The California Institute
For Federal Policy Research
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voice: 202-546-3700     fax: 202-546-2390     ransdell@calinst.org     http://www.calinst.org
California Capitol Hill Bulletin

Volume 5, Bulletin 15 -- April 30, 1998

CONTENTS OF THIS ISSUE:
 Rep. Campbell Addresses California Institute's Advisory Board
 49 California Members Ask for Elk Hills Payment to State
 Delegation Circulating letter on Commercial Space Act
 Senate Banking Reports Securities Litigation Bill
 Berman Increases SCAAP Funding For Immigrant Incarceration with Gallegly's Help;
     Entire 52-Member Delegation Signs SCAAP Letter
 House Subcommittee Reports H-1B Visa Increase
 Senate Judiciary Reports Copyright Liability Bill
 House Passes Emergency Supplemental; Clinton Will Sign
 Letter Seeks Support for CUEREC Expansion; More than Half of Californians Have Signed
 California Farm Bureau Calls On Capitol City
 E-Commerce Examined By House Commerce Committee
 As Deadline Looms, ISTEA Conference Still at Work
 California Home Sales Prices Spike Upward
 McKeon Backs DOD Panel's Recommendation on Cross-Service Management for Range Assets
 Lofgren, CHI and ALF Brief Californians on Hepatitis C
 California Cities Called "Worst Case" in HUD Affordable Housing Report
 California Leads in Manufacturing Jobs by a Longshot



To expand communications between Washington and California, the California Institute provides periodic faxed bulletins regarding current activity on Capitol Hill which directly impacts our state. Bulletins are published weekly during sessions of Congress, and occasionally during other periods. The e-mail edition is made possible in part by a computer server donation from Sun Microsystems.


REP. CAMPBELL ADDRESSES CALIFORNIA INSTITUTE'S ADVISORY BOARD
     Rep. Tom Campbell (Campbell) joined members of the California Institute for a lunch on Wednesday to exchange views on various California-related issues.  The lunch was hosted by IBM.  In his remarks, Rep. Campbell discussed several current legislative issues, including copyright liability on the Internet, encryption, ISTEA, bipartisanship, and various antitrust matters.  On the issue of copyright liability, Rep. Campbell hopes that H.R. 2281 can be amended on the floor to address industry concerns about the proscription on de-encryption devices and the universities concerns that the bill does not contain adequate fair use provisions.  On bipartisanship, Rep. Campbell stated that although he is concerned that Congress as a whole is suffering from politicization regarding some legislative issues, he is pleased with the bipartisan efforts that the California delegation has engaged in over the last two years.

49 CALIFORNIA MEMBERS ASK FOR ELK HILLS PAYMENT TO STATE
     California is waiting for its payment from its share of the sale of the Elk Hills Naval Petroleum Reserve, said 49 members of the California congressional delegation in a letter sent last month to Rep. Ralph Regula, Chairman of the House Appropriations Subcommittee on the Interior.  The letter requests that the first installment of the payment, in the amount of $36 million, be included in this year's Interior appropriations bill.
     In 1996, Congress authorized the sale of the Elk Hills Naval Petroleum Reserve and created a process by which to pay California for its claims to two sections of land within Elk Hills.  However, the letter said, the "selling of Elk Hills has substantially reduced pressures for Interior Appropriations . . . Our people are frustrated by the lack of progress in resolving this issue."   As part of the $3.65 billion sale of Elk Hills, a total of $324 million was set aside for California.

