CRS Reports

Issues in International Trade: A Legal Overview of Investor-State Dispute Settlement

Ongoing trade negotiations among the United States and several Pacific Rim countries regarding the proposed Trans Pacific Partnership (TPP) agreement and between the United States and the European Union with respect to the proposed Transatlantic Trade and Investment Partnership (T-TIP) agreement have rekindled debate over the value of including investor-state dispute settlement (ISDS) provisions in bilateral investment treaties (BIT) and trade agreements. Congress plays an important role in the approval and implementation of U.S. international investment agreements (IIA), and, therefore, in the approval of ISDS provisions within those agreements. ISDS provisions in IIAs enable an aggrieved investor, with an investment in the territory of a foreign host government, to bring a claim against that government for breach of an investment agreement before an international arbitration panel. The United States has negotiated a number of BITs and free trade agreements (FTA) that contain ISDS arbitration procedures for resolving investors’ claims that a host country has violated substantive obligations intended to protect foreign investors and investments from discriminatory, unfair, or arbitrary treatment by the host government. Under U.S. IIAs, the investor and respondent country may agree that the tribunal will conduct the proceedings according to certain procedural rules, such as the International Centre for Settlement of Investment Disputes (ICSID) Rules of Procedure for Arbitration Proceedings; the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules; or the ICSID Additional Facility Rules for disputes in which either the investor’s home country or the host country, but not both, is a member of ICSID. This report focuses on the legal implications of ISDS provisions in U.S. IIAs. Among other things, it discusses who may bring a claim under an IIA; how arbitrators conduct such proceedings; the remedies available to the disputing parties; and how tribunals have interpreted certain substantive obligations contained in U.S. IIAs. Furthermore, the report will discuss the interplay between IIAs containing ISDS provisions, investment arbitration decisions, and domestic law within the United States, as well as the recognition and enforcement of arbitral awards against countries in U.S. courts. Notably, the ISDS provisions within one IIA may differ from the ISDS provisions in other agreements. This report will focus on the provisions contained in the investment chapter of the North American Free Trade Agreement (NAFTA) because nearly all ISDS cases brought by investors against the United States have been brought under that agreement. It will also focus on the investment provisions contained in the United States’ 2012 Model BIT, which is the document that U.S. officials use to negotiate U.S. BITs, and the Korea-U.S. free trade agreement (KORUS), which has the most recent congressionally approved FTA investment chapter, to show the types of provisions U.S. diplomats may seek to include in the TPP and T-TIP. Table 1 of this report contains summaries of ISDS cases brought against the United States. Table 2 includes summaries of several ISDS cases under various IIAs that may be of interest to Congress.

Apr 16, 2015

ARPA-E and the FY2016 Budget Request

This budget and appropriations tracking report describes selected major items from the Administration's FY2016 budget request for ARPA-E and tracks legislative action on FY2016 appropriations to the agency. It also provides selected historical funding data.

Apr 16, 2015

FY2016 Appropriations for the Department of Justice (DOJ)

Apr 15, 2015

2001 Authorization for Use of Military Force: Issues Concerning Its Continued Application

In response to the September 11, 2001, terrorist attacks against the United States, Congress enacted the Authorization for Use of Military Force (2001 AUMF; P.L. 107-40; 50 U.S.C. §1541 note) to authorize the use of military force against those who perpetrated or provided support for the attacks. Under the authority of the 2001 AUMF, U.S. Armed Forces have conducted military operations in Afghanistan since October 2001. As armed conflict against Al Qaeda and the Taliban progressed, and U.S. counterterrorism strategy evolved, U.S. use of military force has expanded outside Afghanistan to include Al Qaeda and Taliban targets in Pakistan, Yemen, Somalia, Libya, and most recently, Syria. The 2001 AUMF is not the sole authority for all U.S. uses of military force in furtherance of U.S. counterterrorism objectives; other legislation and presidential powers under Article II of the Constitution are invoked to carry out U.S. counterterrorism activities globally. Nevertheless, the Obama Administration still finds itself relying on 2001 AUMF authority not only for continuing U.S. military operations in Afghanistan, but also for beginning a new campaign against the Islamic State in Iraq and Syria, with the possibility of expansion to other countries if the Islamic State or Al Qaeda groups or associates effectively expand their reach and pose a threat to U.S. national security and interests. At the same time, the President has requested that Congress enact new authority for U.S. operations to counter the Islamic State and has expressed a continued commitment to “working with the Congress and the American people to refine, and ultimately repeal, the 2001 AUMF.” As the United States has engaged in counterterrorism and other military operations against Al Qaeda, the Taliban, and other terrorist and extremist groups over the past 13-plus years, many Members of Congress and legal and policy analysts have questioned the continuing reliance on the 2001 AUMF as a primary, effective authority for U.S. military action in a number of countries. Some have asserted that the 2001 AUMF has become outdated, unsuited to the challenge of countering terrorism and extremism in a changed world, at times claiming that the executive branch has relied on the 2001 AUMF for military action outside its intended scope. Congress has for several years considered a number of legislative proposals to change the authority in the 2001 AUMF (by amending or repealing the law), the manner in which it is used, and the congressional role in its oversight and continuing existence. This process continues in the 114th Congress, and deliberations over the future of the 2001 AUMF have become entwined with consideration of proposals to enact a new authorization for use of military force to respond to the turmoil caused by the actions of the Islamic State in Iraq and Syria. Debate in Congress over the status of the 2001 AUMF may evolve in response to numerous developments overseas and U.S. policy responses. For further information on the Islamic State crisis, the U.S. response, and proposals to enact a new AUMF targeting the Islamic State, see CRS Report R43612, The “Islamic State” Crisis and U.S. Policy, by Christopher M. Blanchard et al., and CRS Report R43760, A New Authorization for Use of Military Force Against the Islamic State: Issues and Current Proposals in Brief, by Matthew C. Weed.

Apr 14, 2015

H.R. 2: The Medicare Access and CHIP Reauthorization Act of 2015

Apr 10, 2015

Affordable Care Act (ACA): Employer Shared Responsibility Determinations and Potential Penalties

Apr 10, 2015

Patent Litigation Reform Legislation in the 114th Congress

Apr 10, 2015

Islamic State Financing and U.S. Policy Approaches

Countering the financial resources of the Islamic State, which has seized significant territory in Iraq and Syria and threatened to conduct attacks against the United States and its citizens, has become a significant national security priority for policymakers, including Members of Congress. By undermining the financial strength of the group, also known as ISIL or ISIS, policymakers seek to reduce its capability to conduct terrorist attacks, as well as to ultimately “degrade and ultimately destroy” the group. This effort includes a comprehensive look at how the group generates revenue. While IS funding streams remain fluid, the group’s largest revenue sources appear (based on open-source information) to include oil sales, taxation and extortion, and the sale of looted antiquities. Oil sales initially provided the majority of the group’s revenue, but gradually declined as a percentage of overall IS profits due to an extensive campaign of airstrikes by the United States and coalition partners against oil and gas facilities used by the group. U.S. officials have noted that the Islamic State’s financial strength depends not only on its income but also on its expenses, and the extent to which it is able to devote its resources to military operations. U.S. officials have stated that the Islamic State’s decision to hold and govern territory is a financial burden for the group, and thus a vulnerability that the United States could potentially exploit by diminishing the group’s ability to generate and utilize revenue. If the Islamic State cannot afford the expenses associated with governing its territory, some argue that the resulting public backlash would undermine its ability to rule. Along with military strikes, the United States, in cooperation with regional allies, has implemented a series of financial measures designed to block the Islamic State’s access to the international financial system. Without such access, the Islamic State will likely struggle to fund external operations, including facilitating the movement of foreign fighters. However, significant challenges remain, as the Islamic State has thus far been able to limit its direct exposure to the international financial system by generating and spending money largely within territory under its control. U.S. efforts are centered on identifying new ways to target the group’s finances by focusing both on the Islamic State and on others who conduct business with the group. To date, the Administration has not requested new authorities specifically to counter IS financing. As the 114th Congress continues to consider and evaluate U.S. policy responses to address the Islamic State, a focus of concern may center on whether U.S. counterterrorist financing tools are capable of diminishing IS sources of funds. Key questions may include whether current U.S. efforts are effective, sufficiently resourced, or require new legislative authorities to respond to the financial threat that the Islamic State presents. For additional information on the Islamic State and the U.S. response, see CRS Report R43612, The “Islamic State” Crisis and U.S. Policy, by Christopher M. Blanchard et al.

