CONTENTS OF THIS ISSUE:
VA-HUD Appropriations Calls on FEMA To Postpone Rulemaking
Memorial Service Friday for Rep. George Brown
House Supports Extension of NTR to China
Rep. Matsui Address Golden State Roundtable
Senate Judiciary Addresses Methamphetamine Labs
Judiciary Looks at Competition and Electricity Deregulation
ACWA Holds Briefing On Radon In Drinking Water
Senate Considering Tax Bill
House Committee Holds Hearing on Title I
MTBE Report Released
TEA-21 Implementation of Section 1309
EESI Holds Briefing On The Clean Air Partnership Fund
Governor Reaches Agreement on Prop 187 Dropping Appeal

The report on the VA, HUD, Independent Agencies FY2000 Appropriations contains strong language directing the Federal Emergency Management Agency to postpone its proposed rulemaking on Public Assistance Insurance Requirements. Under FEMA’s proposal, public entities would be required to obtain private insurance, or to self-insure, the buildings they own against damage from natural disasters. The entities affected would include not only state and local government buildings, but also schools, public hospitals, and the universities. In order to be eligible for any public assistance grants from FEMA, public buildings covered by the rule would have to have “adequate insurance” against the peril that caused the damage.

The Committee’s report cites the “enormous financial burden” the proposed rule would have on public entities and directs the General Accounting Office to conduct a study to determine the financial impact of the rule. Until the study is completed and reviewed by Congress, the report instructs FEMA to withhold its proposed disaster insurance regulations.

California’s public agencies are extremely concerned about the deleterious financial impact the new rule would have. In June, fifty-one members of the California Congressional Delegation, as well as Governor Gray Davis, wrote letters to James Lee Witt, Director of the Federal Emergency Management Agency, urging the agency to delay publication of its proposed rule.

In addition to the FEMA language, the FY2000 appropriations bill includes $70.456 billion in discretionary funding and contains 215 projects requested by individual members of Congress. Many of the earmarked projects are aimed at California, including: $1,237,000 for repair and construction of a Tracy Fire Station; $400,000 for computer modeling capability upgrades of FEMA and the California Office of Emergency Services; $2,000,000 for Cal. State San Bernardino as a Disaster Resistant University; and $6,000,000 for continued seismic retrofitting at Loma Linda University Hospital.

The full Appropriations Committee will mark-up the VA-HUD bill Friday, July 30. Further details on the California earmarks will be available shortly on the California Institute’s web page at http://www.calinst.org/
 

Memorial Service Friday for Rep. George Brown

Memorial services will be held in Statuary Hall in the U.S. Capitol Building at 11:00 a.m. on Friday, July 30 for Rep. George Brown, who died on July 15. A memorial service was also held in San Bernadino, CA on Wednesday. Mr. Brown was Chair Emeritus of the California Democratic Congressional Delegation, and served more years in Congress than any Californian in the history of the state.
 

House Supports Extension of NTR to China

On Tuesday, July 27, the House voted 260-170 to support the President’s request to extend Normal Trade Relations with the People’s Republic of China for another year. The vote came after a contentious debate triggered by the recent freeze in U.S./China relations because of Chinese espionage at U.S. labs, the bombing of the Chinese Embassy in Belgrade, and continued instances of Chinese violations of human rights. Nevertheless, in the final analysis the vote in support this year was only four votes short of last year’s extension.

The debate over U.S. treatment of China is hardly over, however. There are signs that negotiations over China’s entry into the World Trade Organization may pick up again, setting the stage for a heated debate on that issue by the end of the year. If China is to be admitted to the WTO, the U.S. would have to make NTR permanent to fully implement that decision. NTR, formerly known as most-favored nation status, grants China the same tariff treatment as major U.S. allies enjoy.

In 1998, California exported $2.47 billion in goods to China, a nine percent increase over 1997.
 

