CRS Reports

Overview of Artificial Intelligence

Oct 24, 2017

Transnational Crime Issues: International Drug Trafficking

Oct 24, 2017

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

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

Oct 23, 2017

Comparison of the Bills to Extend State Children’s Health Insurance Program (CHIP) Funding

The State Children’s Health Insurance Program (CHIP) is a means-tested program that provides health coverage to targeted low-income children and pregnant women in families that have annual income above Medicaid eligibility levels but have no health insurance. CHIP is jointly financed by the federal government and the states, and the states are responsible for administering CHIP. In statute, FY2017 is the last year a federal CHIP appropriation is provided. Federal CHIP funding was not extended before the beginning of FY2018. As a result, states do not currently have FY2018 CHIP allotments, and states are funding their CHIP programs with unspent federal CHIP funds from prior years. Some states are expected to exhaust this funding within the first quarter of FY2018. On October 4, 2017, both the Senate Finance Committee and the House Energy and Commerce Committee had markups on different bills that would extend CHIP federal funding through FY2022, among other provisions. The Senate Finance Committee approved the Keeping Kids’ Insurance Dependable and Secure Act of 2017 (KIDS Act, S. 1827), which would extend federal CHIP funding through FY2022 and extend the increased enhanced federal medical assistance percentage (E-FMAP) rates for one year (i.e., through FY2020) but with an 11.5 percentage point increase instead of the 23 percentage point increase under current law. The bill also includes extensions of other CHIP provisions (e.g., the Express Lane eligibility option and the maintenance of effort for children with incomes below 300% of the federal poverty level) and other programs and demonstrations (e.g., the Child Obesity Demonstration Project and the Pediatric Quality Measures Program). The House Energy and Commerce Committee approved the Helping Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable Act of 2017 (HEALTHY KIDS Act, H.R. 3921), which includes almost identical language to the KIDS Act that would extend CHIP federal funding through FY2022 and extend the increased E-FMAP for one year at 11.5 percentage points. The HEALTHY KIDS Act also includes almost identical language that would extend the same CHIP provisions and other programs and demonstrations as the KIDS Act. The HEALTHY KIDS Act also includes some provisions that are not in the KIDS Act, such as adding a new CHIP state option for qualified CHIP look-alike plans; modifying the Medicaid disproportionate share hospital allotment reductions; and providing additional Medicaid funding to Puerto Rico and the U.S. Virgin Islands. The HEALTHY KIDS Act includes the following provisions as offsets: modifications to Medicaid third party liability, treatment of lottery winnings for Medicaid eligibility, and Medicare Part B and D premium subsidies for higher-income individuals.

Oct 23, 2017

Second Treasury Report on Regulatory Relief: Capital Markets

On October 6, 2017, the Department of the Treasury issued a report, A Financial System That Creates Economic Opportunities: Capital Markets, that primarily examines the regulation of debt, equity, commodities, and derivatives markets. The report is the second of a series written in accordance with Executive Order (E.O.) 13772, which was issued by the President on February 3, 2017. The capital markets report provides 91 policy recommendations, the majority of which could be implemented by the primary regulators of U.S. capital markets: the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), state securities regulators, and Self-Regulatory Organizations (SROs). Notwithstanding the nonbinding nature of the recommendations, both SEC Chairman Jay Clayton and CFTC Chairman J. Christopher Giancarlo have publicly applauded the report. The report states that nine of the 91 Treasury recommendations would require congressional action. Report Highlights Treasury’s recommendations, which fall into several categories, aim to enhance the following: Access to capital for companies, especially small and growing businesses, through reduction of regulatory burdens and improved market access. The report identifies scaled regulatory approaches and highlights new tools, namely Regulation A Tier 2 and crowdfunding. It also identifies regulations to modify certain shareholder rights. Secondary markets in equity and debt. The report recommends policies to facilitate liquidity, including consolidating liquidity for thinly traded stocks; reevaluating tick size; potentially harmonizing order types for various exchanges and alternative trading systems (ATS); streamlining public disclosure under Regulation ATS; and revisiting the market data rules and order protection rules under Regulation National Market System. Regulatory relief for securitized products for lending and risk transfer. The report, which asserts that the Dodd-Frank Act (DFA) has created disincentives for securitization, calls for a roll back of certain regulations and suggests that Congress designate a lead agency from the six agencies promulgating the Credit Risk Retention rules. Derivatives regulation for market efficiency and risk mitigation. Treasury suggests SEC and CFTC harmonize their rulemaking in Title VII of DFA, including swaps regime, cross-border coordination, swap data reporting, central clearing capital treatment, and other areas. Risk management for central counterparties and other financial market utilities (FMUs). Treasury recommends improving oversight of systemically important FMUs and suggests the regulators finalize a framework for FMU recovery or resolution. Regulatory structure and processes. Treasury recommends modernizing the regulatory structure through coordination between SEC, CFTC, and banking regulators. It also suggests modifying the regulatory process through the incorporation of more transparency, economic analysis, and the policy impact analysis on small entities. A comprehensive review of SROs is also recommended. International standard setting to generate a “level playing field” for U.S. interests internationally. Policy Roles Although the report presents an extensive list of recommendations, the majority of them could be implemented by financial regulators without congressional involvement. The nine recommendations that would require congressional action include the following: Access to capital. Treasury recommends repeal of what it calls “non-material” disclosures in DFA provisions on conflict minerals, mine safety, resource extraction, and pay ratio. These provisions are said to have imposed requirements to disclose information that is not material to the reasonable investor for making investment decisions. In addition, Treasury recommends the time a company may be considered an Emerging Growth Company (EGC) to be extended to up to 10 years, among other requirements. The extension would allow EGCs to be exempt from certain regulations, including Section 404(b) of the Sarbanes-Oxley Act, for longer periods. Reiteration of three recommendations from the Treasury’s first report. Written in accordance with E.O. 13772 concerning the regulation of banks and credit unions, the recommendations modify regulations relating to repo financing, secondary market liquidity, and credit risk retention. SEC and CFTC operations. The recommendations would harmonize rulemaking of the two agencies, modify certain DFA restrictions, and provide the CFTC with increased authority in certain swaps clearing requirements and allocate more resources toward FMU supervision. Furthermore, many of the 91 recommendations overlap existing proposals that have already received agency and/or congressional attention: Agency-proposed rules. Some of the recommendations align with existing agency agendas and are already part of the agency rulemaking process. For example, Treasury recommends that the SEC amend Regulation S-K, which specifies the disclosure requirements for public companies. The SEC has been studying the issue since 2013, and it voted to amend Regulation S-K on October 11, 2017. Financial CHOICE Act (FCA) provisions repealing portions of the DFA. The FCA passed the House on June 8, 2017. Certain provisions in FCA would produce changes similar to those recommended by the Treasury, including SEC-CFTC harmonization of the derivatives rules, and the repeal of non-material DFA mentioned above. Standalone bills. A number of spinoffs from the FCA have been introduced as standalone bills for consideration. These standalone bills also overlap Treasury recommendations. For example, the Fostering Innovation Act of 2017 proposes the lengthening of the time a company could be considered an EGC. This bill, which was ordered to be reported by the House Financial Services Committee on October 12, 2017, directly relates to a similar FCA provision and the Treasury EGC recommendation mentioned above. Support and Criticism The report states that the United States has experienced the slowest economic recovery of the post-war period. Proponents believe the suggested actions could fuel economic growth. Treasury Secretary Steven Mnuchin asserts that, by streamlining the regulatory system, the capital markets could generate economic growth and foster small business development. Certain trade groups echo this thought. Rob Nichols from American Bankers Association states that the recommendations, if implemented, would make it easier for businesses to raise capital. He also argues that the recommendations promote “effective” supervision. The report also faces criticism for its perceived deregulatory approach. Representative Maxine Waters states that the report is a “blueprint for dismantling” DFA reforms. Others are questioning the linkage between economic growth and deregulation. For example, Mike Calhoun from the Center for Responsible Lending states that he is skeptical of claims that regulations stifle the economy and thinks the Treasury recommendations are the wrong prescription for economic growth.

Oct 19, 2017

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

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

Oct 18, 2017

The Opioid Epidemic and Federal Efforts to Address It: Frequently Asked Questions

Over the last several years, there has been growing concern among the public and lawmakers in the United States about rising drug overdose deaths, which more than tripled from 1999 to 2014. In 2015, more than 52,000 people died from drug overdoses, and approximately 63% of those deaths involved an opioid. Many federal agencies are involved in efforts to combat opioid abuse. The primary federal agency involved in drug enforcement, including diversion control efforts for prescription opioids, is the Drug Enforcement Administration (DEA). The primary agency supporting drug treatment and prevention is the Substance Abuse and Mental Health Services Administration (SAMHSA). The federal government also has several programs that may be used, or are specifically designed, to address opioid abuse. These range from law enforcement assistance in combatting drug trafficking to assistance for states in developing a coordinated response to address opioid abuse. These programs span across several departments, including (but not limited to) the Department of Justice (DOJ), the Department of Health and Human Services (HHS), and the Office of National Drug Control Policy (ONDCP). Federal and state lawmakers have addressed opioid abuse as a public health concern in enacting legislation that focuses heavily on prevention and treatment. During the 114th Congress, the Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198) was enacted in the summer of 2016 and aimed to address the problem of opioid addiction in the United States. Further, the government enacted the 21st Century Cures Act (Cures Act; P.L. 114-255)—a broader law that authorized new funding for medical research, amended the Food and Drug Administration (FDA) drug approval process, and authorized additional funding to combat opioid addiction, among other things. Of note, CARA also addressed broader drug abuse issues, and the Cures Act largely addressed cures and treatment research. Congress also provided funds to specifically address opioid abuse in FY2017 appropriations. This report answers common questions that have arisen as drug overdose deaths in the United States continue to increase. It does not provide a comprehensive overview of opioid abuse as a public health or criminal justice issue. The report is divided into the following sections: Overview of Opioid Abuse; Overview of Opioid Supply; Select Federal Agencies and Programs that Address Opioid Abuse; Recent Legislation; and Opioid Abuse and State Policies.

