The California Institute For Federal Policy Research California Capitol Hill Bulletin Volume 4, Bulletin 17 -- May 15, 1997 website: DEADLINE TO SIGN R&D TAX CREDIT LETTER EXTENDED Reps. Wally Herger (Marysville) and Bob Matsui (Sacramento) have extended until the close of business Friday, May 16, the deadline for California members to sign a letter to House Ways and Means Chairman Bill Archer (Texas) supporting a permanent extension of the Research and Experimentation Tax Credit. See Bulletin Vol. 4, No. 16. The one-year extension given the credit last year will expire May 31, and the authors hope that a permanent extension can be among the budget deal's tax provisions. So far, a bipartisan majority of 31 members of the delegation have signed the letter. Other members who wish to sign should contact Dave Olander in Rep. Herger's office (x5-3076) or Cynthia Johnson in Rep. Matsui's office (x5-7163). HOUSE JUDICIARY MARKS UP ENCRYPTION EXPORT LEGISLATION The House Judiciary Committee favorably reported out H.R. 695, the Security and Freedom Through Encryption (SAFE) Act, on Wednesday by voice vote. The bill affirms the right of U.S. citizens to use software and devices containing the highest levels of encryption ability to ensure the security of financial and other transactions conducted electronically. It would also allow the export of high-level encryption products manufactured by U.S. companies, as long as comparable items were available from foreign manufacturers. The Committee's considered only the right of citizens to use encryption devices in the U.S., and criminal penalties for the intentional use of such devices to commit a crime. During consideration of the bill, three amendments were adopted by voice vote. The first requires the Attorney General to compile a list of instances where the use of encryption devices or materials has obstructed law enforcement's ability to enforce U.S. laws. The second clarifies that the ability of members of the intelligence community, as well as law enforcement officers, to lawfully obtain access to encrypted material through proper judicial procedures is not abridged by the Act. The final amendment limits criminal penalties under the act to cases where a person willfully encrypts incriminating information relating to a felony with the intent to avoid detection by authorities. The International Relations Committee has jurisdiction over the bill's provisions to ease export restrictions on encryption programs and devices. The Committee held a hearing last week, but has not yet scheduled further action. The bill is strongly supported by U.S. companies that manufacture encryption products, many of which are California- based. Rep. Zoe Lofgren (San Jose) has been a strong advocate for passage of the legislation, and 15 other members of the California Congressional delegation are also co-sponsors. IDEA REWRITE PASSES BOTH HOUSES; FORMULA WON'T CHANGE FOR YEARS With considerable haste and virtually no room for amendment, the House and Senate this week passed bills to reauthorize the Individuals with Disabilities Education Act (IDEA). The House approved the measure (H.R.5) on Tuesday on a 420-3 vote; the Senate did the same on Wednesday on a 98-1 vote. The bill makes significant changes to the law in the discipline area, making it easier for schools to remove problematic disabled students from classrooms. Senator Barbara Boxer engaged in a colloquy with Senators Tom Harkin (Iowa) and James Jeffords (Vermont) in order to ensure that California not be penalized for failing to provide full special education services to youths convicted as adults and serving time in adult penal facilities. IDEA distributes about $3 billion among states to help them provide educational services to disabled children, most of which is distributed through its basic grant. (Originally intended to cover 40% of such costs, federal IDEA funds presently cover only about 9%.) Funds at present are distributed according to state-reported counts of disabled students -- counts which some states allegedly inflate substantially. The bill keeps intact the current state-by-state distribution method until total U.S. basic grant funding exceeds $4.9 billion -- roughly twice the current level -- and it will likely be many years before that threshold level is reached. After that point, new funding would be allocated based 85% on a state's population aged 3-21, and 15% based on the state's population in poverty in that age group. The first $4.9 billion would still be allocated under the old method, and no state's allocation would ever decrease in a year when overall IDEA funding increases. California's share of funding under the old formula in 1996 was 10.1%, whereas its share of new funding (after the $4.9 billion threshold) would be 12.3%. If the current relative shares