CRS Reports

Brazil’s Presidential Election

Brazil—the fifth most populous country and ninth-largest economy in the world—is scheduled to hold general elections on October 7, 2018. The presidential race remains extremely volatile, and the outcome could lead to changes in the economic and foreign policies of a U.S. “strategic partner.” Domestic Context The 2018 election is taking place as Brazil struggles to emerge from a series of domestic crises. The country fell into a deep recession in 2014, due to a decline in global commodity prices and economic mismanagement under the center-left Workers Party (PT) government of President Dilma Rousseff (2011-2016). The unemployment rate more than doubled as real gross domestic product contracted by more than 8% from 2015 to 2016. Although economic growth returned in 2017, conditions remain difficult. More than 12% of the population is unemployed, and several million Brazilians who joined the country’s lower middle class from 2004 to 2013 have fallen back into poverty. Brazil also is contending with the repercussions of massive corruption scandals. Since 2014, investigators have uncovered arrangements throughout the public sector in which businesses provided bribes and illegal campaign donations to politicians in exchange for contracts or other favorable government treatment. The revelations discredited much of Brazil’s political establishment and contributed to the controversial impeachment and removal from office of President Rousseff in August 2016. These political crises have eroded citizens’ faith in their democratic institutions; 28% of Brazilians expressed satisfaction with their democracy in 2017. President Michel Temer, who succeeded Rousseff, is deeply unpopular. His center-right government has enacted several major economic reforms, including measures to freeze government spending for 20 years, weaken worker protections, and allow greater private sector participation in Brazil’s oil sector. Temer also has worked with the Brazilian congress to shield himself from corruption charges. Although international investors have applauded Temer’s economic policies, 92% of Brazilians disapprove of his administration. Presidential Race The current presidential front-runner is Jair Bolsonaro, a far-right congressman and former army captain backed by the small Social Liberal Party. Bolsonaro has been in congress since 1991 but is running as a political outsider. He is a longtime defender of Brazil’s military dictatorship, and his running mate—a retired army general—suggested in 2017 that the armed forces might need to intervene to deal with corruption. In recent months, Bolsonaro has asserted that police officers should be free to kill suspected criminals and that land rights activists should be considered terrorists. Although his populist law-and-order message appeals to many Brazilians fed up with corruption and escalating violence, others have expressed alarm at his inflammatory comments and authoritarian sympathies. On September 6, Bolsonaro was stabbed at a political rally in an apparent assassination attempt. He was discharged from the hospital on September 29 but may not be able to return to the campaign trial before Election Day. Figure 1. Presidential Election Polls: September 2018 / Source: IBOPE Inteligência. Most of Brazil’s political establishment is supporting Geraldo Alckmin, a former governor of São Paulo state from the center-right Brazilian Social Democracy Party (PSDB). Alckmin has embraced the Temer Administration’s economic agenda and pledged to enact additional market-oriented reforms if elected president. The parties backing Alckmin’s candidacy control more than half of the seats in the lower house of congress, giving him the largest share of Brazil’s public campaign finance fund and nearly half of all political advertising time on television. Those advantages have not translated into popular support, however, as Alckmin has been unable to consolidate the centrist vote and has lost some traditional PSDB voters to Bolsonaro. Former president Luiz Inácio Lula da Silva (2003-2010) of the PT, who is currently serving a 12-year prison sentence for corruption, led the presidential race for more than a year. Electoral authorities declared Lula ineligible to run on August 31, however, after an appeals court upheld his 2017 conviction. Lula remains popular among many Brazilians whose standard of living improved significantly during his tenure. Fernando Haddad, a former education minister and mayor of São Paulo, replaced Lula at the top of the PT ticket. He quickly won over many Lula supporters (see Figure 1) but continues to face competition for left-leaning voters from Ciro Gomes of the Democratic Labor Party. Gomes is a former member of congress, cabinet minister, and governor of the northeastern state Ceará. If no candidate wins a majority of the vote, the top two finishers will advance to a runoff scheduled for October 28, 2018. The latest polls suggest Bolsonaro would enter the second round trailing each of his principal competitors. Potential Policy Shifts Many economists argue that Brazil’s economic recovery depends on the next president enacting extensive reforms, including measures to reduce pension costs, simplify the tax system, and liberalize trade flows. Alckmin has embraced such policy changes, but the other candidates are more ambivalent. Haddad and Gomes have pledged to address the fiscal deficit; however, they also intend to reverse most of the Temer Administration’s reforms and reassert a stronger role for the state in development. Bolsonaro has expressed support for market-oriented policies during the campaign but has advocated economic nationalism throughout his political career. Whoever is elected may struggle to move legislation through Brazil’s fragmented congress. Stronger economic growth in Brazil could bolster demand for U.S. exports, which totaled $63.7 billion in 2017. Brazilian leaders, who have been preoccupied with domestic crises, have dedicated little attention to foreign affairs over the past five years. The next president will face similar challenges but could reassert Brazilian influence abroad once the domestic situation stabilizes. Most of the candidates likely would maintain Brazil’s long-standing commitments to multilateralism, peaceful dispute settlement, and non-intervention. Bolsonaro is more likely to break with tradition. He has called for closer alignment with President Trump and has announced his intention to withdraw from multilateral arrangements such as the Paris Agreement on climate change and the U.N. Human Rights Council. A more assertive Brazilian foreign policy could help address global challenges, such as the crisis in Venezuela. It also could lead to bilateral tensions, however, when U.S. and Brazilian interests diverge.

Oct 1, 2018

Expiration of the 2014 Farm Bill: Some Potential Implications

Sep 28, 2018

Federalism-Based Limitations on Congressional Power: An Overview

The U.S. Constitution establishes a system of dual sovereignty between the states and the federal government, with each state having its own government, endowed with all the functions essential to separate and independent existence. Although the Supremacy Clause of the Constitution designates “the Laws of the United States” as “the supreme Law of the Land,” other provisions of the Constitution—as well as legal principles undergirding those provisions—nonetheless prohibit the national government from enacting certain types of laws that impinge upon state sovereignty. The various principles that delineate the proper boundaries between the powers of the federal and state governments are collectively known as “federalism.” Federalism-based restrictions that the Constitution imposes on the national government’s ability to enact legislation may inform Congress’s work in any number of areas of law in which the states and the federal government dually operate. There are two central ways in which the Constitution imposes federalism-based limitations on Congress’s powers. First, Congress’s powers are restricted by and to the terms of express grants of power in the Constitution, which thereby establish internal constraints on the federal government’s authority. The Constitution explicitly grants Congress a limited set of carefully defined enumerated powers, while reserving most other legislative powers to the states. As a result, Congress may not enact any legislation that exceeds the scope of its limited enumerated powers. That said, Congress’s enumerated powers nevertheless do authorize the federal government to enact legislation that may significantly influence the scope of power exercised by the states. For instance, subject to certain restrictions, Congress may utilize its taxing and spending powers to encourage states to undertake certain types of actions that Congress might otherwise lack the constitutional authority to undertake on its own. Similarly, the Supreme Court has interpreted the Constitution’s Commerce Clause to afford Congress substantial (but not unlimited) authority to regulate certain purely intrastate economic activities that substantially affect interstate commerce in the aggregate. Congress may also enact certain types of legislation in order to implement international treaties. Additionally, pursuant to a collection of constitutional amendments ratified shortly after the Civil War, Congress may directly regulate the states in limited respects in order to prevent states from depriving persons of certain procedural and substantive rights. Finally, the Necessary and Proper Clause augments Congress’s enumerated powers by empowering the federal government to enact laws that are “necessary and proper” to execute its express powers. In addition to the internal constraints on Congress’s authority, the Constitution also imposes external limitations on Congress’s powers vis-à-vis the states—that is, affirmative prohibitions on certain types of federal actions found elsewhere in the text or structure of the Constitution. The Supreme Court has recognized, for instance, that the national government may not commandeer the states’ authority for its own purposes by forcing a state’s legislature or executive to implement federal commands. Nor may Congress apply undue pressure to coerce states into taking actions they are otherwise disinclined to take. Furthermore, the principle of state sovereign immunity—which limits the circumstances in which a state may be forced to defend itself against a lawsuit against its will—imposes significant constraints on Congress’s ability to subject states to suit. Finally, the Supreme Court has recognized limits to the extent to which Congress may subject some states to more onerous regulatory burdens than other states.

Sep 27, 2018

Global Trade Imbalances

In July 2018, the International Monetary Fund (IMF) released its latest report on global trade imbalances that identifies countries with “excessive” current account balances and exchange rates that are “misaligned.” The current account is a broad measure of a country’s global economic engagement and is comprised of trade in goods, services, and official flows. The report indicates that 40% to 50% of countries had imbalances that were “excessive,” and that imbalances of about 3.25% of world GDP—both surpluses and deficits—remained constant in 2017, as indicated in Figure 1. In other words, some countries are saving too much and others are borrowing too much (globally, the combined saving and borrowing nets to zero, including statistical discrepancy). Individuals, businesses, and governments contribute to the saving rate. Advanced economies account for a rising share of the deficit: the United States has the single largest deficit. Other trade specialists argue that extensive cross-border capital flows have reduced the usefulness of the current account as a monitoring device and that policy prescriptions based on current account imbalances—and trade imbalances as the largest component of the current account—may be counterproductive. Figure 1. Global Current Account Surpluses and Deficits ($ in billions) / Source: International Monetary Fund. The IMF report potentially supports the Trump Administration’s criticism of the global trading system. The Administration has used the U.S. trade deficit and trade practices of U.S. trading partners as barometers for evaluating the success or failure of the global trading system, U.S. trade policy, and bilateral trade relations with various countries. It also characterizes the trade deficit as harming the performance and national security of the U.S. economy. Citing many of these concerns, the President imposed tariffs under three U.S. laws that allow the Administration to impose trade restrictions based on certain criteria: (1) Section 201 (19 U.S.C. §2251), (2) Section 232 (19 U.S.C. §1862), and (3) Section 301 (19 U.S.C. §2411). The United States has experienced current account deficits since the mid-1970s. In 2017, the United States had a current account deficit of about $450 billion, as indicated in Figure 2. The United Kingdom also experienced current account deficits, while Germany, Japan, and China had surpluses. Relative to the size of the U.S. economy (measured by U.S. gross domestic product [GDP]), the current account deficit is equivalent to less than 3% of U.S. GDP. Figure 2. Current Account Balances of Major Economies ($ in billions) / Source: International Monetary Fund. Current account balances are monitored to signal countries that may face long-term debt sustainability issues and, therefore, may require near-term adjustments to macroeconomic policies. The IMF argues that imbalances can be beneficial for countries with aging populations that accrue surpluses to draw down as workers retire. Also, the IMF argues that current account deficits and surpluses may be useful at different times for country-specific shocks and to facilitate a globally efficient allocation of capital. It also states that imbalances may be “symptoms of distortions” and that sustained excess imbalances “risk aggravating trade tensions,” may lower the rate of global economic growth, and can be disruptive for emerging economies. The IMF encourages countries to take corrective measures, but argues that protectionist trade policies negatively affect domestic and global growth and have a limited impact on external balances. The IMF estimates “excessive” current account balances by comparing the actual current account position with a theoretical average level, identified as “normal.” This normal positon represents values that are consistent with certain economic “fundamentals and desirable medium-term policies,” the IMF derives by replacing current economic policies with “desired” economic policies. A current account balance that is excessive or a currency that is misaligned does not mean the IMF determined that a country had purposely manipulated its trade balance or its exchange rate. The IMF also estimates a weighted average of exchange rates, or the real effective exchange rate (REER), that is consistent with the IMF’s estimates of the normal current account position. Finally, the IMF prepares a subjective evaluation using country-specific information. The IMF estimates the gap between the actual and estimated current account balance for the United States was negative 1.6% of GDP and the dollar was overvalued by 8% to 16%. Most economists conclude the U.S. trade deficit is largely the product of a low national savings rate, attributed in part to U.S. macroeconomic policy, or the combination of fiscal policy—notably large and persistent budget deficits—and monetary policy. This combination of policies determines the overall saving-investment balance in the economy, which then determines the inward and outward flows of funds that affect the international exchange value of the dollar and the U.S. trade balance. Although quite esoteric, some trade specialists argue that the widely accepted characterization of the current account as a product of a domestic saving-investment relationship ignores the size and extent of cross-border capital flows. These flows distinguish differences between the role of national saving from the actual financing of a trade deficit and suggesting imbalances in financing, not in the current account, can lead to macroeconomic instability similar to the 2008-2009 financial crisis. A country’s ability to finance its trade deficit can be distinct from its domestic saving-investment balance, as is apparent from the U.S. experience. Despite a low overall national savings rate, the United States has financed its trade deficit through various methods as foreigners have acquired U.S. government, business, and household assets. This process is facilitated by the perceived strengths of the U.S. economy and the role of the dollar as the preeminent global reserve currency. This broad international usage of the dollar, however, challenges the prospect that the dollar is misaligned, despite the persistent U.S. current account deficits, and the role of the current account as a trade or public policy monitoring indicator. It also implies that the ability of the United States to finance its current account deficit is distinct from its domestic saving-investment imbalance and likely will depend on foreign investors’ evaluation of the relative security and stability of the United States as an investment location and of the relative attractiveness of dollar-denominated assets.

