CRS Reports

Farm Commodity Provisions in the 2018 Farm Bill (P.L. 115-334)

The farm commodity program provisions in Title I of the Agricultural Improvement Act of 2018 (P.L. 115-334; the 2018 farm bill) include revenue support programs for major program crops and permanent agricultural disaster assistance programs for producers of most tree crops and livestock. Aside from dairy and sugar, which have their own specific programs, most grain and oilseed crops produced in the United States are eligible for two tiers of revenue support under Title I of the 2018 farm bill—specialty crops such as fruits, vegetables, and tree nuts are not covered. The first tier of support is provided by the Marketing Assistance Loan (MAL) program, which offers interim financing for production of “loan” commodities in the form of a nine-month nonrecourse loan at statutorily set prices. A producer must have a harvested crop to offer as collateral for the MAL loan. Nonrecourse means that, if forfeited, USDA must accept the crop pledged as collateral as full payment of an outstanding loan. Thus, the statutory loan rates serve as minimum price guarantees for eligible commodities. The MAL program may be supplemented by a higher, second tier of revenue support comprised of (1) the Price Loss Coverage (PLC) program, which provides price protection at the national level via statutory fixed “reference” prices for eligible crops, or (2) the Agricultural Risk Coverage (ARC) program, which provides revenue protection via historical moving average revenue guarantees based on the five most recent years of national crop prices and county or farm average yields. Participation is free for both ARC and PLC. However, a producer must own or rent historical “base” acres of “covered” commodities. In addition, producers must sign up and elect either PLC or a county-coverage ARC program (ARC-CO) on a crop-by-crop basis or enroll all covered commodities together in a whole-farm revenue guarantee under an individual-coverage ARC program (ARC-IC). The dairy and sugar sectors are supported by separate federal farm programs that are tailored more specifically to the physical differences associated with each of their products—liquid fresh milk and refined sugar—and their respective markets. For dairy, the Dairy Margin Coverage (DMC) program offers producers milk margin protection for a range of margin thresholds—the milk margin equals the difference between the all-milk farm price and the price of a formula-based feed ration—and for a producer-selected portion (ranging from 5% to 95%) of historical milk production. Milk producers must sign up, select both margin and milk production coverage levels, and pay a premium that varies with coverage levels. The U.S. dairy sector also benefits from tariff-rate quotas (TRQs) on selected dairy products. The sugar program provides revenue support through a combination of limits on domestic output sales (marketing allotments), nonrecourse MAL loans for domestic sugar production (but at the processor level), a sugar-to-ethanol backstop program (Feedstock Flexibility Program), and quotas that limit imports. The import quotas for dairy and sugar are authorized outside of the omnibus farm bill. Disaster assistance is available for producers of most tree crops and livestock. The Noninsured Crop Assistance Program (NAP) is available for all agricultural production that is not covered by a federal crop insurance policy. All of these programs have permanent authority. However, the 2018 farm bill amends most of them. The enacted 2018 farm bill continues a $125,000 per-person cap on combined PLC and ARC payments but excludes MAL program benefits from the limit. The limit applies to the total from all covered commodities except peanuts, which has a separate $125,000 limit. To be eligible for payments, persons must be actively engaged in farming (AEF). Payment limits are doubled if the farm operator has a spouse. On family farming operations, all family members 18 years or older are deemed AEF and eligible for payments, including cousins, nephews, and nieces. The 2018 farm bill retains the adjusted gross income (AGI) limit for payment eligibility of $900,000. The Congressional Budget Office (CBO) projects outlays for Title I provisions of the 2018 farm bill for the five-year period (FY2019-FY2023) to average $6.3 billion compared with an estimated $7.2 billion in annual outlays under the 2014 farm bill. Based on projected market-price-to-PLC-reference price ratios, producers are expected to shift their preference toward PLC over ARC under the 2018 farm bill, resulting in a shift in program outlays concentrated more on PLC than ARC.

May 21, 2019

Regulating Drinking Water Contaminants: EPA PFAS Actions

May 21, 2019

House Rules Changes Affecting Committee Procedure in the 116th Congress (2019-2020)

As agreed to in the House, H.Res. 6, a resolution adopting the rules of the House of Representatives, provided amendments to the rules, as well as separate orders, that affect committee procedure in the 116th Congress (2019-2020). Several of these changes apply to general committee procedure, while others concern specific committees, such as modifications to the names, jurisdiction, or procedures of certain House committees. The rules package also established, during the 116th Congress, two new select committees. H.Res. 6 made several changes to committee membership and organization. Most significantly, it removed the committee chair term limits that were in effect during each Congress from the 104th through the 115th Congresses (1995-2018), excluding the 111th Congress (2009-2010). H.Res. 6 added a provision to Rule XXIII that calls on any Member, Delegate, or the Resident Commissioner who has been indicted or formally charged with certain felony offenses to refrain from committee business. It clarified that Delegates and the Resident Commissioner may serve on joint committees, and it lengthened from 30 days to 60 days the period in which to adopt and publish committee rules at the start of a Congress. In a separate order, the 116th Congress rules package established a requirement that certain legislative measures must be reported and be subject to a committee hearing and markup prior to their consideration on the floor. This requirement applies, with some exceptions, to measures that are raised under the terms of a special rule reported from the Rules Committee. Another separate order requires most standing committees to hold a Member Day Hearing during the first session of the 116th Congress, affording any Member the opportunity to speak on proposed legislation within the committee’s jurisdiction. H.Res. 6 clarified the notification requirement for committee markup meetings. As amended, clause 2 of Rule XI provides Members at least three workdays to prepare for an upcoming markup, as opposed to the less specific requirement that markups may not occur before the “third day” after a chair announces the meeting. H.Res. 6 altered procedures concerning committee oversight. The 115th Congress House rules requirement that committees prepare and submit “authorization and oversight plans” was replaced with the requirement that chairs develop oversight plans in consultation with the ranking member. In addition, a separate order now allows committee counsel to take depositions without the presence of a committee member. Amendments to the House standing rules changed two committees’ names and clarified their jurisdictions. The Committee on Education and the Workforce became the Committee on Education and Labor, a name it held in some previous Congresses. As amended, Rule X specified that the committee’s jurisdiction includes the general management of the Department of Education and the Department of Labor. The Committee on Oversight and Government Reform was re-designated the Committee on Oversight and Reform. The rules changes clarified that the Committee on Oversight and Reform’s existing jurisdiction over the review and study of all government activities includes “the Executive Office of the President.” A separate order directed the Committee on Ethics to empanel an investigative subcommittee to review allegations whenever a Member, Delegate, or the Resident Commissioner is indicted on a criminal charge. H.Res. 6 amended clause 3 of Rule XI to allow the Committee on Ethics, or an investigative subcommittee thereof, to consider trial evidence in ethics investigations of Members, Delegates, and the Resident Commissioner. Another separate order enabled the Committee on Financial Services to establish as many as seven subcommittees, as opposed to the six subcommittees allowed under the rules, while an amendment to clause 3 of Rule XIII exempted the Rules Committee from the requirement that committee reports must include recorded votes taken in committee. The rules changes also removed membership term limits to the Committee on the Budget. However, the rules of the Democratic Caucus and Republican Conference may continue to limit the number of terms that Members may serve on the Budget Committee. Finally, the rules package established, for the 116th Congress, the Select Committee on the Climate Crisis and the Select Committee on the Modernization of Congress. The committees are to “investigate, study, make findings, hold public hearings, and develop recommendations.” By the end of the 116th Congress, they are to report their findings and policy recommendations to the relevant standing committees and publish them in a publicly available format.

May 21, 2019

Major Agricultural Trade Issues in the 116th Congress

Sales of U.S. agricultural products to foreign markets absorb about one-fifth of U.S. agricultural production, thus contributing significantly to the health of the farm economy. Farm product exports, which totaled $143 billion in FY2018 (see chart below), make up about 9% of total U.S. exports and contribute positively to the U.S. balance of trade. The economic benefits of agricultural exports also extend across rural communities, while overseas farm sales help to buoy a wide array of industries linked to agriculture, including transportation, processing, and farm input suppliers. U.S. Agricultural Trade, FY2013-FY2019 / Source: USDA, Outlook for U.S. Agricultural Trade, AES-107, February 2019. Notes: *denotes forecast. Data is not adjusted for inflation. Congress has traditionally displayed a keen interest in agricultural trade issues given their importance to farmers and ranchers and to the overall economy. A major area of interest for the 116th Congress has been the loss of overseas export market shares for agricultural products due to the direction of the Trump Administration’s trade policy, which places increased emphasis on reducing the overall U.S. trade deficit. In March 2018, the Trump Administration imposed Section 232 tariffs on U.S. imports of steel and aluminum from most countries and additional Section 301 tariffs on a number of imports from China. Following these actions, Canada, China, Mexico, the European Union (EU), and Turkey imposed retaliatory tariffs on more than 800 U.S. agricultural and food product exports. In response, USDA authorized $12 billion in short-term assistance to the affected agricultural producers and commodities under its Market Facilitation Program to help mitigate the economic impact on farmers. A number of policy developments undertaken by the Trump Administration in bilateral and regional trade agreements may affect agricultural markets as well. On the Administration’s initiative, the North American Free Trade Agreement (NAFTA) has been renegotiated and signed as the U.S.-Mexico-Canada Agreement (USMCA). This agreement is subject to legislative ratification by Canada and Mexico and approval by U.S. Congress. President Trump withdrew the United States from the Trans-Pacific Partnership (TPP) in January 2017. In March 2018, the remaining 11 countries concluded a revised version of TPP, the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). Signatories of CPTPP have begun to reduce tariffs and provide greater agricultural market access for imports from CPTPP signatory countries, actions that could potentially erode U.S. agricultural market shares in the region. At the bilateral level, the Trump Administration has notified Congress of its intent to begin trade negotiations with Japan (a CPTPP member), the EU, and the United Kingdom. At the global level, and at the initiative of the United States, the World Trade Organization (WTO) recently ruled that China has subsidized its agricultural production beyond the level permitted under its WTO obligations and that China’s administration of its agricultural market access policies are inconsistent with its WTO obligations. The United States has also filed a counter notification against India at the WTO stating that India has underreported its agricultural domestic subsidies. Several other agricultural trade issues may be of interest to Congress. For example, the proposed USMCA does not address all the issues that restrict U.S. agricultural exports to Mexico and Canada, and Southeastern U.S. produce growers have been seeking changes to trade remedy laws to address imports of seasonal produce. A key objective of U.S. trade negotiations continues to be the establishment of a common framework for approval, trade, and marketing of the products of agricultural biotechnology. U.S. farm and food interests see the potential for market expansion opportunities in Cuba, but a prohibition on private U.S. financing is generally viewed as a major obstacle to this end. Moreover, the United States has announced its intention to withdraw eligibility for the Generalized System of Preference (GSP)—which provides duty-free tariff treatment for certain products from developing countries—from Turkey and India. On another front, U.S. exports of beef, pork, and chicken continue to face bans and trade restrictions over disease outbreaks even though the bans are inconsistent with international trade protocols, among which are China’s ongoing bans on imports of U.S. beef and poultry and restrictions imposed by several foreign markets on U.S. ractopamine-fed pork.

