CRS Reports

The Opioid Epidemic and the U.S. Labor Market

Dec 10, 2018

Cryptocurrency: The Economics of Money and Selected Policy Issues

Cryptocurrencies are digital money in electronic payment systems that generally do not require government backing or the involvement of an intermediary, such as a bank. Instead, users of the system validate payments using certain protocols. Since the 2008 invention of the first cryptocurrency, Bitcoin, cryptocurrencies have proliferated. In recent years, they experienced a rapid increase and subsequent decrease in value. One estimate found that, as of August 2018, there were nearly 1,900 different cryptocurrencies worth about $220 billion. Given this rapid growth and volatility, cryptocurrencies have drawn the attention of the public and policymakers. A particularly notable feature of cryptocurrencies is their potential to act as an alternative form of money. Historically, money has either had intrinsic value or derived value from government decree. Using money electronically generally has involved using the private ledgers and systems of at least one trusted intermediary. Cryptocurrencies, by contrast, generally employ user agreement, a network of users, and cryptographic protocols to achieve valid transfers of value. Cryptocurrency users typically use a pseudonymous address to identify each other and a passcode or private key to make changes to a public ledger in order to transfer value between accounts. Other computers in the network validate these transfers. Through this use of blockchain technology, cryptocurrency systems protect their public ledgers of accounts against manipulation, so that users can only send cryptocurrency to which they have access, thus allowing users to make valid transfers without a centralized, trusted intermediary. Money serves three interrelated economic functions: it is a medium of exchange, a unit of account, and a store of value. How well cryptocurrencies can serve those functions relative to existing money and payment systems likely will play a large part in determining cryptocurrencies’ future value and importance. Proponents of the technology argue cryptocurrency can effectively serve those functions and will be widely adopted. They contend that a decentralized system using cryptocurrencies ultimately will be more efficient and secure than existing monetary and payment systems. Skeptics doubt that cryptocurrencies can effectively act as money and achieve widespread use. They note various obstacles to extensive adoption of cryptocurrencies, including economic (e.g., existing trust in traditional systems and volatile cryptocurrency value), technological (e.g., scalability), and usability obstacles (e.g., access to equipment necessary to participate). In addition, skeptics assert that cryptocurrencies are currently overvalued and under-regulated. The invention and proliferation of cryptocurrencies present numerous risks and related policy issues. Cryptocurrencies, because they are pseudonymous and decentralized, could facilitate money laundering and other crimes, raising the issue of whether existing regulations appropriately guard against this possibility. Many consumers may lack familiarity with cryptocurrencies and how they work and derive value. In addition, although cryptocurrency ledgers appear safe from manipulation, individuals and exchanges have been hacked or targeted in scams involving cryptocurrencies. Accordingly, critics of cryptocurrencies have raised concerns that existing laws and regulations do not adequately protect consumers dealing in cryptocurrencies. At the same time, proponents of cryptocurrencies warn against over-regulating what they argue is a technology that will yield large benefits. Finally, if cryptocurrency becomes a widely used form of money, it could affect the ability of the Federal Reserve and other central banks to implement and transmit monetary policy, leading some observers to argue that central banks should develop their own digital currencies (as opposed to a cryptocurrency); others oppose this idea. The 115th Congress has shown significant interest in these and other issues relating to cryptocurrencies. For example, the House passed several bills (H.R. 2433, H.R. 5036, and H.R. 6069, and H.R. 6411) aimed at better understanding or regulating cryptocurrencies. The 116th Congress—and beyond—may continue to consider the numerous policy issues raised by the increasing use of cryptocurrencies.

Dec 7, 2018

Budget Issues Shaping the 2018 Farm Bill

The farm bill is an omnibus, multi-year law that governs an array of agricultural and food programs. It provides an opportunity for policymakers to periodically address a broad range of agricultural and food issues. The farm bill has typically undergone reauthorization about every five years. The 115th Congress has considered a new farm bill but has not enacted one to date. Both the House and the Senate passed versions of a 2018 farm bill (H.R. 2) in June 2018. Conference proceedings officially began in September 2018 but have not reached agreement. The farm bill provides an opportunity for Congress to choose how much support, if any, to provide for various agriculture and nutrition programs and how to allocate it among competing constituencies. Under congressional budgeting rules, many programs are assumed to continue beyond the end of a farm bill. From a budgetary perspective, this provides funding to reauthorize programs, reallocate funding to other programs, or be taken for deficit reduction. Budget for a 2018 Farm Bill (dollars in millions, FY2019-FY2028) CBO score Farm bill titles CBO baseline House-passed Senate-passed Commodities 61,151 +284 -408 Conservation 59,754 -795 +0 Trade 3,624 +470 +515 Nutrition 663,828 -1,426 +94 Credit -4,558 +0 +0 Rural Development 168 +0 -2,340 Research 604 +250 +685 Forestry 10 +0 +5 Energy 612 -517 +375 Horticulture 1,547 +10 +626 Crop Insurance 78,037 -161 -2 Miscellaneous 2,423 +566 +517 Subtotal 867,200 -1,320 +68 Increase in Revenue - +465 +68 Total 867,200 -1,785 0 Source: CRS, compiled using the CBO Baseline by Title (unpublished; April 2018), based on the CBO baseline (April 2018), and the CBO cost estimates for H.R. 2 as passed by the House and as passed by the Senate (July 24, 2018). The farm bill authorizes programs in two spending categories: mandatory spending and discretionary spending. The Congressional Budget Office (CBO) baseline is a projection at a particular point in time of future federal spending on mandatory programs under current law. When a new bill is proposed that would affect mandatory spending, the cost impact (score) is measured in relation to the baseline. Changes that increase spending relative to the baseline have a positive score; those that decrease spending relative to the baseline have a negative score. Federal budget rules such as “PayGo” may require budgetary offsets to balance new spending so that there is no increase in the federal deficit. Discretionary spending may be authorized in a farm bill but is not actually provided until budget decisions are made in a future annual appropriations act. Since 2000, farm bill budgets have varied: The 2002 farm bill increased overall spending, the 2008 farm bill was essentially budget neutral, the 2014 farm bill reduced spending, and the 2018 farm bill is projected to be essentially budget neutral. The April 2018 CBO baseline for farm bill programs, used as the official benchmark in 2018, contains $867 billion over FY2019-FY2028—77% of which stems from the nutrition title ($664 billion) and its largest program, the Supplemental Nutrition Assistance Program. The remaining $203 billion baseline is for agricultural programs, mostly in crop insurance, farm commodity programs, and conservation. Other titles of the farm bill contribute about 1% of the baseline, some of which are funded primarily with discretionary spending. The budgetary impact of the 2018 farm bill proposals are measured relative to the CBO baseline—that is, what the 2014 farm bill (current law) would have spent had it continued. Relative to the baseline, the House-passed bill would reduce federal outlays by $1.8 billion over 10 years (-0.2%), and the Senate-passed bill would remain budget neutral (+0%) over the same 10-year period. These overall relatively small scores are the net result of sometimes relatively larger increases and reductions across individual titles. Some of the overall scores within a single title of the farm bill are the net result of sometimes large changes in individual programs that may reflect changes in the direction of policy. The House bill would achieve its overall 10-year net reduction primarily by reducing net outlays in four titles (Nutrition, Conservation, Energy, and Crop Insurance). It would increase spending by less than the total of these reductions across five other titles (Miscellaneous, Trade, Commodities, Research, and Horticulture). The Nutrition title has provisions that sum to a $22 billion reduction over 10 years (including those for work requirements) and provisions that would add to $20.6 billion in increased spending. Similarly, the Conservation title has provisions that sum to a $12.6 billion reduction (including repealing the Conservation Stewardship Program), as well as provisions that add spending totaling $11.8 billion. The Senate bill would achieve a budget-neutral outcome by reducing net spending primarily in the Rural Development title but also in the Commodities and Crop Insurance titles. It would increase spending across seven titles (Research, Horticulture, Miscellaneous, Trade, Energy, Nutrition, and Forestry). For some of the programs without baseline, both the House-passed and the Senate-passed bills would provide continuing funding and, in some cases, permanent baseline.

Dec 6, 2018

Defense Primer: Special Operations Forces

Dec 6, 2018

U.S. International Food Assistance: An Overview

The United States has played a leading role in global efforts to alleviate hunger and improve food security. U.S. international food assistance programs provide support through two distinct methods: (1) in-kind aid, which ships U.S. commodities to regions in need, and (2) cash-based assistance, which provides recipients with vouchers, direct cash transfers, or locally procured foods. The current suite of international food assistance programs began with the Food for Peace Act (P.L. 83-480), commonly referred to as “P.L. 480,” which established the Food for Peace program (FFP). Congress authorizes most food assistance programs in periodic farm bills. However, Congress authorized the Emergency Food Security Program (EFSP)—a newer, cash-based food assistance program—in the Global Food Security Act of 2016 (P.L. 114-195). Congress funds international food assistance programs through annual agriculture appropriations and state and foreign operations (SFOPS) appropriations bills. Since 2007, annual international food assistance outlays averaged $2.6 billion. In FY2016, FFP Title II and EFSP accounted for 87% of total international food assistance outlays. The U.S. Agency for International Development (USAID) and the U.S. Department of Agriculture (USDA) administer U.S. international food assistance programs. Historically, the United States provided international food assistance exclusively through in-kind aid. Since the mid-1980s, FFP Title II, which provides in-kind donations, has been the dominant U.S. food aid program. (The name “FFP Title II” refers to Title II of the Food for Peace Act, in which Congress first authorized the program.) In the late 2000s, U.S. international food assistance began to shift toward a combination of in-kind and cash-based assistance. This is largely due to the Obama Administration creating the cash-based EFSP in 2010 to complement FFP Title II emergency aid. EFSP is used in conditions when in-kind aid cannot arrive soon enough or could potentially disrupt local markets or when it is unsafe to operate in conflict zones. Despite the growth in cash-based assistance, U.S. international food assistance still relies predominantly on in-kind aid. Many other countries with international food assistance programs have converted primarily to cash-based assistance. U.S. reliance on in-kind aid has become controversial due to its potential to disrupt local markets and cost more than procuring food locally. At the same time, lack of reliable suppliers and poor infrastructure in recipient countries may limit the efficacy and efficiency of cash-based assistance. Also, in poorly controlled settings, cash transfers or food vouchers could be stolen or used by recipients to purchase nonfood items. Agricultural cargo preference (ACP)—the requirement that 50% of all in-kind aid be shipped on U.S.-flag ships—has also become controversial due to findings that it can lead to higher transportation costs and longer delivery times. Higher costs may be partially due to higher wages and better working conditions on U.S.-flag vessels compared to foreign-flag vessels. ACP may also contribute to maintaining a U.S.-flag merchant marine to provide sealift capacity during wartime or national emergencies. The Trump Administration and certain Members of Congress have proposed changes to the structure and intent of international food assistance programs. Some Members of Congress proposed changes in the House and Senate 2018 farm bills (H.R. 2). These proposed changes include amending requirements for some international food assistance programs and expanding flexibility to use cash-based assistance. Other proposed legislation would address ACP, expand flexibility to use cash-based assistance, and consolidate and alter funding for most international food assistance programs.

