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California Capitol Hill Bulletin

Volume 6, Bulletin 33 — October 14, 1999

VA-HUD Conference Report Approved in House; Californians Delay FEMA Public Insurance Rule
Judiciary Subcommittee Marks Up Internet Bills
Title I Renewal Passes Education & Workforce Committee
“Pre-Conference” on Labor-HHS-Education Appropriations Begins Without House Floor Action; House Opposes Title I Hold Harmless
Commerce Committee Reports Brownfields Bill
PPIC Report on California’s Business Climate
House Takes Up Intellectual Property Rights Issue

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 in kind donations from Sun Microsystems and QUALCOMM, Inc.

VA-HUD Conference Report Approved in House; Californians Delay FEMA Public Insurance Rule

Language in the VA-HUD Appropriations conference report requires the Federal Emergency Management Agency to delay finalizing a rule on its public assistance insurance proposal until the General Accounting Office has studied the issue. This past summer, FEMA announced plans to publish a rule requiring all publicly-owned buildings to carry insurance against natural disasters. See, Bulletin, Vol. 6, No. 19(6/10/99). Californians, led by the state’s congressional delegation, the Governor, and a coalition of public entities, joined together to insure that FEMA consider the financial impact of its proposal, and draft a reasonable and feasible rule.

The VA-HUD language recognizes the “significant financial implications for states, municipalities, and private non-profit hospitals and universities,” and requires GAO to report to the House and Senate Appropriations Committees on the fiscal impact within 120 days of enactment. Importantly, the report instructs FEMA not to finalize a rule until the report is done and it “fully consider[s] the GAO findings.”

The $91 billion VA-HUD conference report was approved by the House on Thursday on a 406-18 vote. The final package restored a proposed $1 billion cut in NASA, ultimately funding the space agency at $13.7 billion, just $25 million below last year’s level. The National Science Foundation is funded at $3.9 billion, $240 million above the FY99 amount. California wins a large share of NASA and NSF funds.

Judiciary Subcommittee Marks Up Internet Bills

The Judiciary Committee reported two Internet-related bills on Wednesday, October 13.

Cybersquatting Bill

H.R. 3028, the Trademark Cyberprivacy Prevention Act, was reported by voice vote. The bill, authored by Reps. Jim Rogan (Glendale) and Rick Boucher (VA), is aimed at stopping “cybersquatting.” Cybersquatting is the practice of registering, in bad faith, an Internet domain name or a website using the same or confusingly similar trademark of another entity. See, Bulletin, Vol. 6, No. 32 (10/7/99).

H.R. 3028 grants trademark holders more accessible remedies against Internet infringers without substantively changing current trademark law. It prohibits the registration, use, or trafficking in a domain name that is identical or confusingly similar to, or dilutive of, a distinctive trademark. It establishes: (1) a civil cause of action against an infringer who acts with the bad faith intent to profit from the rightful trademark; and (2) an in rem civil action through which the infringing mark can be forfeited or canceled.

During the markup, the Committee approved by voice vote a technical amendment offered by Reps. Rogan and Howard Coble (NC), the Chair of the Courts and Intellectual Property Subcommittee. H.R. 3028, as amended, was then reported out favorably by voice vote.

Electronic Signatures

The Committee also approved H.R. 1714, which establishes the validity of electronic signatures in electronic commercial transactions. See, Bulletin, Vol. 6, No. 32 (10/7/99). During consideration, an en bloc amendment offered by Rep. Howard Coble was accepted by voice vote. The intent of the amendment is to clarify that federal preemption of state law ceases when a state adopts the Uniform Electronic Transactions Act. It also explicitly includes insurance records and contracts in the coverage of the bill, and corrects a drafting error.

An amendment, offered by Reps. Howard Berman (Valley Village), John Conyers (MI), Zoe Lofgren (San Jose), and William Delahunt (MA), was approved by a vote of 15-14. The amendment tightens up the preemption provisions in the bill to ensure that state laws are not preempted where a state decides that certain written documents or records continue to be necessary.

