Input:
	History of the SPR

		Establishment of the SPR

From the mid-1970s until 2007, world markets have had to absorb roughly five significant spikes in the price of crude oil and petroleum products. Whether driven by disruptions in the physical supply of crude or refined fuels, or by uncertainties owing to international conflicts and instabilities, these price increases have consequences for the United States. Elevated petroleum prices affect the balance of trade and, owing to the relative inelasticity of demand for gasoline at prices less than $4.00 per gallon, siphon away disposable income that might be spent to support spending, investment, or savings.
The origin of the U.S. Strategic Petroleum Reserve (SPR) stems from the 1973 Arab-Israeli War. In response to the United States' support for Israel, the Organization of Arab Exporting Countries (OAPEC) imposed an oil embargo on the United States, the Netherlands, and Canada, and reduced production. While some Arab crude did reach the United States, the price of imported crude oil rose from roughly $4/barrel (bbl) during the last quarter of 1973 to an average price of $12.50/bbl in 1974. While no amount of strategic stocks can insulate any oil-consuming nation from paying the market price for oil in a supply emergency, the availability of strategic stocks can help blunt the magnitude of the market's reaction to a crisis. One of the original perceptions of the value of a strategic stockpile was also that its very existence would discourage the use of oil as a political weapon. The embargo imposed by the Arab producers was intended to create a very discernible physical disruption. This explains, in part, why the genesis of the SPR was focused especially on deliberate and dramatic physical disruptions of oil flow, and on blunting the significant economic impacts of a shortage stemming from international events.
In response to the experience of the embargo, Congress authorized the Strategic Petroleum Reserve in the Energy Policy and Conservation Act (EPCA, P.L. 94-163 ) to help prevent a repetition of the economic dislocation caused by the Arab oil embargo. In the event of an interruption, introduction into the market of oil from the Reserve was expected to help calm markets, mitigate sharp price spikes, and reduce the economic dislocation that had accompanied the 1973 disruption. In so doing, the Reserve would also buy time for the crisis to sort itself out or for diplomacy to seek some resolution before a potentially severe oil shortage escalated the crisis beyond diplomacy. The SPR was to contain enough crude oil to replace imports for 90 days, with a goal initially of 500 million barrels in storage. In May 1978, plans for a 750-million-barrel Reserve were implemented. The SPR is currently authorized for expansion to 1 billion barrels. The George W. Bush Administration was unsuccessful in persuading Congress to raise the authorized size further to 1.5 billion barrels.
The program is managed by the Department of Energy (DOE). Physically, the SPR comprises five underground storage facilities, hollowed out from naturally occurring salt domes, located in Texas and Louisiana. The caverns were finished by injecting water and removing the brine. Similarly, oil is removed by displacing it with water injection. For this reason, crude stored in the SPR remains undisturbed, except in the event of a sale or exchange. Multiple injections of water, over time, will compromise the structural integrity of the caverns. By 2005, the capacity of the SPR reached 727 million barrels. Its inventory reached nearly 700 million barrels before Hurricanes Katrina and Rita in 2005. Following the storms, some crude was loaned to refiners and some was sold. Loans of SPR oil are "paid" by the return of larger amounts of oil than were borrowed. By the end of 2009, was virtually filled to its capacity at 726 million barrels of crude oil.
SPR oil is sold competitively. A Notice of Sale is issued, including the volume, characteristics, and location of the petroleum for sale; delivery dates and procedures for submitting offers; as well as measures for assuring performance and financial responsibility. Bids are reviewed by DOE and awards offered. The Department of Energy estimates that oil could enter the market roughly two weeks after the appearance of a notice of sale.
The SPR could be drawn down initially at a rate of roughly 4.4 mbd for up to 90 days; thereafter, the rate would begin to decline. Although fears were expressed periodically during the 1980s about whether the facilities for withdrawing oil from the Reserve were in proper readiness, the absence of problems during the first real drawdown in early 1991 (the Persian Gulf War) appeared to allay much of that concern. However, some SPR facilities and infrastructure were beginning to reach the end of their operational life. A Life Extension Program, initiated in 1993, upgraded or replaced all major systems to ensure the SPR's readiness to 2025.
The Arab oil embargo also fostered the establishment of the International Energy Agency (IEA) to develop plans and measures for emergency responses to energy crises. Strategic stocks are one of the policies included in the agency's International Energy Program (IEP). Signatories to the IEA are committed to maintaining emergency reserves representing 90 days of net imports, developing programs for demand restraint in the event of emergencies, and agreeing to participate in allocation of oil deliveries among the signatory nations to balance a shortage among IEA members. The calculation of net imports for measuring compliance with the IEA requirement includes private stocks. By that measure, the United States has more than 100 days' cushion. However, it is likely that less than 20% of the privately held stocks would technically be available in an emergency, because most of that inventory supports movement of product through the delivery infrastructure. At full capacity, the SPR might afford the United States roughly 70 days or more of net import protection, depending upon the pace of recovery of the domestic economy. These measures of days' protection assume a total cessation of oil supply to importing nations, a scenario that is highly unlikely. This would be especially true for the United States, given that Canada is currently the nation's principal source for crude oil.
Some IEA member nations require a level of stocks to be held by the private sector or by both the public and private sectors. Including the U.S. SPR, roughly two-thirds of IEA stocks are held by the oil industry, whereas one-third is held by governments and supervisory agencies.
The Energy Policy Act of 2005 (EPACT) requires, "as expeditiously as practicable," expansion of the SPR to its authorized maximum of 1 billion barrels. Advocates for expansion argue that the SPR will need to be larger if the United States is to be able to maintain stocks equivalent to 90 days of net imports. Congress approved $25 million in the FY2008 budget for expansion activities. A site in Richton, MS, has been evaluated for the addition of 160 million barrels of capacity. The FY2010 budget, at $229 million, includes $43.5 million for purchase of a cavern at Bayou Choctaw to replace a cavern posing environmental risks, as well as $25 million for expansion activities. However, it is not apparent that expansion remains a high priority.
The conferees accepted language in the Senate version of the bill that prohibits SPR appropriations expended to anyone engaged in providing refined products to Iran or contributing in any way to expansion of refining capacity in Iran. Firms providing, or insuring tankers carrying, refined product to Iran would also be included in the prohibition.

	The Drawdown Authorities

The Energy Policy and Conservation Act (EPCA, P.L. 94-163 ) authorized drawdown of the Reserve upon a finding by the President that there is a "severe energy supply interruption." This was deemed by the statute to exist if three conditions were joined: If "(a) an emergency situation exists and there is a significant reduction in supply which is of significant scope and duration; (b) a severe increase in the price of petroleum products has resulted from such emergency situation; and (c) such price increase is likely to cause a major adverse impact on the national economy."
Congress enacted additional drawdown authority in 1990 (Energy Policy and Conservation Act Amendments of 1990, P.L. 101-383 ) after the Exxon Valdez oil spill, which interrupted the shipment of Alaskan oil, triggering spot shortages and price increases. The intention was to provide for an SPR drawdown under a less rigorous finding than that mandated by EPCA. This section, 42 U.S.C. § 6241(h), has allowed the President to use the SPR for a short period without having to declare the existence of a "severe energy supply interruption" or the need to meet obligations of the United States under the international energy program. As noted previously, the Energy Policy Act of 2005 made the SPR authorities permanent. These authorities also provided for U.S. participation in emergency-sharing activities of the International Energy Agency without risking violation of antitrust law and regulation.
Under the additional authorities authorized in P.L. 101-383 , a drawdown may be initiated in the event of a circumstance that "constitutes, or is likely to become, a domestic or international energy supply shortage of significant scope or duration" and where "action taken ... would assist directly and significantly in preventing or reducing the adverse impact of such shortage." This authority allows for a limited use of the SPR. No more than 30 million barrels may be sold over a maximum period of 60 days, and this limited authority may not be exercised at all if the level of the SPR is below 500 million barrels. This was the authority behind the Bush Administration's offer of 30 million barrels of SPR oil on September 2, 2005, which was part of the coordinated drawdown called for by the International Energy Agency. The same authority may have been the model for a swap ordered by President Clinton on September 22, 2000.