Sep 27, 2018

EPA Proposes the Affordable Clean Energy Rule to Replace the Clean Power Plan

Sep 26, 2018

The September 2018 Inter-Korean Summit

From September 18 to 20, South Korean President Moon Jae-in visited North Korea and held approximately five hours of meetings with North Korean leader Kim Jong-un. During the summit, their third since April 2018, the two leaders issued a Pyongyang Joint Declaration pledging denuclearization of the Korean Peninsula, improvements in inter-Korean relations, and confidence-building measures to ease military tension. Kim promised to visit Seoul “at an early date.” The Moon-Kim summit has created potential opportunities and obstacles for the United States. The summit appears to have injected new momentum into North Korea-U.S. denuclearization talks, which had stalled in the months after President Trump’s summit with Kim in Singapore in June. Meeting with Moon days after the inter-Korean summit, President Trump said that he and Kim would be holding a second summit “in the not too distant future.” The September inter-Korean summit, however, also may have constrained the United States’ freedom of action, particularly if North Korea does not follow through on its pledges. Major Outcomes Kim’s reciprocal visit to Seoul: Moon said that the two leaders agreed the visit should occur by the end of 2018, “if possible.” If realized, it will be the first trip to Seoul by a DPRK leader since the end of the Korean War in 1953. Nuclear and missile programs: The two leaders agreed that they would “cooperate ... in the process of pursuing complete denuclearization of the Korean Peninsula,” and that “substantial progress toward this end must be made in a prompt manner.” Kim repeated his June pledge to Trump to dismantle the Tongchang-ri (also called Sohae) missile and satellite launch site, adding for the first time that international experts could be present. Kim pledged to take additional steps, including the “permanent dismantlement” of its nuclear facilities in Yongbyon, “as the United States takes corresponding measures.” Military confidence-building measures: Among other steps, the two Koreas agreed to reestablish communications links to prevent accidental military clashes, create a no-fly zone along the DMZ, withdraw many of their guard posts within the DMZ, and create in effect a “no military drills zone” and a joint fishing zone in the Yellow Sea. Economic measures: Moon and Kim pledged to hold a groundbreaking ceremony for reconnecting east and west coast roads and railroad tracks by the end of 2018. They also agreed, “as conditions ripe [sic],” to reopen the inter-Korean Kaesong Industrial Complex (KIC) inside North Korea that Moon’s predecessor closed in February 2016 following Pyongyang’s fourth nuclear test. Moon’s 200-person contingent included business leaders, including the heads of Samsung, Hyundai, and LG. Other exchanges and cooperation: Moon and Kim pledged to jointly participate in the 2020 Olympics and bid to co-host the 2032 Summer Olympics, as well as strengthen medical and environmental cooperation, especially in forestry. They also agreed to create a permanent facility in North Korea for temporarily reuniting the thousands of families separated since the Korean War. Having already established their first-ever permanent liaison office, at the KIC in North Korea, the declaration said the leaders wished that “current developments in inter-Korean relations will lead to reunification.” Symbolism: The summit, which received TV coverage in both countries, included the two leaders’ motorcade through Pyongyang and joint visit with their wives to the peak of the Peninsula’s tallest mountain, Mt. Paektu, the Korean people’s mythical birthplace. In the first direct speech by a South Korean president to a large North Korean audience, Moon gave a short address to a crowd of approximately 150,000 North Koreans attending a gymnastics performance. Questions How significant are Kim’s nuclear and missile pledges? Moon has said that if North Korea follows through on Kim’s existing promises, it essentially will be unable to advance its nuclear and missile programs. However, many U.S. and ROK experts are skeptical because North Korea has yet to disclose the composition and/or size of its nuclear material or warhead stocks and facilities, including those not at Yongbyon. North Korea and the United States also have not agreed upon what constitutes “denuclearization.” Nor have they agreed upon a timeline or verification measures for dismantlement. North Korea “continue[s] to produce fissile material,” Secretary of State Mike Pompeo testified in July, shortly after U.S. intelligence agencies reportedly gathered evidence of DPRK efforts to conceal parts of its nuclear programs. Pyongyang also reportedly has continued working on more advanced long-range missiles. What are the “corresponding measures” the United States must take for North Korea to dismantle Yongbyon? Moon has aligned with Kim’s view that concessions by the United States and DPRK be made in a “balanced manner,” and that the United States should “put an end to hostile relations” and “provide security assurances to the North,” as Trump promised in Singapore. However, the Pyongyang Declaration did not specify which party needs to move first, on what measures. This has stymied progress in U.S.-DPRK relations since the Singapore summit. Without such an agreement, which Moon appears to be trying to broker, the policy logjam could continue. Do the military agreements limit the U.S.-ROK alliance’s capabilities? Defense analysts have claimed that the dramatic expansion of existing no-fly zones could curtail the alliance’s ability to conduct surveillance on North Korean military activities north of the DMZ. Together with the removal of guard posts in the DMZ, North Korea may be better positioned to launch a surprise attack on South Korea. Have the two Koreas limited the United States’ options? By eroding North Korea’s diplomatic and economic isolation, institutionalizing their rapprochement, and declaring their desire for non-aggression and a peace declaration, the two Koreas over the past nine months may have limited the United States’ ability to return to its expansive “maximum pressure” campaign of 2017. They also may have further reduced the viability of a U.S. military strike against North Korea, which the Trump Administration reportedly was considering in 2017, because it likely will be harder to gain support from South Korea. President Moon has stated that he seeks “an enduring peace regime” to enable “the South and North to become the masters of Korean Peninsula issues without getting pushed around by any international situation....”

Sep 25, 2018

EPA Proposes New Permitting Test for Power Plant Modifications

Sep 25, 2018

Escalating Tariffs: Potential Impacts

Concerns over trading partner trade practices and the U.S. trade deficit have been a focus of the Trump Administration. For a timeline of recent actions, see CRS Insight IN10943, Escalating Tariffs: Timeline. Citing these concerns and others, the President has imposed tariffs under three U.S. laws and authorities (Figure 1) that allow the Administration to unilaterally impose trade restrictions: (1) Section 201 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 on U.S. imports from China. Annual U.S. imports of goods subject to the additional tariffs, which range from 10% to 50%, totaled $282 billion in 2017 (Table 1). All formally proposed tariffs are now in effect, but the President has informally raised the prospect of tariffs on an additional $267 billion of U.S. annual imports from China, and, pending a Section 232 investigation, approximately $361 billion of U.S. auto and parts imports. While the tariffs may benefit import-competing U.S. producers, they are also likely to increase costs for downstream users of imported products and consumers. The Administration could be using the tariffs in part to pressure affected countries into broader trade negotiations, such as the 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. The figure above includes all U.S. imports from China under HTS 85176200 ($22.9 billion in 2017). A portion of the products currently included in this category are excluded from the tariffs, but there is currently no statistical reporting number (HTS 10 digit code) for these excluded items such that CRS is unable to determine the portion of trade under this category that will be excluded. USITC is creating a new statistical reporting number, HTS 8517620090, to capture these excluded items. Retaliation may amplify the potential negative effects of the U.S. tariff measures. Retaliatory tariffs in effect cover almost $126 billion of U.S. annual exports, based on 2017 export data (Table 2). 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, such as the recently signed EU-Japan FTA. Adverse effects could grow if a tit-for-tat process of retaliation continues and the scale of trade affected increases. For example, the President stated that $267 billion of additional U.S. imports from China could face increased tariffs. China’s potential retaliation against another round of U.S. tariffs is limited by the fact that it has already imposed tariff increases on nearly all its U.S. imports, but it could further increase tariffs on the products it has already targeted or begin imposing nontariff measures such as informal pressure to limit U.S. multinational sales in China. New Section 232 actions by the Administration could result in 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 (latest available data). 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 more than 10% of annual U.S. goods imports; pending investigations and threatened further counter-retaliations could potentially increase this to nearly 30%. 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 be significant if tit-for-tat action escalates. What are the Administration’s ultimate objectives from the tariff increases and do potential benefits justify 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 that retaliatory countermeasures violate trade agreement obligations. What are the risks to the international trading system of continued unilateral action? Potential Trade Affected The tables below provide the range of potential trade volumes affected by the U.S. tariffs and trading partner retaliation. 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. Table 1. U.S. Import Restrictions U.S. Trade Action U.S. Imports (millions, 2017) Additional Tariff Potential Annual Tariff Revenue (millions, 2017) Effective Date Section 201 Solar Cells/ Modules $5,196 TRQ (0%, 30%)/ 30% $1,559 Feb. 7, 2018 Large Washers/ Washer Parts $1,927 TRQ (20%, 50%)/ TRQ (0%, 50%) $964 Feb. 7, 2018 Total $7,123 $2,523 Section 232 Aluminum $16,643 10% $1,664 Mar. 23, 2018 Steel $23,369 25%a $6,140 Mar. 23, 2018 Total $40,012 $7,805 Section 301 China - Stage 1 $32,262 25% $8,066 July 6, 2018 China - Stage 2 $13,685 25% $3,421 Aug. 23, 2018 China - Stage 3 $188,897b 10%(2018) 25%(2019) $42,502c Sept. 24, 2018 Total $234,844 $53,989 Total in Effect $281,979 $64,316 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. Increases in the price of goods resulting from the tariffs are likely to decrease demand for imports and therefore result in lower revenue collection than the estimated amounts. TRQ tariff revenue estimated assuming all imports are subject to over quota tariff. U.S. steel tariff is 50% on imports from Turkey. This includes all U.S. imports from China under HTS 85176200 ($22.9 billion in 2017). A portion of the products currently included in this category are excluded from the tariffs, but there is currently no statistical reporting number (HTS 10 digit code) for these excluded items such that CRS is unable to determine the portion of trade under this category that will be excluded. USITC is creating a new statistical reporting number, HTS 8517620090, to capture these excluded items moving forward. Annual total revenue estimate calculated with 2 months at 10% and 10 months at 25%. Table 2. Retaliatory Actions Retaliatory Trade Action U.S. Exports (millions, 2017) Additional Tariff Potential Annual Tariff Revenue (millions, 2017) Effective Date Section 201 South Korea (Solar and Washers) $1,377a TBD $474a 2021 China (Solar and Washers) $654a TBD $220a 2021 Japan (Solar) $83a TBD $25a 2021 Total $2,114 $719 Section 232 Canada $12,748 10-25% $1,920 July 1, 2018 Mexico $3,691 7-25% $730 Partial-June 5, Full-July 5, 2018 European Union (EU)—Stage 1 $3,204 10-25% $781 June 25, 2018 EU—Stage 2 $4,239 10-50% $931 2021 China $2,969 15-25% $645 Apr. 2, 2018 Japan $1,911a TBD $440a TBD Turkey $1,788 4-140%b $935 June 21, 2018b India $1,396 10-50% $240 Nov. 2, 2018 Russia $347 25-40% $105 Aug. 6, 2018c Russia—Stage 2 TBD TBD TBD 2021 Total $32,292 $6,727 Section 301 China—Stage 1 $33,834 25% $8,459 July 6, 2018 China—Stage 2 $14,108 25% $3,527 Aug. 23, 2018 China—Stage 3 $53,296 5%-10% $3,650 Sept. 24, 2018 Total $101,238 $15,636 Total in Effect $125,984 $20,752 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 in dollars (foreign trade data converted to U.S. dollars based on monthly average exchange rates during the relevant time periods). This does not account for potential fluctuations in demand resulting from the tariffs or other variables. Increases in the price of goods resulting from the tariffs are likely to decrease demand for imports and therefore result in lower revenue collection than the estimated amounts. TRQ tariff revenue estimated assuming all imports are subject to over quota tariff. 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. Turkey’s retaliatory tariffs have been in effect since June 2018. Turkey increased the tariff rates in August 2018 in response to the Trump Administration’s decision to increase the U.S. steel tariff on Turkish imports to 50%. Russia published its list of retaliatory tariff rates and products on July 6, 2018. The tariffs appear to go into effect within 30 days of publication.

