CRS Reports

Maritime Fuel Regulations

Aug 6, 2018

Buprenorphine and the Opioid Crisis: A Primer for Congress

Buprenorphine is a medication used to treat adults addicted to opioids (it is also used in the treatment of pain). Buprenorphine’s effectiveness, safety, and availability in the treatment of opioid addiction are of considerable interest to policymakers seeking to address the ongoing opioid epidemic in the United States. Congressional actions taken in recent years to address the opioid crisis have included attempts to increase access to buprenorphine. This report addresses questions policymakers may have about the effectiveness of buprenorphine, the demand for buprenorphine, and access to buprenorphine. Effectiveness of Buprenorphine Overall, buprenorphine appears to be an effective medication for treatment of opioid dependence. When compared to other treatments for opioid addiction such as methadone, buprenorphine appeared equally as effective in promoting abstinence from drug use. Buprenorphine does not seem to retain individuals in treatment as well as methadone, however, though the reasons for this remain unclear. The research on buprenorphine suggests that it works better at higher daily doses (16mg or higher). The higher the dose of buprenorphine and the longer people used the drug, the more likely they were to remain in treatment, abstain from opioid use, and successfully complete treatment. Preliminary data suggest that buprenorphine may be safer and more cost effective than methadone; comparison of the safety and costs of buprenorphine with other treatments awaits further research. Demand for Buprenorphine Admissions to substance abuse treatment facilities involving prescription opioids nearly quadrupled between 2002 and 2014; in 2015 18% of individuals in need of treatment for opioid use disorders received it. In 2016, one-fifth (21.1%) of those with any opioid use disorder received specialty treatment, including 37.5% of those with heroin use disorder and 17.5% of those with prescription pain reliever use disorders. Despite marked increases in opioid abuse, deaths attributed to opioids, and related hospital admissions, the majority of individuals in need of treatment do not receive it. Access to Buprenorphine Buprenorphine is regulated differently when used to treat opioid use disorder than when used to treat pain. The Controlled Substances Act (CSA) limits who may prescribe (or administer or dispense) buprenorphine to treat opioid use disorders, and the circumstances under which they may do so. These limits have implications for how patients gain access to buprenorphine and how they pay for buprenorphine. Buprenorphine comes in different formulations, and these modes of administration have implications for how patients gain access to buprenorphine and how they pay for buprenorphine. As of May 1, 2018, the Substance Abuse and Mental Health Services Administration has implemented capacity for health providers to treat with buprenorphine almost 3,000,000 patients. Nonetheless, access to substance abuse treatment such as buprenorphine has not kept pace with the mounting rates of opioid addiction in the United States.

Aug 3, 2018

Chesapeake Bay Restoration: Background and Issues for Congress

The Chesapeake Bay (the Bay) is the largest estuary in the United States. It is recognized as a “Wetlands of International Importance” by the Ramsar Convention, a 1971 treaty about the increasing loss and degradation of wetland habitat for migratory waterbirds. The Chesapeake Bay estuary resides in a more than 64,000-square-mile watershed that extends across parts of Delaware, Maryland, New York, Pennsylvania, Virginia, West Virginia, and the District of Columbia. The Bay’s watershed is home to more than 18 million people and thousands of species of plants and animals. A combination of factors has caused the ecosystem functions and natural habitat of the Chesapeake Bay and its watershed to deteriorate over time. These factors include centuries of land-use changes, increased sediment loads and nutrient pollution, overfishing and overharvesting, the introduction of invasive species, and the spread of toxic contaminants. In response, the Bay has experienced reductions in economically important fisheries, such as oysters and crabs; the loss of habitat, such as underwater vegetation and sea grass; annual dead zones, as nutrient-driven algal blooms die and decompose; and potential impacts to tourism, recreation, and real estate values. Congress began to address ecosystem degradation in the Chesapeake Bay in 1965, when it authorized the first wide-scale study of water resources of the Bay. Since then, federal restoration activities, conducted by multiple agencies, have focused on reducing pollution entering the Chesapeake Bay, restoring habitat, managing fisheries, protecting sub-watersheds within the larger Bay watershed, and fostering public access and stewardship of the Bay. Congress has authorized various programs and activities to restore the Chesapeake Bay, including the Chesapeake Bay Program (CBP), created in 1983. The CBP implements the Chesapeake Bay Agreement, a periodically renewed agreement between executives in the watershed states, a joint Bay state legislative body, and select federal agencies that aims to coordinate Bay restoration efforts. The most recent agreement was signed in 2014 (known as the 2014 Chesapeake Bay Watershed Agreement) and set a series of restoration goals and actions to be completed by 2025. The 2014 Chesapeake Bay Watershed Agreement, like others in the past, is not binding. Other restoration plans—including the 2010 Chesapeake Bay Strategy for Protecting and Restoring the Chesapeake Bay Watershed (pursuant to President Obama’s 2009 Executive Order 13508), the U.S. Environmental Protection Agency’s 2010 Chesapeake Bay Total Maximum Daily Load, and a draft Comprehensive Plan from the U.S. Army Corps of Engineers—harmonize with the goals of the 2014 Chesapeake Bay Watershed Agreement and contain objectives for federal agencies and states. As work continues toward the 2025 restoration goals set by state and federal plans, Congress may consider what role the federal government plays in Chesapeake Bay restoration, if any. In considering the federal role in Chesapeake Bay restoration, Congress may weigh issues related to coordination of federal activities and federal agency authority, funding and total cost of activities, and the rate of progress toward restoration.

Aug 3, 2018

The James Webb Space Telescope

Aug 3, 2018

Gas Exporting Countries Forum (GECF): Cartel Lite?

Aug 2, 2018

U.S.-EU Trade Relations

Aug 1, 2018

Artificial Intelligence (AI) and Education

Aug 1, 2018

Health Savings Accounts (HSAs)

A health savings account (HSA) is a tax-advantaged account that individuals can use to pay for unreimbursed medical expenses (e.g., deductibles, co-payments, coinsurance, and services not covered by insurance). Individuals may establish and contribute to an HSA for each month that they are covered under an HSA-qualified high-deductible health plan (HDHP), do not have disqualifying coverage, and cannot be claimed as a dependent on another person’s tax return. The account can be established with an insurer, bank, or other Internal Revenue Service (IRS)-approved trustee and is tied to the individual. Account holders retain access to their accounts if they change employers, insurers, or subsequently obtain coverage under a non-HSA qualified plan. To be considered an HSA-qualified HDHP, a health plan must meet several tests: it must have a deductible above a certain minimum level, it must limit total annual out-of-pocket expenditures for covered benefits to no more than a certain maximum level, and it can provide only preventive care services before the deductible is met. In 2018, HSA-qualified HDHPs must have a minimum deductible of $1,350 for self-only coverage and $2,700 for family coverage and an annual limit on out-of-pocket expenditures for covered benefits that does not exceed $6,650 and $13,300, respectively. These amounts are adjusted for inflation (rounded to the nearest $50) annually. HSAs have annual contribution limits, which in 2018 are $3,450 for individuals with self-only coverage and $6,900 for those with family coverage. Eligible individuals may make direct contributions to their HSAs, and employers, family members, and other individuals may make contributions to an individual’s HSA on the individual’s behalf. In addition to the annual limit, individuals who are at least 55 years of age but not yet enrolled in Medicare may contribute an additional annual catch-up contribution of $1,000. The annual contribution limit amounts are adjusted for inflation (rounded to the nearest $50) annually, but the catch-up contribution amount is fixed. Unused balances may accumulate without limit, be invested, and carry over from year to year. Individuals do not need to be enrolled in an HSA-eligible HDHP to make withdrawals from the account; however, any withdrawals that are not spent on qualified medical expenses for the account holder, the account holder’s spouse, or the account holder’s dependents generally are subject to a penalty tax. Qualified medical expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part of the body; the amounts paid for transportation to receive medical care; and qualified long-term care services. In general, HSAs cannot be used to pay for health insurance premiums or over-the-counter medications. HSAs have several tax advantages: individual contributions are tax deductible unless made through a pretax salary reduction agreement; employer contributions (including individual contributions made through pretax salary reductions) are excluded from taxable income and from Social Security, Medicare, and unemployment insurance taxes; account earnings are tax exempt; and withdrawals are not taxed if used for qualified medical expenses. However, individuals generally are penalized for withdrawing funds for nonqualified medical expenses and for making contributions above the annual HSA limit. Although it would be beneficial to study the entire HSA population, which is the population that is eligible to establish and contribute to an HSA (i.e., enrolled in an HSA-eligible HDHP) and the population that has an HSA, few available data sources provide a comprehensive understanding of the entire HSA population. The lack of available data stems in part from the fact that HSAs and HSA-qualified HDHPs are two separate products that can be administered by two separate institutions. As a result, HSA research tends to focus on one of two populations, HSA-qualified HDHP enrollees or HSA holders. Although exact point estimates for the entire HSA/HSA-qualified HDHP population are difficult to determine, current research, when referenced collectively, can highlight various trends. Specifically, multiple different sources have demonstrated continued increases in HSA-qualified HDHP enrollment and HSAs since the mid-2000s.