		Proposals in the 111th Congress to Amend the Authorities

Legislation has been reported in the Senate that would alter significantly the authorities governing drawdown and sale from the SPR. The American Clean Energy Leadership Act of 2009 ( S. 1462 ) would require that the SPR include 30 million barrels of refined product (distinct from the 2 million barrels of home heating oil held in the Northeast Heating Oil Reserve); would transfer authority for a drawdown from the President to the Secretary of Energy; and would amend the drawdown authority to permit drawdown and sale in the event of a "severe energy market supply interruption" that has caused, or is expected to cause "a severe increase" in prices. This language is a significant departure from existing authorities which predicate drawdown disruptions in supply, and discourages use of the SPR to address high prices, per se.
The refined product reserves that would be established by S. 1462 could be drawn down if the Secretary of Energy determines that "a sale of refined products will mitigate the impacts of weather-related events or other acts of nature that have resulted in a severe energy market supply disruption." However, the proposed language would amend the broader authorities to allow drawdown in the event of a "severe energy market disruption," deemed to exist if "a severe increase in the price of petroleum products has resulted or is likely to result from the emergency situation" and that the increase in price "is likely to cause a major adverse impact" on the economy.
Historically, use of the SPR is premised on a physical shortage of supply—which normally will manifest itself, in part, in an increase in price. However, price was deliberately kept out of the authorities as grounds for a drawdown because it invited the question: at what price? A concern was that, if there were any hint of a price threshold that would trigger a drawdown, it could influence private sector and industry inventory practices.
Behind this also lies the assumption and expectation that refined product prices are driven, in large measure, by crude supply and price. However this dynamic was severed in recent years. During 2008, for example, with the exception of supply uncertainties caused by Hurricanes Gustav and Ike, high prices were not associated with shortages, but with significantly higher prices for crude that reflected international anxiety about the sufficiency of supply in the future. Though some policymakers urged the Bush Administration to release crude from the SPR, a drawdown would have been unlikely to significantly affect price. High prices were softened when slumping demand in the face of those prices, and pessimistic economic forecasts, triggered a plummeting in the price of crude oil that was eventually reflected in product prices.
If enacted, the legislation would require a report to Congress within 180 days describing what refined products would be acquired for the Reserve and how they would be acquired at minimal cost or disruption of markets. The report would be required to assess storage options (which would need to be above-ground) and "the anticipated location of existing or new facilities." Presumably, some analysis would need to be undertaken to identify regions that might be likeliest affected by incapacitation of normal product distribution, as well as seasonal differences in the refined product itself. The report would be directed to assess the option of exchanging crude oil in the SPR for refined products.
Arguments in favor of establishing a refined product reserve are that U.S. oil imports include refined products and that it could be more efficient and calming to markets if it were not necessary to first draw down SPR crude and then refine it into needed products. The effect that SPR crude might have on moderating price increases could also be offset if refineries themselves or oil pipelines carrying crude to refineries were compromised. The availability of refined product reserves would address that scenario. Having a regional product reserve would also lessen the likelihood that delivery of crude or product from the stocks of IEA signatories might overwhelm U.S. port facilities; this happened in the wake of the European response that followed Hurricanes Rita and Katrina.
Arguments against a product reserve include the prospect that the availability of supplemental supplies of gasoline from abroad may increase as European demand for diesel vehicles displaces gasoline consumption there. Additionally, storage of refined product is more expensive than for crude. Storage of crude in salt caverns is estimated to cost roughly $3.50/barrel while above-ground storage of product in tanks might cost $15-$18/barrel. Refined product will also deteriorate and would need to be periodically sold and replaced to assure the quality of the product held in the product reserve. Many states also use different gasoline blends, adding to the complexity of identifying which blends should be stored where, and in what volume. It would be simpler to hold conventional gasoline in a product reserve with the expectation that the Environmental Protection Agency (EPA) would waive Clean Air Act (CAA) requirements during an emergency.

	Acquisition of Crude Oil for the SPR

		Resumption of Fill (2009)

As already noted, legislation ( P.L. 110-232 ) enacted in May 2008 forbade DOE from initiating any new activities to acquire royalty-in-kind (RIK) oil for the SPR during the balance of 2008. The sharp decline in crude oil prices since spiking to $147/barrel in the summer of 2008 has spurred interest in resuming fill of the SPR. On January 2, 2009, the Bush Administration announced plans to purchase oil for the SPR, and to reschedule deferred deliveries. There are four components in the resumption of fill: (1) a purchase announced on January 16, 2009, of nearly 10.7 million barrels to replace oil that was sold after Hurricanes Katrina and Rita in 2005; (2) the return of roughly 5.4 million barrels of oil borrowed by refiners after Hurricane Gustav in 2008; (3) delivery of roughly 2.2 million barrels of RIK oil that had been deferred; and (4) resumption of RIK fill in May 2009 at a volume of 26,000 barrels per day, totaling over 6.1 million barrels to be delivered over a period from May 2009 to January 2010. These activities are intended to fill the SPR to its current capacity of 727 million barrels by early 2010. The government has not acquired oil for the SPR by outright purchase since 1994, when oil purchases ended. The SPR held 592 million barrels.

		Royalty-in-Kind Acquisition

From 1995 until the latter part of 1998, sales of SPR oil, not acquisition, were at the center of debate. However, the subsequent reduction and brief elimination of the annual federal budget deficit—as well as a precipitous drop in crude oil prices into early 1999—generated new interest in replenishing the SPR, either to further energy security objectives or as a means of providing price support to domestic producers who were struggling to keep higher-cost, marginal production in service. As an initiative to help domestic producers, Secretary of Energy Bill Richardson requested that the Office of Management and Budget (OMB) include $100 million in the FY2000 budget request for oil purchases. The proposal was rejected.
As an alternative to appropriations for the purchase of SPR oil, DOE proposed that a portion of the royalties paid to the government from oil leases in the Gulf of Mexico be accepted "in kind" (in the form of oil) rather than as revenues. The Department of the Interior (DOI) was reported to be unfavorably disposed to the royalty-in-kind (RIK) proposal, but a plan to proceed with such an arrangement was announced on February 11, 1999. (Legislation had also been introduced [H.R. 498] in the 106 th Congress to direct the Minerals Management Service to accept royalty-in-kind oil.) Producers were supportive, maintaining that the system for valuation of oil at the wellhead is complex and flawed. While acquiring oil for the SPR by RIK avoids the necessity for Congress to make outlays to finance direct purchase of oil, it also means a loss of revenues in so far as the royalties are settled in wet barrels rather than paid to the U.S. Treasury in cash. Final details were worked out during the late winter of 1999.
In mid-November of 2001, President Bush ordered fill of the SPR to 700 million barrels, principally through oil acquired as royalty-in-kind (RIK). At its inception, the RIK plan was generally greeted as a well-intended first step toward filling the SPR to its capacity of 727 million barrels. However, it became controversial when crude prices began to rise sharply in 2002. Some policymakers and studies asserted that diverting RIK oil to the SPR instead of selling it in the open market was putting additional pressure on crude prices. A number of industry analysts argued that the quantity of SPR fill was not enough to have driven the market. The Administration strongly disagreed with claims that RIK fill bore responsibility for the continuing spike in prices.
Legislative attempts to suspend RIK fill began in 2004, during the 108 th Congress. The Energy Policy Act of 2005 ( P.L. 109-58 ), enacted in the summer of 2005, required the Secretary of Energy to develop and publish for comment procedures for filling the SPR that take into consideration a number of factors. Among these are the loss of revenue to the Treasury from accepting royalties in the form of crude oil, how the resumed fill might affect prices of both crude and products, and whether additional fill would be justified by national security. On November 8, 2006, DOE issued its final rule, "Procedures for the Acquisition of Petroleum for the Strategic Petroleum Reserve." The rule essentially indicated that DOE would take into account all the parameters required by P.L. 109-58 to be taken into consideration before moving ahead with any acquisition strategy. DOE rejected tying decisions to acquire oil to any specific, measurable differentials in current and historic oil prices.
In the summer of 2007, DOE resumed RIK fill of the SPR. On May 19, 2008, with gasoline prices exceeding, on average, $3.60 gallon, and approaching $4.00/gallon in some regions, Congress passed P.L. 110-232 . However, a few days earlier, on May 16, DOE announced it would not accept bids for an additional 13 million barrels of RIK oil that had been intended for delivery during the second half of 2008.
Through FY2007, royalty-in-kind deliveries to the SPR totaled roughly 140 million barrels and forgone receipts to the Department of Interior an estimated $4.6 billion. DOE had estimated deliveries of 19.1 million barrels of RIK oil during FY2008 and $1.170 billion in forgone revenues.
Opponents of RIK fill in the 110 th Congress were not necessarily opposed to the concept of an SPR. When the price of crude was much less of an issue, objections to RIK fill were also ideological. Opponents of RIK fill in principle contended that a government-owned strategic stock of petroleum is inappropriate under any circumstance—that it essentially saddled the public sector with the expense of acquiring and holding stocks, the cost for which might have otherwise been borne by the private sector. The existence of the SPR, this argument goes, has blunted the level of stocks held in the private sector. As already noted, RIK fill resumed in 2009 and will end in early 2010, pending establishment of additional storage. As has been noted, a site in Richton, MS, has been evaluated as a possible site for expansion of the SPR. However, while $25 million for expansion activities was included in the FY2010 budget, it is not apparent that expansion is a high priority.