Apr 10, 2015

Income Eligibility and Rent in HUD Rental Assistance Programs: Responses to Frequently Asked Questions

The Department of Housing and Urban Development (HUD) administers five main rental assistance programs that subsidize rents for low-income families: the Public Housing program, the Section 8 Housing Choice Voucher program, the Section 8 Project-Based Rental Assistance program, the Section 202 Supportive Housing for the Elderly program, and the Section 811 Supportive Housing for Persons with Disabilities program. Together, these programs serve more than 4 million families and make up well over three-quarters of HUD’s budget. All five programs provide rental assistance in the form of below-market rent available to low-income individuals and families. While the programs vary in some important ways—how assistance is provided, who administers the assistance, whether the assistance is restricted to certain populations—they use many of the same or similar standards when establishing tenants’ income eligibility and their minimum contributions toward rent. Families are generally eligible for HUD assistance if their incomes are below certain income standards set by HUD. Unlike the poverty measurement used by some other federal benefits programs that target low-income populations, income eligibility for HUD-assisted housing varies by locality and is tied to local area median income. Income, for the purposes of eligibility, is defined as income from all sources earned by all members of the family, with some exclusions (e.g., income earned by minors). Although a family may be eligible for assistance, they are not guaranteed to receive it. Housing assistance programs are not entitlements, thus, due to funding limitations they serve only roughly one in four eligible households. Families wishing to receive assistance are generally placed on waiting lists. Once a family is determined eligible for HUD assistance and is selected to receive assistance, the rent they pay is generally based on 30% of their adjusted income. Those adjustments include deductions for elderly and disabled families, certain medical costs, and certain child care costs. Families’ incomes, adjusted incomes, and contributions toward rent are typically recertified annually. The current laws governing both income eligibility and tenant rents were standardized in the early 1980s, although the origins of the current policies date back earlier and are derived from experiences with the public housing program, which was the first federal rental assistance program. The income and rent policies in the five primary HUD rental assistance programs are also used to some extent by other HUD programs such as the homeless assistance programs and the HOME Investment Partnerships program. Looking at non-HUD housing programs, the Department of Agriculture’s rural rental assistance program largely uses HUD’s income and rent policies, and the Department of Treasury’s Low-Income Housing Tax Credit program uses some HUD standards, but not all of them. Comparing HUD’s primary rental assistance programs to other federal assistance programs that serve similar populations, HUD’s programs differ in important ways; most notably, other assistance programs devolve more decision-making about income determination and eligibility to state administrators, whereas the HUD policies are largely set by federal statute and regulation. While the income and rent policies that govern HUD’s five main rental assistance programs are designed to accurately calculate and capture family incomes and financial circumstances, they can also lead to confusion among recipients as well as difficulties for local program administrators. In response to the rather complicated rules, some policy makers have called for changes to the current system. This report provides answers to some of the most common questions about the income and rent policies in federal rental assistance programs, including questions about where these policies came from and how they compare to other federal assistance programs that serve the same or similar purposes or populations. It is intended to help answer commonly asked questions, as well as provide information to policy makers seeking to understand and evaluate proposed changes to the current system.

Apr 9, 2015

The Earned Income Tax Credit (EITC): Administrative and Compliance Challenges

The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers earning relatively low wages. Since the credit is refundable, an EITC recipient need not owe taxes to receive the benefit. Hence, many low-income workers, especially those with children, can receive significant financial assistance from this tax provision. Studies indicate that a relatively high proportion of EITC payments are issued incorrectly. The IRS estimates that in FY2013, 22% to 26% of EITC payments—between $13.3 billion and $15.6 billion—were issued improperly. These improper payments can be overpayments or underpayments. The IRS’s most recent study (released in 2014) of the factors that lead to EITC overclaims—the difference between the amount of EITC claimed by the taxpayer on his or her return and the amount the taxpayer should have claimed—concluded that there were three major reasons that tax filers claimed the wrong amount of the credit: Qualifying child errors: Some EITC claimants claimed children who were not qualifying children for the credit. The most frequent type of qualifying child error was the failure of the tax filer’s qualifying child to meet the credit’s residency requirement whereby the claimed child must live with the tax filer for over half the year in the United States. This was the largest error in terms of dollars of EITC overclaims. Income reporting errors: Some EITC claimants misreported their incomes. For example, tax filers whose income was above the phase-out threshold amount would receive a larger credit if they underreported their income. This was the most common error in terms of its frequency among tax returns which included an EITC claim and also included an overclaim. Filing status errors: Some EITC claimants used the incorrect filing status when claiming the credit. Specifically, married couples were filing as unmarried (as single or head of household) to receive a larger credit. This IRS study—also referred to as the 2006-2008 EITC Compliance Study in this report, because it examined tax returns between 2006 through 2008—found largely the same results as a previous IRS study on overclaims, released in 1999. The 2014 study also found that the majority of taxpayers who overclaim the EITC are ultimately ineligible for the credit, rather than eligible for a smaller credit. The 2014 study did not estimate the proportion of errors which were intentional (i.e., fraud) versus “honest mistakes” made while attempting to comply with EITC rules Unlike previous studies, the 2014 study also examined different types of paid tax preparers who prepared tax returns which included EITC claims (these tax returns are sometimes referred to as “EITC returns”). The study found that among paid tax preparers, unenrolled preparers were both the most common type of tax preparers of EITC returns and among the most prone to erroneous claims of the credit. Unenrolled tax preparers generally do not pass the same testing requirements as enrolled preparers (e.g., attorneys and CPAs) and in contrast to enrolled tax preparers are limited in how they can represent their clients before the IRS. This report summarizes findings from the 2014 IRS study detailing the factors that can lead to erroneous claims of the credit, and describes the challenges the IRS may face in their efforts to reduce each type of error. It also examines the role of paid tax preparers on EITC error.

Apr 9, 2015

Funding of Presidential Nominating Conventions: An Overview

During the 113th Congress, legislation (H.R. 2019) became law (P.L. 113-94) eliminating Presidential Election Campaign Fund (PECF) funding for convention operations. The 2012 Democratic and Republican convention committees each received grants, financed with public funds, of approximately $18.2 million (for a total of approximately $36.5 million, as rounded). Barring a change in the status quo, the 2016 presidential nominating conventions will, therefore, be the first since the 1976 election cycle not supported with public funds. Changes in PECF funding for convention operations do not affect separately appropriated security funds. The 112th Congress enacted one law (P.L. 112-55) in FY2012 that affected convention security funding with the appropriation of $100 million for the Democratic and Republican nominating conventions (each was allocated $50 million). This security funding was not provided to party convention committees but to the state and local law enforcement entities assisting in securing the convention sites. Because public funding for convention operations has now been eliminated, this report provides a historical overview of how PECF convention funding functioned and describes private funding sources that remain available. This report will be updated if public financing for nominating conventions again becomes a major legislative issue. For historical discussion of policy debates that preceded the decision to repeal PECF convention funds, see archived CRS Report RL34630, Federal Funding of Presidential Nominating Conventions: Overview and Policy Options, by R. Sam Garrett and Shawn Reese. For discussion of increased private fundraising limits for political parties, including for party conventions, see CRS Report R43825, Increased Campaign Contribution Limits in the FY2015 Omnibus Appropriations Law: Frequently Asked Questions, by R. Sam Garrett.

Apr 9, 2015

Asian Infrastructure Investment Bank

This report discusses a new development bank, the Asian Infrastructure Investment Bank (AIIB), launched by China that is posing a challenge to U.S. policymakers.

