CRS Reports

NAFTA Renegotiation: Issues for U.S. Agriculture

Jun 22, 2017

The Budget Control Act: Frequently Asked Questions

When there is concern with deficit or debt levels, Congress will sometimes implement budget enforcement mechanisms to mandate specific budgetary policies or fiscal outcomes. The Budget Control Act of 2011 (BCA; P.L. 112-25), which was signed into law on August 2, 2011, includes several such mechanisms. The BCA as amended has three main components that currently affect the annual budget. One component imposes annual statutory discretionary spending limits for defense and nondefense spending. A second component requires annual reductions to the initial discretionary spending limits triggered by the absence of a deficit reduction agreement from a committee formed by the BCA. Third are annual automatic mandatory spending reductions triggered by the same absence of a deficit reduction agreement. Each of those components is described in further detail in this report. The discretionary spending limits (and annual reductions) are currently scheduled to remain in effect through FY2021, while the mandatory spending reductions are scheduled to remain in effect through FY2025. Congress may modify or repeal any aspect of the BCA procedures, but such changes require the enactment of legislation. Several pieces of legislation have changed the spending limits or enforcement procedures included in the BCA with respect to each year from FY2013 through FY2017. These include the American Taxpayer Relief Act of 2012 (ATRA/P.L. 112-240), the Bipartisan Budget Act of 2013 (BBA 2013/P.L. 113-67, also referred to as the Murray-Ryan agreement), and the Bipartisan Budget Act of 2015 (BBA 2015/P.L. 114-74). Those laws included changes to the discretionary limits imposed by the BCA that increased deficits in each year from FY2013-FY2017. No change has been enacted for FY2018 and beyond, so the discretionary spending limits for FY2018 through FY2021 remain at the level prescribed by the BCA. The discretionary caps in FY2018 are scheduled to be approximately $549 billion for defense activities and $516 billion for nondefense activities—slightly lower than the levels of $551 billion and $519 billion, respectively, in FY2017. Combined, the limits for FY2018 are $5 billion lower than the FY2017 level. This report addresses several frequently asked questions related to the BCA and the annual budget.

Jun 22, 2017

Farm Bill Primer: Forestry Title

Jun 22, 2017

The North American Free Trade Agreement (NAFTA) and U.S. Agriculture

The North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994, establishing a free trade area as part of a comprehensive economic and trade agreement among the United States, Canada, and Mexico. President Trump has repeatedly stated that he intends to either renegotiate or withdraw from NAFTA. In May 2017, the U.S. Trade Representative (USTR) formally notified Congress of the Administration’s intent to renegotiate NAFTA. Reactions to the announcement have been mixed, with some industries supporting NAFTA “modernization” as a way to address a range of trade concerns, while others are urging the need to proceed more cautiously so as to not destabilize current U.S. export markets. Canada and Mexico are key U.S. agricultural trading partners. Since NAFTA was implemented, the value of U.S. agricultural trade with its NAFTA partners has increased sharply. Agricultural exports rose from $8.7 billion in 1992 to $38.1 billion in 2016, while imports rose from $6.5 billion to $44.5 billion. As a share of U.S. agricultural trade, Canada and Mexico rank second and third (after China) as leading U.S. export markets. Leading NAFTA-traded agricultural products were meat and dairy products; grains; fruits, tree nuts, and vegetables; oilseeds; and sweeteners. In general, NAFTA is considered to have benefitted the United States both economically and strategically in terms of North American relations. Many U.S. food and agricultural industry groups claim that NAFTA has been positive for their industries. As part of its 2015 retrospective analysis of the impacts of NAFTA, the U.S. Department of Agriculture (USDA) concluded in a 2015 report that “NAFTA has had a profound effect on many aspects of North American agriculture over the past two decades,” contributing to increased market integration and cross-border investment and resulting in “important changes in consumption and production.” Although NAFTA resulted in tariff elimination for most agricultural products and redefined import quotas for some commodities as tariff-rate quotas (TRQs), some products—such as U.S. exports to Canada of dairy and poultry products—are still subject to high above-quota tariffs. In addition to tariffs and quotas, NAFTA addressed sanitary and phytosanitary (SPS) measures and other types of non-tariff barriers that may limit agricultural trade. SPS regulations are often regarded by agricultural exporters as one of the greatest challenges in trade, often resulting in increased costs and product loss and disrupting integrated supply chains. The extent to which the terms of agricultural trade may be altered in a NAFTA renegotiation is unclear; however, what is clear is that U.S. agriculture has a large stake in NAFTA. Still, renegotiating NAFTA could provide an opportunity to “modernize” certain issues affecting U.S. agricultural exporters. Potential options could include the following: Improving market access. Liberalize remaining dutiable agricultural products that are still subject to TRQs and high out-of-quota tariff rates. Updating NAFTA’s SPS provisions. Address SPS concerns in agricultural trade by “going beyond” existing World Trade Organization (WTO) rights and obligations and include additional rapid response mechanism and enforcement regarding SPS and other technical barriers to trade. Addressing other trade concerns. Address concerns raised in outstanding disputes between the United States and its NAFTA partners, as well as geographical indications (GIs) or place names that identify products based on their reputation or origin. A number of these types of trade concerns were addressed in recent U.S. trade negotiations under the Trans-Pacific Partnership (TPP) agreement, and some farm interest groups claim that the TPP could provide a blueprint for NAFTA renegotiations involving U.S. agricultural trade concerns.

Jun 22, 2017

When Congress Does Not Agree on a Budget Resolution: Use of Existing Budget Enforcement and Deeming Resolutions

Jun 22, 2017

Overview of FY2018 Appropriations for Commerce, Justice, Science, and Related Agencies (CJS)

This report describes actions taken by the Administration and Congress to provide FY2018 appropriations for the Commerce, Justice, Science, and Related Agencies (CJS) accounts. It also provides an overview of FY2017 appropriations for agencies and bureaus funded as part of annual CJS appropriations. Division B of the Consolidated Appropriations Act, 2017 (P.L. 115-31) provided a total of $66.360 billion (which includes $109 million in emergency funding) for CJS. Under the act, the Department of Commerce received $9.237 billion, the Department of Justice received $28.962 billion, the science agencies received $27.240 billion, and the related agencies received $921 million. The Trump Administration requests a total of $62.331 billion for CJS for FY2018, a $4.029 billion (6.1%) reduction compared to the FY2016-enacted appropriation. The request includes $7.817 billion for the Department of Commerce, $28.205 billion for the Department of Justice, $25.751 billion for the science agencies, and $559 million for the related agencies. The Administration’s budget includes cuts for most CJS accounts. In addition to the funding reductions, the Administration proposes to eliminate several CJS agencies and programs, including the Economic Development Administration, the Minority Business Development Administration, the Legal Services Corporation, and the National Aeronautics and Space Administration’s Office of Education. Over the past 10 fiscal years, nominal appropriations for CJS have experienced both year-to-year increases and decreases. CJS appropriations increased from FY2007 to FY2010, but generally declined from FY2010 to FY2013. Nominal appropriations for CJS were relatively flat in FY2014 and FY2015. CJS appropriations increased again, by approximately $4 billion, in FY2016, largely due to Congress increasing the discretionary budget cap in the Bipartisan Budget Act of 2015 (P.L. 114-74). Increases in CJS appropriations in FY2009 and FY2010 were largely the result of Congress appropriating more funding for Commerce to support the 2010 decennial census. Although subsequent decreases in appropriations for Commerce account for much of the overall decrease in CJS appropriations between FY2010 and FY2013, cuts in funding for DOJ and NASA and sequestration in FY2013 also contributed to the decrease. The exception to the trend of decreasing appropriations from FY2010 to FY2013 was the National Science Foundation (NSF). The NSF’s appropriations generally increased each fiscal year since FY2007. Appropriations for the Departments of Commerce and Justice and for NASA have generally increased each fiscal year since FY2013.

Jun 21, 2017

Farm Bill Primer: The Conservation Title

Jun 21, 2017

Cuba: President Trump Partially Rolls Back Obama Engagement Policy

On June 16, 2017, President Trump unveiled his Administration’s policy on Cuba, which partially rolls back some of the Obama Administration’s efforts to normalize relations with Cuba. President Trump set forth his Administration’s policy in a speech in Miami, FL, where he signed a national security presidential memorandum on Cuba replacing President Obama’s October 2016 presidential policy directive, which had laid out objectives for the normalization process. The new policy leaves most of the Obama-era policy changes in place, including the reestablishment of diplomatic relations and a variety of eased sanctions to increase travel and commerce with Cuba. The most significant policy changes include (1) restrictions on financial transactions with companies controlled by the Cuban military, intelligence, or security services or personnel and (2) the elimination of individual people-to-people travel. President Trump’s memorandum directed the heads of departments (Treasury and Commerce, in coordination with the State Department) to initiate a process within 30 days to adjust current regulations. The policy changes will not take place until the amended regulations are issued; the Treasury Department, for example, indicated that it expects to issue its regulatory amendments in the coming months. Restrictions on Transactions with the Cuban Military The State Department is tasked with identifying entities controlled by the Cuban military, intelligence, or security services or personnel and publishing a list of those entities with which direct financial transactions would disproportionately benefit those services or personnel at the expense of the Cuban people or private enterprise in Cuba. Financial transactions with those entities are to be prohibited, with certain exceptions, including transactions related to air or sea operations supporting permissible travel, cargo, or trade; the sale of agricultural and medical commodities; direct telecommunications or Internet access for the Cuban people; and authorized remittances. Moreover, transactions that further the national security or foreign policy interests of the United States are to be permitted. The memorandum specifically identifies the Grupo de Administración Empresarial S.A. (GAESA), a holding company of the Cuban military involved in most sectors of the Cuban economy, particularly the tourism sector. Given the Cuban military’s significant involvement in the economy, the new prohibitions could limit future U.S. economic engagement with Cuba, depending on the forthcoming amended regulations and their implementation. Restrictions on People-to-People Travel With regard to people-to-people travel, the Treasury Department will amend the Cuban Assets Control Regulations, specifically, 31 C.F.R. 515.565(b), to require people-to-people educational travel to take place under the auspices of an organization specializing in such travel, with travelers accompanied by a representative of the organization. Individuals will no longer be authorized to travel to Cuba for such travel on their own. The new policy will not affect other categories of permissible travel. The Obama Administration had authorized individual people-to-people travel in March 2016, which, combined with the beginning of regular commercial flights and cruise ship service, led to an increase in Americans visiting Cuba. According to Cuban government statistics, the number of U.S. travelers increased from 91,254 in 2014 to some 285,000 in 2016, a figure almost matched in just the first five months of 2017. This is in addition to the several hundred thousands of Cuban Americans who visit family in Cuba each year. The rising level of U.S. travel to Cuba could possibly slow or be reversed once the new regulations are in place. Moreover, the level of travel also could be affected by the increased Treasury Department scrutiny that President Trump’s memorandum requires. Continued Focus on Human Rights When President Trump announced his Cuba policy, he asserted that he was “canceling the last administration’s policy change with Cuba,” which he labeled as “a terrible and misguided deal with the Castro regime.” The President maintained that “the outcome of the last administration’s executive action has been only more repression and a move to crush the peaceful democratic movement.” Although the Cuban government’s human rights record remained poor after the Obama Administration’s policy of engagement was initiated in December 2014, President Obama continued to speak out strongly about human rights conditions in Cuba, including during his March 2016 visit to Havana; the two countries subsequently engaged in a bilateral human rights dialogue in October 2016. In his Miami speech, President Trump called for the Cuban government to end the abuse of dissidents, release political prisoners, stop jailing innocent people, and return U.S. fugitives from justice in Cuba, all issues that the Obama Administration had raised with the Cuban government. An area where the Trump Administration has diverged from past administrations is U.S. democracy and human rights funding for Cuba; the President’s FY2018 budget request zeroes out such funding, which has been supported by Congress for many years. Cuban Government Reaction As expected, the Cuban government’s reaction to President Trump’s speech was critical. Cuban Foreign Minister Bruno Rodríguez asserted that the speech “was a grotesque spectacle straight from the Cold War.” Nevertheless, the Cuban government also reiterated its willingness to continue a respectful and cooperative dialogue on issues of mutual interest and the negotiation of outstanding issues, although it maintained that Cuba would not make concessions to its sovereignty and independence. Congress and Policy Toward Cuba Just as Congress has been divided in recent years over U.S. policy toward Cuba, there are divergent congressional views regarding President Trump’s policy changes. For example, some Members support the new policy because of Cuba’s lack of progress on human rights, whereas others oppose it because of its potential negative effect on the Cuban people and U.S. business interests. In the 114th Congress, several House appropriations measures would have rolled back certain elements of President Obama’s engagement policy and a Senate appropriations measure would have further eased sanctions; ultimately, none of these Cuba policy provisions was enacted. The debate on Cuba policy is continuing in the 115th Congress, especially with regard to U.S. sanctions. Also see CRS Report R44822, Cuba: U.S. Policy in the 115th Congress; CRS In Focus IF10045, Cuba: U.S. Policy Overview; CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances; and CRS Report R43888, Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations.

Jun 21, 2017

FY2017 State Grants Under Title I-A of the Elementary and Secondary Education Act (ESEA)

The Elementary and Secondary Education Act (ESEA), as amended by the Every Student Succeeds Act (ESSA; P.L. 114-95), is the primary source of federal aid to K-12 education. The Title I-A program is the largest grant program authorized under the ESEA and is funded at $15.5 billion for FY2017. It is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. Under current law, the U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The four Title I-A formulas have somewhat distinct allocation patterns, providing varying shares of allocated funds to different types of states. Thus, for some states, certain formulas are more favorable than others. This report provides estimated FY2017 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California is estimated to receive the largest FY2017 Title I-A grant amount ($1.8 billion, or 11.98% of total Title I-A grants). Vermont is estimated to receive the smallest FY2017 Title I-A grant amount ($35.3 million, or 0.23% of total Title I-A grants). As final data needed to determine actual Title I-A grants for FY2017 are not yet available, all of the estimates included in this report are subject to change before ED makes final Title I-A grant allocations on October 1, 2017.

