CRS Reports

FY2018 State Grants Under Title I-A of the Elementary and Secondary Education Act (ESEA)

The Elementary and Secondary Education Act (ESEA), most recently comprehensively amended by the Every Student Succeeds Act (ESSA; P.L. 114-95), is the primary source of federal aid to K-12 education. The Title I-A program is the largest grant program authorized under the ESEA and was funded at $15.8 billion for FY2018. It is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. Under current law, the U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The four Title I-A formulas have somewhat distinct allocation patterns, providing varying shares of allocated funds to different types of states. Thus, for some states, certain formulas are more favorable than others. This report provides FY2018 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California received the largest FY2018 Title I-A grant amount ($2.0 billion, or 12.76% of total Title I-A grants). Wyoming received the smallest FY2018 Title I-A grant amount ($35.9 million, or 0.23% of total Title I-A grants).

Apr 1, 2019

Digital Trade

Mar 29, 2019

U.S. Environmental Protection Agency (EPA) Appropriations: FY2020 President’s Budget Request

Mar 28, 2019

Assessing NATO’s Value

Mar 27, 2019

Defense Primer: Military Use of the Electromagnetic Spectrum

Mar 27, 2019

Defense Primer: U.S. Policy on Lethal Autonomous Weapon Systems

Mar 27, 2019

Free Speech and the Regulation of Social Media Content

As the Supreme Court has recognized, social media sites like Facebook and Twitter have become important venues for users to exercise free speech rights protected under the First Amendment. Commentators and legislators, however, have questioned whether these social media platforms are living up to their reputation as digital public forums. Some have expressed concern that these sites are not doing enough to counter violent or false speech. At the same time, many argue that the platforms are unfairly banning and restricting access to potentially valuable speech. Currently, federal law does not offer much recourse for social media users who seek to challenge a social media provider’s decision about whether and how to present a user’s content. Lawsuits predicated on these sites’ decisions to host or remove content have been largely unsuccessful, facing at least two significant barriers under existing federal law. First, while individuals have sometimes alleged that these companies violated their free speech rights by discriminating against users’ content, courts have held that the First Amendment, which provides protection against state action, is not implicated by the actions of these private companies. Second, courts have concluded that many non-constitutional claims are barred by Section 230 of the Communications Decency Act, 47 U.S.C. § 230, which provides immunity to providers of interactive computer services, including social media providers, both for certain decisions to host content created by others and for actions taken “voluntarily” and “in good faith” to restrict access to “objectionable” material. Some have argued that Congress should step in to regulate social media sites. Government action regulating internet content would constitute state action that may implicate the First Amendment. In particular, social media providers may argue that government regulations impermissibly infringe on the providers’ own constitutional free speech rights. Legal commentators have argued that when social media platforms decide whether and how to post users’ content, these publication decisions are themselves protected under the First Amendment. There are few court decisions evaluating whether a social media site, by virtue of publishing, organizing, or even editing protected speech, is itself exercising free speech rights. Consequently, commentators have largely analyzed the question of whether the First Amendment protects a social media site’s publication decisions by analogy to other types of First Amendment cases. There are at least three possible frameworks for analyzing governmental restrictions on social media sites’ ability to moderate user content. First, using the analogue of the company town, social media sites could be treated as state actors who are themselves bound to follow the First Amendment when they regulate protected speech. If social media sites were treated as state actors under the First Amendment, then the Constitution itself would constrain their conduct, even absent legislative regulation. The second possible framework would view social media sites as analogous to special industries like common carriers or broadcast media. The Court has historically allowed greater regulation of these industries’ speech, given the need to protect public access for users of their services. Under the second framework, if special aspects of social media sites threaten the use of the medium for communicative or expressive purposes, courts might approve of content-neutral regulations intended to solve those problems. The third analogy would treat social media sites like news editors, who generally receive the full protections of the First Amendment when making editorial decisions. If social media sites were considered to be equivalent to newspaper editors when they make decisions about whether and how to present users’ content, then those editorial decisions would receive the broadest protections under the First Amendment. Any government regulations that alter the editorial choices of social media sites by forcing them to host content that they would not otherwise transmit, or requiring them to take down content they would like to host, could be subject to strict scrutiny. A number of federal trial courts have held that search engines exercise editorial judgment protected by the First Amendment when they make decisions about whether and how to present specific websites or advertisements in search results, seemingly adopting this last framework. Which of these three frameworks applies will depend largely on the particular action being regulated. Under existing law, social media platforms may be more likely to receive First Amendment protection when they exercise more editorial discretion in presenting user-generated content, rather than if they neutrally transmit all such content. In addition, certain types of speech receive less protection under the First Amendment. Courts may be more likely to uphold regulations targeting certain disfavored categories of speech such as obscenity or speech inciting violence. Finally, if a law targets a social media site’s conduct rather than speech, it may not trigger the protections of the First Amendment at all.