	When Should the SPR Be Used?: The Debate Over the Years

The history of the SPR traces differences of opinion over what could be deemed a "severe energy supply interruption." As has been noted, the original intention of the SPR was to create a reserve of crude oil stocks that could be tapped in the event of an interruption in crude supply. However, in the last few years, there have been increases in the price of products independent of crude prices, as well as increases in crude prices that correlate to "tight" markets, but not to measurable shortages in crude supply. Legislation introduced in the 111 th Congress to amend the authorities for drawdown of both the SPR and the Northeast Heating Oil Reserve ( S. 967 , S. 283 ) would allow a drawdown under such a set of circumstances, which would have been seen as anomalous in the past.
Authorizing a drawdown of the SPR and the NHOR in the event of a "severe energy supply disruption," both bills have language that includes a price component in the definition of what constitutes such a "disruption"—either an observed price increase, or the likelihood of one.
A debate during the 1980s over when, and for what purpose, to initiate a drawdown of SPR oil reflected the significant shifts that were taking place in the operation of oil markets after the experiences of the 1970s, and deregulation of oil price and supply. Sales of SPR oil authorized by the 104 th Congress—and in committee in the 105 th —renewed the debate for a time. The rise in oil prices from 2005-2008 renewed interest in the debate over the appropriate time to call upon the SPR.
The SPR Drawdown Plan, submitted by the Reagan Administration in late 1982, provided for price-competitive sale of SPR oil. The plan rejected the idea of conditioning a decision to distribute SPR oil on any "trigger" or formula. To do so, the Administration argued, would discourage private sector initiatives for preparedness or investment in contingency inventories. Many analysts, in and out of Congress, agreed with the Administration that reliance upon the marketplace during the shortages of 1973 and 1979 would probably have been less disruptive than the price and allocation regulations that were imposed. But many argued that the SPR should be used to moderate the price effects that can be triggered by shortages like those of the 1970s or the tight inventories experienced during the spring of 1996, and lack of confidence in supply availability. Early drawdown of the SPR, some argued, was essential to achieve these objectives.
The Reagan Administration revised its position in January 1984, announcing that the SPR would be drawn upon early in a disruption. This new policy was hailed as a significant departure, considerably easing congressional discontent over the Administration's preparedness policy, but it also had international implications. Some analysts began to stress the importance of coordinating stock drawdowns worldwide during an emergency lest stocks drawn down by one nation merely transfer into the stocks of another and defeat the price-stabilizing objectives of a stock drawdown. In July 1984, responding to pressure from the United States, the International Energy Agency agreed "in principle" to an early drawdown, reserving decisions on "timing, magnitude, rate and duration of an appropriate stockdraw" until a specific situation needed to be addressed.

		Use of the SPR in the Persian Gulf War (1990)

This debate was revisited in the aftermath of the Iraqi invasion of Kuwait on August 2, 1990. The escalation of gasoline prices and the prospect that there might be a worldwide crude shortfall approaching 4.5-5.0 million barrels daily prompted some to call for drawdown of the SPR. The debate focused on whether SPR oil should be used to moderate anticipated price increases, before oil supply problems had become physically evident.
In the days immediately following the Iraqi invasion of Kuwait, the George H. W. Bush Administration indicated that it would not draw down the SPR in the absence of a physical shortage simply to lower prices. On the other hand, some argued that a perceived shortage does as much and more immediate damage than a real one, and that flooding the market with stockpiled oil to calm markets is a desirable end in itself. From this perspective, the best opportunity to use the SPR during the first months of the crisis was squandered. It became clear during the fall of 1990 that in a decontrolled market, physical shortages are less likely to occur. Instead, shortages are likely to be expressed in the form of higher prices, as purchasers are free to bid as high as they wish to secure scarce supply.
Within hours of the first air strike against Iraq in January 1991, the White House announced that President Bush was authorizing a drawdown of the SPR, and the IEA activated the plan on January 17. Crude prices plummeted by nearly $10/barrel in the next day's trading, falling below $20/bbl for the first time since the original invasion. The price drop was attributed to optimistic reports about the allied forces' crippling of Iraqi air power and the diminished likelihood, despite the outbreak of war, of further jeopardy to world oil supply. The IEA plan and the SPR drawdown did not appear to be needed to help settle markets, and there was some criticism of it. Nonetheless, more than 30 million barrels of SPR oil was put out to bid, but DOE accepted bids deemed reasonable for 17.3 million barrels. The oil was sold and delivered in early 1991.
The Persian Gulf War was an important learning experience about ways in which the SPR might be deployed to maximize its usefulness in decontrolled markets. As previously noted, legislation enacted by the 101 st Congress, P.L. 101-383 , liberalized drawdown authority for the SPR to allow for its use to prevent minor or regional shortages from escalating into larger ones; an example was the shortages on the West Coast and price jump that followed the Alaskan oil spill of March 1989. In the 102 nd Congress, omnibus energy legislation ( H.R. 776 , P.L. 102-486 ) broadened the drawdown authority further to include instances where a reduction in supply appeared sufficiently severe to bring about an increase in the price of petroleum likely to "cause a major adverse impact on the national economy." The original EPCA authorities permit "exchanges" of oil for the purpose of acquiring additional oil for the SPR. Under an exchange, a company borrows SPR crude and later replaces it, including an additional quantity of oil as a premium for the loan. There were seven exchanges between 1996 and 2005. The most recent one (with the exception of a test exchange in the spring of 2008) was in June 2006. ConocoPhillips and Citgo borrowed 750 thousand barrels of sour crude for two refineries affected by temporary closure of a ship channel.
A new dimension of SPR drawdown and sale was introduced by the Clinton Administration's proposal in its FY1996 budget to sell 7 million barrels to help finance the SPR program. While agreeing that a sale of slightly more than 1% of SPR oil was not about to cripple U.S. emergency preparedness, some in the Congress vigorously opposed the idea, in part because it might establish a precedent that would bring about additional sales of SPR oil for purely budgetary reasons, as did indeed occur. There were three sales of SPR oil during FY1996. The first was to pay for the decommissioning of the Weeks Island site. The second was for the purpose of reducing the federal budget deficit, and the third was to offset FY1997 appropriations. The total quantity of SPR sold was 28.1 million barrels, and the revenues raised were $544.7 million. Fill of the SPR with RIK oil was initiated in some measure to replace the volume of oil that had been sold during this period.

		Hurricanes and Changes in the Market Dynamics (2005-2008)

Prior to Hurricanes Ivan, Katrina, and Rita in 2005, growth in oil demand had begun to strap U.S. refinery capacity. A result has been an altering in a once-observed historic correlation between crude oil and refined oil product prices. In the past, changes in the price of crude had driven changes in the cost of refined products. The assumption that product prices are driven by, and follow the path of, crude prices, was at the center of debates from the 1980s until early in the decade of 2000 whether an SPR drawdown was warranted when prices spiked.
However, beginning in the middle of the first decade of the new century, pressure on product supplies and the accompanying anxiety stoked by international tensions caused a divorce in that traditional correlation between crude and product prices. The increases in prices of gasoline and other petroleum products following Hurricanes Katrina and Rita, for example, were not a response to any shortage of crude, but to shortages of products owing to the shutdown of major refining capacity in the United States, and to an interruption of product transportation systems.
The rise in crude prices to over $140/barrel by the summer of 2008 was attributable to many contributing factors, including increasing international demand, and concern that demand for crude might outstrip world production. Markets were described as "tight," meaning that there might be little cushion in terms of spare production capacity to replace any crude lost to the market, or to provide adequate supply of petroleum products. In such a market, where demand seems to be brushing against the limits to meet that demand, refinery outages, whether routine or unexpected, can spur a spike in crude and product prices, as can weekly reports of U.S. crude and petroleum stocks, if the numbers reported are not consistent with expectations. As prices continued to increase during 2007-2008, some argued that market conditions did not support the high prices. One market analyst remarked at the end of October 2007, "The market at this stage totally ignores any bearish news [that would soften the price of oil], but it tends to exaggerate bullish news." Significant and sustained increases in oil prices were observed in the absence of the sort of "severe energy supply interruption" that remains the basis for use of the SPR. As has been noted, legislation in the Senate ( S. 1462 ) would introduce a price basis for authorizing a drawdown of the SPR. A release from the SPR might not lower prices under every scenario.

		The Call for an SPR Drawdown: Summer 2008

Some policymakers were urging the Administration to release oil from the SPR during the spring and summer of 2008. A review of the dynamics in the oil market during this period provides a demonstration of why an SPR release in the face of high prices will not necessarily foster a decline in petroleum prices.
By mid-July 2008, U.S. gasoline prices were exceeding $4.00/gallon and diesel fuel was averaging $4.75/gallon. Crude oil prices had briefly exceeded more than $145/barrel, but declined late in the month to less than $128/barrel. Oil prices had risen in recent years in the absence of the normal association with the concept of "disruption" or "shortage." The escalation in prices to their observed peak in July 2008 was driven by several factors that are difficult to weigh. Chief among them was the existence of little or no spare oil production capacity worldwide, and a general inelasticity in demand for oil products despite high prices. Prices also generally prove sensitive to the ebb and flow of international tensions, the value of the U.S. dollar, and even the appearance of storms that could develop into hurricanes that might make landfall in the Gulf of Mexico.
In the months prior to Hurricanes Gustav and Ike, there were some calls for an SPR drawdown despite the absence of any discernible shortage. On July 24, 2008, legislation ( H.R. 6578 ) to require a 10% drawdown of SPR oil failed to achieve a two-thirds majority in the House under suspension of the rules (226-190). The language was included in H.R. 6899 , the Comprehensive American Energy Security and Consumer Protection Act, which passed the House on September 16 th (236-189).
The bill would have required a sale of 70 million barrels of light grade petroleum from the SPR within six months following enactment. The bill stipulated that 20 million barrels must be offered for sale during the first 60 days. All oil from the sale would be replaced with "sour" crude to be acquired after the six-month sale period, with the replacement acquisition completed not later than five years after enactment.
The genesis of the proposal lay partly in an analysis by the Government Accountability Office, which observed that the proportion of grades of oil in the SPR was not as compatible as it could be with the trend of refineries toward being able to handle heavier grades of crudes. Refiners reported to GAO that running lighter crude in units designed to handle heavy crudes could impose as much as an 11% penalty in gasoline production and 35% in diesel production. The agency reported that other refiners indicated that they might have to shut down some of their units.
It was unclear what sort of effect a roughly 70 million barrel draw on the SPR would have on prices. In a market where there is no physical shortage, oil companies may have limited interest in SPR oil unless they have spare refining capacity to turn the crude into useful products, or want to build crude oil stocks. SPR oil is not sold at below-market prices. Bids on SPR oil are accepted only if the bids are deemed fair to the U.S. government. If the announcement itself that the SPR is going to be tapped does not prompt or contribute to a softening of prices, there may be limited interest on the part of the oil industry in bidding on SPR supply. Although the possibility exists that prices might decline if additional refined product is released into the market, it was impossible to predict what effect an SPR drawdown would have had on oil prices at any time in 2008, given the many other factors that bear on daily oil prices.
There are additional considerations. A unilateral draw on U.S. stocks will probably have less impact on the world oil market than a coordinated international drawdown of the sort that occurred after Hurricanes Katrina and Rita in 2005. Some might argue that it would be unwise under any scenario for the U.S. to draw down its strategic stocks while other nations continue to hold theirs at current levels. Additionally, it is always possible that producing nations might reduce production to offset any SPR oil delivered into the market. In the setting of 2008, producing, exporting nations could have argued that the market was already well-supplied and that short-term supply concerns were not what was supporting elevated prices.
The SPR has been perceived as a defensive policy tool against high oil prices, but if it is used without a discernible impact on oil prices, it is possible that the SPR will lose some of whatever psychological leverage it exercises on prices when left as an untapped option.