Dec 6, 2018

The Pregnancy Assistance Fund: An Overview

The Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) established the Pregnancy Assistance Fund (PAF) to assist vulnerable individuals and their families during the transition to parenthood. Specifically, the program serves expectant and parenting teens, women, fathers, and their families. This includes women of any age who are survivors of domestic violence, sexual violence, sexual assault, and stalking. The PAF program focuses on meeting the educational, social service, and health needs of eligible individuals and their children during pregnancy and the postnatal period. The research literature indicates that pregnancy has high costs for individuals eligible for the PAF program. Teenage mothers and fathers tend to have less education and are more likely to live in poverty than their peers who are not parenting. Nearly one-third of adolescent females who have dropped out of high school cite pregnancy or parenthood as a reason. Parenthood can also influence whether students pursue postsecondary education. One analysis found that single young women who had children after enrolling in community college were 65% more likely to drop out than their same-age peers who did not have children after enrolling. The research literature further indicates that approximately 3% to 9% of women experience domestic violence during pregnancy. Some studies indicate that this risk is greater among low-income women. The PAF program is administered by the Office of Adolescent Health (OAH) in the Department of Health and Human Services’ (HHS’) Office of the Assistant Secretary for Health (OASH). HHS distributes PAF funding on a competitive basis to the states, the District of Columbia, U.S. territories, and tribal entities. Through FY2018, HHS has awarded PAF funding to 30 states, the District of Columbia, and 5 tribal entities (“grantees”). These grantees can decide how to use funding under four purpose areas. Three of the purpose areas focus on providing services to the eligible expectant and parenting population through subgrants and partnerships. The fourth category focuses on public awareness about such services; however, HHS advises that grantees may not use funding solely for public awareness activities. In general, grantees have provided subgrants to school districts, community service organizations, and institutions of higher education (IHE) that directly serve the expectant and parenting population. Subgrantees have most frequently provided case management, referral services for other supports, group workshops on specific topics (e.g., pregnancy prevention), and home visiting services. The PAF statute and the program grant announcements include requirements for state grantees and subgrantees in carrying out activities under the program. The authorizing law requires each subgrantee to provide an annual report to the grantee about expenditures, fulfilling program requirements, and how it meets the needs of participants. Grantees must prepare an annual report to HHS on information provided by subgrantees, including participant data. In FY2016, grantees (17 states and 3 tribal entities) reported serving 16,053 individuals. Of these participants, 55% were expectant or parenting mothers, 37% were children, and 8% were expectant or parenting fathers. Most expectant or parenting participants were ages 16 through 19, and nearly half of all participants were white, about one-third were black, and the remaining share were another race or multiracial. About half of all participants were Hispanic. The ACA provides mandatory PAF funding of $25 million annually from FY2010 through FY2019. If Congress considers reauthorizing the program, it may look to emerging findings from a recent evaluation that may indicate the program is helping to keep pregnant and parenting students in the District of Columbia connected to their high schools. Among other topics, Congress may consider whether to establish guidelines regarding how the PAF program should interact with other, similar federal programs in the areas of education, health, and social services.

Dec 6, 2018

“Waters of the United States” (WOTUS): Current Status of the 2015 Clean Water Rule

The Clean Water Act (CWA) is the principal federal law governing pollution of the nation’s surface waters. The statute protects “navigable waters,” which it defines as “the waters of the United States, including the territorial seas.” The scope of the term waters of the United States, or WOTUS, is not defined in the CWA. Thus, the Army Corps of Engineers and U.S. Environmental Protection Agency (EPA) have defined the term in regulations several times as part of their implementation of the act. Two Supreme Court rulings (Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers and Rapanos v. United States), issued in 2001 and 2006 (respectively), interpreted the scope of the CWA more narrowly than EPA and the Corps had done previously in regulations and guidance. However, the rulings also created uncertainty about the intended scope of waters that are protected by the CWA. In 2014, the Corps and EPA proposed revisions to the existing 1980s regulations in light of these rulings. After reviewing over 1 million public comments and holding over 400 meetings with diverse stakeholders, the Corps and EPA issued a final rule in June 2015. The final rule—the Clean Water Rule—focused on clarifying the regulatory status of waters with ambiguous jurisdictional status following the Supreme Court rulings, including isolated waters and streams that flow only part of the year and nearby wetlands. Since the Clean Water Rule was finalized in 2015, its implementation has been influenced both by the courts and administrative actions. Following issuance of the 2015 Clean Water Rule, industry groups, more than half the states, and several environmental groups filed lawsuits challenging the rule in multiple federal district and appeals courts. A federal appeals court ordered a nationwide stay of the 2015 Clean Water Rule in October 2015 and later ruled that it had jurisdiction to hear consolidated challenges to the rule. In January 2018, the Supreme Court unanimously held that federal district courts, rather than appellate courts, are the proper forum for filing challenges to the 2015 Clean Water Rule. As a result, the appeals court vacated its nationwide stay. Three district courts have issued preliminary injunctions on the 2015 Clean Water Rule effective in the states challenging the rule in those courts. Accordingly, the 2015 Clean Water Rule is currently enjoined in 28 states and in effect in 22 states. In states where the 2015 Clean Water Rule is enjoined, regulations promulgated by the Corps and EPA in 1986 and 1988, respectively, are in effect. The Trump Administration has taken actions to delay implementation of the 2015 Clean Water Rule and rescind and replace it: In February 2018, the Corps and EPA published a rule that added an “applicability date” to the 2015 Clean Water Rule delaying implementation until February 2020. However, environmental groups and states filed lawsuits challenging the 2018 Applicability Date Rule, and in August 2018, a district court issued a nationwide injunction. The Trump Administration has also taken steps to rescind and replace the 2015 Clean Water Rule. In February 2017, President Trump issued Executive Order 13778 directing the Corps and EPA to review and rescind or revise the rule and to consider interpreting the term navigable waters in a manner consistent with Justice Scalia’s opinion in Rapanos, which proposed a narrower test for determining WOTUS. In July 2017, the Corps and EPA published a proposed rule that would “initiate the first step in a comprehensive, two-step process intended to review and revise the definition of waters of the United States’ consistent with the Executive Order.” The proposed step-one rule would rescind the 2015 Clean Water Rule and re-codify the regulatory definition of WOTUS as it existed prior to the rule. In July 2018, the agencies published a supplemental notice of proposed rulemaking to solicit comment on additional considerations supporting the agencies’ proposed repeal. A final step-one rule has not been issued. According to a statement reportedly made by the acting EPA Administrator on October 2, 2018, the agency planned to release a proposal for the step-two replacement rule sometime “over the next 30 days or so.” In the 115th Congress, some Members have introduced free-standing legislation and provisions within appropriations bills that would either repeal the 2015 Clean Water Rule, allow the Corps and EPA to withdraw the rule without regard to the Administrative Procedures Act, or amend the definition of navigable waters in the CWA. Two bills—H.R. 2 and H.R. 6147—have each passed the House and Senate in different forms. The House-passed versions of both bills would repeal the 2015 Clean Water Rule, while the Senate-passed versions of both bills do not include such provisions.

Dec 6, 2018

State and Local Governments Pursue Judicial Solutions to the Opioid Epidemic

Dec 6, 2018

Congressional Oversight of Intelligence: Background and Selected Options for Further Reform

Prior to the establishment of the Senate Select Committee on Intelligence (SSCI) and the House Permanent Select Committee on Intelligence (HPSCI) in 1976 and 1977, respectively, Congress did not take much interest in conducting oversight of the Intelligence Community (IC). The Subcommittees on the Central Intelligence Agency (CIA) of the congressional Armed Services Committees had nominal oversight responsibility, though Congress generally trusted that IC could more or less regulate itself, conduct activities that complied with the law, were ethical, and shared a common understanding of national security priorities. Media reports in the 1970s of the CIA’s domestic surveillance of Americans opposed to the war in Vietnam, in addition to the agency’s activities relating to national elections in Chile, prompted Congress to change its approach. In 1975, Congress established two select committees to investigate intelligence activities, chaired by Senator Frank Church in the Senate (the “Church Committee”), and Representative Otis Pike in the House (the “Pike Committee”). Following their creation, the Church and Pike committees’ hearings revealed the possible extent of the abuse of authority by the IC and the potential need for permanent committee oversight focused solely on the IC and intelligence activities. SSCI and HPSCI oversight contributed substantially to Congress’s work to legislate improvements to intelligence organization, programs, and processes and it enabled a more structured, routine relationship with intelligence agencies. On occasion this has resulted in Congress advocating on behalf of intelligence reform legislation that many agree has generally improved IC organization and performance. At other times, congressional oversight has been perceived as less helpful, delving into the details of programs and activities. Other congressional committees have cooperated with the HPSCI and SSCI in their oversight role since their establishment. Intelligence programs are often closely tied to foreign and defense policy, military operations, homeland security, cybersecurity, and law enforcement. Committees in both chambers for Foreign Affairs/Relations, Armed Services, Appropriations, Judiciary, and Homeland Security, therefore, share jurisdiction over intelligence. Some have suggested the current overlapping jurisdictions for oversight of the IC in Congress contribute to the perception of weak congressional intelligence committees that have relatively little authority and insufficient expertise. Others cite the overlapping responsibilities as a strength. Oversight of the IC spread over more committees can contribute to greater awareness and transparency in Congress of classified intelligence activities that are largely hidden from public view. They also claim that since the terrorist attacks of September 11, 2001, Senate, and House rules have changed to enable the congressional intelligence committees to have more authority and be more effective in carrying out their oversight responsibilities. Further reform, they argue, may be unrealistic from a political standpoint. An oft-cited observation of the Commission on Terrorist Attacks upon the United States (i.e., the 9-11 Commission) that congressional oversight of intelligence is “dysfunctional” continues to overshadow discussion of whether Congress has done enough. Does congressional oversight enable the IC to be more effective, better funded and organized, or does it burden agencies by the sheer volume of detailed inquiries into intelligence programs and related activities? A central question for Congress is: Could additional changes to the rules governing congressional oversight of intelligence enable Congress to more effectively fund programs, influence policy, and legislate improvements in intelligence standards, organization and process that would make the country safer?

Dec 4, 2018

Public Health and Other Related Provisions in P.L 115-271, the SUPPORT for Patients and Communities Act

On October 24, 2018, President Donald J. Trump signed into law H.R. 6, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (P.L. 115-271; the SUPPORT for Patients and Communities Act, or the SUPPORT Act). The SUPPORT Act is a sweeping measure designed to address widespread overprescribing and abuse of opioids in the United States. The act includes provisions involving law enforcement, public health, and health care financing and coverage. Broadly, the legislation imposes tighter oversight of opioid production and distribution; imposes additional reporting and safeguards to address fraud; and limits coverage of prescription opioids, while expanding coverage of and access to opioid addiction treatment services. The law also authorizes a number of programs that seek to expand consumer education on opioid use and train additional providers to treat individuals with opioid use disorders. The SUPPORT Act builds on recent efforts by the federal government to address the opioid epidemic, including the Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198) and the 21st Century Cures Act (Cures Act; P.L. 114-255). CARA addressed substance use issues broadly, targeting the opioid crisis predominantly through public health and law enforcement strategies. The Cures Act, enacted that same year, largely focused on medical innovation, but it also authorized additional funding to combat opioid addiction and included provisions addressing various mental health and substance use activities. CRS is publishing a series of reports on the SUPPORT Act, which consists of eight titles. This report summarizes the provisions in Title VII and VIII of the SUPPORT Act. Title VII, Public Health Provisions, includes a number of provisions that seek to improve the information collected about opioid abuse and increase access to treatment by supporting treatment programs and providers, among other things. Title VIII, Miscellaneous, includes, among others, provisions related to child welfare, the Department of Justice (DOJ), and drug testing required by the Department of Transportation (DOT). It also includes several revenue-related provisions and the budget effects of this act and also describes Section 4003, an offset included in Title IV related to individuals who seek a religious exemption from the requirement to maintain health insurance coverage.

