CRS Reports

Efforts to Address Seasonal Agricultural Import Competition in the NAFTA Renegotiation

The United States has initiated renegotiations of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Among the Administration’s agriculture-related objectives in the renegotiation is a proposal to establish new rules for seasonal and perishable products, such as fruits and vegetables, which would establish a separate domestic industry provision for perishable and seasonal products in anti-dumping and countervailing duties (AD/CVD) proceedings. This could protect certain U.S. seasonal fruit and vegetable products by making it easier to initiate trade remedy cases against (mostly Mexican) exports to the United States and responds to complaints by some fruit and vegetable producers, mostly in Southeastern U.S. states, who claim to be adversely affected by import competition from Mexico. Mexico’s production of some fruits and vegetables—tomatoes, peppers, cucumbers, berries, and melons—has increased sharply in recent years, in large part due to Mexico’s investment in large-scale greenhouse production facilities and other types of technological innovations. Some claim that this investment is supported by government subsidies and should be addressed through higher countervailing duties (CVD) on U.S. imports of these products. They also claim that these imports are sold to the United States at prices below the cost of production and alternatively could be countered by higher anti-dumping (AD) duties. Concerns have mostly focused on U.S. imports of tomatoes, peppers, and berries. The Administration’s seasonal proposal is among the more contentious of the agricultural proposals reportedly considered by U.S. negotiators. The proposal would likely require changes to U.S. AD/CVD laws by allowing growers to bring an injury case by domestic region and draw on seasonal data. Under current law, an injury case must be supported by a majority (at least 50%) of the domestic industry. The Administration’s proposal could reportedly allow regional groups—representing less than 50% of producer nationwide—to initiate an injury, even if the majority of producers within the industry, or in other regions, do not support initiating an injury case. Also, under current law, three years of annual data is necessary to prove injury, whereas the proposal would allow for the use of seasonal data to prove injury. The seasonal proposal has divided the U.S. fruit and vegetable industry, and opinions are split between producers in some Southeastern states and producers in other states, such as California. Opinions in Congress are also divided. Some in Congress support the seasonal proposal, claiming that such a change is necessary to address perceived unfair trading practices by Mexican exporters of fresh fruits and vegetables. Others in Congress oppose including the proposal, contending that seasonal production complements rather than competes with U.S. growing seasons. They also worry that this change could open the door to retaliation by U.S. trading partners and to the imposition of similar regional and seasonal remedies against U.S. exports. Mexican trade officials also do not support including a seasonal AVD/CVD proposal as part of the NAFTA renegotiations, nor do they support limiting access for some products. Some reports indicate that Mexico is considering retaliation by including its own list of protected products in response to the U.S. proposal. Such a list could include certain grain and pork products and other types of limitations to protect Mexican products in certain production areas. The U.S. food and agriculture industries have much at stake in the current NAFTA renegotiations. Canada and Mexico are the United States’ two largest trading partners, accounting for 28% of the total value of U.S. agricultural exports and 39% of its imports in 2016. Under NAFTA, U.S. agricultural exports to Canada and Mexico has increased sharply, rising from $8.7 billion in 1992 to $38.1 billion in 2016.

Dec 7, 2017

Defining Broadband: Minimum Threshold Speeds and Broadband Policy

Broadband—whether delivered via fiber, cable modem, copper wire, satellite, or mobile wireless—is increasingly the technology underlying telecommunications services such as voice, video, and data. Since the initial deployment of high-speed internet in the late 1990s, broadband technologies have been deployed throughout the United States primarily by the private sector. These providers include telephone, cable, wireless, and satellite companies as well as other entities that provide commercial telecommunications services to residential, business, and institutional customers. How broadband is defined and characterized in statute and in regulation can have a significant impact on federal broadband policies and how federal resources are allocated to promote broadband deployment in unserved and underserved areas. One way broadband can be defined is by setting a minimum threshold speed for what constitutes “broadband service.” Section 706 of the Telecommunications Act of 1996 requires the Federal Communications Commission (FCC) to regularly initiate an inquiry concerning the availability of broadband to all Americans and to determine whether broadband is “being deployed to all Americans in a reasonable and timely fashion.” If the determination is negative, the act directs the FCC to “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” Starting in 1999, there have been 10 Section 706 reports, each providing a snapshot and assessment of broadband deployment. As part of this assessment, and to help determine whether broadband is being deployed in “a reasonable and timely fashion,” the FCC has set a minimum broadband speed that essentially serves as the benchmark the FCC uses to determine what it considers broadband service for the purposes of its Section 706 determination. In 2015 the FCC, citing changing broadband usage patterns and multiple devices using broadband within single households, raised its minimum fixed broadband benchmark speed from 4 Mbps (download)/1 Mbps (upload) to 25 Mbps/3 Mbps. On August 8, 2017, the FCC adopted and released its Thirteenth Section 706 Notice of Inquiry (NOI). One proposal under consideration is establishing a lower benchmark speed specifically for mobile broadband. Stakeholders who support an FCC determination that broadband is not being deployed in a reasonable and timely fashion generally oppose lowering the broadband benchmark by considering the presence of either fixed (at 25 Mbps/3 Mbps) or mobile (at 10 Mbps/1 Mbps) broadband as an indication that an area has adequate broadband service. On the other hand, stakeholders who support an FCC determination that broadband is being deployed in a reasonable and timely fashion generally support changing the FCC’s broadband benchmark methodology to include the presence of either fixed or mobile broadband as an indication that an area is receiving adequate broadband service. Three issues for Congress are how broadband benchmarks should be set, whether the FCC will determine that broadband is being deployed in a reasonable and timely fashion, and how that determination and those benchmarks will impact current and future broadband policies and programs intended to improve broadband availability and adoption throughout the nation. As broadband technology advances, commercially available download and upload speeds will likely increase, and the level at which broadband benchmark threshold speeds should be set is likely to remain controversial. Accordingly, the FCC’s annual Section 706 determination is likely to be contentious as long as it is seen by stakeholders as providing a justification for current or future FCC regulatory or deregulatory policies.

Dec 4, 2017

Nuclear Negotiations with North Korea: In Brief

Some analysts have suggested that, in response to the accelerated pace of North Korea’s nuclear and missile testing programs and its continued threats against the United States and U.S. allies, the United States might engage in an aggressive negotiation strategy. Since the early 1990s, successive U.S. Presidents have faced the question of whether to negotiate with the North Korean government to halt Pyongyang’s nuclear program and ambitions. Questions for policymakers include the utility, timing, scope, and goals of diplomatic talks with Pyongyang. The United States has engaged in four major sets of formal nuclear and missile negotiations with North Korea: the bilateral Agreed Framework (1994-2002), the bilateral missile negotiations (1996-2000), the multilateral Six-Party Talks (2003-2009), and the bilateral Leap Day Deal (2012). In general, the formula for these negotiations has been for North Korea to halt, and in some cases disable, its nuclear or missile programs in return for economic and diplomatic incentives. While some of the negotiations have shown progress, North Korea has continued to advance its nuclear and missile programs. Congress possesses a number of tools to influence whether and how intensely the Administration pursues negotiations with North Korea. The tools include oversight hearings, resolutions expressing congressional sentiment, restrictions on the use of funds for negotiations and the required diplomatic team through the appropriations process, and legislation that attaches or relaxes conditions and requirements for implementation of agreements. Past Congresses have influenced U.S.-DPRK talks and in several cases affected the implementation of the negotiated agreements. Congress’s role has been particularly significant in negotiations over the provision of U.S. energy and humanitarian assistance to North Korea through the appropriations process. This report summarizes past nuclear and missile negotiations between the United States and North Korea, also known by its formal name, the Democratic People’s Republic of Korea (DPRK), and highlights some of the lessons and implications that can be drawn from these efforts. Other CRS products address various aspects of U.S. policy toward North Korea, including those listed below. CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation, coordinated by Emma Chanlett-Avery CRS In Focus IF10467, Possible U.S. Policy Approaches to North Korea, by Emma Chanlett-Avery and Mark E. Manyin CRS Report R41438, North Korea: Legislative Basis for U.S. Economic Sanctions, by Dianne E. Rennack CRS Report R40095, Foreign Assistance to North Korea, by Mark E. Manyin and Mary Beth D. Nikitin CRS Report R44994, The North Korean Nuclear Challenge: Military Options and Issues for Congress, coordinated by Kathleen J. McInnis CRS Report R44912, North Korean Cyber Capabilities: In Brief, by Emma Chanlett-Avery et al. CRS In Focus IF10472, North Korea’s Nuclear and Ballistic Missile Programs, by Steven A. Hildreth and Mary Beth D. Nikitin

Dec 4, 2017

Tax Reform: The Alternative Minimum Tax

Dec 4, 2017

The Supplemental Poverty Measure: Its Core Concepts, Development, and Use

The Supplemental Poverty Measure (SPM) is a measure of economic deprivation—having insufficient financial resources to achieve a specified standard of living. The SPM addresses some of the limitations of the official poverty measure, without supplanting it outright. Both the SPM and the official measure determine the poverty status of people and families by comparing their financial resources against poverty thresholds that are valued in dollars. For both measures, poverty thresholds vary by family size and composition, and families whose resources are lower than the thresholds are considered to be poor. The measures differ in their definitions of need, as it is used in the thresholds (the dollar amounts used to determine poverty status), financial resources that are considered relevant for comparing against the measure of need as specified in the thresholds, and family, for the purpose of assigning thresholds and counting resources. Need The official poverty thresholds measure needs derived from the cost of an austere food budget. The food budget was multiplied by three, based on the finding that food accounted for about one-third of total family expenditures in 1955. Since their original computation, these thresholds have been adjusted annually for price inflation. In contrast, the SPM’s thresholds are based on consumer expenditures for food, clothing, shelter, and utilities, and it uses five years of data from the Consumer Expenditure Survey in calculating needs and thresholds. Developing the SPM thresholds starts with spending data for families with exactly two children. These data are refined by using approximately the 33rd percentile of families’ expenditures on food, clothing, shelter, and utilities. Next, an extra 20% is figured into the thresholds for miscellaneous expenses such as cleaning supplies and personal care items. The thresholds then undergo further adjustment to reflect that housing costs differ between homeowners with mortgages, homeowners without mortgages, and renters; housing costs differ geographically; and costs differ by family size and composition. Financial Resources Financial resources to meet needs, whether in the SPM or the official measure, are based on the sum of income of all family members. While the official measure uses money income before taxes, the SPM makes additional adjustments and considers a wider range of resources. The SPM includes the value of certain in-kind benefits (such as food and housing subsidies), uses income after estimated federal and state taxes, and subtracts some expenses from income. These expenses include medical out-of-pocket costs, such as health insurance premiums, physician co-pays, and over-the-counter medications; child support paid outside of the household; and work expenses, such as child care and the cost of commuting, tools, uniforms, or licensing fees related to a person’s employment. Work expenses, including child care, are capped at the amount of earnings from work of the lowest-earning family member. These expenses are subtracted from family income because they cannot be used to obtain the needs defined in the SPM thresholds. Unlike the official poverty measure, the range of financial resources included in the SPM is defined to be consistent with the types of needs used to compute the SPM poverty thresholds. Family Like the official measure, the SPM family unit definition includes people related by birth, marriage, or adoption living in the same housing unit. However, the SPM additionally includes cohabiting couples and their children, and foster children below age 22. How Does Poverty Look through the Lens of the SPM? The demographic profile of the poverty population is different under the SPM than under the official measure. Children have a comparatively lower poverty rate (percentage in poverty) under the SPM, and the aged (65 and older) and working-age persons (18 to 64) have comparatively higher poverty rates. These differences can be explained by the SPM’s resource definition. The SPM includes tax credits and in-kind benefits that help families with children (in effect, boosting the measure of family income). It subtracts medical out-of-pocket expenses, which disproportionately affects the aged (lowering their measure of income), and subtracts work-related expenses, which disproportionately affects the working-age population (lowering their measure of income). Uses and Limits The SPM can give policymakers the tools to understand how taxes and government programs, including the noncash programs, affect the poor. It also illustrates how medical expenses and work-related expenses such as child care can affect a family’s economic well-being. However, the SPM poverty estimates are derived from household survey data, and hence are affected by issues such as underreporting of income from government benefit programs, limitations on how tax liabilities and tax benefits can be estimated based on survey data, and differences in how noncash benefits and lump-sum tax refunds are “valued” by program recipients versus how they are valued for the purposes of poverty measurement. Additionally, the SPM does not directly value health insurance provided publicly or privately. Further, poverty has historically been measured in the United States as an “absolute” measure, based on how many people fall below a set standard of living. Questions have been raised about whether the SPM continues to measure poverty in that way, or represents a “relative” measure of poverty, based on how the population ranks in terms of well-being relative to each other.