Sep 24, 2018

Campaign Finance Law: An Analysis of Key Issues, Recent Developments, and Constitutional Considerations for Legislation

Federal campaign finance law is composed of a complex set of limits, restrictions, and requirements on money and other things of value that are spent or contributed in the context of federal elections. While the Federal Election Campaign Act (FECA, or Act) sets forth the statutory provisions governing this area of law, several Supreme Court and lower court rulings have had a significant impact on the Act’s regulatory scope. Most notably, since 2003, a series of Supreme Court decisions has invalidated several FECA provisions that were enacted as part of the Bipartisan Campaign Reform Act of 2002 (BCRA), and in 2010, the Court invalidated a long-standing prohibition on independent expenditures funded from the treasuries of corporations and labor unions. Generally, the Court has overturned such provisions as unconstitutional violations of First Amendment guarantees of free speech. As a foundational matter, FECA distinguishes between a contribution and an expenditure: a contribution involves giving money to an entity, such as a candidate’s campaign committee, while an expenditure involves spending money directly for advocacy of the election or defeat of a candidate. Generally, the Supreme Court has upheld limits on contributions, while invalidating limits on expenditures. FECA regulates campaigns in three primary ways: contribution limits, source restrictions, and disclosure and disclaimer requirements. Contribution Limits Contribution limits refer to how much a donor can contribute as well as how they can contribute. Contribution limits include specific limits on how much money a donor may contribute to a candidate, party, and political committee, which are known as base limits. FECA also provides for related restrictions, including the ban on contributions made through a conduit; the ban on converting campaign contributions for personal use; and the treatment of communications a donor makes in coordination with a candidate or party as contributions. While the Supreme Court has generally upheld base limits, the Court has struck down FECA’s aggregate limits, which capped the total amount of money a donor could contribute to all candidates, parties, and political committees; limits on contributions to candidates whose opponents self-finance; and limits on contributions by minors. In addition, based on Supreme Court precedent, an appellate court ruling provided the legal underpinning for the establishment of super PACs. Source Restrictions FECA contains several bans, referred to as source restrictions, on who may make campaign contributions. Source restrictions include the ban on corporate and labor union campaign contributions directly from treasury funds—although the Supreme Court has held that limits on corporate and labor union independent spending are unconstitutional, the Court has upheld limits on contributions. Source restrictions also include the ban on federal contractor contributions—known as the “pay-to-play” prohibition—which the U.S. Court of Appeals for the D.C. Circuit upheld against a First Amendment challenge in 2015; the ban on foreign national contributions and expenditures; and the restrictions on foreign national involvement in U.S. campaigns. Disclaimer and Disclosure Requirements FECA also sets forth disclaimer and disclosure requirements. FECA’s disclaimer requirements mandate that statements of attribution appear directly on campaign-related communications. FECA’s disclosure requirements mandate that political committees register with the Federal Election Commission (FEC) and comply with periodic reporting requirements. In addition, the law requires other entities—such as labor unions and corporations, including incorporated organizations that are tax-exempt under Section 501(c)(4) of the Internal Revenue Code—that make independent expenditures or electioneering communications to disclose information to the FEC. Generally, the Supreme Court has upheld the constitutionality of disclaimer and disclosure requirements against First Amendment challenges as substantially related to the governmental interest of safeguarding the integrity of the electoral process by promoting transparency and accountability. Criminal Penalties For knowing and willful violations of any provision of the Act, FECA sets forth criminal penalties, including specific penalties for violations of the prohibition on contributions made through a conduit. In most instances, the U.S. Department of Justice initiates the prosecution of criminal violations of FECA, but the law also provides that the FEC may refer an apparent violation to the Justice Department for criminal prosecution under certain circumstances.

Sep 24, 2018

Exchange-Traded Funds (ETFs): Issues for Congress

Exchange-traded funds (ETFs) are common ways for Americans to invest. An ETF is an investment vehicle that, similar to a mutual fund, offers public investors shares of a pool of assets; unlike a mutual fund, however, an ETF can be traded on exchanges like a stock. The catchall category of exchange-traded products (ETPs) includes all portfolio products that trade on exchanges. U.S. ETF domestic listings stand at more than $3.4 trillion, making ETFs among the most important investment methods and critical components of the financial system. The first U.S. ETF was introduced in 1993 to track the S&P 500 stock index. That was the first time a public investor could buy or sell a basket of stocks in a single publicly traded share. It was considered as one of the most important financial innovations in decades and one that transformed the asset management industry. In the ensuing 25 years, ETFs have grown to become a mainstream investment vehicle held by 6% of U.S. households and representing 30% of all U.S. equity trading, according to data from Investment Company Institute and iShares. The rapid growth of the ETF market has simultaneously elevated its importance in the global financial system and brought risk and regulatory considerations to the fore. A key consideration is ETFs’ behavior under market stress. ETFs drew media attention when market distress occurred in 2010, 2015, and 2018. These events have led to global discussions of ETFs’ effects on financial stability. Although the events did not seem to leave long-lasting impacts on financial markets, they revealed aspects of ETFs’ vulnerability that could not be observed under normal market conditions. Given ETFs’ scale of representation in financial markets, it is likely that they would be affected by any future financial crisis (e.g., their value would fall with the value of other assets), but it is uncertain whether ETFs would also amplify it. At the center of the debate over ETFs and financial stability is “liquidity mismatch,” which is often discussed under the context of the difficulty of buying and selling ETFs during a market downturn. This mismatch points to a relatively complex ETF operational structure that has generated misunderstanding. Not all ETFs are created equal. The majority of ETFs are “plain vanilla” index-tracking products that are considered lower risk. There is also a growing subset of complex, higher-risk ETFs that are sources of concern over financial stability and investor protection. To add to the confusion, the industry does not currently have a consistent naming convention to differentiate the types of products that vary in risk exposure. Lastly, despite ETFs’ common usage, the Securities and Exchange Commission (SEC) has not yet established a comprehensive listing standard. As such, each aspiring issuer must typically be approved by the SEC under an exemption to the Investment Company Act of 1940 and other securities regulations. The SEC proposed a new ETF approval process on June 28, 2018, that would replace individual exemptive orders with a single rule for plain vanilla ETFs. The proposed approach excludes certain higher-risk ETFs and mandates new disclosures and other conditions generally on index-based and actively managed ETFs.

Sep 24, 2018

The Supreme Court’s Overruling of Constitutional Precedent

By exercising its power to determine the constitutionality of federal and state government actions, the Supreme Court has developed a large body of judicial decisions, or “precedents,” interpreting the Constitution. How the Court uses precedent to decide controversial issues has prompted debate over whether the Court should follow rules identified in prior decisions or overrule them. The Court’s treatment of precedent implicates longstanding questions about how the Court can maintain stability in the law by adhering to precedent under the doctrine of stare decisis while correcting decisions that rest on faulty reasoning, unworkable standards, abandoned legal doctrines, or outdated factual assumptions. Although the Supreme Court has shown less reluctance to overrule its decisions on constitutional questions than its decisions on statutory questions, the Court has nevertheless stated that there must be some special justification—or, at least “strong grounds”—that goes beyond disagreeing with a prior decision’s reasoning to overrule constitutional precedent. Consequently, when deciding whether to overrule a precedent interpreting the Constitution, the Court has historically considered several “prudential and pragmatic” factors that seek to foster the rule of law while balancing the costs and benefits to society of reaffirming or overruling a prior holding: Quality of Reasoning. When determining whether to reaffirm or overrule a prior decision, the Supreme Court may consider the quality of the decision’s reasoning. Workability. Another factor that the Supreme Court may consider when determining whether to overrule a precedent is whether the precedent’s rules or standards are too difficult for lower federal courts or other interpreters to apply and are thus “unworkable.” Inconsistency with Related Decisions. A third factor the Supreme Court may consider is whether the precedent departs from the Court’s other decisions on similar constitutional questions, either because the precedent’s reasoning has been eroded by later decisions or because the precedent is a recent outlier when compared to other decisions. Changed Understanding of Relevant Facts. The Supreme Court has also indicated that changes in how the Justices and society understand a decision’s underlying facts may undermine a precedent’s authoritativeness, leading the Court to overrule it. Reliance. Finally, the Supreme Court may consider whether it should retain a precedent, even if flawed, because overruling the decision would injure individuals, companies, or organizations; society as a whole; or legislative, executive, or judicial branch officers, who had relied on the decision. A survey of Supreme Court decisions applying these factors suggests that predicting when the Court will overrule a prior decision is difficult. This uncertainty arises, in part, because the Court has not provided an exhaustive list of the factors it uses to determine whether a decision should be overruled or how it weighs them. The Appendix to this report lists Supreme Court decisions on constitutional law questions that the Court has overruled during its more than 225-year history.

