[Senate Report 106-14]
[From the U.S. Government Publishing Office]





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106th Congress                                                   Report
  1st Session                    SENATE                          106-14
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PROVIDING GUIDANCE FOR THE DESIGNATION OF EMERGENCIES AS A PART OF THE 
                            BUDGET PROCESS

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                             together with

                            ADDITIONAL VIEWS

                              to accompany

                                 S. 557

PROVIDING GUIDANCE FOR THE DESIGNATION OF EMERGENCIES AS A PART OF THE 
                             BUDGET PROCESS




                 March 15, 1999.--Ordered to be printed

                               --------

                    U.S. GOVERNMENT PRINTING OFFICE                    
69-010                     WASHINGTON : 1999





                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT A. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire

             Hannah S. Sistare, Staff Director and Counsel
                      Dan G. Blair, Senior Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                    Kevin J. Landy, Minority Counsel
                       Lynn L. Baker, Chief Clerk



                            C O N T E N T S

                              ----------                              
                                                                   Page

   I. Purpose.....................................................     1
  II. Summary of S. 557...........................................     1
 III. Background and Need for Legislation.........................     1
  IV. Legislative History and Committee Action....................     3
   V. Section-by-Section Analysis.................................     4
  VI. Regulatory Impact Statement.................................     5
 VII. Congressional Budget Office Cost Estimate...................     6
VIII. Additional Views of Senator Domenici........................     8
  IX. Changes in Existing Law.....................................     9




106th Congress                                                   Report
  1st Session                    SENATE                          106-14
_______________________________________________________________________




PROVIDING GUIDANCE FOR THE DESIGNATION OF EMERGENCIES AS A PART OF THE 
                             BUDGET PROCESS

                                _______
                                

                 March 15, 1999.--Ordered to be printed

                                _______



Mr. Thompson, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 557]

                         I. Purpose of the Bill

    The purpose of the bill is to curb the abuse of designating 
provisions of legislation as an ``emergency'' in order to 
circumvent budget laws.

                         II. Summary of S. 557

    The bill amends the Congressional Budget Act of 1974 to add 
a new section 318 regarding emergency legislation. The bill 
adds a reporting requirement for the President and Congress to 
justify proposed emergency spending and to document whether 
proposed emergencies meet five criteria: necessary, sudden, 
urgent, unforeseen, and not permanent. If a proposed emergency 
does not meet these criteria, then the President and the 
Congress must justify why the provision constitutes an 
emergency. In addition to this reporting requirement, the bill 
provides a point of order in the Senate against any provision 
in legislation that is designated as an emergency. If the point 
of order is raised and sustained against a provision designated 
as an emergency, that provision would be stricken from the 
legislation. The point of order can be waived in the Senate by 
the affirmative vote of a simple majority.

