CRS Reports

Financial Reform: Bank Supervision

Jan 17, 2018

A U.S.-China Bilateral Investment Treaty (BIT): Issues and Implications

Jan 12, 2018

Countering America’s Adversaries Through Sanctions Act (CAATS Act) Deadlines, Time Frames, and Start Dates

Jan 11, 2018

Regulating Lead in Drinking Water: Issues and Developments

Jan 11, 2018

Mandatory Minimum Sentencing of Federal Drug Offenses

As a general rule, federal judges must impose a minimum term of imprisonment upon defendants convicted of various controlled substance (drug) offenses and drug-related offenses. The severity of those sentences depends primarily upon the nature and amount of the drugs involved, the defendant’s prior criminal record, any resulting injuries or death, and in the case of the related firearms offenses, the manner in which the firearm was used. The drug offenses reside principally in the Controlled Substances Act or the Controlled Substances Import and Export Act. The drug-related firearms offenses involve the possession and use of firearms in connection with serious drug offenses and instances in which prior drug convictions trigger mandatory sentences for unlawful firearms possession. The minimum sentences range from imprisonment for a year to imprisonment for life. Although the sentences are usually referred to as mandatory minimum sentences, a defendant may avoid them under several circumstances. Prosecutors may elect not to prosecute. The President may choose to pardon the defendant or commute his sentence. The defendant may qualify for sentencing for providing authorities with substantial assistance or under the so-called “safety valve” provision available to low-level, nonviolent, first-time offenders. Over time, defendants, sentenced to mandatory terms of imprisonment for drug-related offenses, have challenged Congress’s legislative authority to authorize them and the government’s constitutional authority to enforcement. The challenges have met with scant success. Generally, courts have concluded that the provisions fall within congressional authority under the Commerce, Necessary and Proper, Treaty, and Territorial Clauses of the Constitution. By and large, courts have also found no impediment to imposition of mandatory minimum sentences under the Due Process, Equal Protection, or Cruel and Unusual Punishment Clauses, or the separation-of-powers doctrine. Proposals to amend drug-related mandatory minimum sentence provisions surfaced during the 114th Congress. In the 115th Congress, Senator Grassley introduced the successor to those proposals for himself and a bi-partisan list of co-sponsors as S. 1917, the Sentencing Reform and Corrections Act of 2017. Many of the same issues are addressed in H.R. 4261 introduced by Representative Scott of Virginia. This is an overview of the law from which those proposals spring. This report is available in an abridged version, CRS Report R45075, Mandatory Minimum Sentencing of Federal Drug Offenses in Short, without the citations to authority and origin of quotations found here.

Jan 11, 2018

Terrorism in Europe

Jan 11, 2018

Bureau of Reclamation Project Authorization and Financing

Jan 11, 2018

Mandatory Minimum Sentencing of Federal Drug Offenses in Short

As a general rule, federal judges must impose a minimum term of imprisonment upon defendants convicted of various controlled substance (drug) offenses and drug-related offenses. The severity of those sentences depends primarily upon the nature and amount of the drugs involved, the defendant’s prior criminal record, any resulting injuries or death, and in the case of the related firearms offenses, the manner in which the firearm was used. The drug offenses reside principally in the Controlled Substances Act or the Controlled Substances Import and Export Act. The drug-related firearms offenses involve the possession and use of firearms in connection with serious drug offenses and instances in which prior drug convictions trigger mandatory sentences for unlawful firearms possession. The minimum sentences range from imprisonment for a year to imprisonment for life. Although the sentences are usually referred to as mandatory minimum sentences, a defendant may avoid them under several circumstances. Prosecutors may elect not to prosecute. The President may choose to pardon the defendant or commute his sentence. The defendant may qualify for sentencing for providing authorities with substantial assistance or under the so-called “safety valve” provision available to low-level, nonviolent, first-time offenders. Over time, defendants, sentenced to mandatory terms of imprisonment for drug- related offenses, have challenged Congress’s legislative authority to authorize them and the government’s constitutional authority to enforcement. The challenges have met with scant success. Generally, courts have concluded that the provisions fall within congressional authority under the Commerce, Necessary and Proper, Treaty, and Territorial Clauses of the Constitution. By and large, courts have also found no impediment to mandatory minimum sentences under the Due Process, Equal Protection, or Cruel and Unusual Punishment Clauses, or the separation-of- powers doctrine. Proposals to amend drug-related mandatory minimum sentence provisions surfaced during the 114th Congress. In the 115th Congress, Senator Grassley introduced the successor to those proposals for himself and a bi-partisan list of co-sponsors as S. 1917, the Sentencing Reform and Corrections Act of 2017. Many of the same issues are addressed in H.R. 4261 introduced by Representative Scott of Virginia. This is an overview of the law from which those proposals spring. This report is an abridged version of a longer report, CRS Report R45074, Mandatory Minimum Sentencing of Federal Drug Offenses, without the citations to authority and origin of quotations found in the parent report.

Jan 11, 2018

Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) and Selected Policy Issues

Some observers assert the financial crisis of 2007-2009 revealed that excessive risk had built up in the financial system, and that weaknesses in regulation contributed to that buildup and the resultant instability. In response, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203; the Dodd-Frank Act), and regulators strengthened rules under existing authority. Following this broad overhaul of financial regulation, some observers argue certain changes are an overcorrection, resulting in unduly burdensome regulation. The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) was reported by the Senate Committee on Banking, Housing, and Urban Affairs on December 18, 2017. S. 2155 would modify Dodd-Frank provisions, such as the Volcker Rule (a ban on proprietary trading and certain relationships with investment funds), the qualified mortgage criteria under the Ability-to-Repay Rule, and enhanced regulation for large banks; provide smaller banks with an “off ramp” from Basel III capital requirements—standards agreed to by national bank regulators as part of an international bank regulatory framework; and make other changes to the regulatory system. Most changes proposed by S. 2155 as reported can be grouped into one of four issue areas: (1) mortgage lending, (2) regulatory relief for “community” banks, (3) credit reporting, and (4) regulatory relief for large banks. Title I of S. 2155 aims to relax or provide exemptions to certain mortgage lending rules. For example, it would create a new compliance option for mortgages originated and held by banks and credit unions with less than $10 billion in assets to be considered qualified mortgages for the purposes of the Ability-to-Repay Rule. In addition, depositories that originated few mortgages would be exempt from certain reporting requirements. Certain mortgages under $400,000 would be exempt from certain appraisal requirements. A number of Title II provisions are intended to provide regulatory relief to community banks. For example, banks with under $10 billion in assets would be exempt from the Volcker Rule and from existing risk-based capital ratio and leverage ratio requirements, provided they meet a Community Bank Leverage Ratio. Banks under $5 billion would face reduced reporting requirements. The asset-size threshold at which banks become subject to less frequent examination and at which bank holding companies become exempt from the same capital requirements as depository subsidiaries (known as the “Collins Amendment”) would be raised from $1 billion to $3 billion. Title III provisions would subject credit reporting agencies (CRAs) to additional requirements, including requirements to generally provide fraud alerts for consumer files for at least a year and to allow consumers to place security freezes on their credit reports. In addition, CRAs would have to exclude certain defaulted private student loan debt from consumers’ credit reports and certain medical debt from veterans’ credit reports. Title IV would alter the criteria used to determine which banks are subject to enhanced prudential regulation, releasing certain banks from the regime. Banks designated as globally systemically important banks and banks with more than $250 billion in assets would still be automatically subjected to enhanced regulation. Banks with between $100 billion and $250 billion in assets would be subject only to supervisory stress tests, and the Fed would have discretion to apply other individual enhanced prudential provisions to these banks. Banks with assets between $50 billion and $100 billion would no longer be subject to enhanced regulation, except for the risk committee requirement. In addition, leverage requirements would be relaxed for large custody banks, and certain municipal bonds would be allowed to count toward large banks’ liquidity requirements. Proponents of S. 2155 assert it would provide necessary and targeted regulatory relief, foster economic growth, and provide increased consumer protections. Opponents of the bill argue it would needlessly pare back important Dodd-Frank protections to the benefit of large and profitable banks.