Sep 24, 2018

Land and Water Conservation Fund (LWCF): Frequently Asked Questions Related to Provisions Scheduled to Expire on September 30, 2018

Sep 21, 2018

Overview of the Global Humanitarian and Displacement Crisis

Sep 20, 2018

Research Evidence on the Impact of Work Requirements in Need-Tested Programs

Congress is debating work requirements for recipients in programs providing need-tested assistance to low-income families and individuals. Legislation before the 115th Congress—the House-passed version of H.R. 2—would expand work requirements in the Supplemental Nutrition Assistance Program (SNAP). H.R. 5861, reported to the House from the Ways and Means Committee, would alter some of the Temporary Assistance for Needy Families (TANF) program’s rules regarding work. In addition, the Trump Administration is currently granting demonstration waivers for states to implement work requirements for certain recipients of Medicaid, and it has proposed expanded work requirements for tenants in assisted housing. Work requirements for recipients of government assistance seek to achieve a variety of policy goals, including promoting work, reducing assistance caseloads, and improving the economic status of individuals and families. What does the research evidence indicate about the impact of work requirements? The impact of a policy is the difference it makes. Most of the research that addresses work requirements and need-tested assistance comes from a set of experiments, conducted prior to the 1996 welfare reform law, on alternative approaches to the work and education provisions in TANF’s predecessor program, Aid to Families with Dependent Children (AFDC). The pre-1996 welfare-to-work experiments provided evidence that, for mostly nonworking single mothers, work requirements combined with employment and education services could increase employment, increase wages, and reduce assistance payments. Such programs—without supplementing earnings—did not raise incomes. A subset of experiments on programs that combined work requirements, employment and education services, and continued earnings supplements found that some programs increased incomes, but when they did, they did not reduce the amount of government assistance provided to the family. However, the findings from the pre-1996 experiments cannot be automatically applied to TANF. TANF was implemented differently than the pre-1996 experiments. As Congress debates work requirements in SNAP, Medicaid, and housing assistance, there is no large accumulated research base to draw from that applies to these three programs. Given the differences in populations, presence of those in the programs who are already working, goals, and funding structures for employment and education services, the findings of the pre-1996 welfare-to-work experiments cannot be directly applied to the current debate. Different populations. These three programs serve a broader population (including men, single persons, and childless couples) than did the evaluated pre-1996 experiments (mostly nonworking single mothers), with potentially different challenges. Different goals. SNAP, Medicaid, and housing assistance include populations that are already working. Applying work requirements to recipients who are working implies different policy goals than that of moving nonworking recipients into work. The goal of the Medicaid waivers that include work requirements is to improve the health status of recipients, a different purpose, with different outcomes, than the goals tested in the pre-1996 experiments. Different approaches to employment and education services. The pre-1996 experiments were of mandatory welfare–to-work programs, which combined a participation requirement with a program that funded employment or education services. Among the SNAP, Medicaid, and housing programs, only SNAP has an employment and training program.

Sep 20, 2018

Consumer Protections in Private Health Insurance for Individuals with Preexisting Health Conditions

Individuals with preexisting health conditions may have concerns about practices in the private health insurance market in which insurers use medical underwriting to assess their risk of offering health insurance to applicants. Before full implementation of the Affordable Care Act’s (ACA’s; P.L. 111-148, as amended) insurance reforms, subject to certain exceptions, insurers generally were permitted to consider health factors in determining the offer of insurance, its price, and covered health services. Although references to individuals with preexisting conditions commonly focus on the possibility of denial of insurance, they also pertain to the offer of insurance that is more expensive on the basis of health factors and to insurance that excludes health services to treat preexisting conditions. Current Law Current federal law prohibits those insurer practices from most (but not all) private health plans. Guaranteed issue, adjusted community rating, and coverage of preexisting health conditions provide consumer protections related to the offer, price, and scope of insurance, respectively. These provisions are included in the ACA, but their applicability varies across different types of health plans, such as individual vs. group, small group vs. large group, and so on. (The ACA also requires the coverage of essential health benefits in the individual and small-group markets, and the range of covered benefits may be a factor in an individual’s decision to purchase insurance. However, this discussion focuses on the key consumer protections that prohibit differentiating individuals with preexisting health conditions from otherwise healthy insurance applicants.) For more information about these and other federal requirements applicable to private plans, see CRS Report R45146, Federal Requirements on Private Health Insurance Plans. Consumer Protections Established Prior to the ACA A number of federal health insurance requirements established prior to the ACA provided protections to individuals with preexisting conditions. Almost all pre-ACA consumer protections applicable to private health insurance were established under the Health Insurance Portability and Accountability Act (HIPAA; P.L. 104-191). (ACA revisions to HIPAA-established provisions took many forms; HIPAA language was struck and replaced, renumbered, expanded, or left alone.) Specifically, HIPAA’s preexisting condition protections applied to the individual health insurance market under limited circumstances and to a greater degree in the group market (see Table 1). Table 1. Selected HIPAA Provisions Applicable to Individual and Group Health Plans HIPPA Provision Individual Health Plans Group Health Plans Guaranteed Issue HIPAA eligibles onlya All small groups Prohibit Health Discrimination in Eligibility n/a All groups—across similarly situated individualsb Prohibit Health Discrimination in Premiums n/a All groups—across similarly situated individuals Coverage of Preexisting Health Conditions HIPAA eligibles only—prohibit coverage exclusions All groups—allow coverage exclusions for a limited duration Source: CRS Report RL31634, The Health Insurance Portability and Accountability Act (HIPAA) of 1996: Overview and Guidance on Frequently Asked Questions. HIPAA eligibles refers to individuals who meet certain requirements to be eligible for HIPAA protections. Similarly-situated individuals are employees who are part of the same “bona fide employment-based classification”; such classifications include part-time vs. full-time status, different workplace locations, length of employment, and so on. See 29 C.F.R. §2590.702(d). In addition to federal protections, states enacted preexisting condition protections prior to ACA enactment, particularly targeting the individual and small-group markets. These protections varied across states. For example, in 2008, 7 states prohibited the use of health factors in determining premiums in the individual health insurance market, another 11 states allowed health factors to be used in premium development but limited the effects of such factors, and the remaining 32 states and the District of Columbia (DC) allowed health factors to be used to develop premiums with no specified limitations. In the small-group market, in 2009, 12 states prohibited the use of health factors, 35 states allowed limited use of health factors, and 3 states and DC allowed unlimited use of health factors. Likewise, guaranteed issue and preexisting condition coverage provisions varied by state prior to the ACA. Since enactment of the ACA, some states have enacted provisions to partially or completely align with the federal requirements, but such state action has not been uniform. Therefore, current state health insurance requirements are a mix of pre- and post-ACA enacted provisions. Recent Developments Policy and legal developments this past year have refocused attention on preexisting conditions in the press and in policy circles. For example, the Trump Administration has taken actions to support health plans that are largely exempt from federal law, such as promulgation of a final rule regarding short-term, limited-duration insurance. Although such insurance is “primarily designed to fill temporary gaps in coverage,” which may benefit individuals transitioning from one health plan to another, extension of the duration of such plans has raised questions about their value to individuals with preexisting (or newly developed) health conditions. Plaintiffs in a current federal lawsuit argue that Congress lacks the authority to impose an “individual mandate” to purchase health insurance and seek invalidation of the entire ACA. Further, the Department of Justice (DOJ) submitted a brief in which DOJ maintains that “the individual mandate is not severable from the ACA’s guaranteed-issue and community-rating requirements” but is severable from the rest of the ACA; DOJ seeks to strike down provisions related only to those three requirements. Future administrative and judicial developments may raise questions about the applicability and enforcement of consumer protections for individuals with preexisting health conditions. A decision in the federal lawsuit is anticipated following oral arguments heard on September 5, 2018. Congress and states may undertake legislative activity to address preexisting condition protections. In the meantime, uncertainty in the regulatory environment may affect the process (currently under way) for reviewing and approving exchange health plans, which subsequently may affect the types of and prices for plans offered in 2019.

Sep 20, 2018

Expedited Removal of Aliens: Legal Framework

The federal government has broad authority over the admission of non-U.S. nationals (aliens) seeking to enter the United States. The Supreme Court has repeatedly held that the government may exclude such aliens without affording them the due process protections that traditionally apply to persons physically present in the United States. Instead, aliens seeking entry are entitled only to those procedural protections that Congress has expressly authorized. Consistent with this broad authority, Congress established an expedited removal process for certain aliens who have arrived in the United States without permission. In general, aliens whom immigration authorities seek to remove from the United States may challenge that determination in administrative proceedings with attendant statutory rights to counsel, evidentiary requirements, and appeal. Under the streamlined expedited removal process created by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 and codified in Section 235(b)(1) of the Immigration and Nationality Act (INA), however, certain aliens deemed inadmissible by an immigration officer may be removed from the United States without further administrative hearings or review. INA Section 235(b)(1) applies only to certain aliens who are inadmissible into the United States because they either lack valid entry documents or have attempted to procure their admission through fraud or misrepresentation. The statute generally permits the government to summarily remove those aliens if they are arriving in the United States. The statute also authorizes, but does not require, the government to apply this procedure to aliens who are inadmissible on the same grounds if they have been physically present in the country for less than two years. As a matter of practice, however, immigration authorities have applied expedited removal in more limited fashion than potentially authorized by statute—in general, the process is applied strictly to (1) arriving aliens apprehended at a designated port of entry; (2) aliens who arrived in the United States by sea without being admitted or paroled into the country by immigration authorities, and who have been physically present in the United States for less than two years; or (3) aliens who are found in the United States within 100 miles of the border within 14 days of entering the country, who have not been admitted or paroled into the United States by immigration authorities. Nevertheless, expedited removal accounts for a substantial portion of the alien removals each year. And in January 2017, President Trump issued an executive order directing the Department of Homeland Security to expand expedited removal within the broader framework of INA Section 235(b)(1). The agency has yet to promulgate regulations implementing this directive. In some circumstances, however, an alien subject to expedited removal may be entitled to certain procedural protections before he may be removed from the United States. For example, an alien who expresses a fear of persecution may obtain administrative review of his claim, and if his fear is determined credible the alien will be placed in formal removal proceedings where he can pursue asylum and related protections. Additionally, an alien may seek administrative review of a claim that he is a U.S. citizen, lawful permanent resident, admitted refugee, or asylee. Unaccompanied alien children also are statutorily exempted from expedited removal. Given the streamlined nature of expedited removal and the broad discretion afforded to immigration officers to implement that process, challenges have been raised contesting the procedure’s constitutionality. In particular, some have argued that the procedure violates aliens’ due process rights because aliens placed in expedited removal do not have the opportunity to seek counsel or contest their removal before a judge or other arbiter. Reviewing courts have largely dismissed such challenges for lack of jurisdiction, or, in the alternative, rejected the claims on the grounds that aliens seeking entry into the United States generally do not have constitutional due process protections. But such cases have concerned aliens arriving at the U.S. border or designated ports of entry, and such aliens may be entitled to lesser constitutional protections than aliens located within the United States. Expanding the expedited removal process to aliens located within the interior could compel courts to tackle questions involving the relationship between the federal government’s broad power over the entry and removal of aliens and the due process rights of aliens located within the United States.

Sep 19, 2018

Immigration: Frequently Asked Questions about “Public Charge”

Immigration law in the United States has long contained exclusion and removal provisions designed to limit government spending on indigent non-U.S. nationals (aliens). Under the Immigration and Nationality Act (INA), an alien may be denied admission into the United States or adjustment to lawful permanent resident (LPR) status if he or she is “likely at any time to become a public charge.” An admitted alien may also be subject to removal from the United States based on a separate public charge ground of deportability, but this ground is rarely employed. Certain categories of aliens, such as refugees and asylees, are exempted from application of the public charge grounds. The Department of Homeland Security (DHS) and the Department of State (DOS) have primary responsibility for implementing the INA’s public charge provisions. DHS’s U.S. Citizenship and Immigration and Services may make a public charge determination when an alien applies to adjust to LPR status. Abroad, DOS consular officers may make a public charge determination when an alien applies for a visa. Although the INA does not explicitly define the term “public charge,” since 1999, agency guidance has defined it to mean a person who is or is likely to become “primarily dependent” on “public cash assistance for income maintenance” or “institutionaliz[ed] for long-term care at government expense.” However, new public charge rules for DHS are expected to be published in the Federal Register, according to the Unified Agenda of the Office of Management and Budget (OMB). In addition, in January 2018, DOS revised the Foreign Affairs Manual (FAM) to instruct consular officers to consider a wider range of public benefits when determining whether visa applicants who have received or are currently receiving benefits are inadmissible on public charge grounds. This report provides answers to frequently asked questions about current public charge policy, including the sources of laws that govern public charge determinations, who is subject to determinations, factors that are considered in determinations, and the consequences of determinations.