	Establishment of a Regional Home Heating Oil Reserve

Although a number of factors contributed to the virtual doubling in some Northeastern locales of home heating oil prices during the winter of 1999-2000, one that drew the particular attention of lawmakers was the sharply lower level of middle distillate stocks—from which both home heating oil and diesel fuels are produced—immediately beforehand. It renewed interest in establishment of a regional reserve of home heating oil. EPCA includes authority for the Secretary of Energy to establish regional reserves as part of the broader Strategic Petroleum Reserve. With support from the Clinton Administration, Congress moved to specifically authorize and fund a regional heating oil reserve in the Northeast. The FY2001 Interior Appropriations Act ( P.L. 106-291 ) provided $8 million for the Northeast Heating Oil Reserve (NHOR). The regional reserve was filled by the middle of October 2000 at two sites in New Haven, CT, and terminals in Woodbridge, NJ, and Providence, RI. The NHOR is intended to provide roughly 10 days of Northeast home heating oil demand.
There was controversy over the language that would govern its use. Opponents of establishing a regional reserve suspected that it might be tapped at times that some consider inappropriate, and that the potential availability of the reserve could be a disincentive for the private sector to maintain inventories as aggressively as it would if there were no reserve. The approach enacted predicated drawdown on a regional supply shortage of "significant scope and duration," or if—for seven consecutive days—the price differential between crude oil and home heating oil increased by more than 60% over its five-year rolling average. The intention was to make the threshold for use of the regional reserve high enough so that it would not discourage oil marketers and distributors from stockbuilding. The President could also authorize a release of the NHOR in the event that a "circumstance exists (other than the defined dislocation) that is a regional supply shortage of significant scope and duration," the adverse impacts of which would be "significantly" reduced by use of the NHOR.
During mid- and late December 2000, the 60% differential was breached. However, this was due to a sharp decline in crude prices rather than to a rise in home heating oil prices. In fact, home heating oil prices were drifting slightly lower during the same reporting period. As a consequence, while the 60% differential was satisfied, other conditions prerequisite to authorizing a drawdown of the NHOR were not.
A general strike in Venezuela that began in late 2002 resulted, for a time, in a loss of as much as 1.5 million barrels of daily crude supply to the United States. With refinery utilization lower than usual owing to less crude reaching the United States, domestic markets for home heating oil had to rely on refined product inventories to meet demand during a particularly cold winter. Prices rose, and there were calls for use of the NHOR; still, the price of heating oil fell significantly short of meeting the guidelines for a drawdown. In connection with the FY2004 Interior appropriations, both the House and Senate Appropriations Committees included language in their committee reports directing that DOE advise Congress as to the "circumstances" under which the NHOR might be used. The provision implied that some in Congress were not satisfied with the formula currently in place that would permit drawdown of the NHOR. The language was not included in the final FY2004 Interior appropriations bill. As the sharp increases in home heating oil prices during 2005 are averaged into the five-year rolling average, the price differential needed to trigger use of the NHOR will increase further. However, the President can invoke the authorities for an NHOR drawdown even if the price threshold is not met.
S. 283 , introduced on January 21, 2009, would permit drawdown on the basis of price as well as supply. The bill would mandate a release of 20% of the heating oil held in the Reserve if the average retail price for home heating oil in the Northeast exceeds $4.00 per gallon on November 1 of the fiscal year. An additional 20% would be released in four additional installments if the average retail price exceeded $4.00/gallon on the first of each month, December through March.

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Congress authorized the Strategic Petroleum Reserve (SPR) in the Energy Policy and Conservation Act (EPCA, P.L. 94-163) to help prevent a repetition of the economic dislocation caused by the 1973-1974 Arab oil embargo. The program is managed by the Department of Energy (DOE). The capacity of the SPR is 727 million barrels, and by the end of 2009, was virtually filled to its capacity at 726 million barrels of crude oil. In addition, a Northeast Heating Oil Reserve (NHOR) holds 2 million barrels of heating oil in above-ground storage.
The SPR comprises five underground storage facilities, hollowed out from naturally occurring salt domes in Texas and Louisiana. EPCA authorized drawdown of the Reserve upon a finding by the President that there is a "severe energy supply interruption." Congress enacted additional authority in 1990 (Energy Policy and Conservation Act Amendments of 1990, P.L. 101-383), to permit use of the SPR for short periods to resolve supply interruptions stemming from situations internal to the United States. The meaning of a "severe energy supply interruption" has been controversial. EPCA intended use of the SPR only to ameliorate discernible physical shortages of crude oil. However, the American Clean Energy Leadership Act of 2009 (S. 1462), reported in the Senate, would require that the SPR include 30 million barrels of refined product; would transfer authority for a drawdown from the President to the Secretary of Energy; and would amend the drawdown authority to permit drawdown and sale in the event of a "severe energy market supply interruption" that has caused, or is expected to cause, "a severe increase" in prices. This language is a significant departure from existing authorities which predicate drawdown disruptions in supply, and discourages use of the SPR to address high prices, per se.
Beginning in 2000, additions to the SPR were made with royalty-in-kind (RIK) oil acquired by the Department of Energy in lieu of cash royalties paid on production from federal offshore leases. In May 2008, Congress passed legislation (P.L. 110-232) ordering DOE to suspend RIK fill for the balance of the calendar year unless the price of crude oil dropped below $75/barrel. However, the sharp decline in crude oil prices since spiking to $147/barrel in the summer of 2008 brought about a resumption of fill of the SPR. On January 2, 2009, the Bush Administration announced plans that included the purchase of nearly 10.7 million barrels for the SPR to replace oil that was sold after Hurricanes Katrina and Rita in 2005. In May 2009, RIK fill was resumed at an average volume of 26,000 barrels per day, totaling over 6.1 million barrels to be delivered by January 2010. These activities have brought the SPR essentially to capacity. The government has not purchased oil for the SPR since 1994.
The Energy Policy Act of 2005 (EPACT) required expansion of the SPR to its authorized maximum of 1 billion barrels. Congress approved $205 million for FY2009, including $31.5 million to continue expansion activities. A site in Richton, MS, has been evaluated as a possible location for an additional 160 million barrels of capacity. Although expansion activity appears to have been set aside, the FY2010 budget enacted in the FY2010 Energy and Water Appropriations Act (P.L. 111-85), which provides $243.8 million for the entire SPR program, includes $25 million for expansion activities and $43.5 million for purchase of a cavern at Bayou Choctaw to replace a cavern posing environmental risks. An amendment agreed to in the Senate, and included in the final bill, prohibits SPR appropriations expended to anyone engaged in providing refined product to Iran, or assisting Iran in developing additional internal capacity to refine oil.


