The California Institute For Federal Policy Research California Capitol Hill Bulletin Volume 4, Bulletin 10 -- March 20, 1997 ALL 52 HOUSE CALIFORNIANS SIGN UTILITY RESTRUCTURING LETTER Every Member of Congress from California today sent a letter to Commerce Committee Chairman Tom Bliley (VA) regarding electric utility restructuring issues. The letter was circulated by Reps. Jerry Lewis (Redlands) and Lucille Roybal-Allard (Los Angeles), the respective chairs of the California Republican and Democratic delegations. The letter describes AB1890, the landmark utility restructuring bill that passed the California legislature and was signed by the Governor last summer after painstaking negotiations among many of the state's stakeholders. AB1890 provides that customer choice in electricity will begin in California on January 1, 1998, and will be fully implemented by 2002. The bill ensures that all consumers will be able to benefit from utility rate reductions resulting from competition and will improve the reliability of service, advance environmental concerns, and ensure fiscal soundness. The letter supports California's utility restructuring decisions and calls on Chairman Bliley to respect the state's efforts and to insure the opportunity to fully implement AB1890 as Congress considers electric utility restructuring from a national perspective. For a copy of the signed letter, contact the Institute. REP. BILBRAY ADDRESSES INSTITUTE'S ADVISORY BOARD Rep. Brian Bilbray (San Diego) spoke to the monthly breakfast meeting of the Institute's Advisory Board members on Thursday. The Institute wants to thank Pacific Gas & Electric for hosting the breakfast. Rep. Bilbray outlined several of the issues he is focusing on this year. A particular priority will be his bill, H.R. 630, dealing with reformulated natural gas. The bill would allow California's cleaner burning gasoline regulations to apply instead of existing federal regulations, as long as the California regulations achieve equivalent or greater reductions in emissions of ozone-forming compounds and toxic air contaminants. EPA, according to Rep. Bilbray, has already found that California's gasoline standards are equal to, or more stringent than, federal standards. However, the federal standards require that reformulated gasoline contain various specified properties, whereas California's standards allow for more flexibility in its reformulated gasoline. Thus, currently, California's refiners must continue to comply with the federal standards. The bill has been co-sponsored to date by a bipartisan group of 13 members of the California congressional delegation. For more information, or to co-sponsor the bill, please call Dave Schroeder in Rep. Bilbray's office at x52040. Congressman Bilbray also discussed the need for legislation to require federal customs agents at the border to enforce U.S. smog laws and prevent polluting cars being driven into the U.S. from Mexico. He stated that air sensors have shown that although cross-border traffic accounts for only one percent of the traffic in the area, it emits 13 percent of the air pollution. The Congressman also discussed several other issues, including the Medicaid provisions in the President's budget, automatic citizenship for children of illegal immigrants born in the U.S.; and preventing drug addicts, sex offenders, and convicted felons from being deem disabled for purposes of receiving housing assistance. PRESIDENT SENDS EMERGENCY FLOOD RELIEF SUPPLEMENTAL TO CONGRESS The President has requested a $2 billion emergency supplemental appropriation to assist in the recovery efforts from recent disasters in several states, including the January floods in California. Under the request, California would receive about $907 million to cover cleanup costs, government reconstruction loans, and emergency levee maintenance and repair. Specifically, California would receive the following: $274 million for the activities in California undertaken by the Federal Emergency Management Agency (FEMA); $208 million for repair work by the Department of Transportation; $202 million for Army Corps of Engineers emergency repairs; $196 million for Department of Interior repairs, most of which will go to Yosemite National Park; $21 million to the Agriculture Department's Natural Resources Conservation Service; and finally, $5.5 million to the Department of Commerce's fish hatcheries programs in California. The President deemed the supplemental to be an emergency, thus, eliminating the need to reduce FY97 funding for other discretionary programs in order to offset the additional money requested. Rep. Vic Fazio (West Sacramento), whose district suffered from heavy flooding, called for quick action on the supplemental, and urged that Congress not let "regional differences and parochial interests defeat this relief effort." In anticipation of the supplemental, Rep. Richard Pombo (Tracy) said earlier, such funding "will be key in ensuring that California's flood victims get back on their feet." REP. LOFGREN SPONSORS BRIEFING ON PATENT REFORM BILL On Wednesday, Rep. Zoe Lofgren (San Jose) sponsored a briefing on H.R. 400, the 21st Century Patent System Improvement Act of 1997. After welcoming the congressional staff and other parties in attendance, Rep. Lofgren turned the briefing over to Linda Evans of IBM, who introduced representatives from the 21st Century Patent Coalition and the American Intellectual Property Law Association. Among