Sep 19, 2018

Intellectual Property Law: A Brief Introduction

Sep 19, 2018

Long-Tenured Displaced Workers

Sep 19, 2018

The Palestinians: Overview, Aid, and U.S. Policy Issues

Sep 18, 2018

China’s Engagement with Latin America and the Caribbean

Sep 18, 2018

Trade Adjustment Assistance for Workers (TAA)

Sep 17, 2018

Farm Bill Primer: Federal Crop Insurance

Sep 17, 2018

Greenhouse Gas Emissions and Sinks in U.S. Agriculture

Sep 17, 2018

Prospects for U.S.-Saudi Nuclear Energy Cooperation

Sep 17, 2018

Farm Policy: USDA’s Trade Aid Package

In early 2018, the Trump Administration—citing concerns over national security and unfair trade practices—imposed increased tariffs on certain imported products in general and on U.S. imports from China in particular. Several of the affected foreign trading partners (including China) responded to the U.S. tariffs with their own retaliatory tariffs targeting various U.S. products, especially agricultural commodities. On July 24, 2018, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would be taking several temporary actions to assist farmers in response to trade damage from what the Administration has characterized as “unjustified retaliation.” Specifically, the Secretary said that USDA would authorize up to $12 billion in financial assistance—referred to as a trade aid package—for certain agricultural commodities using Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. 714c). USDA intends for the trade aid package to provide short-term assistance until the ongoing trade disputes are resolved. The aid package includes (1) a Market Facilitation Program (MFP) of direct payments to farmers of soybeans, corn, cotton, sorghum, wheat, hogs, and dairy who are most affected by the trade retaliation; (2) a Food Purchase and Distribution Program to partially offset lost export sales of affected commodities; and (3) an Agricultural Trade Promotion (ATP) Program to expand foreign markets. On August 27, 2018, Secretary Perdue announced details of the trade aid package, including an initial tranche of $6.1 billion in outlays. Under this initial phase, the MFP is to provide $4.7 billion in direct payments to qualifying agricultural producers. To be eligible, a producer must have an ownership share in the commodity, be actively engaged in farming, and be in compliance with adjusted gross income restrictions and conservation provisions. The first sign-up period started September 4, 2018, and extends through January 15, 2019. During this period, an eligible producer may apply for MFP payments—equal to an announced MFP payment rate times 50% of the producer’s 2018 production of eligible commodities. USDA estimates that over three-fourths ($3.6 billion) of the $4.7 billion in initial MFP payments could go to soybean producers. If warranted, USDA may announce a second payment period in early December 2018. MFP payments are capped on a per-person or per-legal-entity basis at a combined $125,000 for eligible crop commodities and, separately, a combined $125,000 for dairy production and hogs. In addition to the initial round of MFP payments, the Administration announced a Food Purchase and Distribution Program that is to undertake $1.2 billion in government purchases of excess food supplies. USDA has targeted an initial 29 commodities for purchases and distribution through domestic nutrition assistance programs. Purchasing orders and distribution activities are to be adjusted based on the demand by the recipient food assistance programs geographically. The smallest piece of the trade aid package is an allocation of $200 million to the ATP to boost the trade promotion efforts at USDA’s Foreign Agricultural Service, including foreign market development for affected agricultural products. USDA’s use of its discretionary authority under the CCC Charter Act to make direct payments without further congressional action has historically been somewhat intermittent and limited in its scale. While the use of this authority is not without precedent, the scope and scale of this trade aid package has increased congressional and public interest. Furthermore, the significant variation in the announced MFP payment rates for affected commodities and the general lack of transparency behind the MFP payment rate calculations may elicit questions about equitable treatment among affected commodities.

Sep 12, 2018

Policy Options for Multiemployer Defined Benefit Pension Plans

Multiemployer defined benefit (DB) pension plans are pensions sponsored by more than one employer and maintained as part of a collective bargaining agreement. In DB pensions, participants receive a monthly benefit in retirement that is based on a formula. In multiemployer DB pensions, the formula typically multiplies a dollar amount by the number of years of service the employee has worked for employers that participate in the DB plan. The Pension Benefit Guaranty Corporation (PBGC) is a federally-chartered corporation that insures participant benefits in private-sector DB pension plans. Although PBGC is projected to have sufficient resources to provide financial assistance to multiemployer DB plans through 2025, the projected insolvency of many multiemployer DB pension plans will likely result in a substantial strain on PBGC’s multiemployer insurance program. In a report released in June 2017, PBGC indicated that the multiemployer insurance program is highly likely to become insolvent in 2025. In the absence of increased financial resources for PBGC, participants in insolvent multiemployer DB pension plans would likely see sharp reductions in their pension benefits. As a result of a variety of factors—such as the recessions in 2001 and from 2007 to 2009—about 10% to 15% of multiemployer plan participants are in multiemployer DB plans that are likely to become insolvent over the next 19 years and run out of funds from which to pay benefits owed to participants. The Bipartisan Budget Act of 2018 (P.L. 115-123), enacted February 9, 2018, created the Joint Select Committee on Solvency of Multiemployer Pension Plans to address the impending insolvencies of several large multiemployer DB pension plans and PBGC. The committee must provide to Congress no later than November 30, 2018, a report and proposed legislative language to improve the solvency of multiemployer DB plans and the PBGC. The report and proposed legislative language must be approved by (1) a majority of committee members appointed by the Speaker of the House and Majority Leader of the Senate and (2) a majority of committee members appointed by the Minority Leader of the House and Minority Leader of the Senate. P.L. 115-123 provides for expedited procedures in the Senate if the committee approves of the proposed legislative language. There are no provisions that provide any special procedures governing House consideration of such legislation. Many policy options have been discussed in committee hearings and in the multiemployer pension plan community by policymakers and stakeholders. Not all options directly address the solvency of financially distressed multiemployer plans or PBGC, but they could be considered as part of a comprehensive package of policy options. The options include assistance for financially troubled multiemployer plans with subsidized loans or partitions; changes to the maximum benefit limit imposed on plans when they receive PBGC financial assistance; changes to PBGC’s premium structure; stricter funding rules; and alternative pension plan designs.

Sep 12, 2018

Tax Policy and Disaster Recovery

Sep 11, 2018

3D-Printed Guns: An Overview of Recent Legal Developments

Sep 11, 2018

U.N. Report Recommends Burmese Military Leaders Be Investigated and Prosecuted for Possible Genocide

Sep 10, 2018

Craft Alcoholic Beverage Industry: Overview and Regulation

Sep 7, 2018

JOBS and Investor Confidence Act (House-Amended S. 488): Capital Markets Provisions

Capital markets provide financing for businesses to fund their growth that would facilitate innovation and jobs creation, and enhance the society’s overall standard of living. They are segments of the financial system in which funding is raised through issuing and trading equity or debt securities, which are forms of financial assets representing ownership or indebtedness of a firm. They are considered the largest source of financing for U.S. nonfinancial companies, significantly larger than bank loans and other forms of financing. The Securities and Exchange Commission (SEC) is the principal regulator of U.S. capital markets. In recent years, Congress and the SEC began to increasingly direct capital markets regulation away from its traditional “one size fits all” approach. Starting in 2012, the bipartisan Jumpstart Our Business Startups Act (JOBS Act; P.L. 112-106) has scaled regulation for smaller companies and reduced regulations in general for certain types of capital formation. It established a number of new options to expand capital access, including a new provision for crowdfunding. Starting in 2015, parts of the Fixing America’s Surface Transportation Act (P.L. 114-94)—referred to as JOBS Act 2.0—provided additional scaled disclosure and reporting related regulatory relief for smaller companies. Following the JOBS Act and JOBS Act 2.0, capital markets regulation has become even more tailored to suit companies of different sizes and with different needs. However, concerns over capital formation persisted, given that smaller companies continue to face challenges to accessing capital, and the number of initial public offerings (IPOs) remained at far below long-term average levels post-JOBS Act. To address these concerns, Congress has considered numerous legislative proposals to further expand the scaled approach, with some proposals building on existing JOBS Act provisions. The most notable of these proposals is the JOBS and Investor Confidence Act of 2018 (House-amended S. 488), a capital markets package referred to as JOBS Act 3.0. The House replaced the content of the original S. 488 and passed the amended measure by a 406-4 vote on July 17, 2018. The package includes 32 titles, many of which have previously passed the House with bipartisan support as standalone bills. Of the 32 titles, 18 are more capital markets related. They can be grouped under four general categories: Expand Investor Access. One approach to expand capital access is to expand the investor pool or enhance investor communications. Some of the provisions propose to expand (1) the type of eligible investors by widening certain eligible investor definitions, as seen in Titles IV and X; (2) the number of eligible investors allowed to participate in certain offerings, as seen in Title XXXII; and (3) the communication to eligible investors by allowing broader outreach, as seen in Title I. Reduce Compliance Costs. Some believe compliance costs could potentially outweigh benefits and are disproportionately burdensome for small and medium-sized businesses. In response to these concerns, certain provisions aim to reduce (Titles V and IX) or better understand (required studies in Titles XXII and XXXI) compliance costs for publicly listed companies. Promote Financial Intermediation. Capital markets consist of numerous players. Between investors and company issuers, who are the end contributors and recipients of funding, there are financial intermediaries that serve to channel funding or execute trades. Titles XXVI (a required study) and XXXII would promote the use of pooled investment vehicles to channel funding from investors to issuers. Title XXIV would require a study on investment research of small issuers, and Title XX would create a designated new marketplace for smaller issuer stock trading. Increase Investor Protection. Multiple S. 488 titles would create investor protection safeguards as part of a provision related to capital formation. Other provisions center on investor protection. For example, Titles XXVII (a required study) and XXIX would provide protection to general investors against corporate insiders, and Title XXX would provide targeted protection to senior investors who are victims of financial exploitation.

Sep 7, 2018

The U.S. Nuclear Weapons Complex: Overview of Department of Energy Sites

Responsibility for U.S. nuclear weapons resides in both the Department of Defense (DOD) and the Department of Energy (DOE). DOD develops, deploys, and operates the missiles and aircraft that deliver nuclear warheads. It also generates the military requirements for the warheads carried on those platforms. DOE, and its semi-autonomous National Nuclear Security Administration (NNSA), oversee the research, development, testing, and acquisition programs that produce, maintain, and sustain the nuclear warheads. To achieve these objectives, the facilities that constitute the nuclear weapons complex produce nuclear materials, fabricate nuclear and nonnuclear components, assemble and disassemble nuclear warheads, conduct scientific research and analysis to maintain confidence in the reliability of existing warheads, integrate components with nuclear weapons delivery vehicles, and conduct support operations. The Trump Administration, in testimony before Congress and in the 2018 Nuclear Posture Review (released in February 2018), has raised concerns about the aging infrastructure of facilities in the nuclear weapons complex. While the Obama Administration proposed, and Congress funded, budget increases for these facilities in the past decade, the Trump Administration has argued that “the United States has not pursued the investments needed to ensure that the infrastructure has the capacity to not only maintain the current nuclear stockpile but also to respond to unforeseen technical or geopolitical developments.” The nuclear weapons complex—what NNSA currently refers to as the Nuclear Security Enterprise—consists primarily of nine government-owned, contractor-operated sites in seven states, and a Tennessee Valley Authority (TVA) nuclear reactor used to produce tritium for nuclear weapons. The complex began with the establishment of the Manhattan Engineer District in 1942, then grew in size and complexity during the Cold War, before evolving into the current configuration during the 1990s. Facilities at the current nine sites include three laboratories, five component fabrication/materials production plants, one assembly and disassembly site, a geologic waste repository, and one testing facility that now conducts research but was previously the location for U.S. underground nuclear tests. This report summarizes the operations at each of these sites. As Congress conducts oversight of DOE’s and NNSA’s management, operations, and programs, and as it authorizes and appropriates funds for the Nuclear Security Enterprise, it may address a wide range of issues related to the nuclear weapons complex. These include questions about organization and management at NNSA, infrastructure recapitalization, plutonium pit production, and concerns about access to necessary supplies of tritium.