Nov 28, 2017

Federal Role in Voter Registration: The National Voter Registration Act of 1993 and Subsequent Developments

Historically, most aspects of election administration have been left to state and local governments, resulting in a variety of practices across jurisdictions with respect to voter registration. States can vary on a number of elements of the voter registration process, including whether or not to require voter registration; where or when voter registration occurs; and how voters may be removed from registration lists. The right of citizens to vote, however, is presented in the U.S. Constitution in the 15th, 19th, and 26th Amendments. Beginning with the Voting Rights Act (VRA) in 1965, Congress has sometimes passed legislation requiring certain uniform practices for federal elections, intended to prevent any state policies that may result in the disenfranchisement of eligible voters. The National Voter Registration Act (NVRA) was enacted in 1993 and set forth a number of voter registration requirements for states to follow regarding voter registration processes for federal elections. NVRA is commonly referred to as the motor-voter bill, as it required states to provide voter registration opportunities alongside services provided by departments of motor vehicles (DMVs), although NVRA required other state and local offices providing public services to provide voter registration opportunities as well. NVRA also created a federal mail-based voter registration form that all states are required to accept and created criteria for state voter registration forms. Certain procedures states must follow for performing voter registration list maintenance or removing voters from registration lists are also set forth in NVRA. The Federal Election Commission (FEC) provided guidance to state election officials and issued biennial reports to Congress on NVRA implementation and voter registration in each state until these roles were transferred to the Election Assistance Commission (EAC) in 2002. NVRA remains a fundamental component of federal voter registration policy and has not undergone many significant revisions since its enactment, though voter registration remains a subject of interest to Congress. The Help America Vote Act (HAVA) of 2002 enacted a number of election administration measures, several of which were based on recommendations from the FEC’s biennial NVRA reports, and affected federal voter registration. These included the computerization of state voter lists; grants to states for election technology upgrades; changes to the federal mail-based voter registration form; and the transfer of the FEC’s role in administering NVRA to the newly created EAC. More comprehensive information on HAVA can be found in CRS Report RS20898, The Help America Vote Act and Election Administration: Overview and Selected Issues for the 2016 Election. In the 115th Congress to date, 35 bills have been introduced related to federal voter registration or NVRA. Some of these measures are narrow in scope, whereas others are more comprehensive electoral reforms. Many of these bills seek to expand the ways in which states must allow individuals to register to vote. This can include adding other public service agencies to the list of NVRA voter registration agencies, or requiring online voter registration, same-day voter registration, preregistration of teenagers not yet eligible to vote, or automatic voter registration. A number of other bills reflect ongoing concerns about the technology used to maintain voter registration data and about balancing the efficiency technology provides for citizens and election officials with sufficient cybersecurity protections.

Nov 28, 2017

Iraq: Background and U.S. Policy

The 115th Congress and the Trump Administration are considering options for U.S. engagement with Iraq as Iraqis look beyond the immediate security challenges posed by their intense three-year battle with the insurgent terrorists of the Islamic State organization (IS, aka ISIL/ISIS). While Iraq’s military victory over Islamic State forces is now virtually complete, Iraq’s underlying political and economic challenges are daunting and cooperation among the forces arrayed to defeat IS extremists has already begun to fray. The future of volunteer Popular Mobilization Forces (PMF) and the terms of their integration with Iraq’s security sector are being determined, with some PMF groups maintaining ties to Iran and anti-U.S. Shia Islamist leaders. In September 2017, Iraq’s constitutionally recognized Kurdistan Regional Government held an advisory referendum on independence, in spite of opposition from Iraq’s national government and amid its own internal challenges. More than 90% of participants favored independence. With preparations for national elections in May 2018 underway, Iraqi leaders face the task of governing a politically divided and militarily mobilized country, prosecuting a likely protracted counterterrorism campaign against IS remnants, and tackling a daunting resettlement, reconstruction, and reform agenda. More than 3 million Iraqis have been internally displaced since 2014, and billions of dollars for stabilization and reconstruction efforts have been identified. Iraqi Prime Minister Haider al Abadi is linking his administration’s decisions with gains made to date against the Islamic State, but his broader reform platform has not been enacted by Iraq parliament. Oil exports, the lifeblood of Iraq’s public finances and economy, are bringing diminished revenues relative to 2014 levels, leaving Iraq’s government more dependent on international lenders and donors to meet domestic obligations. The United States has strengthened its ties to Iraq’s security forces and provided needed economic and humanitarian assistance since 2014, but Iraqis continue to disagree over how U.S.-Iraqi relations should evolve. President Trump and Prime Minister Abadi met in Washington, DC, in March 2017 and, according to the White House, “agreed to promote a broad-based political and economic partnership based in the [2008] Strategic Framework Agreement,” including continued security cooperation. Some Iraqis have welcomed U.S. engagement with and assistance to Iraq, whereas other Iraqis view the United States with hostility and suspicion for various reasons. Prime Minister Abadi has expressed the desire for the United States to provide continued support and training for Iraq’s security forces, but some Iraqis—particularly those with close ties to Iran—are deeply critical of proposals for a continued U.S. military presence in the country. U.S. decisions on issues such as policy toward Iran, the conflict in Syria, the Israel-Palestinian conflict, and U.S. relations with Iraqi Kurds and other subnational groups may influence future bilateral negotiations and prospects for cooperation. Congress has authorized a Defense Department train and equip program for Iraqi security forces through December 31, 2019, and has appropriated more than $3.6 billion requested for the program from FY2015 through FY2017, including funds specifically for the equipping and sustainment of Kurdish peshmerga. U.S. military operations against the Islamic State continue with the consent of Iraq’s elected government. Congress has authorized the use of FY2017 funds for sovereign loan guarantees to Iraq and for continued lending for Iraqi arms purchases from the United States. President Trump has requested $1.269 billion to train Iraqis for FY2018 and seeks $347.86 million for foreign aid to Iraq, including $300 million for further U.S. contributions to United Nations-coordinated post-IS stabilization efforts. Appropriations and authorization legislation enacted and under consideration in the 115th Congress generally would provide for the continuation of U.S. assistance and engagement with Iraq on current terms (H.R. 2810, H.R. 3354, S. 1780 and S. 1519).

Nov 21, 2017

Government Printing, Publications, and Digital Information Management: Issues and Challenges

In the past half-century, in government and beyond, information creation, distribution, retention, and preservation activities have transitioned from a tangible, paper-based process to digital processes managed through computerized information technologies. Information is created as a digital object which then may be rendered as a text, image, or video file. Those files are then distributed through a myriad of outlets ranging from particular software applications and websites to social media platforms. The material may be produced in tangible, printed form, but typically remains in digital formats. The Government Publishing Office (GPO) is a legislative branch agency that serves all three branches of the national government as a centralized resource for gathering, cataloging, producing, providing, authenticating, and preserving published information. The agency is overseen by the Joint Committee on Printing (JCP), which in 1895 was charged with overseeing and regulating U.S. government printing. GPO operates on the basis of a number of statutory authorities first granted in the 19th and 20th centuries that presume the existence of government information in an ink-on-paper format, because no other format existed when those authorities were enacted. GPO’s activities include the Federal Depository Library Program (FDLP), which provides permanent public access to published federal government information, and which last received legislative consideration in 1962. In light of the governance and technological changes of the past four decades, a relevant question for Congress might arise: To what extent can decades-old authorities and work patterns meet the challenges of digital government information? For example, the widespread availability of government information in digital form has led some to question whether paper versions of some publications might be eliminated in favor of digital versions, but others note that paper versions are still required for a variety of reasons. Another area of concern focuses on questions about the capacity of current information dissemination authorities to enable the provision of digital government information in an effective and efficient manner. With regard to information retention, the emergence of a predominantly digital FDLP may raise questions about the capacity of GPO to manage the program given its existing statutory authorities. These questions are further complicated by the lack of a stable, robust set of digital information resources and management practices like those that were in place when Congress last considered current government information policies. The 1895 printing act was arguably an expression of the state-of-the-art standard of printing technology and provided a foundation which supported government information distribution for more than a century. By contrast, in the fourth or fifth decade of transitioning from the tangible written word to ubiquitous digital creation and distribution, the way ahead is not as clear, due in part to a lack of widely understood and accepted standards for managing digital information. This report examines three areas related to the production, distribution, retention, and management of government information in a primarily digital environment. These areas include the Joint Committee on Printing; the Federal Depository Library Program; and government information management in the future.

Nov 8, 2017

Public-Private Partnerships (P3s) in Transportation

Public-private partnerships (P3s) in transportation are contractual relationships typically between a state or local government, who are the owners of most transportation infrastructure, and a private company. P3s provide a mechanism for greater private-sector participation in all phases of the development, operation, and financing of transportation projects. Although there are many different forms P3s can take, this report focuses on the two types of agreements that generate the most interest and discussion: (1) design-build-finance-operate-maintain (DBFOM); and (2) long-term lease. P3s have emerged, in part, because of the growing demands on the transportation system and constraints on public resources. To date, however, the number of transportation P3s in the United States is relatively small, as is the amount of long-term private financing provided. Among the reasons for this are the availability to state and local governments of tax-preferred municipal bonds; the need for some kind of revenue stream, such as a toll, fare, or tax, to provide funding; and the fact that many states have very limited experience with P3s. Most transportation P3s to date have been in highways or marine cargo terminals; only a few have involved public transportation, intercity passenger rail, or airports. There are three main potential benefits of P3s: (1) P3s are a way to attract private capital to invest in transportation infrastructure; (2) P3s may be able to build and operate transportation facilities more efficiently than the public sector through better management and innovation in construction, maintenance, and operation; and (3) the public sector can transfer to the private-sector partner many of the risks of building, maintaining, and operating transportation infrastructure. Concerns with P3s include the types of projects involved, the risks retained by the public sector, and transportation planning. P3s that are reliant on tolls or other user fees are unlikely to address transportation issues in rural areas or on lightly traveled routes. However, P3s in these areas may be viable if based on state and local government availability payments. Although some risks are typically transferred to the private sector in a P3, the public sector may retain significant risk. P3s may have longer-term effects on the transportation system because they influence decisions about what to build and where, and can limit what other projects the government can pursue. The federal government exerts influence over the prevalence and structure of P3s through its transportation programs, funding, and regulatory oversight, but is usually not a party to a P3 agreement. The current federal role in P3s includes project loans through the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program, the authorization of private activity bonds (PABs), certain tax provisions such as depreciation schedules, state infrastructure banks, and the provision of technical advice through the U.S. Department of Transportation (DOT). Limiting the formation of P3s would predominantly entail restricting federal benefits to such projects. Two broad policy options for expanding use of P3s would be to actively encourage P3s with program incentives, but with regulatory controls to protect the public interest, or to aggressively encourage the use of P3s through program incentives and deregulation. This report discusses several possible issues and policy options that Congress may want to consider. These include P3 project evaluation and transparency, asset recycling, incentive grants, a national infrastructure bank, equity investment tax credits, and deregulation of Interstate highway tolling. The report also discusses changes to the existing TIFIA and PABs programs.

Nov 2, 2017

Natural Disasters of 2017: Congressional Considerations Related to FEMA Assistance

This Insight provides a short overview of issues Congress may consider in its oversight of the Federal Emergency Management Agency’s (FEMA’s) federal assistance during the 2017 hurricane season (e.g., Harvey, Irma, and Maria) and other disasters (e.g., fires in California). For the current status of response efforts, see official government sources and news media. For additional support, please contact available CRS experts in disaster-related issue areas. Stafford Act Declarations and Response Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act), the President may declare an emergency or major disaster to authorize federal assistance, if the capacities of state and tribal governments are overwhelmed. Generally, emergency declarations help avert further catastrophes, whereas major disaster declarations address significant needs following eligible disasters. For example, in 2017, emergency declarations were made prior to the landfall of hurricanes, as well as to address the emerging threats of a possible dam failure in California. Major disaster declarations have been made for a wide range of disasters. As authorized by numerous sections of the Stafford Act (e.g., §302) and the Homeland Security Act of 2002 (e.g., §504), FEMA is responsible for coordinating the federal disaster response, as guided by the National Response Framework and subcomponent policies. Many deployable federal assets have been used in responding to the 2017 disasters. Other federal agencies are frequently incorporated by, and compensated for, their federal response through Mission Assignments. Congress may evaluate whether the federal response support for the 2017 disasters has been effectively led by FEMA and supported by other federal agencies, and if not, use forthcoming after-action reports (similar to those following previous disasters, such as Hurricane Sandy) to inform congressional oversight and possible reforms. Federal Financial Assistance from FEMA FEMA has multiple disaster assistance programs, including: The Individual Assistance (IA) Program comprised of: (1) Mass Care and Emergency Assistance, (2) Crisis Counseling Assistance and Training Program, (3) Disaster Unemployment Assistance, (4) Disaster Legal Services, (5) Disaster Case Management, and (6) the Individuals and Households Program. IA can include some or all of these programs, depending on what is requested by the governor of the affected state or the tribal leader and approved by FEMA. Congress may evaluate the numerous factors FEMA considers when it decides whether to recommend that IA be provided following a major disaster. The Public Assistance (PA) Grant Program provides grants to tribal, state, local governments, and certain private nonprofit organizations to fund emergency protective services, conduct debris removal operations, and repair or replace damaged public facilities. Congress may consider the cost-share required for this assistance, how the PA Program complements other federal assistance, and whether FEMA’s recent minimum standards policy provides sufficient mitigation against future disasters on PA-funded replacement projects. Hazard Mitigation Assistance (HMA) Programs encompass three separately authorized programs: the Hazard Mitigation Grant Program (HMGP); the Pre-Disaster Mitigation program; and the Flood Mitigation Assistance program. HMGP receives significantly more funding following major disaster declarations than the other two programs. Congress may consider if these HMA programs are sufficiently coordinated with other federal mitigation programs (e.g., from HUD and the U.S. Army Corps of Engineers), and resourced to adequately reduce future risk to disasters. Fire Mitigation Assistance Grants (FMAGs) provide various forms of federal fire suppression assistance for “declared” fires on certain public or private forest land or grassland that might become a major disaster. Congress may consider whether this assistance, coupled with other federal fire assistance, is sufficient to address a perceived increase in wildfire risk, and whether federal wildfire funding mechanisms should be reformed. The above FEMA grant programs all have state cost-share requirements. PA cost-shares can be adjusted by the Administration, but IA and HMGP cost-shares are set in law. Congress has occasionally adjusted cost-shares for specific states and disasters, such as after the 2005 Gulf Coast hurricanes. Major disaster declarations for Florida, Puerto Rico, Texas, and U.S. Virgin Islands related to hurricanes in 2017 have all had cost-share adjustments for PA. FEMA also administers non-grant financial assistance: The National Flood Insurance Program (NFIP) is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has implemented temporary changes to the claims process to allow policyholders to receive funds more quickly in some of the areas affected by floods in 2017. However, past data on participation rates suggest that many properties in the Special Flood Hazard Areas (SFHAs) that have been affected by the hurricanes may not have flood insurance. By law, federal assistance to the owners of these uninsured properties is more restricted than to the owners of properties with insurance or those living outside the SFHA. Key provisions of the NFIP were reauthorized through December 8, 2017 (P.L. 115-56, Division D, §130). OMB has requested revisions to the NFIP. These and other reform ideas may be considered by Congress before expiration of these authorities. The Community Disaster Loan (CDL) Program provides loan assistance to governments to compensate for the loss of tax and other revenues following disasters. Recent provisos in appropriations for CDLs afford discretion to the Trump Administration in providing these loans, so past guidance on CDLs may not apply to future loans. Historically, these loans have frequently been forgiven. Funding for FEMA Assistance FEMA’s Disaster Relief Fund (DRF) is the primary funding source for immediate response and relief provided by FEMA in the wake of disasters. As Hurricane Harvey approached the Texas coast on August 25, 2017, the DRF had approximately $3.5 billion on hand. On August 28, FEMA implemented an “immediate needs funding restriction,” limiting obligations from the DRF for some longer-term recovery and mitigation projects to preserve DRF balances for immediate response needs. $7.4 billion in supplemental appropriations for the DRF were provided through P.L. 115-56, and the continuing resolution in the act provided additional resources. As a result, the funding restriction was lifted on October 2, 2017. $18.67 billion more was appropriated for the DRF in P.L. 115-72, although a $4.9 billion transfer to the Disaster Assistance Direct Loan Program account (which funds CDLs) and a $10 million transfer to the DHS Office of Inspector General reduced the effective appropriation to $13.76 billion. A third supplemental appropriations request is expected from the White House in November. The NFIP was not designed to retain funding to cover claims for truly extreme events; instead, the law allows the Program to borrow money from the Treasury for such events. FEMA borrowed $5.285 billion from the Treasury to meet initial claims from Hurricane Harvey, which reached the borrowing limit of $30.425 billion. As requested by the Administration, P.L. 115-72 will cancel $16 billion of NFIP debt, reducing the NFIP debt to $14.425 billion.