Jun 20, 2017

Freshwater Harmful Algal Blooms: Causes, Challenges, and Policy Considerations

Scientific research indicates that in recent years, the frequency and geographic distribution of harmful algal blooms (HABs) have been increasing nationally and globally. Because the impacts of HABs can be severe and widespread—often with interstate implications—these issues have been a perennial interest for Congress. While algal communities are natural components of healthy aquatic ecosystems, under certain conditions (e.g., increased temperatures and nutrient concentrations), algae may grow excessively, or “bloom,” and produce toxins that can harm human health, animals, aquatic ecosystems, and the economy. In 2014, a cyanobacterial HAB in Lake Erie affected the drinking water for more than 500,000 people in Toledo, Ohio. In 2016, a massive HAB in Florida’s Lake Okeechobee negatively impacted tourism and aquatic life. HABs have been recorded in every state and have become a concern nationwide. Many types of algae can cause HABs in freshwater systems. The most frequent and severe blooms involve the proliferation of cyanobacteria. Some cyanobacteria species can produce toxins—cyanotoxins—that can cause mild to severe health effects in humans and kill aquatic life and other animals. HABs can also contribute to deteriorating water quality and ecosystem health. As masses of cyanobacteria or other algae die and decompose, they consume oxygen, sometimes forming “dead zones” where life cannot survive. These areas can kill fish and organisms, such as crabs and clams, and have detrimental economic effects. Scientists widely consider nutrient enrichment to be a key cause of HAB formation. While nutrients are essential to plants and natural parts of aquatic ecosystems, excessive amounts can overstimulate algal growth. Sources include point sources (e.g., municipal wastewater discharges) and nonpoint sources (e.g., fertilizer runoff from agricultural and urban areas). Congress, federal agencies, and states have taken steps to address HABs and nutrients that contribute to their occurrence. The Harmful Algal Bloom and Hypoxia Research and Control Act of 1998 (HABHRCA), as amended, established an interagency task force, required the task force to prepare reports and plans addressing marine and freshwater HABs, and authorized funding for research, education, monitoring activities, etc. In December 2016, the Environmental Protection Agency (EPA) used its authority under the Clean Water Act (CWA) to propose water quality criteria for two algal toxins in waters used for recreational purposes. States use such criteria when developing water quality standards—measures that describe the desired condition or level of protection of a water body and what is needed for protection. Further, EPA has emphasized the need to reduce nutrient pollution from all sources to reduce public health and environmental impacts associated with HABs. The CWA does not authorize EPA to regulate all sources. It authorizes EPA to regulate point (direct) sources of nutrients but does not authorize EPA to regulate nonpoint (diffuse) sources of nutrient pollution. Some states have developed guidelines for algal toxins, primarily for use in guiding swimming advisories. Also, states have listed waters as impaired, or not meeting water quality standards, for algal blooms or algal toxins. Some of these states have begun to develop Total Maximum Daily Loads (TMDLs)—essentially pollution budgets—to address them. Most states have identified nutrient-related pollution as a priority to be addressed by their TMDLs and/or alternative restoration plans. States rely heavily on financial assistance from EPA in implementing these plans and more broadly, in addressing nonpoint source pollution that leads to degraded water quality and HAB formation. Congress has long provided financial assistance through EPA for regional, state, and local programs through CWA Sections 106 and 319 planning grants, geographic programs (such as the Chesapeake Bay and Great Lakes), and other sources. The President’s FY2018 budget request for most of these programs is either eliminated or significantly reduced. Congress continues to show interest in addressing HABs. This interest has largely focused on funding research to close research gaps identified by scientists and decisionmakers and to coordinate the efforts of federal agencies and their partners to study and address HABs.

Jun 20, 2017

India-U.S. Relations: Issues for Congress

India will soon be the world’s most populous country, home to about one of every six people. Many factors combine to infuse India’s government and people with “great power” aspirations: the Asian giant’s rich civilization and history, expanding strategic horizons, energetic global and international engagement, critical geography (with more than 9,000 total miles of land borders, many of them disputed) astride vital sea and energy lanes, major economy (at times the world’s fastest growing) with a rising middle class and an attendant boost in defense and power projection capabilities (replete with a nuclear weapons arsenal and triad of delivery systems), and vigorous science and technology sectors, among others. In recognition of India’s increasingly central role and ability to influence world affairs—and with a widely-held assumption that a stronger and more prosperous democratic India is good for the United States in and of itself—the U.S. Congress and two successive U.S. Administrations have acted both to broaden and deepen America’s engagement with New Delhi. Such engagement is unprecedented after decades of Cold War-era estrangement and today takes place “across the spectrum of human endeavor for a better world,” as described in a 2015 U.S.-India Declaration of Friendship. Washington and New Delhi launched a “strategic partnership” in 2005, along with a framework for long-term defense cooperation that now includes large-scale joint military exercises and significant defense trade. Bilateral trade and investment have increased while a relatively wealthy Indian-American community is exercising newfound domestic political influence, and Indian nationals account for a large proportion of foreign students on American college campuses and foreign workers in the information technology sector. Yet more engagement has meant more areas of friction in the partnership, many of which attract congressional attention. India’s economy, while slowly reforming, continues to be a relatively closed one, with barriers to trade and investment deterring foreign business interests. Differences over U.S. immigration law, especially in the area of nonimmigrant work visas, remain unresolved; New Delhi views these as trade disputes. India’s intellectual property protection regime comes under regular criticism from U.S. officials and firms. The June 2017 announcement of U.S. withdrawal from the Paris Agreement on climate change dismayed many in India and brought into question significant ongoing bilateral collaboration in the energy field. Other stumbling blocks—on localization barriers and civil nuclear commerce, among others—add to sometimes argumentative associations. Meanwhile, cooperation in the fields of defense trade, intelligence, and counterterrorism, although vastly superior to that of only a decade ago, runs up against the obstacles variously posed by India’s bureaucracy, limited governmental capacity, difficult procurement process, seemingly incompatible federal institutions, and a lingering shortage of trust, not least due to America’s ongoing security relationship with and aid to India’s key rival, Pakistan. Finally, Members of Congress take notice of human rights abuses in India, perhaps especially those related to religious freedom. Despite these many areas of sometimes serious discord, the U.S. Congress has remained broadly positive in its posture toward the U.S.-India strategic and commercial partnership. Meanwhile, the Trump Administration has thus far issued amicable rhetoric overall (with some lapses) that suggests an intention to maintain the general outlines of recent U.S.-India ties. This report reviews the major facets of current U.S.-India relations, particularly in the context of congressional interest. It discusses areas in which perceived U.S. and Indian national interests converge and areas in which they diverge; other leading Indian foreign relations that relate to U.S. interests; the outlines of bilateral engagement in defense, trade, and investment relations, as well as important issues involving energy, climate change; and human rights concerns. This report will be updated.

Jun 19, 2017

Paris Agreement: U.S. Climate Finance Commitments

The United States and other industrialized countries have committed to providing financial assistance for global environmental initiatives, including climate change, through a variety of multilateral agreements. The United Nations Framework Convention on Climate Change (UNFCCC, 1992, U.S. Treaty Number: 102-38) was the first international treaty to acknowledge and address human-driven climate change. Among other obligations, the Convention commits higher-income parties (i.e., those listed in Annex II of the convention, which were members of the Organization for Economic Cooperation and Development in 1992) to seek to mobilize financial assistance to help lower-income countries meet certain obligations common to all parties. International financial assistance may take many forms, from fiscal transfers to market transactions. It may include grants, loans, loan guarantees, export credits, insurance products, and private sector investment. It may be structured as official bilateral development assistance or as contributions to multilateral development banks and other international financial institutions. Over the past several decades, the United States has delivered financial and technical assistance for climate change activities in the developing world through a variety of bilateral and multilateral programs. U.S.-sponsored bilateral assistance has come through programs at the U.S. Agency for International Development, the U.S. Department of State, the Millennium Challenge Corporation, the Export-Import Bank, and the Overseas Private Investment Corporation, among others. U.S.-sponsored multilateral assistance has come through contributions by the U.S. Departments of State and the Treasury to environmental funds at various international financial institutions and organizations such as the Global Environment Facility and the Green Climate Fund, among others. Under the Barack Obama Administration, the U.S. government provided about $1 billion annually for climate finance in the developing world. These funds accounted for approximately 3% of the U.S. foreign operations budget and 0.1% of all discretionary spending. In 2015, Parties to the UNFCCC in Paris, France, adopted the Paris Agreement (PA). The PA builds upon the Convention and—for the first time—brings all nations into a common framework to undertake efforts to combat climate change, adapt to its effects, and support developing countries in their efforts. The PA also reiterates the obligation in the Convention for developed country Parties, including the United States, to seek to mobilize financial support to assist developing country Parties with climate change mitigation and adaptation efforts. On June 1, 2017, President Donald Trump announced his intention to withdraw from the PA. Further, the Administration’s FY2018 budget request, released on May 23, 2017, proposes to “eliminate U.S. funding for the Green Climate Fund (GCF) in FY2018, in alignment with the President’s promise to cease payments to the United Nations’ climate change programs.” These actions may have several implications for the United States. Withdrawal may aid the domestic budget process and may assist certain U.S. industries in the global marketplace, specifically GHG-intensive fuels and technologies. However, withdrawal may also restrict the global marketplace for U.S. exporters of low-emission technologies and may impede U.S. efforts in natural disaster preparedness, national security, and international leadership.

Jun 19, 2017

First Treasury Report on Regulatory Relief: Depository Institutions

On June 12, 2017, the Department of the Treasury issued a report, A Financial System That Creates Economic Opportunities: Banks and Credit Unions, which examines the regulation of banks and credit unions. The Treasury stated it would be the first in a series of reports written in accordance with Executive Order (E.O.) 13772 issued by President Donald Trump on February 3, 2017. E.O. 13772 identified “Core Principles” that should be adhered to in financial regulation and directed the Secretary of the Treasury to report on “the extent to which ... Government policies promote the Core Principles and what actions have been taken, and are currently being taken, to promote and support the Core Principles.” The June report makes numerous recommendations, and an exhaustive examination is beyond the scope of this Insight. Instead, this Insight examines selected recommendations in two broad areas: (1) providing regulatory relief to banks and credit unions, and (2) changing the structures and authorities of regulators. More detailed background and analysis of many of the policy issues addressed here can be found in CRS Report R44855, Banking Policy Issues in the 115th Congress. Regulatory Relief Institution-Based Regulation. The Treasury report asserts that certain regulations facing depositories are unnecessarily complex and burdensome and are not appropriately tailored to institutions’ size and complexity. It argues that the potential benefits of certain regulations (e.g., greater systemic stability, increased consumer protection) are outweighed by their potential costs (e.g., reduced credit availability, slower economic growth). The report’s recommendations include raising certain asset thresholds at which larger banks become subject to enhanced prudential regulations—such as Federal Reserve-run stress tests, the liquidity coverage ratio, and required submission of living wills—and changing the criteria that subject foreign bank organizations to focus more on their U.S. operations. In addition, the report calls for simplifying the stress test process and reducing stress testing and living will submission frequency. The report also endorses simplifying the Volcker Rule and exempting certain banks, including small banks. To further ease the burden on small institutions, the report asks regulators to consider exempting community banks and credit unions from risk-based capital rules and raising the threshold for applicability of the Federal Reserve’s Small Bank Holding Company Policy Statement. The report also notes that a simpler regulatory regime for banks that meet a high leverage ratio should be considered, and that the rules facing bank boards of directors should be pared back. Opponents of these types of changes argue that relaxing these regulations or exempting a greater number of larger banks would inappropriately reduce financial stability and increase the risk of costly financial crises. Activity-Based Regulation. The report asserts that certain regulations for lending activities are unduly burdensome, contending that the effects of increased cost and decreased availability of residential mortgage, small business, and leveraged loans are not justified by the intended benefits of financial stability and consumer protection. The report makes multiple recommendations to clarify, modify, or eliminate various rules related to mortgage lending, including to aspects of the Ability-to-Repay rule, points and fees caps on Qualified Mortgages, mortgage servicing rules, and residential mortgage risk-retention rules. The report notes that its recommendations for regulatory relief for certain banks could help credit availability for small business, and also recommends a reassessment of certain regulation related to small business credit sources, such as real estate collateral, commercial real estate loans, and business lines of credit. The report calls on regulators to revise their supervisory guidance on leveraged lending—a type of corporate finance used for mergers and acquisitions or other large undertakings—which the report asserts is ambiguous and creates uncertainty for banks. Opponents of the type of changes recommended argue current lending rules are appropriate measures necessary to ensure financial stability and consumer protection, particularly in mortgage markets that involved questionable practices leading up to the crisis, and leveraged loans which can fund particularly risky business activities. Financial Regulator Structures and Authorities The report asserts that the structure of the U.S. banking regulatory system contains too much fragmentation and overlap between regulators, creating inefficiency and reducing effectiveness. In addition, the report contends that how regulators engage with regulated institutions can be too intrusive and unresponsive, and does not create accountability of the regulatory agencies. The Treasury also identifies what it perceives to be problems at the Consumer Financial Protection Bureau (CFPB), finding that the agency is unaccountable and its authorities too broad. In order to reduce fragmentation and overlap, the report recommends that Congress consider consolidating agencies or more clearly defining agencies’ mandates and that the Financial Stability Oversight Council’s mandate be broadened to enable it to better coordinate individual agencies. It also calls for improving remediation processes between banks and regulators, and increasing the use of cost-benefit analysis when regulators are making rules. In addition, it recommends that “for cause” removal protection for the Director of CFPB (and other director-led agencies) be changed so that the Director can be removed at-will by the President. The report also recommends that CFPB funding be brought under annual congressional appropriations. In addition, the Treasury calls for certain reductions in the CFPB supervisory and enforcement authorities. Opponents of the type of changes recommended argue that regulators require independence and strong authorities to effectively regulate, and reducing these would impair regulators’ ability to ensure a stable financial system with adequate consumer protections. Legislative Role Many of the changes recommended could be made by regulators under existing authorities, but only to the extent that the agencies choose to do so. Many of the changes could also be achieved through legislative action, and some of the recommendations require changes in statute. The Financial CHOICE Act (H.R. 10), which passed the House on June 8, 2017, is an example of legislation that includes certain provisions that would produce changes similar to those recommended by the Treasury. However, the effects of the entire bill—which proposes sweeping changes to the financial regulatory system—are generally more far-reaching than those that would be produced by the Treasury report’s recommendations.