May 20, 2019

The Highway Funding Formula: History and Current Status

More than 90% of federal highway assistance is distributed to the states by formula. Between 1916, when Congress created the first ongoing program to fund road construction, and 2012, various formula factors specified in law were used to apportion highway funds among the states. After 1982, these factors were partially overridden by provisions to guarantee that each state received federal funding at least equal to a specific percentage of the federal highway taxes its residents paid. Since enactment of the Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141) in 2012, formula factors such as population and highway lane mileage have ceased to have a significant role in determining the distribution of funds. The apportionment among the states under the current surface transportation law, the Fixing America’s Surface Transportation Act (FAST Act; P.L. 114-94), passed in 2015, is not based on any particular policy objectives other than ensuring the stability of states’ shares of total funding based on their shares in the last year of MAP-21, In addition, each state is guaranteed an amount at least equal to 95 cents on the dollar of the taxes paid by its residents into the highway account of the Highway Trust Fund. Some policy-related factors used to distribute highway funds in the past are no longer in use, while other possible factors sometimes mentioned in policy discussions, such as states’ rates of population growth and projected increases in truck traffic, have never been used as formula factors. This report describes mechanism by which Federal-Aid Highway Program funds are distributed today, and includes tables comparing individual states’ shares of the FY2018 apportionment with their shares of some factors relevant to highway needs. Table 5 ranks states’ apportionments based on the apportionment amount per resident, per square mile of land area, per federal-aid highway lane mile, and per million vehicle miles traveled on federal-aid highways.

May 20, 2019

HUD’s Proposal to End Assistance to Mixed Status Families

On May 10, 2019, HUD released a proposed rule to end eligibility for “mixed status” families in its major rental assistance programs (public housing, Section 8 Housing Choice Vouchers, Section 8 project-based rental assistance). “Mixed status” families comprise both citizens (or eligible noncitizens) and ineligible noncitizens. As reported in the press and reflected in analysis by both CRS and the Department of Housing and Urban Development (HUD), the rule would likely result in the displacement from HUD-assisted housing of over 25,000 families, including 55,000 children. Additionally, the rule would establish new documentation requirements for citizens. Treatment of Mixed Status Families Current law—Section 214 of the Housing and Community Development Act of 1980, as amended—prohibits the provision of certain housing assistance benefits to ineligible noncitizens (generally, persons in the country illegally; or persons legally present but in a temporary status, such as tourists or students). The law does not directly address how the prohibition should be applied in the case of mixed status families. It took HUD more than a decade to finalize its interpretation and implementation of this law, in part due to a series of statutory changes related to the categories of eligible and ineligible noncitizens, as well as congressional directives suspending HUD’s implementation of various proposed rules. The final regulations implementing Section 214 address the issue of mixed status families by requiring the proration—or proportional reduction—of assistance provided to these families. Other social programs that provide benefits to families and households (Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP)) also pay reduced benefits to mixed status families. Under HUD’s 2019 proposed rule, mixed status families would be ineligible for assistance. The only exception would be for certain households that were receiving assistance on the date the existing regulations took effect (June 19, 1995). All other mixed status households currently being served will either have to remove ineligible household members in order to continue to receive assistance (an unavailable option for families with ineligible adults but eligible children); or to move to unassisted housing, either voluntarily or by formal eviction. Program administrators would be permitted to continue assistance for mixed status families for 6 to18 months while they seek new housing. No future mixed status families would be eligible for assistance. HUD contends that this policy change is consistent with various Executive Orders promulgated by President Trump. Data According to HUD administrative data from December 2017 (as published in the economic analysis accompanying the rule and analyzed by CRS) the affected programs served more than 25,000 mixed status families, consisting of more than 108,000 people. More than three-quarters of these households were families with children, primarily households containing eligible children and ineligible adult members. This includes roughly 55,000 children who are U.S. citizens or have eligible immigration status. Mixed status families make up a relatively small share of the overall assistance caseload nationally, accounting for approximately 0.5% of all assisted households. However, mixed status families make up a more significant caseload share for some Public Housing Authorities (PHAs) administering public housing and/or the Section 8 Housing Choice Voucher program. Based on CRS analysis of HUD administrative data, mixed status families account for 10% or more of the caseload for approximately 40 PHAs, in some cases accounting for more than one-third of all families served by a PHA. Geographically, the largest numbers of mixed status families are in California, Texas, and New York. HUD’s economic analysis found the proposed rule would increase subsidy costs by roughly $200 million per year, as mixed status families receiving a reduced, prorated benefit would be replaced by families receiving full benefits drawn from waiting lists for assistance. However, in a limited funding environment, this would likely result in fewer families being served or a decrease in the quality of the housing provided. Additionally, turnover in housing programs can be costly for program administrators. These costs can include the court-related expenses related to formal evictions, cleaning and repairs to prepare a unit for new occupants, and/or the costs of processing new applicants for assistance. HUD notes that the administrative costs of turnover associated with the proposed rule may be sizeable. HUD estimates the mixed status families being displaced will bear moving costs of approximately $500 each; HUD notes some families may face homelessness as a result of the rule change, but the agency does not quantify that impact, other than noting that researchers estimate that the costs of homelessness borne by society can exceed $20,000 per homeless person annually. Documentation Requirements for Citizens Under current HUD regulations, each member of a family receiving housing assistance must provide (1) a signed declaration of citizenship, signed under penalty of perjury; (2) a signed declaration of eligible immigration status, signed under penalty of perjury, along with appropriate verification documentation; or (3) an election not to contend to have eligible immigration status, thus making the family a mixed status family subject to prorated benefits. The proposed rule would make changes to the first option by creating a federal requirement for documentation of citizenship. Currently, program administrators may, but are not required to, request citizenship documentation of applicants. Under the proposed rule, all current and future citizen beneficiaries will have to provide proof of citizenship, such as a birth certificate, passport, or other documentation deemed acceptable by HUD, as established in future guidance. The vast majority of the roughly 9.6 million people receiving assistance under the Section 214-covered programs are citizens who would be subject to this requirement. A 2007 GAO report assessed the implications of citizenship documentation requirements added to the Medicaid program and found that such requirements appeared to increase administrative costs of the program and served as a barrier to program enrollment or result in loss of benefits for otherwise eligible citizens. However, the potential administrative or other program costs of the policy change are not contemplated in HUD’s economic analysis of the proposed rule.

May 17, 2019

Drug Pricing and the Law: Pharmaceutical Patent Disputes

May 17, 2019

Drug Pricing and the Law: Regulatory Exclusivities

May 17, 2019

Federal Preemption in the Dual Banking System: An Overview and Issues for the 116th Congress

Banks play a critical role in the United States economy, channeling money from savers to borrowers and facilitating productive investment. While the nature of lawmakers’ interest in bank regulation has shifted over time, most bank regulations fall into one of three general categories. First, banks must abide by a variety of safety-and-soundness requirements designed to minimize the risk of their failure and maintain macroeconomic stability. Second, banks must comply with consumer protection rules intended to deter abusive practices and provide consumers with complete information about financial products and services. Third, banks are subject to various reporting, recordkeeping, and anti-money laundering requirements designed to assist law enforcement in investigating criminal activity. The substantive content of these requirements remains the subject of intense debate. However, the division of regulatory authority over banks between the federal government and the states plays a key role in shaping that content. In some cases, federal law displaces (or “preempts”) state bank regulations. In other cases, states are permitted to supplement federal regulations with different, sometimes stricter requirements. Because of its substantive implications, federal preemption has recently become a flashpoint in debates surrounding bank regulation. In the American “dual banking system,” banks can apply for a national charter from the Office of the Comptroller of the Currency (OCC) or a state charter from a state’s banking authority. A bank’s choice of chartering authority is also a choice of primary regulator, as the OCC serves as the primary regulator of national banks and state regulatory agencies serve as the primary regulators of state-chartered banks. However, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) also play an important role in bank regulation. The Federal Reserve supervises all national banks and state-chartered banks that become members of the Federal Reserve System (FRS), while the FDIC supervises all state banks that do not become members of the FRS. This complex regulatory architecture has resulted in a “symbiotic system” with both federal regulation of state banks and state regulation of national banks. In the modern dual banking system, national banks are often subject to generally applicable state laws, and state banks are subject to both generally applicable federal laws and regulations imposed by their federal regulators. The evolution of this system during the 20th century caused the regulation of national banks and state banks to converge in a number of important ways. However, despite this convergence, federal preemption provides national banks with certain unique advantages. In Barnett Bank of Marion County, N.A. v. Nelson, the Supreme Court held that the National Bank Act (NBA) preempts state laws that “significantly interfere” with the powers of national banks. The Court has also issued two decisions on the preemptive scope of a provision of the NBA limiting states’ “visitorial powers” over national banks. Finally, OCC rules have taken a broad view of the preemptive effects of the NBA, limiting the ways in which states can regulate national banks. Courts, regulators, and legislators have recently confronted a number of issues involving banking preemption and related federalism questions. Specifically, Congress has considered legislation that would overturn a line of judicial decisions concerning the circumstances in which non-banks can benefit from federal preemption of state usury laws. The OCC has also announced its intention to grant national bank charters to certain financial technology (FinTech) companies—a decision that is currently being litigated. Finally, Congress has recently turned its attention to the banking industry’s response to state efforts to legalize and regulate marijuana.

