California Capitol Hill Bulletin, 3/11/97 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 4, Bulletin 8 -- March 6, 1997 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. LEWIS AND ROYBAL-ALLARD CALL BIPARTISAN CALIFORNIA DELEGATION MEETING FOR NEXT WEEK; FOCUS TO BE ON UTILITY RESTRUCTURING On Thursday, March 13, members of the California Congressional delegation will come to a joint meeting called by Reps. Jerry Lewis (Redlands) and Lucille Roybal-Allard (Los Angeles), the respective chairs of the California Republican and Democratic delegations. The meeting will include a briefing on electric utility restructuring issues presented by members of the AB 1890 Implementation Group. The group includes most of the major parties to the landmark utility restructuring legislation passed by the California legislature and signed by Governor Wilson last September. PATENT REFORM BILL MOVES THROUGH SUBCOMMITTEE H.R. 400, the 21st Century Patent System Improvement Act, was favorably reported to the full Judiciary Committee by the Courts and Intellectual Property Subcommittee on Wednesday. The bill, introduced by Rep. Howard Coble (N.J.), Chairman of the Subcommittee, is intended to bring U.S. patent laws into harmony with other industrialized countries. Among other things, it will require that in most instances patent applications be published within 18 months of the original filing date. This provision is aimed at eliminating the practice of submarine patents (See Bulletin Vol. 4, No. 7). The bill also converts the U.S. Patent and Trademark Office into a government corporation. During mark-up, an en bloc amendment was added to the bill. One of the amendments, proposed to the subcommittee by Rep. Tom Campbell (Campbell), provides that the PTO's failure to issue a patent within three years constitutes administrative delay, thus stopping the clock on the current patent term which is 20 years from filing the application. If administrative delay is found, the inventor is guaranteed at least a 17 year patent term, which historically had been the U.S. term. Another provision added to the bill will ensure that all fees will be retained for use by the PTO, rather than diverted to the general treasury. After unanimously reporting H.R. 400, the subcommittee moved to lay H.R. 811 on the table. The bill, introduced by Rep. Dana Rohrabacher (Huntington Beach), would have allowed for a patent term of 17 years from grant of the patent, or 20 years from filing the patent application (See Bulletin Vol. 4, No. 7). This bill was widely opposed by California's high technology companies, which argued that the 17 years from patent award term would resurrect the ability to use submarine patents to abuse the system. MATSUI AND 8 CALIFORNIANS INTRODUCE PERMANENT R&D TAX CREDIT BILL Reps. Nancy Johnson (Conn.) and Bob Matsui (Sacramento) introduced H.R. 947 this week to make permanent the Research and Development (R&D) tax credit. As introduced, the bill has an additional 40 co-sponsors, including a bipartisan group of eight California members. An identical bill was also introduced in the Senate by Sens. Orrin Hatch (Utah) and Max Baucus (Montana). The language of the bills is identical to that included in last year's Small Business Act, with the exception that the Small Business Act only extended the credit from June 1, 1996 through May 31 of this year. The President's FY98 Budget calls for a one-year extension of the credit through May 31, 1998. Prior to introduction, the bills' sponsors determined that the success of H.R. 947 and its Senate counterpart would be diminished if they included a retroactive credit for the 1995-96 period when the credit had lapsed. Reps. Matsui and Johnson stated in a Dear Colleague circulated in late February that although businesses and universities rely on the credit in making investment decisions and conducting critical research, the credit's uncertain future reduces its ability to stimulate increased R&D expenditures. A permanent credit will signal the U.S. commitment to a competitive environment for U.S. industry in the global market, and increase prospects for more and higher quality jobs. The bill is widely supported by California's high technology companies. Members wishing to co-sponsor the bill should contact Cynthia Johnson in Rep. Matsui's office at x5-7163. CALIFORNIA CITY OFFICIALS TO BE BRIEFED BY DELEGATION MEMBERS Next Tuesday, more than 100 officials from cities across California will meet with and receive briefings from six members of the bipartisan California House delegation, and later from both Senators. The city officials, in Washington for events sponsored by the League of California Cities, will hear first from Republican delegation chair Jerry Lewis (Redlands) and Democratic delegation chair Lucille Roybal-Allard (Los Angeles), and then from Rep. Robert Matsui (Sacramento) regarding welfare, economic development and tax issues; Rep. Steve Horn (Long Beach) regarding ISTEA reauthorization; Rep. Zoe Lofgren (San Jose) regarding crime and local law enforcement; and Rep. Buck McKeon regarding job training and job creation. INSTITUTE CO-HOSTS AMERICORPS BRIEFING On Wednesday, the Institute, in association with Rep. Howard Berman (Van Nuys), co- hosted a briefing on AmeriCorps, the federally-supported national service program that funds more than 2,300 members in 52 different programs in California. AmeriCorps was created as part of the National and Community Service Trust Act of 1993 and is administered in California in conjunction with the California Commission