Oct 18, 2017

Congress Faces Calls to Address Expired Funds for Primary Care

The Affordable Care Act (ACA, P.L. 111-148, as amended), enacted in March 2010, appropriated billions of dollars of mandatory funds to support two programs that focus on expanding access to primary care services for populations that are typically underserved: the Health Centers program and the National Health Service Corps (NHSC). The Health Centers and NHSC programs are cornerstones of the federal government’s efforts to expand access to primary care. The Health Centers program helps support more than 1,400 community-based health centers operating more than 10,400 delivery sites across the country. Health centers provide care to medically underserved populations regardless of their ability to pay. They provide care for more than 24 million people annually, or an average of 1 in 13 Americans. The NHSC program awards scholarships and loan repayment to certain health professionals who agree to practice in shortage areas, often at health centers. The NHSC estimates that the program’s clinicians provide care to 11 million people. Community Health Center Fund The ACA established the Community Health Center Fund (CHCF) to help support the Health Centers and NHSC programs, and gave it a total of $11 billion in annual appropriations over the five-year period of FY2011-FY2015. The CHCF was subsequently extended for two years (i.e., for FY2016 and FY2017) by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10). MACRA provided a total of $7.2 billion for health centers and $580 million for the NHSC for two years. CHCF funding was initially intended to supplement the annual discretionary funds that the two programs receive through the regular appropriations process. However, CHCF funds have replaced a significant portion of the Health Center program’s annual discretionary appropriations, which Congress has reduced since FY2010 (see Table 1). In FY2017, CHCF funding represented 71.7% of the Health Center program’s appropriated funding. In the case of the NHSC program, Congress eliminated its annual discretionary appropriation entirely. Since FY2012, the program has relied solely on CHCF funding (see Table 1). Table 1. Health Centers and NHSC Funding (Millions of Dollars, by Fiscal Year) 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Request) Health Centers Discretionary 2,141 1,481 1,472 1,492 1,397 1,392 1,390 1,387 1,389 CHCF NA 1,000 1,200 1,465 2,145 3,510 3,600 3,516 3,600a % CHCF 0% 40.3% 44.9% 49.5% 60.5% 71.6% 72.1% 71.7% 72.1% NHSC Discretionary 141 25 0 0 0 0 0 0 0 CHCF NA 290 295 285 283 287 310 289 310a % CHCF 0% 92.1% 100% 100% 100% 100% 100% 100% 100% Source: Prepared by CRS based on HHS budget documents. Notes: FY2013 reflects sequestrations of discretionary and CHCF funds; FY2014, FY2015, and FY2017 reflect sequestration of the CHCF. Does not include discretionary funding appropriated for Federal Torts Claims Act for Health Centers, which is approximately $100 million annually. Proposed mandatory funding. Funding “Cliff” Advocates are referring to the expiration of the CHCF funding at the end of FY2017 as a “funding cliff.” They are reporting that health centers intend to implement hiring freezes and reduce operating hours as a result of funding reductions. News reports also indicate that centers in some states are experiencing difficulty recruiting providers and have lost staff because of funding uncertainty. No FY2018 CHCF Funding The President’s FY2018 budget proposes new mandatory funding—$3.6 billion for health centers and $310 million for the NHSC—for each of FY2018 and FY2019 (see Table 1). Legislation (e.g., H.R. 3770, H.R. 3922, H.R. 3862, and S. 1899) has been introduced in both chambers that would extend the program’s mandatory funding; however, as of the date of this Insight’s publication, no CHCF funding has been enacted for FY2018. The FY2018 Continuing Resolution includes discretionary funding for the health center program, at the current discretionary funding level, less a 0.6791% reduction. It does not include funding for the NHSC.

Oct 18, 2017

USDA Export Market Development and Export Credit Programs: Selected Issues

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

Oct 17, 2017

Consumer Data Security and the Credit Bureaus

Oct 17, 2017

Rules of Origin

Oct 16, 2017

Major Disaster Assistance from the DRF: Puerto Rico

Oct 16, 2017

NAFTA Renegotiation and Modernization

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

Oct 12, 2017

Farm Bill Primer: Dairy Safety Net

Oct 11, 2017

Burma’s Peace Process: Challenges Ahead in 2017

Oct 10, 2017

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

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

Oct 6, 2017

Overview of Continuing Appropriations for FY2018 (P.L. 115-56)

This report provides an analysis of the continuing appropriations provisions for FY2018 in Division D of H.R. 601. The measure also included separate divisions that establish a program to provide foreign assistance concerning basic education (Division A—Reinforcing Education Accountability in Development Act), supplemental appropriations for disaster relief requirements for FY2017 (Division B), and a temporary suspension of the public debt limit (Division C). On September 8, 2017, the President signed H.R. 601 into law (P.L. 115-56). Division D of H.R. 601 was termed a “continuing resolution” (CR) because it provided temporary authority for federal agencies and programs to continue spending in FY2018 in the same manner as a separately enacted CR. It provides temporary funding for the programs and activities covered by all 12 of the regular appropriations bills, since none of them had been enacted previously. These provisions provide continuing budget authority for projects and activities funded in FY2017 by that fiscal year’s regular appropriations acts, with some exceptions. It includes both budget authority that is subject to the statutory discretionary spending limits on defense and nondefense spending and also budget authority that is effectively exempt from those limits, such as that designated as for “Overseas Contingency Operations/Global War on Terrorism.” Funding under the terms of the CR is effective October 1, 2017, through December 8, 2017—roughly the first 10 weeks of the fiscal year. The CR generally provides budget authority for FY2018 for projects and activities at the rate at which they were funded during FY2017. Most projects and activities funded in the CR, however, are also subject to an across-the-board decrease of 0.6791% (pursuant to Section 101(b) of Division D). According to the cost estimate prepared by the Congressional Budget Office (CBO), the annualized discretionary budget authority provided in the FY2018 CR, as enacted, and subject to the statutory discretionary spending limits is approximately $1,070 billion. When spending that is effectively not subject to those limits (Overseas Contingency Operations, disaster relief, emergency requirements, and program integrity adjustments) is also included, the CBO estimate is $1,183 billion. CRs usually include provisions that are specific to certain agencies, accounts, or programs. These include provisions that designate exceptions to the formula and purpose for which any referenced funding is extended (referred to as “anomalies”) as well as provisions that have the effect of creating new law or changing existing law (often used to renew expiring provisions of law). The CR includes a number of such provisions, each of which is briefly summarized in this report. CRS appropriations process experts for each of these provisions are listed in Table 1. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2016, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices, by James V. Saturno and Jessica Tollestrup.

Oct 6, 2017

U.S. Response to Injuries of U.S. Embassy Personnel in Havana, Cuba

On September 29, the U.S. Department of State ordered the departure of nonemergency personnel assigned to the U.S. Embassy in Havana, Cuba, as well as their families, in order to minimize the risk of their exposure to harm because of a series of unexplained injuries suffered by embassy personnel since November 2016. According to the State Department, 22 persons suffered from “attacks of unknown nature,” most recently in late August 2017, at U.S. diplomatic residences and hotels where temporary duty staff were staying, with symptoms including “ear complaints, hearing loss, dizziness, headache, fatigue, cognitive issues, and difficulty sleeping.” Since the incidents were first made public by the State Department in August 2017, numerous press reports have referred to the attacks as being caused by some type of sonic device. State Department officials maintain, however, that the U.S. investigation has not reached a definitive conclusion regarding the cause, source, or any kind of technologies that might have been used. On October 3, the State Department ordered the departure of 15 Cuban diplomats from the Cuban Embassy in Washington, DC. According to Secretary of State Rex Tillerson, the decision was made because of Cuba’s failure to protect U.S. diplomats in Havana and to ensure equity in the impact on respective diplomatic operations. Previously in May 2017, the State Department had asked two Cuban diplomats to depart the United States because some U.S. diplomats in Cuba had returned to the United States for medical reasons. State Department officials maintain that the United States would need full assurances from the Cuban government that the attacks will not continue before contemplating the return of diplomatic personnel. Although the cause of the injuries to U.S. personnel in Cuba is unknown, speculation by some observers has focused on such possibilities as a rogue faction of Cuban security or a third country, such as Russia or North Korea, with the apparent motivation of wanting to disrupt U.S.-Cuban relations. Some maintain that Cuba’s strong security apparatus makes it unlikely that a third country would be involved without Cuba’s acquiescence. Questions also revolve around what type of device might cause such a variety of symptoms and whether a faulty surveillance device might be responsible for some of the incidents. Vienna Convention Under the 1961 Vienna Convention on Diplomatic Relations and the 1963 Vienna Convention on Consular Relations, nearly all countries worldwide participate in reciprocal obligations regarding the diplomatic facilities of other countries in their territory. The United States and Cuba are both states parties to these conventions. U.S. officials have repeatedly noted the Cuban government’s obligations under the Vienna Convention to protect U.S. diplomats in Cuba. Under the 1961 convention, the safety of diplomatic agents (Article 29), the private residences of diplomatic agents (Article 30), and the premises of diplomatic missions (Article 22) are protected, with the receiving State under special duty to guarantee such protection. Similarly, under the 1963 convention (Article 40), the receiving State is responsible for treating consular officers with due respect and taking “all appropriate steps to prevent any attack on their person, freedom or dignity.” Cuba’s Response The Cuban government denies responsibility for the injuries of U.S. personnel, maintaining that it would never allow its territory to be used for any action against accredited diplomats or their families. In the aftermath of the recent order expelling its diplomats, Cuba’s Ministry of Foreign Affairs issued a statement strongly protesting the U.S. action, asserting that it was motivated by politics, and arguing that ongoing investigations have reached no conclusion regarding the incidents or the causes of the health problems. The statement noted that Cuba had permitted U.S. investigators to visit Cuba three times, most recently in September 2017, and reiterated the government’s willingness to continue cooperating on the issue. Implications for U.S.-Cuba Relations The U.S. decision to downsize personnel at both the U.S. and Cuban embassies has potential implications for bilateral relations. Because of the diplomatic downsizing, the U.S. embassy reports that most of its visa processing is suspended, and that Cubans applying for nonimmigrant visas may apply at another U.S. embassy or consulate overseas. Some press reports have raised questions on the potential effect of the staff cutback on family-based and other legal immigration from Cuba. The State Department issued a travel warning on September 29 stating that due to the drawdown in staff, the U.S. embassy in Havana has limited ability to assist U.S. citizens. The warning advised U.S. citizens to avoid travel to Cuba because of the risk of being subject to attacks since some of the incidents occurred at hotels frequented by U.S. citizens. In June 2017, President Trump had announced a partial rollback of the Obama Administration’s policy of engagement with Cuba; the rollback included tighter restrictions on people-to-people travel and restrictions on transactions with the Cuban military (which is heavily involved in the tourist sector), although the regulations implementing those policy changes have not yet been issued. The new travel warning, along with the forthcoming regulatory changes, could reduce the level of American travel to Cuba, which has grown significantly in recent years to over 600,000 arrivals in 2016. Reduced U.S. travel also could negatively affect private-sector development in Cuba associated with tourism. More broadly, the reduction of diplomatic staff in both countries could negatively affect the normalization process that began under the Obama Administration. Although the Trump Administration announced a partial rollback of some aspects of engagement, it has left most Obama-era changes in place. The diplomatic drawdown could freeze the normalization process because of diminished government-to-government engagement and potentially affect existing areas of cooperation, such as on law enforcement and migration issues. Bilateral cooperation to continue investigating the injuries to U.S. personnel also could be jeopardized. In Congress, Members largely support efforts to protect U.S. diplomatic personnel and their families in Cuba, but appear divided on the expulsion of Cuban diplomats from the United States. Some who have been critical of normalizing relations have expressed support for the expulsion. Others who have been supportive of normalization believe the expulsion could undermine bilateral relations and play into the hands of a potential rogue actor seeking to disrupt relations. For more on U.S. policy toward Cuba, see CRS In Focus IF10045, Cuba: U.S. Policy Overview; and CRS Report R44822, Cuba: U.S. Policy in the 115th Congress.