Jun 16, 2017

U.S. Trade and Development Agency (TDA)

Jun 15, 2017

SelectUSA: U.S. Inbound Investment Promotion

Jun 15, 2017

Short-Term, Small-Dollar Lending: Policy Issues and Implications

Short-term, small-dollar loans are consumer loans with relatively low initial principal amounts (often less than $1,000) with relatively short repayment periods (generally for a small number of weeks or months). Short-term, small-dollar loan products are frequently used to cover cash-flow shortages that may occur due to unexpected expenses or periods of inadequate income. Small-dollar loans can be offered in various forms and by various types of lenders. Banks and credit unions (depositories) can make small-dollar loans through financial products such as credit cards, credit card cash advances, and checking account overdraft protection programs. Small-dollar loans can also be provided by nonbank lenders (alternative financial service [AFS] providers), such as payday lenders and automobile title lenders. The extent that borrower financial situations would be made worse from the use of expensive credit or from limited access to credit is widely debated. Consumer groups often raise concerns regarding the affordability of small-dollar loans. Borrowers pay rates and fees for small-dollar loans that may be considered expensive. Borrowers may also fall into debt traps, situations where borrowers repeatedly roll over existing loans into new loans and subsequently incur more charges rather than completely paying off the loans. Although the vulnerabilities associated with debt traps are more frequently discussed in the context of nonbank products such as payday loans, borrowers may still find it difficult to repay outstanding balances and face additional charges on loans such as credit cards that are provided by depositories. Conversely, the lending industry often raises concerns regarding the reduced availability of small-dollar credit. Regulations aimed at reducing costs for borrowers may result in higher costs for lenders, possibly limiting or reducing credit availability for financially distressed individuals. This report provides an overview of the small-dollar consumer lending markets and related policy issues. Descriptions of basic short-term, small-dollar cash advance products are presented. Current federal and state regulatory approaches to consumer protection in small-dollar lending markets are also explained, including a summary of a proposal by the Consumer Financial Protection Bureau (CFPB) to implement federal requirements that would act as a floor for state regulations. The CFPB estimates that its proposal would result in a material decline in small-dollar loans offered by AFS providers. The CFPB proposal has been subject to debate. H.R. 10, the Financial CHOICE Act of 2017, which was passed by the House of Representatives on June 8, 2017, would prevent the CFPB from exercising any rulemaking, enforcement, or any other authority with respect to payday loans, vehicle title loans, or other similar loans. After discussing the policy implications of the CFPB proposal, this report examines general pricing dynamics in the small-dollar credit market. The degree of market competitiveness, which may be revealed by analyzing market price dynamics, may provide insights concerning affordability and availability options for users of certain small-dollar loan products. The small-dollar lending market exhibits both competitive and noncompetitive market pricing dynamics. Some industry financial data metrics are arguably consistent with competitive market pricing. Factors such as regulatory barriers and differences in product features, however, limit the ability of banks and credit unions to compete with AFS providers in the small-dollar market. Borrowers may prefer some loan product features offered by nonbanks, including how the products are delivered, in comparison to products offered by traditional financial institutions. Given the existence of both competitive and noncompetitive market dynamics, determining whether the prices borrowers pay for small-dollar loan products are “too high” is challenging. The Appendix discusses how to conduct meaningful price comparisons using the annual percentage rate (APR) as well as some general information about loan pricing.

Jun 14, 2017

U.S. Military Presence on Okinawa and Realignment to Guam

Jun 14, 2017

Defining Readiness: Background and Issues for Congress

Many defense observers and government officials, including some Members of Congress, are concerned that the U.S. military faces a readiness crisis. The Department of Defense has used readiness as a central justification for its FY2017 and FY2018 funding requests. Yet what makes the U.S. military ready is debated. This report explains how differing uses of the term readiness cloud the debate on whether a readiness crisis exists and, if so, what funding effort would best address it. CRS has identified two principal uses of the term readiness. One, readiness is used in a broad sense to describe whether military forces are able to do what the nation asks of them. In this sense, readiness encompasses almost every aspect of the military. Two, readiness is used more narrowly to mean only one component of what makes military forces able. In this second sense, readiness is parallel to other military considerations, like force structure and modernization, which usually refer to the size of the military and the sophistication of its weaponry. Both uses embody accepted concepts: the broader use capturing the military’s ability to accomplish its overall goals and the narrower use capturing the military’s ability when its size and type of weaponry are held steady. These two senses of the term are interdependent. Today, most observers assume the military should be as ready as possible in the narrow sense, but in past eras some favored accepting lower readiness in a narrow sense in order to redirect resources in ways they felt improved the military’s readiness in the broad sense (to include funding a larger force or newer equipment). Use of either sense of readiness affects Congress’s evaluation of certain key issues: Is there a readiness crisis? Most observers who see a crisis tend to use readiness in a broad sense, asserting the U.S. military is not prepared for the challenges it faces largely because of its size or the sophistication of its weapons. Most observers who do not see a crisis tend to use readiness in a narrow sense, assessing only the state of training and the status of current equipment. For what scenarios, contingencies, and threats should the U.S. military be ready? Some senior officials express confidence in the military’s readiness for the missions it is executing today—although other observers are not as confident—but express concern over the military’s readiness for potential missions in the future. How is readiness measured? Because of the two uses of the term, measuring readiness is difficult; despite ongoing efforts, many observers do not find DOD’s readiness reporting useful. How might DOD’s FY2018 budget request improve readiness? DOD’s request increases operating accounts more than procurement accounts. If readiness is used in a narrow sense, these funding increases may be the best way to improve the military’s readiness. If readiness is used in a broader sense, that funding may not be sufficient, or at least the best way to improve readiness.

Jun 14, 2017

Financial Regulatory Relief: Approaches for Congress, Regulators, and the Administration

The 2007-2009 financial crisis led to significant changes in financial regulation, but critics argue that the burden these changes have imposed now exceeds their benefits. Congress and the Administration are considering financial regulatory relief from various postcrisis regulatory changes, including the Dodd-Frank Act (P.L. 111-203). This report provides an overview of the options available to pursue that goal. Approaches for Congress Congress can mandate that regulators provide relief through legislation. Most relief legislation likely would follow the normal legislative process. For example, H.R. 10, a wide-ranging regulatory relief package, was passed by the House on June 8, 2017. Two special legislative procedures may be available in limited circumstances, however. The Congressional Review Act (CRA, 5 U.S.C. §§801-808) provides expedited procedures for Congress to overturn recently promulgated regulations. To date, the 115th Congress has used the CRA to overturn one Dodd-Frank Act rulemaking (disclosure requirements for resource-extraction firms). The reconciliation process provides for expedited consideration in the Senate, but is intended to be limited to provisions intended to change direct spending or revenues. Only a few of the funding provisions affecting financial regulators might meet these criteria. Approaches for Financial Regulators The vast majority of postcrisis regulatory reforms have been issued by independent financial regulators, not the Administration. In theory, the regulators issuing any regulation could issue new regulations modifying or repealing the original, provided they have authority under the authorizing statute to do so. But to overturn a final rule that has already been promulgated, regulators must initiate new rulemaking following the standard process, generally including notice and comment procedures. In addition, applying a regulation involves judgment by regulators. Regulators can alter how a regulation is interpreted and enforced using their supervisory (e.g., regulatory guidance and supervisory letters) and enforcement powers. Until new leadership is appointed, regulators may have little desire to revisit regulations that they have issued recently under current or previous leadership. Approaches for the Administration On February, 3, 2017, President Trump signed an executive order to “identify any laws, treaties, regulations, [and] guidance ... that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles.” One of the core principles is to “make regulation efficient, effective, and appropriately tailored.” The order does not revise or repeal any specific regulation, which can be done administratively only through the standard rulemaking process. Because financial regulators are independent regulatory agencies, they cannot be compelled to comply with executive orders governing certain aspects of the rulemaking process. The Treasury Secretary has the opportunity to influence regulatory priorities through his position as chair of the Financial Stability Oversight Council (FSOC), a council made up predominantly of the federal financial regulators. FSOC has limited rulemaking authority, however. It can make recommendations to member agencies, but it cannot compel agencies to follow those recommendations. FSOC’s most notable rulemaking authority is its ability to designate nonbank financial institutions as systemically important (SIFIs). One notable regulation issued by the previous Administration—as opposed to by an independent regulatory agency—was the Department of Labor’s (DOL’s) fiduciary rule, which requires a uniform fiduciary standard for registered broker-dealers and investment advisers when giving financial advice on retirement accounts. On February 3, 2017, President Trump issued a presidential memorandum directing the DOL to rescind or revise the rule if it “adversely affect(s) the ability of Americans to gain access to retirement information and financial advice.” All the leadership positions at the financial regulators have fixed terms and are appointed by the President following Senate confirmation. Although most of these individuals may be removed only “for cause,” over time, these positions will become vacant, allowing President Trump to nominate candidates to fill most, if not all, of them. At present, President Trump has filled the chair of the Securities and Exchange Commission (SEC), while several other positions are vacant, including the chairs of the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC). Most, but not all, multimember boards or commissions have statutory political affiliation requirements that give the President’s party a majority of seats but limit the number of seats that one party can hold.

Jun 14, 2017

Forest Service: FY2017 Appropriations and FY2018 Budget Request

Jun 13, 2017

FY2018 Defense Budget Request: The Basics

The President’s FY2018 budget request includes $677.1 billion for national defense (budget function 050), of which $646.9 billon is allocated for the DOD (budget subfunction 051). The funding request for national defense discretionary spending ($602.9 billion) is $54 billion—or 9%—above the FY2018 limit imposed on discretionary defense spending by the Budget Control Act of 2011 (BCA/P.L. 112-25). Of the DOD total, $574.5 billion covers the base, discretionary spending. An additional $64.6 billion of the DOD total is to support Overseas Contingency Operations (OCO). These operations include the (1) continued U.S. military presence in Afghanistan, (2) assistance to Iraqi and Syrian opposition forces, and (3) enhanced U.S. presence in Eastern Europe, referred to as the European Reassurance Initiative (ERI).

Jun 9, 2017

Prescription Drug User Fee Act (PDUFA): 2017 Reauthorization as PDUFA VI

The Prescription Drug User Fee Act (PDUFA) is being considered by Congress for reauthorization. First passed by Congress in 1992, it gave the Food and Drug Administration (FDA) the authority to collect fees from the pharmaceutical industry and to use the revenue to support “the process for the review of human drug applications.” FDA regulates the safety and effectiveness of drug products sold in the United States. Prior to marketing a drug, a manufacturer must submit to FDA a new drug application (NDA) demonstrating that the drug is safe and effective for its intended use. FDA’s review of drug applications is funded through a combination of annual discretionary appropriations from Congress and user fees collected from the pharmaceutical industry. Congress last reauthorized PDUFA, for a five-year period, through September 30, 2017, via Title I of the Food and Drug Administration Safety and Innovation Act (FDASIA, P.L. 112-144). User fees provided 65% of the Human Drugs Program funding for FY2016, accounting for 3,351 full-time equivalent employees. Therefore, as each reauthorization deadline approaches, FDA, industry groups, and many Members of Congress generally see PDUFA and the other human medical product user fees as must-pass legislation. Congress originally intended PDUFA to diminish the backlog of new drug applications at FDA and shorten the time from submission to decision. The general view is that PDUFA has succeeded. FDA has added review staff and reduced its review times. At each reauthorization, stakeholders (e.g., FDA, industry, and patient groups) have raised different concerns in the context of PDUFA, resulting in changes to the scope of activities covered by PDUFA. For example PDUFA II expanded the user fee program’s scope to include activities related to the investigational phases of a new drug’s development, and to increase FDA communications with industry and consumer groups. PDUFA III again expanded the scope of activities that user fees could support to include a three-year postapproval period. PDUFA IV concentrated on new measures concerning postmarket drug safety. PDUFA V maintained the PDUFA IV scope of activities that PDUFA fees could support. FDA plays an important role in the reauthorization process for PDUFA. In July 2015, the agency held an initial public meeting at the start of the reauthorization process. From September 2015 through February 2016, FDA held negotiations with the pharmaceutical industry and met with consumer and patient advocacy groups. In July 2016, FDA published a notice in the Federal Register announcing the availability of the proposed PDUFA VI commitment letter, as well as a public meeting to discuss the proposed recommendations for the PDUFA VI reauthorization. A public meeting to discuss the proposed recommendations for reauthorization of PDUFA was held on August 15, 2016, and the final agreement (“Commitment Letter”) between FDA and industry has been submitted to Congress. The PDUFA VI commitment letter is posted on the FDA website. On April 25, 2017, the Senate introduced its user fee legislation (S. 934, the FDA Reauthorization Act), which would reauthorize the four expiring user fee agreements. The Senate Health, Education, Labor and Pensions (HELP) Committee approved the bill on May 11, 2017. The House introduced its version of the FDA Reauthorization Act (H.R. 2430) on May 16, 2017, and referred the bill to the House Energy and Commerce Subcommittee on Health, which approved it by voice vote on May 18, 2017. The full Committee approved the bill on June 7, 2017. (This report will be updated to reflect the enacted statutory language.)

