Census Headcount Numbers Will Be Used for Drawing District Lines, But Adjusted Data Could Still Be Used for Funding Allocation

California Electricity To Be Focus of Various Hearings; Bill Introduced To Establish Cost-of-Service Based Rates when Wholesaler Prices are ‘Unfair and Unreasonable’

Boxer Amendment on Natural Gas Price Spike Passes Senate

Reps. Cunningham and Holt Circulating Letter Supporting Fusion

California Site Is Preferred Base for Global Hawk Mission

CSTA Visits Hill; Survey Finds Foreign Competition Impacting California Satellite Manufacturers

Senate Hearing On Export Administration Act Reauthorization

Senate Committee Holds Hearing on Medical Records Privacy

PPIC Report on Effects of Welfare Reform In The Workplace

Software CEOs Present Priorities to Bush Administration

Los Angeles Housing/Business Summit

Delegation to Sponsor February 13 Election Reform Briefing

Census Headcount Numbers Will Be Used for Drawing District Lines, But Adjusted Data Could Still Be Used for Funding Allocation

While no official announcements have been made, press reports indicate that the Bush Administration will elect to use actual decennial headcount numbers rather than data adjusted via statistical sampling for apportioning Congressional districts and for redistricting of state and local political boundaries, but the door reportedly remains open to use of adjusted data for allocating federal formula dollars. The Associated Press, the Washington Post and other media outlets quoted anonymous sources as saying that the use of sampled data — which compensates for undercounting — for purposes other than re-drawing of political boundaries, including determining federal funds, was "negotiable." A decision on whether to release sampled data is expected in March.

California Electricity To Be Focus of Various Hearings; Bill Introduced To Establish Cost-of-Service Based Rates when Wholesaler Prices are ‘Unfair and Unreasonable’

At 10:00 am on Friday, February 9, in 538 Dirksen, the Senate Committee on Banking, Housing and Urban Affairs is scheduled to hold a hearing entitled "California Energy Crisis and Use of the Defense Production Act," featuring testimony by two witnesses from the U.S. Department of Energy, Acting General Counsel Eric J. Fygi and Office of Energy Emergencies Director Paul F. Carrier.

On Thursday, February 15, the House Commerce Committee is expected to hold a hearing regarding the California electricity situation, and a Commerce Committee field hearing is expected to take place in Southern California on Wednesday, February 21, during the President’s Day Congressional recess.

On the Senate side, the Energy & Natural Resources Committee is expected to hold a hearing during the week of February 26 to consider a bill, S. 26, introduced on Thursday, February 8, by Senator Dianne Feinstein. The bill, cosponsored by Senator Barbara Boxer, would direct the Federal Energy Regulatory Commission (FERC) to establish cost-of-service based rates when the agency finds "unjust and unreasonable" wholesale rates are being charged by energy suppliers. A cost-of-service based rate would be defined as a rate, charge, or classification for the sale of electric energy that is equal to: (A) all the variable and fixed costs for producing the electric energy; and (B) a reasonable return on invested capital. In November, 2000, the FERC found that rates charged in the California electricity market were in fact "unjust and unreasonable", yet the agency declined to intervene regarding those rates. Feinstein noted that Senate Energy and Natural Resources Committee Chairman Murkowski and the Ranking Member Jeff Bingaman have agreed to schedule a hearing on the bill before the end of the month. Also on Thursday, Senator Feinstein introduced a bill to authorize $25 million for the Economic Development Administration to operate a revolving loan fund to assist small business owners whose gas or electric bills are at least double what they were a year before.

Meanwhile, Rep. Bob Filner and Senator Barbara Boxer have introduced a bill entitled a bill entitled "the Electricity Consumers Relief Act of 2001." With similarities to legislation introduced last fall, H.R. 268 would require FERC to order energy wholesalers to issue refunds to Californians for overpayments on their electricity bills. The bill would also require FERC to set cost-based wholesale electricity rates in the Western region, using a cost-based price set retroactively to June 1, 2000 and a formula that considers the cost of generation plus a reasonable profit.

