, after its French acronym) in Ituri and its military wing, the Patriotic Forces for the Liberation of Congo (FPLC). At the time, Lubanga was in Congolese custody and had been charged in the domestic justice system. After a determination of admissibility by the ICC, Lubanga was transferred to ICC custody in March 2006. The ICC has charged Lubanga with three counts of war crimes related to the recruitment and use of child soldiers. Following a lengthy delay due to a procedural challenge, Lubanga's trial began in January 2009. The trial is expected to conclude in August 2011 and to bring the ICC's first final verdict before year's end.\nLubanga has pleaded not guilty: his defense team maintains that Lubanga was only a political leader who tried to demobilize children fighting in his group, and that he is a scapegoat for other, more senior militant leaders. The trial has been beset by procedural challenges. Judges have several times halted proceedings and ordered Lubanga's release, contending that a fair trial was impossible because prosecutors had erred in handling evidence and refused to disclose sources' identities to judges and the defense. In each instance, prosecutors successfully appealed to overturn the judges' decision, allowing the trial to resume.", "Germain Katanga, the alleged commander of the Force de Résistance Patriotique en Ituri (FRPI) and Ngudjolo, the alleged highest-ranking commander of the Front des Nationalistes et Intégrationnistes (FNI), are being prosecuted as co-perpetrators for allegedly having \"acted in concert to mount an attack targeted mainly at Hema civilians\" in Ituri in 2003. The ICC issued sealed arrest warrants for Katanga and Ngudjolo in July 2007, and they were transferred by Congolese authorities to ICC custody in October 2007 and February 2008, respectively. The Prosecutor has accused them jointly of four counts of crimes against humanity and nine counts of war crimes related to murder, \"inhumane acts,\" sexual crimes, the use of child soldiers, rape, and other abuses. In November 2009, the joint trial of Katanga and Ngudjolo opened.", "The ICC issued a sealed warrant for the arrest of Bosco Ntaganda, the alleged former deputy military commander in Lubanga's FPLC militia, in August 2006. The warrant was unsealed in April 2008, but Ntaganda remains at large. Ntaganda is accused of three counts of war crimes related to the recruitment and use of child soldiers in 2002 and 2003. His nationality is disputed: the ICC arrest warrant states that he is \"believed to be a Rwandan national,\" but other sources state that he is an ethnic Tutsi from DRC's North Kivu province.\nAt the time the warrant was unsealed, Ntaganda was a commander in a different rebel group, the National Congress for the People's Defense (CNDP), in North Kivu. Ntaganda later agreed to be integrated into the Congolese armed forces as part of a January 2009 peace deal, and he was reportedly promoted to the rank of military general. The Congolese government has since refused to pursue Ntaganda on behalf of the ICC, arguing that to do so would jeopardize peace efforts in the Kivu region. Foreign diplomats and human rights advocates allege that Ntaganda is living openly in the North Kivu city of Goma; that he has played a command role in a high-profile DRC military offensive in the east since early 2009, contrary to statements by the U.N. peacekeeping mission in Congo, which supported the offensive; and that he has continued to orchestrate extra-judicial killings and disappearances of perceived opponents. Others have alleged that he is involved in illicit minerals smuggling. In November 2009, the Obama Administration's then-Special Advisor on the Great Lakes Region, Howard Wolpe, stated that the DRC's protection of Ntaganda was \"inexcusable\" and said that the United States would press Congolese authorities to allow Ntaganda's transfer to the ICC.", "ICC judges issued a sealed warrant for the arrest of Callixte Mbarushimana, a Rwandan national and the alleged political leader in exile of the Democratic Forces for the Liberation of Rwanda (FDLR) militia, on September 28, 2010. The warrant cites \"reasonable grounds\" to believe Mbarushimana is criminally responsible for six counts of war crimes and five counts of crimes against humanity. On October 12, Mbarushimana was arrested in France, where he was living as a political refugee. A French court verdict on November 3 paved the way for his transfer to ICC custody on January 25, 2011.\nThe FDLR is based in the conflict-ridden Kivu provinces of eastern DRC but is primarily led by Rwandan Hutu extremists, including individuals who fled to DRC during the aftermath of the 1994 Rwandan genocide as well as members of the diaspora. The Prosecutor's case against Mbarushimana alleges that he commanded FDLR attacks against civilians in the Kivus, including murder, torture, rape, and the destruction of property. The United States welcomed the arrest, noting that Mbarushimana has been the target of U.N. and U.S. sanctions since 2008, and indicating U.S. support for the ICC's \"ongoing investigations into atrocities that have been committed in the Democratic Republic of the Congo.\" The government of Rwanda, previously a vocal opponent of the Court, has welcomed the prosecution but stated that it would have preferred to try Mbarushimana within Rwanda on charges related to the 1994 genocide.", "The government of CAR, a party to the ICC, referred \"the situation of crimes within the jurisdiction of the Court committed anywhere on [CAR] territory\" to the ICC Prosecutor in January 2005.", "In May 2008, the ICC issued a sealed warrant of arrest for Jean-Pierre Bemba Gombo. A former DRC rebel leader turned politician and successful businessman, Bemba had been the leading challenger to incumbent President Joseph Kabila in DRC's 2006 presidential election, and was elected to the Congolese legislature in January 2007. He subsequently went into exile in Europe following armed clashes with security forces loyal to Kabila. The warrant alleged that as commander of the Movement for the Liberation of Congo (MLC), one of two main DRC rebel groups during that country's civil war (1998-2003), Bemba had overseen systematic attacks on civilians in CAR territory between October 2002 and March 2003. Bemba's MLC, based in the DRC's north, allegedly committed these abuses after it was invited into CAR by then-President Ange-Félix Patassé to help quell a rebellion.\nBemba was arrested in Belgium in May 2008 and turned over to the ICC in July 2008. In June 2009, a panel of ICC judges confirmed three charges of war crimes and two charges of crimes against humanity for alleged rape, murder, and pillaging. The charges hinge on the question of command responsibility: the Prosecutor contends that Bemba personally managed the MLC, stayed in constant contact with combatants, and was well informed about the group's activities in CAR. Bemba's trial opened on November 22, 2010, after ICC judges dismissed various legal appeals. The prosecution has been controversial in the DRC, where Bemba's MLC continues to function as an opposition party. The Office of the Prosecutor has denied that political considerations played a role in the case, and the government of DRC has denied involvement in the prosecution.", "Some observers have praised the ICC's investigations in Africa as a crucial step against impunity on the continent, but ICC actions have also provoked debates over the court's potential impact, its perceived prioritization of Africa over other regions, its selection of cases, and the potential effect of prosecutions on peace processes. Notably, critics have accused the ICC of potentially jeopardizing political settlements that may keep the peace in the pursuit of an often abstract \"justice.\" Supporters of the Court reject these criticisms, and hope that ICC investigations will contribute to Africa's long-term peace and stability.", "The African Union (AU) has strongly objected to certain ICC actions, causing some backers of the Court to be concerned that it could lose the support of its largest regional block. In particular, the AU objects to ICC attempts to prosecute sitting heads of state in Sudan and Libya, and has decided not to enforce arrest warrants for Bashir or Qadhafi. Indeed, the Sudanese president has visited Chad, Kenya, and Djibouti, all ICC states parties, since the first warrant for his arrest was issued in 2009. At least one AU member, Botswana, has indicated, however, that it intends to enforce the warrants, and other AU states may quietly hold the same position. At an AU summit in January 2011, the AU Assembly additionally endorsed Kenya's request for a deferral of prosecutions there. Such a deferral could only be enacted through action by ICC judges or at the U.N. Security Council, and neither has moved to do so. AU Commission chairman Jean Ping has repeatedly accused the ICC Prosecutor of relying on \"double standards\" with regard to Africa (see \" Accusations of Bias ,\" below). At the same time, African parties to the ICC have refrained from withdrawing from the Court.", "The ICC's founders anticipated that by ending impunity, the ICC would deter future atrocities. Indeed, some observers argue that the ICC's success should be evaluated not just based on the punishment of past atrocities, but also in terms of \"the effect its investigations have on reducing abysmal conduct in the present and future.\" (The Office of the Prosecutor maintains that the choice of cases is not based on calculations of deterrent effect, though the Office acknowledges that strategic communications related to ICC prosecutions may play a role in deterrence. )\nThe goal of deterrence has been particularly salient in the ICC's investigations in Africa, which have focused on regions where atrocities are ongoing or have only recently ended. However, difficulties encountered in enforcing ICC arrest warrants and the fact that the Court has yet to convict any suspects have led some to question whether the threat of ICC prosecution is credible. Some observers suggest that the Court's failure to apprehend suspects in Sudan, in particular, has bared tensions between the ICC's universal mandate and its reliance on the enforcement power of states. Others maintain that deterrence is difficult to evaluate and that changes in perpetrators' behavior may be visible only over the long run. Some argue that the Court's compilation of evidence, including transcribed interviews with witnesses, may serve future prosecutions or reconciliation processes even if they do not immediately lead to convictions. Some commentators have raised the possibility that transitional countries in the Middle East—such as Tunisia and Egypt—might submit to the ICC to investigate past abuses by authoritarian regimes.", "The ICC's investigations in Africa have stirred concerns over African sovereignty, in part due to the long history of foreign intervention on the continent. For example, President Paul Kagame of Rwanda, a country which is not a party to the Court, has portrayed the ICC as a form of \"imperialism\" that seeks to \"undermine people from poor and African countries, and other powerless countries in terms of economic development and politics.\" Some commentators allege that the Prosecutor has limited investigations to Africa because of geopolitical pressures, either out of a desire to avoid confrontation with major powers or as a tool of Western foreign policy. The attempt to prosecute Bashir has been particularly controversial, drawing rebuke from African governments and regional organizations. Jean Ping, president of the AU Commission, has accused the ICC of hypocrisy, contending that \"we are not against the ICC, but there are two systems of measurement … the ICC seems to exist solely for judging Africans.\"\nSupporters of the Court respond that most investigations to-date have been determined by referrals, either by African states or the Security Council, and that the Prosecutor continues to analyze situations outside of Africa. The Office of the Prosecutor maintains that its choice of cases is based on the relative gravity of abuses, and that crimes committed in Africa are among the world's most serious. A prominent South African jurist, Constitutional Court Chief Justice Sandile Ngcobo, recently expressed a similar interpretation, stating that \"abuses committed in Sub-Saharan Africa have been among the most serious, and this is certainly a legitimate criterion for the selection of cases.\" ICC officials, including Deputy Prosecutor Fatou Bensouda—a national of The Gambia—contend that the Court is protecting Africans rather than \"targeting\" them.\nSupporters also contend that national legal systems in Africa are particularly weak, which has allowed the ICC to assert its jurisdiction under the principle of complementarity. These sentiments were echoed by former U.N. Secretary-General Kofi Annan, who stated, \"In all of these cases, it is the culture of impunity, not African countries, which are the target. This is exactly the role of the I.C.C. It is a court of last resort.\" At the June 2010 meeting of ICC states parties in Kampala, Uganda, participants initiated mechanisms for increasing coordination between donors on strengthening national justice systems. The United States, which participated in the meeting as an observer, has expressed support for such efforts.\nThe Prosecutor's selection of cases also has proven controversial. As one pair of authors has written, \"perceptions of the ICC on the ground have at times been damaged by insufficient efforts by the Court to make clear the basis on which individuals have been the subject of warrants and of particular charges, while those of apparently equal culpability have not.\" For example, some have criticized ICC prosecutions in Uganda, the DRC, and CAR for focusing on alleged abuses by rebel fighters to the exclusion of those reportedly committed by government troops. The decision to pursue DRC opposition leader Jean-Pierre Bemba Gombo has provoked accusations that the Prosecutor was swayed by political bias or, potentially, excessive pragmatism, since other Congolese and CAR politicians accused of similar abuses have not been pursued to date. ICC supporters have responded that the Prosecutor is mandated to focus on particularly serious cases, and that investigations are ongoing in these countries.", "One of the most persistent criticisms of the ICC's actions in Africa has been that by prosecuting participants in ongoing or recently settled conflicts, the Court risks prolonging violence or endangering fragile peace processes. By removing the bargaining chip of amnesty from the negotiating table, critics allege, the ICC may remove incentives for peace settlements while encouraging perpetrators to remain in power in order to shield themselves from prosecution. Some analysts observe that in such cases, \"it is difficult to tell victims of these conflicts that the prosecution of a small number of people should take precedence over a peace deal that may end the appalling conditions they endure and the daily risks they face.\"\nConcerns that the aims of \"justice\" and \"peace\" may conflict have been particularly prominent in connection with Sudan, Kenya, and the Lord's Resistance Army. Similar concerns have recently been voiced with regard to Libya, where Qadhafi has refused to cede power. As one commentator recently argued, \"In the past, Africa's deposed heads of state could count on a comfortable exile in a friendly country... But since the International Criminal Court was established in 2002, rulers who have committed war crimes or human rights violations against their own people have found their exile options substantially diminished.\" In Sudan, some observers have argued that the attempt to prosecute President Bashir complicated implementation of the 2005 Comprehensive Peace Agreement for Southern Sudan and the peace process in Darfur, by providing an incentive to the ruling party's inner circle to cling to power. For example, according to former U.S. special envoy to Sudan Andrew Natsios, \"the regime will now avoid any compromise or anything that would weaken their already weakened position, because if they are forced from office they face trials before the ICC.... [An ICC warrant for Bashir] may well shut off the last remaining hope for a peaceful settlement for the country.\" In Kenya, concerns persist that ICC prosecutions could destabilize the fragile political truce that has underpinned the post-2007 government of national unity, although some argue that a lack of accountability for human rights violations would also threaten future stability. Some argued that ICC arrest warrants against LRA commanders acted as an impediment to achieving a final peace agreement to that long-running conflict between 2006 and 2008. Ugandan critics included community elders who supported the use of traditional reconciliation mechanisms instead of international prosecution. Others contend that LRA leaders never seriously intended to negotiate a peace, and that the threat of ICC prosecution could serve as \"an important ingredient in a political solution\" for the conflict-plagued north. This discussion has been muted in recent years, as senior LRA commanders are no longer in northern Uganda and have sought refuge instead in neighboring countries.\nCriticisms connected to the case against Bashir in Sudan were reinforced when the Sudanese government responded to the ICC arrest warrant for Bashir by expelling aid agencies and threatening NGOs and peacekeeping troops. In March 2009 testimony before Congress, when asked about the impact of the ICC warrant on U.N. peacekeeping operations in Darfur, then-Director of National Intelligence Dennis C. Blair said that \"the indictment and President Bashir's reaction have made him less cooperative than he was\" and that the warrant would \"make it harder\" for peacekeeping operations in Darfur. In early August 2009, the outgoing commander of the hybrid U.N.-AU peacekeeping mission in Darfur (UNAMID), General Martin Luther Agwai, reportedly stated that the decision to pursue Bashir had been a \"big blow\" for UNAMID and the peace process, although it had not had as drastic an effect on the ground as he had feared. U.N. Secretary-General Ban Ki-moon, who has maintained a neutral position on the ICC's actions in Sudan, has nonetheless argued that the international community must seek to balance \"peace\" and \"justice\" in dealing with the conflict in Darfur and expressed concern that the expulsion of aid organizations was detrimental to relief and peacekeeping operations.\nSupporters of the Court maintain that the warrant against Bashir may open up new opportunities to secure peace in Darfur, as a credible threat of prosecution may serve as an important lever of pressure on actors in a conflict. For example, Priscilla Hayner of the International Center for Transitional Justice has written that \"it would be wrong to suggest that pragmatism always trumps principle in matters of life and death, and thus that one must ease up on justice in order to achieve peace. In some cases, the interest of peace has been well served by strong, forthright efforts to advance justice.\" Some argue that \"peace deals that sacrifice justice often fail to produce peace\" in the long run. Many observers point out that discerning the effect of ICC actions on complex processes is extremely difficult.", "" ], "depth": [ 0, 1, 1, 2, 3, 3, 1, 1, 2, 2, 3, 3, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 2, 2, 3, 3, 3, 3, 2, 3, 1, 2, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "", "h2_title", "h2_title", "h2_full", "", "h2_full", "h0_full h2_title h1_title", "", "h1_full", "", "", "h0_title h2_title h1_full", "h1_full", "", "", "h0_title h2_title h1_title", "h1_full", "h0_full", "", "h2_full", "", "", "", "", "", "", "", "", "", "h1_title", "h1_full", "", "h1_full", "", "" ] }	{ "question": [ "Where has the ICC opened cases?", "What cases are currently open before the Court?", "What happened with a 26th case??", "What preliminary examinations are open?", "What aspect of the ICC has been controversial?", "How was jurisdiction granted for both of these cases?", "How did the United States vote regarding the resolutions?", "How has the Court's activity in Kenya been controversial?", "Why has Congressional interest in the ICC's work in Africa increased?", "To what extent has the Obama Administration supported the ICC?", "Why can't the U.S. provide material assistance to the ICC?", "What legislation was introduced in the 111th Congress regarding the ICC?" ], "summary": [ "The International Criminal Court (ICC) has, to date, opened cases exclusively in Africa.", "Cases concerning 25 individuals are open before the Court, pertaining to crimes allegedly committed in six African states: Libya, Kenya, Sudan (Darfur), Uganda (the Lord's Resistance Army, LRA), the Democratic Republic of Congo, and the Central African Republic.", "A 26th case, against a Darfur rebel commander, was dismissed. The ICC Prosecutor has yet to secure any convictions.", "In addition, the Prosecutor has initiated preliminary examinations—a potential precursor to a full investigation—in Côte d'Ivoire, Guinea, and Nigeria, along with several countries outside of Africa, such as Afghanistan, Colombia, Georgia, Honduras, and the Republic of Korea.", "At the same time, the ICC Prosecutor's choice of cases and the perception that the Court has disproportionately focused on Africa have been controversial. The Prosecutor's attempts to prosecute two sitting African heads of state, Sudan's Omar Hassan al Bashir and Libya's Muammar al Qadhafi, have been particularly contested, and the African Union has decided not to enforce ICC arrest warrants for either leader.", "Neither Sudan nor Libya is a party to the ICC; in both cases, jurisdiction was granted through a United Nations Security Council resolution.", "(The United States abstained from the former Security Council vote, in 2005, and voted in favor of the latter, in February 2011.)", "Controversy within Africa has also surfaced over ICC attempts to prosecute Kenyan officials in connection with post-election violence in 2007-2008. Although Kenya is a party to the Court, the government has recently objected to ICC involvement, which some contend could be destabilizing.", "Congressional interest in the work of the ICC in Africa has arisen in connection with concerns over gross human rights violations on the African continent and beyond, along with broader concerns over ICC jurisdiction and U.S. policy toward the Court.", "Obama Administration officials have expressed support for several ICC prosecutions. At the ICC's 2010 review conference in Kampala, Uganda, Obama Administration officials reiterated the United States' intention to provide diplomatic and informational support to ICC prosecutions on a case-by-case basis.", "The U.S. government is prohibited by law from providing material assistance to the ICC under the American Servicemembers' Protection Act of 2002, or ASPA (P.L. 107-206, Title II).", "Legislation introduced during the 111th Congress referenced the ICC in connection with several African conflicts and, more broadly, U.S. policy toward, and cooperation with, the Court. S.Res. 85 (Menendez) welcomes the U.N. Security Council referral of Libya to the ICC." ], "parent_pair_index": [ -1, -1, -1, -1, -1, 0, 1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3 ] }
GAO_GAO-18-300	{ "title": [ "Background", "U.S. Army’s Joint Trauma System Defense Center of Excellence", "NDAA Requirement for a New DOD Joint Trauma System", "DOD’s Joint Trauma System Implementation Plan Includes the Four Elements Required by the NDAA, but Does Not Yet Fully Incorporate Leading Practices for Planning", "Element One—Serve as a Reference Body for Trauma Care", "Element Two—Establish Standards of Trauma Care for Military Services", "Element Three— Coordinate the Translation of Research into Trauma Care Standards", "Element Four— Incorporate Lessons Learned from Trauma Education and Training Partnerships", "Conclusions", "Recommendation", "Agency Comments", "Appendix I: Comments from the Department of Defense", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Since the mid-2000s, DOD and the military health system have worked to decrease trauma-related morbidity and mortality by improving trauma care in DOD’s military treatment facilities and by conducting research on providing trauma care. As part of these efforts, the Army established the JTS DCOE, which serves to provide advice on trauma care across the military.\nThe JTS DCOE performs several functions to improve trauma care, including overseeing the DOD Trauma Registry (DODTR)—a database that captures trauma data from the time servicemembers are injured on the battlefield to when they are treated by providers in the United States. The JTS DCOE uses DODTR data to conduct performance improvement activities and to identify gaps in medical capabilities to direct ongoing and future combat casualty care research, trauma skills training, and combat casualty care. The JTS DCOE also provides data from the registry to collaborating military and civilian personnel conducting medical research. managing the development, monitoring, and review of Clinical Practice Guidelines (CPGs). These guidelines, developed by subject matter experts using data from DOD’s trauma registry, are created to inform medical professionals of best practices based on medical evidence, with a goal of minimizing inappropriate variation in medical practice and improving care for trauma injuries, specifically when military servicemembers are deployed. The development of CPGs is an ongoing process that takes place during times of war and peace, according to DOD officials. developing and providing training curriculum for first responders to trauma-related injuries. The JTS DCOE seeks to identify lessons learned from trauma care that can be used as part of this training, to help improve the medical readiness of trauma care providers.", "To create a formalized, consistent trauma system across DOD, the NDAA required that a new JTS be operated under the direction of DHA. DHA officials expect to begin initial operation of the new JTS in July 2018. Additionally, DOD plans to realign the existing JTS DCOE and its current functions under DHA. Section 707 (a)(2) of the NDAA required DOD to submit an implementation plan to Congress for the new JTS in June 2017, 180 days after the NDAA was enacted. The NDAA also includes a provision for us to review DOD’s plan within 180 days after DOD submitted it to Congress, and for DOD to implement the new JTS 90 days after we submit our review. The NDAA required that the new JTS and DOD’s implementation plan include the following four elements: 1. serve as the reference body for all trauma care provided across the 2. establish standards of care for trauma services provided at military 3. coordinate the translation of research from DOD’s centers of excellence into standards of clinical trauma care, and 4. coordinate the incorporation of lessons learned from trauma education and training partnerships pursuant to section 708 of the NDAA into clinical practice.", "The implementation plan submitted by DOD to Congress on August 7, 2017 includes a description of the four elements required by the NDAA. It also provides an overview of the implementation activities, including realigning the U.S. Army’s current Joint Trauma System Defense Center of Excellence to become part of the new system within DHA.\nAlthough the implementation plan includes the four required elements, neither it nor DOD’s supplemental planning documents prepared to date fully incorporate leading practices, which we have previously identified. These leading practices, such as the establishment of goals and the identification of strategies to achieve those goals, play an important role in enabling an organization to achieve its objectives. We found that DOD’s planning documents, prepared to date, incorporate only some of the leading practices. (See table 2).\nDOD officials acknowledged that the agency’s plans are presently incomplete because this process is ongoing. They stated that DOD is continuing to plan for implementing all four elements of the JTS— including efforts to incorporate leading practices. DOD’s planning documents that have been prepared to date and our assessment of each of the four elements are described below.", "DOD’s planning documents incorporate goals associated with this element, but only include partial information about the strategies, associated risks, and plans to assess progress. Without including more complete information about plans to serve as a reference body for trauma care, it is unclear how well prepared DOD is to implement this element.\nGoals: According to a planning document, DOD has two goals for JTS to serve as a reference body: 1) consolidating disparate trauma registries into the DODTR. According to DOD officials, there are currently about 70 disparate registries, some of which collect trauma-related information for various entities across DOD. 2) developing a common trauma lexicon—a dictionary of common trauma care terminology to assist in the assessment of trauma-related injury data.\nStrategies: In addition to defining goals, the documents also include some strategies to achieve those goals, such as specific actions that DOD plans to take and target dates for accomplishing these actions. For example, the documents outline plans to take action to define key terms such as “preventable death,” “non- survivable injury,” “potentially survivable injury,” and others by a target date of July 2018. The documents also identify DHA as the lead office within DOD that is responsible for executing and achieving this action.\nThe planning documents do not yet fully reflect the strategies needed to accomplish these goals. For example, although the documents discuss actions and milestones associated with goals for this element, they do not yet provide complete information on the resources and costs needed for implementation. The documents state that DHA will conduct an organizational analysis to determine what organizational structure, staffing needs, and other resources are needed for implementation at a later date. They also state that funding levels for DHA’s operation of the DODTR will be based on the existing JTS DCOE funding levels. However, another planning document indicates that the infrastructure for the DODTR’s existing host network—operated by the United States Army Institute of Surgical Research—would be insufficient to support the planned JTS and DODTR expansion, and that integrating even a single additional registry or component of a registry into the DODTR would require an adjustment to the funding for the system. Given that the planned activities for the new JTS would require an expansion beyond the scope of the current JTS DCOE responsibilities and activities, additional planning for equipment and network support costs may be necessary to ensure that the new JTS has sufficient resources to meet its goals.\nRisks: The planning documents identify risks that could affect the JTS’s ability to serve as a trauma reference body, but the documents do not yet specify how DOD plans to assess or respond to these risks. For example, although one of the planning documents identifies potential shortfalls in the DODTR host network’s ability to support an increased number of users—which are expected as the various disparate registries are consolidated—none of the documents yet address the estimated impact of this risk on DOD’s goals or how it plans to respond to the risk. Not planning for assessing and responding to risks could increase the likelihood that they become problematic, and negatively affect DOD’s goal for the JTS.\nPlans to Assess Progress: The planning documents do not yet fully indicate how DOD plans to assess progress made towards the goals for consolidating registries or developing a lexicon of common trauma terms, as would be consistent with leading practices. The documents include a description of a baseline for performance related to DOD’s goal to develop a lexicon of common trauma terms, but they do not yet include plans to monitor the progress made towards this goal or to assess the results of monitoring. Additionally, the documents do not yet establish a performance baseline, a system to monitor progress, or a plan to assess the results of monitoring for DOD’s other goal for this element—to consolidate registries into the DODTR. Without a fully-developed system for assessing the implementation’s progress—practices which are consistent with federal internal control standards for risk assessment—DOD may be unable to determine progress toward the goals it has identified for this element.", "DOD’s planning documents incorporate goals and plans to assess progress, but do not yet fully incorporate leading practices related to strategies and risks.\nGoals: According to the documents, DOD’s goal for this element is twofold: 1) to develop, publish, and assess standards of care in DOD’s CPGs. 2) to determine if the CPG development process can be improved. DOD publishes CPGs to provide trauma care providers with recommended practices for the provision of care, based on available evidence. According to DOD documents, the CPGs minimize variations from evidence- based best practices, which help to save lives.\nStrategies: DOD’s planning documents describe how the new JTS will continue to produce, update, and monitor adherence to CPGs and designates JTS as the office that is primarily responsible for leading these efforts. Although DOD’s planning documents include information needed for the JTS to establish standards of care through CPGs, they do not yet fully reflect the strategies necessary to achieve DOD’s goal. DOD officials indicated that the new JTS will develop, publish, and assess CPGs using the same process used by the existing JTS DCOE. DOD officials told us that CPGs are currently reviewed on an annual basis and updated once every two years, on average. According to DOD officials, this frequency exceeds standards established by leading civilian organizations. Once updated, officials disseminate CPGs by posting them on a website, sharing them with DOD officials responsible for training trauma care providers, and discussing them at weekly conference calls on combat casualty care. Officials also told us that the existing JTS lacks authority to require that trauma care providers adhere to recommendations made in CPGs. In addition, DOD’s planning documents acknowledge that the existing process lacks sufficient mechanisms to ensure timely updates and effective dissemination, but do not yet indicate what plans are needed to make improvements in these areas. Without additional planning to improve mechanisms for CPG development and dissemination, DOD faces uncertainty regarding the new JTS’s ability to ensure that the CPGs it produces are up to date and effectively disseminated to military trauma care providers, which may ultimately impact the trauma care that it provides.\nRisks: The planning documents identify risks associated with the development and dissemination of trauma care CPGs, such as an inconsistent process for dissemination. However, they do not yet include information on determining the potential effects of these risks, nor do they include how DOD expects to respond, which are both leading practices for risk assessment and are consistent with federal internal control standards. Without additional planning, DOD may not be fully prepared to address risks related to updating and disseminating CPGs.\nPlans to Assess Progress: The planning documents include detailed information about how DOD uses performance measures for each CPG to assess progress in provider adherence to trauma care standards. The documents also establish a baseline for provider performance, a system for ongoing performance monitoring, and a process for evaluating the results of monitoring—performance measurement activities that can help the department track progress towards the goal it has established for this element.", "One of the planning documents provides a general overview of how DOD plans to coordinate the translation of research from its centers of excellence—including the JTS DCOE and other trauma care centers of excellence—into trauma care standards, but the planning documents have yet to incorporate any of the four leading practices, including goals, strategies, risks, or plans to assess progress. According to DOD officials, the current JTS DCOE routinely translates research into trauma care standards by creating and updating these standards to incorporate the findings and results of relevant research. DOD officials also told us the current JTS DCOE routinely interacts with the various DOD organizations responsible for trauma-related research, such as by holding weekly discussions on trauma care issues. Officials stated that they do not expect these interactions to change as the JTS DCOE transitions to the new JTS. However, the planning documents do not yet provide any detail about how these interactions will inform clinical standards. Without including detailed information in the planning documents on how DOD expects to coordinate the translation of research into trauma care standards, it is unclear whether the JTS will be fully prepared to ensure that clinical standards are up-to-date and based on the most relevant evidence from research. This is critical to ensuring the effectiveness of the trauma care provided.", "The planning documents for this element do not yet incorporate any of the four leading practices, including goals, strategies to achieve goals, risks, or plans to assess progress. Officials indicated that planning for the implementation of this element will be incomplete until DOD establishes the new Joint Trauma Education and Training Directorate responsible for establishing these partnerships. Section 708 of the NDAA states that DOD may enter into partnerships with civilian trauma centers to provide trauma care providers with maximum and continuous exposure to a high volume of critically injured patients. According to DOD officials, planning for incorporating lessons learned will begin after the directorate reaches initial operating capacity, which they anticipate in 2018. DOD officials also told us that the JTS will collaborate with the directorate for trauma education and training partnerships, once it is established, to plan the translation of relevant lessons learned into clinical practice. Because planning for this element is still incomplete, it is unclear whether DOD will be prepared to use information from these clinical partnerships to improve the effectiveness of the trauma care it provides to injured service members.", "In an effort to reduce preventable deaths and disabilities due to trauma, and as required by the NDAA, DOD is planning for the implementation of its new JTS. Specifically, the department has submitted its implementation plan to Congress as required and has developed other supplemental planning documents that describe how it plans to address the four required elements of the new system. Incorporating these elements is a critical step for DOD as it works to improve trauma care consistently across the military health system. Although the NDAA requires that DOD begin implementation in 2018, DOD’s planning is ongoing, and its planning documents do not fully incorporate leading practices that can help ensure the success of its efforts. As it moves forward, DOD has the opportunity to update its efforts and planning documents to fully incorporate these leading practices. By not doing so, DOD may be missing an opportunity to ensure that its efforts to implement a new JTS are effective and to help reduce trauma-related deaths and injuries across the military.", "To fully implement the four required elements of the new Joint Trauma System, the Director of the Defense Health Agency should fully incorporate leading practices—including establishing goals, planning strategies to achieve goals, identifying and addressing risks, and assessing progress—in its planning to guide implementation efforts. (Recommendation 1)", "We provided a draft of this report to DOD for comment. DOD provided written comments, which are reprinted in appendix I, and technical comments, which we incorporated as appropriate. In its written comments, DOD concurred with our recommendation to fully incorporate leading practices in its planning to guide JTS implementation efforts. DOD’s written comments also referred to technical concerns regarding the timeliness of its updates to clinical practice guidelines. Specifically, the comments indicate that DOD updates these guidelines more frequently than standards established by leading civilian organizations. Our report includes a description of DOD’s processes for developing and updating these guidelines, including the frequency of the updates, and we added a statement regarding DOD officials’ comparison of this frequency to civilian standards.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact above, Will Simerl (Assistant Director), Carolyn Garvey (Analyst-in-Charge), Sarah Sheehan, Jennie Apter, and Jacquelyn Hamilton made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title h1_title h3_title", "h1_full", "h3_full h2_full", "h0_full h2_title h1_title", "h1_full", "h2_full", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "To what extent does the plan incorporate leading practices?", "Why is the inclusion of these leading practices important?", "Have the leading practices been incorporated?", "What goals do DOD documents include?", "To what extent do these documents have plans for reaching these goals?", "How thorough are these plans?", "What is the DOD’s first leading practice?", "What is the second of four leading practices of the DOD?", "How do DOD documents set trauma care standards?", "How do these documents address the new JTS?", "What aspects of these plans are underdeveloped?", "How did the NDAA for FY2017 attempt to improve DOD trauma care?", "What did the NDAA require regarding the new JTS?", "How did the NDAA involve GAO?" ], "summary": [ "However, the plan and other supplemental planning documents prepared to date do not fully incorporate leading practices for planning as identified by prior GAO work.", "GAO has previously found that implementation plans incorporating these leading practices—goals, strategies to achieve goals, risks that can affect goals, and plans to assess progress toward goals—help ensure organizations achieve their objectives.", "For each of the four required elements, GAO found that these leading practices either were partially incorporated or had not been incorporated:", "DOD documents include specific goals, such as consolidating data from multiple trauma registries.", "They also include some strategies to achieve the goals, such as identifying lead offices and time frames to complete specific actions.", "However, the documents provide limited details on actions DOD plans to take, and do not indicate how DOD plans to address risks or assess its progress.", "Element 1—Serve as the reference body for all trauma care provided across the military health system.", "Element 2—Establish standards of care for trauma care services.", "DOD documents include a goal to develop, publish, and assess clinical practice guidelines that serve as standards of trauma care.", "These documents also describe how the new JTS will continue to produce, update, and monitor adherence to the guidelines.", "However, they do not fully indicate plans to address risks, such as ensuring effective dissemination.", "To improve trauma care across DOD, the NDAA for Fiscal Year 2017 directed DOD to establish a new JTS within DOD's Defense Health Agency.", "The NDAA requires that the new JTS include four specified elements, and also required DOD to submit to Congress an implementation plan that included the four elements.", "The NDAA also included a provision for GAO to review DOD's planning for the new JTS." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 1, -1, -1, -1, 1, 1, -1, 0, 0 ], "summary_paragraph_index": [ 4, 4, 4, 5, 5, 5, 5, 6, 6, 6, 6, 1, 1, 1 ] }
CRS_R42672	{ "title": [ "", "Introduction", "Financing of the Crime Victims Fund", "Deposits to the CVF", "Fluctuation in Deposits and Growth of the Fund", "Caps on the CVF", "Cap on Deposits", "Obligation Cap", "Changes to the CVF Obligation Cap", "Appropriations Riders and the CVF Cap", "Carryover Balance of the CVF", "Distribution of the Crime Victims Fund", "Children's Justice Act Program", "Executive Office of U.S. Attorneys (EOUSA)", "Federal Bureau of Investigation (FBI)", "The Victim Notification System", "Victim Compensation and Assistance", "Victim Compensation Formula Grant Program", "Victim Assistance Formula Grant Program", "Discretionary Grants", "Antiterrorism Emergency Reserve", "Assistance for Victims of Terrorism and Mass Violence", "Assistance for Victims of 9/11", "Selected Issues", "Issues in Considering the Balance of the Fund", "Issues in Considering Amendments to VOCA", "VOCA Support and American Indian Tribes", "Fairness for Crime Victims Act of 2017" ], "paragraphs": [ "", "In 1984, the Crime Victims Fund (CVF, or the Fund) was established by the Victims of Crime Act (VOCA, P.L. 98-473 ) to provide funding for state victim compensation and assistance programs. Since 1984, VOCA has been amended several times to support additional victim-related activities. These amendments established within the CVF\ndiscretionary grants for private organizations; the Federal Victim Notification System; funding for victim assistance staff in the Federal Bureau of Investigation (FBI) and Executive Office of U.S. Attorneys (EOUSA); funding for the Children's Justice Act Program; and assistance and compensation for victims of terrorism.\nIn 1988, the Office for Victims of Crime (OVC) was formally established within the Department of Justice (DOJ) to administer the CVF. As authorized by VOCA, the OVC awards CVF money through formula and discretionary grants to states, local units of government, individuals, and other entities. The OVC also distributes CVF money to specially designated programs, such as the Children's Justice Act Program and the Federal Victim Notification System (see Figure 1 ).\nThe OVC's mission is to enhance the nation's capacity to assist crime victims and to improve attitudes, policies, and practices that promote justice and help victims. According to the OVC, this mission is accomplished by (1) administering the CVF, (2) supporting direct services for victims, (3) providing training programs for service providers, (4) sponsoring the development of best practices for service providers, and (5) producing reports on best practices. The OVC funds victim-support programs in all 50 states, the District of Columbia, and the territories.\nNotably, Congress has amended VOCA several times to provide support for victims of terrorism. These amendments established CVF-funded programs for (1) assistance to victims of terrorism who are injured or killed as a result of a terrorist act outside the United States, (2) compensation and assistance to victims of terrorism within the United States, and (3) an antiterrorism emergency reserve fund to support victims of terrorism.\nThis report provides background and funding information for VOCA programs and the CVF. It describes the process through which CVF funds are allocated and explains how the CVF impacts the annual budget for DOJ. It then provides an analysis of selected issues that Congress may consider regarding the CVF and the federal budget.", "", "The CVF does not receive appropriated funding. Rather, deposits to the CVF come from a number of sources including criminal fines, forfeited bail bonds, penalties, and special assessments collected by the U.S. Attorneys' Offices, federal courts, and the Federal Bureau of Prisons from offenders convicted of federal crimes. In 2001, the USA PATRIOT Act ( P.L. 107-56 ) established that gifts, bequests, or donations from private entities could also be deposited to the CVF.\nThe largest source of deposits into the CVF is criminal fines. Large criminal fines, if collected, can have a significant effect on deposits into receipts for the CVF. For example, from FY1996 through FY2004, fines collected from 12 defendants in federal courts accounted for 45% of all deposits to the CVF during this time period. Table 1 provides the amounts deposited into the CVF in each fiscal year from 1985 through 2016.", "As Table 1 illustrates, since 2000 there has been considerable fluctuation in the amounts deposited each fiscal year. For example, from FY2013 to FY2014 the monetary amount collected rose by over 140% and then decreased by approximately 26.0% in FY2015. This was followed by a 43.7% decrease in FY2016. Table 1 provides the annual amounts collected from FY1985 through FY2016.\nDuring the last decade, over $20 billion has been deposited into the CVF. Large criminal fines levied in cases of financial fraud and other white collar crimes likely contributed to the sizeable growth of the Fund. Although OVC had expected deposits to remain high due to major fines levied against federal offenders (in particular, against corporate violators of federal law), deposits into the Fund fluctuate from year to year and sometimes decrease, as they did from FY2015 to FY2016. Further, DOJ has identified the prosecution of violent offenders as a priority. While this does not mean that prosecutions against corporate offenders that pay substantial criminal fines will decline, if these prosecutions were to decline it may effect a further decline in the deposit amounts to the CVF.", "In the history of the CVF, two caps have affected the balance and distribution of the Fund: a cap on deposits and an obligation cap.", "In 1984, Congress placed a cap on how much could be deposited into the CVF for the first eight years. As shown in Table 1 , from FY1985 through FY1992, the annual cap on deposits ranged from $100 million to $150 million. In 1993, Congress lifted the cap on deposits, establishing that all criminal fines, special assessments, and forfeited bail bonds could be deposited into the CVF.", "From FY1985 to FY1998, deposits collected in each fiscal year were distributed in the following fiscal year to support crime victims services. In 2000, Congress established an annual obligation cap on the amount of CVF funds available for distribution to reduce the impact of fluctuating deposits and ensure the stability of funds for programs and activities. Congress establishes the CVF cap each year as a part of the appropriations for DOJ.", "In FY2015, Congress set the CVF obligation cap at $2.361 billion, a 216.9% increase over the FY2014 cap. Congress did not specify directions for the increase in CVF funds, which were distributed to crime victims programs according to the formula established by VOCA. In FY2016, Congress set the cap at $3.042 billion, a further increase to the cap; however, $379 million was transferred to the Office on Violence Against Women (OVW) for purposes outside of VOCA and $10 million was designated for the DOJ Office of the Inspector General (OIG) for oversight and auditing purposes. After deducting these amounts specified in P.L. 114-113 , the obligation cap was equal to $2.653 billion, a 12.4% increase over the FY2015 cap. In FY2017, however, Congress set the cap at $2.573 billion, a 15.4% decrease compared to the FY2016 cap. From this amount, $326 million was transferred to OVW (again for purposes outside of VOCA) and $10 million was again designated for the DOJ OIG for oversight and auditing purposes. Of note, the Administration's FY2018 budget request specifies that $610 million be transferred from the CVF to OVW and agencies within the Office of Justice Programs for non-VOCA grant programs.\nIn the accompanying explanatory statement for the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2017 (Division B, P.L. 115-31 ), Congress explains that collections into the CVF have slowed, and to ensure solvency of the Fund the FY2017 obligation cap was calculated based on the three-year average of collections into the CVF.", "Language restricting the use of certain funds, particularly as they relate to abortions, is commonly included in appropriations language. Appropriations riders may or may not apply to the programs authorized by the CVF, depending on how those riders are framed. Amounts in the CVF are not appropriated; rather, the CVF is funded through fines and penalties as specified in VOCA.", "Funding for a current year's grants is provided by the previous year's deposits to the CVF, and the OVC is authorized to use the capped amount for grant awards in a given year. After the yearly allocations are distributed, the remaining balance in the CVF is retained for future expenditures. The difference between the fund's balance and the capped amount due to the obligation limitation is scored as a reduction or offset (i.e., as a Change in Mandatory Program or CHIMP) in the DOJ total discretionary spending in a given fiscal year. Moreover, that offset also affects the discretionary spending total in measures reported in the Commerce, Justice, and Science appropriations bill.\nVOCA law requires that all sums deposited in a fiscal year that are not obligated must remain in the CVF for obligation in future fiscal years. If collections in a previous year exceed the obligation cap, amounts over the cap are credited to the CVF, also referred to as the \"rainy day\" fund, for future program benefits. For example, in FY2000 funding for the year was capped at $500 million despite the fact that collections were over $985 million in FY1999. In FY2000, approximately $485 million remained in the CVF and was credited for future use. Table 1 provides the balances that remain credited to the CVF at the end of each fiscal year from FY2000 through FY2016.", "As previously stated, the OVC awards CVF money through formula and discretionary grants to states, local units of government, individuals, and other entities. The OVC also awards CVF money to specially designated programs. Grants are allocated according to statute (see Figure 1 ) established by the VOCA.", "The OVC and the Administration for Children and Families (ACF) within the Department of Health and Human Services (HHS) manage the Children's Justice Act Program, a grant program designed to improve the investigation, handling, and prosecution of child abuse cases. Up to $20 million must be distributed annually to the Children's Justice Act Program. Of the designated funds, ACF receives up to $17 million to manage this program for the states, while the OVC distributes up to $3 million for tribal populations. In FY2016, the ACF received $17.36 million from the CVF to fund the Children's Justice Act Program. Table 2 provides funding data from FY2012 through FY2016.", "The OVC provides annual funding to support victim-witness coordinators within each of the 93 U.S. Attorney's Offices. In accordance with the Attorney General Guidelines for Victim and Witness Assistance , these personnel provide direct support for victims of federal crime by assisting victims in criminal proceedings and advising victims of their rights, such as their right to make oral and written victim impact statements at an offender's sentencing hearing. Table 3 provides the number of full-time employees supported with CVF funding and the amount of CVF funding that the EOUSA victim-witness coordinator program has received from the OVC from FY2012 through FY2016.", "The OVC provides annual funding to support victim witness specialists within the 56 FBI field offices. These specialists, or coordinators, personally assist victims of federal crime and provide information on criminal cases throughout case development and court proceedings. Table 4 provides the amount of CVF funding that the FBI's Victim Witness Program has received from the OVC in FY2012-FY2016.", "The OVC provides annual funding to support the Victim Notification System (VNS), a program administered by the EOUSA and jointly operated by the FBI, EOUSA, OVC, and the Federal Bureau of Prisons. VNS is the vehicle through which victims are notified of major case events relating to the offender, such as the release or detention status of the offender. Table 5 provides the amount of CVF funding that the VNS has received from the OVC in FY2012-FY2016.", "After the Children's Justice Act, victim witness, and VNS programs are funded, remaining CVF money is distributed as follows: Victim Compensation Formula Grants (47.5%); Victim Assistance Formula Grants (47.5%); and OVC Discretionary Grants (5%). Amounts not used for state compensation grants are made available for state victim assistance formula grants. As shown in Figure 1 , while both compensation and assistance grants are allotted the same percentage of the remaining balance, the state victim assistance grant program receives 47.5% of the remaining balance plus any funds not needed to reimburse victim compensation programs at the statutorily established rate.", "As mentioned, 47.5% of the remaining annual CVF money is for grant awards to state crime victim compensation programs. All 50 states, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico have victim compensation programs. The OVC awards each state 60% of the total amount the state paid (from state funding sources) to victims in the prior fiscal year.\nAccording to VOCA, a state is eligible to receive a victim compensation formula grant if the state program meets the following requirements: (1) promotes victim cooperation with requests of law enforcement authorities, (2) certifies that grants received will not be used to supplant state funds, (3) ensures that non-resident victims receive compensation awards on the same basis as victims residing within the state, (4) ensures that compensation provided to victims of federal crimes is given on the same basis as the compensation given to victims of state crime, and (5) provides compensation to residents of the state who are victims of crimes occurring outside the state.\nThe formula grants may be used to reimburse crime victims for out-of-pocket expenses such as medical and mental health counseling expenses, lost wages, funeral and burial costs, and other costs (except property loss) authorized in a state's compensation statute. Victims are reimbursed for crime-related expenses that are not covered by other resources, such as private insurance. Since FY1999, medical and dental services have accounted for close to half of the total payout in annual compensation expenses. In FY2015, 45.2% of the total payments were for medical and dental expenses.\nAccording to OVC data, assault victims represent the highest percentage of victims receiving compensation each year. Victims of assault represented 39.3% all claims filed during FY2015. Nearly half of assault claims for FY2015 were \"domestic and family violence-related.\"\nTable 6 provides the amount of CVF funding that was allotted to OVC's Victim Compensation Program from FY2012 through FY2016.", "The other 47.5% of the remaining annual CVF money (see Figure 1 ) is for the Victim Assistance Formula Grants Program. Amounts not used for state compensation grants are made available for the Victim Assistance Formula Grants Program. This program provides grants to state crime victim assistance programs to administer funds for state and community-based victim service program operations. The grants support direct services to crime victims including information and referral services, crisis counseling, temporary housing, criminal justice advocacy support, and other assistance needs.\nAssistance grants are distributed by states according to guidelines established by VOCA. States are required to prioritize the following groups: (1) underserved populations of victims of violent crime, (2) victims of child abuse, (3) victims of sexual assault, and (4) victims of spousal abuse. States may not use federal funds to supplant state and local funds otherwise available for crime victim assistance. The time period in which states must use their annual award includes the year it was given to the state plus three years.\nVOCA establishes the amount of funds allocated to each state and territory. Each of the 50 states, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico receive a base amount of $500,000 each year. The territories of the Northern Mariana Islands, Guam, and American Samoa receive a base amount of $200,000 each year. The remaining funds are distributed based on U.S. census population data. Table 7 provides the amount of CVF funding that the OVC allotted for the Victim Assistance Grant Program from FY2012 through FY2016.\nAccording to the OVC, victims of domestic violence make up the largest number of victims receiving services under the Victim Assistance Formula Grants Program. In FY2015, 47.8% of the 3,716,668 victims served by these grants were victims of domestic violence. This percentage has remained relatively stable since 2000, when 50.1% of all victims served by the victim assistance grants were victims of domestic violence.", "Five percent of the CVF money available after the specially designated program allocations have been made (see Figure 1 ) is for discretionary grants. According to VOCA, discretionary grants must be distributed for (1) demonstration projects, program evaluation, compliance efforts, and training and technical assistance services to crime victim assistance programs; (2) financial support of services to victims of federal crime; and (3) nonprofit victim service organizations and coalitions to improve outreach and services to victims of crime. The OVC awards discretionary grants each year through a competitive application process.\nTable 8 provides the amount of CVF funding that the OVC allotted for discretionary grants from FY2012 through FY2016.", "The Antiterrorism Emergency Reserve was established in P.L. 104-132 to meet the immediate and long-term needs of victims of terrorism and mass violence. The OVC accomplishes this mission by providing supplemental grants to states for victim compensation and assistance and also by providing direct compensation to victims (U.S. nationals or officers or employees of the U.S. government, including Foreign Service Nationals working for the U.S. government) of terrorist acts that occur abroad.\nThe Director of the OVC is authorized to set aside $50 million of CVF money in the Antiterrorism Emergency Reserve to respond to the needs of victims of the September 11 terrorist attacks, and subsequently, to replenish any amounts expended so that not more than $50 million is reserved in any fiscal year for any future victims of terrorism. After funding all other program areas, as listed above, the funds retained in the CVF may be used to replenish the Antiterrorism Emergency Reserve. This reserve fund supports the following programs:\nAntiterrorism and Emergency Assistance Program (AEAP), International Terrorism Victim Expense Reimbursement Program, Crime Victim Emergency Assistance Fund at the FBI, and Victim Reunification Program.", "Over the past two years, the OVC has responded to several incidents of terrorism and/or mass violence in the United States with grants from the AEAP. Following incidents of terrorism or mass violence, jurisdictions may apply for AEAP funds to be used for crisis response, criminal justice support, crime victim compensation, and training and technical assistance expenses. In January 2014, OVC announced the award of $8.4 million to assist victims, witnesses, and first responders of the Boston Marathon bombings, an incident that resulted in the deaths of three spectators and a police officer, and the injuries of hundreds more. The grant award was received by the Massachusetts Office for Victim Assistance to assist organizations with \"costs, both incurred and anticipated, for organizations providing crisis intervention services and trauma-informed care, continuum of care, socioeconomic support, wrap-around legal services and other victim assistance.\" In 2013, AEAP funds were also used to support victims of mass shootings in Newtown, CT; Oak Creek, WI; and Aurora, CO.", "In the aftermath of the terrorist attacks on September 11, 2001, the OVC used money available in the Antiterrorism Emergency Reserve account to immediately respond to the needs of victims. The OVC awarded $3.1 million in victim assistance funding and $13.5 million in victim compensation funding to the states of New York, Virginia, and Pennsylvania. The funds were used by these states to coordinate and provide emergency assistance to victims in the form of crisis counseling and other direct services, and to offset out-of-pocket expenses for medical and mental health services, funeral costs, and lost wages.\nIn addition to providing funds to states, the OVC provided other assistance and services to victims, including the following:\nOVC staff worked to identify the short- and long-term needs of victims and related costs, as well as to coordinate its efforts with other federal agencies such as the Federal Emergency Management Agency (FEMA). Immediately following the attacks, the OVC set up a call center that offered a 24-hour, toll-free telephone line for collecting victim information and providing referrals for financial, housing, and counseling assistance. Approximately 37,000 victims and family members received assistance and referrals through the call center. The OVC also established a Victim and Family Travel Assistance Center, which handled all logistical arrangements and paid travel and lodging costs for 1,800 family members traveling to funerals and memorial services. The OVC designed and operated a special \"Hope and Remembrance\" website to provide victims with answers to frequently asked questions, official messages from U.S. government sources, news releases, etc.", "Congress may confront several issues when considering the balance of the CVF, the annual obligation cap on the CVF, and possible amendments to VOCA. These issues include using the CVF for purposes other than those explicitly authorized by VOCA, making adjustments to the CVF cap such as eliminating the cap, and amending VOCA to accommodate new programs or to adjust the allocation formula. Congress may also consider the purposes for which certain pools of victim services monies can be used.", "Because the CVF balance remains significantly larger than the amount distributed to victims each year, there are several issues Congress may consider, and in some cases already has considered, regarding the balance of the Fund. One is whether to use receipts from the CVF to fund grant programs that are not authorized by VOCA. In the past, Congress has passed legislation that made CVF money available to support programs authorized outside of VOCA. For example, the National Defense Authorization Act ( P.L. 110-181 ) included a provision mandating that the Attorney General transfer from the emergency reserve of the CVF \"such funds as may be required\" to cover the costs of special masters appointed by U.S. district courts in civil cases brought against state sponsors of terrorism. Until FY2016, CVF money had not been used to fund grant programs outside of those authorized by VOCA; however, in the FY2016 and FY2017 appropriations acts, CVF funds were transferred to the Office on Violence Against Women (OVW) to be used for specified grant programs authorized under the Violence Against Women Act. The Administration's FY2018 budget request proposes to use the CVF to fund multiple DOJ accounts not authorized by VOCA, including those that address domestic violence, sex offenders, trafficking victims, and child abuse.\nWhile it could be argued that funds for non-VOCA grant programs go to support crime victims, it raises a question about whether these actions might pave the way for the CVF to be used to support grant programs that might not be victim-focused. On the other hand, the CVF has a balance of more than $9 billion, which indicates that receipts to the fund, for certain years, exceeded the congressionally specified cap; however, as mentioned, Congress substantially increased the cap in FY2015 and increased it further in FY2016 (see Table 1 ). In addition, deposits into the Fund decreased by approximately 44% from FY2015 to FY2016. In a time of fiscal constraint, the CVF might provide an avenue to fund some DOJ grant programs while reducing DOJ's discretionary appropriation; however, as shown by the drop in CVF deposits in FY2016, there is no guarantee that receipts going into the CVF will be consistent from one year to the next. Therefore, if Congress were to further increase the cap and continue to use funding from the CVF for non-VOCA programs, it may not be possible to ensure that there will be a consistent level of funding to support these programs in future budget cycles.\nCongress may also decide to rescind funds from the balance of the CVF, as it did in November 2015 through the Bipartisan Budget Act of 2015 ( P.L. 114-74 ). This law required the rescission and permanent cancellation of $1.5 billion from the balance of the CVF. This unprecedented rescission and cancellation did not carry any specification as to any redirection for the funds, but rather was treated as a general offset. This action did not impact, at least not directly, the annual obligation cap on the CVF.\nCongress could decide to eliminate the cap on the Crime Victims Fund altogether. If Congress should decide to eliminate the cap and allow all collected funds to be distributed in a given fiscal year, it could possibly have significant consequences for the DOJ budget. As mentioned, the capped amount and remaining balance in the CVF are considered part of the DOJ budget total. These amounts impact the DOJ appropriation, are used to offset spending limits for DOJ programs, and are included in the overall budget score for DOJ. If Congress were to eliminate the cap, it would have to make up the amount of the CVF through offsets. Moreover, Congress may consider whether VOCA programs would be able to use all money in the fund if the obligation cap were eliminated.", "While VOCA may be amended in many possible ways, this report presents two options that Congress may choose to consider. Congress may decide to reassess the allocation formula of the CVF (see Figure 1 ) or consider the addition of new programs to be supported through the CVF.\nVOCA Assistance Administrators have voiced concern that fluctuations in annual obligations can directly impact fund availability for victim assistance formula grants and, to a lesser extent, discretionary grants. The addition of new programs, increases in funding to other programs funded by the CVF, and new management and administration costs cause a reduction in funding available for victim assistance formula grants and discretionary grants. Congress may choose to review the allocation formula to determine if changes should be made to reduce the impact of fluctuations in obligated funds on these grants.\nSince 1984, VOCA has been amended several times to support additional victim-related activities and accommodate the needs of specific groups of victims, such as child abuse victims and victims of terrorist acts. Congress may choose to continue amending VOCA to further accommodate the needs of additional special populations, such as victims of elder abuse and rural victims. While support for victims of elder abuse is an allowable use of the Fund, as the \"baby boom\" generation ages, it is possible that elder abuse will grow as a social concern. Similarly, victims in rural areas are supported through VOCA programs, but they face unique barriers to assistance such as lack of qualified service professionals and higher costs and availability of transportation to obtain services. Other populations with unique risks and needs may present themselves, and Congress may choose to use VOCA as one potential vehicle to address those risks and needs.", "Currently, the VOCA formula does not incorporate American Indian tribal governments for its two largest programs; the victim assistance and victim compensation formula grant programs. While tribal governments are eligible to receive assistance and compensation funds from their respective state victim programs (e.g., in the form of sub-grants), some have argued that there should be a dedicated amount from the Crime Victims Fund directed to American Indian tribes each year. In the 114 th Congress, the Senate Committee on Indian Affairs marked up the Securing Urgent Resources Vital to Indian Victim Empowerment Act (SURVIVE Act; S. 1704 ), which would have amended VOCA to create a special allotment (5% of the annual obligation capped amount) for tribes. These funds would have been used to create a new grant program for tribal crime victims services and compensation to be administered by the U.S. Department of the Interior.\nThe Administration's FY2018 budget request proposes to set aside 5% of the FY2018 obligation cap for grants and assistance to American Indian tribes \"to improve services and justice for victims of crime.\"", "Federal spending can be divided into the budget categories of discretionary spending, mandatory spending, and net interest. In certain circumstances, reductions in mandatory spending can generate offsets that allow higher levels of discretionary spending than would otherwise be permitted under congressional budget rules or under statutory caps on discretionary spending. Changes in mandatory spending (CHIMPs) are provisions in appropriations acts that reduce or constrain mandatory spending, and they can provide offsets to discretionary spending. The obligation limitation on the CVF has been the CHIMP item that has generated the largest offset of discretionary spending in recent years.\nIn the 115 th Congress, the Fairness for Crime Victims Act of 2017 ( H.R. 275 ) has been introduced, and if enacted would adjust the way CHIMPs affect the CVF and how it is used as an offset of discretionary spending. Also, the bill is intended to ensure that the CVF annual obligation cap is never less than the average amount of deposits into the CVF of the previous three fiscal years. As mentioned, the FY2017 obligation cap was calculated based on a three-year average of collections into the CVF." ], "depth": [ 0, 1, 1, 2, 3, 2, 3, 3, 3, 3, 2, 1, 2, 2, 2, 2, 2, 3, 3, 2, 2, 3, 3, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "", "h0_title h2_title h1_title", "h0_full", "", "h2_title h1_title", "h1_full", "h1_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h2_title", "h0_full h2_full", "", "", "" ] }	{ "question": [ "How does the CVF receive deposits?", "What other forms of deposits does the CVF allow?", "What are the largest deposits to the CVF?", "What was the CVF balance by the end of fiscal year 2016?", "How was the first cap on CVF deposits places?", "How was this cap removed?", "How were deposits used pre-2000s?", "Why was a cap reintroduced in the 2000s?", "How has the cap functioned since?", "How has Congress interacted with the CVF?", "What provision was passed by Congress regarding the CVF balance?", "How else did Congress later restrict the cap?" ], "summary": [ "Deposits to the CVF come from criminal fines, forfeited appearance bonds, penalties and special assessments collected by the U.S. Attorneys' Offices, federal courts, and Federal Bureau of Prisons.", "Since 2002, Congress has allowed gifts, bequests, and donations from private entities to be deposited into the CVF.", "Of note, the largest source of deposits into the CVF is criminal fines.", "At the end of FY2016, the CVF had a balance of more than $9 billion.", "When the CVF was created in 1984, Congress placed a cap on how much money could be deposited into the CVF each year.", "Congress eliminated the cap for deposits in 1993.", "From FY1985 to FY1998, deposits collected in each fiscal year were distributed in the following fiscal year to support crime victim services.", "In FY2000, Congress established an annual obligation cap on CVF funds available for distribution to reduce the impact of fluctuating deposits and to ensure the stability of funds for crime victims programs and activities.", "Since 2000, Congress has established the annual obligation cap in appropriations law.", "Over the past few years, Congress has taken a number of unprecedented actions involving the CVF.", "In the 114th Congress, the Bipartisan Budget Act of 2015 (P.L. 114-74) included a provision (§702) that required the rescission and permanent cancellation of $1.5 billion from the balance of the Crime Victims Fund.", "In addition, in FY2017 Congress calculated the obligation cap based on a three-year average of collections into the CVF." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, -1, -1, 3, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 5, 5, 5 ] }
CRS_R42022	{ "title": [ "", "Overview of Palestinian Initiative and Congressional Interest1", "United Nations Framework and Process12", "Introduction", "The United Nations and Recognition of States", "Observer Status in the United Nations", "United Nations Membership: Criteria and Process", "Criteria", "Process", "The Security Council", "The General Assembly", "Advisory Opinion of the International Court of Justice (ICJ)", "Palestinian Initiatives in U.N. Specialized Agencies32", "Introduction", "United Nations Educational, Scientific and Cultural Organization (UNESCO)", "Membership Process", "Recent and Prospective Action", "Tactical Possibilities During the U.N. Process", "Compromise Resolution?", "Diplomacy Involving Europe", "Possible Implications of U.N. Action for Future Israeli-Palestinian Developments", "On-the-Ground Consequences and Further International Action", "Back to Negotiations?", "Israel's Reaction", "Internal Palestinian Developments", "Congressional Options on Aid", "Background on U.S. Aid to the Palestinians", "Possible Changes to Aid to the Palestinians and Contributions to the United Nations", "Congressional Holds on FY2011 Aid", "FY2012 Aid", "Looking Ahead", "Conclusion" ], "paragraphs": [ "", "Palestine Liberation Organization (PLO) Chairman and Palestinian Authority (PA) President Mahmoud Abbas cites a lack of progress on the two-decades-old peace process with Israel as the driving factor behind current PLO/PA consideration of alternative pathways toward a Palestinian state. In recent months, PLO and PA officials have actively worked to obtain more widespread international recognition of Palestinian statehood in the West Bank (including East Jerusalem) and the Gaza Strip. Over 100 countries have recognized the state of Palestine that the PLO declared unilaterally in 1988. No North American or Western European governments that provide significant financial support to the PA and are influential in the Middle East have recognized the 1988 claim, and the current Palestinian initiative has raised new questions about the positions of these third parties.\nPLO officials are pursuing action in the United Nations (U.N.) aimed at solidifying international support for Palestinian statehood, and they appear to enjoy support from the Palestinian public and several international institutions for their efforts. Proponents of these initiatives at the U.N. support the timing of their efforts by citing both the plan of PA Prime Minister Salam Fayyad to reach \"de facto statehood\" by August 2011 through strengthening PA institutions and economic development, and the goal President Obama enunciated in September 2010 for establishing a Palestinian state by 2011 as part of a negotiated two-state solution with Israel. According to a September 2011 poll by the Palestinian Center for Policy and Survey Research, 83% of Palestinians in the West Bank (including East Jerusalem) and Gaza Strip support \"turning to the UN to obtain support for a Palestinian state.\" Reports in 2011 from the World Bank, the International Monetary Fund, and the Office of the U.N. Special Coordinator for the Middle East Peace Process stated that the PA has made institutional progress in areas traditionally deemed necessary for statehood, but noted continued impediments: an underdeveloped private sector, constraints—mainly Israel-imposed—on movement and access respecting the West Bank and Gaza, fiscal problems related to a dearth of international donor funding, and lack of progress in negotiations.\nPLO Chairman/PA President Abbas initiated action at the opening of the annual U.N. General Assembly session that could lead to votes in both the Security Council and the General Assembly. On September 23, 2011, he submitted an application for Palestinian state membership—on the basis of the armistice lines that prevailed before the Arab-Israeli War of 1967 (commonly known as the \"1967 borders\")—to the U.N. Secretary-General, who is expected to submit the matter to the Security Council for its action on whether to recommend membership. A positive recommendation would require 9 \"yes\" votes out of 15 and no vetoes by any of the five permanent Council members. The Obama Administration has indicated that it will veto a Security Council recommendation resolution, but in the unlikely event the Council were to make a positive recommendation, a two-thirds majority vote would be required in the General Assembly to admit a Palestinian state to the United Nations. To date, Security Council deliberations on the Palestinian membership application have remained at the committee level, and the Council could take additional weeks to review it.\nIn an alternate or parallel scenario, an existing U.N. member state supportive of PLO plans may sponsor a resolution in the General Assembly. A General Assembly resolution could recommend the recognition of a Palestinian state based on the 1967 borders—either as-is or based provisionally on those lines subject to future Israel-PLO negotiation—and change Palestine's permanent observer status in the United Nations from that of an \"entity\" to that of a \"non-member state\" with a simple majority vote. Deferring the establishment of permanent borders to future negotiations could help the Palestinians obtain more widespread support for U.N. action from European and other countries.\nAdditionally, the Executive Board of the U.N. Educational, Scientific and Cultural Organization (UNESCO) voted in early October 2011 to have UNESCO's General Conference consider the question of Palestinian membership—see \" United Nations Educational, Scientific and Cultural Organization (UNESCO) \" below for further discussion. A session of UNESCO's General Conference, at which a vote on Palestinian membership might occur, is scheduled to convene from October 25 to November 10, 2011. Admission of a Palestinian state to membership in UNESCO might trigger a legal requirement for the United States to discontinue contributions to UNESCO. Section 410 of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 ( P.L. 103-236 ) is a currently codified legal provision that states that the United States shall not make contributions to \"any affiliated organization of the United Nations which grants full membership as a state to any organization or group that does not have the internationally recognized attributes of statehood.\" Given that the U.S. currently contributes roughly 22% of UNESCO's budget, discontinuance of U.S. contributions could impact the organization.\nMany Members of Congress are actively interested in the question of possible U.N. action on Palestinian statehood. Congress could try to influence U.S. policy and the choices of other actors through the authorization and appropriation of economic and security assistance and through oversight of the Obama Administration's diplomatic efforts. The United States may be faced with a choice between backing its vigorous opposition to U.N. action with possible changes to U.S. aid to the PA, the U.N., and individual U.N. agencies; and taking more of a wait-and-see approach by reserving possible ultimatums for what follows the U.N. outcome both diplomatically and on the ground. Both approaches contain risks. By unsuccessfully mounting strong opposition to U.N. action, the United States may lose credibility and leverage with key actors. A restrained response, however, could lead these actors to perceive U.S. flexibility as weakness open to further exploitation. Either way, the outcome and aftermath of U.N. action on Palestinian statehood could present further challenges to U.S. efforts to pursue a negotiated two-state solution that secures U.S. interests, is acceptable to the Palestinians, guarantees Israel's security, and is credible to both parties and the international community.", "This section provides information on the U.N. framework and process for options being discussed, including the following topics: the United Nations and recognition of states, observer status in the United Nations, and criteria and process for gaining United Nations membership.", "Following PLO Chairman Abbas's September 23 application—presented under the auspices of Abbas's claim to be \"President of the State of Palestine\"—to the U.N. Secretary-General for admission to membership in the United Nations, the Secretary-General circulated the application and a further letter to U.N. member states and to the U.N. Security Council and General Assembly. On September 28, 2011, the Security Council referred the application to its Committee on Admission of New Members \"for examination and report.\" Since September 28, the Committee has been meeting, primarily at the \"expert\" level, to review and \"examine\" the application. These meetings have, as of October 20, 2011, been closed, informal, and not announced in the Daily Journal of the United Nations. Some international media sources have reported that the Committee will report on its deliberations to the Security Council by November 11, but when a vote might occur remains unclear.", "Under international practice, a state is generally understood to be \"an entity that has a defined territory and a permanent population, under the control of its own government, and that engages in, or has the capacity to engage in, formal relations with other such entities.\"\nThe United Nations does not recognize states. States recognize states. The United Nations is \"neither a State nor a Government and therefore does not possess any authority to recognize either a state or a government.\" On the other hand, some contend that admission to membership is an acknowledgement by an organization and its members that an entity has satisfied the requirement of statehood.", "The current relationship of Palestine and the United Nations, as defined through a series of General Assembly resolutions, is as an \"entity\" having received a standing invitation to participate as an observer in the sessions and the work of the General Assembly and maintain permanent offices at Headquarters. Since 1946, non-member states of the United Nations that were members of one or more specialized agencies have applied with the U.N. Secretary-General for the status of Permanent Observer. This practice originated with the application of Switzerland in 1946 for access as a Permanent Observer. It has been suggested that the General Assembly adopt a resolution on the status of Palestine in the United Nations that would change its observer status from \"entity\" to non-member state.", "", "Article 4 of the United Nations Charter establishes the parameters and criteria as well as the process for acquiring membership in the organization. Paragraph 1 of the Article reads\nMembership in the United Nations is open to all other peace-loving states which accept the obligations contained in the present Charter and, in the judgment of the Organization, are able and willing to carry out these obligations.\nBruno Simma, in his two-volume article-by-article commentary on the Charter, converts paragraph 1, above, into \"five criteria for admission.\"\n\"Membership … is Only Open to States\"\nSimma identifies the standard requirements for statehood, including recognition by other states and the capacity to conduct diplomacy with other states.\n[A]n applicant would have to meet the formal requirements of the notion of statehood under international law, i.e., a defined territory, a permanent population, and an independent government…. In order to prove that an applicant ... was a State within the meaning of Art. 4(1) reference was also occasionally made to a certain measure of diplomatic intercourse or a certain degree of international recognition of the applicant State.\n\"The Applicant State Must be 'Peace-Loving'\"\nThe primary purpose of the United Nations organization, as stated in Article 1 of the Charter, is maintenance of international peace and security. This criterion\nwas partly a historical criterion and partly used to qualify a candidate's current conduct.... The criterion ... has also served as a useful instrument of individual States' membership policies.... With regard to the admission of the large number of new States resulting from decolonization, however, the criterion \"peace-loving State\" was of no practical importance at all.\n\"Applicant States Must Accept the Obligations Contained in the Present Charter\"\nApplicant states declare that they accept the obligations set forth in the Charter, a treaty. This would include the principles set forth in Article 2.\n\"Applicants Must, in the Opinion of the Organization, be Able and Willing [emphasis added] to Carry out the Obligations Contained in the Charter\"\nWhile some observers might suggest that these two criteria—capacity and willingness—have been abandoned, they are in the Charter and might be raised during consideration for membership.\nOriginally, it was intended that States should be precluded from membership of the UN if they fell below an objective minimum standard of resource endowment necessary for effective compliance with such obligations .... In this respect, the admissions practice has shown a high measure of flexibility. *** With the open admission to the UN in the second phase of its development, the requirement of the ability to carry out the obligations of the Charter has become practically irrelevant as a membership test.\nRegarding the subjective criterion of willingness to carry out the obligations of the Charter, the GA suggested the following indicators: maintenance of friendly relations with other States; fulfillment of international obligations; and the reputation of States concerned for being prepared to utilize procedures of peaceful dispute settlement (GA Res. 506A (VI), Feb. 1, 1952).", "", "Both the U.N. Security Council and General Assembly are involved in the process for consideration of applications for U.N. membership. According to paragraph 2 of Article 4 of the U.N. Charter,\nThe admission of any such state to membership in the United Nations will be effected by a decision of the General Assembly upon the recommendation of the Security Council.\nThe details of the process are set forth in the rules of procedure of the Security Council and the General Assembly. Applications for membership are submitted by the requesting state to the U.N. Secretary-General, who forwards them to both the Assembly and the Council. In accordance with Rules 58 through 60 of the Provisional Rules of Procedure of the Security Council , the applicant state includes a declaration that \"it accepts the obligations contained in the Charter.\" After receipt of the application, the Council President usually refers the application to the Council Committee on the Admission of New Members for its consideration. After the Council Committee completes its review of the application, it submits a report, with recommended resolution language back to the Council, which takes up the matter in a formal meeting. Decisions on membership applications are subject to veto by any of the five permanent members of the Council. If the Council decides to recommend the state for admission, it adopts a resolution of recommendation that is forwarded in a report to the General Assembly, with a complete record of the discussion. The Council, in recent years, has also issued a presidential statement on its action. If the Council decides not to recommend the state for admission to U.N. membership, it shall, in accordance with Rule 60, submit a special report to the General Assembly with a complete record of the discussion.", "Rule 136 of the Rules of Procedure of the General Assembly states that if the Security Council recommends the applicant State for membership, the General Assembly shall consider whether the applicant is \"a peace-loving State\" and is \"able and willing\" to carry out the obligations contained in the Charter. The Assembly decides, by a two-thirds majority of the members present and voting, on the state's application for membership. Membership becomes effective on the date on which the General Assembly adopts the resolution on admission.\nIf the Security Council has not recommended the applicant state for membership or postpones its consideration of the application, then Assembly Rule 137 provides that the General Assembly may, after full consideration of the special report of the Security Council, send the application back to the Council, along with a full record of the discussion in the Assembly, for further consideration and recommendation or report.\nAppendix A provides information on the process for three recently admitted states. It includes document numbers so that a reader might examine them.", "Can the General Assembly admit a state to membership in the United Nations without a prior Security Council resolution recommending admission? That, in essence, was the question placed before the International Court of Justice (ICJ) in 1949, in response to the persistent inability of the Security Council, between 1946 and 1949, to recommend admission of a number of states. During this time, the USSR exercised its veto in 23 votes on membership applications involving at least nine states.\nIn November 1949, the General Assembly, in an effort to determine if an alternative approach was possible, requested the ICJ, or World Court, to provide an advisory opinion on the following question:\nCan the admission of a State to membership in the United Nations, pursuant to Article 4, paragraph 2, of the Charter, be effected by a decision of the General Assembly, when the Security Council has made no recommendation for admission by reason of the candidate failing to obtain the requisite majority or of the negative vote of a permanent Member upon a resolution so to recommend?\nOn March 3, 1950, the World Court, in its advisory opinion to the Assembly, answered the question in the negative, by 12 votes to 2.\nSome have argued that Security Council failure to recommend Palestine for U.N. membership could be circumvented by taking the issue to the General Assembly, under the Uniting for Peace Resolution (General Assembly Resolution 377 A (V)). The aforementioned World Court advisory opinion appears to refute use of that approach, which was intended to be applied in instances involving maintenance of international peace and security. See Appendix B for further discussion.", "", "There are currently 17 specialized agencies in what is known as the United Nations system. These are \"legally independent international organizations with their own [constitutions,] rules, membership, organs and financial resources\" that have a \"specialized agency\" arrangement or agreement with the United Nations under Article 57 of the United Nations Charter. While the International Atomic Energy Agency (IAEA) is included in this count of 17, it is not a specialized agency having been created by a resolution of the U.N. General Assembly. However, IAEA\noperates like a specialized agency. The unique feature is that IAEA reports to the General Assembly and when appropriate to the Security Council as well as to ECOSOC on matter[s] within ECOSOC's competence. The specialized agencies report to ECOSOC.\nA review of the membership requirements set forth in the constitutions of 13 of these agencies shows a range of provisions. In eleven instances, membership in the United Nations gives a state access to membership in the agency without having to have its admission approved by the membership of the agency (ICAO, IFAD, ILO, IMO, ITU, UNIDO, UPU, WHO, WIPO, WMO, and UNESCO—see textbox below for the agencies' full names). Of these, three agencies also provide membership, without a vote, to member nations of any specialized agency (IFAD, UNIDO, and WIPO). Two agencies require some process of voting for admission to membership (FAO and the UNWTO). The World Tourism Organization (UNWTO) requires a two-thirds vote of its General Assembly for admission to membership. However, an amendment to Article 5 of its Statute, adopted in 2005 but not yet in force, would have membership open to all states that are U.N. members.\nThe United States is not a member of UNIDO or UNWTO.", "", "Article II (paragraph 1) of the UNESCO Constitution provides that membership in the United Nations \"shall carry with it the right to membership in UNESCO.\" Paragraph 2 of Article II states that states not members of the United Nations may be admitted to UNESCO membership, upon recommendation of the UNESCO Executive Board, by a two-thirds majority vote of the UNESCO General Conference.\nThe PLO, or \"Palestine,\" applied for membership in UNESCO in April 1989. The response of both the Executive Board and the General Conference at that time and in intervening years, until October 2011 (see below), has been to defer consideration of the application and to refer the agenda item to the next session of the Executive Board and General Conference.", "On October 5, 2011, the UNESCO Executive Board, by a roll call vote of 40 in favor, 4 against, and 14 abstentions, decided to recommend that the General Conference of UNESCO admit Palestine as a member of UNESCO. The UNESCO General Conference convenes its 36 th session October 25 through November 10, 2011 and may be expected to act on the Board decision during that meeting. The official text of the Board decision is not yet available on the UNESCO website but the following text (see textbox below) was provided by UNESCO through its Liaison Office to the United Nations.", "The following discussion sets forth various possibilities regarding the nature of potential U.N. action or alternatives to such action. Security Council action has begun, but even so, continuing diplomacy might lead to deferral, withdrawal, or modification of a potential resolution. Several actors—including the United States, the PLO, Israel, the European Union, Arab states, and Turkey—could influence developments.\nThe two main decisions for the PLO will be:\nIn which U.N. venue(s) (the Security Council, the General Assembly, or both) will it pursue or continue to pursue its efforts? What will be the substance and wording of its request(s)?", "The United States, Israel, and other actors may seek to influence Palestinian decision-making on both questions. A compromise U.N. resolution might set forth parameters for future Israeli-Palestinian negotiations but stop short of addressing the question of Palestinian statehood beyond expressing aspirations. Such a compromise could prevent the United States from feeling compelled to veto a Security Council vote and risking a significant loss of goodwill among the Palestinian people and wider Arab world. On the other hand, a compromise approach, if perceived by Palestinians as U.S.- or Israeli-engineered coercion of PLO leadership, could lead to an even more negative Palestinian popular reaction—possibly stoked by Hamas or other parties opposed to peace with Israel that have criticized the PLO's resort to the United Nations as futile—than U.S. opposition to U.N. action on statehood.", "It is unclear what leverage U.S. economic and security assistance might have on Palestinian decision-making (see \" Congressional Options on Aid \" below), but any such leverage is likely to be lessened in the event the Palestinians secure significant Western European, Gulf Arab, or other support or assurances of continued assistance. Thus U.S., Israeli, and PLO diplomacy focused on Europe—particularly permanent Security Council members France and the United Kingdom—could intensify as the time for a possible vote draws closer. Such diplomacy also could become intertwined with negotiations regarding the venue for, and the timing and wording of, potential resolutions or other actions.", "The following discussion sets forth possible implications stemming from the process, outcome, or aftermath of U.N. action on Palestinian statehood. Such implications could include consequences for day-to-day interactions between Israelis and Palestinians, precedents that could lead to further international action on behalf of the Palestinians, and ramifications for possible future negotiations and internal Israeli and Palestinian political developments.", "Many proponents of emphasizing Palestinian claims to statehood acknowledge that greater international support through the United Nations or elsewhere will not resolve disputes between Israelis and Palestinians on core issues—borders, security, settlements, refugees, Jerusalem, water rights. Some observers express skepticism that international or unilateral action on the statehood question can transcend symbolism to significantly contribute to Palestinian independence. An upgrade in status would not confer characteristics of sovereignty that might strengthen the Palestinians' position in a negotiating context—such as an independent military capacity and control over territory and borders. Israel would probably retain control over East Jerusalem and overall control—despite the PA's limited self-rule—in the West Bank, while the Sunni Islamist group Hamas (a U.S.-designated Foreign Terrorist Organization) remains de facto ruler over the Gaza Strip.\nIf Israel continues to control developments on the ground in the West Bank and East Jerusalem, along with access to Gaza, the PLO might face questions about next steps from its own people. PLO officials have portrayed the possibility of U.N. action as consequential, if not ultimately decisive, on the statehood issue. However, reduced levels of financial and political support from international patrons stemming from U.N. action could hinder possible subsequent efforts by Palestinian leaders to follow up such action with measures seeking to change Israel's posture in the West Bank and Gaza. It could also detract from their ability to rally popular and international support for these possible follow-up measures.\nA resolution upgrading the permanent observer status of Palestine in the United Nations to a non-member state may also set in motion developments that eventually change how Israelis and Palestinians address their ongoing, fundamental disputes. If Palestinians and other international actors perceive that Palestinian political or legal claims have more basis for redress, altered expectations and calculations could lead to a new dynamic in how Palestinian and third parties relate to Israel with regard to core issues of the dispute. Possible developments—many of which Israel decries as connoting or possibly leading to its \"delegitimization\"—include greater levels of Palestinian civil disobedience or unrest; international boycott, divestment, and sanctions (BDS) movements; and an increase in grievances filed in international courts concerning Israeli actions —such as the International Court of Justice (ICJ) and the International Criminal Court (ICC)—and other forums. A General Assembly resolution purporting to recognize Palestinian statehood could strengthen the Palestinian case for membership in or greater access to some of these international courts and forums, but would not automatically confer such privileges or rights upon the Palestinians. Yet, the possibility of Palestinian state membership in UNESCO might foreshadow future developments.\nSome PLO leaders have stated that following acknowledgment of even limited Palestinian sovereignty, aspects of Israeli control over the West Bank and Gaza would constitute a \"state occupying another state.\" This argument is presumably advanced in order to increase international pressure on Israel to reduce its presence and military control over the territories. Yet, some international actors might reject this argument, particularly if the state's borders have not been definitively established in the Security Council. Israel is likely to reject it under any circumstances.", "Abbas maintains that he still favors a U.S.-led negotiating process under the right conditions, and that U.N. action supporting Palestinian statehood could help bring Israel and the Palestinians to the bargaining table on a more equal footing. Yet, pursuit of U.N. action on Palestinian statehood outside of negotiations could be interpreted as a lack of faith by the Palestinians in the ability and/or willingness of the United States to be an \"honest broker\" and guarantor of the peace process. Additionally, some analysts argue that the PLO's pursuit of U.N. action on Palestinian statehood undermines prospects for resuming negotiations because it violates previous Israeli-PLO agreements that form the foundation for a peace process. See Appendix C for further analysis of this question. Still other analysts warn that nominal Palestinian sovereignty gained through unilateral or international means might serve possible Israeli interests in avoiding serious negotiations toward a two-state solution by relieving the sense of international urgency for action on the issue.\nOn September 23, the same day Abbas submitted the application for Palestinian state membership in the U.N., the international Quartet (United States, European Union, United Nations Secretary-General, Russia) issued a statement that read in part:\nThe Quartet takes note of the application submitted by President Abbas on 23 September 2011, which is now before the Security Council.\nThe Quartet reaffirmed its statement of 20 May 2011, including its strong support for the vision of Israeli-Palestinian peace outlined by United States President Barack Obama.\nThe Quartet recalled its previous statements, and affirmed its determination to actively and vigorously seek a comprehensive resolution of the Arab-Israeli conflict, on the basis of United Nations Security Council resolutions 242, 338, 1397, 1515, 1850, the Madrid principles, including land for peace, the Road Map and the agreements previously reached between the parties.\nThe Quartet reiterated its commitment to a just, lasting and comprehensive peace in the Middle East and to seek a comprehensive resolution of the Arab-Israeli conflict, and reaffirms the importance of the Arab Peace Initiative.\nThe Quartet reiterated its urgent appeal to the parties to overcome the current obstacles and resume direct bilateral Israeli-Palestinian negotiations without delay or preconditions. But it accepts that meeting, in itself, will not re-establish the trust necessary for such a negotiation to succeed. It therefore proposes the following steps:\n1. Within a month, there will be a preparatory meeting between the parties to agree an agenda and method of proceeding in the negotiation.\n2. At that meeting, there will be a commitment by both sides that the objective of any negotiation is to reach an agreement within a time frame agreed to by the parties, but not longer than the end of 2012. The Quartet expects the parties to come forward with comprehensive proposals within three months on territory and security, and to have made substantial progress within six months. To that end, the Quartet will convene an international conference in Moscow, in consultation with the parties, at the appropriate time.\nSubsequent U.S. efforts to restart negotiations have led to plans for Quartet meetings with Israeli and Palestinian officials in late October to discuss an agenda and framework for potential future negotiations.\nHowever, a resumption of negotiations may be unlikely unless the PLO drops its insistence on a halt to Israeli settlement building, which in turn is unlikely in light of Israeli bureaucratic progress in September and October toward new housing units for Jewish residents in disputed areas of East Jerusalem—over 1,000 in Gilo and approximately 1,800 for a new development in Givat Hamatos. These steps toward further construction triggered statements of protest from Palestinian officials, as well as from European Union foreign policy chief Catherine Ashton and U.N. Secretary-General Ban Ki-moon. U.S. State Department spokeswoman Victoria Nuland said that further construction in East Jerusalem would be \"counterproductive to our efforts to resume direct talks between the parties.\" Israeli newspaper Ha'aretz published an editorial on October 18, stating that \"the creation of the new Jewish neighborhood will reduce the likelihood of reaching a peace agreement over Jerusalem that would allow for territorial contiguity between the Palestinian communities. Givat Hamatos joins the plans for the expansion of Gilo and Har Homa to complete the ring that will cut off East Jerusalem completely from the southern West Bank.\"\nMoreover, even if negotiations resume, their prospects remain uncertain, if not dim. The unwillingness of Hamas to recognize Israel's right to exist and renounce violence further complicates matters. Israel and Hamas remain unwilling to negotiate directly with one another, and Israelis and Palestinians appear unwilling to compromise on conflicting positions concerning the claims of Palestinian refugees and the status of Jerusalem.", "Broad international support for Palestinian statehood could amplify Israelis' concerns about their own security, particularly in view of ongoing political change in the surrounding Arab world and the volatility and possible deterioration of Israel's political and military relationships with Egypt and Turkey. Israeli threat perceptions could lead to greater flexibility on its positions on some of the core issues expected to be resolved in a final-status Israel-PLO peace agreement, although the political climate in Israel makes this unlikely. The rationale, espoused by commentators and some former Israeli leaders commonly identified with the left and center of the political spectrum, would be that time for reaching a deal with the Palestinians is running out, as changes in the region lead Palestinian leaders and Arab state governments to show greater responsiveness to popular anti-Israel sentiment, and that negotiating peace is Israel's best chance to ensure its long-term security.\nIsraeli leaders might, instead, be more likely to become less flexible in negotiations due to calculations that Israeli concessions are likely to embolden—not assuage—Palestinians and other Arabs, encouraging them to seek greater gains at Israel's expense. Many Israelis, including many or most in the ruling coalition of Prime Minister Binyamin Netanyahu's government, see the wave of change in the Arab world, and especially in Egypt, as a repudiation of the logic of trading land for peace, and as contributing to an unpredictable environment that merits caution, not concessions. If these views prevail, Israel might conclude that its best options lie in using its military and other strategic assets to shape desired outcomes either unilaterally or in concert with regional and international allies and supporters. Possible specific Israeli responses may include, among others:\nwithholding transfer revenue (taxes and customs Israel collects on behalf of the PA) that constitutes nearly two-thirds of the PA's budget; increasing construction and approval of Israeli settlements and infrastructure in the West Bank and East Jerusalem; and tightening security in and around the West Bank and Gaza.", "Although the PLO is internationally recognized as the sole representative of the Palestinian people, the nature, outcome, and aftermath of U.N. action aimed at advancing the cause of Palestinian statehood could have a significant effect on internal Palestinian developments, which would in turn affect the Palestinians' dealings with Israel and the international community. The following questions could become pertinent:\nWill Mahmoud Abbas and his PLO/PA/Fatah colleagues and possible successors be willing and able to drive the Palestinian agenda toward a negotiated peace with Israel, or will past experience, regional trends, and popular sentiment compel them to pursue alternatives? Will efforts by Fatah and Hamas to form a consensus PA government and reunite the West Bank and Gaza under limited self-rule resume in light of their May 2011 agreement? What form might these efforts take? Could the outcome of international or unilateral action contribute to internal challenges to Fatah-led PA leadership in the West Bank and/or Hamas rule in Gaza? What are the relative risks of uprisings fed by changed popular expectations or the actions of organized militant groups? If a Palestinian entity claims or receives greater international recognition of its sovereignty over the West Bank, Gaza, and East Jerusalem on the basis of the 1967 lines, how might the rights and privileges of Palestinian refugees and other diaspora members living outside the 1967 borders be affected?\nMany observers believe that Hamas was at least partly motivated to agree to the October 2011 exchange of captured Israeli Sergeant Gilad Shalit for roughly 1,000 Palestinian prisoners by its desire to regain domestic and regional prestige that Abbas and the PLO have been receiving for proceeding with U.N. initiatives while facing concerted U.S. and Israeli opposition.", "", "Many observers point to signs of progress with PA security capacities and West Bank economic development, along with greater Israeli cooperation, as indications that U.S. aid is serving its purpose. It is less clear whether the progress they cite can be made self-sustaining and will be useful in promoting a broader political solution, and whether the level of Israeli cooperation is sufficient in forwarding both these goals. For a description of U.S. aid programs, see CRS Report RS22967, U.S. Foreign Aid to the Palestinians , by [author name scrubbed].\nUltimately, the ability of U.S. aid to influence Palestinian political decisions depends on some level of Palestinian popular recognition that U.S. policies and assistance promote Palestinians' long-term interests. PA willingness to support U.S.-sponsored efforts to counter Hamas and to reform internal Palestinian political and economic structures could recede as well unless Palestinians believe that the United States is both willing and able to support their quest for self-determination. Continued active U.S. opposition to U.N. action on Palestinian statehood—particularly a possible U.S. veto in the U.N. Security Council—could cast further doubt among Palestinians (possibly along with other international actors) that the United States is an effective partner, and thus may undermine any potential leverage provided by U.S. aid programs. Bottom-up political pressure, along with frustration at the lack of progress over the past several years, might influence some leaders who once supported U.S. priorities to change course. Close Abbas advisor Yasser Abed Rabbo, anticipating U.S. opposition to U.N. action, said in September 2011:\nThis shows not only disdain for the Palestinian position, but also scorn for what is happening in the Arab world: a revival seeking justice for the Arab peoples and the region as whole.\nThe prospect of a peace process with no end in sight could intensify the jockeying between and among Israelis and Palestinians for alternatives to a two-state solution, perhaps leading ultimately to greater conflict. Also, the attention and resources devoted to reform and to strengthening anti-Hamas groups in the West Bank could widen divisions between the two Palestinian territories, given perceptions that residents of the Gaza Strip—almost totally dependent on external assistance and illicit economic activity—are being neglected, left behind, or perhaps even targeted. This could lead to heightened Palestinian resentment of all parties promoting the peace process.", "Some Members of Congress are questioning the continuation of U.S. budgetary, security, and/or developmental assistance to the Palestinians due to uncertainty over possible contingencies. Both the House of Representatives ( H.Res. 268 ) and Senate ( S.Res. 185 ) passed resolutions in the summer of 2011 questioning the continuation of U.S. aid to the PA or to Palestinians in general in the event the PLO appeals to the United Nations, other international bodies or forums, and/or foreign governments for recognition of statehood or similar diplomatic support.", "Various Members of congressional committees with jurisdiction over the authorization and appropriation of U.S. aid to the Palestinians have reportedly placed informal holds on the obligation of the following two tranches of already-appropriated FY2011 assistance following August 18 congressional notifications by the Obama Administration:\n$192.2 million in Economic Support Fund (ESF) project assistance for the West Bank and Gaza to be distributed through non-governmental organizations; and $147.6 million in International Narcotics Control and Law Enforcement (INCLE) non-lethal assistance for PA security forces.\nMedia reports and statements from Member offices indicate that Congresswoman Kay Granger, Chairwoman of the House Appropriations Subcommittee on State, Foreign Operations, and Related Programs; and Congresswoman Ileana Ros-Lehtinen, Chairwoman of the House Foreign Affairs Committee have each placed holds on at least some portion of one or both tranches listed above. Senator Richard Lugar, Ranking Member of the Senate Foreign Relations Committee, had placed a hold on both tranches, but the hold was lifted in early October 2011. According to reports, the current holds on U.S. FY2011 assistance to the Palestinians are at least partly attributable to Members' uncertainty regarding the advisability of providing aid to the PA when it and the PLO are taking action in international forums to boost support for Palestinian statehood outside of negotiations with Israel. It is unclear how long congressional holds on FY2011 assistance to the Palestinians might last.\nAlthough the Administration also notified Congress on August 18 of its intent to obligate the final $50 million of the total FY2011 authorized amount of $200 million in direct budgetary assistance for the PA, this amount is not subject to a hold. The New York Times reported in September 2011 that Israeli Prime Minister Binyamin Netanyahu \"urged dozens of members of Congress visiting Israel [in August] not to object to the aid,\" at the Administration's request.", "Draft legislation for FY2012 appropriations approved by the House Appropriations Subcommittee for State, Foreign Operations, and Related Programs in July 2011 would condition any direct budgetary assistance to the Palestinian Authority on the Secretary of State's certification that the PA is \"not attempting to establish or seek recognition at the United Nations of a Palestinian state outside of an agreement negotiated between Israel and the Palestinians.\" Draft legislation for FY2012 approved in September 2011 by the Senate Appropriations Committee ( S. 1601 , The Department of State, Foreign Operations, and Related Programs Appropriations Bill, 2012) would prohibit direct budgetary assistance to the PA if \"Palestine becomes a member or non-member state of the United Nations outside of an agreement negotiated between Israel and the Palestinians,\" but would also give the Secretary of State authority to waive the prohibition for national security reasons. S. 1601 also would require the Secretary of State to \"submit to the Committees on Appropriations specific recommendations on appropriate actions to be taken with respect to the Palestine Liberation Organization's status in the United States, especially about the closing of its office, if Palestine seeks to become a member or non-member state of the United Nations outside an agreement negotiated between Israel and the Palestinians.\"", "If the PLO is even partly successful in its ongoing effort to gain U.N. and other international support for Palestinian statehood, one might conclude that it would be encouraged to continue with this approach and either discard or call into question the traditional \"Oslo peace process\" approach involving U.S.-supported negotiations with Israel. In that event, Congress would likely face a dilemma. If Congress continues to appropriate U.S. aid to the Palestinians as-is, the PLO might not have sufficient incentive to consider modifying its new approach to the peace process. The PLO might perceive that it has enhanced its leverage with both the United States and Israel and thus become emboldened to act with less regard for U.S. positions. Alternatively, if Congress elects to reduce or discontinue assistance, U.S. influence over future Palestinian policies and internal developments may decline. Such an approach may also increase PA reliance on aid either from European or from Gulf Arab sources, and might amplify Iran's influence by weakening the PA relative to Hamas. The underlying political agendas of these sources could significantly diverge from U.S. interests with regard to issues such as maintaining Israel's security and promoting democratic values and civil liberties. Moreover, if possible cuts in U.S. aid contribute to an environment in which Israel-PA security cooperation erodes, the result could be an increased level of Israeli-Palestinian or regional violence and the further degradation of prospects for a negotiated two-state solution.\nWitnesses from a September 14, 2011, hearing before the House Committee on Foreign Affairs, including Elliott Abrams (of the Council on Foreign Relations), who handled Israeli-Palestinian issues on the George W. Bush National Security Council, cautioned that an automatic and across-the-board cutoff of aid to the PA in the event of U.N. action might not serve U.S. interests—depending on the venue and substance of the possible action:\nSome of the programs that are up for cutting are actually in our interest and the interest of Israel, such as the security programs….\nThe entire Palestinian Authority is not to blame for what the PLO-Fatah crew is planning in New York. I think the collapse of the P.A. would not be in our interest, or for that matter, Israel's or Jordan's. It might actually benefit Hamas and other terrorist groups….\n[W]ait and see what President Abbas in his capacity as chairman of the PLO does. Does he go to the Security Council to force an American veto? That is very harmful for the United States.\nWhat language does he put forth in his resolution? How bad is it, exactly? Does he try to get the General Assembly to pronounce on Jerusalem; on refugees, on borders? Does he go forward the next day to say, \"I'm for negotiations,\" or is he to go forward the next day in the International Criminal Court? So you should keep some powder dry, I think.\nSome Members of Congress have proposed reducing or ceasing U.S. contributions to the United Nations or any U.N. agency that recognizes Palestinian statehood or accepts a putative Palestinian state as a member, on top of currently codified legal provisions ( P.L. 103-236 discussed above, and P.L. 101-246 discussed in Appendix D ) that may require the discontinuance of such contributions. As possible precedent, Representative Ileana Ros-Lehtinen, chairwoman of the House Committee on Foreign Affairs, has cited threats to U.N. funding from the George H. W. Bush Administration that may have discouraged the General Assembly and U.N. agencies from recognizing the 1988 declaration of Palestinian statehood. See Appendix D for information on congressional action from past instances since 1988 relating to unilateral or international efforts to advance the cause of Palestinian statehood.", "PLO diplomatic efforts in 2011 are unlikely to lead to U.N. membership for a putative Palestinian state because of a near certainty that the United States would veto a Security Council membership recommendation vote. However, most observers believe that the PLO has majority support for a possible General Assembly resolution that would upgrade Palestine's permanent observer status in the U.N. to that of a \"non-member state.\" Additionally, action by U.N.-affiliated agencies such as UNESCO to grant membership to a Palestinian state is possible. The United States, Israel, and European countries are likely to focus on influencing Palestinian decisions on the venue of U.N. action and/or the substance and wording of a possible resolution—with special attention to the question of statehood and to the permanence or provisionality of borders along the 1967 lines.\nThe future implications of U.N. action on Palestinian statehood—beyond its potential symbolic value—are unclear. Although such action is unlikely to immediately resolve any of the core issues of the Israeli-Palestinian dispute, it may affect developments on the ground. For example, tightened Israeli security measures with respect to the West Bank and Gaza and popular unrest or civil disobedience among Palestinians could ensue. Although PLO Chairman/PA President Mahmoud Abbas maintains that he seeks an eventual return to U.S.-backed Israel-PLO negotiations, chances for a meaningful resumption of talks remain dim. An upgrade to Palestinian statehood status at the U.N. could lead to subsequent efforts to apply greater political and international legal pressure on Israel to change its posture on the ground, especially if the PLO gains greater access to international courts—such as the ICJ or ICC—or other forums in order to bring action against Israel. Such legal action could focus on Israeli military and security practices and Israeli settlements and infrastructure in the West Bank and East Jerusalem. Israel has expressed concern that additional Palestinian access to such institutions will further expose Israeli military leaders to the types of war crimes charges that have become more common following Israel's military actions of the past decade—possibly affecting the military's morale and operational freedom.\nU.N. action on Palestinian statehood or its aftermath may affect the willingness of Israel to offer concessions in a negotiating process, especially in light of ongoing, widespread change in the Arab world and the volatility and possible deterioration of Israel's political and military relationships with Egypt and Turkey. Nominal Palestinian sovereignty gained through U.N. action might serve Israeli interests by relieving the sense of international urgency for further action on the issue. If the U.N. outcome does not meet the expectations of the Palestinian people, the PLO could face internal challenges—from popular movements, Hamas, or other organized militant groups—to its continued control of the West Bank and status as the international representative of the Palestinian people.\nCongressional decision-making on future budgetary assistance to the PA and other forms of aid could be tied to PLO efforts to pursue U.N. action, to the outcome of Security Council and/or General Assembly votes, to what follows the U.N. outcome both diplomatically and on the ground, some combination of these, or none of these. Resolution of these questions could depend on congressional views of how maintaining or changing aid levels could affect U.S. leverage and credibility in future regional and global contexts.\nAppendix A. Timeline and Documentation for Three Recently Admitted Member States\nAppendix B. The Uniting for Peace Resolution\nSome observers have expressed the opinion that in the absence of positive Security Council action relating to an independent Palestine, such as a Council recommendation to the General Assembly on an application for U.N. membership by Palestine, the issue might be referred to the Assembly for approval of a membership application. This section briefly discusses the Uniting for Peace Resolution process and application, in light of the U.N. Charter's express requirement that Assembly consideration of an application for U.N. membership is predicated on prior favorable Council recommendation.\nThe General Assembly adopted Resolution 377 A (V) on November 3, 1950, as an option in the event that the Security Council was unable to act on a matter dealing with the maintenance of international peace and security. After military forces from North Korea invaded the Republic of Korea in June 1950, the Council recommended that U.N. member states \"furnish such assistance ... as may be necessary to repel the armed attack and to restore international peace and security in the area.\" Adoption of S/RES/83 (1950) was possible because the USSR had boycotted meetings of the Council. However, from August on, a Soviet delegation was present at Council meetings and cast a negative vote on a U.S. draft resolution condemning the action by the North Korean authorities.\nIn the resolution, the General Assembly\n1. Resolves that if the Security Council, because of lack of unanimity of the permanent members, fails to exercise its primary responsibility for the maintenance of international peace and security in any case where there appears to be a threat to the peace, breach of the peace, or act of aggression, the General Assembly shall consider the matter immediately with a view to making appropriate recommendations to Members for collective measures, including in the case of a breach of the peace or act of aggression the use of armed force when necessary, to maintain or restore international pace and security. If not in session at the time, the General Assembly may meet in emergency special session within twenty-four hours of the request therefor. Such emergency special session shall be called if requested by the Security Council the vote of any seven members, or by a majority of the Members of the United Nations;\nThe aforementioned World Court advisory opinion (see \" United Nations Membership: Criteria and Process \" in the main body of the report) appears to refute use of the Uniting for Peace Resolution approach in connection with the possible admission of states to U.N. membership. The resolution was intended to be applied in instances involving maintenance of international peace and security.\nAppendix C. Possible Legal Implications of U.N. Action on Palestinian Statehood\nFor Previous Israeli-PLO Agreements\nSome Israeli analysts believe that PLO pursuit of a U.N. Security Council or General Assembly vote on Palestinian statehood violates or contradicts previous Israeli-PLO agreements. A May 2011 Jerusalem Report article stated that a former legal advisor to the Israeli Foreign Ministry is contending that \"the Palestinians are in serious breach of the 1995 Oslo Interim Agreement, which set up the Palestinian Authority [PA], the presidency and the parliament, on the understanding that all remaining differences would be resolved through negotiations.\" As discussed below, Palestinian claims that Israel has breached the \"Oslo agreements\" also are possible.\nThe Interim Agreement and the 1993 Declaration of Principles, two of the main Oslo agreements, both contemplated that Israel and the PLO would negotiate a \"permanent settlement based on Security Council Resolutions 242 and 338,\" both of which support the principle of Israel withdrawing from territories that its military occupied during the June 1967 war in exchange for \"just and lasting peace\" with its Arab adversaries. Article XXXI, Clause 7 of the Interim Agreement reads:\nNeither side shall initiate or take any step that will change the status of the West Bank and the Gaza Strip pending the outcome of the permanent status negotiations.\nPLO pursuit or acceptance of a U.N. vote on Palestinian statehood for the West Bank and Gaza outside of an Israel-PLO negotiating context could be interpreted as contradicting the above clause. Israeli sources have argued that, by allowing the U.N. to vote on the issue rather than issuing its own unilateral declaration of statehood, the PLO might seek to receive sovereignty for \"Palestine\" while maintaining that it is not taking active steps that constitute a breach of Article XXXI, Clause 7.\nWhether the PLO has an ongoing requirement to abide by the above clause and the rest of the Oslo agreements may be subject to debate. The PLO could argue that any requirement pertaining to negotiations that might have existed under the Oslo agreements no longer applies because the Oslo agreements contemplated that the transitional period under which negotiations would proceed and the PA would govern specified areas of the West Bank and Gaza Strip would \"not exceed 5 years.\" The continuing applicability of the agreements beyond the initial 5-year period is unclear; one could argue that the agreements remain in force unless explicitly terminated, or one could argue that they are no longer binding. Israel might argue that by continuing the PA's administrative duties in the West Bank and Gaza beyond the initial 5-year-period, the PLO has implicitly accepted the continuing applicability of the Oslo agreements in their entirety. This, however, also could lead to Palestinian claims—likely to be disputed by Israel—that Israel has breached obligations under the agreements. For example, Palestinians could allege that Israel sought to change the status of Gaza when it withdrew its military forces and settlers in 2005, that it failed to treat the West Bank and Gaza as a single territorial unit, or that continued building of settlements and infrastructure in the West Bank and East Jerusalem is tantamount to a change in status.\nFor Previous U.N. Resolutions\nA potential U.N. General Assembly resolution on Palestinian statehood could be seen as contrary to the letter or spirit of U.N. Security Council Resolutions 242 and 338 because these two resolutions are commonly seen as the foundational international legal basis for a negotiated \"land-for-peace\" peace process contemplated under the Oslo agreements (as discussed above). Recognizing Palestinian sovereignty within the 1967 borders in connection with a General Assembly resolution could be interpreted as satisfying the Palestinians' claims to land without requiring them to make commitments for peace with Israel or otherwise address security considerations, and therefore as undermining UNSCRs 242 and 338. Because General Assembly resolutions, however, are generally seen as non-binding as a matter of international law, or at least less binding than Security Council resolutions, such a General Assembly resolution on Palestinian statehood might not legally conflict with the two UNSCRs in question.\nThe PLO and other actors supportive of a General Assembly resolution could argue that pursuing Palestinian statehood does not conflict with \"land-for-peace\" principles because nominal sovereignty alone would not alter Israel's control over lands beyond the 1967 borders. Mahmoud Abbas asserted in a May 2011 New York Times column that a sovereign Palestinian entity could actually be better positioned than the non-sovereign PA to negotiate a final land-for-peace compromise with Israel. Analyzing the matter similarly, though from a different viewpoint, one prominent Israeli analyst stated that \"Abbas' move is aimed at shaping the political context of the diplomatic struggle between Israel and the Palestinians in the future in the Palestinians' favor…. This is as much a struggle about political consciousness as it is about international law.\" Another prominent Israeli analyst has related the idea of potential international recognition of Palestinian statehood to the concept of an \"independent Palestinian state with provisional borders and attributes of sovereignty\" proposed by the United States and the other members of the Middle East Quartet (United Nations, European Union, Russia) in 2002-2003 in Phase II of the Performance-Based Road Map to a Permanent Two-State Solution to the Israeli-Palestinian Conflict (\"Roadmap\").\nAppendix D. Congressional Action Regarding Palestinian Statehood: 1988-2000\nFollowing the PLO's declaration of statehood in 1988, Congress included a section (Section 414) in the Foreign Relations Authorization Act for FY1990 and FY1991 ( P.L. 101-246 ) that prohibited U.S. funding for the United Nations or any U.N. agency to the extent those forums accorded the PLO \"the same standing as member states.\"\nIn the context of Yasser Arafat's threat to declare a state in May 1999 at the expiration of the initial five-year interim period of the Oslo Accords—which Arafat did not ultimately carry out—the House of Representatives (in March 1999) and Senate (in April 1999) passed H.Con.Res. 24 , which contained the following three resolutions:\nThe final political status of the territory controlled by the Palestinian Authority can only be determined through negotiations and agreement between Israel and the Palestinian Authority; Any attempt to establish Palestinian statehood outside the negotiating process will invoke the strongest congressional opposition; and The President should unequivocally assert United States opposition to the unilateral declaration of a Palestinian state, making clear that such a declaration would be a grievous violation of the Oslo accords and that a declared state would not be recognized by the United States.\nIn September 2000, in the context of another Arafat threat—also not carried out—to declare a state following the breakdown of U.S.-brokered Israel-PLO negotiations, and just prior to the outbreak of the second intifada , the House passed the Peace Through Negotiations Act of 2000 ( H.R. 5272 ), which, if enacted as law, would have established the following provisions in the event of a subsequent PLO unilateral declaration of statehood:\nDowngrade to the status of the PLO's office in the United States; Prohibition on U.S. aid to a unilaterally declared Palestinian state, the Palestinian Authority, or any successor or related entity; Prohibition on U.S. program or project aid (except humanitarian aid) in the West Bank and Gaza Strip; Authorization of the President to reduce contributions to international organizations that recognize a unilaterally-declared Palestinian state; and Prohibition on use of funds to extend U.S. recognition to a unilaterally declared Palestinian state.\nH.R. 5272 also sought to require the United States to oppose membership by a unilaterally declared Palestinian state in any international financial institution and to oppose any such institution's extension of loans or other financial or technical assistance to such a state.\nAppendix E. United Nations Observer Status—The Holy See and Palestine: A Comparison of Capacities\nThe following table is intended to provide information on the capacities of observer status in the United Nations (U.N.) for the Holy See (sometimes referred to as the Vatican), which has non-member state observer status, and for Palestine, which is an entity with observer status. Originally, the Holy See gained permanent observer status in the U.N. General Assembly in 1964 when it established a permanent observer mission and requested access to the General Assembly from the U.N. Secretary-General. That status was and is listed in the Blue Book, the Permanent Missions to the United Nations publication. The Palestine Liberation Organization, later designated by the General Assembly as Palestine within the U.N. system, was given observer status in 1974 and received enhanced capacities in successive Assembly resolutions. In 2004, the Assembly adopted a resolution on the Status of the Holy See in the United Nations, that gave the Holy See enhanced capacities that are nearly identical to those Palestine has received." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 3, 3, 4, 4, 4, 2, 3, 3, 4, 4, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h1_title", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h1_title", "h1_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "h0_full h1_full" ] }	{ "question": [ "How is action being taken to develop Palestinian statehood?", "How was the application for Palestinian statehood submitted?", "On what grounds was the Palestinian statehood most considered?", "How does the Obama Administration plan to respond to the possibility of Palestinian statehood?", "How could Palestinian statehood potentially be accepted?", "How would a resolution proceed?", "How might Palestinian statehood negotiations appear in the future?", "How else might Palestinian statehood be achieved?", "What of the U.N. Framework does this report address?", "How does the report specifically address the issues relating to Israel-PLO?", "Why does the report include these prospects?", "How do some observers predict changes will ensue?", "How would Palestinian statehood or other increased status affect Israel-PLO negotiations?", "How might these changes influence Israel?" ], "summary": [ "Officials from the Palestine Liberation Organization (PLO) and Palestinian Authority (PA) are taking action in the United Nations aimed at solidifying international support for Palestinian statehood.", "On September 23, 2011, at the opening of the annual session of the General Assembly, PLO Chairman and PA President Mahmoud Abbas submitted an application for Palestinian state membership to the U.N. Secretary-General—on the basis of the armistice lines that prevailed before the Arab-Israeli War of 1967 (the \"1967 borders\")—in order to bring about a Security Council vote on whether to recommend membership.", "Abbas cites a lack of progress on the peace process with Israel as the driving factor behind PLO consideration of alternative pathways toward a Palestinian state.", "The Obama Administration has indicated that it will veto a Security Council resolution in favor of statehood.", "In an alternate or parallel scenario, an existing U.N. member state supportive of PLO plans may sponsor a resolution in the General Assembly.", "Such a resolution could—with a simple majority vote—recommend the recognition of a Palestinian state based on the 1967 borders—either as-is or subject to future Israel-PLO negotiation—and change Palestine's permanent observer status in the United Nations from that of an \"entity\" to that of a \"non-member state.\" U.S., Israeli, and PLO diplomacy focused on Europe—particularly permanent Security Council members France and the United Kingdom—has been active and could further intensify as the time for a possible vote draws closer.", "Diplomacy also might currently or in the future include negotiations regarding the venue for, and the timing and wording of, potential resolutions or other actions on Palestinian statehood.", "Additionally, action by U.N. specialized agencies such as UNESCO to grant membership to a Palestinian state is possible.", "This report provides information on the U.N. framework and process for options being discussed, including overviews of the following topics: the United Nations and recognition of states, observer status in the United Nations, and the criteria and process for United Nations membership.", "The report also analyzes the prospects for avoiding further U.N. action by reaching an Israel-PLO agreement to resume negotiations, as well as the possibility of a compromise U.N. resolution that could set forth parameters for future Israeli-Palestinian negotiations but stop short of addressing the question of Palestinian statehood beyond expressing aspirations.", "It is difficult to predict the potential future implications of U.N. action on Palestinian statehood.", "Some observers speculate that tightened Israeli security with respect to the West Bank and Gaza and popular unrest or civil disobedience among Palestinians could ensue, depending on various scenarios.", "Although Abbas maintains that he seeks an eventual return to U.S.-backed Israel-PLO negotiations on a more equal basis, an upgrade of the Palestinians' status at the U.N. also could facilitate subsequent efforts to apply greater pressure on Israel, especially if the PLO gains enhanced ability to present grievances in international courts—such as the International Court of Justice (ICJ) or International Criminal Court (ICC).", "Whether U.N. action or its aftermath would make Israel more or less willing to offer concessions in a negotiating process remains unclear, especially in light of ongoing regional political change and the volatility and possible deterioration of Israel's political and military relationships with Egypt and Turkey." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 4, -1, 6, -1, -1, 1, 2, -1, 4 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2 ] }
CRS_98-938	{ "title": [ "", "Introduction", "Defining the Defense Acquisition Workforce", "A Historical Perspective", "Current Approaches", "Jefferson Solutions Report", "Pertinent Observations", "Issues for Congress", "Adequacy and Usefulness of New Definition", "Secretary of Defense's Report", "Funding Implications", "Conclusion", "Selected Bibliography" ], "paragraphs": [ "", "In each of the past four fiscal years, Congress has directed the Administration to reduce the size of the Department of Defense (DOD) acquisition workforce—the DOD employees who participate in the development and procurement of weapons and equipment for the military services.\nIn the FY1996 defense authorization act, Congress directed the Administration to reduce the workforce by 15,000 people by October 1, 1996, and by a total of 25 percent (compared to the 1995 figure) over a period of five years. The act also required the Secretary of Defense to report to Congress on ways to restructure functions among DOD's acquisition departments and agencies. In the FY1997 defense authorization act, Congress directed the Administration to reduce the workforce by an additional 15,000 people by October 1, 1997, and stipulated that this reduction was to be in the form of actual acquisition personnel, not just acquisition positions. In the FY1998 defense authorization act, Congress directed the Administration to reduce the workforce by an additional 25,000 people by September 30, 1998, but permitted the Secretary of Defense to waive a portion of this reduction if her certifies to Congress by June 1, 1998 that such reductions would adversely impact military readiness and acquisition efficiency. The act also required DOD to submit a report to Congress by April 1, 1998 that provides a plan for future acquisition policy, including future opportunities to restructure and streamline DOD's acquisition organizations, workforce and infrastructure. In the FY1999 defense authorization act, Congress directed the Administration to reduce the workforce by 25,000 acquisition personnel by October 1, 1999, lowering it to 12,500 personnel if the Secretary of Defense certifies that such a reduction would cause an adverse effect on military readiness or management of the acquisition system.\nThese mandates to reduce the size of the DOD acquisition workforce reflected Congress' view that the workforce has not been downsized enough—that reductions continue to lag in proportion to the decline in the size of the overall defense budget, in general, and the acquisition portion of the defense budget, in particular. As a result, according to this view, DOD has spent more than is necessary to administer its acquisition programs. Reducing the workforce has been viewed as a necessary requirement for eliminating wasteful spending, and providing DOD with increased funding for other priorities.\nCongressional interest in reducing the size and associated costs of the DOD acquisition workforce has been energized by certain outside reports. The May 1995 report of the DOD Commission on Roles and Missions, for example, noted that while private-sector defense contractors had undertaken large-scale reorganizations adjusting to a reduced level of defense spending, little corresponding reduction had been made in the number of DOD acquisition organizations or personnel.\nCongress and DOD are presently at odds over the need for further reductions in the defense acquisition workforce. DOD now believes that it has exceeded its congressional mandates to reduce the acquisition workforce, and that further acquisition personnel reductions will have an adverse impact. This concern was expressed in a 1997 report to Congress, required by the FY1996 defense authorization act. DOD stated that, in FY1996, it had reduced the acquisition workforce by 23,802 personnel (military/civilian, excluding certain depot trade skill personnel) employed by or assigned to its acquisition organizations—8,802 more than mandated by Congress for that year. DOD stated that without the depot skill-trades exemption, it reduced personnel in acquisition organizations by 30,377 in FY1996. In its report, DOD estimated a two-year reduction by the end of FY1997, of over 56,000 people—a 13.2 percent reduction.\nDOD's current position is that mandated acquisition personnel reductions have undercut its effort to manage the acquisition workforce, and have adversely impacted military readiness. In appeals to the FY 1999 defense authorization bill , DOD asked Congress to reconsider House Section 901 which requires that, by October 1, 2001, DOD would phase-in reductions of an additional 70,000 defense acquisition personnel. DOD believed that Section 901 excluded about 80,000 civilian personnel performing acquisition functions at depot maintenance depots. In its appeal, DOD strongly opposed these reductions, having stated that \"personnel cuts enacted outside the manpower planning, programming and budgeting system are inconsistent with cost-effective management and will require Reductions-in-Force separations, creating associated unprogrammed separation costs.\"\nIn the past, the General Accounting Office (GAO) has examined issues facing DOD's acquisition workforce. In a 1995 report, before congressionally-mandated personnel reductions began, GAO concluded that \"Even with declines in both the defense procurement budget and the civilian workforce since 1990, the number of acquisition organizations remains relatively constant.\" A 1997 GAO report, using data from the Defense Manpower Data Center, stated that for the period ending March 31, 1997, DOD reduced its acquisition workforce from the 1995 baseline by 50,334 full-time equivalent personnel (FTEs), or 20,223 more than required by Congress.\nIn 1998, the House National Security Committee asked GAO to review DOD's progress in achieving a 25-percent reduction in the acquisition organizations' workforce, examine the potential savings associated with such reductions, determine the status of DOD efforts to redefine the acquisition workforce, and examine DOD's efforts to restructure acquisition organizations. GAO concluded that:\nDOD has been reducing its acquisition workforce at a faster rate than its overall workforce and is on schedule to accomplish a 25-percent reduction by the fiscal year 2000. However, potential savings from these reductions cannot be precisely tracked in DOD's budget. In addition, some of the potential savings from acquisition workforce reductions may be offset by other anticipated costs. Such costs include those for contracting with private entities for some services previously performed by government personnel (i.e., substituting one workforce for another.\nSuch conflicting opinions on the size of the defense acquisition workforce, and the potential savings to be achieved, stem from an inability to define it. Over the past three years, as Congress and the Administration have debated the future of the defense acquisition workforce, policymakers have sought to answer the basic question: What, precisely, is the DOD acquisition workforce? How many people are in it, where in DOD are they located, and what, exactly, are their functions?", "There is no commonly accepted definition of the DOD acquisition workforce. This has led to confusing and contentious discussions about the workforce, its size and composition, the significance of reductions DOD has made, and the potential impact of carrying out further reductions.", "There have been at least seven attempts in recent years by Congress and DOD to define what constitutes the defense acquisition workforce. Each attempt was based on a study which used differing combinations of occupational and organizational codes and produced estimates of the size of the workforce ranging from 25,000 to 582,000 personnel. It is important to note that these studies were performed over a period of more than a decade—a period during which there have been significant changes in the size of the defense budget, the size of the procurement portion of the defense budget, the number of uniformed military personnel, and the total number of DOD civilian employees. An estimate of the acquisition workforce that appears large or small in an absolute sense should be considered in light of the defense policy changes that have occurred.\nCurrently, the most commonly accepted estimates agreed upon by Congress and DOD range from about 106,000 to 270,000 personnel; the first is an estimate of personnel whose positions fall under the Defense Acquisition Workforce Improvement Act (DAWIA). DAWIA is the basis for nearly all of DOD's education, training and career development programs for the acquisition workforce. Congress enacted DAWIA in the FY1991 Defense Authorization Act. It is codified in Chapter 87, Title 10 of the U.S. Code, and has been amended several times since enactment. The most recent estimate comes from the FY1998 Defense Authorization Act (Public Law 105-85), and counts 270,000 personnel.", "In DOD's personnel system, members of the acquisition workforce can be identified by using any of three basic approaches, either alone or in combination:\n(1) Identification by occupational codes , such as GS-1102, Contracting Specialist. Contracting specialists are most often thought of as \"the acquisition workforce.\" They are the \"public face\" that is most often associated with directly buying DOD goods and services, from aircraft carriers to \"$600 toilet seats.\" Some contracting specialists directly purchase goods and services; others manage the buying process between DOD and defense contractors; still others develop, supervise, and monitor DOD contracting policy. Not all occupational codes, however, can be neatly classified as either inside or outside the acquisition workforce. Some managers, engineers, and scientists, for example, are involved in acquisition-related activities, but also perform other functions. For example, a manager may be primarily responsible for base operations and serve as a critical support for the day-to-day running of the military installation.\n(2) Identification by organizational codes , which reflect the mission of the office in which the person works, such as the Defense Reutilization and Marketing Service (DRMS), which is responsible for DOD's surplus and excess property programs. DRMS workers routinely acquire goods and services for disposal within federal agencies; these goods and services are no longer needed by DOD. Throughout the defense establishment, some workers are directly involved in buying and selling, while others support this process. For example, auditors may have some oversight authority for the financial management process within a military installation, but have no responsibility for the contracting process. They may not be involved with the actual \"buying\" or \"selling,\" either directly or indirectly. There are also personnel that perform \"acquisition-related\" functions in organizations that do not have an acquisition mission, while other personnel are assigned to an organization with an \"acquisition-related mission,\" but are not involved in the acquisition process. For example, a child care worker responsible for the installation's day care center would be unlikely to have responsibility for procuring goods and services. Thus, the organizational codes are not always an undisputed identifier.\n(3) Direct identification , in which DOD performs a \"desk audit\" of the actual performance of tasks by one worker, and compares it with a description of tasks and duties that make up \"acquisition-related functions,\" and determines that, based on empirical evidence, the worker should be considered as part of the acquisition community. The data is then entered into an information system, and DOD counts that individual as performing acquisition-related functions. The direct identification method may be considered the most reliable, but it is also the most time-consuming.\nAccording to DOD, military and civilian positions that are categorized as part of the DOD acquisition system fall into one of 14 acquisition position categories as established by the Undersecretary of Defense for Acquisition and Technology. Each acquisition position category has standards set according to its level of complexity. Definitions of each category of acquisition positions can be found in DOD Instruction 5000.58-R and DOD Manual 5000.52-M .\nAlthough the definition of each acquisition position category appears in DOD Instruction Manuals, the number of positions made it difficult for Congress to determine just how many different individuals occupied each position, as well as what duties each individual performed within the framework of defense acquisition. Congress sought an objective source for a definition of what constituted the defense acquisition workforce, and directed DOD to create a new definition that would answer these questions.", "At a 1997 hearing on the DOD acquisition workforce before the military procurement and readiness subcommittee of the House National Security Committee (HNSC), DOD was asked to create a new definition of the acquisition workforce that could be accepted and used by all participants in the debate. To carry out this task, DOD hired the Jefferson Solutions Group, a management consulting firm based in Washington, DC, and headed by Dr. Allan V. Burman, a former administrator of the Office of Federal Procurement Policy (OFPP.)\nJefferson Solutions issued its report in September 1997. The report used data gathered from the Defense Manpower Data Center (DMDC) and from interviews with officials from the Office of the Secretary of Defense, Army, Navy, Air Force, Defense Manpower Data Center, Defense Logistics Agency, staff from the Senate Armed Services Committee (SAC) and the House National Security Committee (HNSC), and analysts from the General Accounting Office (GAO) and the Congressional Budget Office (CBO). The report examined two approaches for classifying acquisition workforce personnel: (1) identifying personnel serving in acquisition organizations identified in DOD Instruction 5000.58-R, and (2) identifying personnel designated as part of the Defense Acquisition Workforce Improvement Act (DAWIA). The report reached the following conclusions:\nRelying exclusively on acquisition organizations resulted in too broad a definition, as it included employees that do not perform acquisition-related functions (such as police officers, firefighters, health care personnel), or who perform a variety of functions that are not limited to acquisition. Excluding organizations that did not qualify as acquisition organizations would overlook personnel within these organizations that perform acquisition-related functions (such as contractors, auditors, and quality assurance experts). Since there are only 105,544 acquisition personnel whose positions fall within statutory requirements for inclusion under DAWIA, using DAWIA as an identifier would exclude many personnel who perform acquisition-related functions.\nThe Jefferson Solutions Report adopted a definition for the acquisition workforce that revised and expanded on the definition used by the 1986 Packard Commission. (See Table 1 ) The new definition includes (1) all personnel employed in certain defense acquisition occupations, regardless of the mission of the particular defense agency in which they work; and, (2) all personnel in acquisition organizations who are employed in certain \"acquisition support\" occupations.\nThe report recommended that DOD adopt this new definition of the acquisition workforce, ensure that the definition is applied in a \"uniform and consistent\" manner across DOD and the services, and validate the data results through an independent agency, such as the DMDC. To ensure that the data is accurate and complete, the report recommended that DOD be given an opportunity to adjust the personnel count on a case-by-case basis. The report also recommended that DOD broaden its definition of employees covered by DAWIA to include all members of the newly-defined defense acquisition workforce.\nAs illustrated in the following table, the various occupational codes included in the new definition contained a total of 177,613 people. The study group increased this figure by 6.5 percent to account for administrative and clerical support that the study group believed were underestimated in the data, bringing the total defense acquisition personnel estimate to 189,158, as illustrated in the following table.", "The Jefferson Solutions Report was narrowly focused on the task of developing a workable definition of who and what constituted the acquisition workforce. The study combined both occupational and organizational data elements. Most of the occupations selected for the acquisition workforce were also located in acquisition organizations. The study revealed that the largest acquisition workforce group consisted of scientists and engineers (about 43 percent), followed by computer systems analysts and logistical and program managers (about 16 percent), and contractors, purchasers, or procurement support personnel (about 15 percent).\nNotably, the report did not provide statistics on the extent to which DOD used private-sector contractors to perform acquisition-related functions. Lack of this information could handicap the task of estimating the total cost of acquisition-related activities carried out for DOD, and could hinder policymakers in getting a complete understanding of the workforce composition. In its 1996 report on the defense acquisition workforce, GAO pointed out that savings resulting from staff reductions in acquisition organizations, particularly reductions of engineering, architectural or computer personnel, may have been offset by increases in spending on private-sector contractors. GAO reached the same conclusions in a 1998 report on defense acquisition organizations—that since 1995, DOD support service contracts increased for occupational fields with the largest personnel reductions, and that any potential savings may be offset by contracting for services previously performed by government personnel.\nSince the military services also rely on contractors to varying degrees, the lack of data on contractor support could complicate the task of making cross-service comparisons. It raises the possibility that a simple across-the-board reduction in the DOD acquisition workforce could impact the military services disproportionately.\nDue to the congressional mandate to develop a workable definition for the defense acquisition workforce, DOD must decide whether to use the recommendations of the Jefferson Solutions Report. A further observation is that DOD must consider whether the methodology used in the report can be tracked and duplicated by the Defense Management Data Center (DMDC). If it can, it will be easier for DOD to audit the data, and keep abreast of the rate of growth and/or attrition of both acquisition personnel and positions within DOD and the military services. Regularly recurring audits, by DMDC, would permit DOD to report on the cumulative effects of reducing the acquisition workforce by tracking the movement of displaced workers throughout DOD.", "In the wake of the Jefferson Solutions Report and legislation in the FY 1998 and FY 1999 defense authorization bills, Congress will confront a number of important issues regarding the defense acquisition workforce, including the following:", "Should Congress adopt the definition of the defense acquisition workforce presented in the Jefferson Solutions Report? If so, it will result in a significant reduction in the DOD's official count of defense acquisition personnel. If it is not adopted, the debate on just how many acquisition personnel exist will be prolonged, and probably put DOD further behind in its efforts to streamline the workforce.\nHow much will the new definition help DOD and Congress to identify redundancies, streamline the workforce, and achieve savings? They must determine, to their satisfaction, that the findings of the Jefferson Solutions Report are accurate and thorough. They will presumably seek agreement on the overall number of acquisition workforce personnel as well as the diversity of skills represented. Whether the process based on this particular definition of the workforce will ultimately achieve savings depends on a variety of factors, including the fate of personnel and positions classified as \"non-acquisition-related.\" Will savings be achieved through attrition, reductions-in-force, removals, early buyouts, or retirements? Or will personnel shortages result in an unexpected rise in overtime costs? Will newer, less experienced workers result in greater inefficiencies, with ultimately increased personnel costs? Will individuals be usefully absorbed into non-acquisition-related functions within DOD? Will potential savings be offset by associated administrative costs, as well as costs of increased service contracts for work previously performed by government personnel?\nOnce a new definition is accepted, DMDC—the defense agency responsible for the collection and maintenance of automated databases on manpower, personnel, training and financial movement—can collaborate with DOD to provide further analyses and recommendations to Congress. With DMDC's assistance, the findings of the Jefferson Solutions Report could be validated, thus enabling DOD to make reasonable adjustments to the personnel figures, if such adjustments prove necessary. Coordinating this function with DMDC would make it easier for DOD to perform periodic audits, keeping abreast of the rate of growth and/or attrition of both acquisition personnel and positions within DOD and the military services.", "Section 912(b) of the FY1998 Defense Authorization Act directed the Secretary of Defense to submit to Congress a report on acquisition workforce reductions made since FY1989, by fiscal year, as well as specify definitions used to describe the defense acquisition workforce. Congress required the Secretary to come up with a definition of the workforce that could be applied uniformly throughout DOD.\nSection 912(c) directed the Secretary to submit to Congress a report on the reorganization of the defense acquisition workforce. The purpose was to provide a \"road map\" for future defense acquisition policy, including future opportunities to restructure and streamline DOD's acquisition organizations, workforce, and infrastructure. DOD was directed to identify areas where overlap, duplication, and redundancy existed among the various acquisition organizations, and to present alternative consolidation options, methods for performing industry oversight and quality assurance and ways to shorten the procurement cycle for goods and services. Section 912(c) also required DOD to explore new opportunities for building cross-service and cross-functional arrangements within the military services and defense agencies, consider current and future needs for acquisition personnel, including hiring systems that provided an alternative to the current civil service, and make recommendations for legislative remedies that would be necessary to implement policy and procedural changes.\nThe Secretary was also required to provide an assessment of the recommendations in the Jefferson Solutions Report, as well as a discussion of potential legislative changes viewed necessary to implement policy changes.\nIn April 1998, the Secretary of Defense submitted to Congress the report required by Section 912(c). The report, titled Actions to Accelerate the Movement to the New Workforce Vision , proposed the establishment of five categories of new initiatives, described in the report as part of the Secretary of Defense's \"vision\" for the future acquisition workforce. They are: (1) restructure research, development, and testing, (2) restructure sustainment, (3) increase acquisition workforce education and training, (4) integrate paperless operations, and (5) other future focus areas.\nRather than provide a comprehensive review of acquisition organizations and functions, as mandated in Sections 912(c) and (d), the Secretary proposed the formation of future task forces and focus groups to study these issues. The report did not propose legislative remedies, nor clarify the various definitions of the defense acquisition workforce; nor did it propose a new definition but cite the Jefferson Solutions estimate, based on the revised Packard Commission, as one measure of defining the defense acquisition workforce. DOD stated that it did not endorse the report, nor its recommendations. One of the factors for DOD to consider is whether the methodology used in the study can be tracked and duplicated by DMDC; this would make it easier for DOD to perform periodic audits, keeping abreast of the rate of growth and/or attrition of both acquisition personnel and positions within DOD and the military services. Auditing by DMDC would permit DOD to report on the cumulative effects of reducing the acquisition workforce and track the movement of displaced workers throughout DOD.\nOn November 20, 1998, Deputy Secretary of Defense (for Acquisition and Technology) Jacques S. Gansler issued a memorandum to defense agencies on his review of the recommendations of the Acquisition Workforce Identification Working Group. This group was formed in response to requirements in Section 912(b). The \"new\" workforce definition includes Science and Technology organization personnel. The Jefferson Solution study gave DOD a broader view of the breadth and depth of acquisition-related activities in the total life cycle of weapon acquisition programs; henceforth, the acquisition workforce will be referred to as the \"acquisition and technology workforce.\" Secretary Perry determined that DOD would use a definition of the acquisition workforce based on a modification of the Packard workforce definition. He required each agency to conduct a workforce analysis based on the modified Packard definition, revise the personnel count, and report their findings by December 30, 1998.", "The Jefferson Solutions Report recommended that DOD seek to broaden the definition of what personnel are covered under the Defense Acquisition Workforce Improvement Act (DAWIA), and include all members of the newly-defined defense acquisition workforce. If DOD agrees with the report's recommendations, the decision could have potential funding implications since DAWIA is the vehicle for nearly all of DOD's acquisition-related education, training and career development programs. In FY1998, DOD requested a budget of $100 million for DAWIA; Congress appropriated $95 million. To broaden the membership of DAWIA, from 105,544 personnel to 189,183 personnel, suggests that Congress will have to appropriate more funds for acquisition-related education, training, and career development programs.\nThere are advantages and disadvantages to increasing DAWIA membership; it will cost more money, initially. In the long run, however, the investment should eventuate in a better trained DOD acquisition workforce. Under DAWIA, DOD has developed an organized and systematic approach to career development and training opportunities, with appropriate benchmarks at each level of complexity within each program category. By identifying DAWIA's certification requirements as the benchmark for all acquisition personnel training and development activities, it appears that all acquisition support personnel (many of whom have been historically excluded from training and development due to DAWIA certification and requirements) will have greater access to opportunities for promotion, advance, and growth; the theory holds that this should conduce toward a superior in-house, defense acquisition workforce.", "Congress will determine, perhaps through the oversight process, if DOD has met both the \"letter of the law\" and the \"spirit of the law\" as described in Section 912(c) of the FY1998 Defense Authorization Act, or Section 931 of the FY 1999 Defense Authorization Act. Notably, DOD leaders, who have called for a \"revolution in business affairs,\" have been legislatively required to explore innovative and significant changes to make its acquisition process more efficient. This includes exploring potential overlap and duplication of processes within DOD's acquisition organizations, in the various defense agencies and military services (listed in Appendix D ).\nUltimately, it is Congress that will decide if such changes have been undertaken and, if so, whether the size and composition of the acquisition workforce have been adjusted appropriately.", "U.S. Congress. General Accounting Office. Defense Acquisition Organizations: Status of Workforce Reductions . Report to the Chairman, Committee on National Security, House of Representatives. GAO/NSIAD-98-161. June 1998, 20 pages.\nDepartment of Defense. Actions To Accelerate The Movement To The New Workforce Vision. A Report to Congress. April 1, 1998. 19 p.\n— Report of the Commission on Roles and Missions of the Armed Forces . Washington, 1995. May 1995.\n— Right-Sizing the DoD Acquisition Workforce (Section 906 Report) . A Report to Congress. January 28, 1997. 36 p.\nGeneral Accounting Office. Defense Acquisition Organizations: Reductions in Civilian and Military Workforce . GAO/NSIAD-98-36R DOD Workforce Reductions. Washington, 1997. October 1997. 8 p.\nJefferson Solutions. Commissioned by the Department of Defense. Review of the Department of Defense Acquisition Workforce, DASWO1-97-1847. Washington, 1997. September 1997. 55 p.\nAppendix A. Title IX, Subtitle B - Additional Reductions in Defense Acquisition Workforce\nSEC. 912. DEFENSE ACQUISITION WORKFORCE.\n(a) REDUCTION OF DEFENSE ACQUISITION WORKFORCE (1) The Secretary of Defense shall accomplish reductions in defense acquisition personnel positions during fiscal year 1998 so that the total number of such personnel as of October 1, 1998, is less than the total number of such personnel as of October 1, 1997, by at least the applicable number determined under paragraph (2). (2)(A) The applicable number for purposes of paragraph (1) is 25,000. However, the Secretary of Defense may specify a lower number, which may not be less than 10,000, as the applicable number for purposes of paragraph (1) if the Secretary determines, and certifies to Congress not later than June 1, 1998, that an applicable number greater than the number specified by the Secretary would be inconsistent with the cost-effective management of the defense acquisition system to obtain best value equipment and would adversely affect military readiness. (B) The Secretary shall include with such a certification a detailed explanation of each of the matters certified. (C) The authority of the Secretary under subparagraph (A) may only be delegated to the Deputy Secretary of Defense. (3) For purposes of this subsection, the term `defense acquisition personnel' means military and civilian personnel (other than civilian personnel who are employed at a maintenance depot) who are assigned to, or employed in, acquisition organizations of the Department of Defense (as specified in Department of Defense Instruction numbered 5000.58 dated January 14, 1992).\n(b) REPORT ON SPECIFIC ACQUISITION POSITIONS PREVIOUSLY ELIMINATED- Not later than 30 days after the date of the enactment of this Act, the Secretary of Defense shall submit to Congress a report on reductions in the defense acquisition workforce made since fiscal year 1989. The report shall show aggregate reductions by fiscal year and shall show for each fiscal year reductions identified by specific job title, classification, or position. The report shall also identify those reductions carried out pursuant to law (and how the Secretary implemented any statutory requirement for such reductions, including definition of the workforce subject to the reduction) and those reductions carried out as a result of base closures and realignments under the so-called BRAC process. The Secretary shall include in the report a definition of the term 'defense acquisition workforce' that is to be applied uniformly throughout the Department of Defense.\n(c) IMPLEMENTATION PLAN TO STREAMLINE AND IMPROVE ACQUISITION ORGANIZATIONS (1) Not later than April 1, 1998, the Secretary of Defense shall submit to Congress a report containing a plan to streamline the acquisition organizations, workforce, and infrastructure of the Department of Defense. The Secretary shall include with the report a detailed discussion of the recommendations of the Secretary based on the review under subsection (d) and the assessment of the Task Force on Defense Reform pursuant to subsection (e), together with a request for the enactment of any legislative changes necessary for implementation of the plan. The Secretary shall include in the report the results of the review under subsection (d) and the independent assessment of the Task Force on Defense Reform pursuant to subsection (e). (2) In carrying out this subsection and subsection (d), the Secretary of Defense shall formally consult with the Chairman of the Joint Chiefs of Staff, the Director of Program Analysis and Evaluation, the Under Secretary of Defense (Comptroller), and the Under Secretary for Acquisition and Technology. (d) REVIEW OF ACQUISITION ORGANIZATIONS AND FUNCTIONS- The Secretary of Defense shall conduct a review of the organizations and functions of the Department of Defense acquisition activities and of the personnel required to carry out those functions. The review shall identify the following: (1) Opportunities for cross-service, cross-functional arrangements within the military services and defense agencies. (2) Specific areas of overlap, duplication, and redundancy among the various acquisition organizations. (3) Opportunities to further streamline acquisition processes. (4) Benefits of an enhanced Joint Requirements Oversight Council in the acquisition process. (5) Alternative consolidation options for acquisition organizations. (6) Alternative methods for performing industry oversight and quality assurance. (7) Alternative options to shorten the procurement cycle. (8) Alternative acquisition infrastructure reduction options within current authorities. (9) Alternative organizational arrangements that capitalize on core acquisition competencies among the military services and defense agencies. (10) Future acquisition personnel requirements of the Department. (11) Adequacy of the Program, Plans, and Budgeting System in fulfilling current and future acquisition needs of the Department. (12) Effect of technology and advanced management tools in the future acquisition system. (13) Applicability of more flexible alternative approaches to the current civil service system for the acquisition workforce. (14) Adequacy of Department of Defense Instruction numbered 5000.58 dated January 14, 1992.\nAppendix B. Title IX, Subtitle A - Further Reductions in Defense Acquisition and Support Workforce\nSEC. 931. FURTHER REDUCTIONS IN DEFENSE ACQUISITION AND SUPPORT WORKFORCE.\n(a) REDUCTION OF DEFENSE ACQUISITION AND SUPPORT WORKFORCE- The Secretary of Defense shall accomplish reductions in defense acquisition and support personnel positions during fiscal year 1999 so that the total number of such personnel as of October 1, 1999, is less than the total number of such personnel as of October 1, 1998, by at least the applicable number determined under subsection (b) REQUIRED REDUCTION (1) The applicable number for purposes of subsection (a) is 25,000. However, the Secretary of Defense may specify a lower number, which may not be less than 12,500, as the applicable number for purposes of subsection (a) if the Secretary determines, and certifies to Congress not later than May 1, 1999, that an applicable number greater than the number specified by the Secretary would be inconsistent with the cost-effective management of the defense acquisition system to obtain best value equipment and with ensuring military readiness. (2) The Secretary shall include with such a certification a report setting forth a detailed explanation of each of the matters certified. The report shall include (A) a detailed explanation of all matters incorporated in the Secretary's determination; (B) a definition of the components of the defense acquisition and support positions; and (C) the allocation of the reductions under this section among the occupational elements of those positions. (3) The authority of the Secretary under paragraph (1) may only be delegated to the Deputy Secretary of Defense. (c) LIMITATION ON REDUCTION OF CORE ACQUISITION WORKFORCE- The Secretary shall implement this section so that the core defense acquisition workforce identified by the Secretary in the report submitted pursuant to section 912(b) of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85; 111 Stat. 1860) is reduced proportionally no more than the other occupational elements included as defense acquisition and support positions in that report. (d) DEFENSE ACQUISITION AND SUPPORT PERSONNEL DEFINED- For purposes of this section, the term `defense acquisition and support personnel' means military and civilian personnel (other than civilian personnel who are employed at a maintenance depot) who are assigned to, or employed in, acquisition organizations of the Department of Defense (as specified in Department of Defense Instruction numbered 5000.58 dated January 14, 1992), and any other organizations which the Secretary may determine to have a predominantly acquisition mission.\nAppendix C. Acquisition Position Categories\nF. PROCEDURES\n1. Acquisition functions, position categories, career fields and position category descriptions are as follows:\na. Acquisition Functions, Career Fields, and Position Categories. There are seven acquisition functions, 12 career fields, and 14 position categories in the DoD Acquisition Education, Training, and Career Development Program, as depicted in the chart below. Each function consists of a career field(s) and a position category(ies). Two position categories, Program Management Oversight and Education, Training, and Career Development are not career fields and therefore do not have separate education, training and experience standards specified in DoD 5000.52-M (reference (g)). Personnel in these positions will come from the other career fields and must meet those career development requirements. One position category, Education, Training, and Career Development, does not belong in any of the seven functions. Personnel in this position category may belong in either an acquisition or a non-acquisition function.\nAppendix D. DOD Acquisition Organizations\nArmy\nArmy Acquisition Executive Army Information Systems Command Army Materiel Command Army Strategic Defense Command\nNavy\nAssistant Secretary of Navy for Research, Development and Acquisition Office of the Chief of Naval Research Naval Air Systems Command Naval Facilities Engineering Command Navy Program Executive Officer/ Direct Reporting Program Manager Organization Naval Sea Systems Command Navy Strategic Systems Program Office Naval Supply Systems Command Space and Naval Warfare Systems Command\nMarine Corps\nU.S. Marine Corps Research, Development and Acquisition Command\nAir Force\nOffice of the Assistant Secretary of Air Force for Acquisition Air Force Materiel Command Air Force Program Executive Organization\nDepartment of Defense-Wide\nOffice of the Under Secretary of Defense (Acquisition & Technology) Ballistic Missile Defense Office Defense Logistics Agency U.S. Special Operations Command, Acquisition Center (SOAC)" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h0_full h2_title h1_title", "h0_full", "", "h0_full h2_full h1_full", "h2_full h1_full", "h2_full", "h2_full", "", "", "", "" ] }	{ "question": [ "What questions exist about the DOD workforce?", "Likely why do these questions exist?", "How have previous attempts to define the DOD workforce fared?", "Why did the DOD hire the Jefferson Solutions Group?", "What did the Jefferson Solutions Group issue about the DOD?", "What statistics about workforce types did the report include?", "What did the report fail to address?", "What attention does Congress have on the DOD?", "What are these questions?", "What effect might a new definition have?", "What might be included in the “additional, unanticipated” costs?" ], "summary": [ "As Congress and the Administration have debated the future of the defense acquisition workforce, participants have encountered basic questions: What, precisely, is the DOD acquisition workforce? How many people are in it, and what, exactly, are their functions?", "At present, there is no commonly accepted definition of the DOD acquisition workforce.", "Previous attempts, within the decade, to define the workforce have produced estimates ranging from 25,000 to 582,000 personnel.", "In early 1997, DOD hired the Jefferson Solutions Group, a private consulting firm, to define the size and composition of the acquisition workforce.", "Jefferson Solutions issued its report in September 1997.", "It estimated that the overall workforce included about 189,000 people, and that the largest acquisition workforce group consists of scientists and engineers (about 43 percent), followed by computer systems analysts and logistical and program managers (about 16 percent), and contractors, purchasers, or procurement support personnel (about 15 percent).", "Notably, the study did not address the issue or provide statistics on the extent to which DOD relied on private-sector contractors to perform acquisition-related functions.", "Currently, two major questions confront Congress in regard to the acquisition workforce.", "First, should the new definition constructed by the Jefferson Solutions Group be adopted formally? Second, to what extent will savings achieved through reductions be offset by additional, unanticipated costs?", "If so, it will result in a significant reduction in DOD's official count of acquisition personnel.", "Such costs may include: (1) hiring contractors to perform acquisition-related functions previously performed by government employees; (2) separation costs, such as early buyouts, retirements, and severance pay; and, (3) overtime costs due to both personnel shortages and inexperienced personnel." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, 1, -1, 0, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 4, 4, 4, 4 ] }
CRS_R44437	{ "title": [ "", "Introduction", "Roadmap", "Description of Telehealth and Telemedicine", "Selected Federal Telehealth Activities", "Patient Care", "Department of Veterans Affairs", "Department of Defense", "Indian Health Service", "Health Insurance and Financing", "Medicare", "Medicare Part B", "Medicare Part C", "Medicare Part D", "Medicare Demonstrations and the Center for Medicare and Medicaid Innovation (CMMI)", "Medicaid", "Issues" ], "paragraphs": [ "", "Telehealth is \"the use of electronic information and telecommunications technologies to support long-distance clinical health care, patient and professional health-related education, public health and health administration.\" Videoconferencing, store-and-forward imaging, and remote monitoring are some examples of telehealth applications. Th ough \"telehealth\" may refer to non-clinical services that are provided remotely, such as training, administrative meetings, and continuing education, some individuals may use the term \"telemedicine\" to describe the use of telecommunications technologies in clinical situations that include patient diagnosis, prescriptions, and treatment at a distance.\nThe 114 th Congress has witnessed the introduction of a number of telehealth-related pieces of legislation that address a wide range of issues that have the potential to impact access to, along with the cost and quality of care under various federal programs, including Medicare.\nIn recent years, the federal government has embarked on various initiatives to increase access to telehealth services (as well as to improve the underlying technological infrastructure that supports telehealth) at more than 20 federal agencies. Examples of this agency activity include:\nThe Department of Veterans Affairs (VA) supported more than 2.1 million telehealth visits to veterans in FY2015. The Department of Defense (DOD) reported more than 34,000 telehealth visits and store-and-forward consultations at military installations in more than 30 countries and territories in FY2013. The Centers for Medicare and Medicaid Services (CMS) (of the Department of Health Human Services (HHS)) reported a total of $17.6 million in Medicare (Part B) payments to providers for 192,692 telehealth visits in CY2015.\nTrends in telehealth access, utilization, and innovation indicate that sustained interest is likely among health insurance plans, institutions, and major decisionmakers. For example, market analysts predict that:\nPrivate insurers are likely to increase the number of plans that include telehealth services for their enrollees. Institution-to-institution contracts could lead to greater willingness by patients to pay out-of-pocket for telehealth services they perceive to be convenient and valuable. Examples of these contracts are an arrangement between a large hospital and a rural hospital to provide neurologist services via telemedicine, or an arrangement between a clinical consulting group for a second opinion and an academic medical center or hospital wherein the members of consulting groups provide subspecialty consulting to the physicians at the hospital. Alternative payment models for reimbursement and coverage are likely to expand during 2016.\nThough providers are using telehealth to overcome barriers to health care access created by geography and time, the evidence-base for its use, including issues related to cost and quality, are strong in some areas and weak in others. For example, the Agency for Healthcare Research and Quality (AHRQ) reports that there is evidence that telehealth is effective for certain types of chronic conditions (such as diabetes, heart disease and conditions such as behavioral health). Also, AHRQ describes how telehealth applications may lead to improvements in health outcomes, and reductions in health care costs, such as fewer hospitalizations and fewer emergency room visits, but these findings have not been tested for all telehealth settings. On the other hand, more robust evidence is not yet available in relation to telehealth and various medical specialties according to AHRQ and the Institute of Medicine (IOM). Among the questions that are in need of more evidence: What is the patient telehealth experience regarding safety, effectiveness, timeliness, and overall access to health care? Which cost and quality measures support telehealth applications in primary care and urgent care populations, and which are cost drivers for public health insurance programs, such as Medicare and Medicaid?", "This report describes telehealth activities at selected federal agencies, and the evidence available to assess telehealth through the lenses of health care access, cost, and quality.\nIn this report, a ccess refers to telehealth tools and systems that address behavioral, social and, environmental determinants of health and deliver high quality care; cost is associated with telehealth interventions that impact the cost of health care for individuals, families, employers, and government; and quality is associated with telehealth initiatives that improve the overall quality of care by resulting in health care that is more patient-centered, reliable, accessible and safe. Telecommunications systems along with federal and state licensure policies also impact access, cost and quality, but their discussion is beyond the scope of this report (telecommunications issues are briefly discussed in Appendix D ).", "Current laws, policies, and guidance present a range of descriptions for telehealth and the related term telemedicine, reflecting a need for clarity and distinction. For example, the Office of the National Coordinator for Health Information Technology (ONC) distinguishes between telemedicine and telehealth, with telemedicine being a function of interactions that involve clinical decisionmaking. The Agency for Healthcare Research and Quality (AHRQ) makes a distinction among technologies that support telehealth, noting that the technologies are not treatments in and of themselves but are the means for delivering health care in different formats, such as remote patient monitoring, videoconferencing, Internet applications, and devices. Within the VA, the Veterans Health Administration (VHA) notes that telehealth technologies may include single or combined uses of: videoconferencing, mobile technologies, store-and forward technology (or asynchronous communication). CMS, under the Medicare program, acknowledges that some health plans under its Medicare Advantage (MA) program conduct health services by telephone, over the Internet, or via telemonitoring for selected Medicare beneficiaries. Under the Medicaid program, states use the terms \"telemedicine\" or \"telehealth\" interchangeably. Some state laws explicitly define the terms, and place restrictions within the definition, such as the exclusion of email, phone, or fax from the definition. Other states may use \"telehealth\" to reflect a broader definition, and use \"telemedicine\" to define the delivery of clinical services.\nThese and other distinctions are important not merely for semantic reasons but because they have implications for federal policies that impact access, cost and/or quality. For example, the Medicare statute delineates boundaries for \"telehealth\" reimbursement, and the regulation specifies the conditions under which Medicare makes a payment to a provider for services delivered via telehealth technologies. An acknowledgment of these differences, which may or may not result in uniformity, may be significant for policy decisions that involve telehealth and telemedicine.", "FedTel, a workgroup supported by the Health Resources and Services Administration (HRSA), consists of 26 federal agencies that invest in, or maintain an interest in, various telehealth activities. This section describes telehealth at three federal agencies that are directly involved with telehealth and patient care, and one agency that oversees the nation's largest program for health insurance financing. As noted earlier, issues such as the telecommunications infrastructure that supports the delivery of telehealth services (see Appendix D ) or legal matters such as state licensure portability for providers of telehealth services, while important, are beyond the scope of this report which is focused solely on health policy, financing, and service delivery related matters.", "Various federal agencies use telehealth services to help in providing direct patient care. For example, the VA, DOD, and the Indian Health Service (IHS) provide health care via telehealth to veterans, military beneficiaries, and underserved tribal populations, respectively. This section summarizes examples of telehealth activities in these three federal agencies with substantial telehealth experience. A major caveat analysts of telehealth raise is that it may not be appropriate for all consumers or providers in situations where certain clinical, technological, and environmental factors dictate prudence on the part of the provider. For example, in its Practice Guidelines for Live, On Demand Primary and Urgent Care , the American Telemedicine Association (ATA) urges providers to \"exercise their professional judgment when deciding whether or not to use telemedicine, taking into account the patient condition, mitigating circumstances, available resources, and their own comfort level and expertise in using telemedicine.\" For example, where diagnostic interventions cannot be supported by high quality evidence, providers \"shall use their professional judgment, experience and expertise in making such decisions. Conditions for use of telemedicine are likely to change to reflect new evidence from future research and the evolution of the enabling technology.\" In addition, some physical environments do not support telehealth visits, specifically where there is a lack of privacy, inappropriate lighting, or other distractions. The ATA encourages providers to follow these practice guidelines and guidelines published by other organizations, including governmental agencies and professional entities.", "The VA operates the largest integrated health care delivery system in the United States. It administers health services through 151 Medical Centers, 300 Vet Centers, 820 Community-based Outpatient Clinics (CBOCs), 135 Community Living Centers, 6 Independent Outpatient Clinics, and 103 Residential Rehabilitation Centers throughout the 50 states, U.S. States territories, and the Philippines. In FY2015, the VA employed 298,546 medical care and research professionals. In FY2015, the VA served some 6.8 million unique patients, dependents, and survivors.\nTelehealth technologies used in VA health care include the following:\nClinical Video Telehealth (CVT) (or live-video) which allows VA health care access through live-video consultations representing 44 clinical specialties. Live-video is a tool that allows health providers to diagnose, monitor, and treat conditions in veterans who may be located hundreds of miles away at a VA community-based outpatient clinic, thus eliminating the cost and inconvenience of travel. Home Telehealth technologies, which allow health providers to provide monitoring services to veterans with chronic conditions, such as chronic heart failure, diabetes, chronic obstructive pulmonary disease, depression, or post-traumatic stress disorder. Store-and-Forward (asynchronous) telehealth, which allows for the capture and storage of clinical information (e.g., data, sound, image, video) commonly used in radiology, dermatology, and ophthalmology. Store-and-forward telehealth information can be stored in multimedia formats and evaluated later.\nAccording to the VA, telehealth is significant for the populations it serves because health providers can use the technology to reach rural and remote populations, thereby increasing access to care and reducing the time and cost required to travel to health care facilities. The VA's own data from 2014 indicates that mental illnesses are among the major health concerns for veterans, with Post-Traumatic Stress Disorder (PTSD) ranking the highest. Telehealth technologies support veteran's use of medical apps to help them manage PTSD by accessing tools for symptom-tracking and self-assessment.\nA number of studies provide performance data on VA telehealth systems and their impact on veterans' health, cost of care, and overall patient experience. On access, veterans and their providers exchange health information and services through integrated networks such as the Veterans Health Information Systems and Technology Architecture (VistA) ; My Health eVet ; and Blue Button. In 2015, VA providers delivered 2.1 million telehealth consultations to more than 677,000 veterans via videoconferencing, home telehealth, and store-and-forward telehealth that were provided through one or more of those systems. According to the VA, 45% of the veterans receiving telehealth services live in rural areas. In 2017, VA expects to deliver telehealth-based services to nearly 762,000 veterans (an increase of 12.5%). Evidence indicates that such access is associated with reductions in hospital admissions, and high rates of patient satisfaction among the veteran population. For example, during FY2012, the VA reported that its home telehealth program, consisting of 119,535 veterans resulted in reduced hospital admissions by 38%, and in savings of $1,999 per year per patient.", "The DOD's Military Health System (MHS) provides health care to more than 9.7 million beneficiaries through a health care network consisting of 56 hospitals, 365 clinics, and other facilities worldwide. It operates globally and employs more than 86,000 military personnel and nearly 58,400 civilians.\nDOD's current inventory of electronic health record systems (or legacy systems) includes, among others, inpatient health record systems, outpatient systems, and telehealth components. DOD recognizes the \"need for enhanced EHR support of telehealth,\" and such collaboration is a goal of military health system EHR modernization efforts.\nAccording to the U.S. Army's Surgeon General, Army telehealth systems enable health services to be accessed across the largest geographic area of any telehealth system in the world: Army clinicians can reach service personnel and families to provide health care in multiple medical specialties, across 18 time zones and in over 30 countries and territories. DOD telehealth exchanges occur over telecommunications media that range from telephones to email.\nIn FY2013, the MHS provided approximately 30,000 telehealth encounters through live videoconferencing. Nearly all of these encounters were for patients with psychological health-related issues, with PTSD accounting for approximately 20% of all mental telehealth consultations. Additional examples of telehealth initiatives within the DOD include the following:\nResearch and development through the Telemedicine & Advanced Technology Research Center (TATRC). TATRC fosters research on health informatics, telemedicine, mobile health, medical training systems, and computational biology, among other areas of science and engineering; and The coordination of resources through the National Center for Telehealth and Technology (or T2), which is focused on the development of telehealth networks and systems across the DOD. T2 leverages partnerships with entities, including the VA, and civilian providers.\nWithin the context of patient care, telehealth has increased collaborative opportunities for DOD health providers in pain management through the Project Extension for Community Health Outcomes (ECHO) initiative. Between January 2010 and December 2012, Project ECHO incorporated case-based learning, demonstrations, and teaching through an inter-professional continuing education program for 136 pain clinics and 763 individuals from 191 sites in rural and underserved communities. Project ECHO evaluated approaches to learning and professional practice, and found that the telementoring model (1) closed the knowledge gap in pain education; and (2) served as a model for inter-professional collaborative practice, thereby impacting improved care experiences (or quality) for soldiers and veterans. Currently, Project ECHO serves all military service units and the VA, specializing in traumatic brain injury, behavioral health, complicated diabetes, and other conditions.\nHowever, within the military, mental health conditions such as PTSD are associated with a \"high prevalence of stigma.\" Active-duty servicemembers are concerned about possible adverse effects of mental-health diagnoses and treatment on career advancement. They are reluctant to seek care for mental-health problems due to concerns about the privacy of their health information. According to IOM, telemedicine may address health care access for active duty members, but more needs to be done to determine its acceptance and efficacy.", "The Indian Health Service (IHS) is a federal health system that coordinates health care and disease prevention services for approximately 2.2 million American Indians and Alaska Natives (AI/AN) through a network of more than 679 hospitals, clinics, and health stations on or near Indian reservations. The IHS, Indian Tribes, or Tribal Organizations manage these facilities, which are predominantly located in rural settings. The IHS provides a wide range of clinical, public health, and community services primarily to members of 566 federally recognized tribes in 35 states. The IHS has approximately 15,369 employees, including 2,504 nurses, 737 physicians, 462 engineers, 132 sanitarians, 747 pharmacists, and 271 dentists. In addition, various allied health professionals, such as nutritionists, health administrators, and medical records administrators are IHS employees.\nBecause many AI/AN populations typically reside in locations where they have little or no access to public transportation and must travel considerable distances to health facilities, telehealth has provided an alternative means to accessing health services in these often isolated communities. IHS beneficiaries receive telehealth services through various telecommunications systems that are set up, in part, through federal interagency collaborations and private networks. The IHS and the VA provide health care to veterans through integrated delivery systems that include VA clinical care sites. The following highlights are for telehealth activities within IHS systems (two of which are coordinated with VA and DOD):\nThe Alaska Federal Health Care Partnership (AFHCP) coordinates activities with federal agencies and private partners to provide telehealth and other health services to AI/AN populations. In 2013, the Alaska Tribal Health System (ATHS) used the Alaska Federal Health Care Access Network (AFHCAN) to provide 36,229 telehealth consultations (or episodes of care) to 22,982 patients. AFHCAN provides telehealth services for AI/AN populations in Alaska and develops telehealth technologies to support clinical services. For example, AFHCAN has improved access to care via telemedicine by making services for audiology and ear, nose, and throat (ENT) services available to patients in a shorter amount of time. Using telemedicine has also opened up in-person appointment slots, and allowed other needy patients to be seen in an expedited manner. In 2012, more than 75% of all consultations were conducted remotely without requiring the patient to travel to the specialist, resulting in an estimated $8 million to $10 million savings in patient travel cost for the state of Alaska (Medicaid). Also, AFHCAN coordinates with HRSA to operate a telehealth resource center, which is the National Telehealth Technology Assessment Center (TTAC). The IHS Tele-Behavioral Health Center of Excellence (TBHCE) was established in 2008 to provide behavioral health services across the country through real-time (synchronous) video connections. Program managers report the following benefits: (1) patients are 2.5 times more likely to keep their telepsychiatry appointments than in-person psychiatry sessions; (2) in FY2013, IHS patients avoided more than 500,000 miles of travel, which translated into over $305,000 in savings for them; and (3) in FY2013, patients saved an estimated 16,450 hours of work or school that would otherwise have been missed to travel for appointments. IHS collaborates with private entities such as the IHS Joslin Vision Network (IHS-JVN), which enhances annual eye screening opportunities for patients with diabetes. Since 2000, the IHS began a pilot program at two sites in Arizona. Since then the IHS-JVN Teleophthalmology Program (IHS-JVN) has expanded to include 92 IHS, Tribal, and Urban (I/T/U) sites in 25 states, with more than 16,000 exams performed annually. This program yields important clinical and administrative outcomes. The IHS-JVN reports that its program is more effective and less costly than a conventional eye examination for detecting diabetic retinopathy (DR) and preventing severe vision loss and a four-year study showed that the IHS-JVN was associated with a 50% increase in compliance with DR standards of care. However, improvements in these measures throughout the enterprise have been variable, and this variability is not completely understood. On the administrative side, there has been an increase of almost 20% in the previously static IHS DR exam rate over the past seven years (49.1% to 58.6%), as IHS-JVN patient encounters have accelerated.", "This section describes Medicare and Medicaid reimbursement policies associated with telehealth. It also describes evolving health reforms that are incorporating payment models and systems that focus on improvements in population health, reductions in health costs, and enhancements in quality. This section does not provide historical background on telehealth reimbursement policies under Medicare or Medicaid programs, which are found elsewhere.", "Medicare is a federal entitlement program that provides a wide range of health care benefits to nearly 55 million seniors and certain individuals with disabilities at an annual cost of roughly $632 billion (in FY2015). Medicare provides benefits in the form of health insurance payments to providers who deliver services to beneficiaries. Medicare payments for health services are organized mainly through four parts: Part A (hospital insurance), Part B (physician services), Part C (managed care), and Part D (prescription drugs). Telehealth policies under Medicare Part B, Part C, and Part D are the subjects of this section.\nFurther, the Center for Medicare and Medicaid Innovation (CMMI), awards grants to eligible providers for demonstrations and innovative projects, which include telehealth and related services. Regarding telehealth, CMMI funds various health care payment and service delivery models, some of which incorporate telehealth into their design, such as Accountable Care Organizations (ACOs) and Bundled Payment for Care Improvement (BPCI) Initiatives.", "Medicare Part B reimburses physicians and other providers for medically necessary services and preventive services, such as those needed to diagnose or treat a medical condition and meeting accepted standards of medical practice. These services are typically provided face-to-face with the patient. In some instances, Part B pays if the services are provided via telehealth, in which the patient is at one location (referred to as the originating site) and the provider is at another location (referred to as the distant site).\nThe Medicare Fee-For-Service (FFS) Program (known as Original Medicare) is the basis for telehealth payments under Medicare Part B. The provider receives the same reimbursement as (s)he would have received had the services been furnished face-to-face. The originating site, where the patient is located, receives a nominal fee.\nMedicare telehealth coverage is subject to several limitations. The FY2015 Medicare Part B final rule identifies the following eligibility requirements for telehealth coverage under Medicare Part B:\nProviders—Physicians, nurse practitioners, physician assistants, nurse-midwives, clinical nurse specialists, clinical psychologists, clinical social workers, and registered dietitians or nutrition professionals are among the list of providers eligible for telehealth reimbursement. Services—office visits, annual wellness visits, professional consultations, and individual psychotherapy are among the list of services authorized for telehealth reimbursement. Telecommunication systems—interactive audio and video equipment must result in synchronous (or real-time) communication between the provider and beneficiary. Exceptions are in Alaska and Hawaii, where asynchronous (or store-and-forward) technology is permitted in federal demonstration programs. Geographic locations—originating sites must be (1) located in rural health professional shortage areas (HPSAs); (2) located in a county that is not included in a metropolitan statistical area (MSA); or (3) participating in a federal telemedicine demonstration project that was approved by or received funding from the Secretary of HHS as of December 31, 2000. Originating sites—a patient must be examined in or at a physician's or practitioner's office, a hospital, a critical access hospital (CAHs), a rural health clinic (RHCs), a federally qualified health centers (FQHCs), a skilled nursing facilities (SNFs), a community mental health center (CMHCs), or a hospital-based or CAH-based Renal Dialysis Center (including satellites).\nIn CY2009, Medicare Part B reported 38,000 telehealth visits, but according to CMS, telehealth expenditures were not reported for that year. Six years later, in CY2015, the total number of telehealth visits increased by more than fivefold to 192,692 for which physicians and other professionals received nearly $18 million. In comparison, in FY2014, total Part B expenditures for physician fee schedule services amounted to $69.2 billion. Telehealth reimbursement represents a tiny fraction of overall Medicare spending, partly because provider adoption has been \"modest.\"", "While Part B pays physicians (and others) directly for the services they furnish to Medicare beneficiaries, Medicare Advantage (MA) plans offered by private companies under Part C are paid a fixed amount (or capitated monthly payment) each month to provide a suite of medical services to beneficiaries. Telehealth services are not required services offered under Part C, but MA plans are free to make available a variety of telehealth services to their enrollees, subject to general CMS guidelines. MA payments are determined through a comparison of a plan's estimated cost and the maximum amount Medicare will pay a plan. To date, MA plans have delivered telehealth services to beneficiaries via telemonitoring, web/phone-based technologies, and nursing hotlines. Given the optional nature of telehealth services under Part C, total Part C telehealth expenditures are not known. Total expenditures for Medicare Part C in 2014 amounted to $85.7 billion.", "Medicare Part D provides coverage of outpatient prescription drugs to Medicare beneficiaries who choose to enroll in this optional benefit through a Medicare Advantage Prescription Drug (MAPD) plan or a Prescription Drug Plan (PDP). The Medication Therapy Management (MTM) program is a system of coordinated pharmacy care under Part D for patients with multiple medical conditions who may be seeing a series of practitioners. As required for the coordinated care requirement, Part D plans must include periodic medication reviews, patient consultation and education. Annual medication reviews must be conducted either in-person or via telehealth consultations. However, discrete data on Part D telehealth benefits, providers, utilization, or cost are unavailable. Of interest, AHRQ has funded evidence-based research on the use of health information technology to improve quality of care within an MTM program. In FY2014, total Part D expenditures for prescription drugs amounted to $77.7 billion.", "Telehealth is a focus for selected demonstrations through Medicare, and innovation awards through the CMMI. Several of these projects and awards are generating evidence on telehealth access, cost, and quality. For example:\nThe IDEATel demonstration supported research, from 2003 to 2005, on telemedicine networks that were designed to improve primary and preventive care to 1,364 Medicare beneficiaries with diabetes who were living in underserved inner city and rural areas of New York. Remote patient monitoring for blood glucose levels and high blood pressure, informatics, automated clinical guidelines, standards, and specialized curricula for health care professionals were incorporated into the project. The IDEATel study reported a number of mixed results. Overall, the project did not reduce Medicare costs. However, some telehealth interventions resulted in clinical benefits such as favorable effects on enrollees' diabetes care and communication with health care providers about their diet and care, and the development and the implementation of alternative payment models in a telemedicine environment. The Health Care Buddy (HCB) demonstration supported research, from 2006 to 2009, on provider-based intensive care management services as a way to improve quality of care and reduce costs for 1,767 Medicare beneficiaries who had one or more chronic diseases and generally incurred high health care costs. Medicare beneficiaries received a handheld device (a Health Buddy) with a large, high-resolution color screen located in as patient's home and linked via telephone with care managers. Patients using the device received daily questions tailored to their diagnoses about such things as their symptoms, vital signs, knowledge, and health behavior. The program prompted beneficiaries and their case managers to enter or receive information about their health status regularly. The HCB demonstration reported varied outcomes. HCB interventions led to reduced hospitalization rates, and for high-cost beneficiaries average monthly costs declined between $1,500 and $2,500 (from $3,000 per month). On the other hand, HCB interventions yielded no improvements in patient experiences, functional status or other metrics. Since 2012, CMMI has funded several projects involving telehealth under the first two rounds of the Health Care Innovation Awards . Although some telehealth-related activities (including remote-monitoring) are reported through CMMI-funded activities that may include ACOs and the BPCI initiative, the total amount of telehealth funding within CMMI is unknown. In addition to ACO and BPCI payment models, CMMI makes awards to study other types of models that may support telehealth. These projects either have just been completed in 2015 or are ongoing through 2017. Published data that speak to issues of access, cost and quality are not yet available.\nRecent legislative and regulatory activity is likely to result in more telehealth-related changes in Medicare. For example, the Medicare Access and CHIP Reauthorization Act (MACRA) established a new Merit-Based Incentive Payment System (MIPS). Under MIPS, beginning on January 1, 2019, Medicare providers will be required to comply with an alternative payment system founded on performance standards, composite performance scores, and incentive payments. The MIPS would apply a new set of measures and activities, including clinical practice improvement activities, to determine whether a provider qualifies for an incentive payment. Telehealth and remote monitoring are explicitly identified as examples of clinical practice improvement activities. MIPS implementing regulations are expected to be published in early 2016.\nEarlier, in 2015, CMS published a final rule that qualifies \"telehealth\" and \"remote patient monitoring\" as two types of technologies among other tools that an ACO is permitted to use for the purpose of improving care coordination for Medicare beneficiaries. Also, in 2015, CMS announced that a \"Next Generation ACO Model\" would offer greater opportunities to coordinate care, including an expansion in the eligible settings where Medicare patients can be seen (or originating sites). Under the BPCI initiative, awardees may expand the use of telehealth services for beneficiaries through a waiver of Medicare payment policy. Awardees may provide telehealth services in any area (i.e., beyond those originating sites specified in Section 1834(m)(4) of the SSA). CMS has funded some telehealth studies through Medicare demonstrations, but results are mixed. Some studies show little or no evidence for telehealth cost savings, patient satisfaction and quality improvements, but others show some evidence that telehealth is beneficial to some aspects of the care delivery process, such as reduced hospitalizations, or improved patient experience.", "Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports, to an estimated 65million people. In CY2014, total payments for Medicaid services amounted to a cost of $494 billion, with the federal government paying $299 billion, or about 60% of the total.\nState Medicaid programs must follow federal requirements to receive federal matching funds but they have flexibility to design programs that meet a state's unique needs. States decide whether to provide telehealth and the type of telehealth services they will authorize for payment. This flexibility results in significant program variation across state Medicaid programs.\nSpecifically, state Medicaid programs may decide on (1) the type of telemedicine service (equipment) to cover; (2) the types of telemedicine providers that may be covered and reimbursed; (3) how much to reimburse for telemedicine services, as long as such payments do not exceed federal upper payment limits; and (4) other conditions for payment.\nThe text box summarizes states' policies for telemedicine equipment under Medicaid.\nAlthough many studies have been published on the quality of telehealth activities under the federal Medicare program, fewer studies have been published on state Medicaid programs. In addition, the few that are available report mixed results in, and take place in, variable care settings making comparability and transferability of findings difficult.", "There is growing use of and payment for telehealth-related services among a number of federally funded health programs – at the VA, DOD, the IHS, and by the Medicare program to name a few. All have been adopters (or payers) of various technologies and services to aid in the delivery of care to their respective patient populations. However, despite the level of interest and evidence that telehealth is a viable vehicle for delivering certain services to some populations, there remain a number of issues where evidence is insufficient to address key issues related to access, quality and cost of care.\nThe issues are often inter-related since how much a program or service may cost is related to how accessible a program or service is to the target population. If a service significantly increases the utilization of certain services, the question arises as to what is the downstream impact on the costs of care within a particular program. Some may argue that earlier interventions and diagnoses using telehealth could help to avoid major expenses in the future by better managing chronic conditions. Conversely, others may argue that increasing access will only add more spending and not less to an already expensive health care system by making such services more readily available to beneficiaries and consumers. More research is needed in different programs and settings to better inform questions of the impact of increasing access to care via telehealth on cost effectiveness and cost savings when telehealth services are employed.\nSimilarly, the quality of telehealth services needs additional study for a variety of services, programs, and populations. Is the quality of care and the outcomes associated with that care of greater, lesser or equal value when compared to traditional, brick-and-mortar care? There will be no single, one-size fits all answer to issues of quality. But additional research is needed to answer questions about the impact of these programs on key measures of quality, particularly at a time when there are increased calls to expand the use of telehealth across a number of federal programs as well as efforts to more directly tie reimbursement to quality/performance outcomes.\nFinally, issues of uniformity in terminology could be the subject of further exploration. Specifically how the terms \"telehealth\" and \"telemedicine\" are used across federally funded health programs and if any differences in definitions result in problems associated with data collection, evaluation, and payment.\nAppendix A. Definitions of Related Terms\nAppendix B. FedTel Membership\nFedTel consists of representatives of federal agencies, or departments and programs within those agencies, with an interest or activity in telemedicine. The Health Resources and Services Administration (HRSA), within the Department of Health and Human Services (HHS), coordinates FedTel. The following is a list of current members.\nAgency for Healthcare Research and Quality (AHRQ)\nCenters for Disease Control and Prevention (CDC)\nCenters for Medicare & Medicaid Services (CMS)\nDepartment of Agriculture (USDA)\nDepartment of Labor (DOL)\nDepartment of the Army (Telemedicine & Advanced Technology Research Center [TATRC])\nDepartment of the Army (Army Medical Department (AMEDD))\nDepartment of the Navy National Center for Telehealth & Technology (T2)\nDepartment of Transportation (DOT)\nDepartment of Veterans Affairs (VA)\nFederal Bureau of Prisons (BOP)\nFederal Communications Commission (FCC)\nFood and Drug Administration (FDA)\nHealth Resources and Services Administration (HRSA)\nIndian Health Service (IHS)\nInternational Trade Administration (ITA)\nNational Aeronautics and Space Administration (NASA)\nNational Institutes of Health (NIH)\nNational Institute of Justice (NIJ)\nNational Institute of Standards and Technology (NIST)\nNational Science Foundation (NSF)\nOffice of the Assistant Secretary for Preparedness and Response (ASPR)\nOffice of the National Coordinator for Health Information Technology (ONC)\nSubstance Abuse and Mental Health Services Administration (SAMHSA)\nAppendix C. ACA and Telehealth\nThe ACA created several incentives for telehealth advancement, mainly through Medicare and Medicaid pilots and programs. Although some of these ACA provisions do not explicitly mention telehealth, they provide support for using telehealth-related technologies. Some of the provisions have received funding. Although several provisions could include a role for telehealth, that information is not yet available. ACA Sections 3021, 3022, 3024, 6407, and 10328 explicitly allow telehealth technologies to be incorporated in and assessed through the grant making process. For example, grants under Sections 3021 and 3024 encourage the design and implementation of health care delivery models to support cost-reductions, quality and efficiency in the Medicare, Medicaid and SCHIP programs.\nSec. 3021. Center for Medicare and Medicaid Innovation (CMMI). This funding initiative supports testing for innovative health care payment and service delivery models that have the potential to reduce spending for Medicare, Medicaid, and CHIP while maintaining or improving the quality of care for program beneficiaries. Sec. 3022 Medicare Shared Savings Program. Under the shared savings program, administered by CMMI, eligible Accountable Care Organizations (ACOs) qualify for an annual incentive bonus if they achieve a threshold savings amount established for the three-year agreement period. The program seeks to facilitate coordination and cooperation among providers to improve the quality of care for Medicare fee-for-service beneficiaries and reduce unnecessary costs. While telehealth systems are explicitly permitted as a tool that ACO groups may use to define processes that promote evidence-based medicine, it is uncertain if any funded projects are incorporating them. Sec. 3024. Independence at Home Demonstration Program. This provision of the ACA authorizes demonstration projects on the coordination of care, expenditures, access to care, and quality of care. This demonstration tests the use of teams that use telehealth to provide home-based care to chronically-ill patients through telehealth systems. Sec. 6407. Face-to-Face Encounter with Patient Required Before Physicians May Certify Eligibility for Home Health Services or Durable Medical Equipment Under Medicare. Physicians must have a face-to-face encounter (including through telehealth) with the patient before issuing a certification or re-certification for home health services or durable medical equipment. Sec. 10328. Improvement in Part D Medication Therapy Management Programs (MTM). Part D sponsors will be required to include in their MTM programs an annual comprehensive medication review, furnished in person or using telehealth technologies, and provide follow-up interventions as warranted.\nAppendix D. Telehealth and Telecommunications\nTelehealth systems and networks rely on broadband, as well as specialized health equipment and advanced telecommunications. FCC officials state that\n[b]roadband is essential to 21 st Century health care, saving lives, improving the quality of care, and reducing costs by providing instant remote access over high-speed networks to medical specialists, health care records and training. Telemedicine applications provided over robust broadband networks can facilitate immediate diagnoses and care needed to prevent lasting damage to stroke victims, prevent premature births and deliver psychiatric treatment for patients in rural areas, to name a few examples.\nThis appendix describes support for telehealth through broadband and telecommunications programs within the following four agencies/departments: (1) Federal Communications Commission; (2) Department of Commerce; (3) United States Department of Agriculture; and (4) Department of Health and Human Services.\nFederal Communications Commission (FCC)\nThe FCC is the primary authority in the United States for communications law, regulation, and technological innovation. It regulates interstate and international communications activities connected with broadband programs, as well as television, cable and other communications media, and supports telehealth activities through various initiatives, including program funding and interagency coordination.\nThe Telecommunications Act of 1996 authorized the Rural Health Care Program. With funding capped at $400 million annually (from the Universal Service Fund), the Rural Health Care Program continues to seek improvements in health care quality for patients in rural communities by ensuring that eligible health providers have access to telecommunications and broadband services. The Rural Health Care Program is made up of three programs: the Healthcare Connect Fund, the Telecommunications Program, and the Rural Health Care Pilot Program.\nThe Healthcare Connect Fund, established in 2012, aims to increase access to broadband for health care providers, especially those serving rural areas; foster development and deployment of broadband health care networks; and maximize cost-effectiveness of the FCC's universal service health care program. The RHC Telecommunications Program, established in 1997, ensures that rural health care providers pay no more than their urban counterparts for telecommunications services. The Rural Health Care Pilot Program, established in 2006, has funded up to 85% of the costs associated with deploying broadband health care networks. As of 2015, it supported nearly 50 active pilot projects, but this ongoing program is closed to new applicants.\nIn 2010, the FCC recommended that HHS make arrangements with private insurers that contract with Medicare to receive tax credits for providing telehealth services to Medicare beneficiaries, but this recommendation has not yet been implemented. In 2014, the FCC created a new Connect2Health Task Force, seeking to support ongoing health telecommunications activities within the agency, and to provide an umbrella for all FCC health-oriented activities, including broadband adoption and health IT promotion. Since March 2014 the task force has led various activities at the local and national/federal level, such as roundtables in a \"beyond the beltway\" series of meetings, and has collaborated in a series of health technology related events with the Food and Drug Administration. The FCC and the ONC plan to increase broadband access in support of health care through 2020.\nUnited States Department of Commerce\nThe Department of Commerce supports telehealth primarily through grants to institutions for projects, and secondarily through collaborations with other federal agencies. Although its statutory mission is silent on an explicit telehealth role, the National Telecommunications and Information Administration (NTIA) oversees the Broadband Technology Opportunities Program (BTOP), which was established by ARRA. ARRA appropriated $4.7 billion for NTIA to establish BTOP to increase broadband access and adoption, provide broadband access, training and support to health care providers as well as to schools, libraries, and other organizations.\nNTIA reports that telehealth project grants were awarded under competitive grants through BTOP, some amounting to $250 million or more for innovative programs that encourage sustainable broadband service. BTOP reports ongoing progress as well as impediments. For example, during 2014, BTOP reported 224 active awards. However, BTOP also reported that impediments such as lack of award acceptance, voluntary project termination and material noncompliance with grant terms and conditions are among the reasons for award cancellations or terminations.\nUnited States Department of Agriculture\nThe United States Department of Agriculture (USDA) administers telecommunications telehealth grants through two major programs: the Distance Learning and Telemedicine (DLT) Program and the Community Connect Program.\nThe DLT Program funds institutions to support advanced telecommunications in health care and education in rural communities, and is designed specifically to assist rural communities that would otherwise be without access to learning and medical services over the Internet. It provides:\ndirect loans and project grants to corporations or partnerships, Indian tribes or tribal organizations, state or local units of government, consortia, and private for-profit or not-for profit corporations and other eligible entities. awards grants to eligible institutions for acquiring new instructional programming that is a capital asset for acquiring telehealth equipment, as well as for facilities and services that advance telehealth; and awards grants for providing technical assistance and develop instructional material related to project implementation.\nThe Community Connect Program, whose primary objective is to expand broadband services to rural communities, provides financial assistance to state and local governments, federally-recognized tribes, non-profit organizations and for-profit corporations in rural areas that lack a minimum broadband speed connection. Funds may be used to\nconstruct, acquire, or lease facilities that deploy broadband service; improve, expand, construct, or acquire a community center and provide computer access points; and finance bandwidth cost for service at critical community facilities (such as public medical clinics, public hospitals and public colleges and public universities) for two years.\nDepartment of Health and Human Services\nThe HHS's portfolio of telehealth activities spans several agencies. For example, the ONC coordinates some telehealth-related activities throughout HHS. HRSA and the Office of the Assistant Secretary for Preparedness and Response (ASPR) each develop policy for emergency preparedness, including telehealth capabilities that enable responders to communicate with authorities during a public emergency. Additional agencies such as the National Institutes of Health, AHRQ, CDC and the Food and Drug Administration (FDA) are applying telehealth functions within the scope of their agency missions. Of note, the Office for the Advancement of Telehealth (OAT) manages the following five types of telehealth grant programs that support telehealth coordination and telehealth networks:\nTelehealth Network Grant Program (TNGP) includes funding projects that demonstrate the use of telehealth networks to increase access to health services for medically underserved populations. Telehealth Resource Center Grant Program (TRC) helps with coordinating telehealth organizations that serve rural and underserved communities throughout the country by providing technical assistance to those organizations. Licensure Portability Grant Program (LPGP) helps institutions and states improve clinical licensure coordination across state lines. Grants through LPGP have supported recent licensure portability studies for groups of physicians and nurses. Evidence-Based Tele-Emergency Network Grant Program EB-TNGP grants aim to expand access to care in remote emergency departments for rural patients and providers and to determine the effectiveness of that care. For example, a grant in FY2014 supported implementation and evaluation of broad telehealth networks to deliver Emergency Department consultation services via telehealth to rural and community providers without emergency care specialists. Rural Child Poverty Telehealth Network Grant Program RCP-TNGP is a three-year pilot program to support established telehealth networks to develop innovative ways to address the unique health care challenges faced by children living in impoverished rural areas.\nAppendix E. List of Acronyms" ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 3, 3, 2, 3, 4, 4, 4, 4, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "", "h0_full", "h2_title h1_title", "h1_full", "", "", "", "h2_title h1_title", "h2_title h1_title", "h1_full", "", "", "h2_full", "", "" ] }	{ "question": [ "What is Telehealth?", "What is telemedicine?", "Why are the two terms used interchangeably?", "How does the federal government engage in Telehealth?", "How did the VA provide Telehealth?", "How did Medicare provide Telehealth?", "What barriers were identified with the use of Telehealth?", "What key issues related to these barriers were identified?", "How long has Telehealth been active legislation?", "How has this legislation expanded since?", "Who was teleheath being expanded to benefit?", "What does the 21st Century Cures Act want to require from Congress on Telehealth?", "Why would the government need to study the Telehealth information?" ], "summary": [ "Telehealth is the use of electronic information and telecommunications technologies to support remote clinical health care, patient and professional health-related education, public health, and other health care delivery functions.", "A narrower concept, telemedicine, refers to clinical services that are provided remotely via telecommunications technologies.", "Some sources use the two terms interchangeably, and there is no consensus among federal programs and among health care providers on the definition of either term.", "Federal involvement in telehealth is varied. As of 2014, more than 20 federal agencies were engaged in some aspect of telehealth.", "For example, in FY2015, the Department of Veterans Affairs (VA) was the largest telehealth provider in the federal government, providing 2.1 million telehealth consultations to some 677,000 veterans.", "In contrast, the Medicare (Part B) program, covering more than 52 million beneficiaries, the number of telehealth visits increased fivefold from 38,000 telehealth consultations (or visits) in 2009 to 192,692 in 2015.", "The VA, the Centers for Medicare and Medicaid Services (CMS), the Institute of Medicine, and other stakeholders have identified barriers associated with the use of telehealth, notably that some telehealth modalities have a stronger evidence base than others.", "Furthermore, according to the Agency for Healthcare Research and Quality (AHRQ), key issues requiring additional research are the impact of telehealth on individual and population health, and on moving away from traditional fee structures toward rewarding clinicians for value versus volume of care.", "Telehealth has been an active legislative issue thus far in the 114th Congress.", "For example, in February 2016, bipartisan legislation was introduced to expand telehealth reimbursement for remote patient monitoring under the Medicare program.", "In December 2015, the Senate Committee on Finance published options for expanding telehealth utilization for Medicare beneficiaries with chronic conditions.", "H.R. 6, the 21st Century Cures Act (as passed by the House), would require CMS and the Medicare Payment Advisory Commission to submit programmatic information to Congress on telehealth.", "The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10) includes a provision that encourages the use of telehealth as an element in the new Merit-Based Incentive Payment System and requires the Government Accountability Office to study telehealth and its use under the Medicare program." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, -1, 3, -1, 0, -1, -1, 3 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }
CRS_RL34560	{ "title": [ "", "Forest Carbon Markets", "Compliance Offset Markets", "Kyoto Protocol7", "Clean Development Mechanism", "Joint Implementation", "Ongoing Kyoto Developments", "European Union's Emission Trading Scheme", "Regional Initiatives in the United States", "Mandatory U.S. State Requirements23", "Proposals in the 111th Congress", "Voluntary Offset Markets", "Retail Offsets", "Chicago Climate Exchange", "Reporting and Registry Programs", "1605(b) Reporting Program", "California Registry", "The Climate Registry", "USDA Guidelines40", "Forestry Projects for Offsets", "Afforestation and Reforestation", "Long-Term Wood Products", "Forest Management", "Avoided Deforestation55", "Potential Drawbacks of Forestry-Related Projects", "Additionality", "Verifiability", "Measurement", "Monitoring", "Enforcement", "Leakage", "Emissions Leakage", "Product Leakage", "Permanence", "Forward Crediting" ], "paragraphs": [ "Forests are major carbon sinks—repositories of vast amounts of carbon. Activities that alter forests—create, enhance, modify, or eliminate them—significantly affect the amount of carbon dioxide (CO 2 ) in the atmosphere. Forests store about 45% of terrestrial carbon, and were estimated to sequester 2.6 billion metric tons (tonnes) of CO 2 per year in the 1990s, about a third of annual anthropogenic carbon emissions from fossil fuel and land use changes.\nConcerns about global climate change and its impacts on the environment and the economy are encouraging policy-makers and stakeholders to explore a range of opportunities that would reduce emissions of CO 2 and other greenhouse gases (GHGs). Reducing deforestation and increasing the amount of carbon stored in forests are approaches that have generated considerable interest for their ability to support climate change mitigation. Congress is considering legislation that would, among other things, provide financial incentives for parties to reduce GHGs or sequester (store) CO 2 . The possible use of forests to sequester CO 2 is part of this larger debate over GHGs and climate change.\nThis report describes current markets for forest carbon sequestration, the potential for using forests to offset other sources of GHG emissions, and the concerns and drawbacks related to forest carbon sequestration efforts.", "The potential economic and environmental impacts of global climate change have led many to consider regulating GHG emissions from various sources, and to seek ways to ameliorate their own GHG emissions. Projects that sequester GHGs or reduce GHG emissions from unregulated economic sectors, such as forestry, can generate offsets, or credits, to sell to regulated entities or to those who wish to reduce their carbon footprints. In either case—for regulated entities or for voluntary reductions—forestry activities (e.g., afforestation, reforestation, and avoided deforestation) typically present opportunities to offset GHG emissions.\nOffsets are commonly project-based initiatives involving specific projects or activities whose primary purpose is to reduce, avoid, or sequester GHG emissions. Parties can develop offsets from a wide variety of activities, such as methane capture and agricultural soil projects, but forestry-related projects offer significant potential, in the volume of GHGs that can be avoided or sequestered.\nOffsets, or credits earned by an offset project, would likely be the currency of most forest carbon markets. Offsets are the measurable avoidance, reduction, or sequestration of CO 2 or other GHG emissions. Forestry projects as offsets raise a number of concerns. To be credible, the emissions reduced, avoided, or sequestered must be additional to business as usual (i.e., what would have happened anyway), verifiable , and permanent . These concepts, and the problems that arise in assuring credible forestry, are discussed later in this report.\nOne concern for offset markets, in addition to the drawbacks discussed below, is the potential for double-counting the offsets—that is, that sellers might try to sell the same offset to multiple buyers. Thus, compliance markets, and some voluntary markets, require some type of reporting and registration for offsets. This has led to incentives for independent reporting and registry programs, as discussed below.", "A mandatory GHG reduction program, such as a cap-and-trade system, could allow covered entities (e.g., power plants) to use offsets to comply with their GHG emissions cap. For example, a regulated entity could purchase offsets, rather than reducing direct, onsite emissions, and might choose to do so if the offsets were less expensive. Assuming that the amount of CO 2 reduced, avoided, or sequestered through an offset project equals the amount reduced at a regulated source, the objective to reduce GHG emissions would be met. For global climate change, it does not matter where or from what source the reduction or sequestration occurs; the effect on the atmospheric concentration of GHGs would be the same.\nAlthough forestry-related projects are eligible as offsets in several existing or developing compliance markets, forest projects have, to date, played a negligible role. If the recent cap-and-trade proposals (discussed below) are an indication, however, interest in allowing forestry offsets in a compliance regime is growing.", "The United Nations Framework Convention on Climate Change (UNFCCC) is the primary international agreement to mitigate climate change by reducing GHG emissions. The Kyoto Protocol established a framework for Annex I countries (developed countries, including the United States) for \"reducing their overall emissions of such gases [GHGs] by at least 5% below 1990 levels in the commitment period 2008 to 2012.\" Although the United States originally signed the Kyoto Protocol, it later rejected participation, and thus is not bound by its goals.\nTo provide flexibility to countries in meeting their GHG reduction targets, the protocol included two mechanisms—the Clean Development Mechanism (CDM) and Joint Implementation (JI)—that allow certain forestry activities to generate offsets.", "The CDM is a project-based mechanism that permits Annex I countries under the Kyoto Protocol to earn credits for use in achieving their emission targets. It is the only mechanism that allows Annex I countries to earn credits for actions in non-Annex I countries (developing countries such as India or China). For forestry projects, the CDM includes only afforestation (planting trees where none were previously growing) and reforestation (replanting trees on recently cleared forest sites). Further, project developers can only earn credits for additional projects—those that would not otherwise have occurred (if reforestation is required by a country's laws, for example, the reforestation project cannot earn credits under the CDM).\nThe CDM is a large and growing compliance offset market. Both the trading volume and market value of CDM projects have grown substantially in recent years, although the global recession caused a drop in 2008. (See Figure 1 . ) Forestry-sector projects were initially expected to play a significant role in the CDM, but that has not been the case. An IPCC report stated that although the forestry sector can make a \"very significant contribution to a low-cost mitigation portfolio ... this opportunity is being lost in the current institutional context and lack of political will to implement and has resulted in only a small portion of this potential being realized at present.\" Indeed, of the offsets in the pipeline under the CDM to date, afforestation and reforestation have accounted for 1.1% of the projects (55 of 5,122 CDM projects) and only 0.7% of the offsets (4.7 million tonnes of certified emission reductions—CERs—out of 709.7 million tonnes of CERs for all CDM projects). Also, to date, no afforestation or reforestation projects have had CERs issues.", "JI is also a project-based approach for countries to earn credits toward their emission targets under the Kyoto Protocol. JI projects are conducted jointly between two Annex I countries. A broader array of forestry activities can earn credits than under CDM; in addition to afforestation and reforestation, avoided deforestation and forest management that enhances carbon sequestration can qualify as JI projects. As with CDM projects, credits are only earned on projects that otherwise would not have occurred. JI has a much smaller market than CDM—about 86 million tonnes of emission reduction units (ERUs) compared to 709 million tonnes of CERs for CDM). One JI project (with 82,000 tonnes of ERUs) is a forestry project.", "The concerns about tropical deforestation and Third World contributions to GHG emissions were among the issues discussed at the 13 th Conference of the Parties to the UNFCCC (COP-13) and the Third Meeting of the Parties to the Kyoto Protocol (MOP-3) held in Bali, Indonesia, December 3-14,2007. The United States participated in discussion at Bali, as a party to the UNFCCC and as an observer to the Kyoto Protocol. Among the outcomes of the Bali negotiations was an Action Plan that included:\nPolicy approaches and positive incentives ... [for] reducing emissions from deforestation and forest degradation [REDD] in developing countries; and [identifying] the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries ...\nThe negotiations also led to a decision on forests and deforestation. The decision encourages various efforts, including demonstration projects, to reduce GHG emissions from deforestation and forest degradation, financial and technical support for those efforts, and improved measurement and reporting of GHG reductions that result from such efforts. Some argue that the most important result of the Bali negotiations, however, is that avoided tropical deforestation will be included in any agreement on post-Kyoto (after 2012) actions on global climate change.\nCOP-15 and MOP-5 were held in Copenhagen, Denmark, December 7-18, 2009. Deliberations considered multiple proposed texts, but could not reach agreement among all parties. Hence, the Copenhagen Accord set forth numerous key action points for future negotiations. One of those points is to establish a mechanism to mobilize international finance for REDD+ (reduced carbon emissions from deforestation and forest degradation plus enhanced forest carbon sequestration). However, the nature and timing of such financial tools remains to be developed.", "Members of the European Union (EU) are implementing the requirements of the Kyoto Protocol through the EU's Emission Trading Scheme (ETS). Private parties subject to the ETS cap cannot purchase forestry offsets. However, EU governments can purchase eligible forestry offsets, from afforestation or reforestation projects, to meet their Kyoto Protocol commitments, up to 1% annually of their country's base year (1990) emissions. The World Bank has reported that global transactions of land use, land use change, and forestry offsets have only accounted for 6% of this allowable limit (i.e., 0.06% of EU carbon emission reductions).", "Even though the United States is not a signatory to the Kyoto Protocol, many states are participating in regional initiatives for mandatory reduction of GHG emissions. Twenty-three states (and four Canadian provinces) have joined one of three regional partnerships that would require CO 2 (or GHG) emission reductions. Another nine states (plus two Canadian provinces and six Mexican states) are observers to the partnerships.\nThe first regional initiative to take effect is the Regional Greenhouse Gas Initiative (RGGI), a partnership of 10 northeastern and mid-Atlantic states that creates a cap-and-trade system aimed at limiting carbon dioxide emissions from power plants. RGGI allows for five types of offset projects to generate emission credits, including afforestation. RGGI participants agreed to continue to develop other offset projects, \"including other types of forestry projects, and grassland revegetation projects.\"\nTwo other regional initiatives have been developed, but have yet to be implemented. One is the Western Climate Initiative (WCI), a partnership of seven western states (and four Canadian provinces), with six additional states (plus two Canadian provinces and six Mexican states) as observers. This partnership has agreed to a regional economy-wide GHG emissions target of 15% below 2005 levels by 2020. Although the WCI logistics are in the early stages, \"in each of the opportunities for stakeholder engagement on the design of a cap-and-trade system for the Western Climate Initiative, there has been strong support for including an offset program.\"\nThe other regional initiative in development is the Midwestern Greenhouse Gas Reduction Accord, signed by six states (and one Canadian province), with three additional states (and one Canadian province) as observers. This accord would establish a regional multi-sector GHG cap-and-trade program. As with the WCI, this program is still in the early development stages.", "Several U.S. states have individual programs that currently or will soon mandate reductions in CO 2 or GHG emissions. For example, the California Global Warming Solutions Act of 2006 (AB 32) established a process, with target emission reductions and implementation dates, for reducing GHG emissions within the state. However, the 2008-2009 recession and controversies over various aspects of implementation, including forest offset project protocols, have raised questions about the program's future. Hawaii and New Jersey have also passed legislation to establish mandatory statewide GHG reduction programs, but these programs are still in development. Other states have addressed the issue in a more limited fashion—for example, through restrictions on new power plants (e.g., Oregon and Washington), on existing power plants (e.g., Massachusetts and New Hampshire), and on motor vehicles.", "Members have introduced several legislative proposals that would establish a GHG emissions reduction program, such as a cap-and-trade system. Two particular bills—the American Clean Energy and Security Act of 2009 ( H.R. 2454 ), commonly known as Waxman-Markey, and the Clean Energy Jobs and American Power Act ( S. 1733 ), commonly known as Kerry-Boxer—have attracted most of the attention, but other bills addressing various aspects of GHG emissions reduction and climate change have also been introduced or discussed as possible vehicles. The cap-and-trade programs generally would allow the use of offsets to varying degrees, thus creating a compliance offset market. Many of the proposals that allow offsets would include forestry-related activities as eligible offset projects.", "Voluntary markets are exchanges of offsets by entities not subject to emissions caps. In contrast to compliance markets, forestry-related and other land use projects have played a much larger role in voluntary markets. A 2007 study found that, of the different offset categories in the voluntary market, forest sequestration accounted for the largest percentage (36%) of transaction volume. The primary components of the voluntary market are \"retail\" offsets (also called the over-the-counter, or OTC, market) and offsets generated through the Chicago Climate Exchange (CCX), both of which include forestry projects.\nIn the United States and elsewhere, a growing number of organizations and individuals not subject to mandatory emission caps are buying or selling offsets. These exchanges are voluntary, because there is no requirement for these parties to curtail their GHG emissions. Buyers may be interested in offsetting some or all of their GHG emissions from various activities, reducing their \"carbon footprint,\" or becoming \"carbon neutral.\" Buyers might also be preparing for future mandatory federal GHG emission reductions, getting into the market while prices are relatively low with the expectation that today's carbon offsets will be usable to achieve future federal emission ceilings or caps. Sellers are interested in receiving income for various activities, which, without the voluntary market, would likely not occur.\nThere is currently no registry or tracking system that follows all exchanges in the voluntary market. For this reason, the precise size or value of the voluntary offset market is unknown. However, a series of World Bank reports provides estimates for recent years indicating that the size of the market has increased substantially since 2005. In 2008, the CCX market was 69 million tonnes of CO 2 , with a market value of $309 million, and the rest of the voluntary market was 54 million tonnes of CO 2 , with a market value of $397 million. To put these figures in context, U.S. GHG emissions were 6,957 million tonnes of CO 2 in 2008.", "In general, the voluntary offset market refers to retail or \"over-the-counter\" offsets that may be purchased by anyone. Purchasing a retail offset is as simple as online shopping. Hundreds of organizations—private and nonprofit entities—develop, provide, or sell retail offsets to businesses and individuals in the voluntary market. The quality of the retail offsets in the voluntary market varies considerably, largely because there are no commonly accepted standards; one source reports 21 different standards in use. Some sellers offer offsets that comply with standards generally regarded as quite rigorous, such as the CDM or the Gold Standard. Other sellers offer offsets that meet the seller's self-established guidelines, which may not be publicly available. These self-established protocols can vary considerably, raising questions of integrity.", "The Chicago Climate Exchange (CCX) was established in 2003 as a trading system for buyers and sellers of offset projects to reduce GHG emissions. Buyers (i.e., GHG emitters) make voluntary but legally binding commitments to meet GHG emission reduction targets; those who emit more than their targets comply by purchasing CCX Carbon Financial Instrument (CFI) contracts, which can be generated by qualifying carbon offset projects (from sellers). CCX has standardized rules for CFI contracts, including forestry projects, and requires third-party verification for projects. Eligible forestry projects include afforestation, reforestation, reduced deforestation and forest degradation, forest management to increase stand-level and landscape-level carbon density, and long-term carbon storage in wood products. CCX has guidelines and rules for determining eligible projects and their resulting carbon offsets. However, studies have also criticized the quality of the offsets generated by the CCX.", "In general, GHG reporting and registry programs allow facilities to submit and officially record emissions data. The primary incentive appears to be the opportunity for participants to create an official record of reduced or sequestered emissions, which the parties hope will count as emissions credits in future mandatory reduction programs. At a minimum, participants typically receive some public recognition for their efforts, which may help promote an organization's environmental stewardship profile.", "Section 1605(b) of the Energy Policy Act of 1992 ( P.L. 102-486 ; 42 U.S.C. §§ 13201, et seq.) created a program of voluntary reporting of GHG emissions, reductions, and sequestration. The U.S. Department of Energy, with assistance from other departments, established guidelines for reporting estimated emissions, reductions, and sequestration; the guidelines were revised and updated in 2006.\nThe program has been criticized, because facilities need only report reductions and/or sequestration, instead of reporting all emissions. In other words, a company can submit a record of tons sequestered at one location, but continue to increase emissions at other sites. This may present a concern in subsequent years, if these companies are allowed to receive credit for these reductions or sequestration, and apply the credit towards compliance with an emissions cap.", "The California Climate Action Registry is a private, nonprofit organization for voluntary reporting of GHG emissions and reductions, initially formed by the State of California in 2001. Registry members (currently more than 300 corporations, government agencies, and other organizations) voluntarily measure, verify, and report emissions using registry standards and tools. The Climate Action Reserve is a division of the registry to establish standards for voluntary carbon reductions. The registry and reserve include forestry protocols for the forest sector (for organizations and landowners to account for entity-wide forest carbon stocks and emissions), for forest projects (for carbon sequestration projects by landowners), and for certification (for third-party verifiers to assess reported GHG data).", "The Climate Registry was launched on May 8, 2007. As of February, 2009, 41 states, all Canadian provinces and territories (except Nunavut), and the six northernmost Mexican states have joined the registry to support both voluntary and mandatory reporting schemes. The Climate Registry is modeled on the California Climate Action Registry, with a goal of providing \"an accurate, complete, consistent, transparent and verified set of greenhouse gas emissions data supported by a robust reporting and verification infrastructure.\" Neither the California Registry nor the Climate Registry directly facilitate market transactions, but the information provided could provide a consistent basis for calculating carbon offsets.", "The 2008 farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) contains a new conservation provision to facilitate the development of markets in environmental services. It directs the U.S. Department of Agriculture to develop technical guidelines for measuring environmental services from farms and forests. The provision specifically includes carbon in environmental services, in recognition of the need for uniform standards and consistent measures of emissions reduction and carbon sequestration in the agricultural and forestry sectors. These technical guidelines could provide a consistent basis for carbon reporting and for offset projects in both voluntary and compliance markets.", "Several types of forestry projects might qualify as offsets for compliance or voluntary carbon markets. The capacity of forestry projects to provide offsets is substantial, with higher carbon prices increasing the number of economically feasible projects. One study estimated that U.S. forestry projects could sequester more than 100 million tonnes of CO 2 at a carbon price of $5 per tonne or as much as 1,200 million tonnes at $50, as shown in Figure 2 . Subsequent changes in law and policy, as well as changes in energy, carbon, and forestry markets and different assumptions, would likely lead to different conclusions. Still, this potential is significant when compared to the 6,957 million tonnes of U.S. CO 2 emissions in 2008.\nThe inclusion of projects in other countries would affect the quantity and price of offsets. This is particularly significant for forestry, since tropical deforestation and forest degradation have been estimated to cause as much as 17% of anthropogenic carbon emissions. Whether to include international projects in compliance schemes has been subject of extensive debate. (See \" Avoided Deforestation ,\" below.) In addition, international forestry projects may face more significant problems than domestic projects, as discussed below.", "Establishing stands of trees is one of the most basic objectives of forestry. Afforestation is planting tree seedlings or preparing an area for tree seeding on sites that have been without trees for several years (generally a decade or more), such as pastures or recently abandoned or retired cropland. Reforestation is similar, but applies to sites recently cleared of trees, due to timber harvesting or a natural disaster.\nAfforestation and reforestation are common forestry activities included in trading schemes for forest carbon sequestration offsets. Successful projects must result in established stands to qualify as an offset. Planting failures sometimes occur due to diseases or adverse conditions (e.g., drought). Forest stands generally sequester more carbon than sites without forest cover. Forest biomes store as much as 10 times more carbon in their vegetation than do non-forest biomes, usually at least for decades, and for centuries in some ecosystems. Afforestation will generally sequester more carbon than reforestation because of the carbon release from the site clearing prior to reforestation. (See \" Long-Term Wood Products ,\" below.) Afforestation can provide a broad array of other environmental benefits (e.g., improved water quality and habitat for native animal species), especially if the newly established tree stands restore a historically native mix of species. Plantations, including plantations of exotic species, probably provide less carbon storage than natural mixed forests, but can still be beneficial, especially if fast-growing species are used for products to displace harvests of natural forests (reducing deforestation).\nThe opportunities for afforestation are best in areas with long histories of land clearing for agriculture and other uses—Europe, North America, China, India, and the like. Some countries or regions with substantial open land may have limited opportunities for afforestation because of their arid conditions (e.g., central Asia, north Africa). In other areas (such as the United States), strong demand for corn and other agricultural products (e.g., soybeans, oil palms, or switchgrass) to produce ethanol or biodiesel may also limit afforestation opportunities.", "Some have suggested that harvesting timber for long-term wood products should be included as possible carbon offsets. Lumber, plywood, and other solid wood products can store carbon for many years, ranging from 10 years for shipping pallets to 100 years or more for buildings. Sawmill wastes are almost entirely used for paper or energy (burned as a substitute for fossil fuels). Paper products have a relatively brief duration, often releasing their carbon in less than a year, but paper is commonly recycled, reducing the carbon release as well as reducing the demand for wood from the forest.\nThe wood left on the site after harvesting timber for wood products is more problematic. Some carbon may be added to the soil through decomposition, but much of the carbon left on the site returns to the atmosphere over time—a few minutes if the slash (tree tops and limbs) is burned; weeks, months, or even years if the slash rots.\nWood product harvests from natural tropical forests generally release more carbon than do harvests from plantations and temperate and boreal forests. Native tropical forests have much greater tree species diversity, and thus generally have a greater percentage of the biomass on a site remaining after a timber harvest. Reduced impact logging (RIL) is a collection of practices and techniques intended to reduce the environmental damage of logging, especially in the tropics, that can ameliorate the carbon release from tropical logging. One source reported that RIL reduces wood waste by more than 60% and soil disturbance in roads, landings, and skid trails by almost 50%. However, one barrier to increased use of RIL is illegal logging in the tropics.\nThe net carbon consequences of timber harvesting for wood products have been debated extensively, with little resolution. Some argue that harvesting increases carbon sequestration by storing carbon in long-term products and sequestering large amounts of carbon in reforestation. Others have determined that the carbon released in harvesting operations substantially exceeds the additional carbon sequestered by reforestation. Both conclusions may be valid in certain circumstances; the consequences probably depend on many factors, such as the products made and the amount and treatment of the carbon left on the site. Thus, whether timber harvesting for wood products could be a carbon offset is uncertain.", "Forest management includes a variety of practices. Some are aimed at enhancing growth of the commercially desirable trees. Other plants compete for space, light, water, and nutrients. The undesirable vegetation can be killed chemically (with herbicides), mechanically (with machines or tools), or sometimes by fire (with prescribed burning). The net result, regardless of the tool, is that the carbon from the dead vegetation is released by burning or decomposition. One study found that mechanical thinning increased total carbon storage in dense, young stands, where competition had significantly reduced growth rates; elsewhere, it released carbon by reducing canopy cover and disturbing soils. This is significant because many forest carbon models project carbon sequestration as a fixed percentage of commercial timber volume, not of total biomass on the site. In contrast, using fertilizers can enhance total vegetative growth without disturbing the soil, although many fertilizers are derived from fossil fuels and thus might not result in total net carbon storage. In sum, forestry practices to enhance growth apparently increase carbon sequestration in some circumstances, but not in others. This limits generalizations about potential of forestry practices to offset GHG emissions and raises questions about including growth enhancement for carbon offset projects.\nOne particular forest management practice that can enhance carbon sequestration is delayed timber harvesting. As noted above, whether harvests for long-term wood products represent a net storage or release of carbon is disputed. However, few dispute that allowing trees to continue to grow will continue to sequester additional carbon. Many of the estimates of the potential carbon benefits from forest management are based on the relatively low cost to induce landowners to delay the harvest of their timber to sequester additional carbon in the short run. However, the lack of harvest planning for many landowners raises questions about additionality from delayed harvesting, as discussed below.\nAnother significant practice is certified sustainable forestry. The sustainability of forests has long been an issue of environmental concern. In 1994, the Working Group on Criteria and Indicators for the Conservation and Sustainable Management of Temperate and Boreal Forests was formed to develop internationally accepted measures of sustainable forestry. The 12 member countries, representing 90% of the world's temperate and boreal forests, agreed in 1995 on a set of criteria and indicators to measure forest conservation and sustainable management; these are presented in the Santiago Declaration.\nSeveral systems have been developed to certify that forests are being managed sustainably, consistent with the criteria and indicators developed through the Montreal Process and similar processes for other forested regions. The systems include programs from the Forest Stewardship Council (FSC), the Sustainable Forestry Initiative (SFI), and the Programme for the Endorsement of Forest Certification (PEFC). Although the programs differ in many details, they have many elements in common, such as using RIL, reforesting after harvests, protecting water quality, maintaining habitats for rare species, and preserving native peoples' rights. Furthermore, most require long-term planning for forested areas and independent, third-party monitoring to assure that implementation is consistent with the system's requirements. Most systems also require chain-of-custody reporting to assure that wood products claiming to be from sustainable forests actually come from certified forest lands.\nForest certification clearly provides a legally enforceable standard for forest management that could establish a permanent contract for sustainable production. It clearly produces environmental benefits and provides carbon sequestration when compared to unregulated timber harvesting. However, quantification of the carbon offsets that might result from forest certification, reflecting the variation in forest types and traditional forestry practices, poses a challenge.", "As noted above, tropical deforestation is estimated to account for about 17% of global anthropogenic GHG emissions. Thus, avoiding tropical deforestation has great potential to reduce GHG emissions. Since tropical deforestation is currently external to carbon compliance requirements, it could be a substantial source of forest carbon offsets. At the project level, preventing deforestation is a relatively simple, straightforward action—contracts, easements, and other legal instruments can be created to assure that a site is not cleared of its timber. However, avoiding deforestation is particularly prone to leakage—deforestation of another site to provide the desired products or outcomes. This issue is discussed below.\nSome of the leakage problem can be addressed by determining offsets for avoided deforestation at the national or regional level; this approach is used for some CDM and JI offsets. Proponents of including aggregate national total for avoided deforestation argue that (a) it lowers compliance costs, since avoiding deforestation can be substantially less expensive than active forestry or other emission reduction or sequestration efforts; and (b) it provides compensation to developing tropical Third World nations. Opponents argue that (a) it would be a disincentive to, and would raise eventual costs for, developing countries to participate in global GHG emission reduction efforts; (b) it would benefit the political elite of developing nations, while their indigenous peoples would be further disenfranchised; and (c) it would delay technological development and implementation to reduce GHG emissions in the industries that cause the emissions.", "Although forestry-related projects may offer considerable opportunities to mitigate climate change, several issues with offsets generally and with forestry projects in particular have generated controversy. The primary concern is the integrity and credibility of offsets generated by forestry activities. To be credible, a forestry offset should provide a net CO 2 reduction or sequestration equal to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. This issue is critical, particularly if the offsets are to be used in an emissions trading program.\nImplementing this objective imposes challenges for all offset types, but forest offsets generally present more hurdles than other projects. To generate credible offsets, projects must be additional to what would have occurred without the incentive supplied by the carbon market; they must be verifiable (i.e., measurable and enforceable); they must control or adjust for leakage ; and they must address the issue of permanence . Forward crediting is proposed by some to accommodate the long period of carbon accumulation in forests, but others are concerned about assuring payments only for actual carbon sequestration. These issues are discussed below.", "Additionality is a significant factor in determining offset integrity. Indeed, if a project is not additional , it cannot qualify as an offset in a compliance market. Additionality means that the offset project is an activity beyond what would have occurred under a business-as-usual scenario. In other words, in the case of a forestry project, would the sequestration have happened anyway?\nA test of additionality would examine whether the offset project would have gone forward in the absence of the forest carbon market. For instance, does the activity represent a common practice or conform to an industry standard? Is the forestry project required under other federal, state, or local laws? Would the sequestration project generate financial gain (i.e., be profitable) due to revenues from outside the offset market? For example, in the United States and Canada, reforestation following a timber harvest would generally not qualify as an offset, because most states and provinces require reforestation. Similarly, disposal of sawmill waste by burning to produce energy, and displace the use of fossil fuel, would not qualify as an offset, because all U.S. sawmills burn their waste (except for what is sold for paper production) for energy.\nAdditionality is at the crux of an offset's integrity, but applying the additionality criterion may present practical challenges. Assessing a project's additionality may involve some degree of subjectivity, which may lead to inconsistent additionality determinations. For instance, it may be impossible to accurately determine \"what would have happened anyway\" for some projects. Data on historic deforestation are sketchy, at best, making it difficult to assess whether an avoided deforestation program would be additional. In addition, offsets from forest management via delayed timber harvests might be difficult to document as additional, since many landowners do not have explicit plans for the exact timing of future harvests.", "The forest carbon sequestration must be real and measurable. That is, the forestry project—afforestation, avoided deforestation, etc.—must actually occur and have a quantifiable amount of carbon sequestered. Meeting these objectives requires measurement, monitoring, and enforcement.", "Measuring forest carbon sequestration can be problematic. Various approaches have been taken, including tables, models, and protocols for estimating carbon sequestration by various practices in different locales. A common limitation is that many estimators use commercial timber volume as the basis for carbon stored, but the relationship between commercial volume and carbon sequestered might not be linear. For example, thinning is a forestry practice intended to increase commercial volume by concentrating the same total growth on fewer commercial stems. Total growth also varies widely from site to site, depending on a host of localized physical and environmental factors. Thus, many observers recommend, and some existing carbon markets require, field measurements to adjust the estimated carbon storage to on-the-ground reality. One problem is that field measurements are expensive and subject to sampling error.", "To verify that sequestration projects are meeting their stated level of sequestration, some level of monitoring is required. For enforceable contracts, periodic monitoring is essential to assure that the contract is fulfilled. For agreements larger than projects, such as avoided deforestation for an entire landholding or country, periodic monitoring becomes more important and more difficult. Remote sensing (e.g., satellite imagery) and field sampling are common practices for monitoring large-scale changes, but both are expensive and both are subject to sampling and other possible errors. The two practices are commonly used together, with field sampling to assure the on-the-ground accuracy of remotely sensed data.", "Often, the reality of a project is assured through an enforceable contract, such as an easement attached to the forested property to require continued forest cover. Many existing forest carbon markets require third-party verification for forest carbon credits. For some markets and practices, assurance of sustainable forest management can be obtained through forest certification. A number of organizations, such as the Forest Stewardship Council (FSC), the Programme for the Endorsement of Forest Certification (PEFC), and the Sustainable Forestry Initiative (SFI), have set standards and rely on independent third parties for certification of sustainable forest management.", "Leakage \"occurs when economic activity is shifted as a result of the emission control regulation and, as a result, emission abatement achieved in one location that is subject to emission control regulation is [diminished] by increased emissions in unregulated locations.\" In the context of forestry-related offsets, the opportunity for leakage exists on two fronts: emissions leakage and product leakage.", "Compared to other offset types, forestry projects, particularly those that sequester carbon by curbing logging, likely present the greatest risk of leakage. For example, if large landowners or countries agree to preserve their forests, wood processors might simply shift their harvests to neighboring landowners or countries. As a result, the total harvest (total deforestation) might be unchanged, even though particular landowners or countries might have avoided deforestation of their forests. The only recognized solution is for a majority of landowners or countries to agree to participate in a program to reduce deforestation.", "Forest products face another type of leakage: product leakage. Producing long-term wood products, such as lumber and plywood, uses much less energy—and thus emits fewer GHGs—than comparable quantities of alternative products used to build homes and other structures, such as concrete and masonry walls and steel and aluminum framing. Thus, avoided deforestation might lead builders to replace wood with other more energy-intensive, GHG-emitting products. The net carbon consequences of such a shift are unclear.", "For forestry projects, one concern is that the projected sequestration will be halted or reversed. Forest offset projects are typically expected to generate offsets (via sequestration) for decades. Some are concerned that the emission offsets will be subsequently negated by human activity (e.g., change in land use) or a natural occurrence (e.g., forest fire, disease, or pestilence).\nPermanence is especially problematic for forests, because forests are composed of living organisms—they are born (seeds germinate), they grow, and eventually they die. This life cycle varies widely, depending on the tree species; for example, aspen and Southern yellow pines rarely grow older than 200 years, while Douglas-fir and many live oak species commonly grow for more than 1,000 years, and bristlecone pines can live for more than 4,000 years. Nevertheless, trees die eventually, and their carbon is converted to wood products, contributed to the soil, or sent into the atmosphere.\nPermanence can be achieved for forest projects by providing for mitigation or a buffer against natural losses. An analysis of four particular carbon offset market standards found that one required a 10% buffer (i.e., only 90% of the estimated carbon offset could be sold); another required a 30% buffer, while the other two used variable buffers (from 5% to 60%) depending on an assessment of the risk of the project. For landowners or countries, carbon sequestration permanence can be achieved through sustainable forestry practices, with reforestation following any and all carbon removals to assure stable or increasing carbon storage.\nAn alternative for achieving permanence is to use regional or national accounting, such that a reversal on one project or site is balanced by additional sequestration from other projects or sites. This relies on accurate measurement and monitoring to assure that payments are for net carbon sequestration.", "Many biological sequestration projects, such as afforestation or reforestation, present a unique challenge because of the significant time gap between the initial project activity (e.g., planting trees) and the actual carbon sequestration. Although the project may generate considerable offsets in aggregate, the offsets are produced gradually, over the course of many years or decades. Tree growth patterns follow a traditional S-shape, with slow growth in the early years, accelerating for many years to decades, before tapering off to an eventual maximum. The age at which growth has reached its maximum varies widely among species—as short as 100 years for short-lived species (e.g., aspen and Southern pines), and more than 1,000 years for long-lived species (e.g., western hemlock and Douglas-fir). However, even old-growth forests that have little or no additional tree growth apparently continue to sequester carbon in the soils.\nThis aspect of sequestration projects raises the question of how sequestration offsets should be distributed. Should they be allotted as they are produced—on an annual basis—or should they be allotted up front in an aggregate sum, based on expected future sequestration? The latter option is referred to as forward crediting.\nForward crediting entails risk, because there is some uncertainty about whether the offsets will actually be realized. This risk can be addressed through discounting, much as the permanence risk is addressed through buffers: by retaining a percentage of the offsets that are expected over the course of the project to accommodate unexpected events (e.g., slower vegetative growth than anticipated). Whether such discounting is necessary for forest carbon offsets, and if so how much the discount should be, are as yet undetermined." ], "depth": [ 0, 1, 2, 3, 4, 4, 4, 3, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 2, 3, 3, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h0_title", "", "", "", "", "", "h0_full", "", "", "h0_full", "", "", "", "", "", "", "", "h0_full h2_full h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "h2_full h1_full", "h2_full", "h2_title", "h2_full", "", "", "h2_full", "h2_full", "h2_full", "h2_full", "h2_full" ] }	{ "question": [ "How do forests contribute to carbon levels?", "How have some carbon markets been formed?", "Why have non-mandatory carbon markets been formed?", "What is allowed concerning offsets?", "How are forests good for offsets?", "What forest activities can be used for carbon offsets?", "How does the wood product industry relate to potential forest offsets?", "How does forest management relate to potential forest offsets?", "How does deforestation relate to potential forest offsets?", "What would avoiding deforestation do?", "What might avoiding deforestation cause to question its benefits?", "What concern of offsets penetrate the compliance markets?", "What cannot be used as an offset?", "What must carbon markets do to verify offsets?", "What issues arise from the verification process?", "What concerns do forest offsets have compared to other types?", "How can emission leaks occur?", "How can product leaks occur?", "What are concerns relating to negation of offsets?", "What types of nations does this concern more likely affect?", "What is another concern surrounding not fulfilling expectations?" ], "summary": [ "Forests are major carbon sinks (storehouses), and activities that alter forests can release or sequester carbon dioxide (CO2), the most common greenhouse gas (GHG).", "Some carbon markets have been formed under mandatory GHG reduction regimes, such as the Kyoto Protocol and various regional and state initiatives in the United States.", "Other markets have formed for voluntary efforts to reduce GHG emissions.", "Offsets, or credits for sequestering carbon or reducing emissions in unregulated sectors, are typically allowed in both mandatory and voluntary markets.", "Forestry activities are among the largest-volume and lowest-cost opportunities for generating offsets.", "Various forestry activities may be feasible for carbon offsets. Afforestation (planting trees on open sites) and reforestation (planting trees on recently cleared sites) are the activities most commonly included for offsets.", "Some propose that the carbon stored in long-term wood products, such as lumber and plywood, could be credited as carbon offsets, and mill wastes often substitute for fossil fuels to produce energy; however, short-term products (e.g., paper) and the biomass left in the woods after timber harvesting release carbon, making the net carbon effects uncertain.", "Some forest management practices also might qualify for carbon offsets; certified sustainable forest practices provide a system of assured, long-term forests, while activities to increase tree growth face many of the same concerns as long-term wood products.", "Finally, deforestation is a major source of GHG emissions, accounting for as much as 17% of anthropogenic emissions.", "Thus, avoided deforestation, especially in the tropics, potentially provides an enormous opportunity to reduce GHG emissions.", "However, avoided deforestation is particularly prone to leakage (see below), as well as many of the concerns about forest carbon offsets generally.", "Forestry projects may offer considerable market opportunities for carbon offsets, but several issues have generated concerns and controversy. One concern, especially for compliance markets, is whether projects are additional to business as usual.", "An activity that is common practice or industry standard, or a project that is required under current federal, state, or local laws, cannot be used as an offset.", "Functional carbon markets also require cost-effective practices to verify carbon sequestration.", "Current measurement and monitoring practices are costly and have several implementation challenges.", "Another concern is that, compared to other types of offsets, forestry projects present substantial risk of leakage. Forest carbon projects are expected to generate offsets for decades.", "Emission leakage can occur if carbon sequestered in one location (e.g., by avoided deforestation) leads to carbon release (e.g., from increased harvesting) in another location.", "Product leakage could occur if forest carbon sequestration induces use of more carbon-intensive substitutes (e.g., cement or steel).", "Some are concerned that the sequestration will be negated subsequently by human activity (e.g., change in land use) or a natural occurrence (e.g., forest fire or disease).", "Although there are legal and accounting mechanisms that can address this concern, implementing these options may present challenges, particularly for projects in developing nations.", "Finally, forward crediting to allow early credits for expected sequestration faces many of the same concerns about not fulfilling expectations." ], "parent_pair_index": [ -1, -1, 1, -1, 3, -1, -1, -1, -1, 3, 4, -1, 0, -1, 2, -1, 4, 4, -1, 7, 7 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2 ] }