Dec 3, 2018

Managed Trade and Quantitative Restrictions: Issues for Congress

Dec 3, 2018

Overview of the ACA Medicaid Expansion

Dec 3, 2018

Russia’s Use of Force Against the Ukrainian Navy

Naval Incident Escalates Tensions On November 25, 2018, Russian coast guard vessels in the Black Sea forcibly prevented two small Ukrainian armored artillery boats and a tugboat from transiting the Kerch Strait en route to the Ukrainian port of Berdyansk, on the Sea of Azov, according to official Ukrainian and Russian reports (see Figure 1). After ramming the tugboat and blockading all three boats for hours, the Russian vessels reportedly fired on them as they sought to leave the area, injuring six sailors. The Ukrainian boats and their 24 crew members were detained and taken to Kerch, in the Russian-occupied Ukrainian region of Crimea. The sailors were arrested and placed in pretrial detention on charges of illegally crossing what Russia refers to as its state border (i.e., the territorial waters around occupied Crimea). Observers generally viewed the incident as a major escalation of tensions between Russia and Ukraine. Russia Tightens Control In May 2018, Russian President Vladimir Putin opened a new 12-mile-long bridge linking Russia to Crimea over the Kerch Strait, the waterway connecting the Black Sea to the Sea of Azov. The bridge was designed to accommodate an existing shipping lane, but it imposes new limits on the size of ships that transit the strait. Observers note that since the bridge’s opening, Russia has stepped up its interference with commercial traffic traveling to and from Ukrainian ports in Mariupol and Berdyansk, which export steel, grain, and coal. Russian authorities reportedly have imposed delays at the bridge and conducted inspections of vessels. Russian authorities also have established notification and transit procedures for ships seeking to pass through the strait; during the November 25 incident, Russian authorities invoked what they considered noncompliance with these procedures as partial justification for denying the Ukrainian boats passage. Since the bridge opened, Russia and Ukraine have bolstered their maritime forces in the Sea of Azov. For Russia, this has included transferring to the area (via an inland waterway) naval ships previously assigned to a flotilla in the Caspian Sea. The Ukrainian artillery boats that attempted to transit the Kerch Strait on November 25 were the second pair of naval ships to pass through the strait; a command ship and tugboat crossed in September 2018, escorted by Russian coast guard vessels (other Ukrainian ships have arrived over land). A 2003 bilateral agreement between Ukraine and Russia affirms freedom of navigation through the strait for both countries (it might be argued that customary international law as reflected in the United Nations Charter on the Law of the Sea, or UNCLOS, also does that). According to Ukrainian officials, the agreement allows for Russian inspections, since it recognizes the Sea of Azov as shared “inland waters.” Although Ukrainian officials have considered withdrawing from the agreement, some observers believe this could further disadvantage Ukraine, since Russia could use its de facto control over Crimea and the Kerch Strait to assert sovereignty over most of the Sea of Azov and further restrict Ukrainian and third-party access. Ukraine is seeking the return of its sailors and ships. It also seeks to call attention to what it considers a major escalation in Russia’s efforts to control access to the Sea of Azov. Ukrainians are particularly concerned that Russia’s actions could lead to a blockade of Ukraine’s eastern territories and possibly expanded military operations on land. Figure 1. Southern Ukraine and the Sea of Azov / Source: Congressional Research Service. Martial Law in Ukraine The Ukrainian government introduced 30 days of martial law from November 28, 2018, in regions of the country bordering Russia, the Black Sea and Sea of Azov, and Moldova (where Russian troops are stationed in the separatist region of Transnistria). During the period of martial law, reportedly, the administrative border with Crimea is to remain closed to non-Ukrainian passport holders and Russian male nationals are to be barred from entering Ukraine. U.S. and European Reactions The United States and much of the international community rejects Russia’s claims to sovereignty over Crimea and, by extension, surrounding waters. The United States and the European Union (EU) have called on Russia to release the Ukrainian sailors, return the vessels, and restore freedom of passage through the strait; they also called Russia’s actions a violation of international law. On November 27, 2018, the Senate passed S.Res. 709, condemning Russia’s actions and calling on the Trump Administration “to implement an all-of-government approach to forcefully express opposition to the ... attack ... at every opportunity.” In response to the incident, according to the White House, President Trump canceled a meeting with President Putin at the recent G-20 summit in Buenos Aires. Observers debate what additional steps, if any, the United States and/or the EU should take in response. Some have called for imposing additional sanctions on Russia. Ukrainian officials and some observers have called on the United States and NATO to increase their maritime presence in the Black Sea and Sea of Azov (although only smaller warships would be physically able to pass through the strait, assuming Russia did not block their passage). A NATO spokesperson noted that NATO already has increased its presence in the Black Sea and “will continue to assess our presence in the region.” Wider Political Context in Russia and Ukraine The incident’s timing coincides with a recent increase in tensions between Russia and Ukraine due to a new willingness by the Ecumenical Patriarchate of Constantinople to grant the Ukrainian Orthodox Church formal independence (i.e., autocephaly) from the Russian Orthodox Church. Some observers believe such a development could reduce Russian influence in Ukraine. Russia strongly opposes such a move. Domestic political considerations in Russia and Ukraine also may have played a role. In recent months, Russian public support for Putin has visibly declined, with approval ratings as low as 66% (down from over 80% in the last four years); some observers interpret Russia’s action as an attempt to boost Putin’s popularity. For his part, Ukrainian President Petro Poroshenko faces stiff competition in Ukraine’s upcoming presidential election, scheduled for March 31, 2019. Some believe Poroshenko will use the incident—and potentially his strengthened authority under martial law—to his political advantage.

Dec 3, 2018

U.S. Trade Trends and Developments

Summary The United States is the world’s biggest economy (in nominal dollars), leading trading nation (goods and services), and largest source of and destination for foreign direct investment. The U.S. output of goods and services, or gross domestic product (GDP), totaled $19.5 trillion in 2017. That is almost the combined GDP in nominal dollars of the next three largest economies. All told, the United States, with close to 5% of the world’s population, accounted for almost 25% of the world’s output and more than 16% of its growth in 2017. While the United States is the world’s largest exporter (goods and services combined), U.S. exports are overshadowed by the large U.S. demand for imported products. However, the level of both U.S. exports and imports of goods and services depends on many interrelated domestic and international macroeconomic factors, including the value of the U.S. dollar relative to other currencies, global demand for other dollar-denominated assets—including U.S. Treasury securities, and the relative strength of the U.S. and world economies. While the United States is still by far the dominant economy in the world, its relative position has shifted in the past two decades. The changing dynamics and composition of U.S. trade have been important to Congress because they can affect the overall health of the U.S. economy and specific industries, the success of U.S. businesses and workers, and the U.S. standard of living. They also have implications for U.S. geopolitical interests. Conversely, geopolitical tensions, risks, and opportunities can have major impacts on U.S. trade flows. These issues are complex and at times controversial, and developments in the global economy often make policymaking more challenging, as it involves balancing many competing interests. Congress is in a unique position to address these and other issues, particularly given its constitutional authority for legislating and overseeing international trade and financial policy. Key Trade and Economic Developments in 2017 World Economic Developments. World economic growth rose from 3.3% in 2016 to 3.7% in 2017. Advanced economies grew 2.3%, while emerging market and developing economies grew 4.7%—partly due to the moderate slowdown in China’s GDP growth over the past few years (from 10.6% in 2010 to 6.7% in 2017). In 2017, the United States accounted for 24.5% of global GDP (down from 30.6% in 2000), China for 14.7% (up from 3.6% in 2000), Japan for 6.5% (down from 14.6% in 2000), and Germany for 4.6% (down from 5.8% in 2000). In addition, world merchandise trade recorded its largest increase since 2011. In nominal terms, world merchandise exports expanded 10.6% in 2017, after two years of declines, reaching $17.5 trillion. World merchandise imports also grew considerably in 2017, up 11.3%, after declining 3.2% in 2016. In addition, world exports and imports of services increased in value considerably in 2017, up 7.7% and 6.9%, respectively. U.S. Goods Trade. U.S. merchandise exports totaled $1.6 trillion in 2017, a 6.6% increase from the 2016 level. The value of U.S. merchandise imports was $2.4 trillion over the same period, up 6.9% from the 2016 level. U.S. imports increased more than U.S. exports, leading to a $56.4 billion (7.5%) increase in the U.S. merchandise trade deficit, which reached $807.5 billion in 2017. In 2017, the European Union (EU) was the United States’ top trading partner in terms of two-way (exports plus imports) merchandise trade (accounting for 22.5% of total U.S. merchandise trade), while China was the largest single-country trading partner (accounting for 16.3% of total U.S. merchandise trade). U.S. Services Trade. U.S. two-way (exports and imports) trade in services grew 5.6% between 2016 and 2017. During that period, U.S. exports of services increased 5.1%, from $758.9 billion to $797.7 billion, while U.S. services imports grew 6.4%, from $509.8 billion to $542.5 billion. The United States maintained a services trade surplus with every major services trading partner except Hong Kong, India, and France in 2017. The overall services trade surplus increased 2.5% ($6.1 billion) to $255.2 billion. The EU was the United States’ top trading partner in terms of two-way (exports plus imports) services trade in 2017, while the largest single-country trading partners were the United Kingdom, Canada, Japan, China, and Germany. U.S. Total Trade. In 2017, U.S. exports of goods and services totaled $2.4 trillion, while U.S. imports totaled $2.9 trillion, resulting in a deficit of $552.3 billion, up slightly from 2016, but down from the all-time high level registered in 2006 ($761.7 billion). Issues for Congress International trade is one of several important drivers of economic growth. A number of questions regarding recent and future trends in U.S exports and imports could arise as the Trump Administration renegotiates U.S. free trade agreements (FTAs) and pursues news ones, and takes a more forceful stance to reduce U.S. bilateral trade deficits, enforce U.S. trade laws and agreements, and promote what it considers to be “free,” “fair,” and “reciprocal” trade. One question pertains to the impact of renegotiating or pursuing new FTAs on the U.S. economy. As with any trade liberalizing measure, an FTA can have net positive overall effects on some sectors and adverse effects on others. An FTA may create export and import opportunities in one sector of the U.S. economy but divert trade away from others. Members of Congress weigh these effects on various industries and on their constituencies, while also considering the overall impact on the United States and other trading partners. Because trade relations can differ significantly from one trade partner to another, the evaluation will likely differ in each case. Furthermore, Members may take into account not only the immediate static effects of greater global economic integration efforts, but also the long-term, dynamic effects, which could play an important role in evaluating their contribution to the U.S. economy. Finally, other issues for Congress raised by the changing patterns in U.S. trade and the global landscape could include contemplating the future direction of the global trading system, as well as assessing the quality and availability of data on trade and what, if any, additional resources should be devoted to collecting trade data and analyzing the role of trade in the U.S. economy.