DELEGATION CIRCULATING LETTER ON COMMERCIAL SPACE ACT
     The bipartisan California Congressional delegation is asking Senators Boxer and Feinstein for their support and co-sponsorship of H.R. 1702, the Commercial Space Act of 1997.  Passed unanimously by the House last November and under consideration by the Senate Commerce, Science, and Transportation Committee, the letter asks the Senators to consider the importance of the bipartisan measure to the state.
     H.R. 1072 would allow federal licensing of the nation's reusable launch vehicles to be landed, as well as launched from the United States.  The letter states, "This provision alone will affect the activities in California of six aerospace companies--Lockheed Martin, Kelly Space and Technology, Rotary Rocket, Pioneer Rocketplane, Space Access, and Universal Space Lines--and is critically needed to provide the stable regulatory environment that will allow this emerging industry to flourish."
     The measure would also improve the regulatory process for America's commercial remote sensing industry to allow more use of satellite information for environmental protection and "precision farming."
     Seventeen members of the delegation have already signed the letter.  Members wishing to sign the letter should contact Dave LesStrang in Rep. Lewis's office at x55861 or Sherry Greenberg in Rep. Roybal-Allard's office at x51766.

SENATE BANKING REPORTS SECURITIES LITIGATION BILL
     On Wednesday, the Senate Banking Committee favorably reported out S. 1260, a bill to close a loophole in the 1995 Private Securities Litigation Act.  S. 1260, the Securities Litigation Uniform Standards Act of 1997, requires that all class-action securities litigation cases of nationally traded stocks must be brought in federal court.  Since the enactment of the 1995 Act, plaintiffs lawyers began end running the new law by bringing suit in state courts, which generally have looser pleading standards and discovery rules.  The vote to report the bill was 14-4.
     The bill won the support of the majority of members of the Securities and Exchange Commission when the Committee amended it to allow class-action suits with fewer than 50 plaintiffs to continue to be brought in state court.  The bill had initially cut the exemption off at 25 parties.
     The companion bill in the House, H.R. 1689, is also expected to see action soon.  Reps. Anna Eshoo (Atherton) and Rick White (WA) are the authors of the House version.  Both the Senate and House leadership have indicated that they want to bring the bills to the floor before the Memorial Day recess.
     The bills are strongly supported by California's information technology industry, which has been hard hit in the past by frivolous securities lawsuits.

BERMAN AMENDMENT INCREASES SCAAP FUNDING FOR IMMIGRANT INCARCERATION WITH GALLEGLY'S HELP; ENTIRE 52-MEMBER DELEGATION SIGNS SCAAP LETTER
      Rep. Howard Berman (Mission Hills) successfully amended the Department of Justice reauthorization bill to extend the authorization for criminal alien incarceration cost funding and increase the funding levels.  Rep. Berman's amendment, co-sponsored by Rep. Elton Gallegly (Simi Valley), was added during the House Judiciary Committee mark up of H.R. 3303 on Wednesday. The amendment extends the authorization under the State Criminal Alien Assistance Program (SCAAP) to reimburse the states for the costs of incarcerating illegal criminal immigrants through FY 2001.  The current authorization is set to expire after FY2000.  Rep. Berman's amendment also increases the authorized funding levels to $750 million for FY1999, $800 million for FY2000, and $850 million for FY2001.  Currently, SCAAP is authorized at $650 million.
     In FY1996 it cost California about $420 million to incarcerate illegal criminal aliens, of which the federal government reimbursed about $250 million.
     In the meantime, for the second year in a row, all 52 members of the California Congressional Delegation have signed a letter to Rep. Hal Rogers (KY), Chair of the House Appropriations Subcommittee on Commerce, Justice, State.  The letter urges Chairman Rogers to fund the State Criminal Alien Assistance Program (SCAAP) at $650 million for FY99 and asks for his assistance in ensuring that the Department of Justice disburses SCAAP funds in a timely manner (see Bulletin, Vol. 5, Nos. 13 (4/9/98) & 14 (4/23/98)).