Jan 10, 2018

Attorney General’s Memorandum on Federal Marijuana Enforcement: Possible Impacts

Jan 10, 2018

Venezuela’s Economic Crisis: Issues for Congress

Venezuela’s Economic Crisis: Overview Venezuela is facing a political crisis under the authoritarian rule of President Nicolás Maduro, who appears to have continued to consolidate power over the political opposition in recent months. Underpinning Venezuela’s political crisis is an economic crisis. Venezuela is a major oil producer and exporter, and the 2014 crash in oil prices, combined with years of economic mismanagement, hit Venezuela’s economy hard. Venezuela’s economy has contracted by 35% since 2013, a larger contraction than the United States experienced during the Great Depression. Venezuela is struggling with inflation, shortages of food and medicine, substantial budget deficits, and deteriorating living conditions with significant humanitarian consequences. In response to the Maduro regime’s increasingly undemocratic actions, the Trump Administration imposed sanctions restricting Venezuela’s access to U.S. financial markets in August 2017, increasing fiscal pressure on the government. In November 2017, the Venezuelan government announced it would seek to restructure its debt. The government and the state-oil company, Petróleos de Venezuela, S.A. (PdVSA), subsequently missed key bond payments, leading credit rating agencies to issue default notices. Debt restructuring is expected to be a long and complex process, and it is unclear whether Venezuela will make coming debt repayments. The outlook for the economy is bleak; the Economist Intelligence Unit forecasts the Venezuelan economy will contract by 11.9% in 2018. Implications for U.S. Economic Interests The political crisis in Venezuela and low oil prices have contributed to a contraction in U.S.-Venezuela trade. Venezuela is a relatively minor trading partner of the United States; the contraction in bilateral trade is more consequential for Venezuela, for which the United States is its largest trading partner. In response to the political and economic instability, several large U.S. companies have left Venezuela or curtailed operations there. U.S. investors holding Venezuelan and PdVSA bonds could face substantial losses if Venezuela suspends payment or seeks an aggressive restructuring of its debt. Bondholders are in the early stages of organizing to enter restructuring negotiations and/or pursue legal challenges against the Venezuelan government. Venezuelan dollar-denominated bonds were issued under New York law, and bondholder lawsuits seeking repayment would take place in U.S. courts. Legal challenges could result in the seizure of Venezuela’s assets in the United States, such as CITGO (whose parent company is PdVSA), oil exports, and cash payments for oil exports. Venezuela’s precarious fiscal position also raises concerns for U.S. energy security. In 2016, Venezuela’s state oil company PdVSA secured a loan from the Russian state-oil company Rosneft. PdVSA used 49.9% of its shares in CITGO as collateral. If PdVSA defaults on its Rosneft loan, it is not clear whether Venezuela’s portion of CITGO ownership would be transferred to Rosneft. Reportedly, Rosneft is negotiating to swap its collateral in CITGO for other PdVSA assets. Looking Ahead Congress is considering providing humanitarian aid to Venezuela through nongovernmental organizations. If the Maduro government or a new government in Venezuela engages in a significant reorientation of policy, U.S. policymakers may be interested in providing broader economic support to rebuild Venezuela’s economy. Policymakers might explore how the international community, particularly the International Monetary Fund (IMF), could provide an international financial assistance package, and whether debt incurred by the National Constituent Assembly, widely viewed as an illegitimate legislature, should be enforced. If the Maduro regime stays in power and does not reorient its policies, the United States may revisit its policies and potentially pursue harsher sanctions. For additional information on Venezuela from CRS, see CRS Report R44841, Venezuela: Background and U.S. Policy; CRS In Focus IF10230, Venezuela: Political and Economic Crisis and U.S. Policy; and CRS In Focus IF10715, Venezuela: Overview of U.S. Sanctions.

Jan 10, 2018

Financial Reform: Muni Bonds and the LCR

Jan 10, 2018

Key Issues in Tax Reform: Dynamic Scoring

Jan 9, 2018

Spotlight on Public Corruption in Latin America

Jan 9, 2018

Drug Compounding: FDA Authority and Possible Issues for Congress

Drug compounding is a process by which a pharmacist or physician combines, mixes, or alters various drug ingredients to create a drug to meet the unique needs of an individual patient for whom an approved drug may not be appropriate (e.g., due to an allergy to a dye in the product). The Federal Food, Drug, and Cosmetic Act (FFDCA) authorizes the Food and Drug Administration (FDA) to regulate the manufacturing and sale of drugs in the United States, including compounded drugs. Generally, a drug may not be sold unless the FDA, through its drug approval process, has determined that the drug is safe and effective for its intended use. Although compounded drugs are considered new drugs, it would not be practicable for pharmacies to obtain FDA approval for each drug compounded for an individual patient. Thus, compounded drugs are not evaluated by FDA prior to marketing for safety, effectiveness, or quality. In 1997, Congress passed the Food and Drug Administration Modernization Act (FDAMA, P.L. 105-115), which attempted to clarify FDA’s authority to regulate compounded drugs. The act set forth, in a new FFDCA Section 503A, the conditions that must be met for a compounded drug to be exempt from certain statutory requirements related to new drug approval. Following the 2012 fungal meningitis outbreak and a series of adverse event reports and quality problems linked to compounding facilities, Congress passed the Drug Quality and Security Act (DQSA, P.L. 113-54). Title I of the DQSA, the Compounding Quality Act (CQA), created a new category of drug compounders called outsourcing facilities, a term that describes entities that compound drugs in circumstances that go beyond what 503A compounding pharmacies are allowed to do (i.e., compounding drugs in bulk for use in hospitals and other facilities, referred to as “office-use”). Since the enactment of the CQA, FDA has issued various guidance documents to facilitate implementation of the law and a draft memorandum of understanding (MOU) addressing the interstate distribution of certain compounded drug products. FDA has also increased its enforcement efforts with respect to compounding, conducting over 400 inspections of drug compounders, issuing over 150 warning letters, and overseeing 120 recalls involving compounded drugs. Additionally, FDA has communicated with stakeholders and state regulators via listening sessions, meetings, and information posted on the FDA website. Some stakeholders have found FDA guidance and communication to be helpful; others have reported communication challenges and disagreement with the agency’s interpretation of the statutory provisions. These reported challenges have resulted in certain actions by some in Congress, including letters to FDA, report directives, and the introduction of legislation that would amend certain compounding provisions in the FFDCA. In working to address the issues raised by stakeholders and maintain public health protections, policymakers may consider issues such as patient access, drug quality, and the necessity of compounded drugs. For patients with a legitimate medical need, preserving timely access to compounded medications has been identified as a concern by supporters of office-use compounding. However, in the context of patient safety, drug quality is also a consideration. Compounded drugs are not evaluated by FDA prior to marketing, and pharmacies that compound pursuant to FFDCA Section 503A are not required to register with FDA or report adverse events to the agency. For these reasons, among others, FDA maintains that compounded drugs pose a higher risk than FDA-approved drugs. A third consideration is necessity, specifically whether pharmacies need to compound for office-use. If a hospital, clinic, or health care practitioner wants to keep compounded drugs in stock for office-use, these entities can generally obtain non-patient-specific compounded products from outsourcing facilities that are registered with FDA and subject to more stringent regulatory requirements.

Jan 5, 2018

Protecting Consumers and Businesses from Fraudulent Robocalls

The Telephone Consumer Protection Act of 1991 (TCPA) regulates robocalls. A robocall, also known as “voice broadcasting,” is any telephone call that delivers a pre-recorded message using an automatic (computerized) telephone dialing system, more commonly referred to as an automatic dialer or “autodialer.” Robocalls are popular with many industry groups, such as real estate, telemarketing, and direct sales companies. The majority of companies who use robocalling are legitimate businesses, but some are not. Those illegitimate businesses may not just be annoying consumers—they may also be trying to defraud them. The Federal Trade Commission (FTC) and Federal Communications Commission (FCC) regularly cite “unwanted and illegal robocalls” as their number-one complaint category. The FTC received more than 1.9 million complaints filed in the first five months of 2017 and about 5.3 million in 2016. The FCC has stated that it gets more than 200,000 complaints about unwanted telemarketing calls each year. These statistics, as well as complaints to congressional offices, have spurred Congress to hold hearings and introduce legislation on the issue in an effort to protect consumers. Congressional policymakers have proposed a number of changes to existing law and regulations to address the problem of illegal robocalls under the TCA, many of which are intended to defraud. These changes would, for example, expand the definition of what a robocall is, increase penalties for illegal spoofing, and improve protection of seniors from robocall scams. As yet, none of these proposals has become law. On August 19, 2016, a 60-day Robocall “Strike Force” convened, culminating in the testing of a Do Not Originate (DNO) Registry to stop unwanted calls from reaching customers. The intent of the registry is to block fraudulent calls before they can reach a consumer. With the FCC’s permission, the Strike Force performed a trial of this concept. The trial was considered a success by the Strike Force and the FCC, reducing calls associated with one particular scam by about 90% in the third quarter of 2016. In November 2017, the FCC promulgated rules on the creation and use of the DNO Registry. The new rules explicitly allow service providers to block calls from two categories of number (1) numbers that the subscriber has asked to be blocked, such as “in-bound only” numbers (numbers that should not ever originate a call); and (2) unassigned numbers, as the use of such a number indicates that the calling party is intending to defraud a consumer. Notwithstanding the efforts above, based on their long history, scammers appear determined to continue their attempts to defraud consumers. Robocalls make these efforts easier. The FTC asserts that law enforcement on its own cannot completely solve the problem of robocalls. Technological solutions, including robust call-blocking technology, likely will also be required. The DNO Registry, a technology solution that has been proven to significantly decrease robocalls, is supported by most stakeholders, but concerns remain with legitimate telemarketers who fear it may negatively impact them. The FCC intends to address these concerns in the first half of 2018. The impacts of the FTC initiatives on fraudulent robocalls, and the resulting impacts in the telemarketing industry, may continue to be oversight issues for Congress.

Jan 5, 2018

Acquisition Reform in the FY2016-FY2018 National Defense Authorization Acts (NDAAs)

Congress has long been interested in defense acquisition and generally exercises its legislative powers to affect defense acquisitions through Title VIII of the National Defense Authorization Act (NDAA), entitled Acquisition Policy, Acquisition Management, and Related Matters. Congress has been particularly active in legislating acquisition reform over the last three years. For FY2016-FY2018, NDAA titles specifically related to acquisition contained an average of 82 provisions (247 in total), compared to an average of 47 such provisions (466 in total) in the NDAAs for the preceding 10 fiscal years. This report provides a brief overview of selected acquisition-related provisions found in the NDAAs for FY2016 (P.L. 114-92), FY2017 (P.L. 114-328), and FY2018 (P.L. 115-91), including the following topics that were a focus of the legislation: Major Defense Acquisition Programs, the acquisition workforce, commercial items, Other Transaction Authority, and contract types. This report also discusses one of the more controversial and extensive legislative changes made in recent years affecting acquisition: the breakup of the office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, as well as the shift of authority from that office to the military departments.