H.R. 1714, as amended, was then reported out favorably by voice vote. Earlier in the year, the Commerce Committee reported a different version of the bill. The two will have to be reconciled before floor consideration of H.R. 1714.

Title I Renewal Passes Education & Workforce Committee

On Wednesday, the House Committee on Education and the Workforce completed mark up on and passed H.R. 2, readying the bill for floor action possibly as soon as next week. The legislation reauthorizes the federal Title I (Education for the Disadvantaged) program for another six years. After four days of markup during which 50 amendments, some contested, were considered, the Committee approved the bill on a 42-6 vote.

Reversing an action from the prior week’s markup, the Committee on Wednesday voted narrowly to lower from 50% to 40% the threshold share of needy students a school must have before being eligible to use its Title I funds for schoolwide activities. (If a school has fewer Title I eligible children than the threshold share, it must target its funds solely on those children.) The bill also sets standards for the hiring of paraprofessionals, or teachers aides.

For more detail on California aspects of the bill, see Bulletin, Vol. 6, No. 32 (10/7/99).

“Pre-Conference” on Labor-HHS-Education Appropriations Begins Without House Floor Action; House Opposes Title I Hold Harmless

With the three-week continuing resolution nearing its October 21 expiration, the House Appropriations Committee on Thursday took the unusual step of moving into a House-Senate conference on the Labor-HHS-Education appropriations measure, despite the fact that the bill was never brought to the House floor. The Senate completed work on its version of the measure (S. 1650) last Thursday, but the House bill has been awaiting floor action.

In the section of its bill pertaining to the Title I education program, the Senate version includes a “100% hold harmless” provision, which would in effect nullify funding increases due California and other states which have been strained by rapid growth in poor children. The hold harmless provision states that no state shall receive fewer funds than it did in the prior year. The House version, which passed the full Appropriations Committee on September 30, contains no such provision.

In fact, the House Committee Report explicitly opposes the Senate action: “The Committee notes that the Administration’s budget request rejects the ‘100 percent hold harmless’ legislative rider for the Title I program. The Committee bill does not include this provision either. The Committee believes that such legislative riders unfairly penalize schools and states that educate a growing number of disadvantaged children.” The report favorably quotes a Department of Education document also opposing the 100% hold harmless usage, stating “A basic principle in targeting should be to drive funds to where the poor children are, not to where they were a decade ago.” California delegation members have been instrumental in ensuring the House Committee’s focus.

In addition, the House bill expresses opposition to the past practice of applying the 100% hold harmless scheme to fund programs other than Title I but which use Title I data as a formula element.

Commerce Committee Reports Brownfields Bill

The House Commerce Committee on Wednesday, October 13 reported a Superfund authorization bill that contains provisions aimed at redeveloping brownfields. Brownfields are abandoned, polluted urban industrial sites. Rep. Michael Oxley (OH) offered an amendment in the nature of a substitute to H.R. 2580, which the Committee reported by a mostly party-line vote of 30-21.

The Oxley substitute encourages the redevelopment of brownfields and establishes a remediation program to provide grants of up to $1 million. It also includes provisions limiting the liability of buyers, sellers, and others, and exempts small businesses from the Superfund law. A small business is defined as one with fewer than 75 employees and $3 million in revenues. The bill also reauthorizes Superfund for five years, with $1.5 billion annually for three years, decreasing in years four and five to $1.4 billion and $1.35 billion, respectively.

The Committee defeated, again on a party-line vote of 23-27, a more narrowly drawn substitute offered by Rep. Edolphus Towns (NY). The Towns substitute would have offered limited liability to a smaller list of persons and entities, including municipal governments and small businesses, as well as encouraging brownfields development. Several other amendments offered to narrow the scope of the Oxley substitute were also defeated during the markup. A similar turn of events occurred at the subcommittee level at the end of September. See, Bulletin, Vol. 6, No. 23 (9/30/99).

Earlier in the year, the House Transportation and Infrastructure Committee reported out a different Superfund measure, H.R. 1300. It is uncertain whether there is sufficient time left in this session of Congress to resolve the differences between the bills and bring a bill to the House floor.