CRS_R45706	{ "title": [ "", "Introduction", "Advanced Reactor Technologies", "Advanced Water-Cooled Reactors", "Small Modular Light Water Reactors", "Supercritical Water-Cooled Reactor", "Non-Water-Cooled Reactors", "High Temperature Gas Reactors", "Gas-Cooled Fast Reactor", "Sodium-Cooled Fast Reactor", "Lead-Cooled Fast Reactor", "Molten Salt Reactors and Fluoride Salt-Cooled High Temperature Reactors", "Fusion Reactors", "Major Criteria for Evaluating Unconventional Technologies", "Cost", "Capital Costs", "Operational Costs", "Cost Estimates for Advanced Reactors", "Size", "Safety", "Security and Weapons Proliferation Risk", "Versatility", "Waste Management", "Environmental Effects", "DOE Nuclear Energy Programs", "Office of Nuclear Energy", "Office of Science", "ARPA-E", "Offices of Environmental Management and Legacy Management", "Congressional Issues", "Role of the Federal Government in Technology Development", "Perceived Need for Advanced Nuclear Power and Competing Alternatives", "Versatile Test Reactor", "DOE Hosting of Private-Sector Experimental Reactors", "Funding of Demonstration Reactors", "Cost Sharing", "Full Funding", "Federal Payments for Power and Research Use", "Loan Guarantees", "Tax Credits", "Choosing Projects for Federal Funding", "Licensing Framework for New Technologies", "Power Purchase Agreements", "Advanced Reactor Fuel Availability", "International Organizations", "International Framework on Nuclear Energy Cooperation", "Generation IV International Forum", "Appendix." ], "paragraphs": [ "", "The nuclear power industry is facing severe economic challenges in the United States. High capital costs, low electricity demand growth, and competition from cheaper sources of electricity such as natural gas and renewables have dampened the demand for new nuclear power plants and accelerated the retirement of existing reactors. As of April 2019, seven nuclear reactors had closed in the United States since 2012, and another 12 had announced that they would retire by 2025. There are currently 98 operating U.S. reactors. As aging reactors reach the end of their operating licenses in 2030 and beyond, the number of retirements is projected to increase. In addition, cost and schedule overruns have hindered recent efforts to build new nuclear units in the United States. The only power reactors currently under construction in the United States—two new units at the Vogtle nuclear plant in Georgia—are five years behind schedule and nearly double their original estimated cost.\nAll nuclear power in the United States is generated by light water reactors (LWRs), which were commercialized in the 1950s and early 1960s and are now used throughout most of the world. LWRs are cooled by ordinary (\"light\") water, which also slows (\"moderates\") the neutrons that maintain the nuclear fission chain reaction. Conventional LWRs are large—with 1,000 megawatts electric generating capacity (MWe) or more—in order to spread their high construction costs among the maximum possible number of kilowatt-hours of electricity over their operating lifetime.\nAt the same time conventional reactors are facing an uncertain future, some in Congress contend that more nuclear power plants, not fewer, are needed to help reduce U.S. greenhouse gas emissions and bring low-carbon power to the majority of the world that currently has little access to electricity. Proponents of this view argue that the key to increasing the number of nuclear power plants is investment in \"advanced\" nuclear technologies, which they say could overcome the economic problems, safety concerns, and other issues that have stalled the growth of conventional LWRs.\nCongress enacted legislation in September 2018 that defines \"advanced nuclear reactor\" as \"a nuclear fission reactor with significant improvements over the most recent generation of nuclear fission reactors\" or a reactor using nuclear fusion ( P.L. 115-248 ). Titled the Nuclear Energy Innovation Capabilities Act of 2017 (NEICA), the law requires the Department of Energy (DOE) to take several actions to support advanced reactor development, including studying the need for a versatile fast neutron test reactor that could help develop fuels and materials for advanced reactors. Congress included $65 million for R&D to support development of the versatile test reactor in the Energy and Water Development Appropriations Act for FY2019 (Division A of P.L. 115-244 ), and the Trump Administration has requested $100 million more for FY2020.\nA similar definition of \"advanced nuclear reactor\" is included in the Nuclear Energy Innovation and Modernization Act (NEIMA, P.L. 115-439 ), which was signed January 14, 2019. NEIMA would require the Nuclear Regulatory Commission (NRC) to develop a regulatory framework that could be used for advanced nuclear technologies.\nAdvocates of nuclear power cite a variety of reasons in addition to greenhouse gas reduction for preserving and expanding the U.S. nuclear industry. They contend that a robust domestic nuclear energy industry would contribute to such goals as energy security and diversification, electricity grid resilience and reliability, promotion of a domestic nuclear component manufacturing base and associated exports, clean air, and preservation and enhancement of geopolitical influence. The U.S. Navy uses nuclear energy to power submarines and aircraft carriers. Some observers have suggested that the Navy and other national security organizations benefit from maintaining a strong domestic nuclear energy industry, which provides a post-military career path for many naval reactor personnel, as well as expanding the base of qualified engineers and technicians, and strengthening the infrastructure for training and knowledge transfer.\nNEICA lists a number of potential advantages of advanced nuclear reactors over conventional LWRs, including \"inherent safety features, lower waste yields, greater fuel utilization, superior reliability, resistance to proliferation, increased thermal efficiency, and the ability to integrate into electric and non-electric applications.\" Advanced reactors encompass a wide range of technologies, including next-generation water-cooled reactors (e.g., small modular light water reactors, supercritical water-cooled reactors), non-water-cooled reactors (e.g., lead or sodium fast reactors, molten salt reactors, and high temperature gas reactors), and fusion reactors. Some advanced reactor concepts are relatively new, while others have been under consideration for decades.\nNot all observers are optimistic about the potential safety, affordability, proliferation resistance and sustainability of advanced reactors. Because many of these technologies are in the conceptual or design phases, the potential advantages of these systems have not yet been established on a commercial scale. Testing and demonstration would be required to determine the validity of advocates' claims. Many environmental advocates contend that nuclear power would not be necessary to decarbonize world energy supplies, and that public policy should instead focus on renewable energy and efficiency.\nThe U.S. advanced nuclear industry has expanded in recent years to encompass an array of developers, suppliers, and supporting institutions. By one count, there were 35 U.S. companies developing advanced nuclear reactor technologies as of November 2018. Some have projected that the first U.S. advanced reactor could be providing electricity to the grid by the mid-2020s. For example, the advanced reactor company NuScale predicts that its first nuclear plant will \"achieve commercial operation in 2026.\"\nThis report discusses the history of advanced reactor technologies, briefly describes major categories of advanced reactors, provides an overview of federal programs on advanced nuclear technology, and discusses current issues and legislation.", "Advanced or unconventional reactor designs seek to use combinations of new and existing technologies and materials to improve upon earlier generations of nuclear reactors in one or more of the following areas: cost, safety, security, waste management, and versatility. To achieve these improvements, advanced designs may incorporate one or more of the following characteristics: inherent or passive safety features, simplified or modular designs, enhanced load-following capabilities, high chemical and physical stability, fast neutron spectrums, and \"closed\" fuel cycles (see text box on Fast Reactors). Advanced reactor technologies are often referred to as \"Generation IV\" nuclear reactors, with existing commercial reactors constituting \"Generation III\" or, for the most recently constructed reactors, \"Generation III+.\"\nAdvanced reactor designs may be grouped into three primary categories:\nAdvanced water-cooled reactors , which provide evolutionary improvements to proven water-based fission technologies through innovations such as simplified design, smaller size, or enhanced efficiency; Non-water-cooled reactors , which are fission reactors that use materials such as liquid metals (e.g., sodium and lead), gases (e.g., helium and carbon dioxide), or molten salts as coolants instead of water; and Fusion reactors , which seek to generate energy by joining small atomic nuclei, as opposed to fission reactors, which generate energy by splitting large atomic nuclei.\nA fourth, cross-cutting category of advanced reactors is the s mall m odular r eactor or SMR . DOE defines SMRs as reactors with electric generating capacities of no more than 300 MW, which \"employ modular construction techniques, ship major components from factory fabrication locations to the plant site by rail or truck, and include designs that simplify plant site activities required for plant assembly.\" Both advanced water-cooled reactors and non-water-cooled reactors may be configured as SMRs. Microreactors are relatively small-capacity SMRs, defined by DOE as producing 1-20 megawatts of thermal energy (MWt), which could be used directly as heat for industrial processes or to generate electricity. Microreactors could be transported by truck and installed at a remote location or military base within a week, according to DOE.\nAdvanced reactor concepts may be characterized along a continuum of technological maturity. Light water-cooled SMRs, high-temperature gas-cooled reactors, and sodium-cooled fast reactors are considered to be among the most mature of the unconventional reactor technologies. Molten salt reactors, gas-cooled fast reactors, and fusion reactors are generally considered to be further from commercialization.\nExpert estimates of timeframes for commercialization of these technologies range widely, from the mid-2020s for the first small modular LWRs to midcentury or later for some advanced reactor concepts, such as molten salt reactors and gas-cooled fast reactors. Companies developing similar reactor technologies may be at different stages of design and manufacturing readiness. While some experts predict that molten salt reactors will not be available before 2050, Chinese research institutions and a Canadian/U.S. company, Terrestrial Energy, have announced plans to bring a molten salt reactor online in the next decade.", "", "Small modular reactors are defined by DOE as reactors with an electric generating capacity of up to 300 MW, as opposed to the average capacity of existing U.S. commercial reactors of about 1,000 MW. Light water reactor SMR designs are based on existing commercial LWR technology but are generally small enough to allow all major reactor components to be placed in a single pressure vessel. The reactor vessel and its components are designed to be assembled in a factory and transported to the plant site for installation, potentially reducing construction time and costs from those of large LWRs. If large numbers of identical SMRs were ordered, mass production could further reduce manufacturing costs and construction schedules, according to proponents of the technology.\nShortening the timeframe before a new reactor begins producing revenue could reduce interest payments and shorten payback periods. In addition, each SMR would require a fraction of the capital investment of a large conventional nuclear unit, further reducing the financial risk to plant owners. Some observers have suggested that the smaller size of SMRs would reduce the economies of scale available to larger reactors, potentially negating any SMR cost advantages.\nA 60 MWe reactor module by U.S. company NuScale Power is currently considered the most mature light water SMR design under development. The design would allow between 6 and 12 SMR modules—depending on the energy needs of the site—to be co-located in a central pool of water, which serves as a heat sink and passive cooling system. NRC plans to complete its safety evaluation report on the design in September 2020 and subsequently issue a final design certification, although no date is currently scheduled. NuScale is planning to begin operating its first 12-module plant in the mid-2020s. It is to be built at Idaho National Laboratory (an 890-square-mile DOE site) with a combination of federal government and non-federal support. As with other SMR concepts, the major components of the NuScale plant are designed to be factory-fabricated and shipped to the plant site for installation.\nCompanies in several countries are currently developing light water SMRs. In addition to NuScale, examples of U.S.-based companies developing this technology include Holtec, Westinghouse, and GE Hitachi.", "The supercritical water-cooled reactor (SCWR) is a high-temperature variant of existing LWR technologies. SCWRs would use supercritical water—water which has been brought to a temperature and pressure at which the liquid and vapor states are indistinguishable—to improve plant efficiency (which may approach 44% in SCWRs, compared with 34-36% for current reactors). As in a conventional boiling water reactor (BWR), liquid water would pass upward through the reactor core and turn directly to steam, which would drive a turbine-generator ( Figure 1 ). The superheated conditions would eliminate the need in current BWRs for reactor coolant pumps and steam separators and dryers. Supercritical water has already been used to boost plant efficiency in some advanced coal- and gas-fired power plants. SCWRs could be designed to operate in either the fast or thermal neutron spectrums, and to use either light or heavy water as the coolant and/or moderator. Organizations in Canada, China, the European Union, Japan, and Russia are developing SCWRs.", "", "High temperature gas reactors (HTGRs), including very high temperature gas reactors (VHTRs), are helium-cooled, graphite-moderated thermal reactors. As their names imply, they would operate at higher coolant outlet temperatures than most existing reactors—700-1,000°C compared to 330°C for existing LWRs. This higher temperature threshold allows for the provision of heat for industrial processes, such as the cogeneration of electricity and hydrogen, and high-temperature processes in the iron, oil, and chemical industries. While previous R&D programs focused on achieving very high outlet temperatures, more recently the focus has shifted to reactor designs with more modest outlet temperatures (700-850°C), based on the assessment that lower temperature reactors may be more commercially viable in the short term.\nThere are two primary design variants: In one, the core is composed of graphite blocks with removable sections that have been embedded with fuel particles; in the other, many billiard ball-sized graphite spheres, or \"pebbles,\" with embedded fuel particles are loaded into the core to form a \"pebble bed.\" The spheres are steadily removed from the bottom of the reactor, tested for their level of burnup, and returned to the top of the reactor if they are still viable as fuel and replaced if not. Many HTGRs have been designed as SMRs.\nA unique feature of these reactors is their fuel, which is composed of poppy seed-sized fuel particles that have been encased in silicon carbide and other highly heat-resistant coatings ( Figure 2 ). Coupled with the high heat capacity of the graphite moderator, the reactor and its fuel are designed to withstand the maximum core heat attainable during an accident. Therefore, according to HTGR proponents, even the loss of active cooling systems would not result in a core meltdown and radioactive releases to the environment.\nHTGRs are among the most technologically mature of the advanced reactor concepts. Since the 1960s a number of experimental and commercial HTGRs have been built in multiple countries, including the United States, United Kingdom, Japan, Germany, and China. A small, two-unit pebble bed HTGR plant is currently under construction in China.\nDevelopment of HTGRs was promoted in the United States by the Next Generation Nuclear Plant (NGNP) program, established by the Energy Policy Act of 2005 ( P.L. 109-58 ). In 2016, DOE awarded X-energy $53 million over five years to develop a modular pebble bed HTGR design. X-energy received a second DOE contract for $10 million in 2018. X-energy is also working with DOE and others to develop the fuel technology that would be used in an HTGR pebble bed reactor. Other U.S. companies developing HTGRs include HolosGen and Hybrid Power Technologies.", "Gas-cooled fast reactors (GFRs) would be high-temperature, closed fuel cycle fast reactors using helium as a primary coolant ( Figure 3 ). The primary difference between the HTGR (see above) and the GFR is the neutron spectrum: HTGRs operate in the thermal spectrum, while GFRs operate in the fast spectrum. Therefore, the GFRs would not require the massive graphite moderator of HTGRs to slow the neutrons. The GFR would use a closed U-Pu fuel cycle in which the plutonium and uranium would be recycled from the spent fuel to provide a greatly expanded fuel source if configured as a breeder. GFRs would have operating temperatures similar to those of HTGRs—850°C compared to 330°C for existing LWRs—making them suitable for providing process heat for industrial purposes, in addition to producing electric power. One disadvantage of this design is the lower heat removal capability of the helium gas coolant compared to liquid metal coolants such as sodium and lead in the event of an accident.\nIn 2015, a consortium of European countries, including the Czech Republic, Hungary, Poland, and Slovakia, launched a project to jointly develop a demonstration GFR based on a French design. The group set a goal of completing the conceptual design for the ALLEGRO reactor by 2025, with construction to begin thereafter. If successful, ALLEGRO would be the first demonstration of a GFR to date. General Atomics is an example of a U.S. company developing a GFR design, the Energy Multiplier Module (EM 2 ).", "Along with HTGRs, sodium-cooled fast reactors (SFRs) are among the most technologically mature of the unconventional nuclear concepts. SFRs use fast reactor technology with liquid sodium as the primary coolant. The use of a liquid metal as the coolant allows the primary coolant circuit to operate under lower, near-atmospheric pressure conditions. In addition, even in an emergency without backup electricity, the high heat-transfer properties of liquid sodium (100 times greater than water) would allow for passive cooling through natural circulation. The SFR coolant outlet would reach a temperature of 500-550°C. This lower temperature (compared to 850°C for the GFR) would allow for the use of materials that have been developed and proven in prior fast reactors. SFRs come in two main design variants: loop-type and pool-type designs (see Figure 4 ). In the pool-type SFR, the reactor core and primary heat exchanger are immersed in a single pool of liquid metal, while the loop-type houses the primary heat exchanger in a separate vessel. SFR technologies are conducive to modularization.\nA disadvantage that has been raised about using sodium as a coolant is that it reacts violently with both air and water. As a result, the primary sodium coolant system (which contains highly radioactive sodium) is often isolated from the steam generation system by an intermediary coolant to prevent a release of radioactivity in the case of an accident. This adds costs and complexity to the system, complicates maintenance and refueling, and introduces an additional safety concern. Fires resulting from sodium leaks have caused shutdowns in several SFRs that have been built to date.\nMost SFR designs would use a closed fuel cycle in which plutonium and uranium would be re-used from the spent fuel to provide an indefinite fuel source when configured as a breeder; the process would be similar to that used for the GFR (above). Other designs would rely on future advances in fuel technology to extend the fuel cycle to the point where refueling would only need to occur once in a number of decades. SFRs can achieve high burnup of actinides in spent fuel, potentially reducing the long-term radioactivity of high-level nuclear waste.\nThe first SFR was built in the United States in 1951. Since then, approximately 20 SFRs have been built around the world, most of which have been experimental. The United States maintained SFRs as a high priority focus of its nuclear R&D program (primarily due to the technology's plutonium breeding capabilities) up until the cancellation of the Clinch River Breeder Reactor demonstration plant in 1983 amid public opposition, rising construction costs, and increased concern over weapons proliferation. There are five SFRs currently in operation worldwide: one in China, three in Russia, and one in India. Several others are expected to start up by 2020.\nExamples of U.S. companies developing SFRs include Advanced Reactor Concepts, Columbia Basin Consulting Group, General Electric-Hitachi, Oklo, and TerraPower. General Electric-Hitachi's PRISM design is the only SFR to have passed the NRC preapplication review process, and has been selected to support the Department of Energy's Versatile Test Reactor program.", "Lead-cooled fast reactors (LFRs) are designed to use a closed fuel cycle with either molten lead or lead-bismuth eutectic (LBE) alloy as a primary reactor coolant (see Figure 5 ). The use of lead as a coolant is seen to confer several advantages. As with the SFR, the use of a liquid metal coolant allows for low-pressure operation and passive cooling in an accident. In contrast to liquid sodium, however, molten lead is relatively inert, adding additional safety and economic advantages. Lead also has a high rate of retention of radioactive fission products, which offers benefits in an accident that could release radioactive materials. In such an accident, the chemical properties of the lead could prevent many of the harmful radionuclides from escaping into the atmosphere. LFRs can also be designed for high burnup of waste actinides, allowing for reduced long-term radioactive wastes.\nLead does present some challenges that may require further research and innovation to overcome. At high temperatures, lead tends to corrode structural steel. Achieving commercialization for designs in the higher temperature ranges would thus need further technological advances in corrosion-resistance for structural steel components coming into contact with the liquid lead coolant. Lead is also highly opaque, presenting visibility and monitoring challenges within the core, and very heavy, due to its high density. The high melting point of lead also presents challenges in terms of keeping the lead in liquid form so that it can continue to circulate under lower-temperature scenarios.\nRussia is the world leader in LFR R&D, with experience building and operating seven LFRs for use in submarines. Russia has announced near-term development of two pure LFR facilities and a third facility that would be capable of using lead coolant for test purposes, in addition to other coolants. Members of the European Union have also announced a collaboration to develop an LFR through the Advanced Lead Fast Reactor European Demonstrator (Alfred). Other countries exploring LFR technologies include China, Japan, Korea, and Sweden. U.S. companies pursuing LFRs include Hydromine and Westinghouse.", "Any reactor that uses molten salts as a coolant or fuel may be considered a molten salt reactor (MSR). Salt-cooled MSRs (also known as fluoride-cooled high temperature reactors or FHRs) employ molten salts to cool the core, which is composed of solid fuel blocks configured much like an HTGR. Salt-fueled MSRs, by contrast, are unique in that the fuel is not solid, but rather is dissolved in the molten salt coolant.\nMSRs vary in their design; there are fast and thermal variants, and different moderator materials have been proposed for the thermal variants. Molten salt fast reactors (MSFRs) exhibit high potential for waste actinide burnup and fuel resource conservation. Different molten salts may also be used, depending on the other design features. Outlet temperature specifications range from 700-1000°C, although there are challenges to operating at these temperatures that would need technological advances to resolve.\nUnique to MSR salt-fueled designs is a safety feature called a \"freeze plug\" below the reactor core, consisting of a salt plug that is cooled to a solid state (see Figure 6 ). In the event of an incident that causes heat to rise in the core, the plug will melt, allowing the molten salt fuel to drain by gravity into a basin that is designed to prevent the fuel from undergoing further fission reactions and overheating. It is unknown whether spent MSR fuel could be safely stored in the long term without undergoing additional treatment after removal from the reactor.\nMSR technology has been under development for decades. Two thermal-spectrum experimental reactors were built in the United States at Oak Ridge National Laboratory in the 1950s and 1960s. The first molten salt fuel irradiation tests since the completion of those early experiments were conducted in 2017 in the Netherlands, where research on waste treatment is also being pursued. China is currently developing two prototype MSR microreactors with expected start dates in the 2020s. Terrestrial Energy, a Canadian company with a U.S. subsidiary, is in the second stage of design review with the Canadian Nuclear Safety Commission for its integral molten salt reactor (IMSR). The IMSR is the first advanced reactor design to complete phase one of the Canadian pre-licensing process. Terrestrial Energy has announced a goal of commercialization by the late 2020s. Examples of other U.S. companies developing MSRs include Alpha Tech Research Corp., Elysium Industries, Flibe Energy, Kairos Power, TerraPower, Terrestrial Energy USA, ThorCon Power, Thoreact, and Yellowstone Energy.", "Fusion reactors would fuse light atomic nuclei—as opposed to the fissioning of heavy nuclei—to produce power. Fusion R&D has received significant R&D investment, including over $20 billion in international cooperative funding anticipated to build the International Thermonuclear Experimental Reactor (ITER), a fusion research and demonstration reactor under construction in France. The United States is a major participant in the project.\nFusion power would require light atoms, generally isotopes of hydrogen, to be heated to 100 million degrees to form a plasma, a state of matter in which electrons are stripped away from the atomic nucleus. Holding the plasma together while it is heated sufficiently to create a fusion reaction is a major technical challenge. ITER would do this with a powerful magnetic field, while other approaches would compress a pellet of hydrogen with lasers or other intense energy sources. Fusion reactions are routinely produced at the laboratory scale, but none of these reactions have yet achieved \"burning plasma,\" in which energy produced by fusion at least equals the energy needed to heat the plasma. A fusion power reactor would need to achieve \"ignition,\" in which the fusion energy itself would keep the plasma heated. ITER is scheduled to produce its first plasma by the end of 2025, with full operations, including burning plasma experiments, scheduled to begin in 2035.\nSeveral U.S. companies are pursuing various approaches toward achieving burning plasma with the aim of commercializing fusion power. According to the Fusion Industry Association, \"fusion produces no harmful emissions or waste fuel. A fusion power plant is physically incapable of having a meltdown. There is no fissile radioactive waste left over.\" However, some reactor materials would be made radioactive by neutron exposure during a fusion reaction, and tritium, a primary anticipated fuel source, is radioactive, although far less so than fission products.\nExamples of U.S. companies developing fusion technologies include AGNI Energy, Brillouin Energy, Commonwealth Fusion Systems, General Atomics, Helion Energy, HyperV Technologies, Lawrenceville Plasma Physics, Lockheed Martin, Magneto-Inertial Fusion Technologies, NumerEx, and TAE Technologies.", "", "Investment in electricity generating technologies is largely determined on the basis of cost. Nuclear energy has historically had high capital costs, but relatively low production costs. In recent years, however, conventional nuclear plants have struggled to compete with falling electricity prices driven largely by natural gas and renewables, particularly in parts of the country that are served by competitive electricity markets. The success of advanced reactors in entering these markets may depend on their ability to reduce capital costs relative to conventional reactors and to offer electricity prices that are competitive with non-nuclear sources of baseload power.", "High capital costs present a significant barrier to deployment of new nuclear plants in the United States. Conventional nuclear reactors are more expensive to build than most other electric power plants. Nuclear plants must submit to much more rigorous safety regulation and quality standards than other producers of electricity because of the risk posed by a release of radioactive materials. As a result, they require highly specialized construction materials (e.g., nuclear-grade steel), engineering knowledge, and construction expertise, all of which add to a plant's costs. Large conventional reactors also require a great deal of on-site fabrication of structures and components that are too large to be built in a factory, further adding to costs.\nCapital cost estimates for advanced reactors vary by technology and design. Some designs, such as SMRs, may allow for greater factory fabrication than conventional designs. Costs will remain highly uncertain until demonstration plants are constructed. According to an MIT study, conventional nuclear capital costs are dominated by labor and engineering costs (approximately 60%). By contrast, the actual reactor and associated turbine components comprise less than 20% of the capital cost of the median historical U.S. light water reactor. Accordingly, achieving cost reductions relative to these conventional plants would require that advanced reactor developers find ways to improve upon existing construction methods for nuclear reactors.\nOne advanced reactor design innovation that holds potential for reducing construction costs is modularization of structures and components. Modularity is intended to increase factory production of nuclear components. Manufactured components could then be delivered to the construction site for installation, cutting down on onsite labor, reducing the specialized knowledge needed to custom-build each component on-site, and potentially improving quality. Modularized construction has been shown to improve the pace of construction and reduce costs in other industries, as well as in some recent nuclear construction projects in Asia. NuScale, a U.S.-based SMR vendor, has estimated \"overnight\" cost savings of approximately 10% due to modular construction of structures in its proposed SMR plant.\nAdvanced reactor developers and advocates have also highlighted the cost reduction potential of such characteristics as simplified reactor designs, standardized reactor components, and smaller overall reactor sizes. Advanced reactors may also offer the potential to reduce financing costs as a result of shorter construction times and, in the case of SMRs, the ability to begin generating revenue after the installation of the first module, even as work continues on additional modules.", "Some advanced reactor concepts also show potential for reducing operational costs. Some designs would utilize simpler systems or increased automation to reduce human labor costs during operation. Many advanced reactor developers contend their designs would improve upon the thermal efficiencies of older generations of nuclear plants by operating at higher temperatures or through use of more efficient power conversion technologies. More-efficient plants may be able to reduce their payback periods relative to their less efficient peers.\nNot all aspects of advanced reactor concepts would lead to cost reductions. Some reactor designs would have lower power ratings and/or lower power densities (less power for a given core volume) than conventional reactors, which could reduce the cost advantages that existing large reactors achieve through economies of scale. The majority of advanced designs would require fuels with a fissile isotope enrichment of between 5% and 20%, compared with 3-5% for most existing commercial reactors. Enriching fuel to these higher percentages would add costs. Some designs would use as-yet-unlicensed fuel forms, which may be associated with higher fuel fabrication costs. Some advanced reactors would also require spent fuel reprocessing and treatment on the back end before wastes could be safety stored, which may in turn require higher levels of security in order to limit risks of proliferation. These factors have the potential to add substantial costs to reactor operations compared with those of existing light water reactors.\nSome research on SMRs has suggested that their small size will prevent them from achieving economies of scale. Modularization may allow this disadvantage to be balanced by so-called \"economies of multiples.\" One analysis found that, while SMRs may be cheaper than traditional reactors to construct, the cost per unit of power generated is likely to be higher.", "It is difficult to accurately estimate the costs of advanced reactors. Many advanced reactor concepts remain in the early stages of design and development, and vendor companies generally do not include detailed costs in their publicly available content. Academic analyses of the costs of non-traditional reactors have produced a range of results.\nA common metric for measuring and comparing the cost of electricity production among sources is the levelized cost of electricity (LCOE). LCOE is a measure of the unit cost of producing electricity from a given generating source (e.g., coal, natural gas, solar, wind, etc.) and is calculated by dividing the total costs of constructing and operating a plant over its lifetime by its total electricity output over the same period. LCOE can be a useful tool for comparing production costs across sources; however, because there are additional factors that influence the economic competitiveness of a proposed plant, relying upon a single metric for comparison may be misleading. Other possible cost measures include the cost of construction per kilowatt or megawatt of electric generating capacity and the costs of air emissions.\nOne standardized analysis of cost projections from eight advanced reactor vendors found the average projected LCOE for \"nth-of-a-kind\" (NOAK) reactors to be $60/MWh for the included reactor designs. A separate study projected LCOEs in the range of $110 to $120/MWh for included advanced reactor designs. By comparison, the LCOEs per MWh for competing electricity sources are estimated as follows: large LWRs, $112-$183; coal, $60-$143; natural gas combined cycle, $42-$78; wind, $30-$60; utility-scale solar, $43-$53. Such estimates typically exclude costs that are not currently the responsibility of plant owners, such as greenhouse gas emissions.", "Advanced reactor designs come in a wide range of sizes, from less than 15 MWe to 1,500 MWe or more. In some cases, the optimal reactor size may be influenced by the particular characteristics of a given design. In others, the size may be determined by the needs of the customer or site.\nA commonality among many unconventional reactor concepts is an increased focus on small reactor designs. As noted earlier, advanced SMRs, 300 MWe and below, \"employ modular construction techniques, ship major components from factory fabrication locations to the plant site by rail or truck, and include designs that simplify plant site activities required for plant assembly,\" according to DOE. The smallest of these—under 20 MW of thermal energy—may also be referred to as microreactors. As noted above, most existing conventional reactors in the United States have an electrical generating capacity of 1,000 MWe or more.\nThe small size and modular nature of SMRs gives them the potential to expand the types of sites and applications for which nuclear energy may be considered suitable (see section on Versatility). SMR designs with multiple reactor modules may allow for size customization based on the needs of the customer or characteristics of the host site.", "Safety with respect to nuclear energy refers primarily to the minimization of the risk of release of radioactivity into the environment. Advanced reactor systems may have both safety advantages and disadvantages in comparison with existing reactors as a result of their size and design, and the chemical properties of their main components (e.g. the coolant, fuel, and moderator). Because many of these technologies are in the design phase, the operational safety of many of these systems has not yet been established in practice. Testing and demonstration would be needed to validate the safety claims of advanced reactor vendors.\nConventional nuclear plants use multiple independent and redundant safety systems to minimize risk. In the majority of cases, these systems are \"active,\" meaning that they rely on electricity or mechanical systems to operate. Advanced nuclear reactors tend to incorporate passive and inherent safety systems as opposed to active systems. Passive systems refer primarily to two types of safety features: (1) the ability of these reactors to self-regulate the rate at which fission occurs through negative feedback mechanisms that naturally reduce power output when certain system parameters (such as temperature) are exceeded, and (2) the ability to provide sufficient cooling of the core in the event of a loss of electricity or other active safety systems.\nThe chemical properties of various advanced coolants, fuels, and moderators may also contribute inherent safety advantages. Examples include higher boiling points for coolants, higher heat capacities for fuels and moderators, and higher retention of radioactive fission products for some coolants. Some advanced reactor coolants (such as liquid metals) remain at atmospheric pressure under high reactor temperatures, putting less stress on primary reactor components than high-pressure coolants such as water. Advanced reactors that can operate at or near atmospheric pressure enable simplification of the coolant system design and safety systems, as well as the potential for improved economic performance.\nProponents of small reactors have suggested that SMRs, and microreactors in particular, may pose less of a safety risk due to the smaller total volume of radioactive material on site and lower risk of release to the environment. Consequently, some have argued that they should face streamlined approval processes in line with the NRC's approach of risk-informed regulation. The smaller size of SMRs and microreactors may also enable innovations in siting that could contribute to plant safety. Some have suggested that siting these reactors underground or on floating platforms at sea could reduce risks related accidental release of radioactive materials and seismic activity, respectively.\nWhile some advanced reactor coolants and moderators may have the advantages described above, some also have chemical properties that pose safety concerns. Examples include reactivity, toxicity, or corrosiveness of the primary coolant in the case of sodium, lead, and molten salts, respectively. Molten salt-cooled reactors would incorporate the dissolved fuel into the coolant, posing a safety concern for plant workers who must be shielded from the higher levels of radioactivity flowing through the coolant system as a result. Opaque coolants present additional challenges to visual core monitoring and inspection compared to transparent coolants like water.\nAdvanced reactors, and even some existing conventional reactors, may also make use of advances in fuel technologies and accident-tolerant fuels (ATFs). ATFs are designed to better withstand losses in cooling capacity during an accident, reducing the risk of fuel meltdown and allowing reactor operators more time to respond to accidents. Near-term ATF concepts (e.g. coated zirconium cladding, iron-chrome-aluminum-based cladding) may be commercially available as soon as the mid-2020s, while longer-term ATF concepts (e.g. metallic fuels, silicide fuel, and silicon carbide cladding) would need more testing before they could be licensed.", "In addition to producing energy for peaceful purposes, nuclear fuels such as uranium and plutonium can be used by states to manufacture nuclear weapons material for military use or diverted by non-state actors to produce weapons of mass destruction. The risk of weapons proliferation from civilian nuclear materials presents a challenge for all nuclear energy reactors to varying degrees, and for international controls on nuclear materials. Advanced reactor designs may offer both advantages and disadvantages with respect to their potential effects on nuclear weapons proliferation.\nAdvocates contend that many advanced reactor designs would be more resistant to weapons proliferation than existing LWRS because of factors such as \"sealed\" or difficult-to-access core designs, infrequent refueling, smaller inventories of fissile materials in the core, and remote monitoring capabilities, among others. Some designs may produce waste that is less attractive for weapons proliferation for a variety of reasons.\nAdvanced reactors may also present unique inspection and monitoring challenges. In a 2017 workshop report, the International Atomic Energy Agency (IAEA), which functions as an inspector of nuclear states to ensure compliance with international nonproliferation agreements, noted that some of the characteristics of advanced reactors may make them more difficult to monitor and safeguard. For instance, the opacity of certain advanced coolants, such as sodium, lead, and molten salts, may make it more difficult to monitor reactor cores to ensure nuclear materials are not being diverted. In contrast, inspectors can visually see through cooling water to determine whether fuel rods and assemblies are present or have been removed, possibly for plutonium separation.\nThe IAEA report identified several advanced reactor technologies that pose unique and particularly difficult safeguarding challenges, including transportable reactors, pebble-bed design HTGRs, molten salt reactors, and certain waste reprocessing facilities. The report also noted that \"proliferation resistance and ease to verify (safeguardability) are not interchangeable; and most of the features lending proliferation resistance to Generation-IV reactors actually make safeguards nuclear material accountancy more difficult.\"\nThe utilization by some advanced reactors of more highly enriched fuels could create additional nonproliferation challenges. Many advanced designs would utilize fuel with a fissile isotope enrichment of between 5% and 20% or higher (compared to 5% or lower for most current reactors). At these higher enrichments, even very small reactors would likely contain more than enough fissile material to produce multiple nuclear weapons with further enrichment. The work required to enrich uranium to weapons-grade levels declines as the initial enrichment level rises. Some designs would also produce spent fuel with higher concentrations of isotopes that are desirable from the point of view of weapons production, making them a more attractive target of diversion than current LWR fuel. Additional security measures may be necessary to safeguard against such eventualities.\nThe need to safeguard nuclear materials is present not just at reactor sites, but through the entirety of the nuclear supply chain. This includes during the fuel fabrication process, in transit, and, if applicable, during fuel reprocessing. Many advanced reactors would require or would offer the option to reprocess the spent fuel to extract remaining fissile materials. Some advanced reactor technologies rely on reprocessing to make them cost-effective. Separating these materials from the radioactive wastes makes them more attractive both to thieves for making radiological dispersal devices and to countries that might use them to produce weapons. France, Japan, and the United Kingdom have been engaged in civilian nuclear fuel reprocessing for decades. In the process, they have accumulated more than 290 metric tons of separated plutonium across various civilian facilities as of January 2017. For reference, the minimum fissile inventory required to produce a nuclear weapon from plutonium is generally cited as 10 kg of Pu-239. This figure may vary considerably based on the percentage of other plutonium isotopes mixed with Pu-239 and the sophistication of weapons designs.\nFor existing nuclear power plants in the United States, security and proliferation risks are generally considered to be low, given the current fuel cycle and safeguards regimes in place. In particular, the low-enriched uranium fuel (3%-5% U-235) in U.S. reactors cannot be used for a nuclear explosive device without separation and further enrichment, and the United States lacks commercial facilities for chemical separation of plutonium. Many observers view the lack of reprocessing in the United States as a policy signal to other countries that the country with the largest number of nuclear power plants in the world has been able to support this fleet without reprocessing. The variety of advanced nuclear power plant designs have the potential to further reduce this relatively low risk, or to increase the risks, depending on the technical and policy choices and how they are implemented.", "Many advanced reactor designs are smaller than the existing fleet of LWRs and are designed for modular installation. Because the number of modules may be altered to meet the power and heating needs of the site, SMRs are intended to accommodate a range of sizes and types of uses, including those that may have been considered too small in the past. SMRs and microreactors have potential applications in providing power to remote and isolated areas, on-site heating for industrial or municipal clients, and heat or power to mobile or temporary clients (e.g. remote construction sites and temporary military stations). The Department of Defense (DOD) has expressed interest in using SMRs to power remote bases, such as the Eielson Air Force Base in Alaska. The John S. McCain National Defense Authorization Act for Fiscal Year 2019 instructs DOE to produce a report on how a program could be undertaken to pilot at least one microreactor at a military or DOE site by the end of 2027. DOD issued a request for information about microreactor prototype designs on January 22, 2019, as a first step in its study.\nA recent MIT study cautioned that small size alone would not necessarily give advanced reactors a market edge:\nThe industry's problem is not that it has overlooked valuable market segments that need smaller reactors. The problem is that even its optimally scaled reactors are too expensive on a per-unit-power basis. A focus on serving the market segments that need smaller reactor sizes will be of no use unless the smaller design first accomplishes the task of radically reducing per-unit capital cost.\nAdvanced reactors may also be designed for new applications or to capture new markets. Many advanced nuclear reactors would operate at higher temperatures (500-1,000°C) than existing commercial reactors (approximately 300-330°C). Higher operating temperatures would allow some advanced reactors to tap into the large market for heat for industrial processes.\nIndustrial users consume 25% of all primary energy produced in the United States, 80% of which is in the form of process heat. A report by MIT estimates that 17%-19% (or 134-151 GWt) of the U.S. market for industrial heat could be supplied by small (150-300 MWt) advanced reactors. Potential applications include providing process heat for district heating, desalination, petroleum refining and oil shale processing, steam reforming of natural gas, cogeneration, biomass or coal gasification, and hydrogen production, among others. Advanced reactors may nevertheless face steep barriers to entry into these markets in the form of competition from other sources, such as natural gas plants (with or without carbon capture and storage), that are perceived as being less risky, both physically and economically.", "The radioactivity of nuclear waste presents waste management and facility contamination challenges that are unique to nuclear energy. Radioactivity builds up in a nuclear reactor in three primary ways: 1) through the accumulation of radioactive \"fission products\" that result from the splitting of fissile nuclei, 2) through the accumulation of radioactive \"actinides\" that form when heavy atoms in the reactor core absorb a neutron but do not undergo fission, and 3) through the generation of \"activation products\" in the coolant, moderator, or reactor components that occurs when these materials are made radioactive by absorbing neutrons. The vast majority of the initial radioactivity in nuclear waste comes from the fission products. Due to the long half-lives of some of these radioactive materials (several hundred thousand years and longer), nuclear waste poses long-term health hazards.\nIn 2018, the U.S. inventory of spent nuclear fuel exceeded 80,000 metric tons of uranium (MTU). This is projected to rise at a rate of approximately 1,800 MTU per year, resulting in an estimated 138,000 MTU by 2050. Because no long-term repository or consolidated storage facility for high-level nuclear waste has been licensed by NRC, newly discharged spent nuclear waste is currently stored onsite at nuclear plant locations.\nUnconventional reactors may offer some waste management advantages over existing commercial reactors. Fast reactors, and some other unconventional reactors, would be more effective at destroying actinides compared with commercial reactors. Actinides are responsible for the vast majority of the radioactive hazard that remains in nuclear waste after the first few centuries. Reducing the prevalence of these long-lived waste products by transmuting them to short-lived radionuclides may reduce the health risk associated with a release of spent fuel that occurs far in the future (when storage containers may be more likely to fail).\nActinides are not the only long-lived nuclear wastes, however; some fission products remain radioactive hazards for hundreds of thousands of years and longer. The presence of these fission products in nuclear wastes might not be appreciably reduced by unconventional reactors. As a result, some have argued that, even if advanced reactors are able to deliver the improvements in actinide management that some advocates have claimed are possible, adoption of these reactors at scale would not materially alter the need for a long-term waste repository.\nSome advanced reactors would use new or non-conventional fuel forms, such as metallic fuels or dissolved molten fuels. Some of these fuels pose additional waste management challenges as a result of their tendency to corrode storage containers or otherwise react with the environment in ways that complicate their safe storage and disposal. Research on the safe management and disposal of advanced reactor waste will be a key element in commercializing these technologies.", "Environmental impacts for any electric power source must be evaluated based on air emissions, water discharges, and waste management challenges, considering the full life cycle of the technology. The recent focus for nuclear power environmental impacts has been on air emissions, specifically the greenhouse gas footprint. Historically, however, much attention has been given to the waste management challenges associated with nuclear power. The environmental impacts of current LWR nuclear technologies are well studied. The stated goal of many advanced reactor technologies is to reduce environmental impacts. The impacts for newer advanced technologies would need to be evaluated on a case-by-case basis, and assessed empirically to determine whether the impacts are greater or less than current technologies, and whether advanced technologies eliminated any existing challenges in practice or raised new challenges requiring new technologies, regulatory systems, and support industries.\nNuclear energy is a low-carbon source of electricity, with no direct emissions from the fission process. As such, it is one of a number of energy technologies available for reducing the carbon emissions associated with electricity production (and potentially other uses of energy, such as industrial heat). The nuclear energy industry is not zero-carbon, however. Historically, fossil fuel-powered plants and equipment have provided energy to support the nuclear supply chain. Uranium enrichment facilities, in particular, have high energy requirements, and U.S. enrichment plants in the past used electricity primarily from coal-fired power plants. Current uranium enrichment plants use only a fraction of the electricity of older enrichment technology and are generally less reliant on coal-fired generation. A study by the DOE National Renewable Energy Laboratory of the life-cycle greenhouse gas emissions of major electric generating technologies found that conventional nuclear reactor emissions were similar to those of renewable energy technologies and only a fraction of coal and natural gas plant emissions. Emissions of conventional air pollutants (e.g., sulfur oxides, nitrogen oxides, mercury, and particulates) from nuclear power operations and fuel cycle activities are similarly very low.\nAdvanced reactors are expected to have similar life-cycle air emissions, as non-combustion energy sources. Supporters of advanced reactor technologies contend that they could reduce the obstacles to nuclear power expansion related to cost, safety, waste management, and fuel supply and therefore allow nuclear power to play a greatly expanded role in worldwide greenhouse gas reduction strategies.\nSome have argued that decarbonization goals could be achieved more effectively through improvements in existing light water reactor technologies. In particular, such a strategy could avoid additional waste management technical challenges and potential costs associated with the processing of radioactive waste from some classes of advanced reactors. On the other hand, as noted above, proponents of advanced reactor technologies contend that nuclear fuel recycling/reprocessing could reduce the long-term radioactivity of nuclear waste and produce waste forms more resistant to deterioration than LWR spent fuel.\nPlants with higher thermal efficiencies reject less heat into the environment per kilowatt-hour (KWh) of electricity generated. This can help reduce ecosystem impacts related to heat rejection. For example, increased efficiency may contribute to significant reductions in the amount of water used for waste heat rejection (up to 50% less) per unit of electricity generated, and reduce the amount of heat absorbed by adjacent water bodies. This could have particularly significant implications for the use of nuclear energy in arid environments.", "The Department of Energy supports the development of advanced nuclear technologies through research and development (R&D) programs housed in two primary offices: the Office of Nuclear Energy and the Office of Science. Collectively, advanced nuclear R&D programs (advanced fission and fusion) within these two offices received 23% of funding for energy R&D in fiscal year (FY) 2019, more than existing nuclear, renewables, or fossil energy (see Figure 7 ). The Advanced Research Projects Agency—Energy (ARPA-E) also provides funding for early stage R&D for advanced nuclear projects.", "The Office of Nuclear Energy (NE) \"focuses on three major mission areas: the nation's existing nuclear fleet, the development of advanced nuclear reactor concepts, and fuel cycle technologies,\" according to DOE's FY2020 budget justification. NE primarily supports nuclear fission technologies. NE has established a goal for advanced reactor development that \"by the early 2030s, at least two non-light water advanced reactor concepts will have reached technical maturity, demonstrated safety and economic benefits, and completed licensing reviews sufficient to allow construction to go forward.\" According to one analysis, NE reported spending approximately $2 billion on advanced reactor R&D between 1998 and 2015. Analysts have contended that much higher spending levels would be needed for DOE to support the latter stages of advanced reactor R&D, such as demonstrations and commercialization.\nIn FY2019, Congress appropriated $753 million for NE's nuclear R&D programs. Of that, Congress directed $319.5 million (42%) to be used specifically for advanced nuclear technology R&D within the following programs and activities:\nS upercritical Transformational Electric Power R&D : $5 million appropriated to develop a supercritical carbon dioxide Brayton cycle for thermal-to-electric energy conversion in sodium-cooled fast reactors; Advanced Small Modular Reactor R&D : $100 million appropriated for this new, one-year subprogram that is to support \"cost-shared public-private R&D partnerships\" to address technical challenges and accelerate development of SMR reactor designs and supply chains; Advanced Reactor Technologies : $111.5 million appropriated to conduct early-stage R&D on advanced reactor technologies, including SMRs; Versatile Fast Test Reactor : $65 million appropriated for R&D to support development of a versatile fast test reactor, also called the versatile test reactor; Material Recovery and Waste Form Development : $38 million appropriated to activities related to \"the improvement of the current back end of the nuclear cycle [waste management and reprocessing],\" of which $27 million were specifically directed towards activities supporting advanced nuclear technologies.\nIn addition to the programs that focus exclusively on advanced reactor R&D, several cross-cutting NE programs directly or indirectly support advanced nuclear technologies. NE's Nuclear Energy Enabling Technologies (NEET) program includes several subprograms focused on cross-cutting research to support both existing and advanced nuclear technologies. Subprograms of NEET support DOE's Gateway for Accelerated Innovation in Nuclear (GAIN) initiative, which provides technical, financial, and regulatory support for existing and advanced nuclear technologies by providing enhanced access to DOE's network of national labs and unique nuclear R&D capabilities, as well as through competitive industry funding opportunities. GAIN industry funding opportunities include\nU.S. Industry Opportunities for Advanced Nuclear Technology Development , a five-year funding opportunity announcement initiated in December of 2017 that offers cost-sharing opportunities for advanced reactor development, demonstration, and regulatory assistance, and for other nuclear R&D. Applications are reviewed and awards are announced on a quarterly basis. DOE expects to award a total of $400 million over the five-year program. Nuclear Energy Voucher Program , which provides industry awardees with access to DOE nuclear expertise and capabilities in the form of vouchers redeemable for research and technical support activities at one of DOE's national laboratories. Vouchers are not direct financial awards, but rather fund the work done by the national laboratory on behalf of the awardee. Recipients are required to provide a 20% minimum cost-share. As of October 16, 2018, GAIN had distributed vouchers worth approximately $10.7 million to 22 companies.\nIn the past, NE has also provided support for the review and licensing of advanced reactors by NRC. From FY2012 to FY2017, the NE SMR Licensing Technical Support program provided cost-sharing arrangements with industry to support first-of-a-kind costs associated with NRC design certification, design licensing, and site licensing. The program provided support for the NRC's review of NuScale's SMR design. DOE brought the program to a close at the end of FY2017.", "Support for nuclear fusion technologies comes from DOE's Office of Science. Congress appropriated $432 million for nuclear fusion R&D in FY2019, more than for all other advanced nuclear technologies combined. Congress provided a further $132 million for the U.S. contribution to the ITER fusion project, as discussed above.", "DOE's ARPA-E invests in early-stage energy technologies with high potential for transformational impact. In 2017, ARPA-E announced a funding opportunity for \"technologies to enable lower cost, safer advanced nuclear plant designs\" as part of a new program entitled Modeling-Enhanced Innovations Trailblazing Nuclear Energy Reinvigoration program (MEITNER). In June of 2018, MEITNER awarded $24 million in funding for 10 industry and university projects focused on advanced nuclear technologies. ARPA-E announced grants for five nuclear-related projects totaling $12 million in December 2018.", "The DOE's Office of Environmental Management (EM) and Office of Legacy Management (LM) provide a variety of functions supporting advanced reactor R&D.\nFirst, EM provides waste management services for ongoing advanced reactor R&D activities. For example, EM manages the spent nuclear fuel from the Advanced Test Reactor at the Idaho National Laboratory. DOE describes the Advanced Test Reactor as \"the only U.S. research reactor capable of providing large-volume, high-flux neutron irradiation in a prototype environment … to study the results of years of intense neutron and gamma radiation on reactor materials and fuels for … research and power reactors.\"\nSecond, EM funds and manages environmental remediation and decontamination and decommissioning for several advanced reactor facilities, including the Energy Technology Engineering Center at the Santa Susana Field Laboratory in California, various facilities at the Idaho National Laboratory, and the Hanford site in the state of Washington. At Hanford, EM has conducted decontamination and decommissioning activities at the Fast Flux Test Facility (FFTF) since 1992, which operated for 10 years (1982-1992) as a 400 MWt liquid-metal (sodium)-cooled nuclear research and test reactor to develop and test advanced fuels and materials for the Liquid Fast-Breeder Reactor Program.\nThird, EM funds facility overhead operations for facilities where advanced reactor R&D is occurring or planned. \"Overhead\" (or \"Landlord\") costs can include infrastructure maintenance (e.g., power, water, roads, bridges), site safeguards and security, worker health and safety, and program direction and administration. For example, EM funds site overhead costs at the Hanford and Savannah River sites, home of the Pacific Northwest and Savannah River National Laboratories, where advanced reactor and fuels research has been conducted.", "", "What is the appropriate level of federal support for each stage of technology development? That is a fundamental question in the longstanding national debate over R&D policy writ large. For nuclear energy technology development, major stages include research on fuels and materials, development of reactor concepts and designs, component testing and evaluation, licensing by NRC, demonstration, and commercialization. Typically, the earliest stages of development involve laboratory-scale work and computer modeling and simulation, some of which may be relatively inexpensive and applicable to a broad range of nuclear technology. The later stages focus on specific reactor designs and require construction of full- or nearly full-scale nuclear power plants potentially costing billions of dollars. Even early-stage nuclear research often requires the construction and operation of test reactors, shielded hot cells for remote handling of intensely radioactive materials, and other expensive facilities and infrastructure.\nThe Trump Administration contends that federal support should focus on the early stages of research, where the private sector may have a tendency to underinvest. \"The Federal role in supporting advanced technologies is strongest in the early stages of research and development,\" according to DOE's FY2019 budget justification.\"\nConsistent with that policy, the Administration opposes funding for \"late stage or near commercial ready technology.\" Opponents of federal funding for energy demonstration and commercialization contend that such activities should be conducted by the private sector, where market forces would determine which technologies would succeed. As asserted by the Heritage Foundation, \"By attempting to force government-developed technologies into the market, the government diminishes the role of the entrepreneur and crowds out private-sector investment. This practice of picking winners and losers denies energy technologies the opportunity to compete in the marketplace, which is the only proven way to develop market-viable products.\"\nThe conferees on FY2019 DOE appropriations did not adopt the Administration's proposed focus on early-stage research, saying, \"The Department is directed throughout all of its programs to maintain a diverse portfolio of early-, mid-, and late-stage research, development, and market transformation activities.\" Supporters of a broader federal role contend that mid- and late-stage federal support is necessary for new technologies to survive the \"valley of death,\" after federally funded early-stage research is completed but before a promising technology is able to attract private-sector funding for the more-expensive later development, demonstration, and commercialization phases. Obtaining funding for expensive and risky demonstration projects has been described as a particularly difficult obstacle. According to former DOE Under Secretary John Deutch, \"energy innovation is constrained not by an absence of new ideas, but by the absence of early examples of successful implementation.\"", "World electricity generation is projected by the U.S. Energy Information Administration to grow by nearly 50% between 2015 and 2040. While renewable energy and nuclear power are projected to rise substantially during that period, fossil fuels would still constitute about 55% of total generation if current policies and trends continue. Proponents of unconventional nuclear power contend that advanced reactors could mitigate the concerns about safety, cost, radioactive waste, weapons proliferation, and fuel supply that are seen as inhibiting greater utilization of nuclear energy. Under that view, advanced nuclear technology would be indispensable for meeting the world's rapidly increasing demand for electricity without emitting greenhouse gases.\n\"In the 21 st century the world faces the new challenge of drastically reducing emissions of greenhouse gases while simultaneously expanding energy access and economic opportunity to billions of people,\" according to a recent study by the Massachusetts Institute of Technology. The study found that the cost of worldwide greenhouse gas reductions could be minimized by the deployment of lower-cost nuclear generation.\nThat finding is disputed by various environmental and other groups that contend that a combination of renewable energy and efficiency is the lowest-cost option for eliminating greenhouse gas emissions and could be implemented more quickly. \"With technology already available, renewable energy sources like wind, solar, and geothermal can provide 96 percent of our electricity and 98 percent of heating demand—the vast majority of U.S. energy use,\" according to the environmental advocacy group Greenpeace USA. Some environmental groups contend that the safety and other risks posed by nuclear make it unacceptable in any case, even with advanced technology. The Nuclear Information and Resource Service advocacy group says, \"There is nothing environmentally friendly about nuclear power. It only creates different environmental problems than fossil fuel energy sources. But neither fossil fuels nor nuclear power are safe, sustainable, or healthy for humans and the environment.\"\nGermany adopted a policy after the Fukushima disaster in 2011 to greatly reduce carbon emissions through renewable energy and efficiency while eliminating nuclear power. The policy, called \"Energiewende,\" or energy transition, calls for Germany's consumption of primary energy (the initial energy content of fuels and other energy sources) to be reduced by 50% in 2050 from its 2008 level, while greatly increasing the use of renewable energy throughout the economy. According to the German government, \"By 2050 renewable energies should make up 60 percent of the gross final consumption of energy, and 80 percent of the gross electricity consumption.\" A 2017 study by an academic team developed \"roadmaps\" for 139 countries to convert to 100% renewable energy by 2050. The study concluded that renewable energy production could be expanded with more certainty than nuclear and other non-emitting sources.\nThe National Renewable Energy Laboratory issued a study in 2012 of the impact of increasing U.S. renewable electricity generation to up to 90% by 2050. The study found that renewables could \"adequately supply 80% of total U.S. electricity generation in 2050,\" with nuclear, coal, and gas supplying the remaining 20%. Nuclear power plants were projected to be located almost entirely east of the Mississippi River for economic and other reasons.", "Supporters of advanced reactor technologies are urging DOE to construct a fast spectrum Versatile Test Reactor (VTR), which they consider critical for the development of nuclear fuels, materials, instrumentation, and sensors for fast neutron and other advanced reactors. \"To support the innovative R&D required to revive a competitive U.S. nuclear industry, a new test reactor is required with capabilities that far exceed those of the few remaining test reactors,\" a senior executive from the nuclear firm General Atomics testified to Congress in 2015. According to DOE's Idaho National Laboratory (INL), \"Currently, only a few capabilities are available for testing fast neutron reactor technology in the world and none in the U.S.\"\nRequirements for DOE to plan and develop a \"versatile reactor-based fast neutron source\" by the end of 2025 are included in the Nuclear Energy Innovation Capabilities Act of 2017 (NEICA), signed into law September 28, 2018 ( P.L. 115-248 ). In the 116 th Congress, the Nuclear Energy Leadership Act (NELA, S. 903 ), introduced March 27, 2019, by Senator Murkowski, would authorize DOE to \"provide\" the facility. Funding of $65 million for R&D to support development of the VTR (referred to as a \"versatile fast test reactor\") is included in the Energy and Water Development and Related Agencies Appropriations Act, 2019 (Division A of P.L. 115-244 ). Citing the enactment of NEICA, Energy Secretary Rick Perry announced the official launch of the VTR project on February 28, 2019. The Trump Administration is requesting an additional $100 million for the VTR project in FY2020.\nDOE announced a contract award on November 13, 2018, to GE Hitachi Nuclear Energy to help develop a conceptual design and cost estimate for the VTR, which is to be adapted from the company's PRISM sodium-cooled fast reactor design. According to INL, which is managing the project, the conceptual design and cost and schedule estimates are to be completed in 2021, after which another contract would be awarded for final design and construction. The VTR is currently scheduled to be operational by October 2026. An INL official estimated in February 2019 that a sodium-cooled VTR would cost $3 billion to $3.5 billion in today's dollars. The Nuclear Energy Research Infrastructure Act of 2018 ( H.R. 4378 , 115 th Congress), which passed the House February 13, 2018, but was not enacted, would have authorized $1.99 billion through FY2025 for the project.\nSome who are skeptical of the VTR project have questioned whether there would be enough potential users—primarily companies developing fast reactors—to justify its construction and operating costs. Some advanced nuclear reactor developers have doubted that the VTR will begin operating before their designs are completed. Concerns have also been raised about whether new facilities would be required to fabricate fuel for the VTR, and how much those might cost, and the cost of handling and disposing of highly radioactive spent fuel from the reactor. The potential use of plutonium-based fuel in the VTR has drawn opposition because of the usability of such fuel in nuclear weapons.", "Proposals to authorize DOE to host privately funded experimental and demonstration reactors have been included in several bills in the 114 th and 115 th Congresses, including a provision enacted in NEICA. Supporters of the idea contend that reactor developers could benefit from the expertise and facilities at DOE national laboratories. Safety oversight of private-sector experimental reactors at national laboratories could possibly be conducted by DOE and not require NRC licensing. NEICA specifies that reactors intended to demonstrate commercial suitability would require NRC licenses, even at DOE sites.\nNEICA added section 958 to the Energy Policy Act of 2005 ( P.L. 109-58 ), which authorizes a DOE National Reactor Innovation Center (NRIC). This program would \"enable the testing and demonstration of reactor concepts to be proposed and funded, in whole or in part, by the private sector.\" Such testing and demonstration would take place at DOE national laboratories or other Department-owned sites. In implementing the NRIC program, DOE is to coordinate with NRC on sharing technical expertise on the advanced reactor technologies under development.\nDOE announced an agreement on February 18, 2016, with Utah Associated Municipal Power Systems (UAMPS) \"to support possible siting\" of a first-of-a-kind NuScale SMR plant at INL. Under the agreement, \"UAMPS is currently working to identify potential locations that may be suitable\" at the 890-square-mile INL site for construction of the plant, according to DOE. The NuScale SMR is currently undergoing NRC review for a design certification, which is to be issued sometime after 2020.\nIn 2012, DOE announced three agreements \"to develop deployment plans\" for privately funded SMRs at the Department's Savannah River Site in South Carolina. The agreements with Hyperion Power Generation (now Gen4 Energy), Holtec International, and NuScale were intended to help the companies \"obtain information on potential SMR reactor siting at Savannah River and provide a framework for developing land use and site services agreements to further these efforts,\" according to DOE.\nBecause NEICA says reactor testing and demonstration projects would be funded \"in whole or in part\" by the private sector, the potential federal share of such projects could be a future issue before Congress. NEICA requires DOE to submit a report to Congress on costs and other issues that could be raised by the hosting of reactor testing and demonstration projects, including\nDOE's capabilities for safety review and oversight of privately funded advanced reactor research; potential DOE sites that could host privately funded experimental advanced reactors; contractual mechanisms that could be used for such projects; and responsibility for management and disposal of waste.", "A crucial stage in the commercialization of nuclear technology is the construction of demonstration reactors, which are expected to cost several billion dollars apiece, depending on their size and level of technical maturity. As noted above, the VTR, which would serve as a test reactor and as a demonstration of GE's PRISM reactor (although downsized from 840 MWt to 311 MWt), is estimated to cost up to $3.5 billion to construct. The first 12-module NuScale plant, at 684 MWe, is estimated to cost $3 billion. Including the demonstration stage, bringing a new reactor technology to the market could require up to 30 years and cost up to $15 billion, according to one recent estimate.\nThe majority of U.S. advanced reactor companies surveyed in 2017 have raised only a small portion of the funding that would be necessary for commercial-scale demonstration of their designs. One analysis found that commercialization of advanced reactor concepts would require significantly higher levels of public funding.\nDOE has a range of options for supporting the construction of demonstration reactors and helping bring them to the commercial market.", "DOE can carry out technology demonstration projects on a cost-shared basis under Sec. 988 of the Energy Policy Act of 2005 ( P.L. 109-58 ). At least 50% of demonstration costs must come from non-federal sources, although the Secretary of Energy can reduce the non-federal share based on technological risk and other factors. Repayment of the federal contribution is not required. In addition to construction costs, federal cost sharing can apply to licensing, design work, and \"first of a kind\" engineering, such as the assistance provided to NuScale under the DOE small modular reactor licensing technical support program.", "Construction of research facilities such as the VTR may be completely funded through congressional appropriations, with users of the facility paying to conduct research (sometimes with DOE grants or vouchers). The VTR would also demonstrate the PRISM technology, as noted above, but it would be smaller than the planned commercial version and would not produce power.", "The federal government can purchase power generated by demonstration reactors and also pay for research use of the reactors. For the proposed NuScale demonstration, DOE announced a memorandum of understanding (MOU) in December 2018 with the Utah Associated Municipal Power Systems (UAMPS), which would own the plant. The MOU calls for DOE to purchase power from one of the 60 MWe modules in the plant. DOE would use another module for research under the Joint Use Modular Plant (JUMP) program. \"The research is expected to focus principally on integrated energy systems that support the production of both electricity and non-electric energy products,\" according to DOE's announcement.", "DOE can issue loan guarantees to build advanced nuclear reactors under Title XVII of the Energy Policy Act of 2005. DOE currently has $8.8 billion in loan guarantee authority for advanced nuclear energy projects. To receive a DOE loan guarantee, projects must be found financially viable and they must pay an up-front fee called a \"subsidy cost.\" The subsidy cost is the present value of the government's potential cost of the loan guarantee that could result from future loan defaults. A project considered to be relatively risky would be assessed a relatively high subsidy cost. Title XVII loan guarantees cannot be given to projects that would use federal funds other than the federally guaranteed funding ( P.L. 111-8 , Division C). DOE has awarded $12 billion in Title XVII loan guarantees for the construction of two new reactors at the Vogtle nuclear power plant in Georgia.", "Power plants using advanced nuclear technology are eligible for a federal tax credit of 1.8 cents per kilowatt-hour of electricity generated, as extended by P.L. 115-123 . The nuclear production tax credits do not have an expiration date, but total credits are limited to 6,000 MW of capacity, limited to $125 million per year per 1,000 MW of capacity for eight years of operation. The availability of the tax credits could help nuclear demonstration projects procure financing and reduce the subsidy cost of DOE loan guarantees.", "Because the federal government may have limited funding for multibillion-dollar nuclear demonstration projects, a methodology for selecting which projects and technologies to support would likely be necessary. While this would appear to put DOE in the position of \"picking winners,\" as discussed above, it is conceivable that some market-based selection criteria could be at least part of the selection process for demonstration reactor support. One such criterion could be evidence of a customer base, which could include letters of intent for future orders (perhaps conditioned on successful demonstration). Another market-based criterion could be the extent of private matching funds raised for the project, such as firm contracts for power sales from the demonstration plant, or other private funding. Many other criteria could also be considered, such as technology maturity level (the level of technical risk) and the financial and technical strength of the project sponsor. The potential goal of demonstrating the widest possible range of advanced technologies might also be a consideration.", "The U.S. nuclear industry has argued that current NRC procedures for reviewing and licensing new nuclear reactors are overly burdensome and inflexible, contributing to high regulatory costs and long reviews. Existing licensing pathways and safety regulations, which tend to be based on conventional LWR designs, are not necessarily well-suited to accommodate newer, advanced reactors. Consequently, industry groups and some outside experts have argued for a transition to a technology-neutral regulatory framework, a process which these groups have estimated may take up to five years to complete. The industry has also called for greater flexibility in making changes during reactor construction without regulatory delays.\nIn response to such concerns, NEIMA includes several provisions on advanced nuclear reactor licensing. In the near term, NRC is required to establish \"stages in the licensing process for commercial advanced nuclear reactors,\" which would allow license applicants to gain formal approval for completing each step in the licensing process, such as a conceptual design assessment. A 2016 industry report recommending staged licensing noted that such a process is currently used in Canada and the United Kingdom. \"The step-wise pre-licensing design review processes in Canada and the UK provide earlier opportunities for reactor vendors to demonstrate to their investors and potential investors that the reactor design technology will be licensable,\" according to the report.\nNEIMA also requires NRC to develop procedures for using \"licensing project plans,\" which are described by the committee report as \"agreements between the agency and applicants early in the application process that reflect mutual commitments on schedules and deliverables to support resource planning for both the agency and the applicant.\" NRC must also increase the use of risk-informed and performance-based licensing evaluation techniques \"within the existing regulatory framework.\" Using such techniques, the evaluation of specific safety and other issues would be informed by the calculated level of risk, and performance standards would be used to evaluate safety, \"when appropriate,\" rather than specific reactor design requirements.\nNEIMA requires NRC to issue a \"technology-inclusive\" regulatory framework for optional use by advanced reactor applicants. As noted above, NRC regulations currently focus on light water reactors, which are the only commercial reactors currently used in the United States. NRC also must issue a report that would include an evaluation of the need for additional legislation to implement such a regulatory framework. Prior to NEIMA's enactment, NRC had begun preparing for the potential licensing of advanced reactors, issuing implementation action plans for the near, mid-, and long terms.\nNew nuclear fuels are also subject to NRC regulation. Depending on the design, it can take up to six years to develop, test, and license new fuels. Transporting these new fuel forms may require additional innovation and regulation.\nThe nuclear industry has contended that fees charged by NRC for reviewing reactor designs, new fuels, and license applications constitute a significant obstacle to advanced reactor deployment, particularly by relatively small, independent companies. NEICA authorizes DOE to provide grants to advanced reactor license applicants to cover some of their NRC fees throughout the licensing process.", "Federal agency agreements to purchase power from advanced reactors could substantially improve the financial feasibility of such projects, both at the demonstration and commercialization stages. Such power purchase agreements (PPAs) would provide a projected revenue stream that could help advanced reactor projects obtain financing and potentially reduce their financing costs. Federal agencies could also offer above-market prices for the power to encourage commercialization of nuclear technologies, if authorized by Congress.\nProposals to address this issue are included in NELA ( S. 903 ), noted above. Section 2 of NELA would authorize the General Services Administration (GSA) to enter into PPAs for up to 40 years, an increase from the current limit of 10 years. Under 40 U.S.C. §501, GSA can delegate all or part of this authority to other agencies. Under a PPA, the federal government signs a contract to purchase electricity from a public utility for a specific time period.\nElectricity payments during a PPA contract period, along with any other customer revenues, are intended to be sufficient to allow the power plant developer to recover its construction and other costs, plus a profit, if applicable. The proposed lengthening of the 10-year limit on PPAs is intended to allow enough time for nuclear reactor construction costs to be recovered, according to NELA's sponsors.\nNELA Section 3 would require DOE to enter into at least one PPA to purchase power from a commercial nuclear reactor by the end of 2023. \"Special consideration\" would be given to \"first-of-a-kind or early deployment nuclear technologies\" that could provide reliable power to important national security facilities, especially facilities disconnected from the electricity grid. If a PPA met those criteria, then electricity rates under the agreement could be higher than the average market rate. PPAs with currently operating commercial nuclear plants would not qualify for above-market rates.\nFederal PPAs of any duration are subject to cancellation each year if sufficient funds are not appropriated by Congress, and to cancellation at any time for the convenience of the government.\nDOE's Western Area Power Administration (WAPA), which markets electricity from federal dams and other projects in much of the Western United States, has the authority to sign power sale contracts for up to 40 years (43 U.S.C. 485h(c)). This authority could potentially facilitate PPAs for demonstration reactors at INL or elsewhere in the WAPA service area. According to a 2017 report produced for DOE, \"A federal agency located within WAPA's jurisdiction may leverage WAPA's long-term contract authority by entering into an Interagency Agreement with WAPA and allowing WAPA, in turn, to enter into a PPA with a power provider on such federal agency's behalf for a term of up to 40 years.\" Under that scenario, WAPA could reach an interagency agreement with a military base in California under which WAPA would award a 40-year PPA on behalf of the base to a demonstration reactor at INL and then deliver the power to the base.", "Many advanced reactors would use fuels that are not currently commercially available, either due to lack of demand or technological immaturity. These include higher-enriched versions of existing uranium fuel as well as new types of fuels that are currently under development. Without near-term investment in fuel processing and fabrication capabilities, there may be insufficient supply of next generation fuels to support the deployment of some advanced reactors.\nParticular concern has been raised about the availability of high-assay low enriched uranium (HALEU), which would be necessary to power many advanced nuclear reactors. Existing U.S. commercial nuclear reactors are fueled by uranium that has been enriched to between 3% and 5% of the fissile isotope U-235. HALEU is enriched to between 5% and 20%. (At 20% and above, uranium is considered highly enriched and potentially useable for weapons.) Because HALEU is not used in existing commercial reactors, it is not readily available for advanced reactor development, according to the nuclear industry.\nSection 7 of NELA would require DOE to sell, transfer, or lease high-assay low enriched uranium (HALEU) for use in advanced nuclear reactors. HALEU containing at least 2 metric tons of U-235 is to be made available by the end of 2022 and a total of at least 10 metric tons by the end of 2025. The FY2019 Energy and Water Development Appropriations Act ( P.L. 115-244 , Division A) requires DOE to submit a plan to Congress for HALEU development and provides $20 million for preparation and testing.\nDOE is currently pursuing two approaches for developing HALEU supplies. One approach is to use DOE-owned HALEU currently stored at INL to fabricate fuel for advanced reactors. DOE issued an environmental assessment on January 17, 2019, that found no significant environmental impact from fabricating the fuel at existing INL facilities. In the other approach, DOE announced January 7, 2019, that it intended to sign a sole-source contract with Centrus Energy to build 16 centrifuges at DOE's Portsmouth, OH, site to enrich \"a small quantity\" of uranium to 19.75% U-235 by October 2020.\nThe Nuclear Energy Institute has estimated that it would take a minimum of seven years to establish the infrastructure to supply this fuel for commercial purposes. DOE has proposed to downblend a supply of high enriched uranium to bridge this gap. By some assessments, 32 GWe of deployed advanced reactor capacity would be required to ensure the economic viability of new fuel fabrication and other fuel cycle facilities.", "", "The International Framework on Nuclear Energy Cooperation (IFNEC) is an international body dedicated to ensuring that the \"use of nuclear energy for peaceful purposes proceeds in a manner that is efficient and meets the highest standards of safety, security and non-proliferation.\" IFNEC was formed in 2010 by the members of its precursor organization, the Global Nuclear Energy Partnership. Its membership includes 34 participant countries, 31 observer countries, and 4 international observer organizations. The United States is a participating country. IFNEC working groups focus on issues related to nuclear infrastructure development, reliable fuel services and spent fuel management, and nuclear supply chains and supplier-customer relationships.", "The Generation IV International Forum (GIF) is a collaborative international initiative to promote the development of the next generation of nuclear energy systems through shared R&D. GIF was created in 2000 with nine original members: Argentina, Brazil, Canada, France, Japan, South Korea, South Africa, the United Kingdom, and the United States. Switzerland, the European Union, China, Russia, and Australia joined subsequently.\nIn 2002, after reviewing 130 advanced reactor designs, the GIF identified 6 nuclear energy systems for further development. Collectively, these are known as Generation IV reactors.\nThe six Generation IV reactor technologies are:\nGas-Cooled Fast Reactor, Lead-Cooled Fast Reactor, Molten Salt Reactor, Sodium-Cooled Fast Reactor, Supercritical Water-Cooled Reactor, and Very High Temperature Reactor.\nFactors used in selecting the designs include safety, sustainability, economics, physical security, proliferation resistance, and waste minimization, and they represent a range of technologies. The GIF has suggested that commercialization of some of these technologies may occur as early as 2030, with demonstration of some technologies possibly occurring within the next decade. Each of these technologies is at a different level of technical maturity. Of these, sodium-cooled fast reactors are considered to be the most mature. Gas-cooled fast reactors, lead-cooled fast reactors, and molten salt reactors are not expected to reach commercialization until 2050 under current rates of development, although some vendors and academics have put forth more optimistic timelines.", "" ], "depth": [ 0, 1, 1, 2, 3, 3, 2, 3, 3, 3, 3, 3, 2, 1, 2, 3, 3, 3, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 2, 2, 2, 1, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h0_title", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "h0_title h2_title", "", "", "", "", "", "", "h2_full", "h0_full", "", "", "h1_full", "", "", "", "", "h2_title h1_title h3_title", "h2_full", "h2_full", "", "h3_full h1_full", "h3_full", "", "", "", "", "", "", "", "h3_full", "", "", "", "", "" ] }	{ "question": [ "What is an \"advanced nuclear reactor\"?", "What reactors are included under the label advanced nuclear reactor?", "What are these designs often also considered to be?", "What supports the advanced nuclear reactors?", "What was the first act to support the advanced nuclear reactors?", "What does this act require from the DOE?", "What was the second act to support the advanced nuclear reactors?", "What funding has Congress provided to the advanced nuclear research?", "What reactor issues are likely to be debated?", "What concern is there regarding the federal government?", "What does the DOE's budget request focus on?", "What controversy is likely?", "What support is there for advanced nuclear power?", "What doubt is there for advanced nuclear power?", "What issues of safety exist?", "What weapon risk is there for advanced nuclear power?", "What issues exist relating to advanced nuclear reactors?", "What interest from Congress exists?", "What are some options for assistance?" ], "summary": [ "An \"advanced nuclear reactor\" is defined in legislation enacted in 2018 as \"a nuclear fission reactor with significant improvements over the most recent generation of nuclear fission reactors\" or a reactor using nuclear fusion (P.L. 115-248).", "Such reactors include LWR designs that are far smaller than existing reactors, as well as concepts that would use different moderators, coolants, and types of fuel.", "Many of these advanced designs are considered to be small modular reactors (SMRs), which the Department of Energy (DOE) defines as reactors with electric generating capacity of 300 megawatts and below, in contrast to an average of about 1,000 megawatts for existing commercial reactors.", "The 115th Congress enacted two bills to promote the development of advanced nuclear reactors.", "The first, the Nuclear Energy Innovation Capabilities Act of 2017 (NEICA), was signed into law in September 2018 (P.L. 115-248).", "It requires DOE to develop a versatile fast neutron test reactor that could help develop fuels and materials for advanced reactors and authorizes DOE national laboratories and other sites to host reactor testing and demonstration projects \"to be proposed and funded, in whole or in part, by the private sector.\"", "The second, the Nuclear Energy Innovation and Modernization Act (NEIMA, P.L. 115-439), signed in January 2019, would require the Nuclear Regulatory Commission to develop an optional regulatory framework suitable for advanced nuclear technologies.", "The 115th Congress also appropriated $65 million for R&D to support development of the versatile test reactor in the Energy and Water Development Appropriations Act, FY2019, along with funding for ongoing advanced nuclear research and development programs (Division A of P.L. 115-244).", "Continued debate over advanced reactor issues is anticipated in the 116th Congress.", "A fundamental question may be the role of the federal government in advanced nuclear power development.", "DOE's budget request for FY2020 focuses the federal role on \"early stage research\" rather than the more expensive stages of demonstration and commercialization.", "Controversy is also likely to continue over the need for advanced nuclear power.", "Supporters contend that such technology will be crucial in reducing emissions of greenhouse gases and bringing carbon-free power to the majority of the world that currently has little access to electricity.", "However, some observers and interest groups have cast doubt on the potential safety, affordability, and sustainability of advanced reactors.", "Because many of these technologies are in the conceptual or design phases, the potential advantages of these systems have not yet been established on a commercial scale.", "Concern has also been raised about the weapons-proliferation risks posed by the potential use of plutonium-based fuel by some advanced reactor technologies.", "Other current issues related to advanced reactors include criteria for hosting private-sector demonstration reactors at DOE sites, the licensing framework for non-LWR reactors, longer time periods for federal agreements to purchase power from advanced reactors, and the supply of the high-assay low enriched uranium fuel that would be needed for some advanced reactor designs.", "There also may be congressional interest about potential federal assistance for demonstration reactors, which are expected to cost billions of dollars apiece.", "Major options for such assistance include federal cost sharing, loan guarantees, power purchase agreements, purchase of reactor capacity for research uses, and tax credits." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, -1, 0, -1, -1, 3, 3, 5, 3, -1, -1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4, 4, 5, 5, 5 ] }
CRS_R42097	{ "title": [ "", "History of the Qualifications Clause in the Federal Convention of 1787", "Procedural History", "Apparent Purpose and Intent", "Common Law Meaning of the Term \"Natural Born\" Citizen or Subject", "Common Law and the Constitution", "Common Law and Persons Born \"In\" the Country", "Common Law and Persons Born Abroad to Citizen-Parents", "Common Understanding in 18th Century of the Term \"Natural Born\" Citizen", "Citizenship at Birth: Case Law and Interpretations", "Legal Background and Historical Cases", "Legal Cases and Birth Outside of the United States", "Legal Cases and Birth Within the United States", "Allegations of Loss of Citizenship", "Dual Citizenship and Assertion of Two Citizen-Parent Requirement", "Dual Citizenship", "Citizenship of Parents", "Recent Eligibility and \"Ballot Access\" Cases", "Conclusion" ], "paragraphs": [ "T he standing qualifications to be President of the United States are set out in the Constitution, at Article II, Section 1, clause 5, and state three specific requirements: one must be at leas t 35 years old, a resident \"within the United States\" for 14 years, and a \"natural born Citizen.\" The constitutional provision states as follows:\nNo Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been Fourteen Years a Resident within the United States.\nQuestions from time-to-time have arisen concerning whether one who is a U.S. citizen \"at birth\" because of the operation of federal law , is also a \"natural born\" citizen for purposes of the presidential eligibility clause. Such questions often concern persons born abroad to parents who are U.S. citizens, or persons born abroad when only one parent is a U.S. citizen who had resided in the United States. Although such individuals born abroad may clearly be U.S. citizens \"at birth\" by statute, would such persons also be \"natural born Citizens,\" or is eligibility to the Presidency limited only to \"native born\" citizens? Additionally, questions have been recently raised by some as to whether one born \"in\" the United States of one or more alien parents—and who is thus clearly a U.S. citizen \"at birth\" by the Fourteenth Amendment, as well as by federal law and common law—was intended to be considered a \"natural born\" citizen for purposes of the presidential eligibility clause.\nThe Constitution does not define the term \"natural born Citizen,\" nor are the notes from the debates at the Constitutional Convention of 1787 instructive as to any specific collective intent of the framers concerning the meaning of the term. Furthermore, the Supreme Court has never needed to address this particular issue within the specific context of a challenge to the eligibility of a candidate under Article II, Section 1, clause 5, the only place in the entire Constitution that the phrase appears, although federal courts have discussed the concept extensively with respect to other issues of citizenship. Consequently, although there are numerous Supreme Court cases, as well as other federal and state case law, discussing the phrase and its meaning from which conclusions may be drawn, there has still been certain speculation on the scope of the language.\nAccording to the Supreme Court, words and phrases used, but not defined, within the Constitution, should generally \"be read in light of British common law,\" since the U.S. Constitution is \"framed in the language of the English common law.\" Although the English common law is not \"binding\" on federal courts in interpreting the meaning of words or phrases within the Constitution, nor is it necessarily to be considered the \"law\" of the United States (as it is for the individual states specifically incorporating it), it can be employed to shed light on the concepts and precepts within the document that are not defined there, but which are reflected in the corpus of British law and jurisprudence of the time. As noted by Chief Justice (and former President) Taft, writing for a unanimous Supreme Court, the framers of the U.S. Constitution \"were born and brought up in\" the English common law, they \"thought and spoke in its vocabulary,\" and that English common law was thus what the \"statesmen and lawyers of the Convention\" employed for the meaning of the terms in the Constitution \"confident that they could be shortly and easily understood.\"\nThe term \"natural born\" in the context of citizenship appears to derive from the British concept that those born with a \"natural liege\" (allegiance, tie, or connection) to the nation or to the sovereign, were (under English terminology) \"natural born\" subjects under the law in England and in the American colonies at the time of independence. There appears to be little scholarly debate that the English common law at the time of independence included at least all persons born on the soil of England ( jus soli , that is, \"law of the soil\"), even to alien parents, as \"natural born\" subjects (unless the alien parents were diplomatic personnel of a foreign nation, or foreign troops in hostile occupation). As noted by the Supreme Court of the United States, this \"same rule\" was applicable in the colonies and \"in the United States afterwards, and continued to prevail under the Constitution\" with respect to \"natural born\" U.S. citizenship.\nAlthough the British common law at the time of independence with regard to jus soli was apparently clear, there were varying opinions as whether those born abroad of English subjects were \"natural born\" subjects under the common law , or were considered \"natural born\" subjects merely by long-standing statutory law. Some commentators have claimed that the statutory provisions of English law, first appearing during the reign of Edward III in 1350, were \"incorporated\" into, or in the alternative, \"reflected\" the already established English common law. Regardless of the technical state of the common law in England with respect to children born abroad, however, there appear to be significant arguments that the corpus of English law applicable within the American colonies, known to the framers and adopted in the states, was broader than merely the \"law of the soil.\" Legal commentators have contended that the body of English law carried forward in the United States relating to citizenship included both the strict common law notion of jus soli , as well as that part of the law of descent ( jus sanguin i s ) included in long-standing British law (including as \"natural born\" subjects those born abroad of an English father), and that this was part of the \"common understanding\" of the term \"natural born\" to the framers at the time of the drafting of the Constitution.\nConsidering the history of the constitutional provision, the clause's apparent intent, the English common law expressly applicable in the American colonies and in all of the original states, the common use and meaning of the phrase \"natural born\" subject in England and the American colonies in the 1700s, and the subsequent action of the first Congress in enacting the Naturalization Act of 1790 (expressly defining the term \"natural born citizen\" to include those born abroad to U.S. citizens), it appears that the most logical inferences would indicate that the phrase \"natural born Citizen\" would mean a person who is entitled to U.S. citizenship \"by birth\" or \"at birth.\" Such interpretation, as evidenced by over a century of American case law, would include as natural born citizens those born in the United States and subject to its jurisdiction regardless of the citizenship status of one's parents, and would also appear to include those born abroad of one or more parents who are U.S. citizens (as recognized by statute), as opposed to a person who is not a citizen by birth and is thus an \"alien\" required to go through the legal process of naturalization to become a U.S. citizen.\nThe weight of scholarly legal and historical opinion, as well as the consistent case law in the United States, also supports the notion that \"natural born Citizen\" means one who is a U.S. citizen \"at birth\" or \"by birth.\" The Constitution of the United States of America, Analysis and Interpretation , notes that \"[w]hatever the term 'natural born' means, it no doubt does not include a person who is 'naturalized,'\" and, after discussing historical and legal precedents and arguments, concludes that \"[t]here is reason to believe ... that the phrase includes persons who become citizens at birth by statute because of their status in being born abroad of American citizens.\"", "", "The particular clause concerning presidential eligibility and citizenship was placed in the Constitution and approved at the Convention of 1787 with no debate, objection, or comment. The five-person Committee of Detail, appointed by the Convention delegates to report a draft Constitution containing issues and items agreed upon by the Convention up to that point, was instructed by the Convention, on July 26, 1787, to consider provisions requiring certain qualifications for Congress and the Presidency. Although the subsequent report on August 6 from the Committee of Detail contained qualifications for Senator and Representative, it did not offer qualifications for President. On August 20, the Convention adopted a motion by Mr. Gerry of Massachusetts that the \"Committee be instructed to report proper qualifications for the President ...,\" and on August 22, the Committee of Detail reported its recommendation that several additions be made to the report it had made, including the following concerning the qualifications of the President: \"[H]e shall be of the age of thirty five years, and a Citizen of the United States, and shall have been an Inhabitant thereof for Twenty one years.\" The report of the Committee of Detail was then \"considered\" and \"postponed\" on August 22, so \"that each member might furnish himself with a copy.\"\nIn the subsequent days, the provisions for the qualifications of President were not taken up and thus not agreed upon by the whole Convention, and on August 31, 1787, the delegates agreed to \"refer such part of the Constitution as have been proposed, and such parts of reports as have not been acted upon to a Committee of a Member from each State,\" which has been referred to as the (third) \"Committee of Eleven,\" or the \"Committee on Postponed Matters.\" On Tuesday, September 4, 1787, the (third) Committee of Eleven \"partially\" reported to the Convention several \"additions and alterations,\" including the specific reference for the first time to a presidential qualification to be a \"natural born\" citizen:\nNo Person except a natural born Citizen, or a Citizen of the U.S. at the time of the adoption of this Constitution shall be eligible to the office of President: nor shall any Person be elected to that office, who shall be under the age of 35 years, and who has not been in the whole, at least 14 years a resident within the U.S.\nThe language proposed on presidential eligibility on September 4 was agreed to without objection and without debate on Friday, September 7, 1787. Stylistic and grammatical changes were made through the Committee of Style to the clause on presidential qualifications to conform to the other phrasing and usage in the document, which resulted in the final language adopted by the delegates and sent to the states for ratification.", "Tracing the development of this clause through the Federal Convention of 1787 clearly indicates that there were no specific discussions or other explications within the Convention on the meaning of the specific term \"natural born\" citizen. This does not mean, however, that there were no discussions at all of the concept of a citizenship qualification for federal officers. In fact, the issue of citizenship for Members of Congress was one that garnered much consideration and debate in the Convention of 1787 and, it has been contended, it is within the framework of this discussion that the eventual citizenship eligibility requirement was adopted for President and may be analyzed.\nIn stating concerns regarding the citizenship of congressional officeholders, and the required length of such citizenship, George Mason argued that although he \"was for opening a wide door for immigrants; ... [h]e did not chuse to let foreigners and adventurers make laws for us\"; nor would he want \"a rich foreign Nation, for example Great Britain, [to] send over her tools who might bribe their way\" into federal office for \"invidious purposes.\" These arguments were echoed later by delegates at the Convention who were concerned with \"admitting strangers into our public Councils,\" and feared that \"foreigners without a long residency in the Country ... bring with them, not only attachments to other Countries; but ideas of Govt. so distinct from ours that in every point of view they are dangerous.\" Thus, citizenship requirements of seven years for Representatives and nine years for Senators were eventually adopted, although the Convention did not act upon the wishes of Mr. Gerry \"that in the future the eligibility might be confined to Natives.\" When the citizenship eligibility requirements for President were eventually reported and recommended after the debates and discussion of congressional eligibility requirements, there were no further discussions of the issue in Convention.\nAlthough there was no discussion concerning the precise meaning or derivation of the term \"natural born,\" there is in the Documentary History of the Convention a possible clue from where the qualification for President to be a \"natural born\" citizen may have derived. The history of the Convention indicates that George Washington, the presiding officer, received a letter dated July 25, 1787, from John Jay, which appears to raise for the first time the issue of a requirement to be a \"natural born\" citizen of the United States as a requisite qualification to be President:\nPermit me to hint, whether it would not be wise & seasonable to provide a strong check to the admission of Foreigners into the administration of our national Government; and to declare expressly that the Command in chief of the american army shall not be given to, nor devolve on, any but a natural born Citizen.\nThere is no specific indication as to the precise role this letter and its \"hint\" actually played in the adoption by the Convention of the particular qualification of being a \"natural born\" citizen. However, no other expressions of this particular term are evident in Convention deliberations prior to the receipt of Jay's letter, and the September 4 draft of the Constitution reported from the Committee of Eleven to the delegates, at a time shortly after John Jay's letter had been acknowledged by Washington, contained for the first time such a qualification. The timing of Jay's letter, the acknowledgment of its receipt by Washington on September 2, and the first use of the term in the subsequent report of the Committee of Eleven, on September 4, 1787, may thus indicate more than a mere coincidence. If this were the case, then the concern over \"foreigners,\" without sufficient allegiance to the United States, serving as President and Commander-in-Chief, would appear to be the initial and principal motivating concern of the framers, in a somewhat similar vein as their concerns over congressional citizenship qualifications.\nSuch purpose of the \"natural born\" citizen qualification was expressed by Justice Joseph Story in his historic treatise on the Constitution in 1833:\nIt is indispensable, too, that the president should be a natural born citizen of the United States ... [T]he general propriety of the exclusion of foreigners, in common cases, will scarcely be doubted by any sound statesman. It cuts off all chances for ambitious foreigners, who might otherwise be intriguing for the office; and interposes a barrier against those corrupt interferences of foreign governments in executive elections, which have inflicted the most serious evils upon the elective monarchies of Europe.\n\"Ambitious foreigners\" who may be \"intriguing for the office\" of head of state, which had been the unfortunate experience in Europe, appeared to be a generalized and widespread concern at the time of the drafting of the Constitution, as was the concern over the possibility of allowing foreign royalty, monarchs, and their wealthy progeny, or other relatives to control the government of the new nation. Max Farrand, in his treatise on the adoption of the Constitution, discussed these concerns and rumors during the Convention of 1787:\nDuring the sessions of the convention, but it would seem especially during the latter part of August, while the subject of the presidency was causing so much disquiet, persistent rumors were current outside that the establishment of a monarchy was under consideration. The common form of the rumor was that the Bishop of Osnaburgh, the second son of George III, was to be invited to become King of the United States.\nOthers have noted that rumors were extant concerning colonial statesmen approaching or making inquiries of other foreign royalty about seeking the chief executive's position of the United States, including rumors involving Price Henry of Prussia, and the ascension of King George's second son, Frederick, Duke of York. Presidential scholar Michael Nelson has commented:\nThe presidency they were creating was, the framers realized, the closest analog in the new constitution to a king, just by being a separate, unitary executive. Even before the convention assembled, von Steuben had disseminated a rumor that Nathaniel Gorham, president of Congress under the Articles of Confederation and a convention delegate from New Hampshire, had approached Prince Henry of Prussia about serving as America's King. Similar stories involved the ascendancy of King George's second son, Frederick, Duke of York. During the summer, these rumors gained new currency. The story spread that the convention, whose deliberations were secret, was advancing the plot behind closed doors.\nThe question of not only \"foreign influence\" of wealthy persons immigrating to the United States to become President, but also the issue of an American monarchy, were thus very real concerns of the populace, as well as the framers, and appeared to establish the context in which the role, qualifications, duties, and powers of an American chief executive were developed. As noted by constitutional scholar Akhil Amar, the concerns and anxieties over ambitious and duplicitous foreigners, and the \"possibility that a foreign earl or duke might cross the Atlantic with immense wealth and a vast retinue, and then use his European riches to buy friends on a scale that no home-grown citizen could match,\" led the framers to incorporate Article II's \"most questionable eligibility rule.\" Amar also agrees that the framers' aversion to hereditary monarchies appeared to play an additional role in erecting a barrier to immigrants being President within the Constitution—a document that was otherwise, for its time, enlightened as permitting immigrants to weave their way into the fabric of American political and social life:\nThese anxieties had been fed by England's 1701 Act, which inclined early Americans to associate the very idea of a foreign-born head of state with the larger issue of monarchial government. Though England banned foreigners from all other posts, it imposed no natural-born requirement on the head of state himself. In fact, the 1701 Act explicitly contemplated foreign born future monarchs—the German House of Hanover, in particular. By 1787 this continental royal family had produced three English kings named George, only the third of whom had been born in England itself. Article II's natural-born language squarely rejected the 1701 idea of future foreign-born heads of state, in no small part because many republicans had come to link the idea (perhaps more sociologically than logically) with hereditary succession and foreign intrigue. Foreign-born princes might be good enough to rule in the Old World but should be kept out of the New World order—or at least the New World presidency.\nThe apparent purposes of this citizenship clause were thus to assure the requisite fealty and allegiance to the nation from the person to be the chief executive of the United States, and to prevent wealthy foreign citizens, and particularly wealthy foreign royalty and their relatives, from coming to the United States, becoming naturalized citizens, and then scheming and buying their way into the Presidency or creating an American monarchy. The possibility of satisfying these purposes would appear to be as likely from an interpretation of the term \"natural born\" citizen which would include one who is a citizen \"at birth\" by either common law principles of jus soli , that is, being born on the soil, or by the operation of statutory law of the principles of jus sanguin i s , that is, through the law of descent by being born to U.S. citizens abroad. That is, one who is a citizen of the United States \"at birth\" by descent under federal law could develop the requisite allegiances and reverences for the United States passed down, inculcated, and taught by one's parent-citizens, and would have a lifetime of allegiance to the United States at least as strong, in a theoretical sense, as one who was born a citizen within the geographic boundaries of the country. Those who are born \"in\" the country, and who are subject to its jurisdiction, regardless of the nationality or citizenship of their parents, have always under British common law, as well as under the laws of the original states, and then the United States since its founding, been considered to have the \"natural\" allegiance and ties to the nation.", "", "If the term \"natural born\" with respect to citizenship conveyed a concept clearly within the English common law, there would then be a strong implication that such term and its legal meaning would either have been incorporated into, or at least would strongly influence the framers in using such phrase, as well as subsequent interpretive construction by the courts of the relevant provision of the U.S. Constitution. As noted by the Supreme Court,\nThere is, however, one clear exception to the statement that there is no national common law. The interpretation of the Constitution of the United States is necessarily influenced by the fact that its provisions are framed in the language of the English common law, and are to be read in the light of its history.\nMany of the terms used in the U.S. Constitution were not specifically defined in that document (such as \"natural born\" citizen, the privilege of the writ of \"habeas corpus,\" and the prohibitions against \"bills of attainder\" and \"ex post facto\" laws, for example), and thus referral to the English common law, \"well known\" to the framers and applicable in the American colonies, must be made for a definitional reference for such terms. The Supreme Court has explained with reference to the constitutional prohibition on \"ex post facto\" laws, for example, that the meaning of such term, not defined in the Constitution, requires some explanation, and that \"the necessary explanation is derived from English common law well known to the Framers\":\nThe proscription against ex post facto laws \"necessarily requires some explanation; for, naked and without explanation, it is unintelligible, and means nothing.\" Calder v. Bull, 3 Dallas 386, 390 (1798) (Chase, J.). In Calder v. Bull, Justice Chase stated that the necessary explanation is derived from English common law well known to the Framers : \"The expressions 'ex post facto laws,' are technical, they had been in use long before the Revolution, and had acquired an appropriate meaning, by Legislators, Lawyers, and Authors.\" Id . at 391; see also id . at 389.\nSimilarly, Chief Justice (and former President) Taft explained (in a Supreme Court decision dealing with the parameters of the offenses to which the \"pardon\" authority of the President extends) that the meaning of the language and phrases in the Constitution, when they are not specifically defined in that document, can only be discerned and interpreted by reference to the British common law in place at the time of the drafting of the Constitution. The Chief Justice, writing for a unanimous Court, found that the British common law was what the framers \"were born and brought up in,\" that the framers \"thought and spoke in its vocabulary,\" and was thus what the \"statesmen and lawyers of the Convention\" employed for the meaning of the terms in the Constitution \"confident that they could be shortly and easily understood\":\nThe language of the Constitution cannot be interpreted safely except by reference to the common law and to the British institutions as they were when the instrument was framed and adopted. The statesmen and lawyers of the Convention who submitted it to the ratification of the Conventions of the thirteen States, were born and brought up in the atmosphere of the common law, and thought and spoke in its vocabulary. They were familiar with other forms of government, recent and ancient, and indicated in their discussions earnest study and consideration of many of them, but when they came to put their conclusions into the form of fundamental law in a compact draft, they expressed them in terms of the common law, confident that they could be shortly and easily understood.\nJustice Joseph Story explained in his celebrated work on the United States Constitution, Commentaries on the Constitution , that the British common law formed the \"foundation\" upon which American jurisprudence stands:\nThe universal principle (and the practice has conformed to it) has been that the common law is our birthright and inheritance, and that our ancestors brought hither with them upon their emigration all of it, which was applicable to their situation. The whole structure of our present jurisprudence stands upon the original foundations of the common law.\nThe British common law was, in fact, regularly adopted or recognized as in force expressly in the constitutions, or in the early acts of the legislatures, of the original thirteen states after independence had been declared in July of 1776. The original Constitution of Delaware, for example, stated,\nThe common law of England, as-well as so much of the statute law as has been heretofore adopted in practice in this State, shall remain in force, unless they shall be altered by a future law of the legislature; such parts only excepted as are repugnant to the rights and privileges contained in this constitution, and the declaration of rights, &c., agreed to by this convention.\nThe experience and the wording of the constitutions, or original statutes, adopted in most of the other original states were similar to that of Delaware quoted above. Those immediately involved in framing constitutions for the states in the 1770s, many of whom were also prominent in framing the Constitution for the United States in 1787, were thus not only intimately familiar with, but also expressly recognized the continued application of the British common law within this country.\nSimilar to the concept expressed in the original constitutions and enactments of the new states, Justice Story has also noted in a Supreme Court decision that we did not necessarily, however, adopt all of the British common law, but rather adapted it to our own situation. An analysis of the term \"natural born\" citizen which begins with the British common law meaning of the phrase might thus not necessarily end there, but must also take into consideration the unique American experience, and the application and interpretation of the underlying concepts involved by the courts in the United States.", "There appears to be very little scholarly or legal dispute as to the British common law applicable in England and in the American colonies with respect to those born \"on the soil.\" As to those children born in the geographic boundaries of the country, even of alien parents, the Supreme Court of the United States in United States v. Wong Kim Ark , citing the British decision in Calvin's Case reported by Lord Coke, found that such persons were, under British common law, considered \"natural born\" subjects (with minor exceptions for children born of foreign diplomatic personnel or of hostile military forces in occupation, that is, those not \"under the jurisdiction\" of that host country). This rule of law, noted the Court, applied to the American colonies at the time of the Declaration of Independence and, significantly, \"in the United States afterwards, and continued to prevail under the Constitution ....\"\nThe premiere treatise on British law at the time of the drafting of the Constitution, which was well-known and well-used in the colonies, was Blackstone's Commentaries on the Laws of England (1765). Blackstone explained that \"[t]he first and most obvious division of the people is into aliens and natural-born subjects,\" and that the \"natural\" allegiance due of \"natural-born\" subjects, as opposed to merely \"local\" allegiance of aliens and sojourners, \"is such as is due from all men born within the king's dominions immediately upon their birth.\" Blackstone traced the development of the concept of \"natural-born\" allegiance to the reciprocal duties of protection and allegiance (fealty, or \"ligamen\" (tie)), that developed concerning land ownership and use under the feudal system, eventually understood to encompass the reciprocal protection/allegiance of all English subjects with respect to the crown.\nIn 1844, in a probate case in New York State, Assistant Vice-Chancellor Lewis Sandford authored a detailed and scholarly opinion, later cited and relied upon by numerous federal courts and legal treatises, on the legal history of natural born citizenship status in the United States. The opinion in Lynch v. Clarke found that one of the litigants, Julia Lynch, who was born in New York to alien parents who were merely on a \"temporary sojourn\" in this country, was a natural born U.S. citizen who had the legal capacity to inherit. Sandford concluded that all persons born in the United States, even of alien parents who were only here temporarily, had \"natural born\" citizenship status under English common law, carried forward in the laws in all of the original thirteen states after independence, and then under the laws and constitutional provisions of the United States:\nMy conclusion upon the facts proved is, that Julia Lynch was born in this state of alien parents, during their temporary sojourn. That they came here as an experiment, without any settled intention of abandoning their native country, or of making the United States their permanent home....\nIt is indisputable that by the rule of the common law of England, if applied to these facts, Julia Lynch was a natural born citizen of the United States. And this rule was established and inflexible in the common law, long anterior to the first settlement of the United States ... By the common law, all persons born within the ligeance of the crown of England, were natural born subjects, without reference to the status or condition of their parents....\n*\nAt the formation of our present national government, the common law prevailed as a system of jurisprudence, in all the thirteen states which then constituted the nation....\nI need not dwell more at large upon this unquestionable proposition....\nAs the common law prevailed in all the colonies, and was the basis of their laws and jurisprudence, it follows that all persons born in the colonies while in the ligeance of the King of England, became subjects of the Crown of England; unless it be made to appear that the rule of the common law was incompatible with the situation with the colonists, or unsuited to their circumstances; or that it was altered by legislation.\nInstead of abridging the rule, all colonial legislation which has come under my observation, proceeded on the assumption that it was the settled law of the land.\n*\nIt may then be safely assumed, that at the Declaration of Independence, by the law of each and all of the thirteen states, a child born within their territory and ligeance respectively, became thereby a citizen of the state of which he was a native. This continued unchanged to the time when our National Constitution went into full operation. There is no evidence of any alteration of the rule of any of the states during the period that intervened....\nThe Supreme Court of the United States, in its landmark opinion on birthright citizenship authored by Justice Gray in United States v. Wong Kim Ark , citing both the common law and numerous legal precedents in the United States, explained in 1898 that a child born of alien parents within the country and subject to its jurisdiction (that is, whose parents are not diplomatic personnel representing a foreign nation or troops in hostile occupation) is considered a \"natural born\" citizen (in the United States) or subject (in England), as that term has been used over the centuries in England and the United States:\nIt thus clearly appears that by the law of England for the last three centuries, beginning before the settlement of this country, and continuing to the present day, aliens, while residing in the dominions possessed by the Crown of England, were within the allegiance, the obedience, the faith or loyalty, the protection, the power, the jurisdiction, of the English Sovereign; and therefore every child born in England of alien parents was a natural born subject, unless the child of an ambassador or other diplomatic agent of a foreign State, or of an alien enemy in hostile occupation of the place where the child was born.\nThe same rule was in force in all the English Colonies upon this continent down to the time of the Declaration of Independence, and in the United States afterwards, and continued to prevail under the Constitution as originally established .\nThe Court noted several judicial precedents finding that the clear common law from England, as well as statutory law pertaining to such things as inheritance (which prevailed in the states in this country unless expressly repealed), was that \"persons born within the realm, although children of alien parents, were called 'natural-born subjects.'\" Citing an earlier precedent, the Court noted Justice Story's opinion that the principles of common law \"treated it as unquestionable that by that law a child born in England of alien parents was a natural born subject.\" The Court referenced with approval an earlier decision of a federal circuit court, written by Supreme Court Justice Swayne sitting on circuit, explaining that \"the rule of the common law\" of England, and now \"of this country, as well as in England,\" is that \" all persons born in the allegiance of the United States are natural born citizens.\"\nThe Supreme Court in Wong Kim Ark thus concluded that the Fourteenth Amendment \"affirms\" the common law rule of \"citizenship by birth within the territory,\" even if one is born of alien parents in this country, and approved of the characterization of the children of such resident aliens as \"natural born\" citizens of the United States. The Fourteenth Amendment further requires that the person born \"in\" the United States also be \"subject to the jurisdiction\" of the United States which, as noted, is interpreted to mean that such person is subject to the laws of this country, such that jurisdiction may be exercised over them, and thus would exclude children of foreign diplomats here officially, and those of foreign troops in hostile occupation.\nBeing born within the geographic boundaries of the United States, however, unlike the meaning under British common law, does not necessarily include being born in the unincorporated \"territories,\" possessions, or protectorates of the United States, unless such citizenship \"at birth\" is otherwise provided by statute. A U.S. Court of Appeals, relying on the \"Insular cases,\" found that birth in an unincorporated territory or possession of the United States, such as the Philippines, did not grant Fourteenth Amendment or common law citizenship as being born \"in\" the geographic area of the \"United States,\" even though under the British common law one may have been a natural born \"subject\" of the crown when born within the far-flung dominions ruled by the British Empire.", "In United States v. Wong Kim Ark , the Supreme Court, in examining an immigration question not dealing specifically with the meaning of the presidential eligibility requirement, provided a lengthy examination of the English common law of citizenship at the time of the drafting of the Constitution, and whether such citizenship was obtained by the place of birth ( jus soli ) only, or also by descent ( jus sanguinis ). As noted above, the Court found that the common law of England was that of jus soli , that is, derived from the feudal notion of the reciprocal responsibilities of allegiance and protection of an individual that was established in England by the place of that person's birth; and that the latter principle of citizenship by descent (because of the citizenship or nationality of one's father— jus sanguinis ) was, as a general matter, the law in England by statute, and thus not necessarily as part of the \"common law,\" even though there existed a long-standing statutory recognition (since 1350) of the rights of \"natural-born subjects\" who were born abroad to British parents or a British father.\nAs pointed out by the Supreme Court in Wong Kim Ark , however, there was not necessarily unanimity in legal scholarship concerning a narrow reading of the British common law with regard to the children of subjects/citizens born abroad. Some legal scholars in England and in the United States have argued that the long-standing statutory and parliamentary recognition of children born abroad to English subjects as \"natural-born\" was merely \"declaratory\" of the existing common law principles and understandings in England, although this was disputed in dicta by the Supreme Court in Wong Kim Ark:\nIt has sometimes been suggested that this general provision of the statute of 25 Edw. III. [1350] was declaratory of the common law. See Bacon, arguendo, in Calvin's Case, 2 How. St. Tr. 585; Westlake and Pollock, arguendo, in De Geer v. Stone, 22 Ch. Div. 243, 247; 2 Kent, Comm. 50, 53; Lynch v. Clarke, 1 Sandf. Ch. 583, 659, 660; Ludlam v. Ludlam, 26 N. Y. 536. But all suggestions to that effect seem to have been derived, immediately or ultimately, from one or the other of these two sources: The one, the Year Book of 1 Rich. III. (1483) fol. 4, pl. 7, reporting a saying of Hussey, C. J., \"that he who is born beyond sea, and his father and mother are English, their issue inherit by the common law, but the statute makes clear,\" etc., - which, at best, was but obiter dictum, for the chief justice appears to have finally rested his opinion on the statute. The other, a note added to the edition of 1688 of Dyer's Reports, 224a, stating that at Trinity term 7 Edw. III. Rot. 2 B. R., it was adjudged that children of subjects born beyond the sea in the service of the king were inheritable, - which has been shown, by a search of the roll in the king's bench so referred to, to be a mistake, inasmuch as the child there in question did not appear to have been born beyond sea, but only to be living abroad.\nThe position of the dissenting Justices in Wong Kim Ark was characterized and discussed by the Court in the later case of Weedin v. Chin Bow : \"The attitude of Chief Justice Fuller and Mr. Justice Harlan was, that at common law the children of our citizens born abroad were always natural-born citizens from the standpoint of this Government....\" A detailed law review article in 1921 by the assistant solicitor of the Department of State noted that a number of legal scholars and historians contend that the English common law specifically included jus sanguinis , as well as jus sol i , and noted that the \"question has been a subject of controversy for six centuries or more….\"\nOther legal scholars have contended that long-standing and commonly accepted principles incorporated into English law by statute over several centuries, even if they did not merely \"declare\" already-existing English common law, actually modified the corpus of the common law to incorporate such principles, and that this body of law was the one known to the framers, such that the provisions of the Constitution must be interpreted in that light. Charles Gordon, who was then general counsel for the United States Immigration and Naturalization Service, explained in 1968 that in addition to recognizing birthright citizenship as to the place of birth ( jus soli ), \"the consistent practice over several centuries, in England and the United States, [was] to recognize citizenship status by descent.\" Gordon thus concluded that \"[t]he common law, as it had developed through the years, recognized a combination of the jus soli and the jus sanguinis , \" and that the English common law adopted by the United States had been expanded by the long-standing statutory inclusions over the centuries in England:\n[T]here were doubts concerning the applicability of the jus sanguinis under the early common law. But those doubts were eliminated by statutes enacted in England before the American Revolution, which became part of the body of law followed in England and passed on to this country. It can be argued ... that this total corpus was the common law which this country inherited, and that it persevered unless specifically modified.\nThis position was further implicated in an 1896 Digest of the Law of England with reference to the Conflict of Laws , by Albert Venn Dicey, as cited by the Supreme Court in Wong Kim Ark . Mr. Dicey states in that treatise that \"'Natural-born British subject' means a British subject who has become a British subject at the moment of his birth,\" which expressly includes those born abroad whose British nationality passes to the child by descent.\nThat the United States was not confined to only the narrowest interpretation of the common law of England in our usages and applications of concepts and terms in this country, was noted by the Supreme Court in an opinion authored by Justice Story in 1829:\nThe common law of England is not to be taken, in all respects, to be that of America. Our ancestors brought with them its general principles, and claimed it as their birthright; but they brought with them and adopted, only that portion which was applicable to their situation.\nIt was, in fact, common in the states after independence, upon the adoption of their constitutions and statutes, to incorporate both the common law of England, as well as the statutory laws adopted by Parliament and applicable in the colonies up until a particular date. There is thus some argument and indication that it was common for a \"modified\" English common law—modified by long-standing provisions of English statutory law applicable in the colonies—to be among the traditions and bodies of law incorporated into the laws, applications, usages, and interpretations in the beginning of our nation.", "In addition to examining the common law meaning of the term \"natural born\" as it related to citizenship, there are other interpretive analyses that might be employed in an attempt to understand the \"meaning to the framers\" of the term \"natural born\" citizen when the term was adopted in the Constitution in 1787. If, as noted by the Supreme Court in an opinion authored by Justice Story, the \"common law of England is not to be taken, in all respects, to be that of America,\" there may be accorded some significance to an analysis of what the term \"natural born\" citizen was commonly understood to mean in the American colonies at the time of the revolution and framing of the Constitution.\nIt is, of course, always a somewhat speculative exercise to attempt to discern the \"common understanding\" of a group of individuals who may be geographically, professionally, and politically diverse, particularly during a period many years removed from the current time. The fact that no discussion appears in the notes of the Federal Convention of 1787 on the presidential eligibility clause, and the fact that the actual debates and discussions in the Convention were held in secret with no official journal of the debates being kept (other than for recording votes) highlight the problems in such speculation. That being said, however, one might argue that there existed what might be called a \"common\" or \"general understanding,\" or at least common \"usage\" of the term \"natural born,\" as it related to those who were considered \"natural born\" subjects of England in the American colonies at the time of independence, and \"natural born\" citizens at the time of the adoption of the Constitution. The \"state of the law\" in colonial America concerning who was a \"natural born\" subject of England under English laws, both common law as well as statutory laws, was certainly known to the framers since, as noted by the Supreme Court, \"These statutes applied to the colonies before the War of Independence.\"\nFrom examination of historical documents, it appears that the term \"natural born\" as it related to citizenship under English law and jurisprudence was a term widely known and used in the American colonies in the 1700's, and was employed in the context and understanding of British common law as well as British statutory law. For example, more than a decade before John Jay had employed the term in his \"hint\" to General Washington at the Convention of 1787, the First Continental Congress of the American colonies, meeting in Philadelphia beginning in September of 1774, adopted a resolution asserting that the common law of England was fully applicable to the colonies in America, as were such statutory laws of England as would be relevant to their circumstances, and expressly included in the resolution an assertion of the rights of their ancestors to be considered \"natural-born subjects within the realms of England.\" As noted in Elliot's compilation and analysis of documents related to independence,\nOn the same day [14 th of October, 1774], Congress unanimously resolved, \"that the respective colonies are entitled to the common law of England , and more especially to the great and inestimable privilege of being tried by their peers of the vicinage according to the course of that law.\" They further resolved, \"that they were entitled to the benefit of such of the English statutes as existed at the time of their colonization, and which they have, by experience, respectively found to be applicable to their several and local circumstances.\" They also resolved, that their ancestors, at the time of their immigration, were \"entitled to all the rights, liberties, and immunities, of free and natural-born subjects within the realms of England.\"\nIt is thus clear that the delegates to the First Continental Congress in 1774, among whom were several framers of the Constitution at the Federal Convention of 1787, as well as other notable \"founding fathers\" (including John Jay), were already familiar with and employed the term \"natural born\" in the context of and within the understanding of British common law and statutory law concepts of the rights and privileges of citizenship.\nOf relevance to any meaning and \"common understanding\" of the term \"natural born\" within the American colonies and at the time of the drafting of the Constitution is the legal treatise on the laws of England referred to as \"Blackstone,\" for its author William Blackstone. Published in 1765, this treatise was not only available, but was widely known to the framers at the time of the drafting of the Constitution. As noted by the Supreme Court of the United States, \"Blackstone's Commentaries was widely circulated in the Colonies ...,\" and that \"undoubtedly the framers of the Constitution were familiar with it.\" As discussed in the earlier section of this report on the common law, Blackstone explained that \"natural born\" subjects in England and the American colonies included all those born \"in\" the lands under British sovereignty. Concerning specifically the issue of children born abroad of English subjects, Blackstone explains clearly that such children are then (in 1765) considered under the law of England as \"natural born\" subjects, and have been considered as such for most purposes since at least the time of Edward III (1350), because of the development of statutory law in England to \"encourage also foreign commerce.\" As stated by Blackstone in his 1765 treatise,\n[A]ll children, born out of the king's ligeance, whose fathers were natural-born subjects, are now natural born subjects themselves, to all intents and purposes, without any exception; unless their said fathers were attainted, or banished beyond sea, for high treason; or were then in the service of a prince at enmity with Great Britain.\nThe \"commonly understood\" meaning of the term \"natural born\" in the United States at the time of the drafting of the Constitution might thus be broader than the early, strict English \"common law\" meaning of that term. As noted by Charles Gordon, former Chief Counsel of the Immigration and Naturalization Service, whether the body of English law in the 1770s was from early common law, from statutory law, or from the common law modified over the years by statutory law, these provisions \"were part of the corpus of the English law in existence at the time of the Revolution, which was substantially recognized and adopted by our forefathers.\" This common usage and popular understanding to the framers of the term \"natural born\" subject (as employed in England), and the term's apparent evolution and broadening of meaning through statutory law, has thus led several other legal commentators and historians to conclude: \"The constitutional Framers had a broad view of the term 'natural-born' and considered all foreign- born children of American citizen parents eligible for the Office of the Presidency\"; or, as stated by another: \"[T]he delegates meant to apply the evolved, broader common law meaning of the term when they included it in the presidential qualifications clause.\"\nPresidential historian Michael Nelson has also averred that the term appeared to have a common meaning at the time of the drafting of the Constitution which involved within its concept both the common law definition and mode of acquisition of citizenship (through jus soli ), as well as the common understanding of the long-standing broadening of such term by the operation of English statutory law to include those subjects who may have traveled abroad for purposes of commerce, or otherwise. As noted by Nelson (and pointed out by others), a more restrictive meaning to include only those born within the boundaries of the United States would mean that John Jay, who may have recommended the precise term to the Convention, would have intended to exclude from eligibility his own children who were born in Spain and France while Jay was representing the United States abroad:\nThe provision for \"natural born Citizen\" probably was aimed at immigrants, although the term is so unusual as to be vague.... [b]ut [it] had deep roots in British common law. In medieval times it had embodied the doctrine of jus soli: a natural born citizen was one born within the realm (on the soil, so to speak). But with increased commerce and travel, Parliament, starting in 1350, seemed to expand the definition of natural born to incorporate the doctrine of jus sanguinis. Now babies born of British citizens abroad or at sea were included as well. One can presume only that Jay and the delegates meant to apply the evolved, broader common law meaning of the term when they included it in the presidential qualifications clause. Certainly Jay did not mean to bar his own children born in Spain and France while he was on diplomatic assignments, from legal eligibility to the presidency.\nWith respect to the common or general meaning of the term \"natural born\" to the framers of the Constitution in the context of those born abroad to U.S. citizens, it may be significant to note that the first Congress, under its express constitutional authority \"to establish an uniform Rule of Naturalization,\" enacted the Naturalization Act of 1790. The first of several such acts, this 1790 statute stated that\n[T]he children of citizens of the United States, that may be born beyond the sea, or out of the limits of the United States, shall be considered as natural born citizens: Provided, That the right of citizenship shall not descend to persons whose fathers have never been resident in the United States....\nThis early congressional act provides some argument that the term \"natural born\" citizen was seen to include more than merely the \"native born,\" that is, those born in the country (in accordance with the common law principle of jus soli ), but also to include the long-standing English statutory recognition of citizenship by descent through one's father when an individual is born abroad, that is, all of those who are citizens \"at birth\" or \"by birth.\" The significance of such a statute passed by the first Congress was, of course, the fact that many of the framers of the Constitution were Members of that first Congress, as well as the fact that the first Congress's understanding of the meaning of the terms of the Constitution was most contemporaneous in time with the document's adoption. One author has noted that of the \"Committee of Eleven,\" which first proposed to the Convention of 1787 the eligibility requirement of being a \"natural born\" citizen, 8 of the 11 committee members were in that first Congress, and none stated objections to or disagreement with the characterization of the term \"natural born\" by statute by the Congress. The Supreme Court has expressly noted the weight of authority of early actions of the first Congress in explicating portions of the Constitution because of the make-up of that Congress, and its proximity in time to the Convention. As noted by the Court, an act \"passed by the first Congress assembled under the Constitution, many of whose members had taken part in framing that instrument, ... is contemporaneous and weighty evidence of its true meaning.\"\nOne of the more noted political and constitutional scholars on the American presidency, Edward S. Corwin, has explained that \"natural born\" citizens eligible to be President clearly include all of those born \"on the soil\" of the United States and subject to its jurisdiction, under the common law principles of jus soli applicable in the United States, but also would appear to include those born abroad of U.S. citizens under the principle of jus sanguinis , as adopted by Congress by statute. Corwin noted that Congress has the authority as the legislative body of a sovereign nation \"to determine who shall and shall not be admitted to the body politic\":\nBut who are \"natural-born citizens\"? By the so-called jus soli , which comes from the common law, the term is confined to persons born on the soil of a country; and this rule is recognized by the opening clause of the Fourteenth Amendment, which declares to be citizens of the United States \"all persons born or naturalized within the United States and subject to the jurisdiction thereof.\" On the other hand, by the so-called jus sanguinis , which underlay early Germanic law and today prevails on the continent of Europe, nationality is based on parentage , a principle recognized by the first Congress under the Constitution in the following words:\nThe children of citizens of the United States that may be born beyond the sea, or outside of the limits of the United States, shall be considered as natural-born citizens of the United States; provided that the right of citizenship shall not descend to persons whose fathers have never been resident in the United States.\nBy succeeding legislation the general clause of this provision has been continued in force to this day. The question arises, whence did Congress obtain the power to enact such a measure? By the Constitution the Congress is authorized to pass \"an uniform rule of naturalization,\" that is, a uniform rule whereby aliens may be admitted to citizenship; while the provision under discussion purports to recognize a certain category of persons as citizens from and because of birth . The provision must undoubtedly be referred to the proposition that, as the legislative body of a nation sovereign at international law, Congress is entitled to determine who shall and who shall not be admitted to the body politic.\nShould, then, the American people ever choose for President a person born abroad of American parents, it is highly improbable that any other constitutional agency would venture to challenge their decision ....\nIt may be noted that some have argued that the relevant common meaning of natural born citizen that was prevalent in 18 th century America should not be the one that was actually applicable in the American colonies during that time from British statutory and common law, and which was adopted specifically by the states after independence in 1776 (and which, as noted by Justice Story, formed the \"foundation\" for American jurisprudence), but rather should be recognized as one derived from what has been described as a \"philosophical treatise\" on the law of nations by a Swiss legal philosopher in the mid-1700s. This particular treatise, however, in the editions available at the time of the drafting of the U.S. Constitution, did not actually use, either in the original French or in English interpretations at that time, the specific term \"natural born citizens.\" It was not until after the adoption of the Constitution in the United States did a translator interpret the French in Emmerich de Vattel's Law of Nations to include, in English, the term \"natural born citizens\" for the first time, and thus that particular interpretation and creative translation of the French, to which the Vattel enthusiasts cite, could not possibly have influenced the framing of the Constitution in 1787.\nFurthermore, and on a more basic level, the influence of the work of Vattel on the framers in employing the term \"natural born\" in relation to domestic citizenship within the Constitution is highly speculative at best, is without any direct historical evidence, and is contrary to the mainstream principles of constitutional interpretation and analysis within American jurisprudence. Although it appears that there is one single reference by one delegate at the Federal Convention of 1787 to Vattel (in reference to several works of different authors to support an argument for equal voting representation of the states in the proposed Congress), there is no other reference to the work in the entire notes of any of the framers published on the proceedings of the Federal Convention of 1787, and specifically there is no reference or discussion of the work at all in relation to citizenship at the Convention, in the Federalist Papers, or in any of the state ratifying conventions.\nIt would appear to be somewhat fanciful to contend that in employing terms in the U.S. Constitution the framers would disregard the specific and express meaning of those precise terms in British common law, the law in the American colonies, and subsequently in all of the states in the United States after independence, in favor of secretly using, without comment or explanation, a contrary, non-existent English translation of a phrase in a French-language treatise on international law. In a state case cited with approval by the U.S. Supreme Court, an extensive legal analysis of the question of natural born citizenship under the law of the United States by Assistant Vice Chancellor Sandford, in New York in 1844, found that the laws in all of the American colonies, and then in all of the states after independence, followed the English common law principles of jus soli , that is, that birth in the territory governed citizenship at birth, regardless of the nationality or citizenship of one's parents. Sandford found that it would be \"inconceivable\" that the framers, in drafting the Constitution, would abandon without explicit comment or explanation in the document, the existing law in all of the colonies, and then in all of the states, of who were natural born citizens in favor of an \"international\" or \"natural\" law theory of citizenship by \"descent\" (through one's father), an argument pressed by one of the litigants relying, in part, on Vattel. Addressing specifically the question of the use of the term \"natural born citizen\" in the federal Constitution as one of the qualifications for President, Vice Chancellor Sandford found the following:\nIt is a necessary consequence, from what I have stated that the law which had prevailed on this subject, in all the states, became the governing principle or common law of the United States. Those states were the constituent parts of the United States, and when the union was formed, and further state regulation on the point terminated, it follows, in the absence of a declaration to the contrary, that the principle that prevailed and was the law on such point in all the states , became immediately the governing principle and rule of law thereon in the nation formed by such union.... The term citizen, was used in the constitution as a word, the meaning of which was already established and well understood. And the constitution itself contains a direct recognition of the subsisting common law principle, in the section that defines the qualification of the President. \"No person except a natural born citizen, or a citizen of the United States at the time of the adoption of this constitution shall be eligible to the office of President,\" &c. The only standard which then existed, of natural born citizen , was the rule of the common law, and no different standard has been adopted since. Suppose a person should be elected President who was native born, but of alien parents, could there be any reasonable doubt that he was eligible under the Constitution? I think not. The position would be decisive in his favor that by the rule of common law, in force when the constitution was adopted, he is a citizen.\nMoreover, the absence of any avowal or expression in the constitution of a design to affect the existing law of the country on this subject, is conclusive against the existence of such design. It is inconceivable that the representatives of the thirteen sovereign states, assembled in convention for the purpose of framing a confederation and union for national purposes, should have intended to subvert the long-established rule of law governing their constituents on a question of such great moment to them all, without solemnly providing for the change in the constitution; still more that they should have come to that conclusion without even once declaring their object.\nThe treatise in question by Emmerich de Vattel was a work concerning the \"law of nations,\" which we would now classify generally as \"international law.\" However, the concept of citizenship within a particular country is one governed not by international law or law of nations, but rather is governed by municipal law, that is, the internal law of each country. Vattel's writings on citizenship by \"descent\" reflected in many circumstances what the law or practice may have been in certain European nations at the time—that is, that citizenship followed the nationality or citizenship of one's father, as opposed to the place of birth. This concept, although prevalent on the European Continent was, even as expressly noted in Vattel's work itself, clearly not the law in England or thus the American colonies, and clearly was not the concept and common understanding upon which U.S. law was based. James Madison, often referred to as the \"Father of the Constitution,\" expressly explained in the House of Representatives in the First Congress, in 1789, that with regard to citizenship the \"place\" of birth, and not \"parentage\" was the controlling concept adopted in the United States. Additionally, the Supreme Court in 1971 simply and succinctly explained, after citing historical legal precedent: \"We thus have an acknowledgment that our law in this area follows English concepts with an acceptance of the jus soli , that is, the place of birth governs citizenship status except as modified by statute.\" Again in 1998, the Supreme Court expressly recognized jus soli , the place of birth, as controlling in the United States, noting that in this country \"citizenship does not pass by descent\" except as provided by Congress in statute.\nThe \"common\" understanding of the term \"natural born\" citizen during the revolutionary period, the time of the drafting of the Constitution, and in the generation after, was that of one who was a citizen \"at birth\" (and the principal factor in the United States, as in England, was the place of birth within the country, rather than that of ancestry, lineage, or descent, except as provided in statute). This common understanding and usage has continued up until this day as the term \"natural born\" citizen has entered the popular, legal lexicon as defined as: \"A citizen by birth, as distinguished from a citizen who has been naturalized,\" and the meaning of \"natural born\" in common, general usage as \"having a specified status or character by birth.\"", "The evidence of historical intent, general understandings, and common law principles underlying American jurisprudence thus indicate that the most reasonable interpretation of \"natural born\" citizens would include those who are considered U.S. citizens \"at birth\" or \"by birth,\" either by the operation of the strict \"common law\" of jus soli derived from English common law (physically born in the United States and subject to its jurisdiction, without reference to parentage or lineage), or under existing federal statutory law incorporating long-standing concepts of jus s an guin i s , the law of descent, including those born abroad of U.S. citizen-parents. This general historical understanding and interpretation is supported, as well, by specific federal case law in the United States, and in official legal opinions of U.S. officers.", "Although the Supreme Court has not needed to rule specifically on the presidential eligibility clause, as discussed in more detail below, numerous federal cases, as well as state cases, for more than a century have used the term \"natural born citizen\" to describe a person born in this country and under its jurisdiction, even to parents who were aliens in the U.S. Additionally, several Supreme Court cases, as well as numerous constitutional scholars, have used the term \"native born\" citizen to indicate all of those children physically born in the country (and subject to its jurisdiction), without reference to parentage or lineage, and employed such term in reference to those citizens eligible to be President under the \"natural born\" citizenship clause, as opposed to \"naturalized\" citizens, who are not. In no currently controlling legal opinion in American jurisprudence has the citizenship or nationality of one's parents or forebears been considered a determining factor in the eligibility of a citizen born within the United States to be President, and no holding in any case in federal court has ever established a \"two citizen-parent\" requirement, or other requirement of lineage or bloodline, for such a \"native born\" U.S. citizen to be eligible for the Presidency.\nSome of the legal arguments based on American jurisprudence forwarded by those who support an alternate and highly exclusionary reading of the term \"natural born\" citizen (including reading into the Constitution a requirement for one to have two U.S. citizen-parents) often begin with a citation to language in the 1857 Dred Scott decision, Scott v. Sandford . The Dred Scott decision, in addition to denying that even freed slaves or their progeny could be \"citizens\" of the United States (and thus finding that the specific petitioner in that case did not have the capacity to bring the original suit under consideration), attempted to provide legal justification under the Constitution for human slavery in the United States and the resultant treatment of \"negroes of the African race\" as property and chattel without rights under the Constitution. In so doing, the Court fashioned a very exclusive understanding, eventually rejected and overturned by later Supreme Court decisions, of who were \"citizens\" of the United States, even if one were born to emancipated slaves in this country. The opinion of the Court, written by Chief Justice Taney, noted that the status of those \"whose ancestors were negroes of the African race … imported into this country, and sold and held as slaves\" was that of non-citizens. That is, that even \"descendants of such slaves, when they shall be emancipated, or who had been born of parents who had become free before their birth\" were \"not intended to be included, under the word 'citizens' in the Constitution, and can therefore claim none of the rights and privileges which that instrument provides….\" The Court based such findings regarding citizenship and ancestry on the opinion that such persons did not make up, and were not thought to be part of the community or the \"political body\" of the \"sovereign people\" of the United States who ratified the Constitution, and were thus not \"a constituent member of this sovereignty\" since \"they were at that time considered as a subordinate and inferior class of beings, who had been subjugated by the dominant race, and, whether emancipated or not, yet remained subject to their authority for, and had no rights or privileges but such as those who held the power and the Government might choose to grant them.\"\nIn a concurring opinion in Scott v. Sandford , one Justice cited to Vattel's discussion of citizenship and \"natural born\" citizen (as later interpretations into English had expressed the French usage in his treatise, Law of Nations ), not specifically with regard or intent to define \"natural born\" citizenship in reference to presidential eligibility, but rather to support his opinion that Negroes brought to America as slaves, as well as their progeny, could not be citizens of the United States. It should be noted that this particular opinion was not only a concurring opinion, not joined by any other Justice in the Dred Scott decision, but that such concurrence by Justice Daniel has never formed the basis or authority for any majority ruling of a federal court in the history of American jurisprudence. Similar to the opinion of the Court, Justice Daniels' opinion has been superseded and controverted by later Supreme Court rulings and constitutional amendments.\nIt is general knowledge that the Dred Scott decision has widely and commonly been described as the \"worst\" and most vilified Supreme Court decision in the history of the United States. The decision in that case authored by [Chief] Justice Taney, not only because of the enactment of the Thirteenth, Fourteenth, and Fifteenth Amendments, but also because of its specious constitutional and legal reasoning, has been reduced to an \"historical curiosity.\" As explained by historian and professor James Kettner in his work, The Development of American Citizenship, 1608-1870 :\nIn seeking to derive consistent exclusionist principles from an ambivalent legal tradition, Taney could only succeed by distorting history and making \"bad law.\" ... In making national citizenship exclusively the effect of naturalization or pedigree, he disregarded volumes of judicial precedents emphasizing place of birth without regard to ancestry. Taney's opinion rested instead on the social fact of prejudice and discrimination.\nWithin a few years of the Dred Scott decision, in 1862, the Attorney General of the United States, Edward Bates, issued a formal legal opinion to a federal department on the question of \"citizenship\" of those born within the geographic boundaries of the United States which clearly demonstrated the weakness in the legal reasoning of the Court in Dred Scott . This opinion is significant because it preceded the adoption of the Fourteenth Amendment, and was thus based on the then-existing state of the law, constitutional precepts, and common law principles derived from English law, and clearly expressed the legal and constitutional reasoning concerning \"citizenship\" in the United States underlying previous federal court precedent (other than and ignored by the majority in Dred Scott ) as well as the foundational principles in subsequent Supreme Court determinations over the next 150 years. The formal opinion of the Attorney General concluded that those who were \"natural born\" citizens were those who were U.S. citizens \"by birth\":\nWe have natural-born citizens, (Constitution, article 2, sec. [1],) not made by law or otherwise, but born . And this class is the large majority; in fact, the mass of our citizens, for all others are exceptions specially provided for by law. As they became citizens in the natural way, by birth , so they remain citizens during their natural lives, unless, by their own voluntary act, they expatriate themselves, and become citizens of another nation. For we have no law, (as the French have,) to decitizenize a citizen who has become such either by the natural process of birth, or by the legal process of adoption.... The Constitution itself does not make the citizens; it is, in fact, made by them. It only intends and recognizes such of them as are natural—home-born; and provides for the naturalization of such of them as were alien—foreign born ....\nAs far as I know, Mr. Secretary, you and I have no better title to the citizenship which we enjoy than the \"accident at birth\"—the fact that we happened to be born in the United States. And our Constitution, in speaking of natural-born citizens , uses no affirmative language to make them such, but only recognizes and reaffirms the universal principle ... that the people born in a country do constitute the nation, and, as individuals, are natural members of the body politic....[I]t follows that every person born in the country is, at the moment of birth, prima facie a citizen; and he who would deny it must take upon himself the burden of proving some great disfranchisement strong enough to override the \" natural-born \" right as recognized by the Constitution ... That nativity furnishes the rule, both of duty and of right as between the individual and the government, is a historical and political truth ... Nevertheless, for the satisfaction of those who may have doubts upon the subject, I note a few books, which, I think, cannot fail to remove all such doubts: Kent's Com., vol. 2, part 4, section 25; Bl. Com., book 1, chapter 10, p. 365; 7 Co. Rep., Calvin's case; 4 Term Rep., p. 300, Doe vs . Jones; 3 Pet.Rep., p. 246; Shanks vs . Dupont; and see a very learned treatise, attributed to Mr. Binney, in Am. Law reporter, 193.\nThe Attorney General thus opined that those who are \"born\" citizens of the United States, as opposed to those who are \"aliens\" and must go through the legal process of naturalization, are \"natural born\" citizens of this country, without any reference to the \"citizenship\" or nationality of their parents. The Attorney General's opinion emphasized that these \"natural born\" citizens, those who are citizens of the United States at birth or \"by birth,\" including \"every person\" who is \"home born,\" are not within a very narrow or special category, but rather are \"the mass of our citizens.\" In an earlier formal opinion from Attorney General Bates to Secretary of State Seward, the Attorney General similarly concluded: \"I am quite clear in the opinion that children born in the United States of alien parents, who have never been naturalized, are native-born citizens of the United States, and, of course, do not require the formality of naturalization to entitle them to the rights and privileges of such citizenship.\"\nThe Supreme Court itself soon began to question, re-evaluate, and move away from the legal reasoning underlying the Dred Scott decision. In one early Supreme Court case after Dred Scott , the Court narrowly applied the earlier theory of citizenship in Dred Scott (as being only the original community of people who ratified the Constitution and their progeny), and relied instead on the common law to discuss the concept of citizenship in the United States after the original generation of citizens. The Court noted that those children born on the soil of the United States to citizen-parents would clearly be among those who are \"natural born\" citizens under the common law, but did not rule or hold that such category of citizenship was exclusive to such children. The Supreme Court in Minor v. Happersett , in ruling in 1875 that women did not have the constitutional right to vote in federal or state elections (as a privilege or immunity of citizenship), raised and discussed the question in dicta as to whether one would be a \"natural born\" citizen if born to only one citizen-parent or to no citizen-parents, noting specifically that \"some authorities\" hold so. The Court, however, expressly declined to rule on that subject in this particular case. In dicta , that is, in a discussion not directly relevant to or part of the holding in the case, the Court explained:\nThe Constitution does not, in words, say who shall be natural-born citizens. Resort must be had elsewhere to ascertain that. At common-law, with the nomenclature of which the framers of the Constitution were familiar, it was never doubted that all children born in a country of parents who were its citizens became themselves, upon their birth, citizens also. These were natives, or natural-born citizens, as distinguished from aliens or foreigners. Some authorities go further and include as citizens children born within the jurisdiction without reference to the citizenship of their parents. As to this class there have been doubts, but never as to the first. For the purposes of this case it is not necessary to solve these doubts. It is sufficient for everything we have now to consider that all children born of citizen parents within the jurisdiction are themselves citizens.\nThose issues or \"doubts\" raised in dicta by the Supreme Court in Happersett in 1875 were, however, answered by the Supreme Court in a later decision in 1898, in United States v. Wong Kim Ark , which clearly repudiated the narrow and exclusive \"original-community-of-citizens\" reasoning of the Court in Dred Scott based on lineage and parentage, in favor of interpreting the Constitution in light of the language and principles of the British common law from which the concept was derived. The majority opinion of the Court clearly found, by any fair reading of its reasoning, discussion, and holding, that every person born in the United States and subject to its jurisdiction (that is, not the child of foreign diplomats or of troops in hostile occupation), regardless of the citizenship of one's parents, is a \"natural born\" citizen, and that the Fourteenth Amendment merely affirmed the common law and fundamental rule in this country that one born on the soil of the United States and subject to its jurisdiction is a \"natural born\" citizen:\nThe Fourteenth Amendment affirms the ancient and fundamental rule of citizenship by birth within the territory, in the allegiance and under the protection of the country, including all children born here of resident aliens, with the exceptions or qualifications (as old as the rule itself) of children of foreign sovereigns or their ministers, or born on foreign public ships, or of enemies within and during a hostile occupation of part of our territory, and with the single additional exception of children of members of the Indian tribes owing direct allegiance to their several tribes. The Amendment, in clear words and manifest intent, includes the children born, within the territory of the United States, of all other persons, of whatever race or color, domiciled within the United States. Every citizen or subject of another country, while domiciled here, is within the allegiance and the protection, and consequently subject to the jurisdiction, of the United States. His allegiance to the United States is direct and immediate, and although but local and temporary, continuing only so long as he remains within our territory, is yet, in the words of Lord Coke, in Calvin's Case, 7 Rep. 6a, \"strong enough to make a natural subject, for if he hath issue here, that issue is a natural born subject\"; and his child, as said by Mr. Binney in his essay before quoted, \"if born in the country, is as much a citizen as the natural-born child of a citizen, and by operation of the same principle.\"\nThe Supreme Court in Wong Kim Ark cited with approval to an earlier decision of a federal circuit court, written by Supreme Court Justice Swayne sitting on circuit, explaining that\nAll persons born in the allegiance of the King are natural-born subjects, and all persons born in the allegiance of the United States are natural born citizens. Birth and allegiance go together. Such is the rule of the common law, and it is the common law of this country, as well as in England.... We find no warrant for the opinion that this great principle of the common law has ever been changed in the United States. It has always obtained here with the same vigor, and subject to the same exceptions, since before the Revolution.\nThe underlying opinions and reasoning of the Attorney General in 1862 (citing the historical intent, understanding, and common law principles relating to citizenship), the federal appellate court opinion written by Supreme Court Justice Swayne in 1866, and the detailed discussion of citizenship and the holding by the Supreme Court in Wong Kim Ark in 1898, citing to judicial precedents such as The Charming Bets e y (1804); Inglis v. Sailor's Snug Harbor (1830), McCreery v. Somerville (1824), and Lynch v. Clarke (1844), have been regularly confirmed and supported by later Supreme Court and other federal court decisions finding that the two general categories of \"citizens\" are: (1) those who are \"natural born\" citizens, that is, those who are citizens \"by birth\" or \"at birth,\" including all native born citizens, and (2) those who were born \"aliens\" and must be \"naturalized\" to be citizens. As explained by the Supreme Court in 1998:\nThere are \"two sources of citizenship, and two only: birth and naturalization.\" United States v. Wong Kim Ark , 169 U.S. 649, 702 (1898). Within the former category, the Fourteenth Amendment of the Constitution guarantees that every person \"born in the United States, subject to the jurisdiction thereof, becomes at once a citizen of the United States, and needs no naturalization.\" 169 U.S. at 702. Persons not born in the United States acquire citizenship by birth only as provided by Acts of Congress. Id . at 703.\nThe interpretation that one who obtains \"citizenship by birth\" is a \"natural born\" citizen eligible to be President, as distinguished from one who derives \"citizenship by naturalization\" and who is not so eligible, was discussed by the Supreme Court as early as 1884:\nThe distinction between citizenship by birth and citizenship by naturalization is clearly marked in the provisions of the Constitution, by which \"no person, except a natural-born citizen, or a citizen of the United States at the time of the adoption of this Constitution, shall be eligible to the office of President;\" and \"the Congress shall have the power to establish an uniform rule of naturalization.\" Constitution, art. 2, sect. 1; art. 1, sect. 8.\nThe federal courts have on numerous occasions examined those two categories of citizens of the United States—\"natural born\" citizens (those who are citizens \"by birth\"), and \"naturalized\" citizens (those who are born \"aliens\" and who must go through the process of \"naturalization\")—in the context of the various rights and duties of such citizens within these two categories. The Court has thus explained that \"eligibility to the Presidency\" is one of the very few \"rights and prerogatives of citizenship obtained by birth in this country\" which is not available to a \"naturalized\" citizen. Similarly, the Court has noted: \"The naturalized citizen has as much right as the natural-born citizen to exercise the cherished freedoms of speech, press and religion....\"; and the Court has examined the right of New York to require its \"class of civil servants to be citizens, either natural born or naturalized.\" The United States Court of Appeals for the 9 th Circuit more recently explained that \"once naturalized [appellant] is afforded precisely the same protection of his right to associate as is a natural born citizen.\" Referring specifically to eligibility to the office of President, a United States Court of Appeals found:\nNo more is demanded of an alien who becomes a citizen than a natural-born citizen, and, when an alien becomes a citizen, he is accorded all the rights and privileges afforded to a natural-born citizen except eligibility to the presidency.\nIt should be noted that numerous constitutional scholars and commentators have used the term \"native born\" or \"native citizen\" in a manner which might in some contexts be considered synonymous with \"natural born,\" to indicate a U.S. citizenship from birth in relation to Presidential eligibility, and to distinguish such eligibility from one who is a \"naturalized\" citizen. James Kent, for example, in his Commentaries on American L aw , explained: \"As the President is required to be a native citizen of the United States, ambitious foreigners can not intrigue for the office, and the qualification of birth cuts off all those inducements from abroad to corruption, negotiation, and war....\" Similarly, Justice Joseph Story used the term \"native citizen\" in a treatise on the Constitution: \"It is not too much to say that no one but a native citizen, ought ordinarily to be entrusted to an office so vital to the safety and liberties of the people.\" As noted in the legal treatise from1803 by the noted legal scholar St. George Tucker, editing Blackstone's works and placing them in an American context: \"That provision of the Constitution that requires that the President be a native-born citizen (unless he were a citizen of the United States when the Constitution was adopted) is a happy means of securing against foreign influence....\"\nAlthough the term \"native born\" citizen or \"native citizen\" was seemingly used synonymously with \"natural born\" in reference to presidential eligibility by such noted constitutional scholars, it is most often not necessarily considered a specific term of art in a legal sense and does not appear in the Constitution. In common usage with respect to U.S. citizenship, it may also more narrowly mean anyone born physically within the geographic boundaries of the United States (without reference to the citizenship of one's parents). In one of the most extensive and widely respected multi-volume treatises on immigration and naturalization laws, Immigration Law and Procedure , the authors discuss the meaning of the term \"native-born\":\n[a] Native-Born Citizens\nThis is by far the largest group of U.S. citizens, and their status is acquired simply through birth in the United States , as described in Chapter 92 below. The Constitution does not refer to native-born citizens, although it does mention natural-born citizens. Nor does this term appear in the statute, which includes the native born among various categories who acquire citizenship at birth. However, the designation of the native born is an accurate and convenient one, generally used in colloquial and legal discussions.\nUnder common, modern understanding and later Supreme Court explanations, \"natural born\" citizens would include \"native born\" U.S. citizens, that is, those born physically within the borders of the country, but might also include others whose citizenships were \"obtained by birth\" in other ways. The Supreme Court of the United States has on several occasions also used the terminology \"native born\" citizens or \"native\" citizens to distinguish such citizenship \"at birth\" from those who have obtained U.S. citizenship through \"naturalization.\" Even considering that the Court was using the terms in a narrow sense, and putting aside for the moment the issue of children born abroad of U.S. citizens, it is clear that the Supreme Court in these instances indicated that, at the least, all of those persons obtaining citizenship by birth within the geographic area of the United States (i.e., \"native born\" citizens) were eligible for the presidency (as being within the category of \"natural born\" citizens), as opposed to \"naturalized\" citizens. In Schneider v. Rusk , the Supreme Court appeared to use the term \"native born\" as synonymous and interchangeable with the term \"natural born\" in referencing those citizens eligible for the presidency, as opposed to \"naturalized\" citizens who are not eligible:\nWe start with the premise that the rights of citizenship of the native born and of the naturalized person are of the same dignity and are coextensive. The only difference drawn by the Constitution is that only the \"natural born\" citizen is eligible to be President. Art. II, § 1.\nA similar distinction between \"naturalized\" citizens who are not eligible to the Presidency, and those who are \"native\" citizens (that is, those who are citizens by birth in the country) who are eligible was made in the earlier Supreme Court case of Luria v. United States :\nCitizenship is membership in a political society, and implies a duty of allegiance on the part of the member and a duty of protection on the part of society. These are reciprocal obligations, one being a compensation for the other. Under our Constitution, a naturalized citizen stands on an equal footing with the native citizen in all respects save that of eligibility to the Presidency.\nThe Supreme Court in 1929, in United States v. Schwimmer , had stated in a similar manner that \"Except for eligibility to the Presidency, naturalized citizens stand on the same footing as do native born citizens,\" and noted again in 1931 that, \"The alien, when he becomes a naturalized citizen, acquires, with one exception, every right possessed under the Constitution by those citizens who are native born.\"\nAlthough a small faction of advocates now apparently attempt to cast doubt as to whether every so-called \"native\" born U.S. citizen (having been born within the borders of this country) is a \"natural born\" citizen under the Constitution, all doubt in the judicial arena has been resolved for more than a century in favor of \"natural born\" status of such individuals who are citizens \"by birth\" or \"at birth.\" As discussed in more detail in the following section of this report, there have been some legitimate legal arguments and varying opinions about the status of foreign born children of U.S. citizens as being either \"natural born\" citizens under common law principles, or citizens who are, arguably, \"naturalized\" or made U.S. citizens by statute. There appears, however, to be no legitimate legal issue outstanding concerning the eligibility of all citizens of the United States who are born in the country to be President. The case law in the United States, as well as the clear historical record, does not support the argument or contention that there is some further or additional \"subcategory\" of \"citizen\" of the United States who, although born in the country and subject to the jurisdiction of the United States, is neither a \"natural born\" citizen nor a \"naturalized\" citizen. Rather, as the cases discussed above demonstrate, the categories uniformly recognized and referred to in case law in the United States as \"citizens\" of the United States are \"natural born\" citizens, that is, those who are citizens \"at birth,\" as opposed to \"naturalized\" citizens, that is, those who are aliens at birth and must go through naturalization to become citizens.", "During the 2008 presidential campaign between Senators McCain and Obama, several lawsuits were initiated challenging the \"natural born\" citizenship eligibility of Senator McCain who was not born \"in\" the United States, but rather in the Panama Canal Zone in 1936. Because the place of birth is the concept that principally and traditionally governs strict common law natural born citizenship in the United States, questions have arisen as to whether those born outside of the geographic boundaries of the United States to United States citizen-parents ̶ and who thus are citizens at birth by descent (by way of statute)—should also be considered \"natural born\" citizens eligible to be President.\nThe legal and historical questions concerning those U.S. citizens who are born abroad and eligibility were summarized in the treatise Immigration Law and Procedure :\n[c] Natural-Born Citizens\nUnder the Constitution, only \"natural born\" citizens are eligible to become President or Vice President of the United States. The Constitution nowhere defines this term, and its precise meaning is still uncertain. It is clear enough that native-born citizens are eligible and that naturalized citizens are not. The doubts relate to those who acquire U.S. citizenship by descent, at birth abroad to U.S. citizens.\n\"Natural born citizen\" is an archaic term, derived from ancient British antecedents. Other than its use in the Presidential Qualifications Clause, its only other use was in the provision for citizens by descent in the naturalization statute enacted by the first Congress in 1790.\nThe uncertainty concerning the meaning of the natural-born qualification in the Constitution has provoked discussion from time to time, particularly when the possible presidential candidacy of citizens born abroad was under consideration. There has never been any authoritative adjudication. It is possible that none may ever develop. However, there is substantial basis for concluding that the constitutional reference to a natural-born citizen includes every person who was born a citizen, including native-born citizens and citizens by descent.\nIt has been noted by certain proponents of a narrow interpretation of natural born citizen (to include only those born in the United States) that the Fourteenth Amendment now clearly provides that a U.S. citizen is one who is either \"born or naturalized in the United States.\" Under such reasoning, it is argued that a \"citizen\" of the United States would be a citizen only or exclusively by virtue of either being \"born ... in\" the United States (under the common law principles of jus soli as reflected in the Fourteenth Amendment), or by virtue of being \"naturalized\" in the United States, which some argue means that one is made a citizen by the operation of statutory law. Earlier federal court cases gave credibility to this version of who would be a native or natural born citizen, as opposed to a \"naturalized\" citizen. As explained by the Supreme Court in Wong Kim Ark :\nEvery person born in the United States, and subject to the jurisdiction thereof, becomes at once a citizen of the United States, and needs no naturalization. A person born out of the jurisdiction of the United States can only become a citizen by being naturalized , either by treaty, as in the case of annexation of foreign territory, or by authority of C ongress, exercised either by declaring certain classes of persons to be citizens, as in the enactments conferring citizenship upon foreign-born children of citizens , or by enabling foreigners individually to become citizens by proceedings in the judicial tribunals, as in the ordinary provisions of the naturalization acts.\nUnder such argument, a person who is born of American parents abroad, although clearly a \"citizen\" of the United States by law, is one who is not a citizen by virtue of being \"born ... in \" the United States, and must , therefore, be one of those citizens who has been \"naturalized\" by the operation of law, even though such naturalization was \"automatic\" at birth. It is therefore argued that such citizen should not be considered a \"natural born\" citizen, but rather a \"naturalized\" citizen who is not eligible for the Presidency. Some earlier federal cases had, in fact, specifically held that a person who was born abroad of a father who was a naturalized American citizen, and who therefore was a citizen of the United States by virtue of a statutory provision, was himself a \"naturalized\" American citizen. In Zimmer v. Acheson , the United States Court of Appeals for the 10 th Circuit found that the appellant, who had been born in Germany to a father who had been a naturalized U.S. citizen, was himself a \"naturalized\" citizen who could be expatriated under the provisions and requirements of the then-existing federal law:\nThere are only two classes of citizens of the United States, native-born citizens and naturalized citizens; and a citizen who did not acquire that status by birth in the United States is a naturalized citizen.\nRevised Statutes § 1993, in force at the time of the birth of Harry Ward Zimmer [appellant], provided: \"All children heretofore born or hereafter born out of the limits and jurisdiction of the United States, whose fathers were or may be at the time of their birth citizens thereof, are declared to be citizens of the United States; but the rights of citizenship shall not descend to children whose fathers never resided in the United States.\"\nIf Werner Herman Zimmer [the appellant's father], by virtue of his naturalization on October 30, 1896, was a citizen of the United States on August 9, 1905, the date of the birth of Harry Ward Zimmer, then the latter, at the time of his birth, became a citizen of the United States by virtue of the foregoing statute, but his status as a citizen was that of a naturalized citizen and not a native-born citizen.\nIn Rogers v. Bellei , a case dealing with the expatriation of a U.S. citizen-by-descent (having been born abroad to a U.S. citizen mother), the Court found that the subsequent conditions Congress placed on such citizens-by-descent—requiring them to reside in the United States at some point to retain their U.S. citizenship—were not unconstitutional. In reversing what some analysts saw as a trend limiting Congress's authority to expatriate those who were United States citizens, the Court appeared to assume or imply that such persons born abroad to U.S. citizens became citizens at birth by way of naturalization:\nOur national legislature indulged the foreign-born child with presumptive citizenship, subject to subsequent satisfaction of a reasonable residence requirement, rather than to deny him citizenship outright, as concededly it had the power to do, and relegate the child, if he desired American citizenship, to the more arduous requirement of the usual naturalization process.\nThe existence of these earlier cases, including the Supreme Court's characterization in Wong Kim Ark of statutory citizenship of those born abroad, raise interesting contentions and considerations that have not necessarily been definitively resolved with regard to the \"natural born\" citizenship status ̶ for purposes of presidential eligibility—of those who have obtained U.S. citizenship by virtue of being born abroad to a U.S. citizen parent or parents.\nThose who support a broader, more inclusive reading of the Constitution to include as \"natural born\" citizens those born abroad to U.S. citizen-parents, note that these earlier decisions were based in large part on the more narrow language of the Fourteenth Amendment, but argue that the Fourteenth Amendment was adopted to rectify the wrongly reasoned and decided Supreme Court decision in the Dred Scott case, and was not intended to amend or necessarily even to address the issue of \"natural born\" citizenship under Article II, Section 1, cl. 5, relating to the eligibility for President. The term \"natural born citizen\" in Article II, it is argued, should be interpreted not only in light of the later Fourteenth Amendment, and the reasons for adopting the Fourteenth Amendment, but also in light of the common law and common understanding and usage of the term at the time of the adoption of the Constitution.\nIt has been pointed out that more recent cases have held that the seemingly exclusive language of the Fourteenth Amendment of citizenship being limited only to those who are \"born or naturalized in the United States,\" is applicable only with regard to Fourteenth Amendment first-sentence-citizenship, and is not necessarily the exclusive means of acquiring citizenship \"at birth,\" since the category of \"at birth\" citizenship can clearly be expanded by law adopted by Congress. Such cases indicate that the Fourteenth Amendment establishes a \"floor\" for citizenship at birth, or for naturalization, which can be expanded by federal law. The Supreme Court in Rogers v. Bellei explained that under the Fourteenth Amendment's citizenship clause the requirement that one would have to be either born in the United States or naturalized in the United States were designations for \"Fourteenth-Amendment-first-sentence\" citizenship only. The category or designation of citizen \"at birth\" or \"by birth\" could, however, as expressly noted by the Court, be expanded and \"modified by statute\" (as it had been in England with respect to natural born subjects for more than 600 years): \"We thus have an acknowledgment that our law in this area follows English concepts with an acceptance of the jus soli , that is, the place of birth governs citizenship status except as modified by statute.\"\nIf it is assumed, as postulated by numerous scholars and discussed earlier in this report, that the framers and ratifiers of the Constitution were influenced by or adopted the entire corpus of British law on the subject of \"natural born\" citizenship—that is, the law with which they were familiar and which applied at the time to the colonies in America—then it would not be inconsistent nor necessarily unintended that such status might be affected by legislation by Congress (i.e., \"except as modified by statute\"), as it had been in England by Parliament. It does not appear to be conclusive that merely because Congress could by law \"expatriate\" or take away citizenship of an individual (as in Bellei ), that such individual was necessarily only a \"naturalized\" citizen, since the Supreme Court had upheld Congress's authority, under an earlier immigration law, to expatriate by statute an entire class of possible \"native\"/natural born citizens (women) who had married foreign men.\nIt is significant to note that in a more recent case, in 2001, the Supreme Court indicated that under current law and jurisprudence a child born to U.S. citizens while living or traveling abroad, and a child born in the geographic United States, had the same legal status. In Tuan An h Nguyen v. INS , the Court explained that a woman who is a U.S. citizen living abroad and expecting a child could re-enter the United States and have the child born \"in\" the United States, or could stay abroad and not travel back to this country and have the child born abroad, and that the child in either case would have the same status as far as U.S. citizenship:\n[T]he statute simply ensures equivalence between two expectant mothers who are citizens abroad if one chooses to reenter for the child's birth and the other chooses not to return, or does not have the means to do so.\nConcerning the contention made in earlier cases that everyone who is made a citizen only by federal statute is a \"naturalized\" citizen (even those who are made citizens at birth by statute), it may be noted that the common understanding and usage of the terms \"naturalized\" and \"naturalization,\" as well as the precise legal meaning under current federal law, now indicate that someone who is a citizen \"at birth\" is not considered to have been \"naturalized.\" Justice Breyer, for example, dissenting on other grounds in Miller v. Albright , explained that \"this kind of citizenship,\" that is, under \"statutes that confer citizenship 'at birth,'\" was not intended to \"involve[ ] 'naturalization,'\" citing current federal law at 8 U.S.C. Section 1101(a)(23). The Supreme Court recently recognized in Tuan Anh Nguyen v. INS, that federal law now specifically defines \"naturalization\" as the \"conferring of nationality of a state upon a person after birth.\" Justice Thomas, in a recent opinion concurring in part and dissenting in part, similarly noted: \"It [Congress] has determined that children born abroad to U.S. parents, subject to some exceptions, are natural-born citizens who do not need to go through the naturalization process. 8 U.S.C. § 1401(c)(d),(g).\" It could, therefore, be argued that by current definition and understanding in federal law and jurisprudence, one who is entitled to U.S. citizenship automatically \"at birth\" or \"by birth\"—even by statute—should not be considered to be \"naturalized.\"\nThe United States Court of Appeals for the Ninth Circuit has specifically recognized in a recent case that one may be a \"natural born\" citizen of the United States in two ways: either by being born in the United States, or by being born abroad of at least one citizen-parent who has met the residency requirement. In United States v. Carlos Jesus Marguet-Pillado , a case dealing with the propriety of an appeal based on requested jury instructions not given, the court stated:\nNo one disputes that Marguet-Pillado's requested instruction was \"an accurate statement of the law,\" in that it correctly stated the two circumstances in which an individual born in 1968 is a natural born United States citizen: (1) that the person was born in the United States or (2) born outside the United States to a biologically-related United States citizen parent who met certain residency requirements.\nAlthough the legal cases specifically concerning Senator McCain's eligibility were generally dismissed for want of subject matter jurisdiction (that is, the lack of legal standing of the plaintiff), a federal district court for the Northern District of California did note that Senator McCain would qualify as a citizen \"at birth,\" and thus was a \"natural born\" citizen, since he was born \"out of the limits and jurisdiction of the United States\" to U.S. citizen parents, as provided for in federal nationality statutes in force at the time of his birth. The court found that the meaning of the phrase in the nationality statutes in force in 1936 (R.S. §1993 (1855) and 48 Stat. 797 (1934)), that is, the phrase \"born out of the limits and jurisdiction of the United States\" to citizen parents, was merely the reverse or \"converse of the phrase 'in the United States, and subject to the jurisdiction thereof'\" appearing in the citizenship provision of the Fourteenth Amendment, and that such phrase thus would include all those born abroad of U.S. citizen parents, such as Senator McCain:\nArticle II states that \"No Person except a natural born Citizen, or a Citizen at the time of the Adoption of this Constitution, shall be eligible to the Office of the President.\" Article II left to Congress the role of defining citizenship, including citizenship by reason of birth. Rogers v. Bellei, 401 U.S. 815, 828, 91 S.Ct. 1060, 28 L.Ed.2d 499 (1971). Many decades later, the Fourteenth Amendment set a floor on citizenship, overruled the Dred Scott decision, and provided that all born or naturalized in the United States, and subject to the jurisdiction thereof, were citizens by reason of birth (or naturalization proceedings, for that matter). Id. at 829-30, 91 S.Ct. 1060.\nAt the time of Senator's McCain's birth, the pertinent citizenship provision prescribed that \"[a]ny child hereafter born out of the limits and jurisdiction of the United States, whose father or mother or both at the time of the birth of such child is a citizen of the United States, is declared to be a citizen of the United States.\" Act of May 24, 1934, Pub. L. No. 73-250, 48 Stat. 797. The Supreme Court has interpreted the phrase \"out of the limits and jurisdiction of the United States\" in this statute to be the converse of the phrase \"in the United States, and subject to the jurisdiction thereof,\" in the Fourteenth Amendment, and therefore to encompass all those not granted citizenship directly by the Fourteenth Amendment. [ United States v. Wong Kim Ark, 169 U.S. 649, 687 (1898) ....] Under this view, Senator McCain was a citizen at birth. In 1937, to remove any doubt as to persons in Senator McCain's circumstances in the Canal Zone, Congress enacted 8 U.S.C. 1403(a), which declared that persons in Senator McCain's circumstances are citizens by virtue of their birth, thereby retroactively rendering Senator McCain a natural born citizen, if he was not one already. This order finds it highly probable, for the purposes of this motion for provisional relief, that Senator McCain is a natural born citizen. Plaintiff has not demonstrated the likelihood of success on the merits necessary to warrant the drastic remedy he seeks.\nThe federal court in Robinson v. Bowen thus implicitly adopted a meaning of the term \"natural born\" citizen in the presidential eligibility clause which would include not only the narrowest \"common law\" meaning ( jus soli , being born geographically in the United States without reference to parental citizenship, as codified in the Fourteenth Amendment), but also the statutory designation by Congress of one entitled to U.S. citizenship \"at birth\" or \"by birth\" even if born abroad when such citizenship is transmitted from one's parent or parents ( jus sanguinis ).", "In addition to the lawsuits concerning Senator McCain's eligibility, there have been several allegations and numerous lawsuits brought challenging the status of President Obama as a \"natural born\" citizen, based on various theories, assertions, and speculations. These cases have generally been summarily dismissed, either because of a lack of jurisdiction of the court—in that the plaintiff or plaintiffs did not have legal standing, or for a failure to state a claim upon which relief could be granted—or because the plaintiff seeking a stay or an injunction against some future event was deemed \"not likely to succeed on the merits.\"\nSome of the cases concerning President Obama, or the candidate then-Senator Obama, had alleged or speculated that the President was not born in the United States, but rather was born in some foreign country or another. Other cases put forth a unique legal theory that even if President Obama had been born in Hawaii, as officially certified and documented by the State of Hawaii, he would not qualify as a natural born citizen because his father was not a U.S. citizen at the time of his birth, or because President Obama had or was entitled to \"dual citizenship,\" or had in some way \"forfeited\" his United States citizenship.\nIt may be noted that in addition to court dismissals based on lack of jurisdiction because of the failure of the plaintiff to show \"standing\" or to state a claim upon which relief may be granted, several of the cases regarding President Obama's \"eligibility\" were dismissed on the basis of the lack of subject matter jurisdiction because, as noted by the United States Court of Appeals for the 10 th Circuit, for example, the plaintiff's alleged claim was \"wholly insubstantial and frivolous\" such that \"federal jurisdiction is not extant.\" Similarly, in Stamper v. United States, the United States District Court noted in dismissing an \"eligibility\" challenge of President Obama, that a federal court may dismiss a complaint \"for lack of subject matter jurisdiction\" when the \"allegations of a complaint are totally implausible, attenuated, unsubstantial, frivolous, devoid of merit or no longer open to discussion,\" and in dismissing the case found that the court \"is not required to accept unwarranted factual inferences.\" The United States Court of Appeals for the Third Circuit in Berg v. Obama , in upholding the lower court's dismissal of plaintiff/counsel Berg's case, also noted \"the obvious lack of any merit in Berg's contentions ...,\" and in Kerchner v. Obama , ruled that \"[b]ecause we have decided that this appeal is frivolous, we will order counsel for Appellants to show cause why just damages and costs should not be imposed.\"\nIn dismissing eligibility cases some federal courts have gone so far as to find \"Rule 11\" violations by plaintiff's counsel. A federal district court in Georgia fined plaintiff's counsel $20,000 for a \"Rule 11\" violation, that is, for filing \"frivolous\" motions and for \"using the federal judiciary as a platform to espouse controversial political beliefs rather than as a legitimate forum for hearing legal claims.\" In the United States District Court for the District of Columbia, in dismissing another challenge to the President's \"eligibility\" by an attempt to press an \"interpleader\" claim, the judge ordered plaintiff's counsel to \"show cause\" why he should not be fined under Rule 11 for frivolous filings, and eventually \"reprimanded\" the counsel for filing a frivolous lawsuit.", "In some of the cases filed, plaintiffs have argued that even if President Obama had been born in Hawaii, the move to Indonesia by his mother with him at the time he was a minor in some way \"nullified\" the citizenship \"at birth\" status of President Obama, even though as a minor he moved back to and resided within the United States. It should be noted, however, that the Supreme Court has clearly ruled that a citizen at birth, such as one born \"in\" the United States, does not forfeit his or her citizenship-at-birth status because of removal as a minor to a foreign country, even a country in which one or both parents are or become citizens and nationals. Rather, citizenship may only be forfeited by a citizen of the United States by an affirmative action of renunciation by one having the capacity to do so (that is, as an adult):\nIt has long been a recognized principle in this country that if a child born here is taken during minority to the country of his parents' origin, where his parents resume their former allegiance, he does not thereby lose his citizenship in the United States provided that on attaining majority he elects to retain that citizenship and to return to the United States to assume its duties....\nExpatriation is the voluntary renunciation or abandonment of nationality and allegiance. [footnotes omitted] It has no application to the removal from this country of a native citizen during minority. In such a case the voluntary action which is of the essence of the right of expatriation is lacking.\nThe Supreme Court in a subsequent decision, in Mandoli v. Acheson in 1952, confirmed the meaning of its earlier decision in Perkins v. Elg , explaining:\nWhat it [ Perkins v. Elg ] held was that citizenship conferred by our Constitution upon a child born under its protection cannot be forfeited because the citizen during nonage is a passive beneficiary of foreign naturalization proceedings....\nThe Supreme Court concluded in that case: \"[W]e think the dignity of citizenship which the Constitution confers as a birthright upon every person born within its protection is not to be withdrawn or extinguished by the courts except pursuant to a clear statutory mandate.\" Simply stated, the Supreme Court noted that to expatriate and forfeit one's U.S. citizenship \"there must be a voluntary action and such action cannot be attributed to an infant whose removal to another country is beyond his control and who during minority is incapable of a binding choice.\"", "Other lawsuits, which were also summarily dismissed, alleged that even if President Obama had been born in Hawaii, he was not a \"natural born\" citizen because his father was not a U.S. citizen, but rather was a citizen of Kenya and therefore a British subject. It was argued that President Obama at birth would thus have been entitled to British citizenship by operation of British laws. As one who had or was entitled to \"dual citizenship,\" it was argued that President Obama could not be a \"natural born citizen\" of the United States. Other arguments entailed the unique notion that under American jurisprudence parental citizenship or lineage is the determining factor for eligibility to the Presidency for native born U.S. citizens.", "Merely because a child born within the United States could have, under the operation of foreign law, been a citizen also of that foreign nation because of a parent's nationality, citizenship, or place of birth (i.e., \"dual citizenship\"), would not affect the status of that child as a U.S. citizen \"at birth\" under the Fourteenth Amendment, the federal nationality laws, nor under Article II of the Constitution. The citizenship laws, rights, or recognitions of other nations could not influence and impact the United States' own determination of who its citizens \"at birth\" would be, that is, who would be a \"natural born\" citizen, as the question of citizenship and categories of citizenship are a function of \"municipal law\"—the internal law of every country, as opposed to matters of international law or foreign law.\nIf allowing the recognition of citizenship under the law of foreign nations were determinative of natural born citizenship in the United States—as now argued by some advocates—then the operation of foreign law would, in effect, impact and be determinative of who is eligible to be President of the United States, a result wholly at odds with U.S. national sovereignty, that is, the \"inherent right of every independent nation\" to determine what classes of persons are to be its citizens. As explained by the Supreme Court in 1939:\nOn her birth in New York, the plaintiff became a citizen of the United States. ... In a comprehensive review of the principles and authorities governing the decision in that case—that a child born here of alien parentage becomes a citizen of the United States—the Court adverted to the \"inherent right of every independent nation to determine for itself, and according to its own constitution and laws, what classes of persons shall be entitled to its citizenship.\" United States v. Wong Kim Ark, supra , p. 668. As municipal law determines how citizenship may be acquired, it follows that persons may have a dual nationality. [footnotes omitted] And the mere fact that the plaintiff may have acquired Swedish citizenship by virtue of the operation of Swedish law, on the resumption of that citizenship by her parents, does not compel the conclusion that she lost her own citizenship acquired under our law.\nThe fact that a foreign country might recognize or allow a claim of dual citizenship or nationality of a child born in the United States because of the nationality or heritage of the child's mother or father, has never been determinative of \"natural born\" or other citizenship status in any case in American jurisprudence. The Court in Perkins v. Elg explained that dual nationality of a child does not affect the native-born status of a child born in the United States, and cited with approval an opinion of the Attorney General finding that a \"native-born American citizen,\" even one with \"dual citizenship,\" who returns to the United States would qualify to be President:\nOne Steinkauler, a Prussian subject by birth, emigrated to the United States in 1848, was naturalized in 1854, and in the following year had a son who was born in St. Louis. Four years later Steinkauler returned to Germany taking this child and became domiciled in Weisbaden where they continuously resided.... On reviewing the pertinent points in the case, including the naturalization treaty of 1868 with North Germany, the Attorney General reached the following conclusion:\n\"Young Steinkauler is a native-born American citizen. There is no law of the United States under which his father or any other person can deprive him of his birthright. He can return to America at the age of twenty-one, and in due time, if the people elect, he can become President of the United States ... [even though] the father, in accordance with the treaty and the laws, has renounced his American citizenship and his American allegiance and has acquired for himself and his son German citizenship and the rights which it carries....\"", "Concerning specifically the reading into the Constitution of a two-citizen-parent requirement for \"natural born\" citizenship status, it should be noted that there is, significantly, no historical nor controlling legal holding in American jurisprudence to support the argument that parental citizenship governs and controls the eligibility of a native born United States citizen to be President. As indicated in the discussion of the history of the constitutional provision, there is also no justification for this unique theory, which would exclude an entire class of native born U.S. citizens from eligibility for the Presidency, in any of the statements or writings of the framers of the Constitution, or in the entire record of the ratification debates of the United States Constitution.\nIn 1825, in a significant and widely recognized work on the Constitution, William Rawle specifically noted that the term \"natural born citizen\" as used in the Constitution would include \"every person born within the United States ... whether the parents are citizens or aliens....\" Similarly, in his treatise on Citizenship of the United States , Frederick Van Dyne, Assistant Solicitor of the Department of State, explained in 1904 that the rule governing citizenship is not one derived from \"international law\" or the so-called \"law of nations,\" but is rather municipal law which \"[e]very nation determines for itself' and, in the United States, derives from the common law principle of jus soli , dependent \"on the place of birth,\" as modified by statute incorporating the principles of jus sanguinis to include the children of citizens \"born out of the jurisdiction of the United States.\" In reviewing Supreme Court decisional material, the author in this treatise noted that the Fourteenth Amendment and the 1866 civil rights act \"reaffirm the fundamental principle of citizenship by birth\" which \"was generally held to be regulated by the common law, by which all persons born within the limits and allegiance of the United States were deemed to be natural born citizens thereof.\"\nAlthough the Supreme Court has never had to address the issue of \"natural born\" citizenship directly in the context of a challenge to the eligibility of one to be President, the federal courts have discussed the concept on numerous occasions for more than 200 years and have, other than in the Dred Scott decision, consistently relied upon the place of birth, without regard or reference to the status of one's parents, as the determining factor of natural born citizenship. A celebrated and frequently relied-upon state court ruling in 1844 provided a detailed explanation of the legal history of the citizenship laws and statutes in the United States, and provided the following conclusion with respect to natural born citizenship:\nUpon principle, therefore, I can entertain no doubt, but that by the law of the United States, every person born within the dominions and allegiance of the United States, whatever were the situation of his parents, is a natural born citizen.\nThat the place of birth was principally the rule governing \"natural born\" citizenship under American jurisprudence, regardless of the status of one's parents (except for children of official diplomats or hostile armies), even before the adoption of the Fourteenth Amendment, was explained by the Supreme Court in United States v. Wong Kim Ark , in 1898, which noted that the Fourteenth Amendment \"affirms the ancient and fundamental rule of citizenship by birth within the territory, in the allegiance and under the protection of the country, including all children born here of resident aliens, with the exceptions or qualifications (as old as the rule itself) of children of foreign sovereigns or their ministers, or born on foreign public ships, or of enemies within and during a hostile occupation of part of our territory ....\" The Supreme Court in Wong Kim Ark cited with approval those previous judicial rulings which held that every child born on the soil of the United States, and subject to its jurisdiction, are \"natural born\" citizens of this country, without regard to the nationality or citizenship status of their parents. The Supreme Court, this time using the term \"native born citizen\" again explained in that case:\nPassing by questions once earnestly controverted, but finally put at rest by the Fourteenth Amendment of the Constitution, it is beyond doubt that, before the enactment of the Civil Rights Act of 1866 or the adoption of the Constitutional Amendment, all white persons, at least, born within the sovereignty of the United States, whether children of citizens or of foreigners , excepting only children of ambassadors or public ministers of a foreign government, were native-born citizens of the United States .\nAs discussed previously, the Supreme Court has used the term \"native born\" citizens (as expressly used in Wong Kim Ark to mean those born in the United States \"whether children of citizens or foreigners\") as synonymous with, or at least included within the term \"natural born,\" in subsequent references to eligibility to the Presidency. In United States v. Schwimmer, for example, the Court stated: \"Except for eligibility to the Presidency , naturalized citizens stand on the same footing as do native born citizens \" Similarly, in Luria v. United States the Supreme Court stated: \"Under our Constitution, a naturalized citizen stands on an equal footing with the native citizen in all respects, save that of eligibility to the Presidency,\" and noted in 1931 that other than the one instance in the Constitution which provides a difference, that is, the eligibility to the Presidency, \"[t]he alien, when he becomes a naturalized citizen, acquires, with one exception, every right possessed under the Constitution by those citizens who are native born.\"\nWith regard to the citizenship of children born in the United States to recent immigrants, it is significant to note that in this country in the late 1800's, the public's economic fears and hostility to foreigners led Congress to—in the words of one historian—\"legitimize[ ] racism as national policy\" by adopting legislation to prevent immigration of Chinese laborers to the United States, and to prohibit anyone of Chinese nationality to obtain U.S. citizenship through naturalization. Despite this law and its extensions, commonly known as the Chinese Exclusion Act, the federal courts consistently held that children born \"in\" the United States of Chinese parents were \"natural born\" citizens of the United States, even if the parents may not have been United States citizens themselves and could not have \"naturalized\" under the Chinese Exclusion Act. In 1919, for example, the United States Court of Appeals for the 5 th Circuit ruled that the appellee, Low Hong, based solely on the fact that he was born in San Francisco, without any reference to the nationality of his parents, \"is a natural-born citizen of the United States.\"\nSimilarly, in a case in 1920 concerning the identity of a petitioner, the Supreme Court of the United States explained that \"[i]t is not disputed that if petitioner [Kwock Jan Fat] is the son\" of two Chinese persons who were physically in the United States when petitioner was born, then the Court would accept the characterization of him as \"a natural born American citizen ....\" The Supreme Court recognized that it had been alleged in earlier immigration proceedings that the father of Kwock Jan Fat had been born in the United States and, as averred by one witness, had voted in some election. The Supreme Court, however, made no finding , did not rely upon, nor did the Court even make a passing reference to the citizenship of the father of Kwock Jan Fat. Furthermore, it is significant that there was no evidence, no argument, nor even any discussion in the decision of the Supreme Court, or in the reported lower court decision, concerning the citizenship of the mother of Kwock Jan Fat. Neither the briefs for the petitioner, nor the brief for the respondent made any assertions or allegations concerning the citizenship of, or provided any argument or evidence concerning any naturalization of the mother of Kwock Jan Fat, but rather merely noted that she had been born in China and came to the United States as a child. It is, of course, well known to those familiar with U.S. immigration laws that during the time of the Chinese Exclusion Act a woman who was a Chinese national, and not a citizen of the United States at birth, could not have been naturalized as a United States citizen even if she married someone who was a United States citizen. However, the Supreme Court never discussed, referenced, or made any finding or conclusion concerning the citizenship of either the father, or the citizenship or naturalization of the mother of Kwock Jan Fat because the citizenship of one's parents is not and was not relevant to the determination of \"natural born\" citizenship of one born in the United States. The relevant factor cited and determined by the Supreme Court of the United States was not the citizenship of both the father and mother, but rather—citing to the Wong Kim Ark precedent—was the physical presence of the parents in the United States (that is, that the parents were \"domiciled\" here) at the time of Kwock's birth in this country. Concerning the issue of balancing the considerations of fairness and justice in such identity cases of one born to Chinese parents in the United States, the Supreme Court, in an oft-quoted statement, expressly said:\nIt is better that many Chinese immigrants should be improperly admitted than that one natural born citizen of the United States should be permanently excluded from his country.\nIn a case that preceded the Supreme Court's Wong Kim Ark decision, the United States Court of Appeals agreed with the petitioner's claim to be \"a natural-born citizen of the United States\" because of his place of birth, that is, within the United States, even though his parents were both \"aliens\" of Chinese nationality who were in the United States privately and \"not here in any diplomatic or other official capacity under the emperor of China.\" That federal court in 1884, relying on precedents including Assistant Vice-Chancellor Lewis Sandford's opinion in Lynch v. Clarke , explained the concept in American jurisprudence that one is a \"natural born\" citizen when born in the United States, and subject to the jurisdiction of the United States, and that such was the state of American law even before the adoption of the Fourteenth Amendment (for other than those brought into the United States under slavery):\nIndependently of the constitutional provision, it has always been the doctrine of this country, except as applied to Africans brought here and sold as slaves, and their descendants, that birth within the dominions and jurisdiction of the United States of itself creates citizenship. This subject was elaborately considered by Assistant Vice-chancellor Sandford in Lynch v. Clarke , found in the first volume of his reports. [1 Sandf. 583.] In that case one Julia Lynch, born in New York in 1819, of alien parents, during their temporary sojourn in that city, returned with them the same year to their native country and always resided their afterwards. It was held that she was a citizen of the United States. After an exhaustive examination of the law the vice-chancellor said that he entertained no doubt that every person born within the dominions and allegiance of the United States, whatever the situation of his parents, was a natural-born citizen, and added that this was the general understanding of the legal profession, and the universal impression of the public mind.\nMore recent federal cases expressly recognize the principle explained in the nineteenth century and early twentieth century cases that one born in the United States and under its jurisdiction, even when one or both parents were \"aliens,\" is considered a citizen of the United States by birth, and thus a \"natural born\" citizen of the United States. The court in Dos Reis ex rel. Camara v. Nicolls , for example, accepted the findings of fact that \"The relator was born in the City of Fall River, Massachusetts, on December 31, 1921. His father was a native and citizen of Portugal, and his mother was a native of Brazil,\" and that, as found by the Commissioner of Immigration and Naturalization, affirming the decision of the Board of Special Inquiry, \"that the relator was a natural-born citizen....\" In Loo Goon Hop v. Dulles , the court found that a person \"having been born in this country,\" without any reference to, finding, or identification of the citizenship of that person's parents, is a \"natural born citizen of the United States.\" In Yamauchi v. Rogers , the federal court in reciting \"findings of fact and conclusions of law,\" found that the plaintiff, born in California of a \"Japanese national\" who had married another \"Japanese national,\" \"is a natural born citizen of the United States....\" A federal court in 1974 similarly explained and held: \"The plaintiff was a native of Biafra, now a part of the Republic of Nigeria. His wife and two older children are also natives of that country, but his third child, a daughter, is a natural-born citizen of the United States.\" In Diaz-Salazar v. INS , the court there noted that children born in the United States, even to an \"illegal\" (or undocumented) alien father, \"are natural-born citizens of the United States.\" Similarly, in Mustata v. U.S. Department of Justice , the United States Court of Appeals, in reciting the facts of the case, noted: \"Petitioners Marian and Lenuta Mustata are citizens of Romania. At the time of their petition, they resided in Michigan with their two minor children, who are natural born citizens of the United States .\"", "Despite the existing questions of jurisdiction, as well as the issue of the applicability of a particular state protest or challenge statute to a presidential election (where only \"electors\" are actually voted for), numerous courts or administrative bodies in several states have rendered decisions relating to or at least addressing the merits of the arguments concerning the eligibility of a presidential candidate in challenges to ballot access in the state.\nIn 2008, a U.S. district court discussed the concept of \"natural born\" citizenship specifically with respect to the eligibility to be President as applying—since the founding of the Nation—to all who were born in and subject to the jurisdiction of the United States:\nThose born \"in the United States, and subject to the jurisdiction thereof,\" U.S. Const., amend. XIV, have been considered American citizens under American law in effect since the time of the founding, United States v. Wong Kim Ark , 169 U.S. 649, 674-75, 18 S.Ct. 456, 42 L.Ed. 890 (1898), and thus eligible for the presidency, see, e.g., Schneider v. Rusk, 377 U.S. 163, 165, 84 S.Ct. 1187, 12 L.Ed.2d 218 (1964)(dicta).\nSimilarly, in dismissing an eligibility case concerning President Obama's birth in Hawaii, a state appellate court in Indiana, after a thorough review of federal case law, concluded that anyone born in the United States and subject to its jurisdiction, regardless of the citizenship of that person's parents, was a \"natural born\" citizen eligible to be President:\nBased on the language of Article II, Section 1, Clause 4 and the guidance provided by Wong Kim Ark, we conclude that persons born within the borders of the United States are \"natural born Citizens\" for Article II, Section 1 purposes, regardless of the citizenship of their parents. Just as a person \"born within the British dominions [was] a natural born-born subject\" at the time of the framing of the U.S. Constitution, so too were those \"born in the allegiance of the United States [ ] natural-born citizens.\"\nAlmost all of the cases in the 2012 election cycle had challenged the eligibility to office of the incumbent President, Barack Obama. To date, every court or administrative body dealing with ballot access issues has ruled against the challenges to the eligibility of President Obama.\nNumerous court decisions or administrative rulings have expressly addressed the merits of the issues before them and found that since Hawaii has certified and verified that President Obama was born there, he is a \"natural born\" citizen of the United States eligible to be President. The Arizona Superior Court found, for example, that: \"[P]recedent fully supports that President Obama is a natural born citizen under the Constitution and thus qualified to hold the office of President.\" An administrative law judge in Georgia, in an opinion adopted by the Secretary of State and in which the appeals were dismissed (on jurisdictional grounds), ruled that President Obama, born in the United States, \"... became a citizen at birth and is a natural born citizen.\" In Illinois, after a formal hearing, the elections board ruled that President Obama's birth certificate \"clearly establishes\" his eligibility for office as a \"Natural Born Citizen.\" Citing to the 1898 Supreme Court case of Wong Kim Ark , in which the Supreme Court found over 100 years ago that those born in the United States and subject to its jurisdiction are \"natural born\" citizens, a circuit court in Maryland noted that \"the issue of the definition of 'natural born citizen' is thus firmly resolved by the United States Supreme Court in a prior opinion,\" and held that President Obama is eligible to run for President in Maryland. A federal court in Virginia, similarly citing to Wong Kim Ark , found: \"It is well settled that those born in the United States are considered natural born citizens. ... Moreover, 'those born 'in the United States, and subject to the jurisdiction thereof,' ... have been considered American citizens under American law in effect since the time of the founding ... and thus eligible for the presidency.'\"\nCourts have also specifically considered and found to be \"without merit\" and devoid of \"any legal authority\" the argument that \"natural born\" citizenship in the United States requires that one must at the time of birth have parents who are both United States citizens themselves. In New Jersey, for example, in a decision upheld on appeal, the court explained: \"... [T]he status of 'natural born Citizen' for Mr. Obama has not been denied by any court or administrative agency that has addressed the merits of the issue. ... The petitioners' legal position on this issue, however well intentioned, has no merit in law. Thus, accepting for the point of this issue that Mr. Obama was born in Hawaii, he is a 'natural born Citizen' regardless of the status of his father.\" A court in Florida also held that: \"... [P]ersons born within the borders of the United States are 'natural born citizens' for Article II, Section 1 purposes, regardless of the citizenship of their parents.\" In New York, a court explained that \"anyone born in the United States is a natural-born citizen, irrespective of parentage.\" Similarly, the Vermont Superior Court, citing to Supreme Court and state court precedents, held: \"The common law of England, the American colonies, and later the United States, all support one interpretation only: 'that persons born within the borders of the United States are 'natural born Citizens' for Article II, Section 1 purposes, regardless of the citizenship of their parents.'\"", "The constitutional history, the nearly unanimous consensus of legal and constitutional scholars, and the consistent, relevant case law thus indicate that every child born in and subject to the jurisdiction of the United States (that is, those who are not children of diplomatic personnel representing a foreign nation or military troops in hostile occupation), is a \"natural born Citizen\" eligible to be President under the qualifications clause of the Constitution, regardless of the nationality or citizenship of one's parents. The legal issues regarding \"natural born\" citizenship and birth within the United States without regard to lineage or ancestral bloodline have been well settled in judicial decisions in this country for more than a century, and such concepts date back to, and even pre-date, the founding of the nation.\nThe weight of more recent federal cases, as well as the majority of scholarship on the subject, also indicate that the term \"natural born citizen\" would most likely include, as well as those native born citizens born in the U.S., those born abroad to U.S. citizen-parents, at least one of whom had previously resided in the United States, or those born abroad to one U.S. citizen parent who, prior to the birth, had met the requirements of federal law for physical presence in the country.\nThe technical constitutional meaning (influenced by the corpus of British law, both common law and long-standing statutory law), as well as the meaning of the term in both the general legal lexicon and its common usage, appear to have converged on a seeming consensus that \"natural born\" means having a particular attribute or nature \"at birth,\" as opposed to subsequently obtaining such attribute." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 2, 1, 1, 2, 2, 2, 3, 3, 4, 4, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "", "", "", "", "", "", "", "h1_full", "h0_title h2_title h1_title", "h0_full h1_full", "h2_full", "h0_title", "", "h0_title", "", "h0_full", "", "h2_full" ] }	{ "question": [ "Who can be considered natural-born citizens in the United States?", "For these people, what restrictions are in place for becoming presidents regarding their parenthood?", "What are the circumstances that raise citizenship concerns for those born outside of the country?", "What are the historical laws surrounding citizenship for those born outside of England and American colonies?", "How have these laws impacted the understanding of citizenship in the United States?", "How did challenges to John McCain and Barack Obama help uphold birthright citizenship?", "Who can be considered a natural-born citizen of the United States?", "What restrictions are in place for people born outside of the United states?" ], "summary": [ "In addition to historical and textual analysis, numerous holdings and references in federal (and state) cases for more than a century have clearly indicated that those born in the United States and subject to its jurisdiction (i.e., not born to foreign diplomats or occupying military forces), even to alien parents, are citizens \"at birth\" or \"by birth,\" and are therefore \"natural born\"—as opposed to \"naturalized\"—U.S. citizens.", "There is no provision in the Constitution and no controlling American case law to support a contention that the citizenship of one's parents governs the eligibility of U.S. citizens born within the United States to be President.", "Although the eligibility of U.S. born citizens has been settled law for more than a century, there have been legitimate legal issues raised concerning those born outside of the country to U.S. citizens.", "From historical material and case law, it appears that the common understanding of the term \"natural born\" in England and in the American colonies in the 1700s included both the strict common law meaning as born in the territory (jus soli), as well as the statutory laws adopted in England since at least 1350, which included children born abroad to British fathers (jus sanguinis, the law of descent).", "Legal scholars in the field of citizenship have asserted that this common understanding and legal meaning in England and in the American colonies was incorporated into the usage and intent of the term in the U.S. Constitution to include those who are citizens at birth.", "Challenges in 2008 to the eligibility of both Senators John McCain and Barack Obama to be President, and \"ballot access\" challenges to President Obama in 2012, have prompted numerous court decisions which appear to have validated the traditional, historical, and legal meaning of the term \"natural born\" citizen as one who is entitled to U.S. citizenship \"by birth\" or \"at birth.\"", "This would include those born \"in\" the United States and under its jurisdiction (i.e. \"native\" born), even those born to alien parents; those born abroad to U.S. citizen-parents; or those born in other situations meeting legal requirements for U.S. citizenship \"at birth.\"", "Such term, however, would not include a person who was not a U.S. citizen by birth or at birth, and who was thus born an \"alien\" required to go through the legal process of \"naturalization\" to become a U.S. citizen." ], "parent_pair_index": [ -1, 0, -1, -1, 1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 3, 3, 3, 4, 4, 4 ] }
CRS_R41625	{ "title": [ "", "Introduction", "Caveats", "A Brief History of Federal Low-Income Policy", "Overview of Federal Spending on Benefits and Services for People with Low Income", "Change in Spending from FY2008 to FY2009", "Budgetary Classification of Federal Spending on Benefits and Services", "A Look at the 10 Largest Programs", "Overview of Benefits and Services by Category", "Health Care", "Cash Aid", "Food Assistance", "Housing and Development", "Education", "Social Services", "Energy Assistance", "Employment and Training", "Defining Individual Eligibility for Benefits and Services", "Federal Poverty Guidelines", "Other Income Measures", "Specific Dollar Amounts", "Median Income", "\"Need Analysis\"", "Lower Living Standard Income Level", "Treatment of Income", "Asset/Resource Limits", "Categorical and Behavioral Requirements and Exclusions", "A Note About Noncitizens", "Automatic Eligibility", "Targeting Federal Resources According to Need", "Formula Allocation Factors", "Cost-Sharing Rules", "Limited Eligibility for Areas or Entities", "Types of Federal Grants and Grantees", "Formula-Based Grants", "Competitive or Discretionary Awards", "Direct Benefits to Individuals", "Matching and Related Requirements", "Policies Affecting Indian Tribes", "Policies Affecting U.S. Territories", "Benefit Levels Under Selected Cash and Near-Cash Programs", "Final Notes and Outstanding Questions" ], "paragraphs": [ "", "People and communities with limited resources are a major focus of public policy. While policymakers might disagree in theory on whether or to what extent government should act to protect the economic well-being of individuals and families, the federal government in fact spends large sums of money on numerous programs targeted toward those with limited income and assets. This report attempts to identify and analyze these programs and provide a broad overview of the policies underlying them.\nIn FY2009, federal spending on programs for people with low income was almost $708 billion, and totaled nearly $578 billion the previous year. Most of the growth between the two years was related to the recession and associated policy responses, with almost two-thirds (64%) of the increase coming from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). In both years, four programs accounted for almost 60% of total spending, and 10 programs accounted for more than 75%.\nThe distinguishing feature of federal programs examined here is their explicit focus on low-income populations, as distinct from social insurance programs such as Social Security, Medicare, or Unemployment Insurance. Social insurance programs aim to protect American workers universally against lost wages and work-related benefits due to retirement, disability, or temporary periods of unemployment. They are financed in large part through contributions from workers and employers and their aggregate spending is much larger than programs intended specifically for those with low income. Social insurance programs play a major role in reducing poverty among significant segments of the population.\nIn contrast to social insurance, programs examined in this report are funded through general revenues and provide benefits and services to people with limited income either by explicitly tying eligibility to a measure of income, or by targeting assistance through funding allocation formulas or other need-related mechanisms. They attempt to ameliorate or mitigate the effects of low income by providing cash or noncash benefits to help people meet basic needs, such as food, housing, and health care. They also seek to address root causes of economic disadvantage by providing education, training, and other services to improve people's employability and earnings capacity. Some programs combine these purposes by conditioning aid on participation in work or training or providing incentives to engage in these activities. Finally, some programs target assistance to communities with significant concentrations of low-income people to compensate for their low tax capacities, and help provide revenues to support benefits and services to residents.\nThese programs are extremely diverse in their purpose, design, and target populations. Many were created independently of one another, at different times and in response to different perceived policy problems. They also changed over time in response to various societal and other factors. \"Social welfare,\" \"social safety net,\" and \"public welfare\" are generic terms sometimes used to refer to these programs; however, there is no single label that best describes all programs included in this report.\nKey findings of the report are presented in the Summary, above. The body of the report is organized as follows:\nThe report begins with a very brief history of federal low-income policy, to provide context for the subsequent discussion of current programs. The report then gives an overview of current federal spending on benefits and services for low-income people, including a review of the budgetary classification of these funds (mandatory or discretionary). The next section looks specifically at the 10 largest programs, which together account for three-fourths of all spending in the report, followed by an overview of all programs, organized by major category in order of FY2009 spending: health care, cash aid, food assistance, housing and development, education, social services, energy assistance, and employment and training. The next two sections look in greater detail at the ways in which benefits and services are directed toward people with limited income, either by establishing explicit eligibility criteria for individuals or families, or by targeting assistance toward communities or entities based on a measure of need. These sections look at use of the federal poverty guidelines and other income measures in defining eligibility or otherwise targeting assistance, as well as criteria that enable certain categories of people to qualify automatically. The form of federal assistance—formula grants, competitive or discretionary awards, direct payments to individuals—is the focus of the next section, which also looks at the immediate recipients of federal funds, such as states, local governments, and nonprofit organizations. The section discusses matching or other requirements for nonfederal spending, and very briefly addresses the participation of Indian tribes and U.S. territories. The report generally does not discuss the value of benefits or services provided; however, the next section shows maximum benefit levels under selected cash and near-cash benefit programs. The report concludes by identifying potential questions for further analysis. The report includes several appendixes: Appendix A discusses the methodologies used to prepare the analysis; Appendix B provides overview tables of programs included in the report; and Appendix C is a series of short fact sheets on each program. Appendix D gives references to information about the federal poverty guidelines and other income measures and eligibility tests.", "The analysis in this report required numerous decisions about which programs to include, how to categorize them, and what measure of federal spending to use. The methodologies chosen are described in Appendix A . Readers should be aware, however, of the following caveats: The report refers to the target population of these benefits and services as persons with \"low\" or \"limited\" income, rather than \"poor\" people. Although some programs limit participation to individuals with income below federal poverty guidelines, income eligibility criteria vary widely and frequently include people with income above the federal definition of poverty. The number of programs included in this report is not meaningful. While fact sheets are presented for 82 \"programs,\" some could have been characterized as more than one program and others could have been consolidated. In addition, only programs with new obligations of $100 million or more in a given year are included. If smaller programs were included, the overall number of programs would be larger, but the analysis would essentially be unchanged. The assignment of programs—and therefore dollars—to broad categories (health care, cash aid, food assistance, etc.) is not perfect. Certain programs provide multiple types of assistance and spending could not be disaggregated, so spending was assigned to a single category. Some programs are ambiguous; different analysts might categorize them differently. The analysis might be changed somewhat if different assignments had been made. The report does not include tax programs, with the exception of direct spending for the refundable portion of the Earned Income Tax Credit and the refundable Additional Child Tax Credit. The report does not provide long-term trend data on spending. For reasons explained in Appendix A , obligations are generally used as the measure of spending. While obligations are the most consistent program-specific measure available for the majority of programs included here, they are difficult to trace backward. Spending is provided for FY2009 because it is the most recent year for which final amounts are available for all programs included. Because FY2009 was an unusual year, however, with a large infusion of funding from the economic stimulus law (ARRA), FY2008 spending is also shown. The report provides a snapshot of policies and spending for low-income programs in FY2008 and FY2009. It does not address the effectiveness of these programs in meeting their policy goals. Readers familiar with the CRS series of reports entitled Cash and Noncash Benefits for Persons with Limited Income should know that this report is not an update of that earlier series. This report is meant to replace that series but it uses different methodologies and is therefore not comparable to the Cash and Noncash reports. See Appendix A for an explanation of the differences.", "A review of the evolution of federal policy for low-income people provides useful context for understanding today's programs and policies. The following is a quick overview of key milestones, such as the New Deal of the 1930s and the Great Society of the 1960s. While many current programs trace their roots to these eras, few exist today in the same form. Today's programs reflect policy changes enacted over many decades in response to numerous factors, particularly the shift in societal expectations about mothers working outside the home. Federal aid initially focused on groups who were not expected to work, including mothers of dependent children; however, federal policy today generally favors work among able-bodied aid recipients and includes incentives to \"make work pay.\" Federal policy also expanded over time to include efforts to address root causes of poverty and disadvantage, in addition to helping people meet their basic needs.\nFederal involvement in providing benefits and services for people with low income generally began in the first part of the 20 th century, largely after the Great Depression overwhelmed the resources of states, local governments, and private organizations, which previously had borne primary responsibility for helping the disadvantaged. With some key exceptions, such as veterans' benefits and tax credits for low-wage workers, state and local governments still play a significant role in most programs intended for low-income populations, regardless of whether they are partially or fully federally funded.\nBenefits for veterans, initially to meet the medical needs of those who became disabled during service, are among the oldest in the United States, and date back in some form to the beginning of the country. By the early 1900s, these benefits had grown to include medical care and cash assistance for the indigent as well as veterans with disabilities, including assistance for dependents and survivors of veterans. These were the primary benefit programs administered by the federal government until the Great Depression of the 1930s.\nThe New Deal was the federal government's response to the Depression, and the Social Security Act of 1935 was its cornerstone. The act brought the federal government into the fields of social insurance and cash relief for populations who either could not work or who society at that time did not expect to work. The original act established income security programs for aged and retired workers and for temporarily unemployed workers (the beginning of today's Social Security and Unemployment Compensation programs). It also authorized federal grants to states to make cash aid payments to two groups, in addition to the elderly, who were not expected to work. These groups were fatherless (dependent) children and the blind, although within these categories, the act gave states the authority to define specific eligibility and benefit levels.\nAid to Dependent Children, as created in 1935, was amended over the succeeding decades and became Aid to Families with Dependent Children in 1962. Aid was provided to parents (typically single mothers) in addition to the children. However, at the same time, expectations about mothers' work began to change. Starting in the late 1960s and continuing over the next 30 years, Congress imposed work registration and work or training requirements on certain parents receiving cash benefits. In 1996, Congress replaced AFDC with Temporary Assistance for Needy Families (TANF), which established time limits on the receipt of benefits and conditioned cash aid on participation in work activities. States continue to make key decisions regarding eligibility and benefit levels under TANF, and have the added flexibility to use funds for noncash services. (In fact, the majority of TANF funds are now used for noncash services, such as social services and employment-related activities.) The 1996 law also gave states more federal funding for child care for low-income working families.\nThe 1930s also marked the federal government's entry into the field of housing. In response to trouble in the mortgage market resulting from the Depression, the U.S. Housing Act of 1934 encouraged lending for housing construction through a new Federal Housing Administration. The U.S. Housing Act of 1937 subsequently created the low-rent Public Housing program, which required states to establish quasi-governmental local public housing authorities (PHAs) to administer the program. In 1949, Congress declared the federal goal of \"a decent home and a suitable living environment for every American family,\" and over the next two decades it enacted provisions to provide affordable housing through incentives to private developers to build low-cost housing. The Housing Act of 1974 created a new rental assistance program, known as Section 8, which provided rental subsidies for private properties, in lieu of development subsidies. Section 8 was later expanded to include portable rental vouchers administered by PHAs. While Section 8 vouchers have effectively replaced subsidies for new development, many housing units that were subsidized under these earlier programs still provide affordable housing today. They are administered by PHAs or private properties, under contract with the federal Department of Housing and Urban Development (HUD).\nAn early version of food stamps existed for several years during the Depression and was revived in 1961 as a small pilot program. The program became permanent during the Great Society, through the Food Stamp Act of 1964. Originally, states set their own eligibility rules, and benefits varied regionally. This changed in 1971 when the program was effectively converted to a national income guarantee, providing an amount of food stamps to participating households sufficient to buy items equivalent to the Agriculture Department's \"economy diet.\" However, recipients had to contribute a monthly \"purchase requirement\" based on their income in order to obtain benefits. The law set nationally uniform eligibility rules and federally paid benefit levels, but states continued to administer the program. Congress enacted a number of major policy changes to the Food Stamp program over the next three decades, including removal of the purchase requirement in the late 1970s, allowing automatic eligibility for those receiving other public assistance benefits or services in 1985, and limiting access for able-bodied adults without dependents in 1996. In 2008, the Food Stamp program was renamed the Supplemental Nutrition Assistance Program (SNAP). States continue to administer SNAP and have some leeway in determining eligibility through application of the automatic eligibility rules, but benefit levels remain federally financed and nationally uniform.\nA central feature of the Great Society was the War on Poverty, and the Economic Opportunity Act of 1964 was its primary legislative vehicle. That act and its subsequent amendments authorized numerous programs that sought to address the causes of economic disadvantage, and to ameliorate its effects. Programs were designed to meet the multiple needs of low-income preschool children and their families, and the employability needs of low-income youth and adults, and to give low-income people a formal role in planning services for their communities. Modern-day programs with origins in the War on Poverty include Head Start, Job Corps, Adult Basic Education, components of the Workforce Investment Act, the Legal Services Corporation, Weatherization Assistance, the Low-Income Home Energy Assistance Program, School Breakfast, the Summer Food Service Program, the Child and Adult Care Food Program, and the Community Services Block Grant. The Great Society also focused on education; both the Elementary and Secondary Education Act and the Higher Education Act became law in 1965.\nThe Great Society also saw the creation of Medicare and Medicaid, which have grown into the nation's largest health care programs. Medicare was created in 1965, providing health coverage as a form of social insurance to elderly and disabled individuals with a significant attachment to the workforce. The same legislation created Medicaid, a means-tested entitlement that finances medical services and long-term care for specified low-income and categorical groups. Medicaid replaced two earlier programs of federal grants to states that provided medical care to welfare recipients and the elderly. Both Medicare and Medicaid have been amended numerous times over the years, expanding both eligible populations and services. A prescription drug benefit was added to Medicare in 2003, which includes a subsidy for low-income beneficiaries. And most recently, the 2010 health reform law—the Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended by P.L. 111-152 )—significantly expanded Medicaid, so that, beginning in FY2014 (or potentially sooner, at state option), Medicaid will cover low-income childless adults in addition to the program's traditional target populations of low-income parents and children, and elderly and disabled individuals.\nThe original Social Security Act's grants to states for cash aid to needy blind and aged individuals were expanded over time to include people with disabilities. However, in contrast to cash aid and related programs for needy families with children, which remain state-administered, Congress \"federalized\" programs for low-income aged, blind, and disabled people in 1972. These earlier programs were replaced by Supplemental Security Income (SSI), which has uniform federal minimum eligibility and benefit rules (rather than state-determined policies) and serves blind and disabled children as well as adults.\nAlso in the early 1970s, Congress considered but did not enact welfare reform legislation that would have replaced AFDC with a federal minimum cash guarantee for poor families, including working families with two parents. Instead, in 1975 Congress enacted a temporary \"work bonus\" or wage supplement intended to return a portion of Social Security taxes to low-income working households. This program was made permanent in 1978 and became the current Earned Income Tax Credit (EITC). The credit has been expanded several times over the past 30 years and is currently one of the largest cash assistance programs for low-income households, reflecting the prevailing policy goal of \"make work pay.\"\nConsistent with the emphasis on promoting work for low-income families, the welfare reform law of 1996 created TANF, which, as noted above, conditions cash aid on participation in work activities, and also expanded funding for child care. In the year following enactment of welfare reform, low-income families not sufficiently poor for Medicaid gained access to health insurance for their children through enactment of the State Children's Health Insurance Program (CHIP) in 1997. The Child Tax Credit and refundable Additional Child Tax Credit (ACTC) also were created in 1997, although the impact of the ACTC originally was limited. In 2001 and subsequent years, the ACTC was expanded so that it now targets assistance toward low-income families.\nMost recently, Congress enacted the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ) in 2009, in an effort to stimulate the economy during recession. While ARRA did not create significant new initiatives for people with limited income, it revised and expanded certain existing policies, at least temporarily, to make them more responsive to the needs of people and communities affected by the downturn. As the following discussion shows, ARRA resulted in a substantial increase in spending on benefits and services for low-income populations between FY2008 and FY2009. The bulk of funding provided by ARRA was intended to be spent during FY2009 and FY2010.", "Federal spending on benefits and services for low-income people totaled $708 billion in FY2009 and $578 billion in FY2008. These programs generally seek to mitigate the effects of low income by helping people meet basic needs such as health care, food, or shelter, or to address the root causes of economic disadvantage through services, education, or job training. Notably, few programs have poverty reduction as an explicit goal or purpose. Key target populations for many of these programs, including some of the largest, include low-income elderly and disabled individuals, and dependent children and their families. Other target groups for selected programs include veterans, students, people who are homeless, Indians, and refugees, among others.\nFigure 1 illustrates the composition of spending, by category, in FY2008 and FY2009. Figure 2 displays FY2008 and FY2009 spending by category, and also highlights the portion of spending in FY2009 attributable to ARRA. Table 1 shows this information, both overall and by category, and the percent change in spending from FY2008 to FY2009. See Appendix Table B -1 for a listing of specific programs in each category.\nAs Figure 1 shows, spending for health care dominates all other categories, accounting for close to half (45%) of total spending for limited-income populations in FY2009. Cash aid is the second largest category but trails health care by a wide margin, with 18% of spending in FY2009. Food assistance is third (11% of FY2009 spending), followed by housing and development (almost 9%), education (8%), social services (6%), energy assistance (almost 2%), and employment and training (1%).", "Overall spending on federal benefits and services for low-income populations grew by 22% between FY2008 and FY2009, largely due to policy responses to the recession. Almost two-thirds (64%) of the additional spending was provided under ARRA, the economic stimulus enacted in February 2009. Some large entitlement programs (e.g., Medicaid, the Supplemental Nutrition Assistance Program (SNAP)) saw additional growth in spending beyond that provided under ARRA, likely due to an increase in eligible and enrolled individuals as a result of the economic downturn.\nSpending growth from FY2008 to FY2009 was uneven among categories. The largest percentage increase was for energy assistance, which represented less than 1% of all spending in FY2008 and more than tripled in FY2009. Spending for housing and development programs rose by 51%, education by 39%, and employment and training by 38%. Spending on food assistance increased between the two years (32%), as did spending for health care (24%) and social services (22%). Spending for cash aid appeared to drop by 3% between FY2008 and FY2009; however, this was the result of a one-time $300-per-child tax rebate, which was included as spending under the Additional Child Tax Credit (ACTC) in FY2008 but was not targeted toward low-income families.\nIn terms of dollar increases between the two years, health care saw the largest growth, with $61 billion of additional obligations in FY2009. More than half of this increase (54%) resulted from provisions in ARRA that temporarily raised the federal share of Medicaid costs. However, growth in Medicaid spending—regardless of ARRA—accounted for another 30% of the dollar increase in low-income health spending from FY2008 to FY2009.\nThe next largest dollar increase was for housing and development programs, which grew by $20 billion between FY2008 and FY2009. Most of this growth (71%) resulted from additional appropriations provided under ARRA for such programs as Public Housing, Homeless Assistance Grants (specifically for a new Homelessness Prevention and Rapid Re-Housing Program), and Section 8 Project-Based Rental Assistance. ARRA also funded two temporary grants related to the Low-Income Housing Tax Credit.\nSpending for food assistance rose by almost $19 billion between FY2008 and FY2009. More than a quarter of this growth resulted from ARRA provisions that increased the dollar value of SNAP benefits. As noted above, however, SNAP grew significantly regardless of the ARRA provisions, as more households became eligible and enrolled in the program during the recession and its aftermath. Additional SNAP obligations unrelated to ARRA accounted for 60% of the FY2009 spending increase in the food assistance category.\nEducation spending grew by $16 billion from FY2008 to FY2009, although without additional appropriations provided under ARRA, this category would have decreased by $2 billion. However, ARRA was enacted before final decisions were made on total FY2009 appropriations, so appropriators were able to take into consideration the additional amounts already provided through ARRA. Pell Grants for postsecondary students and grants to disadvantaged school districts under Title I-A of the Elementary and Secondary Education Act were the largest beneficiaries of ARRA funding among education programs specifically targeted on low-income populations.\nSpending for social services rose by $8 billion between FY2008 and FY2009, with almost half of the increase coming from appropriations made by ARRA, specifically for Head Start, the Child Care and Development Fund, and the Community Services Block Grant. Energy spending grew by $7 billion, of which nearly two-thirds (64%) was ARRA funding for the Weatherization Assistance Program. Finally, employment and training saw a $2 billion increase in spending in FY2009, with more than three-quarters (77%) coming from appropriations under ARRA for the Workforce Investment Act and Job Corps.\nAs noted above, cash assistance spending appeared to go down in FY2009, by about $4 billion. However, FY2008 obligations in this category included an unspecified amount of spending for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 ( P.L. 110-185 ). This one-time rebate was counted as spending under the ACTC, but was not targeted toward low-income families. Thus, FY2008 spending for low-income people under the ACTC appears higher than it actually was. While ARRA made changes in both the Earned Income Tax Credit and the ACTC, these changes did not take effect until tax year 2009, and therefore associated spending would generally not be seen until FY2010.", "Of total spending on programs for low-income people, about 75% is classified in budget terms as \"mandatory\" (also called \"direct\" spending) and the remainder as \"discretionary.\" In mandatory programs, many of which are entitlements to individuals or units of government, Congress defines eligibility and payment rules in authorizing laws. These rules determine the amount of spending that will occur, so Congress generally must amend the authorizing law in order to control federal spending. The amount of federal spending for discretionary programs, on the other hand, is determined by Congress through the annual appropriations process.\nMandatory spending may be structured as open-ended or capped. In an open-ended entitlement program, no predetermined ceiling is imposed on federal expenditures; instead, federal payments are made to all eligible beneficiaries for eligible expenditures as defined in law. (Medicaid is an example of an open-ended entitlement program.) In a capped program, the authorizing law limits the total amount of federal spending that can occur. (Temporary Assistance for Needy Families is an example of a capped entitlement program.) Of mandatory spending discussed in this report, more than 90% is through open-ended programs.\nThe pattern of mandatory versus discretionary spending differs by major category of benefits and services. All cash aid spending, and most spending for health care and food assistance, is mandatory. In all three of these categories, spending occurs largely through open-ended entitlement programs. In contrast, all spending for energy assistance and employment and training, and most spending for housing and development and education, is discretionary. Social services spending is a mixture; about two-thirds is mandatory and the rest is discretionary. Of the mandatory social services spending, a little more than half is capped and the balance is open-ended.", "This report generally looks at spending and policy by major category, such as health care, cash aid, or food assistance. It illustrates the enormous diversity among and within categories in terms of target population and various design elements. However, it is important to note that a few individual programs account for the vast majority of spending for low-income populations, and these programs merit special attention. The four largest programs contributed almost 60% of total spending in each of FY2008 and FY2009, and the top 10 accounted for more than three-fourths. The following provides an overview of these programs; they are discussed in the context of all low-income programs in the balance of the report. Table 2 shows spending for these programs in FY2008 and FY2009, and separately under ARRA. Table 3 highlights key features of these programs.\nAs Table 2 shows, Medicaid is the single largest program and alone accounts for nearly 40% of low-income spending. Next in size are the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Supplemental Security Income (SSI), and the refundable portion of the Earned Income Tax Credit (EITC). Notably, SNAP became the second largest program in FY2009 but was number four in spending in FY2008, behind SSI and EITC. Rounding out the top 10 are Pell Grants, the Additional Child Tax Credit (ACTC), Title I-A of the Elementary and Secondary Education Act (ESEA), the low-income drug subsidy under Part D of Medicare, Temporary Assistance for Needy Families (TANF), and Section 8 Housing Choice Vouchers.\nBecause of the effect of Medicaid, more than half (53% in FY2009) of spending under the top 10 programs fell into the health category. Spending for programs in the cash assistance category equaled 23% of spending under the 10 largest programs in FY2009, followed by programs categorized as food assistance (10%) and education (9%). Small percentages of total spending for the top 10 programs went to those categorized as housing (3%), social services (2%), and employment and training (less than 1%).\nLow-income elderly, disabled, and families with dependent children are the focus of much of the spending under the top 10 programs. Medicaid provides health care for low-income people within certain categorical groups, which are primarily the elderly, individuals with disabilities, and dependent children and their families. Low-income elderly and disabled Medicare recipients receive subsidized prescription drug insurance under Part D. Cash aid goes to low-income elderly and disabled beneficiaries under SSI, and to low-income working households through the EITC and ACTC. TANF serves families with dependent children; states define specific eligibility rules but federal law emphasizes participation in work activities for recipients of cash aid.\nSNAP provides assistance specifically for the purchase of food to households below a certain income threshold. While the program does not target benefits to certain demographic groups, nearly half of SNAP recipients in FY2009 were children and another 8% were age 60 or older. The law also requires able-bodied non-elderly adults without dependent children to participate in work or training to receive benefits for more than a brief period of time.\nThe 10 largest programs also include housing vouchers for low-income families (\"families\" are defined by local public housing authorities and may include single individuals). Two education programs are among the top 10, including Pell Grants, which assist students whose family resources are not adequate to meet their college costs. The system used to determine benefit amounts under Pell sometimes gives aid to students with relatively high family income; however, the benefits given to these students are likely to be low. Finally, low-income school districts receive grants through Title I-A of ESEA, but individual students do not necessarily have to be low-income to be served by the program.\nAs noted earlier, about 75% of all spending for limited-income populations is classified as mandatory. This percentage is higher for the top 10 programs; close to 90% of spending under these programs is mandatory, which means the amount spent is a function of program rules set forth in law rather than annual decisions made by congressional appropriators. Moreover, of mandatory programs in the top 10, only TANF is capped; the rest are open-ended. Three of the top 10 programs are classified as discretionary. These are Pell Grants (which also includes a mandatory component), Title I-A of ESEA, and housing vouchers.\nWith one exception, the 10 largest programs all require that beneficiaries must be determined individually eligible to receive aid. In other words, except for Title I-A of ESEA, individuals or households must meet an income (or equivalent) test to benefit from these programs. The particular income test used, however, varies with the program. For example, Medicaid, SNAP, and the Part D subsidy all use different multiples of the federal poverty guidelines to determine eligibility, in addition to criteria that allow beneficiaries of certain other programs to qualify automatically. Specific dollar amounts are used to define eligibility for SSI and also to determine when EITC benefits begin to phase out. Section 8 housing vouchers use income limits that are based on area median income to define eligibility, and TANF income eligibility thresholds, as noted earlier, are set by states. No absolute income threshold determines eligibility for Pell Grants; however, the lowest-income students receive the largest grants.\nAs stated above, children are not required to meet an income eligibility test to receive benefits funded by Title I-A of ESEA. Rather, the program uses allocation formulas to direct federal resources toward local educational agencies with relatively high concentrations of low-income students. Once these funds are received by an individual school, students may be served regardless of their family income.\nTitle I-A is an example of a formula grant program. (Other mechanisms for distributing funds include competitive or discretionary awards, and direct benefits to individuals.) Medicaid, TANF, and Section 8 housing vouchers also use formulas to distribute funds, but the specifics vary. Because Medicaid is an open-ended entitlement, the federal government reimburses states for all eligible expenditures with no cap on federal spending; however, the federal \"matching rate\" is calculated for each state by a formula inversely related to its per capita income (poorer states get a larger federal match, and wealthier states get a smaller federal match). TANF allocates block grants to states according to a formula that considers their spending patterns under the predecessor Aid to Families with Dependent Children (AFDC) program. Funding to renew existing housing vouchers is distributed to local public housing authorities (not states) according to a formula established by Congress each year in appropriations law, which typically is related to the use and cost of vouchers in the local area.\nAs noted above, formula grants are one of three major ways that federal programs for low-income populations distribute funds; the other two are competitive or discretionary awards, and direct benefits to individuals. None of the 10 largest programs award funds on a competitive or discretionary basis, other than a relatively small component of TANF. Instead, these large programs either allocate funds to states or another unit of government by formula, as just described, or give benefits to eligible individuals directly (or through a nongovernment intermediary). Federal benefits are provided directly under SNAP (although states administer the program), SSI (although states may supplement the federal benefit), EITC, ACTC, Pell Grants, and the Medicare Part D subsidy.\nBenefits provided by the federal government directly to eligible individuals typically are 100% federally funded, although, as noted above, states incur administrative costs under SNAP (which are reimbursed at a 50% federal rate) and may supplement federal payments under SSI. Some states also operate their own earned income tax credit programs, which supplement the federal EITC. Medicaid and TANF, however, are federal-state programs, and states must spend a significant amount of their own money to receive federal funds. As noted above, state Medicaid expenditures are reimbursed by the federal government at prescribed matching rates. Unlike Medicaid, TANF is not a matching grant; however, to receive TANF block grant funds, states must maintain a certain level of their own spending from prior years. Local educational agencies that receive Title I-A grants also are required to maintain a certain amount of prior-year spending and must use federal funds to \"supplement and not supplant\" nonfederal funds that would otherwise be used for the same purpose.", "The following sections provide brief overviews of the programs included in each major category of benefits and services, organized by size of spending in FY2009. Tables included in Appendix B individually list and identify key features of the programs, and brief fact sheets on each program are provided in Appendix C .", "As health care dominates federal spending on benefits and services for people with limited income, Medicaid dominates spending within the health care category. Medicaid accounted for 83% of health care spending in FY2009 and, as noted above, was nearly 40% of all spending in this report. Medicaid is intended to provide medical assistance to specified categories of low-income people who lack the income and resources to afford necessary medical care. Low-income parents, dependent children, the elderly, and individuals with disabilities have been the primary target populations served by Medicaid. The program finances the delivery of a wide range of primary and acute medical services as well as long-term care. The State Children's Health Insurance Program (CHIP) provides health coverage for low-income children who lack health insurance but whose family income exceeds Medicaid eligibility levels.\nThe next largest health programs are the low-income subsidy under Medicare Part D, which helps low-income seniors and individuals with disabilities pay for prescription drugs, and medical care for low-income veterans without service-connected disabilities. The latter program pays for an array of primary care, specialized care, and related social and support services provided by the Department of Veterans Affairs (VA). The Indian Health Service also offers a wide variety of health services to its target population, who are American Indians or Alaskan Natives living on reservations or within a specified service delivery area. Consolidated Health Centers offer primary and other health services to low-income populations in medically underserved areas, and the Maternal and Child Health block grant supports preventive and primary health care services for low-income women, infants, and children.\nThe Ryan White HIV/AIDS Program is intended to address the unmet care and treatment needs of individuals living with HIV or AIDS who lack insurance or resources to pay for core medical services, including prescription drugs, and related support services. Additional programs focus on specific health services, such as family planning and early breast and cervical cancer detection, or specific populations, such as refugees.", "Three programs account for the bulk of cash aid spending, and each is among the 10 largest of all programs for low-income people. SSI, which aims to provide a minimum income for aged, blind, or disabled individuals with very low income and resources, is the largest and accounted for slightly more than 40% of cash aid spending in FY2009. The refundable portion of the EITC accounted for another 33% of cash aid spending, and almost 19% resulted from the refundable ACTC. The EITC subsidizes the wages of low-income workers, with most benefits going to those with children. The ACTC is a refundable credit for families whose tax liability is too low for them to fully benefit from the regular nonrefundable Child Tax Credit.\nThe cash aid category also includes TANF, the welfare reform program that replaced Aid to Families with Dependent Children (AFDC) in 1996. As AFDC's successor, TANF is still sometimes viewed as traditional \"welfare\" for poor families; however, the majority of TANF expenditures are for activities other than cash aid. TANF aims to increase the flexibility of states in meeting several statutory goals, including assisting needy families so that children can remain in their homes; ending dependence of needy parents through job preparation, work, and marriage; preventing and reducing incidence of out-of-wedlock pregnancies; and encouraging the formation and maintenance of two-parent families. In this report, TANF spending has been allocated among cash aid, social services, and employment and training, based on states' reporting of their actual expenditures. Finally, cash aid programs include pensions for needy elderly or disabled veterans and their dependents or survivors.", "SNAP (formerly food stamps) dominates spending for food assistance, accounting for about two-thirds of obligations in this category and registering as the second largest of all low-income programs in FY2009. SNAP attempts to alleviate hunger and malnutrition and to help low-income households purchase food to support a healthy diet. The next largest area of food assistance spending is for programs that subsidize the costs of breakfast and lunch served to low-income schoolchildren; these programs aim to support learning readiness, promote healthy eating, and protect the health and well-being of low-income children. Related programs subsidize the costs of meals and snacks for children in child care and other out-of-school settings (and some low-income elderly and disabled adults in adult care settings) and for children during the summer when they lack access to school-based meal programs.\nFood assistance programs also include the Special Supplemental Food Program for Women, Infants and Children (WIC), which provides supplemental food and nutrition education to low-income pregnant, postpartum, or breastfeeding women and their infants and young children who are at nutritional risk. The program seeks to protect children's health during critical developmental stages, to prevent health problems, and to improve health status. Food assistance programs also include congregate and home-delivered meals for the elderly to reduce hunger and promote socialization and well-being for older individuals, and emergency food assistance in the form of commodities for individuals defined by their states as needy.", "The federal government supports the housing needs of low-income people primarily by subsidizing the cost of rental units in the private market. Section 8 housing vouchers and project-based rental assistance together accounted for 43% of all housing and development spending in FY2009. (The voucher component of Section 8 is one of the 10 largest low-income programs.) The overarching goal of Section 8 is to provide low-income people with decent, safe, and sanitary housing. Public Housing, which represented 18% of spending in this category in FY2009, achieves a similar goal by making publicly owned rental units available to low-income tenants at affordable prices. Federal spending for Public Housing supports the capital needs and operating costs of publicly owned housing developments, as well as the HOPE VI program, which demolishes, rehabilitates, and replaces distressed public housing units. Additional housing programs are intended to expand the supply of supportive housing for low-income elderly and disabled households, as well as individuals living with AIDS. Homeless Assistance Grants attempt to meet the needs of homeless individuals and families, including individuals with disabilities, for basic shelter, short-term and long-term housing, and related support services.\nTwo block grants—HOME and the Community Development Block Grant (CDBG)—target federal assistance toward communities with high rates of poverty and aging housing stock (among other factors) to help meet the housing needs of low-income homeowners, homebuyers, and renters (HOME) and to expand the community's supply of decent housing and economic development activities (CDBG). An additional block grant provides housing assistance and helps develop private housing finance mechanisms on Indian lands.\nTo address housing needs in rural areas, loans are available to help low-income households purchase, build, or renovate homes, and rental subsidies are available for low-income tenants. Low-interest loans and grants also are available to support new and improved water and waste disposal facilities in low-income rural communities. Finally, the housing and development category includes the Public Works and Economic Development program, which provides grants to distressed communities to help them revitalize, expand, and upgrade their physical infrastructure to attract new industries, expand businesses, diversify their economies, and generate job and investment growth.\nCertain temporary programs are included in the housing and development category. The Neighborhood Stabilization Program-1 was established by the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) to assist in rehabilitating abandoned and foreclosed homes for occupancy by low-income tenants. Obligations under this program occurred in FY2009. Likewise, FY2009 spending includes obligations under two temporary programs created by ARRA as adjuncts to the Low-Income Housing Tax Credit (LIHTC) program. These temporary programs offered grants to states in lieu of tax credits and provided capital investments for owners of certain LIHTC-financed properties. They were enacted in response to the financial crisis, which, along with the departure of several large tax credit investors, made it difficult for developers to sell their tax credits to raise capital. Finally, ARRA added funds to HUD's Homeless Assistance Grants, specifically for a new Homelessness Prevention and Rapid Re-Housing Program.", "The Federal Pell Grant Program is the single largest education program for people with limited incomes, accounting for 43% of targeted federal education spending in FY2009. The program is among the 10 largest in this report. Pell Grants are one of several ways the federal government helps subsidize the costs of higher education for needy students. Other grant programs with similar goals include Federal Supplemental Education Opportunity Grants, Federal Work-Study, and the Academic Competitiveness and Smart Grant programs. In addition to direct assistance to students, the federal government provides institutional aid to help expand the capacity of colleges and universities that serve high proportions of low-income and minority students. Federal TRIO Programs offer grants to institutions of higher education and other organizations to motivate and support disadvantaged students as they move from high school through college. The GEAR-UP program provides services to low-income children in elementary and secondary schools who are at risk of dropping out and aims to increase the number of such students who enter and succeed in higher education.\nThe second largest education program included in the report (also one of the 10 largest low-income programs) is Title I-A of the Elementary and Secondary Education Act, which accounted for more than one-third of targeted federal education spending in FY2009. Title I-A provides grants to local educational agencies with high concentrations of disadvantaged children and aims to ensure that all children have an opportunity to obtain a high-quality education and reach at least minimum proficiency on challenging academic achievement standards. A separate program has similar goals for children of migrant workers, and the Rural Education Achievement Program helps rural school districts meet academic achievement standards. The Bureau of Indian Education operates several programs to meet the educational needs of Indian children living on or near reservations. Other elementary and secondary education grant programs aim to increase student achievement through improvements in teacher and principal quality and to improve teacher knowledge and student performance in mathematics and science.\nLiteracy is the focus of the Adult Basic Education program, which helps adults to become literate and obtain the skills necessary for employment and self-sufficiency, and to become partners in their own children's educational development. Reading First and Early Reading First also promoted literacy, focusing specifically on young children, from preschool through grade 3. Finally, 21 st Century Community Learning Centers are intended to provide a wide range of remedial education and academic enrichment opportunities during non-school hours for children in high-poverty and low-performing schools.", "The social services category is diverse and includes a wide variety of activities to support low-income or otherwise vulnerable populations. Of spending categorized as social services in this report, the vast majority—93% in FY2009—is focused directly on children and youth or their families. Services funded by TANF are the largest single activity in this category, accounting for almost a quarter of social services spending in this report. As noted in the earlier discussion of cash aid, TANF is often thought of as traditional welfare for poor families. However, states have flexibility in spending their TANF grants, and the majority of funds are used for noncash aid, including a wide variety of social services for families with children. TANF spending in the social services category also includes obligations under competitive grants for promotion of healthy marriage and responsible fatherhood.\nHead Start is the second largest program in this category, accounting for more than 20% of social services spending for low-income populations. Head Start aims to promote school readiness for young children through a full array of educational, health, nutritional, social and other services to children and their families. The Child Care and Development Fund (CCDF), with 16% of social services spending in FY2009, subsidizes the cost of child care for low-income parents while they work or attend school. Additional programs targeted toward children and families include Child Support Enforcement, which provides services on behalf of custodial parents who are seeking support for their children from the children's noncustodial parent. Foster Care grants are used by states to provide temporary homes for children who cannot remain safely with their families; Adoption Assistance helps facilitate the adoption of children with special needs as defined by their state; and the Chafee Foster Care Independence Program helps current and former foster children transition to a self-sufficient adulthood.\nOf social services programs not specifically targeted toward children and families, the Social Services Block Grant (SSBG) is the largest and most flexible. The program supports a continuum of services to promote self-sufficiency but decisions about target populations and services are left to the states. Other social services programs focus on specific target populations. For example, social services for the elderly are provided under the Older Americans Act; support and advocacy grants help people with developmental disabilities; and various human services are provided for American Indians. Programs that focus services at the community level include the Community Services Block Grant (CSBG), which aims to reduce poverty and empower low-income individuals and families to become self-sufficient, and Emergency Food and Shelter Grants, which provide services for homeless and hungry individuals in high-need communities. Finally, the Legal Services Corporation attempts to ensure equal access to the justice system for people who are otherwise unable to afford legal counsel.", "Two programs make up the energy assistance category. The Low-Income Home Energy Assistance Program (LIHEAP) helps low-income households pay their heating and cooling expenses, and the Weatherization Assistance Program helps increase the energy efficiency of homes occupied by low-income people to reduce energy costs and improve health and safety.", "Two programs serving disadvantaged youth comprised almost half of FY2009 employment and training spending included in this report. Specifically, youth activities under the Workforce Investment Act (WIA) provide a variety of services to improve the educational and skill competencies of eligible youth and to develop connections with employers and mentoring opportunities with adults. Job Corps focuses on those disadvantaged youth who can benefit from an intensive residential program to become employable and productive. The employment and training category also includes work-related services for needy families with children under TANF, a small employment and training program for recipients of SNAP benefits, and a program that provides employability and related services to help refugees and other humanitarian entrants find jobs quickly. Remaining programs include WIA's adult activities program; Community Service Employment for Older Americans, which helps older individuals (age 55 or older) become self-sufficient through community service jobs and training; and Foster Grandparents, which provides stipends for low-income older individuals to provide services to children with special needs.", "As described above, federal programs for low-income people can be grouped into several major categories of benefits and services. Key target groups for these benefits and services include the elderly, individuals with disabilities, and children and families, among others. Within these broad target populations, there is not necessarily a coherent policy regarding who should receive assistance, although some themes emerge within categories.\nPrograms use different concepts to define who is eligible. Many programs use explicit income eligibility criteria that individuals, families, or households must meet, but the specific levels and measures of income vary. Some measures are uniform throughout the country; others vary by geography. Some are adjusted annually for inflation; others are not. In some cases, income criteria are used to set priorities for who is served but are not necessarily applied to every participant. Some programs use asset tests in addition to income tests. Many programs have categorical requirements, such as age or disability, in addition to income criteria; and some use alternative criteria that allow specified groups or categories of people to qualify automatically without having to meet an individual income test. Automatic \"exclusions\" exist under some programs, so that people who would otherwise qualify based on their income are excluded if they fall into specified categories. Finally, some programs establish federal parameters for eligibility but allow states or other entities to set their own income eligibility criteria within these parameters.\nThis section of the report discusses the various ways in which individual eligibility is determined. The section looks at use of the federal poverty guidelines, as well as other measures of economic need used to define eligibility such as specific dollar amounts, percentages of area or state median income, and the \"need analysis\" system used for postsecondary student aid. The section briefly discusses asset limits, and then turns to nonfinancial or categorical rules. Table 4 summarizes the various concepts used in determining individual eligibility and Table B -2 in Appendix B shows the concepts used by specific programs.\nIt is important to note that being eligible for a program does not necessarily mean that an individual will receive benefits from that program. While some of the programs included here, especially some of the larger ones, are entitlements to individuals, which means that all eligible applicants must receive benefits, most programs are either discretionary (subject to annual appropriations) or capped entitlements, and eligible individuals are served only to the extent that funds are available.\nFinally, not all programs require participants to be determined individually eligible. Some target federal resources toward communities or entities where low-income populations are likely to be concentrated and do not examine the income, assets, or other characteristics of a particular individual or family. Such targeting mechanisms are discussed in the next major section of this report.", "As already stated, programs in this report do not strictly serve the poor. Rather, target populations are more accurately characterized as people with \"low\" or \"limited\" income. Even among programs that use the federal poverty guidelines as a criterion for determining eligibility, very few limit participation to individuals or households with income at or below \"poverty\" as defined by the federal government. Most programs that use the federal poverty guidelines (FPG) as an element in defining eligibility use a multiple of poverty, with some programs defining eligibility as high as 200% or 300% of FPG.\nThe poverty guidelines trace their origin to a 1963 Social Security Administration study that based poverty income cutoffs on the amount families needed to spend to meet their basic food needs (the \"Economy Food Plan\") and the relationship between expenditures on food and expenditures on other items. With food accounting for roughly one-third of low-income budgets in a 1950s survey of consumption, the poverty cutoffs were set at three times the Economy Food Plan for a given family size and type. These poverty cutoffs were subsequently adopted by the Census Bureau for counting the poor, and are also the basis for the HHS poverty guidelines used for administering programs. They are uniform nationwide (except for Alaska and Hawaii) and are updated annually for inflation (see Table 4 ).\nMost health care programs that serve people with limited income use FPG as a criterion in determining eligibility, typically in conjunction with categorical requirements. Mandatory coverage groups under Medicaid, for example, which has numerous pathways to eligibility, include different categories of children and families with income ranging from 100% to 185% of FPG. Optional coverage groups (which states may serve at their discretion) include additional categories, including certain elderly and disabled individuals, with income as high as 250% of FPG. The CHIP program serves children with family income above Medicaid eligibility levels, at income thresholds established by states with federal approval. (As of January 2009, the highest reported income standard was 350% of FPG, in New Jersey. )\nMedicare beneficiaries are eligible for the low-income prescription drug subsidy under Part D if their income is no higher than 150% of FPG, although the deepest subsidy goes to those below 135% of poverty. Remaining health programs that use FPG either give priority to people below 100% of poverty (Family Planning and the Maternal and Child Health block grant), or provide services free of charge to those below 100% but allow higher-income participants on a sliding fee scale basis (up to 200% of FPG under Consolidated Health Centers and 250% for Breast and Cervical Cancer Early Detection).\nCash aid, housing and development, and education programs generally do not use the poverty guidelines in determining eligibility. An exception is the TRIO programs for certain low-income postsecondary students, which cap income eligibility at 150% of FPG. TANF eligibility thresholds are established by states and are well below the federal poverty guidelines in most states.\nFood assistance programs typically use multiples of the federal poverty guidelines in determining eligibility, but they also provide automatic eligibility to categorical groups. The SNAP program generally serves those with gross income up to 130% of poverty. Child nutrition programs serve meals free to children with family income up to 130% of poverty, and at a reduced price to children with family income up to 185%. The WIC program caps eligibility at 185% of poverty. The nutrition program authorized by the Older Americans Act gives priority to certain groups, including seniors with the greatest economic need, defined as 100% of poverty.\nIn the social services category, CSBG and Head Start use 100% of the federal poverty guidelines as their income eligibility limit, but they both provide flexibility to states (in the case of CSBG) or grantees (for Head Start) in adjusting this limit upwards. Likewise, the Legal Services Corporation sets eligibility at 125% of FPG, but allows it to be increased up to 200% in certain circumstances. The SSBG has no federal income eligibility limit except for services funded by TANF grants that are transferred to the SSBG, which may only be used for families with income below 200% of FPG. Like the elderly nutrition program mentioned above, the Older Americans Act grant programs for supportive services and senior centers and for family caregivers give priority to seniors with income below 100% of poverty.\nLIHEAP uses 150% of poverty as its income eligibility limit, or 60% of state median income, if higher. Weatherization formerly used 150% of FPG to define income eligibility, but effective in FY2009, this was increased to 200%. Both weatherization and LIHEAP allow automatic eligibility for those eligible for certain other programs.\nEmployment and training programs for people with limited income use the federal poverty guidelines as one of several eligibility criteria, which include other measures of low income as well as categorical groups. Job Corps limits eligibility to those with income no higher than 100% of FPG; however, certain groups qualify automatically. Youth activities under WIA set eligibility at 100% of FPG, or 70% of the lower living standard income level (described below), if higher. The same criteria are used to give priority for certain adult activities under WIA. Both adult and youth activities under WIA also allow automatic eligibility for specified groups. Community Service Employment for Older Americans and Foster Grandparents (as in effect in FY2009) both limit eligibility to those with income no higher than 125% of poverty.", "Three alternative measures of income are most commonly used to define eligibility for programs that have individual income eligibility criteria but do not use the federal poverty guidelines. These measures are used primarily, but not exclusively, in three categories of federal benefits and services. Specifically, most cash assistance programs set an actual dollar amount that determines who is eligible; housing and development programs typically use a percentage of area median income; and student financial assistance programs use a relative concept of need that considers both available family resources and the actual cost of education. A fourth alternative measure is the lower living standard income level, which is used in conjunction with the poverty guidelines in certain employment and training programs.", "In the cash assistance category, specific dollar amounts are used to determine eligibility (and benefit levels) for pensions for needy veterans; the same concept is used in the health care category to determine eligibility for free medical care for needy veterans. Specific dollar amounts also are used to determine eligibility and benefit levels under SSI, and to determine when EITC benefits begin to phase out. Veterans' benefits, SSI, and EITC are generally adjusted each year for price inflation. Veterans' benefits and SSI adjustments are tied to Social Security cost-of-living adjustments (COLAs); and EITC is adjusted for price changes through indexing to the Consumer Price Index.\nAs noted previously, under TANF, states set their own dollar limits to define who is eligible to participate. (See Appendix D for references to further information about the current VA income thresholds, SSI eligibility limits, and EITC phase-out limits.)", "Housing and development programs typically use the concept of area median income, with various percentages of local area median income used to define \"low-income,\" \"very low-income\" and \"extremely low-income.\" These income limits are then used to determine program eligibility. For example, Section 8 Housing Choice Vouchers serve \"very low-income\" families, defined as those with income no higher than 50% of the area median. However, 75% of the Section 8 vouchers that become available each year must go to \"extremely low-income\" people, defined as those with income no higher than 30% of area median. Under limited circumstances, vouchers may go to \"low-income\" households, with income up to 80% of area median. Similarly, Public Housing serves low-income families (80% of area median) but at least 40% of units that become available each year must go to extremely low-income families (30% of area median). Supportive housing programs for the elderly and disabled limit eligibility to households with income no higher than 50% of area median, while Housing Opportunities for Persons with AIDS (HOPWA) and Indian Housing Block Grants serve people with income up to 80% of area median. The single-family rural housing loan program makes guaranteed loans available to households with income as high as 115% of area median, while direct loans are limited to those with income no higher than 80% of area median. (See Appendix D for references to further information about area median family incomes published by the Department of Housing and Urban Development.)\nFew non-housing programs use the median income concept. Exceptions are the Child Care and Development Fund (CCDF) and LIHEAP, which both use state median income as a component of their eligibility criteria. CCDF allows states to define their own income eligibility limits within the federal maximum of 85% of state median income, and LIHEAP, as noted earlier, uses 60% of state median income as an alternative measure of low income, if higher than 150% of the federal poverty guidelines.", "There is no absolute income threshold for certain postsecondary student aid programs. As noted above, these programs use a relative concept to determine the amount of aid a student is eligible to receive. Applicants provide information about family income and assets through completion of the Free Application for Federal Student Assistance (FAFSA). This information is then used to determine the Expected Family Contribution (EFC), or the amount the student's family is expected to contribute toward the student's education. Different EFC formulas are applied to three different groups of students: those considered dependent on their parents; independent students with no dependents other than a spouse; and independent students with dependents other than a spouse. The federal need analysis methodology is used for Pell Grants and several smaller higher education programs such as Supplemental Educational Opportunity Grants, Federal Work-Study, and Academic Competiveness and Smart Grants. Aid is capped under the Pell Grant program, so that higher income students are likely to receive smaller awards and the majority of students who receive Pell grants are low-income. (See Appendix D for references to additional information on the need analysis system.)", "Employment and training programs for adults and youth under WIA, as discussed earlier, use the lower living standard income level (LLSIL) as one component in eligibility determinations. The LLSIL has its origins in a series of family budgets developed by the Department of Labor's Bureau of Labor Statistics (BLS). In 1967, BLS published estimates for family budgets at three standards of living—lower, intermediate, and higher—based on a list of goods and services needed to achieve those standards of living and their prices. These budgets were last fully priced in 1969. They were subsequently updated by summary components of the Consumer Price Index (CPI) through 1981, when the BLS family budget series was discontinued. Since 1981, the LLSIL has been updated annually based on overall changes in the CPI-U. (See Appendix D for references to further information about the current LLSILs.)\nUnder WIA, individuals are determined eligible (or, in the case of certain adult activities, receive priority) if their income is at or below 100% of the federal poverty guidelines, or 70% of the LLSIL, whichever is higher. Unlike the federal poverty guidelines, the LLSIL vary by region and by metropolitan and non-metropolitan areas.", "As illustrated in the discussion above, measures of income used to determine eligibility vary widely among federal programs. It is important to note that definitions of countable income also vary. Some programs have explicit rules for counting income while many do not. A full discussion of the treatment of income is beyond the scope of this report; however, readers should know there may be differences between programs, so that income counted in determining eligibility for one program might not be counted in another, even though the programs might appear to use similar eligibility criteria.\nWages are typically counted as income, although some programs disregard a portion of earned income as an incentive for aid recipients to work. Programs differ as to whether they count Social Security and retirement income, public or private disability insurance, other work-related benefits such as Unemployment Compensation and Workers' Compensation, and investment income such as interest and dividends. Benefits provided under means-tested programs often—but not always—are excluded from the definition of income when determining eligibility for another means-tested program. Programs vary as to whether they count the income of the individual applicant, or also the income of a spouse, children, or other household members; in other words, the definition of \"filing unit\" varies among programs. Income can be looked at before tax, or after tax; on a monthly or an annual basis. Finally, some programs specify allowable deductions from countable income.\nMoreover, income (and assets, as discussed below) used to determine eligibility for a particular program might be evaluated differently when determining benefit levels under that program. Individuals with the same amount of countable income or assets might qualify for different levels of benefits, because of the program's specific calculation rules. This section of the report has focused primarily on eligibility rules; benefit determinations are discussed briefly in a later section.", "In addition to income eligibility rules, some programs use explicit asset or resource tests to limit eligibility. In other words, applicants may not have assets (e.g., cars, bank accounts; see Table 4 ) valued above a certain level to be eligible for a particular program. As with income eligibility rules, the amount of assets or resources that are subject to limits varies widely among programs. Likewise, programs define countable assets differently, although typically they are limited to liquid assets. Many exclude the value of a primary residence and personal belongings, and some overlook all or part of the value of a car.\nWithin the health care category, asset tests apply for the VA medical care program and the low-income subsidy under Part D of Medicare. Under CHIP, states have the option of applying an asset test, although few states currently do, and Medicaid is required to use an asset test only for certain categories of beneficiaries that are age 65 or older, have disabilities, and/or have high medical expenses.\nIn the cash assistance category, asset rules apply to pensions for needy veterans and to the SSI program. States also may choose to apply asset tests in their TANF programs, and the majority of states currently do. SNAP is the only food assistance program with an explicit resource test, although it is not applied to households that are automatically eligible because they have already received benefits or services under another means-tested program. While housing programs do not have asset tests, several impute a certain amount of income from assets. These include single-family rural housing loans, supportive housing for the elderly and persons with disabilities, and Section 8 vouchers and project-based rental assistance. Higher education programs that use the \"need analysis\" system consider assets along with income and the cost of school attendance to determine how much financial aid a student may receive.\nPrograms that were historically linked to the former AFDC program, including Foster Care and Adoption Assistance, still have remnants of the AFDC assets test. And, Legal Services Corporation grantees are required to establish \"reasonable\" asset limits for eligible individuals and households.", "For many programs, categorical requirements apply in addition to financial eligibility rules, so that an applicant must be both income-eligible and a member of the program's target population. While some programs are intended to help people in general below a certain income level, most are targeted on specific segments of the low-income population. As noted previously, key target populations for low-income programs, including many of the largest included here, are the elderly and individuals with disabilities, and dependent children and their families. Other target groups for selected programs include veterans, students, people who are homeless, Indians, and refugees, among others.\nSome programs also impose behavioral requirements as a condition of eligibility. For example, recipients of TANF cash assistance must comply with work and training requirements and cooperate with child support enforcement efforts; student aid recipients must generally maintain good academic standing; and certain Public Housing residents must participate in a self-sufficiency program or engage in community service. Able-bodied adults without dependent children must comply with work and training requirements to receive SNAP benefits for more than a limited time, and the EITC and ACTC go only to workers with earnings and their families. To receive CCDF-funded child care, parents must be working or in training, in addition to meeting income eligibility criteria.\nCertain behaviors or characteristics automatically exclude individuals from participating in some programs. For example, postsecondary students, households with members on strike (unless they were eligible before the strike), or people living in institutions are automatically disqualified from SNAP, even if they otherwise meet eligibility rules. Federal law bars individuals who are fleeing arrest or have been convicted of a drug-related felony from participation in SNAP and TANF, and individuals fleeing prosecution or confinement for a felony also are disqualified from SSI. TANF further allows states to test cash aid applicants and recipients for substance abuse and to sanction those who fail. Federal housing law prohibits individuals who have been convicted of producing methamphetamine on federally-assisted housing property or who are subject to lifetime registration on a state sex offender registry from admission to Public Housing or receipt of Section 8 vouchers. Public housing authorities have the discretion to adopt additional criteria, barring admission to households on the basis of such factors as other criminal convictions, poor credit histories, poor rental histories, or other criteria set by the PHA.", "Treatment of noncitizens under federal programs serving low-income populations is a complex topic that is beyond the scope of this report. Federal policy in this area is found in the various programs' authorizing statutes, but also in overarching provisions enacted in the 1996 welfare reform ( P.L. 104-193 ) and immigration reform ( P.L. 104-208 ) laws, as subsequently amended, as well as policy interpretations by executive branch agencies. Eligibility of noncitizens varies across and within programs and often depends on the noncitizens' immigration status, when they arrived in the U.S., how long they have lived here legally, their work history and military connection, and policies in the state where they live. Aliens living in the U.S. without legal authorization are generally barred from access to most federal benefits.", "As distinct from categorical or behavioral requirements that apply in addition to income eligibility rules, a concept of \"automatic eligibility\" is sometimes used as an alternative to individual income eligibility. If someone meets the eligibility criteria for one program, that person is automatically deemed eligible for another program, simplifying the process for both the applicant and the administering agency. In some programs, people are automatically determined eligible because they fit a particular demographic group or have a particular characteristic.\nAmong health care programs, Medicaid, the low-income subsidy under Medicare Part D, and services for refugees allow some degree of automatic eligibility. For example, SSI recipients are one of several groups that automatically qualify for Medicaid; SSI and Medicaid recipients are automatically eligible for the Part D subsidy; and unaccompanied minor children are automatically eligible for transitional medical services for refugees.\nCash assistance programs typically do not allow automatic eligibility for specified groups, while almost all food assistance programs do. TANF and SSI recipients automatically qualify for SNAP; TANF and SNAP recipients are automatically eligible for child nutrition programs; and TANF, SNAP and Medicaid recipients are automatically eligible for WIC, if they also are at nutritional risk. Head Start children, residents of emergency shelters, and runaway and homeless youth are examples of other groups that automatically qualify for some nutrition programs.\nMost housing and development programs that have individual income eligibility criteria do not allow automatic eligibility for particular groups as an alternative. Homeless Assistance Grants, however, base eligibility on a person's residential status rather than their income, and Indian Housing Block Grants allow certain non-low-income households to receive assistance if they meet other criteria related to their need for housing.\nIn the education category, the Pell Grant program allows certain postsecondary students—dependent students and independent students with dependents other than a spouse—to qualify for an automatic zero EFC (expected family contribution). This means they would receive the maximum Pell Grant award if they enroll full-time at a school where the cost of attendance equals or exceeds the maximum award. In general, to qualify for the automatic zero EFC, these students must have received means-tested benefits from other federal programs or had been eligible to file certain federal income tax returns, or had been a dislocated worker. However, parents or students also must have family income levels at or below certain annual thresholds ($30,000 in award year 2010-2011), to qualify. Children of deceased Iraq/Afghanistan service members also may qualify for an automatic zero EFC. One of the benefits of qualifying for an automatic zero EFC is that it greatly reduces the response burden associated with completing financial aid forms.\nWith the exception of postsecondary student aid, education programs typically do not require individuals to be determined income-eligible for assistance; rather, they target assistance toward areas or entities where low-income students are likely to be served (such targeting mechanisms are discussed later in the report). However, certain education programs use alternative criteria to identify eligible participants. For example, Adult Basic Education serves adults who lack basic skills or credentials; the Title I Migrant Education Program serves the children of migrant workers; and Education for Homeless Children and Youth bases eligibility on children's living situations. GEAR-UP serves students determined to be at risk of dropping out, and Reading First and Early Reading First based eligibility on a child's reading proficiency. Indian education programs generally serve children who are members of federally recognized tribes.