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	Introduction

The increasing Department of Defense (DOD) emphasis on expanding U.S. partnerships and building partnership capacity with foreign military and other security forces has refocused congressional attention on two long-standing human rights provisions affecting U.S. security assistance policy. Sponsored in the late 1990s by Senator Patrick Leahy (D-VT), and often referred to as the "Leahy amendments" or the "Leahy laws," one is Section 620M of the Foreign Assistance Act of 1961, as amended (FAA, P.L. 87-195, made permanent law by its codification at 22 U.S.C. 2378d) and the other is a recurring provision in annual defense appropriations. FAA Section 620M prohibits the furnishing of assistance authorized by the FAA and the Arms Export Control Act, as amended (AECA, P.L. 90-629), to any foreign security force unit that is credibly believed to have committed a gross violation of human rights. The other provision, inserted annually in DOD appropriations legislation, for years prohibited the use of DOD funds to support any training program (as defined by DOD) involving members of a unit of foreign security or police force if the unit had committed a gross violation of human rights. For FY2014, the prohibition has been expanded to also include "equipment, or other assistance."
As two of the many laws that Congress has enacted in recent decades to promote respect for human rights, which has become widely recognized as a core U.S. national interest, the Leahy laws have been the subject of long-standing debate. Policy makers, practitioners, and advocacy groups continue to deliberate overarching questions regarding their utility and desirability, as well as specific questions regarding their appropriate scope and problems in implementation. For many, the Leahy laws are important U.S. foreign policy tools not only because of their potential to promote human rights but because they may help safeguard the U.S. image abroad by distancing the United States from corrupt or brutal security forces. Some, however, raise concerns that these laws limit the Administration's flexibility to balance competing national interests and may constrain the United States' ability to respond to national security needs. Central to this debate are overarching questions that are difficult to answer given the lack of systematic study of Leahy law results. Have these laws indeed been effective in promoting human rights? To what extent have these laws impeded or advanced other key U.S. objectives, such as countering terrorism, preventing violence, or stabilizing territory? Do the laws lead other nations to choose competitors for foreign influence as the source of military materiel and training? Will the United States be able to control down-range effects as it outsources military training through third-party nations? Competing perceptions of these overarching issues underlie perspectives on specific proposals for congressional action.
In the 113 th Congress, an illustration of the enduring debate surrounding the Leahy laws is deliberation on a provision in the Senate Appropriations Committee (SAC) version of the FY2014 DOD Appropriations bill (Section 8057 of S. 1429 ), a modified version of which is now contained in the Consolidated Appropriations Act, 2014 (Division C, Section 8057, P.L. 113-76 , signed into law January 17). This provision expanded the scope of the DOD Leahy law by extending the FY2013 (and prior fiscal year) prohibition on training to all DOD assistance. Further action in the 113 th Congress may occur during consideration of FY2015 foreign aid appropriations, which may include proposals to fund implementation of the laws.
This report provides background on the Leahy laws, including a brief history of their legislative development; an overview guide to the standards and processes used to "vet"—that is, review and clear—foreign military and other security forces for gross violations of human rights; and a brief review of salient issues regarding the provisions of the laws and their implementation. Two of these issues concern debate over the consistency of the language of the two laws: whether the scope of the DOD provision should be expanded or altered to bring it closer to the FAA version, and whether the FAA and DOD "remediation standards" (the conditions for clearing units found guilty of a gross violations of human rights in order to provide aid) should be made consistent. Two others concern debate over implementation: whether the resources to conduct vetting are adequate, and whether implementation practices and procedures should be standardized. Several text boxes provide information on security assistance subject to the Leahy laws, the types of acts defined as gross violations of human rights, the language of the FAA and DOD Leahy laws and key differences between them, a discussion of the "credible information" standard for denying assistance, and a case study on Colombia. A concluding section offers further observations for Congress.

	Legislative Background

Since Congress first enacted the two "Leahy laws" in the late 1990s, these laws have been regarded as a key element of U.S. human rights policy. Beginning in the 1970s, Congress passed many conditions on U.S. assistance to foreign governments seeking to promote respect for human rights. Most were—and continue to be—attached to legislation for an individual country or region.
A major precursor to the Leahy laws was the broad legislative provision passed in 1974, known as "Section 502B," which prohibits security assistance to any country found to engage in a "consistent pattern of gross violations of internationally recognized human rights." This legislation provides the basis for the standard definition of human rights used for U.S. government purposes, including for Leahy law vetting, but has been rarely if ever invoked. In 1997, Congress enacted a condition on counternarcotics (CN) assistance similar to the current Leahy laws, prohibiting the use of FY1998 State Department CN appropriations for foreign security forces where there was credible evidence that a unit had committed gross violations of human rights.
In 1998, Congress passed the first of what are now known as the Leahy laws, extending the scope of the CN condition to all assistance provided by foreign operations appropriations. The expanded provision was thereafter included in annual foreign operations appropriations acts until 2008, when that condition was codified in permanent law first as FAA Section 620J, now FAA Section 620M (22 U.S.C. 2378d), applying to all assistance authorized by the FAA and AECA, unless exempted by a notwithstanding provision.
In 1998, for FY1999, Congress placed a similar condition in the DOD appropriations bill. This condition prohibited the use of DOD funds to train units of foreign military and other security forces if there was credible information that a member of a unit had committed a gross violation of human rights. (Unlike the FAA version, the DOD Leahy law, as contained in DOD FY2013 and prior DOD appropriations, pertained only to training, but not to any other form of assistance and activities—such as equipment, support services, grants, loans and cash transfers, and exercises—that might be provided under a variety of DOD authorities.) DOD defines military training of foreign personnel as the "instruction of foreign security force personnel that may result in the improvement of their capabilities." This condition has been retained in all subsequent DOD appropriations legislation, with two changes. In 2000, the reference to a "member" of a unit was deleted, and in 2013 the words "or police" were added.
In 2011, Congress amended the FAA provision (and renumbered it as Section 620M of the FAA) with three word changes to align it more closely with the DOD language. First, the requirement invoking "gross violations" of human rights was changed from the plural to the singular "a gross violation" of human rights. Second, Congress modified the standard to resume aid to require that the government take "effective steps" (rather than "effective measures") to bring responsible members of the foreign security unit to justice. Finally, the standard of proof was changed from "credible evidence" to "credible information," a term that expresses Congress's intent that the standard not require a level of substantiation that would be admissible in a U.S. court. Congress also added seven procedural requirements to the provision.
In January 2014, Congress expanded the scope of the DOD provision, making it equivalent in scope to the FAA provision. The Consolidated Appropriations Act, 2014 (P.L. 113-76), contains a provision extending the FY2013 (and earlier) prohibition on any support for training where a gross violation of human rights occurred to "any training, equipment, or other assistance for the members of a unit of a foreign security force if the Secretary of Defense has credible information that the unit has committed a gross violation of human rights." An exception is made for disaster and humanitarian assistance.
Depending on the legal interpretation, this provision applies to many of the DOD programs and activities conducted with foreign military and other security forces under a wide variety of DOD authorities. These may include counternarcotics, coalition, and logistics support and assistance, including equipment; services such as transportation and logistics, maintenance and operation of equipment; and grants and loans to procure goods and services in support of security forces, as well as cash transfers of funds. They may also include some types of military-to-military contacts, including advising and mentoring. Not all military activities with foreign forces would necessarily constitute assistance, however.
As contained in P.L. 113-76 , the expanded provision would not apply to DOD-funded foreign disaster assistance and other humanitarian assistance, where the ultimate beneficiaries are foreign populations but where U.S. military personnel often work with or support foreign military or other security forces in delivering assistance.

		Comparison of Current Laws

The FAA and DOD appropriations Leahy laws both prohibit assistance to foreign military and other security units credibly believed to be involved in a gross violation of human rights. After the FY2014 change, three differences remain. First, in the FAA language, the prohibition does not apply if the Secretary of State "determines and reports" to specified congressional committees "that the government of such country is taking effective steps to bring the responsible members of the security forces unit to justice." The DOD appropriations language states that the prohibition applies "unless all necessary corrective steps have been taken." These provisions establish the basis for "remediating" units, making them eligible for assistance, but neither remediation standard is defined. Second, the DOD version provides for a waiver by the Secretary of Defense in consultation with the Secretary of State in extraordinary circumstances; the FAA contains no corresponding provision. Third, the FAA legislation includes a "duty to inform" provision requiring the Secretary of State to promptly inform a foreign government of the basis for withholding assistance and to help that government, to the extent practicable, take effective measures to bring the responsible members of the security forces to justice.
(See Table 1 , below, which summarizes these key differences.)

	Leahy Vetting in Practice22

The State Department and U.S. embassies worldwide have developed a system that seeks to ensure that no applicable State Department assistance or DOD-funded training is provided to units or individuals in foreign security forces who have committed any gross violations of human rights. This procedure, designed to comply with the Leahy laws, is known as "vetting" or "Leahy vetting." Primarily a State Department responsibility with input from other agencies, Leahy vetting is a multi-step process that involves staff at U.S. embassies abroad; the State Department Bureau for Democracy, Human Rights, and Labor (DRL) in Washington, DC, which is the lead State Department bureau for vetting; State Department regional bureaus; and other government agencies as required. The State Department policy provides for two separate processes, one for training and one for equipment and other non-training assistance.
For DOD and State Department-funded training (and in some cases the provision of equipment related to training), the process has evolved from a "cable-based" system when the State Department began to vet foreign security forces in 1997 to a computerized process through the International Vetting and Security Tracking (INVEST) system. Gradually put in place between April 2010 and February 2011, INVEST is the current official system for Leahy vetting for training. At some posts INVEST is also used for equipment provided in conjunction with training, but this is not mandatory.
For State Department-funded equipment and other non-training assistance, the State Department generally approves potential recipients through a memorandum and clearance process generated by the Bureau of Political-Military Affairs at the time funding is allocated to beneficiary countries. (The GAO recommended in November 2011 that the State Department vet individuals and units receiving equipment through the INVEST system, but the State Department has not developed such a policy. In some cases, however, equipment and non-training assistance is vetted through INVEST even though this is not mandatory.)
Under the INVEST system, the State Department to date has vetted approximately 400,000 "candidates" for training, a figure that includes both individuals and units. Since its adoption, INVEST has averaged about 130,000 discrete new vettings a year, and the pace seems to be increasing. In FY2012, the State Department reported vetting nearly 165,000 individuals and units. According to some vetters, the 2011 amendments to the FAA Leahy law requiring that, in the case of individual training candidates, the candidate's unit as well as the individual candidate be vetted each time the candidate is named as a potential recipient of assistance have increased their work load. In some embassies, however, vetters had already interpreted the vetting requirements to cover both individuals and their units.