HOUSE SUBCOMMITTEE REPORTS H-1B VISA INCREASE
     The House Judiciary Committee's Immigration and Claims Subcommittee reported H.R. 3736, the Workplace Improvement and Protection Act, on Thursday by voice vote.  The bill increases the number of H-1B skilled worker visas from the current level of 65,000 to 95,000 for this year, with an eventual level of 115,000 in the year 2000.  The bill also requires employers seeking the visas to attest that an American worker will not be laid off to fill a job with a foreign worker and that they have recruited U.S. workers using industry-wide standards.  In addition, the bill would allow the Department of Labor to make random inspections of workplaces where the employer has previously violated visa restrictions.
     While reporting the bill unanimously, several members of the Subcommittee, including Reps. Zoe Lofgren (San Jose) and James Rogan (Glendale) indicated that they want to work with the Subcommittee before the full Committee mark up to address various concerns.  One of the major concerns is the provision on employer attestation, which some feel will slow down the process for getting a visa.  The full Committee may mark up the bill as early as next week.
     The increase in H-1B visas is strongly supported by the high technology industry because of critical problems finding skilled U.S. workers.  INS estimates that the current 65,000 permitted visas will be used within the next few weeks, leaving many companies without the ability to fill vacancies until the new fiscal year in October.
     H.R. 3736 is similar to the Senate bill, S. 1723, which was reported by the Senate Judiciary Committee on April 2.

SENATE JUDICIARY REPORTS COPYRIGHT LIABILITY BILL
     The Senate Judiciary Committee on Thursday approved, 18-0, the Digital Millennium Copyright Act of 1998 after compromise positions were worked out over several weeks between on-line service providers and copyright owners.  The bill, which has yet to be formally introduced, will bring U.S. copyright law into compliance with the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty agreed to in Geneva, Switzerland on December 20, 1996.  It also will provide providers of access to the Internet with some protection against copyright litigation where a user of the on-line service infringes on the copyright of another party.
     During consideration on Thursday, several provisions were added to the bill to address concerns raised by interested parties.  Among those provisions was one clarifying that although the bill prohibits manufacturing and trafficking in technology primarily designed to circumvent  copyright protections, it does not extend to technology which has a legitimate use.
     The committee also added two provisions calling for studies to address the concerns of schools and libraries.  The first study will examine the compatibility of copyright law and what is called "long-distance learning", which is were students "attend" classes conducted over the Internet or by live video.  The second study will investigate whether schools and libraries need some protection from copyright infringement allegations where students, using Internet access provided by the institution, violate a copyright.

HOUSE PASSES EMERGENCY SUPPLEMENTAL; CLINTON WILL SIGN
     The House on Thursday passed, 242-163, the $5.5 billion supplemental, which will provide disaster assistance to California and other states hard hit by this year's El Niño storms.  The bill contains $2.6 billion for disaster relief, including $1.6 billion for the Federal Emergency Management Agency for continued El Niño damage, and $2.9 billion for Bosnia and Persian Gulf operations.
     The resolution had been held up for weeks in the conference committee as the House and Senate negotiated on several controversial issues.  The final agreement does not include: the $17.9 billion funding that the Clinton Administration had requested for the International Monetary Fund; and money to pay U.S. arrearages to the United Nations.  Additionally, the bill will only offset domestic supplemental spending, not defense spending, as the House leadership had hoped.  The domestic offsets will come primarily from the Section 8 housing program, but the conferees agreed not to cut the Clinton Administration's Americare program.
     During consideration of the bill on the floor Thursday afternoon, Congress received a message from the White House indicating that President Clinton would sign the bill.