Jun 8, 2017

The Budget Resolution and the Budget Control Act’s Discretionary Spending Limits

Jun 7, 2017

When an Agency’s Budget Request Does Not Match the President’s Request: The FY2018 CFTC Request and “Budget Bypass”

Two Different Budget Requests for CFTC? The Trump Administration released its first full budget request on May 23, 2017, for FY2018. Like other recent presidential budget requests, it includes an Appendix chapter for independent agencies such as the Commodity Futures Trading Commission (CFTC). Notably, the Trump Administration’s budget request for CFTC does not equal the amount requested directly by the agency in its budget justification submitted to Congress. Specifically: The Trump Administration’s FY2018 request for CFTC is $250 million. CFTC’s Budget Justification submitted to Congress requests $281.5 million. The FY2017 Consolidated Appropriations Act provided CFTC with $250 million (P.L. 115-31). Therefore, the President’s FY2018 request for CFTC is the same as last year’s appropriation. By contrast, the agency is requesting a $31.5 million increase (+12.6%). CFTC’s budget justification, concurrent statements by a CFTC commissioner, and press reports explain why the agency is requesting an increase over FY2017 and more than the Administration’s request. In Congress, the appropriation for CFTC is under the jurisdiction of the House Appropriations Subcommittee for Agriculture and Related Agencies and the Senate Appropriations Subcommittee for Financial Services and General Government. Presidential Budget Requests and Agency “Bypass” Authority Before 1921, executive branch agencies would oftentimes submit their budget requests directly to Congress without review and modification by the President. In the wake of World War I, growing domestic challenges, and a growing federal budget, however, the administrative machinery of the federal government was severely taxed. At the time, Congress did not have extensive staff resources and support agencies to help it cope with these heightened demands. Congress responded, in part, with the enactment of the Budget and Accounting Act of 1921 (codified in part at 31 U.S.C. 1108). The law requires executive agencies to submit budget requests first to the President—and by further delegation to the Office of Management and Budget (OMB)—who may attempt to reconcile competing budget priorities into a single, consolidated proposal for congressional consideration. The law also established a process that many observers later perceived as enabling the President to control the nature of information that agencies released to Congress and the public. Beginning in the 1970s, Congress reconsidered this statutory approach. Specifically, Congress began to authorize some agencies to submit budget and/or legislative information concurrently and directly to Congress, in effect bypassing the President and OMB. This “bypass authority” has also been referred to as “concurrent” or “direct” submission (using language from applicable statutory provisions). The authorizing statute for CFTC establishes a form of bypass authority when it says: Whenever the Commission submits any budget estimate or request to the President or the Office of Management and Budget, it shall concurrently transmit copies of that estimate or request to the House and Senate Appropriations Committees and the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry. [7 U.S.C. 2(a)(10)(A)] Budgetary bypass has been the subject of a Freedom of Information Act (FOIA) case that resulted in OMB releasing lists from different points in time of agencies with bypass authority. The President is not obliged to accept or transmit such a proposal from an executive agency in the President’s submission to Congress. Rather, the President may propose something different that reflects the President’s policy preferences (see OMB, p. 3). An executive agency with budgetary bypass authority, however, might seek to submit its own separate and independent request directly to Congress. In effect, concurrent budget submission allows Congress to see this difference, if it exists, that otherwise may be less visible without the bypass opportunity. Any differences may provide an opportunity for Congress to conduct oversight, examine assumptions, and otherwise contrast differing perspectives on an agency’s resource needs. CFTC Statements Since CFTC was given additional oversight over derivatives markets through passage of the Dodd-Frank Act in 2010 (P.L. 111-203), funding for CFTC has been a contentious issue. Organizationally, CFTC is led by five commissioners appointed by the President, with the advice and consent of the Senate, to serve staggered five-year terms. No more than three commissioners at any one time may be from the same political party. There are currently only two CFTC commissioners in place—a Republican appointee who is the acting chair, J. Christopher Giancarlo, and a Democratic appointee, Sharon Y. Bowen. In his May 23, 2017, transmittal letter accompanying the CFTC budget request, acting chair Giancarlo did not specifically address the divergence from the Trump Administration’s budget request. However, he did say, “The $31.5 million in additional funds over FY 2017 is not a formulaic or superficial number, but a thorough and informed assessment of what the CFTC needs to execute its mission in FY 2018.” He noted that the $31.5 million in additional funding he was requesting would help the agency particularly with its examinations, including stress testing for large derivatives clearinghouses and resources to address financial technology innovation, among other purposes. Commissioner Bowen cited the large size and complexity of the $430 trillion swaps and futures markets (in notional value) that CFTC oversees, saying, “At our current level of resources, I do not believe we can fully protect our markets or ward off a new financial crisis, to say nothing of dealing with nascent developments like fintech or cybersecurity.” She noted that even though she believed CFTC’s $281.5 million request was too low, she was advised that formally opposing it “would block the Commission from releasing its own budget because there are only two Commissioners at present.” She asserted that the current funding process for CFTC was “inadequate and should be reconsidered.” She stated that almost all other financial regulators were funded partly or wholly by market participants paying “user fees” and that such a funding model would enable “taxpayers to be freed from the burden of funding another government agency.” The funding method for financial regulators has been a controversial issue in recent years.

Jun 7, 2017

Child Welfare Funding in Brief: FY2017 Final Funding and the President’s FY2018 Request

Child welfare; President’s FY2018 budget; final FY2017 appropriations; H.R. 244, P.L. 115-31; Title IV-E, foster care, kinship guardianship assistance, adoption assistance; Title IV-B, Child Welfare Services, Promoting Safe and Stable Families (PSSF), Court Improvement Program (CIP), Regional Partnership Grants (RPG); Child Abuse Prevention and Treatment Act (CAPTA); Adoption Opportunities; Adoption and Legal Guardianship Incentive Payments; Chafee Foster Care Independence Program (CFCIP), Educational and Training Vouchers (ETVs), Victims of Child Abuse Act, Court Appointed Special Advocates (CASAs), Children’s Advocacy Centers

Jun 7, 2017

Reauthorization of the Perkins Act in the 115th Congress: Comparison of Current Law and H.R. 2353

Since 1984, a number of acts named after former Congressman Carl D. Perkins have been the main federal laws authorized to support the development of career and technical education (CTE) programs aimed at students in secondary and postsecondary education. The Carl D. Perkins Career and Technical Education Act of 2006 (Perkins Act; P.L. 109-270), the most recent reauthorization of the federal CTE law, was passed in 2006 and authorized appropriations through FY2012. The authorization of appropriations was extended through FY2013 under the General Education Provisions Act, and the Perkins Act has continued to receive appropriations through annual appropriations acts through FY2017. During the 114th Congress, the House Committee on Education and the Workforce marked up and unanimously reported the Strengthening Career and Technical Education for the 21st Century Act (H.R. 5587), which would have provided for a comprehensive reauthorization of the Perkins Act. H.R. 5587 was subsequently passed by the House of Representatives on September 13, 2016, by a vote of 405-5. No further action was taken on the bill. In the 115th Congress, a new act, also named the Strengthening Career and Technical Education for the 21st Century Act (H.R. 2353), was introduced and marked up by the House Committee on Education and the Workforce. H.R. 2353 is similar to H.R. 5587 from the 114th Congress but contains several modified provisions. The committee reported the bill unanimously on May 17, 2017. H.R. 2353 would make a number of major changes to current law. Some of these include: repealing the Tech Prep program, which provided funds to consortia of secondary and postsecondary CTE providers but has not been funded since FY2010; gradually raising total authorized appropriation levels for CTE, reaching a total of $1.21 billion in FY2023, compared to the FY2017 actual appropriations of $1.12 billion; introducing a change to the state allocation formula that would require that states receive an allocation of no less than 90% of their previous year’s allocation starting in FY2021; permitting states to reserve up to 15% of their Basic State Grants funds for innovative CTE activities in rural areas or areas with higher numbers or concentrations of CTE students; allowing states to set their own annual targets on the core indicators of performance at both the secondary and postsecondary education levels without approval from the Secretary of Education; replacing the local plan required from CTE providers with a comprehensive needs assessment meant to align the CTE programs being offered with local workforce needs; removing the ability of the Secretary of Education to withhold state funds due to a lack of improved performance; and revising and introducing a number of new definitions, including common definitions for terms already defined in the Workforce Innovation and Opportunity Act. This report highlights the key provisions in H.R. 2353 and explains the major differences between it and current law.

Jun 6, 2017

Farm Bill Primer: SNAP and Other Nutrition Title Programs

Jun 2, 2017

The President’s FY2018 Budget Request for Agriculture Appropriations and the Farm Bill