Oct 6, 2017

European Union Digital Single Market

Oct 6, 2017

Private Securities Offerings: Background and Legislation

Oct 5, 2017

Preliminary Damage Assessments for Major Disasters: Overview, Analysis, and Policy Observations

When a major disaster overwhelms a state or tribal nation’s response capacity, the state’s governor or tribal nation’s chief executive may request a major disaster declaration from the federal government. The Robert T. Stafford Disaster Relief and Emergency Assistance Act authorizes the President to issue major disaster declarations in response to such requests. To evaluate a state or tribal nation’s need for federal assistance, the Federal Emergency Management Agency (FEMA) uses a Preliminary Damage Assessment (PDA) as a mechanism to determine the impact and magnitude of damage caused by the incident. Although not explicitly mentioned in the Stafford Act, PDAs play a crucial role in the declaration process. State and tribal governments use PDA information as part of the basis for their major disaster request, and FEMA relies on the PDA findings to provide a recommendation to the President concerning whether a major disaster declaration is warranted and what types of federal supplemental assistance should be made available. More specifically, the PDA provides information about various “factors” which FEMA evaluates to determine whether Public Assistance (PA) is warranted after an incident. For PA, these factors include estimated costs of assistance, localized impacts, insurance coverage, hazard mitigation, recent multiple disasters, and the availability of other federal resources. Similarly, FEMA uses information from the PDA to assess factors that determine whether an incident warrants Individual Assistance (IA) and, if so, which types of IA. Despite their importance in the declaration process, PDA information has only recently been publicly available. In 2008, FEMA, at the direction of Congress, began to post PDA reports on its website. PDA reports contain information concerning (1) damage estimates, (2) demographic information of the affected area (including percentages of elderly populations and low-income households), and (3) insurance coverage in the area. This report analyzes a dataset built from 587 PDA documents. It also compares that constructed dataset to a previously constructed dataset of disaster declarations and other data from FEMA regarding obligations from the Disaster Relief Fund (DRF), the account from which FEMA provides PA and IA. In recent years, congressional interest in emergency management has focused on funding, program administration, and program coordination—both among federal agencies and state emergency management agencies. The data from PDA reports informs debates about these policy issues. For example, PDA reports provide insight as to whether FEMA recommendations are applied uniformly to all major disaster requests. Similarly, PDA reports can be analyzed to address congressional concerns over whether PA and IA determinations are systematic and appropriate. More broadly, PDA information can inform the debate over whether federal disaster assistance is being provided for incidents that could be handled at the state, local, or tribal level. Some of the key findings in this report include major disaster declarations that authorize PA generally conform with the PA thresholds outlined in regulation; higher percentages of low-income households in a disaster-impacted area seem to influence the decision to authorize IA; of requests that were neither expedited nor appealed, 18.5% were decided within one week, 63.7% were decided within two weeks, and 89.8% were decided within one month; the time between a major disaster request and decision varies based on the amount of PA and IA damage as well as the type of event; and the magnitude of PDA estimates for both PA and IA that under-estimate ultimate obligations is greater than the magnitude of estimates that over-estimate ultimate obligations. This report concludes with policy observations and considerations for Congress. These considerations include replacing the per capita threshold used by FEMA to make major disaster recommendations with another form of measurement; requiring PDA reports to include additional information about the incident; taking measures to increase PDA accuracy; and amending Section 320 of the Stafford Act. This report will be updated as events warrant.

Oct 4, 2017

Hunting, Fishing, and Related Issues in the 115th Congress

Oct 4, 2017

Short-Term FAA Extension in Place, but Legislative Debate Continues

Both the House Committee on Transportation and Infrastructure and the Senate Committee on Commerce, Science, and Transportation acted favorably on bills to reauthorize the Federal Aviation Administration (FAA) and other aviation programs in June 2017. The two bills, H.R. 2997 and S. 1405, have significant differences, many of them related to provisions in the House bill that would create a not-for-profit private corporation to take over responsibility for running the national air traffic control system. The Senate bill contains no similar provisions, and the passage of long-term legislation will likely depend on whether both chambers can agree on an issue that they were unable to bridge last year. Disagreement on air traffic control reforms in the 114th Congress led to a one-year aviation extension (P.L. 114-190) that expired at the end of FY2017. A subsequent six-month extension (P.L. 115-63) is to expire at the end of March 2018. Whereas S. 1405 would fund FAA programs through FY2021, H.R. 2997 would extend funding through FY2023 (see Table 1). Since the House committee bill provides that the proposed corporation would take over air traffic services starting in FY2021, it would eliminate all Airport and Airway Trust Fund (AATF) financing for FAA operations and air traffic facilities and equipment beyond FY2020. Consequently, taxes on airline tickets, cargo, and commercial fuel would be reduced by roughly 80% starting in FY2020. These temporary tax reductions would expire after FY2023, and would therefore need to be revisited in subsequent FAA reauthorization debate. AATF funding of facilities and equipment not directly tied to air traffic functions and general fund financing of aviation safety programs would continue through FY2023 under the House bill. Table 1. FAA Major Account Funding Authorization (in millions of dollars) FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Operations H.R. 2997 10,132 10,349 10,571 1,957 2,002 2,047 General Fund 2,059 2,126 2,197 1,957 2,002 2,047 Airport and Airway Trust Fund 8,073 8,223 8,374 S. 140510,12310,23310,34110,453 P.L. 115-63 (Oct. 1, 2017-Mar. 31, 2018) 4,999 Airport Improvement Program H.R. 2997 3,597 3,666 3,746 3,829 3,912 3,998 S. 14053,3503,7503,7503,750 P.L. 115-63 (Oct. 1, 2017-Mar. 31, 2018) 1,670 Facilities and Equipment H.R. 2997 2,920 2,984 3,049 189 193 198 S. 14052,8772,8992,9062,921 P.L. 115-63 (Oct. 1, 2017-Mar. 31, 2018) 1,424 Research, Engineering, and Development H.R. 2997 181 186 190 126 130 132 S. 1405175175175175 P.L. 115-63 (Oct. 1, 2017-Mar. 31, 2018) 88 TOTALS H.R. 2997 16,649 16,999 17,366 5,975 6,107 6,243 S. 140516,52517,05717,17217,299 P.L. 115-63 (Oct. 1, 2017-Mar. 31, 2018)8,181 Sources: CRS analysis of H.R. 2997, S. 1405, and P.L. 115-63 (H.R. 3823). Reforming Air Traffic Control Under H.R. 2997, FAA facilities and equipment would be transferred without charge to the proposed corporation, which would be run by a board comprising industry stakeholders. FAA would become principally a safety regulator, rather than managing air traffic control with its own employees. The bill would authorize the proposed corporation to charge user fees to cover its costs. This has been a particular point of contention; although the bill would exempt noncommercial aircraft from user fees, general aviation and business aviation groups have opposed the user-fee model, fearing that fees could be charged more broadly in the future and that airlines would have too much influence over how the aviation system is run. Proponents argue that the user fee model would charge airlines for the services they use, would resolve the issue stemming from airlines’ increased use of untaxed ancillary fees, and would provide the corporation with a reliable long-term funding source to support investments in new air traffic control technology. Some Members of Congress have objected that aviation user fees, like the taxes they would supplant, should be subject to some level of congressional oversight rather than being left solely to the corporation’s board. Other Key Issues The bills differ in how they address a number of other key issues: While both the House and Senate committee bills pave the way for delivery services using small drones and facilitate small commercial drone operations in low-altitude airspace, both bills would continue to limit FAA’s authority to regulate model aircraft and drones operated strictly for hobby or recreation. Both bills, however, would allow FAA to require model aircraft to register, a practice that was halted by a recent court decision. The Senate committee’s bill would modify training standards for airline pilots, allowing FAA to consider alternatives to the existing 1,500-flight-hour requirement. Proponents argue that the increased flexibility could help regional airlines address pilot hiring needs, while opponents argue that doing so could erode safety improvements made following the February 2009 crash of a commuter flight near Buffalo, NY. The House committee bill would significantly increase discretionary funding starting in FY2021 for Essential Air Service (EAS), the program that subsidizes airline service to small communities, because FAA would no longer collect the overflight fees that currently provide baseline mandatory EAS funding if the proposed air traffic privatization plan is implemented. The Senate committee bill authorizes appropriations for EAS at an annual level of $175 million for FY2018-FY2021, unchanged from the amount appropriated in FY2017. Both bills would ease restrictions on the ability of airports to impose passenger facility charges to fund airport improvements. However, the current limit of $4.50 per flight segment would remain. Both bills address complaints about crowding aboard airplanes. H.R. 2997 would require FAA to issue regulations establishing minimum dimensions for passenger seats, including legroom, within one year of enactment. S. 1405 would require FAA to initiate a study of minimum seat pitch within 18 months of enactment and review whether changes in seat size and legroom affect the ability to evacuate an aircraft in an emergency.