LETTER SEEKS SUPPORT FOR CUEREC EXPANSION; MORE THAN HALF OF CALIFORNIANS HAVE SIGNED
     California Members of Congress are circulating a letter seeking appropriations of $1.5 million for FY99 for the California Urban Environmental Research and Education Center (CUEREC) as it seeks to expand its program to include all California universities, both public and private.  CUEREC was established by Congress in 1994 via Environmental Protection Agency funds.  It is centered at CSU Hayward, though it has partnerships in various areas, including the Santa Monica Mountains Conservancy, the Monterey Bay National Marine Sanctuary, and the Presidio of San Francisco.  Current plans include expansion to the Central Valley, the San Diego region, and the Inland Empire, and the center hopes to fund thirty to forty projects.
     A bipartisan group of more than half of California's Members have signed the letter, which is set to be mailed at the end of the week.  Staff to Members wishing to sign the letter should contact Chris Walker with Rep. Tom Lantos at x53531.
    For more information regarding the organization or its activities, contact Sam Doctors at CUEREC (510-885-4822), or Beth Buehlmann at the CSU Washington office (202-639-9309), or visit CUEREC at http://barney.sbe.csuhayward.edu/~cuerec.

CALIFORNIA FARM BUREAU CALLS ON CAPITOL CITY
     This week, representatives of the California Farm Bureau Federation were in Washington, D.C. to meet with the Administration and Congress.  California is the nation's leading agriculture producer with $24.7 billion in 1996; the state produces more than 11 percent of the national gross cash receipts for farming.
     In meetings with U.S. Department of Agriculture and Environmental Protection Agency  officials, members of the California congressional delegation and Senators, and the Chilean embassy, Farm Bureau members discussed, among other agriculture issues, implementation of the 1997 Food Quality Protection Act, creation of a pilot guest farm worker program, and reform of the Endangered Species Act.
     Led by California Farm Bureau Federation Vice President Doug Mosebar, the delegates represented the California Farm Bureau's more than 75,000 member families in 56 counties on this bi-annual trip.  The California Farm Bureau is the state's largest farm organization.  For additional information, visit their web site at http://www.cfbf.com.
 
E-COMMERCE EXAMINED BY HOUSE COMMERCE COMMITTEE
     A hearing was held Thursday, another in a series by the House Commerce Committee to focus on electronic commerce:  "The Marketplace of the 21st Century."   Chairman Tom Bliley (VA) opened the day's discussions by saying he did not intend to view the 21st century economy through the eyes of 20th century regulations and looked forward to learning more about electronic commerce.  In his opening statement, Congressman Edward Markey (MA) encouraged the Committee to develop policies that would maximize benefits for everyone using the Internet.  Committee member Anna Eshoo (Atherton) looked forward to a discussion on the role of the federal government in electronic commerce.  She believes the Committee should examine whether the existing rules that govern a paper-based economy make sense for a economy based on electronic commerce.
     Representatives from America On Line, Inc., the SABRE Group Holdings Inc., Mastercard International, and Cdnow described the present structure of, and their firms' experiences with, electronic commerce.  According to their written testimony, by the end of 1997, 100 million people were connected to the Internet worldwide and 10 million people had made purchases over the Internet.  Traffic on the Internet is reportedly doubling every 100 days.
     Common policy concerns cited by the industries using electronic commerce were fears of hastily-enacted government regulation of the still-mostly-unprofitable medium; non-uniform taxation of goods transacted by electronic commerce; privacy and security of electronic transactions; and accessibility to the Internet.  Some said immediate action that the federal government could take would be to help build consumer confidence in using electronic commerce.
     Also testifying at the hearing were representatives from the Corporation for National Research Initiatives, Technological Partners, Forbes ASAP, and Professor David Farber of the University of Pennsylvania.  For a copy of the testimony, please contact the Committee at 202/225-2927 or by e-mail at commerce@mail.house.gov.  Testimony should soon be available on the Committee's web site at http://www.house.gov/commerce.