Sep 6, 2018

Agriculture in the WTO: Rules and Limits on U.S. Domestic Support

Omnibus U.S. farm legislation—referred to as the farm bill—has typically been renewed every five or six years. Farm income and commodity price support programs have been a part of U.S. farm bills since the 1930s. Each successive farm bill usually involves some modification or replacement of existing farm programs. A key question likely to be asked of every new farm proposal or program is how it will affect U.S. commitments under the World Trade Organization’s (WTO’s) Agreement on Agriculture (AoA) and its Agreement on Subsidies and Countervailing Measures (SCM). The United States is currently committed, under the AoA, to spend no more than $19.1 billion annually on those domestic farm support programs most likely to distort trade—referred to as amber box programs and measured by the Aggregate Measure of Support (AMS). The AoA spells out the rules for countries to determine whether their policies—for any given year—are potentially trade distorting and how to calculate the costs. The most recent U.S. notification to the WTO of domestic support outlays (made on May 1, 2018) is for the 2015 crop year. To date, the United States has never exceeded its $19.1 billion amber box spending limit. However, this has been achieved in some years (1999, 2000, and 2001) through judicious use of the de minimis exclusion described below. An additional consideration for WTO compliance—the SCM rules governing adverse market effects resulting from a farm program—comes into play when a domestic farm policy effect spills over into international markets. The SCM details rules for determining when a subsidy is “prohibited” (e.g., certain export- and import-substitution subsidies) and when it is “actionable” (e.g., certain domestic support policies that incentivize overproduction and result in significant market distortion—whether as lower market prices or altered trade patterns). Because the United States is a major producer, consumer, exporter, and/or importer of most major agricultural commodities, the SCM is relevant for most major U.S. agricultural products. As a result, if a particular U.S. farm program is deemed to result in market distortion that adversely affects other WTO members—even if it is within agreed-upon AoA spending limits—then that program may be subject to challenge under the WTO dispute settlement procedures. Designing farm programs that comply with WTO rules can avoid potential trade disputes. Based on AoA and SCM rules, U.S. domestic agricultural support can be evaluated against five specific successive questions to determine how it is classified under the WTO rules, whether total support is within WTO limits, and whether a specific program fully complies with WTO rules: Can a program’s support outlays be excluded from the AMS total by being placed in the green box of minimally distorting programs? Can a program’s support outlays be excluded from the AMS total by being placed in the blue box of production-limiting programs? If amber, will support be less than 5% of production value (either product-specific or non-product-specific) thus qualifying for the de minimis exclusion? Does the total, remaining annual AMS exceed the $19.1 billion amber box limit? Even if a program is found to be fully compliant with the AoA rules and limits, does its support result in price or trade distortion in international markets? If so, then it may be subject to challenge under SCM rules.

Sep 6, 2018

Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation

The Safe Drinking Water Act (SDWA) is the federal authority for regulating contaminants in public water supplies. The act includes the Drinking Water State Revolving Fund (DWSRF) program, established in 1996 to help public water systems finance infrastructure projects needed to comply with federal drinking water regulations and to meet the act’s health protection objectives. Under this program, states receive annual capitalization grants from the U.S. Environmental Protection Agency (EPA) to provide financial assistance (primarily subsidized loans) to public water systems for drinking water projects and other specified activities. Through FY2018, Congress has appropriated a total of $20.41 billion for the program. From FY1997 through FY2017, states provided $35.38 billion in DWSRF assistance to water systems for 14,090 projects. The latest EPA survey of capital improvement needs indicates that public water systems need to invest $472.6 billion on infrastructure improvements over 20 years to ensure the provision of safe drinking water. EPA reports that, while all of the projects identified in the survey would promote the health protection objectives of the SDWA, $57.6 billion (12%) of reported needs are attributable to SDWA compliance. A study by the American Water Works Association estimates that restoring aging infrastructure and expanding water systems to keep up with population growth would require a nationwide investment of at least $1 trillion through 2035. Program issues include (1) the gap between estimated needs and funding; (2) the growing cost of complying with SDWA standards (particularly for small communities); (3) the ability of small or disadvantaged communities to afford DWSRF financing; and (4) the broader need for cities to maintain, upgrade, and expand infrastructure unrelated to SDWA compliance. Several overarching policy questions are under debate, including the appropriate federal role in providing financial assistance for local water infrastructure projects and potential funding mechanisms that could supplement or replace a program reliant on annual appropriations. Enacted in 2014, the Water Infrastructure Finance and Innovation Act (WIFIA; P.L. 113-121,Title V, Subtitle C) authorized a five-year pilot loan guarantee program to promote increased development of, and private investment in, primarily large water infrastructure projects. Congress noted that the pilot program is intended to complement, not replace, the DWSRF program and the similar Clean Water Act State Revolving Fund (CWSRF) program for wastewater infrastructure. For FY2017, Congress provided $30.0 million for the program ($25 million for EPA to provide loan guarantees for water infrastructure projects under WIFIA and $5 million for administrative costs). The Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322) made several revisions to the DWSRF program and authorized $100 million in DWSRF appropriations to Michigan to assist the City of Flint in repairing its drinking water system. In P.L. 114-254, Congress appropriated the DWSRF funding authorized in the WIIN Act. The Consolidated Appropriations Act, 2017 (P.L. 115-31), included $863.23 million for the DWSRF program. For FY2018, the President requested $863 million for the DWSRF program and $20 million for the WIFIA program. The Consolidated Appropriations Act, 2018 (P.L. 115-141), included $1.16 billion for the DWSRF program and $63 million for WIFIA. The state of the nation’s water infrastructure and the challenges many communities face in addressing infrastructure needs continue to receive congressional attention. Numerous bills have been introduced in the 115th Congress to expand DWSRF eligibilities, increase funding authority, and make other revisions to the DWSRF program and to authorize new funding programs. Two such bills have been reported: the Drinking Water System Improvement Act of 2017 (H.R. 3387) and a broader water resources infrastructure bill, America’s Water Infrastructure Act of 2018 (S. 2800), which would add new DWSRF and CWSRF provisions to WIFIA.

Sep 5, 2018

Georgia: Background and U.S. Policy

Georgia is one of the United States’ closest non-NATO partners among the post-Soviet states. With a history of strong economic aid and security cooperation, the United States has deepened its strategic partnership with Georgia since Russia’s 2008 invasion of Georgia and 2014 invasion of Ukraine. U.S. policy expressly supports Georgia’s sovereignty and territorial integrity within its internationally recognized borders, and Georgia is a leading recipient of U.S. aid in Europe and Eurasia. Many observers consider Georgia to be one of the most democratic states in the post-Soviet region, even as the country faces ongoing governance challenges. The center-left Georgian Dream party has more than a three-fourths supermajority in parliament, allowing it to rule with only limited checks and balances. Although Georgia faces high rates of poverty and underemployment, its economy in 2017 appeared to enter a period of stronger growth than the previous four years. Georgia: Basic Facts Population: 3.73 million (2018 est.) Comparative Area: slightly larger than West Virginia Capital: Tbilisi Ethnic Composition: 87% Georgian, 6% Azerbaijani, 5% Armenian (2014 census) Religion: 83% Georgian Orthodox, 11% Muslim, 3% Armenian Apostolic (2014 census) GDP/GDP per capita: $15.1 billion/$4,099 (2017 est.) Top Exports: copper ores, beverages, iron and steel, motor vehicles, pharmaceuticals (2017) Leadership: Prime Minister Mamuka Bakhtadze, President Giorgi Margvelashvili, Defense Minister Levan Izoria, Foreign Minister David Zalkaliani, Parliamentary Chairman Irakli Kobakhidze Sources: National Statistics Office of Georgia and International Monetary Fund (does not include Abkhazia and South Ossetia). The Georgian Dream won elections in 2012 amid growing dissatisfaction with the former ruling party, Mikheil Saakashvili’s center-right United National Movement, which came to power as a result of Georgia’s 2003 Rose Revolution. In August 2008, Russia went to war with Georgia to prevent Saakashvili’s government from reestablishing control over Georgia’s regions of South Ossetia and Abkhazia, which broke away from Georgia in the early 1990s to become informal Russian protectorates. Congress has expressed firm support for Georgia’s sovereignty and territorial integrity. The Countering Russian Influence in Europe and Eurasia Act of 2017 (P.L. 115-44, Title II, §253) states that the United States “does not recognize territorial changes effected by force, including the illegal invasions and occupations” of Abkhazia, South Ossetia, and other territories occupied by Russia. In September 2016, the House of Representatives passed H.Res. 660, which condemns Russia’s military intervention and occupation of Abkhazia and South Ossetia. Similar resolutions on Georgia and other countries with territories under Russian occupation have been introduced recently in the House and the Senate (H.Res. 955, H.Res. 1030, S.Res. 106). The United States provides substantial nonmilitary and military aid to Georgia each year. Since 2010, U.S. nonmilitary aid to Georgia has totaled around $60 million a year on average, in addition to a second five-year Millennium Challenge Corporation grant of $140 million to support education. In FY2018, Congress appropriated $68 million in nonmilitary aid to Georgia. U.S. Military aid to Georgia has been estimated at around $74 million a year on average from FY2010 to FY2017. For FY2018, Congress appropriated at least $37 million in military aid (Foreign Military Financing [FMF] and International Military Education and Training [IMET]), not including Defense appropriations. The Trump Administration also has provided major defensive lethal weaponry to Georgia. In November 2017, the U.S. State Department approved a foreign military sale of over 400 Javelin portable anti-tank missiles at a total estimated cost of $75 million. The Georgian Ministry of Defense confirmed that the first stage of two sales was complete as of January 2018.

Sep 5, 2018

UPDATED: Déjà Vu All Over Again: States Renew Constitutional Challenge to the ACA’s Individual Mandate

Sep 5, 2018

Defense Primer: Lowest Price Technically Acceptable Contracts

Sep 4, 2018

Federal Role in U.S. Campaigns and Elections: An Overview

Conventional wisdom holds that the federal government plays relatively little role in U.S. campaigns and elections. Although states retain authority for most aspects of election administration, a closer look reveals that the federal government also has steadily increased its presence in campaigns and elections in the past 50 years. Altogether, dozens of congressional committees and federal agencies could be involved in federal elections under current law. Congress faces a complex mix of traditional oversight areas with developing ones throughout the elections field. Reports of foreign interference during the 2016 election cycle, and concerns about future interference, have raised the profile of campaigns and elections policy in Congress, at federal agencies, and beyond. As Congress considers these and other developing issues, this report provides the House and Senate with a resource for first understanding the current campaigns and elections regulatory structure. The report addresses those areas of law and public policy that most directly and routinely affect American campaigns and elections. This includes six broad categories of law through which Congress has assigned various agencies roles in regulating or supporting campaigns, elections, or both. These are campaign finance; election administration; election security; redistricting; qualifications and contested elections; and voting rights. No single federal agency is in charge of the federal role in campaigns and elections, just as multiple statutes address various aspects of the field. The Election Assistance Commission and Federal Election Commission are devoted entirely to campaigns and elections. Congress has charged other departments and agencies—such as the Department of Justice, Department of Defense, and component organizations comprising the Intelligence Community—primarily with responsibilities for other areas of public policy, but also with supporting or administering campaigns and elections policy in specific cases. Other agencies or statutes may be relevant in specific cases. This report does not track legislation that proposes changes in the policy environment discussed herein. It will be updated occasionally to reflect new information or major policy developments.