Mar 27, 2019

Congressional Subpoenas: Enforcing Executive Branch Compliance

Congress gathers much of the information necessary to oversee the implementation of existing laws or to evaluate whether new laws are necessary from the executive branch. While executive branch officials comply with most congressional requests for information, there are times when the executive branch chooses to resist disclosure. When Congress finds an inquiry blocked by the withholding of information by the executive branch, or where the traditional process of negotiation and accommodation is inappropriate or unavailing, a subpoena—either for testimony or documents—may be used to compel compliance with congressional demands. The recipient of a duly issued and valid congressional subpoena has a legal obligation to comply, absent a valid and overriding privilege or other legal justification. But the subpoena is only as effective as the means by which it may be enforced. Without a process by which Congress can coerce compliance or deter non-compliance, the subpoena would be reduced to a formalized request rather than a constitutionally based demand for information. Congress currently employs an ad hoc combination of methods to combat non-compliance with subpoenas. The two predominant methods rely on the authority and participation of another branch of government. First, the criminal contempt statute permits a single house of Congress to certify a contempt citation to the executive branch for the criminal prosecution of an individual who has willfully refused to comply with a committee subpoena. Once the contempt citation is received, any prosecution lies within the control of the executive branch. Second, Congress may try to enforce a subpoena by seeking a civil judgment declaring that the recipient is legally obligated to comply. This process of civil enforcement relies on the help of the courts to enforce congressional demands. But these mechanisms do not always ensure congressional access to requested information. Recent controversies could be interpreted to suggest that the existing mechanisms are at times inadequate—particularly in the instance that enforcement is necessary to respond to a current or former executive branch official who has refused to comply with a subpoena. There would appear to be several ways in which Congress could alter its approach to enforcing committee subpoenas issued to executive branch officials. These alternatives include the enactment of laws that would expedite judicial consideration of subpoena-enforcement lawsuits filed by either house of Congress; the establishment of an independent office charged with enforcing the criminal contempt of Congress statute; or the creation of an automatic consequence, such as a withholding of appropriated funds, triggered by the approval of a contempt citation. In addition, either the House or Senate could consider acting on internal rules of procedure to revive the long-dormant inherent contempt power as a way to enforce subpoenas issued to executive branch officials. Yet, because of the institutional prerogatives that are often implicated in inter-branch oversight disputes, some of these proposals may raise constitutional concerns.

Mar 27, 2019

Dairy Provisions in USMCA

Mar 26, 2019

Congressional Participation in Litigation: Article III and Legislative Standing

Mar 26, 2019

FY2020 Defense Budget Request: An Overview

Mar 25, 2019

Data Protection Law: An Overview

Recent high-profile data breaches and other concerns about how third parties protect the privacy of individuals in the digital age have raised national concerns over legal protections of Americans’ electronic data. Intentional intrusions into government and private computer networks and inadequate corporate privacy and cybersecurity practices have exposed the personal information of millions of Americans to unwanted recipients. At the same time, internet connectivity has increased and varied in form in recent years. Americans now transmit their personal data on the internet at an exponentially higher rate than in the past, and their data are collected, cultivated, and maintained by a growing number of both “consumer facing” and “behind the scenes” actors such as data brokers. As a consequence, the privacy, cybersecurity and protection of personal data have emerged as a major issue for congressional consideration. Despite the rise in interest in data protection, the legislative paradigms governing cybersecurity and data privacy are complex and technical, and lack uniformity at the federal level. The constitutional “right to privacy” developed over the course of the 20th century, but this right generally guards only against government intrusions and does little to shield the average internet user from private actors. At the federal statutory level, there are a number of statutes that protect individuals’ personal data or concern cybersecurity, including the Gramm-Leach-Bliley Act, Health Insurance Portability and Accountability Act, Children’s Online Privacy Protection Act, and others. And a number of different agencies, including the Federal Trade Commission (FTC), the Consumer Finance Protection Bureau (CFPB), and the Department of Health and Human Services (HHS), enforce these laws. But these statutes primarily regulate certain industries and subcategories of data. The FTC fills in some of the statutory gaps by enforcing a broad prohibition against unfair and deceptive data protection practices. But no single federal law comprehensively regulates the collection and use of consumers’ personal data. Seeking a more fulsome data protection system, some governments—such as California and the European Union (EU)—have recently enacted privacy laws regulating nearly all forms of personal data within their jurisdictional reach. Some argue that Congress should consider creating similar protections in federal law, but others have criticized the EU and California approaches as being overly prescriptive and burdensome. Should the 116th Congress consider a comprehensive federal data protection law, its legislative proposals may involve numerous decision points and legal considerations. Points of consideration may include the conceptual framework of the law (i.e., whether it is prescriptive or outcome-based), the scope of the law and its definition of protected information, and the role of the FTC or other federal enforcement agency. Further, if Congress wants to allow individuals to enforce data protection laws and seek remedies for the violations of such laws in court, it must account for standing requirements in Article III, Section 2 of the Constitution. Federal preemption also raises complex legal questions—not only of whether to preempt state law, but what form of preemption Congress should employ. Finally, from a First Amendment perspective, Supreme Court jurisprudence suggests that while some privacy, cybersecurity, or data security regulations are permissible, any federal law that restricts protected speech, particularly if it targets specific speakers or content, may be subject to more stringent review by a reviewing court.

Mar 25, 2019

Defense Primer: Active Component Enlisted Recruiting

Mar 25, 2019

Attaching a Price to Greenhouse Gas Emissions with a Carbon Tax or Emissions Fee: Considerations and Potential Impacts

The U.S. Fourth National Climate Assessment, released in 2018, concluded that “the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas [GHG] emissions and to adapt to the changes that will occur.” Members of Congress and stakeholders articulate a wide range of perspectives over what to do, if anything, about GHG emissions, future climate change, and related impacts. If Congress were to consider establishing a program to reduce GHG emissions, one option would be to attach a price to GHG emissions with a carbon tax or GHG emissions fee. In the 115th Congress, Members introduced nine bills to establish a carbon tax or emissions fee program. However, many Members have expressed their opposition to such an approach. In particular, in the 115th Congress, the House passed a resolution “expressing the sense of Congress that a carbon tax would be detrimental to the United States economy.” Multiple economic studies have estimated the emission reductions that particular carbon tax would achieve. For example, a 2018 study analyzed various impacts of four carbon tax rate scenarios: a $25/metric ton of CO2 and $50/metric ton of CO2 carbon tax, increasing annually by 1% and 5%. The study concluded that each of the scenarios would likely achieve the U.S. GHG emission reduction target pledged under the international Paris Agreement (at least in terms of CO2 emissions). A carbon tax system would generate a new revenue stream, the magnitude of which would depend on the scope and rate of the tax, among other factors. In 2018, the Congressional Budget Office (CBO) estimated that a $25/metric ton carbon tax would yield approximately $100 billion in its first year. CBO projected that federal revenue would total $3.5 trillion in FY2019. Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. Congress could apply revenues to support a range of policy objectives but would encounter trade-offs among the objectives. The central trade-offs involve minimizing economy-wide costs, lessening the costs borne by specific groups—particularly low-income households and displaced workers in certain industries (e.g., coal mining)—and supporting other policy objectives. A primary argument against a carbon tax regards it potential economy-wide impacts, often measured as impacts to the U.S. gross domestic product (GDP). Some may argue that projected impacts should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action. The potential impacts would depend on a number of factors, including the program’s magnitude and design and, most importantly, the use of carbon tax revenues. In general, economic literature finds that some of the revenue applications would reduce the economy-wide costs from a carbon tax but may not eliminate them entirely. In addition, some studies cite particular economic modeling scenarios in which certain carbon tax revenue applications produce a net increase in GDP compared to a baseline scenario. These scenarios involve using carbon tax revenues to offset reductions in other tax rates (e.g., corporate income or payroll taxes). Although economic models generally indicate that these particular revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such an approach. As lower-income households spend a greater proportion of their income on energy needs (electricity, gasoline), these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion (e.g., lump-sum distribution). A price on GHG emissions could create a competitive disadvantage for some industries, particularly “emission-intensive, trade-exposed industries.” Policymakers have several options to address this concern, including establishing a “border carbon adjustment” program, which would levy a fee on imports from countries without comparable GHG reduction programs. Alternatively, policymakers could allocate (indefinitely or for a period of time) some of the carbon tax revenues to selected industry sectors or businesses. Relatedly, a carbon tax system is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment. To alleviate these impacts, policymakers may consider using some of the revenue to provide transition assistance to employees or affected communities.