		The Vetting Process

Leahy vetting is a multi-stage process that begins in U.S. embassies abroad and concludes with action at State Department headquarters in Washington, D.C. Vetting procedures generally utilize a dedicated online tracking system for vetting candidates—both units and individuals—for training and the exchange of memoranda for other forms of assistance.

			U.S. Embassy Procedures

U.S. embassy staff initiates each vetting request. (For a diagram of the process see Figure 1 , below.) The State Department recommends that each embassy have its own Standard Operating Procedures (SOPs) that define country-specific requirements for initiating and completing vetting requests such as the lead time needed for turning around a request. Representatives of relevant U.S. departments and agencies at U.S. embassies submit vetting requests to staff conducting the vetting. The subjects of these vetting requests typically are members of the country's military or civilian police, but they may also include prison guards, armed game wardens, and coast guards, as well as customs, border, and tax enforcement personnel. Civilian government officials, including those representing foreign defense ministries, are typically not required to be vetted. Exceptions to this general rule do exist. For example, the DOD Regional Counterterrorism Fellowship Program (CTFP) vets all participants as a matter of policy.
As part of the vetting process under INVEST, individuals proposed for receiving U.S. assistance as part of a single event, equipment issuance, or training are grouped together in a "batch." Input of the initial data is just one of the functions that are completed at the embassy. Once a batch of candidates has been identified, embassy personnel check their names as well their units against a variety of sources for derogatory information. (See the textbox below regarding the standard for judging derogatory information to be credible enough to disqualify candidates for U.S. assistance.) Sources include local and U.S. government databases and reports, as well as a range of civil society and non-governmental organizations (NGOs).
The vetting at the embassy stage is completed with one of four determinations: to approve, reject, or suspend candidates, or to request further guidance from State Department headquarters. Once the suspended or rejected cases are removed from an INVEST batch, the remaining candidates are sent on to State Department headquarters for further vetting.

			Headquarters Level

In Washington, DRL and the State Department regional bureaus further vet approved individuals in the batch. DRL and the relevant regional bureau work independently, although the two offices stay in communication as the vetting process proceeds. If the regional bureau and the DRL vetters agree that no derogatory information was found, then the individual is deemed approved and the embassy vetting staff is notified of the positive determination. One exception to this process involves vetting candidates from "Fast Track" countries, determined by the State Department to be functional democracies without a record of human rights abuse. Candidates from Fast Track countries are vetted only at the embassy and not in Washington.

			Additional Review and Conclusion

If further review is deemed required, DRL convenes a "broader team of State Department representatives" who may request further information from the relevant embassy to evaluate the credibility of derogatory information. Until the team reaches consensus, the assistance or training is kept on hold. Except for Fast Track countries, Leahy vetting is complete when the final determination is recorded in INVEST.

		Vetting Results and Their Use

By and large, most vettings filed through the INVEST system conclude with an approval. Vettings recently have ended in denial around 1% or less of the time, and a suspension about 9% of the time, according to figures provided in news reports. CQ Weekly reports that training was withheld "for a variety of reasons, including the possibility that there was credible information that the person or unit involved had committed a gross violation of human rights," and for administrative difficulties. In some cases, training was suspended if derogatory information other than a human rights violation was found, as candidates may be excluded for other undesirable behavior. In the many cases where training was suspended for administrative reasons, it was subsequently rescheduled once the problem was resolved, according to that source.
In general, vetting results are used to determine who will receive U.S. assistance or training. They also form the basis for reporting to foreign governments under the FAA "duty-to-inform" provision when members and units of their security forces fail vetting and assistance is denied. According to some U.S. policy makers, even though only the FAA contains the "duty-to-inform" requirement, in practice the provision should extend also to DOD-funded cases. The logic of this requirement is to garner cooperation with the law, encourage improved compliance by host governments with human rights standards, and make clear that U.S. assistance will not be provided to human rights violators. In addition, the FAA provides that the State Department should offer assistance to a foreign "host" government to investigate and prosecute suspected human rights violators who have been identified through the vetting process.

		Vetting Personnel

The number of embassy staff involved in Leahy vetting may differ based on work flows, request volumes, funding levels, and other conditions that vary across U.S. embassies. Some embassy operations are quite limited, according to embassy inspection reports by the State Department's Office of the Inspector General (OIG). Some advocates for strengthening implementation of the Leahy law conditions maintain that some vetting operations are underfunded and this has resulted in "thin" to nonexistent efforts at some embassies.

		Vetting Funding

In recent years, Congress has supported Leahy vetting operations through a directed allocation of funds to DRL in the Diplomacy and Consular Programs (D&CP) account. In FY2008, for example, DRL received $2.65 million in appropriations for Leahy vetting. Much of this funding was used to develop and establish the INVEST system, an online tool to track and process vetting requests. Subsequently, Congress directed DRL to allocate approximately $2 million for Leahy vetting, which the State Department has made a regular practice. (The joint explanatory statement to the Consolidated Appropriations bill for FY2014 [ H.R. 3547 , Division K] states that State Department Diplomatic and Consular Affairs funding in the bill contains $2.75 million to implement the FAA Leahy law.) According to State Department officials, the $2 million in recent years has supported several regional bureau vetting positions, and a few contract positions to carry out vetting and support running the INVEST system. The number of completed vettings has become a performance indicator for the DRL bureau. In its annual congressional budget justification, the DRL bureau reports completed vettings and sets targets for the future.
In the field, vetting-related activities, including personnel costs, are typically funded out of embassy administrative budgets. The State Department generally gives the embassies wide latitude in staffing and financing their operations. There does not appear to be formal guidance on how U.S. embassies should allocate resources and funds for Leahy vetting. As a result, each embassy plans and budgets for Leahy vetting operations differently. Some embassies, for example, receive assistance from the State Department's International Narcotics and Law Enforcement (INL) bureau, through its International Narcotics Control and Law Enforcement (INCLE) account. U.S. Embassy Mexico City, which conducts the second-largest number of vettings worldwide, reportedly draws funds from the Mérida Initiative, a multi-year counternarcotics and anticrime assistance program that is funded largely through the State Department's Foreign Military Financing (FMF) and INCLE accounts.
Some embassies with large volumes of vetting requests have one or more full-time positions dedicated to the vetting process. Many embassies, however, are very lightly staffed and the data entry into the INVEST system is frequently a part-time duty. Increased workloads resulting from the 2011 amendments to the Leahy law in the FAA have raised concerns at some embassies, among them those that are small and understaffed or those with the heaviest Leahy vetting demands. In the absence of dedicated Leahy vetting funding, such embassies maintain they have inadequate staff to handle the increased demand on their operations.

		Vetting System Improvement Initiatives

The State Department and DOD are discussing ways to improve the vetting process by increasing DOD participation. (After DOD personnel in each embassy's security assistance organization forward nominees for security assistance to embassy Leahy vetters, DOD generally has no further role in the Leahy vetting process.) One step would be to improve the lines of communication between the State Department and DOD, and creating greater communication within DOD, when the INVEST system identifies potential human rights violations or other obstacles to approving assistance. A related step would be to lengthen the timeline between the embassy's submission of a vetting request to State Department headquarters and the conclusion of the vetting process. This change would allow time for DOD headquarters officials to coordinate a response with the geographic Combatant Commands that might avert the suspension of activities for non-substantive reasons. A third step would be to improve training on how to conduct vetting. DOD is also looking into updating its own guidance on Leahy vetting as last articulated in the DOD 2004 Joint Staff policy message.
DRL recently broadened its outreach to human rights organizations, increasing dialogue through meetings and developing an Internet-based "portal." DRL has received Leahy-relevant information from NGOs through face-to-face meetings and email, and encouraged U.S.-based NGOs to communicate with the relevant country desk officers in DRL and NGOs outside the United States to communicate with the designated human rights officer in each U.S. embassy. The portal is an online website designed to facilitate the anonymous and confidential reporting of accusations and evidence of human rights abuses. The State Department hopes the portal, scheduled to go online in early 2014, will encourage human rights and other NGOs to post credible information about violations of human rights without fear they are further endangering victims. The portal will augment the current processes by which NGOs can report information through written correspondence, meetings, or briefings with State Department personnel. (Additionally, all written communication to the State Department and embassies is reviewed by desk officers.) Some practitioners and analysts warn that an anonymous reporting system has to be carefully designed or it has the potential to be manipulated or "gamed" by those who might seek to discredit units and block their receipt of U.S. assistance by submitting false reports.

	Issues for Congress

The Leahy laws raise many potential policy questions. At the broadest level, questions remain about the extent to which the promotion of human rights abroad and the pursuit of other U.S. national security objectives are mutually reinforcing and the circumstances in which they might diverge. More narrowly, some in Congress question whether the Leahy laws should be further modified and how implementation of those laws might be improved. The following discussion first addresses questions of law: specifically, should the FAA and DOD remediation standards and other remaining differences be made consistent, and should implementation practices be standardized? It then discusses questions of implementation, specifically resource availability and standardization. It concludes with a discussion of the possible challenges presented by Congress's recent expansion of the scope of the DOD law.