May 17, 2019

Shipping Under the Jones Act: Legislative and Regulatory Background

The Jones Act, which refers to Section 27 of the Merchant Marine Act of 1920 (P.L. 66-261), requires that vessels transporting cargo from one U.S. point to another U.S. point be U.S.-built, and owned and crewed by U.S. citizens. The act provides a significant degree of protection for U.S. shipyards, domestic carriers, and American merchant sailors. It is a subject of debate because some experts point out that it leads to high domestic ocean shipping costs and constrains the availability of ships for domestic use. The Jones Act has come into prominence amid debates over Puerto Rico’s economic challenges and recovery from Hurricane Maria in 2017; in the investigation into the sinking of the ship El Faro with 33 fatalities during a hurricane in 2015; and in discussions about domestic transportation of oil and natural gas. The law’s effectiveness in achieving national security goals has also been the subject of attention in conjunction with a congressional directive that the Administration develop a national maritime strategy, including strategies to increase the use of short sea shipping and enhance U.S. shipbuilding capability. The Jones Act of 1920 was not the first law requiring that vessels transporting cargo domestically be U.S.-built, owned, and crewed. It restated a long-standing restriction that was temporarily suspended during World War I. Since 1920, Congress has enacted provisions that could be said to tighten Jones Act requirements as well as provisions that exempt certain maritime activity from the requirements. In 1935, Congress forbade Jones Act-qualified vessels that were sold to foreign owners or registered under a foreign flag to subsequently requalify as Jones Act-eligible (P.L. 74-191). This provides additional protection from competition for Jones Act carriers if coastal shipping demand increases, because it can take around two years to construct a new ship. In 1940, Congress expanded the Jones Act to include towing and salvage vessels (P.L. 76-599). In 1988, Congress specified that waterborne transport of valueless material required use of a Jones Act-qualified vessel, such that transport of dredge spoil or municipal waste would fall under the law (P.L. 100-329). Generally, dredging and towing vessels, as well as Great Lakes ships, have occasioned less debate about the Jones Act than oceangoing ships and offshore supply vessels. Congress has enacted numerous exemptions or exceptions to the Jones Act. In some cases, Congress has enacted an exemption if there are no Jones Act-qualified carriers interested in providing service in a particular market (for example, passenger travel to and from Puerto Rico). Congress has allowed waivers of the Jones Act for national defense reasons, which most often have been executed to speed fuel deliveries to a region after a natural disaster disrupted normal supply lines. Regulatory interpretations of the Jones Act have been significant in defining what constitutes a “U.S.-built” vessel, what constitutes “transportation” between two U.S. points, and what are “U.S. points.” The Coast Guard has determined that a U.S.-built vessel can be assembled with major foreign components such as engines, propellers, and stern and bow sections. This interpretation has been consistent from the late 1800s. Customs and Border Protection (CBP) has determined that cruise ship voyages that involve visits to foreign ports in addition to a domestic port are not domestic transportation and therefore not subject to the Jones Act. This interpretation also dates to the late 1800s. CBP’s interpretations of what constitutes domestic transportation and U.S. points are significant to the offshore oil industry, as some of the vessels supporting that industry must be Jones Act-compliant while others need not be. By long-standing agreement, the military is to utilize U.S.-flag commercial ships for sealift before it utilizes government-owned vessels in its reserve fleet. Jones Act mariners are expected to crew sealift ships when needed, and thus the decades-long shrinkage of the oceangoing Jones Act fleet and mariner pool has been raised as a concern. The Department of Defense is planning to buy more used foreign-built ships for sealift rather than building them in the United States for cost reasons. It also has found that repairing its current fleet in U.S. shipyards is three times more expensive and has taken twice as long as estimated. Much of the commercial fleet is relatively old, raising safety concerns. Some useful types of ships are missing from the Jones Act-qualified fleet, such as heavy-lift vessels, liquefied natural gas (LNG) tankers, and deepwater offshore construction vessels. Both situations appear to some observers to be contrary to the policy goal of the Jones Act, which is to “have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in times of war or national emergency.”

May 17, 2019

African Swine Fever (ASF)

May 17, 2019

2018 Farm Bill Primer: Support for Urban Agriculture

May 16, 2019

Fiscal Policy: Economic Effects

Fiscal policy is the means by which the government adjusts its spending and revenue to influence the broader economy. By adjusting its level of spending and tax revenue, the government can affect the economy by either increasing or decreasing economic activity in the short term. For example, when the government runs a budget deficit, it is said to be engaging in fiscal stimulus, spurring economic activity, and when the government runs a budget surplus, it is said to be engaging in a fiscal contraction, slowing economic activity. The government can use fiscal stimulus to spur economic activity by increasing government spending, decreasing tax revenue, or a combination of the two. Increasing government spending tends to encourage economic activity either directly through purchasing additional goods and services from the private sector or indirectly by transferring funds to individuals who may then spend that money. Decreasing tax revenue tends to encourage economic activity indirectly by increasing individuals’ disposable income, which tends to lead to those individuals consuming more goods and services. This sort of expansionary fiscal policy can be beneficial when the economy is in recession, as it lessens the negative impacts of a recession, such as elevated unemployment and stagnant wages. However, expansionary fiscal policy can result in rising interest rates, growing trade deficits, and accelerating inflation, particularly if applied during healthy economic expansions. These side effects from expansionary fiscal policy tend to partly offset its stimulative effects. The government can use contractionary fiscal policy to slow economic activity by decreasing government spending, increasing tax revenue, or a combination of the two. Decreasing government spending tends to slow economic activity as the government purchases fewer goods and services from the private sector. Increasing tax revenue tends to slow economic activity by decreasing individuals’ disposable income, likely causing them to decrease spending on goods and services. As the economy exits a recession and begins to grow at a healthy pace, policymakers may choose to reduce fiscal stimulus to avoid some of the negative consequences of expansionary fiscal policy, such as rising interest rates, growing trade deficits, and accelerating inflation, or to manage the level of public debt. In recent history, the federal government has generally followed a pattern of increasing fiscal stimulus during a recession, then decreasing fiscal stimulus during the economic recovery. Prior to the “Great Recession” of 2007-2009 the federal budget deficit was about 1% of gross domestic product (GDP) in 2007. During the recession, the budget deficit grew to nearly 10% of GDP in part due to additional fiscal stimulus applied to the economy. The budget deficit began shrinking in 2010, falling to about 2% of GDP by 2015. In contrast to the typical pattern of fiscal policy, the budget deficit began growing again in 2016, rising to nearly 4% of GDP in 2018 despite relatively strong economic conditions. This change in fiscal policy is notable, as expanding fiscal stimulus when the economy is not depressed can result in rising interest rates, a growing trade deficit, and accelerating inflation. As of publication of this report, interest rates have not risen discernibly and are still near historic lows, and inflation rates show no sign of acceleration. The trade deficit has been growing in recent years; however, it is not clear that this growth in the trade deficit is a result of increased fiscal stimulus.

May 16, 2019

The European Parliament and U.S. Interests

May 16, 2019

House Select Committee on the Modernization of Congress: Structure and Procedures

On January 4, 2019, the House established the Select Committee on the Modernization of Congress by adopting Title II of H.Res. 6, the House rules package for the 116th Congress (2019-2020), on a 418-12 vote. The purpose of the select committee as stated in its authorizing resolution is “to investigate, study, make findings, hold public hearings, and develop recommendations on modernizing Congress.” Twelve Members, six from each party, have been selected by their leadership to serve on the select committee during its year-long investigation. The committee’s authorizing resolution requires its membership to include two Members from the freshman class of the 116th Congress, two Members of the Rules Committee, and two Members of the Committee on House Administration. Funding for the select committee in the amount of $487,500 was provided through House adoption of H.Res. 245 on March 27, 2019. The committee has held four hearings to date, with additional meetings likely. Committee operations are scheduled to end on February 1, 2020. Any final report of the committee will be made public. Publication of the final report will require approval from at least two-thirds of the committee. Given that both parties are equally represented on the committee, some amount of bipartisan support will be needed to approve and publish the final report.

May 16, 2019

Proposed U.S.-EU Trade Agreement Negotiations

May 15, 2019

Marijuana Use and Highway Safety

A growing number of Americans report that they use marijuana. Most states now allow the use of marijuana for treatment of medical conditions. Ten states and the District of Columbia, representing a quarter of the U.S. population, have decriminalized the recreational use of marijuana, and other states are considering following suit. As the opportunity for legal use of marijuana grows, there is concern about the impact of marijuana usage on highway safety. In a 2018 survey, the majority of state highway safety officers considered drugged driving an issue at least as important as driving while impaired by alcohol (which is associated with over 10,000 highway deaths each year). As of May 2019, 18 states have enacted laws declaring that a specified concentration of THC in a driver’s body constitutes evidence of impairment and is inherently illegal (referred to as per se laws), similar to the .08% blood alcohol content (BAC) standard of alcohol impairment. Advocates of loosening restrictions on marijuana often compare marijuana usage to drinking alcohol, which may contribute to some stakeholders viewing marijuana use and driving as similar to alcohol’s impairment of driving. Research studies indicate that marijuana’s effects on drivers’ performance may vary from the effects of alcohol, in ways that challenge dealing with marijuana impairment and driving similarly to alcohol-impaired driving. Alcohol is a nervous system depressant that is absorbed into the blood and metabolized by the body fairly quickly, such that there is little trace of alcohol after 24 hours. Its impairing effects have been extensively studied over many decades, and the association between levels of alcohol consumption and degrees of impairment is well-established. By contrast, marijuana is a nervous system stimulant. It contains over 500 chemical compounds, only one of which, tetrahydrocannabinol (THC), is significantly psychoactive. Its effects are felt quickly after smoking, but more slowly when consumed in other forms (e.g., in food). It is metabolized quickly, but the body can store THC in fat cells, so that traces of THC can be found up to several weeks after consumption. Its impairing effects have been the subject of limited study, due in part to its status as a controlled substance under federal law. Although laboratory studies have shown that marijuana consumption can affect a person’s response times and motor performance, studies of the impact of marijuana consumption on a driver’s risk of being involved in a crash have produced conflicting results, with some studies finding little or no increased risk of a crash from marijuana usage. Levels of impairment that can be identified in laboratory settings may not have a significant impact in real world settings, where many variables affect the likelihood of a crash occurring. Research studies have been unable to consistently correlate levels of marijuana consumption, or THC in a person’s body, and levels of impairment. Thus some researchers, and the National Highway Traffic Safety Administration, have observed that using a measure of THC as evidence of a driver’s impairment is not supported by scientific evidence to date. Congress, state legislatures, and other decisionmakers may address the topic of marijuana use and driver impairment through various policy options, including whether or not to support additional research on the impact of marijuana on driver performance and on measurement techniques for marijuana impairment, as well as training for law enforcement on identifying marijuana impairment. Other deliberations may address federal regulations on marijuana use and testing for transportation safety-sensitive employees.