                III. Background and Need for Legislation

    The Budget Enforcement Act (BEA) of 1990 amended the 
Balanced Budget and Emergency Deficit Control Act of 1985 to 
require that the cost of appropriations legislation be within 
spending limitations and that the cost of all other legislation 
satisfy a ``pay-as-you-go'' requirement. If the cost of 
legislation does not meet these two requirements, a sequester 
order will be issued (an across-the-board spending reduction) 
in order to ensure such legislation does not cause an increase 
in the deficit.
    There was a concern this enforcement regimen could stifle 
efforts to provide funding for extraordinary emergencies. As a 
result, Congress provided in sections 251(b)(2)(A) and 252(e) 
of the Balanced Budget and Emergency Deficit Control Act that 
provisions of legislation designated as an emergency 
requirement are exempt from the limits on appropriated spending 
and the pay-as-you-go requirement. More specifically, if the 
President designates a provision as an emergency requirement 
and the Congress concurs in statute, then the cost of that 
provision of legislation is effectively exempted from the 
spending limits and the pay-as-you-go requirement.
    The BEA is generally silent as to what constitutes an 
emergency--with two exceptions. When the BEA was enacted, it 
specifically defined and exempted the incremental costs 
associated with the 1990-1991 Persian Gulf War (Operations 
Desert Shield and Desert Storm). Second, in 1994, as part of 
legislation dealing with crop insurance, Congress amended the 
BEA to provide that agriculture crop disaster spending could 
not be designated as an emergency requirement.
    The question of the definition of emergency spending 
immediately became an issue after the BEA's enactment in 1990. 
As part of the FY 1992 Dire Emergency Supplemental 
Appropriations Act (Public Law 102-55), Congress directed the 
Office of Management and Budget (OMB) to prepare a report on 
emergencies. On June 27, 1991, OMB submitted a report to 
Congress on the cost of domestic and international 
emergencies.\1\ in that report, OMB used the following five 
elements to define what constituted an emergency:
---------------------------------------------------------------------------
    \1\ Office of Management and Budget, Executive Office of the 
President, Report on the Costs of Domestic and International 
Emergencies and on the Threats Posed by the Kuwaiti Oil Fires (as 
required by P.L. 102-55, June 1991.
---------------------------------------------------------------------------
          necessary expenditure--an essential or vital 
        expenditure, not one that is merely useful or 
        beneficial;
          sudden--quickly coming into being, not building up 
        over time;
          urgent--pressing and compelling need requiring 
        immediate action;
          unforseen--not predictable or seen beforehand as a 
        coming need (an emergency that is part of an aggregate 
        level of anticipated emergencies, particularly when 
        normally estimated in advance, would not be 
        ``unforeseen''); and
          not permanent--the need is temporary in nature.
    Although the BEA was amended in 1993 and again in 1997 to 
extend the limits on appropriated spending and the pay-as-you-
go requirement, the provisions regarding emergency spending 
were not substantively changed. While major changes have not 
been made to the law, there has been a growing concern about 
the cost of emergencies. For example, the FY 1995 Emergency 
Supplemental Appropriations Act created a Senate task force to 
study disaster assistance funding. That task force reported to 
the Senate on March 15, 1995.
    The Omnibus Consolidated and Emergency Supplemental 
Appropriations Act for fiscal year 1999, including $21.4 
billion in emergency spending, and represented an unprecedented 
use of the exemption for emergency spending. As the table below 
illustrates, Congress has consistently provided for emergency 
spending since 1990. Nonetheless, the combination of the amount 
of money provided and the broad use of the emergency 
designation in last year's omnibus appropriations measure was 
unprecedented.

                               TABLE 1. OVERVIEW OF EMERGENCY SPENDING, 1991-1999
----------------------------------------------------------------------------------------------------------------
                                                                  Fiscal year--
                                --------------------------------------------------------------------------------
                                   1991     1992     1993     1994     1995     1996     1997     1998     1999
----------------------------------------------------------------------------------------------------------------
                                           EMERGENCY SPENDING AMOUNTS
                                    (Millions of dollars budget authority)\1\

Total..........................   45,846   16,168    6,029   13,860    7,935    5,051    9,536    5,898   21,574
By Type of Spending:
    Defense....................   44,387    7,527      642    1,497    2,448      982    2,077    2,834    7,796
    Nondefense.................    1,459    8,641    5,387   12,363    5,487    4,069    7,459    3,064   13,778
By Type of Appropriation:
    Regular....................    1,000      314      878    1,901    1,704      487    2,122      313   21,444
    Supplemental \2\...........   44,846   15,854    5,151   11,959    6,231    4,564    7,414    5,585      130
By Type of Designation:
    Designated.................   45,846   15,708    5,336   12,942    7,717    5,047    9,236    5,699   13,987
    Contingent \3\.............        0      460      693      918      218        4      300      199    7,587
 
                         NUMBER OF APPROPRIATION ACCOUNTS THAT CONTAIN EMERGENCY FUNDING

Total..........................       43       93       59       62       48       61      110       60      104
By Type of Spending:
    Defense....................       37       14        4       10       13       11       15       25       35
    Nondefense.................        6       79       55       52       35       50       95       35       69
By Type of Appropriation:
    Regular....................        1        2        5       11        9        7       72        3      103
    Supplemental...............       42       91       54       51       39       54       39       57        1
By Type of Designation:
    Designated.................       43       85       55       55       45       60      107       56       85
    Contingent \3\.............        0        8        4        7        3        1        3        4      19
----------------------------------------------------------------------------------------------------------------
\1\ The budget authority amounts for 1991 through 1998 differ from those in CBO's June 23, 1998, testimony on
  emergency spending because they reflect updates in the categorization and designation of several
  contingencies.
\2\ The supplemental amount of 130 million for 1999 represents a 1998 contingent emergency supplemental
  appropriation designated as an emergency by the President (and thus made available for obligation) on November
  5, 1998.
\3\ Appropriation items awaiting emergency designation by the President.

Source: Congressional Budget Office.

