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California Capitol Hill Bulletin

                Volume 8, Bulletin 21 — June 29, 2001    [or see pdf version]

Unified Delegation Supports Waiving Reformulated Gas Oxygenate Rule

House Approps Approves CJS Bill; Restores SCAAP Funding

House Votes To Prevent Mexican Trucks From Operating In US

House Judiciary Holds Hearing on Internet Tax Moratorium

Pentagon Officials Renew Call for Base Closures

FERC Begins Overcharge Settlement Negotiations

Secretary Mineta Speaks at Golden State Roundtable Luncheon

House Passes Energy & Water Funding, Rejects NIF Cut Proposal

Senate Follows House in Approving 302(b) Allocations

House Subcommittee Holds Hearing on Brownfields Legislation

California Fuel Cell Partnership Briefing

Uninsured Californians: Improving Coverage in Congressional Districts

Unified Delegation Supports Waiving Reformulated Gas Oxygenate Rule

All 52 members of the California Congressional Delegation have co-sponsored a bill, H.R. 2270, to waive the requirement that California operate under the federal reformulated gasoline program (RFG). The main sponsors of the bill are Reps. Darrell Issa (Vista), Anna Eshoo (Atherton), Gary Condit (Ceres), and Christopher Cox (Newport Beach).

The bill is in response to the U. S. Environmental Protection Agency’s recent decision to deny California a waiver from the two percent oxygenate requirement under the federal RFG. H.R. 2270 amends the Clean Air Act Amendments of 1990 to permit the exclusive application of California State regulations on RFG, instead of the federal regulations, which forced the use of MTBE, an additive linked to groundwater contamination. See, Bulletin, Vol. 8, Nos. 19 (6/14/01) and 20 (6/21/01). Under the bill, the state’s regulations will be controlling, only if they will "achieve equivalent or greater emission reductions." California’s standards are more stringent than the U.S. regulations, and have been approved in the past by the EPA as part of California’s State Implementation Plan for emission reduction and, therefore, are federally enforceable.

Because EPA denied California’s waiver request, the state will be forced to use ethanol to meet the oxygenate requirement if H.R. 2270 is not enacted. The use of ethanol would raise the price of a gallon of gas in the state by several cents. Senator Dianne Feinstein has introduced a bill similar to H.R. 2270 in the Senate, S. 947.

House Approps Approves CJS Bill; Restores SCAAP Funding

On Wednesday, June 27, the Commerce, Justice, State Appropriations Subcommittee approved its FY02 appropriations by voice vote. The Subcommittee’s bill restores funding for the State Criminal Alien Assistance Program to $565 million, the same level as last year. The President’s budget recommended slashing funding by $300 million to $265 million. Historically, California has received about 40 percent of the SCAAP funding. In 2000, California state and local governments received about $241 million. The next highest recipient was New York with a total funding level of $114 million.

The $38.5 billion CJS bill includes a total of $21.5 billion for the Justice Department. The Immigration and Naturalization Service funding is set at $5.6 billion, a $130 million increase over the President’s request. The extra funding will go toward additional border patrol agents, increased detention and removal capacity, and continuation of interior enforcement, naturalization, and application backlog reduction initiatives.

An increase of $661 million over the President’s budget request is also included for state and local law enforcement assistance. The $4.3 billion total, however, is still $324 below the FY01 level. The total includes: $522 million for the Local Law Enforcement Block Grant program; $570 million for the Edward Byrne Memorial State and Local Law Enforcement Assistance Grant program; and $250 million for Juvenile Accountability Block Grant programs, in addition to the money for SCAAP. The Community Oriented Policing Services (COPS) program is funded at $1.01 billion, $158 million more than the President’s request and $17 million less than last year. The funding includes $150 million to provide local law enforcement with cutting edge technologies that help reduce crime and $48 million to fight the methamphetamine problem.

A detailed analysis of the CJS Appropriations bill will be prepared by the Institute after the full Appropriations Committee has considered the bill.