remained stable, California would receive 10.5% of a $6 billion IDEA pot, 11% of an $8 billion pot, and 11.3% of a $10 billion appropriation. For the California Institute's state-by-state table of IDEA funds at various appropriations levels, contact the Institute at 202-546-3700. GOP LEADERSHIP DENOUNCES SAMPLING; CENSUS DIRECTOR RESPONDS In a May 7 letter to Census Bureau Director Martha Farnsworth Riche, Speaker Newt Gingrich (Georgia), House Majority Leader Dick Armey (Texas), Senate Majority Leader Trent Lott (Mississippi), and Senate Assistant Majority Leader Don Nickles (Oklahoma), denounced the Census Bureau's plans to utilize statistical sampling techniques in the 2000 census. Specifically the letter noted the leaders' concerns regarding the accuracy, constitutionality, and cost of a 2000 census that uses sampling. The letter drew an immediate point-by-point response from Bureau Director Riche. At question is the 1996 announcement from the Census Bureau that they would pursue the use of statistical sampling for the 2000 census to resolve many of the under-counting problems that were uncovered after the 1990 decennial census was completed. In that census, the Bureau -- by employing non-binding sampling after the decennial census had been completed -- discovered, among other findings, that they had failed to count 4 million persons, or 1.6 percent of the nation's population. ACCURACY O F SAMPLING The congressional leaders' joint letter states that, "despite criticism, the 1990 census was the most accurate in history" and that the only legitimate way to improve upon the 1990 census is to "physically count each and every American." The letter continues on to caution that "we cannot rely on statistical sampling schemes that compromise accuracy for the sake of economy. Despite the Bureau's insistence that statistical estimation is more accurate than actually counting Americans, the fact remains that if statistical adjustment had been allowed in 1990, Pennsylvania would have erroneously lost a congressional seat to California." In 1990, California was undercounted by 2.73% or 834,000 persons -- more than 222,000 persons more than the average California congressional district -- and Pennsylvania was undercounted by 0.29% or just 35,000 persons. Census Bureau Director Riche responded by noting that "the 1990 census had an undercount that was one-third greater than the undercount in 1980," and that the 1990 census failed to account for millions of persons in America. Riche further noted that the National Academy of Sciences, responding to inquiries from Congress as to how to improve the census, concluded that: "'It is fruitless to try to count every last person with traditional census methods of physical enumeration,'" and endorsed the use of statistical sampling as a complement to physical enumeration to achieve greater accuracy. CONSTITUTIONALITY OF SAMPLING The second concern regarding sampling expressed by the congressional leaders pertained to what was constitutionally allowable. In question is the Constitutional mandate that the census should be an "actual enumeration" of the population. "We strongly believe," the letter states, "that the Bureau's proposed use of statistical sampling exposes taxpayers to the unacceptable risk of an invalid and unconstitutional census." Riche counters that, while the Supreme Court has yet to rule directly on the constitutionality of sampling, the Department of Justice -- under three Presidents -- has issued three opinions regarding the constitutionality and legality of sampling, and that all three opinions concluded that the "Constitution and relevant statutes permit the use of sampling in the decennial census." In a lawsuit based on the 1990 undercount, the Supreme Court ruled that the Commerce Department has wide discretionary latitude in interpreting censal finding. COST OF SAMPLING VS. COMPLETE ENUMERATION It is widely agreed that the use of statistical sampling would save between $200 million and $1 billion. The House and Senate leaders, however, expressed concern that a census using sampling would be invalidated by the courts and would ultimately lead to a costlier census. In a Tuesday press conference, Rep. Xavier Becerra (Los Angeles) echoed Riche's assertion that a 2000 Census employing sampling would "save money, improve accuracy, and ensure that all communities are counted." Speaker Gingrich's recent position on census sampling is a direct turnabout from his own 1991 comments, when he urged then Commerce Secretary Robert Mosbacher to adjust the findings of the 1990 census to account for his home state of Georgia's 2.1 percent undercount. "Without the adjustment," Gingrich wrote, "minority voting strength in Georgia will be seriously diluted . . . . In effect, Georgia would be required to utilize funds to provide for an