other provisions, the bill will bring U.S. patent laws into harmony with other industrialized countries. It will require that in most instances patent applications will be published 18 months after the original filing date. The bill also converts the U.S. Patent and Trademark Office into a government corporation and ensures that all fees collected will be retained for use by the PTO, rather than diverted to the general treasury. The bill is widely supported by the high technology industry. For a copy of the materials handed out by the 21st Century Patent Coalition, call the Institute at 546-3700. SENATE HOLDS HEARING ON ENCRYPTION BILL The Senate Commerce, Science, and Transportation Committee held a hearing Wednesday on two bills, S. 377 and S. 378, that would ease restrictions on the export of encryption software and devices, manufactured by U.S. computer electronics companies to ensure the security of financial and other transactions conducted electronically. The U.S. historically has severely restricted the export of these items because of the potential that terrorists and other criminal groups may use them to cover up their activities. Recently, the Department of Commerce issued new regulations that open a two-year window for export of more sophisticated encryption items, as long as they have a key recovery system. The key to unlocking the encrypted material must be kept by an authorized third-party. Should U.S. law enforcement authorities need access to the key because of suspected criminal activity, a court order would be required, much as is currently the case for wiretaps. Among others, the Committee heard from FBI Director Louis Freeh; Deputy Director of the National Security Agency, William Crowell; William Reinsch, Undersecretary of Commerce, Bureau of Export Administration; and James Barksdale, CEO, Netscape Communications Inc, representing the Information Technology Association and Software Publishers Association. The government witnesses all defended the need for a U.S. sanctioned key recovery system, which would guarantee law enforcement's access to criminal material if the need arose. Mr. Barksdale, on the other hand, stated that consumers globally were becoming aware of the benefits of having a key to decrypt encoded data and that market forces would be able to resolve 85 percent of the government's and industry's mutual concerns about security. He argued that, under the Administration's proposal, U.S. companies will not be able to compete globally, because foreign consumers do not want the U.S. government to dictate the type of encryption device they purchase. The testimony from the hearing can be found at the Committee's Internet homepage at www.senate.gov/~commerce. EDUCATION STAFFERS CONTINUE IDEA NEGOTIATIONS; HOUSE BILL'S FORMULA STILL LIKELY TO FAVOR CALIFORNIA Negotiations to resolve differences over changes to the Individuals with Disabilities Education Act (IDEA) continued this week, and final resolution will probably take several more weeks. While discipline issues are being debated now, staff will soon turn to changes in the funding formula, an issue which will significantly impact California's share of federal dollars distributed. Sources close to the negotiations said that they expect the bill that comes out of the House committee will include a formula based on population -- an approach which could increase California's share of the program's funds from roughly 10% to about 12%. At present, funds are distributed based on each state's estimates of how many disabled children served in a state. Such a system is subject to state-by-state variation in reporting methods, and in some cases over-reporting by excessively inclusive states. The source expects the bill to reflect the formula change previously proposed by the committee -- which would instead use an objective standard such as a state's school-age population, population age 3-21, or a mixture of population and poverty data. Any of these approaches would significantly increase California's share of the $2.3 billion distributed nationwide. According to one source, "every scenario comes out positively for California." HOUSE PANEL HOLDS HEARING ON CALIFORNIA FLOODING Earlier this week the Transportation Committee's Subcommittee on Water Resources and Environment held a hearing on the recent flooding in Northern and Central California. In addition to examining the impact of the floods, the witnesses and committee members considered the steps necessary to mitigate future flood threats. The first panel of witnesses consisted of California members whose districts were hardest hit by the recent floods: Rep. Wally Herger (Chico), Rep. Vic Fazio (West Sacramento), Rep. Richard Pombo (Tracy), and Rep. George Miller (Richmond). The members described the devastation caused by the disaster which evacuated more than 120,000 people from their homes and caused more than $1.7 billion in damage. In order for the emergency recovery work to move ahead the panelists urged support for the President's emergency supplemental appropriations request (see earlier article in this Bulletin for details). Although each member acknowledged the significance of emergency repairs, they stressed the need for longer term solutions to the region's flood protection difficulties, such as the Auburn Dam proposal or increased off-stream storage capacity. Several California members also suggested a comprehensive study of Northern and Central California's