Nov 2, 2017

Coverage in the Private Health Insurance Market

Nov 2, 2017

Ukraine: Background and U.S. Policy

In February 2014, protests over the Ukrainian government’s decision to postpone concluding an association agreement that would lead to closer relations with the European Union (EU) culminated in violence and the collapse of then-President Viktor Yanukovych’s government. The government that followed pledged to embrace pro-Western reforms, and an energized civil society supported its efforts. Within weeks, the new government was forced to confront Russian armed interventions in southern and eastern Ukraine. These culminated in Russia’s occupation of Ukraine’s Crimea region in March 2014 and a protracted conflict in eastern Ukraine, where observers consider that the Russian government has fostered and supported pro-Russian separatists. Even while waging a defensive conflict, Ukraine’s government under President Petro Poroshenko has professed a commitment to economic reform, Western integration, and democratic norms. At the same time, many observers consider that Ukraine’s reforms remain fragile and that the government has progressed slowly in certain areas. International donors and domestic civil society organizations continue to encourage the Ukrainian government to implement necessary measures, including with regard to fighting corruption. After an economic decline in 2014-2015, some signs of financial and economic stabilization have emerged, due in part to international assistance including a multibillion dollar International Monetary Fund (IMF) loan package. Observers caution, however, that economic growth depends on continuation of critical reforms. The United States has long supported Ukraine’s pro-Western orientation and reform efforts. It supports the restoration of Ukraine’s territorial integrity, including with respect to Crimea, as well as implementation of the Minsk agreements that would establish a cease-fire and conflict settlement in eastern Ukraine. In 2014, the United States, in coordination with the European Union and others, imposed sanctions on Russia for its actions in Ukraine. The United States is a leading contributor of foreign assistance to Ukraine, including over $300 million a year since FY2015 in nonmilitary, nonhumanitarian assistance. The United States also provides substantial military assistance to Ukraine, including via a newly established Ukraine Security Assistance Initiative that provides “appropriate security assistance and intelligence support” to help Ukraine defend against aggression and support its sovereignty and territorial integrity. The Trump Administration has continued a policy of support to Ukraine. President Donald Trump and Ukrainian President Poroshenko have met twice, in June and September 2017. The Administration requested relatively substantial economic and military assistance to Ukraine for FY2018. In July 2017, Secretary of State Rex Tillerson announced the appointment of a new U.S. Special Representative for Ukraine Negotiations, elevating the U.S. role in the conflict settlement process. Secretary Tillerson has stated repeatedly that Ukraine-related sanctions on Russia will remain in place “until Moscow reverses the actions that triggered” them. The U.S. Congress has actively participated in efforts to address the Ukraine conflict since its onset. Many Members have condemned Russia’s annexation of Crimea and support for separatists in eastern Ukraine and pushed to impose and retain sanctions against Russia for its actions. Congress has also supported substantial economic and security assistance for Ukraine. Key legislation includes the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (P.L. 113-95), the Ukraine Freedom Support Act (P.L. 113-272), and the Countering Russian Influence in Europe and Eurasia Act of 2017 (P.L. 115-44, Title II).

Nov 1, 2017

The North Korean Nuclear Challenge: Military Options and Issues for Congress

North Korea’s apparently successful July 2017 tests of its intercontinental ballistic missile capabilities, along with the possibility that North Korea (DPRK) may have successfully miniaturized a nuclear warhead, have led analysts and policymakers to conclude that the window for preventing the DPRK from acquiring a nuclear missile capable of reaching the United States is closing. These events appear to have fundamentally altered U.S. perceptions of the threat the Kim Jong-un regime poses to the continental United States and the international community, and escalated the standoff on the Korean Peninsula to levels that have arguably not been seen since 1994. A key issue is whether or not the United States could manage and deter a nuclear-armed North Korea if it were to become capable of attacking targets in the U.S. homeland, and whether taking decisive military action to prevent the emergence of such a DPRK capability might be necessary. Either choice would bring with it considerable risk for the United States, its allies, regional stability, and global order. Trump Administration officials have stated that “all options are on the table,” to include the use of military force to “denuclearize,”—generally interpreted to mean eliminating nuclear weapons and related capabilities—from that area. One potential question for Congress is whether, and how, to employ the U.S. military to accomplish denuclearization, and whether using the military might result in miscalculation on either side, or perhaps even conflict escalation. Questions also exist as to whether denuclearization is the right strategic goal for the United States. This is perhaps because eliminating DPRK nuclear or intercontinental ballistic missile (ICBM) capabilities outside of voluntary denuclearization, and employing military forces and assets to do so, would likely entail significant risks. In particular, any move involving military forces by either the United States/Republic of Korea (U.S./ROK) or the DPRK might provoke an escalation of conflict that could have catastrophic consequences for the Korean Peninsula, Japan, and the East Asia region. In this report, CRS identifies seven possible options, with their implications and attendant risks, for the employment of the military to denuclearize North Korea. These options are maintaining the military status quo, enhanced containment and deterrence, denying DPRK acquisition of delivery systems capable of threatening the United States, eliminating ICBM facilities and launch pads, eliminating DPRK nuclear facilities, DPRK regime change, and withdrawing U.S. military forces. These options are based entirely on open-source materials, and do not represent a complete list of possibilities. CRS cannot verify whether any of these potential options are currently being considered by U.S. and ROK leaders. CRS does not advocate for or against a military response to the current situation. Conservative estimates anticipate that in the first hours of a renewed military conflict, North Korean conventional artillery situated along the Demilitarized Zone (DMZ) could cause tens of thousands of casualties in South Korea, where at least 100,000 (and possibly as many as 500,000) U.S. soldiers and citizens reside. A protracted conflict—particularly one in which North Korea uses its nuclear, biological, or chemical weapons—could cause enormous casualties on a greater scale, and might expand to include Japan and U.S. territories in the region. Such a conflict could also involve a massive mobilization of U.S. forces onto the Korean Peninsula, and high military casualty rates. Complicating matters, should China choose to join the conflict, those casualty rates could grow further, and could potentially lead to military conflict beyond the peninsula. Some analysts contend, however, that the risk of allowing the Kim Jong-un regime to acquire a nuclear weapon capable of targeting the U.S. homeland is of even greater concern than the risks associated with the outbreak of regional war, especially given Pyongyang’s long history of bombastic threats and aggressive action toward the United States and its allies and the regime’s long-stated interest in unifying the Korean Peninsula on its terms. Estimating the military balance on the peninsula, and how military forces might be employed during wartime, requires accounting for a variety of variables and, as such, is an inherently imprecise endeavor. As an overall approach to building and maintaining its forces, the DPRK has emphasized quantity over quality, and asymmetric capabilities including weapons of mass destruction and its special operations forces. The Republic of Korea, by contrast, has emphasized quality over quantity, and maintains a highly skilled, well-trained, and capable conventional force. Most students of the regional military balance contend that overall advantage is with the U.S./ROK, assuming that neither China nor Russia become involved militarily. Should they do so, the conflict would likely become exponentially more complicated. As the situation on the Korean Peninsula continues to evolve, Congress may consider whether, and if so under what circumstances, it might support U.S. military action. Congress could also consider the risks associated with the possible employment of military force on the Korean Peninsula against North Korea; the efficacy of the use of force to accomplish the Trump Administration’s strategic goals; whether and when a statutory authorization for the use of U.S. forces might be necessary, and whether to support such an authorization; what the costs might be of conducting military operations and post-conflict reconstruction operations, particularly should a conflict on the Korean Peninsula escalate significantly; the consequences for regional security, regional alliances, and U.S. security presence in the region more broadly; and the impact that renewed hostilities on the Korean Peninsula might have for the availability of forces for other theaters and contingencies.

Oct 27, 2017

Child and Dependent Care Tax Benefits: How They Work and Who Receives Them

Two tax provisions subsidize the child and dependent care expenses of working parents: the child and dependent care tax credit (CDCTC) and the exclusion for employer-sponsored child and dependent care. The child and dependent care tax credit is a nonrefundable tax credit that reduces a taxpayer’s federal income tax liability based on child and dependent care expenses incurred. The policy objective is to assist taxpayers who work or who are looking for work. A taxpayer must meet a variety of eligibility criteria including incurring qualifying child and dependent care expenses for a qualifying individual and have earned income. These three terms are defined below: Qualifying expenses: Qualifying expenses for the credit are generally defined as expenses incurred for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. (Married taxpayers who do not file a joint return are ineligible for the credit). Qualifying individual: A qualifying individual for the CDCTC is either (1) the taxpayer’s dependent child under 13 years of age or (2) the taxpayer’s spouse or dependent who is incapable of caring for himself or herself. Earned income: A taxpayer must have earned income to claim the credit. For married couples, both spouses must have earnings unless one is a student or incapable of self-care. The CDCTC is calculated by multiplying the amount of qualifying expenses—a maximum of $3,000 if the taxpayer has one qualifying individual, and up to $6,000 if the taxpayer has two or more qualifying individuals—by the appropriate credit rate. The credit rate depends on the taxpayer’s adjusted gross income (AGI), with a maximum credit rate of 35% declining, as AGI increases, to 20% for taxpayers with AGI above $43,000. Even though the credit formula—due to the higher credit rate—is more generous toward lower-income taxpayers, many lower-income taxpayers receive little or no credit since the credit is nonrefundable. In addition to the CDCTC, taxpayers can exclude from their income up to $5,000 of employer-sponsored child and dependent care benefits, often as a flexible spending account (FSA). Eligibility rules and definitions of the exclusion are virtually identical to those of the credit. However, this is one major difference—the $5,000 limit applies irrespective of the number of qualifying individuals. Taxpayers can claim both the exclusion and the tax credit but not for the same out of pocket child and dependent care expenses. In addition, for every dollar of employer-sponsored child and dependent care excluded from income, the taxpayer must reduce the maximum amount of qualifying expenses claimed for the CDCTC. The aggregate data for the CDCTC indicate several key aspects of this tax benefit. First, middle- and upper-middle-income taxpayers claim the majority of tax credit dollars. Second, at most income levels the average credit amount is between $500 and $600. Lower-income taxpayers receive less than the average amount. Third, the credit is used almost exclusively for the care of children under 13 years old (as opposed to older dependents). On average 13% of taxpayers with children claim the credit. This participation rate is significantly lower for lower-income taxpayers. Data from the Bureau of Labor Statistics indicate that about 40% of employees have access to a child and dependent care flexible spending account, while 11% have access to other types of employer-sponsored childcare. Overall, these data indicate that these benefits are more widely available to higher-compensated employees at larger establishments.

Oct 26, 2017

Overview of Artificial Intelligence

Oct 24, 2017

Energy Tax Provisions That Expired in 2016 (“Tax Extenders”)

Sixteen temporary energy tax provisions expired at the end of 2016. Most of the expired provisions were last extended in 2015 as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015, signed into law as Division Q of the Consolidated Appropriations Act, 2016 (P.L. 114-113). Under this law, all tax provisions that had expired at the end of 2014 were retroactively extended. Most expired energy tax provisions were extended for two years, through 2016. Division P of P.L. 114-113 also included longer-term extensions with scheduled phaseouts for wind and solar tax credits. This report briefly summarizes and discusses the economic impact of energy-related tax provisions that expired at the end of 2016, including the following: Renewable energy property provisions Production Tax Credit (PTC) for Non-Wind Facilities Energy Credit for Non-Solar Facilities Five-Year Cost Recovery for Certain Energy Property Credit for Residential Energy Property Alternative and renewable fuels provisions Incentives for Biodiesel and Renewable Diesel Incentives for Alternative Fuel and Alternative Fuel Mixtures Alternative Fuel Vehicle Refueling Property Second Generation (Cellulosic) Biofuel Producer Credit Special Depreciation Allowance for Second Generation (Cellulosic) Biofuel Plant Property Vehicles provisions Alternative motor vehicle credit for qualified fuel cell vehicles Credit for two-wheeled plug-in electric vehicles Building energy efficiency provisions Credit for Construction of Energy-Efficient New Homes Energy-Efficient Commercial Building Deduction Credit for Section 25C Nonbusiness Energy Property Other provisions Special Rule to Implement Electric Transmission Restructuring Credit for Production of Indian Coal This report does not include provisions that in the past have been classified as individual or business related. For a general overview of tax provisions that expired in 2016, see CRS Report R44677, Tax Provisions that Expired in 2016 (“Tax Extenders”), by Molly F. Sherlock. For an overview of individual and business provisions, see CRS Report R44925, Recently Expired Individual Tax Provisions (“Tax Extenders”): In Brief, coordinated by Molly F. Sherlock; and CRS Report R44930, Business Tax Provisions that Expired in 2016 (“Tax Extenders”), coordinated by Molly F. Sherlock.