additional 200,000 for which it was not receiving funding . . . . Based on these factors, I strongly urge you adjust Georgia's population figures to reflect the correct population." The Census Bureau has requested $354.8 million for decennial census activities in FY98, an increase of $270.7 million over the FY97 funding level. The increase is a result of the requirements of the Bureau to: complete the initial phase of address list development for all city-style addresses; begin building an address list for rural areas; and conduct a full-scale dress rehearsal in Sacramento and a few other select areas in March, 1998 of all aspects of the 2000 census plan. Other activities planned for next year include awarding contracts for data processing and telecommunications, opening the 12 regional census centers and a number of field offices, and awarding the contract for the paid advertising campaign. IMMIGRATION SUBCOMMITTEE HOLDS HEARING ON CALIFORNIA CRIMINAL ALIEN IDENTIFICATION PROGRAM AND OTHER BILLS The House Judiciary Subcommittee on Immigration held a hearing Tuesday on various immigration issues, including two bills sponsored by Rep. Elton Gallegly (Simi Valley). H. R. 1493 would make permanent and expand a pilot program begun last November in Ventura and Anaheim Counties. In those counties, an INS agent on location at a jail screens incoming arrestees for deportable criminal and illegal aliens before they are arraigned. This prevents them from being let out on the streets again, as the INS takes custody and deports them after the disposition of the matter for which they were arrested. Mr. Gallegly's bill would make this program permanent and require that an INS agent be posted at all jails in the 100 counties with the highest levels of illegal immigrants. The bill also calls for a GAO study on expanding the program by allowing INS agents to conduct off-site verification of prisoners using computers or electronic means such as IDENT. In addition to Rep. Gallegly, Richard Bryce, Undersheriff, Ventura County, and Randy Gaston, Chief of Police, Anaheim, California testified in support of the program. Paul Virtue, Acting Executive Associate Commissioner for Programs of the INS testified that although the purpose of the bill was in keeping with INS policy, the Service opposed the bill because of the strain it would put on its resources. The second Gallegly bill considered at the hearing was H. R. 471, the Illegal Alien Employment Disincentive Act. It would prohibit the work experience gained by a person illegally employed in the U.S. from being counted towards the valid work experience needed when that person applies for an employment-based immigrant visa or an H-1B visa. Mr. Virtue testified in support of the bill for the INS. HOUSE PANEL CONSIDERS FUTURE OF EXPORT ADMINISTRATION ACT The International Economic Policy and Trade Subcommittee of the House International Relations Committee held a hearing on Tuesday to discuss the future of the Export Administration Act (EAA) and overall administration of Congressional extensions and export controls. The recent history of the EAA has been tumultuous and uncertain. The original Export Administration Act of 1979, expired in 1990, and the Administration has continued to utilize the authority under the Act through executive orders. The Act provides the statutory basis for the control of exports of dual-use commodities and technology. Dual-use commodities and technologies are non-munitions, civilian items that have potential military applications. In response to the disorderly legislative status, the House last year attempted to rewrite the EAA through H.R. 361 -- the Omnibus Export Administration Act of 1996--which was passed by the House but not taken up by the Senate. The witnesses appearing before the panel this week, most representatives of the Administration and high technology trade associations, addressed a broad range of issues related to export controls and the need to find a balance between the objectives of non-proliferation of weapons of mass destruction and expanded trade opportunities for U.S. manufacturers. Witnesses representing the Departments of State and Commerce emphasized the legal and political complications raised by the EAA's continued operation under the President's emergency authority. Specifically, export control authority under the President's executive order is more limited, is subject to legal challenge, and sends an unclear message to allies and regime partners. Clinton officials also highlighted the need to tie controls to multinational nonproliferation agreements and the importance of strengthening enforcement abilities. Recognizing the national security benefits of export controls, representatives from the high technology trade associations proposed a number of reforms to streamline U.S. export