on Improving Life Through Service which was begun by Governor Wilson in 1994. Commission and AmeriCorps members receive specialized training in areas such as leadership, team building, conflict resolution, community outreach, and tutoring and mentoring. In return for full-time service, members receive a living stipend of approximately $600 per month and an education award of $4,725 per year. For information regarding the California Commission on Improving Life Through Service and AmeriCorps call 916-323-7646 or visit the Commission's web site at www.impactonline.org/caameric. BOXER TO CO-HOST EAST-WEST INITIATIVE SESSION Senator Barbara Boxer will join with Senators from Massachusetts, North Carolina, Utah, and Washington to host a half-day session to examine opportunities for these two regions of the country to increase cooperation. Senator Boxer joined by Senator Edward Kennedy held a similar California-Massachusetts forum last year. The effort was so successful that the three new states were added. The session will take place on Wednesday, March 12, beginning with an introduction by Sens. Boxer and Kennedy, and Secretary of Commerce William Daley. The group will then break- out into smaller sessions on topics including biotechnology, telecommunications, transportation, computers/semiconductors, and exports. A reception will follow the event. The aim of the session is to encourage the Eastern and Western states to form an alliance of business and political leaders to promote job creation and increased productivity in leading industries in the states. For more information, contact Roman Hoyos in Sen. Boxer's office at 202-224-3553. SECRETARY DUNPHY DISCUSSES CALIFORNIA ISTEA OBJECTIVES; HOUSE BEGINS HEARINGS ON MEMBERSÕ TRANSPORTATION PROJECTS Last week, the California ISTEA Task Force sponsored another in its series of briefings, this time with California Business, Transportation and Housing Secretary Dean Dunphy. In addition to his discussion of the status of CaliforniaÕs transportation financing and infrastructure, the Secretary outlined the State of CaliforniaÕs policy priorities for reauthorization of the Intermodal Surface Transportation Efficiency Act (ISTEA). According to the Secretary, four key policy principles are guiding the StateÕs efforts in setting transportation policy: the efficient movement of goods and people necessary to support and revitalize the stateÕs economy; the creation of an Òintegrated, multi- modal networkÓ that will allow users to move efficiently to and through population and commercial centers; the creation of a policy driven approach to transportation investment and the resting of transportation management responsibility on the lowest responsible level of government. In describing the current state of CaliforniaÕs transportation system, Sec. Dunphy noted that the rise in road use has rapidly out paced increases in population. Since 1970, CaliforniaÕs population has grown by 60 percent while, in the same period, vehicle miles of travel have jumped 140 percent. Despite the overcrowding of California roads and highways, the stateÕs transit system has failed to garner significant increases in ridership over the last decade. In addition to capacity difficulties, CaliforniaÕs freeways are also suffering from disrepair due to age. The majority of CaliforniaÕs freeways are well past their 20-30 design life and are in serious need of rehabilitation. The significance of infrastructure decay is evidenced in state highway expenditure trends where spending on rehabilitation and maintenance is replacing capitol outlay expenditures. The State of California has identified eight primary issues for their ISTEA reauthorization agenda: (1) advantageous formula and fund distributions; (2) elimination of most federal mandates; (3) improved state programmatic and funding flexibility; (4) innovative financing; (5) decision to spend-down Highway Trust Fund; (6) support for national priorities (e.g., trade corridors and border infrastructure); (7) support for new starts in transit; and (8) re-evaluation of national environmental standards for states that exceed national requirements. For copies of the SecretaryÕs briefing materials, contact the Institute at 202-546-3700. In a related event, this week the House Subcommittee on Surface Transportation began consideration of testimony from individual Members of Congress who have specific policy initiatives or support inclusion in the ISTEA reauthorization legislation of high priority projects in their district. Eleven members of CaliforniaÕs delegation presented their requests this week and more are expected to appear before the committee when hearings continue next week. A detailed listing of requested California high priority projects will appear in the next Bulletin. CALIFORNIA EDUCATION ALLIANCE SEEKS CHANGE IN IDEA FORMULA In a letter this week to the California Congressional delegation, a broad-based alliance of California K-12 education interests wrote that they support H.R. 5, the House Education & Workforce CommitteeÕs proposal to change the formula by which disabled education grants are distributed. ÒCalifornia-DC: An Education Alliance,Ó which includes representatives of California teachers, school boards, administrators and other advocates, wrote that Òthe proposal changes the formula grant in a way that would give California its fair share of federal funds.