House Votes To Prevent Mexican Trucks From Operating In US

During floor consideration of the Transportation Appropriations bill (H.R. 2299) on Tuesday, June 26, the House voted, 285-143, to halt Bush Administration plans to allow Mexican trucks to operate in the United States. Under NAFTA provisions supported by the Administration, Mexican trucks would have been allowed to operate in the U.S. beginning next January.

The amendment will restrict Mexican registered trucks to a 20-mile commercial zone inside U.S. borders. It was authored by Reps. Martin Olav Sabo (MN) and Boy Ney (OH). Critics of the proposal to open U.S. highways to Mexican trucks argued that the majority of trucks would not meet U.S. safety and environmental standards and would pose a risk to public health and safety. Opponents of the amendment, however, argued that it discriminates against Mexico, because similar restrictions are not placed on Canadian-registered trucks, and will violate NAFTA, subjecting the U.S. to potential sanctions of $1 billion.

House Judiciary Holds Hearing on Internet Tax Moratorium

The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on two bills to extend the ban on Internet taxes. The bills, H.R. 1552 and H.R. 1675, were both introduced by Rep. Chris Cox (Newport Beach). H.R. 1552 extends for five years the ban on multiple and discriminatory taxes; permanently extends the ban on Internet access taxes; and ends the grandfathering of the handful of states (including California) that were taxing Internet access at the time the Internet Tax Freedom Act (ITFA) of 1998 was passed. H.R. 1675 differs in that it permanently bans multiple and discriminatory taxes on e-commerce.

ITFA imposed a three-year prohibition on new taxes imposed on Internet access and on multiple or discriminatory taxes on Internet commerce. The ITFA moratorium is set to expire October 21, 2001. Last year, the House voted 352-75 to extend the moratorium, but the Senate failed to act on the bill.

Rep. Cox testified in support of his bills, but urged the Subcommittee to give particular attention to H.R. 1675 which would permanently extend the entire moratorium. He outlined the proliferation of confusing Internet taxes that instigated the passage of ITFA in 1998. He also stressed that a "permanent extension is preferable precisely because the existing moratorium does not overreach. Because it bars only Internet access and other specialized Internet taxes, its fundamental structure is ideally suited to become permanent policy."

Virginia Gov. James Gilmore, Chairman of the Advisory Commission on Electronic Commerce, also testified. He pointed out several of the ideas that the Commission recommended in its report on Internet taxation, many of which extend beyond the issue of access taxes and multiple and discriminatory taxes, to include more far-reaching tax reform. He also testified that, at least as a start, the Congress should pass H.R. 1675 to permanently extend the moratorium, arguing that it is critical to maintaining a tax-free Internet and consistent with the Commission’s Report.

Michigan Governor John Engler testified on behalf of the National Governors Association. He argued that the states fully support a robust Internet, but it should not be "a way for buyers and sellers of goods and services to avoid their obligation to pay sales or use tax." He urged Congress to enact legislation giving states the authority to require remote sellers to collect and remit sales and use taxes for Internet transactions.

Other witnesses included: Mr. Robert Comfort, V.P., Tax and Tax Policy, Amazon.com, and member of the Information Technology Association of America. The testimony of all the witnesses can be obtained from the Committee’s website at: http://www.house.gov/judiciary.

Pentagon Officials Renew Call for Base Closures

In a hearing before the House Armed Services Committee on Thursday, June 28, Defense Secretary Donald Rumsfeld urged increased spending for the military and repeated the administration’s request for additional closures of U.S. bases. In order to simply keep pace with current force levels without modernization, he estimated that an additional $18.4 billion would be required in FY2003. Secretary Rumsfeld predicted that, by the end of 2001, the Administration will propose legislation to close additional facilities, perhaps as much as 25% of the current total capacity. He commented that not closing bases for the next nine years would cost an additional $7 billion annually, adding flatly, "We will need to close unneeded bases." Arguing for base closures, Secretary Rumsfeld predicted that "Under our Efficient Facilities Initiative, a 20-25% reduction in excess military bases and facilities could generate savings of several billion dollars annually. Legislation authorizing a new round of facilities rationalization in will be transmitted later this year."

