California Institute LogoThe California Institute for Federal Policy Research
419 New Jersey Avenue, SE, Washington, D.C. 20003
voice: 202-546-3700   fax: 202-546-2390
California Capitol Hill Bulletin

                           Volume 7, Bulletin 10 -- March 23, 2000    [or see pdf version]

Tauscher Addresses Institute Advisory Board
State Legislators Make Annual Visit To Capitol
         FEMA Disaster Insurance Rule
         Electronic Commerce
         Child Support
         Health Care
EPA Proposes MTBE Phase-out, But Increases Ethanol Use
Governor and Counties Comment on FEMA Insurance Rule
House and Senate Committees Examine Export Administration Act
Governor Davis Announces State Legislation Seeking $14 Million
       For Pierce's Disease; California Congressional Letter Seeks Funds
Senate Finance Discusses Implications of Trade With China
Senate Discusses Water Contracts: CVP Transfers and Vallejo Use of Bureau of Reclamation Canal

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 in kind donations from Sun Microsystems and QUALCOMM, Inc.

Tauscher Addresses Institute Advisory Board

Rep. Ellen Tauscher (Pleasanton) was the guest speaker at the California Institute's monthly breakfast for its Advisory Board members on Thursday, March 23. Ms. Tauscher briefed the group on transportation issues affecting the Bay area and some of her successful efforts to expedite road improvements. She also expressed concern that the EPA's decision to waive MTBE requirements (see article below) only replaces one federal mandate--MTBE as an oxygenate--for another--ethanol. In response to a question on permanent normal trade relations (PNTR) with China, Rep. Tauscher indicated that she believed a third option, perhaps including some residual annual congressional review of China's activities, might be necessary to secure the votes to pass PNTR. She also focused on the ongoing discussions about the federal energy laboratories and on the advances in various fields made by the Lawrence Livermore National Lab, which is located in her district. The breakfast was hosted by PG&E.

State Legislators Make Annual Visit To Capitol

A bipartisan cross-section of the California State Legislature made their annual visit to Washington this week to hold meetings with the Administration and members of the California Congressional Delegation. Participants pressed the case for the state's share of federal funding as well as fair treatment by the federal government. The trip was led by Assembly Speaker-elect Robert Hertzberg, Senate President Pro-Tem John Burton, Assembly Speaker Antonio Villaraigosa, and Assembly Minority Leader Scott Baugh, with much of the planning work done by Senator Jim Costa. Senator Costa is president-elect of the National Conference of State Legislatures, which coordinated logistics for the events. Lieutenant Governor Cruz Bustamante, himself a former Assembly Speaker, joined the legislators at some events.

On March 21, members of the California Legislature met with leaders of the California Congressional delegation. At an opening session, Rep. Sam Farr, chair of the California Democratic Congressional Delegation, noted some of the recent successes of the state's bipartisan Congressional members, such as a provision ensuring that closing military base properties may be transferred without cost to local entities for economic development purposes. Farr also highlighted several bipartisan letters and efforts, including those focused on raising SCAAP funding, abating methamphetamine lab proliferation, ensuring continued funds under the Elk Hills settlement, and avoiding a hasty move by the Federal Emergency Management Agency to require disaster insurance for public buildings.

Rep. Jerry Lewis, chair of the California House Republicans, spoke about the pending supplemental appropriations measure, the federal role in supporting education, and the importance of encouraging that the Joint Strike Fighter (JSF) aircraft be at least partly built in California. Both Reps. Farr and Lewis noted the ongoing collaboration between the Congressional delegation and Governor Gray Davis to seek funding equity for the state.

Senator Dianne Feinstein, who also addressed the group on Tuesday morning, noted the state's formula funding needs, focusing in part on efforts to repair "hold harmless" language imposed by opportunistic Congressional members from other states which unreasonably reduces California's share of funds from the Title I education for the disadvantaged program. Feinstein also discussed exotic pest quarantines, the closure of hospitals due to reduced provider payments, restoration of Lake Tahoe, privacy issues, and the elimination of MTBE as a gasoline additive (see below article).

Also during the morning session, Speaker-elect Hertzberg noted the state's shortfall in federal receipts, and Senator Costa and Rep. Farr noted the growing consensus that infestations of exotic species are becoming a problem for the state's vast agricultural industry, as evidenced by the fear that an imported pest may spread deadly Pierce's Disease widely throughout the state's wine growing regions.

At various points during their three-day stay, the legislators heard from a range of executive and congressional officials a range of issues:

EPA Proposes MTBE Phase-out, But Increases Ethanol Use

The Environmental Protection Agency (EPA) on Monday, March 20, proposed phasing out the use of MTBE as a gasoline additive. MTBE has been found to leak into the water supply and is responsible for contaminating several water sources in California. In making its proposal, however, EPA also announced that it will seek a requirement for the use of 1.2 percent renewable fuel sources in gasoline. Currently, ethanol is the most widely used renewable fuel.