Oct 3, 2017

The Equifax Data Breach: An Overview and Issues for Congress

According to Equifax, cybercriminals exploited a vulnerability in one of its online applications between mid-May and July 2017, potentially revealing information for 143 million U.S. consumers. Equifax stated that “the information accessed primarily includes names, Social Security numbers, birth date, addresses, and, in some cases, driver’s license numbers. In addition, credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed.” Much of the information that Equifax listed is difficult or impossible to change, potentially exposing affected individuals to significant risk of identity theft in the future. Credit Reporting Agencies Equifax is a credit reporting agency (CRA). CRAs collect information to develop credit reports about individuals. A credit report typically includes information related to a consumer’s identity (such as name, address, and Social Security number), existing or recent credit transactions (including credit card accounts, mortgages, and other forms of credit), public record information (such as court judgments, tax liens, or bankruptcies), and credit inquiries made about the consumer. The three largest CRAs—Equifax, TransUnion, and Experian—are the most well-known, but they are not the only CRAs. Approximately 400 smaller CRAs either are regional or specialize in collecting specific types of information or for specific industries, such as information related to payday loans, checking accounts, or utilities. Credit reports are used in several ways. Lenders use credit reports to evaluate loan applications. Landlords may use credit information to help to decide whether to rent to a household. Some employers use credit reports to evaluate job applicants. Insurance companies use customized credit reports with claims histories to set rates. Regulation of Credit Reporting Agencies CRAs are subject to many different laws and regulations related to nearly all aspects of their business. Much of what is thought of as the business of credit reporting is regulated through the Fair Credit Reporting Act (FCRA). The FCRA requires “that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.” The FCRA establishes consumers’ rights in relation to their credit reports, as well as permissible uses of credit reports. It also imposes certain responsibilities on those who collect, furnish, and use the information contained in consumers’ credit reports. Although originally the FCRA delegated rulemaking and enforcement authority to the Federal Trade Commission (FTC), the Dodd-Frank Act transferred that authority to the Consumer Finance Protection Bureau (CFPB). The CFPB coordinates enforcement efforts with the FTC’s enforcements under the Federal Trade Commission Act. Since 2012, the CFPB has subjected the “larger participants” in the consumer reporting market to supervision. Previously, CRAs were not actively supervised for FCRA compliance on an ongoing basis. CRAs are subject to the data protection requirements of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA). Section 501(b) requires the federal financial institution regulators to “establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguard—(1) to insure the security and confidentiality of customer records and information; (2) to protect against any anticipated threats or hazards to the security or integrity of such records; and (3) to protect against unauthorized access or use of such records or information which could result in substantial harm or inconvenience to any customer.” As the “federal functional regulator” of CRAs and other nonbank financial institutions, the FTC has promulgated 15 C.F.R. §341 implementing this requirement and subjecting CRAs to its provisions. The FTC has authority, under GLBA, to enforce this regulation with respect to the CRAs through its authority under the Federal Trade Commission Act. The FTC, however, has little up-front supervisory or enforcement authority, making it difficult to prevent an incident from occurring and instead often relying on enforcement after the fact. As mentioned above, the CFPB does have supervisory authority over the CRAs, but that authority appears to be limited. The CFPB has asserted that Dodd-Frank “excluded financial institutions’ information security safeguards under GLBA Section 501(b) from the CFPB’s rulemaking, examination, and enforcement authority.” Potential Issues for Congress Many Members have expressed significant concerns about the Equifax breach, and at least four committees have announced hearings to examine the breach more closely. Several issues are likely to be of interest during the hearings and subsequent policy debate. Data Breach. The announcement by Equifax has left a significant amount of uncertainty related to the breach itself. When Equifax stated that information was “accessed,” it is unclear if that means the consumer data was observed using the unauthorized access or if data was downloaded by an unauthorized party. The data breach has also raised questions about whether Equifax’s safeguards were in compliance with GLBA and other data protection requirements. Legal Framework. The incident has prompted some to question whether the regulatory framework for CRAs is appropriate. The FCRA contains certain consumer protections, but some have called for additional safeguards, such as allowing consumers to freeze their credit report for free or to opt out of having their information collected. Others have called for more stringent data protection requirements and a uniform nationwide data breach notification law to replace state laws so that all consumers would be notified in a timely manner if their data is compromised. Congress may also reassess whether the CFPB, which has supervisory authority over CRAs that are larger participants, should have explicit supervisory authority over cybersecurity at CRAs. Regulatory Response. Multiple agencies are reportedly investigating the breach. The breach also raises questions about the performance of Equifax’s regulators and whether any action on their part could have prevented the incident. The director of the CFPB recently stated during an interview that the CFPB would be changing its supervisory regime for the three largest CRAs and that the CRAs were “going to have monitoring in place that’s preventive.” It is unclear what the enhanced monitoring would look like and whether it would have been able to prevent the Equifax incident.

Sep 29, 2017

Ethics Pledges and Other Executive Branch Appointee Restrictions Since 1993: Historical Perspective, Current Practices, and Options for Change

On January 28, 2017, President Donald Trump issued Executive Order (E.O.) 13770 on ethics and lobbying. E.O. 13770 created an ethics pledge for executive branch appointees, provided for the administration and enforcement of the pledge, and revoked President Barack Obama’s executive order ethics pledge that covered his Administration (E.O. 13490). President Trump’s executive order shares some features with President Obama’s executive order and a previous executive order issued by President Bill Clinton. Executive order ethics pledges are one of several tools, along with laws and administrative guidance, available to influence the interactions and relationships between the public and the executive branch. The ability of private citizens to contact government officials is protected by the Constitution. As such, the restrictions placed by executive order ethics pledges, laws, and administrative guidance are designed to provide transparency and address enforcement of existing “revolving door” (when federal employees leave government for employment in the private sector) and lobbying laws. The report begins with an overview of the relationship between the public and the executive branch, including the use of laws, executive orders, and other guidance and Administration policy to regulate interactions. A brief summary of recent executive orders is then provided, including a side-by-side analysis of ethics pledges from the Clinton, Obama, and Trump Administrations. This analysis is followed by observations about the similarities and differences among the three pledges. These observations focus on the revolving door restrictions (18 U.S.C. §207), the definition of lobbying used in ethics pledges, and the representation of foreign principals by former executive branch officials. In the context of observations drawn from the ethics pledges, Congress has many options available to potentially address the relationship and contact between the private sector and government employees. These include options to amend revolving door restrictions, amend the Lobbying Disclosure Act of 1995, and codify the ethics pledge to make executive order additions to existing laws permanent. Additionally, Congress could take no immediate action and maintain current standards.

Sep 29, 2017

Key Issues in Tax Reform: The Section 199 Deduction

Sep 29, 2017

Who Pays the Corporate Tax?