May 14, 2019

Addressing the Long-Run Deficit: A Comparison of Approaches

The growth of the national debt, which is considered unsustainable under current policies, continues to be one of the central issues of domestic federal policymaking. Addressing a federal budget deficit that is unsustainable over the long run involves choices. Fundamentally, the issues require deciding what government goods, services, and transfers are worth paying taxes for. Most people would agree that the country benefits from a wide range of government services—air traffic controllers, border security, courts and corrections, and so forth—provided by the federal government. Yet federal government provision of goods and services comprises only a modest portion of the federal budget. Transfers, including interest payments, accounted for around 75% of the federal budget. Central findings of this analysis include the following: A comparatively small share of federal spending is for the direct provision of domestic government goods and services. Transfers and payments to persons and to state and local governments constitute most of federal spending, about 75% of all federal spending. Defense spending, accounting for about 15% of federal spending, has declined as a share of output over the past 35 years, but it also tends to vary depending, in part, on the presence and magnitude of international conflicts. The problem with the debt lies not in the past but in the future, as growth in spending for health and Social Security is projected to continue faster than the economy as a whole. The increase in deficits and debt, in turn, leads to a significant increase in interest payments. Because much of the pressure on future spending arises from imbalances in Social Security and Medicare Part A (Hospital Insurance) trust funds, keeping these funds and their sources of financing intact is a concern that could constrain choices. Preserving entitlements would likely require significant increases in taxes, such as raising rates, reducing tax expenditures, increasing other taxes, or introducing new revenue sources. Reductions in discretionary spending are insufficient to reduce the deficit to a sustainable level, so limiting taxes as a percentage of output or constraining the overall size of the government to current levels would likely require significant cuts in mandatory spending, including entitlement programs such as Social Security, Medicare, and Medicaid. Because the federal government provides about one-fifth of the revenue for state and local governments, cutbacks in transfers to these governments may, in part, shift the burden of providing services from the national to subnational governments rather than altering the overall size of government services.

May 14, 2019

FY2020 LHHS Appropriations: Status

Congress recently began consideration of the FY2020 appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS). The LHHS bill is the largest ($1.06 trillion in FY2019) of the 12 annual appropriations bills, when accounting for both mandatory and discretionary funding. On May 8, 2019, the House Appropriations Committee marked up the FY2020 LHHS bill at their first full committee markup of the year. (See the draft bill and draft committee report considered at the markup. The draft report includes a detailed table summarizing proposed funding for agencies, accounts, and programs across the bill.) At the markup, the committee ordered the bill reported by a vote of 30-23. The full committee markup followed subcommittee approval of the bill, by voice vote, on April 30. Senate Appropriations Committee action for FY2020 has yet to occur. Scope of the Bill The LHHS bill provides annually appropriated budget authority for the Department of Labor, the majority of the Department of Health and Human Services (except for the Food and Drug Administration, the Indian Health Service, and the Agency for Toxic Substances and Disease Registry, which are funded in other appropriations bills), the Department of Education, and more than a dozen related agencies, including the Social Security Administration and the Corporation for National and Community Service. In general, mandatory funding represents just over 80% of the total LHHS bill, supporting annually appropriated entitlements, such as Medicaid and Supplemental Security Income. Discretionary funds account for less than 20% of total funds in the bill, but tend to receive the most attention throughout the LHHS appropriations process. This is because the appropriations process generally has little control over the amounts provided for appropriated entitlements; rather, the authorizing statute controls the program parameters (e.g., eligibility rules, benefit levels) that entitle certain recipients to payments. While discretionary appropriations represent a relatively small share of the entire LHHS bill, the bill itself is typically the largest single source of nondefense discretionary funding for the federal government. (The Department of Defense bill is the largest single source of discretionary funding overall.) Context for FY2020 Appropriations Under the congressional budget process, the start of annual appropriations decision-making traditionally is preceded by the submission of the President’s budget request and the adoption of the congressional budget resolution. Both of those steps were delayed or have not yet occurred for FY2020. The President’s budget submission for FY2020 was submitted on March 11, 2019, about five weeks after the statutory deadline. The delay was, in part, attributable to protracted negotiations over a number of the FY2019 annual appropriations bills (not including LHHS), during which there was a five-week government shutdown. Ultimately, appropriations for these annual bills were enacted on February 15, 2019 (almost five months after the start of the fiscal year). The annual adoption of a congressional budget resolution by its target date of April 15 is meant to provide an opportunity for Congress to consider and subsequently execute an overall budget framework. For FY2020, the House and Senate have not yet agreed to a budget resolution. In the absence of agreement on a budget resolution, on April 9, 2019, the House passed a deeming resolution for FY2020 (H.Res. 293) which gave the House Appropriations Committees a spending allocation of approximately $1.295 trillion for FY2020. This is about $177 billion (+16%) more than the combined FY2020 statutory discretionary spending limits for defense and nondefense spending under the Budget Control Act (BCA), as amended. The BCA limits come to $1.118 trillion, with $576 billion allocated to defense spending and $542 billion allocated to nondefense spending. Because the House allocation of $1.295 trillion exceeds amounts available under the statutory discretionary spending limits and because the Senate has not agreed to the same allocation, complications may arise as the House and Senate seek to resolve their differences on appropriations legislation. FY2020 LHHS Discretionary Funding On May 8, the same day as the full committee LHHS markup, the House Appropriations Committee adopted FY2020 discretionary suballocations for each of the 12 appropriations bills by a vote of 30-22. (These are sometimes also referred to as “302(b) suballocations.”) The Senate Appropriations Committee has not released any guidance as to how it intends to allocate discretionary funding among the 12 bills. Table 1 displays the FY2020 House discretionary suballocation for LHHS, along with the comparable FY2019 LHHS funding level. Relative to FY2019, the House committee allocation would increase FY2020 discretionary funding for LHHS by about $11.8 billion (+7%). Table 1. FY2020 LHHS Discretionary Suballocations with FY2019 Comparable Budget Authority in Billions of Dollars FY2019 Comparable FY2020 House Suballocation FY2020 Senate Suballocation $178.076 $189.876 TBD Source: Table prepared by the Congressional Research Service (CRS). The FY2019 comparable amount is the discretionary appropriations for LHHS, as scored by the Congressional Budget Office. The FY2020 House suballocation is as posted on the committee website in advance of the LHHS markup on May, 8, 2019. Notes: TBD = To Be Determined. Amounts in this table reflect current-year discretionary budget authority subject to spending limits. These amounts exclude discretionary funds for which special rules apply with regard to the spending limits, including certain funds for program integrity activities. In addition, this table does not reflect funds provided under certain authorities in the 21st Century Cures Act (P.L. 114-255) that are effectively exempt from the spending limits. Additional Resources For more information on the status of FY2020 appropriations as a whole, see the CRS Appropriations Status Table. CRS reports addressing key funding questions for the programs and agencies funded by the LHHS appropriations bill are available on the CRS website. For assistance with the LHHS bill, please reach out to the relevant CRS expert.

May 13, 2019

The Potential Decline of Cash Usage and Related Implications

Electronic forms of payment have become increasingly available, convenient, and cost efficient due to technological advances in digitization and data processing. Anecdotal reporting and certain analyses suggest that businesses and consumers are increasingly eschewing cash payments in favor of electronic payment methods. Such trends have led analysts and policymakers to examine the possibility that the use and acceptance of cash will significantly decline in coming years and to consider the effects of such an evolution. Cash is still a common and widely accepted payment system in the United States. Cash’s advantages include its simplicity and robustness as a payment system that requires no ancillary technologies. In addition, it provides privacy in transactions and protection from cyber threats or financial institution failures. However, using cash involves costs to businesses and consumers who pay fees to obtain, manage, and protect cash and exposes its users to loss through misplacement, theft, or accidental destruction of physical currency. Cash also concurrently generates government revenues through “profits” earned by producing it and by acting as interest-free liabilities to the Federal Reserve (in contrast to reserve balances on which the Federal Reserve pays interest), while reducing government revenues by facilitating some tax avoidance. The relative advantages and costs of various payment methods will largely determine whether and to what degree electronic payment systems will displace cash. Traditional noncash payment systems (such as credit and debit cards and interbank clearing systems) involving intermediaries such as banks and central banks address some of the shortcomings of cash payments. These systems can execute payments over physical distance, allow businesses and consumers to avoid some of the costs and risks of using cash, and are run by generally trusted and closely regulated intermediaries. However, the maintenance and operation of legacy noncash systems involve their own costs, and the intermediaries charge fees to recoup those costs and earn profits. The time it takes to finalize certain transactions—including crediting customer accounts for check or electronic deposits—can lead to consumers incurring additional costs. In addition, these systems involve cybersecurity risks and generally require customers to divulge their private personal information to gain system access, which raises privacy concerns. To date, the migration away from cash has largely been in favor of traditional noncash payment systems; however, some observers predict new alternative systems will play a larger role in the future. Such alternative systems aim to address some of the inefficiencies and risks of traditional noncash systems, but face obstacles to achieving that aim and involve costs of their own. Private systems using distributed ledger technology, such as cryptocurrencies, may not serve the main functions of money well and face challenges to widespread acceptance and technological scalability. These systems also raise concerns among certain observers related to whether these systems could facilitate crime, provide inadequate protections to consumers, and may adversely affect governments’ ability to implement or transmit monetary policy. The potential for increased payment efficiency from these systems is promising enough that certain central banks have investigated the possibility of issuing government-backed, electronic-only currencies—called central bank digital currencies (CBDCs)—in such a way that the benefits of certain alternative payment systems could be realized with appropriately mitigated risk. How CBDCs would be created and function are still matters of speculation at this time, and the possibility of their introduction raises questions about the appropriate role of a central bank in the financial system and the economy. If the relative benefits and costs of cash and the various other payment methods evolve in such a way that cash is significantly displaced as a commonly accepted form of payment, that evolution could have a number of effects, both positive and negative, on the economy and society. Proponents of reducing cash usage (or even eliminating it all together and becoming a cashless society) argue that doing so will generate important benefits, including potentially improved efficiency of the payment system, a reduction of crime, and less constrained monetary policy. Proponents of maintaining cash as a payment option argue that significant reductions in cash usage and acceptance would further marginalize people with limited access to the financial system, increase the financial system’s vulnerability to cyberattack, and reduce personal privacy. Based on their assessment of the magnitude of these benefits and costs and the likelihood that market forces will displace cash as a payment system, policymakers may choose to encourage or discourage this trend.