Boxer Amendment on Natural Gas Price Spike Passes Senate

On Thursday February 8, the Senate passed an amendment by Senator Boxer to the Pipe Line Safety bills, calling on the National Academy of Sciences to conduct a study to determine the causes underlying natural gas supply shortages and prices increases. In her floor statement, Boxer pointed out that in California natural gas prices have increased twenty-fold, and that, according to experts, one of the major causes for the price increase has been a lack of supply and a lack of a natural gas reserve. She indicated that the lack of reserve in California was compounded by the rupture of an El Paso Natural Gas Company pipeline in Carlsbad, New Mexico, an accident which the pipeline legislation seeks to prevent.

Reps. Cunningham and Holt Circulating Letter Supporting Fusion

This week, Reps. Duke Cunningham (San Diego) and Rush Holt (NJ) are circulating two letters of support for fusion research, one to House Appropriations Energy and Water Development Subcommittee Chairman Sonny Callahan (AL) and the other to DOE Secretary Spencer Abraham. Both letters cite the several recent reviews of fusion energy sciences research in the U.S. and ask that no less than $300 million for fusion energy sciences plus $30 million for high average power lasers be made available in Fiscal Year 2002. California perennially wins a large share of federal fusion science expenditures.

The letter references California’s energy woes, stating "If we have learned anything from the lessons of the past, it is that the response to this most recent energy crisis must be to broaden and deepen our energy options for the future and to act to address the problem in the short, medium and long-term." The letter points out that recently, "the U.S. fusion energy sciences program has received high level reviews from the President’s Committee of Advisors on Science and Technology (PCAST), the Secretary’s Energy Advisory Board (SEAB), the National Research Council (NRC), and the Fusion Energy Sciences Advisory Committee (FESAC)." Later, the letter states that these expert panels have concluded that the fusion program is underfunded: "These studies have made it clear that existing fusion research facilities at universities and laboratories are severely underutilized due to budgetary constraints, that more dollars must be expended for theory and computation, for broadening the connections to other areas of science, for international collaborations and for enabling materials and technology work."

To sign the letters or for more information, Congressional offices should contact Tim Charters of Congressman Cunningham’s office x5-5452 or Chris Davis of Congressman Holt’s office x5-5801.

For more information regarding fusion issues generally, contact Mark Haynes at General Atomics (202-496-8209) or Kate Bannan with the University of California (202-588-0080).

California Site Is Preferred Base for Global Hawk Mission

In January, Air Force Chief of Staff Mike Ryan announced that Beale Air Force Base was the "preferred alternative" for the new Global Hawk Unmanned Aerial Vehicle (UAV) mission. A final siting decision is expected in March, following release of the final draft Environmental Assessment.

Rep. Wally Herger (Marysville) commented, "This is terrific news for Northern California. The selection of Beale as the ‘preferred alternative’ brings us one important step closer to final placement of Global Hawk at Beale." Siting the mission at Beale could bring in as many as 800 jobs and as much as $140 million in local revenue.

Senator Dianne Feinstein said, "This decision is a win-win for the Air Force and for the local community," adding "Because of its history, location and relationship with the community, Beale Air Force Base is an ideal location for the Global Hawk project. The personnel at the base are well-equipped to deal with the sophisticated surveillance aircraft of the mission, and Beale’s climate and rural setting lends itself to year-round operations."

The Global Hawk is more advanced and versatile than the U-2, which entered service in the 1950’s. One advantage is the ability to provide its data in near real time via satellite communications, allowing immediate assessment of enemy actions. Beale currently houses the U-2 mission, which is nearly identical in size and mission, so the facilities at Beale would need very little modification to accommodate the Global Hawk.

CSTA Visits Hill; Survey Finds Foreign Competition Impacting California Satellite Manufacturers

A study by the Satellite Industry Association, released at a February 6 breakfast briefing hosted by the California Space Technology Authority (CSTA), indicates that California-based manufacturers of commercial satellites suffered record losses in revenue, jobs and market share in 2000, due in part to increasing foreign competition exacerbated by export control policies.

The study found a $1.2 billion, 1,000 job decline in 2000, with a global market share of 45% compared to a 10-year average global market share of 75%. (Prior to 2000, California manufacturers’ market share had never dropped below 60%, except for the year of the Challenger disaster.) It also found that California satellite manufactures are spending 400 to 500 percent more time and resources to comply with State Department export control procedures (authority over licensing of commercial satellites was shifted from the Commerce to the State Department in March 1999). In addition to export restrictions, the study also blamed the downturn on the consolidation of the European market and on favorable euro/dollar exchange rates. It notes that two French companies plan to hire 1,500 people to handle more than $2 billion in new orders for 16 billion satellites booked in 2000.