AS DEADLINE LOOMS, ISTEA CONFERENCE STILL AT WORK
     As negotiations continue, the nation's transportation laws that had been kept alive until May 1st  by a short-term extension passed last fall, will expire on Friday without another short-term extension or full six-year ISTEA reauthorization to take their place.  Another short-term extension appeared unlikely this week, as key negotiators said another extension would not speed along, and could perhaps hinder, conference negotiations.  Expect the first and hardest hit to be small states and local transportation agencies which do not have enough of their own resources to continue transportation programs without federal dollars.
     While conferees continue to debate the larger financing issues, they did reach agreement on several policy and technical issues.  Among their reported compromises were:  permit contractors to do environmental impact statements as well as subsequent design work; allow small urban areas (25,000 or less) to use capital grants for both capital and operating costs for transit projects; require financing plans for highway or transit projects greater than $1 billion; and retain the current structure of the metropolitan planning process in addition to technical changes suggested by conference staff.
      In a letter dated April 28th sent to California's conferees (Senator Boxer and Reps. Kim (Diamond Bar), Filner (San Diego), Horn (Long Beach) and Rohrabacher (Huntington Beach), California Department of Transportation's (Caltrans) Deputy Director Andrew Poat highlighted state priorities in reauthorizing the transportation laws.  (Note: Reps. Rohrabacher and George Brown (San Bernardino) have now joined the conference negotiations; Rep. Rohrabacher on the consideration of budget issues and Rep. Brown on provisions relating to transportation research.)
     The letter says the state should receive a return on its contributions to the Highway and Mass Transit Trust Funds consistent with the state's rate of return under the original ISTEA law.  According to Caltrans' calculations, that "means the state should receive approximately $19.6 billion over the next six years, still contributing $600 million to the national transportation interests."  The letter also thanked conferees for their efforts so far in creation of a Border Infrastructure program and a pilot program under the U.S. Department of Transportation to coordinate NEPA/CEQA.
     Caltrans also discussed highway formula factors that would increase California's share if given more weight, such as total trust fund contributions, population, interstate lane miles, and non-National Highway System vehicle miles traveled.  Other less favorable factors like the number of deficient/functionally obsolete bridges and diesel fuel usage should be emphasized less to increase the state's share of the formula funds.   Finally, Caltrans believes that funding for high priority projects listed in the House bill should instead be distributed through the highway formula programs and projects selected by existing planning processes.

CALIFORNIA HOME SALES PRICES SPIKE UPWARD
     Sales prices of existing California homes jumped in March by 10.5% from the same month one year ago, and sales volume rose 14.8%, according to figures this week from the California Association of Realtors and Transamerica.  The median price for a single-family home in California rose to $196,400 in March 1998 from $177,740 in March 1997, and the median condominium price rose to $151,440 from $133,940 in March 1997.
     Nearly every region in the state saw a year-over-year increase in median home sales prices, with the largest increases experienced in Santa Clara County (up 20.2% to $351,160), the Bay Area generally (up 13.1% to $312,300), Monterey (up 13.1% to $276,440), Orange County (up 12.3% to $246,390), Ventura (up 11.9% to $224,830), and San Diego (up 9.9% to $198,300).
     The real estate market has become more brisk, according to the figures, with the median number of days it took to sell a single-family home declining from 53 in March 1997 to 41 in March 1998.
     For further information or more detailed figures, see the C.A.R. home page at http://www.car.org/newsstand/news/april98-2.html.

MCKEON BACKS DOD PANEL'S RECOMMENDATION ON CROSS-SERVICE MANAGEMENT FOR RANGE ASSETS
     A March 1998 report by the Pentagon's Defense Science Board urges the creation of a unified cross-service management structure for testing sites in the western U.S.  The report proposes creation of an "All-Service Range Command" once appropriate study and site selection is completed, and suggests that the concept be built around the White Sands Missile Range, Edwards Air Force Base, and China Lake.
     Rep. Buck McKeon (Santa Clarita) wrote last week to House National Security Chairman Floyd Spence to support the recommendation and suggest expanding the concept to include the Point Mugu Naval Air Station, Nellis Air Force Base, and the Utah Test and Training Range.  McKeon wrote, "Unifying the operation of DOD's range assets will not only save money, but will demonstrate to Congress how military installations can be jointly managed," adding that the concept could then be expanded to other installations.
     The installations discussed, as well as other testing and training facilities in California, Nevada, Utah, Arizona and New Mexico, are considered part of the Southwest Defense Complex.  For further information, contact the Southwest Defense Alliance at 805-723-6103 or send e-mail to colaero@qnet.com.