Oct 23, 2017

Water Infrastructure Improvements for the Nation (WIIN) Act: Bureau of Reclamation and California Water Provisions

Most of the provisions in the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322), enacted on December 16, 2016, relate to the U.S. Army Corps of Engineers. However, the WIIN Act also includes a subtitle (Subtitle J, §§4001-4013) with the potential to affect western water infrastructure owned by the Bureau of Reclamation (Reclamation; part of the Department of the Interior). Three sections in Subtitle J (§4007, §4009, and §4011) made alterations that would apply throughout Reclamation’s service area, the 17 states to the west of the Mississippi River. Most of the remaining sections of Subtitle J include provisions specific to the Central Valley Project (CVP), a multipurpose water-conveyance system in California operated by Reclamation. Most of Subtitle J’s provisions were derived from bills that received consideration in the 112th, 113th, and 114th Congresses. Although most parts of the WIIN Act had broad stakeholder support when enacted, some of Subtitle J’s provisions were (and continue to be) debated. Particularly controversial provisions include those related to implementation of the federal Endangered Species Act (ESA; 16 U.S.C. §§1531-1544) as it relates to endangered salmon and threatened Delta smelt and to California water infrastructure, as well as authorities that alter Reclamation’s approach to water resources project development. The controversy of these provisions was evidenced by President Obama’s signing statement accompanying the bill, which focused on the Obama Administration’s interpretation of Subtitle J, particularly the act’s environmental provisions. The WIIN Act was debated and enacted at a time when California was enduring severe drought. However, by most metrics, the drought in California ended with the wet winter of 2016-2017, which occurred after enactment of the WIIN Act. Regardless of hydrologic status, most of the WIIN Act’s drought provisions are to remain in effect until five years after its enactment, or December 2021. Because there was ample water for both water supplies and species needs in early 2017, many of the WIIN Act’s operational directives were not tested in the first months after the bill’s enactment. Future years may be different, and the legislation could affect water allocations compared to pre-WIIN Act levels under some scenarios and interpretations. Due to the scarcity of water in the West and the importance of federal water infrastructure to the region, western water issues are regularly of interest to lawmakers, and Subtitle J of the WIIN Act is likely to receive attention in the 115th Congress. In addition to oversight, there may be ongoing debate as to the meaning and significance of individual provisions in the act, and observers are expected to closely monitor implementation of its new authorities. Of particular interest will be the WIIN Act’s application to the operations of the CVP and federal support for the construction of new surface water supply projects, among other things. Some may also propose adding to or repealing parts of Subtitle J. Legislation considered in the 115th Congress (e.g., H.R. 23) has proposed to build on and, in some cases, replace key parts of the WIIN Act. This report discusses selected provisions that were enacted under Subtitle J of the WIIN Act. It provides background and context related to selected drought- and water-related provisions, summarizes the changes authorized in the WIIN Act, and discusses issues and questions that may be considered in the 115th Congress. For additional background on California water issues, see CRS Report R40979, California Drought: Hydrological and Regulatory Water Supply Issues, by Betsy A. Cody, Peter Folger, and Cynthia Brown, and CRS Report R44456, Central Valley Project Operations: Background and Legislation, by Charles V. Stern and Pervaze A. Sheikh.

Oct 18, 2017

USDA Export Market Development and Export Credit Programs: Selected Issues

Agricultural exports are important to both farmers and the U.S. economy. With the productivity of U.S. agriculture growing faster than domestic demand, farmers and agriculturally oriented firms rely heavily on export markets to sustain prices and revenue. The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79) authorizes a number of programs to promote farm exports that are administered by the U.S. Department of Agriculture (USDA). There are two main types of agricultural trade and export promotion programs: Export market development programs assist efforts to build, maintain, and expand overseas markets for U.S. agricultural products. Programs include the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for Specialty Crops Program (TASC). Export financing assistance programs provide payment guarantees on commercial financing to facilitate U.S. agricultural exports. Programs include the Export Credit Guarantee Program (GSM-102) and the Facility Guarantee Program (FGP). Annual funding for USDA’s export market promotion programs is authorized at about $255 million (not including reductions due to sequestration). In addition, USDA’s export credit guarantee programs provide commercial bank financing of up to $5.5 billion of U.S. agricultural exports annually. Funding for USDA’s programs is mandatory through the Commodity Credit Corporation and is not subject to annual appropriations. USDA has commissioned a number of economic studies to assess the effects of its export market development programs on U.S. agricultural exports, export revenue, and other economy-wide effects. Most studies measure the “economic return ratio” or the ratio of the estimated returns compared to the estimated costs. USDA’s most recently commissioned study claims that MAP and FMDP return $28 for each dollar spent. USDA’s studies also claim broader economy-wide returns in terms of farm revenue, economic output, and full-time jobs. However, the U.S. Government Accountability Office (GAO) has raised many questions regarding USDA’s export promotion programs. GAO’s reports have generally been critical of USDA-reported estimates of the economic effects of USDA’s programs on U.S. agricultural exports, export revenue, and other economy-wide effects. The most recent GAO report expressed ongoing concerns about USDA’s assessment methodologies for estimating program effectiveness, citing the need for improved methods and cost-benefit analysis. USDA’s Office of Inspector General (OIG) also conducted a review of its export market development programs and recommended certain changes with regard to data and information collection by program participants. In anticipation of the next farm bill debate, legislation introduced in both the House and Senate (Cultivating Revitalization by Expanding American Agricultural Trade and Exports Act or CREAATE Act, H.R. 2321/S. 1839) would progressively double annual funding for MAP and FMDP to $400 million and $69 million, respectively, by 2023. The Coalition to Promote U.S. Agricultural Exports and the National Association of State Departments of Agriculture also support doubling funding for MAP and FMDP. However, some in Congress have long opposed USDA’s export and market promotion programs, especially MAP, calling for its elimination and/or reduced program funding. President Trump’s FY2018 budget proposes to eliminate both MAP and FMDP.

Oct 17, 2017

Rules of Origin

Oct 16, 2017

NAFTA Renegotiation and Modernization

The 115th Congress faces policy issues related to the Trump Administration’s renegotiation and modernization of the North American Free Trade Agreement (NAFTA). NAFTA negotiations were first launched in 1992 under President H. W. Bush, who signed the agreement in December 1992, and continued under President Bill Clinton, who negotiated additional side agreements on labor and the environment. President Clinton signed the agreement into law on December 8 1993, (P.L. 103-182) and NAFTA entered into force on January 1, 1994. It is particularly significant because it was the most comprehensive free trade agreement (FTA) negotiated at the time, contained several groundbreaking provisions, and was the first of a new generation of U.S. FTAs later negotiated. Congress played a major role during its consideration and, after contentious and comprehensive debate, ultimately approved legislation to implement the agreement. NAFTA established trade liberalization commitments that set new rules and disciplines for future FTAs on issues important to the United States, including intellectual property rights protection, services trade, dispute settlement procedures, investment, labor, and the environment. NAFTA’s market-opening provisions gradually eliminated nearly all tariff and most nontariff barriers on goods produced and traded within North America. At the time of NAFTA, average applied U.S. duties on imports from Mexico were 2.07%, while U.S. businesses faced average tariffs of 10%, in addition to nontariff and investment barriers, in Mexico. The U.S.-Canada FTA had been in effect since 1989. Trade among NAFTA partners has tripled since the agreement entered into force, forming a more integrated North American market. The Trump Administration has made NAFTA renegotiation and modernization a prominent initial priority of its trade policy. President Trump has viewed the agreement as the “worst trade deal,” and has stated that he may seek to withdraw from the agreement. He has focused on the trade deficit with Mexico as a major reason for his critique. On May 18, 2017, the Trump Administration sent a 90-day notification to Congress of its intent to begin talks to renegotiate NAFTA, as required by the 2015 Trade Promotion Authority (TPA) (P.L. 114-26). Negotiations started August 16, 2017. Stating they are committed to an expeditious process, negotiators plan to have a series of seven rounds at three-week intervals for a conclusion by the end of 2017 or early 2018. The fourth round of negotiations began at the time this report was printed. The final text of the agreement will not be released until after negotiations are concluded. NAFTA parties have agreed that the information exchanged in the context of the negotiations, such as the negotiating text, proposals of each government, and other materials related to the substance of the negotiations, must remain confidential. Congress will likely continue to be a major participant in shaping and potentially considering an updated NAFTA. Key issues for Congress in regard to the renegotiation or modernization include the constitutional authority of Congress over international trade, its role in revising or withdrawing from the agreement, the U.S. negotiating objectives, the impact on U.S. industries and the U.S. economy, the negotiating objectives of Canada and Mexico, and the impact on broader relations with Canada and Mexico. The outcome of these negotiations will have implications for the future direction of U.S. trade policy under President Trump. NAFTA renegotiation may provide opportunities to address issues not covered in the original text. Technology and industrial production processes have changed significantly since it was negotiated. The widespread use of the Internet has affected economic activities and the use of e-commerce, for example. A modernization could incorporate elements of more recent U.S. FTAs, such as digital and services trade and enhanced IPR protection. Many U.S. manufacturers, services providers, and agricultural producers oppose efforts to eliminate NAFTA and ask that the Trump Administration strive to “do no harm” in the negotiations because they have much to lose if the United States pulls out of the agreement. Other groups contend that NAFTA should be rewritten to include stronger and more enforceable labor protections, provisions on currency manipulation, and stricter rules of origin.

Oct 12, 2017

DOE’s Office of Energy Efficiency and Renewable Energy (EERE): Appropriations Status

The U.S. Department of Energy’s (DOE’s) Office of Energy Efficiency and Renewable Energy (EERE) administers renewable energy and end-use energy efficiency technology programs in research, development, and implementation. EERE works with industry, academia, national laboratories, and others to support research and development (R&D). EERE also works with state and local governments to assist in technology implementation and deployment. EERE supports nearly a dozen offices and programs including vehicle technologies, solar energy, advanced manufacturing, and weatherization and intergovernmental programs, among others. Funding for EERE is provided in the annual Energy and Water Development (E&W) Appropriations bill. At issue for the 115th Congress is the level of EERE appropriations and which activities EERE should support, including whether to continue support for specific initiatives and programs. On May 23, 2017, the Trump Administration submitted the budget proposal for FY2018. The FY2018 budget request for DOE is $28.2 billion of which about 2% is for EERE. The budget request for EERE is $636.1 million, a decrease of $1.5 billion, or nearly 70%, from the FY2017 enacted level of approximately $2.1 billion. The proposed reduction, if enacted, would affect all offices within EERE. For FY2018, the bulk of the EERE request is allocated to three areas: 25% for energy efficiency programs, 21% for renewable energy programs, and about 29% for sustainable transportation programs. The request estimates that two-thirds of the current portfolio of 2,500 multi-year projects (e.g., early-stage R&D projects) would remain active in FY2018. DOE anticipates that eliminating one-third of these projects would result in a reduction of approximately 30% in EERE-funded full-time equivalent staff. The President’s request would include two specific program eliminations: the Weatherization Assistance Program and the State Energy Program, which received FY2017 appropriations of $225.0 million and $50.0 million, respectively. The President’s request for EERE emphasizes early-stage R&D, limited validation testing and simulation to inform R&D, and analysis to support regulatory activities. The DOE budget justification states that funding for EERE would focus on “early-stage R&D, where the Federal role is critically important, and reflects an increased reliance on the private sector to fund later-stage research, development, and commercialization of energy technologies.” There are several bills before Congress that recommend FY2018 appropriations for EERE. The bills contain EERE funding levels that are below the FY2017 enacted level, but higher than the President’s budget request. The House passed H.R. 3219, the Defense, Military Construction, Veterans Affairs, Legislative Branch, and Energy and Water Development National Security Appropriations Act, 2018, on July 27, 2017. Division D of H.R. 3219—which contains the E&W appropriations—provides funding of $1.1 billion for EERE, $1.0 billion below the FY2017 enacted level and $449 million above the request. Floor amendments to H.R. 3219 reduced funding for EERE in H.R. 3219 by $18.4 million from H.R. 3266, the House Appropriations Committee version of the FY2018 E&W appropriations bill. H.R. 3266 would provide funding of $1.1 billion to EERE—$986 million below the FY2017 enacted level and $468 million above the request (H.Rept. 115-230). The Senate Committee on Appropriations reported S. 1609, the Energy and Water Development and Related Agencies Appropriations Act of 2018, on July 20, 2017. S. 1609 would appropriate $1.9 billion to EERE—$153 million below the FY2017 enacted level and $1.3 billion above the request (S.Rept. 115-132). The President signed P.L. 115-56, the Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 on September 8, 2017, providing FY2018 funding at the FY2017 appropriations level through December 8, 2017.