Rumsfeld noted various items which could be funded if DoD reduced overall costs by 5%, including "Procure several hundred additional aircraft annually, rather than 189, to help meet reach the steady state requirements for Navy, Air Force, and Army aircraft $16 billion annually" ($82 billion over 5 years); "Increase defense-related science and technology funding from 2.7% to 3% of the DoD budget" ($1.2 billion annually); purchase three additional C-17 aircraft ($600 million); and make $730 million in bomber upgrades. Rumsfeld argued for President Bush’s FY02 budget request for additional defense funds, noting that, for example, the Navy needs 180 to 200 new aircraft per year at a cost of $11 billion simply to maintain current levels. He said that the 2001 budget amendment would provide for 97 aircraft at a cost of $8.4 billion, and that the 2002 Bush budget would provide for 88 aircraft at a cost of $8.3 billion.

Also testifying before the committee, Joint Chiefs of Staff Chairman, Gen. Henry Shelton, commented that reducing base inventories to bring installation infrastructure in line with personnel numbers could save roughly $3 billion annually. Gen. Shelton commented that, "we sorely need further base closure rounds as part of our overall recapitalization effort. According to the April 1998 DoD BRAC Report, we have 23% excess base capacity in the United States, a situation that directly impacts the ability of the Service Chiefs to provide, train, maintain, and equip today’s force. By removing validated excess capacity, we could save $3 billion per year in the long-term."

California was hit disproportionately hard by the first four rounds of military base closures, held in 1988, 1991, 1993 and 1995. Despite housing only 15% of the nation’s military personnel at the beginning of the closure process, California shouldered roughly 60% of the nation’s net personnel cuts from those four closure rounds. During the hearing, some committee members suggested that the Pentagon make public a list of bases which will absolutely not be considered for closure, in order to calm nervous communities. Rep. Floyd Spence (SC) recommended against base closures, commenting, "After you close a base you never get it back."

In other comments during the hearing, Secretary Rumsfeld stated that, while equipment has been used more frequently over the past 10 years, "procurement of new equipment fell significantly below the levels necessary to sustain existing forces – leading to steady increases in the average age of equipment." He referred to the phenomenon as a "procurement holiday." He also lamented the fact that "Basic research funding has declined by 11% since 1992, and RDT&E funding levels have declined 7.4% in the same period."

FERC Begins Overcharge Settlement Negotiations

On Monday, June 25, the Federal Energy Regulatory Commission (FERC) began two weeks of negotiations to settle lawsuits filed against electric power wholesalers in the deeply troubled California marketplace. Shortly before the negotiations were to begin, FERC expanded the scope of the conference to include activities in other Western states, rather than solely California. Participants in the conference included officials from various wholesale energy providers including Reliant, Duke, Enron, Mirant, Dynegy, and Williams. Claims for the period from May 2000 to May 2001 amount to nearly $9 billion in California alone, though some estimate the total excess cost is higher, while suppliers argue the level should be considerably lower. Claimants include PG&E, Southern California Edison, and the California Department of Water Resources. FERC asked Administrative Law Judge Curtis Wagner to give participants until July 10 to reach a settlement, after which time he should prepare a refund recommendation of his own.

Also this week, Governor Gray Davis met in Sacramento with FERC’s two new appointees, Commissioners Pat Wood and Nora Brownell. Wood is expected to become FERC Chairman in the fall.

Secretary Mineta Speaks at Golden State Roundtable Luncheon

On Wednesday, June 27, the California State Society hosted a Golden State Roundtable Luncheon featuring remarks by Transportation Secretary and former California Member of Congress, Norman Y. Mineta. As Secretary of Transportation, Mineta oversees an agency with a $58.7 billion budget. Before his appointment by President Bush, Mineta served as Secretary of Commerce under President Clinton and previously served over 20 years in the House of Representatives.