Mar 22, 2019

U.S. Health Care Coverage and Spending

Mar 21, 2019

A Low-Yield, Submarine-Launched Nuclear Warhead: Overview of the Expert Debate

Mar 21, 2019

Older Americans Act: Senior Community Service Employment Program

The Senior Community Service Employment Program (SCSEP) authorizes the Department of Labor (DOL) to make grants to support part-time community service employment opportunities for eligible individuals age 55 or over. In FY2019, appropriations for SCSEP programs were $400 million and supported approximately 41,000 positions. DOL may also refer to the SCSEP program as Community Service Employment for Older Americans (CSEOA) SCSEP is authorized by Title V of the Older Americans Act (OAA). The Older Americans Act Reauthorization Act of 2016 (P.L. 114-144) authorized appropriations for OAA programs for FY2017 through FY2019. In FY2019, SCSEP appropriations accounted for about 20% of the funding under the OAA. The bulk of SCSEP appropriations support two primary grant streams: one to national nonprofit organizations and one to state agencies. In the most recent program year, approximately 78% of formula grant funds were allocated to national grantees and about 22% were allocated to state grantees. Both the national organizations and state grantees subgrant funds to host agencies that provide the actual community service employment opportunities to participants. Host agencies are responsible for recruiting eligible participants. To be eligible for the program, prospective participants must be at least age 55, low-income, and unemployed. Federal law requires host agencies to give preference to prospective participants who demonstrate additional barriers to employment such as having a disability or being at risk of homelessness. Program participants work part-time in community service jobs, including employment at schools, libraries, social service organizations, or senior-serving organizations. Program participants earn the higher of minimum wage or the typical wage for the job in which they are employed. An individual may typically participate in the program for a cumulative total of no more than 48 months. During orientation, participants receive an assessment of their skills, interests, capabilities, and needs. This assessment informs the development of an individual employment plan (IEP). A participant’s IEP is updated throughout their participation in the program. Grantees are subject to a performance accountability system. Performance metrics generally relate to participants’ unsubsidized employment and earnings after exiting the program. In addition to outcome-based metrics, grantees are also assessed on participants’ total number of hours of service and whether the grantee served participants with barriers to employment. Grantees that do not meet negotiated levels of performance may become ineligible for subsequent grants.

Mar 21, 2019

U.S. Environmental Protection Agency (EPA) FY2019 Appropriations

Mar 20, 2019

Title X Family Planning Program: 2019 Final Rule

Mar 20, 2019

The International Emergency Economic Powers Act: Origins, Evolution, and Use

The International Emergency Economic Powers Act (IEEPA) provides the President broad authority to regulate a variety of economic transactions following a declaration of national emergency. IEEPA, like the Trading with the Enemy Act (TWEA) from which it branched, sits at the center of the modern U.S. sanctions regime. Changes in the use of IEEPA powers since the act’s enactment in 1977 have caused some to question whether the statute’s oversight provisions are robust enough given the sweeping economic powers it confers upon the President upon declaration of a state of emergency. Over the course of the twentieth century, Congress delegated increasing amounts of emergency power to the President by statute. The Trading with the Enemy Act was one such statute. Congress passed TWEA in 1917 to regulate international transactions with enemy powers following the U.S. entry into the First World War. Congress expanded the act during the 1930s to allow the President to declare a national emergency in times of peace and assume sweeping powers over both domestic and international transactions. Between 1945 and the early 1970s, TWEA became a critically important means to impose sanctions as part of U.S. Cold War strategy. Presidents used TWEA to block international financial transactions, seize U.S.-based assets held by foreign nationals, restrict exports, modify regulations to deter the hoarding of gold, limit foreign direct investment in U.S. companies, and impose tariffs on all imports into the United States. Following committee investigations that discovered that the United States had been in a state of emergency for more than 40 years, Congress passed the National Emergencies Act (NEA) in 1976 and IEEPA in 1977. The pair of statutes placed new limits on presidential emergency powers. Both included reporting requirements to increase transparency and track costs, and the NEA required the President to annually assess and extend, if appropriate, the emergency. However, some experts argue that the renewal process has become pro forma. The NEA also afforded Congress the means to terminate a national emergency by adopting a concurrent resolution in each chamber. A decision by the Supreme Court, in a landmark immigration case, however, found the use of concurrent resolutions to terminate an executive action unconstitutional. Congress amended the statute to require a joint resolution, significantly increasing the difficulty of terminating an emergency. Like TWEA, IEEPA has become an important means to impose economic-based sanctions since its enactment; like TWEA, Presidents have frequently used IEEPA to restrict a variety of international transactions; and like TWEA, the subjects of the restrictions, the frequency of use, and the duration of emergencies have expanded over time. Initially, Presidents targeted foreign states or their governments. Over the years, however, presidential administrations have increasingly used IEEPA to target individuals, groups, and non-state actors such as terrorists and persons who engage in malicious cyber-enabled activities. As of March 1, 2019, Presidents had declared 54 national emergencies invoking IEEPA, 29 of which are still ongoing. Typically, national emergencies invoking IEEPA last nearly a decade, although some have lasted significantly longer--the first state of emergency declared under the NEA and IEEPA, which was declared in response to the taking of U.S. embassy staff as hostages by Iran in 1979, may soon enter its fifth decade. IEEPA grants sweeping powers to the President to control economic transactions. Despite these broad powers, Congress has never attempted to terminate a national emergency invoking IEEPA. Instead, Congress has directed the President on numerous occasions to use IEEPA authorities to impose sanctions. Congress may want to consider whether IEEPA appropriately balances the need for swift action in a time of crisis with Congress’ duty to oversee executive action. Congress may also want to consider IEEPA’s role in implementing its influence in U.S. foreign policy and national security decision-making.