Apr 8, 2015

Barriers Along the U.S. Borders: Key Authorities and Requirements

Securing the borders is an issue of perennial concern to Congress. Federal law authorizes the Department of Homeland Security (DHS) to construct barriers along the U.S. borders to deter illegal crossings. DHS is also required to construct reinforced fencing along at least 700 miles of the land border with Mexico (a border that stretches 1,933 miles), though Congress has not provided a deadline for its completion. At this time, fence construction has largely been halted, though DHS still needs to deploy fencing along nearly 50 additional miles of the southwest border to satisfy the 700-mile requirement. The primary statute authorizing DHS to deploy barriers along the international borders is Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA; P.L. 104-208, div. C). Congress made significant amendments to IIRIRA Section 102 through three enactments—the REAL ID Act of 2005 (P.L. 109-13, div. B), the Secure Fence Act of 2006 (P.L. 109-367), and the Consolidated Appropriations Act, 2008 (P.L. 110-161, div. E). These amendments required that DHS construct hundreds of miles of new fencing along the border, and also provided the Secretary of DHS with broad authority to waive “all legal requirements” that may impede construction of barriers and roads under IIRIRA Section 102. These statutory modifications, along with increased funding for border projects, resulted in the deployment of several hundred miles of new barriers along the southwest border between 2005 and 2011. In recent years, DHS has largely stopped deploying additional fencing along the border, as the agency has altered its enforcement strategy in a manner that places less priority upon fencing. As amended by the Secure Fence Act in 2006, IIRIRA Section 102(b) required DHS to install at least two layers of reinforced fencing along five stretches of the southwest border totaling more than 700 miles. IIRIRA was substantially revised just over a year later by the Consolidated Appropriations Act, 2008, to replace this requirement with a mandate that DHS install reinforced fencing (but not necessarily in two or more layers) “along not less than 700 miles” of the border. Section 102(b) provides that “notwithstanding” this requirement, DHS is not legally obligated to install fencing at “any particular location.” One way to construe this clause is simply to indicate that, while DHS is required to install fencing along at least 700 miles of the border, it is not required to install any portion of the mandated fencing at any specific location (in contrast to the earlier requirement of the Secure Fence Act). An alternative interpretation of this clause has also been suggested (including by some DHS officials, but not consistently), under which DHS could potentially construct fencing along less than 700 miles of the border and satisfy the statute’s fencing requirements, if it determined additional fencing to be unwarranted. This broad interpretation of the clause seems problematic, however, as it would render Section 102(b)’s provision requiring fencing “along not less than 700 miles” of the border meaningless. The legislative history behind the changes made to IIRIRA Section 102(b) also favors the narrower interpretation. Legislation in the 114th Congress, including H.R. 399, the Secure Our Borders First Act of 2015, as reported by the House Homeland Security Committee, would effectively mandate the completion of the remaining mileage and also provide additional fencing specifications. This report discusses key statutory authorities and requirements governing DHS’s construction of barriers along the U.S. borders. It also includes appendixes listing federal laws that have been waived by DHS in furtherance of border construction projects. For more extensive discussion of ongoing activities and operations along the border between ports of entry, see CRS Report R42138, Border Security: Immigration Enforcement Between Ports of Entry, by Lisa Seghetti.

Apr 8, 2015

Proposed Trans-Pacific Partnership

Apr 7, 2015

Al Qaeda in the Islamic Maghreb (AQIM) and Al Murabitoun

Apr 7, 2015

Army Corps of Engineers: FY2016 Appropriations

Apr 7, 2015

Bureau of Reclamation: FY2016 Appropriations

Apr 7, 2015

Commerce, Justice, Science, and Related Agencies Appropriations (CJS): Trade-Related Agencies

Apr 6, 2015

Net Neutrality: Selected Legal Issues Raised by the FCC's 2015 Open Internet Order

This report discusses the primary legal issues raised by the Federal Communication Commission's (FCC's) 2015 Open Internet Order: the FCC's authority to reclassify broadband Internet access services, the FCC's authority to forbear from the imposition of Title II regulations following reclassification, the FCC's authority under Section 706 of the Telecommunications Act of 1996, and whether the FCC properly complied with the Administrative Procedure Act.

Apr 6, 2015

Boko Haram

Apr 3, 2015

Al Shabaab

This report briefly examines Al Shabaab (aka Harakat Shabaab al Mujahidin, or Mujahidin Youth Movement) which is an insurgent and terrorist group that evolved out of a militant wing of Somalia’s Council of Islamic Courts in the mid-2000s.

Apr 3, 2015

Veterans and Homelessness

Apr 2, 2015

The Affordable Care Act’s Contraceptive Coverage Requirement: History of Regulations for Religious Objections

Apr 2, 2015

SAMHSA FY2016 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 three centers: the Center for Substance Abuse Treatment (CSAT), the Center for Substance Abuse Prevention (CSAP), and the Center for Mental Health Services (CMHS). Each center has general statutory authority, called Programs of Regional and National Significance (PRNS), under which it has established grant programs for states and communities to address their important substance abuse and mental health needs. 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. In addition to the three statutorily defined centers, SAMHSA’s budget reflects a fourth category, “health surveillance and program support,” for other activities such as collecting data, providing statistical and analytic support, raising public awareness, collaborating with other agencies, developing and supporting the behavioral health workforce, and maintaining the National Registry of Evidence-based Programs and Practices (NREPP). The last comprehensive reauthorization of SAMHSA and its programs occurred in 2000 as part of the Children’s Health Act, which also added “charitable choice” provisions allowing religious organizations to receive funding for substance abuse prevention and treatment services without altering their religious character. Since 2000, Congress has expanded some of SAMHSA’s programs and activities without taking up comprehensive reauthorization. Authorizations of appropriations for most of SAMHSA’s grant programs expired at the end of FY2003; many of these programs continue to receive annual appropriations. The total amount of funding available to SAMHSA (i.e., total program level) includes discretionary budget authority provided in annual appropriations acts, PHS Program Evaluation Set-Aside funds, Prevention and Public Health Fund (PPHF) transfers, and data request and publications user fees. Table 1 presents SAMHSA’s FY2016 budget request in the context of SAMHSA’s funding history since FY2013.

Apr 2, 2015

Energy and Water Development: FY2016 Appropriations

Mar 31, 2015

Labor, Health and Human Services, and Education: FY2015 Appropriations

This report provides an overview of actions taken by Congress and the President to provide FY2015 appropriations for accounts funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies (L-HHS-ED) appropriations bill. This bill provides funding for all accounts subject to the annual appropriations process at the Departments of Labor (DOL) and Education (ED). It provides annual appropriations for most agencies within the Department of Health and Human Services (HHS), with certain exceptions (e.g., the Food and Drug Administration is funded via the Agriculture bill). The L-HHS-ED bill also provides funds for more than a dozen related agencies, including the Social Security Administration (SSA). Enacted Appropriations: On December 16, 2014, President Obama signed into law the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235), which provided FY2015 appropriations for L-HHS-ED in Division G. This law appropriated $164 billion in discretionary funding for L-HHS-ED (not counting emergency Ebola funds), which is roughly comparable to amounts provided in FY2014 (+0.05%) and the FY2015 President’s request (-0.1%). In addition, the FY2015 omnibus provided an estimated $681 billion in mandatory L-HHS-ED funding, for a total of $846 billion for L-HHS-ED as a whole. The FY2015 omnibus followed three government-wide continuing resolutions (CRs), which provided temporary funding earlier in the fiscal year (P.L. 113-164, P.L. 113-202, and P.L. 113-203). DOL: The FY2015 omnibus provided roughly $11.9 billion in discretionary funding for DOL, roughly 0.8% less than the comparable FY2014 funding level of $12.0 billion. HHS: The FY2015 omnibus provided roughly $71.0 billion in discretionary funding for HHS, roughly 0.3% more than the comparable FY2014 funding level of $70.7 billion. ED: The FY2015 omnibus provided roughly $67.1 billion in discretionary funding for ED, roughly 0.2% less than the comparable FY2014 funding level of $67.3 billion. Related Agencies: The FY2015 omnibus provided roughly $14.2 billion in discretionary funding for L-HHS-ED related agencies, roughly 0.8% more than the comparable FY2014 funding level of $14.1 billion. Earlier L-HHS-ED Congressional Action: Prior to the start of the fiscal year, the Senate Appropriations L-HHS-ED Subcommittee initiated action on a full-year FY2015 bill. On June 10, 2014, the Senate subcommittee approved an FY2015 L-HHS-ED appropriations bill by voice vote. This bill was not reported by the full committee. However, on July 24, 2014, the Senate Appropriations Committee released a copy of the subcommittee-approved bill and draft subcommittee report. The subcommittee-approved bill would have provided $167 billion in discretionary L-HHS-ED funds, which is about 2% more than the comparable FY2014 funding level and the FY2015 President’s request. In addition, the Senate subcommittee bill would have provided an estimated $681 billion in mandatory funding, for a combined total of $848 billion for L-HHS-ED as a whole. The House did not take action on a stand-alone FY2015 L-HHS-ED bill. President’s Request: On March 4, 2014, the Obama Administration released its FY2015 budget. The President requested $164 billion in discretionary funding for accounts funded by the L-HHS-ED bill (0.2% more than comparable FY2014 levels). In addition, the President’s budget requested roughly $681 billion in annually appropriated mandatory funding, for a total of roughly $846 billion (6% more than comparable FY2014 levels) for the L-HHS-ED bill as a whole.