Jan 4, 2018

EPA Proposes to Repeal the Clean Power Plan

Jan 4, 2018

Children’s Hospital Graduate Medical Education (CHGME)

The Children’s Hospital Graduate Medical Education (CHGME) program provides direct financial support to children’s hospitals to train medical residents and fellows. The program is administered by the Health Resources and Services Administration (HRSA) within the Department of Health and Human Services (HHS) and is authorized in Section 340E of the Public Health Service Act (PHSA). CHGME receives annual discretionary appropriations and received $299.3 million in FY2017. The program is currently funded under the FY2018 continuing resolution (P.L. 115-96) until January 19, 2018. The program’s appropriations are authorized through FY2018. Hospitals typically receive support for graduate medical education (GME) through Medicare, and those payments are provided to hospitals based on their Medicare patient volume. Because the Medicare program is used primarily by people who are over the age of 65, and children’s hospitals treat primarily people below the age of 18, children’s hospitals have low Medicare patient volume and receive few Medicare GME payments. Prior to the CHGME program, advocates argued that the lack of direct federal support for GME in children’s hospitals impeded the development of the pediatric workforce. Program proponents argued that children’s hospitals, rather than general hospitals, are more likely to have the patient volume necessary to train pediatric subspecialists. Since the program was created in 1999, the size of the pediatric subspecialty workforce has increased. The CHGME program supports the training of nearly half of general pediatricians and more than half of all pediatric subspecialists. In the most recent year for which final training data are available (FY2015), the program provided financial support to more than 6,800 medical residents and fellows. In FY2017, the program supported training at 58 free-standing children’s hospitals located in 29 states, the District of Columbia, and Puerto Rico. As part of its potential reauthorization of the program, Congress may evaluate a number of related policy issues. These include, but are not limited to, whether the program size is appropriate (i.e., whether the current number of residents trained is appropriate to meet the current and future workforce needs), whether the program’s level of support per resident is appropriate, and whether the volume and type of information that the CHGME program collects is appropriate and being utilized effectively.

Jan 3, 2018

P.L. 115-97: The Mortgage Interest Deduction

P.L. 115-97, the 2017 tax revision, was enacted on December 22, 2017. The law makes significant changes to the federal tax system, including to the mortgage interest deduction. This Insight briefly explains the 2017 law governing the mortgage interest deduction and the modifications made to the deduction by P.L. 115-97. 2017 Law For the 2017 tax year, a homeowner may deduct the interest paid on a mortgage that finances the acquisition of a primary or secondary residence as long as the homeowner itemizes their tax deductions. The amount of interest that may be deducted is limited to the interest incurred on the first $1 million of combined mortgage debt and the first $100,000 of home equity debt ($1.1 million total). If a taxpayer has mortgage debt exceeding $1 million, they may still claim a deduction for a percentage of interest paid. The percentage of interest that is deductible is equal to $1 million divided by the mortgage balance (a similar calculation is made separately in cases where home equity debt exceeds $100,000). For example, a homeowner with a mortgage of $1.25 million may deduct 80% ($1 million divided by $1.25 million) of their interest payments. Modifications Made by P.L. 115-97 P.L. 115-97 modifies the mortgage interest deduction in two ways. First, the maximum mortgage amount is temporarily reduced to $750,000 for debt incurred after December 15, 2017. Mortgage debt that is the result of a refinance on or before December 15, 2017, is exempt from the reduction to the extent that the new mortgage does not exceed the amount refinanced. Second, the ability to deduct interest on new and existing home equity debt is temporarily suspended. The temporary reduction in the maximum mortgage amount and the temporary suspension regarding home equity debt applies to taxable years beginning after December 31, 2017, and beginning before January 1, 2026. Two other changes included in P.L. 115-97 will likely reduce the number of homeowners claiming the mortgage interest deduction. P.L. 115-97 limits the deduction for state and local property and income taxes (SALT) to $10,000 until the end of 2025. The SALT deduction is a primary reason why taxpayers choose to itemize. As a result, limiting the deduction will reduce the number of homeowners who itemize their deductions and therefore the number claiming the mortgage interest deduction. Additionally, P.L. 115-97 increases the standard deduction to $12,000 (single) and $24,000 (married), which will further reduce the number of taxpayers who itemize and claim the deduction. Budgetary Effects The Joint Committee on Taxation (JCT) did not provide an estimate specifically for the changes to the mortgage interest deduction. The JCT only provided an estimate for the combined set of itemized deductions that were temporarily repealed or modified, which included provisions such as the deductions for state and local taxes and nondisaster casualty losses, among others.

Dec 29, 2017

Agricultural Trade Balances Under NAFTA

Dec 29, 2017

CRS Products on North Korea

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Dec 28, 2017

The Federal Tax System for the 2017 Tax Year

The 115th Congress has passed legislation that substantially changes the U.S. federal tax system (H.R. 1). This report describes the federal tax structure, provides some statistics on the tax system as a whole, as of 2017. Historically, the largest component of the federal tax system, in terms of revenue generated, has been the individual income tax. In fiscal year (FY) 2016, $1.5 trillion, or 47% of the federal government’s revenue, was collected from the individual income tax. The corporate income tax generated another $300 billion in revenue in FY2016, or 9% of total revenue. Social insurance or payroll taxes generated $1.1 trillion, or 34% of revenue in FY2016. Revenues in 2016 were 17.8% of GDP, slightly above the post-World War II average of 17.3%. The federal individual income tax is levied on an individual’s taxable income, which is adjusted gross income (AGI) less deductions and exemptions. Tax rates based on filing status (e.g., married filing jointly, head of household, or single individual) determine the level of tax liability. Tax rates in the United States are generally progressive, such that higher levels of income are typically taxed at higher rates. Once tentative tax liability is calculated, tax credits can be used to reduce tax liability. Tax deductions and tax credits are tools available to policymakers to increase or decrease the after-tax price of undertaking specific activities. Individuals with high levels of exemptions, deductions, and credits relative to income may be required to file under the alternative minimum tax (AMT). Corporate taxable income is also subject to varying rates, where those with higher levels of income pay higher levels of taxes. Social Security and Medicare tax rates are, respectively, 12.4% and 2.9% of earnings. In 2017, Social Security taxes are levied on the first $127,200 of wages. Medicare taxes are assessed against all wage income. Federal excise taxes are levied on specific goods, such as transportation fuels, alcohol, and tobacco. Looking at the tax system as a whole, several observations can be made. Notably, the composition of revenues has changed over time. Corporate income tax revenues have become a smaller share of overall tax revenues over time, while social insurance revenues have trended upwards as a share of total revenues. Social insurance revenues are a sizable component of the overall federal tax system. Most taxpayers pay more in payroll taxes than income taxes. Many taxpayers pay social insurance taxes but do not pay individual income taxes, having incomes below the amount that would generate a positive income tax liability. From an international perspective, the U.S. federal tax system tends to collect less in federal revenues as a percentage of GDP than other OECD countries. This report reflects the tax system as in effect in 2017. H.R. 1, the 2017 tax revision, as passed in both the House and Senate, substantially modifies the federal tax system. The purpose of this report is to review the federal tax system in 2017. Any changes to the federal tax system enacted in the 115th Congress will be explored in subsequent reports and other CRS products.

Dec 26, 2017

Financial Stability Oversight Council (FSOC): Structure and Activities

The Financial Stability Oversight Council (FSOC) and its Office of Financial Research (OFR) were established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) to address several potential sources of systemic risk. Some observers argue that communication and coordination of financial regulators was insufficient to prevent the financial crisis of 2008. To foster coordination and communication, the FSOC assembles the heads of federal financial regulators, representatives from state regulatory bodies, and an independent insurance expert in a single venue. The OFR supports the FSOC with data collection, research, and analysis. The FSOC does not generally have direct regulatory authority; its role is to make policy recommendations to member agencies where authority already exists or to Congress where additional authority is needed. However, it is responsible for monitoring financial stability and designating nonbank financial companies and financial market utilities as systemic, which subjects those entities to heightened prudential regulation and the direct regulatory authority of other agencies. The FSOC considers a company to pose a threat to financial stability if a company’s financial distress or activities could be transmitted to other firms or markets, causing broader disruptions to financial intermediation or other financial market functions. Three of the many relevant factors used for designation include leverage, interconnectedness with other systemically important nonbank financial institutions (SIFIs), and whether a primary prudential regulator already has responsibility for the SIFI and the activity. Additional FSOC and OFR responsibilities include collection and analysis of financial data, issuing nonbinding recommendations to member agencies, facilitating the resolution of jurisdictional issues among member agencies, issuing a congressionally mandated annual report, and reviewing Consumer Financial Protection Bureau (CFPB) rules under some circumstances. The FSOC is composed of 15 members: 10 voting members and 5 nonvoting members. Voting members include the chair of the FSOC (Treasury Secretary), heads of the banking agencies (Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency, and the National Credit Union Administration), Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Housing Finance Agency, CFPB, and an independent insurance expert appointed by the President. Nonvoting members include the directors of the OFR and Federal Insurance Office, and state regulatory representatives, one each for insurance, banking, and securities. If an agency is led by a commission or board, the chair is a member, not other commissioners or board members. Additionally, some FSOC actions require a supermajority council vote and an affirmative vote by the chair. The FSOC also monitors regulatory gaps and overlaps to identify emerging sources of systemic risk. Regulatory gaps and overlaps occur in part because agencies have different policy missions and authorities. The financial regulatory architecture includes agencies that issue and enforce behavioral mandates and bans, balance a set of risky but permissible activities, and administer an emergency program or participate in the financial system similarly to a private firm. These diverse missions continue to create regulatory gaps and overlaps. In the current Congress, the House has passed the Financial CHOICE Act of 2017 (H.R. 10) to amend the FSOC. The bill would repeal the FSOC’s ability to designate entities as systemic; eliminate the OFR; subject the FSOC to the congressional appropriations process; repeal the FSOC’s ability to set aside CFPB regulations; and modify council membership, voting procedures, open meeting requirements, and other duties. Additionally, the Financial Stability Oversight Council Insurance Member Continuity Act (P.L. 115-61) became law on September 27, 2017, and modified the term of the FSOC’s independent insurance member.