Oct 6, 2017

Navy Frigate (FFG[X]) Program: Background and Issues for Congress

As part of its FY2018 budget submission, the Navy has initiated a new program, called the FFG(X) program, to build a new class of guided-missile frigates. The Navy wants to procure the first FFG(X) in FY2020, a second FFG(X) in FY2021, and two FFG(X)s per year starting in FY2022. Given current Navy force-structure goals, the Navy might procure a total of 8 to 20 FFG(X)s. The Navy’s proposed FY2018 budget requests $143.5 million in research and development funding for the program. U.S. Navy frigates are smaller, less capable, and less expensive to procure and operate than U.S. Navy destroyers and cruisers. In contrast to cruisers and destroyers, which are designed to operate in higher-threat areas, frigates are generally intended to operate more in lower-threat areas. The Navy envisages the FFG(X) as a multimission ship capable of conducting anti-air warfare (aka air defense) operations, anti-surface warfare operations (meaning operations against enemy surface ships and craft), antisubmarine warfare operations, and electromagnetic maneuver warfare (EMW) operations. (EMW is a new term for electronic warfare.) Although the Navy has not yet determined the design of the FFG(X), given the desired capabilities just mentioned, the ship will likely be larger in terms of displacement, more heavily armed, and more expensive to procure than the Navy’s Littoral Combat Ships (LCSs). The Navy envisages developing no new technologies or systems for the FFG(X)—the ship is to use systems and technologies that already exist or are already being developed for use in other programs. The Navy’s desire to procure the first FFG(X) in FY2020 does not allow enough time to develop a completely new design (i.e., a clean-sheet design) for the FFG(X). (Using a clean-sheet design might defer the procurement of the first ship to about FY2023.) Consequently, the Navy intends to build the FFG(X) to a modified version of an existing ship design—an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design. The Navy intends to conduct a full and open competition to select the builder of the FFG(X), including proposals based on either U.S. or foreign ship designs. Given the currently envisaged procurement rate of two ships per year, the Navy envisages using a single builder to build the ships. The FFG(X) program presents several potential oversight issues for Congress, including the following: whether to approve, reject, or modify the Navy’s FY2018 funding request for the program; whether the Navy has accurately identified the capability gaps and mission needs to be addressed by the program; whether procuring a new class of FFGs is the best or most promising general approach for addressing the identified capability gaps and mission needs; the Navy’s proposed acquisition strategy for the program, including the Navy’s intent to use a parent-design approach for the program rather than develop an entirely new (i.e., clean-sheet) design for the ship; the potential implications of the FFG(X) program for the U.S. shipbuilding industrial base; and whether the initiation of the FFG(X) program has any implications for required numbers or capabilities of U.S. Navy cruisers and destroyers.

Sep 28, 2017

The National Health Service Corps

The National Health Service Corps (NHSC) provides scholarships and loan repayments to health care providers in exchange for a period of service in a health professional shortage area (HPSA). The program places clinicians at facilities—generally not-for-profit or government-operated—that might otherwise have difficulties recruiting and retaining providers. The NHSC is administered by the Health Resources and Services Administration (HRSA), within the Department of Health and Human Services (HHS). Congress created the NHSC in the Emergency Health Personnel Act of 1970 (P.L. 91-623), and its programs have been reauthorized and amended several times since then. The Patient Protection and Affordable Care Act of 2010 (ACA; P.L. 111-148) permanently reauthorized the NHSC. Prior to the ACA, the NHSC had been funded with discretionary appropriations. The ACA created a new mandatory funding source for the NHSC—the Community Health Center Fund (CHCF), which was intended to supplement the program’s annual appropriation. However, since FY2012, the CHCF has entirely replaced the NHSC’s discretionary appropriation. The CHCF is time-limited. Initially an appropriation from FY2011 through FY2015, the CHCF was subsequently extended in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10) for two years (FY2016 and FY2017). As of the date of this report, no funding has been approved for the NHSC in FY2018. The program does not currently receive discretionary appropriations; consequently, funding for this program was not included in the continuing resolution for FY2018 (P.L. 115-56). From FY2011 through FY2016, the most recent year of final data available, the NHSC offered more than 33,500 loan repayment agreements and scholarship awards to individuals who have agreed to serve for a minimum of two years in a HPSA. In FY2016, the NHSC made 6,129 awards. The number of awards the NHSC makes is only one component of program size, because not all awardees are currently serving as NHSC providers; some are still completing their training (e.g., scholarship award recipients). As such, the NHSC also measures its field strength: the number of NHSC providers who are fulfilling a service obligation in a HPSA in a given year. In FY2016, total NHSC field strength was 10,493. NHSC providers are currently serving in a variety of settings throughout the entire United States and its territories. The majority of NHSC providers serve in outpatient settings, most commonly at federally qualified health centers.

Sep 27, 2017

Infantry Brigade Combat Team (IBCT) Mobility, Reconnaissance, and Firepower Programs

Infantry Brigade Combat Teams (IBCTs) constitute the Army’s “light” ground forces and are an important part of the nation’s ability to project forces overseas. The wars in Iraq and Afghanistan, as well as current thinking by Army leadership as to where and how future conflicts would be fought, suggest IBCTs are limited operationally by their lack of assigned transport and reconnaissance vehicles as well as firepower against hardened targets and armored vehicles. There are three types of IBCTs: Light, Airborne, and Air Assault. Light IBCTs are primarily foot-mobile forces. Light IBCTs can move by foot, by vehicle, or by air (either air landed or by helicopter). Airborne IBCTs are specially trained and equipped to conduct parachute assaults. Air Assault IBCTs are specially trained and equipped to conduct helicopter assaults. Currently, the Army contends IBCTs face a number of limitations: The IBCT lacks the ability to decisively close with and destroy the enemy under restricted terrains such as mountains, littorals, jungles, subterranean areas, and urban areas to minimize excessive physical burdens imposed by organic material systems. The IBCT lacks the ability to maneuver and survive in close combat against hardened enemy fortifications, light armored vehicles, and dismounted personnel. IBCTs lack the support of a mobile protected firepower capability to apply immediate, lethal, long-range direct fires in the engagement of hardened enemy bunkers, light armored vehicles, and dismounted personnel in machine gun and sniper positions; with all-terrain mobility and scalable armor protection; capable of conducting operations in all environments. To address current limitations, the Army is undertaking three programs: the Ground Mobility Vehicle (GMV), formerly known as the Ultra-Light Combat Vehicle (ULCV); the Light Reconnaissance Vehicle (LRV); and Mobile Protected Firepower (MPF) programs. These programs would be based on vehicles that are commercially available. This approach serves to reduce costs and the time it takes to field combat vehicles associated with traditional developmental efforts. The GMV is intended to provide mobility to the rifle squad and company. The LRV would provide protection to the moving force by means of scouts, sensors, and a variety of medium-caliber weapons, and the MPF would offer the IBCT the capability to engage and destroy fortifications, bunkers, buildings, and light-to-medium armored vehicles more effectively. Potential issues for Congress related to IBCTs include how the addition of new vehicles affects IBCT deployability; detailed plans for GMV, LRV, and MPF fielding; what additional resources are needed to support GMV, LRV, and MPF; the “way ahead” for the LRV; and the impact of FY2018 appropriations by continuing resolution on GMV, LRV, and MPF.

Sep 26, 2017

National Flood Insurance Program Borrowing Authority

This Insight evaluates the National Flood Insurance Program (NFIP) borrowing authority to receive loans from the U.S. Department of the Treasury, particularly in the context of major floods, and discusses the current financial situation of the NFIP as it begins to pay claims from Hurricanes Harvey, Irma, and Maria. On September 22, 2017, FEMA borrowed $5.285 billion from the Treasury, reaching the NFIP’s authorized borrowing limit of $30.425 billion. NFIP Funding Funding for the NFIP is primarily maintained in an authorized account called the National Flood Insurance Fund (NFIF). Generally, the NFIP has been funded from receipts from the premiums of flood insurance policies, including fees and surcharges; direct annual appropriations for specific costs of the NFIP (currently only flood mapping); and borrowing from the Treasury when the balance of the NFIF has been insufficient to pay the NFIP’s obligations (e.g. insurance claims). NFIP Borrowing Authority The NFIP was not designed to retain funding to cover claims for truly extreme events; instead, the National Flood Insurance Act of 1968 allows the program to borrow money from the Treasury for such events. For most of the NFIP’s history, the program has generally been able to cover its costs, borrowing relatively small amounts from the Treasury to pay claims, and then repaying the loans with interest. Table 1 and Table 2 show NFIP borrowing, repayments, and debt from 1981 to 2017. Comparable figures are not available before 1980. When the NFIP was first established, the borrowing limit was $250 million. In 1973, the borrowing limit was increased to $500 million, or $1 billion with the approval of the President. The borrowing limit was increased to $1.5 billion in 1996; however, borrowing at that level was not required prior to 2005. The largest debt was $917 million in 1997, which was steadily reduced to zero by the end of FY2003. However, the NFIP was forced to increase the level of borrowing to pay claims in the aftermath of the 2005 hurricane season (particularly Hurricanes Katrina, Rita, and Wilma). Congress increased the borrowing limit to $18.5 billion in November 2005, and further increased the borrowing limit to $20.775 billion in March 2006. In July 2010, the borrowing limit was decreased to $20.725 billion. In 2013, following Hurricane Sandy, Congress increased the borrowing limit to the current $30.425 billion. The Biggert-Waters Flood Insurance Reform Act of 2012 established a reserve fund to cover future expenses, especially those from catastrophic disasters. Since the 2005 hurricane season, the NFIP has made six principal repayments totaling $2.8 billion and has paid $3.4 billion in interest. The program is currently paying nearly $400 million annually in interest. In January 2017, the NFIP borrowed $1.6 billion due to losses in 2016 (the Louisiana floods and Hurricane Matthew) and anticipated programmatic activities, including debt repayments. Table 1. NFIP Borrowing FY1980 to FY1998 (Nominal dollars) Fiscal Year Amount Borrowed Amount Repaid Cumulative Debt 1980 917,406,008 0 917,406,008 1981 164,614,526 624,970,099 457,050,435 1982 13,915,000 470,965,435 0 1983 50,000,000 0 50,000,000 1984 200,000,000 36,879,123 213,120,877 1985 0 213,120,877 0 1986 0 0 0 1987 0 0 0 1988 0 0 0 1989 0 0 0 1990 0 0 0 1991 0 0 0 1992 0 0 0 1993 0 0 0 1994 100,000,000 100,000,000 0 1995 265,000,000 265,000,000 0 1996 423,600,000 62,000,000 626,600,000 1997 530,000,000 239,600,000 917,000,000 1998 0 395,000,000 522,000,000 Source: CRS analysis of data provided by FEMA Congressional Affairs, September 18, 2017. Table 2. NFIP Borrowing FY1999 to FY2017 (Nominal dollars) Fiscal Year Amount Borrowed Amount Repaid Cumulative Debt 1999 400,000,000 381,000,000 541,000,000 2000 345,000,000 541,000,000 600,000,000 2001 600,000,000 345,000,000 600,000,000 2002 50,000,000 640,000,000 10,000,000 2003 0 10,000,000 0 2004 0 0 0 2005 300,000,000 75,000,000 225,000,000 2006 16,600,000,000 0 16,885,000,000 2007 650,000,000 0 17,735,000,000 2008 50,000,000 225,000,000 17,360,000,000 2009 1,987,988,421 347,988,421 19,000,000,000 2010 0 500,000,000 18,500,000,000 2011 0 750,000,000 17,750,000,000 2012 0 0 17,750,000,000 2013 6,250,000,000 0 24,000,000,000 2014 0 1,000,000,000 23,000,000,000 2015 0 0 23,000,000,000 2016 0 0 23,000,000,000 2017 7,425,000,000 0 30,425,000,000 Source: CRS analysis of data provided by FEMA Congressional Affairs, September 22, 2017. Figures for 2017 do not include any borrowing which may be needed to cover claims for Hurricane Maria or additional claims for Hurricanes Harvey and Irma. Hurricanes Harvey, Irma, and Maria On September 22, 2015, FEMA borrowed the remaining $5.825 billion from the Treasury, so the NFIP now owes $30.425 billion to the U.S. Treasury. The NFIP has $6.796 billion in available funds to pay claims ($6.090 billion in the NFIF and $911 million in the reserve fund, minus $205 million for the September debt interest payment). As of September 22, $1.021 billion has been approved in response to Hurricane Harvey and $64 million has been approved in response to Hurricane Irma. FEMA will also have to pay significant claims for Hurricane Maria. The funds currently available to the NFIP do not include additional resources that a recent reinsurance contract will provide. FEMA paid a $150 million premium for the reinsurance contract, which is structured to pay 26% of the losses between $4 billion and $8 billion arising from a single flooding event. FEMA estimates that flood claims for Hurricane Harvey will be between $9 billion and $12 billion, and therefore triggering the full $1.042 billion reinsurance payment. Once FEMA has used the remaining funds and the reinsurance payment, all it would have available to pay claims would be the income from NFIP policyholder premiums, fees, and surcharges. Key provisions of the NFIP were extended from September 30, 2017, through December 8, 2017 (Section 130 of P.L. 115-56). However, this extension did not increase the NFIP’s borrowing limit or provide additional funds to the NFIP. Given the severity of Hurricanes Harvey, Irma, and Maria, the remaining funds may not be sufficient to pay all claims. In this case Congress may consider increasing the borrowing limit, as was done most recently following Hurricane Sandy.