May 10, 2019

The Director of National Intelligence (DNI)

May 10, 2019

Attorney General Rules that Unlawful Entrants Generally Must Remain Detained While Asylum Claims Are Considered

May 10, 2019

Federal Research and Development (R&D) Funding: FY2020

President Trump’s budget request for FY2020 includes approximately $134.1 billion for research and development (R&D). Several FY2019 appropriations bills had not been enacted at the time the President’s FY2020 budget was prepared; therefore, the President’s budget included the FY2018 actual funding levels, 2019 annualized continuing resolution (CR) levels, and the FY2020 request levels. On February 15, 2019, Congress enacted the Consolidated Appropriations Act, 2019 (P.L. 116-6). This act included each of the remaining appropriations acts, completing the FY2019 appropriations process. The act also rendered the CR levels identified in the budget no longer relevant, though for some agencies the exact amount of R&D funding in the act remained uncertain. The analysis of government-wide R&D funding in this report compares the President’s request for FY2020 to the FY2018 level. For agencies for which the FY2019 R&D funding levels are known, individual agency analyses in this report compare the FY2020 request to FY2019 enacted levels. For agencies for which the FY2019 R&D funding levels remain unknown, individual agency analyses in this report compare the FY2020 request to FY2018 actual levels; when the FY2019 levels become available, these sections will be updated to compare the FY2020 request to FY2019 enacted amounts. As of the date of this report, the House had not completed action on any of the 12 regular appropriations bills for FY2020; nor had the Senate. In FY2018, OMB adopted a change to the definition of development, applying a more narrow treatment it describes as “experimental development.” This change was intended to harmonize the reporting of U.S. R&D funding data with the approach used by other nations. The new definition is used in this report. Under the new definition of R&D (applied to both FY2018 and FY2020 figures), President Trump is requesting approximately $134.1 billion for R&D for FY2020, a decrease of $1.7 billion (1.2%) from the FY2018 level. Adjusted for inflation, the President’s FY2020 R&D request represents a decrease of 5.1% below the FY2018 level. Funding for R&D is concentrated in a few departments and agencies. In FY2018, eight federal agencies received 96.3% of total federal R&D funding, with the Department of Defense (DOD, 38.6%) and the Department of Health and Human Services (HHS, 27.2%) combined accounting for nearly two-thirds of all federal R&D funding. The same eight agencies account for 97.2% of the FY2020 request, with DOD accounting for 44.3% and HHS for 25.1% Under the President’s FY2020 budget request, most federal agencies would see their R&D funding decline. The primary exception is the Department of Defense. DOD’s requested R&D funding for FY2020 is $7.1 billion (13.5%) above the FY2018 level. The Departments of Transportation and Veterans Affairs would see small increases in R&D funding. Among the agencies with the largest proposed reductions in R&D funding in the FY2020 budget compared to the FY2018 actual levels are the Department of Energy ($2.8 billion, 15.8%), the National Science Foundation ($567 million, 9.0%), and National Aeronautics and Space Administration ($475 million, 4.0%). The President’s FY2020 budget request would reduce funding for basic research by $1.5 billion (4.0%), applied research by $4.3 billion (10.5%), and facilities and equipment by $0.5 billion (12.8%), while increasing funding for development by $4.5 billion (8.3%). President Trump’s FY2020 budget is largely silent on funding levels for multiagency R&D initiatives. However, some activities supporting these initiatives are discussed in agency budget justifications and are reported in the agency analyses in this report. The request represents the President’s R&D priorities. Congress may opt to agree with none, part, or all of the request, and it may express different priorities through the appropriations process. In recent years, Congress has completed the annual appropriations process after the start of the fiscal year. Completing the process after the start of the fiscal year and the accompanying use of continuing resolutions can affect agencies’ execution of their R&D budgets, including the delay or cancellation of planned R&D activities and the acquisition of R&D-related equipment.

May 9, 2019

U.S. Fish and Wildlife Service: FY2020 Appropriations

May 8, 2019

Firearm “Red Flag” Laws in the 116th Congress

May 8, 2019

FY2018 and FY2019 Agriculture Appropriations: International Food Aid

The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—funds the U.S. Department of Agriculture (USDA) except for the Forest Service. This includes funding for certain U.S. international food aid programs. In March 2018, President Trump signed the Consolidated Appropriations Act, 2018 (P.L. 115-141), an omnibus appropriations act for FY2018, into law. In February 2019, President Trump signed the Consolidated Appropriations Act, 2019 (P.L. 116-6), an omnibus appropriations act for FY2019, into law. The FY2018 and FY2019 Agriculture Appropriations Acts—Division A of P.L. 115-141 and Division B of P.L. 116-6, respectively—include funding for certain U.S. international food aid programs, such as the Food for Peace (FFP) Title II Program and the McGovern-Dole International Food for Education and Child Nutrition Program. Other international food aid programs receive mandatory funding and do not rely on discretionary funding provided through annual appropriations. Congress authorizes discretionary and mandatory funding levels for international food aid programs in periodic farm bills, most recently the Agriculture Improvement Act of 2018 (P.L. 115-334). Funding for U.S. International Food Aid in Agriculture Appropriations, FY2013-FY2019 / Source: Compiled by CRS using enacted appropriations acts, the FY2019 Administration’s Budget Request, H.R. 5961, and H.R. 6147. Notes: FFP = Food for Peace. FY2017 totals for FFP Title II do not include a $300 million transfer from the SFOPS International Disaster Assistance account. Appropriations for the USDA Foreign Agricultural Service’s (FAS) Salaries and Expenses account support FAS international trade and international food aid programs. USDA does not account for salaries and expenses supporting international food aid programs separate from those supporting nonfood aid programs. Therefore, FAS salaries and expenses are not included in appropriations totals. This analysis covers appropriations for U.S. international food aid programs that Congress funds through agriculture appropriations bills. It does not cover appropriations for international food assistance or agricultural development programs that Congress funds in State, Foreign Operations, and Related Programs (SFOPS) appropriations bills, such as the Emergency Food Security Program (EFSP) or the Feed the Future Program. In FY2018, Congress provided a total of $1.924 billion in funding for U.S. international food aid programs, a 7% increase from the $1.802 billion provided in FY2017. In FY2019, Congress provided $1.942 billion in funding for U.S. international food aid programs, a 1% increase from FY2018 enacted levels. In addition to providing funding for U.S. international food aid programs, agriculture appropriations bills may also include policy-related provisions that direct how the executive branch should carry out certain appropriations. The FY2018 and FY2019 Agriculture Appropriations Acts, as well as House and Senate Agriculture appropriations bills for those fiscal years, include policy provisions related to international food aid programs. For example, one provision directs that a certain amount of the funds appropriated for the McGovern-Dole Program be used to provide locally and regionally procured food assistance—food assistance purchased in the country or region where it is to be distributed rather than in the United States.

May 8, 2019

FY2019 Supplemental Appropriations: CRS Experts

(To be suppressed.) The following list of CRS experts provides points of contact for CRS’s congressional clients with specific questions regarding the particular appropriations and provisions proposed in the various disaster relief supplemental bills considered for FY2019. This report is intended as a companion to other CRS products on the FY2019 disaster relief supplemental appropriations measures. The appropriations are largely arranged the way they are in the bill itself: they are grouped by subcommittee of jurisdiction, and by department or agency within each subcommittee—some departments receive appropriations from multiple subcommittees. After the appropriation account, a cross-reference to a CRS product may be listed to provide context for the programs or activities funded by that particular account, followed by the name of the relevant CRS expert, their phone number, and e-mail address. Please note that some experts cover multiple accounts or programs.

May 7, 2019

Proposed Civilian Personnel System Supporting “Space Force”

May 7, 2019

Enhanced Prudential Regulation of Large Banks

The 2007-2009 financial crisis highlighted the problem of “too big to fail” financial institutions—the concept that the failure of large financial firms could trigger financial instability, which in several cases prompted extraordinary federal assistance to prevent their failure. One pillar of the 2010 Dodd-Frank Act’s (P.L. 111-203) response to addressing financial stability and ending too big to fail is a new enhanced prudential regulatory (EPR) regime that applies to large banks and to nonbank financial institutions designated by the Financial Stability Oversight Council (FSOC) as systemically important financial institutions (SIFIs). Previously, FSOC had designated four nonbank SIFIs for enhanced prudential regulation, but all four have since been de-designated. Under this regime, the Federal Reserve (Fed) is required to apply a number of safety and soundness requirements to large banks that are more stringent than those applied to smaller banks. These requirements are intended to mitigate systemic risk posed by large banks Stress tests and capital planning ensure banks hold enough capital to survive a crisis. Living wills provide a plan to safely wind down a failing bank. Liquidity requirements ensure that banks are sufficiently liquid if they lose access to funding markets. Counterparty limits restrict the bank’s exposure to counterparty default. Risk management requires publicly traded companies to have risk committees on their boards and banks to have chief risk officers. Financial stability requirements provide for regulatory interventions that can be taken only if a bank poses a threat to financial stability. Capital requirements under Basel III, an international agreement, require large banks hold more capital than other banks to potentially absorb unforeseen losses. The Dodd-Frank Act automatically subjected all bank holding companies and foreign banks with more than $50 billion in assets to enhanced prudential regulation. In 2017, the Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174) created a more “tiered” and “tailored” EPR regime for banks. It automatically exempted domestic banks with assets between $50 billion and $100 billion (five at present) from enhanced regulation. The Fed has discretion to apply most individual enhanced prudential provisions to the 11 domestic banks with between $100 billion and $250 billion in assets on a case-by-case basis if it would promote financial stability or the institutions’ safety and soundness, and has proposed exempting them from several EPR requirements. The eight domestic banks that have been designated as Global-Systemically Important Banks (G-SIBs) and the five banks with more than $250 billion in assets or $75 billion in cross-jurisdictional activity remain subject to all Dodd-Frank EPR requirements. In addition, the Fed has proposed applying some EPR requirements on a progressively tiered basis to the 23 foreign banks with over $50 billion in U.S. assets and $250 billion in global assets. P.L. 115-174 also reduced the amount of capital that custody banks are required to hold against one of the EPR capital requirements, the supplementary leverage ratio (SLR). In addition, the Fed has issued a proposed rule that would reduce the amount of capital that G-SIBs are required to hold against the SLR. Finally, the Fed has proposed another rule that would combine capital planning under the stress tests with overall capital requirements for large banks. Collectively, these proposed changes would reduce, to varying degrees, capital and other advanced EPR requirements for banks with more than $50 billion in assets. In the view of the banking regulators and the supporters of P.L. 115-174, these changes better tailor EPR to match the risks posed by large banks. Opponents are concerned that the additional systemic and prudential risks posed by these changes outweigh the benefits to society of reduced regulatory burden, believing that the benefits will mainly accrue to the affected banks.