Dec 22, 2017

Policy Options to Increase Physician Training Education in Proper Opioid Prescribing

Among the recommendations of the President’s Commission on Combating Drug Addiction and the Opioid Crisis (President’s Commission) is to mandate “medical education and prescriber education initiatives in proper opioid prescribing and risks of developing an SUD [Substance Use Disorder].” This Insight focuses on physician efforts because physicians can prescribe in every state but not all states permit advanced practice nurses or physician assistants to prescribe opioids. Many of the policy options discussed in this Insight could also be applied to other provider types (e.g., nonphysicians) who have prescriptive authority. Efforts to increase training on opioid prescribing for physicians could occur at three points during training: during medical school, during medical residency (i.e., as part of graduate medical education), and while in active practice (i.e., as part of the requirements to obtain or maintain a license). Federal efforts to mandate such education may be limited at each of these levels. For example, the federal government does not have direct oversight over the content of medical school curricula, although it has some indirect influence because federal student loan funds are often available only to individuals who attend a school accredited by an approved body (the Liaison Committee on Medical Education or the Commission on Osteopathic College Accreditation). Attending an accredited medical school is also required to enter residency training. Medical schools determine their own curricula subject to standards set by the relevant accreditation body. Some medical schools have implemented opioid-prescribing curricula. Prior to being licensed to practice independently, typically a physician must complete a residency. As with medical school curricula, the federal government does not have a direct role in setting the content of residency training, although it plays a large role in financing residency training. Physician licensing occurs at the state level. As such, the federal government cannot mandate that certain training be required for state licensure or be required to maintain state licensure. State licensure, however, is required to enroll as a provider eligible for reimbursement from federal health programs (e.g., Medicare). States have made efforts to increase provider education about prescribing opioids, for example, by requiring continuing education courses in pain management for physicians licensed in that state. The federal government does regulate the prescribing of controlled substances, including opioids, by requiring individuals who seek to prescribe controlled substances to register with the Drug Enforcement Administration (DEA). This registration generally requires the DEA to verify an individual’s state license and does not require additional training. What Levers Are Available to the Federal Government? Although much of the authority to mandate prescriber education would occur through schools or through states, the federal government may have some leverage in encouraging or requiring this education. Examples of policy levers are discussed below. Specific examples are provided where options have been used. Developing the content of potential new prescribing-related curricula. For example, the Centers for Disease Control and Prevention (CDC) released opioid-prescribing guidelines that have been used in some medical schools. In addition, the National Institutes of Health (NIH) Centers of Excellence in Pain Education (COPEs) have also worked to develop and distribute pain-related curricula. This initiative involves 11 health professional schools. Providing funding to encourage medical schools and residency programs to provide training in opioid prescribing and substance abuse. The explanatory statement accompanying P.L. 115-31, which provided appropriations for the end of FY2017, included the following language: “The agreement supports efforts by the Health Resources and Services Administration (HRSA), through its Title VII health professions programs, to provide educational and training grants to medical schools and teaching hospitals to develop innovative educational materials related to substance use disorders and pain management.” Providing grants or explicit funding to support education and training. For example, Public Health Service Act Title VII includes a grant program for education and training in pain care, which authorizes awarding funds to health professional schools, and hospices, among others, to develop and implement programs to provide pain care training to health care professionals. Appropriations for this program were authorized through FY2012, but funds have never been appropriated. Providing funding preferences in federal grant programs to states that implement prescriber requirements or to medical schools that implement opioid training requirements. For example, HRSA provides grants to medical schools to increase training in primary care. Grant funds could be awarded in ways that give preference to medical schools that implement opioid prescribing curricula. Requiring physicians who are employed by the federal government to have training on safe opioid prescribing. For example, a 2015 presidential memorandum requires federal agencies such as the Department of Veterans Affairs (VA) and the Indian Health Service (IHS) to provide training to their providers about safe prescribing. The presidential memorandum does not mandate set curricula. Providing funding for programs that provide opioid training (or withdrawing funding from those that do not). As mentioned, the federal government provides financial support to hospitals for medical residency training, though the majority of these funds flow from the Medicare trust fund by formula; other GME payments could be used to incentivize training programs to include opioid-related training. Amending the Controlled Substances Act to require that individuals seeking to register with the DEA to prescribe controlled substances have training on opioid prescribing. The President’s Commission recommended that the law be amended to require that prescribers undertake continuing medical education on opioid prescribing prior to being relicensed with the DEA. These examples are some of the policy options that could be employed for training on safe opioid prescribing. These options could target physicians or a larger group of providers. While the options discussed in this Insight focus on opioid training, similar policy options could also be considered for other content areas, such as nutrition or end-of-life care.

Dec 22, 2017

Comparing Key Elements of H.R. 1 to 2017 Tax Law

Dec 22, 2017

Tailoring Bank Regulations: Differences in Bank Size, Activities, and Capital Levels

Banking organizations differ across a multitude of characteristics. The amount of assets they hold, the services they provide, and how they secure funding are just a few examples. These differences affect an individual organization’s risk of failure and the risk its failure or distress could pose to the overall financial system. Policymakers generally agree that certain banking regulations should be tailored to account for such differences, and as a result, banks are currently subject to or exempt from various regulations if they meet certain criteria. To what degree existing bank classifications adequately tailor regulation and how tailoring should be designed and implemented are debated issues. This report examines existing and proposed bank regulatory classifications, legislation that proposes to change existing classifications or create new ones, and, the characteristics of bank organizations that fall under existing and proposed classifications. Banks are classified in a variety of ways. Some are informal classifications that refer to widely understood differences between community and Wall Street banks—two commonly recognized types of banks—but that are unofficial classifications that do not affect banking regulations. For example, community banks are understood to be small institutions that meet the credit needs of a community and Wall Street banks are understood to be large, complex institutions that could individually pose risk to the financial system. Existing regulatory classifications are official classifications applied to banks that meet some criteria and determine whether a bank is subject to certain regulations. In addition, several existing proposals would establish new regulatory classifications and criteria. Often (but not always) existing criteria are size-based thresholds that subject a bank to more stringent regulation once it exceeds a certain amount of assets. Proponents of this system argue simple, “bright line” rules create certainty and transparency and that asset size is an adequate measurement to identify which institutions should or should not be subject to certain regulation. Critics argue it too narrowly focuses on one aspect of a bank organization, and thus may subject certain banks to inappropriate regulation. Critics may argue that new or additional criteria based on other characteristics (e.g., the business activities a bank engages in or the amount of capital it holds) should be implemented. To investigate how well certain criteria would appropriately tailor regulation, it is informative to examine characteristics of banking organizations and compare banks that meet some criteria to those that do not. This report examines characteristics such as asset size; concentrations in loans, deposits, trading assets, and trading liabilities; activity in derivatives; and capital levels. The analysis generally suggests that these characteristics are correlated; larger banks tend to be involved in more business lines and hold less capital whereas smaller banks tend to be more focused on making loans and taking deposits and hold more capital. However, the large number of banks and the high degree of variation across multiple variables means that no set of criteria is easily and objectively identifiable as the best means of tailoring regulations. In the 115th Congress, numerous bills—including H.R. 10, H.R. 1116, H.R. 1948, H.R. 2121, H.R. 3072, H.R. 3312, S. 1002, S. 1284, S. 1499, and S. 1893—would change the existing system of bank regulation tailoring. Some would alter existing size-based classifications or introduce new sized-based criteria, and others would establish new activities-based or capital-based criteria.

Dec 21, 2017

Department of Veterans Affairs FY2018 Appropriations

The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans and eligible dependents who meet certain criteria as authorized by law. These benefits include medical care, disability compensation and pensions, education, vocational rehabilitation and employment services, assistance to homeless veterans, home loan guarantees, administration of life insurance and traumatic injury protection insurance for servicemembers, and death benefits that cover burial expenses. The VA is funded through the Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) appropriations bill. On May 23, 2017, the President submitted his budget request to Congress for FY2018 and for the advance appropriations accounts for FY2019. The President’s FY2018 budget request for the VA is $182.66 billion. Compared with the FY2017-enacted amount of $176.94 billion, this would be a 3.23% (or $5.72 billion) increase. The FY2018-requested amount includes $103.95 billion in mandatory budget authority and $78.71 billion in discretionary budget authority. For the Veterans Benefits Administration (VBA), the President’s budget request includes $106.97 billion for FY2018. For the Veterans Health Administration (VHA) the President’s budget request includes $69.67 billion for FY2018, without collections. Compared with the FY2017-enacted amount of $65.32 billion, this would be a 6.66% increase, and the amount includes additional funding of $2.65 billion over the FY2018 advance appropriations of $66.39 billion provided in P.L. 114-223. Although the Veterans Choice Program (VCP) is not part of the annual appropriations for the VA health care programs, the President is requesting $2.9 billion in mandatory funding for FY2018 and $3.5 billion for FY2019 to continue the program. On September 14, 2017, the House passed its version of the FY2018 MILCON-VA appropriations bill (Division K—Military Construction, Veterans Affairs, and Related Agencies Appropriations, bill, 2018 in H.R. 3354). The House-passed measure (H.R. 3354) provides $182.28 billion for the VA. This amount includes $103.95 billion in mandatory funding and $78.33 billion in discretionary funding. For the VBA, the House-passed measure provides $107.03 billion. A majority of this funding is for mandatory benefits such as disability compensation, readjustment benefits, and veterans insurance programs. For VHA, the House-passed bill provides $69.74 billion (without collections) for FY2018. This amount includes $66.39 billion provided as advance appropriations in P.L. 114-223 for FY2018 for the four accounts—medical services, medical community care, medical support and compliance, and medical facilities—and $2.65 billion in additional funding for FY2018 for those same four accounts. The total VHA amount also includes $698.23 million for the medical and prosthetic research account. On July 13, 2017, the Senate Appropriations Committee reported its version of the FY2018 MILCON-VA Appropriations bill (S. 1557; S.Rept. 115-130). The committee-reported version would provide $182.37 billion for the VA for FY2018. This amount includes $103.95 billion in mandatory funding and $78.42 billion in discretionary funding. For the VBA, the Senate-reported bill recommends $107.04 billion for FY2018. For VHA, the committee recommends $70.09 billion (without collections) for FY2018. This amount includes $66.39 billion provided as advance appropriations in P.L. 114-223 for FY2018 for the four accounts—medical services, medical community care, medical support and compliance, and medical facilities—and $2.98 billion in additional funding for FY2018 for those same four accounts. The total VHA amount also includes $722.26 million for the medical and prosthetic research account. Since none of the 12 regular appropriations bills were enacted prior to the start of FY2018 (October 1, 2017), Congress passed and the President signed into law two continuing resolutions (CRs) (P.L. 115-56 and P.L. 115-90). The most recent CR (P.L. 115-90) funds some VA accounts for FY2018 until December 22, 2018.