Dec 3, 2018

Defense Primer: Planning, Programming, Budgeting, and Execution (PPBE) Process

Nov 30, 2018

Schemes and False Statements: Supreme Court to Consider Scope of Anti-Fraud Liability Under Securities Laws

Nov 30, 2018

World Trade Organization: Overview and Future Direction

Historically, the United States’ leadership of the global trading system has ensured the United States a seat at the table to shape the international trade agenda in ways that both advance and defend U.S. interests. The evolution of U.S. leadership and the global trade agenda remain of interest to Congress, which holds constitutional authority over foreign commerce and establishes trade negotiating objectives and principles through legislation. Congress has recognized the World Trade Organization (WTO) as the “foundation of the global trading system” within trade promotion authority (TPA) and plays a direct legislative and oversight role over WTO agreements. The statutory basis for U.S. WTO membership is the Uruguay Round Agreements Act (P.L. 103-465), and U.S. priorities and objectives for the General Agreement on Tariffs and Trade (GATT)/WTO have been reflected in various TPA legislation since 1974. Congress also has oversight of the U.S. Trade Representative and other agencies that participate in WTO meetings and enforce WTO commitments. The WTO is a 164-member international organization that was created to oversee and administer multilateral trade rules, serve as a forum for trade liberalization negotiations, and resolve trade disputes. The United States was a major force behind the establishment of the WTO in 1995, and the rules and agreements resulting from multilateral trade negotiations. The WTO encompassed and succeeded the GATT, established in 1947 among the United States and 22 other countries. Through the GATT and WTO, the United States, with other countries, sought to establish a more open, rules-based trading system in the postwar era, with the goal of fostering international economic cooperation and raising economic prosperity worldwide. Today, 98% of global trade is among WTO members. The WTO is a consensus and member-driven organization. Its core principles include nondiscrimination (most favored nation treatment and national treatment), freer trade, fair competition, transparency, and encouraging development. These are enshrined in a series of WTO trade agreements covering goods, agriculture, services, intellectual property rights, and trade facilitation, among other issues. Some countries, including China, have been motivated to join the WTO not just to expand access to foreign markets but to spur domestic economic reforms, help transition to market economies, and promote the rule of law. The WTO Dispute Settlement Understanding (DSU) provides an enforceable means for members to resolve disputes over WTO commitments and obligations. The WTO has processed more than 500 disputes, and the United States has been an active user of the dispute settlement system. Supporters of the multilateral trading system consider the dispute settlement mechanism an important success of the system. At the same time, some members, including the United States, contend it has procedural shortcomings and has exceeded its mandate in deciding cases. Many observers are concerned that the effectiveness of the WTO has diminished since the collapse of the Doha Round of multilateral trade negotiations, which began in 2001, and believe the WTO needs to adopt reforms to continue its role as the foundation of the global trading system. To date, WTO members have been unable to reach consensus for a new comprehensive multilateral agreement on trade liberalization and rules. While global supply chains and technology have transformed international trade and investment, global trade rules have not kept up with the pace of change. Many countries have turned to negotiating free trade agreements (FTAs) outside the WTO as well as plurilateral agreements involving subsets of WTO members rather than all members. At the latest WTO Ministerial conference in December 2017, no major deliverables were announced. Several members committed to make progress on ongoing talks, such as fisheries subsidies and e-commerce, while other areas remain stalled. While many were disappointed by the limited progress, in the U.S. view, the outcome signaled that “the impasse at the WTO was broken,” paving the way for groups of like-minded countries to pursue new work in other key areas. Certain WTO members have begun to explore aspects of reform and future negotiations. Potential reforms concern the administration of the organization, its procedures and practices, and attempts to address the inability of WTO members to conclude new agreements. Proposed DS reforms also attempt to improve the working of the dispute settlement system, particularly the Appellate Body—the seven-member body that reviews appeals by WTO members of a panel’s findings in a dispute case. Some U.S. frustrations with the WTO are not new and many are shared by other trading partners, such as the European Union. At the same time, the Administration’s overall approach has spurred new questions regarding the future of U.S. leadership and U.S. priorities for improving the multilateral trading system. Concerns have emphasized that the Administration’s recent actions to unilaterally raise tariffs under U.S. trade laws and to possibly impede the functioning of the dispute settlement system might undermine the credibility of the WTO system. A growing question of some observers is whether the WTO would flounder for lack of U.S. leadership, or whether other WTO members like the EU and China taking on larger roles would continue to make it a meaningful actor in the global trade environment. The growing debate over the role and future direction of the WTO may be of interest to Congress. Important issues it may address include how current and future WTO agreements affect the U.S. economy, the value of U.S. membership and leadership in the WTO, whether new U.S. negotiating objectives or oversight hearings are needed to address prospects for new WTO reforms and rulemaking, and the relevant authorities and impact of potential U.S. withdrawal from the WTO on U.S. economic and foreign policy interests.

Nov 29, 2018

Budgetary Decisionmaking in Congress

Nov 29, 2018

Commercial Space: Federal Regulation, Oversight, and Utilization

U.S. companies have always been involved in spaceflight as contractors to government agencies. Increasingly, though, space is becoming commercial. A majority of U.S. satellites are now commercially owned, providing commercial services, and launched by commercial launch providers. Congressional and public interest in space is also becoming more focused on commercial activities, such as companies developing reusable rockets or collecting business data with fleets of small Earth-imaging satellites. This report addresses two distinct but closely related topics: how the federal government regulates, oversees, and promotes the commercial space sector; and how the federal government itself uses (or might in the future use) commercial space capabilities. Multiple federal agencies regulate the commercial space industry, based on statutory authorities that were enacted separately and have evolved over time. The Federal Aviation Administration (FAA) licenses commercial launch and reentry vehicles (i.e., rockets and spaceplanes) as well as commercial spaceports. The National Oceanic and Atmospheric Administration (NOAA) licenses commercial Earth remote sensing satellites. The Federal Communications Commission (FCC) licenses commercial satellite communications. The Departments of Commerce and State license exports of space technology. In response to industry concerns about the complexity of this regulatory framework, the Administration and Congress have made several reform proposals, including Space Policy Directive–2, Streamlining Regulations on Commercial Use of Space; the American Space Commerce Free Enterprise Act (H.R. 2809); and the Space Frontier Act of 2018 (S. 3277). How the federal government makes use of commercial space capabilities is also evolving. The National Aeronautics and Space Administration (NASA) used to own and operate the space shuttles that contractors built for it, but since 2012 it has contracted with commercial service providers to deliver cargo to the International Space Station using their own spacecraft. The Department of Defense (DOD) has its own satellite communications capabilities, but it also procures communications bandwidth from commercial satellite companies. Agencies are considering a host of new opportunities, including acquisition of weather data from commercial satellites, acquisition of science data from commercial lunar landers, and expanded commercial utilization of the International Space Station. As Congress considers these topics, some of the questions that may arise include: Should the federal regulatory framework for commercial space activities be consolidated? Reorganization proposals include transferring the FAA’s licensing responsibilities to the Office of the Secretary of Transportation, consolidating NOAA’s licensing responsibilities and other Department of Commerce functions in the Office of the Secretary of Commerce, and creating a new civil authority for space situational awareness in either the FAA or the Department of Commerce. How can the commercial space licensing process be made simpler, more timely, and more transparent? One focus of this discussion has been the process for interagency consultation on license applications for commercial remote sensing satellites. The challenge for that process is balancing industry’s need for timeliness and transparency with the government’s need to meet national security and foreign policy objectives. How should federal regulatory policies be adjusted as the commercial space industry develops new capabilities and applications? For example, there is currently no clear mechanism for new space applications, not already subject to FAA, NOAA, or FCC regulation, to be authorized and supervised as mandated by the Outer Space Treaty. Current law restricts the FAA’s authority to regulate the safety of commercial spacecraft with human occupants. What government space activities can or should be conducted by commercial entities? How can government and industry best work together? As the commercial space industry’s capabilities expand, there may be new opportunities for agencies to execute programs via commercial contracts, but stakeholders may not always agree on which programs are suitable for a commercial approach.

Nov 29, 2018

U.S. Sanctions on Russia

Sanctions are considered by many to be a central element of U.S. policy to counter Russian malign behavior. Most Russia-related sanctions have been in response to Russia’s 2014 invasion of Ukraine. In addition, the United States has imposed sanctions on Russia in response to human rights abuses, election interference and cyberattacks, weapons proliferation, illicit trade with North Korea, support to Syria, and use of a chemical weapon. The United States also employs sanctions to deter further objectionable activities. Most Members of Congress support a robust use of sanctions amid concerns about Russia’s international behavior and geostrategic intentions. Ukraine-related sanctions are mainly based on four executive orders (EOs) the President introduced in 2014. In addition, Congress passed and the President signed into law two acts establishing sanctions in response to Russia’s invasion of Ukraine: the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (SSIDES; P.L. 113-95) and the Ukraine Freedom Support Act of 2014 (UFSA; P.L. 113-272). In 2017, Congress passed and the President signed into law the Countering Russian Influence in Europe and Eurasia Act of 2017 (CRIEEA; P.L. 115-44, Countering America’s Adversaries Through Sanctions Act [CAATSA], Title II). This legislation codifies Ukraine-related and cyber-related EOs, strengthens existing Russia-related sanctions authorities, and identifies several new targets for sanctions. It also establishes congressional review of any action the President takes to ease or lift a variety of sanctions. Additional sanctions on Russia may be forthcoming. On August 6, 2018, the United States determined that in March 2018 the Russian government used a chemical weapon in the United Kingdom in contravention of international law. In response, the United States launched an initial round of sanctions on Russia, as required by the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act; P.L. 102-182, Title III). The law requires a second, more severe round of sanctions in the absence of Russia’s reliable commitment to no longer use such weapons. The United States has imposed most Ukraine-related sanctions on Russia in coordination with the European Union (EU). Since 2017, the efforts of Congress and the Trump Administration to tighten U.S. sanctions on Russia have prompted some degree of concern in the EU about U.S. commitment to sanctions coordination and U.S.-EU cooperation on Russia and Ukraine more broadly. The EU, in addition, continues to consider its response to Russia’s use of a chemical weapon in the United Kingdom. Debates about the effectiveness of U.S. and other sanctions on Russia continue in Congress, in the Administration, and among other stakeholders. Russia has not reversed its occupation and annexation of Ukraine’s Crimea region, nor has it stopped fostering separatism in eastern Ukraine. With respect to other malign activities, the relationship between sanctions and Russian behavior is difficult to determine. Nonetheless, many observers argue that sanctions help to restrain Russia or that their imposition is an appropriate foreign policy response regardless of immediate effect. In the 115th Congress, several bills have been introduced to increase the use of sanctions in response to Russia’s malign activities. The 116th Congress is likely to continue to debate the role of sanctions in U.S. foreign policy toward Russia.