		Should the FAA and DOD Leahy Laws Be Made Consistent?

Over time, Congress has aligned the State Department and DOD Leahy language for greater consistency, most recently by extending the scope of the DOD law in the Consolidated Appropriations Act, 2014. Three differences remain —the difference in remediation standards between the laws, DOD the waiver provision, and the FAA requirement to report the reasons for the denial of assistance to the foreign government. Policymakers and those in the human rights and international security communities debate whether U.S. interests are best served by maintaining, modifying, or eliminating these differences. Some view these differences as inconsistencies that undermine U.S. policy goals related to the promotion of human rights; others view them as providing the United States with flexibility to balance potentially competing interests, or to respond to an emerging threat or disaster in a timely manner. The following explores these perspectives.

			Should the FAA and DOD Remediation Standards Be the Same?

The differing FAA and DOD language on remediation standards—the criteria that a foreign government must meet before aid can be provided or resumed to units that have been denied funding due to human rights abuses—leaves much open to interpretation. Questions have been raised as to whether these remediation standards are appropriate, given that few if any units appear to have been cleared for aid after they have been denied assistance. The "taint" remains even years later after membership in a unit may have substantially or even entirely changed. Questions are also raised about the degree to which these standards actually differ in practice, given that the State Department makes the decision to deny assistance, and whether they should be aligned.
If FAA or AECA assistance is withheld, a foreign government must "take effective steps to bring responsible members of the security forces unit to justice" before assistance can be provided to that unit. Congressional intent regarding the FAA language was expressed in the conference report on the original (1998) legislation, where the conferees stated that "effective steps" required the government to "carry out a credible investigation and that the individuals involved face appropriate disciplinary action or impartial prosecution in accordance with local law." This was echoed in the conference report for subsequent legislation. It is similar to State Department guidance which, according to GAO, states that effective steps "means that the foreign government must carry out a credible investigation and take steps so that individuals who are credibly alleged to have committed gross violations of human rights face impartial prosecution or appropriate disciplinary action." The DOD remediation provision requires that "all necessary corrective steps" be taken before aid can be resumed. There has been no statement of intent in documents accompanying annual DOD appropriations measures. In 1999, Senator Leahy wrote to then Secretary of Defense William Cohen that the FAA and DOD standards were intended to be the same. Secretary Cohen differed, and since then DOD has held that, in the words of the 2013 GAO report, necessary corrective steps "could include removing the identified violator or violators from the unit to be trained, providing human rights training and law-of-war training, or some other combination of steps." Despite this position, according to DOD officials, DOD has never proceeded with DOD-funded training to an otherwise ineligible unit on the basis that "all necessary corrective steps" have been taken by a foreign government.
In practice, according to State and DOD officials, the same remediation standards have been applied to potential recipients of DOD and State Department assistance. Some Members would favor incorporating that practice into law as a means of increasing the consistency of U.S. human rights policy and the message sent to foreign governments. Standardization of remediation steps is necessary, they affirm, because the purpose of DOD and FAA Leahy provisions is the same—to promote human rights and protect the U.S. government against the stigma of supporting human rights violators. In addition to expanding the scope of the DOD Leahy law, the SAC version of the FY2014 DOD appropriations bill, S. 1429 , would have made the DOD language on remediation the same as that of the FAA. This provision was not retained in action on the final DOD appropriations measure included in the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ).
On the other hand, given that few, if any, units have been cleared once aid has been denied, some practitioners argue that the State Department standard may set too high a bar and may be perceived as unattainable by a host government. In addition, some analysts argue that the FAA's standard for remediation—punishing all members of a unit for the transgressions of some members of a unit—is inequitable. Some critics view the remediation measures set forth by DOD—removing individuals who have committed abuses from units rather than making all in the unit guilty of their transgressions—as a more realistic standard. In addition, some perceive as an internal contradiction of the Leahy laws that they block even human rights training to "tainted" units whose members, they argue, would potentially most benefit from such training. Some point to the Senate floor colloquy between Senators Graham and Leahy in 1997, regarding the Leahy human rights provision affecting counternarcotics assistance, as evidence that the legislative intent was not meant to permanently bar assistance to "tainted" units after offending individuals were removed, although others caveat that the meaning of the colloquy would depend on the circumstances of the removal.
In contrast, those who believe that holding a unit responsible is an appropriate standard point out that it often is difficult to ascertain actions of individuals, and that sanctioning the entire unit may be the only way of ascertaining that U.S. assistance is not provided to human rights violators. In addition, holding units responsible for the actions of their members may serve as a means to promote a "self-cleansing" mechanism, where individuals who feel they are being unfairly denied training will cooperate with or put pressure on authorities to cleanse the unit, promoting an ethos among members of a unit that does not tolerate human rights abuse.

			Should Other Differences Be Aligned?

In addition to the differences in remediation standards, discussed above, two other differences between the FAA and the DOD Leahy provisions remain: the DOD waiver and the FAA "duty to inform. Neither has a corresponding provision in the other legislation. To some analysts, the DOD waiver seems dispensable, given its historic lack of use. According to DOD officials, the waiver has never been exercised. Others would argue the waiver provides DOD with needed flexibility to act in urgent circumstances where important U.S. security interests are at stake; alternatively, notwithstanding language might be added to authorities that are used in such circumstances. The FAA "duty to inform" requirement for the Secretary of State to "promptly inform the foreign government of the basis" for withholding aid is a precursor to assisting the government in bringing responsible members of the security forces to justice. Some who view this provision as central to promoting reform among foreign security forces would include it in the DOD law.

		What Level of Resources Are Adequate to Conduct Vetting?

The level of funding available to implement Leahy vetting is determined by Congress (through appropriations measures) and by the State Department (through its internal allocation of resources and personnel positions at embassies). Financial and personnel resources can directly affect the Leahy vetting process. Resource-related questions concerning Leahy implementation include the following and are discussed below. Are Leahy vetting operations adequately funded? Do vetting activities at State Department headquarters and U.S. embassies worldwide receive enough technological support to be successful, and if not, where are the biggest resource deficits? Are those who conduct the vetting adequately trained, and is there sufficient oversight by State Department headquarters of vetting operations at the embassies?
The recent expansion of the scope of the DOD Leahy law to cover all DOD assistance, not just training, may present extensive challenges for the current vetting system. Some practitioners have voiced concern that the number of additional vettings required each year could overload the State Department's arguably already overstretched vetting system.

			Funding

Some advocates for strengthening implementation of the Leahy conditions maintain that some vetting operations are underfunded. Indeed, some practitioners consider the vetting requirements an "unfunded mandate" placed on the State Department and its embassies by Congress. Several advocates who promote more vigorous enforcement of the Leahy conditions suggest that leadership from State Department's DRL bureau has improved headquarters vetting operations and they commend DRL for strengthening its outreach to in-country and international human rights organizations. Nevertheless, the quality and capacity of U.S. embassies abroad to carry out Leahy vetting requirements remain mixed; some advocates suggest that this is in part due to the lack of consistent and dedicated funding for vetting operations at post.
Some have proposed that vetting be paid for with a dedicated funding source that is proportional to the size of U.S. security assistance expenditures on a global basis. In the 113 th Congress, a variation of this idea was put forth by the Senate Appropriations Committee in its version of the FY2014 Department of State and Foreign Operations appropriations measure ( S. 1372 , S.Rept. 113-81 ) to fund DRL to carry out the amended FAA prohibition, Section 620M. Acknowledging "the technological challenges and staff time involved in the vetting process" in its report, the Committee would provide not less than 0.1% of funds appropriated in the FMF account "for assistance for the security forces of foreign countries" to fund DRL to carry out Section 620M. This would amount to over $5 million in FY2014, depending on the final level of appropriation for FMF, which would be a significant increase over the roughly $2 million that DRL has received for Leahy vetting in recent appropriations. Neither the House version of the FY2014 Department of State and Foreign Operations appropriations bill ( H.R. 2855 , H.Rept. 113-185 ), nor the Consolidated Appropriations Act, FY2014 ( P.L. 113-76 ) makes reference to funding for Leahy vetting.

			Technology

Another resource challenge for carrying out the Leahy conditions concerns developing adequate databases and applying technology to better implement vetting. Some observers maintain that information about the Leahy vetting requirements provided on embassy websites remains limited. One potential consequence of this limitation is that local NGOs that might report alleged human rights abuse are unaware of U.S. requirements and their opportunities to assist the vetting process. Some advocates maintain that many embassy databases are inadequate, and that many do not take advantage of technological tools to gather data and documentation about human rights abuses. Such tools could include those that compile and analyze video images and aerial photography, and that have audio capabilities to facilitate voice and facial recognition of alleged abusers.

			Training and Oversight

Concern about the adequacy of resources extends to whether personnel and time are made available to train and oversee those at U.S. embassies who conduct the vetting. The State Department provides training at its Foreign Service Institute and DOD provides training through the Defense Institute for Security Assistance Management (DISAM).
In its September 2013 report, GAO found that the State Department offers training to human rights vetting personnel by various means. These include two web-based training courses; modules in Foreign Service Institute (FSI) courses; a specially developed briefing that provides an overview of State and DOD Leahy laws and explains State's policies and processes (now available online through http://www.humanrights.gov ); and other outreach efforts. Vetting personnel also receive on-the-job training. At the time, GAO found that the web-based courses were out-of-date, lacking changes mandated in the 2011 law, but DRL officials report that the courses were subsequently updated and are now available to everyone in the State Department through the FSI online learning website. DOD personnel assigned to work on security assistance at U.S. embassies and at the geographic combatant commands receive an instructional module on human rights training at DISAM that includes instruction on Leahy vetting. DISAM statistics indicate, however, that while most military personnel destined for security assistance organization posts at U.S. embassies take the three-week training course, some 15% do not.