May 6, 2019

2018 Farm Bill Primer: Title II Conservation Programs

May 3, 2019

Housing Issues in the 116th Congress

The 116th Congress may consider a variety of housing-related issues. These could include topics related to housing finance, federal housing assistance programs, and housing-related tax provisions, among other things. Particular issues that may be of interest during the Congress include the following: The status of Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that have been in conservatorship since 2008. Congress might consider comprehensive housing finance reform legislation to resolve the status of Fannie Mae and Freddie Mac. Furthermore, a new director for the Federal Housing Finance Agency (FHFA), Fannie Mae’s and Freddie Mac’s regulator and conservator, was sworn in on April 15, 2019. Congress may take an interest in any administrative changes that FHFA might make to Fannie Mae and Freddie Mac under new leadership. Appropriations for federal housing programs, including programs at the Department of Housing and Urban Development (HUD) and rural housing programs administered by the U.S. Department of Agriculture (USDA), particularly in light of discretionary budget caps that are currently scheduled to decrease for FY2020. Oversight of the implementation of certain changes to federal assisted housing programs that were enacted in prior Congresses, such as expansions of HUD’s Moving to Work (MTW) program and Rental Assistance Demonstration (RAD) program. Considerations related to housing and the federal response to major disasters, including oversight of the implementation of certain changes related to Federal Emergency Management Agency (FEMA) assistance that were enacted in the previous Congress. Consideration of legislation related to certain federal housing programs that provide assistance to Native Americans living in tribal areas. Consideration of legislation to extend certain temporary tax provisions that are currently expired, including housing-related provisions that provide a tax exclusion for canceled mortgage debt and allow for the deductibility of mortgage insurance premiums, respectively. Housing and mortgage market conditions provide context for these and other issues that Congress may consider, although housing markets are local in nature and national housing market indicators do not necessarily accurately reflect conditions in specific communities. On a national basis, some key characteristics of owner-occupied housing markets and the mortgage market in recent years include increasing housing prices, low mortgage interest rates, and home sales that have been increasing but constrained by a limited inventory of homes on the market. Key characteristics of rental housing markets include an increasing number of renters, low rental vacancy rates, and increasing rents. Rising home prices and rents that have outpaced income growth in recent years have led to policymakers and others increasingly raising concerns about the affordability of both owner-occupied and rental housing. Affordability challenges are most prominent among the lowest-income renter households, reflecting a shortage of rental housing units that are both affordable and available to this population.

May 3, 2019

Postsecondary Education of Native Americans

May 3, 2019

Land and Water Conservation Fund (LWCF): Frequently Asked Questions

May 3, 2019

U.S. Fish and Wildlife Service: FY2019 Appropriations

May 2, 2019

Administration Proposal to Reorganize the U.S. Office of Personnel Management (OPM)

The U.S Office of Personnel Management (OPM), the federal government’s central personnel agency, is an independent establishment in the executive branch. Created by the Civil Service Reform Act of 1978, the agency’s statutory authority is codified in 5 U.S.C. Chapter 11. In June 2018, President Donald Trump issued reorganization recommendations that included a proposal to transfer several OPM functions to the Executive Office of the President (EOP) and the General Services Administration (GSA). The President’s FY2020 budget restated the reorganization proposal, including that the entire agency would be reorganized. Government Reorganization Authority Reorganizations that exceed the boundaries of one agency, or that are inconsistent with existing law, are generally accomplished through the legislative process. In some cases, Congress has changed the organization of an agency by shifting funding and functions between offices. Where statutes vest functions in the President, they may be delegated and redelegated. In general, agency heads have discretion, consistent with existing statutes, to organize and manage the day-to-day operations of their organizations. These authorities do not, however, supersede or conflict with specific statutory directives, limitations, or organizational arrangements. According to the budget proposal, “the Administration has been developing plans to execute transfers of OPM functions to GSA and the Department of Defense using a combination of existing legal authority and legislation” since June 2018. Principal OPM program offices that are proposed to be reorganized are briefly discussed below. Employee Services (ES) OPM Employee Services provides “policy direction and leadership in designing, developing, and implementing Government-wide human resources systems and programs.” The EOP’s FY2020 Congressional Budget Submission proposed that a new office be established in the Office of Management and Budget to “provide Government-wide strategic direction on federal human capital policy, and coordinate personnel policies, regulations and procedures for Executive agencies, in conjunction with the Office of Personnel Management vested within” the GSA. The budget requested $400,000 and three full-time equivalent employees to establish the office. Merit System Accountability and Compliance (MSAC) OPM Merit System Accountability and Compliance ensures that “Federal agency human resources programs are effective and meet merit system principles and related civil service requirements.” The GSA and OPM Congressional Justification proposed the merger of this function with GSA “upon enactment of authorizing legislation during FY2020.” The budget requested $16,457,000 for MSAC. Human Resources Solutions (HRS) OPM Human Resources Solutions provides a variety of HR products and services to agencies on a reimbursable basis to help them perform their core functions. HRS manages USAJOBS and other information technology systems that automate HR processes. Notably, HRS and GSA currently partner to administer the Human Capital and Training Solutions contracts, which provide customized training and development, human capital strategy, and organizational performance services. HRS is financed by OPM’s revolving fund. HRS was identified as the first program office that would transition to GSA as part of the proposed reorganization in a July 2018 congressional hearing. GSA issued a sources sought notice in August 2018 to identify potential contractors to assist with the transition. Since then, few details have been provided on the HRS transition. The budget proposals from the President and GSA and OPM mention that the transition is underway but do not discuss its status, cost, or organizational and policy implications. In February 2019, Congress directed OPM to provide quarterly updates on the status of the HRS transition and a report outlining the budgetary implications of and existing legal authority for the transfer. Retirement Services (RS) OPM Retirement Services determines eligibility and administers benefits for almost 2.6 million federal retirees and their survivors under the Civil Service Retirement System (CSRS) and the Federal Employees’ Retirement System (FERS). These pension systems cover the majority of the civilian federal workforce. Both CSRS and FERS include retirement, disability, and survivor components. CSRS and FERS benefits are financed through a dedicated federal trust fund, the Civil Service Retirement and Disability Fund. Under the Administration’s plan to reorganize OPM, the current RS functions would be merged into the GSA. Additionally, the budget proposed changes to OPM-administered federal retirement benefits, including increases to employee contributions, elimination and/or reduction in the cost-of-living-adjustments for different federal retirement benefits, elimination of a retirement supplement for certain qualifying former employees, and a change in the measure of pay used in the retirement benefit calculation (from “high-3” to “high-5”). Healthcare and Insurance (H&I) OPM Healthcare and Insurance administers insurance and benefit programs for federal employees, retirees, and their families. These programs are the Federal Employees Health Benefits Program, the Federal Employees’ Group Life Insurance Program, the Federal Long Term Care Insurance Program, the Federal Flexible Spending Account Program, and the Federal Employees Dental and Vision Insurance Program. H&I coordinates and administers the annual Federal Benefits Open Season, during which current participants can enroll or change their enrollment in the programs mentioned above, and “performs operational, analytical, and systems support; policy development and implementation; actuarial analysis; and stakeholder outreach and education for each” program. The GSA and OPM Congressional Justification proposed to transfer the “transactional and consultative services” within H&I to GSA and stated that the reorganization would be completed by September 30, 2020, through “legislation and a request for direct appropriation to cover transition costs.” Office of Inspector General (OIG) The OPM Office of the Inspector General is an independent, nonpartisan entity that is intended to prevent and detect waste, fraud, and abuse at the agency. Under the Inspector General Act of 1978, as amended, the OIG conducts audits, investigations, and other evaluations of programs and operations and makes recommendations to improve them. The Administration’s budget proposed transferring the OIG to the GSA OIG—a recommendation that was not included in the June 2018 reform plan. The GSA and OPM Congressional Justification requested $1 million to cover anticipated costs associated with the transfer. It stated that the transfer is “contingent upon enactment of authorizing legislation” but anticipates that the GSA OIG will oversee “human resources operations functions” currently performed by OPM in FY2019.

May 1, 2019

Energy and Water Development: FY2020 Appropriations

The Energy and Water Development appropriations bill provides funding for civil works projects of the U.S. Army Corps of Engineers (USACE); the Department of the Interior’s Bureau of Reclamation (Reclamation) and Central Utah Project (CUP); the Department of Energy (DOE); the Nuclear Regulatory Commission (NRC); and several other independent agencies. DOE typically accounts for about 80% of the bill’s funding. President Trump submitted his FY2020 detailed budget proposal to Congress on March 18, 2019 (after submitting a general budget overview on March 11). The budget requests for agencies included in the Energy and Water Development appropriations bill total $38.02 billion—$6.64 billion (15%) below the FY2019 appropriation. The largest exception to the overall decrease proposed for energy and water programs is a $1.309 billion increase (12%) for DOE nuclear weapons activities. For FY2019, the conference agreement on H.R. 5895 (H.Rept. 115-929) provided total Energy and Water Development appropriations of $44.66 billion—3% above the FY2018 level, excluding supplemental funding, and 23% above the FY2019 request. It was signed by the President on September 21, 2018 (P.L. 115-244). Emergency supplemental appropriations totaling $17.419 billion were provided to USACE and DOE for hurricane response by the Bipartisan Budget Act of 2018 (P.L. 115-123), signed February 9, 2018. Major Energy and Water Development funding issues for FY2020 are listed below. They were selected based on the total funding involved, the percentage of proposed increases or decreases, and potential impact on broader public policy considerations. Water Agency Funding Reductions. The Trump Administration requested reductions of 31% for USACE and 29% for Reclamation for FY2020 from the FY2019 enacted levels. The largest reductions would be from USACE Operation and Maintenance (-48%) and Reclamation’s Water and Related Resources account (-31%). Similar reductions proposed by the Administration for FY2019 were not enacted. Power Marketing Administration (PMA) Reforms. DOE’s FY2020 budget request includes mandatory proposals to sell PMA electricity transmission lines and other assets, repeal certain PMA borrowing authority, and eliminate cost-based limits on the electricity rates charged by the PMAs. The proposals would need to be enacted in authorizing legislation. Termination of Energy Efficiency Grants. DOE’s Weatherization Assistance Program and State Energy Program would be terminated under the FY2020 budget request. The Administration had proposed to eliminate the grants in FY2018 and FY2019, but Congress continued funding. Reductions in Energy Research and Development. Under the FY2020 budget request, DOE research and development appropriations would be reduced for energy efficiency and renewable energy (EERE) by 83%, nuclear energy by 38%, and fossil energy by 24%. Similar reductions proposed by the Administration for FY2019 were not enacted. Nuclear Waste Repository. The Administration’s budget request would provide new funding for the first time since FY2010 for a proposed nuclear waste repository at Yucca Mountain, NV. DOE would receive $116 million to seek an NRC license for the repository and develop interim waste storage capacity. NRC would receive $38.5 million to consider DOE’s repository license application. Similar Administration funding requests for FY2018 and FY2019 were not enacted. Elimination of Advanced Research Projects Agency—Energy (ARPA-E). The Trump Administration proposes no new appropriations for ARPA-E in FY2020 and to cancel $287 million in unobligated balances from previous appropriations. Similar proposals to terminate ARPA-E in FY2018 and FY2019 were not enacted. Loan Programs Termination. The FY2020 budget request would terminate DOE’s Title 17 Innovative Technology Loan Guarantee Program, the Advanced Technology Vehicles Manufacturing Loan Program, and the Tribal Energy Loan Guarantee Program. Administration proposals to eliminate the programs were not included in the enacted appropriations measures for FY2018 and FY2019. Weapons Activities. The FY2020 budget request for DOE Weapons Activities is 12% greater than it was in FY2019 ($12.4 billion vs. $11.1 billion), in contrast to a proposed 10% reduction in DOE’s total funding. Notable proposed increases would be used for warhead life extension programs and preparations for increase production of plutonium pits (warhead cores).

Apr 30, 2019

The Department of Homeland Security’s “Metering” Policy: Legal Issues

Apr 29, 2019

Financial Innovation: Reducing Fintech Regulatory Uncertainty

Apr 25, 2019

The Automobile Lending Market and Policy Issues

Apr 25, 2019

Base Closure and Realignment (BRAC): Background and Issues for Congress

Since 1977, statutory thresholds have effectively constrained the President’s ability to close or realign major military installations in the United States. Congress has instead periodically granted temporary authorities—known as a Base Realignment and Closure (BRAC)—that have established independent commissions for the review and approval of basing changes submitted by the Secretary of Defense. These unique and transient authorities last expired on April 16, 2006. There have been five rounds of base closures: 1988, 1991, 1993, 1995, and 2005. Though Congress has periodically adjusted the BRAC process to account for lessons learned, the modern framework has remained generally consistent with earlier rounds, and includes establishment of an independent commission; reliance on objective and uniform criteria; Government Accountability Office (GAO) review and certification of Department of Defense (DOD) data; deliberations designed to be transparent that include open hearings, solicitation of feedback, installation visits, and data available for public review; and requirement that the final list of closure and realignment recommendations be accepted or rejected in their entirety. Congress has defined BRAC selection criteria in statute, thus requiring the Secretary to prioritize military value over cost savings. Additionally, Congress has required the Secretary to align the Department’s recommendations with a comprehensive 20-year force structure plan. The commission may modify, reject, or add recommendations during its review before forwarding a final list to the President. After receiving the Commission’s list of recommendations, the President may either accept the report in its entirety or seek to modify it by indicating disapproval and returning it to the commission for further evaluation. If the President accepts the commission’s recommendations, they are forwarded to Congress. BRAC implementation begins by default unless Congress rejects the recommendations in their entirety within 45 days by enacting a joint resolution. During the implementation phase, DOD is required to initiate closures and realignments within two years and complete all actions within six years. The BRAC process represents a legislative compromise between the executive and legislative branches wherein each shares power in managing the closure and realignment of military bases. The imposition of an independent, third-party mediator was intended to insulate base closings from political considerations by both branches that had complicated similar actions in the past. This report provides background on the development of BRAC, describes its major elements and milestones, and outlines issues frequently cited in the context of new rounds, such as potential savings.

Apr 25, 2019

Community Disaster Loans: Homeland Security Issues in the 116th Congress

/ The Community Disaster Loan (CDL) program was developed to help local governments manage tax and other revenue shortages following a disaster. Administered by the Federal Emergency Management Agency (FEMA), CDLs provide financial liquidity to local governments through a structured loan that may be converted to grants when certain financial conditions are met. CDLs are codified in Section 417 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. §5184, as amended). Modified “non-traditional” CDL programs were developed in response to Hurricanes Rita and Katrina in 2005, and CDL-type programs for Puerto Rico and the U.S. Virgin Islands (USVI) were developed following 2017’s Hurricanes Harvey, Irma, and Maria. This Insight provides an overview of traditional and non-traditional CDLs and the policy issues they may raise in the 116th Congress, particularly with regard to CDL-type instruments developed for Puerto Rico and USVI. The CDL program may be of interest to Congress given observed increases in frequency and severity of disaster events and apparent congressional interest in oversight issues related to federal disaster response in Puerto Rico and USVI. Overview of Traditional CDLs CDLs were first authorized in the Disaster Relief Act of 1974 (P.L. 93-288) but are defined and established in the Stafford Act (which amended the Disaster Relief Act) to help local governments manage acute tax and other revenue loss after a disaster, which could inhibit their ability to adequately serve their communities during recovery. To qualify for a traditional CDL, an applicant must be located in a presidentially declared disaster area; show substantial loss (greater than 5%) of tax and other revenues; not be in arrears on any other previous CDL loans; and be permitted to take federal loans under their respective state law. CDLs are statutorily capped at $5 million (P.L. 106-390); and are structured around underwriting criteria that account for estimated revenue losses, the local government’s annual operating budget, and a disaster’s economic effects. CDLs are five-year loans, extendable to 10 years at FEMA’s discretion (44 C.F.R §206.367(c)), with interest rates determined by the Treasury Secretary. FEMA also issues guidance on how a CDL can be canceled, which involves submitting evidence of disaster-related operating deficits and associated revenue analyses to FEMA. Overview of Non-Traditional CDLs In special circumstances, Congress has authorized FEMA to administer non-traditional CDLs and CDL-type programs with different eligibility and technical requirements. Unlike traditional CDLs, these loans are not subject to the $5 million cap, and eligible areas are more geographically concentrated. For example, as part of the federal response to extensive economic damage caused by Hurricanes Katrina and Rita, Congress passed legislation in 2005 (P.L. 109-88) and 2006 (P.L. 109-234) to make approximately $1 billion available to support nearly $1.4 billion of non-traditional CDLs. While these non-traditional CDLs initially prohibited cancelation, subsequent 2007 legislation (P.L. 110-28) mandated that cancelation be allowed. CDL-Type Program in Puerto Rico and USVI Following Hurricanes Harvey, Irma, and Maria, Congress passed legislation (P.L. 115-72) providing funding for CDL-type loan instruments for Puerto Rico and USVI. This was not the first time territories received CDLs, with USVI receiving nearly $180 million in CDL funding after Hurricanes Hugo (1989) and Marilyn (1995) prior to the $5 million cap’s enactment. However, while the 2017 loan instruments were based on CDLs defined in the Stafford Act, and appropriations were made to the same fund drawn for CDLs, the resulting program was functionally different due to significant exceptions and modifications, including: Territorial governments were considered municipalities for the purposes of the program; The $5 million cap was lifted; Loan recipients were allowed to receive more than one loan; Loans could only be canceled at the discretion of the Secretary of Homeland Security in consultation with the Secretary of the Treasury; and The Secretary of Homeland Security, in consultation with the Secretary of the Treasury, solely determined the “terms, conditions, eligible uses, and timing and amount” of such loans. The CDL-type instrument’s statutory ambiguities related to loan cancelation and terms were further complicated by Puerto Rico’s broader fiscal crisis and the existence of a federal oversight board, as established by the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA; P.L. 114-187; see CRS Report R44532, The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; H.R. 5278, S. 2328), coordinated by D. Andrew Austin). Subsequent legislation in February 2018 (P.L. 115-123) required the Puerto Rican government to establish oversight board-approved recovery plans with monthly reports as a requirement for the CDL-type loan disbursement. Given this CDL-type instrument’s statutory ambiguities, the constitutional limitations of territories, and the extent of disaster across the entirety of both territories, the CDL-type program raises potential questions of equity compared to federal disaster response to states, such as in the aftermath of Hurricanes Katrina and Rita, where CDL-type disaster assistance was more comprehensive and less restricted. Potential Policy Issues for Congress Should the rate and severity of disaster-related damages continue along recent trends or accelerate, traditional CDLs or their non-traditional analogues may be increasingly utilized for disaster response or recovery purposes. However, due to their relatively low funding cap and specialized nature, traditional CDLs may be inadequately suited to widespread and severe disaster events. However, non-traditional CDLs or CDL-type instruments may lack sufficiently defined disbursement and cancelation criteria, which potentially contribute to concerns over equity and utility. With respect to Puerto Rico and USVI, Congress may seek to specify program terms and cancelation criteria to bring these instruments more in line with traditional CDLs, or the types used following Hurricanes Katrina and Rita. Considering the CDL program in broader terms, Congress may consider structuring CDLs more expansively to account for a wider universe of disaster and emergency scenarios, such as state- or executive agency-based disaster declarations, expanding or lifting the $5 million cap, or simplifying the loan forgiveness process. One potential alternative would be to restructure CDLs with automatic forgiveness thresholds based on predetermined triggering criteria. Congress could also develop disaster assistance instruments that separately address immediate governmental liquidity, disaster response, and long-term recovery needs.