Sep 29, 2017

Waivers of Jones Act Shipping Requirements

On September 28, the Trump Administration issued a temporary waiver of the Jones Act (§27 of the Merchant Marine Act of 1920) to facilitate response to the severe damage caused by Hurricane Maria in Puerto Rico. In recent weeks, the Administration issued similar waivers affecting Texas and Louisiana, following Hurricane Harvey, and affecting Florida, following Hurricane Irma. This CRS Insight is intended to clarify the process and requirements for obtaining waivers of this law. The Jones Act requires that vessels transporting goods or passengers between U.S. points be built in the United States, at least 75% owned by U.S. citizens, and mostly crewed by U.S. citizens. The U.S. Virgin Islands is exempted from the law (as is American Samoa and the Northern Mariana Islands), while Puerto Rico is exempted for passengers but not for cargo. The Jones Act requirements may constrain the available supply of ships at particular times and places in the United States, which is why the requirements frequently have been waived temporarily in response to major hurricanes. For instance, in response to Hurricane Katrina in September 2005, an 18-day waiver was issued to allow foreign-flag tankers to move petroleum and petroleum products along the Gulf Coast because pipeline facilities in the region were without power. Shortly thereafter, a waiver was granted in response to Hurricane Rita, also for the purpose of moving fuel. In response to Superstorm Sandy in 2012, a waiver lasting about three weeks was granted to move fuel to the Northeast. In July and August 2011, the Jones Act was waived during a crisis in Libya to allow foreign tankers to ship oil from the U.S. Strategic Petroleum Reserve. These and other waivers are noticed in the Federal Register. Temporary Waivers Procedures for obtaining waivers to U.S. navigation and vessel-inspection laws, including the Jones Act, are codified at 46 U.S.C. Section 501, which specifies that a waiver can be granted only if it is deemed “necessary in the interest of national defense” by the Secretary of Defense or the Secretary of Homeland Security. A waiver issued by the Department of Homeland Security (but not by the Secretary of Defense) requires a finding by the Maritime Administrator in the U.S. Department of Transportation that Jones Act-qualified vessels are not sufficiently available to meet national defense requirements. The waiver process originated in a 1950 law (P.L. 81-891) that made permanent a temporary waiver enacted in 1942 for World War II (P.L. 77-507, §501). Since 2009, the waiver process has required that the Maritime Administrator is to be consulted as to the extent, manner, and terms of any non-Department of Defense-requested waiver. In 2012, Congress amended the waiver process by providing the Maritime Administration with an opportunity to identify actions that could be taken to avoid the need for a waiver (P.L. 112-213, §301). The waiver granted for Puerto Rico applies to all types of shipping for a 10-day period. But federal regulations (33 C.F.R. §19 and 46 C.F.R. §6) also outline a process for granting a temporary waiver for a particular vessel on a single voyage. A request for an individual vessel waiver can be made by any authorized representative of an agency of the U.S. government or any other interested person (including the master, agent, or owner of the vessel involved). Application is to be made to the Coast Guard or the Customs and Border Protection (agencies within the Department of Homeland Security) in writing, but can be made orally, at least initially, in the case of extreme urgency. The application must outline the facts supporting the national defense need for the waiver. Customs and Border Protection decisions either granting or denying waivers can be found by searching its Ruling Letters. These decisions confirm that waivers are granted only for national defense considerations, not commercial expediency. Permanent Waivers In addition to the temporary waivers discussed above, vessels can receive permanent waivers of Jones Act requirements. One type of permanent Jones Act waiver is specific to small passenger vessels. As authorized by the Coast Guard Authorization Act of 1998 (P.L. 105-383, Title V; 46 U.S.C. §12121), the Maritime Administration can waive the U.S.-build requirement of the Jones Act for passenger vessels carrying no more than 12 passengers for hire. However, while a small foreign-built vessel could carry passengers between two U.S ports, the vessel must still be U.S.-owned and -crewed. The Maritime Administration must determine that granting the waiver will not adversely affect U.S. vessel builders or the business of other operators using U.S.-built vessels. The Maritime Administration publishes a notice in the Federal Register when it receives such a request and when it either grants or denies a waiver. Congress also frequently grants individual vessels permanent waivers from the Jones Act. This most often occurs in legislation reauthorizing the Coast Guard. Typically, only the name of the vessel and its identifying number are indicated in law, so information regarding the rationale for the waiver is not readily available. However, it appears that most such waivers are for small vessels that have little or no commercial impact. Congress has also enacted some ad hoc waivers, perhaps more accurately described as exemptions, from the Jones Act. In 2011, Congress granted a Jones Act waiver for vessels supporting the 34th America’s Cup sailing race (P.L. 112-61). In addition to exempting Puerto Rico from the Jones Act with regard to passenger services (P.L. 98-563, enacted in 1984), Congress exempted the shipping of lumber to Puerto Rico for up to a one-year period (P.L. 87-877, §4) in 1962 to address the ability of U.S. Pacific Northwest lumber suppliers to compete with Canadian suppliers. Congress has also exempted a cruise ship in Hawaii service from the U.S.-build requirement (P.L. 105-56 and P.L. 108-7). Congress permits the Maritime Administration to exempt certain vessels supporting offshore oil drilling in Alaskan waters from some Jones Act restrictions as well.

Sep 29, 2017

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

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

Sep 28, 2017

Hurricanes Irma and Maria: Impact on Caribbean Countries and Foreign Territories

In addition to causing massive destruction to the U.S. territories of Puerto Rico and the U.S. Virgin Islands in the Caribbean, Hurricanes Irma and Maria severely affected several Caribbean countries and foreign territories. Between September 5 and 9, 2017, Hurricane Irma caused widespread damage to Barbuda, part of the independent country of Antigua and Barbuda; the island of St. Martin/St. Maarten, split between French and Dutch rule (St. Martin is a French overseas collectivity while St. Maarten is an autonomous country within the Kingdom of the Netherlands); several southeastern and northwestern islands of the Bahamas; and the northern coast of Cuba. Other islands severely affected were the French overseas collectivity of St. Barthélemy and the British overseas territories of Anguilla, the British Virgin Islands, and the Turks and Caicos Islands. On September 18 and 19, respectively, Hurricane Maria severely damaged the country of Dominica and the French department of Guadeloupe with direct hits, while St. Kitts and Nevis experienced lesser damage as the hurricane passed south of the country. On September 21, the hurricane passed close to the Dominican Republic and Haiti, which experienced limited impact, largely caused by flooding, and the Turks and Caicos Islands were battered once again as the storm passed nearby on September 22. Reconstruction costs are not yet known, but will likely be high for several of these islands, many of which depend on tourism. Antigua and Barbuda Prime Minister Gaston Browne estimates that 95% of the structures on Barbuda were seriously damaged or destroyed by Hurricane Irma, although the larger island of Antigua was largely unscathed. As a result, the population of Barbuda, estimated at some 1,700 residents, was evacuated completely, with the majority of evacuees sheltering on Antigua. The governor general of Antigua and Barbuda has estimated that the cost of rebuilding Barbuda could be approximately $300 million, not including the costs of providing shelter, schooling, and medical care to those displaced from Barbuda. St. Martin/St. Maarten The French- and Dutch-administered island of St. Martin (estimated population, 32,000)/St. Maarten (estimated population, 42,000) suffered widespread damage from Hurricane Irma, with 11 deaths in St. Martin and 4 in St. Maarten. The hurricane damaged the island’s water desalination plants and primary airport, as well as electrical and telecommunications networks; an estimated 91% of buildings in St. Maarten suffered damage. In the aftermath of the hurricane, the island experienced widespread looting. Hundreds of Dutch and French military, police, and emergency personnel have been providing emergency relief and security and working to restore services. Figure 1. Caribbean Island Countries and Territories / Source: Prepared by Amber Hope Wilhelm, Visual Information Specialist, and James C. Uzel, Geospatial Information System Analyst, CRS. Cuba Hurricane Irma caused widespread damage in Cuba, killing 10 people and affecting more than 2 million along 300 miles of the northern coast. The storm damaged infrastructure (electric power, water and sanitation systems), the agricultural sector, and tourism facilities, and flooded low-lying areas of Havana. More than 210,000 homes were damaged. The economy, which contracted by almost 1% in 2016, was poised to grow 1% this year, but now some economists are forecasting continued economic contraction. Dominica With a population of around 74,000, Dominica suffered at least 15 deaths from Hurricane Maria according to the Caribbean Disaster Emergency Management Agency (CDEMA), and damage to almost all roofs on the island. The agricultural sector also suffered widespread damage. Washed-out roads, damaged bridges, and communication outages have made rescue operations difficult. U.S. and International Response U.S. foreign disaster relief efforts in response to the Caribbean hurricanes have focused largely on Antigua and Barbuda, St. Martin/St. Maarten, the Bahamas, and Dominica. As of September 25, U.S. humanitarian funding for the hurricanes amounted to almost $7.3 million, with $1.7 million from the U.S. Agency for International Development (USAID)/Office of U.S. Foreign Disaster Assistance (OFDA) and $5.6 million from the Department of Defense. In response to requests for assistance, USAID/OFDA activated a regional Disaster Assistance Response Team on September 7, 2017, and predeployed team members in the Bahamas, Barbados, the Dominican Republic, and Haiti. In the aftermath of the hurricanes, USAID repositioned team members to hard-hit areas—Antigua and Barbuda, St. Martin/St. Maarten, the Bahamas, and Dominica. USAID/OFDA has provided immediate cash for emergency relief, and has supplied more than 150 metric tons of relief commodities. (For up-to-date information on USAID/OFDA efforts, see https://www.usaid.gov/irma.) U.S. military personnel from the U.S. Southern Command’s Joint Task Force-Leeward Islands (JTF-LI) have also assisted USAID’s relief effort. The task force consists of 300 onshore military personnel and 1,100 personnel aboard the USS Wasp; it includes 10 helicopters and 4 C-130 Hercules aircraft. JTF-LI has helped in the delivery of relief supplies and also evacuated thousands of U.S. citizens from St. Martin/St. Maarten, Anguilla, and Dominica. In St. Martin, JTF-LI set up two water-production sites with desalination units generating potable water. Some Members of Congress have called for any additional hurricane-related supplemental appropriations to include assistance for Caribbean countries and foreign territories affected by the storms. With regard to Cuba, some Members have called on President Trump to remove restrictions on the ability of U.S. companies to export relief and reconstruction supplies to Cuba. France, the Netherlands, and the United Kingdom have deployed military, police, and relief specialists to their Caribbean territories. All three European countries are providing significant assistance for immediate relief and plan to support longer-term recovery efforts. Following Hurricane Irma, the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) developed two response plans as part of its coordinating mechanism to identify the most urgent needs and funding required. One plan is for countries and territories in the Caribbean region, while a separate plan is solely for Cuba because of the widespread damage there. OCHA’s regional Caribbean plan, developed with the assistance of CDEMA and other partners, requests $27 million in funding from September to December 2017, with $15.1 million to target urgent needs for an estimated 265,000 people and $11.9 million for complex logistics (including air and maritime services) and communications support. OCHA’s plan for Cuba requests $55.8 million, which would target the needs of almost 2.2 million people most affected by the hurricane. Plans for additional assistance will likely develop as these Caribbean countries and territories assess the full impact of both storms.