Rep. Matsui Address Golden State Roundtable

Rep. Bob Matsui (Sacramento) addressed the California State Society’s Golden State Roundtable Luncheon on Tuesday. In his remarks, the twenty year Ways and Means veteran discussed the difficulties in making mid-range financial projections for the budget, the current projected surplus, and tax cut possibilities. He questioned whether there is a real on-budget surplus, and argued that a $700 billion dollar tax cut at this point would leave a huge budgetary hole and not allow for the shoring up of Medicare or Social Security. He predicted that a deal on a tax cut and FY2000 appropriations would not be forthcoming in the near future, and raised the possibility of a continuing resolution into February 2000 as one possible method to prevent a Government shut-down.
 

Senate Judiciary Addresses Methamphetamine Labs

The Senate Judiciary Committee met Wednesday on the methamphetamine proliferation in the United States. Donnie R. Marshall, Acting Administrator of the Drug Enforcement Administration, Paul Warner, United States Attorney in Salt Lake City, UT, and Katina Kypridakes, Manager, Precursor Compliance Unit of the California Bureau of Narcotics Enforcement in Sacramento were among those testifying. Ms. Kypridakes provided a history of methamphetamine in California, the current status of the production and distribution of the drug, the exceptional violence associated with meth usage including the explosive nature of the “cooking” process, the environmental damage from toxic chemical waste from meth production, and emerging trends. Mr. Marshall addressed DEA’s approach to the problem and what he described as the growing power and influence of international drug trafficking syndicates, especially those in Mexico.

Committee member Senator Dianne Feinstein noted deep concern with the proliferation, particularly in California: in a nation-wide drug enforcement operation, 92.8 percent of all methamphetamine seized throughout the country from January, 1993 to May, 1995 was determined to have originated in California. She noted San Diego has the highest number of meth arrests in the country, with Sacramento and San Jose also particularly high in arrests.

Last week the Hatch-Feinstein Methamphetamine Anti-Proliferation Act of 1999 was introduced which would, among other elements, increase penalties for dealing in amphetamine, require criminals to pay lab cleanup costs, prohibit distribution of drug-making information, including Internet transmissions, and authorize funding for 50 new DEA positions to focus on meth. The Committee web site for testimony is http://www.senate.gov/~judiciary/witness.htm.
 

Judiciary Looks at Competition and Electricity Deregulation

The House Judiciary Committee held a hearing on competitive issues in electricity deregulation on Wednesday, July 28. In addition to several Administration and private witnesses, the Committee also heard from Kellan Fluckiger, Vice President for Operations of the California Independent System Operator (ISO). The California ISO is the non-profit public benefit corporation created under California’s electric restructuring law (AB1890) that operates the high voltage power lines that deliver electricity throughout the state and between neighboring states, Mexico, and British Columbia.

Mr. Fluckiger testified that ISOs can efficiently address antitrust issues with respect to market power in generation and transmission of electricity for three primary reasons. First, ISOs are disinterested players in the market; second, they function to facilitate efficient markets; and third, they are in the best position to monitor and ensure compliance in a highly technical and data intensive environment. Mr. Fluckiger also strongly supported the principle of self-policing in electricity markets because any entity responsible for compliance must have operational access to the transmission system. Further testimony can be obtained through the Committee’s website at: www.house.gov/judiciary.
 

ACWA Holds Briefing On Radon In Drinking Water

On Thursday July 29 the Association of California Water Agencies (ACWA) held an educational briefing on radon in drinking water, in preparation for the Environmental Protection Agency’s (EPA) new radon regulatory proposal due in late August 1999. The EPA’s proposal will be followed by a 60 day comment period, then a federal review, and finally issuance of the rule in August 2000.

