California Capitol Hill Bulletin, 10/19/96 Page 1  The California Institute For Federal Policy Research 419 New Jersey Avenue, SE, Washington, D.C. 20003 Voice: 202-546-3700 Fax: 202-546-2390 e-mail: ransdell@calinst.org California Capitol Hill Bulletin Volume 3, Bulletin 35 -- October 3, 1996 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. Omnibus Appropriations Bill Passes As House Leaves Town; President Signs Bill; Senate Finishes Work Thursday Late Saturday, September 28, the House passed, 370-37, the omnibus continuing resolution (the "CR") combining six appropriations bills and providing for $244 billion in defense spending and $138 billion in nonmilitary discretionary spending for Fiscal Year 1997. After the vote, the House left town for the election. The Senate late Monday night approved the bill by a vote of 84-15. The Senate, however, remained in session until Thursday night as it reauthorized the Federal Aviation Administration and debated a national parks and lands bill. Both houses also rolled into the continuing resolution a revised version of the illegal immigration reform bill passed by the House last week. (See story below.) Below are some of the highlights of funding for several agencies and programs included in the CR that may have a specific impact on California. Immigration Issues _ $330 million for the State Criminal Alien Assistance Program to reimburse the states for the costs of incarcerating undocumented criminal aliens, and an additional $170 million under the Violent Offender Incarceration and Truth in Sentencing Initiative Grants (VOITSIG) for the costs of incarcerating criminal aliens _ an additional $500 million under VOITSIG, under which California receives approximately 14 percent and may choose to use that money (about $70 million) for reimbursement of undocumented alien felon incarceration costs _ $121.4 million for 1,000 new border patrol agents and 136 support personnel _ $116 million for detention and deportation proceedings against illegal aliens, including funding for 2,700 new beds to hold detainees pending deportation proceedings _ $66.2 million for the expeditious deportation of denied asylum applicants _ $9.8 million for the construction and maintenance of buildings and facilities Criminal Justice Programs _ $1.4 billion for the community policing program, known as "Cops on the Beat" _ $523 million in local law enforcement block grants _ $60 million for discretionary grants under the Edward Byrne Memorial State and Local Law Enforcement Assistance Programs Environmental Clean Up on The Border _ $56 million for the United States' share of the FY1997 payment to the North American Development Bank Alameda Corridor _ $58.7 million for financing $400 million in direct loans for the high-speed transportation corridor. Loan allowances for fiscal years 1997-1999, respectively, are as follows: $140 million; $140 million; and $120 million Interior Funds _ California land acquisition projects: San Pedro NCA - $500,000; Santa Rosa Mountains NRA - $1 million; West Riverside County HCP - $1 million; San Diego NWR - $2.7 million; San Joaquin NWR - $500,000 _ California construction projects: Sacramento NWR (water delivery system) - $500,000; Kings Canyon National Park (Cedar Park waste water) - $2.9 million Agriculture _ Wildland fire management construction funding in the amount of $470,000 for LTBMU SO phase II in California _ Wildland fire management California land acquisitions: Los Padres NF (Big Sur) - $1.5 million; San Bernardino NF (Garner Ranch & Deep Creek) - $1.5 million; Trinity Alps - $600,000 Education _ $261.7 million for Bilingual and Immigrant Education, an increase from $167 million in the House bill and $185 million in the Senate version _ $7.194 billion for Title One grants, which includes a large increase to $1 billion for concentration grants, which are targeted to high-poverty urban school districts _ Restoration of $9.5 million for migrant education programs Health & Human Services _ $412 million (the higher House level) for refugee and entrant assistance _ $12.747 billion (the higher House level) for the National Institutes of Health, which includes $189.7 million for human genome research Disaster Relief _ Funds for mitigation of the damages caused by natural disasters such as Hurricane Fran included $63 million for watershed and flood prevention, $25 million for farm services emergency conservation, $113 million for SBA disaster loans, $22 million for SBA salaries & expenses, $25 million for Economic Development Administration emergency funds, and $82 million for highways -- for total hurricane and flood relief of $397 million Bay-Delta Authorization Included In Continuing Resolution Thanks to the efforts of Rep. Bill Baker (Danville), and the bipartisan support of 49 members of the California congressional delegation, the House leadership agreed to include in the continuing resolution the text of the California Bay-Delta Environmental Enhancement and Water Security Act. The bill authorizes $143.3 million per year for fiscal years 1998 through 2000 for environmental enhancement and habitat restoration in the Bay-Delta region, but is contingent on passage of the $995 million state bond measure, Proposition 204, which is on the November ballot. Getting the measure included in the CR was