flood control system as a necessary first step in resolving the region's persistent flooding problems. Also appearing before the committee were the following federal officials discussing their agencies' disaster relief efforts: FEMA Director James Lee Witt; Civil Works Director Major General Russell L. Fuhrman (Army Corps of Engineers); Natural Resources Conservation Service Director Warren M. Lee; U.S. Fish and Wildlife Service Director Gerry A. Jackson; and FEMA Executive Associate Director Lacy Suiter. Finally, the panel heard testimony from California Resources Agency Secretary Douglas P. Wheeler and a number of local California officials from affected areas. CALIFORNIA MEMBERS PRESENT REQUESTS FOR ISTEA REAUTHORIZATION Over the past several weeks the House Subcommittee on Surface Transportation began consideration of testimony from individual Members of Congress who have specific policy initiatives or who wish to express support for high priority projects in their district for inclusion in the ISTEA reauthorization legislation. Historically, California has not fared well in the fight for transportation demonstration projects. The General Accounting Office recently estimated that California receives just under 6% of federal dollars authorized for such projects. Thirty-one members of California's delegation presented their requests to the transportation panel. Below is a list of requested California high priority projects by member. For a copy of a particular member's testimony visit the subcommittee's website at www.house.gov/transportation. Rep. Bill Thomas - Tulare County Road Projects/Kern County Road Projects/Porterville, California Request Rep. Ron Packard - Oceanside-Escondido Light Rail Rep. Julian Dixon - L.A. County MTA Projects Rep. Buck McKeon - L.A. County MTA Projects/North L.A. County Projects Rep. Maxine Waters - Project Requests Rep. Gary Condit - University of California Parkway Loops Rep. George Brown - I-10-Pepper Ave. Interchange, Sierra Ave Reconst., Etiwanda Interchange/Metrolink Rep. Matthew Martinez - Foothill Transit Rep. Xavier Becerra - MTA Issues/Glendale Corridor Project Rep. Lucille Roybal-Allard - I-710 Firestone Exchange Rep. George Miller - Project Requests Rep. Walter Capps - Route 46 Extension Project Rep. Bob Filner - San Diego & Arizona Eastern Railway Rep. Ken Calvert - Riverside County Transportation Projects Rep. Frank Riggs - Highway 101 Funding/Intermodal Center Rep. Lynn Woolsey - HOV Widening US-1/Intermodal Fac./Retrofit G.G. Bridge/Marin Bike Path-HOV Proj. Rep. Nancy Pelosi - HOV Widening US-1/Intermodal Facilities/Retrofit G.G. Bridge Rep. David Drier - Alameda Corridor East/Gateway to America Rep. Jay Kim - Alameda Corrid. E./Gateway to Amer./Ontario Int'l Ground Access/Mountain Ave-I-10 Interch Rep. Robert Matsui - South Sac. Corridor Light Rail Project/Arden-Garden Connector/Sac. Intermodal Center Rep. Calvin Dooley - Highway 180 West Rep. Brian Bilbray - San Diego Light Rail Rep. Loretta Sanchez - Bristol Street Project/ Interstate 5 - Gene Autry Way Project Rep. Brad Sherman - Ventura County, Sherman Oaks, Woodland Hills Projects Rep. Tom Campbell - BART, Tasman Light Rail Rep. Zoe Lofgren - BART, Tasman Light Rail Rep. Anna Eshoo - BART, Tasman Light Rail Rep. Ellen Tauscher - Route 4/Route 84 - I-180 Interchange Rep. Sam Farr - Santa Cruz County Transit Projects, Monterey County Transit Projects Rep. George Radanovich - Highway 41 Extension Rep. Tom Lantos - BART SFO Extension SENATE COMMITTEE CHAIR INTENDS TO SEEK FDA REFORM Labor & Human Resources Committee Chair James Jeffords (VT) reportedly intends to link FDA reform measures, which failed to reach final Senate passage last year, with this year's reauthorization of the Prescription Drug User Fees Act (PDUFA). The Act, which regulates the federal government's receipt and use of user fees associated with prescription drugs, expires at the end of 1997. California's biomedical community (which includes about one-third of the nation's firms) has strongly backed an FDA overhaul. CALIFORNIAN INTRODUCES CLASSROOM TECHNOLOGY IMPROVEMENT BILL Earlier today, California Congressman Randy "Duke" Cunningham (San Diego) introduced legislation to provide tax incentives, in the form of a deduction, to businesses that donate computer technology, equipment, and software to schools and non-profits involved in primary and secondary education. Additionally, corporations that contribute cash to primary and secondary educational institutions and non-profits for the purpose of purchasing computer-related items will receive a 110 percent tax credit for their donations. Given the California economy's reliance on skilled technical labor and the state's low national ranking in primary and secondary school spending, this tax incentive could significantly benefit California's schools. Rep. Cunningham introduced the legislation in response to a recent GAO report entitled "America's Schools Are Not Designed Or Equipped For The 21st Century." As the title suggests, the document concluded that America's classrooms are lacking the computer technology necessary for school children to develop needed computer literacy. For instance, only 14 percent of classrooms have the type of phone jack needed to access the Internet, and a mere one in fifty classrooms is actually connected to the Internet. Those schools fortunate enough to own computers often must use machines which are nearly obsolete, according to the report.