Mar 20, 2019

Employer Tax Credit for Paid Family and Medical Leave

Mar 20, 2019

Russia’s Nord Stream 2 Natural Gas Pipeline to Germany Halted

Mar 18, 2019

Federal Regional Commissions and Authorities: Overview of Structure and Activities

Mar 18, 2019

Army Corps of Engineers: FY2020 Appropriations

Mar 15, 2019

Army Corps of Engineers: Continuing Authorities Programs

Mar 13, 2019

History and Enforcement of the Voting Rights Act of 1965

Mar 12, 2019

Access to Broadband Networks: Net Neutrality

Mar 11, 2019

The U.S. Trade Deficit: An Overview

Mar 8, 2019

2018 Farm Bill Primer: What Is the Farm Bill?

Mar 8, 2019

Strategic Petroleum Reserve: Mandated Sales and Reform

The Strategic Petroleum Reserve (SPR), administered by the Department of Energy (DOE), has played a role in U.S. energy policy for over 40 years. Over that time, its primary focus has changed from its original intent as world oil market conditions have changed. Originally intended to offset the market power of cartels and prevent economic damage from oil supply disruption, it has become primarily a tool for combatting the fuel market effects of domestic natural disasters like hurricanes. Most recently, U.S. net imports of oil and petroleum products have decreased as a result of the increase in domestic oil production. Because of lower reliance on imports, some stakeholders see less need for an oil stockpile, and view the SPR more as a mechanism for providing funding for a wide variety of legislative purposes, ranging from health care, to highways, and general purpose revenues. Over this period, the SPR has expanded its potential usefulness to cover all of these purposes. As a member of the International Energy Agency (IEA) and a participant in the International Energy Program established by the IEA, the United States, as are all net-importer nations in the IEA, is required to hold the equivalent of 90 days of its net imports of oil and petroleum products as a reserve stock. As a result of relatively stable U.S. oil consumption and rapidly increasing production, and declining net imports, available oil stocks held in the SPR now are almost double the 90-day requirement. While the SPR has recently seen relatively little use in combatting oil supply disruptions caused by political and military instability, or even natural disasters, it has provided a source of funding for a variety of legislative initiatives. These mandated sales from the SPR have committed almost 260 million barrels of oil for sale by FY2027, leaving less than 400 million barrels of uncommitted oil reserves. Determining whether further reductions can be made from the reserve while maintaining its ability to carry out its designed purpose is a key energy policy question. The extreme variant of this question is whether a reserve is required at all, or whether privately held stocks, as practiced by most European countries, are adequate to meet international commitments. Legislation in the 115th Congress, H.R. 6511, sought to maintain the SPR facility and infrastructure, while reducing operating and maintenance costs, by renting unused storage capacity in the reserve to private companies and foreign nations. As of this writing, no bills have been introduced in the 116th Congress modifying the SPR.