The Capitol Hill briefing was co-hosted by Reps. Christopher Cox (Newport Beach), Lucille Roybal-Allard (Los Angeles), Dana Rohrabacher (Huntington Beach), and Ellen Tauscher (Pleasanton). Attending the event were Reps. Rohrabacher, Ken Calvert (Corona), Lois Capps (Santa Barbara), Jane Harman (Torrance), Mike Honda (San Jose), Steve Horn (Long Beach), and Darrell Issa (Vista). Rep. Harman noted that export control policies need to balance two goods — competitiveness in the global economy and national security. Rep. Rohrabacher argued that it is important to treat potential enemies differently than allies, and he promoted his "zero gravity-zero tax" measure. Rep. Issa commented that, from a business standpoint, it appears that the U.S. is facing competition from a cheaper foreign product, and that the U.S. needs to build a better product. Rep. Calvert noted that the nation now has a less competitive domestic launch capability, and suggested that federal policies should address that problem. There was general consensus that California and the U.S. needed to develop greater domestic launch capabilities. Rep. Capps noted that an excellent launch facility for polar orbits is located at Vandenberg Air Force Base. Other participants agreed and also noted recent successes of SeaLaunch efforts based in Long Beach.

The study, a seven-month study conducted by SIA and Futron Corporation under a State grant from the California Trade and Commerce Agency, surveyed and interviewed major California satellite manufacturers and subcontractors. Commercial satellite manufacturers employ more than 25,000 California skilled workers, engineers and executives.

For more information, go to the CSTA website at http://www.csta.net .

Senate Hearing On Export Administration Act Reauthorization

On Wednesday, February 7, the Senate Banking Committee held a "Hearing on Establishing an Effective Modern Framework for Export Controls," focused on S.149, the Export Administration Act of 2001, which reauthorizes the EAA before it expires on August 20, 2001.

Committee Chairman Phil Gramm (TX) opened the hearing, commenting on the dual goals of export policy, "On one hand, we have a goal to dominate the production of high-tech items in the world. … We want to be at the cutting edge of the world’s commercial markets and, at the same time, as the preeminent defender of freedom and right in the world, we want, to the degree we can and at prices we’re willing to pay, to prevent adversaries and would-be hostile forces from getting access to technology that could endanger our interests, our freedom and our lives." Gramm commented that S. 149 "is based on the premise that we need to build a higher wall around a smaller number of items and that we need to have stiff penalties for people who, on a knowing and willful basis, violate the law." The bill would allow for prospective changes in thresholds for licensing of technology products as they become broadly commercialized, a system which Gramm called "clearly better than having to fool around with an application process for a technology that is already widely available."

Also making statements in favor of the bill were co-authors Jim Bunning (KY) and Michael Enzi (WY). The statements, as well as prepared witness testimony, are available on the web at http://www.senate.gov/~banking/01_02hrg/020701/index.htm .

Testifying at the hearing was Dan Hoydysh, Director of Trade, Public Policy & Government Affairs at the Unisys Corporation and co-chair of the Computer Coalition for Responsible Exports (CCRE). He advocated repealing the computer control requirements in the National Defense Authorization Act (NDAA); requiring the Secretary of Commerce to review the National Security Control List on a continuing basis; and clarifying that a relevant Risk Assessment Factor is whether the capability or performance provided by an item can be effectively controlled. He testified that as a general rule, "it is a bad idea to legislate static technological standards to address dynamic technological challenges. The NDAA violates this principle by requiring the President to use the MTOPS (millions of theoretical operations per second) metric to measure computer performance and set export control thresholds based on Country Tiers. Although the Department of Defense and the General Accounting Office now consider the NDAA approach to be ‘ineffective,’ the NDAA severely limits the authority of the President to determine both what computers should be controlled and how they may be controlled."