Nov 28, 2018

Defense Primer: The Military Departments

Nov 28, 2018

U.S. Tariff Policy: Overview

Nov 28, 2018

Federal Pell Grant Program of the Higher Education Act: Primer

The federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting postsecondary education students. Pell Grants, and their predecessor, Basic Education Opportunity Grants, have been awarded since 1973. The program provided approximately $29 billion in aid to approximately 7.2 million undergraduate students in FY2017. Pell Grants are need-based aid that is intended to be the foundation for all need-based federal student aid awarded to undergraduates. To be eligible for a Pell Grant, an undergraduate student must meet several requirements. One key requirement is that the student and his or her family demonstrate financial need. Financial need is determined through the calculation of an expected family contribution (EFC), which is based on applicable family financial information provided on the Free Application for Federal Student Aid (FAFSA). Although there is no absolute income threshold that determines who is eligible or ineligible for Pell Grants, an estimated 95% of Pell Grant recipients had a total family income at or below $60,000 in academic year 2015-2016. Other requirements include, but are not limited to, the student not having earned a bachelor’s degree and being enrolled in an eligible program at an HEA Title IV-participating institution of higher education for the purpose of earning a certificate or degree. The maximum annual award a student may receive during an academic year is calculated in accordance with the Pell Grant award rules. The student’s scheduled award is the least of (1) the total maximum Pell Grant minus the student’s EFC, or (2) Cost of Attendance (COA) minus EFC. For a student who enrolls on a less-than-full-time basis, the student’s maximum annual award is the scheduled award ratably reduced. For FY2019 (academic year 2019-2020), the total maximum Pell Grant is $6,195. The COA is a measure of a student’s educational expenses for the academic year. Qualified students who exhaust their scheduled award and remain enrolled beyond the academic year (e.g., enroll in a summer semester) during an award year receive a year-round or summer Pell Grant. With year-round Pell Grants, qualified students may receive up to 1½ scheduled grants in each award year. Finally, a student may receive the value of no more than 12 full-time semesters (or the equivalent) of Pell Grant awards over a lifetime. The program is funded primarily through annual discretionary appropriations, although in recent years mandatory appropriations have played an increasing role in the program. The total maximum Pell Grant is the sum of two components: the discretionary maximum award and the mandatory add-on award. The discretionary maximum award amount is funded by discretionary appropriations enacted in annual appropriations acts, and augmented by permanent and definite mandatory appropriations provided for in the HEA. For FY2019, the discretionary appropriation is $22.475 billion and the augmenting mandatory funds total $1.370 billion. The mandatory add-on award amount is funded entirely by a permanent and indefinite mandatory appropriation of such sums as necessary, as authorized in the HEA. The mandatory add-on is estimated to require $6.077 billion in FY2019. Funding provided for the Pell Grant program is exempt from sequestration. The Pell Grant program is often referred to as a quasi-entitlement because for the most part eligible students receive the Pell Grant award level calculated for them without regard to available appropriations. In a given year, the discretionary appropriation level may be smaller or larger than the actual cost to fund the discretionary maximum award, despite the augmenting mandatory appropriation. When the discretionary appropriation is too small, the program carries a shortfall into the subsequent fiscal year. When the discretionary appropriation is too large, the program carries a surplus into the following fiscal year. Since FY2012, the program has maintained a surplus. The surplus has variably been used to increase Pell Grant awards, expand eligibility, and either fund other programs or reduce the national deficit.

Nov 28, 2018

Brexit at a Pivotal Moment

UK Parliament to Vote on Withdrawal Agreement Four months away from the United Kingdom’s (UK’s) expected withdrawal from the European Union (EU), discord and uncertainty remain central themes in the analysis of “Brexit.” The efforts of UK and EU negotiators to reconcile a complex set of competing interests and preferences have produced a 585-page draft withdrawal agreement and a 26-page political declaration on the future UK-EU relationship. EU leaders signed off on the deal in late November 2018, leaving a vote by the European Parliament as the final step for approval by the EU before the March 29, 2019, withdrawal date. In the UK, however, pronounced divisions remain about how Brexit should look. The withdrawal agreement faces a crucial test when the UK Parliament votes on whether to approve it, a vote expected to occur on December 11, 2018. A Tough Sell Securing passage in the UK’s Parliament is expected to be challenging for UK Prime Minister Theresa May. The draft agreement contains elements strongly disliked by each of the main British political factions. A transition period and the so-called Northern Ireland backstop are particular points of contention. During a proposed transition period lasting through 2020, which might be extended through 2022, the UK would be bound to follow all rules governing the EU single market while the two sides negotiate their future relationship. The backstop provision would keep the UK in the EU customs union beyond the transition period unless and until the two sides agree on alternate arrangements. The backstop was made necessary by the lack of an apparent solution to the Irish border question, with both sides intent on avoiding a “hard border” (with customs checks and physical border infrastructure) between Northern Ireland and the Republic of Ireland to preserve the peace process and extensive cross-border economic relations. Supporters of a “hard Brexit” fear the transition period and backstop could lead to the UK ending up a “vassal state” of the EU, bound indefinitely to EU rules in a wide range of areas (both sides would have to jointly agree to end the backstop). The UK would gain sovereign control over immigration policy but, as a member of the EU customs union, would be unable to conduct an independent national trade policy and conclude its own trade agreements, negating one of the main arguments made in favor of Brexit. It also would have to accept EU economic regulations and rules in areas such as the environment and labor market. Skeptics of Brexit also criticize the deal as not only relegating the UK to a “rule taker” without a say in EU decisionmaking but also failing to provide certainty about future trading conditions. Advocates of “soft Brexit,” including much of the UK business community, maintain that permanent membership in the EU single market would be the least damaging outcome in economic terms and that an assurance of permanent customs union membership would mitigate Brexit-related uncertainties. Some in Parliament may vote against the deal in the hopes that its defeat would lead to an early general election or a second referendum on EU membership. Meanwhile, Northern Ireland’s Democratic Unionist Party (DUP), whose backing is critical to Prime Minister May’s Conservative Party in Parliament, maintains strong objections to a provision in the backstop that would preserve deeper regulatory alignment between Northern Ireland and the EU to avoid a hard border. The DUP and others argue that treating Northern Ireland differently from the rest of the UK is unacceptable and threatens the UK’s constitutional integrity. Prime Minister May maintains that the backstop will never come into effect because subsequent negotiations on the future relationship with the EU will make it unnecessary. The declaration on the future relationship with the EU outlines ambitions for deep cooperation and a UK-EU free trade area alongside the development of an independent UK trade policy. Many critics are not reassured by the text, however, viewing it as vague and noncommittal. The document envisions that a variety of “facilitative arrangements and technologies” could be used to overcome the impasse over customs checks at the Irish border. This Deal or No Deal? With potential opposition to the deal from a significant minority of Conservative Party members of Parliament (MPs), the DUP, and most of the Labour Party and other opposition parties, the initial arithmetic for passing the withdrawal agreement in Parliament appears unfavorable. If Parliament rejects the deal, a range of possible scenarios come into play, including Brexit without a negotiated withdrawal agreement (“no-deal Brexit”), a new attempt to negotiate a better deal, a leadership challenge to May and/or an early general election in the UK, and a second referendum. Several of these scenarios would suggest a need to extend the two-year window for the withdrawal process. The threat of a no-deal Brexit may convince some MPs to vote in favor of the package despite their misgivings. Hard-line supporters of Brexit assert that a no-deal scenario could be managed through side deals on critical issues such as citizens’ rights and civil aviation. Many others, however, view a no-deal Brexit and a disorderly exit from the EU as a recipe for deep legal uncertainty and potentially severe economic disruption, and they urge Parliament to avoid such a scenario. Issues for Congress Given that both the UK and the EU are important U.S. partners on a range of global political and economic issues, many Members of Congress have a broad interest in Brexit. Administration officials and some Members have expressed support for a prospective U.S.-UK free trade agreement and may wish to consider how the outcome of the withdrawal negotiations affects the prospects for such an agreement. Brexit-related developments also have implications for transatlantic cooperation on foreign policy and security issues, including sanctions, counterterrorism, and defense cooperation. In addition, Members of Congress may have an interest in how Brexit might affect the peace process in Northern Ireland.

Nov 28, 2018

Which Punishment Fits Which Crime?: Supreme Court to Consider Whether Portion of Supervised Release Statute is Unconstitutional

Nov 27, 2018

FY2018 and FY2019 Agriculture Appropriations: Federal Food Safety Activities

The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—funds the Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA), excluding the U.S. Forest Service. Congress enacted the FY2018 agriculture appropriation in March 2018 as part of the Consolidated Appropriations Act, 2018 (P.L. 115-141, Division A). Both the House and the Senate Appropriations Committees have reported Agriculture appropriations bills for FY2019 (H.R. 5961, S. 2976). The Senate amended and passed its version as Division C of a four-bill minibus (H.R. 6147). Numerous federal, state, and local agencies share responsibilities for regulating the safety of the U.S. food supply. Federal responsibility for food safety rests primarily with FDA, an agency of the Department of Health and Human Services, and also the Food Safety and Inspection Service (FSIS), an agency of USDA. FDA is responsible for ensuring the safety of the majority of all domestic and imported food products—except for meat and poultry products, which are within USDA’s jurisdiction to oversee meat, poultry, and processed egg products. Appropriations for Federal Food Safety Activities, FY2009-FY2018 / Combined appropriations covering food safety activities at both FDA and USDA totaled nearly $2.1 billion in FY2018. Congressional appropriations at both FDA and USDA are augmented by existing (currently authorized) user fees. FDA user fees authorized by the FDA Food Safety Modernization Act (FSMA, P.L. 111-353) have generated between $10 million and $18 million annually in recent years. At FSIS, user fees have generated between $180 million and $250 million per year. At FDA, ongoing efforts to improve food safety include implementation of FSMA. FSMA was enacted by the 111th Congress and was the largest expansion of FDA's food safety authorities since the 1930s. Since FSMA became law in 2011, congressional appropriators have increased annual funding for the FDA Foods Program by $204.3 million—an increase of about 24% between FY2011 and FY2018—largely in an effort to support FDA’s implementation of FSMA. The enacted FY2018 appropriation for FDA’s Foods Program provided $1,041.6 million. Currently, FDA funding for its food safety oversight activities is roughly similar to those of FSIS (Figure 1). FDA's total budget for food safety programs and activities extends beyond the agency's Foods Program, encompassing other food and veterinary medicine programs at FDA. Food-safety-related activities at FSIS include continuous inspections at federal meat and poultry plants. The enacted FY2018 appropriation provided $1,056.8 million to carry out this function. Compared to FY2011—the year FSMA was enacted—annual congressional appropriations for FSIS have increased by $48.3 million (+5%). For FY2019, congressional appropriators would increase funding for federal food safety activities, whereas the Administration’s budget proposal would reduce food safety funding below FY2018 levels at both FDA and FSIS.