Sep 28, 2017

The National Health Service Corps

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

Sep 27, 2017

Naloxone for Opioid Overdose: Regulation and Policy Options

Sep 27, 2017

Overview of the Federal Government’s Power to Exclude Aliens

The Supreme Court has determined that inherent principles of sovereignty give Congress “plenary power” to regulate immigration. The core of this power—the part that has proven most impervious to judicial review—is the authority to determine which aliens may enter the country and under what conditions. The Court has determined that the executive branch, by extension, has broad authority to enforce laws concerning alien entry mostly free from judicial oversight. Two principles frame the scope of the political branches’ power to exclude aliens. First, nonresident aliens abroad cannot challenge exclusion decisions because they do not have constitutional or statutory rights with respect to entry. Second, even when the exclusion of a nonresident alien burdens the constitutional rights of a U.S. citizen, the government need only articulate a “facially legitimate and bona fide” justification to prevail against the citizen’s constitutional challenge. The first principle is the foundation of the Supreme Court’s immigration jurisprudence, so well established that the Court has not had occasion to apply it directly in recent decades. The second principle, in contrast, has given rise to the Court’s modern exclusion jurisprudence. In three important cases since 1972—Kleindienst v. Mandel, Fiallo v. Bell, and the splintered Kerry v. Din—the Court applied the “facially legitimate and bona fide” test to deny relief to U.S. citizens who claimed that the exclusion of certain aliens violated the citizens’ constitutional rights. In each case, the Court accepted the government’s stated reasons for excluding the aliens without scrutinizing the underlying facts. This deferential standard of review effectively foreclosed the U.S. citizens’ constitutional challenges. Nonetheless, the Court refrained in all three cases from deciding whether the power to exclude aliens has any limitations. Particularly with regard to the executive branch, the Court left an unexplored margin at the outer edges of the power. In March 2017, President Trump issued an executive order temporarily barring many nationals of six Muslim-majority countries and all refugees from entering the United States, subject to limited waivers and exemptions. This order replaced an earlier executive order that a federal appellate court had enjoined as likely unconstitutional. Upon challenges brought by U.S. citizens and entities, two federal appellate courts determined that the revised order is likely unlawful, one under the Establishment Clause of the First Amendment and the other under the Immigration and Nationality Act (INA). The Supreme Court agreed to review those cases and, for the meantime, has ruled that the Executive may not apply the revised order to exclude aliens who have a “bona fide relationship” with a U.S. person or entity. In reaching this interim solution, the Supreme Court considered only equitable factors and carefully avoided any discussion of the merits of the constitutional and statutory challenges against the revised order. Even so, the Court’s temporary restriction of the executive power to exclude nonresident aliens abroad is remarkable when compared with the Court’s earlier immigration jurisprudence. The merits of these so-called “Travel Ban” cases raise significant questions about the extent to which the rights of U.S. citizens limit the executive power to exclude aliens. It seems relatively clear that, under existing jurisprudence, the “facially legitimate and bona fide” standard should govern the Establishment Clause claims against the revised executive order. However, Supreme Court precedent does not clarify whether that standard contains an exception that might permit courts to test the government’s proffered justification for an exclusion by examining the underlying facts in particular circumstances. Nor does Supreme Court precedent resolve whether the standard governs U.S. citizens’ statutory claims against executive exercise of the exclusion power, or even whether such statutory claims are cognizable. The outcome of the Travel Ban cases would likely turn upon these issues, if the Supreme Court were to decide the cases on the merits rather than on a threshold question such as mootness (a key issue in light of a presidential proclamation modifying the entry restrictions at issue in the cases).

Sep 27, 2017

Key Issues in Tax Reform: The Business Interest Deduction and Capital Expensing

Sep 27, 2017

Pesticide Registration Fees: Reauthorization and Proposed Amendments

The U.S. Environmental Protection Agency’s (EPA’s) capacity to evaluate pesticide registrations within statutory time frames is generally dependent on sufficient resources and requisite scientific information to inform evaluations. Pursuant to the Pesticide Registration Improvement Extension Act of 2012 (PRIA 3, P.L. 112-177), Congress reauthorized EPA to collect two categories of fees to support the agency’s pesticide regulatory program and related activities through September 30, 2017. The Continuing Appropriations Act, 2018, and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (P.L. 115-56), enacted September 8, 2017, extends to December 8, 2017, EPA’s authority to collect and expend one of these fees—pesticide maintenance fees. The authority to collect the other fees—pesticide registration service fees—is also extended to December 8, 2017, before phasing out unless further extended. If authority to collect pesticide registration service fees were to expire, EPA would no longer be required to complete the evaluation of applications within statutory time frames. On March 20, 2017, the House passed the Pesticide Registration Enhancement Act of 2017 (H.R. 1029, H.Rept. 115-49), which would reauthorize the collection of both fees and amend how EPA obligates monies derived from fee collections. On June 29, 2017, the Senate Committee on Agriculture, Nutrition, and Forestry reported an amendment to H.R. 1029, renamed the Pesticide Registration Improvement Extension Act of 2017. Both versions of H.R. 1029 are discussed below. Background EPA assesses fees on pesticide registrants (i.e., manufacturers and distributors) for pesticide registrations and pesticide-related applications. These fees, in conjunction with discretionary appropriations, support EPA’s pesticide regulatory activities as authorized by two statutes—the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA, 7 U.S.C. §136-136y) and Section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA, 21 U.S.C. §346a). FIFRA requires EPA to (1) evaluate proposed uses of pesticides and register (i.e., license) pesticide products that meet certain statutory criteria and (2) periodically reevaluate existing pesticide registrations (i.e., registration review). For pesticides used in food production, FIFRA requires EPA to establish maximum limits (“tolerances”) for pesticide residues in accordance with FFDCA Section 408. Since 1954, Congress has authorized the collection of various fees to partially defray certain costs associated with federal pesticide program activities. Annual appropriations generally fund the remainder of the expenditures. The Pesticide Registration Improvement Act of 2003 (PRIA 1, P.L. 108-199, Division G, Title V) established the current pesticide fee framework in 2004. The Pesticide Registration Improvement Renewal Act (PRIA 2, P.L. 110-94) and PRIA 3 reauthorized fee collections and further amended the framework. These past reauthorizations have generally received widespread support in Congress and among stakeholders. (For more information on PRIA 1, PRIA 2, and PRIA 3, see CRS In Focus IF10424, The Pesticide Registration Improvement Extension Act of 2012 (PRIA 3, P.L. 112-177): Authorization to Collect Fees, by Jerry H. Yen and Robert Esworthy.) Pesticide Maintenance Fees House-passed H.R. 1029 would reauthorize the collection of pesticide maintenance fees through September 30, 2023. The Senate-committee-reported amendment would extend the authority three fewer years to September 30, 2020. Both versions of H.R. 1029 would amend FIFRA Section 4 (7 U.S.C. §136a-1) to increase the cap on annual maintenance fees per registrant and the aggregate for all maintenance fees (from $27.8 million per fiscal year to an average amount of $31.0 million per fiscal year). “Small business” waivers and fee reductions and exemptions for certain public health pesticides would be retained in both versions of H.R. 1029. Maintenance fees collected by EPA would continue to be deposited as receipts in the “Reregistration and Expedited Processing Fund” of the U.S. Treasury and made available to EPA without further appropriation to offset costs associated with (1) pesticide registration review, (2) tracking and implementing registration review decisions, and (3) making enhancements to information system capabilities to track registration decisions. Additionally, both versions of H.R. 1029 would direct EPA to set aside not more than $500,000 for each of two new purposes: (1) to prescribe standards for demonstrating the effectiveness of pesticides intended to address bed bugs, pests that feed on humans and pets, and fire ants and (2) to enhance the Good Laboratory Practices Standards compliance monitoring program. Pesticide Registration Service Fees House-passed H.R. 1029 would reauthorize the collection of pesticide registration service fees under FIFRA Section 33 (7 U.S.C. §136w-8) through September 30, 2025 (with the last two years having reduced rates). The Senate-committee-reported amendment would extend the authority for three fewer years to September 30, 2022 (also with the last two years having reduced rates). Both versions of H.R. 1029 would revise registration service fee amounts for different actions the applicant may request the agency to conduct. Under PRIA 3, Congress set fees for 189 specific actions. Both versions of H.R. 1029 would set fees for 212 actions. Additionally, both versions of H.R. 1029 would revise certain time frames in which EPA is required to complete review of a requested action and retain fee reductions and waivers for eligible entities (e.g., minor use pesticide manufacturers, small businesses, and federal and state agencies). Pesticide registration service fees collected by EPA would continue to be deposited as receipts in the “Pesticide Registration Fund” of the U.S. Treasury and would be made available to EPA through subsequent appropriations acts. EPA would still be authorized to use fee receipts without fiscal year limitation for covering costs associated with reviewing applications received with the payment of the applicable registration service fee; enhancing worker protection activities; awarding worker protection partnership grants ($500,000 in aggregate annually); and carrying out a pesticide safety education program ($500,000 annually). Neither version of H.R. 1029 would amend FIFRA Section 33(d)(2), which prohibits EPA from collecting registration service fees if annual appropriations (excluding any fees appropriated) for specified functions of EPA’s Office of Pesticide Programs are less than the FY2012 appropriation level of $128.3 million. For FY2013 through FY2017, appropriations acts provided less than the level specified in current law (i.e., FY2012 level) but authorized the assessment of registration service fees by waiving the FIFRA Section 33(d)(2) condition.