While EPA will use the Toxic Substance Control Act as controlling authority for the phase-out, that route may take three years, so congressional action should still be pursued. H.R. 11, authored by Rep. Brian Bilbray and co-sponsored by a broad bipartisan cross-section of the California delegation, would exempt California from the 2 percent oxygenate requirement that spurred the use of MTBE. Governor Gray Davis has already announced that use of MTBE will be phased-out in California by 2003. For background on the MTBE issue and the delegation's efforts, see, Bulletin, Vol. 7, No. 2 (1/27/00) & Vol.6, Nos. 26 (8/5/99), 25 (7/29/99), 15 (5/6/99), 12 (4/15/99), 11 (4/1/99), 10 (3/25/99), & 4 (2/4/99).

Governor and Counties Comment on FEMA Insurance Rule

The Governor's Office of Emergency Services (OES) and the Excess Insurance Authority (EIA) of the California State Association of Counties (CSAC) have submitted comments to FEMA's Advanced Notice of Proposed Rulemaking on Public Assistance Insurance, which would require all public buildings to carry insurance coverage for natural disasters such as earthquakes. See Bulletin, Vol. 6, Nos. 19 (6/10/99) & 25 (7/29/99) & Vol. 7, Nos. 5 (2/10/00) & 7, No. 9 (3/16/00).

OES raised several issues of concern, not the least of which is that while FEMA's stated intention is to "encourage" the use of private insurance, in fact the rule would mandate it. It also reiterated its concern from over a year ago that FEMA was in effect requiring insurance for all possible hazards, no matter how small the threat. In summary, OES opposed the proposed rule because it is administratively expensive and would slow disaster assistance, it fails to address uncertainty in the commercial earthquake insurance market, and utilizes a punitive approach that may adversely impact public health and safety.

The full comments from OES can be obtained on its website at:

CSAC's EIA posed many of the same concerns, especially the "all or nothing" approach that requires an entity to have insurance or be banned from any federal assistance. EIA laid out four proposed alternatives to the rule. First, convert the "all or nothing" system to an "all or something" system. Second, modify the 30 cent threshold for determining affordability of insurance. Third, revise and streamline the waiver issuance system. And, fourth, remove the "post disaster" insurance requirement as currently implemented per the Stafford Act.

For EIA's comments, please contact Joe Krahn at 202-898-1444.

House and Senate Committees Examine Export Administration Act

The House International Relations Subcommittee on International Economic Policy and Trade held a hearing on Wednesday, March 22 on S.1712, the Senate bill to reauthorize the Export Administration Act. The Senate Armed Services Committee followed with a hearing on the bill on Thursday, March 23.

The House subcommittee heard from a number of witnesses, including: David Rose of Intel, representing the American Electronics Association; Daniel A. Hoydysh, representing the Computer Coalition for Responsible Exports; and John W. Douglass, Aerospace Industries Association.

Mr. Rose testified that S. 1712 overall represented a much-need significant reform of U.S. export controls. In particular, he supported the provisions in the bill allowing license exemptions for mass-marketed products and those readily available in foreign markets. Mr. Hoydysh also supported the mass-market and foreign availability provisions in S. 1712. In addition, he called for another increase this year in the MTOP limits controlling the export of high performance computers.

On the Senate side, Donald Mancuso, Deputy Inspector General of the Department of Defense testified in support of reauthorizing the Export Administration Act, but raised several concerns regarding S. 1712. In particular, he argued that the license exceptions allowed in the bill should be strictly limited and some items, especially encryption technology, should never be exported without a license. He also argued that the Secretary of Defense should be given a more powerful role in reviewing exemptions under the mass-market and foreign availability provisions.

Mr. Douglass of the Aerospace Industries Association also testified at the Senate hearing. AIA supports enactment of S.1712. He also called on the Department of Defense to change substantially its approach to technology security and fully realize the need to work with the commercial sector to develop new products and technologies.

Testimony from both committees may be obtained on their respective websites at: and

Governor Davis Announces State Legislation Seeking $14 Million For Pierce's Disease; California Congressional Letter Seeks Funds

On Thursday, March 23, Governor Davis announced his endorsement of SB 671, a state bill seeking $14 million over two years for the "eradication and prevention of Pierce's Disease." Pierce's Disease, which is carried by the Glassy-Winged Sharpshooter caused $46 million in damages to northern California in1999, and has already caused $12 million in losses to Temecula Valley this year. Jointly authored by Senator Wesley Chesboro (Arcata) and Assemblyman Dennis Cardoza (City of Industry), the legislation would require an industry match of 25% for research funds and a dollar for dollar match by the federal government.

Earlier, on Wednesday, March 22, thirty-nine California Members sent a letter to Rep. Joe Skeen (NM), Chairman of the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies. The letter asks for inclusion in the FY01 Appropriations of nearly $7 million to contain Pierce's Disease and prevent further invasive species from destroying California's agricultural industry.

The letter requests $ 4 million to control Pierce's disease. This amount would be in addition to the $3.25 million that the wine industry, and state and local governments will provide over the next few years. These funds would increase monitoring and inspections of plants, while helping to ensure that plants transported to northern California would be free of infestations.