Background The Trump Administration released its first full budget request on May 23, 2017. It proposes specific amounts for the FY2018 Agriculture appropriation as well as legislative changes to various mandatory spending programs, including those in the farm bill. The Administration’s budget outline, released on March 16, 2017, proposed an overall 21% reduction for the U.S. Department of Agriculture, and it mentioned seven specific discretionary programs for elimination or reduction. It did not address any mandatory spending proposals. (See CRS Insight IN10675, The President’s FY2018 Budget Outline for the U.S. Department of Agriculture.) This report separates the President’s budget request into proposed changes for agriculture based on congressional jurisdiction. The proposals are likely to be treated differently in Congress because of separate appropriations and authorizing committee jurisdictions. The Appropriations committees will determine funding levels for FY2018 through the budget and appropriations process and may incorporate elements of the request. The Agriculture committees may respond to the mandatory spending proposals, which would need separate legislative action to be enacted, and the committees may wait until 2018, when the current farm bill is due for reauthorization. Agriculture Appropriations Request The President’s budget request for FY2018 proposes an estimated $5.1 billion reduction (-24%) in discretionary spending for accounts that are in the Agriculture and Related Agencies Appropriations bill (Figure 1, Table 1). This CRS estimate is preliminary and subject to rescoring by the Congressional Budget Office (CBO). The estimate is based on Agriculture appropriations jurisdiction, which does not cover all of USDA. It excludes the Forest Service, includes the Food and Drug Administration and, in the House, includes the Commodity Futures Trading Commission. It is also relative to the enacted FY2017 appropriation (P.L. 115-31; see CRS Report R44441, FY2017 Agriculture and Related Agencies Appropriations: In Brief) rather than the FY2017 continuing resolution that existed when the budget request was assembled. The $5.1 billion reduction to Agriculture appropriations is comprised largely of the following proposals: $1.7 billion reduction in foreign food aid (-90%, by eliminating Food for Peace and McGovern-Dole Food for Education), $912 million reduction to rural development (-30%, including eliminating rural water and waste disposal grants, and the Rural Business Cooperative Service), $382 million reduction to agricultural research agencies (-13%), $260 million reduction to conservation programs (-25%), $250 million reduction to discretionary domestic nutrition assistance programs, primarily the Supplemental Nutrition Program for Women, Infants and Children (WIC, -3%), $234 million reduction to the Food and Drug Administration (-8.5%), $136 million reduction to animal and plant health inspection (-14%), $115 million reduction to Farm Service Agency operations (-7%), including a 13% reduction in the amount of ownership and operating loans that can be made to farmers, $1.1 billion of rescissions and limitations beyond the FY2017 level of $1.8 billion (including a $212 million rescission of prior-year funds for research facilities, and $410 million of limitations to mandatory programs beyond the FY2017 level of $744 million). The request also proposes reducing USDA staffing by over 5,000 employees (-5%), including an 8% reduction at the Farm Service Agency (headquarters and county offices), 19% at Rural Development, and 10% at the Agricultural Research Service. Farm Bill and Other Legislative Requests The President’s budget request proposes nearly $240 billion of reductions over 10 years to mandatory spending programs that are in the jurisdiction of the House and Senate Agriculture Committees. The reduction includes $229 billion affecting farm bill programs, nearly $2 billion in rural development programs, and $9 billion of proposed user fees (Table 2). This Office of Management and Budget estimate is subject to rescoring by CBO. This request may be an indicator of the Administration’s priorities for the next farm bill, which is expected to receive legislative attention by 2018, when the current farm bill expires. The request proposes reducing the Supplemental Nutrition Assistance Program (SNAP), capping crop insurance premiums, eliminating a crop insurance option, tightening income eligibility requirements for farm subsidies, reducing conservation programs, and eliminating various smaller farm bill programs such as trade promotion and specialty crop support. These reductions are relative to a farm bill baseline of about $870 billion for the same period based on the January 2017 CBO baseline projection. (See CRS Report R44784, Previewing a 2018 Farm Bill.) If enacted, the $229 billion subtotal of farm bill reductions would imply a 26% reduction to the farm bill baseline over FY2018-FY2027. The SNAP proposals would be a 28% reduction to its $672 billion 10-year baseline, and the crop insurance proposals would be a 35% reduction to its $79 billion baseline. Figure 1. Discretionary Agriculture Appropriations, by Title, Since FY2008 / Source: CRS. Notes: FY0218 data are a preliminary compilation by CRS of congressional appropriations jurisdiction based on the President’s budget. Includes CFTC in Related Agencies in all years for comparability, regardless of jurisdiction. Table 1. President’s FY2018 Request for Agriculture and Related Agencies Appropriations (discretionary budget authority in millions of dollars) FY2017 FY2018 Change from FY2017 to FY2018 Request Agency or Major Program P.L. 115-31 Admin. Request Title I. Agricultural Programs Departmental Administration 410.1 383.0 -27.1 -6.6% Agricultural Research Service 1,269.8 993.1 -276.7 -21.8% National Institute of Food and Agriculture 1,362.9 1,252.8 -110.1 -8.1% National Agricultural Statistics Service 171.2 185.7 +14.4 +8.4% Economic Research Service 86.8 76.7 -10.1 -11.6% Animal and Plant Health Inspection Service 949.4 812.9 -136.5 -14.4% Agricultural Marketing Service 86.2 78.6 -7.6 -8.8% Grain Inspection, Packers and Stockyards Administration 43.5 43.0 -0.5 -1.2% Food Safety and Inspection Service 1,032.1 1,038.1 +6.0 +0.6% Farm Service Agency 1,623.5 1,508.3 -115.2 -7.1% Risk Management Agency 74.8 55.0 -19.8 -26.5% Subtotal 7,110.3 6,427.1 -683.2 -9.6% FSA Farm Loan Authority 8,002.6 6,953.9 -1,048.7 -13.1% Title II. Conservation Programs Conservation Operations 864.5 766.0 -98.5 -11.4% Watershed and Flood Prevention 150.0 0.0 -150.0 -100.0% Watershed Rehabilitation Program 12.0 0.0 -12.0 -100.0% Subtotal 1,026.5 766.0 -260.5 -25.4% Title III. Rural Development Salaries and Expenses (including transfers) 675.8 624.0 -51.8 -7.7% Rural Economic Infrastructure Grants — 161.9 +161.9 — Rural Housing Service 1,654.9 1,365.3 -289.6 -17.5% Rural Business-Cooperative Service 97.7 0.0 -97.7 -100.0% Rural Utilities Service 639.9 5.4 -634.5 -99.2% Subtotal 3,068.3 2,156.6 -911.7 -29.7% Rural Development Loan Authority 37,288.9 33,477.0 -3,811.9 -10.2% Title IV. Domestic Food Programs Women, Infants, and Children (WIC) Program 6,350.0 6,150.0 -200.0 -3.1% Commodity Assistance Programs 315.1 293.6 -21.5 -6.8% Nutrition Programs Administration 170.7 148.5 -22.2 -13.0% Discretionary amounts in child nutrition, SNAP 48.0 40.9 -7.1 -14.7% Subtotal 6,883.9 6,633.1 -250.8 -3.6% Title V. Foreign Assistance Foreign Agricultural Service and other admin. 205.3 195.1 -10.2 -5.0% Food for Peace Title II 1,466.0 0.0 -1,466.0 -100.0% McGovern-Dole Food for Education 201.6 0.0 -201.6 -100.0% Subtotal 1,872.9 195.1 -1,677.8 -89.6% Title VI. Related Agencies Food and Drug Administration 2,771.2 2,536.7 -234.4 -8.5% Commodity Futures Trading Commission [250.0] 250.0a +0.0 +0.0% Subtotal [3,021.2] 2,786.7 -234.4 -7.8% Title VII. General Provisions Changes in Mandatory Program Spending -744.0 -1,154.2 -410.2 +55.1% Rescissions -854.0 -1,424.7 -570.7 +66.8% Other appropriations 266.0 0.0 -266.0 -100.0% Scorekeeping adjustments -524.0 -363.0 +161.0 -30.7% Subtotal -1,855.9 -2,941.9 -1,086.0 +58.5% Totals Discretionary: Senate basis w/o CFTC 20,877.0 15,772.5 -5,104.5 -24.5% Discretionary: House basis w/ CFTC [21,127.0] 16,022.5 -5,104.5 -24.2% Source: CRS, using P.L. 115-31, and Office of Management and Budget, President’s Budget for FY2018: Appendix, May 2017. Notes: FY0218 data are a preliminary compilation by CRS of congressional appropriations jurisdiction, based on the President’s budget. Bracketed amounts are not in the official totals due to differing House-Senate appropriations jurisdiction for the Commodity Futures Trading Commission. As an independent agency, CFTC submits its budget concurrently to Congress and the Administration. CFTC is requesting a different amount in its budget justification: $281.5 million, an increase of $31.5 million (+12.6%). See CRS Insight IN10715, When an Agency’s Budget Request Does Not Match the President’s Request: The FY2018 CFTC Request and “Budget Bypass”, by Jim Monke, Rena S. Miller, and Clinton T. Brass. Table 2. President’s Request for Mandatory Programs in Agriculture and the Farm Bill 10-year reduction FY2018-FY2027 ($ billion) Farm Bill Savings SNAP reform (including categorical eligibility, able-bodied waivers, state matching) -190.9 Crop Insurance Premium Subsidy Limit (create new $40,000 limit) -16.2 Eliminate Harvest Price Option (reduce crop insurance) -11.9 AGI Eligibility Limit (tighten the limit from $900,000 to $500,000) -1.1 Conservation programs (including reductions to Agricultural Management Assistance, Regional Conservation Partnership Program, Conservation Stewardship Program) -5.8 Eliminate other programs (including Specialty Crop Block Grants, Farmers Markets Promotion, Market Access Program, Foreign Market Development, Pima Cotton and Wool trust funds) -3.1 Subtotal of farm bill programs -229.0 Other reductions Eliminate Interest Payments to Rural Utilities (cushion of credit account) -1.4 Eliminate Rural Economic Development Program (cushion of credit account) -0.5 Create user fees Food Safety and Inspection Service (fee for inspections) -5.9 SNAP Retailer Application Fee (fee to become a retailer) -2.4 Grain Inspection, Packers, and Stockyards Admin. (licensing and standards development) -0.3 Agricultural Marketing Service (to pay for marketing orders) -0.2 Animal and Plant Health Inspection Service (animal welfare, biotechnology, veterinary biologics) -0.2 Total -239.8 Source: CRS, compiled from Office of Management and Budget, President’s Budget for FY2018: Major Savings and Reforms, and Appendix, May 2017. Other parts of the budget may propose changes to programs that were not included in the Major Savings list.

Jun 2, 2017

SAMHSA FY2018 Budget Request and Funding History: A Fact Sheet

The Substance Abuse and Mental Health Services Administration (SAMHSA), at the U.S. Department of Health and Human Services (HHS), is the lead federal agency for increasing access to behavioral health services. SAMHSA supports community-based mental health and substance abuse treatment and prevention services through formula grants to the states and U.S. territories and through competitive grant programs to states, territories, tribal organizations, local communities, and private entities. SAMHSA also engages in a range of other activities, such as technical assistance, data collection, and workforce development. SAMHSA and most of its programs and activities are authorized under Public Health Service Act (PHSA) Title V, which organizes SAMHSA in four centers: the Center for Substance Abuse Treatment (CSAT), the Center for Substance Abuse Prevention (CSAP), the Center for Mental Health Services (CMHS), and the Center for Behavioral Health Statistics and Quality (CBHSQ). Each of CSAT, CSAP, and CMHS has general statutory authority, called Programs of Regional and National Significance (PRNS), under which it administers numerous grants and other programs. PHSA Title V also authorizes a number of specific grant programs, referred to as categorical grants. SAMHSA’s two largest grant programs are separately authorized under PHSA Title XIX, Part B. The Community Mental Health Services block grant falls within CMHS. The full amount of the Substance Abuse Prevention and Treatment block grant falls within CSAT, although no less than 20% of each state’s block grant must be used for prevention. SAMHSA’s budget is organized in four categories, three of which correspond to CSAT, CSAP, and CMHS. The fourth category, “health surveillance and program support,” does not correspond directly to CBHSQ; it supports data collection, analytic support, public awareness campaigns, behavioral health workforce initiatives, and the National Registry of Evidence-based Programs and Practices (among other programs and activities). In the 114th Congress, the Helping Families in Mental Health Crisis Reform Act of 2016 (Division B of P.L. 114-255) made numerous changes to SAMHSA’s statutory authorities—reauthorizing, modifying, or codifying existing programs and activities; authorizing new programs and activities; and repealing authorities for programs and activities that had not been funded. Also in the 114th Congress, the Comprehensive Addiction and Recovery Act of 2016 (CARA, P.L. 114-198) included authorizations of appropriations for SAMHSA-administered grant programs, and Section 1003 of the 21st Century Cures Act (Division A of P.L. 114-255) authorized appropriations for grants to support state responses to opioid abuse.

Jun 2, 2017

Special Counsels, Independent Counsels, and Special Prosecutors: Options for Independent Executive Investigations

Under the Constitution, Congress has no direct role in federal law enforcement and its ability to initiate appointments of any prosecutors to address alleged wrongdoings by executive officials is limited. While Congress retains broad oversight and investigatory powers under Article I of the Constitution, criminal investigations and prosecutions have generally been viewed as a core executive function and a responsibility of the executive branch. Historically, however, because of the potential conflicts of interest that may arise when the executive branch investigates itself (e.g., the Watergate investigation), there have been calls for an independently led inquiry to determine whether officials have violated criminal law. In response, Congress and the U.S. Department of Justice (DOJ) have used both statutory and regulatory mechanisms to establish a process for such inquiries. These responses have attempted, in different ways, to balance the competing goals of independence and accountability with respect to inquiries of executive branch officials. Under the Ethics in Government Act of 1978, Congress authorized the appointment of “special prosecutors,” who later were known as “independent counsels.” Under this statutory scheme, the Attorney General could request that a specially appointed three-judge panel appoint an outside individual to investigate and prosecute alleged violations of criminal law. These individuals were vested with “full power and independent authority to exercise all investigative and prosecutorial functions and powers of the Department of Justice” with respect to matters within their jurisdiction. The independent counsel provisions included sunset provisions, but were reauthorized regularly until 1992, when Congress allowed the law to expire. Although it was again reauthorized in 1994, debate over the scope, cost, and effect of the investigations (perhaps most notably the Iran-Contra investigation and the Whitewater investigation) resulted in the law’s expiration and nonrenewal in 1999. Following the lapse of the statutory independent counsel provisions, DOJ promulgated regulations authorizing the Attorney General (or, if the Attorney General is recused from a matter, the Acting Attorney General) to appoint a “special counsel” to conduct specific investigations or prosecutions that may be deemed to present a conflict of interest if pursued under the normal procedures of the agency. Under these regulations, the Attorney General may appoint an individual from outside the federal government to investigate and prosecute criminal matters within his or her assigned jurisdiction. Two instances in which the Attorney General has invoked this authority include the investigation of the Branch Davidian incident in Waco, Texas, and the current investigation of alleged Russian interference in the 2016 election. Special counsels appointed under this authority are vested “within the scope of his or her jurisdiction, the full power and independent authority to exercise all investigative and prosecutorial functions of any United States Attorney.” Special counsels are not subject to “day-to-day supervision” by any official, but may be asked to report to the Attorney General during the course of their work. The Attorney General must “give great weight to the views of the Special Counsel” but may conclude that particular actions should not be pursued and must notify Congress accordingly if the Attorney General rejects a particular course of action. Additionally, the Attorney General maintains the authority to discipline or remove the special counsel for cause. Ultimately, under the previous statutory authorization for independent counsel appointments or under the existing regulatory authority to appoint special counsels, the Attorney General holds the sole authority to initiate the appointment for such investigations and prosecutions. However, other alternatives of investigation and oversight of actions by federal officials—whose methods are beyond the scope of this report—are available, such as inspector general investigations and congressional oversight investigations.

Jun 1, 2017

The Green Climate Fund (GCF)

Jun 1, 2017

Commercial Filming and Photography on Federal Lands

May 31, 2017

Democracy Promotion: An Objective of U.S. Foreign Assistance

Promoting democratic institutions, processes, and values has long been a U.S. foreign policy objective, though the priority given to this objective has been inconsistent. World events, competing priorities, and political change within the United States all shape the attention and resources provided to democracy promotion efforts and influence whether such efforts focus on supporting fair elections abroad, strengthening civil society, promoting rule of law and human rights, or other aspects of democracy promotion. Proponents of democracy promotion often assert that such efforts are essential to global development and U.S. security because stable democracies tend to have better economic growth and stronger protection of human rights, and are less likely to go to war with one another. Critics contend that U.S. relations with foreign countries should focus exclusively on U.S. interests and stability in the world order. U.S. interest in global stability, regardless of the democratic nature of national political systems, could discourage U.S. support for democratic transitions—the implementation of which is uncertain and may lead to more, rather than less, instability. Funding for democracy promotion assistance is deeply integrated into U.S. foreign policy institutions. More than $2 billion annually has been allocated from foreign assistance funds over the past decade for democracy promotion activities managed by the State Department, the U.S. Agency for International Development, the National Endowment for Democracy, and other entities. Programs promoting good governance (characterized by participation, transparency, accountability, effectiveness, and equity), rule of law, and promotion of human rights have typically received the largest share of this funding in contrast to lower funding to promote electoral processes and political competition. In recent years, increasing restrictions imposed by some foreign governments on civil society organizations have resulted in an increased emphasis in democracy promotion assistance for strengthening civil society. Despite bipartisan support for the general concept of democracy promotion, policy debates in the 115th Congress continue to question the consistency, effectiveness, and appropriateness of such foreign assistance. With the Trump Administration indicating that democracy and human rights might not be a top foreign policy priority, advocates in Congress may be challenged to find common ground with the Administration on this issue. As part of its budget and oversight responsibilities, the 115th Congress may consider the impact of the Trump Administration’s requested FY2018 foreign assistance spending cuts on U.S. democracy promotion assistance, review the effectiveness of democracy promotion activities, evaluate the various channels available for democracy promotion, and consider where democracy promotion ranks among a wide range of foreign policy and budget priorities.