\nAmong social services programs, Child Support Enforcement automatically serves families receiving TANF, foster care payments, or who are eligible for Medicaid. Children receiving public assistance, foster children, and homeless children automatically qualify for Head Start, along with a limited number of non-low-income children if they meet other criteria related to their likelihood to benefit from the program. Individuals with developmental disabilities are eligible for services under Developmental Disabilities Basic Support and Advocacy Grants, regardless of their individual income status. Likewise, older foster children and former foster children may participate in the Chafee Foster Care Independence Program, without meeting individual income eligibility criteria.\nBoth energy programs included in the report allow automatic eligibility for TANF and SSI recipients. Weatherization also allows states to make LIHEAP recipients automatically eligible, and LIHEAP provides automatic eligibility for beneficiaries of SNAP and certain veterans benefits. Finally, in the employment and training category, public assistance recipients, homeless youth, and certain foster youth automatically qualify for WIA youth activities and Job Corps. And, the WIA adult program gives priority for certain services to adults considered low-income, which may include those who receive public assistance or are homeless.", "The previous section looked at the ways in which programs define individual eligibility for federal benefits and services for low-income people. In most programs, the process of determining individual eligibility and delivering benefits and services is done through entities such as states, local governments, or private organizations. Federal funds are often provided to these entities via mechanisms that target areas with the greatest need or concentration of eligible individuals. These targeting provisions also may compensate for variation in fiscal capacity at the state and local level.\nThis section looks at three primary concepts used to target federal resources: allocation formulas that distribute funding to states or other areas based, at least in part, on factors related to need; cost-sharing rules that vary the federal share of total program costs by a measure of need; and provisions that limit federal funds only to certain institutions or jurisdictions that serve low-income people. As with individual eligibility rules, specific targeting provisions vary widely, even within the same general concept. Moreover, some programs use a combination of these concepts; in other words, federal funds might be allocated to states according to factors related to the target population, but the federal share of the program's costs might also be determined by a measure of need. Table 5 provides a summary of these targeting concepts, and Table B -2 in Appendix B shows use of the concepts by program.\nThere is considerable overlap between programs that impose individual eligibility criteria (those discussed in the previous section) and those that also target federal resources by a measure of need. In other words, programs may use targeting mechanisms to distribute federal funds, but individuals still must be determined income-eligible for the program. Some programs, however, rely on broad targeting mechanisms only, and do not require participants or beneficiaries to meet an individual eligibility test.", "Federal grant programs, especially those targeted toward a particular population, frequently use formulas to allocate funding among states or, sometimes, local governments or other entities. Many programs in this report are formula grants (as compared with competitive or discretionary awards, or direct benefits to individuals), and use population-based allocation factors as a way to direct resources toward areas with large concentrations of the program's target group. Programs that allocate funding in this way usually have a cap on total federal spending, so that allocation factors determine each jurisdiction's relative share of the total amount available.\nWhile programs for low-income people often allocate funds in part on a measure of economic need (e.g., population with income at or below the poverty guidelines), not all formula factors are need-based. Some programs base allocations in whole or in part on historic spending patterns, which may reflect a wide variety of factors; if current population-based formulas were applied to these programs, the distribution of resources might change significantly. Moreover, \"hold-harmless\" provisions, small-state minimums, and \"ceilings\" and \"floors\" are often used to mitigate large changes in a particular jurisdiction's formula-based allotment from one year to the next. The specific data sources to be used also are significant and sometimes are specified in statute.\nThe following provides an overview of the types of allocation factors used in low-income programs, but does not constitute a complete explanation of any particular formula, nor does it discuss the effectiveness or efficiency of these allocation factors in actually directing resources toward areas with the greatest need.\nIn the health care category, the CHIP program for low-income children without health insurance currently (effective FY2009) allocates funds among states according to past and projected spending. Previously, however, CHIP allocated funds among states, in part, using two relevant population factors: the number of low-income children in the state and the number of such children without health insurance. The Ryan White program for low-income people with HIV or AIDS allocates funds to metropolitan areas and states based on relative population size and incidence of AIDS cases, but does not use an income factor. The Maternal and Child Health block grant allocates funds according to states' relative shares of funding under predecessor programs, and according to their population of low-income children.\nTANF block grants are allocated among states according to their historic spending under the predecessor AFDC program, so that states with higher expenditures under AFDC get relatively larger grants under TANF. Among food assistance programs, WIC uses a formula that reflects actual food and caseload costs, and the Commodity Supplemental Food Program allocates resources according to caseload, based on past participation. The Emergency Food Assistance Program (TEFAP) allocates resources based on the number of poor people in each state, in combination with the number of unemployed persons. Nutrition for the elderly under the Older Americans Act allocates funds among states based on the population age 60 and older, with no income factor.\nMost housing and development programs use a need-based formula to allocate funds, but the formulas vary widely. Rural programs use such factors as state shares of rural population, rural poverty, overcrowded housing or housing units without plumbing, and unemployment. Housing programs for the elderly and people with disabilities use measures of elderly or disabled individuals, in addition to housing factors. Community Development Block Grants go to eligible communities and states based on poverty, population, overcrowded housing, age of housing, and slow population growth; somewhat similar factors are used for Emergency Shelter Grants and Indian Housing Block Grants. The HOME program uses the number of older housing units occupied by low-income households and number of poor families. The temporary Neighborhood Stabilization Program-1 allocated funds to states and local governments on the basis of home foreclosures, subprime mortgages, and homes in default or delinquency.\nIn the case of Section 8 Housing Choice Vouchers, Congress establishes a formula, typically in annual appropriations laws, for allocating funding among public housing authorities to renew their existing vouchers. The formula is usually based on some measure of the utilization and cost of vouchers in the local area. However, the geographic distribution of vouchers that are renewed each year is a function of historic patterns and may not necessarily reflect the current distribution of the eligible population. Likewise, operating and capital funds for Public Housing are allocated by formula, but the distribution of public housing units that receive these funds is a reflection of decisions made by local communities to participate in the program in its earlier days.\nMany education programs are designed as formula grants and rely in some way on counts of poor children. Title I-A of ESEA distributes funds to local educational agencies according to four separate formulas that consider such factors as number of school-aged children in poverty and average per-pupil expenditures in the state. Areas with high concentrations of poverty receive additional weighting under two of the four formulas. Aggregate state allocations under Title I-A in turn determine state shares under other ESEA programs, including Education for Homeless Children and Youth and 21 st Century Community Learning Centers. The number of school-aged children in poverty also is an allocation factor for Reading First, Math/Science Partnerships, and Improving Teacher Quality Grants.\nCertain education programs use allocation factors related to the target population, but not explicitly tied to income. The Migrant Education Program (under Title I of ESEA) allocates funds according to the number of eligible migrant children and state average per pupil expenditures, and Adult Basic Education bases allocations on the number of individuals age 16 or older who have not completed high school. Federal Supplemental Educational Opportunity Grants and the Federal Work-Study Program both allocate funds to participating institutions of higher education, based on the aggregate \"need\" of their students, as indicated through the need analysis system discussed earlier.\nMost social services programs allocate funds by formulas, which often include a poverty-related allocation factor. Components of the CCDF are distributed through several formulas, which use such factors as a state's relative share of children under age 5, children who receive free or reduced-price school meals (a proxy for low-income children), and children under age 13, as well as state per capita income and historic funding patterns. Head Start allocates funds among states (from which awards are made to local grantees) according to several factors, including poor children under age 5. The Legal Services Corporation allocates funds according to each state's poverty population.\nAs with a number of the education programs discussed above, some social services programs use allocation factors tied to their target population but not explicitly to their income. The Older Americans Act allocates funds for supportive services and senior centers according to each state's relative share of population aged 60-plus, and for the family caregiver program according to population aged 70-plus. The Chafee Foster Care Independence Program bases allocations on each state's number of foster children; the Emergency Food and Shelter Program allocates funds to local jurisdictions based on their number of unemployed persons; and SSBG allocates funds according to total state population. CSBG allocates funds based on historic funding patterns; the total amount received in 1981 by local antipoverty agencies in each state, under a now-defunct provision of the Economic Opportunity Act, determines the state's allotment of CSBG funds today.\nWeatherization funds go to states based on a combination of factors, including low-income population, climate conditions, and residential energy expenditures by low-income households. LIHEAP uses a particularly complex formula, which, among other things, includes total residential energy consumption, temperature variation, and low-income heating and cooling consumption.\nFinally, among employment and training programs, Community Service Employment for Older Americans gives states an amount based on historic funding, and then allocates funds according to state shares of the nation's population age 55-plus and state per capita income. WIA funds go to states based on their shares of \"substantial\" unemployment (unemployment rate of at least 6.5%), \"excess\" unemployment (rate above 4.5%), and the \"disadvantaged\" population (disadvantaged adults for the WIA adult activities program, and disadvantaged youth for the youth program). Funding for employability services for refugees (referred to as \"social services and targeted assistance\") are allocated according to the number of refugees, asylees, and other humanitarian cases that entered a state during the previous 36 months.", "Under certain programs, the federal government pays a larger share of total costs depending on the income level or concentration of poverty in the state or community to be served. This increased federal share can happen through use of a federal matching rate that is tied to income or another measure of need, or through special provisions that raise the matching rate or federal share under specified circumstances. Relatively few programs use need-related cost-sharing mechanisms; however, these programs include Medicaid which, as noted previously, is the single largest program included in this report.\nAs discussed earlier, Medicaid is a federal-state partnership, in which the federal government and states share the costs of providing health care services to eligible beneficiaries, with no predetermined cap on federal spending. The federal government's share of expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). Generally determined annually, the FMAP varies by state and is inversely related to state per capita income, so the federal government pays a larger portion of Medicaid costs in lower-income states and a smaller portion in higher-income states. For expenditures in FY2009 (and extended through June 2011 by subsequent legislation), ARRA (the economic stimulus legislation) authorized increased FMAPs for states. Most Medicaid administrative expenditures are matched at a uniform 50% rate.\nThe CHIP program uses an enhanced FMAP (E-FMAP) to determine the federal share of program funding, which is more generous than the regular FMAPs used under Medicaid. CHIP is a capped entitlement program and, as discussed earlier, allotments to states are based on past and projected spending, among other factors. Because CHIP is a federal-state matching program, states must spend a portion of their own money, determined through use of the E-FMAP, to receive their full formula-determined allocation of federal funds.\nIn the social services category, the Medicaid FMAP is used to calculate the federal matching rate for certain child care funds under the CCDF, and for expenditures on maintenance payments and adoption assistance payments in the Foster Care and Adoption Assistance programs.\nThe rural Water and Waste Disposal program varies the amount of federal support provided by the income level of the community served. The lowest interest rates are provided to projects in communities where median household income is no higher than 80% of state nonurban median income or the poverty guidelines. In addition, federal resources may cover up to 75% of costs in such communities, but no more than 45% of costs in communities where income is higher. Under the Public Works and Economic Development program, the usual 50% federal share of program costs may be increased up to 80%, depending on the relative needs of the area where a project is located, and may reach 100% for grantees that have exhausted their borrowing and/or taxing capacity.\nIn the education category, the 21 st Century Community Learning Center program allows states to require local grantees to match federal funds; however, the match is adjusted based on the relative poverty of the grantee's target population. The developmental disabilities program requires a nonfederal match of 25%, which may be reduced to as low as 10% for projects conducted in poverty areas.", "As discussed previously, many programs for low-income people require individual participants or beneficiaries to meet a need-related eligibility test. Some programs also (or instead) require the geographic area or participating entity to meet an income or need-related test, which is the third general concept used to target federal resources toward low-income populations. Under this approach, funding is not necessarily distributed nationwide, but only to areas or entities meeting specified criteria. The approach is not used widely, but the following provides examples.\nConsolidated Health Centers assist people who are \"medically underserved,\" defined to mean they live in an area designated by the federal government as having a shortage of personal health services. In designating such an area, economic factors such as the area's poverty population may be considered.\nAlthough TANF block grants go to all states, TANF contingency funds are available only to states that meet a test of \"economic need,\" based on either unemployment rates or food stamp (SNAP) caseloads. TANF supplemental grants go to states that meet criteria related to high population growth and/or low historic spending for welfare.\nA few housing and development programs limit eligibility to communities or areas based on need. For example, Water and Waste Disposal grants and loans only go to communities that are unable to finance their projects through other means. To receive funding under the Public Works and Economic Development program, projects must be located in areas with either low per capita income (at or below 80% of the national average), high unemployment (above the national average for the most recent 24 months), or a special need arising from severe unemployment or changes in economic conditions.\nEducation programs that target resources in this way include Institutional Aid for higher education; eligible institutions must have high proportions of students receiving need-based assistance or Pell Grants, or be minority-serving institutions. Funding goes to states by formula under the 21 st Century Community Learning Center program but must be used to serve children attending high-poverty schools. Similarly, certain formula grants to states under the Rural Education Achievement Program must go to local educational agencies where at least 20% of children are poor. To be eligible for GEAR-UP grants, partnerships must include a low-income middle school.\nFinally, in the social services category, eligible jurisdictions in the Emergency Food and Shelter Grant program are chosen by measures of population, unemployment, and poverty.", "As discussed in the previous section, federal benefits and services are frequently structured as nationwide grant programs, in which federal funds are provided to specified jurisdictions according to some type of formula; government agencies or other entities within these jurisdictions deliver the benefits and services to eligible individuals. Some programs are structured as competitive or discretionary grants, leaving decisions about specific grantees and award amounts to the federal administering agency, within parameters set forth in law. Certain federal benefits are provided to eligible individuals directly.\nThis section looks at the three primary forms of federal assistance for low-income people—formula-based grants, competitive or discretionary awards, and direct benefits—and the immediate recipients of these funds (see Table B -3 in Appendix B ). It also discusses matching and related requirements for state or local spending, and briefly examines policies affecting participation of Indian tribes and U.S. territories.", "Most programs for low-income people allocate funds nationwide, dividing federal resources among jurisdictions according to a formula based on specified factors (e.g., number of children with family income below the poverty guidelines). Formula-based grants also include those that use cost-sharing formulas to determine the amount of federal funds a jurisdiction will receive (such as the Medicaid FMAP, described above, which determines the amount of state expenditures that the federal government will reimburse). Formulas are most often used to determine funding levels for states (as opposed to localities), and state governments or specified state agencies are typically the recipients of the funds. However, some programs distribute funds by formula at the local level. Moreover, programs that award formula funds to states sometimes require the states to pass through a portion (or all) of the funding to local entities, either using a substate formula specified in law or at the state's discretion. And, some programs award funds directly to local agencies, but use a state-level formula to determine the aggregate amount that grantees in the state may receive.\nIn the health care category, Medicaid makes payments to states based on their eligible expenditures and the applicable federal matching rate. CHIP, the Maternal and Child Health block grant, and Transitional Cash and Medical Services for refugees all use formulas to allocate and award funds to states. The Ryan White program for low-income people with HIV or AIDS allocates and awards funds by formula both to states and to eligible localities.\nCash aid is the only major category that does not rely significantly on formula grants. TANF operates as a formula grant to states, but all other cash programs award benefits directly to eligible individuals. Most food assistance programs operate as formula grants to states (usually state educational agencies for child nutrition programs), which then distribute resources to participating schools, institutions, or other local sponsors. SNAP is something of a hybrid; although SNAP benefits go directly to eligible individuals, states administer the program and the federal government reimburses states for part of their administrative costs, using a cost-sharing formula of 50% federal and 50% state.\nHousing and development formula grants typically allocate and award funds at the substate level, with a few exceptions. For example, the Water and Waste Disposal program allocates funds among the Department of Agriculture's state rural development offices using state-level formula factors, but makes loans and grants directly to local governments and organizations. Both of the temporary ARRA-created programs related to the Low-Income Housing Tax Credit made formula grants at the state level, awarding funds to state housing credit agencies. Among other housing and development formula grants, however, Community Development Block Grants go to substate \"entitlement communities\" and to states only on behalf of non-entitlement communities. Emergency Shelter Grants (one of HUD's homeless assistance programs), HOME, HOPWA, and the temporary NSP-1 all allocate and award federal funds to a combination of metropolitan cities and urban counties and to states on behalf of non-metropolitan areas. Funding for Public Housing and Section 8 Housing Choice Vouchers is allocated and awarded to local public housing authorities, while Indian Housing Block Grants go to Indian tribes.\nEducation programs under ESEA are a combination of formula grants to state and local educational agencies (SEAs and LEAs). Adult Basic Education and Education for Homeless Children and Youth are non-ESEA programs that operate as formula grants to states, which in turn award funds to local projects or LEAs. Federal Supplemental Education Opportunity Grants and the Federal Work-Study program allocate and award funds by formula directly to institutions of higher education.\nAlmost all social services programs are structured as formula grants to states. An exception is the Emergency Food and Shelter Program, which allocates funding among eligible local jurisdictions and makes grants to local boards in those jurisdictions. In addition, both Head Start and the Legal Services Corporation use state-level data to allocate funds among states, but grants are awarded from those allocations directly to local programs. CSBG requires states to pass through most of their allotments to local \"eligible entities\" and Older Americans Act grants are suballocated to local area agencies on aging.\nWeatherization and LIHEAP grants are allocated and awarded to states, which in turn use a network of local agencies and organizations to operate their programs. Among employment and training programs, WIA allocates federal funds among states by formula, but the majority of these funds are awarded directly to local workforce investment boards, with a portion given to the states. The Community Service Employment Program under the Older Americans Act allocates and awards funding by formula both to states and national organizations.", "Federal programs are sometimes structured as competitive or discretionary grants, in which federal agencies select specific grantees and determine amounts to be awarded. Authorizing laws provide criteria or parameters for federal agencies to follow in making such decisions, but these criteria can range from very specific to relatively broad. Grantees may be selected through an annual competition or for multi-year periods with a presumption of renewal.\nCompetitive awards are less common than formula grants among federal benefits and services for limited-income populations. No cash, food, or energy assistance programs are structured this way; however, a number of such programs exist in other categories.\nIn health care, Family Planning and Consolidated Health Centers are both competitive grants to eligible public and nonprofit agencies. Under the Breast/Cervical Cancer Early Detection program, states compete for grants and in turn, enter into grants or contracts with public and private nonprofits. The Ryan White program, in addition to its formula grants described earlier, makes competitive awards to specified health care providers.\nUnder the Public Works and Economic Development program, a variety of entities are eligible to compete for grants, including designated economic development districts, states, local governments, institutions of higher education, and public and private nonprofit organizations. With the exception of the formula-driven Emergency Shelter Grants program described above, Homeless Assistance Grants award funds on a competitive basis; states, local governments, public housing authorities, private nonprofits, and (for certain grants) community mental health centers may apply. HOPWA includes a competitive grant component in addition to its formula grants, with states, local governments and nonprofit organizations eligible to apply. The HOPE VI component of Public Housing also operates as a competitive grant, open to public housing authorities.\nThe federal government directly administers a few discretionary education programs, including Institutional Aid for colleges and universities; the TRIO programs, which are open to institutions of higher education and other public and private organizations; and GEAR-UP, which is open to states and partnerships that include an institution of higher education and a low-income middle school.\nWhile TANF is primarily a formula grant program, it includes certain grants designated for social services to promote healthy marriage and responsible fatherhood. These grants are awarded by the federal government directly to public and private nonprofit agencies through a competitive process. As described earlier, both Head Start and the Legal Services Corporation are social services programs that allocate funds among states by formula, but award funds directly to local grantees. These grantees are selected on a competitive basis, but grantees retain their designations for several years at a time.\nAmong employment and training programs, public and nonprofit organizations may apply for sponsorship of the Foster Grandparents program, and the federal government enters into contracts for operation of Job Corps centers with selected federal, state and local agencies, area vocational schools, residential vocational schools, and other public and private organizations.", "A relatively small number of programs make benefits available directly to eligible individuals, or through a nongovernmental intermediary organization or entity. These programs, however, include six of the 10 largest programs in this report.\nAmong health programs, both the Department of Veterans Affairs (VA) and the Indian Health Service (IHS) provide free medical care directly to eligible needy veterans and American Indians and Alaskan Natives, respectively, at VA and IHS facilities. The Part D Medicare program subsidizes the costs of prescription drug insurance directly through contracts with participating drug plans.\nOther than TANF, all cash aid is provided directly to beneficiaries. The Social Security Administration makes payments to eligible elderly and disabled individuals under SSI (although medical determinations of disability are made by state agencies). The Internal Revenue Service administers the EITC and ACTC, issuing refund checks directly to eligible workers. The VA makes direct payments to recipients of pensions for needy veterans.\nAs noted earlier, SNAP is a hybrid of direct benefits and formula grants to states. States play a key role in SNAP—determining eligibility and benefit levels and administering a related employment and training program—but assistance to purchase food is provided directly to beneficiaries, typically through electronic benefit transfer.\nA few housing and development programs provide benefits directly. For example, the Department of Agriculture either makes or guarantees single-family rural housing loans, and makes direct payments to property owners who participate in the Rural Rental Assistance Payments program. Likewise, HUD makes payments directly to property owners under the Section 8 Project-Based Rental Assistance Program; these subsidies enable owners to rent units to low-income families at affordable rates.\nAmong education programs, Pell Grants and Academic Competitiveness and Smart Grants are paid to participating institutions on behalf of eligible students; the schools receive an administrative allowance for the cost of determining students' eligibility and benefit levels.", "This report does not attempt to quantify nonfederal spending related to federal programs for limited-income populations. However, a significant amount of such spending occurs. For example, as already explained, Medicaid is a federal-state matching program in which states spend considerable amounts of their own money. Specifically, in calendar year (CY) 2009, national health expenditures under Medicaid totaled $385 billion, of which $254 billion were federal and $131 billion were state or local. In CY2008, national expenditures under Medicaid totaled $354 billion, of which $209 billion were federal and $145 billion were state or local. The decrease in state and local expenditures from CY2008 to CY2009 is likely a function of the increased federal medical assistance percentage (FMAP) in effect for FY2009, as authorized by ARRA ( P.L. 111-5 ).\nMany low-income programs have provisions that require states or other grantees to match federal funds with a specified amount of nonfederal resources (\"matching\" requirements), or require grantees to maintain the same level of their own spending that occurred in a previous year (\"maintenance-of-effort\" provisions), or prohibit grantees from substituting federal funds for nonfederal funds that would have been available otherwise (\"supplement and not supplant\" requirements).\nMatching grants are generally designed in one of two ways. Under certain programs (e.g., Medicaid), the federal government reimburses grantees for a portion of their eligible expenditures, generally based on a cost-sharing formula. Additional examples are CHIP, Child Support Enforcement, Foster Care, and Adoption Assistance.\nMore typically, matching programs require grantees to demonstrate that they can provide nonfederal resources equal to a percentage of the federal grant, but the federal government is not necessarily reimbursing grantees for expenditures already incurred. Some federal programs require the nonfederal share to be in cash, but many also allow in-kind contributions (e.g., the value of donated real estate or other property, the services of volunteers). Programs with nonfederal matching requirements include the Ryan White program for people with HIV/AIDS, Breast/Cervical Cancer Early Detection, and the Maternal and Child Health block grant; Older Americans Act nutrition and social services programs; the Public Works and Economic Development program, certain Homeless Assistance Grants, and HOME; Adult Basic Education, Supplemental Education Opportunity Grants, and GEAR-UP; Head Start, State Councils on Developmental Disabilities, the Chafee Foster Care Independence Program; Community Service Employment for Older Americans, and Foster Grandparents.\nAs noted above, some programs use maintenance-of-effort (MOE) requirements to ensure a minimum level of nonfederal spending. A key example is TANF, which requires states to spend annually at least 75% of the amount they had spent under the predecessor AFDC program in FY1994 (or 80% if they fail to meet certain work participation requirements). Other programs with MOE provisions include School Lunch, The Emergency Food Assistance Program (TEFAP), Title I-A of ESEA, and CCDF.\nEducation programs in particular use the \"supplement and not supplant\" concept, which provides that grantees may not use federal funds to replace nonfederal (or in some cases, other federal) funds that would otherwise have been used for the same purpose. Programs with such provisions include Title I-A of ESEA, the Rural Education Achievement Program, Math and Science Partnerships, Improving Teacher Quality State Grants, and Institutional Aid for higher education.", "Several programs specifically for Indian populations are included in this report, namely the Indian Health Service, Indian Housing Block Grants, Indian Education, and Indian Human Services. However, tribes and tribal organizations are eligible to participate in additional programs, either by applying for competitive or discretionary awards, or through funding specifically set-aside for them. Moreover, individuals who are American Indians or Native Americans likely participate in many programs for limited-income populations, not because of their heritage or tribal affiliation but because they otherwise meet a program's eligibility rules.\nExamples of programs for which tribes and tribal organizations or other Indian entities are explicitly eligible to participate include the Ryan White program and Breast/Cervical Cancer Early Detection; WIC and TEFAP; Water and Waste Disposal grants and loans, Public Works and Economic Development, Homeless Assistance Grants, and HOME; Institutional Aid for colleges and universities; the Community Service Employment Program for Older Americans, Foster Grandparents and Job Corps. In addition, tribes may apply to the federal government to participate directly (rather through states) under several block grant programs, including TANF, CSBG, Weatherization Assistance, and LIHEAP.\nSeveral education programs reserve funds specifically for transfer to the Interior Department's Bureau of Indian Education (BIE) for schools overseen by BIE. These programs include Title I-A of ESEA, Education for Homeless Children and Youth, 21 st Century Community Learning Centers, Reading First, a component of the Rural Education Achievement Program, and Improving Teacher Quality State Grants. In the social services category, funds are set-aside for Indian tribes under CCDF and for Indian Head Start programs.\nThe authorizing laws for certain programs establish a separate Indian component that is funded and administered independently of the primary program. These include SNAP (the law authorizes a separate Food Distribution Program on Indian Reservations), the Older Americans Act (Title VI authorizes separate nutrition and social services programs for Native Americans), and Community Development Block Grants (the law authorizes a separate Indian Community Development grant).", "United States territories or their residents are eligible to participate in the majority of federal programs that provide benefits and services to people with limited income. The specific territories that are eligible to participate, however, and the rules that apply to their participation vary by program. Territories may or may not actually participate in all programs for which they are eligible. In addition, Title V of P.L. 95-134 authorizes federal agencies to consolidate grants for certain territories, specifically American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and the Trust Territory of the Pacific Islands (which include Micronesia, the Marshall Islands, and Palau).\nA detailed discussion of the eligibility of U.S. territories and their rules of participation, by program, is beyond the scope of this report. A few general observations can be made about the treatment of territories in programs included here.\nAbout two-thirds of programs included in this report have some provisions for participation by at least one of the territories. Among programs that include the territories, Puerto Rico, along with American Samoa, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands, are most commonly included; however, not every program includes every one of these territories. Some statutes also allow for participation by Micronesia, the Marshall Islands, and Palau.\nPuerto Rico is more likely than other territories to be defined as a state, subject to the same rules as the 50 states and the District of Columbia. However, while some formula grants apply the same general policies to Puerto Rico that apply to states, they sometimes use different criteria to determine its funding level. Formula grants often set aside a percentage or specific amount of funds to be made available to specified territories, subject to their meeting program-related criteria, while discretionary or competitive grants often include the territories among the various other entities and organizations that are eligible to apply.", "This report generally does not discuss the value of benefits and services received under programs targeted toward low-income people. For many of the programs included here, the process of quantifying their value is complex. Moreover, there may be different ways to look at the value of a particular benefit. For example, the value of Medicaid could be considered its \"market value\" (what a family would have to pay in the private insurance market to purchase comparable coverage), or it could be considered the amount of a family's resources that are \"freed up\" as a result of Medicaid coverage and therefore available to purchase other goods and services.\nEstimating the value of benefits provided under the range of education, housing, food assistance, and service programs included in this report raises similarly difficult questions. For many programs, benefit computations depend on factors that vary for each individual case. For example, rental assistance is a function of both family income and the fair market rent of a particular housing unit. Pell Grants and certain other higher education benefits are calculated based on a family's available resources and the cost of attendance at the student's particular college or university. In other words, both housing programs and student aid consider the cost of goods and services (i.e., the rent for a particular apartment or the cost at a particular school) as a component in the benefit calculation, in addition to an individual's income and/or assets.\nCalculating the value of cash and near-cash benefits (such as SNAP) is somewhat more straightforward. However, even with cash and near-cash benefits, the amount an individual or family receives depends on their specific circumstances, and the benefit computation can be complicated. Under certain programs, benefits are larger for larger family sizes, reflecting greater need. Benefits are generally reduced when a family has other sources of cash income, such as earnings or Social Security benefits.\nTable 6 shows the maximum benefit, under each program's specific rules, for certain individuals and family types from cash assistance programs, specifically SSI, EITC, ACTC, veterans' pensions, and TANF. It also shows the maximum benefit amounts under the \"near-cash\" SNAP program. Benefit amounts are shown for FY2008 and FY2009 (the years covered by this report) and, for comparison, FY2011. The table shows either maximum monthly benefits or maximum annual benefits, depending on the program, with annual benefits also shown as per month equivalents, to allow comparison. Benefits are shown for different family sizes; however, for the ACTC, the maximum benefit shown is per child . There is no limit on the number of eligible children for whom the credit may be claimed in an individual family. For TANF, the benefit levels shown are for families and households with no other source of family income, who also are in compliance with behavioral rules (notably, work requirements).\nSSI, EITC, veterans' pensions, and SNAP are generally adjusted each year for price inflation. However, SNAP benefits were raised by ARRA, which effectively suspended benefit adjustments in 2010 and 2011. SSI and veterans' benefit adjustments are tied to Social Security cost-of-living adjustments (COLAs); there were no such COLAs for 2010 and 2011 because of the low rate of price inflation accompanying the economic downturn that began in 2007. EITC benefits are also adjusted for price changes through indexing to the Consumer Price Index; ACTC benefits are not indexed.\nSSI, EITC, ACTC, veterans' pensions, and SNAP benefits are determined in federal law. It should be noted that states can also supplement SSI benefits with their own funds and many states also have their own EITCs that can increase benefits for families above the amounts shown in the table.\nTANF benefits are set by the states, and vary greatly from one state to another. States typically do not make regular adjustments for price inflation. Rather, states make ad-hoc adjustments to TANF cash benefits. The table shows maximum TANF cash benefits for states with the highest benefits (Alaska) and with the lowest benefits (Tennessee for family size of two, Mississippi for family size of three). Benefit levels remained the same for cash assistance recipients in these states in 2008 and 2009. However, some states did increase benefit amounts, as illustrated by the slight increase in the median state maximum benefit for both a family of two and a family of three.", "Federal programs providing benefits and services to low-income people are extremely diverse and are rarely looked at collectively. These programs and their underlying policies evolved over many decades; they were created to achieve different policy goals in response to different perceived policy problems. Their common feature is an explicit focus on low-income populations.\nThis report provides a snapshot of policies and spending in FY2008 and FY2009 on specified categories of benefits and services for low-income people. It looks at the broad purposes of these programs and then focuses primarily on concepts used to determine eligibility for individual participants and to distribute federal resources according to need. The report also briefly examines the units of government or other entities that receive and administer these federal funds.\nNumerous additional questions can be raised about this collection of benefits and services targeted toward low-income people. For example, the report does not address programs' effectiveness in meeting their policy goals, either individually or by category. A comprehensive review of program evaluations is beyond the scope of this report; moreover, a consistent body of evaluation literature on all programs for low-income populations is not available. Likewise, the report generally does not attempt to quantify the benefits provided under these programs, for reasons stated in the previous section.\nMany programs included in this report rely on the federal poverty guidelines for determining income eligibility, or population statistics based on federal poverty thresholds to allocate funds. In addition to issues raised by use of different multiples of the poverty guidelines by different programs, the guidelines themselves—and the thresholds on which they are based—are the subject of considerable controversy.\nDespite different eligibility rules, using various concepts in addition to the federal poverty guidelines, many federal programs for low-income people have overlapping target populations. However, these programs were not necessarily designed intentionally to be consistent with or complementary to one another. Thus, questions can be raised—about potential duplication, the ease with which people can understand and access benefits or services, whether gaps exist among programs in terms of eligibility and available benefits, and the efficiency of service delivery mechanisms. The variety of targeting provisions raises questions about equity and whether \"need\" is addressed uniformly across the country.\nAs for the level of participation in federal low-income programs, the fact sheets in Appendix C provide very limited data, primarily to give a sense of scope for each program. However, many questions can be asked about participation in these programs, both individually and collectively. For example, what percent of eligible beneficiaries are served or participate in each program? Assuming most programs do not serve everyone eligible, what are the characteristics of those who actually participate? Are programs targeting the lowest-income individuals, or do other criteria determine who gets served? For programs with overlapping target populations, to what extent are people served under multiple programs?\nAdministrative data for some programs provide information about the number and characteristics of participants, but these data are inconsistent across programs, and cannot be used in combination to get a picture of multiple program participation. The Survey of Income and Program Participation (SIPP), administered by the Census Bureau, provides some insight. The most recent SIPP data, for the third quarter of 2008, indicate that about 28.4 million households—24% of total households in the United States—received cash or noncash benefits under one or more means-tested program in an average month. Most often, these programs were Medicaid, free and reduced-price school meals, or SNAP; other programs included housing assistance, SSI, TANF, WIC, LIHEAP, and veterans' pensions. Notably, however, the SIPP data do not identify the extent to which households receive benefits under the EITC or ACTC, although these cash assistance programs are among the 10 largest federal benefits for low-income people.\nReturning to the discussion of benefits and services by category, Figure 1 clearly demonstrates that certain categories—most notably health—have grown larger than others. The relative size of the programs, the budgetary classification of their spending (e.g., discretionary or mandatory, open-ended or capped), and the diversity of design elements have implications for the ability of lawmakers to enact new policies, change existing policies, or adjust spending priorities in a time of fiscal constraint.\nFinally, the report notes that many programs for low-income people operate through formula grants, typically to states. Many of these programs require states, or sometimes other entities within states, to spend a certain amount of nonfederal funds to access their full federal grant. Even in some programs that provide benefits directly to individuals, such as SNAP or SSI, states play a role in determining eligibility or conducting other administrative functions and, in some cases, in supplementing the federal benefits provided. In the current fiscal environment, with many state budgets in critical condition, the ability of states to fully access federal funding and to maintain their level of support for low-income benefits and services is an outstanding question. At the same time, continued federal spending on these benefits and services is at issue, in light of current concerns about the size of federal deficits and long-term debt.\nAppendix A. Methodology of Report\nSelection of Programs\nPrograms were selected for inclusion in this report if they (1) have provisions that base an individual's eligibility or priority for service on a measure (or proxy) of low or limited income; or (2) target resources in some way (e.g., through allocation formulas, variable matching rates) using a measure (or proxy) of low or limited income.\nA few programs without an explicit low-income provision were included because either their target population is disproportionately poor or their purpose clearly indicates a presumption that participants will be low-income. Such programs that serve disproportionately low-income people include the Indian Health Service, Homeless Assistance Grants, Indian Education, Title I Migrant Education Program, and Indian Human Services. Programs with purposes that presume a low-income target population include Adult Basic Education and Social Services Block Grants.\nFederal student loan programs were considered for inclusion because they determine benefit levels through the same need analysis system that is used for Pell Grants and several smaller postsecondary education programs. However, this system can result in students from relatively well-off families receiving assistance, as there is no absolute income ceiling on eligibility. Pell Grants are structured in such a way that the majority of recipients are low-income and the lowest-income students receive the largest benefits. Student loan programs are not as strongly targeted and therefore, are not included in the report.\nOn the other hand, deliberations about whether to include the Additional Child Tax Credit (ACTC) reached a different conclusion. The regular Child Tax Credit (CTC) is a nonrefundable credit and phases out at relatively high income levels. The ACTC is a refundable credit that allows families with no or insufficient tax liability to get all or part of the benefit they would otherwise receive from the CTC. Because of the refundable nature and other design features of the ACTC, including certain recently enacted changes, it serves predominantly low-income families. For example, for tax year 2008, 87% of returns that claimed the ACTC were filed by families with adjusted gross incomes (AGI) below $40,000 and 83% of the credit went to such families; 94% of returns that claimed the ACTC were filed by families with AGI below $50,000 and 93% of the credit went to such families. Thus, ACTC is included in the report.\nCategorization of Programs\nMost programs are easily assigned to broad categories, such as health, cash aid, food assistance, or education. A few, however, have multiple purposes or allowable activities. For some of those programs, spending can be disaggregated into the relevant categories. For example, using state reporting of actual expenditures, it is possible to estimate the amount of TANF obligations attributable to cash aid, social services, and employment and training. Other programs cannot be disaggregated, however, and must be assigned to a single category. For example, Transitional Cash and Medical Services for Refugees was categorized as health care, and Indian Human Services was categorized as social services although it also provides cash and housing assistance.\nThe social services category, in general, is not well-defined and some analysts might assign some programs differently. Head Start, for example, could be considered an education program, since its purpose is to promote school readiness; however, it supports a very broad range of activities—including for children age 0-3 through its Early Head Start component—that can best be characterized collectively as social services. Foster Care and Adoption Assistance both give cash to families or other care providers, but income support is not the programs' purpose or sole use of funding. Foster Care subsidizes maintenance payments and administrative activities on behalf of children who cannot remain safely at home, and Adoption Assistance makes payments to facilitate the adoption of children who would otherwise lack permanent homes. Thus, in this report, these programs were categorized as social services and not cash assistance.\nSelection of Spending Measure\nNew obligations incurred in the indicated fiscal year were chosen as the measure of spending for this report, although for many programs, readers may be more accustomed to seeing appropriations (budget authority) or outlays. These spending concepts are related. Congress and the President enact budget authority through appropriations measures or other authorizing laws. Budget authority in turn allows federal agencies to incur obligations , through actions such as entering into contracts, employing personnel, and submitting purchase orders. Outlays represent the actual payment of these obligations, usually in the form of electronic transfers or checks issued by the Treasury Department. Obligations are used in this report because they are the most consistent measure available at the necessary level of detail for the majority of programs. The source of obligations data is the U.S. Budget Appendix for FY2011 (for final FY2009 obligations) and FY2010 (for final FY2008 obligations).\nObligations were either not available or not appropriate for a small number of programs. Because obligations were not available at the necessary program level, appropriations were used for the following: Transitional Cash and Medical Services for Refugees, Breast/Cervical Cancer Early Detection, the Title I Migrant Education Program, Social Services and Targeted Assistance for Refugees, and Foster Grandparents.\nFor veterans' medical care, the Budget Appendix shows obligations for the entire program, and not solely the income-tested component. Thus, for this report, estimated obligations for Priority Group 5 veterans (needy veterans without service-connected disabilities) were calculated from Department of Veterans Affairs data on obligations for Priority Groups 1-6 and 7-8 and number of patients receiving care by individual priority group.\nThe Budget Appendix also does not show obligations solely for the low-income subsidy portion of the Medicare Part D prescription drug program. Therefore, the report uses aggregate reimbursements for the low-income subsidy for the calendar year (instead of fiscal year), available from the annual report of the Medicare trustees.\nLoan subsidy outlays were used as the more appropriate measure of spending for the Section 502 single-family rural housing loan program. Direct and guaranteed loan subsidy outlays, available from the Budget Appendix, were adjusted for re-estimates provided in the Federal Credit Supplement to the U.S. Budget for the relevant years.\nFinally, as noted above, TANF obligations provided in the Budget Appendix were disaggregated into the categories of cash aid, social services, and employment and training, based on states' reporting to the Department of Health and Human Services of their actual expenditures.\nSpending Threshold\nPrograms are included in this report if they had obligations in either FY2008 or FY2009 of at least $100 million. To simplify the analysis without significantly changing the overall picture, smaller programs were excluded, even if they met the low-income criteria. Only one program included in the report—Education for Homeless Children and Youth—had spending above the threshold in one year but below the threshold in the other. Therefore, spending totals for FY2009 include obligations for this program, but spending totals for FY2008 do not. Thus, each year's spending total is a snapshot of spending in that year for low-income programs which— in that year —had obligations totaling at least $100 million.\nComparison with Predecessor CRS Report Series\nFrom 1979 to 2006, the Congressional Research Service issued a series of reports, typically every other year, called Cash and Noncash Benefits for Persons with Limited Income . The series was conceived and produced (except for the last edition in 2006) by [author name scrubbed], Specialist in Social Policy, who retired from CRS in 2004.\nThe current report is meant to replace the Cash and Noncash series. However, this report uses different methodologies to select and categorize programs and measure spending; therefore, the current report cannot be considered an update of Cash and Noncash for various reasons. For example, the older series did not include certain programs that are included in this report, such as the low-income subsidy under Medicare Part D, Title I-A of the Elementary and Secondary Education Act, and Community Development Block Grants. At the same time, the older series had no minimum spending threshold, so it included several smaller programs that are not included here. In addition, the older series included student loans, which are not included in this report for reasons explained above. Several programs were also categorized differently in the previous series (e.g., Head Start was categorized as education; Foster Care and Adoption Assistance as cash aid; and Homeless Assistance Grants as social services). The older series used different measures of spending for different programs, while this report uses obligations where possible. The older series also provided estimates of state-local spending, which are not included in this report. Finally, the older series traced spending back to 1968, which is beyond the scope of the current report. Changes in programs and appropriations accounts over time make it virtually impossible to trace obligations backward with precision.\nAppendix B. Detailed Program Tables\nThe following three tables identify and provide specific information about programs included in this report. Programs are organized by category. Within categories, programs are listed in order of their Catalog of Federal Domestic Assistance number (see Appendix C ).\nTable B -1 shows obligations (or another measure of spending, as noted) for each program for FY2008 and FY2009. ARRA amounts are included in the FY2009 amounts; they are also shown in a separate column. The table also indicates the federal administering agency for each program.\nTable B -2 identifies, for each program, the general target population and the concept (or multiple concepts) used to determine individual income eligibility and (if relevant) the concept used to target federal resources broadly based on need. These concepts are discussed in detail earlier in the report. The table indicates the general concept used but not the specific application of the concept. For example, the table might indicate that federal poverty guidelines (FPG) are used as a concept in determining income eligibility for a particular program, but does not indicate what percent of FPG is used. Likewise, the table might show that a program uses formula allocation factors to direct federal resources toward areas with the greatest need, but does not identify the specific factors or their weighting or any mitigating factors, such as small-state minimums or hold-harmless provisions. Readers are referred to the fact sheets in Appendix C , relevant CRS reports, or the statutes themselves for these details.\nTable B -3 shows the type of federal assistance provided (typically formula grants, competitive or discretionary grants, or direct benefits) and the immediate recipients of this assistance. As noted in the table, \"immediate\" recipient refers to the level of government or the organization that directly receives the federal grant or award. As discussed in the body of the report, many programs require that funds be further distributed (by formula or other criteria) to other units of government or organizations. For example, federal grants may be awarded by formula to states, but states are then required to subaward these funds to local governments or other entities. This table only shows the \"immediate\" grantee. The table also indicates whether a program has provisions for participation by U.S. territories or residents or organizations located within the territories. The specific details of these provisions are not provided in the table, however; readers are referred to statutory language or the federal agency that administers the program for this information.\nAppendix C. Program Fact Sheets\nThe following fact sheets provide brief information about each program included in this report's analysis. Efforts were made to present the information in a relatively consistent manner; however, the programs are sufficiently different that the fact sheets vary in scope and level of detail.\nFor each program, the following information is provided: Catalog of Federal Domestic Assistance (CFDA) number(s); statutory and regulatory citations; the name of the federal administering agency and (where appropriate) the specific office within that agency; the program's purpose; the type of benefit or service provided; criteria used to determine individual eligibility; the form and recipient of federal assistance; the allocation formula used if relevant; any matching or related nonfederal spending requirements; the amount of new obligations in FY2008 and FY2009; the budgetary classification of the program's spending; some limited detail on program participation in FY2009 or the most recent year for which data are available; and citations to relevant CRS reports. Information was derived from statutes, regulations, agency websites, or other authoritative sources.\nOnly selected information is included in these fact sheets, relevant to the overall analysis in this report. Moreover, programs are generally described as they existed in FY2009, although references are provided in cases where significant changes have been enacted affecting years after FY2009. For complete information about a particular program of interest, readers are referred to the legal citations provided, the federal administering agency, or the identified CRS report.\nThe following table provides a list of programs and page numbers, for easier reference to individual program fact sheets.\nHealth Care\nMedical Care for Veterans Without Service-Connected Disability (CFDA #64.009)\nAuthority: Statute: 38 USC Part 2, Chapter 17. Regulations: 38 CFR Part 17.\nFederal administering agency: Department of Veterans Affairs, Veterans Health Administration.\nPurpose of program: To provide primary care, specialized care, and related social and support services to eligible veterans.\nBenefit/service: Standardized medical benefits package including preventive services, such as immunizations, screening tests, and health education and training classes; primary health care diagnosis and treatment, prescription drugs, comprehensive rehabilitative services, mental health services, including professional counseling, home health care, respite (inpatient), hospice and palliative care; and emergency care. Some veterans also may receive long-term care, including nursing home care, domiciliary care, adult day care, and limited dental care.\nIndividual eligibility criteria: In general, eligibility for VA health care is based on veteran status, service-connected disabilities or exposures, and other factors such as veterans who were former prisoners of war or who are awarded the Purple Heart. Veterans with no service-connected conditions and who are Medicaid-eligible, or who have income below a certain VA means-test threshold and below a median income threshold for the geographic area in which they live are eligible to enroll in the VA health care system. These veterans are classified as Priority Group 5 veterans.\nForm and recipient of federal assistance: Services are provided directly by the VA in VA facilities or through contracts.\nAllocation formula: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $11.644 billion. FY2008: $10.717 billion. (Estimated obligations on behalf of Priority Group 5 veterans.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 1,484,467 Priority Group 5 veteran patients received care from the VA.\nCRS report: CRS Report R41343, Veterans Medical Care: FY2011 Appropriations , by [author name scrubbed].\nFamily Planning (CFDA #93.217)\nAuthority: Statute: Title X of the Public Health Service Act, established in the Family Planning and Services and Population Research Act of 1970 (P.L. 91-572); 42 USC 300 et seq. Regulations: 42 CFR Part 59.\nFederal administering agency: Department of Health and Human Services, Office of Public Health and Science, Office of Population Affairs, Office of Family Planning.\nPurpose of program: To assist individuals to determine freely the number and spacing of their children through the provision of education, counseling, and medical services.\nBenefit/service: A broad range of family planning methods and services (including natural family planning methods, infertility services, and services for adolescents). Family planning services include clinical family planning and related preventive health services; information, education and counseling related to family planning; and referral services. Services are free for persons whose income does not exceed federal poverty guidelines (unless covered by Medicaid or other health insurers) and are provided on a sliding fee scale basis for those with incomes between 100% and 250% of federal poverty guidelines.\nIndividual eligibility criteria: Priority is given to individuals from low-income families, defined in regulation as individuals whose family income does not exceed 100% of federal poverty guidelines, and individuals whose family income exceeds 100% of federal poverty guidelines but who otherwise are unable to afford family planning services.\nForm and recipient of federal assistance: Competitive grants to public and nonprofit agencies. Allows participation by agencies in territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Outlying Islands, the Marshall Islands, the Federated States of Micronesia, Republic of Palau, and the U.S. Virgin Islands).\nAllocation formula: Not applicable.\nMatching or related requirements: None. However, regulations provide that no project may be fully supported by Title X funds.\nNew obligations: FY2009: $307 million. FY2008: $300 million.\nBudgetary classification: Discretionary.\nParticipation data: In calendar year 2008, a total of 5.051 million users were served by Title X-funded sites.\nCRS report: CRS Report RL33644, Title X (Public Health Service Act) Family Planning Program , by [author name scrubbed].\nConsolidated Health Centers (CFDA #93.224)\nNote: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAuthority: Statute: Section 330 of the Public Health Service Act, established by the Health Centers Consolidation Act of 1996 ( P.L. 104-299 ) and most recently reauthorized by the Patient Protection and Affordable Care Act ( P.L. 111-148 ); 42 USC 254b. Regulations: 42 CFR Subpart 51c and 42 CFR Parts 56.201-56.604.\nFederal administering agency: Department of Health and Human Services, Health Resources and Services Administration, Bureau of Primary Health Care.\nPurpose of program: To provide health care services to groups that are determined to be medically underserved.\nBenefit/service: Primary and additional health care services defined in statute, delivered by community health centers, migrant health centers, health centers for the homeless, and health centers for residents of public housing.\nIndividual eligibility criteria: The statute defines \"medically underserved\" as \"the population of an urban or rural area designated by the Secretary as an area with a shortage of personal health services or a population group designated by the Secretary as having a shortage of such services.\" Regulations provide that, in designating these populations, the Secretary may consider economic factors, such as the percentage of the population with incomes below poverty. Grant funds may be used to pay the full cost of services to individuals and families with income at or below federal poverty guidelines; services are provided on a sliding fee scale basis for those with incomes between 100% and 200% of federal poverty guidelines and no discount is provided for those with incomes above 200% of poverty.\nForm and recipient of federal assistance: Competitive grants to public and private nonprofit entities.\nAllocation formula: Not applicable.\nMatching or related requirements: None. Grantees are expected to collect fees from third-party payors, such as Medicare, Medicaid, and private health insurance; centers may also collect fees from patients with family income above the federal poverty guidelines; and centers may also receive funding from state, local and other federal sources. For grants serving certain populations, federal funds must supplement and not supplant other funds used by the health center to serve the same population.\nNew obligations: FY2009: $3.665 billion (includes $1.519 billion under the American Recovery and Reinvestment Act). FY2008: $2.021 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, a total of 1.7 million patients were served.\nCRS reports: CRS Report R41278, Public Health, Workforce, Quality, and Related Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed] and [author name scrubbed]; and CRS Report RL32046, Federal Health Centers Program , by Barbara English.\nTransitional Cash and Medical Services to Refugees (CFDA #93.566)\nAuthority: Statute: Title IV, Chapter 2 of the Immigration and Nationality Act, established by the Refugee Act of 1979 ( P.L. 96-212 ) and most recently reauthorized by P.L. 106-104 ; 8 USC 1521-1524. Regulations: 45 CFR Parts 400-401.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Refugee Resettlement.\nPurpose of program: To provide for the effective resettlement of refugees and to assist them to achieve economic self-sufficiency as quickly as possible.\nBenefit/service: Cash payments to eligible individuals that are at least equal to the payment rate to a family of the same size under the state's Temporary Assistance for Needy Families (TANF) program; and medical benefits, through payments to doctors, hospitals and pharmacists. Those eligible for Supplemental Security Income (SSI) may receive refugee cash assistance while their SSI applications are pending.\nIndividual eligibility criteria: Adult refugees, asylees, other specified humanitarian cases, and trafficking victims who meet the income and asset tests for TANF or Medicaid but who are not categorically eligible for those programs; and unaccompanied refugee minor children.\nForm and recipient of federal assistance: Formula grants to states, and discretionary grants to state-alternative programs and voluntary agencies. Allows participation by territories (American Samoa, Guam, Northern Marianas, Puerto Rico, the Trust Territories of the Pacific, and the U.S. Virgin Islands).\nAllocation formula: Formula funds are allocated to states based on their estimates of eligible expenditures.\nMatching or related requirements: No matching requirements for formula grants. Voluntary agencies receiving discretionary grants must provide a $1 match for each 2 federal dollars.\nNew obligations: FY2009: $282 million. FY2008: $296 million. (Appropriations.)\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nCRS report: CRS Report R41570, U.S. Refugee Resettlement Assistance , by [author name scrubbed].\nState Children's Health Insurance Program (CHIP) (CFDA #93.767)\nNote: The following describes this program as it operated in FY2009; see CRS reports listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAuthority: Statute: Title XXI of the Social Security Act, established by the Balanced Budget Act of 1997 ( P.L. 105-33 ) and most recently reauthorized by the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA, P.L. 111-3 ); 42 USC 1397aa-mm. Regulations: 42 CFR Parts 431, 433, 435.\nFederal administering agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services.\nPurpose of program: To provide health coverage to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children.\nBenefit/service: Health care coverage is available through expansion of a state's existing Medicaid program, creation of a separate CHIP program, or a combination of both. In general, for separate CHIP programs under which the majority of children are enrolled, states may offer one of three \"benchmark\" benefit packages: (1) the standard Blue Cross/Blue Shield preferred provider plan offered under the Federal Employees Health Benefits Program (FEHBP), (2) the health coverage that is offered and generally available to state employees, and (3) the health coverage that is offered by a health maintenance organization (HMO) with the largest commercial (non-Medicaid) enrollment in the state. (States also have the option of providing \"Secretary-approved\" coverage for which benefits are suitable for the target population.) States that use the Medicaid expansion option can provide the full range of mandatory Medicaid benefits as well as all optional services specified in their state Medicaid plans. Alternatively, under a CHIP Medicaid expansion, states may offer benchmark benefit plans similar to those listed above. States may also waive many of the basic benefit rules described above to conduct demonstration projects under Section 1115 authority that test alternative methods of meeting the overall purpose of CHIP. Medicaid expansion programs must follow the nominal Medicaid cost-sharing rules or, for certain populations, may apply alternative higher premiums and service-related cost-sharing. States with separate CHIP programs may vary cost-sharing requirements by family income, but the total annual aggregate cost-sharing (including premiums, copayments, and similar charges) for a family may not exceed 5% of total income in a year, and certain services such as preventive care are exempt from cost-sharing.\nIndividual eligibility criteria: Target populations are defined by states within federal parameters. Children must be under age 19, lack health insurance, and not be qualified for regular Medicaid. States may set the upper income limit for targeted children at up to 200% of federal poverty guidelines or 50 percentage points above the applicable pre-CHIP (1997) Medicaid income level. States may seek federal approval to serve higher-income children. States also may cover pregnant women who lack health insurance and meet specified income thresholds. Other groups (e.g., parents) may be covered under certain circumstances (e.g., through Section 1115 waivers or CHIP premium assistance payments).\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: The allotment methodology was changed by CHIPRA, beginning with FY2009. Rather than dividing the entire national appropriation among states, the law now calculates allotment amounts for each state, which they will receive unless the national appropriation is inadequate. The new allotment formula is based primarily on states' past and/or projected federal CHIP spending (depending on the year) increased by a growth factor. For FY2009 onward, annual allotments are available for two years, with unspent funds available for redistribution first to shortfall states and then for bonus payments directed at states that exceed certain child enrollment levels and that implement certain outreach and enrollment initiatives. Prior to CHIPRA, funds were allocated among states according to a formula based on a combination of the number of low-income children and low-income uninsured children in the state, and including a cost factor that represented average health service industry wages in the state compared to the national average.\nMatching or related requirements: State expenditures are matched at an \"enhanced\" federal medical assistance percentage (E-FMAP). The E-FMAP for CHIP lowers the state's share of CHIP expenditures by 30% compared to the regular Medicaid FMAP. The CHIP E-FMAP rate is subject to a ceiling of 85% and a floor of 65%.\nNew obligations: FY2009: $9.534 billion. FY2008: $6.360 billion.\nBudgetary classification: Mandatory (capped entitlement to states).\nParticipation data: During FY2009, the total number of children ever enrolled during the year was 7,717,317; and the total number of adults ever enrolled during the year was 504,915.\nCRS reports: CRS Report R40444, State Children's Health Insurance Program (CHIP): A Brief Overview , by [author name scrubbed] and [author name scrubbed]; and CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed].\nVoluntary Medicare Prescription Drug Benefit—Low-Income Subsidy (CFDA 93.770)\nNote: The following describes this program as it operated in FY2009; see CRS report s listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAuthority: Statute: Part D of Title XVIII of the Social Security Act, established by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ); 42 USC 1395w-101-152. Regulations: 42 CFR Part 423.\nFederal administering agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services.\nPurpose of program: To provide low-income seniors and people with disabilities with comprehensive prescription drug benefits.\nBenefit/service: Prescription drug coverage with reduced premiums, copayments and other out-of-pocket expenses.\nIndividual eligibility criteria: Individuals with incomes below 150% of federal poverty guidelines and limited resources are eligible for subsidized prescription drug coverage. Those with incomes no higher than 135% of federal poverty guidelines receive the highest level of subsidy. Certain individuals are automatically eligible: those also eligible for Medicaid (i.e., \"dual eligibles\"); Medicare Savings Program recipients; and Supplemental Security Income (SSI) recipients.\nForm and recipient of federal assistance: Contracts with participating prescription drug plans; payments are made to plans for the monthly premiums, deductibles and coverage gap expenses of low-income subsidy beneficiaries.\nAllocation formula: Not applicable.\nMatching or related requirements: Not applicable.\nNew obligations: CY2009: $20.300 billion. CY2008: $17.400 billion. (Aggregate reimbursements under Low-Income Subsidy in calendar year.)\nBudgetary classification: Mandatory (entitlement to individuals).\nParticipation data: In calendar year 2009, 10 million beneficiaries received low-income subsidies.\nCRS reports: CRS Report R40611, Medicare Part D Prescription Drug Benefit , by [author name scrubbed]; and CRS Report R41196, Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline , coordinated by [author name scrubbed].\nMedicaid (CFDA #93.778)\nNote: The following describes this program as it operated in FY2009; see CRS reports listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAuthority: Statute: Title XIX of the Social Security Act, established by the Social Security Amendments of 1965 (P.L. 89-97); 42 USC 1396. Regulations: 42 CFR Parts 430-456.\nFederal administering agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services.\nPurpose of program: To provide medical assistance to families with dependent children and aged, blind or disabled individuals who have insufficient income and resources to afford necessary medical care, and to provide rehabilitation and other services to help such families and individuals achieve independence and self-care.\nBenefit/service: Federal law requires states to cover certain health benefits under Medicaid; other services may be offered at state option. Examples of mandatory services for most eligibility groups include inpatient hospital services, services provided by qualified federal health centers, laboratory and x-ray services, physician services, pregnancy-related services, nursing facility services for individuals 21 and older, and home health care for those entitled to nursing home care. Examples of optional services provided for most eligibility groups in many states include prescribed drugs, physician-directed clinic services, other licensed practitioners (e.g., optometrists, podiatrists, psychologists), inpatient psychiatric care for the elderly and individuals under age 21, nursing facility services for individuals under age 21, physical therapy, prosthetic devices, and transportation.\nIndividual eligibility criteria: Individuals must meet financial (i.e., income and sometimes resource) and nonfinancial (i.e., categorical) requirements. Federal law defines more than 50 potentially eligible population groups; some groups are mandatory (all states must cover them) and others are optional (states may cover them at their discretion). In some cases, income eligibility standards are tied directly to specified percentages of the federal poverty guidelines. For example, Medicaid mandatory coverage groups include pregnant women and children under age 6 with family incomes at or below 133% of poverty; children ages 6-18 with family incomes at or below 100% of poverty; certain parents and children in working families who are entitled to Medicaid for at least 6 months and up to 12 months if their income does not exceed 185% of poverty (i.e., Transitional Medical Assistance, TMA)); individuals who qualify for Medicare Part A whose incomes do not exceed 100% of poverty (Qualified Medicare Beneficiaries (QMBs)); and individuals who are entitled to Medicare Part A with incomes between 100% and 120% of poverty (Specified Low-Income Beneficiaries (SLMs)). Mandatory groups also include families who qualify via rules applicable to the former Aid to Families with Dependent Children (AFDC) program; also, families who lose Medicaid as a result of increased child/spousal support or earned income may receive TMA for four months. Medicaid optional groups with income eligibility standards tied directly to specified percentages of the federal poverty guidelines include pregnant women and infants with incomes between 133% and 185% of poverty; CHIP-financed targeted low-income children; disabled and elderly (age 65+) individuals with incomes up to 100% of poverty; disabled working individuals whose family income does not exceed 250% of poverty; and individuals who would be QMBs except that their incomes are between 120% and 135% of poverty (i.e., Qualifying Individuals (QI-1s)).\nForm and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no cap on federal spending. Allows participation by territories (American Samoa, Guam, Northern Marianas, Puerto Rico and the U.S. Virgin Islands).\nAllocation formula: Payments to states are based on their eligible expenditures and the applicable FMAP (see below).\nMatching or related requirements: The federal share of expenditures on Medicaid services is called the federal medical assistance payment (FMAP) and is inversely related to a state's per capita income. The FMAP is higher for states with lower per capita income relative to the national average and vice versa for states with higher per capita income. The FMAP ranges from a statutory low of 50% to a statutory high of 83%. Medicaid administrative expenditures are generally matched at a 50% rate, with certain exceptions. For expenditures in FY2009, the American Recovery and Reinvestment Act authorized a temporary increase in FMAPs for states. (Subsequent legislation extended this increase through June 2011.)\nNew obligations: FY2009: $265.058 billion (includes $32.632 billion in estimated additional federal matching provided under the American Recovery and Reinvestment Act). FY2008: $214.015 billion.\nBudgetary classification: Mandatory (open-ended entitlement to states).\nParticipation data: During FY2009, an average of 51.1 million individuals were enrolled in Medicaid each month (including 24.9 million children); and a total of 65.2 million individuals were enrolled during the year (including 31.3 million children).\nCRS reports: CRS Report RL33202, Medicaid: A Primer , by [author name scrubbed]; and CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed].\nRyan White HIV/AIDS Program (CFDA #93.917)\nAuthority: Statute: Title XXVI of the Public Health Service Act, established by the Ryan White Comprehensive AIDS Resources Emergency Act of 1990 ( P.L. 101-381 ) and most recently reauthorized by the Ryan White HIV/AIDS Treatment Extension Act of 2009 ( P.L. 111-87 ); 42 USC 300ff. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Health and Human Services, Health Resources and Services Administration, HIV/AIDS Bureau.\nPurpose of program: To address the unmet care and treatment needs of persons living with HIV/AIDS who are uninsured or underinsured, and therefore are unable to pay for HIV/AIDS health care and vital health-related supportive services.\nBenefit/service: Primarily core medical services; i.e., outpatient and ambulatory health services, drug treatments (including through the AIDS Drug Assistance Program, ADAP), oral health, early intervention services, health insurance premium and cost-sharing assistance for low-income individuals, home health, medical nutrition therapy, hospice, home and community-based services, mental health, substance abuse outpatient care, and medical case management, including treatment adherence services; and some supportive services; i.e., outreach, medical transportation, language services, respite care for caregivers, and referrals for health care and support services. Services are provided without charge for individuals whose incomes are below federal poverty guidelines and are provided on a sliding fee scale basis for those whose incomes exceed federal poverty guidelines.\nIndividual eligibility criteria: Individuals and families with HIV disease. Specific clinical and income eligibility criteria are set by states.\nForm and recipient of federal assistance: Formula grants to eligible metropolitan areas, \"transitional grant\" areas, and to states and territories; competitive supplemental grants are awarded based on need. Competitive grants are made to qualified health centers, family planning clinics, hemophilia centers, rural health clinics, Indian Health Service facilities and certain other health facilities and organizations; public and private nonprofit organizations; and dental schools. Allows participation by territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated on the basis of number of living HIV and AIDS cases.\nMatching or related requirements: Any state with more than 1% of the nation's confirmed cases of HIV/AIDS must provide a nonfederal match equal to $1 for every federal $5 in the first year of payments under the grant, $1 for every federal $4 in the second year, $1 for every federal $3 in the third year, and $1 for every federal $2 in the fourth and fifth years of the grant.\nNew obligations: FY2009: $2.227 billion. FY2008: $2.141 billion.\nBudgetary classification: Discretionary.\nParticipation data: It is estimated that the program serves more than a half-million low-income people with HIV/AIDS each year.\nCRS report: CRS Report RL33279, The Ryan White HIV/AIDS Program , by [author name scrubbed].\nBreast/Cervical Cancer Early Detection (CFDA #93.919)\nAuthority: Statute: Title XV of the Public Health Service Act, established by the Breast and Cervical Cancer Mortality Prevention Act of 1990 ( P.L. 101-354 ) and most recently reauthorized by the National Breast and Cervical Cancer Early Detection Program Reauthorization Act of 2007 ( P.L. 110-18 ); 42 USC 300k. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Health and Human Services, Centers for Disease Control and Prevention, Division of Cancer Prevention and Control.\nPurpose of program: To provide low-income, uninsured, and underserved women access to timely breast and cervical cancer screening and diagnostic services.\nBenefit/service: Clinical breast examinations, mammograms, Pap tests, pelvic examinations, diagnostic testing if results are abnormal, and referrals to treatment. No fees for services may be charged for women with incomes below 100% of federal poverty guidelines. (Under the Breast and Cervical Cancer Prevention and Treatment Act of 2000, P.L. 106-354 , women who are screened through the CDC program are an optional Medicaid coverage group, which means that states may offer them medical services through their Medicaid programs.)\nIndividual eligibility criteria: States must give priority to low-income women. CDC defines the eligible population as uninsured and underinsured women with income at or below 250% of federal poverty guidelines, aged 18-64 for cervical screening and 40-64 for breast screening.\nForm and recipient of federal assistance: Competitive grants to states, which enter into grants and contracts with public and private nonprofit entities. Allows participation by territories (Puerto Rico, American Samoa, Northern Mariana Islands, Marshall Islands, Micronesia, Palau) and Indian tribes and tribal organizations.\nAllocation formula: Not applicable.\nMatching or related requirements: A nonfederal match, in cash or in-kind, of $1 for every federal $3 is required. Programs must also maintain their previous level of effort before additional resources will be considered toward the matching requirement.\nNew obligations: FY2009: $206 million. FY2008: $201 million. (Appropriations.)\nBudgetary classification: Discretionary.\nParticipation data: In program year 2009 (July 2008-June 2009), a total of 324,912 women were screened for breast cancer and 320,627 women were screened for cervical cancer.\nMaternal and Child Health Block Grant (CFDA #93.994)\nNote: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAuthority: Statute: Title V of the Social Security Act, enacted in 1935 and converted into a block grant by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ); 42 USC 701. Regulations: 42 CFR Part 96.\nFederal administering agency: Department of Health and Human Services, Health Resources and Services Administration, Maternal and Child Health Bureau.\nPurpose of program: To improve the health of all mothers and children consistent with applicable health status goals and national health objectives established by the Secretary of HHS.\nBenefit/service: Preventive and primary health care services (excluding inpatient services with some exceptions) for women, infants and children, including children with special health care needs.\nIndividual eligibility criteria: Defined by the states. Federal law emphasizes services to low-income mothers and children, defined as those with income at or below the federal poverty guidelines.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, Northern Mariana Islands, and Micronesia, Marshall Islands, and Palau).\nAllocation formula: Funds are allocated among states based on two factors: the amount awarded to each state in 1983 under previous programs that were consolidated into the block grant; and each state's relative share of low-income children.\nMatching or related requirements: States must provide $3 for every $4 in federal funding received. States must maintain their level of spending from state funds in 1989 on maternal and child health services.\nNew obligations: FY2009: $662 million. FY2008: $666 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, an estimated 35 million children were served.\nCRS report: CRS Report R41278, Public Health, Workforce, Quality, and Related Provisions in PPACA: Summary and Timeline , coordinated by [author name scrubbed] and [author name scrubbed].\nIndian Health Service (no CDFA #)\nNote: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAuthority: Statute: Snyder Act of 1921 (P.L. 83-568) and the Indian Health Care Improvement Act of 1976 ( P.L. 94-437 ), most recently reauthorized by the Patient Protection and Affordable Care Act ( P.L. 111-148 ); 25 USC 1601 et seq. Regulations: 42 CFR Part 136.\nFederal administering agency: Department of Health and Human Services, Indian Health Service.\nPurpose of program: To elevate the health status of the Indian population to a level at parity with the general U.S. population.\nBenefit/service: Hospital, medical, and dental care, behavioral health, environmental health and sanitation services as well as outpatient services and the services of mobile clinics and public health nurses, and preventive care, including immunizations and health examinations of special groups, such as school children. Services are provided free of charge.\nIndividual eligibility criteria: Persons of American Indian or Alaskan Native (AI/AN) descent who are members of a federally recognized Indian tribe, live within an Indian Health Service Health Service Delivery Area (HSDA), or are the natural minor children (18 years old or younger) of such an eligible member AI/AN and live within an HSDA.\nForm and recipient of federal assistance: Services are provided directly by the Indian Health Service in IHS or tribal health facilities or through contracts.\nAllocation formula: Not applicable.\nMatching or related requirements: None. The Indian Health Service collects reimbursements from Medicare and Medicaid for services that it provides to members of its eligible population who also are eligible for those programs. If an eligible AI/AN has private health insurance, IHS is reimbursed for services provided.\nNew obligations: FY2009: $5.416 billion (includes $294 million under the American Recovery and Reinvestment Act). FY2008: $4.347 billion. (Services and facilities.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, the IHS service population was estimated at 1.9 million American Indians and Alaskan Natives.\nCRS report: CRS Report R41152, Indian Health Care Improvement Act Provisions in the Patient Protection and Affordable Care Act (PPACA) , by [author name scrubbed] and [author name scrubbed].\nCash Aid\nPensions for Needy Veterans, their Dependents and Survivors (CFDA #64.104 and #64.105)\nAuthority: Statute: 38 USC Chapter 15. Regulations: 38 CFR Subpart A of Part 3.\nFederal administering agency: Department of Veterans Affairs, Veterans Benefits Administration.\nPurpose of program: To provide assistance to needy veterans, their dependents and survivors.\nBenefit/service: Cash assistance.\nIndividual eligibility criteria: Veterans, age 65 and older or who are permanently and totally disabled (not due to military service or willful misconduct) regardless of age, who served in the active military for a minimum duration during a period of war, whose income is below a specified amount and whose net worth is not considered excessive. Also, surviving spouses and unmarried dependent children of deceased veterans who served in the active military for a minimum duration during a period of war, whose income is below a specified amount and whose net worth is not considered excessive.\nForm and recipient of federal assistance: Direct payment to individuals.\nAllocation formula: Not applicable.\nMatching or related requirements: Not applicable.\nNew obligations: FY2009: $4.134 billion. FY2008: $3.777 billion.\nBudgetary classification: Mandatory (entitlement to individuals).\nParticipation data: In FY2009, benefits were paid to 315,842 veterans and 194,807 survivors.\nCRS report: CRS Report RS22804, Veterans' Benefits: Pension Benefit Programs , by [author name scrubbed] and [author name scrubbed].\nTemporary Assistance for Needy Families (CFDA #93.558)\nAuthority: Statute: Title IV-A of the Social Security Act, established by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ) and most recently reauthorized by the Claims Resolution Act of 2010 ( P.L. 111-291 ); 42 USC 601-619. Regulations: 45 CFR Parts 260-270.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance.\nPurpose of program: To increase state flexibility in operating programs designed to (a) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (b) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (c) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (d) encourage the formation and maintenance of two-parent families.\nBenefit/service: Benefits or services reasonably calculated to achieve the four statutory goals above, and certain \"grandfathered\" activities conducted under predecessor program (Aid to Families with Dependent Children) prior to enactment of P.L. 104-193 . (More than 70% of total TANF federal and state expenditures in FY2009 were for noncash services, including child care, work activities, child welfare services, and various social services directed toward the statutory goals of family formation and reduced nonmarital pregnancies.) Cash assistance benefit levels are defined by the individual states.\nIndividual eligibility criteria: Families with dependent children as determined eligible under income and asset criteria defined by the states.\nForm of assistance: Formula grants to states; competitive awards to public and private entities for healthy marriage promotion and responsible fatherhood grants. Allows participation by territories (American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands) and federally recognized Indian tribes and certain Alaskan Native organizations.\nAllocation formula: The basic TANF block grant is allocated among states according to their peak expenditures for pre-TANF programs during the FY1992-FY1995 period. Supplemental TANF grants are provided to states that meet certain criteria of high population growth and/or low historic grants per poor person. TANF contingency funds are available to states that meet a test of economic \"need\" and increase spending from their own funds above what they spent in FY1994 on cash, emergency assistance, and job training in TANF's predecessor programs. For FY2009 (and FY2010), states could draw down additional funds from the TANF Emergency Contingency Fund, created by the American Recovery and Reinvestment Act (ARRA), which reimbursed states for increased expenditures on basic assistance, nonrecurring short-term benefits, and subsidized employment.\nMatching or related requirements: None. The basic TANF block grant requires states to maintain spending from their own funds on TANF or TANF-related activities for needy families with children equal to 75% of what was spent from state funds in FY1994 under TANF's predecessor programs. This maintenance-of-effort (MOE) requirement increases to 80% of FY1994 spending for states that fail to meet TANF work participation requirements. For the TANF contingency fund, a higher state spending requirement applies (100% of the historic level).\nNew obligations: FY2009: $18.761 billion (includes $616 million under the American Recovery and Reinvestment Act). FY2008: $17.469 billion.\nObligations are broken down as follows in this report, based on states' reporting of expenditures: FY2009 : $6.102 billion (cash assistance); $10.826 billion (social services); and $1.832 billion (employment and training). FY2008: $6.356 billion (cash assistance); $9.416 billion (social services); and $1.697 billion (employment and training). (Cash assistance and employment and training amounts include obligations under the TANF block grant, supplemental grants, territories and tribal grants, and contingency funds. Social services amounts include obligations under these grants as well as healthy marriage promotion and responsible fatherhood grants.)\nBudgetary classification: Mandatory (capped entitlement to states).\nParticipation data: In June 2009, a total of 1.8 million families, composed of 4.3 million recipients (including 3.3 million children), received TANF- or MOE-funded cash assistance. In June 2010, a total of 1.9 million families, composed of 4.5 million recipients (including 3.4 million children), received TANF- or MOE-funded cash assistance. The larger number of individuals or families receiving any TANF- or MOE-funded benefit or service is not known.\nCRS report: CRS Report R40946, The Temporary Assistance for Needy Families Block Grant: An Introduction , by [author name scrubbed].\nSupplemental Security Income (CFDA #96.006)\nAuthority: Statute: Title XVI of the Social Security Act, established by the Social Security Amendments of 1973 (P.L. 92-603); 42 USC 1381-1383f. Regulations: 20 CFR Part 416.\nFederal administering agency: Social Security Administration.\nPurpose of program: To provide a minimum income for aged, blind or disabled individuals who have very limited income and assets.\nBenefit/service: Cash assistance. The basic federal SSI benefit is the same for all beneficiaries nationwide (reduced by any countable income). States may supplement the federal benefit.\nIndividual eligibility criteria: Individuals who are aged 65 or older, blind or disabled (adults and children of any age), whose countable income and resources fall within certain specified limits.\nForm and recipient of federal assistance: Direct payments to individuals. Allows participation by individuals in the Northern Mariana Islands.\nAllocation formula: Not applicable.\nMatching or related requirements: Not applicable. However, states may supplement the federal benefit with their own funds.\nNew obligations: FY2009: $52.446 billion. FY2008: $48.926 billion.\nBudgetary classification: Mandatory (entitlement to individuals).\nParticipation data: In FY2009, a total of 7,691,602 beneficiaries received benefits, of which 263,386 received state supplements only.\nCRS reports: 94-486, Supplemental Security Income: A Fact Sheet , by Scott Szymendera; and CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) , by [author name scrubbed].\nAdditional Child Tax Credit (no CFDA #)\nAuthority: Statute: 26 USC 24, established by the Taxpayer Relief Act of 1997 ( P.L. 105-34 ). Regulations: no formal program-specific regulations.\nFederal administering agency: Internal Revenue Service.\nPurpose of program: To assist eligible parents with dependent children whose tax liability is not sufficient to receive the full benefit of the regular nonrefundable Child Tax Credit.\nBenefit/service: Refundable tax credit.\nIndividual eligibility criteria: Families with qualifying children (i.e., under age 17) who have earned income above a specified threshold, and whose tax liability is not sufficient for them to receive the full benefit of the regular nonrefundable Child Tax Credit.\nForm and recipient of federal assistance: The credit is provided in a refund check.\nAllocation formula: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $24.284 billion. FY2008: $34.019 billion. (Note: FY2008 amount includes an unspecified amount of spending for a one-time tax rebate of $300 per child, as authorized by the Economic Stimulus Act of 2008, P.L. 110-185 , which was not targeted toward low-income families.)\nBudgetary classification: Mandatory (entitlement to individuals).\nParticipation data: For tax year 2008, 18.2 million returns claimed the Additional Child Tax Credit.\nEarned Income Tax Credit (refundable portion) (no CFDA #)\nAuthority: Statute: 26 USC 32, established by the Tax Reduction Act of 1975 ( P.L. 94-12 ). Regulations: 26 CFR 1.32.\nFederal administering agency: Internal Revenue Service, Earned Income Tax Credit Office.\nPurpose of program: To offset the burden of taxes, including Social Security taxes, and provide an incentive to work.\nBenefit/service: Tax credit to reduce the amount of income taxes owed; an eligible worker may receive the credit regardless of whether taxes are owed (i.e., the credit is refundable).\nIndividual eligibility criteria: Families with qualifying children (i.e., under age 19 or 24 if a full-time student, or permanently or totally disabled) and childless adults (aged 25-64) who have earned income below specified levels.\nForm and recipient of federal assistance: The refundable portion of the credit can be provided in a refund check, or (prior to 2011) for eligible families with children, as an adjustment to income throughout the year. (This advance payment option was repealed for tax years beginning after Dec. 31, 2010, by P.L. 111-246 .)\nAllocation formula: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $42.418 billion. FY2008: $40.600 billion.\nBudgetary classification: Mandatory (entitlement to individuals).\nParticipation data: For tax year 2008, 21.7 million returns claimed the refundable portion of the EITC.\nCRS report: CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview , by [author name scrubbed].\nFood Assistance\nSupplemental Nutrition Assistance Program (formerly the Food Stamp Program) (CFDA #10.551)\nAuthority: Statute: Food Stamp Act of 1964 (P.L. 88-525), renamed and most recently reauthorized as the Food and Nutrition Act of 2008, by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 2011-2036. Regulations: 7 CFR Part 271.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To alleviate hunger and malnutrition and permit low-income households to obtain a more nutritious diet by increasing their food purchasing power.\nBenefit/service: Cash benefits that can be used to purchase food, typically provided through electronic benefit transfer. Allotments are determined on the basis of a low-cost model diet plan (called the Thrifty Food Plan). An individual household's allotment is equal to the inflation-indexed maximum allotment for that household's size, reduced by 30% of the household's net monthly income (gross income, less allowances for non-food living expenses).\nIndividual eligibility criteria: Eligible households must (1) have gross monthly income no higher than 130% of federal poverty guidelines and limited liquid assets (special, higher standards apply to households with elderly/disabled members) or (2) be categorically (automatically) eligible because they receive benefits/services financed by Temporary Assistance for Needy Families (TANF) programs or the Supplemental Security Income (SSI) program. Some individuals are categorically ineligible: most noncitizens, able-bodied adults without dependents (ABAWDs) after three months (unless they are working or in a work/training program), strikers, and post-secondary students without dependents who are not working or in a work/training program.\nForm and recipient of federal assistance: Direct benefits to individuals; grants to states for assistance with administrative costs and operating expenses for employment/training programs for recipients. Allows participation by territories (Guam and the U.S. Virgin Islands). Separate programs operate in Puerto Rico (described later in this report), American Samoa, the Northern Mariana Islands and on Indian reservations.\nAllocation formula: Not applicable.\nMatching or related requirements: None for expenditures on benefits; 50% for state administrative and the majority of employment/training expenditures.\nNew obligations: FY2009: $53.763 billion (includes $4.478 billion under the American Recovery and Reinvestment Act). FY2008: $37.530 billion. (Benefits, state administration, employment and training program, and other program costs.)\nObligations are broken down as follows in this report: FY2009: $53.396 billion (food assistance) and $367 million (employment and training). FY2008: $37.179 billion (food assistance) and $351 million (employment and training).\nBudgetary classification: Mandatory (entitlement to individuals, and open-ended entitlement to states for administrative costs).\nParticipation data: In FY2009, average monthly participation was 33.49 million persons.\nCRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed].\nSchool Breakfast Program (Free and Reduced-Price Components) (CFDA #10.553)\nAuthority: Statute: Section 4 of the Child Nutrition Act of 1966 (P.L. 89-642), most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1773. Regulations: 7 CFR Part 220.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To promote learning readiness and healthy eating behaviors through provision of nutritious breakfasts.\nBenefit/service: Breakfasts that meet minimum federal nutrition standards and are served free or at reduced price by participating public and private elementary and secondary schools and residential child care institutions.\nIndividual eligibility criteria: Children are eligible to receive free school breakfasts if their family income is below 130% of federal poverty guidelines, or if they receive Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) benefits or services. Children are eligible to receive reduced-price school breakfasts if their family income is between 130% and 185% of federal poverty guidelines.\nForm and recipient of federal assistance: Cash is allocated to state educational agencies, which distribute benefits to participating schools and institutions to subsidize the costs of school breakfasts. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating schools and institutions also receive a small subsidy for meals served at full price to non-needy children. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: Inflation-adjusted per-meal reimbursement rates are specified for each type of breakfast served (free, reduced-price, full-price).\nMatching or related requirements: None, although children's meal payments help finance the cost of the program.\nNew obligations: FY2009: $2.513 billion. FY2008: $2.307 billion. (Free and reduced-price components only.)\nBudgetary classification: Mandatory (open-ended entitlement to participating schools and institutions).\nParticipation data: In FY2009, average monthly participation in the free and reduced-price components was 9.068 million children.\nCRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed].\nNational School Lunch Program (Free and Reduced-Price Components) (CFDA #10.555)\nAuthority: Statute: Richard B. Russell National School Lunch Act (P.L. 79-396), most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1751-1769i. Regulations: 7 CFR Parts 210 and 245.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To safeguard the health and well-being of the nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food.\nBenefit/service: Lunches that meet minimum federal nutrition standards and are served free or at reduced price by participating public and private elementary and secondary schools and residential child care institutions.\nIndividual eligibility criteria: Children are eligible to receive free school lunches if their household income is below 130% of federal poverty guidelines, or if they receive Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) benefits or services. Children are eligible to receive reduced-price school lunches if their household income is between 130% and 185% of federal poverty guidelines.\nForm and recipient of federal assistance: Cash and commodity support are allocated to state educational agencies, which distribute benefits to participating schools and institutions to subsidize the costs of school lunches. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating schools also receive a small subsidy for meals served at full price to non-needy children. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: Inflation-adjusted per-meal reimbursement rates are specified for each type of lunch served (free, reduced-price, full-price).\nMatching or related requirements: None, although children's meal payments help finance the cost of the program. States must maintain the level of support they offered in 1980.\nNew obligations: FY2009: $8.498 billion. FY2008: $7.863 billion. (Free and reduced-price components only.)\nBudgetary classification: Mandatory (open-ended entitlement to participating schools and institutions).\nParticipation data: In FY2009, average monthly participation in the free and reduced-price components was 19.45 million children.\nCRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed].\nSpecial Supplemental Nutrition Program for Women, Infants and Children (WIC) (CFDA #10.557)\nAuthority: Statute: Section 17 of the Child Nutrition Act of 1966, established by the National School Lunch Amendments (P.L. 92-433) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1786. Regulations: 7 CFR Part 246.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To provide supplemental food and nutrition education to eligible women and children to serve as an adjunct to good health care during critical times of development, to prevent the occurrence of health problems, including drug abuse, and improve the health status of beneficiaries.\nBenefit/service: Food assistance (in the form of vouchers for the purchase of specifically prescribed food packages), nutrition risk screening, and related services (e.g., nutrition education and breastfeeding support, medical care referral).\nIndividual eligibility criteria: Eligible individuals are pregnant, postpartum or breastfeeding women, infants (to age 1) or children (to age 5) who are at nutritional risk (as defined by the Secretary), and who have family income no greater than 185% of federal poverty guidelines or who receive or are eligible for benefits or services under the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Medicaid.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, and the U.S. Virgin Islands) and Indian tribes and tribal organizations.\nAllocation formula: State allocations are based on a formula established through regulations that reflect food and caseload costs, inflation, and \"need\" as evidenced by poverty indices.\nMatching or related requirements: None. States are required to operate a cost containment system for infant formula, which results in manufacturers' rebates that reduce the cost of WIC food packages.\nNew obligations: FY2009: $7.028 billion (includes $72 million under the American Recovery and Reinvestment Act). FY2008: $6.400 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 9.1 million participants were served.\nCRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed].\nChild and Adult Care Food Program (Lower-Income Components) (CFDA #10.558)\nAuthority: Statute: Section 17 of the Richard B. Russell National School Lunch Act, established by the National School Lunch and Child Nutrition Act Amendments ( P.L. 94-105 ) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1766. Regulations: 7 CFR Part 226.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To enable nonresidential day care institutions to integrate a nutritious food service with organized care services for enrolled children or adults.\nBenefit/service: Breakfasts, lunches, suppers and snacks that meet minimum federal nutrition standards.\nIndividual eligibility criteria: Eligible children are age 12 or under, migrant children age 15 or under, disabled children of any age; also eligible are chronically impaired and elderly adults. In centers, individuals are eligible to receive free meals/snacks if their household income is below 130% of federal poverty guidelines, or reduced-price meals/snacks if their household income is between 130% and 185% of federal poverty guidelines. Children whose families receive benefits or services under the Supplemental Nutrition Assistance Program (SNAP), Food Distribution Program on Indian Reservations (FDPIR), or Temporary Assistance for Needy Families (TANF) program are automatically eligible for free meals/snacks. Children who are income-eligible for Head Start or Even Start, or who are residents of emergency shelters, also are automatically eligible for free meals/snacks. Adults who receive SNAP, FDPIR, Supplemental Security Income (SSI) or Medicaid benefits are automatically eligible for free meals/snacks.\nForm and recipient of federal assistance: Cash and commodity support are allocated to state agencies, which distribute benefits to eligible public or private nonprofit centers and sponsoring organizations to subsidize the costs of meals and snacks. Meals that are served free receive a higher subsidy than meals served at reduced price. Participating institutions also receive a small subsidy for meals served at full price to non-needy children and adults. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, Trust Territories of the Pacific, and the U.S. Virgin Islands).\nAllocation formula: Centers are reimbursed for meals based on the eligibility of participating children and adults for free, reduced-price, or full-price meals/snacks. Reimbursements to day care homes differ depending on whether they are \"Tier 1\" homes (located in low-income areas or operated by low-income providers) or \"Tier 2\" homes (not located in low-income areas or operated by low-income providers).\nMatching or related requirements: None.\nNew obligations: FY2009: $2.217 billion. FY2008: $2.029 billion. (Lower-income components only.)\nBudgetary classification: Mandatory (open-ended entitlement to participating centers and sponsoring organizations).\nParticipation data: In FY2009, total participation was 3.33 million persons; 82% of meals served to these participants were served either free or at reduced price.\nCRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed].\nSummer Food Service Program (CFDA #10.559)\nAuthority: Statute: Section 13 of the Richard B. Russell National School Lunch Act, established by the National School Lunch and Child Nutrition Act Amendments ( P.L. 94-105 ) and most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 ( P.L. 111-296 ); 42 USC 1761. Regulations: 7 CFR Part 225.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To help children in low-income areas get necessary nutrition during the summer months when they are out of school.\nBenefit/service: Meals and snacks.\nIndividual eligibility criteria: Children age 18 or younger and certain individuals with disabilities over the age of 18, who live in low-income areas where at least half the children are from families with incomes below 185% of federal poverty guidelines (open sites), or who are enrolled in an activity program where half the children are from families with incomes below 185% of federal poverty guidelines (enrolled sites), and children from families with incomes below 185% of federal poverty guidelines at participating camps. Automatically eligible are homeless or runaway children and children in Head Start, Early Head Start, Even Start, or state-funded pre-kindergarten programs that have received authorized waivers.\nForm and recipient of federal assistance: Cash and commodity support are allocated to state educational agencies, which distribute benefits to approved local public or private nonprofit sponsors to subsidize the costs of meals. Meals that are served free receive a higher subsidy than meals served at reduced price. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: Inflation-adjusted per-meal reimbursement rates are specified for the type of meal served (free or reduced-price).\nMatching or related requirements: None.\nNew obligations: FY2009: $356 million. FY2008: $312 million.\nBudgetary classification: Mandatory (open-ended entitlement to approved sponsors).\nParticipation data: In FY2009, a daily average of 2.23 million children participated.\nCRS report: CRS Report R41354, Child Nutrition and WIC Reauthorization: Issues and Legislation in the 111 th Congress , by [author name scrubbed].\nCommodity Supplemental Food Program (CFDA #10.565)\nAuthority: Statute: Sections 4(a) and 5 of the Agriculture and Consumer Protection Act of 1973 ( P.L. 93-86 ), most recently reauthorized by the Food, Energy and Conservation Act of 2008 ( P.L. 110-246 ); 7 USC 612c note. Regulations: 7 CFR Part 247 and 250.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To meet the nutritional needs of low-income elderly persons and pregnant, postpartum, and breastfeeding women, infants, children.\nBenefit/service: Food packages and nutrition education.\nIndividual eligibility criteria: Eligible elderly participants (60 years or older) must have incomes below 130% of federal poverty guidelines; eligible women, infants (under one year of age) and children (under six years old) may have incomes up to 185% of federal poverty guidelines. Regardless of income, individuals may participate if they are eligible for the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Medicaid. Individuals who participate in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) may not also participate in this program.\nForm and recipient of assistance: Formula grants and commodity support to states. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: Funding and commodities are allocated among states according to the caseload, or number of slots, allotted to each project, which is based on previous participation levels. Subject to available appropriations, states may request additional caseload slots.\nMatching or related requirements: None.\nNew obligations: FY2009: $165 million. FY2008: $141 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, a monthly average of 467,000 persons participated.\nCRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed].\nNutrition Assistance for Puerto Rico (CFDA #10.566)\nAuthority: Statute: Food Stamp Act of 1977 ( P.L. 95-113 ), renamed and most recently reauthorized as the Food and Nutrition Act of 2008, by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 2028. Regulations: 7 CFR Part 285.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To improve diets of needy persons living in Puerto Rico.\nBenefit/service: Nutrition assistance benefits. Benefits are provided through electronic benefit transfers, and at least 75% must be used for food purchases.\nIndividual eligibility criteria: \"Needy\" is defined by Puerto Rico.\nForm and recipient of federal assistance: Block grant to Puerto Rico.\nAllocation formula: An annually indexed amount is specified in law.\nMatching or related requirements: No match required for costs of benefits; 50% match required for administrative costs.\nNew obligations: FY2009: $2.000 billion (includes $240 million under the American Recovery and Reinvestment Act). FY2008: $1.623 billion.\nBudgetary classification: Mandatory (capped entitlement to Puerto Rico).\nParticipation data: In FY2009, a monthly average of 1.19 million individuals participated.\nCRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed].\nThe Emergency Food Assistance Program (TEFAP) (CFDA #10.568 and 10.569)\nAuthority: Statute: The Emergency Food Assistance Act of 1983 ( P.L. 98-8 ), most recently reauthorized by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 7501 et seq. Regulations: 7 CFR 251.\nFederal administering agency: Department of Agriculture, Food and Nutrition Service.\nPurpose of program: To supplement the diets of low-income Americans, including elderly people, by providing them with emergency food and nutrition assistance at no cost.\nBenefit/service: Food commodities that are distributed to local feeding programs and the administrative costs necessary to store and transport the commodities.\nIndividual eligibility criteria: Eligible individuals must be needy as defined by the state. State criteria must ensure that only households in need of food assistance because of inadequate income receive assistance under the program. At state discretion, income-based criteria may be met through participation in other income-tested health or welfare programs.\nForm and recipient of federal assistance: Formula grants and commodities to states, which distribute funds and commodities among eligible local feeding organizations. Allows participation by Indian tribal organizations.\nAllocation formula: Commodities and funding are allocated among states according to a poverty-unemployment formula; 60% is allocated on the basis of a state's share of all persons with income below the poverty level, and 40% is based on a state's share of all unemployed persons.\nMatching or related requirements: Funds retained by states for administrative costs must be matched with an equal cash or in-kind contribution. States may not reduce their level of spending of their own funds on commodities or services to organizations receiving TEFAP funds in the later of FY1988 or the year the state began administering the TEFAP program.\nNew obligations: FY2009: $425 million (includes $125 million under the American Recovery and Reinvestment Act). FY2008: $240 million. (Commodities and administrative costs.)\nBudgetary classification: Mandatory (capped/open-ended entitlement to states) and discretionary.\nParticipation data: No data available.\nCRS report: CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill , by [author name scrubbed].\nNutrition Program for the Elderly (CFDA #93.045)\nAuthority: Statute: Title III of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3030d-21 - g-22. Regulations: 7 CFR 250.42 and 45 CFR Parts 1321, 1326, 1328.\nFederal administering agency: Department of Health and Human Services, Administration on Aging.\nPurpose of program: To reduce hunger and food insecurity, promote socialization, and promote the health and well-being of older individuals and delay adverse health conditions through access to nutrition and other disease prevention and health promotion services.\nBenefit/service: Meals served in congregate settings, home-delivered meals, and related nutrition services (nutrition screening, education and assessment and counseling).\nIndividual eligibility criteria: Individuals age 60 or older and their spouses. Individuals with disabilities younger than 60 who live in housing facilities occupied primarily by the elderly and where congregate meals are served also may receive congregate meals. To be eligible for home-delivered meals, individuals must be homebound or otherwise isolated. Preference is given to individuals with the greatest economic and social needs, with particular attention to low-income older individuals (i.e., having income no higher than federal poverty guidelines), including low-income minority older individuals, those with limited English proficiency, and those living in rural areas.\nForm and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands). A separate nutrition program for Native Americans is authorized under Title VI of the Older Americans Act.\nAllocation formula: Funds are allocated to states according to their relative share of the nation's population of older individuals (age 60 and over). States develop their own formulas for allocation of funds among local agencies, which must consider the geographic distribution of older individuals and older individuals with the greatest economic and social needs, paying particular attention to low-income minority households.\nMatching or related requirements: A nonfederal share of 25% is required for administrative activities, and a nonfederal share of 15% is required for nutrition services.\nNew obligations: FY2009: $905 million (includes $97 million under the American Recovery and Reinvestment Act). FY2008: $756 million. (Congregate meals, home-delivered meals, and nutrition services incentive program.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, 1,656,634 clients received congregate meals; 909,913 received home-delivered meals; and 28,358 received nutrition counseling.\nC RS report: CRS Report RS21202, Older Americans Act: Title III Nutrition Services Program , by [author name scrubbed].\nHousing and Development\nSingle-Family Rural Housing Loans (Section 502) (CFDA #10.410)\nAuthority: Statute: Section 502 of the Housing Act of 1949 (P.L. 81-171); 42 USC 1471 et seq. Regulations: 7 CFR Part 3550 Subpart B and 7 CFR Part 1980.\nFederal administering agency: Department of Agriculture, Rural Housing Service.\nPurpose of program: To assist low-income households in obtaining adequate but modest, decent, safe, and sanitary dwellings and related facilities in rural areas.\nBenefit/service: Guaranteed or direct loans to assist in purchasing homes; loans also can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including to provide water and sewage facilities.\nIndividual eligibility criteria: For guaranteed loans, individuals may have incomes up to 115% of area median income. For direct loans, individuals must be either low-income (with incomes no higher than 80% of area median) or very low-income (with incomes no higher than 50% of area median).\nForm and recipient of federal assistance: Guaranteed or direct loans to individuals. Allows participation by residents of territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Marianas, Palau, Puerto Rico and the U.S. Virgin Islands).\nAllocation formula: Loan funds are allocated among states according to the state's share of rural substandard housing units, rural population in very small communities, rural households with incomes between 80% and 100% of area median income, and rural renter households paying more than 35% of income for rent.\nMatching or related requirements: Not applicable.\nNew obligations: FY2009: $225 million. FY2008: $121 million. (Re-estimated direct and guaranteed loan subsidy outlays.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 131,335 units received assistance.\nCRS report: CRS Report RL33421, USDA Rural Housing Programs: An Overview , by [author name scrubbed].\nRural Rental Assistance Payments (Section 521) (CFDA #10.427)\nAuthority: Statute: Section 521 of the Housing Act of 1949, established by the Housing and Urban Development Act of 1968 (P.L. 90-448); 42 USC 1490. Regulations: 7 CFR Part 3560.\nFederal administering agency: Department of Agriculture, Rural Housing Service.\nPurpose of program: To reduce the rent paid by low-income households in eligible units financed under certain Rural Housing Service programs.\nBenefit/service: Rental subsidies for low-income tenants provided through payments to eligible property owners; payments make up the difference between the tenant's rental payment to the owner and the approved rent for the unit.\nIndividual eligibility criteria: Eligible tenants must have incomes no greater than 80% of area median income, although most assistance is targeted toward tenants with incomes no greater than 50% of area median.\nForm and recipient of federal assistance: Direct payments to property owners.\nAllocation formula: The number of rental assistance units that may be subsidized is allocated among states according to each state's share of the rural population, rural housing units that are overcrowded and/or lack plumbing, and poor persons living in rural areas.\nMatching or related requirements: None.\nNew obligations: FY2009: $902 million. FY2008: $479 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 202,525 units were under contract to be subsidized.\nCRS report: CRS Report RL33421, USDA Rural Housing Programs: An Overview , by [author name scrubbed].\nWater and Waste Disposal for Rural Communities (CFDA #10.760)\nAuthority: Statute: Section 306 of the Consolidated Farm and Rural Development Act of 1972 (P.L. 92-419), most recently amended and reauthorized by the Food, Conservation and Energy Act of 2008 ( P.L. 110-246 ); 7 USC 1926. Regulations: 7 CFR Parts 1779-1780.\nFederal administering agency: Department of Agriculture, Rural Utility Service.\nPurpose of program: To provide basic human amenities, alleviate health hazards, and promote the orderly growth of the nation's rural areas by meeting the need for new and improved rural water and waste disposal facilities.\nBenefit/service: Long-term low-interest loans and grants to support the installation, repair, improvement or expansion of rural water facilities. Loan interest rates are based on the economic health of the community and are lowest in communities where the median household income is 80% of the state nonurban median or the poverty level, or less.\nIndividual eligibility criteria: There are no individual eligibility criteria. Eligible communities have populations of 10,000 or less and are unable to finance their projects through other means. Grants are targeted toward projects serving poorer communities.\nForm and recipient of federal assistance: Loans and formula grants to local governments and public and private organizations. Allows participation by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands) and Indian tribes.\nAllocation formula: USDA allocates grant funds among its state rural development offices based on each state's rural population, number of households in poverty, and unemployment.\nMatching or related requirements: Grants and loans are intended to cover no more than 75% of project development costs in communities where median household income is 80% of the state nonurban median or the poverty level, or less; or 45% of project development costs in communities where median household income is higher than 80% but less than 100% of the state nonurban median.\nNew obligations: FY2009: $1.370 million (includes $631 million from the American Recovery and Reinvestment Act). FY2008: $685 million.\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nCRS reports: CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs , coordinated by [author name scrubbed]; and CRS Report RL31837, An Overview of USDA Rural Development Programs , by [author name scrubbed].\nPublic Works and Economic Development (CFDA #11.300)\nAuthority: Statute: Section 201 of the Public Works and Economic Development Act of 1965 (P.L. 89-136), most recently reauthorized by the Economic Development Administration Reauthorization Act of 2004 ( P.L. 108-373 ); 42 USC 3141. Regulations: 13 CFR Part 305.\nFederal administering agency: Department of Commerce, Economic Development Administration.\nPurpose of program: To help the nation's most distressed communities revitalize, expand and upgrade their physical infrastructure to attract new industry, encourage business expansion, diversify local economies and generate or retain long-term private sector jobs and investments.\nBenefit/service: Assistance in the acquisition or development of land and improvements for use for a public works, public service, or development facility; and assistance in the acquisition, design and engineering, construction, rehabilitation, alteration, expansion, or improvement of such a facility, including related machinery and equipment.\nIndividual eligibility criteria: There are no individual eligibility criteria. Eligible projects must be located in areas that have either: low per capita income (80% of the national average or lower); unemployment for the most recent 24-month period that is at least one percentage point higher than the national average; or a special need arising from actual or threatened severe unemployment or economic adjustment problems resulting from severe changes in economic conditions. Projects may be outside such an area if they would create significant employment opportunities for unemployed, underemployed, or low-income residents of such an area.\nForm and recipient of federal assistance: Competitive grants to economic development districts (i.e., areas designated by EDA which have sufficient size and resources to foster economic development and which have at least one area fitting the income, unemployment or special need criteria described above), states, local governments, institutions of higher education, or public or private nonprofit organizations and associations acting in cooperation with local governments. Allows participation by territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Marianas, Palau, Puerto Rico, and the U.S. Virgin Islands) and Indian tribes.\nAllocation formula: Not applicable. However, no more than 15% of available funds may be spent in a single state.\nMatching or related requirements: In general, the federal share is 50%, plus an additional federal share of no more than 30% based on the relative needs of the area where the project is located. Nonfederal contributions may be in cash or in-kind. At the discretion of the Secretary of Commerce, the federal share may be increased up to 100% for grants to Indian tribes, states or localities that have exhausted their effective taxing and borrowing capacity, or nonprofit organizations that have exhausted their borrowing capacity.\nNew obligations: FY2009: $285 million (includes $147 million under the American Recovery and Reinvestment Act). FY2008: $170 million.\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nCRS report: CRS Report R41162, Economic Development Administration: Reauthorization and Funding Issues in the 111 th Congress , by [author name scrubbed] and [author name scrubbed].\nSupportive Housing for the Elderly (CFDA #14.157)\nAuthority: Statute: Section 202 of the U.S. Housing Act of 1959 (P.L. 86-372), most recently reauthorized by the American Homeownership and Economic Opportunity Act of 2000 ( P.L. 106-569 ); 12 USC 1701q. Regulations: 24 CFR Part 891.\nFederal administering agency: Department of Housing and Urban Development, Office of Housing.\nPurpose of program: To help expand the supply of affordable housing with supportive services for the elderly.\nBenefit/service: Financial assistance for development of supportive housing for the elderly, and rent subsidies for eligible tenants.\nIndividual eligibility criteria: Very low-income households in which at least one member is at least 62 years old at the time of initial occupancy. Very low-income is defined as having income no greater than 50% of area median, adjusted for family size.\nForm and recipient of federal assistance: Interest-free capital advances to finance development costs, which do not have to be repaid as long as the project serves very low-income elderly residents for at least 40 years, and project-based rental assistance contracts to cover the difference between the HUD-approved operating costs for the project and the tenant's contribution toward rent. Assistance is provided to private nonprofit organizations and for-profit general partnerships where the sole general partner is a nonprofit organization. Allows participation by territories (Puerto Rico and the possessions of the U.S).\nAllocation formula: HUD uses a needs-based formula to allocate funds among HUD multifamily hubs, allocating 85% of funds to metropolitan areas and 15% to non-metropolitan areas, and considering relevant characteristics of the elderly population, such as the number of single elderly renters with incomes below 50% of area median income, and various housing factors. HUD awards funds to eligible applicants on a competitive basis.\nMatching or related requirements: None.\nNew obligations: FY2009: $800 million. FY2008: $778 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 106,663 units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.)\nCRS report: CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents , by [author name scrubbed].\nSupportive Housing for Persons with Disabilities (CFDA #14.181)\nAuthority: Statute: Section 811 of the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ), most recently reauthorized by the Frank Melville Supportive Housing Investment Act of 2010 ( P.L. 111-374 ); 42 USC 8013. Regulations: 24 CFR Parts 891 Subparts A, C and D.\nFederal administering agency: Department of Housing and Urban Development, Office of Housing.\nPurpose of program: To allow persons with disabilities to live as independently as possible in the community by increasing the supply of rental housing with the availability of supportive services.\nBenefit/service: Financial assistance for development of supportive housing for persons with disabilities, and rent subsidies for eligible tenants.\nIndividual eligibility criteria: Very low-income households (which may include a single individual) in which at least one member is age 18 or older and has a disability, such as a physical or developmental disability or chronic mental illness. Very low-income is defined as having income no greater than 50% of area median, adjusted for family size.\nForm and recipient of federal assistance: Interest-free capital advances to finance development costs, which do not have to be repaid as long as the project serves very low-income disabled residents for at least 40 years, and project-based rental assistance contracts to cover the difference between the HUD-approved operating costs for the project and the tenant's contribution toward rent. Assistance is provided to private nonprofit organizations.\nAllocation formula: HUD uses a needs-based formula to allocate funds among HUD field offices based on the number of noninstitutionalized persons within the local office jurisdiction who are between the ages of 16 and 64 and have a disability. Field offices award funds to eligible applicants on a competitive basis.\nMatching or related requirements: None.\nNew obligations: FY2009: $284 million. FY2008: $256 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 30,221 units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.) In addition, 14,811 tenant-based vouchers were in use.\nCRS report: CRS Report RL34728, Section 811 and Other HUD Housing Programs for Persons with Disabilities , by [author name scrubbed].\nSection 8 Project-Based Rental Assistance (CFDA #14.195)\nAuthority: Statute: Section 8 of the U.S. Housing Act of 1937, established by the Housing and Community Development Act of 1974 ( P.L. 93-383 ); 42 USC 1437f. Regulations: 24 CFR Parts 5, 880, 881, 883, 884, 886 and 891 Subpart E.\nFederal administering agency: Department of Housing and Urban Development, Office of Housing.\nPurpose of program: To help very low-income families afford decent, safe and sanitary housing in the private market.\nBenefit/service: Rent subsidies tied to units in privately-owned multifamily housing properties. Tenants are expected to pay the highest of 30% of counted income, 10% of gross income, or, in states where applicable, the \"welfare\" rent. The program pays owners the difference between the tenant contribution and a previously negotiated rent.\nIndividual eligibility criteria: Eligible families must be very low-income (with incomes no higher than 50% of area median income), but 40% of units that become available each year must be given to families that are extremely low-income (incomes no higher than 30% of area median income). In some limited circumstances, families may be low-income, with incomes as high as 80% of area median income.\nForm and recipient of federal assistance: Project-based rental assistance contracts between HUD and private property owners. HUD has not had the authority to enter into new contracts since 1983, but does have the authority to renew existing contracts when they expire. There are properties with project-based rental assistance contracts in the territories (U.S. Virgin Islands, Puerto Rico, and Guam).\nAllocation formula: None.\nMatching or related requirements: None.\nNew obligations: FY2009: $9.391 billion (includes $1.991 billion under the American Recovery and Reinvestment Act). FY2008: $7.004 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 1.279 million housing units were eligible for assistance payments. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.)\nCRS report: CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by [author name scrubbed].\nCommunity Development Block Grants (CFDA #14.218 and #14.228)\nAuthority: Statute: Title I of the Housing and Community Development Act of 1974 ( P.L. 93-383 ), most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 USC 5301 et seq. Regulations: 24 CFR Part 570.\nFederal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development.\nPurpose of program: To develop viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low to moderate income.\nBenefit/service: Assistance with the acquisition of real property, relocation and demolition, rehabilitation of residential and non-residential structures, construction of public facilities and improvements, public services within certain limits, activities related to energy conservation and renewable energy resources, and assistance to nonprofit entities and to profit-motivated businesses to carry out economic development and job creation/retention activities.\nIndividual eligibility criteria: There are no individual eligibility criteria. At least 70% of funds must be used for activities that benefit low- and moderate-income individuals. Low-income is defined as income no greater than 50% of the state or entitlement community's median; moderate-income is defined as income above 50% but no greater than 80% of the state or entitlement community's median.\nForm and recipient of federal assistance: Formula grants to \"entitlement communities\" (i.e., principal cities in metropolitan statistical areas, other metropolitan cities with populations of at least 50,000, and qualified urban counties with populations of at least 200,000); and states, which administer funds on behalf of non-entitlement communities (i.e., cities with populations of less than 50,000 and counties with populations of less than 200,000). HUD directly administers the state component of the program for Hawaii, which has elected not to participate in the program. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Marianas, and the U.S. Virgin Islands) and Indian tribes.\nAllocation formula: Of available funds, 70% are allocated to entitlement communities according to a formula that considers various measures of community need, including the extent of poverty, population size, housing overcrowding, age of housing, and lag in population growth as compared to other metropolitan areas. The remaining 30% are allocated to states according to a formula that considers population, poverty, incidence of overcrowded housing, and age of the housing.\nMatching or related requirements: None.\nNew obligations: FY2009: $4.733 billion (includes $965 million under the American Recovery and Reinvestment Act). FY2008: $3.645 billion. (Community Development Formula Grants and Indian Community Development Grants.)\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nHomeless Assistance Grants (CFDA #14.231, #14.235, #14.238, #14.249)\nNote: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Helping Families Save Their Homes Act ( P.L. 111-22 ).\nAuthority: Statute: Title IV of the McKinney-Vento Homeless Assistance Act, established by the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ) and most recently reauthorized by the Helping Families Save Their Homes Act ( P.L. 111-22 ); 42 USC Chapter 119, Subchapter IV. Regulations: 24 CFR Parts 576, 582, 583, and 882, Subpart H. (Homeless Assistance Grants consist of four programs administered through a consolidated budget account: Supportive Housing Program (SHP), Shelter Plus Care Program (S+C), Single Room Occupancy Program (SRO), and Emergency Shelter Grants Program (ESG).)\nFederal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development.\nPurpose of program: SHP: To develop supportive housing and services that will allow homeless persons to live as independently as possible. S+C: To provide housing and supportive services on a long-term basis for homeless persons with disabilities and their families who are living in places not intended for human habitation or in emergency shelters. SRO: To expand the supply of single room occupancy units and use them to assist homeless persons. ESG: To provide homeless persons with basic shelter and essential support services and to prevent at-risk persons and families from becoming homeless.\nBenefit/service: SHP: Transitional housing for homeless individuals and families for up to 24 months, permanent housing for disabled homeless individuals, and supportive services. S+C: Rent subsidies for homeless individuals and their families, and supportive services. SRO: Permanent housing for homeless individuals in efficiency units similar to dormitories. ESG: Renovation, rehabilitation or conversion of buildings into homeless shelters, services such as employment counseling, health care and education, assistance with rent or utility payments to prevent homelessness.\nIndividual eligibility criteria: SHP: Homeless individuals and their families, and, for permanent housing, disabled homeless individuals. S+C: Homeless individuals with disabilities (primarily those with serious mental illness, chronic drug or alcohol problems, and AIDS) and their families. SRO: Unaccompanied homeless individuals. ESG: Homeless individuals and families and families and individuals at risk of becoming homeless.\nForm and recipient of federal assistance: SHP: Competitive grants to states and local governments, public housing authorities, private nonprofit organizations, and community mental health centers. S+C: Competitive grants to states and local governments and public housing authorities. SRO: Competitive grants to public housing authorities and private nonprofit organizations. ESG: Formula grants to states, metropolitan cities and urban counties. Allows participation by territories (depending on the individual program: American Samoa, Guam, Northern Mariana Islands, Palau, Puerto Rico, Trust Territory of the Pacific, the U.S. Virgin Islands, and any other territory or possession of the United States).\nAllocation formula: SHP, S+C, SRO: Not applicable. ESG: Funds are allocated on the basis of population, poverty population, housing overcrowding, age of housing, and extent of growth lag.\nMatching or related requirements: SHP: Dollar-for-dollar cash matching is required for projects involving acquisition, rehabilitation or construction of new housing units; a 20% nonfederal cash match is required for supportive services; and a 25% nonfederal cash match is required for operating expenses. S+C: Grant funds used for rental assistance must be matched with an equal amount of resources used for supportive services. SRO: None. ESG: Dollar-for-dollar match (although first $100,000 provided to a state need not be matched), which might be in the form of cash or value of buildings, staff salaries or volunteer time.\nNew obligations: FY2009: $2.861 billion (includes $1.485 billion under the American Recovery and Reinvestment Act). FY2008: $1.538 billion.\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nCRS report: CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds , by [author name scrubbed].\nHome Investment Partnerships Program (HOME) (CFDA #14.239)\nAuthority: Statute: Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ); 42 USC 12722 et seq. Regulations: 24 CFR Part 92.\nFederal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development.\nPurpose of program: To increase the number of families served with decent, safe, sanitary and affordable housing and expand the long-term supply of affordable housing; and to strengthen the ability of states and local governments to provide for housing needs.\nBenefit/service: Assistance for existing homeowners in repairing, rehabilitating or rebuilding their homes; assistance for homebuyers in the purchase or rehabilitation of a new home; assistance for developers or other organizations in the purchase or rehabilitation of affordable rental housing; and tenant-based rental assistance.\nIndividual eligibility criteria: Recipient households may not have incomes above 80% of area median income. At least 90% of families receiving rental housing and tenant-based rental assistance must have incomes that are no more than 60% of area median income.\nForm and recipient of federal assistance: Formula grants to states and local participating jurisdictions, which are metropolitan cities or urban counties that meet certain minimum funding thresholds. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated according to a formula that considers various housing quality and affordability factors, as well as certain income-related factors, including the number of older units in the jurisdiction occupied by poor households and the number of poor families in the jurisdiction.\nMatching or related requirements: Nonfederal matching of 25% is required.\nNew obligations: FY2009: $1.911 billion. FY2008: $1.647 billion.\nBudgetary classification: Discretionary.\nParticipation data: No annual program data are available. Between 1992 and 2009, there have been 391,669 completed homebuyer units, 349,390 completed rental units, 184,268 completed homeowner rehab units assisted through HOME (for a total of 925,563 units), along with 216,563 households receiving rental assistance.\nCRS report: CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by [author name scrubbed].\nHousing Opportunities for Persons with AIDS (HOPWA) (CFDA #14.241)\nAuthority: Statute: AIDS Housing Opportunity Act, established by the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ) and most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 USC 12901-12912. Regulations: 24 CFR Parts 574.3-574.655.\nFederal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development, Office of HIV/AIDS Housing.\nPurpose of program: To devise long-term comprehensive strategies for meeting the housing needs of persons with AIDS.\nBenefit/service: Housing assistance and related supportive services, including housing information services; acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing and services; new construction (for single room occupancy dwellings and community residences only); project- or tenant-based rental assistance; short-term rent, mortgage, and utility payments to prevent homelessness; supportive services such as health and mental health services, drug and alcohol abuse treatment and counseling, day care, nutritional services, intensive care when required, and aid in gaining access to other public benefits.\nIndividual eligibility criteria: Eligible individuals are HIV-positive or have AIDS, and have incomes no higher than 80% of area median income.\nForm and recipient of federal assistance: 90% of funds are awarded as formula grants to states and eligible metropolitan statistical areas (MSAs) that meet minimum AIDS case requirements; 10% are competitively awarded to states, local governments, and nonprofit agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Marshall Islands, Micronesia, Northern Mariana Islands, Palau, and the U.S. Virgin Islands).\nAllocation formula: Of formula funds, 75% (base funding) is awarded to eligible cities (MSAs with population of more than 500,000 and more than 1,500 cumulative reported AIDS cases) and to eligible states (those with more than 1,500 AIDS cases in areas outside of eligible MSAs); and the remaining 25% (bonus funding) is awarded on the basis of AIDS incidence during the past three years to MSAs that have populations of more than 500,000, more than 1,500 cumulative reported AIDS cases, and a higher than average per capita incidence of AIDS.\nMatching or related requirements: None.\nNew obligations: FY2009: $318 million. FY2008: $310 million.\nBudgetary classification: Discretionary.\nParticipation data: In program year 2008-2009, 56,627 households received permanent, transitional or emergency housing assistance.\nCRS report: CRS Report RL34318, Housing for Persons Living with HIV/AIDS , by [author name scrubbed].\nPublic Housing (CFDA #14.850, #14.872 and #14.866)\nAuthority: Statute: Sections 9(d), 9(e), 24 and 30 of the U.S. Housing Act of 1937, as amended (P.L. 75-412); 42 USC 1437. Regulations: 24 CFR Parts 5 and 901-972. (Public Housing programs include Operating Fund, Capital Fund, and HOPE VI.)\nFederal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing.\nPurpose of program: To provide cost-effective, decent, safe and affordable rental housing for eligible low-income families, the elderly, and persons with disabilities; and for HOPE VI, to improve the living environment for public housing residents through demolition, rehabilitation and replacement of severely distressed housing units.\nBenefit/service: Subsidized publicly-owned rental housing units; eligible households pay rent equal to the highest of 30% of counted income, 10% of gross income, or, in states where applicable, the \"welfare\" rent.\nIndividual eligibility criteria: Eligible households are low-income (defined as having income at or below 80% of area median income). At least 40% of households admitted each year must be extremely low-income households (defined as having income at or below 30% of area median income). Certain residents are required to participate in an economic self-sufficiency program or contribute 8 hours per month of community service.\nForm and recipient of federal assistance: Operating and Capital Funds: Formula grants to public housing authorities. HOPE VI: Competitive grants to public housing authorities. Includes public housing projects located in territories (Puerto Rico, the U.S. Virgin Islands, and Guam).\nAllocation formula: Operating Fund: Funds to support ongoing costs of operating public housing are allocated according to a formula intended to make up the difference between the costs of maintaining public housing and the amount of tenant-paid rent received by the public housing authority; amounts are prorated to fit within the amount appropriated annually by Congress. Capital Fund: Funds to support development, financing and modernization of public housing are allocated on the basis of relative need.\nMatching or related requirements: None. However, an indirect local contribution results from the difference between full local property taxes and payments in lieu of taxes that are made by local housing authorities.\nNew obligations: FY2009: $10.843 billion (includes $3.977 billion under the American Recovery and Reinvestment Act). FY2008: $6.894 billion. (Operating Fund, Capital Fund, and HOPE VI.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 1,128,891 public housing units were eligible for payment. (Note: Not all units may have been occupied in the year and some units may have served more than one household during the year.)\nCRS reports: CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy , by [author name scrubbed] et al., CRS Report RS22557, Public Housing: Fact Sheet on the Operating Fund Formula , by [author name scrubbed], and CRS Report RL32236, HOPE VI Public Housing Revitalization Program: Background, Funding, and Issues , by [author name scrubbed].\nIndian Housing Block Grants (CFDA #14.867)\nAuthority: Statute: Native American Housing and Self-Determination Act of 1996 ( P.L. 104-330 ), most recently reauthorized by the Native American Housing and Self-Determination Reauthorization Act of 2008 ( P.L. 110-411 ); 25 USC 4101 et seq. Regulations: 24 CFR Part 1000.\nFederal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing, Office of Native American Programs.\nPurpose of program: To provide housing assistance and, to the extent practicable, to assist in the development of private housing finance mechanisms on Indian lands to achieve the goals of economic self-sufficiency and self-determination for tribes and their members.\nBenefit/service: Housing development, assistance to housing developed under the former Indian Housing Program, housing services to eligible individuals and families, crime prevention and safety, and model activities that provide creative approaches to solving affordable housing problems.\nIndividual eligibility criteria: Low-income Indian families living on Indian reservations and other Indian lands; low-income is defined as having income no greater than 80% of the area median. Non-low-income families may be served if such families have a need for housing that cannot otherwise be met. Assistance also may be provided to non-Indian families living on Indian reservations or Indian lands if the presence of such families on the reservation or Indian land is essential to the well-being of Indian families and their housing needs cannot reasonably be met otherwise. Housing assistance also may be provided to law enforcement officers if their presence on the reservation or Indian land may deter crime.\nForm of assistance: Formula grants to federally recognized Indian tribes or their tribally designated housing entity, and a limited number of state recognized Indian tribes that were funded under prior law. (\"State\" is defined to include American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands, and any other territory or possession of the United States.)\nAllocation formula: Funds are allocated among tribes according to a two-part formula based on \"need\" (e.g., Indian households with significant housing cost burdens, households that are overcrowded or lack kitchen or plumbing facilities, and number of Indian households at different levels of low-income) and \"formula current assisted stock\" (housing developed under the former Indian Housing Program and owned or operated by the grantee).\nMatching or related requirements: None. However, grant recipients must make annual user fee payments to compensate local governments for the costs of providing governmental services or must make payments in lieu of taxes to taxing authorities.\nNew obligations: FY2009: $1.149 billion (includes $500 million under the American Recovery and Reinvestment Act). FY2008: $556 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, the program assisted approximately 5,936 homeowners and more than 1,410 families in rental homes.\nSection 8 Housing Choice Vouchers (CFDA #14.871)\nAuthority: Statute: Section 8 of the U.S. Housing Act of 1937, established by the Housing and Community Development Act of 1974 ( P.L. 93-383 ); 42 USC 1437f. Regulations: 24 CFR Parts 5 and 982.\nFederal administering agency: Department of Housing and Urban Development, Office of Public and Indian Housing.\nPurpose of program: To help very low-income families afford decent, safe and sanitary housing in the private market.\nBenefit/service: Tenant-based vouchers that can be used to subsidize the cost of privately-owned rental housing, chosen by tenants in the private market. Tenants are expected to pay an amount toward rent that is at least the greater of 30% of counted income, 10% of gross income, or, in states where applicable, the \"welfare\" rent. The program pays the balance, up to the payment standard set by the local public housing authority at between 90% and 110% of the HUD-established fair market rent for the unit. Public housing authorities may choose to \"project-base\" up to 20% of their vouchers, which means the subsidy is attached to a preselected unit of housing. However, tenants living in project-based voucher units are entitled to move with a tenant-based voucher, if they so choose, after one year.\nIndividual eligibility criteria: Eligible families must be very low-income (with incomes no higher than 50% of area median income), but 75% of vouchers that become available each year must go to families that are extremely low-income (incomes no higher than 30% of area median income). In some limited circumstances, families may be low-income, with incomes as high as 80% of area median income.\nForm and recipient of federal assistance: Formula grants to public housing authorities. Includes public housing authorities in the territories (Puerto Rico, the U.S. Virgin Islands, Guam and Northern Mariana Islands).\nAllocation formula: Congress typically specifies the allocation formula in annual appropriations laws. For FY2009, funds to renew existing vouchers were provided to public housing authorities according to their utilization rates and costs from the prior year, adjusted for inflation.\nMatching or related requirements: None.\nNew obligations: FY2009: $16.289 billion. FY2008: $15.552 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 2.097 million vouchers were in use.\nCRS report: CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by [author name scrubbed].\nNeighborhood Stabilization Program-1 (no CFDA #)\nAuthority: Statute: Division B, Title III of the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ); 42 USC 5301 note. Regulations: 73 FR 58330.\nFederal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development.\nPurpose of program: To assist in the rehabilitation of abandoned and foreclosed homes, to reverse blight conditions, and to stabilize home values and the property tax base of affected communities.\nBenefit/service: Assistance with the purchase, rehabilitation, and resale of abandoned and foreclosed homes and residential properties, demolition of blighted structures, and redevelopment of blighted and vacant properties.\nIndividual eligibility criteria: Individuals and families who benefit from the program must have incomes no higher than 120% of area median income. At least 25% of appropriations must be used to purchase or rehabilitate residential structures that will be used to house individuals or families with incomes no higher than 50% of area median income.\nForm and recipient of federal assistance: Formula grants to states and local governments. Allows participation by territories (Puerto Rico, Guam, the Northern Marianas, American Samoa and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated on the basis of the number and percentage of home foreclosures in the state or locality, the number and percentage of subprime mortgages in the state or locality, and the number of homes in default or delinquency in the state or locality.\nMatching or related requirements: None.\nNew obligations: FY2009: $3.920 billion. FY2008: None (program not authorized).\nBudgetary classification: Mandatory.\nParticipation data: No data available.\nCRS report: CRS Report RS22919, Community Development Block Grants: Neighborhood Stabilization Program; Assistance to Communities Affected by Foreclosures , by [author name scrubbed] and [author name scrubbed].\nGrants to States for Low-Income Housing Projects In Lieu of Low-Income Housing Credit Allocations (no CFDA #)\nAuthority: Statute: Section 1602 of Division B of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). Regulations: 31 CFR Part 32.\nFederal administering agency: Department of Treasury.\nPurpose of program: To support the construction and rehabilitation of affordable housing typically financed with funds from the Low-Income Housing Tax Credit (LIHTC) program.\nBenefit/service: Grants are provided in lieu of tax credits to help finance the construction or acquisition and rehabilitation of qualified buildings that will provide rent-restricted rental units to low-income households.\nIndividual eligibility criteria: Qualified projects must meet one of the following tests: at least 20% of units must be rent-restricted and occupied by households with incomes at or below 50% of area median income; or at least 40% of units must be rent-restricted and occupied by households with incomes at or below 60% of area median income.\nForm and recipient of federal assistance: Grants to state housing credit agencies. Allows participation by territories (American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands).\nAllocation formula: States could elect to exchange for grants all of their unused and returned 2008 tax credit allocation, 40% of their 2009 tax credit allocation, and 40% of any allocation in 2009 made from the national LIHTC pool. Tax credits could be exchanged for grants at a rate of $0.85 on the dollar. Annual tax credit allocations are determined on the basis of each state's population.\nMatching or related requirements: No matching requirements for the grant program; however, the LIHTC (and this related grant program) are intended to finance only part of a project and are typically combined with other resources.\nNew obligations: FY2009: $2.465 billion (entirely appropriated under ARRA). FY2008: None (program not authorized).\nBudgetary classification: Mandatory.\nParticipation data: No data available.\nCRS report: CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit , by [author name scrubbed].\nTax Credit Assistance Program (no CFDA #)\nAuthority: Statute: Division A, Title XII of the American Recovery and Reinvestment Act ( P.L. 111-5 ). Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Housing and Urban Development, Office of Community Planning and Development.\nPurpose of program: To make funds available for capital investments in Low-Income Housing Tax Credit (LIHTC) projects where the additional funds can be spent within specified deadlines.\nBenefit/service: Assistance is provided to owners of projects who received an award of LIHTCs.\nIndividual eligibility criteria: To qualify for LIHTCs, projects must meet one of the following tests: at least 20% of units must be rent-restricted and occupied by households with incomes at or below 50% of area median income; or at least 40% of units must be rent-restricted and occupied by households with incomes at or below 60% of area median income.\nForm and recipient of federal assistance: Formula grants to state housing credit agencies, which competitively award funds to project owners. Allows participation by Puerto Rico.\nAllocation formula: Funds are allocated among states according to each state's percentage of FY2008 HOME awards.\nMatching or related requirements: None. However, the LIHTC is intended to finance only part of a project and is typically combined with other resources.\nNew obligations: FY2009: $2.250 billion (entirely appropriated under ARRA). FY2008: none (program not authorized).\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nCRS reports: CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit , by [author name scrubbed]; and CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by [author name scrubbed].\nEducation\nIndian Education (CFDA #15.026, 15.028, 15.042, 15.043, 15.044, 15.046, 15.047, 15.058, 15.059, 15.060, 15.130, 15.114)\nAuthority: Statute: Snyder Act of 1921 (P.L. 67-85), Johnson-O'Malley Act of 1934 (P.L. 73-167), Indian Adult Vocational Training Act of 1956 (P.L. 84-959), Navajo Community College Act (P.L. 92-189), Indian Self-Determination and Education Assistance Act of 1978 ( P.L. 93-638 ), Tribally Controlled College Assistance Act ( P.L. 95-471 ), Education Amendments of 1978 ( P.L. 95-561 ), Tribally Controlled Schools Act of 1988 ( P.L. 100-297 ), and Tribal Self-Governance Act of 1994 ( P.L. 103-413 ); 25 USC 13, 309 et seq., 450 et seq., 640a, Chapters 7, 20, 22, 27, 28, and 35. Regulations: 25 CFR Part 30-47, 273, 900-1001.\nFederal administering agency: Department of Interior, Bureau of Indian Education.\nPurpose of program: To provide comprehensive education programs and services for American Indians and Alaska Natives; to provide quality education opportunities from early childhood through life in accordance with the tribes' needs for educational, cultural and economic well-being in keeping with the wide diversity of Indian tribes and Alaska Native villages as distinct cultural and governmental entities.\nBenefit/service: Preschool, elementary, secondary, postsecondary and adult education at BIE-funded institutions, public schools, and postsecondary institutions; financial assistance for postsecondary education at accredited institutions.\nIndividual eligibility criteria: Eligible children and postsecondary students are members of federally recognized Indian tribes or at least one-fourth degree Indian blood descendants of such members, and (for elementary and secondary students) live on or near a federal Indian reservation; members of federally recognized tribes who are accepted or enrolled at an accredited institution of higher education and are determined to have financial need by the institution's financial aid office.\nForm and recipient of federal assistance: Services are provided at BIE schools and institutions, public schools, and tribally controlled colleges and universities; postsecondary assistance is provided directly to students.\nAllocation formula: Depending on the individual program, funds are allocated to BIE-funded elementary and secondary schools based on number of students and their academic needs, commercial transportation costs, and the number of weighted bus miles driven; to tribes and tribal organizations based on the number of eligible preschool-age children and an administrative cost percentage rate; to tribes, states and public school districts based on historic funding in FY1995 and the number of Indian students served; to tribally controlled colleges based on Indian student counts and previous year allocations; and to BIE postsecondary schools based on prior allocations and unmet need.\nMatching or related requirements: None.\nNew obligations: FY2009: $699 million. FY2008: $684 million.\nBudgetary classification: Discretionary.\nParticipation data: In school year 2008-2009, an \"average daily membership\" of 40,710 students was reported at BIE-funded schools. Early childhood programs served 2,297 children and 2,286 parents in 2008-2009. BIE-funded postsecondary schools enrolled 2,042 students in academic year 2008-2009. Tribal colleges enrolled 24,572 students in academic year 2008-2009.\nCRS report: CRS Report RL34205, Federal Indian Elementary-Secondary Education Programs: Background and Issues , by [author name scrubbed].\nAdult Basic Education Grants to States (CFDA #84.002)\nAuthority: Statute: Adult Education and Family Literacy Act, most recently reauthorized by Title II of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 20 USC 9201 et seq. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Vocational and Adult Education, Division of Adult Education and Literacy.\nPurpose of program: To assist adults to become literate and obtain the knowledge and skills necessary for employment and self-sufficiency, to assist adults who are parents obtain the educational skills necessary to become full partners in the educational development of their children, and to assist adults in completing a secondary school education.\nBenefit/service: Adult education and literacy services, including workplace literacy services; family literacy services; and English literacy programs.\nIndividual eligibility criteria: Qualified adults are individuals age 16 or older, who are not enrolled or required to be enrolled in secondary school under their state law, and who lack sufficient mastery of basic educational skills to function effectively in society, or who lack a secondary school diploma or equivalent and have not achieved an equivalent level of education, or who cannot speak, read or write the English language.\nForm and recipient of federal assistance: Formula grants to state agencies (typically state educational agencies), which fund local projects on a competitive basis. Eligible providers include local educational agencies, community-based organizations, volunteer literacy organizations, institutions of higher education, public or private nonprofit agencies, libraries, public housing authorities, other nonprofits with the ability to provide literacy services to adults and families, and consortia of eligible entities. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Marshall Islands, Micronesia, Northern Mariana Islands, Palau, and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated among states based on their relative number of qualified adults. Hold-harmless provisions apply.\nMatching or related requirements: A 25% nonfederal match is required for states.\nNew obligations: FY2009: $572 million. FY2008: $555 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, there was an estimated total of 2,537,662 participants.\nCRS report: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed].\nFederal Supplemental Educational Opportunity Grants (CFDA #84.007)\nAuthority: Statute: Title IV, Part A, Subpart 3 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070b. Regulations: 34 CFR Parts 673 and 676.\nFederal administering agency: Department of Education, Office of Federal Student Aid.\nPurpose of program: To promote access to postsecondary education for low-income undergraduate students.\nBenefit/service: Grants to help students with the costs of postsecondary education.\nIndividual eligibility criteria: Eligible students are undergraduate students who demonstrate financial need. Students demonstrate financial need if the cost of attendance of their school exceeds the sum of their expected family contribution (EFC) and estimated financial assistance from other sources. A student's EFC is determined according to an analysis of income and asset information reported on the Free Application for Federal Student Aid (FAFSA). Financial aid administrators must give priority in awarding FSEOG aid to students who are Pell Grant recipients and to those with exceptional financial need.\nForm and recipient of federal assistance: Formula grants to institutions of higher education. Recipient institutions use federal funds and institutional matching funds to award aid to eligible students. Allows participation by citizens of Palau.\nAllocation formula: Federal capital contributions are allocated among participating institutions first according to a statutory formula that provides a \"base guarantee\" that is based on past funding amounts and, if funds remain, then according to a need-based formula that considers institutional need (as measured by the aggregate need of the institution's undergraduate students).\nMatching or related requirements: Participating institutions must provide a match equal to one-third of the federal funds received.\nNew obligations: FY2009: $760 million. FY2008: $759 million.\nBudgetary classification: Discretionary.\nParticipation data: In academic year 2008-2009, a total of 1,451,213 students received grants.\nCRS report: CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed].\nEducation for the Disadvantaged—Grants to Local Educational Agencies (CFDA #84.010)\nAuthority: Statute: Title I-A of the Elementary and Secondary Education Act (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6301-6339, 6571-6578. Regulations: 34 CFR Part 200.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Student Achievement and School Accountability Programs.\nPurpose of program: To ensure that all children have a fair, equal and significant opportunity to obtain a high-quality education and reach, at a minimum, proficiency on challenging state academic achievement standards and state academic assessments.\nBenefit/service: Additional academic support and learning opportunities for students in pre-kindergarten through grade 12 to help low-achieving children master challenging curricula and meet state standards in core academic subjects.\nIndividual eligibility criteria: Within local educational agencies (LEAs), funds are allocated to school attendance areas and schools in rank order based on their number of children from low-income families. Schools in which at least 40% of children are poor may operate schoolwide programs that serve all children. Otherwise, schools must focus services on children who are failing or most at risk of failing state academic standards.\nForm and recipient of federal assistance: Formula grants to local educational agencies (LEAs). Allows participation by territories (Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and Northern Mariana Islands).\nAllocation formula: Portions of available annual funds are allocated under four different formulas—Basic, Concentration, Targeted, and Education Finance Incentive Grants (EFIG)—although funds are then combined and used for the same purposes by recipient LEAs. Although the allocation formulas have several distinctive elements, the primary factors used in all four formulas are an eligible child count and an expenditure factor. The eligible child count includes children aged 5-17: (a) in poor families; (b) in institutions for neglected or delinquent children or in foster homes; and (c) in families receiving Temporary Assistance for Needy Families payments above the poverty level. Each element of the population factor is updated annually. The expenditure factor is the state average per pupil expenditure for public K-12 education (subject to a minimum of 80% and maximum of 120% of the national average, further multiplied by 0.40), and is the same for all LEAs in the same state. Both the Targeted and EFIG formulas include weighting schemes to increase aid to LEAs with the highest numbers or concentrations of eligible children. The EFIG formula also includes an effort factor, based on average per pupil expenditure for public K-12 education compared to personal income per capita for each state compared to the nation as a whole, and an equity factor, based on variations in average per pupil expenditures among the LEAs in each state. Each formula has a hold-harmless provision (no LEA may receive less than 85%-95% of its previous year grant, depending on the LEA's poverty level and whether the LEA continues to meet the formula's eligibility threshold). All four formulas have state minimum grant provisions.\nMatching or related requirements: Three requirements apply to total LEA grants under all four formulas: (1) maintenance of effort : recipient LEAs must provide, from state and local sources, a level of funding (either aggregate or per pupil) in the preceding year that is at least 90% as high as in the second preceding year; (2) funds must supplement and not supplant state and local funds that would otherwise be available for the education of disadvantaged pupils in participating schools; and (3) comparability: services provided with state and local funds in schools participating in Title I-A must be comparable to those in non-Title I-A schools of the same LEA.\nNew obligations: FY2009: $21.495 billion (includes $9.936 billion under the American Recovery and Reinvestment Act). FY2008: $13.352 billion.\nBudgetary classification: Discretionary.\nParticipation data: For school year 2008-2009, about 19.2 million public and private school students were served (of which about 217,000 students were served in private schools). The majority of students (17.2 million or 89.8%) were served through schoolwide programs in public schools.\nCRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed].\nTitle I Migrant Education Program (CFDA #84.011)\nAuthority: Statute: Title I, Part C of the Elementary and Secondary Education Act of 1965 (P.L. 89-10), most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6391-6399. Regulations: 34 CFR 200 Subpart C.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Migrant Education.\nPurpose of program: To help reduce educational and other disruptions that result from repeated moves by migratory children; to ensure that migratory children are not penalized by education disparities among states; to ensure that migratory children receive appropriate educational and supportive services; to ensure that migratory students have opportunities to meet the same challenging standards as other students; and to prepare migratory children for a successful transition to postsecondary education or employment.\nBenefit/service: Education and support services, including academic instruction, remedial and compensatory instruction, bilingual and multicultural instruction, vocational instruction, career education services, special guidance, counseling and testing services, health services, preschool services, professional development, and family literacy instruction.\nIndividual eligibility criteria: Eligible children (or their parent or spouse) are migratory agricultural workers, dairy workers, or fishermen and who, in the preceding 36 months, have moved from one school district to another for employment, or have moved for employment from one administrative area to another in a state that constitutes a single school district, or who live in a school district greater than a specified size and migrate at least 20 miles to a temporary residence to engage in a fishing activity.\nForm and recipient of federal assistance: Formula grants to state educational agencies, consortia of states and other appropriate entities, or public or private nonprofit agencies, which may make subgrants to local operating agencies that may include local educational agencies and other public and nonprofit entities. Allows participation by Puerto Rico.\nAllocation formula: Federal funds are allocated by formula, based on each state's per pupil expenditure for education and counts of eligible migratory children, ages 3 through 21, residing within the state.\nMatching or related requirements: None.\nNew obligations: FY2009: $395 million. FY2008: $380 million. (Appropriations.)\nBudgetary classification: Discretionary.\nParticipation data: During school year 2007-2008, the program served 650,007 students. (Note: This is a duplicated count; students may be counted more than once as they migrate to different schools during a single school year.)\nCRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed].\nHigher Education—Institutional Aid and Developing Institutions (CFDA #84.031, #84.120, #84.382)\nAuthority: Statute: Titles III, V and VII of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ); 20 USC 1051-1068h and 1101-1103g. Regulations: 34 CFR 606, 607, 608, 637. (Programs include Strengthening Institutions, Strengthening Tribally Controlled Colleges and Universities, Strengthening Alaska Native and Native Hawaiian-serving Institutions, Strengthening Historically Black Colleges and Universities, Strengthening Historically Black Graduate Institutions, Masters Degree Programs for Historically Black Colleges and Universities and Predominantly Black Institutions, Strengthening Predominantly Black Institutions, Strengthening Asian American and Native American Pacific Islander-serving Institutions, Strengthening Native American-serving Nontribal Institutions, Minority Science and Engineering Improvement, Developing Hispanic-serving Institutions, Developing Hispanic-serving STEM and Articulation Programs, and Promoting Postbaccalaureate Opportunities for Hispanic Americans.)\nFederal administering agency: Department of Education, Office of Postsecondary Education, Institutional Development and Undergraduate Education Programs.\nPurpose of program: To assist institutions of higher education that serve high percentages of low-income and minority students in improving their management, fiscal operations, and educational quality, to ensure access and equal educational opportunity for low-income and minority students.\nBenefit/service: Possible activities are broad and depend on the specific program. They may include but are not limited to assistance in planning, faculty development, and establishing endowment funds; administrative management; development and improvement of academic programs; equipment and facilities improvement, acquisition, and construction; debt reduction; staff development and tutoring.\nIndividual eligibility criteria: There are no individual eligibility criteria. Institutional eligibility criteria differ for each program; e.g., eligible institutions must be institutions of higher education that have a high enrollment of needy students, have low educational and general expenditures per student, be accredited; be a historically black college or university; be listed in statute; be institutions of higher education with high minority enrollment; or be science-oriented societies or organizations.\nForm and recipient of federal assistance: Competitive and formula grants to institutions of higher education (and nonprofit organizations in the case of the Minority Science and Engineering Program). Certain grants allow participation by institutions in territories (the College of the Marshall Islands, the College of Micronesia, Palau Community College, institutions of higher education in Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa, and Northern Mariana Islands) and by tribal colleges and universities.\nAllocation formula: Depending on the program, factors may include Indian student enrollment, enrollment of Pell Grant recipients, number of graduates, number of graduates seeking a higher degree, student enrollment, cost of education per student, and percentage of total degrees awarded to African-American students by the applicant institution.\nMatching or related requirements: Funds must supplement and not supplant any funds that would otherwise be used for the same purposes. Funds used for endowment must be matched, if permitted.\nNew obligations: FY2009: $801 million. FY2008: $755 million.\nBudgetary classification: Discretionary and mandatory.\nParticipation data: No data available.\nFederal Work-Study (CFDA #84.033)\nAuthority: Statute: Title IV, Part C of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 42 USC 2751-2756b. Regulations: 34 CFR Parts 673 and 675.\nFederal administering agency: Department of Education, Office of Federal Student Aid.\nPurpose of program: To assist students in financing the costs of postsecondary education.\nBenefit/service: Federally subsidized part-time employment for students.\nIndividual eligibility criteria: Eligible students are undergraduate, graduate and professional students who demonstrate financial need. Students demonstrate financial need if the cost of attendance of their school exceeds the sum of their expected family contribution (EFC) and estimated financial assistance from other sources. A student's EFC is determined according to an analysis of income and asset information reported on the Free Application for Federal Student Aid (FAFSA). Students must be willing to work to receive Federal Work Study (FWS) assistance.\nForm and recipient of federal assistance: Formula grants to institutions of higher education. Recipient institutions combine federal funds and matching funds from FWS employers to compensate eligible students employed in part-time work-study jobs. Allows participation by citizens of Palau.\nAllocation formula: Federal capital contributions are allocated among participating institutions first according to a statutory formula that provides a \"base guarantee\" that is based on past funding amounts and, if funds remain, then according to a need-based formula that considers institutional need (as measured by the aggregate need of the institution's students).\nMatching or related requirements: Student compensation is comprised of a federal share and an employer share. In general, the federal share is 75%, but may range between 50% and 100%. The remaining share is provided by the FWS employer.\nNew obligations: FY2009: $1.156 billion (includes $200 million under the American Recovery and Reinvestment Act). FY2008: $989 million.\nBudgetary classification: Discretionary.\nParticipation data: In academic year 2008-2009, a total of 677,915 students participated.\nCRS report: CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed].\nFederal TRIO Programs (CFDA #84.042, #84.044, #84.047, #84.066, #84.103, #84.217)\nAuthority: Statute: Title IV, Part A, Subpart 2, Chapter 1 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070a-11 – 1070a-18. Regulations: 34 CFR Parts 642-647. (Federal TRIO programs consist of: Student Support Services, Talent Search, Upward Bound, Educational Opportunity Centers, Staff Training, and Ronald E. McNair Postbaccalaureate Achievement.)\nFederal administering agency: Department of Education, Office of Postsecondary Education, TRIO Programs.\nPurpose of program: To motivate and support students from disadvantaged backgrounds through outreach and support programs designed to help them move through the academic pipeline from middle school to postbaccalaureate programs.\nBenefit/service: Depending on the program, academic instruction; personal, academic and career counseling; tutoring; exposure to cultural events and academic programs; information on the availability of financial and academic assistance available for postsecondary education; assistance in filling out college applications and financial aid request forms; summer internships; research opportunities; stipends; grant aid; and staff development.\nIndividual eligibility criteria: Specific eligibility requirements differ among the TRIO programs but generally require that two-thirds of participants be low-income students who are first-generation college students. Low-income is defined as income no greater than 150% of federal poverty guidelines. The programs also target to varying extents students from educationally underrepresented groups, students with disabilities, low-income students, first generation college students, students at high risk of academic failure, and military veterans.\nForm and recipient of federal assistance: Competitive grants to institutions of higher education, public and private organizations, secondary schools, and consortia of such entities. Allows participation by agencies or institutions in territories (American Samoa, Puerto Rico, the U.S. Virgin Islands, Micronesia, the Marshall Islands, or Palau).\nAllocation formula: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $905 million. FY2008: $885 million.\nBudgetary classification: Discretionary and mandatory.\nParticipation data: In FY2009, the programs served a total of 2,613,890 students. (Note: This is a duplicated count; some students may have participated in more than one TRIO program.)\nFederal Pell Grants (CFDA #84.063)\nNote: The following describes this program as it operated in FY2009; see CRS report listed below for discussion of changes made by the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ).\nAuthority: Statute: Title IV, Part A, Subpart 1 of the Higher Education Act of 1965, most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070a. Regulations: 34 CFR 690.\nFederal administering agency: Department of Education, Office of Federal Student Aid.\nPurpose of program: To promote access to postsecondary education for low-income students.\nBenefit/service: Need-based grants (size of grant is capped by law) to eligible students at participating institutions of higher education.\nIndividual eligibility criteria: Eligible students may be undergraduate or certain other post baccalaureate students in good academic standing, who demonstrate financial need as determined through analysis of income and asset information provided in their Free Application for Federal Student Aid (FAFSA). This need analysis determines the student's expected family contribution (EFC) toward their education and the amount of federal student aid they may be eligible to receive.\nForm and recipient of federal assistance: Funds are provided to participating institutions of higher education to pay eligible students; participating institutions also receive an administrative allowance per student. Individual students receive assistance either by payment to school account, direct payment (usually by check), or a combination of these methods. Allows participation by citizens of territories (American Samoa, Guam, Micronesia, the Marshall Islands, Palau Northern Mariana Islands, and U.S. Virgin Islands).\nAllocation formula: Not applicable.\nMatching or related requirements: Not applicable.\nNew obligations: FY2009: $26.019 billion (includes $8.497 billion under the American Recovery and Reinvestment Act). FY2008: $18.000 billion.\nBudgetary classification: Discretionary and mandatory (entitlement to individuals).\nParticipation data: During award year (July-June) 2009-2010, an estimated 8,151,663 students were served.\nCRS report: CRS Report R41437, Federal Pell Grant Program of the Higher Education Act: Background, Recent Changes, and Current Legislative Issues , by [author name scrubbed].\nEducation for Homeless Children and Youth (CFDA #84.196)\nAuthority: Statute: Title VII, Subtitle B of the McKinney-Vento Homeless Assistance Act, established by the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ) and renamed by the McKinney-Vento Homeless Assistance Act ( P.L. 106-400 ), most recently reauthorized by the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ); 42 U.S.C. 11431 et seq. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Student Achievement and School Accountability Programs.\nPurpose of program: To ensure that each child of a homeless individual and each homeless youth has equal access to the same free, appropriate public education, including a public preschool education, as other children and youth.\nBenefit/service: Comprehensive services to facilitate the enrollment, attendance, and success in school for homeless children and youth, including, among other things, tutoring, supplemental instruction and referral services, as well as services to address barriers such as transportation, immunization, and lack of birth records.\nIndividual eligibility criteria: Eligible children and youth are those who lack a regular, fixed and adequate nighttime residence and include those who are sharing the housing of others due to economic hardship or a similar reason; are living in motels, hotels, trailer parks, or camping grounds due to the lack of alternative adequate accommodations; are living in emergency or transitional shelters; are abandoned in hospitals; or are awaiting foster care placement; have a primary nighttime residence that is a public or private place not designed as a regular sleeping arrangement; are living in cars, parks, public spaces, abandoned buildings, substandard housing, bus or train stations, or similar settings; or are migratory children who also qualify as homeless.\nForm and recipient of federal assistance: Formula grants to state educational agencies, which make subgrants to local educational agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated among states on the basis of their relative shares of funding under Title I, Part A of the Elementary and Secondary Education Act.\nMatching or related requirements: None.\nNew obligations: FY2009: $135 million (includes $70 million under the American Recovery and Reinvestment Act). FY2008: $64 million.\nBudgetary classification: Discretionary.\nParticipation data: In school year 2008-2009, a total of 956,914 children were enrolled.\nCRS report: CRS Report RL30442, Homelessness: Targeted Federal Programs and Recent Legislation , coordinated by [author name scrubbed].\n21 st Century Community Learning Centers (CFDA #84.287)\nAuthority: Statute: Title IV, Part B of the Elementary and Secondary Education Act, established by the Improving America's Schools Act of 1994 ( P.L. 103-382 ) and most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 7171-7176. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of Academic Improvement and Teacher Quality Programs.\nPurpose of program: To create community learning centers that provide academic enrichment opportunities during non-school hours to help students meet state and local academic achievement standards, particularly for children who attend high-poverty and low-performing schools. Also offers a variety of additional programs intended to reinforce and complement the students' regular academic program and offers families of participating students opportunities for literacy and related educational development.\nBenefit/service: Remedial education and academic enrichment learning programs, mathematics and science education activities, arts and music education activities, entrepreneurial education programs, tutoring services, after-school activities for limited-English-proficient students that emphasize language skills and academic achievement, recreational activities, telecommunications and technology education programs, expanded library service hours, programs to promote parental involvement and family literacy, academic assistance to students who are truant or suspended or expelled, drug and violence prevention programs, counseling and character education programs.\nIndividual eligibility criteria: Funds must be used to serve students who attend schools that are eligible for schoolwide programs under Title I-A of the Elementary and Secondary Education Act (i.e., schools in which at least 40% of the children are poor) or schools that serve a high percentage of students from low-income families, and the families of such students.\nForm and recipient of federal assistance: Formula grants to state educational agencies, which make competitive subgrants to local educational agencies, community-based organizations, other public and private nonprofit organizations, or a consortium of the above. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated among states on the basis of their relative shares of funding under Title I, Part A of the Elementary and Secondary Education Act for the preceding fiscal year.\nMatching or related requirements: States may require local grantees to match federal funds; however, the match may not exceed the amount of federal funds and may not come from other federal or state funds. The size of the match is adjusted based on the relative poverty of the grantee's target population and the grantee's ability to obtain the match. The match may be in cash or in-kind.\nNew obligations: FY2009: $1.127 billion. FY2008: $1.082 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, a total of 1,481,870 students were served.\nCRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed].\nGaining Early Awareness and Readiness for Undergraduate Programs (GEAR-UP) (CFDA #84.334)\nAuthority: Statute: Title IV, Part A, Subpart 2, Chapter 2 of the Higher Education Act of 1965, established by the Higher Education Amendments of 1998 ( P.L. 105-244 ) and most recently reauthorized by the Higher Education Opportunity Act ( P.L. 110-315 ); 20 USC 1070a21-28. Regulations: 34 CFR Part 694.\nFederal administering agency: Department of Education, Office of Postsecondary Education, Teacher and Student Development Programs Service.\nPurpose of program: To assist low-income students attain a secondary school diploma or equivalent and prepare for and succeed in postsecondary education.\nBenefit/service: Teacher training, scholarships and early intervention services; e.g., financial assistance necessary for attending an institution of higher education, and additional counseling, mentoring, academic support, outreach, and supportive services.\nIndividual eligibility criteria: A cohort of students in at least one grade level of a school in which at least 50% of students are eligible for free or reduced-price lunch; a cohort of students in at least one grade level that reside in public housing; or secondary school students eligible to be counted under the basic formula for Title I-A of the Elementary and Secondary Education Act, eligible under Title IV-B or IV-E of the Social Security Act, eligible for the homeless education program under the McKinney-Vento Act, or considered disconnected.\nForm and recipient of federal assistance: Competitive grants to states and to partnerships consisting of at least one degree-granting institution of higher education and one or more local educational agencies, and if desired, at least two other partners (such as community organizations, businesses, and public or private agencies or organizations). Allows participation by agencies or institutions in territories (American Samoa, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands).\nAllocation formula: Not applicable.\nMatching or related requirements: A 50% nonfederal match is required, unless granted a waiver.\nNew obligations: FY2009: $313 million. FY2008: $303 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, the program served a total of 747,260 students.\nReading First and Early Reading First (CFDA #84.357 and #84.359)\nAuthority: Statute: Title I, Part B, Subparts 1 and 2 of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6361-6376. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs.\nPurpose of program: Reading First: To ensure that every child can read at grade level or above by no later than grade 3. Early Reading First: To enhance the early language, literacy and prereading development of preschool-aged children, particularly from low-income families.\nBenefit/service: Reading First: Assistance in selecting and administering reading assessments, selecting and implementing programs of reading instruction based on scientifically based reading research (SBR) that include the essential elements of reading instruction, procuring and implementing SBR-based teaching materials, providing professional development for teachers of grades K-3 and special education teachers of grades K-12, collecting and analyzing data to document program effectiveness and identify successful schools, reporting student progress, promoting reading and library programs, supporting family literacy programs, and training parents as reading tutors. Early Reading First: High-quality oral language and literature rich environments, professional training based on SBR to early childhood staff in early reading development, SBR-based language and literacy activities and instructional materials, and SBR-based reading assessments.\nIndividual eligibility criteria: Reading First: Children in grades K- 3 who may have reading difficulties, are at risk of referral to special education because of their reading difficulties, have been evaluated but not identified as a child with disabilities, are receiving special education services because they have been identified as having a specific learning disability related to reading, are deficient in essential reading skills, or have limited English proficiency. Early Reading First: No specific eligibility criteria; however, services are targeted toward preschool children from low-income families with limited English proficiency, disabilities, or other special needs, who are also experiencing difficulty with spoken language, prereading and early reading skills.\nForm and recipient of federal assistance: Reading First: Formula grants to state educational agencies, which award funds competitively to local educational agencies. Early Reading First: Competitive grants to local educational agencies eligible for Title I-A ESEA grants, or to one or more public or private organizations acting on behalf of programs that serve preschool-age children located in an area served by a Title I-A-eligible LEA, or to a consortium of the above. Reading First allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Marianas, and the Virgin Islands).\nAllocation formula: Reading First: Funds are allocated among states according to their proportion of children aged 5-17 whose families have income below federal poverty guidelines. Early Reading First: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $129 million. FY2008: $560 million. (Note: No appropriations have been made for Reading First since FY2008 or for Early Reading First since FY2009, although both programs continued to have new obligations in FY2008 and FY2009.)\nBudgetary classification: Discretionary.\nParticipation data: In school year 2008-2009, an estimated 1,245,353 students participated in Reading First. In FY2009, grantees proposed to serve a total of 33,278 children and 3,402 educators in Early Reading First.\nCRS report: CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed].\nRural Education Achievement Program (CFDA #84.358)\nAuthority: Statute: Title VI, Part B of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 7341-7372. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Office of School Support and Technology Programs.\nPurpose of program: To help rural and rural low-income school districts meet their state's definition of adequate yearly progress under the No Child Left Behind Act.\nBenefit/service: Small Rural School Achievement Program (SRSA): Activities authorized under Title I-A (improving the academic achievement of disadvantaged children), Title II-A (teacher and principal training and recruiting), Title II-D (enhancing education through technology), Title III (language instruction for limited English proficient and immigrant children), Title IV-A (safe and drug-free schools), Title IV-B (21 st century community learning centers) and Title V-A (innovative programs) of the Elementary and Secondary Education Act. Rural and Low-Income School Program (RLIS): Teacher recruitment and retention, teacher professional development, educational technology, parental involvement activities, activities under Title IV-A (safe and drug-free schools) and Title I-A (improving the academic achievement of disadvantaged children) and Title III (language instruction for limited English proficient and immigrant children) of the Elementary and Secondary Education Act.\nIndividual eligibility criteria: There are no individual eligibility criteria.\nForm and recipient of federal assistance: SRSA: Formula grants to small local educational agencies (LEAs). RLIS: Formula grants to state educational agencies (SEAs) for suballocation to local educational agencies that do not meet the small-size thresholds for SRSA and in which 20% of the children aged 5-17 are from families below federal poverty guidelines. RLIS allows participation by territories (American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated among LEAs (SRSA) and SEAs (RLIS) according to a formula that considers average daily attendance.\nMatching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities.\nNew obligations: FY2009: $174 million. FY2008: $172 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, an estimated 4,100 LEAs received SRSA grants, and 1,497 LEAs received RLIS grants.\nCRS report: CRS Report R40853, The Rural Education Achievement Program: Title VI-B of the Elementary and Secondary Education Act , by [author name scrubbed].\nMathematics and Science Partnerships (CFDA #84.366)\nAuthority: Statute: Title II, Part B of the Elementary and Secondary Education Act, established by the Hawkins-Stafford Elementary and Secondary School Improvements Act of 1988 ( P.L. 100-297 ) and most recently reauthorized by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6661-6663. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs.\nPurpose of program: To improve the content knowledge of teachers and the performance of students in the areas of mathematics and science.\nBenefit/service: Enhanced and ongoing professional development of mathematics and science teachers, promotion of strong teaching skills through integrating reliable research methods and technology-based teaching methods into the curriculum, and summer workshops or institutes including follow-up training for elementary and secondary mathematics and science teachers.\nIndividual eligibility criteria: There are no individual eligibility criteria.\nForm and recipient of federal assistance: Formula grants to state educational agencies (SEAs), which award funds to partnerships of local educational agencies (LEAs) and institutions of higher education. At a minimum, partnerships must include a high-need LEA and an engineering, mathematics or science department of an institution of higher education.\nAllocation formula: Funds are allocated among states according to the state's share of children aged 5-17 from families with income below federal poverty guidelines.\nMatching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities.\nNew obligations: FY2009: $176 million. FY2008: $182 million.\nBudgetary classification: Discretionary.\nParticipation data: Most recent data available are for FY2006 (spending level of $182 million); in that year, more than 56,000 teachers received professional development.\nImproving Teacher Quality State Grants (CFDA #84.367)\nAuthority: Statute: Title II, Part A of the Elementary and Secondary Education Act, established by the No Child Left Behind Act ( P.L. 107-110 ); 20 USC 6601-6641. Regulations: no formal program-specific regulations.\nFederal administering agency: Department of Education, Office of Elementary and Secondary Education, Academic Improvement and Teacher Quality Programs.\nPurpose of program: To increase student achievement through improving teacher and principal quality and increasing the number of highly qualified teachers, principals and assistant principals in classrooms and schools.\nBenefit/service: State activities include teacher and principal certification reform, professional development activities, assistance to local educational agencies in teacher and principal recruitment and retention, tenure reform, subject matter testing for teachers, across-state certification reciprocity projects, technology training for teachers, assistance to help teachers become highly qualified, and teacher recruitment and placement clearinghouses. Local activities include assistance to schools in recruitment and retention of highly qualified teachers and principals, use of such teachers to reduce class size, professional development activities, and quality improvement activities such as tenure reform, merit pay and subject-area testing for teachers.\nIndividual eligibility criteria: There are no individual eligibility criteria.\nForm and recipient of federal assistance: Formula grants to state educational agencies, which make formula-based subgrants to local educational agencies, and to state agencies of higher education, which award competitive grants to partnerships of institutions of higher education and high-need local educational agencies (those with a high number or proportion of poor children). Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands).\nAllocation formula: Funds are allocated among states and local educational agencies based first on the amounts they received under predecessor programs in 2001; excess funds are allocated according to formulas based on number of children ages 5-17 and number of children ages 5-17 from families with incomes below federal poverty guidelines.\nMatching or related requirements: None. Funds must supplement and not supplant any funds that would otherwise be used for these activities.\nNew obligations: FY2009: $2.687 billion. FY2008: $2.946 billion.\nBudgetary classification: Discretionary.\nParticipation data: In school year 2009-2010, funds were used to hire an estimated 17,295 teachers.\nCRS report: CRS Report R41267, Elementary and Secondary School Teachers: Policy Context, Federal Programs, and ESEA Reauthorization Issues , by [author name scrubbed].\nAcademic Competitiveness and Smart Grant Program (CFDA #84.375 and 84.376)\nAuthority: Statute: Title IV, Part A, Subpart 1, Section 401A of the Higher Education Act of 1965, established by the Higher Education Reconciliation Act of 2005 ( P.L. 109-171 ); 20 USC 1070a-1. Regulations: 34 CFR Part 691.\nFederal administering agency: Department of Education, Office of Federal Student Aid.\nPurpose of program: To help eligible financially needy students finance their postsecondary education by encouraging students to complete a rigorous high school curriculum, maintain a high grade point average (GPA), and major in math and science fields during their undergraduate studies.\nBenefit/service: Grant aid that, together with any other student aid received, cannot exceed the student's cost of postsecondary school attendance.\nIndividual eligibility criteria: Eligible students are undergraduates who attend participating schools, are eligible to receive a Pell Grant, and meet other eligibility requirements related to—depending on their year in school—completing a rigorous high school curriculum; majoring in mathematics, science, or selected foreign languages; and maintaining a required minimum GPA.\nForm and recipient of federal assistance: Funds are provided to participating institutions of higher education to pay eligible students; participating institutions also receive an administrative allowance per student. Individual students receive assistance either by payment to school account, direct payment (usually by check), or a combination of these methods. Allows participation by citizens of territories (American Samoa, Guam, Micronesia, the Marshall Islands, Palau Northern Mariana Islands, and U.S. Virgin Islands).\nAllocation formula: Not applicable.\nMatching or related requirements: Not applicable.\nNew obligations: FY2009: $690 million. FY2008: $297 million.\nBudgetary classification: Mandatory (entitlement to individuals).\nParticipation data: During award year (July-June) 2009-2010, 731,653 students were served.\nSocial Services\nIndian Human Services (CFDA #15.025, #15.113, #15.141, #15.144)\nAuthority: Statute: Snyder Act of 1921 (P.L. 67-85), Indian Self-Determination and Education Assistance Act ( P.L. 93-638 ), Indian Child Welfare Act ( P.L. 95-608 ), and Indian Child Protection and Family Violence Prevention Act ( P.L. 101-630 ); 25 USC 13, 450 et seq., 1901 et seq., and 3210. Regulations: 25 CFR Parts 20, 23, and 256. (Programs include Social Services, Welfare Assistance, Indian Child Welfare, and Housing Improvement Program.)\nFederal administering agency: Department of Interior, Bureau of Indian Affairs, Division of Human Services.\nPurpose of program: To provide financial assistance for basic needs of needy eligible American Indians who live on or near reservations when such assistance is not available from state or local agencies; to fund federally recognized tribal governments to administer welfare assistance programs for American Indian adults and children, to support caseworkers and counselors, and to support tribal programs to reduce incidence of substance abuse and alcoholism in Indian country; to promote stability and security of American Indian tribes and families by protecting American Indian children, preventing separation of American Indian families, and assisting Indian tribes in the operation of child and family service programs; and to eliminate substantially substandard Indian owned and inhabited housing for very low-income Indians living in tribal service areas.\nBenefit/service: Assistance in processing welfare applications, determining suitable placement of American Indian children in need of foster care, operation of emergency shelters and similar services; cash payments to meet basic needs (i.e., food, clothing, shelter), assistance for nonmedical institutional or custodial care of adults not eligible for other programs, foster home care and nonmedical institutional care for American Indian children in need of protection; counseling, family assistance, protective day care, after-school care, recreational activities, respite care, education and training, foster care subsidies, legal advice and representation, home improvement programs; and renovations, repairs, or additions to existing homes.\nIndividual eligibility criteria: Depending on the program, American Indian adults in need of financial assistance or social services, children in need of foster care, and youth requiring temporary emergency shelter; members of federally recognized Indian tribes who live on or near federally recognized reservations who are in need of financial assistance; American Indian children and families; and Indians who are members of federally recognized tribes.\nForm and recipient of federal assistance: Discretionary grants to federally recognized Indian tribes and tribal organizations.\nAllocation formula: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $115 million. FY2008: $118 million.\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nOlder Americans Act Grants for Supportive Services and Senior Centers (CFDA #93.044)\nAuthority: Statute: Title III, Part B of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3030d. Regulations: 45 CFR 1321.\nFederal administering agency: Department of Health and Human Services, Administration on Aging.\nPurpose of program: To secure and maintain maximum independence and dignity in a home environment for older individuals capable of self-care with appropriate supportive services, to remove individual and social barriers to economic and personal independence for older individuals, and to provide a continuum of care for older individuals.\nBenefit/service: Supportive services, including health (and mental health), education and training, welfare, informational, recreational, homemaker, counseling, or referral services; transportation services; services to help older individuals use the services and facilities available to them (including language translation services); housing-related services; services to help older individuals avoid institutionalization, legal assistance and other counseling services; activities to attain and maintain physical and mental well-being; health and mental health screenings; preretirement counseling and assistance; ombudsman services for residents of long-term care facilities; services and assistive devices for disabled older persons; employment-related services and counseling; crime prevention and victim assistance; services to identify and meet the needs of low-income older individuals; abuse prevention; health and nutrition education services; coordinated services for mentally impaired older individuals; services for family caregivers; information and training for guardians or representative payees of older individuals; services to facilitate interaction between students and older individuals; in-home services for frail elderly; information about life-long learning programs; and any other services necessary for the general welfare of older individuals.\nIndividual eligibility criteria: Individuals age 60 or older. Preference is given to individuals with the greatest economic and social needs, with particular attention to low-income older individuals (i.e., having income no higher than federal poverty guidelines), including low-income minority older individuals, those with limited English proficiency, and those living in rural areas.\nForm and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Separate grants are provided for Native Americans under Title VI of the Older Americans Act.\nAllocation formula: Funds are allocated among states according to their relative share of the nation's population of older individuals (age 60 or older). States develop their own formulas for allocation of funds among local agencies, which must consider the geographic distribution of older individuals and older individuals with the greatest economic and social needs, paying particular attention to low-income minority individuals.\nMatching or related requirements: A nonfederal share of 25% is required for administrative activities, and a nonfederal share of 15% is required for supportive services and senior centers.\nNew obligations: FY2009: $361 million. FY2008: $351 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, the number of clients participating by type of service were: 502,675 for case management; 165,349 for homemaker services; 109,488 for personal care; 38,432 for chore services; 44,437 for assisted transportation; and 25,204 for adult day care.\nCRS report : CRS Report RL33880, Older Americans Act: Funding , by [author name scrubbed] and [author name scrubbed].\nOlder Americans Act Family Caregiver Support Program (CFDA #93.052)\nAuthority: Statute: Title III, Part E of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3030s. Regulations: 45 CFR 1321.\nFederal administering agency: Department of Health and Human Services, Administration on Aging.\nPurpose of program: To provide multifaceted systems of support services for family caregivers and grandparents or older individuals who are relative caregivers.\nBenefit/service: Information to caregivers about available services, assistance to caregivers in gaining access to services; individual counseling, organization of support groups, and caregiver training in the areas of health, nutrition, and financial literacy, and in making decisions and solving problems related to their caregiving roles; respite care to enable caregivers to be temporarily relieved of their caregiving responsibilities; and supplemental services, on a limited basis, to complement the care provided by caregivers.\nIndividual eligibility criteria: Family members or others providing informal care to an older individual, and those providing informal care to individuals of any age with specific cognitive disabilities. Also, grandparents or older individuals who are relative caregivers to children, including those caring for children of any age with a disability. Priority is given to older caregivers with the greatest social and economic need and to older individuals providing care to individuals with severe disabilities, including children with severe disabilities.\nForm and recipient of federal assistance: Formula grants to state agencies on aging, which make subgrants to local area agencies on aging. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands). Separate grants are provided for Native Americans under Title VI of the Older Americans Act.\nAllocation formula: Funds are allocated to states according to their relative share of the nation's population of older individuals (age 70 or older).\nMatching or related requirements: A nonfederal share of 25% is required for services and administrative activities. Funds must be used to supplement and not supplant any other federal, state or local funds used for the same purpose.\nNew obligations: FY2009: $154 million. FY2008: $153 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, the number of clients participating by type of service were: 22,948,978 for information services, 373,130 for access assistance; 141,167 for counseling services; 72,887 for respite care; and 48,268 for supportive services.\nCRS report : CRS Report RL33880, Older Americans Act: Funding , by [author name scrubbed] and [author name scrubbed].\nChild Support Enforcement (CDFA #93.563)\nAuthority: Statute: Title IV-D of the Social Security Act, established by the Social Services Amendments of 1974 ( P.L. 93-647 ); 42 USC 651-669. Regulations: 45 CFR Chapter 3.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Child Support Enforcement.\nPurpose of program: To enforce the support obligations owed by noncustodial parents to their children and the spouse (and former spouse) with whom such children are living through locating noncustodial parents, establishing paternity, obtaining child and spousal support, and assuring that assistance in obtaining support will be available to all children who request such assistance.\nBenefit/service: Noncustodial parent location, paternity establishment, establishment of child support orders, review and modification of child support orders, collection of child support payments, distribution of child support payments, and establishment and enforcement of medical support. Services are free for families that are automatically eligible; states may charge a fee of up to $25 for all other families.\nIndividual eligibility criteria: Services are available to parents with custody of a child whose other parent is living outside the home. Services are automatically available for families receiving Temporary Assistance for Needy Families (TANF), federal foster care payments, or Medicaid.\nForm and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Guam, Puerto Rico, the U.S. Virgin Islands) and Indian tribes and tribal organizations.\nAllocation formula: None. Payments to states are based on their eligible expenditures.\nMatching or related requirements: The federal government reimburses states for 66% of their eligible expenditures.\nNew obligations: FY2009: $4.719 billion. FY2008: $4.585 billion.\nBudgetary classification: Mandatory (open-ended entitlement to states).\nParticipation data: In FY2009, the total CSE caseload was 15.8 million cases, involving 17.4 million children.\nCRS report: CRS Report RS22380, Child Support Enforcement: Program Basics , by [author name scrubbed].\nCommunity Services Block Grants (CFDA #93.569)\nAuthority: Statute: Community Services Block Grant Act, established by the Omnibus Budget Reconciliation Act of 1980 ( P.L. 97-35 ) and most recently reauthorized by the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 ( P.L. 105-285 ); 42 USC 9901 et seq. Regulations: 45 CFR Part 96, Subpart I.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services.\nPurpose of program: To reduce poverty, revitalize low-income communities, and empower low-income individuals and families in rural and urban areas to become fully self-sufficient.\nBenefit/service: A wide range of activities may be supported to help low-income individuals and families become self-sufficient, find meaningful employment, attain an adequate education, make better use of available income, find and maintain adequate housing, obtain emergency assistance, and achieve greater participation in community affairs; address the needs of youth in low-income communities; and effectively use and coordinate with related programs.\nIndividual eligibility criteria: In general, beneficiaries must have incomes no higher than the federal poverty guidelines, although states may set eligibility criteria at 125% of the poverty guidelines when \"it serves the objectives of the block grant.\" (The American Recovery and Reinvestment Act, P.L. 111-5 , allowed states to set eligibility criteria at 200% of poverty during FY2009 and FY2010.)\nForm and recipient of federal assistance: Formula grants to states. Of funds received by each state, at least 90% must be passed through to \"eligible entities,\" which are primarily community action agencies that had been designated prior to 1981 under the former Economic Opportunity Act or their successor agencies. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) and Indian tribes.\nAllocation formula: Funds are allocated among states based on the relative amount received in each state in FY1981, under a section of the former Economic Opportunity Act.\nMatching or related requirements: None.\nNew obligations: FY2009: $1.692 billion (includes $992 million under the American Recovery and Reinvestment Act). FY2008: $654 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, states reported that local agencies served nearly 16 million individuals in more than 7 million families.\nCRS report: CRS Report RL32872, Community Services Block Grants (CSBG): Background and Funding , by [author name scrubbed].\nChild Care and Development Fund (CFDA #93.575 and #93.596)\nAuthority: Statute: Child Care and Development Block Grant Act, established by the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) and most recently reauthorized by the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 ( P.L. 104-193 ); 42 USC 9859. Section 418 of the Social Security Act, established by PRWORA ( P.L. 104-193 ) and most recently reauthorized by the Claims Resolution Act of 2010 ( P.L. 111-291 ); 42 USC 618. Regulations: 45 CFR Parts 98 and 99.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Child Care.\nPurpose of program: To develop child care programs that best suit the needs of children and parents in each state, to empower working parents to make their own decisions on the child care that best suits their family's needs, to provide consumer education to help parents make informed decisions, to provide child care to parents trying to achieve independence from public assistance, and to help states implement their child care regulatory standards.\nBenefit/service: Subsidized child care services for families provided on a sliding fee scale basis, which may be free for those with incomes below federal poverty guidelines (or, on a case-by-case basis, for those in foster care or receiving protective services). Child care providers may be paid directly by the state through a grant or contract, or through certificates (also known as vouchers) that parents may use to purchase child care from an eligible provider of their choice. Child care services may include center-based care, group home care, family care, and care provided in the child's own home.\nIndividual eligibility criteria: Eligible children must be under age 13 (or under 18 if disabled or under court supervision), have a parent who is working or attending job training (unless the child is receiving protective services), and have family income no greater than 85% of state median income or lower depending on state policy. States must give priority to very low-income children and must target a certain amount of funds to welfare families working toward self-sufficiency or families at risk of welfare dependency.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by Indian tribes, and for certain funds, by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands).\nAllocation formula: Discretionary funds are allocated among states according to each state's proportion of children under age 5, its proportion of all children who receive free or reduced price school lunches, and its relative per capita income. Of mandatory funds, states receive a fixed amount each year based on their spending under predecessor programs in the mid-1990s (\"guaranteed\" funds). Remaining mandatory funds are allocated according to each state's share of children under age 13.\nMatching or related requirements: No matching requirement for discretionary funds or \"guaranteed\" mandatory funds. States must match remaining mandatory funds at their FMAP (federal medical assistance percentage) matching rate. States also must achieve certain maintenance-of-effort targets to qualify for these funds.\nNew obligations: FY2009: $7.034 billion (includes $1.990 billion under the American Recovery and Reinvestment Act). FY2008: $4.979 billion.\nBudgetary classification: Discretionary (Child Care and Development Block Grant Act) and mandatory (Section 418 of the Social Security Act) (capped entitlement to states).\nParticipation data: In FY2007 (the most recent year for which final data are available), the average monthly number of children served by the CCDF was 1.7 million. Preliminary data for FY2008 estimate the average monthly number of children served was 1.6 million.\nCRS report: CRS Report RL30785, The Child Care and Development Block Grant: Background and Funding , by [author name scrubbed].\nHead Start (CFDA #93.600)\nAuthority: Statute: Head Start Act, established by the Omnibus Budget Reconciliation Act ( P.L. 97-35 ) and most recently reauthorized by the Head Start for School Readiness Act ( P.L. 110-134 ); 42 USC 9801 et seq. Regulations: 45 CFR Parts 1301-1311.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Head Start.\nPurpose of program: To promote school readiness by enhancing the social and cognitive development of children through the provision of educational, health, nutritional, social and other services to children and their families; and (for Early Head Start) to promote healthy prenatal outcomes, enhance the development of infants and toddlers, and promote healthy family functioning.\nBenefit/service: Comprehensive child development services, including educational, dental, medical, nutritional, and social services to children and their families. Services may be center-based, home-based, or a combination, and may be full- or part-day or full- or part-year.\nIndividual eligibility criteria: Eligible children are those from low-income families (defined as having income below 100% of federal poverty guidelines, receiving public assistance or being a foster child) or who would be eligible for public assistance in the absence of child care, and homeless children. Up to 10% of participants may not meet these eligibility criteria if they would benefit from the program. An additional 35% of participants may have family incomes between 100% and 130% of federal poverty guidelines, as long as such children are not given higher priority than poor or homeless children.\nForm and recipient of federal assistance: Formula grants to local public and private nonprofit and for-profit entities. Allows participation by territories (Puerto Rico, American Samoa, Guam, Northern Mariana Islands, Palau and the U.S. Virgin Islands) and Indian Head Start programs.\nAllocation formula: Funds are allocated among states but awarded directly to local grantees. The allocation formula is intended to hold states harmless at their prior year's level, award a cost-of-living adjustment, and allocate remaining funds for quality improvement and program expansion. Allocation factors include children under age 5 whose family incomes are below poverty.\nMatching or related requirements: A 20% nonfederal match is required unless a waiver is granted.\nNew obligations: FY2009: $9.077 billion (includes $578 million under the American Recovery and Reinvestment Act). FY2008: $6.877 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, the Head Start funded enrollment level was about 965,153 children, of whom approximately 114,389 (or 12%) were in Early Head Start programs. The term \"funded enrollment\" refers to the number of Head Start slots that are funded, not the total number of children served throughout the year (which would be higher, accounting for turnover).\nCRS report: CRS Report RL30952, Head Start: Background and Issues , by [author name scrubbed].\nDevelopmental Disabilities Basic Support and Advocacy Grants (CFDA #93.630)\nAuthority: Statute: Developmental Disabilities Assistance and Bill of Rights Act of 1978 ( P.L. 95-602 ), most recently reauthorized by the Developmental Disabilities Assistance and Bill of Rights Act of 2000 ( P.L. 106-402 ); 42 USC 15001 et seq. Regulations: 45 CFR Parts 1385-1386.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Developmental Disabilities.\nPurpose of program: To enable individuals with developmental disabilities to maximize their work potential, facilitate their ability to live independently, and foster their integration into the community.\nBenefit/service: State councils on developmental disabilities identify the most pressing needs of individuals with developmental disabilities in their state and conduct activities to address these needs through training, technical assistance, barrier elimination, coalition development and citizen participation, informing policymakers, advocacy and capacity-building, and demonstration of new service approaches. Special financial and technical assistance must be given to organizations that serve individuals in areas designated as urban and rural poverty areas. Protection and advocacy agencies provide services intended to protect the legal and human rights of individuals with developmental disabilities.\nIndividual eligibility criteria: Developmental disability is defined as a severe, chronic disability that is attributable to a mental or physical impairment or combination of such impairments, that is manifested before an individual becomes 22 years old, is likely to continue indefinitely, and that results in substantial functional limitations in at least three of several specified areas: self-care, receptive and expressive language, learning, mobility, self-direction, capacity for independent living, and economic self-sufficiency. Additionally, an individual from birth to age 9, inclusive, who has a substantial developmental delay or specific congenital or acquired condition, may be considered to have a developmental disability without meeting three or more of the criteria described above if the individual, without services and supports, has a high probability of meeting those criteria later in life.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands).\nAllocation formula: Each state receives a minimum allotment; remaining funds are allocated among states on the basis of population, extent of need for services for developmentally disabled individuals, and financial need.\nMatching or related requirements: For state councils on developmental disabilities, a nonfederal share of 25% is required, except for projects in poverty areas where the nonfederal share may be reduced to as low as 10%. No match is required for protection and advocacy grants or for certain state planning activities.\nNew obligations: FY2009: $114 million. FY2008: $111 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, 1,527,995 services were provided.\nCRS report: CRS Report RL34507, The Developmental Disabilities Act , by [author name scrubbed].\nFoster Care (CFDA #93.658)\nAuthority: Statute: Title IV-E of the Social Security Act, established by the Adoption Assistance and Child Welfare Act of 1980 ( P.L. 96-272 ); 42 USC 672. Regulations: 45 CFR 1355 and 1356.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration for Children, Youth and Families, Children's Bureau.\nPurpose of program: To provide temporary out-of-home care for children who cannot safely remain in their own homes, until the children may be safely returned home; placed permanently with adoptive families, in a legal guardianship, or with a fit and willing relative; or placed in another planned permanent living arrangement.\nBenefit/service: Payments to foster care providers to cover the costs of children's maintenance (e.g., room and board, clothing and supplies, liability insurance, certain travel expenses); and support for administrative and child placement services intended to promote safety and permanency for children and well-being for children and their families.\nIndividual eligibility criteria: For states to receive federal reimbursement for the maintenance and related costs of providing foster care, children must have been removed from their homes pursuant to a voluntary placement agreement or certain judicial determinations and be placed in foster care settings that meet specified requirements. Children also must have been removed from homes in which they would have been considered \"needy\" under the former Aid to Families with Dependent Children (AFDC) program, as that program was administered in their state on July 16, 1996.\nForm and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands).\nAllocation formula: Payments to states are based on their eligible expenditures and the applicable matching (reimbursement) rate.\nMatching or related requirements: Maintenance payment expenditures are reimbursed at each state's federal medical assistance percentage (FMAP), which varies according to state per capita income. Certain training expenditures are reimbursed at a 75% federal rate; remaining administrative and child placement expenditures are reimbursed at 50%.\nNew obligations: FY2009: $4.705 billion. FY2008: $4.525 billion.\nBudgetary classification: Mandatory (open-ended entitlement to states).\nParticipation data: In FY2009, the average monthly number of children served was 186,303.\nCRS report: CRS Report RL34121, Child Welfare: Recent and Proposed Federal Funding , by [author name scrubbed].\nAdoption Assistance (CFDA #93.659)\nAuthority: Statute: Title IV-E of the Social Security Act, established by the Adoption Assistance and Child Welfare Act of 1980 ( P.L. 96-272 ); 42 USC 673. Regulations: 45 CFR 1355 and 1356.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration on Children, Youth and Families, Children's Bureau.\nPurpose of program: To facilitate the timely placement of children whose special needs (which may include age, membership in a large sibling group or a racial/ethnic minority group, physical or mental disabilities or other circumstances as determined by the state) would otherwise make it difficult to place them with adoptive families.\nBenefit/service: One-time nonrecurring payments to assist with the costs of adopting a special needs child (e.g., adoption fees, court costs, attorney fees) and ongoing monthly payments to adoptive families; administrative and child placement services intended to promote child safety, permanency and well-being.\nIndividual eligibility criteria: For states to receive federal reimbursement for either nonrecurring or ongoing costs of adoption assistance, the children must have special needs, as defined by the state, which generally would make their placement for adoption difficult. For states to receive federal reimbursement for the ongoing costs of adoption assistance, children also must be eligible for Supplementary Security Income (SSI) or must have been removed from their homes pursuant to a voluntary placement agreement or certain judicial determinations. In addition, children (who are not eligible for SSI) must have been removed from homes in which they would have been considered \"needy\" under the former Aid to Families with Dependent Children (AFDC) program, as that program was administered in their state on July 16, 1996. (Under P.L. 110-351 , income-related eligibility criteria are phased out for children entering the adoption assistance program beginning in FY2010 and no income eligibility criteria will remain by FY2018.)\nForm and recipient of federal assistance: Partial reimbursement to states of eligible expenditures, with no limit on federal spending. Allows participation by territories (Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands).\nAllocation formula: Payments to states are based on their eligible expenditures and the applicable matching (reimbursement) rate.\nMatching or related requirements: Adoption assistance payment expenditures are reimbursed at each state's federal medical assistance percentage (FMAP), which varies according to state per capita income. Certain training expenditures are reimbursed at a 75% federal rate; remaining administrative and child placement expenditures are reimbursed at 50%.\nNew obligations: FY2009: $2.324 billion. FY2008: $2.038 billion.\nBudgetary classification: Mandatory (open-ended entitlement to states).\nParticipation data: In FY2009, the average monthly number of children served was 416,408.\nCRS report: CRS Report RL34121, Child Welfare: Recent and Proposed Federal Funding , by [author name scrubbed].\nSocial Services Block Grants (CFDA #93.667)\nAuthority: Statute: Title XX of the Social Security Act, established by the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ); 42 USC 1397. Regulations: 45 CFR Part 96, Subpart G.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services.\nPurpose of program: To provide services directed at the following goals: achieve or maintain economic self-support to prevent, reduce, or eliminate dependency; achieve or maintain self-sufficiency to reduce or prevent dependency; prevent or remedy abuse, neglect or exploitation of children or adults unable to protect their own interests, or to preserve, rehabilitate or reunite families; prevent or reduce inappropriate institutional care; or refer or admit individuals into institutional care when other forms of care are not appropriate or provide services to individuals in institutions.\nBenefit/service: Services directed at the goals listed above, such as child care services, protective services for children and adults, services for children and adults in foster care, services related to the management and maintenance of the home, day care services for adults, transportation services, family planning services, training and related services, employment services, information, referral, and counseling services, the preparation and delivery of meals, health support services and appropriate combinations of services designed to meet the special needs of children, the aged, the mentally retarded, the blind, the emotionally disturbed, the physically disabled, and alcoholics and drug addicts.\nIndividual eligibility criteria: Eligibility criteria are determined by the states, except that any funds transferred into the Social Services Block Grant from the Temporary Assistance for Needy Families (TANF) program must be used to serve children and their families whose incomes are no greater than 200% of the federal poverty guidelines.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands).\nAllocation formula: Funds are allocated among states according to their relative population size.\nMatching or related requirements: None.\nNew obligations: FY2009: $2.300 billion. FY2008: $1.700 billion.\nBudgetary classification: Mandatory (capped entitlement to states).\nParticipation data: In FY2008, nearly 24.7 million individuals (10.9 million children, and 13.8 million adults) received services supported in whole or in part by the SSBG.\nCRS report: CRS Report 94-953, Social Services Block Grant: Background and Funding , by [author name scrubbed].\nChafee Foster Care Independence Program (CFDA #93.674)\nAuthority: Statute: Section 477 of the Social Security Act, established by the Foster Care Independence Act of 1999 ( P.L. 106-169 ); 42 USC 677. Regulations: 45 CFR 1356.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Administration for Children, Youth and Families, Children's Bureau.\nPurpose of program: To help current and former foster youth achieve self-sufficiency.\nBenefit/service: Educational assistance, vocational training, employment services, life skills training, mentoring, preventive health activities, counseling, and (subject to certain limitations) room and board.\nIndividual eligibility criteria: Children who are likely to remain in foster care until age 18, youth age 18-21 who have aged out of the foster care system, and youth who left foster care after age 16 for kinship guardianship or adoption.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by Puerto Rico.\nAllocation formula: Funds are allocated among states according to their share of the nation's children in foster care, except that no state may receive less than $500,000 or the amount payable to the state under the predecessor program for FY1998, whichever is greater.\nMatching or related requirements: A 20% nonfederal match is required. Funds must supplement and not supplant any funds that would otherwise be used for the same general purposes.\nNew obligations: FY2009: $140 million. FY2008: $140 million.\nBudgetary classification: Mandatory (capped entitlement to states).\nParticipation data: No data available.\nCRS report: CRS Report RL34499, Youth Transitioning from Foster Care: Background and Federal Programs , by [author name scrubbed].\nEmergency Food and Shelter Program (CFDA #97.024)\nAuthority: Statute: Title III of the Stewart B. McKinney Homeless Assistance Act of 1987 ( P.L. 100-77 ), most recently reauthorized by the Housing and Community Development Act of 1992 ( P.L. 102-550 ); 42 USC 11331-11346. Regulations: no formal program-specific regulations.\nFederal administering agency: The program is administered by a National Board, which operates under the auspices of the Department of Homeland Security, Federal Emergency Management Agency.\nPurpose of program: To provide shelter, food, and supportive services for homeless and hungry individuals nationwide.\nBenefit/service: Mass shelter, mass feeding, food distribution through food pantries and food banks, one-month utility payments to prevent service cutoff, one-month rent/mortgage payments to prevent evictions or help people leaving shelters to establish stable living conditions.\nIndividual eligibility criteria: Determined by boards that administer the program at the local level.\nForm and recipient of federal assistance: Formula grants to local boards in eligible local jurisdictions. Local boards further distribute funds among local service providers (called local recipient organizations), which provide direct services to homeless and hungry individuals and families. Eligible jurisdictions are chosen based on measures of population, unemployment and poverty. Some funds are set-aside for states to award to local jurisdictions that don't qualify as eligible jurisdictions but have high levels of need.\nAllocation formula: Funds are allocated among eligible local jurisdictions based on their number of unemployed persons relative to other eligible local jurisdictions. Allows participation by territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands).\nMatching or related requirements: None.\nNew obligations: FY2009: $300 million (includes $100 million under the American Recovery and Reinvestment Act). FY2008: $153 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, services \"rendered\" were estimated at 70.1 million meals and 5.4 million nights of lodging. In addition, funds were used to provide approximately 209,061 rent/mortgage payments and 226,822 utility bill payments.\nCRS report: CRS Report RL30442, Homelessness: Targeted Federal Programs and Recent Legislation , coordinated by [author name scrubbed].\nLegal Services Corporation (no CFDA #)\nAuthority: Statute: Legal Services Corporation of 1974 ( P.L. 93-355 ), most recently reauthorized by the Equal Access to Courts Act ( P.L. 95-222 ); 42 USC 2996 et seq. Regulations: 45 CFR Part 1600.\nFederal administering agency: Legal Services Corporation.\nPurpose of program: To provide equal access to the justice system for individuals who seek redress of grievances and to provide high quality legal assistance to those would be otherwise unable to afford legal counsel.\nBenefit/service: Legal services in civil cases.\nIndividual eligibility criteria: Eligible individuals must have incomes no greater than 125% of the federal poverty guidelines, with exceptions (up to 200% of poverty) allowed in specified circumstances.\nForm and recipient of federal assistance: Formula grants to public and private nonprofit entities. Allows participation by territories (American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the U.S. Virgin Islands and any other territories or possessions of the United States).\nAllocation formula: Funds are allocated among states but awarded directly to local grantees. The allocation formula is based on each state's share of the nation's poverty population.\nMatching or related requirements: None.\nNew obligations: FY2009: $392 million. FY2008: $351 million.\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 920,447 cases were closed.\nCRS report: CRS Report RL34016, Legal Services Corporation: Background and Funding , by [author name scrubbed].\nEnergy Assistance\nWeatherization Assistance (CFDA #81.042)\nAuthority: Statute: Title IV of the Energy Conservation and Production Act of 1976 ( P.L. 94-385 ), most recently reauthorized by the Energy Independence and Security Act of 2007 ( P.L. 110-140 ); 42 USC 6871 et seq. Regulations: 10 CFR Part 440.\nFederal administering agency: Department of Energy, Office of Energy Efficiency and Renewable Energy.\nPurpose of program: To increase the energy efficiency of homes owned or occupied by low-income persons to reduce their total residential energy costs, and improve their health and safety.\nBenefit/service: Computerized energy audits and diagnostic equipment to determine the most energy-efficient measures for each individual home; labor and materials necessary to install such energy-efficient measures.\nIndividual eligibility criteria: Homes eligible for weatherization assistance must be occupied by persons with income below 150% of the federal poverty guidelines—increased to 200% of poverty beginning in FY2009—or who have received cash assistance under Temporary Assistance for Needy Families (TANF) or Supplemental Security Income (SSI) in the previous 12 months, or (at state option) who are eligible for assistance under the Low-Income Home Energy Assistance Program (LIHEAP).\nForm and recipient of federal assistance: Formula grants to states. Allows participation by Indian tribes and, effective FY2009, by territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands).\nAllocation formula: A specified dollar \"base\" amount is allocated among states; the balance is allocated according to a formula that reflects each state's relative low-income population, climatic conditions, and residential energy expenditures by low-income households in each state.\nMatching or related requirements: None.\nNew obligations: FY2009 : $5.240 billion (includes $4.748 billion under the American Recovery and Reinvestment Act). FY2008: $291 million. (Weatherization and Intergovernmental Activities.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2007 (most recent year for which data are available), program funds accounted for the weatherization of 104,283 homes.\nLow-Income Home Energy Assistance Program (LIHEAP) (CFDA #93.568)\nAuthority: Statute: Low-Income Home Energy Assistance Act, established by Title XXVI of the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) and most recently reauthorized by the Energy Policy Act of 2005 ( P.L. 109-58 ); 42 USC 8621-8630. Regulations: 45 CFR Parts 96.80-96.89.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Community Services.\nPurpose of program: To assist low-income households, particularly those with the lowest incomes, that pay a high proportion of their income for home energy, primarily in meeting their immediate home energy needs.\nBenefit/service: Assistance to households in paying their heating and cooling costs, crisis intervention, home weatherization, and services (such as counseling) to help reduce energy costs.\nIndividual eligibility criteria: States establish their own eligibility criteria within federal parameters. Maximum federal income eligibility is 150% of federal poverty guidelines or, if greater, 60% of state median income (75% of state median income in FY2009 and FY2010). States may not set eligibility at lower than 110% of federal poverty guidelines. States may grant categorical eligibility to households in which at least one member receives benefits under Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), or certain veterans' programs.\nForm and recipient of federal assistance: Formula block grants and contingency funds to states. Allows participation by territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the U.S. Virgin Islands) and by Indian tribes.\nAllocation formula: Regular block grant funds are distributed to states based on a three-tier formula depending on the total amount of funds appropriated. Formula factors include total residential energy consumption, temperature variation, low-income heating and cooling consumption, among others; however, the formula also includes two hold-harmless provisions. Contingency funds are awarded by the President based on need.\nMatching or related requirements: None.\nNew obligations: FY2009: $5.100 billion. FY2008: $2.590 billion.\nBudgetary classification: Discretionary.\nParticipation data: In FY2008, 5.4 million households received heating/winter crisis assistance, and 600,000 households received cooling/summer crisis assistance. There may be duplication among those receiving heating and cooling assistance.\nCRS report: CRS Report RL31865, The Low Income Home Energy Assistance Program (LIHEAP): Program and Funding , by [author name scrubbed].\nEmployment and Training\nCommunity Service Employment for Older Americans (CFDA #17.235)\nAuthority: Statute: Title V of the Older Americans Act of 1965 (P.L. 89-73), most recently reauthorized by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ); 42 USC 3056 et seq. Regulations: 20 CFR Part 641.\nFederal administering agency: Department of Labor, Employment and Training Administration.\nPurpose of program: To enable individuals to become self-sufficient through placement in community service positions and job training.\nBenefit/service: Part-time temporary community service jobs that pay at least minimum wage, job-related training, and supportive services that are necessary to enable an individual to participate in the program.\nIndividual eligibility criteria: Unemployed individuals age 55 or older with low incomes (defined as no higher than 125% of the federal poverty guidelines). Regulations require priority for certain groups, including veterans and individuals age 60 or older. Regulations also require special consideration to be given to certain groups, including individuals with the \"greatest economic and social need.\"\nForm and recipient of federal assistance: Formula grants to states and national nonprofit organizations. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) and by tribal organizations.\nAllocation formula: Funds are allocated to states and national organizations according to a three-part formula: a hold-harmless factor (FY2000 level of funding); each state's relative share of individuals age 55 or older; and each state's relative per capita income.\nMatching or related requirements: A nonfederal share of 10% is required.\nNew obligations: FY2009: $708 million. FY2008: $504 million.\nBudgetary classification: Discretionary.\nParticipation data: In program year 2009 (July 2008-June 2009), approximately 89,000 low-income workers participated in community service assignments.\nCRS report: CRS Report RL33880, Older Americans Act: Funding , by [author name scrubbed] and [author name scrubbed].\nWIA Adult Activities (CFDA #17.258)\nAuthority: Statute: Chapter 5 of Title I, Subtitle B of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 29 USC 2861-2864. Regulations: 20 CFR Part 663.\nFederal administering agency: Department of Labor, Employment and Training Administration, Office of Workforce Investment.\nPurpose of program: To assist eligible individuals in finding and qualifying for meaningful employment, and to help employers find the skilled workers they need to compete and succeed in business.\nBenefit/service: Core services, including outreach, job search and placement assistance, and labor market information. Intensive services, including comprehensive assessments, development of individual employment plans and counseling and career planning. Training services, including occupational skill training and basic skills training. Supportive services, including transportation, child care, housing and needs-related payments in certain circumstances.\nIndividual eligibility criteria: Eligible individuals are at least 18 years old. No additional eligibility criteria apply for core services. For intensive or training services, individuals must need the services in order to become employed or to obtain or retain a job that allows for self-sufficiency. If funds are limited, priority must go to recipients of cash assistance and other low-income individuals. Low-income is defined as having income below the federal poverty guidelines or 70% of the lower living standard income level, whichever is higher; receiving means-tested public assistance; being a member of a household that receives food stamps; qualifying as homeless; or being a disabled individual whose own income meets the low-income definition but whose family income exceeds it.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, the U.S. Virgin Islands, Marshall Islands, Micronesia, and Palau).\nAllocation formula: Funds are allocated to states on the basis of a three-part formula: state shares of the national distribution of areas of \"substantial\" unemployment (unemployment rate of at least 6.5%), \"excess\" unemployment (rate above 4.5%) and the \"disadvantaged\" adult population (family income below the federal poverty guidelines or 70% of the lower living standard income level).\nMatching or related requirements: None.\nNew obligations: FY2009: $1.357 billion (includes $495 million under the American Recovery and Reinvestment Act). FY2008: $827 million.\nBudgetary classification: Discretionary.\nParticipation data: In program year 2008 (April 2008-March 2009), there were 849,738 \"exiters\" from adult activities, of which 540,665 received core services only, 210,859 received core and intensive services, and 98,214 received training services. An exiter is a participant (who was determined eligible and received a service funded by WIA, including individuals who accessed self-services) who has not received a service funded by WIA or a partner program for 90 consecutive calendar days.\nCRS report: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed].\nWIA Youth Activities (CFDA #17.259)\nAuthority: Statute: Chapter 4 of Title I, Subtitle B of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 29 USC 2851-2954. Regulations: 20 CFR Part 664.\nFederal administering agency: Department of Labor, Employment and Training Administration, Office of Workforce Investment.\nPurpose of program: To improve educational and skill competencies of youth and develop connections to employers, mentoring opportunities with adults, training opportunities, supportive services, incentives for recognition and achievement, and leadership opportunities.\nBenefit/service: Strategies to complete secondary school, alternative secondary school services, summer employment, work experience, occupational skill training, leadership development opportunities, supportive services, adult mentoring, follow-up services, and comprehensive guidance and counseling.\nIndividual eligibility criteria: Eligible youth are low-income, ages 14 through 21, and either deficient in basic skills, a school dropout, homeless, a runaway or foster child, pregnant or a parent, or a youth offender. Low-income is defined as receiving (or being eligible to receive) cash assistance or food stamps (now the Supplemental Nutrition Assistance Program); having family income no greater than the federal poverty guidelines or 70% of the lower living standard income level; or being homeless, a foster child for whom state or local payments are made, or a disabled person whose income meets the low-income definition but whose family income exceeds it.\nForm and recipient of federal assistance: Formula grants to states. Allows participation by territories (Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the Marshall Islands, Micronesia, and Palau).\nAllocation formula: Funds are allocated to states according to a three-part formula: state shares of the national distribution of areas of \"substantial\" unemployment (unemployment rate of at least 6.5%); \"excess\" unemployment (rate above 4.5%); and population of \"disadvantaged\" youth (family income below the federal poverty guidelines or 70% of the lower living standard income level).\nMatching or related requirements: None.\nNew obligations: FY2009: $2.218 billion (includes $1.182 billion under the American Recovery and Reinvestment Act). FY2008 : $984 million.\nBudgetary classification: Discretionary.\nParticipation data: In program year 2008 (April 2008-March 2009), there were 115,083 \"exiters\" from youth activities. An exiter is a participant (who was determined eligible and received a service funded by WIA, including individuals who accessed self-services) who has not received a service funded by WIA or a partner program for 90 consecutive calendar days.\nCRS reports: CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery System , by [author name scrubbed]; and CRS Report R40929, Vulnerable Youth: Employment and Job Training Programs , by [author name scrubbed].\nSocial Services and Targeted Assistance for Refugees (CFDA 93.566)\nAuthority: Statute: Title IV, Chapter 2 of the Immigration and Nationality Act, established by the Refugee Act of 1980 ( P.L. 96-212 ) and most recently reauthorized by P.L. 106-104 ; 8 USC 1521-1524. Regulations: 45 CFR Part 400.\nFederal administering agency: Department of Health and Human Services, Administration for Children and Families, Office of Refugee Resettlement.\nPurpose of program: To provide for the effective resettlement of refugees and to assist them to achieve economic self-sufficiency as quickly as possible.\nBenefit/service: Employability and other services that address participants' barriers to employment such as social adjustment services, interpretation and translation services, day care for children, citizenship and naturalization services. Services are designed to enable refugees to obtain jobs within one year of becoming enrolled.\nIndividual eligibility criteria: Refugees, asylees, other specified humanitarian cases, and trafficking victims. Priority goes to newly arriving refugees during their first year in the U.S. who apply for services; refugees who are receiving cash assistance; unemployed refugees who are not receiving cash assistance; and employed refugees in need of services to retain employment or to attain economic independence.\nForm and recipient of federal assistance: Formula grants to states and competitive grants to public and private nonprofit entities.\nAllocation formula: State formula grants are based on the number of refugees, asylees, and other eligible cases who arrived in the U.S. not more than 36 months before the start of the fiscal year and who are residing in the state.\nMatching or related requirements: None.\nNew obligations: FY2009: $203 million. FY2008: $203 million. (Appropriations.)\nBudgetary classification: Discretionary.\nParticipation data: No data available.\nCRS report: CRS Report R41570, U.S. Refugee Resettlement Assistance , by [author name scrubbed].\nFoster Grandparents (CFDA #94.011)\nAuthority: Statute: Domestic Volunteer Service Act of 1973, most recently reauthorized by the Serve America Act ( P.L. 111-13 ); 42 USC 5011. Regulations: 45 CFR Part 2552.\nFederal administering agency: Corporation for National and Community Service.\nPurpose of program: To provide opportunities for older low-income people to have a positive impact on the lives of children in need.\nBenefit/service: Employment (between 15 and 40 hours weekly), with hourly stipend, providing services to children with special or exceptional needs or with conditions or circumstances that limit their academic, social or economic development.\nIndividual eligibility criteria: Eligible individuals must be age 60 or older (55 starting in FY2010) and, to be eligible to receive a stipend, individuals must have incomes no greater than 125% of federal poverty guidelines (200% starting in FY2010).\nForm and recipient of federal assistance: Discretionary grants to public and private nonprofit entities. Allows participation by entities in territories (American Samoa, Guam, Puerto Rico, the Trust Territories of the Pacific Islands, the U.S. Virgin Islands) and by Indian tribes.\nAllocation formula: Not applicable.\nMatching or related requirements: Nonfederal match of 10% required, which may be in cash or in-kind.\nNew obligations: FY2009: $109 million. FY2008: $109 million. (Appropriations.)\nBudgetary classification: Discretionary.\nParticipation data: In FY2009, 28,400 foster grandparents participated.\nCRS report: CRS Report RL33931, The Corporation for National and Community Service: Overview of Programs and FY2010 Funding , by Abigail B. Rudman and [author name scrubbed].\nJob Corps (no CFDA #)\nAuthority: Statute: Title I-C of the Workforce Investment Act of 1998 ( P.L. 105-220 ); 29 USC 2881-2901. Regulations: 20 CFR Part 670.\nFederal administering agency: Department of Labor, Employment and Training Administration, Office of Job Corps.\nPurpose of program: To assist eligible youth who need and can benefit from an intensive program, operated in a group setting in residential and nonresidential centers, to become more responsible, employable, and productive citizens.\nBenefit/service: Education and vocational training, including advanced career training; work experience; recreational activities; physical rehabilitation and development; job placement and counseling; and child care.\nIndividual eligibility criteria: Low-income youth aged 16-24 who have one or more of the following characteristics: deficient in basic reading, writing or computing skills; a school drop-out; homeless, a runaway, or a foster child; a parent; in need of additional education, vocational training, or intensive counseling to accomplish regular schoolwork or to secure and hold a job. Low-income is defined as a person who receives or whose family receives cash assistance or food stamps, or has income no higher than federal poverty guidelines, is homeless or a foster child, or is a disabled person whose own income does not exceed federal poverty guidelines but whose family income does.\nForm and recipient of federal assistance: Competitive contracts and interagency agreements with federal, state or local agencies, area vocational education schools or residential vocational schools, or private organizations. Allows participation by Indian tribes and tribal organizations.\nAllocation formula: Not applicable.\nMatching or related requirements: None.\nNew obligations: FY2009: $1.804 billion (includes $148 million under the American Recovery and Reinvestment Act). FY2008: $1.558 billion.\nBudgetary classification: Discretionary.\nParticipation data: In program year 2008 (April 2008-March 2009), total Job Corps enrollment was 60,896.\nCRS report: CRS Report R40929, Vulnerable Youth: Employment and Job Training Programs , by [author name scrubbed].\nAppendix D. Sources of Additional Information on Selected Income Measures and Eligibility Tests\nThe following references provide additional information about selected measures of income, income thresholds, and eligibility or benefit calculations that are used under various programs discussed in this report.\nFederal Poverty Guidelines and Related Poverty Measures\nFederal Poverty Guidelines, Research and Measurement —include links to current and prior poverty guidelines and frequently asked questions about the guidelines, their use by various federal programs to determine eligibility, and the federal poverty thresholds:\nhttp://aspe.hhs.gov/ poverty/ index.shtml\nU.S. Census Bureau: Poverty —includes links to information about poverty data reported by the Census Bureau from several major household surveys and programs, including the Annual Social and Economic Supplement to the Current Population Survey, the American Community Survey, the Survey of Income and Program Participation, and the Small Area Income and Poverty Estimates:\nhttp://www.census.gov/ hhes/ www/ poverty/ poverty.html\nDepartment of Veterans Affairs Income Thresholds\nVA Health Care—National Income Thresholds for FY2011 and FY2010 :\nhttp://www4.va.gov/ healtheligibility/ Library/ pubs/ VAIncomeThresholds/ VAIncomeThresholds.pdf\nQuestions and Answers on Veterans Pension Program :\nhttp://www.vba.va.gov/ bln/ 21/ pension/ vetpen.htm#1\nPension Rate Table, effective December 2009 —provides annual income limits for maximum annual pension rates, and includes links to prior year limits:\nhttp://www.vba.va.gov/ bln/ 21/ Rates/ pen01.htm\nSupplemental Security Income\nMonthly Federal SSI Payment (Maximum) and Monthly Income Limits, 2010 :\nhttp://www.ssa.gov/ pubs/ 10003.html\nUnderstanding Supplemental Security Income—SSI Eligibility Requirements, 2010 Edition :\nhttp://www.ssa.gov/ ssi/ text-eligibility-ussi.htm\nEarned Income Tax Credit\nIncome Limits and Maximum Credit Amounts, 2010 , and links to prior year limits:\nhttp://www.irs.gov/ individuals/ article/ 0,,id= 150513,00.html\nMedian Income\nState median income data published by the Census Bureau :\nhttp://www.census.gov/ hhes/ www/ income/ statemedfaminc.html\nFY2010 HUD Income Limits Briefing Material :\nhttp://www.huduser.org/ portal/ datasets/ il/ il10/ IncomeLimitsBriefingMaterial_FY10.pdf\nFY2010 Income Limits for the Public Housing and Section 8 Programs :\nhttp://www.huduser.org/ portal/ datasets/ il/ il10/ HUD-sec8.pdf\nFrequently Asked Questions, FY2010 Income Limits :\nhttp://www.huduser.org/ portal/ datasets/ il/ il10/ faq_10.html\n\"Need Analysis\" System\nThe EFC Formula, 2010-2011 (June 2010 update) —explains the formula used to calculate a student's \"expected family contribution\" and the amount of aid the student would be eligible to receive:\nhttp://www.ifap.ed.gov/ efcformulaguide/ attachments/ 062810EFCFormulaGuideUpdate1011.pdf\nLower Living Standard Income Levels\nFederal Register notice of determination of Lower Living Standard Income Levels for 2010 , and links to LLSILs for prior years:\nhttp://www.doleta.gov/ llsil/ 2010/" ], "depth": [ 0, 1, 2, 1, 1, 2, 2, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 2, 2, 3, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h2_full h1_full", "", "h0_full", "h2_full", "", "", "h4_full", "h2_title", "h2_full", "", "", "", "", "", "", "", "h3_full", "", "h3_title", "", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "h4_title", "", "", "h4_full", "", "", "", "", "h3_full h1_full" ] }	{ "question": [ "Describe federal spending amounts on low-income programs between 2008 and 2009.", "What caused the increased spending of the two years?", "Where did the majority of funding for this come from?", "What is the purpose of social insurance programs?", "How does the focus of low-income programs differ from social insurance programs?", "What manners of assistance do low-income programs provide?", "How much spending does healthcare account for?", "What makes up the next largest spending amount?", "What other categories of spending compromise spending for low-income programs?", "How is the eligibility for low-income programs determined?", "Where is the majority of spending allocated?", "What defines \"low income\"?", "How are funds to states for low-income programs provided?", "How do states qualify for these funds?", "How are these funds administered?" ], "summary": [ "The federal government spent almost $708 billion in FY2009 on programs for low-income people, and nearly $578 billion the previous year.", "The increased spending between the two years was largely due to the recession, with almost two-thirds coming from the American Recovery and Reinvestment Act (ARRA, P.L. 111-5), the economic stimulus enacted in February 2009.", "The increased spending between the two years was largely due to the recession, with almost two-thirds coming from the American Recovery and Reinvestment Act (ARRA, P.L. 111-5), the economic stimulus enacted in February 2009.", "Low-income programs discussed in this report are distinct from social insurance programs, such as Social Security or Medicare, which aim to protect American workers universally against lost wages or benefits when they retire, become disabled, or lose a job.", "In contrast, programs addressed here focus explicitly on low-income populations.", "They provide assistance in obtaining basic needs, such as health care, food, or housing, and seek to address the causes of low income through education, training, or other services.", "Health care dominates all other categories of benefits and services, accounting for nearly half of federal spending for low-income people.", "Cash aid is second but trails far behind, comprising 18% of spending in FY2009.", "Other categories, in decreasing size, are food assistance, housing and development, education, social services, energy assistance, and employment and training.", "Within broad target populations, programs use different concepts to determine who is eligible.", "Most spending is on behalf of people determined individually eligible by virtue of their low income or eligibility for another income-tested program.", "\"Low income\" is defined in a multitude of ways, using different percentages of the federal poverty guidelines, specific dollar amounts, percentages of local area median income (primarily for housing programs), or other measures.", "Programs for low-income people are most likely to use formula grants to distribute funds to states or another unit of government.", "Under many of these programs, notably including Medicaid, states must spend a specified amount of their own funds to receive federal dollars.", "State and local governments administer most of these federal programs; however, many of the largest programs provide federal benefits directly to individuals or via a nongovernmental intermediary." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, -1, 0, 0, -1, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2, 5, 5, 5, 7, 7, 7 ] }
CRS_R42936	{ "title": [ "", "Overview of Unemployment Insurance Programs", "Unemployment Compensation Program", "Emergency Unemployment Compensation Program (Expired)", "EUC08 Benefit Ended on December 28, 2013", "EUC08 Program Expired", "Impact of Federal \"Nonreduction\" Rule on State UC Laws", "Extended Benefit Program", "Expired Temporary EB Provisions in P.L. 111-312", "Unemployment Insurance Benefits and the Sequester", "FY2013 Sequester of UI Benefits", "FY2014 Sequester of UI Benefits", "EUC08: FY2014 Sequestration", "EB: FY2014 Sequestration", "FY2015 Sequester of UI Benefits", "EB: FY2015 Sequestration", "Alleviating State Unemployment Compensation Stress", "President's Budget Proposal for FY2015", "Enacted Legislation in the 113th Congress", "Unemployment Insurance Integrity Provision in P.L. 113-67", "Legislative Proposals in the 113th Congress", "Extension of Federal UI Provisions", "H.R. 3979", "Additional UI Extension Proposals", "Administrative Concerns Related to Proposals to Extend Federal UI Provisions", "Additional UI Provisions in the American Jobs Act of 2013 (H.R. 2821)", "Reemployment NOW Program and Funding Opportunities", "Short-Time Compensation Programs (\"Worksharing\")", "Long-Term Unemployed Work Opportunity Credits", "Exempting UI Benefits from the Sequester", "Integrity Proposals", "Short-Time Compensation", "Concurrent Receipt of SSDI and UI Benefits42", "Income Restrictions (\"Millionaires\")", "Vouchers/Demonstration Projects", "Job Training and Education", "Drug Testing47", "Aid for Hurricane Sandy States", "Rehiring UI Beneficiaries and Exhaustees", "Domestic Violence" ], "paragraphs": [ "The unemployment insurance (UI) system has two primary objectives: (1) to provide temporary, partial wage replacement for involuntarily unemployed workers and (2) to stabilize the economy during recessions. In support of these goals, several UI programs provide benefits for eligible unemployed workers.", "In general, when eligible workers lose their jobs, the joint federal-state Unemployment Compensation (UC) program may provide up to 26 weeks of income support through the payment of regular UC benefits. UC benefits may be extended for up to 13 or 20 weeks by the Extended Benefit (EB) program if certain economic situations exist within the state. Previously, up to 47 weeks by the temporarily authorized Emergency Unemployment Compensation (EUC08) program were available. (EUC08 benefits expired on December 28, 2013, and are no longer authorized.) Figure 1 depicts the sequence of unemployment benefits that were available until December 28, 2013. Currently, only the UC and EB programs are authorized, although no state is in an active EB period.", "The joint federal-state UC program, authorized by the Social Security Act of 1935 (P.L. 74-271), provides unemployment benefits for up to a maximum of 26 weeks. Former U.S. military servicemembers may be eligible for unemployment benefits through the unemployment compensation for ex-servicemembers (UCX) program. The Emergency Unemployment Compensation Act of 1991 ( P.L. 102-164 ) provides that ex-servicemembers be treated the same as other unemployed workers with respect to benefit levels, the waiting period for benefits, and benefit duration.\nAlthough federal laws and regulations provide broad guidelines on UC benefit coverage, eligibility, and benefit determination, the specifics regarding UC benefits are determined by each state. This results in essentially 53 different programs. Generally, UC eligibility is based on attaining qualified wages and employment in covered work over a 12-month period (called a base period) prior to unemployment. All states require a worker to have earned a certain amount of wages or to have worked for a certain period of time (or both) within the base period to be monetarily eligible to receive any UC benefits. The methods states use to determine monetary eligibility vary greatly. Most state benefit formulas replace approximately half of a claimant's average weekly wage up to a weekly maximum.\nThe UC program is financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The 0.6% effective net FUTA tax paid by employers on the first $7,000 of each employee's earnings (no more than $42 per worker per year) funds federal and state administrative costs, loans to insolvent state UC accounts, the federal share (50%) of EB payments, and state employment services.\nSUTA taxes on employers are limited by federal law to funding regular UC benefits and the state share (50%) of EB payments. Federal law requires that the state tax be on at least the first $7,000 of each employee's earnings (it may be more) and requires that the maximum state tax rate be at least 5.4%. Federal law also requires the state tax rate to be based on the amount of UC paid to former employees (known as \"experience rating\"). Within these broad requirements, states have great flexibility in determining the SUTA structure of their state. Generally, the more UC benefits paid out to its former employees, the higher the tax rate of the employer, up to a maximum established by state law. Funds from FUTA and SUTA are deposited in the appropriate accounts within the Unemployment Trust Fund (UTF).", "On June 30, 2008, President George W. Bush signed the Supplemental Appropriations Act of 2008 ( P.L. 110-252 ), which created a new temporary unemployment insurance program, the EUC08 program. This was the eighth time Congress had created a federal temporary program to extend unemployment compensation during an economic slowdown. State UC agencies administered the EUC08 benefit along with regular UC benefits.\nThe authorization for this program has been extended multiple times and was authorized through December 28, 2013, for all states except New York (December 29, 2013) and North Carolina. EUC08 benefits have not been available in North Carolina since June 2013.", "The EUC08 program was amended 11 times, the final time by P.L. 112-240 . The EUC08 benefit amount was equal to the eligible individual's weekly regular UC benefits and included any applicable dependents' allowances. The most recent modifications to the underlying structure of the EUC08 program were made by P.L. 112-96 . These modifications included changes to the number of weeks available in each EUC08 tier as well as the state unemployment rates required to have an active tier in that state. These requirements were implemented during 2012 in three separate phases. The following weeks of EUC08 benefits were available in the tiers listed below through December 28, 2013:\nTier I was available in all states, except in North Carolina, with up to 14 weeks of EUC08 benefits provided to eligible individuals. Tier II was available if the state's total unemployment rate (TUR) was at least 6%, with up to 14 weeks provided to eligible individuals in those states (not available in North Carolina). Tier III was available if the state's TUR was at least 7% (or an insured unemployment rate, IUR, of at least 4%), with up to 9 weeks provided to eligible individuals in those states (not available in North Carolina). Tier IV was available if the state's TUR was at least 9% or the IUR was 5%, with up to 10 weeks provided to eligible individuals in those states (not available in North Carolina).", "All tiers of EUC08 benefits were temporary and expired in the week ending on or before January 1, 2014. Thus, on December 28, 2013 (December 29, 2013, for New York), the EUC08 program ended. All entitlement to EUC08 benefits is no longer authorized. (There is no grandfathering of any EUC08 benefit.)", "In response to similar state UC financial stress following prior recessions, states typically reduced the amount of UC benefits paid to individuals through reductions in the maximum benefit amount or through changes in the underlying benefit calculations. Under two temporary provisions in federal law, however, most states were prohibited from enacting legislation that would reduce the average UC benefit amount through changes to benefit calculation from February 2009 through December 2013. One state, North Carolina, implemented new legislation that reduced benefit amounts. As a result, the EUC08 agreement between North Carolina and the Secretary of the U.S. Department of Labor (DOL) terminated early. All tiers of EUC08 ended in North Carolina as of June 29, 2013. No EUC08 benefits have been available in that state since June 30, 2013.\nThe implementation of this \"nonreduction\" rule coincided with new state actions that reduced UC benefit duration as an alternative means to decrease total UC benefit payments. As a result, these changes in state UC benefit duration may be a state response to state UC financing shortfall. For more information on the state law changes, see CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws .", "The EB program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. §3304, note). EUCA may extend receipt of unemployment benefits (extended benefits) at the state level if certain economic situations exist within the state.\nThe EB program is triggered when a state's insured unemployment rate (IUR) or total unemployment rate (TUR) reaches certain levels. All states must pay up to 13 weeks of EB if the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the same 13-week period in each of the two previous years. There are two other optional thresholds that states may choose. (States may choose one, two, or none.) If the state has chosen a given option, it would provide the following:\nOption 1: an additional 13 weeks of benefits if the state's IUR is at least 6%, regardless of previous years' averages. Option 2: an additional 13 weeks of benefits if the state's TUR is at least 6.5% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years; an additional 20 weeks of benefits if the state's TUR is at least 8% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years.\nEach state's IUR and TUR are determined by the state of residence (agent state) of the unemployed worker rather than by the state of employment (liable state). EB benefits are not \"grandfathered\" when a state triggers \"off\" the program. When a state triggers \"off\" of an EB period, all EB benefit payments in the state cease immediately regardless of individual entitlement.", "P.L. 111-312 , as amended (most recently by P.L. 112-240 ), made some technical changes to certain triggers in the EB program. These changes allowed states to temporarily use lookback calculations based on three years of unemployment rate data (rather than the permanent-law lookback of two years of data) as part of their mandatory IUR and optional TUR triggers if states would otherwise trigger off or not be on a period of EB benefits. Using a two-year versus a three-year EB trigger lookback was an important adjustment at the time of the signing of P.L. 111-312 (December 17, 2010) because many states were likely to trigger off of their EB periods despite high, sustained—but not increasing—unemployment rates. For more information on these state law changes see CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws . The authorization for the temporary EB trigger modifications expired the week ending on or before December 31, 2013.\nThe EB benefit amount is equal to the eligible individual's weekly regular UC benefits. Under permanent law, FUTA finances half (50%) of the EB payments and 100% of EB administrative costs. States fund the other half (50%) of EB benefit costs through their SUTA. Beginning on February 17, 2009, P.L. 111-5 (most recently amended by P.L. 112-240 ) temporarily changed the federal-state funding arrangement for the EB program. The FUTA financed 100% of EB benefits from February 17, 2009, through December 31, 2013. The one exception to the 100% federal financing was for those EB benefits based on work in state and local government employment; those \"non-sharable\" benefits continued to be 100% financed by the former employers.", "The sequester order required by the Budget Control Act of 2011 ( P.L. 112-25 ) and implemented on March 1, 2013 (after being delayed by P.L. 112-240 ), affects some but not all types of unemployment insurance expenditures. Regular UC, UCX, and UCFE payments are not subject to the sequester reductions. EB, EUC08, and most forms of administrative funding are subject to the sequester reductions. Please see CRS Report R43133, The Impact of Sequestration on Unemployment Insurance Benefits: Frequently Asked Questions for additional information on the impact of sequestration on UI benefits.", "The FY2013 sequestration reductions applied to the budgetary resources for all of FY2013 (October 1, 2012, through September 30, 2013)—but the actual EB and EUC08 payment reductions were not implemented before the week beginning March 31, 2013. The sequester order for FY2013 required a 5.1% reduction to be applied on all nonexempt nondefense mandatory expenditures. Thus, EUC08 and EB payments were required to be reduced by 10.7% for benefits paid for weeks of unemployment beginning on March 31, 2013, to meet the 5.1% reduction target for FY2013.\nThe U.S. DOL released guidance on how states should implement the FY2013 sequester reductions to unemployment benefits for FY2013. These reductions began the week beginning on or after March 31, 2013. For states that were not able to implement these reductions by March 31, 2013, the amount of the benefit reduction was actuarially increased to be equivalent to a 10.7% reduction. Not all states implemented the sequestration reductions uniformly across all EUC08 beneficiaries. Several states were unable to implement the preferred method of reduction as outlined by the DOL and opted for an alternative method.\nNo unemployment benefits already paid to individuals before the state began the sequester reductions were affected.", "In FY2014, the sequestration order required a 7.2% reduction in all nonexempt nondefense mandatory expenditures.", "The FY2014 sequestration order required that EUC08 expenditures be reduced by 7.2% for EUC08 benefits paid for weeks of unemployment beginning on October 6, 2013 (ending December 28, 2013, when EUC08 authorization expired). According to its guidance, the DOL will work with states individually to assist them in administering the FY2014 sequester of EUC08:\nDue to the extraordinary programming challenges states experienced during sequestration implementation for FY 2013, and the additional challenges presented by the further changes necessary for sequestration implementation for FY 2014, the Department has reached out to states with various options that may be used in order to achieve the required FY 2014 sequestration savings. Letters have been sent to each state approving the implementation strategy agreed upon by the Department and the states in advance of further specific guidance in this UIPL [Unemployment Insurance Program Letter].", "The federal share of EB benefits would have been reduced by 7.2% for any benefits paid for weeks of unemployment beginning on October 6, 2013, and ending September 27, 2014. For the entire period, no state had an active EB program.", "In FY2015, the sequestration order requires a 7.3% reduction in all nonexempt nondefense mandatory expenditures.", "In FY2015, the sequestration order requires that EB expenditures be reduced by 7.3% (only on the federal share of EB benefits) for weeks of unemployment beginning on October 4, 2014, through September 26, 2015.", "Eleven states and the Virgin Islands owed a cumulative $13.9 billion to the federal accounts within the UTF as of October 28, 2014. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) temporarily stopped the accrual of interest charges on these state UC loans and deemed any interest payments due during that time as having been paid through December 31, 2010. Since January 1, 2011, interest charges again began to accrue and interest payments must be made. For calendar year 2013, employers in 13 states and the Virgin Islands faced an increased net FUTA because the state UC program had borrowed funds from the federal UTF loan account for two consecutive years.", "The President's Budget Proposal for FY2015 attempts to address some of these state and federal financing concerns. The proposal includes extending the suspension of interest accrual for 2014 and 2015 as well as temporarily suspending net FUTA tax increases (because of outstanding state loans) for the same period.\nThe proposal would increase the FUTA taxable wage base from $7,000 to $15,000 in 2017 while increasing the FUTA tax rate from 0.6% to 0.8% for 2015 and then decreasing the FUTA tax rate from 0.80% to 0.38% in 2017. Beginning in 2017, the FUTA tax base would be indexed to wage growth. Under federal law, the taxable wage base for SUTA taxes in states must be at least the taxable wage base for FUTA. Therefore, the proposed increase in the FUTA taxable wage in the President's Budget Proposal would have the effect of requiring states to have a SUTA taxable wage bas e of at least $15,000 in 2017, which would then be indexed to wage growth.\nThe FY2015 President's Budget Proposal also includes various UC program measures:\n1. Additional funding for Reemployment and Eligibility Assessments (REAs) 2. Funding ($2 billion) to encourage states to adopt Bridge to Work programs, which would allow individuals to continue receiving unemployment benefits while participating in a short-term work placement and would also support other strategies for getting UC claimants back to work more quickly 3. Reduction of an individual's Social Security Disability Insurance (SSDI) benefit in any month in which that person also receives an unemployment benefit\nIn addition, the President's Budget Proposal would provide $4 billion in mandatory funding to support partnerships between businesses and education and training providers to train approximately 1 million long-term unemployed workers for new jobs.", "", "P.L. 113-67 , the Bipartisan Budget Act of 2013, was signed by the President on December 26, 2013. P.L. 113-67 included a provision that requires states (one year after the unemployment benefit overpayment debt was finally determined to be due) to recover any remaining state overpayments through reduced federal income tax refunds.", "", "Numerous proposals have been introduced in the 113 th Congress to further extend some or all of the now-expired temporary federal provisions of UI law: the authorization of EUC08, the 100% federal financing of EB, the authorization for states to use a three-year lookback for state EB triggers, temporary railroad UI benefits, and funds for Reemployment Services and Reemployment and Eligibility Assessment Activities (RES/REAs). Additionally, some of these extension proposals also waive the nonreduction rule for states that had legislatively lowered their weekly UC benefit amount calculation. Table 1 provides summary details of these proposals.", "On April 7, 2014, the Senate passed a version of H.R. 3979 , the Emergency Unemployment Compensation Act of 2014, which includes an extension of various federal UI provisions. Among other provisions, H.R. 3979 would retroactively extend EUC08 authorization—and maintain the EUC08 tier structure that had been available prior to the program's expiration in December 2013—for five months (i.e., through May 2014).\nIn addition, H.R. 3979 would also\nextend the expired EB provisions for five months; extend the expired railroad UI provisions for five months; reauthorize the funding for RES/REAs and change the timing of RES/REAs requirements; provide an exception to the nonreduction rule associated with EUC08 prior to its expiration; prohibit any individual reporting more than $1 million in adjusted gross income (AGI) in the preceding year from receiving EUC08 benefits; and make the same decreases in expenditures and increases in revenues to offset the cost of the proposed UI extensions as are found in S. 2148 and S. 2149 .\nBoth H.R. 4415 and Title I of H.R. 4550 contain identical language to H.R. 3979 .", "Besides H.R. 3979 , H.R. 4415 , and H.R. 4550 , many of the other extension bills propose retroactively reauthorizing the expired federal UI provisions for one additional year through December 2014 ( H.R. 3546 , H.R. 3773 , H.R. 3885 , S. 1747 , and S. 1797 ). H.R. 2821 , however, would retroactively extend the expired provisions for an additional two years (i.e., through December 2015). A number of other bills would retroactively extend the expired provisions for less than a year:\nS.Amdt. 2631 proposes a retroactive extension of 10.5 months through mid-November 2014; H.R. 3936 and S. 2077 propose a retroactive, six-month extension through June 2014; S. 2097 , S. 2148 , and S. 2149 propose a retroactive, five-month extension through May 2014; and H.R. 3813 , H.R. 3824 , S.Amdt. 2714 , S. 1845 , and S. 1931 propose a retroactive, three-month extension through March 2014.\nIn addition, two bills, H.R. 4970 and S. 2532 , would reauthorize the temporary federal provisions for five months from the time of enactment without any retroactive benefits.\nMost of the additional proposed UI extension legislation would maintain the EUC08 tier structure that had been available prior to the program's expiration in December 2013. H.R. 3885 , however, would only extend tier I of EUC08 with a maximum duration of up to 14 weeks. S.Amdt. 2631 and S. 1931 would reauthorize all four tiers of EUC08, but reduce the duration of the first two tiers to be up to 6 weeks each (i.e., for a total maximum duration of up to 31 weeks from all four tiers of EUC08). In addition, H.R. 4431 would introduce a gradual reduction of the weekly benefit amount if EUC08 benefits were reauthorized.\nThere is additional variation among these proposals in terms of the other UI provisions:\nAll of these bills—except for H.R. 3773 —would reauthorize the temporary EB and railroad UI provisions. Most of these bills—except for H.R. 3773 , H.R. 3813 , and H.R. 3885 —would reauthorize the funding for RES/REAs. Most of these bills—except for H.R. 2821 , H.R. 3546 , H.R. 3773 , S. 1747 , and S. 1797 —propose exceptions to the nonreduction rule associated with EUC08 prior to its expiration. Several of these bills contain offset provisions related to the concurrent receipt of UI and Social Security Disability Insurance (SSDI) payments ( H.R. 3885 , S.Amdt. 2631 , S. 1931 , and S. 2097 ). Two bills— S.Amdt. 2714 and S. 2097 —would prohibit any individual reporting more than $1 million in AGI in the preceding year from receiving from receiving federal unemployment compensation, including EB and EUC08 payments. H.R. 3979 , H.R. 4415 , H.R. 4550 , H.R. 4970 , S. 2148 , S. 2149 , and S. 2532 would prohibit any individual reporting more than $1 million in AGI in the preceding year from receiving EUC08 benefits. Several of these bills propose changes to REAs: S. 2097 would amend REAs to include an assessment of the reason for unemployment and allow states the option to require that a EUC08 claimant participate in job training program or community service if job training is not appropriate. In addition, it would enact changes to work search and suitable work requirements and disqualifications to conform to EB requirements (rather than UC requirements). S. 2148 , S. 2149 , S. 2532 , and H.R. 4970 would change the timing of REAs to require that REAs and employment services are available when an individual enters tier I of EUC08 and, if applicable, again when the individual enters tier III of EUC08. Several of these proposals include decreases in expenditures or increases in revenues to offset the cost of the proposed UI extensions: H.R. 4970 , S.Amdt. 2714 , S. 2097 , S. 2148 , S. 2149 , and S. 2532 would extend the changes that the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ) made to the discount rates that are used by defined benefit (DB) pension plans for four additional years. The bills would allow the sponsors of DB pension plans to contribute less to their pension plans, which would increase plans sponsors' taxable income. S. 2077 proposes to offset the cost of its provisions with previously enacted Farm bill savings found in P.L. 113-79 . H.R. 4970 , S. 2097 , S. 2148 , S. 2149 , and S. 2532 include an extension of certain customs user fees. S. 2148 and S. 2149 would allow the sponsors of single-employer and multiemployer DB pension plans to prepay the annual flat-rate, per participant premium paid to the Pension Benefit Guaranty Corporation (PBGC).", "On March 19, 2014, the National Association of State Workforce Agencies (NASWA), an organization of state UI administrators and other employment services stakeholders, provided a letter and fact sheet to Senate Majority Leader Reid and Senate Minority Leader McConnell outlining state administrative concerns related to a potential extension of UI. In particular, these March 2014 NASWA documents responded to the UI provisions in S. 2148 .\nNASWA highlighted a number of key administrative challenges for states raised by S. 2148 , including\nolder state UI computer systems (average age of 25) that make rapid EUC08 program changes difficult to administer; potential difficulty in administering the work search requirement retroactively for all weeks of backdated claims; potential difficulty in administering the proposal to prohibit any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation (since UI benefits are not currently means-tested and state UI administrators do not currently collect tax information on UI claimants); and lack of clarity in legislation regarding prohibition on using federal funds to administer EUC08 claims.\nIn sum, NASWA stated that—faced with the administrative challenges that S. 2148 , if enacted, would entail—some states might choose to terminate their EUC08 agreements with DOL:\nThe requirements in S. 2148 would cause considerable delays in the implementation of the program and increased administrative issues and costs. Some states have indicated they might decide such changes are not feasible in the short time available, and therefore would consider not signing the U.S. Department of Labor's agreement to operate the program.\nOn March 21, 2014, U.S. Labor Secretary Thomas Perez wrote a letter to Senate Majority Leader Reid and Senate Minority Leader McConnell responding to the administrative concerns raised by NASWA. In this letter, Secretary Perez maintains that NASWA's concerns can be addressed and overcome:\nI am confident that there are workable solutions for all of the concerns raised by NASWA. From the Great Recession to the present, the Congress has worked in a bipartisan fashion to enact twelve different expansions or extensions to the EUC program. A number of the extensions included changes to the program that were as or more complex than those included in the current bill. The Department of Labor has consistently worked with states to implement these extensions in an effective, collaborative and prompt fashion, and will do so again.\nFor instance, to address NASWA's specific concern regarding the lack clarity in the legislation prohibiting the use federal funds to administer EUC08 claims, Secretary Perez suggested a \"technical amendment without changing the substance of the agreement that is the foundation of the bill.\" S. 2149 , S. 2532 , H.R. 3979 , H.R. 4415 , H.R. 4550 , and H.R. 4970 incorporate this type of technical correction.\nOn May 7, 2014, Secretary Perez wrote a similar letter to House Speaker Boehner.", "In addition to the two-year extension of federal UI provisions discussed in the previous section, Title III (\"Assistance for the Unemployed and Pathways Back to Work\") of H.R. 2821 includes several provisions relating to unemployment insurance.", "H.R. 2821 would establish a \"Reemployment NOW\" program with $4 billion in federal appropriations. The $4 billion in funds would be allotted to the states based on a two-part formula: (1) two-thirds would be distributed to the states based upon the state share of the U.S. total number of unemployed persons and (2) one-third would be distributed to the states based on the state share of the long-term unemployed (measured as unemployment spells of at least 27 weeks). Up to 1% of the funds would be available for program administration and evaluation. To receive a Reemployment NOW allotment, a state would have to submit a plan to DOL describing the activities it would perform to reemploy eligible individuals, among other requirements (such as performance measures).\nReemployment NOW funds would be available for several allowable programs uses:\nThe \"Bridge to Work\" program, which would allow individuals to continue to receive EUC08 benefits as wages for work performed in a short-term work experience placement. Wage insurance, which would authorize states to provide an income supplement to EUC08 claimants who secure reemployment at a lower wage than their separated employment. Enhanced reemployment services, which would allow states to use funds to provide EUC08 claimants and individuals who have exhausted all entitlements to EUC08 benefits with reemployment services that are more intensive than any reemployment services provided by the states previously (for instance, one-on-one assessments, counseling, or case management). Start-up of Self-Employment Assistance (SEA) state programs, which would authorize states to use funds for any administrative costs associated with the start-up of SEA agreements. Additional innovative programs, which would allow states to use funds for programs other than the programs described above. These programs would be required to facilitate the reemployment of EUC08 claimants, among other requirements.", "H.R. 2821 would provide temporary 100% federal financing for up three years and six months after enactment for short-time compensation (STC) benefits in states with existing STC programs. States without existing STC programs would be allowed to enter into an agreement with DOL for up to two years and three months after enactment and receive federal reimbursement for administrative expenses, as well as temporary federal financing of 50% of STC payments to individuals, with employers paying the other 50% of STC costs. If a state enters into an agreement with the Secretary of Labor and then subsequently enacts a law providing for STC, that state would then be eligible to receive 100% federal financing.\nH.R. 2821 would also award grants of up to $700 million total to eligible states, with one-third of each state's grant available for implementation and improved administration purposes and two-thirds of each state's grant available for program promotion and enrollment of employers. This proposal would also provide $1.5 million for DOL to submit a report to Congress and the President, within four years of enactment, on the implementation of this provision.\nThese provisions are similar to the STC provisions enacted in P.L. 112-96 .", "H.R. 2821 would add a targeted group for purposes of the Work Opportunity Tax Credit (WOTC) for individuals who have been unemployed for six months or more during the one-year period prior to being hired. For those long-term unemployed who are hired and remain on a firm's payroll at least 400 hours, an employer would be able to claim a non-refundable income tax credit of 40% of the first $10,000 in wages paid during the worker's first year of employment. For eligible hires who remain employed for 120 hours to 399 hours, the credit rate would be 25%. Under certain circumstances, tax-exempt employers may claim the credit for hiring long-term unemployed individuals.", "H.R. 2177 , the Unemployment Restoration Act, would make both EB and EUC08 exempt from sequestration. This exemption would be retroactive and would continue through FY2021. Any reduction of UI payments that occurred because of the sequester order would be paid back retroactively.", "H.R. 3205 , the Promoting Adoption and Legal Guardianship for Children in Foster Care Act; S. 1870 , the Supporting At-Risk Children Act; and S. 1876 also include proposals similar to the UI integrity provision enacted via P.L. 113-67 . The proposals in H.R. 3205 , S. 1870 , and S. 1876 would also require states (after two years since the state unemployment benefit overpayment occurred) to recover any remaining state overpayments through reduced federal income tax refunds.\nH.R. 2826 , the Permanently Ending Receipt by Prisoners Act, would require states to use the Prisoner Update Processing System (PUPS) data compiled by the Social Security Administration. States would use PUPS data to confirm that an individual is not confined in a jail, prison, or other penal institution or correctional facility. Any individual who is incarcerated would not be eligible for regular UC benefits because the individual would not be available for work.\nH.R. 3447 , the Furloughed Federal Employee Double Dip Elimination Act, would clarify that if a federal employee were to receive back pay for a period during which he or she had been furloughed due to a lapse in federal appropriations, the federal employee would have to repay any unemployment compensation for that period.", "The Layoff Prevention Extension Act of 2014 ( H.R. 5583 and S. 2906 ) would extend several of the STC provisions in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). The 100% federal cost sharing provisions of approved STC programs would be extended for an additional year until August 2016. Similarly the STC grants for implementation or improved administration of an STC program or to promote and enroll employers in an STC program if state STC law conforms to the federal STC definition would be available for an additional year until December 2015.", "H.R. 1502 , the Social Security Disability Insurance and Unemployment Benefits Double Dip Elimination Act, would require that for any month that an individual is entitled to UC, EB, EUC08 or Trade Adjustment Assistance (TAA), he or she shall be deemed to have engaged in substantial gainful activity (SGA) and so be disqualified from receiving Social Security Disability Insurance (SSDI) benefits after a certain period has elapsed. H.R. 3885 , the GROWTH Act, has a similar provision among its many proposals.\nS. 1099 , the Reducing Overlapping Payments Act, would require that for any month that an individual receives UC, no SSDI benefits would be paid.\nS.Amdt. 2631 , among its many provisions, would require that any UI benefit paid to an individual during a month offset any SSDI payment for that month.\nAmong many other provisions, S. 1931 , the Responsible Unemployment Compensation Extension Act of 2014, and S. 2097 , the Responsible Unemployment Compensation Extension Act of 2014, would both require UI payments to offset SSDI payments except if based upon employment while participating in the Ticket to Work and Self-Sufficiency Program.", "Four proposals in the 113 th Congress would prohibit any individual reporting more than $1 million in adjusted gross income (AGI) in the preceding year from receiving federal unemployment compensation, including EB and EUC08 payments:\nS. 18 (Section 401), H.R. 2448 , S.Amdt. 2714 (Section 7), and S. 2097 (Section 9).\nSeveral additional proposals contain provisions that would prohibit any individual reporting more than $1 million in AGI in the preceding year from receiving any EUC08 payments:\nS. 2148 (Section 7), S. 2149 (Section 7), S. 2532 (Section 7), H.R. 3979 (Section 7), H.R. 4415 (Section 7), H.R. 4550 (Section106), and H.R. 4970 (Section 7).", "H.R. 51 , the Hire Just One Act of 2013, and Section 201 of H.R. 4550 would create an employment assistance voucher program and would allow states to use UC funds to pay for the vouchers. Instead of paying UC directly to the unemployed worker, if an eligible individual is issued an employment assistance voucher and is hired by a participating employer, the employer would receive a subsidy from the state for the wages paid to the employee. The individual must have been unemployed for at least six months and would otherwise be eligible for UC, EB, or EUC08 and must have been profiled as likely to exhaust UC benefits.\nH.R. 3864 , the Flexibility to Promote Reemployment Act, and S. 2870 , the On the Job Training Act, would make a number of changes to the state UC demonstration projects created by the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). For instance, the bills would expand the existing authority for state UC demonstration projects by authorizing 10 states per year to conduct approved demonstration projects (the current authority is only for 10 states total) and extending the time period that state demonstration projects may be approved by DOL by two years until December 31, 2017. They would also revise state UC demonstration project requirements, including removing a requirement that any direct disbursements paid to employers for hiring UC claimants not exceed an individual's UC weekly benefit amount and requiring that DOL approve state applications for UC demonstration projects based on the order of receipt. Additionally, the bills would transfer the responsibility for state UC demonstration project impact evaluation from states, as under current law, to DOL and require a specific procedure for termination of state UC demonstration project by DOL.", "H.R. 1530 , the Opportunity KNOCKs Act, would require that states allow UC beneficiaries to participate in a Workforce Investment Act (WIA) authorized job training program and remain eligible for benefits. If the UC beneficiary has been profiled to exhaust regular benefits the individual may be enrolled in any coursework necessary to attain a recognized postsecondary credential.\nS. 2097 would require EUC08 claimants undergo an assessment for the cause of continued unemployment and allow states the option to require EUC08 claimants participate in job training programs or community services if job training is not appropriate.\nS. 2148 , S. 2149 , and H.R. 3979 would change the timing of REAs for EUC08 claimants so that REAs and employment services would be available, at the minimum, when an individual enters tier I of EUC08 as well as again when the individual enters tier III of EUC08, if applicable.", "H.R. 1172 would create a new federal requirement that individuals be deemed ineligible for UC benefits based on previous employment from which they were separated due to an employment-related drug or alcohol offense. The bill would deny benefits to anyone who (1) is discharged from employment for alcohol/drug use; (2) is in possession of controlled substance at place of employment; (3) refuses drug testing by employer; or (4) tests positive on employer drug test for illegal or controlled substances. This proposal would require states to amend their state UC laws.\nH.R. 1277 , the Accountability in Unemployment Act of 2013, would create a new federal requirement for states to drug test all UC claimants as a condition of benefit eligibility. If an individual tests positive for certain controlled substances (in the absence of a valid prescription or as otherwise authorized under a state's laws), he or she would be required to retake a drug test after a 30-day period and test negative in order to be eligible for UC benefits.\nH.R. 3454 , the Ensuring Quality in the Unemployment Insurance Program act, would require states to assess each UC applicant for substance abuse for each benefit year. The screening instrument would be approved by the Director of the National Institutes of Health and designed to determine whether an individual has a high risk of substance abuse. If the applicant is determined to be \"high risk,\" the applicant would have to test negative for controlled substances within one week after the results of such assessment.\nH.R. 4310 , the Ready to Work Act, would provide DOL with a deadline of one year after enactment to issue a final rule with regard to the drug testing provisions in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). The drug testing provisions in P.L. 112-96 permit states to drug test UI claimants if (1) the claimant was discharged from employment for illegal use of drugs or (2) the claimant is only available for suitable work in an occupation that regularly conducts drug testing. States may deny UI benefits to claimants whose drug tests yield a positive result. The regulation deadline proposed in this bill refers to the identification of occupations in which drug testing is regularly conducted.", "S. 803 , Superstorm Sandy Unemployment Relief Act of 2013, would have allowed 13 additional weeks of Disaster Unemployment Assistance (DUA) for unemployment as a result of the disaster declaration made for Hurricane Sandy after October 20, 2012, to make such assistance available for 39 weeks after the date of the declaration (currently limited to 26 weeks). In addition, the bill would have reimbursed states 100% of the amount UC paid under state law to affected individuals in each affected state or any area within it. Payments would have been available until July 28, 2013.", "Several proposals have attempted to target the rehiring of workers who have exhausted unemployment benefits. In addition to the measures described above in the \" Additional UI Provisions in the American Jobs Act of 2013 (H.R. 2821) \" section, H.R. 188 , H.R. 1617 , and H.R. 2889 give priority to those workers who have exhausted regular UC benefits.\nH.R. 3453 would extend the priority treatment tax treatment in P.L. 112-56 (Work Opportunity Tax Credits, WOTC, now expired) for employers who hire veterans who have exhausted unemployment benefits or are otherwise long-term unemployed for an additional two years, until March 31, 2016.\nH.R. 3726 , the Long-Term Unemployed Hiring Incentive Act, would similarly extend priority to all workers who had exhausted regular unemployment benefits for three additional years, until December 31, 2016.\nH.R. 3781 , the American Unemployed Worker Investment Act of 2013, would similarly extend priority to any worker who is receiving any state or federal unemployment benefit at the time of hire for the two years following enactment of the bill.\nH.R. 4033 , the American Worker Mobility Act of 2014, would provide a UC exhaustee with up to $10,000 in relocation expenses to begin a new job or to move to an area where the unemployment rate is at least two percentage points lower than the worker's current location.", "H.R. 1229 , the Security and Financial Empowerment Act, would require states to consider an individual who quit a job as a result of domestic or sexual violence to be eligible for UC benefits." ], "depth": [ 0, 1, 2, 2, 3, 3, 3, 2, 3, 1, 2, 2, 3, 3, 2, 3, 1, 2, 1, 2, 1, 2, 3, 3, 4, 2, 3, 4, 4, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "h0_title", "", "h0_full", "", "h0_full", "", "h0_title", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "How much longer has the EUCO8 program been extended?", "How does this extension impact the financing of the program?", "What has Congress decided about the extent of authorization?", "What does this report cover?", "what programs experienced reductions?" ], "summary": [ "P.L. 112-240 extended the authorization for the EUC08 program until the week ending on or before January 1, 2014 (December 28, 2013, for most states).", "P.L. 112-240 extended the 100% federal financing of the EB program through December 31, 2013.", "Congress continues to consider whether to extend the authorization for these expired key temporary unemployment insurance provisions.", "This report provides a brief overview of the three unemployment insurance programs—UC, EUC08 (expired), and EB—that may provide benefits to eligible unemployed workers.", "It contains a brief explanation of how the EUC08 program, as well as some other UC-related payments, began to experience reductions in benefits as a result of the sequester order contained within the Budget Control Act of 2011 (P.L. 112-25)." ], "parent_pair_index": [ -1, 0, -1, -1, 0 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2 ] }
CRS_R44235	{ "title": [ "", "Background", "How Supreme Court Vacancies Occur10", "Death of a Sitting Justice", "Retirement or Resignation of a Sitting Justice", "Nomination of a Sitting Justice to Chief Justice Position", "Advice and Consent", "The Role of Senate Advice", "Advice from Other Sources", "Criteria for Selecting a Nominee", "Political Considerations", "Professional Qualifications", "Integrity and Impartiality", "Other Factors", "Background Investigations", "Speed by Which a President Selects a Nominee", "Vacancies That Have Had Multiple Nominations", "The Powell Vacancy", "The O'Connor Vacancy", "The Scalia Vacancy", "Factors Affecting the Speed by Which a Nominee Is Selected", "Advance Notice of Vacancy", "Strong Preference of President", "Sense of Urgency", "When Vacancy Occurs", "Potential Drawbacks of Quickly Selecting a Nominee", "Recess Appointments to the Court", "Senate Resolution 334, 86th Congress" ], "paragraphs": [ "", "The appointment of a Supreme Court Justice is an event of major significance in American politics. Each appointment to the nine-member Court is of consequence because of the enormous judicial power that the Court exercises, separate from, and independent of, the executive and legislative branches. While \"on average, a new Justice joins the Court almost every two years,\" the time at which any given appointment will be made to the Court is unpredictable. Appointments may be infrequent (with a vacancy on the Court occurring only once or twice, or never at all, during a particular President's years in office) or occur in close proximity to each other (with a particular President afforded several opportunities to name persons to the Court).\nThe procedure for appointing a Justice to the Supreme Court is provided for in the U.S. Constitution in only a few words. The \"Appointments Clause\" (Article II, Section 2, Clause 2) states that the President \"shall nominate, and by and with the Advice and Consent of the Senate, shall appoint ... Judges of the supreme Court.\" While the process of appointing Justices has undergone some changes over two centuries, its most essential feature—the sharing of power between the President and the Senate—has remained unchanged: To receive appointment to the Court, one must first be formally selected (\"nominated\") by the President and then approved (\"confirmed\") by the Senate.\nAlthough not mentioned in the Constitution, an important role is also played midway in the process—after the President selects, but before the Senate as a whole considers the nominee—by the Senate Judiciary Committee. Since the end of the Civil War, almost every Supreme Court nomination received by the Senate has first been referred to and considered by the Judiciary Committee before being acted on by the Senate as a whole.\nFor the President, the appointment of a Supreme Court Justice can be a notable measure by which history will judge his Presidency. For the Senate, a decision to confirm is a solemn matter as well, for it is the Senate alone, through its \"Advice and Consent\" function, without any formal involvement of the House of Representatives, which acts as a safeguard on the President's judgment. Traditionally, the Senate has tended to be less deferential to the President in his choice of Supreme Court Justices than in his appointment of persons to high executive branch positions. The more exacting standard usually applied to Supreme Court nominations reflects the special importance of the Court, coequal to and independent of the presidency and Congress. Senators are also mindful that, as noted earlier, Justices receive what can amount to lifetime appointments.\nOn June 27, 2018, Justice Anthony Kennedy announced his retirement from the Court, effective July 31, 2018. This report will be further updated upon the selection of a nominee by President Trump.", "Under the Constitution, Justices on the Supreme Court hold office \"during good Behaviour,\" in effect typically receiving lifetime appointments to the Court. Once confirmed, Justices may hold office for as long as they live or until they voluntarily step down. Such job security in the federal government is conferred solely on judges and, by constitutional design, is intended to insure the independence of the federal judiciary, including the Supreme Court, from the President and Congress.\nA President has no power to remove a Supreme Court Justice from office. A Justice may be removed by Congress, but only through the process of impeachment by the House and conviction by the Senate. Only one Justice has ever been impeached (in an episode which occurred in 1804), and he remained in office after being acquitted by the Senate. Many Justices serve for 20 to 30 years and sometimes are still on the Court decades after the President who nominated them has left office.", "The prospect of lifetime tenure, interesting work, and the prestige of the office often result in Justices choosing to serve on the Court for as long as possible. Consequently, it has not been unusual, historically, for Justices to die while in office. For example, death in office was common on the Court during the first half of the 20th century—14 (or 41%) of 34 vacancies between 1900-1950 occurred as a result of a Justice dying while serving on the Court. Additionally, all five Court vacancies occurring between 1946 and 1954 were due to the death of a sitting Justice. Since 1954, however, only 2 of 24 vacancies occurring on the Court were the result of a Justice dying while still in office.", "Since 1954, voluntary retirement has been by far the most common way in which Justices have left the bench (20, or 83%, of 24 vacancies occurring after 1954 resulted from retirements).\nIn contrast to retirement, resignation (i.e., leaving the bench before becoming eligible for retirement compensation) is rare. In recent history, two Justices have resigned from the Court. Justice Arthur Goldberg resigned in 1965 to assume the post of U.S. Ambassador to the United Nations. Justice Abe Fortas resigned four years later, in 1969, after protracted criticism over controversial consulting work while on the bench and a failed nomination to be elevated from Associate Justice to Chief Justice. When Justices retire or resign, the President is usually notified by formal letter.\nPursuant to a law enacted in 1939, a Justice (or any other federal judge receiving a lifetime appointment) may also retire if \"unable because of permanent disability to perform the duties of his office,\" by furnishing the President a certificate of disability. Prior to 1939, specific legislation from Congress was required to provide retirement benefits to a Justice departing the Court because of disability who otherwise would be ineligible for such benefits, due to insufficient age and length of service. In such circumstances in 1910, for instance, Congress took legislative action granting a pension to Justice William H. Moody. As the Washington Post reported at the time, although illness had kept Justice Moody from the bench for \"almost a year,\" he was not yet eligible for retirement.", "When a Chief Justice vacancy arises, the President may choose to nominate a sitting Associate Justice for the Court's top post. If the Chief Justice nominee is confirmed, he or she must, to assume the new position, resign as Associate Justice, requiring a new nominee from the President to fill the newly vacated Associate Justice seat.\nNote, however, that the scenario described above is a relatively rare occurrence. During the 1900-2009 period, Presidents attempted to elevate Associate Justices to Chief Justice four times, with the Senate confirming the nominees on three occasions. Most recently, in 1986, President Ronald Reagan nominated then-Associate Justice William H. Rehnquist to be Chief Justice after Chief Justice Burger announced he was stepping down from the Court. Consequently, President Reagan also nominated Antonin Scalia to fill the Associate Justice vacancy that would ultimately be created by Justice Rehnquist's elevation to Chief Justice.", "As discussed above, the need for a Supreme Court nominee arises when a vacancy occurs on the Court due to the death, retirement, or resignation of a Justice (or when a Justice announces his or her intention to retire or resign). It then becomes the President's constitutional responsibility to select a successor to the vacating Justice, as well as the constitutional responsibility of the Senate to exercise its role in providing \"advice and consent\" to the President.", "Constitutional scholars have differed as to how much importance the Framers of the Constitution attached to the word \"advice\" in the phrase \"advice and consent.\" The Framers, some have maintained, contemplated the Senate performing an advisory, or recommending, role to the President prior to his selection of a nominee, in addition to a confirming role afterwards. Others, by contrast, have insisted that the Senate's \"advice and consent\" role was meant to be strictly that of determining, after the President's selection had been made, whether to approve the President's choice. Bridging these opposing schools of thought, another scholar recently asserted that the \"more sensible reading of the term 'advice' is that it means that the Senate is constitutionally entitled to give advice to a president on whom as well as what kinds of persons he should nominate to certain posts, but this advice is not binding.\" Historically, the degree to which Senate advice has been sought or used has varied, depending on the President.\nIt is a common, though not universal, practice for Presidents, as a matter of courtesy, to consult with Senate party leaders as well as with members of the Senate Judiciary Committee before choosing a nominee. Senators who candidly inform a President of their objections to a prospective nominee may help in identifying shortcomings in that candidate or the possibility of a confirmation battle in the Senate, which the President might want to avoid. Conversely, input from the Senate might draw new Supreme Court candidates to the President's attention, or provide additional reasons to nominate a person who already is on the President's list of prospective nominees.\nAs a rule, Presidents are also careful to consult with a candidate's home-state Senators, especially if they are of the same political party as the President. The need for such care is due to the long-standing custom of \"senatorial courtesy,\" whereby Senators, in the interests of collegiality, are inclined, though not bound, to support a Senate colleague who opposes a presidential nominee from that Member's state. While usually invoked by home-state Senators to block lower federal court nominees whom they find unacceptable, the custom of \"senatorial courtesy\" has sometimes also played a part in the defeat of Supreme Court nominations.\nBesides giving private advice to the President, Senators may also counsel a President publicly. A Senator, for example, may use a Senate floor statement or issue a statement to the news media indicating support for, or opposition to, a potential Court nominee, or type or quality of nominee, for the purpose of attracting the President's attention and influencing the President's choice.", "Advice, it should be noted, may come to Presidents not only from the Senate but from many other sources. One key source of influence may be high-level advisers within the President's Administration. Others who may provide advice include House Members, party leaders, interest groups, news media commentators, and, periodically, Justices already on the Court. Presidents are free to consult with, and receive advice from, whomever they choose.", "While the precise criteria used in selecting a Supreme Court nominee vary from President to President, two general motivations appear to underlie the choices of almost every President. One is the desire to have the nomination serve the President's political interests (in the partisan and electoral senses of the word \"political,\" as well as in the public policy sense); the second is to demonstrate that a search was successfully made for a nominee having the highest professional qualifications.", "Virtually every President is presumed to take into account a wide range of political considerations when faced with the responsibility of filling a Supreme Court vacancy. For instance, most Presidents, it is assumed, will be inclined to select a nominee whose political or ideological views appear compatible with their own. Specifically, \"Presidents are, for the most part, results-oriented. This means that they want Justices on the Court who will vote to decide cases consistent with the president's policy preferences.\"\nThe President also may consider whether a prospective nomination will be pleasing to the constituencies upon whom he especially relies for political support or whose support he would like to attract. For political or other reasons, such nominee attributes as party affiliation, geographic origin, ethnicity, religion, and gender may also be of particular importance to the President. A President also might take into account whether the existing \"balance\" among the Court's members (in a political party, ideological, demographic, or other sense) should be altered. The prospects for a potential nominee receiving Senate confirmation are another consideration. Even if a controversial nominee is believed to be confirmable, an assessment must be made as to whether the benefits of confirmation will be worth the costs of the political battle to be waged.", "Most Presidents also want their Supreme Court nominees to have unquestionably outstanding legal qualifications. Presidents look for a high degree of merit in their nominees not only in recognition of the demanding nature of the work that awaits someone appointed to the Court, but also because of the public's expectations that a Supreme Court nominee be highly qualified. With such expectations of excellence, Presidents often present their nominees as the best person, or among the best persons, available. Many nominees, as a result, have distinguished themselves in the law (as lower court judges, legal scholars, or private practitioners) or have served as Members of Congress, as federal administrators, or as governors. Although neither the Constitution nor federal law requires that a Supreme Court Justice be a lawyer, every person nominated to the Court thus far has been.\nAfter the President formally submits a nomination to the Senate (but prior to committee hearings on the nomination), the nominee is evaluated by the American Bar Association's Standing Committee on the Federal Judiciary. The committee stresses that an evaluation focuses strictly on the candidate's \"professional qualifications: integrity, professional competence and judicial temperament\" and does \"not take into account [his or her] philosophy, political affiliation or ideology.\"\nFigure 1 reports, from 1945 to the present, the type of professional position or occupation held by an individual at the time of his or her nomination to the Supreme Court. So, for example, at the time of his nomination by President Truman in 1945, Harold H. Burton was serving as a U.S. Senator from Ohio. Since 1945, the most common type of professional experience at the time of his or her nomination has been service as a federal appellate court judge (23, or 62%, of 37 nominees), followed by service as an official in the executive branch (8, or 22%, of 37 nominees). Overall, at least since 1945, it has been relatively rare for a nominee, at the time of nomination, to be serving as a state judge, working as an attorney in private practice, or holding elective office.\nNote that the percentage of nominees serving as U.S. appellate court judges at the time of nomination is even greater during relatively recent presidencies. From 1981 to the present, for example, 13 (or 81%) of 16 nominees were serving as appellate judges immediately prior to nomination. In contrast, since 1981, no nominees to the Court were engaged in private practice or serving in elective office at the time of nomination.\nA President's search for professional excellence in a nominee rarely proceeds without also taking political factors into account. Rather, \"more typically,\" a President \"seeks the best person from among a list of those who fulfill certain of these other [political] criteria and, of course, who share a president's vision of the nation and the Court.\"", "Closely related to the expectation that a Supreme Court nominee have excellent professional qualifications are the ideals of integrity and impartiality in a nominee. Most Presidents presumably will be aware of the historical expectation, dating back to Alexander Hamilton's pronouncements in the Federalist Papers , that a Justice be a person of integrity who is able to approach cases and controversies impartially, without personal prejudice. In that same spirit, a bipartisan study commission on judicial selection in 1996 declared that it was \"most important\" to appoint judges who were not only learned in the law and conscientious in their work ethic but who also possessed \"what lawyers describe as 'judicial temperament.'\" This term, the commission explained, \"essentially has to do with a personality that is evenhanded, unbiased, impartial, courteous yet firm, and dedicated to a process, not a result.\" Accordingly, Presidents sometimes will cite the integrity or fairness of Supreme Court nominees to buttress the case for their appointment to the Court.", "Any given President also might single out other qualities as particularly important for a Supreme Court nominee to have, as President Barack Obama did in 2009, when announcing his nomination of Judge Sonia Sotomayor to the Court. In prefatory remarks to that announcement, President Obama cited selection criteria similar to those mentioned by other recent Presidents, such as \"mastery of the law,\" the \"ability to hone in on the key issues and provide clear answers to complex legal questions,\" and \"a commitment to impartial justice.\"\nHe added, however, that such qualities, while \"essential\" for anyone sitting on the Supreme Court, \"alone are insufficient,\" and that \"[w]e need something more.\" An additional requisite quality, President Obama said, was \"experience,\" which he explained was\nExperience being tested by obstacles and barriers, by hardship and misfortune, experience insisting, persisting, and ultimately, overcoming those barriers. It is experience that can give a person a common touch and a sense of compassion, an understanding of how the world works and how ordinary people live. And that is why it is a necessary ingredient in the kind of Justice we need on the Supreme Court.\nA President, as well, may consider additional factors when the Supreme Court vacancy to be filled is that of the Chief Justice. Besides requiring that a candidate be politically acceptable, have excellent legal qualifications, and enjoy a reputation for integrity, a President might be concerned that his nominee have proven leadership qualities necessary to effectively perform the tasks specific to the position of Chief Justice. Such leadership qualities, in the President's view, could include administrative and human relations skills, with the latter especially important in fostering collegiality among the Court's members.\nThe President also might look for distinction or eminence in a Chief Justice nominee sufficient to command the respect of the Court's other Justices, as well as to further public respect for the Court. A President, too, might be concerned with the age of the Chief Justice nominee, requiring, for instance, that the nominee be at least of a certain age (to insure an adequate degree of maturity and experience relative to the other Justices) but not above a certain age (to allow for the likely ability to serve as a leader on the Court for a substantial number of years).", "An important part of the selection process involves investigating the background of prospective nominees. In recent years the investigative effort generally has followed two primary tracks—one concerned with the public record and professional credentials of a person under consideration, the other with the candidate's private background. The private background investigation, which includes examination of a candidate's personal financial affairs, is conducted by the Federal Bureau of Investigation (FBI). The investigation into a candidate's public record and professional abilities ordinarily is headed by high Justice Department officials, White House aides, or both, working together.\nThe investigative process may be preliminary in nature when the objective is to identify potential candidates and consider their relative merits based on information already known or readily available. The investigations become more intensive as the initial list is narrowed. The object then becomes to learn as much as possible about the prospective nominees—to accurately gauge their qualifications and their compatibility with the President's specific requirements for a nominee, and, simultaneously, to flag anything in their backgrounds that might be disqualifying or jeopardize their chances for Senate confirmation. For help in evaluating the backgrounds of Court candidates, Presidents sometimes also have enlisted the assistance of private lawyers, legal scholars, or, on rare occasions, the American Bar Association (ABA). Near the culmination of this investigative effort, the President might want to personally meet with one or more of the candidates before finally deciding whom to nominate.\nDuring the pre-nomination phase, Presidents vary in the degree to which they publicly reveal the names of individuals under consideration for the Court. Sometimes, Presidents seek to keep confidential the identity of their Court candidates. Such secrecy may allow a President to reflect on the qualifications of prospective nominees, and the background investigations to proceed, away from the glare of publicity, news media coverage, and outside political pressures. Other times, the White House may, at least in the early pre-nomination stage, reveal the names of Supreme Court candidates being considered. Such openness may be intended to serve various purposes—among them, to test public or congressional reaction to potential nominees, please political constituencies who would identify with identified candidates, or demonstrate the President's determination to conduct a comprehensive search for the most qualified person available.\nAn Administration, of course, need not wait until a vacancy occurs on the Court to begin investigating the backgrounds of potential nominees. Immediately after President George W. Bush was sworn into office in 2001, according to a recent book on Supreme Court nominations, \"his staff began putting together a list of potential nominees and conducting extensive background research on them.\" The book continued:\nOfficials believed [Chief Justice William H.] Rehnquist was likely to retire in the summer of 2001, and they were determined to be ready. Each young lawyer in the White House counsel's office, most of whom had clerked on the Supreme Court, was assigned a candidate and made responsible for writing a lengthy report about him or her. In the late spring, then-White House counsel Alberto Gonzalez and his deputy Tim Flanigan began secretly interviewing some of those possible replacements.\nThe advance work was designed to ensure that George W. Bush would be prepared when a Justice stepped down. The early in-depth research and interviews with prospective nominees were important in ensuring Bush would have coolheaded advice, removed from any external political pressure to select a particular nominee in the hours after a retirement.", "Figure 2 shows the number of days that elapsed between the date on which it was publicly known that a Justice was leaving the Court and the date on which the President publicly identified a nominee to replace the departing Justice. Note that the figure only shows those vacancies on the Court, since 1975, which required only one nomination to be filled. Consequently, the vacancy created by the death of Justice Scalia is not included in Figure 2 (since more than one nomination was made to fill it).\nWhen a Justice steps down from the Court (or announces his or her intention to do so), Presidents sometimes move quickly, selecting their nominee within a week of the vacancy being announced. Presidents Reagan and George H. W. Bush, for instance, selected most of their Supreme Court nominees quickly, within days of the vacating Justices publicly announcing their retirements from the Court.\nPresident Clinton, in contrast, took more time in selecting his two Supreme Court nominees, nominating Ruth Bader Ginsburg on June 22, 1993, nearly three months after the retirement announcement of Justice Byron R. White, and nominating Stephen G. Breyer on May 17, 1994, approximately five weeks after the retirement announcement of Justice Harry A. Blackmun.\nLikewise, President George W. Bush's first two Supreme Court selections were not made immediately upon the heels of a Justice's retirement announcement: President Bush announced his choice of John G. Roberts Jr. to succeed Sandra Day O'Connor 18 days after she submitted her retirement letter to the President, and he announced his choice of Harriet E. Miers to succeed Justice O'Connor 28 days after withdrawing the aforementioned Roberts nomination. President Bush did, however, move much more swiftly in selecting a nominee to succeed Chief Justice William H. Rehnquist, announcing his choice of John G. Roberts Jr. for that office two days after the death of Chief Justice Rehnquist on September 3, 2005.\nMost recently, President Obama's three Supreme Court selections were made within approximately one month of an incumbent Justice departing the Court. He selected Sonia Sotomayor 25 days after Justice David Souter announced he was leaving the Court; Elena Kagan 31 days after Justice Stevens announced his retirement; and Merrick Garland 32 days following the death of Justice Scalia.", "As noted previously, Figure 2 includes only those vacancies on the Court, occurring since 1975, that did not have multiple nominations by a President in order for the vacancy to be filled. Specifically, since 1975, there have been three vacancies on the Court that had more than one nomination by a President in order for the vacancy to be filled—the most recent being the vacancy created on the Court by the death of Justice Scalia.", "The first vacancy during this period that had multiple nominations was the vacancy created by the departure of Justice Lewis Powell in 1987. President Reagan first nominated Robert Bork, an appellate judge on the D.C. Circuit, to fill the vacancy; Judge Bork was nominated five days after Justice Powell announced his retirement. The Bork nomination was ultimately rejected by the Senate and, as a result, President Reagan announced his intention to nominate Douglas H. Ginsburg, another appellate judge on the D.C. Circuit. President Reagan announced his intention to nominate Judge Ginsburg six days after the Bork nomination was rejected by the Senate. Judge Ginsburg was never formally nominated, and four days later Mr. Ginsburg withdrew his name from consideration, President Reagan nominated Anthony Kennedy (whose nomination was ultimately approved by the Senate).\nAltogether, a total of 138 days, or approximately 4.5 months, elapsed from Justice Powell announcing his retirement to President Reagan nominating Anthony Kennedy to the vacancy.", "The second vacancy that had multiple nominations to be filled was the vacancy created by the retirement of Justice Sandra Day O'Connor. Eighteen days elapsed from Justice O'Connor's announcement that she would step down from the Court (contingent upon the confirmation of her successor) to President G.W. Bush's nomination of John Roberts Jr. to replace her. The Roberts nomination was later withdrawn by the President (in order for Mr. Roberts to be re-nominated to fill the vacancy in the Chief Justice position arising from Justice Rehnquist's death); 28 days after the withdrawal of the Roberts nomination, President Bush nominated Harriet Miers to replace Justice O'Connor. The Miers nomination was later withdrawn by the President and four days later he nominated Samuel Alito (whose nomination was confirmed by the Senate).\nAltogether, a total of 122 days, or approximately 4 months, elapsed from Justice O'Connor's announcement that she intended to retire to President G.W. Bush's nomination of Samuel Alito.", "The third vacancy during this period that had more than one nomination prior to the appointment of a new Justice is the vacancy created by the death of Justice Antonin Scalia on February 13, 2016. In contrast to the Powell and O'Connor vacancies discussed above, this is the sole vacancy during this period for which nominations to the Court will have been made by two different Presidents. Specifically, President Obama nominated Merrick Garland on March 16, 2016 (32 days after Justice Scalia's death). The Garland nomination was not acted upon by the Senate during the second session of the 114 th Congress and was returned to the President on January 3, 2017. The Garland nomination was pending before the Senate for a total of 293 days, or approximately 10 months, prior to being returned to the President.\nOn January 31, 2017, President Trump, 11 days after he assumed office on January 20, 2017, announced his intention to nominate Neil Gorsuch to fill the vacancy created by the death of Justice Scalia.", "", "A President may be well positioned to make a quick announcement when a retiring Justice alerts the President beforehand (thus giving the President lead time, before the vacancy occurs, to consider whom to nominate as a successor). Even when receiving no advance warning from an outgoing Justice, the President may already have in hand a \"short list,\" prepared precisely for the event of a Court vacancy, of persons already evaluated and acceptable to the President for the appointment.", "If the President has a strong personal preference for a particular individual, nominating the person quickly preempts the issue of whether someone else should be nominated. Rather than focus on a range of individuals who should be considered for the Supreme Court, the appointment process moves to the next major stage, to the question of whether that individual should be confirmed.", "Presidents also might be moved to nominate quickly in order to minimize the time during which there is a vacancy on the Court. If an actual vacancy is suddenly created—for example, due to an unexpected retirement, resignation, or death of a Justice—a President, as well as Members of the Senate, might be eager to bring the Court back to full strength as soon as possible. A similar sense of urgency might be felt if a Justice has announced the intention to step down from the Court by a date certain in the near future.", "The speed with which a President chooses a nominee also, as noted above, can be affected by when a seat on the Court is vacated. Sometimes, Justices might announce their retirement when the Court recesses for the summer, in late June or early July, giving the President little or no advance notice. In such situations, a President might decide to nominate quickly, to allow the Senate confirmation process to begin as quickly as possible. A swiftly made nomination, in such a circumstance, affords the Senate Judiciary Committee and the Senate as long as three months (July through September) in which to consider the nomination before the start of the Court's term in early October, thereby increasing the chances of the Court being at full nine-member strength when it reconvenes.\nSometimes, when Justices give advance notice of their intention to retire, Presidents might be under relatively little pressure to nominate quickly. In the spring of 1993, for example, Justice Byron R. White announced he would step down when the Court adjourned for the summer. His advance notice gave President Clinton and the Senate together more than six months in which, respectively, to nominate and confirm a successor before the beginning of the Court's next term in October. A year later, in the spring of 1994, Justice Harry A. Blackmun announced his intention to retire at the end of the Court term then in progress, again affording the President and the Senate ample time to appoint a successor to a retiring Justice before the start of the next Court term. Despite the long lead time afforded by Justice Blackmun's announcement, however, White House advisers reportedly believed it was \"important to act quickly\" to name a successor to Blackmun. To move quickly, it was reported, would serve to \"avoid a repeat of the [previous] year's drawn out process\" in which President Clinton engaged in a \"very public, three-month search\" before nominating Ruth Bader Ginsburg to the Court. After Justice Blackmun's announcement, President Clinton deliberated five weeks before announcing, on May 13, 1994, his selection of U.S. appellate court judge Stephen G. Breyer to be his Supreme Court nominee.\nPresident Barack Obama also was provided considerable advance notice of an upcoming Court vacancy when Justice David H. Souter informed the President by letter on May 1, 2009, of his intention to step down when the Court recessed for the summer (the Court went into summer recess on June 29). Three and a half weeks later, on May 26, President Obama announced his intention to nominate a U.S. appellate judge, Sonia Sotomayor, to succeed Justice Souter. The selection by President Obama was, on the one hand, not as quickly made as some of the nominee selections of Presidents Reagan, George H. W. Bush, and George W. Bush. On the other hand, President Obama took less time than President Clinton did in making his three Court selections.\nDuring the 25 days between Justice Souter's retirement notice and the selection of Judge Sotomayor, President Obama had enough time, in his words, to seek \"the advice of Members of Congress on both sides of the aisle, including every member of the Senate Judiciary Committee.\" That he did not take additional time to decide whom to select might have been influenced by a concern for allowing the Senate to begin considering a Court nomination as soon as possible. The President and some Senate Democrats expressed the hope that the Senate would vote to confirm Judge Sotomayor not merely before the start of the Court's term in October, but before the Senate's August 2009 recess, in order to afford time for her to prepare for that term. (The Senate ultimately confirmed the Sotomayor nomination on August 6, 2009.)\nPresidents also may have considerable latitude in deciding when to nominate if an outgoing Justice schedules his or her retirement to take effect only when a successor is confirmed or assumes office. The most recent instance of that occurred when Justice Sandra Day O'Connor, in a July 1, 2005, letter to President George W. Bush, announced her decision to retire from the Court \"effective upon the nomination and confirmation\" of her successor. At the announcement of Justice O'Connor's retirement, President Bush declared he would \"choose a nominee in a timely manner\" so that the nominee would receive a Senate hearing and confirmation vote \"before the new Supreme Court term begins.\" Within three weeks he announced his selection of John G. Roberts Jr. to succeed Justice O'Connor. The conditional nature of Justice O'Connor's planned retirement, however, meant that her seat on the Court would be occupied when the Court convened for its October 2005 term, whether or not her successor were confirmed by then.\nUltimately, Justice O'Connor remained on the Court for four months of the new Court term, retiring only on January 31, 2006, when the third person nominated by President Bush to succeed her, Samuel A. Alito Jr., was confirmed by the Senate. During the months that Justice O'Connor remained on the Court, awaiting the confirmation of her successor, the Associate Justice nomination of John G. Roberts Jr. was withdrawn so that President Bush could nominate Roberts to be Chief Justice (following the death of Chief Justice Rehnquist on September 3, 2005); a second nomination to succeed Justice O'Connor, that of White House Counsel Harriet E. Miers, was made, only to be withdrawn three weeks later; and, on November 10, 2005, a third person, Samuel A. Alito Jr., was nominated to succeed Justice O'Connor. For a President, the need to select an Associate Justice nominee might be seen as less urgent than the appointment of a Chief Justice, particularly if, as was the case in 2005, the Chief Justice position is actually vacant and the Associate Justice vacancy is not actual, but prospective.", "Selecting a Supreme Court nominee relatively quickly, however, may sometimes have drawbacks. A President may be accused of charging ahead with a nominee without having first adequately consulted with the Senate, or without having taken the time necessary to determine who really would make the best nominee—either in terms of the nominee's professional qualifications or ideological disposition. Also, quick announcements might not allow time for the FBI to conduct a comprehensive background investigation prior to nomination, leaving open the possibility of unfavorable information about the nominee coming to light later.\nSome nominees who were selected relatively quickly by a President were ultimately not approved or considered by the Senate (for one or more of the reasons mentioned above). President Reagan, for example, announced his intention to nominate Robert Bork five days after Justice Powell announced his retirement. Six days after the Bork nomination failed in the Senate, President Reagan subsequently announced his intention to nominate Douglas H. Ginsburg (who later asked the President to withdraw his name from consideration for Powell's seat). But note, however, that the relatively quick selection of a nominee by a President does not necessarily mean that the nomination will not be approved by the Senate. David Souter, for example, was nominated three days after Justice Brennan's retirement was publicly announced (and Clarence Thomas was nominated four days after Justice Marshall's retirement).", "On 12 occasions (most of them in the 19 th century), Presidents have made temporary appointments to the Supreme Court without submitting nominations to the Senate. These occurred when Presidents exercised their power under the Constitution to make \"recess appointments\" when the Senate was not in session. Historically, when recesses between sessions of the Senate were much longer than they are today, recess appointments served the purpose of averting long vacancies on the Court when the Senate was unavailable to confirm a President's appointees. The terms of these recess appointments, however, were limited, expiring at the end of the next session of Congress (unlike the potentially lifetime appointments Court appointees receive when nominated and then confirmed by the Senate). Despite the temporary nature of these appointments, every person appointed during a recess of the Senate, except one, ultimately received a later appointment to the Court after being nominated by the President and confirmed by the Senate.\nRecess appointments, when they do occur, may cause controversy, in large part because they bypass the Senate and its \"advice and consent\" role. The last President to make a recess appointment to the Court was Dwight D. Eisenhower. Of the five persons whom he nominated to the Court, three initially received recess appointments and served as Justices before being confirmed by the Senate—Earl Warren (as Chief Justice) in 1953, William Brennan in 1956, and Potter Stewart in 1958.", "The Senate, on August 29, 1960, adopted S. Res. 334 \"expressing the sense of the Senate that the President should not make recess appointments to the Supreme Court, except to prevent or end a breakdown in the administration of the Court's business, and a recess appointee should not take his seat on the Court until the Senate has 'advised and consented' to the nomination.\" The resolution was adopted by a vote of 48-37, largely along party lines.\nSenate proponents of the resolution contended, among other things, that judicial independence would be affected if Supreme Court recess appointees, during the probationary period of their appointment, took positions to please the President (in order not to have the President withdraw their nominations) or to please the Senate (in order to gain confirmation of their nominations). It also was argued that Senate investigation of nominations of these recess appointees was made difficult by the oath preventing sitting Justices from testifying about matters pending before the Court.\nOpponents, however, said, among other things, that the resolution was an attempt to restrict the President's constitutional recess appointment powers. Opponents also argued that recess appointments were sometimes called for in order to keep the Court at full strength to handle the Court's large and complex case load, as well as to prevent evenly split rulings by its members. Additionally, opponents argued that the resolution \"not only went beyond the 'advise and consent' powers of Congress, but that it was a reflection against [Eisenhower], as well as Chief Justice Earl Warren, and Justices William J. Brennan Jr. and Potter Stewart, who were recess appointees during the Eisenhower Administration.\"\nBecause of the criticisms of judicial recess appointments in recent decades, the long passage of time since the last Supreme Court recess appointment in 1958, and the relatively short duration of contemporary Senate recesses (which might diminish the need for recess appointments to the Court), a President in the 21 st century might hesitate to make a recess appointment to the Court and do so only under unusual circumstances. Additionally, recent Supreme Court jurisprudence involving the Recess Appointments Clause might, under certain circumstances, constitutionally limit a President's ability to make recess appointments to the Court." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 2, 3, 3, 3, 2, 3, 3, 3, 3, 2, 1, 2 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h1_full", "h0_full", "", "", "", "", "", "", "h2_title h1_title", "h1_full", "h2_full", "h2_full", "", "", "h3_title", "", "", "", "", "h3_title", "", "", "", "h3_full", "", "h4_full", "" ] }	{ "question": [ "How are Supreme Court appointments important?", "What influences does the Supreme Court have?", "How regularly can Supreme Court appointments be expected?", "What ensures the Court's independence?", "How do political considerations impact Supreme Court appointments?", "How does a President's views impact this process?", "How does the political influence of the appointment highlight issues?", "What idea or theme has appeared frequently in Supreme Court nominations?", "What have nominees most commonly done when receiving a nomination?", "What criteria have been important as part of a nomination?", "How quickly are nominees for Court vacancies made?", "How long does this typically take?", "What factors play a role in nominations?", "On what occasions have Presidents made Court appointments without Senate consent?", "How long do these appointments typically last?", "Why were these appointments controversial?", "How did Potter Stewart become a court Justice?" ], "summary": [ "The appointment of a Supreme Court Justice is an event of major significance in American politics.", "Each appointment is of consequence because of the enormous judicial power the Supreme Court exercises as the highest appellate court in the federal judiciary.", "Appointments are usually infrequent, as a vacancy on the nine-member Court may occur only once or twice, or never at all, during a particular President's years in office.", "Under the Constitution, Justices on the Supreme Court receive what can amount to lifetime appointments which, by constitutional design, helps ensure the Court's independence from the President and Congress.", "Political considerations typically play an important role in Supreme Court appointments.", "It is often assumed, for example, that Presidents will be inclined to select a nominee whose political or ideological views appear compatible with their own.", "The political nature of the appointment process becomes especially apparent when a President submits a nominee with controversial views, there are sharp partisan or ideological differences between the President and the Senate, or the outcome of important constitutional issues before the Court is seen to be at stake.", "Additionally, over more than two centuries, a recurring theme in the Supreme Court appointment process has been the assumed need for professional excellence in a nominee.", "During recent presidencies, nominees have at the time of nomination, most often, served as U.S. appellate court judges.", "The integrity and impartiality of an individual have also been important criteria for a President when selecting a nominee for the Court.", "The speed by which a President selects a nominee for a vacancy has varied during recent presidencies.", "A President might announce his intention to nominate a particular individual within several days of when a vacancy becomes publicly known, or a President might take multiple weeks or months to announce a nominee.", "The factors affecting the speed by which a President selects a nominee include whether a President had advance notice of a Justice's plan to retire, as well as when during the calendar year a Justice announces his or her departure from the Court.", "On rare occasions, Presidents also have made Court appointments without the Senate's consent, when the Senate was in recess.", "Such \"recess appointments,\" however, were temporary, with their terms expiring at the end of the Senate's next session.", "Recess appointments have, at times, been considered controversial because they bypassed the Senate and its \"advice and consent\" role.", "The last recess appointment to the Court was made in 1958 when President Eisenhower appointed Potter Stewart as an Associate Justice (Justice Stewart was confirmed by the Senate the following year)." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, -1, -1, -1, 1, -1, 0, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 3, 3, 3, 4, 4, 4, 5, 5, 5, 5 ] }
CRS_R43919	{ "title": [ "", "Introduction", "Caveats", "Nutrients: A Primer", "Adding Nutrients—Fertilizers", "Organic Fertilizers", "Inorganic Fertilizers", "Nitrogen", "Phosphorus", "Potassium", "Effects of Nutrient Excess on Water Quality", "Nitrogen", "Phosphorus", "Environmental Effects", "Cyanobacteria", "Red Tide", "Ciguatera", "Human Health Effects", "Best Management Practices", "Crop Production", "Animal Agriculture", "Federal Response to Agricultural Nutrients", "Regulation––Clean Water Act50", "Concentrated Animal Feeding Operation (CAFO) Permits51", "Total Maximum Daily Load (TMDL)54", "Production Support", "Technical Assistance, Education, and Outreach", "Financial Assistance", "Research and Monitoring", "Policy Questions", "Conclusion", "Appendix. NRCS Practice Standards" ], "paragraphs": [ "", "United States agriculture has been touted as a model for production and a leader of innovation. The nation's intense agricultural production, however, can lead to adverse impacts to the surrounding environment. In some cases, it is the excess of basic nutrients required for plant and animal growth that can cause this degradation. Ongoing research aims to improve understanding of nutrients used and released in agricultural production, including how they interact in the environment, the damages the y can cause, and ways to prevent or correct the damage.\nFederal policies concerning agricultural nutrients have changed over time. Currently, few federal regulations govern the environmental impacts of nutrients from agriculture. Some environmental laws specifically exempt agriculture from regulatory requirements, and others are structured so that agriculture is not addressed by most, if not all, of the regulations. The major federal response continues to be through research, education, outreach, and voluntary technical and financial incentives to producers.\nRecent events involving degraded water quality have raised questions as to whether the current federal response to agricultural nutrients is adequate or should be altered. This has prompted both administrative and congressional action. This report discusses the types and sources of nutrient pollution from agricultural production; possible environmental effects of nutrient pollution; examples of current control measures; the federal response to excess nutrients, including regulatory and incentive-based programs; and future considerations for nutrient management policy at the federal level.", "Agriculture is one of a number of industries that produce, use, or release nutrients that may adversely affect the environment. The lack of discussion in this report of other industries that might release excess nutrients does not imply that one industry is more or less to blame for environmental harms. The science and methods of pinpointing the exact source of excess nutrients causing environmental harm are still evolving. Regardless, whether released by agriculture, lawn care companies, or sewage treatment plants, the environmental harms of excess nutrients are much the same.\nA large body of research, including numerous technical publications, explores the relationship between agriculture and nutrients. This report gives an overview of current knowledge, while further complexities of individual issues are discussed in many of the sources cited throughout the report.\nSimilarly, the examples used to describe best management practices and federal response should not be considered exhaustive lists. In many cases, the success or failure of a particular nutrient management practice will vary greatly by location. This report highlights examples of these practices but is not meant to imply or suggest that they can be universally applied. In addition to the federal response, the private sector, nonprofit groups, and state and local governments play active roles in the management of nutrients from agriculture, either through regulation or technical support. These nonfederal efforts are outside the scope of this report.", "Nutrients are elements essential to plant growth. Plant roots absorb nutrients––including water, oxygen, and others––from the soil. As crops grow and are harvested, they gradually remove the existing nutrients from the soil. Over time, most soils will require additional nutrients to maintain or increase crop yield. When nutrients are added in excess of the plants' ability to utilize them, there is an increased risk that the nutrients will enter the surrounding environment (water or air) and create problems such as algal blooms (discussed below).\nPlants utilize nutrients in different ways, and each plant has a different set of nutrient requirements. How, where, and when plants utilize nutrients can greatly affect the overall yield and plant production. For a farmer seeking to maximize crop yields and lower input costs, it can be critical to understand a crop's nutrient requirements.\nBasic nutrients––carbon, hydrogen, and oxygen––are the most abundant elements in plants. In addition, plants utilize other nutrients commonly referred to as macronutrients and micronutrients (see Figure 1 ). In agricultural production, the focus generally rests on the three primary macronutrients––nitrogen (N), phosphorus (P), and potassium (K)—because of their relative abundance in plants. Micronutrients, while not commonly discussed, may have just as much of an effect on plant growth as macronutrients when levels are too high (toxic) or too low (deficient). This report focuses on two of the three primary macronutrients (nitrogen and phosphorus), because of the volume used in agricultural production and the relative potential for environmental harm if they are overused. This is not meant to indicate that other nutrients do not also pose an environmental harm if overapplied.\nPlants use nutrients in an ionic form rather than as raw elements (see Figure 2 ). Nutrients are taken up by plants in three forms:\ninterception—by direct contact with the nutrient; mass flow—when nutrients move with water as the plant transpires; and diffusion—when nutrients move from high to low concentration.\nInterception accounts for a very low percentage of nutrients taken up by plants. Mass flow, on the other hand, is the most substantial method of nutrient movement toward a plant's roots. This is particularly important for more \"mobile\" nutrients (e.g., nitrogen) and less important for relatively \"immobile\" nutrients (e.g., phosphorus). Diffusion is most important for nutrients that are relatively immobile, have low solution concentrations, and are needed in large amounts (e.g., phosphorus and potassium).\nPlants use nutrients at different times and at different rates throughout the growing cycle. For example, for corn, phosphorus is important early in the growing season, but not necessarily later in the season. Nitrogen is important in both the beginning and later in the growing season, before the plant begins the stem-extension phase. Various nutrients are also applied differently by farmers, based on knowledge about nutrient mobility in soils. For example, nitrogen can be applied using a broadcast method (discussed further under \" Best Management Practices \") because of its mobility in the soil. Phosphorus, on the other hand, is most effective when placed below the soil surface near the root system because it is generally immobile.", "Fertilizers are either organic or inorganic materials applied to the soil to promote plant growth. They may either contain a specific nutrient or may be used to increase the availability of other plant nutrients. Organic fertilizers are those derived from living matter (e.g., manure) whereas inorganic fertilizers are synthetic or mined (e.g., urea as a nitrogen source or potash as a potassium source).", "The primary organic fertilizer is animal manure. Manure can be a good source of plant-available nutrients (including but not limited to nitrogen and phosphorus), as well as providing increased soil organic matter, increased water and nutrient retention in soil, and decreased soil density. The nutrient content of manure can vary greatly depending on animal type, diet, bedding, moisture content, and storage method.\nPrior to the development of inorganic fertilizers, organic \"wastes\" were a major source of nutrients for crop production. According to the U.S. Department of Agriculture (USDA), 15.8 million acres, or about 5% of all U.S. cropland, use manure as fertilizer ( Table 1 ). A number of factors prevent a wider use of manure fertilization. Primarily, the cost of transporting manure can be prohibitive. The nutrient content of the manure, the type of crop grown and nutrients required (i.e., the nutrient needs of plants being grown may not match nutrients in readily available manure), compaction from manure application equipment, and the relative cost and availability of inorganic fertilizers, among other factors, also affect the use of organic wastes as fertilizers.\nFrom a livestock perspective, animal waste is a by-product of production that must be managed to avoid environmental harms and for the health of the animals themselves if raised in captivity. For a confined production system, manure must be utilized—typically by being collected, stored, and distributed elsewhere, likely on available crop- or pastureland. In the case of grazing livestock, the animals deposit manure directly onto pastureland, thus fertilizing the associated grassland. High stocking rates, however, may lead to an imbalance, which in turn could create an excess supply of nutrients. If not properly managed, manure can adversely impact water quality through surface runoff and erosion, direct discharges to surface waters, spills and other dry-weather discharges, and leaching into soil and groundwater. It can also result in emission to the air of particles and gases such as ammonia, hydrogen sulfide, and volatile organic chemicals.\nTheoretically, of the total manure produced, more could be utilized on additional cropland than what is currently utilized in order to potentially reduce the risk of environmental harms from excessive concentrations. Regions with a higher capacity for manure are largely due to the type of soils and crops grown in the area. For example, the soils (mollisols) and crops (corn) grown in the Midwest are able to utilize additional nitrogen from manure ( Figure 3 ), whereas the soils (ultisols) and crops (cotton and rice) in the Southeast are able to handle more phosphorus from manure ( Figure 4 ). In some cases the ability to utilize additional manure application corresponds to areas with large livestock populations. In other cases, livestock production occurs in areas with\nlow or modest capacity to assimilate additional manure, thereby increasing the risk of excessive concentrations. When the amount of manure produced by an operation is more than the assimilative capacity of the land, an excess of manure is created ( Figure 5 and Figure 6 ). This can create a greater risk for potential runoff and leaching of manure nutrients and subsequent water quality issues. Geographically, areas with excess farm-level nutrients correspond to areas with increasing numbers of confined animals.", "Inorganic fertilizers consist of nutrients that are mined or created synthetically. In most cases, compared to organic fertilizers, inorganic fertilizers are more concentrated, their nutrient content is easily identifiable, and in some cases, they are more cost effective to use. This does not, however, make inorganic fertilizers any less damaging when found in excess in the environment. Similar to organic fertilizers, when applied in excess, inorganic fertilizers can be lost to the environment through volatilization into the air, leaching into groundwater, emission from soil to air, and runoff into surface water.\nThe use of inorganic fertilizers has changed over time and continues to outpace the use of organic fertilizers in the United States. The introduction of seed varieties that respond more favorably to specific nutrients, the use of more precise application technology, and the overall price of commercial fertilizers have driven much of this change. The three primary inorganic fertilizers produced commercially are nitrogen-, phosphorus-, and potassium-based products. In general, commercial nitrogen fertilizer use has increased more than phosphorus and potassium ( Figure 7 ).\nCorn, which uses intensive fertilizer applications, accounts for almost 40% of the total U.S. commercial fertilizer consumption, principally due to the high number of planted acres and crop requirements.", "Nitrogen (N) is an abundant element, with gaseous nitrogen (N 2 ) accounting for 78% of the earth's atmosphere. Despite this abundance, N 2 cannot be used as a nutrient by living organisms unless converted to a useable form. This conversion occurs synthetically through the Haber-Bosch process, developed in the early 20 th century, which converts \"unreactive\" N 2 to a more usable \"reactive\" form. The process uses heat and pressure to combine N 2 with hydrogen from natural gas. The result is NH 3 (anhydrous ammonia), which can be used as a fertilizer directly or reacted with other compounds to form other products ( Figure 8 ). Approximately 74% of the NH 3 produced worldwide is for nitrogen fertilizer. Domestically, NH 3 , urea (NH 3 with carbon dioxide, CO(NH 2 ) 2 ), and dissolved N (with water) account for 90% of total N fertilizer use.", "Phosphate rock is the primary raw material used to manufacture soluble phosphorus (P) fertilizers. The sedimentary deposit is found in a number of countries, with the largest deposits in northern Africa, China, the Middle East, and the United States. Annual world phosphate rock production is projected to increase from 223 million tons in 2015 to 255 million tons in 2019. In the United States, mines in Florida and North Carolina account for over 85% of domestic output. Other domestic mining operations are located in Idaho and Utah. In 2015, more than 95% of U.S. mined phosphate rock was used to manufacture phosphate fertilizers and animal feed supplements.", "Similar to phosphorus, potassium fertilizer is primarily a mined material. Mined and manufactured salts containing soluble potassium (K) are referred to as potash. The largest high-grade potash deposit in the world is in the Saskatchewan province of Canada. Domestic production occurs in Michigan, New Mexico, and Utah. In 2015, approximately 85% of potash sales in the United States were by the fertilizer industry.", "As nutrients cycle through the soil-plant-atmosphere continuum, some are recovered by plant uptake, some incorporated into the soil organic matter (SOM), and some precipitated as solid minerals. The remainder can be transported to surface water, groundwater, and the atmosphere. The increased use of nutrients in agricultural production has increased the potential for nutrient excess and associated environmental and health impairments. Recent water and air quality concerns have brought attention to excessive nutrients in the environment and the damage they can create. The nutrients of primary environmental concern in agriculture are nitrogen and phosphorus.\nWater quality concerns are present across the United States for a number of reasons, including pollution from excess nutrients, heavy metals, and toxic substances, to name a few. Overall, data reported by the U.S. Environmental Protection Agency (EPA) and states indicate that 44% of river and stream miles assessed by states and 64% of assessed lake acres do not meet applicable water quality standards and are impaired for one or more desired uses. In 2006, EPA issued an assessment of streams and small rivers and reported that 67% of U.S. stream miles are in poor or fair condition and that nutrients and streambed sediments have the largest adverse impact on the aquatic species in these waters. Agricultural production can contribute both nutrient and sediment loading to waterways if not properly managed.", "As stated previously, nitrogen is a mobile nutrient that can occur in a variety of forms. Nitrogen is affected by chemical and biological processes that can change its form and transfer it to or from water, soil, biological organisms, and the atmosphere. The increasing use of reactive nitrogen in agriculture also increases the potential for nitrogen to be lost to the environment as ammonia (NH 3 ), ammonium (NH 4 ), nitrate (NO 3 ), nitrogen oxides (NO x ), and nitrous oxide (N 2 O).\nExcess nitrogen can be transferred to water sources in a number of ways, including:\nsoil erosion––either by wind or water, erosion can move soil particles containing nitrogen into surrounding waterways; runoff––dissolved nitrogen, either as inorganic (e.g., nitrate) or organic (e.g., manure) fertilizer, applied directly to the soil surface can \"run off\" the field with moving water (e.g., rain, snowmelt, or irrigation) if not incorporated into the soil; and leaching––water moving through the soil profile can transport dissolved nitrogen to underground water sources or through tile drains to surface water.", "Phosphorus is an immobile nutrient and therefore is generally transferred to water through sediment-based runoff or erosion. More than 80% of phosphorus transported from cultivated lands is associated with soil particle and organic material erosion during flow events (e.g., rain or irrigation). To a lesser extent, phosphorus leaching can occur through subsurface flow, primarily transported in drainage waters (e.g., through tile drains). While some soils can absorb applied phosphorus, they are not infinite sinks. Once the capacity of the soils to absorb phosphorus is exceeded, the excess will dissolve and move more freely with water. Continued application of phosphorus beyond plant requirements can be a major cause of soil phosphorus saturation; both surface runoff and subsurface flow are linked to soil phosphorus concentration.", "One of the better-known environmental responses to high levels of nutrients is eutrophication––the enrichment of water bodies, which can promote the growth of algae. When nutrients (e.g., nitrogen and phosphorus) and sunlight stimulate algal growth (e.g., algae, seaweed, and phytoplankton), this increases the amount of organic matter in an aquatic ecosystem over time. Algae are a natural part of the ecosystem, and most species of algae are not harmful. However, high levels of nutrients and ideal growing conditions can overfeed algae, creating algal blooms that deplete the oxygen content of water, block sunlight to other organisms, and potentially produce toxins. These harmful algal blooms (HABs) can contaminate surface and drinking water supplies, potentially harming animal and human health. Cyanobacteria (blue-green algae) and red tides are examples of HABs that produce toxins harmful to humans and animals.\nAlgal blooms, whether toxic or not, can cause significant environmental and economic problems when the algae die. As organisms die and sink to the bottom, they are consumed (decomposed) by oxygen-dependent bacteria, depleting the water of oxygen. When this eutrophication is extensive and persistent, bottom waters may become hypoxic (depressed concentration of dissolved oxygen), or even anoxic (no dissolved oxygen). Hypoxic conditions in lakes and coastal waters can cause die-offs of fish and other aquatic life. If these conditions persist, a \"dead zone\" may develop in which little life exists.", "Cyanobacteria live in terrestrial, fresh, brackish, or marine water. Cyanobacterial harmful algal blooms (CyanoHABs) occur when organisms that are normally present grow exuberantly. CyanoHABs are caused by a combination of conditions, including warm water temperatures, high levels of light, and abundant nutrients (primarily phosphorus and nitrogen). Nutrients play a key role, and major sources include agricultural runoff (organic and inorganic); discharges from sewage treatment plants; and storm-water runoff from lawns, streets, and elsewhere. CyanoHABs can contain various toxins that can affect the liver, skin, or nervous system. Exposure to cyanotoxins can cause a range of health effects, from mild rashes to severe illness (and rarely death) in humans. Deaths of exposed wildlife, livestock, birds, and pets have been documented worldwide. Most human exposures are thought to occur during recreational activities, such as swimming and boating; through accidental ingestion or inhalation of water; or when skin comes into contact with toxins. Exposures also can result from drinking or showering in contaminated water or eating contaminated shellfish.", "In the case of red tides, microscopic marine alga called Karenia brevis ( K. brevis ) grows quickly and creates blooms that look red or brown (hence \"red tide\"). K. brevis produces toxins called brevetoxins, which are deadly to fish and other marine organisms. Brevetoxins can become concentrated in the tissues of shellfish that feed on K. brevis and make those who eat these shellfish sick with neurotoxic shellfish poisoning (NSP). NSP can produce neurologic symptoms (e.g., tingling in fingers and toes) and gastrointestinal symptoms in humans. The effects of environmental exposure to brevetoxins are less well known. However, evidence suggests that air and skin exposure near red tides can result in irritation of the eyes, nose, and throat, as well as coughing, wheezing, and shortness of breath.", "Ciguatera is another illness caused by eating fish that contain toxins produced by HABs. Ciguatera is caused by Gambierdiscus toxicus , a marine microalga. The toxin accumulates and can move up the food chain, for example, through large carnivorous reef fish (barracuda, black grouper, blackfin snapper, amberjack, and yellowfin grouper). Symptoms are similar to NSP and can go away in days or last for years.", "In addition to HABs, excess nutrients in water have other known health effects, depending on the type and condition of exposure. Conjectural evidence suggests that an excess of both nitrogen and phosphorus may contribute to infections and noninfectious pathogens, potentially causing epidemic conditions. This, however, is a difficult relationship to make given the interrelated nature of humans and wildlife disease emergence.\nThe primary route of human exposure to nitrogen is through ingestion of contaminated drinking water. The most well-known effect is methemoglobinemia, a blood disorder in which an abnormal amount of methemoglobin (a form of hemoglobin) interferes with the body's ability to release oxygen to body tissue. Infants are especially susceptible to this condition, which is why it is sometimes referred to as \"blue baby syndrome.\" Other known health effects include various cancers, adverse reproductive outcomes (neural tube defects), diabetes, and thyroid conditions. No comprehensive research has examined the health effects of nitrate ingestion, or whether the current regulatory limits on nitrogen in drinking water are adequately protective.\nBecause of phosphorus's role in eutrophication and associated HABs, the environmental and health concerns are much the same as those for nitrogen. The direct health effects of excess phosphorus fertilizers are less well known than the effects of nitrogen fertilizers.", "Nutrient management is a practice whereby nutrient cycles are kept in balance with the surrounding ecosystem. As most crop production is not considered to be a naturally occurring part of an ecosystem, how production is managed is increasingly important for the overall health of the surrounding environment and sustainability of production. Over time, through research and technological advancements, nutrient management has become increasingly sophisticated. An advanced understanding of how crops utilize nutrients and how nutrients move in the environment has led to the development of a number of best management practices (BMPs) for nutrient use. Primarily, nutrient BMPs focus on preventing or reducing the ways in which excess nutrients can enter the environment––erosion, runoff, leaching, volatilization, denitrification, and nitrification.\nIn many cases, the success of a BMP depends on how and where it is applied. Not all BMPs will work in every location, and more than one BMP may be required to correct a nutrient imbalance. For example, a BMP may help reduce one nutrient but do little to reduce another. Additionally, not all BMPs are fail-safe, and they can require a significant amount of time and investment to achieve a successful balance.\nThis section discusses select examples of nutrient BMPs that can lessen the potential harm to water quality. These examples should not be considered a comprehensive list. USDA's Natural Resources Conservation Service (NRCS) maintains national practice standards for many of these BMPs ( Table A-1 ); however, state and local regulations may affect how the standards apply locally.", "Crop production BMPs for nutrient management generally focus on the \"4Rs\"––applying the right amount of nutrients, from the right source, in the right place, at the right time. Other associated BMPs try to prevent nutrients and sediment from leaving the field and entering waterways. Select examples of crop production BMPs for water quality improvement include:\nNutrient Diagnosis and Testing. Fertilizer recommendations are often based on nutrient diagnostic methods, such as soil testing ( Figure 9 ), plant analysis, and canopy sensing. These activities measure the amount of nutrients present and help determine additional need. The results, combined with data on expected yields and field conditions, help producers minimize excessive nutrient release into the environment.\nPlanning. Nutrient management planning calculates the amount of nutrients required for maximum yield, while minimizing the overall environmental impacts of nutrient use. NRCS defines nutrient management as the management of the \"4Rs.\"\nTillage Systems. The use of no-till ( Figure 10 ) or reduced till systems can increase soil organic matter, reduce nutrient use, reduce sediment loss, enhance ground-water retention, and reduce runoff and leaching of nutrients. No-till systems maintain most of the crop residue on the soil surface by not using traditional full-width tilling methods throughout the year. Reduced till, also referred to as mulch till, disturbs the majority of the soil's surface with noninversion tillage methods and uniformly spreads residue on the soil surface.\nCover Crops. Legume crops and cover crops can provide nitrogen through biological fixation and nutrient recycling. The use of cover crops helps to sequester nutrients, primarily nitrogen; reduce soil run-off; and improve nutrient use efficiency.\nCrop Rotation. Crop rotations are planned sequences of two or more crops grown on the same ground over a period of time. Whether rotating with other commodity crops or perennials, the use of crop rotations has been known to improve nutrient cycling and reduce energy needs ( Figure 10 ).\nStripcropping. The use of grass or close-growing crops alternated with row crop production can slow runoff, reduce erosion, and increase filtration. This can reduce the loss of nitrates and soluble phosphorus (see Figure 11 ).\nInhibitors. Nitrification inhibitors maintain ammonium longer by eliminating a bacterium where the ammonium is present, thereby delaying denitrification and reducing leaching potential. Urease inhibitors allow urea to be retained in the soil longer, thereby reducing nitrogen volatilization.\nDenitrifying Bioreactor. A structure that uses a carbon source (e.g., wood chips) to reduce the concentration of nitrate nitrogen in subsurface agricultural drainage (e.g., tile drainage) flow via enhanced denitrification (see Figure 12 ).\nApplication Timing. How a plant uses nutrients will determine when nutrients should be applied for most efficient uptake. In some cases, this might mean more than one application at different times (often referred to as split application).\nApplication Amount. The amount of nutrient application should be based on the results of nutrient diagnosis and testing; realistic expected yields and yield history; and residual nutrients from manure, legumes, and irrigation water applied to reduce overapplication.\nApplication Method. How a plant uses nutrients will determine where nutrients should be placed for most efficient uptake. The application method is determined based on crop type, nutrient diagnosis and testing, and planning. Different application methods are available based on the time of application (see Figure 13 ).\nFilter and Buffer Strips. A strip of vegetation located near the edge of the field along streams, lakes, wetlands, and other adjacent waters in order to trap sediment and denitrify residual nitrates in subsurface flow.\nConstructed Wetlands. Surface or subsurface drainage tile water may be channeled through artificially created wetlands to provide nutrient filtration.\nIrrigation Management. Coordinating the use of irrigation water and nutrient application can impact nutrient uptake, runoff, and leaching. Other irrigation system practices, such as tailwater recovery, can also assist in capturing residual nutrient loss.\nTerraces and Grassed Waterways. Terraces are a series of ridges and channels constructed across a slope to intercept sediment and nutrient runoff. Grassed waterways are channels with established vegetation that reduces runoff (see Figure 14 ).", "Best management practices for livestock operations are typically prescribed for concentrated animal feeding operations where animals are raised or bred in close quarters, thus creating a concentrated source of nutrients. Other BMPs for grazing operations can reduce the potential for nutrient and sediment contamination by controlling animals' movements within grazing sites.\nNutrient Testing. The nutrient content of manure can vary greatly. Nutrient testing of manure can inform feed and fertilizer application recommendations. Testing results can help minimize nutrient release into the surrounding environment.\nPlanning. Animal waste planning helps producers determine their current waste and nutrient production and distribution capacities. Balancing the production and distribution of waste is critical to preventing excess nutrient release.\nFeed Management. Modifying animal feed diets can reduce the nutrient content of the manure.\nCarcass Disposal. Improper disposal of livestock and poultry carcasses can impact surface and groundwater resources. Animal mortality facilities vary and can consist of composters, refrigeration, incinerators, or burial pits, among others.\nConstructed Wetlands. Constructed wetlands can provide nutrient filtration from wastewater and contaminated runoff from livestock and agricultural processing facilities. Constructed wetlands generally use hydrophytic vegetation (i.e., grows in water) in a shallow basin where the contaminated water, both entering and exiting the wetland, is controlled ( Figure 15 ).\nWaste Storage and Handling. The storage of manure waste can allow for greater flexibility in nutrient application and timing for crop production. Practices such as short-term storage––consisting of plastic sheeting––or longer-term storage facilities (e.g., pits or lagoons) are generally pursued as part of a larger nutrient management plan.\nLagoon. A lagoon is a pond-like earthen basin that provides biological treatment and long-term storage of animal waste. Generally manure is diluted with water, decomposed through a biological process, and then used in a separate form such as irrigation liquid. The biological reaction is achieved by either anaerobic bacteria (inhibited by oxygen) or aerobic bacteria (requiring oxygen).\nStream Crossing. A stabilized area constructed across a stream or waterway to provide access for people or livestock while reducing sediment and nutrient loading in the stream.", "Currently, few federal regulations govern the environmental impacts from agriculture. Some environmental laws specifically exempt agriculture from regulatory requirements, and others are structured so that agriculture is not addressed by most, if not all, of the regulatory impact. The major federal response continues to be through research, education, outreach, and voluntary technical and financial incentives.", "Federal environmental law does not regulate all agricultural activities. In terms of environmental impacts, the primary regulatory focus has been on protecting water resources and is governed by the Clean Water Act (CWA). As with many environmental regulations affecting industries, regulations affecting agriculture have been and continue to be controversial and draw congressional attention.\nThe CWA provides one exception to policies that generally exempt agricultural activities—and specifically the livestock industry—from environmental rules. The law protects water quality through a combination of ambient water quality standards established by states, limits on effluent discharges, and permits. The regulatory structure of the CWA distinguishes between \"point sources\" (e.g., manufacturing and other industrial facilities that are regulated by discharge permits) and \"nonpoint sources\" (pollution that occurs in conjunction with surface erosion of soil by water and surface runoff of rainfall or snowmelt from diffuse areas, such as farm and ranch land). Most agricultural activities are considered to be nonpoint sources, since they do not discharge wastes from pipes, outfalls, or similar conveyances. Pollution from nonpoint sources is generally governed by state water quality planning provisions of the act.", "The CWA prohibits the discharge of pollutants from any point source to waters of the United States unless authorized under a permit that is issued by EPA or a qualified state, and the act expressly defines concentrated animal feeding operations (CAFOs) as point sources. Permits limiting the type and quantity of pollutants that can be discharged are derived from effluent limitation guidelines promulgated by EPA under the National Pollutant Discharge Elimination System (NPDES) program. In 2003, EPA revised regulations that were first promulgated in the 1970s defining the term CAFO for purposes of permit requirements and specifying effluent limitations on pollutant discharges from regulated feedlots. The 2003 rules were challenged in federal court ( Waterkeeper Alliance et al. v. EPA , 399 F.3d 486 (2 nd Cir. 2005)), and parts of the regulations were remanded to EPA for revision and clarification. As a result, EPA issued revised regulations in 2008.\nThe 2008 CAFO rule applies to approximately 15,300 of the largest animal feeding operations that confine cattle, dairy cows, swine, sheep, chickens, laying hens, and turkeys, or less than 10% of all animal confinement facilities in the United States. The rule details requirements for permits, annual reports, and development of plans for handling manure and wastewater. The rule contains a performance standard that prohibits discharges from regulated CAFOs except in the event of wastewater or manure overflows or runoff from an exceptional 25-year, 24-hour rainfall event. Parts of the rule are intended to control land application of animal manure and wastewater.", "Section 303(d) of the CWA requires states to identify waters that are impaired by pollution, even after application of pollution controls. For those waters, states must establish a total maximum daily load (TMDL) to ensure that water quality standards can be attained. A TMDL is essentially a pollution budget, a quantitative estimate of what it takes to achieve standards, setting the maximum amount of pollution that a waterbody can receive without violating standards. If a state fails to do this, EPA is required by the CWA to make its own TMDL determination for the state. Throughout the United States, more than 20,000 waterways are known to be violating applicable water quality standards and require a TMDL. Lawsuits have been brought with the intention of pressuring EPA and states to develop TMDLs because the waters have been identified as being impaired (that is, not meeting applicable water quality standards). The Chesapeake Bay TMDL is the largest single TMDL developed to date.\nSince 1995, EPA and states have developed a total of 69,205 TMDLs, addressing 72,653 causes of water quality impairment in U.S. waters. Of the 69,205 total TMDLs, 6,161 (8.9%) addressed nutrient impairments, and 3,942 (5.7%) addressed sediment impairments. According to EPA, 42,368 waterbodies remain impaired in the United States, due to 71,602 causes of impairment (i.e., a waterbody may be impaired by more than one pollutant). TMDLs are to be established for these waterbodies. Of the total known causes of current impairment, 7,166 (10%) are known to be caused by nutrients, and 5,993 (8.4%) are known to be caused by sediment. Generally it is not possible to determine how many of the nutrient impairments for which TMDLs are to be developed are caused by agriculture or other possible sources until the TMDL is developed by a state. The identification and listing of impaired waters are done by states.", "In large part, the federal response to nutrient pollution from agriculture is through voluntarily adopted technical and financial assistance. A number of USDA agencies provide support through education, outreach, and research, while federal funds are provided through conservation programs to adopt BMPs for nutrient reduction.", "USDA offers technical support to producers through direct assistance and research. Nutrient management planning assistance is available at no cost through NRCS. Agency resources and planning techniques draw on publicly reviewed and scientifically based principles. Various conservation practices (the BMPs described above) may be prescribed, based on needs and resource goals. Unless the nutrient management plan was created for a CAFO to meet the regulatory requirements under the CWA NPDES program, implementation of a nutrient management plan and associated BMPs are voluntary. Other state- and local-level programs (e.g., tax credits, pollution violation compliance, cost-share agreement, or local ordinance) may require implementation of a nutrient management plan, but this varies greatly by state.\nNutrient management education and outreach is primarily handled through the land-grant university system and the extension programs of the National Institute of Food and Agriculture (NIFA).", "In addition to technical assistance, NRCS also administers a number of conservation programs that offer financial assistance for nutrient management. According to NRCS, 8.2% of all acres receiving NRCS conservation assistance for water quality between FY2005 and FY2014 were for practices that support nutrient management.\nMany of the programs that fund nutrient management BMPs are authorized in omnibus farm bills, the most recent of which is the Agricultural Act of 2014 ( P.L. 113-79 ). The Environmental Quality Incentives Program (EQIP) is the largest farm bill program that funds nutrient management practices, including conservation activity plans for nutrient management as well as financial assistance to implement other nutrient management practices recommended in the nutrient management plan (e.g., cover crops, buffer strips, and waste lagoons). Other farm bill programs, such as the Conservation Stewardship Program (CSP), provide incentives encouraging producers to adopt additional nutrient-reducing practices. Land retirement and easement programs, such as the Conservation Reserve Program (CRP) and the Agricultural Conservation Easement Program (ACEP), remove land from production and establish resource-conserving vegetation for wildlife and water quality benefits.\nThe Clean Water Act Section 319 Program authorizes grants to states, territories, and tribes to help address national water quality challenges posed by nonpoint sources of pollution, such as runoff from farmland, forests, and city streets. State Section 319 programs generally address nonpoint source pollution from a variety of sectors, not just agriculture. According to EPA, states use their Section 319 funding, along with a state match (40% match is required), to implement statewide, non-regulatory programs that promote implementation on a widespread basis (e.g., promote broad use of nutrient management in agriculture).", "USDA conducts nutrient management research both through its in-house research agencies––Agricultural Research Service (ARS) and the Economic Research Service (ERS)––and through funds provided to states and localities by NIFA. The ARS conducts numerous research projects within 17 national programs, five of which support nutrient management-related research. The ERS, which conducts economic research on policy issues, has produced a number of publications that analyze the societal and economic impacts of nutrient use in the United States from the standpoint of both production and environmental quality.\nUSDA also participates in a multi-agency effort led by NRCS, called the Conservation Effects Assessment Project (CEAP). The purpose of CEAP is to quantify the environmental effects of conservation practices and programs and develop the science base for managing the agricultural landscape for environmental quality. Project findings are used to guide USDA conservation policy and program development and potentially to assist producers with making more informed conservation decisions. To date, a number of CEAP publications focus on nutrient management.\nThe U.S. Geological Survey (USGS), as part of its National Water Quality Assessment Program, continues to conduct studies on the transport and fate of agricultural nutrients in agricultural settings across the country. Early study results highlight how environmental processes and agricultural practices interact to affect the movement and transformation of agricultural chemicals in the environment. The study covers surface water, groundwater, the unsaturated zone, the streambed, and the atmosphere, as well as the pathways that interconnect these compartments. In an attempt to make the findings nationally relevant, the study areas represent major agricultural settings, such as diverse irrigated crop systems in Western states and corn and soybean row crop systems in the Midwest. A 2015 USGS report found that while nitrate levels in U.S. rivers remain high, the overall change has been smaller in recent decades. The report also found no widespread evidence of improving conditions.", "Despite advancements made through research, education, and funding, environmental problems with excess nutrients from agriculture remain throughout the United States. As policymakers consider these issues, additional questions may be asked.\nRegulatory-Voluntary Balance : Currently, few environmental regulations govern nutrients from agriculture; instead, a more voluntary incentive-based approach is used. What benefits are achieved through the voluntary approach, and how could they be strengthened? Could additional benefits be achieved through regulation, and at what cost? What is an acceptable balance between the two? Federal-State-Local Balance : In many cases, the enforcement of federal laws that address environmental pollution is delegated to the states. Does this model work? Should more or less oversight or action occur, and at what level? How can regional and watershed planning impact the overall effectiveness of the current environmental laws? Use of Current Resources : Congress authorizes and appropriates billions of dollars for federal conservation efforts each year. Demand for these resources continues to outpace supply. How are current federal resources for conservation being utilized? How effective are they, and how can they be improved? Are federal leveraging programs—such as the Regional Conservation Partnership Program, which leverages federal funds with private funds—an effective way to extend the federal dollar? Agencies and stakeholders have suggested \"targeting\" limited resources to areas of greatest need. To what extent is targeting effective, and what barriers to targeting exist? The Source of the Problem : The exact sources and causes of nutrient pollution can vary greatly by location. Case study analysis and modeling can assist with identifying sources at the local level but provide little in the way of nationwide conclusions. What additional research or monitoring efforts are required to identify sources of nutrient pollution? At what level should these efforts occur––field level, state level, nationally? Effectiveness of the Solution : Conservation BMPs are frequently held up as being the solution to agricultural nutrient pollution. What scientific evidence supports the use of these BMPs? Can additional research and innovation provide other \"tools\" in the response \"toolbox\"? Value Versus Cost of Conservation : Agricultural producers seek to maximize profit, while simultaneously minimizing cost. Does the value of conservation BMPs outweigh the cost? Are savings and efficiencies (if any) adequately communicated to producers to increase adoption? Consequences of Actions : Nutrient pollution may or may not directly impact the polluters themselves. According to ERS, the cost of removing nitrates from U.S. drinking water supplies is over $4.8 billion per year. The bulk of this cost is borne by large water utilities and then passed on to consumers. It is estimated that if the agricultural industry were required to pay based on its contribution to nitrate loading, agriculture's share would be about $1.7 billion per year. Who should bear the cost of nutrient loading? Can education and outreach connect on-farm actions to potential off-farm results?", "Increased demand to feed a growing population is frequently cited as the reason for additional agricultural output. Applying additional nutrients for increased yields and managing nutrients from animal production will likely continue if these demands are realized. This will only elevate the importance of managing these additional nutrients correctly or potentially repeating and exacerbating the environmental degradation that has occurred in the past.\nAgriculture is one of a number of industries that produces, uses, or releases nutrients that may adversely affect the environment. The exact source of water impairments is frequently not identified until major ecological events prompt additional research. Even then, the nature of how nutrients move through the environment can make their origin difficult to track. It is agriculture's use of nutrients and large land-use presence across the United States that have brought attention to how the industry utilizes and manages nutrients. And while best management practices exist to eliminate or reduce nutrients from entering waterways, they are not required, they may not be effective or affordable in all locations, and the success will depend on how and where they are applied.\nSome advocate for the additional regulation of agricultural nutrient activities, while others seek to expand incentive-based resources. The track record of success and failure for both options varies, making the likely solution a balance of the two. It is this exact balance that Congress continues debate through the oversight of current federal activities and consideration of new or modified initiatives. Research, data, and monitoring continue to impact the debate, but perhaps not as much as larger water impairments that affect public health and safety.", "" ], "depth": [ 0, 1, 2, 1, 2, 3, 3, 4, 4, 4, 1, 2, 2, 2, 3, 3, 3, 2, 1, 2, 2, 1, 2, 3, 3, 2, 3, 3, 3, 1, 1, 2 ], "alignment": [ "h0_title h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "h1_full", "h1_full", "" ] }	{ "question": [ "What factors have led to the development of BMPs in nutrient management?", "What are the main focuses of these BMPs?", "What is the focus of crop production BMPs?", "What is the focus of livestock BMPs?", "What is one of the main issues the 114th Congress is focusing on?", "What are some of the concerns regarding this issue?", "Why are these important?" ], "summary": [ "Over time, through research and technological advancements, an understanding of how crops utilize nutrients and how nutrients move in the environment have led to the development of a number of best management practices (BMPs) for nutrient management.", "Primarily, nutrient BMPs focus on preventing or reducing the ways in which excess nutrients can enter the environment.", "Crop production BMPs for nutrient management generally focus on applying the right amount of nutrients, from the right source, in the right place, at the right time.", "BMPs for livestock operations are typically prescribed for concentrated animal feeding operations (CAFOs), where animals are raised or bred in close quarters, thus creating a concentrated source of nutrients.", "As the 114th Congress reviews nutrient pollution in U.S. waterways, among the issues being discussed is how to address nutrients from agricultural sources.", "Whether the current balance between regulatory action and voluntary response is enough to meet environmental goals, who should bear the cost of preventing and correcting nutrient loading, and whether the tools for correction are adequate are among the issues being discussed.", "How these issues are resolved will have important implications for agriculture, which has taken a keen interest in water quality policy and legislation." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 5, 5, 5 ] }
CRS_R44827	{ "title": [ "", "Evolution of Law Enforcement Exploiting Vulnerabilities", "Operation Torpedo", "Seizure of Freedom Hosting", "Operation Pacifier", "Operation Onymous", "San Bernardino iPhone", "Vulnerabilities Equities Process: Administration Policy, Not Law", "VEP Procedure", "VEP Decision Process", "Retaining and Disclosing Vulnerabilities: Data", "Using Known Vulnerabilities", "Data Issues", "Policy Issues", "Lawful Hacking Intertwined with the Going Dark Debate", "Law Enforcement Acquisition of Vulnerability Exploits", "Bug Bounties", "Sharing Vulnerabilities Information" ], "paragraphs": [ "T here has been increased discussion about law enforcement legally \"hacking\" and accessing certain information on or about devices or servers. Officials conduct this hacking as part of criminal investigations and takedowns of websites that host illicit content or facilitate illegal activity. There have been reports of such hacking for more than a decade.\nOver the years, law enforcement has explored various avenues to discover and exploit vulnerabilities in technology so it may attempt to uncover information relevant to a case that might otherwise be inaccessible. For instance, as people have adopted tools to conceal their physical locations and anonymize their online activities, law enforcement reports that it has become more difficult to locate bad actors and attribute certain malicious activity to specific persons. As a result, officials have debated the best route to access information that may be beneficial to the administration of justice. Exploiting vulnerabilities is one such tool.\nIn exploiting vulnerabilities, law enforcement may take one of two broad paths to gain access to devices and information. It may rely upon known vulnerabilities that have not yet been patched, or it may develop tools to detect and use previously unknown and undisclosed vulnerabilities (or otherwise acquire exploits for these zero-day vulnerabilities) that it can then leverage.\nLaw enforcement's use of previously unknown vulnerabilities has become the subject of some debate. Policymakers have questioned law enforcement practices for maintaining versus disclosing these vulnerabilities. They have also questioned how maintaining or disclosing vulnerabilities may impact security—information security, public safety, and homeland security alike. This has opened a broader debate about whether law enforcement should disclose vulnerabilities and whether there should be rules for law enforcement behavior in this arena.\nThis report provides background on law enforcement's use of technology vulnerabilities in criminal investigations. It also provides information on the government's system by which agencies collectively determine whether to maintain or disclose newly discovered vulnerabilities. The report also outlines a range of policy issues that may arise regarding the use and disclosure of vulnerabilities in technology.", "The first reported instances of law enforcement hacking involved authorities using keylogging programs to obtain encryption keys and subsequent access to devices. For example, in a 1999 case against a Cosa Nostra mob boss the Federal Bureau of Investigation (FBI) physically installed a keylogger (using a technique that was classified at the time) on his computer to capture his encryption key and gain access to his computer. Several years later, in 2001, authorities started using a more advanced keylogger—one that could be installed remotely—named Magic Lantern. In addition to capturing keystrokes, Magic Lantern could record Internet browsing histories and usernames/passwords for sites.\nMore recently, law enforcement has been utilizing exploits to bypass protections of software such as Tor, which allows users to access websites anonymously. In addition, it has relied on vulnerabilities discovered in software that encrypts or otherwise secures data and limits access to information. While some investigations are known to have used specially designed exploits or malware, referred to as Network Investigative Techniques (NITs), others are merely suspected of using NITs to exploit vulnerabilities. The remainder of this section discusses examples of how the FBI has utilized exploits or malware over the years to facilitate its investigations.", "In 2011, the Netherlands' National High Tech Crime Unit began an investigation into child pornography websites hosted on the Dark Web. During the course of this investigation, they learned —and informed the FBI—that a server hosting one of these sites was located in Nebraska. The FBI then traced the server's IP address to Aaron McGrath, who they later arrested. They also seized the servers.\nThe FBI's affidavit supporting its search warrant application detailed the purpose of the NIT it proposed to use in its investigation. The FBI believed that the NIT was the \"only available investigative technique with a reasonable likelihood of securing the evidence necessary to prove beyond a reasonable doubt the actual location and identity of those users\" viewing certain pages of the child pornography websites administered by McGrath or sending/viewing private messages on those pages.\nThe NIT was proposed to direct relevant computers accessing three specific child pornography websites to download instructions that would direct the computer to send certain information (computer identifying information, location, and user) back to the FBI. The FBI specified that the NIT would not hinder the use or functionality of impacted computers.\nThrough the use of the NIT, the FBI reportedly collected IP addresses of at least 25 U.S. visitors to the child pornography websites. The FBI then subpoenaed the Internet Service Providers for the physical addresses of the computers associated with the IP addresses. The FBI was then able to make arrests around the country.\nAs experts have noted, this was \"the first time—that we know of—that the FBI deployed such code broadly against every visitor to a website, instead of targeting a particular suspect.\"", "In 2013, the FBI seized Freedom Hosting, a website hosting service operating on the Tor network that was reportedly home to more than 40 child pornography websites, as well as additional sites with no links to child pornography. When the FBI took control of the site, it infected it with \"custom malware designed to identify visitors.\" This custom malware \"exploited a Firefox security hole to cause infected computers to reveal their real IP addresses to the FBI.\" Specifically, the NIT targeted computers that accessed 23 specific websites on Freedom Hosting. It also targeted users of specific Tor Mail email accounts—a \"free, anonymous e-mail service provider that operates as a 'hidden service' on the Tor network\"—that investigators had linked to child pornography crimes.\nLike in Operation Torpedo, the FBI's exploit against Freedom Hosting targeted all visitors to the associated websites—both illegal child pornography sites and legitimate businesses. As experts have noted, customers to the legitimate websites may have been impacted by the FBI's malware. Because the court documents have been sealed and the FBI has not discussed details of the exploit, it is unknown how many innocent individuals may have been \"hooked\" by the FBI's malware.", "The FBI conducted an investigation into a child pornography website known as Playpen, which was operating on the Dark Web and had nearly 215,000 members. Through the course of its investigation, the FBI determined that the computer server hosting Playpen was located in North Carolina. In February 2015, the FBI seized this server, and subsequently continued to run the website for nearly two weeks from a server in Virginia. In addition, a Virginia District Court judge authorized a search warrant allowing law enforcement to employ an NIT to try to identify actual IP addresses of computers used to access Playpen.\nThe NIT in the Playpen case sent a command to users' computers directing those computers to send certain information back to the FBI. This information included the computer's true IP address, a unique identifier that would distinguish it from other machines, and information on whether this computer had already received the NIT.\nThrough the use of the NIT, the FBI was able to uncover about 1,300 IP addresses and subsequently trace those to individuals. Criminal charges have been filed against more than 185 individuals. The FBI has declined to reveal the details of the NIT used against the Playpen website, and in at least one case has opted to dismiss charges rather than reveal the NIT source code. The FBI has also classified elements of the NIT, which, as experts have noted, impedes criminal discovery of the specific NIT source code.", "In November 2014, the FBI and over 15 countries, operating through the European Cybercrime Center (EC3), launched Operation Onymous to investigate several Dark Web markets that traded in drugs, weapons, credit card information, fake documents, and computer hacking tools, among other things. Among the websites taken down in this operation was Silk Road 2, one of the most notorious online global bazaars for illicit services and contraband (mainly drugs).\nThe Department of Justice (DOJ) noted that, \"using court-authorized legal processes and Mutual Legal Assistance Treaty Requests, [international law enforcement] seized 400 online user addresses and multiple computer servers.\" These addresses could be accessed via Tor. However, authorities did not reveal how they bypassed security and anonymity protections offered by Tor and specifically stated they were keeping that information secret. Some speculate that the FBI may have paid Carnegie Mellon researchers for an exploit technique to take down certain dark websites. The FBI has not confirmed this, however, and has denied allegations that it paid $1 million to Carnegie Mellon for an exploit tool.", "In addition to exploiting vulnerabilities in websites and networks to obtain information about certain devices, law enforcement has also leveraged weaknesses in hardware and software to access content on certain devices. In the aftermath of the December 2, 2015, San Bernardino, CA, terrorist attack, investigators recovered an Apple iPhone belonging to one of the shooters. Law enforcement hoped that the device would contain valuable information on who the shooters may have been communicating with to plan the attacks, where the shooters may have traveled prior to the attack, and the potential involvement of others in the attack. However, after several months the FBI was still unable to access information on the device. The FBI requested through the courts that Apple assist investigators in accessing the data. Apple refused to comply. After a back and forth legal battle, the FBI ultimately found assistance from a third party entity, was able to access the contents of the phone, and dropped the case with Apple. Specifically, the FBI paid hackers to find a software flaw that the bureau was then able to leverage to ultimately crack into the iPhone.\nResearchers have noted that the FBI has not disclosed to Apple information about vulnerabilities in its operating system software that were discovered and used to get into the San Bernardino iPhone. Moreover, the FBI has noted that it cannot reveal the vulnerability to Apple because it did not purchase the rights to the technical details about the extent of the vulnerability or the method used to exploit the vulnerability. The FBI subsequently told Apple about a different flaw in software running on older versions of iPhones and Macs—a flaw that Apple reportedly had already patched in an update to its operating systems.", "The Obama Administration established a process—known as the Vulnerabilities Equities Process (VEP)—to help decide whether or not to disclose information about a vulnerability that the government has discovered or otherwise obtained. The VEP was first set into motion through a presidential directive in 2008. An Executive Secretariat, run by the White House's National Security Council, oversees the VEP.", "The VEP is triggered whenever a federal government entity, including law enforcement, discovers a new hardware or software vulnerability. The VEP specifies that the entity classify and/or designate the vulnerability for special handling. The vulnerability is then formally entered into the VEP if it is both newly discovered and not publicly known .\nWhen the vulnerability enters the VEP, the Executive Secretariat notifies the points of contact for all entities participating in the VEP. Any entity that determines it has equities at stake will send a subject matter expert to participate in discussions about the given vulnerability. These subject matter experts then collectively submit recommendations or options to the VEP Executive Review Board. Ultimately, the Executive Review Board decides how the federal government will respond to the vulnerability. Notably, there is an appeals process if any entity with equities at stake in the vulnerability disputes the Executive Review Board's decision.", "Since establishing the VEP, the government has noted that there are simultaneously benefits and challenges that arise from retaining and disclosing vulnerabilities. For instance, Michael Daniel, the former Cybersecurity Coordinator under President Obama, noted that on one hand, disclosing certain vulnerabilities may mean that officials \"forego an opportunity to collect crucial intelligence that could thwart a terrorist attack[,] stop the theft of our nation's intellectual property, or even discover more dangerous vulnerabilities that are being used by hackers or other adversaries.\" On the other hand, \"[b]uilding up a huge stockpile of undisclosed vulnerabilities while leaving the Internet vulnerable and the American people unprotected would not be in our national security interest.\" Daniel outlined a number of factors considered when determining whether the government will retain or disclose a vulnerability:\nHow much is the vulnerable system used in the core internet infrastructure, in other critical infrastructure systems, in the U.S. economy, and/or in national security systems?\nDoes the vulnerability, if left unpatched, impose significant risk?\nHow much harm could an adversary nation or criminal group do with knowledge of this vulnerability?\nHow likely is it that we would know if someone else was exploiting it?\nHow badly do we need the intelligence we think we can get from exploiting the vulnerability?\nAre there other ways we can get it?\nCould we utilize the vulnerability for a short period of time before we disclose it?\nHow likely is it that someone else will discover the vulnerability?\nCan the vulnerability be patched or otherwise mitigated?\nIn 2014, President Obama noted that the government should generally reveal vulnerabilities so that they can be patched rather than preserving them for use, except in situations with \"a clear national security or law enforcement need.\" It is unclear whether the Trump Administration will take a similar position on erring toward vulnerability disclosure rather than retention.", "While the federal government has outlined a process that can be used for deciding whether or not to disclose a vulnerability, it has not provided clear data on how often this process is used and how many vulnerabilities it may retain at any given moment. In 2015, the National Security Agency (NSA) noted that \"[h]istorically, the NSA has released more than 91 percent of vulnerabilities discovered in products that have gone through [its] internal review process and that are made or used in the United States.\" The NSA further noted that the remaining 9% of vulnerabilities it did not disclose were either patched by the relevant vendors or retained for national security purposes. The discussion has not included information on the total number of vulnerabilities uncovered and does not provide a reference for the total number of vulnerabilities disclosed through the process. Of note, the NSA used an internal review process prior to the establishment of the interagency VEP, so it is not clear whether use of the VEP has resulted in a similar proportion of newly discovered vulnerabilities being disclosed. It is also unclear whether federal law enforcement would disclose vulnerabilities at a rate similar to the NSA if it had its own process for vetting vulnerabilities to be retained or disclosed. Due to the nature of its investigations, law enforcement may be poised to exploit categorically different types of vulnerabilities than its foreign intelligence counterparts.\nRAND researchers analyzed a dataset of more than 200 zero-day software exploits that it received from a vulnerability research group. RAND considers these data to be a proxy for the vulnerabilities that a \"private use group\" (e.g., government, defense contractor, exploit developer, or vulnerability researcher) may have. Looking at the stockpile of zero-day vulnerabilities, RAND's findings indicate that about 5.7% of them will have been discovered by an outside entity after a year. If these findings can be applied to other vulnerability stockpiles, one might extrapolate, for instance, that if the U.S. government has a similar stockpile of vulnerabilities, a similar proportion of them may be discovered by an outside group—including another nation state—after a year.\nRAND also determined that the average lifespan of a given vulnerability in its dataset was 6.9 years before it was patched or became publicly disclosed. In addition, 25% of the vulnerabilities only survived 1.5 years or less, while at the top end, 25% survived at least 9.5 years before being patched or publicly disclosed. As such, if these findings may be reliably applied to other vulnerabilities, law enforcement or another government entity may be able to retain or exploit a given vulnerability for about 9.5 years before it is patched or publicly disclosed. Of course, this lifespan may be influenced by factors such as the desirability—by researchers, nation states, criminals, or others—of finding a specific vulnerability.", "The debate surrounding law enforcement use and disclosure of vulnerabilities generally circles around the exploitation of zero-day, or unknown and unpatched, vulnerabilities. However, law enforcement also relies upon known vulnerabilities to obtain certain information and evidence. These known vulnerabilities may be unpatched by software vendors. Additionally, the vulnerabilities may be patched by software vendors but users may continue to rely on outdated, unpatched versions of the technology. Some experts have suggested that a majority of hacking incidents involve such known vulnerabilities, and potentially \"3/4 of hacking incidents occur through means that we know about and therefore have the opportunity to fix.\"\nIn some instances, Congress has mandated that certain vulnerabilities exist such that law enforcement may legally exploit these security flaws to obtain information. For instance, the 1990s brought \"concerns that emerging technologies such as digital and wireless communications were making it increasingly difficult for law enforcement agencies to execute authorized surveillance.\" Congress passed the Communications Assistance for Law Enforcement Act (CALEA; P.L. 103-414 ) to help law enforcement maintain its ability to execute authorized electronic surveillance in a changing technology environment. Among other things, CALEA requires that telecommunications carriers assist law enforcement in intercepting electronic communications for which it has a valid legal order to carry out. Specifically, CALEA places capability requirements on telecommunications carriers mandating, among other things, that their system designs allow law enforcement to intercept wire and electronic communications and access call-identifying information. Essentially, the systems must be sufficiently unsecured such that content and call-identifying information can, given a lawful court order, be accessed by or provided to law enforcement.\nThere have been debates around expanding the range of built-in vulnerabilities that law enforcement may utilize. For instance, Congress has debated whether to require technology companies to build back door access points into encryption such that law enforcement, when presenting a lawful warrant, may access encrypted communications or stored data. This has been one of the most contentious points of debate in the larger policy discussion on the challenges that law enforcement may encounter from evolving technology. For more information on this issue, see the following text box.\nOfficials and policymakers have largely moved away from the idea of introducing what could be exploitable vulnerabilities into technology. To date, research has not demonstrated that granting exceptional access—a means by which a vulnerability could be introduced and only accessed by legitimate, authorized actors—could be controlled such that only these authorized actors (e.g., law enforcement) may take advantage of it. One group of computer scientists and security experts, for instance, contends that providing for exceptional access \"will open doors through which criminals and malicious nation-states can attack the very individuals law enforcement seeks to defend.\"", "The discussion on whether law enforcement should generally retain or disclose zero-day vulnerabilities that it discovers/obtains lacks a number of data points that may help inform this conversation, as well as other conversations on law enforcement's relationship with technology.\nOne primary question centers on the effectiveness of using, or exploiting, vulnerabilities. How \"effective\" are these NITs, or vulnerability exploits, in developing law enforcement cases? There are a number of arguments for and against why law enforcement should retain knowledge of vulnerabilities and, if available, their exploits. However, quantitative analysis of related questions is lacking.\nIn what number—and proportion—of cases does law enforcement rely on technology vulnerabilities to obtain evidence? In cases involving evidence obtained through the use of NITs, was this evidence more crucial than other case evidence (not obtained through an NIT) to the investigation or prosecution? Are there tools other than NITs that law enforcement can use to obtain the same evidence, and how often are those tools utilized? How often do investigators decline to pursue a suspect or case because they cannot access communications or a device and do not have an exploit (and related vulnerability)? What is the financial cost of developing or purchasing vulnerability exploits? Once a vulnerability is discovered and an exploit is developed, how many times might a given exploit be used? What is the impact on \"innocent bystanders\"? Are NITs deployed narrowly enough to avoid implicating innocent individuals? Are the warrants authorizing use of NITs written narrowly enough to prevent innocent individuals from having their machines and information compromised? Can NITs introduce unintended weaknesses into the target machines/servers? Can they (and how often do they) unintentionally collect information beyond the scope of the intended target information?", "", "Within the broader going dark debate, \"lawful hacking is often posited as an alternative to encryption regulation.\" Some experts have suggested that the U.S. government should continue to support strengthening encryption and simultaneously give law enforcement resources to bolster their capabilities to conduct investigations in an environment of evolving technology and strong encryption. Some have also noted that \"if the executive branch is unable to successfully develop lawful hacking tools to address a sufficient amount of the need for government access to communications to meet the expectations of the general public, it becomes dramatically more likely that it will feel compelled to seek comprehensive legislative solutions mandating exceptional access.\" These hacking tools may include exploits for both publicly known and zero-day vulnerabilities.\nThe ability of law enforcement to take advantage of publicly known vulnerabilities may drive the conversation on going dark. If law enforcement is readily able to exploit these vulnerabilities, the question of whether it is going dark becomes less relevant. However, if law enforcement cannot take advantage of known vulnerabilities (for whatever reason), the question remains of whether it is being outpaced by the speed and strength of technology.\nLaw enforcement's use of zero-day vulnerabilities (those that it would submit to the vulnerabilities equities process), however, is a different issue. One question is whether the VEP, or any potential changes to the process, could affect law enforcement's reported going dark challenges. If the VEP generally results in disclosure of vulnerabilities, law enforcement might have a more limited timeframe in which it may develop exploits for, and take advantage of, a given vulnerability. On the other hand, if disclosure results in vendors patching these holes, malicious actors may be less likely to detect and exploit the vulnerabilities.", "Law enforcement may acquire knowledge of vulnerabilities through a number of means; this information may be publicly available (such as that included in the National Vulnerability Database), obtained from a hacker or vulnerabilities marketplace, or discovered. Law enforcement may obtain exploits to take advantage of these vulnerabilities by purchasing them off-the-shelf (which may not be useful to law enforcement who need to customize them for legal use), including from an online marketplace. They may also develop exploits (or contract an outside entity to develop them) tailored to suit specific law enforcement needs.\nYet another unknown regarding the acquisition of zero-day vulnerabilities or exploits is whether other entities have or will discover the same vulnerability. As former White House cybersecurity coordinator Howard Schmidt noted, \"[i]t's pretty naive to believe that with a newly discovered zero-day, you are the only one in the world that's discovered it ... [w]hether it's another government, a researcher or someone else who sells exploits, you may have it by yourself for a few hours or a few days, but you sure are not going to have it alone for long.\"\nAcquiring the knowledge of vulnerabilities and their exploits can be costly. Some have suggested that the knowledge of vulnerabilities and their exploits can go for upwards of $1 million on the black or grey markets. RAND reports that the federal government may, however, spend more money assessing products for vulnerabilities and subscribing to vulnerability feeds than it spends on purchasing zero-day vulnerabilities and their exploits. If this is indeed the case, the latter choice could be more cost-effective for federal law enforcement, which operates within specific fiscal constraints. There has been speculation surrounding how much the FBI paid a company for the exploit to help obtain data from the phone of one of the shooters in the 2015 San Bernardino terrorist attack. Some have placed the price tag near $1 million. It is unclear how often federal law enforcement purchases information on vulnerabilities or their exploits, how much the average payment may be, or whether the acquired material can be applied to multiple investigations. Policymakers may explore federal law enforcement budgets for acquiring vulnerability knowledge and tools to exploit these holes.", "Given that there will always be vulnerabilities, some may question whether there should be more attention given to preventing exploits of these vulnerabilities by strengthening security rather than to responding to exploits and deciding how to handle them. FBI Director Comey has noted that the government needs \"to be more predictive, less reactive\" and that this involves, in part, a focus on reducing vulnerabilities; the public and private sectors can use information on malicious actors and their techniques to strengthen potential targets and prevent cyber incidents. Some have suggested that \"the U.S. government should create incentives for individuals, companies, and governments to find software vulnerabilities, publicize, and patch them, and thus reduce the risk of attack.\" Part of this may involve establishing or promoting \"bug bounty\" programs.\nThe concept of a bounty has long been used by law enforcement (and others) to obtain leads in identifying and locating suspects in crimes. For instance, the FBI runs a Most Wanted program, offering monetary rewards for information that leads to the identification or arrest of a suspect. Federal law enforcement could formalize a bug bounty program leading to information on vulnerabilities and their exploits. While this practice already occurs on an ad hoc basis, policymakers may debate whether a formalized process would be cost effective or fruitful.\nA number of companies have established internal bug bounty programs such that they can identify software vulnerabilities and patch them quickly. For example, Apple offers up to $200,000 for the identification of certain vulnerabilities, and this reward has been identified as one of the highest. Rewards such as these may incentivize some hackers to bring vulnerability knowledge directly to vendors or affected companies rather than to law enforcement. Bug bounty programs are also familiar to the federal government, as some agencies have already piloted them for their own systems. In April 2016, the Department of Defense (DOD) launched the \"Hack the Pentagon\" pilot program where \"hackers were provided legal consent to perform specific hacking techniques against [DOD] websites, receiving financial awards for successfully submitting vulnerability reports.\"\nWhile the federal government may expand its own bug bounty programs, another option that policymakers may consider is financially supporting private sector bug bounty programs through federal grants. There are a number of avenues through which various departments and agencies could provide assistance, and DOJ grants are one such angle. For one, DOJ could provide grants to support bug bounty programs at entities that share information on vulnerabilities with law enforcement. However, the success of such an initiative may be bounded by financial capabilities, as the federal government could have trouble competing with the high bug bounty rewards offered by the private sector. Grants could also be used to help entities establish internal bug bounty programs so that they would be better prepared to counter the efforts of hackers, criminals, and other malicious actors.", "With respect to vulnerabilities, two types of information sharing may be of particular interest to law enforcement. One involves sharing information with technology companies and the public, the other involves sharing information amongst law enforcement entities.\nThe Vulnerabilities Equities Process (VEP), outlined above, is a primary means by which law enforcement may share information on zero-day vulnerabilities with the technology industry and public. In examining the VEP, policymakers may evaluate whether this is the most appropriate path by which law enforcement disseminates knowledge of previously unknown and unpatched vulnerabilities.\nRelatedly, policymakers may examine the issue of law enforcement disclosing details about NITs used to exploit vulnerabilities. There is no formalized or mandated process by which these tools may be evaluated for potential sharing. Law enforcement may view these details as sensitive and may even classify the tools used. Take, for instance, cases involving the Playpen website and the FBI's NIT that leveraged a vulnerability to help obtain identifying information of potential perpetrators. Even when requested in court, the FBI has declined to reveal the details of the NIT used against the Playpen website, and in at least one case has opted to dismiss charges rather than reveal detailed NIT source code. In addition, the FBI has classified elements of the NIT, which impedes criminal discovery—and thus potential public disclosure—of the specific NIT source code. Some have questioned whether revealing details about an NIT would provide insight into how law enforcement is utilizing it and whether—if a court has authorized a warrant for the use of an NIT—law enforcement has acted within the authorized scope of the warrant. Others have argued that details about an NIT would reveal information about the presence of a particular software vulnerability and how the NIT was deployed to a target computer. Policymakers may examine which entities should determine if and how NIT details should be revealed. Should this be decided by law enforcement, the courts, or Congress?\nIn sharing information on vulnerabilities and potential exploits with the larger law enforcement community, law enforcement may turn to the National Domestic Communications Assistance Center (NDCAC). The NDCAC, which opened in 2013, is led by the FBI and aimed at technical knowledge management and information sharing on technical solutions between federal, state, and local law enforcement agencies. Specifically, its four core functions are law enforcement coordination, industry relations, technology sharing, and CALEA implementation. The NDCAC may be an appropriate venue for law enforcement to share information on vulnerabilities and potential exploits that may be used to leverage these vulnerabilities. In the 114 th Congress, the Encryption Working Group recommended that Congress officially authorize and modernize the NDCAC to help bolster law enforcement's technical expertise." ], "depth": [ 0, 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "", "", "h0_full", "h2_full", "h2_full", "", "", "", "h2_full", "h0_title", "h0_full", "h0_full", "", "h0_full" ] }	{ "question": [ "What have discussions regarding law enforcement been focusing on recently?", "How have law enforcement groups utilized technology vulnerabilities?", "Why have law enforcement agencies explored new methods of finding information?", "What has been the result of increased difficulties in obtaining information?", "How has law enforcement used technology over the years?", "What were the first uses of technology in hacking related to law enforcement?", "How has technology usage changed in recent times?", "How are investigators using vulnerabilities in recent times?", "What is the purpose of the Vulnerabilities Equities Process?", "When is the VEP used?", "What could improve discussions related to retaining or disclosing vulnerabilities?", "What are some questions that could provide these answers?" ], "summary": [ "There has been increased discussion about law enforcement legally \"hacking\" and accessing certain information about or on devices or servers.", "Law enforcement has explored various avenues to discover and exploit vulnerabilities in technology so it may attempt to uncover information relevant to a case that might otherwise be inaccessible.", "For instance, as people have adopted tools to conceal their physical locations and anonymize their online activities, law enforcement reports that it has become more difficult to locate bad actors and attribute certain malicious activity to specific persons.", "As a result, officials have debated the best means to obtain information that may be beneficial to the administration of justice. Exploiting vulnerabilities is one such tool.", "Law enforcement's use of tools that take advantage of technology vulnerabilities has evolved over the years.", "The first reported instances of law enforcement hacking involved authorities using keylogging programs to obtain encryption keys and subsequent access to devices.", "More recently, law enforcement has been relying on specially designed exploits, or network investigative techniques (NITs), to bypass anonymity protections of certain software.", "In addition, investigators have leveraged vulnerabilities discovered in software designed to encrypt or otherwise secure data and limit access to information.", "The Obama Administration established a process, known as the Vulnerabilities Equities Process (VEP), to help decide whether or not to disclose information about newly discovered vulnerabilities.", "The VEP is triggered whenever a federal government entity, including law enforcement, discovers or obtains a new hardware or software vulnerability.", "The discussion on whether the government, and law enforcement, should generally retain or disclose discovered vulnerabilities lacks a number of data points that may help inform the conversation.", "For example, in what number or proportion of cases does law enforcement leverage technology vulnerabilities to obtain evidence? Are there tools other than vulnerability exploits or NITs that law enforcement can use to obtain the same evidence, and how often are those tools utilized?" ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, 0, 2, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 3, 3, 3, 3 ] }
CRS_R42576	{ "title": [ "", "Background", "Impact of Current PTC Expiration", "Potential Impact of Extending the PTC", "Wind Installations", "Wind Turbine Manufacturing", "Short-Term versus Long-Term PTC Extension", "Other Factors that Affect U.S. Wind Development", "State Renewable Portfolio Standards", "U.S. Electricity Demand Growth", "Natural Gas Price", "Example 1: Markets Coordinated by a Regional Transmission Organization", "Example 2: California RPS Cost Containment Approach", "Policy Discussion", "Allow the PTC to Expire", "Extend the PTC Incentive", "Phase-Out of the PTC", "Legislative Action" ], "paragraphs": [ "", "Federal incentives for operational renewable electricity projects have generally been in the form of tax benefits, including production tax credits (PTC), investment tax credits (ITC), and accelerated depreciation. Renewable energy production tax credits were first introduced in the Energy Policy Act of 1992. Section 45 of the Internal Revenue Code (IRC) outlines production tax credit incentives for wind, biomass, geothermal, landfill gas, trash, qualified hydropower, and marine and hydrokinetic projects that generate electricity. Under current law, the production tax credit for new wind projects will no longer be available as of January 1, 2013. For all other eligible renewable energy projects, the PTC is available to projects placed in service before January 1, 2014.\nPTC policies provide incentives for electricity projects by providing a tax credit for each kilowatt-hour of electricity produced by a qualified project during the first 10 years of operation. Currently, the tax credit for wind projects is 2.2 cents ($0.022) per kilowatt-hour. The PTC incentive is annually adjusted for inflation.\nTo date, the wind industry has been the largest beneficiary of federal production tax credits. The industry has experienced substantial growth over the last several years, with annual capacity installations generally increasing since 2005 (see Figure 1 ). As of the end of March 2012, cumulative U.S. wind power capacity was 48,611 megawatts, equal to approximately 4% of total U.S. generation capacity. In 2011 wind was the largest source of non-hydro renewable electricity generation, providing approximately 120 million megawatt-hours, roughly 3% of total U.S. generation.\nIn response to U.S. wind market growth, a number of manufacturing and assembly facilities were established to supply wind turbine components and systems. In 2012, the U.S. wind manufacturing sector is estimated to have the capacity to produce approximately 13 gigawatts (GW) of wind turbines annually. Industry estimates indicate that approximately 470 facilities in the United States provide various products (e.g., towers, turbines, gear boxes) for the wind turbine manufacturing supply chain. In 2011, the wind industry reported that these facilities supported approximately 30,000 jobs.\nThere are many arguments both for and against tax incentives for renewable electricity generation. Proponents of extending the wind PTC point to the potential loss of manufacturing and construction jobs that will result if the tax incentive is allowed to expire, the environmental benefits of U.S. wind development, and the potential to re-establish the United States as a global leader in an emerging industry. Opponents of a wind PTC extension argue that all electricity generators should be subject to market-based competition, wind electricity generation has been incentivized for a long enough period of time, and wind projects should compete on their own economic and environmental merits without the support of federal financial incentives.\nThis report examines how the production tax credit and its impending expiration impact the wind industry, and how other factors influence market demand for wind power projects.", "U.S. wind installations are expected to reach record levels in 2012, with industry analysts estimating between 10 GW and 12 GW of total installations by the end of the year. As a result, related economic development, employment, and manufacturing activities needed to support 2012 wind installations are likely to be at record levels. Wind developers, utility companies, and investors are accelerating their planned wind projects in order to qualify for tax credit incentives that might not be available in 2013 and beyond.\nIn essence, the pending PTC expiration at the end of 2012 has actually created a short-term surge in wind-related manufacturing and employment. Due to lead times—generally 12 to 18 months—required to fully develop wind projects, most manufacturing activities supporting 2012 wind capacity additions likely occurred either in 2011 or during the first quarter of 2012. Wind-related employment and economic development activity in the second half of 2012 will be primarily focused on construction, installation, and commissioning activities for projects in development. Based on current market conditions and other factors, it is unlikely that 2012 wind development levels can be sustained in either the near or long term, regardless of PTC availability.\nAccelerated wind development in anticipation of the PTC expiring can create a severe market downturn in the year following PTC expiration. The wind PTC has expired three times since 2000 (in 2000, 2002, and 2004), and the wind industry experienced precipitous drops in annual wind capacity installations in each of those years. One market estimate projects that 2013 wind capacity additions may drop to as low as 1 GW in 2013, if the PTC is not extended.", "Production tax credits for wind-generated electricity provide a financial incentive for project developers and investors to install wind projects in the United States. However, the PTC incentive is only one of several factors that influence wind development, and a PTC extension, in isolation of other market factors, may not result in ever-larger levels of wind deployment. Other important factors for project development include state renewable portfolio standards, electricity demand growth, and natural gas prices. Each of these factors is discussed in more detail below. The following sections provide some background on how a PTC extension might impact U.S. wind project installations and manufacturing. A brief discussion of the potential impact of a short-term versus long-term PTC extension is also provided.", "Various organizations have estimated the amount of wind project development under scenarios in which the PTC is either extended or is not extended. CRS obtained forecast information from the U.S. Energy Information Administration (EIA) and from Bloomberg New Energy Finance (BNEF) that estimates the amount of wind capacity (megawatts) expected to be installed under different PTC availability scenarios. Figure 2 compares estimated wind installations with existing U.S. wind turbine manufacturing capacity.\nAs indicated in Figure 2 , both BNEF and EIA forecast levels of wind development in 2013 and 2014 that are much less than development activity expected in 2012. As a result, levels of investment, manufacturing, and employment activity will be commensurately lower in the near term, even with a PTC extension. However, a short-term PTC extension may result in higher near-term levels of development activity when compared to scenarios without a PTC extension.", "Neither BNEF nor EIA estimate a scenario where wind installations meet or exceed existing U.S. wind turbine manufacturing capacity (see Figure 2 ). As a result, a PTC extension is unlikely to result in stimulating additional wind manufacturing facilities in the United States. Estimated wind installations in 2013 and 2014 are expected to drop to levels much lower than existing U.S. manufacturing capacity, including PTC extension scenarios. Whether the PTC expires or is extended, U.S. wind manufacturing utilization levels will likely be less than levels needed to support the wind market in 2012. Therefore, some U.S. wind manufacturing facilities could reduce operations or even completely shut down in 2013 and beyond.\nMuch like the U.S. wind market, there is excess capacity in the global wind turbine manufacturing sector. The competitive global market for wind generating equipment is one factor that may limit U.S. wind turbine manufacturing export opportunities. Other factors affecting U.S. wind exports may include logistic and transportation costs associated with exporting large wind turbine equipment and certain local-content policies within global markets that may require co-locating manufacturing capability within a geographical market area. However, excess wind turbine manufacturing capacity will likely result in wind turbine price decreases as manufacturers improve their cost and technology performance. Wind turbine price declines would contribute to new wind projects becoming more economically competitive with other sources of electricity generation on an unsubsidized basis.", "Some advocates for extending the availability of the PTC for wind projects argue that a long-term extension is needed to provide stable incentives that will result in certainty within the wind industry and may stimulate growth. The American Wind Energy Association (AWEA) states the following:\nThe wind industry seeks long-term tax policies, lasting more than just a few years, to provide consistency and market certainty.\nAWEA and other proponents of extending the availability of the PTC incentive argue that the expiring nature of production tax credits has created a volatile U.S. wind market with new installations ramping up just before the credits expire, and the following year having very little new wind development. It is possible that such uncertainty could reduce investment, research, and employment in the wind industry. Going forward, an element of the PTC debate may include the duration of PTC availability. If the PTC is extended, should it be a short-term, long-term, or indefinite extension?\nShort-term PTC extensions generally result in short-term manufacturing, development, and employment activity as project developers and investors seek to capture the value of tax credit incentives during their availability window. However, since much of the demand for wind-generated electricity is a result of state-level renewable portfolio standards (discussed in more detail below), a short-term PTC extension would likely result in accelerating wind deployments needed to comply with state RPS requirements. This acceleration scenario is illustrated by the BNEF three-year PTC extension forecast (dark green line) in Figure 2 , where annual installations reach 4 GW in 2013, 5 GW in 2014, and then ramp up to approximately 10 GW in 2015, when the credit extension would end. As a result, RPS-related demand in later years would likely decline and any future PTC extensions may or may not provide enough incentive to stimulate additional development activity.\nAlternatively, a stable and long-term PTC incentive would provide manufacturers and developers with known incentive levels over an established period of time. However, a long-term or permanent PTC may not stimulate market activity comparable to levels observed between 2010 and 2012. EIA forecasts indicate that an indefinite PTC extension could result in more total wind capacity installations over the projection period (see Figure 3 ) when compared to a reference case scenario. However, annual capacity installations in the long-term extension scenario are relatively modest (in some years zero) and peak at around 4 GW. These annual installation levels are much lower than the existing 13 GW of U.S. wind turbine assembly capacity.", "As briefly discussed above, availability of the federal production tax credit is one of several factors that impact the amount of wind development and deployment in the United States. Generally, state-level renewable portfolio standards (RPS) create a source of demand for wind projects. Overall U.S. electricity demand growth is also an important factor as it determines the total addressable market that wind projects can target. Low natural gas prices can create economic competitiveness pressure for wind projects but high natural gas prices can result in additional opportunities for the wind sector. While not an all-inclusive list of factors that affect wind development, the factors addressed below do represent some of the critical non-PTC factors that influence the U.S. wind industry. The following sections provide additional details about each factor.", "Generally, but not in all instances, a renewable portfolio standard is a policy that requires a certain percentage of electricity sold or generated within a defined geographical area be derived from qualified renewable energy sources. As of May 2012, 29 states plus the District of Columbia and Puerto Rico had binding RPS policies. While the general concept of an RPS is the same for all states, each state typically has a unique design and implementation approach for its respective RPS policy. For example, the state of California requires that by 2020 its utility companies will have 33% of their retail electricity sales generated from renewable energy sources.\nState RPS policies are the primary renewable electricity demand driver, although demand for renewable power can also be encouraged by voluntary green power programs and fundamental economics. Analysis by Lawrence Berkeley National Laboratory (LBNL) indicates that approximately 27 GW of non-hydro renewable electricity capacity was added in states with RPS policies in the years 1998-2010. On a capacity basis, 92% of these renewable electricity additions were wind power projects. From a generation perspective, the combination of mandated demand at the state level and federal financial incentives has created an environment that supports development of renewable electricity projects, most notably wind projects.\nOne typical compliance approach for RPS policies is submitting renewable energy certificates (RECs) to the appropriate state agency that manages RPS compliance. RECs, each of which receives a unique tracking identification number, represent the renewable attributes of electricity generated from a qualified renewable power facility. One REC typically represents one megawatt-hour of renewable electricity. RECs can be obtained on either a bundled basis, where a utility company contracts to purchase both the electricity and associated RECs from a renewable generator, or an unbundled basis, in which case a utility company may purchase qualified RECs from other entities. RECs can potentially provide an additional revenue source for wind projects, although the value of RECs can vary depending on the supply/demand balance within certain markets.\nAnalysis of state RPS compliance indicates that existing renewable electricity capacity may be adequate to allow for RPS compliance over the next several years. Furthermore, future RPS-driven demand may not be large enough to stimulate substantial growth in the wind electricity sector. LBNL estimates that approximately 4 GW-5 GW of annual renewable electricity capacity additions between 2011 and 2025 would be required in order to meet state RPS requirements. This compares to 6 GW-11 GW of renewable capacity installed between 2008 and 2010. RPS-driven renewable electricity demand, on its own, does not appear large enough to support annual wind industry growth going forward, and RPS policies may not provide enough demand to sustain annual wind capacity installations compared to levels installed in the years 2009 to 2012, or to match current U.S. manufacturing capacity.", "Electricity demand growth is an important factor when considering opportunities for renewable electricity for two primary reasons. First, generally, the greater the annual demand growth the more new electricity capacity needed to satisfy that demand. Larger annual requirements for new electricity capacity create more opportunities for renewable electricity projects to compete. Second, large annual demand growth can result in a larger base of electricity to which RPS policies are applied. The larger the electricity base, the greater the amount of renewable electricity required to comply with state percentage-based RPS policies. However, EIA projects modest growth levels for U.S. electricity demand over the next several years (see Figure 4 ).\nLong-term U.S. electricity demand is expected to continue along a modest annual growth path out to 2035. However, electric power demand in developing economies, such as China, is expected to experience significant annual growth out to 2035 (see Figure 5 ).\nAs indicated in Figure 5 , expected electric power demand growth profiles for the United States and China are very different, with China's growth level forecasted to be much larger than that of the United States. Therefore, opportunities for new electric generation capacity in China will be commensurately larger. As result, the Chinese electricity market may present more opportunities for renewable electricity projects, including wind power, due to the large amount of additional installations needed to meet projected electricity demand.", "The price of natural gas also has an impact on the U.S. wind market. Generally, lower natural gas prices can reduce the economic competitiveness of wind power, while higher natural gas prices can create opportunities for wind to compete on economics alone, in some cases without subsidies. Since wind power economics vary depending on project location, there is no single natural gas price level at which all wind projects can compete either on an unsubsidized basis or with the availability of PTC incentives. Furthermore, natural gas prices can affect wind power in different ways depending on the state or region in which a wind project operates.\nU.S. electricity markets are complex, and a comprehensive analysis of electricity markets is beyond the scope of this report. Generally, however, there are two distinct types of markets in the United States: (1) competitive markets: power generators are subject to price competition when selling power into wholesale markets, and (2) cost-of-service markets: power generators earn a regulated rate of return established by a public utilities commission. According to one estimate, approximately two-thirds of electricity consumed in the United States is within competitive markets. Furthermore, there are several regional power markets in the United States, each with a unique market structure, fuel mix, and set of rules that govern market operations. Depending on the respective market characteristics, natural gas prices can impact wind projects in different ways. The following sections provide two simplified examples of how natural gas prices might impact the economics, and development, of U.S. wind power projects.", "Competitive electricity markets are typically managed by a Regional Transmission Organization (RTO) or an Independent System Operator (ISO), a third-party operator of the electricity transmission system for a defined geographical area. In essence, the RTO provides a market making function and is a critical interface between electricity purchasers and suppliers. RTO-coordinated markets can generally be described as markets where wholesale electricity rates are frequently established (typically on an hourly basis) through a bidding process. Power generators provide bids, usually based on the variable cost for each respective generator, to supply a certain amount of electricity. The RTO will organize the bids from the lowest to the highest. The bid offer price that matches the level of electricity supply necessary to meet power demand sets what is known as the \"clearing price.\" Figure 6 provides a simplified example of how the clearing price might be established for wholesale electric power within an RTO-coordinated market. All generators that supply electricity at or below the clearing price are paid for their electricity supply at the clearing price level. However, many power generators may establish power purchase agreements (PPAs) directly with utility companies to provide long-term revenue certainty. In these instances financial transactions between generators and power purchasers will often occur exclusive of the RTO clearing price mechanism in order to satisfy PPA terms and conditions.\nIn certain electricity markets, during different times of year, and during certain times throughout a day, especially during daytime hours when electricity demand peaks, natural gas power generation sets the clearing price. Since natural gas fuel costs are the largest contributor to natural gas power generation costs, there will be some degree of correlation between the price of natural gas and the wholesale electricity clearing price within certain markets. Generally, as natural gas prices rise, so does the clearing price during certain times throughout the day. However, total electricity demand within a market can also impact wholesale electricity prices. For wind projects that participate in this type of market without a PPA, also known as \"merchant wind,\" the clearing price will usually determine the revenue received for electricity sold into the market. Although, in certain instances, wind projects can supplement their electric power revenue by selling renewable energy certificates (RECs) to entities required to comply with state RPS policies. Nevertheless, higher natural gas prices and the resulting higher electricity clearing prices can increase revenues for wind projects thereby making them attractive investment and development opportunities. Conversely, lower natural gas prices and lower clearing prices can decrease wind project revenues to a point where projects are not economically viable.\nWind projects in RTO-coordinated markets can mitigate wholesale market price risk by entering into long term PPAs with utility companies. In this case, utility companies absorb the risks associated with low wholesale clearing prices. Utilities may be motivated to enter into PPAs with wind projects as a means of complying with state RPS policies or as a way to hedge against rising natural gas and wholesale electricity prices. However, many state RPS policies include an alternative compliance payment (ACP) design element whereby utilities can opt to make payments to an ACP fund instead of generating or purchasing a required amount of renewable electricity. Low natural gas prices can lower electricity prices and result in making ACPs more economical than either building or paying for renewable generation. Thus, the short- and long-term price of natural gas, along with any ACP policy, can impact a utility company's decision to enter into PPAs with renewable electricity generators.", "The state of California currently has one of the most aggressive RPS policies. However, as part of the policy design, the California RPS includes a cost containment design element, which is directly linked to the price of natural gas. California has used a Market Price Referent (MPR) as a benchmark for determining the price premium required to support certain sources of renewable electricity. If contract prices for renewable electricity exceed MPR levels, then formal approval by the California Public Utilities Commission (CPUC) of the contract must be obtained and above market funds (AMFs) must be available to compensate for the additional cost associated with purchasing the renewable power. AMFs establish cost limits for California electric utility companies required to comply with the state's RPS policy. Benchmark MPR prices are set based on the levelized price of electricity from a 500 MW natural gas-fired combined cycle gas turbine (CCGT). Consequently, natural gas prices can significantly influence MPR benchmark price levels. This approach is designed to contain costs associated with RPS implementation since \"the MPR sets a limit on the procurement obligations of retail sellers under the RPS program.\"", "The 112 th Congress may decide if the PTC incentive for wind electricity will be extended, modified, or terminated. During the congressional debate about the future of the wind PTC incentive, Congress may consider various policy options, including those discussed below.", "Absent congressional action, the PTC incentive for wind electricity projects will no longer be available for new installations placed in service after January 1, 2013. Some market projections suggest that annual wind capacity additions will decline precipitously if the PTC expires (see Figure 2 ). As a result, wind-related manufacturing and project development employment would decline as well. Allowing the PTC to expire may motivate wind equipment manufacturers and developers to take certain actions (e.g., maximize turbine performance, minimize manufacturing costs) necessary to make wind electricity more broadly competitive on an unsubsidized basis. These actions could potentially result in a stronger and more robust, although possibly smaller, wind industry that can compete directly with all sources of power generation. However if state RPS policies remain as-is and low natural gas prices persist, a prolonged industry contraction could limit the ability of the wind industry to respond once, and if, market conditions change.", "Congress might also consider extending the PTC incentive. Some market estimates indicate that a PTC extension would result in increasing U.S. wind capacity installations, when compared with allowing the PTC to expire—but at levels less than those observed since 2009 and less than current U.S. wind turbine manufacturing capacity (see Figure 2 ). Determining the duration of a possible PTC extension is also an important policy consideration. Generally, the shorter the extension the more near-term wind market activity that may be stimulated since project developers are motivated to install new capacity in order to qualify for PTC incentives. However, depending on the timing of an extension, a one-year extension may have limited impact due to 12-18 month wind project development lead times. Also, as discussed above, the near-term market stimulation that might result from a PTC extension may accelerate wind development at the expense of future-year RPS-driven demand. A permanent PTC may not stimulate near-term wind development activity since there would likely be less motivation to accelerate projects in order qualify for federal tax incentives (see Figure 3 ). However, in a market where natural gas prices are rising, a permanent PTC could potentially stimulate wind electricity demand that might not otherwise occur.\nSome bills have been introduced in the 112 th Congress that would extend the availability of the PTC incentive for wind electricity projects. Table 1 includes four bills that have been introduced and compares the duration of the PTC extension under each proposal.", "Another policy option that has been discussed during the 112 th Congress is the possibility of an extension that phases out the PTC incentive over time. The basic concept of a PTC phase-out is to gradually reduce the value of the incentive over time in order to provide the industry a degree of certainty and a motivation to improve cost and performance efficiencies in order to become price competitive without the PTC. The design of a PTC phase-out policy could potentially be difficult because, in order to stimulate U.S. wind development, the rate at which the PTC is reduced may need to be offset by, or aligned to changes in, other market factors (e.g., higher natural gas prices, more stringent state RPS policies, increased U.S. electricity demand). These other market factors will likely be beyond the scope of control of the PTC phase-out policy. An alternative approach may be a dynamic PTC phase-out design that requires a minimum PTC incentive reduction annually but could also be adjusted based on other market conditions (e.g., natural gas prices, system costs, technology improvements). Implementation of a dynamic PTC phase-out could potentially be complicated as well and the policy would need to be designed in such a way to motivate the industry to continue cost reduction and technology improvement initiatives.", "The Family and Business Tax Cut Certainty Act of 2012 ( S. 3521 ) passed a Senate Finance committee vote and was reported to the Senate on August 28, 2012. Among a number of tax-related provisions and extensions, S. 3521 includes language that extends the availability of production tax credits for wind facilities until January 1, 2014. The bill also modifies the definition of a qualified facility by allowing projects that start construction by January 1, 2014, to qualify for PTC incentives. This modification could be viewed as important to wind projects as it alleviates investment and development pressures that might result from having to place new projects into service by the end of 2013. Precedent for using a start-of-construction deadline for tax incentives includes the Section 1603 cash grant program administered by the U.S. Treasury. As part of the Section 1603 program, projects could qualify for the cash grant by starting construction before a certain date, but the project must be placed into service before the underlying tax credit for each respective technology expired. The wind PTC extension and modification outlined in S. 3521 enables projects to qualify for the PTC if construction begins before January 1, 2014; however, there is no requirement for the qualified project to be placed in service by a certain date. By not having a placed-in-service deadline, projects would have the flexibility to complete construction based on their optimal completion schedules. On the other hand, including a placed-in-service deadline as part of a PTC extension could potentially result in stimulating manufacturing and construction activity required to receive PTC incentives." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 2, 2, 3, 3, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h1_full", "h1_full", "h0_full h2_title h1_title h3_title", "h2_full", "", "h0_full h3_full h1_full", "h2_full h3_title", "h3_full h2_full", "h2_full", "h2_full", "", "", "h3_full h0_title", "h0_full", "h3_full", "h3_full", "" ] }	{ "question": [ "Why is the PTC important in the U.S wind industry?", "What projects are and are not eligible for PTC incentives?", "Why are industry members advocating for PTC availability extensions?", "What benefits would an extension provide?", "How will an extension impact the wind industry?", "How is the pending expiration of the PTC impacting the wind market?", "What are the projected differences in wind installations between 2012 and 2013?", "What are some explanations for this discrepancy?", "What do projections say about wind turbine demand?", "What are some of the factors affecting wind development?", "How have state RPS policies created demand for wind projects?", "How much growth can be expected from these policies?", "How can natural gas prices influence the wind market?", "What kind of changes in natural gas pricing are anticipated in the coming years?", "What options does Congress have regarding the PTC incentive?", "What other consideration could be a part of a decision around PTC incentives?", "How can duration influence wind market activity?", "What factors could influence the results of a PTC plan?" ], "summary": [ "Originally established in 1992, the PTC has played a role in the evolution and growth of the U.S. wind industry.", "U.S. wind projects that use large turbines—greater than 100 kilowatts (kW)—are eligible to receive federal tax incentives in the form of production tax credits (PTC) and accelerated depreciation. Under existing law, wind projects placed in service on or after January 1, 2013, will not be eligible to receive the PTC incentive.", "Industry proponents are advocating for an extension of PTC availability, citing employment, economic development, and other considerations as justification for the extension.", "While a PTC extension may improve the prospects for U.S. wind development and manufacturing next year and beyond, the wind industry is influenced by a number of other factors.", "It is uncertain how the near- or long-term availability of the PTC incentive—in isolation of changes to other market factors—would either grow or sustain current wind development and manufacturing levels.", "For 2012, the pending expiration of the wind PTC is actually creating a short-term surge in wind project development and related investment and employment.", "Wind installations in 2012 are expected to range somewhere between 10 to 12 gigawatts (GW)—a record year for the industry. However, market estimates for new installations in 2013 range from 1-2 GW if the PTC expires and 2-4 GW if the PTC is extended.", "Limited market activity in 2013 is partially explained by the uncertain nature of the PTC, which results in reduced manufacturing orders and development activity as developers and investors wait for official policy direction. Wind installation projections for 2014 and beyond vary with the assumed availability, and duration, of PTC incentives.", "However, all projections reviewed for this report expect annual U.S. wind turbine demand to be less than the existing U.S. turbine manufacturing capacity—approximately 13 GW per year.", "Other factors that can affect wind development include (1) state renewable portfolio standards (RPS), (2) U.S. electricity demand growth, and (3) the price of natural gas.", "State RPS policies have been the primary demand creator for wind projects, in most cases, by requiring certain utilities to source a percentage of their retail electricity sales from renewable generators.", "Market analysis indicates that incremental RPS-driven demand for all sources of renewable power is estimated to be 4 GW-5 GW annually until 2025. Additionally, U.S. electricity demand growth is expected to be modest for the foreseeable future, meaning that there will likely be modest demand for new electric power capacity.", "Finally, the price of natural gas can also influence wind markets. Low natural gas prices can erode the economic competitiveness of wind electricity, while high natural gas prices can result in opportunities for wind to compete economically without the PTC.", "Current estimates from the U.S. Energy Information Administration (EIA) project sustained low, but increasing, natural gas prices for the next several years.", "By the end of 2012, Congress will either allow the PTC incentive to expire or it may choose to extend or modify the incentive.", "Should Congress decide to extend the availability of wind PTC incentives, the duration (e.g., two years, four years, permanent) of such an extension will likely be part of the policy debate.", "Generally, the shorter the extension the greater the short-term economic and employment activity as developers and investors accelerate development plans in order to qualify for the PTC incentive. However, this development acceleration is likely to reduce future RPS-driven demand.", "A permanent PTC is also a policy option that may be considered, and EIA estimates indicate that such a policy may actually reduce near-term wind capacity additions, with annual installations peaking at 4 GW in the 2030 timeframe. Higher natural gas prices, more aggressive RPS policies, and increased U.S. electricity demand could change this outlook." ], "parent_pair_index": [ -1, -1, -1, 2, 2, -1, -1, 1, -1, -1, -1, 1, -1, 3, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }
GAO_GAO-16-155	{ "title": [ "Background", "Overview of IRS Referrals for Tax Noncompliance", "Paper Information Referrals Mailed to IRS", "IRS Roles and Responsibilities for Processing Information Referrals", "Information Referral Screening Is a Manual Process, and Operating Division Priorities Determine Audit Selection", "Operating Division Priorities Influence Audit Selection Decisions", "Classification", "Prioritization", "Selection", "The Small Share of Information Referrals Audited Resulted in Millions in Additional Tax Assessments Recommended", "Ineffective Internal Controls Undercut IRS’s Ability to Sufficiently Manage Information Referrals", "IRS Organizational Structure for Information Referrals Is Fragmented without Clear Leadership for Defining Objectives and Measuring Results", "IRS Has Not Documented and Consistently Implemented Procedures Controlling the Information Referral Screening and Routing Process", "IRS Lacks Supervisory Review and Segregation of Duties for Preparing Information Referral Inventory Reports", "Information Referrals Retained for Destruction Are Not Subject to Ongoing Monitoring", "Misroutes Returned Are Used as a Measure of Routing Quality, but the Extent of Misrouting Is Unknown", "Opportunities Exist to Improve Coordination across Fragmented and Overlapping Referral Programs and to Share Efficiency Improvement Practices", "Fragmented Referral Programs Complicate Tax Noncompliance Reporting and Result in Overlapping Efforts", "Referral Programs May Benefit from Improved Communication and Options to Increase Referral Intake Efficiencies", "IRS Lacks Mechanisms for Coordinating and Streamlining Referral Intake Processes", "Opportunities to Consolidate Referral Intake", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: IRS Form 3949-A Information Referral", "Appendix III: Comment from the Treasury Department", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "In order to collect tax revenue that would otherwise go uncollected and resolve threats to the integrity and fairness of the tax system, IRS encourages the public to report possible federal tax noncompliance and fraud. IRS has a web page to help the public find resources for reporting both general and specific types of federal tax noncompliance. IRS’s information referral process is for reporting general types of tax noncompliance, including failure to file a tax return, report income, or pay taxes owed. IRS has other specialized processes for reporting specific types of tax noncompliance, such as identity theft and misconduct by a tax return preparer.\nIn fiscal year 2015, IRS received over 87,000 information referrals, as shown in figure 1. During fiscal years 2013 and 2014, IRS revised the information referral instructions for the public to help clarify the other specific forms to use to report directly to IRS’s specialized referral programs, which IRS officials said has contributed to the reduced volume in information referrals.", "The public reports general tax noncompliance—by individuals, businesses, or both—by submitting Form 3949-A. The form provides checkboxes for identifying 16 types of noncompliance (including activities such as organized crime, narcotics income, and false/altered documents) and requests the dollar amounts and years of unreported income, among other things (see figure 2). The form instructions, which are reproduced in appendix II, explain the different checkboxes for reporting tax noncompliance.\nIn completing the information referral form, a person is asked to provide as much information as possible identifying the name, address, and tax identification number of the taxpayer reported. Providing partial information does not mean IRS will reject the information outright, but insufficient identifying information may preclude IRS from making use of a referral. The person submitting an information referral is also asked to provide personal identifying information but may submit anonymously. Persons submitting an information referral are not entitled to any reward if the information is used and results in additional tax being collected. Once the form is completed, the person mails it to the IRS submission processing center in Fresno, California, where the form enters the information referral process.", "As summarized in table 1, multiple units across IRS play important roles in processing information referrals submitted by the public:\nThe Image Control Team (ICT), within the submission processing center in Fresno, California, receives and initially screens paper information referrals received by mail for routing to other IRS units for further action. Like other ICT clerical units, the Fresno ICT is also responsible for processing, distributing, and managing other time- sensitive taxpayer correspondence.\nSubmission Processing management assigns Fresno ICT staff for information referral screening as resources are available.\nAccounts Management maintains the guidelines and facilitates coordination between Submission Processing, Fresno ICT, and the various IRS units, such as SB/SE and W&I, which receive information referrals for follow-up.\nTiger Team—established in October 2012 by IRS with membership composed of representatives from Accounts Management, Submission Processing, and IRS audit and investigation operating divisions—is responsible for developing the guidelines for screening and routing information referrals for further action. The Tiger Team meets bimonthly to discuss the guidelines, provide feedback on information referrals misrouted to other IRS units, and receive updates on the number of information referrals received and screened and routed by Fresno ICT. In addition, the Tiger Team receives questions from Fresno ICT regarding how the information referrals should be handled when new situations arise.\nFollowing initial processing, IRS operating divisions screen information referrals for audit and investigation potential. The W&I division handles referrals about individual income taxpayers. The SB/SE division handles referrals about small businesses and business income for individual taxpayers. The Large Business and International division handles referrals about large corporations and partnerships as well as international income tax issues. The Tax Exempt and Government Entities (TE/GE) division receives referrals about tax-exempt organizations, employee retirement plans, and government entities. The Criminal Investigation (CI) division receives referrals about schemes and transactions involving larger dollars or numbers of taxpayers.", "The information referral screening and routing process involves multiple steps, as shown in figure 3. The process begins when a person mails a paper information referral reporting alleged tax noncompliance to IRS in Fresno, California. The process ends with the information referral being retained for destruction or routed by mail to an operating division or other IRS unit for additional review to determine if the alleged wrongdoer may owe taxes or face other enforcement actions.\nIntake. Information referrals alleging tax noncompliance are initially received in the Submission Processing, Receipt and Control unit (mailroom) of the IRS Fresno campus: mailroom staff date stamp the forms and route them to ICT. Upon receipt in ICT, the information referrals are date stamped a second time and batched in bundles of 25 or less. The inventory of information referrals is stored on a wall of bookcases until Fresno ICT clerical staff are available to screen them.\nInitial screening. Once assigned to review information referrals, Fresno ICT clerical staff screen the information referral text describing the alleged violation (shown in figure 2). To do this, staff look for key words that signal possible tax law noncompliance as specified in the guidelines. For example, if an information referral alleges unreported income, staff look for the “unreported income” checkbox or key words, such as paid by cash, off the books, or under the table. A referral may allege multiple types of tax noncompliance, and determining the appropriate IRS unit to receive the referral for further action can be subjective.\nTaxpayer identification research. After initial screening for the tax issues, Fresno ICT clerical staff must determine if the information referral includes a tax identification number (TIN) that identifies the alleged wrongdoer. If a TIN is not included, staff use the IRS integrated data retrieval system (IDRS) to locate the Social Security number for an individual or the employer identification number for a business. For alleged issues with Form 1040 individual tax returns, such as itemized deductions or refundable credits, Fresno ICT clerical staff use IDRS to determine whether the taxpayer is overseen by W&I or SB/SE. After doing the appropriate screening and research, the Fresno ICT employee who performed the work is required to enter his or her identification number on the top left hand corner of the paper information referral.\nRouting. Upon completion of TIN research, Fresno ICT clerical staff use the guidelines to route information referrals to IRS divisions or other units or to retain them for destruction. After determining the appropriate routing, clerical staff manually sort the paper referrals into 31 boxes—each labeled with key words drawn from the guidelines and the name of the corresponding IRS unit. For example, the box for routing business tax issues to SB/SE audit lists key words for unreported business income, such as “company or corporation,” “rental property,” and “self-employed.” For alleged issues with Form 1040 individual tax returns, such as itemized deductions or refundable credits, Fresno ICT clerical staff sort the information referrals into separate boxes for W&I and SB/SE routing based on the IDRS tax identification research. On an intermittent basis (or when a box is full), Fresno ICT lead staff count the number of information referrals in a box, attach a Form 3210 Document Transmittal, and route the referrals by mail to the designated operating division or other IRS unit for further review. Fresno ICT routes information referrals to 26 different locations across about 15 other IRS operating divisions and units. SB/SE and W&I audit divisions are the most common recipients of information referrals from the Fresno ICT, as shown in figure 4. From fiscal years 2012 through 2015, SB/SE received over 170,000 information referrals and W&I received over 100,000—about two-thirds of all information referrals routed for further review.\nRetention. Referrals that cannot be routed as instructed by the guidelines are retained for destruction for 90 days. These may include information referrals that do not allege a federal tax issue or do not have key words specified in the guidelines. For example, the referral may allege that the taxpayer owes paid child support, has unpaid state taxes, or is improperly receiving benefits from another federal program. Those retained may also include referrals without the name, address, or TIN where the clerical staff cannot identify the alleged taxpayer. IRS officials told us that some referrals have only vague insinuations of wrongdoing and that a small number of individuals repeatedly submit multiple claims of this type. For example, a few individuals send in bulk referrals with similar allegations about businesses in certain industries or geographic areas. Since fiscal year 2012, the share of referrals sent for destruction has increased, with 25 percent of referrals retained for destruction in fiscal years 2014 and 2015. Once sent to retention, information referrals are boxed and sealed for storage for 90 days. These referrals are not subject to further screening or analysis prior to destruction.", "After information referrals are routed to the appropriate IRS audit unit, staff within that unit determine if there is a tax noncompliance issue and whether it is worth pursuing in light of available resources and priorities. The first step is classification, which is a process of determining whether a return should be selected for audit and what issues should be audited. The next steps are prioritization and actual return selection. For paper information referrals, these steps are generally a manual process.", "To classify information referrals, operating units and divisions (such as W&I and SB/SE) review the content of the information referral to determine whether the referral has audit potential—returns for which an audit is most likely to find errors and recommend changes to the reported tax. Factors to be considered at this stage include a clear and reliable issue, strong supporting documentation by the person submitting the information referral, attainment of certain IRS-defined criteria or tolerances (such as dollar thresholds), inclusion of a significant dollar amount in the allegation, and criminal or significant civil tax potential. If the referral does not have audit potential, it is held for the retention period and then destroyed.", "After classifying those information referrals with audit potential, IRS determines each referral’s priority. The prioritization process varies among IRS operating divisions. W&I and SB/SE both perform correspondence audits—in which a letter is sent to taxpayers asking them to provide information about an item on their tax return. SB/SE also performs field audits—which include face-to-face audits with taxpayers to review their books and records.\nTo prioritize its audits, W&I uses a work plan to determine how many Earned Income Tax Credit (EITC) information referrals to audit each month for its correspondence audits. According to W&I officials, the planned number of referral audits by month is an estimate, and sometimes other non-referral cases may receive higher priority over referrals for audit. If W&I performs fewer referral-related audits than estimated in one month, it will plan to perform more in the following month.\nSB/SE prioritizes returns for examination based on the merit of the tax issue, not on the source of the information. SB/SE also uses a work plan for its correspondence audits, but does not have targets for numbers of information referral cases to audit. According to SB/SE officials, whether a referral is included in a correspondence audit is dependent on the current inventory level. In contrast, SB/SE field audit uses a project code list to prioritize audits by project issues, such as tax return preparers, offshore transactions, abusive transactions, fraud, and information referrals. According to SB/SE officials, other projects may be a higher priority than information referrals in general, and a referral that involves higher priority issues would be considered higher priority as well. For example, an information referral involving offshore transactions would receive a higher priority than a routine information referral.\nAccording to CI officials, CI conducts a general review of all referrals (regardless of the source) in order to evaluate the facts and allegations and to determine if there is a potential criminal lead that warrants an investigation. CI priorities are those referrals that involve high-risk tax noncompliance or financial crimes.", "Taxpayers are selected for audit based on the amount of audit potential, how they fit into the audit plan, the resources available, and the size of the inventory. According to IRS officials, there are many reasons why information referrals may not be selected for audit. For example, if a referral contains erroneous information (such as a tax return that was incorrectly claimed to be unfiled) it may not be selected. In addition, a referral may not lead to a new audit case if IRS has already identified that return through another selection mechanism.", "In fiscal years 2012 through 2015, about 4.6 percent of information referrals routed to SB/SE and W&I led to audits. Specifically, about 5.4 percent of information referrals routed to SB/SE and about 3.4 percent routed to W&I led to audits over that period. As shown in tables 2 and 3, approximately 13,000 audits selected based on information referrals resulted in over $209 million in additional tax assessments recommended.", "Internal control standards can serve as tools to help IRS management ensure that the information referral process contributes to IRS’s mission of treating all taxpayers equitably and with integrity. However, when we compared IRS’s process to these standards, we found that some controls were deficient in their design and implementation. Specifically, we found limitations in oversight structure, documentation of procedures, and monitoring results. These control deficiencies increase the risk that handling of information referrals could fall short of the IRS mission, resulting in inconsistent and inequitable treatment of noncompliance leads submitted by the public.", "According to federal internal control standards, an agency’s organizational structure provides management’s framework for planning, directing, and controlling operations to achieve agency objectives. A good internal control environment requires that the agency’s organizational structure clearly defines key areas of authority and responsibility and establishes appropriate lines of reporting. IRS does not have an organizational structure for the information referral process with clear leadership responsible for defining objectives in measureable terms to ensure that the objectives of the information referral process aligns with IRS’s mission of fair and equitable application of the tax laws and addressing the tax gap. For example, within the current structure, Accounts Management and the Fresno ICT have separate responsibilities focused on routing information referrals to other IRS units, but Accounts Management and the Fresno ICT are not responsible for determining the outcomes of the information referrals. Also, the Tiger Team is not tasked with tracking how many referrals undergo follow-up and results achieved, such as detecting noncompliant taxpayers and potential revenue that would otherwise go uncollected.\nIn an effort to determine measureable outcomes for the information referral process, in 2013 TIGTA recommended that W&I assess the value of the information referral process to reassess the emphasis placed on that process, and prioritize it as needed. IRS had agreed to assess the value of the process after implementing other changes TIGTA recommended in a prior report which included revising the form and its instructions and developing guidelines for screening and routing referrals. As of December 2015, IRS had not taken action on this recommendation. In November 2015, W&I leadership explained that it would not be cost-effective for Accounts Management and Fresno ICT to track the information referrals and determine outcomes achieved by the various divisions and other units that receive the forms when ICT is only processing the forms. According to IRS officials, Fresno ICT clerical staff spent over 4,900 hours on information referral screening in fiscal year 2015, but those hours do not reflect Submission Processing and Accounts Management time for the coordination activities and maintaining the guidelines. Although IRS has not assessed the value of the information referral process, according to IRS’s Audit Information Management System data, audits based on information referrals resulted in at least $62 million in recommended tax assessments for fiscal year 2014 (the most recent complete year available).\nW&I and SB/SE received nearly two-thirds of information referrals routed out of Fresno but W&I and SB/SE do not track their costs for screening and classifying paper information referrals for audit consideration. The IRS realignment of compliance operations has led to additional processing steps within the W&I and SB/SE units that process information referrals. In November 2014, IRS realigned compliance operations across its W&I and SB/SE operating divisions. As a result of this realignment, all EITC and pre-refund compliance programs are now carried out by W&I, and all other discretionary programs moved to SB/SE. At the end of fiscal year 2015, the guidelines still directed Fresno ICT to send information referrals involving individual taxpayers without business or self-employed income to W&I and all referrals for individual taxpayers with business income to SB/SE. According to IRS audit officials, W&I and SB/SE are taking an additional step to physically exchange information referrals routed from Fresno between their correspondence audit units in Andover, Massachusetts. As of December 2015, W&I was routing information referrals other than those for the EITC to SB/SE, and SB/SE was routing all EITC referrals to W&I. According to IRS officials, W&I and SB/SE have agreed to conduct a test to track receipts of EITC and non-EITC information referrals and to discuss the results in early 2016 to determine the next steps for the routing of the information referrals.\nThe fragmented structure of oversight and management of the information referral screening process coupled with dispersed responsibility for follow-up activities throughout IRS also complicates determining how much IRS spends in total on screening paper information referrals and mailing the paper forms back and forth between IRS locations. Without clear leadership and responsibility for defining program objectives and measuring outcomes resulting from information referrals about tax noncompliance by individuals and businesses, IRS does not know the costs of the information referral process or how effectively that process is contributing to the agency’s mission and addressing the tax gap.", "Federal internal control standards call for all transactions and other significant events to be clearly documented and available for examination. The documentation should appear in management directives, administrative policies, or operating manuals and may be in paper or electronic form. All documentation and records should be properly managed and maintained. IRS requires primary sources of guidance and procedures with an IRS-wide or organizational impact to be included in the IRM. This requirement is intended to ensure that IRS employees have the approved policy and guidance they need to carry out their responsibilities in administering the tax laws. However, we found gaps in documentation of procedures for ICT clerical screening and routing of information referrals as well as for updating and distribution of screening and routing guidelines.\nIRS has incomplete documentation of procedures for screening and routing information referrals to other IRS units for further action. Since 2012, IRS has developed written screening and routing guidelines documenting which tax issues to mail to specific points of contact in other IRS units. Accounts Management distributes these guidelines via the Servicewide Electronic Research Program, which provides employees with access to current IRMs, interim procedural guidance, and reference materials. In November 2015 Submission Processing issued IRM procedures for ICT clerical operations effective January 1, 2016. However, the revised IRM does not have procedures for the Fresno ICT clerical screening and routing of information referrals. Specifically, the Fresno ICT does not have documented procedures to ensure that labels used by the clerical staff in sorting screened referrals into the various boxes for routing are consistent with the guidelines developed by the Tiger Team. The Fresno ICT staff developed the box labels as an onsite job aid, and the Fresno ICT managers incorporated the box numbering job aid in training for the 2015 filing season temporary clerical staff.\nHowever, discrepancies between the key words on the box labels and the guidelines have resulted in misrouting. For example, we observed that labels indicated to route referrals alleging unreported retirement and tax- exempt bond income to the TE/GE division. However, the guidelines direct routing individual income misreporting allegations to the W&I and SB/SE divisions. TE/GE officials confirmed that the ICT incorrectly routes referrals about individuals misreporting income to their unit. They also said that the number of misroutes had decreased as misroutes were discussed at Tiger Team meetings and Fresno ICT clerks received additional training on screening referrals.\nThe revised IRM lists the Form 3949-A screening and routing guidelines as a document but does not have procedures for the Fresno ICT regarding (1) applying the guidelines, (2) inventory management reporting,(3) monitoring referrals retained for destruction, and (4) feedback on the misrouted referrals. In contrast, IRM procedures for the correspondence scanning performed by ICT clerical staff detail steps on removing staples from paper to be scanned and the daily tasks for cleaning the scanners. The lack of documented procedures clearly linking the guidelines to the physical logistics of clerical routing of paper forms increases the risk that the guidelines will not be implemented consistently.\nWe also found deficiencies in maintaining and communicating the guidelines to the clerical staff. According to an Accounts Management official, in the fall of 2014, the Accounts Management unit inadvertently distributed an outdated copy of the guidelines that did not incorporate clarifications added to aid the Fresno ICT staff with clerical screening of information referrals involving child identify theft (discussed further below). According to Accounts Management officials, they are working to ensure that updated guidelines are communicated in a timely basis to the clerical staff. At the June 2015 coordination meeting, the Fresno ICT managers said that they were not aware that the Accounts Management unit had distributed updated guidelines on the Servicewide Electronic Research Program. As a result, the Fresno ICT managers did not distribute copies of the latest guidance for the clerical staff to follow. According to IRS officials in September 2015, the Accounts Management unit began to electronically distribute updated guidelines each month and to alert the Fresno ICT managers by email so they can print paper guidelines for the clerical staff. However, we noted that the revised IRM for ICT operations does not have procedures for this communication practice. In December 2015, when we discussed this with IRS officials, they agreed that the IRM should document the guidelines and procedures for the Fresno ICT clerical staff for screening and routing information referrals.\nIn addition, inadequate controls over maintaining and communicating the routing guidelines coupled with incomplete procedures linking the routing guidelines to the routing boxes have contributed to clerical confusion and errors that resulted in IRS erroneously destroying information referrals from taxpayers reporting child identity theft. In March 2015, the ICT clerical staff we observed in Fresno said that they were uncertain how to route such referrals. The clerical staff we interviewed said that the label on the identity theft routing box originally specified child identity theft as key words for screening and routing, but those key words were omitted at some point in updating the box label. Although the routing guidelines for screening and routing identity theft referrals approved by the Tiger Team had not changed, some clerical staff stopped routing child identity theft referrals and instead retained those for destruction. We were not able to quantify how many information referrals reporting child identify theft may have been erroneously destroyed between the fall of 2014 and March 2015.\nDuring our audit visit, we reviewed the most recent box of 155 information referrals retained for destruction and identified 12 information referrals reporting potential child identity theft or misuse of a child’s tax identification number where the parent or custodian did not know who was using the child’s identity. During a meeting with Fresno ICT managers regarding the 12 information referrals, the ICT managers said that they determined that 4 of the 12 referrals were correctly retained for destruction because the individual submitting the referral did not specify another tax issue and did not know who used the child’s identity. Seven of the 12 referrals should not have been retained for destruction and were subsequently routed by the Fresno ICT as stolen refund cases, and one of the 12 referrals alleging identity theft by a tax return preparer was routed to the Return Preparer referral program. During the June 2015 coordination meeting that we observed, Accounts Management officials orally directed the Fresno ICT managers to instruct the clerical staff to route referrals about child identity theft. The Fresno ICT managers instead requested that Accounts Management and Tiger Team clarify the guidelines for child identity theft reports to avoid further confusion. In August 2015, the clarification was added to the routing guidelines.\nInadequate controls over the guidelines without clearly documented clerical review procedures pose the risk that clerical staff may apply outdated or inaccurate routing guidelines. Misrouting the information referrals causes delays and added cost for IRS in getting referrals to the appropriate unit for follow-up. Information referrals inappropriately retained for destruction may compromise IRS’s ability to combat tax noncompliance reported by the public and to assist identity theft victims.", "According to federal internal control standards, effective management of an organization’s workforce—its human capital—is essential to achieving results. Qualified and continuous supervision should be provided to ensure that internal control objectives are met. Internal control standards also require key duties and responsibilities to be divided or segregated among different people to reduce the risk of error or fraud. This should include separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling related assets. No one individual should control all key aspects of a transaction or event.\nAccording to Fresno ICT management, due to limited experienced staff for the information referral process, management relies on one lead clerk to keep track of the information referral inventory. That Fresno ICT lead clerk is responsible for several key inventory reporting duties which include documenting the number of referrals received, counting and mailing those routed to other IRS units, and compiling the weekly inventory reports. The weekly inventory reports compiled by the Fresno ICT are used by Submission Processing, Accounts Management, and other IRS units participating in the Tiger Team to track the volume of information referrals received, referrals waiting in inventory, and volumes routed to other units. Inventory information is used by the Fresno ICT management in assigning clerical staff The Fresno ICT has not trained additional lead clerks to compile the inventory reports. Given the fragmented organizational structure and shared use of the weekly report, it is unclear whether the Accounts Management unit or the Fresno ICT is responsible for documenting procedures on how to prepare the inventory reports.\nIn addition, IRS officials explained that due to time constraints and other priorities in the Fresno ICT, information referral inventory reports are not reviewed by a supervisor before relaying the weekly report to Accounts Management. During our visit, we tested several weekly reports to the transmittal forms that document the number of information referrals that are routed to other units. Developing the reports involves several calculations to document the number of information referrals received and routed to each of the other operating units. We identified errors in tallying the counts of referrals retained, recording the number of referrals sent to each IRS unit, and calculating the total number routed. The lack of supervisory review and segregation of duties in preparing information referral inventory reports can lead to errors in developing these reports which are used by other IRS operating units.", "According to federal internal control standards, ongoing monitoring should occur in the course of normal operations. It is performed continually and is ingrained in the agency’s operations. It includes regular management and supervisory activities, comparisons, reconciliations, and other actions people take in performing their duties.\nWe found that IRS does not have documented procedures for supervisory review for screening referrals retained for destruction, although one- quarter of information referrals received in fiscal years 2014 and 2015 were destroyed rather than routed for follow-up. The ICT quality review staff are to sample all ICT work streams, but we could not determine which, if any, retained referrals had been reviewed under that process. According to the Fresno ICT managers and lead clerical staff, the lead clerk is to conduct a limited visual review of the referrals retained for destruction before sealing and dating each storage box, but we found no documentation of such reviews. Also, IRS does not track common reasons as to why referrals are not routed for follow-up.\nInformation referrals inappropriately retained for destruction may compromise IRS’s ability to combat tax noncompliance reported by the public and to assist identity theft victims. According to the Fresno ICT manager, prior to our March 2015 site visit, the Fresno ICT conducted an ad hoc quality review of referrals retained for destruction and had trained all clerical staff on the routing guidelines. According to the Fresno ICT manager, the clerical staff who do not screen information referrals regularly—such as temporary seasonal staff during the tax filing season—are less familiar with the guidelines and are more likely to incorrectly retain referrals for destruction. In response to the ad hoc review by Fresno ICT, the ICT removed and routed for follow-up several hundred referrals that otherwise would have been destroyed.\nDuring our March 2015 visit to the IRS ICT office in Fresno, California, we reviewed a nongeneralizable sample of 38 information referrals (screened during early January 2015 through mid-March 2015) retained for destruction. Even though IRS had conducted an ad hoc quality review of referrals retained for destruction prior to our visit, we questioned IRS officials about 10 of the 38 retained referrals we reviewed. These 10 referrals lacked documentation of clerical screening and tax identification number research or did not appear to follow the routing guidelines. IRS managers subsequently determined 4 of the 10 should not have been retained for destruction. Three referrals were routed to other IRS units after clerical staff completed TIN research and re-screened. One Spanish language referral had not been screened and was sorted for screening by a clerical staff person knowledgeable of Spanish.\nThe ad hoc review conducted by the Fresno ICT in March 2015 saved hundreds of referrals from destruction, but without periodic monitoring of the reasons for referrals being retained, IRS is missing an opportunity to identify patterns in retention errors. Analysis of referrals retained before destruction could help identify clerical staff errors that may be addressed by better documenting procedures. For example, the screening and routing guidelines do not have a procedure for referrals in languages other than English. The Fresno ICT has set up two boxes labeled for Spanish and other languages, respectively. However, clerical staff may not know to sort other language referrals in those boxes, and lead clerks may not regularly check those boxes because they are not part of the weekly routing mail and inventory report. Without procedures for reviewing information referrals retained for destruction, some referrals may be inappropriately retained which may compromise IRS’s ability to combat tax noncompliance reported by the public.", "Federal internal controls and all transactions and other significant events need to be clearly documented, and the documentation should be readily available for examination. The documentation should appear in management directives, administrative policies, or operating manuals and may be in paper or electronic form. All documentation and records should be properly managed and maintained.\nOfficials from the Accounts Management unit and the Fresno ICT told us that they rely on misrouted information referrals that are returned by other IRS units as feedback about the quality of the screening and routing process. The weekly inventory management and routing report documents the number of misroutes returned by various IRS units. The Fresno ICT uses the misrouted referrals to provide feedback to clerical staff about specific errors and then re-routes the paper referrals by mail to the appropriate unit for follow-up. IRS units that return misroutes to the Fresno ICT use an IRS transmittal form to document the return of misroutes to the ICT. The transmittal form also reports the number of referrals incorrectly sent to the IRS unit. This feedback process adds costs of mailing misroutes back and delays in re-routing referrals for follow-up. For fiscal year 2016 as of December 2015, W&I returned 625 misrouted information referrals by mail to Fresno. According to Accounts Management and Fresno ICT officials, misrouted referrals involving business income issues are to be re-routed by mail to SB/SE.\nAlthough Accounts Management and the Fresno ICT rely on misrouted information referrals as feedback about the quality of the routing process, the IRM does not contain procedures on handling information referral misroutes. The total number of misroutes by the Fresno ICT is unknown as not all misroutes are properly identified and recorded. Information referral inventory reporting showed nearly 1,400 referrals (approximately 2 percent) were initially misrouted in fiscal year 2015. The Accounts Management unit and Fresno ICT officials said these data reflect when operating units return misrouted referrals back to the ICT. However, some units have not returned information referrals misrouted by the Fresno ICT and instead forwarded misroutes directly to other units rather than mailing misroutes back to the ICT for re-routing. According to SB/SE officials, the SB/SE division previously forwarded misrouted information referrals to other units but now returns misroutes to the Fresno ICT. TE/GE officials told us that they forward misrouted information referrals to other units rather than mailing misroutes back to the ICT for re-routing. The lack of documented guidance on handling information referral misroutes poses the risk that IRS may be missing opportunities to identify the number and types of misroute errors and analyze ways to reduce misrouting.", "", "We found that fragmentation and overlap characterize the IRS system used for public reporting of tax noncompliance and potential fraud. Fragmentation can sometimes result in duplication of efforts, and inefficient use of resources. Multiple and uncoordinated forms and instructions can confuse the public trying to submit information to IRS. Such conditions can also create rework for IRS in routing information for specialized review. Gaps and delays in routing and redirecting information among referral programs could hamper IRS’s pursuit of some tax noncompliance and potentially leave taxpayers vulnerable to issues such as identity theft or abusive transactions. As we have previously reported, fragmentation and overlap can have potentially positive effects, such as when programs work together to provide services or when the overlap is planned so that the public is receiving services in a coordinated manner.\nIn addition to the general information referral process, we identified eight other specialized referral programs, as shown in table 4. Several of the referral programs have their own forms and their own mechanisms for intake and screening.\nFragmentation and overlap across a mix of IRS external referral programs and processes create duplication of effort, contribute to inefficient use of resources, and may be confusing to individuals submitting referrals. We cannot quantify the extent of duplication when a person submits the same information to more than one program or submits duplicate information referrals because IRS has no way to track information across the multiple referral programs. However we did identify some issues:\nThe public submits referral information on the wrong form or to the wrong office. Although IRS revised the information referral instructions in March 2014 to help clarify how to submit specialized forms directly to other referral programs (as shown in table 4), Fresno ICT continues to erroneously receive information referrals that must be routed to those referral programs and the Whistleblower Office. For example, Fresno ICT routed more than 2,900 information referrals related to identity theft and return preparer misconduct in fiscal year 2015. Also, some individuals mistakenly mail information referrals to the SB/SE Abusive Transactions referral program instead of the Fresno ICT address specified on the information referral form.\nSome individuals submit multiple forms for the same allegation.\nIRS officials stated that several programs could receive the same referral for processing. For example, some whistleblowers submit both the information referral Form 3949-A and the whistleblower claim Form 211, either together as a package or separately to both Fresno ICT and the Whistleblower Office.\nRouting between referral programs results in delays and added costs for re-screening. For specialized referrals submitted as information referrals, the Fresno ICT first screens and routes the referrals to other IRS referral programs where the referrals again undergo intake and screening. Similarly, staff from the SB/SE Abusive Transactions program must screen and mail the information referrals to the Fresno ICT for processing. Form 3949-A referrals submitted directly to the E-file program—discussed further below—are first screened in IRS scheme detection centers and then mailed to Fresno ICT for information referral processing.", "According to federal internal control standards, management should ensure there are adequate means of communicating with, and obtaining information from, external stakeholders that may have significant impact on achieving goals. Effective information technology management is critical to achieving useful, reliable, and continuous recording and communication of information.", "IRS does not have a mechanism to facilitate information sharing across the multiple referral programs used for handling tax noncompliance and other issues reported by the public. While Accounts Management uses the Tiger Team to enable communication and coordination with other IRS units that receive information referrals, IRS does not consistently draw on this vehicle in coordinating information referral activity.\nFor example, we found that officials from one referral program (tax exempt organizations) attend the Tiger Team meeting. Officials from other referral programs were not aware of the Tiger Team, met separately with Accounts Management officials, or did not attend the Tiger Team meeting. According to an Accounts Management official, the Tiger Team was established to address misrouted Form 3949-A information referrals and to respond to inquiries from IRS units that receive most of the information referrals—specifically, SB/SE and W&I.\nThe SB/SE Abusive Tax Transactions program does not receive information referrals routed from Fresno and thus does not have staff participate in Tiger Team discussions on information referral routing guidelines. However, the Abusive Tax Transactions program does receive information referrals that are mistakenly mailed by the public to the Abusive Tax Transactions mailing address. According to an official from the Abusive Tax Schemes programs, they must then screen and forward the erroneously submitted information referrals to the IRS Fresno office for appropriate screening and routing. This referral program had not reached out through the Tiger Team or to Accounts Management to determine and resolve why the public is mailing information referrals to their program.\nThe E-file program does not participate in the Tiger Team or in discussions on developing the information referral routing guidelines. However, the E-file program began using Form 3949-A for its own referral program for reporting fraudulent or abusive tax returns. Accounts Management officials were not previously aware of this use of the information referral form until we brought it to their attention. According to an Accounts Management official, this gap in coordination on the use of the form could result in some e-file related information referrals mailed to Fresno being destroyed.\nIn the past, our work has found that mechanisms or strategies to coordinate programs that address crosscutting issues may reduce potentially fragmented, overlapping, and duplicative efforts. Some of the specialized referral programs with overlapping responsibilities already have some formal means of coordinating on crosscutting issues and sharing information on related referrals. For example, the Return Preparer Office and SB/SE Abusive Transactions regularly coordinate on abusive transactions involving tax preparers and can access common electronic information systems to identify overlapping referrals. The Return Preparer Office also shares information with the Identity Theft Program on identity theft, a crosscutting issue. For example, identity theft can involve another IRS unit and a different referral form, such as the Identity Theft Program and the Return Preparer Office based on the type of identity theft. If the taxpayer is alleging that they are an actual or potential victim of identity theft, the specific Identity Theft referral form should be used to report the allegation. If the taxpayer is alleging a return preparer filed a return or altered their return without their consent, the Return Preparer Office referral form should be used to report the allegation. Other referral programs using specialized forms also have practices that could improve information referral processing, as shown in table 5.\nImproving the referral intake process through improved collaboration and coordination could benefit both IRS and the public. Specifically, harmonizing referral forms and instructions to avoid duplicate and misdirected filings may improve efficiency and help to reduce public confusion and administrative burden. For example, an IRS mechanism for coordinating referrals could explore electronic fax (e-fax) as a method to improve efficiency of referral intake. In fiscal year 2015, IRS received over 87,000 information referrals submitted on Form 3949-A or as letters. As previously mentioned, IRS only accepts paper information referrals, which must be mailed to the Fresno office where the Image Control Team manually sorts and routes the form to other IRS units for further review. In contrast, five referral programs with forms—Identity Theft, SB/SE Abusive Transactions, Return Preparer Office, TE/GE Exempt Organizations, and E-file program—allow the public to submit referrals by fax. In 2013, IRS briefly explored and rejected the e-fax option for information referrals because the Image Control Team screening clerks at that time did not have computers to access fax submissions. Since December 2014, Fresno Image Control Team clerks have had access to computers to perform TIN research for information referrals; however, IRS has not revisited the e-fax option. Although IRS officials stated they do not believe e-fax for information referrals is feasible due to the large volume received, other IRS units collaborating across referral programs could provide lessons learned or suggestions for streamlining the intake process through e-fax or other options.\nWithout a broader collaborative mechanism to communicate across its referral programs and collaborate on practices for receiving and screening referrals, IRS may be missing opportunities to leverage resources, streamline intake processes, and address challenges arising from the fragmented and overlapping referral programs.", "Resolving the inefficiencies of IRS’s paper-based information referral system poses a unique challenge for management, given resource constraints, the complexity of current processes, and the need to protect taxpayer information. We have previously identified a number of management approaches that may enable IRS to consolidate the referral intake and screening process and improve efficiency, including implementing process improvement methods and technology improvements that improve efficiency, increase product quality, and decrease costs. Process improvement methods can involve examining processes and systems to identify and correct costly errors, bottlenecks, or duplicative processes while maintaining or improving the quality of outputs. Providing information to policymakers on how to improve efficiency and reduce and better manage fragmentation, overlap, or duplication can help alleviate some of the government’s fiscal pressures and improve program effectiveness.\nAnother component of improved efficiency involves identifying, developing, and implementing strategies that streamline the reporting of tax noncompliance while appealing to the public. According to IRS’s Strategic Plan for fiscal years 2014 through 2017, the public has a preference for Internet-based service over other service channels such as phones, paper, or in-person. IRS says it is committed to expanding its portfolio of digital service offerings to meet customer expectations while continuing to keep taxpayer data secure. State tax agencies and other federal agencies accept fraud referrals via online Internet submission. For example, among seven of the most populous states, five provided an online reporting option to report allegations of tax fraud and evasion. Similarly, the Social Security Administration has an online form for reporting fraud via its website.\nFinally, strengthened collaboration across the nine referral programs could enable IRS to explore a more systemic online referral submission process: such an effort could help the agency improve its ability to more efficiently receive and process information referrals, while also reducing the public confusion caused by trying to choose among multiple forms. Currently, IRS’s specialized referral forms to report alleged tax noncompliance are received within IRS units through different channels (mail, fax, email). As discussed earlier, the public often uses information referrals because it is a general form that is used to report different tax noncompliance; however, we found that information referrals are misrouted and often retained for destruction. According to a Return Preparer Office official, the Return Preparer Office is exploring conversion of its specialized referral form to an online form. However, if the various referral programs separately explore developing online form submission, IRS risks replicating or compounding the fragmented mix with multiple referral forms and means of submission. An IRS official stated that a universal online referral intake system to control the routing of referrals would be preferable to separate systems for each referral form. Streamlining referral submission could be less cumbersome for the public and could reduce delays and rework in re-routing information to specialized referral programs. According to IRS officials, more electronic submissions is a vision for the future but funding is limited. However, officials stated that committing resources for referral capacity is in the queue behind direct taxpayer account services. An IRS plan and timeline for developing a consolidated, online referral submission could assist IRS in leveraging specialized expertise to further consolidate the referral intake process.", "Information referrals are a key mechanism for the public to report potential tax noncompliance and aid IRS in addressing the tax gap. Audits of individuals and businesses based on information referrals resulted in at least $62 million in recommended assessments in fiscal year 2014. However, IRS oversight and management of its information referral screening process is fragmented across multiple IRS units, with the actual handling of referral follow-up further dispersed across operating divisions, multiple referral programs, and other IRS units. Although IRS has guidelines for screening and routing the information referrals, it does not have an organizational structure for the Form 3949-A information referral process that identifies responsibility for defining program objectives and an appropriate line of reporting for measuring results. Without such a structure, IRS cannot ensure accountability in the referral process or determine how effectively it is using resources in this area.\nIRS has not consistently documented and implemented procedures for the information referral process. Procedures are not clearly documented for the screening and routing guidelines and changes are not consistently communicated to relevant staff, resulting in referrals being misrouted or inadvertently destroyed and errors in inventory management. In addition IRS does not have procedures for monitoring information referrals retained for destruction or those that are incorrectly routed. Without adequate internal controls, IRS cannot effectively manage the information referral process. Documenting and implementing procedures for the information referral process would help IRS ensure that the process is implemented consistently.\nIRS has a fragmented and overlapping system for the public to report tax noncompliance, with several units having their own forms and mechanisms for intake and screening. Multiple referral forms and instructions may contribute to inefficient use of IRS resources. In addition, IRS does not have a mechanism for coordinating referral issues across the multiple programs used for handling tax noncompliance. Without a coordination mechanism, IRS may be missing opportunities to leverage resources and address challenges from the multiple referral programs. Choosing to stay with the paper information referral means that the manual screening of the waiting inventory must compete with other IRS staffing resources needed for scanning and relaying time-sensitive taxpayer correspondence. Strengthened collaboration across the referral programs could enable IRS to explore an online referral submission process which could help the agency improve its processing of information referrals. Without a mechanism to coordinate on a plan and timeline for developing a consolidated, online referral submission, IRS cannot receive referrals efficiently or meet its strategic goal of expanding its portfolio of digital service offerings to the public.", "We recommend the Commissioner of Internal Revenue take the following seven actions:\nEstablish, document, and implement an organizational structure identifying responsibility for defining objectives with an appropriate line of reporting for measuring costs and results for information referrals.\nEnsure that the IRM has internal controls for processing information establishing, documenting, and implementing procedures for maintaining and communicating the information referral screening and routing guidelines to ICT and IRS units receiving information referrals as well as procedures for ICT screening and routing operations; establishing, documenting, and implementing supervisory review and segregation of duties for inventory management reporting procedures; establishing, documenting, and implementing ongoing monitoring of information referrals retained for destruction, including a mechanism for tracking the reasons referrals were retained prior to destruction; and establishing, documenting, and implementing procedures for each IRS operating unit receiving information referrals to provide feedback on the number and types of referrals misrouted and on their disposition, and a mechanism to analyze patterns of misroute errors.\nEstablish a coordination mechanism to facilitate communication and information sharing across IRS referral programs on crosscutting tax issues and ways to improve efficiency in the mechanisms for public reporting of possible tax violations.\nDirect the referral programs to establish a mechanism to coordinate on a plan and timeline for developing a consolidated, online referral submission in order to better position IRS to leverage specialized expertise while exploring options to further consolidate the initial screening operations.", "We provided a draft of this product to the Commissioner of Internal Revenue for comment. The IRS Deputy Commissioner for Services and Enforcement provided written comments dated February 8, 2016, which are summarized below and reprinted in appendix III. In an email received February 9, 2016, IRS indicated through the Office of Audit Coordination that it generally agreed with our recommendations. In its letter, IRS stated that our report identified several opportunities for improving the information referral process, and in response, IRS set up a new cross-functional working group to develop a streamlined, coordinated, and efficient process with appropriate internal controls. IRS also plans to explore the feasibility of a single referral form and consider offering a secure online option for the public to submit referrals to IRS. IRS stated that it is identifying the specific actions, responsible officials, and implementation timelines to address our recommendations.\nAs agreed with your offices, unless you publically release its contents earlier, we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies to the Secretary of the Treasury, the Commissioner of Internal Revenue, and other interested parties. The report will also be available at no charge on the GAO website at http://www.gao.gov.\nIf you, or your staff, have any questions about this report, please contact me at (202) 512-9110 or at [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.", "You asked us to assess the overall effectiveness of the Internal Revenue Service’s (IRS) information referral process. This report (1) describes IRS’s process for screening and routing Form 3949-A information referrals and for prioritizing information referrals within the IRS audit workload; (2) assesses the controls for the information referral screening and routing process; and (3) evaluates the coordination between the information referral process, the Whistleblower Office, and other IRS referral programs.\nFor the first objective, we reviewed IRS documents, to the extent that they were available, describing the information referral screening, routing, classifying, prioritizing, and selection of information referrals for audit. The documents include the Internal Revenue Manual (IRM), Form 3949-A Screening and Routing Guidelines, operating division referral processing flowcharts, organizational charts, and training materials. We interviewed IRS officials responsible for maintaining the screening and routing guidelines and those overseeing the clerical screening and routing process, and in March 2015 we observed the information referral screening process in Fresno, California. We reviewed coordination meeting agendas and minutes and observed coordination meetings between the officials responsible for the screening process and with other IRS unit officials. In addition, we analyzed inventory data on the volumes of referrals received and routed to operating divisions for fiscal years 2012 through 2015. Based on testing of the data and review of documentation and interviews, we identified several weaknesses in the information referral inventory reporting including minor miscalculations of referral routing totals and lack of supervisory review but determined that the data were reliable for the purposes of this report.\nWe also interviewed IRS audit officials in the Wage and Investment (W&I) and Small Business/Self-Employed (SB/SE) operating divisions because they receive about two-thirds of the referrals sent for screening, classifying, prioritizing, and audit selection. We also interviewed IRS officials from the Criminal Investigation division which receives referrals involving possible large dollar value or broader schemes. We analyzed data from the Audit Information Management System for W&I and SB/SE referral audits closed and the recommended tax assessments from fiscal year 2012 through 2015 (as of August 2015, the latest data available). We compared the results of our analyses of data to the tabulations provided by W&I and SB/SE to assess consistency of the results. Based on our testing of the data and review of documentation and interviews, we determined that these data were reliable for the purposes of this report.\nFor the second objective, we reviewed existing internal controls for the information referral screening process and assessed whether the procedures aligned with relevant Standards for Internal Control in the Federal Government. To assess how IRS implements its procedures and controls, we used IRS’s Form 3949-A screening and routing guidelines and other procedure documents as criteria. We reviewed inventory data including data on misrouted referrals returned by other IRS units for fiscal years 2012 through 2015, and we interviewed IRS officials on misrouted referrals. Based on our review of the data and interviews, we determined that the misroute data were not reliable for the purposes of this report because the total number of misroutes is unknown as not all misrouted referrals are properly identified and recorded. We also reviewed a nongeneralizable sample of 38 referrals retained for destruction to check whether the documentation followed the procedures. We selected a systematic sample of these referrals from among 5,935 referrals retained for destruction from January through March 2015; we selected about every 150th referral among those boxed for destruction. To follow-up on information obtained during the site visit regarding ICT clerical staff screening of referrals alleging child identity theft, we identified 12 referrals that were related to child identity theft out of 155 referrals that were retained for destruction in March 2015. The 12 referrals were referrals reporting identify theft by a parent/custodian of a child’s identification number where the parent/custodian did not know who was using the child’s identity. We did not include cases that involved custodial issues about eligibility to claim a dependent which are not considered identity theft. Finally, we interviewed IRS officials about the processes and controls for the routing guidelines and screening process, and to discuss any potential deficiencies we identified.\nFor the third objective, we interviewed IRS officials to determine the extent of coordination between the information referral process and other IRS external referral programs. Specifically, we reviewed referral programs with forms for reporting identity theft, fraud by tax return preparers, abusive tax promotions, and misconduct by tax-exempt organizations. We drew on information and analysis from our October 2015 report on the IRS Whistleblower Office. We analyzed and compared the Form 3949-A, Form 211, Application for Award for Original Information, (Whistleblower Office form), and five other public referral forms to identify common information items as well as information specific to the various referral programs. We reviewed the IRS web page on reporting tax noncompliance. We also reviewed other IRS web pages that identified other referral programs that handled issues for the E-file program, employee plans and tax shelters. We reviewed the IRM and other IRS guidance and interviewed IRS officials for referral programs with forms to determine how the other referral programs receive and screen their referrals and also process information referrals. We reviewed the Standards for Internal Control in the Federal Government and our prior reports on interagency collaboration, which discuss key practices and considerations for implementing collaborative mechanisms. We also drew on our April 2015 guide on fragmentation, overlap, and duplication. We interviewed IRS officials about options to coordinate or consolidate referral form intake in order to address areas of potential fragmentation, overlap, and duplication.\nWe conducted this performance audit from December 2014 to February 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "", "In addition to the contact named above, MaryLynn Sergent (Assistant Director), LaSonya Roberts, (Analyst in charge), Jehan A. Chase, Deirdre Duffy, Steven Flint, George Guttman, Laurie C. King, James R. McTigue, Donna L. Miller, and Cynthia M. Saunders made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 3, 3, 3, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "h0_full", "", "h0_full", "", "h1_title", "h1_full", "h1_title", "h1_full", "", "h0_full h1_full", "", "", "h2_full", "", "", "", "", "" ] }	{ "question": [ "What role do internal controls play in the IRS's information referral process?", "Why are effective internal controls important to the IRS?", "How does incomplete documentation influence this process?", "Why is a lack of procedures for control deficiencies hurting the IRS?", "What can confuse members of the public reporting tax noncompliance?", "How does the IRS attempt to handle coordination between referral programs?", "How does this impact the efficacy of the IRS in reporting tax noncompliance?", "What was GAO focused on covering in this report?", "What information regarding the IRS processes was covered in this report?", "What other processes were covered?" ], "summary": [ "Ineffective internal controls undercut IRS management of the information referral process. IRS does not have an organizational structure for information referrals with clear leadership for defining objectives and outcomes for measuring cost-effectiveness and results.", "Without clear leadership, IRS does not know how effectively it is leveraging information referrals to address the tax gap.", "IRS has incomplete documentation of procedures for the information referral process, increasing the risk of delays and added costs in routing the information for further action.", "Without procedures to address these control deficiencies, IRS is compromised in its ability to know how effectively it is leveraging tax noncompliance information reported by the public.", "Fragmentation and overlap across IRS's general information referral process and eight specialized referral programs, such as for reporting identity theft and misconduct by return preparers, can confuse the public trying to report tax noncompliance to IRS.", "Yet coordination between referral programs is limited, and IRS does not have a mechanism for sharing information on crosscutting issues and collaborating to improve the efficiency of operations across the mix of referral programs.", "As a result, IRS may be missing opportunities to leverage resources and reduce the burden on the public trying to report possible noncompliance.", "GAO was asked to assess the overall effectiveness of the information referral process.", "This report (1) describes IRS's process for screening and routing information referrals; (2) assesses the controls for the information referral screening and routing process; and (3) evaluates the coordination between the information referral process, the Whistleblower Office, and other IRS referral programs.", "GAO reviewed IRS guidance, processes, and controls for the information referral process, assessed whether IRS's processes followed Standards for Internal Control in the Federal Government , and interviewed IRS officials." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 1, 1, 1 ] }
GAO_GAO-16-608	{ "title": [ "Background", "WIPP Facility Layout and Base Operations", "WIPP Truck Fire and Radiological Release Accidents and Investigation Reports", "DOE’s Requirements for Operations Activities and for Project Management Applicable to the WIPP Recovery Effort", "GAO’s Best Practices for Cost and Schedule Estimating", "GAO’s Best Practices for Analysis of Alternatives", "Revisions in 2014 and 2015 to DOE’s Requirements for Analysis of Alternatives", "DOE’s AOA Process for WIPP’s New Permanent Ventilation System", "DOE Did Not Meet Its Initial Cost and Schedule Estimates for Restarting Waste Disposal Operations", "DOE Incurred A Cost Increase of about $64 Million and a Nearly 9- month Delay in Its Efforts to Restart WIPP Operations", "DOE’s Initial Cost and Schedule Estimates for Restarting Operations at WIPP Were Unreliable", "DOE Did Not Successfully Manage WIPP Recovery Project Risks That Contributed to the Project Cost Increase and Schedule Delay but Has Revised Its Risk Management Process", "DOE Did Not Follow All Best Practices in Analyzing and Selecting an Alternative for the New Ventilation System at WIPP", "DOE Fully Met Best Practices in the Identifying Alternatives Category", "DOE Partially Met Best Practices in the General Principles Category", "DOE Minimally Met Best Practices in the Analyzing Alternatives Category", "DOE Partially Met Best Practices in the Selecting a Preferred Alternative Category", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Assessment of DOE’s Cost Estimate for the WIPP Recovery Project Compared with Best Practices", "Appendix III: Assessment of DOE’s Schedule for the WIPP Recovery Project Compared with Best Practices", "Appendix IV: Assessment of DOE’s Analysis of Alternatives for the WIPP Ventilation System Project Compared with Best Practices", "Appendix V: Comments from the Department of Energy", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "This section describes (1) WIPP’s layout and base operations, (2) the February 2014 truck fire and radiological release accident investigation reports, (3) DOE’s requirements for operations activities and for project management applicable to the WIPP Recovery effort, (4) best practices for cost and schedule estimating, (5) best practices for conducting an AOA, (6) Revisions in 2014 and 2015 to DOE’s requirements for AOAs, and (7) DOE’s AOA process for WIPP’s new permanent ventilation system.", "As shown in figure 1, WIPP’s layout consists of surface facilities, underground facilities, and four shafts that connect the surface with the underground. WIPP’s underground facilities currently include seven waste disposal units or panels where waste containers are placed for final disposal, an area designated for constructing future disposal units, and an area for experimental research. The four shafts connecting the surface and underground facilities are (1) the air intake shaft, which is the primary air supply to the underground; (2) the exhaust shaft, through which all air exits the underground; (3) the salt handling shaft, which is used to remove mined salt from the underground and also supplies air to the underground; and (4) the waste handling shaft which is used to transport waste containers to the underground. Figure 1 also shows the locations of the February 2014 accidents that led to the suspension of WIPP’s operations.\nUnder normal operating conditions, base operations at WIPP include waste handling to receive waste from generator sites and prepare and place the waste, ongoing maintenance of the WIPP surface facilities and underground, as well as support functions such as program management, engineering, quality assurance, safety and security, and environmental management. In addition, NWP reviews and certifies waste containers on DOE’s behalf at DOE’s transuranic waste generator sites. During implementation of the WIPP recovery plan, DOE continued aspects of these base operations such as maintenance of the surface facilities and program management. In addition, NWP continued to review and certify waste packages at select sites.", "The salt truck fire, which occurred on February 5, 2014, created substantial smoke and soot that damaged key equipment and facilities in the underground. On February 14, 2014, the radiological release occurred when a transuranic waste container was breached. The breach was caused by a chemical reaction inside the container between materials that DOE later determined should not have been packaged together. The reaction generated enough heat to increase pressure in the container. The pressure forced open the container’s lid and propelled its radioactive waste contents, combustible gases, and other materials into the air and on to adjacent waste containers. The radioactive contents, gases, and other materials ignited and triggered a fire in the disposal room by igniting other materials in the room. WIPP’s ventilation system failed to contain all of the airborne radiological material underground and allowed a small amount to enter the environment. As a result of the release, portions of the WIPP underground and the existing ventilation system were radiologically contaminated.\nDOE issued an accident investigation report on the salt truck fire in March 2014 and an accident investigation report on the radiological release in April 2014 called “phase one report.” The phase one report focused on the release to the environment and the response at WIPP to the release. One year later, in April 2015, DOE issued a phase two report that focused on the radiological release from inside the waste container. The reports determined that the causes of the accidents included the degraded condition of critical equipment, inadequacies in the design and operations of WIPP’s ventilation system, and deficiencies in the management of WIPP’s safety programs that are intended to control and discipline operations to protect workers, the public, and the environment from radiological and other hazards. In total, the three reports made 100 recommendations to DOE and NWP to complete corrective actions. For example, the phase one report identified a number of weaknesses with the WIPP nuclear safety documentation and recommended that this documentation be revised prior to resuming limited waste disposal operations to ensure the repository can be operated safely with respect to workers, the public, and the environment.", "DOE is managing the recovery activities to restart limited waste disposal operations at WIPP and to design and build the new permanent ventilation system capital asset project following two separate project management requirements. DOE requires that the recovery activities to restart limited waste disposal operations and overall base operations of WIPP be managed following EM’s protocol for operations activities. This protocol defines operations activities to include activities that are project- like with defined start and end dates and reoccurring facility or environmental operations. The new permanent ventilation system project must follow DOE’s Order 413.3B, which governs project management for the acquisition of capital assets. The following is a description of the two different requirements:\nEM operations activities protocol. EM’s protocol establishes a framework for managing and reporting the progress of cleanup operations by requiring, among other things, that project performance be measured objectively and that management actions be taken to mitigate risks and manage costs. EM’s protocol directs EM sites to develop performance baselines—or estimates—for cost, schedule, and scope to use in assessing the project’s performance over the fiscal year, multiyear contract period of performance, and the life cycle of the project. The protocol directs that the project develop estimates but does not include specific requirements that must be followed, such as the steps that must be followed to develop cost and schedule estimates.\nDOE Order 413.3B. DOE’s order provides program and project management direction for the acquisition of capital assets, with the stated goal of delivering fully capable projects within the planned cost, schedule, and performance baseline. The order establishes five critical decision processes of project development that each end with a major approval milestone—or “critical decision” point—that cover the life of a project. The order specifies the requirements that must be met, including for developing and managing project cost and schedule estimates to move a project past each critical decision milestone. DOE also provides suggested approaches for meeting the requirements contained in the order through a series of guides, such as a guide for cost estimating. In June 2015, the Secretary of Energy directed that this order be revised to require that cost and schedule estimates be developed, maintained, and documented in a manner consistent with methods and the best practices identified in GAO’s cost and schedule assessment guides and other published standards and best practices, such as the Federal Acquisition Regulation and Office of Management and Budget guidance.", "The GAO Cost Estimating and Assessment Guide and the GAO Schedule Assessment Guide compiled best practices corresponding to the characteristics of high-quality and reliable cost and schedule estimates. A high-quality, reliable cost estimate has the following four characteristics: comprehensive (e.g., has enough detail to ensure that cost elements are neither omitted nor double counted), well-documented (e.g., allows for data it contains to be traced to accurate (e.g., is based on an assessment of most likely costs and has been adjusted properly for inflation), and credible (e.g., discusses any limitations because of uncertainty or bias surrounding data or assumptions).\nSimilarly, a high-quality, reliable schedule has four characteristics: comprehensive (e.g., captures all government and contractor activities necessary to accomplish a project’s objectives), well-constructed (e.g., sequences all activities using the most straightforward logic possible), controlled (e.g., is updated periodically to realistically forecast dates for activities), and credible (e.g., uses data about risks to predict the level of confidence in meeting a completion date and necessary schedule contingency and high-priority risks are identified based on conducting a robust schedule risk analysis).\nThe characteristics of a high-quality and reliable cost estimate are supported by best practices listed in appendix II, and the characteristics of a high-quality and reliable schedule are supported by best practices listed in appendix III.", "In a December 2014 report we compiled 24 best practices for conducting an AOA. As noted above, the AOA is a key first step in acquisition of a capital asset such as WIPP’s new permanent ventilation system. The process entails identifying, analyzing, and selecting a preferred alternative. Conforming to these best practices helps ensure that the preferred alternative selected is the one that best meets the agency’s mission needs. We grouped these 24 best practices into the following four categories:\nGeneral principles. This category includes best practices to be applied in planning, conducting, and documenting the AOA, such as defining functional requirements based on the mission need and conducting the analysis without a predetermined solution.\nIdentifying alternatives. The identifying alternatives category includes best practices that help ensure the alternatives to be analyzed are sufficient, diverse, and viable.\nAnalyzing alternatives. The analyzing alternatives category contains best practices related to estimating the costs and benefits of each alternative over its life cycle.\nSelecting a preferred alternative. The selecting a preferred alternative category includes best practices to help ensure a preferred alternative is selected that best meets the mission need by comparing alternatives based on their costs and benefits and independently reviewing the AOA process. Appendix IV lists the 24 best practices organized by the four categories.", "DOE’s procedures for conducting an AOA have changed twice since DOE began the AOA process for the WIPP permanent ventilation system. DOE started the AOA process for this system in October 2014. At that time, DOE was operating under AOA requirements defined in Order 413.3B. The AOA process, as defined in the order, occurs during the span of the first two critical decisions—Critical Decision-0 and Critical Decision-1 (Approve Alternative Selection and Cost Range). In December 2014, the Secretary of Energy established a new requirement that for projects estimated to cost $50 million or more, the responsible program office is to conduct an AOA independent of the contractor responsible for the project. Later, in June 2015, the Secretary of Energy directed the department to develop guidance for conducting AOAs consistent with the AOA best practices that GAO has published. The Secretary further required that AOAs be conducted and documented in a manner consistent with the guidance when it is complete. A DOE official told us in June 2016 that the department expected the guidance to be completed by December 2016. The Secretary’s action followed a recommendation that we made in December 2014 that DOE revise its Order 413.3B to adopt AOA best practices.", "DOE’s changes in its requirements for the AOA process under Order 413.3B took effect in the midst of DOE’s AOA process for WIPP’s new permanent ventilation system. DOE’s process was conducted as follows:\nDOE EM approved the mission need for the new ventilation system project in October 2014.\nAlso in October 2014, NWP started an initial AOA and completed it in January 2015 shortly after the Secretary’s December 2014 directive on the independence of AOAs and prior to the Secretary’s June 2015 directive about the use of the AOA best practices; therefore the new requirements did not apply to NWP’s AOA.\nTo respond to the Secretary’s December 2014 directive, DOE contracted in spring 2015 with a contractor unaffiliated with WIPP— Trinity Engineering Associates (Trinity)—to do a second AOA. DOE specifically directed Trinity in its contract to implement all of the AOA best practices that we compiled in our December 2014 report. The WIPP program manager in the Carlsbad Field Office told us that he included the best practices in the contract to provide more formality to their process. Trinity completed its AOA in October 2015.\nDOE evaluated the preferred alternatives proposed by NWP and Trinity, and it selected and approved a final alternative to complete Critical Decision-1 in December 2015.", "DOE did not meet its initial cost and schedule estimates for the efforts needed to restart WIPP disposal operations, resulting in about $64 million in added costs and a delay of nearly 9 months. Two primary factors contributed to the cost increase and schedule delay. First, DOE only partially followed best practices in developing its initial cost and schedule estimates, which made them unreliable and increased the likelihood that they would be exceeded. Second, DOE did not successfully manage key project risks it had identified that had potential to cause delay.", "DOE incurred a cost increase of about $64 million and a nearly 9-month schedule delay in its efforts to restart WIPP waste disposal operations. Specifically, in January 2016, approximately a year after approving the initial project baseline, DOE approved a new project management baseline that increased the estimated costs for the recovery project by $2 million (from $242 million to $244 million) and added 8.5 months to the project schedule, extending the date when limited waste disposal operations might begin from March 2016 to December 2016. According to DOE officials, the project was unable to meet its estimated completion date due to delays, including delays associated with procuring components for the interim ventilation system upgrade that were found to be faulty, and delays associated with DOE’s decision to require the project to adhere to new nuclear safety requirements. According to the operations activity manager for WIPP in the Carlsbad Field Office, the recovery project only exceeded the $242 million baseline by $2 million in part because DOE overestimated the cost of some project activities and spent contingency funds to make up for cost increases in certain parts of the project. For example, DOE overestimated the cost for decontaminating the WIPP underground by more than $6 million, which offset a $5 million cost increase caused by delays associated with the faulty ventilation system components. However, we identified an additional $61.6 million cost increase in base operations that was attributable to the delay in completing the recovery project. Specifically, DOE’s justification supporting the President’s fiscal year 2016 budget request to Congress from February 2015 estimated about $130.6 million for WIPP’s base operations in fiscal year 2016. According to DOE officials, as DOE revised its cost and schedule estimates for the WIPP recovery project in the fall of 2015, DOE also revised its cost estimate for WIPP’s base operations and provided the updated information to the congressional appropriations committees. In December 2015, DOE received $192.1 million for fiscal year 2016 base operations, an increase of $61.6 million (47 percent) over the initial estimate for base operations in fiscal year 2016. According to the operations activity manager for WIPP in the Carlsbad Field Office and representatives from NWP, this increase to base operations occurred because DOE estimated the cost of base operations on the assumption of restarting WIPP in March 2016 following its initial schedule estimate. The delay in the recovery efforts required DOE to keep base operations running alongside the recovery efforts for a longer period of time than initially planned.", "DOE did not meet its initial schedule and cost estimates for restarting waste disposal operations at WIPP, in part because DOE did not develop the estimates following all best practices, rendering the estimates unreliable and increasing the likelihood that they would be exceeded. More specifically, of the four characteristics of a high-quality and reliable cost estimate, DOE’s initial cost estimate substantially met two characteristics—comprehensive and well-documented—but partially met or minimally met the other two characteristics—accurate and credible. We made the following observations:\nDOE substantially met best practices for a comprehensive cost estimate by, for example, including a majority of life-cycle costs and identifying the cost estimating ground rules and assumptions.\nDOE substantially met best practices for a well-documented estimate by including the actual sources for the cost data and documenting that the cost estimate was reviewed and accepted by DOE management.\nDOE partially met best practices for an accurate estimate by, for example, only documenting a portion of the process they used to adjust costs to account for inflation.\nDOE minimally met best practices for a credible estimate by, for instance, not developing an independent cost estimate. Had DOE completed an independent cost estimate, the department would have had an unbiased and objective benchmark to assess whether the cost estimate prepared by NWP could be achieved, and thus would have been positioned to reduce the risk that the project would proceed underfunded.\nRegarding DOE’s initial schedule for restarting waste disposal operations, DOE substantially met two of the four characteristics of a high-quality schedule—comprehensive and controlled—but partially met the characteristics—well-constructed and credible—resulting in a schedule that was also unreliable and unrealistic. We made the following observations:\nDOE substantially met best practices for a comprehensive schedule because, for example, the schedule reflected the activities in the recovery work breakdown structure, which defined the work necessary to accomplish the project’s objectives. In addition, work scope was assigned in the schedule as the responsibility of NWP or DOE.\nDOE substantially met best practices for a controlled schedule by, for example, regularly updating its master schedule and using the schedule as the basis for measuring performance.\nDOE partially met best practices for a well-constructed schedule because, for instance, a significant number of activities in the schedule had incorrect or missing logic relationships that are important for determining how delays or accelerations in one activity would affect the start or finish of other activities later in the schedule.\nDOE partially met best practices for a credible schedule, in particular, because its schedule did not include extra time, or contingency, to account for known project risks. As noted above, DOE acknowledged in its WIPP recovery plan that the schedule did not include contingency that may be needed due to unanticipated difficulties or delays with the project. However, DOE did not acknowledge in the plan that the schedule also did not include contingency for the occurrence of known and quantified risks that had been anticipated in its project risk analysis—such as the risks that were the primary causes of the project delays. Notably, DOE’s risk analysis predicted that the March 2016 date to restart operations had a less than 1 percent confidence level, meaning in effect that DOE had a less than 1 percent chance of meeting the March 2016 deadline. EM officials said the department used a less than 1 percent confidence level because it wanted to have an aggressive goal for restarting operations. According to EM officials, when EM managers presented this schedule to senior DOE decision-makers for approval, they described the schedule as “aggressive” but did not clarify that there was less than a 1 percent chance of meeting the schedule. According to these officials, they did not think that senior managers would understand the project management terminology regarding confidence levels.\nIn January 2016, DOE approved revised cost and schedule estimates for restarting WIPP’s limited waste disposal operations. The operations activity manager for WIPP in the Carlsbad Field Office said the revised schedule included contingency and the revised restart date of December 2016 had an 80 percent confidence level. However, according to DOE officials, they did not follow other best practices. For example, DOE did not provide evidence of having an independent cost estimate which would have provided DOE an unbiased and objective benchmark to validate the estimates prepared by NWP. As noted above, we did not assess DOE’s revised estimates against all of the best practices. The full results of our analysis of the initial cost and schedule estimates can be found in appendixes II and III.\nDOE did not follow all best practices in developing the initial cost and schedule estimates for the WIPP recovery project or in developing new estimates because, unlike DOE’s requirements for capital asset projects under Order 413.3B, DOE’s EM operations activities protocol that governs cleanup operations such as WIPP recovery does not require the use of best practices in developing such estimates. As mentioned above, DOE EM’s protocol requires that EM sites develop or approve baselines for each project’s cost and schedule to judge project performance. However, the protocol does not specify any best practices in terms of the steps to follow in developing the cost and schedule estimates in these baselines. The absence of a requirement to follow best practices for cost and schedule estimating is in contrast to a decision in June 2015 by the Secretary of Energy to require that all capital asset projects with an estimated cost of $10 million or more follow such practices under Order 413.3B. Operations activities such as the WIPP recovery activities are not considered capital asset projects and therefore are not required to follow these requirements even though EM’s operations activities share many of the same characteristics as capital asset projects. Without requiring EM’s operations activities such as WIPP to follow all best practices when developing cost and schedule estimates DOE cannot have confidence that it is producing reliable baselines needed to monitor its performance in managing these activities. Without reliable baselines, DOE will also continue to be at risk of cost overruns and delays in achieving its cleanup missions such as the permanent disposal of transuranic waste from sites across the country.\nDOE has reported progress in completing the activities needed to restart limited waste operations using its revised cost and schedule estimates, although it still faces challenges and it remains unclear whether DOE identified and analyzed the risks associated with these challenges in revising the estimates. In terms of progress, for example, in December 2015, NWP submitted revisions to WIPP’s nuclear safety documentation to EM for review. In addition, DOE reported in March 2016 that NWP completed most of the construction of the interim ventilation system upgrade in the underground. However, as noted above, in March 2016, the Defense Nuclear Facilities Safety Board reported that additional work was needed to revise WIPP’s nuclear safety documentation to prevent recurrence of a radiological release accident. In addition, in April 2016, DOE’s Office of Enterprise Assessments, which provides independent internal oversight of DOE’s management of safety, issued two reports that found that although NWP had made improvements in its operational safety and emergency management programs and procedures, significant challenges remained to fully meet DOE requirements and effectively plan and implement these programs and procedures. As we noted above, DOE officials acknowledged that the department did not follow all best practices in developing the revised estimates to restart WIPP operations. Without having followed all best practices, including having an independent cost estimate conducted to validate the estimates, DOE cannot be confident that NWP sufficiently accounted for these challenges in revising its risk analysis and that DOE set an appropriate allowance for contingency to reduce the risk of cost overruns and delays in restarting WIPP’s operations.", "DOE did not successfully manage key risks that it had identified and that contributed to the project’s cost increase and schedule delay but has taken steps to revise the risk management process for the WIPP recovery project. DOE’s EM operations activities protocol requires the use of a risk management process to identify and mitigate risks to completing a project within its baseline cost and schedule estimates. For the WIPP recovery project, DOE and NWP developed a project risk register to support the initial project management baseline for WIPP recovery. The risk register listed the risks that could increase costs or delay completion. DOE and NWP assessed the likelihood and consequence of each risk and identified a mitigation plan for each risk that described the actions to reduce the impact on the project if the risk were realized.\nIn a public statement explaining the need to revise its baseline for the recovery project, DOE cited problems with three activities that the department had previously identified in its project risk register: (1) completing revisions to WIPP’s nuclear safety documentation; (2) installing the interim ventilation system upgrade; and (3) completing the corrective actions that address the recommendations in the phase two accident investigation report. DOE had identified risks related to each of these activities in the project risk register but was not able to effectively mitigate them, as discussed below:\nWIPP nuclear safety documentation. NWP identified the risk of a potential delay of up to 6 months in restarting operations if DOE decided that the WIPP nuclear safety documentation should be revised according to standards that were in the process of being updated rather than according to the existing standards. According to DOE, when NWP started to revise the safety documentation in the summer of 2014, the contractor assumed it should follow the existing standard. NWP added this risk to its project risk register to account for the possibility that EM could require NWP to revise the nuclear safety documentation according to the new standards. To mitigate this risk, NWP’s plan was to ensure they had concurrence with DOE to start the revisions using the existing standards. DOE issued the new standards in November 2014 and notified NWP in December 2014 that the WIPP safety documentation would need to comply with them. According to an NWP recovery project manager, this change in policy resulted in a 7-month delay in NWP’s schedule for revising the WIPP safety documentation.\nInterim ventilation system. NWP identified the risk of a potential delay of 3 months to complete the installation of the interim ventilation system upgrade if NWP faced difficulties acquiring the components for the system. To mitigate this risk, NWP’s plan was to identify difficult- to-procure equipment early in the project, ensure it had a valid and up-to-date list of qualified suppliers, and monitor and review equipment purchases. According to NWP officials, this plan was partially effective. Specifically, NWP officials said that they discovered that components for the interim ventilation system were damaged when they inspected the components before formally accepting them. In addition, they said that the costs to return the components to the manufacturer and repair them were paid for by the manufacturer. However, the NWP officials said that as a result of receiving the faulty equipment, the installation of the interim ventilation system was delayed about 4 months because NWP needed to send the components back to the manufacturer and make corrections to its shipping process to prevent a reoccurrence of these issues.\nCorrective actions from the phase two accident investigation report. NWP identified the risk of potential delay of up to 6 weeks regarding the length of time DOE needed to complete the phase two accident investigation. In the summer and fall of 2014, when NWP was developing the initial project management baseline, DOE’s phase two accident investigation was still underway. According to NWP officials, they needed to wait for DOE to complete the accident investigation and issue the final report with recommendations before they could begin developing and implementing corrective actions. DOE issued the final report in April of 2015. According to the operations activity manager for WIPP in the Carlsbad Field Office, completing the corrective actions in response to the report’s recommendations resulted in a 3-month delay.\nNWP officials said that in recognition of the need for a more effective risk management process, they revised their process as part of revising the recovery cost and schedules estimates. These officials explained, for example, the revised process now involves more frequent discussions and updating the status of potential risks with managers at WIPP who oversee the departments where the project risks are generated. We did not conduct an assessment of the effectiveness of this new risk management process.", "DOE did not follow all best practices in analyzing and selecting an alternative for the new ventilation system at WIPP. As a result, DOE’s analysis was not reliable and DOE cannot be confident that the selected alternative will best provide the needed capabilities. Of the four categories of the best practices, DOE fully met the category for identifying alternatives. However, DOE partially or minimally met the other three categories of best practices—general principles, analyzing alternatives, and selecting the preferred alternative—because of key limitations. (See app. IV for the detailed results of our analysis of DOE’s AOA process.)", "DOE’s AOA process fully met the best practices in the identifying alternatives category. To identify alternatives, DOE relied on analyses conducted by NWP, the contractor responsible for the project, and the second contractor—Trinity. These analyses were completed in January and October 2015, respectively. NWP and Trinity identified a broad range of alternatives. Specifically, they identified nine ventilation system alternatives that the contractors determined should be analyzed because the alternatives could meet the mission need and other screening criteria that they defined: NWP identified six and Trinity identified three. The alternatives included continued use of the existing exhaust shaft as well as constructing a new shaft or more than one shaft, such as a new exhaust shaft and a new air intake shaft. In addition, the studies identified different ventilation filtration capacities and modes of operation that included continuous filtering of all exhaust air or filtering air only when a radiological release is detected underground.", "DOE’s AOA process partially met the best practices in the general principles category, which covers how the AOA process is planned, conducted, and documented. In particular, DOE partially or minimally followed the best practices of defining the mission need for the project, analyzing alternatives without a predetermined solution, and defining the functional requirements based on the mission need. As the AOA related to the best practices of defining the mission need for the project and analyzing alternatives without a predetermined solution, DOE did not define the mission need for the new ventilation system by focusing only on the capabilities needed for the project, but instead defined the need for the system to include a particular solution, which included constructing a new ventilation exhaust shaft. Because DOE defined the mission need by mentioning a new exhaust shaft, both contractors appeared to have analyzed alternatives with a preference for the alternatives that included constructing a new shaft. Specifically, NWP completed its analysis of the six alternatives by proposing two for further consideration by DOE, one that did not include a new shaft and one that did. NWP’s alternative that did not include a new shaft was its highest-scoring alternative and the alternative that included a new shaft was its third-highest scoring alternative. NWP officials told us that they proposed the second alternative along with the highest-scoring one because they believed the mission need statement discussed a new shaft. Regarding Trinity, in its final AOA report, Trinity stated that the mission need statement endorsed a new exhaust shaft. Trinity then analyzed three alternatives, one of which included using the existing shaft, and proposed an alternative to DOE that included constructing a new shaft. In its final assessment, DOE assessed the two alternatives proposed by NWP and the one proposed by Trinity and selected NWP’s alternative that included constructing a new shaft, shown as the second of the three alternatives in table 1. According to best practices, the AOA process should be an unbiased inquiry into the costs, benefits, and capabilities of all alternatives. By conducting the AOA with a predetermined solution, DOE undermined the credibility of its final decision.\nAnother limitation under the general principles category was that DOE partially followed the best practice of defining the functional requirements that the ventilation system would need to satisfy. DOE did not consistently define two key functional requirements of the project—(1) the rate of airflow needed to support full operations at WIPP, and (2) the expected operational life of the new system—which limited the reliability of the overall AOA process as follows:\nRegarding the estimated airflow, DOE did not specify a functional requirement in its mission need statement for the rate of airflow that the new ventilation system must be capable of providing for full operations at WIPP. Instead, the mission need statement described the minimum airflow required by WIPP’s hazardous waste facility permit, which was 260,000 cfm, and the actual airflow at WIPP before the accidents, which was 425,000 cfm. In conducting its AOA, NWP calculated its own airflow that it thought would be necessary for full operations at WIPP, which they estimated was about 540,000 cfm. NWP estimated the higher airflow based on its analysis of underground operations and used this amount to analyze a range of alternatives. In contrast, Trinity used the airflow associated with the WIPP hazardous waste facility permit, 260,000 cfm, as the estimated airflow in conducting its AOA. The federal project director in the Carlsbad Field Office told us that he did not direct Trinity to redo its analysis using NWP’s higher airflow because he believed that airflow was needed for examining the scale of the system and would be defined lower during design. Moreover, he said that he wanted to maintain Trinity’s independence from NWP to be consistent with the December 2014 DOE requirement for conducting independent AOAs.\nHowever, as a result of not defining the same functional airflow requirement for both contractors, DOE officials explained that they needed to conduct additional analysis to compare the alternatives proposed by NWP and Trinity.\nRegarding the estimated operational life of the new ventilation system, DOE did not specify a functional requirement in its mission need statement for the estimated operational life of WIPP. Without such a requirement, NWP used 2030 as the estimated end date for WIPP operations—this date was based on DOE’s approved life-cycle plan for ending WIPP’s operations current at the time NWP conducted its analysis. NWP completed its AOA in January 2015 when it presented two alternatives to DOE for further evaluation—as described above, NWP had proposed these two alternatives from an initial group of six alternatives. In February 2015, EM revised the estimated operational life of WIPP, extending it from 2030 to 2050 to more accurately reflect DOE’s schedules for transuranic waste cleanup at DOE sites. Trinity did not start its AOA process until after DOE had revised the estimated operational life of WIPP to 2050 and therefore used the 2050 date in conducting its AOA. In analyzing NWP’s two proposed alternatives, DOE used the new estimated operational life of 2050 and did not reassess the four previously eliminated alternatives using the revised date.\nBy not following the best practice of specifying functional requirements at the start of the AOA process, including specifying the airflow that the system needed to deliver and the estimated end date of operations for WIPP, it is unclear whether the AOAs conducted by NWP and Trinity and DOE’s subsequent analyses of these AOAs allowed DOE to select the alternative that best meets mission needs.", "DOE’s AOA process minimally met the best practices in the analyzing alternatives category. Significant limitations in this category included DOE and its contractors not consistently examining life-cycle costs for each alternative and not quantifying their benefits. Regarding examining life- cycle costs:\nNWP did not examine full life-cycle cost estimates for all of the alternatives it examined. Specifically, NWP’s AOA completed in January 2015 examined the estimated costs for the design and construction of each of the six alternatives, but did not examine the full life-cycles of these alternatives. As a result, NWP eliminated four of its six principal alternatives from further evaluation before examining each of them in terms of full life-cycle costs. According to the NWP project manager who led NWP’s AOA team, the team did not have sufficient time to examine the full life-cycle costs of each alternative. In addition, according to DOE officials, NWP was not required to examine the full life-cycle costs of each alternative under DOE Order 413.3B because they completed the analysis in January 2015, which was several months before the Secretary’s June 2015 directive to incorporate AOA best practices in the order. According to AOA best practices, the team conducting the AOA should be given enough time to complete the AOA process to ensure a robust and complete analysis.\nNWP and Trinity used different assumptions in developing life-cycle cost estimates, which prevented DOE from directly comparing the life- cycle estimates for the three proposed alternatives. We found that DOE relied on NWP and Trinity to define the assumptions they used rather than providing the contractors consistent guidance or direction. As a result, NWP assumed certain costs should be excluded in estimating the life-cycle costs of its two proposed alternatives. These costs included the costs for major equipment replacements or upgrades which NWP assumed would not be needed during the 30- year operational life of the system; costs for providing facility security, quality assurance, and nuclear safety that are provided to all facilities at WIPP; and costs for the final closure of the new exhaust shaft after 2050 when the system will be decommissioned. In contrast, Trinity assumed these costs should be included in estimating the life-cycle costs of its alternatives. As a result of including these additional costs, Trinity’s estimated life-cycle cost was substantially more than NWP’s estimate—Trinity’s estimate for its proposed alternative was $3.45 billion and NWP’s estimates for its two proposed alternatives were $368.8 million and $467.6 million.\nRegarding quantifying benefits, DOE and its contractors did not provide any measures of the benefits or effectiveness for each of the alternatives in their analyses. By not ensuring that the life-cycle costs of each alternative were developed in a consistent manner and not ensuring that the benefits or effectiveness of each alternative were quantified, DOE did not have an accurate and complete picture of all the alternatives to make reliable comparisons between them.", "DOE’s AOA process partially met the best practices in the selecting a preferred alternative category which covers selecting an alternative that best meets the mission need and also independently reviewing the overall AOA process. Most notably, DOE and its contractors did not follow the best practice to select the alternatives based on a cost-benefit analysis and only partially followed the best practice to independently review the AOA process, as follows:\nRegarding cost-benefit analysis, DOE and its contractors did not select the alternatives based on such an analysis which compares the life-cycle costs and benefits or effectiveness of each alternative. As noted above, DOE and its contractors did not consistently examine life-cycle cost estimates for each alternative and did not quantify their benefits. Therefore, DOE did not produce the information needed for a cost-benefit analysis. By not selecting the alternatives based on a cost-benefit analysis, DOE did not adequately justify that the selected final alternative would best provide the capabilities needed at WIPP.\nRegarding independently reviewing the AOA process, DOE conducted an independent review of the AOA process (which assessed whether best practices were followed) but did not implement the recommendation identified by the review. Specifically, an independent review conducted by DOE’s Office of Project Management Oversight and Assessments found that the project team did not adequately document a cost-benefit analysis and that, as a result, the selection of the preferred alternative was not supported by compelling information. The review recommended that DOE perform a cost-benefit analysis to be consistent with best practices and support the selection of the final alternative. However, DOE and NWP did not conduct the recommended cost-benefit analysis and document it before DOE selected the final alternative. According to the DOE officials who led the independent review of the AOA process, the project team was not required by DOE’s Order 413.3B to implement the recommendation or justify and document the reasons for not doing so. Therefore, DOE EM approved the selection of the preferred alternative for the permanent ventilation system project in December 2015 without implementing the independent review’s recommendation.\nConducting an independent review of the AOA is a best practice because it is one of the most reliable means to ensure that bias does not influence the AOA process and that the AOA is sufficiently thorough to ensure that a preferred solution is chosen and not a favored solution. DOE’s independent review was an internal control to help DOE meet its goal for the capital asset project, in this case selecting the alternative that will best provide the capabilities to meet the mission need. Under federal standards for internal control, management is to evaluate and document internal control issues and determine appropriate corrective actions. By not implementing the recommendation from the independent review to do a cost-benefit analysis or not justifying and documenting the reason for not doing so, DOE cannot provide assurance that the final alternative selected would best provide the capabilities needed at WIPP.", "Restarting WIPP’s waste disposal operations is a top priority for DOE, and it has made progress in its efforts to restart limited waste disposal operations. However, DOE did not meet its initial cost and schedule estimates to restart operations and incurred a cost increase of about $64 million—$2 million to the recovery project and $61.6 million in base operations—and a delay of nearly 9 months. DOE incurred the cost increase and schedule delay, in part, because DOE’s initial estimates did not follow all best practices and were therefore unreliable. Notably, DOE did not include any contingency in its schedule, giving itself less than a 1 percent chance of success—said another way DOE gave itself a 99 percent chance of failure in meeting its schedule to restart operations. Moreover, when DOE revised its cost and schedule estimates for WIPP recovery it still did not follow all best practices. DOE did not develop its estimates for WIPP recovery following best practices, in part because DOE does not require its cleanup operations activities, such as WIPP, to follow them. This lack of a requirement is in contrast to a new policy put into effect in June 2015 by the Secretary of Energy, which established the requirements that DOE develop cost and schedule estimates for its capital asset projects following best practices—such projects include the new permanent ventilation system at WIPP. Without similar requirements for EM operations activities to follow best practices, DOE cannot have confidence that it is producing reliable baselines needed to monitor its performance in managing these activities and reduce the risk of cost overruns and delays in achieving its cleanup missions, such as the permanent disposal of transuranic waste from DOE sites across the country. By also requiring cleanup operations to follow best practices, DOE would have more confidence in the estimates for its cleanup operations activities and its capital asset projects.\nIn selecting the preferred alternative for the new permanent ventilation system at WIPP, DOE relied on an AOA process that did not follow all best practices. In particular, DOE only partially followed or did not follow best practices to define functional requirements based on the mission need, compare alternatives using a cost-benefit analysis, or independently review the AOA process. By not following these and other practices, DOE’s AOA process was not reliable. Notably, DOE conducted an independent review of the process which found that the project team did not adequately document a cost-benefit analysis and that, as a result, the selection of the preferred alternative was not supported by compelling information. Nonetheless, DOE did not implement the recommendation of the review to conduct a cost-benefit analysis before the department selected the preferred alternative. DOE officials explained that the project team was not required by DOE’s Order 413.3B to implement the recommendation. By not implementing the recommendation of the independent review or not justifying and documenting the reason for not doing so, DOE cannot provide assurance that the final selected alternative would best provide the capabilities needed at WIPP. More broadly, without requiring in its Order 413.3B that recommendations from independent reviews of AOAs be implemented or that the reason for not doing so be justified and documented, DOE cannot have assurance that it selects, for all capital asset projects, preferred alternatives from its AOAs that best meet the mission need.", "To help ensure that DOE develops and uses reliable cost and schedule estimates and AOAs, we recommend that the Secretary of Energy take the following three actions:\nDirect EM to revise its protocol governing cleanup operations activities to require use of best practices in developing cost and schedule estimates.\nDirect EM to implement the recommendation made by DOE’s Office of Project Management Oversight and Assessments in its independent review of the AOA for WIPP’s new permanent ventilation system to perform a cost-benefit analysis consistent with best practices for conducting an AOA, or justify and document why the office does not intend to do so.\nDirect DOE to revise its Order 413.3B to require that DOE offices implement any recommendations from an independent review of the extent to which an AOA followed best practices, or justify and document the rationale for not doing so.", "We provided a draft of this report to DOE for review and comment. In written comments, reproduced in appendix V, DOE concurred with the report’s recommendations. DOE stated that our recommendations were consistent with its commitment to continuous improvement in project management. In addition, DOE stated that it had two issues that the department believed needed to be addressed. DOE also provided technical comments that were incorporated, as appropriate.\nDOE identified the following two issues:\nDOE stated that WIPP recovery activities were under way concurrent with DOE-wide efforts to improve project management, including revisions to its project management order (DOE Order 413.B). DOE stated that, consequently, EM project management practices were separate from evolving department project management guidance and that it is now in the process of bringing EM practices into conformance with the department’s project management guidance.\nDOE stated that the report needs to be clear, in each instance, regarding the $64 million cost increase for WIPP attributed to schedule delays in recovery activities, to indicate that $2 million of the cost increase was WIPP recovery project-related and that $61.6 million was due to reexamination and assessment of the cost of base operations.\nWe do not believe changes are needed to the report for either of these issues. The report explains that WIPP recovery activities were based on EM’s operations activities protocol and that actions were under way within the department to improve project management, including revisions to DOE’s project management order. In addition, the report includes a breakout of the cost increase. We did, however, revise the conclusions to reflect this breakout.\nAs noted above, DOE concurred with the report’s three recommendations. Regarding the first recommendation—that EM revise its protocol governing cleanup operations activities to require use of best practices in developing cost and schedule estimates—DOE stated in its written comments that it concurred with clarification. DOE stated that EM is transitioning from the operations activities protocol to a new directive that is expected to include a key decision approving a cost and schedule baseline. As EM develops the guidance for this key decision, it will include the use of cost and schedule best practices. DOE stated that EM plans to finalize this new directive by September 2016 and seek departmental approval by December 2016.\nRegarding the second recommendation— that EM implement the recommendation made by DOE in its independent review of the AOA for WIPP’s new ventilation system to perform a cost-benefit analysis consistent with best practices, or justify and document why it does not intend to do so—DOE stated in its written comments that it concurred with clarification. DOE stated that in accordance with GAO best practices, further cost-benefit analysis will be conducted on the project prior to approval of Critical Decision-2 (Approve Performance Baseline). DOE stated that several alternatives remain to be evaluated including the size of the ventilation system and the location of the exhaust shaft.\nRegarding the third recommendation—that DOE revise its project management (Order 413.3B) to require that DOE offices implement recommendations from independent reviews of the extent to which an AOA followed best practices, or justify and document the rationale for not doing so—DOE concurred with the recommendation. DOE stated that it will prepare a project management policy on how DOE offices should respond to recommendations from independent reviews. DOE stated that it will prepare this policy by December 2016 and update DOE Order 413.3B at the next available opportunity.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Energy, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.", "Our report examined the extent to which the Department of Energy (DOE) (1) met its initial cost and schedule estimates for restarting waste disposal operations at the Waste Isolation Pilot Plant (WIPP) and (2) followed best practices in analyzing and selecting an alternative for the new ventilation system. To address both objectives, we conducted a site visit to WIPP in January 2015. During the site visit we obtained documentation and interviewed officials from DOE’s Office of Environmental Management (EM), which is responsible for oversight of WIPP and exercises this responsibility primarily through its Carlsbad Field Office. We also interviewed representatives at WIPP from Nuclear Waste Partnership LLC (NWP), which is the private contractor that manages and operates WIPP for DOE.\nTo examine the extent to which DOE met its initial cost and schedule estimates for restarting waste disposal operations, we compared DOE’s initial cost and schedule estimates to restart limited waste disposal operations contained in its February 2015 WIPP recovery project management baseline with DOE’s revised estimates in its January 2016 integrated project management baseline for WIPP. We reviewed DOE’s budget justification supporting the President’s fiscal year 2016 budget request to Congress from February 2015 and the amounts DOE received for WIPP in the 2016 Consolidated Appropriations Act. We reviewed DOE’s reports on the reasons it exceeded the initial estimates for restarting waste disposal operations and DOE’s risk management plans for WIPP recovery prepared by NWP and used in developing the February 2015 estimates. We also compared DOE’s initial cost and schedule estimates to restart limited waste disposal operations from the February 2015 WIPP recovery project management baseline with the best practices described in our cost and schedule guides that identified the characteristics of high-quality, reliable cost and schedule estimates because these were the approved estimates when we conducted our analysis. Specifically, we compared DOE’s initial WIPP recovery cost estimate presented in DOE’s project management baseline document and supporting documents and data with the best practices in our Cost Estimating and Assessment Guide. In addition, we compared DOE’s initial WIPP recovery schedule presented in DOE’s project management baseline document and supporting documents and data with the best practices in our Schedule Assessment Guide. We interviewed the Carlsbad Field Office officials who oversee the recovery project and NWP’s cost estimator and scheduler. We provided a draft of our cost and schedule assessments to the Carlsbad Field Office and NWP and revised the draft, as appropriate, after discussing our assessment with the federal officials and the contractor. We reviewed documentation on the revised (January 2016) baseline and interviewed DOE and NWP officials on the approach followed to develop the revised cost and schedule estimates to restart WIPP’s waste disposal operations in the baseline, but we did not assess the revised estimates against the best practices because of the time frame of our review.\nTo examine the extent to which DOE followed best practices in analyzing and selecting an alternative for WIPP’s new ventilation system, we used as criteria the best practices for conducting an AOA identified in GAO-15-37 issued in December 2014. GAO developed the best practices identified in this report by reviewing AOA policies and guidance used by seven public and private-sector entities with experience in the AOA process, and verified these practices with subject-matter experts. DOE’s AOA process for the WIPP ventilation system consisted of three elements: NWP’s January 2015 AOA that resulted in the selection of two preferred alternatives proposed for further analysis, a second AOA completed by Trinity Engineering Associates (Trinity) in October 2015 which resulted in a single preferred alternative proposed to DOE, and DOE’s final alternative evaluation process led by the Carlsbad Field Office that considered the three alternatives proposed by the initial studies. Our analysis assessed the overall AOA process considering each element. We compared the process with the best practices and determined a score for the overall process. We reviewed project documentation from the Carlsbad Field Office, NWP, and Trinity and interviewed Carlsbad Field Office officials and NWP representatives in charge of the AOA. In addition, in October 2015, as we were conducting our engagement, EM and DOE’s Office of Project Management Oversight and Assessments completed separate assessments of the WIPP AOA for the new ventilation system. We reviewed documentation of these reviews and interviewed the DOE officials who worked on them. We examined the extent that the independent assessments followed the best practice to have an independent entity assess the extent that a project’s AOA followed all best practices.\nTo score DOE’s AOA process, a GAO analyst examined the AOA documentation received from the agency and then assigned a score for each of the 24 best practices. Following this, a GAO AOA specialist independent of the engagement team reviewed the AOA documentation and the scores assigned by the analyst for accuracy and cross-checked the scores in all the analyses for consistency. We used a five-point scoring system to determine the extent to which DOE’s AOA process conformed to the best practices. After determining a score for each individual best practice, we calculated the score for each category—(1) general principles, (2) identifying alternatives, (3) analyzing alternatives, and (4) selecting a preferred alternative—by calculating the average of the scores for the best practices that fall under each category. If the score for each best practice and the average score for each category was “fully met” or “substantially met,” we concluded that the AOA process conformed to best practices and therefore could be considered reliable. In contrast, if the score was “partially met,” “minimally met,” or “not met,” we concluded that the AOA process did not conform to best practices and therefore could not be considered reliable. We shared our analysis with DOE officials and representatives from NWP for review and incorporated their technical comments and any additional evidence they provided in our analysis, as appropriate. We also interviewed officials from DOE’s Office of Enterprise Assessments, which provides internal oversight of DOE facilities; the Defense Nuclear Facilities Safety Board, which provides external oversight of DOE defense nuclear facilities; the U.S. Mine Safety and Health Administration, which provides external oversight of mining activities at WIPP; as well as the U.S. Environmental Protection Agency and the New Mexico Environment Department, both of which provide external regulation of WIPP.\nWe conducted this performance audit from November 2014 to August 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Table 2 below assesses the Department of Energy’s (DOE) initial cost estimate in its February 2015 project management baseline for the Waste Isolation Pilot Plant (WIPP) recovery project compared to best practices for cost estimating published in the GAO Cost Estimating and Assessment Guide. Overall, of four characteristics of a high-quality and reliable cost estimate, DOE’s initial cost estimate substantially met two characteristics—comprehensive and well-documented—but partially met or minimally met the other two characteristics—accurate and credible.", "Table 3 below assesses the Department of Energy’s (DOE) initial schedule in its February 2015 project management baseline for the Waste Isolation Pilot Plant (WIPP) recovery project compared to best practices for developing a schedule estimate published in the GAO Schedule Assessment Guide. Overall, DOE’s schedule substantially met two of the four characteristics of a high-quality schedule—comprehensive and controlled—but partially met the characteristics of well-constructed and credible.", "Table 4 below compares the Department of Energy’s (DOE) analysis of alternatives (AOA) process completed in December 2015 for the new permanent ventilation system at the Waste Isolation Pilot Plant (WIPP) to best practices for conducting an AOA published in a December 2014 GAO report. DOE’s overall AOA process consisted of an initial AOA by DOE’s WIPP contractor, Nuclear Waste Partnership LLC, completed in January 2015; a second AOA by a contractor unaffiliated with WIPP, Trinity Engineering Associates, completed in October 2015; and DOE’s final evaluation of the three preferred alternatives proposed by the contractors’ analyses. Overall, DOE’s AOA process fully met the category for identifying alternatives and partially or minimally met the other three categories of best practices—general principles, analyzing alternatives, and selecting the preferred alternative.", "", "", "David C. Trimble, (202) 512-3841 or [email protected].", "In addition to the contact named above, Daniel Feehan, Assistant Director; Cheryl Arvidson; Mark Braza; Richard P. Burkard; Jennifer Echard; Brian M. Friedman; Carly Gerbig; Jason Lee; Eli Lewine; Cynthia Norris; and Katrina Pekar-Carpenter made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h1_full", "h0_full", "", "h0_full", "", "", "", "h0_full", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "", "", "h1_full", "h1_full", "", "", "", "", "", "" ] }	{ "question": [ "What is WIPP?", "Why were waste operations suspended?", "What did the DOE state as their goal in February 2015?", "How did they plan to achieve their goal?", "What was included in the Senate Report?", "What did the report examine?", "What did GAO examine?", "What did the GAO do when examining WIPP recovery estimates?" ], "summary": [ "DOE's WIPP is the only deep geologic repository for the disposal of U.S. defense-related nuclear waste.", "In February 2014, waste operations were suspended following a truck fire and an unrelated radiological release.", "DOE estimated in February 2015 that it would complete recovery activities and restart limited waste operations by March 2016.", "To resume full operations, DOE planned to build a new ventilation system at WIPP. DOE completed an AOA to identify the best solution for this system in December 2015.", "The Senate Report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2015 included a provision for GAO to review WIPP operations.", "This report examines the extent to which DOE (1) met its initial cost and schedule estimates for restarting waste disposal operations, and (2) followed best practices in analyzing and selecting an alternative for the new ventilation system.", "GAO examined documentation on the WIPP recovery estimates.", "GAO compared DOE's February 2015 cost and schedule estimates and AOA with best practices GAO published." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1 ] }
GAO_GAO-16-351	{ "title": [ "Background", "Status of Making Home Affordable Program Funding Balance", "Making Home Affordable Program Components", "Changes in Mortgage Performance Since 2009", "Changes in the Volume of Mortgage Loan Modifications Since 2009", "HAMP Modifications’ Effect on Borrowers’ Monthly Payments", "Between 2009 and 2015, Treasury Did Not Assess Potential Unexpended MHA Balances Using an Estimate of Likely Expenditures Arising from Future Participation", "Without Periodic Reviews of Unexpended Balances, Treasury May Miss Opportunities to Achieve Budgetary Benefits", "Agencies Can Identify Opportunities for Budgetary Benefits by Reviewing Unexpended Balances", "Treasury Did Not Update Its Estimate of MHA Program Participation and Costs between 2009 and 2015", "Treasury Cites Challenges in Estimating Future Participation and Related Expenditures", "Treasury May Be Missing Opportunities to Achieve Budgetary Benefits", "Some of Our Estimates of Future MHA Program Activity and Costs Suggest That Treasury May Not Use All Funds", "Conclusions", "Matter for Congressional Consideration", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Technical Discussion of GAO Analysis of Potential Home Affordable Modification Program Unexpended Balances", "Estimated Future HAMP Expenditures and Unused Funds", "Appendix III: Comments from the Department of the Treasury", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Treasury’s Office of Homeownership Preservation within the Office of Financial Stability, which administers Treasury’s TARP-related efforts, is tasked with finding ways to help prevent avoidable foreclosures and preserve homeownership. The $27.8 billion in TARP funds that Treasury has obligated for MHA is to be used to encourage the modification of eligible mortgages and to provide other relief to distressed borrowers. Only loans that were originated on or before January 1, 2009 and that meet other requirements are eligible for assistance under the MHA program. In December 2015, Congress mandated that the MHA program be terminated on December 31, 2016, with an exemption for HAMP loan modification applications made before that date. Congress also provided Treasury with the authority to extend its authority under EESA with respect to the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (Hardest Hit Fund) to December 31, 2017 for current program participants and to obligate up to $2 billion of TARP funds to that program.", "Treasury uses contracts with its servicers to establish the amount of funds that each servicer may receive under MHA for incentives or other payments. Treasury initiated HAMP and the other TARP housing programs using its authority under EESA and authorized Fannie Mae to act as a financial agent. At Treasury’s request, Fannie Mae signed contracts with banks and other mortgage servicers. As prescribed by EESA, the contracts took the form of agreements to purchase financial instruments from the servicers. For the MHA program, in these contracts, known as servicer participation agreements, Treasury, through Fannie Mae, committed to pay servicers for completing modifications of mortgage loans according to the terms of HAMP and other MHA programs. Each of these contracts establishes a maximum amount that Treasury, through Fannie Mae, is obligated to pay the servicer.\nEach of the contracts established a maximum amount that Treasury would have to pay, and Treasury recorded these amounts for each contract as obligations, for a total of approximately $27.8 billion. All of the contracts were signed and the corresponding funds obligated in fiscal years 2009 and 2010. Treasury has not obligated any new funds for MHA since the end of 2010 but has made many adjustments to the amounts originally set out in the contracts, pursuant to provisions set forth in the contracts. The contracts do not require upfront payments of the full maximum amounts; Treasury expends funds as servicers enroll borrowers in modifications and complete other activities.\nAs of October 2015, $12.6 billion had been expended for all the MHA programs, leaving $17.2 billion in obligated but unexpended funds. Of this $17.2 billion, according to Treasury’s estimate, a maximum of $9.5 billion could be expended through future payments to servicers for HAMP loan modifications completed before October 2015 and for other activities that servicers have already initiated. The remaining $7.7 billion in obligations represents the amounts potentially available to servicers for future HAMP modifications and other MHA transactions, as established in the original contracts. Due to restrictions imposed by the Dodd-Frank Act, Treasury may obligate TARP funds only for programs that were initiated prior to June 25, 2010.", "MHA consists of several programs designed to help struggling homeowners and prevent avoidable foreclosures.\nHAMP first-lien modifications. The largest component of MHA is the first-lien modification program. The program was intended to help eligible borrowers stay in their homes and avoid potential foreclosures by reducing the amount of their monthly payments to affordable levels. Modifications are available for single-family properties (one to four units) with mortgages no greater than $729,750 for a one-unit property. Borrowers are eligible only if companies servicing their mortgages have signed program participation agreements. Participating loan servicers use a standardized net present value (NPV) model to compare a modified loan’s expected cash flows to the cash flows that would be expected from the same loan with no modifications, using certain assumptions. If the expected cash flow with a modification is positive (i.e., more than the estimated cash flow of the unmodified loan), the participating loan servicer is required to offer the loan modification. HAMP provides both one-time and ongoing incentives to mortgage investors, loan servicers, and borrowers for up to 6 years after a loan is modified. These incentives take into consideration the servicers’ and investors’ costs for making the modifications and are designed to increase the likelihood that the program will produce successful modifications over the long term. They include principal balance reductions for borrowers who make payments on time and incentives for servicers tied to the amount by which a modification reduces the borrower’s monthly payment.\nThe HAMP first-lien modification program has three components—the original HAMP (Tier 1), an additional first-lien modification known as HAMP Tier 2, and a modification with reduced borrower documentation requirements known as Streamline HAMP. Announced in March 2009, HAMP Tier 1 is generally available to qualified borrowers who occupy their properties as their primary residence and whose first-lien mortgage payments are more than 31 percent of their monthly gross income, as calculated using the front-end debt-to- income (DTI) ratio. HAMP Tier 2, which was announced in January 2012, is available for both owner-occupied and rental properties, and borrowers’ monthly mortgage payments prior to modification may be less than 31 percent DTI. Streamline HAMP, which was announced in July 2015 and requires servicers to have an implementation policy in place as of January 2016, offers modification terms and eligibility criteria similar to those of HAMP Tier 2 but does not require documentation (or verification) of borrower income.\nAs part of the HAMP Tier 1 modification, servicers reduce a borrower’s interest rate until the DTI is 31 percent or the interest rate reaches 2 percent. The new interest rate is fixed for the first 5 years of the modification. It then gradually increases by increments of no more than 1 percent per year until it reaches the cap, which is the Freddie Mac Primary Mortgage Market Survey rate at the time of the modification agreement. The interest rate is then fixed at that rate for the remaining loan term. In contrast, under HAMP Tier 2 and Streamline HAMP, the interest rate is adjusted to a rate that remains fixed for the life of the loan. The fixed rate is set using the weekly Freddie Mac Primary Mortgage Market Survey Rate at the time of the modification agreement.\nFor HAMP Tier 1, HAMP Tier 2, and Streamline HAMP, borrowers must demonstrate their ability to pay the modified amount by successfully completing a trial period of 3 months or more before a loan is permanently modified and any government payments are made. When a borrower defaults—misses three consecutive monthly mortgage payments—after the loan has been permanently modified, Treasury stops paying financial incentives to the borrower, servicer, and investor for that modification. Borrowers who have received a HAMP Tier 1 modification may be eligible for a HAMP Tier 2 or Streamline HAMP modification under certain conditions. These include having undergone a change in circumstances, having entered into a permanent HAMP Tier 1 loan modification at least 12 months earlier, or having defaulted on the HAMP Tier 1 modification (referred to as redefault). In all cases, borrowers must otherwise meet HAMP eligibility criteria, such as having a financial hardship.\nThe Second Lien Modification Program (2MP). 2MP is designed to work in tandem with HAMP modifications to provide a comprehensive solution to help borrowers afford their mortgage payments. Under 2MP, when a borrower’s first lien is modified under HAMP and the servicer of the second lien is a 2MP participant, that servicer must offer a modification and/or full or partial extinguishment of the second lien. Treasury provides incentive payments to second lien mortgage holders in the form of a percentage of each dollar in principal reduction on the second lien. Treasury has doubled the incentive payments offered to second lien mortgage holders for 2MP permanent modifications that include principal reduction and have an effective date on or after June 1, 2012.\nPrincipal Reduction Alternative (PRA). In October 2010, PRA took effect as a component of HAMP to give servicers more flexibility in offering relief to borrowers whose homes were worth significantly less than their mortgage balance. Under PRA, Treasury provides mortgage holders/investors with incentive payments in the form of a percentage of each dollar in principal reduction. Treasury has tripled the PRA incentive amounts offered to mortgage holders/investors for permanent modifications with trial periods effective on or after March 1, 2012. Participating servicers of loans not owned by the housing enterprises (Fannie Mae or Freddie Mac) must evaluate the benefit of principal reduction for mortgages with a loan-to-value (LTV) ratio that is greater than 115 percent when evaluating a homeowner for a HAMP first-lien modification. Servicers must adopt and follow PRA policies that treat all similarly situated loans in a consistent manner but are not required to offer principal reductions, even when the NPV calculations show that the expected value of the loan’s cash flows would be higher with a principal reduction than without it. When servicers include principal reduction in modifications under PRA, the reduction is initially treated as noninterest-bearing principal forbearance. If the borrower is in good standing on the first, second, and third anniversaries of the effective date of the modification’s trial period, one-third of the principal reduction amount is forgiven on each anniversary.\nHome Affordable Foreclosure Alternatives (HAFA) Program. Under this program, servicers offer foreclosure alternatives (short sales and deeds-in-lieu of foreclosure) to borrowers who meet the basic eligibility requirements for HAMP and do not qualify for a HAMP trial modification, do not successfully complete a HAMP trial modification, default on a modification (miss three or more consecutive payments), or request a short sale or deed-in-lieu. The program provides incentive payments to investors, servicers, and borrowers for completing these foreclosure alternatives.\nHome Affordable Unemployment Program. This program offers assistance to borrowers who are suffering financial hardship due to unemployment. Borrowers are eligible for a 12-month forbearance period during which monthly mortgage payments are reduced or suspended. Servicers can extend the forbearance period at their discretion if the borrower is still unemployed after the 12-month period. Borrowers who later find employment or whose forbearance period expires should be considered for a HAMP loan modification or a foreclosure alternative, such as the HAFA program. No TARP funds are provided to servicers under this program.\nFederal Housing Administration (FHA) and Rural Housing Service (RHS) modification programs (FHA-HAMP and Rural Development, or RD-HAMP, respectively). These programs are similar to HAMP Tier 1 and cover FHA-insured and RHS-guaranteed mortgage loans. If a modified FHA-insured or RHS-guaranteed mortgage loan meets Treasury’s eligibility criteria, the borrower and servicer can receive TARP-funded incentive payments from Treasury.\nIn 2009, Treasury entered into agreements with Fannie Mae and Freddie Mac to act as financial agents for MHA. Fannie Mae serves as the MHA program administrator and is responsible for developing and administering program operations, including registering, executing participation agreements with, and collecting data from servicers and providing ongoing servicer training and support. Freddie Mac serves as Treasury’s compliance agent and has a designated independent division, Making Home Affordable Compliance, which is responsible for assessing servicers’ compliance with program guidelines, including conducting on- site and remote servicer loan file reviews and audits.", "Several indicators of distress among homeowners with mortgages have shown improvements since the height of the housing crisis, and evidence suggests that recent loans are less risky than those originated before the crisis. As shown in figure 1, the percentage of mortgages in default— delinquent 90 days or more—is lower than it was when HAMP was introduced in 2009, according to data published by the Mortgage Bankers Association. The percentage of mortgages that are seriously delinquent (those in default or foreclosure) has declined from a peak in 2009 but remains elevated relative to the period from 2000 to 2007.\nIn most parts of the country, a smaller proportion of homeowners owed 95 percent or more of their home’s value on a mortgage in 2015 than in 2008. According to published data from CoreLogic, the percentage of properties with mortgages that are in negative equity or near negative equity has declined in most states since 2008, but several states have seen little improvement (see fig. 2). In two states, Nevada and Florida, 20 percent or more of homes that have mortgages fell into the negative equity or near negative equity category as of the second quarter of 2015. In other states—Rhode Island, Maryland, Illinois, New Jersey, Connecticut, and New Mexico—the percentage of homes with mortgages that fall into this category was not substantially lower in 2015 than in 2008.\nAccording to the Housing Credit Availability Index (HCAI) developed by the Urban Institute, the expected default risk of mortgages at origination has declined since 2006. The HCAI is based on the historical default rates of loans originated in selected years, for categories of loans defined by borrower characteristics (such as credit scores and debt-to-income ratios) and loan characteristics (such as the presence or absence of prepayment penalties or adjustable interest rates). The historical default rates, combined with data about loan terms and borrower characteristics at origination, are used to generate a measure of expected default risk at origination. The HCAI presents this measure in terms of the percentage of loans originated in a given quarter that will probably default, that is, become 90 or more days delinquent. This overall percentage is the sum of product risk (risk due to characteristics of loans) and borrower risk (risk due to characteristics of borrowers). When few loans with risky characteristics are originated, the product risk will be low. As shown in figure 3, the overall index remained between 10 and 17 percent for almost a decade (from 1998 through the 3rd quarter of 2007) and was below 6 percent as of the 2nd quarter of 2015. By the 2nd quarter of 2015, the index had increased from a low in 2013, but by less than 1 percentage point. This change over time in the HCAI may also suggest that mortgage credit is not as easily available as it was before the financial crisis.", "According to HOPE NOW, nearly 1.8 million mortgage loan modifications were completed in 2010, and this number has steadily decreased since that time, to a total of about 330,000 modifications in the first 3 quarters of 2015. The HOPE NOW estimate includes both HAMP and non-HAMP modifications and is based on data from Treasury as well as data from mortgage servicers, extrapolated to produce an estimate of the entire U.S. mortgage market. According to the HOPE NOW data, in 2009, the first year in which HAMP modifications were available, HAMP Tier 1 permanent modifications accounted for about 5 percent of the total number of modifications completed that year. However, HAMP was not in place for the full year, and servicers did not report the first permanent HAMP modifications until the latter part of 2009. According to the HOPE NOW data, HAMP permanent modifications (Tier 1 and Tier 2 combined) have accounted for between 22 and 34 percent of the total number of modifications completed each year since 2010. The same data indicate that HAMP’s percentage of the total number of modifications decreased in 2012 and 2013 over the previous years, increased in 2014, and remained above the 2012 level through the first 3 quarters of 2015.\nRegarding the vintage of loans being modified, OCC data suggest that pre-2009 loans represented the majority of modifications completed in the first half of 2015 and in earlier years. OCC data, which are based on loans serviced by national banks that report to OCC for its quarterly Mortgage Metrics report, show that loans originated before 2009 represent the vast majority of all modifications performed since HAMP was introduced in 2009, but the share represented by pre-2009 loans has been decreasing. In the first 3 quarters of 2015, modifications of pre- 2009 loans represented 68 percent of the total number of modifications in OCC’s Mortgage Metrics Report portfolio.", "According to the OCC Mortgage Metrics data, HAMP modifications have resulted in greater payment reductions than non-HAMP modifications. As described above, HAMP modifications are designed to help borrowers stay in their homes by reducing monthly payments. Figure 4 compares modifications under one of the HAMP programs—including FHA-HAMP and enterprise HAMP modifications—with modifications performed outside of HAMP. In both cases, only modifications of mortgages originated before 2009 are included. As shown in figure 4, modifications performed outside of HAMP in 2009 resulted in an approximately 10 percent median payment reduction, while modifications performed in one of the HAMP programs resulted in an approximately 39 percent median payment reduction. These two numbers have gradually converged over time, and, by the third quarter of 2015, non-HAMP modified mortgages received a median 22 percent payment reduction, while HAMP-modified mortgages received a median 29 percent payment reduction.", "Treasury did not update its original estimate of borrower participation in the Making Home Affordable program between 2009 and 2015. Our prior work has concluded that conducting reviews of unexpended balances can help agencies identify funds that are not likely to be used. Treasury officials previously indicated that they cannot reliably estimate future borrower participation and likely program expenditures due to inherent limitations of the available data. While no estimate of future participation and expenditures can be made with complete certainty, our own analysis of data from Treasury and a private vendor resulted in estimates of borrower participation and cost projections that ranged from Treasury using all available MHA funds to an estimated surplus of $2.5 billion. By assessing likely future program participation and related expenditures, Treasury could create opportunities for it and Congress to identify and use any likely unexpended funds for other priorities. In providing technical comments to this report, Treasury officials provided us with analysis of expected future program participation and related expenditures for the MHA program as a whole—the first such analysis since 2009.", "", "Prior GAO work has concluded that conducting reviews of unexpended balances can help agencies identify opportunities to achieve budgetary benefits. This work identified four key questions to consider when evaluating unexpended balances. 1. What mission and goals is the account or program supporting? 2. What are the sources and fiscal characteristics of the funding? 3. What factors affect the size and composition of the unexpended balance? 4. How does the agency estimate and manage unexpended balances?\nThis last question has particular relevance for the MHA program given the approaching deadline of December 31, 2016, for entry into the program.\nUnderstanding an agency’s processes for estimating and managing carryover balances provides information that can be assessed to determine how effectively the agency anticipates program needs and helps ensure the most efficient use of resources. In our September 2013 report on evaluating account balances in federal accounts, we identified several things to consider when attempting to understand how an agency estimates and manages carryover balances, as the following examples illustrate. 1. What assumptions or factors did the agency incorporate into its estimate of the account’s carryover balance (e.g., historical experience, demand models)? 2. Does the agency have a routine mechanism for reviewing its obligations and determining whether there are opportunities to deobligate funds (e.g., written procedures or ad hoc processes)? 3. What is the agency’s timeline for obligating and expending funds in the account? 4. What is the spendout rate after funds have been obligated?\nWe also found in our 2013 report that if an agency does not have a robust strategy in place to manage carryover balances or is unable to adequately explain or support the reported carryover balance, balances may either fall too low to efficiently manage operations or rise to unnecessarily high levels. This produces potential opportunities for those funds to be used more efficiently elsewhere. For example, if Treasury were to identify and deobligate any MHA funds that are likely to not be expended, these funds may then be available for Congress to permanently rescind and use elsewhere for other priorities.", "In 2009, Treasury announced that as many as 3 million to 4 million borrowers who were at risk of default and foreclosure could be offered a loan modification under HAMP. In our July 2009 report, which reviewed these estimates, we found that Treasury’s estimate may have been overstated, reflecting uncertainty resulting from data gaps and the numerous assumptions that had to be made. In addition, we noted that documentation of the many assumptions and calculations necessary for the analysis was incomplete and that Treasury had not specified its plans for systematically updating key assumptions and calculations. We concluded that to improve the validity of the projection, the process would need to be supported by detailed information and complete documentation and the key assumptions and calculations would need to be regularly reviewed and updated. Based on those findings, we recommended that Treasury institute a system to routinely review and update key assumptions and projections about the housing market and the behavior of mortgage holders, borrowers, and servicers, revising the projections as necessary to assess the program’s effectiveness and structure.\nTo address our recommendation, Treasury began obtaining information from the Mortgage Bankers Association to update its estimate of the number of HAMP-eligible borrowers. In August 2009 Treasury began publicly reporting monthly data on the estimated eligible loans and in January 2010 began publicly reporting data on the estimated eligible borrowers for the HAMP Tier 1 program. However, Treasury subsequently discontinued that practice after its February 2014 MHA Program Performance Report, moving instead to quarterly reporting.", "Instead of producing updated estimates of future program participation and related expenditures, Treasury historically had assumed that all funds obligated for MHA would be spent. Officials said that they focus on monitoring the housing market and the behavior of its participating loan servicers. For example, Treasury has been using a monthly report based on servicer-reported data of individual transactions to monitor expenditures in the aggregate and at the individual servicer level across all MHA programs. In addition to Treasury’s monitoring reports, Fannie Mae, in its role as financial agent, provides Treasury with a consolidated estimate of potential future HAMP participation based on survey data that it receives from MHA servicers. Additionally, Fannie Mae continues to provide Treasury with an internal estimate of potentially eligible HAMP Tier 1 borrowers based on a combination of industry data and information received from MHA servicers (known as a “waterfall”).\nTreasury officials have indicated that they have historically assumed that all funds obligated for MHA would be spent under that program, and, therefore, had not been analyzing likely unexpended or excess MHA funds that could potentially be deobligated. Additionally, Treasury officials previously indicated that they had not found the servicer survey data to be reliable predictors of future participation. Instead, Treasury uses the servicer surveys to look for trends in the HAMP modification activity data and as a vehicle for discussions with servicers on their approaches to the MHA program. Treasury officials also questioned the utility of the waterfall, given several limitations. First, it may not be possible to acquire a full knowledge of the factors that would make a borrower eligible, such as current income, the current occupancy/use of the property, any financial hardship, the borrower’s ability to meet applicable underwriting criteria, and the modified loan’s net present value status from available industry data sources. Second, estimating the potentially eligible population for HAMP Tier 2, which the waterfall does not attempt to do, is difficult because (1) all borrowers are first considered for HAMP Tier 1, raising the possibility of double counting; (2) non-owner-occupied units are only eligible if they are used for rental purposes; (3) each servicer determines its own DTI range within Treasury’s established parameters; and (4) servicers have limited historical data for HAMP Tier 2 on which to base estimates. Third, Treasury officials noted that Fannie Mae’s waterfall is only a point-in-time estimate and does not account for borrowers who might become eligible in the future (a number that depends on a variety of changing economic and market factors).\nInstead, as we found in our July 2015 report, Treasury has focused on identifying ways to increase the reach and effectiveness of MHA programs by making program changes and modifications. For example, Treasury’s internal Action Memorandums that describe program changes and modifications, including its Streamline HAMP modification process, for senior management indicate that Treasury has assumed that all funds obligated for MHA would be spent. Over the course of the MHA program, Treasury has extended program deadlines and introduced new features designed to increase program participation and program expenditures. However, as previously noted, in December 2015 Congress mandated that the MHA program be terminated on December 31, 2016. Treasury has stated that any program expansions or modifications resulting in additional expenditures would remain within the amount obligated to the MHA program. Treasury’s Action Memorandum that discussed Streamline HAMP also explained that the amount that would ultimately be expended in connection with the program change was difficult to estimate and would depend on a number of factors that Treasury could not predict at that time (e.g., national mortgage delinquency rates and other economic conditions, borrower application rates, and the performance of modified loans over time). Treasury officials previously told us that Treasury’s mandate is to help as many struggling homeowners as possible. Treasury officials also told us that the MHA Program Administrator will be conducting program readiness assessments for Streamline HAMP starting in January 2016 and will request the servicers’ Streamline HAMP policies at that time. However, Treasury officials indicated that they would not require servicers to report estimates of the population eligible for Streamline HAMP as they do for HAMP Tier 1 and Tier 2. Given the common eligibility criteria, Treasury expects that the potentially eligible population for Streamline HAMP will significantly overlap with that of HAMP Tier 1 and HAMP Tier 2. Estimating the potentially eligible population for Streamline HAMP is challenging, in part because servicers can tailor the eligibility criteria to their unique loan portfolios.", "Because Treasury has not routinely estimated expenditures associated with estimated likely future MHA program participation, it may not have identified in a timely manner whether it is retaining funds that may not be needed. Estimating likely future participation and associated expenditures would provide Treasury greater assurance that the funds it has obligated are necessary. As previously stated, as of October 2015, Treasury had $7.7 billion in unexpended obligations representing the amounts potentially available to servicers for future MHA transactions, including, but not limited to, HAMP modifications. The President’s fiscal year 2017 budget submission indicates that Treasury is now estimating a $4.7 billion reduction in total outlays for the MHA program. This estimate is based on analysis Treasury prepared assuming that future activity will be similar to recent activity. Treasury deobligated $2 billion of this $4.7 billion on February 25, 2016. Treasury officials told us that deobligating all MHA funds in excess of the current cost estimate would unduly increase the risk of insufficient funding for future program expenditures. Additionally, Treasury has indicated it plans to evaluate whether to deobligate additional funds after the complete universe of MHA transactions (i.e., modifications, short sales, and deeds-in-lieu of foreclosure) is known, sometime after entry into the MHA program is complete in late 2017.\nIn our 2012 assessment of federal grant programs, we found that deobligating excess funds helps ensure that federal agency resources are not improperly spent and helps agencies maintain accurate accounting of their budgetary resources. Further, by preparing such estimates on a periodic basis, Treasury can achieve greater certainty over time and provide Congress with the opportunity to use those funds more efficiently elsewhere.", "Because prior to the President’s 2017 budget submission Treasury had not projected expenditures associated with likely future MHA participation or the likely resulting unexpended balances, we performed our own analysis to illustrate the potential range of estimated future participation in the various HAMP programs and generate cost projections from those estimations. These estimates are derived from data provided by a vendor and are based on the vendor’s two datasets, for which it had September 30, 2015, loan-level information, and an extrapolation to the remaining universe of loans for which the vendor had no data. We limited the analysis to loans that were determined by the vendor to be originated prior to January 2009 that were not owned by the housing enterprises or insured or guaranteed by the government. These are just two of the criteria for determining whether a loan meets basic eligibility criteria for the MHA program. We also limited the analysis to reflect other program requirements, as discussed further below. Based upon these estimates of potential eligibility and program data on the typical costs of modifications, we produced estimates of potential future costs. We compared these estimates of future cost with available, but unused, funds as of October 16, 2015, to produce estimates of potential excess funds. For a complete description of our methodology, see appendix II.\nOur results provide a range of potential future costs and excess funds using various assumptions for three important factors—the extent to which potentially eligible loans are serviced by HAMP-approved servicers, whether the loan had been previously modified, and whether the loan was 60 or more days delinquent or otherwise met certain measures of risk that might indicate that the loan was in imminent danger of default. Specifics of each of the three factors follow. 1. We prepared higher and lower estimates of costs and excess funds assuming for the higher estimate that 62 percent of loans were serviced by HAMP-approved servicers, and for the lower estimate that 57 percent of loans were serviced by HAMP-approved servicers. 2. Within the higher and lower estimates, we projected estimated future program costs for (a) loans that were 60 or more days delinquent that met the basic HAMP eligibility criteria and (b) loans that were 60 or more days delinquent combined with loans that were in imminent danger of default. Loans that are 60 or more days delinquent are potentially eligible for all three HAMP loan modification categories (HAMP Tier 1, Tier 2, and Streamline HAMP). Loans in imminent danger of default are potentially eligible for HAMP Tier 1 and Tier 2 modifications. 3. Also within the higher and lower estimates, we estimated future costs based on two different assumptions—that 25 percent of the at-risk loans were currently in a loan modification (HAMP or non-HAMP) and that none of the at-risk loans were currently in a loan modification.\nOur analysis found that when considering the most inclusive of the assumptions—that more loans are serviced by HAMP-approved servicers, that both loans that are 60 or more days delinquent and loans that might be at risk of default would be eligible, and that no loans are already in modification—results in an estimate of Treasury using all available funds. Conversely, using the least inclusive assumptions—that fewer loans are serviced by HAMP-approved servicers, that only loans that are currently 60 or more days delinquent would be eligible, and that 25 percent of loans are already in modification—results in an estimated surplus of $4.8 billion, not considering other non-HAMP MHA costs. (See table 1.)\nOur high and low estimates of potential unused or excess funds are based upon assumptions that generally would result in higher expected eligibility and participation, higher overall costs and, therefore, lower unused or excess funds, than might actually be realized. In particular, for all scenarios, we assumed a borrower participation rate of 100 percent. That is, we assumed that all borrowers that are eligible for modification are offered and accept the modification. We also assumed that all borrowers offered a trial modification would successfully complete their trial and convert the modification into a permanent one, which is not likely to be the case. In some scenarios we also established measures of mortgage risk to approximate a definition of loans that are not 60 or more days delinquent, but in imminent danger of default—a potential eligibility qualification for modification under the Tier 1 and Tier 2 programs. Based upon our analysis of at-risk loans, we assumed an approximate equal split between the modifications for the 60 days or more delinquent and the imminent default loans. According to Treasury data, approximately 20 percent of HAMP loan modifications went to borrowers that servicers determined were in imminent danger of default. If instead one assumed that loans that are in imminent danger of default would comprise 20 percent of the loans receiving a modification, then even our most inclusive estimate of future cost would be $5.3 billion (versus $8.6 billion) and the estimate of unused or excess funds would be much higher—$2.4 billion (versus a deficit of $0.9 billion).\nNot shown in table 1 are estimates for program costs related to the non- HAMP programs of MHA. Treasury officials told us these non-HAMP MHA programs are important because servicers can use the funds obligated under the participation agreement for MHA programs other than HAMP.Therefore, funds that are not used for HAMP loan modifications could be used for non-HAMP MHA programs, such as the Home Affordable Foreclosure Alternative and the FHA/RD HAMP programs. According to Treasury, it expended approximately $467 million for the non-HAMP programs during fiscal year 2015. Extrapolating that amount over an additional 6 years (entry into the MHA programs ends on December 31, 2016, and incentive payments can extend up to 5 years after entry, as in the case of the 2MP program) would result in an additional $2.3 billion in MHA expenditures. Together with our lowest estimate of HAMP program costs, total MHA program costs could therefore be $5.2 billion, which would leave an estimated $2.5 billion in potentially excess funds. In contrast, our high estimate resulted in all available MHA program funds being spent. Also, as previously noted, our analysis does not include estimates for HAMP modification of loans owned by the housing enterprises or insured or guaranteed by the government.\nCBO has also conducted analysis that illustrates the uncertainty about whether or not Treasury will likely spend all the funds allocated to the MHA programs. CBO’s most recent analysis, published in March 2015, projected a $9 billion surplus (with Treasury estimating full use of $37 billion in funds and CBO estimating use of $28 billion) over the amount that Treasury has estimated, because CBO anticipated that fewer households would participate in housing programs. CBO had increased its estimate of likely expenditures of TARP-funded housing programs by $2 billion from its previous year’s estimate, primarily because of Treasury’s announcement in November 2014 of an additional $5,000 in principal reduction for participants in the sixth year of a mortgage modification. CBO’s projections were made before Treasury’s announcement of its Streamline HAMP program, which if taken into account will likely decrease CBO’s estimated surplus.", "Treasury has not consistently been estimating expenditures related to likely future program participation and the likely resulting funding balances for the MHA programs because of concerns about the inherent limitations of the available data. In addition, Treasury assumed that it would use all funds obligated for MHA. However, conducting reviews of unexpended balances, including those that have been obligated, can help agencies redirect resources to other priorities or identify opportunities to achieve budgetary benefits. Additionally, if Treasury were to deobligate MHA funds that it determines were likely to not be expended, this may provide Congress with the opportunity to use those funds for other priorities. Our eligibility estimates, cost projections, and estimated unexpended balance figures represent a wide range of possible future outcomes, including a potential surplus in some cases, even when including potential future costs of non-HAMP housing programs. Treasury, with the assistance of its program administrators and servicers, is in a better position to conduct its own estimates of the number of eligible borrowers, potential costs of the program, and any balances that remain unexpended. We recognize that no estimate of future participation and expenditures can be made with complete certainty. However, Treasury has historically assumed that all MHA program funds will be spent and has instead focused on ways to expend the existing balance by making program changes and modifications. Congress recently enacted legislation that effectively terminates entry into the MHA programs after December 31, 2016, and authorized Treasury to move up to $2 billion in TARP funds to the Hardest Hit Fund. In February 2016, Treasury deobligated $2 billion and announced plans to move these funds to the Hardest Hit Fund. By taking action to estimate likely MHA expenditures and potential excess funds, Treasury could identify additional opportunities to deobligate those funds.", "To better ensure that taxpayer funds are being used effectively, Congress should consider permanently rescinding any Treasury-deobligated excess MHA balances that Treasury does not move into the Hardest Hit Fund.", "To provide Congress and others with accurate assessments of the funding that has been and will likely be used to help troubled borrowers and to identify any potential obligations not likely to be used, the Secretary of the Treasury should (1) review potential unexpended balances by estimating future expenditures of the MHA program; and (2) deobligate funds that its review shows will likely not be expended and obligate up to $2 billion of such funds to the TARP-funded Hardest Hit Fund as authorized by the Consolidated Appropriations Act, 2016.", "We provided a draft of this report to Treasury, OCC, FHFA, Fannie Mae, and Freddie Mac for review and comment. OCC, FHFA, and Fannie Mae had no technical comments and did not provide written comments. Treasury provided written comments which are presented in Appendix III. In addition, Treasury and Freddie Mac provided technical comments that we incorporated as appropriate throughout the report. Additionally, Treasury provided information on recent analyses of MHA obligations and actions to deobligate funds, which are discussed below.\nIn its comment letter, Treasury agreed with our recommendations and stated that it had updated its cost estimates for MHA and planned to deobligate $2 billion from the program, which it did on February 25, 2016.\nTreasury stated in its comment letter that it agreed with the statement in the draft report that the recent Congressional action to terminate MHA on December 31, 2016, provided Treasury with greater certainty and opportunity with respect to estimating and reprogramming excess MHA fund balances.\nIn addition, Treasury provided information related to actions to deobligate certain funds, which we have incorporated as appropriate. Specifically, Treasury noted that its updated cost estimates had identified an additional $2.7 billion in potential excess MHA funds but that deobligating all MHA funds in excess of the current cost estimate would unduly increase the risk of insufficient funding for future program expenditures. Instead, Treasury stated that it will evaluate whether to deobligate additional funds after the complete universe of MHA transactions is known in late 2017. According to Treasury, once servicers have reported all final transactions to the MHA system of record, they plan to calculate the maximum potential expenditures under MHA and deobligate excess funds, as appropriate. Given the uncertainties in estimating future participation and the associated expenditures, in particular the impact of the Streamline HAMP program, it will be important for Treasury to update its cost estimates as additional information becomes available and take timely action to deobligate likely excess funds. We have updated the relevant sections of the report to reflect these new developments and added language reflecting Treasury’s planned actions.\nWe are sending copies of this report to the appropriate congressional committees. This report will be available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.", "In response to a provision in the Emergency Economic Stabilization Act of 2008 that requires GAO to issue a report on TARP every 60 days, this report examines to what extent the Department of the Treasury (Treasury) is reviewing unexpended balances and cost projections for the Troubled Asset Relief Program (TARP)-funded Making Home Affordable (MHA) program.\nTo assess changes in mortgage performance since 2009 and the state of the loan modification market, we analyzed summary data from (1) the Mortgage Bankers Association, CoreLogic, Inc., and the Urban Institute on mortgage delinquencies, negative equity, and credit availability, and (2) the HOPE NOW Alliance and the Office of the Comptroller of the Currency (OCC) on mortgage loan modifications completed between January 1, 2009, and September 30, 2015, by servicers that report data to the Department of the Treasury’s Office of the Comptroller of the Currency (OCC) for OCC’s Mortgage Metrics Report. At our request, OCC provided us with data summaries not published in the Mortgage Metrics reports, such as analyses of the Mortgage Metrics portfolio by date of origination of the modified loans. We also used data on negative equity on homes published by CoreLogic, Inc. and data on a measure of housing credit availability published by the Urban Institute. While we did not independently confirm the accuracy of these summary data that we obtained, we took steps to ensure the data were sufficiently reliable for our purposes, such as reviewing the data with officials familiar with generating the data and reviewing related documentation. We found that the data were sufficiently reliable for our purposes.\nTo assess the extent to which Treasury is reviewing unexpended balances and cost projections for the MHA program, we collected and reviewed internal Treasury memorandums on the purpose and justification of program changes made in 2014 and 2015. We reviewed Fannie Mae servicer survey results as well as Fannie Mae projections of eligible borrowers and loans to understand the factors that might affect program participation. We reviewed internal Treasury estimates of the average cost of modifications, and of obligations, future expenditures, and remaining funds for the MHA programs. We also reviewed a prior GAO report on best practices concerning reviews of unexpended balances and cost projections, which we used as criteria to evaluate the extent to which Treasury is reviewing unexpended balances and cost projections for the MHA programs. In addition, we conducted our own analysis of potential future program participation and the likely associated costs to illustrate the potential for unexpended balances. To do so, we used analyses as of September 30, 2015, that we directed and that were prepared by a private vendor of mortgage data—Black Knight Data & Analytics, LLC (Black Knight)—as detailed in appendix II. We took a number of steps to help ensure the reliability of the data and analyses we purchased from Black Knight. For example, we reviewed related documentation, such as Black Knight’s technical quote in response to our solicitation. We discussed with Black Knight officials Black Knight’s internal procedures for ensuring data reliability and the process by which they completed the work we requested. We reviewed information provided by Black Knight describing its quality control process. We also conducted reasonableness checks on certain data elements comparing the Black Knight data to that of other industry data sources, such as the Mortgage Bankers Association and CoreLogic, Inc. We determined the data were sufficiently reliable for our purposes. Further, we analyzed the Congressional Budget Office’s (CBO) most recent published analysis of projected TARP spending. We had previously spoken to CBO officials about their cost estimates for the MHA program. We confirmed that they had not changed how they calculated their cost estimates. We also conducted interviews and reviewed past records of interviews with Treasury officials about the status of the programs, including any future program changes, and their projections for completing expenditure of TARP-housing funds.\nWe conducted this performance audit from August 2015 to March 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on the audit objectives.", "We performed our own analysis to illustrate the potential range of estimated future participation in HAMP and generate cost projections. These estimates are derived from September 30, 2015, summary data provided by a vendor and are based on the vendor’s two datasets and an extrapolation to the remaining universe of loans for which the vendor had no data. The first of the datasets, which includes only data reported by HAMP-approved servicers, includes loans for which loss mitigation actions are known (loss mitigation known). The second dataset includes loans for which loss mitigation actions are not identified (loss mitigation unknown). These data were provided to the vendor by a variety of loan servicers, the majority of which were approved for HAMP, according to the vendor. Based on known factors such as loan type and vintage, the vendor extrapolated to the remaining universe of loans for which it had no loan-specific data.", "The third part of our analysis estimated future HAMP expenditures and potential unexpended balances for the MHA program using estimated costs for the various HAMP loan modification types and various exclusion scenarios. To perform this analysis, we first assumed that modifications of potentially eligible loans that were 60 or more days delinquent would be split between HAMP Tier 1 and HAMP Tier 2/Streamline HAMP modifications at a ratio of 24.5 percent to 75.5 percent. This assumption was based on the expectation that Streamline HAMP is expected to have similar participation rates based on current trends reported by the enterprises and the increases in HAMP Tier 2 relative to HAMP Tier 1 observed during 2015. We further assumed that modifications of potentially eligible loans that were not 60 days delinquent and had two or more risk factors would be split between HAMP Tier 1 and HAMP Tier 2 at a ratio of 50 percent and 50 percent (loans that are not 90 days-plus delinquent are not eligible for Streamline HAMP) based on the split between new HAMP modifications made during calendar year 2015.\nWe then reduced the estimate of potentially at-risk eligible loans to account for various exclusions or reasons that a loan modification may not be offered. Depending on the particular modification program, these exclusions can include such things as unemployed borrower, property being vacant, debt-to-income ratio of less than 31 percent, negative net present value test results, and investor restrictions. Overall, based on servicer survey data provided by Treasury, we assumed that the combined exclusions would be about 50 percent for HAMP Tier 1 and 42 percent for both HAMP Tier 2 and Streamline. The estimate further accounted for two scenarios—one in which 25 percent of the at-risk loans were assumed to currently be in modification, and one in which we assume that no at-risk loans were currently in modification—of loans that would not be offered further modification. Finally, we applied the average expected cost of a HAMP Tier 1 modification and the average expected cost of HAMP Tier 2 modifications to both HAMP Tier 2 and Streamline modifications. Our analyses resulted in a range of estimated unused or excess funds, from a surplus of $4.8 billion to Treasury using all available funds depending on the share of the HAMP-approved servicers represented in the data, the definition of the at-risk borrowers, and the percentage of loans that are currently in modification (see table 5).\nIt is important to recognize that these high and low estimates of potential unused or excess funds are based upon assumptions that generally would result in higher expected eligibility and participation, higher overall costs and, therefore, lower unexpended balances, than might be realized. In particular, we assume a borrower participation rate of 100 percent. Furthermore, according to Treasury, approximately 20 percent of HAMP loan modifications are imminent default borrowers. In our calculations shown in table 5, the analysis had an approximate equal split between the modifications for the 60 days-plus delinquent and the imminent default loans. If instead one assumed that loans that are in imminent danger of default would comprise 20 percent of the at-risk loans, then the estimated future cost of low estimates of participation would only be $5.3 billion (versus $8.6 billion) and the estimate of unused or excess funds would be much higher—$2.4 billion (versus -$0.9 billion).\nNot shown in the table are estimates for program costs related to the non- HAMP programs of MHA. These non-HAMP MHA programs are important because servicers can use the funds obligated under the participation agreement for MHA programs other than HAMP, and therefore funds that are not needed for HAMP loan modifications could be used for non- HAMP MHA programs, such as the Home Affordable Foreclosure Alternative and the FHA/RD HAMP programs. According to Treasury, it expended approximately $467 million for the non-HAMP programs during fiscal year 2015. Extrapolating that amount over an additional 6 years (entry into the MHA programs ends on December 31, 2016, and incentive payments for certain non-HAMP programs can extend up to 5 years after entry) would result in an additional $2.3 billion in MHA expenditures. Together with our lowest estimate of HAMP program costs, total MHA program costs could therefore be $5.2 billion, which would leave an estimated $2.5 billion in potentially excess funds. In contrast, our high estimate resulted in all available MHA program funds being spent. Also, as previously noted, our analysis does not include estimates for HAMP modification of loans owned by the housing enterprises or insured or guaranteed by the government.", "", "", "", "In addition to the contact named above, John A. Karikari and Harry Medina (Assistant Directors), Jon D. Menaster, (Analyst-in-Charge), Theodore Alexander, Bethany M. Benitez, Emily R. Chalmers, William R. Chatlos, Lynda E. Downing, Carol M. Henn, Marc Molino, Oliver M. Richard, Estelle M. Tsay-Huang, James D. Vitarello, and William T. Woods made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 1, 1, 1, 1, 1, 1, 2, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_full", "", "", "", "", "", "h0_full h1_title", "h0_title h1_title", "h0_full h1_full", "h0_full", "h1_full", "h1_full", "h1_full", "h1_full", "h3_full", "h3_full", "h0_full h3_full", "h3_full h2_full", "h1_title", "h1_full", "", "", "", "" ] }	{ "question": [ "Why did Treasury originally say they could not make estimates regarding future participation?", "How did the GAO respond to Treasury's lack of estimates?", "What other factors help Treasury make estimates?", "What was Treasury’s intention regarding transferring funds?", "Why was Treasury criticized for transferring funds to the Hardest Hit Fund?", "Why did GAO perform its own analysis of mortgage data?", "What were the results of the analysis?", "In what ways is the estimate thought to be inaccurate?", "How have the estimates been used to influence the obligation of funds?", "Why has Treasury spent TARP funds for the MHA?", "How did the Emergency Economic Stabilization Act of 2008 mandate reporting on TARP?", "What is included in the report?", "What does the report examine?", "How was the report created?", "What recommendation did the GAO make for Treasury?", "How did Treasury respond to these recommendations?", "What recommendation did the GAO make for Congress?" ], "summary": [ "Treasury officials previously told GAO that they could not reliably estimate future participation levels due to data limitations and that they assumed that all available MHA funds would be spent.", "GAO recognizes that no estimate of future participation and expenditures can be made with certainty. But prior GAO work has concluded that reviewing unexpended balances, including those that have been obligated, can help agencies identify possible budgetary savings.", "Moreover, Congress's recent action to limit entry into the MHA programs after December 31, 2016, and to allow Treasury to obligate up to $2 billion in TARP funds, including MHA funds, to the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (Hardest Hit Fund), provides Treasury with greater certainty and opportunity with respect to estimating and reprogramming excess MHA fund balances.", "Since then, the President's 2017 Budget identified $4.7 billion in potential excess funds, and Treasury has announced its intention to transfer $2 billion of these funds to the Hardest Hit Fund.", "Officials said that deobligating additional amounts would present undue risk of having insufficient funds, and that further estimates of excess funds should await the completion of all new activity.", "GAO performed its own analysis of September 2015 mortgage data to estimate potential future HAMP participation and costs.", "This analysis resulted in estimates of MHA program balances as of October 16, 2015, that ranged from using all available funds to a surplus of $2.5 billion.", "In preparing these estimates, GAO attempted to provide a wide range of possible outcomes and generally used inclusive assumptions. Thus the actual number of eligible loans is likely to be lower and the unexpended balances higher than GAO's estimates.", "Taking action to estimate likely MHA expenditures allows Treasury to deobligate excess funds and, as appropriate, move funds to the Hardest Hit Fund. To the extent that additional funds may be deobligated, Congress may then have the opportunity to use those funds on other priorities.", "Since 2009 Treasury has obligated $27.8 billion in TARP funds through its MHA program to help struggling homeowners avoid foreclosure.", "The Emergency Economic Stabilization Act of 2008 includes a provision for GAO to report every 60 days on TARP activities.", "The Emergency Economic Stabilization Act of 2008 includes a provision for GAO to report every 60 days on TARP activities.", "This report examines the extent to which Treasury is reviewing unexpended balances and cost projections for the MHA programs.", "To do this work, GAO used 2015 mortgage and other data from a private vendor and Treasury to help illustrate potential future costs of MHA/HAMP, reviewed internal Treasury documents, and interviewed relevant federal agency officials.", "Treasury should (1) estimate future expenditures for the MHA program and any unexpended balances and (2) deobligate funds that its review shows will likely not be expended and move up to $2 billion of such funds to the TARP-funded Hardest Hit Fund as authorized.", "Treasury agreed with our recommendations and indicated that it has updated its cost estimates and subsequently deobligated $2 billion of MHA funds on February 25, 2016.", "Congress should consider permanently rescinding any deobligated MHA funds that are not moved to the Hardest Hit Fund and make them available for other priorities." ], "parent_pair_index": [ -1, 0, 0, -1, 3, -1, 0, -1, -1, -1, -1, 1, 1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0, 0, 4, 4, 4 ] }
CRS_R40080	{ "title": [ "", "Net Job Loss", "Infrastructure Spending and Job Creation Estimates", "Job Creation Estimates: What Are They?", "Some Caveats", "The Multiplier Effect", "Job Estimates and Construction Spending", "The Federal Highway Administration", "BLS Employment Requirements Table", "BEA's Regional Input-Output Modeling System (RIMS II)", "Job Estimates and Green Infrastructure Spending", "Measuring Jobs Supported by Spending Provisions in the American Recovery and Reinvestment Act", "Job Reporting by Recipients of ARRA Appropriations", "Job Estimation by the Council of Economic Advisers" ], "paragraphs": [ "After the long economic expansion that characterized much of the current decade, the nation entered its 11 th postwar recession in December 2007. It was not until November 2008, however, that the Business Cycle Dating Committee of the National Bureau of Economic Research announced that a substantial and widespread decline in economic activity had begun a year earlier. As part of its announcement, the committee noted that it \"views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series [the CES] reached a peak in December 2007.\"\nThe committee's announcement intensified congressional interest in passage of legislation aimed at encouraging creation of new jobs and warding off further loss of jobs. So, too, did comments equating the recession to the Great Depression. (See CRS Report R40655, The Labor Market During the Great Depression and the Current Recession .) This, in turn, sparked the interest of some policymakers in the job creation programs of the Depression period. (See CRS Report R41017, Job Creation Programs of the Great Depression: the WPA and the CCC .)\nTo mitigate all but one recession since the 1960s, Congress chose to increase federal expenditures on infrastructure (public works), thereby directly raising demand for goods and services to offset the reduced demand of consumers. (See CRS Report 92-939, Countercyclical Job Creation Programs .) But, there are a number of issues associated with using spending on public works to quickly create jobs during a recession. (See CRS Report R40107, The Role of Public Works Infrastructure in Economic Stimulus .)\nWhen Congress considers spending on infrastructure to help stimulate a flagging economy, \"how many jobs are created\" is a commonly asked question. After first briefly examining trends in employment since the latest recession began, this report focuses on job creation estimates available in late 2008 associated with increased spending on traditional and so-called green infrastructure, placing a heavy emphasis on explaining the methodology often used to derive them and the difficulties associated with developing estimates for green economic activities in particular.\nOnce stimulus legislation is signed into law, the focus of Congress customarily turns to estimates of the number of jobs that result as federal funds are allocated to specific activities. In the case of the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ), which was enacted in early 2009, Congress included language requiring entities that receive ARRA appropriations from federal agencies to report the number of jobs created or maintained as a result and requiring the Council of Economic Advisers to report on the employment and other economic effects of ARRA provisions. The report closes with a review of what is known to date about the number of jobs associated with the stimulus act.", "Total nonfarm employment declined steadily between December 2007 and October 2009, falling from 137,951,000 to 129,633,000. The great majority of this 8,318,000 job loss occurred after November 2008. Despite a small uptick in employment from October to November 2009, the number of jobs on employer payrolls fell the following month. Private and public employers typically have increased aggregate employment since then, however, with the number of jobs in July 2010 preliminarily rising to 130,470,000.\nAs is typical during economic downturns, employees in the goods-producing sector (mining, construction, manufacturing) have been the most adversely affected. Workers in the sector's construction industry began experiencing job losses even before the economy-wide downturn began.\nEmployment in the service-providing sector most recently peaked in December 2007, when the recession began. Some service-providing industries—education and health services—have continued to add workers. But, job losses elsewhere in the sector have far outweighed their gains. The financial activities industry began to lose jobs before the advent of the economy-wide downturn. This mirrors the above-mentioned trend in construction employment in part because real estate is a component of financial activities and it, like construction, has been hurt by the collapse of the housing market. Other components of financial activities, such as brokerage firms that packaged high-risk mortgages and the investors (e.g., banks) that purchased them, have been negatively affected by the housing market downturn as well.\nDespite the widely expressed belief that the recession ended sometime in the third quarter of 2009, the pattern following the end of the prior 10 postwar recessions suggests that an uninterrupted rebound in jobs will not be immediate. According to a CRS analysis, in all but one of these recessions,\nthe number of jobs on employer payrolls fluctuated for months.... Sustained job growth occurred within three to five months of the start of seven recoveries. In sharp contrast, steady job growth did not commence until March 1992—12 months after the July 1990–March 1991 recession ended—and not until September 2003—22 months after the March–November 2001 recession ended.", "When in response to a recession Congress has acted to create jobs by raising demand for goods and services through increased federal spending, it often has chosen to direct the funds to infrastructure (public works) activities. Other means of direct countercyclical job creation—public service employment, fiscal relief to state governments, and employment tax credits—have been relied on much less often.\nHistorically, public works has been synonymous with heavy and civil construction activities (e.g., road and bridge building, flood control structures and dam building). Today, it includes green economic activities or so-called green jobs. Although numerous studies on the emerging green economy have been released in the last several years, no consistent definition of green jobs exists at present. Green jobs seemingly are those in and related to industries that utilize renewable resources to produce their outputs (e.g., energy generated by wind, solar, and geothermal technologies) and jobs in and related to industries that produce energy-efficient goods (e.g., Energy Star appliances) and services (e.g., mass transit). For this reason, the following discussion focuses on what is known about the job-generating impact of infrastructure spending broadly defined.\nThe section below begins with an in-depth examination of how job creation estimates usually are developed. The focus then narrows to look at two models that can be used to calculate the number of jobs nationwide dependent upon demand in the construction industry among others, and one model that can be used to calculate the number of jobs by state dependent on the construction industry among other industries. The section ends by reviewing the difficulties that researchers encounter in estimating the number of jobs supported by expenditures on green economic activities and the consequent caution that should be taken when utilizing these estimates in particular.", "Interest in how many jobs are created by a particular type of economic activity has surfaced when the economy is in a downturn and policymakers seek to compare the relative advantages of different stimulus options. It also has arisen when policymakers want to know the impact of shifting expenditures from one federal budget category to another (e.g., away from defense and towards social services programs). Unless there is an increase in total spending, however, the number of jobs in the labor market would remain largely unchanged.\nAlthough there are other bases upon which to develop estimates of the number of jobs created by a given economic activity, an input-output (I-O) model of the economy often is utilized due to its cost-effectiveness. An I-O model describes the interrelationships between industries in the production process, showing how the dollar value of a sale is distributed across industries at a particular point in time. It thus reflects how much of the purchased product comes from final and supplier industries. An I-O table might show, for example, the dollar value of roof trusses produced by the veneer, plywood, and engineered wood products manufacturing industry and the dollar value of bricks produced by the clay product and refractory manufacturing industry used by the construction industry to erect residential buildings.\nThe output requirements from each industry must then be converted to employment requirements. Employment requirements are derived from productivity estimates for each industry at a particular point in time. The total employment requirement associated with a given type of final demand (e.g., a water reuse program) is the employment in the industry producing the final product or service and in the supplier industries. In other words, it is an approximation of both the direct and indirect employment dependent upon/supported by the economic activity. It commonly is expressed as the number of jobs per billion dollars of expenditures valued in a particular year's dollars.\nLike an I-O table, an employment requirements table is a matrix of hundreds of columns and rows. Each column displays the number of jobs supported in each of the industry rows by an expenditure of one billion dollars in the column industry. For example, one billion dollars spent in the construction industry supports (direct) employment in the various components of that industry (e.g., residential and commercial building, highway and bridge building) and (indirect) employment in the many industries that supply their goods and services to the construction industry (e.g., asphalt shingle manufacturing, fabricated metal bridge section manufacturing). An employment requirements table thus permits estimation of the varying impact of an expenditure on different industries and the varying impact of different kinds of expenditures.", "I-O models freeze technology and productivity at a particular point in time. Thus, the job-generating potential of an economic activity undertaken today could differ from that of an earlier period if there were technological and productivity improvements in the intervening years. Similarly, the estimates often are stated in terms of the number of jobs created for every billion dollars of expenditures, but a billion dollars spent in one year could buy less (or more) than a billion dollars spent in another year depending on changes in price levels over time.\nThere also could be differences in estimated versus actual job creation because I-O models assume that resources are unlimited. If, for example, the economy was performing at a fairly high level with plants operating near full capacity and with fairly few workers unemployed, the actual number of new jobs might fall short of the estimate due to capital and labor constraints. This is less likely to matter during a broad-based economic downturn.\nFurther, I-O tables do not necessarily differentiate between imported and domestically produced goods. As a consequence, the domestic employment impact of expenditures might be overstated to the extent that inputs are imported. Similarly, I-O tables typically do not express employment in terms of full-time equivalents (i.e., both full-time and part-time jobs are counted equally). Thus, programs which draw upon industries that rely relatively more on part-time workers (e.g., retail trade) might appear to create more jobs than programs that draw to a greater extent on industries employing relatively more full-time workers (e.g., manufacturing).", "A more comprehensive estimate of the number of jobs created by a particular type of economic activity has three components:\nthe number of jobs directly attributable to the activity, the number of jobs indirectly attributable to the activity, and the number of jobs induced throughout the economy as a result of the activity.\nInduced jobs are those dependent upon the purchases of persons in direct and indirect jobs. For example, workers who are directly or indirectly employed as the result of a highway construction program might spend some portion of their wages in their communities at grocery stores, auto repair shops, and movie theaters.\nEstimates of induced jobs or the multiplier are considered tenuous. To calculate the multiplier effect, one must estimate how much of the additional money earned by directly and indirectly employed workers will likely be spent versus saved. The actual number of jobs created by this added spending will further depend on economic conditions (e.g., the availability of labor, the inflation rate). As a result, there are widely varying estimates of the multiplier effect and those job creation studies that include induced employment utilize different multipliers.", "", "Perhaps the most widely known estimate of the employment impact of federal spending on our nation's roads comes from the Federal Highway Administration (FHWA). Although the FHWA twice updated its 1997 analysis, which estimated that $1 billion of federal-aid highway expenditures plus a $250 million state match supported 47,575 jobs, some proponents of stimulating job growth through increased federal spending on infrastructure continue to use this figure. The most recent update by the FHWA to 2007 indicates that a $1.25 billion expenditure on highway construction consisting of $1 billion from the federal government and $250 million from state government could support 34,779 jobs. If a state match is not required, \"then $1 billion in Federal funds supports 27,800 jobs.\" The jobs number has decreased over time in part because of increases in the price of inputs, such as asphalt and diesel fuel.\nThe FHWA breaks down the estimate of 27,822 jobs per billion dollars of federal spending on highways as follows:\n9,536 construction-oriented jobs (i.e., jobs at construction companies working on the projects and at businesses that provide direct inputs to the projects such as asphalt, concrete, and guard rails); 4,324 jobs in supporting industries (i.e., employment at firms that provide inputs to the industries directly providing the materials and equipment utilized in highway construction such as producers of sheet metal who supply the manufacturers of guard rails); and 13,962 induced jobs (i.e., jobs throughout the economy dependent upon consumer expenditures from the wages of workers in \"construction-oriented\" and \"industry-supporting\" jobs).\nThus, induced jobs account for one-half of the total estimate.\nThe FHWA notes one caveat about I-O analysis in addition to those mentioned above; that is, the job estimate \"utilizes the national average mix of construction materials and labor inputs. Specific projects and local utilization ratios will alter the estimated number of jobs supported.\" For example, a different combination of materials and number of workers might be required for road resurfacing projects compared to bridge building or commuter rail projects.\nThe FHWA also states that\n[t]he employment figures have recently been used as a justification for including highway spending in an economic stimulus package. But with the exception of short-term resurfacing and preservation projects, highway funds spend out slowly, with only 27% of a project, on average, outlaying in the first year.", "In recognition of the fact that \"people want to assess the impact on employment of different policies or actions,\" the U.S. Bureau of Labor Statistics (BLS) makes available electronically free-of-charge to the public the employment requirements tables it develops as part of its employment projections program. I-O and employment requirements tables developed and utilized by others often are proprietary and not made widely available.\nThe employment requirements tables are based on the official I-O tables for the nation that the U.S. Bureau of Economic Analysis (BEA) develops every five years. BLS takes the latest national I-O table available from BEA—in this case, 1997—and updates it to reflect more recent production and distribution technologies. It then utilizes the updated I-O table and recent labor productivity data to develop an employment requirements table. The employment requirements table referenced in this report reflects 2006 technologies of production and distribution as well as labor productivity. It is the table that was available in late 2008 when this report was first released.\nThe BLS employment requirements table provides information for the construction industry as a whole. The construction industry, according to the North American Industry Classification System, is composed of three major subdivisions:\nconstruction of buildings (residential and nonresidential), heavy and civil engineering construction (highway, street, and bridge construction; utility system construction; construction of flood control structures, dams, and hydroelectric power generation facilities), and specialty trade contractors (foundation, structure, and building exterior contractors; building equipment contractors; building finishing contractors).\nSome 11,768 jobs are directly and indirectly dependent upon $1 billion of spending on construction. A majority of the jobs are in the construction industry itself (i.e., 6,925 direct jobs).\nThe figure from the BLS employment requirements table for construction expenditures (11,768) is somewhat lower than the direct and indirect jobs figure for highway expenditures from the FHWA (13,860). Potential explanations for the disparity include differences in industry definition, data sources, method of updating the model, and time period.\nThe employment requirements available from BLS do not break out other types of construction that have been discussed as part of a federal job creation package (e.g., public school construction). BLS formerly conducted surveys to estimate full-time year-long employment associated with a variety of different construction activities, including new schools, hospitals, water and sewer facilities, roads, mass transit, and maintenance and repair construction. The survey information was last updated a few decades ago, however.", "From its Regional Input-Output Modeling System (RIMS II), the BEA produces estimates by geographic area of the employment, earnings, and output dependent on additional spending in hundreds of different industries. For a fee to most parties, BEA utilizes either the 1997 benchmark I-O for the nation or the 2006 annual I-O for the nation adjusted by 2006 data from its regional economic accounts to provide these estimates at the subnational level.\nAs shown in Table 1 , the number of jobs directly and indirectly supported by an expenditure of $1 billion in the construction industry in a given state ranges widely. The main reason for the disparity in job creation estimates is that each state has a different mix of industries within its borders. As a consequence, one state varies from the next in its capacity to supply all the intermediate goods needed to carry out construction projects. A secondary explanation is that earnings vary by state.", "Estimating the number of jobs dependent upon green infrastructure activities presents a greater challenge than estimates related to infrastructure projects as traditionally defined. The basis for most data collection by U.S. statistical agencies is the North American Industry Classification System (NAICS). It currently does not identify separately so-called green industries (e.g., those that utilize renewable resources to produce their outputs, those that manufacture goods which minimize energy use). For example, the NAICS disaggregates the electric utility industry into hydroelectric, fossil fuel, nuclear, and other power generation, transmission, and distribution. Such renewable sources of energy production as wind, solar, and biomass are not uniquely recognized; they are included in the \"other\" category. If harnessing the wind to produce electricity and plant material to produce biofuel requires a substantially different mix of inputs than relying on coal and gasoline, for example, the conventional I-O model does not seem well-suited as a basis for estimating the number of jobs supported by these green activities. Similarly, within NAICS, the construction industry does not have a unique category for retrofitting (e.g., installing additional insulation, fluorescent lighting, or energy-efficient heating and air-conditioning systems). Retrofitting likely requires a combination of inputs from supplier industries that differs from the mix for the top-to-bottom construction of buildings, once again making use of conventional I-O models problematic.\nThis recognized difficulty generally is either not mentioned, or how it is dealt with is not described, in the analyses of green job creation. One study, commissioned by the Center for American Progress and discussed in more detail below, does address the problem. The researchers explain that because \"the U.S. government surveys and accounts that are used to construct the input-output tables do not specifically recognize wind, solar, biomass, building retrofitting, or new mass transit as industries in their own right,\" they created synthetic industries by combining parts of industries for which data are available. The researchers provided an example in the case of the biomass \"industry:\" they constructed it by combining farming, forestry, wood products, and refining industries; then they \"assigned relative weights to each of these industries in terms of their contributions to producing biomass products.\"\nFurther complicating the matter is the context and manner in which estimates of green jobs generally are presented. Studies often develop employment projections based on differing sets of assumptions and time horizons. For example, the number of direct and indirect jobs some 10 or more years in the future supported by an assumed increase in the demand for energy that is met by an assumed shift during the projection period from coal to wind and geothermal power generation. Some reports also include induced employment, but this is not always made clear. In addition, some analyses relate to a particular state. Their results may not be generalizeable to other areas because state economy's have different mixes of industries and may not be able to provide any or all of the inputs for a particular green output. Additionally, the assumptions and methodologies underlying the job creation estimates often are not clearly articulated, which makes thoughtful review of the results very difficult.\nIt should be noted that many of the studies by green economy proponents that were available when Congress was crafting stimulus legislation had not been conceived for the purpose of quickly stabilizing or increasing the number of jobs in the nation or in industries particularly hard hit by the recession. Job creation estimates from two organizations that proposed broad-based green economy strategies intended in part to stimulate the deteriorating labor market are briefly described below.\nThe September 2008 report, Green Recovery: A Program to Create Jobs and Start Building a Low-Carbon Economy , was commissioned by the Center for American Progress (a research and educational institute). It represents an acceleration of a 10-year program included in a 2007 report ( Capturing the Energy Opportunity: Creating a Low - Carbon Economy ). The 2008 report's authors at the Department of Economics and Political Economy Research Institute (University of Massachusetts-Amherst), who relied on I-O analysis, estimate that almost 2 million jobs (935,200 direct jobs, 586,000 indirect jobs, and 496,000 induced jobs) could be created or preserved by a two-year $100 billion \"green economic recovery program.\" Of the $100 billion total, $46 billion would be in the form of federal spending for such activities as public building retrofits, mass transit and freight rail expansion, and smart electrical grid development. Much of the remainder would be in the form of tax credits to encourage businesses and homeowners to retrofit commercial and residential buildings. The authors acknowledge that not all of the green activities\ncan contribute equally to a short-term green economic recovery program. Some ... strategies are clearly capable of delivering within a year, while others will require as long as two years to be implemented.\nIn December 2008, the Apollo Alliance (a coalition of labor, environmental, business and community leaders) proposed The Apollo Economic Recovery Act . It is an initial step toward achievement of a 10-year $500 billion program to create 5 million green-collar jobs, which had been released in September 2008. The new initiative calls for federal spending of about $50 billion to create or maintain more than 650,000 direct jobs and 1.3 million indirect jobs. The derivation of these job creation figures is not always clear, appearing to rely much of the time on spending-to-jobs relationships estimated by other organizations. The proposed allocation of federal funds and associated job estimates include $10 billion to improve the efficiency and reliability of the electric transmission grid (131,000 direct and indirect jobs), $8 billion to repair roads and bridges (278,000 direct and indirect jobs), and $8 billion to encourage localities to replace aging buses and trains with U.S.-made clean-energy vehicles (37,600 direct jobs in vehicle manufacturing and 167,000 indirect jobs).", "While crafting the American Recovery and Reinvestment Act (ARRA), Congress was concerned about timely tracking of the number of jobs whose creation or maintenance results from the legislation. The 111 th Congress therefore addressed this matter in bill language much more than prior Congresses had in countercyclical job creation legislation.", "At Title XV—Accountability and Transparency of Division A—Appropriations Provisions, P.L. 111-5 requires entities that receive ARRA appropriations from federal agencies (e.g., grant, loan, or contract recipients; states) to include in their quarterly reports to the agencies estimates of the number of direct jobs created and retained by infrastructure projects, for example. Recipients of recovery funds were required to make their first submission of the required information in October 2009. Federal agencies are required to post the contents of these and subsequent reports on websites 30 days after the end of each calendar quarter. The Office of Management and Budget (OMB) was directed to provide guidance to help recipients prepare the reports, including the development of job estimates. The act further charged the Congressional Budget Office (CBO) and the Government Accountability Office (GAO) with commenting on the job estimates contained in the reports within 45 days after their submission to federal agencies.\nBased on the self-reporting of recipients of ARRA appropriations, 633,342 jobs were saved or retained through September 30, 2009. Because the notion of a retained (saved) job caused consternation in some quarters, OMB revised its guidance issued in June 2009. According to that guidance, upon which the aforementioned job figure was based, Congress' reference in ARRA to a job retained meant \"an existing position that would not have been continued to be filled were it not for Recovery Act funding.\" In response to feedback from GAO, among others, OMB revised its guidance on jobs saved so that recipients no longer will have \"to make a subjective judgment on whether a given job would have existed were it not for the Recovery Act. The updated guidance [issued in December 2009] ... defines jobs created or retained as those funded ... by the Recovery Act.\" Based on this definition, recipients reported that 608,311 jobs were funded by ARRA in the fourth quarter of 2009. Another 682,370 jobs were created or saved at ARRA recipients in the first quarter of 2010.", "Title XV of P.L. 111-5 additionally tasked the Council of Economic Advisers (CEA) with submitting quarterly reports to the Committees on Appropriations on the effect of ARRA-provisions on employment and other economic indicators. The CEA's mandate thus extends well beyond the above-described reporting requirements, which apply only to $271 billion in direct government investment spending out of a total of $787 billion.\nThe first quarterly report of the CEA was issued in September 2009. Based on two different estimating procedures, it found that ARRA might have added some one million jobs to employer payrolls in August 2009 compared to what employment would have been in the absence of the legislation.\nAs noted above, CBO was charged in ARRA with commenting on the number of jobs created or saved as a result of direct government purchases of goods and services, grants and loans to private entities, and grants to states and localities. Although it did so in Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009 , CBO went further to provide a broader estimate than can be gleaned from the reports of primary and secondary recipients of more than $25,000 from appropriations in ARRA; it is an estimate more comparable to that of the CEA. Based upon information provided by macroeconomic models and historical relationships, CBO estimated that ARRA's tax cuts and outlay increases that occurred through September 2009 increased the number of people employed by between 600,000 and 1.6 million compared to the employment level without the law. The CEA's estimate of 1.0-1.1 million additional jobs as of August 2009, discussed in the preceding paragraph, falls within the range estimated by CBO.\nIn its second quarterly report, released in January 2010, the CEA estimated the effect of ARRA on employment through December 2009. It found that the stimulus law might have raised year-end employment by about 1.7–1.9 million jobs above what it otherwise would have been. Similarly, CBO estimated in its report covering the fourth quarter of 2009 that ARRA's policies might have increased the number of people employed by 1.0–2.1 million.\nThe CEA's third quarterly report, released in April 2010, showed ARRA's employment effect through March 2010. It estimated that the law might have raised employment by 2.2–2.8 million jobs above what it otherwise would have been as of the first quarter of 2010. Similarly, CBO estimated in its report covering the first quarter of 2010 that ARRA's policies might have increased the number of people employed by 1.2–2.8 million.\nThe fourth quarterly ARRA jobs report of the CEA covering the second quarter of 2010 was released on July 14. Based on the two methods utilized by the CEA, ARRA might have increased employment compared to what it otherwise would have been in the quarter by between 2.5 million and 3.6 million jobs. Using its macroeconomic model, the CEA further estimated the effect on aggregate employment of public investment outlays under ARRA, which include clean energy generation and efficiency; human capital (e.g., Pell grants, K-12 schools excluding the State Fiscal Stabilization Fund); transportation infrastructure (air, sea, highway) and transit; health care delivery and technology; and building construction. Public investment outlays might have increased total employment by over 627,000 jobs in the first quarter of 2010, and by over 800,000 jobs in the second quarter of the year." ], "depth": [ 0, 1, 1, 2, 3, 3, 2, 3, 3, 3, 2, 1, 2, 2 ], "alignment": [ "h0_title h1_title", "", "h0_full h1_title", "h1_full", "", "", "", "", "", "", "h1_full", "h1_full", "", "" ] }	{ "question": [ "How does Congress usually mitigate recessions?", "What specifically does funding go to when public works spending is increased?", "How has the definition of infrastructure changed?", "What is a common consideration about congressional economic stimulus?", "How is this sometimes measured?", "How does Congress track the effectiveness of the stimulus?", "How are estimates used to make this assessment?" ], "summary": [ "To mitigate all but one recession since the 1960s, Congress chose to increase federal spending on public works (i.e., infrastructure).", "Public works expenditures traditionally have gone to certain types of construction activities (e.g., building highways and bridges, dams and flood control structures), which indirectly increase demand in industries that supply their products to construction firms (e.g., sand and gravel mines, heavy equipment manufacturers).", "Today, the definition of infrastructure has been expanded to include green economic activities (commonly referred to as green jobs), which include industries that utilize renewable resources (e.g., electricity generated by wind), produce energy-efficient goods and services (e.g., mass transit), and install energy-conserving products (e.g., retrofitting buildings with thermal-pane windows).", "A question that typically arises during congressional consideration of economic stimulus legislation is which approach produces the most bang for the buck.", "In the instant case, this means how many jobs might be supported by federal expenditures on traditional and green infrastructure projects.", "Once stimulus legislation is signed into law, the focus of Congress customarily turns to estimates of the number of jobs that result as federal funds are allocated to specific activities.", "Therefore, after briefly examining the trend in employment since the recession's onset, the report turns to an in-depth look at estimates of job creation, including the limitations of the methodology often used to derive them and the difficulties associated with developing job estimates for green infrastructure in particular." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, 2 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2 ] }
GAO_GAO-19-21	{ "title": [ "Background", "Medical Centers Rely on Environment of Care Inspections to Identify Deficiencies but May Encounter Challenges in Completing Needed Repairs", "Environment of Care Inspections", "Challenges in Addressing Identified Deficiencies", "Workload", "Staffing", "VHA Takes Steps to Help Medical Centers Comply with Inspection Requirements but Does Not Have Goals or Measures to Determine Program Effectiveness", "VHA’s Oversight of the Environment of Care Program Focuses on Compliance with Inspections Requirements", "VHA Has Not Established Outcome-Oriented Performance Goals, Objectives, and Related Measures", "Conclusions", "Recommendation for Agency Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Veterans Affairs", "Appendix II: Inspections Related to the Condition of Veterans Health Administration’s (VHA) Facilities", "Appendix III: GAO Contacts and Staff Acknowledgements", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "VHA policy requires that all medical facilities provide a safe, clean, functional environment for patients, visitors, and employees. The Joint Commission, an organization that accredits medical centers and other hospitals throughout the country, has developed standards that require medical centers to undertake several actions that relate to engineering, environmental management, and safety including: maintaining the patient environment by ensuring that a suitable temperature is maintained, that areas are clean and appropriately lighted, and furnishings and equipment are in good repair; managing utility systems to ensure operational reliability; and minimizing fire hazards and providing a safety system in case of fire.\nTo help ensure medical centers maintain these standards, VHA requires medical centers to conduct regular environment of care inspections of the facility. According to VHA officials, because of the large size of many medical centers, most conduct environment of care inspections in a different part of their facility every week throughout the year. In 2016, a VHA directive formally established VHA’s Comprehensive Environment of Care Program (Environment of Care Program) and outlined management and oversight responsibilities for the program. Environment of care inspections are a main component of the program.\nIn addition to the environment of care inspections, VHA uses other inspections to help execute and oversee facility operations and maintenance functions. For example, every 3 years, VA contracts for Facility Condition Assessments, where contractors evaluate all buildings and major systems at a medical facility (e.g., structural, mechanical, plumbing, and others) and identifies needed repairs and replacements. This inspection gives a graded score from A to F for VHA facilities, with “C minus” as the average facility score received for overall infrastructure conditions at VHA facilities as of 2015. This inspection focuses on major systems, while environment of care inspections focus on day-to-day facility conditions, including that of patient-care areas. Furthermore, preventative maintenance inspections are usually conducted on systems, such as boilers or heating, ventilation, and air-conditioning (HVAC) systems, and would vary in frequency based on the manufacturer requirements. Medical center staff also noted that facility operations and maintenance issues may be identified by staff in the course of their day- to-day duties and reported to engineering for repair.\nVHA medical centers employ staff trained in plumbing, carpentry, grounds maintenance, and other trades needed to maintain facilities, as well as housekeeping staff. These employees are responsible for carrying out the work necessary to ensure medical centers comply with safety standards, and VHA policies and inspection requirements.\nThe majority of funding for medical centers, including funding for operations and maintenance, is determined on the basis of past years’ allocations, veteran populations served, and the types of services provided. The budget for VA medical facilities has increased by approximately 30 percent over the last 5 fiscal years.", "", "The medical center director or a designee, such as the medical center’s Environment of Care Coordinator, has the overall responsibility for managing and leading weekly environment of care inspections at a medical center. Each medical center should have an environment of care committee, and the medical center director or a designee should facilitate committee meetings to discuss the environment of care processes, findings, trends, and any other related issues. Inspections are conducted by an environment of care inspection team, which is made up of representatives from various facility departments, including, among others:\nEnvironmental Management Service—which is responsible for ensuring a state of physical and biological cleanliness, including proper handling of waste materials—and\nEngineering Service, which is responsible for utilities that allow the physical plant to function, including basic systems such as heating and electrical, among others.\nAccording to VHA guidance, the team is to conduct its inspections using a VHA checklist as a guide to determine if there are any deficiencies. For example, the checklist includes questions such as:\nAre there loose floor tiles/carpet?\nAre ceiling tiles stained or other signs of leaks?\nAre there any electrical hazards present?\nTeam members record information on deficiencies that they identify into an Environment of Care inspections database, which is used to document and track the status of deficiencies.\nDuring interviews with medical center staff at all six of the medical centers included in our review, officials told us they follow the environment of care inspections process that VHA guidance outlines. At two of the medical centers we visited, we accompanied inspections team on environment of care inspections and observed staff following this process. The inspection teams walked through the areas designated for inspection, for example examining conditions of floors, ceilings and fire safety systems. Also, as we discuss later in the report, VHA officials also monitor aspects of the inspections process, such as who attends the inspection. VHA officials told us they also collect data on performance measures related to utilization of the environment of care checklists and environment of care inspections process but no longer track these measures because medical centers achieved 100 percent utilization of these measures in 2015. Figure 1 below details the process used to identify and address deficiencies, as outlined in VHA guidance.\nAs previously mentioned, VHA guidance considers these inspections to be critical to all aspects of patient care in a medical facility, and officials at all six medical centers confirmed that they rely on these inspections to identify needed repairs. For example, officials in one medical center noted that the frequency and thoroughness of these inspections has helped them determine day-to-day wear and tear issues and informed their planning processes. Medical center staff noted that condition deficiencies identified through this process are often minor but are nonetheless important to maintenance of a clean and safe patient environment. For example, a damaged or stained ceiling tile identified during an inspection could be a potential safety hazard to patients or indicate an issue with leaking pipes. The replacement of the tile itself is a minor repair, but that repair could be an indication of an important maintenance issue at the medical center. As table 2 below shows, the deficiencies commonly identified through the inspections process include items that need to be cleaned or dusted or walls that need minor repairs.\nMedical center staff we interviewed said, in general, the most common environment of care deficiencies can be addressed by medical center staff, but medical centers told us they sometimes use contractors if warranted. In most cases, a deficiency can be addressed with simple repairs such as patching and repainting walls, replacing stained and damaged tiles, or by cleaning. On our site visits, we saw examples of the types of issues that medical center staff address during environment of care inspections. In one case, we were shown a recurring deficiency at the medical center caused by moving hospital beds. Moving beds in and out of rooms was damaging the plaster corners of a wall near the door. We were also shown the solution, which was a metal corner guard the medical center had installed in some rooms, and the center was working to install corner guards in other locations as funds became available. Figure 2 below shows examples of deficiencies we observed during environment of care inspections at medical centers.\nOther types of condition deficiencies that are not directly in the environment of care, such as a broken boiler, typically would not be identified during environment of care inspections, but rather medical center staff said they are identified during scheduled preventive maintenance activities, or during other facility inspections. Regardless of how they are identified, more serious repairs often require a different funding and approval process than day-to-day maintenance. For example, if significant damage occurred to a medical center’s roof and the cost of repairs is greater than $25,000, it would most likely be deemed a non-recurring maintenance project and would require approval from either the VISN or VA’s central office.", "The buildings that VHA manages are, on average, 55 years old, and many have substantial capital repair and improvement needs. A VA- commissioned report noted that there were significant barriers that facility management staff faced in maintaining facilities to a high quality. According to the report, while some of these barriers involved immediate resource constraints such as budgets for staffing and conducting maintenance and janitorial tasks, the root cause of many of these issues is the general age and underlying condition of VHA facilities.", "Engineering officials at medical centers told us that the amount of work associated with conducting weekly inspections and addressing environment of care deficiencies is substantial. For example, according to VHA’s data for fiscal year 2017, medical centers reported conducting about 11,000 weekly inspections, during which more than 128,000 deficiencies were identified. Most deficiencies were closed within 14 business days, as required by VHA policy, but nearly 30,000 deficiencies across all medical centers had not been addressed within 14 days or had been addressed through a plan for future work.\nOne significant factor contributing to the number of deficiencies and the associated workload is the advanced age of many medical centers. A VHA commissioned study found that the general age and underlying condition of medical centers, including VHA buildings’ being older than 50 years on average and lack of capital investment to address infrastructure concerns, are the root causes of many barriers that facility management staff faced in achieving their objectives of maintaining high quality facilities, and exacerbate the workload issues at these medical centers. This observation was echoed by medical center officials in our review. For example at one medical center officials told us that in some cases, correcting deficiencies found on an environment of care inspection is a temporary solution for issues related to aging structures that need extensive repairs and renovations. For example, a roof that needs to be repaired due to leaks and other structural issues may result in an increase in the number of interior ceiling tiles with water stains. Maintenance staff must then continue to identify and replace stained ceiling tiles, until the root cause, which is subject to a different funding and approval process, is addressed.\nAlso, medical center staff we interviewed said the administrative requirements associated with the environment of care program contributed to workload challenges. Medical center staff are responsible for entering deficiency data into the Environment of Care inspections database, which is used to document and track results from the environment of care inspections. The same staff can also be responsible for reconciling the environment of care inspections database with other systems, like the medical center’s work order system and other inspections databases. Medical center staff said that each deficiency can result in as many as four or more separate data entry actions in the Environment of Care inspections database and in a separate system used to track work orders. As an example of the administrative workload related to the inspection process, the Long Beach medical center in California, whose main building was built in 1967, reported the most deficiencies in its VISN. According to VHA data, this medical center reported more than 3,500 environment of care deficiencies related to facility condition in fiscal year 2017, and medical center officials said this resulted in as many as 12,000 or more separate data-entry actions.\nAdditionally, VHA’s aging information technology systems exacerbate the administrative workload. VA medical center officials told us that VHA’s work order system lacks interoperability with the Environment of Care inspections database, resulting in the need to manually record information on deficiencies in both systems. Officials we spoke with at VA medical centers told us that this process can substantially add to post-inspection workload and to the administrative burden associated with tracking and closing out deficiencies. Medical center staff also noted that it can often be the same staff member performing environment of care inspections, conducting the work to correct deficiencies, and performing administrative tasks.\nLimitations in VA’s information technology systems, among other things, led GAO to designate VA health care as a high-risk area. Information technology limitations we previously identified at VA include the outdated, inefficient nature of certain systems and a lack of system interoperability.", "Staffing shortages have also been recognized by VA’s Central Office staff as an issue that needs to be addressed across VA facilities. For example, officials said that in addition to the engineering staff’s shortages discussed below, there is also a known shortage at many medical centers of qualified cleaning and janitorial staff, a shortage that can affect the ability for medical centers to quickly address some of the environment of care deficiencies. Additionally, we have previously reported that VA is collaborating with the Office of Personnel Management to address challenges with recruiting and retaining engineering positions.\nOfficials at medical centers included in our review discussed the difficulty of recruiting and retaining employees to perform maintenance work, such as painters, electricians, and other relevant maintenance trades. All six of the medical centers reported vacancies during the last year in engineering department positions that are needed to complete maintenance and repairs, such as electricians and painters. The extent to which these medical centers experienced vacancies, however, varied widely. The lowest number of reported vacancies by a medical center was two and the highest number of reported vacancies was 49. Factors cited by medical center officials on why they had difficulty hiring and retaining staff encompassed a range of issues, including loss of long-time staff due to retirement, and a lack of qualified applicants for vacant positions. For example, medical centers located in and around Los Angeles, California, reported that their location—in a high cost of living area with a competitive private-sector jobs market—affected their ability to recruit and retain these employees. Conversely, medical centers located farther from urban areas reported difficulty finding and retaining staff due to their relatively rural locations and smaller overall population.\nOfficials from all six medical centers said that while they endeavor to address all environment of care deficiencies in accordance with the inspection requirements, these vacancies affected their ability to perform maintenance and repair functions. For example, officials from one medical center reported that four out of seven electrician positions at their medical center were vacant. The officials said in addition to their rural location, their need for engineering staff knowledgeable in a range of electrical systems made recruitment difficult. Their facility has buildings that are over 50 years old, as well as newer buildings, with significantly different electrical systems. The officials noted that while all electrical work was eventually completed, the lack of staff slowed or deferred repairs, or required contract labor. Another medical center noted that a shortage of relevant engineering staff meant that work orders and preventative maintenance functions were backlogged and that they had to utilize overtime to accomplish required functions. When faced with changing workload demands and staffing shortages, medical centers can, and do, utilize contractors.", "While VHA provides guidance and oversight to ensure medical centers implement the environment of care inspection process, it lacks performance goals, objectives, and measures that would enable it to assess how well it is achieving its policy of a clean, safe, and functional environment. We have previously found that results-oriented organizations set performance goals to define desired program outcomes and develop performance measures that are clearly linked to these performance goals and outcomes. Program goals communicate what results the agency seeks, and performance measures show the progress the agency is making toward achieving program goals. Performance measurement also gives managers crucial information to identify gaps in program performance and plan any needed improvements. Without such goals and measures in place, VHA is limited in its ability to effectively manage the Environment of Care Program, including making effective use of program data and addressing obstacles to improving program performance.", "VHA’s oversight of the Environment of Care Program focuses on ensuring that medical centers are conducting the inspections according to VHA requirements. To help medical centers achieve compliance with the inspection requirements, VHA does the following: develops guidance for medical center and VISN staff on their roles and responsibilities in conducting inspections and compliance monitoring, and on how to use the Environment of Care inspections database software; oversees the deployment and maintenance of the Environment of Care inspections database software, which medical centers use to track deficiencies and staff attendance at inspections, among other things; and provides summary reports from inspections data on deficiencies, closure status, and staff attendance rate at inspections to officials at the medical center and VISN-level for program management purposes To monitor a medical center’s compliance with environment of care requirements, VHA tracks three measures, which, according to VHA officials, were established to ensure that medical centers were meeting requirements related to the inspections process, such as having relevant staff present for the inspections. Table 3 below shows the three measures VHA currently uses along with the related performance targets.\nWe have previously reported that performance measures should focus on outcomes to help agencies manage programs to achieve desired results. VHA’s current measures do not indicate whether desired outcomes are being achieved or how effective inspections are but rather whether staff are following policies related to inspections. As a result, these measures provide program managers with little information on the actual quality of the environment of care, such as the level of cleanliness and safety provided. For example:\nOne performance measure is based on the requirement that medical centers address deficiencies within 14 days, either by fixing the problem or by preparing an action plan describing how the problem will be fixed. However, because this requirement can be met with an action plan, it is not a useful measure for understanding the deficiencies that have not yet been remediated.\nSimilarly, the two performance measures on staff attendance at inspections do not directly relate to the condition of the facility but reflect the level of compliance with inspection requirements. We spoke with officials at one medical center who said vacancies within their information security office prevented them from meeting the inspection team attendance measure. However, officials said the staff absence did not affect the inspection team’s ability to perform an inspection and determine facility deficiencies, given that relevant engineering staff was present.\nFurthermore, we have previously reported that VHA needs to strengthen aspects of the environment of care inspection process to ensure more complete and accurate data on medical center compliance with environment of care standards, and provide better oversight of the system.", "VHA has not defined program goals and objectives and related performance measures, and is therefore limited in its ability to determine how well program activities, including the environment of care inspection process, are supporting the agency’s broader policy of providing a clean, safe, and functional environment. VHA’s current performance measures are not tied to specific performance goals for the Environment of Care Program, as such goals have not yet been created. Nor do these performance measures provide useful information on the actual condition of facilities or desired outcomes. As a result, these metrics provide VHA with limited information on how to better manage the program to ensure clean, safe, and functional medical facilities that, at a minimum, meet the Joint Commission standards. Without clearly defined and outcome- oriented goals, it will be challenging for VHA to determine what type of evaluative information it will need to monitor the progress of the Environment of Care Program, identify how system-wide challenges such as staffing shortages are affecting outcomes, and improve medical center conditions.\nVHA has stated it intends to create goals and objectives for the Environment of Care Program, along with performance measures to assess whether the goals and objectives are being achieved, but it has not yet done so. The VHA directive from 2016 that created the Environment of Care Program directed program officials to establish a steering committee, whose responsibilities would include, among other things, developing goals, objectives, and related performance measures for the program. According to a VHA official, VHA formed this committee in January 2018, following delays caused by leadership vacancies and competing demands within the agency. In June 2018, the committee finalized its charter, which states that the scope of the committee’s activities is to include defining goals, objectives, performance metrics, and targets for the Environment of Care Program. VHA officials do not have a timeline in place for when they expect to complete the steps they defined in the charter.", "To provide quality care for the nation’s veterans, medical centers must be clean, safe, and functional. This standard can be a challenge given the substantial capital repair and improvement needs in many of these facilities. The Environment of Care Program is an important part of VHA’s efforts to ensure medical centers are maintained in accordance with accreditation requirements. However, absent clear goals, objectives, and performance measures, and a timeline for developing them, VHA will continue to be limited in its ability to assess how effective the program is at ensuring a safe, clean, and functional environment. Setting outcome- oriented program goals and objectives provides structure to then reevaluate existing performance measures or set new ones, all of which would improve oversight, help VHA determine the effectiveness of the program, and target areas in need of improvement.", "We are making the following recommendation to VHA: The Undersecretary for Health should set a timeline for defining goals, objectives, and outcome-oriented performance measures for the Environment of Care Program. (Recommendation 1)", "We provided a draft of this product to VA for comment. In its written comments, reproduced in appendix I, VA stated it concurred with our recommendation. VA also provided technical comments, which we incorporated as appropriate.\nAdditionally, VA provided general comments on our report. In those general comments, VA questioned how we characterized the Environment of Care Program in the context of Facility Condition Assessments, the age of its buildings, and software interoperability, and stated that responsibility for a successful Environment of Care Program lies at the medical center. We agree it is important to have a strong Environment of Care Program that is facilitated by leadership at the medical center and VISN-levels. However, even with strong leadership and a robust Environment of Care Program, underlying facility condition issues—impacted by the age of the facility—can affect the kind of deficiencies found during inspections. These challenges impacted elements of the Environment of Care Program at all of the medical centers in our review.\nVA also stated that the report did not adequately reflect the significance of the environment of care committees at each medical center, and that performance measures at the national level are measures of compliance, not a measure of success. We have made relevant revisions in the report to reflect the role these committees play as a part of the inspections process. We also agree with VA that the metrics established nationally are not a measure of success for the various medical centers’ Environment of Care Programs. While the primary responsibility for the Environment of Care Program and its inspections is at the medical center and VISN-level, it is still important for VA to have national level performance measures. Without them, gauging national level performance and analyzing trends across medical centers is difficult. In concurring with our recommendation, VA has positioned itself to create and implement measures to support medical centers and the Environment of Care Program.\nVA also made comments related to the non-recurring maintenance approval and funding process, and highlighted a pilot to test a tool to replace its current facility condition assessment. We have made revisions to footnotes and relevant report sections as appropriate to address the changes noted by VA to the non-recurring maintenance approval and funding process, and added a footnote acknowledging the pilot.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Veterans Affairs, the Undersecretary of Veterans Affairs for Health, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions regarding this report, please contact Andrew Von Ah at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III.", "", "Appendix II: Inspections Related to the Condition of Veterans Health Administration’s (VHA) Facilities Purpose The Facility Condition Assessment evaluates all buildings and major systems at a medical facility and identifies needed repairs and replacements. This inspection gives a graded score from A to F for VHA facilities.\nFrequency Facility Condition Assessments are done on a rotating basis, with each Veterans Integrated Service Network (VISN) being evaluated every 3 years. The information gathered during each Facility Condition Assessment is put into a Facility Condition Assessment database for each facility identified by building, system, and condition. Each system has an associated cost for identified repairs and replacements. These data allow for planning and expenditure of resources within the VISNs. This information enables the VISN to plan, manage, and direct capital resources against identified needs in a consistently managed approach across the VA system.\nGreen Environmental Management System ensures VHA compliance with relevant federal, state and local environmental statutes and regulations; increases the efficiency of energy, water and other resource usage; helps reduce regulated air emissions; utilizes pollution prevention principles; incorporates environmentally preferable practices for the design, construction and operation of buildings; and ensures that VHA facilities are good neighbors in the local communities.\nGreen Environmental Management System inspections are done annually.\nThe primary purpose and intent of the Annual Workplace Evaluation is to ensure occupational safety and health evaluations of all worksites are completed and comply with Occupational Safety and Health Administration and agency requirements. The objective is to evaluate Occupational Safety and Health Administration compliance, current building conditions, work practices, and Occupational Safety and Health Administration program implementation throughout the facility and at offsite campuses such as rented office buildings, clinics, labs, etc.\nAnnual Workplace Evaluations are required to be performed at least once every fiscal year. The Annual Workplace Evaluation must be scheduled at least once during a 12- month period +/- 3 months from the start date of the previous Annual Workplace Evaluation.", "", "", "In addition to the contact named above, Heather J. Halliwell (Assistant Director), Betsey Ward-Jenks (Analyst-in-Charge), Dwayne Curry, and Colleen A. Taylor made key contributions to this report. Also contributing were Kelly Rubin, Michelle Weathers, and Crystal Wesco." ], "depth": [ 1, 1, 2, 2, 3, 3, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full", "h1_title", "", "h1_full", "h1_full", "h1_full", "h0_title h2_title", "h0_full h2_full", "h2_full", "", "", "", "", "h0_full", "", "", "" ] }	{ "question": [ "How does the VHA identify maintenance and repair needs?", "What other purpose do these inspections serve?", "What are the steps of the inspection?", "What do the inspections usually find?", "What issues are these findings causing?", "How has the response time for these deficiencies been?", "What have medical officials identified as an issue for efficiency?", "What other issues have medical center officials identified with deficiency correction?", "What is the role of the VHA?", "What does the VHA organization lack?", "How does the VHA ensure compliance with the inspection process?", "What does measures of compliance does the VHA lack?" ], "summary": [ "Veterans Health Administration's (VHA) medical centers conduct regular inspections of the settings in which patients receive health care services, called the “environment of care”, to identify maintenance and repair needs.", "These inspections also help ensure compliance with accreditation standards requiring, among other things, that utility systems operate properly and that areas are clean and in good repair.", "The main three steps in the process associated with these inspections are shown below. In addition to the environment of care inspections, VHA conducts other periodic assessments of facilities' major systems, such as plumbing and air conditioning.", "VHA inspections routinely identify deficiencies reflective of an aging infrastructure—VHA's buildings are on average 55 years old.", "This situation in turn is leading to workload and staffing challenges in addressing maintenance and repair needs. For example, according to VHA's 2017 data, medical centers reported conducting approximately 11,000 total inspections for the year that resulted in about 128,000 identified deficiencies.", "Most of these deficiencies were closed within 14 business days, as required by VHA. However, nearly 30,000 of them were not closed or had been addressed through a plan for future work.", "In addition, VA headquarters and field officials said that staff vacancies are common and can affect the efficiency and speed of maintenance and repairs.", "Medical center officials added that correcting deficiencies may only be a temporary solution for issues related to aging structures that need extensive repairs and renovations.", "VHA provides guidance and selected oversight to ensure medical centers implement the process for environment of care inspections.", "However, VHA lacks performance goals, objectives, and measures that would enable it to provide effective oversight, address challenges, and assess how well it is achieving a clean, safe, and functional environment.", "As part of ensuring compliance with the inspection process, VHA measures whether medical centers meet certain requirements, such as having appropriate staff present for inspections.", "VHA does not, however, have measures that enable it to assess how well medical centers are achieving desired outcomes. Although it has stated its intent to develop such measures, VHA has not yet committed to a time frame for doing so." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, 2, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 5 ] }
CRS_R41200	{ "title": [ "", "Background1", "The Ouagadougou Declaration", "Congressional Interest", "The Government of National Unity", "U.S. and Other International Reactions", "Issues for U.S. Policy", "Bilateral Relations with the Transitional Government", "Aid Restrictions", "Travel Restrictions", "Progress Toward Elections", "Potential International Criminal Court Investigation", "Security Sector Reform", "Guinea's Security Forces: Key Challenges", "Lack of Civilian Control", "Size and Mandate", "Militias", "The Justice Sector", "Potential Challenges", "Outlook" ], "paragraphs": [ "", "On December 23, 2008, a military junta calling itself the National Council for Democracy and Development (CNDD) seized power in Guinea following the death of longtime President Lansana Conté. A previously little-known army officer, Captain Moussa Dadis Camara, was named president. The CNDD dissolved the constitution and legislature, appointed a civilian prime minister, and promised to hold presidential and legislative elections. However, elections were repeatedly postponed, while Dadis Camara's erratic leadership sparked increasing civilian unrest and concerns that military fragmentation could lead to violence. On September 28, 2009, Guinean security forces opened fire on civilian demonstrators in Conakry who were protesting the CNDD and Dadis Camara's implied intention to run for president, killing over 150 and injuring many more. The crackdown, which was accompanied by reports of widespread military abuses against civilians, sparked fierce international condemnation, including from the United States.\nOn December 3, 2009, Dadis Camara was shot and wounded in the head by a member of his presidential guard. He was evacuated to Morocco for medical treatment. On January 12, 2010, he was unexpectedly flown to Ouagadougou, the capital of Burkina Faso, whose president, Blaise Compaoré, had earlier been appointed the regional mediator in Guinea's political crisis by the Economic Community of West African States (ECOWAS). In Dadis Camara's absence, the CNDD defense minister, Brig. Gen. Sekouba Konaté, informally assumed the position of acting head of state. However, uncertainty remained over Konaté's authorities, the extent of Dadis Camara's injuries, and the future leadership of the country. The power vacuum coincided with reports of rising ethnic tensions, the reported recruitment of militia groups by various factions, and instability within the CNDD and wider armed forces. Fears of imminent conflict caused some Guineans, human rights groups, and diplomats to call for a regional intervention force.", "On January 15, 2010, Dadis Camara, Konaté, and Compaoré announced a new political agreement, known as the Joint Declaration of Ouagadougou , after meeting in Burkina Faso. The declaration stated that Konaté would assume executive powers as \"Interim President\" and form a government of national unity. The declaration also promised the following:\nThe appointment of a prime minister from the Forces Vives , a coalition of opposition political parties, trade unions, and civil society groups formed after the 2008 coup d'état. The inauguration of a quasi-legislative body, the National Transitional Council (CNT). The organization of presidential elections within six months, with Konaté, the prime minister, and members of the government, the CNDD, the CNT, and the defense and security forces barred from running as candidates. Reform of the defense and security forces.\nThe statement was widely welcomed as an end to the protracted political vacuum that had followed Dadis Camara's exit from Guinea. While its main points largely reaffirmed previous statements by Konaté, the declaration appeared to quell attempts by hard-line CNDD members to wrest power from Konaté and push for Dadis Camara's return. Following the declaration, Dadis Camara publicly read a prepared statement expressing full support for Konaté's leadership. Although he remains the nominal head of state, Dadis Camara has since declined to return to Guinea from Burkina Faso, where he continues to pursue medical treatment for his wounds. The constitution remains suspended, but restrictions on political and union activity have been lifted.", "The 111 th Congress has closely monitored events in Guinea since the 2008 coup. Recent activities have focused on human rights abuses under the CNDD, progress toward elections, oversight of U.S. assistance, and the potential for regional destabilization. Recent legislation includes H.Res. 1013 (Ros-Lehtinen), a bill condemning the violent suppression of legitimate political dissent and gross human rights abuses in the Republic of Guinea, introduced January 13, 2010, and passed by the House on January 20, 2010; and S.Res. 345 (Boxer), a resolution deploring the rape and assault of women in Guinea and the killing of political protesters on September 28, 2009, introduced on November 9, 2009, and agreed to in the Senate on February 22, 2010.", "The key public figures in the government of national unity are Konaté, Jean-Marie Doré, and Rabiatou Serah Diallo. Doré, the former spokesman for the Forces Vives coalition, was named prime minister on January 19. Serah Diallo, a prominent trade union leader, was appointed in early March to head the quasi-legislative National Transition Council (CNT), which was inaugurated with 155 members representing political parties, trade unions, civil society groups, and other socioeconomic demographics. The CNT is expected to revise Guinea's electoral laws and the constitution, though its precise mandate and authorities have not been publicly detailed.\nDoré appointed a 34-person cabinet, composed of 24 civilians and 10 military officers selected by the CNDD, in mid-February. The civilians include representatives of political parties and civil society groups. The Defense Ministry, Security Ministry, and Justice Ministry, however, remain under CNDD leadership. Konaté separately appointed a 23-member \"presidential cabinet\" of advisors, including several hard-line CNDD figures previously seen as loyal to Dadis Camara.\nThe trio of key leaders represents three prominent ethno-regional groups and Guinea's two largest religious identities, Christian and Muslim. Doré and Serah Diallo both have roots in the opposition movement against former President Lansana Conté, though they were not previously seen as allies. They also have little experience in government, which is seen by some as both a potential challenge and an asset, as many are critical of Guinea's poor governance record. Serah Diallo leads a trade union coalition that was instrumental in organizing watershed anti-Conté demonstrations in early 2007. Prior to his appointment, Doré led a small opposition political party, the Union for Guinean Progress (UPG, after its French acronym). He ran for president in 1998 but garnered less than 2% of the vote, far less than the two leading opposition candidates at the time. Doré was later elected to the National Assembly, but he declined to take up his seat after the 2002 legislative elections in a protest against electoral fraud.", "U.S. officials have expressed strong support for the Ouagadougou declaration and Konaté's leadership. Officials have also publicly stated that the United States would prefer Dadis Camara to remain outside of Guinea and suggested that his return could destabilize the fragile political situation. In his February 2010 testimony to Congress, Director of National Intelligence Dennis C. Blair highlighted Guinea's continuing instability but contended that Dadis Camara's departure \"has opened a narrow window of opportunity for defusing a volatile situation.\"\nPrior to Dadis Camara's exit, the State Department had expressed support for a transitional government led jointly by military and civilian officials. Assistant Secretary of State for African Affairs Johnnie Carson met with Konaté in Morocco on January 5, 2010, reportedly emphasizing U.S. support for \"a civilian-led transition government leading to free, fair, and transparent democratic elections.\" Officials have since suggested that the unity government fulfills these criteria. Deputy Assistant Secretary of State William Fitzgerald has said that Konaté appears to be \"an ideal transition leader.\" U.S. Ambassador Patricia N. Moller, who arrived in Guinea in late 2009, officially presented her credentials to the government in March; she had previously declined to do so, as the United States did not recognize the CNDD. Addressing Konaté, Moller stated that \"you and your government hold the key to a brighter future for Guinea.\"\nMajor donors, the U.N. Secretary-General, and regional organizations—notably the African Union (AU) and ECOWAS—have likewise welcomed the transitional government. Neighboring countries, with which Guinea shares economic and ethno-regional ties, have also expressed support on a bilateral basis, with several hosting state visits by Konaté. The International Contact Group on Guinea, a policy coordination group chaired by the AU and ECOWAS, and of which the United States is a member, has called on the new government to hold elections within the agreed-upon timeframe of six months. France, a major donor, resumed bilateral cooperation programs, including military assistance, in February after suspending them in response to the abuses of September 2009. While the European Union has largely maintained targeted sanctions and an arms embargo instituted in October 2009, in March 2010 it removed four individuals, including Konaté and Security Minister Mamadouba Toto Camara, from the sanctions list.", "While the United States has expressed support for the transitional government, restrictions on some forms of U.S. assistance to Guinea remain in place, as do targeted travel restrictions against certain CNDD members, other Guinean officials, and key associates. As electoral preparations advance, a number of issues will confront U.S. policy-makers. These include the status of bilateral relations; the monitoring of progress toward elections; U.S. policy toward a potential International Criminal Court investigation of alleged CNDD human rights abuses; and potential U.S. support for security sector reform.", "U.S. relations with the unity government, underpinned by support for the Ouagadougou declaration and Konaté's transitional leadership, represent a significant shift from U.S. policy toward the government led by Dadis Camara. The United States did not recognize the CNDD and placed restrictions on bilateral aid, meetings between senior U.S. officials and CNDD leaders, and travel to the United States by CNDD members, government officials, and associates.\nState Department officials have justified U.S. support for the unity government on the basis that it represents an improvement from the junta that took power in 2008, and that Konaté's stated commitments to implement the electoral calendar and refrain from running as a candidate will be upheld. Indeed, most Guineans and international observers have welcomed the transitional government and the plan to hold elections. At the same time, some argue that the new government has yet to demonstrate its political will to hold elections, and there are already signs that the timeline may be delayed (see \" Progress Toward Elections \" below). Critics have also pointed to continuity between the CNDD and the unity government—the CNDD retains control of key ministries and the security forces—and have raised questions as to Konaté's role in CNDD abuses. As former commander of the elite airborne battalion known as the BATA, Konaté was seen as a powerful figure in the 2008 coup and a close advisor to Dadis Camara. While he was not in Conakry during the September 2009 military crackdown, a United Nations commission of inquiry concluded that his role deserved further investigation. Some observers have seen similarities to the first six months of CNDD rule, when Dadis Camara also repeatedly promised to uphold the electoral calendar and refrain from running as a candidate.\nThe U.S. approach to the transitional government to date appears to highlight tension between the goal of seeking accountability for abuses and the goal of preserving peace in a still-fragile state. Like other transitional regimes, the unity government includes individuals implicated in human rights violations, and there has been little public attempt by the Guinean government to spur prosecutions or broader truth and reconciliation mechanisms. Two CNDD military officers accused of serious abuses have retained their ministerial rank and hold positions in Konaté's \"presidential cabinet.\" Human Rights Watch has called for their immediate removal. Others, however, contend that attempts to remove or prosecute such officials prior to elections would be deeply destabilizing, and could lead to a counter-coup or further violence.", "According to the State Department, the CNDD takeover in 2008 did not trigger legal restrictions, enacted by Congress for over 25 years through annual appropriations legislation, on certain forms of bilateral assistance to countries in which the \"duly elected head of government is deposed by military coup or decree,\" as the deposed government was not \"duly elected.\" Most recently, such restrictions were included in the Consolidated Appropriations Act, 2010 ( P.L. 111-117 , Section 7008, Title VII, Division F, signed into law on December 16, 2009). Restrictions on aid, aside from humanitarian aid and democracy and governance programs, were nonetheless imposed as a matter of U.S. policy. Separately, the Consolidated Appropriations Act, 2010 (Section 7070) restricts International Military Education and Training (IMET) programs in Guinea to Expanded IMET (E-IMET), which emphasizes human rights and civilian control of the military.\nIn practice, security assistance was suspended after the 2008 coup, while most non-military aid to Guinea fit into permitted categories. Notably, the policy restrictions halted security assistance programs aimed at enhancing Guinea's military professionalism and maritime security capacity, which responded in part to growing U.S. concerns over transnational narcotics trafficking through Guinea. Permitted aid includes Projet Faisons Ensemble , a $23 million USAID-funded umbrella project initiated in 2007 that aims to integrate local governance programs with health, education, agriculture, and other development assistance. It also includes over $5.5 million in electoral assistance, expected to fund activities including voter education projects; the provision of electoral materials; and training and assistance for the National Independent Electoral Commission (CENI), poll workers, civil society groups, media, and political parties.\nState Department officials have recently suggested that limited exceptions may be made to restrictions on security assistance in light of recent positive developments. In March 2010, the State Department notified Congress of its intention to obligate up to $200,000 in FY2005 \"no year\" IMET funds to conduct courses for military officials and civilians on topics including civil-military relations, military justice, human rights, and the rule of law. At least one course is expected to be held prior to elections. Some argue that aid restrictions should be further rolled back in order to assist the government in maintaining security and preparing for elections. Others contend that they should be maintained until free and fair elections are ascertained to have taken place. Critics have also pointed to the difficulties of vetting beneficiaries of assistance programs for potential involvement in human rights abuses.", "In October 2009, following the military abuses of September 2009, the U.S. government imposed targeted travel restrictions on \"certain members of the military junta and the government, as well as other individuals who support policies or actions that undermine the restoration of democracy and the rule of law in Guinea.\" These restrictions are still in effect, though a full list of those targeted has not been made public. Some argue that if the restrictions target certain CNDD leaders participating in the unity government—such as Konaté himself—they should be repealed in light of the evolving political situation. Others contend that the restrictions should be maintained if they are based on perceived complicity in abuses.", "Presidential elections are scheduled for June 27, 2010. The date for legislative elections has not been set. Many Guineans appear to support the six-month timeline stipulated in the Ouagadougou declaration, as does the International Contact Group on Guinea. Donors have expressed confidence that funding for the elections—projected to cost roughly $27 million—will not be a challenge. However, several factors could contribute to a delay in the election timetable. Some observers believe such a delay could undermine public support for the unity government or cause popular unrest, as in 2009. The United States has not publicly identified benchmarks for the continuance or suspension of electoral assistance programs.\nFactors that could potentially lead to a postponement of elections include the political will of the transitional government; the capacity, efficiency, and mandate of the CNT, which is expected to reform the constitution and electoral legislation prior to the vote; ongoing disputes over the reliability of voter lists compiled in 2009 ; the actions of potential political or military \"spoilers\"; the attempt to register Guinean voters in neighboring countries and overseas, which could prolong the process by months ; and logistics associated with the onset of the rainy season in Guinea.", "International Criminal Court (ICC) prosecutors announced a \"preliminary examination\" of the situation in Guinea in October, in connection with the violence of September 28, 2009. A U.N. commission of inquiry later concluded that elements of the crackdown may have constituted crimes against humanity for which the Guinean state carries legal responsibility, in addition to the potential individual criminal liability of Dadis Camara and other security commanders, and recommended referral of certain cases to the ICC. Guinea is a state party to the Court.\nObama Administration officials have indicated, amid a wider review of U.S. policy toward the Court, that the Administration is \"considering ways in which we may be able to assist the ICC, consistent with our law, in investigations involving atrocities.\" A determination on what types of assistance, and in which cases, remains under review. Advocates of international justice believe the United States should assist the ICC in its Guinea investigation, and that prosecution of military commanders could serve to deter future abuses. Others counter that ICC involvement could be destabilizing, or that U.S. cooperation with ICC prosecutions is generally undesirable.", "U.S. officials have recently indicated that the United States may provide assistance for security sector reform (SSR) in Guinea. In March 2010, a U.S. delegation representing the State Department, the U.S. Agency for International Development (USAID), and the Defense Department met with Guinean officials in Conakry to discuss potential U.S. support for \"justice and security sector reform\" (JSSR) efforts. These could potentially include training of Guinean police and military forces, assistance in military \"right-sizing,\" and assistance for electoral security preparations. The United States is also funding two contracted experts' participation in an assessment of Guinea's security sector led by ECOWAS and the United Nations. Significant U.S. involvement in SSR is unlikely to occur prior to elections, however.\nU.S. security assistance in Guinea has previously largely focused on providing training and—at times—equipment, not on altering security services' authorities, overall structure, or oversight. Prior to the 2008 coup, Guinea benefitted from IMET, Foreign Military Financing (FMF), \"Section 1206\" programs , and other U.S. military assistance aimed at enhancing security forces' capabilities and professionalism. In 2002, the United States trained and equipped an 800-person \"Ranger\" battalion in response to cross-border attacks from Liberia and Sierra Leone. In contrast, in neighboring Liberia, the United States has led efforts to rebuild, restructure, and train the military after it was dissolved following the end of civil conflict in 2003.", "Nearly all observers point to Guinea's bloated and undisciplined military as a central cause of political instability. Upon former President Conté's death, one analyst noted that \"the army that General Conté has bequeathed his country knows little of the role and methods that it would need to employ in a democratic state respectful of its citizens' most basic rights.\" The military has been implicated in multiple coup attempts, mutinies, and human rights abuses, including the abuses of September 2009 and the shooting of over 100 unarmed anti-government demonstrators in early 2007. Military officers implicated in abuses are perceived as benefiting from near-complete impunity. The armed forces are also divided along ethnic, generational, and factional lines; military factionalization reportedly grew further entrenched under the CNDD.\nIn the eyes of some, the armed forces serve largely as a vehicle for corruption and patronage rather than national defense. The military is thought to exert substantial control over key imports such as rice (a dietary staple) and gasoline. Many mid-ranking and senior members of the officer corps fought in regional conflicts and in Guinea's border war with Liberia (2000-2001); some are understood to have participated in looting, resource trafficking, and other abuses during these operations. Senior military figures were also reportedly involved or complicit in transnational narcotics trafficking during the final years of Conté's rule. At the same time, military salaries and other benefits are seen by many as a vital safety net for a deeply impoverished population.\nFollowing the CNDD takeover and throughout 2009, abuses by security forces escalated, including looting, extrajudicial arrests, detentions, torture, extortion, the targeting of political opponents, and other abuses of power. Concurrently, military hierarchy and the chain of command were seen as deteriorating. While many credit Konaté with improving military discipline since early January, the potential for abuses remains high. Some also contend that a broad-based truth and reconciliation process is needed to address public perceptions of the armed forces and allegations of abuses stretching back to the post-colonial period. Repeated attempts by civil society groups in recent years to push for official investigations have not succeeded. In addition to perceived impunity and lack of discipline, various other elements are seen as challenges to a well-functioning security sector, as the following sections will address.", "Guinea's military has not been submitted to effective civilian control in decades. The defense sector's structure, size, and budget are opaque. Under Dadis Camara, the Defense Ministry was staffed and led by uniformed military officers (notably Konaté), as it continues to be under the current unity government. Former President Conté came to power in a military coup in 1984, and while he later transformed the regime into one nominally governed by civilian institutions, it retained many aspects of military rule. Attempts to institute budgetary or structural changes during the Conté era were met with mutinies or other violence. Most recently, in May 2008, mutinous troops seized a major army base in Conakry, took senior officials hostage, pillaged shops and homes, and exchanged fire with loyalist soldiers, until the government eventually agreed to pay each soldier over $1,000, sack the defense minister, and grant mass promotions.", "Guinea's military personnel are thought to number in the tens of thousands, making its standing military one of the region's largest despite a population of roughly 10 million. The size of the military presents a challenge on multiple levels. Personnel reportedly include numerous \"ghost\" soldiers, as well as individuals brought into the military through irregular processes, outside formal channels of military recruitment and training. Furthermore, military salaries and a government-financed rice subsidy for soldiers represent a significant financial burden on the Guinean state. Both are politically sensitive, not least because military benefits represent scarce safety nets for many families. The ratio of military to civilian security forces is also thought to require redress, as insufficient police capacity is thought by some to have contributed to an overreliance on military force to conduct law enforcement and crowd control operations.\nThe respective roles and mandates of the various security services in Guinea's national security policy are also largely undefined. It is unclear, for example, which security agencies have the lead role in ensuring crowd-control, election security, border security, or counter-insurgency. The role of the so-called \"Red Berets,\" who report directly to the presidency and have repeatedly been accused of human rights abuses, is particularly contentious. The Red Berets have, at various times, comprised the Presidential Guard, the BATA, the U.S.-trained Rangers, and other elite corps, in addition to soldiers who purchased red berets for personal use. Under the CNDD, Red Beret units were regrouped under the Ministry for Presidential Security, outside the purview of the Ministry of Defense. Their current mandate and chain of command remain undefined.", "Individuals within the CNDD reportedly oversaw the recruitment and training of militias in 2009. Militia fighters, including ex-combatants of neighboring conflicts, are reported to have received training from foreign mercenaries, and to have participated in the September 2009 violence. In January, Konaté ordered the militia training camps closed and dispersed the recruits. However, militia fighters' whereabouts and level of cohesion are unclear, and they are thought to represent a potential security risk. According to some reports, some militia trainees may be inducted into the military, further swelling its numbers. The militias trained by the CNDD represent only one example, among many, of irregular recruitment by Guinean authorities in response to perceived security threats; reportedly, previous recruits have not benefited from formal disarmament or reintegration processes.", "Some observers contend that security sector reform should include a judicial component. Judicial and law enforcement capacity is reportedly very low and further compromised by widespread corruption and politicization. According to the State Department's 2009 Human Rights Report , Guinea's \"judicial system was endemically corrupt.... Budget shortfalls, a shortage of qualified lawyers and magistrates, and an outdated and restrictive penal code limited the judiciary's effectiveness.\" Political interference in the judiciary is commonly reported, and does not appear to have decreased since the advent of the unity government. A regional human rights organization recently concluded that \"the lack of judicial independence has created, among Guineans, a sense of vacuum that can only be filled by violence: the law of the jungle is perceived in Guinea as the only way to protect oneself against injustice.\" Under the CNDD, military leaders further sidelined the role of the judiciary and civilian law enforcement agencies in upholding the rule of law, and encouraged vigilante justice.", "Successful SSR may require deep structural, policy, and budgetary reforms. These could involve downsizing the total number of security personnel and tailoring the balance between military and civilian services (such as the police) to Guinea's national security strategy and needs. Some further contend that reforms should include prosecuting those implicated in human rights abuses and bolstering military justice mechanisms. Such actions could be perceived as deeply political in the Guinean context, potentially creating clear \"winners\" (those who retain their positions and/or experience an expansion in their mandate and roles) and \"losers\" (those who forfeit coveted salaries and privileges). Guinea shares this characteristic with post-conflict states, many of which have benefited from internationally funded disarmament, demobilization, and reintegration (DDR) programs to stem potential violence by ex-combatants. Whether a similar level of donor commitment and coordination could be ensured for Guinea remains to be seen.\nAdditionally, in order to be effective, SSR may require efforts to bolster Guinea's justice sector and civilian oversight of the defense sector, which could be resource- and time-intensive. Overall, SSR in Guinea is likely to be a long-term process, potentially requiring multi-year funding commitments by donors, as well as coordination and oversight. A related issue for U.S. policy, should the United States choose to provide support, will be whether to contribute to a multilateral program, such as one coordinated by ECOWAS, or provide assistance on a bilateral basis.", "Guinea's current outlook has improved significantly from early January 2010, when the country was beset by deep political uncertainty and fears of imminent civil conflict. However, the formation of a transitional government has not altered the underlying causes of Guinea's recent instability, and the months leading up to planned elections could prove decisive to Guinea's future trajectory and that of the sub-region. Inter-ethnic relations—historically perceived as relatively harmonious in Guinea though subject to political manipulation and occasional violent confrontation—are perceived as having deteriorated under the CNDD, particularly in Conakry and the southeastern Forest Region. Any number of factors, including election delays, regional developments, continued economic hardship, military divisions, and ethnic tensions, could spark renewed insecurity and corresponding challenges to U.S. policy goals in West Africa." ], "depth": [ 0, 1, 2, 2, 1, 2, 1, 2, 3, 3, 2, 2, 2, 3, 4, 4, 4, 4, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "h0_full h2_title h1_title", "h2_full h1_full", "h0_title h2_full h1_title", "h1_full", "", "", "h0_full", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "What resulted in the development of a \"government of national unity\" in Guinea?", "How has the CNDD compromised with power?", "How have temporary powers been established?", "What caused political uncertainty?", "How has this reduced international concern?", "What concerns still remain?", "How has the US responded to these political movements?", "What action is the US taking to ensure security?", "What issues will US policies face?" ], "summary": [ "A \"government of national unity\" was formed in Guinea on January 15, 2010, a year after a military junta, the National Council for Democracy and Development (CNDD), took power in a coup d'état.", "While the CNDD has not been dissolved, it has agreed to share power with civilian opposition groups in the lead-up to presidential elections, scheduled for June 27, 2010.", "Defense Minister Sekouba Konate has assumed executive power as interim president, while opposition spokesman Jean-Marie Dore was named prime minister.", "The formation of a unity government followed six weeks of political uncertainty after CNDD President Capt. Moussa Dadis Camara was shot in December 2009 by a member of his personal guard and evacuated for medical treatment.", "The appointment of the unity government has temporarily stemmed international concerns over political instability in Guinea and its potential spillover into fragile neighboring countries, such as Liberia and Côte d'Ivoire.", "However, concerns remain over the political will to hold elections, impunity and disorder among the security forces, and the potential for \"spoilers\" to disrupt Guinea's long-awaited transition to civilian rule.", "The United States, which had been highly critical of Dadis Camara's erratic leadership, has expressed support for Guinea's transitional government.", "At the same time, certain restrictions on U.S. bilateral assistance and targeted travel restrictions against CNDD members and others remain in place.", "As electoral preparations advance, a number of issues will confront U.S. policy. These include U.S. relations with the Guinean government; the status of U.S. assistance and travel restrictions on CNDD members; the monitoring of progress toward elections; U.S. policy toward a potential International Criminal Court (ICC) investigation of alleged CNDD human rights abuses; and potential U.S. support for security sector reform in Guinea." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2 ] }
GAO_GAO-17-704	{ "title": [ "Background", "Antiterrorism Assistance Program Management", "ATA Funding Allocations for Fiscal Years 2012 through 2016", "ATA Contract and Training Facilities", "Restrictions on Security- Related Assistance Based on Human Rights Concerns", "ATA Participant Nonimmigrant Visas and Admission to the United States", "State Officials and Contractors Have Taken Various Steps to Ensure that Domestic Tactical Training Facilities Used by ATA Align with Security Requirements", "State Has Taken Steps to Oversee the Contract for ATA Training, Which Includes General Requirements for Facility Security", "Contractors Have Taken Required and Voluntary Steps to Ensure the Security of Training Facilities Used for Domestic Tactical Training", "State Completed Human Rights Vetting for a Generalizable Sample of ATA Participants and Screened for Terrorist Activity", "Weaknesses Exist in ATA Data and Oversight of Participants, Some of Whom May Still Be in the United States", "ATA Course and Participant Data Are Incomplete and Sometimes Inaccurate", "State and DHS Have Acted on Incidents of Participants’ Unauthorized Departures from Domestic ATA Training Activities", "ATA’s Domestic Participant Oversight Process Does not Include Confirming that Participants Return to Their Home Countries after Training, and the Departure of Some Participants Is Unconfirmed", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Department of State", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The ATA program was established in 1983 to provide assistance to foreign countries in enhancing the ability of their law enforcement personnel to deter terrorists and terrorist groups from engaging in international terrorist acts such as bombing, kidnapping, assassination, hostage taking, and hijacking. The stated purposes of the ATA program’s activities are to (1) enhance the antiterrorism skills of friendly countries by providing counterterrorism training and equipment; (2) strengthen bilateral ties with partner nations by offering assistance; and (3) increase respect for human rights by sharing modern, humane, and effective antiterrorism techniques with foreign civil authorities.\nWithin State, management of the ATA program is undertaken as a partnership between the Bureau of Counterterrorism and Countering Violent Extremism (CT), which conducts policy formulation, strategic guidance, and oversight, and the Bureau of Diplomatic Security (DS), which administers and implements the program. In addition, ATA officials work with officials from State’s regional bureaus and Regional Security Officers at U.S. posts overseas to help ensure that appropriate ATA participants are selected to receive training. Regional Security Officers also help ensure that ATA activities target key focus areas, including the threat of terrorism, individual country-level operational needs, and the advancement of U.S. national security interests. ATA uses its own training experts as well as those from other U.S. federal, state, and local law enforcement agencies, police associations, and private security firms and consultants to deliver a blend of training, mentoring, equipment, advising, and consulting to partner nations.", "As shown in figure 1, in fiscal years 2012 through 2016, State allocated approximately $715 million to the ATA program for training, mentoring, equipment, and other services to help partner nations build or enhance their counterterrorism capabilities.\nAs shown in table 1, State has obligated or disbursed about $543 million (76 percent) of the approximately $715 million allocated to ATA in fiscal years 2012 through 2016. Of the $172 million in unobligated funds, $136 million (79 percent) are fiscal year 2016 funds still available for obligation through the end of fiscal year 2017. About $36 million of that $172 million in unobligated balances were allocated in fiscal years 2012 through 2015 and thus, funds that were not obligated within the initial period of availability for new obligations have expired. The Joint Explanatory Statement to the Consolidated Appropriations Act, 2017, directs State to conduct a review of unobligated ATA balances from fiscal year 2016.\nState has reported that, since its inception in 1983, the ATA program has trained and assisted more than 84,000 foreign security and law enforcement officials from 154 countries. As shown in figure 2, in fiscal years 2012 through 2016, State provided bilateral ATA assistance to 34 partner nations.", "State implements ATA training through the GATA contract signed in December 2011 and in effect during fiscal years 2012 through 2016, according to State officials. ATA officials told us that they secured two prime contractors to implement this contract who, in turn, manage subcontracts with several training facilities. The majority of ATA training occurs at facilities located abroad, either at facilities in recipient nations or at regional facilities. For example, ATA has agreements in place with the government of Jordan to use multiple facilities there to deliver ATA training to participants from Jordan as well as from other U.S. partner nations. According to State officials, as of June 2017, State was also negotiating an agreement to use facilities in Kenya for regional ATA training. In addition to overseas locations, about 10 percent of the ATA courses in fiscal years 2012 through 2016 were delivered at training facilities in the United States. State officials told us that training ATA participants at domestic facilities also offers senior U.S. government officials an opportunity to interact with partner nation officials, both of whom benefit from the direct diplomatic interaction. While classroom training is conducted in various localities across the United States, according to ATA officials, two facilities have been subcontracted to deliver tactical training: The O’Gara Group (O’Gara) located in Montross, VA, and Academi a Constellis Company (Academi), located in Moyock, NC.\nIn addition, State officials told us about two relevant modifications to ATA program management that they are making or plan to make in relation to the contract used to secure services for the delivery of ATA training and locations to be used for ATA training activities. First, in March 2017, State issued a request for proposals (RFP) for a new GATA contract that makes some technical modifications to language we identified during our engagement and that ATA officials determined was unclear. Second, according to State officials, in fiscal year 2017, State finalized a shift of nearly all training delivered at facilities in the United States to locations in partner nations or regional training centers outside the United States.\nAccording to State officials, this approach is expected to generate savings on costs such as international travel and accommodations. Further, the RFP for the new training contract states a preference to use State’s planned Foreign Affairs Security Training Center, when it becomes available, for any tactical training that is delivered in the United States.", "To help ensure that U.S. assistance is not used to support those who violate human rights, U.S. law prohibits the provision of assistance to foreign security forces implicated in human rights abuses. Section 620M of the Foreign Assistance Act of 1961 (also known as the State Leahy law) prohibits the United States from providing assistance under the Foreign Assistance Act or the Arms Export Control Act to any unit of the security forces of a foreign country if the Secretary of State has credible information that such unit has committed a gross violation of human rights.\nIn response to the State Leahy law, State has established a human rights vetting process to determine whether there is credible information of a gross violation of human rights for any potential recipient of assistance, such as ATA training. In accordance with State guidance, State may conduct individual or unit-level vetting, depending on the circumstances. This process generally consists of vetting by personnel representing selected agencies and State offices at U.S. embassies and at State headquarters in Washington, D.C.; State’s Bureau of Democracy, Human Rights, and Labor (DRL); and the relevant geographic bureau. These personnel are to screen prospective recipients nominated to receive assistance by searching relevant files, databases, and other sources of information for credible information about gross violations of human rights. Each embassy determines which agencies and State offices should participate in the embassy’s vetting process and, according to ATA officials, each individual’s unit affiliation if conducting unit-level vetting. Among other duties, DRL is responsible for overseeing the vetting process and for developing human rights vetting policies, in coordination with the regional and relevant functional bureaus. State processes, documents, and tracks human rights vetting requests and results through its INVEST system, a web-based database. ATA is to receive a list of vetted individuals from DRL, through INVEST, and requires the GATA contractors to cross-check that list with the participants who attend the first day of training to ensure that each has been vetted before any course information is presented.", "Conducting ATA training in the United States rather than at locations abroad requires additional logistical procedures that State and DHS must undertake, including issuing visas and granting admission to participants traveling to the United States, respectively. Prior to training in the United States, ATA participants must apply for a visa at a U.S. embassy or consulate abroad or with State’s Bureau of Consular Affairs. State’s consular officers evaluate visa applications and issue nonimmigrant A-2 visas—those for foreign government officials and employees traveling to the United States to engage solely in official duties or activities on behalf of their national government—to eligible travelers coming to the United States for ATA training.\nWhen foreign nationals arrive at a U.S. port of entry for admission to the United States to attend domestic ATA training, DHS officials determine whether to admit them into the United States. DHS officials grant ATA participants admission for what the agency refers to as duration of status. According to State officials, ATA participants’ status is generally tied to their participation in the associated ATA course and, therefore, they will generally only be recognized as entitled to A-2 status during participation in the ATA training and reasonable travel to and from the United States.\nWhile ATA participants are in the United States, they may be permitted to apply to DHS for certain immigration benefits and changes in immigration status, such as for asylum. According to DHS officials, ATA participants also are not subject to travel restrictions and can depart training facilities for purposes such as tourism and visiting family living in the United States, so long as they also maintain their status as participants of their ATA courses, by not being absent from training, for example.\nAccording to State and DHS officials, if participants miss ATA course activities without authorization, and do not attain an alternative immigration status, they may become subject to removal procedures. ATA officials told us that, upon arrival at domestic training facilities, ATA participants receive a briefing from officials or contractors to ensure that they understand that they should not depart the facility without authorization and that any unauthorized departure will be reported to ATA for further action. State and DHS officials told us that, because ATA participants are admitted “for the duration of the period for which the alien continues to be recognized by the Secretary of State as being entitled to that status,” it is State’s responsibility to determine whether participants are entitled to A-2 status upon request by DHS. According to these officials, DHS cannot take any related enforcement action until State has confirmed that participants are no longer entitled to A-2 status. Once State has done so, DHS officials search U.S. Citizenship and Immigration Services databases to determine whether the participants in question have filed for a change in status or other benefits. According to DHS officials, if participants have not applied for or have been denied changes in status or other benefits, DHS may seek to remove them from the country on the grounds that they have violated the terms of their admission.", "", "State’s steps to oversee the security of the tactical training facilities used for domestic ATA training are predicated on the GATA contract. This contract has general requirements for the secure storage of equipment, including weapons and explosives, and some more specific requirements related to obtaining licenses and for controlling access to explosives ranges and armories. The contract requires, among other provisions, that tactical training facilities have secure storage for all explosives, ammunition, and equipment. The contract also states that the armory shall be secured and alarmed and have climate-controlled weapons storage and a maintenance shop. Finally, contractors are required to have the necessary federal, state, and local permits for the storage of weapons, ammunition, and explosives. The contract stipulates that explosives storage areas and facilities shall meet all federal, state, and local criteria for safe and secure storage. For example, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has promulgated a regulatory framework for explosives storage, possession, and use, including licensing criteria specifying that ATF may verify by inspection that applicants for permits and licenses have places to store explosive materials that meet certain safety and security requirements. The regulations also dictate the type of material from which the storage containers are to be made, depending on the type of explosives to be stored, and the types of locks that should be used to secure the containers.\nState reports receiving copies of the facilities’ federal licenses for storing, transporting, and handling explosives for the relevant training facilities. In addition, State oversees the GATA contract, including facility security provisions, through visits to the subcontracted training facilities and frequent interactions with the contractors.\nFacility visits. State officials visit the training facilities used by ATA to review security and other aspects of training delivery. For example, following the award of the GATA contract, ATA subject matter experts conducted a survey of O’Gara’s training facility, which included an examination of whether the facility had secure storage and firing ranges. Officials said that they did not conduct a similar survey of the Academi training facility at the time the GATA contract was awarded because it had been previously certified under a prior ATA training contract. State and contractor officials said that ATA program managers who visit training facilities during course delivery also review the sites to ensure that they are in compliance with contract requirements.\nFrequent interactions. State and prime contractor officials told us that they meet weekly to discuss operational and planning issues. Officials noted that there is no set agenda for these meetings because the topics are driven by events, and all issues are open for discussion.", "Contractors that manage ATA’s domestic training have taken a variety of required and voluntary steps to ensure security at the tactical training facilities. State officials said that it is the responsibility of the prime contractors to ensure that the training facility subcontractors have the necessary federal, state, and local permits for the storage of weapons, ammunition, and explosives. Both facilities we visited—O’Gara and Academi—had relevant, unexpired licenses. For example, they had ATF licenses for transporting, storing, and possessing explosives. They also had state or local licenses such as the Commonwealth of Virginia Explosives Usage Permit, the Virginia Fire Marshall’s Office Certified Blaster Certification, and North Carolina county special use permits for firing ranges and training facilities. Moreover, the prime contractor that implements the majority of ATA training performs an annual audit of both tactical training facilities to assess compliance with the GATA contract, including its facility security provisions. The prime contractor found the facilities in compliance with those provisions of the GATA contract. As shown in figure 3, we also observed during our November 2016 site visits that both the O’Gara and Academi training facilities used locked explosives storage containers, as required by ATF. In addition, we observed that both training facilities had locked and alarmed armories, as required by the GATA contract, with the alarms monitored by private security companies.\nIn addition to taking steps to meet the GATA contract requirements, both training facilities we visited have taken voluntary actions related to facility security. ATF suggests security measures including installing fences, security cameras, and locked gates to increase security; however, the measures are not ATF licensing requirements. During investigative surveillance operations and escorted facility site visits in September 2016 and November 2016, respectively, we observed that both domestic tactical training facilities included some of these suggested security measures such as fences and natural barriers to deter and prevent unauthorized access to the facilities, warning signs, secured gates, security patrols, and surveillance cameras. These security measures align with the ATF’s suggestions for storing and safeguarding explosive materials. For example, the Academi facility has one main entrance with a gate, warning signs, and 24-hour armed security guards. The facility’s natural barriers include woods and farmland, and officials said that bears and snakes also deter unauthorized access. The O’Gara facility is located next to a highway and has a main entrance with a gate, a warning sign, and an unarmed security guard during business hours. The facility’s other entrance is restricted by an access code-controlled electronic gate. The O’Gara facility’s natural barriers also include woods and farmland. Furthermore, as shown in figure 3 above, both facilities had fences surrounding the explosives storage containers, a practice suggested by ATF, and contractors told us that the fences are locked when the containers are not being used for training.\nIn response to the December 2015 media reports mentioned earlier that alleged that its facility had potential security vulnerabilities, O’Gara made several changes to the physical security of its training facility. For example, officials said that in August 2016, the company constructed a wood fence to block public observation of one of the areas of the facility used during ATA training. The first photo in figure 4 shows that during our September 2016 investigative surveillance operation, we observed this wood fence and a lift barrier gate deterring vehicular access to the training grounds. The second photo in figure 4 shows a locked chain link fence that O’Gara officials told us they installed in October 2016, which we observed during our November 2016 site visit. O’Gara officials told us that in November 2016, they added slats to the newly installed chain link fence, to further reduce public observation, as shown in the third photo in figure 4.", "Using available ATA participant data, we confirmed that all ATA participants in a generalizable sample of 98 participants had been vetted at the individual or unit level or were not members of a security force with police powers and, therefore, did not require Leahy vetting, according to State officials and guidance. Of the 98 ATA participants in our sample, we determined that State had vetted 96 of those participants and that 2 participants were non-security forces without police powers and, therefore, did not require vetting. U.S. law prohibits assistance from being provided to any unit of the security forces of a foreign country if the Secretary of State has credible evidence that such unit has committed a gross violation of human rights. State has developed policies to prevent U.S. assistance from being used to provide training for units or individuals who have committed gross violations of human rights.\nWe selected a generalizable random sample of 98 names from 2,271 available electronic records of ATA participants who had received training in the United States in fiscal years 2012 through 2016 and for whom ATA officials confirmed that vetting was required by State guidance. We cross-checked these names and associated training dates with human rights vetting data from State’s INVEST system—used to process and document human rights vetting—to determine if they were vetted before receiving training. For any participants for whom we could not readily confirm vetting, we worked with DRL and ATA officials to identify additional supporting evidence to confirm that participants had been vetted before training was provided. For example, DRL provided us with records from INVEST based on the use of “ATA” in INVEST’s funding source field. However, in some instances, vetting officials had used the broader category of funding of which ATA funds are a subset; as a result, those INVEST records were not included in the original data provided to us.\nIn addition to prohibitions related to human rights violations, U.S. law prohibits assistance from being provided to any country if the Secretary of State has determined that the government of that country has repeatedly provided support for acts of international terrorism. From fiscal years 2012 through 2016, those countries were Cuba, Iran, Sudan, and Syria, none of which were ATA recipients during that time period.\nBeyond country-level prohibitions on support for state sponsors of terrorism, there is no formal requirement to screen individuals for terrorist activities, according to State officials. However, State includes criminal and terrorism screenings as part of its process at both the embassy and headquarters levels for checking the names of potential ATA participants before nominating them. For example, State described the process by which U.S. embassy officials conduct name checks through access to a variety of law enforcement databases, including the Terrorist Screening Center’s Terrorist Screening Database. The Terrorist Screening Database contains information about individuals known or suspected to be or to have been engaged in conduct constituting, in preparation for, in aid of, or related to terrorism and terrorist activities. In addition, State officials said that regional bureau personnel conduct terrorist activity screening of ATA participants through a national counterterrorism database. Further, State officials said that all visa applicants, including ATA participants, are subject to a standard suite of screening tools.", "", "ATA program data on the courses that ATA delivered in fiscal years 2012 through 2016, and the participants of those courses, are incomplete and inaccurate. ATA collects and maintains electronic information about delivered ATA courses and the participants of those courses in two separate systems: Snapshot, for course data, and the Student Training and Reporting Systems, for participant data. In response to our request for data from these systems, State initially provided data from the participant data system that included about 16,000 participants, rather than the more than 56,000 participants ATA reported training in fiscal years 2012 through 2016. In response to our questions about the completeness of these data, State undertook an effort to review available e-mail-based and other participant data that had not been systematically added to its participant data system and provided us with a revised response that included about 8,600 additional records. Therefore, the revised electronic participant data, which included about 25,000 participant records, remained incomplete, missing records for more than half of the reported 56,000 participants. In addition, the participant and course records that were included in the revised data were not always accurate.\nCourse data. ATA course data are incomplete in that the data do not include all delivered courses. For the 4 fiscal years 2012 through 2015, ATA reported that 1,987 courses were delivered. The course data ATA provided to us included only 1,633 courses, or about 82 percent, of the courses ATA reported to have delivered in those 4 years. Our analysis of ATA participant data similarly indicates that the course data are incomplete, as some courses listed in the participant data were not included in the course data. For example, we identified 25 participant records that were associated with a Senior Crisis Management course that was not included in the course data. In addition to being incomplete, ATA course data elements are not always accurate. For example, the number of “participants” included in the course records ATA provided to us was not always accurate. ATA officials told us that while some course records may have initially included the maximum number of participants a course could accommodate, it was intended that records would be updated with the number of actual participants following the conclusion of training. In reviewing fiscal years 2012 through 2016 course records, ATA officials noted that some records may not have been updated and, therefore, they could not tell us if the participant numbers included in the course data represented the maximum capacity of a course or the number of participants who ultimately attended each course. Notwithstanding these weaknesses, ATA officials told us that the number of participants included in the course data system from which data were provided to us is used to report the official number of ATA students trained. However, the aggregate number of participants included in the course data provided to us included about 41,000 participants, or about 75 percent of the 56,000 participants ATA reported to have trained in fiscal years 2012 through 2016. We were not able to determine which total participant number was more reliable. ATA officials told us that the difference between the two figures might be explained by “in-house” training—such as sustainment training and mentorship—that was delivered to participants in Afghanistan and that was not captured in electronic data systems. ATA officials said that they plan to begin capturing such information this fiscal year, 2017.\nParticipant data. Data on individual participants that the ATA program collects and maintains in its electronic participant data system are also incomplete. As noted above, data in ATA’s participant data system account for only about 25,000, or less than half of the 56,000 participants ATA reported to have trained in fiscal years 2012 through 2016. In addition, some individual electronic participant records do not contain complete information for all elements that the system is designed to capture. For instance, while ATA policy instructs officials to collect participant unit affiliations, we found that 15 percent of the approximately 25,000 participant records that ATA provided to us did not include information on each participant’s current assigned unit. In addition to our concerns of completeness, we found that elements of the participant records included in the electronic data were not always accurate. For example, some participant records included course dates that did not align either with course dates identified in ATA’s course data or provided to us directly by the contractors who delivered the training. Moreover, the recipient partner nation included in some of ATA’s participant records was incorrect. For example, we identified 27 participant records with the partner nation incorrectly entered as Jordan, which was the location of the regional training facility where the training occurred, rather than the home country of the participants who had received the training. Further, hundreds of records noted a government agency, such as Ministry of the Interior, or broad job type, such as police, in the “unit” data field, rather than a unit name. In addition, some participant records included a job title, such as security officer, in that data field.\nATA officials acknowledged weaknesses in their processes to capture course and participant data and have taken some steps to improve the completeness of their participant data since the initiation of our review. First, as previously described, in response to our requests for data, ATA officials undertook an effort to add participant records that previously existed only in e-mails to the electronic participant data system. With this effort, ATA officials identified about 8,600 records that they added to their electronic participant data system and that we included in the data we used for our analysis. Second, officials noted that, partly in response to our ongoing review, ATA revised the standard operating procedures for data collection in November 2016 to more clearly guide staff who enter data into and use the course and participant data systems. For example, the revised procedures clarify the information that officials should capture in the “participant” field of the course data system, noting that when entering the numbers under the participant field, officials should enter the number of participants who actually participated in the course and not the maximum number of participants the course can accommodate. In addition, the revised procedures outline steps that officials should take to help ensure the quality of information in the participant data system and the alignment of that participant data with information in the separate course data system.\nState’s Foreign Affairs Manual notes the importance of producing and maintaining adequate documentation of agency activities. In addition, ATA policy instructs officials to collect student names and unit affiliations, among other things, and State’s fiscal year 2014 Full Performance Plan Report identifies the “number of individuals in the security sector trained in counterterrorism knowledge and skills” as a performance indicator for the ATA program for fiscal years 2014 through 2017. Further, the Standards for Internal Control in the Federal Government state that agencies should clearly document transactions and all significant events. This could include records of courses delivered and participants trained. Federal internal control standards also state that management should periodically review procedures and related control activities to determine that those activities are implemented appropriately. Although ATA has revised its data collection procedures with the intent to improve data completeness and accuracy, ATA officials told us that prior standard operating procedures to capture electronic data have not always been followed. For example, they explained that a series of personnel changes involving staff responsible for data entry led to inconsistent implementation of the data collection procedures in place during fiscal years 2012 through 2016. Without management efforts to ensure the implementation of ATA’s revised procedures, ATA will lack reasonable assurance that its data collection efforts will improve data completeness and accuracy, and officials may not be able to accurately report the number of participants trained, in line with program performance indicators.", "State and DHS have acted on 10 documented participant unauthorized departures from ATA training activities in the United States since fiscal year 2012. Of the 10, 3 departed from their training facility during overnight hours in 2013; 6 fled during escorted class excursions, such as shopping trips, in 2014; and 1 absconded in 2016 during escorted transit from the airport to the training facility. After making their unauthorized departures, these 10 participants have pursued various courses of action. According to DHS data, 2 of the 10 departed the United States for countries other than their own home country, and 6 remain in the United States, having applied to DHS for asylum and been granted a work authorization while their asylum applications are adjudicated by DHS. According to DHS officials, none of these 8 former ATA participants are currently in violation of the terms of their admission to the United States, as they each have departed or have pending applications for an alternative immigration status. The ninth ATA participant, who made an unauthorized departure from an October 2014 training event in the United States, according to DHS, is believed to be in the United States without having applied for an alternative immigration status. ATA officials explained that, after discovering the participant’s absence, ATA notified DHS that a participant was missing. Officials told us that when DHS learns about this type of incident, DHS officials request notification from State that the participant in question is no longer entitled to A-2 status, which was predicated on their participation in State’s ATA training, as described previously. In this case, once DHS made this request and State determined that the ATA participant was no longer entitled to A-2 status, the participant became subject to potential removal from the United States. As of June 2017, according to DHS, the former participant remains the subject of an open investigation. DHS officials told us that they are taking proactive steps to locate the individual, who was not known to pose a threat to national security. As of September 15, 2017, we had not received requested information regarding the status of the tenth individual.\nWhen each of these 10 participants made unauthorized departures, the ATA program had standard operating procedures in place to direct officials’ actions in cases where a participant makes an unauthorized departure from training or during transit between the airport and training facility before and after training. However, ATA officials noted that the procedures were not always followed. Further, the procedures in place through 2014 did not specifically include sharing information with DHS. Our analysis of information related to the 9 documented unauthorized departures during fiscal years 2013 and 2014 indicates that in 3 cases, more than a year passed before relevant information was provided to the DHS unit responsible for investigating nonimmigrant visa holders who violate their immigration status. In January 2015, ATA revised these standard operating procedures to clarify the steps to be taken if a participant makes an unauthorized departure. For example, the revised procedures note that if a participant attending ATA training has been missing for 24 hours, ATA should contact the U.S. Regional Security Officer for the participant’s partner nation and notify DHS. ATA officials provided information to DHS on the same day that the aforementioned 2016 unauthorized departure occurred.\nBoth training facilities we visited also had procedures providing guidance to their employees specifying how to respond to the unauthorized departure of an ATA participant. For example, the facilities’ procedures acknowledge that facility staff are not to restrain participants from departing facilities, because the terms of their admission to the United States do not restrict them from doing so. In addition, the Academi facility guidelines for delivering ATA training instruct employees to “contact any Academi ATA staff immediately” if any participants are missing during an outing. The O’Gara facility’s procedures for hosting international students note that “although O’Gara and our prime contractors work hard to ensure 100 accountability of all international students, they may still decide to prematurely depart training without notice or permission. When this occurs, O’Gara is required to immediately notify the respective prime contractor, and in turn, the associated . O’Gara’s role is an investigatory support role whereas we provide witness statements, lead instructor statements, copies of associated close circuit television camera’s footage and other information as required.”", "According to ATA officials, ATA’s oversight process for domestic training participants does not include confirming that participants return to their home countries to use their new skills, and the departure of some participants who completed their training is unconfirmed. ATA officials and staff at the training facilities we visited described their responsibilities for overseeing ATA participant departures to include escorting ATA participants to the airport, helping them check in for their flights, and escorting them to airport security. We spoke with Regional Security Officers who help oversee ATA activities in three partner nations, all of whom described informal follow-up processes with ATA participants, including those trained abroad, but none of whom used a systematic process to confirm the return of all participants trained in locations outside their home countries. ATA’s standard operating procedure for unauthorized departures does not cover this portion of a participant’s travel home.\nPrior to our review, ATA officials had not reviewed data to determine if any participants who completed training failed to leave the United States and return to their home country. In response to our inquiry, during fiscal year 2017, ATA identified 20 former ATA participants for whom DHS records do not indicate departures from the United States following the completion of their ATA training in fiscal years 2012 through 2016, as seen in figure 5.\nFollowing the initiation of our engagement, ATA officials requested from DHS all arrival and departure records for foreign nationals admitted to the United States in fiscal years 2012 through 2016 using A-2 visas, including ATA participants. ATA officials reported that they reviewed departure information for more than 69,000 A-2 visa holders recorded in ADIS to manually identify departure information for 2,773 ATA participants trained in the United States during that time period and included in electronic participant data. ATA’s analysis identified 20 participants for whom DHS data did not include departure records and who, therefore, might still be in the United States. ATA officials told us that they had asked the U.S. Regional Security Officer for the partner nation of 1 of these participants for any related information and that the officer had been unaware that the participant may not have returned from training. DHS information we requested for each of the 20 participants in question indicated that 1 had applied for an alternative immigration status, but DHS found no records of applications for immigration status changes for the remaining 19. Eleven of these 19 had been participants in the same fiscal year 2013 course. ATA officials noted that during their review of ADIS information, each of the 20 appeared to be “in legal status,” which DHS officials explained to us would remain the case for all nonimmigrants with A-2 status until DHS received a determination from State that any individuals in question were no longer entitled to A-2 status. As a result, a draft of this report provided to State in July 2017 included a recommendation that State provide information to DHS about former participants who may have remained in the United States following the completion of ATA training. After reviewing the draft report and recommendation, ATA formally notified DHS about such former participants in August 2017.\nState and DHS officials stated that A-2 status complicates the ability of DHS officials to independently identify individuals who remain in the United States and may warrant removal. DHS uses ADIS to maintain, among other things, entry and departure data for tracking immigrants and nonimmigrants and to facilitate the investigation of individuals who may have violated their immigration status by remaining in the United States beyond their authorized stay. DHS officials explained that for visitors admitted with an “admit until date,” DHS systems can alert officials that an individual who should have departed may not have complied with the terms of their admission. However, according to DHS officials, because all A-2 visa holders, including ATA participants, are admitted to the United States for duration of status without a specific admit until date, as previously described, there is no similar indicator in ADIS that an individual may have remained in the United States beyond their authorized stay. Instead, DHS would need other means to identify individuals with A-2 status, including ATA participants, who may warrant follow-up. State and DHS officials suggested that such identification could happen if DHS officials encounter the individual in the course of other activity or if someone tells DHS that the individual may no longer be eligible for A-2 status. For example, DHS officials told us that for some training programs sponsored by the Department of Defense whose participants are also admitted to the United States on A-2 visas, the agency asks U.S. military attachés stationed in partner nations to confirm participants’ return so that the department can notify DHS of any who do not. As noted previously, regardless of how DHS learns of such A-2 status individuals, State must issue an official determination that the individuals are no longer entitled to their A-2 status before DHS can begin removal proceedings. State officials involved in making these determinations noted that they would similarly not be aware of such individuals unless (a) someone familiar with the situation told them; or (b) DHS, having otherwise learned about such individuals, requested an official determination regarding their eligibility for A-2 status.\nATA officials at headquarters and Regional Security Officers posted in two partner nations told us that while some domestic ATA participants engage in personal travel following the conclusion of training, they typically depart the United States immediately. Using a subset of 443 participants trained in the United States during fiscal years 2012 through 2016 for whom we could reliably determine departure dates, we found that 386 participants, or 87 percent, left the United States within 2 days following the completion of training, as shown in figure 6. The remaining 57 participants, or 13 percent, remained in the United States for 3 to 21 days before departing.\nThe ATA program has no process for confirming that participants return to their home countries after completing training—either immediately or following personal travel—because there is no legal requirement that they do so, according to ATA officials. However, the Standards for Internal Control in the Federal Government state that agencies should design control activities such as policies, procedures, and mechanisms to achieve objectives and enforce management directives. In addition, a stated purpose of the ATA program is to enhance the antiterrorism skills of friendly countries by providing counterterrorism training and equipment. Without a process to confirm and document that ATA participants return to their home countries, ATA may not be able to assess the extent to which participants are making use of training to help detect, deter, and prevent acts of terrorism, in line with program goals. In addition, without some way to identify ATA participants who do not return home and, therefore, may have remained in the United States following the completion of ATA training, ATA may not be able to provide information to DHS about participants whose failure to depart may warrant enforcement action.", "Building partner capacity is a central focus of U.S. counterterrorism strategy, and the ATA program, for which State allocated more than $700 million in fiscal years 2012 through 2016, is among State’s primary mechanisms for accomplishing that goal. ATA has demonstrated a commitment to making improvements to the program with recent efforts such as correcting errors and omissions in historical participant data. However, we identified weaknesses in program data and participant oversight that may limit the effectiveness of program management.\nFirst, we found significant weaknesses in ATA program data. Officials told us that procedures for the collection of course and participant data have been inconsistently implemented. Although State revised these procedures in 2016, in light of the limited implementation of prior procedures, management review of related control activities could help ensure that revised procedures are properly implemented. Without data quality improvements, program managers may not have comprehensive or accurate information with which to confirm compliance with human rights vetting requirements, ensure participant compliance with the terms of their admission to the United States, and report on and assess the achievement of program goals.\nSecond, ATA does not confirm that all participants trained in the United States or at regional training centers return to their home countries after training because it lacks a process to do so. ATA’s analysis of the available electronic participant data indicated that the vast majority of participants who received ATA training in the United States during fiscal years 2012 through 2016 departed following the completion of training. However, their analysis of that limited data also indicates that ATA had been unaware of at least 20 who may have remained in the United States. Without knowing whether all participants trained in the United States or at regional training centers return to their home countries to implement the skills they learned during ATA training, it may be difficult to accurately assess the effectiveness of program activities. In addition, without this information for those trained in the United States, it will be difficult for ATA to identify and provide information to DHS about participants whose unconfirmed departures may warrant enforcement action.", "We are making the following two recommendations to the Department of State: The Assistant Secretary of State for Diplomatic Security should take steps to ensure the implementation of revised standard operating procedures for collecting electronic ATA course and participant data. (Recommendation 1)\nThe Assistant Secretary of State for Diplomatic Security should develop and implement a process to confirm and document whether future ATA participants return to their home countries following the completion of ATA training and, for any participants trained in the United States who do not, share relevant information with the Department of Homeland Security. (Recommendation 2)", "We provided a draft of this report, which included three recommendations, to the Departments of State and Homeland Security for comment. State provided written comments, which we have reprinted in appendix II, concurring with all of our recommendations. In response to the first recommendation, State noted ATA had revised its standard operating procedures for collecting data and shared the document with us. We will follow-up with ATA regarding steps taken to ensure the implementation of those procedures. In response to the second recommendation, State stated that, by the end of the year, it will implement a process to ensure that participants sent to ATA training in the United States return to their home countries. We will follow-up with ATA regarding the implementation of such a process for participants sent to ATA training in the United States or other locations outside of their home countries. Lastly, State noted that it had already implemented the third recommendation. Having received evidence that State had provided the relevant information to DHS, we removed this recommendation from the final report. The Department of Homeland Security provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees and to the Departments of State and Homeland Security. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-6991 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "To determine what steps the Department of State (State) has taken to ensure that facilities used for Antiterrorism Assistance (ATA) training in the United States align with applicable facility and equipment security requirements, we analyzed the security requirements in the Global Antiterrorism Training (GATA) contract, which is used to secure third- party services to manage and deliver ATA training activities. We compared those requirements to documents, such as federal, state and local licenses, obtained from the contractors who implement GATA as well as to observations we made during investigative surveillance operations and escorted site visits to two domestic tactical training facilities used by ATA. We selected this nongeneralizable sample of two facilities because a significant proportion of ATA domestic students were trained there, and they were locations with courses that had equipment that needed to be secured on-site. We also reviewed Bureau of Alcohol, Tobacco, Firearms and Explosives regulations for explosives licenses and storage and suggestions for facilities that store and use explosives. Furthermore, we reviewed additional State and contractor documents related to facility and equipment security such as a survey and audits of the training facilities. We interviewed State program and contracting officials about their oversight of the GATA contract requirements. We also interviewed contractor officials to obtain information on how they comply with the GATA contract; federal, state and local licensing requirements; and other facility and equipment security measures they employ.\nTo assess the extent to which State has vetted domestic ATA participants for human rights concerns, we reviewed Section 620M of the Foreign Assistance Act of 1961 (also known as the State Leahy law) and analyzed State documents establishing its policies and procedures for complying with that law and conducting human rights vetting. For example, we analyzed policies and procedures documented in State’s 2012 and 2017 Leahy vetting guides and State’s 2010 International Vetting and Security Tracking (INVEST) system user guide. Using the fiscal years 2012 through 2016 ATA participant data, we developed a generalizable random sample of 100 names from a population of 2,271 ATA participants who were trained in the United States and receive foreign assistance funding for which vetting is required, in accordance with State guidance. We then cross-checked the names in our sample with human rights vetting data from the INVEST system to verify that the ATA participants were vetted before receiving the training. For any participants for whom we could not readily confirm vetting, we worked with State’s Bureau of Democracy, Human Rights, and Labor (DRL) and ATA officials to identify additional supporting evidence to confirm that participants had been vetted before training was provided. After selecting our sample, through the process of following up with DRL and ATA officials, we discovered that our sample included one interpreter and one participant in the Special Program for Embassy Augmentation and Response (SPEAR) training—for whom human rights vetting would not have been required by State guidance, according to officials. ATA officials said that the interpreter should not have been included in the data because interpreters are not participants and that ATA would remove all interpreters from the participant data system. Officials also said that the misidentification of the SPEAR participant was the result of a data entry error in their system. Excluding these individuals reduced our sample size from 100 to 98. As discussed in this report, ATA’s participant data were incomplete and, therefore, we could only draw our sample from those participants trained in the United States for whom ATA had electronic records in its data system. We determined that the data available were sufficiently reliable (1) to identify participants who had taken courses in the United States and (2) that the data could be used to assess whether the participants for whom there were records in ATA’s participant data system had been appropriately vetted. However, we could not generalize our findings about vetting from this group for which ATA had records to those participants who were not recorded in its system. The confidence interval for our estimate that all 98 participants in our sample had been vetted to the full population of 2,271 recorded participants who were trained in the United States and for whom vetting was required is between 97 and 100 percent, with a 95-percent confidence level. To gather additional information on human rights vetting, we interviewed officials from ATA and DRL, which oversees human rights vetting in coordination with the regional and relevant functional bureaus.\nTo describe how State screens participants for terrorist activity, we reviewed U.S. law that prohibits assistance from being provided to any country if the Secretary of State has determined that the government of that country has repeatedly provided support for acts of international terrorism. Those states for which the Secretary has made this determination are referred to as state sponsors of terrorism. We compared the countries on that list of state sponsors of terrorism to the countries for which ATA allocated funding in fiscal years 2012 through 2016 as well as the list of potential ATA partner nations as of fiscal year 2013. In addition, we interviewed State officials about their processes and embassy data systems used for screening potential ATA participants for terrorist activity.\nTo examine the extent to which State has implemented data collection and program policies to promote oversight of ATA participants, we analyzed ATA participant and course data and Department of Homeland Security (DHS) arrival and departure data. We reviewed State, DHS, and contractor documents, including State’s report on its analysis of immigration exit records for ATA participants trained at U.S. facilities, and interviewed cognizant agency officials and contractors. With respect to reporting on the ATA participant and course data, our review of State’s response to our initial data request generated questions about the quality and completeness of the information provided. In response to our questions, State undertook an effort to review program participant data and provided us with a revised response. Using the revised data, we analyzed the extent to which the data included records for all participants ATA reported to have trained in fiscal years 2012 through 2016 as well as the extent to which data fields were populated. We also compared information in data fields that appeared in both ATA participant and course data systems to determine data accuracy and consistency. Further, we compared ATA data to data provided directly by the contractor that implemented the majority of ATA training during fiscal years 2012 through 2016 as an independent source of information with which to assess the accuracy and completeness of ATA’s participant and course data, particularly course dates used in other analyses. We reviewed information about the systems used to house the data and spoke with knowledgeable agency officials in Washington, D.C., and Dunn Loring, Virginia, responsible for the databases about agency processes for collecting the data and for ensuring data quality. While the data provided were sufficiently reliable for the purposes of documenting the extent to which State has implemented data collection processes to promote oversight of ATA participants, the data in the participant and course data systems are not comparable, and neither system contains complete and accurate records, as discussed in this report. In addition to reporting on these problems, we augmented a subset of records with date of birth information that allowed us to use DHS data to analyze domestic participant departures, as described below, but noted that the results for this subset are not generalizable to the universe of all ATA participants. In addition, we reviewed guidance included in ATA’s standard operating procedures for collection of participant data. The Standards for Internal Control in the Federal Government also state that agencies should clearly document transactions and all significant events, such as records of courses delivered and participants trained. Federal internal control standards also state that management should periodically review procedures and related control activities to determine that those activities are implemented appropriately. Furthermore, State’s Foreign Affairs Manual notes the importance of producing and maintaining adequate documentation of agency activities. State’s fiscal year 2014 Full Performance Plan Report identifies the “number of individuals in the security sector trained in counterterrorism knowledge and skills” as a performance indicator for the ATA program for fiscal years 2014 through 2017.\nWith respect to reporting on ATA’s policies regarding unauthorized departures from training activities in the United States, we reviewed ATA documents regarding the 10 documented unauthorized departures and discussed these events with ATA officials and contractor staff at the facilities that hosted some of the participants who departed. We also discussed such events via teleconferences with U.S. embassy officials in three ATA partner nations—Bangladesh, Indonesia, and Jordan— selected based on criteria such as number of ATA participants trained and in light of countries included in recently completed or ongoing GAO and State Inspector General reviews of the ATA program. We also obtained and analyzed information from DHS regarding the departure and immigration status for 9 of these 10 participants. We analyzed ATA and contractor documents outlining procedures to be used if an ATA participant makes an unauthorized departure from training activities in the United States. Regional training facilities are outside the scope of this review. State officials told us they were unaware of any instances of unauthorized departure from regional training centers.\nWith respect to reporting on ATA’s processes regarding participants who fail to return to their home country following training at domestic facilities, we discussed existing related policies and procedures with knowledgeable ATA officials. The Standards for Internal Control in the Federal Government state that agencies should design control activities such as policies, procedures, and mechanisms to achieve objectives and enforce management directives. A stated purpose of the ATA program is to enhance the antiterrorism skills of friendly countries by providing counterterrorism training and equipment. To conduct an analysis regarding the extent to which ATA participants trained at domestic facilities depart immediately following the completion of training, we identified 2,712 unique participant records among the 24,885 records ATA provided that were associated with fiscal years 2012 through 2016 training at domestic facilities. For 535 of these 2,712 participants, we were able to obtain dates of birth for DHS and GAO to use for data reliability purposes in identifying and analyzing related departure data, respectively. To identify birth dates, we used manual and automated processes to augment ATA participant records with date of birth information from other State systems to serve as a unique identifier for data reliability purposes. Of these 535, we determined the departure date for 443 using data from the DHS Arrival and Departure Information System (ADIS). To do so, we manually matched participant names in ATA data with names in DHS departure data using dates of birth to help ensure that ATA participant records and DHS departure data pertained to the same individual. As noted above, the results for this subset of 443 participants, for whom we could obtain birth dates and departure data, are sufficiently reliable to report on the length of stay in the United States after these participants completed training but cannot be generalized to the other 92 participants for whom we found birth dates but not departure records, or to the nearly 2,200 for whom we did not find birth dates, or to participants who were not included in ATA’s participant data system. Therefore, we cannot infer that all participants who were trained in the United States and subsequently departed did so following the patterns we report for this subset. For each of the 443 participant records for which we identified departure data, we used the date identified in the ATA participant data system as the final day of training and the departure date from ADIS to calculate the number of days that each participant remained in the United States following the conclusion of ATA training. In addition to our analysis of length of stay following the conclusion of training, we asked DHS to identify if any of the 535 participants for whom we identified dates of birth appeared in DHS systems used to manage applications for changes in immigration status and investigations of individuals who violated the terms of their admission to the United States. DHS did not find any exact matches for these 535 ATA participant names and dates of birth in related systems. We and DHS acknowledge that the searches for exact matches are limited for several reasons, including potential differences in the spellings of names translated from foreign languages. Regional training facilities are outside the scope of this review. State officials told us they were unaware of participants who did not return to their home countries following training at regional centers.\nWith respect to our reporting on ATA’s analysis of the departure status of ATA participants trained at domestic facilities in fiscal years 2012 through 2016, we reviewed State’s report on the results of its analysis and discussed the analysis with knowledgeable State and DHS officials. We asked DHS to provide documentation confirming the status of the participants whom ATA identified who may have remained in the United States following the conclusion of ATA training and analyzed the information provided in response. We used ATA’s analysis and DHS’s additional information to provide insights into participants for whom there were no departure records. We noted that ATA’s analysis and results included only participants included in ATA’s electronic participant data, which we determined to be incomplete.\nWe also provided information in the background section of this report about funds allocated to ATA activities. To do so, we assessed funding data, including allocations, obligations, and disbursements for fiscal years 2012 through 2016 from Nonproliferation, Anti-terrorism, Demining, and Related Programs (NADR) funding for ATA, NADR/ATA Overseas Contingency Operations, Global Security Contingency Fund, and International Narcotics Control and Law Enforcement accounts. State provided data on allocations, amounts reallocated, unobligated balances, unliquidated obligations, and disbursements of funds for program activities. We analyzed these data to determine the extent to which allocated funds had been disbursed. We also discussed the status of these funds, including the extent to which any had expired and were no longer available for obligation, with State officials. We assessed the reliability of these data by interviewing cognizant agency officials and comparing the data with previously published data. We determined that the data were sufficiently reliable for our purposes.\nWe conducted this performance audit from May 2016 to September 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.\nWe conducted our related investigative evaluation work—site surveillance—in accordance with investigation standards prescribed by the Council of the Inspectors General on Integrity and Efficiency.", "", "", "", "In addition to the contact named above, Jason Bair, Kathryn Bolduc (Analyst-in-Charge), Ashley Alley, Kathryn Bernet, Debbie Chung, Martin de Alteriis, April Gamble, Rebecca Gambler, Rachel Girshick, K. Ryan Lester, Wayne McElrath, Ramon Rodriguez, Alex Welsh, Helina Wong, and Bill Woods made key contributions to this report. Neil Doherty also provided technical assistance." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_title", "h1_full", "h1_full", "", "", "", "h0_title", "h0_full", "h0_full", "", "", "", "", "", "h1_full", "", "", "h0_full h2_full", "", "", "", "" ] }	{ "question": [ "How has ATA training been improved?", "What requirements are training facilities held to?", "What did the GAO observe on their visit?", "What goals does the state's ATA have?", "How are these goals being achieved?", "What training did these officials have?", "What was GAO asked to review?", "What does the report examine?", "How did the GAO gather information for their report?" ], "summary": [ "State and the contractors who implement ATA training have taken steps to ensure that facilities used for domestic training align with applicable security requirements.", "State's ATA training contract requires the secure storage of weapons and explosives and that the contractors have the relevant federal, state, and local permits. State reports overseeing the contractors through the receipt of copies of relevant licenses such as those required for possessing explosives; visits to the training facilities, including surveys examining storage security; and frequent meetings.", "Both of the domestic tactical training facilities that GAO visited had relevant licenses and, during site visits, GAO observed some suggested security measures, including fences, secured gates, and security patrols.", "State's ATA program aims to enhance foreign partners' capabilities to prevent acts of terrorism, address terrorism incidents when they do occur, and apprehend and prosecute those involved in such acts.", "In fiscal years 2012 through 2016, State allocated about $715 million to the ATA program, which it reports to have used to train about 56,000 security force officials from more than 34 partner nations.", "At least 2,700 of those participants were trained at facilities in the United States.", "GAO was asked to review ATA program management.", "This report examines, among other objectives, (1) State's ability to oversee ATA participants trained in the United States and (2) the steps State has taken to ensure that facilities used for domestic ATA training align with applicable security requirements.", "GAO conducted fieldwork at two domestic training facilities selected because they provide tactical training; analyzed State and DHS data and documentation related to fiscal year 2012 through 2016 domestic training participants; and interviewed State and DHS officials, including those who oversee ATA training for three partner nations receiving significant ATA training. GAO also interviewed contractors who help implement the ATA program and analyzed related documents." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }
GAO_GAO-13-629	{ "title": [ "Background", "TSA Security Threat Assessments and Responsible Offices", "Adjudication Center Contractor Related Performance Challenges", "Adjudication Center Performance Data Show Mixed Results, Accuracy Measures Are Limited, and Performance Measurement Practices Are Not Fully Documented", "Two Performance Measures Showed Mixed Results", "The Adjudication Center’s Contractor Met TSA’s Accuracy Rate, but the Rate Does not Include Key Information", "The Adjudication Center’s Manual Performance Management Process is not Documented", "TSA Offices Can Strengthen Coordination to Ensure Effective Adjudication Center Workload Planning", "TSA Has Made Limited Progress in Addressing Risks Posed by Using Contract Employees to Adjudicate Security Threat Assessments", "TSA Assessment Identified Risks in the Adjudication Center’s Use of Contractors", "TSA Has Been Delayed in Implementing Workforce Conversion", "TSA Has Not Updated and Approved the Conversion Plan and Key Plan Elements are Unclear", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: TSA Organizational Chart with Key Offices with Responsibility for Implementing Security Threat Assessments", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "TSA is responsible for administering background checks—known as security threat assessments—for maritime, surface, and aviation transportation security programs that have vetted approximately 15 million applicants since 2003, according to TSA officials. Security threat assessments are designed to ensure that only eligible individuals are granted TSA-related credentials, such as a TWIC. Specifically, security threat assessments focus on identifying threats posed by individuals seeking to obtain an endorsement, credential, access, and/or privilege for, among other purposes, unescorted access to secure or restricted areas of transportation facilities at maritime ports and TSA-regulated airports, and for commercial drivers transporting hazardous materials. Implementing these programs is a shared responsibility among multiple TSA offices, including the OIA Program Management Division which manages the programs, and the Adjudication Center within OLE/FAMS, which serves as the primary operational component for conducting security threat assessments for 12 of TSA’s 17 aviation, maritime, and surface transportation credentialing programs—with the TWIC, HME and Aviation Worker programs accounting for a reported 95 percent of the Adjudication Center’s workload. (See appendix I for a TSA organization chart showing TSA offices responsible for implementing transportation security threat assessment programs.)\nThe security threat assessment process includes reviewing information to determine if applicants are disqualified to possess a credential based on criminal offenses, immigration status, or a link to terrorism. The security threat assessment involves two key components:\nAutomated watchlist and related vetting: The initial automated vetting process is conducted to determine whether any derogatory information is associated with the name and fingerprints submitted by an applicant during the enrollment process. Among the checks conducted by TSA, one is against criminal history records maintained by or available through the Federal Bureau of Investigation (FBI). These records contain information from federal, state and local sources in the FBI’s National Crime Information Center database and the FBI’s Integrated Automated Fingerprint Identification System/Interstate Identification Index, which maintain criminal records and related fingerprint submissions. A check is also conducted against the Terrorist Screening Database, which is the federal government’s consolidated terrorist watchlist and from which the Selectee and No-Fly lists, among others, are compiled. To determine an applicant’s immigration/citizenship status, applicant information is checked against the Systematic Alien Verification for Entitlements system. If the applicant is a U.S.-born citizen with no related derogatory information, the system can approve the individual’s application for a credential with no further review of the applicant or human intervention.\nAdjudication Center review: A manual, second level review is conducted as part of an individual’s security threat assessment if (1) the automated vetting uncovers any derogatory information, such as a criminal offense or (2) the applicant has identified himself or herself to be a non-U.S.-born citizen or national. As such, not all applicants will be subjected to a second-level review. The Adjudication Center plays an integral role in the security threat assessment process by adjudicating cases for which an initial automated check finds potential links to criminal history or immigration eligibility issues. Adjudication Center staff review the program applicant’s enrollment file to determine if derogatory or other information may be potentially disqualifying. The applicant’s files are processed from credentialing program enrollment centers through two-web enabled case management systems, called the Screening Gateway and Consolidated Screening Gateway. Adjudication Center staff use the Screening Gateways as their tool for gathering, viewing, and synthesizing the information needed to conduct security threat assessments.\nSince its establishment in 2005, the Adjudication Center has relied primarily upon contractor staff to complete its security threat assessment workload, and a smaller number of federal government staff to conduct oversight and other functions. Contractor staff performs initial adjudication of cases, and may either approve applications if they determine an applicant is eligible to obtain a credential or refer the application to a federal (that is, TSA) adjudicator for further review if they determine the applicant to be ineligible. Federal staff review cases of potential ineligibility, issue Preliminary Determination of Ineligibility letters to applicants, and conduct redress actions, among other things. As of May 2013, TSA reported that about two-thirds (37 of 55) of Adjudication Center staff were contractors.\nFigure 1 shows the TSA credentialing process for the TWIC, HME, and Aviation Worker programs from enrollment through credential issuance, and the functions of the Adjudication Center’s TSA and contract staff in the security threat assessment process.\nFederal agencies face a complicated set of decisions in finding the right mix of government and contractor personnel to conduct their missions. While contractors, when properly used, can play an important role in helping agencies accomplish their missions, our prior work has shown that agencies face challenges with increased reliance on contractors to perform core agency missions. Consistent with Office of Management and Budget procurement policy, agencies should provide a greater degree of scrutiny when contracting for professional and management support, program evaluation, and other services that can affect the government’s decision-making authority—functions that may be considered as being closely associated with inherently governmental functions. Contractors can provide services that closely support inherently governmental functions, but agencies must provide greater scrutiny and enhanced management oversight to ensure that the contractors’ work does not limit the authority, accountability, and responsibilities of government employees.\nThe DHS BWS refers to the department’s effort to identify the appropriate balance of federal and contractor employees required to support critical agency functions. Consistent with our recommendations and in accordance with the Omnibus Appropriations Act, 2009 DHS adopted the BWS in August 2010 to undertake risk analyses that are to enable the department to achieve the appropriate mix of Federal employees and contractors to accomplish its mission while minimizing mission risk that may result from an over-reliance on contractors. DHS uses an automated tool to help components—such as TSA—perform the necessary analysis to categorize work as appropriate for use of a contractor, inherently governmental, or closely associated with an inherently governmental function. The assessment tool is intended to facilitate an assessment of mission risk, level of contractor oversight needed, risk mitigation strategies, and cost analysis. Based on component responses, the tool is to provide a recommended sourcing decision on whether the work is appropriate for federal or contractor performance, or both. For example, should the BWS assessment find that a function is inherently governmental, the component would recommend the function be insourced to government employees, whereas a determination that the function was closely associated with an inherently governmental function would require the agency to either insource the function (also known as federalizing), or strengthen oversight of the contractor workforce.", "In December 2011, we reported that the Adjudication Center had faced recurring challenges in meeting its security threat assessment workload requirements and largely attributed these challenges to its reliance on a contractor workforce. Specifically, the Adjudication Center had experienced recurring backlogs in completing its caseload, and Adjudication Center officials attributed these backlogs to staffing limitations caused by contractor turnover. Officials at the time reported that the challenge was that the Adjudication Center had used three different contractors since establishing the Adjudication Center in 2005, and on each occasion the contract adjudicator turnover had led to backlogs as adjudicators were hired and trained. TSA reported that it did not consider the risks of acquiring contractor support services to provide adjudication services before awarding its first contract in 2005. Rather, TSA reported that it chose to use contract adjudicators when the Adjudication Center was created because, at the time, it considered them to be the most readily available workforce and effective way to augment federal staff with skilled resources. TSA reported that the agency had initiated an assessment in March 2011 through the DHS BWS process to determine whether the adjudication functions were appropriate to be performed by a contractor workforce, whether the work was inherently governmental and whether there would be cost savings resulting from conversion of the contract positions to government positions. We recommended TSA develop a workforce staffing plan with timelines articulating how the Adjudication Center will effectively and efficiently meet its current and emerging workload requirements, and incorporate the results of TSA’s study examining the appropriateness and costs and benefits of using contractors. TSA concurred with our recommendation and reported that it had begun taking steps to implement it.", "TSA has evaluated the Adjudication Center largely based on contractor performance in meeting established metrics and data shows mixed performance since 2011; however the Adjudication Center’s performance measures and practices are limited. We found that the Adjudication Center contractor met two of its three performance measures—for timeliness and accuracy—but did not do so for its caseload size measure. Further, these measures and practices were limited. For example, the Adjudication center’s methodology for calculating contractor adjudicator accuracy was limited because it did not include key information. Moreover, the Adjudication Center has not documented key elements of its performance measurement practices.", "TSA has used performance data for three primary metrics to measure the performance of the Adjudication Center in conducting security threat assessments for the TWIC, HME, and Aviation Worker programs. The three metrics are timeliness for completing initial adjudication, caseload size, and adjudication accuracy. According to TSA Adjudication Center officials, these performance measures were established to evaluate the performance-based contract for adjudication services at the Adjudication Center.\nTimeliness. The Adjudication Center contractor met timeliness standards for completing initial adjudication of its TWIC, HME, and Aviation Worker caseloads (see figure 1 for a description of this process). TSA requires that its contract adjudicator workforce complete initial adjudication of 95 percent of cases within 7 calendar days of the case entering TSA’s Screening Gateway case management systems for TWIC, HME, and Aviation Worker cases. According to TSA data, from August 2011 to January 2013, the adjudicator workforce met this standard for TWIC, HME, and Aviation Worker cases.\nWhile the Adjudication Center’s timeliness measure shows the Adjudication Center’s contractor met TSA’s standard for completing initial adjudication, the measure does not show the extent to which the agency has communicated its adjudication decision to the applicant in a timely manner—key statutory and TSA policy requirements for its credentialing programs—and TSA officials reported they did not maintain such documentation. For example, as specified in statute, TSA shall review an initial TWIC application and provide a response to the applicant, as appropriate, within 30 days of receiving the initial application. Moreover, officials with the OIA Program Management Division and Adjudication Center reported that TSA had established internal requirements for the agency to meet 30 day and 14 day applicant response times for HME and Aviation Worker applicants. Officials from the OIA Program Management Division reported tracking this measure through weekly Adjudication Center performance reports and identifying and addressing those cases that do not meet applicant response time standards. However, officials reported that they did not maintain documentation showing the extent to which TSA had responded to applicants within their applicant response timeframe requirements. Officials reported that maintaining such performance data would be of use, but noted it was rare that they did not meet their initial adjudication standards and respond to applicants on or within established applicant response time requirements. Officials noted that functional limitations in TSA’s Screening Gateway reporting system limits their ability to efficiently run reports showing the extent to which TSA responds to applicants within required timeframes. A senior OIA Program Management Division official reported it was her understanding that the division would have to obtain the capability to automatically run applicant response time reports from TSA’s Technology Infrastructure Modernization program, known as TIM. However, we reviewed TIM program documentation and did not find this data management capability requirement in TIM planning documents. We raised this issue with TSA TIM program officials, and in response to our inquiry, in May 2013, the TIM program added documentation of this requirement to its plans and reported that the capability would be available to the Adjudication Center beginning in March 2014 for TWIC program cases, and by 2016 for surface and aviation program cases.\nCaseload size. The Adjudication Center generally did not meet its contract caseload performance standards and experienced backlogs for its TWIC and HME program caseloads the majority of the time between October 2010 and January 2013. According to TSA contractor evaluation and performance reports, the Adjudication Center requires its contract workforce to maintain a total number of new TWIC, HME, and Aviation Workers cases at or below 1,500 cases—and Adjudication Center officials told us that a caseload above this threshold was considered a backlog. Adjudication Center data we reviewed for the period of October 2010 through January 2013 showed that the Adjudication Center had a backlog of HME cases approximately 60 percent of the time and TWIC cases approximately 61 percent of the time. In addition, the Adjudication Center had a backlog of Aviation Worker cases approximately 15 percent of the time from October 2010 through March 2012. Moreover, many of these backlogs were far higher than the Adjudication Center’s 1,500 caseload standard. For example, the Adjudication Center had a backlog of more than 4,000 HME cases roughly 16 percent of the time (20 of 122 weeks) during this period. Figure 2 shows Adjudication Center caseload levels for TWIC, HME, and Aviation Worker cases from October 2010 through January 2013.\nAccording to Adjudication Center officials and TSA documentation we reviewed, technical issues and a lack of sufficiently trained contract adjudicators contributed to the workload backlogs at the Adjudication Center. First, the Adjudication Center operations manager reported that technical problems with its case reporting systems had contributed to both challenges in assessing workload backlogs and, in some cases, growth in the backlog itself. For example, the Screening Gateway systems, which the Adjudication Center relies on for processing applicant cases and communicating results to TSA enrollment centers, has experienced periodic technical errors that have delayed the Adjudication Center’s ability to process new cases. According to TSA evaluation and performance reports we reviewed, between February 2012 and August 2012, TSA was unable to evaluate contractor performance in meeting its workload on several occasions, including approximately 3 months, because of technical problems with its case management systems. Adjudication Center officials reported that TSA’s Office of Technology was pursuing a solution to the technical errors with a solution expected by May 2012; however, as of May 2013 this had not been corrected. They also reported that TSA plans to replace this system with a more functional system through its TIM program, but as noted earlier, according to TSA’s schedule for the program and TSA officials, this system is not scheduled to be fully operational until 2016. In addition, since April 2012 TSA has experienced technical problems related to the Designated Aviation Channeler program that TSA uses to process Aviation Worker program cases into the Screening Gateway systems. According to TSA officials, technical problems with one of its vendors were delaying processing of cases and returning previously adjudicated cases into the Adjudication Center’s new caseload queue and not distinguishing between the two sets of cases. This was delaying processing time and Adjudication Center management was unable to determine the true extent of its new caseload. TSA officials responsible for managing the Designated Aviation Channeler program reported that they had been in discussions with the vendor since April 2012 to address the technical processing issues, and as of May 2013, the vendor was in the process of implementing corrective actions.\nAnother factor contributing to growth in the workload backlog according to TSA Adjudication Center management officials and a contractor performance report we reviewed has been the lack of trained adjudicators provided by the contractor. According to a senior Adjudication Center official, the contractor lacked a sufficient number of staff who had been certified as self approvers, and this had required the Center’s limited federal staff to assume additional responsibilities and reduced the Center’s progress in meeting its caseload. Adjudication Center officials reported that they were working with the contractor to address this issue. We discuss the Adjudication Center’s contractor-related staffing issues, and actions to address them, in more detail later in this report.", "For its third key performance measure, TSA requires its contract adjudicators to maintain an average accuracy rate of at least 95 percent. According to Adjudication Center data, from August 2011 to December 2012, the Adjudication Center’s contract workforce met TSA’s accuracy standard for the TWIC, HME, and Aviation Worker programs. However, the accuracy rate is not a complete representation of Adjudicator contract accuracy because it does not include evaluation of a key population of cases. According to Adjudication Center officials, the Adjudication Center’s average accuracy rate is generally based on error rates identified from a daily review of all cases where adjudicators found an applicant was disqualified, but reviewers found an applicant should not have been (i.e., incorrectly disqualified). However, according to officials, this calculation generally does not include those cases where adjudicators had approved applicants, but reviewers found they should have been disqualified (i.e., incorrectly approved). For example, according to our analysis of TSA data, approvals comprised over 90 percent of the Adjudication Center’s TWIC and HME caseload from August 2011 to January 2013—and TSA reviewed roughly 7 percent of these approvals. In this way, the average accuracy rate TSA uses to evaluate the performance of its contractor is incomplete and limited because it does not include the extent contract adjudicators incorrectly approved applicants.\nThe Adjudication Center official responsible for reporting the accuracy rate told us that the accuracy rate of the contract workforce includes only those cases that were incorrectly found to have disqualifying factors because that is how the contract evaluation standards were established. The official noted that the Adjudication Center processes included a review of all trainee adjudicators approved cases and a separate quality assurance review process to spot check approved cases to identify errors among all adjudicators who are certified to approve cases without further review. However, the official reported that these performance measurement practices were not documented and that a lack of staffing capacity had limited the extent to which the Adjudication Center conducted the quality assurance spot checks—with the Center meeting only about two-thirds of its 10 percent goal for the number of cases selected for spot checking. Nonetheless, the results of this quality assurance review are not factored into the rate TSA uses to measure contractor accuracy performance and award funds to its contractor.\nStandards for Internal Control in the Federal Government specifies the need to comprehensively identify risks and consider all significant interactions. Once risks have been identified, they should be analyzed for possible effect. Moreover, internal control and all transactions and other significant events need to be clearly documented, and the documentation should be readily available for review. The overall accuracy rate calculated by the Adjudication Center is generally limited to incorrectly disqualified cases and does not include incorrectly approved cases. In this way, TSA does not have a representative assessment of the Adjudication Center’s average accuracy rate. If error rates for approved cases were included in its evaluation, the Adjudication Center’s reported average accuracy rate may ultimately be higher or lower than it has reported—but it will remain unclear until the Adjudication Center captures this information in its accuracy rate. Determining the performance of the workforce in adjudicating security threat assessments for this population is important for overseeing adjudicator performance and identifying cases where the Adjudication Center is incorrectly approving applicants. By developing and documenting an accuracy rate measure that includes data on both types of incorrectly adjudicated cases (approved and disqualified), the Adjudication Center can determine an accuracy rate that comprehensively captures accuracy performance and enables Adjudication Center management to more effectively identify and address performance issues among its workforce.", "Since beginning operations in 2005, Adjudication Center management officials told us that they have used a complex, manual process to track the performance data of its contract adjudicator workforce. In particular, because of functional limitations of TSA’s Screening Gateway systems, officials reported that the Adjudication Center lacks an automated process for tracking adjudicator performance of the estimated 7,500 to 10,000 security threat assessment cases that adjudicators process each week. As a result, Adjudication Center management has used a cumbersome, manual process to track case production and performance of its contract adjudicator workforce. For example, each week, one adjudication center official is responsible for reviewing contractor reported caseload information, compiling spreadsheets summarizing contractor performance, verifying and reconciling the information with the contractor, and preparing weekly summary reports for distribution to TSA credentialing program stakeholders. Adjudication Center management told us that it has used these reports to measure Adjudication Center performance and support oversight of its contract adjudicator workforce.\nThe manual process exists because, according to Adjudication Center officials, TSA’s Screening Gateway case management systems were not designed to meet the functional requirements of the Adjudication Center for tracking contractor operational performance, and TSA has been unsuccessful to date in developing a technical solution to do so. TSA officials recognized that the system did not meet the needs of the Adjudication Center and reported that the agency’s TIM program would replace the Screening Gateway systems and enable the adjudication center to automate its case tracking and performance requirements. However, as noted earlier, TSA officials reported that this new system is not scheduled to be fully operational until 2016.\nIn the meantime, however, Adjudication Center management officials reported that they had not documented the manual process currently in use. Adjudication Center management officials told us that they had placed some information on an internal web sharing system in the past, but that this information was neither thorough nor updated to reflect the case management reporting system that the Adjudication Center has used since 2010—when TSA began its most recent contract for Adjudication Center staff. According to Adjudication Center officials, time constraints in meeting the Adjudication Center’s workload of security threat assessments had been a factor that had prevented the Operations Manager from updating or developing new documentation of the procedures in recent years. Further, given the complexity of the process and that two officials were familiar it, a senior Adjudication Center management official said that documenting this process would be of value should the two officials be unavailable.\nStandards for Internal Control in the Federal Government specifies the need for appropriate documentation of transactions and internal control.\nInternal control and all transactions and other significant events need to be clearly documented, and the documentation should be readily available for review. The documentation should be included in directives, policies, or manuals to help ensure operations are carried out as intended. Documenting the Adjudication Center’s case reporting performance measurement practices is important to allow someone unfamiliar with this process to assume responsibilities in the event of attrition by the Adjudication Center managers. This is particularly important considering the complexity of the Adjudication Center’s case performance reporting process and TSA’s need to ensure effective performance and operational continuity in its security threat assessments.", "Implementing credentialing-related programs is a shared responsibility between the Program Management Division in TSA’s OIA and the Adjudication Center in OLE/FAMS. Officials from these offices reported taking various actions to ensure its offices coordinate information related to security threat assessment adjudication workload planning and performance. These include: Sharing weekly Adjudication Center performance reports: These reports include information for the TWIC, Aviation Worker, and HME programs such as the number of cases the Adjudication Center receives for each of these programs during the prior week, the number of cases ready for adjudication, and the number of applicants who have sought redress based on initial determinations of ineligibility. The three program managers for TSA’s maritime, aviation, and surface credentialing programs reported that they rely on these reports to ensure the program offices are meeting workload demands for the various credentialing programs TSA supported, and to identify and develop strategies to address performance challenges.\nConvening monthly program management review meetings: These meetings are used to share information relating to changes that may impact the Adjudication Center’s workload. As part of these meetings, the Adjudication Center contractor provides a monthly report which provides details pertaining to contractor staffing levels and changes, training status, contractor accuracy rates, and challenges in need of resolution.\nDeveloping spend plans: Adjudication Center and the OIA Program Management Division officials meet to develop a spend plan to support the credentialing programs’ annual budgets and discuss population projections for the programs that would affect Adjudication Center workload. For example, the Aviation Worker program manager reported that the workload had increased by about 5 percent annually, and that this information was used to inform the Adjudication Center’s spend plan.\nNotwithstanding these actions, opportunities exist for the Adjudication Center and OIA Program Division to strengthen their coordination. While officials with the two offices coordinate on a routine basis to share information on workload completion, they do not have a process in place to ensure that information in the Adjudication Center’s staffing plan—such as caseload projections and associated staffing needs—reflects the mutual understanding of both Adjudication Center and credentialing program management officials. For instance, Adjudication Center management officials have periodically updated a staffing plan that they use to guide Adjudication Center workforce planning. However, an Adjudication Center program management official reported that while the staffing plan had been shared with credentialing program managers in the past, it had not been shared in recent years. He reported that a prior plan had been shared with the OIA Program Management Division to communicate staffing needs, and said that sharing the updated versions of the staffing plan with the Program Management Division may be valuable for guiding decisions on workforce planning.\nOIA Program Management Division officials reported that they were unfamiliar with the Adjudication Center’s staffing plan and questioned workload projections in the Adjudication center’s current staffing plan. For example, the current Adjudication Center staffing plan cites an anticipated regulation that will address the security threat assessment process and that according to the plan would double the Adjudication Center’s security threat assessment workload from 500,000 to 1 million per year by the end of fiscal year 2014, and triple the workload by the end of fiscal year 2015. In October 2012, we shared this staffing plan with the OIA Program Management Division Manager responsible for Aviation programs and that official questioned the accuracy of the aviation worker workload increase projections in the staffing plan. The official said that TSA had yet to issue this regulation and that the timeline for doing so would take longer than officials had initially planned. Thus, the projected workload increases in the Adjudication Center’s staffing plan would not be realized, and the plan would need to be revised. However, as of March 2013, the Adjudication Center’s staffing plan had not been updated.\nAccording to key collaboration practices that we have identified, federal agencies engaged in collaborative efforts need to create the means to monitor and evaluate their efforts to enable them to identify areas for improvement. Reporting on these activities can help key decision makers within the agencies, as well as clients and stakeholders, obtain feedback for improving both policy and operational effectiveness. Such reporting mechanisms can then be used to modify plans. Moreover, a focus on results, as envisioned by the Government Performance and Results Act, as amended, implies that federal programs contributing to the same or similar results should collaborate to ensure that goals are consistent and, as appropriate, program efforts are mutually reinforcing.\nIn this way, ensuring these components have access to respective workforce planning documents by establishing a mechanism for OIA Program Management Division and Adjudication Center officials to share and reconcile information included in the Adjudication Center’s staffing plan updates, such as timelines for anticipated workload growth, will help ensure TSA is using accurate workload projections to guide the Adjudication Center’s workforce planning.", "", "Between January 2011 and September 2011, TSA conducted and completed its DHS required BWS assessment for the Adjudication Center contract and determined that the adjudicator position represented work that is “closely associated with inherently governmental functions” and that an excessive risk exists by allowing contractors to make security credential approvals without sufficient federal oversight. According to the assessment, the adjudicator functions performed by the contractor are critical to TSA’s accomplishment of the security threat assessment process to ensure terrorist and other security threats are identified and prevented from gaining credentialed access to critical U.S. transportation system infrastructure. The assessment found that TSA was reliant upon contractors for making decisions regarding criminal history and immigration status for a majority of applicants and if contractors were to continue performing the adjudicator function, the government would need to provide continuous and substantive oversight of them to ensure successful performance. However, the assessment found that the Adjudication Center did not have an effective oversight process in place to do so—noting that the federal government staffing at the Adjudication Center is not sufficient to adequately oversee contractor case processing for quality control, as contract staff have independent decision making ability on the majority of cases. Further, the assessment noted that the Adjudication Center’s use of a mixed contractor and government workforce was inefficient. For example, according to the assessment, for every contractor work hour, a federal government employee must check that work and this had led federal government staff to work more than 2,500 overtime and compensation hours over the preceding year—an inefficient and duplicative process that would not be necessary if the workforce were all federal government officers.\nIn light of these factors, in October 2011, TSA’s BWS Departmental Working Group determined that the adjudicator function was closely associated with inherently governmental functions and recommended TSA end the Adjudication Center’s reliance on a contract workforce and convert to an all federal employee workforce. The working group reported that doing so was designed to improve the Adjudication Center’s security threat assessment processing by having a better oversight process, streamlining overall operations, reducing training requirements, and better managing resources.", "TSA has been delayed in implementing the proposed workforce conversion at the Adjudication Center. According to TSA’s May 2012 Adjudication Center conversion plan, TSA offices were to take several actions before the Adjudication Center may begin implementing its conversion plan and hiring a new federal employee workforce; however, these steps have generally not been implemented. For instance, as of May 2013, responsible stakeholders in TSA’s BWS effort, including the Office of Human Capital and OLE/FAMS, reportedly had not approved the plan—necessary steps before the plan can proceed to TSA leadership, and ultimately, DHS for review. According to the conversion plan, TSA proposed to convert to a government adjudicator workforce by hiring TSA employees during fiscal years 2013 and 2014—with the hiring to be completed by the end of calendar year 2013. However, as of May 2013, TSA had not begun hiring its new federal workforce and TSA officials reported that the agency had not determined new timelines to do so.\nTSA officials attributed the agency’s delays in implementing the Adjudication Center conversion plan to its prioritization on implementing agency reorganization efforts. According to a senior TSA official, implementing the BWS assessment was delayed because TSA was undergoing a large reorganization and agency resources were prioritized to that effort. With this reorganization completed in January 2013, the official reported that implementing the conversion plan would become a greater priority.", "TSA’s delay in acting on the recommendations of Adjudication Center conversion has rendered the implementation timelines and key hiring level and cost information in its May 2012 conversion plan outdated or unclear and TSA has not updated the plan to reflect these changes. In particular, TSA’s plan to convert to an all-federal Adjudication Center workforce has not been updated although information in this plan, such as the timeline for hiring federal employees and cost information, is no longer valid or is unclear. For example:\nThe implementation schedule in TSA’s plan is no longer valid.\nTSA officials responsible for managing the conversion effort acknowledged that the timelines for implementing its plan had been delayed, and that TSA would not complete its workforce conversion by the end of calendar year 2013 as proposed in its plan. TSA officials reported that determining a revised schedule for the Adjudication Center conversion was dependent on various factors, such as when responsible TSA offices completed their respective reviews, and when OLE/FAMS approved the plan and sent it to TSA leadership for review. TSA officials reported that TSA did not have timelines for when this would occur.\nImplementing the in-sourcing plan may present a cost saving opportunity to TSA, but TSA is unclear on extent of those savings. According to an August 2012 OLE/FAMS memorandum, converting from contractor to federal employees at the Adjudication Center would save the federal government over $5.4 million in fiscal years 2013 and 2014. However, TSA’s May 2012 conversion plan reports that the conversion plan would result in approximately $1 million in savings, rather than the $5.4 million cited in an August 2012 OLE/FAMS memorandum. According to the May 2012 plan, TSA used the DHS Modular Cost Table to determine the potential cost savings from converting to a federal employee workforce at the Adjudication Center. TSA budget officials reported that they could not determine why the cost savings estimates varied between the May 2012 conversion plan and the August 2012 memorandum. The officials reported that the cost savings estimate was still speculative and that TSA would need to revisit its calculations. As of May 2013, TSA had provided no further information.\nTSA officials involved in the BWS Adjudication Center conversion noted that the delays in implementing the plan may pose challenges for TSA. For example, TSA’s contract for the Adjudication Center is a performance-based contract, with 1 option year remaining that would begin in February 2014 and run to January 2015. The official reported that continuing the contract would delay TSA from potential cost savings, while the cost to TSA continuing the contract increases 3 percent per option year. Officials reported that if they did not begin hiring new federal employees by August 2013, they would need to begin the process to recompete the Adjudication Center staffing contract to ensure continuity of operations in the case that TSA does not implement its conversion plan.\nAccording to DHS BWS guidance, the more important the function, the more important it is to have internal capability to maintain control of the department’s mission and operations. TSA’s BWS assessment found that (1) TSA lacked sufficient internal capacity to control its use of contractors in Adjudication Center mission and operations, (2) TSA’s reliance on a contractor workforce carried excessive risk, (3) the adjudicator functions were closely associated with inherently governmental functions, and (4) that the positions should be insourced.\nThis assessment was made almost 2 years ago. While senior TSA Adjudication Center management officials support implementation of the plan, collectively, TSA has not mitigated the risks and operational inefficiencies identified in the DHS BWS assessment. Moreover, TSA has not completed its internal review of the conversion plan, including determining a revised implementation schedule as well hiring target levels and cost information. Completing this review, determining this information, and updating the conversion plan to ensure the plan reflects current conditions and an estimation of cost savings will help TSA and DHS decision makers by providing a roadmap for moving forward. Finally, implementing TSA’s Adjudication Center workforce conversion will be important to ensure TSA has sufficient and appropriate adjudication personnel to make the decisions that may deny or allow individuals unescorted access to the nation’s critical transportation infrastructure.", "TSA’s Adjudication Center plays a critical role by conducting security threat assessments to ensure individuals posing security threats are identified and are not granted TSA-related credentials for, among other things, unescorted access to secure areas of the nation’s transportation systems. However, the Adjudication Center has faced challenges in fulfilling this role. First, while the Adjudication Center uses three key measures to evaluate the performance of the Adjudication Center’s contract workforce, it has not documented its methods and two of its measures are limited. For example, TSA’s timeliness measure does not capture the extent to which the agency has communicated its adjudication decision to the applicant in a timely manner—a key TSA requirement for its credentialing programs—and TSA officials reported they did not maintain such documentation. Ensuring that the TIM program provides the capability for Adjudication Center officials to efficiently prepare and document applicant response time reports would help ensure TSA meets standards and decisionmakers identify and address performance challenges. In addition, the Adjudication Center’s accuracy rate generally does not include cases in which contract adjudicators incorrectly approved an applicant—and these constitute roughly 90 percent of the Adjudication center’s caseload. Developing, documenting and implementing an accuracy rate that includes this information will provide TSA with a more complete assessment of the performance of its workforce—regardless of whether the members of that workforce are contractors or TSA employees.\nSecond, because of functional limitations in its case reporting systems, Adjudication Center management uses an undocumented, manual, process to track adjudicator performance. Documenting the Adjudication Center’s case reporting performance measurement practices is important to ensure continuity of operations in the event of attrition by the two Adjudication Center officials familiar with this process. Third, the Adjudication Center relies on its staffing plan to guide its workload planning decisions but has not shared updated versions of this plan with the credentialing program offices that it serves. Establishing a mechanism for the Adjudication Center to share and reconcile information included in the staffing plan updates, such as timelines for anticipated workload growth, would help improve internal coordination and support the Adjudication Center’s workload planning efforts.\nFourth, TSA’s 2011 BWS assessment for the Adjudication Center found that the adjudicator function is closely associated with inherently governmental functions and recommended that TSA insource its Adjudication Center workforce to mitigate the risks that contractors were making security credential approvals without sufficient federal oversight. Taking additional steps to end its use of contract adjudicators and convert to an all-federal employee adjudicator workforce would help TSA mitigate such risks, but it has been delayed in doing so. Completing its internal review and updating and documenting the conversion plan to ensure the plan reflects current condition conditions, including timelines for hiring, planned hiring numbers, and cost information would help TSA and DHS decision makers by providing a roadmap for moving forward. Finally, providing this plan to TSA and DHS leadership for review are important steps to help ensure TSA addresses the risks identified in the 2011 BWS assessment and has an appropriate workforce to make the decisions that may ultimately deny or allow individuals credentials for unescorted access to the nation’s critical transportation infrastructure.", "We recommend that the Secretary of Homeland Security direct the TSA Administrator to take the following 5 actions:\nTo ensure that the Adjudication Center accuracy rate effectively captures the center’s accuracy in completing security threat assessments, the Adjudication Center should develop an accuracy rate measure that includes accuracy data for cases where adjudicators both approved and disqualified applicants, document this methodology, and implement the process.\nTo ensure continuity of case reporting, the Adjudication Center should document its case reporting performance management processes.\nTo ensure workforce planning is based on accurate workload projections, establish a mechanism for TSA’s OIA Program Management Division and OLE/FAMS Adjudication Center to share and reconcile information included in the Adjudication Center’s staffing plan updates, such as timelines for anticipated workload growth.\nTo advance efforts to address risks identified in the Adjudication update and document its Adjudication Center insourcing conversion plan to reflect revised schedule timeframes, cost and hiring level information, and review the updated Adjudication Center insourcing conversion plan, and provide it to TSA and DHS leadership for review and implementation approval.", "We provided a draft of this report to DHS for review and comment. DHS, in written comments received July 2, 2013, concurred with all five of the recommendations in the report and identified actions taken, planned, or under way to implement the recommendations. Written comments are summarized below, and official DHS comments are reproduced in appendix II. In addition, DHS provided written technical comments, which we incorporated into the report, as appropriate.\nIn commenting on the draft report, DHS described efforts underway or planned to address our recommendations. DHS also noted that the Adjudication Center’s caseload performance measure of keeping backlogs below 1,500 cases is a self-imposed standard that TSA established to provide the best possible customer service to applicants. We agree that the Adjudication Center’s caseload performance measurement was developed by TSA. Regardless of source, however, TSA’s caseload standard is a contractual requirement and our analysis of TSA data found that the Adjudication Center contractor generally did not meet this requirement between October 2010 and January 2013. In addressing our recommendations, DHS concurred with our first recommendation that TSA should develop an accuracy rate that includes accuracy data for both cases where an applicant is approved and cases where an applicant is disqualified, document this methodology, and implement the process. DHS stated that TSA OIA will modify its current quality control process to include both approved and disqualified cases that will more accurately reflect the adjudications performed. Furthermore, DHS reported that it will develop, document, and formalize an accuracy rate measure that includes review of approved and disqualified cases. Such actions will ensure that the Adjudication Center’s accuracy rate measure provides a more comprehensive assessment of adjudicator performance.\nDHS also concurred with our second recommendation that TSA should document the Adjudication Center’s case reporting performance management processes. DHS stated that while TSA anticipates that the current manual process will be phased out and replaced by an automated process as the TIM program is implemented, TSA OIA will document the current manual performance management process. DHS stated that documenting the process will confirm the Adjudication Center’s performance is accurately tracked and will also ensure continuity in the event of personnel turnover. These actions, if implemented effectively, should address the intent of our recommendation.\nRegarding our third recommendation that OIA’s Program Management Division and the OLE/FAMS Adjudication Center should establish a mechanism to share and reconcile information included in the Adjudication Center’s staffing plan updates, such as timelines for anticipated workload growth, DHS concurred. DHS reported that the OIA Program Management Division and the OLE/FAMS Adjudication Center were already working to resolve the issues and had begun coordination to ensure security threat assessment workload estimates and the staffing plan are updated. DHS stated that TSA will formalize a quarterly review process between the Program Management Division and the Adjudication Center to meet and discuss these issues.\nDHS concurred with our fourth recommendation to update and document the Adjudication Center’s insourcing conversion plan to reflect revised schedule timeframes and cost and hiring level information. In its comments, DHS stated that OIA is working with the DHS Office of the Chief Human Capital Officer to address any potential issues posed by using a mix of government employees and contractors. Furthermore, DHS reported that TSA will update its insourcing conversion plan to reflect current timelines, costs, and hiring levels. Such actions should improve TSA’s ongoing insourcing efforts. Lastly, DHS concurred with our fifth recommendation that TSA review the updated Adjudication Center insourcing conversion plan and provide it to TSA and DHS leadership for review and implementation approval. DHS stated that OIA has already begun updating the insourcing conversion plan and intends to provide it for review and approval. We will continue to monitor DHS’s efforts.\nAs arranged with your office, unless you publicly announce its contents earlier, we plan on no further distribution of this report until 30 days after its issue date. At that time, we will send copies of this report to the Secretary of Homeland Security, the Assistant Secretary for the Transportation Security Administration, and appropriate congressional committees. In addition, this report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7141 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are acknowledged in appendix III.", "Figure 3 shows that responsibility for carrying out programs related to issuing credentials for transportation workers is divided among multiple Transportation Security Administration (TSA) offices. In particular, the TSA Office of Intelligence and Analysis manages transportation security credentialing programs—including the three largest programs: the Transportation Worker Identification Credential (TWIC) program for maritime workers; the Hazardous Materials Endorsement (HME) program for truckers seeking a commercial driver’s license endorsement to carry hazardous materials; and the Aviation Worker program. Within the Office of Law Enforcement/Federal Air Marshal Service, the Adjudication Center is responsible for providing security threat assessment adjudication services to meet the workload needs of TSA programs.\nFigure 3 TSA Organization Chart Showing Key Offices Responsible for Managing and Implementing Transportation Security Threat Assessment Programs, as of May 2013.", "", "", "In addition to the contact names above, David Bruno (Assistant Director), Jason Berman (Analyst-in-Charge), Carl Barden, Melissa Bogar, Jennifer Dougherty, Eric Hauswirth, Richard Hung, Thomas Lombardi, Stephen M. Lord, Steve Morris, Jessica Orr, Minette Richardson, Katherine Trimble, and Jonathan Tumin made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "h2_full", "", "h2_title", "h2_full", "", "", "h0_full", "h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "", "h2_full", "h0_full h2_full", "", "", "" ] }	{ "question": [ "What TSA offices help implement security threat assessments?", "What could be improved in how the two TSA offices share information?", "What issues were there with program managers regarding the staffing plan?", "What could the offices do to improve upon these issues?", "What conclusion did the Balanced Workforce Strategy Working Group come to in regards to the Adjudication Center's treatment of contractors?", "What recommendations did the Working Group make to TSA?", "How did TSA plan to implement these recommendations?", "Why should TSA update this plan?", "Why are security threat assessments so important?", "What role does the Adjudication Center serve in regards to these security threat assessments?", "What does GAO address in this report?", "What data do GAO analyze in this report?" ], "summary": [ "Two TSA offices that share responsibility for implementing security threat assessments--the Program Management Division in the Office of Intelligence and Analysis and the Adjudication Center in the Office of Law Enforcement/Federal Air Marshal Service--can improve coordination on workforce planning.", "While the offices share information on workload completion, they do not have a process in place to ensure that information in the Adjudication Center's staffing plan--which the Adjudication Center periodically updates to reflect caseload projections and associated staffing needs--reflects the mutual understanding of both offices.", "For example, program managers in the Office of Intelligence and Analysis reported to GAO that they were unfamiliar with the staffing plan and they disagreed with workload projections in the plan.", "Establishing a mechanism for the offices to share and reconcile information in the plan can help better support the Adjudication Center's workforce planning.", "In October 2011 TSA's Balanced Workforce Strategy Working Group completed its assessment for the Adjudication Center and determined that an excessive risk exists by allowing contractors to make security threat assessment approvals without sufficient federal oversight.", "The Working Group recommended that TSA convert to an all government workforce.", "According to a May 2012 implementation plan, TSA planned to convert this workforce by the end of calendar year 2013. However, delays have rendered the timelines and cost information in its plan outdated and TSA has not updated the plan or determined a revised implementation schedule.", "Completing this review and updating the plan would help TSA and Department of Homeland Security (DHS) decision makers by providing a roadmap for moving forward. Finally, providing this plan to DHS for review will be important to help ensure TSA can begin its conversion and mitigate identified risks of using contract adjudicators to conduct security threat assessments.", "TSA implements programs that, for example, ensure individuals with unescorted access to secure areas of the nation's critical transportation infrastructure do not pose a security threat. Key to these programs are security threat assessments that screen individuals for links to terrorism, criminal history, and immigration status.", "TSA's Adjudication Center serves as the primary operational component in this process. GAO was asked to examine the performance and staffing strategy of the center.", "This report addresses the extent to which 1) TSA has measured performance for the center and what the data show; 2) TSA offices have coordinated to meet security threat assessment workload; and 3) TSA addressed potential risks posed by using a mix of government employees and contractors to adjudicate security threat assessments.", "GAO analyzed TSA data describing the center's performance since October 2010; reviewed documentation, including staffing plans; and interviewed TSA officials about data measurement and staffing practices." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 1, 2, -1, 0, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0 ] }
CRS_RL34664	{ "title": [ "", "Background and Introduction", "Who and What Qualifies for the Credit?", "Who Is a First-time Homebuyer?", "What Is a Principal Residence?", "What Is a Purchase?", "When Must the Property Be Purchased?", "How Much Is the Credit?", "Dollar Limitation", "Purchases in 2008", "Purchases After 2008", "Limitation Based on Modified Adjusted Gross Income", "Example of Credit Reduction for a Married Couple Who Files Jointly", "Example of Credit Elimination for a Single Taxpayer", "When Is the Credit Claimed?", "Who Does Not Qualify for the Credit?", "The Repayment Provision", "2008 Purchases", "When and How Is the Credit Repaid?", "When Is Repayment Waived?", "Sale of Property with No Taxable Gain", "Death of the Taxpayer", "Relocation Related to Government Orders", "When Is Recapture not Accelerated?", "Involuntary Conversions", "Transfers Between Spouses or Incident to Divorce", "Relocation Related to Government Orders", "Exception for Members of the Military, Foreign Service or Intelligence Community", "No Special Provisions for Taxpayers with Job Transfers or Changes in Health", "Purchases after 2008", "When and How is the Credit Repaid?", "Sale or Change in Use Within 36 Months of Purchase", "Effect on Basis" ], "paragraphs": [ "", "Homebuyers who were unable to close on their purchases by the June 30, 2010, deadline imposed by the Worker, Homeownership, and Business Assistance Act of 2009 ( P.L. 111-92 ) have been granted an additional three months in which to complete their sales and still qualify for the first-time homebuyer tax credit. On July 2, 2010, President Obama signed H.R. 5623 ( P.L. 111-198 ), which was introduced and passed by the House on June 29, 2010, and passed in the Senate by unanimous consent on June 30, 2010. The law's provisions to extend the homebuyer tax credit mirror those contained in an amendment to H.R. 4213 that was offered by Senator Reid. The law only affects those people who would have qualified for the credit if they had completed their purchase before July 1, 2010. This means that before May 1, 2010, they must have entered into a binding contract to purchase a residence and that contract must have called for closing before July 1, 2010. Those who had such contracts, but were unable to close on the sales by June 30, 2010, are allowed to close before October 1, 2010, and treat the purchase as if it had occurred before July 1, 2010.\nThe new law modifies a provision of The Worker, Homeownership, and Business Assistance Act of 2009 ( P.L. 111-92 ) that extended the eligible dates of purchase to include purchases before May 1, 2010, as well as those that were under a binding contract on that date if the contract provided for closing the sale before July 1, 2010, and the sale was completed before that date. Previously, there had been no exception that allowed closing after the statutory deadline for the purchase.\nThe credit was created in 2008 as part of the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) in response to the housing crisis in 2007 and 2008. As originally enacted, the credit was available only for purchases made after April 8, 2008, and before July 1, 2009. The credit also had two characteristics that made it unlike most other tax credits—it was refundable, and it was repayable; however, the repayment requirement was subject to certain exceptions. The American Recovery and Reinvestment Act of 2009 (ARRA) modified the first-time homebuyer tax credit for those taxpayers purchasing principal residences in 2009, increasing the amount of the credit, extending the eligible purchase dates through November 30, 2009, and generally eliminating the repayment provision for purchases after 2008.\nIn addition to extending the eligible dates of purchase and allowing an additional two months in which to complete the purchase, the Worker, Homeownership, and Business Assistance Act of 2009 expanded the statutory definition of \"first-time homebuyer\" by introducing an exception for those who have owned and used the same residence as their principal residence for any period of five consecutive years during the eight-year period that ends on the date they purchase a subsequent property to use as their principal residence. These \"long-time residents\" generally are treated as first-time residents; however, their credit is capped at $6,500. P.L. 111-92 also raised the income limitation for all qualifying purchases, making more buyers eligible to claim the full credit. However, the law imposed new restrictions on qualifying for the credit. For purchases after November 6, 2009, property costing more than $800,000 is no longer eligible for the credit. Eligible purchasers must be at least 18 years old and cannot be eligible to be claimed as a dependent on another taxpayer's tax return. For all tax returns for calendar year 2009 and later, taxpayers must attach a copy of their settlement statement to their tax returns.\nCertain members of the military, foreign service, and intelligence communities received special consideration under P.L. 111-92 . For those who either sold or ceased using their property as their principal residence as a result of official government orders, the repayment requirement was virtually eliminated. Those who served on qualified official extended duty outside the United States for a period of at least 90 days during the period beginning January 1, 2009, and ending April 30, 2010, may qualify for the credit if they purchase a residence before May 1, 2011, or have entered into a binding contract by that date; if the contract calls for closing before July 1, 2011; and if they close before July 1, 2011. The recent three-month extension for closing provided by P.L. 111-198 does not apply to allow them the credit if they close after June 30, 2011, and before October 1, 2011.", "The credit is called the \"First-time Homebuyer Credit.\" Taxpayers must purchase property within a prescribed time period, use the property as their principal residence, and meet the definition of \"first-time homebuyer\" as provided in the law. Beginning on November 7, 2009, some who did not previously meet the statutory definition will qualify for the credit; however, their credit will be subject to a lower dollar limit.\nFor purchases after November 6, 2009, qualified purchasers must be at least 18 years old and cannot be eligible to be claimed as dependents on any other taxpayer's return. Additionally, taxpayers will not qualify for the credit if the purchase price of the residence is more than $800,000 and it is purchased after November 6, 2009.", "One might think that only someone who had never before purchased a principal residence could be considered a first-time homebuyer. However, the law is not that literal. A first-time homebuyer is an individual who, during the three-year period ending on the date of the purchase, has had no present interest in property used as that individual's principal residence. If the individual is married at the time the property is purchased, neither spouse may have had such an interest in the three-year period. However, unmarried individuals who buy property as co-owners are not \"tainted\" by another co-owner's recent ownership interest in a principal residence—each unmarried co-owner's status as a first-time homebuyer is determined independently. Ownership of real property that has not been used as a principal residence within the three-year period does not disqualify an individual for the tax credit. Examples of such property include vacation homes and rental or investment properties.\nFor residences purchased after November 6, 2009, P.L. 111-92 introduced an exception to the general definition of first-time homebuyer as described above. The exception applies to \"long-time residents of the same principal residence\" (long-time residents). These individuals are those who have both owned and used the same property as their principal residence for five consecutive years during the eight-year period that ends on the day a subsequent principal residence is purchased. Long-time residents will be treated as first-time homebuyers and be eligible for the tax credit if they otherwise qualify and purchase a new property after November 6, 2009, that they will begin using as their principal residence. The law specifically requires that, in the case of married taxpayers, both taxpayers have owned and used the same property as their principal residence for the required five consecutive years. It does not include a provision for imputing the five-year period of ownership to a non-owner spouse nor for allowing any portion of the credit when only one spouse meets the usage requirement.\nThe marital status of the purchasers on the date of purchase determines whether they must each qualify for the credit that is claimed. Unlike those who are married when they purchase a new residence, two people who are unmarried on the date of purchase could each qualify as long-time residents using different prior residences. Similarly if one unmarried person who was a long-time resident purchased a new residence with another unmarried person who had not owned a home within the last three years, each person could qualify for the homebuyer credit—the first as a long-time resident and the second as a first-time homebuyer. In that case, the credit could be divided between them so long as the long-time resident claimed no more than $6,500. The party who had not owned a home in the last three years would be able to claim a maximum credit of $8,000, but would be required to reduce it by the amount claimed by the long-time resident.", "The code section that creates the credit does not explicitly define the term \"principal residence.\" The term is said to have \"the same meaning as when used in section 121\" of the Internal Revenue Code (IRC). Section 121 provides no explicit definition but uses the term and refers to situations in which property that might otherwise not be thought of as a principal residence will nonetheless be considered one. However, a Treasury regulation provides guidance regarding property that may be considered a principal residence.\nAccording to regulation § 1.121-1, to be a principal residence, property must first be used as a residence. Facts and circumstances determine whether property is used as a residence. The regulation notes that \"a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation\" may be a residence, but personal property that is not a fixture under local law is not included.\nA taxpayer may have more than one residence, but can have only one principal residence. When there is more than one residence, determining which of the residences is the principal one depends on facts and circumstances. Some of the factors that can be relevant are where the taxpayer works; where the taxpayer's family lives; where the taxpayer banks; where the taxpayer attends religious services; where the taxpayer belongs to recreational clubs; the taxpayer's usual mailing address for bills; and the addresses used on income tax returns, driver's licenses, car registrations, and voter registrations. When a taxpayer relocates due to employment, the residence in the new location may or may not be the taxpayer's principal residence. If the taxpayer's family remains in the old location temporarily until a house is sold, a lease expires, or a school year is completed, the residence in the new location could be considered the taxpayer's principal residence. However, if the taxpayer leaves the family indefinitely in the old location and lives in a small dwelling in the new location, it becomes more likely that the old residence will remain the taxpayer's principal residence. Thus, if the taxpayer's spouse and four children remain in a large rental property in another location, that rental property might continue to be the taxpayer's principal residence even if the taxpayer purchased a small condominium in the new location. The taxpayer would not be eligible for the first-time homebuyer's credit on the newly purchased property if the rental property was still the taxpayer's principal residence.\nEven if a property is used as the taxpayer's principal residence when it is purchased, it will not qualify for the credit if the taxpayer ceases to use it as the principal residence before the end of the tax year in which the residence was purchased.", "The law defines a purchase as generally being \"any acquisition,\" but excludes certain acquisitions—notably, those acquired by inheritance or from a related party. As it is interpreted by the Internal Revenue Service, the exclusion on purchases from related parties applies even if the buyer paid fair market value for the property. For purchases made before November 7, 2009, a related party includes the lineal ancestors (father, mother, grandfather, great grandmother, etc.) or lineal descendents (child, grandchild, etc.) of the taxpayer as well as the taxpayer's spouse and certain corporations or partnerships in which the taxpayer has a direct or indirect interest of more than 50%. For purchases after November 6, 2009, \"related party\" also includes lineal ancestors or descendents of the taxpayer's spouse.", "With notable exceptions, the credit generally is available only for principal residences purchased after April 8, 2008, and before May 1, 2010. If the residence is being constructed by the taxpayer, it will be considered purchased on the date when the taxpayer first occupies it. Therefore, to qualify for the credit, any residence constructed by the taxpayer must not only be sufficiently finished to allow occupancy but must also be occupied by the taxpayer as the principal residence before May 1, 2010.\nP.L. 111-92 introduced two exceptions to the ending purchase date. The first affects those who have entered into a binding purchase contract before May 1, 2010, that provides for closing on the sale before July 1, 2010. These purchasers will qualify for the credit if the sale is closed on or before June 30, 2010. The second exception affects members of the military, foreign service, or intelligence communities who were on qualified official extended duty service outside the United States for at least 90 days during the period beginning January 1, 2009, and ending April 30, 2010. For these taxpayers, purchases of a principal residence will qualify for the credit if the taxpayers enter into a binding purchase contract by April 30, 2011, and close by June 30, 2011.\nP.L. 111-198 enacted an exception to the first exception noted above for P.L. 111-92 . Purchasers may qualify for the credit if they entered into a binding contract before May 1, 2010, that contract called for closing before July 1, 2010, and they closed on the property before October 1, 2010.\nAn additional exception created by P.L. 111-92 applies only to property purchased by \"long-time residents.\" To qualify for the $6,500 credit, these taxpayers must purchase the property after November 6, 2009—the date that the law was signed by the president. The last purchase date that is available for \"long-time residents\" who want to take the credit is the same as that for others taking the credit.", "The credit is calculated as 10% of the residence's purchase price, which is defined as its adjusted basis in the taxpayer's hands on the date of acquisition. However, the amount of the credit is limited in two ways—by dollar amount and by modified adjusted gross income.", "The credit is limited to $7,500 for qualifying 2008 purchases and $8,000 for most qualifying purchases after December 31, 2008. However, the credit is limited to $6,500 for long-time residents who qualify for the credit.", "The credit cannot be more than $7,500 for residences purchased in 2008. For married couples filing separate returns, it is limited to $3,750 each. When unmarried individuals purchase property together, with each using it as a principal residence, the total amount claimed between them cannot exceed $7,500. The law states that the credit \"shall be allocated among such individuals in such manner as the Secretary may prescribe.\" The instructions for Form 5405 state that \"[i]f two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method\" so long as the total amount allocated does not exceed the allowable credit. The instructions note that \"[a] reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit.\"", "In February 2009, the dollar limitation was raised to $8,000 for purchases made after December 31, 2008. Under the new provisions that extended the eligible dates of purchase, the $8,000 limitation will continue to apply to most qualifying purchases, but long-time residents will be limited to $6,500. Married couples filing separate returns may allocate no more than half of the maximum credit amount. Unmarried individuals may allocate the entire amount of their credit using \"any reasonable method.\" If one unmarried homebuyer qualifies as a long-time resident and the other qualifies for the $8,000 credit, they may allocate a total of $8,000 between them with no more than $6,500 allocated to the long-time resident.", "The credit may be reduced or eliminated for taxpayers whose \"modified adjusted gross income\" (MAGI) exceeds the statutory thresholds. For purchases prior to November 7, 2009, the threshold is $150,000 for taxpayers who are married and file a joint federal tax return. For all other taxpayers buying before November 7, 2009, the threshold is $75,000. Effective for purchases on or after November 7, 2009, the thresholds have been raised to $225,000 for joint filers and $125,000 for all others.\nFor all purchases, the amount by which the credit is reduced is determined by a ratio, where $20,000 is the denominator and the numerator is the difference between the taxpayer's MAGI and the threshold amount. This ratio is multiplied by the otherwise allowable credit. If the MAGI exceeds the threshold amount by $20,000 or more, the credit is reduced to zero.", "Assume a married couple with no previous ownership interest in a principal residence purchases a house costing $425,000 on October 30, 2009. Since 10% of the purchase price is more than $8,000, their credit is limited to $8,000. If their MAGI is $154,000, their credit would be $6,400. These are the calculations:\nMAGI - threshold = $154,000 - $150,000 = $4,000 $4,000/$20,000 = 20% [reduction ratio] $8,000 x 20% = $1,600 [reduction] $8,000 - $1,600 = $6,400 [allowable credit]\nIf the property had been purchased on November 15, 2009, the income threshold would have been $225,000. In that case, the couple would have been able claim the entire $8,000.", "Assume a single taxpayer with no previous ownership interest in a principal residence buys a condominium costing $220,000 on July 15, 2009. The credit is limited to $8,000 since 10% of the purchase price would be greater than $8,000. If the taxpayer's MAGI is $95,000, the credit would be eliminated. These are the calculations:\nMAGI - threshold = $95,000 - $75,000 = $20,000 $20,000/$20,000 = 100% [ratio] $8,000 x 100% = $8,000 [reduction] $8,000 - $8,000 = $0 [allowable credit]\nIf the property had been purchased December 3, 2009, the income threshold would have been $125,000, and the taxpayer would have been able to claim the entire $8,000 credit.", "The credit may be claimed on the tax return for the tax year in which the property is purchased. However, taxpayers may choose to treat the property as if it had been purchased on December 31 of the prior calendar year. Since most individual taxpayers are calendar year taxpayers, this provision generally means that taxpayers may choose to claim their credit on the tax return for the tax year prior to the tax year in which they actually make the purchase. A taxpayer purchasing an eligible property before filing the prior year's tax return would be able to claim the credit on that year's original return. If a taxpayer had already filed the prior year's tax return, an amended return could be filed to claim the credit. Taxpayers choosing to claim the credit for their 2009 purchase on their 2008 tax return would still be able to claim up to $8,000 as their credit even though the limit for 2008 purchases is $7,500. Likewise, long-term residents would be able to claim their credit (up to $6,500) on the tax return for the year prior to the year in which they purchased their subsequent principal residence.\nThe advantage to claiming the credit on the prior year's tax return is that the credit could produce a refund sooner than if it were claimed on the return for the year of purchase. In the case of a taxpayer who would otherwise have a balance due on the prior year's return, claiming the credit for that prior year would reduce or eliminate the balance due. The credit for a purchase after December 31, 2008, generally does not have to be repaid, and claiming the credit on the 2008 return would not change this.\nTaxpayers choosing not to claim the credit for their purchase on their prior year's tax return could still effectively receive their credit before filing their return for the year of purchase. To do this, they would adjust the amount they pay toward their federal taxes for the remainder of the year. For taxpayers with wage income, this can be done by filing a new Form W-4 with the employer, increasing withholding allowances to adjust withholdings so that the total withheld for the year is reduced by an amount equal to their anticipated credit. Taxpayers who must pay quarterly estimated taxes can make similar adjustments to their quarterly payments. However, to avoid a possible penalty on underpayment of estimated taxes, they should adjust the payments equally rather than reducing the payment in early quarters by the entire amount of the credit.\nIn mid-2009, the FHA announced a program that would allow homebuyers to \"sell\" their tax credits and thereby effectively receive the money prior to the purchase so that it could be used toward the down payment, prepaid expenses, and closing costs. FHA-approved entities and federal, state, and local governmental agencies may \"purchase\" the credits. A number of state housing finance agencies (HFAs) are offering short-term loans that can be repaid with the credit when the taxpayer receives it. Some loans may have no interest, and others may have very low interest. Additionally, some may require a monthly payment, but others may be \"silent\" and require only a lump sum payment when the credit is received.", "Even those who meet the definition of first-time homebuyer and purchase property to use as a principal residence within the time frame required by the statute may not qualify for the credit. In some cases, the purchase date of the principal residence will determine whether a particular factor will disqualify the purchaser from taking the credit. For purchases made in any year, the following taxpayers do not qualify for the credit:\nnon-resident aliens; those whose home is located outside the United States; those who inherited their principal residence; and those who purchased their principal residence from a related party. Those purchasing their residence in 2008 would not qualify for the credit if they financed their new residence with the proceeds of a tax-exempt mortgage revenue bond or if they (or their spouses) who also qualified for the first-time homebuyer credit in the District of Columbia in the current taxable year or in any prior taxable year.\nHowever, taxpayers who purchase their principal residence after 2008 will still qualify for the credit even if their new residence was financed with the proceeds of tax-exempt mortgage revenue bonds. Additionally, taxpayers purchasing their property after 2008 would be eligible for the § 36 credit even if they had been eligible to claim the D.C. credit in an earlier year. Purchases after 2008 will not be eligible for the D.C. credit if they are eligible for the § 36 credit.\nP.L. 111-92 imposed several limitations regarding purchases after November 6, 2009. Individuals will not qualify for the credit if they are eligible to be claimed as a dependent on another taxpayer's tax return (whether or not they actually are claimed). Taxpayers who are under 18 years old at the time of purchase are not eligible for the credit unless married at that time. Additionally, taxpayers will not be eligible for the credit if their principal residence cost more than $800,000.\nEffective for all tax returns for tax years ending after November 6, 2009, as a matter of procedure, taxpayers will not be eligible for the credit unless their tax return includes \"a properly executed copy of the settlement statement used to complete such purchase\" as an attachment to the return. For credits claimed on the 2009 calendar year tax return, this provision applies to all purchases, including those occurring before November 7, 2009.", "As enacted by the Housing Assistance Tax Act of 2008, the first-time homebuyer tax credit was essentially a no-interest loan with a 15-year repayment period. This repayment provision is called \"recapture\" in the statute. This is a term that is used for other credits; however, for those credits recapture generally is required only when the taxpayer ceases to qualify for the credit. In contrast, for credits based on property purchased in 2008, the entire amount of the allowed first-time homebuyer credit must be repaid even if the taxpayer continues to live in the property as a principal residence for 30 years. The American Recovery and Reinvestment Act of 2009 modified the recapture requirement so that it more closely resembles the recapture provisions for other credits. For credits based on property purchased in 2009, no recapture of the credit is required unless, within 36 months of the purchase date, the taxpayer ceases to use the property as the taxpayer's principal residence.\nP.L. 111-92 eliminated the repayment provisions for certain members of the military, foreign service, or intelligence community who cease to use their property in connection with government orders for qualified official extended duty received by either the taxpayer or the taxpayer's spouse.", "", "The standard repayment for credits based on property purchased in 2008 is structured by recapturing one-fifteenth of the allowed first-time homebuyer tax credit on the taxpayer's tax returns for each of 15 consecutive tax years. For taxpayers who were allowed the maximum credit, $500 would be added to their tax return as a liability in each of 15 consecutive tax years. This recapture begins two years after the tax year in which the property is purchased or deemed to be purchased. Since recapture is reported on the taxpayer's tax return, the taxpayer is required to file a tax return for each year in which repayment is due even if otherwise not required to file a return.\nRecapture may be accelerated if the property is sold or is no longer used by the taxpayer as the taxpayer's principal residence. Generally, this means that any allowed credit that has not already been recaptured, must be recaptured in full on the tax return for the tax year in which the house is sold or otherwise ceases to be used as the taxpayer's principal residence. However, there are two situations in which repayment is waived. There are two other situations in which repayment is not accelerated when the taxpayer ceases to use the property as the principal residence. Additionally, there is an exception for certain members of the military, foreign service, and intelligence community who receive government orders for qualifying official extended duty service.", "Recapture of the outstanding credit may be waived in three situations: (1) a sale with no gain, (2) the death of the taxpayer, or (3) relocation related to government orders.", "Generally, gain on the sale of property is determined by subtracting the adjusted basis of the property from the sale price and then subtracting the sales expenses. This remains the same for determining the taxable gain for properties for which the first-time homebuyer tax credit was allowed. However, another calculation is required to determine whether the outstanding credit must be recaptured. In this case, the outstanding credit is subtracted from the adjusted basis of the property, reducing it. The taxpayer must use this amount as the adjusted basis for a new calculation of gain to determine whether the outstanding credit must be recaptured in the year of sale. If the new calculation results in gain, the outstanding credit, up to the amount of gain, must be recaptured. For this reason, taxpayers who make improvements to their property would be well-advised to keep careful record of the costs incurred since those costs would increase their adjusted basis in the property and possibly eliminate the need to repay the credit when the property is sold.\nExample 1—Outst anding Credit Must Be Recaptured . Taxpayer purchases a house for $250,000 and reports $7,500 as the first-time homebuyer credit on Form 1040 in the year of purchase. Two years later, before repaying any of the credit and without doing anything that would change the basis of the property, the taxpayer moves to another state and must sell the property. The sales price is $265,000. Expenses of sale are $15,000. The taxpayer has no gain from the sale for income tax purposes:\nHowever, to determine the extent to which the credit must be repaid, another gain calculation is required. For this calculation, the property's basis is reduced by the amount of the credit that has not yet been repaid; therefore for this calculation, the adjusted basis is $242,500 ($250,000 - $7,500 [the outstanding credit]). Using this number, there is a gain of $7,500, so the entire $7,500 credit must be recaptured on the tax return for the year in which the property is sold.\nExample 2—Outstanding Cre dit Must Be Partially Recaptured . Assume the same facts as in the first example except that the sales price is $260,000 and the property is sold four years after purchase. For both the second and third years after purchase, $500 of the $7,500 credit would have been recaptured on the taxpayer's tax returns each year. Thus, $1,000 has been recaptured, and the outstanding credit is $6,500. Again, for tax purposes there is no gain.\nHowever, the basis must be reduced by the outstanding credit to determine the amount of outstanding credit that must be recaptured. Since $1,000 has been recaptured, only $6,500 of the credit is still outstanding. When the basis is reduced by $6,500, the result is $243,500 ($250,000 - $6,500). Using this number in the gain calculation, there is a $1,500 gain. Therefore, $1,500 of the outstanding credit must be recaptured on the tax return in the year of sale, but the remaining $5,000 will never be recaptured.\nExample 3—No Recapture of Outstanding Credit . Use the same facts as in example 2, except that the sales expense is $17,000. Again, there would be no gain for tax purposes:\nAgain, the basis as reduced by the outstanding credit would be $243,500 ($250,000-$6,500). In this case, however, the gain calculation to determine the required recapture of the outstanding credit would result in no gain. Therefore, none of the outstanding credit would be recaptured in the year of sale.", "Repayment of the outstanding credit is also waived if the taxpayer dies. For property owned by a single taxpayer, this provision is clear—recapture of any outstanding credit is waived for tax years ending after the death of the taxpayer. For property that was purchased by more than one taxpayer, it appears that only the individual decedent's portion of the outstanding credit is free from recapture, even if the credit was claimed by a married couple on a joint return.\nThe statute states that half of the credit allowed on a joint return is allocated to each spouse for purposes of the recapture provision. The instructions for Form 5405 indicate that when the credit was claimed on a joint return, the death of one spouse cancels only that spouse's half of any remaining repayment amount.\nWhere unmarried individuals purchased property together and allocated the credit between them, each has a separate repayment obligation based on the credit claimed. The death of one of the co-owners would not change the remaining owner's own repayment obligation. Similarly, when couples who are married file separate returns, they each claim a specific amount of credit on which their separate repayment obligation would be based.", "When government orders for qualified official extended duty service for the taxpayer or the taxpayer's spouse lead to relocation, the property purchased to qualify the taxpayer for the homebuyer tax credit may be sold or converted to another use. Generally, such a change in use would result in accelerated recapture of any outstanding credit or, if accelerated recapture was not required, continued repayment of the outstanding balance of the credit. However, P.L. 111-92 provides an exception from both the accelerated recapture provision as well as the repayment provision of § 36. The exception applies to members of the uniformed services or the Foreign Service of the United States as well as employees of the intelligence community. Additionally, the exception applies to spouses (unlike the death waiver discussed above).", "Even though the taxpayer ceases to use the property as a principal residence, recapture of the credit is not accelerated if either of three circumstances exists: (1) involuntary conversion, (2) transfer between spouses or incident to divorce, or (3) relocation related to government orders.", "When property is destroyed, it is involuntarily converted. Likewise, if the property is taken under eminent domain, it is involuntarily converted. An involuntary conversion also occurs when a property owner agrees to sell property that is under \"threat of condemnation,\" which means that the property will be taken by eminent domain if the owner does not agree to sell.\nIn each of these situations the taxpayer will cease to use the property as the principal residence. However, recapture will not be accelerated if a new principal residence is acquired within two years after the original property was sold or ceased being used as a principal residence. The new principal residence would be substituted for the one that was involuntarily converted, and recapture of the outstanding credit would proceed along the 15-year scheduled payback period just as if there had been no disruption in usage. Note that the new principal residence cannot be property that was owned by the taxpayer before the qualifying residence was involuntarily converted.", "Generally, property can be freely transferred between spouses with no recognition of gain or loss. Transfers between former spouses enjoy this benefit only when the transfer is incident to the divorce between the two. The recapture provisions of the first-time homebuyer tax credit allow such transfers to occur without accelerating recapture of the outstanding credit, even when one of the parties ceases to use the property as a principal residence. Additionally, the party who transferred the property is relieved of all subsequent repayment obligations. The party to whom the property was transferred becomes responsible for both the yearly recapture of the outstanding credit as well as accelerated recapture if the property is later sold or ceases to be used as a principal residence.\nThere is no parallel provision to allow unmarried co-owners to transfer the repayment obligations to another owner if the property is transferred to the other owner. Additionally, unmarried taxpayers who transferred their share of the property to a co-owner would have to repay their share of the credit, to the extent that it was still outstanding, in the tax year in which the transfer occurred.", "For certain government personnel, repayment will not be accelerated when property is no longer used by the taxpayer or spouse as the principal residence so long as the change in use occurs after December 31, 2008, and is related to government orders for qualified official extended duty service for the taxpayer or the taxpayer's spouse. This applies to members of the uniformed services or the Foreign Service of the United States and to employees of the intelligence community. For married taxpayers, neither half of the total credit (or its outstanding balance) will be subject to the accelerated repayment provision.", "Certain members of the uniformed services or the Foreign Service of the United States who cease to use their property as their principal residence after December 31, 2008, will not be subject to the accelerated recapture requirements if the change in use was related to government orders. P.L. 111-92 established an exception to the repayment provisions for these taxpayers and their spouses as well as for employees of the intelligence communities and their spouses. To qualify taxpayers for the exception, the government orders must be for qualified official extended duty service for either the taxpayer or the taxpayer's spouse.\nThose qualifying taxpayers (and their spouses) whose credit was based on a 2008 purchase not only will be excepted from accelerated recapture of their credit, but will also be excepted from any further repayment of the outstanding credit. This differs from other situations in which acceleration is not triggered but scheduled repayment continues. The exception applies whether the property is sold or is converted to a use other than as the principal residence so long as the change is in connection with qualifying government orders.", "As with the first-time homebuyer credit, another housing-related section of the IRC includes special provisions for the death of a taxpayer, involuntary conversions, divorce, and qualified official extended duty service. However, that section also includes a provision for taxpayers with job transfers or changes in health. Section 121 of the IRC generally allows taxpayers to exclude the gain from the sale of a principal residence so long as that gain is not more than $250,000 ($500,000 if married filing jointly) and the taxpayer meets three other conditions:\n1. The taxpayer or spouse owns the property for at least two years in the five years preceding the sale of the property. 2. The property has been used as the principal residence of either the taxpayer or spouse for at least two years in the five years preceding the sale of the property. 3. Neither the taxpayer nor the spouse has excluded gain from the sale of another principal residence within the two years preceding the sale of the property.\nUnder § 121 taxpayers who do not meet the time requirements for excluding the gain from the sale of their principal residence may, nonetheless, exclude some or all of that gain when the sale is due to \"a change in the place of employment, health, or ... unforeseen circumstances.\" In those cases, the taxpayer is allowed to prorate the exclusion according to the ratio by which the time-based requirements are met. The proration is based on the entire exclusion limit—$250,000 or $500,000 for couples who are married and file jointly. In many cases, this means that the taxpayer may exclude the entire gain realized on the sale.\nTaxpayers who experience job transfers or changes in health requiring a move subsequent to their purchase of a principal residence qualifying for the first-time homebuyer tax credit find no relief in the provisions of the credit that parallels the relief they find in § 121 for the exclusion of gain on the sale. CRS is unaware of any bills introduced in the 111 th Congress that would provide such relief for these taxpayers.", "", "So long as a principal residence purchased after 2008 continues to be used as the taxpayer's principal residence for at least 36 months following the date of purchase, no repayment of the credit is required. However, if this continuing use requirement is not met, the entire credit must generally be repaid on the tax return for the tax year in which the taxpayer ceases using the property as her principal residence, even if the property is not sold.", "Generally, taxpayers claiming a credit for post-2008 purchases must repay the entire credit if they cease to use the property as their principal residence within 36 months of the date of purchase. However, just as with credits based on 2008 purchases, in some cases, these taxpayers may be relieved of some or all of the recapture requirement. These situations are discussed in detail in the section on 2008 purchases. They include a sale with no taxable gain; the death of the taxpayer; an involuntary conversion of the property; a transfer between spouses; a transfer incident to a divorce; and for those in the uniformed services, Foreign Service, and intelligence community.", "Taxpayers who receive the first-time homebuyer tax credit are not required to reduce the basis of their residence by the amount of the credit. This differs from most tax credits, which generally have required taxpayers to reduce the basis of assets on which a credit was based by the amount of the credit. However, there is no general section of the Internal Revenue Code that requires this basis reduction when claiming a credit. Generally, the sections specific to the credit have a subsection requiring basis reduction. There is nothing in § 36 that would require an adjustment to basis.\nSince credits based on 2008 purchases must be repaid, there being no adjustment to basis is harmonious with other tax law —long-term, the taxpayer's investment is the full amount paid for the property. However, since the post-2008 credit is generally not repaid by the taxpayer, arguably the taxpayer's actual investment is less than the amount paid for the property, and basis should be reduced to reflect the credit received. Nevertheless, § 36 does not require basis adjustment for these purchases. It is unclear whether the lack of basis adjustment was intentional or inadvertent." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 3, 3, 2, 3, 3, 1, 1, 1, 2, 3, 3, 4, 4, 4, 3, 4, 4, 4, 3, 3, 2, 3, 3, 1 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h0_full h1_full", "h4_full h1_title", "h1_full", "", "", "", "h2_full h4_title h3_title", "h4_full h2_full", "", "", "h3_full", "", "", "h5_full", "h5_full h4_full h2_full", "h2_title", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "", "h2_full", "h0_full" ] }	{ "question": [ "What can homebuyers do to receive the first-time homebuyer tax credit?", "How does P.L. 111-198 further benefit homebuyers?", "How was the first-time homebuyer credit established?", "How was this credit later extended?", "What new homebuyers were included for the credit under P.L. 111-92?", "How is the credit determined?", "How does this credit change for purchases before 2009?", "How does this credit change for purchases after 2008?", "In what case is repayment required?", "How can year of purchase impact the amount of credit for those with incomes over a threshold amount?", "What is the threshold amount like for purchases before November 7, 2009?", "How does the threshold amount change for purchases after November 6, 2009?", "Why might a purchase not qualify for credit?", "Why might property purchase in 2008 not qualify for credit?", "What restrictions apply to purchases made after November 6, 2009?", "What did the FHA do that allowed taxpayers to borrow against the credit under certain situations?", "In these situations, what is necessary to do regarding claiming the credit?", "How must credits claimed on tax returns for 2009 and later be documented?" ], "summary": [ "Homebuyers who were unable to close on their properties by the June 30, 2010, deadline imposed by the Worker, Homeownership, and Business Assistance Act of 2009 (P.L. 111-92) may still be able to receive the first-time homebuyer tax credit if they close before October 1, 2010, so long as they had a binding contract for the property before May 1, 2010, and that contract required closing before July 1, 2010, and they meet all other requirements for the credit.", "P.L. 111-198, enacted July 2, 2010, and effective for closings after June 30, 2010, provides the additional time for closing.", "The first-time homebuyer credit was established in 2008 by P.L. 110-289.", "It was modified and extended by P.L. 111-5 in February 2009. It was further extended by P.L. 111-92 in November 2009, and expanded to include some homebuyers who did not qualify under the credit's original definition of a first-time homebuyer.", "These homebuyers—called \"long-time residents\"—must have owned and lived in their principal residence for at least five consecutive years during the eight-year period that ends on the date they purchase a subsequent property to use as their principal residence.", "The credit is based on 10% of the purchase price of property that is used as the purchaser's principal residence.", "For purchases before 2009, it is limited to $7,500, which generally must be repaid over a 15-year period that begins with the second tax year following the tax year for the year of purchase.", "For purchases after 2008, the credit is generally limited to $8,000, but that limit is reduced to $6,500 for \"long-time residents.\"", "Repayment is not required unless taxpayers cease to use the property as their principal residences within three years of the date of purchase.", "Regardless of the year of purchase, the credit may be reduced or eliminated for those with incomes over a threshold amount.", "For purchases before November 7, 2009, the threshold amount is $150,000 for joint filers and $75,000 for all others.", "For purchases after November 6, 2009, the threshold is increased to $225,000 for joint filers and $125,000 for others.", "There are some limitations on qualifying for the credit. No credit is allowed for property (1) located outside the United States; (2) inherited; (3) purchased from a close relative; or (4) purchased by a non-resident alien.", "Property purchased in 2008 will not qualify if financed with the proceeds of tax-exempt mortgage revenue bonds, or if the purchaser qualified for the first-time homebuyer credit in the District of Columbia in 2008 or earlier.", "Certain additional restrictions apply to purchases made after November 6, 2009: (1) residences costing more than $800,000 will not qualify; (2) purchasers must be at least 18 years old; and (3) purchasers cannot be eligible to be claimed as a dependent on another taxpayer's tax return.", "In mid-2009, the FHA authorized state housing finance agencies and others to arrange advances of the credit to taxpayers, effectively allowing taxpayers to borrow against the credit if funds were used for down payments, prepaid expenses, or closing costs.", "The purchase must have been completed before the credit is claimed on a tax return, but it can be claimed on an amended return for the tax year prior to the year of purchase.", "Generally credits claimed on tax returns for 2009 and later must be documented with a copy of the settlement statement attached to the return." ], "parent_pair_index": [ -1, 0, -1, 0, 0, -1, 0, 0, -1, -1, 0, 0, -1, 0, -1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 5, 5, 5 ] }
CRS_R43880	{ "title": [ "", "Introduction", "The COMPETES Acts", "Policy Debate", "Enactment and Reauthorization", "America COMPETES Act", "America COMPETES Reauthorization Act of 2010", "Implementation Status", "PS&E Doubling Path Policy", "Selected STEM Education Activities30", "America COMPETES Act", "America COMPETES Reauthorization Act of 2010", "Selected Other Provisions", "Advanced Research Projects Agency-Energy (ARPA-E)", "Innovation Inducement Prizes", "Public Access to Federally Funded Research", "Efforts to Reauthorize in the 114th Congress", "H.R. 1806", "H.R. 1898", "S. 1398", "Concluding Observations", "Appendix. Efforts to Reauthorize in the 113th Congress" ], "paragraphs": [ "", "Enacted in response to concerns that the United States could lose its historical advantages in scientific and technological innovation, the 2007 America COMPETES Act ( P.L. 110-69 ) sought \"to invest in innovation through research and development, and to improve the competitiveness of the United States.\" Containing eight titles and dozens of provisions affecting at least a half-dozen federal agencies, the principal policy contributions of the America COMPETES Act were the establishment of the doubling path policy for certain federal physical sciences and engineering (PS&E) research accounts and the authorization (or reauthorization) of various federal science, technology, engineering, and mathematics (STEM) education programs.\nMajor provisions of the America COMPETES Act, and its successor, the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ), have expired. Most of the funding authorizations in the America COMPETES Act spanned the three-year period between FY2008 and FY2010. Congress extended these authorizations for a second three-year period—through FY2013—as part of the 2010 reauthorization. Congress has not enacted legislation to authorize funding for COMPETES Acts programs and agencies since then. Bills were introduced, but not enacted, in the 113 th Congress.\nLegislators in the 114 th Congress have also moved to reauthorize the COMPETES Acts. The America COMPETES Reauthorization Act of 2015 ( H.R. 1806 ) and the America Competes Reauthorization Act of 2015 ( H.R. 1898 ), as well as several stand-alone bills containing selected provisions from these reauthorization measures, have been introduced and, in some cases, passed by the House. In the Senate, Members have introduced a bill called the Energy Title of America COMPETES Reauthorization Act of 2015 ( S. 1398 ).\nThis report provides an overview of the COMPETES Acts for readers seeking background and legislative context. It was written to serve as both a primer and a reference document. It includes a description and legislative history of the acts, a summary of the broad policy debate, and an examination of the implementation status of selected COMPETES-related programs and policies. This report also provides analysis of major bills to reauthorize the COMPETES Acts from the 113 th and 114 th Congresses.\nFor authorized and appropriated funding for COMPETES-related accounts through FY2013, see CRS Report R42779, America COMPETES Acts: FY2008 to FY2013 Funding Tables , by [author name scrubbed].", "The contemporary federal conversation about scientific and technological advancement generally centers on concerns about prosperity and security. The possibility that the United States has or could lose its historic strengths in scientific and technological advancement—and therefore has or could lose the prosperity and security attributed to that advancement—has become the central rationale for a portfolio of otherwise disparate federal programs, policies, and activities. Sometimes identified as \"innovation\" or \"competitiveness\" policy, these programs, policies, and activities address education, tax, patent, immigration, economic development, research and development, telecommunications, and other policy issues—either alone or in combination—that policymakers perceive as critical to the U.S. scientific and technological enterprise.\nThe 2007 America COMPETES Act ( P.L. 110-69 ) was an example of this type of policymaking. Designed to \"invest in innovation through research and development, and to improve the competitiveness of the United States,\" the law authorized $32.7 billion in appropriations for certain federal PS&E research accounts, STEM education activities, and innovation-related programs and policies between FY2008 and FY2010. In particular, the law established what is commonly referred to as the \"doubling path policy\" for PS&E research. This policy provided annual increases in authorized funding for the National Science Foundation (NSF), the Scientific and Technical Research and Services (STRS) and Construction of Research Facilities (CRF) accounts at the National Institute of Standards and Technology (NIST), and the Office of Science account at the Department of Energy (DOE)—with the implicit goal of doubling combined funding for these accounts over a seven-year period (from an FY2006 baseline). Some of the STEM education and innovation-related programs and policies authorized by the act include the Math Now program at the Department of Education (ED), the Manufacturing Extension Partnership program at NIST, and the Advanced Research Project Agency-Energy (ARPA-E) at DOE.\nThe America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) reaffirmed the central policy thrusts of the America COMPETES Act. It, too, sought to \"invest in innovation through research and development, and to improve the competitiveness of the United States.\" However, under the reauthorization, funding for the PS&E doubling path accounts grew more slowly—they would have doubled over an 11-year period instead of a 7-year period—and STEM education provisions focused more on college and university-level programs rather than on programs targeting earlier grades. Other provisions in the America COMPETES Reauthorization Act of 2010 allow federal agencies to offer innovation prizes and direct the Department of Commerce (DOC) to establish a new loan guarantee program for manufacturers, as well as a regional innovation program. The reauthorization also repealed certain STEM education program authorizations, particularly those that did not receive appropriations between FY2008 and FY2010 (e.g., Math Now). Overall, the America COMPETES Reauthorization Act of 2010 authorized $45.5 billion in appropriations between FY2011 and FY2013.", "Congressional debate about the America COMPETES Act and the America COMPETES Reauthorization Act of 2010 was substantively similar. Advocates for the COMPETES Acts argued that additional support for R&D in the physical sciences and engineering, and in STEM education, would lead to innovation and improve U.S. competitiveness. They noted that many experts consider innovation, particularly technological innovation, to be a driving force behind U.S. global economic competitiveness and national prosperity. As such, many observers consider innovation a crucial national asset.\nProponents of the acts further asserted that the United States is at risk of losing its innovation advantage. They argued that a combination of external pressures and internal weaknesses threatens the U.S. global position. For example, they noted that changes in the industrial bases and educational attainment rates of rapidly developing countries like China and India have led many analysts to conclude that these countries are able to compete for a growing percentage of the world's high-value jobs and industries. These global changes, advocates asserted, appeared to be accompanied by perceived weaknesses in areas that have long been U.S. strengths. In particular, the acts' proponents raised concerns about federal funding for research in the physical sciences and engineering and about the education and training of U.S. scientists, engineers, and technicians. This case was more fully laid out in the National Academies publication Rising Above the Gathering Storm , which is widely believed to have contributed to the shape and scope of the America COMPETES Act. The argument for, as well as major provisions in, the America COMPETES Act can also be traced to a 2006 proposal by President George W. Bush, known as the American Competitiveness Initiative (ACI).\nOpposition to the acts tended to fall into three broad categories: (1) questions about fundamental assumptions, (2) preferences for alternative policies or approaches, and (3) cost. For example, some analysts disputed fundamental assumptions driving provisions designed to increase the number of STEM graduates, arguing that there is a lack of evidence of extensive STEM workforce shortages and that the bigger challenge is a dearth of attractive employment opportunities in STEM fields. Other analysts preferred to use regulatory and tax policy tools to achieve the acts' objectives, arguing that direct federal investment in R&D in the physical sciences and engineering and in STEM education could distort markets. Finally, opponents raised concerns about costs, arguing that proposed funding increases were too expensive in light of the federal deficit and debt.", "The following sections describe enactment of, and selected legislative action related to, the COMPETES Acts.", "The America COMPETES Act ( H.R. 2272 , then called the 21 st Century Competitiveness Act of 2007) was introduced in the House and referred to the House Committee on Science and Technology on May 10, 2007. As introduced, the bill represented a package of five bills that had previously passed the House: H.R. 362 (10,000 Teachers, 10 Million Minds Science and Math Scholarship Act), H.R. 363 (Sowing the Seeds through Science and Engineering Research Act), H.R. 1867 (National Science Foundation Authorization Act of 2007), H.R. 1868 (Technology Innovation and Manufacturing Stimulation Act of 2007), and H.R. 1068 (To Amend the High-Performance Computing Act of 1991). H.R. 2272 passed the House by voice vote on May 21, 2007.\nThe Senate received H.R. 2272 and on July 19, 2007, struck all language after the enacting clause and substituted the language of S. 761 (America COMPETES Act). The Senate then passed H.R. 2272 , as amended, by unanimous consent. The House and Senate agreed to a conference, and on August 1, 2007, the conferees submitted a conference report ( H.Rept. 110-289 ) containing both the agreed-upon bill text and a joint explanatory statement. In final form, H.R. 2272 (America COMPETES Act) passed by unanimous consent in the Senate and by a vote of 367-57 in the House. The President signed the bill, which became P.L. 110-69 , on August 9, 2007.", "The America COMPETES Reauthorization Act of 2010 ( H.R. 5116 ) was introduced in the House on April 22, 2010. The bill was referred to the House Committee on Science and Technology, where it was amended and reported ( H.Rept. 111-478 , Part 1). The House passed H.R. 5116 on May 28, 2010, by a vote of 262-150.\nThe Senate received H.R. 5116 and referred it to the Senate Committee on Commerce, Science, and Transportation, which discharged the bill by unanimous consent on December 17, 2010. The full Senate replaced the House-passed language in H.R. 5116 with its version of the bill ( S.Amdt. 4843 ) and passed the bill as amended by unanimous consent on December 17, 2010. H.R. 5116 was returned to the House, which voted 228-130 to agree to the Senate amendment on December 21, 2010. The President signed H.R. 5116 , which became P.L. 111-358 , on December 28, 2010.", "Overall, neither the America COMPETES Act nor the America COMPETES Reauthorization Act of 2010 were fully funded or implemented. In 2013, the Government Accountability Office (GAO) released a report on implementation of the acts. In that report, GAO found that existing programs with defined (or specific) appropriations authorizations generally continued to operate, though not typically at authorized funding levels. The implementation of new programs was less consistent. According to GAO, the COMPETES Acts established 28 new programs with defined appropriations authorizations. Of these, one new program was fully implemented (ARPA-E) and five new programs were partially implemented as of May 2013.\nLess is known about the disposition of policy provisions that did not receive a specific funding authorization in the acts. The outcomes of such provisions are typically harder to assess because agencies may not explicitly report all implementation actions. However, insight into agency activities is possible in some cases. The following sections describe the disposition and implementation of selected COMPETES Acts provisions, including those with and without defined funding authorizations. They provide information on (1) the status of the doubling path for physical sciences and engineering research funding, (2) implementation of certain STEM education provisions, and (3) the implementation status of certain other provisions of ongoing interest to Congress, including the ARPA-E, data access, and innovation inducement prize provisions.", "As discussed in previous sections, the America COMPETES Act and the America COMPETES Reauthorization Act of 2010 authorized a doubling path policy for certain federal PS&E research accounts. Because federal appropriations are distributed to agencies and programs, and not by scientific field, the PS&E doubling effort targeted certain federal agency accounts known to support PS&E research. These accounts included the NSF (total), the STRS and CRF accounts at NIST, and the Office of Science account at the DOE—collectively, the \"targeted accounts.\"\nFor the most part, actual appropriations to the targeted accounts did not reach authorized levels during either of the COMPETES Acts' authorization periods. (See Figure 1 .) Under the America COMPETES Act, combined funding for the targeted accounts was authorized to increase at a compound annual growth rate of 10.4% (between the FY2006 baseline and FY2010, the final year under P.L. 110-69 ). If actual and authorized appropriations had grown at the 10.4% pace, funding for the targeted accounts would have doubled in seven years. That is, combined funding for the targeted accounts would have increased to approximately twice the FY2006 level in FY2013. However, actual appropriations to the targeted accounts over the America COMPETES Act's authorization period increased at a compound annual growth rate of 6.3%. At this pace, funding for the targeted accounts would have doubled in about 11 years.\nFollowing the trend in actual appropriations during the first authorization period, the America COMPETES Reauthorization Act of 2010 authorized funding increases at a compound annual growth rate of 6.4% (between the FY2006 baseline and FY2013, the final year under P.L. 111-358 ). If actual and authorized appropriations had grown at this pace, funding for the targeted accounts would have doubled over about an 11-year period. In other words, combined funding for the targeted accounts would have increased to approximately twice the FY2006 level in FY2017. However, actual appropriations over the reauthorization act's authorization period increased at a compound annual growth rate of 3.1%. At this pace, it would take about 22 years for the targeted accounts to double.\nPolicymakers have sought to double funding for various federal research accounts on several occasions. President Ronald Reagan, for example, proposed a doubling of the NSF budget in FY1987. The 2002 NSF authorization ( P.L. 107-368 ) also sought to double funding for the NSF over a five-year period. Neither the Reagan effort nor the 2002 NSF authorization act resulted in a doubling of NSF's budget within the proposed time frames. An effort to double funding for the National Institutes of Health (NIH) resulted in a nearly 100% increase in that research agency's budget. (NIH funding increased from $13.7 billion in FY1998 to $27.1 billion in FY2003.)", "Implementation of the STEM education provisions from both the America COMPETES Act and the America COMPETES Reauthorization Act of 2010 has been mixed. Certain preexisting programs appear to have continued to operate, while most new programs appear to have been either partially implemented or not implemented at all. The following sections highlight some of the STEM education provisions from the COMPETES Acts and describe agency efforts to implement authorized activities.\nBy budget authority, the largest STEM education account in the COMPETES Acts was the main education account at NSF (called Education and Human Resources or E&HR). Although funding for E&HR did not reach the levels authorized by the COMPETES Acts, it increased by 20% between FY2007 ($696 million), which was the year before the first COMPETES-related authorization for this account, and FY2013 ($835 million), the last authorized year under the COMPETES Acts. STEM education funding at the NSF—the bulk of which is in E&HR—provided about a third of annual federal STEM education funding during the COMPETES Acts' authorization periods.\nOverall, the federal STEM education effort appears to have changed substantially since the enactment of the America COMPETES Reauthorization Act of 2010. In FY2014 and FY2015, the Obama Administration used the federal budget process to propose significant changes to the federal STEM education portfolio. Although overall funding levels stayed about the same, the number of programs and activities has been significantly reduced. For example, in FY2012 (enacted), the federal STEM education effort was estimated at 229 investments worth about $2.9 billion. A comparable assessment of the federal effort in FY2015 (estimated) was 129 investments, totaling $2.9 billion. It is not clear what impact these changes had, if any, on COMPETES-authorized agencies and programs.", "In general, the America COMPETES Act ( P.L. 110-69 ) included more kindergarten-to-grade 12 (K-12) education provisions than the America COMPETES Reauthorization Act of 2010. However, many of the K-12 STEM education provisions in the America COMPETES Act were not funded, and several were later repealed by the 2010 reauthorization. Repealed programs include the Pilot Program of Grants to Specialty Schools for Science and Mathematics and Experiential-Based Learning Opportunities at the DOE; as well as the Math Now for Elementary School and Middle School Students Program, Foreign Language Partnership Program, and Mathematics and Science Partnership Bonus Grant at ED.\nOf the ED programs with defined funding authorizations in the America COMPETES Act, only one appears to have received defined appropriations: Teachers for a Competitive Tomorrow (TCT). TCT received approximately $2.2 million in funding per fiscal year between FY2008 and FY2010. The FY2011 appropriations act ( P.L. 112-10 ) provided no funding for TCT. Congress has not appropriated defined funding for TCT since then.\nAlthough Congress did not provide defined appropriations for the education alignment and data systems provisions in the America COMPETES Act—which authorized appropriations of up to $120 million for these activities in FY2008, as well as such sums as may be necessary in FY2009—ED propagated the education data system elements included in P.L. 110-69 , Section 6401, through its Statewide Longitudinal Data System Grant Program.\nThe degree to which DOE implemented its America COMPETES Act-authorized STEM education provisions is not clear. The department has stated that some of its activities were consistent with the law, but these activities are not easily traced to specific provisions in P.L. 110-69 . Further, DOE has terminated some of the activities that it had previously identified as consistent with the America COMPETES Act—such as the DOE Academies Creating Teacher Scientists (DOE ACTS) program. Prior to the program's termination, DOE asserted that the DOE ACTS program was consistent with the Summer Institutes program authorized by the America COMPETES Act (Section 5003).\nNSF's implementation of America COMPETES Act-authorized STEM education programs was also mixed. The Mathematics and Science Partnership and the Robert Noyce Teacher Scholarship programs—both of which were preexisting programs reauthorized by the America COMPETES Act—continued to operate between FY2008 and FY2013. However, the Hispanic-Serving Institutions and Laboratory Science Pilot programs do not appear to have been implemented. NSF initiated the Professional Science Master's (PSM) program using American Recovery and Reinvestment Act (ARRA) funding in FY2010, but the program does not appear to have received funding since then and GAO reports that the program shut down. NSF asserts that existing programs serve the same or similar functions as the PSM.", "In general, the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) focused more on postsecondary STEM education and on governance issues than did the America COMPETES Act. Section 101 of the 2010 reauthorization, for example, directed the National Science and Technology Council (NSTC) to establish a Committee on Science, Technology, Engineering, and Math Education (Co-STEM) to survey, coordinate, develop, and implement a strategy for the federal STEM education effort. The NSTC established Co-STEM in February 2011 and has since produced an inventory of federal STEM education programs, a report on its efforts to coordinate the federal STEM education effort, and a five-year strategic plan. In March 2015, the Office of Science and Technology Policy (OSTP) published a progress report describing these and related Co-STEM activities. The progress report included an updated federal STEM education program inventory which provided funding levels for FY2014 (enacted) and FY2015 (requested).\nNSF mostly implemented provisions from the America COMPETES Reauthorization Act of 2010 that required it to provide 50% of program funds for the Graduate Research Fellowship (GRF) and Integrative Graduate Education and Research Traineeship (IGERT) from the Research and Related Activities (R&RA) account between FY2011 and FY2013. However, it is unclear if NSF treated these programs equally, as the act also required. The annual percentage change in funding for the GRF differed from that of the IGERT for each fiscal year between FY2011 and FY2013. It is unclear if this is what Congress intended when it enacted the equal treatment provisions.\nWith respect to provisions authorizing the STEM Training Grant Program, NSF does not appear to have sought funds in its annual budget justifications to establish this program or to have otherwise implemented this program during the authorization period. The STEM Training Grant Program is widely believed to be both modeled on, and intended to provide federal support for postsecondary replication of, the University of Texas's UTeach program. UTeach, which was launched in 1997, was first funded by NSF in 2000 through the now-defunct Teacher Preparation Program. NSF does not appear to have established a program targeted specifically at UTeach activities and projects, but it funds similar activities through the Robert Noyce Teacher Scholarship and related STEM education programs. The Department of Education has also provided funding for UTeach replication. UTeach Institute administrators anticipate that there will be 44 UTeach programs in 21 states and the District of Columbia beginning in spring 2015.", "In addition to the doubling path policy and STEM education provisions in the COMPETES Acts, both bills included provisions that sought to address a variety of innovation-related policy issues. The following sections provide information about the implementation status of some of these provisions—including those related to ARPA-E, innovation inducement prizes, and public access to federally funded research.", "The America COMPETES Act established ARPA-E at the Department of Energy. As enacted, P.L. 110-69 prescribes ARPA-E's administrative structure and leadership; its relationship to other DOE programs; and its responsibilities, reporting requirements, and evaluation.\nThe America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 , Section 904) reauthorized ARPA-E and made certain program changes. As amended, the ARPA-E statute requires the director of ARPA-E to take a number of steps designed to ensure that research projects supported by the agency focus on areas that industry is not likely to undertake. Other provisions in Section 904 address administrative issues (e.g., staff, award authority) and add \"research and development (R&D) in advanced manufacturing process and technologies for domestic manufacturing of novel energy technologies\" to the list of the director's responsibilities. Section 904 also adds \"identifying mechanisms for commercial application of successful energy technology development projects, including through establishment of partnerships between awardees and commercial entities\" to the list of staff responsibilities.\nThe DOE has implemented ARPA-E. The agency issued its first open funding solicitation in 2009 using ARRA funds. Congress first provided regular appropriations to ARPA-E in FY2011 ($180 million, actual). The energy agency received $251 million in FY2013, the final year of authorization under COMPETES. ARPA-E asserts that it has funded over 400 energy technology projects since 2009.\nSome analysts have questioned whether ARPA-E projects have focused on areas that industry is not likely to undertake, as required by Section 904. However, a 2012 GAO report on ARPA-E found that \"most ARPA-E-type projects could not be funded solely by private investors.\" The GAO report also identified 18 of 121 award winners that had received prior private sector investment. According to GAO, the agency took steps to identify and understand how this prior funding related to currently proposed projects and now requires applicants to explain why private investors are not willing to fund their proposals. GAO further determined that 91 of 121 winning projects involved technological concepts that had not been proven in a laboratory setting, noting that the private sector may consider projects too risky to invest in at this stage. GAO recommended that ARPA-E\nprovide guidance with a sample response to assist applicants in providing information on sources of private funding for proposed ARPA-E projects,\nrequire that applicants provide letters or other forms of documentation from private investors that explain why investors are not willing to fund the projects proposed to ARPA-E, and\nuse venture capital funding databases to help identify applicants with prior private investors and to help check information applicants provide on their applications.\nThe House Committee on Science, Space, and Technology, Subcommittee on Investigations and Oversight, held a hearing on the above-described GAO findings in January 2012. The majority staff report and Subcommittee's ranking Member appeared to disagree on the extent to which private industry might fund ARPA-E projects. The majority staff report suggested that there may be \"many exceptions\" to ARPA-E's general practice of funding research that is too risky for private investment. The Subcommittee's ranking Member, on the other hand, reiterated and expressed support for GAO's general conclusions and stated that the exceptions identified in the majority staff report were \"cherry-picked.\" ARPA-E former director, Arun Majumdar, who testified on behalf of ARPA-E at the hearing, generally endorsed GAO's findings and stated\nImportantly, GAO did not identify a single instance in which private investors would have funded an ARPA-E project within the same, accelerated timeframe (i.e., 3 years or less). This demonstrates that selected projects were appropriate and fulfilled a critical criterion and objective of the agency.\nIt is not clear whether ARPA-E implemented Section 904 provisions relating to R&D in advanced manufacturing process and technologies for the domestic manufacturing of novel energy technologies. Although ARPA-E does not appear to have operated a specific program focused solely on advanced domestic manufacturing during the authorization period, some of its projects seek to develop manufacturing capabilities.\nARPA-E's capacity for technology transfer has also been of interest to policymakers. In a 2011 audit, the DOE's Inspector General stated that\nARPA-E had not established a systematic approach to ensure that it was meeting the technology transfer and outreach requirement of the COMPETES Act that it spend 2.5% of its budget on technology transfer and outreach activities.\nThe Inspector General also stated that ARPA-E was working to address the auditing office's concerns about its commercialization and technology transfer activities, noting\nMore recently, in the five funding opportunity announcements it issued in April 2011, ARPA-E included a requirement for recipients to spend a minimum of 5 percent of their awards on technology transfer and outreach and to track and report to ARPA-E on such expenditures.\nTwo other external researchers who assessed ARPA-E in 2011 concluded that the agency's program managers \"have adopted a 'hands-on' relationship with award recipient\" and that they \"promote contacts with venture and commercial funding.\"\nARPA-E uses a variety of mechanisms designed to help move technologies into the marketplace. For example, ARPA-E's Technology-to-Market team assists project teams in constructing and implementing their Technology-to-Market plans. The agency also hosts an annual Innovation Summit that is designed to move technologies out of the lab and into the marketplace. At the 2015 ARPA-E summit, the agency announced that 34 projects had received $850 million in follow-on funding from the private sector, after an initial aggregate ARPA-E investment of approximately $135 million. In 2012, the agency joined with NSF to allow its project teams to participate in NSF's Innovation Corps (I-Corps) program. I-Corps program participants form entrepreneurial-academic teams that follow an accelerated version of Stanford University's Lean LaunchPad course (among other I-Corps-specific elements), with the ultimate goal of teaching participants how to identify product opportunities that can emerge from academic research.", "Although prizes have a long history as innovation inducement tools, some analysts suggest that their use is increasing. The federal government is among the types of entities (including philanthropic organizations and other governmental bodies) that use prizes to induce innovation. Before passage of the America COMPETES Reauthorization Act of 2010, only certain federal agencies had the authority to initiate prize competitions. Section 105 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) provided federal agencies with broad authority to carry out programs designed to stimulate innovation through prize competitions.\nAlthough the authorization is only five years old, federal agencies' use of innovation inducement prizes authorized under Section 105 is relatively well documented. OSTP has published annual reports on the implementation of Section 105 as required by the America COMPETES Reauthorization Act of 2010. In its May 2014 progress update, OSTP reported that the executive branch was initiating prize competitions under the authority of Section 105 and that it had issued guidance to agencies and created a contract vehicle, as required by the provision. In its April 2015 progress report, OSTP further noted that federal agencies had initiated at least 100 prize competitions at 30 agencies specifically under the authority of Section 105.\nWith the legal authority for federal innovation inducement prizes established for most agencies, and the evidence that agencies are initiating competitions, focus has turned to implementation. OSTP states that prizes have enabled federal agencies to\nPay only for success and establish an ambitious goal without having to predict which team or approach is most likely to succeed;\nReach beyond the \"usual suspects\" to increase the number of solvers tackling a problem and to identify novel approaches, without bearing high-levels of risk;\nBring out-of-discipline perspectives to bear; and\nIncrease cost-effectiveness to maximize the return on taxpayer dollars.\nOther observers, examining a large universe of federal innovation inducement prize activities conducted between 2010 and 2014, identified a wide range of still-evolving competition practices and experimentation in federal prize design. They found a mix of desired outcomes and competition goals, as well as \"growth in the pursuit of bolder outcomes that require more complex design.\" They also asserted that the most ambitious prize competition outcomes, which they defined as \"market stimulation\" and \"inspiring transformation,\" made up a small percentage (2%) of the historical competitions examined.\nQuestions about the design and management of innovation contests appear frequently in the literature on innovation inducement prizes. For example, one study focused on whether (and in what ways) the number of contestants affects the outcome of innovation contests. This study found both positive and negative effects from so-called open innovation contests and suggested that open contests may be most appropriate for problems with a high degree of uncertainty. Another scholar raised questions about the design of innovation inducement competitions, including whether policymakers ought to condition prize payments on a market test (e.g., award the prize only if consumers purchase the technology) and whether prizes can be designed (via pricing conditions) to ensure widespread access to the technologies developed. A third scholar assessed prizes as a policy tool, identifying a wide range of issues for policymakers to consider, such as trade-offs and complementarities between prizes and other innovation policy tools (e.g., patents, grants), as well as prize design considerations and conditions (e.g., rules, outcomes, incentives, deadlines). Several scholars have noted that publicity appears to be a key non-monetary motivation in prize competitions.\nAt least one observer has highlighted the conditions under which prizes may be a uniquely effective tool and suggested best practices for their use. Other observers have sought to provide practical guidance on strategic considerations and tactical guidance in prize design. Analysts who object to government-sponsored inducements (in general) may view prizes as unnecessary, arguing that consumer demand and the potential for profit are sufficiently powerful motivators.", "Section 103 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) directed the National Science and Technology Council (NSTC) to establish an Interagency Public Access Committee to \"coordinate federal science agency research and policies related to the dissemination and long-term stewardship of the results of unclassified research, including digital data and peer-reviewed scholarly publications, supported wholly, or in part, by funding from the federal science agencies.\"\nAccording to the NSTC, the council established two working groups pursuant to Section 103. The council published a progress report on the working groups' activities in March 2012. The report stated that the working groups focused on scholarly publications and digital data and that they issued a series of requests for comments to collect ideas about how to facilitate data sharing and public access. Commenters varied in their opinions about how to implement increased access.\nIn February 2013, OSTP Director John P. Holdren issued a government-wide policy memorandum directing each federal agency with over $100 million in annual R&D expenditures to develop a plan to increase public access to the results of research it funds. The memorandum stated that these plans must be consistent with the objectives set out in the memorandum, which were designed to comply with Section 103. As per the memorandum, agencies were to submit draft plans to OSTP within six months—i.e., on or about August 22, 2013—at which point OSTP and the Office of Management and Budget (OMB) would review the draft plans and provide guidance. In a November 13, 2014, letter to congressional appropriators, Director Holdren reported that OSTP and OMB had given final approval to two agency plans (DOE and an unnamed agency) and that other federal agency plans remained in the revise-review stage of the approval process. However, Director Holdren's letter also stated that most agencies would \"be releasing their public access plans over the next three months.\"", "At least three bills have been introduced to reauthorize selected provisions of the COMPETES Acts in the 114 th Congress: H.R. 1806 , H.R. 1898 , and S. 1398 . Both H.R. 1806 and H.R. 1898 include provisions authorizing activities and appropriations for physical sciences and engineering research, STEM education, and related programs at multiple COMPETES Acts agencies. S. 1398 focuses on the Office of Science and ARPA-E within the Department of Energy. The following sections summarize these bills and highlight some of their provisions.\nInformation about efforts to reauthorize in the 113 th Congress is included in the Appendix .", "As passed by the House, the America COMPETES Reauthorization Act of 2015 ( H.R. 1806 ) seeks to\nprovide for technological innovation through the prioritization of Federal investment in basic research, fundamental scientific discovery, and development to improve the competitiveness of the United States, and for other purposes.\nH.R. 1806 would authorize appropriations for NSF, NIST, and the DOE Office of Science and would authorize various research, STEM education, and innovation-related programs and activities (including ARPA-E) at various federal agencies. H.R. 1806 would also authorize appropriations for selected other research activities at the Department of Energy—including electricity delivery and energy reliability R&D, nuclear energy R&D, energy efficiency and renewable energy R&D, and fossil energy R&D. Most of the appropriations authorizations in H.R. 1806 are for two years (FY2016 and FY2017). Although many of the provisions in H.R. 1806 are similar to provisions in H.R. 4186 and H.R. 4869 from the 113 th Congress, the bills are not identical. H.Rept. 114-107 (parts 1 and 2) accompanied H.R. 1806 when it was reported from the House Committee on Science, Space, and Technology on May 8, 2015. The House passed H.R. 1806 , as amended, on May 20, 2015 by a vote of 217-205.\nFunding for the Targeted Accounts. H.R. 1806 would authorize appropriations to NSF, NIST, and the DOE Office of Science for FY2016 and FY2017. Table 1 provides the FY2014 actual, current, or enacted funding levels as reported by each agency; the FY2015 enacted levels; the Administration's FY2016 request; and the FY2016 and FY2017 authorization levels. Explanatory materials associated with H.R. 1806 do not mention the doubling path policy or targeted accounts; rather, they highlight provisions authorizing year-over-year increases. Accordingly, Table 1 shows the compound annual growth rate (CAGR) in funding for these agencies under H.R. 1806 , treating FY2015 enacted appropriations as the baseline and FY2017 as the final year.\nSTEM Education. Among other things, H.R. 1806 seeks to address governance concerns about the federal STEM education effort. It includes provisions to establish a STEM Education Advisory Panel to advise the President and other policymakers, update the duties of NSTC's Committee on STEM Education, and establish a STEM Education Coordinating Office at the NSF. Additionally, H.R. 1806 contains language that would authorize informal STEM education activities and make changes to the Noyce program, among other things, at NSF. The bill would also clarify that the definition of STEM education includes computer science (for the purposes of the act) and would require NSF to establish the Hispanic-Serving Institutions program that was authorized by the 2007 America COMPETES Act.\nOther Provisions. Other provisions in H.R. 1806 would provide for coordination of international science and technology partnerships and would establish the position of U.S. Chief Technology Officer within OSTP. The bill also includes provisions to authorize certain Office of Science research programs and activities (e.g., High Energy Physics, Fusion Energy), address various commercialization issues within DOE (e.g., technology transfer, early-stage technology demonstration, participation in I-Corps), and amend the ARPA-E statute.\nSome of the more intensely debated provisions in H.R. 1806 would authorize appropriations to NSF by directorate (e.g., $832.0 million for Biological Sciences and $150.0 million for Social, Behavioral, and Economic Sciences in FY2016 and FY2017) and would authorize funding below current spending levels for certain DOE and NSF accounts and programs. These accounts include ARPA-E, Energy Efficiency and Renewable Energy, and Biological and Environmental Research within the Office of Science at DOE, as well as the Social, Behavioral, and Economic Sciences and Geosciences directorates at NSF. For example, H.R. 1806 would authorize ARPA-E at $140 million in both FY2016 and FY2017. With the exception of FY2013—when ARPA-E was subject to reductions as a result of certain rescissions and the sequestration process—Congress has funded ARPA-E at about $280 million since FY2012.", "As introduced, the America Competes Reauthorization Act of 2015 ( H.R. 1898 ) seeks to \"provide for investment in innovation through research and development and STEM education, to improve the competitiveness of the United States, and for other purposes.\"\nH.R. 1898 would authorize funding for NSF, NIST, and the Office of Science and would authorize or amend various federal STEM education and innovation-related programs, policies, and activities. It is similar, but not identical, to H.R. 4159 from the 113 th Congress.\nFunding for the Targeted Accounts. H.R. 1898 , as introduced, would authorize appropriations to NSF, NIST, and the Office of Science from FY2016 through FY2020. Table 2 includes FY2014 actual, current, or enacted funding levels (as reported by each agency); the FY2015 enacted levels; the Administration's FY2016 request; and the FY2016 to FY2020 authorization levels. Explanatory materials associated with H.R. 1898 do not mention the doubling path policy or the targeted accounts; rather, they highlight provisions authorizing year-over-year increases for NSF, NIST, and the Office of Science. Accordingly, Table 2 shows the compound annual growth rate (CAGR) for these agencies under H.R. 1898 , treating FY2015 enacted appropriations as the baseline and FY2020 authorized levels as the final year.\nSTEM Education. H.R. 1898 contains a number of STEM education provisions that seek to address governance concerns. Examples include provisions that would establish a government-wide STEM education coordinator within the OSTP and would establish a STEM Education Advisory Panel to advise the President and other policymakers. At NSF, the bill would, among other things, authorize grants (1) to institutions of higher education for undergraduate STEM education reform, (2) to community colleges for advanced manufacturing education, and (3) to unspecified organizations for R&D on the alignment, implementation, impact, and improvement of state-based STEM education standards. Additionally, like H.R. 1806 would authorize informal education activities and amend the Noyce program at NSF.\nOther Provisions. Other provisions in H.R. 1898 seek to broaden the participation of underrepresented groups in STEM education and employment. These include provisions directing NSF to develop written guidance for institutions of higher education on best practices for identifying cultural or institutional barriers to the recruitment, retention, and promotion of underrepresented populations in STEM degree programs and academic STEM careers. H.R. 1898 also includes provisions to reauthorize the Federal Loan Guarantees for Innovative Technologies in Manufacturing program and directs specified federal science agencies, to the extent practicable, to support federal employee and contractor attendance at scientific and technical conferences. The bill's DOE title would authorize certain Office of Science research programs (e.g., High Energy Physics, Fusion Energy) and would reauthorize and amend the statutory authority for ARPA-E. H.R. 1898 , Title I, Subtitle B, would reauthorize the National Nanotechnology Initiative, while Title I, Subtitle C, would provide for a National Engineering Biology Research and Development program to \"advance areas of research at the intersection of the biological, physical, and information sciences and engineering.\"", "As introduced, the Energy Title of America COMPETES Reauthorization Act of 2015 ( S. 1398 ) seeks to \"extend, improve, and consolidate energy research and development programs.\"\nDoubling path policy, revised . As its title indicates, S. 1398 was not designed to be a comprehensive COMPETES reauthorization bill. Rather, it contains only energy-related provisions—including funding authorizations for the Office of Science and ARPA-E. A press release and materials associated with S. 1398 described the bill as putting \"us on a path to double basic energy research.\" The materials treat FY2015 as the baseline year and would set basic energy research on a path to double at a rate of 4% a year over a period of about 18 years. The doubling path policy for basic energy research in S. 1398 includes both the Office of Science and ARPA-E.\nThe doubling path policy in S. 1398 represents an evolution of the doubling path policy in the COMPETES Acts. The COMPETES Acts policy focused on doubling funding for physical sciences and engineering research, while S. 1398 focuses more narrowly on basic energy research. The COMPETES Acts baseline year is FY2006, while the baseline for S. 1398 is FY2015. Additionally, the COMPETES Acts doubling path policy targeted increases at the NSF, certain NIST accounts, and the Office of Science. S. 1398 seeks increases for the Office of Science and ARPA-E.\nTable 3 shows the compound annual growth rate (CAGR) for the Office of Science and ARPA-E under S. 1398 , treating FY2015 enacted appropriations as the baseline and FY2020 authorized levels as the final year. The table also includes FY2014 current funding levels, FY2015 enacted levels, the Administration's FY2016 request, and FY2016 to FY2020 authorization levels under S. 1398 .\nAmendments to ARPA-E's statutory authority in S. 1398 would require the director to ensure that (1) activities are coordinated with, and not duplicative of, other DOE efforts; and (2) funding is not provided for projects that might otherwise be independently commercially viable. Other provisions would define certain types of ARPA-E awardee information (including business plans and certain financial information) as privileged and confidential and therefore not subject to disclosure under the Freedom of Information Act (5 U.S.C. 552).\nSTEM Education . S. 1398 includes provisions to repeal many of the remaining DOE STEM education activities authorized by the America COMPETES Act. Specifically, the bill would repeal the Nuclear Science Talent Expansion Program for Institutions of Higher Education, the Hydrocarbon Systems Science Competitiveness Grants for Institutions of Higher Education, and Discovery Science and Engineering Innovation Institutes. These programs were authorized by P.L. 110-69 , Sections 5004, 5005(e), and 5008, respectively. S. 1398 would not repeal Section 5005(d) of P.L. 110-69 , which authorizes Hydrocarbon Systems Science Program Expansion Grants for Institutions of Higher Education. These programs and activities do not appear to have been implemented or received funding.\nS. 1398 also seeks to repeal certain STEM education provisions from the Department of Energy Science Education Enhancement Act (DOE-SEEA, 42 U.S.C. 7381 et seq.). These provisions were added to the DOE-SEEA by Section 5003 of the America COMPETES Act. The America COMPETES Reauthorization Act of 2010 already repealed three of the six DOE-SEEA STEM education provisions added by that act: 42 U.S.C. 7381h, 7381j, and 7381p. S. 1398 would repeal the remaining three: 42 U.S.C. 7381l, 7381n, and 7381r. These programs and activities do not appear to have been implemented or received funding.\nS. 1398 would also repeal the appropriations authorizations of three DOE STEM education programs authorized by the America COMPETES Act. (Program authority would remain.) These include the Department of Energy Early Career Awards for Science, Engineering, and Mathematics Researchers (Early Career), Protecting America's Competitive Edge (PACE) Graduate Fellowship Program, and Distinguished Scientist programs. These programs were authorized by the America COMPETES Act, P.L. 110-69 , Sections 5006, 5009, and 5011, respectively. Other STEM education provisions in S. 1398 would consolidate the Early Career and Distinguished Scientist programs, provide $150 million in appropriations authorizations for the consolidated program (each fiscal year between FY2016 and FY2020), and specify that no more than 65% of total consolidated program funds may accrue to either Early Career or Distinguished Scientist activities.", "In addition to their stated purposes—investing in innovation and improving U.S. competitiveness—the COMPETES Acts have effectively functioned as the primary authorization acts for NIST, the Office of Science, and NSF since FY2008. The acts have also contained a variety of provisions for policy and programs at ARPA-E, OSTP, ED, NASA, the National Oceanic and Atmospheric Administration, the DOC's Economic Development Administration, and GAO. As such, the range of policy issues that may arise during congressional debate about reauthorization of the COMPETES Acts could include a wide variety of issues perceived as relating to innovation or competitiveness, or reauthorization, at any or all of these agencies. However, key questions for Congress may center on the future of the doubling path policy for PS&E research and authorized funding levels for NSF, NIST, and the Office of Science as well as on the disposition and direction of the federal STEM education effort.", "At least four bills were introduced to reauthorize selected provisions from the COMPETES Acts in the 113 th Congress: H.R. 4159 , H.R. 4186 , H.R. 4869 , and S. 2757 . All of these bills included various policy and fiscal provisions authorizing activities and appropriations for physical sciences and engineering research, STEM education, and related programs at COMPETES Act agencies. The following sections summarize these bills and highlight some of their provisions.\nH.R. 4159\nThe America COMPETES Reauthorization Act of 2014 ( H.R. 4159 ) was introduced to \"provide for investment in innovation through research and development and STEM education, to improve the competitiveness of the United States, and for other purposes.\" It would have authorized funding for NSF, NIST, and the Office of Science and would have authorized or amended various federal STEM education and innovation-related programs, policies, and activities.\nFunding for the Targeted Accounts. H.R. 4159 would have authorized appropriations to NSF, NIST, and the Office of Science from FY2015 through FY2019. Explanatory materials associated with H.R. 4159 do not mention the doubling path policy or the targeted accounts; rather, they highlight provisions authorizing year-over-year increases for NSF, NIST, and the Office of Science. Accordingly, Table A-1 shows the compound annual growth rate for these agencies under H.R. 4159 , treating FY2014 enacted appropriations as the baseline and FY2019 authorized levels (as per H.R. 4159 ) as the final year.\nFor the sake of comparison with the COMPETES Acts, under H.R. 4159 , the compound annual growth rate in authorized funding for just the targeted accounts would have been 4.1% (between the FY2006 baseline and FY2019) or about a 17-year doubling period.\nSTEM Education. H.R. 4159 contained a number of STEM education provisions. Examples include provisions that would have (1) established a government-wide STEM education coordinator within the OSTP and (2) directed OSTP to develop guidance for federal agencies on increasing opportunities for federal scientists and engineers to participate in STEM education activities. At NSF, the bill would have, among other things, authorized grants to institutions of higher education for undergraduate STEM education reform; authorized grants to community colleges for advanced manufacturing education; and authorized grants for R&D on the alignment, implementation, impact, and improvement of state-based STEM education standards. Additionally, H.R. 4159 would have authorized informal education activities and made changes to the Robert Noyce Teacher Scholarship Program (Noyce) program at NSF.\nOther Provisions. Other provisions in H.R. 4159 sought to broaden the participation of underrepresented groups in STEM education and employment. For example, Section 217 would have directed NSF to develop written guidance for institutions of higher education on best practices for identifying cultural or institutional barriers to the recruitment, retention, and promotion of underrepresented populations in STEM degree programs and academic STEM careers. H.R. 4159 also included provisions to reauthorize the Regional Innovation Program and Federal Loan Guarantees for Innovative Technologies in Manufacturing, which were established by the America COMPETES Reauthorization Act of 2010. The bill's DOE title would have authorized certain Office of Science research programs (e.g., High Energy Physics, Fusion Energy) and would have reauthorized and amended ARPA-E. Section 204 would have created a new Advanced Research Projects Agency-Education (ARPA-ED) at the Department of Education.\nLegislative Disposition. H.R. 4159 was referred to both the House Committee on Education and the Workforce, as well as the House Committee on Science, Space, and Technology. It was not marked up or enacted. The bill was sponsored by the ranking minority Member of the House Committee on Science, Space, and Technology and co-sponsored by all of the minority Members of that committee. It had no House majority Members as co-sponsors.\nH.R. 4186\nThe Frontiers in Innovation, Research, Science, and Technology Act of 2014 ( H.R. 4186 , FIRST Act) was introduced \"to provide for investment in innovation through scientific research and development, to improve the competitiveness of the United States, and for other purposes.\" The act included provisions that would have authorized funding for NSF and NIST, as well as those that would have authorized or amended various federal STEM education and innovation-related programs, policies, and activities.\nFunding for the Targeted Accounts. The FIRST Act would have authorized appropriations to NSF and NIST for FY2014 and FY2015. In his statement during full committee markup of H.R. 4186 , the Chairman of the House Committee on Science, Space, and Technology did not mention the doubling path policy or targeted accounts, but rather said\nIn a time of tight budgets, this bill authorizes small overall funding increases for the National Science Foundation (NSF) and the National Institute of Standards and Technology (NIST) in Fiscal Year 2015.\nAccordingly, Table A-2 shows the compound annual growth rate in authorized appropriations for NSF and NIST under the FIRST Act, treating FY2013 actual appropriations as the baseline and FY2015 authorized levels (as per H.R. 4186 ) as the final year.\nH.R. 4186 would not have authorized funding for the Office of Science. As such, it is not possible to calculate a growth rate for the targeted accounts under H.R. 4186 that would be comparable to the growth rate in funding for the targeted accounts as authorized under the COMPETES Acts' doubling path policy.\nSTEM Education. The FIRST Act included many STEM education provisions, several of which sought to address governance concerns about the federal effort. In particular, the bill would have established a STEM Education Advisory Panel to advise the President and other policymakers on STEM education-related topics. In addition, the bill would have created a federal government-wide STEM Education Coordinating Office at the NSF. Other STEM education provisions in H.R. 4186 would have authorized informal STEM education activities—and made changes to the Noyce program—at NSF. Section 2 of H.R. 4186 would have clarified that the definition of the term \"STEM education\" included computer science (for the purposes of the act).\nOther Provisions. Other provisions in the FIRST Act would have authorized and amended certain Networking and Information Technology R&D (NITRD) program provisions, provided for coordination of international science and technology partnerships, and provided for public access to federally funded research and data. The bill also included provisions from the Transfer Act of 2013 ( H.R. 2981 ), which would have amended the Small Business Act to revise and expand (to certain other agencies) an existing proof-of-concept pilot program at the National Institutes of Health. Some of the more intensely debated provisions of the FIRST Act would have provided defined appropriations to NSF by directorate (e.g., $742.9 million for Biological Sciences in FY2014, $150.0 million for Social, Behavioral, and Economic Sciences in FY2015) and would have required NSF to determine (and describe in writing) how each grant it issues serves certain enumerated national interests.\nLegislative Disposition. H.R. 4186 was not enacted. It was marked up and ordered reported by voice vote from the House Committee on Science, Space, and Technology on May 28, 2014. The bill was sponsored by the Chairman of the Subcommittee on Research and Technology, House Committee on Science, Space, and Technology. It was co-sponsored by Members of the majority (including the chairman of the full committee) and opposed by the ranking minority Member of the full committee. It had no House minority co-sponsors.\nH.R. 4869\nThe Department of Energy Research and Development Act of 2014 ( H.R. 4869 , DOE-RDA), would have authorized funding for the Office of Science and other Department of Energy programs in FY2014 and FY2015.\nFunding for Targeted Accounts. DOE-RDA would have authorized appropriations for the Office of Science in FY2014 and FY2015. In a statement about the bill, the sponsor said funding levels for the Office of Science were \"true to the intent of the COMPETES Act legacy.\" Under DOE-RDA, the compound annual growth rate in authorized appropriations for the Office of Science would have been 7.3%, treating FY2013 actual appropriations as the baseline and FY2015 authorized levels (as per H.R. 4869 ) as the final year.\nBecause DOE-RDA would not have authorized appropriations for the other targeted accounts (e.g., NSF, as well as NIST's STRS and CRF), it is not possible to calculate a growth rate for the targeted accounts under H.R. 4869 that would be comparable to the growth rate in funding for the targeted accounts as authorized under the COMPETES Acts' doubling path policy.\nOther Provisions. In addition to authorizing overall appropriations for DOE's Office of Science, H.R. 4869 would have authorized certain Office of Science research programs (e.g., High Energy Physics, Fusion Energy); addressed various issues at the national laboratories (e.g., technology transfer, early-stage technology demonstration, etc.); and amended the ARPA-E statute. Additionally, the bill would have authorized certain DOE activities in crosscutting R&D, nuclear energy R&D, energy efficiency and renewable R&D, and fossil energy R&D.\nLegislation Disposition. H.R. 4869 was not enacted. The Subcommittee on Energy, House Science, Space, and Technology Committee sought to mark up a committee print of DOE-RDA on June 11, 2014; however, the markup was adjourned before full consideration after some of the minority Members expressed concern about process. H.R. 4869 was formally introduced two days later, on June 13, 2014. H.R. 4869 was sponsored by the Chairman of the Subcommittee on Energy, House Committee on Science, Space, and Technology and co-sponsored by Members of the majority, including the chairman of the full committee. It had no House minority co-sponsors.\nS. 2757\nThe America COMPETES Reauthorization Act of 2014 ( S. 2757 ) was introduced \"to invest in innovation through research and development, to improve the competitiveness of the United States, and for other purposes.\" S. 2757 differs from the House bill of the same name ( H.R. 4159 ). For example, unlike H.R. 4159 , S. 2757 does not include Office of Science or other Department of Energy provisions. However, both bills would have authorized funding for NSF and NIST and would have authorized or amended various (in some cases, differing) federal STEM education and innovation-related programs, policies, and activities.\nFunding for the Targeted Accounts. S. 2757 would have authorized appropriations to the NSF and NIST from FY2015 through FY2019. In a press release, the bill's sponsor stated that S. 2757 \"builds on the goals and successes\" of the COMPETES Acts and that it would authorize \"stable and sustained increases\" in funding for the NSF and NIST. The press release does not mention the doubling path policy. Accordingly, Table A-3 shows the compound annual growth rate in authorized appropriations for NSF and NIST under S. 2757 , treating FY2014 enacted appropriations as the baseline and FY2019 authorized levels as the final year.\nS. 2757 would not have authorized funding for the Office of Science. As such, it is not possible to calculate a growth rate for the targeted accounts under S. 2757 that would be comparable to the growth rate in funding for the targeted accounts as authorized under the COMPETES Acts' doubling path policy.\nSTEM Education. Examples of STEM education provisions in the Senate version of the America COMPETES Reauthorization Act of 2014 include Section 102, which would have directed the NSTC Subcommittee on STEM Education to encourage comments from certain stakeholders (e.g., state education agencies, nonprofits) when updating the five-year federal strategic STEM education plan; to consider cross-agency efforts to improve STEM career awareness when implementing and updating the five-year plan; and to develop guidance and best practices for federal agencies on encouraging informal STEM education, among other things. Other STEM education provisions in S. 2757 would have authorized a program for STEM secondary schools at NSF and would have amended and reauthorized the informal STEM education and Noyce programs at NSF. Section 202 directs the National Aeronautics and Space Administration (NASA) to continue providing STEM education and outreach activities and to consider the long-term research and workforce needs of the mission directorates before finalizing any reorganization of NASA education programs.\nOther Provisions. Other provisions in S. 2757 would have directed OSTP to evaluate \"family-responsive\" federal science agency programs and policies and to provide guidance to federal science agencies on such policies. Section 511 would have allowed NSF to establish a prize program for educational practices that broaden participation in STEM fields. Other provisions would have directed NSF to maintain its intellectual merit and broader impacts criteria as the basis for evaluating grant proposals and would have authorized the expansion of NSF's Innovation Corps (I-Corps) program to other federal agencies. Section 611 would have reauthorized the Regional Innovation Program at the Department of Commerce; Title IV, Subtitle B would have reauthorized the National Nanotechnology Initiative.\nLegislative Disposition. S. 2757 was not enacted. It was referred to the Senate Committee on Commerce, Science, and Transportation but was not marked up. S. 2757 was sponsored by the (then retiring) chairman of the Senate Committee on Commerce, Science, and Transportation. It had six Senate majority (and no Senate minority) co-sponsors." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 1, 2, 2, 3, 3, 2, 3, 3, 3, 1, 2, 2, 2, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full", "h0_full h1_full", "h0_full", "", "", "", "h2_full h1_title", "h1_full", "h2_full", "h2_full", "", "h2_title h1_title", "h2_full h1_full", "h2_full", "", "h3_full", "", "", "", "", "" ] }	{ "question": [ "Why is United States leadership at risk?", "Why is this research and education considered so important?", "How are other nations changing regarding education in STEM fields?", "How do these nations’ changes affect the United States?", "What concern propelled the passage of P.L. 110-69 and P.L. 111-358?", "What do the COMPETES Acts do?", "What does the Advanced Research Projects Agency-Energy do?", "How effective have the COMPETES Acts been?", "What issues have arisen in regards to the COMPETES Acts?", "What did the COMPETES Acts reauthorize?", "How has the act's prize authority been used?", "What has happened to the funding in the COMPETES Acts?", "What action has Congress taken in order to continue the COMPETES Acts?", "What is the purpose of this report?", "How does this report address the continuation of the COMPETES Acts?" ], "summary": [ "Some observers assert that U.S. leadership is at risk. They argue that the United States underinvests in physical sciences and engineering (PS&E) research and underperforms in science, technology, engineering, and mathematics (STEM) education.", "(PS&E research and STEM education are believed to be central pillars in the foundation supporting U.S. scientific and technological achievement.)", "At the same time, other nations are increasing their commitments to research and education in the STEM fields and, as a result, can compete for a growing percentage of the world's high-value jobs and industries.", "Whether the United States will maintain its preeminence over the course of the 21st century is an open question.", "Concern that the United States has fallen or could fall behind in the global race to innovate propelled passage of the 2007 America COMPETES Act (P.L. 110-69) and its successor, the America COMPETES Reauthorization Act of 2010 (P.L. 111-358).", "The COMPETES Acts authorized increasing funding for targeted federal accounts that support PS&E research (commonly referred to as the \"doubling path policy\") and authorized (or reauthorized) certain federal STEM education programs.", "The acts also established the Advanced Research Projects Agency-Energy (ARPA-E), allowed federal agencies to use prize competitions to spur innovation, and directed the executive branch to coordinate policies providing access to federally funded research—among many other provisions.", "Neither of the COMPETES Acts has been fully funded or implemented. Actual funding for the targeted PS&E research accounts did not reach authorized levels, and most of the STEM education programs established by the acts were not realized.", "Actual funding for the targeted PS&E research accounts did not reach authorized levels, and most of the STEM education programs established by the acts were not realized.", "On the other hand, existing STEM education programs that were reauthorized by the acts generally continued to operate. ARPA-E, which was established by the acts, was implemented and continues to operate.", "Federal agencies are also using the act's prize authority—at least 100 competitions have been initiated under the authority of P.L. 111-358.", "Most of the funding authorizations in the COMPETES Acts have expired.", "Legislation to reauthorize all or portions of the acts was introduced, but not enacted, in the 113th Congress. Legislators have introduced bills to reauthorize all or portions of the acts in the 114th Congress.", "This report provides an overview of the acts for readers seeking background and legislative context. It serves both as a primer and a reference document, including a description and legislative history of the acts, a summary of the broad policy debate, and an examination of the implementation status of selected COMPETES-related programs and policies.", "This report also highlights major bills to reauthorize the acts from the 113th and 114th Congresses." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, -1, 0, -1, -1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4 ] }
GAO_GAO-16-180	{ "title": [ "Background", "Increased Apprehensions", "ORR’s Responsibility for Children", "ORR Responded to the Increase in Unaccompanied Children by Expanding Its Capacity, but Has Not Yet Updated Its Plans to Meet Future Needs", "ORR Expanded Capacity to Care for the Highest Number of Children on Record in 2014 and Updated Policies to Help Expedite Release of Children to Sponsors", "ORR Continues to Assess Capacity Needs", "Grantees Provided Education, Medical, and Therapeutic Services to Unaccompanied Children in ORR Custody, but ORR’s Monitoring of Grantees Is Inconsistent", "Grantees Provided Services to Children", "Grantees Did Not Always Document the Services They Provided", "ORR’s On-Site Monitoring of Facilities Is Inconsistent", "ORR Grantees Have Identified and Screened Sponsors before Placing Children with Them", "Limited Information Is Available on Services Provided and Status of Children Once Released from ORR Care", "ORR Continues to Serve a Small Percentage of Children After They Have Been Released, but Has Limited Contact with Most", "Children Placed with Sponsors by ORR Generally Have Access to Similar Services as Other Children without Lawful Immigration Status", "Immigration Proceedings May Result in Several Possible Outcomes for Unaccompanied Children, and the Outcomes for Many Have Not Yet Been Determined", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Unaccompanied Children’s Age at Office of Refugee Resettlement Admission for Children from El Salvador, Guatemala, and Honduras, January 2014 through April 2015", "Appendix III: Comments from the Department of Health and Human Services", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "In recent years there has been a significant increase in apprehensions of unaccompanied children from El Salvador, Guatemala, and Honduras (see table 1). We previously reported that children from El Salvador, Guatemala, and Honduras often leave their home country due to crime, violence, and lack of economic opportunity, among other reasons. In particular, the decision to migrate to the United States is also influenced by a desire for family reunification, educational opportunities, perception of U.S. immigration policy, and the role of smuggling networks that encourage migration. Historically, most unaccompanied children have been adolescents 14 to 17 years of age, with males representing a higher percentage of the children; however, the population is diverse and includes children of all ages, as well as pregnant and parenting teens.", "Under the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (Trafficking Victims Protection Reauthorization Act), except in the case of exceptional circumstances, unaccompanied children in the custody of any federal department or agency, including DHS, must be transferred to ORR within 72 hours after determining that they are unaccompanied children. The Homeland Security Act of 2002 gives ORR responsibility for coordinating and implementing the care and placement of unaccompanied children— individuals younger than 18 years old with no lawful immigration status and no parent or legal guardian in the United States available to provide care and physical custody. While these children may have parents or guardians already in the United States, if the parent or guardian is unable to provide immediate care, the children are considered unaccompanied. The children remain in the custody of the federal government throughout their stay in ORR care, but are in the physical custody of ORR residential care providers (see fig. 1). ORR solicits residential care providers, referred to as grantees in this report, through funding opportunity announcements, and funds these grantees through 3-year cooperative agreements. When making funding decisions, ORR evaluates applications against a set of established criteria. The grantees are private nonprofit and for-profit organizations and must be licensed by a state licensing agency to provide residential, group, or foster care services for dependent children, for example, in a shelter setting.\nThe aim of shelter care is to provide the least restrictive environment commensurate with the safety, emotional, and physical needs of the child. In keeping with the 1997 Flores v. Reno Settlement Agreement (Flores Agreement), which articulates a number of broad principles and policies applicable to the detention of unaccompanied children, grantees are required to provide proper physical care and shelter for children that ORR has interpreted to include suitable living accommodations (e.g., bed, chair, desk, storage for clothing and other personal items), culturally appropriate meals and snacks, several sets of new clothing, and personal grooming items. The facilities where children are housed are required by ORR to have designated common areas, including space for education, recreation, and case management as well as space to hold confidential services, such as health services and counseling. The primary settings in which children receive care include:\nShelters. These residential facilities are operated by state-licensed ORR grantees aiming to provide the least restrictive shelter environment based on the safety, emotional, and physical needs of the child. The majority of children going through ORR are placed in shelter care.\nFoster care. Transitional foster care is short term care that is designed for children under the age of 13, sibling groups with one sibling under the age of 13, pregnant and parenting teens, and children with special needs. Long-term foster care is designed for children who ORR expects to be eligible for immigration relief and who are expected to have an extended stay within the ORR system, for example trafficking victims or orphaned children. Therapeutic foster care is for unaccompanied children whose exceptional needs cannot be met in regular family foster care homes and consists of intensive supportive and clinical services in the homes of specially trained foster parents. Foster family homes must be licensed according to their state’s licensing regulations. Foster care placements are the least restrictive placement option in the ORR continuum.\nStaff-secure shelters. These facilities maintain a heightened level of security measures within a licensed shelter care context. The population is primarily made up of children with an offender history, but does not typically include children with serious offenses, a violent or assaulting history, or serious sex offenders. Service provision is to be tailored to address the individual needs and underlying behavior and reasons for such a placement.\nSecure shelters. These are ORR’s most restrictive residential settings.\nThese facilities are designed for a child who requires very close supervision and may need the additional internal controls and physical structure of a secure facility. This secure population is primarily made up of children with a serious offender history; children who are serious escape risks; children who have attempted to escape or escaped from a staff-secure care provider; or children who have been severely disruptive in a staff-secure setting. A secure facility may be a licensed juvenile detention center or a highly structured therapeutic facility.\nResidential treatment centers. These facilities are considered therapeutic placements for children diagnosed with a mental health disorder by a psychiatrist or psychologist. These centers provide services in a highly structured clinical program and have the ability to provide services to children with various diagnoses, such as bipolar, depressive, and conduct disorders.\nGroup home. A group home specializes in caring for specific populations (e.g., teen mothers). A group home is run by 24-hour staff or house parent and typically houses 4 to 12 unaccompanied children. Extended care group homes are for children who may be in ORR custody for an extended period.\nIn addition to caring for the children, ORR’s grantees assess the suitability of potential sponsors—generally parents or other relatives in the country who can care for the child after they leave ORR custody. This assessment includes background checks, and in some cases, conducting home studies when there are questions about the ability of the sponsors to meet the needs of a child and provide a safe environment. In cases in which a child is considered to have mental health or other needs that could benefit from ongoing assistance from a social welfare agency, ORR may arrange for post-release services. Additionally, in cases in which a favorable home study was conducted, post-release services are automatically provided. Post-release service providers refer sponsors and children to community resources, such as legal, psycho-social, or educational services. Children released to sponsors may attend public schools and use other services they are eligible for, such as health care provided by state or local agencies or nonprofit organizations in the communities in which they reside. Release to a sponsor does not grant legal immigration status to these children.\nChildren are scheduled for removal proceedings in EOIR immigration courts to determine whether they will be ordered to be removed from the United States or granted immigration relief. ORR requires sponsors to ensure that children attend their removal proceedings. Immigration judges, who are located in courts around the country, hear children’s cases and make determinations regarding whether they should be ordered removed from the United States or granted legal immigration status. Children who wish to apply for asylum or Special Immigrant Juvenile (SIJ) status do so through DHS’s USCIS. USCIS has initial jurisdiction over all asylum applications filed by unaccompanied children, including those in removal proceedings. If USCIS does not grant asylum, an immigration judge considers the asylum claim anew. When applicable, ICE is responsible for the removal and repatriation of children.", "", "In response to an increased number of referrals of unaccompanied children from DHS in recent years, particularly in fiscal year 2014, ORR increased its shelter capacity (the number of beds it has available) and updated its policies and procedures to reduce the number of days children spend in ORR custody. From fiscal years 2003 through 2011, ORR cared for less than 10,000 unaccompanied children per year (see fig. 2). Beginning in fiscal year 2012, the number of unaccompanied children apprehended at the southwest border by DHS and transferred to ORR custody rose to unprecedented levels, and peaked in fiscal year 2014 at nearly 57,500.\nThe vast majority (95 percent) of the children in ORR’s care from January 2014 through April 2015 were from Guatemala, Honduras, and El Salvador according to our analysis of ORR data (see table 2). As noted earlier, some children from contiguous countries such as Mexico who meet certain conditions are also referred to ORR. Over half of the children were 16 or 17 years old; the remainder were 15 and younger.\nExamples of Experiences of Unaccompanied Children Reasons for Migration: Children in ORR care reported a variety of reasons for traveling to the United States. Several children reported a desire to reunite with a parent or relative in the United States and pursue better education opportunities. One child reported being threatened by a gang member who wanted to date her, while others were being pressured to join local gangs. Another child described leaving his biological parents and siblings to find work in the United States in order to send money home to provide for his family. The Journey: Children described diverse experiences during their journeys to the United States. A number of children or their relatives paid professional smugglers or “coyotes” to facilitate their journey to the United States. One child described a journey that took a month traveling by buses, a plane, several stays in a house with other migrants and finally a boat crossing into the United States. Another child reported that it took nearly 45 days to make it to the border by bus. Some children traveled with other relatives. One child described traveling for 10 days with a cousin, taking a combination of cars, buses, taxis, walking, and swimming across the Rio Grande together. In some cases children faced troubling circumstances during their journey. One girl describes being physically assaulted by Mexican border officials who took money and belongings from migrants traveling from countries outside of Mexico.\nSponsors Shortened time frame for identifying and approving sponsors, and simplified sponsor application.\nEstablished priority categories for approving sponsors based on relationship to child.\nStreamlined procedures and simplified documentation requirements for sponsors, including elimination of fingerprinting requirement for parents/legal guardians with no criminal or child abuse history. Release Reduced the maximum number of days between approval of a child’s release and actual discharge, and paid for travel of child to sponsor, if needed, during the height of the surge. Clarified policy to staff that optional medical services should not delay a child’s release.\nCollaborated with Executive Office for Immigration Review on a pilot to expedite requests for voluntary departure; streamlining voluntary departure process. Internal Policies Reduced various paperwork requirements and standardized case management forms.\nStandardized mechanisms for tracking providers’ performance on release processing, for example, created tools to track timeframes from ORR approval of release to the physical discharge of the child, by the care provider.\nRevised care provider policies including child assessments, safety planning, and services mandated by Flores Settlement Agreement. Staffing Expanded duties for field staff.\nProvided training on sponsor identification and approval procedures to all care providers.\nAdditionally, ORR implemented several policy changes to address fluctuations in the number of children in its custody. In November 2014, ORR implemented a new policy in order to address fluctuations in its standard capacity needs by defining a “high” season (April through July) and a “low” season (August through March), and providing 25 percent less funding during the low season to shelters with more than 50 beds. Generally, this means ORR is paying less money per bed, while still maintaining capacity in case those beds at the larger shelters are needed. However, the fluctuations in seasons can create challenges for grantees, according to shelter staff. For example, grantees employ and train professional staff (such as licensed counselors) which makes it difficult for them to downsize shelter operations during the low season while remaining sufficiently staffed for the high season or an influx of children.\nAnother policy change that occurred in June 2014 decreased the number of children staff served. The number of children per case manager decreased from 20:1 to 8:1 and per clinician from 25:1 to 12:1. According to ORR officials, these changes helped ensure that children received needed services and facilitated the timely release of children. Agency officials said that while these policy changes could improve service provision for children and sponsors, the changes also increased shelter staffing costs, making it more difficult for grantees to decrease their budgets to account for the low season. Although grantees told us the low season is used to train staff while fewer children are in care, it is possible staff may not be fully utilized from August through March.", "ORR has taken additional steps to prepare to meet ongoing and future capacity needs by developing a framework to guide its efforts and is continuing to participate in an interagency group created in response to the influx of unaccompanied children.\nBed Capacity Framework—ORR developed a bed capacity framework for fiscal year 2015 that outlines its plans to continually monitor data on the referrals of unaccompanied children and other indicators, such as apprehensions and releases, to help it assess its capacity needs. The framework also includes key information ORR should have and mechanisms that should be in place to meet its needs, such as an inventory of available beds, timelines and decision points for determining if and when bed capacity should be increased, and ways to operationalize these decisions. ORR officials said that prior to 2014, ORR’s shelter capacity was based on the number of children referred to its care in previous years. The new capacity framework provides bed capacity based on two possible scenarios: (1) a baseline scenario similar to fiscal year 2014 in which about 58,000 children would be served during fiscal year 2015, and (2) a surge scenario that can serve 104,000 children over the fiscal year. The framework also includes three types of beds: “standard” beds, which are available year-round through the annual grant process; “temporary” beds, which are part of the annual grant process but provide additional capacity for a portion of the year as needed; and “surge” beds, which can be made available during surges and outside of the annual grant process.\nThe Unified Coordination Group—The President established this interagency effort, led by the DHS’s Federal Emergency Management Agency, to enhance coordination among HHS, DHS, and other agencies in response to the significant increase in the number of unaccompanied children. The Unified Coordination Group issued a strategic plan in March 2015 that outlines indicators (for example, when a certain percent of ORR beds are occupied) for determining when partnering agencies need to meet and for deciding appropriate levels of response.\nEven with these efforts in place and as we have previously reported, ORR officials said predicting the number of unaccompanied children that will be apprehended each year is difficult because there are many factors that affect a child’s decision to leave his or her home country and come to the United States. ORR officials added that determining appropriate capacity levels for ORR shelters is challenging because the agency must be prepared for a large increase of children without overspending on unused beds if fewer children arrive.\nIn ORR’s bed capacity framework for fiscal year 2015, its baseline scenario was informed by the 2014 influx (58,000 children annually with the peak need of 10,600 beds). The actual number of children placed in ORR’s care in fiscal year 2015 was over 33,700 with almost 6,000 children in ORR’s custody in September 2015 (see fig. 4). Generally, children needing care in fiscal year 2015 numbered well below the fiscal year 2014 baseline and below the actual number of beds available, particularly during the “low” season months at the beginning of fiscal year 2015. As discussed earlier, ORR has reduced funding levels for some facilities during this low time period to help manage costs and two of the grantees we spoke with said this time was used to train employees. The children served in fiscal year 2015 were less than one-third of ORR’s alternative scenario of 104,000 children needing care.\nThe number of children in ORR’s care increased during the “high” season in 2015 and reached more than 50 percent of ORR’s bed capacity in June. This percentage of capacity in use—one of the indicators developed by the Unified Coordination Group—triggered a meeting of the group. Because fewer children were arriving than expected, officials decided that a higher level response was not needed and ORR did not increase shelter capacity at that time. However, as shown in figure 4, the number of children in ORR’s care increased in August, departing from historical trends in which August marked the start of the “low” season. In our testimony on October 21, 2015, we provided analyses of DHS data that indicated that unlike the prior year, apprehensions at the border in the month of August 2015 increased compared to previous months in 2015, and exceeded by nearly 50 percent August 2014 apprehensions. In mid-August 2015, ORR had 5,500 children in its care and approximately 7,800 available beds. ORR officials told us that information it received from DHS and the Department of State through its work with the Unified Coordination Group suggest that the rate of referrals will remain steady or increase in fiscal year 2016. As a result, ORR plans to increase its bed capacity to between 8,500 and 8,700 as of November 15, 2015, adding beds through its existing network of shelter providers.\nAs noted above, ORR is taking several actions, including working with related agencies, to minimize the risks of not meeting its charge of providing care and services to unaccompanied children by ensuring it has capacity to meet demand. At this point, given the uncertainty of the number and timing of children’s journeys from Central America, ORR has supported some levels of unused capacity in order to be prepared. The bed capacity framework it developed for fiscal year 2015 included plans and steps to manage its capacity and ORR officials said they continue to use it as a roadmap. However, they have not updated this framework for fiscal year 2016 and have not established a systematic approach to update their framework on an annual basis to account for new information so that it remains current and relevant to changing conditions. For example, adjustments may be warranted for baseline and alternative scenarios that influence plans for bed capacity. According to federal standards for internal control, an agency’s processes for decision making should be relevant to changing conditions and completely and accurately documented. Not having a documented and continually updated process for capacity planning may hinder ORR’s ability to be prepared for an increase in unaccompanied children while at the same time minimizing excess capacity to conserve federal resources.", "", "ORR policy requires certain care and services be provided to unaccompanied children while in ORR facilities (see table 4).\nDuring our site visits to nine facilities, staff described providing services to children that ranged from intake, orientation, and medical screening processes, to recreational activities and supervised field trips to museums. Staff also provided information to us about the Know Your Rights presentations, which provide basic legal information to children, and other legal screening services, through arrangements with various nonprofit organizations. Staff also shared with us information about ORR’s program to provide children with independent advocates. In addition, we saw children’s rooms, and we observed staff distributing clothing and personal hygiene items to children. We also visited dining and recreational areas, health clinics where children are vaccinated and receive medical care, and classrooms. Classrooms and course instruction varied across the facilities that we visited. Some facilities had classrooms dedicated to single subjects, while others taught all subjects in the same space. In some instances, teachers from local school districts provided on-site instruction. In other instances, grantees employed teachers. One facility we visited bused children to a school off-site. Children placed in transitional foster care attended school at the facility.", "ORR requires grantees to document in case files many of the services they provide to children and review of case files figures prominently in ORR’s monitoring of grantees. However, we found that required documents were often missing from the 27 randomly selected case files that we reviewed. Facility staff must maintain numerous documents in children’s case files to ensure that care is provided and that facilities are in compliance with ORR policy and applicable laws, according to ORR policy. For example, ORR’s case file checklist includes admission, legal, and medical documents; education services, case management, clinical services and discharge records; acknowledgement of program forms; and significant incident reports. The checklist also includes the reunification packet, which contains sponsor information, such as proof of identification, including a birth certificate; proof of relationship to the child, including the child’s birth certificate; and a completed reunification application.\nWhile our site visits suggest that the ORR facilities were generally providing care to children as required by ORR policy; none of the 27 case files we reviewed contained all of the required documents to verify the services provided. Specifically, 14 case files were missing the Know Your Rights legal presentation acknowledgement form, 10 were missing a record of group counseling sessions, and 5 were missing clinical progress notes. In addition, we identified several cases in which forms that were present in the files were not signed or dated. Although ORR uses its web- based data system, the UAC portal, to track some information about the services children receive, and grantees report on the services they provide in their annual reports, the documents contained in case files are the primary source of information about the services provided to individual children.\nORR staff told us that some of the documents were probably not included in the case files we reviewed for the following reasons:\nFacility staff sometimes forget to place copies of acknowledgements in case files.\nSome group activities are documented through sign-in forms that may not get placed in individual case files.\nStaff may not place documents in files until cases are closed.\nHowever, because all of the cases we reviewed were closed cases, this explanation does not apply to the files we reviewed. ORR officials added that missing documentation is often a routine reason for corrective action.\nWithout all of the documents included in the case files, it is difficult for ORR to verify that required services were actually provided in accordance with ORR policy and grant agreements during its monitoring visits.", "ORR’s most comprehensive monitoring of its grantees occurs during on- site monitoring visits, however we found that on-site visits of facilities has been inconsistent. According to ORR documents, during on-site monitoring visits, ORR project officers spend a week at facilities touring, reviewing children’s case files and personnel files, and interviewing children and staff. Additionally, prior to visiting the facilities, ORR guidance directs project officers to review quarterly reports, recent audit reports, organization charts, grant applications and agreements, facility leases, safety and sanitation certificates, and other items. They are also to consult with other ORR staff who work with grantees. Also, according to ORR, on-site monitoring typically includes a review of a random sample of case files for children cared for at a facility. ORR officials noted that, in addition to on-site monitoring, they monitor grantees in other ways, such as desk monitoring where project officers, review, among other things, significant incident, quarterly reports, and obtain feedback from facility staff. Additionally, according to ORR officials, ORR field staff—contract field specialists and federal field specialists—provide oversight and work directly with facility staff. For example, field staff provide technical assistance, attend facility staffing meetings, and advise ORR headquarters officials on decisions involving the placement, transfer, discharge, and special needs of unaccompanied children.\nPrior to fiscal year 2014, project officers were supposed to conduct on- site monitoring of facilities at least once a year. However, our review of data provided by the agency found that many facilities went several years without receiving a monitoring visit. For example, ORR did not visit 15 facilities for as many as 7 years. ORR officials acknowledged that some facilities went many years without on-site monitoring and attributed it to lack of staff resources. The officials noted that in 2009, four project officers were responsible for 45 facilities, as well as other tasks. By 2013, although the number of facilities had increased, there were two project officers responsible for on-site monitoring.\nIn 2014, ORR implemented a biennial on-site monitoring program, hiring new project officers whose sole responsibility is to provide on-site monitoring of all of its facilities. Nevertheless, ORR did not meet its goal to visit all of its facilities by the end of fiscal year 2015. ORR officials said they rescheduled some monitoring visits because of limited resources and administrative challenges, such as limited travel funds. In fiscal year 2014, project officers visited 12 of 133 facilities, and by August of fiscal year 2015, they completed 22 of 29 scheduled visits to 140 facilities. ORR rescheduled 11 other monitoring visits from fiscal 2015 to 2016, bringing the total number of visits scheduled for 2016 to 70. Given ORR’s recent history, its ability to visit 70 facilities in a single year is uncertain. According to standards for internal control, management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Monitoring generally should be designed to assure that it is ongoing and occurs in the course of normal operations, is performed continually, and is ingrained in the agency’s operations.\nIn addition to ORR’s scheduled onsite monitoring, officials said that project officers occasionally visited facilities out of cycle. However, they did not use specific criteria to determine when out-of-cycle visits were warranted. Instead, they assessed facility risks on a case-by-case basis. According to ORR officials, as part of ORR’s desk monitoring of facilities, project officers looked for patterns that indicated a possible lack of oversight by facility staff, such as an increase in significant incident reports, and the need for a monitoring visit. Officials said that staff were more likely to provide technical assistance or schedule a 1-day site visit, rather than a week-long on-site monitoring visit. During fiscal year 2015, ORR officials said that they scheduled one out-of-cycle visit after an unaccompanied child ran away from a facility under unclear circumstances.\nMonitoring visits are intended to provide an opportunity to identify program deficiencies or areas where programs are failing to comply with ORR policies. For example, according to ORR site visit monitoring reports that we reviewed, during two separate visits to one facility project officers found that facility staff had failed to medicate children properly, including, in one instance, accidental overdoses of medicine. At another facility, children informed ORR staff that they were not meeting regularly with their case managers. All of the monitoring reports that we reviewed included findings that were gleaned from case file reviews about grantees failing to document services. Project officers prepare monitoring reports, citing remedial steps or corrective actions that programs must take to comply with ORR policies. According to ORR officials, in 2014, grantees typically implemented corrective actions within 30 days of receiving notice of a program deficiency. Without consistently monitoring its grantees, ORR cannot know whether they are complying with their agreements and that children are receiving needed services.", "ORR has delegated the responsibility for identifying and screening sponsors to its grantees. In addition to the day-to-day care that grantees provided to children, facilities’ staff are responsible for identifying and screening potential sponsors. During the initial intake process, case managers ask children about potential sponsors with whom they hope to reunite. Within 24 hours of identifying potential sponsors, case managers are required to send them a Family Reunification Application to complete. The application includes questions about the sponsor and other people living in the sponsor’s home, including whether anyone in the household has a contagious disease or criminal history. Additionally, the application asks for information about who will care for the child if the sponsor is required to leave the United States or becomes unable to provide care. Sponsors also are asked to provide documents to establish their identity and relationship to a child. The manner in which grantees screen the sponsor varies based on the sponsor’s relationship to the child (see table 5). The Trafficking Victims Protection Reauthorization Act requires home studies in cases in which it is determined that the child is a victim of a trafficking; the child has a disability as defined by the Americans with Disabilities Act; the child has been a victim of physical or sexual abuse significantly affecting their health or welfare; or the child’s sponsor clearly presents a risk of abuse, maltreatment, exploitation or trafficking to the child. In addition, ORR policy requires home studies in cases where the sponsor is a non-relative and a child is 12 years old or younger, the individual is seeking to sponsor multiple children to whom he or she is not related, or as required by the Trafficking Victims Protection Reauthorization Act. ORR officials reported that 2.2 percent of released cases received a home study in fiscal year 2014.\nTable 5 identifies the types of background checks that are conducted as part of the reunification process to help ensure the safety of the child once released to a sponsor.\nIn these rare instances, children remain in ORR facilities or are placed in ORR’s long-term foster care.\nLegend: ● A full-circle indicates that the background check is required in all cases. ◑ A half-circle indicates that the background check is only required in cases in which there is a documented risk to the safety of the unaccompanied child, the child is especially vulnerable, and/or the case is being referred for a mandatory home study.\nPrior to children’s release to sponsors, sponsors sign a Sponsor Care Agreement, which stipulates, among other things, that they will: provide for the physical and mental well-being of the child; ensure that the child appears for all removal proceedings in ensure that the child reports to ICE in the event that they are ordered removed from the United States by an immigration judge; notify DHS of address changes; and if not the parent or legal guardian of the child, attempt to establish legal guardianship through the local court system.\nBetween January 7, 2014, and April 17, 2015, ORR released 51,984 children from El Salvador, Guatemala, or Honduras to sponsors. Of these children, nearly 60 percent were released to a parent. Fewer than 9 percent of these children were released to a non-familial sponsor, such as a family friend, and less than 1 percent of these children were released to a sponsor to whom their family had no previous connection (see table 6).\nIn fiscal year 2014, ORR released a total of 53,518 children to sponsors, and these children were released in every state except one. The largest number of children were placed in Texas, New York, California, Florida, and the Washington, D.C. area, respectively, with Harris County, TX receiving 4,028 children in fiscal year 2014, more children than any other single county (see fig. 5). Often children were placed in counties with large Latino populations.", "", "The Trafficking Victims Protection Reauthorization Act requires ORR to provide post-release services in cases in which a home study was conducted prior to a child’s release to a sponsor, and authorizes ORR to provide post-release services to other children, such as those with mental health needs, who may benefit from them. These services include direct assistance to the child and sponsor by ORR grantees in the form of guidance to the sponsor to ensure the safest environment possible for the child, as well as assistance accessing legal, medical, mental health, and educational services, and initiating steps to establish guardianship if necessary. These services can also include providing information about resources available in the community and referrals to such resources.\nAccording to ORR officials, a relatively small percentage of unaccompanied children received post-release services, and ORR’s responsibility for the other children typically ended once it transferred custody of the children to their sponsors. According to information provided by ORR, the number of children receiving post-release services increased from fiscal year 2012 through fiscal year 2014, but, due to the overall increase in the number of unaccompanied children served by ORR, the percentage receiving these services decreased from 24 percent to 9.5 percent over this timeframe. However, ORR officials also stated that they had not confirmed that these data provided by grantees are accurate. Post-release services are limited in nature and typically last for 6 months; however, in cases in which a home study was conducted, ORR is required to provide post-release services until the child’s immigration case is resolved. According to ORR, in these cases, post- release services last, on average, a year to a year and a half.\nAlthough ORR provides post-release services to a small percentage of children after they leave its care, the office has recently taken several steps to expand access to services to children. For example, according to ORR officials, the agency recently expanded the eligibility criteria for post- release services to include all children released to a non-relative or distant relative. In addition, on May 15, 2015, ORR began operating a National Call Center help-line. Children who contact ORR’s National Call Center within 180 days of release who have experienced or are at risk of experiencing a placement disruption are also now eligible for post- release services according to ORR officials. In its first month of operation, ORR officials stated that the call center received 25 calls from children and sponsors related to placements that had been disrupted or were in danger of becoming disrupted. Lastly, in August 2015, ORR instituted a new policy requiring facility staff to place follow-up calls to all children and their sponsors after the children are released. The purpose of these calls is to determine whether the children are still living with their sponsors, enrolled in or attending school, aware of upcoming removal proceedings, and safe. ORR guidance requires the “Safety and Well Being” calls to occur 30 days after the children are released from ORR care to sponsors. Staff are required to make a “reasonable effort” to contact the children and document the results of the call in the children’s case files. Facilities are also required to submit a tracking report to ORR monthly to document these follow-up calls. In cases in which additional services are needed, the case manager will refer the child and sponsor to ORR’s National Call Center. In cases in which the child is believed to be unsafe, ORR’s policy requires that the case manager comply with mandatory reporting laws, state licensing requirements, and federal laws and regulations regarding reporting to child protective agencies and law enforcement.\nORR officials told us these policy changes were made as a result of an overall review of ORR policies, including those related to post-release services. These changes expand post-release services to children and families who may need additional support, but were not assigned such services when the child was initially placed with the sponsor.\nORR already has some information from its post-release grantees on services provided to children after they leave ORR custody, and its newly instituted well-being calls and National Call Center allow it to collect additional information about these children. However, ORR does not have processes to ensure that all of these data are reliable, systematically collected, and compiled in summary form to provide useful information about this population for its use and for other government agencies. Regarding post-release services, as noted previously, ORR officials had not confirmed that data provided on the number of children served by their grantees were reliable and had not compiled or summarized information on post-release services. In addition, ORR officials told us that reports on post-release services are not currently entered in ORR’s web-based database; although they said they had plans to incorporate this information into the database in the future. Because post-release information is currently stored in grantees’ individual quarterly program performance reports, it is difficult to compile and summarize. Regarding the National Call Center, ORR officials said they did not have a process in place for systematically summarizing information collected from these calls. According to ORR officials, for the National Call Center that began operation in May 2015, ORR receives weekly and monthly reports from the contractor operating the call center with information on calls related to child abuse and neglect; placement disruptions; domestic violence; and children who have run away from their sponsors. ORR officials told us that they plan to analyze the call center data for trends, but as of October 2015, they had not yet begun to do so. Federal internal control standards require that an agency must have relevant, reliable, and timely information to enable it to carry out its responsibilities.\nAccording to ORR officials, the agency is generally not required by law to track or monitor the well-being of these children once they are released to sponsors. However, because of its expansion of post-release services, the new call center, and the new well-being calls, ORR will have access to information on children’s well-being. Compiling and sharing this information presents an opportunity that could help ORR and other federal and state agencies better understand and respond to changing circumstances, such as the potential involvement of unaccompanied children with state child welfare services and emergency medical services. Without processes to ensure that the data from its activities are reliable, systematically collected, and compiled in summary form, ORR may be missing an opportunity to provide useful information about this population for the use of other government agencies.", "Once children are released from ORR custody to their sponsors, ORR policy states the sponsors are responsible for providing for their physical and mental well-being. Services available to unaccompanied children through local service providers are typically the same as those available to other children without lawful immigration status. For example, children without lawful immigration status are generally not eligible for federal benefits, such as the Supplemental Nutrition Assistance Program, Medicaid, and Temporary Assistance for Needy Families; however they are eligible for other federal benefits such as emergency medical assistance. Local service providers we spoke with in six counties told us that the children’s status would have no effect on eligibility for many of the services they provide. For example, school districts are required to educate students regardless of their immigration status. Similarly unaccompanied children were not precluded from receiving services at health clinics we spoke with.\nOverall, the level of awareness about, and services available to, unaccompanied children varied across the jurisdictions we spoke with. For example, in two of the counties in which we conducted phone interviews, representatives from mayors’ offices told us that they were unaware that unaccompanied children were living in their city or had limited knowledge about the issue. However, in another jurisdiction we visited, the mayor’s office had established a working group related to unaccompanied children that included representatives from several city departments and nonprofits. In this city, representatives from the health and education departments regularly attended immigration court to screen and enroll children in the state’s Children’s Health Insurance Program and to help with school enrollment.\nIn some locations, non-profit organizations work specifically with unaccompanied children, providing legal, medical, or other services. In one community, we spoke with a staff member at a nonprofit organization that provides services to unaccompanied children from Central America, such as case management, individual and family counseling, support group services, and educational services. This organization also has other programs that serve unaccompanied children, along with other at- risk children, that focus on gang prevention and intervention services. Program staff told us they receive the bulk of their referrals from gang prevention coordinators and school social workers, but also receive referrals from courts, mental health counselors, and parents. Program staff told us the program is “overwhelmed” by the number of recently immigrated youth referred to it. Unaccompanied children may also receive some services through local or national nonprofit organizations that other children without lawful immigration status do not. For example, services provided through post-release service grants with ORR or by legal service organizations under DOJ’s Executive Office for Immigration Review’s (EOIR) Legal Orientation Program for Custodians of Unaccompanied Alien Children.\nLocal service providers we spoke with expressed concerns that unaccompanied children might have unmet needs or face barriers to receiving some necessary services. For example, representatives we spoke with in four of the six school districts, as well as representatives from a County Office of Education, discussed the mental and behavioral health needs of these children and several noted barriers to meeting these children’s needs. We were also told by seven local service providers who worked with these children that they had previous exposure to violence and trauma. Four local service providers noted that in some cases children have experienced challenges related to reunification with parents they had not seen for many years. Six service providers said that these factors could contribute to behavioral and mental health needs or make them more susceptible to gang recruitment and trafficking.\nA staff member in a local health clinic and a school district official told us that some children disclosed harrowing stories of their journeys to the United States, including incidents such as being tied to a tree for several days, experiencing a sexual assault, and watching a fellow train rider’s execution by beheading. One health care provider estimated that about 50 percent of unaccompanied children he served required mental health services. Some counties reported challenges attracting bilingual professionals, such as mental health providers, making it difficult for these children to obtain needed services. Officials we spoke with in five of the six school districts also noted that newly arrived children from Central America—many of whom may have been unaccompanied—often have limited or disrupted educational histories and face language barriers. Officials from four of these school districts said that these issues can make academic achievement or graduation challenging. According to officials we spoke with, state and local requirements may also create barriers for unaccompanied children. Officials we spoke with in one county told us that non-parental sponsors lack the rights of a parent or legal custodian under state law. In this county, such sponsors must apply for legal custodianship in court. However, until they have obtained custodianship, it can be difficult to enroll children in school or access health services for them, according to court and social service agency officials in this county.\nUnaccompanied children also face barriers similar to those faced by other children without lawful immigration status. Staff we spoke with at all three of the clinics, as well as other local agency officials told us that lack of health insurance, lack of knowledge about where to seek services, and/or fear of disclosing their immigration status made it challenging to access certain health care services and other services. Staff at the three clinics and local agency officials in one county told us that lack of health insurance made obtaining some health care services especially difficult, such as dental care and care for more specialized health needs, which tend to be more expensive and not available through local clinics. Officials in two school districts told us that finding teachers who are bilingual or teach English as a second language was a challenge for them and ensuring that they had appropriate personnel to serve these children was therefore difficult. However, officials in some school districts we spoke with appeared to have more resources available to serve these students. Specifically, one official we spoke with said the school district was establishing a “newcomers division” within its Multilingual Education Department, which would serve newly arrived immigrant students— including formerly unaccompanied children. Another school district we contacted had a contract with a nonprofit organization to provide services to these students, including socio-emotional supports.", "Under the Trafficking Victims Protection Reauthorization Act, unaccompanied children are generally required to be transferred to ORR and await immigration removal proceedings while in the custody of either ORR or a qualified sponsor. Upon apprehension by DHS, unaccompanied children are given a Notice to Appear before EOIR for removal proceedings. During these proceedings, EOIR’s immigration judges, who are located in courts around the country, decide whether the child is removable from the United States and, if so, whether he or she is eligible for relief or protection from removal. In 2007, EOIR issued guidance for immigration judges concerning cases involving unaccompanied children, which sets out basic principles that immigration judges should use in court proceedings. These include employing child- sensitive procedures and how the best interest of the child should be taken into account in the context of the judge’s discretion. In addition, ORR requires sponsors to ensure that children attend their removal proceedings.\nAn unaccompanied child who is in removal proceedings could apply for various types of lawful immigration status with DHS’s U.S. Citizenship and Immigration Services (USCIS), including asylum and Special Immigration Juvenile (SIJ) status. USCIS’s asylum officers have initial jurisdiction of any asylum application filed by an unaccompanied child, even where such child is in removal proceedings. If, for example, an unaccompanied child intends to apply for asylum with USCIS, an immigration judge may administratively close (i.e., temporarily remove the case from the immigration judge’s calendar) or continue the removal proceeding pending the adjudication of the asylum application with USCIS. According to EOIR officials, administrative closure does not grant the child lawful immigration status, but the child is not at risk of removal while the proceeding is closed. In general, an individual is eligible for asylum if he or she (1) applies from within the United States; (2) suffered past persecution, or has a well-founded fear of future persecution, based on race, religion, nationality, membership in a particular social group, or political opinion; and (3) is not statutorily barred from applying for or being granted asylum. If USCIS determines that the unaccompanied child is ineligible for asylum and does not otherwise have lawful immigration status in the United States, USCIS asylum officers refer the asylum application for review by an immigration judge, who will reopen the case and reinitiate the child’s removal proceedings. In addition to asylum, unaccompanied children may seek to apply for SIJ status through USCIS, which is designed to help immigrant children who have been abused, abandoned, or neglected. According to USCIS, certain children who are unable to be reunited with a parent can obtain lawful permanent resident (or green card) status as a SIJ, and children who obtain a green card through the SIJ program can live and work permanently in the United States. To be eligible for SIJ status, among other things, a child must be declared dependent on a state court or such court must decide to legally place the child with a state agency, or an individual or entity appointed by a state or juvenile court; it must be determined not in the best interests of the child to be returned to his or her home country; and it must be that reunification of the child with a parent is not viable due to abuse, neglect, abandonment, or a similar basis found under state law. Once an unaccompanied child has met all the eligibility requirements for SIJ status, he or she must then file for adjustment of status to receive an SIJ- based green card.\nIn July 2015, the Associate Director of the Refugee, Asylum and International Operations Directorate at USCIS testified that USCIS has received increasing numbers of asylum applications from unaccompanied children in recent years and, in particular, from fiscal years 2012 through 2014. Specifically, the Associate Director testified that USCIS received 534 asylum applications from unaccompanied children who were apprehended in fiscal year 2011 as compared to 6,990 asylum applications from such children who were apprehended in fiscal year 2014. In addition, according to USCIS, when compared to the number of unaccompanied children apprehended annually over the 2011 through 2014 time period, the percent of children applying for asylum with USCIS has also increased (from 3 percent in fiscal year 2011 to 10 percent in fiscal year 2014). Further, the Associate Director testified that since fiscal year 2009, USCIS granted asylum to unaccompanied children at a rate of 42.6 percent (according to USCIS, the overall rate at which all new asylum applicants with USCIS were granted asylum was 41 percent). From fiscal year 2009 through May 31, 2015, USCIS’s testimony statement indicated that 92 percent of the unaccompanied children who applied for asylum with USCIS were from El Salvador, Guatemala, or Honduras.\nIf unaccompanied children have not yet sought, or are not granted, certain immigration benefits within the jurisdiction of USCIS, there are several other possible outcomes, and various forms of relief that may be available to them during immigration proceedings. For example:\nRemoval order: An immigration judge rules that the child is removable, not otherwise eligible for relief or protection from removal, and therefore is to be removed from the United States. ICE is responsible for carrying out such orders.\nAdministrative closure: When a case is temporarily removed from an immigration judge’s calendar or from the Board of Immigration Appeals’ docket. According to EOIR, a judge may administratively close a case, for example, if a child applies for asylum during their removal hearing. EOIR officials said that such an action does not grant the child legal immigration status, but the child is not at risk of removal while the case is closed. Cases that are administratively closed can be reopened at a later date.\nTermination: A decision by an immigration judge that dismisses the case related to a particular charging document. In such cases, the child is not subject to removal relating to the dismissed charging document, but this decision does not grant the child legal immigration status.\nVoluntary departure: An order from the immigration judge that allows a child who is removable to voluntarily leave the country in a designated time frame in lieu of formal removal.\nRelief: An immigration judge may grant relief or protection from removal to a child who is otherwise removable, provided the applicable eligibility requirements are satisfied.\nIn July of 2014, DHS began noting on Notices to Appear whether the juvenile who was apprehended was accompanied or unaccompanied. With this information, EOIR began using a specific code in its automated case management system to identify unaccompanied children. According to EOIR data, from July 18, 2014, through July 14, 2015, DHS initiated more than 35,000 removal proceedings for unaccompanied children. Of these 35,000 removal proceedings, EOIR data indicate that as of July 14, 2015, an immigration judge issued an initial decision in nearly 13,000 proceedings (or 36 percent). Of those 13,000 decisions, about 7,000 (or 55 percent) resulted in a removal order for the unaccompanied child. According to EOIR data, about 6,100 (or 88 percent) of those initial decisions that resulted in removal orders were issued in absentia, which is when a child fails to appear in court for their removal proceedings and the immigration judge conducts the proceeding in the child’s absence. However, a judge’s initial decision does not necessarily indicate the end of the removal proceedings. For example, cases that are administratively closed can be reopened, and new charges may be filed in cases that are terminated. In addition, children who receive a removal order in absentia, and with respect to whom a motion to reopen their case has been properly filed, are granted a stay of removal pending a decision on the motion by the immigration judge. Moreover, a child may seek to appeal a removal order; thus, it is unclear from the data pertaining to orders of removal whether such orders were deemed administratively final as a result of all avenues for appeal with EOIR to remain in the United States being exhausted or waived. Overall, according to ICE data, from fiscal year 2010 through August 15, 2015, based on final orders of removal, ICE removed 10,766 unaccompanied children, 6,751 of whom were from El Salvador, Guatemala, or Honduras. According to EOIR data, as of July 14, 2015, there were over 23,000 pending cases for unaccompanied children. Therefore, the ultimate legal outcome for many unaccompanied children has not yet been determined.", "To accommodate the increase in the number of unaccompanied children, ORR has increased its number of grantees and bed capacity in recent years and developed a framework to help it prepare for future demand, starting with fiscal year 2015. The number of children referred to ORR through most of fiscal year 2015, while high by historical standards, was less than expected, and ORR grantees had many unoccupied beds. However, the number of referrals began increasing towards the end of the summer and has remained high through the beginning of what is typically ORR’s “low” season. Although ORR may not be able to predict the exact number of facilities and beds needed in any given year, developing a process for updating its bed capacity framework on an annual basis may help ensure an adequate response while minimizing the use of federal funds and provide documentation of its analysis and decisions in support of its capacity levels.\nIn addition, ORR brought new grantees online quickly and increased the number of its staff responsible for monitoring these grantees. Now, ORR has to determine how best to leverage its resources and use its staff to monitor these grantees. Grantees provide care and services to unaccompanied children, many of whom have been exposed to trauma and violence and travelled great lengths to get to the United States. It is important that grantees comply with ORR’s policies to ensure these children receive, among other things, medical, clinical and educational services, and that children are quickly reunified with sponsors. However, ORR does not regularly monitor its grantees, and cannot ensure that they are providing these needed services and properly documenting them. Lastly, in addition to many questions about the children’s well-being and whether they have access to needed services, there are questions about their potential involvement with state child welfare services, and whether these children will return to their country of origin or legally remain in the United States. Although ORR has recently taken steps to gather more information on the children once they are released, it does not have a process to ensure that the data are reliable, systematically collected, and summarized. While ORR is not required to gather this information, an opportunity would be lost to help ORR and other government agencies better understand and respond to issues related to unaccompanied children if this information is not collected in a reliable and consistent manner.", "We recommend that the Secretary of the Department of Health and Human Services direct the Office of Refugee Resettlement to take the following three actions:\nDevelop a process to update its bed capacity framework on an annual basis to include the most recent data related to numbers of unaccompanied children who may be referred to its care and adjust its planning scenarios that guide its bed capacity as appropriate.\nReview its monitoring program to ensure that onsite visits are conducted in a timely manner, case files are systematically reviewed as part of or separate from onsite visits, and that grantees properly document the services they provide to children.\nDevelop a process to ensure all information collected through its existing post-release efforts are reliable and systematically collected so that they can be compiled in summary form and provide useful information to other entities internally and externally.", "We provided a draft of this report to the Departments of Health and Human Services (HHS), Homeland Security, and Justice for review and comment. Each of the departments provided technical comments that we incorporated in the report as appropriate. HHS also provided written comments that are reproduced in appendix III.\nHHS concurred with all of our recommendations and stated that it is committed to continuously working to improve its operations. HHS agreed to update its bed capacity framework annually. Additionally, HHS agreed to improve its monitoring of grantees. HHS described several of its monitoring efforts, for example day long site visits, desk monitoring, and monthly reporting, which we discuss in the report, and stated that it has created a new monitoring initiative workgroup to examine opportunities for further improvement. These are all important efforts, but it is also important for HHS to take steps to strengthen its most comprehensive monitoring of grantees, its weeklong on-site monitoring, through timely visits, systematic reviews of case files, and properly documenting services provided to children. HHS also agreed to improve its data collection process to provide more systematic and standardized information on post-release services.\nAs agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies of this report to relevant congressional committees, the Secretaries of Health and Human Services and Homeland Security, and the U.S. Attorney General. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512–7215 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.", "We used several approaches to address our objectives, including reviewing relevant laws and regulations, court settlement agreements, and agency policies. In addition, we interviewed relevant ORR and HHS officials and officials from the Departments of Homeland Security and Justice.\nTo address how ORR responded to the increased number of unaccompanied children, we analyzed changes in the number of ORR’s grantees and ORR’s average monthly bed capacity from fiscal year 2010 through 2015. We reviewed ORR documents, such as ORR’s Bed Capacity Framework for fiscal years 2015, funding opportunity announcements, and other relevant planning documents. We also reviewed a plan developed by the Unified Coordination Group and interviewed ORR and ACF officials about the Unified Coordination Group’s activities. In addition, we reviewed ORR’s policy guide for its unaccompanied children program, updates to this guidance, and ORR’s schedule for additional policy updates.\nTo gather information about how children were cared for while in ORR custody, we analyzed information from ORR’s web-based UAC portal for children admitted to and discharged from ORR care between January 7, 2014, when ORR began using the portal, and April 17, 2015. This database contains information such as children’s date and country of birth, intake, placement, and sponsor information, among other data. To assess the reliability of these data, we conducted electronic testing of the data, reviewed ORR business rules to ensure data reliability, and interviewed ORR officials and contractors knowledgeable about the data. We determined the data were sufficiently reliable for our purposes. We also visited nine ORR facilities in three states—New York, Texas, and Virginia—to interview ORR grantee staff. Locations were selected to ensure variation in the types of care provided by ORR grantees, shelter size, and location. We visited shelters, staff-secure shelters, secure shelters, and transitional foster care providers. We also reviewed a nongeneralizable random sample of 27 case files of children who were released from the nine shelters we visited. This sample was generated using alien identification numbers from data from ORR’s UAC portal for all children with a status of discharged and a valid discharge date. Each case file was reviewed by two GAO analysts to assess the extent to which documents required by the Flores Agreement and specific ORR policies were present and complete. After both analysts reviewed the files, they reconciled any differences between their reviews.\nTo assess ORR’s monitoring of its grantees, we reviewed ORR and grantee documents, including monitoring schedules, reports, and corrective actions. We also analyzed data provided by ORR on the frequency of past monitoring and levels of staffing devoted to monitoring activities. In addition, we discussed monitoring with grantees’ staff during site visits and with ORR officials.\nLastly, to learn what is known about these children once they leave ORR’s custody, we conducted phone interviews with school districts and other local government officials and nonprofit groups in 6 counties where 50 or more children were released to sponsors in fiscal year 2014. We interviewed individuals representing 19 local entities including—six school districts, one county office of education, five human services agencies or organizations, one county health system, one county executive’s office, one county juvenile court system, one mayor’s office, and three local health clinics. We also corresponded via email with a representative from a second mayor’s office. The counties include Fairfax County, VA; Harris County, TX; Nobles County, MN; Pulaski County, AR; San Mateo County, CA; and Scott County, MS. These counties were selected to represent a diversity of size, geographic location, and demographics, including variation in the size of the Latino population. We used publically available ORR data on the number of children released to sponsors by county and county demographic data from the United States Census Bureau to select counties. We then obtained additional data on the cities within selected counties children were being released to from ORR to select localities within counties to contact. Separately, we conducted interviews with city officials and nonprofit service providers in one of the cities in which we conducted a site visit.\nWe also analyzed Department of Justice’s Executive Office for Immigration Review (EOIR) data and interviewed relevant officials from EOIR. To assess the reliability of EOIR data we reviewed related documentation and interviewed officials knowledgeable about the data. We also spoke with DHS officials. DHS’s Immigration and Customs Enforcement (ICE) and U.S. Citizenship and Immigration Services (USCIS) responded to written questions regarding the reliability of their data. We found these data to be sufficiently reliable for our purposes.\nWe conducted this performance audit from October 2014 to February 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "", "In addition to the contact named above, Gale Harris (Assistant Director), Kathryn Larin (Assistant Director), Ramona L. Burton (Analyst-in-Charge), David Barish, Erika Huber, and Jesse Lamarre-Vincent made key contributions to this report. In addition, key support was provided by Lucas M. Alvarez, Sandra L. Baxter, James Bennett, Kathryn Bernet, Justin Fisher, Alison Grantham, Jean L. McSween, Jon Najmi, James Rebbe, Almeta J. Spencer, and Kathleen van Gelder.", "Unaccompanied Alien Children: Improved Evaluation Efforts Could Enhance Agency Programs to Reduce Migration from Central America. GAO-16-163T. Washington, D.C.: October 21, 2015.\nCentral America: Improved Evaluation Efforts Could Enhance Agency Programs to Reduce Unaccompanied Child Migration. GAO-15-707. Washington, D.C.: July 29, 2015.\nUnaccompanied Alien Children: Actions Needed to Ensure Children Receive Required Care in DHS Custody. GAO-15-521. Washington, D.C.: July 14, 2015.\nCentral America: Information on Migration of Unaccompanied Children from El Salvador, Guatemala, and Honduras. GAO-15-362. Washington, D.C.: February 27, 2015." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h2_title", "h2_full", "h2_full", "h0_title h1_title", "h0_full", "h0_full h1_full", "h1_title", "", "h1_full", "h1_full", "h2_full", "h4_title h0_title h1_title h3_title", "h3_full", "h0_full h3_full h4_full h1_full", "", "h0_full h1_full", "", "", "h4_full", "", "", "", "", "", "" ] }	{ "question": [ "What issue did ORR initially have when given the care of tens of thousands of children?", "What did ORR do to fix the issue for the future?", "How did the number of children in ORR's care change through 2015?", "How could ORR improve its ability to balance preparations for anticipated needs while minimizing excess capacity?", "What happened to the children apprehended by federal immiagration officers?", "What part of the world were most of these children from?", "How is ORR able to provide care for unaccompanied children?", "How did GAO attempt to verify that all required services were being provided?", "What efforts did ORR make to ensure better coverage of grantees?", "Why might ORR not be able to identify areas where children's care is not provided in accordance with policies and agreements?", "What do ORR grantees do to potential sponsors before releasing children to them?", "How does the extent of what the grantee does vary?", "What kinds of people might be sponsors?", "What are these children often waiting for when with their sponsors?", "Why is there limited info available on post-release services provided to children?", "What was the purpose behind the National Call Center established by ORR?", "What other initiatives has ORR undertaken in order to track children’s progress?", "Why might this data not be reliable?", "What other difficulties may these services run into?", "What does this report examine about ORR?", "What data did GAO review in order to create this report?", "How were interviews part of the report process?", "How did GAO choose a sample ORR grantee facilities to visit?" ], "summary": [ "GAO found that ORR was initially unprepared to care for that many children; however, the agency increased its bed capacity to accommodate up to 10,000 children at a time.", "Given the unprecedented demand for capacity in 2014, ORR developed a plan to help prepare it to meet fiscal year 2015 needs.", "The number of children needing ORR's care declined significantly through most of fiscal year 2015, but began increasing again toward the end of the summer.", "Given the inherent uncertainties associated with planning for capacity needs, ORR's lack of a process for annually updating and documenting its plan inhibits its ability to balance preparations for anticipated needs while minimizing excess capacity.", "In fiscal year 2014, nearly 57,500 children traveling without their parents or guardians (referred to as unaccompanied children) were apprehended by federal immigration officers and transferred to the care of the Department of Health and Human Services' Office of Refugee Resettlement (ORR).", "Most of these children were from Central America.", "ORR relies on grantees to provide care for unaccompanied children, including housing and educational, medical, and therapeutic services.", "GAO's review of a sample of children's case files found that they often did not contain required documents, making it difficult to verify that all required services were provided.", "ORR revised its on-site monitoring program in 2014 to ensure better coverage of grantees.", "However, ORR was not able to complete all the visits it planned for fiscal years 2014 and 2015, citing lack of resources. By not monitoring its grantees consistently, ORR may not be able to identify areas where children's care is not provided in accordance with ORR policies and the agreements with grantees.", "ORR grantees conduct various background checks on potential sponsors prior to releasing children to them. These potential sponsors are identified and screened by the grantees as part of their responsibilities for the unaccompanied children in their care.", "The extent of the checks conducted depends on the relationship of the sponsor to the child.", "In nearly 90 percent of these cases, the sponsors were a parent or other close relative already residing in the United States. Sponsors do not need to have legal U.S. residency status.", "Between January 2014 and April 2015, ORR released about 50,000 children from Central America to sponsors to await their immigration hearings.", "There is limited information available on post-release services provided to children after they leave ORR care. In part, this is because ORR is only required to provide services to a small percentage of children, such as those who were victims of trafficking.", "In May 2015, ORR established a National Call Center to assist children who may be facing placement disruptions, making post-release services available to some of them.", "Also, in August 2015, ORR began requiring well-being follow-up calls to all children 30 days after their release.", "ORR is collecting information through these new initiatives, but does not currently have a process to ensure that the data are reliable, systematically collected, or compiled in summary form.", "Service providers GAO spoke with also noted that some of these children may have difficultly accessing services due to the lack of bilingual services in the community, lack of health insurance, or other barriers.", "This report examines (1) ORR's response to the increase in unaccompanied children, (2) how ORR cares for children in its custody and monitors their care, (3) how ORR identifies and screens sponsors for children, and (4) what is known about services children receive after they leave ORR custody.", "GAO reviewed relevant federal laws and regulations, ORR policies, and ORR and Executive Office for Immigration Review data.", "GAO interviewed agency officials and community stakeholders in six counties that received unaccompanied children, representing diversity in geographic location, size, and demographics.", "GAO also visited nine ORR grantee facilities in three states selected to vary in the type of care provided, shelter size, and location, and conducted a random, non-generalizable case file review of 27 case files of children released from these facilities." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 4, -1, 0, -1, -1, -1, 0, -1, -1, -1, -1, 1, -1, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 5, 5, 1, 1, 1, 1 ] }
CRS_R44499	{ "title": [ "", "Introduction", "Understanding the DOT Appropriations Act", "Reauthorization of Air Transportation Programs", "DOT Funding Trend", "DOT FY2017 Appropriations", "Selected Issues", "Highway Trust Fund Solvency", "National Infrastructure Investment (TIGER Grants)", "Essential Air Service (EAS)14", "Intercity Rail Safety", "Intercity Passenger Rail Development", "Federal Transit Administration Capital Investment Grants", "Grant to the Washington Metropolitan Area Transit Authority", "Commercial Driver Hours of Service and the 34-Hour Restart Requirement" ], "paragraphs": [ "", "The Obama Administration requested $94.5 billion for the Department of Transportation (DOT) for FY2017, $19.5 billion (26%) more than DOT received in FY2016. The Obama Administration proposal included significant increases in funding for highway, transit, and intercity passenger rail programs. Around 75% of DOT's funding is mandatory budgetary authority drawn from trust funds; the Administration's request would have drawn a larger portion (87%) from mandatory budget authority, reducing the amount of discretionary budget authority in DOT's budget from $18.6 billion in 2016 to $12.0 billion for FY2017.\nThe Senate Committee on Appropriations recommended a total of $76.9 billion in new budget authority for DOT for FY2017 ($74.7 billion after scorekeeping adjustments); this is $1.8 billion (2.5%) above the comparable FY2016 amount. The committee rejected the request to reclassify some DOT expenditures as \"mandatory.\"\nOn May 12, 2016, the full Senate began consideration of FY2017 appropriations for Transportation, HUD, and Related Agencies. By custom, appropriations bills originate in the House of Representatives. Because House action on the FY2017 THUD bill had not yet occurred, the Senate substituted the text of the Senate-reported FY2017 THUD bill ( S. 2844 ) for the text of H.R. 2577 , which originally contained the text of the Senate-reported FY2016 THUD bill. The Senate Appropriations Committee substitute amendment ( S.Amdt. 3896 ) to the bill also includes as Division B the text of the Senate Appropriations Committee-reported FY2017 Military Construction, Veterans Affairs, and Related Agencies bill.\nOn May 24, 2016, the House Committee on Appropriations reported out H.R. 5394 .\nAccording to press reports, the Trump Administration has requested that the Essential Air Service program and the TIGER (National Infrastructure Investment) grant program be eliminated, and that the transit New Starts (Capital Investment Grants) program be reduced by $400 million from its FY2016 level, for FY2017.", "DOT's funding arrangements are unusual compared to those of most other federal agencies.\nTwo large trust funds, the Highway Trust Fund and the Airport and Airway Trust Fund, provide 91% of DOT's budget authority (see Table 1 ). The scale of the funding coming from these funds is not entirely obvious in DOT budget tables, because most of the funding from the Airport and Airway Trust Fund is in the form of discretionary budget authority and so is combined with the discretionary budget authority provided from the general fund.\nAlso, for most federal agencies discretionary funding is close or identical to total funding. But roughly three-fourths of DOT's funding is mandatory budget authority derived from trust funds. Only one-fourth of DOT's budget authority is truly discretionary authority. Table 2 shows the breakdown between the discretionary and mandatory funding in DOT's budget.\nApproximately 80% of DOT's funding is distributed to states, local authorities, and Amtrak in the form of grants (see Table 3 ). Of DOT's largest sub-agencies, only the Federal Aviation Administration, which is responsible for the operation of the air traffic control system and employs roughly 83% of DOT's 56,252 employees, many as air traffic controllers, has a budget whose primary expenditure is not making grants.", "Since most DOT funding comes from trust funds whose revenues typically come from taxes, the periodic reauthorizations of the taxes supporting these trust funds, and the apportionment of the budget authority from those trust funds to DOT programs, are a significant aspect of DOT funding. The current authorization for the federal aviation programs is scheduled to expire during FY2017. Reauthorization of this program may affect both its structure and funding level.", "In current (nominal) dollars, DOT's nonemergency annual funding has risen from a recent low of $70 billion in FY2012 to $75 billion in FY2016. However, adjusting that funding for inflation tells a somewhat different story. DOT's inflation-adjusted funding peaked in FY2010 at $85.4 billion (in constant 2016 dollars) and declined from that point until FY2015, before rising in FY2016 (see Figure 1 ). Since FY2012, DOT's funding has been lower, after adjustment for inflation, than in any year during the FY2006-FY2011 period.", "Table 4 presents a selected account-by-account summary of FY2017 appropriations for DOT, compared to FY2016.", "Overall, the Obama Administration's FY2017 budget request totaled $96.9 billion in new budget resources for DOT. The requested funding is $21.9 billion more than that enacted for FY2016. The Obama Administration request called for significant increases over the authorized amounts for highways, transit, and intercity rail.\nAccording to press reports, the Trump Administration has requested $1 billion in reductions from FY2016 levels, zeroing out the Essential Air Services program (-$150 million) and the TIGER (National Infrastructure Investment) grant program (-$500 million) and reducing funding for the transit New Starts program (-$400 million).", "Virtually all federal highway funding and most federal transit funding come from the Highway Trust Fund, whose revenues comes largely from the federal motor fuels excise tax (\"gas tax\"). For several years, expenditures from the fund have exceeded revenues; for example, for FY2017, revenues are projected to be approximately $42 billion, while authorized outlays are projected to be approximately $56 billion. Congress transferred about $143 billion, mostly from the general fund of the Treasury, to the Highway Trust Fund during the period FY2008-FY2016 to keep the trust fund solvent.\nOne reason for the shortfall in the fund is that the federal gas tax has not been raised since 1993. The tax is a fixed amount assessed per gallon of fuel sold, not a percentage of the cost of the fuel sold: whether a gallon of gas costs $1 or $4, the highway trust fund receives 18.3 cents for each gallon of gasoline and 24.3 cents for each gallon of diesel. Meanwhile, the value of the gas tax has been diminished by inflation (which has reduced the purchasing power of the revenue raised by the tax) and increasing automobile fuel efficiency (which reduces growth in gasoline sales as vehicles are able to travel farther on a gallon of fuel). The Congressional Budget Office (CBO) has forecast that gasoline consumption will be relatively flat through 2024, as continued increases in the fuel efficiency of the U.S. passenger fleet are projected to offset increases in the number of miles driven. Consequently, CBO expects Highway Trust Fund revenues of $40 billion to $42 billion annually from FY2017 to FY2026, well short of the annual level of projected expenditures from the fund.", "For FY2017, the Administration requested $1.25 billion for TIGER grants, the same amount as in previous years. The Senate bill would have provided $525 million, $25 million above the FY2106 amount. The Senate bill also recommended that the portion of funding allocated to projects in rural areas be increased from 20% to 30%; the same change was included in the Senate-passed bill in FY2016, but was not enacted. The House Committee on Appropriations recommended $450 million.\nThe Transportation Investments Generating Economic Recovery (TIGER) grant program originated in the American Recovery and Reinvestment Act ( P.L. 111-5 ), where it was called \"national infrastructure investment\" (as it has been in subsequent appropriations acts). It is a discretionary grant program intended to address two criticisms of the current structure of federal transportation funding:\nthat virtually all of the funding is distributed to state and local governments, which select projects based on their individual priorities, making it difficult to fund projects that have national or regional impacts but whose costs fall largely on one or two states; and that federal transportation funding is divided according to mode of transportation, making it difficult for projects in different modes to compete on the basis of comparative benefit.\nThe TIGER program provides grants to projects of national, regional, or metropolitan area significance in various modes on a competitive basis, with recipients selected by DOT.\nAlthough the program is, by description, intended to fund projects of national, regional, and metropolitan area significance, in practice its funding has gone more toward projects of regional and metropolitan area significance. In large part this is a function of congressional intent, as Congress has directed that the funds be distributed equitably across geographic areas, between rural and urban areas, and among transportation modes, and has set relatively low minimum grant thresholds ($5 million for urban projects, $1 million for rural projects).\nCongress has continued to support the TIGER program through annual DOT appropriations. It is heavily oversubscribed; for example, DOT announced that it received a total of $10.1 billion in applications for the $500 million available for FY2015 grants.\nThe U.S. Government Accountability Office (GAO) has reported that, while DOT has selection criteria for the TIGER grant program, it has sometimes awarded grants to lower-ranked projects while bypassing higher-ranked projects without explaining why it did so, raising questions about the integrity of the selection process. DOT has responded that while its project rankings are based on transportation-related criteria (e.g., safety, economic competitiveness), it must sometimes select lower-ranking projects over higher-ranking ones to comply with other selection criteria established by Congress, such as geographic balance and a balance between rural and urban awards.\nCritics argue that TIGER grants go disproportionately to urban areas. For several years Congress has directed that at least 20% of TIGER funding should go to projects in rural areas. According to the 2010 Census, 19% of the U.S. population lives in rural areas.\nAs Table 5 illustrates, the TIGER grant appropriation process has followed a pattern for several years: the Administration requests as much as or more than Congress has previously provided; the House zeroes out the program or proposes a large cut; the Senate proposes an amount similar to the previously enacted figure; and the final enacted amount is similar to the previously enacted amount.", "As Table 6 shows, the Obama Administration requested $150 million for the EAS program in FY2017, in addition to $104 million in mandatory funding for a total of $254 million. The Senate bill would have provided a total of $254 million, the requested amount. This was a reduction of $29 million (10%) from the FY2016 level. The requested reduction is based on an expectation of reduced costs as cost-saving measures previously enacted come into effect. The House Committee on Appropriations likewise recommended $150 million.\nThe program is funded through a combination of mandatory and discretionary budget authority. In addition to the annual discretionary appropriation, there is a mandatory annual authorization, $108 million in FY2016, financed by overflight fees collected from commercial airlines by FAA. These overflight fees apply to international flights that fly over, but do not land in, the United States. The fees are to be reasonably related to the costs of providing air traffic services to such flights.\nThe EAS program seeks to preserve commercial air service to small communities by subsidizing service that would otherwise be unprofitable. The cost of the program in real terms has doubled since FY2008, in part because route reductions by airlines resulted in new communities being added to the program (see Table 7 ). Congress made changes to the program in 2012, including allowing no new entrants, capping the per-passenger subsidy for a community at $1,000, limiting communities that are less than 210 miles from a hub airport to a maximum average subsidy per passenger of $200, and allowing smaller planes to be used for communities with few daily passengers.\nSupporters of the EAS program contend that preserving airline service to small communities was a commitment Congress made when it deregulated airline service in 1978, anticipating that airlines would reduce or eliminate service to many communities that were too small to make such service economically viable. Supporters also contend that subsidizing air service to smaller communities promotes economic development in rural areas. Critics of the program note that the subsidy cost per passenger is relatively high, that many of the airports in the program have very few passengers, and that some of the airports receiving EAS subsidies are little more than an hour's drive from major airports.", "In 2008, Congress directed railroads to install positive train control (PTC) on certain segments of the national rail network by the end of 2015. PTC is a communications and signaling system that is capable of preventing incidents caused by train operator or dispatcher error. Freight railroads have reportedly spent billions of dollars thus far to meet this requirement, but most of the track required to have PTC installed was not in compliance at the end of 2015; in October 2015 Congress extended the deadline to the end of 2018—with an option for individual railroads to extend to 2020 with Federal Railroad Administration (FRA) approval.\nCongress provided $50 million in FY2010 and again in FY2016 for grants to railroads to help cover the expenses of installing PTC. The Obama Administration's FY2017 budget request included $875 million for the cost of PTC implementation on commuter railroad routes. The Senate recommended $199 million for PTC implementation on commuter and state-supported intercity passenger rail lines, as did the House Committee on Appropriations.", "The Passenger Rail Reform and Investment Act of 2015 (Title XI of P.L. 114-94 ) reauthorized Amtrak while changing the structure of its federal grants: instead of getting separate grants for operating and capital expenses, it will now receive separate grants for the Northeast Corridor and the rest of its national network. This act also authorized three programs to make grants to states, public agencies, and rail carriers for intercity passenger rail development.\nThe Administration's FY2017 budget for intercity rail development requested a total of $6 billion in two new programs: a Current Rail Passenger Service Program, which would primarily fund maintenance and improvement of existing intercity passenger rail service (i.e., Amtrak), and a Rail Service Improvement Program, which would fund new intercity passenger rail projects as well as some improvements to freight rail. The funding would come from a new transportation trust fund rather than discretionary funding. The Administration has made a similar proposal annually since FY2014. The Senate bill includes $1.42 billion for Amtrak, $30 million more than its FY2016 appropriation of $1.39 billion (see Table 8 ), and observed that creating a new transportation trust fund was a task for authorizing committees, not appropriations committees, while acknowledging that Amtrak has a state of good repair backlog of $28 billion on the Northeast Corridor. The House Committee on Appropriations likewise recommended $1.42 billion for Amtrak.\nThe $85 million in the Senate bill, and $50 million recommended in the House bill, for intercity passenger rail grants in FY2017 in addition to the grants to Amtrak would be the first funding provided for intercity passenger rail (other than grants for positive train control implementation) since the 111 th Congress (2009-2010), which provided $10.5 billion for DOT's high-speed and intercity passenger rail grant program. Since then, Congress has provided no additional funding, and in FY2011 rescinded $400 million that had been appropriated but not yet obligated.", "The majority of the Federal Transit Administration's (FTA's) roughly $12 billion in funding is funneled to state and local transit agencies through several formula programs. The largest discretionary transit grant program is the Capital Investment Grants program (commonly referred to as the New Starts and Small Starts program). It funds new fixed-guideway transit lines and extensions to existing lines. The program has four components. New Starts funds capital projects with total costs over $300 million that are seeking more than $100 million in federal funding. Small Starts funds capital projects with total costs under $300 million that are seeking less than $100 million in federal funding. Core Capacity grants are for projects that will increase the capacity of existing systems. The Expedited Project Delivery Pilot Program will provide funding for eight projects in the previous three categories that require no more than a 25% federal share and are supported, in part, by a public-private partnership.\nThe Capital Investment Grants program funds for any project are typically disbursed over a period of years. Much of the funding for this program each year is committed to projects with multiyear grant agreements signed in previous years.\nFor FY2017, the Obama Administration requested $3.5 billion for the program, $1.323 billion (61%) more than the $2.177 billion provided in FY2016. The Senate bill would have provided $2.338 billion, the authorized level, which is 7% ($161 million) above the FY2016 level. The House Committee on Appropriations recommended $2.5 billion.\nA New Starts grant, by statute, can be up to 80% of the net capital project cost. Since FY2002, DOT appropriations acts have included a provision directing FTA not to sign any full funding grant agreements for New Starts projects that would provide a federal share of more than 60%. That provision was not included in the Senate bill. The House-reported bill included a provision prohibiting grant agreements where the federal share was more than 50%.\nCritics of lowering the federal share provided for New Starts projects note that the federal share for highway projects is typically 80%, and in some cases is higher. They contend that the higher federal share makes highway projects relatively more attractive than public transportation projects for communities considering how to address transportation problems. Advocates of this provision note that the demand for New Starts funding greatly exceeds the amount available, so requiring a higher local match allows FTA to support more projects with the available funding. They also assert that requiring a higher local match likely encourages communities to estimate the costs and benefits of proposed transit projects more carefully, reducing the risk of subsequent cost overruns.", "The Passenger Rail Investment and Improvement Act of 2008 authorized $1.5 billion over 10 years in grants to the Washington Metropolitan Area Transit Authority (WMATA) for preventive maintenance and capital grants, to be matched by funding from the District of Columbia and the states of Maryland and Virginia. Under this agreement, Congress has provided $150 million to WMATA in each of the past six years.\nWMATA faces a number of difficulties. It is dealing with a backlog of maintenance needs due to inadequate maintenance investment over many years, and it has experienced several fatal incidents, most recently in January 2015, and a number of other incidents that have raised questions about the safety culture of the agency. An investigation that found numerous instances of mismanagement of federal funding has led FTA to restrict WMATA's use of federal funds. An FTA audit of WMATA's safety practices in 2015 produced many recommendations for change, and in October 2015 FTA assumed oversight of WMATA's safety compliance practices from the Tri-State Oversight Committee, the agency created by the governments of the District of Columbia, Maryland, and Virginia to oversee WMATA safety performance. The three jurisdictions are to create a new, more effective oversight entity to replace the Tri-State Oversight Committee. The National Transportation Safety Board has recommended that oversight of WMATA's rail operations be assigned to the Federal Railroad Administration (FRA), which has a long history of safety enforcement, rather than the FTA, which is primarily a grant management agency. However, Congress would have to act to give FRA authority to oversee WMATA, while FTA already has such authority.\nFor FY2017, the Senate bill would have provided $150 million for WMATA, while expressing frustration at the lack of progress the agency has made in improving safety with the additional funding it has been receiving. The House Committee on Appropriations likewise recommended $150 million.", "The Senate bill would have amended a provision from the FY2016 THUD act, and made a provisional change in the hours-of-service rule. The FY2016 THUD act included a provision that suspends portions of the commercial driver hours-of-service rules pending a study of their costs and benefits. These Federal Motor Carrier Safety Administration (FMCSA) rules took effect in June 2013. Prior to that time, drivers were required to take at least 34 hours off duty after working for 60 hours in a seven-day period (or 70 hours in an eight-day period); this was referred to as the \"34-hour restart requirement.\" The 2013 rules required that the 34-hour off-duty period cover two consecutive 1 a.m.-5 a.m. periods, and drivers were limited to taking this 34-hour \"restart\" once in a 168-hour (seven-day) span. If drivers work for less than 60 hours in a week, they do not have to take the 34-hour restart; for example, if a driver works eight hours every day, for a total of 56 hours in any seven-day period, that driver is not required to take a 34-hour rest period.\nThe purpose of the 2013 change in the hours-of-service rules was to promote highway safety by reducing the risk of driver fatigue. Under the previous rules, drivers could start their 34-hour rest period at any time of the day, and could take more than one such rest period per seven-day period. Thus a driver was able to work the maximum permitted time per day (14 hours) and take the 34-hour restart after five days, and then, after a rest period of as little as one night and two daytime periods, work 14 hours a day for another five consecutive days. FMCSA asserted that this schedule allowed a driver to work up to 82 hours over a seven-day period, which it judged to not allow sufficient rest over time to prevent driver fatigue. By requiring that the 34-hour restart period cover two 1 a.m.-5 a.m. periods, the 2012 rule was intended to allow drivers to get more sleep during the night hours, when studies indicate that sleep is most restorative (compared to sleeping during other times of the day).\nA provision included in the FY2016 THUD appropriations act prohibited enforcement of the new requirements, returning the rule to what it was prior to June 2013, unless a study required by Section 133 of Division K of P.L. 113-235 (the FY2015 THUD act) finds that commercial drivers operating under the new restart provisions showed \"statistically significant improvement in all outcomes related to safety, operator fatigue, driver health and longevity, and work schedules.\" This is slightly different than the original standard set in the FY2015 DOT appropriations act, P.L. 113-235 , which set as the standard whether the study showed a \"greater net benefit for the operational, safety, health and fatigue impacts of the restart provisions.\"\nThe Senate bill would have made a technical correction to the provision in the FY2016 THUD bill. It also would have provided that, should the results of the study be such that the rule changes implemented in 2013 are rolled back, the maximum work time for a driver would be 73 hours in a seven-day period (down from the potential 82 hours calculated by FMCSA).\nFMCSA published a cost-benefit analysis in the final rule that implemented the 2013 changes, which found that the changes were cost-beneficial, but critics of the changes said that the costs were greater than FMCSA had estimated. FMCSA submitted the new study to Congress at the beginning of March 2017; it found that the 2013 rule changes did not result in significant safety benefits." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 3, 3, 3, 3, 3, 3, 3, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "", "h0_title h2_title h1_title", "h0_title h2_full h1_title", "h0_full", "", "", "", "h0_full", "h2_full h1_full", "", "h2_full" ] }	{ "question": [ "What does the DOT appropriations bill do?", "What changed regarding funding for transportation infrastructure?", "What issue has arisen as a result of this decision?", "How has the federal excise tax on motor fuel changed over the years?", "How has Congress addressed issues surrounding the federal excise tax on motor fuel?", "What does the THUD appropriations bill include?", "What happened to H.R. 2577 in the 114th Congress?", "What would this bill have done?", "Why was the increase in spending though H.R. 2577 not obvious?", "What was the point of H.R. 5394?", "How did FY2017 funding compare to FY2016 levels?", "What programs did the Trump Administration request a funding reduction for from FY2016?" ], "summary": [ "The DOT appropriations bill funds federal programs covering aviation, highways and highway safety, public transit, intercity rail, maritime safety, pipelines, and related activities.", "Federal highway, transit, and rail programs were reauthorized in the fall of 2015, and their future funding authorizations were somewhat increased.", "There is general agreement that more funding is needed for transportation infrastructure, but Congress has not been able to agree on a source that could provide the additional funding.", "The federal excise tax on motor fuel, which is the primary funding source for federal highway and transit programs, has not been increased in over 20 years, and does not raise enough revenue to support even the current level of spending.", "To address this shortfall, Congress periodically transfers money from the general fund to keep the programs going.", "The annual appropriations for DOT are combined with those for the Department of Housing and Urban Development (HUD) in the Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations bill.", "In the 114th Congress, the Senate passed H.R. 2577, in which Division A was FY2017 appropriations for THUD.", "The bill would have provided $76.9 billion in new budget authority for DOT, $1.8 billion more than the comparable figure in FY2016 but roughly $20 billion less than the Administration request.", "The increase in spending over FY2016 was not obvious in budget tables due to a proposed rescission of $2.2 billion of contract authority, which made the net FY2017 amount $344 million less than the comparable FY2016 appropriation.", "The House Committee on Appropriations reported out H.R. 5394, which would have provided $76.9 billion in new budget authority for DOT.", "FY2017 funding is being provided by a continuing resolution (CR) at roughly FY2016 levels.", "According to press reports, the Trump Administration has requested a $1 billion reduction in DOT funding from FY2016 levels, with cuts to the Essential Air Service, TIGER (National Infrastructure Investment), and transit New Starts grant programs." ], "parent_pair_index": [ -1, -1, 1, -1, 3, -1, -1, 1, 2, -1, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 4, 4 ] }
CRS_R40107	{ "title": [ "", "Introduction", "The Context: Current Economic Conditions", "Defining Infrastructure in Today's Context", "Infrastructure and the Economy", "Productivity and Output", "Infrastructure Job Creation", "The Contribution of Infrastructure to Economic Stimulus", "Issues", "Setting Priorities and Determining Funding Needs", "\"Ready to Go\" Projects", "Getting the Job Done: Resource and Governance Issues", "Is There a Role for \"Green Infrastructure\" as Part of Economic Stimulus?", "Appendix. Infrastructure Sector Categories", "Conditions, Performance, and Funding Needs", "Federal Assistance", "Issues for the Water Resources Sector", "Conditions, Performance, and Funding Needs", "Federal Assistance", "Issues for the Wastewater Sector", "Conditions, Performance, and Funding Needs", "Federal Assistance", "Drinking Water Investment as a Mechanism for Economic Stimulus", "Issues for the Drinking Water Sector", "Conditions, Performance, and Funding Needs", "Federal Assistance", "Issues for the Electric Power Sector", "Conditions, Performance, and Funding Needs", "Federal Assistance", "Issues for the Federal Building Construction and Renovation Sector", "Issues for the Broadband Sector" ], "paragraphs": [ "", "Policymakers at all levels of government are debating a wide range of options for addressing the nation's faltering economic conditions. One option that is receiving attention is accelerated investments in the nation's public infrastructure—that is, highways, mass transit, airports, water supply and wastewater, dams, locks, canals, passenger rail, and other facilities—in order to create jobs while also promoting long-term economic growth.\nThis report presents policy issues associated with using infrastructure as a mechanism for economic stimulus. It begins with two contextual aspects of this discussion, what is the current economic condition and how to define infrastructure. The report then reviews the role of infrastructure investment in economic growth generally and in contributing to stimulating a faltering economy. It discusses key issues, such as setting priorities, resource and governance, and the possible role of \"green\" infrastructure as part of economic stimulus. Finally, it includes an Appendix with descriptions of a number of infrastructure categories that have recently been mentioned for inclusion in economic stimulus legislation in the 111 th Congress.", "Interest in government spending to stimulate economic recovery has intensified recently in response to economic indicators showing significant and continuing deterioration of the national economy. In the third quarter of 2008, real gross domestic product (GDP, the economy's total output of goods and services) fell by 0.5%, and the December 2008 Blue Chip Economic Indicators consensus forecast was for real GDP to decline by 1.1% for all of 2009 and for the unemployment rate to reach 8.1% by the end of 2009. In November, the unemployment rate stood at a 15-year high of 6.7%. Further, on December 1, the nonpartisan National Bureau of Economic Research officially declared that the U.S. economy has been in recession since December 2007; a recession is defined as a broad contraction of the economy not confined to one sector. The economy reportedly lost jobs every month in 2008 for a total of 1.9 million for the year.\nFiscal problems are affecting all levels of government. In December, the National Association of State Budget Officers and the National Governors Association reported significant weakening of fiscal conditions in nearly every state and budget gaps for the current fiscal year of approximately $30 billion, in addition to more than $12 billion that has already been cut from state budgets. States face growing expenditure pressures as the economy deteriorates, including increased funding of public assistance programs such as Medicaid. States also face long-term issues such as funding pensions and maintaining and repairing infrastructure.\nLocal governments also are dealing with fiscal pressures. A September survey by the National League of Cities found that city finance officers expect revenue from property, sales, and income taxes to decrease by 4.3% in 2008. The survey also found that 79% of cities expect their finances to worsen in 2009, because of a lag between current economic conditions and effects on city revenue. Consequently, cities are laying off workers, raising fees, closing municipal facilities such as libraries, and cancelling or postponing projects.\nMuch of the public responsibility to build, operate, and maintain infrastructure resides with localities. Cities and states that normally rely on the bond market to finance long-term projects recently have found that market less accessible, as a fallout from financial turmoil on Wall Street, meaning that it is more difficult to borrow money. Municipal bonds, if they can be sold, are lately commanding higher interest rate yields, making it more costly for states and cities to borrow. These higher rates are causing officials to scale back, delay, or cancel projects.\nAs a result of these conditions, states, which under their constitutions are not permitted to operate in deficit, and cities are increasingly looking to the federal government for assistance on a range of policies and projects. Organizations representing states and municipalities have issued agenda documents with both policy and short-term and long-term assistance recommendations for Congress and the Administration, including infrastructure, health care reform, housing, benefit programs for individuals, budget relief and help in accessing capital, and governance.\nThe concept of countering the effect of recessions with legislation to spur job creation through increased spending on public works infrastructure is not new. In recent decades, Congress has done so on several occasions. For example, in 1983 ( P.L. 98-8 ) and 1993 ( P.L. 103-50 ), Congress appropriated funds to a number of existing federal infrastructure and public works programs in hopes that projects and job creation would be stimulated quickly.\nAt least two factors are new this time. One is the severity of the economic downturn (reportedly the worst in 50 years ) which is widely expected to be of long duration, not short. Another is the fact that the current debate about a job-creating stimulus program is merging with discussion among infrastructure advocates that has been ongoing for years about the need for investment to address problems of aging and deteriorating public works. These infrastructure problems have been increasingly recognized by policymakers and the public at large. It is argued that the U.S. investments in public infrastructure have declined significantly in recent decades, to the point that this country is underinvesting in its critical assets, and is failing to construct new facilities or adequately maintain existing systems. The perception that current investment levels are inadequate is in part supported by data which show that, relative to GDP, infrastructure spending has declined about 20%, from 3.06% in 1959 to 2.40% of GDP in 2004. During this same period, spending has shifted from predominantly on capital (63% in 1959, compared with 46% in 2004) to operation and maintenance (37% in 1959, compared with 54% in 2004). In a growing economy, infrastructure should hold its own, but other data show that spending by government at all levels has declined from a high of $1.37 per capita in 1960 to $0.94 per capita in 2004 (in 2006 dollars).\nDuring the presidential campaign, candidate Barack Obama pledged to invest in rebuilding the nation's infrastructure, especially transportation systems, in order to create jobs. Since November, President-elect Obama has highlighted immediate investments in infrastructure projects as a key element of his plans to revitalize the economy:\nThe Obama-Biden emergency plan would make $25 billion immediately available in a Jobs and Growth Fund to help ensure that in-progress and fast-tracked infrastructure projects are not sidelined, and to ensure that schools can meet their energy costs and undertake key repairs starting this fall. This increased investment is necessary to stem growing budget pressures on infrastructure projects. In addition, in an environment where we may face elevated unemployment levels well into 2009, making an aggressive investment in urgent, high-priority infrastructure will serve as a triple win: generating capital deployment and job creation to boost our economy in the near-term, enhancing U.S. competitiveness in the longer term, and improving the environment by adopting energy efficient school and infrastructure repairs. In total, Obama and Biden's $25 billion investment will result in 1 million jobs created or saved, while helping to turn our economy around.\nFor now, details of the new Administration's economic stimulus plan, including how much of the total will be devoted to infrastructure and to which infrastructure sectors, are unclear.", "Most people probably think about roads, airports, or water supply when they refer to infrastructure, having in mind the types of systems or facilities that are publicly provided and are important to the productive capacity of the nation's economy. But some analysts argue that such a conception is too narrow. Accordingly, the term might be defined more broadly to also include spending by the private sector, such as by private utilities that provide electricity or natural gas. In addition, other types of public investment, such as public buildings, may not add directly to the productive capacity of the economy but do represent assets in the nation's capital stock.\nThe current discussion includes no single definition of infrastructure or list of categories or types of infrastructure that might receive assistance as part of economic stimulus, and ultimately it will be defined by those who are responsible for crafting the legislation. The lack of a definition is not unlike infrastructure discussions that have occurred in the past (see the box \"What is Infrastructure?\" below). Today, policymakers and stakeholder groups appear inclined to define the term broadly to include facilities and categories that vary considerably in the degree of historic federal investment in building or rebuilding physical structures (e.g., highways compared with public schools) and systems that have a long history of combined public and private ownership (water resource projects as well as electric transmission systems, some of which are federally owned, for example). See Table A-1 in the Appendix for information on the level(s) of government or the private sector that typically are responsible for infrastructure. Indeed, today there is considerable blurring between public and private infrastructure, raising more frequent questions about what should be the role of government, including the federal government, in providing infrastructure services. In part, this is due to increasing reliance on the private sectors—through contract operations, full ownership and other arrangements—to provide functions and services that typically are thought of as public. Examples include prisons, passenger rail, and postal services and mail delivery. A relatively new dimension in today's context is the notion of coupling public works with investments in environmentally friendly systems that incorporate renewable technologies or energy efficiency—called \"green infrastructure\" (see discussion below).\nThe Appendix to this report provides descriptions of a number of infrastructure categories that have recently been mentioned for inclusion in economic stimulus legislation in the 111 th Congress. The descriptions include information on conditions, performance, and funding needs; discussion of investment in each category as a mechanism for economic stimulus; and longer term issues.", "Academics, economists, and policymakers debate two key issues concerning the contribution of infrastructure investment to the economy. One is the general issue of the effects of infrastructure spending and investment on productivity and growth. The second related issue is the role of infrastructure spending, including short-term job creation, as a countercyclical tool in stimulating a faltering economy.", "The question of whether or how the availability of public infrastructure, and investments in public infrastructure, influence productivity and growth has long interested academics. One economist describes the issue as follows:\nThe argument is simple. Infrastructure is a public good that produces positive externalities for production. The provision of adequate infrastructure is a necessary condition for private firms to be productive. Even if infrastructure is also provided for its amenity value (i.e. for its direct utility value to individuals) it is obvious that it plays a central role in generating external effects that fundamentally alter the capacity of the economy to produce goods and services. Just imagine an economy without roads or telephones to think about the impact that infrastructure has on productivity.\nFew would argue that infrastructure isn't important to economic activity. But, important in what precise ways, and to what degree (e.g., new construction or maintenance of existing systems), are questions that have interested researchers. Thus, public roads are important, but by themselves, they don't produce anything. Yet they are linked in complex ways to economic growth. Economically, what is important are the services that roads provide in transporting goods and people, mitigating congestion, etc.\nAcademic interest in the issue of economic payoff associated with public infrastructure spending was motivated in part by recognition of declines in public investment in the early 1970s and declines in economic productivity growth at about the same time. The question for researchers was whether there was linkage, or causality, between public investments and economic productivity and, consequently, whether underinvestment in infrastructure helped to explain the slowdown in productivity growth. Research reported in the late 1980s found that there are very large returns on investment from infrastructure spending and, by implication, argued that part of the U.S. productivity slump in the 1970s and 1980s was due to a shortfall of investing in infrastructure. Some of this early work found that a 10% rise in the public capital stock would raise multifactor productivity (meaning, changes in economic output resulting from the combination of labor, capital, materials, fuels, and purchased services) by almost 4%. This was a very high estimate and, as such, was very controversial. Subsequent investigations by others found that the initial results were highly sensitive to numerous factors, such as minor changes in data, or time period, or sectors of the economy that were analyzed.\nDuring the 1990s, further research on this issue modified the methodology used to analyze the economic effects of investing in public infrastructure and either affirmed or challenged the findings of the initial work. Although not all subsequent studies found a growth-enhancing effect of public capital, a general consensus has developed over time that there are positive returns on investment in public infrastructure, but that the impact is less than was first reported. Some of this research suggests that investments in energy infrastructure have the greatest impact on long-term private employment and investment, followed by mass transit, and water and sewer.\nAnother important conclusion of more recent research is that both the average return and range of return to the economy vary, based on the type of infrastructure and the amount of infrastructure already in place. In other words, the larger the existing stock and the better its efficient use and current quality, the lower will be the impact of new infrastructure. Also, the effect of new public investment will crucially depend on the extent to which spending aims to alleviate bottlenecks in the existing network of infrastructure systems and facilities.", "One of the ways in which Congress has tried to spur job growth and stem job losses to mitigate the impact of economic downturns is by directly raising demand for (i.e. increasing spending on) goods and services. That is to say, Congress has substituted increased federal spending for decreased consumer purchases. Most often in the postwar period, Congress has focused its efforts at direct job creation by increasing federal expenditures on public works.\nWhen Congress has considered raising spending on infrastructure to help stimulate a flagging economy, \"how many jobs will be created\" is a commonly asked question. Although all spending increases labor demand through direct and multiplier effects, the nature and number of jobs varies in the first round. Job creation estimates often are based on input-output (I-O) models of the economy. These models show, for example, the dollar value of concrete produced by the nonmetallic mineral product manufacturing industry and the dollar value of steel produced by the primary metal manufacturing industry that are used by the construction industry to produce its various final outputs (e.g., bridges, roads). The output requirements from each intermediate and final goods industry must then be converted to employment requirements. Thus, job creation estimates reflect employment directly and indirectly dependent on/supported by demand for an industry's products. Induced jobs, that is, the number of jobs that result from purchases of goods and services made by those in direct and indirect jobs, may be included as well. Estimates of induced jobs are considered tenuous, however.\nJob creation estimates vary from one source to another depending in part on industry definition, data sources, and time period. The Federal Highway Administration ( FHWA) is the source of the most widely cited estimate of jobs supported by federal highway investments. According to the FHWA's latest update, in 2007, an expenditure of $1 billion on highway construction (without a state match of $250 million) could support 27,822 direct, indirect, and induced jobs. The FHWA analysis is careful to observe that it addresses jobs supported by highway investments, not jobs created Alternatively, an employment requirements table that the U.S. Bureau of Labor Statistics (BLS) makes publicly available for use by researchers, which differs from that used by the FHWA (and does not include induced jobs), suggests that, in 2007, 13,860 jobs were directly and indirectly dependent on $1 billion of spending in the construction industry (i.e., construction of buildings, heavy and civil engineering construction including highways, and specialty trade contractors). The 13,860 direct and indirect jobs per $1 billion of total construction expenditures in 2007 is somewhat more than the 11,768 direct and indirect jobs estimate of the FHWA for each $1 billion of highway expenditures in 2006.\nAnother example of an infrastructure job creation estimate is provided by a CRS analysis based on the U.S. Bureau of Economic Analysis' Regional Input-Output Modeling System (RIMS II) and the BLS' employment requirements table described above. It suggests that between 8.1217 and 12.6231 direct and indirect jobs might be created for each $1 million spent on water reuse activities such as Title XVI projects carried out by the Department of the Interior, which provide supplemental water supplies by reclaiming and reusing wastewater and naturally impaired ground and surface water. Within the utility sector, the \"water, sewage and other systems industry\" is the proxy in this analysis for water reuse infrastructure activities. Unlike the BLS and FHWA models, RIMS II provides state estimates of job creation. (See Table 1 .) Through its use of regional data, RIMS II addresses one of the caveats mentioned by the FHWA, namely, the reliance of national models on average data which may differ from combinations of construction materials and labor inputs in the specific geographic areas where projects are undertaken.", "Since mid-2008, there have been increasing calls for Congress and the Administration to address the nation's significant economic difficulties through a variety of policy approaches. On the one hand, some argue that economic stabilization can best be achieved through monetary policy (i.e., the Federal Reserve's ability to adjust interest rates), coupled with automatic fiscal stabilizers. Others support a fiscal stimulus, and policymakers are debating a range of options for doing so.\nIn February 2008, Congress and the Administration agreed to legislation ( P.L. 110-185 ) that prominently included tax rebates for individuals as a means of stimulating the ailing economy. Effects of that legislation on the economy are not yet fully known. Under discussion now is a second stimulus package, and in that connection, many others now advocate using direct fiscal stimulus through a combination of short-term infrastructure investments, state fiscal relief, and expanded unemployment insurance and food stamps. A wide range of experts—including economists who generally differ in their economic policy views, such as Martin Feldstein and Paul Krugman —contend that, because neither consumers nor businesses are spending, a massive infusion of government spending is needed quickly to energize economic activity. Infrastructure investment, it is argued, will be an important source of stimulating labor demand, which is lacking in the current labor market, and enhancing U.S. productivity through long-neglected investments in roads, bridges, water systems, etc.\nSomewhat ironically, the nation's economic downturn presents an opportunity, according to this view, to stimulate the economy by spending on projects to address unmet infrastructure needs. These needs are presented in the finding of the American Society of Civil Engineers (ASCE) that the condition of the nation's infrastructure merits a letter grade of \"D\" and that U.S. funding needs total $1.6 trillion. ASCE reported the condition of a dozen categories of infrastructure, including roads (\"Americans' personal and commercial highway travel continues to increase at a faster rate than highway capacity, and our highways cannot sufficiently support our current or projected travel needs\"), dams (\"the number of dams identified as unsafe is increasing at a faster rate than those being repaired\"), wastewater (\"the physical condition of many of the nation's 16,000 wastewater treatment systems is poor, due to a lack of investment in plant, equipment and other capital improvements over the years\"), and schools (\"The Federal government has not assessed the condition of America's schools since 1999, when it estimated that $127 billion was needed to bring facilities to good condition. Other sources have since reported a need as high as $268 billion\").\nWhile there is growing momentum for more infrastructure investment, some analysts are cautious about the effectiveness of this type of fiscal stimulus because of one key issue: timing. This concern was described in testimony by the Director of the Congressional Budget Office.\nThe timing of fiscal stimulus is critical. If the policies do not generate additional spending when the economy is in a phase of very slow growth or a recession, they will provide little help to the economy when it is needed.... Poorly timed policies may do harm by aggravating inflationary pressures and needlessly increasing federal debt if they stimulate the economy after it has already started to recover.\n****\nFor federal purchases [of goods and services, such as infrastructure spending], the primary issue in targeting the spending is that of timing ... because many infrastructure projects may take years to complete, spending on those projects cannot easily be timed to provide stimulus during recessions, which are typically relatively short lived.\nBy definition, the goal of stimulus spending is to get money into the economy swiftly. But that objective conflicts with the reality of building infrastructure projects that typically are multiyear efforts with slow initial spendout. CBO notes that public works projects are likely to involve expenditures that take a long time to get underway and also are spread out over a long time. Even those that are \"on the shelf\" generally take time to inject money into the economy. For major infrastructure, such as highway construction and water resource projects, the initial rate of spending can be 25% or less of the funding provided in a given year. Based on CBO information, the National Governors Association reported spendout rates for several infrastructure categories:\nAbout 68% of highway and 45% of transit obligations spend out over the first two years of a project. About 19% of airport obligations spend out in the first year and another 42% in year two. About 24% of drinking water and wastewater obligations are expended over two years, and 54% over three years.\nEconomist Mark Zandi, who favors a fiscal stimulus package that includes increased infrastructure spending, also cautions that it takes a substantial amount of time for funds to flow to builders, contractors, and the broader economy. \"Even if the funds are only used to finance projects that are well along in their planning, it is very difficult to know just when the projects will get underway and the money spent.\"\nAdvocates of infrastructure spending have two responses to this concern. First, they point out that because economists now expect the current recession to be of long duration (longer than 12 months), projects with extended timeframes can still contribute to the economy's recovery, which is likely to be a two-year undertaking. Thus, the general concern about timing is less relevant, compared with previous shorter recessions, they say. Second, because every major infrastructure category has significant backlogs of projects that are \"ready to go\" except for funding, advocates are confident that large amounts of actual construction work can begin quickly (see discussion below, \" \"Ready to Go\" Projects \").\nSome economists contend that public infrastructure investments stimulate economic growth only if the impact of the infrastructure outweighs the adverse effects of higher taxes that are needed to finance the investment, or if it outweighs the adverse effects of spending cuts in other areas, such as properly maintaining existing public works systems. Higher deficits that result from stimulus spending slow economic growth in the long run, it is sometimes said, because government borrowing crowds out private investment. Critics of this view say that this concern is valid in non-recessionary times when the economy is working at full capacity, because under those circumstances, government spending just changes the mix of jobs with no change in the overall quantity or quality of labor. According to this view, government spending in a recession affects resources and labor that are idle, and it does not fully displace private investment.\nOther economists say that if federal assistance merely provides fiscal relief by paying for spending that would have occurred anyway—that is, if federal dollars merely substitute for or replace local dollars invested in the same activity—it provides no economic stimulus. In response, state and local public officials say that that is not the case in today's economy. Because of the current recessionary pressures that they face, states and cities have been cancelling infrastructure projects. Another way of describing this situation could be to say that what is under discussion is really not entirely about stimulus, but it is better termed holding state and local governments harmless in order to encourage them to carry out projects that they couldn't otherwise do, because of budget shortfalls.", "Funding infrastructure is a long-term investment, not quick-fix spending, that should lead to something durable, useful, and financially productive. The long-term nature of such investments can be at odds with the stimulus goal of quickly injecting money into the economy. Thus, the overriding question in debating infrastructure spending as part of economic stimulus is, what will the stimulus buy? Two important considerations regarding any fiscal stimulus proposal are, will the proposal produce stimulus quickly, and will it produce a significant amount of stimulus, relative to its budgetary cost. These issues are explored in the remainder of this report.", "Traditionally, setting priorities for infrastructure spending is based on a combination of factors. Estimates of funding needs are one factor that is commonly used as a measure of the dimension of a problem and to support spending on some activities relative to others, as in: funding needs for X are much greater than for Y, therefore, society should spend more heavily on X.\nIn the infrastructure context, funding needs estimates try to identify the level of investment that is required to meet a defined level of quality or service. Essentially, this depiction of need is an engineering concept. It differs from the concept of \"ready to go\" projects (discussed below), which is being used in connection with stimulus proposals. It also differs from economists' conception that the appropriate level of new infrastructure investment, or, the optimal stock of public capital (infrastructure) for society, is determined by calculating the amount of infrastructure for which social marginal benefits just equal marginal costs.\nThe last comprehensive national infrastructure needs assessment was conducted by the National Council on Public Works Improvement that was created by the Public Works Improvement Act of 1984 ( P.L. 98-501 ). The Council reported in 1988 that government outlays for public works capital totaled about $45 billion in 1985 and that a commitment to improve the nation's infrastructure \"could require an increase of up to 100 percent in the amount of capital the nation invests each year.\" This estimate of future needs by the Council may have been imprecise because of the inherent difficulties of needs assessments, something its report discusses in detail. It is worth highlighting a few of these key difficulties as a cautionary note when attempting to interpret infrastructure needs assessments discussed in the Appendix to this report and elsewhere.\nOne of the major difficulties in any needs assessment is defining what constitutes a \"need,\" a relative concept that is likely to generate a good deal of disagreement. For this reason, some needs assessments are anchored to a benchmark, such as current provision in terms of physical condition and/or performance. This current level of provision may be judged to be too high by some and too low by others, but nonetheless it provides a basis for comparison as future spending needs can be estimated in terms of maintaining or improving the current condition and performance of the infrastructure system. Needs estimates in highway and public transit are calculated in this way by the U.S. Department of Transportation (DOT). The Environmental Protection Agency (EPA) similarly estimates total U.S. funding needs for wastewater treatment facilities. EPA defines a \"need\" as a project, with associated costs, that addresses a water quality or public health problem existing as of January 1, 2004.\nOther federal agencies estimate the funding necessary to bring the current infrastructure system to a state of good repair. The resulting funding estimate is sometimes referred to as the infrastructure \"backlog.\" Again, among other problems, such as inventorying the current condition of infrastructure and calculating repair costs, the needs estimate is affected by judgments about what constitutes a state of good repair. It is worth noting, too, that needs assessment are often conducted by organizations with a vested interest in the outcome. This is most obviously a concern when a needs assessment is conducted by an advocacy group, but may also occur with government agencies.\nA second major difficulty with needs assessments is estimating future conditions, especially consumer demand for services that infrastructure provides. To begin with, estimating demand is difficult because it is based on a host of assumptions such as the rate of population and economic growth. Typically, the longer the time period over which conditions are forecast, the harder it is to accurately predict them. Particularly hard to predict, and, thus, the effect they have on infrastructure needs, are structural changes in the economy and technological change. In addition, however, consumer demand can vary enormously depending on how a service is financed and priced, as well as other public policy decisions including regulation and conservation. For example, highway infrastructure is primarily financed by fuels and other taxes that provide a vague signal or no signal at all about the total cost of driving, particularly the external costs such as the fuel and time wasted in congested conditions. Highway tolls, on the other hand, particularly those that fluctuate in line with congestion, provide a direct price signal for a trip on a certain facility at a certain time of the day. Pricing highway infrastructure in this way has been found to reduce travel demand, thereby affecting infrastructure need. Consumer demand can sometimes be met without infrastructure spending. For example, water supply needs can be reduced by employing water conservation methods.\nFinally, it is worth mentioning that the need for public funding to supply infrastructure, including federal support, may often be an open question because the roles of the public and private sector can and do shift over time. Even within the public sector, the roles of federal, state, and local governments change and these shifting intergovernmental relationships may even affect the assessments of infrastructure needs.\nA third major difficulty with infrastructure needs assessments is that needs estimates for individual elements of public infrastructure are rarely comparable. Some assessments include only capital spending, others include both capital and operation and maintenance (O&M) spending. Some estimates of need are developed for the purposes of short-term, fiscally constrained spending plans, while others are developed to assess long-term needs based on current system condition and performance, future demand, and the effects of pursuing different policy options. Some needs assessments are for public sector spending by all levels of government, while others focus only on federal spending. Furthermore, needs estimates are rarely directly comparable because of differing underlying assumptions, such as those about economic and population growth, based on when the assessment is being done and for what purpose.\nNeeds surveys are likely to be conducted at different times, thus will be expressed in different years' dollars. Comparing dollar estimates of infrastructure needs from different assessments is difficult. Many estimates are prepared in nominal dollars for the reference year, while others, particularly multi-year estimates, are sometimes prepared in constant dollars for a base year. Because there are different ways to inflate and deflate nominal dollar estimates, it should not be assumed that dollar estimates for the same year are necessarily comparable.\nBecause of major differences in coverage and methodology, individual needs assessments cannot be added together to provide a single estimate of future public infrastructure needs, despite the political desire to do so. Moreover, as needs assessments are typically prepared separately, there may be instances where a need for a type of infrastructure is included in more than one estimate, resulting in double counting, and other instances of omission, resulting in undercounting. As separately estimated, these assessments also ignore competitive and complementary situations in which spending levels in one area may affect needs in another. For example, in the case of transportation infrastructure, an improved freight rail line might reduce the need to improve the highway system to accommodate truck traffic.", "In September 2008 the House approved a job creation stimulus bill with $25 billion in FY2009 supplemental funding for highway, public transit, airport, passenger rail (Amtrak), wastewater and drinking water, water resources, and public school modernization/renovation programs ( H.R. 7110 ). Under the legislation, which failed in the Senate, most of the funding was to go to projects that could award contracts based on bids within a certain number of days of enactment, generally 120 days. Because of the urgency of responding to the economic downturn, emphasis has been on projects that could move to construction in 90 or 120 days, which are often referred to as \"shovel ready\" or \"ready to go\" projects.\nIn an effort to support arguments for generous spending levels in a new stimulus bill, interest groups have come forward recently with lists and estimates of \"ready to go\" projects. These lists are fluid and evolving.\nIn November, the National Governors Association identified $43 billion in \"shovel ready\" projects for roads ($18.9 billion), transit ($8 billion), passenger rail ($0.5 billion), wastewater ($9.2 billion), and drinking water projects ($6.0 billion). This estimate was essentially a compilation of information from other organizations. In mid-December, the U.S. Conference of Mayors identified $63 billion in \"ready to go\" projects in more than 400 cities. This list included nearly 9,000 projects for highways ($24.6 billion), transit ($8.8 billion), airports ($4.5 billion), passenger rail ($1.1 billion), wastewater and drinking water ($18.9 billion), and schools ($4.8 billion). The list was 30% bigger (in dollars) than an estimate from this group released 10 days earlier. State and local water agencies have reportedly identified from $9 to $20 billion in wastewater treatment projects and $10 billion in drinking water projects that are \"\"ready to go\".\" The American Association of State Highway Transportation Officials identified more than 5,100 road and highway projects totaling $64 billion, and the Association of Public Transit Officials identified more than 700 transit projects totaling $12.2 billion that are \"shovel ready.\" The American Public Works Association identified more than 3,600 \"ready to go\" projects in 43 states totaling $15.4 billion for roads, water supply and wastewater, and other local public works.\nIt is difficult to know what to make of such estimates, since the criteria used to develop them are largely unknown. Generally, the term \"ready to go\" is being used to refer to projects that lack funding but otherwise have been designed, engineered, and have cleared environmental permitting and other requirements, such as necessary land acquisition, and are ready to proceed. But that is not a standardized definition found in law, regulation, or technical guidance. Arguably, it is in the interest of those that are developing the lists to present estimates that demonstrate significant needs. Some projects may have permits, but sponsors might lack easements to or ownership of land in question. Experts point out that, unless a project has already been bid (a time-consuming process), even with all permits in hand, it still may not be able to proceed in 90 or 120 days. Without a recognized methodology for vetting them, the true status of the projects that stakeholder groups have identified is uncertain.\nMany of the \"ready to go\" lists include estimates of job creation that is expected to result from the identified projects. For example, the Conference of Mayors says that 790,910 jobs will be created from the infrastructure projects on its mid-December list. The methodology for deriving these estimates is often unstated, but in many cases is based on that used by the FHWA (discussed above).\nTwo additional issues are apparent. One is whether spending undertaken as part of a stimulus program will represent investment in long-term assets for society. Some of the lists prepared by stakeholder groups identify projects with some description (for example, the Conference of Mayors list), but others only identify state-by-state project totals. Critics contend that lists of \"ready to go\" projects are likely to include many with marginal value, such as projects with plans that have been backlogged for some time because they lack sufficient merit, but for which there now is an opportunity to get funding. Under a stimulus program, the majority of actual funding decisions will be made by state and local officials with responsibility for determining priorities. Proponents believe that citizens will hold public officials accountable for the quality of projects.\nA second issue, related to the first, concerns the tension between funding activities that will create jobs quickly and the desire to invest in projects that will have sustained value. This also relates to the issue of timing, discussed previously. Critics worry that projects will be small and won't solve long-term problems or have strategic value. One such critic of additional infrastructure spending noted, \"If additional infrastructure is worthwhile, it should be constructed. Such determinations are most likely to be accurate, however, when they are made without the haste associated with an attempt to respond to economic weakness.\"\nProponents of a new stimulus program can be expected to try to balance the dual objectives of spending money quickly and investing for the long-term. Some types of public jobs programs may support jobs that have little long-term impact, such as hiring workers to sweep streets or rake leaves, sometimes called \"make work.\" Projects that involve substantial new construction are slower to complete and to impact jobs, but often have a political appeal because of high visibility to the public. Some infrastructure, such as highway resurfacing and minor road repairs or replacement of pumps and compressors at water facilities, does benefit the value of the nation's capital assets and can be done more quickly than new construction. Likewise, acquiring new clean fuel buses or rehabilitating transit stations can occur more rapidly than extending collector sewer lines into unsewered communities. Many public officials are hoping that there will be room in an emerging stimulus program for both short-term and long-term infrastructure projects.", "Two additional issues are important in considering how infrastructure stimulus spending is done. One is whether there will be adequate labor and other resources available to supply activities on the scale that some now contemplate. The other is how policymakers will ensure accountability for federal funds that will be spent.\nCurrently, the state of the U.S. economy is such that there is excess capacity of both labor and materials for infrastructure projects. Large number of workers are unemployed, especially in the construction sector, which reported a 12.1% unemployment rate in November 2008. It is widely believed that a large number of those workers (many of whom had been employed in residential construction) could be employed on infrastructure construction projects, but how transferable those skills are to infrastructure projects is an open question. There is unlikely to be total substitutability, that is, unemployment will not disappear. It is possible, however, that some skills or expertise could become scarce, as a result of increased demand due to greater construction activity in multiple sectors.\nThe same is true regarding materials used in construction. Industry officials believe that supplies of materials such as concrete and steel, and equipment such as pipes and valves, are adequate to meet additional demand, or will be available when needed. As with labor, however, it is an open question whether greatly increased demand across multiple sectors will lead to some scarcities.\nResource issues also encompass the capacity of government to oversee projects that will be undertaken through a stimulus program. Some stakeholder groups advocate a stimulus program in which funds are directly disbursed by the federal government in the form of grants to project sponsors. This would differ from the current practice of most infrastructure assistance programs in which federal funds are provided to states, and they in turn select qualified projects and distribute monies locally. Some local government groups contend that state agencies are slow to make decisions and award funds, thus frustrating the goal of stimulating economic activity quickly. Unsurprisingly, states prefer that stimulus funds be allocated and distributed according to established selection and delivery mechanisms that include criteria for project priorities and eligibilities and contain fiscal safeguards, such as auditing requirements. Altering such procedures would be highly disruptive, states say. If a stimulus program were to feature direct federal grants, federal agencies would face significant additional grants management responsibilities for which most are likely to be unprepared.\nAnother concern of some stakeholder groups is with programmatic and other requirements that typically apply to receipt of federal assistance. These range from program-specific planning mandates, procurement rules, and set-asides for purposes such as assisting economically disadvantaged communities, to cross-cutting requirements dealing with a variety of environmental, social, economic, and other issues, such as compliance with the Clean Air Act, Civil Rights Act of 1964, and the Davis-Bacon Act. These cross-cutting requirements promote and regulate national policy goals such as equal employment opportunity or protection of endangered species. Some groups contend that it would be appropriate to suspend these requirements in order to facilitate project spending, but not all are likely to support doing so. Waiving existing rules and policies that govern financial assistance programs could be seen as undercutting the numerous policy objectives that the requirements are intended to meet. Further, projects that are considered \"\"ready to go\"\" in terms of planning, design, etc. arguably have already complied with all or most of these requirements, so waiving them may not affect project timing.\nState match requirements present a different issue, according to some groups. They propose that Congress temporarily waive requirements in some programs that states must match a percentage of the federal funds that they receive with non-federal money. For example, the federal programs that provide assistance for highways, drinking water projects, and wastewater treatment plant construction require a 20% state match to ensure that states have a fiscal investment in projects and to enlarge the available pool of funds that can be disbursed to localities. Because state budgets already are severely pressed by the recession, many argue that they do not have the fiscal resources for this type of match, especially if a stimulus program provides a much larger amount of funds than states have recently been receiving.\nThe overriding governance issue, for all levels of government, is ensuring accountability for funds that will be spent through a stimulus program. The amounts of federal dollars committed to such a program are likely to be enormous (some advocates are proposing $850 billion or more in total stimulus, to include as much as $350 billion for infrastructure) and other direct spending, making it particularly important for the public to be assured that decisions involving public dollars are made quickly yet with transparency, that investments are made in quality projects, and that projects have adequate oversight. One group, Building America's Future, recommends that states and cities should have to track and report on how the money is spent and how many jobs are created. How this issue will be addressed legislatively is unknown for now.", "President-elect Obama's agenda includes plans to \"create millions of green jobs\" through a variety of actions, such as increased use of renewable sources of electricity (i.e. wind and solar), home weatherization, and development and implementation of \"next generation\" vehicles. The concept that he and others advocate is, broadly speaking, to couple growing the economy and creating jobs with investments that will promote clean energy and environmental protection. Several interest groups have stepped forward with proposals for inclusion in a stimulus package. Among these, the Center for American Progress (CAP), a public policy and research think tank, has recommended green investment projects totaling $100 billion as part of \"A Strategy for Green Recovery.\" Also, the Apollo Alliance, a coalition of labor, environmental, business, and community leaders, has proposed a 10-year, $500 billion program to create five million \"green\" jobs.\nSeveral questions arise concerning these proposals. First, what, exactly, is \"green infrastructure?\" The term is less precisely defined than is traditional infrastructure (see page 8), which some \"green\" advocates now refer to as \"gray infrastructure.\" It has been defined as \"strategically planned and managed networks of natural lands, working landscapes and other open spaces that conserve ecosystem values and functions and provide associated benefits to human populations,\" including natural elements such as wetlands and grasslands. For example, it describes the management of stormwater runoff through the use of natural systems, or engineered systems that mimic natural systems, to treat polluted runoff before it reaches streams or lakes. But in the current context of economic stimulus, the term extends more broadly to include support for constructing the manufacturing infrastructure to develop and commercialize various technologies that are more energy efficient (e.g, advanced vehicle batteries) or more environmentally friendly (e.g, investments in renewable energy sources and the electricity grid to transmit and distribute clean energy). Particular attention has been given to mass transit projects that can decrease energy consumption and reduce global warming pollution and other projects such as retrofitting schools and public buildings to use clean energy.\nA second question is, can investment in \"green\" projects occur quickly enough to help stimulate the economy out of the current recession? That is, are there \"ready to go\" \"green\" projects? As previously discussed, the key to stimulus spending is to get funds moving quickly into the economy. However, many of the proposals by green economy proponents were not conceived for the purpose of quickly stabilizing or increasing the number of jobs in the nation, or in industries particularly hard hit by the current recession. Studies like that of CAP recommend categories of projects to create green jobs, such as full funding of federal energy-efficiency programs, which \"can start stimulating the economy relatively rapidly\" and others, such as new authorization for grants to states to support manufacturing plant retooling to produce clean and energy-efficient technologies, that are \"less fast-acting.\" Eighty percent of CAP's recommended funding would be for \"less fast-acting\" programs. Critics say that the types of \"green\" projects under discussion are pricey and would do little to stimulate the economy quickly, but proponents contend that \"green\" investments represent a downpayment on long-term economic growth and should be done even over a somewhat longer time period.\nOne environmental advocacy group, American Rivers, reportedly has identified 194 water-related green infrastructure projects totaling $1.1 billion that are \"ready to go\" within six to nine months. The types of projects include installing green roofs, raingardens, and permeable pavement that can reduce the need for new wastewater treatment plants and stormwater and sewer pipes; restoring wetlands and natural floodplains; and planting urban forests.\nA final question is, what is the job creation potential of \"green infrastructure\"investments? Although all stimulative spending ultimately increases labor demand, the first round effects vary by the type of spending. This question is addressed in a recent CRS report. According to the CRS analysis, estimating the number of jobs dependent upon green infrastructure activities presents a greater challenge than estimates related to infrastructure projects as traditionally defined. The basis for most data collection by U.S. statistical agencies is the North American Industry Classification System (NAICS). It currently does not identify separately so-called green industries (e.g., those that utilize renewable resources to produce their outputs, or those that manufacture goods which minimize energy use). Within NAICS, the electric utility industry is disaggregated into hydroelectric, fossil fuel, nuclear, and other power generation, transmission, and distribution. Such renewable sources of energy production as wind, solar, and biomass are not uniquely recognized; they are included in the \"other\" category. If harnessing the wind to produce electricity and plant material to produce biofuel requires a substantially different mix of inputs than relying on coal and gasoline, for example, the conventional input-output (I-O) model does not seem well-suited as a basis for estimating the number of jobs supported by these green activities. Similarly, within NAICS, the building construction industry does not have a unique category for \"green\" retrofitting (e.g., installing additional insulation, fluorescent lighting, or energy-efficient heating and air-conditioning systems). Retrofitting likely requires a combination of inputs from supplier industries that differs from the mix for the top-to-bottom construction of buildings, once again making use of conventional I-O models problematic.\nThis recognized difficulty generally is either not mentioned, or how it is dealt with is not described, in analyses of green job creation, according to the CRS report. The CAP study, mentioned above, does address the problem. The researchers explain that because \"the U.S. government surveys and accounts that are used to construct the input-output tables do not specifically recognize wind, solar, biomass, building retrofitting, or new mass transit as industries in their own right,\" they created synthetic industries by combining parts of industries for which data are available. The researchers provided an example in the case of the biomass \"industry:\" they constructed it by combining the farming, forestry, wood products, and refining industries; then they \"assigned relative weights to each of these industries in terms of their contributions to producing biomass products.\"\nAs discussed in CRS Report R40080, Job Loss and Infrastructure Job Creation During the Recession , further complicating the matter is the context and manner in which estimates of green jobs generally are presented. Studies often develop employment projections based on differing sets of assumptions and time horizons. For example, some attempt to estimate the number of direct and indirect jobs 10 or more years in the future that are supported by an assumed increase in the demand for energy that is met by an assumed shift during the projection period from coal to wind and geothermal power generation. Some reports also include induced employment (see \" Infrastructure Job Creation \" above), but this is not always made clear. In addition, some analyses relate to a particular state. Their results may not be generalizeable to other areas, because state economies have different mixes of industries and may not be able to provide any or all of the inputs for a particular green output. The analyses also may express job estimates per unit of power generated by renewable resources and saved by increased demand for energy-efficient products and equipment, rather than per dollar of investment in green activities. And, the assumptions and methodologies underlying the job creation estimates often are not clearly articulated, which makes thoughtful review of the results very difficult. For these reasons, policymakers considering which if any green infrastructure programs to fund to create and preserve jobs in the near term to mitigate the recession's impact on U.S. workers may not find helpful many green economy studies.", "This Appendix provides descriptions of a number of infrastructure categories that have recently been mentioned for inclusion in economic stimulus legislation in the 111 th Congress. The sectors are highways and bridges (page 22 ), transit (page 23 ), airports (page 25 ), passenger rail (page 27 ), water resources (page 30 ), wastewater (page 32 ), drinking water (page 34 ), electric transmission (page 36 ), schools (page 39 ), federal public buildings (page 41 ), and broadband (page 42 ).This list is not meant to be exclusive or definitive of categories that Congress and the Administration may consider. Evolving legislative proposals may include assistance for some or all of these, and could include others, as well. The descriptions include information on conditions, performance, and funding needs of each category; recent federal assistance; discussion of investment in each category as a mechanism for economic stimulus; and identification of other key issues for the sector. Table A-1 summarizes the level(s) of government and/or the private sector that typically are responsible for financing, policy, and standard setting for the infrastructure categories described in the Appendix.\nHighways and Bridges\nThere are almost 4 million miles of highways in the United States. The vast majority of these highways are owned and operated by state and local governments, 20.4% and 76.5% respectively. Only 3.1% of highway mileage is federally owned and almost all of this mileage is in national parks, national forests, military bases, and other federal facilities. Just over 75% of U.S. highways are in rural areas, but these highways carry only 35.9% of total traffic as measured by vehicle miles traveled (VMT), and of this rural total almost half is on rural interstate highways and other major arterial highways. Conversely, the much smaller urban highway system carries fully 64.1% of all traffic, with urban interstates alone accounting for 15.4% of the total. The U.S. highway system has almost 600,000 bridges. Again, state and local governments own and operate almost all of the bridges in the U.S. system. As is the case for the highway system, a relatively small number of bridges carry the bulk of national traffic. Interstate highway bridges and bridges on arterial highways carry almost 90% of average daily traffic (ADT), with urban interstate bridges alone carrying almost 35% of ADT.\nConditions, Performance, and Funding Needs\nThere is broad consensus in the transportation community that U.S. highway and bridge infrastructure is in need of considerable investment in the years ahead, largely to accommodate future growth in passenger and especially freight traffic. This need exists in spite of the fact that increased federal, state, and local spending over the last decade and a half has, according to the Department of Transportation, generally resulted in measurable improvement to the condition and performance of much of the nation's highway and bridge system. This improvement has been particularly notable for bridges, where the number of structurally deficient bridges was cut almost in half between 1990 and 2007. According to a 2007 report by a congressionally established commission, spending on surface transportation by all levels of government needs to average somewhere between $145 billion and $276 billion per year depending on whether the goal is to maintain the existing system at a high level or expand the system to facilitate system growth. This compares with expenditure of $68 billion on surface transportation nationwide in 2007. It should be pointed out, however, that there are other estimates of need that are considerably below the levels espoused by the Surface Commission.\nFederal Assistance\nThe federally operated, state administered, federal-aid highway program is the major conduit for federal funding of surface transportation infrastructure. FY2009 authorizations for this program amount to almost $42 billion. The majority of funding in the federal-aid program is provided through seven formula programs (also referred to as apportioned programs). Among these is a separate bridge program. Because of transferability and flexibility provisions in the program, states have considerable leeway in spending funds for various types of surface transportation infrastructure. The existing federal-aid program was last authorized in FY2005, and this authorization expires at the end of FY2009. Legislation reauthorizing the program is likely to be considered during the 1 st Session of the 111 th Congress, and this issue is still expected to dominate the congressional transportation agenda during the year ahead.\nHighways and Bridges as a Mechanism for Economic Stimulus\nBuilding and repairing highway and bridge infrastructure is often seen as a way to put people and assets to work constructively and to create economically valuable assets during a recessionary period. The principal argument against infrastructure spending is that it tends to be counter-cyclical, meaning that the slow spending nature of many large infrastructure projects is such that the benefit to the economy does not arrive in full measure until after the recession is largely over. For example, large bridge and highway construction projects often take multiple years to plan and construct. Transportation industry groups counter this argument in part by pointing out that there is an existing backlog of projects in the states that are \"ready to go\" and could put people and assets to work in short order. The American Association of State Highway and Transportation Officials (AASHTO), the principal interest group for this sector, has compiled a list of over 5,200 projects that it believes could be started quickly, creating a significant number of new jobs in the process. According to AASHTO and others, focusing on these projects would make a significant dent in the existing national backlog of projects that could not be constructed for many years if their funding was to rely on the current federal-aid highway program.\nIssues for Highways and Bridges\nThere is some concern that using \"ready to go\" project lists will not result in building the most important infrastructure and will not necessarily build it in the places most impacted by the ongoing recession. For example, Utah is identified as having the largest share of projects in the AASHTO \"ready to go\" list, yet unemployment is below the national average in that state. There also are concerns that there are insufficient resources, labor, management, equipment, materials, etc., to allow for speedy spending of stimulus funds. An additional concern is that many states have announced cutbacks in infrastructure spending due to their own budget problems. As a result, the extent to which stimulus spending might serve as a substitute for foregone state spending is unclear, thus raising questions about whether the stimulus will provide the levels of infrastructure improvement and jobs that are expected by proponents.\nTransit\nPublic transit infrastructure includes the track, stations, vehicles, and associated facilities and equipment owned and operated by more than 6,000 transit providers in urban and rural areas. The main forms of public transit service, known as \"modes,\" are bus, heavy rail (subway and elevated), commuter rail, light rail, paratransit (also known as demand response), and ferryboat. About 60% of transit trips are made by bus, followed by heavy rail (29%), commuter rail (4%), and light rail (4%). Demand response accounts for a little more than 1% of all transit trips, and ferryboat a little less than 1%.\nConditions, Performance, and Funding Need\nAs a result of increases in overall government spending over the past decade, transit service provision has grown, and the condition and performance of transit systems have generally improved. Nevertheless, in its most recent assessment of transit needs, the Department of Transportation estimated that the capital cost to maintain the current condition and operational performance of transit systems in the United States from 2005 through 2024 is 25% more annually than is currently being spent by all levels of government. In 2004, transit capital spending by all levels of government was $12.6 billion, $3.2 less than the $15.8 billion that DOT estimated will be needed annually over the next 20 years.\nFederal Assistance\nThe federal transit program administered by DOT's Federal Transit Administration (FTA) is a collection of individual programs, each with different funding distribution mechanisms and spending eligibility rules. The two major transit programs are the Urbanized Area Formula Grants Program and the Capital Investment Program. Of the $10.4 billion authorized by SAFETEA ( P.L. 109-12 ) for transit programs in FY2009, the Urbanized Area Formula Program accounts for about 40% of the total ($4.2 billion), and the Capital Investment Program accounts for 43% ($4.5 billion). The Capital Investment Program has three elements, the Bus and Bus Facilities Capital Program, the Rail Modernization Program, and the New Starts Program that are funded on a roughly 20-40-40 percentage share of program funds respectively. The remaining 17% of federal transit monies ($1.7 billion) authorized by SAFETEA in FY2009 funds several other programs, such as the Other Than Urbanized Area Formula Program (commonly referred to as the Rural Formula Program), the Elderly Individuals and Individuals with Disabilities Formula Program, the Jobs Access and Reverse Commute Program, as well as state and metropolitan planning, research, and FTA operations. Although federal transit programs focus on supporting capital expenses, about 30% of federal funding goes for operational expenses.\nTransit as a Mechanism for Economic Stimulus\nThere were a number of proposals in 2008 for federal transit spending in addition to funding already authorized. Early on these proposals had to do mainly with helping transit agencies cope with an increase in fuel prices that caused a jump in operating costs and demand. Later in the year, as the poor health of the economy became more apparent, proposals were geared more toward economic stimulus and job creation. In October, the American Public Transportation Association (APTA) identified 559 \"ready to go\" projects worth about $8 billion, projects that could begin within 90 days of funding availability. In a second survey in mid-December, APTA identified 736 projects worth $12.2 billion. In a U.S. Conference of Mayors report published in mid-December, 726 \"ready to go\" transit projects worth $8.8 billion were identified.\nA general criticism of surface transportation infrastructure funding as economic stimulus is that it tends to spend out slowly, and it is thought that transit funding generally tends to spend out more slowly than highway funding. Another issue is that many \"ready to go\" projects identified by APTA and the Conference of Mayors are for bus and rail vehicle purchases, manufacturing that is dominated by foreign companies. Thus, despite domestic content requirements for foreign made vehicles bought using federal funds, some transit capital spending may not create as many jobs in the United States as hoped. Some might also question the historic bias in the federal transit program toward capital rather than operating expenditures, when research suggests that operating expenses tends to create more jobs, more quickly. Another issue is whether federal spending will merely replace rather than supplement state and local level spending, reducing the effectiveness of stimulus spending. A final issue is whether a large increase in transit spending will improve transit service where it is most needed and encourage new ridership, or alternatively will result in little used facilities that require long-term government support.\nIssues for the Transit Sector\nDespite rising patronage over the past decade, government's share of transit industry expenses has continued to rise. Fares and other operating revenue now cover only about 30% of industry costs. A long term issue for the transit industry, therefore, will be how to improve service and attract new riders without requiring substantially more support from federal, state, and local government. In terms of federal support for transit, one of the biggest challenges over the next few years will be the amount of funding available from the Highway Trust Fund. The Mass Transit Account of the Highway Trust Fund is the source of approximately 80% of federal transit program monies, with the remaining 20% drawn from the general fund of the U.S. Treasury. Although the transit account is in somewhat better financial shape than the Highway Account, it is clear that current revenue into the transit account will not sustain FTA programs and activities at current levels.\nAirports\nCivil aviation public infrastructure is composed mostly of airports and air traffic control facilities. Only airports will be discussed in this section. Overall, only about one-quarter of airports are publicly owned, typically by state and local governments, yet these airports represent the vast majority of utilized airport capacity, particularly that used for commercial aviation operations. Privately owned airports predominantly serve general aviation. According to the Federal Aviation Administration (FAA), there were 20,341 airports in the United States at the end of 2007. Of these, 5,221 were civil public use airports, with a more limited nationally significant 3,411 airports in the FAA's current National Plan of Integrated Airport Systems (NPIAS) and therefore eligible to receive Airport Improvement Program (AIP) grants.\nConditions, Performance, and Funding Needs\nAccording to the FAA's NPIAS, the estimated capital needs of airports from 2009 through 2013 is $49.7 billion (in 2008 dollars), approximately $9.9 billion a year. The estimates contained in the NPIAS do not include projects that are ineligible for AIP funding. A more comprehensive accounting of airport project costs by the Government Accountability Office estimates the costs of airport capital development for the period 2007 through 2011 to be $14 billion a year (in 2006 dollars).\nFAA's estimate of airport infrastructure needs, as contained in the NPIAS, are obtained from airport master and state system plans and are reviewed for AIP eligibility and conformity with FAA forecasts of aviation activity. The GAO estimate is based on FAA's estimate of capital needs contained in the NPIAS, but also includes capital projects that are not included in the NPIAS, e.g. projects that are ineligible for federal grants under the AIP.\nFederal Assistance\nGAO calculated that public spending on airport capital improvements averaged about $13 billion per year between 2001 and 2005 (in 2006 dollars). Of this amount, $3.6 billion per year was funded from the federal Airport Improvement Program (AIP), $6.5 billion from airport bonds, $2.2 billion from the Passenger Facility Charge (PFC, a local tax levied by an airport), and $0.7 billion from state and local contributions. The AIP is funded entirely from the Airport and Airway Trust Fund.\nAirport and Air Traffic Control Investment as a Mechanism for Economic Stimulus\nIn a letter to the leadership of Congress on December 10, 2008, 12 aviation interest groups called on Congress to add $1 billion to the AIP program for stimulus purposes. According to these groups such an additional investment would \"provide needed stimulus to both cities and rural communities in all 50 states,\" and in the process create 35,000 high paying jobs (although it is unclear how this number was derived). In a separate letter on December 31, 2008, to Senator Harry Reid, the American Association of Airport Executives stated that \"the FAA has indicated that $1.7 billion could be used for \"ready to go\" projects – projects that can be bid and under contract within 180 days.\" In addition to these estimates, numerous U.S. airports have asked that projects at their airport be considered for stimulus spending.\nIssues for the Air Transportation Sector\nInfrastructure needs for airports are expected to increase because air traffic is expected to grow significantly over the next few decades. FAA forecasts that revenue passenger enplanements will grow from 765 million in 2007 to 1,293 million in 2025, an average annual increase of 3.0%. Estimating infrastructure needs, however, presents a number of difficulties. Predicting the future is difficult and, although the FAA has a reasonably good record for accuracy in its activity forecasts, the FAA itself has pointed out that since the events of 9/11, the instability of the industry has led to larger errors in the agency's short-term forecasts. The recent unpredictability of fuel prices, a major component of aviation business costs, also brings a degree of uncertainty to aviation forecasts. In addition, the issue of quality versus quantity arises when considering airport stimulus spending. Approximately 73% of all airline enplanements takes place at the nation's 35 busiest airports. Obviously, anything that can be done to increase capacity and decrease delays at these airports has a significantly greater impact on national aviation connectivity than is the case at non-congested airports. In recent years the FAA has tried to emphasize funding infrastructure projects at these airports as part of its Operational Evolution Plan (OEP). Public discussions of airport stimulus spending thus far make it unclear whether and/or how prioritization of funding requests from a national benefit perspective will be part of the decision-making process for the distribution of additional AIP assistance.\nPassenger Rail\nAmtrak is the nation's only provider of intercity passenger rail service. It operates trains over a network covering around 22,000 miles, 97% of which is owned by freight rail companies. The portion of the network that Amtrak owns, the Northeast Corridor (the NEC, running from Washington, D.C. through New York City to Boston), includes some of the most heavily used sections of track in the nation, shared by Amtrak, commuter rail operations, and freight operations. Amtrak was created in 1970 by the federal government to preserve some intercity passenger rail service while allowing private railroad companies to discontinue their money-losing passenger rail service. Amtrak is structured as a private company, but virtually all of its stock is held by the federal government.\nConditions, Performance, and Funding Needs\nMost of Amtrak's infrastructure was built over 100 years ago, and much of its equipment is over 30 years old. Due to perennial financial problems, Amtrak has regularly deferred investments in maintaining its infrastructure; it now has an estimated $5-$6 billion backlog in deferred maintenance. This estimate does not include the cost of major improvement projects.\nSpeed and reliability are two key features of modern intercity passenger rail service, neither of which Amtrak is able to offer. In many other countries, electrified trains run on dedicated routes offering gentle curves and no intersections where roads cross railways at the same level (\"at-grade crossings\"). This permits average speeds between stations of 125 miles per hour (mph) or more, with top speeds of 175 mph or more, and good on-time performance. Amtrak's only \"high-speed\" electrified line, the NEC, still follows the alignment laid out over a century ago, and still has curves and several at-grade crossings that restrict speeds. As a result, the average speed of Amtrak's high-speed Acela service even between Washington, D.C. and New York City, where there are no grade crossings, is around 80 mph. In the rest of the country, Amtrak operates over freight rail lines, where Amtrak's maximum speed is generally limited to no more than 79 mph. Although federal law provides that Amtrak is to be given operating priority over freight trains, Amtrak nevertheless experiences many delays due to freight rail operations, as well as breakdowns of Amtrak's aging equipment. Amtrak's system-wide on-time performance ratio was 71% in FY2008; even on its flagship Acela route, on the NEC where Amtrak controls the operations of all trains, on-time performance was only 85%.\nAmtrak maintains a transcontinental network with service in 47 states, but it only captures a measurable share of intercity travel in a handful of relatively short corridors. About 39% of Amtrak's ridership occurs on the NEC while another 46% of ridership occurs on relatively short-distance corridors in other parts of the country. Nationally, Amtrak captures 0.8% of intercity trips over 100 miles, less than half the market share of intercity bus service (which captures 2.1%). Amtrak has been successful in competing with air passenger service between two city pairs in the NEC. Slightly more people ride Amtrak than fly between Washington, D.C. and New York City (56% to 44%) while slightly fewer ride the train than fly between New York City and Boston (41% to 59%). However, Amtrak captures only 5% of the air-rail travel market between Washington, D.C. and Boston. Even though Amtrak has been competitive with the airlines between many city pairs along the NEC, its real competitor is the automobile. For trips between 50 and 499 miles one way, Amtrak and the airlines combined capture only 2.4% of the market while personal vehicles capture over 95% of the market.\nFederal Assistance\nRailroad companies lost money on intercity passenger rail service before Amtrak was created, and Amtrak has continued to lose money offering that service. As a result, since its creation in 1970 Amtrak has relied on federal assistance to support its operations. In recent years, Congress has provided around $1.3 billion annually to support Amtrak. The Passenger Rail Investment and Improvement Act of 2008 ( P.L. 110-432 ) authorized significant increases in Amtrak funding, about $2.4 billion per year through FY2013. Congress also directed the DOT to issue a request for proposals from the private sector for the development of high-speed rail in 11 federally designated corridors. Because there is no dedicated user fee mechanism to raise revenue for rail investments, as there is for other transportation modes, Amtrak must compete with other funding priorities from the General Treasury. There is no guarantee that Congress will appropriate funding at levels close to the amount that it authorized in the recently enacted authorization bill.\nRailroad Investment as a Mechanism for Economic Stimulus\nWhile the Federal Highway Administration has attempted to evaluate road building as an economic stimulus tool by estimating resulting job creation and the timing of federal outlays, similar analysis specific to the rail sector is not available. However, some of the factors applicable to road building would appear equally applicable to the rail sector: winter weather would delay some projects in the northern half of the country, and it is likely that rail maintenance projects could get underway sooner than could new construction projects. On some routes, Amtrak receives financial support from state governments, so their approval of projects in some cases would be necessary. Since Amtrak runs on track owned by the freight railroads for most of its routes, cooperation from the host freight railroad is necessary. Regulatory approval of upgrades to freight rail infrastructure is not required, but negotiation with the freight railroad is necessary because Amtrak operates over their busiest corridors. The issue of publicly-funded improvements to private property may also arise. Railroad union work rules could be another factor affecting the jobs impact of funding rail improvements. Also, the transparency of Amtrak's account keeping has been an important issue for Congress in the past. Congress may seek to ensure that any economic stimulus funding for Amtrak is directed towards job-inducing projects rather than servicing its debt, for instance.\nIssues for the Railroad Sector\nSince intercity passenger rail service is likely to require operating subsidies in all but the most densely populated corridors meeting certain conditions, policymakers might consider the long-term public financial commitment that is associated with investments in intercity passenger rail. Rail can compete with the automobile for trips that are uncomfortably long to drive and where road congestion is a problem, parking is a concern at the destination city, gas prices are relatively high, and the destination city has an extensive public transit system. Thus, for most city destinations it may be difficult for passenger rail service to match the automobile's flexibility. Intercity passenger rail can be time competitive with the airlines for trips less than about 350 miles because this is not sufficient distance for the air mode to exploit its speed advantage. Where large cities are approximately this far apart, and there are important intermediate cities on the route, such as in the NEC, then there may be enough of a customer base to run trains as frequently as the airlines and to fill them, which is necessary to cover operating costs.\nWater Resources\nWater resources infrastructure includes locks, dams, levees, floodwalls, channels, breakwaters, hydropower facilities, canals, and related structures. A system of shared responsibilities for this infrastructure has evolved, with programs existing at all levels of government and in the private sector. While more than 25,000 publicly owned and 54,000 private dams provide the benefits of flood control, navigation, power generation, and irrigation water, they also pose safety risks and other challenges as they age. Although federal water resources agencies, principally the Bureau of Reclamation (Reclamation) and the U.S. Army Corps of Engineers (Corps), played a significant role in the construction of many large dams, few similar large federal facilities currently are under construction. The vast majority of U.S. dams were constructed and are maintained without federal assistance; however, most of the largest U.S. dams were built by Reclamation or the Corps. Reclamation owns and operates more than 600 dams and reservoirs and 58 powerplants capable of producing 40 billion kilowatt hours of electricity (enough to serve six million homes). The Corps also owns and operates more than 600 dams and has 75 hydropower projects in operation generating 68 billion kilowatt hours annually. Additionally the Corps maintains through dredging and infrastructure investments the navigation conditions of 900 harbors and nearly 12,000 miles of commercially active waterways. The Corps constructed, usually with nonfederal participation, roughly 9,000 miles of the estimated 30,000 miles of the nation's levees, but only maintains 600 miles. The remaining levees are operated by nonfederal entities, often special districts of local governments, which are responsible for maintaining the level of protection they provide.", "Many federal water resources structures were built more than 50 years ago and require rehabilitation, repair, or replacement to continue to generate benefits. These structures have contributed greatly to U.S economic development; however, they also have contributed to environmental degradation, resulting in ongoing efforts to restore aquatic ecosystems. For example, concerns about aging infrastructure have been raised for years and accompanied by calls to invest in improved hydroelectric facilities and new locks to reduce outages and improve efficiency. The federal agencies neither estimate their future infrastructure investment needs nor conduct national systematic needs assessments, instead they undertake activities pursuant to congressional direction. The backlog of active federal water resources construction projects that have been authorized by Congress but have not been completed is roughly $70 billion, and the backlog of deferred maintenance roughly $4 billion for Reclamation and Corps activities, Tennessee Valley Authority's dams and pumped storage facilities, and the water resource projects financed by the U.S. Department of Agriculture's Natural Resources Conservation Service (NRCS). Construction projects in this backlog have not been ranked on their economic or environmental merit via a competitive or formula basis.\nTwo significant categories of nonfederal water resources infrastructure are nonfederal dams and levees. The Association of State Dam Safety Officials estimated $36.2 billion was needed to rehabilitate all nonfederal dams. There are no national-level estimates of the investment needs for other nonfederal flood protection measures, such as levees and flood walls.", "Recent federal appropriations have been approximately $6.6 billion annually, not including emergency supplemental appropriations, for water resource activities of federal agencies. The vast majority of these funds are spent directly by these agencies and are not dispersed through grants or loans. The Corps typically requires local project sponsors to share construction costs and uses different cost-share formulas depending on the project purpose. Reclamation projects are generally financed up front with project users repaying the federal government for allocated proportions of construction costs. Exceptions include \"ability to pay\" adjustments for irrigators.\nWater Resources Investment as a Mechanism for Economic Stimulus\nWhich water resources activities may be funded as part of a stimulus is central to the types of benefits that may be expected and whether these investments will be controversial; however, this central policy decision remains unknown. Instead more attention has been given to the potential level of investment. The American Society of Civil Engineers estimated that the Corps alone could use $7 billion for \"ready to go\" projects, and another $10 billion could be applied to critical nonfederal dams. H.R. 7110 (110 th Congress) included $300 million for Reclamation, with $126 million intended to go toward water reuse projects and the remainder directed toward capital improvements including rural water supply.\nWithout information on which Corps projects or project types would be in the $7 billion portfolio, analysis of potential efficiency, equity, and long-term economic growth and environmental effects is highly constrained. The universe of Corps authorized projects is heterogeneous across purpose (i.e., the types of benefits to be produced ecosystem restoration, flood damage reduction, improved navigation), size, and economic effect. Moreover, many Corps projects are highly controversial and proceeding with these could be politically problematic. Economic stimulus of $7 billion would represent significantly more than the roughly $5.5 billion in annual appropriations for the agency. It is unclear whether or the degree to which the existing level of annual Corps appropriations is insufficient. Of the $7 billion, $3.2 billion is being discussed for Corps operation and maintenance activities. In FY2006, the agency had estimated its deferred maintenance well below this amount, at $1.8 billion.\nIn contrast, the stimulus discussions for Reclamation funding target projects involving reclamation or reuse of wastewater or naturally impaired ground and surface water, as well as rural water supply projects. These are nontraditional roles for the agency, but have been supported through legislation and appropriations in recent Congresses.\nOver the decades, Congress has enacted user pays approaches and environmental laws that apply to water resources projects. The majority of federal water resources projects that could be funded through a stimulus require nonfederal cost-sharing. Whether and how quickly the nonfederal sponsors would be able to participate given their own financial situations remains unknown; if cost-sharing waivers are provided they raise their own equity and efficiency issues. Similarly, questions arise regarding how quickly these federal activities would be able to start given environmental planning and protection requirements (e.g., seasonal or other restrictions on construction due to threatened or endangered species), as well as weather, availability of materials, and agency contracting constraints.", "Federal water resource construction activities shrank during the last decades of the 20 th century. Fiscal constraints, changes in national priorities and local needs, few remaining prime construction locations, and environmental and species impacts of construction all contributed to this shift. Although these forces are still active, there are proposals for greater federal financial and technical assistance to address growing pressures on developed water supplies and to manage regional water resources to meet demands of multiple water uses. Whether and how to adapt the federal role to current water resources demands, in particular how to select which actions to authorize and fund, is an ongoing issue for Congress. Similarly, how to systematically address the aging and operational challenges of existing facilities is a concern; rehabilitation and safety repairs have largely proceeded on a project-by-project basis.\nWastewater\nWastewater utilities operate facilities that clean the flow of used water from a community. Nationally, about 16,000 publicly owned wastewater treatment facilities and 24,000 collection systems provide these services. The federal government has had significant involvement with these systems, through setting standards to protect public health and the environment, and funding to assist them in meeting standards. Nearly all of these facilities are publicly owned and operated by local governments. Today, ratepayers fund both construction costs and costs associated with operating and maintaining facilities that serve their communities.", "Many wastewater systems were built more than 50 years ago and have reached the end of their useful design lives. Older systems are plagued by chronic overflows during major rain storms and heavy snowmelt and, intentionally or not, are bringing about the discharge of raw sewage into U.S. surface waters. The most recent survey of funding needed for wastewater facility projects estimates that $202.5 billion is needed nationally for projects and activities eligible for federal assistance under the Clean Water Act (CWA). This estimate includes $134.4 billion for wastewater treatment and collection systems, $54.8 billion to correct uncontrolled overflows from municipal sewers, and $9 billion for stormwater management. Needs for small communities represent 9% of the total.", "The largest federal program for wastewater treatment assistance is administered by the Environmental Protection Agency (EPA) under the CWA. Since 1973 Congress has appropriated $78 billion in assistance under this act. Total FY2008 funding was $689 million. Federal funds are used to capitalize state loan programs (State Revolving Funds, or SRFs), and project loans are made by states to communities to assist projects on priority lists that are determined by the states, but according to criteria in the CWA. Loans are repaid to the states. In addition, the U.S. Department of Agriculture provides assistance through grant and loan programs for communities with populations of fewer than 10,000 persons. Total FY2008 funding for these USDA programs was $534 million. Even with federal assistance, local governments are the primary investors in wastewater and sewer systems. According to the U.S. Census, local governments invested nearly $14 billion in capital projects and nearly $22 billion in operations and maintenance in 2004-2005.\nWastewater Investment as a Mechanism for Economic Stimulus\nAs interest in providing economic stimulus through infrastructure investments has grown, states, localities, and stakeholder groups have attempted to identify wastewater projects that are \"ready to go,\" that is, with engineering and permitting complete, but only needing financing. Totals in these several estimates vary widely. In December, the U.S. Conference of Mayors reported that cities have identified 3,343 water and sewer projects that are \"shovel ready,\" but that need $18.9 billion in funding. The National Governors Association estimated that $9 billion in wastewater projects are \"ready to go\" throughout the country, while the Water Information Network estimates that nearly $20 billion in wastewater projects are \"shovel ready.\" House-passed H.R. 7110 (110 th Congress) included $6.5 billion for wastewater projects, to be funded through the existing CWA SRF program. With respect to such spending, several questions arise about projects that may be funded. In terms of efficiency, will wastewater infrastructure funds deliver stimulus to the economy quickly, or will most spending occur after recovery has begun, since initial outlays for major infrastructure projects usually are 25% or less of funding provided in a given year? Also, will stimulus spending for wastewater result in additional investments, or will it displace other spending that would have gone to the same projects? In terms of equity, one question is whether stimulus funds will be equitably distributed across regions, between urban and rural areas, and with recognition of disadvantaged communities. In terms of sustainability, of particular interest is how to incorporate accountability to ensure that stimulus-funded projects provide significant water quality benefits.", "A number of long-term issues are apparent for this sector, beyond those related to short-term stimulus. First, and broadly, how will communities meet their continuing funding needs for wastewater pollution control projects, in view of the large identified needs? Communities face long-standing needs to fund projects to comply with federal standards and projects not traditionally eligible for federal aid programs, such as major repair and replacement of existing systems. Second, what is the appropriate federal role in meeting those needs, and will the federal government play a significant future role in funding capital investments? Third, how should federal support be delivered? Issues include what is the appropriate state-level mechanism to administer funding, how should aid be provided (loans versus grants, for example), and should federal assistance be available to private as well as public entities.\nDrinking Water\nDrinking water utilities have the task of constructing, operating, and maintaining treatment plants, water supply transmission lines, storage facilities and other infrastructure needed to provide potable water to communities in both the appropriate quality and quantity. Nationwide, there are nearly 53,000 community water systems, and roughly 15% of these public utilities are investor owned. The federal government has been involved in this sector primarily as a regulator, setting standards to control the quality of public water supplies, but also has provided significant technical and financial assistance for drinking water infrastructure projects through several federal programs.", "The most recent survey of capital improvement needs for drinking water systems, prepared by the Environmental Protection Agency (EPA), indicated that water utilities need to invest $276.8 billion on infrastructure improvements over 20 years to ensure the provision of safe water and to comply with federal Safe Drinking Water Act (SDWA) regulations. Of the total national need, EPA estimates that $183.6 billion (two-thirds) is needed for the installation and rehabilitation of water supply transmission and distribution systems, and $53.2 billion is needed for treatment facilities. A broader EPA study, the 2002 Gap Analysis, estimates a potential 20-year funding gap for drinking water capital and operations and maintenance ranging from $45 billion to $263 billion, depending on different revenue and funding scenarios. The agency has cautioned that outdated and deteriorated water infrastructure poses a fundamental long-term threat to drinking water safety, and that in many communities, basic infrastructure costs far exceed SDWA compliance costs.", "Local governments traditionally have provided the bulk of financing for drinking water projects. Notwithstanding the existence of several federal infrastructure funding programs, the U.S. Conference of Mayors reports that localities continue to provide 95% of investment in drinking water infrastructure. A key federal program, the drinking water state revolving loan fund (DWSRF) program, was authorized by the SDWA Amendments of 1996 ( P.L. 104-182 ). Paralleling the Clean Water Act SRF program, the DWSRF program helps public water systems finance infrastructure projects needed to comply with federal drinking water regulations and to protect public health. Under the DWSRF program, states receive capitalization grants to make loans to water systems for drinking water projects and other eligible activities. Each state develops a project priority list, based on statutory criteria that emphasize public health protection, compliance, and economic need. Since FY1997, Congress has provided more than $10.3 billion for this program, including approximately $829 million for FY2008. Also, as noted above, the U.S. Department of Agriculture (USDA) administers a loan and grant program for water and wastewater projects, with eligibility limited to communities having 10,000 or fewer people. For FY2008, this program received roughly $534 million for drinking water, wastewater, and waste disposal projects.", "How many job-stimulating projects are actually ready to go? The American Water Works Association (AWWA), an association of water utility managers and professionals, has identified $10 billion worth of drinking water infrastructure projects that could move forward rapidly given funding. Using construction industry multipliers, the association projects that this funding level could generate 400,000 jobs and bring additional economic benefits to communities. In contrast, the U.S. Conference of Mayors estimates that $15.36 billion in identified 'ready to go' water and wastewater projects could generate133,193 jobs. Although much uncertainty surrounds the estimates associated with the potential benefits of a stimulus package, the backlog of water infrastructure projects is large. Water sector advocates note that stimulus funding is especially needed to assist projects pending nationwide that have been hampered by the credit crisis.", "Consideration of economic stimulus proposals raises a number of issues pertinent to the water sector. A key issue concerns the funds distribution mechanism. H.R. 7110 (110 th Congress) anticipated using the DWSRF program as the means for delivering stimulus funds. Such an approach would have benefits, as it would take advantage of an established federal-state program structure that includes criteria for project priorities and eligibilities, and contains fiscal safeguards, such as auditing requirements. Yet, some local water utility representatives have noted that the distribution of funds by states under this program can be sluggish. Others have noted that federal program requirements can pose time-consuming hurdles for projects, slow down project starts, and ultimately could reduce the effectiveness of economic recovery efforts. Also, how well do projects identified as \"ready to go\" complement state funding priorities? Similarly, some projects viewed as priorities by cities may be outside program eligibility or priority criteria. One policy question is whether such projects might be made eligible for stimulus funding. Similarly, should some federal requirements be relaxed, and if so, what might be the public health, environmental or other trade-offs in doing so? As an alternative or complement to the EPA program, the National Rural Water Association advocates using the USDA program which has an estimated $3 billion backlog of water and wastewater projects, and which the association argues distributes funds more quickly. However, this program is limited to small communities. Regardless of distribution mechanism, many questions arise. For example, how will priorities be set: in view of multiple considerations, including speed and efficiency in creating jobs, public health need, economic need, or ensuring urban/rural or state equity? A broader question concerns the long-term federal role in water infrastructure financing and how stimulus efforts might affect it. For example, how might stimulus funding impact congressional efforts to develop a sustainable funding source to replace or supplement federal appropriations, such as a water infrastructure trust fund?\nElectric Transmission\nThe electric power transmission grid for the lower 48 states consists of approximately 160,000 miles of high voltage lines used to move electricity from power plants to load centers. The system is owned primarily by investor-owned utilities (IOUs); other owners include municipal and other public power entities (including federal entities), rural cooperatives, and independent transmission companies. In the West, where solar and wind potential are greatest, two federal Power Marketing Administrations (PMAs) own and operate a significant portion of the transmission system. The Bonneville Power Administration (BPA) maintains approximately 75% of the high-voltage transmission lines in the Northwest, a system of over 15,000 miles of transmission line in approximately 300 substations. The service area of the Western Area Power Administration (WAPA) covers 1.3 million square miles and WAPA maintains 17,000 miles of high-voltage transmission. The nation's electric generating capacity currently totals about 1,000,000 megawatts; These plants are owned and operated by IOUs, public power, cooperatives, and independent power producers.\nThe degree of federal regulatory involvement of the electric power system varies; in general, the regulatory system for electric power is fragmented and inconsistent. In brief, for transmission , the Federal Energy Regulatory Commission (FERC) approves transmission rates for IOUs, independent transmission companies, and provides oversight for the PMAs but generally not for utilities in most of Texas. The Energy Policy Act of 2005 ( P.L. 109-58 , § 1241) allows for incentive rate making for new transmission in an attempt to encourage investment in transmission. FERC, under Order 679, has approved incentive rate making for many new projects. New transmission lines must be approved by every state the line crosses and, in many cases, FERC. For generation , state regulation over power prices varies with the degree of power market deregulation in the state. Plant siting regulations also vary by state, but siting decisions are also influenced by federal environmental regulations and access to the transmission system.", "The transmission grid was developed in patchwork fashion over decades and interconnected to support system reliability and a limited volume of bulk power sales. The role of the grid has changed with the partial deregulation of the power market over the past 30 years. The grid is now being used to carry a large volume of wholesale power sales and serves as a key element in maintaining competitive power prices in many parts of the nation. This new role for the grid, combined with low investment since the 1970s, has led to concerns that the grid is overstressed, and will ultimately fail to operate reliably and serve its new market-enabling function. In addition to the stress of traditional generators connecting to the grid, expanding the grid to reach remote areas suitable for developing wind and solar power is an emerging issue both for reliability concerns and concerns over who will construct the needed transmission.\nAn overriding issue for both generation and transmission is how the nation may respond to climate change policies. The future emphasis on renewables and other \"green\" generating technologies or carbon sequestration would require large investment in the transmission system. The demand centers for electricity are in some cases relatively far from renewable resources or areas that would be geologically favorable for carbon sequestration. Renewable power is currently more costly than coal and natural gas-fired generation, so incentives or mandates would be required to meet a Department of Energy's July 2008 proposed goal of generating 20% electricity from wind by 2030. In general, electric generation capacity will have to expand to meet future growth. The current financial crisis will probably slow demand growth, but it will also reduce investment in new power plants and create additional uncertainty about the future balance of electricity supply and demand.\nThe two issues of transmission capacity adequacy and reliability, and expansion of generating capacity generally and renewable power in particular, impact proposals for an extensive grid modernization program. These modernization proposals take two forms. One is the \"smart grid,\" an umbrella term for a series of technologies that would create \"an intelligent, auto-balancing [of supply and demand], self-monitoring grid, that integrates a variety of energy sources with minimal human intervention.\" In addition to upgrading the existing grid, a second proposal is to expand the existing grid with a new ultra-high voltage backbone system, that would allow renewable power in remote locations to be efficiently moved across the continent to demand centers.\nInvestments required for the power system could be very large. One recent analysis, performed for the investor-owned electric power industry, suggests a total of $1.5 to $2.0 trillion by 2030 would be required to maintain reliability.", "The federal government has numerous incentive programs intended to spur particular electric power investments in the private sector. These include production tax credits, currently scheduled to expire at the end of 2009, for wind and some other renewable power sources; tax credits for certain renewable and clean coal technologies; loan guarantees for nuclear and other low carbon technologies; and incentive rates for new transmission projects that meet certain criteria. The current and future effectiveness of these programs has been debated. For example, although the loan guarantee program was created by the Energy Policy Act of 2005, three years later the Department of Energy has still issued no guarantees. The production tax credits have often been used in complex financial transactions to develop new wind farms, but in a recession the opportunities to conduct these transactions may contract.\nPower Sector Investment as a Mechanism for Economic Stimulus\nAs noted above, the potential investment requirements for the power sector may range into the trillions of dollars. Most of these private-sector investments would go into complex, long-lived privately owned and operated infrastructure, which requires significant up-front planning. Accordingly, there may be a question of how much short-term stimulus versus long-term benefits would result from power sector investments. Some larger concepts will require much more development before specific facilities can be built, such as the ultra-high voltage backbone grid. Certain smart grid technologies are perhaps ready for wide scale deployment, such as advanced electric meters, but there is currently no smart grid template ready for a national roll-out. Utilities do have many transmission projects planned, and these could perhaps be accelerated or expanded with federal incentives. In the West, additional federal investment for BPA and WAPA transmission expansion could provide a means for spurring wind and solar generation development. However, most of these transmission projects would still require lengthy (several year) siting approval from each state in which the transmission line would be built.", "Two fundamental and related issues raised by the potential for greater federal intervention in the power sector are the role of national planning of a system owned primarily by the private-sector and federal preemption of state regulation. Certain initiatives, such as a concerted push to install renewable power or construction of a ultra-high voltage backbone transmission grid, could require additional federal control over power sector investment decisions. The PMAs could be used, especially in the West, to create a larger federal presence in the transmission system, thus allowing greater influence to implement climate change policies. Timely enhancements to the grid to accommodate new, remote renewable power and smart grid technology may require federal authority to override what have historically been state decisions. Another crucial issue is deciding what improvements are necessary to enhance the grid for increased reliability and the ability to accommodate increased intermittent resources such as wind and solar. While many concerns have been raised over the reliability of the existing transmission network, actual data is scarce and a new transmission reliability data gathering system has just started. Decisions must be made whether to promote nuclear power, clean coal, or natural gas-fired plants. Natural gas has been the main fuel for new power plants since the 1990s, but expanded use of gas raises the risk of reliance on another fossil fuel for which the nation may ultimately have to rely on large imports.\nSchools\nU.S. Department of Education (ED) data indicate that an estimated 50 million students were enrolled in public elementary and secondary schools (grades preK-12) in 2008. Safe, healthy, up-to-date school facilities are considered essential for successful educational programs. School infrastructure has traditionally been considered largely a state and local responsibility. The federal government has played a relatively small role in financing school construction and renovation.\nConditions, Performance, and Funding Needs\nData on school infrastructure needs are extremely limited and difficult to assess in part because of the wide variation of potential assumptions and definitions regarding both conditions and needs. At present there is no ongoing federal collection of data on the conditions of schools. However, in response to concerns about the physical condition of schools and a Congressional mandate, in 2000, ED issued a one-time study with estimates of the costs of needed modernization, renovation, and repair to school buildings and/or building features. It remains the latest reliable estimate of these needs. This study is based on 1999 survey data collected by ED of 903 public elementary and secondary schools, weighted to provide a national estimate. These data are based on surveys of school officials rather that on direct, independent data collection. ED estimated the costs to bring school facilities into good condition in 1999 at $127 billion.\nED found that although most public schools in 1999 were in adequate or better condition, a significant number were not. The ED survey found that approximately 25% of schools indicated that at least one type of onsite building was in less than adequate condition. Fifty percent indicated that one or more building feature(s) was not in adequate condition, and 40% indicated that one or more environmental condition(s) was unsatisfactory.\nFederal Assistance\nAs noted above, the federal government plays a relatively small role in school infrastructure. It does, however, provide some indirect support for school construction (mainly by exempting the interest on state and local governmental bonds used for school construction and renovation from federal income taxation), and some direct support through federal education programs such as Impact Aid. The largest federal contribution to school infrastructure occurs via indirect support, i.e., the foregone revenue attributable to the exemption of interest.\nSchool Infrastructure Investment as a Mechanism for Economic Stimulus\nMany school modernization, renovation, and repair projects will require start up time. This will potentially limit their effectiveness as a quick economic stimulus. However, because many states and localities face budget shortfalls and may not have funds available for needed school modernization, renovation, and repair projects, federal investment in these projects would provide an important alternative source of funding. According to Education Daily, not only are school districts \"increasingly faced with difficult financial choices and must meet daily operating expenses, like payroll, while delaying higher-priced construction of schools and libraries,\" but they also must confront the unavailability of affordable credit for capital improvements to schools.\nIn a letter to the Speaker of the U.S. House of Representatives, the Committee for Education Funding argued that \"$20 billion spread over a five-year period, has the potential to support an estimated 50,000 jobs a year. If all new school construction and renovation used the 'green' approach energy savings alone would total $20 billion over the next 10 years, while also creating new and innovative jobs.\"\nIssues Regarding School Construction, Modernization, Repair and Renovation\nAs noted above, school infrastructure needs are significant and are affected by a variety of complicated variables. Not only are the age and physical condition of a school important, but a variety of other factors are important as well, e.g., shifts in the student population, changes in school policies (such as implementing smaller class size), changes in technology, changes in school instructional practices, energy efficiency requirements, and retrofitting schools to meet requirements of legislation such as the Americans with Disabilities Act ( P.L. 101-336 ). Currently there is no regular federal collection of data on the condition of schools. This lack of data makes accurate projections of school infrastructure needs difficult.\nIn addition, although there is currently a backlog in needed school infrastructure projects, the ability of states and localities to finance these projects is particularly strained under current economic conditions. This raises questions regarding whether or not a greater role for the federal government in financing school infrastructure should be considered, and if so, what form federal assistance should take.\nFederal Public Buildings\nThe Public Building Service (PBS), a component of the General Services Administration (GSA), is responsible for meeting the space needs of more than 100 federal departments and agencies. In support of its mission, PBS constructs new buildings, renovates existing ones, and leases space. When new construction is required, PBS contracts with private sector architects, construction managers, and engineers to design and build the structure. New construction projects are tailored for a range of government activities, and may include courthouses, land ports of entry, federal office buildings, laboratories, and data processing centers. PBS also repairs, alters, and renovates the 1,500 buildings already in its inventory.", "Each year the Public Building Service surveys the housing needs of its client agencies and determines whether it has space in its existing inventory to meet those needs. In its budget justification, PBS identifies the construction and renovation projects it believes are needed to meet the most critical workspace needs, and ranks them in order of priority. In FY2008 and FY2009, PBS has ranked homeland security projects among its top capital investment priorities, including the consolidation of homeland security headquarters workspace, and the modernization of several existing land ports of entry, which it describes as outdated and unable to accommodate current workloads and technology. PBS also ranked federal courthouses as priorities for capital investment in FY2008 and FY2009, citing the need for additional space, building systems modernization – such as replacing failing pipes and obsolete fire alarms – and enhanced security.", "Construction and renovation projects, as well as other PBS property management activities, are funded through the Federal Buildings Fund (FBF). The FBF is a revolving fund that is financed by income from rent charged to occupants of GSA-controlled space, and by additional funds appropriated by Congress. Funds in the FBF are subject to enactment of new obligational authority each year, which is referred to as a limitation on the use of revenue. For FY2008, Congress provided just over $1.25 billion for new construction projects ($531 million) and renovation of existing facilities ($722 million). For FY2009, GSA's budget justification included a request for $1.31 billion for new construction ($620 million) and renovation ($692 million).\nFederal Building Construction and Renovation as Mechanisms for Economic Stimulus\nThe FBF provides capital for construction and renovation projects that typically range from several million to hundreds of millions of dollars. When viewed as potential mechanisms for economic stimulus, it may be noted that construction and renovation projects may not be distributed widely or equitably across states and localities. In recent years, FBF funding has been concentrated in a relatively small number of projects. In FY2008, for example, $722 million was appropriated for six renovation projects, and $531 million was appropriated for 11 new construction projects. FBF funding may be geographically concentrated as well. The geographic concentration of construction funds is a consequence of Congressional infrastructure priorities: eight of the 11 new construction projects funded in FY2008 were land ports of entry, all of which were necessarily located in states that bordered Mexico or Canada. The geographic concentration of FBF funds also occurs because cities with the largest existing federal presence are more likely to receive funding for workspace renovation, expansion, or consolidation. Three of the six FBF renovation projects that Congress funded in FY2008, for example, were in the District of Columbia.", "An ongoing challenge for the federal building construction and renovation sector is to secure adequate funding to meet homeland security needs, improve space and security at federal courthouses, and reduce the backlog of federal buildings in need of repair. The FBF does not now have the resources to meet all of those needs, and there may be discussions in the future about restructuring the FBF to increase its available capital.\nBroadband\nBroadband infrastructure refers to networks of deployed telecommunications equipment and technologies necessary to provide high-speed Internet access and other advanced telecommunications services for private homes, businesses, commercial establishments, schools, and public institutions. In the United States, broadband infrastructure is constructed, operated, and maintained primarily by the private sector, including telephone, cable, satellite, wireless, and other information technology companies. Although broadband is deployed by private sector providers, federal and state regulation of the telecommunications industry as well as government financial assistance programs can have a significant impact on private sector decisions to invest in and deploy broadband infrastructure.\nConditions, Performance, and Funding Needs\nThe latest data from the Federal Communications Commission (FCC) indicate that broadband adoption stands at roughly 58% of U.S. households, while less than 10% of households have no access to any broadband provider whatsoever (not including satellite). Data from the FCC, the Pew Internet and American Life Project, and the U.S. Government Accountability Office (GAO) indicate that broadband infrastructure is most lacking in rural and lower-income areas in which there is less economic incentive for companies to invest in such infrastructure. Even in areas where broadband infrastructure is present, demand for those services may lag because of factors such as a household's inability to afford computers or broadband service.\nIt is difficult to estimate with any degree of precision the amount of funding that would be necessary to deploy a ubiquitous broadband infrastructure throughout the United States. \"Broadband\" can refer to a complex array of technologies, speeds, and capacities, each with its own set of costs and benefits. Additionally, the state of broadband data in the United States is incomplete, and policymakers do not yet have a clear or complete picture of where broadband is and is not deployed, nor is there agreement on what criteria determine whether an area is considered \"underserved,\" and the extent to which it may require federal assistance.\nFederal Assistance\nThe Rural Broadband Access Loan and Loan Guarantee Program and the Community Connect Grant Program – both housed in the Rural Utilities Service (RUS) of the U.S. Department of Agriculture – are the only federal programs exclusively focused on financing broadband infrastructure in unserved and underserved areas. Since inception, these programs have provided $1.8 billion in loans (since FY2003) and $83.7 million in grants (since FY2002), and in FY2009 will make available $594 million in loans and $13.4 million in grants. Additionally, there exist other federal programs that provide financial assistance for various aspects of telecommunications development that have been or could be used for financing broadband infrastructure. These include programs under the FCC's Universal Service Fund (USF), RUS rural telephone loans and distance learning and telemedicine loans and grants, and potential Department of Commerce grants to states for broadband data collection and mapping as directed by the recently enacted Broadband Data Improvement Act ( P.L. 110-385 ).\nBroadband Investment as a Mechanism for Economic Stimulus\nTo be effective for economic recovery, any federal broadband infrastructure program must induce incremental broadband investment beyond that which would be undertaken absent the program. It is difficult to estimate precisely the impact of broadband infrastructure spending on employment. According to the Communications Workers of America, every $5 billion invested in broadband deployment would create 97,500 direct jobs in the telecommunications, information technology, and computer sectors, and indirectly lead to 2.5 million new jobs throughout the economy. A June 2007 report from the Brookings Institution found that for every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3% per year. Additionally, many point to successful broadband deployments in other nations, and argue that a comparable broadband infrastructure is essential for future U.S. economic competitiveness.", "The overarching issue is how to strike a balance between providing federal assistance for unserved and underserved areas where the private sector may not be providing acceptable levels of broadband service, while at the same time minimizing any deleterious effects that government intervention in the marketplace may have on competition and private sector investment. In addition to loans, loan guarantees, and grants for broadband infrastructure deployment, a wide array of policy instruments are available to policymakers including tax incentives to encourage private sector deployment, demand-side incentives (such as assistance to low income families for purchasing computers), government-backed \"broadband bonds,\" regulatory and deregulatory measures, and spectrum policy to spur roll-out of wireless broadband services. In assessing stimulus incentives for broadband deployment, Congress will likely consider the appropriate mix of broadband deployment incentives to create jobs in the short and long term, the extent to which incentives should target next-generation broadband technologies, and how broadband stimulus measures might fit into the context of overall goals for a national broadband policy." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_full", "", "h0_title h1_full", "h1_full", "", "h0_full h1_full", "h2_full", "", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "Why has interest in using federal spending for fiscal stimulus intensified?", "What are some approaches to using federal government spending to stimulate the economy?", "What does this report address?", "What two issues do academics, economists, and policymakers debate concerning infrastructure investment?", "What general consensus has been reached as a result of research on infrastructure investment?", "Why might infrastructure spending be important?", "Why are some analysts cautious about infrastructure spending as a type of fiscal stimulus?", "What counterarguments have been presented in response to these sentiments?", "What important considerations must be made about economic stimulus?", "Why do stakeholder groups prepare projects that are \"ready to go\"?", "What tension is there with trying to fund activities?" ], "summary": [ "Interest in using federal government spending to stimulate U.S. economic recovery has intensified recently in response to indicators showing significant deterioration of the economy.", "Some favor using traditional monetary and fiscal policies. Others, however, favor making accelerated investments in the nation's public infrastructure in order to create jobs while also meeting infrastructure needs.", "This report is an overview of policy issues associated with the approach of using infrastructure as a mechanism for economic stimulus.", "Academics, economists, and policymakers debate two issues concerning the contribution of infrastructure investment to the economy. One is the effects of infrastructure investment on productivity and growth, including job creation. The second related issue is the role of infrastructure spending, which is typically a long-term activity, as a short-term mechanism to stimulate a faltering economy.", "Research conducted over time has resulted in a general consensus that there can be positive returns on productivity of investing in infrastructure.", "Many experts now argue that infrastructure spending could be an important source of stimulating labor demand and enhancing U.S. productivity through investments in roads, bridges, water systems, etc.", "Still, some analysts are cautious about the effectiveness of this type of fiscal stimulus because of one key issue: timing. By definition, the goal of stimulus spending is to get money into the economy swiftly. But that objective can conflict with the reality of building infrastructure projects that typically are multiyear efforts with slow initial spendout.", "Spending advocates counter that because the current recession is expected to be of long duration, projects with extended timeframes can still contribute to the economy's recovery, and that investments that improve long-term productivity are preferable to options that focus on consumption as a stimulus tool.", "Two important considerations are, will the proposal produce stimulus quickly, and will it produce a significant amount of stimulus, relative to its budgetary cost.", "Because of the urgency of responding to the recession, stakeholder groups have been preparing lists of projects that are \"ready to go,\" but the criteria for developing these lists are largely unknown.", "There is tension between the goal of funding activities that will create jobs quickly and the desire to invest in projects that will have sustained value that contributes to U.S. productivity." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, 1, 3, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 2, 3, 3, 3 ] }
CRS_RL31073	{ "title": [ "", "Introduction", "Formula and Other Changes", "Grants Allocation Before P.L. 92-500 (Pre-1973)", "P.L. 92-500 and the Formula for 1973-1974", "The 1973 Needs Survey", "Formula Applicable in 1975 and 1976", "1977 Allocation and Appropriations", "Allotment under the Public Works Employment Act (Talmadge-Nunn Act)", "1977 Supplemental Appropriations Allocation", "1978-1982 Allocation", "Categorical Restrictions", "1983-1986 Allocation", "Categorical Restrictions", "The 1987 Revised Statutory Allotment Formula", "Congressional Interest since 1987", "EPA Report on the Allotment Formula", "Expansion of Categorical Eligibilities in 2014", "Conclusion" ], "paragraphs": [ "", "Congress established a statutory formula governing distribution of financial aid for municipal wastewater treatment in the Clean Water Act (CWA) in 1972. Since then, Congress has modified the formula and incorporated other eligibility changes five times, actions which have been controversial on each occasion. Federal funds are provided to states through annual appropriations according to the statutory formula to assist local governments in constructing wastewater treatment projects in compliance with federal standards. Congress has appropriated more than $91 billion since 1972. The formula originally applied to the act's program of grants for constructing such projects. That grants program was replaced in the law in 1987 by a new program of federal grants to capitalize state revolving loan funds (SRFs) for similar activities. The most recent formula change, also enacted in 1987, continues to apply to federal capitalization grants for clean water SRFs.\nThe current state-by-state allotment is a complex formulation consisting basically of two elements, state population and \"need.\" The latter refers to states' estimates of capital costs for wastewater projects necessary for compliance with the act. Funding needs surveys have been done since the 1960s and became an element for distributing CWA funds in 1972. The Environmental Protection Agency (EPA), in consultation with states, has prepared 15 clean water needs surveys since then to provide information to policymakers on the nation's total funding needs, as well as needs for certain types of projects. Legislation to fund water infrastructure projects has been on Congress's agenda regularly since the 107 th Congress. The 113 th Congress enacted some changes to the SRF provisions of the CWA in Title V of the Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121 ). These amendments did not modify the existing allotment formula, but requested EPA to conduct a review of the current allotment formula and submit a report to Congress. In part because the formula is more than 25 years old, while needs and population have changed, the issue of state-by-state distribution of funds remains an important topic.\nThis report describes the formula and eligibility changes adopted by Congress since 1972, revealing the interplay and decisionmaking by Congress on factors to include in the formula. Two types of trends and institutional preferences can be discerned in these actions. First, there are differences over the use of need and population factors in the allocation formula itself. During the 1970s, the Senate strongly favored reliance on use of population factors in the allocation formula, while the House strongly advocated a needs-based approach. During the 1980s, the period when categorical eligibilities were restricted in order to emphasize water quality benefits, the Senate favored needs as the basis for grants distribution, while the House position generally was to retain formulas used in prior years, which incorporate both needs and population elements. When population has been used as a factor, differences have occurred over whether a current or future year population estimate is appropriate, but there is no clear trend on this point.\nSecond, until recently, there have been gradual increases in restrictions on types of wastewater treatment projects eligible for federal assistance. Beginning with a limitation that denied use of federal funds for stormwater sewer projects in 1977, debate over categorical eligibility has had two elements. One has been fiscal: a desire to not fund types of projects with the highest costs and often the most unreliable cost estimates. The other focus has been environmental: a desire to use federal resources to assist projects which benefit water quality protection most directly. While some of these eligibility restrictions presented Congress with rather straightforward choices, others have been more complex. Some continue to be debated, such as whether certain types of projects should be fully eligible for federal aid or should be the responsibility of state and local governments. The 2014 CWA amendments enacted as part of WRRDA revised the list of project categories that are SRF-eligible to include some that have been eligible by practice, such as stormwater management and treatment, and to identify newly-eligible categories, such as decentralized wastewater treatment systems.", "The following table provides a generalized summary of the components of the allocation formula since 1972. Details discussed below should be consulted, because a summary table such as this cannot fully reflect factors such as \"hold harmless\" or \"minimum share\" provisions frequently included in the state-by-state distribution scheme to protect states with small allocations or to minimize potential disruptions when formula changes were adopted. The term \"total needs\" refers to funding needs identified by states for all categories of projects and water quality activities eligible for assistance. The term \"partial needs\" refers to a subset of eligible project categories, primarily construction or upgrades to comply with the act's minimum requirement that municipalities achieve secondary treatment of wastewater.", "Prior to enactment of the Federal Water Pollution Control Act Amendments in 1972 (FWPCA, P.L. 92-500), the federal government administered a comparatively small program of aid for constructing municipal wastewater treatment plants.\nUnder the prior program, assistance was allocated to states on the basis of population. There was no statutory formula. Nor was there a systematic process for the federal government or states to estimate and report on funding needs for sewage treatment. Needs surveys had been developed by the Conference of State Sanitary Engineers, which reported generally (but not rigorously) on estimated construction costs of municipal waste treatment facilities planned by communities to meet water quality standards or other standards or enforcement requirements. They lacked both consistent definitions of objectives and consistent reporting requirements. Moreover, these surveys tended to be based on needs of larger municipalities, so needs in small or rural communities were underrepresented.\nThe first funding needs survey undertaken by the federal government was published in 1968, in response to a general requirement in the 1966 Clean Water Restoration Act for an annual report on \"the economics of clean water,\" but it was a considerably more modest effort than followed enactment of P.L. 92-500. These early documents reported state-by-state and national total needs over a given period of time but did not estimate or report needs for particular categories of waste treatment projects, such as secondary treatment. Annual surveys were published each year through 1974; Congress then changed the reporting requirement to biennial.", "In P.L. 92-500 Congress provided the first statutory formula, governing state-by-state allocations in fiscal years 1973 and 1974. It was entirely needs-based and contained no categorical limitations. Despite weaknesses of the prior surveys, they were the only tool available to guide Congress when the decision was made in the 1972 legislation to move away from a population-based distribution of grants. The 1972 survey estimated total needs, from 1972 through 1976, to be $18.1 billion. Estimated construction costs for the first three years of that period were reported to be $14.6 billion. The rationale for changing to a needs basis for grants allocation despite limitations of available needs information was explained in the House Public Works Committee's report on the 1972 legislation.\nThis needs formula is a sound basis for allotting funds since our experience to date clearly demonstrates that there is no necessary correlation between the financial assistance needed for waste treatment works in a given State and its population.\nThe Committee is fully aware that at the present time there is no satisfactory estimate of the total funds required by the States for construction of publicly owned treatment works... However [the 1972 Needs Survey] report does provide some measure of the relative needs of the various States and in the absence of any better measure has been incorporated in the bill for the determination of the State allotments for the fiscal years 1973 and 1974.\nThe Senate favored retaining population as the basis for grants allocation, and the available public records—committee reports and Senate debates—give no indication whether an alternative approach, such as one based on needs, was considered.\nThe 1972 FWPCA incorporated a statutory formula for distributing grants that was derived from the 1972 survey for the period 1972 through 1974. It covered reported needs in the 50 states and territories, with little categorical restriction. Some limitation was included on use of federal funds for new collector sewers (which collect and carry wastewater from an individual house or business to a major, or interceptor, sewer that conveys the wastewater to a treatment facility). In addition, eligibility for funds was limited to communities in existence when P.L. 92-500 was enacted and could only be provided if the treatment plant had sufficient existing or planned capacity to treat sewage collected by such sewers.\nSection 205(a) of the FWPCA cross-referenced a table in a House Public Works and Transportation Committee Print that identified each state's percentage share under the legislation. The percentages would apply to total grant amounts made available through annual congressional appropriations. The statute provided that this distribution formula would apply for two years; in Section 516 of the act, EPA was directed to prepare a new needs survey that would govern distribution in FY1975.", "In response to the 1972 statutory directive, EPA undertook a new method of preparing the needs survey, and the 1973 Needs Survey was the first effort to report and evaluate needs for categories of waste treatment projects, as well as state and national totals. This survey reported costs for the following categories:\nI—Secondary treatment required by the 1972 act\nII—Treatment more stringent than secondary required by water quality standards\nIII—Rehabilitation of sewers to correct infiltration and inflow\nIV—New collector and interceptor sewers\nV—Correction of overflows from combined stormwater and sanitary sewers (CSOs)\nThis original categorization was subsequently refined. Category III was subdivided to include category IIIA—correction of infiltration and inflow in existing sewers; and category IIIB—replacement or rehabilitation of structurally deteriorating sewers. Category IV was subdivided to include category IVA—new collector sewers; and category IVB—new interceptor sewers. Needs surveys have continued to be based on this same categorical arrangement since the mid-1970s.\nHowever, from an initial estimate of $63 billion in the 1973 survey, the survey figure for wastewater treatment and collection system projects went to a high of $342 billion in 1974, dropped to $96 billion in 1976, rose to $106 billion in 1978, $120 billion in 1980, declined to $80 billion in 1990, and was assessed at $67 billion in 2000, the 13 th and most recent survey. Since the 1992 survey, states also have assessed needs for projects to address nonpoint pollution from sources such as agriculture, silviculture, and urban runoff. In the 2000 survey, needs for these types of projects were an additional $14 billion. Over time, inconsistencies and variations in the surveys have been ascribed to several factors, including the lack of precision with which needs for some project categories could be assessed and the desire of state estimators to use the needs survey as a way of keeping their share of the federal allotment as high as possible.", "In December 1973, Congress enacted P.L. 93-243 , Waste Treatment Fund Allocations, providing the Section 205(a) allocation formula for FY1975. As enacted, the formula was based on EPA's November 1973 Needs Survey, with a formula that split the difference between total needs and partial needs. The formula was one-half of amounts reported in the 1973 Needs Survey for all categories (secondary treatment, more stringent than secondary, sewer rehabilitation to correct infiltration and inflow, new collector sewers, new interceptor sewers, and CSO correction, but not separate stormwater sewers), and one-half of amounts just for categories including secondary treatment, more stringent than secondary and new interceptor sewers. The formula also included a hold harmless provision, under which no state would receive less in construction grant funds than it was allotted under the previous formula.\nUse of the partial needs categories was based on EPA's recommendation to the Congress that the allocation formula should only include the costs of providing treatment works to achieve secondary treatment (the basic national treatment requirement mandated in the 1972 act), treatment more stringent than secondary as required by water quality standards, and eligible new interceptor sewers, force mains, and pumping stations (categories I, II, and IVB, respectively). These were the core categories representing projects to comply with the basic water quality objectives of the Clean Water Act. EPA's basis for this recommendation was the agency's assessment that the data for the other categories, as reported by the states, were limited and considerably less reliable than for these three categories.\nIn the 1973 survey, EPA reported that total needs nationwide were $60.1 billion (1973 dollars), but that reported costs probably underestimated actual expenditures—by half—due to underreporting of CSO needs and failure of states to report all needs in categories I and II. EPA reported that estimates from only 15 states included cost surveys of all communities in the state; data from the remaining 35 states represented all urban areas plus a sample of communities of less than 10,000 persons located outside urban areas.\nThe Senate Committee on Public Works found that EPA's recommendations would lead to inequities affecting a number of states. In its version of legislation to establish an allocation formula for 1975 ( S. 2812 ), it recommended distribution based 75% on partial needs and 25% on 1972 population (i.e., the ratio of a state's 1972 population compared to the population of all states).\nThe formula recommended by the House, in its version of the legislation ( H.R. 11928 ), was the same as the version finally agreed to: one-half partial needs, and one-half total needs, based on the 1973 EPA Needs Survey. The House committee's actions were explained by the chairman of the Public Works and Transportation Committee.\nThe Environmental Protection Agency proposed two tables for allocation of the grant funds to the States. One was based on all of the needs of the States ... The other table was based on only part of the needs ... The committee heard testimony from several States, some of which would receive more funds under one table and some of which would receive more under the other table. In addition, some States found that under the needs concept they would receive less than they had previously when funds were allocated on the basis of population. The primary reason for this appears to be that these States have not yet accurately identified their true needs for wastewater treatment facilities.\nThe committee is very much committed to the allocation of funds on the basis of need. After much consideration, we determined that the most equitable solution would be to allocate the funds for the next 2 fiscal years on the basis of 50 percent of each of the two tables, with no State receiving less than its allocation of 1972. While some States may receive a little less under the committee's solution, all States will benefit greatly in the long run.\nAlthough the House-passed bill called for a two-year allocation formula, the enacted legislation applied only to FY1975. Nevertheless, the formula continued to apply through FY1976, because Congress did not enact legislation to modify it until 1977.", "Appropriations in FY1977 were provided under two appropriations acts, the Public Works Employment Appropriations Act of 1976 and the Fiscal Year 1977 supplemental appropriations act, each using a different allocation formula.", "The 1973 allocation legislation, P.L. 93-243 , required EPA to prepare a new, comprehensive needs survey no later than September 3, 1974, and directed that it include all of the categories included in the 1973 survey, plus costs to treat separate storm water flows. In response, the next wastewater needs survey (the 1974 survey) was transmitted to Congress in February 1975. Based on that survey, EPA recommended that future formulas focus on needs reported for categories I, II, and IVB. This recommendation came from the agency's conclusion that data and cost estimates for other categories submitted in prior surveys had been of poor and inconsistent quality and had resulted in an inequitable allocation formula, as expressed by EPA Administrator Russell Train.\nThere is serious doubt, however, that we will be able to provide accurate estimates of the total national needs, or of needs for each State, which would form an equitable basis for allocation of construction grant funds. Even categories I, II, and IV(b) will be very difficult to refine for purposes of allocation because of the large variations in approach used by the States in estimating needs in these categories.\nI believe that the fundamental differences in reported cost estimates for the construction of publicly owned wastewater treatment facilities highlighted by the last two surveys confirms our concerns about basing the allocation of Federal funds on \"needs,\" at least as they are currently reported.\nCongress adopted EPA's recommendation to limit the use of \"total needs\" in connection with the allotment formula that governed distribution of $700 million in authorized monies under the Public Works Employment Act of 1976, P.L. 94-369 , but in so doing, it reintroduced a population factor. This act, commonly referred to as the Talmadge-Nunn Act, authorized funds for a number of public works programs, including wastewater treatment construction, in order to counter unemployment conditions in certain regions of the country. Under the statutory language, the wastewater treatment monies authorized in P.L. 94-369 were to be allocated just to the 33 states and 4 territories that had received inequitable allocations as a result of the prior two needs surveys. The action in this legislation is significant, because it restored population as a factor in the construction grants allocation formula. The formula in P.L. 94-369 was used to govern the distribution of $480 million in FY1977 construction grants to the 33 states and 4 territories identified in that act. The formula provided under P.L. 94-369 was 50% partial needs, as reported in the 1974 needs survey, and 50% 1990 projected population.", "The second portion of funds provided in Fiscal Year 1977, totaling $1 billion, was governed by the formula that Congress enacted in the FY1977 supplemental appropriations act, P.L. 95-26 . That legislation directed that construction grants allocation be according to the 25-50-25 formula contained in the table on page 16 of S.Rept. 95-38, which was 25% total needs from the EPA 1974 needs survey, 50% partial needs from the 1974 survey, and 25% 1975 population. The needs factors used in this formula were the same as had been in use since FY1975 (derived from the 1974 needs survey), but the population basis was different—population in 1975, rather than projected 1990 population, as under the formula that applied in 1976 under Talmadge-Nunn.", "The next Clean Water Act amendments that addressed the allocation formula were in the 1977 amendments ( P.L. 95-217 ); these amendments provided the distribution formula for FY1978 through FY1981. The final version of the formula was based 25% on total needs (excluding costs of treating separate stormwater flows), 50% on partial needs (categories I, II, and IVB), and 25% on population. The resulting distribution, on a percentage basis, was summarized in tables included in a House Public Works and Transportation Committee print; the allocation provided in table 3 from that report is referenced in Section 205(a) of the Clean Water Act, as amended by P.L. 95-217 . (As discussed below, this same formula was subsequently extended to 1982.)\nDocuments in the legislative history do not indicate clearly either which year's needs survey or which population year were reflected in the final formula. The formula provided in the House version of the 1977 legislation ( H.R. 3199 ) contained a ratio similar to the final version and was based on data from EPA's 1974 needs survey and 1990 estimated population (the factors also used under the Public Works Employment Act of 1976).\nThe Senate version of the legislation, S. 1952 , contained a formula based on 1975 population and needs reported in the 1976 survey for categories I, II, III, IVB, and V. The committee formula utilized the higher of the two percentages each state would receive under the two formulas and then reduced the total (which added up to 117.34%) to 100%. In addition, no state would receive less than one-half of one percent of total funds.\nAlthough the 25-50-25 ratio in the final formula was the same as under the House bill, the state-by-state percentages were not identical, so it appears that, although conferees endorsed the basic House approach, they made some changes, as well. Neither the conference report nor House and Senate debates on the final legislation provides sufficient explanation to determine which population year (1990 or 1975) or needs survey (1974 or 1976) was used in the final allocation formula.", "Beyond the question of which categories should be included for purposes of the allocation formula, the 1977 amendments presented the first explicit restrictions on categories eligible for federal grant assistance. Based on provisions in the Senate bill (the House version had no similar provisions), the 1977 amendments made one categorical restriction. The legislation prohibited use of federal funds for projects to control pollutant discharges from separate storm sewer systems, category VI in the EPA needs survey. The concerns here were fiscal (the 1974 survey estimated category VI costs at $235 billion, or double all other costs in total) and environmental. The committee sought to assure that federal funds would be used for facilities most critical to reducing pollutant discharges, according to the report on the Senate bill, S. 1952 .\nThe cost of controlling stormwater is substantial even after consideration of other options such as land use controls which may be more cost-effective in some situations. The Federal share for stormwater projects is beyond the reach of the limitations of the Federal budget. It is, furthermore, a cost for which water quality benefits have not been sufficiently evaluated, particularly since stormwater discharges occur on an episodic basis during which water use is minimal.\nSenate-proposed restrictions on new collector sewer systems and rehabilitation of existing collectors were not included in the final 1977 amendments. Like its proposal concerning stormwater sewers, the committee had contended that the costs of all such projects were excessive, while the water quality benefits were less significant than other core projects, such as constructing secondary treatment plants.", "P.L. 97-117 , passed in 1981, contained the formula governing distribution of construction grant funds from 1982 through 1985. It was subsequently extended through 1986. These amendments included a number of eligibility restrictions, as well.\nThe House bill, H.R. 4503 , proposed to extend the existing formula through FY1982 only. The position of the House Public Works Committee was that it would address multi-year funding issues in a comprehensive review of the Clean Water Act in 1982.\nIn S. 1716 , the Senate adopted a new formula based on 1980 population; backlog needs for categories I, II, and IVB, as reported in the 1980 needs survey; plus a minimum state share and \"hold harmless\" provisions to protect states in order to alleviate disruption of state programs, by minimizing potential loss of funds under a new formula. Backlog needs, used for the first time in connection with this legislation, were defined as facility requirements to meet the needs of the 1980 population—rather than 20 years' future growth, as had been customary in previous needs surveys and allotment formulas. The Senate formula would apply through FY1984. EPA was directed to conduct a new needs survey placing greater emphasis on public health and water quality needs; that survey would be the basis for allocation beginning in FY1985.\nAs enacted, P.L. 97-117 incorporated the House formula for 1982. For 1983 through 1985, the legislation used the average of the House formula and the Senate formula for 1984—which was 1980 population, backlog partial needs (for categories I, II, IVB, and IIIA), and a hold harmless provision that no state would receive less than 80% of what it would have received under the 1977 amendments formula. These four categories were those which were to be fully eligible for federal grants, under categorical restrictions included in the legislation (see below).\nBecause of delays in enacting a reauthorization bill in the mid-1980s, Congress extended this formula through 1986, as well.", "The 1981 legislation put in place several eligibility restrictions intended to restructure the grants program. The Senate committee explained the rationale in its report on the legislation.\nThe members of this Committee, the Administration, and the majority of the witnesses who came before the Committee agree that the time has come to provide priority funding to those parts of the program which provide the greatest water quality benefit. The Committee bill reflects this principle. In the future, only treatment facilities and the necessary interceptor sewers associated with those plants will be eligible for Federal assistance.\nTwo broad points were made by those who advocated restrictions: (1) current budgetary problems made it necessary to focus limited federal resources on the highest priority environmental problems; and (2) the Administration believed that the federal government's funding responsibilities had largely been met, and remaining water quality needs were local, not national, in scope. Based on these issues, the Reagan Administration proposed a number of program changes that Congress endorsed with some modifications:\nThe Administration recommended eliminating eligibility for new collector sewers, sewer rehabilitation, infiltration and inflow correction, and combined sewer overflow projects. The 1981 amendments retained full eligibility for infiltration and inflow projects, on the basis that they can reduce the need for additional sewage treatment plant capacity. The amendments made the other categories (new collector sewers, sewer rehabilitation, and combined sewer overflows) generally ineligible for federal grants, but allowed governors to use up to 20% of their annual allotment for such projects. The general prohibition on use of federal funds for separate storm sewer projects, established in the 1977 legislation, was continued. The Administration recommended eliminating eligibility for reserve capacity to meet future population growth and recommended that the allotment formula be based only on backlog needs. The legislation provided that, after October 1, 1984, no grant would be made for reserve capacity in excess of that needed when an actual construction grant is awarded and in no event in excess of needs existing on October 1, 1990. The Administration recommended eliminating \"hold harmless\" and minimum allocation provisions of the formula which were not related to water quality benefits. Congress did not adopt these recommendations.\nFinally, although not part of the Administration's recommendations, the enacted legislation reduced the federal share for eligible projects from 75% to 55%, to extend limited federal funds to more projects.", "In the 1987 amendments, P.L. 100-4 , Congress adopted the allocation formula that has been in effect since then. Unlike the 1981 legislation, Congress did not make fundamental changes in eligibility—there were no further limitations on types of projects eligible for federal assistance. The prohibition on federal funding for separate storm sewers was continued. The bigger policy issues debated in this legislation concerned establishing state revolving funds as the future funding mechanism, thus replacing the previous construction grants program. Congress directed that the act's statutory allotment formula would govern the new SRF program (Title VI of the act) and also would continue to govern construction grants allotment during the transition from the old funding program to the new one in 1991.\nNowhere in the legislative history of Congress's final action on the 1987 amendments is there a clear statement about the weighting or factors that went into the final allocation formula—it is even difficult to guess. The conference report on the final legislation merely states: \"The conference substitute adopts a new formula for distributing construction grant funds and the state revolving loan fund capitalization grants among states for fiscal years 1987 through 1990. The allotment formula for FY1986 is the same as under current law.\"\nIt is clearer, however, where the two houses began. During consideration of the legislation, the House favored retaining the formula adopted in 1981. The Senate proposed an entirely new formula.\nThe Senate formula was based on partial needs (year 2000 needs—not backlog needs, as in the 1981 formula) reported in the 1984 needs survey for the 4 categories which are fully eligible for federal funds: I, II, IIIA (made eligible in 1981), and IVB. As reported by the committee, the formula was essentially based on needs for these categories. There was no explicit population factor—but an implicit population factor was incorporated in reverse, because 21 small states were allotted a slightly larger share in order to be able to maintain viable programs, according to the committee report. In addition, the formula in the Senate-reported bill included an 80% hold harmless provision for 11 large states that were expected to experience greater changes in eligibility because of the revised formula, compared with the average.\nThe formula adopted by the Senate was different still: it provided that the full extent of formula changes would apply to the last three of the five years covered by the reauthorization and that a modified version would govern during the first two years. The two-year modified version gave the large states an 85% hold harmless by holding down the amount of increased share that the smaller states would receive—so that large states would lose less, and smaller states would gain less, at least in the first two years.\nAccordingly, the Senate formula was essentially needs-based, with an unquantifiable population factor apparently included, as well. It was merged—in ways that are not clear from available public documents—with the House formula, which had total needs, partial needs, and 1980 population factors. The revised formula is contained in CWA Section 205(c)(3) (33 U.S.C. § 1285(c)(3)).", "Since 1987, Congress has on several occasions considered CWA reauthorization legislation that would have modified the allotment formula that was adopted in P.L. 100-4 . In each Congress since the 107 th , House and Senate committees approved legislation to reauthorize water infrastructure financing programs, including a revised allocation formula. The House has twice passed reauthorization bills (in 2007 and 2009), but none has received further action.\nAllotment formula issues were again under consideration in the 111 th Congress, but no legislation was enacted. H.R. 1262 , passed by the House in March 2009, and S. 1005 , approved by the Senate Environment and Public Works Committee in May 2009, would have revised the current allotment for clean water SRF monies, but in different ways. The House bill would have extended the current formula in full for two years. Under that legislation, beginning in the third year and thereafter, distribution would be determined under a hybrid approach: for appropriated funds up to $1.35 billion, the current formula would apply, and for appropriated funds in excess of that amount, allotment would be done in accordance with funding needs as reported in the most recent clean water needs survey conducted by EPA and states.\nThe Senate bill in the 111 th Congress proposed a new state-by-state allotment for clean water SRF capitalization grants that was based on the 2004 needs survey (which was the survey available at the time of the committee's consideration). The revised formula in S. 1005 included certain adjustments, for example, guaranteeing small states a minimum 0.75% share (rather than 0.5% as under current law), and generally insuring that no state would \"gain\" more than 50% compared with its current percentage share or \"lose\" more than 25% compared with its current allotment.\nIn 1996, Congress amended the Safe Drinking Water Act and established a drinking water state revolving loan fund program modeled after the clean water SRF. However, in that act ( P.L. 104-182 ), Congress took a different approach from that in the CWA and directed that drinking water SRF capitalization grants be allotted among the states by EPA based on the proportional share of each state's needs identified in the most recent national drinking water needs survey, not according to a statutory allotment formula.\nWhile the clean water and drinking water SRFs represent significant amounts of federal financial assistance, Congress has provided other assistance, as well, in the form of grants earmarked in EPA appropriations acts for specific communities, both small and large. For a number of years, congressional appropriators had dedicated a portion of annual water infrastructure assistance as earmarked special project grants which are not subject to any statutory or other allotment formula. For example, for FY2010 ( P.L. 111-88 ), Congress appropriated $2.1 billion for clean water SRF capitalization grants, $1.4 billion for drinking water SRF capitalization grants, and $187 million in earmarked grants for projects in 319 designated communities or areas. Since the first of these earmarks in EPA appropriations in FY1989, Congress provided $7.5 billion for special project grants. Congress imposed a moratorium on earmarking in FY2011, but could restore it in the future.", "In 2014, as part of CWA amendments enacted in the Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121 ), Congress directed EPA to prepare a report to Congress \"to determine whether [the current allotment] formula adequately addresses the water quality needs of eligible States, territories, and Indian tribes.\" The EPA report, completed in May 2016, concludes that the current allotment formula does not adequately reflect reported water quality needs or current population for the majority of states. For example, EPA's analysis found that the current formula adequately reflects the water quality needs for only 17 states, compared with an allotment based on the most recent needs survey. Similarly, the current formula reflects the water quality needs for only 14 states, compared with an allotment calculated using 2010 population data. The report provides several possible options for updating the allocation formula, without recommendation, based on needs survey data, population data, and other elements, such as the extent of a state's reported water quality impairment. Some of the options described in the EPA report include \"hold harmless\" factors that could constrain potential percentage decreases or increases in funding to individual states.", "Because the CWA SRF program is the principal source of federal financial assistance for wastewater infrastructure projects, pressure has grown to expand the categories eligible under the program to include additional types needed by communities to meet a wider range of water quality objectives. Congress responded to these concerns in the CWA amendments that were included in WRRDA 2014. These amendments did not modify the existing state-by-state allotment formula or reauthorize SRF capitalization grant funds, but they revised the statutory list of SRF-eligible projects to expressly include some types of projects that have been SRF-eligible by practice (such as measures to manage, reduce, treat, or recapture stormwater; wastewater facility security projects; and reusing or recycling wastewater or stormwater), as well as a number of newly identified categories that now may be assisted by an SRF. These include—\ndecentralized wastewater treatment projects (e.g., individual onsite systems), measures to reduce demand for wastewater treatment works capacity through water conservation or reuse, or to reduce the energy consumption needs of wastewater treatment works, development and implementation of watershed projects, and assistance to small and medium wastewater treatment facilities to develop and obtain project financing and to assist such facilities in complying with the CWA (assistance recipients must be a nonprofit entity).\nArguably, these less-traditional types of projects could benefit water quality protection and improvement, as do traditional infrastructure investments, and supporting them through the SRF would help ensure comparatively secure funding. But expanding the scope of eligibility also arguably dilutes the historic focus of the CWA SRF program, at a time when needs for core projects—wastewater treatment facilities and sewers—are estimated to be more than $195 billion.", "Since adoption of the allocation formula that has governed distribution of Clean Water Act assistance since 1987, EPA and the states have produced seven updated needs surveys (in 1988, 1992, 1996, 2000, 2004, 2008, and 2012). In addition, updated population information became available through three subsequent decennial Censuses (in 1990, 2000, and 2010). Although population changes have occurred during that time, and needs for water quality projects also have changed (total needs increased 17% between the 2004 and 2008 surveys, but decreased 20% between the 2008 and 2012 surveys), none of this more recent information is reflected in the currently applicable distribution formula. The recent needs surveys have included estimates of needs for traditional wastewater project categories, but they also have included estimates for newer categories, such as stormwater management—now identified separately from combined sewer overflow correction—recycled water distribution, and decentralized wastewater treatment systems (e.g., onsite and clustered community systems often found in rural areas).\nCrafting an allotment formula has been one of the most controversial issues debated during reauthorization of the Clean Water Act. The dollars involved are significant, and considerations of \"winner\" and \"loser\" states bear heavily on discussions of policy choices reflected in alternative formulations. This is likely to be the case again, when Congress reauthorizes the wastewater infrastructure funding portions of the act. In part because the current allocation formula is now more than 25 years old, the issue of how to allocate state-by-state distribution of federal funds remains an important topic of interest to policymakers and state and local officials." ], "depth": [ 0, 1, 1, 2, 2, 3, 2, 2, 3, 3, 2, 3, 2, 3, 2, 2, 3, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full", "h1_title", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "h1_full", "", "h1_full" ] }	{ "question": [ "What does this report describe?", "What trends and institutional preferences can be discerned?", "What issues have arisen with the allocation formula?", "What amendments have been adopted?", "Why has crafting an allotment formula been so controversial?", "How has this controversy changed over the years?", "What did EPA's report on the allotment of CWA water infrastructure funding conclude?", "What guidance does this report give for updating the allotment?" ], "summary": [ "This report describes the formula and eligibility changes adopted by Congress since 1972, revealing the interplay and decisionmaking by Congress on factors to include in the formula.", "First, there are differences over the use of \"need\" and population factors in the allocation formula itself. Second, until recently, there was a gradual increase in restrictions on types of projects eligible for federal assistance.", "Over time, the weighting and preference given to certain factors in the allocation formula have become increasingly complex and difficult to discern.", "However, amendments adopted in 2014 expanded eligibilities, adding eligibility for such measures as water conservation, efficiency, or reuse in order to reduce demand for capacity of wastewater treatment facilities.", "Crafting an allotment formula has been one of the most controversial issues debated during past reauthorizations of the Clean Water Act. The dollars involved are significant, and considerations of \"winner\" and \"loser\" states bear heavily on discussions of policy choices reflected in alternative formulations.", "This is likely to be the case again, when Congress considers legislation to reauthorize the act. Because the current allocation formula is now more than 25 years old, while needs and population have changed, the issue of how to allocate state-by-state distribution of federal funds remains an important topic.", "It concludes that, for the majority of states, the current allotment does not adequately reflect reported water quality needs or the most recent Census data on population.", "It provides several possible options to update the allotment in the future, but does not recommend or identify a preferred option." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3 ] }
CRS_R44609	{ "title": [ "", "The Paris Agreement in Context", "Introduction", "What is the relationship of the PA to the UNFCCC and the Kyoto Protocol?", "What are some key policy takeaways from Paris?", "Requirements and Recommendations in the PA", "What is the purpose and long-term goal of the PA?", "What does the PA require?", "Is the PA legally binding?", "Are PA requirements new for some Parties?", "What are the financial obligations, if any, for the United States in the PA?", "What is the role of the Green Climate Fund in the PA?", "Does the PA address \"Loss and Damage\"?", "Does the PA include or allow market-based mechanisms to reduce GHG emissions?", "What gases and sectors does the PA cover?", "Procedural Topics", "How did the PA enter into force?", "Signatures", "Deposits of Instruments of Ratification, Acceptance, Approval, or Accession", "What actions did the United States take to join the PA?", "Can a Party withdraw from the PA?", "What are the roles of Congress with respect to the UNFCCC and the PA?", "Countries' Pledges to Contribute to GHG Emission Mitigation", "What did the United States pledge as its Nationally Determined Contribution (NDC) to global GHG mitigation?", "Could a Party rescind its NDC and submit a new one?", "Can the United States meet its 2025 GHG reduction pledge?", "What did other major GHG-emitting countries pledge as their INDCs?", "What if a Party does not meet its pledge?", "What effect might full compliance with the PA have on climate change?", "Next Steps for the PA", "Tasks for all Parties", "Questions About Next Steps for the United States", "Appendix. Schedule for Some Key Tasks Under the PA" ], "paragraphs": [ "", "", "Debate continues in the United States over whether and how the federal government should address human-relat ed climate change. A large majority of scientists and governments accept that stabilizing the concentrations of greenhouse gases (GHG) in the atmosphere and avoiding further GHG-induced climate change would require concerted effort by all major emitting countries. Toward this end, 195 governments attending the 21 st Conference of Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) in Paris, France, adopted an agreement in 2015 outlining goals and a structure for international cooperation to address climate change and its impacts over decades to come. The \"Paris Agreement\" (PA) is subsidiary to the UNFCCC, a treaty that the United States ratified with the advice and consent of the Senate and that entered into force in 1994.\nThe PA entered into force on November 4, 2016, 30 days after at least 55 countries representing at least 55% of officially reported global GHG emissions had deposited their instruments. On behalf of the United States, President Obama signed an instrument of acceptance of the PA on August 29, 2016, and deposited it with U.N. Secretary General Ban-Ki Moon on September 3, 2016. As of April 1, 2017, 142 additional nations have become Parties.\nOn June 1, 2017, President Donald Trump announced his intent to withdraw the United States from the PA. He also stated that his Administration would seek to reopen negotiations on the PA or on a new \"transaction.\" As discussed later, a Party may withdraw from the PA if it chooses to do so. Article 28 allows a Party to give written notice of withdrawal to the U.N. depositary after three years from the date on which the agreement has entered into force for that Party. The withdrawal could take effect one year later. The United States could give notice of withdrawal as soon as November 4, 2019, with withdrawal taking effect as soon as November 4, 2020. The President did not indicate how the United States might participate in PA procedures until withdrawal should take effect.\nThe PA creates a structure for nations to pledge to abate their GHG emissions, adapt to climate change, and cooperate toward these ends, including financial and other support. The PA is intended to be legally binding on Parties, though not all provisions are mandatory. The Parties in Paris also adopted a Decision to help implement the PA, and the specified processes to define rules, methods, and other tasks are underway.\nMembers of Congress have expressed diverse views about the PA and may have questions about its content, process, and obligations. This report is intended to answer some of the primary factual and policy questions about the PA and its implications for the United States. It touches on nearly all of the 29 articles in the 16-page agreement, as well as some in the accompanying decision of the Parties to give effect to the PA. Other CRS products, available by request or on the CRS website, may provide additional or deeper information on specific questions.", "The UNFCCC is a \"framework\" treaty. (See text box.) The PA is subsidiary to the UNFCCC, meaning that it is understood to exist within the scope and terms of the UNFCCC. As such, only Parties to the UNFCCC are eligible to become Parties to the PA (PA Article 20.1).\nThe PA is the outcome of the so-called Durban Mandate: The Conference of the Parties (COP) to the UNFCCC agreed at its 2011 meeting in Durban, South Africa, \"to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties,\" which could be adopted by the COP in December 2015 and come into effect and be implemented by 2020.\nThe PA may take advantage of many rules and processes that currently support Parties' implementation of their UNFCCC obligations (e.g., to submit and review national GHG inventories). UNFCCC processes will continue in parallel with new ones under the PA unless Parties modify them. In developing implementation of the PA, the Parties may elect to make use of existing UNFCCC or Kyoto Protocol processes and agreed rules—such as to promote adaptation to climate change or to account for emissions from land use change—rather than beginning new ones. Some processes may be streamlined or merged under the related agreements.", "While the PA is only 16 pages long, it contains a number of complex mechanisms—many of which will require further definition by the negotiating Parties. Some experts and observers, noting the PA's largely procedural nature and lack of binding quantitative GHG obligations, have questioned whether the PA marks significant change. Others note a number of substantive differences from prior commitments, specifically for some Parties. Below are several ways in which the PA embodies change under the UNFCCC.\nCommon process for all Parties . For the first time under the UNFCCC, all Parties will participate in a common framework with common guidance, although some Parties will have flexibility in line with their capacities. The commonality largely supersedes the bifurcation into wealthier and developing countries that has held the negotiations in often-adversarial stasis for many years. Ratcheting process to ward quantified objective . The PA defines a quantitative (though collective) long-term objective to hold the GHG-induced increase in temperature to well below 2 o Celsius (C) and pursue efforts to limit the temperature increase to 1.5 o C above the pre-industrial level. The PA establishes a process, with a \"ratchet mechanism\" in five-year increments, for countries to set and achieve GHG abatement targets until the long-term goal is met. Greater subsidiarity . The PA embodies greater decentralization than, for example, the Kyoto Protocol. The PA increases reliance on decisionmaking and strategy by individual countries or countries cooperating among themselves, not necessarily through central decision mechanisms. Examples of subsidiarity include the nationally determined contributions (pledges) that set countries' GHG targets, and recognition that Parties will use market-based mechanisms (e.g., emissions trading) to transfer emission reduction credits to meet their commitments. Growing role of non-state entities . The negotiations leading to the Paris conference and the PA grew more inclusive of non-state entities (including the private sector) as observers and influencers. Parties recognized them as key decisionmakers and implementers of activities expected to be necessary to achieve the GHG abatement and increased resilience to climate change envisioned in the PA. The government of France established a website for non-state actors to make pledges and share information. Moderate compliance incentives for all. For the first time, all countries agreed to a single system for transparency, accountability, and public accessibility to emissions and policy information to promote compliance with the PA. The UNFCCC lacks universal obligations for transparency and review; the Kyoto Protocol's more intrusive non-compliance provisions may have discouraged participation in commitments by some Parties. To promote compliance, the PA works to balance accountability necessary to build and maintain trust (if not certainty) with the potential for public and international pressure (\"name-and-shame\"). A compliance mechanism is defined to be expert-based and facilitative rather than punitive. Many Parties and observers will closely monitor the effectiveness of this strategy.", "", "The PA states its purpose in Article 2: to enhance implementation of the UNFCCC and \"to strengthen the global response to the threat of climate change.\" Parties to the UNFCCC adopted the PA \"in pursuit of the objective of the Convention\" —to stabilize GHG concentrations in the atmosphere at a level to avoid dangerous anthropogenic interference in the climate system.\nAlthough stabilizing GHG concentrations would require eventually reducing human-related net emissions to near zero, the UNFCCC did not state when or at what levels stabilization should occur. The levels at which GHG atmospheric concentrations stabilize ultimately determines the degree of GHG-induced temperature change.\nThe PA quantifies the intent of Parties in this regard in Article 2, stating that it aims to\n[hold] the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.\nArticle 2 also calls for, inter alia , increasing the ability to adapt to climate change and making financial flows consistent with a pathway toward low GHG emissions and climate-resilient development.\nIn order to achieve the PA's \"long-term temperature goal,\" Parties aim to make their GHG emissions peak as soon as possible and then reduce them rapidly \"so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.\" In other words, the PA envisions achieving net zero anthropogenic GHG emissions within a defined time period. While this is arguably synonymous with the UNFCCC's objective of stabilizing GHG atmospheric concentrations, the PA puts a time frame on the objective for the first time. The objective, however, is collective. It remains unclear whether the PA could hold an individual Party accountable if the collective objective were not met.", "The PA establishes a single framework under which all Parties shall:\ncommunicate every five years and undertake Nationally Determined Contributions (NDCs) to mitigate GHG emissions, reflecting the \"highest possible ambition\"; participate in a single \"transparency framework\" that includes communicating Parties' GHG inventories and implementation of their obligations—including financial support provided or received—not less than biennially (with exceptions to a few least-developed states); and be subject to international review of their implementation.\nThe requirements are procedural. There are no legal targets and timetables for reducing GHG emissions.\nAll Parties will eventually be subject to common procedures and guidelines. However, developed country Parties should provide NDCs stated as economy-wide, absolute GHG reduction targets, while developing country Parties are exhorted to enhance their NDCs and move toward similar targets over time in light of their national circumstances. Further flexibility in the transparency framework is allowed to developing countries (depending on their capacities) regarding the scope, frequency, and detail of their reporting. Many observers consider this flexibility key to gaining the participation of many low-income countries, while some observers note that the flexibility may allow reticent Parties to resist more stringent commitments. The administrative Secretariat of the UNFCCC will record the NDCs and other key reports in a public registry.\nThe PA also requires \"as appropriate\" that Parties prepare and communicate their plans to adapt to climate change. Adaptation communications, too, will be recorded in a public registry.\nThe PA reiterates the obligation in the UNFCCC for developed country Parties to provide public and private financial support to assist developing country Parties with mitigation and adaptation efforts. It also urges scaling up of financing. The Parties agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties. Financing is not restricted to public funds, and many stakeholders expect that most would flow through private investment.\nThe PA permits Parties to participate in cooperative approaches (implicitly, emissions markets ) that \"involve the use of internationally transferred mitigation outcomes.\" Additional mechanisms for cooperative activities, and efforts to incentivize private sector participation, are identified.\nFurther, the PA establishes a committee that will address compliance issues under the PA in a facilitative and non-punitive manner. Finally, the PA contains provisions for voluntary withdrawal by Parties.", "The Department of State in 2016 communicated to Congress that, in its view, some elements of the PA are legal and binding: \"Once the Agreement enters into force for the United States, the legally binding provisions of the Agreement … will apply to the United States.\"\nNegotiators intended the PA to be a legal instrument, though not all provisions in it are mandatory. Some are recommendations or collective commitments to which it would be difficult to hold an individual Party accountable.\nAs explained in CRS Report RL32528, International Law and Agreements: Their Effect upon U.S. Law :\nAn international agreement is generally presumed to be legally binding in the absence of an express provision indicating its nonlegal nature. State Department regulations recognize that this presumption may be overcome when there is \"clear evidence, in the negotiating history of the agreement or otherwise, that the parties intended the arrangement to be governed by another legal system.\" Other factors that may be relevant in determining whether an agreement is nonlegal in nature include the form of the agreement and the specificity of its provisions.\"\nThe PA was negotiated as a subsidiary agreement to the UNFCCC, which is a legally binding treaty among its Parties under international law. Pursuant to enhancing implementation of the UNFCCC, the negotiators adopted the Durban Mandate for \"a protocol, another legal instrument or an agreed outcome with legal force\" applicable to all Parties. As negotiations under the Durban Mandate neared their resolution, many Parties stated their intentions that the PA be legally binding in many respects. The text contains provisions consistent with the form of an agreement intended to be governed by international law, such as entry into force, the depositary for the agreement, dispute settlement, and withdrawal from the agreement. As discussed above, the PA also contains specific obligations intended to be binding on Parties to it. Many of the mandatory obligations appear to be distinguishable by use of the imperative verb shall , although some are qualified in ways (e.g., \"as appropriate\") that soften the potential obligation. Not all provisions in the PA are mandatory. Some provisions exhort but would not legally require Parties (individually or collectively) or the Secretariat to undertake actions or to conform to norms under the PA. Some provisions are facilitative.\nThe principal mandatory provisions for individual Parties are procedural. Among the most important of these is PA Article 4.2:\n[E]ach Party shall prepare, communicate, and maintain successive nationally determined contributions that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions.\nWhile the PA obligates Parties to submit NDCs to mitigate GHG emissions—with certain characteristics and frequency of those submissions identified in the PA or to be determined in guidance of the Parties—the contents of the NDCs are not intended to be enforceable under the PA. The Department of State has stated:\nEven after the United States deposits its instrument and the Agreement enters into force, the U.S. 26-28 percent contribution will not, by the terms of the Agreement, be legally binding. Neither Article 4, which addresses mitigation efforts, nor any other provision of the Agreement obligates a Party to achieve its contribution.\nArticle 4.8 requires that Parties' communications of their NDCs shall provide the information necessary for clarity, transparency, and understanding in accordance with guidance on reporting and NDCs to be developed by the APA for adoption by the CMA in its first session. Each Party must communicate an NDC every five years. Each shall also account for its NDC post-submission in accordance with CMA guidance, including reporting on its progress in achieving its NDC.\nEach Party must also, \"as appropriate,\" engage in adaptation planning processes and implementation of adaptation-related actions.\nWhile the PA contains many additional requirements, such as to provide \"continuous and enhanced support … to developing country Parties\" for required adaptation efforts, those provisions are collective obligations. There is currently no mechanism by which an individual Party could be held accountable for collective shortcomings.", "The PA contains a multitude of obligations for governments that are Parties to it, but few experts have suggested that there are substantive, legal obligations for the United States in the PA beyond those in the UNFCCC. The Obama Administration articulated its view: \"The elements that are binding are consistent with already approved previous agreements.\"\nSome of the PA's provisions are, arguably, new obligations for other Parties, such as the (mostly low-income) Parties not listed in the UNFCCC's Annex I. One example is the provision requiring all Parties to ultimately be held to common transparency and review guidelines.\nAll Parties to the UNFCCC, including the United States, have a host of obligations under the treaty. These existing obligations require Parties to:\ninventory, report, and control their human-related GHG emissions, including from land use; cooperate in preparing to adapt to climate change; seek to mobilize financial resources; and assess and review, through the COP, the effective implementation of the UNFCCC, including the commitments therein.\nThe industrialized countries listed in Annex I of the UNFCCC, including the United States, took on stronger obligations than other countries with regard to reporting, communicating, and international review. In addition, the then-highest income countries, listed in Annex II of the UNFCCC, also agreed to provide financial, technological, and capacity-building assistance to help developing country Parties meet their obligations.\nFor countries not listed in Annex I, some obligations under the PA will be new or stronger than those under the UNFCCC. The PA and Decision establish a single framework under which all Parties would:\ncommunicate every five years and undertake NDCs to mitigate GHG emissions, reflecting the \"highest possible ambition\" (Article 4.3), participate in a single transparency framework that includes communicating their GHG inventories and implementation of their obligations—including financial support provided or received—not less than biennially (with exceptions to a few least developed states), and be subject to international review of their implementation.\nThe United States, as a Party listed in Annex I of the UNFCCC, has already taken on the PA's general obligations under the UNFCCC. In contrast, Parties not listed in Annex I were not subject to UNFCCC provisions that required detailed reporting of policies and measures and their effects, among other requirements. Additional provisions subjected Annex I Parties to certain reviews not applicable to other Parties. The PA expands reporting and reviews for non-Annex I Parties.\nAll Parties to the PA will eventually be subject to common procedures and guidelines under it. However, while developed country Parties must provide NDCs stated as economy-wide, absolute GHG reduction targets, developing country Parties are exhorted to enhance their NDCs (i.e., deepen their GHG reductions) and move toward similar targets over time in light of their national circumstances. Article 4 states that \"each Party's successive nationally determined contribution will represent a progression beyond the Party's then current nationally determined contribution.\" Many view this as a ratchet mechanism that would result in progressively deeper GHG emission reductions. This may be more an expectation than an obligation.", "Article 9 of the PA reiterates the obligation in the UNFCCC for developed country Parties, including the United States, to mobilize financial support to assist developing country Parties with mitigation and adaptation efforts (Article 9.1). Also, for the first time under the UNFCCC, the PA encourages all Parties to provide financial support voluntarily, regardless of their economic standing (Article 9.2). The agreement states that developed country Parties should take the lead in mobilizing climate finance and that the mobilized resources may come from a wide variety of sources—noting the significant role of public funds. It adds that the mobilization of climate finance \"should represent a progression beyond previous efforts\" (Article 9.3).\nThe COP Decision to adopt the PA uses exhortatory language to restate the collective pledge by developed countries in the 2009 Copenhagen Accord of $100 billion annually by 2020 and calls for continuing this collective mobilization through 2025. In addition, the Parties to the COP agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties. The Decision strongly urges developed country Parties to scale up their current financial support—in particular to significantly increase their support for adaptation. The Decision recognizes that \"enhanced support\" will allow for \"higher ambition\" in the actions of developing country Parties (1/CP.21§114). This is a collective commitment to which it would be difficult to hold an individual Party accountable.", "The Decision recognizes the Green Climate Fund (GCF) as one of the entities entrusted with the operation of the financial mechanism of the UNFCCC (1/CP.21§58) and, thus, as one channel through which official UNFCCC financing may flow. In general, the Decision recognizes that adequate and predictable financial resources will flow from, inter alia , \"public and private, bilateral and multilateral sources, such as the Green Climate Fund, and alternative sources\" (1/CP.21§54).\nThe GCF is a multilateral trust fund intended to operate at arm's length from the UNFCCC with an independent board, trustee, and secretariat. The GCF was proposed during the 2009 COP in Copenhagen, Denmark; accepted by Parties as an \"operating entity of the financial mechanism under Article 11 of the Convention\" during the 2011 COP in Durban, South Africa; and made operational in the summer of 2014. The governing instrument for the GCF states that the GCF is to be \"accountable to and function under the guidance of the Conference of Parties\" (3/CP.17§A4)—that is, similar in legal structure to the Global Environment Facility—as opposed to \"accountable to and function under the guidance and authority of the Conference of Parties\" (i.e., similar in legal structure to the Adaptation Fund).", "A key issue for some Parties in the PA negotiations was \"loss and damage\" due to climate change. Parties that perceived themselves as vulnerable to climate change have long sought commitments from the historically high-emitting countries to provide liability or funds to compensate for loss and damage that vulnerable Parties may suffer. The UNFCCC Secretariat defined loss and damage, at least temporarily, as \"the actual and/or potential manifestation of impacts associated with climate change in developing countries that negatively affect human and natural systems.\" Loss and damage may occur even with preparation and adaptation to anticipated climate change. The United States and other historically high-emitting nations opposed new programs or commitments addressing loss and damage.\nIn response to the interests of many countries, the Warsaw International Mechanism on Loss and Damage (\"Warsaw Mechanism\") was agreed under the UNFCCC in 2013 at COP19 in Decision 3/CP.19. The Warsaw Mechanism is procedural in nature.\nDespite strenuous negotiations, the UNFCCC Parties did not adopt proposals that could have established legal remedies—such as liability or compensation for loss and damage. Instead, the negotiators agreed in Article 8 to continue the existing process under the authority of the CMA to explore cooperation and facilitation that could include early warning systems, emergency preparedness, comprehensive risk assessment and management, and improved resilience.", "Article 6 of the PA recognizes that Parties may use market-based mechanisms that generate and allow international transfer of GHG reduction credits that can be used to meet NDCs. The Decision calls for a work program that would govern market mechanisms and the additional mechanisms under the PA.\nArticle 6 covers four distinct (but not mutually exclusive) opportunities for Parties to the PA to voluntarily cooperate to mitigate GHG emissions in ways that can lead to transfers of emission reduction credits between Parties:\nCooperative approaches , acknowledging that Parties may choose, on a voluntary basis, to cooperate in the implementation of their NDCs. This provision may be read as broad, potentially encompassing the other means included in the article as well as additional approaches that may emerge through the duration of the PA. Transfers of mitigation outcomes between Parties are recognized as a means to meet Parties' NDCs. \"Internationally transferred mitigation outcomes\" will need to be consistent with future CMA guidance on their GHG accounting, intended to ensure \"environmental integrity\"—that is, that there is no double counting or other misaccounting that could undermine the abatement pledged by Parties. The language is explicit that the transfers occur under the authorities of the participating Parties, not the CMA. This contrasts with the provisions in the Kyoto Protocol that required exchanges of credits to occur under—and with the prior approval of—Kyoto-established institutions (i.e., the Clean Development Mechanism). A m echanism to contribute to mitigation and support sustainable development is established under the CMA that could establish credit for cooperative programs that mitigate GHG emissions and development of a Party. Those credits could be used to meet one Party's NDC. A share of the proceeds from activities under this mechanism will help defray administrative expenses and assist developing countries. A framework for non-market approaches is defined but not \"established.\" The provisions make clear that the framework should promote sustainable development; synergies across mitigation, adaptation, finance, and technology transfer; and capacity-building, along with additional purposes. But the nature and processes of this framework remain to be developed.\nCollectively, these four mechanisms encompass a diversity of interests and preferred approaches among Parties. They may be viewed as broadly inclusive, not suggesting preferences in the PA for one approach over another.", "The PA is silent regarding the anthropogenic gases and sectors potentially covered, leaving the scope bounded by the UNFCCC's scientific definition of what constitutes a GHG. The UNFCCC includes all human-related GHGs and all sectoral sources of them. It also includes removals of GHGs from the atmosphere by \"sinks\" and reservoirs, including land uses (i.e., photosynthesis by vegetation and soils). Article 5 explicitly exhorts Parties to \"reduce emissions from deforestation and forest degradation, and conservation (REDD+), including through results-based payments.\"\nTo support the PA negotiations, most UNFCCC Parties submitted Intended Nationally Determined Contributions (INDCs) during 2015, constituting country-driven intentions of what each would do to address GHG emission mitigation and, in some cases, adaptation. Each Party decided and communicated which GHG and sectors it covered in its INDC, and a wide diversity of scopes were identified across nations. A continuing task for the UNFCCC Secretariat will be to try to put those INDCs into a common metric and assess the aggregate effects of the INDCs. It began this task with an analysis released in October 2015 updated on May 2, 2016.\nThe COP Decision giving effect to the PA requested the APA to develop guidance for the CMA to consider and adopt at its first session. The process of negotiating guidance will likely consider methods and approaches for estimating and accounting for anthropogenic GHG emissions and sinks in the NDCs. (See paragraphs 28 and 27 of Decision 1/CP.21.) This process will build on extensive but flexible guidance already adopted under the UNFCCC for estimating and reporting GHG inventories, but challenging issues—such as reporting of sinks—may arise as they have in the past.", "", "In accordance with Article 21 of the PA, the agreement entered into force on November 4, 2016, on the 30 th day after at least 55 countries representing at least 55% of officially reported global GHG emissions deposited their instruments. Entry into force of the PA entailed four steps by Parties:\n1. Signature by individual national governments; 2. Governments' processes of ratification, acceptance, approval, or accession, according to their domestic laws and practices; 3. Deposition of those instruments of ratification, acceptance, approval, or accession with the United Nations depositary; and 4. Passing a threshold of 55 countries, representing at least 55% of GHG emissions, that have deposited their instruments.\nThe threshold in step 4, above, was passed on October 5, 2016, initiating the 30-day clock. The PA has legal force only for those nations that are Parties to it—those that have deposited their instruments.\nThe Durban Mandate for the PA envisioned the PA taking effect in 2020. The entry into force four years sooner than anticipated poses some challenges to the Parties. In particular—as discussed later in \" Next Steps for the PA \"—Parties are pressed to develop and adopt many procedures and methods to guide their compliance with the PA's provisions. Some procedures were envisioned in the PA as being ready for adoption in the first COP serving as the meeting of the Parties to the PA (CMA). That first meeting began in November 2016 rather than in 2020, and development of rules and procedures are ongoing.", "More than 170 governments (including the United States and EU) signed the agreement on April 22, 2016. This set a new record for signatures on a U.N. treaty in a single day. As of June 1, 2017, the PA had received 195 signatures. Signatories included all major emitting countries and the EU; only Nicaragua and Syria had not signed. The PA remained open for signature until April 21, 2017.\nSignature alone did not trigger entry into force of the agreement, but was a first step in the process for a UNFCCC Party to become Party to the PA. The PA is explicit in Article 20 that signature is further subject to ratification, acceptance, approval, or accession by the signing state or regional economic integration organization (REIO) before the agreement has legal force on that signatory. After signing, a state that seeks to become Party to the PA proceeds with its own domestic processes, defined by its laws, to ratify, accept, approve, or (for nations that do not sign before April 21, 2017) accede to the agreement.\nFinally, to become a Party, a national government or an REIO (e.g., the EU) must deposit an instrument of ratification, acceptance, approval, or accession with the U.N. depositary. On April 22, 2016, 15 nations deposited their ratifications with the United Nations, and others pledged to do so as quickly as possible.", "By October 5, 2016, 72 nations had deposited their ratifications , acceptances , or approvals of the PA , accounting for more than 56% of global GHG emissions, passing the threshold for the PA to enter into force. In synchrony, the United States and China deposited their instruments with U.N. Secretary General Ban-Ki Moon on September 3, 2016. As of June 23, 2017, 149 Parties had joined the PA, including the major emitters Brazil, the EU and seven of its members, India, Indonesia, Japan, Mexico, South Africa, South Korea, and Ukraine. Additional Parties represent a spectrum of emissions and economies, from Albania to Vanuatu. Among the top 20 emitting countries, only Iran and Russia are not yet Parties. In 2016, Russia pledged to join the PA as quickly as possible.", "The United States completed a number of steps necessary to become a Party to the PA. First, the United States became a Party to the umbrella treaty, the UNFCCC, when it entered into force in 1994. The United States participated as a UNFCCC Party in the 21 st meeting of the COP when it adopted the PA by consensus, on December 12, 2015.\nThe United States became a signatory of the PA when Secretary of State John Kerry signed the PA on behalf of the United States on April 22, 2016. On August 29, 2016, President Obama, on behalf of the United States, signed an instrument of acceptance of the PA, effectively providing U.S. consent to be bound by the PA. He deposited that instrument of acceptance directly with U.N. Secretary General Ban-Ki Moon on September 3, 2016. The United States became a Party to the PA when it entered into force on November 4, 2016.\nWhether the United States legally could—or should—have become a Party to the PA as a treaty with Senate advice and consent, or as an executive agreement , has been a matter of interest for some in Congress and the public. The PA is intended by its negotiators to be an international treaty as defined in the Vienna Convention on the Law of Treaties. Nonetheless, under U.S. law, the term treaty refers to agreements that receive Senate advice and consent in conformance with Article II of the Constitution. President Obama accepted the PA as an executive agreement rather than seeking the advice and consent of the Senate to ratify it; executive agreements may be made pursuant to congressional authorization, pursuant to authority granted to the executive in a prior treaty, or \"solely on the basis of the constitutional authority of the President.\" This process has been used for other international treaties. At least one other international environmental agreement, the 2013 Minamata Convention on Mercury , was entered into as an executive agreement.\nThe State Department's Handbook on Treaties and Other International Agreements identifies considerations for the executive branch's determination of the type of agreement and the constitutionally authorized procedures to be followed by the United States in joining an agreement. The determination depends on a number of considerations , including whether the PA was negotiated pursuant to a ratified treaty (e.g., the UNFCCC), its content and importance, whether it requires additional legislative authorizations for the United States to comply, related congressional resolutions, and other factors. As examples of application of these considerations, if the PA were to contain new legal obligations for the United States, or if the United States were unable to meet its obligations without additional authority from Congress, those factors would favor regarding the PA as requiring congressional action. Senior officials of the executive branch asserted that the PA is an executive agreement that does not require submission to the Senate because of the way it is structured. State Department officials stated that they had \"a standard State Department exercise that [they were] going through for authorizing an executive agreement, which this is.\"\nThe State Department's Handbook states, following its listing of considerations, that \"[i]n determining whether any international agreement should be brought into force as a treaty or as an international agreement other than a treaty, the utmost care is to be exercised to avoid any invasion or compromise of the constitutional powers of the Senate, Congress as a whole, or the President.\" It also states that consultations on the type of agreement to be used \"will be held with congressional leaders and committees as may be appropriate.\" The 2016 White House statement upon deposit of the U.S. instrument of acceptance provided little insight into the decision.\nThe Senate Legislative Counsel in 1975 stated its position that \"the scope of presidential authority to make executive agreements is unclear.\" Congress has interests in both the substance of the agreement and protecting its constitutional authorities. In 2015, Members of the 114 th Congress introduced several resolutions (e.g., S.Res. 329 , S.Res. 290 , H.Res. 544 , S.Con.Res. 25 ) to express the sense that the PA should be submitted for the advice and consent of the Senate. Additionally, resolutions were introduced in the House ( H.Con.Res. 97 , H.Con.Res. 105 , H.Res. 218 ) to oppose the PA or set conditions on its signature or ratification by the United States. None received further action. In the 115 th Congress, a number of resolutions have also been introduced to oppose or support U.S. participation in the PA (e.g., H.Con.Res. 55 , H.Res. 85 , H.Res. 390 , S.Con.Res. 17 ). Again, no further action has occurred.\nThe 1997 Byrd-Hagel Resolution ( S.Res. 98 , 105 th Congress, adopted 98-0) expressed the Sense of the Senate opposing an agreement pursuant to the UNFCCC that would\n(A) mandate new commitments to limit or reduce greenhouse gas emissions for the Annex I Parties, unless the protocol or other agreement also mandates new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country Parties within the same compliance period, or\n(B) would result in serious harm to the economy of the United States.\nThe PA could be seen to satisfy the first clause, as all Parties have the same obligation to submit NDCs to abate GHG emissions, with all Parties pledging to achieve their contributions by 2030. (The U.S. opted for a target date of 2025.) The substance of the NDCs is not binding for any Party. In the second clause, determining whether the agreement could cause \"serious harm\" to the U.S. economy would require analysis and judgment.\nStakeholders have weighed in with their views regarding the appropriate legal form and process for the PA in the United States. Some commentators consider that the PA is appropriately an executive agreement because it does not contain new, specific legal obligations for the United States beyond those in the UNFCCC and already authorized under U.S. law. The United States and other Parties to the UNFCCC accepted legally binding obligations when they ratified the UNFCCC, including addressing GHG emissions (Articles 4.1 and 4.2), preparation to adapt to climate change (Article 4.1), financial assistance to developing countries (Articles 4.3-4.5), international cooperation and support (Article 4.1), and regular reporting of emissions and actions (Article 12) with international review (Article 4.2, 7). Some commentators note that the obligation to submit Nationally Determined Contributions (NDCs) is procedural, because the Parties would not have a legal obligation to comply with the content of the NDC. In other words, a Party could be held to account under the compliance provisions of the PA for not submitting an NDC, but it could not be held accountable under the compliance provisions should that Party not, for example, achieve a GHG emissions target it specified in its NDC. (See discussion in \" Are PA requirements new for some Parties? \")\nOther commentators argued that the PA is a treaty that should have been submitted to the Senate. Some gave reasons such as historical practice, the potential costs and benefits, or other factors. At least one commentator argued that the PA could, in future decades, result in stronger obligations for the United States than the Senate anticipated when it gave its consent to ratifying the UNFCCC.", "The PA—typical of modern international agreements, including the UNFCCC—includes provisions for Parties to withdraw if they choose to do so. Article 28 spells out a procedure by which a Party may give written notice of withdrawal to the U.N. depositary after three years from the date on which the agreement has entered into force for that Party. The soonest date the United States may submit that intent would be November 4, 2019. The withdrawal would take effect after one year, as soon as November 4, 2020 for the United States, or later if so specified in the notification of withdrawal.\nOn June 1, 2017, President Donald Trump announced his intent to withdraw the United States from the PA. As the PA is an executive agreement, U.S. historical practice suggests that the President may withdraw from the PA, without prior approval by Congress, by submitting notification of withdrawal from the PA to the U.N. Depositary.\nSome have suggested that the United States could withdraw more quickly by exercising the right to withdraw from the UNFCCC under its Article 25. Article 28(3) of the PA specifies: \"Any Party that withdraws from the Convention shall be considered as also having withdrawn from this Agreement.\"\nBecause the UNFCCC received the Senate's advice and consent in 1992, an effort by the executive to terminate that treaty unilaterally could invoke the historical and largely unresolved debate over the role of Congress in treaty termination. The Constitution sets forth a definite procedure for the President to make treaties with the advice and consent of the Senate, but it does not describe how they should be terminated. There are proponents on both sides of the debate over the executive's power of unilateral treaty determination. On the one hand, the Restatement of the Foreign Relations Law of the United States (Third) concludes that the President has the power to terminate or suspend a treaty by virtue of the executive's powers related to foreign affairs. On the other hand, some contend that the Founders could not have intended the executive to be the \"sole organ\" of treaty powers, because the Treaty Clause expressly provides a role for the Senate formation of treaties. The Senate must, by this reasoning, also approve the termination of a treaty that it previously ratified.\nGiven the diverse past practices and the unsettled state of the law relating to Congress's role in this process, it is unclear whether the executive would be required to receive congressional or senatorial approval should it decide to withdraw from the UNFCCC. It is also unclear whether the courts would resolve a dispute between the legislative and executive branches over termination of the UNFCCC should a disagreement arise.", "Congress has power to influence U.S. commitments and performance under the UNFCCC and the PA. As with other actions of the executive branch, Congress retains its powers of appropriations and oversight, as well as of giving (or withdrawing) authorizations regarding implementation of the PA.\nAppropriations or prohibition of use of funds for certain purposes have been used on numerous occasions in the context of the UNFCCC with regard to supporting the UNFCCC processes, providing technical or financial assistance to lower capacity countries in furtherance of the treaties, and cooperative activities of particular interest, such as enhancing monitoring of compliance with treaty obligations or promotion of key technologies, such as carbon capture and sequestration.\nMembers of Congress and their staff routinely consult with the executive branch and conduct oversight with respect to the UNFCCC before and after multilateral sessions and while attending as part of congressional delegations. Letters to executive officials may convey views or request specific information, and legislative resolutions may express majority views more strongly. Congressional hearings provide more public settings for receiving testimony and exchanges of views with the Administration. Committee chairs have requested reviews of particular issues by the Government Accountability Office and others. All of these may continue under the UNFCCC and the PA.\nSome key issues that may attract oversight, should the United States proceed with the President's intent to withdraw from the agreement include:\nOptions for withdrawing from the PA; The degree and content of U.S. participation in the PA activities while the United States is a Party and after withdrawal occurs; Objectives and options for renegotiation of the PA, or of a new \"transaction,\" should other Parties be willing to engage; The possible implications for the United States of decisions Parties make following U.S. withdrawal (for example, regarding technology cooperation and trade); or Evaluation of bilateral cooperation in areas such as development of advanced technologies and information-sharing.\nAs long as the United States remains a Party, issues include the following:\nDevelopment of methods and guidance to which PA Parties will be expected to conform concerning reporting on and achievement of NDCs; Protection of intellectual property and opportunities for market access in technology-related provisions; Balancing and evaluating outcomes of appropriations, partnership programs, regulations, and other federal activities to advance technologies, inform the public, and influence GHG emissions and adaptation to climate change; Use and outcomes of any appropriated funding, such as for operations of the Secretariat, bilateral cooperation with other Parties, or the GCF; and Overall outcomes of Parties' actions in light of the objectives of the UNFCCC and PA and in view of domestic concerns about potential economic and trade implications and climate effectiveness of the agreement.", "", "Intended NDCs (INDCs)—and, now for Parties, Nationally Determined Contributions (NDCs) —embody the pledges of countries to abate their GHG emissions, and, in some, to adapt to climate change. They are thus critical to considering the overall effect of the PA. To support the negotiations, most UNFCCC Parties submitted statements or INDCs of the contributions they intended to make to the global effort to mitigate GHG emissions and, in some cases, adapt to climate change. The PA requires formal, country-driven pledges from its Parties as NDCs, though Parties are not bound to achieve the targets or take the actions the NDCs contain.\nOn March 31, 2015, the State Department communicated its INDC, a U.S. pledge to reduce U.S. GHG emissions by 26-28% by 2025 compared to 2005 levels ( Figure 1 ). The United States stated that it will \"make best efforts to reduce its emissions by 28%.\" The U.S. INDC was not explicitly conditional on other countries' actions, as some other Parties' were.\nThe United States noted that its INDC was supported by domestic policy actions that placed the nation on a course to reduce GHG emissions by 17% by 2020 below 2005 levels. The INDC also stated that the U.S. 2025 target is consistent with a straight-line emission reduction path to \"deep decarbonization\" of 80% or more by 2050.\nHaving communicated the U.S. INDC to the UNFCCC Secretariat in 2015 before joining the PA, the United States is considered, in accordance with paragraph 22 of the Decision, to have satisfied the PA's requirement to submit a first NCD under PA Article 4.2. The Secretariat has now registered the U.S. pledge in the interim NDC Registry in accordance with PA Article 4.12 and Decision paragraph 30.", "Once a government becomes a Party to the PA, its INDC may be registered by the Secretariat as the Party's NDC, unless the Party requests otherwise. The question has arisen as to whether, once a Party's NDC has been submitted and registered, that Party may rescind it and submit a new one.\nThis question is pertinent to the United States for several reasons. President Trump, in announcing his intent to withdraw from the PA, stated that \"this includes ending the implementation of the nationally determined contribution.\" In addition, some U.S. stakeholders have expressed concern that the ambition of the U.S. NDC GHG emission reduction target may be too little or too great. Those seeking a less ambitious target may assert that there is not parity in the levels of effort being contributed across countries, especially among competitive nations, or that the costs of achieving the target may harm the U.S. economy or fossil fuel interests. Some have suggested that the United States remain Party to the PA but rescind its NDC and possibly submit a less ambitious substitute. These views and President Trump's statement have raised legal and political questions, including how to interpret related provisions in the PA.\nThe U.S. NDC has been registered by the Secretariat. Unless the United States rescinds its NDC, the NDC presumably remains in effect. Its content is not binding, and, indeed, achievement of its content could not be definitively determined until at least two years after the 2025 target date. Most Parties stated their NDC with a target date of 2030; their GHG emissions data would become available for review by Parties and the public in 2032 or later (depending on the capacity of the country and rules developed under the PA).\nFormal accounting of actions Parties are taking to achieve their NDCs would probably not be required until the next biennial national report (BNR) under the UNFCCC is due in 2018, and perhaps not even then. This communication is due under the Convention, not the PA, and so will be expected regardless of U.S. intent to withdraw from the PA. The United States may expect that other Parties will pay particular attention to U.S. explanation of its policies, actions, and GHG trajectories, as required in such reports, when the BNR is published.\nThe United States may have an interest in supporting rigorous reporting and transparency under the UNFCCC and PA and generally to be viewed as compliant with its international procedural obligations. The United States may therefore have broader considerations than strictly the legal terms of the PA and the UNFCCC.\nThere are no provisions in the PA permitting a Party to rescind its NDC or express prohibitions. Possible withdrawal of the existing U.S. NDC raises two aspects of compliance with the PA: (1) the requirement that each Party must submit a NDC; and (2) provisions suggesting that each NDC must include a more ambitious pledge, a ratcheting mechanism for ambition in GHG emission reductions.\nAs noted above, the U.S. NDC has already been registered. Should the United States withdraw its NDC without submitting another, it would arguably no longer be in compliance with PA Article 4.2 as long as the United States' withdrawal has not taken effect (in late 2020 or later). There is no clear time by which a Party must have an initial NDC in place. Deadlines may be decided by the PA Parties as they develop rules under the PA. Subsequent NDCs must be submitted every five years. In light of President Trump's stated intent to withdraw, Parties may or may not pursue non-compliance processes should the United States rescind its NDC and not submit a new one.\nArticle 4.3 states that \"each Party's successive nationally determined contribution will represent a progression beyond the Party's then current nationally determined contribution and reflect its highest possible ambition.\" Article 4.11 of the PA states that \"a Party may at any time adjust its existing nationally determined contribution with a view to enhancing its level of ambition, in accordance with guidance adopted by the [CMA].\" Various legal advisers and diplomatic officials, in the United States and other countries, have asserted differing opinions regarding whether the \"ratcheting\" mechanism is legally obligatory. The language appears permissive and not prohibitive. During the negotiations, countries disagreed regarding whether Parties should be obligated to submit NDCs that are progressively more ambitious. As is often the case in difficult negotiations, the differences were resolved by language that may be ambiguous. Whether a less ambitious NDC would be noncompliant would entail further legal interpretation and diplomatic discussion among Parties. The provisions' uses of the words will and may , rather than shall , may undermine the argument that they could be legally mandatory. Nonetheless, a less ambitious NDC would likely be inconsistent with the express intent in multiple provisions aimed at peaking global emissions with reductions thereafter and could be seen as undermining the intent of the agreement overall.\nThe advantages and disadvantages for the United States of invoking a compliance question may depend on expectations of diplomatic repercussions in light of President Trump's stated intention to withdraw from the PA. It may also be influenced by the possibility that the United States might meet the existing NDC target under expected market conditions and public policies, including those at state and local levels, as a few observers suggest.", "Whether the United States will meet the GHG reduction targets in its NDC is uncertain but does not appear likely. A Party's achievement of its GHG emissions target is not a legal obligation but likely has broader diplomatic and public opinion implications in the PA's \"name and shame\" compliance system. President Trump announced on June 1, 2017, that the United States would, as of that date, \"cease all implementation\" of the U.S. NDC. The likelihood that the United States would meet its target would be further reduced should the Administration's review of regulations (such as the Clean Power Plan [CPP] ) by agencies result in rescissions or more permissive standards than those promulgated under the Obama Administration. One dozen states —along with hundreds of localities, businesses, universities, and other U.S. entities—have stated, nonetheless, their intentions to continue efforts to reduce their GHG emissions and, in many cases, to achieve a reduction proportionate to their shares of the U.S. NDC target.\nThrough 2016, several analyses indicated that the United States could meet its NDC pledge to reduce GHG emissions to 26-28% below their 2005 levels by 2025, relying on optimistic assumptions and additional policies. Other analyses, or less optimistic assumptions, suggested that the United States would fall short of its NDC target.\nAt the end of 2015, the United States submitted its second biennial report to the UNFCCC and itemized actions that the United States was implementing or intended to take that would assist in reducing GHG emissions. The State Department reported that, under then-current measures only, the United States could reduce GHG emissions (net of removals by sinks) by 12-16% below 2005 levels by 2025. This would be well short of the U.S. NDC target. Analyses by non-governmental sources produced similar results.\nNew policies and actions of the Trump Administration could decrease the likelihood that the United States could meet the NDC GHG target. President Trump's Executive Order 13783, \"Promoting Energy Independence and Economic Growth,\" directed the U.S. Environmental Protection Agency (EPA) Administrator to review and, if appropriate, suspend, revise, or rescind, \"as appropriate and consistent with law,\" the CPP and other rules that \"unduly burden the development or use of domestically produced energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.\" E.O. 13783 also withdrew President Obama's Climate Action Plan (CAP), among other policies.\nOne measure in the CAP considered important to achieving the US NDC target was EPA's CPP, promulgated in 2015. It set standards limiting CO 2 emissions from existing fossil-fuel-fired electric generating facilities, which emitted 33% of U.S. net GHG emissions in 2015. Already, the Supreme Court had stayed the rule on February 10, 2016, under litigation challenging the rule. EPA published notice in April 2017 that it was reviewing the CPP and, if appropriate, would initiate proceedings, consistent with the law, to suspend, revise, or rescind the regulation. The court paused the CPP litigation for 60 days to allow EPA time for that review.\nRegarding GHG emissions from the transportation sector, the Trump Administration announced on March 15, 2017 a reconsideration of vehicle GHG standards for the Model Years 2017-2025 that could ease or delay the emissions limits. The evaluation is due by April 2018. Other new policies designed to encourage greater fossil energy production and consumption could increase associated GHG emissions.\nThe outcomes on U.S. GHG emissions of the ordered regulatory reviews and other changes in policy remain to be seen. Many factors outside of federal policy could increase or decrease the likelihood of meeting the target, and it is not possible to predict future emissions precisely. Some analysts suggest that economic and technological factors may continue to reduce U.S. GHG emissions through 2025, with a few suggesting that the NDC targets could be met through continuing market forces along with state, local, and philanthropic programs. Plentiful natural gas supplies have continued to offer an attractive alternative to coal-fired electricity, and falling costs of electricity from wind and solar—along with federal tax incentives—have expanded investment in these more advanced technologies. Any projection of future emissions is contingent on assumptions about future economic conditions and consumer preference, the size and structure of the energy sector, the influence of existing and new policy measures, and the modeling methods. Strategies being undertaken by states and localities and many in the private sector could also limit GHG emissions. Rapid technological change in the energy sector may have an even greater influence.\nMany state and local policies already constrain GHG emissions, and they will continue to influence the U.S. emissions trajectory even under new federal policy. California proceeds with its Advanced Clean Car Program, which included an EPA waiver to use the MY2017-2025 vehicles standards; 12 additional states have adopted the California standards. California has also enacted laws to reduce its GHG emissions to 1990 levels by 2020 and has set a goal to reduce GHG emissions to 40% below 1990 levels by 2030. This will require GHG reductions beyond what was counted in earlier projections of California's Climate Action Plan. Ten northeastern states continue to implement the Regional Greenhouse Gas Initiative limiting CO 2 emissions, allowing emissions trading and reinvestment of associated revenues. Many states have renewable energy portfolio requirements, and many have stated that they will continue to pursue GHG reduction policies, as have a number of localities and major corporations. More than 130 U.S. cities have joined the Global Covenant of Mayors for Climate and Energy, pledging to abate GHG emissions locally. A number of electric utilities reliant on fossil fuels are hedging with investments in renewable energy generation or finding them economically competitive with the alternatives. Many experts expect expanding deployment of advanced technologies to continue to reduce costs and increase availability of less GHG-emitting energy systems.\nSome potentially countervailing factors include the relatively low prices of motor fuels and impacts on consumer choices and use of vehicles, relatively low operating costs of existing coal-fired plants, electricity grid constraints, and intermittency and storage challenges of renewable energy technologies. If natural gas prices rise significantly, or the CPP is remanded, rescinded, or weakened, the NDC targets could be especially challenging to achieve. Under most scenarios, fossil fuels remain strongly present in the U.S. energy economy through 2030 and beyond.", "More than 190 Parties to the UNFCCC submitted INDCs—now NDCs for Parties to the PA—that included pledges to address national GHG emissions. Nearly all announced specific GHG targets or actions to contribute to the evolving post-2020 regime. Some included pledges to prepare to adapt to forecasted climate change as well.\nThe UNFCCC Secretariat synthesized and assessed the pledges of the 189 UNFCCC Parties—representing about 99% of 2010 global emissions—that had submitted INDCs as of April 4, 2016. The Secretariat estimated that implementation of the INDCs would result in aggregate global emissions of 55.0 (51.4 to 57.3) gigatons (Gt) CO 2 e in 2025 and 56.2 (52.0 to 59.3) Gt CO 2 e in 2030. These estimates would be higher than the 2010 global emissions by 7-19% in 2025 and 8-23% in 2030. While these estimates indicate that GHG emissions would continue to rise to 2030, the rate of growth would be 8-23% in the period 2010-2030, perhaps cutting by 4-67%, the 24% rate of growth in 1990-2010. (The ranges of uncertainty capture a number of questions, including how to characterize INDC pledges made conditional on, for example, financial assistance.)\nBelow is a sampling of countries' NDC pledges, mostly from large emitting nations:\nChina's NDC included myriad policies, existing and intended, and targets for 2030: Achieve peaking of CO 2 emissions around 2030 and make best efforts to peak earlier; Increase the share of non-fossil-fuel energy sources to around 20% of primary energy supply; Lower CO 2 emitted per unit of GDP by 60-65% compared with 2005 levels; Expand forest stock volume by around 4.5 billion cubic meters compared with 2005 levels; Gradually establish a nationwide carbon emission trading system; and \"Proactively\" adapt to climate change. The EU pledged to reduce its GHG emissions by at least 40% below 1990 levels by 2030. India stated its intention to reduce the GHG emissions intensity by 33-35% below 2005 levels by 2030, reach a 40% share of non-fossil installed electric capacity by 2030 with help and financing, increase carbon sinks by 2.5-3 billon tons CO 2 e by 2030, and set qualitative goals to mitigate GHG and adapt to climate change. Mexico pledged a NDC to \"peak\" its GHG emissions by 2026. Canada's NDC stated its intention to reduce its GHG emissions by 30% below 2005 levels by 2030. Russia offered an \"indicator\" of limiting GHG to 25-30% below 1990 levels by 2030, subject to \"maximum possible account of absorbing capacity of forests.\"\nFor more information, see CRS Report R44092, Greenhouse Gas Pledges by Parties to the United Nations Framework Convention on Climate Change , by [author name scrubbed].", "The effect of the PA will depend both on the nonbinding pledges that Parties to it make and their achievement of those pledges. The PA relies on good faith, transparency, accountability, and peer and public pressure to motivate Parties' compliance with both binding and nonbinding provisions rather than enforcement mechanisms with mandatory sanctions. Also, Article 15 of the PA establishes a mechanism to facilitate implementation of and promote compliance with the provisions of the PA. The compliance mechanism \"shall be expert-based and facilitative in nature and function in a manner that is transparent, non-adversarial and non-punitive.\"\nThe mechanisms that best promote compliance can be difficult to predict. One treaty expert has argued that \"transparency, accountability, and precision can also make a significant difference\" in gaining compliance with a treaty. It is unclear whether formal sanctions promote greater compliance or result in less ambitious commitments. Even legally binding treaties or provisions—and provisions for non-compliance consequences—may not succeed in gaining compliance. Some analysts have looked at experience under the Kyoto Protocol as an example: It had provisions for enforcement, with possible punitive consequences for Parties that did not comply with their obligations; according to some, those provisions did not visibly encourage compliance from some Parties. However, reviews and compliance proceedings raised questions about reporting or other implementation actions of several Kyoto Protocol Parties, and those issues were corrected or resolved during the compliance procedures. These experiences of compliance procedures may be one indication that the process may promote compliance with procedural and technical matters.\nMany states comply with treaty obligations even when there are not enforcement mechanisms. Hence, it is difficult to conclude that the legal format of particular provisions, or inclusion of penalties for non-compliance, would be requisite for the effectiveness of the PA. As a senior State Department official stated, \"At the end of the day, what applies in a country are the rules and the laws that it has to implement its obligations, its commitments.\" The Senate Environment and Public Works Committee majority staff, however, expressed doubts about future compliance with the PA:\nJust because a country signs a UNFCCC agreement does not mean the agreement has any legal effect in the country.… Countries that have signed and ratified an agreement have the freedom to act in their best interest and withdraw…. Kyoto was legally binding and countries still failed to comply. Non-binding targets in the Paris Agreement will not produce any greater confidence that countries will comply.\nProcesses are taking shape to decide detailed rules to achieve the transparency and facilitative provisions of the PA under UNFCCC and PA bodies. Government officials and public stakeholders will likely be closely monitoring the effectiveness of those mechanisms by for the duration of the agreement.", "There are two aspects to understanding the effects of the PA on the climate system: (1) compliance with the long-term aspects of the agreement, and (2) compliance with the pledges made by countries only to 2025 or 2030; reporting of studies on effects of the PA often do not distinguish between the long-term PA and the near-term GHG pledges.\nAccording to scientific models of GHG-induced climate change, significant reductions of cumulative GHG emissions would reduce the induced temperature increase. There is wide scientific agreement that the more significant and earlier the GHG emission reductions, the greater the expected effect. If all countries were to comply fully with the vision and obligations of the PA, they would reduce their aggregate net GHG emissions nearly to net zero emissions in the second half of this century (Article 4.1), thereby stabilizing GHG concentrations in the atmosphere. Scientists expect that near-zero GHG emissions could curtail GHG-induced global warming and other climate changes on a multicentury timescale. Article 2 spelled out a goal of holding the increase in global average temperature to \"well below\" 2 o C above pre-industrial levels and to pursue efforts to limit the increase to 1.5 o C.\nIn principle, Parties could achieve the PA's long-term temperature limits—but only if they ratchet their GHG reductions at a faster rate than was reflected on average in the INDCs. The UNFCCC Secretariat assessed that full compliance with the INDCs (mostly set to 2025 or 2030, including the conditional pledges) would show global GHG emission trajectories still rising in 2030, though the curve could be bending significantly toward a plateau. A few Parties submitted INDCs that envisioned continued downward GHG emission trajectories to 2050, but none pledged to achieve net zero emissions by mid-century.\nThe UNFCCC Secretariat presented an analysis comparing the INDCs with externally developed GHG scenarios illustrating least-cost paths to a 2 o C temperature limit. (See Figure 2 .) The assessment concluded that the INDCs would reduce GHG emission below the pre-INDC paths (which included policies to which countries had previously committed) and that full compliance with INDCs would result in emission levels well above many identified least-cost paths to achieving the temperature target:\n[G]lobal GHG emissions resulting from the implementation of the communicated INDCs are generally expected to be lower than the emission levels according to pre-INDC trajectories, by 2.8 (0.0 to 6.0) Gt CO 2 eq in 2025 and 3.3 (0.3 to 8.2) Gt CO 2 eq in 2030.… If all conditional components of the INDCs are implemented, the resulting global total emissions are expected to be even lower, by 3.7 (1.2 to 6.0) Gt CO 2 eq in 2025 and 5.3 (0.9 to 8.2) Gt CO 2 eq in 2030 compared with emissions consistent with pre-INDC trajectories, while considering only the unconditional components of the INDCs reduces the emission difference from pre-INDC trajectories to 2.1 (–0.4 to 4.3) Gt CO 2 eq in 2025 and 2.8 (–0.4 to 5.9) Gt CO 2 eq in 2030. (paragraph 208 and footnote 65)\nThe gap between INDCs and least-cost paths to temperature targets well below 2 o C or 1.5 o C would presumably be larger.", "", "The PA and the COP Decision to give it effect identified numerous tasks to bring the PA into force and help it function effectively according to Parties' intentions. Some tasks have already begun. The \"Ad Hoc Working Group on the PA\" (APA) met for the first time in May 2016 in Bonn, Germany. The first session of the COP, serving as the meeting of the Parties to the PA (CMA 1), was also held in Marrakech, Morocco, in November 2016, a few days after the agreement entered into force on November 4, 2016. (See question above, \" How did the PA enter into force? \")\nMany Parties advocate for quick decisions by the CMA on numerous topics identified in the work program decided in November 2016. The main elements include:\nNDCs Adaptation communications Transparency framework for action and support The Global Stocktake The mechanism to facilitate implementation and compliance The Adaptation Fund The public registry/registries for NDCs and adaptation communications Periodic assessments of the Technology Mechanism Cooperative approaches under PA Article 6; and Accounting for financial resources provided and mobilized.\n(See Appendix , \"Schedule for Some Key Tasks Under the PA.\") Many of those activities will require sensitive negotiations over issues that were controversial in the lead-up to the PA.\nA complete list of tasks arising from the Decision to adopt the PA is available from the UNFCCC Secretariat. Some highlights of the tasks:\nThe CMA is to develop guidance on the information to be submitted in NDCs so that they are clear, transparent, and comparable. The Secretariat established a public, interim NDC Registry containing NDCs communicated by Parties. The CMA is tasked with agreeing on guidance to ensure measurement of PA Parties' performance on their NDCs. Elements of this guidance may consider criteria in the PA that NDCs should promote environmental integrity, transparency, accuracy, completeness, comparability, and consistency and avoid double counting. Countries were invited to communicate, by 2020, their mid-century, long-term low GHG emission development strategies. The Executive Committee of the Warsaw Mechanism was charged with reviewing work in September 2016 to develop recommendations for integrated approaches to avert, minimize, and address displacement of people related to the adverse impacts of climate, and for a repository for information on insurance and risk transfer to help Parties develop and implement comprehensive risk management strategies. Associated with \"cooperative approaches,\" the Subsidiary Body for Scientific and Technological Advice under the UNFCCC is tasked with developing guidance for market-based systems that the PA recognizes will be used by Parties to meet their NDCs. The bodies will also develop a work program for considering other cooperative approaches, including non-market-based approaches, to GHG emissions reductions. The Adaptation Committee under the COP must develop methods to recognize the adaptation efforts of developing countries and for communication of Parties' priorities, implementation, support needs, plans, and actions and for recording them in a registry maintained by the Secretariat. The CMA will, in the 2020s, negotiate to set a new collective, quantified goal for climate finance by 2025.\nIn addition, there will be many requests for submissions of Parties' views, development of rules and guidance, and reviews of existing approaches and mechanisms in the period to 2020. The topics will include capacity building, technology cooperation, adaptation, and more.", "President Trump's announcement on June 1, 2017, of his intent to withdraw the United States from the PA raises several issues regarding next steps under the PA, including:\nWhat procedure might the United States follow to withdraw from the PA? Might the United States request that the PA Parties allow it an early exit from the agreement, following customary international law, rather than the four-year withdrawal process under PA Article 28? Will the United States continue to participate in meetings and decisions of the PA until withdrawal occurs, pursuant to the President's statement that \"as of today, the United States will cease all implementation of the non-binding Paris Accord.... This includes ending the implementation of the nationally determined contribution and, very importantly, the Green Climate Fund\"? When and how may the Administration follow up on the President's statement that the United States would begin negotiations to reenter either the PA or an entirely new transaction on terms that are fair to the United States\"? May this occur within the procedures of the UNFCCC and/or the PA or in a different forum? How may other Parties alter their strategies and positions on implementing the PA in light of the U.S. announcement? Or, how may the balance of influence shift among Parties that have often shared or opposed U.S. views in negotiations?", "" ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_title h2_title h1_title", "h0_full h1_full", "", "h2_full", "h2_title h1_title", "h2_full", "h2_full", "h2_full h1_full", "", "", "", "", "", "", "h1_title", "", "", "", "", "", "h1_full", "h0_title h2_title", "", "", "h0_full h2_full", "", "h2_full", "", "h2_title", "h2_full", "", "" ] }	{ "question": [ "How do experts consider the greenhouse gas (GHG) in the environment?", "How do these facts influence the PA?", "What is true about US GHG emissions?", "How is the PA related to current treaties?", "What does the PA ask of participating nations?", "How are nations bound to the PA's requirements?", "Why are the PA's requirements not always enforceable?", "How is the PA committed to changing the worldwide temperature?", "How will the PA asses temperature change?", "How does the PA plan to keep nations on track with their goals?", "How does this PA framework differ from the UNFCCC?", "How does the framework assist inclusion for both developed and developing countries?", "How does the PA plan to hold nations accountable for their goals?", "How is the accountability measure being scrutinized?", "How does the PA plan to handle adaptations to their plan?", "What does the PA expect financially from participating nations?", "How does the financial obligation look in the future of the PA?" ], "summary": [ "Experts broadly agree that stabilizing greenhouse gas (GHG) concentrations in the atmosphere to avoid dangerous GHG-induced climate change would require concerted efforts by all large emitting nations.", "Toward this purpose, the PA outlines goals and a structure for international cooperation to slow climate change and mitigate its impacts over decades to come.", "The United States is the second largest emitter of GHG globally after China.", "The PA is subsidiary to the United Nations Framework Convention on Climate Change (UNFCCC), which the United States ratified in 1992 with the advice and consent of the Senate and which entered into force in 1994.", "The PA requires that nations submit pledges to abate their GHG emissions, set goals to adapt to climate change, and cooperate toward these ends, including mobilization of financial and other support.", "The negotiators intended the PA to be legally binding on its Parties, though not all provisions in it are mandatory.", "Some are recommendations or collective commitments to which it would be difficult to hold an individual Party accountable.", "Temperature goal. The PA defines a collective, long-term objective to hold the GHG-induced increase in temperature to well below 2o Celsius (C) and to pursue efforts to limit the temperature increase to 1.5o C above the pre-industrial level.", "A periodic \"global stocktake\" will assess progress toward the goals.", "Single GHG mitigation framework. The PA establishes a process, with a ratchet mechanism in five-year increments, for all countries to set and achieve GHG emission mitigation pledges until the long-term goal is met.", "For the first time under the UNFCCC, all Parties participate in a common framework with common guidance, though some Parties are allowed flexibility in line with their capacities.", "This largely supersedes the bifurcated mitigation obligations of developed and developing countries that held the negotiations in often-adversarial stasis for many years.", "Accountability framework. To promote compliance, the PA balances accountability to build and maintain trust (if not certainty) with the potential for public and international pressure (\"name-and-shame\"). Also, the PA establishes a compliance mechanism that will be expert-based and facilitative rather than punitive.", "Many Parties and observers will closely monitor the effectiveness of this strategy.", "Adaptation. The PA also requires \"as appropriate\" that Parties prepare and communicate their plans to adapt to climate change. Adaptation communications will be recorded in a public registry.", "Collective financial obligation. The PA reiterates the collective obligation in the UNFCCC for developed country Parties to provide financial resources—public and private—to assist developing country Parties with mitigation and adaptation efforts. It urges scaling up of financing.", "The Parties agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, 1, -1, 0, -1, 2, 3, -1, 5, -1, -1, 8 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3 ] }
CRS_R40145	{ "title": [ "", "Introduction", "EPA's Greenhouse Gas Regulations", "Legislation on Climate Change", "Legislative and Regulatory Issues", "Cap-and-Trade", "GHG Emission Standards", "HFC Cap-and-Trade", "Removal of Existing EPA Authorities", "Agricultural Sources of Emissions", "International Offsets", "Tariff Provisions", "State Preemption", "Cost of the Bill", "Experience with Other Cap-and-Trade Systems", "Emissions from Power Plants", "Clean Air Interstate Rule (CAIR)", "North Carolina v. EPA", "Effects of the Decision", "EPA's CAIR Replacement: The Clean Air Transport Rule", "Judicial and Legislative Options", "Clean Air Mercury Rule (CAMR)", "Background", "New Jersey v. EPA", "Other Mercury Issues", "Next Steps", "New Source Review", "Air Quality Standards", "Background", "Judicial Reviews", "CASAC's Role", "Adequacy of Monitoring", "NAAQS Implementation" ], "paragraphs": [ "", "EPA regulatory actions to limit greenhouse gas (GHG) emissions using existing Clean Air Act authority have been the major focus of congressional interest in clean air issues in recent months. Members and Senators from both sides of the aisle have expressed concern that EPA is proceeding with regulations that could have major economic impacts without direct congressional authorization, and/or that EPA should delay taking such action until Congress specifically authorizes it.\nThe Administration counters that it would prefer for Congress to pass new legislation to control greenhouse gas emissions, but the Clean Air Act already requires action: a 2007 Supreme Court decision interpreting that authority found that EPA must weigh whether GHG emissions endanger public health and welfare and, if it concludes that they do, proceed with regulation.\nThe 111 th Congress struggled to produce its own approach to climate change. On June 26, 2009, the House narrowly passed H.R. 2454 , a 1,428-page bill addressing a number of interrelated energy and climate change issues. Among its numerous provisions, the bill would have established cap-and-trade programs for GHG emissions, beginning in 2012. The Senate did not act; however, two Senate committees reported bills, but the prospect of obtaining 60 votes for either bill appeared slim, and neither came to the floor. Given these prospects, a trio of Senators began negotiating a climate bill from scratch, but they also encountered difficulty: the process ultimately lost its Republican sponsor and did not produce an introduced bill. Toward the end of the second session, there was talk of a slimmed-down bill focusing on energy and perhaps electric utilities, but even this limited approach did not come to the floor.\nBesides legislation and potential EPA regulation of greenhouse gases, a bipartisan group of Senators and EPA both considered addressing issues related to sulfur dioxide (SO 2 ), nitrogen oxides (NOx), and mercury emissions from electric power plants. Regulations addressing these emissions were vacated by the D.C. Circuit Court of Appeals in 2008, leaving major potential gaps in EPA and state regulations. EPA is developing new regulations to address the court's concerns and proposed regulations addressing SO 2 and NOx, July 6,2010, but legislation might provide a more straightforward solution, resolving ambiguities in current law and reducing the likelihood of further delays from litigation. S. 2995 , a bipartisan bill addressing these issues, was introduced in the Senate and hearings were held, but no further action was taken.\nThe Obama Administration's EPA has also moved to reconsider or modify several Bush Administration decisions regarding national ambient air quality standards (NAAQS). NAAQS represent EPA's formal judgment regarding how clean the air must be to protect public health and welfare; the standards set in motion monitoring and planning requirements, which in turn lead to emission controls.\nOn January 19, 2010, the agency proposed a more stringent NAAQS for ozone, having concluded that a 2008 revision to the standard did not satisfy the requirements of the Clean Air Act. The revision could affect as many as 650 counties—virtually every county that currently has an ozone monitor. Final action on this proposal is expected by the end of December. On June 22, 2010, the agency promulgated revisions to the NAAQS for SO 2 ; 59 counties would violate the new SO 2 standard, based on the most recent monitoring data. None violated the old standard. The agency is also reviewing or has recently completed reviews of the NAAQS for four other pollutants, notably particulates, which are emitted by a wide range of mobile and stationary sources. A revised particulate standard is to be proposed by February 2011. Early indications are that the agency may propose substantially more stringent standards.\nThis report provides a brief overview of the climate change, power plant, and air quality standard issues. More detailed information on most of the issues can be found in other CRS reports, which are referenced throughout this report.", "EPA's actions to regulate GHG emissions stem from more than a decade of petitions and litigation. Responding to a 1999 petition that it regulate greenhouse gases from new motor vehicles, the agency in 2003 denied that it had such authority, arguing that GHGs did not fall within the Clean Air Act's definition of \"air pollutants.\" The denial was challenged by Massachusetts, 11 other states, and various other petitioners in a case that ultimately reached the Supreme Court. In an April 2, 2007, decision ( Massachusetts v. EPA ), the Court found by 5-4 that EPA does have authority to regulate greenhouse gas emissions, since the emissions are clearly air pollutants under the Clean Air Act's definition of that term. The Court's majority concluded that EPA must, therefore, decide whether emissions of these pollutants from new motor vehicles contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. When it makes such an \"endangerment finding,\" the act requires the agency to establish standards for emissions of the pollutants.\nOn December 15, 2009, acting in response to the Court's decision, EPA finalized an endangerment finding for greenhouse gas emissions from motor vehicles, under Section 202(a) of the act. Relying on this finding, EPA promulgated GHG emission standards for new cars and light trucks, April 1, 2010. The implementation of these standards will, in turn, trigger permitting requirements and the imposition of Best Available Control Technology for new major stationary sources of GHGs beginning in 2011. (For information on these regulations and permit requirements, see CRS Report R40506, Cars, Trucks, and Climate: EPA Regulation of Greenhouse Gases from Mobile Sources , and CRS Report R41212, EPA Regulation of Greenhouse Gases: Congressional Responses and Options .)\nThe prospect of GHG standards for motor vehicles is not particularly controversial. On May 19, 2009, President Obama announced an agreement involving nine U.S. and foreign auto manufacturers; the federal government; the governors of California, Michigan, and Massachusetts; the United Auto Workers; and environmental groups under which EPA and the National Highway Traffic Safety Administration (NHTSA) would proceed with a joint rulemaking in which GHG emissions from new motor vehicles would be reduced under the Clean Air Act, while NHTSA would set corresponding fuel economy standards under the Corporate Average Fuel Economy (CAFE) program. The objective of the new greenhouse gas standards is to reach reduction levels similar to those adopted by the state of California and 13 other states, who will harmonize their standards with those of EPA as part of the agreement. The California standards required about a 30% reduction in GHG emissions from new vehicles by 2016. The auto industry supported the national agreement, in part, to avoid having to meet standards on a state-by-state basis; thus, it is not interested in seeing EPA's motor vehicle GHG standards blocked.\nIn addition to the motor vehicle GHG standards, EPA has received petitions asking the agency to regulate GHGs from a variety of other sources, including coal mines, concentrated animal feeding operations (CAFOs), aircraft, ocean-going ships, nonroad engines and equipment (e.g., construction equipment, farm equipment, recreational equipment, forklifts, harbor craft, and lawn and garden equipment), and fuels. Another petition asks the agency to set National Ambient Air Quality Standards for seven specific greenhouse gases. The agency also faces lawsuits seeking to force it to regulate GHGs from stationary sources, including power plants, petroleum refineries, nonroad vehicles and engines, and the Portland cement industry. The decision to move forward on GHG standards for new motor vehicles is seen by many as a precedent for regulation of these other sources.\nEven without EPA decisions on these petitions or the conclusion of lawsuits, the adoption of GHG standards for motor vehicles will trigger GHG permit requirements for new stationary sources, as a result of language in Section 165 of the act that requires such permits to require best available control technology for all pollutants \"subject to regulation\" under the act. It is this triggering of standards for stationary sources (power plants, manufacturing facilities, and others) that appears to have raised the most concern in Congress: legislation has been introduced in both the House and Senate aimed at preventing EPA from implementing these requirements. The legislation has taken several forms, including the introduction of resolutions of disapproval for the endangerment finding itself under the Congressional Review Act ( S.J.Res. 26 , H.J.Res. 66 , H.J.Res. 76 , and H.J.Res. 77 ), and five other bills that would either require EPA to reevaluate its endangerment finding ( H.Res. 974 ), amend the Clean Air Act to provide that greenhouse gases are not subject to the act ( H.R. 4396 ), limit EPA's GHG authority to motor vehicle emissions ( S. 1622 ), or suspend EPA actions regulating stationary source emissions of GHGs for two years ( S. 3072 , H.R. 4753 ). S.J.Res. 26 , Senator Murkowski's resolution of disapproval for the endangerment finding, was defeated 53-47, on June 10, 2010. Meanwhile, EPA has itself promulgated regulations and guidance that would delay the applicability of requirements for stationary sources of GHGs until 2011 and focus its initial regulatory efforts on the largest emitters, granting smaller sources at least a six-year reprieve.\nAlthough both the resolutions of disapproval and the stand-alone legislation to restrict EPA's authority have received a great deal of attention, the path to enactment of either of these forms of legislation would be a steep one. The Obama Administration has made the reduction of GHG emissions one of its major goals; as a result, many conclude that legislation restricting EPA's authority to act, if passed by Congress, would encounter a presidential veto.\nAddressing the issue through an amendment to the EPA appropriation, by cutting EPA's appropriation or by restricting its authority to use funds to take specific GHG regulatory actions, might have more chance of enactment. The overall appropriation bill to which it would be attached would presumably contain other elements that would make it more difficult to veto. This approach was discussed at some length in the fall of 2009, when Senator Murkowski introduced (but ultimately did not offer) S.Amdt. 2530 to the Interior, Environment, and Related Agencies Appropriation Act ( H.R. 2996 ).\nIn short, there are numerous ways that Congress can address EPA's greenhouse gas authority, and opponents of EPA action may continue to exert pressure to delay or limit the agency's actions, as the agency continues on its planned course. (For a more detailed discussion of EPA's regulatory actions and potential congressional responses, see CRS Report R41212, EPA Regulation of Greenhouse Gases: Congressional Responses and Options , by [author name scrubbed] and [author name scrubbed].)", "On June 26, 2009, by a vote of 219-212, the House passed H.R. 2454 , the American Clean Energy and Security Act of 2009. The bill, also referred to by its acronym (ACES) or as the Waxman-Markey bill, addresses a number of interrelated energy and climate change issues. The Senate Energy and Natural Resources Committee and the Senate Environment and Public Works Committee reported Senate counterparts: S. 1462 (Bingaman), equivalent to the energy titles, and S. 1733 , the Kerry-Boxer bill, establishing a cap-and-trade system and other measures to address climate change. The Kerry-Boxer bill faced strong opposition, however. The Republican members of the Environment and Public Works Committee boycotted the markup. The bill was reported with no Republican support and less than unanimous support among Democrats: it was clear that the bill would lack the 60 votes necessary to overcome a filibuster and secure passage on the floor. As a result, negotiations took place among a trio of Senators (Kerry, Graham, and Lieberman) for a bipartisan (or, more accurately, tripartisan) alternative. This legislation, without Senator Graham's sponsorship, circulated extensively in draft form in 2010, but was not introduced.\nControlling greenhouse gas emissions was among the highest priorities of the congressional leadership and the Obama Administration in the 111 th Congress. It would have been addressed in the ACES legislation in a number of ways, many of which would have amended the Clean Air Act. The remainder of the climate portion of this report discusses the House bill and the issues that arose in the course of its consideration, with occasional references to developments in the Senate.\nThe House bill would have amended the Clean Air Act to establish a cap-and-trade program (similar to the act's current program for addressing acid rain) to limit greenhouse gas (GHG) emissions beginning in 2012. The emissions cap on covered sources would have gradually declined—from 3% below the 2005 emissions level in 2012 to 83% below in 2050. In addition to the cap-and-trade program, the bill would have established renewable energy and energy efficiency requirements, mandated carbon capture and sequestration by new coal-fired electric generating units, and required EPA to set GHG emission standards for various sources. The bill distributed the cap-and-trade program's emission allowances to a wide array of sectors in an effort to address potential impacts on low income households and protect industries that might be subject to import competition from countries with less stringent GHG requirements, and it encouraged the use of \"offsets\" (emission reductions in sectors not directly covered by the cap-and-trade program). The cap-and-trade program in S. 1733 was similar.", "In an earlier version of this report, we discussed five broad issues that climate legislation would need to address: (1) how a new program regulating greenhouse gas emissions would relate to the Clean Air Act, which gives EPA broad authority to set standards for air pollutants—potentially including GHGs; (2) whether legislation would focus on individual sectors of the economy, the economy as a whole, or both; (3) whether a cap-and-trade system would be the best approach, and, if it were chosen, the specifics of such a system:\nthe comprehensiveness of the program, how allowances (which are essentially permits to emit GHGs) would be distributed or sold, how allowance price volatility might be addressed, what measures would be taken to address potential effects on U.S. industries vis-a-vis foreign competitors, and what role there might be for offsets (i.e., credit for emission reductions by sources outside the cap-and-trade program);\n(4) what role there would be for carbon taxes; and (5) what role there would be for state programs—in particular, the degree to which a federal program might preempt state measures affecting similar sources.\nThe Waxman-Markey bill, as passed by the House, addressed most of these issues. It would have both established an economy-wide cap-and-trade system and addressed individual sectors of the economy and categories of emitters. In addition to capping GHG emissions, it set forth energy efficiency and renewable energy requirements aimed at reducing the emissions of individual sectors, notably electric utilities, cars and trucks, electrical appliances, and commercial or government buildings. Together, these sectors account for the lion's share of energy use and GHG emissions. The bill would have amended the Clean Air Act to remove potential authority that EPA has to regulate GHGs under several broadly worded sections of the existing statute, while establishing new requirements that EPA set standards for specific emission sources. It would not have established a carbon tax. In general, it would not have preempted state authority to set standards for GHG emission sources, but it would have preempted state and regional cap-and-trade systems for the period 2012-2017.\nS. 1733 , reported by the Environment and Public Works Committee on February 2, 2010, had similar provisions. The following sections discuss these provisions in more detail, as well as issues that arose during floor debate on the House bill.", "The House bill would have added a new Title VII to the act, in which an economy-wide cap-and-trade program for GHGs would have been established. The cap for GHG emissions from major sources of emissions decreased 3% by 2012, 17% by 2020, 42% by 2030, and 83% by 2050, compared to 2005 levels. As the cap (and hence, the number of allowances) was gradually ratcheted down, markets would have determined who would reduce emissions: companies that could do so at low cost would have incentives to take action; companies with fewer or more costly options could buy allowances or offsets to cover excess emissions.", "In addition to the cap-and-trade system, the bill also would have added a new Title VIII to the act, in which standards for specific sources of GHG emissions were addressed. Under Title VIII, EPA would have been required to\nset performance standards for CO 2 removal from new coal-fired power plants—50% removal for units initially permitted after January 1, 2009, and 65% for units initially permitted after January 1, 2020. These standards would not have taken effect until 2025, or four years after EPA determined that carbon capture and sequestration technology had met criteria for commercialization specified in the bill, whichever is earlier; promulgate regulations within two years of enactment to minimize the risk of atmospheric release of CO 2 from geologic sequestration sites, and develop a certification and permitting process for such sites; promulgate GHG emission standards that reflect the greatest degree of emissions reduction achievable for new heavy duty motor vehicles and engines, by December 31, 2010; promulgate GHG emission standards that reflect the greatest degree of emissions reduction achievable for nonroad vehicles or engines, by December 31, 2012; set New Source Performance Standards and corresponding regulations for existing uncapped major sources of GHGs, generally within three years of the date of enactment; and report on black carbon emissions, including an inventory of sources and identification of cost-effective control technologies, and, within two years of enactment, either promulgate regulations to reduce emissions or find that existing Clean Air Act regulations provide adequate control.", "The bill would also have amended Title VI of the Clean Air Act to establish a separate cap-and-trade program for hydrofluorocarbons, refrigerants used in air conditioning systems, which, with one exception, have a global warming potential 1,000-15,000 times as great as CO 2 . HFC production and imports would have been capped at 90% of baseline levels in 2012, and the cap would have declined each year until it reached 15% of the baseline in 2033. The baseline amount would have been the amount that EPA determined was the annual average consumed in the period 2004-2006, but not higher than 370 million tons of CO 2 equivalent, nor less than 280 million tons.", "Among the more controversial aspects of H.R. 2454 was its removal of numerous potential authorities under current law that the agency could use to control emissions of GHGs. Under the Obama Administration, the authority EPA already possesses has taken on new significance. The President is committed to addressing GHG emissions, and he can use existing Clean Air Act authority in a number of ways to do so. For starters, the agency proposed on April 17, 2009, and finalized December 15 an \"endangerment finding\" under Section 202(a) of the Clean Air Act. This finding permits EPA to establish GHG emission standards for motor vehicles. On May 19, 2009, before finalizing the endangerment finding, the President announced that EPA would move forward with the motor vehicle standards. EPA promulgated the standards April 1, 2010. Implementation of the first limits is scheduled for the 2012 model year. EPA also proposed GHG emission standards for medium- and heavy-duty trucks and engines, November 30, 2010.\nIn addition to the pending controls on cars and trucks, EPA has received nine additional petitions to regulate GHG emissions from coal mines, concentrated animal feeding operations (CAFOs), ships, non-road engines, aircraft, and fuels. Any of these petitions could prompt further agency action. Another petition asks the agency to set National Ambient Air Quality Standards for seven specific greenhouse gases. The agency also faces lawsuits seeking to force it to regulate GHGs from stationary sources, including power plants, petroleum refineries, and the Portland cement industry. The decisions on motor vehicle standards are likely to serve as precedents for some of the other decisions, and may have implications for the agency's position in the pending litigation.\nDuring the Bush Administration, some groups, including EPA, four Cabinet departments, and the Office of Management and Budget, expressed concern that proceeding with GHG standards for motor vehicles would activate numerous other Clean Air Act provisions. Addressing these concerns, H.R. 2454 would have prevented EPA from setting National Ambient Air Quality Standards for GHGs solely on the basis of their effect on global climate change. It would have prohibited the agency from regulating GHGs under Section 115's provisions for international air pollution. It would have prohibited regulation of GHGs as hazardous air pollutants under Section 112. It would have prohibited the use of New Source Review to regulate GHG emissions under the Prevention of Significant Deterioration (PSD) program. And no stationary source of GHGs would have been required to obtain a permit under Title V of the act solely because of its GHG emissions. Of these, only the two permit provisions (PSD-NSR, and Title V) have been invoked by EPA, thus far, and the agency has taken steps to limit their applicability. The other authorities seem, for the most part, ill-designed to address GHG emissions. Nevertheless, advocates of retaining the authorities questioned the necessity of their removal. (For a further discussion of these authorities, see CRS Report R40585, Climate Change: Potential Regulation of Stationary Greenhouse Gas Sources Under the Clean Air Act , and CRS Report R41212, EPA Regulation of Greenhouse Gases: Congressional Responses and Options .)", "Another major controversy concerned the treatment of agricultural sources of emissions in the Waxman-Markey bill. The bill would have excluded the \"agricultural and forestry sectors\" (undefined in the bill) from its emissions cap. It would also have excluded sources of methane from enteric fermentation (livestock) from the standards that EPA must promulgate for uncapped emission sources. Instead, it would have treated agriculture and forestry activities as a source of offsets (reductions from sources outside the cap-and-trade system) that could be purchased by capped sources and used in place of allowances. The bill would have allowed the use of up to 1 billion offset credits from domestic sources annually.\nIndustrial and electric utility emitters subject to the GHG cap would presumably have purchased offsets if the cost of doing so were less than the cost of controlling their own emissions or of purchasing allowances. As a result, agriculture and forestry could have earned substantial sums for activities undertaken to reduce their GHG emissions—from $3.7 billion to $7.8 billion annually in gross revenues using an initial set of CBO assumptions. USDA's Economic Research Service was less sanguine about the near-term revenues; nevertheless, its analysis \"strongly suggests that revenue from agricultural offsets ... rise faster than costs to agriculture from cap and trade legislation.\"\nThe agriculture provisions helped insure some support for the bill from the agricultural community, but raised concerns among those who favored a more stringent bill. Of particular concern to the latter group was the bill's delegation of authority over the offset program to the Department of Agriculture rather than to EPA.", "The bill would also have allowed up to 1 billion offset credits to be generated annually by international sequestration or emission reduction activities. If fewer than 1 billion domestic offsets were used, up to 500 million additional international offsets could have been substituted, raising the total permissible international offsets to as many as 1.5 billion in any given year. The objective of this provision was to provide emission reductions at a lower cost than domestic GHG controls and reduce emissions from developing countries. Opponents of the provision, however, viewed it as a give-away to countries that choose not to participate in internationally agreed reduction requirements.", "For more than a decade, a primary concern in the climate debate has been how a GHG emissions cap or other GHG controls would affect the competitiveness of U.S. industry: whether, for example, it might lead manufacturers of carbon-intensive goods to relocate production to countries with weaker GHG regulations or no cap at all. A number of options have been proposed to address this \"carbon leakage\" concern, including directly supporting domestic carbon-intensive industries, imposing countervailing duties or allowance requirements on imports from countries with weaker GHG requirements, and/or developing sectoral approaches that address the emissions of specific industries worldwide.\nH.R. 2454 would have established an allowance rebate program for energy-intensive, trade-exposed industries. The net effect of the program would have been that these industries (likely to include iron and steel, aluminum, and other energy-intensive heavy industry) would have been given free allowances until 2025. Starting then, the rebates would have been phased out over a 10-year period.\nEPA, with the concurrence of U.S. Customs, would also have been required to establish international reserve allowance requirements (tariff provisions) for imports of energy-intensive trade-exposed goods from countries that have not entered into international agreements for GHG emission reductions at least as stringent as those of the United States. This provision, which would have begun in 2020, was singled out by the President after the bill's passage as an area of concern. Earlier versions of the bill would have given the President tariff authority, but would have allowed him greater discretion not to impose the tariffs.", "A number of states, notably California and the Northeastern states, have already begun programs to reduce GHG emissions. (For a discussion, see CRS Report RL33812, Climate Change: Action by States to Address Greenhouse Gas Emissions .) Although the federal government under the Bush Administration challenged some of these programs, particularly those affecting mobile sources, states do have clear authority to regulate emissions from power plants, landfills, residential and commercial buildings, and other stationary sources of GHGs. The extent to which such state programs might serve as national models (or that a patchwork of state programs might serve as a catalyst to a stronger federal regime) has been one set of issues; another is the degree to which a federal program might preempt state measures affecting similar sources.\nThe Waxman-Markey bill would generally have left the states' authority to set standards for stationary sources of GHGs intact. One exception would have been that state and regional cap-and-trade programs for GHGs would have been preempted from 2012 through 2017. The bill also would have preserved EPA's authority to grant waivers to California for mobile source GHG standards.", "Among the most important issues in the House debate was the prospective cost of the bill. In an earlier CRS report, CRS noted that long-term cost projections, particularly for a bill that would reduce GHG emissions over the course of four decades, are at best speculative. Over such a long period of time, uncertainty about the future direction of the basic drivers of greenhouse gas emissions and the economy's responsiveness (economically, technologically, and behaviorally) make economic models unable to predict the ultimate macroeconomic costs of a GHG reduction program.\nDespite this and similar caveats offered by other analysts, estimates of the bill's impact were widely cited both by opponents and proponents in the House debate. Opponents of the bill claimed that it would impose costs of as much as $3,100 annually per family, one source of which was a 2007 assessment of U.S. cap-and-trade proposals prepared by MIT's Joint Program on the Science and Policy of Global Change. The author of that study, in letters to the House minority leader and the Select Committee on Energy Independence and Global Warming, stated that the study's conclusions had been misstated.\nAt the other end of the spectrum, EPA estimated that the costs of the reported bill (prior to some of the final changes) would be $80 to $111 per family, annually, or as proponents have sometimes expressed it, less than the cost of a postage stamp a day. EPA's lower cost was, in part, the result of assuming cost-saving energy technologies and including the availability of low-cost emission offsets from both domestic and international sources. As noted above, the House bill would have allowed the use of as many as 2 billion offsets annually (out of a total allowance pool of 5-6 billion in the initial years). Questions have been raised whether so many offsets would actually be available, especially in the short term.\nA related issue was the impact of the bill on the federal deficit. In a letter dated June 26, 2009, the Congressional Budget Office and the Joint Committee on Taxation (JCT) estimated that\nenacting the legislation would increase revenues by $873 billion over the 2010-2019 period and would increase direct spending by $864 billion over that 10-year period. In total, CBO and JCT estimate that enacting the legislation would reduce future budget deficits by about $4 billion over the 2010-2014 period and by about $9 billion over the 2010-2019 period.\nWhatever the true cost, a bill of this size, affecting numerous sectors of the economy, would be bound to create winners and losers, even if its net impact on the economy or on federal revenues were small. The result was intense lobbying, as affected industries/states/regions/labor unions/etc. attempted to shape the bill to their advantage.", "Although now disparaged by opponents of climate legislation, cap-and-trade programs have had an enviable reputation over most of the last two decades, largely based on the success of the Clean Air Act's acid rain program. That program imposed a cap on sulfur dioxide emissions for a limited number of electric power plants in 1995, and in 2000 lowered the cap and expanded coverage to more plants. It met its emission reduction goals at low cost, with virtually 100% compliance, and with minimal administrative oversight.\nThe success of the program was at least partly the result of the favorable circumstances in which it was implemented: the reduction targets were easily met because of an abundant supply of cheap low-sulfur coal; there were only about 1,000 entities (power plants) covered by the trading program, making it simple and inexpensive to monitor and administer; and most of the regulated entities were allowed 10 years to achieve compliance, by which time early reductions had generated an enormous number of extra allowances that helped lubricate the trading system.\nSome other trading programs have not been as successful. Southern California's Regional Clean Air Incentives Market (RECLAIM), for example, which was implemented in 1994 to reduce emissions of NOx and SO 2 in the Los Angeles area, saw a 50-fold increase in NOx allowance prices during the 2000-2001 California energy crisis. To permit its continued functioning and allow utilities to use backup power generators, electric utilities were removed from the RECLAIM system, charged a flat fee of $15,000 per ton for excess emissions, and subjected to new command and control requirements (i.e., the type of regulation the trading system was designed to avoid). The European GHG trading system (EU-ETS), established to help European Union countries meet their Kyoto Protocol targets, saw wild swings in short-term allowance prices during its start-up years, making planning and decision-making difficult for participating entities.\nBoth supporters and opponents have cited previous experience with cap-and-trade systems to buttress their arguments, and the House bill's GHG cap-and-trade system was designed to deal with several of the problems experienced by previous systems. Among the most notable of the design features were mechanisms to address potential volatility of allowance prices. The bill addressed cost control through five main mechanisms: (1) unlimited banking and limited borrowing of allowances, (2) a two-year compliance period, (3) a strategic auction with a reserve price to increase the availability of allowances in the early years of the program, (4) periodic auctions with a reserve price, and (5) generous limits on the use of offsets.", "In addition to climate change, other clean air issues with a shorter time horizon are being addressed by EPA. Many of these have to do with emissions from electric power plants.\nCoal-fired power plants are among the largest sources of air pollution in the United States. Under the Clean Air Act, however, they are not necessarily subject to stringent requirements: emissions and the required control equipment can vary depending on the location of the plant, when it was constructed, whether it has undergone major modifications, the specific type of fuel it burns, and, to some extent, the vagaries of EPA enforcement policies. More than half a dozen separate Clean Air Act programs could potentially be used to control emissions, which makes compliance strategy complicated for utilities and difficult for regulators. Because the cost of the most stringent available controls, for the entire industry, could range into the tens of billions of dollars, utilities have fought hard and rather successfully to limit or delay regulations affecting them, particularly with respect to plants constructed before the Clean Air Act of 1970 was passed.\nAs a result, emissions from power plants have not been reduced as much as those from some other sources. Many plants built in the 1950s and 1960s (generally referred to as \"grandfathered\" plants) have little emission control equipment.\nCollectively, power plants are large sources of pollution. In 2005, they accounted for 10.2 million tons of sulfur dioxide (SO 2 ) emissions (70% of the U.S. total), 52 tons of mercury emissions (46% of the U.S. total), and 3.6 million tons of nitrogen oxides (19% of the U.S. total). Power plants are also considered major sources of fine particles (PM 2.5 ), many of which form in the atmosphere from emissions from a wide range of stationary and mobile sources. In addition, power plants account for about 40% of U.S. anthropogenic emissions of the greenhouse gas carbon dioxide.\nWith new ambient air quality standards for ozone, fine particles, and SO 2 taking effect, emissions of NOx and SO 2 will necessarily have to be reduced to meet standards. (These standards are discussed below under \" Air Quality Standards .\") For more than a decade, mercury emissions have also been a focus of concern: 48 states have issued fish consumption advisories due to mercury pollution, covering 14 million acres of lakes, 882,000 river miles, and the coastal waters of 13 entire states. The continuing controversy over the interpretation of New Source Review requirements for existing power plants (also discussed below) has exerted pressure for a more predictable regulatory structure, as well.\nThus, some in industry, environmental groups, Congress, and the last two Administrations have said that legislation addressing power plant pollution in a comprehensive (multi-pollutant) fashion would be desirable. Such legislation would address the major pollutants on a coordinated schedule and would rely, to a large extent, on a system such as the one used in the acid rain program, where national or regional caps on emissions are implemented through a system of tradable allowances. The key questions have been how stringent the caps should be and whether carbon dioxide (CO 2 ), the major gas of concern with regard to climate change, would be among the emissions subject to a cap.", "The Senate Environment and Public Works Committee has voted twice on a multi-pollutant bill (in 2002 and 2005), but neither of the bills progressed to the Senate floor. In the House, similar bills have been introduced, but none has progressed to markup. On March 10, 2005, therefore, EPA announced that it would use existing Clean Air Act authority to promulgate final regulations similar to the Bush Administration's multi-pollutant bill (the \"Clear Skies\" bill ) for utility emissions of SO 2 and NOx in 28 eastern states and the District of Columbia.\nThe Clean Air Interstate Rule (CAIR) established cap-and-trade provisions for SO 2 and NOx. CAIR covered only the eastern half of the country, but since most of the grandfathered generation capacity is located in the East and South, EPA projected that nationwide emissions of SO 2 would decline 53% by 2015 and NOx emissions 56%. The agency also projected that the rule would result in $85-$100 billion in health benefits annually by 2015, including the annual prevention of 17,000 premature deaths. CAIR's health and environmental benefits would be more than 25 times greater than its costs, according to EPA.", "CAIR was one of the few Bush Administration environmental initiatives that was generally supported by environmentalists. It also had broad support among the regulated community. But a variety of petitioners, including the state of North Carolina, which argued that the rule was not strong enough to address pollution from upwind sources, and some individual utilities that felt they were unfairly treated by the rule's emission budgets, challenged the rule in the D.C. Circuit, and the court vacated it July 11, 2008. A unanimous court found that EPA had established a significant contribution made by power plants to nonattainment of standards and failure to maintain standards in downwind states, as required by Section 110 of the Clean Air Act, but the court concluded that the agency's methodology for establishing emission budgets for each state was unrelated to that link. The court also found that the choice of 2015 for a second phase compliance deadline, based on technological and economic feasibility, ignored EPA's statutory mandate. It found the fuel adjustment factors in the rule (which set more stringent requirements for natural gas- and oil-fired plants than for coal-fired ones) to be arbitrary and capricious. It concluded: \"CAIR's flaws are deep. No amount of tinkering ... will transform CAIR, as written, into an acceptable rule.\"\nDespite the seemingly high hurdle set by the language the court used, EPA, environmental groups, and the utility and mining industries asked the court to review its decision. On December 23, 2008, the court modified its decision, allowing CAIR to remain in effect until a new rule is promulgated by EPA. The court was not specific about how long this process would be allowed to take, but stated:\nThough we do not impose a particular schedule by which EPA must alter CAIR, we remind EPA that we do not intend to grant an indefinite stay of the effectiveness of this court's decision. Our opinion revealed CAIR's fundamental flaws, which EPA must still remedy.", "From a policy standpoint, the court's vacatur of CAIR would remove the lynchpin of the Bush Administration's approach to clean air. CAIR was a principal means by which EPA projected that nonattainment areas in the eastern half of the country would attain the ozone and fine particulate National Ambient Air Quality Standards (NAAQS); in the agency's analysis, it would also have been responsible for achieving the lion's share of reductions in mercury emissions from coal-fired power plants (as discussed further below); it would have addressed regional haze impacts from power plants; and it would have addressed state petitions to control upwind sources of ozone and fine particulate pollution, making controls on individual power plants under Section 126 of the Clean Air Act unnecessary, according to EPA. Thus, EPA asked the court to reconsider its decision, which led the court to announce that it would delay issuing its mandate.\nThere is general agreement among the states, electric utilities, and environmental groups that something like CAIR should be salvaged.\nWithout CAIR, most eastern states would have huge gaps in their emission control programs, which would have to be filled by other regulatory measures if the states are to attain the NAAQS by the statutory deadlines. The states could be subject to sanctions, including a suspension of federal highway funding for new projects, if they fail to adopt such measures. For the utilities, CAIR was designed to build on the existing regulatory framework of cap-and-trade programs under the acid rain program and the \"NOx SIP Call.\" Anticipating the ability to bank and trade emission allowances under CAIR, numerous utilities have already invested in equipment to meet or exceed CAIR's requirements, the first phase of which are now being implemented. For environmental groups, which found little to their liking in the Bush Administration, CAIR was the major exception. They argued for a stronger version of CAIR—particularly its second phase, to be implemented in 2015—but they generally supported the basic approach.", "On July 6, 2010, EPA proposed a replacement for CAIR, the Clean Air Transport Rule. The transport rule would leave the CAIR Phase 1 limits in place and would set new limits replacing CAIR's second phase in 2012 and 2014, up to three years earlier than CAIR would have.\nThe CAIR Phase 1 rules already appear to be having substantial effects. On August 11, 2010, EPA reported that emissions of SO 2 had declined sharply in both 2008 and 2009: in the latter year, emissions from fossil-fueled power plants in the lower 48 states (at 5.7 million tons) were 44% below 2005 levels. NOx emissions from the same sources declined to 1.8 million tons in 2009, a decline of 45% compared to 2005. Further reductions of both SO 2 and NOx can be expected as Phase 1 takes effect.\nThe proposed transport rule would build on these reductions. It would establish a second and third phase of reductions in 2012 and 2014, with particular emphasis on SO 2 —emissions of which would decline to 3.8 million tons (62% below 2005 levels) in 2014. The proposed rule would cover 31 Eastern, Midwestern, and Southern states and the District of Columbia, adding three new states (Oklahoma, Kansas, and Nebraska) to the 28 covered by CAIR. The rule would allow unlimited trading of allowances within individual states, but it would limit interstate trading in order to comply with the D.C. Circuit's ruling. In order to insure that the rule is implemented quickly, EPA proposed a Federal Implementation Plan (FIP) for each of the states: the FIP specifies budgets for each state based on controlling emissions from electric power plants. States may develop their own State Implementation Plans and choose to control other types of sources if they wish, but the federal plan will take effect unless the state acts.\nEPA estimates that the rule will cost the power sector $2.8 billion annually in 2014, but it expects the benefits to be 40 to 100 times as great—an estimated $120 billion to $290 billion annually. The most important benefit would be 14,000 to 36,000 fewer premature deaths annually. Avoided deaths and other benefits occur throughout the East, Midwest, and South, according to EPA, with Ohio, Pennsylvania, and New York benefitting the most.\nBecause the agency is near finalizing more stringent ambient air quality standards for ozone, it stated its intention to propose another transport rule in 2011 to address any additional emission reductions needed to meet those new standards. It also stated an \"ongoing commitment\" to consider upwind contributions of pollution to nonattainment when implementing any future NAAQS revisions. With revisions of the fine particulate (PM 2.5 ) standard expected in 2011, additional transport rules might be expected.\nState air pollution control agencies, through the National Association of Clean Air Agencies (NACAA), have argued that substantial further reductions will be necessary if the states are to attain the new ozone standards. Ozone forms through chemical reactions in the atmosphere between volatile organic compounds and NOx; thus, NOx reductions are key to attaining a more stringent ozone standard. For NOx, the Phase 1 cap is 45% below baseline, with Phase 2 providing an additional 7%. The technology is clearly available to do more: EPA modeling projects 34% of coal-fired electric generating units in the transport region to be without the best available NOx control in 2014. Assuming that modeling shows that more reductions are needed for the states to attain the new ozone NAAQS, the pressure will be on EPA to strengthen the regulations further.", "The courts might be the venue for further consideration of the issues if any of the parties find themselves unhappy with the pace or substance of EPA's regulatory decisions.\nCongress might also act: in order to shorten the regulatory process and avoid further litigation, some have argued that Congress needs to resolve the issues posed by the D.C. Circuit's 2008 CAIR decision. Over the past decade, several dozen multi-pollutant bills would have addressed SO 2 and NOx emissions from power plants through a cap-and-trade system, most of them in conjunction with controls on mercury and CO 2 . If legislation is to be considered now, the issues might, therefore, include not only the stringency and timing of SO 2 and NOx controls, but also whether to include mercury and CO 2 controls in the bill.\nOn February 4, 2010, Senators Carper and Alexander, with a bipartisan group of cosponsors, introduced S. 2995 to address the issues posed by the CAIR decision and to set standards for power plant mercury emissions. The bill would establish cap-and-trade systems for SO 2 and NOx with more stringent caps than those of the CAIR rule or EPA's proposed replacement. The SO 2 cap would be 78% below the 2001 baseline in 2015, and 83% below in 2018. The EPA Administrator would be authorized to reduce the cap further for 2021 and later years. The NOx cap would also be more stringent than provided by CAIR or the proposed transport rule and it would cover 32 states (seven more than CAIR, four more than the proposed EPA rule). In 2012, its cap would be 24% below CAIR's emissions level (in addition to covering more states within that cap). In 2015, its cap would be identical to CAIR's, but because it would cover seven more states, would still be substantially more stringent. The bill would also establish a NOx cap in the rest of the lower 48 states for the first time, which would decline 37% by 2020.\nAt a Senate hearing, March 4, 2010, there was general support for S. 2995 , although some concern was expressed that the reductions would still not be sufficient to bring Eastern states into attainment of the ozone NAAQS.", "", "Regulation of mercury emissions from coal-fired power plants has a complicated legislative and regulatory history, dating back to the 1990 Clean Air Act Amendments. EPA was required by that legislation and a 1998 consent agreement to determine whether regulation of mercury from power plants under Section 112 of the Clean Air Act was appropriate and necessary. Section 112 is the section that regulates emissions of hazardous air pollutants. In general, it requires EPA to set standards based on the Maximum Achievable Control Technology (a term defined with great precision in the act), and to impose the MACT standards at each individual emissions source. In a December 2000 regulatory finding, EPA concluded that regulation of mercury from power plants under Section 112 was appropriate and necessary. The finding added coal- and oil-fired electric generating units to the list of sources of hazardous air pollutants, and triggered other provisions of the 1998 consent agreement: that the agency propose MACT standards for them by December 15, 2003, and finalize the standards by March 15, 2005.\nRather than promulgate MACT standards, however, EPA reversed its December 2000 finding in March 2005, and established through regulations a national cap-and-trade system for power plant emissions of mercury, the Clean Air Mercury Rule (CAMR). Under CAMR, the final cap would have been 15 tons of emissions nationwide in 2018 (about a 70% reduction from 1999 levels, when achieved). There would also have been an intermediate cap of 38 tons in 2010, well above EPA's projection of emissions in that year.\nUnder the cap-and-trade system, utilities could either control the pollutant directly or purchase excess allowances from other plants that instituted controls more stringently or sooner than required. As with the acid rain and CAIR cap-and-trade programs, early reductions under CAMR could have been banked for later use, which the agency itself said would result in utilities delaying compliance with the full 70% reduction until well beyond 2018, as they used up banked allowances rather than installing further controls. The agency's analysis projected actual emissions to be 24.3 tons (less than a 50% reduction) as late as 2020. Full compliance with the 70% reduction would have been delayed until after 2025. (For additional information on the mercury rule, see CRS Report RL32868, Mercury Emissions from Electric Power Plants: An Analysis of EPA ' s Cap-and-Trade Regulations , by [author name scrubbed].)", "The CAMR rule was immediately challenged in petitions for review filed by New Jersey and 16 other states as well as other petitioners. The D.C. Circuit, in a 3-0 decision handed down February 8, 2008, vacated the rule. The court found that once the agency had listed electric generating units (EGUs) as a source of hazardous air pollutants, it had to proceed with MACT regulations under Section 112 of the act unless it \"delisted\" the source category, under procedures the act sets forth in Section 112(c)(9). Delisting would have required the agency to find that no EGU's emissions exceeded a level adequate to protect public health with an ample margin of safety, and that no adverse environmental effect would result from any source—a difficult test to meet, given the agency's estimate that EGUs are responsible for 46% of mercury emissions from all U.S. sources. Rather than delist the EGU source category, the agency had maintained that it could simply reverse its December 2000 \"appropriate and necessary\" finding, a decision that was much simpler because there were no statutory criteria to meet. The court found this approach unlawful. \"This explanation deploys the logic of the Queen of Hearts, substituting EPA's desires for the plain text of Section 112(c)(9),\" the court said in its opinion.", "Besides the question of whether EPA complied with the law's requirements, critics found other reasons to oppose EPA's cap-and-trade approach to controlling mercury. One of the main criticisms has been that it would not address \"hot spots,\" areas where mercury emissions and/or concentrations in water bodies are greater than elsewhere. In fact, under a cap-and-trade system, nothing would prevent emissions from increasing at hot spots. Many also argued that the mercury regulations should have been more stringent or implemented more quickly than the cap-and-trade regulations would have required. These arguments found a receptive audience in the states: about 20 states have promulgated requirements stricter than the federal program, with several requiring 80% to 90% mercury reductions before 2010. (For additional information, see archived CRS Report RL33535, Mercury Emissions from Electric Power Plants: States Are Setting Stricter Limits , by [author name scrubbed].)", "Under the D.C. Circuit's ruling, unless EPA delists the power plant category, it does not have the legislative authority to establish a cap-and-trade program for their mercury emissions: it must impose MACT standards on each individual plant once it has listed the category. The agency could have appealed the court's ruling: under the Bush Administration, on October 17, 2008, it petitioned for certiorari to the Supreme Court. But the Obama Administration withdrew the petition in early February 2009 and announced that it will proceed with the development of MACT standards. Proposed standards are expected, under a consent agreement, by March 2011, with final standards to be promulgated in November of that year.\nWhile the agency develops new regulations in response to the court's remand, new coal-fired electric generating units and modifications of existing units will be required to obtain permits under a provision of the law known as the \"MACT hammer\" (Section 112(g)(2)). Under this provision, if no applicable emission limits have been established, no person may construct a new major source or modify an existing major source in the category unless the Administrator or the state determine on a case-by-case basis that they meet MACT emission limits. On February 28, 2008, the Natural Resources Defense Council (NRDC) released a list of 32 new coal-fired power plants in 13 states that it believed must adopt MACT mercury controls under this provision.", "A related issue that has driven some of the debate over the regulation of power plant emissions is whether EPA has adequately enforced existing regulations, using a process called New Source Review (NSR). The New Source Review debate has occurred largely in the courts. EPA took a more aggressive stance on NSR late in the Clinton Administration, filing lawsuits against 13 utilities for violations at 51 plants in 13 states. The Bush and Obama Administrations have taken action against an additional dozen or so utilities and, after years of negotiation, settled many of the original suits. In the interim, however, the Bush Administration proposed major changes in the NSR regulations that critics argued would have weakened or eliminated New Source Review as it pertained to modifications of existing plants. Under the Obama Administration, some additional NSR cases have been filed against electric utilities, and six cases have been settled.\nThe controversy over the NSR process stems from EPA's use of it to require the installation of best available pollution controls on existing stationary sources of air pollution that have been modified. The Clean Air Act requires that plants undergoing modifications meet these NSR requirements, but industry has often avoided the NSR process by claiming that changes to existing sources were \"routine maintenance\" rather than modifications. In the 1990s, EPA began reviewing records of electric utilities, petroleum refineries, and other industries to determine whether the changes were, in fact, routine. As a result of these reviews, since late 1999, EPA and the Department of Justice have filed suit or administrative actions against numerous large sources of pollution, alleging that they made major modifications to their plants, extending plant life and increasing output, without undergoing required New Source Reviews and without installing best available pollution controls.\nOf the utilities charged with NSR violations, 21 have settled with the EPA, generally without going to trial. Under the settlements, they have agreed to spend about $10 billion on pollution controls or fuel switching to reduce emissions at their affected units. Combined, these companies will reduce pollution by at least 1.65 million tons annually. Since March 2000, the agency has also reached 24 agreements with petroleum refiners representing 88% of industry capacity. The refiners agreed to settle potential charges of NSR violations by paying fines and installing equipment to eliminate 337,000 tons of pollution.\nThe courts have generally sided with the Clinton Administration's interpretation of NSR.In the first case to go to trial, the U.S. District Court for the Southern District of Ohio found that Ohio Edison had violated the Clean Air Act 11 times in modifying its W. H. Sammis power plant. The company subsequently settled the case, agreeing to spend $1.1 billion to install controls that are expected to reduce pollution by 212,000 tons annually. A second case, involving Duke Energy, was initially decided in the utility's favor, but on appeal to the Supreme Court, the utility lost. The issue in that case involved whether EPA should consider the hourly emissions rate or the annual total of emissions in deciding whether to apply NSR. The U.S. District Court for the Middle District of North Carolina, in a decision upheld by the Fourth Circuit Court of Appeals, held that the company was not required to undergo NSR and install more stringent pollution controls since the maximum hourly emissions rate did not increase as a result of the modifications, even if annual emissions did increase. On April 2, 2007, the Supreme Court overturned the lower court rulings in a unanimous decision, finding that EPA's regulations, promulgated in 1980, clearly specified an increase in actual annual emissions as the measure of whether a permit for a modification was required.\nThe Bush Administration promulgated a number of changes to the NSR regulations that would have made future enforcement of NSR less likely. In December 2002 and October 2003, the agency promulgated five sets of changes to the NSR rules. The most controversial were new regulations defining what constitutes routine maintenance. The new regulations would have exempted industrial facilities from undergoing NSR (and thus from installing new emission controls) if the cost of the replacement components was less than 20% of the replacement value of the process unit. Using this benchmark, few, if any, plant modifications would trigger new pollution controls. Fifteen states, three municipalities, and several environmental groups filed suit to block this \"equipment replacement / routine maintenance\" rule. The rule was stayed by the U.S. Court of Appeals for the D.C. Circuit on December 24, 2003, and on March 17, 2006, a three-judge panel of the court unanimously struck the rule down. In its decision, the court held that EPA's attempt to change the NSR regulations was \"contrary to the plain language\" of the Clean Air Act.\nEPA proposed further changes to the NSR regulations on October 20, 2005, and September 14, 2006. For the most part, these regulations have not been promulgated. Under the October 2005 proposal, power plants could have modified existing facilities without triggering NSR, provided that the facility's \"maximum hourly emissions achievable\" after the changes were no greater than the same measure at any point during the past five years. The new rule would have effectively allowed increases in annual emissions without an NSR permit, if a modification led to an increase in the hours of operation of a facility. The agency's proposal stated that this change would establish a uniform national emissions test, in conformance with the Fourth Circuit's decision in the Duke Energy case, and it downplayed the significance of the change in light of \"substantial emissions reductions from other CAA [Clean Air Act] requirements that are more efficient,\" an allusion to CAIR.\nSince that time, both of these justifications have disappeared—the Fourth Circuit decision being overturned by the Supreme Court, and the \"more efficient\" reduction requirements (CAIR) having been vacated by the D.C. Circuit. Thus, the rule has not been promulgated.\nAt Congress's direction, the National Academy of Sciences began a review of the NSR program in May 2004. An interim report, released in January 2005, said the committee had not reached final conclusions, but it also said, \"In general, NSR provides more stringent emission limits for new and modified major sources than EPA provides in other existing programs\" and \"It is ... unlikely that Clear Skies [the Bush Administration's proposed multi-pollutant legislation] would result in emission limits at individual sources that are tighter than those achieved when NSR is triggered at the same sources.\" The final report, issued July 21, 2006, was ambivalent in many of its conclusions, but it found that\n[m]ore than 60% of all coal-fired electricity-generation capacity in the United States currently lacks the kinds of controls for SO 2 and NOx emissions that have been required under NSR. Also, the older facilities are more likely than newer facilities to undergo maintenance, repair, and replacement of key components, so a substantial portion of emissions from the electricity-generating sector is potentially affected by the NSR rule changes.\nBesides the NAS study, on April 21, 2003, the National Academy of Public Administration (NAPA) released a report commissioned by Congress that made sweeping recommendations to modify NSR. The study panel recommended that Congress end the \"grandfathering\" of major air emission sources by requiring all major sources that have not obtained an NSR permit since 1977 to install Best Available Control Technology or Lowest Achievable Emissions Rate control equipment. In the interim, the NAPA panel concluded, the EPA and the Department of Justice should continue to enforce NSR vigorously, especially for changes at existing facilities.\nThe continuing controversy over NSR, the court decisions involving CAIR and CAMR, and the prominence of the electric power industry's CO 2 emissions might all be addressed through multi-pollutant legislation. On the other hand, legislation addressing emissions from utilities found itself competing with economy-wide climate change cap-and-trade legislation which had priority both in the 111 th Congress and the Administration.", "", "Air quality has improved substantially since the passage of the Clean Air Act in 1970: annual emissions of the six most widespread (\"criteria\") air pollutants have declined nearly 180 million tons (59%), despite major increases in population, motor vehicle miles traveled, and economic activity. Nevertheless, the goal of clean air continues to elude many areas, in part because scientific understanding of the health effects of air pollution has caused EPA to tighten standards for most of the criteria pollutants.\nThe most widespread problems involve ozone and fine particles. As of September 2010, 119 million people lived in areas classified \"nonattainment\" for the ozone National Ambient Air Quality Standard (NAAQS); 70 million lived in areas that were nonattainment for the fine particle (PM 2.5 ) NAAQS. EPA attributes at least 33,000 premature deaths and millions of lost work days annually to exceedances of the PM 2.5 standard. Recent research has tied ozone pollution to premature mortality as well.\nViolations of the ambient air quality standards for the other four criteria pollutants are not as widespread, but EPA is engaged in (or has recently completed) reviews indicating that health effects of most of these pollutants are more serious than previously thought. At present, for example, no areas exceed the NAAQS for sulfur dioxide (SO 2 ), but in a recent review, EPA determined that between 2,300 and 5,900 premature deaths can be avoided annually by strengthening that standard. Thus, the agency has promulgated a new SO 2 standard under which as many as 59 counties could be designated nonattainment, based on the most recent monitoring data.\nTable 1 summarizes EPA's recent efforts to review the NAAQS and implement revisions, including the next steps for each of the six criteria pollutants. Revisions for five of the six pollutants (ozone, PM, lead, NO 2 , and SO 2 ) have been completed since 2006, with the standards being made more stringent in each case (three of the five were subsequently challenged in court and two of these three were remanded to the agency for further revisions). Reviews of the NAAQS for carbon monoxide and the two remanded standards (ozone and PM) are to be completed in 2010 or 2011.", "As the table indicates, court challenges have played a key role in bringing about the NAAQS reviews, and in causing further review after the NAAQS have been promulgated. Reviews of most of the standards were stimulated at least in part by court cases: EPA is statutorily required to review the NAAQS every five years, and its failure to do so can be addressed by citizen suits.\nAt the other end of the process, once the agency's review of a NAAQS is completed, the standards are almost invariably challenged in court. In the case of both particulate matter and ozone, judicial review has led to a remand of the standards that EPA promulgated in 2006 and 2008 respectively. The agency has now agreed to promulgate further revisions to these standards in 2010 and 2011.", "As the table indicates, in at least two cases, EPA's revised standards have been remanded at least in part because the agency did not follow the advice of its independent science advisors, the Clean Air Scientific Advisory Committee (CASAC). EPA is not required by statute to follow CASAC's recommendations; the act requires only that the Administrator set forth (in the Federal Register notice in which she proposes a NAAQS) any pertinent findings, recommendations, and comments made by CASAC and, if her proposal differs in an important respect from any of the recommendations, provide an explanation of the reasons for such differences. But the failure to follow CASAC recommendations almost inevitably raises the question of whether the Administrator's decision will be judged arbitrary and capricious in a judicial review.\nIn the recent revisions of both the ozone and PM standards, CASAC made detailed objections to the Administrator's final decisions. The committee's description of the process as having failed to meet statutory and procedural requirements played an important role during judicial review. This raises the question of whether Congress might opt to strengthen CASAC's statutory role in the review process, or limit the Administrator's authority to reject CASAC's advice.", "A feature common to many of the recent NAAQS reviews has been EPA's finding that the current monitoring network is inadequate to determine whether or not many areas of the country are in attainment of the standards. In several cases, such as for lead and sulfur dioxide, more extensive monitoring networks had been partly dismantled by the time the standards were reviewed, after years of indicating compliance with older, less stringent standards. In other cases, such as PM and NO 2 , the monitoring network was not designed to measure the kinds of exposure that current research identifies as a cause of concern (e.g., exposure to fine particles near highways). As a result, EPA and the states will need to devote resources in the next few years to expanding and refocusing the monitoring networks in order to identify areas where air quality does not meet new standards.", "Although most of the NAAQS standards are likely to have been revised by the end of 2011—ultimately stimulating billions of dollars in expenditures on pollution control—the impact of the new standards will be gradual. A NAAQS does not directly limit emissions; rather, a primary NAAQS represents the Administrator's formal judgment regarding the level of ambient pollution below which public health will be protected with an adequate margin of safety; a secondary standard reflects her judgment as to the level of ambient pollution necessary to protect public welfare, including protection of the environment, water quality, building materials, etc.\nPromulgation of a NAAQS sets in motion a lengthy process under which states and the EPA first identify nonattainment areas. Those areas then undertake a complicated implementation process. The first step, designation of nonattainment areas, generally takes at least two years after a standard is promulgated, and in many cases longer, if a new monitoring network needs to be established. After nonattainment areas are formally designated, the states generally have three years to submit State Implementation Plans (SIPs) that identify the specific regulations and emission control requirements that will bring the area into attainment.\nWhether more stringent NAAQS will lead to stronger federal emission controls for the sources of pollution—in addition to the controls contemplated by individual states or metropolitan areas—is likely to be an important issue. Several of the criteria pollutants have impacts across state lines, far from the source of emissions; others (notably ozone) form in the atmosphere as the result of chemical reactions involving precursors that may have been emitted many miles upwind. Thus, measures taken by individual states and nonattainment areas to control emissions within their borders may be inadequate for the areas to attain a NAAQS. Federal standards for cars, trucks, power plants, and other major pollution sources could need strengthening for many areas to be able to attain the NAAQS.\nCongress has given EPA the authority to strengthen such emission standards; but Congress may still act to review the implementation of that authority." ], "depth": [ 0, 1, 1, 1, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 1, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full", "h0_full h1_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "h3_full", "h3_title", "", "h3_full", "h3_full", "h3_full", "", "", "", "", "", "", "h3_title", "h3_full", "", "", "", "" ] }	{ "question": [ "What clean air issues have been the focus of Congress?", "How does EPA policy differ from the Obama Administration preferences for climate change legislation?", "What regulations has EPA developed?", "How will EPA standards change the HGH?", "How has Congress combatted unwanted EPA requirements?", "What legislation has allowed Congress to combat EPA?", "What legislation has the EPA published and created?", "What was triggered by a 2007 Supreme Court decision?", "How was a bill addressing energy and climate change passed?", "What energy and climate change issues would the bill address?", "What other sources attempted to enact climate legislature?", "What were the results of attempting to pass legislature in place of EPA response?", "How has the EPA taken action in addition to climate change?", "What Bush Administration decisions impacted the EPA?", "How will the EPA address these decisions?", "How does Congress wish to address these issues?", "What is the EPA doing regarding air quality standards?" ], "summary": [ "EPA regulatory actions on greenhouse gas (GHG) emissions using existing Clean Air Act authority have been the main focus of congressional interest in clean air issues in recent months.", "Although the agency and the Obama Administration have consistently said that they would prefer that Congress pass legislation to address climate change, EPA has begun to develop regulations using its existing authority.", "On December 15, 2009, the agency finalized an \"endangerment finding\" under Section 202 of the Clean Air Act, which permits it (in fact, requires it) to regulate pollutants for their effect as greenhouse gases for the first time. Relying on this finding, EPA finalized GHG emission standards for cars and light trucks, April 1, 2010.", "The implementation of these standards will, in turn, trigger permitting requirements and the imposition of Best Available Control Technology for new major stationary sources of GHGs in January 2011.", "It is the triggering of standards for stationary sources (power plants, manufacturing facilities, etc.) that has raised the most concern in Congress: legislation has been introduced in both the House and Senate aimed at preventing EPA from implementing these requirements.", "The legislation has taken several forms, including the introduction of resolutions of disapproval for the endangerment finding itself under the Congressional Review Act, and stand-alone legislation that would forestall specific EPA regulatory actions.", "Meanwhile, EPA has itself promulgated regulations and guidance that will limit the applicability of Clean Air Act GHG requirements, delaying the applicability of requirements for all stationary sources until 2011 through guidance published April 2, 2010, and focusing its regulatory efforts on the largest emitters while granting smaller sources at least a six-year reprieve through what it calls the Greenhouse Gas \"Tailoring Rule.\"", "The endangerment finding and EPA's other actions, which were triggered by a 2007 Supreme Court decision, came as Congress struggled with climate change and energy legislation.", "On June 26, 2009, the House narrowly passed H.R. 2454, a 1,428-page bill addressing a number of interrelated energy and climate change issues.", "The bill would have established a cap-and-trade program for greenhouse gas (GHG) emissions, beginning in 2012.", "In the Senate, both the Environment and Public Works Committee and the Energy and Natural Resources Committee reported bills (S. 1733 and S. 1462), but action subsequently bogged down, while a trio of Senators began negotiating a climate bill from scratch.", "As the clock wound down on the 111th Congress, it became less likely that climate legislation would be enacted, and more likely that EPA's actions would be the principal U.S. response to climate issues for now.", "Besides addressing climate change, EPA has taken action on a number of conventional air pollutants, generally in response to the courts.", "Several Bush Administration regulatory decisions were vacated or remanded to the agency: among them, the Clean Air Interstate Rule (CAIR)—a rule designed to control the long-range transport of sulfur dioxide and nitrogen oxides from power plants, by establishing a cap-and-trade program—and the Clean Air Mercury Rule, which would have established a cap-and-trade program for power plant mercury emissions.", "EPA will address these court decisions through new regulations—the agency proposed a replacement for CAIR July 6.", "Some in Congress have wanted to address these issues through legislation, an approach that might reduce the likelihood of further court challenges.", "The agency is also in the midst of reviewing ambient air quality standards for the six most widespread air pollutants. These standards serve as EPA's definition of clean air, and drive a wide range of regulatory controls." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, -1, -1, 1, -1, -1, -1, -1, 1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3 ] }
GAO_GAO-19-448	{ "title": [ "Background", "State, USAID, and UNRWA Fund Education Assistance in the West Bank and Gaza.", "State", "The U.S. Government Funded an Estimated $243 Million for Education Assistance in the West Bank and Gaza for Fiscal Years 2015 through 2017, and UNRWA Purchased English Language Textbooks with Contributions from Donor Countries, including the United States", "State Funded an Estimated $193 Million for Education Assistance in the West Bank and Gaza for UNRWA and Non- UNRWA Projects for Fiscal Years 2015 through 2017", "USAID Obligated about $50 Million for Education Projects Active in the West Bank and Gaza for Fiscal Years 2015 through 2017, and Did Not Fund Textbooks", "UNRWA Reported Expending about $877 Million for Education in the West Bank and Gaza for Fiscal Years 2015 through 2017 and Purchased English Textbooks with Funds That Consist of Contributions from Donor Countries, including the United States", "Education Program", "English Language Textbooks and Other Educational Materials", "UNRWA and State Have Taken Actions to Identify and Address Potentially Problematic Textbook Content", "UNRWA Reported Taking Steps to Identify Textbook Content Not Aligned with UN Values and Efforts to Address Such Content Are Ongoing", "Actions UNRWA Reported Taking to Identify Content Not Aligned with UN Values in Textbooks", "Actions UNRWA Reported Taking to Address Content It Deems Not Aligned with UN Values in Textbooks but Did Not Complete", "State Reported Taking Steps to Identify and Address Content Deemed Problematic", "State Submitted Required Reports to Congress, but One Contains Inaccurate Information and Reports Do Not Include Some Information That Could Be Useful for Congressional Oversight", "State’s Reports Generally Explain UNRWA’s Actions to Address Textbook Content Not Aligned with UN Values, but Its 2017 Report to Congress Inaccurately Described Certain Actions", "State’s Reports Do Not Include Some Information That Could Be Useful for Congressional Oversight", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Overview of UN Relief and Works Agency for Palestine Refugees in the Near East’s (UNRWA) Curriculum Framework Review and Rapid Review Processes", "Appendix III: 2016-2017 Rapid Review, as Reported by the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)", "Appendix V: Comments from the State Department", "Appendix VI: Comments from the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "", "Two State entities play key roles in education assistance in the West Bank and Gaza—State’s Bureau of Population, Refugees, and Migration (State/PRM) and State’s U.S. Consulate General in Jerusalem (State/ConGen). State/PRM has an important role in funding and overseeing education assistance provided by UNRWA in the West Bank and Gaza. State contributes funds to and manages the institutional relationship with UNRWA on behalf of the U.S. government, while recognizing UNRWA’s independence and commitment to upholding humanitarian principles, including neutrality. This relationship is guided by the U.S.-UNRWA Framework for Cooperation, annually negotiated between State/PRM and UNRWA. The framework includes UNRWA’s commitment to meet the condition on U.S. contributions to UNRWA that U.S. funds do not support terrorism, pursuant to section 301(c) of the Foreign Assistance Act of 1961, as amended. The framework also sets forth the activities used to evaluate UNRWA’s conformance with this condition. According to State/PRM officials, some educational materials fit into the framework’s section involving broader U.S. priorities for UNRWA’s education sector. For example, continuing support for mutually identified special projects such as UNRWA’s Human Rights, Conflict Resolution, and Tolerance education program in all of UNRWA’s five fields of operation fit into the latter category. UNRWA’s five fields of operations are the West Bank (including East Jerusalem), Gaza, Jordan, Lebanon, and Syria. The framework also defines U.S. priorities for UNRWA’s education sector. The frameworks for fiscal years 2016 and 2017 state, “The United States is particularly interested in ongoing curriculum review process, which enables UNRWA’s educators to use consistent criteria in analyzing and enriching local textbooks, in order to promote UN values and principles in UNRWA classrooms.”\nThe Secretary of State is required under Section 7048(d) of the Department of State, Foreign Operations, and Related Programs Appropriations Acts for fiscal years 2015 and 2016 to submit a report in writing to the Committees on Appropriations not less than, and for fiscal year 2016 no later than, 45 days after enactment. Section 7048(d) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2017 states that this report must be submitted prior to initial obligation of funds. This report is to cover seven topics. One of the required topics in the report is whether UNRWA is taking steps to ensure that the content of all educational materials currently taught in UNRWA-administered schools and summer camps is consistent with the values of human rights, dignity, and tolerance, and does not induce incitement.\nState/ConGen also has a key role in funding and overseeing U.S. educational assistance. State/ConGen is responsible for the U.S. bilateral relationship with the Palestinian Authority, including efforts to combat incitement to violence and address problematic content in textbooks. In addition, according to the Consulate General’s Education Statement of Purpose, State/ConGen funds and implements education projects to improve the quality of education to equip Palestinians with the skills to grow their economy and build a democratic, secular, politically moderate, and outward-focused Palestinian civil society as a driver for peace.\nUSAID funds education projects that support Palestinian Authority- administered schools, teacher and administrator training in the West Bank, and scholarships. USAID did not identify or address potentially problematic content in Palestinian Authority textbooks between fiscal years 2015 and 2017 because, according to USAID and State officials, reviewing textbooks is outside the scope of the work of USAID’s partners, including nongovernmental organizations, that implement projects in the West Bank and Gaza. USAID officials told us that they defer discussion of any potentially problematic content in textbooks to State as a bilateral policy issue.\nUNRWA is to provide humanitarian assistance to Palestine refugees in accordance with its mandate provided by the UN General Assembly. UNRWA provides education, health care, social services, microfinance, and emergency assistance to Palestine refugees; infrastructure and camp improvement within Palestine refugee camps; and protection. When UNRWA began operations in 1950, it was responding to the needs of about 860,000 Palestine refugees. UNRWA reports that over 5 million Palestine refugees are registered with UNRWA in the West Bank, Gaza, Jordan, Lebanon, and Syria and are currently eligible for its services.\nUNRWA administers its education system of more than 700 schools across its five fields of operation, educating approximately 526,000 children, according to UNRWA officials. This includes 370 schools in the West Bank and Gaza for grades 1 through 9 (and grade 10 in two East Jerusalem schools) serving over 300,000 children. UNRWA uses the curricula and textbooks of host governments. In keeping with this practice, UNRWA schools in the West Bank and Gaza use the Palestinian Authority curriculum and textbooks. This practice helps to ensure that UNRWA students can continue their education at government secondary schools and universities and can take national exams. According to UNRWA officials, using the host country curricula is also in line with good practice—affirmed by other UN agencies, such as United Nations High Commissioner for Refugees. The Palestinian Authority provides all textbooks used in UNRWA and Palestinian Authority schools in the West Bank and Gaza except for English language textbooks. Figure 1 shows an UNRWA girls’ school in Shufat refugee camp, located in East Jerusalem.\nPrior to the release of the first set of Palestinian Authority textbooks developed by the Palestinian Authority in 2000, schools in Gaza used Egyptian textbooks, and schools in the West Bank used Jordanian textbooks. The Palestinian Authority developed its first curriculum in the mid-1990s in cooperation with the United Nations Educational, Scientific and Cultural Organization. Since then, the Palestinian Authority has developed multi-year strategies to improve its educational system, including by modernizing its curriculum and improving its textbooks. The Palestinian Authority worked to implement its early strategies but could not fully do so because responding to other events took priority, according to Palestinian Authority documents. These events included the second Palestinian Intifada (uprising) that began in 2000, the government of Israel’s subsequent tightening of security, the rise of Hamas to power in the Palestinian government in 2006, and the resulting delays in donor funding. After donors resumed their support, the Palestinian Authority developed an education strategy for 2008 through 2012. This strategy’s stated goals include improving the quality of education by reviewing the curriculum and revising textbooks, among other things. Beginning in 2013 the Palestinian Authority undertook a multi-year effort to revise its curriculum and issue new textbooks to provide students with skills such as problem solving and analysis. As a result, the Palestinian Authority Ministry of Education and Higher Education issued new pilot textbooks for grades 1 through 4 in 2016 and 2017. The Palestinian Authority issued textbooks for the first semester of these grades in summer 2016 and textbooks for the second semester later in the year with the start of that semester. The Palestinian Authority issued the final textbooks for grades 1 through 4 and new pilot textbooks for grades 5 through 10 in 2017. As of August 2017, Palestinian Authority public schools and UNRWA schools in the West Bank and Gaza use these textbooks, according to State and UNRWA officials. Figure 2 shows examples of the pilot textbooks for grades 1 through 3.", "The U.S. government provided an estimated $243 million for education assistance in the West Bank and Gaza—State provided an estimated $193 million, and USAID provided about $50 million—for fiscal years 2015 through 2017, according to State and USAID data and UNRWA- provided information. Of State’s estimated $193 million contributions to education assistance in the West Bank and Gaza, UNRWA estimated that about $187 million went to its education assistance. State provided the remaining approximately $6 million to non-UNRWA education programs. UNRWA reported expending about $877 million for education in the West Bank and Gaza for fiscal years 2015 through 2017, including contributions from the United States and other donors. According to UNRWA officials, UNRWA used some of these funds to purchase English language textbooks that were used in UNRWA schools in the West Bank and Gaza. State, UNRWA, and USAID funds were not used to purchase or produce other textbooks used in the West Bank or Gaza, according to officials from these agencies.", "Of the estimated $243 million that the United States provided for education assistance in the West Bank and Gaza for fiscal years 2015 through 2017, State funded an estimated $193 million for UNRWA and non-UNRWA projects, according to State and UNRWA information. For UNRWA, State contributed an estimated $187 million for education in the West Bank and Gaza for fiscal years 2015 through 2017, out of a total contribution to UNRWA of about $1 billion for that timeframe. U.S. contributions support UNRWA’s core programs of education, health, relief and social services, microfinance, and infrastructure and camp improvement across its five fields of operation. State does not earmark the majority of its contributions to UNRWA’s program budget by either program area or field of operation. Rather, State contributes funds to UNRWA’s program budget, which UNRWA pools with contributions from other donors to provide general support to UNRWA’s core programs, according to State and UNRWA officials.\nState earmarks a small portion of its contributions to the program budget to support special projects of mutual priority to State and UNRWA, according to State officials. For each fiscal year from 2015 through 2017, State earmarked funds for the Human Rights, Conflict Resolution, and Tolerance project, an agency-wide, education-related project implemented in all five of UNRWA’s fields of operations, including in the West Bank and Gaza. UNRWA officials stated that UNRWA aims to support teachers in integrating human rights, conflict resolution, and tolerance into the regular curriculum. As part of its education reform, UNRWA developed a Human Rights, Conflict Resolution, and Tolerance Policy and Teacher Toolkit to further strengthen human rights education in UNRWA. According to UNRWA officials, UNRWA has built on international best practices to better integrate human rights education in all UNRWA schools. The United States exclusively funds the Human Rights, Conflict Resolution, and Tolerance project activities, according to State officials. UNRWA estimated expending about $0.3 million on the Human Rights, Conflict Resolution, and Tolerance project in the West Bank and Gaza for fiscal years 2015 through 2017.\nIn addition to State’s funding for UNRWA, State’s U.S. Consulate General in Jerusalem (ConGen) officials said that State/ConGen provided about $6 million in funding for three non-UNRWA education programs focused on youth in grades 1 through 10 in the West Bank and Gaza for fiscal years 2015 through 2017. These three education programs include (1) a program that provides secondary school students in the West Bank and Gaza an opportunity to study at American high schools and live with American host families; (2) an afterschool English language program that targets academically gifted and economically disadvantaged high school students; and (3) a 2-week summer camp program for at-risk Palestinian youth ages 8 through 14 residing in refugee camps and other marginalized areas throughout the West Bank, Gaza, and Jerusalem.", "Of the estimated $243 million that the United States provided for education assistance in the West Bank and Gaza for fiscal years 2015 through 2017, USAID obligated about $50 million for active non- construction education projects for this timeframe, and it did not fund textbooks, according to USAID officials. USAID funds supported six education projects, of which four were scholarship projects. Two projects—the School Support Program and the Leadership and Teacher Development program—provided support directly to Palestinian Authority public schools in the West Bank. The School Support Program offers assistance to 50 schools, including infrastructure rehabilitation of schools, in-kind assistance (e.g., science lab equipment and school supplies), extracurricular activities (sports, arts and music, career counseling, and psychosocial support), and leadership and teacher development for the school administration. The Leadership and Teacher Development program supports teacher, principal, and supervisor training to make teaching and learning practices more learner-centered, in addition to the introduction of information technology in education (e.g., internet connectivity, equipment, teaching of coding), classroom assessment and testing methods, and administrative reform at the school, district, and central levels.", "According to UNRWA-provided information, UNRWA expended about $877 million on education for fiscal years 2015 through 2017 in the West Bank and Gaza with funds from the United States and other donors. These funds were expended for UNRWA’s education program, including the purchase of English language textbooks and other educational materials.", "Of the approximately $877 million UNRWA reported expending on education, it expended about $671 million for education in Gaza and $206 million for education in the West Bank. UNRWA’s expenditures for Gaza are significantly higher because, as of June 30, 2017, UNRWA operated 275 schools in Gaza serving approximately 270,000 students compared to 95 schools in the West Bank serving approximately 48,000 students. UNRWA’s largest reported expenditure within the education sector in fiscal years 2015 and 2016 was personnel-related expenditures, which represented about 85 percent of all education expenditures, according to UNRWA.", "Between fiscal years 2015 and 2017, including estimated expenditures in 2017, UNRWA reported that it expended about $2 million on educational materials—including about $1 million on English language textbooks for fiscal years 2015 through 2017 for UNRWA schools in the West Bank and Gaza. Of the approximately $1 million expended on English language textbooks, UNRWA estimates that the U.S. contributions totaled about $587,369, with about $28,763 for the West Bank and about $558,606 for Gaza.\nEducational materials made up less than one percent of UNRWA’s reported education expenditures in the West Bank and Gaza in part because UNRWA does not purchase or fund textbooks for use in its schools in the West Bank and Gaza, with the exception of English language textbooks. The Palestinian Authority provides UNRWA with textbooks for all but one academic subject (English) as an in-kind contribution, according to UNRWA officials. As such, U.S. funds do not contribute to the textbooks that are published by the Palestinian Authority, according to UNRWA information. However, to purchase English language textbooks used in Gaza, UNRWA sent payment from its program budget, which includes commingled donor funds, directly to the Palestinian Authority Ministry of Education and Higher Education, for which they subsequently paid a private publisher. According to information provided by UNRWA, doing so lowered the per unit cost through bulk ordering.\nAccording to UNRWA, UNRWA staff work on complementary teaching materials—educational materials that UNRWA develops to use alongside host government textbooks, as part of their regular course of work. They also work on student summer learning materials based on the textbooks. Therefore, the expenditures for these materials cannot be disaggregated from staff wages and salaries and are not included in UNRWA’s expenditures for educational materials.", "UNRWA has reviewed Palestinian Authority textbooks for the first semester of grades 1 through 10 to identify content it deemed not aligned with UN values and has developed complementary teaching materials to address this content when considered necessary. However, UNRWA did not train teachers on the materials or distribute materials to classrooms; as a result, these materials were not used in UNRWA classrooms. Since at least 2015, State has used several means to identify and address Palestinian Authority textbook content it deemed problematic, including examining nongovernmental organizations’ allegations about problematic Palestinian Authority textbook content, engaging with Palestinian Authority officials, and monitoring UNRWA’s efforts.", "UNRWA reported that it had reviewed 111 textbooks used in its West Bank and Gaza schools during three sessions since 2016 to identify content it deemed not aligned with UN values. UNRWA reported that it had developed specific complementary teaching materials for any page identified to address this content following each of the reviews. In addition, UNRWA reported that it had trained some field-level education staff but had not trained teachers on the materials or distributed materials to classrooms for several reasons including staff refusal to attend training and workshops.", "UNRWA reported that it reviewed the Palestinian Authority and English language textbooks in part based on the values contained in its Framework for the Analysis and Quality Implementation of the Curriculum (Curriculum Framework), through which UNRWA aims to ensure that the curricula taught in its schools reflect UN values, such as neutrality, tolerance, equality, and nondiscrimination, and human rights with regard to race, gender, language, and religion. However, UNRWA explained that, given the urgency of reviewing any newly issued textbooks, it developed a “rapid review” process. Appendix II provides an overview of the Curriculum Framework and rapid review processes.\nUNRWA reported conducting three rapid reviews of all newly released Palestinian Authority textbooks since 2016, in each case using the rapid review criteria as a guide: beginning in October 2016, for textbooks for the first semester of grades 1 through 4; beginning in January 2017, for textbooks for the second semester of grades 1 through 4; and beginning in August 2017, for all textbooks used in UNRWA schools for the first semester of grades 1 through 10.\nUNRWA slightly revised the criteria used over the course of its three rapid reviews. UNRWA officials noted that for the first rapid review, they reviewed textbooks to determine if the textbooks were aligned with UN values and the UN commitment to neutrality. For the second rapid review, UNRWA developed three criteria: (1) neutrality/bias, (2) gender, and (3) aggressiveness. For the third rapid review, UNRWA renamed the criterion of aggressiveness to age-appropriateness to better reflect the types of issues it was intended to capture. The criteria for the third rapid review are 1. neutrality/bias: taking sides or engaging in controversies of a political, racial, religious, or ideological nature 2. gender: gender stereotypes 3. age-appropriateness (formerly aggressiveness): content that is violent, frightening, or inappropriate for the student’s age.\nAppendixes II and III provide more detail on UNRWA’s textbook reviews.\nIn fall 2017, UNRWA reported to donors that, based on its rapid review criteria, its August 2017 review identified issues on 3.1 percent of the pages in the 75 textbooks for the first semester of grades 1 through 10 used during the school year 2017-2018. In particular, UNRWA identified 203 issues covering a total of 229 pages (out of a total of 7,498 pages reviewed), the majority of which they identified as related to neutrality/bias. According to UNRWA-provided information, UNRWA found no cases of incitement to violence in the Palestinian Authority grades 1 through 10 textbooks during the August 2017 rapid review. More than half of the neutrality/bias issues it found were related to one of the following three categories—maps, Jerusalem, and cities—for example, regional maps that exclude Israel and refer to Israeli cities as Palestinian. Additional details about the issues UNRWA identified and the complementary teaching materials it developed have been omitted from this report because the information is classified.\nIn addition to issues UNRWA identified using the three rapid review criteria, it identified positive attributes in the textbooks newly issued by the Palestinian Authority, such as promoting active learning, life skills, gender equality, higher-order thinking, and problem-solving skills, according to UNRWA officials.", "For the content that UNRWA identified as not aligned with UN values during all three rapid reviews, UNRWA officials reported that they developed specific complementary teaching materials for any page with issues identified, such as alternate photos, examples, and guidance for teachers, as needed, to use with the textbooks in UNRWA schools. UNRWA also developed training guides and presentations to support training on the complementary teaching materials for each of the reviews. According to UNRWA, it developed these materials to ensure that the lessons taught in UNRWA schools adhere to UN core values, such as neutrality. In addition, UNRWA officials reported that they trained some field-level education officials but were not able to train teachers or distribute materials to classrooms. UNRWA officials told us that UNRWA did not change the content of Palestinian Authority textbooks and that they do not have the authority or mandate to do so.\nUNRWA developed complementary teaching materials to address the following issues it identified, among others, during its rapid review process of pilot textbooks for the second semester of grades 1 through 4 textbooks. Details about these complementary teaching materials were omitted because the information is classified.\nFor details about the issues UNRWA addressed, see appendix IV.\nUNRWA officials told us that as of April 2018 they have reviewed all textbooks for the second semester of grades 1 through 10.\nUNRWA did not train teachers or complete distributing complementary teaching materials after its first rapid review for several reasons. In a January 2017 briefing note to the United States and other donors, UNRWA reported that it had completed training for professional support staff on the complementary teaching materials for the pilot textbooks for the first semester of grades 1 through 4. However, UNRWA officials told us that UNRWA was not able to deliver the training for school staff, including principals or teachers, or disseminate these materials to classrooms before the end of the first semester of the 2016-2017 school year. They noted that this was due to collective employment actions between August 2016 and January 2017, including staff walkouts and a refusal to attend training and workshops, that were unrelated to the curriculum reform and having to complete the school exam period immediately following the resolution of these collective employment actions.\nFor similar reasons, UNRWA was unable to distribute materials or train teachers after the second rapid review of pilot textbooks for the second semester of the 2016-2017 school year. UNRWA reported to the United States and other donors in March 2017 that it anticipated completing training on the complementary teaching materials for all professional support staff and teachers by the end of that month in the West Bank and by the end of the following month in Gaza, according to State/PRM officials. However, UNRWA officials told us that UNRWA halted the training following a Palestinian Authority announcement of suspension of ties with UNRWA in response to UNRWA’s use of complementary teaching materials, and the UNRWA staff union reactions. UNRWA then determined that these materials would be outdated because the Palestinian Authority planned to issue revised textbooks in August 2017, before the start of the new school year.\nUNRWA’s efforts to train teachers and issue complementary teaching materials as a result of the third rapid review were ongoing as of December 2017. As of that date, UNRWA officials told us that UNRWA had finalized the complementary teaching materials for the final textbooks for the first semester of grades 1 through 4 and pilot textbooks for grades 5 through 10, as well as the English Language textbooks for the first semester of grades 1 through 10, all of which are being used during the 2017-2018 school year. UNRWA officials told us that UNRWA has developed training materials for the final textbooks for first semester grades 1 through 4 and pilot textbooks for grades 5 through 10 and planned to begin training of all relevant professional support staff, who will, in turn, train teachers using a cascaded training model. In addition, UNRWA officials reported sharing the complementary teaching materials in PDF format with field education staff in the West Bank and Gaza for distribution to all teachers. However, in commenting on a draft report, UNRWA officials told us in April 2018 that they did not disseminate the training or the complementary teaching materials for the third rapid review for various reasons. For example, some UNRWA staff opposed the use of these materials in classrooms while other staff boycotted the training. In addition, UNRWA faced deteriorating operational and political environments during that time period, such as financial shortfalls, as well as an increased number of violent confrontations between Palestinians and Israeli Security forces in the West Bank and Gaza. According to UNRWA, these factors heightened sensitivities and risks associated with the training and curriculum enrichment materials. As a result, these materials were not used in UNRWA classrooms.", "To promote appropriate content in Palestinian Authority textbooks, State/ConGen officials have examined nongovernmental organizations’ studies and allegations about potentially problematic Palestinian Authority textbook content and confirmed instances of problematic material since fiscal year 2015. State/ConGen officials told us that the studies they reviewed raised concerns with a range of content, and they will continue their reviews of these studies in the future. In examining Palestinian Authority textbooks, State/ConGen has found material that ignores Israeli narratives, includes militaristic and adversarial imagery, and preaches the values of resistance, according to State officials. Although according to State officials there has been a general agreement in these studies on the absence of anti-Semitic content or explicit incitement to violence in Palestinian Authority textbooks, State/ConGen nonetheless has confirmed instances of inappropriate language, content, and imagery based on the grade level of certain textbooks. State/ConGen also noted that the textbooks do not mention Israel or Judaism, and they continue to include regional maps that exclude Israel.\nIn response to allegations that two textbooks in particular—the National and Social Education (civics) textbooks for grades 3 and 4—contained problematic content, State/ConGen officials reported that they translated them into English and then analyzed two new pilot civics textbooks for grade 4 for the first and second semesters as well as previous versions of the same books and contracted for an external review of the textbooks. State/ConGen officials selected these textbooks for translation and analysis to examine a smaller subset of material reviewed in one independent study. State/ConGen officials told us in September 2017 that they had received the results of the external review and that these results informed their advocacy efforts and provided external perspective on additional material.\nTo address incitement to violence, such as the inclusion of problematic content in textbooks, State/ConGen officials have engaged the highest levels of the Palestinian Authority officials, according to State officials. State/ConGen officials reported that, since 2015, they have encouraged Palestinian officials during these meetings to address incitement to violence in textbooks, and Palestinian officials have done so. Officials also noted that the Palestinian Authority President has publicly condemned incitement to violence and vowed to combat it. A case study of a particularly problematic lesson illustrates State/ConGen’s role and approach. State/ConGen officials reported that a specific math problem using the number of Palestinian casualties in the First and Second Intifadas (uprisings) was clearly objectionable even if it did not demonstrate a call for violence against Israel. The Consulate and Consul General subsequently raised this concern with Palestinian officials, including the Minister of Education.\nTo discuss the Palestinian Authority’s ongoing textbook reform and address potential concerns, State/ConGen officials reported that they also convened a meeting in April 2017 of international donor groups and members of the international community that participate in the Palestinian-led Education Sector Working Group. A State official said that the group conducted a wide-ranging discussion about incitement to violence and agreed to discuss incitement bilaterally with the Palestinian Authority as appropriate. State/ConGen continued to raise the issue with the Palestinian Authority following the meeting.\nIn accordance with State/PRM’s role in monitoring UNRWA’s efforts to identify and address potentially problematic content in Palestinian Authority textbooks, State/PRM reports that it engages regularly with UNRWA. It does so through reviews of UNRWA reports, site visits to UNRWA schools and classrooms when and where security permits, regular communication with UNRWA staff at UNRWA headquarters and in the field, and by attending UNRWA’s briefings on the status of its textbook reviews. In addition, State/PRM officials aim to ensure that UNRWA takes adequate steps to ensure neutrality in UNRWA’s operations. To do so, State/PRM meets regularly with UNRWA officials to ensure that UNRWA operates in a fully neutral way in line with UN standards across all sectors of operation, including education and content of textbooks.", "State/PRM submitted annual reports to Congress in response to provisions in the annual appropriations acts for fiscal years 2015, 2016, and 2017; however, these reports have several limitations regarding educational assistance. First, we found that State/PRM’s 2017 report inaccurately described certain UNRWA actions to address textbook content not aligned with UN values. Inaccurate information about UNRWA’s actions could limit the transparency of State’s and UNRWA’s activities and the usefulness of State’s reports as tools for congressional decision making and oversight. Second, while State’s reports explain generally how UNRWA is taking steps to ensure that educational materials in UNRWA schools are consistent with certain values, we found that the reports did not include some information about UNRWA’s textbook review that could be useful for congressional oversight. Specifically, State’s reports did not specify whether the educational materials are consistent with the value of dignity or not inducing incitement. In addition, we found that in its 2017 report, State did not include information provided by UNRWA about the nature and extent of content that UNRWA identified in Palestinian Authority textbooks as not aligned with UN values. This information, while not required by law to be included in State’s reports, could be useful to congressional decision- makers.", "State submitted reports to Congress each year in a timely manner in accordance with the requirements of the appropriations acts. In the annual appropriations acts for fiscal years 2015 through 2017, Congress required State to report on seven different topics, including whether UNRWA is taking steps to ensure that the content of all educational materials taught in UNRWA schools and summer camps is consistent with the values of human rights, dignity, and tolerance, and does not induce incitement. State’s reports explain that UNRWA applied its Curriculum Framework in reviewing textbook content and that the Curriculum Framework will help ensure all materials used in UNRWA classrooms reflect UN values and principles. These UN values address issues related to neutrality, human rights, tolerance, and non-discrimination. These values are aligned with the ones that are included in the laws, according to State officials.\nHowever, we found that State’s 2017 report to Congress inaccurately described some of UNRWA’s actions to address content that is not aligned with UN values. State correctly reported that UNRWA completed several actions related to its second rapid review, including that UNRWA reviewed 18 new Palestinian Authority pilot textbooks, with a particular focus on the issues of neutrality and bias, gender, and aggressiveness. However, State reported that UNRWA trained teachers on the application of the complementary teaching materials they developed and disseminated the materials to classrooms, actions that UNRWA officials told us they did not complete.\nState/PRM officials stated they became aware that UNRWA’s classroom training and dissemination of complementary teaching materials had been delayed in June 2017, after the school year ended and after submitting the report to Congress in May 2017. State/PRM officials stated that, based on conversations they had with UNRWA during tense discussions between UNRWA and the Palestinian Authority in March and April 2017, they believed UNRWA would train teachers and disseminate complementary teaching materials after the tensions dissipated. These officials said they did not provide the congressional report to UNRWA for it to review because it is considered an internal U.S. government document. While State/PRM officials stated they verified facts related to other aspects of the reporting requirement, they did not verify the implementation of training and dissemination of complementary teaching materials because they believed this information to be current given ongoing dialogue with UNRWA.\nIn addition, State/PRM officials told us that they were not aware of the inaccuracy in their report to Congress until we brought it to their attention, although they were aware that the trainings had not been implemented in June 2017. In November 2017—about 6 months after the 2016-2017 school year ended—State/PRM officials told us that their understanding remained that UNRWA had trained some education staff on the application of the complementary teaching materials, though not all teachers, and that UNRWA had disseminated the materials to some education staff and schools, though not to all classrooms. From State’s perspective, the statement in its report to Congress about UNRWA training teachers and disseminating complementary teaching material was partly accurate. However, UNRWA officials confirmed that they did not disseminate the training or the complementary teaching materials related to the second rapid review to any school staff, including principals and teachers.\nIn October 2017, State noted that it has taken, or plans to take, action to address the accuracy of reporting in the future. First, subsequent to learning that the training had been halted in June 2017, State/PRM officials reiterated to UNRWA the need to keep them informed in a timely manner when the situation in the field shifts with regard to textbooks and other issues. State/PRM officials also said that they would likely avoid misreporting facts in the future by taking additional actions, such as including specific dates of the actions taken in their reports and verifying key facts with UNRWA. Further, they said they plan to address the issue of inaccuracy in the fiscal year 2018 report, if needed.\nStandards for Internal Control in the Federal Government states that management should use quality information to achieve the entity’s objectives. Incomplete and inaccurate information about UNRWA’s actions could limit the transparency of UNRWA’s activities and usefulness of State’s reports as tools for congressional decisionmaking and oversight.", "Our analysis also showed that State’s required reports did not include some information that could be useful for congressional oversight of whether UNRWA is taking steps to ensure that all the content of all educational materials currently taught in UNRWA schools and summer camps is consistent with the values of human rights, dignity, and tolerance, and does not induce incitement. In particular, our analysis showed that while State’s reports partly explain how certain educational materials are consistent with two elements included in the law (human rights and tolerance), they do not address the other two elements (dignity and not inducing incitement). In addition, State’s reports do not include details about the nature and extent of content UNRWA identified in Palestinian Authority textbooks as not aligned with UN values.\nState’s reports for all 3 years partly explain how certain educational materials are consistent with the values of human rights and tolerance but do not specifically say whether the Palestinian Authority textbooks are consistent with these values. In particular, the reports discuss the U.S.- funded Human Rights, Conflict Resolution, and Tolerance project and accompanying teacher toolkit. The toolkit aims to ensure that teachers have the skills and resources to implement human rights education across UNRWA classrooms. The reports note that in Gaza, UNRWA students use a dedicated human rights curriculum anchored in the Universal Declaration of Human Rights. While the Human Rights, Conflict Resolution, and Tolerance project is relevant to the congressional reporting requirement, it is supplemental to the Palestinian Authority textbooks—the core educational materials used in UNRWA’s schools. State’s reports do not discuss whether these Palestinian Authority textbooks are consistent with the values of human rights and tolerance.\nMoreover, none of State’s reports for these 3 years explicitly state that the UN values UNRWA applied in reviewing textbooks encompass the value of dignity or not inducing incitement. State/PRM officials said that these topics are addressed implicitly, in that the value of “dignity” is encompassed by the concepts of human rights and non-discrimination, which are among the elements encapsulated by the “UN values” applied as part of the Curriculum Framework. State/PRM officials further assert that reporting to Congress on UNRWA’s application of “UN values” via the Curriculum Framework necessarily encompasses the concept of non- inducement of incitement. In State’s view, materials reviewed through the lens of UN values and principles as defined by the UN imply that such review is taking into consideration whether the materials include incitement to violence. However, State did not include language about dignity or not inducing incitement explicitly in its reports to Congress.\nRegarding the nature and extent of content UNRWA identified in Palestinian Authority textbooks as not aligned with UN values, State did not include details provided by UNRWA about UNRWA’s reviews of Palestinian Authority textbooks in its May 2017 report to Congress that, while not required by law to be included in State’s reports, could be helpful for congressional oversight. The May 2017 report states that UNRWA reviewed pilot textbooks for the first and second semesters of grades 1 through 4 and identified a “limited amount of problematic content in the Palestinian Authority materials.” However, State’s report did not cite the percentage of all pages UNRWA deemed as including content not aligned with UN values, the percentage of issues UNRWA identified in relation to each of the three rapid review criteria, or examples of such content (e.g., frightening pictures that they considered inappropriate for children), which UNRWA had reported to State/PRM and other donors at least 2 months earlier.\nWe have previously reported that agencies should consider the differing information needs of various users to ensure that performance information will be useful in decision making. Standards for Internal Control in the Federal Government states that information should be communicated in a way that is useful to internal and external users. Less thorough information in State’s annual reporting could limit its usefulness as a tool for congressional oversight. In addition, the lack of certain relevant information may limit Congress’ ability to fully assess the nature and extent of material that may not be aligned with UN values in Palestinian Authority textbooks.", "The United States has funded education for Palestinian children for decades, including an estimated $243 million for fiscal years 2015 through 2017. State funds education projects to improve the quality of education to equip Palestinians with the skills to grow their economy and build a democratic, secular, politically moderate, and outward-focused Palestinian civil society as a driver for peace, according to the Consulate General’s Education Statement of Purpose. Congress remains interested in the role UNRWA plays in educating children under its purview, requiring State to report on steps UNRWA is taking to ensure that the content of all educational materials currently taught in UNRWA- administered schools is consistent with the values of human rights, dignity, and tolerance, and that those materials do not induce incitement. State’s 2017 report inaccurately describes certain UNRWA actions to address content not aligned with UN values. In addition, State’s reports to Congress did not specify whether the educational materials used in UNRWA schools are consistent with the value of dignity or not inducing incitement. Although State’s reports generally discuss whether UNRWA is taking certain steps, the lack of certain relevant information in State’s reports could limit their usefulness as a tool for congressional decision making and oversight. Accurate and complete information would help Congress more fully understand and assess the nature and extent of content in textbooks that is not aligned with UN values, as well as UNRWA’s actions to address this content.", "We are making the following four recommendations that could further enhance State’s annual reports to Congress: The Secretary of State should direct the Assistant Secretary for Population, Refugees, and Migration to establish a process to ensure that State’s reporting to Congress on the actions UNRWA has taken is accurate. (Recommendation 1)\nThe Secretary of State should direct the Assistant Secretary for Population, Refugees, and Migration to provide information in its reports to Congress that could be useful for congressional oversight, including information that: discusses whether Palestinian Authority textbooks used in UNRWA schools are found to be consistent by UNRWA with the values of human rights and tolerance. (Recommendation 2) explicitly states whether the UN values UNRWA applied as part of the Curriculum Framework encompass dignity and do not induce incitement. (Recommendation 3) describes the nature and extent of textbook content that UNRWA identified as not aligned with UN values, including in the English language textbooks purchased by UNRWA. (Recommendation 4)", "We provided a draft of our April 2018 classified report to State and USAID for comment. We also provided UNRWA with relevant information for comment. In response, State and UNRWA provided written comments on the classified report. We have reprinted State’s updated written comments in appendix V and UNRWA’s original written comments in appendix VI. All three also provided technical comments, which we incorporated as appropriate throughout our report.\nIn its written comments on this report, State noted that it has implemented all four of our recommendations contained in the classified report we issued in April 2018. To ensure the accuracy of information in its reports, State has developed standard operating procedures for drafting and verifying the information contained in its annual report to Congress on UNRWA, including clearly sourcing all information contained in the report and seeking written verification from UNRWA on any information previously obtained via oral communication. State implemented our recommendation that it discuss whether Palestinian Authority textbooks used in UNRWA schools are found to be consistent by UNRWA with the values of human rights and tolerance. State included additional qualitative details from UNRWA on its evaluation of the Palestinian Authority materials, and the degree to which UNRWA assesses that these materials are consistent with human rights and tolerance. State implemented the recommendation to explicitly state in its reports to Congress whether the UN values UNRWA applied as part of the Curriculum Framework encompass dignity and do not induce incitement. In addition, State implemented the recommendation to describe the nature and extent of textbook content that UNRWA identified as not aligned with UN values, including in the English language textbooks purchased by UNRWA. State provided additional qualitative and quantitative details from UNRWA’s evaluation of Palestinian Authority textbooks in its fiscal year 2018 report based on information provided by UNRWA.\nIn its written comments, UNRWA said, among other things, that while using the curricula and textbooks of host nations, UNRWA’s education program strives to realize the potential of all its Palestine refugee students, to help them develop into confident, innovative, questioning, thoughtful, tolerant and open-minded critical thinkers, who uphold human values and tolerance, and contribute positively to the development of their society and the global community. In addition, UNRWA noted that it appreciates our understanding of the role of the Curriculum Framework and how UNRWA takes specific measures to rapidly review newly issued textbooks, including the large number of new textbooks released by the Palestinian Authority Ministry of Education and Higher Education throughout 2016 and 2017. UNRWA also commented that while it does not have authority to determine or alter national curricula, UNRWA is committed to taking all measures within its control to ensure that the delivery of its educational services is fully aligned with the values of the United Nations. UNRWA did not comment on our recommendations, since they were not directed to UNRWA.\nWe are sending copies of this product to the appropriate congressional committees, as well as the Secretary of State, the Administrator of USAID, the Commissioner-General of UNRWA, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9601 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VII.", "This report examines (1) the amount of funding Department of State (State) and U.S. Agency for International Development (USAID) provided for education assistance to the West Bank and Gaza for fiscal years 2015 through 2017 and how it was used; (2) how the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) and State have identified and addressed potentially problematic content in educational materials used by schools in the West Bank and Gaza; and (3) whether State has submitted required annual reports to Congress including information on whether UNRWA is taking steps to ensure that the content of all educational materials currently taught in UNRWA- administered schools is consistent with the values of human rights, dignity, and tolerance, and do not induce incitement.\nTo determine which U.S. government agencies provide education assistance for the West Bank and Gaza, we reviewed documents and conducted interviews with State, USAID, and the Overseas Private Investment Corporation (OPIC). We initially conducted an interview with OPIC because it was included in a previous report we issued on a similar topic. We excluded OPIC from the scope of this engagement because they did not provide relevant education assistance to the West Bank or Gaza between fiscal years 2015 and 2017. We focused our review on State and USAID because these agencies provided education assistance to the West Bank and Gaza during this timeframe. For this review, we refer to State and USAID when we refer to the U.S. government.\nTo examine the amounts of funding State and USAID provided for education assistance to the West Bank and Gaza and how it was used for fiscal years 2015 through 2017, we took the following steps. We examined actual funding where it was available and estimated funding where it was not. We obtained and analyzed financial data from State and USAID and expenditure data from UNRWA for education assistance to the West Bank and Gaza in fiscal years 2015 through 2017. We used these data to describe how much and for what types of activities State contributed funds to UNRWA. We also obtained and analyzed expenditure and contributions data from State and obligations data from USAID to describe non-UNRWA education programs that they administered in the West Bank and Gaza. We reported the amount of funds UNRWA expended in general on education in the West Bank and Gaza, including the amounts that UNRWA expended on educational materials and specifically on textbooks. We define educational materials to primarily include curriculum, textbooks, select videos and web-based tools, and any complementary teaching materials, including those developed by UNRWA that aim to supplement, replace, or mitigate materials that UNRWA deems not aligned with UN values. We exclude posters, library books, educational technology, education administration materials, extracurricular materials, handouts and worksheets, and teacher training materials, with limited exceptions, from materials produced by UNRWA and used to mitigate material that UNRWA deemed not aligned with UN values or to supplement the curriculum. According to UNRWA officials, the financial information they provided pertains to educational materials, including textbooks, complementary teaching materials, and costs related to an interactive learning portal in Gaza and UNRWA TV. Finally, we reported the amount of funds USAID obligated for education programs in the West Bank and Gaza during this timeframe.\nTo analyze these data, we reviewed State-UNRWA contribution agreements, State reports on UNRWA emergency appeals expenditures, and USAID award documents. We examined the two types of funding that State contributed to UNRWA—program budget funding and emergency appeals. We also examined the three ways in which UNRWA expends that funding—through program budget expenditures, emergency appeals expenditures, and special project expenditures. We supplemented these data by interviewing State, UNRWA, and USAID officials about funding. While the majority of UNRWA data are actual expenditures, some UNRWA data are estimates. According to UNRWA officials, they estimated all UNRWA expenditure data for fiscal year 2017 because, as of December 2017, when we finished collecting data, UNRWA’s 2017 fiscal year was ongoing. In addition, UNRWA estimated its education expenditures provided by the United States because U.S. contributions to UNRWA are generally not earmarked. Rather, UNRWA’s core budget, its program budget, pools funding from all UNRWA donors. For this reason, we reported all UNRWA expenditure data on education assistance based on information UNRWA officials provided us. To make these estimates, UNRWA officials informed us that they calculated U.S. funding as a proportion of all UNRWA funding, and applied that proportion to their educational expenditures. Data on State’s contributions to UNRWA and USAID’s funding to education programs in the West Bank and Gaza active between fiscal years 2015 and 2017 are obligations; according to State, all funds disbursed to UNRWA were through contributions. Data on State’s funding for non-UNRWA education programs are expenditures.\nFor the purposes of this report, we use the U.S. fiscal year (October 1 through September 30) for all State and USAID contributions data, while we use UNRWA’s fiscal year (January 1 through December 31) for all UNRWA expenditure data. In addition, State and USAID awarded several grants for additional years not included in our scope. For example, the USAID’s first obligation to the Leadership and Teacher Development program occurred in fiscal year 2011 and the latest obligation to that program occurred in fiscal year 2017. As a result, the data presented in this report may include additional contributions of funds beyond what State and USAID obligated for fiscal years 2015 through 2017.\nTo determine the reliability of the obligations and expenditure data, we requested information from State, UNRWA, and USAID officials regarding the processes they used to collect and verify data, and we checked the data for reasonableness and completeness. When we found discrepancies or missing data fields, we worked with relevant agency officials to correct the discrepancies and missing fields. We compared State’s contribution data with UNRWA’s expenditure data to ensure consistency. We discussed UNRWA’s financial data for educational expenditures with knowledgeable officials, reviewed audited financial statements for confirmation, and reviewed vouchers they provided. However, we did not independently audit their financial data. To ensure completeness of the data, we reviewed initial grant documents or contribution agreements and all associated amendments for the (1) six education projects USAID funded in the West Bank and Gaza, and (2) annual UNRWA contributions State made between fiscal years 2015 and 2017. We discussed UNRWA’s procedures for estimating the proportion of U.S. funds that went to educational expenditures with knowledgeable officials. Based on our initial assessments of the data, we determined that the State and USAID funding data we collected were sufficiently reliable for the purposes of this report. In addition, we determined that the actual expenditure data we collected from UNRWA were sufficiently reliable for our purposes, and that the estimated expenditures it provided were reasonable for the purposes of this review. (To examine how UNRWA and State have identified and addressed potentially problematic content in educational materials used by schools in the West Bank and Gaza, we reviewed the policies and procedures that UNRWA and State have established and implemented. We focused on actions agencies took in response to the (1) pilot textbooks for grades 1 through 4 that the Palestinian Authority issued in 2016 and that UNRWA used during the 2016-2017 school year; (2) final textbooks for grades 1 through 4, and pilot textbooks for grades 5 through 10 the Palestinian Authority issued in in 2017 and used during the first semester of the 2017-2018 school year; and (3) English language textbooks that UNRWA and the Palestinian Authority purchased for grades 1 through 10 published in 2011 through 2014 and used during the 2017-2018 school year. According to UNRWA officials, these textbooks do not include the second semester Palestinian Authority textbooks for the 2017-2018 school year (released in late 2017) and the second semester English language textbooks, and therefore do not cover all the textbooks used in UNRWA and Palestinian Authority schools for grades 1 through 10. We examined how UNRWA and State have implemented their policies and procedures. We reviewed State’s cables and agencies’ policy documents and reports and met with officials from State, UNRWA, and USAID in Washington, D.C., and overseas. In addition, we interviewed international donors overseas and officials from the government of Israel, the Palestinian Authority, and Jerusalem municipality. We only interviewed official government entities and public international organizations and did not meet with non-governmental interest groups. We followed up with relevant officials on multiple occasions to assess the progress of textbook review and the status of implementation of other policies and procedures.\nWe interviewed UNRWA officials about the methods they used to conduct the rapid reviews of textbook content and reviewed documents they provided that outline their procedures. While the methods and procedures described seemed generally reasonable, we did not independently review UNWRA’s underlying documents to fully assess the reliability of the rapid review results it reported because UNRWA is an international organization. Moreover, it was beyond the scope of our review to examine the underlying documents and textbooks themselves, most of which are written in Arabic. There can be a number of challenges to analyzing and coding content as UNRWA did in its rapid reviews, such as the need for those performing the review to exercise judgment, and while the overall process officials outlined generally appeared reasonable, we cannot comment on the extent to which it successfully overcame all of the potential challenges. We are presenting the results of the textbook reviews, attributed to UNRWA, to help support our finding that the agency has developed procedures to review textbooks, and that it found some concerns in its recent reviews. In addition, we are providing details about these reviews for context because the State Department summarized the results of the first two reviews in its May 2017 report to Congress, which we discuss in the third section of this report. This report is a public version of a classified report that we issued in April 2018. The Department of State deemed some of the information in our April 2018 report to be classified, which must be protected from loss, compromise, or inadvertent disclosure. Therefore, this report omits classified information about neutrality/bias, gender issues, and other textbook content identified in English language textbooks by UNRWA as not aligned with UN values. Although the information provided in this report is more limited, the report addresses the same objectives as the classified report and uses the same methodology.\nTo examine whether State has submitted required annual reports to congressional committees, including information on whether UNRWA is taking steps to ensure that the content of all educational materials currently taught is consistent with the UN values of human rights, dignity, and tolerance, and do not induce incitement, we took the following steps. We reviewed the legal requirements for State to report on the steps UNRWA is taking to ensure that the content of all educational materials currently taught is consistent with the UN values. These requirements are found in the annual appropriations acts; for fiscal year 2017, the requirement is located in Section 7048(d)(5) of the Consolidated Appropriations Act, 2017. We reviewed State’s reports to Congress in 2015, 2016, and 2017, and compared data State reported regarding education assistance with data we gathered through meetings with State and UNRWA officials in in Washington, D.C., and overseas. We also reviewed UNRWA documents.\nThe performance audit upon which this report is based was conducted from January 2017 to April 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We subsequently worked with State from February 2019 to June 2019 to prepare this unclassified version of the original classified report for public release. This public version was also prepared in accordance with these standards.", "UNRWA’s Framework for Analysis and Quality Implementation of the Curriculum (Curriculum Framework) provides the overarching structure for the review and enrichment of educational materials used in UNRWA schools in all of its fields of operation, including the West Bank and Gaza. The Curriculum Framework, developed as part of UNRWA’s education reform process, aims to ensure that the curricula taught in its schools support the development of skills and competencies that are considered important for individual development in the 21st century. In addition, the Curriculum Framework aims to ensure that the delivery of the host country’s curriculum reflects UN values, such as neutrality, tolerance, equality, and nondiscrimination, and human rights with regard to race, gender, language, and religion as well as the development of respect for a child’s own cultural identity, language, and values in line with UN values. According to UNRWA officials, neutrality is one of the four “humanitarian principles” formally adopted by the UN General Assembly and endorsed by UNRWA and is a core obligation and value of UN staff as spelled out in the UN’s regulatory framework. According to UN humanitarian principles, the concept of neutrality means that, irrespective of their personal beliefs and opinions, “umanitarian actors must not take sides in hostilities or engage in controversies of a political, racial, religious or ideological nature.” The Curriculum Framework includes 10 Curriculum Framework principles and five student competencies against which UNRWA reviews educational materials used in its schools:\nPrinciple 1—Focuses on understanding and application and not just memorization\nPrinciple 2—Is active, practical, and encourages independent thinking\nPrinciple 3—Is relevant to students’ lives and situation, particularly as\nPrinciple 4—Provides a variety of teaching and learning approaches\nPrinciple 5—Integrates learning and emphasizes connections to other\nPrinciple 6—Is inclusive and provides learning opportunities for\nPrinciple 7—Provides for students’ personal development and well-\nPrinciple 8—Is free of biases (such as gender, disabilities, and ethnicity)\nPrinciple 9—Enables students to value their Palestinian culture,\nPrinciple 10—Reflects UN values Curriculum Framework Student Competencies: 1. Critical and creative thinking 3. Communication and literacy UNRWA’s Curriculum Framework includes tools to guide the analysis and review of host country textbooks and other learning material at the school and field levels, and remains the overarching framework for the review and enrichment of educational materials used in UNRWA schools agency-wide. However, given the urgency of reviewing any newly issued textbooks for use during the 2016-2017 school year, UNRWA developed a rapid review process. The rapid review process does not replace the Curriculum Framework process, as the Palestinian Authority textbooks reviewed through the rapid review process are also subject to the regular Curriculum Framework review process at the field and school levels, as follows:\nAt the field level, field education staff are to use the Field-Level Analysis Tool of the Curriculum Framework to review textbooks against all five student competencies and 10 principles of the Curriculum Framework.\nAt the school level, all UNRWA teachers and school principals in the West Bank and Gaza and UNRWA’s other fields of operations are to use the School-Level Analysis Tool of the Curriculum Framework to review their own teaching programs and lessons, including curriculum materials they use, while considering their context and diversity of needs. The School-Level Analysis Tool focuses on the five Student Competencies and select Curriculum Framework Principles: (1) Principle 4—provides a variety of teaching and learning approaches; (2) Principle 6—is inclusive and provides learning opportunities for students of all abilities; (3) Principle 8—is free of biases (such as gender, disabilities, and ethnicity); (4) Principle 9—enables students to value their Palestinian culture, heritage, and identity; and (5) Principle 10—reflects UN values.\nThe Curriculum Framework is a more comprehensive pedagogical review—one that relates more directly to the theory and practice of education—than the rapid review process, which focuses specifically on three rapid review criteria linked to the UN values in the Curriculum Framework.\nAccording to UNRWA documents, UNRWA employed a multi-stage rapid review process to identify textbook content not aligned with UN values, and its efforts to address this content were ongoing as of November 2017. Figure 3 summarizes UNRWA’s process.\nComplementary teaching materials are educational materials that UNRWA developed to use alongside host government textbooks to ensure that the lessons taught in UNRWA schools adhere to UN core values, such as neutrality, according to UNRWA officials. UNRWA’s Agency Task Force is composed of the Chief of Staff and headquarters officials from the departments of Education and Legal Affairs, according to UNRWA officials.\nThe cascade training model involves training groups of individuals who in turn train other individuals. UNRWA has established strategic support units in the fields that train educational specialists who then train school principals and teachers using a cascade model, according to UNRWA officials. Professional support staff include field-level strategic support unit staff, education specialists, and Chiefs of the Field Education Programs, according to UNRWA officials.", "Appendix III: 2016-2017 Rapid Review, as Reported by the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)\nUNRWA reported that it has reviewed newly issued Palestinian Authority textbooks during three rapid review sessions since 2016 to identify content it deems not aligned with UN values and that it has developed complementary teaching materials to specifically address this content for any page with issues identified.\nThroughout the 2016-2017 school year, UNRWA reported reviewing pilot textbooks newly issued by the Palestinian Authority for grades 1 through 4 in two separate reviews.\nIn August 2017, UNRWA reported reviewing the final textbooks for grades 1 through 4 for the first semester, pilot textbooks for grades 5 through 10 for the first semester, and English language textbooks funded with contributions from donor countries, including the United States, for grades 1 through 10 for the first semester.\nFor the August 2017 review, UNRWA reported reviewing 75 textbooks (7,498 pages) in aggregate. Table 1 provides details on the number of textbooks and number of pages UNRWA reported reviewing between 2016 and 2017 for the textbooks used in its schools in the West Bank and Gaza.\nTable 2 provides detail on the academic subjects for which UNRWA reported reviewing Palestinian Authority textbooks in 2016 and 2017.\nTable 2. Select Academic Subjects for Which the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) Reported Reviewing Content of Palestinian Authority and English Language Textbooks, 2016-2017 recitation)\nLegend: =UNRWA reviewed textbook for this subject. N/A= Not applicable because Palestinian Authority and UNRWA schools do not use these textbooks for the grades listed.\nAppendix IV: Textbook Content Issues Identified by the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)\nAppendix IV: Textbook Content Issues Identified by the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)\nDuring its August 2017 review of textbooks for grades 1 through 10 for the first semester, UNRWA identified 203 issues covering a total of 229 pages (out of a total of 7,498 pages reviewed), the majority of which it identified as related to neutrality/bias. Specific details about the percentage of pages with issues UNRWA identified in relation to each of the three rapid review criteria subjects, as well as the types and percentages of neutrality/bias issues UNRWA reported finding were omitted because the information is classified.\nOf the 203 issues UNRWA identified in the textbooks for the first semester of grades 1 through 10 for the 2017-2018 school year, UNRWA officials reported that they identified the largest number of issues in social studies textbooks (105 issues), followed by Arabic grammar (30 issues), Islamic education (20 issues), mathematics (18 issues), science and life (15 issues), English language (14 issues), and vocational education (1 issue).\nThe 14 issues that UNRWA identified in the English language textbooks purchased by UNRWA for the first semester of grades 1 through 10 cover a total of 22 pages out of 664 textbook pages (3.3 percent), according to UNRWA officials. Of the 14 issues, UNRWA officials identified 10 of the 14 as neutrality/bias issues and 4 as gender issues. The neutrality/bias issues that UNRWA identified include issues related to maps, Jerusalem, and the Islamic religion. Details about the neutrality/bias and gender issues that UNRWA identified and the complementary teaching materials it developed were omitted because the information is classified.\nUNRWA officials identified four examples in the English language textbooks for the first semester of grades 1 through 10 that show a lack of gender balance in sports, hobbies, and professions. In response, they developed complementary classroom discussion questions to discuss gender bias with UNRWA students. Details about the gender issues that UNRWA identified and the complementary teaching materials UNRWA developed were omitted from this report because they included classified information.", "", "Appendix VI: Comments from the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)", "", "Thomas Melito at (202) 512-9601 or [email protected].", "In addition to the contact named above, Cheryl Goodman (Assistant Director), Jaime Allentuck (Analyst in Charge), Ashley Alley, Martin de Alteriis, and Lynn Cothern made key contributions to this report. Other contributors to this report include Neil Doherty, Mark Dowling, Aldo Salerno, and Mona Sehgal." ], "depth": [ 1, 2, 3, 1, 2, 2, 2, 3, 3, 1, 2, 3, 3, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "h3_title", "h3_full", "h0_full", "", "", "h0_title", "", "h0_full", "h1_full", "h1_full", "", "h1_full", "h1_full", "h2_full h4_title", "h2_full", "h4_full h2_full", "h3_full", "h2_full", "", "h3_full h4_full", "", "h3_full", "", "", "", "", "" ] }	{ "question": [ "How does the US assist education in the West Bank and Gaza (WBG)?", "How is the State's contribution specifically used?", "How does the UNRWA use education funds?", "How does the UNRWA fund textbooks published by the Palestinian Authority?", "How have UNRWA and State handled problematic textbooks?", "What content was considered problematic?", "How did UNRWA work to address problematic content in textbooks?", "Why did UNRWA solutions fall through?", "How did State work to address problematic content in textbooks?", "What values are required for UNRWA to enforce in educational materials?", "How have State reports on UNRWA been incorrect?", "How did State incorrectly report on UNRWA teaching materials in 2007?", "How did State fail regarding reporting on enforced values?", "What standards does Internal Control in the Federal Government state?", "How does the lack of these standards affect Congress?", "How has the US assisted Palestine?", "What forms of education assistance are used?", "How does the UNRWA provide educational assistance?", "Who does the Palestinian Authority provide schools to?", "What has the DAO been taken to review?", "What does the GAO cover in this report on the WBG?", "How does the GAO plan on reviewing these objectives?", "What problems does the GAO specifically cover?" ], "summary": [ "The U.S. government funded an estimated $243 million for education assistance in the West Bank and Gaza (WBG) for fiscal years 2015 through 2017, including an estimated $193 million from the Department of State (State) and about $50 million from the U.S. Agency for International Development (USAID).", "Of State's contribution of approximately $193 million, the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) estimated that about $187 million was provided for its education assistance. State provided the remaining approximately $6 million for non-UNRWA education projects.", "UNRWA purchased English language textbooks used in UNRWA schools with funds that consist of contributions from donor countries, including the United States.", "The U.S. government and UNRWA did not fund textbooks published by the Palestinian Authority because the Palestinian Authority provided these textbooks free of charge, according to agency officials.", "UNRWA and State have taken steps to identify and address potentially problematic content of textbooks used in UNRWA schools, such as maps that exclude Israel.", "UNRWA reviewed textbooks, including English language textbooks, and took actions to address content it deemed as not aligned with UN values.", "For example, UNRWA created complementary teaching materials, such as alternate photos, examples, and guidance for teachers to use with the textbooks in UNRWA schools.", "However, due to financial shortfalls and other constraints, UNRWA officials told GAO that UNRWA did not train teachers or distribute the complementary teaching materials to classrooms. As a result, these materials were not used in UNRWA classrooms.", "To address textbook content deemed problematic, State examined nongovernmental organizations' studies, encouraged Palestinian Authority officials to address the issue, and monitored UNRWA's efforts.", "The annual appropriations acts for fiscal years 2015 through 2017 require State to report to Congress on several topics, including steps UNRWA has taken to ensure that the content of all educational materials taught in UNRWA schools is consistent with the values of human rights, dignity, and tolerance, and do not induce incitement.", "Although State submitted its required reports to Congress on time, State included inaccurate information in the 2017 report and omitted potentially useful information in all three reports.", "In its 2017 report, State noted incorrectly that UNRWA had completed training teachers and distributed complementary teaching materials to address textbook content that UNRWA deemed as not complying with UN values.", "In all three of the reports, State omitted information concerning whether UNRWA found that any educational materials used in its schools do not comply with two of four elements, dignity and not inducing incitement.", "Standards for Internal Control in the Federal Government states that management should use quality information to achieve the entity's objectives and communicate it in a way that is useful to users.", "Without a fuller explanation, Congress may not have the information it needs to oversee efforts to identify and address potentially problematic textbook content.", "The U.S. government has funded education assistance to Palestinians.", "The State Department oversees U.S. contributions to UNRWA, and USAID provides assistance to Palestinian Authority schools.", "UNRWA generally administers schools for Palestine refugees.", "The Palestinian Authority generally administers schools for non-refugee Palestinians who live in the WBG. During the 2016-2017 school year, it issued new pilot textbooks for grades 1 through 4 for use in both its and UNRWA's schools.", "GAO was asked to review issues related to U.S. education assistance to the WBG.", "This report examines (1) the funding the U.S. government provided for education assistance to the WBG for fiscal years 2015 through 2017, (2) how UNRWA and State have identified and addressed potentially problematic content in textbooks, and (3) whether State has submitted required annual reports to Congress including information on educational materials used in UNRWA schools.", "To address these objectives, GAO reviewed documents and interviewed U.S. government, UNRWA, and Palestinian Authority officials.", "For this report, GAO refers to potentially problematic content as that which State defined as inappropriate and that UNRWA defined as not aligned with UN values." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, -1, -1, -1, 1, 1, -1, 4, -1, 0, -1, 2, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 0, 0, 1, 1, 1 ] }
GAO_GAO-12-269	{ "title": [ "Background", "Staffing, Budgeting, and Training", "CBP Revised Its Training for Newly Hired CBP Officers Consistent with Its Training Standards", "CBP Has Taken Steps to Identify and Address Incumbent Officer Training Needs but Could Do More to Improve Oversight", "CBP Uses Covert Tests to Help Identify Possible Training Needs, but Further Evaluation Could Enhance Their Usefulness", "CBP Faces Challenges in Identifying and Addressing Training Needs", "CBP Lacks Policies and Procedures to Ensure Incumbent CBP Officers Complete Training", "CBP Has Not Fully Identified and Addressed Potential Incumbent Officer Training Needs", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Customs and Border Protection Officer Staffing Policy and Specialized Teams", "Passenger Enforcement Roving Team/Counter- Terrorist Response", "Passenger Analysis Unit/Tactical Analysis Group", "Passenger Control Secondary", "Outbound", "Advance Targeting Unit", "Anti-Terrorism Contraband Enforcement Team", "Training", "Scheduling", "Firearms", "Appendix II: Mandatory and Specialized Courses for CBP Officers", "Appendix III: Comments from the Department of Homeland Security", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "CBP is the lead federal agency charged with interdicting terrorists, criminals, and inadmissible travelers at ports of entry while facilitating the flow of legitimate travel and commerce at the nation’s borders. In March 2003, inspectors from the three legacy agencies—the Department of Justice’s U.S. Immigration and Naturalization Service, the Department of the Treasury’s U.S. Customs Service and the Department of Agriculture’s Animal and Plant Health Inspection Service—were merged to form CBP. As part of the merger, CBP cross-trained CBP officers to simultaneously perform immigration and customs inspection functions as well as identify and refer possible agricultural violations for further inspection. DHS stated that the ability to use inspectors interchangeably for immigration and customs inspection functions would allow the agency to more effectively use its personnel and accelerate the processing of legitimate travelers, thereby enabling CBP to more effectively enhance efforts to secure the border. OFO—one of the CBP component offices—manages and deploys CBP officers who operate within 20 field offices, and 329 ports of entry composed of airports, seaports, and designated land ports of entry throughout the United States plus selected locations overseas.", "As of July 2011, nearly 20,000 CBP officers operated at U.S. ports of entry and other locations overseas. The total number of onboard CBP officers peaked in fiscal year 2009 at 21,339 but declined in fiscal years 2010 and 2011 to 20,431. According to OFO, the decline in the onboard number of CBP officers is due, in part, to a decline in traveler volume resulting in a decline in collected user fees that fund CBP officers located at airports and seaports. At the end of fiscal year 2004, there were about 18,000 CBP officers, the majority of whom were legacy officers from the Department of Treasury’s U.S. Customs Service, followed by legacy officers from the Department of Justice’s U.S. Immigration and Naturalization Service and the Department of Agriculture’s Animal and Plant Health Inspection Service. Since fiscal year 2007, the total number of legacy officers has declined. As of July 2011, 45 percent of the CBP officer workforce was comprised of legacy officers. Since fiscal year 2007, the annual attrition rate of legacy officers has declined from 6.5 percent to 2.4 percent in fiscal year 2010. Figure 1 illustrates the percentage of legacy CBP officers compared to the total CBP officer workforce over time.\nCBP officer responsibilities for passenger inspection are primarily focused at the primary and secondary inspection areas at ports of entry. In the primary inspection area, CBP officers are expected to rapidly analyze passenger admissibility by sufficiently questioning the passenger, examining the passenger’s travel documents, and using appropriate technology to identify those passengers that can be immediately admitted into the United States or need to be referred to a secondary inspection area for a more thorough inspection, if necessary. Specifically, CBP officers in the primary inspection area are expected to first examine travel documents by comparing the document to the passenger and then ask questions to confirm the identity of the traveler. They also may inspect travelers’ luggage. CBP officers who serve in the secondary inspection area conduct closer inspection of travel documents and possessions and can use multiple law enforcement databases to verify the traveler’s identity, background, and purpose for entering the country. CBP officers may also serve in specialized teams to support the inspection functions at the ports of entry. For example, CBP established the Passenger Analysis Unit team, which is responsible for cross-checking passenger data in automated systems to identify high-risk passengers before they enter the country. Appendix I provides more detail on CBP officer staffing policy and OFO specialized teams.\nOFO is to coordinate with OTD to ensure that component training complies with OTD training standards. In the case of CBP officers, OFO and OTD share responsibility for ensuring that newly hired and incumbent CBP officers are sufficiently trained. OTD is responsible for designing, developing, delivering, and evaluating CBP-wide training courses and establishing training standards and policies for the program, while OFO is responsible for identifying the training requirements of CBP officers, providing subject-matter experts to assist in the development and instruction of some training courses, and reviewing training that is developed. OFO established a training branch in 2003 to serve as a liaison between OTD and OFO. OFO also established FDAU in 2005, which performs analyses of fraudulent documents that have been seized to identify global patterns and trends. FDAU is to provide training and training materials to enhance CBP officers’ abilities to detect fraudulent documents and thereby increase the number of interceptions through the sharing of information within CBP and DHS and with other U.S. and foreign government agencies.\nOTD is also responsible for overseeing and managing the CBP training budget, known as the National Training Plan (NTP), and prioritizing training development and delivery via the Training Advisory Board (TAB). Also, OTD developed and manages the Virtual Learning Center (VLC) where CBP officers can take self-paced courses on a variety of topics. Further, OTD operates and manages basic and advanced training schools for CBP officers. Specifically, OTD operates the Field Operations Academy, which trains and prepares newly hired CBP Officers for deployment to U.S. ports of entry. OTD is responsible for managing and overseeing CBP’s official training records system, Training Records and Enrollment Network (TRAEN), and the Academy Course Management System, a training scheduling and tracking system that OFO uses to monitor newly hired CBP officers’ successful completion of basic training. Each year, OTD is to request that the CBP offices provide a list of specific training courses and the approximate number of participants they would like to send to training. OTD is to compile these requests and present them to TAB, which is to review and prioritize the courses to be delivered that year. In addition, TAB approves the total NTP budget amount for each fiscal year. On the basis of the Board’s priorities, OTD is to develop the NTP budget for the fiscal year and is also responsible for monitoring the delivery of the training and managing the NTP budget during the year. The NTP budget funds the delivery of training for all CBP offices—including training for OFO—for a single fiscal year. In fiscal year 2009, CBP training expenditures peaked due, in part, to receipt of supplemental funding to hire and train CBP officers and Border Patrol agents. Since fiscal year 2009, CBP’s NTP budget expenditures have declined due to increasing budget constraints. Figure 2 displays CBP’s actual NTP budget expenditures from fiscal years 2008 through 2010 and its projected end-of-year expenditures for fiscal year 2011. OFO has also funded the development and delivery of its own training courses for CBP officers when they have not received funding from the NTP.\nIA has oversight authority for all aspects of CBP operations, personnel, and facilities. IA is responsible for ensuring compliance with all CBP-wide programs and policies and operates a covert test program to ensure compliance. Following the issuance of the results of our covert tests of border security in May 2008, CBP initiated covert tests to evaluate CBP’s capabilities to detect document fraud. Specifically, CBP focused its tests on evaluating CBP’s detection of impostors, or individuals who attempt to enter the United States fraudulently by using a genuine, unaltered travel document that belongs to another person. CBP also continued covert tests to detect cargo containing illicit radioactive material, among others.potential training needs.\nOFO uses these ongoing test results to identify All newly hired CBP officers are required to complete a basic training program and demonstrate proficiency in CBP officer duties. Incumbent CBP officers are required to take mandatory courses such as information technology security, occupational safety, and human trafficking awareness, among others. CBP provides most mandatory courses on a one-time or annual basis via the VLC. OFO has mandatory course requirements, such as fraudulent document detection, and has also developed specialized courses for incumbent officers assigned to specialized teams. However, CBP does not require that all CBP officers assigned to specialized teams complete the specialized training developed for that team. According to OFO, management must balance the operational needs of the port with the availability of the training. Appendix II lists examples of mandatory and specialized courses for CBP officers for fiscal year 2011.\nAs we previously reported, in 2003, CBP initiated a multiyear cross- training program to equip new and legacy officers with the tools necessary to perform primary immigration and customs inspections, and sufficient knowledge to identify agricultural inspections in need of further examination.courses—covering immigration fundamentals, immigration law, and agriculture fundamentals—regardless of where they were assigned. All legacy immigration officers were required to complete three courses— customs fundamentals, customs law, and agriculture fundamentals— regardless of where they were assigned. Further, based on their assignment, legacy officers were required to complete additional courses specific to their assignment and port environment. In June 2011, CBP officially retired the cross-training courses and replaced them with revised modules. OFO instructed managers, supervisors, and training officers to use these new materials as refresher training for officers who transfer to a CBP required all legacy customs officers complete three new assignment or environment or who return to inspection duties after an extended absence.\nCBP has prepared training development standards for all CBP training programs and courses to ensure that training delivered to CBP employees meets established quality standards of instruction and evaluation. OTD standards are based, in part, on federal laws and regulations, which require agencies to establish training programs that support their mission and meet specified standards, including identifying training needs, prioritizing these needs, and evaluating the results of training programs and plans. Also, CBP develops and revises its basic training for new CBP officers to meet Federal Law Enforcement Training Accreditation (FLETA) standards, which provide law enforcement agencies with an opportunity to voluntarily demonstrate that they meet an established set of professional standards and receive appropriate recognition. Finally, Standards for Internal Control in the Federal Government provide criteria for the management and oversight of agency operations, including training programs.", "In 2009, CBP revised its training program for new officers in accordance with its training development standards. These standards are based on legal standards that guide the development of training in the federal government and standards that guide federal law enforcement training. OTD standards also contain specific guidance related to the following phases: (1) planning, (2) analysis, (3) design, (4) development, (5) evaluation, and (6) delivery of the course curriculum, which CBP adhered to in revising its training program. Table 1 provides an overview of the OTD training development phases and related standards and our assessment of how CBP efforts met these standards in revising its training for newly hired officers.\nOTD standards state that the training curriculum should be current, valid, and updated once every 3 to 5 years. CBP began the process of revising its training for new officers in 2009 after the initial launch of the CBP Officer curriculum in 2004, consistent with OTD standards for updating the training curriculum every 5 years. OTD, as well as other federal law enforcement training standards, state that programs should first identify the critical tasks that the individual is expected to perform in order to determine what training is needed. Consistent with these standards, OTD convened a team of subject matter experts (SMEs) to identify and rank the tasks that new CBP officers are expected to perform. The team identified a total of 138 critical tasks that newly hired CBP officers are expected to perform within the first 2 years of employment. These included conducting thorough and accurate research to support inspections and investigations, and preparing thorough and accurate reports covering significant incidents and intelligence. Once the tasks were identified, the panel of SMEs compared the identified tasks to the tasks addressed in the existing curriculum to identify any skill gaps. OTD then developed specific courses with appropriate lessons and topics to ensure that these tasks were addressed in the new curriculum. For example, new modules on evidence preservation and secondary report writing were incorporated in the revised curriculum to address identified officer skill gaps in handling evidence and writing. Consistent with the OTD standard that requires a test run of a complete and approved course in a controlled environment by selected individuals representing the course’s learning audience, the new CBP officer curriculum was piloted to test its content and delivery prior to its launch in February 2011. As a result, the new officer training program course was expanded from about 15 to 18 weeks and approximately 30 to 35 percent of the new officer curriculum is new or updated and expanded. Thus, the new officer training program complies with OTD’s standards that state the training curriculum should be current and valid.\nOTD internal training standards also state that the training should be aligned with the current agency mission and current threats. According to OFO and OTD officials, the previous CBP officer curriculum focused primarily on preparing the officer to serve in the primary inspection function at a port. The SME panel recommended that the new officer curriculum be revised to produce a law enforcement officer capable of supporting CBP’s expanding antiterror mission. As a result, the new curriculum is designed to produce a professional law enforcement officer capable of protecting the homeland from terrorist, criminal, biological, and agricultural threats. Specifically, the new curriculum states that the CBP officer is expected, among other tasks, to draw appropriate conclusions and take appropriate action to identify behavioral indicators displayed by criminals and terrorists, effectively interview and analyze travelers to identify potential threats, expertly identify altered and counterfeit documents and impostors, and use technology in support of the inspection process.officer is expected to be able to perform the primary inspection function, as well as some aspects of the secondary inspection function.\nUpon completion of training, the newly hired CBP OTD standards also state that is important to identify the appropriate delivery method and location. In accordance with these standards, CBP determined that the training for new CBP officers would be divided into three components as shown in figure 3.\nPre-academy—According to OFO officials, the pre-academy component helps educate incoming CBP officers of job responsibilities before the agency commits the funds to send them to the Field Operations Academy in Glynco, Georgia, for basic training. OFO officials also stated that the pre-academy curriculum is structured because it recommends that a fixed curriculum be completed in a specific amount of time. Also, it contains a mix of classroom instruction and web-based courses to familiarize incoming CBP officers with the specific requirements of the law enforcement and inspections job, thereby helping to ensure that the pre- academy training is consistent throughout the nation.\nBasic academy—The SME panel recommended that the curriculum include intensified training to enhance officer vigilance and awareness though interview training, behavior analysis training to discern passenger behavior, report writing training, and training to detect fraudulent documents, among others. In addition, CBP increased the amount of time devoted to practical exercises in response to comments made by newly hired officers during pilot testing. For example, exercises in the passenger processing module increased from 11 hours in the old curriculum to 33 hours in the revised curriculum. The revised curriculum was designed to enhance an officer’s ability to effectively interview and analyze travelers to identify potential threats; expertly identify altered and counterfeit documents and impostors; identify behavioral indicators displayed by terrorists and criminals; use technology (including computers and other resources) in support of the inspection process.\nPostacademy—In 2007, we reported that although CBP had issued guidance for on-the-job training of new CBP officers, CBP had difficulty in providing the training in accordance with the guidance. We recommended that CBP incorporate the following into its on-the-job training program: (1) specific tasks that CBP officers must experience during on-the-job training and (2) requirements for measuring officer proficiency in performing those tasks. In response to our recommendations, CBP revised its postacademy training program by identifying specific tasks and developing a plan for measuring officer proficiency in those tasks. The revised postacademy training program combines classroom and on-the-job training and incorporates ongoing testing and evaluation of officer proficiency. The evaluations are tied to the critical tasks and competencies that a new officer must perform. In accordance with the new postacademy training program, prior to being able to perform primary inspections independently, a training officer must certify that the officer is proficient to perform the task. The revised postacademy training began in June 2011. Consistent with OTD training standards that call for measuring the effectiveness of training, CBP plans to ask new officers to evaluate their basic academy and postacademy training. In addition, CBP plans to survey both new officers and their supervisors several months after a new officer completes on-the-job training to determine the effectiveness of the training. Consistent with OTD standards that its training meets federal law enforcement standards, OTD officials stated that the curriculum received its federal law enforcement training accreditation in November 2011.", "CBP has taken steps to identify the training needs of its incumbent officers, by for example, conducting covert tests to assess vulnerabilities and systemic weaknesses at ports of entry and identifying possible officer training needs, but could do more to analyze the tests’ results. In response to its covert tests, CBP has delivered two required training courses for incumbent officers, but it has not evaluated the effectiveness of these courses. Also, OFO officials stated that supervisors identify CBP officer training needs. However, CBP faces challenges in establishing policies and procedures to guide its component offices’ efforts to implement and oversee training, and ensuring that it has reliable training data. Moreover, CBP has not conducted an analysis of possible skill gaps that may exist between identified critical skills all incumbent officers should possess and incumbent officers’ current skills.", "To identify vulnerabilities and weaknesses at U.S. ports of entry, CBP IA conducts covert tests in which undercover inspectors attempt to enter the United States with genuine documents used fraudulently. The tests are designed to provide a snapshot of the level of a port’s performance related to the testing objectives on a particular day. We examined CBP’s results of covert tests conducted over more than 2 years and found significant weaknesses in the CBP inspection process at the ports of entry that were tested.all ports, OFO officials stated that the tests are useful to identify possible Although the results are not fully generalizable to weaknesses and vulnerabilities. Following each covert test, IA prepared a written post-test summary of the tests and outcomes, debriefed with senior port management and headquarters officials, and provided data to OFO on the test outcomes. In some of the summaries, IA inspectors identified what they observed to be the key factors that contributed to successful outcomes, as well as potential vulnerabilities.\nIn response to initial test results, OFO developed and mandated an updated annual fraudulent document course in August 2009. Also, in March 2010, OFO developed and mandated a “Back to Basics” course that emphasized the basic inspection duties that all CBP officers are required to perform during a primary inspection. In July 2011, OFO began implementing a follow-on course which includes more specific instruction. CBP administers postcourse evaluations to CBP officer trainees to obtain their feedback on the “Back to Basics” course but does not have plans to fully evaluate the effectiveness of this course by checking the extent to which the officers have retained the information over time. OTD officials stated that they conduct these types of evaluations for the newly hired CBP officer basic training but do not do so for this one for incumbent officers, due to time and cost constraints. However, we have previously reported that agencies should assess the extent to which training and development efforts contribute to improved performance and results to help ensure that the agency is not devoting resources to training that may An evaluation of the impact of these training courses on be ineffective.CBP officer performance could help CBP know the extent to which such training is a sufficient response to the covert test results or whether adjustments to the training or other management actions are needed.\nCBP has not conducted an analysis of all the possible causes or systemic issues that may be contributing to the test results. The protocols for covert tests state that IA will provide a comprehensive report at the conclusion of all cover tests that will summarize test results and identify systemic issues. As of August 2011, neither IA nor OFO have conducted such an analysis due to staffing and time constraints, according to IA and OFO officials. However, this type of analysis would help CBP identify any patterns or trends that indicate the extent to which CBP officer training, performance, or other systemic issues may contribute to the issues identified in the covert tests. Without a comprehensive assessment, it is difficult for CBP to identify the systemic issues underlying the test results.", "", "In December 2008, CBP issued a directive assigning general roles and responsibilities for training to OTD and other CBP offices, such as identifying OTD as the centralized leader for all CBP training. However, CBP has not established policies or procedures to guide component offices’ efforts to implement and oversee training. Figure 4 illustrates the key offices and positions that OFO identified as responsible for incumbent CBP officer training.\nOFO does not have a policy that specifies the roles and responsibilities of each of these offices and positions for training implementation and oversight. Federal regulations require that agencies establish policies governing employee training, including a statement of the alignment of employee training and development with agency strategic plans, the assignment of responsibility to ensure the training goals are achieved, and the delegation of training approval authority to the lowest appropriate level. In addition, internal control standards state, in a good control environment, areas of authority and responsibility are clearly defined and appropriate lines of reporting are established. Internal control standards also require that responsibilities be communicated within an organization. According to OFO, the OFO Programs and Policy branch is responsible for overseeing and coordinating the development of policy to govern incumbent officer training, including policy that assigns roles and responsibilities. According to the OFO officials, a policy would be useful because it helps clearly define the responsibilities of all offices involved in incumbent CBP officer training. Specifically, a policy outlining the roles and responsibilities of offices and positions for training would help clarify which offices and positions are responsible for ensuring incumbent officer training needs are identified and addressed. However, the acting branch chief of the OFO Programs and Policy branch stated staffing constraints have limited the branch’s ability to initiate the process of developing a policy that clearly assigns responsibility for all offices involved in CBP officer training. According to OFO officials, supervisors are responsible for identifying officer training needs and requesting training to meet these needs. For example, in June 2011, CBP instructed supervisors to identify training needs and use the post academy modules to address those needs.\nHowever, OFO could not provide a policy document outlining how supervisors would identify training needs and coordinate training. Also, according to the OFO officials, port management and field office directors are responsible for ensuring that CBP officers complete mandatory and other training related to their job duties. However, OFO officials in headquarters and at the ports stated that no policy exists that assigns these responsibilities to port management or field offices. In addition, senior CBP officials stated that Field Training Officers help ensure that CBP officers are receiving the training they need to perform their assigned duties, and that internal measures are in place to assess training needs and accomplishments nationwide. However, officials from the OFO Training branch stated that Field Training Officers are assigned to help deliver training to the ports but are not required to oversee the completion of required training by CBP officers at their respective ports. Further, OFO could not provide documentation confirming the roles and responsibilities of the Field Training Officer. A policy outlining the roles and responsibilities of offices and positions for training could help eliminate such confusion and clarify which offices and positions are responsible for identifying and addressing training needs and for holding these offices and individuals accountable for their responsibilities.\nCBP currently lacks reliable training completion records to ensure CBP officers received required training or other training relevant to their assigned duties. According to OTD and OFO officials, the training completion records maintained in TRAEN, CBP’s official record of training, are incomplete or contain inaccurate information, such as the dates of training completion. As a result, officials from OTD’s Office of Operations, which plans and manages the annual National Training Plan (NTP) budget, stated they developed their own records of training completions that consist of TRAEN records supplemented with data they gather from e-mail archives. Also, officials from two of the three ports we visited stated they rely on locally developed databases or data sources other than TRAEN to track CBP officers’ training records.\nWe found, based on our analysis of TRAEN records, more than 4,000 onboard legacy customs officers have not completed the immigration fundamentals, immigration law, and agricultural fundamentals courses although they were required to complete them during the cross-training program. According to OFO officials, the training completion records maintained in TRAEN are incomplete, and it is unlikely that legacy officers did not complete required cross-training. Nevertheless, without reliable training records, CBP cannot provide reasonable assurance that all legacy customs officers completed required cross-training courses. OTD stated that CBP offices are responsible for recording their employees’ training records in TRAEN. However, CBP does not have a policy that assigns the responsibility for entering records to its offices or that assigns oversight responsibility to port management to ensure that their staff enter data into TRAEN completely and accurately. CBP is currently in the process of transferring the TRAEN system to the VLC and training CBP officials on how to properly enter training records in the new system. However, OFO and OTD officials stated that even trained employees sometimes do not enter training records completely or in a timely manner. Internal control standards state control activities—such as policies, procedures and management supervision—help to ensure that all transactions are completely and accurately recorded. Further, having reliable data could enable agency managers to compare actual performance to planned or expected results throughout the organization and analyze differences. Moreover, having reliable data to measure the degree to which CBP officers have completed required or recommended training for their assigned positions would put CBP in a better position to gauge the results of its cross-training program and other CBP officer training and measure its progress towards achieving CBP officer training goals.", "CBP has taken steps to identify training needs among incumbent CBP officers but has not conducted a comprehensive training needs assessment to identify and address potential gaps in incumbent officers’ current skills and competencies. Under executive order and federal regulations, agencies are to review, not less than annually, programs to identify training needs, establish priorities for training, and allocate resources in accordance with those priorities.development standards state that a training needs assessment is needed to identify knowledge or skill gaps and suggest material for new or follow- on training. Specifically, the analysis stage of training development includes conducting a training needs assessment to identify skill or knowledge gaps, conducting a job task analysis to identify critical competencies required for the target audience, and analyzing the target audience to develop appropriate training, among other steps.\nCBP has taken some steps to identify and analyze incumbent officer training needs. In 2008, CBP initiated the first job task analysis for the CBP officer position since 2003 by identifying nearly 300 job tasks and about 100 competencies that all incumbent CBP officers are expected to perform regardless of their currently assigned duties or port environment. In 2011, CBP also completed a curriculum gap analysis, which compared the newly revised basic academy curriculum with the previous basic academy training to identify new skills or material that incumbent CBP officers may not have learned in their basic academy training. For example, the previous curriculum trained CBP officers to perform 75 critical tasks while the newly revised curriculum trains newly hired officers to perform 138 critical tasks. According to OTD officials, the curriculum gap analysis identified a shift in the training philosophy and delivery methods and some changes in course content. For example, the revised training for newly hired officers aims to instill a law enforcement mindset by adding new courses in weapons training, evidence preservation, and courtroom testimony, among others, and by expanding courses that are designed to increase situational awareness and anti-terrorism vigilance among the CBP officers. It also increases physical conditioning and the number of hours of practical exercises related to conducting primary inspections and examining documents as well as course content to reflect new laws related to immigration processing and operating new equipment. The revised curriculum also adds more training in skills that CBP officers need to perform in secondary processing, including using appropriate computer systems and following procedures to verify passenger admittance.\nHowever, CBP has not conducted a training needs assessment or analyzed the target audience to determine what training is needed. For example, it has not evaluated potential gaps between the skills and competencies of current incumbent officers to identify appropriate training needs and possible gaps between (1) the nearly 300 job tasks and 100 competencies that all incumbent officers are expected to perform and (2) any additional skills and knowledge that are currently taught in the revised basic academy curriculum. In addition, CBP has not reviewed incumbent CBP officers’ previous training and experience, including cross-training or any on-the-job training, to identify what training they may have completed. OTD training standards state that it is important to review the previous experience and training to better identify the training needs for particular audiences. In 2007, we recommended that CBP develop data on cross-training programs to determine whether officers received required training so the agency may measure progress toward achieving its training goals. As of September 2011, CBP has not developed these data or measured the extent to which officers completed required cross-training. In June 2011, CBP retired the cross-training courses and replaced the courses with new postacademy modules that contain updated content. However, CBP could review the previous training records of its legacy and other incumbent officers to help identify what training they have completed and to identify which postacademy modules or other training they may need to take to perform their assigned duties.\nConducting a comprehensive training needs assessment could help CBP analyze and identify potential skill gaps and training needs for incumbent officers—including legacy officers—and better position it to develop training to meet these needs, thus ensuring its officers are equipped to meet the operational demands at the border. OTD criteria state that CBP training managers may use a variety of techniques during a training needs assessment to gather and analyze information about the necessary training content for proposed training, including: interviews with SMEs; focus groups (moderated group interviews) involving SMEs and representatives of the learning audience; observation of and interviews with those performing a particular job or task in the field; review of course critiques, test results, and performance evaluations; instructional review, course audit, or content review of existing training; and review of field incident reports, critical factors identified, and lessons learned.\nOFO officials stated that a training needs assessment would be useful, but they have been unable to conduct one due to budget constraints and may not be able to undertake a comprehensive training needs assessment until fiscal year 2013, at the earliest. However, CBP could begin the initial steps of planning for a training needs assessment for incumbent officers in fiscal year 2012. Office of Personnel Management (OPM) guidance states that a training needs assessment should include a plan that sets goals or objectives for the training needs assessment; evaluates the agency readiness and identifies key roles; evaluates prior or other relevant needs assessments; prepares a project plan; and clarifies success measures and program milestones. This plan could be similar to the preparation of a project plan. Specifically, elements of a project plan include (1) establishing clear and achievable training goals; (2) balancing the competing demands for quality, scope, time, and cost; (3) adapting the specifications, plans, and approach to the different concerns and expectations of the various stakeholders involved in the project; and (4) developing milestone dates to identify points throughout the project to reassess efforts under way to determine whether project changes are necessary. OFO officials stated that such a plan could be helpful in initiating the process for conducting a training needs assessment. Project management standards also call for assigning responsibility and accountability for ensuring the results of program activities are carried out. Developing a project plan could also help CBP ensure that it is well-positioned to conduct a comprehensive training needs assessment in 2013 for its incumbent officers—while allowing for monitoring and oversight of the staff efforts through the completion of interim milestones to ensure progress in being made as intended.", "CBP has designed its training program for newly-hired CBP officers to comply with its standards. Such compliance can contribute to ensuring that newly-hired officers are prepared to accomplish CBP’s mission of securing the border and simultaneously facilitating the cross-border movement of millions of legitimate travelers and billions of dollars in international trade. However, CBP faces challenges in ensuring that the training needs of its nearly 20,000 incumbent CBP officers are properly identified and addressed. The results of its covert tests are not generalizable to the entire CBP officer population. However, they reveal a consistent pattern of weaknesses among the officers tested in their ability to perform basic tasks and these weaknesses have not been corrected. CBP has no plans for assessing the effectiveness of its “Back to Basics” course and subsequent follow-on training developed in response to the covert tests. Assessing the effectiveness in improving incumbent officer performance could help CBP management know if the training is a sufficient response to the weaknesses identified by the covert tests or if additional adjustments are needed.\nIn addition, CBP has not established policies and procedures to guide OFO’s implementation and oversight of incumbent officer training, including entry of complete and accurate data into TRAEN. Having policies and procedures to ensure that managers are fulfilling their oversight responsibilities, including maintaining accurate and complete training records, could help improve CBP’s knowledge of whether incumbent CBP officers have been properly trained.\nGiven CBP’s commitment to reinforcing the law enforcement mindset among all CBP officers, evaluating the training needs of the current CBP officers so that they can be addressed in a timely and cost-efficient manner is important. In addition, given budget constraints on training resources throughout the government, planning accordingly to ensure that skill needs of the incumbent CBP officers are assessed could help ensure that a road map is in place for conducting such an assessment thereby ensuring that CBP’s officer workforce is equipped to meet the operational demands at the border.", "To improve CBP training efforts, we recommend that the CBP Commissioner take the following four actions: (1) Conduct an evaluation of the effectiveness of the “Back to Basics” and subsequent follow-on training, (2) Conduct a comprehensive assessment of its covert test results to identify the causes of and systemic issues underlying the results, (3) Establish a policy that specifies roles and responsibilities for CBP officer training implementation and related oversight, including oversight responsibilities to ensure that training records are entered in TRAEN completely and accurately and (4) Develop a plan for conducting a training needs assessment to address any skill gaps for incumbent CBP officers and then implement that plan.", "We provided a draft of the sensitive version of this report to DHS for comment. DHS provided written comments which are reprinted in appendix III. In commenting on the sensitive version of this report, DHS, including CBP, agreed with the recommendations. Specifically, DHS stated that CBP is taking action or has taken action to address each recommendation.\nDHS agreed with the first recommendation that CBP conduct an evaluation of the effectiveness of the training course and subsequent follow-on training, and stated that the Office of Field Operations and the Office of Training and Development will work in partnership to determine if the Back to Basics and follow-on training had an effect on overall CBP officer performance by conducting a study and obtaining the results of any further covert tests by March 30, 2012. Regarding the second recommendation that CBP conduct a comprehensive assessment of its covert test results, DHS agreed and stated that the Office of Internal Affairs plans to conduct a comprehensive assessment of its covert test results for fiscal year 2011 by December 30, 2011. DHS agreed with the third recommendation that CBP establish a policy that specifies roles and responsibilities for CBP officer training implementation and related oversight, and stated that a policy will be developed by March 30, 2012, to clarify the training roles and responsibilities at all national and local levels to include the responsibility for maintaining accurate training records. Regarding the fourth recommendation that CBP develop a plan for conducting a training needs assessment to address any skill gaps for incumbent CBP officers and then implement that plan, DHS stated that OFO is coordinating with OTD to evaluate current training to identify any existing training gaps, and plan to address any identified needs through formal training by December 31, 2012. If effectively implemented, these actions should address the intent of the recommendations.\nDHS raised an issue regarding the report’s characterization of the DHS covert test results. Specifically, DHS stated that the covert tests were deliberately designed to test only a specific aspect of the overall primary inspection process within the wide range of inspectional duties that CBP officers perform and are not a valid measure of overall officers’ performance and capabilities or reliability of the entire admissibility process. The report noted that the test results are not generalizable to all ports of entry. However, OFO officials emphasized that the tests are informative in that they can help management identify possible weaknesses and vulnerabilities in the inspection process and in the CBP officer ability to perform basic tasks. Specifically, the tests are designed to provide a snapshot of the level of a port’s performance related to the testing objectives. Further, according to the protocols, the tests are designed to test and challenge CBP officers on their abilities, adherence to policies and procedures, and use of technologies to detect and prevent individuals attempting to enter the United States through the use of document fraud. OFO also developed and mandated an annual fraudulent document course based on the initial response to the covert test results. Nevertheless, we incorporated language throughout the report to clarify the objectives and the scope of the covert tests. We believe that this report presents a valid characterization of the covert test results and their potential uses.\nDHS also provided technical comments, which we incorporated into the report as appropriate.\nWe will send copies of this report to the Department of Homeland Security, the Commissioner of U.S. Customs and Border Protection, the appropriate congressional committees and other interested parties. In addition, the report will be available at no charge at GAO’s website https://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-8816 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Other GAO contacts and staff acknowledgments are listed in appendix IV.", "In February 2009, Customs and Border Protection (CBP) management and the union that represents CBP officers reached an agreement to allow CBP officers the opportunity to bid and rotate to a new work unit, specialized team, or port location every 1 or 2 years. This bid-and- rotation system for CBP officers is based on seniority and is designed to increase officer morale and retain CBP officers. The system also provides port management the ability to assign CBP officers to units based on immediate, changing workload demands.\nThe following list includes specialized teams that operate at all U.S. air, land, and sea ports of entry. Ports may have additional CBP officer specialized teams depending on their size, environment, and mission demands.", "These are the passenger work units charged with the interdiction of high- risk passengers attempting to facilitate surreptitious entry of contraband or who may be associated with terrorist activities.", "These are the work units charged with the use of automated systems to target high-risk passengers, conduct threat analysis, or using after-action reports to identify threats.", "This work unit is charged with processing violations to the Immigration and Nationality Act (INA) which may result in adverse actions, such as determination of inadmissibility to the United States.", "This work unit is charged with targeting and examining outbound commercial cargo for violations of law, rules or regulations.", "This work unit is charged with the use of automated systems to target high-risk commercial shipments, conduct analysis, or use after-action reports to identify threats.", "This work unit is charged with the inbound and/or outbound interdiction of narcotics and other contraband, including currency, arms and ammunition, as well as terrorist related materials in the cargo and/or passenger environments.", "This work unit is charged with providing nationally mandated and locally designed training including, but not limited to pre-academy, postacademy, virtual learning center, and unification training.", "This work unit is charged with the scheduling of all regular day and overtime assignments, as well as the administration of the Customs Officers Pay Reform Act, including, but not limited to, overtime cap compliance and annuity integrity.", "This work unit is charged with developing and conducting local firearms programs, including but not limited to, conducting required firearms qualifications and use of force training, maintaining quantities of firearms- related supplies and equipment, and conducting annual firearms inventory.", "The following mandatory courses are required either on a one-time basis or annually for all nonsupervisory Customs and Border Protection (CBP) officers. The specialized courses were developed to enhance incumbent nonsupervisory CBP officer skills in specific areas and are not mandatory.", "", "", "", "In addition to the contact named above, Michael Dino, Assistant Director, Kathryn Bernet, Assistant Director, and Nanette J. Barton, Analyst-in- Charge, managed this assignment. Jennifer Bryant and Edith Sohna made significant contributions to the work. Stanley Kostyla assisted with design and methodology. Frances Cook provided legal support. Katherine Davis provided assistance in report preparation." ], "depth": [ 1, 2, 1, 1, 2, 2, 3, 2, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "", "h0_full", "h1_full", "h1_full", "h1_title", "h1_full", "h1_full", "h2_full h1_full", "", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }	{ "question": [ "Why did the CBP revise its training program?", "How did the CBD fulfill these standards?", "How was the curriculum designed in response to their team of experts?", "How did the curriculum cover identification of potential issues?", "How could the CBD broadly improve officer training?", "What weaknesses did the GAO initially find in CBP processes?", "What did CBP develop in response to the GAO's critique?", "How has the CBP failed to fully improve their performance?", "How can the CBP improve their performance through analysis of their performance issues?", "How does the CBP fail to assign responsibilities?", "How could assigning responsibilities improve the CBP?", "How does the CBP fail to retain records?", "What did the GAO find from the CBD's current training records?", "What did the CBP remark about the missing training records indicate?", "How does this lack of records implicate the CBP?", "What has the CBP failed to do regarding officer skills?", "How would a needs assessment assist the CBP?", "Why has the border workforce been an important topic?", "What is the U.S. Customs and Border Protection (CBP)?", "What do CBP officers do?", "What about CBP officers is the GAO reviewing?", "How is the GAO gaining data to review?", "How does this report differ from the original?" ], "summary": [ "CBP revised its training program for newly hired CBP officers in accordance with its own training development standards.", "Consistent with these standards, CBP convened a team of subject-matter experts to identify and rank the tasks that new CBP officers are expected to perform.", "As a result, the new curriculum was designed to produce a professional law enforcement officer capable of protecting the homeland from terrorist, criminal, biological and agricultural threats.", "In addition, the curriculum stated that the CBP officer is to draw conclusions and take appropriate action to identify behavioral indicators displayed by criminals, effectively interview travelers to identify potential threats, identify fraudulent documents, and use technology in support of the inspection process.", "CBP has taken some steps to identify and address the training needs of its incumbent CBP officers, but could do more to ensure that these officers are fully trained.", "GAO examined CBP’s results of covert tests conducted over more than 2 years and found significant weaknesses in the CBP inspection process at the ports of entry that were tested.", "In response to these tests, CBP developed a “Back to Basics” course in March 2010 for incumbent officers but has no plans to evaluate the effectiveness of the training.", "Moreover, CBP has not conducted an analysis of all the possible causes or systemic issues that may be contributing to the test results.", "Further evaluation of the training and causes underlying covert test results could help inform CBP about whether the training is sufficient to address the weaknesses identified by the covert tests or if adjustments are needed.", "In addition, CBP offices are responsible for recording their employees’ training records; however, CBP does not have a policy that assigns responsibility to port management to ensure that their staff enter data into its training records system completely and accurately.", "A policy outlining the roles and responsibilities of offices and positions for training could help clarify which offices and positions are responsible for identifying and addressing training needs and for holding these offices accountable for their responsibilities.", "Moreover, CBP currently does not have reliable training completion records to ensure CBP officers received required training or other training relevant to their assigned duties.", "Based on GAO’s analysis of training records, more than 4,000 customs officers have not completed the immigration fundamentals, immigration law, and agricultural fundamentals courses, although they were required to complete them during a cross-training program.", "According to CBP, the training completion records are incomplete, and it is unlikely that the officers did not complete the required cross-training.", "Nevertheless, without reliable training records; CBP cannot provide reasonable assurance that all customs officers completed the required cross-training.", "Further, CBP has not conducted a needs assessment that would identify any gaps between identified critical skills and incumbent officers’ current skills and competencies.", "A needs assessment could enhance CBP’s ability to ensure its workforce is training to meet its mission.", "Recent incidents involving potential terrorists attempting to enter the country highlight the need for a vigilant and well-trained workforce at the border.", "U.S. Customs and Border Protection (CBP), within the Department of Homeland Security, is the lead federal agency in charge of inspecting travelers and goods for admission into the United States.", "About 20,000 CBP officers play a central role in ensuring that CBP accomplishes its mission of securing the border while also facilitating the movement of millions of legitimate travelers and billions of dollars in international trade.", "GAO was asked to assess the extent to which CBP has (1) revised its training program for newly hired CBP officers in accordance with training standards and (2) identified and addressed the training needs of incumbent CBP officers.", "GAO analyzed data and documentation related to the agency’s training efforts, such as its covert test program and its training records. GAO also interviewed CBP officials and CBP officers.", "This is a public version of a sensitive report that GAO issued in October 2011. Information CBP deemed sensitive has been redacted." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 1, 1, 1, -1, 5, -1, 7, 8, 8, -1, 11, -1, -1, 1, -1, 3, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0 ] }
GAO_GAO-15-604T	{ "title": [ "Background", "FECA and Retirement under FERS", "Partial and Total-disability", "FECA Operations", "Proposed FECA Revisions Would Reduce Median Wage Replacement Rates and Increase the Difference between Total- Disability Beneficiaries With and Without a Dependent", "Proposed Single Rates Would Reduce Wage Replacement Rates", "Years of Service Play a Key Role in the Comparison between FECA and FERS Benefits", "Current Median FECA Benefit Packages Exceed 2010 FERS Benefit Packages", "Increased Years of Service Were Associated with Increased FERS Benefits Relative to FECA Benefits for 2010 Annuitants", "Proposals Would Roughly Equalize FECA and FERS Benefit Packages for 2010 Annuitants", "Median Reduced FECA Benefit Packages Would Likely Be Less Than Median FERS Benefit Packages for Federal Annuitants with 30-Year Careers", "Effects of Proposed FECA Revisions on Partial-disability Beneficiaries Depend on Post-Injury Earning Capacity and Employment Over Time", "Total Income Comparisons for Partial-disability Beneficiaries Under Single-Rate Proposals Depend on the Extent to Which Each Is Reemployed", "Effects of Proposals to Reduce FECA at Retirement Age Depend on Whether Partial- disability Beneficiaries Remain on FECA or Elect OPM Retirement Benefits", "GAO Contacts and Staff Acknowledgments" ], "paragraphs": [ "FECA provides cash and other benefits to eligible federal employees who suffer temporary or permanent disabilities resulting from work-related injuries or diseases. DOL’s Division of Federal Employees’ Compensation in the Office of Workers’ Compensation Programs (OWCP) administers the FECA program and charges agencies for whom injured employees worked for benefits provided. These agencies subsequently reimburse DOL’s Employees’ Compensation Fund from their next annual appropriation. FECA benefits are adjusted annually for cost-of-living increaseshas large FECA program costs. At the time of their injuries, 43 percent of and are neither subject to age restrictions nor taxed. USPS FECA beneficiaries in 2010 were employed by USPS, as shown in table 1.\nOne way to measure the adequacy of FECA benefits is to consider wage replacement rates, which are the proportion of pre-injury wages that are replaced by FECA. Wage replacement rates that do not account for missed career growth capture the degree to which a beneficiary is able to maintain his or her pre-injury standard of living whereas wage replacement rates that account for missed career growth capture the degree to which a beneficiary is able to maintain his or her foregone standard of living (i.e., standard of living absent an injury). Data limitations can preclude calculating wage replacement rates that account for missed career growth; however, doing so provides a more complete story of the comparison between an injured worker and his or her counter-factual of having never been injured. Wage replacement rates can be targeted by policymakers; however, there is no consensus on what wage replacement rate policies should target.", "FECA beneficiaries receive different benefits past retirement age than workers who retire under a federal retirement system. Specifically, under FERS, federal retirees have a benefit package comprised of three components: the FERS annuity, which is based on years of service and high-3 average pay; the TSP, which is similar to a 401(k); and Social Security benefits. FECA benefits do not change at retirement age and beneficiaries cannot receive a FERS annuity and FECA benefits simultaneously. In addition, FECA beneficiaries cannot contribute to their TSP accounts post-injury, but they can receive benefits from contributions made to their TSP accounts prior to being injured. In addition, Social Security benefits attributable to federal service are offset by FECA.", "If an individual has a disability and no current capacity to work, OWCP determines that he or she is a total-disability beneficiary and calculates long-term FECA benefits as a proportion of the beneficiary’s entire income at the time of injury. In 2010, 31,880 FECA beneficiaries received long-term total-disability cash benefits.\nAlternatively, if an individual recovers sufficiently to return to work in some capacity, OWCP determines that he or she is a partial-disability beneficiary and reduces his or her FECA benefits from the total-disability amount. For such partial-disability beneficiaries, OWCP calculates long- term benefits based on any loss of wage earning capacity (LWEC), as compared to their pre-injury wages. A beneficiary’s LWEC may be based on the difference between their pre-injury wages and their actual post-injury earnings if the beneficiary has found employment that OWCP determines to be commensurate with their rehabilitation. Alternatively, OWCP may construct a beneficiary’s LWEC based on the difference between pre-injury wages and OWCP’s estimate of what the FECA beneficiary could earn in an appropriate job placement (constructed earnings). In 2010, 10,594 FECA beneficiaries received long-term partial- disability cash benefits.", "In addition to our work on FECA benefit levels, we have also conducted work on program integrity and management. We have identified several weaknesses in these areas. Most recently, in April 2013, we found examples of improper payments and indicators of potential fraud in the FECA program, which could be attributed, in part, to oversight and data- access issues. For example, we found cases where, in comparison to state wage data reports, individuals underreported their employment wages to DOL. Underreporting earnings could result in overpayments of FECA benefits. DOL did not have access to wage data to corroborate the self-reported incomes. Because of this limitation, we included a matter for congressional consideration, stating that Congress should consider granting DOL additional authority to access wage data to help verify claimants’ reported income and help ensure the proper payment of benefits. Congress has not yet passed legislation to give DOL additional authority to access wage data. We also found that, although some FECA claimants may be eligible to receive both FECA and unemployment insurance benefits, DOL did not have a process to share the necessary data to help the states identify overlapping payments. We recommended that the Secretary of Labor assess the feasibility of developing a cost- effective mechanism to share FECA compensation information with states. DOL agreed with the recommendation and has taken steps to develop a cost-effective mechanism to share FECA compensation information with states, but has not completed its efforts. Specifically, in August 2014, a DOL official stated that the agency’s Office of Workers’ Compensation Programs and Office of Unemployment Insurance are working with DOL’s Office of the Solicitor to develop agreements that would allow DOL to provide information on FECA compensation to states for use in determining unemployment benefits. When completed, these actions should help states to identify whether claimants are inappropriately receiving overlapping UI and FECA payments.", "Our simulations of the effects of compensating non-USPS and USPS total-disability beneficiaries at the single rate of either 66-2/3 or 70 percent of wages at injury, regardless of the presence of dependents, reduced the median wage replacement rates. Median wage replacement rates overall, and within the subgroups we examined, were generally lower under the 66-2/3 percent compensation proposal.", "As we reported in 2012, compared to the current FECA program, both proposals reduced 2010 median wage replacement rates for total- disability non-USPS and USPS beneficiaries, as shown in figure 1. The decreases in the overall median wage replacement rates were due to the greater proportion of beneficiaries who had a dependent—73 percent of non-USPS beneficiaries and 71 percent of USPS beneficiaries. Beneficiaries with a dependent received lower compensation under both proposals whereas beneficiaries without a dependent saw their compensation increase or stay the same.\nAs shown in the middle group of bars in figure 1, the results of our simulation indicate that median wage replacement rates for USPS beneficiaries were generally higher than those for non-USPS beneficiaries. In both cases, the wage replacement rates account for missed income growth, as they are simulated based on 2010 take-home pay. All else equal, FECA beneficiaries who would have experienced more income growth—from the time of injury through 2010—had lower wage replacement rates than did those beneficiaries who would have experienced less income growth absent their injury. In general, USPS beneficiaries missed less income growth due to their injury than did non- USPS beneficiaries. Consequentially, USPS beneficiaries had higher wage replacement rates than non-USPS beneficiaries. For example, 4 out of 5 USPS beneficiaries in our analysis would have had less than 10 percent income growth had they never been injured. In contrast, 2 out of 5 non-USPS beneficiaries would have had less than 10 percent income growth, absent an injury.\nUnder our simulations, both proposals increased the difference in wage replacement rates between beneficiaries with and without a dependent, increasing the magnitude and reversing the direction of the difference in median wage replacement rates, as shown in figure 2. Had we been able to account for the actual number of dependents, beneficiaries with dependents would have had lower wage replacement rates and thus the difference between median wage replacement rates would have been smaller under FECA and larger under both proposals.\nFor other beneficiary subgroups we examined for our 2012 reports, the proposals did not reduce wage replacement rates disproportionately to the reduction in the overall median. However, we found that under the current FECA program and both proposals, wage replacement rates for some beneficiaries, such as those who, due to injury earlier in their careers, missed out on substantial income growth, were substantially lower than the overall median. FECA was not designed to account for missed income growth and thus total-disability beneficiaries who missed substantial income growth had lower wage replacement rates— outweighing the cumulative effect of FECA’s annual cost of living adjustments—as shown in figure 3.", "", "According to the retirement simulations from our 2012 reports comparing current FECA benefits to FERS benefits, we found that the overall median FECA benefit package (FECA benefits and TSP annuity) for both USPS and non-USPS FECA beneficiaries was greater than the current median FERS retirement benefit package (FERS annuity, TSP annuity, and Social Security). Specifically, the median FECA benefit package for non- USPS beneficiaries was 32 percent greater than the current median FERS—and 37 percent greater for USPS FECA beneficiaries. This implies that in retirement, FECA beneficiaries generally had greater income from FECA and their TSP in comparison to the FERS benefits they would have received absent an injury.", "As we reported in 2012, although the overall median FECA benefit was substantially higher than the median FERS benefit for 2010 annuitants, the difference between the two varies based on years of service. Our simulation showed that median FECA benefit packages were consistently greater than median FERS benefit packages across varying years of service; however, the gap between the two benefits narrowed as years of service increased. This occurred in large part because FERS benefits increase substantially with additional years of service. For example, under our simulation non-USPS beneficiaries whose total federal career would have spanned less than 10 years had a median FECA benefit that was about 46 percent greater than the corresponding FERS benefit. In contrast, non-USPS beneficiaries whose total federal career would have spanned 25 to 29 years had a median FECA benefit that was 16 percent greater than the corresponding FERS benefit. For USPS beneficiaries, those whose total federal career would have spanned less than 10 years had a median FECA benefit that was about 65 percent greater than the corresponding FERS benefit, while beneficiaries whose total federal career would have spanned between 20 and 24 years had a median FECA benefit that was 23 percent greater than the corresponding FERS benefit.", "Based on the simulations we conducted for our 2012 reports, we found that reducing FECA benefits once beneficiaries reach retirement age to 50 percent of wages at the time of injury would result in an overall median for the reduced FECA benefit package (reduced FECA plus the TSP) that is about 6 percent less than the median FERS benefit package for non- USPS annuitants. Under our simulation for USPS annuitants, the reduced FECA benefit package would be approximately equal to the median 2010 FERS benefit package. This implies that under the proposed reduction, both USPS and non-USPS FECA beneficiaries would have similar income from their FECA benefit package in comparison to their foregone FERS benefit.\nIn addition, under our simulation reduced FECA benefits were similar or less than FERS benefits across varying years of service. However, as years of service increase, the gap between the two benefits widened. For example, we found that non-USPS beneficiaries whose total federal career would have spanned less than 10 years had a median reduced FECA benefit that was about 2 percent greater than the corresponding FERS benefit. In contrast, those non-USPS beneficiaries whose total federal career would have spanned 25 to 29 years had a median reduced FECA benefit that was 19 percent less than the corresponding FERS benefit. Similarly, USPS beneficiaries whose total federal career would have spanned less than 10 years had a median reduced FECA benefit that was about 13 percent greater than the corresponding FERS benefit. In contrast, USPS beneficiaries whose total federal career would have spanned 25 to 29 years had a median reduced FECA benefit that was 20 percent less than the corresponding FERS benefit.", "When we conducted simulations for our 2012 reports, FERS had only been in place for 26 years in 2010, and therefore our simulation did not capture the “mature” FERS benefit that an annuitant could accrue with more years of service. Consequently, it is likely that our analysis understated the potential FERS benefit when we considered 2010 benefit levels. As a result, we conducted a simulation of a “mature” FERS that was coupled with the assumption that individuals have 30-year federal careers. Based on this simulation, we found that the median current FECA benefit packages for non-USPS beneficiaries were on par or less than the median FERS benefit package—depending on the amount an individual contributes toward their TSP account for retirement. As shown on the right sides of figures 4 and 5, under the default scenario where there is no employee contribution and the employing agency contributes 1 percent to TSP, the median FECA benefit package is about 1 percent greater than the median FERS benefit package. However, under a scenario where each employee contributes 5 percent—and receives a 5 percent agency match—the median FECA benefit package is about 10 percent less than the median FERS benefit package. Similarly, our simulation showed that for USPS annuitants, the median FECA benefit package was about 13 percent greater than the median FERS benefit package under the 1 percent agency contribution scenario, and about 4 percent less than the median FERS benefit package under the 10 percent contribution scenario.\nOur simulation also found that, for both non-USPS and USPS annuitants, the median reduced FECA benefit package under the proposed changes was less than the median FERS benefit package—regardless of the simulated contributions to TSP accounts. Specifically, under a scenario where there is no employee contribution—and a 1 percent contribution from the employing agency—the median reduced FECA benefit package is about 31 percent less than the median FERS benefit package for non- USPS annuitants and 22 percent less than the median FERS benefit package for USPS annuitants. Under a scenario where each employee contributes 5 percent—and receives a 5 percent agency match—the median reduced FECA benefit package is about 35 percent less than the FERS benefit package for non-USPS annuitants and about 29 percent less than the FERS benefit package for USPS annuitants.", "As we reported in 2012, partial-disability beneficiaries are fundamentally different from total-disability beneficiaries, as they receive reduced benefits based on their potential to be re-employed and have work earnings. However, there is limited information available about the overall population of partial-disability beneficiaries. They do not all find work and their participation in the workforce may change over time, and their individual experiences will determine how they would fare under the proposed revisions.", "As we reported in 2012, we found that partial-disability beneficiaries in the case studies we examined fared differently under both FECA and the proposed revisions to pre-retirement compensation, depending on the extent to which they had work earnings in addition to their FECA benefits. To consider this larger context, we conducted total income comparisons for the partial-disability case studies we examined. We defined the post- injury total income comparison to be the sum of post-injury FECA benefits and any gross earnings from employment at the time of the LWEC decision, as a percentage of pre-injury gross income.\nAmong the seven partial-disability case studies we examined, those beneficiaries with constructed earnings LWECs had post-injury total income comparisons that were substantially less than those with actual earnings LWECs. As shown in table 2, the beneficiaries in case studies 5 to 7 had constructed earnings LWECs and had post-injury total incomes that ranged from 29 to 65 percent of their pre-injury income under the current FECA program. This range was substantially lower than the total income comparisons for the beneficiaries in case studies 1 to 4 with actual earnings LWECs (77 to 96 percent). We found that by definition, at the time of their LWEC decision, those beneficiaries with constructed earnings LWECs earned less than the income OWCP used to calculate their LWECs. Consequently, their total income comparisons—FECA benefits plus earnings, as a percentage of pre-injury wages—are necessarily lower than those with actual earnings LWECs.\nWe also found that beneficiaries in our case studies were affected differently by the proposed revisions to pre-retirement benefits. As expected, the beneficiaries who did not have a dependent (case studies 2, 4, and 7) experienced either slight increases or no change in their post- injury total income comparisons under the proposed revisions to pre- retirement benefits. Under both proposals, the beneficiaries in our case studies who had a dependent (case studies 1, 3, 5, and 6) experienced declines in their post-injury total income comparisons.decreases in total income comparisons were relatively small compared to the impact of not having actual earnings. For instance, the beneficiary with a constructed earnings LWEC in case study 6 experienced declines in total income comparisons of about 3 to 4 percentage points between the current FECA program and the proposals. However, the beneficiary’s total income comparisons under the current FECA program and the proposals were over 30 percentage points lower than those of the beneficiary in case study 3 who had the lowest total income comparisons of those beneficiaries with actual earnings LWECs.\nDue to the importance of actual work earnings on partial-disability beneficiaries’ situations, we have previously concluded that a snapshot of post-injury total income comparisons is insufficient to predict how beneficiaries fare over the remainder of their post-injury careers. Employment at the time of OWCP’s LWEC decision does not necessarily imply stable employment over time, as beneficiaries can find, change, or lose jobs over time.", "We have also found that the proposals to reduce FECA benefits at retirement age would primarily affect those partial-disability beneficiaries who continue to receive FECA benefits past retirement age. As we reported in December 2012, among those partial-disability beneficiaries who stopped receiving FECA benefits in 2005-2011, 68 percent did so due to their election of Office of Personnel Management (OPM) retirement or other benefits, such as Veterans Affairs disability benefits. At that time, DOL officials told us that because many variables affect retirement benefits, they cannot predict why partial-disability beneficiaries would potentially choose to retire instead of continuing to receive FECA benefits. Only 17 percent of partial-disability beneficiaries who stopped receiving FECA benefits were beneficiaries who died (i.e., received benefits from injury until death). These aggregate numbers do not track individual beneficiaries’ decisions to elect retirement or to continue receiving FECA benefits past retirement age, but they suggest that there is a substantial percentage of partial-disability beneficiaries that elects other benefits instead of FECA at some point post-injury.\nSince those beneficiaries who elect FERS retirement would not be affected by the proposed revisions to FECA compensation at retirement age, the overall effects of the proposals on partial-disability beneficiaries should be considered in the larger context of retirement options. To do so, in our December 2012 report, we used data from the seven partial- disability case studies to simulate and compare FERS and FECA benefits and to highlight various retirement options these partial-disability beneficiaries may face. As shown in table 3, we found:\nThe beneficiaries in case studies 2, 4, and 6 had potential FERS benefit packages that were higher than their FECA benefits under the current FECA program and the proposed revision—they would likely not be affected by the proposed revision.\nThe beneficiaries in case studies 1, 3, and 7 had potential FERS benefit packages that were lower than their FECA benefits under the current FECA program and the proposed revision—they would likely face a reduction in FECA benefits in retirement under the proposed revision.\nThe beneficiary in case study 5 had a potential FERS benefit package that was lower than his FECA benefits under the current FECA program, but higher than his benefits under the proposed FECA reduction—he would likely face a reduction in FECA benefits in retirement under the proposed revision.\nBased on our prior work, we have concluded that the differences in retirement options that individual beneficiaries face stem from two key factors: (1) OWCP’s determination of their earning capacities, and (2) their total years of federal service. Partial-disability beneficiaries with greater potential for earnings from work receive relatively lower FECA benefits to account for their relatively lower loss of wage earning capacity, all else equal. In table 2, beneficiaries with: low earning capacities post-injury (case studies 1, 3, and 5) had FECA benefits that were more favorable than FERS benefits; high earning capacities post-injury (case studies 2 and 4) had FECA benefits that were less favorable than FERS benefits; and mid-range earning capacities post-injury (case studies 6 and 7) had FECA benefits whose favorability depended on their total years of federal service. Fewer years of federal service resulted in a lower FERS annuity and lower Social Security benefits attributable to federal service, all else equal.\nWe have also found that partial-disability beneficiaries who choose to remain on FECA past retirement age currently face lower FECA benefits in retirement as compared with total-disability beneficiaries, and would experience a reduction in benefits under the proposals. Partial-disability beneficiaries receive FECA benefits that are lower than those of otherwise identical total-disability beneficiaries to account for their potential for work earnings. As long as they work, their income is comprised of their earnings and their FECA benefits. However, once they choose to retire, partial-disability beneficiaries who choose to stay on FECA likely no longer have any work earnings and are not eligible to simultaneously receive their FERS annuity. Thus, we found that because of the way FECA benefits are currently calculated, such partial- disability beneficiaries may have less income in retirement than otherwise identical total-disability beneficiaries, and the proposals would reduce benefits in retirement without differentiating between partial and total- disability beneficiaries. The proposed reduction may serve as a long- term incentive for partial-disability beneficiaries to return to work,particularly because their initial FECA benefits are lower than those of total-disability beneficiaries.\nIn conclusion, FECA continues to play a vital role in providing compensation to federal employees who are unable to work because of injuries sustained while performing their federal duties and FECA benefits generally serve as the exclusive remedy for being injured on the job. Our simulations of the potential effects of proposed changes to FECA benefit levels incorporated the kinds of approaches used in the literature on assessing benefit adequacy for workers’ compensation programs, such as accounting for missed career growth. More specifically, we assessed the proposed changes by simulating the level of take-home pay or retirement benefits FECA beneficiaries would have received if they had not been injured, which provides a realistic basis for assessing how beneficiaries may be affected. However, we did not recommend any particular level of benefit adequacy. As policymakers assess proposed changes to FECA benefit levels, they will implicitly be making decisions about what constitutes an adequate level of benefits for FECA beneficiaries before and after they reach retirement age. While our analyses focused on how the median FECA beneficiary might be affected by proposed changes, it also highlighted how potential effects may vary for different subpopulations of beneficiaries, which can assist policymakers as they consider such changes to the FECA program. Apart from proposed changes to FECA benefit levels, the legislative proposal in the 2016 congressional budget justification for OWCP also seeks to strengthen FECA program integrity. As policymakers examine proposed changes to reduce improper payments in the FECA program, they should consider granting DOL authority to access wage data so the agency does not have to rely on self-reported income data, as our prior work has recommended.\nChairman Walberg, Ranking Member Wilson, and Members of the Subcommittee, this concludes my prepared statement and I would be happy to answer any questions that you may have at this time.", "For further information regarding this testimony, please contact Andrew Sherrill at (202) 512-7215 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals who made key contributions to this testimony include: Nagla’a El-Hodiri (Assistant Director); Michael Kniss (Analyst-in-Charge), James Bennett, Jessica Botsford, Holly Dye, Kathy Leslie, James Rebbe, and Walter Vance.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 2, 2, 1, 2, 1, 2, 2, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h2_full", "", "h2_full", "", "h3_title", "h3_full", "h0_title h2_title", "h0_full", "", "h0_full h2_full", "h0_full", "h2_title h3_title h1_full", "h1_full", "h3_full h2_full h1_full", "h3_full" ] }	{ "question": [ "What did the GAO find about proposals to reduce FECA benefits?", "How does the current FECA benefit package compare to the retirement benefit package for USPS and non-USPS beneficiaries?", "What individuals did the GAO simulations cover?", "How did the GAO find the reduced FECA benefit package compared to the retirement benefit package for USPS and non-USPS beneficiaries?", "What individuals did the GAO simulations cover?", "What happened when the GAO then used different simulation individuals?", "How would the FECA proposed changes affect individuals?", "Why do different beneficiaries receive different levels of aid?", "How did the GAO measure the different individuals affected?", "How would beneficiaries with high earning capacities based on actual earnings be affected?", "How would beneficiaries with low earning capacities based on actual earnings be affected?", "What does the FECA program do?", "How are benefits adjusted?", "How are FECA benefits initially set?", "How have policymakers regarded FECA benefit levels?", "What have proposals to revise FECA included?", "What results does the given testimony cover?", "What does the testimony relating to FECA cover?", "How does the GAO plan to measure FECA changes?" ], "summary": [ "The simulations for GAO's 2012 reports also found that proposals to reduce FECA benefits upon reaching Social Security retirement age would reduce beneficiaries' retirement income, bringing the median FECA benefits on par with or below the median retirement incomes individuals would have received absent their injuries.", "In simulations comparing FECA benefits to retirement benefits—both in 2010—GAO found that under the existing FECA program, the median FECA benefit package for total-disability retirement-age beneficiaries was 37 and 32 percent greater than the median 2010 retirement benefit package for USPS and non-USPS beneficiaries, respectively.", "This analysis focused on individuals covered under the Federal Employees Retirement System (FERS), which generally covers employees first hired in 1984 or later.", "GAO found that the proposal to reduce FECA benefits at the full Social Security retirement age would result in a median FECA package roughly equal to the median 2010 FERS retirement package.", "However, the median years of service for the FERS annuitants GAO analyzed were 16 to 18 years—which did not constitute a mature FERS system—so these simulations understated the future FERS benefit level.", "GAO then simulated a mature FERS system—intended to reflect benefits of workers with 30-year careers—and found that the median FECA benefit package under the proposed change would be 22 to 35 percent less than the median FERS retirement package.", "The potential effects of the proposed changes to FECA on partial-disability beneficiaries would vary based on individual circumstances.", "Partial-disability beneficiaries differ fundamentally from total-disability beneficiaries, as they receive reduced FECA benefits based on a determination of their post-injury earning capacity.", "GAO's seven case studies of partial-disability beneficiaries showed variation based on characteristics such as earning capacity and actual earnings.", "For example, beneficiaries with high earning capacities based on actual earnings might elect to retire under FERS if their potential retirement benefits were higher than their current or reduced FECA benefit levels. They would, thus, not be affected by the proposed changes.", "In contrast, those beneficiaries with low earning capacities who might remain on FECA past retirement age would have their benefits reduced under the proposed change.", "The FECA program, administered by the Department of Labor, provides wage-loss compensation to federal workers who sustained injuries or illnesses while performing federal duties.", "Benefits are adjusted for inflation and are not taxed nor subject to age restrictions.", "Initial FECA benefits are set at 75 percent of gross wages at the time of injury for beneficiaries with eligible dependents and 66-2/3 for those without.", "Some policymakers have raised questions about the level of FECA benefits, especially compared to federal retirement benefits.", "Prior proposals to revise FECA for future total- and partial-disability beneficiaries have included: setting initial FECA benefits at a single rate, regardless of whether the beneficiary has eligible dependents; and converting FECA benefits to 50 percent of applicable wages at time of injury—adjusted for inflation—once beneficiaries reach full Social Security retirement age.", "This testimony presents results from GAO reports issued in fiscal year 2013.", "It summarizes (1) potential effects of the proposals to compensate total-disability FECA beneficiaries at a single rate; (2) potential effects of the proposal to reduce FECA benefits to 50 percent of applicable wages at full Social Security retirement age for total-disability beneficiaries; and (3) how partial-disability beneficiaries might fare under the proposed changes.", "For this work, GAO conducted simulations for USPS and non-USPS beneficiaries comparing FECA benefits to income (take-home pay or retirement benefits) a beneficiary would have had absent an injury and conducted case studies of partial-disability beneficiaries." ], "parent_pair_index": [ -1, -1, 1, -1, 3, 3, -1, 0, -1, 2, 2, -1, -1, 1, 1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0, 0, 1, 1, 1 ] }
GAO_GAO-14-196T	{ "title": [ "Several Factors Are Important to Secure Maritime Borders and DHS Has Made Progress to Address Them, but Challenges Remain", "Maintaining Robust Maritime Domain Awareness", "Assessing Risks Coming from Foreign Ports", "Leveraging International Partnerships in Global Supply Chain Security", "Conducting Maritime Surveillance, Interdiction, and Security Operations along the Coast and in Ports", "Coordinating with Partners along the Coast and in Ports", "Measuring Maritime Security", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "Our prior work has identified several key factors important to securing the maritime borders, which include (1) maintaining robust maritime domain awareness, (2) assessing risks coming from foreign ports, (3) leveraging international partnerships, (4) conducting maritime surveillance, interdiction, and security operations, (5) coordinating with partners along the coast and in ports, and (6) measuring performance. Our prior work has also shown that DHS and its components have made progress, and in some cases experienced challenges, with their programs to address these factors.", "To ensure the security of our maritime borders, it is critical that federal agencies maintain robust maritime domain awareness. According to the National Plan to Achieve Maritime Domain Awareness, the maritime domain provides an expansive pathway around the world that terrorist organizations could exploit for moving equipment and personnel, as well as a means for launching attacks. Timely awareness of the maritime domain and knowledge of threats helps the Coast Guard to detect, deter, interdict, and defeat adversaries. For example, according to the Coast Guard, maritime domain awareness played a key role in allowing it to interdict narcotics, intercept thousands of alien migrants, detain hundreds of suspected smugglers, board foreign vessels to suppress illegal fishing, and rescue thousands of people.\nTo enhance maritime domain awareness, the Coast Guard works with its maritime partners to facilitate the sharing and dissemination of a wide array of information and intelligence to better secure the nation’s maritime transportation system against potential threats. The Coast Guard has made progress in developing its maritime domain awareness systems— including its Common Operational Picture—by increasing user access and adding data sources. The Coast Guard also has related systems that can be used to provide enhanced maritime domain information to Coast Guard units and port partners. However, as we previously reported, the Coast Guard experienced challenges in developing and implementing these systems. For example, in July 2011, we reported that the Coast Guard had not met its goal of building a single, fully interoperable Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance program system intended to enable the sharing of information among its new offshore vessels and aircraft. In addition, in February 2012, we reported that the intended information- sharing capabilities of the Coast Guard’s WatchKeeper software—which was designed to gather data to help port partner agencies collaborate in the conduct of operations and share information, among other things— met few port partner agency needs. This is, in part, because the Coast Guard did not determine these needs when developing the system. Further, in April 2013, we reported that, among other things, the Coast Guard had not followed its own information technology development guidance when developing one of its new maritime domain awareness systems, known as Coast Guard One View. We recommended, and the Coast Guard concurred, that it take actions to address these challenges. DHS stated that it planned to take actions to address these recommendations, such as developing necessary acquisition documentation.\nIn addition to its own systems, the Coast Guard also relies on systems operated by other entities to help it track vessels and enhance maritime domain awareness. For example, to track vessels at sea, the Coast Guard uses a long-range identification and tracking system and an automatic identification system that broadcasts information on the vessels and their locations. To track vessels in U.S. coastal areas, inland waterways, and ports, the Coast Guard operates a land-based automatic identification system and also obtains information from radar and cameras in some ports. In March 2009, we reported on the challenges of tracking small vessels using available technologies. For example, we reported that although the Coast Guard and other agencies may have technology systems that can track small vessels within some ports, these did not always work in bad weather or at night. In September 2012, we reported that the expansion of vessel tracking technology to all small vessels may be of limited utility because of, among other things, the large number of small vessels, the difficulty in identifying threatening actions, and the challenges associated with getting resources on scene in time to prevent an attack once it has been identified. DHS and its components— such as the Coast Guard and CBP—have started or completed initiatives to improve maritime domain awareness in order to address small vessel security risks, including an initiative to help CBP better track small vessels arriving from foreign locations and another initiative to assist the Coast Guard in assessing and monitoring small vessel launch sites.", "The security of maritime borders also depends, in part, upon security at foreign ports where cargo and vessels bound for the United States may originate. CBP and the Coast Guard have developed models to assess the risks of cargo carried by these vessels, foreign ports, and foreign vessels entering U.S. ports. In particular, CBP developed the Container Security Initiative (CSI) program that places officials at select foreign ports to use intelligence and risk assessment information to determine whether U.S.-bound cargo container shipments from those ports are at risk of containing weapons of mass destruction or other terrorist contraband. CBP’s selection of the initial 23 CSI ports in 2002 was primarily based on the volume of U.S.-bound containers, but beginning in 2003, CBP considered more threat information when it expanded the number of CSI ports. In our September 2013 report, we reported that CBP had not assessed the risk posed by foreign ports that ship cargo to the United States since 2005. In 2009, CBP developed a model that ranked 356 potential expansion ports for a related program on the basis of risk, but it was not implemented because of budget cuts. We found in September 2013 that by applying CBP’s risk model to fiscal year 2012 cargo shipment data, CSI did not have a presence at about half of the ports CBP considered high risk, and about one fifth of the existing CSI ports were at lower risk locations. As a result, we recommended that CBP periodically assess the supply chain security risks from foreign ports that ship cargo to the United States and use the results to inform any future expansion of CSI and determine whether changes need to be made to existing CSI ports. DHS concurred with our recommendation and reported that by December 2014 it plans to develop a process for conducting periodic assessments of the supply chain security risks from all ports that ship cargo to the United States and use information from the assessments to determine if future expansion or adjustments to CSI locations are appropriate.\nWhile CBP is focused on the security of the cargo shipped to the United States from foreign ports, the Coast Guard is focused on the security of ports and the vessels arriving in the United States. Under the International Port Security program, Coast Guard officials visit foreign ports to evaluate their antiterrorism security measures against established international standards. We reported in October 2007 that the Coast Guard had found that most of the over 100 countries it visited had substantially implemented international standards. More recently, the Coast Guard reported in November 2013 that it had visited over 150 countries. In September 2012, we reported that the Coast Guard had made progress with implementing its International Port Security program despite a number of challenges. For example, we reported that the Coast Guard was able to alleviate sovereignty concerns of some countries by including a reciprocal visit feature in which the Coast Guard hosts foreign delegations to visit U.S. ports. Further, as we reported in September 2013, the Coast Guard developed a risk-informed model— that it updates annually—as part of its International Port Security program to regularly assess the potential threat foreign ports pose to the maritime supply chain and make operational decisions. According to the Coast Guard International Port Security Program: Annual Report 2012, the Coast Guard uses the model to make informed decisions on how to engage each country with the International Port Security program, including (1) how often to visit ports, (2) how many staff to assign to a particular visit, and (3) whether the country requires assistance.\nIn addition to assessing the security of foreign ports, the Coast Guard also uses the results of the International Port Security program to help determine which arriving foreign vessels to board and inspect through its Port State Control program. In particular, according to the Coast Guard’s International Port Security Program: Annual Report 2012, the Coast Guard is to use risk-based criteria to identify which foreign vessels entering U.S. ports and waterways it considers to be at risk of noncompliance with international or domestic regulations, and perform compliance examinations of these vessels. The risk-based criteria used to make these decisions include the vessel’s management, the flag state under which the vessel is registered, and the vessel’s security compliance history resulting from previous examinations.", "International partnerships based on international standards are another key aspect of secure maritime borders. For example, the International Ship and Port Facility Security (ISPS) Code was developed after the September 11, 2001, terrorist attacks to establish measures to enhance the security of ships and port facilities with a standardized and consistent security framework. The ISPS Code requires facilities to conduct an assessment to identify threats and vulnerabilities and then develop security plans based on the assessment. The requirements of this code are performance based; therefore, compliance can be achieved through a variety of security measures. Additionally, in collaboration with 11 other members of the World Customs Organization, CBP developed the Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework), which is based, in part, on the core concepts of CBP programs and provides standards for collaboration among customs administrations and entities participating in the supply chain. The SAFE Framework was adopted by the 173 World Customs Organization member customs administrations in June 2005; and as of our last report on this topic in July 2008, 154 had signed letters of intent to implement the standards.\nCBP and the Coast Guard also leverage relationships with private industry stakeholders and foreign partners to promote the security of maritime borders, given that protecting domestic ports begins outside the United States where inbound shipments enter the supply chain. For example, the Customs-Trade Partnership Against Terrorism (C-TPAT) program is a voluntary program that enables CBP officials to work in partnership with private companies to review and approve the security of their international supply chains. Companies that join the C-TPAT program commit to improving the security of their supply chains and agree to provide CBP with information on their specific security measures. In addition, the companies agree to allow CBP to verify, among other things, that their security measures meet or exceed CBP’s minimum security requirements. This allows CBP to ensure that the security measures outlined in a member’s security profile are in place and effective. In April 2008, we reported that the C-TPAT program holds promise as part of CBP’s multifaceted maritime security strategy. We also reported that the program allows CBP to develop partnerships with the trade community, which is a challenge given the international nature of the industry and resulting limits on CBP’s jurisdiction and activities, and provides CBP with a level of information sharing that would otherwise not be available. However, our reports raised concerns about the overall management of the program and challenges in verifying that C-TPAT members meet security criteria. We recommended that CBP strengthen program management by developing planning documents and performance measures, and by improving the process for validating security practices of C-TPAT members. CBP agreed with these recommendations and has addressed them.\nAdditionally, through mutual recognition arrangements with foreign partners, the security-related practices and programs established by the customs or maritime security administration of one partner are recognized and accepted by the administration of another. Both CBP and the Coast Guard have entered into such arrangements. For example, CBP can expand the reach of its supply chain security programs (such as C-TPAT) through mutual recognition arrangements. According to the World Customs Organization, mutual recognition arrangements allow customs administrations to target high-risk shipments more effectively and expedite low-risk shipments by, for example, reducing redundant examinations. As we reported in September 2013, mutual recognition arrangements may allow the Coast Guard to allocate resources more efficiently and reduce risks. For example, we further reported that the Coast Guard signed a memorandum of understanding with the European Union that establishes a process for mutually recognizing security inspections of each other’s ports. According to DHS documents and Coast Guard officials in Europe, by signing this memorandum of understanding, the Coast Guard plans to reassign some International Port Security officials from Europe to Africa, where certain countries are having more difficulties than others in implementing effective antiterrorism measures in their ports. Further, we reported that one trade-off of signing the memorandum of understanding is that Coast Guard’s International Port Security officials will not have the same opportunities to have face- to-face interactions and share port security information and practices directly with their European Union counterparts as in the past. Despite this trade-off, Coast Guard officials stated that entering into such arrangements increases efficiencies and noted that they intend to negotiate additional memorandums of understanding with other foreign governments that have strong port inspection programs.", "Along the coast and in ports, maritime surveillance, interdiction, and security operations are conducted to ensure the security of maritime borders. For example, CBP’s Office of Air and Marine provides maritime surveillance and interdiction capabilities. Its strategic assumptions include the ability to provide a 24-hour, 7-day a week response to border penetrations anywhere along the U.S. border, with a 1-hour response time for areas designated as high priority. We reported in March 2012 that as of May 2011, the Office of Air and Marine had placed about half of its air assets on the southwest border region and the remainder in the northern and southeast regions, while marine resources were distributed fairly evenly across the northern, southwest, and southeast regions. Further, our analysis of the Office of Air and Marine’s fiscal year 2010 performance results indicate that they did not meet its national performance goal to fulfill greater than 95 percent of Border Patrol air support requests and did not provide higher rates of support in locations designated as high priority based on threats. We made recommendations to help ensure that the Office of Air and Marine’s assets and personnel are best positioned to effectively meet mission needs and address threats, and to help DHS better leverage existing resources, eliminate unnecessary duplication, and enhance efficiencies. DHS concurred with these recommendations, and described actions it was taking, or planned to take to address them, including making strategic and technological changes in its assessment of the mix and placement of its resources by the end of March 2014.\nIn addition to CBP’s Office of Air and Marine interdiction and response activities, the Coast Guard conducts a number of activities to deter potential threats to the United States’ maritime borders. For example, the Coast Guard escorts a certain percentage of high-capacity passenger vessels—cruise ships, ferries, and excursion vessels—and energy commodity tankers to protect against an external threat, such as a waterborne improvised explosive device. The Coast Guard also provides additional security response capabilities through its Maritime Safety and Security Teams and Maritime Security Response Teams. Created by the Maritime Transportation Security Act of 2002, the Maritime Safety and Security Teams constitute a maritime security antiterrorism force. The teams are managed as assets that may be deployed nationwide, and are responsible for safeguarding the public and protecting vessels, harbors, ports, facilities, and cargo in U.S. territorial waters. The teams are to maintain readiness to deploy to events such as terrorist threats or incidents and storm recovery operations, and routinely deploy to national special security events such as Super Bowls and presidential inaugurations. They are also to enforce security zones around high- interest vessels in transit and at other times when additional levels of security are needed within the nation’s ports and waterways. The Coast Guard’s Maritime Security Response Team complements the Maritime Security and Safety Team, and is charged with maintaining a high readiness posture 365 days a year. The Maritime Security Response Team is the Coast Guard’s advanced interdiction force for counterterrorism and law enforcement operations of a high-risk nature. The team provides a variety of advanced capabilities or skills, including addressing threats posed by weapons of mass destruction and vertically deploying from helicopters to engage potentially hostile personnel.", "Along the coast and in ports, partnerships and coordination among various stakeholders contribute to the security of the maritime borders. To target the threat of transnational terrorist and criminal acts along the coastal borders, the Maritime Operations Coordination Plan, established in 2011, directs CBP, the Coast Guard, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations to utilize the fusion of their intelligence, planning, and operations capabilities through the formation of Regional Coordinating Mechanisms. The Coast Guard serves as the lead agency responsible for planning and coordinating among components. We reported in September 2013 that, according to the Coast Guard, there were 32 Regional Coordinating Mechanisms as of June 2013 that aligned with Coast Guard sectors’ geographic areas of responsibility. In addition to the lead agencies, other stakeholders include the Federal Bureau of Investigation; the Drug Enforcement Administration; the U.S. Attorney’s Office; state, local, and tribal law enforcement agencies; and foreign law enforcement agencies.\nIn ports, Area Maritime Security Committees consist of key stakeholders who (1) may be affected by security policies and (2) share information and develop port security plans. These committees, which are required by Coast Guard regulations that implement the Maritime Transportation Security Act of 2002, also identify critical port infrastructure and risks to the port, develop mitigation strategies for these risks, and communicate appropriate security information to port stakeholders. Recommended committee members include a diverse array of port stakeholders, including federal, state, and local agencies, as well as private sector entities such as terminal operators, yacht clubs, shipyards, marine exchanges, commercial fishermen, trucking and railroad companies, organized labor, and trade associations. Area Maritime Security Committees also are to serve as forums for developing Area Maritime Security Plans. The Maritime Transportation Security Act of 2002 required the Coast Guard to develop Area Maritime Security Plans—to be updated every 5 years—for ports throughout the nation. The Coast Guard develops these plans for each of the 43 geographically defined port areas with input from applicable governmental and private entities, and the plans are to serve as the primary means to identify and coordinate Coast Guard procedures related to prevention, protection, and security. In March 2007, we reported that there was a wide variance in ports’ natural disaster planning efforts and that Area Maritime Security Plans—limited to security incidents—could benefit from unified planning to include an all- hazards approach. We recommended that DHS encourage port stakeholders to use existing forums for discussing all-hazards planning. DHS concurred with our recommendation and implemented it through the fiscal year 2007 Port Security Grant Program supplemental program, which was designed, in part, to facilitate the development of a Port-Wide Risk Management/Mitigation and Business Continuity/Resumption of Trade Plan.", "Another important aspect of a secure border is measuring maritime security. In the DHS component agencies’ implementation of the various maritime security related programs I have described today, and as we have previously reported, one of the challenges that DHS and its component agencies have faced has been the lack of adequate performance measures. The following are some of the performance measurement challenges we have reported on:\nLack of reliable and accurate data: DHS and its component agencies have experienced challenges collecting complete, accurate, and reliable data. For example, in January 2011, we reported that both CBP and the Coast Guard tracked the frequency of illegal seafarer incidents at U.S. seaports, but the records of these incidents varied considerably between the two component agencies and between the agencies’ field and headquarters units. As a result, the data DHS used to inform its strategic and tactical plans were of undetermined reliability. We recommended that CBP and the Coast Guard determine why their data varied and jointly establish a process for sharing and reconciling records of illegal seafarer entries at U.S. seaports. DHS concurred and has made progress in addressing the recommendation.\nNot using data to manage programs: DHS and its component agencies have not always had or used performance information to manage their missions. For example, we reported in February 2008 that Coast Guard officials used their Maritime Information for Safety & Law Enforcement database—the Coast Guard’s primary data system for documenting facility inspections and other activities—to review the results of inspectors’ data entries for individual maritime facilities, but the officials did not use the data to evaluate the facility inspection program overall. We found that a more thorough evaluation of the facility compliance program could provide information on, for example, the variations we identified between Coast Guard units in oversight approaches, the advantages and disadvantages of each approach, and whether some approaches work better than others. We recommended that the Coast Guard assess its Maritime Information for Safety & Law Enforcement compliance data, including the completeness and consistency of the data and data field problems, and make any changes needed to more effectively utilize the data. The Coast Guard agreed and has reported taking actions to address the recommendation. These actions include hiring a full-time management and program analyst to consistently review the data for trends and gaps, and developing training resources, help desks, and conferences, among other things, to help field personnel track changes to Maritime Information for Safety & Law Enforcement and to improve data entry time and consistency.\nLack of outcome-based performance measures: DHS and its component agencies have also experienced difficulties developing and using performance measures that focus on outcomes. Outcome- based performance measures describe the intended result of carrying out a program or activity. For example, although CBP had performance measures in place for its C-TPAT program, these measures focused on program participation and facilitating trade and travel and not on improving supply chain security, which is the program’s purpose. We made separate but related recommendations in July 2003, March 2005, and April 2008 that CBP develop outcome- based performance measures for this program. CBP concurred, and, in response to our recommendations, identified measures to quantify actions required and to gauge C-TPAT’s impact on supply chain security. The Coast Guard has faced similar issues with developing and using outcome-based performance measures. For example, we reported in November 2011 that the Coast Guard developed a measure to report its performance in reducing maritime risk, but faced challenges using this measure to inform decisions. The Coast Guard reported it has improved the measure to make it more valid and reliable and stated it believes it is a useful proxy measure of performance, but notes that developing outcome-based performance measures is challenging because of limited historical data on maritime terrorist attacks.\nChairman Miller, Ranking Member Jackson Lee, and members of the subcommittee, this completes my prepared statement. I would be happy to respond to any questions you may have at this time.", "For questions about this statement, please contact Stephen L. Caldwell at (202) 512-9610 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this statement include Christopher Conrad (Assistant Director), Christine Hanson (Analyst-in-Charge), Tracey Cross, and Jeff Jensen.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h1_full h2_title h0_title h4_title h3_full", "h0_full h4_full", "h4_full h1_full", "", "h2_full", "", "h3_full h1_full", "h0_full" ] }	{ "question": [ "What is maritime domain awareness?", "How has the Coast Guard enhanced maritime domain awareness?", "How does the GAO regard the Coast Guards systems?", "What is one of the pitfalls the GAO found in the Coast Guard system?", "How does the GAO recommend this issue be addressed?", "How is the risk from foreign ports determined?", "How does the CBP and Coast Guard model simulate these risks?", "What did the GAO find regarding CBP steps surrounding security of cargo from foreign ports?", "How does the GAO recommend the CBP enhance their security?", "How does the DHS regard the GAO's recommendation?", "Why is maritime surveillance conducted?", "Who is required to provide the surveillance capabilities?", "How did the CBP fail their surveillance capabilities?", "What recommendations did the GAO make to improve surveillance?", "How did the DHS support this recommendation?", "What issues have been found in performance monitoring?", "What example from the GAO shows issues with measuring performance?", "What issues were found when the GAO reported on both CBP and Coast Guard records of illegal seafarer incidents?", "How has the GAO tried to improve data?", "What is the importance of maritime borders?", "How could an attack on these borders affect the world?", "What other issues could the US face from these borders being breached?", "What is the Coast Guard responsible for?" ], "summary": [ "Maintaining robust maritime domain awareness. It is critical that federal agencies maintain maritime domain awareness--the understanding of anything associated with the global maritime environment that could adversely affect the security, safety, economy, or environment of the United States.", "The U.S. Coast Guard has developed systems--including information-sharing and vessel-tracking systems--to enhance maritime domain awareness.", "GAO's prior work has found that the Coast Guard has made progress in developing its systems, but that it also experienced some challenges.", "For example, in July 2011, GAO reported that the Coast Guard had not met its goal of building a system intended to enable the sharing of information among its new offshore vessels and aircraft.", "GAO recommended that the agency take actions to address this challenge. DHS concurred and stated it planned to take actions.", "Assessing risks coming from foreign ports . The security of maritime borders also depends upon security at foreign ports where cargo bound for the United States originates.", "U.S. Customs and Border Patrol (CBP) and the Coast Guard have developed models to assess the risks of foreign ports, foreign vessels entering U.S. ports, and the cargo carried by these vessels from these ports.", "In September 2013, GAO found that CBP has taken steps to enhance the security of U.S.-bound cargo, but CBP does not periodically assess the supply chain security risks from foreign ports that ship cargo to the United States.", "GAO recommended that CBP periodically assess the supply chain security risks from these ports.", "DHS concurred with GAO's recommendation and reported that it planned to take actions to address it.", "Conducting maritime surveillance, interdiction, and security operations . Along the coasts and in ports, maritime surveillance, interdiction, and operations are conducted to ensure the security of the maritime borders.", "For example, CBP's Office of Air and Marine is to provide maritime surveillance and interdiction capabilities.", "In March 2012, GAO found that the office did not meet its national performance goal and did not provide higher rates of support in locations designated as high priority.", "GAO made recommendations to help ensure that the office's assets and personnel are best positioned to effectively meet mission needs and address threats, among other things.", "DHS concurred and reported that it planned to take action to address the recommendations by the end of March 2014.", "Measuring performance. In securing our maritime borders, DHS and its component agencies have faced challenges in developing meaningful performance measures .", "For example, GAO's prior work found that they have experienced challenges collecting complete, accurate, and reliable data; among other things.", "In January 2011, GAO reported that both CBP and the Coast Guard tracked the frequency of illegal seafarer incidents at U.S. seaports, but the records of these incidents varied considerably between the two component agencies and between the agencies' field and headquarters units.", "GAO made a recommendation to improve the accuracy of DHS data, and DHS concurred and has made progress in addressing the recommendation.", "Maritime borders are gateways to our nation's maritime transportation system of ports, waterways, and vessels--which handle billions of dollars of cargo annually.", "An attack on this system could have dire consequences and affect the global economy.", "In addition, criminals could use small vessels to smuggle narcotics, aliens, and other contraband across U.S. maritime borders.", "Within DHS, the Coast Guard is responsible for many homeland security efforts in the maritime domain, including conducting port facility and commercial vessel inspections and coordinating maritime information-sharing efforts, among other things. In addition, CBP is responsible for screening incoming vessels' crews and cargo to facilitate the flow of legitimate trade and passengers." ], "parent_pair_index": [ -1, 0, -1, 2, 3, -1, 0, -1, 2, 3, -1, 0, -1, 2, 3, -1, -1, 1, 1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 5, 5, 6, 6, 6, 6, 0, 0, 0, 0 ] }
CRS_RL32776	{ "title": [ "", "Introduction and Issue for Congress", "Background", "Full Funding Policy", "General Description", "Advance Procurement (AP) Payments Under Full Funding", "AP Payments for Long-Lead Items", "AP Payments for EOQ under Multiyear Procurement", "\"One Decision for One Pot of Money\"", "Incremental Funding", "General Description", "\"Multiple Decisions for Multiple Pots of Money\"", "Advantages and Disadvantages", "Potential Advantages", "Potential Disadvantages", "Split Funding In FY2007 and FY2008 Budget Submissions", "Earlier Navy Proposal for Funding Lead Ships", "Advance Appropriations", "General Description", "\"One Decision for Multiple Pots of Money\"", "Advantages and Disadvantages", "Navy Advocacy in 2001", "Potential for Reducing Instability in Ship-Procurement Plans", "Potential for Increasing Number of Ships Procured", "Options for Congress", "Maintain Current Funding Practices", "Strengthen Adherence to Full Funding Policy", "Increase Use of Incremental Funding", "Begin Using Advance Appropriations", "Transfer Lead-Ship DD/NRE Costs to R&D Account", "Legislative Activity for FY2008", "H.R. 1585/S. 1547 (FY2008 Defense Authorization Bill)", "House", "Senate" ], "paragraphs": [ "", "Some observers have proposed procuring Navy ships using funding approaches other than the traditional full funding approach that has been used to procure most Navy ships since the 1950s. These alternative funding approaches include incremental funding, which has been used to fund a few Navy ships in recent years, and advance appropriations, which has not been used for Navy ship procurement. Supporters of these alternative funding approaches believe they could increase stability in Navy shipbuilding plans and perhaps increase the number of Navy ships that could be built for a given total amount of ship-procurement funding.\nThe issue for Congress is whether to maintain current practices for funding Navy ship procurement or change them by, for example, increasing the use of incremental funding or starting to use advance appropriations. Congress's decision on this issue could be significant because the full funding policy relates to Congress's power of the purse and its responsibility for conducting oversight of Department of Defense (DOD) programs. Consequently, the issue can be alternately expressed as how to procure Navy ships economically while maintaining key congressional prerogatives. Congress's decision on ship funding approaches could also affect future Navy capabilities, annual Navy funding requirements, and the shipbuilding industrial base.\nPortions of this report are adapted from another CRS report that discusses the full funding policy in DOD procurement generally.", "", "", "Most Navy ships procured since the late 1950s have been funded in accordance with the full funding policy. Before then, many Navy ships were procured with incremental funding, which is discussed in the next section.\nFor DOD procurement programs, the full funding policy requires the entire procurement cost of a usable end item (such as a Navy ship) to be funded in the year in which the item is procured. The policy applies not just to Navy ships, but to all weapons and equipment that DOD procures through the procurement title of the annual DOD appropriations act.\nIn general, the full funding policy means that DOD cannot contract for the construction of a new weapon or piece of equipment until funding for the entire cost of that item has been approved by Congress. Sufficient funding must be available for a complete, usable end item before a contract can be let for the construction of that item. Under traditional full funding, no portion of a usable end item's procurement cost is funded in a year after the year in which the item is procured.\nCongress imposed the full funding policy on DOD in the 1950s to make the total procurement costs of DOD weapons and equipment more visible and thereby enhance Congress's ability to understand and track these costs. Congress's intent in imposing the policy was to strengthen discipline in DOD budgeting and improve Congress's ability to control DOD spending and carry out its oversight of DOD activities. Understanding total costs and how previously appropriated funds are used are key components of Congress's oversight capability.\nThe full funding policy is consistent with two basic laws regarding government expenditures—the Antideficiency Act of 1870, as amended, and the Adequacy of Appropriations Act of 1861. Regulations governing the full funding policy are found in Office of Management and Budget (OMB) Circular A-11 and DOD Directive 7000.14-R, which provide guidelines on budget formulation. OMB Circular A-11 states, among other things, that\nGood budgeting requires that appropriations for the full costs of asset acquisition be enacted in advance to help ensure that all costs and benefits are fully taken into account at the time decisions are made to provide resources. Full funding with regular appropriations in the budget year also leads to tradeoffs within the budget year with spending for other capital assets and with spending for purposes other than capital assets. Full funding increases the opportunity to use performance-based fixed price contracts, allows for more efficient work planning and management of the capital project (or investment), and increases the accountability for the achievement of the baseline goals.\nWhen full funding is not followed and capital projects (or investments) or useful segments are funded in increments, without certainty if or when future funding will be available, the result is sometimes poor planning, acquisition of assets not fully justified, higher acquisition costs, cancellation of major investments, the loss of sunk costs, or inadequate funding to maintain and operate the assets.\nSupport for the full funding policy has been periodically reaffirmed over the years by Congress, the Government Accountability Office (GAO), and DOD.", "The executive branch regulations that implement the full funding policy for DOD procurement programs permit two circumstances under which advance procurement (AP) \"down payments\" on a usable end item can be provided in one or more years prior to the item's year of procurement:\nAP funding may be used to pay for long-lead items—components of a usable end item that have long manufacturing lead times—if needed to ensure that these items will be ready for installation into the end item at the appropriate point in the end item's construction process. AP funding may also be used to pay for economic order quantity (EOQ) procurement of a set of long-lead items for a set of weapons being acquired under a multiyear procurement (MYP) arrangement.\nEach of these is discussed below.", "Long-lead items are often manufactured not at the end item's final assembly facility (such as a shipyard) but at separate supplier firms. In Navy shipbuilding, AP payments have most commonly been used to pay for nuclear-propulsion components of nuclear-powered aircraft carriers and submarines.\nCongress in recent years has occasionally approved AP funding for conventionally powered Navy ships, such as destroyers and amphibious ships, for which the Navy did not request any AP funding for long-lead items. Congress in recent years has also occasionally approved AP funding for \"advance construction\" work on certain ships, which apparently refers to early shipyard activities for building the basic structure of a ship, as opposed to manufacturing long-lead components to be installed into the ship. The use of AP funding for shipyard advance construction activities is not recognized in executive branch budget regulations on the full funding policy, at least not in the same way as these regulations recognize the use of AP funding for long-lead components.\nCongressional decisions to approve AP funding for ships for which the Navy did not request such funding, or for shipyard advance construction activities, could be aimed at one or more of the following goals:\ngenerating shipyard construction work (and thus shipyard revenues and jobs) on a particular ship in a year prior to that ship's year of procurement; creating an early financial commitment to procuring a ship that is planned for procurement in a future year, which can enhance job security for construction workers at the yard that would build the ship; reducing the total construction cost of a ship through improved sequencing or year-to-year balancing of shipyard construction work; and reducing the portion of a ship's cost to be funded in the year of procurement.", "Most DOD procurement programs use annual contracting, under which DOD lets one or more contracts for each year's worth of procurement of a given item. Multiyear procurement is a special contracting authority, approved by Congress on a program-by-program basis, that permits DOD to use a single contract to procure a set of end items that are scheduled to be procured across a series of up to five fiscal years (i.e., the budget year in question, plus up to four future years). An MYP arrangement approved for the Navy's F/A-18E/F strike-fighter program, for example, permitted the Navy to use a single contract for a total of 198 to 224 F/A-18E/Fs procured during the five-year period FY2000-FY2004. Congress over the years has granted MYP authority for a relatively small number of procurement programs.\nThe law governing MYP arrangements is set forth in 10 U.S.C. § 2306b. This provision permits AP funding to be used to finance, at the outset of an MYP arrangement, the procurement of long-lead components for all of the end items to be procured under the MYP arrangement. The MYP arrangement to procure a total of five Virginia (SSN-774) class nuclear-powered attack submarines over the five-year period FY2004-FY2008, for example permits the Navy to procure, in the first years of the arrangement, five sets of long-lead nuclear-propulsion components. This up-front batch procurement of long-lead items is called an economic order quantity (EOQ) because it procures (i.e., places an order for) these items in the form of a batch that can be manufactured in an efficient (i.e., economic) manner.", "Although some DOD weapons and equipment are procured with AP funding provided in prior years, most DOD procurement items are funded through a single decision by Congress to provide the entire cost of the item in the item's year of procurement. For this reason, the full funding policy for DOD procurement programs can be described in simplified terms as \"one decision for one pot of money.\"", "", "In spite of the existence of the full funding policy, a few Navy and DOD ships have been procured in recent years, are currently being procured, or are proposed to be procured, with incremental funding. Examples include DOD sealift ships, the attack submarine SSN-23, the amphibious assault ships LHD-6, LHD-8, and LHA-6, the first two DDG-1000 (formerly DD(X)) destroyers, and the aircraft carrier CVN-78. The DOD sealift ships were procured through the National Defense Sealift Fund (NDSF), a DOD revolving and management fund that is outside the procurement title of the DOD appropriations act and therefore not subject to the full funding policy in the same way as DOD procurement programs funded through the procurement title. LHD-8 was incrementally funded by explicit legislative direction. SSN-23, LHD-6, LHA-6, the first two DDG-1000s, and CVN-78 amount to cases of de facto incremental funding. (For additional information on these ships, see Appendix C of this report.) These ships constitute recent exceptions to the use of full funding in the procurement of Navy ships. Prior to the imposition of the full funding policy in the 1950s, however, much of DOD weapon procurement was accomplished through incremental funding.\nUnder incremental funding, a weapon's cost is divided into two or more annual portions, or increments, that can reflect the need to make annual progress payments to the contractor as the weapon is built. Congress then approves each year's increment as part of its action on that year's budget. Under incremental funding, DOD can contract for the construction of a weapon after Congress approves only the initial increment of its cost, and completion of the weapon is dependent on the approval of the remaining increments in future years by that Congress or future Congresses. A key feature of incremental funding is that a portion of the ship's cost is provided in one or more years beyond the item's year of procurement.", "Since incremental funding divides the procurement cost of an end item into two or more annual increments, and since Congress typically approves one of these increments each year, incremental funding can be described in simplified terms as \"multiple decisions for multiple pots of money.\"", "", "Supporters of incremental funding could argue that, compared to full funding, using incremental funding in DOD procurement can be advantageous because it can do one or more of the following:\npermit very expensive items, such as large Navy ships, to be procured in a given year while avoiding or mitigating budget \"spikes\" (i.e., lumps) that could require displacing other programs from that year's budget, which can increase the costs of the displaced programs due to uneconomic program-disruption start-up and start costs; avoid a potential bias against the procurement of very expensive items that might result from use of full funding due to the item's large up-front procurement cost (which appears in the budget) overshadowing the item's long-term benefits (which do not appear in the budget) or its lower life cycle operation and support (O&S) costs compared to alternatives with lower up-front procurement costs; permit construction to start on a larger number of items in a given year within that year's amount of funding, so as to achieve better production economies of that item than would have been possible under full funding; recognize that certain DOD procurement programs, particularly those incorporating significant amounts of advanced technology, bear some resemblance to research and development activities (which can be funded in increments), even though they are intended to produce usable end items; reduce the amount of unobligated balances associated with DOD procurement programs; implicitly recognize potential limits on DOD's ability to accurately predict the total procurement cost of items, such as ships, that take several years to build; and preserve flexibility for future Congresses to stop \"throwing good money after bad\" by halting funding for the procurement of an item under construction that has become unnecessary or inappropriate due to unanticipated shifts in U.S. strategy or the international security environment.", "In spite of its potential advantages, Congress replaced incremental funding with the full funding policy in the 1950s, and has periodically reaffirmed the full funding policy since then, on the grounds that incremental funding did (or could do) one or more of the following:\nmake the total procurement costs of weapons and equipment less visible to Congress and more difficult for Congress to understand and track; permit one Congress to \"tie the hands\" of one or more future Congresses—a kind of action that Congress traditionally tries to avoid—by providing initial procurement funding for a weapon whose cost would have to be largely funded by one or more future Congresses; create a potential for DOD to start procurement of an item without necessarily understanding its total cost, stating that total cost to Congress, or providing fully for that total cost in future DOD budgets—the so-called \"camel's-nose-under-the-tent\" issue; and increase weapon procurement costs by exposing weapons under construction to potential uneconomic start-up and stop costs that can occur when budget reductions or other unexpected developments cause one or more of the planned increments to be reduced or deferred.", "Split funding is a two-year form of incremental funding. Under split funding, a weapon's procurement cost is divided into two portions, one of which is funded in the item's year of procurement, the other the following year. The Navy in its FY2007 and FY2008 budget submissions proposed to procure LHA-6 and the first two DDG-1000s using split funding in FY2007 and FY2008, and to procure CVN-78 using split funding in FY2008-FY2009.", "As part of its proposed FY2005 budget and FY2005-FY2009 Future Years Defense Plan (FYDP), the Navy in 2004 proposed funding the procurement of the lead DDG-1000 destroyer and the lead Littoral Combat Ship (LCS) program in the Navy's research and development (R&D) account rather than the Navy's ship-procurement account, which is known formally as the Shipbuilding and Conversion, Navy (SCN) account. Funding the procurement of lead ships through the R&D account would permit them to be incrementally funded without violating the full funding policy.\nCongress, in acting on the Navy's proposed FY2005 and FY2006 defense budgets, rejected the Navy's proposal to procure the lead DDG-1000 through the Navy's research and development account, directed the Navy to fully fund the lead DDG-1000 in the Navy's ship-procurement account, and fully funded the two lead LCSs in the Navy's research and development account.", "", "Advance appropriations have not been used in Navy ship procurement, but have been used by other executive branch agencies to fund various programs.\nAdvance appropriations is an alternate form of full funding that is permitted under executive branch budget regulations. As a funding approach, it can be viewed as lying somewhere between traditional full funding and incremental funding. Advance appropriations is not to be confused with advance procurement (AP) funding that can occur under traditional full funding.\nUnder advance appropriations, as under traditional full funding, Congress makes a one-time decision to fund the entire procurement cost of an end item. That cost, however, can then be divided into two or more annual increments, as under incremental funding, that are assigned to (in budget terminology, \"scored in\") two or more fiscal years.\nIn contrast to incremental funding, under which Congress must take a positive action each year to approve each year's funding increment, under advance appropriations, Congress, following its initial decision to fund the item, would need to take a positive action to cancel or modify an annual funding increment in a future-year budget. In this sense, advance appropriations can be thought of as a legislatively locked in form of incremental funding: the future-year funding increments will occur unless Congress takes action to stop them.\nOMB Circular A-11 allows for the use of advance appropriations to help finance capital assets under certain circumstances:\nRegular appropriations for the full funding of a capital project or a useful segment (or investment) of a capital project in the budget year are preferred. If this results in spikes that, in the judgment of OMB, cannot be accommodated by the agency or the Congress, a combination of regular and advance appropriations that together provide full funding for a capital project or a useful segment or an investment should be proposed in the budget.\nExplanation : Principle 1 (Full Funding) is met as long as a combination of regular and advance appropriations provide budget authority sufficient to complete the capital project or useful segment or investment. Full funding in the budget year with regular appropriations alone is preferred because it leads to tradeoffs within the budget year with spending for other capital assets and with spending for purposes other than capital assets. In contrast, full funding for a capital project (investment) over several years with regular appropriations for the first year and advance appropriations for subsequent years may bias tradeoffs in the budget year in favor of the proposed asset because with advance appropriations the full cost of the asset is not included in the budget year. Advance appropriations, because they are scored in the year they become available for obligation, may constrain the budget authority and outlays available for regular appropriations of that year.\nIf, however, the lumpiness caused by regular appropriations cannot be accommodated within an agency or Appropriations Subcommittee, advance appropriations can ameliorate that problem while still providing that all of the budget authority is enacted in advance for the capital project (investment) or useful segment. The latter helps ensure that agencies develop appropriate plans and budgets and that all costs and benefits are identified prior to providing resources. In addition, amounts of advance appropriations can be matched to funding requirements for completing natural components of the useful segment. Advance appropriations have the same benefits as regular appropriations for improved planning, management, and accountability of the project (investment).", "Because advance appropriations involves a one-time decision by Congress to approve the entire procurement cost of the end item, which can then be divided into two or more increments that are assigned to two or more fiscal years, advance appropriations can be described in simplified terms as \"one decision for multiple pots of money.\"", "Supporters of advance appropriations could argue that it offers many of the potential advantages of incremental funding outlined earlier—including avoiding or mitigating budget spikes—while avoiding some of its potential disadvantages, such as the risk of increasing weapon procurement costs created by uneconomic start-up and stop costs that can occur when budget reductions or other unexpected developments cause planned increments to be reduced or deferred.\nOpponents of advance appropriations could argue that it retains (or even expands) one of the key potential disadvantages of incremental finding—that of tying the hands of future Congresses—by committing a portion of one or more future-year budgets to the financing of an item procured in a prior year and requiring a positive action from future Congresses to undo those commitments. Opponents could also argue that compared to full funding, advance appropriations under certain circumstances could increase ship-construction costs by causing work on a ship to stop and then be restarted. Specifically, they could argue, if a given increment of construction work on the ship is completed before the end of a fiscal year and that year's funding increment is entirely expended, the Navy might have to halt work on the ship and wait until the start of the next fiscal year to access the next increment of funding and resume work. Under full funding, in contrast, the Navy would have access to funding for the ship's entire construction cost and consequently would not have to halt work until the start of the next fiscal year, avoiding the additional costs of halting and then resuming work.", "In 2001, some Navy officials advocated the use of advance appropriations for Navy ship procurement, noting at that time that this funding approach is used by several federal agencies other than DOD.\nAlthough use of advance appropriations for Navy ship procurement was supported by some Navy officials and some Members of Congress, the Navy in 2001 apparently did not receive approval from the Office of Management and Budget (OMB) to use the approach for ship procurement, and did not officially propose its use as part of its FY2002 budget submission to Congress. Congress in 2001 did not adopt advance appropriations as a mechanism for funding Navy ships. The House Appropriations Committee, in its report ( H.Rept. 107-298 of November 19, 2001) on the FY2002 defense appropriations bill ( H.R. 3338 ), stated that it was\ndismayed that the Navy continues to advocate the use of alternative financing mechanisms to artificially increase shipbuilding rates, such as advanced appropriations, or incremental funding of ships, which only serve to decrease cost visibility and accountability on these important programs. In attempting to establish advanced appropriations as a legitimate budgeting technique, those Navy advocates of such practices would actually decrease the flexibility of future Administrations and Congresses to make rational capital budgeting decisions with regard to shipbuilding programs. Accordingly, the Committee bill includes a new general provision (section 8150) which prohibits the Defense Department from budgeting for shipbuilding programs on the basis of advanced appropriations.\nThe general provision mentioned above (Section 8150) was not included in the final version of the bill that was passed by Congress and signed into law ( H.R. 3338 / P.L. 107-117 of January 10, 2002).", "Could using incremental funding or advance appropriations reduce instability in Navy ship-procurement plans?\nUsing incremental funding or advance appropriations could help reduce instability in Navy ship-procurement plans by avoiding or mitigating budget spikes that can occur when traditional full funding is used to procure ships that are very expensive and are procured once every few years. The ships that best fit this description are aircraft carriers and \"large-deck\" amphibious assault ships. Accommodating budget spikes for such ships within an overall ship-procurement or Department of the Navy budget for a given fiscal year can require the Navy to move to other fiscal years other ships that the Navy would have preferred to procure in the spike year, or, conversely, require the Navy to move the carrier or amphibious assault ship from a preferred year of procurement to a less-preferred year that happens to have fewer other Navy ships in it. Such movements of planned ship procurements can be a source of instability in Navy ship-procurement planning.", "Could using incremental funding or advance appropriations increase the number of Navy ships that can be built for a given total amount of ship-procurement funding?\nUsing incremental funding or advance appropriations could marginally increase the number of ships that could be built for a given total amount of ship-procurement funding (or, conversely, marginally reduce the total cost to procure a given number of ships). By avoiding instances in which budget spikes caused ships to be moved from one year to another in ship-procurement plans, using incremental funding or advance appropriations can avoid perturbations in the production schedules for these ships. Such perturbations can increase the cost of a ship, reducing at the margin the total number of ships that can be procured for a given total amount of ship-procurement funding.\nIn addition, if a situation arises in which annual funding for ship procurement limits ship-procurement in the near term to low rates with poor production economies of sale, but is expected to rise in future years to levels that would be more than adequate to support higher, economic rates of ship procurement, then using incremental funding or advance appropriations could permit construction to begin on additional ships in the near term, improving near-term production economies of sale, while still permitting the Navy to procure ships in future years at economic rates of production. Improving near-term production economies of scale while preserving acceptable production economies of scale in later years might result in marginally higher average economies of scale for the entire period in question and thereby reduce, at the margin, the collective cost of all the ships procured in the near term and the later years.\nThis second scenario, however, is dependent on realizing the expected increase in ship-procurement funding in the later years. If this increase is not realized, then using incremental funding or advance appropriations could simply trade poor production economies of scale in the near term for poor production economies of scale in future years. Put another way, it would simply trade an inability to afford something now for an inability to afford something later.\nIn discussing the potential effects of using incremental funding or advance appropriations, it is possible to construct presentations showing how a decision today to begin using incremental funding or advance appropriations can increase, perhaps dramatically, the number of ships on which construction can be started in the near term. This is simply because using incremental funding or advance appropriations would defer much of the procurement cost of the ships in question to future years. In those future years, the remainder of the cost of these ships would still have to be paid. As a result, other things held equal, the number of new ships that could be procured in those future years for a given amount of ship-procurement funding will be reduced because portions of those future-year budgets would now be needed to pay for the ships on which construction had started in prior years.\nPresentations that show a dramatic near-term increase in the number of ships on which construction can begin by starting to use incremental funding or advance appropriations—if not tempered by cautions that it would also reduce the number of new ships that can be procured in future years for a given amount of shipbuilding funding—can mislead audiences into concluding that using incremental funding or advance appropriations can dramatically increase the total number of ships that can be procured over the long run for a given total amount of ship-procurement funding. Incremental funding or advance appropriations, by avoiding perturbations in ship production schedules or improving average production economies of scale over a period of several years, can marginally reduce ship-procurement costs and thereby marginally (rather than dramatically) increase the total number of ships that can be procured over the long run for a given amount of ship-procurement funding. The reduction in ship-procurement costs might be sufficient, for example, to increase from 20 to 21 the total number of ships that could be fully paid for with a certain total amount of funding.\nUnder certain other circumstances, using incremental funding or advance appropriations could increase rather than reduce ship-procurement costs. As discussed earlier, using incremental funding can increase the procurement cost of a ship if one of more of the ship's funding increments is reduced or deferred and the ship's production schedule is consequently disrupted. In addition, if budget circumstances require reducing the ship-procurement budget for a given year and some portion of that year's budget is already devoted to paying for ships started in prior years with incremental funding or advance appropriations, then preserving that portion of the budget so as to avoid disrupting the production schedule of those prior-year ships would mean that the budget reduction would fall more heavily on the remaining part of the ship-procurement budget. This could increase the chance that the reduction would lead to a decision to defer to a future year the procurement of a ship planned for that year, which could increase the procurement cost of that ship.\nLastly, if Congress decides to make more use of incremental funding or to start using advance appropriations, and then decides at a later point to return to a more exclusive reliance on full funding, it could temporarily reduce the number of new ships that could be procured because the full costs of new ships being procured and portions of the costs of ships started in prior years under incremental funding or advance appropriations would need to be funded at the same time.", "Options for Congress that arise out of proposals to make greater use of incremental funding or begin using advance appropriations for procuring Navy ships include (but are not limited to) the following:\nmaintain current ship-procurement funding practices; strengthen adherence to the full funding policy in ship procurement; increase the use of incremental funding in ship procurement; begin using advance appropriations in ship procurement; and shift lead-ship detailed design/nonrecurring engineering (DD/NRE) costs to the Navy's research and development (R&D account).\nEach of these is discussed below.", "Current ship-procurement funding practices can be summarized as procuring almost all ships with full funding, procuring a small number (e.g., aircraft carriers and large-deck amphibious assault ships) with de facto or explicit incremental funding, and approving, for some ships being fully funded, advance procurement (AP) funding that the Navy did not request, or for purposes of shipyard advance construction activities rather than long-lead components.\nSupporters of this option could argue that current funding practices give DOD and the Congress the flexibility to use incremental funding on a limited basis for certain ships while not formally abandoning the full funding policy. They could similarly argue that current funding practices provide Congress with flexibility for using AP funding for purposes other than funding long-lead items requested by DOD. Such flexibility, they can argue, is important for meeting policy goals such as preserving the shipbuilding industrial base within available funding.\nOpponents of this option could argue that current practices weaken adherence to the full funding policy by making even limited use of incremental funding and by using AP funding for purposes other than funding long-lead items requested by DOD. Such practices, they could argue, increase the chance that supporters of other kinds of procurement items, such as aircraft and satellites, could seek to have them funded using incremental funding, and that such proposals have been made.", "This option would involve reducing or eliminating the use of incremental funding in Navy ship procurement and reducing or eliminating the use, in ships being fully funded, of AP funding for purposes other than funding the procurement of long-lead items requested by DOD.\nSupporters could argue that this option, by strengthening adherence to the full funding policy, would reduce the chance that supporters of other kinds of DOD procurement items, such as aircraft, would seek to have them funded using incremental funding. Budget spikes associated with procuring aircraft carriers or large-deck amphibious assault ships, they could argue, can be anticipated years in advance, permitting their effects to be carefully managed. They could argue that stability in Navy ship-procurement plans can be increased by encouraging the Navy and DOD to better define their thinking regarding Navy requirements, and that ship-procurement costs can be reduced through measures other than incremental funding or advance appropriations, such as multiyear procurement, contracts that are structured to provide incentives to shipbuilders to control costs, and investment in improved shipyard production capabilities.\nOpponents of this policy could argue that it would deprive Congress of the flexibility it has under current funding practices to use incremental funding on a limited basis when absolutely necessary and to use AP funding for purposes other than funding long-lead items requested by DOD. Congress, they could argue, should not deprive itself of tools that might help improve stability in Navy shipbuilding plans, reduce ship-procurement costs, and preserve the shipbuilding industrial base within available funding. Congress, they could argue, has recently taken steps to discourage the spread of incremental funding to DOD procurement items other than ships, and can continue doing this while preserving some flexibility for itself in funding ship procurement.", "This option could involve explicitly (rather than tacitly) using incremental funding for aircraft carriers, using incremental funding to procure all (not just some) large-deck amphibious assault ships, or both. It could also involve funding the procurement of the lead ships of each new class of Navy ships in the Navy's research and development account rather than the ship-procurement account, as the Navy has proposed in previous years.\nSupporters of this option could argue that it would take maximum advantage of opportunities for avoiding or mitigating budget spikes associated with the procurement of these ships. They could also argue that it could strengthen the full funding policy by making it clear to observers that only certain ships, and no other DOD procurement items, may be procured with incremental funding. They could argue that current funding practices—under which aircraft carriers and selected other ships can be funded with incremental funding (either de facto or explicit)—can send confusing signals regarding adherence to the full funding policy, and that a clear, explicit policy of using incremental funding only for certain ships would send a clear signal that these ships represent special exceptions to an otherwise strict practice of adhering to the full funding policy.\nOpponents of this option could argue that any use of incremental funding weakens the full funding policy, increasing the likelihood of proposals to use it for funding other DOD procurement items. Incremental funding, they could argue, should be used to avoid or mitigate budget spikes only when doing so is necessary to avoid disruptions in ship-procurement programs that would substantially increase procurement costs. Depending on the composition of the ship-procurement plan, they could argue, the budget spike associated with a carrier or large-deck amphibious assault ship might or might not lead to a disruption that substantially increased procurement costs, and that such increases in any event would have to be weighed against the risk of an increase in cost of an incrementally funded ship due to a decision in a future year to reduce or delay a funding increment.", "This option could involve starting to use advance appropriations for ships such as aircraft carriers or large-deck amphibious assault ships.\nSupporters could argue that this option, like the previous one, would take maximum advantage of opportunities for avoiding or mitigating budget spikes associated with the procurement of these ships. Since advance appropriations is a form of full funding, they could argue that this option would not weaken the full funding policy. They could also argue that compared to the previous option, this option would create less risk of an increase in the cost of an aircraft carrier or large-deck amphibious assault ship due to a decision to reduce or defer a funding increment because, under advance appropriations, funding increments occur automatically unless Congress takes a positive actions to stop them.\nOpponents of this option could argue that even though advance appropriations is a form of full funding, introducing its use into Navy ship procurement would still amount to a relaxation of the application of the full funding concept to DOD procurement that could serve as a precedent for subsequent proposals to relax its application still further. This option, they could argue, is unnecessary because a budget spike associated with the procurement of an aircraft carrier or large-deck amphibious assault ship can be accomplished through the currently accepted practice of occasionally using incremental funding. Starting to use advance appropriations for aircraft carriers or large-deck amphibious assault ships, they could argue, creates a risk of increasing the procurement cost of other ships as a result of concentrating potential reductions in future-year ship-procurement budgets on those ships.", "In Navy ship-procurement programs, the detailed design and nonrecurring engineering (DD/NRE) costs for each class of ship—the cost to create the detailed plans for building the class—are included in the procurement cost of the lead ship in the class. Since the DD/NRE costs for a complex combatant can be significant, including them in the procurement cost of the lead ship can make the lead ship significantly more expensive to procure than the second and subsequent ships in the class.\nIncluding DD/NRE costs in the procurement cost of the lead unit is a practice that is not followed by other DOD procurement programs, such as programs for procuring aircraft, ground vehicles, and missiles. If it were, the lead units of these other types of procurement programs would be significantly more expensive to procure.\nOne response to the challenge of paying for lead ships whose procurement cost includes significant DD/NRE costs, would be to fund the procurement of lead ships through the Navy's research and development (R&D) account rather than the Navy's ship-procurement account, as the Navy has proposed in 2004 and 2005. This approach, which would permit both DD/NRE costs and the hands-on construction costs of lead ships to be funded incrementally while not violating the full funding policy, can be viewed as an example of the previously-discussed option of increasing the use of incremental funding.\nAs discussed earlier, Congress, in acting on the Navy's proposed FY2005 and FY2006 defense budgets, rejected the Navy's proposal to procure the lead DDG-1000 through the Navy's research and development account, directed the Navy to fully fund the lead DDG-1000 in the Navy's ship-procurement account, and fully funded the two lead LCSs in the Navy's research and development account.\nAn alternative approach to the challenge of paying for lead ships whose procurement cost includes significant DD/NRE costs would be to treat DD/NRE work as the final stage of the R&D process and transfer DD/NRE costs to the Navy's R&D account. Under this option, the DD/NRE costs for a ship class could be incrementally funded without violating the full funding policy, while the actual hands-on construction cost of the lead ship would be fully funded, in conformance with the full funding policy.\nThis option can be viewed as an intermediate approach that is between the current practice of fully funding both DD/NRE costs and the lead ship's hands-on construction costs, and incrementally funding both these costs in the R&D account, as would occur under the Navy's proposal.\nSupporters of this option could argue that DD/NRE work is best viewed as the final stage of research and development and should be treated as such in the budget, and that shifting these costs to the R&D account would make Navy ship-procurement programs look more like DOD procurement programs for things such as aircraft, ground vehicles, and missiles.\nOpponents could argue that NN/NRE work is more closely related to production than to research, and that the current practice of including DD/NRE costs in the procurement cost of the lead ship makes these costs more visible to Congress, which is important because detailed design costs for certain past Navy ships have experienced significant cost growth.", "", "", "The House Armed Services Committee, in its report ( H.Rept. 110-146 of May 11, 2007) on the FY2008 defense authorization bill ( H.R. 1585 ), approved the Navy's FY2008 request for the second of two increments of procurement funding for the amphibious assault ship LHA-6, the second of two increments of procurement funding for the first two DDG-1000 destroyers, and the first of two increments of procurement funding for the aircraft carrier CVN-78.", "The Senate Armed Services Committee, in its report ( S.Rept. 110-77 of June 5, 2007) on the FY2008 defense authorization bill ( S. 1547 ), approved the Navy's FY2008 request for the second of two increments of procurement funding for the amphibious assault ship LHA-6, the second of two increments of procurement funding for the first two DDG-1000 destroyers, and (with a recommended $20-million reduction) the first of two increments of procurement funding for the aircraft carrier CVN-78.\nAppendix A. Legislative Activity for FY2007\nH.R. 5122 / P.L. 109-364 (FY2007 Defense Authorization Act)\nHouse\nIn its report ( H.Rept. 109-452 of May 5, 2006) on H.R. 5122 , the House Armed Services Committee recommended approval of the Navy's proposed use of split funding FY2007 and FY2008 for procuring LHA-6, but did not recommend approval of the Navy's proposal to use split funding in FY2007 and FY2008 for procuring the two lead DDG-1000s. The committee for FY2007 instead recommended full funding for one DDG-1000, and design funding for a second. The committee's report states:\nThe budget request recommends incremental funding for 3 of the 7 ships in the request, including for the first time construction of a surface combatant, the next-generation destroyer DD(X). Furthermore, during the consideration of the National Defense Authorization Act for Fiscal Year 2006 ( P.L. 109-163 ), the Navy sought and was granted the authority to use incremental funding for the next aircraft carrier [CVN-78], which will be recorded as procured in 2008.\nThe committee remains concerned that the use of incremental funding is not a solution to the Navy's problem in funding shipbuilding. While incremental funding can allow the Navy to smooth out the dramatic spikes in shipbuilding funding required as a result of aircraft carrier construction every four or five years, it does not fundamentally increase the number of ships that a given amount of money will purchase. During the committee's hearings on shipbuilding, all witnesses emphasized the importance of program and funding stability as the top priority for reducing the cost of shipbuilding and sustaining the shipbuilding industrial base. The committee notes that Congress adopted the full funding policy in the 1950s in part because of a concern that incremental funding was detrimental to funding stability. Future congresses may find themselves unwilling, or unable, to fund completion of ships begun in prior years and only partially funded. The committee remains convinced that the full funding policy is the correct policy for funding shipbuilding.\nThe committee understands that the Department of Defense this year considered submission of a legislative proposal that would permanently authorize the use of \"split funding\" for aircraft carriers and large deck amphibious ships, and the Navy's fiscal year 2007 shipbuilding plan already assumes such authority for the second LHA class amphibious assault ship. The committee has approved the use of split funding for certain ships in certain cases. However, the committee does not believe that a blanket policy supporting incremental funding for any class of ship is appropriate, and has not included such a provision in the bill. (Pages 68-69)\nSenate\nSection 121 of the Senate version of the FY2007 defense authorization bill ( S. 2766 ) would authorize the use of four-year incremental funding for procuring CVN-78 and future aircraft carriers, rather than split funding (i.e., two-year incremental funding) as proposed by the Navy. Under four-year incremental funding, the main portion of the procurement cost of CVN-78, for example, would be divided into four increments that would be provided in FY2008, the ship's year of procurement, and the three following years.\nSection 121 would also authorize the Navy to contract in FY2007 for the procurement long-lead items for CVN-79 and CVN-80, aircraft carriers that the Navy plans to procure in FY2012 and FY2016, respectively. This authority resembles an economic order quantity (EOQ) arrangement, except that EOQs normally take place within the context of a multiyear procurement (MYP). These ships have not been approved for MYP, and under past practice would not qualify for it under the requirements set forth in the law governing MYP arrangements. MYP arrangements are permitted to cover items to be procured over a period of up to five years, while the authority granted under Section 121 would cover three ships that the Navy wants to procure over a period of nine years (FY2008-FY2016).\nIn its report ( S.Rept. 109-254 of May 9, 2006) on S. 2766 , the Senate Armed Services Committee recommended approval of the Navy's proposed use of split funding FY2007 and FY2008 for procuring LHA-6 and the two lead DDG-1000s.\nThe report states:\nThe committee recommends a provision that would authorize the Secretary of the Navy to incrementally fund procurement of CVN-21 class aircraft carriers over four year periods, commencing with CVN-78 procurement in fiscal year 2008. The budget request included $739.1 million in Shipbuilding and Conversion, Navy (SCN) for CVN-78 advance procurement and $45.1 million in SCN for CVN-79 advance procurement. The provision would also authorize advance procurement for CVN-80, commencing in fiscal year 2007.\nIn reviewing the budget request for fiscal year 2006, the committee received testimony from the Navy and industry that the low rate of shipbuilding was driving higher costs, which in turn further reduced shipbuilding rates, creating a downward spiral. The committee believes that stable ship requirements, increased funding in the shipbuilding budget, and increased flexibility for funding large capital ships are critical elements of any strategy to reverse this trend.\nThe Secretary of the Navy's fiscal year 2007 report to Congress on the long-range plan for the construction of naval vessels identifies a requirement to procure the CVN-21 class aircraft carriers at 4-year intervals, commencing in fiscal year 2008. The Navy originally planned to procure the first CVN-21 class aircraft carrier, CVN-78, in fiscal year 2006. Since then, the Navy has delayed procurement to 2008, which has delayed fielding this vital capability, while significantly increasing the aircraft carrier's procurement cost. The committee believes that procuring and delivering the CVN-21 class aircraft carriers over 4-year periods in accordance with the Navy's long-range plan is vital to the National Defense Strategy, and is vital to the affordability of these capital ships.\nElsewhere in this report, the committee has expressed concern with cost growth on the CVN-77 program, and has urged the Navy and the shipbuilder to identify opportunities to improve affordability of future aircraft carriers. Procurement delays, excess inflation, and material escalation have been reported as significant contributors to CVN-77 cost growth. The shipbuilder has proposed to achieve significant CVN-21 class program savings through a stable procurement plan, and through procurement of economic order quantity material for CVN-79 and CVN-80 in conjunction with CVN-78 procurement.\nIn view of the potential for significant program savings, the committee recommends an increase of $50.0 million in SCN for CVN-21 class advance procurement, and directs the Secretary of the Navy to review economic order quantity and long lead time material procurement for the CVN-21 class. The Secretary is to submit a report to the congressional defense committees with the fiscal year 2008 budget request, outlining the advance procurement requirements to potentially optimize economic order quantity savings and escalation avoidance (to include offsetting factors) for the first three vessels of the CVN-21 class. Of the amount authorized to be appropriated for advance procurement for CVN-79 and CVN-80, none of the funds are available for obligation prior to 30 days following receipt of the Secretary's report. (Page 67)\nConference Report\nSection 121 of the conference report on H.R. 5122 ( H.Rept. 109-702 of September 29, 2006) authorizes four-year incremental funding for the CVN-21 class aircraft carriers CVN-78, CVN-79, and CVN-80. Section 124 authorizes the procurement of the first two DDG-1000 destroyers in FY2007 using split funding in FY2007 and FY2008, as requested by the Navy. The section states in part:\n(c) SENSE OF CONGRESS ON FUNDING FOR FOLLOW-ON SHIPS.—It is the sense of Congress that there is sufficient benefit to authorizing the one-time exception provided in this section to the full funding policy in order to support the competitive procurement of the follow-on ships of the DDG-1000 Next-Generation Destroyer program. However, it is the expectation of Congress that the Secretary of the Navy will structure the DDG-1000 program so that each ship, after the first two ships, is procured using the method of full funding in a single year.\nH.R. 5631 / P.L. 109-289 (FY2007 Defense Appropriations Act)\nHouse\nIn its report ( H.Rept. 109-504 of June 16, 2006) on H.R. 5631 , the House Appropriations Committee recommended approval of the Administration's proposed use of split funding FY2007 and FY2008 for procuring the amphibious assault ship LHA-6, but did not recommend approval of the Administration's proposal to use split funding in FY2007 and FY2008 for procuring the two lead DDG-1000 destroyers. The committee for FY2007 instead recommended full funding for one DDG-1000. The committee's report states:\nFor fiscal year 2007, the Committee faces several challenges in recommending appropriations for the Department of Defense and the intelligence community. First, the President's budget proposes an unorthodox approach to funding two major procurement programs, the F-22 fighter of the Air Force and the DD(X) destroyer of the Navy. In both cases, the budget request includes incremental or partial funding, for these two programs. In the case of the F-22, incremental funding is requested in the middle of the production run.\nThe use of incremental funding mortgages the future of the procurement budget of the Defense Department in a manner that is not acceptable to the Committee. In addition, the precedent of incremental funding for these programs could be applied to a variety of other procurements, leading to a loss of budget transparency and reducing the ability to perform oversight. Therefore, the recommendations in this bill include full funding for one DD(X) destroyer and the F-22 fighter program.\nFunding of $2,568,111,000 is recommended to complete full funding of one DD(X) vessel. This is the same level as the funding request for this item, but under the President's budget these funds would have been allocated on an incremental basis against two ships. (Page 4)\nThe report also states:\nThe Committee recommends $2,568,111,000 for the procurement of 1 DD(X) destroyer. The budget requested $2,568,111,000 to incrementally fund 2 ships, with the balance of funding to be provided in fiscal year 2008. The Committee cannot support such a far-reaching policy change which has implications beyond the Navy's shipbuilding program. Further, the Navy's proposal requires special legislative authority to be executed, and this authority is not included in the House-passed National Defense Authorization Act, 2007 ( H.R. 5122 ). (Page 139)\nSenate\nIn its report ( S.Rept. 109-292 of July 25, 2006) on H.R. 5631 , the Senate Appropriations Committee recommends approving the Navy's request for FY2007 procurement funding for the first two DDG-1000 destroyers. The report states:\nConsistent with the Senate-passed authorization bill and the Navy's current acquisition strategy, the Committee recommendation supports the budget request of $2,568,111,000 for dual lead ships. The Committee reminds the Navy that this is a unique acquisition strategy and should not be used as a precedent for incrementally funding any future DDG—1000 or any other shipbuilding program. (Page 115)\nThe report recommends funding the procurement of one Littoral Combat Ship, or LCS (rather than the requested two) in FY2007, and rescinding funding (in Section 8043) for one of the three LCSs procured in FY2006. The report states:\nWith the fiscal year 2007 budget submission of $520,670,000 for the fifth and sixth LCS flight 0 ships, the Navy revealed the LCS unit cost estimate used as a basis for last year's appropriation was exclusive of contract change orders, planning and engineering services, program management support and other costs not included in the ship construction contract ... As a result, the Navy is unable to procure both the third and fourth LCS flight 0 ships without the availability of additional funding. The Committee is troubled by this revelation and recommends rescinding the insufficient fiscal year 2006 funds currently allocated to the fourth LCS flight 0 vessel.\nThe Committee is further troubled by reports that the first two LCS flight 0 ships under construction are exceeding their cost as previously budgeted.... As a result, the Committee believes the fiscal year 2007 budget request is insufficient to procure two ships and recommends $300,670,000 to fully fund procurement of one LCS seaframe, which is a reduction of $220,000,000 and one seaframe from the request. The Committee notes that this recommendation puts the Navy on its previously established path of procuring four LCS flight 0 ships by the end of fiscal year 2007. (Pages 115-116)\nConference Report\nThe conference report on H.R. 5631 ( H.Rept. 109-676 of September 25, 2006) approves the Navy's request for the initial (FY2007) increment of procurement funding for the LHA(R) amphibious assault ship, which the Navy wants to procure in FY2007 using split funding in FY2007 and FY2008. The conference report approves the Navy's request for the initial (FY2007) increment of procurement funding for the first two DDG-1000 destroyers, which the Navy wants to procure in FY2007 using split funding in FY2007 and FY2008. The report states:\nThe conferees agree to provide $2,568,111,000 for the DDG-1000 (formerly DDX) Destroyer Program, and agree to delete language proposed by the House requiring full funding of a single lead ship. The effect of the conference agreement would allow the Navy to split fund twin lead ships of the DDG-1000 class, if authorized in separate legislation by the Congress. This action is being taken based upon the expectation that the total cost of these two ships is well understood and low risk. The conferees are willing to make this one-time exception to the full funding principle because of the unique situation with the shipbuilding industrial base and with the DDG—1000 program. The conferees will not entertain future requests to fund ships other than under the full funding principle, except for those historically funded in this manner (aircraft carriers and some large deck amphibious ships).\nThe unusual procurement of twin lead ships raises the risk that future design changes or production problems will impact two ships under construction simultaneously. This could raise costs significantly compared to other lead ship programs. However, the Navy believes the cost and schedule risk in the DDG-1000 program is low enough to permit the twin lead ship acquisition strategy. The Navy has identified the total cost to procure the twin lead ships of the DDG—1000 class as $6,582,200,000. The conferees insist that the Navy manage this program within that total cost, and will be unlikely to increase funding through a reprogramming or an additional budget request except in the case of emergency, natural disaster, or other impact arising from outside the Navy's shipbuilding program. (Page 180)\nAppendix B. Legislative Activity for FY2006\nH.R. 1815 / P.L. 109-163 (FY2006 Defense Authorization Bill)\nHouse\nIn its report ( H.Rept. 109-89 of May 20, 2005) on H.R. 1815 , the House Armed Services Committee states:\n[Chief of Naval Operations] Admiral [Vernon] Clark, in his posture statement before the House Committee on Appropriations, Subcommittee on Defense stated, \"We need to partner with Congress and industry to regain our buying power. Acquisition and budget reforms, such as multi-year procurement, economic order quantity, and other approaches help to stabilize the production path, and in our view, reduce the per unit cost of ships and increase our shipbuilding rate.\" The committee does not agree that creative financing methodologies that delay recognizing the true cost of shipbuilding or that provide ever-increasing amounts of funding to cover the explosion in ship costs are responsible actions. Incremental funding, advanced procurement, multiyear procurement, and various creative shipyard work allocation arrangements have failed to control the cost growth of vessel classes such as the Virginia class submarine, the replacement amphibious assault ship (LHA(R)), the future major surface combatant ship (DD(X)), and the future aircraft carrier CVN-21. (Page 63)\nSection 1004 of the bill as reported by the committee states:\nSenate\nSection 122 of the FY2006 defense authorization bill ( S. 1042 ) as reported by the Senate Armed Services Committee ( S.Rept. 109-69 of May 17, 2005) would permit the aircraft carrier CVN-78 to be procured with split funding (i.e., incremental funding) during the period FY2007-FY2010. The section states:\nSection 123 of the bill would permit an amphibious assault ship LHA(R) to be procured with split funding (i.e., incremental funding) in FY2007 and FY2008. The section would also permit FY2006 funding to be used for advance construction of the ship. The section states:\nS.Rept. 109-69 states:\nThe CVN-78 will be a new class of aircraft carrier, incorporating numerous new technologies. This budget request reflects the second one-year slip in the program in recent years. This slip would cause a delay in the delivery of the CVN-78 until fiscal year 2015, with the ship it is scheduled to replace, the USS Enterprise (CVN-65), scheduled to be decommissioned in fiscal year 2013. Additionally, this slip translates into a cost growth for CVN-78 of approximately $400.0 million, according to the Navy.\nThe committee is concerned about this delay. The committee has been told there is no technical reason for the delay, but that the delay was driven by budget considerations. Both the Secretary of the Navy and the Chief of Naval operations testified that large capital assets such as aircraft carriers are difficult to fund under the traditional full-funding policy, and that more flexible methods of funding must be found and used. The program of record for CVN-78 has the detail design and construction funding split between two years. This provision would authorize that same funding to be split over four years, thereby allowing needed funding flexibility. The committee directs the Navy to provide an updated funding profile, fully funding the remaining costs of the ship from fiscal years 2007 through 2010, with delivery of the fiscal year 2007 budget request.\nConference Report\nSection 128 of the conference report ( H.Rept. 109-360 of December 18, 2005) on H.R. 1815 / P.L. 109-163 of January 6, 2006 authorizes the use of incremental funding in FY2007, FY2008, and FY2009 for the procurement of the aircraft carrier CVN-78, subject to the availability of appropriations for those fiscal years. The provision states:\nSection 129 of the conference report authorizes the use of incremental funding in FY2007 and FY2008 for the procurement of the LHA(R) amphibious assault ship, subject to the availability of appropriations for those fiscal years. The provision states:\nH.R. 2863 / P.L. 109-148 (FY2006 Defense Appropriations Bill)\nHouse\nIn its report ( H.Rept. 109-119 of June 10, 2005) on H.R. 2863 , the House Appropriations Committee stated, in the section on Navy shipbuilding, that it \"supports the LHA(R) [amphibious assault ship] program, and it directs the Navy to reconsider its proposal to request split funding for LHA(R) over the FY2007-08 timeframe, and instead follow the full funding principle for this ship class, to ensure an adequate budget is in hand before contract award.\" (Page 146)\nSenate\nIn its report ( S.Rept. 109-141 of September 29, 2005) on H.R. 2863 , the Senate Appropriations Committee stated:\nThe Committee remains gravely concerned about the overall health and stability of Navy shipbuilding. Fleet inventory and capability requirements remain unstable as do program performance and costs.\nOf primary concern are soaring cost overruns. The Committee finds unanticipated cost overruns to be the root cause of much of the instability in the program. Until budget estimates become more realistic, requirements stabilize and penalties for exorbitant cost overruns are exercised, ship construction costs are unlikely to improve. The Committee is aware that the new Chief of Naval Operations [CNO] is actively reviewing shipbuilding programs and is considering several options for controlling long-term costs. In an effort to assist the Navy in the short-term, the Committee recommends providing the Navy financial management authorities that have previously been denied.\nFor fiscal year 2006, the Committee recommends providing the Navy additional reprogramming authority. This authority allows the Navy, through above threshold reprogramming procedures, to increase funding for programs experiencing unforeseen shortfalls. The Committee understands that in fiscal year 2005 after exhausting the $100,000,000 of the transfer authority the Congress provided, the Navy sought to use dollars specifically appropriated for outfitting and post delivery to address funding shortfalls. The Committee is concerned about this change in Navy policy as it will only further obscure actual program costs. The new reprogramming authority is provided only with the understanding that this change will not be implemented in the future.\nThe additional reprogramming authority essentially provides the Navy a reactive mechanism or approach to cost management. The Committee believes the situation requires more proactive program, budgetary and contract management and encourages the Department of Defense to consider whether using advance appropriations in future budgets will improve the shipbuilding program. (Page 126)\nThe committee also stated:\nThe fiscal year 2006 President's budget requests $225,427,000 for [the]DDG-51 [destroyer program] for what the Navy describes as \"program completion requirements and shutdown costs.\" These funds are requested for a mix of Class and ship specific plan, basic construction, ordnance, certification, and inspection costs. Such costs are traditionally included in the budget request for each ship. However, when signing the multiyear contract for the construction of the final DDGs of the Class, the Department decided to change its policy and budget for these costs after the last ship was appropriated. The Committee finds this decision troubling. First, budgeting for such costs after procurement of the last vessel obscures the actual cost to procure each ship and overstates savings attributable to the multiyear contract authority under which these ships were purchased. The Congress approved the Navy's request for multiyear procurement authority in fiscal year 2002 assuming a level of savings to the taxpayer that are now not being realized. Most disconcerting about this change in policy and resultant budget request is the Navy's assertion that if these costs are not funded, the Navy will not be able to meet its contractual obligations and the Chief of Naval Operations will not be able to accept delivery of these ships. The Committee is alarmed that the Navy would knowingly sign a multibillion dollar contract for ships that would be both non-operational and undeliverable unless additional dollars, outside the contract, were provided. The Committee directs the Secretary of the Navy to provide a detailed report of all the costs required to complete each of the remaining 11 ships and a rationale for such a contractual arrangement by December 1, 2005. Until sufficient explanation is provided, the Committee recommends only providing funds for plans and those costs directly attributable to ships scheduled to deliver in the near-term. As such the Committee recommends reducing the budget request by $195,654,000. (Page 127)\nConference Report\nThe conference report ( H.Rept. 109-359 of December 18, 2005) on H.R. 2863 states:\nThe conferees do not agree with House direction urging the Navy to reconsider split funding for the LHA(R) Program. The conferees agree to consider either split funding or full funding if proposed by the Administration.\nH.Con.Res. 95 (Concurrent Resolution on FY2006 Budget)\nConference Report\nThe conference report ( H.Rept. 109-62 of April 28, 2005) on H.Con.Res. 95 , the budget resolution for FY2006, states:\nThe conference conferees understand the Navy may review whether advance appropriations can improve its procurement of ships and provide savings as it designs its 2007 budget. In addition, the conferees intend to request the Government Accountability Office [GAO] to assess the implications of using advance appropriations to procure ships.\nThe report notes that\nSection 401 [of H.Con.Res. 95 ] reflects an overall limit on advance appropriations of $23.158 billion in fiscal year 2007, which is the same limit on advance appropriations as has been included in all previous limitations on advance appropriations in past budget resolutions.\nThe report includes the Shipbuilding and Conversion, Navy (SCN) appropriation account in the list of accounts identified for advance appropriations in the Senate.\nS.Amdt. 146 to S.Con.Res. 18\nS.Con.Res. 18 is the earlier Senate version of the budget resolution. Senate Amendment ( S.Amdt. 146 ) to S.Con.Res. 18 was sponsored by Senator Warner, co-sponsored by several other members, and submitted on March 15, 2005. It would amend Section 401 of S.Con.Res. 18 —the section that restricts use of advance appropriations—to increase the amount of advance appropriations in FY2007 and FY2008 by $14 billion, to $37.393 billion. The amendment would also insert a new provision (Section 409) that would include the Shipbuilding and Conversion, Navy (SCN) appropriation account on a list of accounts identified for advance appropriations in the joint explanatory statement of the managers to accompany S.Con.Res. 18 . The amendment was ordered to lie on the table. The Senate passed S.Con.Res. 18 on March 17, 2005.\nAppendix C. Recent Ships Procured with Incremental Funding\nThis appendix discusses Navy and DOD ships that have been procured in recent years or are currently being procured using incremental funding.\nDOD LMSR-Type Sealift Ships\nAs part of its action on the FY1993 defense budget, Congress created the National Defense Sealift Fund (NDSF)—a revolving fund in the DOD budget for the procurement, operation, and maintenance of DOD-owned sealift ships —and transferred procurement of new military sealift ships and certain Navy auxiliary ships from the Shipbuilding and Conversion, Navy (SCN) appropriation account, where they traditionally had been procured, to the NDSF. Since the NDSF is outside the procurement title of the defense appropriation act, sealift ships procured since FY1993, including DOD's Large, Medium-Speed, Roll-on/Roll-off (LMSR) ships (as well as Navy Lewis and Clark (TAKE-1) dry cargo ships procured since FY2003 ) have not been subject to the full funding policy as traditionally applied to DOD procurement programs.\nAs discussed in a 1996 CRS report, although individual LMSRs were ostensibly fully funded each year by Congress, like ships procured in the SCN account, DOD in some cases actually applied LMSR funding provided in a given year to partially finance the construction of LMSRs authorized in various years. For example, although Congress ostensibly approved $546.4 million in FY1995 for the procurement of two LMSRs, the FY1995 funds were actually applied to help finance portions of 16 LMSRs whose construction contracts were awarded between FY1993 and FY1997. In explaining its use of funds in the LMSR program, DOD stated:\nThe National Defense Sealift Fund (NDSF) is not a procurement appropriation but a revolving fund. Dollars appropriated by Congress for the fund are not appropriated to purchase specific hulls as in the case of, for example the Navy's DDG-51 program. Rather, dollars made available to the NDSF are executed on an oldest money first basis. Therefore, full funding provisions as normally understood for ship acquisition do not apply.\nSSN-23 Attack Submarine\nThe Jimmy Carter (SSN-23), the third and final Seawolf (SSN-21) class attack submarine, was originally procured in the FY1992 defense budget, which Congress passed in 1991. In early 1992, the George H. W. Bush Administration terminated procurement of further Seawolf-class submarines and proposed rescinding funds for both the second Seawolf-class boat (SSN-22, which had been procured in FY1991) and SSN-23. In acting on this proposal, Congress rejected the request to rescind funding for SSN-22 (i.e., Congress affirmed the procurement of SSN-22), effectively suspended the procurement of SSN-23, and gave the Secretary of the Navy the choice of whether to reinstate procurement of SSN-23. In 1993, as part of its Bottom-Up Review (BUR) of U.S. defense policy and programs, the Clinton Administration decided to reinstate procurement of SSN-23 in FY1995 or FY1996 (it later settled on FY1996). By this point, $382.4 million had already been obligated and expended on SSN-23. Congress's action on the 1992 rescission proposal also made an additional $540.2 million in funding available for obligation to SSN-23. As a consequence, completing the approximate $2.4 billion cost of SSN-23 would require about $1.5 billion in additional funding.\nThe Administration requested $1,507.5 million in FY1996 to complete the cost of SSN-23. Congress approved the procurement of SSN-23 in FY1996, but provided only $700 million in procurement funding, leaving about $807.5 million to complete the cost of the ship.\nRather than requesting all $807.5 million or so in FY1997, the Administration requested $699.1 million in FY1997 for SSN-23 and deferred the final $105 million or so needed to complete the cost of the ship (as adjusted) to FY1998. Congress, as part of its action on the FY1996 defense budget, approved $649.1 million (rather than $699.1 million) for SSN-23, leaving about $155 million to complete the cost of the ship.\nThe Administration requested $153.4 million in FY1998 to complete the cost of SSN-23 (as adjusted); Congress approved this amount. Thus, of the approximately $2.4 billion cost of SSN-23 as then estimated, a total of $802.5 million—about one-third of the total estimated cost of the ship—was appropriated by Congress in the two years (FY1997 and FY1998) following the year (FY1996) in which SSN-23 was (for a second time) procured.\nLHD-6 Amphibious Assault Ship\nGoing into the conference on the FY1993 defense appropriation bill, the House had recommended fully funding procurement of the Wasp (LHD-1) class amphibious assault ship Bonhomme Richard (LHD-6)—a ship the Administration had not requested for procurement—at a cost of $1.205 billion, while the Senate recommended $1.050 billion. During the conference, however, competition among various programs for defense funding resulted in an agreement in which LHD-6 was approved for procurement in FY1993 but only $305 million in FY1993 funding was provided. The conference report on the bill stated:\nThe conferees agree to provide $305,000,000 in funds to initiate the purchase of one LHD-1 class amphibious assault ship. The conferees have provided authority for the Navy Secretary to enter into a contract for this ship even though full funding has not yet been provided to the Navy. The conferees request that the Navy award a contract for the construction of this vessel and include the additional funds required for this program in its fiscal year 1994 budget request.\nThe $893.8 million needed to complete the funding of the ship (as adjusted) was requested by the Administration in FY1994 and approved by Congress. Thus, LHD-6 was split-funded, with about three-quarters of the cost of LHD-6 provided the year after the ship's year of procurement.\nLHD-8 Amphibious Assault Ship\nCongress included a provision in the Shipbuilding and Conversion, Navy (SCN) sections of both the FY2000 and FY2001 defense appropriations acts stating \"That the Secretary of the Navy is hereby granted the authority to enter into a contract for an LHD-1 [class] Amphibious Assault Ship which shall be funded on an incremental basis.\" The ship in question is LHD-8, which was funded on an incremental basis, with the final increment provided in FY2006. DOD records the ship in its budget presentations as having been procured in FY2002.\nLHA-6 Amphibious Assault Ship\nThe Navy in its FY2007 budget proposed procuring the amphibious assault ship LHA-6 in FY2007 using split funding in FY2007 and FY2008. Congress, in acting on the proposed FY2007 budget, approved the Navy's requested first increment of funding for LHA-6. The Navy's proposed FY2008 budget requests the second increment of funding for the ship.\nFirst Two DDG-1000 Destroyers\nThe Navy in its proposed FY2007 budget proposed procuring the first two DDG-1000 destroyers in FY2007 using split funding in FY2007 and FY2008. Congress, in acting on the proposed FY2007 budget, approved the Navy's requested first increment of funding for the two DDG-1000s. The Navy's proposed FY2008 budget requests the second increment of funding for the two ships.\nCVN-78 Aircraft Carrier\nThe Navy in its proposed FY2007 and FY2008 budgets proposed procuring the aircraft carrier CVN-78 in FY2008 using split funding in FY2008 and FY2009. Under the Navy's proposed funding plan, the ship is to be funded over a total of nine years, with about 35.2% of its procurement cost provided in advance procurement funding between FY2001 and FY2007, about 26.1% to be provided in the procurement year of FY2008, and about 38.8% to be provided in FY2009." ], "depth": [ 0, 1, 1, 2, 3, 3, 4, 4, 3, 2, 3, 3, 3, 4, 4, 3, 3, 2, 3, 3, 3, 3, 2, 2, 1, 2, 2, 2, 2, 2, 1, 2, 3, 3 ], "alignment": [ "h0_title h1_title", "", "h0_title h1_title", "", "", "", "", "", "", "h1_title", "", "", "h1_title", "h1_full", "", "", "", "h0_title", "h0_full", "", "h0_full", "", "", "h1_full", "h1_full", "", "", "h1_full", "", "", "h1_title", "h1_title", "", "h1_full" ] }	{ "question": [ "How do advance appropriations work?", "How does this affect the funding of the end item?", "Why are advance appropriations useful?", "What are potential negative effects of advance appropriations?", "How could incremental funding affect the cost of Navy ships?", "What options are available for Congress?", "To what extent are all the options viable?", "How will this report be updated?" ], "summary": [ "Under advance appropriations, Congress makes a one-time decision to fund the entire procurement cost of an end item.", "That cost can then be divided into two or more annual increments that are assigned to (in budget terminology, \"scored in\") two or more fiscal years.", "Supporters could argue that using advance appropriations could avoid or mitigate budget spikes without some of the potential disadvantages of incremental funding.", "Opponents could argue that advance appropriations retains (or even expands) a key potential disadvantage of incremental finding—that of tying the hands of future Congresses.", "Using incremental funding or advance appropriations could, under certain circumstances, marginally reduce the cost of Navy ships. Under certain other circumstances, however, it could increase costs.", "Options for Congress include maintaining current ship-procurement funding practices; strengthening adherence to the full funding policy; increasing the use of incremental funding; beginning to use advance appropriations; and transferring lead-ship detailed design and nonrecurring engineering costs to the research and development account.", "Arguments could be made in support of or against each of these options.", "This report will be updated as events warrant." ], "parent_pair_index": [ -1, 0, 0, 0, -1, -1, 1, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4 ] }
CRS_R41423	{ "title": [ "", "Introduction", "Express Authorization for State and Local Officers to Enforce Federal Immigration Law", "Delegation of Immigration Enforcement Authority via Cooperative Agreement Under INA Section 287(g)", "Delegation of Immigration Enforcement Authority to Respond to Mass Influx of Aliens", "Authorization to Arrest and Detain Previously Removed Criminal Aliens", "Authorization to Enforce the Federal Alien Smuggling Statute", "Major Judicial Rulings Concerning Immigration Enforcement by State and Local Police", "Supreme Court Ruling in Arizona v. United States", "Pre-Arizona Appellate Court Decisions", "Ninth Circuit Jurisprudence", "United States v. Urrieta (Sixth Circuit)", "Tenth Circuit Jurisprudence", "Pre-Arizona Office of Legal Counsel Opinions", "2002 OLC Opinion" ], "paragraphs": [ "", "The power to prescribe rules as to which aliens may enter the United States and which aliens may be removed resides solely with the federal government, and primarily with Congress. Concomitant to its exclusive power to establish rules which determine which aliens may enter and which may stay in the country, the federal government also has the power to proscribe activities that subvert this system and establish penalties for those who undertake prohibited activities. These powers have primarily been implemented through the Immigration and Nationality Act of 1952, as amended (INA). The INA establishes a comprehensive set of requirements for legal immigration, naturalization, and the removal of aliens, as well as rules governing aliens' continued presence in the United States. The INA also establishes an enforcement regime to deter violations of federal immigration law, including through the imposition of penalties upon persons who violate INA requirements.\nIn examining the INA, it is crucial to distinguish between its civil and criminal provisions. For example, the INA generally makes it a criminal offense for an alien to enter the United States without authorization, with heightened penalties available in cases where an alien unlawfully reenters after having previously been ordered removed from the country. Moreover, persons who transport unauthorized aliens into or within the United States, or harbor such aliens within the country, are generally subject to criminal penalty.\nOn the other hand, some violations of the INA are subject to civil penalties. For example, an entity that knowingly hires an alien who is not authorized to work in the United States may be subject to a civil monetary penalty. Moreover, alien removal (deportation) and associated administrative processes are civil in nature. For example, an alien's unauthorized immigration status makes him removable, but absent additional factors (e.g., having reentered the United States after being formally removed), unlawful presence does not constitute a criminal offense. In some cases, conduct may potentially be subject to both civil and criminal sanction under the INA. For instance, an alien who unlawfully enters the United States may be subject to criminal penalty as well as deportation. However, the fact that an alien may be subject to both criminal sanction and removal for an immigration violation does not mean that each tool shall be employed.\nCongressional authority to prescribe rules on immigration does not necessarily imply exclusive authority to enforce those rules. Congress may expressly authorize states and localities to assist in enforcing federal law. Moreover, there is a notion that has been articulated in some federal courts and by the executive branch that states may possess \"inherent\" authority to assist in the enforcement of federal immigration law, even in the absence of express authorization by federal statute.\nNonetheless, state enforcement of federal immigration law must always be consistent with federal authority. The Supremacy Clause of the Constitution establishes that federal law, treaties, and the Constitution itself are \"the supreme Law of the Land.\" States can therefore be precluded from taking actions that are otherwise within their authority if federal law would thereby be thwarted. Congressional intent is paramount in the analysis as to whether federal law preempts state or local activity; accordingly, a court must determine whether Congress expressly or implicitly intended to preempt state or local action. Generally, a court will determine that Congress intended to preempt state regulation or activity when (1) Congress expresses preemptive intent in \"explicit statutory language\"; (2) a state entity regulates \"in a field that Congress intended the Federal Government to occupy exclusively\"; or (3) a state entity's activity \"actually conflicts with federal law.\" A question of ongoing legal dispute concerns the extent to which state and local law enforcement may be preempted from directly enforcing federal immigration law in the absence of express authorization by federal statute.\nRecently, several states have enacted measures to facilitate the detection of unlawfully present aliens by state and local law enforcement officials. Many of these measures are the subject of ongoing litigation. The U.S. Department of Justice (DOJ), in particular, has challenged measures enacted by several states which are intended to deter the presence of unlawfully present aliens within their jurisdiction. In a 2012 ruling in the case of Arizona v. United States , the Supreme Court ruled that one such measure enacted by Arizona, commonly referred to as S.B. 1070, was largely preempted by federal immigration law. In the course of its decision, the Court indicated that states' ability to enforce federal immigration law, at least as it pertains to non-criminal immigration status violations, is limited in the absence of either direct authorization by federal law or coordination of enforcement efforts with federal authorities.\nThis report discusses the authority of state and local law enforcement to assist in the enforcement of federal immigration law through the investigation and arrest of persons believed to have violated such laws. It describes current provisions in federal law that permit state and local police to enforce immigration law directly; analyzes major cases concerning the ability of states and localities to assist in immigration enforcement, including the Supreme Court's ruling in Arizona v. United States ; and briefly examines opinions on the issue by the Office of Legal Counsel (OLC) within the Department of Justice. This report does not discuss legal issues raised by state and local measures intended to supplement federal immigration laws through the imposition of additional criminal or civil penalties. For more discussion of the legal implications of such measures, see CRS Report R42719, Arizona v. United States: A Limited Role for States in Immigration Enforcement , by [author name scrubbed] and [author name scrubbed], and CRS Report R41991, State and Local Restrictions on Employing Unauthorized Aliens , by [author name scrubbed].", "The enforcement of federal immigration law by state and local police is most clearly permissible when Congress has evidenced intent to authorize such activity. In exercising its power to regulate immigration, Congress is free to delegate to the states, among other things, the authority to arrest, hold, and transport aliens into federal custody. Indeed, Congress has created several avenues for states and localities to assist in the enforcement of federal immigration law. The following sections discuss notable provisions in federal statutes that expressly authorize state and local law enforcement to directly engage in immigration enforcement activities, including arresting persons who have violated federal immigration law.\nThis section does not discuss those provisions of federal law that, while contemplating participation by state and local authorities in immigration enforcement matters (such as the sharing of immigration status information between federal, state, and local authorities) , do not directly authorize state and local police to perform immigration enforcement duties.", "One of the broadest grants of authority for state and local immigration enforcement activity stems from Section 133 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), which amended INA Section 287 to permit the delegation of certain immigration enforcement functions to state and local officers. Pursuant to INA Section 287(g), the Attorney General (now the Secretary of Homeland Security ) is authorized\nto enter into a written agreement with a State, or any political subdivision of a State, pursuant to which an officer or employee of the State or subdivision, who is determined by the [Secretary of Homeland Security] to be qualified to perform a function of an immigration officer in relation to the investigation, apprehension, or detention of aliens in the United States (including the transportation of such aliens across State lines to detention centers), may carry out such function at the expense of the State or political subdivision and to the extent consistent with State and local law.\nAgreements entered pursuant to INA Section 287(g) (commonly referred to as \"287(g) agreements\") enable specially trained state or local officers to perform specific functions relative to the investigation, apprehension, or detention of aliens, during a predetermined time frame and under federal supervision. In order for state or local officers to perform functions pursuant to a 287(g) agreement, they must \"have knowledge of and adhere to\" federal law governing immigration officers and be certified as having received \"adequate training\" regarding the enforcement of immigration laws. State or local officers performing functions pursuant to 287(g) agreements are not considered federal employees, except for purposes relating to certain tort claims and compensation matters, but are considered to be acting under color of federal law for purposes of liability and immunity from suit in any civil actions brought under federal or state law.\nINA Section 287(g)(10) specifies that a written agreement is not required for state or local officials to engage in certain cooperative functions with federal immigration authorities (though these officials would not be entitled to the same rights and immunities as persons operating under a 287(g) agreement). Specifically, no agreement is necessary for a state or local officer to communicate with federal authorities concerning the immigration status of any person, including persons believed to be unlawfully present in the United States. More broadly, no agreement is necessary in order for a state or local officer \"otherwise to cooperate … in the identification, apprehension, detention, or removal of aliens not lawfully present in the United States.\" An unsettled issue concerning state efforts to enforce federal immigration law is whether the \"cooperation\" contemplated under INA Section 287(g)(10) requires states and localities to consult and coordinate their immigration enforcement efforts with federal authorities. However, in Arizona v. United States , discussed infra , the Supreme Court stated that although \"[t]here may be some ambiguity as to what constitutes cooperation under the federal law[,] … no coherent understanding of the term would incorporate the unilateral decision of state officers to arrest an alien for being removable absent any request, approval, or other instruction from the Federal Government.\"\nThe 287(g) agreements follow two different models. Under the jail enforcement model (also referred to as the \"detention model\"), designated officers within state or local detention facilities are authorized to identify and process criminal aliens in preparation for removal by federal immigration authorities. Under the task force model, designated officers may, during the course of their regular law enforcement duties within the community or under the direction of a supervising federal immigration officer, identify and arrest certain removable aliens. Some 287(g) agreements singularly employ a task force or detention model, while others use both. In 2009, U.S. Immigration and Customs Enforcement (ICE), the agency within the Department of Homeland Security which administers the 287(g) program, renegotiated agreements with participating jurisdictions in an effort to bolster federal oversight, training, and communication within the 287(g) program, and to prioritize the arrest and detention of aliens involved in serious criminal activity. As of August 31, 2012, agreements pursuant to INA Section 287(g) were in place with 64 law enforcement agencies within 24 states.\nIt should be noted that federal immigration authorities have entered cooperative arrangements with states pursuant to statutory authorities other than INA Section 287(g). For example, under the Criminal Alien Program (CAP), ICE officers assigned to federal, state, and local prisons are tasked with identifying criminal aliens in order to facilitate their removal, including through the placement of detainers upon such aliens so that federal immigration authorities may take them into custody upon completion of their criminal sentences.\nA separate program, Secure Communities, is also used to identify criminal aliens in local law enforcement custody. This program—which was first implemented in 14 jurisdictions in 2008 and is scheduled for implementation nationwide in 2013—relies upon the sharing of information regarding persons arrested by state and local law enforcement to identify aliens who may be removable. Specifically, the fingerprints of persons arrested by state and local officers are sent to the Federal Bureau of Investigation's (FBI's) Integrated Automatic Fingerprint Identification System (IAFIS), which then sends them to ICE's Automated Biometric Identification System (IDENT). This system automatically notifies ICE personnel whenever the fingerprints of persons arrested by state and local officers match those of a person previously encountered and fingerprinted by immigration officials. ICE personnel then review other databases to determine whether the person is here illegally or otherwise removable, and may issue detainers for any aliens who appear removable.\nUnlike 287(g) agreements, neither CAP nor the Secure Communities initiative involves direct enforcement of federal immigration law by state or local law enforcement officers or agencies. Moreover, whereas CAP is effectuated via formal arrangements between federal and state authorities, the Secure Communities program, though initially effectuated through written agreements between ICE and state identification bureaus, is now implemented through an information-sharing arrangement between federal authorities.\nIn addition to formal agreements, federal immigration authorities sometimes have informal cooperative arrangements with state or local law enforcement, particularly along the northern and southern borders, in which officers will provide support to one another in the performance of their law enforcement duties.", "Section 372 of IIRIRA amended INA Section 103(a) to authorize the Attorney General (now the Secretary of Homeland Security ) to call upon state and local police to perform immigration enforcement functions in response to an actual or imminent mass influx of aliens. Specifically, INA Section 103(a) provides:\nIn the event that the [Secretary of Homeland Security] determines that an actual or imminent mass influx of aliens arriving off the coast of the United States or near a land border presents urgent circumstances requiring an immediate Federal response, the [Secretary] may authorize any State or local law enforcement officer, with the consent of the head of the department, agency or establishment under whose jurisdiction the individual is serving, to perform or exercise any of the power, privileges or duties conferred or imposed by the Act or regulations issued thereunder upon officers or employees of the service.\nThus, state and local officers may exercise the civil or criminal arrest powers of federal immigration officers when certain criteria are met: (1) the designated state and local officers are expressly authorized by the Secretary of Homeland Security to exercise such authority; (2) the head of the relevant state or local law enforcement agency has given its consent to the performance of federal immigration functions by the agency's officers; and (3) the Secretary has made a determination that an imminent or ongoing mass influx of aliens requires an immediate response. Any authority delegated to state or local law enforcement officers under this provision can only be exercised for the duration of the emergency.\nIn 2002, the DOJ issued a final rule that implemented INA Section 103(a)(10) and described the cooperative process by which state or local governments could agree to place authorized state and local law enforcement officers under the direction of the INS in exercising federal immigration enforcement authority. The following year the DOJ found it necessary to amend the previous regulations, determining that the regulations did not provide the Attorney General with sufficient flexibility to address unanticipated situations that might occur during a mass influx of aliens. When such action is deemed necessary to protect public safety, public health, or national security, the new rules also allow the abbreviation or waiver of training requirements for state and local law enforcement.\nAlthough one preemptory agreement was entered with Florida pursuant to INA Section 103(a)(1) in 1998, which could go into effect in the event that a mass influx of aliens is declared, it does not appear that any other agreements have been entered pursuant to this authority.", "Section 439 of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA, P.L. 104-132 ) authorizes state and local law enforcement officers to arrest unlawfully present criminal aliens who have presumably violated INA Section 276 (concerning the reentry of previously removed aliens). Section 439 states in part:\n[T]o the extent permitted by relevant State and local law, State and local law enforcement officials are authorized to arrest and detain an individual who—(1) is an alien illegally present in the United States; and (2) has previously been convicted of a felony in the United States and deported or left the United States after such conviction, but only after the State or local law enforcement officials obtain appropriate confirmation from the Immigration and Naturalization Service of the status of such individual and only for such period of time as may be required for the Service to take the individual into Federal custody for purposes of deporting or removing the alien from the United States.\nThis provision originated as a floor amendment during congressional consideration of AEDPA, and its sponsor intended it to overcome a perceived federal limitation on state and local officers' ability to arrest and detain criminal aliens so that they could be transferred to the custody of federal immigration authorities. There is some debate as to whether such a limitation actually existed prior to the enactment of AEDPA, and whether states and localities are now only permitted to arrest and detain aliens on account of their unlawful reentry pursuant to the procedure established under AEDPA Section 439 (i.e., when state or local officers have obtained prior confirmation of a suspect's unauthorized immigration status from federal immigration authorities). As discussed infra , the U.S. Court of Appeals for the Ninth Circuit appears to have construed AEDPA Section 439 in this manner, while the U.S. Court of Appeals for the Tenth Circuit has recognized that federal law pre-AEDPA was not intended to displace any preexisting authority permitting states and localities to enforce federal immigration law. The Supreme Court did not squarely assess the intended effect of AEDPA Section 439 in its 2012 ruling in Arizona v. United States , though it cited the provision as one of the few avenues through which state and local police could make arrests on the basis of aliens' suspected removability.", "Congress appears to have authorized state and local police to enforce INA Section 274, which criminalizes activities relating to the smuggling, transport, or harboring of unauthorized aliens. INA Section 274(c), entitled \"Authority to Arrest,\" states that \"No officer or person shall have authority to make any arrest for a violation of any provision of this section except officers and employees of the Service designated by the Attorney General, either individually or as a member of a class, and all other officers whose duty it is to enforce criminal laws .\"\nThe plain language in this subsection seems to indicate that state and local law enforcement officers are permitted to make arrests for violations of the federal alien smuggling statute, as they are \"officers whose duty it is to enforce criminal laws.\" The legislative history of INA Section 274 seems to confirm this understanding. The Senate-passed version of this provision stated that arrests for violations could only be made by federal immigration agents and \"other officers of the United States whose duty it is to enforce criminal laws.\" The House, however, struck the words \"of the United States,\" so that state and local officials could enforce this provision as well.\nAlthough the federal alien smuggling provision appears to permit state and local officials to directly enforce its provisions, other INA provisions which criminalize immigration-related conduct do not contain similar authorizing language. Nonetheless, as discussed infra , reviewing courts have thus far recognized that state and local law enforcement may arrest persons for criminal violations of the INA, regardless of whether the applicable INA provision expressly authorizes such arrests. The Supreme Court in Arizona declined to definitively resolve this issue.", "At least until the Supreme Court's decision in Arizona v. United States , there had been considerable debate concerning the power of state and local police to enforce federal immigration law in the absence of express authorization in federal statute. For decades, the prevailing view had been that states were not precluded from arresting persons for criminal violations of the INA, but that they were generally preempted from arresting persons for civil violations making them removable. More recently, however, some courts appeared to take the view that state and local police could generally arrest persons for either criminal violations of federal immigration laws or civil violations making them removable. A few states subsequently passed measures that authorized state police to arrest certain categories of aliens who committed immigration status violations making them removable. Many of these measures were subsequently challenged in federal court on preemption grounds. The Supreme Court agreed to review one such challenge, concerning a comprehensive immigration enforcement measure enacted by Arizona, and held that states are generally preempted from arresting or detaining aliens on the basis of suspected removability under federal immigration law.\nIt should be noted that inquiries by state and local law enforcement that touch upon the immigration status of stopped individuals do not always constitute attempts to enforce federal immigration law. Such inquiries might arise in the normal course of an investigation unrelated to immigration enforcement. For example, an officer investigating an offense under state or local law might question a person regarding his identity, and such questioning might possibly touch upon that person's immigration status (e.g., requesting the production of any documents that may verify the person's purported identify, including perhaps any federal immigration documents in the person's possession). These situations might not raise the same legal issues as situations where questioning regarding immigration status either serves as the legal justification for a person's initial stop, detention, or arrest, or constitutes a basis for detaining a person beyond the period necessary to resolve any non-immigration related matters that justified the person's stop or detention.", "In June 2012, the Supreme Court issued its decision in Arizona v. United States , ruling that some aspects of an Arizona law intended to deter unlawfully present aliens from remaining in the state were preempted by federal law, but also holding that Arizona police were not facially preempted from running immigration status checks on persons stopped for state or local offenses (though the Court left the door open for future challenges to this provision). The Court's ruling indicates that states' ability to enforce federal immigration law is limited in the absence of either direct authorization by federal law or coordination of enforcement efforts with federal immigration authorities. The Arizona measure, commonly referred to as S.B. 1070, was enacted in 2010 and almost immediately challenged by the DOJ on the grounds that it conflicted with federal immigration law and policy and was therefore unenforceable under the Supremacy Clause. A federal district court preliminarily enjoined enforcement of four of the five provisions of S.B. 1070 that were challenged by the DOJ, pending a final ruling in the case, and the injunction was upheld by a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit. Arizona appealed this ruling to the Supreme Court.\nArguments at the Supreme Court centered on four major provisions of S.B. 1070, which can be divided into two categories: (1) those provisions seeking to bolster direct enforcement of federal immigration law by Arizona law enforcement, including through the identification and apprehension of unlawfully present aliens; and (2) those provisions that criminalize conduct which may facilitate the presence of unauthorized aliens within the state. The Arizona Court found that the provisions imposing state criminal penalties on two types of immigration-related conduct were preempted by federal law. However, the Court split on the permissibility of the two provisions of S.B. 1070 involving direct enforcement of federal immigration law by Arizona police. The Court held that Arizona police were generally preempted from arresting or detaining aliens solely on the basis of immigration status violations. However, state and local police were not facially preempted from running immigration status checks with federal authorities when they reasonably suspected a person stopped for a state or local offense was a removable alien.\nA five-Justice majority ruled that Section 6 of S.B. 1070, which authorized the warrantless arrest of aliens who committed certain criminal offenses that constitute grounds for removal under federal law, was facially preempted. Writing for the majority, Justice Kennedy found that Section 6 would confer broader authority to Arizona police to arrest aliens on the basis of removability than is granted to federal immigration authorities under federal law. The majority also deemed it significant that the arrest authority conferred on Arizona police could be \"exercised without any input\" from federal authorities, which would \"allow the State to achieve its own immigration policy\" and potentially lead to unnecessary harassment of certain aliens who were unlikely to be removed by federal authorities.\nMore broadly, the majority recognized that states and localities \"may perform the functions of an immigration officer\" only in \"limited circumstances\" specified by federal law. In particular, the Supreme Court held that states are generally preempted from arresting and detaining persons for suspected immigration status violations, except when done pursuant to (1) a written agreement under INA Section 287(g); (2) some other specific federal statutory authorization; or (3) pursuant to a \"request, approval, or instruction from the Federal Government.\" The scope of activities permitted under the third category seems likely to be the subject of continued debate.\nThree Justices dissented from this portion of the Court's ruling, and would have recognized that state and local police are generally not precluded from assisting in the enforcement of federal immigration law, including by arresting aliens on the basis of their removability under federal law.\nIt is important to note that the Arizona Court's discussion of states' limited authority to enforce federal immigration law was in reference to arrests for immigration status violations, which are non-criminal in nature. The Court did not opine as to whether state law enforcement agencies are also precluded from making arrests for criminal violations of federal immigration law. As previously mentioned, reviewing courts have generally recognized that state and local police are not preempted from making such arrests. Still, the Arizona Court appeared to leave the door open to a possible preemption challenge in the event that a person is arrested or detained by state authorities based on \"reasonable suspicion of illegal entry or another immigration crime.\"\nAlthough a majority of the Arizona Court found that most of the challenged provisions of S.B. 1070 were preempted by federal law, the sitting Justices unanimously agreed that Section 2(b) of S.B. 1070, which requires Arizona police, whenever practicable, to investigate the immigration status of persons reasonably suspected of being unlawfully present when such persons are stopped for a state or local offense, is not facially preempted. The Court emphasized that federal law contemplates the sharing of immigration information among federal, state, and local authorities. Similar reasoning was employed by the Court last year, when it rejected a facial preemption challenge to another Arizona law that required the use of a federal work authorization database and imposed licensing sanctions upon Arizona businesses that hire unauthorized aliens, after the Court found that federal law either permitted or encouraged the type of regulation that had been adopted by the state.\nNonetheless, a majority of the Arizona Court appeared to take the view that while state police may ask the federal government about the immigration status of stopped individuals, future challenges to the provision might be made depending upon how the requirement was interpreted and applied (e.g., if Arizona police delayed the release of persons in their custody \"for no reason other than to verify their immigration status\").\nFollowing the Arizona ruling, lower courts have applied the Supreme Court's decision to state laws modeled after Arizona's S.B. 1070. In August 2012, for example, the U.S. Court of Appeals for the Eleventh Circuit (\"Eleventh Circuit\") issued decisions concerning immigration enforcement measures adopted by Alabama and Georgia soon after the enactment of the Arizona statute. While finding that some provisions of these measures were likely preempted by federal immigration law, the Eleventh Circuit ruled that a provision in the Georgia statute which authorized state police to run immigration status checks on persons stopped for state offenses (which had been modeled on Arizona's S.B. 1070) was not facially preempted, though the court left the door open for a future challenge in the event that the checks result in the prolonged detention of persons.", "Prior to the Supreme Court's ruling in Arizona , there were conflicting judicial opinions regarding the degree to which state and local police officers could, in the absence of express authorization by federal law, act to enforce federal immigration law. The U.S. Court of Appeals for the Ninth Circuit (\"Ninth Circuit\") and the U.S. Court of Appeals for the Sixth Circuit (\"Sixth Circuit\") issued opinions which recognized that state and local law enforcement agencies were generally preempted from making arrests for civil violations of the INA in the absence of clear authorization under federal law, though each either expressly or impliedly endorsed the notion that states were not barred from arresting persons for criminal violations of federal immigration law. On the other hand, the U.S. Court of Appeals for the Tenth Circuit (\"Tenth Circuit\") issued a series of rulings which appeared to support the position that state and local law enforcement have implicit authority to investigate and arrest persons for either criminal or civil violations of federal immigration law.\nThe continuing validity of these rulings, and in particular those of the Tenth Circuit, is uncertain in the aftermath of the Supreme Court's ruling in Arizona . Nonetheless, it is possible that these decisions may still provide some guidance to future courts and policymakers, particularly to the extent that they may be viewed as supplementing the Court's analysis of immigration enforcement activity by the states, or addressing matters not squarely addressed by the Arizona ruling, including the authority of state and local police to make arrests for criminal violations of federal immigration law.", "The issue of whether state and local law enforcement agencies are precluded from enforcing provisions of the INA was analyzed by the Ninth Circuit in the 1983 case of Gonzales v. City of Peoria and the 2011 case of United States v. Arizona (which was reviewed by the Supreme Court on appeal as Arizona v. United States , discussed supra ). In Gonzales , a three-judge panel examined a Peoria policy that authorized local officers to arrest aliens who violated INA Section 275, which makes it a criminal offense for an alien to enter the United States unlawfully. The petitioners, who had been questioned and detained pursuant to the city's policy, claimed that enforcement of federal immigration laws was the exclusive responsibility of the federal government, precluding any concurrent enforcement activities by states or localities.\nThe appellate court disagreed. As an initial matter, the Gonzales court noted that the \"general rule is that local police are not precluded from enforcing federal statutes,\" and that federal regulation of a particular field \"should not be presumed to preempt state enforcement activity 'in the absence of persuasive reasons—either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained.'\" The court concluded that the enforcement of the criminal provisions of the INA by states and localities did not inherently conflict with federal interests. Moreover, the court found that neither the structure nor legislative history of the INA manifested an intent by Congress to preclude state or local enforcement of the INA's criminal provisions. Accordingly, the Gonzales court declared that local police officers may, subject to state law, constitutionally stop or detain individuals when there is reasonable suspicion or, in the case of arrest, probable cause that such persons have violated, or are in the process of violating, the criminal provisions of the INA.\nIn the course of its analysis of the preemptive effect of federal immigration law, the Gonzales court appeared to distinguish the preemptive effect of the INA's civil and criminal provisions, and assumed that the former constituted a pervasive and preemptive regulatory scheme, whereas the latter did not. The court stated:\nWe assume that the civil provisions of the [INA], regulating authorized entry, length of stay, residence status, and deportation, constitute such a pervasive regulatory scheme, as would be consistent with the exclusive federal power over immigration. However, this case does not concern that broad scheme, but only a narrow and distinct element of it—the regulation of criminal immigration activity by aliens. The statutes relating to that element are few in number and relatively simple in their terms. They are not, and could not be, supported by a complex administrative structure. It therefore cannot be inferred that the federal government has occupied the field of criminal immigration enforcement.\nWhereas the Ninth Circuit had \"assumed\" in Gonzales that state and local police were precluded from directly enforcing the civil provisions of federal immigration law, a more definitive pronouncement to that effect was made by the circuit court in Arizona . As discussed earlier, the case centered on an Arizona law intended to deter the entry or presence of aliens within the state who lack lawful status under federal immigration law. The DOJ and a number of private entities filed separate lawsuits to prevent aspects of the Arizona statute from going into effect. The reviewing federal district court granted the federal government's request to preliminarily enjoin most of the challenged provisions of the Arizona law, after it found that the DOJ was likely to prevail in its argument that these provisions were preempted by federal immigration law and policy.\nOn appeal, a three-judge panel of the Ninth Circuit affirmed the lower court's ruling. While unanimous on some aspects of its decision, the panel split on the permissibility of those provisions of S.B. 1070 concerning immigration status verifications and warrantless arrests of deportable aliens by state and local police. By a 2-1 decision, the panel held that state and local police officers generally lacked the authority to enforce the non-criminal provisions of the INA, and also held that states may not mandate that police investigate the immigration status of persons suspected of being unlawfully present aliens.\nIn reaching this conclusion, the panel majority construed those provisions of INA Section 287(g) permitting state and local officers to perform immigration enforcement functions pursuant to a written agreement with the Secretary of Homeland Security as indicative of congressional intent for state involvement in immigration enforcement to generally occur under federal supervision. The majority further found that INA Section 287(g)(10), which refers to state and local \"cooperation\" in immigration enforcement in the absence of a 287(g) agreement, encompasses only assistance on \"an incidental and as needed basis\" when requested by the Secretary of Homeland Security or otherwise necessary. The majority also viewed the Arizona statute as being inconsistent with congressional intent, on the ground that it would permit state and local police to arrest aliens for civil deportation violations in a broader set of circumstances than had been authorized under AEDPA Section 439.\nThe panel majority further found that the government was likely to prevail in its preemption challenge because of the Arizona measure's \"deleterious effect\" on foreign relations, as well as \"the threat of 50 states layering their own immigration enforcement rules on top of the INA.\"\nIn a partial dissent from the majority's ruling, one member of the panel criticized the majority for holding that states and localities are generally preempted from enforcing the civil provisions of the INA or investigating the immigration status of persons suspected of being deportable aliens. The dissent characterized most jurisprudence as supporting the proposition that state and local officers are generally not preempted from making arrests for violations of federal law, including arrests for immigration violations. The dissent also construed INA Section 287(g)(10) as reflecting congressional recognition that state police may assist in the enforcement of both the civil and criminal provisions of the INA, even in the absence of a 287(g) agreement. The dissent further claimed that AEDPA Section 439 was not intended to define the parameters of state authority to arrest aliens for civil immigration violations. The dissenting judge also construed 8 U.S.C. Section 1373(c), which requires federal authorities to respond to immigration status requests by state and local authorities, as being indicative of congressional support for state and local participation in immigration enforcement activities.\nIt should be noted that while the circuit panel majority found that state and local police are generally preempted from making arrests for civil violations of the INA, its related ruling that S.B. 1070's immigration verification requirements were preempted (a ruling subsequently overruled by the Supreme Court) appeared to be based on the \"mandatory\" nature of these requirements. Thus, the court's decision would not necessarily have barred Arizona law enforcement from attempting to verify the immigration status of persons on a more limited, case-by-case basis. The panel majority's opinion apparently contemplated such attempts at verification in limited circumstances. The DOJ also seemed to suggest in its argument before the district court that it did not view discretionary attempts by state or local law enforcement to verify the immigration status of individuals as raising the same preemption concerns as Arizona's \"mandatory\" requirements relating to status verification.\nAs discussed supra , the Ninth Circuit's ruling was subsequently reviewed by the Supreme Court. Although the Court agreed with the Ninth Circuit regarding the preemptive effect that federal law had upon many provisions of S.B. 1070, it disagreed that the mandatory immigration status requirements imposed by the Arizona law were facially preempted.", "In the 2008 case of United States v. Urrieta , a three-judge circuit panel similarly appeared to construe federal immigration law as generally precluding states and localities from arresting or detaining persons for civil immigration violations. The case concerned the lawfulness of the petitioner's extended detention following the issuance of a traffic citation by local law enforcement, during which time the officer attempted to determine whether the petitioner was an unlawfully present alien. During the extended detention, the petitioner consented to a search of his vehicle, which resulted in the discovery of firearms and fraudulent documents. In his subsequent criminal trial for unlawful possession of these items, the petitioner sought to have the evidence discovered during his extended detention suppressed, arguing that his extended detention beyond the period necessary to issue a traffic citation was unlawful.\nThe circuit panel concluded that the petitioner's extended detention could not be justified solely on account of the police officer's reasonable suspicion that the petitioner was an unlawfully present alien. In so doing, the panel characterized INA Section 287(g) as \"stating that local law enforcement officers cannot enforce completed violations of civil immigration law (i.e., illegal presence) unless specifically authorized to do so by the Attorney General under special conditions that are not applicable in the present case.\" Although the majority opinion in Urrieta appeared to recognize that state or local law enforcement could detain a person on account of a criminal violation of the INA, it indicated that an alien could not be detained solely on account of unauthorized immigration status in the absence of a 287(g) agreement or other express federal authority. Because the local officer did not have \"reasonable suspicion that [the petitioner] was engaged in some nonimmigration-related illegal activity\" that could justify his extended detention, the court ruled that the petitioner was unlawfully detained and ordered the evidence discovered during this detention to be suppressed in subsequent criminal proceedings.", "In contrast to the approach taken by the Sixth and Ninth Circuits, the Tenth Circuit Court of Appeals issued a series of rulings that arguably supported the view that state and local officers were not preempted from investigating and arresting persons who have violated either the criminal or civil provisions of the INA. Although these cases arose in the context of criminal investigations, they concerned activities undertaken by state or local officers involving the enforcement of the civil provisions of federal immigration law—namely, the arrest or extended detention of persons in order to determine whether they were unlawfully present aliens.\nIn the 1984 case of United States v. Salinas-Calderon , a three-judge circuit panel considered a case involving a state trooper who had pulled over the criminal defendant for driving erratically, and who had subsequently found six individuals in the back of the defendant's truck. Because neither the driver nor the six individuals spoke English or carried identification documentation, and another passenger (the driver's wife) stated that they were from Mexico, the state trooper arrested them and attempted to verify their immigration status. The driver was subsequently charged with the criminal offense of unlawfully transporting unauthorized aliens, but moved to suppress statements made by himself and the six passengers in which they admitted their unauthorized immigration status.\nExamining the record, the circuit panel found that, based on the observable facts that had been available, the trooper had probable cause to detain and arrest all of the individuals. Moreover, the court rejected the defendant's argument that the state trooper lacked authority to detain the passengers in order to inquire into their immigration status. The court determined that a \"state trooper has general investigatory authority to inquire into possible immigration violations,\" and that based on his questioning of the defendant and passengers, the trooper had \"probable cause to make a warrantless arrest for violation of the immigration laws.\"\nIn 1999, the Tenth Circuit Court of Appeals once again considered state and local authority to enforce federal immigration laws in the case of United States v. Vasquez-Alvarez . The case concerned an Oklahoma police officer's arrest of an individual, who was being monitored by the officer partially due to suspicion of drug trafficking, following the individual's admission that he was an \"illegal alien.\" Subsequently, the alien admitted that he had a felony record and had previously been deported from the United States, and was charged by federal authorities with the criminal offense of unlawfully reentering the United States. As discussed previously, Section 439 of AEDPA expressly permits state and local law enforcement to arrest previously deported aliens who have been convicted of criminal activity and thereafter unlawfully reenter the United States, but requires that law enforcement acting pursuant to this authority first obtain confirmation of the alien's immigration status prior to making an arrest. In the instant case, however, the law enforcement officer did not act pursuant to the authority conferred under AEDPA Section 439. Instead, the arrest was premised upon Oklahoma state law, which permitted state and local law enforcement to make arrests for any violation of federal law.\nThe Vasquez-Alvarez court rejected the defendant's argument that because his arrest was not in accordance with the procedure detailed in AEDPA Section 439, it was therefore unlawful. Citing Salinas-Calderon , the circuit court noted that it had previously \"held that state law-enforcement officers have the general authority to investigate and make arrests for violations of federal immigration laws.\" Examining the language and legislative history of AEDPA Section 439, the court determined that the provision neither expressly nor implicitly limited or displaced \"the preexisting general authority of state or local police officers to investigate and make arrests for violations of federal law, including immigration law.\" Instead, the circuit panel held that AEDPA Section 439 \"merely creates an additional vehicle for the enforcement of federal immigration law,\" besides any independent authority to make such arrests under state law.\nIn the 2001 case of United States v. Santana-Garcia , the Tenth Circuit once again addressed the role of state and local law enforcement in immigration matters, reaffirming and expanding upon its prior rulings in Salinas-Calderon and Vasquez-Alvarez . The case concerned a traffic stop by a Utah state trooper. The driver of the car did not possess a driver's license, a misdemeanor under Utah law, and did not speak English. The passenger in the car spoke limited English and explained that he and the driver were traveling from Mexico to Colorado, which prompted the officer to ask if they were \"legal.\" The passenger and the driver appeared to understand the question and answered \"no.\" Following further inquiry, the driver and passenger consented to a search of their vehicle, which revealed illegal drugs. In subsequent criminal proceedings, the driver and passenger moved to suppress this evidence on the grounds that the police lacked reasonable suspicion to detain them beyond the purpose of the initial stop.\nThe circuit panel upheld the admission of the evidence, finding that the state trooper had probable cause to arrest the defendants for violations of state criminal law (i.e., driving without a valid driver's license) and federal law at the time they consented to a search of the vehicle. With respect to federal law, the court held that the defendants' admission of unlawful status provided the state officer with probable cause to arrest them for suspected violations of federal immigration law. The Santana-Garcia panel also seemed to dismiss the suggestion that state law must explicitly authorize state and local officials to make such arrests. The court relied upon a number of inferences from earlier decisions that recognized the \"implicit authority\" or \"general investigatory authority\" of state officers to inquire into possible immigration violations. The court also seemed to rely upon a broad understanding of a Utah state law that empowers officers to make warrantless arrests for any public offense committed in the officer's presence to include violations of federal law.\nAlthough the defendants in Santana-Garcia were apparently in violation of a civil provision of the INA (i.e., unauthorized presence), the Santana-Garcia court made no distinction between state and local police officers' ability to enforce either the civil or criminal provisions of federal immigration law, although the supporting cases which the court cited generally involved arrests for criminal matters. Moreover, it remains unclear how the court, pursuant to its broad understanding of Utah state law, would have ruled if there had not been an independent legal basis supporting the state officer's stop (i.e., a traffic violation) unrelated to the investigation as to whether a civil violation of federal immigration laws had occurred.\nIn any event, the Supreme Court's decision in Arizona would seem to preclude arguments that state and local police may independently act to enforce federal immigration law through the arrest and detention of persons for non-criminal immigration status violations.", "In recent decades, the executive branch has repeatedly opined on the scope of potential state and local involvement in the enforcement of federal immigration law. Over the years, it has modified its views as to whether state and local officials may enforce the civil provisions of the INA. In a 1978 press release, the DOJ \"reaffirmed … that the enforcement of the immigration laws rests with [federal immigration authorities], and not with state and local police.\" The DOJ further urged state and local police not to \"stop and question, detain, arrest, or place an 'immigration hold' on any persons not suspected of crime, solely on the ground that they may be deportable aliens.\" In 1983, the DOJ announced revisions to this policy to encourage greater involvement by state and local police in the enforcement of immigration laws, but emphasized that federal authorities \"remain responsible for all arrests for [civil] immigration violations.\" In 1989, the DOJ's OLC opined that while state and local law enforcement could enforce the provisions of the INA concerning criminal offenses, it was \"unclear\" whether they could enforce non-criminal federal statutes.\nIn 1996, the OLC reached a more definitive conclusion on the question, issuing an opinion which found that while state and local police are not preempted from making arrests for criminal violations of the INA, they \"lack recognized legal authority\" to enforce the INA's civil provisions. The opinion acknowledged that \"[i]t is well-settled that state law enforcement officers are permitted to enforce federal statutes where such enforcement activities do not impair federal regulatory interests.\" Such enforcement is \"subject to the provisions and limitations of state law.\" However, the OLC concluded, based upon an examination of jurisprudence, that \"state and local police lack recognized legal authority to stop and detain an alien solely on suspicion of civil deportability, as opposed to a criminal violation of the immigration laws or other laws.\" In particular, the OLC construed the Ninth Circuit's ruling in Gonzales v. City of Peoria as holding that state and local authority to enforce the INA \"is limited to criminal violations.\"", "In 2002, the OLC issued a memorandum which concluded that \"federal law did not preempt state police from arresting aliens on the basis of civil deportability,\" and it withdrew the advice of the 1996 opinion which had suggested otherwise. The 2002 OLC Opinion described the states, like the federal government, as possessing the status of \"sovereign entities.\" Because of this status, states do not require affirmative delegation of federal authority in order to make arrests for violations of federal law—\"[i]nstead, the power to make arrests inheres in the ability of one sovereign to accommodate the interests of the other.\"\nThe 2002 OLC Opinion recognized that the exercise of states' inherent authority to arrest persons for federal violations may be subject to federal preemption. However, it concluded that \"federal law should be presumed not to preempt this arrest authority,\" because \"it is ordinarily unreasonable to assume that Congress intended to deprive the federal government of whatever assistance States may provide in identifying and detaining those who have violated federal law.\" The 2002 OLC Opinion explicitly rejected the 1996 opinion's conclusion that federal law preempts state or local enforcement of the civil provisions of the INA, because \"[o]n re-examination, we believe that the authorities we cited in the 1996 OLC opinion provide no support for our conclusion that state police lack the authority to arrest aliens solely on the basis of civil deportability.\" In particular, it construed the Ninth Circuit's statements in Gonzales v. City of Peoria regarding the preemptive nature of the INA's civil provisions as \"mere assumption in dictum ,\" and instead emphasized Tenth Circuit jurisprudence supporting the inherent authority of state and local police to enforce both the criminal and civil provisions of federal immigration law.\nSome critics of the 2002 OLC Opinion have characterized it as \"deeply flawed\" and unsupported by judicial precedent or historical practice in the field of immigration. For example, even prior to the Supreme Court's ruling in Arizona , some critics argued that immigration has long been understood to be a distinctly federal concern, and that Congress would not have provided express statutory authorization for state and local enforcement of civil immigration laws in limited circumstances (e.g., pursuant to INA Section 287(g)) unless it was understood that state and local police were otherwise preempted from making arrests for civil immigration violations.\nIt should be noted that the 2002 OLC Opinion concerned whether states are preempted from arresting persons for violations of federal immigration law. The opinion characterized this as \"an extremely limited … preemption question,\" which does not, \"[u]nlike the typical preemption scenario,\" involve a state enacting its own immigration-related measures, which might \"arguably conflict with federal law or intrude into a field that is reserved to Congress or that federal law has occupied.\"\nOLC opinions are generally viewed as providing binding interpretive guidance for executive agencies and reflecting the legal position of the executive branch, but they cannot compel state action and do not have the same weight as an act of Congress. Generally, courts will consider opinion letters by executive agencies on legal matters to the extent that they \"have the power to persuade.\"\nIt remains to be seen whether the OLC will modify or supplement any of the conclusions reached in its 2002 opinion, in light of the Supreme Court's ruling in Arizona. The Court's opinion indicates that state and local police do not enjoy broad discretion to determine when and whether to arrest or detain persons for immigration status violations. If such enforcement activity is not directly authorized by federal statute, it must still, at minimum, be pursuant to the \"request, approval, or instruction from the Federal Government.\"" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 1, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "", "", "", "", "", "h1_full", "h1_full", "", "", "", "", "", "" ] }	{ "question": [ "How is the power to regulate alien entry into the United States delegated?", "How did Congress define the U.S.'s immigration laws?", "How is this legislation upheld?", "What is the nature of the enforcement regime?", "In what ways does Congress not necessarily have exclusive authority to enforce its rules?", "In what situation would states be disallowed to take action?", "To what extent is there consensus as to the power of local police to enforce federal immigration law?", "What was the historical consensus?", "How has consensus changed recently?", "What did the Supreme Court rule in the Arizona case?" ], "summary": [ "The power to prescribe rules as to which aliens may enter the United States and which aliens may be removed resides solely with the federal government, and primarily with Congress. Concomitant to its exclusive power to determine which aliens may enter and which may stay in the country, the federal government also has the power to proscribe activities that subvert this system.", "Congress has defined our nation's immigration laws in the Immigration and Nationality Act (INA), a comprehensive set of laws governing legal immigration, naturalization, work authorization, and the entry and removal of aliens.", "These requirements are bolstered by an enforcement regime containing both civil and criminal provisions.", "Deportation and associated administrative processes related to the removal of aliens are civil in nature, while certain violations of federal immigration law, such as smuggling unauthorized aliens into the country, carry criminal penalties.", "Congressional authority to prescribe rules on immigration does not necessarily imply exclusive authority to enforce those rules. In certain circumstances, Congress has expressly authorized states and localities to assist in enforcing federal immigration law. Moreover, there is a notion that has been articulated in some federal courts and by the executive branch that states may possess \"inherent\" authority to assist in the enforcement of federal immigration law, even in the absence of clear authorization by federal statute.", "Nonetheless, states may be precluded from taking actions if federal law would thereby be thwarted.", "At least until the Supreme Court's decision in the 2012 case of Arizona v. United States, there had been considerable legal debate concerning the power of state and local police to enforce federal immigration law in the absence of express authorization in federal statute.", "For decades, the prevailing view had been that states were not precluded from arresting persons for criminal violations of the INA, but were generally preempted from arresting persons for civil violations making them removable.", "More recently, however, some courts (and the Department of Justice (DOJ) in a 2002 legal opinion) took the view that state and local police were not preempted from arresting persons for any violation of federal immigration law, including immigration status violations. A few states subsequently passed measures that authorized state police to arrest certain categories of aliens who committed immigration status violations making them removable.", "In Arizona, however, the Supreme Court held that states are generally preempted from arresting or detaining aliens on the basis of suspected removability under federal immigration law. Such action may be taken only when there is specific federal statutory authorization, or pursuant to \"request, approval, or instruction from the Federal Government.\"" ], "parent_pair_index": [ -1, 0, 1, 2, -1, 4, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 1 ] }
CRS_R44607	{ "title": [ "", "Introduction", "CEIP Proposed Rule—Overview", "Legal Status of the CPP and CEIP" ], "paragraphs": [ "", "The U.S. Environmental Protection Agency (EPA) established the Clean Energy Incentive Program (CEIP) as a voluntary complement to its regulatory program known as the Clean Power Plan (CPP). The CEIP is intended to promote early reductions of carbon dioxide (CO 2 ) emissions before the CPP is scheduled to take effect in 2022. The goal of the CPP is to reduce CO 2 emissions from existing fossil-fuel-fired electric power plants, which produced 30% of all U.S. greenhouse gas emissions in 2014. Economic modeling indicates that the CPP would significantly reduce future CO 2 emission levels from U.S. electricity generation. The CEIP would support this objective by supporting renewable energy electricity generation and energy efficiency activities through early action incentives.\nThe CPP has generated considerable controversy and garnered interest from Congress and a wide range of stakeholders. After EPA proposed the CPP in 2014, the agency received more than 4.2 million public comments. Some Members in the 114 th Congress have made several attempts to hinder the implementation of the CPP. In particular, after EPA published its CPP final rule in October 2015, both the Senate and the House passed a resolution of disapproval pursuant to the Congressional Review Act. President Obama vetoed the resolution in December 2015. If enacted, the resolution would have prohibited the CPP rulemaking from taking effect.\nMore recently, the House passed H.R. 5538 (Department of the Interior, Environment, and Related Agencies Appropriations Act, 2017) on July 14, 2016. Section 495 of this bill would prohibit EPA from using appropriations to \"finalize, implement, administer, or enforce\" the CEIP proposed rule.\nVarious state and industry parties applied to the Supreme Court in late January 2016 for an immediate stay of the CPP final rule. In a move that surprised many observers, the Supreme Court issued a stay of the final rule until the legal challenges have been resolved.\nThe first section of this report discusses the details of the CEIP proposed rule. The second section discusses the legal status of the CPP and how the Supreme Court stay may or may not affect the CEIP rulemaking developments.", "EPA established the framework of the CEIP in its CPP final rule in 2015 and published a proposed rule for the CEIP in the Federal Register on June 30, 2016. The proposed rule seeks to provide additional detail, clarify certain elements that were previously outlined, and alter some of the program eligibility requirements.\nThe CEIP, as described in the proposed rule, is a voluntary program that would encourage states to support energy efficiency measures and renewable energy projects before the first CPP compliance obligations are scheduled to take effect in 2022. Under the CPP, states would submit plans to EPA detailing how they would comply with state-specific interim and final targets. The CPP allows states to use either emission rate targets (measured in pounds of CO 2 emissions per megawatt-hour [MWh] of electricity generation) or mass-based targets (measured in tons of CO 2 emissions). In addition, states would need to include particular design elements in their plans in order to participate in the CEIP.\nThe CEIP would establish a system to award either emission rate credits or emission allowances for two categories of activities:\n1. Energy efficiency and solar renewable energy projects in low-income communities, and 2. Renewable energy projects in participating states.\nThe proposed rule altered these two categories from the CEIP introduced in 2015 by adding solar power projects to the low-income community category and expanding the scope of renewable energy project types to include not only wind and solar but also geothermal and hydropower. Electricity generated from nuclear power or biomass would not qualify.\nRegarding the definition of a \"low-income community,\" EPA decided to let states choose the scope of this term and include the details in their respective state plans. The proposed rule states\nEPA proposes to provide states with the flexibility to use existing local, state or federal definitions that best suit their specific economic and demographic conditions while ensuring that eligible projects and programs receiving incentives are benefitting low-income communities.\nThe proposed rule modified the eligibility start date for projects. Eligible energy efficiency projects in low-income communities would include those that commence operation on or after September 6, 2018. EPA defines \"commence operation\" as \"the date that a CEIP-eligible low-income community demand-side [energy efficiency] project is delivering quantifiable and verifiable electricity savings.\" Eligible renewable energy projects, including solar power projects in low-income communities, would include those that commence commercial operation on or after January 1, 2020.\nRenewable energy projects would receive one credit/allowance from the state and one credit from EPA for every two MWh of renewable energy generation in 2020 and 2021. Projects in low-income communities would receive double credits: For every two MWh of generation from solar power or avoided electricity generation through energy efficiency, these projects would receive two credits/allowances from the state and two from EPA.\nThe CEIP credits take the form of emission rate credits or emission allowances, depending on whether a state plan chooses an emission rate or mass-based target. The credits/allowances could be sold to or used by an affected emission source to comply with the state-specific emission or emission rate reduction requirements. In a CO 2 -constrained regime, these credits/allowances would have monetary value. For example, in the Regional Greenhouse Gas Initiative , a CO 2 cap-and-trade program involving nine Northeast states, emission allowances have sold at auction at prices between $2 per ton and $7.50 per ton.\nEPA requires state plans to ensure that state-issued credits/allowances for the CEIP will maintain the stringency of the emission or emission rate targets. For example, for mass-based plans, EPA proposes that states allocate CEIP allowances from the state's CPP emission allowance budget in its first compliance period (2022-2024). For states using a rate-based approach, EPA proposes that states apply an adjustment factor to any credits issued in the CPP's first compliance period to account for credits issued pursuant to the CEIP.\nIn contrast to state-issued credits/allowances, states do not need to account for the matching credits/allowances provided by EPA. The proposed rule does not provide details as to the source of the EPA's matching pool. For mass-based programs, EPA would match up to the equivalent of 300 million emission allowances nationally during the CEIP program life. Half of the EPA's pool of matching credits would support renewable energy projects, and half would support energy efficiency and solar energy projects in low-income communities. The amount of EPA credits/allowances potentially available to each state participating in the CEIP depends on the relative amount of emission reduction each state is required to achieve. States with greater reduction requirements would have access to a greater share of the EPA credits.\nFigure 1 illustrates the allowances available to each state, assuming the state were to adopt a mass-based approach in its compliance plan. Table 1 presents the same information, in list form, alphabetically by state.\nIn its proposed rule, EPA seeks comments from stakeholders on multiple issues. In particular, EPA seeks comments regarding the intersection of the CEIP and the recently renewed tax credits for renewable energy. On December 18, 2015, the President signed into law the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), which, among other provisions, extended and modified the production tax credit and the investment tax credit for specific renewable energy technologies. Prior to the December 2015 development, the PTC had expired and the ITC was scheduled to expire at the end of 2016.\nSome groups have raised concern about the CEIP rewarding projects that would have been constructed anyway, especially in the context of the extended tax incentives. EPA is seeking comments on how to design a mechanism in the CEIP that would address this possibility.", "Parties began filing petitions for review in the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) challenging the CPP final rule starting on the day the rule was published in the Federal Register , October 23, 2015. By the December 22, 2015, petition deadline, more than a hundred parties, including 27 states, filed dozens of petitions challenging the CPP. Eighteen states, the District of Columbia, five cities, one county, over a dozen nonprofit organizations, and other parties intervened to support the CPP. On February 9, 2016, the Supreme Court issued an order staying the legal effect of the rule for the duration of the litigation. A stay is generally defined as the \"postponement or halting of a proceeding, judgement, or the like.\" Therefore, EPA cannot implement or enforce the CPP during the stay. If the rule is ultimately upheld, some of the deadlines for the states will likely be delayed.\nWhile the CPP litigation progresses, with oral arguments before the en banc D.C. Circuit set to occur on September 27, 2016, EPA continues to work on the CEIP and other measures to complement the implementation of the CPP if it survives legal challenge.\nEPA's release of the CEIP proposed rule following the Supreme Court's order has raised questions regarding the agency's legal authority to move forward with the CEIP and other related measures while the CPP is stayed. The House Committee on Energy and Commerce sent a letter to EPA Administrator Gina McCarthy stating, \"Continuing to develop a suite of derivative rules and guidance raises questions about whether EPA is complying fully with the Court's stay order, about what legal authority the agency has to proceed with such actions.\" Some have argued that EPA is effectively enjoined from engaging in any activities relating to the CPP, which would include the CEIP. Although some have interpreted the stay to require EPA to \"put its pencil down\" and stop all work related to the CPP, EPA believes that the stay halts only the legal effect and enforceability of the CPP and does not prevent EPA from continuing activities that relate to the CPP but that do not impose legal obligations.\nAn agency or court may stay the effective date of an agency action pending judicial review. In Nken v. Holder , the Supreme Court explained that, unlike an injunction, which\ndirect[s] the conduct of a particular actor, a stay operates upon the judicial proceeding itself. It does so either by halting or postponing some portion of the proceeding, or by temporarily divesting an order of enforceability. A stay pending appeal certainly has some functional overlap with an injunction, particularly a preliminary one. Both can have the practical effect of preventing some action before the legality of that action has been conclusively determined. But a stay achieves this result by temporarily suspending the source of authority to act—the order or judgment in question—not by directing an actor's conduct.\nBoth EPA and opponents of the CPP cite Nken v. Holder to support their positions on what actions, if any, EPA is permitted during the stay of the CPP. In the CEIP proposed rule, the agency cites Nken to argue that \"EPA has not been enjoined by any court from continuing to work with state partners in the development of frameworks to reduce CO 2 emissions from affected EGUs.\" In a request to extend the comment deadline for the CEIP proposed rule, a coalition of 27 states and state agencies (many of which are petitioners in the CPP litigation ) also cites Nken to support its claim that \"the agency cannot require States to take any action related to the Power Plan during the stay.\"\nThe state coalition argues that any actions regarding the CEIP that trigger deadlines for notice-and-comment \"would improperly compel action by States to take action ... on a proposal that would not exist but for the [Clean] Power Plan.\" The coalition claims that the states are forced to act before the stay is lifted because not commenting on the CEIP proposed rule would \"forgo their right to raise objections to the CEIP immediately upon judicial review.\" The letter cites past regulatory efforts to support their claim that \"granting an extension would also be consistent with the practice followed by other federal agencies that have promulgated rules potentially affected by pending litigation.\" The coalition requests that EPA extend the proposed CEIP's comment deadline for at least 60 days following the termination of the CPP stay, arguing that this would also be consistent with the purpose of notice and comment to \"ensure the States' full and robust participation[,] not harm EPA or the public interest[, and] could save significant public resources by postponing any further work on the CEIP until it is clear whether the [Clean] Power Plan has survived judicial review.\" On August 25, 2016, EPA extended the comment period by 60 days until November 1, 2016, stating that this change \"allows for requested tribal consultation\" on the proposed CEIP rule.\nIn contrast, EPA believes that it has sufficient authority to move forward with rulemakings that relate to the stayed CPP. EPA stated that \"while the legal effectiveness of the Clean Power Plan is currently stayed, the EPA has determined that it is appropriate to move forward with the design details of the CEIP component of the Clean Power Plan at this time.\" In the CEIP proposed rule, EPA argues that the agency has not been \"enjoined by any court from continuing to work with state partners in the development of frameworks to reduce CO 2 emissions from affected [power plants].\" EPA points to several instances when it continued to revise provisions related to stayed regulations. For example, after the D.C. Circuit issued a stay of the Cross-State Air Pollution Rule (CSAPR) in 2011, EPA issued a final rule in February 2012 correcting errors and delaying the effective date for certain provisions of the stayed CSAPR rule. EPA argued that the rule \"is consistent with and is unaffected by the Court's Order staying the underlying final [CSAPR]. Finalizing this action in and of itself does not impose any requirements on regulated units or states.\" EPA also finalized a second rule in June 2012 that adjusted the state emission budgets under CSAPR while the stay was in effect. It does not appear that EPA's authority to finalize these rules during the CSAPR stay was challenged.\nThese two CSAPR rulemakings tend to demonstrate that, as a matter of practice, a stay does not necessarily prevent the agency from moving forward with finalizing details of the CEIP. Unlike the two final rules issued during the CSAPR stay that revised mandatory requirements and deadlines that would take effect once the stay was lifted, the CEIP does not have any binding requirements for the states and regulated power plants during or after the stay unless a state voluntarily acts to adopt the CEIP. If the CPP survives legal challenge, a state may include the CEIP as part of its CPP implementation plan. The CEIP is mandatory only if it is part of the federal plan imposed by EPA for states that do not submit an approvable implementation plan.\nThere are few judicial opinions that address the types of agency activities allowed during a judicial stay. In the CEIP proposed rule, EPA highlights a 2001 D.C. Circuit opinion that addressed whether EPA could proceed to regulate nitrogen oxide (NO x ) emission sources under CAA Section 126 in light of the stayed NO x state implementation plan (SIP) call for revisions under CAA Section 110. In Appalachian Power Co. v. EPA , the court held that EPA could proceed to regulate the same emissions sources that would be subject to the stayed NO x SIP call because it was acting pursuant to a separate authority under CAA Section 126. In contrast, EPA relied on CAA Section 111(d) as its authority to issue both the CPP and CEIP.\nIn addition to CAA Section 111(d), the agency claims that CAA Sections 102 and 103 \"establish that the EPA has the authority [to move forward with the CEIP], and illustrate why the EPA would have good reason to continue coordinating and assisting in the development of CO 2 pollution prevention and control efforts of the states and local governments, even in light of the stay of the Clean Power Plan.\" EPA recognizes that these additional authorities are typically used to \"support\" regulatory mandates and programs such as CAA Section 111(d) emission guidelines but argues that these authorities can stand independently to support EPA's actions related to the CEIP.\nThese authorities have been used primarily to maintain uniform implementation and enforcement of CAA regulations and provide authority for EPA to engage in research and development activities to prevent and control air pollution. Under CAA Section 102, EPA \"shall encourage cooperative activities by the States and local governments for the prevention and control of air pollution; encourage the enactment of improved and ... uniform State and local laws relating to the prevention and control of air pollution.\" EPA most commonly cites this authority to approve or disapprove implementation plans developed by states to meet new and revised National Ambient Air Quality Standards. It does not appear that EPA has used Section 102 as authority to develop and issue a standalone program to control air pollution.\nCAA Section 103 appears to authorize EPA to develop and demonstrate voluntary pollution control strategies and programs such as the CEIP. This section provides EPA with the authority to conduct research and development activities, provide financial and technical assistance to air pollution control agencies and other entities, and collect and disseminate data related to improving air quality and preventing pollution. Of particular relevance to the CEIP, Section 103(g) requires EPA to\nconduct a basic engineering research and technology program to develop, evaluate, and demonstrate nonregulatory strategies and technologies for air pollution prevention.... Such program shall include ... [i]mprovements in nonregulatory strategies and technologies for preventing or reducing multiple air pollutants, including ... carbon dioxide , from stationary sources, including fossil fuel power plants.... Nothing in this subsection shall be construed to authorize the imposition on any person of air pollution control requirements.\nThis statutory language lends support to EPA's claim that it has the independent authority to issue the CEIP proposed rule as a type of nonregulatory strategy that does not impose air pollution control requirements since states have no obligation to adopt the CEIP. Previously, EPA has used its Section 103 authority to develop nonregulatory programs to help reduce CO 2 emissions. In 1992, EPA established the Energy Star program under the authority of Section 103(g). Energy Star is a voluntary labeling program jointly administered by EPA and the Department of Energy that, among other things, seeks to encourage the purchase and manufacture of energy efficient products that could help reduce GHG emissions such as CO 2 through reduced energy consumption. Similar to the CEIP, manufacturers and other entities are not required to participate in the Energy Star program.\nEPA will accept comments on the CEIP proposed rule until November 2, 2016. It is possible that EPA may continue to move forward with other CPP-related rulemakings or guidance during the stay, such as finalizing the proposed model emission trading rules and federal plan (that would be imposed if the CPP survives legal challenge in any state that does not submit an approvable state implementation plan) before the courts have completed their judicial review." ], "depth": [ 0, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h2_full", "h0_full h3_full h1_full", "h3_full" ] }	{ "question": [ "What is the CEIP?", "How can states participate in the CEIP?", "How does the CEIP help states meet emission reduction targets?", "How would renewable energy projects receive credits?", "How will low-income community projects receive credits differently?", "How many credits would the EPA match?", "To what extent are the EPA credits uniformly distributed across all states?", "How much interest has the CPP garnered?", "How have opponents of the CPP shown their disapproval?", "How did H.R. 5538 affect the CEIP?", "Why did the EPA publish the CEIP proposed rule in June 2016?", "What questions has the publication raised?", "How does the EPA support its position?", "What judicial precedent is there regarding such a case?" ], "summary": [ "The CEIP is a voluntary program that would encourage states to develop energy efficiency measures and renewable energy projects.", "To participate, a state would need to include specific design elements in its CPP state plan that is submitted to EPA for approval.", "The CEIP would establish a system to award either emission rate credits (measured in pounds of CO2 emissions per megawatt-hour) or emission allowances (measured in tons of CO2 emissions) that can be used to meet state emission reduction targets for two categories of activities:", "Renewable energy projects would receive one credit/allowance from the state and one credit from EPA for every two megawatt-hour of renewable energy generation.", "Projects in low-income communities would receive double credits.", "Under a mass-based approach, EPA would match up to the equivalent of 300 million emission allowances nationally: Half of the credits/allowances would support renewable energy projects, and half would support energy efficiency and solar energy projects in low-income communities.", "The amount of EPA credits/allowances potentially available to each state participating in the CEIP would depend on the relative amount of emission reduction each state is required to achieve under the CPP. Thus, states with greater reduction requirements would have access to a greater share of the EPA credits.", "EPA's CPP has generated significant interest from Congress and a wide range of stakeholders.", "Some Members in the 114th Congress have made several attempts to prevent the implementation of the CPP and more recently the CEIP. In particular, both the Senate and the House passed a resolution of disapproval pursuant to the Congressional Review Act, which President Obama vetoed in December 2015.", "In July 2016, the House passed H.R. 5538 (Department of the Interior, Environment, and Related Agencies Appropriations Act, 2017), which would prohibit EPA from using appropriations to \"finalize, implement, administer, or enforce\" the CEIP proposed rule.", "EPA published the CEIP proposed rule in June 2016 to provide additional implementation details for states wishing to participate in the program.", "EPA's release of the CEIP proposed rule has raised questions regarding the agency's legal authority to move forward with the CEIP while the CPP is stayed. Although some argue that the stay requires EPA to \"put its pencil down\" and stop all work related to the CPP, EPA believes that it has sufficient authority to move forward with rulemakings that relate to the stayed CPP.", "To support this assertion, EPA points to several instances when it continued to revise provisions related to previously stayed regulations.", "However, there are few judicial opinions that address the types of activities allowed during a judicial stay." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, 2, -1, -1, 1, -1, 0, 1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 3, 3, 3, 3, 4, 4, 4, 6, 6, 6, 6 ] }
CRS_RL34422	{ "title": [ "", "Patents and Innovation Policy", "The Mechanics of the Patent System", "Innovation Policy", "Continuing Application Practice Reform", "Continued Application Practice", "The USPTO Continued Application Rules", "Patent Claiming Practice Reform", "Patent Claiming Practice", "The USPTO Claim Rules", "The Tafas v. Dudas Litigation", "IDS Practice Reform", "Congressional Issues and Alternatives" ], "paragraphs": [ "Legislative interest in the patent system has been evidenced by substantial discussion of omnibus reform bills. Some of the reforms considered in the 110 th Congress, but ultimately not enacted, would have impacted the United States Patent and Trademark Office (USPTO). Among these proposals are the adoption of patent opposition proceedings, changes to the rules governing the publication of pending patent applications, and third party submission of information to the USPTO that may be pertinent to the decisions whether to allow a patent to issue or not.\nAlongside these congressional proposals, the USPTO itself has engaged in a substantial rulemaking effort in recent years. This process culminated in new rules that would make several significant changes to the patent acquisition process. First, the rules would limit the number of \"claims\" that can be filed in a particular patent application, unless the applicant supplies the USPTO with an \"Examination Support Document\" in furtherance of that application. Second, the rules would limit the number of \"continued applications\" that could be filed, absent a petition and showing by the patent applicant of the need for such applications. In addition, the USPTO has proposed reforms that would impose additional applicant disclosure obligations with respect to \"Information Disclosure Statements\" filed in support of a particular patent application.\nThe USPTO rules concerning claims and continued applications are controversial. Some patent professionals are concerned that the rules would make the process of patent acquisition more costly, impede the ability of innovators to protect their inventions adequately, and ultimately harm innovation. Some have also opined that the rules are inconsistent with the provisions of the governing patent legislation, the Patent Act of 1952. On the other hand, other observers believe that current claiming and continued application practices are subject to abuses that can potentially place undue burdens upon the USPTO during its examination tasks, be harmful to competitive industry, and at times work against the public interest. These observers favor reforms that would limit what they see as applicant abuses of the current system.\nCriticisms of the USPTO rules have led to legal challenges before the U.S. District Court for the Eastern District of Virginia. The result was the April 1, 2008 decision in Tafas v. Dudas . There, the U.S. District Court for the Eastern District of Virginia concluded that the USPTO claims and continued application rules were substantive in nature. Because Congress has not granted general substantive rulemaking power to the USPTO, the District Court declared that the rules were void and therefore unenforceable. The USPTO has appealed this judgment. At the time of the publication of this report, this outcome of this appeal is not yet available.\nCongressional response to the claims and continuing application rules has thus far been limited. In the 110 th Congress, H.R. 1908 would have expressly provided the USPTO with regulatory authority to specify the circumstances under which a patent applicant may file a continuing application. That bill passed the House on September 7, 2007, as the \"Patent Reform Act of 2007.\" No other legislation in the 110 th Congress—including S. 1145 , the Senate legislation also titled the \"Patent Reform Act of 2007\"—addressed the new USPTO rules.\nThis report reviews the USPTO rules that would restrict claims and continuing applications. It begins by offering a summary of the patent system and the role of patents in innovation policy. The context, details, and legal challenges to the new USPTO rules are then explained. The report then offers both the policy justifications for the new rules, as well as concerns that patent professionals and other observers have expressed over their effectiveness and impact. The report closes by identifying congressional issues and options.", "", "The U.S. Constitution provides Congress with the power \"To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries.... \" In accordance with the Patent Act of 1952 (the \"Patent Act\"), an inventor may seek the grant of a patent by preparing and submitting an application to the USPTO. USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent.\nIn determining whether to approve a patent application, a USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must disclose the \"best mode,\" or preferred way, that the applicant knows to practice the invention.\nThe examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must meet four primary requirements. First, the invention must fall within at least one category of patentable subject matter. According to the Patent Act, an invention which is a \"process, machine, manufacture, or composition of matter\" is eligible for patenting. Second, the invention must be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit.\nThird, the invention must be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. Finally, an invention is not patentable if \"the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.\" This requirement of \"nonobviousness\" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art.\nIf the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages \"adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.\"\nThe maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent.\nPatent rights do not enforce themselves. Patent proprietors who wish to compel others to respect their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit.", "Patent ownership is perceived to encourage innovation, which in turn leads to industry advancement and economic growth. One characteristic of the new knowledge that results from innovation is that it is a \"public good.\" Public goods are non-rivalrous and non-excludable, for use of the good by one individual does not limit the amount of the good available for consumption by others, and no one can be prevented from using that good.\nThe lack of excludability in particular is believed to result in an environment where too few inventions would be made. Absent a patent system, \"free riders\" could easily duplicate and exploit the inventions of others. Further, because they incurred no cost to develop and perfect the technology involved, copyists could undersell the original inventor. Aware that they would be unable to capitalize upon their inventions, individuals might be discouraged from innovating in the first instance. The patent system corrects this market failure problem by providing innovators with an exclusive interest in their inventions, thereby allowing them to capture their marketplace value.\nThe patent system purportedly serves other goals as well. The patent law encourages the disclosure of new products and processes, for each issued patent must include a description sufficient to enable skilled artisans to practice the patented invention. At the close of the patent's twenty-year term, others may employ the claimed invention without regard to the expired patent. In this manner the patent system ultimately contributes to the growth of the public domain.\nEven during their term, issued patents may encourage others to \"invent around\" the patentee's proprietary interest. A patentee may point the way to new products, markets, economies of production and even entire industries. Others can build upon the disclosure of a patent instrument to produce their own technologies that fall outside the exclusive rights associated with the patent.\nThe regime of patents has also been identified as a facilitator of markets. Absent patent rights, an inventor may have scant tangible assets to sell or license. In addition, an inventor might otherwise be unable to police the conduct of a contracting party. Any technology or know-how that has been disclosed to a prospective licensee might be appropriated without compensation to the inventor. The availability of patent protection decreases the ability of contracting parties to engage in opportunistic behavior. By lowering such transaction costs, the patent system may make transactions concerning information goods more feasible.\nThrough these mechanisms, the patent system can act in a more socially desirable way than its chief legal alternative, trade secret protection. Trade secrecy guards against the improper appropriation of valuable, commercially useful and secret information. In contrast to patenting, trade secret protection does not result in the disclosure of publicly available information. That is because an enterprise must take reasonable measures to keep secret the information for which trade secret protection is sought. Taking the steps necessary to maintain secrecy, such as implementing physical security measures, also imposes costs that may ultimately be unproductive for society.\nThe patent system has long been subject to criticism, however. Some observers have asserted that the patent system is unnecessary due to market forces that already suffice to create an optimal level of innovation. The desire to obtain a lead time advantage over competitors, as well as the recognition that passive firms may lose out to their more innovative rivals, may provide sufficient inducement to invent without the need for further incentives. Other commentators believe that the patent system encourages industry concentration and presents a barrier to entry in some markets.\nBecause the relationship between the rate of innovation and the availability of patent rights is not well-understood, we lack rigorous analytical methods for studying the impact of the patent system upon the economy as a whole. As a result, current economic and policy tools do not allow us to calibrate the patent system precisely in order to produce an optimal level of investment in innovation. Thus, each of these arguments for and against the patent system remain open to challenge by those who are unpersuaded by their internal logic.", "", "The Patent Act allows inventors to file \"continued applications.\" Stated generally, a continued application is one that has been \"re-filed\" at the USPTO, commonly following the rejection of some or all of its claims. Continued patent applications allow inventors to extend the period of examination at the USPTO in order to negotiate further with a patent examiner, amend claims, submit new claims, and gain additional time to prepare evidence to be submitted to the USPTO in support of their applications, among other potential benefits.\nUnder current patent practice, several different types of continued applications exist. A \"continuation\" application discloses the same subject matter as the original application. A \"continuation-in-part\" application, or CIP, adds some additional subject matter to the original application. Finally, a \"request for continued application,\" or RCE, allows applicants to request additional examination of an application without the need to file a continuation application.\nA simple example illustrates continuation practice. Suppose that an inventor files a patent application on January 1, 2000. After the USPTO examiner subsequently issues a \"final rejection\" of that application, the inventor files a continuation application on February 1, 2004. The continuation application includes the same disclosure as the 2000 application. By filing it, the inventor may continue to assert to the USPTO that a patent should issue on that invention. If the USPTO approves the continuation application, it will issue as a patent that expires on January 1, 2020—twenty years from the date of filing of the original or \"parent\" application.\nSection 120 of the Patent Act imposes several technical requirements that must be met with respect to continuation applications. First, the continuation application must be filed prior to the patenting, abandonment, or termination of proceedings of its predecessor application. Second, the predecessor and continuation application must have at least one inventor in common. Third, the continuation application must expressly identify the predecessor application.\nFinally, to be entitled to the benefit of the predecessor application, claims within the continuation application must be fully supported by the technical disclosure found within the predecessor application. Claims that reference \"new matter\" found in the continued application, but not in the predecessor application, are entitled only to the actual filing date of the continued application. As noted earlier, such an application is termed a \"continuation-in-part,\" or CIP.\nIt should be appreciated that an applicant may file a continuation application even though the \"parent\" application has resulted in an issued patent itself. Even in circumstances where the USPTO examiner has allowed all of the claims of a patent application to issue, the inventor may nonetheless file a continuation application. He may do so in order to obtain broader claims, to obtain claims that more closely track his competitor's products, or for any other reason.\nContinued applications are widely used in modern patent practice. In 2006, about 29.4% of the applications filed at the USPTO were continued applications, as compared to approximately 18.9% in 1990 and approximately 11.4% in 1980. Furthermore, the relevant provisions of the Patent Act place no numerical limits upon the number of continued applications that may be filed. Many existing U.S. patents have relied upon a chain of four, five, or even greater number of continuations, CIPs, and RCEs.", "As part of its rules announcement of August 21, 2007, the USPTO imposed some limitations upon the number of continued applications that could be filed absent a petition by the applicant. In particular, the USPTO rules stipulate that applicants may file only two continuations or CIPs, plus one RCE, with respect to an original application as a matter of right. In order to file additional continued applications, the applicant must submit a petition showing an amendment, argument, or evidence that could not have been previously submitted.\nThe USPTO issued the rules on August 21, 2007, and followed them with an additional \"clarification\" memorandum on October 10, 2007. The rules were to apply to applications filed after November 1, 2007. In addition, the rules were to apply to applications that had been filed at the USPTO prior to November 1, 2007, provided that they had not yet been reviewed by the USPTO.\nThe USPTO rationalized its rule in part on the basis of administrative efficiency. As explained by the USPTO:\nThe volume of continued examination filings ... is having a crippling effect on the Office's ability to examine \"new\" (i.e., non-continuing) applications.... The cumulative effect of these continued examination filings is too often to divert patent examining resources from the examination of new applications disclosing new technology and innovations, to the examination of applications that are a repetition of prior applications that have already been examined and have either issued or become abandoned.\nThe USPTO has also explained that the public interest lies in knowledge of the scope of patent claims. According to the USPTO, the filing of a sequence of continued applications leaves the public \"with an uncertainty as to what the set of patents resulting from the initial application will cover.\"\nAcademics have also criticized continued application practice. Mark Lemley and Kimberly Moore, then members of the Berkeley and George Mason law school faculties respectively, stated that continued application practice has introduced a number of deleterious consequences into the patent law:\nFirst, at a minimum, continuation practice introduces substantial delay and uncertainty into the lives of a patentee's competitors, who cannot know whether a patent application is pending in most circumstances. Second, the structure of the PTO suggests that continuations may well succeed in \"wearing down\" the examiner, so that the applicant obtains a broad patent not because he deserves one, but because the examiner has neither incentive nor will to hold out any longer. Third, continuation practice can be—and has been—used strategically to gain advantages over competitors by waiting to see what product the competitor will make, and then drafting patent claims specifically designed to cover that product. Finally, some patentees have used continuation practice to delay the issuance of their patent precisely in order to surprise a mature industry, a process known as \"submarine patenting.\"\nOn the other hand, critics of the USPTO rules explain that continuation practice has a number of beneficial attributes. First, some observers believe that continued application practice allows inventors to pursue a cautious, deliberate strategy before the USPTO, allowing them to obtain robust patent rights. This tactic may be appropriate in view of recent judicial opinions that have emphasized the doctrine of \"prosecution history estoppel.\" Broadly stated, this principle allows courts to consider negotiations between the applicant and the examiner when determining the scope of rights associated with a particular patent. In view of these judicial developments, some patent practitioners believe that it is unwise to make certain concessions to the examiner during the course of prosecution. The ability to file a continued application supports this strategy by allowing additional opportunities for discourse between the applicant and examiner.\nSecond, critics of the USPTO rules state that continued applications allow innovative firms to procure patent claims that relate to the products that they will ultimately market. For example, a pharmaceutical and biotechnology firm may file a patent application incorporating claims directed towards a broad category of compounds. At the time of the initial filing, however, that firm may not have conducted the extensive testing and research that is often needed to identify the particular member of that category that will be brought to market. Under current law, once that particular compound has been identified, the firm may file a continuation application specifically claiming it.\nShould administrative rulemaking impose limitations upon continuing applications, some observers believe that pharmaceutical and biotechnology firms in particular may potentially be unable to obtain claims that both cover their marketed products and be able to withstand validity challenges on a reliable basis. This tendency could potentially diminish the effectiveness of patent protection within industries where the patent system is widely acknowledged as crucial to innovation.\nThird, critics of the USPTO rules have asserted that some examiners at times do not understand the invention presented to them in particular applications. The use of continued applications is, in their view, necessary to obtain a competent examination. In addition, some observers believe that certain examiners have encouraged the filing of continued applications in order to inflate statistics pertaining to their workplace productivity.", "", "In addition to addressing continued applications, the USPTO Rules also announced changes to claiming practice. As noted previously, the Patent Act requires each patent to include \"one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.\" The claims set forth the proprietary rights that the patent owner asserts for itself. In particular, the words of a patent's claims are compared to the physical features of an accused product to determine whether infringement has occurred. As well, the teachings of earlier publications, patents, and other relevant \"prior art\" is compared to a patent's claims in order to decide whether the patented invention has been anticipated or would have been obvious.\nClaims may be drafted in either \"independent\" or \"dependent\" format. A dependent claim references an earlier claim, but then provides additional limitations upon the scope of that claim. Claims 1 and 2 of U.S. Patent No. 4,161,079, which relate to traps for mice and other pests, provides an example of independent and dependent claims:\n1. A trap for rodents or like pests comprising:\nan enclosure for the pest to enter;\nmeans for ensnaring the pest in the enclosure;\na charge of separately covered bait material mounted to the enclosure;\nmeans for uncovering said covered bait material within the enclosure, said means for uncovering being operable externally of said enclosure;\nwhereby covered bait material may be stored for a long period of time and yet easily released when desired.\n2. The invention of claim 1 wherein:\nsaid enclosure includes a window through which a user may look to see if a mouse or like pest is entrapped therein.\nThe use of dependent claims is largely a drafting convenience for patent applicants. In the mouse trap example, rather than reciting each of the features of claim 1 once more, claim 2 merely references them but also incorporates an additional limitation.\nIn practice, most patents contain multiple claims. Each claim is ordinarily viewed as presenting a separate statement of the patented invention. It is possible that the patent proprietor's competitor may infringe some of the patent's claims, but not others, depending upon the precise wording of the claim. Similarly, a court may declare that some of the patent's claims are invalid, but uphold other claims, in view of novelty, nonobviousness, or other legal requirements to obtain a patent. For the most part, then, each claim in a patent affords the patent owner separate proprietary rights that must be judged on its individual merits.\nDeterminations as to the precise number of claims that a particular patent contains falls largely within the discretion of the individual who drafted the patent. As Paul Janicke, a member of the University of Houston law faculty, has explained:\nNo limit is placed on the number of claims that can be included in an application. Most good patent attorneys write many of them of varying scope, in case the broadest turn out to be invalid because they cover some unknown piece of prior art, and in case the narrowest fail to provide commercially effective scope because they are easily designed around. Each claim is judged for validity and infringement as though it were a sort of mini-patent unto itself. To win an infringement case, the patentee need only establish infringement of one claim that the defendant is unable to invalidate. Such a system encourages the most diverse possible claiming. It is a good system for protecting inventions.\nThe USPTO fee schedule provides some financial incentives to limit the number of claims in a particular patent. The basic filing fee for patent applications is currently $310. For each independent claim in excess of three, the USPTO imposes a surcharge of $210. In addition, for each claim in excess of 20, whether dependent or independent, the USPTO imposes a surcharge of $50. As a result, incorporating large numbers of claims within a patent may lead to a substantial increase in the official fees associated with its acquisition.\nEmpirical studies have arrived at varying results on the average number of claims per patent, depending on the sampling technique employed and the time frame under consideration. Patent lawyer Peter L. Giunta reported an average of 3.09 independent claims and 18.15 total claims per patent issued in 2003. John Allison and Mark Lemley, members of the faculties of the University of Texas and Stanford University respectively, sampled 1,000 patents issued between 1976 and 1978, and another 1,000 patents issued between 1996 and 1998. Allison and Lemley reported an average of 9.94 claims per patent for the 1970's patents, and 14.87 claims per patent for the 1990's patents. Both the Giunta and Allison-Lemley studies agreed that the average number of claims per patent has increased over time.\nIt should be appreciated, however, that some patents incorporate considerably more claims than average. For example, in the well-known patent litigation involving the BlackBerry® mobile communications device, the patent proprietor asserted charges of infringement based upon five patents. The first of these patents to issue incorporated 89 claims; the remaining four included 276, 223, 341, and 665 claims respectively. As a general matter, one empirical study has concluded that patents of greater value to their owners tend to have a larger number of claims than average.", "Following issuance of notice and a period of public commentary, the USPTO promulgated rules that would impose an obligation upon inventors who file patent applications that have more than five independent claims, or more than 25 total claims (dependent or independent). That obligation consists of the duty to prepare and file an Examination Support Document, or ESD. The ESD contains information about the claimed inventions that may assist the USPTO in conducting its examination tasks. In order to prepare the ESD, the applicant must conduct a search of databases of patents and the scientific literature. The applicant must then provide a detailed explanation of why the submitted claims are patentable over the prior art discovered during the search, as well as provide additional information pertinent to the patentability determination.\nThe USPTO is concerned that applicants might attempt to file multiple applications directed toward the same or similar inventions in order to avoid the obligation to submit an ESD. The USPTO rules therefore require applicants to disclose all applications that are commonly owned and have at least one inventor in common. If the examiner determines that the applications have \"substantially overlapping disclosures,\" the examiner may presume that the claims are not \"patentably distinct\" and will apply the 5/25 claim limitation to the total number of claims in the relevant applications. The USPTO further \"cautioned\" applicants from attempting to avoid this rule by filing separate applications outside the two-month window.\nOn the other hand, the USPTO has recognized that applicants may permissibly file continued applications in order to obtain additional claims without the filing of an ESD. As the new continuation rules allow applicants to file two continuation applications and one RCE without special justification, applicants may potentially obtain 15 independent claims, and 75 total claims without the filing of an ESD.\nAs with the rules with respect to continued applications, the claiming practice rules were to apply to applications filed after November 1, 2007. In addition, the rules were to apply to applications that had been filed at the USPTO prior to November 1, 2007, provided that they had not yet been reviewed by the USPTO.\nThe USPTO justified these restrictions upon claiming practice on a number of grounds. One rationale was that these reforms would lead to a \"better focused and effective examination process\" that would allow examiners to concentrate upon a smaller number of claims, or in the alternative be assisted by an ESD. According to the USPTO, the result would be a reduction in \"the large and growing backlog of unexamined applications,\" while \"the quality of issued patents\" would be maintained or possibly improved.\nThe USPTO also expressed concerns that, absent rule changes, the public would face difficulty in analyzing numerous claims in issued patents that were directed towards \"patentably indistinct inventions.\" Patents are often complex, technical instruments that may prove difficult to parse. It is not uncommon for jurists who frequently adjudicate disputes concerning patents to disagree on their appropriate construction. The transaction costs and uncertainty surrounding determinations of patent scope may be further exaggerated if the patent includes a large number of claims. These circumstances may not favor the ability of others to innovate themselves, and also to compete in the marketplace.\nAlthough the USPTO rules place no absolute restrictions upon the number of claims that may be incorporated within a particular application, they were subject to negative commentary by many patent professionals. In particular, some observers viewed the filing of an ESD as a costly, time-consuming, and potentially risky endeavor. Patent attorneys John Pegram and Ronald Lundquist opined that preparing an ESD may require more technical and legal effort than drafting its associated patent application. Submitting an ESD might therefore significantly increase the costs of procuring patent rights in the United States.\nIn addition, some observers believe that ESDs will commonly incorporate statements and disclosures that might potentially be viewed as admissions. An ESD might therefore limit the scope of protection and enforceability of any patent that resulted from its application. Other observers believed that the claim rules would negatively impact patent rights without meaningfully serving the goals identified by the USPTO. As explained by patent attorneys John R. Harris and Daniel E. Sineway:\nFor the USPTO to claim that an ESD will \"improve examination quality\" seems disingenuous—the improvement in quality will likely result not from any greater scrutiny or effort by the patent examiner, but from patent applicants providing the examiner with the ammunition to reject the application. The ESD will give examiners the information and reasoning needed to deny a patent, and/or force the applicant to fill the file history with information that helps infringers avoid liability in later litigation.\nAs a result, patent attorney Kevin Noonan opined that \"an applicant should avoid filing an ESD under any circumstances.\"\nIf inventors widely subscribe to this view, then they will be practically limited in the number of claims that they can obtain from the USPTO. This effect may limit the extent of patent protection an inventor may effectively procure, particularly in view of a number of judicial opinions that have stressed that inventors possess the ability to draft claims using words of their own choosing. Courts have further observed that a patent's claims are intended to provide notice to third parties of its owner's proprietary rights. If the claims do not match the accused infringer's product or process literally, then courts may be reluctant to employ equitable principles such as the \"doctrine of equivalents\" to reach a finding of infringement. As the Federal Circuit explained, \"as between the patentee who had a clear opportunity to negotiate broader claims but did not do so, and the public at large, it is the patentee who must bear the cost of its failure to seek protection for [a] forseeable alteration of its claimed [invention].\" Some observers believe that the combination of judicial stress upon precise claim drafting and administrative limitations upon claims will make the patent system less attractive, thereby decreasing investment in R&D, diminishing innovation, and encouraging use of trade secret law.", "Criticisms over the propriety of the claims and continued application rules led to litigation against the USPTO in federal court. Legal challenges to the rules resulted in the April 1, 2008 decision in Tafas v. Dudas . There, the U.S. District Court for the Eastern District of Virginia concluded that the USPTO claims and continued application rules were substantive in nature. Because Congress has not granted general substantive rulemaking power to the USPTO, the District Court declared that the rules were void and therefore unenforceable.\nThe Tafas v. Dudas ruling arose from lawsuits filed by two separate plaintiffs: (1) individual inventor Triantafyllos Tafas, and (2) the multinational pharmaceutical enterprise organized as Smithkline Beecham Corp. and Glaxo Group Limited. The plaintiffs requested a permanent injunction that would prevent the USPTO from implementing the claims and continued application rules.\nAlthough a number of arguments were before the District Court, Judge Cacheris confined his ruling to the issue of whether the USPTO claims and continued application rules were substantive or not. He concluded that the rules were indeed substantive because they would \"affect[] individual rights and obligations.\" In particular, Judge Cacheris observed that the Patent Act placed no strict limitations upon the number of claims or continuing applications that an inventor could pursue. Because the rules would deprive inventors of these rights, they were substantive in nature and thus beyond the ability of the USPTO to enact.\nIn keeping with its opinion, the District Court issued an order permanently enjoining the USPTO from implementing its claims and continued application rules. The USPTO has appealed this judgment to the Federal Circuit, where the appeal remains pending at the time of the publication of this report.", "Although patent professionals have focused attention upon the claims and continued application rules, the USPTO has proposed additional reforms as well. One of these reforms relates to the so-called Information Disclosure Statement, or IDS. An IDS is a document submitted to the USPTO that discloses all journal articles, patents, and other \"prior art\" of which a patent applicant is aware. The USPTO has expressed concerns that applicants too frequently include numerous \"irrelevant or marginally relevant\" prior art reference that not only fail to bring the most relevant material to the attention of examiners, but also require them to sort through dozens or hundreds of documents that are not pertinent to the question of patentability.\nAs a result, the USPTO has proposed rules that would impose additional applicant responsibilities with respect to IDS filings. In particular, the USPTO proposes that if more than 20 documents are disclosed in an IDS, the applicant must provide an explanation of each cited document. That explanation consists of \"an identification of a portion of a document that caused it to be cited, and an explanation of how the specific feature, showing, or teaching of the document correlates with language in one or more claims.\" If an IDS contains fewer than 20 documents, the applicant would be required to provide an explanation only for documents not published in English, or for English-language documents over 25 pages in length.\nCritics of the proposed IDS rules assert that \"their practical effect will be to dramatically increase the cost of obtaining patent protection\" and \"make it much more difficult for inventors and innovators to protect their legitimate intellectual property rights . . ..\" At present time, the USPTO has not taken final action with respect to the proposed IDS rules.", "Should Congress conclude that the current situation with respect to the USPTO rulemaking is satisfactory, then no action need be taken. If Congress wishes to intervene, however, a number of options present themselves. In the 110 th Congress, H.R. 1908 would have expressly provided the USPTO with regulatory authority to specify the circumstances under which a patent applicant may file a continued application. That bill passed the House on September 7, 2007, as the \"Patent Reform Act of 2007,\" and was referred to the Senate. No other legislation that was before the 110 th Congress—including S. 1145 , the Senate legislation also titled the \"Patent Reform Act of 2007\"—addresses the subject matter of the claims or continuation rules.\nOne possibility would be to provide the USPTO with substantive rulemaking authority. In the 110 th Congress, an earlier verison of H.R. 1908 would have granted the USPTO Director the authority to \"promulgate such rules, regulations, and orders that the Director determines appropriate to carry out the provisions of this title or any other law applicable to the United States Patent and Trademark Office.\" This provision was ultimately removed from the bill in favor of a more narrow grant of authority with respect to continued applications.\nMore specific legislative amendments provide another option. Amendments to the relevant provisions of the Patent Act could confirm that no limitations should be imposed upon the number of claims or continuations that applicants may file. They could also address IDS filing requirements or other aspects of USPTO procedures. Alternatively, amended statutory provisions could impose such limitations, or grant the USPTO the authority to do so.\nPatent administration has becoming increasingly difficult as the USPTO faces both a rising number of filings and more technologically complex applications. On the other hand, many patent professionals have viewed both judicial and legislative developments as emphasizing well-crafted applications. Limitations upon claims and continued application practice have been widely viewed as constraining the ability of patent professionals to achieve this goal. Establishing the appropriate balance of rights and responsibilities between applicants and the USPTO forms an important consideration in maintaining a fair and efficient patent system." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1 ], "alignment": [ "h0_title h1_title", "", "", "", "h0_title", "h0_full", "h0_full", "h0_title", "", "h0_full", "", "", "h1_full" ] }	{ "question": [ "How would the rules affect \"continued applications\"?", "What is a continued application?", "Why does the USPTO want to regulate continued applications?", "Why might Congress not take action regarding the USPTO?", "How could Congress intervene?", "How could Congress specifically augment USPTO regulatory authority?", "How could Congress otherwise intervene?" ], "summary": [ "First, the rules would limit the number of \"continued applications\" that could be filed, absent a petition and showing by the patent applicant of the need for such applications.", "Stated generally, a continued application is one that has been re-filed at the USPTO, commonly following an examiner's rejection.", "The USPTO has justified this limitation on the basis that the increasing number of continued examination filings is hampering its ability to review new applications.", "Should Congress conclude that the current situation with respect to claims and continued application practice at the USPTO is satisfactory, then no action need be taken.", "If Congress wishes to intervene, however, a number of options present themselves.", "Congress could expressly provide the USPTO with regulatory authority to specify the circumstances under which a patent applicant may file a continued application.", "Other possibilities include providing the USPTO with substantive rulemaking authority and more specific reforms directed to the relevant substantive provisions of the Patent Act." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 5, 5, 5, 5 ] }

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