An additional request for $2 million in the letter would support research at the University of California to study control methods for the bacterium common to Pierce's Disease. The letter further asks for two grants of $300,000 each to fund a U.S. Department of Agriculture (USDA) Agricultural Research Service (ARS) position at UC Davis and another ARS position in Fort Pierce, Florida. See also, Bulletin, Vol. 7, No. 7 (3/2/00).

Senate Finance Discusses Implications of Trade With China

On Thursday, March 23, the Senate Finance Committee held a hearing discussing the implications of granting China permanent normal trade relations (PNTR). On one side, arguments in opposition to PNTR for China centered around whether or not China will abide by the agreement and continued to voice concern over human rights violations in China. Supporters of the measure argued that PNTR is one way to make China reciprocate to the US for its already exposed markets and will provide a tremendous economic benefit. Those in favor also remarked that PNTR and China's entrance into the WTO will make China more accessible to discuss human rights violations.

Two panels testified at the hearing. Panel I included: Robert Kagan, Senior Associate, Carnegie Endowment for International Peace; James Lilly, Former Ambassador to the People's Republic of China and Resident Fellow, American Enterprise Institute; Richard Pearle, Former Assistant Secretary of Defense for International Security Policy, Department of Defense and Resident Fellow, American Enterprise Institute; and James Sasser, Former Ambassador to the People's Republic of China. Panel II consisted of: Merle Goldman, Ph.D., Professor, Fairbanks Center, Harvard University; Nelson E. Graham, President, East Gates Ministries International; Michael A. Santoro, Professor, Rutgers Business School; John Sweeny, President, AFL-CIO; and Harry Wu, Executive Director, The Laogai Research Foundation.

One of the witnesses, Robert Kagan of the Carnegie Endowment for International Peace opposes granting China PNTR on the grounds that there is no historical evidence that a "correlation between economic modernization and political liberalization" exists.

Another witness, James Lilly of the American Enterprise Institute, testified in support of PNTR because it would "strengthen the better guys [in China], the economic reformers, against the military and party dinosaurs." While Mr. Lilly admits that WTO entry and PNTR will not "convert China into a democracy" he stated that "advancing the rule of law, supporting village elections and international criticism are better ways to affect the political process over time."

Merle Goldman, Professor at Harvard University supports PNTR for China because he believes that "the more China participates in international organizations, the more likely it will in time play by the rules of those organizations." While he admits that human rights abuses increased in 1999, the "numbers in the post-Mao era are in the thousands" compared to the Mao era when "millions were imprisoned and silenced." Professor Goldman also thinks that linking economic sanctions to human rights reform is "counter-productive because it arouses the antagonism of ordinary Chinese people, which ultimately hurts the cause of human rights in China."

John J. Sweeny, President of the AFL-CIO testified that granting China PNTR will "give the biggest law breaker a voice in writing the rules," as he cited human rights violations and instances in which China failed to comply with trade agreements already established with the U.S.

Copies of the testimonies can be obtained from the Senate Finance Committee at (202) 224-4515 or at their web site:

Senate Discusses Water Contracts: CVP Transfers and Vallejo Use of Bureau of Reclamation Canal

On Wednesday, March 22, the Senate Energy and Natural Resources' Water and Power subcommittee discussed two water bills that passed the House last year with bipartisan support. H.R. 1235 would allow the Secretary of the Interior to enter into contracts with the Solano County Water Agency and to use Solano Project facilities for beneficial purposes. Another bill, H.R. 3077 would facilitate water transfers in the Central Valley Project.

Members of the California Delegation, government officials, and water contractors testified on behalf of these and other title transfer bills. Witnesses included: Reps. Wally Herger (Marysville), John T. Doolittle (Rocklin), George Miller (Martinez), and Cal Dooley (Visalia). Other witnesses included: Eluid Martinez, Commissioner, Bureau of Reclamation, Interior Department; Walter McNeil, Counsel, Clear Creek Community Service District; and Walter Bishop, General Manager, Contra Costa Water District.

Rep. Miller testified on behalf of his bill, H.R. 1235 which would allow Vallejo to use excess capacity in the nearby Bureau of Reclamation project canal. He explained that his bill was the culmination of an agreement reached at the local level in Vallejo and will maintain the flows of the Steelhead population in that area. Senator Boxer also supports this measure.

Another witness, Eluid Martinez of the Bureau of Reclamation testified in support of H.R. 1235, as well. Mr. Martinez explained that the Warren Act requires that water projects be utilized for environmental purposes only, or else be subject to Congressional approval. Martinez testified that since 1995, Congress had to pass legislation for two title transfers due to the Warren Act. H.R. 1235 would waive the congressional approval rule.

Rep. Doolittle testified in support of H.R. 3077 and stated that Sen. Feinstein and Governor Davis have also written letters in support of the measure. Rep. Doolittle explained that while California enjoyed a relatively wet year in 1999, 60% of that water went to federal contractors. He stated that H.R. 3077 would allow greater flexibility so that farmers and their regional economies can survive.

Chairman Gordon Smith (OR) appeared receptive to the measures and remarked that he was willing to work with the California Members to move the bills forward.

For more information, contact the Water and Power Subcommittee at (202) 224-4971 or at their web site: .
California Institute LogoClick here to return to the California Institute home page.  Or click here to e-mail.