Nov 27, 2018

Immigration Laws Regulating the Admission and Exclusion of Aliens at the Border

Nov 27, 2018

Revisiting the Doubling Effort: Trends in Federal Funding for Basic Research in the Physical Sciences and Engineering

The adequacy of federal investment in physical sciences and engineering (PS&E) basic research is a long-standing concern of many in industry and academia. This topic received much attention in the early 2000s due to perceived underinvestment in these disciplines. Many Members of Congress, industry leaders, and science and technology policy analysts asserted that the long-term competitive position and national security of the United States depended in large measure on the rapid increases in federal funding for PS&E. PS&E research provides the foundation for materials, products, and manufacturing technologies spanning a wide range of industries, including automotive, chemicals, semiconductors, electronics, telecommunications, aerospace, defense, and pharmaceuticals. Stakeholder interest in increasing federal PSE funding was further fueled by the doubling of funding for life sciences research at the National Institutes of Health (NIH) from FY1998 to FY2003. Although the NIH doubling had broad support, some subsequently expressed concerns that it had created an imbalance in the federal research portfolio that undervalued PS&E research and might reduce the number of students choosing to pursue PS&E graduate degrees. Momentum toward a doubling effort for PS&E research was catalyzed by a 2005 National Academies report, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future (RAGS). The report, requested by several Members of Congress, recommended doubling federal basic research funding over seven years, emphasizing fields such as the physical sciences and engineering. In 2006, President George W. Bush launched the American Competitiveness Initiative (ACI), which sought to increase federal funding for PS&E research by doubling funding over 10 years for targeted accounts at the National Science Foundation (NSF), the Department of Energy (DOE), and Department of Commerce (DOC). The targeted accounts included all NSF accounts, the DOE Office of Science, and the National Institute of Standards and Technology’s Scientific and Technical Research and Services (STRS) and Construction of Research Facilities (CRF) accounts with DOC. Since Congress provides appropriations for agencies and programs, not for particular fields of science and engineering, these PS&E-focused accounts served as surrogates for the effort. In 2007, Congress passed the America COMPETES Act (COMPETES 2007, P.L. 110-69), which authorized funding for the accounts identified in the ACI for FY2008-FY2010. In aggregate, the FY2010 authorized amounts represented a compound annual growth rate (CAGR) of 10.3% over the FY2006 level (a growth rate that would result in doubling in seven years if this growth rate were sustained). Actual appropriations were lower than the authorized levels, with actual FY2010 appropriations corresponding to a 6.4% CAGR over FY2006 (a doubling pace of 11 years). Concerns that gave rise to the America COMPETES Act had not subsided when the act’s authorizations of appropriations expired. Congress sought to address these ongoing concerns with enactment of the America COMPETES Reauthorization Act of 2010 (COMPETES 2010, P.L. 111-358). Congressional support for COMPETES 2010 lacked the wider bicameral consensus enjoyed by COMPETES 2007. While COMPETES 2010 passed the Senate by unanimous consent, the House vote on the final bill was 228-130, in large measure because of the bill’s proposed increases in authorized spending for FY2010-FY2013. Like COMPETES 2007, a pillar of COMPETES 2010 was increased funding for the targeted accounts. Authorizations for FY2013 represented a 6.5% CAGR over FY2006, a doubling pace of approximately 11 years. Actual FY2013 appropriations, however, were lower than the authorized level and even below the FY2010 appropriations level. Actual FY2013 appropriations represented a 3.1% CAGR from FY2006, a doubling pace of 22 years—more than triple the length of time originally envisioned in COMPETES 2007 and twice as long as the COMPETES 2010 doubling pace. Figure 1. Funding for Accounts Targeted for Doubling: Appropriations, Authorizations, and Requests (FY2006-FY2019) versus Selected Doubling Rates budget authority, current dollars / Source: Prepared by CRS based on data from agency budget justifications, annual appropriations acts, ARRA, COMPETES 2007, and COMPETES 2010. Note: ARRA = American Recovery and Reinvestment Act of 20019 (P.L. 111-5) Figure 1 shows authorizations, budget requests, and appropriations since FY2006 as a percentage of their FY2006 funding level and how they compare to different doubling rates. The thick black line at the top of the chart is at 200%, the doubling level. The data used in Figure 1 are in current dollars, and do not reflect the effect of inflation on the purchasing power of these funds. Figure 2 illustrates the progress made toward the underlying goal of increasing federal PS&E basic research funding. Total federal PS&E basic research grew at a 3.6% CAGR from FY2006 to FY2016, with engineering research growing at a 4.4% CAGR and physical sciences research growing at a 3.0% CAGR. Figure 2. Federal Funding for PS&E Basic Research, FY2006-FY2016 obligations, in millions of current dollars / Source: NSF, Survey of Federal Funds for Research and Development: Fiscal Years 2016–17. Notes: CAGR = compound annual growth rate Despite repeated efforts in Congress, the targeted accounts have not been reauthorized since the expiration of the COMPETES 2010 authorizations. From FY2013 to FY2018, funding grew at 4.3% CAGR. The compound annual growth rate between FY2006 and FY2018 is 3.6%, a nearly 20-year doubling pace—slower than envisioned in RAGS, the ACI, COMPETES 2007, and COMPETES 2010. While some policymakers have continued to advocate for a doubling approach or even faster increases for specific agencies (for example, see H.R. 1569 and S. 641), other advocates for increased funding for basic research have moved away from using the “doubling” framework as the appropriate goal for such increases, asserting instead that “sustained and predictable” federal funding is a better framework (for example, see H.R. 1806). Given current concerns about U.S. competitiveness, driven in part by China’s rapid increases in research and development funding, Congress may consider the effects of the doubling effort on total federal PS&E research funding trends, impediments to achieving the doubling target, the role of increased funding for basic research in advancing national competitiveness, the current competitive position of U.S. industries that depend on physical sciences and engineering research, and how commercial competitiveness concerns can best be addressed by the federal government.

Nov 27, 2018

Medicaid Alternative Benefit Plan Coverage: Frequently Asked Questions

Medicaid is a federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports, to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older. Medicaid is financed jointly by the federal government and the states. Federal Medicaid spending is an entitlement, with total expenditures dependent on state policy decisions and use of services by enrollees. State participation in Medicaid is voluntary, although all states, the District of Columbia, and the territories choose to participate. States are responsible for administering their Medicaid programs. States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute’s basic framework. This flexibility results in variability across state Medicaid programs. Most Medicaid beneficiaries receive services in the form of what is sometimes called traditional Medicaid. However, states also may furnish Medicaid in the form of alternative benefit plans (ABPs). ABPs were first introduced in the Deficit Reduction Act of 2005 (DRA 2005; P.L. 109-171 P.L. 109-171) and are referred to in the Social Security Act (SSA) as benchmark or benchmark-equivalent coverage. In general, under traditional Medicaid benefit coverage, state Medicaid programs must cover specific required services listed in statute (e.g., inpatient and outpatient hospital services, physician’s services, or laboratory and x-ray services) and may elect to cover certain optional services (e.g., prescription drugs, case management, or physical therapy services). Under ABPs, by contrast, states may furnish a benefit that is defined by reference to an overall coverage benchmark that is based on one of three commercial insurance products (e.g., the commercial health maintenance organization (HMO) with the largest insured commercial, non-Medicaid enrollment in the state) or a fourth, “Secretary-approved” coverage option rather than a list of discrete items and services. The 33 states and District of Columbia that have implemented the state option to expand Medicaid to low-income adults under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) are required to cover the ACA Medicaid expansion population using ABPs, and states also may elect to require other Medicaid populations to receive care through ABPs. States cannot require certain vulnerable populations to obtain benefits through ABPs. ABPs must qualify as either benchmark, where the benefits are at least equal to one the statutorily specified benchmark plans, or benchmark-equivalent benefits, which means the benefits include certain specified services and the overall benefits are at least actuarially equivalent to one of the statutorily specified benchmark coverage packages. In addition, ABPs must include a variety of specific services, including services under Medicaid’s early and periodic screening, diagnostic, and testing (EPSDT) benefit and family planning services and supplies. Unlike traditional Medicaid benefit coverage, coverage under an ABP must include at least the essential health benefits (EHB) that most plans in the private health insurance market are required to furnish. States choose whether to furnish ABPs through managed care or a fee-for-service delivery system. The Medicaid limitations on beneficiary premiums and cost sharing apply to services furnished through ABPs. To date, states have chiefly used ABPs as the benefit package for the ACA Medicaid expansion population. However, several states have elected to use ABPs to serve other Medicaid populations (e.g., working individuals with disabilities or children and adults who do not have special health care needs). States can have more than one ABP coverage option to serve different target populations operating concurrently with traditional Medicaid benefit coverage. States have largely used the ABP design flexibility to align their benefit coverage with the traditional Medicaid benefit coverage.

Nov 26, 2018

Hong Kong: Recent Developments and U.S. Relations

Nov 26, 2018

Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (UESCs)

Many in Congress have expressed a continuing interest in improving energy efficiency and increasing the use of renewable energy. To facilitate investment in energy efficiency and renewable energy at federal facilities, Congress established alternative financing methods that utilize private sector resources and capabilities. Two such alternative financing methods are energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs). ESPCs and UESCs are contracts between a federal agency and another party—an energy service company or a utility, depending upon the contract type. In general, a federal agency agrees to pay an amount not to exceed the current annual utility costs for a fixed period of time to the company or utility, which finances and installs the energy-efficiency and renewable energy projects. The costs are repaid by the agency over the length of the contract. After the end of the contract, the agency benefits from any reduced energy costs as a result of the improvements. The Department of Energy’s Federal Energy Management Program (FEMP) is the lead organization responsible for providing implementing rules and policies for ESPCs. FEMP also provides training, guidance, and technical assistance to aid federal agencies in achieving energy and water goals. Federal agencies are required to document progress toward energy-saving goals through annual reporting to the President and Congress. FEMP compiles agency data annually. Between FY2005 and FY2017, investment in federal facility energy efficiency improvements totaled nearly $21.7 billion (in constant 2017 dollars): direct obligations funded $14.5 billion, ESPCs funded $5.7 billion, and UESCs funded $1.5 billion. A lack of consistency in reporting across agencies for projects makes it challenging to document the cost savings achieved solely from ESPCs or UESCs. The available data may provide insight into broad trends in federal energy and water consumption. Over available reporting time periods, total site-delivered energy use has declined, renewable electricity use has increased as a percentage of total electricity consumption, and water use has declined. The Government Accountability Office (GAO) has examined alternative financing for federal energy projects, including ESPCs and UESCs. In a 2016 study, GAO reported that the Department of Defense had identified challenges in using ESPCs and UESCs for renewable energy projects, as such financing mechanisms may not realize the federal tax benefits under requirements set by the Office of Management and Budget (OMB). Prior to 2012, the Army had structured ESPCs to allow private developers to capture federal incentives by owning renewable energy projects. The Army stopped doing so after a 2012 OMB memorandum required government ownership of such renewable energy projects to avoid obligating the full cost of the project when the contract is signed. A 2017 study by GAO examined energy projects for DOD more broadly and found that the majority of these were financed using ESPCs or UESCs. Congressional Budget Office (CBO) scoring policies for ESPCs and UESCs have changed over time. The 2018 House Budget Resolution (H.Con.Res. 71) directed CBO to score ESPCs and UESCs on a net present value basis with payments covering the period of the contract. The estimated net present value of the budget authority and any outlays would be classified as direct spending; it would not change the fact that federal agencies would continue to cover contractual payments through annual, discretionary appropriations. H.Con.Res. 71 also prohibited any savings estimated by CBO to be considered as an offset for purposes of budget enforcement. This prohibition applies to budget enforcement in the House of Representatives; CBO considers estimated savings to offset budget enforcement differently for the House of Representatives and the Senate. Congress has revised the policies enabling ESPCs and UESCs over time, and Congress may address additional changes going forward. Issues for possible consideration include reporting requirements, definitions of terminology including federal building and energy savings, and whether to expand the applicability of ESPCs and UESCs.