Ó The current law controlling the Individuals with Disabilities Education Act (IDEA) distributes $2.3 billion in federal funds according to figures reported by states. The letter notes, ÒCalifornia serves more than 12% of the nationÕs disabled school-age children, but receives only slightly more than 10% of the IDEA fund, perhaps due to over-reporting by other states.Ó The alternative formula proposed by the House Committee would have instead allocated funds 85% based on school-age population and 15% based on poverty. After failing to reach a House-Senate agreement last year, staffs to the committees from both chambers are working hard through various IDEA issues at present, and are expected to revisit the formula issue soon. Members of the California-DC Education Alliance are expected to visit Washington in early April. The California Institute will organize a briefing for California delegation staff and others at that time. CENSUS BUREAU DIRECTOR RESPONDS TO HOUSE COMMITTEE'S CONCERNS On February 21, Martha Farnsworth Riche, the Director of the Bureau of Census, issued a response to the House Government Reform and Oversight Committee's earlier concerns regarding the Bureau's proposal to use, in part, statistical techniques to augment the 2000 Census. In September of 1996, the House Committee adopted and forwarded to the full House on a 22-12 vote, a non-binding report repudiating the Census Bureau's plans to develop the tools to statistically adjust the 2000 Census. The report, which was prepared by then Chairman William Clinger (Penn.), was sharply critical of the Census Bureau's intentions to adjust the 2000 Census from one based entirely on direct enumeration -- literally counting every citizen -- to a system based in small part on statistical sampling. The Census Bureau has proposed the use of statistical sampling to resolve many of the problems that were uncovered shortly after the 1990 decennial Census was completed. In that case, the Census Bureau -- by employing non-binding sampling after the decennial Census had been complete -- discovered, among other findings, that they had failed to count as many as 834,000 Californians in their final numbers, thus forcing California to provide federally unfunded services to nearly one million people more than accounted for. Then Commerce Secretary Robert Mosbacher overruled his Census director and refused to adjust the data for formula funding purposes. Western states such as California, were undercounted by as much as 2.73 percent, while northeastern states fared much better. Former Committee Chairman Clinger's home sate of Pennsylvania, for example, was only undercounted by .029 percent. Riche's detailed response highlighted six general areas of concern that the Committee's September report addressed. The Bureau's findings on those concerns are as follows: _ Cost: The Bureau's use of statistical sampling would achieve a less costly and more accurate Census. _ Constitutionality: The use of statistical sampling in conjunction with direct enumeration has been held valid by the Department of Justice and various Federal courts. _ Voter Skepticism: The partial employment of sampling will increase voter confidence by accounting for every resident more accurately than previous censuses. _ Apportionment: Sampling will make the national, state, and congressional district totals more accurate, reduce the differential rates of undercoverage among all population groups, and reduce the variability in the amount of error for census tracts. _ Accuracy: The use of sampling in the 2000 Census will decrease the number of errors and undercounts for blocks and other small areas that were prevalent in the 1990 census. _ Complexity: The Bureau's proposed techniques planned for the 2000 Census will simplify the overall census operation and reduce the major risks of a census taken using only past methods. Accurate decennial census results are critical to states such as California since the results are used to allocate and apportion numerous elected districts; distribute and allot billions of dollars in federal funding for a myriad number of programs; and guide the plans for decisions of government, business, education, and health institutions in the multi-billion dollar investments that they make. In addition to the direct federal effect of an accurate decennial census, states and municipalities often rely on accurate census data to allocate their own funds for the next ten years. HOUSE COMMITTEE HOLDS HEARING ON JOB TRAINING PROGRAMS REFORM On Tuesday, the House Subcommittee on Postsecondary Education, Training and Life-Long Learning held a hearing on reform of the major federal job training programs. In addition to the remarks of Acting Assistant Secretary of Labor Raymond J. Uhalde, the panel heard testimony from a half dozen local job training officials on reform recommendations. Mr. Uhalde discussed the Labor DepartmentÕs suggested strategy to streamline and reform job training and education programs, specifically the adoption of the PresidentÕs proposed G.I. Bill for AmericaÕs Workers. The Administration has identified five principles which should guide workforce development reform. First, any new programs should direct resources to individual adults, enabling them to make informed autonomous decisions. The federal government should also make every effort to consolidate training programs and organize them within the One-Stop Career Center delivery system. In order to maximize taxpayer dollars, any reforms should establish Òhigh standards for program quality...giving States and localities responsibility for results." Further, the federal government should organize youth training programs in the School-to-Work