PPIC Report on California’s Business Climate

In Rethinking the California Business Climate, the Public Policy Institute of California (PPIC) outlines the key factors affecting California’s “business climate.” In the report, authors Michael Dardia and Sherman Luk seek to modify California’s evaluation of its own competitiveness from the current statewide characterization to one that considers California’s diversity and size.

According to PPIC, businesses weigh the costs and benefits of setting up their service in a certain area, thus evaluating whether or not a specific area maintains a good or bad business climate. Costs commonly associated with business climate include wages, corporate tax rates, utility costs, workers’ compensation and unemployment premiums. Until the 1990s, continued economic growth characterized by high employment fostered a good business climate in California. However, a sharp drop in employment rates in the early 1990s followed by a five year recovery led many businesses, politicians, and economists to claim that California no longer promoted competition.

While some employment declines did occur during the 1990s, employment levels varied across regions and business sectors. The Inland Empire, Sacramento, and Oakland metropolitan areas experienced a relatively small decline, while Los Angeles employment rates fell by over 10 percent. Furthermore, PPIC points out that “with the exception of Los Angeles, California actually had a smaller percentage decline in employment than did the nation.”

Employment levels also varied across business sectors during the early 1990s. While employment in construction, mining, and manufacturing fell by 15 percent or more, employment in transportation and public utilities increased slightly, and employment in services grew by more than 20 percent. Thus because of California’s (except Los Angeles’) performance during the recession, and the variations in employment levels across sectors, the report challenges the notion that California, as a whole, was “bad for business.”

PPIC recognizes the great diversity and size of California and recommends that policy makers and business communities be made aware of California’s competitiveness on a more heterogenous level. The report advises legislators to carefully consider the regional and sectoral variations and target their policies appropriately. It cites “Index of Silicon Valley”, prepared annually by the Joint Venture: Silicon Valley Network, as an example of how business climate studies can focus on a specific region and sector to enhance legislators’ knowledge of local needs.

For more information, contact the Public Policy Institute of California at 415-291-4400 or at their website: .

House Takes Up Intellectual Property Rights Issue

The International Relations Committee’s International Economic Policy and Trade Subcommittee held a hearing on Wednesday, October 13 to address the issue of intellectual property rights (IPR) piracy and its impact on the US and world economy. The Subcommittee estimated that 1998 losses incurred due to piracy amounted to about $5 billion for business applications; over $3 billion for entertainment software; almost $2 billion for the motion picture industry; and close to $2 billion for the music industry.

Witnesses in attendance at the IPR hearing included Hon. Raymond Kelly, Commissioner of the U.S. Customs Service; Deputy U.S. Trade Representative Richard Fisher; and, Jeremy Salesin, General Counsel and Director of Business Affairs for LucasArts Entertainment Company LLC. While Kelly cited federal law enforcement’s heightened awareness of piracy, he voiced the need for international cooperation. Commissioner Kelly mentioned the recent creation of an intellectual property rights coordination initiative that synchronizes federal agencies’ efforts in IPR investigations and integrates international partners.

Mr. Fisher expanded on current federal efforts to control piracy through enforcement of the World Trade Organization’s Agreement on Trade-Related Aspect of Intellectual Property (TRIPS). TRIPS requires all World Trade Organization members to enact and enforce copyright and intellectual property protection by January1, 2000. Fisher also noted the continual focus on controlling piracy in optical media – mainly music and video CDs, and software CD-ROMs.

Jeremy Salesin, of LucasArts Entertainment Company LLC, testified on behalf of the Interactive Digital Software Association (IDSA) which publishes 90 percent of the entertainment software sold and rented in the U.S. Salesin pointed out that the entertainment software industry, with $5.5 billion in sales in the US, lost over $3.2 billion due to copyright piracy in 1998. He noted three important elements of IPR protection: an adequate legal regime; enforcement of that regime; and technological protection. Salesin concluded his testimony by encouraging Congress to take a more direct role in persuading other countries to implement intellectual property protection.

For testimony of all of the witnesses, contact the Committee through its website at: .
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