Radon is primarily a health threat in the air, according to the EPA. However, due to the reauthorization of the Safe Drinking Water Act in 1996, the EPA is required to set a standard for radon allowed in drinking water. The briefing focused on the monetary and health effects that the expected lowering of the acceptable levels of radon in drinking water would have on consumers, particularly in the state of California. ACWA believes that water prices will increase dramatically. For instance, it estimates that Fresno may see a rise of as much as 100% in average water rates. Tom Levy, General Manager and Chief Engineer for Coachella Valley Water District, served on Thursday’s panel and argued that a lower radon level in drinking water would not have an appreciable effect on reducing deaths from radon-related cancers. For more information contact ACWA via its web site at http://www.acwanet.com.
 

Senate Considering Tax Bill

The Senate began consideration of its $792 billion tax bill, S. 1429, the Taxpayer Refund Act of 1999, on Wednesday, and rejected a smaller $290 billion Democrat alternative by a vote of 39-60. But on a vote to override the requirement that after 10 years costs must be offset by either revenues or spending cuts, the Senate fell 9 votes short of the 60 needed for the override. The package contains a permanent extension of the Research and Development tax credit, strongly supported by California’s high technology industries, as well as an extension of the welfare-to-work tax credit and an increase in the low-income tax credit. See, Bulletin, Vol. 6, No. 24 (7/22/99). Another alternative, containing a $500 billion tax cut, being offered on the floor by Senators Chafee, Jeffords, Breaux and Kerrey also includes the underlying bill’s permanent R&D tax credit extension.

It is possible that during floor consideration Sen. Pete Domenici (NM) will offer an amendment that would undermine the permanent R&D tax credit provisions. Action on the bill is expected to continue throughout Thursday night. Although House and Senate leaders hope to work out a compromise on the two bodies’ versions before the August recess, it is not expected it will be sent to the President yet, because a veto threat still looms over the planned cuts.
 

House Committee Holds Hearing on Title I

On Tuesday July 27, the Committee on Education and the Workforce held a hearing on Title I of the Elementary and Secondary Education Act (ESEA). Five individuals testified before the committee, primarily focusing on the effects that Title I has had on schools and offering changes that would increase the effectiveness of the program. Title I was initially created to assist children in overcoming learning disadvantages that can be attributed to their economic status or associated with home, school, or community experiences. The general consensus among the witnesses was that Title I was an asset to the school system but there are some changes that could be made that would increase the benefit of the program. Some of these requested changes to Title I include: an increase in funds allocated to Title I programs, a strengthening of local accountability and encouragement of parental involvement in the education process. This hearing was another step in the reauthorization of the ESEA, which the Committee hopes to complete this year. For more information contact the committee via its web site at http://www.house.gov/eeo.
 

MTBE Report Released

In December of 1998 U.S. Environmental Protection Agency head Carol Browner appointed a group of 13 specialists on air and water quality, as well as representatives of the MTBE, ethanol and oil industries to a panel to evaluate environmental benefits and risks of oxygenates in gasoline, particularly those of methyl tertiary butyl ether (MTBE). After six months of investigating, the panel presented findings Tuesday that MTBE is polluting groundwater and that the current two percent requirement for oxygenates in clean-burning gasoline is not needed to meet clean air standards.

Browner says that she will urge Congress to change the current oxygenate requirement and that the administration will support current legislative proposals supported by California officials facilitating the development of low-polluting fuel with small amounts or no MTBE. The panel’s chair, Dan Greenbaum of the Health Effects Institute in Boston, said that Governor Gray Davis’ executive order for the phase out of MTBE in California by 2002 will be much easier to implement if Congress acts on the panel’s guidance. For previous California Institute coverage of this issue, including legislation introduced by Rep. Brian Bilbray (Imperial Beach) and Senator Dianne Feinstein, see, Bulletin, Vol. 6, Nos. 15 (5/6/99), 12 (4/15/99), 11 (4/1/99), 10 (3/25/99), & 4 (2/4/99).
 