Mar 8, 2019

The February 2019 Trump-Kim Hanoi Summit

Overview On February 27 and 28, President Donald Trump and North Korean leader Kim Jong-un met in Hanoi to discuss North Korea’s nuclear and missile programs, as well as the establishment of a new relationship between the two countries. The two leaders had held one prior summit, in Singapore, in June 2018. The Hanoi summit ended earlier than scheduled, with the cancelation of both a lunch and a ceremony to sign a joint statement. President Trump and U.S. officials said that the two leaders parted amicably, and that they expected dialogue would resume at a later date. An article in North Korea’s state-run media also presented the summit in a positive light and mentioned that the two leaders agreed to “continue productive dialogues.” South Korean President Moon Jae-in offered to help the United States and North Korea narrow their differences. The United States and North Korea (Democratic People’s Republic of Korea, DPRK) each attributed the summit’s breakdown to their inability to resolve differences over the scope and sequencing of concessions, specifically DPRK denuclearization measures in exchange for sanctions relief. North Korea’s Nuclear and Missile Programs Several issues stymied a summit agreement on next steps for denuclearization. Denuclearization Definition: The two sides do not appear to have an understanding on the definition of complete denuclearization, a goal Kim Jong-un has committed to in several settings. Fissile Material Production Facilities: In a post-summit press conference, North Korean officials said they had offered to shut down fissile material production facilities, which can be used to make plutonium or highly enriched uranium (HEU), at the Yongbyon nuclear complex. However, this step would not necessarily have ended North Korea’s ability to produce all nuclear weapons material. U.S. intelligence community reports have said there are additional uranium enrichment plants outside of Yongbyon. Before the summit, U.S. negotiator Stephen Biegun said that disclosure of enrichment sites other than Yongbyon was to be a key part of negotiations. President Trump in his post-summit remarks referred to a lack of agreement on North Korea’s disclosing a second uranium enrichment plant. Declaration: Another possible sticking point is whether and when North Korea will declare all of its nuclear weapons related stocks (plutonium, HEU, and warheads) and related facilities (including those outside of Yongbyon). Inspections: In his press conference following the summit, DPRK Foreign Minister Ri Yong Ho said that North Korea had proposed that technical inspectors from the United States come to Yongbyon to monitor the shuttering of fissile material production facilities there. The U.S. response is unknown. Missiles: It is unclear whether the DPRK’s ballistic missile program was discussed in Hanoi. Sanctions The two sides appeared to be far apart on the issue of sanctions relief. President Trump stated that North Korea demanded the removal of sanctions “in their entirety.” DPRK Foreign Minister Ri claimed that they had only asked for relief from United Nations Security Council (UNSC) sanctions imposed since 2016 that target North Korea’s export of coal, iron, and other minerals; imports of petroleum; and other sectoral industries. This sanctions relief would leave in place only sanctions that restrict imports of arms, dual-use items, and luxury goods. The 2016-2017 sanctions are considered the most likely to isolate North Korea’s economy if fully enforced. In the period between the Singapore and Hanoi summits, Biegun suggested that sanctions relief could be implemented as an incremental incentive and reward as North Korea, also incrementally, moves toward verifiable denuclearization. Relieving sanctions could keep all parties engaged, provide momentum for the diplomatic process, and help build trust between Pyongyang and Seoul, which would like to implement a range of inter-Korean projects but cannot under the current sanctions regime. Some critics of this approach contend that easing sanctions in the 2016-2017 UNSC resolutions would, in essence, end the multilateral sanctions regime that may have been central to bringing North Korea to the negotiating table. Some Members of Congress, after the Hanoi summit, called on the Trump Administration to resume using the legislative tools already in place to strengthen and broaden sanctions to include, for example, banks in China that conduct business for North Korea. For example, in the North Korea Sanctions and Policy Enhancement Act of 2016 (P.L. 114-122), Congress provided a statement of the goals to be achieved before relieving the pressures of sanctions, including an end to North Korea’s currency counterfeiting, money laundering, compliance with all U.N. Security Council requirements, return of abductees of foreign nations, and improved conditions in DPRK political prison camps. U.S. and U.N. sanctions are imposed on North Korea to address a broad range of behavior; comprehensive sanctions relief in response to denuclearization could be seen to diminish the importance of the other rationales for sanctions. Other Issues Missile and nuclear testing. According Secretary of State Mike Pompeo, Kim promised to maintain the moratorium on nuclear and missile tests that North Korea has had in place since late November 2017. Satellite imagery reveals that in recent weeks North Korea has started restoring structures at its Sohae missile and satellite launch site. Peace declaration and liaison offices. The United States and North Korea were expected to issue in Hanoi a declaration formally ending the Korean War and to announce the exchange of diplomatic liaison offices. After the summit, a senior State Department official involved in the negotiations said “... our view is that all these pieces [including denuclearization] fit together and ... have to move in parallel.” U.S.-South Korea military exercises. On March 2, the United States and South Korea announced a permanent halt to large-scale U.S.-South Korean military exercises and their replacement with smaller exercises. President Trump cited the exercises’ cost as the reason for their cessation. Prior to Trump’s original suspension of the exercises after the Singapore summit, U.S. defense officials often said that the annual large-scale exercises were critical to maintaining military readiness. According to the commander of U.S. forces in South Korea, over the past year North Korea has continued to hold its own military exercises “on a scale consistent with recent years.”

Mar 6, 2019

U.S.-UK Trade Relations

Mar 5, 2019

BB&T and SunTrust: The Latest Proposed Merger in a Long-Term Trend of Banking Industry Consolidation

On February 9, 2019, BB&T and SunTrust—the 16th- and 17th-largest U.S. banks by asset size, respectively—announced they intend to merge, which would create the 8th-largest U.S. bank. This proposed merger illustrates a transformative 35-year trend of banking industry consolidation. Banks are becoming fewer, and industry assets are increasingly concentrated in large banks. Observers have warned that this trend could leave certain markets traditionally served by small banks underserved or unserved. In addition, large, complex banks—or “too big to fail” (TBTF) banks—potentially create market distortions and threaten systemic stability. This Insight examines industry consolidation in general and the proposed BB&T-SunTrust merger specifically. For a detailed examination of related policy issues, see CRS Report R45518, Banking Policy Issues in the 116th Congress. Industry Consolidation The number of institutions insured by the Federal Deposit Insurance Corporation (FDIC) fell from a peak of 18,083 in 1986 to 5,406 in 2018. Banks with less than $1 billion in assets fell from 17,514 to 4,631, and the share of industry assets held by them fell from 37% to 7%. Meanwhile, the number of banks with more than $10 billion in assets rose from 38 to 137, and the share of assets held by those banks increased from 28% to 84%. The decline occurred mainly through three methods: mergers, failures, and lack of new banks. Bank mergers, which averaged almost 396 per year from 1990 to 2018, are the largest factor in this decline, although mergers have slowed since the 2007-2009 financial crisis (see Figure 1). Figure 1. Mergers of FDIC-Insured Depository Institutions / Source: FDIC. Bank failures played a large role in this decline during and after financial crises (over 1,000 depositories failed following the savings and loans crisis, and over 500 failed following the 2007-2009 crisis). Failures have declined as economic conditions have improved, but the number of new banks has been extraordinarily small in recent years. On average, 152 new banks formed annually between 1990 and 2007; in 2018, 8 new banks formed. Certain analysts attribute the lack of new banks to slow economic growth and low interest rates. Critics of new bank regulations argue that regulatory burden inhibits new bank formation. Merger Motivations Banking operations in general may be subject to increasing economies of scale—meaning banks become more profitable as they get bigger—perhaps due to the growing role of information technology. If this is the case, banks could be merging to become more profitable through greater efficiency. Some observers argue that banks experience economies of scale specifically in regulation compliance, meaning compliance costs may increase more slowly than revenues as bank size increases. Based on this argument, critics of new regulations assert regulatory burden is driving smaller banks to merge into larger institutions. However, the role regulatory burden plays in bank consolidation is a matter of debate, in part because empirically measuring economies of scale in compliance is difficult. Mergers also could occur for reasons other than scale. For example, a bank that is struggling financially may look to merge with a stronger bank to stay in business. Alternatively, a larger bank may buy a small bank that has been outperforming its peers to add the successful portfolio to its own. Other regulatory factors also could be driving consolidation. Through much of the 20th century, federal and state laws restricted banks’ ability to open new branches and operate across state lines. States substantially relaxed these restrictions in the late 1980s, and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 did so at the federal level. As a result, it became easier for banks to consolidate and spread operations to other markets. BB&T-SunTrust Merger BB&T has nearly $226 billion in total assets ($219 billion at its main depository) and 1,884 U.S. depository branch offices across 15 mostly southeastern states and the District of Columbia (DC). SunTrust has nearly $216 billion in total assets ($210 billion at its main depository) and 1,254 U.S. branches across 10 mostly southeastern states and DC. The two organizations have characteristics that observers identify with “regional” banks—an unofficial bank classification. Both have a large amount of assets, mostly attributable to a single depository subsidiary, but are not nearly as large as the very largest U.S. banks. Both also have a relatively high concentration in loan making and deposit taking and a less-than-national geographic footprint. Regional bank advocates argue these characteristics make such banks similar to “community” banks and dissimilar to risky, complex TBTF banks. Thus, they argue, certain regulations aimed at TBTF banks should be applied based on criteria that regional banks would not meet. Opponents of this position, citing the size of the banks’ exposures and the amount of available resources for compliance, assert it is appropriate to subject the banks to stringent regulation. Given that, if the merger is approved, the new entity can reasonably be expected to have about $442 billion in total assets and continue to operate primarily as a lender and deposit taker, the merger may stir this ongoing debate. Both banks are individually approaching the $250 billion asset threshold at which banks become subject to stricter advanced approaches capital requirements. Some research suggests that banks approaching such thresholds are motivated to merge, because they would prefer entering a more stringent regulatory regime with cost savings from a big jump in economies of scale to incrementally crossing the line. Arguably, this “in-for-a-penny-in-for-a-pound” strategy could be a factor in the proposed BB&T-SunTrust merger. The $250 billion asset threshold will—once regulators implement Section 401 of P.L. 115-174—also be the criterion that automatically subjects banks to enhanced prudential regulation (EPR). BB&T and SunTrust currently are subject to EPR based on the original $50 billion threshold that Section 401 raises to $250 billion. Thus, depending on the timing of the implementation and the merger, the two banks may not technically cross into a new EPR regime. However, the in-for-a-penny-in-for-a-pound logic still may hold, because without a merger, even post-Section 401 implementation, each bank would be incrementally approaching a threshold that would trigger more stringent regulation.