Sep 27, 2017

2017 Hurricanes and Army Corps of Engineers: Background for Flood Response and Recovery

In addition to damage from high winds, hurricanes can produce damaging storm surge and flooding from rainfall. This Insight summarizes flood-management activities of the U.S. Army Corps of Engineers (USACE, or Corps) related to Hurricanes Harvey, Irma, and Maria. USACE has three roles relevant to hurricanes: emergency responder with flood-fighting and post-disaster recovery, owner and operator of flood-risk-reduction projects, and provider of assistance to repair certain nonfederal flood-control infrastructure. Congress may have interest in these roles as it responds to hurricane-related flooding and recovery. Emergency Response to Flooding and Disasters USACE often plays a prominent role in the federal emergency response to flooding under various authorities. Under its P.L. 84-99 authorities, USACE can assist in flood-fighting to protect life and property, principally when response resources of a state or U.S. territory are overwhelmed. USACE also may be tasked under the National Response Framework with a variety of disaster-related activities, including providing emergency power; repairing public water, wastewater, and solid waste facilities; monitoring, stabilizing, and demolishing damaged structures and facilities; and providing technical assistance with managing debris from public property. For assistance for presidentially declared disasters pursuant to the Stafford Act (P.L. 93-288), USACE’s response activities are funded through the Disaster Relief Fund, at the direction of the Federal Emergency Management Agency (FEMA) and the President and the request of the governor of a state or territory with an affected area. USACE is active in the response and recovery to the 2017 hurricanes. It is restoring emergency power and commercial navigation channels, providing temporary roofing, and conducting infrastructure assessments (e.g., assessing dam safety of nonfederal facilities such as Puerto Rico’s Guajataca dam). FEMA has tasked USACE with not only managing power restoration in Puerto Rico but also initial elements of rebuilding the territory’s electric grid. USACE Infrastructure Affected by Hurricanes At Congress’s direction, USACE plans, builds, and operates numerous riverine and coastal flood-control projects. Some USACE-operated flood-risk-reduction projects are located in areas damaged by hurricanes in 2017. Information on USACE flood-related infrastructure damaged by Hurricane Maria is not yet available. Irma-Affected Area USACE has numerous coastal and inland flood-risk-reduction projects in southeastern states. In preparation for Irma, USACE made releases from Lake Okeechobee to create storage capacity for the storm’s runoff. After the storm, USACE determined that Herbert Hoover Dike (the flood-control structure around the perimeter of Lake Okeechobee) had no structural-integrity issues resulting from Hurricane Irma. USACE has a number of cost-shared shore-protection projects and inland flood-control projects in Florida and the Southeast, which were tested by Hurricane Irma’s storm surge. USACE has begun inspecting these projects to determine whether repairs, such as sand placement, may be required to restore their role in reducing flood damages. Hurricane Irma’s flooding in northeastern Florida where USACE has shore-protection projects and elsewhere (e.g., Savannah, GA and Charleston, SC) illustrated that the sites of peak storm surge from a hurricane can differ from where peak winds are experienced (see Figure 1), and coastal areas can face “compound flood” risks (i.e., simultaneous flooding from inland rainfall and coastal surge). Figure 1. Wind and Storm Surge from Hurricane Irma / Source: Marine Weather and Climate/ U-Surge with data from NOAA. Harvey-Affected Area: Addicks and Barker Dams and Reservoirs Two USACE-operated dams—Addicks and Barker dams—were of particular concern with Hurricane Harvey’s rainfall. The dams are operated to reduce flooding downstream in Buffalo Bayou, which traverses the city of Houston. USACE completed the dams in the 1940s. In the late 2000s, USACE began addressing deficiencies at the two dams, which are rated as Dam Safety Action Classification I dams (i.e., high urgency due to the risk and/or consequences of failure). Since FY2015, USACE has had a rehabilitation project under way. When a rain event occurs, the Addicks and Barker dams’ gates are closed to reduce flooding downstream. Typically, the gates are reopened after downstream runoff recedes. During Hurricane Harvey, USACE increased releases starting on August 28, 2017, while high water levels downstream continued. The releases were made because of the rapid inflow into the reservoirs and to protect the dams’ structural integrity. As the rains continued, USACE made additional unexpected releases due to rising water levels at the reservoirs. USACE had acquired lands within the reservoirs’ 100-year flood pool as part of the Addicks and Barker projects. Lands above that elevation were not acquired; some neighborhoods that were constructed above the 100-year flood pool were flooded as the reservoirs’ water rose with the storm’s rainfall. Nonfederal Infrastructure Affected by Hurricanes In recent decades, Congress generally authorizes USACE to participate in the construction of cost-shared flood-risk-reduction projects in U.S. states and territories that are turned over to local entities for operation and maintenance. Nonfederal entities also construct flood-control works without USACE participation. The condition of some nonfederal infrastructure in hurricane-stricken areas has been a concern in 2017. According to the National Levee Database prior to the 2017 hurricanes, several of the affected states and territories had nonfederal flood-control infrastructure whose condition was classified as “unacceptable” by USACE’s Rehabilitation and Inspection Program (RIP). USACE is authorized to fund the repair of nonfederal flood-control works (e.g., levees, dams, engineered beaches) that are damaged by natural events. To be eligible for RIP assistance, damaged flood-control works must be active in RIP (i.e., subject to regular inspections) and in an acceptable condition at the time of damage. The repairs eligible for RIP assistance as a result of the 2017 hurricanes will be determined in coming weeks. 2017 Hurricanes and USACE Issues for Congress A common issue for Congress after a disaster is whether to provide additional funds to USACE and, if so, how much funding and for which USACE activities, and what nonfederal cost-share applies to those activities. In recent years, Congress has used supplemental appropriations to fund much of USACE’s construction and repair of flood-risk-reduction projects in flood-damaged areas. Oversight issues for Congress related to the 2017 hurricane season may include not only the performance of USACE and local levees, shore protections, and dams, but also local and federal actions that exacerbate or alleviate flood risk. Additional Reading CRS Insight IN10763, Congressional Considerations Related to Hurricanes Harvey and Irma, coordinated by Jared T. Brown. CRS Report R42841, Army Corps Supplemental Appropriations: Recent History, Trends, and Policy Issues, by Charles V. Stern and Nicole T. Carter. CRS In Focus IF10606, Dam Safety: Federal Programs and Authorities, by Charles V. Stern et al.

Sep 27, 2017

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

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

Sep 26, 2017

Wildfire Suppression Spending: Background, Issues, and Legislation in the 115th Congress

Congress has directed that the federal government is responsible for managing wildfires that begin on federal lands, such as national forests or national parks. States are responsible for managing wildfires that originate on all other lands. Although a greater number of wildfires occur annually on nonfederal lands, wildfires on federal lands tend to be much larger, particularly in the western United States. The federal government’s wildfire management responsibilities—fulfilled primarily by the Forest Service (FS) and the Department of the Interior (DOI)—include preparedness, prevention, detection, response, suppression, and recovery. The Federal Emergency Management Agency (FEMA) also may provide disaster relief, mostly for certain nonfederal wildfires. Congress provides appropriations for wildfire management to both FS and DOI. Within these appropriations, suppression operations are largely funded through two accounts for each agency: Wildland Fire Management (WFM) accounts and Federal Land Assistance, Management, and Enhancement Act (FLAME) reserve accounts. If the suppression funding in both of these accounts is exhausted during any given fiscal year, FS and DOI are authorized to transfer funds from their other accounts to pay for suppression activities; this is often referred to as “fire borrowing.” Congress also may provide additional funds for suppression activities through emergency or supplemental appropriations. Thus, for any given year, total suppression appropriations to FS or DOI may be a combination of several sources: the WFM accounts, the FLAME accounts, additional funding as needed through transfers, and/or supplemental appropriations. Overall appropriations to FS and DOI for wildland fire management have increased considerably since the 1990s. A significant portion of that increase is related to rising suppression costs, even during years of relatively mild wildfire activity, although the costs vary annually and are difficult to predict in advance. FS and DOI have frequently required more suppression funds than have been appropriated to them. This discrepancy often leads the agencies to transfer funds from other accounts, prompting concerns that increasing suppression spending may be detrimental to other agency programs. In response, Congress has enacted supplemental appropriations to repay the transferred funds and/or to replenish the agency’s wildfire accounts. Furthermore, wildfire spending—like all discretionary spending—is currently subject to procedural and budgetary controls. In the past, Congress has effectively waived some of these controls for certain wildfire spending, but it has not consistently done so in more recent years. This situation has prompted some to explore providing wildfire spending outside of those constraints. The 115th Congress is considering legislation to address these issues. All of these bills (H.R. 2862, S. 1842, H.R. 2936, and S. 1571), directly or indirectly, would allow for some wildfire suppression funds—subject to certain criteria—to be provided outside the statutory limits on discretionary spending, either through the annual appropriations process or through supplemental appropriations. Under those proposals, varying levels of wildfire funding would not need to compete with other programs and activities that are subject to the statutory limits. However, the amounts that could be provided for wildfire suppression operations under these proposals—both within and outside of the spending limits—would be subject to future appropriations decisions by Congress. These proposals also could affect certain funding mechanisms that have been used to provide additional spending for major disaster recovery (e.g., hurricanes, earthquakes).