Sep 4, 2018

Securities Regulation and Initial Coin Offerings: A Legal Primer

Initial coin offerings (ICOs)—a method of raising capital in exchange for digital coins or tokens that entitle their holders to certain rights—are a hot topic among legislators, regulators, and financial market professionals. In response to a surge in the popularity of ICOs over the past 18 months, regulators in a number of countries have banned ICOs. Other foreign regulators have cautioned that unregistered ICOs may violate their securities laws, issued guidance clarifying the application of their securities laws to ICOs, or proposed new rules or legislation directed at regulating ICOs. ICOs have also attracted the attention of U.S. securities regulators. The Securities and Exchange Commission (SEC) has cautioned that depending on their specific features, ICOs may qualify as offerings of “securities” subject to federal regulation. Whether an ICO involves an offering of “securities” has important legal consequences. Section 5 of the Securities Act of 1933 (Securities Act) requires issuers of securities to register their offerings with the SEC or conduct them pursuant to a specific exemption from registration. Issuers and sellers of securities also face anti-fraud liability under the Securities Act and the Securities Exchange Act of 1934 (Exchange Act). The SEC has the authority to investigate and punish violations of the securities laws, and has indicated that it will “vigorously” police the burgeoning ICO market for such violations. To determine whether a transaction involves an offering of “securities,” courts employ a four-part test outlined by the Supreme Court’s 1946 decision in SEC v. W.J. Howey Co. Under that test, a transaction qualifies as an offering of “securities” if it involves (1) an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profit, (4) to be derived from the efforts of others. In applying the Howey test, the Court has emphasized the importance of analyzing “the economic realities” of a transaction, as opposed to its form or the label that its promoters give it. Because ICOs are incredibly diverse, it is impossible to draw broad conclusions about their status under the securities laws, which will depend on fact-intensive inquiries into details that vary among different ICOs. As a general matter, though, ICOs are more likely to qualify as offerings of “securities” when token purchasers (1) are motivated primarily by a desire for financial returns (as opposed to a desire to use or consume some good or service for which tokens can be exchanged), and (2) lack a meaningful ability to control the activities on which their profits will depend. In light of these principles, attorneys have developed a method for structuring ICOs—the Simple Agreement for Future Tokens (SAFT)—that attempts to avoid classification of the tokens issued pursuant to certain ICOs as “securities.” However, whether the SAFT achieves its intended goal remains subject to significant debate. The SEC has pursued a number of enforcement actions related to unregistered ICOs. In July 2017, the SEC issued a report of investigation concluding that tokens issued by an unincorporated organization called “The DAO” qualified as “securities” under the Howey test. And in December 2017, the agency reached the same conclusion about tokens issued by Munchee, Inc., the creator of an iPhone application involving restaurant reviews. These enforcement actions, and a prominent speech given by an agency official in June 2018, offer some guidance on the SEC’s views on when ICOs will qualify as offerings of “securities.” The Securities Act and related regulations offer a number of exemptions from the Act’s registration requirements for offerings that meet certain conditions. However, some commentators have doubted the attractiveness of the relevant exemptions for ICOs. Commentators have also proposed a number of policies to improve the regulation of ICOs, ranging from a specific registration exemption for ICOs to a “safe harbor” for certain token exchanges.

Aug 31, 2018

Turkey’s Currency Crisis

Aug 30, 2018

India: Religious Freedom Issues

India is the world’s second-most populous country with more than 1.3 billion people and is the birthplace of four major world religions: Hinduism, Buddhism, Sikhism, and Jainism. It is also home to about 180 million Muslims—only Indonesia and Pakistan have more. A small Christian minority includes about 30 million people. An officially secular nation with thousands of ethnic groups and 22 official languages, independent India has a long tradition of religious tolerance (with periodic and sometimes serious lapses). Religious freedom is explicitly protected under its constitution. Hindus account for a vast majority (nearly four-fifths) of the country’s populace. Hindu nationalism has been a rising political force in recent decades, by many accounts eroding India’s secular nature and leading to new assaults on the country’s religious freedoms. The 2014 national election victory of the Bharatiya Janata Party (Indian Peoples’ Party or BJP) brought newly acute attention to the issue of religious freedom in India. Tracing its origins to a political party created in 1951 in collaboration with the Hindu nationalist Rashtriya Swayamsevak Sangh (National Volunteer Organization or RSS), the BJP has since gone on to win control of numerous state governments, including in Uttar Pradesh, the country’s most populous state with more than 200 million residents, one-fifth of them Muslim. The BJP’s leader, Prime Minister Narendra Modi, is a self-avowed Hindu nationalist and lifelong RSS member with a controversial past: In 2002, during his 13-year tenure as chief minister of the Gujarat state, large-scale anti-Muslim rioting there left more than 1,000 people dead, and Modi faced accusations of complicity and/or inaction (he was later formally exculpated). In 2005, Modi was denied a U.S. visa under a rarely-used law barring entry for foreign government officials found to be complicit in severe violations of religious freedom, and he had no official contacts with the U.S. government until 2013. Many in the U.S. Congress were critical of Modi’s role in the 2002 violence, and some continue to call attention to signs that religious freedom abuses are increasing under his and his party’s rule, as documented by the U.S. State Department and independent human rights groups. This report provides an overview of religious freedom issues in India, beginning with a brief review of U.S.-India relations and India’s human rights setting broadly, then discussing the country’s religious demographics, religious freedom protections, and conceptions of Hindu nationalism and its key institutional proponents in Indian society. It then moves to specific areas of religiously-motivated repression and violence, including state-level anti-conversion laws, cow protection vigilantism, and perceived assaults on freedoms of expression and operations by nongovernmental organizations that are seen as harmful to India’s secular traditions and the U.S-promoted goal of interfaith tolerance.

Aug 30, 2018

The Clean Air Act’s Good Neighbor Provision: Overview of Interstate Air Pollution Control

Notwithstanding air quality progress since 1970, challenges remain to reduce pollution in areas exceeding federal standards and to ensure continued compliance elsewhere. The movement of air pollutants across state lines, known as interstate transport, has made it difficult for some downwind states to attain federal ozone and fine particulate matter (PM2.5) standards, partly because states lack authority to limit emissions from other states. The Clean Air Act’s “Good Neighbor” provision (Section 110(a)(2)(D)) seeks to address this issue and requires states to prohibit emissions that significantly contribute to another state’s air quality problems. It requires each state’s implementation plan (SIP)—a collection of air quality regulations and documents—to prohibit emissions that either “significantly contribute” to nonattainment or “interfere with maintenance” of federal air quality standards in another state. The act also authorizes states to petition EPA to issue a finding that emissions from “any major source or group of stationary sources” violate the Good Neighbor provision (Section 126(b)). EPA and the states have implemented regional programs to address interstate ozone and PM2.5 transport and comply with the Good Neighbor provision. These programs set emission “budgets” for ozone and PM2.5 precursor emissions—specifically, sulfur dioxide (SO2) and nitrogen oxide (NOx) as PM2.5 precursors and seasonal NOx emissions as an ozone precursor. The current program—the Cross State Air Pollution Rule (CSAPR)—focuses on limiting interstate transport of power sector SO2 and NOx emissions to eastern states. Power sector emissions in CSAPR states are below emission budgets as a result of regulatory and market factors (see figure). Annual SO2, annual NOx, and ozone season NOx emissions from CSAPR sources decreased 77%, 41%, and 15%, respectively, between 2009 and 2016. CSAPR Emission Trends: 2009-2016 / Source: EPA Air Markets Program Data, https://ampd.epa.gov/ampd/. Notes: The Clean Air Interstate Rule was in effect 2009 through the end of 2014 and was replaced by CSAPR on January 1, 2015. EPA has concluded that regional SO2 and NOx programs have reduced interstate transport of PM2.5 and ozone. The Energy Information Administration’s national-scale analysis identifies market and regulatory factors contributing to emission reductions. It is unclear whether emissions will remain well below budgets, given recent prices of ozone season NOx allowances (i.e., authorization for each ton emitted) and the supply of banked allowances for future use in lieu of emission reductions. Research indicates that ozone transport harms air quality in downwind states. However, stakeholder views vary regarding the extent to which interstate transport impacts air quality. Some note that some coal-fired power plants do not fully use already-installed pollution controls. Several states have sought additional upwind reductions in ozone precursors through Section 126(b) petitions. Others have questioned the feasibility of achieving additional reductions in ozone precursors, raising concerns about emissions from international or natural sources. EPA recently proposed to determine that CSAPR fully addresses Good Neighbor obligations for the 2008 ozone standard but has not yet made a “Good Neighbor” determination for the more stringent 2015 ozone standard. The agency has therefore not yet determined whether and how it will update the CSAPR budgets with respect to the 2015 ozone standard. Members of Congress may have an interest in better understanding how EPA and states implement the Clean Air Act’s Good Neighbor provision, particularly as EPA continues its assessment of Good Neighbor obligations under the 2015 ozone standard. The following issues, among others, may inform deliberations about interstate air transport. First, the extent to which existing programs will improve air quality in areas not meeting the 2015 ozone standard is to be determined. CSAPR has not addressed NOx emissions from nonpower sector sources, such as large industrial boilers. EPA concluded that industrial sources have potential to cost-effectively reduce NOx emissions but is less certain about the structure of potential NOx control strategies. Second, some have questioned whether additional regulatory incentives are necessary to fulfill Good Neighbor obligations, particularly given current NOx allowance prices. These prices are below the marginal abatement cost, which may result in higher emissions. Third, EPA’s current air quality initiatives may indirectly affect its Good Neighbor assessments. EPA recently sought comment on potential flexibilities for the development of Good Neighbor SIPs.