Apr 24, 2019

Iran Oil Sanctions Exceptions Ended

Overview On April 22, 2019, the State Department announced that exceptions granted to eight countries enabling them to buy Iranian oil without U.S. penalty would not be renewed when they expire on May 2, 2019. The announcement stated that the global oil market is sufficiently well supplied to permit the move, which “aims to bring Iran’s oil exports to zero, denying the regime its principal source of revenue.” The decision has raised speculation over how effective it will be in reducing Iran’s oil exports, how Iran will react, and potential effects on the global oil market—issues that might potentially be considered in evaluating legislation, including Iran sanctions legislation, in the 116th Congress. Legislative Basis The State Department announcement represents a decision under Section 1245 of the FY2012 National Defense Authorization Act (NDAA; P.L. 112-81). That law requires the President to prevent a foreign bank from opening or maintaining an account in the United States if that bank is determined to have conducted a “significant financial transaction” with Iran’s Central Bank or with any sanctioned Iranian bank. Iran’s Central Bank maintains or controls accounts abroad for the primary purpose of receiving payments for Iranian oil and other goods that are considered a national resource. The FY2012 NDAA provision provides an incentive for Iran’s oil buyers to cut purchases of Iranian oil by providing for an exception for the banks of any country determined to have “significantly reduced” its purchases of oil from Iran. The exception, called a “Significant Reduction Exception” (SRE), allows the banks of countries granted the SRE to conduct all transactions with the Central Bank (not just for oil) or with any sanctioned Iranian bank. The SRE is reviewed every 180 days, and, to maintain the SRE, countries are required to reduce their oil buys from Iran by approximately 20% relative to the previous period. Implementation The Obama and Trump Administrations have implemented the FY2012 NDAA with an eye toward balancing the stability of the global oil market with the intended effects on Iran’s economy and behavior. During 2012, the Obama Administration granted SREs to 20 countries, and the incentive succeeded in reducing Iran’s oil exports from about 2.5 million barrels per day (mbd) to about 1.1 mbd by the end of 2013. Of that amount, almost all was exported to six major customers: the European Union (mainly Greece, Italy, and Spain), China, India, Turkey, Japan, and South Korea, with smaller amounts exported to other buyers mainly in East Asia. In January 2016, in concert with the implementation of the 2015 multilateral nuclear deal with Iran, President Obama waived the NDAA provision, thus suspending the requirement of Iran’s oil customers to reduce their purchases to avoid sanctions. As a result, most buyers resumed purchasing oil from Iran at levels prior to the enactment of the law, and Iran’s exports quickly returned to the 2.5 mbd level. On November 5, 2018 the FY2012 NDAA provision went back into full effect as a consequence of President Trump’s decision in May 2018 to withdraw the United States from the Iran nuclear accord. However, Administration officials said at that time that they would evaluate new requests for SREs based on country-specific circumstances and the need for global oil market stability. On November 5, 2018, eight countries received SREs: China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey. Yet the requirement that countries continue to reduce purchases from Iran caused Iran’s oil sales to fall to about 1.1 mbd as of the end of March 2019. Of the eight, Taiwan, Greece, and Italy had ceased importing Iranian oil in late 2018. With the SREs set to expire on May 2, 2019, some of Iran’s oil customers indicated an expectation of receiving an SRE for another 180-day period. However, the Administration decided to apply additional pressure on Iran’s economy, perhaps assisted by commitments from Saudi Arabia, the United Arab Emirates, and other suppliers to ensure that “global oil markets remain adequately supplied.” Responses of Key Iran Oil Customers Whether the ending of the SREs achieves the stated goal of reducing Iran’s oil exports to zero depends on the behavior of Iran’s key customers. Some buyers might attempt to bypass U.S. penalties by forging an arrangement that trades Iranian oil for goods of equivalent value. Others might process payments through banks that do not operate in the United States. Some countries might try to link the imposition of actual penalties to their broader relationship with the United States. Officials from China, the largest buyer of Iranian oil, have expressed defiance of the U.S. move, indicating they will continue to buy oil from Iran. Turkey’s leaders have strongly criticized the U.S. decision and indicated Turkey might continue to buy Iranian oil. Indian officials said they would arrange alternate supplies. Japan and South Korea historically have strictly complied with U.S. sanctions and may find alternate supplies of oil and condensate—an ultra-light oil feedstock on which South Korea’s petrochemical industry depends. Iran’s Reaction and Possible Responses Coming only two weeks after the United States designated the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization (FTO), the SRE decision has further aggravated tensions with Iran. Immediately after the SRE announcement, the head of the IRGC Navy, Rear Admiral Alireza Tangsiri, reiterated a previous threat to close the strategic Strait of Hormuz, through which a third of the world’s seaborne oil passes, if the end of the SRE allowances causes Iran to be “banned from using [the Strait].” This latest Administration move might strengthen Iran’s hardliners in the internal Iranian debate over whether to abrogate the 2015 multilateral nuclear deal on the grounds that it no longer provides the promised economic benefits. Iran’s reaction to the Administration decision might affect congressional consideration of Iran sanctions legislation introduced in the 116th Congress.

Apr 24, 2019

Tax Depreciation of Qualified Improvement Property: Current Status and Legislative History

Apr 24, 2019

2018 Farm Bill Primer: Dairy Programs

Apr 24, 2019

Selected Homeland Security Issues in the 116th Congress

Apr 23, 2019

Assessing Commercial Disclosure Requirements under the First Amendment

Federal law contains a wide variety of disclosure requirements, including food labels, securities registrations, and disclosures about prescription drugs in direct-to-consumer advertising. These disclosure provisions require commercial actors to make statements that they otherwise might not, compelling speech and implicating the Free Speech Clause of the First Amendment. Nonetheless, while commercial disclosure requirements may regulate protected speech, that fact in and of itself does not render such provisions unconstitutional. The Supreme Court has historically allowed greater regulation of commercial speech than of other types of speech. Since at least the mid-1970s, however, the Supreme Court has been increasingly protective of commercial speech. This trend, along with other developments in First Amendment law, has led some commentators to question whether the Supreme Court might apply a stricter test in assessing commercial disclosure requirements in the near future. Nonetheless, governing Supreme Court precedent provides that disclosure requirements generally receive lesser judicial scrutiny when they compel only commercial speech, as opposed to noncommercial speech. In National Institute of Family and Life Advocates v. Becerra, a decision released in June 2018, the Supreme Court explained that it has applied a lower level of scrutiny to compelled disclosures under two circumstances. First, the Supreme Court has sometimes upheld laws that regulate commercial speech if the speech regulation is part of a larger regulatory scheme that is focused on conduct and only incidentally burdens speech. If a law is properly characterized as a regulation of conduct, rather than speech, then it may be subject to rational basis review, a deferential standard that asks only whether the regulation is a rational way to address the problem. However, it can be difficult to distinguish speech from conduct, and the Supreme Court has not frequently invoked this doctrine to uphold laws against First Amendment challenges. Second, the Supreme Court has sometimes applied a lower level of scrutiny to certain commercial disclosure requirements under the authority of a 1985 case, Zauderer v. Office of Disciplinary Counsel. In Zauderer, the Court upheld a disclosure requirement after noting that the challenged provision compelled only “factual and uncontroversial information about the terms under which . . . services will be available.” The Court said that under the circumstances, the service provider’s First Amendment rights were sufficiently protected because the disclosure requirement was “reasonably related” to the government’s interest “in preventing deception of consumers.” Lower courts have generally interpreted Zauderer to mean that if a commercial disclosure provision requires only “factual and uncontroversial information” about the goods or services being offered, it should be analyzed under rational basis review. If a commercial disclosure requirement does not qualify for review under Zauderer, then it will most likely be analyzed under the intermediate standard that generally applies to government actions that regulate commercial speech. Some legal scholars have argued that recent Supreme Court case law suggests the Court may subject commercial disclosure provisions to stricter scrutiny in the future, either by limiting the factual circumstances under which these two doctrines apply or by creating express exceptions to these doctrines. If a court applies a heightened level of scrutiny, it may require the government to present more evidence of the problem it is seeking to remedy and stronger justifications for choosing a disclosure requirement to achieve its purposes.

Apr 23, 2019

National Oceanic and Atmospheric Administration (NOAA): FY2020 Budget Request and Appropriations

Apr 22, 2019

No Oil Producing and Exporting Cartels (NOPEC) Act of 2019

Apr 22, 2019

Overview of FY2020 Appropriations for Commerce, Justice, Science, and Related Agencies (CJS)

This report describes actions taken by the Trump Administration and Congress to provide FY2020 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. The annual CJS appropriations act provides funding for the Department of Commerce, which includes agencies such as the Census Bureau, the U.S. Patent and Trademark Office (USPTO), the National Oceanic and Atmospheric Administration (NOAA), and the National Institute of Standards and Technology (NIST); the Department of Justice (DOJ), which includes agencies such as the Federal Bureau of Investigation (FBI), the Bureau of Prisons (BOP), the U.S. Marshals, the Drug Enforcement Administration (DEA), and the U.S. Attorneys; the National Aeronautics and Space Administration (NASA); the National Science Foundation (NSF); and several related agencies such as the Legal Services Corporation and the Equal Employment Opportunity Commission. The Administration requests $71.388 billion for CJS for FY2020, which is $1.520 billion (-2.1%) less than the $72.908 billion appropriated for CJS for FY2019. The Administration’s request includes $12.214 billion for the Department of Commerce, $30.529 billion for the Department of Justice, $28.092 billion for the science agencies, and $552 million for the related agencies. The Administration’s FY2020 budget proposes eliminating several CJS agencies and programs, including the Economic Development Administration, the Community Oriented Policing Services Office, NASA’s STEM Engagement Office (formerly the Office of Education), and the Legal Services Corporation. The Administration proposes reducing funding for many accounts in CJS, though there are a few exceptions—the most notable of which is the proposed $2.334 billion increase for the Census Bureau’s Periodic Censuses and Programs account. The increased funding is requested to help the Census Bureau conduct the decennial 2020 Census.

Apr 22, 2019

Army Corps of Engineers: Environmental Infrastructure (EI) Assistance

Apr 19, 2019