                        IV. Legislative History

    1999 (106th Congress)--S. 557 was ordered reported as an 
original bill from the Committee on Governmental Affairs on 
March 4, 1999 and filed with the Senate on March 8, 1999. The 
bill provides a majority vote point-of-order against emergency 
spending legislation.
    On January 6, 1999, Senator Lott on behalf of Senator 
Domenici introduced S. Res. 5, a resolution to amend the 
Senate's procedures for consideration of emergency legislation. 
On January 19, 1999, Senator Domenici introduced S. 93, the 
Budget Enforcement Act of 1999. Title II of S. 93 would have 
amended the Congressional Budget Act of 1974 to modify 
procedures for the consideration of emergency legislation. S. 
Res. 5 and title II of S. 93 would have established 5 
guidelines (necessary, sudden, urgent, unforeseen, and 
temporary) for evaluating emergency proposals and made any 
emergency provision subject to 60 vote point of order in the 
Senate. S. Res. 5 and title II of S. 93 also provided a 60 vote 
point of order against riders on emergency supplemental 
appropriations bills. Both S. Res. 5 and S. 93 were jointly 
referred to the Committees on Budget and Governmental Affairs.

i. Hearings

    January 27, 1999--Joint Budget and Governmental Affairs 
Committee Hearing: Governmental Affairs Committee Chairman 
Thompson and Budget Committee Chairman Domenici chaired a joint 
hearing on S. 92, the Biennial Budgeting and Appropriations 
Act, and S. 93, the Budget Enforcement Act of 1999. Title II of 
S. 93 contained proposed emergency spending reforms.
    There were three panels of witnesses:
    Panel I--The Honorable John McCain, United States Senator 
from Arizona. Senator McCain criticized the current treatment 
of emergency spending.
    Panel II--The Honorable Benjamin L. Cardin, A 
Representative from Maryland and the Honorable Jim Nussle, a 
Representative from Iowa. Both witnesses advocated changes to 
the current treatment of emergency spending.
    Panel III--Timothy J. Muris, Professor, George Mason 
University School of Law; Van Doorn Ooms, Senior Vice President 
and Director of Research, Committee for Economic Research; and 
Martha Phillips, Executive Director, the Concord Coalition.
    Mr. Muris testified in favor of reforming the current 
treatment of emergency spending. In addition, Ms. Phillips 
testified in favor of the proposed emergency spending reform 
legislation.

ii. Committee action

    On March 4, 1999, the Committee held a business meeting at 
which an original committee bill embodying the text of title II 
of S. 93, providing guidance for the designation of emergencies 
as a part of the budget process, was considered. Senator 
Domenici offered an amendment in the nature of a substitute, on 
his behalf and cosponsored by Senator Lieberman and Senator 
Thompson, which was approved by voice vote. This substitute 
amendment reduced the votes necessary to waive the point-of-
order from a 60-vote requirement to a majority requirement. 
Further, the amendment dropped the point-of-order against 
riders on emergency supplemental appropriation bills.
    An amendment exempting national defense spending form the 
majority point-of-order was offered, by Senator Stevens. 
Following discussion of the amendment, Senator Stevens withdrew 
his amendment.
    Following completion of debate on the measure, the 
Committee favorably ordered the committee print, as amended, to 
be reported by voice vote.

                     V. Section-by-Section Analysis

    Section 1(1) of the bill adds a new section 318 to the 
Budget Act to address emergency legislation. Pursuant to 
sections 251(b)(2)(A) and 252(e) of the Balanced Budget and 
Emergency Deficit Control Act, legislation can be exempted from 
the limits on discretionary spending and the pay-as-you-go 
requirement for direct spending and revenue legislation if the 
President and the Congress designate the spending or revenue 
change as an emergency requirement.
    The proposed new section (section 318) retains the existing 
exemption for emergency legislation, but makes a number of 
changes to tighten up the ability for new spending or revenue 
losses to be exempt from the spending limitations and the pay-
as-go-requirement.
    Section 318(a) essentially provides a new reporting 
requirement, directing the President and congressional 
committees to analyze whether a proposed emergency meets five 
criteria that the Office of Management and Budget first 
outlined in a 1991 report to the Congress. That report defined 
an emergency as a requirement that was necessary, sudden, 
urgent, unforeseen, and not permanent. These criteria are 
listed in paragraph (2) of section 318(a). If a proposed 
emergency does not meet these criteria, subparagraph (3) 
requires the President or the reporting committee to justify 
why the proposal constitutes an emergency.
    Section 318(b)(1) establishes a new point of order in the 
Senate that can be waived by a simple-majority vote (usually 51 
votes). This point of order is similar to the point of order 
under section 313 of the Budget Act, known as the ``Byrd 
rule''. This point of order would lie against a specific 
provision of a bill and does not lie against the entire bill. 
If the point of order is sustained in the Senate, the provision 
is stricken from the bill.
    As is the case with other points of order under the Budget 
Act, this point of order is not self-executing. A Senator must 
challenge a provision and raise a point of order on the floor 
of the Senate. The reporting and justification requirements set 
forth in section 318(a) do not determine theapplication of this 
point of order. Any provision designated as an emergency is subject to 
this point of order. Based on the reporting requirements of section 
318(a) and the debate on the motion to waive, the Senate will 
ultimately decide whether an emergency provision should be exempted 
from the spending limitations or the pay-as-you-go requirement.
    Section 318(b)(2) provides that a Senator may make a single 
omnibus point of order against a number of provisions in the 
same manner as is currently permitted by the Byrd Rule (see 
section 313(e) of the Budget Act).
    Section 318(b)(3) provides that if a point of order is 
sustained against a conference report the conference report 
will be disposed of in the same manner as is currently 
permitted by the Byrd rule (see section 313(d) of the Budget 
Act).
    Section 1(2) of the bill amendments the table of Contents 
in section 1(a) of the Budget Act by adding after section 117 
the following:

``318. Emergency Legislation''.

                    VI. Regulatory Impact Statement

    The enactment of this legislation will not have significant 
regulatory impact. S. 557 contains no intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act (UMRA) and would impose no costs on state, local, or 
tribal governments.

             VII. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 12, 1999.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 557, a bill to 
provide guidance for the designation of emergencies as a part 
of the budget process.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mary 
Maginniss.
            Sincerely,
                                         Barry B. Anderson,
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 557--A bill to provide guidance for the designation of emergencies 
        as a part of the budget process

    Summary: This legislation would impose new controls on 
emergency spending and thus could result in savings to the 
federal government, but CBO has no basis for estimating the 
precise amount. Because S. 557 would not affect direct spending 
or receipts, pay-as-you-go procedures would not apply. The bill 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA) and would 
impose no costs on state, local, or tribal governments.
    Description of the bill's major provisions: Under the 
Balanced Budget and Emergency Deficit Control Act, the 
President and the Congress can designate certain spending or 
revenue changes as an emergency requirement, thereby exempting 
them from the limits on discretionary spending and the pay-as-
you-go rules for legislation affecting direct spending and 
revenues. S. 557 would retain the existing exemption for 
emergency spending but would impose new restrictions. 
Specifically, the bill would direct the President and 
Congressional committees to analyze whether a proposal for 
emergency spending meets five criteria--that is, whether the 
proposed spending or tax change is (1) essential, (2) sudden, 
(3) urgent, (4) unanticipated, and (5) temporary. The bill also 
would establish points of order in the Senate that, if 
sustained, would (1) strike provisions designated as emergency 
requirements that fail to meet the five criteria for emergency 
spending, and (2) strike nonemergency provisions included in 
emergency supplemental appropriation bills.
    Estimated cost to the Federal Government: Appropriations 
that are designated as emergency spending trigger increases in 
the caps on discretionary budget authority and outlays, thus 
allowing for greater spending than under the existing caps. 
Similarly, reductions in revenues or increases in outlays from 
direct spending that are designated as emergencies are not 
subject to pay-as-you-go procedures, also allowing for greater 
spending or lower revenues than could occur without such 
designations. Because S. 557 might make it more difficult for 
some provisions to qualify as emergency requirements, it could 
reduce the magnitude of emergency spending in the future and 
thus lead to larger surpluses or smaller deficits than would 
occur under current law.
    Almost all emergency spending has been the result of 
appropriation action. Annual amounts of budget authority 
appropriated for emergency spending have ranged from $5 billion 
to almost $46 billion over the 1991-1999 period. However, CBO 
has no basis for predicting what emergency designations would 
be made in the future, either under current law or under this 
bill. Thus, we cannot estimate the savings, if any, that might 
result from enacting S. 557.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: The 
legislation contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments.
    Estimate prepared by: Mary Maginniss.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

           VIII. Additional Views of Senator Pete V. Domenici

    This bill is designed to curb the increasing abuse of 
designating legislation as an ``emergency.'' The Budget 
Enforcement Act of 1990 established statutory limits on 
appropriated spending and a pay-as-you-go requirement for 
revenue legislation and direct spending legislation. That Act 
also provided an exemption from these spending limits and the 
pay-as-you-go requirement for legislation that was designated 
as an emergency. Designating provisions of legislation as an 
emergency allows the President and the Congress to skirt the 
limits on appropriated spending and the pay-as-you-go 
requirement for direct spending and revenue legislation.
    This emergency exemption for legislation has become a 
loophole to tap the budget surplus for all kinds of spending. 
In his 1998 state of the union address, the President pledged 
that every penny of any surplus should be saved until Social 
Security is reformed. While the subsequent debate has focused 
on tax reductions and the surplus, few realize that since the 
President's pledge we have already spent $27 billion of the 
surplus by designating legislation as an ``emergency.'' The FY 
1998 Emergency Supplemental Appropriations Act included $5.7 
billion in emergency appropriations and the FY 1999 Omnibus 
Consolidated and Emergency Supplemental Appropriations Act 
provided $21.4 billion in emergency appropriations.
    My original proposal, title II of S. 93, would have made 
any provision designated as an emergency subject to a 60 vote 
point of order in the Senate. When I was developing this 
proposal, some advocated that we should repeal the emergency 
exemption in its entirety. Others suggested that we should only 
exempt the first year's cost of legislation. I rejected these 
two approaches because I believe we need to have some way to 
quickly and fully respond to extraordinary emergencies without 
violating our budget laws.
    Although I still believe my original proposal was a 
reasonable way to curb the misuse of the emergency designation, 
it did not have the support of a majority of the Governmental 
Affairs Committee. With the assistance of the Chairman, Senator 
Thompson, and the ranking member, Senator Lieberman, we were 
able to develop a proposal that would enjoy the support of the 
committee. I felt it was crucial to get this bill to the floor 
so that the debate regarding the budgetary treatment of 
emergencies would continue. I particularly appreciate Senator 
Lieberman's efforts to gain adoption of this proposal. This 
modified approach as reported by the committee may be 
sufficient to curb the abuse of emergency spending and I will 
study it further. As I made clear when we developed this 
compromise, however, I reserve the right to offer or support an 
amendment that would raise the threshold to 60 votes to waive a 
point of order against emergency spending.

                                                  Pete V. Domenici.

                      IX. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported are shown as follows:
    The Congressional Budget Act of 1974 is amended (1) by 
adding the following new section at the end of title III:

SEC. 318. EMERGENCY LEGISLATION.

    (a) Designations.--
          (1) Guidance.--In making a designation of a provision 
        of legislation as an emergency requirement under 
        section 251(b)(2)(A) or 252(e) of the Balanced Budget 
        and Emergency Deficit Control Act of 1985--
                  (A) the President shall submit a message to 
                the Congress analyzing whether a proposed 
                emergency requirement meets all the criteria in 
                paragraph (2); and
                  (B) the committee report, and any statement 
                of managers if any, accompanying that 
                legislation shall analyze whether a proposed 
                emergency requirement meets all the criteria in 
                paragraph (2).
          (2) Criteria.--
                  (A) In general.--The criteria to be 
                considered in determing whether a proposed 
                expenditure or tax change is an emergency 
                requirement are whether it is--
                          (i) necessary, essential, or vital 
                        (not merely useful or beneficial);
                          (ii) sudden, quickly coming into 
                        being, and not building up over time;
                          (iii) an urgent, pressing, and 
                        compelling need requiring immediate 
                        action;
                          (iv) subject to subparagraph (B), 
                        unforeseen, unpredictable, and 
                        unanticipated; and
                          (v) not permanent, temporary in 
                        nature.
                  (B) Unforeseen.--An emergency that is part of 
                an aggregate level of anticipated emergencies, 
                particularly when normally estimated in 
                advance, is not unforeseen.
          (3) Justification for failure to meet criteria.--If 
        the proposed emergency requirement does not meet all 
        the criteria set forth in paragraph (2), the President, 
        the committee report, or the statement of managers, as 
        the case may be, shall provide a written justification 
        of why the requirement should be accorded emergency 
        status.
    (b) Point of Order.--
          (1) In general.--When the Senate is considering a 
        bill, resolution, amendment, motion, or conference 
        report, upon a point of order being made by a Senator 
        against any provision in that measure designated as an 
        emergency requirement pursuant to section 251(b)(2)(A) 
        or 252(e) of the Balanced Budget and Emergency Deficit 
        Control Act of 1985 and the Presiding Officer sustains 
        that point of order, that provision along with the 
        language making the designation shall be stricken from 
        the measure and may not be offered as an amendment from 
        the floor.
          (2) General point of order.--A point of order under 
        this subsection may be raised by a Senator as provided 
        in section 313(e).
          (3) Conference reports.--If a point of order is 
        sustained under this subsection against a conference 
        report the report shall be disposed of as provided in 
        section 313(d).; and
    (2) in the table of contents in section 1(a), by adding 
after the item for section 317 the following:

318. Emergency legislation.

                                
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