May 31, 2017

Banking Policy Issues in the 115th Congress

The financial crisis and the ensuing legislative and regulatory responses greatly affected the banking industry. Many new regulations—mandated or authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) or promulgated under the authority of bank regulators—have been implemented in recent years. In addition, economic and technological trends continue to affect banks. As a result, Congress is faced with many issues related to the bank industry, including issues concerning prudential regulation, consumer protection, “too big to fail” (TBTF) banks, community banks, regulatory agency design and independence, and market and economic trends. For example, the Financial CHOICE Act (H.R. 10) proposes comprehensive reform to the financial regulatory system, and includes provisions related to many of these banking issues. Prudential Regulation. This type of regulation is designed to ensure banks are safely profitable and unlikely to fail. Regulatory ratio requirements agreed to in the international agreement known as the Basel III Accords and the Volcker Rule are examples. Ratio requirements require banks to hold a certain amount of capital on their balance sheets to better enable them to avoid failure. The Volcker Rule prohibits certain trading activities and affiliations at banks. Proponents argue the rules appropriately balance the need for safety and soundness with regulatory burden. Opponents argue that current rules are overly complex, unduly burdensome, and difficult to enforce. Consumer Protection. Certain laws and regulations protect consumers from unfair, deceptive, or abusive acts and practices. Regulations promulgated by the Consumer Financial Protection Bureau (CFPB) and the Durbin Amendment—which directs regulators to restrict interchange fees charged to merchants—are contentious issues in this area. Observers disagree over whether CFPB regulations appropriately balance the benefit of protecting consumers and the potential costs of unnecessarily burdening banks and restricting credit availability. Observers also disagree over whether the Durbin Amendment corrects monopolistic pricing by issuing banks and network providers, or instead creates market distortions by interfering with market pricing. “Too Big To Fail” Banks. Regulators also regulate for systemic risks, such as those associated with TBTF financial institutions that may contribute to systemic instability. Dodd-Frank Act provisions include enhanced prudential regulation for TBTF banks and changes to resolution processes in the event one failed. Proponents of these changes assert they will eliminate or reduce excessive risk-taking at, and bailouts for, these large banks. Opponents assert that market forces and bankruptcy law are more effective and less distortionary than the new regulations and resolution authorities. Community Banks. The number of relatively small and simple banks has declined substantially in recent decades. Some analysts assert market forces and removal of regulatory barriers to interstate branching and banking are having a large effect, given that small banks are exempt from many recent regulations and have been consolidating for decades. Others assert small institutions have limited resources and are being unnecessarily burdened by regulation, especially because such banks are unlikely to contribute to systemic risk. Regulatory Agency Design and Independence. How regulatory agencies are structured and promulgate rules are also issues. Some assert that financial agencies’ relatively high degree of independence from the President and Congress results in too little accountability in rulemaking; thus, their leadership structures, funding, and rulemaking procedures should be altered. Opponents of such measures maintain that financial regulator independence should be maintained because it allows regulations to be promulgated by technical experts with some insulation from political considerations. Recent Market and Economic Trends. Changing economic forces may also pose issues to the banking industry. Increases in regulation could drive certain financial activities into a relatively lightly regulated “shadow banking” sector. Innovative financial technology may alter the way certain financial services are delivered. Interest rates are likely to begin rising soon after a long period of low rates, which could present risks to banks. Competition and regulatory differences between banks and nonbanks with different charter types is an ongoing issue.

May 26, 2017

DOE Office of Energy Efficiency and Renewable Energy: FY2017 Appropriations and the FY2018 Budget Request

May 25, 2017

Overseas Private Investment Corporation (OPIC)

May 24, 2017

21st Century U.S. Energy Sources: A Primer

Since the start of the 21st century, the U.S. energy system has seen tremendous changes. Technological advances in energy production have driven changes in energy consumption, and the United States has moved from being a growing net importer of most forms of energy to a declining importer—and possibly a net exporter in the near future. The United States remains the second largest consumer of energy in the world, behind China. The U.S. oil and natural gas industry has gone through a “renaissance” of production. Technological improvements in hydraulic fracturing and horizontal drilling have unlocked enormous oil and natural gas resources from tight formations, such as shale. Oil has reached a level of production not seen in decades, and is projected to surpass the previous peaks of the early 1970s. Natural gas has set new production records almost every year since 2000. In conjunction with the rise in oil and natural gas production, U.S. production of natural gas liquids has also increased. The rise in production of these fuel sources has also corresponded with increased consumption and exports of each. The rise in U.S. oil and natural gas production has taken place mostly onshore and on nonfederal lands. Nonfederal crude oil production nearly doubled over the past decade. While production on federal land has increased, it has not grown as fast as nonfederal oil production, causing the federal share of total U.S. crude oil production to fall from its peak of nearly 36% in 2009 to about 22% in 2015 (the latest data available). U.S natural gas production shifted even more dramatically, with total U.S. production nearly doubling since 2006, while production on federal lands declined by almost 26% over the same time period. The federal share decreased from 28% in 2006 to 15% in 2015. The electric power industry is in the process of transformation, especially with natural gas becoming the main electric generation fuel in 2016 and the growth in renewable forms of energy. The electricity infrastructure of the United States is aging. Uncertainty exists about how to modernize the grid and what technologies and fuels will be used to produce electricity in the future. Unresolved questions about transmission and reliability of the grid are arising due to potential cybersecurity threats and continuing interest in renewable energy and other low carbon sources of electricity. Concerns about reliability and electricity prices are complicated by environmental regulations and the rising availability of natural gas for electric power production. While renewable energy is currently a relatively small portion of the total U.S. energy sector, renewables production and consumption have increased since the turn of this century. As a source of total primary energy, renewable energy increased 97% between 2001 and 2016. Unlike some other energy commodities (e.g., crude oil), renewable energy is available in a variety of distinct forms that use different conversion technologies to produce usable energy products (e.g., electricity, heat, and liquid fuels). Therefore, it is important to distinguish between renewable fuel sources and uses. The United States has the largest coal resources in the world. Coal is used primarily for electricity generation. Although its prices have stayed low, coal has faced increasing competition from natural gas and renewables. U.S. consumption peaked in 2007 and has since declined by 35%. Meanwhile, nuclear output has stayed flat during the time period, but has faced significant stress as a future source of electric power generation. Energy production and consumption have been issues of interest to Congress for decades. Current topics of concern to Congress include exports, imports, independence, security, infrastructure, efficiency, the environment, and geopolitics. Legislation has been introduced in both houses of Congress to address these issues and others.

May 19, 2017

North American Free Trade Agreement: Notification for Renegotiation

On May 18, 2017, the Trump Administration sent a 90-day notification to Congress of its intent to begin talks with Canada and Mexico to renegotiate the North American Free Trade Agreement (NAFTA) (see CRS In Focus IF10047, North American Free Trade Agreement (NAFTA)). Under U.S. Trade Promotion Authority (TPA) (P.L. 114-26), the President must consult with Congress before giving the required 90-day notice of his intention to start negotiations (see CRS In Focus IF10297, TPP-Trade Promotion Authority (TPA) Timeline). Newly confirmed U.S. Trade Representative (USTR), Ambassador Robert Lighthizer, met with the Members of the House Ways and Means Committee and Senate Finance Committee on May 16 and 17, respectively. Ambassador Lighthizer also met with Members of the House and Senate Advisory Groups on Negotiations on trade negotiations. These groups were created by TPA to provide additional opportunities for consultation with the committees of jurisdiction, as well as other committees with jurisdiction over potential subject matter in the trade agreement. Following the 90-day notice, and at least 30 days prior to the start of negotiations, USTR is to publish "a detailed and comprehensive summary of the specific objectives with respect to the negotiations, and a description of how the agreement, if successfully concluded, will further those objectives and benefit the United States." Based on the May 18 notification date, negotiations could start on August 16, 2017, at the earliest. Letter of Notification The letter of notification from USTR Lighthizer states that the United States aims “to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under NAFTA.” The letter notes that because NAFTA was negotiated 25 years ago, some chapters are outdated and do not reflect modern standards. For this reason, it states, the Administration’s aim is to “modernize” NAFTA by updating provisions on intellectual property rights (IPR), regulatory practices, state-owned enterprises, digital trade, services, customs procedures, sanitary and phytosanitary measures, labor, environment and small and medium enterprises. The Administration states that it intends to work closely with Congress as it reviews elements of NAFTA and renegotiates changes, where appropriate, in a timely manner and with ”substantive results.” Some Members of Congress have expressed support for opening trade talks with NAFTA partners and believe that NAFTA will benefit from “strengthening and modernization,” but also contend that any efforts to abandon the main provisions of the agreement or impose burdensome restrictions with NAFTA partners “will have devastating economic consequences.” Others have stated that any renegotiation should include new provisions that support U.S. manufacturing jobs, improve worker rights protection, and support increased transparency during the negotiations. “Modernizing” NAFTA Key NAFTA provisions include market opening measures, IPR protection, investment provisions that removed significant foreign investment barriers in Mexico and ensured basic protections for NAFTA investors, as well as labor and environmental provisions. A modernization of NAFTA could include updated provisions, possibly similar to those in the proposed Trans-Pacific Partnership (TPP) agreement (see CRS In Focus IF10000, TPP: Overview and Current Status). For example, NAFTA could be changed to include a chapter on digital trade (see CRS In Focus IF10390, TPP: Digital Trade Provisions). The role of the Internet in international commerce has expanded dramatically since NAFTA's implementation over 20 years ago. While technological advancements have fundamentally changed how firms trade and do business across international borders, some companies argue that new barriers have also emerged, which existing trade rules fail to address. Other modifications could include the incorporation of updated dispute settlement provisions found in more recent U.S. FTAs and new rules of origin requirements. Another possible area for modernization relates to labor and environmental provisions. In labor issues, NAFTA marked the first time that worker rights provisions were associated with an FTA. The TPP, from which the United States dropped out, includes stronger provisions in which parties must adopt, enforce, and not derogate from laws incorporating internationally recognized principles for the protection of worker rights, in a manner affecting trade and investment. It also contained stronger provisions on environmental protection, including adherence to certain environmental accords. NAFTA only includes provisions for parties to enforce their own labor or environmental laws. Other Issues Likely to be Raised In regard to Canada, some discussions may involve dairy, softwood lumber or Buy American provisions. Canada administers a restrictive supply management system for dairy, poultry, and eggs, a program that was specifically excluded from NAFTA. U.S. dairy producers may seek greater market access into Canada. Possible negotiations could also address trade in softwood lumber (see CRS Report R42789, Softwood Lumber Imports from Canada: Current Issues). U.S. lumber producers claim they are at an unfair competitive disadvantage in the domestic market against Canadian lumber producers because of Canada's timber pricing policies. Another issue relates to Buy American policies in the United States. While Canadian firms are able to bid on a wide range of U.S. federal procurements through commitments made under NAFTA, they are excluded from "pass-through" procurements—state-tendered contracts using federal funds. Canada has been dissatisfied with application of these policies, while the United States may seek greater restrictions on the ability of Canadian and Mexican firms to access the U.S. procurement market. Mexican government officials have expressed interest in modernizing NAFTA, while maintaining that the strong regional supply chains that were enhanced through NAFTA should not be disrupted. Mexico’s lead trade negotiator, on numerous occasions, has stated that Mexico would not consider any introduction of tariffs or quotas in the talks, and that it would walk away from the table if that were to happen. Mexican officials have also hinted that they may seek to broaden NAFTA negotiations to include bilateral or trilateral cooperation on various issues, including trade facilitation and security. Mexico is actively engaging in talks with other countries to decrease its reliance on the United States as a trading partner and is seeking to import more agricultural products from South America instead of the United States. It is possible that a renegotiation of NAFTA may address trucking provisions. The implementation of NAFTA trucking provisions arose as a major trade issue between the United States and Mexico in 2000 because the United States, due to safety concerns about Mexican trucks, delayed its trucking commitments. The two countries engaged in numerous talks regarding safety and operational issues. By 2015, the trucking issue had been resolved. The International Brotherhood of Teamsters subsequently filed a lawsuit over the implementation of the trucking provisions and may seek to revise NAFTA's trucking provisions under a potential renegotiation.

May 19, 2017

The 2006 U.S.-Canada Softwood Lumber Trade Agreement (SLA): In Brief

Softwood lumber imports from Canada have been a persistent concern to Congress for decades. Canada is an important trading partner, but lumber production is a significant industry in many states, and the U.S. lumber producers are a powerful economic influence. U.S. lumber producers claim that they are at an unfair competitive disadvantage in the domestic market against Canadian lumber producers because of Canada’s timber pricing policies. This has resulted in five major disputes (so-called “lumber wars”) between the United States and Canada since the 1980s. Tension between the United States and Canada over the softwood lumber trade has been persistent. Both countries have extensive forest resources, but they have different population levels and development pressures. Vast stretches of Canada are still largely undeveloped, while relatively fewer areas in the United States (outside Alaska) remain undeveloped. These differences, among others, have contributed to different forest management policies between the two countries. For decades, U.S. lumber producers have argued that they have been injured by subsidies to their Canadian competitors. U.S. producers have attributed Canadian subsidies to lost market share and lost revenue. In the United States, the majority of the timberlands are privately owned; private markets dominate the allocation and pricing of timber, although federally-owned forests are regionally important. In Canada, forests are largely owned by the provincial governments and leased to private firms. The provinces establish the price of timber through a stumpage fee, a per unit volume fee charged for the right to harvest trees. U.S. lumber producers argue that the stumpage fees charged by the Canadian provinces are subsidized, or priced at less than their market value, providing an unfair competitive advantage in supplying the U.S. lumber market. Directly comparing Canadian and U.S. lumber prices is difficult and often inconclusive, due to major differences in tree species, sizes, and grades; measurement systems; requirements for harvesters; environmental protection; and other factors. [To be suppressed.]

