Calif Institute: June 27, 2008: CA Capitol Hill Bulletin: Vol. 15, No. 19

To expand communications between Washington and California, the California Institute provides periodic bulletins regarding current activity on Capitol Hill that affects our state. Bulletins are published weekly during sessions of Congress, and occasionally during other periods. To subscribe to the Bulletin or other California Institute announcements, visit this link.

Appropriations: Senate Appropriations Approves CJS Spending Bill

The Senate Appropriations Committee favorably reported its FY 2009 funding for Commerce, Justice, and Science, on Thursday, June 19, 2008. The bill provides total funding of $57.9 billion, about $1.1 billion more than the House Appropriations bill; $4.1 billion more than the Administration’s request; and $6.1 billion more than the FY08 funding level.

The Department of Justice funding level is set at $25.8 billion. The House’s version is about $400 million less; the Administration’s request was $5.1 billion less, and FY08 funding is $2.3 billion less. State and local law enforcement programs would be funded at $1.387 billion – about $478.9 million above the FY08 enacted level, and $983 million above the budget request. Within that, SCAAP is funded at $400 million, however, $45 million of that is set aside for border prosecution programs, leaving SCAAP itself with just $355 million. Last year’s omnibus funded SCAAP at $410 million. Byrne grants would get $580 million, with an additional $190 million for Byrne discretionary grants.

The Commerce Department would also see a boost in funding. The $9.4 billion allocated to the Department is about $700 million more than the House appropriations version, as well as greater than the President’s request. Included in that is a significant increase for the National Oceanic and Atmospheric Administration (NOAA). It would get $4.5 billion – $200 million more than the House bill, $600 million more than FY08 funding, and $380 million more than the Administration’s FY09 request. The Appropriations Committee provided $17.8 billion to NASA, which is the same as the House figure, but $500 million more than FY08 funding and $200 million more than requested.

Appropriations: Homeland Spending Marked up in House Full Committee

On Tuesday, June 24, 2008, the House Appropriations Committee marked up and approved their version of the FY 2009 Homeland Security appropriations bill. It had been marked up at the subcommittee level on June 11. Total discretionary funding is $40 billion, which is about $2.2 billion above both the fiscal year 2008 amount and the level requested in February by the Administration’s budget proposal.

In a statement about the bill, Subcommittee Chairman David Price (NC) commented that the “primary objective” was correcting funding deficiencies, and he said that, “Prime among these was the President’s proposal to cut first responder, transit, and port grant programs by $2 billion, or 49 percent.” The House bill proposes to restore these programs to their 2008 levels. It would also restore $140 million that the President’s budget had eliminated for explosive detection equipment at airports, bringing the total spending for the program back to the FY 2008 level of $544 million. (The Administration had counted on offsetting revenue from a new passenger surcharge, which the Committee predicts will not be enacted.)

The bill rejected the President’s proposal to reduce $2 billion from homeland security grant programs, and it increases funds in high priority areas including the security of ports and rail and transit systems. It would increase funds for border patrol agents to allow hiring of 2,200 new agents.

For First Responder and Port Security Grants, the bill provides level funding of $3.7 billion: including $950 million for state homeland security grants used to plan, equip and train local first responders to respond to terrorist attacks and catastrophic incidents; $850 million for Urban Area Grants ($30 million above 2008 and $25 million above the President’s request); $400 million for transit grants to help protect infrastructure such as freight rail, Amtrak and ferry systems in high-threat areas; $315 million for Emergency Management Performance Grants; $800 million for Fire Grants (including SAFER); $50 million for the Metropolitan Medical Response System; and $50 million for Interoperable Communications. (Under a separate Maritime Security, Safety and Environmental Protection category, port security grants are provided $400 million, the same level as 2008.)

Also included are $775 million for the President’s request for border security needs, including fencing, infrastructure, and technology, with $30 million of that to address problems with communications interoperability at the U.S. border, as well as $390 million for the US-VISIT program to tracking foreign visitors to the U.S.

For Immigration and Customs Enforcement (ICE), the bill proposes $4.8 billion, $78 million above 2008 and $65 million above the President’s request. The total includes $800 million for Prioritizing Criminal Aliens — in order to identify dangerous criminal aliens and prioritize these individuals for removal once an immigration judge orders them deported. ICE is also required to prioritize requests from correctional facilities for delegation of immigration enforcement authority.

