[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Senate]
[Pages 29136-29137]
[From the U.S. Government Publishing Office, www.gpo.gov]



               COST ESTIMATE ON EXPORT ADMINISTRATION ACT

  Mr. GRAMM. Mr. President, I ask unanimous consent that a cost 
estimate on the Export Administration Act of 1999, prepared by the 
Congressional Budget Office, be printed in the Congressional Record.
  There being no objection, the cover letter and estimate were ordered 
to be printed in the Record, as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                 Washington, DC, November 3, 1999.
     Hon. Phil Gramm,
     Chairman, Committee on Banking, Housing, and Urban Affairs, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 1712, the Export 
     Administration Act of 1999.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are Mark 
     Hadley (for federal costs), Hester Grippando (for 
     governmental receipts), Shelley Finlayson (for the state and 
     local impact), and Patrice Gordon (for the private-sector 
     impact).
           Sincerely,
                                                 Barry B. Anderson
                                   (For Dan L. Crippen, Director).
       Enclosure.
     S. 1712--Export Administration Act of 1999
       Summary: The bill would replace the expired Export 
     Administration Act (EAA), thereby updating the system for 
     applying export controls on American business for national 
     security or foreign policy purposes. Since the expiration of 
     the EAA in 1994, the President has extended export controls 
     pursuant to his authority under the International Emergency 
     Economic Powers Act. The Bureau of Export Administration 
     (BXA) in the Department of Commerce administers export 
     controls. The bill also would prohibit participation in 
     boycotts imposed by a foreign country against a country that 
     is friendly to the United States, and would preempt state 
     laws pertaining to participation in such a boycott.
       CBO estimates that funding the Department of Commerce to 
     carry out the bill would cost $255 million over the 2000-2004 
     period if funding is maintained at the 1999 level or $280 
     million if funding is increased each year for anticipated 
     inflation. Because the bill would increase penalties for 
     violations of export controls, CBO estimates governmental 
     receipts would increase by $18 million over the 2000-2004 
     period. CBO estimates that half that amount would be spent 
     from the Crime Victims Fund, and BXA would pay informants 
     about $500,000 a year. Because the bill would affect direct 
     spending and receipts, pay-as-you-go procedures would apply.
       Section 4 of the Unfunded Mandates Reform Act (UMRA) 
     excludes from the application of that act any legislative 
     provisions that are necessary for the national security. CBO 
     has determined that several provisions of S. 1712 fall within 
     that exclusion. One section of the bill that does not fall 
     within that exclusion contains an intergovernmental mandate 
     as defined in UMRA, but CBO estimates that the costs of this 
     mandate would not be significant and would not exceed the 
     threshold established in that act ($50 million in 1996, 
     adjusted annually for inflation). Provisions of the bill that 
     are not excluded from the application of UMRA also contain 
     private-sector mandates. CBO estimates that the direct costs 
     of those mandates would be below the threshold established in 
     UMRA ($100 million in 1996, adjusted annually for inflation).
       Estimated cost to the Federal Government: The estimated 
     budgetary impact of the bill is shown in the following table. 
     The costs of this legislation fall within budget function 370 
     (commerce and housing credit).

------------------------------------------------------------------------
                                By fiscal years, in millions of dollars--
 
                               -----------------------------------------
                                 1999   2000   2001   2002   2003   2004
------------------------------------------------------------------------
                 CHANGE IN REVENUES AND DIRECT SPENDING
 
Estimated Revenues............      0      0      0      6      6      6
Estimated Budget Authority....      0      0      0      1      4      4
Estimated Outlays.............      0      0      0      1      4      4
 
                    SPENDING SUBJECT TO APPROPRIATION
 
EAA Spending Under Current Law
 by the Bureau of Export
 Administration:
  Budget Authority \1\........     44      0      0      0      0      0
  Estimated Outlays...........     43      6      2      0      0      0
Proposed Changes:
  Estimated Authorization           0     59     56     57     59     61
   Level \2\..................
  Estimated Outlays...........      0     50     53     57     59     61
EAA Spending H.R. 973 by the
 Bureau of Export
 Administration:
  Estimated Authorization          44     59     56     57     59     61
   Level \1\..................
  Estimated Outlays...........     43     56     55     57     59     61
------------------------------------------------------------------------
\1\ The 1999 level is the amount appropriated for that year. BXA has not
  yet received a full-year appropriation for 2000.
\2\ The estimated authorization levels include annual adjustments to
  cover anticipated inflation, resulting in an estimated cost of $280
  million over the next five years. Alternatively, if funding is not
  increased to cover anticipated inflation, the cost would be $255
  million over the 2000-2004 period.