Sep 22, 2017

Wastewater Infrastructure: Overview, Funding, and Legislative Developments

The collection and treatment of wastewater remains among the most important public health interventions in human history and has contributed to a significant decrease in waterborne diseases during the past century. Nevertheless, waste discharges from municipal sewage treatment plants into rivers and streams, lakes, and estuaries and coastal waters remain a significant source of water quality problems throughout the country. The Clean Water Act (CWA) establishes performance levels to be attained by municipal sewage treatment plants in order to prevent the discharge of harmful wastes into surface waters. The act also provides financial assistance so that communities can construct treatment facilities and related equipment to comply with the law. Although approximately $95 billion in CWA assistance has been provided since 1972, funding needs for wastewater infrastructure remain high. According to the most recent estimate by the Environmental Protection Agency and the states, the nation’s wastewater treatment facilities will need $271 billion over the next 20 years to meet the CWA’s water quality objectives. Meeting the nation’s wastewater infrastructure needs efficiently and effectively is likely to remain an issue of considerable interest to policymakers. The CWA authorizes the principal federal program to support wastewater treatment plant construction and related eligible activities. Congress established the CWA Title II construction grants program in 1972, significantly enhancing what had previously been a modest grant program. Federal funds were provided through annual appropriations under a state-by-state allocation formula contained in the act. States used their allotments to make grants to cities to build or upgrade categories of wastewater treatment projects including treatment plants, related interceptor sewers, correction of infiltration/inflow of sewer lines, and sewer rehabilitation. In 1987, Congress amended the CWA and created the State Water Pollution Control Revolving Fund (SRF) program. This program represented a major shift in how the nation finances wastewater treatment needs. In contrast to the Title II construction grants program, which provided grants directly to localities, SRFs are loan programs. States use their SRFs to provide several types of loan assistance to communities, including project construction loans made at or below market interest rates, refinancing of local debt obligations, providing loan guarantees, and purchasing insurance. In 2014, Congress revised the SRF program by providing additional loan subsidies (including forgiveness of principal and negative interest loans) in certain instances. The law identifies a number of types of projects as eligible for SRF assistance, including wastewater treatment plant construction, stormwater treatment and management, energy-efficiency improvements at treatment works, reuse and recycling of wastewater or stormwater, and security improvements at treatment works. In both FY2016 and FY2017, Congress provided $1.394 billion for the clean water SRF program. President Trump’s FY2018 budget proposal requests the same amount as provided for the previous two fiscal years. Although appropriation levels have remained consistent in recent years (in nominal dollars), policymakers have continued to propose changes to the funding program. Issues debated in connection with these proposals include extending SRF assistance to help states and cities meet the estimated funding needs, modifying the program to assist small and economically disadvantaged communities, and enhancing the SRF program to address a number of water quality priorities beyond traditional treatment plant construction—particularly the management of wet weather pollutant runoff from numerous sources, which is the leading cause of stream and lake impairment nationally.

Sep 22, 2017

Patent Law: A Primer and Overview of Emerging Issues

In an increase over prior terms, the Supreme Court of the United States issued six opinions involving patent law during its October 2016 Term. These decisions addressed issues ranging from patent exhaustion, multicomponent products, and biosimilar patents to procedural issues like venue and the statute of limitations for infringement claims. The growing number of Supreme Court opinions involving patent law over the past decade may also speak to the rising importance of intellectual property more broadly; a reported 84% of the S&P 500 Market Value in 2015 is ascribed to intangible assets. With this increased attention on patent law, an understanding of patent law and the cases issued during the High Court’s recently concluded term will likely be of interest to Congress. The patent law regime in the United States is grounded in the U.S. Constitution itself; article I, section 8, clause 8 of the Constitution provides: “The Congress Shall Have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their respective ... Discoveries.” Nonetheless, the rights associated with patents do not arise automatically. Rather, to obtain patent protection, the Patent Act of 1952 requires inventors to apply with the U.S. Patent and Trademark Office (PTO). A patent may be obtained by “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter,” subject to the requirements of the Patent Act. A valid patent bestows upon its holder the right to take action against anyone who “makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent,” unless authority to do so is secured from the patent holder. In addition to examining patent applications, the PTO conducts other proceedings to determine the validity of issued patents, which can result in the revocation of previously issued patents. These proceedings play a central role in the country’s patent system. Final decisions from the PTO are appealable to the U.S. Court of Appeals for the Federal Circuit, which has exclusive, nationwide jurisdiction over most patent appeals. With the Supreme Court hearing an increasing number of cases involving patent law and other areas of intellectual property over the last decade, the Court is playing a larger role in the development of patent law. During its October 2016 Term, the Court issued two patent law opinions involving procedural issues that will affect when and where patent cases may be filed. In another pair of cases heard during the October 2016 Term, the High Court dealt with issues related to patents on multicomponent products—one in the context of determining infringement and another in the context of calculating damages. A final pair of patent cases decided during the Term may have major implications for the pharmaceutical industry—one addresses whether post-sale restrictions, commonly used in the pharmaceutical industry, are enforceable under patent law, and the other will likely affect the speed at which biosimilars come to market. In addition to the effects of the Supreme Court’s patent decisions issued during its October 2016 Term on patent law, there are a number of patent-related issues on the horizon. The constitutionality of one of the PTO’s post-grant review proceedings has been called into question in a case that will be heard during the Court’s upcoming October 2017 Term. In addition, with patent reform being of perennial concern to Congress, certain legislative proposals have the potential to alter various areas of patent law.

Sep 21, 2017

Insurance Regulation: Legislation in the 115th Congress

Insurance companies constitute a major segment of the U.S. financial services industry. The industry is often separated into two parts: (1) life and health insurance companies, which also often offer annuity products, and (2) property and casualty insurance companies, which include most other lines of insurance, such as homeowners insurance, automobile insurance, and various commercial lines of insurance purchased by businesses. Different lines of insurance present very different characteristics and risks. Life insurance typically is a longer-term proposition with contracts stretching over decades and insurance risks are relatively well defined in actuarial tables. Property and casualty insurances typically are shorter-term propositions with six-month or one-year contracts and have greater exposure to catastrophic risks. Since 1868, the individual states have been the primary regulators of insurance with the National Association of Insurance Commissioners (NAIC) acting to coordinate state actions and collect national data. In accordance with the 1945 McCarran-Ferguson Act, the states have operated as the primary insurance regulators with congressional blessing, but they have also been subject to periodic congressional scrutiny. Immediately prior to the 2007-2009 financial crisis, congressional attention on insurance regulation focused on the inefficiencies in the state regulatory system. A major catalyst was the aftermath of the Gramm-Leach-Bliley Act of 1999 (GLBA; P.L. 106-102), which overhauled the regulatory structure for banks and securities firms, but left the insurance sector largely untouched. The financial crisis refocused the debate surrounding insurance regulatory reform. Unlike many financial crises in the past, insurers played a large role in this crisis. In particular, the failure of the insurer American International Group (AIG) spotlighted sources of systemic risk that had gone unrecognized. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203), enacted following the crisis, gave enhanced systemic risk regulatory authority to the Federal Reserve and to a newly created Financial Stability Oversight Council (FSOC). The Dodd-Frank Act also included measures affecting the states’ oversight of surplus lines insurance and reinsurance and created a new Federal Insurance Office (FIO) within the Department of the Treasury. Legislation before the 115th Congress addressing insurance regulatory issues includes the following: H.R. 10, Title XI, would merge and revamp the FIO and the independent insurance expert position on FSOC; S. 1463/H.R. 3110 would alter the term of the FSOC independent insurance expert; H.R. 3363 would add insurance claims adjusters to the National Association of Registered Agents and Brokers licensing structure created by Congress in P.L. 114-1; and S. 1360 would respond the development of international standards by the International Association of Insurance Supervisors (IAIS).

Sep 20, 2017

Collateralized Loan Obligations (CLOs) and the Volcker Rule

Sep 20, 2017

The State Department’s Trafficking in Persons Report: Scope, Aid Restrictions, and Methodology

The State Department’s annual release of the Trafficking in Persons report (commonly referred to as the TIP Report) has been closely monitored by Congress, foreign governments, the media, advocacy groups, and other foreign policy observers. The 109th Congress first mandated the report’s publication in the Trafficking Victims Protection Act of 2000 (TVPA; Div. A of the Victims of Trafficking and Violence Protection Act of 2000, P.L. 106-386). Over time, the number of countries covered by the TIP Report has grown, peaking at 188 countries, including the United States. In the 2017 TIP Report, the State Department categorized 187 countries. Countries were placed into one of several lists (or tiers) based on their respective governments’ level of effort to address human trafficking between April 1, 2016, and March 31, 2017. An additional category of special cases included three countries that were not assigned a tier ranking because of ongoing political instability (Libya, Somalia, and Yemen). Its champions describe the TIP Report as a keystone measure of government efforts to address and ultimately eliminate human trafficking. Some U.S. officials refer to the report as a crucial tool of diplomatic engagement that has encouraged foreign governments to elevate their own antitrafficking efforts. Its detractors question the TIP Report’s credibility as a true measure of antitrafficking efforts, suggesting at times that political factors distort its country assessments. Some foreign governments perceive the report as a form of U.S. interference in their domestic affairs. Continued congressional interest in the TIP Report and its country rankings has resulted in several key modifications to the process. Such modifications have included the creation of the special watch list, limiting the length of time a country may remain on a subset of the special watch list, expanding the list of criteria for determining whether countries are taking serious and sustained efforts to eliminate trafficking, establishing a list of governments that recruit and use child soldiers, and prohibiting the least cooperative countries on antitrafficking matters from participating in authorized trade negotiations. These modifications were often included as part of broader legislative efforts to reauthorize the TVPA, whose current authorization for appropriations expires at the end of FY2017. Recent Developments On June 27, 2017, the U.S. Department of State released the 17th edition of the TIP Report—the first for the Administration of President Donald J. Trump. In spite of State Department efforts to alleviate congressional concerns that the report’s methodology is susceptible to political pressure, several Members in the 115th Congress have introduced legislation to further modify key aspects of the annual country ranking and reporting process. The most significant changes to the TIP Report methodology are contained in H.R. 2200, the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2017, which passed the House on July 12, 2017. If enacted, the changes could reduce State Department flexibility and discretion in assigning tier rankings to countries and increase the number of countries that would fall into the worst category (Tier 3)—while also making it potentially more difficult for countries to attain the best category (Tier 1). Other proposed changes to the TIP Report methodology are contained in S. 377, S. 952, H.R. 436, H.R. 1191, and H.R. 2219. While some observers may anticipate that changes to the TIP Report’s methodology will improve its overall credibility and country ranking process, others may question whether such changes will confuse foreign governments and be perceived as too complex. The reputational harm of a poor ranking in the TIP Report has motivated some countries to improve their antitrafficking efforts. It is not clear, however, if this scenario will hold true indefinitely. If the prospect of achieving a top ranking in the TIP Report begins to appear unattainable, could the TIP Report’s ability to motivate countries to improve their antitrafficking efforts—and thus its value as a policy tool for international engagement to combat human trafficking—diminish?

Sep 19, 2017

Chevron Deference: A Primer

When Congress delegates regulatory functions to an administrative agency, that agency’s ability to act is governed by the statutes that authorize it to carry out these delegated tasks. Accordingly, in the course of its work, an agency must interpret these statutory authorizations to determine what it is required to do and to ascertain the limits of its authority. The scope of agencies’ statutory authority is sometimes tested through litigation. When courts review challenges to agency actions, they give special consideration to agencies’ interpretations of the statutes they administer. Judicial review of such interpretations is governed by the two-step framework set forth in Chevron U.S.A. Inc., v. Natural Resources Defense Council. The Chevron framework of review usually applies if Congress has given an agency the general authority to make rules with the force of law. If Chevron applies, a court asks at step one whether Congress directly addressed the precise issue before the court, using traditional tools of statutory construction. If the statute is clear on its face, the court must effectuate Congress’s stated intent. However, if the court concludes instead that a statute is silent or ambiguous with respect to the specific issue, the court proceeds to Chevron’s second step. At step two, courts defer to an agency’s reasonable interpretation of the statute. Application of the Chevron doctrine in practice has become increasingly complex. Courts and scholars alike debate which types of agency interpretations are entitled to Chevron deference, what interpretive tools courts should use to determine whether a statute is clear or ambiguous, and how closely courts should scrutinize agency interpretations for reasonableness. A number of judges and legal commentators have even questioned whether Chevron should be overruled entirely. Moreover, Chevron is a judicially created doctrine that rests in large part upon a presumption about legislative intent, and Congress could modify the courts’ use of the doctrine by displacing this underlying presumption. This report discusses the Chevron decision, explains the circumstances in which the Chevron doctrine applies, explores how courts apply the two steps of Chevron, and highlights some criticisms of the doctrine, with an eye towards the potential future of Chevron deference.

Sep 19, 2017

Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI): An Overview

The Social Security Administration (SSA) is responsible for administering two federal entitlement programs established under the Social Security Act that provide income support to individuals with severe, long-term disabilities: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is a social insurance program established under Title II of the act that provides monthly cash benefits to nonelderly workers with disabilities and to their eligible dependents, provided the worker paid Social Security taxes for a sufficient number of years in jobs covered by Social Security. In contrast, SSI is a public assistance program that provides monthly cash benefits to seniors and individuals with disabilities (adults and children) who have limited assets and little or no Social Security or other income. In 2016, SSDI and SSI combined paid an estimated $199 billion in federally administered benefits to 14.6 million qualified disabled individuals and 1.6 million non-disabled dependents of disabled workers. SSDI is part of the federal Old-Age, Survivors, and Disability Insurance (OASDI) program, commonly known as Social Security. OASDI benefits are based on an insured worker’s career-average earnings in jobs covered by Social Security and designed to replace a portion of the income lost to a family due to the worker’s retirement, disability, or death. Workers become insured against these events by acquiring a certain number of earnings credits during their careers in covered employment or self-employment. The SSDI component of the program provides benefits to disabled workers who are under Social Security’s full retirement age and to their eligible spouses and children. The Old-Age and Survivors Insurance (OASI) component also provides disability benefits to eligible disabled dependents of retired workers and to eligible disabled survivors of deceased beneficiaries and insured workers. Although these individuals are not technically disability insurance beneficiaries, they are often included in the term SSDI because they receive Social Security benefits due to a qualifying impairment. SSI is a federal assistance program that provides needy aged, blind, or disabled individuals (including children) with a guaranteed minimum income to meet their basic living expenses. Although there are no work or contribution requirements to qualify for benefits, the program is based on need and therefore is restricted to individuals with limited financial means. SSI is commonly known as a program of “last resort” because claimants must first apply for all other benefits for which they may be eligible; cash assistance is awarded only to those whose assets and other income (if any) are within prescribed limits. The basic federal SSI benefit is the same for all recipients and is reduced by the amount of other income that an individual receives. SSDI and SSI are open-ended entitlement programs, meaning that the federal government is obligated to pay benefits to individuals who meet the eligibility requirements specified in each program’s authorizing statute. SSDI benefits are paid from the Disability Insurance trust fund, which is financed primarily by a portion of the Social Security payroll tax levied on the earnings of covered workers. SSI, in contrast, is financed by appropriations from general revenues. Most claimants are considered disabled for SSDI and SSI eligibility purposes if they are unable to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment that is expected to last for at least 12 months or to result in death. In 2017, the SGA earnings limit is $1,170 per month for most individuals. Claimants generally qualify if they have an impairment (or combination of impairments) of such severity that they are unable to perform any kind of substantial work that exists in significant numbers in the national economy, taking into consideration their age, education, and work experience. If a claimant’s application for benefits is denied at any point during the disability determination process, the claimant has the right to appeal the decision.