no small task for Rep. Baker and others of the delegation. Of over 300 last-minute requests for inclusion of specific projects and legislation made by members only four, including the Bay-Delta authorization and three much smaller measures, were appended to the bill by the House leadership. The efforts of Rep. Baker, complemented by the broad bipartisan support that his bill enjoyed, played a major role in its successful inclusion. Illegal Immigration Reform Bill Enacted As Part of CR After last-minute changes to soften some provisions of the illegal immigration reform bill to make it more acceptable to leading opponents and the White House, Congress added the bill to the omnibus continuing resolution which was passed by both houses and signed by the President before the October 1 start of FY1997. The most notable change made to the bill was dropping the required income level of some prospective sponsors of legal immigrants from 200 percent of the poverty level to 125 percent. (According to 1995 figures, the poverty level for a family of four was income below $15,455 annually.) Sponsorship under the bill will become a legally binding contract for the first time. The sponsor's income will be deemed that of the legal immigrant for purposes of receiving any federal means-tested assistance until the immigrant becomes a citizen or has worked for forty qualifying quarters (10 years) in the United States. A qualifying quarter does not include one in which the immigrant receives any federal public assistance. The final version of the bill also deleted the provision denying Medicaid treatment to HIV-positive legal immigrants. Despite opponents wishes, however, the negotiators did not reinstate the provisions calling for additional wage and hour inspectors at the Department of Labor to aid in cracking down on employers who knowingly hire undocumented workers, nor did it delete the waiver of the Endangered Species Act and National Environmental Policy Act for construction projects along the border. The final bill also did not delete the provisions that will increase the burden of proof for a prospective employee claiming hiring discrimination on the basis of immigration status. In addition to provisions outlined in last week's Bulletin (see Bulletin Vol. 3, No. 34, September 26, 1996), the new law will make the following changes. In addition to the 5,000-person increase in border patrol agents, the bill calls for the hiring of 300 new Immigration and Naturalization Service employees per year for three years to investigate the unlawful hiring of illegal aliens and the smuggling of illegal immigrants. Criminal penalties for smuggling illegal aliens or using fraudulent documents have been increased up to a maximum of 15 years in prison. In addition, any employer who knowingly hires at least 10 smuggled undocumented aliens will face up to five years in prison. Any undocumented alien who has resided in the States for more than one year, or who has previously been ordered deported, cannot be admitted lawfully to the United States for a period of ten years. Administration Announces Plan To Relax Export Controls on Encryption Products On Tuesday, the Administration announced its new plan to relax export controls on encryption technology, but many in the computer electronics and software industry do not feel the plan goes far enough to allow U.S. companies to compete against foreign companies that face no export restrictions. Encryption programs are computer encoding technologies that use mathematical formulas to scramble information being sent over computer communications systems, such as the Internet. Under current law, companies can export programs using only 40 bit long keys. The Administration's new plan would allow companies to export 56 bit key length programs, as long as they agree to include a key recovery system in the program within two years. A key recovery system would give the government access to encrypted messages with a court order under judicial procedures similar to those currently used to obtain wiretap authorization. Some companies have argued that 128 bit key length programs are now becoming increasingly available on the foreign market, and relaxing U.S. controls to only encompass the 56 bit programs would not be sufficient. (See Bulletin Vol. 3, No. 34, September 26, 1996). The Administration, on the other hand, is concerned that stronger and stronger encryption programs will make it harder for law enforcement to track down terrorists, drug traffickers, and other criminals. Congress has held hearings on encryption controls and it is expected to be a continuing issue in the 105th Congress. Baker Proposal Would Ease Depreciation Rules for Computer Software and Related Technologies Prior to adjournment, Rep. Bill Baker (Danville) introduced H.R. 4169 to change the current tax laws relating to computer software. Under current law, computer software equipment acquired in the purchase of a business is considered an "intangible asset," and as such is subject to a 15-year depreciation rule. Rep. Baker's bill would first place all computer software regardless of its origin, composition, or means of acquisition on the same level with off-the-shelf software technology currently available to most consumers. The bill then reduces the current depreciation