Mar 31, 2015

Domestic Drones and Privacy: A Primer

It has been three years since Congress enacted the FAA Modernization and Reform Act of 2012 (FMRA), calling for the integration of unmanned aircraft systems (UAS), or “drones,” into the national airspace by September 2015. During that time, the substantive legal privacy framework relating to UAS on the federal level has remained relatively static: Congress has enacted no law explicitly regulating the potential privacy impacts of drone flights, the courts have had no occasion to rule on the constitutionality of drone surveillance, and the Federal Aviation Administration (FAA) did not include privacy provisions in its proposed rule on small UAS. This issue, however, has not left the national radar. Congress has held hearings and introduced legislation concerning the potential privacy implications of domestic drone use; President Obama recently issued a directive to all federal agencies to assess the privacy impact of their drone operations; and almost half the states have enacted some form of drone legislation. There are two overarching privacy issues implicated by domestic drone use. The first is defining what “privacy” means in the context of aerial surveillance. Privacy is an ambiguous term that can mean different things in different contexts. This becomes readily apparent when attempting to apply traditional privacy concepts such as personal control and secrecy to drone surveillance. Other, more nuanced privacy theories such as personal autonomy and anonymity must be explored to get a fuller understanding of the privacy risks posed by drone surveillance. Moreover, with ever-increasing advances in data storage and manipulation, the subsequent aggregation, use, and retention of drone-obtained data may warrant an additional privacy impact analysis. The second predominant issue is which entity should be responsible for regulating drones and privacy. As the final arbiter of the Constitution, the courts are naturally looked upon to provide at least the floor of privacy protection from UAS surveillance, but as will be discussed in this report, under current law, this protection may be minimal. In addition to the courts, the executive branch likely has a role to play in regulating privacy and drones. While the FAA has taken on a relatively passive role in such regulation, the President’s new privacy directive for government drone use and multi-stakeholder process for private use could create an initial framework for privacy regulations. With its power over interstate commerce, Congress has the broadest authority to set national standards for UAS privacy regulation. Several measures were introduced in the 113th Congress that would have restricted both public- and private-actor domestic UAS operations, and reintroduction of these bills is likely in the 114th Congress. Lastly, some have argued that under our system of federalism, the states should be left to experiment with various privacy schemes. It is reported that by the end of 2014, 20 states have enacted some form of drone regulation. This report will provide a primer on privacy issues related to various UAS operations, both public and private, including an overview of current UAS uses, the privacy interests implicated by these operations, and various potential approaches to UAS privacy regulation.

Mar 30, 2015

Cyberwarfare and Cyberterrorism: In Brief

Recent incidents have highlighted the lack of consensus internationally on what defines a cyberattack, an act of war in cyberspace, or cyberterrorism. Cyberwar is typically conceptualized as state-on-state action equivalent to an armed attack or use of force in cyberspace that may trigger a military response with a proportional kinetic use of force. Cyberterrorism can be considered “the premeditated use of disruptive activities, or the threat thereof, against computers and/or networks, with the intention to cause harm or further social, ideological, religious, political or similar objectives, or to intimidate any person in furtherance of such objectives.” Cybercrime includes unauthorized network breaches and theft of intellectual property and other data; it can be financially motivated, and response is typically the jurisdiction of law enforcement agencies. Within each of these categories, different motivations as well as overlapping intent and methods of various actors can complicate response options. Criminals, terrorists, and spies rely heavily on cyber-based technologies to support organizational objectives. Cyberterrorists are state-sponsored and non-state actors who engage in cyberattacks to pursue their objectives. Cyberspies are individuals who steal classified or proprietary information used by governments or private corporations to gain a competitive strategic, security, financial, or political advantage. Cyberthieves are individuals who engage in illegal cyberattacks for monetary gain. Cyberwarriors are agents or quasi-agents of nation-states who develop capabilities and undertake cyberattacks in support of a country’s strategic objectives. Cyberactivists are individuals who perform cyberattacks for pleasure, philosophical, political, or other nonmonetary reasons. There are no clear criteria yet for determining whether a cyberattack is criminal, an act of hactivism, terrorism, or a nation-state’s use of force equivalent to an armed attack. Likewise, no international, legally binding instruments have yet been drafted explicitly to regulate inter-state relations in cyberspace. The current domestic legal framework surrounding cyberwarfare and cyberterrorism is equally complicated. Authorizations for military activity in cyberspace contain broad and undefined terms. There is no legal definition for cyberterrorism. The USA PATRIOT Act’s definition of terrorism and references to the Computer Fraud and Abuse Act appear to be the only applicable working construct. Lingering ambiguities in cyberattack categorization and response policy have caused some to question whether the United States has an effective deterrent strategy in place with respect to malicious activity in cyberspace.

Mar 27, 2015

DOE’s Office of Science and the FY2016 Budget Request

Mar 27, 2015

Yemen: Civil War and Regional Intervention

This report provides material on the latest crisis in Yemen and the U.S. policy response. Yemen's internationally backed transition government, which replaced the regime of former President Ali Abdullah Saleh in 2012, appears to have fully collapsed.

Mar 26, 2015

Federal Involvement in Sex Offender Registration and Notification: Overview and Issues for Congress, In Brief

The federal government plays a role in the management of sex offenders. In a law enforcement capacity, it enforces federal laws involving sexual abuse, online predatory offenses, or other related federal crimes. In addition, Congress has enacted legislation that encourages the development of state sex offender registries, urges states to punish recalcitrant sex offenders, and induces state and local law enforcement to make certain information on sex offenders public, and has taken other steps involving the registration of sex offenders and notification of the community. Federal legislation affecting sex offender policy has largely centered on sex offender registration and notification, and therefore they are the focus of this report. All states have sex offender registration and notification laws; however, these laws vary widely. Congress has attempted to standardize these laws through legislation, most recently through the Sex Offender Registration and Notification Act (SORNA), a major component of the Adam Walsh Child Protection and Safety Act (Adam Walsh Act; P.L. 109-248) enacted in 2006. Among other things, SORNA created a three-tier classification system for sex offenders based solely on the crime of conviction. To date, 17 states, 3 territories, and many American Indian tribes have been found to have “substantially implemented SORNA.” SORNA stated that jurisdictions that fail to comply with its requirements risk having their annual Justice Assistance Grant (JAG) funds reduced by 10%. While several noncompliant states have chosen to lose 10% of their JAG funds, the majority of noncompliant states have applied to have these funds reallocated and used solely for the purpose of implementing SORNA. Sex offenses and sex offender management are primarily state and local criminal justice issues; however, the federal government plays a role in sex offender registration and notification as well as other sex offender management issues not discussed in this report. The federal government (1) sets minimum requirements and baseline standards for states for sex offender registration and notification, (2) provides assistance to states via grants and law enforcement support in tracking down noncompliant offenders, (3) maintains a public national website that provides information on registered sex offenders, (4) maintains a national sex offender registry for assisting law enforcement, and (5) receives and transmits information on the international travel of sex offenders. In recent years, several issues with sex offender registration and notification in the United States have been raised by state governments, the media, and academics alike. Congress may decide to address a number of these issues that fall under federal jurisdiction. Issues include notification of offenders’ international travel, issues with registration of sex offenders in the military, states’ noncompliance with requirements of SORNA, and the effectiveness of SORNA.

Mar 25, 2015

The Radiation Exposure Compensation Act (RECA): Compensation Related to Exposure to Radiation from Atomic Weapons Testing and Uranium Mining

The Radiation Exposure Compensation Act (RECA) provides one-time benefit payments to persons who may have developed cancer or other specified diseases after being exposed to radiation from atomic weapons testing or uranium mining, milling, or transporting. Administered by the Department of Justice (DOJ), RECA has awarded nearly $2 billion in benefits to more than 30,000 claimants since its inception in 1990. The RECA program is scheduled to sunset in 2022. RECA benefits are available to the following groups: onsite participants—$75,000 to persons who participated onsite in the atmospheric test of an atomic weapon and developed one of the types of cancers specified in the statute; downwinders—$50,000 to persons who were present in one of the specified areas near the Nevada Test Site during a period of atmospheric atomic weapons testing and developed one of the types of cancers specified in the statute; and uranium miners, millers, and ore transporters—$100,000 to persons who worked in mining, milling, or transportation of uranium between 1942 and 1971 and developed one of the types of diseases specified in the statute. The RECA statute was last amended in 2000. Since then, Congress has frequently considered legislation to expand the downwinder-eligibility area by making persons who were affected in other states during periods of atmospheric atomic weapons testing eligible for benefits and by allowing uranium miners, millers, and ore transporters to qualify for benefits based on work after 1971. However, an expansion of the downwinder-eligibility area is not supported by a congressionally mandated National Research Council report on atomic test fallout and the inclusion of post-1971 uranium work, which was largely for commercial rather than governmental purposes, and is not consistent with the stated intent of the program.