Sep 14, 2017

Due Process Limits on the Jurisdiction of Courts: Issues for Congress

Businesses that are incorporated in foreign countries and conduct a large portion of their operations outside of the territorial jurisdiction of the United States may nevertheless cause injury to U.S. persons. For example, a foreign company might manufacture in its home country a machine that another company later distributes in the United States, ultimately resulting in an injury to a U.S. consumer. Although foreign companies may engage in actions or omissions that injure U.S. persons, such injured persons may face various procedural challenges in obtaining judicial relief from a foreign company defendant in U.S. courts. One potential obstacle to such civil lawsuits is the doctrine of personal jurisdiction. The Supreme Court has long interpreted the Due Process Clause of the Fourteenth Amendment to limit the power of state courts to render judgments affecting the personal rights of defendants who do not reside within the state’s territory. And the Federal Rules of Civil Procedure give federal district courts power to assert personal jurisdiction over a defendant to the same extent that a state court in which the federal district court is located may assert that power, meaning the same limits on personal jurisdiction generally apply to federal courts. The Court has offered several justifications for the constitutional constraints on a court’s assertion of personal jurisdiction over nonresident persons and corporations, including concerns about state sovereignty and fairness to defendants. The Supreme Court’s jurisprudence addressing the doctrine of personal jurisdiction spans a period of American history that has witnessed a significant expansion of interstate and global commerce, as well as major technological advancements in transportation and communication. These changes produced a fundamental shift in the Court’s views concerning the doctrine. Although the Court initially considered the defendant’s physical presence within the forum state to be the touchstone of the exercise of personal jurisdiction over him or her, it later rejected strict adherence to this rule in favor of a more flexible standard that examines a nonresident defendant’s contacts with the forum state to determine whether those contacts make it reasonable to require him to respond to a lawsuit there. The Supreme Court’s opinions in International Shoe Co. v. Washington and subsequent cases have established a more flexible two-part test for determining when exercise of personal jurisdiction over each nonresident defendant sued by a plaintiff comports with due process: (1) the defendant must establish minimum contacts with the forum state that demonstrate an intent to avail itself of the benefits and protections of state law; and (2) it must be reasonable to require the defendant to defend the lawsuit in the forum. Recent Supreme Court rulings have limited the circumstances in which U.S. courts may exercise personal jurisdiction. This report discusses the evolution of the doctrine of personal jurisdiction as elucidated by the Supreme Court in its opinions. It concludes by examining the implications of recent developments in the doctrine of personal jurisdiction for Congress, as well as options that Congress might have to address these developments.

Sep 14, 2017

Redeploying U.S. Nuclear Weapons to South Korea: Background and Implications in Brief

Recent advances in North Korea’s nuclear and missile programs have led to discussions, both within South Korea and, reportedly, between the United States and South Korean officials, about the possible redeployment of U.S. nuclear weapons on the Korean Peninsula. The United States deployed nuclear weapons on the Korean Peninsula between 1958 and 1991. Although it removed the weapons as a part of a post-Cold War change in its nuclear posture, the United States remains committed to defending South Korea under the 1953 Mutual Defense Treaty and to employing nuclear weapons, if necessary, in that defense. The only warheads remaining in the U.S. stockpile that could be deployed on the Korean Peninsula are B61 bombs. Before redeploying these to South Korea, where they would remain under U.S. control, the United States would have to recreate the infrastructure needed to house the bombs and would also have to train and certify the personnel responsible for maintaining the weapons and operating the aircraft for the nuclear mission. Some who support the redeployment of U.S. nuclear weapons argue that their presence on the peninsula would send a powerful deterrent message to the North and demonstrate a strong commitment to the South. Their presence would allow for a more rapid nuclear response to a North Korean attack. Some also argue that weapons could serve as a “bargaining chip” with North Korea and that their presence would allow for a more rapid nuclear response to a North Korean attack. Those who oppose the redeployment argue the weapons would present a tempting target for North Korea and might prompt an attack early in a crisis. They also argue that nuclear weapons based in the United States are sufficient for deterrence, and that the costs of installing the necessary facilities on the peninsula could detract from conventional military capabilities. Finally, some assess that the cost of installing the necessary storage, security, and safety infrastructure could drain funding from other military priorities and time needed to train and certify the crews could undermine readiness for other military missions. Some analysts also assert that, if the United States believed it needed the capability to deliver nuclear weapons to North Korea in a shorter amount of time than allowed by the current force posture, it could pursue sea-based options that would not impose many of the costs or risks associated with the deployment of nuclear weapons on the peninsula. South Korea’s President Moon Jae-in has advocated for more muscular defense options, but does not support the redeployment of U.S. tactical nuclear weapons. The Liberty Korea Party, the main opposition party, has formally called for the move. While some in South Korea believe nuclear weapons are necessary to deter the North, others, including those who maintain hope that North Korea will eliminate its program, argue that their redeployment could make it that much more difficult to pressure the North to take these steps. Further, if North Korea saw the deployment as provocative, it could further undermine stability and increase the risk of conflict on the peninsula. China would also likely view the redeployment of U.S. nuclear weapons as provocative; it has objected to U.S. military deployments in the past. Some analysts believe that China might respond by putting more pressure on North Korea to slow its programs, while others believe that China might increase its support for North Korea in the face of a new threat and, possibly, expand its own nuclear arsenal. Japan’s reaction could also be mixed. Japan shares U.S. and South Korean concerns about the threat from North Korea, but given its historical aversion to nuclear weapons, Japan could oppose the presence of U.S. nuclear weapons near its territory. In addition, any adjustment of the U.S. military posture on the peninsula could create additional security concerns for Tokyo.

Sep 14, 2017

Military Sexual Assault: A Framework for Congressional Oversight

Article I, Section 8 of the U.S. Constitution gives Congress the power to raise and support armies; provide and maintain a navy and make rules for the governance of those forces. Under this authority, Congress determines military criminal law applicable to members of the Armed Forces. Congress has determined that sexual assault is a criminal act under the Uniform Code of Military Justice (UCMJ). As such, Congress has an interest in overseeing the implementation and enforcement of these laws in order to provide for the health, welfare, and good order of the Armed Forces. Prevention and response to sexual violence in the military is not a new concern, nor is sexual violence a problem confined to the military. While prevalence is difficult to estimate, some surveys suggest that up to 19.3% of women and 1.7% of men in the United States have been a victim of sexual assault at some point in their lives. There is a continued national dialogue with regard to sexual violence at universities and other government and private organizations. Sexual assault can have both deleterious physical and psychological effects on the victim and, when an assault occurs in or around the workplace, it can harm the working environment and function of the organization. In the military context, when an assault occurs it impairs the unit’s ability to work effectively; it can have an impact on cohesion, stability, and ultimately, mission success. Thus, concern about sexual assault in the military stems from complementary imperatives: protecting the individual health and welfare of military servicemembers, and ensuring preparedness and effectiveness of military units. Congressional efforts to address military sexual assault, pursuant to its Constitutional authority, have intensified over the past two decades in response to rising public concern about incident rates and perceptions of a lack of adequate response by the military to support the victims and hold perpetrators accountable. Since 2004, Congress has enacted over 100 provisions intended to address some aspect of the problem as part of the annual National Defense Authorization Act (NDAA). In addition, DOD has devoted significant resources to the issue in terms of funds, personnel, and training time. Given the scope and complexity of this issue, it is helpful to apply a framework for analysis and oversight. This report provides such a framework to help congressional staff understand the legislative and policy landscape, link proposed policy solutions with potential impact metrics, and identify possible gaps that remain unaddressed. Congressional oversight and action on military sexual assault can be organized into four main categories: (1) Department of Defense (DOD) management and accountability, (2) prevention, (3) victim protection and support, and (4) military justice and investigations. The first category deals with actions to improve management, monitoring, and evaluation of DOD’s efforts in sexual assault prevention and response. The second category includes efforts to reduce the number of sexual assaults through screening, training, and organizational culture. The third category focuses on DOD’s response once an alleged assault has occurred, including actions to protect and support the victim. Finally, the last category addresses bringing perpetrators to justice through military investigative and judicial processes.

Sep 12, 2017

TPP: Digital Trade Provisions

Sep 7, 2017

Possible U.S. Policy Approaches to North Korea

Sep 4, 2017

Forecasting Tropical Cyclones: NOAA’s Role

Aug 29, 2017

Reinsurance in Health Insurance

Aug 18, 2017

Farm Bill Primer: ARC and PLC Support Programs

Aug 17, 2017

Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework

The financial regulatory system has been described as fragmented, with multiple overlapping regulators and a dual state-federal regulatory system. The system evolved piecemeal, punctuated by major changes in response to various historical financial crises. The most recent financial crisis also resulted in changes to the regulatory system through the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (Dodd-Frank Act; P.L. 111-203) and the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289). To address the fragmented nature of the system, the Dodd-Frank Act created the Financial Stability Oversight Council (FSOC), a council of regulators and experts chaired by the Treasury Secretary. At the federal level, regulators can be clustered in the following areas: Depository regulators—Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve for banks; and National Credit Union Administration (NCUA) for credit unions; Securities markets regulators—Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC); Government-sponsored enterprise (GSE) regulators—Federal Housing Finance Agency (FHFA), created by HERA, and Farm Credit Administration (FCA); and Consumer protection regulator—Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Act. These regulators regulate financial institutions, markets, and products using licensing, registration, rulemaking, supervisory, enforcement, and resolution powers. Other entities that play a role in financial regulation are interagency bodies, state regulators, and international regulatory fora. Notably, federal regulators generally play a secondary role in insurance markets. Financial regulation aims to achieve diverse goals, which vary from regulator to regulator: market efficiency and integrity, consumer and investor protections, capital formation or access to credit, taxpayer protection, illicit activity prevention, and financial stability. Policy debate revolves around the tradeoffs between these various goals. Different types of regulation—prudential (safety and soundness), disclosure, standard setting, competition, and price and rate regulations—are used to achieve these goals. Many observers believe that the structure of the regulatory system influences regulatory outcomes. For that reason, there is ongoing congressional debate about the best way to structure the regulatory system. As background for that debate, this report provides an overview of the U.S. financial regulatory framework. It briefly describes each of the federal financial regulators and the types of institutions they supervise. It also discusses the other entities that play a role in financial regulation.

Aug 17, 2017

Farm Bill Primer: The Farm Safety Net

Aug 16, 2017

Public Health Service Agencies: Overview and Funding (FY2016-FY2018)

Within the Department of Health and Human Services (HHS), eight agencies are designated components of the U.S. Public Health Service (PHS). The PHS agencies are funded primarily with annual discretionary appropriations. They also receive significant amounts of funding from other sources, including mandatory funds from the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended), user fees, and third-party reimbursements (collections). The Agency for Healthcare Research and Quality (AHRQ) funds research on improving the quality and delivery of health care. For more than a decade prior to FY2015, AHRQ did not receive its own annual appropriation. Instead, it relied on redistributed (“set-aside”) discretionary funds from other PHS agencies for most of its funding, with supplemental amounts from the ACA’s mandatory Patient-Centered Outcomes Research Trust Fund (PCORTF). Since FY2015, AHRQ has received an annual appropriation in lieu of any set-aside funds. The agency’s FY2017 funding level of $417 million was $11 million less than the FY2016 level of $428 million. The Centers for Disease Control and Prevention (CDC) is the federal government’s lead public health agency. CDC obtains its funding from multiple sources besides discretionary appropriations. The Agency for Toxic Substances and Disease Registry (ATSDR) investigates the public health impact of exposure to hazardous substances. ATSDR is headed by the CDC director and included in the discussion of CDC in this report. The CDC/ATSDR funding level decreased from $12.2 billion in FY2016 to $12.1 billion in FY2017. The Food and Drug Administration (FDA) regulates drugs, medical devices, food, and tobacco products, among other consumer products. The agency is funded with annual discretionary appropriations and industry user fees. The agency’s funding levels for FY2016 and FY2017 remained constant at about $4.7 billion, with user fees accounting for 41% of FDA’s total FY2017 funding. The Health Resources and Services Administration (HRSA) funds programs and systems that provide health care services to the uninsured and medically underserved. HRSA, like CDC, relies on funding from several different sources. The agency’s funding decreased from $10.8 billion in FY2016 to $10.7 billion in FY2017. The Indian Health Service (IHS) supports a health care delivery system for Native Americans. IHS’s funding, which includes discretionary appropriations and collections from third-party payers of health care, increased between FY2016 and FY2017 from $6.2 billion to $6.4 billion. Appropriations increased during that period, while collections stayed the same in both fiscal years. The National Institutes of Health (NIH) funds basic, clinical, and translational biomedical and behavioral research. NIH gets more than 99% of its funding from discretionary appropriations. Recent increases in NIH’s annual appropriations have boosted its funding level to a new high of $34.1 billion in FY2017, compared with $32.3 billion in FY2016. The Substance Abuse and Mental Health Services Administration (SAMHSA) funds mental health and substance abuse prevention and treatment services. SAMHSA’s funding, about 95% of which comes from discretionary appropriations, was approximately $3.8 billion in FY2016 and $4.3 billion in FY2017. This report supersedes two earlier products, both of which remain available: CRS Report R43304, Public Health Service Agencies: Overview and Funding (FY2010-FY2016), and CRS Report R44505, Public Health Service Agencies: Overview and Funding (FY2015-FY2017).