TEA-21 Implementation of Section 1309

The House Transportation and Infrastructure Subcommittee on Ground Transportation met Tuesday to discuss TEA-21 Section 1309 environmental streamlining provisions. Witnesses included Michael Davis, Deputy Assistant Secretary of the Army for Civil Works; Steven Herman, Assistant Administrator for Enforcement and Compliance Assurance, Environmental Protection Agency; Eugene Conti, Jr., Assistant Secretary for Transportation Policy; and representatives from the Surface Transportation Policy Project, Arkansas State Highway and Transportation Department, American Road and Transportation Builders Association, and the American Consulting Engineers Council.

Mr. Davis discussed the recent history of improvements in coordination between the Army Corps of Engineers regulatory program and the Federal Highway Administration (FHWA) Federal Aid Highway program. A recent step was the July 1, 1999 interagency memorandum of understanding (MOU) between the Assistant Secretary of the Army for Civil Works and the US Department of Transportation on principles of protecting natural and human environments in highway construction and an agreement to continue to streamline the processes involved with these projects. Upon questioning from Rep. Steve Horn (Long Beach), Mr. Davis said that the Corps does not have sufficient financial resources to provide all the assistance it would like, because of no budget increases for the last three to four years. Mr. Herman emphasized that while committed to environmental streamlining, EPA cannot compromise its responsibilities under the Clean Air Act and the National Environmental Policy Act (NEPA) to conduct reviews and consider environmental impacts. Mr. Conti cited the San Diego Association of Governments and Metropolitan Transit Development Board light rail expansion planning process as a model effective process for streamlining transportation projects.

The American Consulting Engineers Council and the American Road & Transportation Builders Association representatives expressed concern over the slow pace of implementation of Section 1309. The Surface Transportation Policy Project urges targeting reforms toward the 90% of projects that are supported by local consensus, because those that do not have a consensus have substantive difficulties that procedural tinkering won’t resolve.

Further information can be found on the Committee’s website at: www.house.gov/transportation.
 

EESI Holds Briefing On The Clean Air Partnership Fund

The Environmental and Energy Study Institute held a briefing on Thursday July 29 to discuss the Clean Air Partnership Fund (CAPF). The Fund is a grant program operated by the Environmental Protection Agency (EPA) under section 103 of the Clean Air Act, that would allocate $200 million for state and local governments for FY2000 for use in reducing air pollutants and to promote new innovations and technologies that would lead to the reduction of air pollutants.

Statements were heard from five individuals that included William J. Keese, chairman of the California Energy Commission and Robert Perciasepe, assistant administrator, Office of Air and Radiation, U.S. Environmental Protection Agency (EPA). The focus of the briefing was to educate individuals on CAPF, potential projects that could eventually be funded under CAPF,

and to answer questions relating to the design of the program. CAPF is currently still awaiting authorization and funding by Congress. For more information contact Keith Mason (202-260-1360) or Anna Garcia (202-564-9492) in the EPA’s Office of Air and Radiation.

Governor Reaches Agreement on Prop 187 Dropping Appeal

Governor Gray Davis and opponents of Proposition 187 have reached a mediated settlement that will allow illegal immigrant children to continue to attend state schools, and drop most other provisions from the proposition in favor of federally-enacted laws. Governor Davis opted for mediation on Prop 187 about three months ago, instead of appealing a federal court’s ruling overturning the proposition on constitutional grounds. Under the settlement, provisions denying or restricting welfare, emergency health and social benefits to undocumented immigrants, which were enacted as part of federal immigration and welfare reform, will be implemented instead of similar restrictions contained in Prop 187. The settlement also sets aside provisions that would have required local law enforcement authorities, educators, and social and medical workers to turn in suspected illegal immigrants to federal and state authorities. In the end, the only provisions that will be enforced are two relatively minor ones concerning the production and use of false documents to hide illegal immigration status.

The agreement is expected to be filed with the U.S. Ninth Circuit Court of Appeals on Friday, July 30. The Court is expected to accept it, and thus end the appeal process before it reaches the U.S. Supreme Court.

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