Paul Freedenberg, Government Relations Director for the Association for Manufacturing Technology (whose members make machine tools, manufacturing software, and measurement devices) and a former Under Secretary for Export Administration in the Reagan Administration, emphasized that while U.S. export control policy is "ostensibly aimed at keeping dangerous technology out of the hands of the so-called pariahs, or rogue states, the really important issues revolve around the question of what to do about China. Unfortunately, the China issue is being addressed unilaterally by our Government, because there is absolutely no consensus within the Western alliance about how to treat technology transfer to China." He added that, "it is unclear what U.S. technology transfer policy toward China is. China is obviously seen as a major trading partner, and great effort is put forth to ensure that U.S. companies obtain a major share of the China market, which is predicted to be the largest in the world in most capital goods categories over the next decade. Clearly, however, China is also viewed by U.S. licensing authorities as a potential technology transfer risk. This is reflected in the fact that the U.S. Government is far more rigorous (and more time-consuming) than any other industrialized state in reviewing and disapproving licenses for exports to China." He called the media’s perception that the U.S. is lax with regard to it’s China export policy a "myth", adding "The U.S. Government has consistently been by far the most rigorous with regard to reviewing license applications for exports to China. [Our allies] simply do not share our assessment of the risk factors involved in technology transfer to China and have generally maintained a far less stringent licensing policy." He noted that, "Official licensing statistics demonstrate that the United States Government is far more likely to disapprove machine tool licenses for China than any of our European competitors."

Larry Christensen, Vice President of International Trade Content for Vastera Incorporated and representing AeA (formerly the American Electronics Association), testified in support of a new EAA. He recommended that the Committee: alter definitions in the act to expressly exclude transfers of data, technology or source code within a company; specify that controlled items exclude those that fall below reasonable low value standards; consider development of a tiered system similar the U.S. Customs Service’s ranking of offenses as negligence, gross negligence, and fraud, with a corresponding tiered schedule of penalties; eliminate the current five-tier country system; change language to accommodate future changes, such as the term "is or will be available"; ensure staff at the Export Administration are trained regarding the latest technologies; and repeal the provisions of the NDAA relating to high performance computers.

California Delegation Members Meet With Bay-Delta Stakeholders

Senator Feinstein along with Reps. Ken Calvert, Wally Herger, George Radanovich, Cal Dooley and John Doolittle met with Bay-Delta stakeholders on Thursday February 1 to discuss Feinstein’s draft CALFED legislation. Also is attendance was Sue Ellen Wooldridge, Deputy Chief of Staff to Interior Secretary Gale Norton

The proposed legislation, "California Water Supply and Ecosystem Enhancement Act of 2001" would authorize the secretary to implement the Bay-Delta Program as well as two new programs, the Water Supply Program and the Land Retirement Program. Current draft bill language states it is the intent of Congress that the Bay-Delta Program result in a "balanced implementation of projects" in the following eight program areas: Water storage; Water Conveyance; Water Use Efficiency; Ecosystem Restoration; Watershed management; Levee System Integrity; Water Transfers; and Water Quality. The bill also authorizes $2.4 billion for CALFED, estimating the total federal and non-federal share of the cost of carrying out the program will be $8.4 billion. Stakeholders at the meeting on February 1 were asked to provide comment on the proposed legislation by February 9.

Senate Committee Holds Hearing on Medical Records Privacy

On Thursday February 8, the Senate Committee on Health, Education, Labor and Pensions held a hearing on "Making Patient Privacy a Reality: Does the Final HHS Regulation Get the Job Done?" Through the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Congress sought to protect the privacy of individuals’ medical information. In December 2000 the Department of Health and Human Services released the final regulations on privacy standards, requiring most entities to comply by February 26, 2003.

The committee heard testimony from Leslie G. Aronovitz, Director Health Care – Program Administration and Integrity Issues, US GAO who reported that at the request of the committee the GAO obtained the perspectives on the regulations of entities impacted by them. The GAO contacted 17 national organizations representing patients, health care providers, accrediting bodies, state officials, employers, insurance companies and research and pharmaceutical groups.

The GAO found that HHS was responsive in addressing concerns and comments to the draft regulation. However, from the interview, it was evident that many groups had concerns about the following: complexity of the regulation; requirements for entities to obtain patient consent or authorization prior to disclosing or using personal health information; how regulated entities will apply the privacy provisions to their business associates; the provision that more stringent state privacy requirements preempt the federal regulation; and the feasibility and cost of implementing the regulation in the time allotted.

Along with the GAO the committee was also scheduled to hear testimony from Jalori Goldman, Director Health Privacy Project at Georgetown University; Jane Greenman, American Benefits Council; John Houston, American Hospital Association; Judith Lichtman, National Partnership for Women and Families; Dr. G. Richard Smith, Association of American Medical Colleges; and Robert Heird, BlueCross BlueShield Association. The GAO testimony can be viewed in its entirety at http://www.gao.gov under reports, and for updates on posting of other testimony please visit the committee website: http://www.senate.gov/~labor/ .