Aug 16, 2017

Tolling U.S. Highways and Bridges

The Federal-Aid Road Act of 1916 (39 Stat. 355), which provided federal funds to states for highway construction, included the requirement that all roads funded under the act be “free from tolls of all kinds.” Following the funding of the Interstate System in 1956, the “freedom from tolls” policy was reaffirmed (23 U.S.C. §301). Although the provision still exists, exceptions to the general ban on tolls now cover the vast majority of federal-aid roads and bridges. New roads, bridges, and tunnels may be tolled, and most existing roads, bridges, and tunnels may be tolled if they are reconstructed or replaced. Yet growth in the extent of toll facilities has been slow, and some new toll projects have struggled financially. The failure, beginning in 2008, of federal highway user taxes and fees to provide sufficient revenues to fund the surface transportation program authorized by Congress has renewed interest in expanding toll financing. The Congressional Budget Office (CBO) projects that annual highway revenues, mostly from motor fuels taxes, will fall an average of $20 billion short of the amount needed to sustain the current federal surface transportation program between FY2021 and FY2025, and some Members of Congress see an expansion of tolling as a way to reduce the need for federal expenditures on roads. Congress could achieve an expansion of tolling in several ways. At one extreme, it could simply encourage tolling pilot projects on Interstate System highways, of which relatively few have been implemented to date. At the other extreme, Congress might authorize states to toll federal-aid highways as they see fit, or even require that Interstate highway segments be converted to toll roads as they undergo reconstruction, eventually turning all Interstates into toll roads. One obstacle to increased use of tolling is that tolls are a relatively inefficient way of raising revenue. The costs of toll collection on many existing toll roads exceed 10% of revenues even if all tolls are collected electronically, not including the cost of toll collection infrastructure. This compares unfavorably to the cost of collecting the existing federal motor fuels tax, estimated to be less than 1% of revenues. In addition, many roads may not have sufficient traffic willing to pay a high enough toll to fully cover financing, construction, maintenance, and toll collection costs. Due to these factors, as well as their political unpopularity, tolls are likely to play a limited role in funding surface transportation projects in the near future. Beyond a requirement that toll rates on bridges “shall be just and reasonable” and a provision limiting tolls on over-the-road buses, current federal law provides no role for the federal government in regulating toll rates or practices. States do not need to ask for permission from the Federal Highway Administration (FHWA) prior to imposing tolls but must be careful to adhere to the legal requirements, especially in regard to the use of revenues. However, there have been controversies in a number of states over toll schedules that favor in-state residents over others; over attempts to collect tolls at state borders, where more nonresidents would be affected, rather than at internal locations; and over trucking industry complaints that truck tolls are excessive compared to auto tolls. If tolling becomes more widespread, the extent to which tolling should be subject to federal oversight may become a more prominent question.

Aug 4, 2017

Global Engagement Center: Background and Issues

The State Department’s Global Engagement Center (GEC) is tasked with countering foreign state and non-state propaganda and disinformation targeting the United States and U.S. interests. A number of recent reports have stated that the GEC has not been given access to authorized funds for FY2017, leading to speculation and concern in some quarters about its continued role and operations. Counterterrorism Communications in the State Department The GEC is the latest iteration of State Department efforts to coordinate interagency communications countering the messaging and influence of terrorist organizations and other groups and countries that threaten U.S. interests and security. Beginning in 2006, several “centers” have been established in the State Department to produce strategy for, direct, and coordinate counterterrorism (CT) and countering violent extremism (CVE) communications: The Counterterrorism Communication Center (CTCC) was established in the Bureau of International Information Programs (IIP) in summer 2006, coordinating interagency messaging and creating specific messaging for the Departments of State and Defense. The Global Strategic Engagement Center (GSEC) replaced the CTCC in 2008, conducting similar activities guided by the decisionmaking and planning of the National Security Council’s (NSC’s) Policy Coordination Committee (PCC) for Public Diplomacy and Strategic Communication. Established by executive order in 2011, the Center for Strategic Counterterrorism Communication (CSCC) replaced the GSEC in 2010, with dedicated funding, an interagency Steering Committee and operational Support Office, and a Coordinator leading the organization. Establishing the GEC In March 2016, President Barack Obama issued Executive Order 13721, revoking the executive order that established the CSCC, and directing the Secretary of State to establish the GEC. Similar to the structure and purpose of the CSCC, the GEC was tasked with leading interagency efforts to carry out U.S.-government-sponsored counterterrorism communications to foreign publics, with a GEC Coordinator reporting to the Secretary through the Under Secretary of State for Public Diplomacy and Public Affairs. The GEC was designed to lead a whole-of-government approach to countering terrorist messaging, violent extremism, and ideological support to terrorism; better integrating advanced technologies and analysis into U.S. government counterterrorism communications efforts; and leveraging private sector and local foreign communicators, all aided by greater budgetary authority than had been afforded its predecessors. Executive Order 13721 directed executive branch agencies to provide the GEC with personnel, resources, and information to carry out its mission, and established an interagency Steering Committee, chaired by the Under Secretary of State for Public Diplomacy and Public Affairs, to allow other agencies to provide strategic advice and ensure support for the GEC. Expanding the GEC’s Mandate In December 2016, Congress enacted Section 1287 of the National Defense Authorization Act for Fiscal Year 2017 (P.L. 114-328; FY2017 NDAA), which requires the Secretary of State essentially to reestablish the GEC with a purpose, structure, and authority that differ from those provided in Executive Order 13721. Whereas the original GEC had a specific purpose to focus on countering terrorist and extremist groups’ influence, Section 1287 states that the GEC’s purpose is to “counter foreign state and non-state propaganda and disinformation efforts” that threaten U.S. national security interests as well as the national security interests of U.S. allied and partner countries. This language indicates a much broader purpose for the new GEC than the original one, possibly encompassing counterterrorism communications but also expanding the GEC’s coverage to include countering certain foreign communications from any source. Section 1287 also provides the new GEC with specific hiring and grant-making authorities that were not included in Executive Order 13721. Under Section 1287, the GEC will be terminated in December 2024. Increasing the GEC’s Funding Along with a significantly broadened mandate, the GEC stands to receive substantially increased funding under Section 1287, continuing an upward trend in recent years for funding of the GEC and the CSCC before it. GEC predecessors CTCC and GSEC were housed in State’s Bureau of International Information Programs (IIP), and did not receive dedicated funding through legislation. For FY2015, the CSCC had a budget of approximately $6 million in dedicated funding. Establishment of the GEC to replace the CSCC came with an expectation of an expanded role for the new GEC and a corresponding increase in funding. FY2016 GEC funding was approximately $16 million, jumping to an estimated $32 million by the end of FY2017. The State Department has requested to maintain GEC at the same funding level in FY2018. Section 1287 authorizes another increase in GEC funding, albeit through designating new transfer authority to the Secretary of Defense: pursuant to the provision, if the GEC receives less than $80 million in direct funding in FY2017 or FY2018, the Secretary of Defense is authorized to transfer up to $60 million to fund the GEC in each of those two fiscal years. GEC funding increases could be considerable, therefore, but such increases do not seem to be mandated per se by the authorization in Section 1287. Current GEC Funding Issue Recent news articles have reported that the State Department has not used all available funding for the GEC in FY2017, including a reported $19.8 million in State Department accounts, and that the Secretary of State has not requested transfer of Defense Department funds authorized under Section 1287. Observers cited in these reports have questioned whether the GEC continues to have support of State Department leadership or can effectively carry out its mandate, and whether organizational inefficiency or shifts in U.S. policy are behind these funding decisions. Senators Rob Portman and Chris Murphy, sponsors of the GEC legislation in the FY2017 NDAA, among other Members of Congress, have criticized the GEC funding situation, stating that GEC capabilities and effectiveness are harmed by the continued lack of funding. State Department officials have countered that reviews of various organizations, activities, and policies within the department are ongoing, with the goal of ensuring that resources are being used effectively, and that the delays in utilization of GEC funding can be attributed to such review.

Aug 4, 2017

North Korean Cyber Capabilities: In Brief

As North Korea has accelerated its missile and nuclear programs in spite of international sanctions, Congress and the Trump Administration have elevated North Korea to a top U.S. foreign policy priority. Legislation such as the North Korea Sanctions and Policy Enhancement Act of 2016 (P.L. 114-122), and international sanctions imposed by the United Nations Security Council have focused on North Korea’s WMD and ballistic missile programs and human rights abuses. According to some experts, another threat is emerging from North Korea: an ambitious and well-resourced cyber program. North Korea’s cyberattacks have the potential not only to disrupt international commerce, but to direct resources to its clandestine weapons and delivery system programs, potentially enhancing its ability to evade international sanctions. As Congress addresses the multitude of threats emanating from North Korea, it may need to consider responses to the cyber aspect of North Korea’s repertoire. This would likely involve multiple committees, some of which operate in a classified setting. This report will provide a brief summary of what unclassified open-source reporting has revealed about the secretive program, introduce four case studies in which North Korean operators are suspected of having perpetrated malicious operations, and provide an overview of the international finance messaging service that these hackers may be exploiting. SWIFT Sony Bangladesh WannaCry

Aug 3, 2017

Countering America’s Adversaries Through Sanctions Act

Aug 2, 2017

Provisions of Obamacare Repeal Reconciliation Act of 2017 (ORRA)

Per the reconciliation instructions in the budget resolution for FY2017 (S.Con.Res. 3), the House passed its reconciliation bill, H.R. 1628—the American Health Care Act (AHCA)—with amendments on May 4, 2017. The House bill was received in the Senate on June 7, 2017, and the next day the Senate majority leader had it placed on the calendar, making it available for floor consideration. The Senate Budget Committee published on its website a “discussion draft” titled, “The Better Care Reconciliation Act of 2017” (BCRA) on June 22, 2017, and subsequently updated the discussion draft on June 26, July 13, and July 20. The Senate’s draft legislation is written in the form of an amendment in the nature of a substitute, meaning that it is intended to be considered by the Senate as an amendment to H.R. 1628, as passed by the House, and that all of the House-passed language would be stricken and the language of the BCRA would be inserted in its place. On July 19, 2017, the Senate Budget Committee posted the “Obamacare Repeal Reconciliation Act of 2017” (ORRA) on its website as another draft reconciliation bill. ORRA is largely based off the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (H.R. 3762), which was vetoed by President Obama on January 8, 2016, and returned to the House. ORRA would repeal several provisions of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended), and it could restrict federal funding for the Planned Parenthood Federation of America (PPFA) and its affiliates and clinics for a period of one year. The bill also would appropriate (1) an additional $422 million for FY2017 to the Community Health Center Fund and (2) $750 million for each of FY2018 and FY2019 to award grants to states to address the substance abuse public health crisis or respond to urgent mental health needs. The Congressional Budget Office and the Joint Committee on Taxation estimate that ORRA would reduce federal deficits by $473 billion from FY2017 through FY2026, and they estimate that 17 million more people would be uninsured under ORRA than under current law in FY2018, with that figure growing to 32 million in CY2026. A number of the provisions in ORRA are also in the AHCA and/or BCRA. However, ORRA does not include the AHCA or BCRA provisions that would substitute the ACA’s premium tax credit for premium tax credits with different eligibility rules and calculation requirements. ORRA also does not include the AHCA or BCRA provisions that would establish new programs and requirements that are not related to the ACA, for example, a new fund to provide funding to states for specified activities intended to improve access to health insurance and health care or provisions to convert Medicaid financing to a per capita cap model (i.e., per enrollee limits on federal payments to states) with a block grant option (i.e., a predetermined fixed amount of federal funding) for certain populations. This report provides summaries of each ORRA provision.

Jul 24, 2017

Amended Sugar Agreements Recast U.S.-Mexico Trade

Jul 21, 2017

Legislative Branch: FY2018 Appropriations

The legislative branch appropriations bill provides funding for the Senate; House of Representatives; Joint Items; Capitol Police; Office of Compliance; Congressional Budget Office (CBO); Architect of the Capitol (AOC); Library of Congress (LOC), including the Congressional Research Service (CRS); Government Publishing Office (GPO); Government Accountability Office (GAO); Open World Leadership Center; and the John C. Stennis Center. The FY2018 legislative branch budget request of $4.865 billion was submitted on May 23, 2017. In general, FY2018 legislative branch budget requests were developed and submitted to the Office of Management and Budget (OMB) prior to the enactment of FY2017 funding. By law, the President includes the legislative branch request in the annual budget submission without change. The House and Senate Appropriations Committees’ Legislative Branch Subcommittees held hearings in May and June to consider the FY2018 legislative branch requests. On June 23, 2016, the House Appropriations Committee Legislative Branch Subcommittee held a markup of the draft bill. The bill was ordered reported to the full committee by voice vote. On June 29, the House Appropriations Committee held a markup of the bill. Four amendments were considered: two were adopted, one was not adopted, and one was withdrawn. The bill was ordered reported by voice vote. It would provide $3.580 billion, not including Senate items (H.R. 3162, H.Rept. 115-199). On July 18, 2017, the text of H.R. 3162 was included in a print issued by the House Rules Committee entitled, “Text of the Defense, Military Construction, Veterans Affairs, Legislative Branch, and Energy And Water Development National Security Appropriations Act, 2018” (Committee Print 115-30, which also contains the text ofH.R. 3219, H.R. 2998, and H.R. 3266). When compared to FY2010, which was the peak of legislative branch funding, the FY2017 level of $4.440 billion has decreased 4.9% when not adjusted for inflation and 14.9% when adjusted for inflation. The FY2017 level was an increase of $77.0 million (+1.7%) from FY2016. The FY2016 level of $4.363 billion represented an increase of $63 million (+1.5%) from the FY2015 level of $4.300 billion, and the FY2015 level represented an increase of $41.7 million (+1.0%) from the FY2014 funding level of $4.259 billion. The FY2013 act funded legislative branch accounts at the FY2012 enacted level, with some exceptions (also known as “anomalies”), less across-the-board rescissions that applied to all appropriations in the act, and not including sequestration reductions implemented on March 1. The FY2012 level of $4.307 billion represented a decrease of $236.9 million (-5.2%) from the FY2011 level, which itself represented a $125.1 million decrease (-2.7%) from FY2010. The smallest of the appropriations bills, the legislative branch comprises approximately 0.4% of total discretionary budget authority.

Jul 20, 2017