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Friday, May 31, 2013

Maritime Territorial and Exclusive Economic Zone (EEZ) Disputes Involving China: Issues for Congress



Ronald O'Rourke
Specialist in Naval Affairs

This report presents policy and oversight issues for Congress arising from (1) maritime territorial disputes involving China in the South China Sea (SCS) and East China Sea (ECS) and (2) an additional dispute over whether China has a right under international law to regulate U.S. and other foreign military activities in its 200-nautical-mile maritime Exclusive Economic Zone (EEZ).

China is a party to multiple maritime territorial disputes in the SCS and ECS, including, in particular, disputes over the Paracel Islands, Spratly Islands, and Scarborough Shoal in the SCS, and the Senkaku Islands in the ECS. Maritime territorial disputes involving China in the SCS and ECS date back many years, and have periodically led to incidents and periods of increased tension. The disputes have again intensified in the past few years, leading to numerous confrontations and incidents, and heightened tensions between China and other countries in the region, particularly Japan, the Philippines, and Vietnam.

In addition to maritime territorial disputes in the SCS and ECS, China is involved in a dispute, particularly with the United States, over whether China has a right under international law to regulate the activities of foreign military forces operating within China’s EEZ. The dispute appears to be at the heart of multiple incidents between Chinese and U.S. ships and aircraft in international waters and airspace in 2001, 2002, and 2009.

The issue of whether China has a right under the United Nations Convention on the Law of the Sea (UNCLOS) to regulate foreign military activities in its EEZ is related to, but ultimately separate from, the issue of maritime territorial disputes in the SCS and ECS. The two issues are related because China can claim EEZs from inhabitable islands over which it has sovereignty, so accepting China’s claims to islands in the SCS or ECS could permit China to expand the EEZ zone within which China claims a right to regulate foreign military activities.

The EEZ issue is ultimately separate from the territorial disputes issue because even if all the territorial disputes in the SCS and ECS were resolved, and none of China’s claims in the SCS and ECS were accepted, China could continue to apply its concept of its EEZ rights to the EEZ that it unequivocally derives from its mainland coast—and it is in this unequivocal Chinese EEZ that most of the past U.S.-Chinese incidents at sea have occurred.

China depicts its maritime territorial claims in the SCS using the so-called map of the nine-dash line that appears to enclose an area covering roughly 80% of the SCS. China prefers to discuss maritime territorial disputes with other parties to the disputes on a bilateral rather than multilateral basis, and has resisted U.S. involvement in the disputes. Some observers believe China is pursuing a policy of putting off a negotiated resolution of maritime territorial disputes so as to give itself time to implement a strategy of taking incremental unilateral actions that gradually enhance China’s position in the disputes and consolidate China’s de facto control of disputed areas. China’s maritime territorial claims in the SCS and ECS appear to be motivated by a mix of factors, including potentially large undersea oil and gas reserves, fishing rights, nationalism, and security concerns.

The United States does not take a position (i.e., is neutral) regarding competing territorial claims over land features in the SCS and ECS. The U.S. position is that territorial disputes should be resolved peacefully—without coercion, intimidation, threats, or the use of force—and that claims

of territorial waters and EEZs should be consistent with customary international law of the sea, as reflected in UNCLOS. U.S. officials have stated that the United States has a national interest in the preservation of freedom of navigation as recognized in customary international law of the sea and reflected in UNCLOS. The United States, like most other countries, believes that coastal states under UNCLOS do not have the right to regulate foreign military activities in their EEZs. If China’s position on the issue—that coastal states do have a right under UNCLOS to regulate the activities of foreign military forces in their EEZs—were to gain greater international acceptance under international law, it could substantially affect U.S. naval operations not only in the SCS and ECS, but around the world.

Maritime territorial and EEZ disputes involving China in the SCS and ECS raise a number of policy and oversight issues for Congress, including the following:


  • the risk that the United States might be drawn into a crisis or conflict over a territorial dispute involving China, particularly since the United States has bilateral defense treaties with Japan and the Philippines; 
  • the risk of future incidents between U.S. and Chinese ships and aircraft arising from U.S. military survey and surveillance activities in China’s EEZ; 
  • the impact of maritime territorial and EEZ disputes involving China on the overall debate on whether the United States should become a party to UNCLOS; 
  • implications for U.S. arms sales and transfers to other countries in the region, particularly the Philippines, which currently has limited ability to monitor maritime activity in the SCS on a real-time basis, and relatively few modern ships larger than patrol craft in its navy or coast guard; 
  • implications for the stationing and operations of U.S. military forces in the region, and for U.S. military procurement programs; 
  • implications for interpreting the significance of China’s rise as an economic and military power, particularly in terms of China’s willingness to accept international norms and operate within an international rules-based order; 
  • the impact on overall U.S. relations with China and other countries in the region; and 
  • the effect on U.S. economic interests, including oil and gas exploration in the SCS and ECS by U.S. firms, and on international shipping through the SCS and ECS, which represents a large fraction of the world’s seaborne trade. 