Dec 20, 2017

The War in Yemen: A Compilation of Legislation in the 115th Congress

The 115th Congress continues to debate the extent and terms of the United States involvement in the ongoing conflict in Yemen, where fighting has continued unabated since March 2015. Lawmakers have questioned the extent to which successive Administrations have adhered to existing law relating to providing security assistance, including sales or transfers of defense goods and defense services, while upholding international human rights standards (e.g., 22 U.S.C. §2754 or 22 U.S.C. §2304). They also have proposed new legislation that would extend legislative oversight over the executive branch’s policy toward the war in Yemen. This product provides a summary of all legislative proposals that the 115th Congress has considered to date regarding the conflict in Yemen. Proposed stand-alone legislation, resolutions, and amendments to wider bills [National Defense Authorization Act (H.R. 2810; P.L. 115-91) and Defense appropriations (H.R. 3219/Division I, H.R. 3354)] reflect a range of congressional perspectives and priorities, including, among other things: the authorization of the deployment of U.S. armed forces in the conflict; the extent of U.S. logistical and intelligence support for the coalition led by Saudi Arabia; the approval, disapproval, or conditioning of U.S. arms sales to Saudi Arabia; the appropriation of funds in support of the Saudi-led coalition’s operations; the conduct of the Saudi-led coalition’s air campaign and adherence to international humanitarian law and the laws of armed conflict; the demand for greater humanitarian access to Yemen; the call for a wider government assessment of the U.S. role in the conflict; the imperative of U.S.-Saudi counterterrorism cooperation; and the role of Iran in suppling missile technology and other weapons to the forces of the Houthi movement. This product will be updated during the second session of the 115th Congress to reflect new legislative proposals. It does not include references to Yemen in Iran sanctions legislation, which are covered in CRS Report RS20871, Iran Sanctions. For additional information on the war in Yemen and Saudi Arabia, please see the following CRS Products. CRS Report R43960, Yemen: Civil War and Regional Intervention. CRS Report RL33533, Saudi Arabia: Background and U.S. Relations. CRS Insight IN10729, Yemen: Cholera Outbreak. CRS Insight IN10557, Saudi Military Campaign in Yemen Draws Congressional Attention to U.S. Arms Sales. CRS Insight IN10599, Yemen: Recent Attacks Against U.S. Naval Vessels in the Red Sea.

Dec 20, 2017

The 2017 National Security Strategy: Issues for Congress

On December 18, 2017, the Trump Administration released its first National Security Strategy (NSS). The document maintains that, in addition to the threats posed to the United States by rogue regimes and violent extremist organizations that have been a central focus of national security policy since the end of the Cold War, great power rivalry and competition have once again become a central feature of the international security landscape. To advance U.S. interests effectively within this strategic context, the Administration argues, the United States must improve domestic American security and bolster economic competitiveness while rebuilding its military. The NSS is organized into four interconnected “pillars”: Protect the American People, the Homeland, and the American Way of Life, which focuses on border security, immigration, improving resilience to catastrophic events, and combating threats to the American homeland, including those from weapons of mass destruction. Promote American Prosperity, which concentrates on rejuvenating the domestic economy; promoting free and reciprocal economic relationships; leading on research, innovation, and invention; and protecting the national security innovation base. Preserve Peace Through Strength, which focuses on defense policy, including improving the lethality of the joint force, and articulates U.S. interests in different regions around the world, as well as ways to advance U.S. interests using diplomatic and economic means. Enhance American Influence, which aims to improve the U.S. ability to achieve its desired outcomes in multilateral fora, as well as broaden the community of states with which the United States partners. The 2017 NSS retains many of the same themes as those articulated by previous Administrations, particularly its prioritization of combating threats from weapons of mass destruction, promoting U.S. global leadership, and advancing economic prosperity. It differs in several key respects, including the degree of its emphasis on homeland security and American economic growth, its declaration that the United States will no longer “impose [its] values on others” (p.37), its assertion that the United States will defend its sovereignty “without apology,” (p.4) and its argument that the United States must better compete with other actors in a complex international security environment in which many adversaries are blurring the lines between war and peace. Some observers maintain that the 2017 NSS’s emphasis on advancing U.S. interests and global competition is a return to principled realism. Others take the view that the document dismisses the importance of “soft power,” in particular promulgating U.S. values as a source of American strength. NSS Statutory Requirement The NSS is a congressionally mandated document, originating in the Goldwater-Nichols Department of Defense Reorganization Act of 1986 (P.L. 99-433, §603/50 U.S.C §3043). The NSS has been an unclassified document published by the President since the Reagan Administration in 1987. The FY2017 National Defense Authorization Act (NDAA), P.L. 114-328, Section 944, amended 50 U.S. Code, Section 304, to delete “both a classified and unclassified form” and insert “to Congress in classified form, but may include an unclassified summary.” What the 2017 NSS Says Many observers and practitioners have long noted that NSSs are not strategies as traditionally understood; that is, successive Administrations’ National Security Strategies generally fail to link overall national objectives to the tasks and resources necessary to accomplish stated goals. The Trump Administration’s NSS is no different, as it broadly describes key strategic challenges and “priority tasks,” without articulating the resources necessary to accomplish stated goals, or asserting which of the 117 identified tasks are most important. What NSSs do provide is a broad assessment of the international strategic context in which the United States is operating, as well as an articulation of an Administration’s underlying philosophy for advancing U.S. interests. One could infer from the NSS that the Trump Administration regards homeland security, economic growth, and national security as more fundamentally interrelated than its predecessors have argued, and that at times, the United States must cooperate with those states with which it also competes. Some key specific points in the new NSS include The U.S. must operate in a global strategic context, wherein adversaries often compromise American interests using nonmilitary tools. “China, Russia and other state and non-state actors recognize that the United States often views the world in binary terms, with states being either at peace’ or at war,’ when it is actually an arena of continuous competition. Our adversaries will not fight us on our terms. We need to raise our competitive game to meet that challenge, to protect American interests and to advance our values” (p. 28). Some actors, particularly Russia and China, have exploited international institutions in a manner that has compromised American economic security. The NSS further distinguishes between those like-minded states that follow “fair and free market principles,” with which the United States encourages healthy economic competition, from those that “act with little regard for those principles.” With respect to the latter, it maintains that the United States will pursue enforcement actions against those countries that violate the rules to their unfair advantage (p. 19). While the United States has benefited from an interconnected world, significant work is required to mitigate the threats that globalization poses to American homeland security. In addition to securing the border and preventing the use of weapons of mass destruction on U.S. soil, the NSS maintains that adversaries “steal and exploit our intellectual property and personal data, interfere in our political processes, target our aviation and maritime sectors, and hold our critical infrastructure at risk” (p. 7). The U.S. military needs significant investment to maintain superiority against adversaries such as China and Russia. Noting that “since the 1990s, the United States displayed a great degree of strategic complacency” (p. 27), the NSS argues that investments in new technologies and additional military manpower are required (p. 29). Advancing U.S. interests requires diplomats that are adept at navigating and negotiating in international competitive spaces. The NSS makes the case for effective diplomacy: “Across the competitive landscape, America’s diplomats are our forward-deployed political capability, advancing and defending America’s interests abroad” (p. 33). Yet, many observers have argued that the State Department has been underfunded for decades, a trend that the Trump Administration arguably has not reversed. As it ponders the 2017 NSS, Congress may wish to consider what, if any, additional resources may be required to implement the strategy effectively, and to what degree it will be supported by the forthcoming National Defense Strategy to be issued by the Pentagon in early 2018.