Mar 24, 2015

Introduction to Financial Services: “Regulatory Relief”

Mar 24, 2015

Seventh Summit of the Americas: In Brief

On April 10-11, 2015, President Obama is scheduled to attend the seventh Summit of the Americas in Panama City, Panama. The Summits of the Americas, which have been held roughly every three years since 1994, serve as opportunities for the Western Hemisphere’s leaders to engage directly with one another and discuss issues of collective concern. With Cuba expected to attend for the first time in 2015, the Summit of the Americas will be the only forum in the hemisphere that includes all 35 independent nations. The theme of the 2015 summit is “Prosperity with Equity: The Challenge of Cooperation in the Americas.” Although strengthening economic growth while reducing inequality will be one of the principal topics of conversation, the leaders of the hemisphere are also expected to discuss a variety of other issues, including education, health, energy, the environment, migration, security, citizen participation, and democratic governance. This will be President Obama’s third and final Summit of the Americas and could set the tone for hemispheric relations for the final two years of his Administration. While most leaders warmly welcomed President Obama at the 2009 summit, where he introduced his approach to the region, the 2012 summit proved to be more divisive. Many Latin American leaders criticized U.S. policy toward Cuba and U.S. counternarcotics efforts in the region, and some leaders chose not to attend. Some analysts assert that President Obama’s recent policy shifts on Cuba and migration issues could pave the way for a more cordial 2015 Summit of the Americas and closer hemispheric cooperation. Nevertheless, some Latin American leaders may use the 2015 summit to condemn the ongoing U.S. embargo on Cuba and recent U.S. sanctions on Venezuelan officials. This could distract from efforts to forge more constructive relations. Members of Congress traditionally have expressed considerable support for the Summits of the Americas. A resolution introduced in March 2015 (H.Res. 160, Castro), for example, welcomes the seventh Summit of the Americas and states that it will be an important forum for the United States to advance its interests in the region and for the leaders of the Western Hemisphere to work collaboratively to address common policy issues. As in previous years, numerous Members of Congress are expected to attend the summit. President Obama could call upon Congress to approve policy changes and/or appropriate resources relating to proposals he makes at the summit; the Administration already has requested $2 million in foreign assistance to support initiatives stemming from U.S. participation in the 2015 summit.

Mar 24, 2015

Human Rights in China and U.S. Policy: Issues for the 114th Congress

Mar 24, 2015

2013 National Ambient Air Quality Standard (NAAQS) for Fine Particulate Matter (PM2.5): Designating Nonattainment Areas

Mar 24, 2015

International Trade Agreements and Job Estimates

Mar 23, 2015

An Overview of Air Quality Issues in Natural Gas Systems

Mar 23, 2015

A Snapshot of Student Loan Debt

Mar 23, 2015

Educational Accountability and Reauthorization of the ESEA

Mar 23, 2015

Sudan

This report provides a brief overview of political, economic, and humanitarian conditions in Sudan and examines the conflict dynamics that persist in the country. It also outlines U.S. policy and congressional engagement.