period applicable to those products from 36 months to 24 months to better reflect their useful life. Rep. Baker expects to expand the bill before introduction next year to include other electronic or computer related products produced by California's high-technology industries. To that end, he is seeking input from electronic and computer companies over the next few months on ways to make the bill more beneficial for California's computer electronics industry. Those wishing to discuss the legislation should contact Chris Carter in Rep. Baker's office at 202-225-1880. Senate Passes Parks Bill; Presidio Management Provision Included In the waning hours of ThursdayÕs session, the Senate finally adopted H.R. 4236, the omnibus parks bill. Although the House passed the measure overwhelmingly last Saturday, the legislation had been mired in last-minute Senate controversy relating primarily to a provision inserted by Sen. Murkowski (Alaska) which would allow the closing of a pulp mill in Tongass National Forest. Following the resolution of this issue, the Senate passed the measure by unanimous consent. One key provision of the bill creates a public-private trust to manage the Presidio, the historic former Army base in San Francisco. This partnershipÕs Board of Directors will be granted authority to lease old army base buildings, offsetting the cost of maintaining the public park areas of the site. Early estimates indicated that such an arrangement could make the Presidio self-supporting in 15 years. For a list of the remaining California park projects included in the bill, contact the Institute at 202-546-3700. Commerce to Hold Defense Technology Conferences in California In an effort to facilitate the process of technology transfer and commercialization for California defense firms, the U.S. Department of CommerceÕs Economic Development Administration will be holding two conferences in California designed to help small-and medium-sized businesses take advantage of emerging and existing technologies. Conference speakers will discuss a wide range of topics including technology transfer, effective partnerships with federal and state agencies, procurement opportunities, identification of international markets and patent and intellectual property rights issues. The day-long conferences will be held in San Diego on October 8 and in Oakland on October 10. For more information contact Scott Carter of the Department of Commerce at 202-482-2322. Sun Microsystems Receives NASA Goddard Workstation Contracts Earlier today, Sun Microsystems announced that one of its subsidiaries has been awarded two contracts by NASAÕs Goddard Space Flight Center. Taken together the expected value of the awards exceeds $100 million. The contracts were awarded to Sun Microsystems Federal under the Scientific and Engineering Workstation Procurement contract for software development and electronic circuit design workstations. Sun Microsystems estimates that the award represents approximately 40 percent of the estimated 34,000 workstations projected over the life of the contract. HUD Designates 4 ÒCampuses of LearnersÓ Programs in California HUD Secretary Henry Cisneros announced on Friday that 25 public housing communities will become Campuses of Learners sites, where residents can learn basic computer skills and train for jobs. Four of the 25 sites are in California: two in Los Angeles, and one each in San Francisco and San Diego. The four California public housing authorities designated as Campuses of Learners will work with local school districts -- from elementary through medical school -- to develop curricula, strengthen parent-teacher relationships, establish a series of after-school activities, create adult education classes, and encourage parental involvement. More specifically, adult education programs will include language development programs, life- skills training, and GED classes. The new program will require that all participants living on a Campus of Learners be enrolled in an education program of some kind. Secretary Cisneros noted on Friday, that "this initiative provides thousands of public housing residents with the opportunity to live in a campus-like setting that is focused on learning." Wilson Makes California Earthquake Authority a Reality On Friday, in an effort to end California's earthquake insurance availability crises, Governor Pete Wilson signed three bills, which when combined, create the California Earthquake Authority (CEA), a publicly run, privately financed agency. As a public entity, the CEA will be tax-exempt, enabling it to build up enough reserves to cover major earthquake disasters. The CEA is expected to be capable of funding $10.5 billion through a combination of sources, including insurer contributions, CEA policyholder premiums, capital markets, and reinsurance. Before the CEA can begin operating, at least 70% of the market must agree to join the program and commit $700 million in start-up capital. In addition the program must obtain $1.4 billion in reinsurance. Consumer and insurance company participation in the CEA is wholly voluntary. Creation of the CEA was authorized last year by legislation by then Assemblymember, now Congresswoman, Juanita Millender-McDonald (Carson), but required further legislation to be implemented. No state or federal tax