Dec 19, 2017

Educational Assessment and the Elementary and Secondary Education Act

The Elementary and Secondary Education Act (ESEA), as amended by the Every Student Succeeds Act (ESSA; P.L. 114-95), specifies the requirements for assessments that states must incorporate into their state accountability systems to receive funding under Title I-A. While many of the assessment requirements of the ESEA have not changed from the requirements put into place by the No Child Left Behind Act (NCLB; P.L. 107-110), the ESSA provides states some new flexibility in meeting them. This report has been prepared in response to congressional inquiries about the revised educational accountability requirements in the ESEA, enacted through the ESSA, and implications for state assessment systems that are used to meet these requirements. While these changes have the potential to add flexibility and nuance to state accountability systems, for these systems to function effectively the changes need to be implemented in such a way as to maintain the validity and reliability of the required assessments. To this end, the report also explores current issues related to assessment and accountability changes made by the ESSA. The ESEA continues to require that states implement high-quality academic assessments in reading, mathematics, and science. States must test all students in reading and mathematics annually in grades 3 through 8 and once in high school. States must also test all students in science at least once within three grade spans (grades 3-5, 6-9, and 10-12). Assessments in other grades and subject areas may be administered at the discretion of the state. All academic assessments must be aligned with state academic standards and provide “coherent and timely” information about an individual student’s attainment of state standards and whether the student is performing at grade level (e.g., proficient). The reading and mathematics assessment results must be used as indicators in a state’s accountability system to differentiate the performance of schools. State accountability systems continue to be required to report on student proficiency on reading and mathematics assessments. However, a singular focus on student proficiency has been criticized for many reasons, most notably that proficiency may not be a valid measure of school quality or teacher effectiveness. It is at least partially a measure of factors outside of the school’s control (e.g., demographic characteristics, prior achievement), and may result in instruction being targeted toward students just below the proficient level, possibly at the expense of other students. In response, the ESSA provides the option for student achievement to be measured based on proficiency and student growth. While measures of student growth remain optional, prior to the enactment of the ESSA, states were only able to include measures of student growth in their accountability systems if they received a waiver from the U.S. Department of Education to do so. The ESSA also authorizes two new assessment options to meet the requirements discussed above. First, in selecting a high school assessment for reading, mathematics, or science (grades 10-12), a local educational agency (LEA) may choose a “nationally-recognized high school academic assessment,” provided that it has been approved by the state. Second, the ESSA explicitly authorizes the use of “computer adaptive assessments” as state assessments. Previously, it was unclear whether computer adaptive assessments met the requirement that statewide assessments be the same assessments used to measure the achievement of all elementary and secondary students. Computer adaptive assessments adjust to a student’s individual responses, which means that all students will not see the exact same questions. The ESSA added language clarifying that students do not have to be offered the same assessment items on a computer adaptive assessment. The ESSA also authorizes an exception to state assessment requirements for 8th grade students taking advanced mathematics in middle school that permits them to take an end-of-course assessment rather than the 8th grade mathematics assessment, provided certain conditions are met. The ESSA added specific provisions related to the assessment of “students with the most significant cognitive disabilities” that were previously addressed only in regulations. It made changes in how English learners (ELs) have their assessment results included in states’ accountability systems as well. Additionally, the ESEA as amended through the ESSA now requires LEAs to notify parents of their right to receive information about assessment opt-out policies in the state. If excessive numbers of students opt out of state assessments, however, it may undermine the validity of a state’s accountability system. States continue to be required to administer 17 assessments annually to meet the requirements of Title I-A. These requirements have been implemented within a crowded landscape of state, local, and classroom uses of educational assessments, raising concerns about over-testing of students. The ESSA added three new provisions related to testing burden: (1) each state may set a target limit on the amount of time devoted to the administration of assessments; (2) LEAs are required to provide information on the assessments used, including the amount of time students will spend taking them, and (3) the Secretary of Education may reserve funds from the State Assessment Grant program for state and LEA assessment audits.

Dec 19, 2017

Basic Concepts and Technical Considerations in Educational Assessment: A Primer

Federal education legislation continues to emphasize the role of assessment in elementary and secondary schools. Perhaps most prominently, the Elementary and Secondary Education Act (ESEA), as amended by the Every Student Succeeds Act (ESSA; P.L. 114-95), requires the use of test-based educational accountability systems in states and specifies the requirements for the assessments that states must incorporate into state-designed educational accountability systems. These requirements are applicable to states that receive funding under Title I-A of the ESEA. More specifically, to receive Title I-A funds, states must agree to assess all students annually in grades 3 through 8 and once in high school in the areas of reading and mathematics. Students are also required to be assessed in science at least once within each of three specified grade spans (grades 3-5, 6-9, and 10-12). The results of these assessments are used as part of a state-designed educational accountability system that determines which schools will be identified for support and improvement based on their performance. The results are also used to make information about the academic performance of students in schools and school systems available to parents and other community stakeholders. As student assessments continue to be used for accountability purposes under the ESEA as well as in many other capacities related to federal programs (e.g., for identifying students eligible to receive extra services supported through federal programs), this report provides Congress with a general overview of assessments and related issues. It discusses different types of educational assessments and uses of assessment in support of the aims of federal policies. The report aims to explain basic concepts related to assessment in accessible language, and it identifies commonly discussed considerations related to the use of assessments. The report provides background information that can be helpful to readers as they consider the uses of educational assessment in conjunction with policies and programs. This report accompanies CRS Report R45049, Educational Assessment and the Elementary and Secondary Education Act, by Rebecca R. Skinner, which provides a more detailed examination of the assessment requirements under the ESEA. The following topics are addressed in this report: Purposes of Assessment: Assessments are developed and administered for different purposes: instructional, diagnostic, predictive, and evaluative. Increasingly, states are attempting to use assessments for these purposes within a balanced assessment system. A balanced assessment system often incorporates various assessment types, such as formative and summative assessments. Formative assessments are used to monitor progress toward a goal and summative assessments are used to evaluate the extent to which a goal has been achieved. Types of Tests: Educational assessments can be either norm-referenced tests (NRTs) or criterion-referenced tests (CRTs). An NRT is a standardized test that compares the performance of an individual student to the performance of a large group of students. A CRT compares the performance of an individual student to a predetermined standard or criterion. The majority of tests used in schools are CRTs. The results of CRTs, such as state assessments required by Title I-A of the ESEA, are usually reported as scaled scores or performance standards. A scaled score is a standardized score that exists along a common scale that can be used to make comparisons across students, across subgroups of students, and over time. A performance standard is a generally agreed upon definition of a certain level of performance in a content area that is expressed in terms of a cut score (e.g., basic, proficient, advanced). Technical Considerations in Assessment: The technical qualities of assessments, such as validity, reliability, and fairness, are considered before drawing conclusions about assessment results. Validity is the degree to which an assessment measures what it is supposed to measure. Reliability is a measure of the consistency of assessment results. The concept of fairness is a consideration of whether there is equity in the assessment process. Fairness is examined so that all participants in an assessment are provided the opportunity to demonstrate what they know and can do. Using Assessment Results Appropriately: Assessment is a critical component of accountability systems, such as those required under Title I-A of the ESEA, and can be the basis of many educational decisions. An assessment can be considered low-stakes or high-stakes, depending on the type of educational decisions made based on its result. For example, a low-stakes assessment may be a formative assessment that measures whether students are on-track to meet proficiency goals. On the other hand, a state high school exit exam is a high-stakes assessment if it determines whether a student will receive a diploma. When the results of assessments are used to make high-stakes decisions that affect students, teachers, districts, and states, it is especially important to have strong evidence of validity, reliability, and fairness. It is therefore important to understand the purpose of educational assessments, and the alignment between the purpose and their use, and to give consideration to the appropriateness of inferences based on assessment results. A glossary containing definitions of commonly used assessment and measurement terms is provided at the end of this report. The glossary provides additional technical information that may not be addressed within the text of the report.

Dec 19, 2017

Supplemental Appropriations Proposed for Agriculture

Crop and livestock losses from the 2017 hurricane season and wildfires in the West have created a demand for agricultural disaster assistance. To date, Congress has enacted two supplemental appropriations, but neither included funding for agricultural-related losses. On November 17, 2017, the Administration made a third supplemental appropriations request. Overall, it included $44 billion of additional appropriations, offset by $59 billion of reductions. For analysis of the request see CRS Insight IN10832, Proposed Offsets Exceed Spending for Agriculture in the Administration’s Disaster Assistance Request, and CRS Insight IN10834, Supplemental Appropriations and the 2017 Hurricane Season. On December 18, 2017, H.R. 4667 was introduced in the House, a third supplemental appropriation. The House bill includes funding for several new and existing agriculture and disaster assistance programs (Table 1). Some provisions could have long-term implications because they change farm bill statutes. We discuss four of the more noteworthy issues. Table 1. Proposed Supplemental Funding for Agriculture (budget authority in millions of dollars) H.R. 4667 ProgramAdmin. Request FY2018 10 years FY2018-FY2027 Agricultural Assistance Block Grants for Agricultural Disasters — 2,600.0 2,600.0 Requirement to purchase crop insurance for two years 0.0 68.0 Watershed and Flood Prevention Operations 500.0 541.0 541.0 Emergency Conservation Program 375.0 400.0 400.0 Emergency Forest Restoration Program 50.0 — — Rural Water and Waste Disposal Program — 165.5 165.5 Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish 40.0 20.0a 200.0a Agricultural Research Service Buildings and Facilities 21.7 22.0 22.0 Commodity Assistance Program (food assistance) — 24.0 24.0 Rural Housing Service Multifamily Housing 4.3 18.7 18.7 Food and Drug Administration Buildings and Facilities — 7.6 7.6 Office of Inspector General 1.0 2.5 2.5 Subtotal, Division A 3,801.2 4,049.2 Cottonseed as covered commodity — -57.0 -1.0 Eliminate limit on Livestock Gross Margin Insurance — 0.0 308.0 National Accuracy Clearinghouse (SNAP) — 0.0 -579.0 Subtotal, Division C — -57.0 -272.0 Subtotal 992.0 3,744.2 3,777.2 Agricultural Offsets Extend sequestration two more years through FY2027 -2,600.0b — — Offsets to unobligated agriculture appropriations -3,026.0 — — Subtotal -5,626.0 — — Total, Agriculture -4,634.0 3,744.2 3,777.2 Source: CRS, compiled from OMB, “Letter regarding additional funding” November 17, 2017, and CBO, Cost Estimate for “Rules Committee Print 115-50, Containing the Text of H.R. 4667.” Notes: This program has existing mandatory authority of $20 million for each fiscal year. H.R. 4667 would increase the funding to $40 million annually, an increase of $20 million for each year FY2018 and thereafter. Accounts in Agriculture appropriations bear $1.3 billion of sequestration in FY2018 (OMB, “Report to the Congress,” May 23, 2017). We use this to estimate the two-year Agriculture share from extending sequestration. Block-Grants for Agricultural Losses H.R. 4667 would provide $2.6 billion to the Secretary of Agriculture to cover crop, tree, bush, vine, and livestock losses that were not covered under the Federal Crop Insurance Program (crop insurance) and the Noninsured Crop Disaster Assistance Program (NAP). Assistance would be through block grants to eligible states. Historically, assistance for production losses has been provided directly from the U.S. Department of Agriculture (USDA) to eligible farmers and ranchers. The requirement to implement this assistance through states that have not run such programs could delay implementation and add complexity for participants. The proposed new program would limit payments to no more than 85% of losses, including payments from crop insurance and NAP. For producers that did not purchase crop insurance or NAP in advance of the natural disasters, payments are limited to 65% of losses. All participants would be required to purchase crop insurance or NAP for the next two years. Because crop insurance and NAP are federally administered programs, data needed to calculate payments under the block grants are not currently available to states. Also, the new program would cover the losses of farmers who chose not to purchase insurance, as well as those who did, creating a potential moral hazard for future participation. It is unclear whether the new program would duplicate payments made under other existing disaster programs (e.g., Tree Assistance Program and Livestock Indemnity Program) that were not specifically mentioned under the 85/65 loss coverage limitation. Treatment of Cotton Seed Section 3001 of H.R. 4667 would amend the 2014 farm bill to add cottonseed as a “covered commodity” and make cotton eligible for farm commodity supports such as Price Loss Coverage (PLC). Cotton had long been a covered commodity, but was removed by the 2014 farm bill in order to comply with a World Trade Organization dispute settlement. The current farm safety net for cotton, including a new insurance program, is perceived by many as insufficient and a high-profile farm bill issue. The cottonseed provision in the supplemental would establish a reference price, loan rate, and payment yield that are higher than proposed in the Senate committee-reported Agriculture appropriations bill (S. 1603). The Congressional Budget Office (CBO) score of the provision is essentially budget neutral over 10 years, and a small savings in FY2018. Livestock Related Expenditures Section 3002 of H.R. 4667 would remove the $20 million cost limitation on the livestock margin insurance programs that allow producers to manage price risk by insuring their margins (market value minus feed costs). The USDA Risk Management Agency offers margin insurance policies for cattle, dairy, and swine. In 2016, dairy producers represented 93% of livestock gross margin liability. Stakeholders have advocated for an increase or removal of the cap to enhance their risk management opportunities. CBO projects the cost of removing the cap to be $308 million over 10 years. National Accuracy Clearinghouse Section 3003 of H.R. 4667 would require USDA to expand the National Accuracy Clearinghouse (NAC), currently a five-state pilot, and would require all Supplemental Nutrition Assistance Program (SNAP) state agencies to participate. Under current SNAP law, individuals are not to apply for or receive benefits from more than one state agency concurrently. NAC was begun in 2013 to test a strategy for reducing such duplicate enrollment. NAC currently gathers and analyzes SNAP enrollment data from five participating states (Alabama, Florida, Georgia, Louisiana, and Mississippi).