May 18, 2017

The Value of Energy Tax Incentives for Different Types of Energy Resources: In Brief

The U.S. tax code supports the energy sector by providing a number of targeted tax incentives, or tax incentives only available for the energy industry. As Congress evaluates the tax code and contemplates tax reform, there has been interest in understanding how energy tax benefits are distributed across different domestic energy resources. For example, what percentage of energy-related tax benefits support fossil fuels (or support renewables)? How much domestic energy is produced using fossil fuels (or produced using renewables)? And how do these figures compare? In 2016, the value of federal tax-related support for the energy sector was estimated to be $18.2 billion. Of this, $5.2 billion (28.6%) can be attributed to tax incentives supporting fossil fuels. Tax-related support for renewables was an estimated $11.4 billion in 2016 (or 62.6% of total tax-related support for energy). The remaining tax-related support went toward nuclear energy, efficiency measures, and alternative technology vehicles. While the cost of tax incentives for renewables has exceeded the cost of incentives for fossil fuels in recent years, the majority of energy produced in the United States continues to be derived from fossil fuels. In 2016, fossil fuels accounted for 77.9% of U.S. primary energy production. The remaining primary energy production is attributable to renewable energy and nuclear electric resources, with shares of 12.1% and 10.0%, respectively. The balance of energy-related tax incentives has changed over time, and it is projected to continue to change, under current law, in coming years. Factors that have contributed to recent changes in the balance of energy-related tax incentives include the following: Increased tax expenditures for solar and wind. Tax expenditures associated with the energy credit for solar and the production tax credit for wind have increased substantially in recent years. Following the long-term extensions of these temporary tax benefits provided in the Consolidated Appropriations Act, 2016 (P.L. 114-113), tax expenditures for the solar energy credit are projected to remain stable, while wind production tax credit tax expenditures are projected to increase, through 2020. The expiration of tax-related support for renewable fuels. Tax-related support for renewable fuels declined substantially after the tax credits for alcohol fuels were allowed to expire at the end of 2011. Other fuels-related incentives also expired at the end of 2016 (although these may be extended as part of the “tax extenders”). Expired tax incentives for energy efficiency. Several other incentives for energy efficiency have expired (again, these may be extended as part of the tax extenders). Since tax-related support for fossil fuels is expected to remain roughly constant under current law, the expiration of efficiency-related incentives means the share of tax incentives for efficiency is expected to decline. One starting point for evaluating energy tax policy may be a calculation of subsidy relative to production level. However, a complete policy analysis might consider why the level of federal financial support differs across various energy technologies. Tax incentives for energy may support various environmental or economic objectives. For example, tax incentives designed to reduce reliance on imported petroleum may be consistent with energy security goals. Tax incentives that promote renewable energy resources may be consistent with certain environmental objectives.

May 18, 2017

Buying American: Protecting U.S. Manufacturing Through the Berry and Kissell Amendments

The Berry and Kissell Amendments are two separate but closely related laws requiring that certain goods purchased by national security agencies be produced in the United States. The Berry Amendment (10 U.S.C. §2533a) is the popular name for a law requiring textiles, clothing, food, and hand or measuring tools purchased by the Department of Defense (DOD) to be grown, reprocessed, reused, or produced wholly in the United States. Congress over the decades has varied the list of products covered by the law. Under the Kissell Amendment (6 U.S.C. §453b), textile, apparel, and footwear products purchased by certain Department of Homeland Security (DHS) agencies—namely, the Transportation Security Administration (TSA) and the U.S. Coast Guard—must be manufactured in the United States with 100% U.S. inputs. The Berry and Kissell Amendments have created niche markets for domestic producers. DOD’s Defense Logistics Agency purchased about $2.4 billion of Berry-applicable products in FY2016. DOD’s annual Berry Act purchases equal approximately 2% of domestic textile and apparel shipments and around 1% of domestic production of footwear, food, and hand or measuring tools. Annual purchases of textiles, clothing, and shoes by the TSA and the Coast Guard pursuant to the Kissell Amendment are approximately $30 million. Proponents of the Berry and Kissell Amendments assert the laws serve to keep certain U.S. production lines operating, provide jobs to American factory workers, and shield the U.S. military from dependence on foreign sources for critical items that could lead to supply problems during times of war or military mobilization. Critics of the amendments point out the laws may undercut free-market competition and can result in higher costs to DOD and DHS because they must pay more for protected products than the free market requires. They also argue the laws are inconsistent with modern practices in manufacturing, which often rely on supply chains that source components and raw materials from multiple countries. Another concern is that these requirements can potentially provoke retaliation and harm foreign sales. In recent Congresses, legislative action has centered on the scope of the Berry and Kissell Amendments. For example, in the 2017 National Defense Authorization Act (NDAA), Congress extended the Berry Amendment to athletic footwear, ending a voucher program that had allowed new recruits to purchase foreign-made running shoes. Beginning on October 1, 2018, DOD is scheduled to provide 100% U.S.-made running shoes to recruits. In the 115th Congress, H.R. 1811 has been introduced to widen the scope of the Kissell Amendment to all DHS agencies. A related issue for Congress is the use of prison labor to manufacture Berry-compliant apparel by DOD. A mandatory source provision in law gives an advantage to prison factories if they can provide the desired product within the required time frame at a competitive price. In the 114th Congress, the Federal Prison Industries Competition in Contracting Act of 2015 (H.R. 1699) would have eliminated Federal Prison Industries’ no-bid contract status. Requirements for obtaining waivers are another congressional concern. The Government Accountability Office (GAO) is currently auditing DHS’s compliance with the Kissell Amendment. The audit is expected to be finished in summer 2017. Congress is also considering the effectiveness of the laws. To address this issue, the Bureau of Industry and Security (BIS) at the U.S. Department of Commerce (DOC) is conducting an assessment of the defense industrial base for textiles, apparel, and footwear, which will include a review of the usefulness of the Berry and Kissell Amendments. That review is scheduled to be released in 2017.

May 18, 2017

A Little Old, a Little New: The Cybersecurity Executive Order

The President signed Executive Order 13800 (EO) on May 11, 2017, titled “Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure.” Combined with the President’s budget blueprint and recent EO establishing the American Technology Council, these documents lay out the Administration’s policy agenda concerning national cybersecurity—which to date focuses on improving federal information technology (IT) systems. The proposals contained in the EO echo proposals from the previous Administration and recent legislative activity. Federal Network Cybersecurity The new EO reiterates policy established in the Federal Information Security Management Act (FISMA) that agency heads are responsible for managing risks to IT at their agencies. However, it goes further and establishes policy that the executive branch will manage cybersecurity risks as a single entity as a matter of national security. The EO directs agencies to use the “Framework for Improving Critical Infrastructure Cybersecurity,” otherwise known as the National Institute of Standards and Technology (NIST) Cybersecurity Framework (Framework), to manage the agencies’ cybersecurity risks. The previous Administration did not explicitly direct agencies to follow the Framework, but used it to develop the metrics that CIOs and inspectors general continue to use to assess their agencies’ progress in securing IT. NIST published a draft report shortly after the release of the EO to assist agencies in implementing the EO and applying the Framework to their systems. The Framework also identifies NIST Special Publications that federal agencies use to inform the security of their networks as references for the private sector to use in developing their cybersecurity risk management procedures. To address agency cybersecurity as a national security issue, the EO directs agencies to evaluate risks to their systems (to include budgetary and system vulnerabilities) and report them to the Department of Homeland Security (DHS) and the Office of Management and Budget (OMB). DHS and OMB in turn are directed to work with agencies to identify insufficiencies and develop a plan to mitigate cybersecurity risks to the federal enterprise as a whole. The EO does not discuss whether or not DHS’s authority to issue binding operational directives to other agencies should be considered as part of that plan. Concerning IT modernization, the EO directs agency heads to procure shared services and the American Technology Council to report on considerations relevant to IT consolidation such as technical concerns and costs of moving to the cloud. These efforts are similar to the previous Administration’s “cloud first” policy and the “Modernizing Government Technology Act of 2017” (MGT Act, H.R. 2227), recently passed by the House. Critical Infrastructure Cybersecurity The EO builds upon the previous administration’s work towards critical infrastructure security and resilience in Presidential Policy Directive 21 (PPD-21) and EO 13636. Section 9 of EO 13636 directed DHS to identify critical infrastructure entities where a cybersecurity incident could result in a catastrophic impact, which DHS defines as billions of dollars in damages, thousands of fatalities, or a degradation of national security. EO 13636 prioritized expedited security clearances for these critical infrastructure entities. The EO required agencies to identify new ways for the government to support these entities. The number of entities identified as part of the Section 9 designation is expected to increase regardless of government action, because new investments in infrastructure and growth in the interconnectedness of that infrastructure will increase dependency. EO 13800 builds upon recommendations from the Commission on Enhancing Nation Cybersecurity and think tank recommendations on transparency in critical infrastructure cybersecurity risk management so that stakeholders may better understand risks. It also builds upon the FAST Act (P.L. 114-94) authorities and requires the government to plan for cyber incidents involving the energy sector. The government has developed plans for incident coordination and supply chain impacts which could assist in meeting this requirement. The EO additionally requires a review of cybersecurity risks to defense, which was partially required in the 2017 National Defense Authorization Act (NDAA, P.L. 114-328) and required as part of the National Infrastructure Protection Plan sector specific plans. EO 13800 newly requires the government to collaborate with public and private sector stakeholders in a process to identify ways to reduce threats caused by botnets and to encourage voluntary action by the private sector to both improve the resilience of the Internet and mitigate botnet attacks. National Cybersecurity The EO states that the policy of the Executive branch is to “promote an open, interoperable, reliable, and secure Internet ... while respecting privacy and guarding against disruption, fraud and theft.” It also recognizes the public and private sector workforce as vital to achieving the policy goal. The National Cybersecurity Enhancement Act directs NIST to coordinate cybersecurity awareness and education and to evaluate future cybersecurity workforce needs for both the public and private sector, including recruitment and retention issues. The EO reiterates these responsibilities and seeks further government collaboration on these efforts. There are additional requirements for national cybersecurity. The EO recognizes U.S. dependency on a global Internet and requires the identification of priorities and engagement strategies which may build upon a recent Department of State international strategy, as required by the Cybersecurity Act of 2015. The 2017 NDAA requires a report on deterring adversaries in cyberspace and the EO requires a similar report. The EO requires the government to examine the cybersecurity workforce developments of other countries with a focus on those which may affect the U.S.’s competitiveness, and to examine national-security-related cyber capabilities. Although not focused on national security capabilities, recent government strategies and plans concerning research and development have addressed some of these capabilities. Deliverables Table 1 outlines the deliverables included in the EO. The reports may be classified in full or in part, and required to be made available to the President. However, aside from one exception, noted below, none of the reports is required to be made available to the public or Congress. Table 1. Table of Deliverables from Cybersecurity Executive Order 13800 Deliverable Due Date Agencies Notes Report on International Priorities June 25, 2017 DOS, Treasury, DOD, DHS DOJ, FBI Report on Findings from a Review of Foreign Cybersecurity Workforce Practices July 10, 2017 DOC, DHS, DOD, DOL, Ed, OPM This review will focus on practices that will likely affect the U.S.’s long-term cybersecurity competiveness. Report on Agency Risk Management and Mitigation August 9, 2017 Individual agencies Individual agency reports to DHS and OMB. Report on Modernizing Federal IT August 9, 2017 American Technology Council, NIST This report is to include recommendations to transitioning to shared services, such as cloud computing. Report on Marketplace Transparency August 9, 2017 DHS, DOC Assessment of Cyber Incident Response to the Electric Sector August 9, 2017 DOE, DHS, DNI, state and local governments Report on Cybersecurity Risks to the Defense Industrial Base August 9, 2017 DOD, DHS, FBI, DNI Report on Cybersecurity Deterrence Options August 9, 2017 DOS, Treasury, DOD, DOJ, DOC, DHS, U.S. Trade Representative, DNI Report on Engagement Strategy for International Cooperation September 23, 2017 DOS, Treasury, DOD, DOC, DHS, DOJ, FBI, Report on Federal Risk Management and Mitigation October 8, 2017 OMB, DHS, DOC, GSA Report on Modernizing National Security Systems October 8, 2017 DOD, DNI Report on Growing and Sustaining the Cybersecurity Workforce of the Public and Private Sectors October 8, 2017 DOC, DHS, DOD, DOL, Ed, OPM Report on Strategies to Improve National-Security-Related Cyber Capabilities October 8, 2017 DOD, DOC, DHS, DNI Report on Support Critical Infrastructure at Greatest Risk November 7, 2017 DHS, DOD, DOJ, DNI, FBI, sector-specific agency heads Preliminary Report on Efforts to Reduce Botnet Threats January 6, 2018 DOC, DHS, DOD, DOJ, FBI, sector-specific agency heads, FCC, FTC, stakeholders This report shall be made publicly available. Final Report on Efforts to Reduce Botnet Threats May 11, 2018 DOC, DHS Final version of the report is to the President. Source: CRS analysis of The White House, “Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure,” executive order, May 11, 2017, at https://www.whitehouse.gov/the-press-office/2017/05/11/presidential-executive-order-strengthening-cybersecurity-federal. Note: The lead agencies for the deliverables are italicized.