Mar 4, 2019

The State and Local Role in Election Administration: Duties and Structures

The administration of elections in the United States is highly decentralized. Elections are primarily administered by thousands of state and local systems rather than a single, unified national system. States and localities share responsibility for most election administration duties. Exactly how responsibilities are assigned at the state and local levels varies both between and within states, but there are some general patterns in the distribution of duties. States typically have primary responsibility for making decisions about the rules of elections (policymaking). Localities typically have primary responsibility for conducting elections in accordance with those rules (implementation). Localities, with varying contributions from states, typically also have primary responsibility for paying for the activities and resources required to conduct elections (funding). The structures of the state and local systems that conduct elections also vary between and within states. Common variations include differences related to the leadership of the system, the relationship between local election officials and the state, and the population size and density of the jurisdiction the system serves. The leadership of a state or local election system may be elected or appointed, and both the leaders and the methods used to select them may be partisan, bipartisan, or nonpartisan. State officials may have more or less direct influence over local election officials, and the extent of their influence may be affected by other structural features of the state’s election systems, such as the methods used to select local officials. Finally, larger election jurisdictions have different administrative advantages and challenges than smaller ones, and more urban jurisdictions have different advantages and challenges than more rural ones. These differences between jurisdictions may be reflected in structural features of the election systems that serve them, such as how the systems allocate resources and where they find specialized expertise. Understanding the duties and structures of state and local election systems may be relevant to Congress for at least two reasons. First, the way state and local election systems work can affect how well federal action on election administration serves its intended purposes. The effectiveness of federal action depends in part on how it is implemented. How it is implemented can depend, in turn, on how the state and local election systems that implement it work. Second, Congress can make or incentivize changes to the way state and local election systems work. Congress has a number of policy tools it can use to affect the administration of federal elections. The use of these tools can—either intentionally or unintentionally—affect the state and local election systems that administer federal elections.