Dec 19, 2017

Tax Cuts and Jobs Act (H.R. 1): Conference Agreement

Dec 19, 2017

The Application of the “One Central Reason” Standard in Asylum and Withholding of Removal Cases

Dec 18, 2017

Farm Credit Administration and Its Board Members

Dec 18, 2017

U.S.-Brazil Trade Relations

Dec 15, 2017

Brand USA: Congressional Appropriators and Administration Disagree on Funding Cuts for U.S. Tourism Promotion

Dec 14, 2017

What Next for the Third Offset Strategy?

Dec 13, 2017

Federal Milk Marketing Orders: An Overview

Federal Milk Marketing Orders (FMMOs) are geographically defined fluid-milk demand areas. Under FMMO law and regulations, the U.S. Department of Agriculture (USDA) establishes a minimum milk price, and those who buy milk from producers, known as handlers, are required to pay milk producers no less than this established price. Handlers are responsible for reporting milk receipts by end use to FMMO milk market administrators and maintain adequate records so that administrators may audit and verify the accuracy of the reported uses. The two main features of the FMMO system are classified pricing and pooling of milk. The FMMO system recognizes four different classes of milk: Class I (fluid use), Class II (soft products such as ice cream), Class III (cheese), and Class IV (butter and milk powder). Milk handlers report all milk receipts by end use, and the FMMO values this “pool” of milk receipts through fixed minimum-price formulas to compute the four class prices. Milk handlers pay milk producers at least the weighted-average price of all class uses—known as a “uniform” price or “blend” price. The main objectives of FMMOs are to (1) promote orderly marketing conditions in fluid milk markets, (2) improve the income situation of dairy farmers, (3) supervise the terms of trade in milk markets in such a manner as to achieve more equality of bargaining between milk producers and milk processors, and (4) assure consumers of adequate supplies of good quality milk at reasonable prices. FMMOs are permanently authorized in the Agricultural Marketing Agreement Act of 1937, as amended, and not subject to reauthorization. FMMOs are established and amended through a formal public-hearing process that allows interested parties to present evidence regarding marketing and economic conditions in support of, or in opposition to, instituting or amending an order. Most FMMO changes are made administratively by USDA through the rulemaking process, which must then be approved by farmers in a referendum. Legislation can also address issues related to the FMMO system. The most recent major national revision to FMMOs occurred as part of the 1996 farm bill (P.L. 104-127). It reduced the number of orders from 31 to 11 (now 10 since 2004) and made changes to classified pricing, order provisions, terminology, and classification of milk by end use. The 1996 farm bill provisions went into effect on January 1, 2000. FMMOs continue to operate under those reforms, although there have been some changes in the operations of orders brought about through FMMO hearings and rulemaking since then. Several dairy issues have attracted stakeholder attention. Milk industry stakeholders have proposed two changes to how milk is priced. Milk handlers may forward contract milk purchases used to manufacture dairy products. Milk processors, who would like to use forward contracts as a risk management tool, have asked Congress to expand forward contracting rules to fluid milk. Also, both milk processors and producers have proposed that USDA change the method used to calculate the Class I milk price. Some stakeholders believe that altering the Class I milk formula could improve their ability to manage price risk. In addition to these pricing issues, California milk producers petitioned USDA to establish a California federal order, which would bring an additional 20% of national milk production under federal regulations. Lastly, the Organic Trade Association (OTA) petitioned USDA to alter FMMO pricing requirements for organic milk handlers. Organic milk handlers are required to pool organic milk under FMMO regulations, but OTA argues that classified pricing and pooling disfavor organic handlers.

Dec 13, 2017

Suing Subway: When Does a Class Action Settlement Benefit Only the Lawyers?

Dec 12, 2017

Supreme Court Declines to Take Up Military Commission Challenges – Al Bahlul and Al-Nashiri

Dec 12, 2017

Nonimmigrant (Temporary) Admissions to the United States: Policy and Trends

U.S. law provides for the temporary admission of foreign nationals, who are known as nonimmigrants. Nonimmigrants are admitted for a designated period of time and a specific purpose. There are 24 major nonimmigrant visa categories, which are commonly referred to by the letter and numeral that denote their subsection in the Immigration and Nationality Act (INA); for example, B-2 tourists, E-2 treaty investors, F-1 foreign students, H-1B temporary professional workers, J-1 cultural exchange participants, or S-5 law enforcement witnesses and informants. A U.S. Department of State (DOS) consular officer (at the time of application for a visa) and a Department of Homeland Security (DHS) inspector (at the time of application for admission) must be satisfied that an alien is entitled to nonimmigrant status. The burden of proof is on the applicant to establish eligibility for nonimmigrant status and the type of nonimmigrant visa for which the application is made. Both DOS consular officers (when the alien is applying for nonimmigrant status abroad) and DHS inspectors (when the alien is entering the United States) must also determine that the alien is not ineligible for a visa under the INA’s “grounds for inadmissibility,” which include criminal, terrorist, and public health grounds for exclusion. In FY2016, DOS consular officers issued 10.4 million nonimmigrant visas, down from a peak of 10.9 million in FY2015. There were approximately 8 million tourism and business visas, which comprised more than three-quarters of all nonimmigrant visas issued in FY2016. Other notable groups were temporary workers (883,000, or 8.5%), students (513,000, or 4.9%), and cultural exchange visitors (380,000, or 3.7%). Visas issued to foreign nationals from Asia made up 45% of nonimmigrant visas issued in FY2016, followed by North America (20%), South America (17%), Europe (11%), and Africa (5%). U.S. Customs and Border Protection (CBP) inspectors approved 181.3 million temporary admissions of foreign nationals to the United States during FY2016. CBP data enumerate arrivals, thus counting frequent travelers multiple times. Mexican nationals with border crossing cards and Canadian nationals traveling for business or tourist purposes accounted for the vast majority of admissions, representing approximately 104.7 million entries in FY2016. In FY2015, California and Florida were the top two destination states for nonimmigrant visa holders, with each state being listed as the destination for more than 10 million nonimmigrant admissions. In addition, 10 other states and the territory of Guam were listed as the destination for more than 1 million nonimmigrant admissions each in that year. Current law and regulations set terms for nonimmigrant lengths of stay in the United States, typically include foreign residency requirements, and often limit what aliens are permitted to do while in the country (e.g., engage in employment or enroll in school). Some observers assert that the law and regulations are not uniformly or rigorously enforced. Achieving an optimal balance among policy priorities, such as ensuring national security, facilitating trade and commerce, protecting public health and safety, and fostering international cooperation, remains a challenge.