dollars will be used, and the CEA fund may not be used for other purposes. Headwaters Truce Reached at the Last Minute On Saturday, Deputy U.S. Interior Secretary John Garamendi announced that an agreement had been reached that would save much of the Headwaters Forest preserves from being logged. The 1,000 year-old forest, America's last unprotected expanse of virgin redwoods, has been at the center of an often volatile, decade-long debate, which, in recent weeks has seen public demonstrations leading to nearly 900 arrests for civil disobedience. The deal, brokered by Senator Dianne Feinstein, moves the core of the Headwaters forest -- 7,500 acres in all -- from the property of Pacific Lumber, and into the public domain. The estimated 7,000 remaining acres of the Headwaters forest still remains eligible to be logged. In return for the land, the Clinton administration and Governor Pete Wilson jointly agreed to pay Charles Hurwitz, the Houston, Texas venture capitalist who owns the property, $380 million in cash and unspecified real estate. Pacific Lumber spokesman are confident that no jobs will be lost as a result of the land transfer. The agreement still requires both state and federal approval, including votes in the legislature and Congress, for final ratification. The Interior Department, the state Resources Agency, and Pacific Lumber executives have all said that they are confident that the deal can be ratified and that environmentalists, many of whom are skeptical of the concordance, will eventually come to accept it as the best possible deal for everyone. Census 2000 Adjustments Debated at Public Briefing On Thursday, September 26, the Census Bureau held a Census 2000 public briefing to help raise awareness about the Bureau's proposed reforms for the next census, still four years away. The briefing brought together various data users, public policy organizations, businesses, and staff members of Congressional offices to try to help develop a series of common messages and to alleviate stated Congressional dissatisfaction with the Bureau's proposal to adopt, in part, a system based on sampling. On September 18, the House Committee on Government Reform and Oversight adopted a report that strongly denounced the Bureau's intended use of statistical sampling, calling such methodology "inherently problematic given the subjectivity in the various decisions." Though the Committee report is non-binding, it is a strong indication that Congress may plan to block any adjustments to the current methodology being employed in decennial Census'. The over-riding theme of the public briefing was that key decisions being made now by the Census Bureau and Congress will likely affect the scope and accuracy of the upcoming census. At stake is literally billions of dollars in federal funding for social services, highways, housing, schools, child care and other important services. California, maybe more than any other state, has the greatest interest invested in assuring an accurate census count. In 1992, the Census Bureau estimated that 834,000 Californians were overlooked in the 1990 census. In addition to the millions of dollars in federal monies lost, California lost the potential to add an additional Congressional district. On a related matter, the omnibus continuing resolution included language which somewhat toned down restrictions placed on statistical sampling which had been inserted in a prior Senate version. The Senate Commerce-Justice-State appropriations bill had specified that no 2000 Census funds could be used for statistical sampling, the method by which the 1990 undercount was discovered. The final restriction in the CR states that census funds should Òbe devoted to those activities most critical to preparation for the 2000 Census in FY97, namely geographic and address list preparation, and data capture and processing systems activities.Ó SEMI to Host Prop 211 Briefing in Bay Area On the morning of Wednesday, October 9, SEMI -- the Semiconductor Equipment and Materials International trade association -- will host a briefing on the implications of Proposition 211, the securities litigation initiative on CaliforniaÕs November ballot. The briefing features Tom Proulx, co-founder of Intuit Inc. and co-chair of Taxpayers Against Frivolous Lawsuits (TAFL). Prop. 211 would ease the standard of proof for shareholders bringing suit against companies for misstatements made in regard to the sale of stock, prohibit indemnification of directors and officers, and allow plaintiffs to seek punitive damages. A recent report by Prop 211 opponents estimated that although significant industry losses would be felt throughout the state, the two hardest hit areas would be Silicon Valley, with its high-tech concentration, and coastal Los Angeles, where motion picture production is concentrated. The American Electronics Association (AEA) on Thursday released the results of an August survey of its California members which claimed that 47% of its high-tech public member companies surveyed (representing 61,000 jobs) would consider leaving California if Prop. 211 passes. For reservations for the briefing, contact Kay Mascoli at SEMI at 415-940-6913 or by fax to 415-940-7995. For further information about efforts to oppose Prop. 211, refer to the TAFL home page at www.tafl.com.