Sep 26, 2017

Potential Impacts of Uncertainty Regarding Affordable Care Act (ACA) Cost-Sharing Reduction Payments

Funding for the cost-sharing reduction (CSR) payments established under the Affordable Care Act (ACA; P.L. 111-148, as amended) has been the subject of recent hearings about the individual insurance market, numerous press articles, and analyses from actuaries to the Congressional Budget Office (CBO). The continuation of CSR payments has come into question, and insurers warn that they may leave the market or raise premiums without a commitment to sustained funding. To understand the concern about funding CSR payments, it is important to understand the context in which CSRs are provided, beginning with insurance premiums. How Does Cost-Sharing Affect Premiums? Consumers with private health insurance generally pay for health care in two ways: a periodic premium to purchase the insurance and cost-sharing requirements (e.g., deductibles, copayments, etc.) that are related to health services received. Insurers collect premiums from consumers and use that revenue to pay primarily for medical claims. To this end, a premium is determined through a months-long process to develop a rate (a price for a given insurance policy) sufficient to cover expected medical claims and other expenses and earn a positive margin. Once insurers file individual insurance rates with applicable state and federal authorities and such rates are finalized, premiums are generally set for policies that cover the upcoming benefit year. Federal regulations require that any insurer in the individual insurance market develop an “index rate” that incorporates prior claims experience for all of the insurer’s individual market policyholders and projects the medical costs for covering the essential health benefits. This rate is then adjusted to account for factors applicable to the individual market, a given insurance policy (including that policy’s specific set of cost-sharing requirements), and the characteristics by which premiums are allowed to vary among consumers purchasing the same policy. An insurer may only establish an index rate and make adjustments on an annual basis. (The ongoing uncertainty about the future of CSR payments has motivated some states to adjust the process by which rates are set.) How Do CSRs Affect Consumer and Insurer Spending? Given the rate-setting rules described above, the premium for an individual insurance policy typically reflects the cost-sharing requirements as determined by the insurer. However, in the case of an eligible consumer, the ACA requires changes to his or her actual cost-sharing requirements. A consumer must enroll in a “silver plan” and meet income and other eligibility criteria to receive CSRs. The ACA requires that a low-income consumer who is determined to be eligible for CSRs be enrolled in a plan variation that reduces cost-sharing requirements. Because overall consumer spending is reduced, insurer spending must increase in order to pay for the covered health services, with the premium staying the same. Under this scenario, the revenue from collected premiums no longer reflects an actuarial estimate of the amount needed to cover expected medical claims. To fully offset this imbalance, the ACA requires the HHS Secretary to provide regular and timely payments to insurers that provide CSRs. What Is the Status of Funding for the CSR Payments? The ACA did not provide appropriations for the CSR payments; in the time since the ACA was enacted, neither has Congress. While the previous and current Administrations have funded the payments through the same source that finances the ACA tax credit, such funding is the subject of a legal challenge. In 2016, the U.S. District Court for the District of Columbia concluded that the payments were unconstitutional, but stayed its decision, allowing the CSR payments to continue for the time being. However, continuation of the payments is not guaranteed. Although legislative ideas have been explored, no bill to fund the CSR payments appears to be currently moving through the legislative process. What Are the Potential Impacts of Terminating the CSR Payments? Termination of CSR payments has the potential to affect not only insurers, but also consumers and the federal budget. Without CSR payments, many insurers would face substantial losses. Consequently, insurer reactions may range from exiting the exchanges (per contract language allowing for possible mid-year exit), raising premiums (if allowed in a given state), or not taking any action, with a mix of these options depending on the timing of potential payment termination (current year or for the upcoming benefit year). There are pros and cons for a given insurer with each of these options. Moreover, just the possibility of payment termination has created enough market uncertainty to affect certain insurer decisions. According to CBO, the impact on consumers may be mixed. While CBO projects silver plan premiums to increase substantially, premiums for other plans were projected to grow with the baseline in later years. Moreover, the number of uninsured individuals was projected to be higher in 2018 compared to baseline estimates, but lower after a few years compared to the same baseline. CBO also projected that the federal deficit would increase. Because the formula for calculating the ACA tax credit is based on silver plan premiums, an increase in such premiums would result in larger federal outlays. Also, CBO projected that more individuals would receive premium tax credits, which would contribute to an increase in federal spending.

Sep 25, 2017

Social Costs of Carbon/Greenhouse Gases: Issues for Congress

Sep 24, 2017

National Flood Insurance Program Borrowing Authority

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

Sep 22, 2017

Wastewater Infrastructure: Overview, Funding, and Legislative Developments

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

Sep 22, 2017

Patent Law: A Primer and Overview of Emerging Issues

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

Sep 21, 2017

FDA Reauthorization Act of 2017 (FDARA, P.L. 115-52)

Food and Drug Administration (FDA) review of medical products (human drugs and devices) is funded through a combination of annual discretionary appropriations from Congress (budget authority) and user fees collected from industry. The human medical product user fee programs require reauthorization every five years to continue uninterrupted. Prior to the passage of the Food and Drug Administration Reauthorization Act of 2017 (FDARA, P.L. 115-52), these programs were set to expire on September 30, 2017. The reauthorization legislation typically includes additional provisions related to FDA, since for many the bill is considered “must-pass” legislation in order to not interrupt FDA product review activities. FDARA continues the five-year reauthorization cycle of the human medical product user fee programs; this reauthorization allows FDA to keep collecting user fees and using the revenue to support, among other things, the review of marketing applications for brand-name and generic drugs, biological and biosimilar products, and medical devices. In addition to titles that reauthorize the four user fee programs (drugs, devices, generic drugs, and biosimilars) through FY2022, FDARA includes titles that modify the drug and device regulatory processes to encourage the development of drugs and devices for pediatric use; amend the law regarding medical device, prescription drug, and generic drug regulation; and make changes in several cross-cutting areas, such as annual reporting on inspection and analysis of use of funds. The passage of the 21st Century Cures Act (P.L. 114-255) in December 2016 made numerous changes to the FDA approval processes for drugs, devices, and biologics, as well as other reforms to FDA; therefore, fewer non-user fee provisions were included in FDARA. This report presents an overview of FDARA by title and section, providing a narrative context for each title, as well as a brief description of each section.

Sep 21, 2017

Insurance Regulation: Legislation in the 115th Congress

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

Sep 20, 2017

Collateralized Loan Obligations (CLOs) and the Volcker Rule

Sep 20, 2017

Hurricanes and Electricity Infrastructure Hardening

This Insight discusses the measures undertaken by electric utilities to prevent or mitigate power outages resulting from severe weather events. Power lines and transformers used to provide electricity to customers are particularly susceptible to damage due to their exposure to the elements. (See CRS Report R42696, Weather-Related Power Outages and Electric System Resiliency.) The loss of life and extensive damage seen so far in the 2017 hurricane season has refocused the attention of Congress on the destructive potential of such storms. High winds, rain, and coastal surges can combine to create floods which exacerbate damage from hurricanes. Other severe weather events such as ice storms can be equally as destructive as hurricanes and tropical storms, and can also affect entire U.S. regions. Infrastructure Hardening Winds and rain from hurricane-type events tend to cause different types of power system failures than snow and ice events. Power outages from hurricane-type events are most often a result of damage to electric distribution lines caused by high winds or flooding. Transmission lines typically have wider rights-of-way clearings than distribution lines, and are therefore less susceptible to impacts from flying debris and vegetation. Many utilities have sought to reduce storm-related outages by “hardening” their systems to storms, by making the electric lines, poles, and distribution transformers less susceptible to damage. This might include simple yet generally effective strategies, such as increased tree-trimming schedules to prevent branches or trees from falling on power lines. To protect against high winds, wooden poles can be replaced on distribution lines with metal or concrete poles, and use supporting “guy” wires or structural supports to keep poles upright. Flood mitigation can lead to substations and system control rooms in flood-prone areas being moved to higher ground, or berms or floodwalls being built to protect facilities which cannot be moved. Undergrounding Power Lines Among the more expensive options for hardening is placing distribution lines and transformers underground, which can be 5 to 10 times (or more) than the cost of an overhead line depending on topography and subsurface conditions. Underground lines may require special insulation, and can be encased in conduits or steel pipes. While underground lines may be less prone to many severe weather impacts, the power lines and equipment access vaults may not be completely impervious to damage, especially due to flooding from storm surges. Maintenance costs for underground facilities may also be higher, as a line may have to be dug up to make repairs. The perceived benefit of burying power lines sometimes comes at a cost which some communities are not willing to accept. Costs of undergrounding are usually passed along to electricity customers, and collected over an assumed average 25-year service life. Some utilities are also willing to share the cost with communities, as they may derive some benefits from undergrounding. However, plans to underground power lines are not always approved by regulatory bodies in some jurisdictions, as electric utilities and transmission builders are often required to consider “least cost” options. Making Electric Systems More Weather Resilient Resilient electric systems are able to maintain some level of operations during hurricanes or storms, and quickly recover from storm-related damage. To promote system efficiency and resilience, many electric utilities are deploying “smart grid” sensors and control technologies, which can pinpoint line segments with power failures and reroute power flows, thus helping to speed restoration efforts. Utilities also plan for storm-related events, and conduct preparedness drills involving their fellow utilities under existing or improved mutual assistance agreements. The question of how much more system hardening is appropriate must be addressed in the context of the perceived risks from climate change. While some distribution poles and electric power facilities have been hardened in coastal areas to withstand a category 3 hurricane, consideration may be warranted for upgrading certain facilities to withstand a category 5 event. Congress may consider options to help reduce storm-related outages. These range from improving the quality of data on storm-related outages to help risk assessments, to a greater strategic investment in the U.S. electricity grid under an infrastructure improvement program. Congress could also empower a federal agency to develop standards for the consistent reporting of power outage data. Improved data collection at the distribution level could lead to better assessments of and improved reliability for distribution systems, as this is where most power outages occur. While responsibility for the reliability of the bulk electric system is under the Federal Energy Regulatory Commission (as per the Energy Policy Act of 2005), no central responsibility exists for the reliability of distribution systems. Distribution system reliability is typically under the regulatory purview of state public utility commissions (PUCs). State PUCs largely have authority over rate processes for cost recovery by utilities for their investments in infrastructure. Another possible option could be for a federal agency or the Electric Reliability Organization (i.e., the North American Electric Reliability Corporation) to develop a “best practices” database focused on improving electric distribution system reliability.

Sep 20, 2017

Chevron Deference: A Primer

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

Sep 19, 2017

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

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

Sep 19, 2017

Risks and Rewards of Transportation Public-Private Partnerships (P3s), with Lessons from Texas and Indiana

Sep 19, 2017