Mineta’s remarks focused on the several issues, including congestion in the field of aviation. He indicated that in 2001 there will be 6.8 million airline passengers and by 2010 this number will increase to over a billion. He discussed various issues related to aviation, including coordination between air traffic control, airlines and airports, as well as the need to expand the number of runways. Secretary Mineta discussed Highway and Transit funding, focusing on TEA-21 reauthorization. He also fielded questions form the audience on the Reauthorization of TEA-21 and other issues such as Regional Airport expansion and high-speed rail. As a California Member of Congress, Mineta chaired the Surface Transportation Subcommittee of Public Works and Transportation and was instrumental in linking the previously disparate highway and transit programs.

House Passes Energy & Water Funding, Rejects NIF Cut Proposal

During floor debate on the Energy and Water Appropriations bill on Thursday, June 28, the House resoundingly defeated a proposal to cut hundreds of millions in funding for the National Ignition Facility (NIF). The amendment, proposed by Rep. Dennis Kucinich (OH), was rejected by a vote of 91 to 331, with four out of five Californians voting no.

Rep. Ellen Tauscher (Pleasanton) commented that she shared the hope of amendment proponents to reduce nuclear proliferation but stated that "Our best hope for maintaining the reliability of our nuclear weapons without testing is a robust Stockpile Stewardship Program that includes the National Ignition Facility." She added, "The NIF is an essential component of our Stockpile Stewardship Program because it will allow us to create the conditions similar to those that exist within a nuclear explosion — without actually conducting live tests of nuclear weapons." She noted that, "The building housing the NIF is 98 percent complete and 70 percent of the laser glass has been produced and meets specifications."

Also on June 28, Senators Larry Craig (ID) and Dianne Feinstein introduced the Fusion Energy Sciences Act of 2001, which seeks to promote fusion energy research. The bill is a companion to H.R. 1781, which was introduced in May by Reps. Zoe Lofgren, Mike Honda, Randy "Duke" Cunningham, Darrel Issa, Ken Calvert, Jane Harman, Barbara Lee, Tauscher and Susan Davis For more information, see Bulletin, Vol. 8 , No. 15 (5/10/2001).

The California Institute has prepared an analysis of the FY2002 House Appropriations Bill for Energy and Water, which is available at http://www.calinst.org/pubs/ew02.htm .

Senate Follows House in Approving 302(b) Allocations

On June 21, 2001, the Senate Appropriations Committee approved subcommittee allocations for Fiscal Year 2002. The House Appropriations Committee set its funding levels earlier in the month. These so-called 302(b) allocations divvy the approved budget level among the 13 subcommittees of Appropriations. Earlier this year, Congress agreed that it plans to spend $661 billion in new budgeting authority and outlay $682 billion for ongoing obligations for FY 2002.

The division of funding between the two houses of Congress differed for some of the subcommittees. The House proposes to spend $1.7 billion more on budget authority for defense than does the Senate. The House figure is also higher for Labor-HHS-Education ($758 million), Military Construction ($506 million), and Interior ($414 million). The Senate, on the other hand, proposes to spend more than the House for Energy and Water ($1.4 billion), Transportation ($686 million), Agriculture ($573 million), Foreign Operations ($356 million) and Commerce-Justice-State ($$219 million).

The following table, with figures in millions of dollars, reflects discretionary funding levels for the upcoming fiscal year for budget authority and outlays for both houses.

Fiscal Year 2002 302(b) Allocation

House Subcommittee Holds Hearing on Brownfields Legislation

On Thursday, June 28, the House Committee on Energy and Commerce, Subcommittee on Environment and Hazardous Materials held a hearing on the Brownfields Revitalization and Environmental Restoration Act of 2001 (S.350), the Democratic Discussion Draft, and Rep. Paul Gillmor’s Discussion Draft. Among the witnesses at the hearing were: the Honorable Linda Fisher, Deputy Administrator of the U.S. Environmental Protection Agency; the Honorable J. Christian Bollwage on behalf of the U.S. Conference of Mayors; Mr. Gordon J. Johnson, National Association of Attorneys General; Mr. Javier Gonzales, National Association of Counties, and Mr. Leon Billings, National Conference of State Legislatures.