PPIC Report on Effects of Welfare Reform In The Workplace

The Public Policy Institute of California recently released a study entitled Employers and Welfare Recipients: The Effects of Welfare Reform in the Workplace which finds that many employers have hired welfare recipients for positions paying above minimum wage. The report cautions that the willingness of employers to hire these workers appears to be tied to the tight labor market in the country today so that many recipients still may face difficulty finding employment.

The study, which is based on a detailed survey conducted in 1998 and 1999 of over 3,000 employers in Los Angeles, Chicago, Cleveland and Milwaukee, found that almost all employers expressed a willingness to hire welfare recipients and 30-40% of them have hired recipients over the past two years. The survey also found that demand for welfare recipients is five times greater in businesses with higher proportions of vacant positions than in those with fewer openings. These results reportedly suggest that the current demand for welfare recipient workers will diminish significantly as the economy slows and the employment opportunities decrease accordingly.

The study also examines employers’ perception of welfare recipient workers and the quality of their work comparable to other workers, as well as the role of race and education in employment opportunities. In looking at Los Angeles specifically, researchers found that employers report hiring fewer welfare recipients compared with other cities in the study, but they rate the quality of workers higher than in than other regions. The study also indicates that jobs in Los Angeles pay better than average wages — approximately $7.83/hour — but only 59% of these jobs provide health benefits.

The authors of the study offer policy recommendations based on research findings such as investment in training and support services enabling recipients to experience employment security and wage growth and the development of other employment options such as community service jobs. The report can be viewed in its entirety at the PPIC website, http://www.ppic.org .

Software CEOs Present Priorities to Bush Administration

On Wednesday February 7 CEOs of leading high technology companies represented by the Business Software Alliance (BSA) presented priorities to the Bush Administration. In a letter to the new administration the CEOs listed their top three priorities as intellectual property protection, trade and a world-class workforce.

The CEOs asked the Administration to support strong domestic and international enforcement of copyright protection, noting that software theft results in economic harm to their companies as well as local, state and federal treasuries which depend on tax revenues. The letter also requests implementation of trade liberalization through the following means: multilateral negotiations within the World Trade Organization; the conclusion of regional free trade agreements; and bilateral trade agreements.

In listing their priorities to the Administration, the letter also advocated for "aggressive improvements" in education, specifically in the areas of science and math to address the ever increasing demand for skilled employees in the high tech industry. They expressed support for granting H-1B visas to hire foreign professional qualified for industry jobs. BSA also highlights the following as issues impacting the high tech industry: on-line software theft, government competition, Internet security and consumer privacy protection.

The letter which was signed by CEOs from 12 high tech companies, can be viewed in its entirety at http://www.bsa.org .

Los Angeles Housing/Business Summit

A forum entitled "Building Together: Los Angeles Housing Business Summit" is scheduled for Friday, February 23, at the Biltmore Hotel in Los Angeles. The forum which is being organized by the Southern California Association of Non-Profit Housing (SCANPH) and Housing Los Angeles will address issues such as cost of housing and its impact on local business, land use reform, slum housing and the City’s financial investment in the development of affordable housing.

The Summit will bring together business leaders, economists, housing developers, housing advocates, lenders as well as state and local government officials in an effort to address the housing crisis and to identify the roles of both the public and private sectors in responding to the housing situation. For more information contact SCANPH at 213-480-1249.

Delegation to Sponsor February 13 Election Reform Briefing

On Tuesday, February 13, from 10:00 to 11:00 am, in room 2226 Rayburn, election reform experts from Booz-Allen & Hamilton will give a briefing regarding suggestions for helping federal, state, and local authorities cope with election reform issues.

Recently, the firm helped the National Association of Secretaries of State (NASS) Elections Standards Task Force develop its newly released recommendations for improving the election process. They also worked with the State of California in conducting independent verification and validation of the California voter registration system. Finally, Booz-Allen helped the Department of Defense Federal Voting Assistance Program develop an Internet-based prototype system for military and overseas voters used in the 2000 elections.

The briefing is co-hosted by Hon. Jerry Lewis, Chair of the California Republican Congressional Delegation, Hon. Sam Farr, Chair of the California Democratic Congressional Delegation, and the California Institute.

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