The Transportation Security Administration (TSA) would receive $4.6 billion, including $544 million to increase the purchase of explosive detection systems for baggage; $110 million for air cargo security; and $400 million for specialized screening programs.

The bill proposes $382 million to Customs and Border Protection for container security, including Secure Freight Initiative pilots and overseas programs, and $544 million for Domestic Nuclear Detection efforts. It would provide $100 million to help states to comply with the REAL ID Act, which requires state licenses to meet new standards in order to be used for federal identification purposes. This includes $50 million, requested by the President, for DHS to develop a data hub that links state DMVs to other record-keeping agencies to allow State governments to verify applicants’ identity documents when they apply for new drivers licenses.

Appropriations: House Panel Reports FY09 Commerce, Justice, Science Bill

On June 25, 2008, the House Appropriations Committee by voice vote approved its FY 2009 funding bill for Commerce, Justice, Science. The bill provides total funding of $56.9 billion, about $3.2 billion above the President’s request.

State and Local Law Enforcement and Crime Prevention Grants are funded at $3.13 billion, about $447 million above the FY08 enacted level. Within that, the State Criminal Alien Assistance Program (SCAAP) would receive $420 million; last year’s enacted level was $410 million. The Community Oriented Policing Services (COPS) program would get $627 million, $40 million above FY08, and with $40 million included for the “COPS on the Beat” hiring program. Office of Justice Programs are funded at $1.87 billion, $177 million above FY08. This includes Byrne Justice Assistance Grants, the State Criminal Alien Assistance Program, drug courts, and programs for at risk youth and missing or abused children. The Committee also provides $68 million, $45 million above the President’s request, for fighting Methamphetamines.

Science and Science Education funding is set at $26 billion, $1.7 billion above 2008 and $500 million above the President’s request. This includes $1.9 billion for efforts to address global climate change at NASA, NOAA, the National Science Foundation, and the Economic Development Administration, $181 million above 2008.

NASA funding in the bill is set at $17.8 billion, $459 million above 2008 and $155 million above the President’s request. The bill requires NASA to report to Congress the full costs of retiring the Space Shuttle by November 2009, and 2 shuttle flights to complete work on the international space station before NASA can retire the Space Shuttle. The National Science Foundation would receive $6.9 billion, $790 million above 2008 and the same as the President’s request. However, $50 million above the President’s request is included for Science, Technology, Engineering, and Mathematics Education activities.

Appropriations: House Transportation and Housing Subcommittee Marks Up FY 2009 Spending

On Friday, June 20, 2008, the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, marked-up the Subcommittee’s FY 2009 legislation. The bill was approved and reported to the full committee.

– $75 million to fund 10,000 new housing vouchers for homeless veterans through the Veterans Affairs Supportive Housing program, otherwise known as the VASH program

– $75 million for foreclosure counseling and assistance to assist more than 200,000 families at risk of losing their homes; and

– $1.69 billion for Homeless Assistance Grants, an additional $55 million above the President’s request and over $100 million more than last year.

– $4 billion for Community Development Block Grants, $134 million above 2008 and $1 billion above the Administration’s request;

– $16.57 billion for the Section 8 Tenant Based housing program, which is enough funding to ensure that no one that has a housing voucher will lose that voucher

– $120 million for the HOPE VI program to rebuild severely distressed public housing

– $3.5 billion for the Airport Improvement Program, an increase of $765 million above the budget request and the same as last year, to continue infrastructure improvements at the nation’s airports.

– $1.5 billion for intercity passenger rail, including $60 million for Capital Assistance to States.

Appropriations: Senate Panel Approves FY 2009 Labor-HHS-Education Bill

Energy: House Agriculture Committee Reviews Trading in Energy Markets

On Tuesday, June 24, 2008, the House Agriculture Committee held a hearing to review trading in energy markets. Mr. Walter Lukken, Acting Chairman of the Commodity Futures Trading Commission (CFTC) in Washington, D.C., delivered the sole witness testimony.

Lukken spoke about the expansion of markets in recent years, stating that the commodities market has shown a “500 percent growth in both volume and products listed.” Aiding in this expansion are the “technology-driven corporations that primarily trade electronically, 24 hours a day, all around the globe,” he said. About $5 trillion in transactions flow through U.S. exchanges and clearing houses daily. These factors together pose challenges for regulators, but the challenges are exacerbated by the sub-prime crisis and the credit crunch.

Lukken emphasized that CFTC shares the concerns of Congress about the increasing cost of crude oil and other commodities. He affirmed CFTC is “committed to ensuring that out nation’s futures markets operate fairly and efficiently, and that the prices of commodities, including crude oil, are determined by the fundamental forces of supply and demand, rather than abusive or manipulative practices.

He noted the concerns over the role of speculators and index traders in the commodities market. To address these concerns, CFTC is launching several initiatives directed at enhancing oversight of the energy and agricultural markets. The initiatives fall into five broad categories, he reported: 1) Increasing Information Transparency, 2) Ensuring Proper Market Controls, 3) Continuing Aggressive Enforcement Efforts, 4) Improving Oversight coordination, and 5) Seeking increased funding.

Climate: House Energy and Commerce Committee Addresses Reducing Greenhouse Gases

On Thursday, June 19, 2008, the House Energy and Commerce Subcommittees on Energy and Air Quality addressed proposed legislative solutions to curbing greenhouse gas emissions; specifically, cap-and-trade programs. The Committee heard from industry and environmental experts on their organizations’ views on how to effectively implement cap-and-trade programs that will reduce greenhouse gases. Current legislation dealing with cap-and-trade programs that were discussed included HR 1590 (Rep. Henry Waxman(Los Angeles)), and S. 2191 and Senate Amendment 4825 (to S. 2191) introduced by Senator Barbara Boxer (California).

Chairman Rick Boucher (VA) began the hearing by welcoming Rep. Doris Matsui (Sacramento) as a member of the Full Committee and the Subcommittee. In their opening statements members discussed the lack of alternatives to cap-and-trade programs in the current legislation, the need to focus on agricultural emissions as well as vehicles and energy production, and the “safety valves” needed to keep the legislation from having a major negative economic impact.

Rep. Jane Harman (Venice) said addressing global warning is a threefold issue. First, she said, the “looming likelihood of $5 a gallon gas has created the political will to address this issue”, but now “political leadership” is needed. Second, she called for reducing our dependence on fossil fuels as an economic, environmental, and national security issue. And third, she concluded, “cap-and-trade is an essential part of the solution but not the only one…we need short, medium, and long-term solutions” that include energy efficiency and conservation, and renewable fuels.

Rep. Matsui called California’s drought, wildfires, and Sacramento’s flood protection worries a “daily reminder to my constituents that global warming is here and needs to be addressed.”

Mr. Thomas R. Kuhn, President of the Edison Electric Institute, and Mr. Michael Goo, Climate Legislative Director for the Natural Resources Defense Council (NRDC), were among witnesses delivering testimony.

Kuhn said the electric industry took the lead in reducing green house gas emissions in 1994, and is responsible for about two-thirds of overall emissions reductions since that time. Edison continues to support emissions reductions, he said, as well as putting a price on carbon through a “carbon tax” or a cap-and-trade system. He emphasized, however, than neither of those policies would sufficiently reduce emissions on their own. “We will need the full suite of technologies to accomplish these goals,” he said, and noted that although all of the technologies that are needed are feasible, there use would need significant support from public policy makers.

Kuhn also mentioned the steps Edison thinks are necessary to address global warming with current and developing technologies:

– Energy efficiency should be further advanced through advanced metering information systems, energy efficient buildings, and appliances.

– Renewable energy needs continued support and significant expansion. Wind is the strongest emerging renewable energy source, Kuhn said. Edison believes that current efforts need to be quadrupled and policies must be enacted to allow the transmission of renewable energy to the places where it is needed. Furthermore, there must be an extension of production tax credits for renewables and, he said, nuclear power will have to be in our future energy picture.

– Carbon capture and sequestration and clean coal technologies must be advanced quickly and there must be a great deal of funding for these technologies in the near term.

Mr. Goo, on behalf of the NRDC, emphasized the urgency of action and tried to allay concerns that addressing global warming will have a negative impact on the economy. He commented: “Global warming is upon us now. Since 1974, the percentage of summer time global ice has decreased by 40%. We need action, and we need it now.” Goo said the cost of inaction is much greater than the cost of action. He sited a study that showed the “cost of inaction would cost the U.S. more that $3.8 trillion annually by the year 2100.” He further emphasized that if S. 2191 is enacted the GDP will continue to grow, just at a slower pace. Between now and 2030, the GDP will be reduced by 1.6% relative to where it would be without action, he testified. Previous cost estimates that predict disastrous economic impacts did not consider energy efficiency, CAFÉ standards, renewable energy, or energy conservation, said Goo, so they do not paint a realistic picture of the economic impact.

Climate: California ARB Releases Cap-and-Trade Planning Document

On Thursday, June 26, 2008, California officials formally released a draft plan to pare down the expected greenhouse gas emissions by 30 percent by 2020. It was required by AB32, California’s landmark legislation aimed at reducing global warming. A key component of the plan to return to 1990 levels by 2020 is a cap-and-trade program creating a carbon emissions market.

Called the “Climate Change Draft Scoping Plan,” the document released by the California Air Resources Board (ARB) requires a specific reduction of 10 percent in carbon dioxide as part of a requirement to reduce overall climate-affecting emissions by the 30 percent target. Overall emissions would need to fall by 80 percent by 2050. Mary Nichols, Chairman of the Air Resources Board, commented, “Our economy and our society face no greater threat than global warming. This draft plan is the roadmap to move us quickly to a cleaner, more sustainable future, energy independence and a healthier environment. This plan fulfills the Governor’s determination to act now, and it is based on the conviction that Californians will rise to the challenge and develop creative solutions to improve our environment and grow our economy.”

The plan is partially modeled after a national cap-and-trade program spurred by the 1990 amendments to the Clean Air Act that sought to limit emissions associated with the production of acid rain. Drafters also drew on the design experiences of those creating a $50 billion market for carbon trading underway in Europe.

The system would allow producers of climate-affecting emissions to trade credits with colleagues in other areas. Still to be worked out is whether or not carbon credits will be distributed free of cost.

Climate: Senate Commerce, Science and Transportation Addresses Climate Change Impacts on Transportation

On Tuesday, June 24, 2008, the Senate Commerce, Science and Transportation Committee held a hearing on climate change research, mitigation and adaptation efforts in the transportation sector, including surface transportation and aviation. The hearing, entitled “Climate Change Impacts on the Transportation Sector,” focused on the projected increases in freight and passenger traffic in each mode of transportation, the contributions of the transportation sector to climate change efforts and the potential impact of climate change on the nation’s transportation infrastructure.

Thomas J. Barrett, Deputy Secretary of Transportation, and Edward R. Hamberger, President and CEO of the Association of American Railroads, delivered witness testimony. Secretary Barrett outlined the goals of the U.S. Department of Transportation as they pertain to Climate Change. He commented: We support the Administration’s efforts to reduce the Nation’s greenhouse gas emissions, not only by working to reduce greenhouse gas emissions from transportation activities, but also by preparing for the impacts of climate change in order to protect our valuable transportation infrastructure.” Barrett laid out the Department’s strategies for reducing transportation’s impact. He commented, “Our approach focuses on: improving vehicle efficiency; increasing the use of alternative fuels; advancing the efficiency of the transportation system (often by promoting market-based measures and technological innovations); and improving our understanding of the impacts of climate change on transportation infrastructure.”

Hamberger spoke about the wide-spread agreement that more investment in rail infrastructure is needed; the efficiency of railroad transit and freight movement; and, the impact increasing rail can have on reducing emissions. He commented: “One area where everyone can and should agree is that greater use of rail transportation offers a simple, cost-effective, and immediate way to meaningfully reduce greenhouse gas emissions without potentially harming the economy…[P]olicymakers should take steps to attract more freight and passengers to railroads and expand the substantial greenhouse gas and other public benefits of rail transportation — for example, by implementing an investment tax credit for rail infrastructure capacity expansion projects; by encouraging greater use of rail-related public-private partnerships; and by adequately funding Amtrak to allow it to…procure new rolling stock, and make additional capital improvements and maintenance over its network.”