       Basis of estimate: S. 1712 would authorize the BXA to 
     control the export of certain items from the United States 
     for national security or foreign policy purposes. Generally, 
     export controls would not apply to products that are mass-
     market items or available from foreign sources at a 
     comparable price and quality. Under the bill, exporters who 
     are executing existing contracts that involve items which are 
     prohibited from being exported for foreign policy reasons 
     would be allowed to fulfill such contracts. CBO estimates 
     that provisions of the Export Administration Act of 1999 
     would increase revenues by about $6 million a year beginning 
     in fiscal year 2002 and direct spending by about $1 million 
     in 2002 and $4 million a year thereafter. In addition, we 
     estimate that implementing the bill would cost $280 million 
     over the 2000-2004 period, assuming appropriation of the 
     necessary amounts.
     Revenues
       Since the expiration of the EAA in 1994, criminal and civil 
     penalties for violating export control laws have been 
     collected under the Economic Emergency Powers Act. The bill 
     would transfer the authority to levy fines back to the EAA 
     and would significantly raise the maximum criminal fines that 
     could be imposed--up to $10 million for corporations or $1 
     million for individuals--for violation of export controls. 
     Under the bill, civil penalties of up to $1 million could 
     also be imposed for violations of the law. On average, about 
     two years elapse between the initial investigation of 
     violations of export control law and the collection of a 
     penalty. Fines are based on the law in force at the start of 
     an investigation. CBO does not expect penalties under the new 
     law to be collected until fiscal year 2002. Based on 
     information from the Department of Commerce, CBO estimates 
     that enacting the bill would increase receipts from penalties 
     by $6 million a year beginning in 2002.
     Direct spending
       Collections of criminal fines are recorded in the budget as 
     government receipts (i.e., revenues), which are deposited in 
     the Crime Victims Fund and spent in subsequent years. We 
     estimate half of the increase in governmental receipts 
     attributable to this bill ($3 million a year), would be for 
     criminal fines. Thus, the additional direct spending for this 
     provision of the bill also would be about $3 million a year 
     beginning in 2003, because spending from the Crime Victims 
     Fund lags behind collections by about a year.

[[Page 29137]]

       Under current law, BXA pays informants negligible amounts 
     each year for leads on possible violations of export control 
     law. The bill would allow BXA to pay informants the lesser of 
     $250,000 or 25 percent of the value of fines recovered under 
     the act as a result of the information provided. This 
     provision would greatly expand the authority to pay 
     informants. Based on information from BXA, CBO estimates that 
     the bureau would pay informants about $500,000 a year, 
     starting in 2002.
     Spending subject to appropriation
       BXA is responsible for implementing the EAA. Based on 
     information from the Department of Commerce, CBO estimates 
     that BXA's budget for this work was about $44 million in 
     1999, and about $45 million would be needed in 2000 to 
     continue this work. S. 1712 would authorize the appropriation 
     of such sums as may be necessary to continue this work, to 
     hire 20 employees to establish a best practices program for 
     exporters, to hire 10 overseas investigators, and to procure 
     a computer system for export licensing and enforcement. Based 
     on information from BXA, CBO estimates that implementing a 
     best practices program for exporters would cost about $4 
     million a year, stationing overseas investigators would cost 
     about $5 million a year, and procuring the computer system 
     would cost about $5 million in 2000. Any such spending would 
     be subject to appropriation of the necessary amounts. 
     Assuming historical spending patterns and allowing for cost 
     increases to cover anticipated inflation, CBO estimates that 
     implementing the bill would cost $280 million over the 2000-
     2004 period.
       Pay-as-you-go considerations: The Balanced Budget and 
     Emergency Deficit Control Act sets pay-as-you-go procedures 
     for legislation affecting direct spending or receipts. The 
     net changes in outlays and governmental receipts that are 
     subject to pay-as-you-go procedures are shown in the 
     following table. For the purposes of enforcing pay-as-you-go 
     procedures, only the effects in the budget year and the 
     succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal years, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................      0      0      1      4      4      4      4      4      4      4
Changes in receipts.......................      0      0      6      6      6      6      6      6      6      6
----------------------------------------------------------------------------------------------------------------

       Estimated impact on state, local, and tribal governments: 
     Section 4 of the Unfunded Mandates Reform Act excludes from 
     the application of that act legislative provisions that are 
     necessary for the national security. CBO has determined that 
     several provisions of S. 1712 fall within that exclusion. One 
     section of the bill that does not fall within that exclusion 
     contains an intergovernmental mandate as defined in UMRA. 
     That section would preempt a state or local government's 
     ability to participate in, comply with, implement, or furnish 
     information regarding restrictive trade practices or boycotts 
     fostered or imposed by foreign countries against other 
     countries. Because state and local governments would not be 
     required to take any action, however, CBO estimates that the 
     cost of this preemption would be insignificant.
       Estimated impact on the private sector: Section 4 of UMRA 
     excludes from the application of that act legislative 
     provisions that are necessary for the national security. CBO 
     has determined that several provisions of S. 1712 fall within 
     that exclusion. Provisions of the bill that do not fall 
     within that exclusion contain private-sector mandates as 
     defined in UMRA.
       By replacing the expired Export Administration Act, the 
     bill would impose private-sector mandates on exporters of 
     items controlled for foreign policy purposes. (At the same 
     time the bill would put into place certain new procedural 
     disciplines on the President in the implementation of such 
     controls.) In addition, S. 1712 would impose a mandate by 
     prohibiting anyone, with respect to that person's activities 
     in the interstate or foreign commerce of the United States, 
     from participating in boycotts imposed by a foreign country 
     against a country that is on good terms with the United 
     States.
       The bill also would make changes in the system of foreign 
     policy export controls that would lower costs to the private 
     sector of complying with requirements under that system. In 
     particular, S. 1712 would restrict the use of foreign policy 
     export controls on agricultural commodities, medicine, or 
     medical supplies. According to information provided by 
     several government and industry sources, the nonexcluded 
     provisions of the bill would largely either codify current 
     policies with respect to export controls or make reforms that 
     could reduce requirements on exporters of controlled (and de-
     controlled) items. Thus, CBO expects that the direct costs of 
     complying with private-sector mandates in the bill would fall 
     well below the statutory threshold established in UMRA ($100 
     million in 1996, adjusted annually for inflation).
       Estimate prepared by: Federal Costs: Mark Hadley. Federal 
     Receipts: Hester Grippando. Impact on State, Local, and 
     Tribal Governments: Shelley Finlayson. Impact on the Private 
     Sector: Patrice Gordon.
       Estimate approved by: Peter H. Fontaine, Deputy Assistant 
     Director for Budget Analysis.

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