Dec 8, 2017

Jerusalem: U.S. Recognition as Israel’s Capital and Planned Embassy Move

Via a presidential document that he signed after a speech on December 6, 2017, President Trump proclaimed “that the United States recognizes Jerusalem as the capital of the State of Israel and that the United States Embassy to Israel will be relocated [from Tel Aviv] to Jerusalem as soon as practicable.” A December deadline for a presidential decision under the Jerusalem Embassy Act of 1995 (P.L. 104-45) and plans for Vice President Pence to travel to the region apparently precipitated the timing of the President’s decision. Despite his proclamation on the planned embassy relocation, the President ultimately did sign a waiver (on national security grounds) in response to the December deadline. So long as the embassy has not officially opened in Jerusalem, the waiver is required every six months under P.L. 104-45 to prevent a 50% limitation on spending from the general “Acquisition and Maintenance of Buildings Abroad” budget. This limitation would otherwise apply in the following fiscal year. In making his decision, President Trump departed from the decades-long U.S. executive branch practice of not recognizing Israeli sovereignty over any part of Jerusalem. The western part of Jerusalem that Israel has controlled since 1948 has served as the seat of its government since shortly after its founding as a state. Israel officially considers Jerusalem (including the eastern part it unilaterally annexed after the 1967 Arab-Israeli war, while also expanding the city’s municipal boundaries—see Figure 1) to be its capital. Palestinians envisage East Jerusalem as the capital of their future state. Figure 1. Greater Jerusalem / Note: All locations and lines are approximate. The President stated in his speech that he was not taking a position on “specific boundaries of the Israeli sovereignty in Jerusalem,” but leaving the city’s final status to Israeli-Palestinian negotiations. He did not explicitly mention Palestinian aspirations regarding Jerusalem. He also called on all parties to maintain the “status quo” arrangement at holy sites, including the Temple Mount/Haram al Sharif. Apparently echoing past statements, the President said that the United States would support a two-state solution if both sides agree to it. For more background on Jerusalem and U.S. policy, see CRS Report RL33476, Israel: Background and U.S. Relations, by Jim Zanotti. U.S. Policy Questions and Options for Congress The following questions are prominent in the debate over the President’s decision: How might it affect security and political interactions among Israelis and Palestinians, and Arab governments and publics in neighboring states? How might it affect the security of U.S. personnel, installations, and citizens abroad, especially in the Middle East? How might it affect ongoing efforts by the Administration to mediate Israeli-Palestinian peace negotiations with the involvement of Arab states such as Saudi Arabia, Egypt, and Jordan? (Jordan has a special custodial role over Jerusalem’s holy sites, as acknowledged by Israel and the Palestinians.) How might it affect U.S. policy in the region more broadly? Some Members of Congress have expressed their support for President Trump’s decision, while others have voiced opposition or warned about possible negative consequences. Congress could consider a number of legislative and oversight options. With regard to the planned embassy move, these could include funding, timeframe and logistics, progress reports, and security for embassy facilities and staff. Past media reports have identified a number of sites owned or leased by the U.S. government in Jerusalem—including the existing Consulate General that deals with the Palestinians—as possible venues for an embassy (see Figure 2). Figure 2. Jerusalem: U.S. Sites and Other Selected Sites / Note: All locations and lines are approximate. International Reactions While Israeli officials welcomed the President’s decision, reactions from other international actors—including key Arab and European countries—were mostly negative. Several governments’ officials have warned that recognizing Jerusalem as Israel’s capital and preparing for an embassy move could lead to the collapse of the Israeli-Palestinian peace process and to violence, and some have asserted that it goes against international law or political consensus. In joining other Palestinian leaders who denounced the decision, Palestine Liberation Organization Chairman and Palestinian Authority President Mahmoud Abbas said it represented a U.S. withdrawal “from undertaking the role it has played over the past decades in sponsoring the peace process.” Palestinian factions have united to announce general strikes and protests, with thousands turning out in Jerusalem, the West Bank, and the Gaza Strip, and some protests in other Muslim-majority countries. Clashes with Israeli security forces have ensued, and Hamas has called for a new uprising (or intifada). As of December 8, there are reports of one Palestinian death and up to 200 injuries. Background and Assessment As a candidate, Trump pledged to move the embassy to Jerusalem. Nevertheless, on June 1, 2017, President Trump signed a waiver that suspended the P.L. 104-45 spending limitations for six months, following the precedent of previous Presidents. Reportedly, the leaders of Jordan and Egypt had warned of negative consequences for the region, at a time when the Administration was starting consultations with key Arab states about a possible peace process initiative. In a statement accompanying the President’s June 1 waiver, the White House said that “the question is not if that [embassy] move happens, but only when.” Observers debate how the President’s December decision might complicate an anticipated 2018 relaunch of Israeli-Palestinian talks. Some commentators surmise that the Administration probably expects Arab leaders to continue their support for a U.S.-led peace process, despite their initial negative reactions in public, because of their widely reported interest in working with the United States and Israel to counter Iran’s influence in the region. Whether Arabs will move toward or away from supporting the peace process may depend on various factors. These could include the popular Palestinian and larger Arab reaction to announced changes in U.S. policy, and the extent to which Arabs believe that their ability to counter Iran is tied to cooperation on the peace process. A separate issue is whether Arab support would be sufficient to engage Palestinian officials in a new diplomatic initiative, given the difficulties with past initiatives and questions regarding Palestinian leadership overall and divided rule in the West Bank and Gaza.

Dec 8, 2017

Efforts to Address Seasonal Agricultural Import Competition in the NAFTA Renegotiation

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

Dec 7, 2017

Levee Safety and Risk: Status and Considerations

Dec 7, 2017

Bank Systemic Risk Regulation: The $50 Billion Threshold in the Dodd-Frank Act

The 2007-2009 financial crisis highlighted the problem of “too big to fail” financial institutions—the concept that the failure of a large financial firm could trigger financial instability, which in several cases prompted extraordinary federal assistance to prevent their failure. This report focuses on one pillar of the Dodd-Frank Act’s (P.L. 111-203) response to addressing financial stability and ending too big to fail: a new enhanced prudential regulatory regime that applies to all banks with more than $50 billion in assets and to certain other financial institutions. Under this regime, the Federal Reserve is required to apply a number of safety and soundness requirements to large banks that are more stringent than those applied to smaller banks. These requirements are intended to mitigate systemic risk posed by large banks: Stress tests and capital planning ensure banks hold enough capital to survive a crisis. Living wills provide a plan to safely wind down a failing bank. Liquidity requirements ensure that banks are sufficiently liquid if they lose access to funding markets. Counterparty limits restrict the bank’s exposure to counterparty default. Risk management requires publicly traded companies to have risk committees on their boards and banks to have chief risk officers. Financial stability, regulatory interventions that can be taken only if a bank poses a threat to the financial stability. Most of these requirements apply to about 30 U.S. bank holding companies or the U.S. operations of foreign banks. The requirements do not apply to other types of financial institutions with more than $50 billion in assets (unless individually designated by the Financial Stability Oversight Council), including a few large securities and insurance firms that are chartered as thrift holding companies. In addition, a number of provisions, such as higher capital requirements, that stem from the international “Basel III” agreement apply only to a handful of the largest banks. This is an example of how the current system is tailored, with the largest banks facing more stringent regulatory requirements than medium-sized and smaller banks. Congress is debating whether to modify the $50 billion threshold because some Members believe that it applies to too many banks that do not pose systemic risk. Bills to amend which banks are subject to enhanced regulation include H.R. 3312/S. 1893, H.R. 10, and S. 2155. Many economists believe that the economic problem of too big to fail is really a problem of firms that are too complex or too interdependent to fail. Size correlates with complexity and interdependence, but not perfectly. Size is a much simpler and more transparent metric than complexity or interdependence, however. As a practical matter, if size is well correlated with systemic importance, a dollar threshold could serve as a good proxy that is inexpensive and easy to administer. Designating banks on a case-by-case basis could raise similar issues that have occurred in the designation of nonbanks, such as legal challenges to overturn their designation. This report also examines the question of which banks are systemically important. However, examining the banks above and slightly below the threshold does not reveal any natural cut off points that divide bank organizations into two groups that clearly present substantively different risks to systemic stability. This is because the size differences between each bank and those nearest to it are incremental and because banks vary across numerous characteristics. For these reasons, making an objective and definitive size-based determination of the point that a bank becomes systemically important is difficult. Regulators do employ an empirical methodology to identify globally systemically important banks (G-SIBs) based on a score that is calculated using 12 indicators that measure the size, interconnectedness, substitutability, complexity, and cross-jurisdictional activity of a bank. However, the results of this exercise do not produce a clear and uncontestable score threshold at which institutions clearly become systemically important.

Dec 6, 2017

What Happens If the National Flood Insurance Program (NFIP) Lapses?

This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by December 8, 2017, and allowed to lapse. See CRS Report R45019, 21st Century Flood Reform Act (H.R. 2874): Reforming the National Flood Insurance Program, by Diane P. Horn for more information on the current status of NFIP reauthorization legislation. Expiration of Certain NFIP Authorities The National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1986 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. §§4001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program. Authorization of the NFIP was extended from September 30, 2017, until December 8, 2017 (Section 130 of P.L. 115-56). The recent cancellation of $16 billion of NFIP debt (P.L. 115-72) has essentially no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), recently passed by the House, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Committee on Banking, Housing, and Urban Affairs has yet to take any formal action. Unless reauthorized or amended by Congress, the following will occur on December 8, 2017: The authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. The authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. Other activities of the program would technically remain authorized following December 8, 2017, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. The NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of September 2017, the NFIP had 4.94 million flood insurance policies providing nearly $1.24 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating in the NFIP. The program collects about $3.5 billion in annual premium revenue. If there were to be a lapse in authorization on or after December 8, 2017, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premium dollars were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. In the event that Congress were not to provide funding to cover unpaid claims, policyholders might be able to avail themselves of judicial remedies to recover these funds from the U.S. Treasury. The Mandatory Purchase Requirement The expiration of the NFIP’s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSEs) must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. In the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12, Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement instead of the NFIP standard flood insurance policy, if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop following BW-12 and the mandatory purchase requirement is still generally met through NFIP coverage. Past Lapses of the NFIP The NFIP was extended 17 times between 2008 and 2012, and lapsed four times: from March 1 to March 2, 2010; from March 29 to April 15, 2010; from June 1 to July 2, 2010; and from October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies. When the NFIP lapsed in the past, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could have potentially been broader than the reported effects on the domestic real estate market.

Dec 5, 2017

Tax Reform: The Alternative Minimum Tax

Dec 4, 2017

Defining Broadband: Minimum Threshold Speeds and Broadband Policy

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

Dec 4, 2017