Nov 23, 2018

Global Human Rights: Multilateral Bodies & U.S. Participation

Nov 23, 2018

Medicaid Primer

Nov 21, 2018

Election Policy on the November 2018 Ballot

On November 6, voters in some states did not just vote on the policymakers who will represent them. They also made policy themselves, by approving or rejecting ballot measures. Some of the measures on state ballots included provisions that would affect the conduct of federal elections. Most of those measures succeeded. Thirteen state measures with implications for federal elections were on the ballot in 10 states, and 12 were approved. What Are Ballot Measures? Ballot measures are policy questions that are decided by popular vote. Local measures are voted on by residents of a locality, such as a city or county, and can make changes only for that locality. State measures, like the ones discussed in this Insight, get a statewide vote and can change policy for the whole state. The types of measures available vary by state and in two main ways: how they reach the ballot; and their effects if approved. State measures may be referred to the ballot by the state legislature or, less commonly, a state commission or constitutional convention. In some states, they can also be initiated by citizens. Direct citizen initiatives and popular referendums go directly to the ballot if they get enough signatures. Indirect initiatives are submitted to the state legislature for possible adoption first. They typically go to the ballot if the legislature does not adopt them, although additional signature-gathering may be required. Some state measures create new policies if approved, by adding or amending state statutes or amending the state constitution. Others affect existing laws. They can be used to repeal or, in some cases, affirm previously enacted legislation. What Was on the Ballot? This chart provides an overview of the state measures related to federal elections that were on the ballot on November 6. Table 1. Election Policy on State Ballots in November 2018 State Title Summary of Relevant Provisions Type Results (%) Arkansas Issue 2 Requires voters to present photo ID Legislatively referred constitutional amendment 79-21 Colorado Amendment Y Establishes an independent redistricting commission Legislatively referred constitutional amendment 71-29a Florida Amendment 4 Requires restoration of voting rights to voters convicted of most felonies on completion of sentence Direct citizen-initiated constitutional amendment 65-35a Florida Amendment 10 Requires county election supervisors to be elected Commission-referred constitutional amendmentb 63-37a Maryland Question 2 Authorizes the state legislature to enact Election Day registration Legislatively referred constitutional amendment 68-32 Michigan Proposal 2 Establishes an independent redistricting commission Direct citizen-initiated constitutional amendment 61-39 Michigan Proposal 3 Authorizes automatic and same-day registration and straight-ticket and no-excuse absentee voting and enshrines certain existing election policies in the state constitution Direct citizen-initiated constitutional amendment 67-33 Montana LR-129 Prohibits most third-party ballot collection Legislatively referred statutec 63-37 Nevada Question 5 Establishes automatic registration at motor vehicle agencies Indirect citizen-initiated statute 60-40 North Carolina Elections Board Amendment Would have eliminated the nonpartisan seat on the state election board and authorized state legislative leadership to nominate board members Legislatively referred constitutional amendment 38-62 North Carolina Voter ID Amendment Requires voters to present photo ID to vote in person Legislatively referred constitutional amendment 55-45 North Dakota Measure 2 Clarifies that only U.S. citizens may vote Direct citizen-initiated constitutional amendment 66-34 Utah Proposition 4 Establishes an independent redistricting commission Direct citizen-initiated statute 50-50 Source: CRS, based on analysis of data from Ballotpedia, the National Conference of State Legislatures, and state election offices. Notes: This chart does not include campaign finance measures, election-related measures that do not apply to federal elections, or provisions of the listed measures that are unrelated to elections. Some of the listed measures apply to nonfederal as well as federal elections. Results are as of November 20, 2018. Bolded italics indicate that a measure was approved. Approval required 55% of the vote in Colorado and 60% in Florida. Florida has a Constitution Revision Commission that may refer constitutional amendments to the ballot. Statutes referred to the ballot by the Montana State Legislature and approved by voters cannot be vetoed. What Has Congress Proposed? Many of the election issues addressed by state ballot measures on November 6 have been the subject of legislation in the 115th Congress. Proposals include bills that would make the following changes for federal elections: establish a commission to report legislation to automatically register voters when they turn 18 or gain citizenship and to restore voting rights to voters with criminal convictions on release from incarceration (H.R. 893); restore voting rights to voters with criminal convictions except while incarcerated for a felony (H.R. 12, H.R. 5785, H.R. 6612, S. 1437, S. 1588); require states to either automatically register voters when they turn 18 or offer Election Day registration (S. 2106); provide for automatic registration at motor vehicle agencies and/or other agencies (H.R. 12, H.R. 2669, H.R. 2840, H.R. 2876, H.R. 3848, H.R. 5785, S. 1231, S. 1353, S. 1437, S. 1880); require states to offer same-day registration (H.R. 12, H.R. 1044, H.R. 3537, H.R. 3848, H.R. 5785, S. 360, S. 1437, S. 1880); prohibit states from requiring an excuse and/or setting other conditions for mail voting (H.R. 12, H.R. 946, H.R. 2669, H.R. 3132, H.R. 5785, S. 1231, S. 1437, S. 1510, S. 1880); require states to establish independent redistricting commissions (H.R. 145, H.R. 711, H.R. 712, H.R. 1102, H.R. 2981, H.R. 3057, H.R. 3537, H.R. 3848, S. 1880); prohibit officials from providing ballots to voters who do not present photo ID (H.R. 2090); amend the U.S. Constitution to prohibit unduly burdensome proof of identity or proof of citizenship requirements (H.J.Res. 28); prohibit officials from requiring voters to present photo ID to register or vote (H.R. 607); require states to accept specified submissions as voter ID (H.R. 2854, H.R. 5785, H.R. 7127, S. 3543); and prohibit states from registering voters who do not present proof of citizenship (H.R. 6723). As of this writing, none of the above bills had advanced beyond subcommittee referral.

Nov 21, 2018

Maternal, Infant, and Early Childhood Home Visiting Program

Nov 20, 2018

Global Human Rights: International Religious Freedom Policy

Nov 20, 2018

Activities-Based Regulation and Systemic Risk

Past financial crises have shown that systemic risk can emanate from financial firms or activities. It can be caused by the failure of a large firm (hence, the moniker “too big to fail”) or it can be caused by correlated losses among many small market participants. Although historical financial crises have centered on banks, nonbank financial firms were also a source of instability in the 2007-2009 crisis. The 2010 Dodd-Frank Act (P.L. 111-203) was enacted in response to the crisis. It enhanced the regulation of certain financial firms and activities to reduce systemic risk, particularly prudential regulation administered by the Federal Reserve (Fed) of banks and nonbanks. All large banks would automatically be subject to more stringent standards, as would nonbanks designated by the Financial Stability Oversight Council (FSOC), popularly known as systemically important financial institutions (SIFIs). This approach can be classified as an institution-based approach because it addresses risks to financial stability at the firm level. As discussed in this Insight, all four of the nonbanks that were designated by FSOC have since been de-designated, and the size threshold for enhanced regulation of banks was recently increased. The Treasury Department has argued that activities-based systemic risk regulation—regulating particular financial activities or practices to prevent them from causing financial instability—is preferable to institution-based regulation for nonbanks. The two approaches, however, need not be mutually exclusive. International insurance regulation has also moved away from a focus on institution-based regulation and toward activities-based regulation recently. Regulating Firms vs. Activities for Systemic Risk An institution-based approach addresses financial instability that stems primarily from the failure of large, interconnected firms. It particularly could address the experience during the 2007-2009 crisis, when large, complex firms, such as AIG, failed due to unanticipated correlated losses in different activities within a firm (credit default swaps and securities lending, in the case of AIG). An institution-based approach could also address the possibility of a firm failing due to more company-specific issues, such as inadequate internal controls, for example. Institution-based regulation allows for overall monitoring of firms’ risk-taking that activities-based regulation does not. (Dodd-Frank gave the Fed the authority to actively supervise SIFIs; all banks are subject to similar supervision, but some other types of financial firms are not.) For example, stress tests and living wills allow regulators to prepare for, respectively, how SIFIs would fare under stress and their orderly failure. Systemic risk might be more likely to build up undetected if regulators do not regularly examine large nonbanks because they are not subject to enhanced regulation. Institution-based regulation, however, also has drawbacks. It could create regulatory “cliffs” where two fairly similar firms do not compete on a “level playing field” because one is designated for enhanced regulation and the other is not. Such regulation could even backfire by pushing more “risky” activities into institutions that are not regulated for safety and soundness or systemic risk. Institution-based regulation, as put into place under Dodd-Frank, was also particularly criticized for the possibility of the Fed, a bank regulator, inappropriately applying bank-centric regulation to nonbanks. (Since the pertinent regulations were never finalized, the merits of this argument remain unknown.) An activities-based approach may be more effective at mitigating systemic risk unrelated to distress at large firms. In particular, systemic risk sometimes results from correlated activities among smaller firms, such as the U.S. savings and loan crisis in the 1980s, in which more than 1,000 smaller financial institutions failed. Some have argued that an activities-based approach is more appropriate in securities markets. For example, in the asset management industry, firms primarily managing customers’ assets may be less likely to fail themselves in a financial panic, but could serve as conduits for instability. One concern some have with activities-based regulation under the current structure is that regulators—particularly those who are not primarily prudential regulators—may not have the authority or capacity to identify and address systemic risk in all cases. In contrast to the Fed’s institution-based authority, FSOC itself does not have authority to promulgate new activities-based regulations as systemic threats emerge. Instead, Dodd-Frank relied on FSOC members’ existing authorities. In some cases, that authority is broad and discretionary; in others, it is not. Where individual agencies lack authority to address systemic risk posed by activities engaged in by the institutions they regulate, Congress would need to provide these agencies with the necessary authority to act. FSOC may make nonbinding recommendations to its member agencies to implement reforms, but cannot require the agency to implement the changes. FSOC has recommended activities-based systemic risk regulations only once—in 2012, when it recommended that the Securities and Exchange Commission (SEC) implement money market reforms, which were ultimately adopted in 2014. Activities-Based Regulation and Insurers Since three out of four of the de-designated SIFIs are insurers, insurance regulation is potentially the most significantly affected by a shift from institution-based to activities-based regulation. Although insurers, particularly AIG, were instrumental in the recent crisis, traditional insurance (e.g., life, property, and casualty insurance), as an activity, is typically not seen as posing systemic risk. Insurance liabilities are often contingent and based on the occurrence of events uncorrelated with financial markets, such as extreme weather events. For these forms of insurance, “runs,” such as those that occur on banks during a financial panic, are essentially impossible. Some insurance policies, however, do allow for loans against policy values or forms of withdrawals that could partially mimic bank runs. Some insurers also offer forms of financial guaranty insurance, the payouts of which could be highly correlated with the financial markets. Beyond simple insurance policies, insurance companies may also undertake other financial market activities, such as repurchase agreements or securities lending, that could pose systemic risk. If FSOC were to deem any insurance activities as systemically risky, arguably no federal regulator would have jurisdiction to regulate them. There is also debate about whether the state-based insurance regulatory system—with its historical focus on individual insurer solvency and consumer protection, rather than systemic risk—can adequately address potential risks posed by insurers’ noninsurance activities.