		Should Implementation Practices and Procedures Be Standardized?

Although there are not many studies of how the Leahy laws are implemented worldwide, a few reports point to an inconsistent application of the laws. For example, a September 2013 non-government publication on trends in security assistance in Latin America and the Caribbean found that the Leahy provisions have been "applied with varying degrees of rigor by U.S. embassies around the world." This report noted, for example, that "while the U.S. Embassy in Colombia had [in 2012] a substantial system in place, the U.S. Embassy in Honduras's system was far less developed." Recently, GAO has identified other implementation inconsistencies across countries.
In its September 2013 report, GAO found after examining implementation practices in eight countries that the Standard Operating Procedure (SOP) guides of those embassies "contained inconsistent information on how to address" the part of the duty-to-inform requirement that directs State to inform foreign governments when funds are withheld because of human rights violations. GAO's three recommendations were for the State Department to (1) "provide clarifying guidance for implementing the duty-to-inform requirement of the State Leahy law" added in December 2011; (2) ensure that all U.S. embassies have human rights vetting standard operating procedures that address the requirements in the Leahy law;" and (3) update the web-based training for personnel who conduct human rights vetting to reflect December 2011 changes. According to GAO, State agreed with all three of its recommendations, but said that the steps State planned regarding the need for standard operating procedures "do not directly address our recommendation." The GAO recommended that the State Department take further steps to implement its recommendations on SOP guides.
To many analysts, standardizing practices and procedures seems a self-evident means to ensure a more rigorous compliance with the Leahy laws. However, others might argue that given the divergent circumstances under which the laws are applied from country to country—including levels and types of training and equipment provided, whether a country's human rights practices are a matter of concern, and whether the United States regards other matters as more pressing than human rights practices in a given country—a certain degree of flexibility in the application of the laws may be desirable.

		What Challenges May the Expanded DOD Scope Present?

The recent expansion of the scope of the DOD Leahy law in the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), to include not only training but also DOD "equipment and other assistance" is a step toward institutionalizing human rights promotion in U.S. law, according to some analysts. From this perspective, the lack of consistency in scope between the DOD and FAA Leahy laws muddled the intended message regarding the importance of U.S. human rights policy, a problem intensified by the perception that DOD is increasingly providing security assistance and directing security assistance programs under an expanding array of DOD authorities.
Nevertheless, the expansion of scope of the DOD prohibition presents the State Department and DOD with a number of challenges. These challenges include the following:
Defining what constitutes DOD "assistance" as intended by the law may be one challenge. DOD conducts a wide range of activities that it categorizes as "security cooperation" with no agreement which among them constitute "assistance." The FY2014 expansion in scope seems to require a specific definition of assistance for the purposes of the DOD Leahy law. Determining whether additional resources are needed to implement Leahy vetting may be another challenge. A lack of resources may hinder the United States' ability to thoroughly vet prospective participants in a timely manner and may result in a failure to disqualify ineligible participants or lead to withholding aid from eligible participants. Determining whether DOD vetting will be conducted through a system compatible with the State Department's current two-track system using the INVEST database and memos, or a new, unique DOD-specific system. Whatever the choice, DOD and the State Department may find it necessary to proactively collect information on foreign military units and individuals who may be potential recipients of DOD assistance to expedite the vetting process. Implementing the broadened scope of DOD Leahy vetting may present possible diplomatic challenges. Some practitioners already note that explaining to foreign military and political leaders why U.S. assistance is being withheld can be difficult and disrupt other aspects of a bilateral relationship. Some express concern that the new scope of the DOD Leahy law, even without the express "duty to inform" found in the FAA law, may further complicate diplomatic and military-to-military relations. In some cases, some analysts suggest that the new DOD provision may put at risk U.S. efforts to advance bilateral relations or to achieve other national security priorities.

	Conclusion

More than a decade after the passage of the Leahy laws, their implementation remains a work in progress, and overarching questions on their utility and desirability persist. Congress continues to deliberate whether and how to strengthen their application, as represented by recent debate over expanding the scope of the DOD law through the omnibus FY2014 appropriations bill ( P.L. 113-76 ), and by proposals to increase available resources, such as the one contained in the Senate Appropriations Committee version of State Department and foreign operations appropriations bill ( S. 1372 ) but not in P.L. 113-76 . Many may judge that an expansion of the scope of the DOD law, which may require extensive additional vetting, could also require substantial new resources.
Given that foreign aid appropriations have declined in recent years, an important issue for consideration of FY2015 foreign operations appropriations may be whether existing Leahy vetting requirements receive sufficient funds to be carried out effectively. In hearings and other consideration of the FY2015 budget, Congress may wish to question the quality and effectiveness of Leahy law vetting, and request information about current State Department and DOD efforts to improve procedures, practices, and standards. Congress may wish to be informed of new technologies and methodologies that may require additional resources but could improve data collection as well as the monitoring and assessment of the activities of foreign units. A related question is whether and how to establish metrics or compile standardized narratives; although such measures could involve extra costs, they might provide greater insight to the Leahy laws' utility in advancing foreign policy goals and national security interests.
Evolving global conditions and circumstances may warrant ongoing consideration of when and how the Leahy law provisions should be applied. One national security trend raising questions about the utility of the Leahy provisions is the "outsourcing" of U.S. military training—with the United States funding other military forces to train third parties. And, as the United States faces competition in the international security arena in developing relationships with foreign militaries, Congress may wish to stay apprised of whether the Leahy laws are a significant factor leading some foreign militaries to choose other countries as providers of military training and equipment. In addressing the overarching issues of utility and desirability, Congress may wish to question the Obama Administration about the laws' effectiveness.
Some questions may target potential indicators of success. For example: Where has the application of the Leahy laws resulted in the United States withholding assistance from units and individuals credibly believed to have committed gross violations of human rights? How have the human rights practices of partner nation security forces improved as a result of the application of the Leahy laws? Do foreign governments and populations view the United States more favorably as a result of the Leahy laws? Other questions may target possible instances of negative effects: Where has application of the Leahy vetting process precluded or significantly delayed a U.S. engagement that in retrospect would have been important for U.S. national security? To what extent might such engagement have been possible if different standards or procedures were in place?
Congress may wish to address such questions to the State Department and DOD in hearings, or request that they be examined in the context of the Obama Administration's ongoing review mandated by its April 5, 2013, Presidential Policy Decision (PPD) 23, U.S. Security Assistance Policy , which identifies promoting universal values, including respect for human rights, as a goal.

Output:
Congressional interest in the laws and processes involved in conditioning U.S. assistance to foreign security forces on human rights grounds has grown in recent years, especially as U.S. Administrations have increased emphasis on expanding U.S. partnerships and building partnership capacity with foreign military and other security forces. Congress has played an especially prominent role in initiating, amending, supporting with resources, and overseeing implementation of long-standing laws on human rights provisions affecting U.S. security assistance.
First sponsored in the late 1990s by Senator Patrick Leahy (D-VT), the "Leahy laws" (sometimes referred to as the "Leahy amendments") are currently manifest in two places. One is Section 620M of the Foreign Assistance Act of 1961 (FAA), as amended, which prohibits the furnishing of assistance authorized by the FAA and the Arms Export Control Act to any foreign security force unit where there is credible information that the unit has committed a gross violation of human rights. The second is a recurring provision in annual defense appropriations, newly expanded by the FY2014 Department of Defense (DOD) appropriations bill as contained in the Consolidated Appropriations Act, 2014 (P.L. 113-76), to align its scope with that of the FAA provision. (Prior DOD appropriations measures had applied the prohibition to support for any training program, as defined by DOD, but not to other forms of DOD assistance.) As they currently stand, the FAA and DOD provisions are similar but not identical. Over the years, they have been subject to changes to more closely align their language, most recently with the expansion of scope enacted in the FY2014 DOD appropriations law. Nevertheless, some differences remain.
Implementation of Leahy vetting involves a complex process in the State Department and U.S. embassies overseas that determines which foreign security individuals and units are eligible to receive U.S. assistance or training. Beginning in 2010, the State Department has utilized a computerized system called the International Vetting and Security Tracking (INVEST) system, which has facilitated a major increase in the number of individuals and units vetted (some 160,000 in FY2012). Congress supports Leahy vetting operations through a directed allocation of funds in State Department appropriations.
The Leahy laws touch upon many issues of interest to Congress. These range from current vetting practices and implementation (involving human rights standards, relations and policy objectives with specific countries, remediation mechanisms, and inter-office and inter-agency coordination, among other issues), to legislative efforts to increase alignment between the Foreign Assistance Act and DOD restrictions, to levels and forms of resources dedicated to conduct vetting. More broadly, overarching policy questions persist about the utility and desirability of applying the Leahy laws, and whether there is sometimes a conflict between promoting respect for human rights and furthering other national interests.