Mar 4, 2019

The Power Marketing Administrations: Background and Current Issues

The federal government, through the Department of Energy, operates four regional power marketing administrations (PMAs), created by statute: the Bonneville Power Administration (BPA), the Southeastern Power Administration (SEPA), the Southwestern Power Administration (SWPA), and the Western Area Power Administration (WAPA). Each PMA operates in a distinct geographic area. Congressional interest in the PMAs has included diverse issues such as rate setting, cost and compliance associated with the Endangered Species Act (ESA; P.L. 93-205; 16 U.S.C. §§1531 et seq.), and questions of privatization of these federal agencies. In general, the PMAs came into being because of the government’s need to dispose of electric power produced by dams constructed largely for irrigation, flood control, or other purposes, and to achieve small community and farm electrification—that is, providing service to customers whom it would not have been profitable for a private utility to serve. With minor exceptions, these agencies market the electric power produced by federal dams constructed, owned, and operated by the U.S. Army Corps of Engineers (Corps) and the Bureau of Reclamation (BOR). By statute, PMAs must give preference to public utility districts and cooperatives (e.g., “preference customers”), and sell their power at cost-based rates set at the lowest possible rate consistent with sound business principles. The Federal Energy Regulatory Commission regulates PMA rates to ensure that they are set high enough to repay the U.S. Treasury for the portion of federal facility costs allocated to hydropower beneficiaries. With energy and capacity markets changing in the western United States (especially with the growing need to integrate increasing amounts of variable renewable sources), and the development of the Energy Imbalance Market in the West, BPA and WAPA may have to adapt their plans with regard to generation needs and how transmission systems are developed. In 2018, the Trump Administration proposed to sell the transmission assets (lines, towers, substations, and/or rights of way) owned and operated by the federal Power Marketing Administrations. The proposal suggested that “eliminating or reducing” the federal government’s role in owning and operating transmission assets, and increasing the private sector’s role, would “encourage a more efficient allocation of economic resources and mitigate unnecessary risk to taxpayers.” The resulting PMA entities would then contract with other utilities to provide transmission services for the delivery of federal power, similar to what SEPA does currently. Reportedly, the proposed sale of PMA assets was dropped after opposition to the plan emerged from stakeholders. Under Section 208 of the Urgent Supplemental Appropriations Act, 1986 (P.L. 99-349), the executive branch is prohibited from spending funds to study or draft proposals to transfer from federal control any portion of the assets of the PMAs unless specifically authorized by Congress. Environmental, fishing, and tribal advocates have sued the federal government over concerns that operating rules for hydropower dams on the Columbia and Snake Rivers (i.e., the National Marine Fisheries Service Biological Opinion) are inadequate to ensure survival of species threatened or endangered under the ESA. In 2016, a federal judge overturned a previous management plan for the dams, finding that it would not be sufficient to protect salmon runs, and ordered a new management plan that could include removing the dams. However, in 2018, President Trump issued a Presidential Memorandum accelerating the process for a new management plan, requiring the biological opinion to be ready by 2020. Since FY2011, power revenues associated with the PMAs have been classified as discretionary offsetting receipts (i.e., receipts that are available for spending by the PMAs), thus the agencies are sometimes noted as having a “net-zero” spending authority. Only the capital expenses of WAPA and SWPA require appropriations from Congress.

Mar 1, 2019

Definition of National Emergency under the National Emergencies Act

Mar 1, 2019

Management of the Colorado River: Water Allocations, Drought, and the Federal Role

Mar 1, 2019

Suspension of the Rules: House Practice in the 114th Congress (2015-2016)

Suspension of the rules is the most commonly used procedure to call up measures on the floor of the House of Representatives. As the name suggests, the procedure allows the House to suspend its standing and statutory rules in order to consider broadly supported legislation in an expedited manner. More specifically, the House temporarily sets aside its rules that govern the raising and consideration of measures and assumes a new set of constraints particular to the suspension procedure. The suspension of the rules procedure has several parliamentary advantages: (1) it allows nonprivileged measures to be raised on the House floor without the need for a special rule, (2) it enables the consideration of measures that would otherwise be subject to a point of order, and (3) it streamlines floor action by limiting debate and prohibiting floor amendments. Given these features, as well as the required two-thirds supermajority vote for passage, suspension motions are generally used to process less controversial legislation. In the 114th Congress (2015-2016), measures considered under suspension made up 62% of the bills and resolutions that received floor action in the House (743 out of 1,200 measures). The majority of suspension measures were House bills (83%), followed by Senate bills (11%) and House resolutions (4%). The measures covered a variety of policy areas but most often addressed government operations, such as the designation of federal facilities or amending administrative policies. Most measures that are considered in the House under the suspension procedure are sponsored by a House or Senate majority party member. However, suspension is the most common House procedure used to consider minority-party-sponsored legislation regardless of whether the legislation originated in the House or Senate. In 2015 and 2016, minority-party members sponsored 31% of suspension measures, compared to 9% of legislation subject to different procedures, including privileged business (17 measures), unanimous consent (21 measures), and under the terms of a special rule (one Senate bill). Most suspension measures are referred to at least one House committee before their consideration on the floor. The House Committee on Oversight and Government Reform (now called the Committee on Oversight and Reform) was the committee of primary jurisdiction for the plurality of suspension measures considered in the 114th Congress. Additional committees—such as Energy and Commerce, Homeland Security, Natural Resources, Foreign Affairs, and Veterans’ Affairs—also served as the primary committee for a large number of suspension measures. Suspension motions are debatable for up to 40 minutes. In most cases, only a fraction of that debate time is actually used. In the 114th Congress, the average amount of time spent considering a motion to suspend the rules was 13 minutes and 10 seconds. The House adopted nearly every suspension motion considered in 2015 and 2016. Approval by the House, however, did not guarantee final approval in the 114th Congress. The Senate passed or agreed to 40% of the bills, joint resolutions, and concurrent resolutions initially considered in the House under suspension of the rules, and 276 measures were signed into law. This report briefly describes the suspension of the rules procedure, which is defined in House Rule XV, and provides an analysis of measures considered under this procedure during the 114th Congress. Figures and one table display statistics on the use of the procedure, including the prevalence and form of suspension measures, sponsorship of measures by party, committee consideration, length of debate, voting, resolution of differences between the chambers, and the final status of legislation. In addition, an Appendix illustrates trends in the use of the suspension procedure from the 110th to the 114th Congress (2007-2016).

Feb 28, 2019

Enforcing U.S. Trade Laws: Section 301 and China

Feb 28, 2019

U.S.-Japan Trade Agreements and Negotiations

Feb 28, 2019

Declarations under the National Emergencies Act, Part 1: Declarations Currently in Effect

Feb 28, 2019

Federal Records: Types and Treatments

Feb 26, 2019

Medicaid Disproportionate Share Hospital (DSH) Reductions

Feb 26, 2019

Iran: Efforts to Preserve Economic Benefits of the Nuclear Deal

Feb 26, 2019

Defense Primer: Electronic Warfare

Feb 26, 2019

Redirecting Army Corps of Engineers Civil Works Resources During National Emergencies