Mar 23, 2015

Space Exploration

Mar 20, 2015

State Children’s Health Insurance Program: An Overview

Mar 20, 2015

Local Food Systems: Selected Farm Bill and Other Federal Programs

Mar 20, 2015

Proposals to Reduce Premium Subsidies for Federal Crop Insurance

Congressional Research Service 7-5700 www.crs.gov R43951 Summary Many farm policymakers generally consider the federal crop insurance program as the principal tool to help farmers cope with the variable impact of weather on crop yields. The program makes available subsidized policies that farmers may purchase each year to protect against yield and/or revenue declines during a particular growing season. Policies are available for about 130 commodities, covering crops supported by traditional farm programs (e.g., corn, wheat, and soybeans) as well as many fruits, vegetables, tree nuts, nursery crops, pastureland, and other commodities. Farmers pay a portion of the premium, unlike farm programs, which are free. Premium subsidies for federal crop insurance have been instrumental in expanding program participation to levels acceptable to policymakers (i.e., avoiding ad hoc disaster assistance). Congress first introduced premium subsidies in 1980 and increased them in 1994 and 2000. Currently, the subsidy percentage ranges from 38% to 100% of the policy premium. The mix of policies purchased by producers (with varying coverage levels) translates into an average premium subsidy of 62%, resulting in an annual federal cost of $6.5 billion per year. The 2014 farm bill (P.L. 113-79) bolstered the program by authorizing more risk products. Crop insurance subsidies, by design and like other purchasing-based subsidies, encourage farmers to purchase more insurance than they otherwise would because they are not paying full price. The higher coverage provides better farm financial protection (up to 85% of expected farm yields or revenue) and reduces the probability of requests for federal ad hoc assistance, but it also increases costs to taxpayers and can encourage production on environmentally sensitive land. Some question whether current subsidy levels are necessary to maintain program participation. Given federal budget pressures, the 114th Congress might consider trimming government costs of the federal crop insurance program pending the outcome of the FY2016 budget. Several proposals have surfaced that would limit premium subsidies, including an Administration proposal and several bills introduced in the 114th Congress. The Administration’s FY2016 budget proposal would reduce premium subsidies by 10 percentage points for revenue protection policies with “harvest price coverage.” Unlike for other policies, the guarantee is revised upward when the harvest-time price is higher than the initial guarantee established prior to planting. Another proposal (S. 463/H.R. 892) would completely eliminate subsidies on those policies. A separate approach, S. 345, would establish a subsidy cap of $50,000 per person for all policies purchased. The magnitude of any subsidy reduction would have varying impacts on the income of farmers and crop insurance companies, as well as the overall cost of the farm safety net, particularly if ad hoc assistance is enacted later as an additional backstop for farmers. A relatively small cut would most likely cause farmers to pay more for their existing coverage or to shift to less expensive policies and absorb more risk. It would also likely have minimal impacts on the size of the risk pool and therefore little effect on premiums, which could rise if farmers stop buying insurance. Crop insurance companies could see lower incomes, because their revenue depends on product sales. In contrast, a large cut would most likely result in farmers reducing levels of coverage, perhaps significantly, and overall program participation (acreage) could decline sharply. Congress will likely continue to weigh the overall benefits of the program to the farm sector with the cost of the federal crop insurance program and other aspects of the farm safety net. The tradeoff for Congress is finding what reductions (if any) to premium subsidies can be tolerated before pressure to make ad hoc payments occurs. Contents Role of Federal Crop Insurance 1 Level of Support in Question 2 Program Costs 2 Crop Insurance Policies 3 Rationale for Premium Subsidies 3 Premium Subsidy Mechanics 4 Trends in Total Premiums and Premium Subsidies 6 Subsidies by Crop and State 7 Subsidies by Farm Size 7 Proposals to Limit Premium Subsidies 8 Administration’s Proposal 8 S. 463/H.R. 892 Eliminates Subsidy for “Harvest Price Coverage” 10 S. 345 Caps Premium Subsidies 10 Potential Impacts 11 Farmers Maintain Coverage 11 Farmers Insure Fewer Acres or Reduce Coverage 11 Some Farmers Stop Buying Federal Crop Insurance 12 Additional Options for Congress 12 Conclusion 13 Figures Figure 1. Total Premiums—Farmer-Paid Plus Subsidy, 2000-2014 6 Figure 2. Estimated Average Crop Insurance Premium Subsidy per Farm in 2013 8 Tables Table 1. Crop Insurance Premium Subsidy Schedule 4 Table 2. Premium Subsidies in 2014 by Crop and State 7 Contacts Author Contact Information 13 Acknowledgments 13 Given federal budget pressures and changing government priorities, the 114th Congress might consider trimming government costs of the federal crop insurance program pending the outcome of the FY2016 budget. A potential target is the policy premium subsidy, which reduces the price that farmers pay for federal crop insurance policies. The subsidy percentage ranges from 38% to 100% of the premium, depending on the policy and coverage level selected by the producer. The mix of policies purchased by producers (with varying coverage levels) translates into an average premium subsidy of 62% and an annual federal cost of about $6.5 billion per year. When contemplating reductions to the statutory subsidy schedule, as proposed by the President’s budget and by bills introduced in the 114th Congress, a basic policy tradeoff is that a reduction in the premium subsidy could reduce the amount of insurance purchased by farmers and adversely affect participation in the program. Such an outcome could limit the effectiveness of the federal safety net for farmers and possibly create a larger federal liability for ad hoc crop disaster assistance. A reduction in premium subsidies also reduces incentives for risk-taking (e.g., expanding production on land that would otherwise not be planted). This report examines current premium subsidies, proposals to limit them, and potential options for Congress. Role of Federal Crop Insurance The federal crop insurance program began in 1938 when Congress authorized the Federal Crop Insurance Corporation (FCIC). The program, as administered by the U.S. Department of Agriculture’s (USDA’s) Risk Management Agency and funded by the FCIC, makes available subsidized policies that farmers may purchase each year to protect against yield and/or revenue declines during a particular season. Guarantees are established just prior to planting, based on expected market prices and historical farm yields. This compares with statutory prices used in farm commodity support programs, which provide price and income support for a much narrower list of “covered and loan commodities,” such as corn, wheat, rice, and peanuts. Also, participation in price and income support programs is generally free, whereas producers must pay a portion of any crop insurance premium in order to participate. Insurance policies are sold and completely serviced through 18 approved private insurance companies. The insurance companies’ losses are reinsured by USDA, and their administrative and operating costs are reimbursed by the federal government (i.e., not by the producer). In 2014, federal crop insurance policies covered 294 million acres, and total liability was $110 billion. Four crops—corn, cotton, soybeans, and wheat—have accounted for more than 70% of total acres enrolled in crop insurance. Less widely planted crops and pastureland account for the remainder. Many agricultural producers and farm policymakers generally consider the federal crop insurance program as the principal tool for coping with the variable impact of weather on crop yields and producer cash flows. Policies are available for about 130 commodities, covering crops supported by traditional commodity programs (e.g., corn, wheat, and soybeans) as well as many fruits, vegetables, tree nuts, nursery crops, pastureland, and other commodities. Yields or revenue can be insured at levels between 50% and 85% of expected value, depending on the policy purchased by the producer. As part of the general policy emphasis in the 2014 farm bill (Agricultural Act of 2014, P.L. 113-79) to provide more risk management tools and amid widespread support among the farm community and the crop insurance industry, Congress increased expenditures on the crop insurance program by expanding commodity coverage and providing supplemental policies to further expand farmers’ set of risk management tools. With these changes and additional participation in the program, federal outlays for crop insurance is expected to average $8.8 billion per year during FY2015-FY2024, according to the Congressional Budget Office, making it the single largest cost component of the farm safety net. To help pay for crop insurance expansion and to accomplish other farm bill goals, including budget savings and greater price protection under farm commodity programs, Congress eliminated “direct” cash payments (saving $5 billion per year), which had been available to farmers and landowners of program crops since 1996. Level of Support in Question While political support for federal crop insurance has been generally strong for decades, the absolute level of support has become a policy question. Press reports have noted growing political pressure on reducing premium subsidies for federal crop insurance. In early February 2015, as part of the FY2016 budget proposal to Congress, the Administration recommended that Congress reduce premium subsidies for farmers in order to fund other priorities and offset higher than anticipated costs of farm commodity programs. USDA has also commented that lower subsidies would make it easier to defend the program to non-farmers. Groups concerned with federal outlays and/or farming on environmental-sensitive land have advocated strongly in recent years for reducing expenditures on federal crop insurance. During the debate prior to enactment of the 2014 farm bill, critics of federal crop insurance led unsuccessful efforts to reduce federal expenditures of the program. Importantly, some critics do not necessarily call for elimination of the crop insurance program. Rather, they prefer crop insurance over the traditional price and income support programs, which use statutorily fixed prices and are considered more market-distorting than crop insurance. Others argue that, while large premium subsidies were necessary to encourage farmer adoption of crop insurance, most producers now recognize the value of crop insurance and would be willing to pay a “fairer” share of the premium. Many supporters do not want to see premium subsidies or other aspects of the federal crop insurance program altered because of its importance to farmers, input suppliers, and the rural economy in general. Moreover, crop insurance is considered less susceptible than traditional price support programs to challenges under World Trade Organization rules because the guarantee is based on market prices, and participants absorb a loss before receiving an indemnity. Supporters also point out that financial assistance to the farm sector is not unlike benefits Congress bestows on other sectors such as energy (via tax credits) and housing (tax deductions). Program Costs The total federal cost of the federal crop insurance program averaged $8.7 billion annually during FY2010-FY2014. The largest portion has been the premium subsidy, which is approximately $6.5 billion annually. Farmers also benefit from free program delivery through the federal reimbursement of private crop insurance companies for their costs of selling and servicing the policies. These “administrative and operating (A&O) expenses” are about $1.4 billion per year. Another federal cost component is underwriting. Program losses and gains are shared between the federal government and private crop insurance companies, with the government absorbing excess losses in years with poor crop yields. In contrast, overall federal costs are reduced in years when there are underwriting gains for the program (resulting from above-average yields), which occurred in six out of 10 years between 2005 and 2014. Together, the premium subsidies, A&O expenses, and underwriting losses/gains are considered mandatory spending in the federal budget (i.e., receiving such sums as necessary rather than a fixed appropriation) which varies year to year depending upon producer participation, crop yields, market prices, and other factors. The final cost component is discretionary spending for USDA/RMA’s administrative costs, which are about $70 million annually. Crop Insurance Policies When purchasing a policy, a farmer selects the type of guarantee, generally one based either on (1) historical farm yields or (2) revenue using historical yields and current-year market prices. Other policy types are also available. The participating farmer specifies the coverage level, which establishes the guarantee as a portion of the expected crop value. Catastrophic policies have a deductible of 50% (the farmer absorbs the first 50% of loss), and the premium is covered completely by the federal government (100% subsidy). More expensive policies with “buy-up” coverage reduce the out-of-pocket loss (deductible) when the insured files a claim. For crop insurance purposes, a deductible of 25%, for example, is referred to as a “75% coverage level.” As coverage levels rise, the premium subsidy percentage declines (see “Premium Subsidy Mechanics” below). For selected crops, farmers may purchase an additional policy called Supplemental Coverage Option (SCO), authorized by the 2014 farm bill and subsidized at 65%, to cover part of the out-of-pocket loss (deductible) on the producer’s underlying policy (the “shallow loss”). Indemnities are triggered by county losses greater than 14%, and policy coverage cannot exceed the difference between 86% and the coverage level selected by the producer for the underlying policy. Besides the premium subsidy (62% of the premium, on average) and the availability of a financial backstop, another major benefit for producers is the timely payment for crop losses, generally about 30 days after the farmer signs the claim form. Rationale for Premium Subsidies In the absence of premium subsidies and free delivery, it is generally agreed that farmer participation in the crop insurance program and/or purchased coverage levels would be lower and that paying the full premium would be cost-prohibitive for many farmers. Crop insurance premiums were not explicitly subsidized until Congress enacted the Federal Crop Insurance Act of 1980. The legislation included a 30% premium subsidy and other provisions to increase program participation in an attempt to shift away from costly disaster payments that compensated producers following weather-related losses. Participation in the federal crop insurance program grew in the 1980s, but it was not enough to avoid congressional ad hoc disaster assistance later in the decade, including more than $3 billion in direct disaster payments for 1988 crop losses. As a result, to encourage participation of new farmers and expand coverage levels purchased by existing participants, Congress enhanced the program with greater premium subsidies and other changes in two pieces of legislation: the Federal Crop Insurance Reform Act of 1994 (P.L. 103-354) and the Agricultural Risk Protection Act of 2000 (P.L. 106-224). These and other laws enacted since 1980 have resulted in widespread use of federal crop insurance. Policies now cover nearly 300 million acres, and approximately 83% of U.S. crop acreage is insured. For major crops, a large share of plantings is covered. In 2014, the portion of total corn acreage covered by