Nov 20, 2018

United States and Saudi Arabia Energy Relations

Nov 19, 2018

Reissued Labor Department Rule Tests Congressional Review Act Ban on Promulgating “Substantially the Same” Rules

On November 5, 2018, the Department of Labor published a proposed rule in the Federal Register on the states’ ability to drug test certain unemployment compensation (UC) applicants. The proposed UC drug testing rule is a reissued version of a rule that the 115th Congress disapproved in 2017 under the Congressional Review Act (CRA). That rule had been issued by the Obama Administration on August 1, 2016, but was disapproved by P.L. 115-17, which President Donald Trump signed into law on March 31, 2017. Notably, this is the first time an agency reissued a rule after the original version was disapproved under the CRA. No Administration appears to have seriously considered reissuing the one rule that was disapproved prior to the 115th Congress, and none of the other 15 rules that have been disapproved in the 115th Congress have been reissued thus far. When a rule is disapproved under the CRA, the rule may not take effect or continue in effect, and, furthermore, the agency may not reissue the rule in “substantially the same form” or issue a “new rule that is substantially the same” as the disapproved rule unless Congress provides subsequent statutory authorization. Congress has not provided additional authorization since the UC drug testing rule was disapproved. Thus, DOL reissued the rule under the same authority as the disapproved rule, Section 2105 of P.L. 112-96, the Middle Class Tax Relief and Job Creation Act of 2012. In so doing, the agency made clear that it was attempting to reissue the rule in a form that was sufficiently different from the disapproved rule so as not to violate this provision of the CRA. In the preamble to the reissued rule, DOL stated the following: “To comply with both the mandate to issue regulations [under the Middle Class Tax Relief and Job Creation Act], and the CRA prohibition on reissuing the rule in substantially the same form,’ the Department has carefully considered the Act, the 2016 Rule, and the congressional notice of disapproval.” The CRA does not define “substantially the same.” Whether a reissued rule is “substantially the same” as the disapproved rule is likely to depend upon the specific circumstances surrounding the rule, such as whether the rule was required by statute (as was the case with the UC drug testing rule) and how much discretion the agency has. During floor consideration of the disapproval measure for the UC drug testing rule, House Ways and Means Committee Chairman Kevin Brady, who was also the sponsor of the joint resolution of disapproval, stated that the UC drug testing rule issued by the Obama Administration had been inconsistent with congressional intent because the rule was written too narrowly, impairing the ability of states to implement their own requirements for drug testing. In the preamble to the newly reissued rule, DOL acknowledged this concern: “In this NPRM, the Department now proposes a substantially different and more flexible approach to the statutory requirements than the [disapproved] 2016 Rule, enabling States to enact legislation to require drug testing for a far larger group of UC applicants than the previous Rule permitted.” The CRA does not specify who is to decide whether a reissued rule is “substantially the same.” It is possible that Congress might be ultimately responsible for making that determination, rather than a court: the CRA contains a prohibition on judicial review, stating that “no determination, finding, action, or omission under this chapter shall be subject to judicial review.” This provision has generally been interpreted by courts to mean that they may not consider any claims under the CRA, although the “substantially the same” prohibition has not been tested in a court. Should the prevailing judicial interpretation of the CRA’s judicial review provision hold, a court would be unlikely to strike down the reissued UC drug testing rule on the basis that it violates the “substantially the same” prohibition in the CRA. A number of commentators have argued, however, that the CRA’s judicial review provision would not necessarily bar a court from reviewing whether a rule is “substantially the same” as a disapproved rule. If courts continue to bar all judicial challenges under the CRA, Congress would arguably be the sole arbiter of whether the reissued rule clears the “substantially the same” standard. Upon finalizing the new version of the rule, DOL would be required to submit it to Congress under the CRA, and Members would have the opportunity once again to introduce and act on resolutions of disapproval under the CRA. If Congress does not disapprove the rule, and if the prevailing interpretation of the CRA’s prohibition of judicial review holds, the rule would likely take effect—arguably giving Congress’s implicit acceptance of the reissued rule. Thus, the possibility of future action in Congress, in a sense, could be considered an enforcement mechanism for the “substantially the same” prohibition. Once the newly reissued UC drug testing rule is finalized, however, enactment of a CRA resolution of disapproval overturning it may be difficult. Enactment of a CRA resolution of disapproval requires either passage by both chambers of Congress and the signature of the President or an override of the President’s veto, which would require a two-thirds majority in both chambers. The President may be unwilling to sign a resolution of disapproval overturning a rule issued by his own Administration. Thus, one might expect that Congress would need to override the President’s veto if it wanted to disapprove the reissued rule, necessitating a supermajority in both houses. For more information on the CRA, see CRS Report R43992, The Congressional Review Act (CRA): Frequently Asked Questions. For a discussion of policy developments related to the UC drug testing rule, see CRS Insight IN10909, Recent Legislative and Regulatory Developments in States’ Ability to Drug Test Unemployment Compensation Applicants and Beneficiaries, by Julie M. Whittaker and Katelin P. Isaacs.

Nov 19, 2018

The Emergency Food Assistance Program (TEFAP): Background and Funding

The Emergency Food Assistance Program (TEFAP) is a federal food distribution program that supports food banks, food pantries, soup kitchens, and other emergency feeding organizations serving low-income Americans. Federal assistance takes the form of federally purchased commodities—including fruits, vegetables, meats, and grains—and funding for administrative costs. Food aid and funds are distributed to states using a statutory formula that takes into account poverty and unemployment rates. TEFAP is administered by the U.S. Department of Agriculture’s Food and Nutrition Service (USDA-FNS). TEFAP was established as the Temporary Emergency Food Assistance Program by the Emergency Food Assistance Act of 1983. The Emergency Food Assistance Act continues to govern program operations, while the Food and Nutrition Act provides mandatory funding authority for TEFAP commodities. Based on levels set in statute, appropriations provided $289.5 million in mandatory funding for TEFAP’s “entitlement” commodities in FY2018. TEFAP also incorporates “bonus” commodities, which are distributed at USDA’s discretion throughout the year to support different crops using separate budget authority. USDA purchased $268.6 million worth of bonus commodities for TEFAP in FY2017. A smaller amount of cash assistance ($64.4 million in FY2018) is appropriated to cover administrative and distribution costs under Emergency Food Assistance Act authority. These administrative funds are discretionary. USDA-FNS coordinates the purchasing of commodities and the allocation of commodities and administrative funds to states, and provides general program oversight. State agencies—often state departments of health and human services, agriculture, or education—determine program eligibility rules and allocations of aid to feeding organizations (called “recipient agencies”). States often task food banks, which operate regional warehouses, with distributing foods to other recipient agencies. TEFAP aid makes up a modest proportion of the food and funds available to emergency feeding organizations, which are reliant on private donations as well. TEFAP is the largest source of federal support for emergency feeding organizations. Other related food distribution programs focus on specific subpopulations; for example, the Federal Emergency Management Agency’s (FEMA’s) Emergency Food and Shelter Program distributes food to homeless individuals and USDA’s Commodity Supplemental Food Program distributes food to low-income elderly individuals. TEFAP is typically amended and reauthorized through farm bills. Most recently, the 2014 farm bill (P.L. 113-79) extended and provided additional funding for TEFAP’s entitlement commodities. Current 2018 farm bill proposals (two versions of H.R. 2) would reauthorize and continue additional funding for entitlement commodities (as of the date of this report). They also include different approaches to incorporating non-federally donated foods and reducing food waste. Recent program developments include TEFAP’s use in disaster response and receipt of commodities from the 2018 trade aid package.

Nov 19, 2018

Insulin Products and the Cost of Diabetes Treatment

Nov 19, 2018

Quantum Information Science: Applications, Global Research and Development, and Policy Considerations

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

Nov 19, 2018

Infrastructure Investment and the Federal Government

Nov 19, 2018

Highway and Public Transit Funding Issues

Nov 19, 2018

Defense Primer: Navigating the NDAA

Nov 16, 2018

Defense Primer: Department of the Army and Army Command Structure

Nov 16, 2018

Defense Primer: Organization of U.S. Ground Forces

Nov 16, 2018

FY2018 and FY2019 Appropriations for Agricultural Conservation

The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. The FY2018 Consolidated Appropriations Act (P.L. 115-141, Division A), and both of the FY2019 agriculture bills reported by the House and Senate Appropriations Committees (H.R. 5961, S. 2976) include funding for conservation programs and activities at USDA. Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018, which included agriculture appropriations under Division A. For FY2019, the House and Senate Appropriations Committees reported agriculture bills in May 2018. The Senate amended and passed its version as Division C of a four-bill minibus on August 1, 2018 (H.R. 6147). In the absence of a final appropriation, Congress enacted a continuing resolution through December 7, 2018 (P.L. 115-245, Division C). Agricultural conservation programs include both mandatory and discretionary spending. Most conservation program funding is mandatory and is authorized in omnibus farm bills. Other conservation programs—mostly technical assistance—are discretionary and are funded through annual appropriations. The largest discretionary program is the Conservation Operations (CO) account, which funds conservation planning and implementation assistance on private agricultural lands across the country. The enacted FY2018 appropriation provided $874 million for CO, an increase from the FY2017 enacted amount ($864 million). The FY2019 House-reported and Senate-passed bills would further increase funding for CO above FY2018 levels to $890 million and $879 million, respectively. Other discretionary spending is primarily for watershed programs. The largest—Watershed and Flood Prevention Operations (WFPO)—was funded at $150 million in FY2018. Both the House-reported and Senate-passed bills would fund WFPO at the $150 million level in FY2019. Most mandatory conservation programs are authorized in omnibus farm bills and do not require an annual appropriation. However, Congress has reduced mandatory conservation programs through changes in mandatory program spending (CHIMPS) in the annual agricultural appropriations law every year since FY2003. The enacted FY2018 omnibus marks the first appropriation since FY2002 that does not include CHIMPS to mandatory conservation programs. For FY2019, both the House and Senate appropriation bills do not include reductions to mandatory conservation programs, because most programs’ authorizations expired on September 30, 2018, making these programs ineligible for reduction. While this is infrequent, the Agriculture appropriations bill may also serve as a vehicle for amendments to authorized programs that permanently alter or create programs. The FY2018 enacted appropriation included two such amendments—one to WFPO and one to farm bill conservation program reporting requirements. The WFPO amendment increased the size threshold required for congressional approval. Under the amended language, the Senate and House Agriculture Committees must approve WFPO projects that include an estimated federal contribution of more than $25 million for construction, an increase from the previous $5 million threshold. Additionally, the FY2018 appropriation exempted farm bill conservation programs from select federal reporting requirements, including obtaining a Data Universal Numbering System (DUNS) number and System for Award Management (SAM) registration. Agriculture appropriations bills may also include policy-related provisions that direct how the executive branch should carry out the appropriation. The FY2018 enacted appropriation and both the FY2019 House-reported and Senate-passed bills include policy provisions for conservation programs that range from reports to Congress to suggested natural resource priorities.

Nov 16, 2018

Army Corps of Engineers: FY2019 Appropriations

Nov 16, 2018

Defense Primer: Defense Appropriations Process

Nov 16, 2018