Feb 26, 2019

Venezuela: Overview of U.S. Sanctions Policy

Feb 25, 2019

Digital Services Taxes (DSTs): Policy and Economic Analysis

Several countries, primarily in Europe, and the European Commission have proposed or adopted taxes on revenue earned by multinational corporations (MNCs) in certain “digital economy” sectors from activities linked to the user-based activity of their residents. These proposals have generally been labeled as “digital services taxes” (DSTs). For example, beginning in 2019, Spain is imposing a DST of 3% on online advertising, online marketplaces, and data transfer service (i.e., revenue from sales of user activities) within Spain. Only firms with 750 million in worldwide revenue and 3 million in revenues with users in Spain are to be subject to the tax. In 2020, the UK plans to implement a 3% DST that would apply only to businesses whose revenues exceed £25 million per year and groups that generate global revenues from search engines, social media platforms, and online marketplaces in excess of £500 million annually. The UK labels its DST as an “interim” solution until international tax rules are modified to allow countries to tax the profits of foreign MNCs if they have a substantial enough “digital presence” based on local users. The member states of the European Commission are also actively considering such a rule. These policies are being considered and enacted against a backdrop of ongoing, multilateral negotiations among members and nonmembers of the Organization for Economic Cooperation and Development (OECD). These negotiations, prompted by discussions of the digital economy, could result in significant changes for the international tax system. Proponents of DSTs argue that digital firms are “undertaxed.” This sentiment is driven in part by some high-profile tech companies that reduced the taxes they paid by assigning ownership of their income-producing intangible assets (e.g., patents, marketing, and trade secrets) to affiliate corporations in low-tax jurisdictions. Proponents of DSTs also argue that the countries imposing tax should be entitled to a share of profits earned by digital MNCs because of the “value” to these business models made by participation of their residents through their content, reviews, purchases, and other contributions. Critics of DSTs argue that the taxes target income or profits that would not otherwise be subject to taxation under generally accepted income tax principles. U.S. critics, in particular, see DSTs as an attempt to target U.S. tech companies, especially as minimum thresholds are high enough that only the largest digital MNCs (such as Google, Facebook, and Amazon) will be subject to these specific taxes. DSTs are structured as a selective tax on revenue (akin to an excise tax) and not as a tax on corporate profits. A tax on corporate profits taxes the return to investment in the corporate sector. Corporate profit is equal to total revenue minus total cost. In contrast, DSTs are “turnover taxes” that apply to the revenue generated from taxable activities regardless of costs incurred by a firm. Additionally, international tax rules do not allow countries to tax an MNC’s cross-border income solely because their residents purchase goods or services provided by that firm. Rather, ownership of assets justifies a country to be allocated a share of that MNC’s profits to tax. Under these rules and their underlying principles, the fact that a country’s residents purchase digital services from an MNC is not a justification to tax the MNC’s profits. DSTs are likely to have the economic effect of an excise tax on intermediate services. The economic incidence of a DST is likely to be borne by purchasers of taxable services (e.g., companies paying digital economy firms for advertising, marketplace listings, or user data) and possibly consumers downstream from those transactions. As a result, economic theory and the general body of empirical research on excise taxes predict that DSTs are likely to increase prices in affected markets, decrease quantity supplied, and reduce investment in these sectors. Compared to a corporate profits tax—which, on balance, tends to be borne by higher-income shareholders—DSTs are expected to be more regressive forms of raising revenue, as they affect a broad range of consumer goods and services. Certain design features of DSTs could also create inequitable treatment between firms and increase administrative complexity. For example, minimum revenue thresholds could be set such that primarily large, foreign (and primarily U.S.) corporations are subject to tax. Requirements to identify the location of users could also introduce significant costs on businesses. This report traces the emergence of DSTs from multilateral tax negotiations in recent years, addresses various purported policy justifications of DSTs, provides an economic analysis of their effects, and raises several issues for Congress.

Feb 25, 2019

The Army’s Optionally Manned Fighting Vehicle (OMFV) Program: Background and Issues for Congress

Feb 22, 2019

Department of Defense Use of Other Transaction Authority: Background, Analysis, and Issues for Congress

The Department of Defense (DOD) obligates more than $300 billion annually to buy goods and services, and to support research and development. Most of these acquisitions are governed by procurement statutes and regulations found in Title 10 (and parts of other select titles) of the United States Code, the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement. Under certain circumstances, DOD can enter into an other transaction (OT) agreement instead of a traditional contract. OT agreements are generally exempt from federal procurement laws and regulations. These exemptions grant government officials the flexibility to include, amend, or exclude contract clauses and requirements that are mandatory in traditional procurements (e.g., termination clauses, cost accounting standards, payments, audit requirements, intellectual property, and contract disputes). OT authorities also grant more flexibility to structure agreements in numerous ways, including joint ventures; partnerships; consortia; or multiple agencies joining together to fund an agreement encompassing multiple providers. Other transaction agreements are legally binding contracts; they are referred to as agreements to distinguish them from the traditional procurement contracts governed by the FAR and procurements laws. Other transaction authorities are set forth in two sections of law: 10 U.S.C. 2371—granting authority to use OTs for basic, applied, and advanced research projects. 10 U.S.C. 2371b—granting authority to use OTs for prototype projects and follow-on production. Under this authority, a prototype project can only be conducted if at least one nontraditional defense contractor significantly participates in the project; all significant participants are small businesses or nontraditional defense contractors; at least one-third of the total cost of the prototype project is provided by nongovernment participants; or the senior procurement acquisition official provides a written justification for using an OT. Follow-on production can only be conducted when the underlying prototype OT was competitively awarded, and the prototype project was successfully completed. OTs have the potential to provide significant benefits to DOD, including attracting nontraditional contractors with promising technological capabilities to work with DOD, establishing a mechanism to pool resources with other entities to facilitate development of, and obtain, state-of-the-art dual-use technologies, and offering a unique mechanism for DOD to invest in, and influence the direction of, technology development. A number of analysts warn that along with the potential benefits come significant risks, including potentially diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests. In FY2017, DOD obligated $2.1 billion on prototype OT agreements, representing less than 1% of contract obligations for the year. However, the use of OTs is expected to grow at a rapid pace, due in part to recent statutory changes expanding other transaction authorities. A number of analysts and officials have raised concerns that if DOD uses OTs in ways not intended by Congress—or is perceived to abuse the authority—Congress could clamp down on the authority. Generally, DOD lacks authoritative data that can be used to measure and evaluate the use of other transaction authorities.

Feb 22, 2019