Aug 30, 2018

Made in China 2025 and Industrial Policies: Issues for Congress

Aug 29, 2018

Emergency Relief for Disaster-Damaged Roads and Public Transportation Systems

The U.S. Department of Transportation (DOT) provides federal assistance for disaster-damaged roads and public transportation systems through two programs: the Emergency Relief Program (ER) administered by the Federal Highway Administration (FHWA) and the Public Transportation Emergency Relief Program administered by the Federal Transit Administration (FTA). These programs are funded mainly by appropriations that have varied considerably from year to year. Over time the amounts are substantial. Since 2012, the Highway ER Program has received $5.4 billion; FTA’s ER program has received $10.7 billion, all but $330 million of which was in response to Hurricane Sandy. Roads and bridges that are federal-aid highways or are public-use roads on federal lands are eligible for assistance under FHWA’s ER Program. Following natural disasters (such as Hurricanes Harvey, Irma, and Maria in 2017, which damaged highways in Florida, Texas, Puerto Rico, and the U.S. Virgin Islands), or catastrophic failures (such as the 2013 collapse of the Skagit River Bridge in Washington State), ER funds are made available for both emergency repairs and restoration of eligible facilities to conditions comparable to those before the disaster. Although emergency relief for highways is a federal program, the decision to seek ER funding is made by a state government or by a federal land management agency. Local governments are not eligible to apply. The program is funded by a permanent annual authorization of $100 million from the Highway Trust Fund (HTF) along with general fund appropriations provided by Congress on a “such sums as necessary” basis. Appropriated ER funds have averaged roughly $730 million annually since FY2009. FHWA pays 100% of the cost of emergency repairs done to minimize the extent of damage, to protect remaining facilities, and to restore essential traffic during or immediately after a disaster. Emergency repairs must be completed within 180 days of the disaster event. Permanent repairs go beyond the restoration of essential traffic and are intended to restore damaged bridges and roads to conditions and capabilities comparable to those before the event. The federal share for permanent repairs is generally 80% for non-Interstate roads and 90% for Interstate Highways. All ER funding is distributed through state departments of transportation or federal land management agencies such as the National Park Service. Certain “quick release” funds are allocated to help with initial emergency repair costs and may be released prior to completion of detailed damage inspections and cost estimates. Other allocations to the states follow a more deliberate process of completing detailed damage reports, developing cost estimates, and processing competitive bids. Unlike the long-standing ER program in highways, the Public Transportation ER Program dates to 2012. The Public Transportation ER program provides federal funding on a reimbursement basis to public transportation agencies, states, and other government authorities for damage to public transportation facilities or operations as a result of a natural disaster or other emergency and to protect assets from future damage. The Public Transportation ER program provides federal support for both capital and operating expenses. Unlike the FHWA’s ER program, FTA’s ER program does not have a permanent annual authorization. All funds are authorized on a “such sums as necessary” basis and are available only pursuant to an appropriation from the general fund of the U.S. Treasury. In the absence of an appropriation, transit agencies must rely on funds from the Federal Emergency Management Agency (FEMA). Since its creation in 2012, there have been two appropriations to the Public Transportation ER program. More than $10 billion was appropriated in 2013 to respond to Hurricane Sandy and $330 million was appropriated in 2018 to respond to Hurricanes Harvey, Irma, and Maria. Two recurring issues drawing congressional attention are funding levels and funding of activities that go beyond restoring transportation facilities to predisaster conditions, such as making damaged highways more resilient to natural disasters. FTA’s ER program has fewer limits and more flexibility than the emergency relief programs administered by FEMA and FHWA; thus it too faces questions about expenditures that go beyond repairing damage from a disaster. The lack of a permanent annual authorization for FTA means FTA cannot provide funding immediately after a disaster or emergency, and transit agencies must rely on FEMA for a quick response.

Aug 29, 2018

Universal Postal Union to Convene an Extraordinary Congress

The Universal Postal Union (UPU) Established in 1874, the Universal Postal Union (UPU) is the primary forum for multilateral cooperation and negotiation of international postal issues among nations worldwide. According to its website, the UPU “helps to ensure a truly universal network of up-to-date products and services.” The primary decisionmaking body of the UPU is the UPU Congress. Normally, the Congress convenes every four years and was next scheduled to meet in 2020. On September 3, 2018, however, the UPU is scheduled to hold an “Extraordinary Congress” for the first time since 1900. This Insight provides a brief introduction to the UPU and its policies regarding two international mail issues that have been the subject of legislation introduced in the 115th Congress: (1) advanced electronic customs data and (2) international mail rates and procedures for establishing terminal dues (i.e., international mail remuneration rates). The UPU and UPU Congress The UPU became a specialized agency of the United Nations in 1948 and currently has 192 member nations. The UPU Congress is the “supreme authority” of the UPU and the primary forum for negotiation among member nations. The 26th UPU Congress was held in 2016 in Istanbul, Turkey. Representatives from each of the UPU’s member nations met to “decide on a new World Postal Strategy and set the future rules for international mail exchanges.” Other UPU Bodies Besides the UPU Congress, the UPU consists of these bodies The Postal Operations Council (POC) includes 40 member nations elected during the UPU Congress to handle technical and operational issues. The Council of Administration meets annually to ensure the continuity of the UPU’s work between Congresses. Among other things, it is responsible for the UPU’s budget and accounts. The International Bureau is an administrative body that provides logistical and technical support to the UPU. Extraordinary Congress An “Extraordinary Congress” may be convened by request with approval of two-thirds of the current UPU nations. The UPU has convened an Extraordinary Congress on one occasion, in 1900, to commemorate the 25th anniversary of the UPU’s founding. During the 26th Congress, the UPU approved a resolution to convene its second Extraordinary Congress in September 2018. International Mail: Select Issues for Congress Bills on international postal issues have been introduced in the 115th Congress, including several that would require the Secretary of State to renegotiate any portion of an existing UPU agreement where the United States’ obligation conflicts with its provisions (e.g., H.R. 5788, S. 372). Although the POC has authority to make select regulatory changes at its annual sessions, changes to the UPU Acts that require ratification by the member nations may be renegotiated only at the quadrennial Congress. The UPU’s 27th Congress is scheduled for 2020. However, the Extraordinary Congress will convene from September 3 to September 7, 2018, in Addis Ababa, Ethiopia. On August 23, 2018, President Trump issued a Presidential Memorandum that specified international postal policies and reforms that are “in the interest of the United States.” Many of the policies and reforms listed in the memorandum have been the subject of legislation introduced in the 115th Congress, including (1) rates that do not favor foreign mailers over domestic mailers, (2) terminal dues reform with rates that fully reimburse the United States Postal Service (USPS) for costs, and (3) advance collection of electronic customs data (e.g., H.R. 5524, S. 2638, S. 3057). The President states that future UPU agreements, including those from the upcoming Extraordinary Congress, should be consistent with the policies in the memorandum. Terminal Dues and International Mail Rates Each UPU member nation selects one—or, in rare instances, more than one—Designated Postal Operator (DPO) to “operate postal services and to fulfill the related obligations arising out of the Acts of the Union on its territory.” The USPS is the DPO for the United States. Terminal dues are payments that the destination DPO (e.g., USPS) collects from the originating DPO (e.g., China Post) for the costs of delivering inbound international letter mail in the destination country (in this example, the United States). The purpose of terminal dues is to compensate the destination country for the costs it incurs. Terminal dues, however, are not calculated based on the actual cost of handling and delivery of the mail in the destination country. Instead, terminal dues are based on the originating country’s economic and postal development. Terminal dues paid by less developed countries are lower than those paid by more developed countries regardless of the actual cost incurred by the destination country. The prices an originating DPO charges its customers for outbound international mail are not the same as the terminal dues it pays the destination DPO. Each member nation is responsible for developing its own policies and regulations to determine the prices its DPO charges consumers for outgoing international mail products. International postal rates may be also set by negotiated service agreements or through a bilateral or multilateral agreement between the USPS and DPOs of one or more UPU member nations. Although terminal dues do not apply to these agreements, a 2017 study commission by the PRC noted that the rates are often the baseline point during negotiations. Further, terminal dues apply only to international letter mail (e.g., letters, postcards, small packets) between DPOs. Terminal dues do not apply to express consignment operators (e.g., UPS, FedEx) or to parcel post, which is priced using a system based primarily on the size and weight of each package. Advanced Electronic Customs Data The UPU’s POC is responsible for developing policies and recommendations regarding advanced electronic customs data. Among other things, the POC has conducted outreach and monitored the legislative developments of UPU member nations regarding advanced electronic data requirements. Additionally, in May 2017, the UPU and the World Customs Organization (WCO) launched a joint WCO-UPU survey to assess nations’ preparedness for “capturing, sending, receiving and using data in electronic format.” Sharing of advanced electronic customs data is not required under the 2016 UPU agreements for all member nations. However, a WCO-UPU Memorandum of Understanding and the 2018 WCO-UPU Postal Customs Guide note the importance of developing best practices and standards for nations’ collection and sharing of electronic customs data.

Aug 29, 2018

The “Flores Settlement” and Alien Families Apprehended at the U.S. Border: Frequently Asked Questions

Reports of alien minors being separated from their parents at the U.S. border have raised questions about the Department of Homeland Security’s (DHS’s) authority to detain alien families together pending the aliens’ removal proceedings, which may include consideration of claims for asylum and other forms of relief from removal. The Immigration and Nationality Act (INA) authorizes—and in some case requires—DHS to detain aliens pending removal proceedings. However, neither the INA nor other federal laws specifically address when or whether alien family members must be detained together. DHS’s options regarding the detention or release of alien families are significantly restricted by a binding settlement agreement from a case in the U.S. District Court for the Central District of California now called Flores v. Sessions. The “Flores Settlement” establishes a policy favoring the release of alien minors, including accompanied alien minors, and requires that those alien minors who are not released from government custody be transferred within a brief period to non-secure, state-licensed facilities. DHS indicates that few such facilities exist that can house adults and children together. Accordingly, under the Flores Settlement and current circumstances, DHS asserts that it generally cannot detain alien children and their parents together for more than brief periods. Following an executive order President Trump issued that addressed alien family separation, the Department of Justice filed a motion to modify the Flores Settlement to allow for the detention of alien families in unlicensed facilities for longer periods. The district court overseeing the settlement rejected that motion, much as it has rejected similar motions to modify the settlement filed by the government in recent years. (The U.S. Court of Appeals for the Ninth Circuit has affirmed the earlier rulings but has not yet reviewed the most recent ruling.) In its most recent motion, the government has argued, among other things, that a preliminary injunction entered in a separate litigation, Ms. L v. ICE, which generally requires the government to reunite separated alien families and refrain from separating families going forward, supports a modification of the Flores Settlement to allow indefinite detention of alien minors alongside their parents. Congress, for its part, could largely override the Flores Settlement legislatively, although constitutional considerations relating to the rights of aliens in immigration custody may inform the permissible scope and effect of such legislation.

Aug 28, 2018

U.S.-Turkey Trade Relations

Aug 28, 2018

Overview of Programs Supporting Minority-Serving Institutions under the Higher Education Act

Aug 27, 2018

Financial Services and General Government (FSGG) FY2019 Appropriations: Overview

The Financial Services and General Government (FSGG) appropriations bill includes funding for the Department of the Treasury, the Executive Office of the President (EOP), the judiciary, the District of Columbia, and more than two dozen independent agencies. The House and Senate FSGG bills fund the same agencies, with one exception. The Commodity Futures Trading Commission (CFTC) is funded through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. President Trump submitted his FY2019 budget request on February 12, 2018. The request included a total of $49.1 billion for agencies funded through the FSGG appropriations bill, including $282 million for the CFTC. The House Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2019 (H.R. 6258, H.Rept. 115-792) on June 28, 2018. Total FY2018 funding in the reported bill would be $45.7 billion, with another $255 million for the CFTC included in the Agriculture appropriations bill (H.R. 5961, H.Rept. 115-706). The combined total of $45.9 billion would be about $3.2 billion below the President’s FY2019 request, with the largest difference in the funding for the General Services Administration (GSA) and in government-wide transfers (Section 737). H.R. 6258 was included as Division B of H.R. 6147, the interior appropriations bill, when it was considered by the House of Representatives beginning on July 17, 2018. The bill was amended numerous times, shifting funding among FSGG agencies but not changing the FSGG totals. H.R. 6147 passed the House on July 19, 2018. The Senate Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2019 (S. 3107, S.Rept. 115-281) on June 28, 2018. Funding in S. 3107 totaled $45.9 billion, about $3.2 billion below the President’s FY2018 request, with the largest difference in the funding for the GSA and in government-wide transfers (Section 737). The Senate began floor consideration of H.R. 6147 on July 24, 2018, including the text of S. 3107 as Division B of the amendment in the nature of a substitute (S.Amdt. 3399). The Senate passed its version of H.R. 6147 on August 1, 2018. Although financial services are a major focus of the FSGG appropriations bills, these bills do not include funding for many financial regulatory agencies, which are funded outside of the appropriations process. The FSGG bills do, however, often contain additional legislative provisions relating to such agencies, as is the case with H.R. 6258/H.R. 6147, which contains language from a number of different bills relating to financial regulation that had previously passed the House.

Aug 24, 2018