LOFGREN, CHI AND ALF BRIEF CALIFORNIANS ON HEPATITIS C
     California delegation staff members were briefed Wednesday by Rep. Zoe Lofgren (San Jose) and by representatives of the California Healthcare Institute and the American Liver Foundation regarding the status of hepatitis C.  According to the panel, more than 500,000 Californians are infected with hepatitis C, out of a total of 3.9 million persons nationwide, which places the prevalence rate at about five times that of HIV.  Spread of the disease is primarily blood borne, with transmission methods similar to those of the virus which causes AIDS.  The only known treatment, interferon alpha, only works in 20% of patients, and half the time only incompletely.  Because the disease typically lies dormant for twenty years, many people may not realize that they carry the disease and could transmit it to others.
     Presenters highlighted the need for additional diagnostic work, and for the development of successful treatments and vaccines.  To date, federal funding for research has been negligible.  Presenters are seeking $404 million for NIH research over seven years, including $56 million for the upcoming year.  A large portion of those funds could be spent in California, given the state's strength in medical research.
     For further information, contact CHI at 619-551-6677 or refer to a February 1998 report on hepatitis C by the California Center for Health Improvement which is available in Adobe Acrobat (.pdf) format at http://www.cchi.org/pdf/HWHC.pdf.

CALIFORNIA CITIES CALLED "WORST CASE" IN HUD AFFORDABLE HOUSING REPORT
     The federal Department of Housing and Urban Development this week released "America's Affordable Housing Crisis," a report detailing shortages of affordable housing in 43 metropolitan areas across the country, including six in California.  According to HUD calculations, California accounts for 753,000 of the nation's 5.3 million very-low-income households which face unaffordable rents or substandard living conditions, and therefore require housing assistance.  (HUD identified households with less than 50% of the area's median income and which pay more than half their incomes for rent or are living in severely substandard housing.)
     According to the report, these renter households include 401,000 in the Los Angeles area; 123,000 in the Bay Area; 74,000 in the San Diego area; 68,000 in the San Bernardino-Riverside area; 54,000 in Orange County; and 33,000 in Sacramento.
     Review of the data in the report indicates that HUD thinks California's very poor are considerably more likely to need housing help than their urban counterparts in other states.  The percentage of very-low-income renters with "worst case needs" in the six California metro areas ranges from 41% (in Sacramento) to 48% (in Los Angeles and San Diego).  That percentage in most of the other 43 U.S. metro areas examined is in the 25% to 40% range.
     For more detail, refer to the HUD website at http://www.hud.gov/worscase.html.

CALIFORNIA LEADS IN MANUFACTURING JOBS BY A LONGSHOT
     According to the "1996 Annual Survey of Manufacturers - Geographic Area Statistics," released Wednesday by the Census Bureau, California has nearly twice as many manufacturing jobs as the next state.  The report estimates that there are 1.9 million manufacturing jobs in the state, followed by just over a million in Ohio, and then Texas and New York.  California's level represents a continued increase above the manufacturing employment base in 1993 through 1995, including a rise of 15,000 over the 1995 level, although it remains 165,000 jobs behind the recorded peak experienced in 1987.
     Nationwide, 18.7 million Americans were employed in manufacturing establishments in 1996, a level which represents a decline of 63,000 from 1995, but which remains higher than any other year measured this decade.  All of these figures are for all employment at manufacturing establishments -- roughly two-thirds of employees at such firms are considered production workers.
     For more detail, the 146-page report from the Census Bureau is available in Adobe Acrobat (.pdf) format at http://www.census.gov/prod/3/98pubs/m96-as3.pdf.

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