Opportunities Act system. Finally, the Administration supports annual increases in workforce development funding necessary to keep pace with the economy. Also appearing before the panel were a select group of local job training program administrators who discussed their successes and their reform recommendations. Among them were Ms. Donna DeWeerd, Director of the Napa County Training and Employment Center, and Mr. Jan Vogel, Executive Director of the South Bay Private Industry Council (Southern California). For copies of the witnesses testimony, contact the Institute at 202-546-3700. ASSESSMENT OF NAFTA AIRS AT HOUSE HEARING The International Economic Policy and Trade Subcommittee of the International Relations Committee held a hearing Wednesday to hear testimony on the effects of NAFTA on the U.S. economy and jobs. Opening the hearing, Chairwoman Ileana Ros-Lehtinen (Fla.) expressed concern over reports and studies that have shown that NAFTA has caused job losses in the U.S. and trade deficits with Mexico and Canada. Because the U.S. has now invited Chile to negotiate entrance into NAFTA, Rep. Ros-Lehtinen stated that it was timely to determine whether NAFTA benefits or harms the U.S. economy. Regina Vargo, the Commerce Department's Deputy Assistant Secretary for the Western Hemisphere, and Ira Shapiro, Senior Counsel and Negotiator at the U.S. Trade Representative's office, testified for the Administration. Both cited numerous statistics showing that the U.S. economy has benefited from NAFTA. Sec. Vargo testified that Mexico and Canada buy $3 of every $10 that the U.S. exports, and that one-third of the current $420 billion trade level with the two countries new trade begun post-NAFTA. As an example, she cited automobile sales to Mexico, which were about 4,000 cars and 2,000 trucks before NAFTA, and have now risen to 51,000 cars and 31,500 trucks in 1996. On the other hand, Ron Carey, President of the Teamsters, argued that while the U.S. had a trade surplus with Mexico before NAFTA, in 1996 that surplus had become a trade deficit of $16.3 billion, and the combined Mexico/Canada trade deficit rose to $85 billion. He also testified that a study by the Economic Policy Institute had found that 420,000 American jobs have been lost. The testimony of these witnesses, and others appearing at the hearing, will be available shortly on the Committee's Internet homepage at www.house.gov/international_relations. NIF GO-AHEAD EXPECTED SOON The next procedure milestone in the life of the National Ignition Facility (NIF) is expected in the next few days, when the Department of Energy certifies that the NIFÕs final design has been approved. That certification, called Òcritical decision threeÓ or cd3 in the administrative parlance, will open the door for groundbreaking and construction to begin on the facility, which will be a stadium- sized, state-of-the-art laser optics facility to be built at Lawrence Livermore National Laboratory. The pending approval will release funds already appropriated from FY97 accounts. SAN DIEGO MEETING FOCUSES ON EMERGING TECHNOLOGIES On Monday, February 24, the University of California and UCSD hosted ÒCalifornia and the Future of American Innovation,Ó a regional summit on the role of innovation and emerging technologies and how these parallel goals can be best furthered. The keynote luncheon address by Governor Pete Wilson examined the role of California in national innovation, and remarks by U.C. President Richard C. Atkinson focused on CaliforniaÕs strengths in these areas and on future challenges facing the efforts to maintain the stateÕs prominence, as well as on U.C.Õs industry- university cooperative research efforts. Other speakers at the event included UCSD Chancellor Robert Dynes, Council on Competitiveness President John Yochelson, White House science and technology advisor John Gibbons, Rep. George Brown (Colton), NSF Director Neal Lane, Rockwell CEO Donald Beall, CalTech President Thomas Everhart, Commerce Technology Undersecretary Mary Good, California Trade & Commerce Secretary Julie Meier Wright, UCSD Engineering Dean Robert Conn, QUALCOMM Inc. CEO Irwin Jacobs, Chiron CEO Edward Penhoet, Hambrecht & Quist Chairman William Hambrecht, and Jet Propulsion Lab Director Edward Stone. For further information, contact UCSDÕs Office of Science and Technology Policy and Projects at 619-534-8400 or send e-mail to stpp@ucsd.edu. DEFENSE MERGER TO GET FURTHER JUSTICE DEPT. REVIEW In response to concerns raised by the aerospace industry, the Justice Department has prolonged by one month its review of the Raytheon Corporation's proposed $3 billion acquisition of the defense holdings of Texas Instruments Inc. Northrop Grumman is concerned that Raytheon, which is simultaneously in the process of acquiring Hughes Electronics for $9.5 billion, will acquire a strangle-hold in the area of weapons- control radar systems for fighter planes. According to the Wall Street Journal, if the planned mergers are approved by the Justice Department, the Lexington, Massachusetts-based Raytheon would control the only two operations currently making microchips and other components for what essentially constitutes the central nervous system of nearly all combat-aircraft radars. Both Northrop Grumman and Lockheed Martin, whom the Los Angeles Times states has also expressed concerns to Pentagon and Defense Department officials regarding the merger, reportedly fear that Raytheon's potential monopoly on a key component of aircraft production will hinder their ability to compete for future contracts.