May 18, 2017

Challenges in Cybersecurity Education and Workforce Development

May 16, 2017

Understanding Process Labels and Certification for Foods

May 12, 2017

The Changing Geopolitics of Asia: Issues for Congress

May 12, 2017

The Growing Gap in Life Expectancy by Income: Recent Evidence and Implications for the Social Security Retirement Age

Life expectancy is a population-level measure that refers to the average number of years an individual will live. Although life expectancy has generally been increasing over time in the United States, researchers have long documented that it is lower for individuals with lower socioeconomic status (SES) compared with individuals with higher SES. Recent studies provide evidence that this gap has widened in recent decades. For example, a 2015 study by the National Academy of Sciences (NAS) found that for men born in 1930, individuals in the highest income quintile (top 20%) could expect to live 5.1 years longer at age 50 than men in the lowest income quintile. This gap has increased significantly over time. Among men born in 1960, those in the top income quintile could expect to live 12.7 years longer than men in the bottom income quintile. This NAS study finds similar patterns for women: the life expectancy gap between the bottom and top income quintiles of women expanded from 3.9 years for the 1930 birth cohort to 13.6 years for the 1960 birth cohort. Gains in life expectancy are generally heralded as good news by lawmakers and others, signifying improved well-being in the population. Yet widening differentials in life expectancy are more troubling. Congress may be interested in recent research on this topic for many reasons, including the implications for Social Security benefits as well as Social Security reform proposals. Social Security provides monthly benefits to retired and disabled workers and their dependents, and to dependents of deceased workers. A key goal of the Social Security program is redistribution of income from the high earner to the low earner by way of a progressive benefit formula. Widening gaps in life spans by SES pose a challenge to meeting this goal. When Social Security benefits are measured on a lifetime basis, low earners, who show little to no gains in life expectancy over time, are projected to receive increasingly lower benefits than those with high earnings. For instance, in the 2015 NAS study, men in the lowest earnings quintile saw little or no improvement in the value of their lifetime Social Security retirement benefits between the 1930 and 1960 birth cohorts (roughly $125,000 in 2009 dollars in lifetime benefits for both birth cohorts). Due to gains in life expectancy for higher earners, however, men in the highest earnings quintile born in 1930 had lifetime Social Security benefits of $229,000, and men in the highest earnings quintile born in 1960 had estimated lifetime benefits of $295,000. Thus, according to this 2015 NAS analysis, differential gains in life expectancy increased the disparity in the lifetime value of Social Security retirement benefits between the top and bottom earnings quintiles by about $70,000 (in 2009 dollars) for the later birth cohort. In response to rising life expectancy, some commonly discussed Social Security reform proposals involve increasing the retirement age. Yet these proposals would affect low earners disproportionately (i.e., reductions in their lifetime Social Security benefits would be considerably larger than for high earners). Congress may be interested in policy proposals that mitigate the uneven effects of increasing the retirement age and protect the interests of lower-earning, shorter-lived workers. This report provides a brief overview of the concept of life expectancy, how it is measured, and how it has changed over time in the United States. While life expectancy may be studied in a variety of contexts, this report focuses on the link between life expectancy and SES, as measured by lifetime income. In particular, this report synthesizes recent research on (1) the life expectancy gap by income and (2) the relationship between this gap and Social Security benefits. Finally, this report discusses the implications of this research for one type of Social Security reform proposal: increasing the Social Security retirement age.

May 12, 2017

Administration of the William D. Ford Federal Direct Loan Program

The William D. Ford Federal Direct Loan (Direct Loan) program, authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA), is the primary federal student loan program. It makes available loans to undergraduate and graduate students and the parents of dependent undergraduate students to help them finance postsecondary education expenses. As of the end of FY2016, there was approximately $949.1 billion in outstanding Direct Loan program loans. Direct Loan program administrative expenses totaled approximately $771 million in FY2016. Under the Direct Loan program, the federal government essentially serves as the banker by providing loans to students and their families using federal capital and assuming the risk of loss against borrower default. In addition, the federal government, via the U.S. Department of Education’s Office of Federal Student Aid (FSA), manages the outstanding loan portfolio and is responsible for the program’s administration. FSA is primarily responsible for developing the administrative functions and processes and performing oversight activities for the Direct Loan program to enable its day-to-day operation. Additional parties, including institutions of higher education (IHEs), contracted loan servicers, and contracted private collection agencies (PCAs), perform many of the routine administrative tasks for the program. The first step in administering a Direct Loan is processing a student’s Free Application for Federal Student Aid (FAFSA). After a student has completed his or her FAFSA, FSA’s automated systems process the application and make an initial determination regarding a student’s eligibility for federal student aid. IHEs then receive the processed information and take a variety of steps to award financial aid, including Direct Loans, to the student. Steps taken by the IHE at this point include packaging available aid for the student, originating and disbursing any Direct Loans the student is eligible for and has accepted, and managing Direct Loan program funds available to the institution. After a borrower’s Direct Loan is disbursed, the loan is then assigned to one of multiple loan servicers with which FSA has contracted. Functions performed by loan servicers vary depending on the loan’s status (e.g., repayment, grace period) and individual borrower circumstances; however, there are several tasks loan servicers typically perform. These include providing information to borrowers on loan terms and conditions, collecting and applying loan payments to outstanding balances, processing requests for loan deferment or forbearance, processing applications to consolidate federal student loans into a Direct Consolidation Loan, and providing delinquency and default prevention activities. If a borrower defaults after entering repayment on a Direct Loan, then a variety of actions may be taken to attempt to reinstate the loan into good standing and recover payment on it. Loan servicers provide initial outreach to defaulted borrowers and attempt to enter into repayment or rehabilitation agreements with them. If the loan servicer is unsuccessful, a borrower’s defaulted loan is transferred to FSA and then may also be transferred to one of multiple PCAs with which FSA has contracted. FSA and PCAs will attempt to enter into voluntary repayment agreements with borrowers; however, a variety of other debt collection tools may also be used if these attempts are unsuccessful. For instance, a borrower may be determined eligible for administrative wage garnishment or income tax offset. If a borrower successfully brings his or her loan into good standing, the account is transferred back to a loan servicer, which will continue to service it.

May 11, 2017

Insurance and the Financial CHOICE Act (H.R.10)

The Financial CHOICE Act of 2017 (H.R. 10) was ordered reported by the House Committee on Financial Services on May 4, 2017. Among many other provisions, H.R. 10 would revamp many of the insurance provisions in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203). Background on Insurance Regulation The federal role in regulating insurance is relatively limited compared with the role in banking and securities. Insurance companies, unlike banks and securities firms, have been chartered and regulated solely by the states for the past 150 years. The current state-centric system was confirmed by Congress in the 1945 McCarran-Ferguson Act (15 U.S.C. §1011 et seq.) specifically preserving the states’ authority to regulate and tax insurance and also granting a federal antitrust exemption to the insurance industry for “the business of insurance.” There are no federal insurance regulators akin to those for securities or banks, such as the Securities and Exchange Commission (SEC) or the Office of the Comptroller of the Currency (OCC), respectively. Each state government has a department or other entity charged with licensing and regulating insurance companies and those individuals and companies selling insurance products. States regulate the solvency of the companies and the content of insurance products as well as the market conduct of companies. Although each state sets its own laws and regulations for insurance, the National Association of Insurance Commissioners (NAIC) acts as a coordinating body that sets national standards through model laws and regulations. NAIC-adopted models, however, must be enacted by the states before having legal effect, which can be a lengthy and uncertain process. The states have also developed a coordinated system for insurer resolution, including guaranty funds designed to protect policyholders in the event of insurer insolvency. Dodd-Frank Insurance Provisions The Dodd-Frank Act significantly altered the overall financial regulatory structure in the United States, but it largely left the state-centered insurance regulatory structure intact. The areas where the act did affect insurance regulation include potential designation of an insurer for enhanced prudential supervision by the Federal Reserve if an insurer’s material distress could pose a threat to U.S. financial stability (popularly known as “systemically important financial institution” or SIFI designation). The new Financial Stability Oversight Council (FSOC), a council of regulators headed by the Treasury Secretary and including a presidentially-appointed independent insurance expert, is empowered to make SIFI designations. Currently, two insurers are designated (AIG and Prudential) and a third (MetLife) had its designation overturned by a court decision under appeal; potential resolution of an insurer by the Federal Deposit Insurance Corporation (FDIC) under the Dodd-Frank Orderly Liquidation Authority (OLA). Under Dodd-Frank Section 203, nonbank financial companies may be subject to resolution by the FDIC if resolution under the Bankruptcy Code is deemed to pose a systemic risk, a process separate from the FSOC SIFI designation. Application of this authority to insurers, however, would only occur if the state regulators did not act first under the state resolution system; creation of a new Federal Insurance Office (FIO) within the Department of the Treasury. FIO has a variety of authorities, including monitoring the insurance industry and negotiating (along with the U.S. Trade Representative) international covered agreements on insurance prudential matters; oversight of bank and thrift holding companies, including companies with insurance subsidiaries, was consolidated in the Federal Reserve; and streamlining of the states’ oversight of surplus lines insurance and reinsurance. Insurance and H.R. 10 H.R. 10 would amend the Dodd-Frank provisions relating to FIO, FSOC, and OLA, it would not amend the sections relating to Federal Reserve oversight of bank and thrift holding companies with insurance subsidiaries, nor the sections relating to surplus lines and reinsurance. Creation of the Office of Insurance Advocate (Title XI of H.R. 10) H.R. 10 would repeal the Dodd-Frank Title V provisions creating the Federal Insurance Office and replace it with a new Office of Independent Insurance Advocate. The new office would be similar to the FIO, but with some notable differences: Independence. Both FIO and the new office are within the Treasury, but the Office of Independent Insurance Advocate would be established as an independent bureau with the authority to submit a separate budget request. The Advocate would be appointed by the President and confirmed by the Senate rather than being a civil service appointee. While being subject to general direction by the Treasury Secretary, the Secretary would not be able to delay or prevent the promulgation or rules by the Advocate, nor intervene in matters or proceedings before the Advocate. FSOC Membership. The head of FIO is currently an FSOC non-voting member, whereas the separate independent insurance expert is appointed by the President to serve as a voting member. H.R. 10 would essentially merge these roles, making the Advocate a voting member and removing the independent insurance expert position. Office Authority. To perform its function of monitoring the insurance industry, FIO is authorized to issue subpoenas requiring information from insurers. H.R. 10 tasks the Advocate with “observing” the industry and the Advocate is to rely on publicly available information without subpoena authority. Covered Agreements and International Negotiations. The Advocate retains the FIO authority to enter into international negotiations (along with the U.S. Trade Representative) regarding covered agreements and to potentially preempt state laws in limited circumstances. H.R. 10 would, however, add the requirement that any potential covered agreements be published and open for comment when finalized. FSOC Designation of Nonbank Financial Institutions (Section 115 of H.R. 10) Section 115(a) of H.R. 10 would repeal the nonbank designation authority and the application of enhanced prudential requirements by the Federal Reserve. Orderly Liquidation Authority (Section 111 of H.R. 10) Section 111(a) of H.R. 10 would repeal all of Dodd-Frank Title II, which created OLA, and replace it with a new chapter of the Bankruptcy Code for financial firms, but one that would not apply to insurers. Thus, any insurer failure would be resolved by the state resolution system.

May 11, 2017

Telehealth and Medicare

May 11, 2017

Venezuela: Background and U.S. Policy

Venezuela is in the midst of an acute political, economic, and social crisis. Following the March 2013 death of populist President Hugo Chávez, acting President Nicolás Maduro of the United Socialist Party of Venezuela (PSUV) narrowly defeated Henrique Capriles of the opposition Democratic Unity Roundtable (MUD) to be elected to a six-year term in April 2013. Four years later, President Maduro has less than 20% public approval and fissures have emerged within the PSUV about the means that he has used to maintain power, including a recent aborted attempt to have the Supreme Court dissolve the MUD-dominated legislature. Protests are escalating amid calls for the Maduro government to hold the regional elections that Maduro postponed last year rather than convene a constituent assembly to rewrite the constitution, as he has proposed. Venezuela also is grappling with crippling economic and social challenges. It faces an increasingly unstable economic crisis, triggered by mismanagement and the global drop in oil prices. In 2016, the economy contracted by some 18% and inflation averaged 254%. In addition, massive shortages of food and medicine have caused a humanitarian crisis. The Maduro government is struggling to make debt payments and seeking loans from Russia, but economists maintain that Venezuela is at risk of default in 2017. International efforts to facilitate dialogue between President Maduro and the opposition have failed, due to the government’s intransigence. In March 2017, Secretary General of the Organization of American States (OAS) Luis Almagro called on member states to temporarily suspend Venezuela from the organization if the government did not take certain actions, including convening general elections. On April 26, 2017, the OAS Permanent Council approved a resolution to convene a meeting of foreign ministers to discuss Venezuela. In response, the Maduro government initiated the two-year process required to leave the OAS. U.S. Policy U.S. policymakers have had concerns for more than a decade about the deterioration of human rights and democracy in Venezuela and the government’s lack of cooperation on antidrug and counterterrorism efforts. The Obama Administration strongly criticized the Maduro government’s heavy-handed response to protests in 2014 and employed sanctions against Venezuelan officials linked to drug trafficking, terrorism, and human rights abuses. At the same time, it supported efforts at dialogue and OAS activities. The Trump Administration has followed the same general policy approach. In February 2017, the Treasury Department imposed drug-trafficking sanctions against Vice President Tareck el Aissami. President Trump and the State Department have called for the release of imprisoned opposition leader Leopoldo López and all political prisoners. State Department officials have condemned the Venezuelan Supreme Court’s recent rulings, expressed grave concern about a recent ban preventing Capriles from running for office, and called for prompt elections. Congressional Action Congress has taken various actions in response to the situation in Venezuela. It enacted legislation in 2014 to impose sanctions on current and former Venezuelan officials responsible for human rights abuses (P.L. 113-278). In July 2016, Congress enacted legislation (P.L. 114-194) extending the ability to impose sanctions through 2019. In the 115th Congress, the Senate approved S.Res. 35, expressing support for OAS efforts to hasten a return to electoral democracy in the country. The FY2017 Consolidated Appropriations Act (H.R. 244/P.L. 115-31), enacted on May 4, 2017, recommends providing $7 million in democracy and human rights assistance to Venezuela. Congress soon will have the opportunity to reexamine such aid to Venezuela as it considers the FY2018 request. On May 3, 2017, a bipartisan Senate bill was introduced, S. 1018, that would, among other measures, authorize humanitarian assistance for Venezuela and codify existing targeted sanctions on individuals undermining democratic governance and involved in corruption in Venezuela. H.Res. 259, introduced April 6, 2017, expresses concern about the crises that Venezuela is facing and urges the Venezuelan government to hold elections, release political prisoners, and accept humanitarian aid. This report provides an overview of the political and economic challenges Venezuela is facing and efforts to respond to those challenges taken through the OAS. The report also analyzes U.S. policy concerns regarding democracy and human rights, drug trafficking, terrorism, and energy issues in Venezuela. See also CRS In Focus IF10230, Venezuela: Political Crisis and U.S. Policy Overview, and CRS Report R43239, Venezuela: Issues for Congress, 2013-2016.

May 10, 2017