regulations, including: consolidation of regulatory systems; simplification of export licensing; and publication of end-user lists. These witnesses also urged the panel to resist the use of unilateral controls and instead pursue multilateral export controls. Finally, members of the subcommittee were encouraged to recognize, in any new Export Administration Act, the need for provisions addressing the rapid pace of technological change and the issue of foreign availability of products. Testimony from the hearing will be made available on the Committee's website: http://www.house.gov/international_relations. COHEN OUTLINES LONG-TERM DEFENSE PLAN TO CONGRESS At a Thursday breakfast with key members and staff of Congressional appropriations and military committees, Defense Secretary William Cohen outlined the new Pentagon review of U.S. military strategy, forces and weapons. The Quadrennial Defense Review (QDR) calls for a new round of base closings, cuts in jet fighter procurement, and slight reductions in troop size. It envisions annual defense budgets of around $250 billion over the long term. Although the U.S. will maintain its current strategy of being prepared to fight in two major regional conflicts, the QDR recommends cuts of about 60,000 active duty military personnel, 70,000 members of the reserve, and approximately 80,000 civilian Pentagon workers. From a procurement perspective, the QDR urges significant cuts in fighter jet procurement including reduction, by more than 300, of the planned purchase of Air Force F-22 and Navy FA-18E/F fighter planes. Both planes are produced by Lockheed Martin and McDonnell Douglas, companies with a substantial California presence. Although specifics were not available, Cohen said he planned to ask Congress to institute a new plan for further base closures. Greater detail about the QDR will be available next week. PROPOSED DOD REVISIONS COULD CUT CALIFORNIA NATIONAL GUARD The Department of Defense's (DOD) announcement that it plans to reduce the Army National Guard by some 70,000 persons may cut a substantial portion of California's 40th Infantry Division. The Los Alamitos-based 40th represents more than 15,000 authorized soldiers in the state and is often called upon to respond to natural disasters such as earthquakes, fires, and floods. The depth of the cuts to the Division -- assuming that California will bear some portion of the national downsizing burden -- is yet to be determined. In addition to the possible Army National Guard cuts in California, the Air Force announced on May 2, its plans to cut four more C-130 aircraft from the 146th Airlift Wing unit located at Channel Islands, leaving 8 airplanes -- down 50% from the original authorization of 16 aircraft. Additionally, the DOD coordinator for Drug Enforcement Policy and Support recently announced that the Governor's State Counterdrug Support Plans will be cut by 42 percent in Fiscal Year 1998. This reverses a seven year trend of increased spending on the federally funded and state administered program. The cut will likely translate into an approximately 42 percent reduction of its current counterdrug force -- which translates into as many as 184 soldiers and airmen -- and will reduce military aviation support to law enforcement by 50 percent. EPA CHOOSES TWO CALIFORNIA SITES FOR BROWNFIELD PILOT PROJECTS On Tuesday, Vice President Al Gore announced the selection of two California municipalities to participate in pilot projects to redevelop industrial sites called "brownfields". The City of East Palo Alto and Santa Barbara County were among the 34 governments chosen for the program which offers localities incentive funding to engage in environmental cleanup and economic redevelopment of polluted industrial land. Santa Barbara will use its $200,000 two-year grant to restore the Goleta Old Town area. The lack of economic growth and redevelopment at the location have been partially a function of industrial waste contamination. East Palo Alto will use its $125,000 award to aid in the rejuvenation of the Ravenswood Industrial Area complex. This grant follows $300,000 worth of technical assistance to evaluate levels of contamination at the site and to work on brownfields cleanup and economic development in the city. The two new sites bring California's brownfield pilot projects total to 8 of the nation's 113. Existing brownfield projects in California are located in Sacramento, Stockton, Emeryville, Richmond, San Francisco and Oakland. 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. ______________________________________________________________ Tim Ransdell, California Institute for Federal Policy Research 419 New Jersey Ave., SE, Basement Level, Washington, DC 20003 Voice: 202-546-3700 -- Fax: 202-546-2390 -- Cell: 202-288-6598 -- Home: 301-773-4078 -- Website: