The California Institute

CONTENTS OF THIS ISSUE:
Bono and Lee Sworn In
PPIC’s Lyon Briefs Advisory Board
Biomaterials Liability Letter
SCAAP Letter Has 32 Signers
California Healthcare Institute To Brief Delegation On Viral Hepatitis
Market Access Program Letter
Senate Passes Sweeping Education Bill
Thirty Californians on Fusion Letter
Subcommittee Examines Immigration and Future Workforce Needs
New Study Shows Cost to Economy of Encryption Controls
Committee Examines Future Labor Needs in High-Tech Industry
Role of Federal Research Examined
California Reformulated Gas Discussed by House Commerce
ISTEA Work to Begin Again
House Banking Hears Testimony on Natural Disaster Insurance Bill
Forum on Santiago Summit
Napalm Disposal Plan Hits Snag
Population Data Briefing

PPIC President David Lyon Briefs Institute’s Advisory Board
     Members of the California Institute’s Advisory Board and education representatives met with the Public Policy Institute of California’s (PPIC) President and CEO David Lyon, to learn about proposed PPIC current and future activities and to discuss policy questions facing the state.  Founded in 1994 by William Hewlett and the late Roger Heyns, the PPIC is a private, non-profit organization devoted to non-partisan research on the major policy issues facing California.  PPIC is funded through a generous endowment from William Hewlett.  The organization is currently reviewing alternatives for future research projects.
     Lyon said the focus of the PPIC’s research is three core areas:  population, the economy, and governance and finance.  Through both the PPIC’s own research staff and its Extramural Research program, Lyon reviewed some of the highlight’s of the PPIC’s work in welfare, public finance, transportation, health care, immigration, and state politics.  Recent titles from studies include: Subsidizing Redevelopment in California; Welfare Reform: A Primer in 12 Questions; Dynamics of Immigration: Return Migration to Western Mexico; and The Distribution of Income in California.   PPIC recently published its first book, with the University of California Press, When Government Fails: The Orange County Bankruptcy by Mark Baldassare.  PPIC also conducted its first survey earlier this month, the first in a series of large-scale surveys to study voting patterns in the state’s first open primary election cycle.
     Two of the goals of PPIC are to raise public awareness of issues and to provide public officials a resource for developing public policies.  To learn more about the organization, visit their web site at http://www.ppic.org, send e-mail to [email protected], or call the Institute at 202-546-3700 for a packet of information on PPIC activities.

Biomaterials Liability Letter Circulating
     Thus far, 19 California members have signed a letter to Speaker Newt Gingrich urging that the Biomaterials Access Assurance Act (H.R. 872) be considered by Congress as soon as possible.  The letter is being circulated by Reps. Zoe Lofgren (San Jose), Brian Bilbray (Imperial Beach), and Howard Berman (West Hollywood).  Access to life-saving implantable devices has been jeopardized by a shortage of the raw bio-materials used to make the devices, because of expensive and frivolous lawsuits.  H.R. 872 makes it easier for suppliers of materials used in the manufacture of medical devices to be dismissed from medical malpractice suits brought against manufacturers and others, if their materials met the manufacturer’s specifications.  It also ensures that negligent or intentionally tortious suppliers can be brought back into a case if subsequent evidence warrants it.  The House Judiciary Committee reported the bill on April 1.
     Members wishing to sign the letter should contact Tom Oscherwitz in Rep. Lofgren’s office (x53072) or Mickey Forrest in Rep. Bilbray’s office (x52040).  The deadline for signing is Tuesday, April 28.

SCAAP Letter Has 32 Signatures So Far
     The SCAAP letter being circulated by Reps. David Dreier (San Dimas), Gary Condit (Ceres), Jerry Lewis (Redlands), and Lucille Roybal- Allard (Los Angeles) seeking delegation signatures on a letter to Rep. Hal Rogers (KY), Chair of the House Appropriations Subcommittee on Commerce, Justice, State, has garnered 32 signatures from the delegation so far.  The letter urges Chairman Rogers to fund the State Criminal Alien Assistance Program (SCAAP) at its full authorization level of $650 million and asks for his assistance in ensuring the Department of Justice disburses SCAAP funds in a timely manner (see Bulletin, Vol. 5, No. 13 (4/9/98)
     Those members wishing to sign the letter should contact Brian Faughan in Rep. Dreier’s office, 225-2305 or Mike Dayton in Rep. Condit’s office, 225-6131.

California Healthcare Institute To Brief Delegation On Viral Hepatitis
     The California Healthcare Institute, joined by the American Liver Foundation, will host a briefing for the California Congressional delegation next Wednesday, April 29.  The briefing, to be held at 10:00 a.m. in Room 2226, will educate the delegation on the public health threat of chronic viral hepatitis, and the need to accelerate research efforts into the disease.  Senator Barbara Boxer, and Reps. Brian Bilbray (Imperial Beach), Zoe Lofgren (San Jose), and Elton Gallegly (Simi Valley) will make remarks.  The briefing will be conducted by Edward Penhoet, Ph.D., President & CEO of Chiron, and Teresa Lyn Wright, M.D., an internationally renowned liver disease specialist.
     To RSVP, please call Chris Gonzales at California Healthcare Institute, 619-551-6677.

Market Access Program Letter Gathers 24 Signatures
     Twenty-four California Members of Congress signed a bipartisan letter this week to House Speaker Newt Gingrich (GA) asking for his assistance in funding the U.S. Department of Agriculture’s Market Assistance Program (MAP) at the Administration’s requested FY99 level of $90 million.  In the recent Senate budget resolution, funding for the program was eliminated.  It is rumored that House Budget Committee Chairman John Kasich (OH) is considering removing funding for the program as well.
     Established under the 1990 Farm Act, MAP was established to increase U.S. exports by developing and expanding overseas markets for U.S. agricultural commodities and products, and will be used as a tool to stabilize prices as traditional commodity support is phased out through 2002.  The letter says that since 1986 when export assistance for agriculture began, the dollar value of high-value agriculture exports doubled.  Facing competition by the European Union’s highly-subsidized agriculture exports, the letter says, “the U.S. cannot afford to unilaterally disarm its export promotion programs.”  The letter continues, “Compared to this kind of competition, the proposed $90 million for MAP in FY99 is a vital investment for the American economy that yields returns of $2 to $7 for every dollar of MAP funds spent overseas.”
     According to the California Farm Bureau, California’s agricultural exports led the nation with a value of $11.7 billion in 1995.  According to the CFB’s Agricultural Fact Sheet, “more than 2 million acres in the state produce crops for the export market led by beef, cotton, grapes, almonds and fish.  Every $1 billion in exports creates about 27,000 jobs for Californians.”

Senate Passes Sweeping Education Bill
     After adding provisions to convert certain education programs to block grants and to limit implementation of federal reading and math tests, the Senate on a vote of 56 to 43 today passed the Coverdell “A+” education bill to create education savings accounts for use at the K-12 or higher education level.
     The original bill, sponsored by Sen. Paul Coverdell (GA), would allow tax-free savings accounts to be created for children, into which up to $2,000 a year could be contributed from various sources. Tax-free interest and withdrawals could be used for expenses from kindergarten through college, including tuition at private schools. The bill is scored to cost $1.6 billion over 10 years.  A similar measure has been passed by the House.
     Amendments adopted included one by Sen. Slade Gorton (WA) to allow state legislatures to elect to receive have funds for $10 billion worth of federal K-12 education programs sent to states or school districts as block grants, or to continue to receive federal funds under the current structure.
     The Senate rejected Administration proposals to expand federal school construction support and forgive student loans for new teachers.  The Senate also narrowly rejected, on a 49 to 51 vote, an amendment by Senator Barbara Boxer to provide $250 million for after-school programs.  Both California Senators voted against final passage of the bill.  Arguing that it would undermine public schools, President Clinton has vowed to veto the measure.

Thirty Californians Have Signed Fusion Letter; Deadline Friday
     So far, 30 members of the California Congressional delegation have signed a letter to Energy & Water Appropriations Chair Joseph McDade (PA) seeking a funding level of $250 million for the Fusion Energy Sciences program in FY99.  The level would be an increase from the FY98 level, though it remains well below the peak level of $365 million reached earlier this decade.  The level is aimed at partially compensating for the funding shortfalls in the program and is based on the recommendations of two independent scientific review panels which recommended minimum spending levels of $250 million and $320 million respectively.  Principal authors of the letter include Reps. Ken Calvert (Corona), Duke Cunningham (San Diego), Bob Filner (San Diego), and Ellen Tauscher (Pleasanton).  California is among the nation’s primary fusion research centers and would likely win a substantial share of any additional funds.
     Staff for Members wishing to sign onto the letter should contact either Tom Jones with Rep. Roscoe Bartlett (5-2721) or John St. Croix with Rep. Tim Roemer (5-3915) as soon as possible.

Subcommittee Examines Immigration and Future Workforce Needs
     The House Judiciary Committee’s Immigration Subcommittee held a hearing on Tuesday to examine U.S. immigration policy in light of U.S. employment needs in the 21st Century.  Although much of the hearing focused on the issue of increasing the cap on H-1B visas for skilled workers, the subcommittee began by hearing from a panel of immigration experts on the broader issue of the connection between successful assimilation of immigrants in the United States and education levels.  George Vernez of the RAND Corporation testified that his research had shown a definite correlation between education levels and successful assimilation — the higher the level of education, the more successful the assimilation.  Under questioning, he suggested three changes in U.S. immigration policy:  1) a greater balance between lesser educated and higher educated immigrants; a reduction in overall immigration to somewhere between the current 900,000 annually and the 300,000 of thirty years ago; and 3) adding flexibility to the system so that immigration can be reduced during economic recessions or slowdowns.
     On the issue of increasing the cap on H-1B visas, the Department of Labor witness questioned whether there was a large shortage of U.S. workers in information technology jobs, because U.S. university graduates in the sciences are growing at a rate of 10 percent annually, and wage rates in the computer and scientific fields have not increased to the point that would be expected if there were an unfulfilled demand.  If the H-1B cap is raised, however, DOL supports requiring employers to attest to searching first for U.S. workers to fill the vacancy and to promise not to lay off U.S. workers.
     The subcommittee also heard from several witnesses representing the information technology industry.  Harris Miller of the Information Technology Association of America, Daniel Sullivan of QUALCOMM, and Darryl Hatano of the Semiconductor Industry Association all testified that the current 65,000 visa cap was expected to be reached in June of this year, leaving the information technology industry in a position of having to turn down the best talent available to keep the industry globally competitive.  Each of these witnesses also discussed the billions of dollars that the industry has invested in providing continuing skills training and education for employees.
     Rep. Lamar Smith, Chairman of the Subcommittee, indicated that he would introduce legislation that would shift U.S. immigration policy to give greater priority to admitting immigrants with higher education levels.

New Study Shows Cost to Economy of Encryption Controls
     A recently released study by the Economic Strategy Institute finds that the U.S. economy could lose $35 to $96 billion over the next five years if exports of U.S. encryption products continue to be strictly regulated.  The Institute’s report is the first to be done by an organization unrelated to the information technology industry, which has been campaigning for the deregulation of encryption exports for several years.
     The report found that the direct loss to the industry would be roughly $35 billion, but the greater loss would be the ripple effect on the U.S. economy as a whole, amounting to as much as $51.6 billion.  Erik Olbeter, the report’s main author, stated that the importance of his findings are even more significant because the information technology industry has generated much of the United States’ increased wealth over the last 10 years, and will remain instrumental in that growth over the next 20 years.
     The report, entitled Finding the Key: Reconciling National and Economic Security Interests in Cryptography Policy, can be obtained from the Economic Strategy Institute at 202-289-1288, or visit its website at: www.econstrat.org.

Education and Workforce Committee Examines Future Labor Needs in High-Tech Industry
     The Oversight and Investigations Subcommittee of the House Education and the Workforce Committee held a hearing on Thursday to examine whether the U.S. labor force is sufficiently trained to fill the employment needs of the high-technology industry.  The panel heard from William Archey of the American Electronics Association, James Mitchell of Texas Instruments, and Rick Martino, the Vice President of National Human Resources Operations for IBM.
     The American Electronics Association testified on its two recent reports, Cybernation: The Importance of the High-Technology Industry to the American Economy, and Cyberstates: A State-by-State Overview of the High-Technology Industry (see Bulletin, Vol. 5, No. 13 (4/9/98)), which point out the importance of the industry to the nation’s economic well-being.   Mr. Archey expressed concern in his testimony that American students were not being taught math and science well enough to compete in a job market dominated by information technology.  He noted that of 8th grade students tested in 41 nations in math and science, U.S. students ranked 28th and 17th respectively.
     Mr. Martino of IBM supported the increase in the cap on H-1B visas to allow IBM to hire the best talented workers to ensure continued global competitiveness.  Additionally, he outlined many programs that IBM has championed to encourage students to develop the employment skills needed for the industry, and the assistance IBM provides its employees to encourage them to continue to develop their professional skills.  Finally, he testified that U.S. labor laws need to be flexible in order to accommodate the fast-changing needs of the information technology industry, and the importance of teamwork among IBM’s employees.

Science Committee Considers Role of Federal Research
     On Wednesday, April 22, the House Science Committee held a hearing examining “The Irreplaceable Federal Role in Funding Basic Scientific Research.”  The committee, led by chair James Sensenbrenner (WI) and Ranking Minority Members George Brown (Colton), has been examining the federal role in supporting science via its Science Policy Study.  Wednesday’s was the fifth hearing in that process.
     Rep. Vern Ehlers (MI) commented that, “Without robust federal funding for basic research, many of these opportunities will not receive the attention they deserve.”  However, he added that “state-level partnerships have significant advantages over the federal government” regarding commercialization of new technologies and therefore it is important though sometimes difficult to adequately explain the need for long-term research by the federal government.
     Michael P. Doyle, a vice president of the Arizona-based Research Corporation which follows private investment in basic research, commented that even a generous $100 million level of private foundation support for basic research in the physical sciences would be “insufficient to support even ten percent of the annual costs for education and training of graduate students in chemistry, physics and astronomy.”  He added that “there has been a diminution in private support for basic research in the physical sciences,” and he speculated that university support is even less than private foundations, thereby leaving the role largely to the federal government.  He concluded that, “you will find that the vast majority of funding for basic research in the sciences resides in the federal government and that this funding cannot be replaced by any combination of private or state-initiated programs.”
     For further information, refer to the science committee’s website at http://www.house.gov/science/hearing.htm#Full_Committee or at  http://www.house.gov/science_democrats/legis.htm#HEARINGS.
     Earlier in the month, the House Science Committee examined “Math & Science Education, Part II:  Attracting and Graduating Scientists and Engineers Prepared to Succeed in Academia and Industry” as part of the same study.  Among those testifying was California Institute of Technology Vice Provost Professor David Goodstein, who lamented the overall shortage of scientifically and technically trained Americans, despite the nation’s strength at the highest echelons of scientific study.  Dr. Goodstein’s testimony is available at http://www.house.gov/science/goodstein_04-01.htm

California Reformulated Gas Discussed by House Commerce
     California is home to seven of the ten smoggiest metropolitan areas in the nation.  Under the existing Clean Air Act, it is the only state able to set its own fuel standards.  In 1990, Congress amended the Clean Air Act to require gasoline used in the nation’s most air polluted regions to contain 2% oxygen by weight, better known as the federal reformulated gasoline program.  John Dunlap of the California Air Resources Board (CARB) testified that the result of that change is that about 70% of the gas sold in California must meet the federal oxygenate requirement in addition to the state standards.
     On Wednesday, the House Commerce Committee’s Subcommittee on Health and the Environment held a hearing to discuss H.R. 630.  The bill is authored by Rep. Brian Bilbray (San Diego), who introduced similar legislation in the 104th Congress (H.R. 3518 ), and is co-sponsored by 48 members of the congressional delegation.  Senator Dianne Feinstein has also introduced S. 1576, a companion measure, in the Senate.  In addition to Rep. Bilbray, Rep. Anna Eshoo (Atherton), a member of the Subcommittee, and Rep. Ellen Tauscher (Pleasanton) spoke and testified in support of H.R. 630, and Rep. Jerry Lewis (Redlands) and Senator Feinstein submitted a written statement praising the bill.
     H.R. 630 would exempt California from the federal reformulated gasoline oxygenate requirement for highly polluted areas, only if the state continues to meet or exceed federally mandated air quality standards.  Cal/EPA and the CARB testified in support of the bill, arguing the federal standards should focus on the state’s performance in reducing fuel emissions, not the contents of the gasoline.  Rep. Bilbray said, “The beauty of HR 630 is that it is content-neutral and outcome-based.”
     At the hearing, however, the U. S. Environmental Protection Agency (EPA) and the U.S. Department of Energy said they are opposed to the California-exclusive measure.  Both cited possible disruption of previously negotiated agreements and potential shortfalls in gasoline supplies if H.R. 630 was enacted.  Some oil refiners, like the California Independent Gasoline Marketers of America and the Western Petroleum Association represented by Chevron President Dave O’Reilly, testified in support of the bill, but the Renewable Fuels Association, and the Oxygenated Fuels Association represented by ARCO Chemical Company’s CAO and Executive VP Marvin Schlanger said they oppose the legislation.
     A related issue is one of the primary oxygenates used in reformulated gasoline, MTBE (methyl tertiary-butyl ether).  Last year, after widespread media reports of MTBE contamination of some water supplies, the State Legislature requested the California Energy Commission to study the economic and supply implications of a ban or phase out of MTBE.  Governor Wilson also signed legislation to study MTBE’s threat to public health.  The presence of MTBE in drinking water is believed to be the result of leakage from underground fuel storage tanks (USTs).  According to U.S. EPA’s testimony, all USTs installed before December 1988 must be upgraded or replaced, and those after 1988 must also meet EPA standards by December 1998.  It is important to note that H.R. 630 does not directly require the use of, or ban the use of, any specific gasoline additive.
     Please visit the Committee’s web site at http://www.house.gov/commerce for testimony, or call the Subcommittee at 202/225-2927.

ISTEA Work to Begin Again
     Staff to members of the ISTEA Conference Committee are already reportedly hard at work, but several aides have told Capitol Hill press that it is unlikely that Congress will beat the expiration of the ISTEA extension law on May 1st.  Many sources say a more realistic target for completion of the legislation is before Congress’ May recess, scheduled to begin on May 23rd, but another short-term extension has not been formally discussed.  Moving on the task at hand, House Transportation and Infrastructure Chairman Bud Shuster (PA) was appointed to chair the conference committee.
     Four Californians sit on the conference committee: Senator Barbara Boxer, Rep. Bob Filner (San Diego), Rep. Steve Horn (Long Beach), and Rep. Jay Kim (Diamond Bar).  The first step toward resolving differences between the House’s $218 billion BESTEA and the Senate’s $214 billion ISTEA II is agreement on the overall funding level for transportation.  Other issues are whether or not to take the Highway Trust Fund off-budget, the House’s 1,400 high- priority projects, and funding allocations between Northeast and Southern states.
     In the conference negotiations, California’s priorities will include increasing its share of highway formula funds (9.1%) in relation to the state’s contributions to the highway trust fund (10.1%) and maintaining the state’s original ISTEA levels of mass transit funding.  Preliminary estimates indicate California would receive about $19 billion under BESTEA and $18 billion under ISTEA II for highways and transit, however, the state’s exact share of discretionary funds under each bill is unknown, because the monies are ultimately allocated by the Department of Transportation.
     Although no formal threat has been issued, President Clinton is critical of the large highway bills, especially the House bill’s 1400 projects.

House Banking Committee Hears Testimony on Natural Disaster Insurance Bill
     On Thursday, testimony on H.R. 219, the Homeowners Insurance Availability Act of 1997 was taken by the House Banking Committee.  The bill was introduced last year by the Subcommittee on Housing and Community Opportunity’s Chairman Rick Lazio (NY), and Reps. Vic Fazio (West Sacramento) and the full Committee’s ranking member Bill McCollum (FL), and has bi-partisan support.  The Subcommittee reported H.R. 219 in February.
     H.R. 219 authorizes the Secretary of the Treasury to establish a federal program to provide reinsurance for state disaster insurance and reinsurance programs. The bill would allow states that offer natural disaster insurance programs to residents to join a federal reinsurance program, which would cover excess losses from earthquakes and hurricanes up to a maximum federal payout of $25 billion annually.  Currently, only California, Florida, and Hawaii have state insurance programs eligible under the bill for federal reinsurance.
     In his opening statement, Chairman James Leach (IO) highlighted the difficulty some homeowners have obtaining insurance by citing a 1996 study finding that the number of insurance underwriters dropped 23% in California over the last 10 years.  Coupled with a 95% shutdown of the homeowner’s insurance market after the 1994 Northridge earthquake, he said, some states have created their own insurance programs to fill the gaps.  U.S. Treasury Deputy Secretary Lawrence Summers said the Administration sees a lot of promise in the legislation, but asked the Committee to continue to work together with Treasury.
     In addition to Rep. Fazio, Rep. Lucille Roybal-Allard (Los Angeles), who sits on the Committee, also expressed her desire to continue to work on the legislation.  California’s Chief Deputy Insurance Commissioner David Knowles and Babette Heimbuch of the Western League of Savings Institutions testified on behalf of California’s interests.  In her testimony, Ms. Heimbuch illustrated the need for federal intervention by describing the ramifications if the California insurance market failed and suggested several principles for the Committee to focus on in considering H.R. 219.
     For a copy of the testimony, please visit the House Banking Committee’s web site at http://www.house.gov/banking and look under the heading “Hearings/testimony.”

U.C. Institute Hosts Forum on Santiago Summit
     In Washington on Monday, April 20, The University of California’s Institute on Global Conflict and Cooperation (IGCC) held a policy luncheon on “The Santiago Summit of the Americas: A First-hand Report” on April 20, 1998, at the U.C. Washington Center.  The Santiago summit took place over the preceding weekend, on April 18-19. The IGCC seminar, attended by an audience of more than 70, featured UCSD International Relations Professor Richard E. Feinberg, formerly with the National Security Council and a principal architect of the first Summit of the Americas in 1994.  For more information about the event, related publications and other IGCC programs, please contact Monique Kovacs at (202) 296-8183; e-mail: [email protected]; or Ronald Bee in San Diego, (619) 534-6429; e-mail: [email protected].

Vietnam-Era Napalm Recycling/Disposal Plan Hits Snag
     Despite the efforts of California Members of Congress, the nation’s last remaining stockpile of obsolete, Vietnam War-era napalm remains stuck in northern San Diego County.  Area Members of Congress — particularly Reps. Ron Packard (Oceanside), Randy “Duke” Cunningham (San Diego), and Jerry Lewis (Redlands) — are seeking to have it disposed of and recycled.  A plan by EPA, the Navy and the Department of Energy to remove the napalm from 34,000 canisters in Fallbrook, CA — and ship the contents to a recycling facility near Chicago for conversion into cement plant fuel — faltered last week when the EPA issued an eleventh-hour objection and the recycler refused the shipment.
         The first shipment made it as far as a Kansas rail yard before being halted and sent back to California, stopping at the China Lake Naval Weapons Center.  The previous contractor cited pressure from Chicago-area members of Congress and local communities in explaining their decision to reject the shipment.
     Press reports quoted a Navy spokesman who was optimistic that a new contractor could be found to recycle the 23 million pounds of napalm which remains at the Fallbrook site.  Burlington Northern, which transported the substance, rated it only low-to-medium in risk, well below the risk level for propane which it ships routinely.
     For further information regarding the situation, refer to Rep. Packard’s website at http://www.house.gov/packard/napalm2.htm.

Population Data To Be Focus of Briefing
     The Population Resource Center will host a congressional briefing next week entitled “Taking the Social & Economic Pulse of America: Data from the Census Long Form.”  The briefing will take place on Friday, May 1, from 10:00 a.m. to 12:00 noon in 2247 Rayburn House Office Building, and will feature comments by noted demographer and UCLA professor Dr. Leobardo Estrada, among others.  For further information or to RSVP, contact PRC at 202-467-5030.

Click here to return to the California Institute home page.  Or click here to send us e-mail.