Jul 31, 2018

Escalating Tariffs: Timeline and Potential Impact

Concerns over the U.S. trade deficit and trading partner trade practices have been a focus of the Trump Administration. Citing these concerns, the President has imposed tariffs under three U.S. laws that allow the Administration to impose trade restrictions based on certain criteria unilaterally: (1) Section 201 (Table 1) on U.S. imports of washing machines and solar products; (2) Section 232 () on U.S. imports of steel and aluminum, and potentially autos and uranium, and (3) Section 301 (Table 3) on U.S. imports from China. In 2017, U.S. imports of goods subject to the additional tariffs, which range from 10%-50%, totaled $80 billion (Table 4), a figure that would increase should additional proposed tariffs go into effect (Figure 1). While the tariffs may benefit some import-competing U.S. producers, they are also likely to increase costs for downstream users of imported products and some consumer prices. The Administration is likely using the tariffs in part to pressure affected countries into broader trade negotiations, such as the recently announced U.S.-EU trade liberalization talks, but it is unclear what specific outcomes the Administration is seeking. Figure 1. Trump Administration Tariffs and Affected Imports / Source: CRS calculations with data from U.S. Census Bureau sourced through Global Trade Atlas. Notes: Based on 2017 import values. Increased U.S. import tariffs may reduce demand for imports lowering annual import values. Congress delegated aspects of its constitutional authority to regulate foreign commerce to the President through these trade laws. These statutory authorities allow presidential action, based on agency investigations and other criteria, to impose import restrictions to address specific concerns (see text box). They have been used infrequently in the past two decades, in part due to the 1995 creation of the World Trade Organization (WTO) and its enforceable dispute settlement system. Prior to this Administration, U.S. import restrictions were last imposed under these trade laws in 1982 for Section 232, 2001 for Section 301, and 2002 for Section 201. U.S. Laws Related To Trump Administration Trade Actions Section 201 of the Trade Act of 1974 – Allows the President to impose temporary duties and other trade measures if the U.S. International Trade Commission (ITC) determines a surge in imports is a substantial cause or threat of serious injury to a U.S. industry. Section 232 of Trade Expansion Act of 1962 – Allows the President to take action to adjust imports of products the Department of Commerce finds to be threatening to impair U.S. national security. Section 301 of Trade Act of 1974 – Allows the United States Trade Representative (USTR) to suspend trade agreement concessions or impose import restrictions if it determines a U.S. trading partner is violating trade agreement commitments or engaging in discriminatory or unreasonable practices that burden or restrict U.S. commerce. Increasing U.S. tariffs or imposing other import restrictions through these laws potentially opens the United States to complaints that it is violating its WTO and free trade agreement (FTA) commitments. Several U.S. trading partners, including Canada, China, Mexico, and the European Union have initiated dispute settlement proceedings and imposed retaliatory tariffs in response. The retaliatory tariffs in effect cover approximately $60 billion of U.S. annual exports, based on 2017 export data (Table 5). Retaliation may be amplifying the potential negative effects of the U.S. tariff measures. Economically, retaliatory tariffs broaden the scope of U.S. industries potentially harmed, targeting those reliant on export markets and sensitive to price fluctuations, such as agricultural commodities. Some U.S. manufacturers have announced plans to shift production to other countries in order to avoid the tariffs on U.S. exports. Lost market access resulting from the retaliatory tariffs may compound concerns raised by many U.S. exporters that the United States increasingly faces higher tariffs than some competitors in foreign markets as other countries proceed with trade liberalization agreements eliminating tariffs, such as the recently signed EU-Japan FTA. Negative effects could grow if a tit-for-tat process of retaliation continues and the scale of trade affected increases. For example, in response to China’s retaliation against U.S. Section 301 tariffs, USTR has proposed counter-retaliation tariffs covering an additional $200 billion of U.S. imports, doubling the current tariff coverage and potentially affecting approximately half of U.S. annual imports from China. Additional actions by the Administration could result in considerably larger potential trade effects. On March 23, 2018, the Commerce Department initiated a new Section 232 investigation on U.S. auto and auto parts imports. Motor vehicles and parts accounted for $361 billion of U.S. imports in 2017. The EU, which accounts for more than $50 billion of U.S. motor vehicle and parts imports, has reportedly threatened comparable retaliatory measures. The globally integrated nature of the industry could complicate the impact of the tariffs. For example, affiliates of foreign motor vehicle firms operating in the United States exported more than $49 billion (nearly $70 billion including wholesale trade) in 2015. Although the auto investigation remains ongoing, the Administration has stated it will not impose tariffs while the recently announced U.S.-EU trade talks are ongoing. On July 18, the Administration began a fourth Section 232 investigation on U.S. uranium imports. Many Members of Congress and U.S. businesses, interest groups, and trade partners, including major allies, have weighed in on the President’s actions. While some U.S. stakeholders support the President’s use of unilateral trade actions, many have raised concerns, including the Chairs of the Ways and Means and Senate Finance Committees, about potential negative impacts. In July 2017, Congress passed a nonbinding resolution directing appropriations bill conferees to include language giving Congress a role in Section 232 determinations, and several Members have introduced legislation that would constrain the President’s authority (e.g., S. 3013 and S. 3266). As it debates the Administration’s import restrictions, Congress may consider the following: Delegation of Authority. Among these statutes, only Section 201 requires an affirmative finding by an independent agency (the ITC) before the President may restrict imports. Section 232 and Section 301 investigations are undertaken by the Administration, giving the President broad discretion in their use. Are additional congressional checks on such discretion necessary? Economic Implications and Escalation. The Administration’s tariffs imposed to date cover approximately 3% of annual U.S. goods and services imports; pending investigations and threatened further counter-retaliations could potentially increase this to nearly one-third. While most economists estimate that the current level of tariffs is unlikely to have major effects on the overall U.S. economy, these effects may be substantial for individual firms reliant either on imports subject to the U.S. tariffs or exports facing retaliatory measures. The potential drag on economic growth could also be significant if tit-for-tat action escalates. What are the Administration’s objectives from the tariff increases and do potential benefits justify the potential costs? International Trading System. While the Administration argues that the imposition of U.S. import restrictions is within its rights under international trade agreement obligations, U.S. trade partners disagree and have initiated dispute proceedings, and begun retaliating. The United States has initiated its own dispute proceedings arguing the retaliation violates trade agreement obligations. What are the risks to the international trading system of continued unilateral action? The tables below provide a timeline of key events related to each U.S. trade action, as well as the range of potential trade volumes affected by the U.S. tariffs and U.S. trading partners’ retaliations. In addition to tariffs, the President has imposed quotas, or quantitative limits on U.S. imports of certain goods from specified countries, as well as tariff-rate quotas (TRQs), for which one tariff applies up to a specific quantity of imports and a higher tariff applies above that threshold. Timeline and Status of U.S. Trade Actions Table 1. Section 201 Global Safeguard Investigations Key Dates 5/17/2017 – U.S. industry petition initiates ITC injury investigation on solar cells/modules. 6/5/2017 – U.S. industry petition initiates ITC injury investigation on large residential washers. 9/22/2017 – ITC makes affirmative solar cells/modules injury determination. 10/5/2017 – ITC makes affirmative large residential washers injury determination. 11/13/2017 – ITC submits report and recommended action on solar cells/modules to President. 12/4/2017 – ITC submits report and recommended action on large residential washers to President. 1/23/2018 – President proclaims actions on solar cells/modules and large residential washers, effective February 7, 2018. U.S. Import Restriction Solar Cells: 4-year TRQ with 30% above quota tariff, descending 5% annually. Solar Modules: 4-year 30% tariff, descending 5% annually. Large Residential Washers: 3-year TRQ, 20% in quota tariff descending 2% annually, 50% above quota tariff descending 5% annually. Large Residential Washer Parts: 3-year TRQ, 50% above quota tariff, descending 5% annually. Countries Affected Canada excluded from the duties on washers. Certain developing countries excluded if they account for less than 3% individually or 9% collectively of U.S. imports of solar cells or large residential washers, respectively. All other countries included. Current Status Effective February 7, 2018. Table 2. Section 232 Steel and Aluminum Investigations Key Dates 4/2017 – Commerce initiates investigations on effects on national security of U.S. steel (4/19) and aluminum (4/26) imports. President signs memoranda prioritizing steel and aluminum investigations. 1/2018 – Commerce submits steel (1/11) and aluminum (1/17) findings and recommendations to President. 3/8/2018 – President proclaims steel and aluminum duties, effective March 23, 2018, temporarily exempting Canada and Mexico. 3/22/2018 – President temporarily exempts Argentina, Australia, Brazil, South Korea and the European Union (EU) in addition to Canada and Mexico from steel and aluminum duties. 4/30/2018 – President permanently exempts South Korea from steel duties, based on a quota arrangement. South Korea’s exemption from aluminum duties expires. 5/31/2018 – President permanently exempts Argentina, Australia, and Brazil from steel duties, and Argentina and Australia from aluminum duties, based on quota arrangements. Brazil’s exemption from aluminum duties, and Canada, Mexico, and EU’s exemptions from steel and aluminum duties expire. U.S. Import Restriction Aluminum: 10% tariffs on specified list of aluminum imports effective indefinitely. Steel: 25% tariffs on specified list of steel imports effective indefinitely. Countries Affected Aluminum: Australia and Argentina* permanently exempted. Steel: Australia, Argentina*, Brazil*, and South Korea* permanently exempted. All other countries included. (*) Quantitative import restrictions imposed in place of tariffs. Current Status Effective March 23, 2018. (Retaliation also in effect, see Table 5) Table 3. Section 301 China Trade Barriers Investigation Key Dates 8/14/2017 – President directs USTR to determine whether it should investigate China’s laws, policies, practices, or actions affecting U.S. intellectual property and forced technology transfers. 8/18/2017 – USTR announces it will proceed with Section 301 case against China. 3/22/2018 – USTR releases Section 301 report and finds that China’s policies are “unreasonable or discriminatory, and burden or restrict U.S. commerce.” President signs memorandum proposing to: (1) implement tariffs on certain Chinese imports; (2) initiate a WTO dispute settlement case against China’s discriminatory technology licensing; and (3) propose new investment restrictions on Chinese efforts to acquire sensitive U.S. technology. 4/3/2018 – USTR releases proposed list of 1,300 tariff lines to be subject to 25% import tariff. 4/5/2018 – President directs USTR to consider additional list of Chinese imports to be subject to 25% tariff if China retaliates. 5/29/2018 – President Trump announces U.S. plan to proceed with Section 301 actions, including 25% tariff on $50 billion of U.S. imports from China. 6/15/2018 – USTR releases two-stage plan to impose 25% tariffs on approximately $50 billion of Chinese imports. 6/18/2018 – President directs USTR to propose a list of imports from China valued at $200 billion that would be subject to an additional 10% tariff if China retaliates against Section 301 tariffs, and an additional $200 billion if such retaliation occurs again. 7/10/2018 – USTR releases list of proposed imports subject to additional 10% tariff accounting for approximately $200 billion of U.S. imports in 2017. U.S. Import Restriction Stage 1 – 25% import tariff on 818 U.S. imports (final, approx. $34 billion) Stage 2 – 25% import tariff on 228 U.S. imports (proposed, approx. $16 billion). Stage 3 – 10% import tariff on 6,031 U.S. imports (proposed, approx. $200 billion). Countries Affected China Current Status Stage 1 – Effective July 6, 2018. Stage 2 – Proposed, hearing 7/24 to determine final list. Stage 3 – Proposed, hearing 8/20 to determine final list. (Retaliation also in effect, see Table 5) Potential Trade Affected Table 4. Proposed and Existing U.S. Import Restrictions U.S. Trade Action U.S. Imports (millions, 2017) Additional Tariff Potential Tariff Revenue* (millions, 2017) Effective Date Section 201 Solar Cells/ Modules $5,196 TRQ (0%, 30%)/ 30% $1,559 February 7, 2018 Large Washers/ Washer Parts $1,927 TRQ (20%, 50%)/ TRQ (0%, 50%) $964 February 7, 2018 Total $7,123 $2,523 Section 232 Aluminum $16,643 10% $1,664 March 23, 2018 Steel $23,369 25% $5,842 March 23, 2018 Total $40,012 $7,507 Section 301 China - Stage 1 $32,262 25% $8,066 July 6, 2018 China - Stage 2 $14,116 25% $3,529 TBD China - Stage 3 $197,214 10% $19,721 TBD Total $243,592 $31,316 Total in Effect $79,975 $18,095 Total Formally Proposed $293,421 $41,345 Source: Calculations by CRS based on trade data from U.S. Census Bureau and tariff data from Administration notifications. Notes: (*) Potential tariff revenue estimated using 2017 import values. This does not account for potential fluctuations in demand resulting from the tariffs or other variables. It is useful for comparing the magnitude of the various tariff actions but should not be used to estimate actual tariff collection. TRQ tariff revenue estimated assuming all imports are subject to over quota tariff. Table 5. Proposed and Existing Retaliatory Actions Retaliatory Trade Action U.S. Exports (millions, 2017) Additional Tariff Potential Tariff Revenue* (millions, 2017) Effective Date Section 201 South Korea (Solar and Washers) $1,377** TBD $474** 2021 China (Solar and Washers) $654** TBD $220** 2021 Japan (Solar) $83** TBD $25** 2021 Total $2,114 $719 Section 232 Canada $12,748 10-25% $1,920 July 1, 2018 European Union (EU) – Stage 1 $3,204 10-25% $781 June 25, 2018 EU – Stage 2 $4,239 10-50% $931 2021 Mexico $3,691 7-25% $730 Partial-June 5, Full-July 5, 2018 Russia $3,008** TBD $515** TBD China $2,969 15-25% $645 April 2, 2018 Japan $1,911** TBD $440** TBD Turkey $1,788 5-40% $267 June 21, 2018 India $1,396 10-50% $240 June 21, 2018 Total $33.834 $6,469 Section 301 China – Stage 1 $33,834 25% $8,459 July 6, 2018 China – Stage 2 $14,345 25% $3,586 TBD Total $48,179 $12,045 Total in Effect $59,630 $13,042 Total Formally Proposed $85,247 $19,233 Source: CRS calculations based on import data of U.S. trade partner countries sourced from Global Trade Atlas and tariff details from WTO or government notifications. Notes: (*) Potential tariff revenue estimated using 2017 import values. This does not account for potential fluctuations in demand resulting from the tariffs or other variables. It is useful for comparing the magnitude of the various tariff actions but should not be used to estimate actual tariff collection. (**) Retaliation announcements did not include a product list or specific tariff values. Retaliatory export and tariff value estimated based on retaliation commensurate with U.S. tariff actions.

Jul 31, 2018

The World Trade Organization (WTO): U.S. Participation at Risk?