Hamberger offered a detailed break down of the impacts of increased freight rail on climate change. He remarked: “Freight railroads…are the most fuel efficient mode of surface transportation. In 2007, railroads moved one ton of freight an average of 436 miles per gallon of fuel — roughly the distance from… Boston to Baltimore. Indeed, on a ton-miles per gallon of fuel basis, freight railroads are three or more times more fuel efficient than trucks. That means that every ton-mile of freight that moves by rail instead of truck reduces greenhouse gas emissions by two thirds or more. The railroad fuel efficiency advantage helps explain why freight railroads account for just 2.6 percent of transportation-related greenhouse gas emissions and just 0.7 percent of total U.S. greenhouse gas emissions, according to the EPA.”

Hamberger’s testimony provided additional details about current practices, and also provided information on railroads’ initiatives to become even more efficient. For more information visit www.commerce.senate.gov .

Housing: Financial Services Investigates Affordable Housing Preservation

On Thursday, June 19, 2008, the House Financial Services Committee held a hearing to investigate policy proposals aimed at preserving affordable housing and expanding federal programs. The hearing issues related to the protection of tenants, as well as efforts to preserve the nation’s existing stock of federally-assisted affordable, multi-family rental housing.

The committee’s discussion and testimony centered on the Housing and Urban Development (HUD) Department’s policies regarding property owners who provide affordable housing. HUD has been accused of mismanaging accounts, making late payments to property owners, and not providing enough tenant protections when a property owner decides to sell.

Mr. John Garvin, Deputy Assistant Secretary for Multi-Family Housing Programs and Senior Advisor to the Federal Housing Commissioner for the U.S. Department of Housing and Urban Development and Mr. J. Kenneth Pagan, Secretary of the National Affordable Housing Management Association (NAHMA), delivered the primary witness testimony.

Garvin spoke about administrative improvements at HUD and offered its perspective on the reasons owners are leaving the program, as well as the rights of tenants affected by these decisions. He commented: “The Department has preserved the affordability of over 3,500 projects with about 300,000 units. However, the Department does acknowledge the need to continue its efforts to preserve as well as develop affordable rental housing units in communities throughout the country. There are many factors, he believes, that influence an owner’s decision to retain a property as affordable or convert to market rate rents. For a profit-motivated owner, the decision may be influenced by financial considerations, the condition of the property and the income levels in the surrounding neighborhood. For a non-profit owner, however, the decision is not likely influenced by cash flow considerations since these owners are not primarily motivated by economic returns and their basic mission is to provide affordable housing. He did not address the issue of whether or not HUD’s perceived unreliability was a contributing factor.

He continued: “Currently, there is no statutory requirement for the Department to offer residents special protections, such as enhanced vouchers, when a mortgage matures. In the event of a foreclosure, the residents are a top priority for the Department. If there is project-based rental assistance, the Department attempts to retain the rental assistance at the project. However, if there are conditions that warrant that the residents be relocated and the rental assistance is terminated, the Department provides relocation assistance to all residents (assisted or non-assisted) and provides vouchers to the eligible HUD-assisted residents.”

Pagan spoke about the difficulties facing property owners who want to stay in the program, but do not feel like it is a stable environment in which to conduct business. He said that his members face four major obstacles to preservation: market factors which would determine the property’s viability as market-rate housing or condominiums; costs and benefits of remaining in the federal programs; long-term financial and physical viability of the property; and experience with HUD as a poor business partner. He specifically mentioned the undependability of section 8 project funding for his members. He commented: “Shortfalls in the project-based Section 8 program have had two immediate impacts on the day-to-day operations of affordable properties: late subsidy payments to owners and ‘incremental’ or partial funding of the housing assistance payment (HAP) subsidy contracts. When HAP payments are severely late, housing operators have to lay-off staff, cut services to residents, miss mortgage payments, make late utility payments or miss payments to site vendors, borrow from the project’s reserves for replacement, postpone maintenance and/or ask owners for loans.”

– Restoring confidence in the guarantee of timely, fully-funded project-based Section 8 HAP payments is a cornerstone of preservation;

– Ensuring long-term financial and physical sustainability of preserved affordable properties;

– Recognizing the Essential Role of the Section 42 Low Income Housing Tax Credit Program to Preservation;

– Extending tenant protections when mortgages mature and when HAP payments stop;

– Creating incentives to encourage voluntary transfer and preservation of affordable properties; and,

– The highest levels of HUD’s leadership should take meaningful, proactive steps to restore a feeling a partnership with the multifamily owner and management agent communities.

Immigration: California Receives $3.2 Million in Grants for REAL ID Act Demonstration Project

On Friday, June 20, 2008, the Department of Homeland Security (DHS) announced the award of $80 million in competitive grants as part of the FY 2008 REAL ID Demonstration Grant Program. California’s share of the grants is $3.2 million.

The REAL ID Act of 2005 mandates that states meet specific standards and requirements when issuing drivers’ licenses and identification (ID) cards to be used for federal purposes, such as entering federal buildings or boarding airplanes. It was enacted in May 2005, as part of the fiscal year 2006 emergency supplemental appropriation. States must comply by December 31, 2009, unless granted an extension.

Defense: GAO Calls For Reopening of Air Force Refueling Tanker Contract Bidding

On Wednesday, June 18, 2008, the Government Accountability Office (GAO) issued a report condemning the Air Force for botching a major aircraft contract bidding process earlier this year. GAO recommended a rebidding within 60 days for a contract to build airborne tankers for in-flight refueling of military aircraft.

In January, the Air Force accepted a $35 billion bid for the contract to build 179 tankers that had been offered by a team led by Northrop Grumman and European Aeronautic Defense and Space (EADS). After it did not win the bid, Boeing filed a formal protest outlining alleged numerous failures and oversights by the Air Force during the process. Wednesday’s GAO report agrees with Boeing’s allegations, citing “significant errors” by the review personnel. The report stated, “We recommend that the Air Force reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals and make a new source selection decision, consistent with our decision.” The Pentagon has indicated that it will review the report and announce its next move after that.

While the team that won the initial bid indicated that much or most of the work would be done in the United States, Boeing and other critics expressed concern about the large offshore portion of the work. EADS is based in France and Germany. (The Boeing bid had stated that no more than 15 percent of work under its proposal would be performed outside the United States.)

In Congress, legislators representing areas likely to see jobs benefits from each of the two proposals have sought to sway the process toward one or the other bidder. But it is more likely that a full repeat of the bidding process will take place, albeit one that receives greater scrutiny from both inside and outside the Pentagon.

Briefing: PPIC Gives Capitol Hill Briefing re Immigrant Pathways to Legal Permanent Residence

On Monday, June 23, 2007, Dr. Laura Hill presented to a Capitol Hill briefing her findings from a recent report from the Public Policy Institute of California (PPIC) entitled “Immigrant Pathways to Legal Permanent Residence.” Dr. Hill noted that many immigrants who have become legal permanent residents first lived in the United States illegally. That is particularly true in California, where more than half lived in the state illegally before getting green cards. The report analyzes the pathways immigrants take to become legal permanent residents and finds them far from straightforward. It also found, Hill said, that rather than being new arrivals, most immigrants have lived in the United States for some time when they get their green cards, the official identification of a legal permanent resident.

– Fewer than four in 10 (38%) legal permanent residents were new to the United States when they got their green cards and many had lived here illegally for at least some time. In California, more than half (52%) had lived in the country illegally. They either crossed the border illegally (35%) or violated the terms of their visas by overstaying a tourist visa or by working when they were not authorized (18%). In the United States, about four in 10 (42%) first lived in the country illegally. This group was more evenly divided between those who crossed the border illegally (20%) and those who violated their visa terms (22%).

– In the nation as a whole, the pathways that immigrants – whether legal or illegal – took to legal residency differed significantly according to their home countries. Those who came from Asia and the Pacific were more likely to be new arrivals to the U.S. (53%). Those who came from Latin America and the Caribbean were more likely to have crossed the border illegally (41%) than immigrants from other regions. Those who violated their visa terms at some point before getting green cards were more likely to have come from the Mideast/North Africa (31%) or Europe/Central Asia (27%).

– In the U.S. overall, immigrants who crossed the border illegally before becoming legal permanent residents were likely to be less educated and less proficient in English than recent permanent residents overall, but they were much more likely to be currently employed (72% vs. 56%). Immigrants who had violated the terms of their visas before becoming legal permanent residents were more educated, more likely to speak English well or very well, and also more likely to be currently employed than recent legal permanent residents overall (66% vs. 56%).

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