Decisions that Congress makes on these issues could substantially affect U.S. political and economic interests in the Asia-Pacific region and U.S. military operations in both the Asia-Pacific region and elsewhere.

Legislation in the 113
th Congress concerning maritime territorial and EEZ disputes involving China in the SCS and ECS includes H.R. 772.

Date of Report: May 16, 2013
Number of Pages: 95
Order Number: R42784
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Terrorism Risk Insurance: Issue Analysis and Overview of Current Program



Baird Webel
Specialist in Financial Economics

Prior to the September 11, 2001, terrorist attacks, insurance coverage for losses from such attacks was normally included in general insurance policies without specific cost to the policyholders. Following the attacks, such coverage became very expensive if insurers offered it at all. Because insurance is required for a variety of economic transactions, it was feared that the absence of insurance against terrorism loss would have a wider economic impact. Private terrorism insurance was largely unavailable for most of 2002, and some have argued that this adversely affected parts of the economy.

Congress responded to the disruption in the terrorism insurance market by passing the Terrorism Risk Insurance Act of 2002 (TRIA; P.L. 107-297, 116 Stat. 2322). TRIA created a temporary three-year Terrorism Insurance Program in which the government would share some of the losses with private insurers should a foreign terrorist attack occur. This program was extended in 2005 (P.L. 109-144, 119 Stat. 2660) and 2007 (P.L. 110-160, 121 Stat. 1839). The amount of government loss sharing depends on the size of the insured loss. In general terms, for a relatively small loss, private industry covers the entire loss. For a medium-sized loss, the federal role is to spread the loss over time and over the entire insurance industry; the government assists insurers initially but then recoups the payments through a broad levy on insurance policies afterwards. For a large loss, the federal government would cover most of the losses, although recoupment is possible in these circumstances as well. Insurers are required to make terrorism coverage available to commercial policyholders, but TRIA does not require policyholders to purchase the coverage. The prospective government share of losses has been reduced over time compared with the initial act, but the 2007 reauthorization expanded the program to cover losses from acts of domestic terrorism. The TRIA program is currently slated to expire at the end of 2014.

The specifics of the current program are as follows: (1) a single terrorist act must cause $5 million in damage to be certified for TRIA coverage; (2) the aggregate insured loss from certified acts of terrorism must be $100 million in a year for the government coverage to begin; and (3) an individual insurer must meet a deductible of 20% of its annual premiums for the government coverage to begin. Once these thresholds are passed, the government covers 85% of insured losses due to terrorism. If aggregate insured losses due to terrorism do not exceed $27.5 billion, the Secretary of the Treasury is required to recoup 133% of the government coverage by the end of 2017 through surcharges on property/casualty insurance policies. If the losses exceed $27.5 billion, the Secretary has discretion to apply recoupment surcharges, but is not required to do so.

Since TRIA’s passage, the private industry’s willingness and ability to cover terrorism risk have increased. According to industry surveys, prices for terrorism coverage have generally trended downward, and approximately 60% of commercial policyholders have purchased coverage over the past few years. This relative market calm has been under the umbrella of TRIA coverage, and it is unclear how the insurance market would react to the expiration of the federal program.

In the 113
th Congress, two bills, H.R. 508 and H.R. 1945, have been introduced to extend the TRIA program. H.R. 508 would extend the program’s expiration date five years, until 2019. H.R. 1945 would both extend the program 10 years, until 2024, and add the Secretary of Homeland Security as the lead authority for certifying an act of terrorism. Both bills have been referred to the House Committee on Financial Services, with H.R. 1945 also referred to the House Committee on Homeland Security.


Date of Report: May 15, 2013
Number of Pages: 16
Order Number: R42716
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Coast Guard Cutter Procurement: Background and Issues for Congress



Ronald O'Rourke
Specialist in Naval Affairs

The Coast Guard’s program of record (POR) calls for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs) as replacements for 90 aging Coast Guard cutters and patrol craft. The NSC, OPC, and FRC programs have a combined estimated acquisition cost of about $21.1 billion, and the Coast Guard’s proposed FY2014 budget requests a total of $716 million in acquisition funding for the three programs.

NSCs are the Coast Guard’s largest and most capable general-purpose cutters. They have an estimated average procurement cost of about $684 million per ship. The first three are now in service, the fourth and fifth are under construction, and the sixth has been funded. The Coast Guard’s proposed FY2014 budget requests $616 million in acquisition funding for the seventh NSC; it does not request any funding for long lead time materials (LLTM) for the eighth NSC, which is scheduled to be procured in FY2015.

OPCs are to be smaller, less expensive, and in some respects less capable than NSCs. They have an estimated average procurement cost of about $484 million per ship. The first OPC is to be procured in FY2017. The Coast Guard’s proposed FY2014 budget requests $25 million in acquisition funding for the OPC program.

FRCs are considerably smaller and less expensive than OPCs. They have an estimated average procurement cost of about $73 million per boat. A total of 18 have been funded through FY2012, and the first five had been delivered as of March 25, 2013. The Coast Guard’s proposed FY2014 budget requests $75 million in acquisition funding for two FRCs and associated program costs.

Potential oversight issues for Congress regarding the NSC, OPC, and FRC programs include the following:


  • the impact on the NSC, OPC, and FRC programs of the March 1, 2013, sequester on FY2013 funding; 
  • the potential impact on the NSC, OPC, and FRC programs of a possible sequester on FY2014 funding that might occur in late 2013 or early 2014 under the terms of the Budget Control Act of 2011; 
  • the adequacy of the Coast Guard’s planned NSC, OPC, and FRC procurement quantities; 
  • the lack of a request in the Coast Guard’s proposed FY2014 budget for acquisition funding for long lead time materials (LLTM) to support the procurement of an eighth NSC in FY2015; 
  • the Coast Guard’s FY2014 request for acquisition funding for two (rather than six) FRCs; 
  • delays, cost growth, and testing issues in the FRC program; 
  • the $25 million in acquisition funding requested for FY2014 for the OPC program, which is one-half of the $50 million that was projected for FY2014 under the Coast Guard’s FY2013 budget submission; 
  • the Coast Guard’s acquisition strategy for the OPC;
  • the potential for using multiyear procurement (MYP) in acquiring new cutters; 
  • whether 8 NSCs, 25 OPCs, and 58 FRCs is the best mix of cutters that could be procured for roughly the same total amount of acquisition funding; and 
  • the adequacy of information available to Congress to support review and oversight of Coast Guard procurement programs, including cutter procurement programs.


Date of Report: May 13, 2013
Number of Pages: 52
Order Number: R42567
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Wednesday, May 29, 2013

The Military Commissions Act of 2009 (MCA 2009): Overview and Legal Issues



Jennifer K. Elsea
Legislative Attorney

On November 13, 2001, President Bush issued a Military Order (M.O.) pertaining to the detention, treatment, and trial of certain non-citizens in the war against terrorism. Military commissions pursuant to the M.O. began in November 2004 against four persons declared eligible for trial, but the Supreme Court in Hamdan v. Rumsfeld invalidated the military commissions as improper under the Uniform Code of Military Justice (UCMJ). To permit military commissions to go forward, Congress approved the Military Commissions Act of 2006 (MCA), conferring authority to promulgate rules that depart from the strictures of the UCMJ and possibly U.S. international obligations. Military commissions proceedings were reinstated and resulted in three convictions under the Bush Administration.

Upon taking office in 2009, President Obama temporarily halted military commissions to review their procedures as well as the detention program at Guantánamo Bay in general, pledging to close the prison facilities there by January 2010, a deadline that passed unmet. One case was moved to a federal district court.

In May 2009, the Obama Administration announced that it was considering restarting the military commission system with some changes to the procedural rules. Congress enacted the Military Commissions Act of 2009 (MCA 2009) as part of the Department of Defense Authorization Act (NDAA) for FY2010, P.L. 111-84, to provide some reforms the Administration supported and to make other amendments to the Military Commissions Act, as described in this report. The plan to transfer five “high value detainees” to New York for trial in federal court, announced in November 2009, was halted due to resistance from Congress and some New York officials. Military commissions resumed under the new statute, resulting in an additional four convictions, although two of the previous convictions have been reversed on appeal. The government has been granted a rehearing en banc at the U.S. Court of Appeals for the D.C. Circuit for one case.

This report provides a background and analysis comparing military commissions as envisioned under the revised MCA to those established by the MCA 2006. After reviewing the history of the implementation of military commissions in the armed conflict against Al Qaeda and associated forces, the report provides an overview of the procedural safeguards provided in the MCA. Finally, the report provides two charts comparing the MCA as amended by the MCA 2009 to the original MCA enacted in 2006 and to general courts-martial. The first chart describes the composition and powers of the military tribunals, as well as their jurisdiction. The second chart, which compares procedural safeguards in courts-martial to the MCA as enacted and as amended, follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts, as well as CRS Report R40932, Comparison of Rights in Military Commission Trials and Trials in Federal Criminal Court, both by Jennifer K. Elsea, to facilitate comparison with safeguards provided in federal court and international criminal tribunals.



Date of Report: May 13, 2013
Number of Pages: 58
Order Number: R41163
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