Trump Administration Approach to the WTO In a break from past administrations, the Trump Administration has expressed doubt over the value of the World Trade Organization (WTO) to the U.S. economy. The United States was a key architect of the WTO—the 164-member international organization established in 1995 that oversees global trade rules and trade liberalization negotiations, and resolves trade disputes. In late June, media reports suggested that President Trump was considering withdrawing the United States from the WTO; U.S. officials have since said talks of withdrawal are “premature” and an “exaggeration.” Congress has recognized the WTO as the “foundation of the global trading system,” and plays a direct legislative and oversight role over WTO agreements. As a candidate, President Trump asserted that WTO trade deals are a “disaster” and that the U.S. should “renegotiate” or “pull out.” Since taking office, the Administration has continued to express skepticism toward the value of multilateral agreements, preferring bilateral negotiations to address “unfair trading practices” of other countries. In addition, “reform of the multilateral trading system” is a stated trade policy objective. One concern U.S. officials voice is that the WTO is not equipped to deal effectively with the unique, state-driven features of the Chinese economy. In addition, they criticize the ability of emerging markets to claim special treatment under WTO flexibilities for developing countries. The Administration has suggested that the United States might ignore WTO rulings that are not in the U.S. favor, amid concerns that dispute settlement infringes on U.S. sovereignty. The U.S. is currently blocking new appointments to the WTO’s Appellate Body (the seven-member body responsible for appeals)—a practice that began under the Obama Administration; with more judicial terms set to expire, the AB could no longer meet its quorum after December 2019. Some officials have downplayed U.S. retreat from the WTO. In the view of WTO Deputy Director-General Alan Wolff, “the U.S. is actively engaged in a whole panoply of areas.” At the 11th WTO ministerial, U.S. Trade Representative Lighthizer acknowledged the WTO does “an enormous amount of good” and expressed U.S. support for initiatives on e-commerce and fisheries subsidies. Some U.S. frustrations with the WTO are not new and many are shared by other trading partners. But the Administration’s overall approach has spurred new questions regarding the future of U.S. leadership (and participation) in the WTO, as well as the role of Congress in U.S. trade policy. In particular, recent U.S. actions to raise tariffs against major trading partners unilaterally and to potentially obstruct the functioning of the dispute settlement system, have prompted concerns that the United States may undermine the effectiveness and credibility of the institution that it helped to create. WTO Successes and Challenges The WTO succeeded the 1947 General Agreement on Tariffs and Trade (GATT), created out of U.S. post-war efforts with other developed countries to foster an open, rules-based trading system. The GATT was established in part to lessen incentives for countries to resort to tit-for-tat trade protectionism. As the WTO describes itself, it is not simply a “free trade” institution, but “a system of rules dedicated to open, fair, and undistorted competition.” The WTO now covers 98% of global trade. Successive rounds of trade liberalization have supported the significant expansion of trade, with the average most-favored nation (MFN) applied tariff of WTO members falling from 25% in 1994 to less than 10% today (Figure 1). Greater trade openness and investment flows have helped drive economic growth and raise living standards across economies. The WTO also created a binding dispute settlement system, which has processed more than 500 disputes, with the aim of enforcing its rules, managing trade tensions, and ensuring a stable system. Figure 1. Average applied MFN tariffs / Source: Map created by CRS using 2017 WTO data. The WTO has also faced challenges as a consensus-driven organization. With a few exceptions, members have been unable to bridge differences and agree to comprehensive new trade and market opening rules—which require unanimous approval—raising questions over the institution’s relevance as a negotiating body. Countries have increasingly turned to trade deals outside the WTO and plurilaterals to tackle new issues. The dispute settlement system is increasingly under strain due to the growing number and complexity of cases. Perhaps at the root of WTO challenges are questions about its ability to adapt to new realities of the global economy; as the EU put it: “in essence, since 1995 the world has changed; the WTO has not.” These challenges have raised the stakes for members to find new strategies to safeguard and strengthen the trading system. U.S. WTO Participation The United States participates in the WTO for several reasons. Reconsidering U.S. leadership of or membership in the organization would potentially raise a number of issues for congressional consideration. U.S. leadership U.S. historical leadership of the global trading system has ensured a seat at the table to shape the agenda in important areas that both advance and defend U.S. interests. The United States played a major role shaping GATT/WTO negotiations and rulemaking, many of which reflect U.S. laws and norms. It was a leading advocate in the Uruguay Round (1986-1994) for expanding negotiations to include services and intellectual property rights (IPR), key sources of U.S. competitiveness, as well as binding dispute settlement to ensure new rules were enforceable. The U.S. has indicated strong interest in ongoing initiatives that are gaining some momentum, such as new WTO disciplines for e-commerce. A growing question is whether the WTO would flounder for lack of U.S. leadership, or whether other WTO members like the EU and China would step up to greater roles. In an effort to address growing trade tensions, in mid-July, EU and Chinese officials jointly called for new WTO reforms. The EU issued a proposal for WTO modernization, including rules on subsidies, a new approach to development, and dispute settlement reforms. Many of these ideas arguably are in line with current and past U.S. negotiating objectives. Market access and rules WTO membership encourages the United States to maintain an open market, while ensuring access to markets abroad. WTO rules are built on the principle of nondiscrimination: MFN treatment means a member’s lowest tariff or best trade concession must be granted to all members (with some exceptions), and national treatment means domestic products cannot be treated more favorably than foreign products. Absent WTO membership, remaining members would no longer be obligated to grant the U.S. MFN status under WTO agreements. Consequently, the U.S. could face significant disadvantages in other markets, including China, the EU and Japan, as members without bilateral free trade agreements (FTA) with the United States could raise tariffs or other trade barriers at will. Since joining the WTO, China’s average MFN tariff on U.S imports (trade-weighted) fell from 17.1% to 6.3%. More than 60% of U.S. trade is with non-FTA partners and thus relies solely on terms negotiated under the WTO. WTO rules also restrict members’ ability to use quotas, regulations, trade-related investment measures, or subsidies in ways that discriminate or disadvantage U.S. goods and services; as well as require members to respect U.S. IPR. Resolving disputes The WTO has provided the United States a forum for resolving disputes and holding countries accountable for their trading practices. The U.S. has been the largest user of WTO dispute settlement, initiating 122 disputes—with a relatively high success rate—challenging China over several issues including export restrictions, agricultural support, and IPR enforcement. The United States also has had the largest number of cases filed against it, as a respondent in 147 disputes. In particular, one concern of U.S. officials is several WTO findings that certain aspects of U.S. trade remedy measures are inconsistent with U.S. WTO obligations. Adverse rulings cannot compel the U.S. to change its laws, but a panel may authorize countries to retaliate if the U.S. maintains measures in violation of WTO rules. Without recourse to WTO dispute settlement, the United States could face unrestrained retaliation. In turn, the U.S. could potentially pursue more unilateral enforcement outside the WTO—as in the past through mechanisms like Section 301 and again recently. Many argue this approach is less effective at addressing trade barriers and mitigating trade tensions. Role of Congress Many analysts view U.S. withdrawal from the WTO as unlikely, in part given the potential role of Congress, which holds constitutional authority over foreign commerce. There has been broad debate among experts over whether the President has authority to withdraw unilaterally from trade agreements without congressional consent. The agreement establishing the WTO specifies any member may withdraw following six months of written notice. Congress established the statutory basis for U.S. WTO membership in the Uruguay Round Agreements Act (URAA; P.L. 103-465)—WTO agreements take effect in domestic law only through implementing legislation. Congress has also included provisions in trade promotion authority (TPA) setting forth objectives for WTO negotiations. Sec. 125(b) of the URAA sets procedures for congressional disapproval of WTO participation. It specifies that Congress’s approval of the WTO agreement shall cease to be effective only if Congress enacts a joint resolution calling for withdrawal. Congress may vote every five years on withdrawal; resolutions were introduced in 2000 and 2005, however neither passed.

Jul 31, 2018

Status of FY2019 LHHS Appropriations

Congress has begun consideration of the FY2019 appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS). This is the largest ($1.0 trillion in FY2018) of the 12 annual appropriations bills, when accounting for both mandatory and discretionary funding. The House and Senate appropriations committees have each reported their respective versions of the FY2019 LHHS bill (H.R. 6470 and S. 3158), but neither bill has received floor consideration as of the date of this report. Scope of the Bill The LHHS bill provides annually appropriated budget authority for the Department of Labor (DOL), the majority of the Department of Health and Human Services (HHS) (except for the Food and Drug Administration, the Indian Health Service, and the Agency for Toxic Substances and Disease Registry, which are funded in other bills), the Department of Education, and more than a dozen related agencies, including the Social Security Administration (SSA). Discretionary appropriations account for about 19% of total funds in the LHHS bill, yet this bill is typically the largest single source of nondefense discretionary funding for the federal government. In general, mandatory funding represents about 81% of the total LHHS bill, supporting annually appropriated entitlements such as Medicaid and Supplemental Security Income. Discretionary spending programs tend to receive the most attention during the appropriations process because this process controls amounts provided to these programs; the authorizing process generally controls amounts needed for mandatory spending programs. FY2019 Congressional Action on LHHS The House Appropriations Committee’s LHHS subcommittee approved its draft bill on June 15. The full committee markup was held on July 11, and the bill was ordered to be reported that same day (30-22). The bill was subsequently reported to the House on July 23 (H.R. 6470). The committee report H.Rept. 115-862) includes a detailed table summarizing the funding provided in the bill and reserved in report language. The Senate Appropriations Committee’s LHHS subcommittee approved its draft bill on June 26. The full committee markup was held on June 28. The committee approved the bill (30-1) and reported the bill that same day (S. 3158). The committee report (S.Rept. 115-289) includes a detailed table summarizing the funding provided in the bill and reserved in report language. Table 1 compares FY2019 LHHS discretionary appropriations proposed by the House and Senate committee bills to FY2018 enacted levels. All the amounts in this table are drawn from Congressional Budget Office estimates and represent current-year budget authority subject to discretionary spending limits. The table displays regular appropriations as well as a funding total that includes the upward adjustments to the spending limits that are allowed under the Budget Control Act (“adjusted appropriations”). (In the case of the LHHS bill, these adjustments may occur for “Program Integrity” and “Emergency Requirements” funding.) Relative to FY2018, discretionary LHHS appropriations (excluding funds provided as an emergency requirement) would be relatively flat under the FY2019 House committee bill (+$5 million). The FY2019 Senate committee bill, meanwhile, would increase regular discretionary LHHS appropriations by roughly $2 billion (+1%). Table 1. FY2018 Enacted and FY2019 Proposed LHHS Discretionary Appropriations Current-Year Discretionary Budget Authority Subject to Spending Limits (in billions of dollars) FY2018 Enacted FY2019 House Cmte. (H.R. 6470)FY2019 Senate Cmte. (S. 3158) Regular Appropriations177.100177.105179.289 Adjustments: Program Integrity1.8961.8971.897 Emergency Requirements3.9870.0000.000 Adjusted Appropriations182.983179.002181.186 Source: Table prepared by CRS based on Congressional Budget Office estimates (see FY2018 Enacted, FY2019 House Committee, and FY2019 Senate Committee). Notes: Regular appropriations reflect current-year discretionary budget authority subject to spending limits. Adjusted appropriations include discretionary funds for which special rules apply with regard to the spending limits, including certain funds for program integrity activities and (where applicable) provided as emergency requirements. Amounts in this table do not include funds provided under certain authorities in the 21st Century Cures Act (P.L. 114-255) that are exempt from discretionary spending limits ($996 million for FY2018 enacted and $711 million for the FY2019 committee bills). Additional Resources For more information on the status of FY2019 appropriations as a whole, see the CRS Appropriations Status Table. Reports addressing key funding questions for the programs and agencies funded by the LHHS appropriations bill are available on the CRS website. Table 2. Selected CRS LHHS Appropriations Contacts Department or Agency Name Phone Email Labor David Bradley 7-7352 [email protected] Health and Human Services Karen Lynch Jessica Tollestrup 7-6899 7-0941 [email protected] [email protected] Education Cassandria Dortch 7-0376 [email protected] Social Security Administration William Morton 7-9453 [email protected]

Jul 31, 2018

Family Separation at the Border and the Ms. L. Litigation

Jul 31, 2018

Child Welfare Funding in FY2018

Child welfare services are intended to prevent the abuse or neglect of children; ensure that children have safe, permanent homes; and promote the well-being of children and their families. For FY2018, an estimated $9.5 billion in federal support was made available for child welfare purposes. Comparable funding for FY2017 is estimated at $9.3 billion. At least $100 million of the FY2018 increase was provided as discretionary appropriations intended to address the impact of parental substance abuse on children and the child welfare system and to help implement the Family First Prevention Services Act (Div. E., Title VII, of P.L. 115-123). About $37 million in additional discretionary funding was provided to enable the U.S. Department of Health and Human Services to provide full incentive payments to states that are increasing the rate at which children who are otherwise expected to remain in temporary foster care are placed in permanent adoptive families or with a legal guardian. Finally, mandatory funding made available under the Title IV-E foster care, prevention, and permanency program is expected to increase by some $111 million in FY2018. The bulk of this increase is expected to provide ongoing assistance to children who leave foster care for permanent adoptive or guardianship families. Spending on foster care is not projected to grow and Title IV-E funding for prevention activities (as provided for by the Family First Prevention Services Act) is not available before FY2020. FY2018 began on October 1, 2017, but full funding levels for it were not determined until enactment, on March 23, 2018, of the Consolidated Appropriations Act, 2018 (P.L. 115-141). In the interim, funding to continue child welfare programs in FY2018 was provided via short-term funding measures, including P.L. 115-56 (through December 8, 2017), P.L. 115-90 (through December 22, 2017), P.L. 115-96 (through January 19, 2018), P.L. 115-120 (through February 8, 2018), and P.L. 115-123 (until March 23, 2018).

Jul 30, 2018

Commodity Credit Corporation: Q&A

On July 24, 2018, the U.S. Department of Agriculture (USDA) announced the use of up to $12 billion in funding authorized under the Commodity Credit Corporation (CCC) to compensate agricultural producers for losses in response to retaliatory tariffs on certain U.S. agricultural commodities. This has raised general questions related to the CCC, its use, and authorities. In brief, CCC makes payments to producers and conducts other operations to support U.S. agriculture. Typically, Congress passes laws, such as omnibus farm bills, that specifically direct USDA on how to administer these activities and in what amounts to fund them. The underlying authorization for CCC also provides the Secretary of Agriculture with general powers to take certain actions in support of U.S. agriculture at the discretion of the Secretary. This discretionary use has historically been somewhat intermittent and limited in its scale. It is this discretionary use of CCC authority that USDA cites for the supplemental, tariff-related activities it announced on July 24. This CRS Insight answers frequently asked questions about the CCC and its authorities and uses. For additional information on the CCC and its authorities, see CRS Report R44606, The Commodity Credit Corporation: In Brief. What Is the CCC? The CCC is a wholly government-owned entity that exists solely to finance authorized programs that support U.S. agriculture. It is federally chartered by the CCC Charter Act of 1948 (P.L. 80-806; 15 U.S.C. 714 et seq.), as amended, and subject to the supervision and direction of the Secretary of Agriculture at USDA. How Is the CCC Funded? CCC is responsible for the direct spending and credit guarantees used to finance the federal government’s agricultural commodity price support and related activities that are undertaken by authority of agricultural legislation (such as farm bills) or the CCC Charter Act itself. Borrowing Authority Most CCC-funded programs are classified as mandatory spending programs and therefore do not require annual discretionary appropriations in order to operate. CCC instead borrows from the U.S. Treasury to finance its programs. CCC has permanent, indefinite authority to borrow up to $30 billion from the Treasury. Cash Flow CCC recoups some of the money it expends for authorized activities (e.g., loan repayments, and fees), though not nearly as much money as it spends. CCC outlays, or expenditures, represent the total cash outlays of CCC-funded programs (e.g., loans, conservation programs, and commodity payments). Outlays are partially offset by receipts (e.g., loan repayment and fees), resulting in net expenditures, or cash flow. Appropriations CCC also has “net realized losses,” referred to as nonrecoverable losses. These are outlays that CCC will never recover, such as uncollectible loans, interest paid to the Treasury, direct payments to agricultural producers, and operating expenses. The net realized loss is the amount that CCC, by law, is authorized to receive through appropriations to replenish the CCC’s borrowing authority. The annual appropriation for CCC varies each year based on the net realized loss of the previous year. The change in appropriation does not indicate any action by Congress to change program support but rather reflects farm program payments and other CCC activities that fluctuate based on economic circumstances and weather. What Is the CCC Authorized to Do? The CCC serves as the funding institution for carrying out federal farm support programs, such as the farm-bill-authorized commodity and conservation programs, disaster assistance, research, and bioenergy development. In addition, the general powers of the CCC Charter Act provide broad authorities allowing CCC, at the direction of the Secretary of Agriculture, to carry out almost any operation that is consistent with the objective of supporting U.S. agriculture. It is these broad general powers that USDA references in its July 24 announcement related to tariff relief. Section 5 of the Charter Act (15 U.S.C. 714c) lists CCC’s general powers (paraphrased) Support agricultural commodity prices through loans, purchases, payments, and other operations. Make available materials and facilities in connection with the production and marketing of agricultural products. Procure commodities for sale to other government agencies; foreign governments; and domestic, foreign, or international relief or rehabilitation agencies and for domestic requirements. Remove and dispose of surplus agricultural commodities. Increase the domestic consumption of commodities by expanding markets or developing new and additional markets, marketing facilities, and uses for commodities. Export, cause to be exported, or aid in the development of foreign markets for commodities. Carry out authorized conservation or environmental programs. How Has USDA Used CCC’s General Powers in the Past? Recent discretionary uses of the CCC’s general powers have included the following: In June 2015, USDA announced the availability of $100 million from the CCC in matching grants under an administratively created Biofuel Infrastructure Partnership (BIP) initiative. Grants were aimed at overcoming infrastructure constraints that limit the market for biofuels. USDA justified the initiative by citing the marketing expansion and development authorities of the Charter Act. In 2016 USDA used CCC authority to create the Cotton Ginning Cost Share program, which provided payments based on cotton acres and average ginning costs. The program was initiated again in 2018 using CCC authorities similar to those cited in the BIP initiative. In April 2010, under a Brazil-U.S. memorandum of understanding, and in response to a World Trade Organization dispute settlement case initiated by Brazil over federal U.S. cotton policies, the U.S. agreed to make payments to Brazil. All payments were made from the CCC using authorities related to export promotion under the Charter Act. How Has Congress Expanded CCC’s Use? CCC activities are derived from authorities granted by Congress. Recent expansion in CCC’s use has generally come through omnibus farm bill legislation that has authorized new or additional mandatory spending by CCC. When Congress authorizes or expands CCC activities, it follows statutory and other budget rules that generally require offsets and other budgetary scorekeeping procedures. Has Congress Restricted CCC’s Use? CCC’s authorities have been restricted in recent annual appropriation bills. Beginning in FY2012, annual appropriation acts limited USDA’s use of CCC’s discretionary authority to remove surplus commodities and support prices. The FY2018 omnibus appropriation removed this limitation, effectively allowing USDA to use CCC’s full authority. Amendments in other acts of Congress to previously enacted farm bill programs have also restricted CCC by amending specific programs or activities or limiting funding for them.

Jul 27, 2018

The House and Senate 2018 Farm Bills (H.R. 2): A Side-by-Side Comparison with Current Law

Congress sets national food and agriculture policy through periodic omnibus farm bills that address a broad range of farm and food programs and policies. The 115th Congress has the opportunity to establish the future direction of farm and food policy, because many of the provisions in the current farm bill (the Agricultural Act of 2014, P.L. 113-79) expire in 2018. On June 21, 2018, the House voted 213-211 to approve H.R. 2, the Agriculture and Nutrition Act of 2018, an omnibus farm bill that would authorize farm and food policy for FY2019-FY2023. The Senate passed its version of H.R. 2, the Agriculture Improvement Act of 2018, also a five-year bill, on June 28, 2018, on a vote of 86-11. In terms of cost, the Congressional Budget Office (CBO) score of July 24, 2018, of the programs in both bills with mandatory spending—such as nutrition programs, commodity support programs, major conservation programs, and crop insurance—over a 10-year budget window (FY2019-FY2028) amounts to $867 billion in the Senate-passed bill and $865 billion in the House-passed bill. These cost projections compare with CBO’s baseline scenario of an extension of existing 2014 farm bill programs with no changes of $867 billion. In both the House and Senate versions of H.R. 2, most existing programs would be extended through FY2023. Overall, the bills provide a relatively large measure of continuity with the existing framework of farm and food programs even as they would modify numerous programs, alter the amount and type of program funding that certain programs receive, and exercise discretion not to reauthorize some others. Both bills would extend commodity support programs largely along existing lines while modifying them in different ways. For instance, the House bill could raise the effective reference price for crops enrolled in the Price Loss Coverage program (PLC) under certain market conditions. It would also amend payment limits and the adjusted gross income (AGI) limit for eligibility for farm program payments and increase the number of producer exemptions from payment and income limits. In contrast, the Senate bill would leave payment limits unchanged while lowering the AGI limit for payment eligibility. The Senate would also leave PLC unchanged while adopting changes to the Agricultural Risk Coverage program (ARC) that could enhance its appeal as a program option. Both bills would amend disaster assistance programs but under different approaches. Both bills would also rename the dairy program and expand coverage choices for milk producers, and both bills extend the sugar program with no changes. The House and Senate bills would reauthorize the Supplemental Nutrition Assistance Program (SNAP) for five years, and both bills include polices intended to improve error and fraud detection. Among their differences, the House bill includes multiple changes to who is eligible for SNAP and the calculation of benefits, which are not included in the Senate bill. The House bill includes major changes to work requirements, while the Senate bill would make changes that are minor by comparison. Within the conservation title, the two bills would raise the acreage limit on enrollment in the Conservation Reserve Program (CRP), with the House bill setting a higher limit than the Senate does. Among other differences, the House bill would repeal the Conservation Stewardship Program (CSP), whereas the Senate bill would extend CSP but lower the limit on acreage enrollment. The House bill also increases funding for the Environmental Quality Incentives Program (EQIP), while the Senate bill reduces funding for EQIP. Within the credit title, both bills increase the maximum loan amounts for the U.S. Department of Agriculture’s guaranteed farm ownership loans and guaranteed farm operating loans. The Senate bill would also raise the limits for direct farm ownership loans and direct farm operating loans, whereas the House bill would not. The miscellaneous title of both bills establishes an animal disease preparedness program and a vaccine bank, although they diverge over funding. The Senate bill includes a number of provisions that are intended to facilitate the possible commercial cultivation of industrial hemp, while the House bill would amend certain regulatory requirements that apply to industrial hemp. For rural communities, the House bill would authorize the Secretary of Agriculture to reprioritize certain loan and grant programs and take other actions to respond to specific health emergencies, and it would require the Secretary to promulgate minimum acceptable standards for broadband service. The Senate bill would establish priorities for awarding loans and grains for rural broadband projects and add a new program on substance abuse education and prevention. Both bills extend most bioenergy programs, but the House bill places them within the title on rural development and infrastructure, while the Senate bill maintains a separate energy title. Moreover, while the House bill would provide discretionary funding for these programs but no mandatory funding, the Senate bill would provide both mandatory and discretionary funding.

Jul 27, 2018

Technology Service Providers for Banks

Jul 26, 2018

Background on Renewable Identification Numbers under the Renewable Fuel Standard

Jul 25, 2018

Animal and Plant Export Health Certificates in U.S. Agricultural Trade

An agricultural export health certificate verifies that agricultural products are prepared or raised in accordance with requirements of the importing country. In the United States, export health certificates are issued primarily by the U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) for live animals, raw fruits and vegetables, and some grain products. APHIS ensures that U.S. exporters have met animal and plant health requirements for export. Other federal agencies, not discussed here, have authority over agricultural products outside of APHIS’s jurisdiction, such as oversight of processed foods and processed meats. APHIS serves as the principal U.S. scientific authority on verification of the animal and plant export health certificates when communicating with foreign governments. Animal and plant export health certificates assure foreign countries that their health requirements (e.g., disease-free livestock and plants) have been met and aim to keep diseases from crossing international borders. In FY2017, APHIS issued almost 675,000 export health certificates that helped facilitate more than $50 billion in plant and animal product exports. A major driver of the volume of agricultural exports was meeting key “sanitary and phytosanitary” (SPS) measures established by international organizations such as the World Trade Organization. SPS measures are the rules that governments employ to protect against diseases, pests, toxins, and other contaminants. These SPS measures are verified in animal and plant health certificates, which in turn help to facilitate agricultural trade. Failure to meet export health certificate requirements can result in shipments being rejected or delayed, resulting in additional expense to the exporter. Therefore, export health certification allows both parties to agree to mutual trade terms and in so doing facilitates agricultural trade. Congress has direct interest in export health certificates through annual appropriations for APHIS activities. The President’s proposed FY2019 budget for APHIS is $742 million (including building and facility costs), down 25% from FY2018 appropriations (P.L. 115-141). This proposed reduction decreases APHIS funding for “Safeguarding and Emergency Preparedness/Response,” which provides technical support for both exported and imported agricultural products. In addition to facilitating U.S. agricultural exports, this item also supports APHIS enforcement of animal and/or plant health requirements that protect the United States against the unintended introduction of animal and/or plant pests and diseases. Limiting APHIS’s ability to issue export health certificates could negatively impact U.S. agricultural exports. In May 2018, both the House and the Senate proposed roughly $1 billion for the APHIS FY2019 appropriations, an increase from FY2018, or roughly $260 million over the Administration’s request. Potential issues for congressional oversight include preparation for animal disease outbreaks, opening export markets, and potential U.S. agricultural trade barriers. The Trump Administration has entered into, or is currently negotiating, regional and bilateral free trade agreements (FTAs) that address SPS measures and export health certificates. Each importing country can have different import requirements—which sometimes result in “non-tariff measures” (NTMs). SPS requirements by individual countries can become the source of a trade dispute and may be used by some countries as a way to protect local markets, thereby discouraging U.S. exports.

Jul 23, 2018

Judicial Opinions of Judge Brett M. Kavanaugh

On July 9, 2018, President Trump announced the nomination of Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to succeed Supreme Court Justice Anthony M. Kennedy, who is scheduled to retire from active status on July 31, 2018. Judge Kavanaugh has served as a judge on the D.C. Circuit since May 30, 2006. He has also sat, by designation, on judicial panels of the U.S. Court of Appeals for the Eighth Circuit and the U.S. Court of Appeals for the Ninth Circuit, and also served on three-judge panels of the U.S. District Court for the District of Columbia. During his tenure on the bench, Judge Kavanaugh has adjudicated more than 1,500 cases, almost all while a member of either a three-judge or en banc panel of the D.C. Circuit. In part because of the D.C. Circuit’s location in the nation’s capital and the number of statutes providing it with special or even exclusive jurisdiction to review certain agency actions, legal commentators generally agree that the D.C. Circuit’s docket, relative to the dockets of other circuits, contains a greater percentage of nationally significant legal matters. Cases adjudicated by the D.C. Circuit are more likely to concern the review of federal agency action or civil suits involving the federal government than cases adjudicated in other circuits, while the D.C. Circuit docket has a lower percentage of cases involving criminal matters, prisoner petitions, or civil suits between private parties. Arguably, Judge Kavanaugh’s authored opinions provide the greatest insight into the nominee’s judicial approach, as a judge’s vote or decision to join an opinion authored by a colleague may not necessarily represent full agreement with a colleague’s views. This report provides a tabular listing of 306 cases in which Judge Kavanaugh authored a majority, concurring, or dissenting opinion. The opinions are categorized into three tables: Table 1 identifies 148 opinions authored by Judge Kavanaugh on behalf of a unanimous panel; Table 2 contains 47 controlling opinions authored by Judge Kavanaugh in which one or more panelists wrote a separate opinion; and Table 3 lists 111 cases where Judge Kavanaugh wrote a concurring or dissenting opinion (decisions where Judge Kavanaugh wrote both the controlling opinion and a separate concurrence are included in this final table). Opinions are identified and briefly discussed in each table in reverse chronological order based on where the case appears in the Federal Reporter. The opinions are also categorized by their primary legal subjects (e.g., administrative law, criminal law & procedure, environmental law, federal courts & civil procedure, labor & employment law, and national security). While this report identifies and briefly describes judicial opinions authored by Judge Kavanaugh during his time on the federal court, it does not analyze the implications of his judicial opinions or suggest how he might approach legal issues if appointed to the Supreme Court. Those matters will be discussed in a forthcoming CRS report. Key CRS products related to the Supreme Court vacancy and Judge Kavanaugh’s nomination are collected in CRS Legal Sidebar LSB10160, Supreme Court Nomination: CRS Products, by Andrew Nolan.

Jul 23, 2018

U.S. Fish and Wildlife Service: An Overview

The U.S. Fish and Wildlife Service (FWS), an agency within the Department of the Interior (DOI), is the principal federal agency tasked with the conservation, protection, and restoration of fish and wildlife resources across the United States and insular areas. This report summarizes the history, organizational structure, and selected functions of FWS and provides an overview of the agency’s appropriations structure. The report describes the actions Congress has taken to shape FWS’s structure and functions over time and notes selected issues of interest to Congress. The current structure of FWS is the result of more than 150 years of agency and departmental reorganizations. FWS began as two agencies: the Office of the Commission of Fish and Fisheries (established as an independent agency in 1871) and the Bureau of the Biological Survey (established in 1885 as an outgrowth of the U.S. Department of Agriculture’s [USDA’s] Division of Entomology). These two entities evolved into the Bureau of Fisheries (in the Department of Commerce) and the Bureau of Biological Survey in USDA. They were consolidated and established within DOI as the Fish and Wildlife Service in 1939. After that time, the service was further restructured on several occasions through both presidential reorganizations and congressional statutes. The most recent major reorganization took place in 1970, although FWS has continued to evolve pursuant to the passage of additional laws and the addition of new responsibilities. In its current form, FWS contains national, regional, and field offices spread across the United States, including its headquarters in the Washington, DC, metropolitan area, eight regional headquarter offices, and other field and FWS-administered sites. Pursuant to authorizing statutes, FWS is responsible for a multitude of fish- and wildlife-related activities. These activities include administering the National Wildlife Refuge System; managing migratory bird species; protecting endangered and threatened species; restoring fish species and aquatic habitats; enforcing fish, wildlife, and conservation laws; conducting international conservation efforts; and disbursing financial and technical assistance to states, territories, and Indian tribes for wildlife and sport fish restoration and other activities. For example, FWS is responsible for the enforcement of several wildlife-related statutes and international agreements, such as the Endangered Species Act (16 U.S.C. §§1531 et seq.), the Lacey Act (16 U.S.C. §§3371-3378 and 18 U.S.C. §§42-43), and the Migratory Bird Treaty Act (16 U.S.C. §§703-712). The service administers the National Wildlife Refuge System pursuant to the National Wildlife Refuge System Administration Act (16 U.S.C. §§668dd-668ee), as amended, which includes more than 800 million acres of lands and waters that FWS administers through either primary or secondary jurisdiction, including 566 national wildlife refuges as well as other service lands and waters. FWS also manages more than 70 national fish hatcheries, fish health centers, and fish technology centers and oversees the Aquatic Animal Drug Approval Partnership Program. In addition, FWS coordinates both domestic and international conservation activities, including administering multiple international conservation statutes. FWS also is responsible for disbursing financial assistance pursuant to the Federal Aid in Wildlife Restoration Act (known as the Pittman-Robertson Act; 16 U.S.C. §§669 et seq.) and the Federal Aid in Sport Fish Restoration Act (commonly known as the Dingell-Johnson Act; 16 U.S.C. §§777 et seq.), as well as State and Tribal Wildlife grants. From FY2014 through FY2018, Pittman-Robertson and Dingell-Johnson allocations together provided more than $1 billion annually to states, territories, and DC for wildlife and sport fish restoration and hunter education. FWS is funded through a mix of discretionary and mandatory appropriations. Discretionary appropriations, which averaged $1.5 billion annually from FY2009 through FY2018, regularly have been allocated across nine accounts and have supported many of the agency’s essential functions. FWS mandatory funding, which averaged $1.2 billion annually from FY2009 through FY2018, predominately has been derived through revenues generated from excise taxes on hunting- and fishing-related equipment. Mandatory funding supports land acquisition and financial assistance activities, including a significant portion of FWS’s grant-making activities to states and insular areas.

Jul 20, 2018

The Trump Administration’s “Zero Tolerance” Immigration Enforcement Policy

For the last several years, Central American migrant families have arrived at the U.S.-Mexico border in relatively large numbers, many seeking asylum. While some request asylum at U.S. ports of entry, others do so after entering the United States “without inspection” (i.e., illegally) between U.S. ports of entry. On May 7, 2018, the Department of Justice (DOJ) implemented a zero tolerance policy toward illegal border crossing both to discourage illegal migration into the United States and to reduce the burden of processing asylum claims that Administration officials contend are often fraudulent. Under the zero tolerance policy, DOJ prosecutes all adult aliens apprehended crossing the border illegally, with no exception for asylum seekers or those with minor children. DOJ’s policy represents a change in the level of enforcement for an existing statute rather than a change in statute or regulation. Prior Administrations prosecuted illegal border crossings relatively infrequently. Criminally prosecuting adults for illegal border crossing requires detaining them in federal criminal facilities where children are not permitted. While DOJ and the Department of Homeland Security (DHS) have broad statutory authority to detain adult aliens, children must be detained according to guidelines established in the Flores Settlement Agreement (FSA), the Homeland Security Act of 2002, and the Trafficking Victims Protection Reauthorization Act of 2008. A 2015 judicial ruling held that children remain in family immigration detention for no more than 20 days. If parents cannot be released with them, children are treated as unaccompanied alien children and transferred to the Department of Health and Human Services’ (HHS’s) Office of Refugee Resettlement (ORR) for care and custody. The widely publicized family separations are a consequence of the Trump Administration’s 100% prosecution policy, not the result of any family separation policy. Since that policy was implemented, up to 3,000 children may have been separated from their parents. Following mostly critical public reaction, President Trump ordered DHS to maintain custody of alien families during the pendency of any criminal trial or immigration proceedings. DHS Customs and Border Protection (CBP) subsequently stopped referring most illegal border crossers to DOJ for criminal prosecution. A federal judge then mandated that all separated children be promptly reunited with their families. Another rejected DOJ’s request to modify the FSA to extend the 20-day child detention guideline. DHS has since reverted to some prior immigration enforcement policies. Family unit apprehensions, which increased from just over 11,000 in FY2012 to 68,560 in the first nine months of FY2018, are occurring within relatively low historical levels of total alien apprehensions. The national origin of recently apprehended aliens and families has shifted from mostly Mexican to mostly Central American. Administration officials and immigration enforcement advocates argue that measures like the zero tolerance policy are necessary to discourage migrants from coming to the United States and submitting fraudulent asylum requests. They maintain that alien family separation resulting from the prosecution of illegal border crossers mirrors that occurring under the U.S. criminal justice system policy where adults with custody of minor children are charged with a crime and held in jail, effectively separating them from their children. Immigrant advocates contend that migrant families are fleeing legitimate threats from countries with exceptionally high rates of gang violence, and that family separations resulting from the zero tolerance policy are cruel and violate fundamental human rights—such as the ability to request asylum. They maintain that the zero tolerance policy was hastily implemented and lacked planning for family reunification following criminal prosecutions. Some observers question the Trump Administration’s capacity to marshal sufficient resources to prosecute all illegal border crossers without additional resources. Others criticize the family separation policy in light of less expensive alternatives to detention.

Jul 20, 2018

U.S.-EU Trade and Investment Ties: Magnitude and Scope

Jul 20, 2018

“Duck Boat” Accident Highlights Gap in Regulation

On July 19, 2018, an amphibious vehicle capsized during a sudden storm on a lake in Branson, MO, killing at least 17 passengers. The accident highlights gaps and discrepancies in federal safety regulations affecting amphibious passenger vehicles (APVs), more widely known as “duck boats.” Duck boats are tourist vehicles designed both to drive on roads and operate as boats in the water. These vehicles host thousands of tours for more than 1 million passengers annually. The original vehicles were built during World War II to deliver cargo from ships at sea directly to the shore, and often to evacuate injured military personnel. Some of the vehicles in use today have been refurbished, but others were built more recently. Many duck boats are operated under a license from Ride the Ducks International (RTDI), a private company, but there may be others operated independently as well. These vehicles have been involved in a number of accidents in recent years. In September 2015, a duck boat was involved in a crash with a commercial bus on a bridge in Seattle, killing five passengers. APV accidents occurred in Boston in 2016 and Philadelphia in 2010, and include an earlier incident in Seattle in 2001 and a sinking with 13 fatalities in Arkansas in 1999. These unique vehicles answer to several regulators. Because they operate in the open water of harbors and rivers, they are considered small passenger vessels, and the U.S. Coast Guard must inspect them for seaworthiness and certify the drivers as vessel captains. Since APVs also carry passengers on land, they are subject to federal commercial vehicle regulations enforced by the Federal Motor Carrier Safety Administration. Commercial vehicle inspections typically are conducted by state agencies. In addition, drivers must be certified by state officials as commercial vehicle drivers. And because the vehicles were rebuilt for commercial service, they must comply with certain federal motor vehicle standards established by the National Highway Traffic Safety Administration (NHTSA). After investigating the 2015 APV crash in Seattle, the National Transportation Safety Board (NTSB), an independent federal agency, issued an accident report with recommendations to enhance the safe operation of these vehicles. Among NTSB’s recommendations, NHTSA should classify all APVs as non-over-the-road buses and make newly manufactured APVs subject to applicable federal motor vehicle safety standards; NHTSA should separately adopt Coast Guard rules about cargo loads and passenger seating limits; and the Coast Guard should ensure that APV operators instruct passengers not to wear seat belts when the vehicle is operated in the water. The NTSB report also had specific recommendations for Ride the Ducks International after finding that it had failed to fully address known mechanical defects that resulted in the 2015 crash. It appears that some of the recommended regulatory changes have not been implemented. It is unclear whether implementation of all the NTSB recommendations would have reduced the severity of the accident in Branson. It remains the case that no single state or federal agency has ultimate responsibility for APV safety.

Jul 20, 2018

Department of Homeland Security Appropriations: FY2019

This report provides an overview and analysis of FY2019 appropriations for the Department of Homeland Security (DHS). The primary focus of this report is on congressional direction and funding provided to DHS through the appropriations process. It includes an Appendix with definitions of key budget terms used throughout the suite of Congressional Research Service reports on homeland security appropriations. It also directs the reader to other reports providing context for specific component appropriations. As part of an overall budget that the Office of Management and Budget (OMB) estimated to be $74.88 billion, the Trump Administration requested $47.43 billion in adjusted net discretionary budget authority through the appropriations process for DHS for FY2018. The request amounted to a $0.29 billion (0.6%) decrease from the $47.72 billion in annual appropriations enacted for FY2018 through the Department of Homeland Security Appropriations Act, 2018 (P.L. 115-141, Division F). The Administration also requested discretionary funding for DHS components that does not count against discretionary spending limits and is not reflected in the adjusted net discretionary budget authority total. The Administration requested an additional $6.65 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act (P.L. 112-25; BCA), and in the budget request for the Department of Defense (DOD), $165 million in Overseas Contingency Operations designated funding (OCO) from the Operations and Maintenance budget of the U.S. Navy. On June 21, 2018, the Senate Committee on Appropriations reported out S. 3109, the Department of Homeland Security Appropriations Act, 2019, accompanied by S.Rept. 115-283. Committee-reported S. 3109 included $48.33 billion in adjusted net discretionary budget authority for FY2019. This was $901 million (1.9%) above the level requested by the Administration, and $611 million (1.3%) above the enacted level for FY2018. The Senate committee-reported bill included the Administration-requested levels for disaster relief funding, and included the OCO funding in an appropriation to the Coast Guard, rather than as a transfer from the U.S. Navy. This report will be updated as the FY2019 appropriations process continues.

Jul 20, 2018

Supreme Court Invalidates Public-Sector Union Agency Fees: Considerations for Congress in the Wake of Janus

Jul 20, 2018

Comparing DHS Component Funding, FY2019: In Brief

Generally, the homeland security appropriations bill includes all annual appropriations for the Department of Homeland Security (DHS), providing resources to every departmental component. Table and Figure show DHS’s new discretionary budget authority enacted for FY2018 and requested by the Administration for FY2019, as well as the Senate committee-reported response, broken down by component—from largest to smallest FY2018 appropriation. (TO BE SUPPRESSED) Department of Homeland Security DHS budget Appropriations FY2018, FY2019 funding analysis components

Jul 18, 2018

U.S. Army’s Initial Maneuver, Short-Range Air Defense (IM-SHORAD) System

The Current State of Army SHORAD The Army defines SHORAD as: Dedicated air defense artillery (ADA) and non-dedicated air defense capabilities that enable movement and maneuver by destroying, neutralizing or deterring low altitude air threats to defend critical fixed and semi-fixed assets and maneuver forces. The Army summarizes the recent history and current state of Army SHORAD in the following section: Short-range air defense artillery units were historically embedded in Army divisions, providing them with an organic capability to protect their critical assets against fixed-wing and rotary-wing aircraft. However, in the early 2000s, these ADA units were divested from the Army to meet force demands deemed more critical at that time. Decision-makers accepted the risk that threat aircraft might have on maneuver forces and other critical assets because we believed the Air Force could maintain air superiority. Thus, the short-range ADA force post-2005 was reduced to two battalions of active component Avenger and counter-rocket, artillery and mortar batteries and seven National Guard Avenger battalions; none of which are organic divisional elements. Defense against air threats in maneuver forces is currently limited to that provided by organic weapons and maneuver personnel. Renewed Emphasis on SHORAD Since 2005, there has been a dramatic increase in air and missile platforms that could threaten U.S. ground forces. The use of unmanned aerial systems (UASs) has increased exponentially, and UASs have been used successfully by both sides in the Russo-Ukrainian conflict. Furthermore, fixed-wing aircraft, attack helicopters, and cruise missiles continue to pose a significant threat to U.S. ground forces. In its 2015 report to the President and Congress, the National Commission on the Future of the Army noted, among things, there were unacceptable modernization shortfalls in SHORAD and those major shortfalls caused other concerns across a wide range of contingencies, including in Europe and the Korean peninsula. IM-SHORAD While Initial Maneuver, Short-Range Air Defense (IM-SHORAD) is primarily intended to defend maneuver forces against air threats, it also has the capability to engage a range of ground targets. The Army has requested $17 million in FY2019, $72.7 million in FY2020, $152 million in FY2021, $443 million in FY2022, and $291 million in FY2023 for IM-SHORAD procurement. IM-SHORAD is an Army directed requirement to address the urgent need to support Operation Atlantic Resolve to provide air and missile defense protection of Stryker and Armored Brigade Combat Teams. IM-SHORAD is the Army’s “initial” solution, and new weapons systems and weapons carriers might be incorporated into future variants. The Army reportedly plans to procure 144 IM-SHORAD Systems, with the objective to equip the first and second battalions with 36 systems apiece by FY2021 and a third and fourth battalion with 36 systems each by FY2022. The House and Senate Armed Services Committees have recommended fully funding the Army’s FY2019 IM SHORAD budget request. The House Appropriations Committee also recommends fully funding the FY2019 request, and the Senate Appropriations defense subcommittee has yet to markup its version of the FY2019 appropriations bill. The Army reportedly categorizes IM-SHORAD as a rapid acquisition system and is not scheduled to go through a standard defense acquisition development cycle, but is to be developed under the Other Transaction Authority (OTA) contracting process. IM-SHORAD uses the M-1126 Stryker combat vehicle as its chassis. The weapons and radar packages will reportedly be put together by Leonardo DRS and then installed on the Stryker by General Dynamics Land Systems (GDLS)—the vehicle’s original manufacturer. The Leonardo DRS–developed multi-purpose unmanned turret reportedly will include two Hellfire missiles capable of hitting ground and air targets; four Stinger missiles for less-well armored aerial targets in a launcher configured by Raytheon; a 30mm automatic cannon; a 7.62mm machine gun; an electronic warfare (EW) package to counter selected enemy systems; and a Rada (Israeli) multi-mission radar capable of tracking both ground and air targets. Potential Issues for Congress The Army describes IM-SHORAD as an “initial” or “short term” capability to address the lack of air defense capability in maneuver forces. If the Army eventually opts to not adopt IM-SHORAD as the long-term solution for maneuver force air defense, what are the Army’s subsequent plans for this potentially $1 billion plus program? Would this capability be realigned to protect other Army assets, inactivated and placed in storage, or would it be made available to other countries under Foreign Military Sales? While IM-SHORAD has the capability to engage ground targets and threats, given the criticality of the potential air threat to maneuver forces and the somewhat limited number of IM-SHORAD systems available, is having a ground attack capability in the Army’s best interest? Will the wheeled IM-SHORAD system have sufficient mobility and survivability to provide air defense protection to Armored Brigade Combat Teams that consist primarily of heavily armored and tracked M-1 Abrams tanks and M-2 Bradley Infantry Fighting Vehicles? Do IM-SHORAD’s Stinger missiles have sufficient capability to destroy armored attack helicopters and ground attack fixed-wing aircraft or would some other type of weapon be better suited to address these “heavier” threats? If so, could another weapon be easily integrated into the current IM-SHORAD configuration? While IM-SHORAD has a limited organic onboard capability to detect, track, and engage enemy air threats, it is also expected to be part of the Army’s overall integrated air and missile defense architecture. As such, how will IM-SHORAD integrate with and depend upon the Army’s Integrated Air and Missile Defense Battle Command System (IBCS)—a program that has experienced noteworthy developmental challenges? What are some of the benefits and risks associated with the Army’s decision to procure IM-SHORAD under an Other Transaction Authority (OTA) contracting process?

Jul 18, 2018

The Black Lung Program, the Black Lung Disability Trust Fund, and the Excise Tax on Coal: Background and Policy Options

The federal government pays benefits to coal miners affected by coal workers’ pneumoconiosis (CWP, commonly referred to as black lung disease) and other lung diseases linked to coal mining in cases where responsible mine operators are not able to pay. In 2018, the monthly benefit for a miner with no dependents is $660.10. Benefits can be as much as $1,320.10 per month for miners with three or more dependents. Medical benefits are provided separately from disability benefits. Benefit payments and related administrative expenses in cases in which the responsible operators do not pay are paid out of the Black Lung Disability Trust Fund. The primary source of revenue for the trust fund is an excise tax on coal produced and sold domestically. If excise tax revenue is not sufficient to finance Black Lung Program benefits, the trust fund may borrow from the general fund of the Treasury. Coal Excise Tax Collections / Source: IRS SOI Bulletin Historical Table 20, available at https://www.irs.gov/statistics/soi-tax-stats-historical-table-20; and Department of the Treasury, Bureau of the Fiscal Service, Treasury Bulletin, March 2018, pp. 90-91, http://www.fiscal.treasury.gov. For 2018, the tax rates on coal are $1.10 per ton of underground-mined coal or $0.55 per ton of surface-mined coal, limited to 4.4% of the sales price. These rates were established in 1986. Starting in 2019, under current law, these tax rates are scheduled to be $0.50 per ton of underground-mined coal or $0.25 per ton of surface-mined coal, limited to 2% of the sales price. These are the rates that were set when the trust fund was established in 1977. The scheduled decline in the excise tax rates will likely put additional financial strain on a trust fund that already borrows from the general fund to meet obligations. The decline in domestic coal production, recent increases in the rate of CWP, and bankruptcies in the coal sector also contribute to the financial strain on the trust fund. The Black Lung Disability Trust Fund and associated excise tax on coal were established so that the coal industry, as opposed to taxpayers in general, would bear the burden associated with providing black lung benefits. Throughout its history, the Black Lung Disability Trust Fund has not raised revenues sufficient to meet obligations. As a result, at various points in time, Congress and the President have acted to increase the excise tax on coal, forgive or refinance trust fund debt, and modify black lung benefits eligibility. With the rate of the excise tax on coal scheduled to fall in 2019, the 115th Congress may again evaluate options for improving the fiscal condition of the Black Lung Disability Trust Fund, or other issues related to providing federal benefits to miners with black lung disease.

Jul 18, 2018

Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles

Jul 18, 2018

The Federal Role in Groundwater Supply: Overview and Legislation in the 115th Congress

Groundwater, the water in aquifers accessible by wells, is a critical component of the U.S. water supply. It is important for both domestic and agricultural water needs, among other uses. Nearly half of the nation’s population uses groundwater to meet daily needs; in 2015, about 149 million people (46% of the nation’s population) relied on groundwater for their domestic indoor and outdoor water supply. The greatest volume of groundwater used every day is for agriculture, specifically for irrigation. In 2015, irrigation accounted for 69% of the total fresh groundwater withdrawals in the United States. For that year, California pumped the most groundwater for irrigation, followed by Arkansas, Nebraska, Idaho, Texas, and Kansas, in that order. Groundwater also is used as a supply for mining, oil and gas development, industrial processes, livestock, and thermoelectric power, among other uses. Congress generally has deferred management of U.S. groundwater resources to the states, and there is little indication that this practice will change. For example, several bills introduced in the 115th Congress contain provisions that would direct that the federal government recognizes that aspects of groundwater, such as the connection between surface water and groundwater, be consistent with state water laws (surface water includes streams, rivers, lakes, ponds, and is not groundwater or atmospheric water, such as rain or snow). Those same bills also would prohibit the federal government from requiring the transfer of water rights to the United States or obtaining a water right in the name of the United States as a condition for receiving, renewing, amending, or extending “any permit, approval, license, lease, allotment, easement, right-of-way, or other land use or occupancy agreement.” In addition, these bills contain language asserting that the legislation would not alter certain reserved rights associated with federal and tribal lands. Congress, various states, and other stakeholders recently have focused on the potential for using surface water to recharge aquifers and the ability to recover stored groundwater when needed. Some see aquifer recharge, storage, and recovery as a replacement or complement to surface water reservoirs, and there is interest in how federal agencies can support these efforts. In the congressional context, there is interest in the potential for federal efforts to facilitate state, local, and private groundwater management efforts (e.g., management of federal reservoir releases to allow for groundwater recharge by local utilities). The two primary federal water resources agencies are the U.S. Bureau of Reclamation (Reclamation) and the U.S. Army Corps of Engineers (USACE). No significant federal restrictions apply to Reclamation’s authorities to deliver water for purposes of aquifer recharge, storage, and recovery. USACE authorities also do not contain restrictions on the nonfederal use for groundwater recharge of water stored or released from USACE reservoirs. Both agencies acknowledge that some state restrictions affect the use of the delivered or stored waters for groundwater activities. Some legislative proposals would provide the agencies with additional directives and mechanisms regarding their authority to support nonfederal groundwater recharge. Other federal agencies support activities that inform groundwater management. For example, the U.S. Geological Survey monitors and reports groundwater conditions across the country, develops groundwater models and software tools for characterizing aquifers, and provides long- and short-term forecasts of changing groundwater conditions as part of local and regional groundwater studies. The National Aeronautics and Space Administration and the National Oceanic and Atmospheric Administration also make observations and collect data that are relevant to groundwater monitoring and assessment. The U.S. Department of Agriculture collects groundwater data related to irrigation. Long-term changes to the climate affecting the United States, particularly rising temperatures and changes in the patterns, quantities, and type of precipitation (i.e., rain versus snow), could affect the availability of groundwater in the future. Other factors, such as changes to land use, irrigation practices, and patterns of water consumption, also may influence groundwater supplies.

Jul 18, 2018

Energy and Water Development: FY2019 Appropriations

The Energy and Water Development appropriations bill provides funding for civil works projects of the Army Corps of Engineers (Corps); the Department of the Interior’s Bureau of Reclamation (Reclamation) and Central Utah Project (CUP); the Department of Energy (DOE); the Nuclear Regulatory Commission (NRC); and several other independent agencies. DOE typically accounts for about 80% of the bill’s total funding. President Trump submitted his FY2019 budget proposal to Congress on February 12, 2018. The President’s budget requests for agencies included in the Energy and Water Development appropriations bill totaled $36.341 billion (excluding rescissions)—$6.871 billion (15.9%) below the FY2018 appropriation. A $375 million increase (3.5%) was proposed for DOE nuclear weapons activities. In contrast, the two versions of the FY2019 Energy and Water Development Appropriations bill passed by the House and Senate (Division A of H.R. 5895, H.Rept. 115-697, S.Rept. 115-258) would boost total appropriations above the FY2018 level. FY2018 Energy and Water Development funding was included in the Consolidated Appropriations Act, 2018 (P.L. 115-141), signed by the President on March 23, 2018. Major Energy and Water Development funding issues for FY2019 include Water Agency Funding Reductions. The Trump Administration requested reductions of 29.9% for the Corps and 26.5% for Reclamation for FY2019. Those cuts were largely not followed by the House and Senate. Termination of Energy Efficiency Grants. DOE’s Weatherization Assistance Program and State Energy Program would be terminated under the FY2019 budget request. Congress did not eliminate the grants for FY2018 and the proposed cuts were not included in the FY2019 House and Senate bills. Reductions in Energy Research and Development. Under the FY2019 budget request, DOE research and development appropriations would be reduced for energy efficiency and renewable energy (EERE) by 65.5%, nuclear energy by 37.2%, and fossil energy by 30.9%. The House and Senate bills largely did not include the proposed reductions. Energy R&D funding was increased 12.9% from its FY2017 level by the FY2018 Consolidated Appropriations Act. Nuclear Waste Repository. The Administration’s budget request would provide new funding for the first time since FY2010 for a proposed nuclear waste repository at Yucca Mountain, NV. DOE would receive $110 million to seek an NRC license for the repository, and NRC would receive $47.7 million to consider DOE’s application. DOE would also receive $10 million to develop interim nuclear waste storage facilities. The House bill would provide an additional $100 million to DOE for Yucca Mountain licensing above the request, while the Senate bill includes no Yucca Mountain funds. An Administration funding request for the Yucca Mountain project in FY2018 was not included in the FY2018 Consolidated Appropriations Act. Elimination of Advanced Research Projects Agency—Energy (ARPA-E). The Trump Administration proposed to eliminate funds for new research projects by ARPA-E in FY2019, and called for terminating the program after currently funded projects were completed. The House approved an 8.0% cut and the Senate voted for a 6.1% increase. A similar proposal to terminate ARPA-E in FY2018 was not followed by Congress, with the FY2018 Consolidated Appropriations Act boosting funding for ARPA-E by 15.5%—to $353.3 million. Low-Yield Warhead. DOE’s FY2019 budget documents proposed a low-yield version of the W76 LEP nuclear warhead. DOE’s initial FY2019 budget request did not request any funding specifically allocated to this modification, but the White House included $65 million for it in a budget amendment package submitted to Congress on April 13, 2018. Plutonium Disposition Plant Termination. The Administration proposed in FY2018 and FY2019 to terminate construction of the Mixed-Oxide Fuel Fabrication Facility (MFFF), which would make fuel for nuclear reactors out of surplus weapons plutonium. The FY2018 Consolidated Appropriations Act conforms to provisions in the National Defense Authorization Act, 2018 (P.L. 115-91) that allow DOE to pursue an alternative plutonium disposal program if sufficient cost savings are projected. The FY2019 House bill includes a similar provision, while the Senate bill provides funding for termination. The Administration certified under P.L. 115-91 on May 10, 2018, that the cost-saving requirement for termination of MFFF would be met.

Jul 17, 2018

Mexico’s 2018 Elections: Results and Potential Implications

Jul 17, 2018

Brett M. Kavanaugh: Selected Primary Material

Jul 17, 2018

Supreme Court Directs State Court to Decide Whether Indian Tribe Can Invoke Sovereign Immunity in Property Dispute

Jul 16, 2018

Improper Payments in High-Priority Programs: In Brief

The Improper Payments Information Act (IPIA) of 2002 defines improper payments as payments that should not have been made or that were made in an incorrect amount, including both overpayments and underpayments. This definition includes payments made to ineligible recipients, duplicate payments, payments for a good or service not received, and payments that do not account for applicable discounts. Since FY2004, federal agencies have been required to report on the amount of improper payments they issue each year and take steps to address the root causes of the problem. The data show a significant increase in improper payments from FY2007 ($42 billion) to FY2010 ($121 billion), followed by a slight decrease through FY2013 ($106 billion), another increase through FY2016 ($144 billion), and a slight decrease in FY2017 ($141 billion). The data also show that a small subset of programs has accounted for 85% to 98% of the government’s total improper payments each year. With this in mind, President Barack Obama signed Executive Order (E.O.) 13520 in 2009, which requires agencies to take additional measures to reduce the amount of improper payments associated with these “high-priority” programs. Notably, the executive order requires agencies to identify high-priority programs, develop detailed plans for reducing related improper payments, and establish annual goals against which progress could be measured. Agencies have identified 20 high-priority programs, all but one of which have been reporting data for several years. The data on high-priority programs present mixed results. Nine high-priority programs have showed improvement over time, as indicated by decreasing error rates, while three others have reported no improvement in their error rates. The error rates for the eight remaining high-priority programs have increased since they were first reported. Without further progress in reducing the error rates among high-priority programs the government’s total amount of improper payments may continue to exceed $100 billion per fiscal year, as it has since FY2009. Over the period of FY2004 through FY2017, high-priority improper payments have totaled $1.2 trillion and total improper payments have totaled $1.3 trillion.

Jul 16, 2018

Colombia’s 2018 Elections

Jul 12, 2018

Military Transition Assistance Program (TAP): An Overview

Jul 12, 2018

Justice Anthony Kennedy: His Jurisprudence and the Future of the Court

On June 27, 2018, Justice Anthony M. Kennedy announced that, effective July 31, 2018, he would retire from active service as an Associate Justice on the Supreme Court of the United States. His decisive role on the Court, particularly since the Roberts Court era began in 2005, cannot be overstated. The Roberts Court era has witnessed the Court issue a number of landmark rulings, many of which have involved matters where the sitting Justices were closely divided. Justice Kennedy typically voted with the majority of the Court in such cases. Since the October 2005 term that marked the beginning of the Roberts Court, Justice Kennedy voted for the winning side in a case more often than any of his colleagues in 9 out of 12 terms. Unlike several other Justices on the Court, Justice Kennedy did not necessarily subscribe to a particular judicial philosophy, such as originalism or textualism. Instead, Justice Kennedy’s judicial approach seemed informed by a host of related principles. First, Justice Kennedy’s views on the law were often grounded in concerns for personal liberty, particularly freedom from government interference with thought, belief, expression, and certain intimate conduct. His emphasis on liberty manifested itself in a range of opinions he wrote or joined during his tenure on the Court, including on issues related to free speech, religious freedom, and government policies concerning same-sex relationships. Second, the structural protections of the Constitution—i.e., restraints imposed on the federal government and its respective branches by the doctrines of federalism and separation of powers—also animated Justice Kennedy’s jurisprudence. For Justice Kennedy, separation of powers was a “defense against tyranny,” and he authored or joined a number of Court opinions that invalidated on separation-of-powers grounds intrusions on the executive, legislative, or judicial functions. Likewise, during the Rehnquist Court and Roberts Court eras, Justice Kennedy joined several majority opinions that recognized federalism-based limitations on the enumerated power of the federal government, established external limitations on Congress’s legislative powers over the states, and reaffirmed protections for state sovereignty. Third, Justice Kennedy’s jurisprudence was undergirded by his view that the Court often has a robust role to play in resolving issues of national importance. With Justice Kennedy casting critical votes, over the last 30 years the Court has reasserted its role in a number of areas of law in which it was previously deferential to the judgment of the political branches. Given Justice Kennedy’s outsized role on the Roberts Court, whoever succeeds him could have an important influence on any number of areas of law. In particular, Justice Kennedy’s votes were critical to the outcome of numerous Court decisions on matters relating to abortion, business law, civil rights, the death penalty, the regulation of elections, eminent domain, the environment, federalism, the First Amendment, gun rights, immigration, national security, oversight of the administrative state, and separation of powers. Accordingly, Justice Kennedy’s jurisprudence in these areas—particularly in cases where he was the deciding vote—may be especially relevant to the Senate as it determines whether to approve the President’s nominee to replace the soon-to-be-retired Justice. On July 9, 2018, President Trump announced the nomination of Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to– fill the impending vacancy on the Supreme Court caused by Justice Kennedy’s scheduled retirement. CRS reports analyzing Judge Kavanaugh’s jurisprudence on particular areas of the law, as well as a tabular listing of lower-court decisions in which he authored opinions, are in preparation.

Jul 11, 2018

Mongolia

Jul 10, 2018

President Trump Nominates Judge Brett Kavanaugh: Initial Observations

Jul 10, 2018

Financial Reform: Overview of the Volcker Rule

Jul 9, 2018

State Election Reform Payments: FY2018 Appropriations

Jul 9, 2018

Section 232 Investigations: Overview and Issues for Congress

Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862) provides the President with the ability to impose restrictions on certain imports based on an affirmative determination by the Department of Commerce (Commerce) that the product under investigation “is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” Section 232 actions are of interest to Congress because they are a delegation of Congress’ constitutional authority “to regulate Commerce with foreign Nations.” They also have important potential economic and policy implications for the United States. Global overcapacity in steel and aluminum production, mainly driven by China, has been an ongoing concern of Congress. The George W. Bush, Obama, and Trump Administrations each engaged in multilateral discussions to address global steel capacity reduction through the Organization for Economic Cooperation and Development (OECD). While the United States has extensive antidumping and countervailing duties on Chinese steel imports to counter China’s unfair trade practices, steel industry and other experts argue that the magnitude of Chinese production acts to depress prices globally. Based on concerns about global overcapacity and certain trade practices, in April 2017 the Trump Administration initiated Section 232 investigations on U.S. steel and aluminum imports. Effective March 23, 2018, President Trump applied 25% and 10% tariffs, respectively, on certain steel and aluminum imports. The President temporarily exempted several countries from the tariffs pending negotiations on potential alternative measures. Permanent tariff exemptions in exchange for quantitative limitations on U.S. imports were eventually announced covering steel for Brazil and South Korea, and both steel and aluminum for Argentina. Australia was exempted from both tariffs with no quantitative restrictions. Commerce is also managing a process for potential product exclusions to limit potential negative domestic effects the tariff may have on U.S. businesses and consumers. To date, over 20,000 applications have been received. U.S. trading partners are challenging the tariffs under World Trade Organization (WTO) rules and have threatened or enacted retaliation, risking potential escalation of retaliatory tariffs. Some analysts view the U.S. unilateral actions as potentially undermining WTO rules, which generally allow parties to act to protect “national security.” Congress enacted Section 232 during the Cold War when national security issues were at the forefront of national debate. The Trade Expansion Act sets clear steps and timelines for Section 232 investigations and actions, but allows the President to make a final determination over the appropriate action to take following an affirmative finding by Commerce that the relevant imports threaten to impair national security. Prior to the Trump Administration, there have been 26 Section 232 investigations resulting in nine affirmative findings by Commerce. In six of those cases the President imposed a trade action. On May 23, 2018, the Trump Administration initiated an additional Section 232 investigation on U.S. automobile and automobile part imports. This investigation as well as the Administration’s decision to apply the steel and aluminum tariffs on imports from Canada, Mexico, and the EU—all major suppliers of the affected imports—has prompted further questions by some Members of Congress and trade policy analysts on the appropriate use of the trade statute and the proper interpretation of threats to national security on which Section 232 investigations are based. These actions have also intensified debate over potential legislation to constrain the President’s authority with respect to Section 232. The steel and aluminum tariffs are affecting various stakeholders in the U.S. economy, prompting reactions from several Members of Congress, some in support and others voicing concerns. In general, the tariffs are expected to benefit the domestic steel and aluminum industries, leading to potential higher steel and aluminum prices and expansion in production in those sectors, while potentially negatively affecting consumers and downstream domestic industries (e.g., manufacturing and construction) through higher costs. Congress may exercise its authority on this issue by conducting oversight of the Section 232 investigations, examining the potential economic and broader policy effects of the tariffs, or potentially considering legislation to revoke or further limit the authority it previously delegated to the President.

Jul 5, 2018

The Congressional Review Act: Determining Which “Rules” Must Be Submitted to Congress

The Congressional Review Act (CRA) allows Congress to review certain types of federal agency actions that fall under the statutory category of “rules.” The CRA requires that agencies report their rules to Congress and provides special procedures under which Congress can consider legislation to overturn those rules. A joint resolution of disapproval will become effective once both houses of Congress pass a joint resolution and it is signed by the President, or if Congress overrides the President’s veto. The CRA generally adopts a broad definition of the word “rule” from the Administrative Procedure Act (APA), defining a rule as “the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency.” The CRA, however, provides three exceptions to this broad definition: any rule of particular applicability, including a rule that approves or prescribes for the future rates, wages, prices, services, or allowances therefor, corporate or financial structures, reorganizations, mergers, or acquisitions thereof, or accounting practices or disclosures bearing on any of the foregoing; any rule relating to agency management or personnel; or any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties. The class of rules the CRA covers is broader than the category of rules that are subject to the APA’s notice-and-comment requirements. As such, some agency actions, such as guidance documents, that are not subject to notice-and-comment rulemaking procedures may still be considered rules under the CRA and thus could be overturned using the CRA’s procedures. The effect of Congress disapproving a rule that is not subject to notice-and-comment rulemaking may be subject to debate, given that such rules are generally viewed to lack any legal effect in the first place. Nonetheless, the CRA does encompass some such rules, as highlighted by the recent enactment of a CRA resolution overturning a bulletin from the Consumer Financial Protection Bureau that was not subject to the notice-and-comment procedures. Even if an agency action falls under the CRA’s definition of “rule,” however, the expedited procedures for considering legislation to overturn the rule only become available when the agency submits the rule to Congress. In many cases in which agencies take actions that fall under the scope of a “rule” but have not gone through notice-and-comment rulemaking procedures, agencies fail to submit those rules. Thus, questions have arisen as to how Members can avail themselves of the CRA’s special fast-track procedures if the agency has not submitted the action to Congress. To protect its prerogative to review agency rules under the CRA, Congress and the Government Accountability Office (GAO) have developed an ad hoc process in which Members can request that GAO provide a formal legal opinion on whether a particular agency action qualifies as a rule under the CRA. If GAO concludes that the action in question can be considered a rule under the CRA, Congress has treated the publication of the GAO opinion in the Congressional Record as constructive submission of the rule. In other words, an affirmative opinion from GAO can allow Congress to use the CRA procedures to consider legislation overturning an agency action despite the agency not submitting that action to Congress.

Jul 5, 2018

Rural Highways

Of the nation’s 4.1 million miles of public access roads, 2.9 million, or 71%, are in rural areas. Rural roads account for about 30% of national vehicle miles traveled. However, with many rural areas experiencing population decline, states increasingly are struggling to maintain roads with diminishing traffic while at the same time meeting the needs of growing rural and metropolitan areas. Federal highway programs do not generally specify how much federal funding is used on roads in rural areas. This is determined by the states. Most federal highway money, however, may be used only for a designated network of highways. While Interstate Highways and other high-volume roads in rural areas are eligible for these funds, most smaller rural roads are not. It is these roads, often under the control of county or township governments, that are most likely to have poor pavement and deficient bridges. Rural roads received about 37% of federal highway funds during FY2009-FY2015, although they accounted for about 30% of annual vehicle miles traveled. As a result, federal-aid-eligible rural roads are in comparatively good condition: 49% of rural roads were determined to offer good ride quality in 2016, compared with 27% of urban roads. Although 1 in 10 rural bridges is structurally deficient, the number of deficient rural bridges has declined by 41% since 2000. When it comes to safety, on the other hand, rural roads lag; the fatal accident rate on rural roads is over twice the rate on urban roads. The Federal Highway Administration has generally urged states to select highway projects based on a broad view of transportation benefits; the FHWA has asserted that transportation can shape development but cannot create development where there is no demand. However, an April 2018 statement by the U.S. Department of Transportation (DOT) contended “underinvestment in rural transportation systems has allowed a slow and steady decline in the transportation routes that connect rural American communities.” DOT said that it intends to favor rural areas in awarding discretionary grants for highway projects. If it seeks to focus on the condition of rural roads and bridges, Congress could expand the network of federal-aid highways to include more local roads; could create new programs that would specifically target transportation in rural areas; and/or could fund an expansion of the Interstate System. Without an increase in overall funding levels, however, such measures might cause states to spread their federal highway funds across wider networks of highways, making it more difficult for them to marshal the funds needed to undertake large and costly projects. Alternatively, given the population loss in some rural areas, Congress might provide incentives for states and counties to close or pulverize underused roads back to gravel and close underused and structurally deficient rural bridges, encouraging them to devote more of their resources to more heavily used roads.

Jul 5, 2018

The Edward Byrne Memorial Justice Assistance Grant (JAG) Program

Jul 5, 2018

Medicare Overview

Jul 5, 2018

Community Oriented Policing Services (COPS) Program

Jul 5, 2018

Broadband Data and Mapping

Improving the quality of broadband deployment data has become an issue of congressional interest, as policymakers recognize that more accurate broadband availability maps could help ensure that federal broadband programs target unserved areas of the country that are most in need of assistance. Since the initial deployment of broadband in the late 1990s, two federal agencies have implemented broadband availability data collection and mapping initiatives: the National Telecommunications and Information Administration (NTIA) at the Department of Commerce (DOC) and the Federal Communications Commission (FCC). NTIA In 2009, the American Recovery and Reinvestment Act (P.L. 111-5) appropriated $350 million to NTIA to develop and maintain a comprehensive nationwide inventory map of existing broadband service capability and availability in the United States. Previously, in 2008, the Broadband Data Improvement Act (P.L. 110-385) had directed the Department of Commerce to establish a state broadband data and development grant program, and to use the data gathered by the states to create a broadband inventory map. NTIA launched the State Broadband Initiative (SBI) in 2009 and awarded $293 million to 56 grantees, one each from the 50 states, 5 territories, and the District of Columbia. NTIA worked with each to collect fixed and mobile broadband availability data for over 11 million census blocks. In the SBI program, NTIA used a state-level validation process intended to ensure the accuracy of the broadband availability data submitted by providers. On February 17, 2011, NTIA utilized the state-gathered data to launch the National Broadband Map. The map was updated approximately every six months until April 2015. The final SBI-generated National Broadband Map reflected data as of June 30, 2014. Because the ARRA state grants had expired, NTIA could no longer update the map, and the FCC subsequently assumed responsibility for the National Broadband Map. FCC In 2000, the FCC established the Form 477 Data Program to collect from providers subscription data on broadband services, local telephone service competition, and mobile telephony services. Since 2000, the FCC has revised its Form 477 data process three times. The most recent revision expanded the scope of the data collection program to enable the FCC to, among other things, populate and update the National Broadband Map. The first FCC map was based on June 2016 fixed broadband data collected through the Form 477 process. The second and current map was released in February 2018 and reflects December 2016 fixed broadband data. Unlike NTIA’s SBI program, Form 477 data does not undergo an independent validation and verification process. Twice per year, all facilities-based providers of fixed broadband are required to provide a list of all census blocks where fixed broadband service (at speeds of 200 kilobits per second or higher) is currently available to at least one location, or where the provider could—within a standard service interval—provide service. The collection of accurate and reliable mobile broadband data is particularly challenging, because a user’s mobile wireless experience varies and is affected by signal strength and factors such as terrain, user location, weather, network congestion, and the type of connected device. Mobile broadband service providers are required to submit polygons in shapefiles that digitally represent the geographic areas in which a customer could expect to receive the minimum speed the provider advertises for that area. Additionally, mobile broadband providers report the census tracts in which their service is advertised and available to potential customers. Form 477 mobile broadband data is not reflected in the FCC’s National Broadband Map, which displays fixed broadband deployment only. However, Form 477 mobile broadband data is used by the FCC to determine and map which areas are eligible for the Mobility Fund Phase II program. Moving Forward Two major criticism of the FCC’s Form 477 National Broadband Map are that provider-reported data is not independently verified or validated, and that broadband availability is overstated because the data is not sufficiently granular. A significant factor in over-reporting is that fixed broadband deployment data is collected at the census block level. A census block is considered served if there is broadband service to one or more locations. This is especially problematic in rural areas, which have large census blocks and may be considered served if, for example, a single neighborhood in that large census block has broadband service. On the other hand, broadband providers assert that requiring the collection of certain additional broadband data, including increased granularity (such as address-level data), would be impractical and unduly burdensome, would require significant time and expense, and may not necessarily result in more useful data. On August 3, 2017, the FCC adopted a Further Notice of Proposed Rulemaking to explore ways “to improve the quality, accuracy, and usefulness of the data it collects on fixed and mobile voice and broadband service,” while at the same time examining how it can “reduce burdens on industry by eliminating unnecessary or onerous data filing requirements.” The Administration requested $50 million for broadband mapping in FY2018. The Consolidated Appropriations Act, 2018 (P.L. 115-141) appropriated $7.5 million to NTIA to update the national broadband availability map in coordination with the FCC and using partnerships previously developed with the states. For FY2019, the House and Senate appropriations committees would provide an additional $7.5 million to NTIA for broadband mapping. On May 30, 2018, NTIA issued a Request for Comments on actions it should take to improve the quality and accuracy of broadband availability data. Meanwhile, broadband data bills in the 115th Congress include H.R. 1546, H.R. 4810, S. 1104, S. 1621, and draft NTIA reauthorization legislation. Issues include how to obtain more granular data while minimizing burdens and costs to providers; whether self-reported provider data should be independently verified, and if so, how; and the appropriate roles and funding of federal agencies in collecting and coordinating broadband data.

Jul 3, 2018

Foreign Investment Risk Review Modernization Act (FIRRMA)

Some Members of Congress, the Trump Administration, and some U.S. businesses have raised concerns over continued U.S. technological leadership to support national defense and economic security due to growing foreign, primarily Chinese, investments in U.S. high-tech companies. These and other concerns motivated the House and the Senate to adopt measures, both known as the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The bills would amend the current process for the Committee on Foreign Investment in the United States (CFIUS) (under P.L. 110-49) to review, on behalf of the President, the national security implications of foreign direct investments in the United States. The Senate version (S. 2098) of FIRRMA was added as Title XVII to the Senate version of the National Defense Authorization Act for Fiscal Year 2019 (S. 2987, and as incorporated into the Senate amendments to H.R. 5515), which passed the Senate on June 18, 2018. The House version (H.R. 5841) of FIRRMA was passed by the House as a stand-alone bill on June 26, 2018. It is expected that the provisions will go to conference to be reconciled in the coming weeks. The House and Senate measures would represent the most comprehensive revision of the foreign investment review process under CFIUS since previous revisions were enacted in 2007. Since its inception in 1975, CFIUS has operated at the nexus of shifting concepts of national security and a changing global economic order that is marked in part by such emerging economies as China and state-led firms that are playing a more active role in the global economy. The CFIUS process grants the President the authority to block or suspend proposed or pending foreign “mergers, acquisitions, or takeovers” of “persons engaged in interstate commerce in the United States” that threaten to impair the national security. To exercise his authority, the President must conclude that (1) other U.S. laws are inadequate or inappropriate to protect the national security; and (2) must have “credible evidence” that the foreign interest exercising control might take action that threatens to impair U.S. national security. CFIUS currently does not review joint ventures or new business ventures, the latter often referred to as “greenfield investments.” The U.S. export control system, which addresses certain outbound transactions, operates separately from CFIUS, although the Secretaries of Commerce, Defense, and State, whose departments are involved in administering export controls, are permanent members of CFIUS. Proposed changes to CFIUS could recast the current law’s generally open approach to foreign investment that largely focuses reviews and investigations on the potential impact of individual investments on national security, to a more assertive role that emphasizes both U.S. economic and national security interests, particularly relative to the development of dual-use leading-edge technology. Overall, the changes range from provisions that would codify existing administrative actions to provisions that would expand the scope of transactions that fall under CFIUS’ jurisdiction and distinguish foreign investments by country. Specifically, investment transactions involving “countries of special concern,” would face a higher level of scrutiny, though the criteria for that designation by CFIUS differ between the House and Senate bills. The House and Senate versions of FIRRMA differ in a number of ways, but key provisions would Broaden CFIUS’ role by including for review certain real estate transactions in close proximity to a military installation or U.S. government facility or property of national security sensitivities; joint ventures (House version); any nonpassive investment in U.S. businesses involved in critical technology or critical infrastructure; any change in foreign investor rights regarding a U.S. business; transactions in which a foreign government has a direct or indirect substantial interest; and any transaction or arrangement designed to evade CFIUS regulations. Allow for CFIUS to discriminate among foreign investors by country of origin in reviewing investment transactions by labeling some countries as being a country of special concern—one that poses a “significant threat to the national security interests of the United States” (Senate version), or a country that is subject to export restrictions, is a state-sponsor of terrorism, or is subject to an arms embargo (House version). Shift the filing process for foreign firms from voluntary to mandatory in certain cases and provide for a two-track method for reviewing investment transactions with some transactions requiring a declaration to CFIUS and receiving an expedited process, while transactions involving investors from countries of special concern would require a written notification of a proposed transaction and receive greater scrutiny. Lengthen most time periods for CFIUS reviews and investigations and for a national security analysis by the Director of National Intelligence. Provide for more staff to handle an expected increased work load and provide for additional funding for CFIUS through a filing fee structure for firms involved in a transaction (Senate version) or a combination of a $20 million annual appropriation and a fee structure (House version). Provide for additional factors for consideration that CFIUS and the President can use to determine if a transaction threatens to impair U.S. national security. Formalize CFIUS’ use of risk-based analysis to assess the national security risks of a transaction by assessing the threat, vulnerabilities, and consequences to national security related to the transaction. Modify CFIUS’ annual confidential report to specified Members of Congress and nonconfidential reports to the public to provide for more information on foreign investment transactions. Mandate separate reforms related to export controls, with requirements to establish an interagency process to identify so-called “emerging and foundational technologies”—such items would also fall under CFIUS review of critical technologies—and establish controls on the export or transfer of such technologies. (The House version includes more extensive export control revisions.) President Trump reportedly endorses the enhanced CFIUS process that would result from the adoption of FIRRMA in lieu of proposing new restrictions on foreign investment, including from China as part of the U.S. investigation into Chinese practices related to technology transfer and intellectual property rights.

Jul 3, 2018