federal crop insurance was 87%; cotton, 96%; soybeans, 88%; and wheat, 84%. Most policies are “buy-up” at 70% coverage levels or higher (a deductible of 30% or less). A number of fruit and vegetable crops have acreage participation rates that exceed 75%. While not an explicit goal of the crop insurance program, the premium subsidy transfers money from taxpayers to the farm sector because, over the long term and in the aggregate, indemnities received by producers exceed the value of farmer-paid premiums. For example, a revenue protection policy in McLean County, IL, pays an insured farmer about $9.77 per acre, on average, more than the policy premium cost over the long run. Nevertheless, the subsidy is a not a cash payment. It appears on the producer’s bill from the insurance company as a “risk subsidy” provided by FCIC. Premium Subsidy Mechanics The premium subsidy for federal crop insurance is set in statute as a percentage of the total premium (7 U.S.C. §1508(e)). The percentage depends on the type of policy, coverage level selected by the producer, and the type of “unit” insured (e.g., individual fields or countywide). See Table 1. The premium schedule is “crop neutral,” meaning it applies uniformly across all commodities. The only exception is the 80% subsidy for the Stacked Income Protection Plan (STAX), which is available only for upland cotton. Table 1. Crop Insurance Premium Subsidy Schedule (government-paid portion of premium as a percent of total premium) Coverage Level (%) Type of policy CAT 50 55 60 65 70 75 80 85 90 Premium subsidy (%) Policies with basic or optional units 100 67 64 64 59 59 55 48 38 n/a Policies with enterprise units n/a 80 80 80 80 80 77 68 53 n/a Area yield plans n/a n/a n/a n/a n/a 59 59 55 55 51 Area revenue plans n/a n/a n/a n/a n/a 59 55 55 49 44 Whole farm (one commodity) n/a 67 64 64 59 59 55 n/a n/a n/a (two commodities) n/a 80 80 80 80 80 80 n/a n/a n/a (three commodities) n/a 80 80 80 80 80 80 71 56 n/a Supplem. Coverage Option (SCO) 65a Stacked Income Protection Plan (STAX) for upland cotton n/a n/a n/a n/a n/a 80 80 80 80 80 Source: 7 U.S.C. §1508(e); and 7 U.S.C. §1508b(d) for STAX. Notes: n/a = not applicable. Coverage level = 100% minus deductible percentage. A basic unit covers land in one county with the same tenant/landlord. An optional unit is a basic unit divided into smaller units by township section. An enterprise unit covers all land of a single crop in a county for a producer, regardless of tenant/landlord structure. For catastrophic (CAT) policies, a loss beyond 50% is indemnified at 55% of the expected price. For 50% coverage level, a loss beyond that percentage is indemnified at a higher percentage of price (selected by the purchaser) within a minimum and maximum range set by RMA. For SCO, coverage equals 86 percent minus the selected coverage level of the underlying policy. In general, the subsidy percentage declines as the coverage increases (i.e., the deductible declines). However, the dollar amount of subsidy rises with higher levels of coverage (because the premiums rise with higher coverage levels). The maximum subsidy is 100%, which applies to catastrophic (CAT) policies where the deductible equals 50%. In this case, the producer absorbs the initial loss up to 50% of the guarantee, and the policy covers any additional losses. While the premium is fully subsidized, producers must pay a $300 administrative fee for each crop insured in each county. For “buy-up” coverage (i.e., above CAT), the premium subsidy ranges from 38% to 80% of the policy premium, depending on the coverage level selected by the producer. In recent years, the average subsidy rate across all policies purchased has been 62%. The average subsidy percentage has been at or near 60% since the current subsidy schedule was put in place by the Agricultural Risk Protection Act of 2000. Higher subsidy levels are available for beginning farmers or ranchers with less than five years of experience. For these farmers, the $300 fee for purchasing CAT coverage is waived, and the premium subsidy for additional coverage is increased by 10 percentage points. Unlike farm commodity programs, the federal crop insurance program does not have per-person premium subsidy limits or an income limit test for program eligibility, although the topic was widely discussed in Congress during the farm bill debate, particularly in 2012 and 2013. In fact, a controversial item not included in the 2014 farm bill (P.L. 113-79) was the reduction of premium subsidies for high-income farmers, a provision that was included in the Senate bill but not the House bill. Previously, in the 2012 farm bill passed by the Senate in the 112th Congress, an amendment was adopted during floor debate to reduce crop insurance premium subsidies by 15 percentage points for producers with average adjusted gross incomes greater than $750,000. In 2013, the Senate Agriculture Committee–reported version of S. 954 did not include the provision, but an amendment to S. 954 requiring the subsidy reduction was adopted on the Senate floor in June 2013 by a vote of 59-33. A House amendment to limit crop insurance premium subsidies failed during floor debate in June 2013. While no limits to subsidies were included in the enacted 2014 farm bill, a few conservation-related restrictions were enacted. Producers are not eligible for premium subsidies if they are not in compliance with conservation requirements for wetlands and/or highly erodible land. Also, crop insurance subsidies are reduced for plantings on native sod acreage in certain states. Trends in Total Premiums and Premium Subsidies During the last decade, increases in insured acreage and higher crop prices have increased gross liability, which translated into higher total premiums (Figure 1). During the five-year period from 2010-2014, total premiums averaged $10.5 billion, up from $5.0 billion during 2000-2009. For the 2010-2014 period, the farmer-paid share of the total was $4 billion, on average, and the government-paid share (premium subsidy) was $6.5 billion, on average. Figure 1. Total Premiums—Farmer-Paid Plus Subsidy, 2000-2014 Source: CRS, using data from USDA, Risk Management Agency, http://www.rma.usda.gov/data/sob.html. Notes: Crop year data. Total premiums advanced beginning 2007 following a significant rise in crop prices, which increased total liability and premiums. A decline in premiums generally reflects lower crop prices. Crop prices during the next five years are expected to be lower than during the 2010-2014 period, which would reduce total premiums (and crop insurance premium subsidies). According to the Congressional Budget Office, the total premium value during 2015-2019 is projected to average $9 billion per year, with producers paying $3.4 billion, on average, and the government paying $5.6 billion, on average. Of course, any projection of the future is subject to changing market conditions. Subsidies by Crop and State Premium subsidies in 2014 totaled $6.2 billion. Reflecting sizeable planted area, four crops—corn, soybeans, wheat, and cotton—accounted for 80% of the total, or $5 billion. Farm states with large acreages of one or more of these crops received the largest amounts of premium subsidies, including Texas ($640 million), North Dakota ($598 million), South Dakota ($491 million), Kansas ($403 million), and Minnesota ($392 million). A summary of top states and crops is displayed in Table 2. The top seven states account for just over one-half of the total premium subsidy in 2014. Table 2. Premium Subsidies in 2014 by Crop and State (millions of dollars) State Corn Soybeans Wheat Cotton Fruit, veg., tree nut & nursery Other Total 1. Texas 52 4 112 329 13 129 640 2. North Dakota 163 147 168 0 11 108 598 3. South Dakota 264 127 56 0 <1 45 491 4. Kansas 103 70 161 1 1 67 403 5. Minnesota 203 134 23 0 7 25 392 6. Iowa 260 120 <1 0 <1 4 384 7. Illinois 243 112 12 0 2 4 373 8. Nebraska 194 79 23 0 2 20 318 9. Missouri 116 102 14 3 1 7 243 10. California 2 0 5 16 191 27 242 11. Indiana 120 75 5 0 1 4 205 12. Wisconsin 106 35 3 0 8 9 161 13. Ohio 78 73 6 0 2 1 160 14. Oklahoma 8 8 82 11 1 17 127 15. Michigan 44 33 7 0 22 11 117 Other states 229 270 240 129 140 341 1,347 Total U.S. 2,185 1,389 917 489 402 819 6,201 Source: USDA Risk Management Agency, http://www3.rma.usda.gov/apps/sob/. Notes: Totals may not add due to rounding. Subsidies by Farm Size Producer subsidies for crop insurance are proportional to the value of the premiums and underlying liability of the policies. Compared with small farms, larger operations have greater crop liability, which increases the total costs of insurance and value of the government-paid portion of the total premium. Based on federal crop insurance expenditures data from USDA’s Agricultural Resource Management Survey (ARMS) and the average subsidy percentage (62%) from RMA, CRS estimates that the producer subsidy in 2013 averaged about $19,000 per farm for farms purchasing crop insurance. By farm size, the calculated average ranged from $2,300 per farm for operations with less than $10,000 in sales to $115,000 for farms with at least $5 million in sales (Figure 2). As stated earlier, unlike farm commodity subsidies, crop insurance premium subsidies are not capped and are not subject to a gross income eligibility limit. The next section (“Proposals to Limit Premium Subsidies”) reviews proposals that would limit premium subsidies. Figure 2. Estimated Average Crop Insurance Premium Subsidy per Farm in 2013 Source: CRS Report R40532, Federal Crop Insurance: Background, using average premium subsidy of 62% from USDA’s Risk Management Agency (RMA) and total federal crop insurance expenditures by farm sales class from USDA’s Agricultural Resource Management Survey, provided by USDA’s Economic Research Service. Notes: The calculated average was $18,900 per farm. (Calculation includes only farms that pay federal crop insurance premiums.) Total premium subsidy reported by RMA was $7.3 billion for crop year 2013. Proposals to Limit Premium Subsidies Several proposals have been introduced in 2015 to limit premium subsidies. The Administration’s FY2016 budget proposal and bills introduced in the 114th Congress would affect the premium subsidy schedule or the total amount of subsidy an individual farm could receive. Administration’s Proposal To reduce program costs, the Administration’s FY2016 budget proposal included two legislative recommendations for the federal crop insurance program. Together they would reduce outlays by a combined $16 billion over 10 years. Legislation would be required to accomplish either of these recommendations. The first would reduce premium subsidies by 10 percentage points for revenue protection policies with “harvest price coverage.” Unlike for other policies, the guarantee for these policies is revised upward when the harvest-time price is higher than the initial guarantee established prior to planting. This feature is available on policies for crops—such as wheat, corn, and soybeans—that employ a guarantee based on the futures market. Nearly all “revenue protection” policies, representing about three-fourths of all crop insurance policies, are sold with harvest price coverage because the policy can generate a larger indemnity to help cover the cost of purchasing “replacement bushels” at higher market prices if the farmer had previously signed a forward contract and cannot deliver the crop on it due to weather-related losses. The estimated savings of this recommendation is $14.6 billion over 10 years, according to the Administration. The Administration and others argue that such “up-side” price protection does not need to be subsidized by the government. USDA says producers would pay an out-of-pocket premium that more closely matches the market price of the purchased coverage, shifting more of the cost from the taxpayer to the producer. Producers could also switch to less expensive policies and consequently absorb more risk. The second proposal (Administration-estimated savings of $1.4 billion over 10 years) would change “prevented planting coverage,” which indemnifies producers when crops cannot be planted for weather reasons. The changes include adjusted payment rates and lower yield guarantees. Supporters of the measure include Taxpayers for Common Sense, which commented that the proposals to cut crop insurance could go further. The Environmental Working Group (EWG) said the proposals would cut “overly generous premium subsidies ... save taxpayers billions of dollars” and “shield land and water from further abuse.” A previous report issued by EWG concluded that the crop insurance industry would bear most of the cost of farmers switching to less-expensive policies that are less profitable to sell and service. In early February 2015, leaders of the House and Senate Agriculture Committees heavily criticized the Administration’s proposal. House Agriculture Committee Chairman Mike Conaway said the cuts “would jeopardize the ability of producers to insure their crops in a climate of collapsing crop prices, major crop losses, and falling farm income.” Senate Agriculture Committee Chairman Pat Roberts said the proposal “ignores the concerns of the nation’s farmers and ranchers.” Later in February, nearly 400 organizations representing a broad coalition of farm conservation, nutrition, rural development, and other interests wrote a letter to congressional leaders of the House and Senate Budget Committees asking them to reject any cuts to programs under the jurisdiction of House and Senate Agriculture Committees, including crop insurance. They argued that the 2014 farm bill has already generated significant savings and that no additional cuts should be made until the new policies have been implemented and thoroughly evaluated. S. 463/H.R. 892 Eliminates Subsidy for “Harvest Price Coverage” Rather than reduce subsidies for harvest price coverage, two bills (S. 463 and H.R. 892) would completely eliminate subsidies on those policies. The Congressional Budget Office estimates a reduction in outlays of $16.8 billion over 10 years. Sponsors are Senators Jeff Flake and Jeanne Shaheen and Representative John J. Duncan Jr. Supporters expect that producers would remain covered by crop insurance but would shift to less-expensive policies, such as Revenue Protection with Harvest Price Exclusion (HPE), which has a price guarantee that does not rise if the harvest-time price is above the initial guarantee set prior to planting. Some producers already purchase this product because of its lower cost. Other interested producers might be those who do not typically hedge much grain prior to harvest or are willing to accept “drought risk” that can drive up overall crop prices. Critics say that not providing this option to producers makes crop marketing more risky because they would no longer have a low-cost way to comfortably sell crops in advance (forward contract). Purchasing options on futures contracts is an alternative, but it is generally more expensive than using the insurance product and may not be viable for producers with small acreages. S. 345 Caps Premium Subsidies Rather than altering the premium subsidy schedule as in the proposals above, S. 345 establishes a subsidy cap of $50,000 per person or entity for all policies purchased. The Congressional Budget Office estimates a savings of $2.2 billion over 10 years. The bill sponsors are Senators Jeanne Shaheen and Pat Toomey. Supporters argue that the current uncapped program is expensive for taxpayers and results in excessive benefits to individuals and large agribusiness firms. A report by the Government Accountability Office in 2012 found that 53 farmers each received more than $500,000 in premium subsidies. Critics counter that capping premium subsidies would reduce the pool of insured producers, resulting in higher premium rates if large farmers who leave the program were generating underwriting gains. Potential Impacts All of the legislative proposals described above would save federal dollars. They also raise questions about how farmers would respond to the subsidy reductions. If faced with reduced crop insurance premium subsidies, would farmers (1) maintain coverage levels (and absorb the higher co

Mar 20, 2015

House of Representatives Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2014

Between 1977 and 2014, the number of House staff grew from 8,831 to 9,175, or 3.90%.Since 2008, however, the number of staff working for the House of Representatives has decreased 8.28%. These changes were characterized in part by increases in the number of staff working in chamber leadership offices, and larger increases in the staffing of chamber officers and officials. House staff working for Members have shifted from committee settings to the personal offices of Members. Some of these changes may be indicative of the growth of the House as an institution. This report is one of several CRS products focusing on congressional staff. Others include CRS Report RL34545, Congressional Staff: Duties and Functions of Selected Positions; CRS Report R43946, Senate Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2014; CRS Report R43774, Staff Pay Levels for Selected Positions in Senators’ Offices, FY2009-FY2013; CRS Report R43775, Staff Pay Levels for Selected Positions in House Member Offices, 2009-2013.

Mar 19, 2015

Senate Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2014

Senate staff from 1977 to 1986, excluding state-based staff, increased from 3,397 to 4,180, or 23.05%. From 1987 and 2014, all Senate staff grew from 4,916 to 5,758, or 23.89%. Since 2010, however, staff working for the Senate has decreased 6.65%. The changes in both time periods were characterized in part by increases in the number of staff working in chamber leadership offices, and larger increases in the staffing of chamber officers and officials. Additionally, staff working for Members have shifted from committees to the personal offices of Members. Some of these changes may be indicative of the growth of the Senate as an institution, or the value the chamber places on its various activities. This report is one of several CRS products focusing on congressional staff. Others include CRS Report RL34545, Congressional Staff: Duties and Functions of Selected Positions, by R. Eric Petersen; CRS Report R43947, House of Representatives Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2014, by Lara E. Chausow, R. Eric Petersen, and Amber Hope Wilhelm; CRS Report R43774, Staff Pay Levels for Selected Positions in Senators’ Offices, FY2009-FY2013, by R. Eric Petersen, Lara E. Chausow, and Amber Hope Wilhelm; and CRS Report R43775, Staff Pay Levels for Selected Positions in House Member Offices, 2009-2013, by R. Eric Petersen, Lara E. Chausow, and Amber Hope Wilhelm.

Mar 19, 2015

Federal Research and Development Funding: FY2016

This report begins with a discussion of the overall level of the President's FY2016 R&D request, followed by analyses of the R&D funding request from a variety of perspectives and for selected multiagency R&D initiatives. The report concludes with discussion and analysis of the R&D budget requests of selected federal departments and agencies that, collectively, account for more than 98% of total federal R&D funding.

Mar 18, 2015

Health Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA) in 2015

New federal tax credits, authorized under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended), first became available in 2014 to help certain individuals pay for health insurance. The tax credits apply toward premiums for private health plans offered through exchanges (also referred to as health insurance marketplaces). The ACA also established subsidies to reduce cost-sharing expenses. Health insurance exchanges operate in every state and the District of Columbia (DC), per the ACA statute. Exchanges may be established and administered by states, the federal government, or a combination of both. Exchanges are not insurers, but they provide eligible individuals and small businesses with access to private health insurance plans. Generally, plans offered through the exchanges provide a comprehensive set of health services and meet all of the ACA’s insurance market reforms, as applicable. The new premium credits established under the ACA are advanceable and refundable, meaning tax filers need not wait until the end of the tax year to benefit from the credit and may claim the full credit amount even if they have little or no federal income tax liability. Premium tax credits generally are available to individuals who enroll in an exchange plan; are part of a tax-filing unit; have household income between specified amounts; are not eligible for other forms of comprehensive health coverage; and are U.S. citizens or lawfully present residents. This report provides examples of hypothetical individuals and families that qualify for the premium credits. The examples use actual 2015 exchange premiums. The amounts received in premium credits are based on federal income tax returns. These amounts are reconciled after individuals file their returns and can result in overpayment of premium credits if income increases, which must be repaid to the federal government. The ACA limits the amount of required repayments for lower-income enrollees. In addition to premium credits, the ACA authorized new cost-sharing subsidies. Certain premium credit recipients also are eligible for reductions in their annual cost-sharing limits. Moreover, certain low-income individuals receive additional subsidies in the form of reduced cost-sharing requirements (e.g., lower deductibles).

Mar 18, 2015

Federal Lands Recreation Enhancement Act: Overview and Issues

Mar 17, 2015