In her testimony, Ms. Fisher indicated the Administration supports the direction of many of the provisions being developed in Chairman Gillmor’s discussion draft. She indicated brownfields legislation should provide redevelopers with protection from federal Superfund liability and should ensure that states have the authority and resources to run their own brownfields programs. She also indicated support for legislation which streamlines and expedites the process by which grants are given to states and directs the EPA to work with the States to ensure that they employ high cleanup standards and allows EPA to enforce those standards.

Representing states’ interests and the National Conference of State Legislatures (NCSL) was Maryland State Delegate Leon Billings, who indicated brownfields legislation is a top priority for NCSL. He indicated NCSL supports legislation that defines brownfields in such a way as to separate them from Superfund sites, allows states to determine whether or not a site is a brownfield despite a federal statutory definition, and retains states’ primary responsibility for brownfields redevelopment programs. Billings stated NCSL supports brownfields legislation which would grandfather existing state voluntary cleanup programs and honor existing Memorandums of Agreement between states and the EPA. He also argued for increased federal funding for the assessment and cleanup of state brownfields.

To view the testimony of these and other witnesses please visit the committee website at http://www.house.gov/commerce .

California Fuel Cell Partnership Briefing

On Wednesday, June 27, the California Fuel Cell Partnership (CAFCP), based in West Sacramento, hosted a briefing for the California Congressional delegation on fuel cell vehicles. CAFCP, which is a collaboration of auto companies, fuel providers, fuel cell technology companies and government agencies, is the largest program in the world for demonstrating fuel cell vehicles.

Members of the partnership include DaimlerChrysler, Ford, General Motors, Honda, Hyundai, Nissan, Toyota, Volkswagen, Ballard Power Systems, International Fuel Cells, XCELLSiS, BP, ExxonMobil, Shell, Texaco, the California Air Resources Board, the California Energy Commission, the South Coast Air Quality Management District, the U.S. Department of Energy and the U.S. Department of Transportation.

During the briefing, CAFCP provided a status report on the Partnership’s efforts to advance the commercialization of fuel cell vehicles in California. According to CAFCP, vehicles run by fuel cell have zero or near-zero emissions, lower maintenance costs compared to conventional vehicles, and have the potential for increased fuel efficiency.

The Partnership is demonstrating fuel cell electric vehicles in California through 2003 under day to day driving conditions. It is exploring the path to commercializing fuel cell electric vehicles by examining such issues as infrastructure requirements, vehicle and fuel safety, market incentives and consumer acceptance. For more information on the Partnership visit the following website: http://www.fuelcellpartnership.org .

Uninsured Californians: Improving Coverage in Congressional Districts

The UCLA Center for Health Policy Research and the California Wellness Foundation co-sponsored a briefing on Thursday, June 28, entitled Uninsured Californians: Improving Coverage in Your Congressional District. The briefing provided an overview of the uninsured problem in California, an examination of uninsured children and adults in the states, as well as a discussion of employment based insurance coverage and Medicaid and the State Child Health Insurance Program (S-CHIP). Presenters at the briefing were Dr. E. Richard Brown, Director of the UCLA Center for Health Policy Research, two of the Center’s Senior Researchers, Dr. Ying-Ying Meng and Dr. Ninez Ponce, and Dr. Thomas Rice, Professor at the UCLA School of Public Health.

The briefing was based on two recently released reports, The State of Health Insurance in California: Recent Trends, Future Prospects and Uninsured Californians in Congressional Districts, 2000. Researchers have found that 85% of the uninsured are workers, while 15% are non-working families. The uninsured generally have low or moderate incomes, with 67% of the uninsured having incomes below 250% of the federal poverty level.

Researchers also found that while the rate of uninsured children improved in California, it remains higher than the national average. Latino and other children of color remain much more likely to be uninsured than non-Latino whites. Also family citizenship and immigration status still dramatically affect children’s coverage, with 41% of noncitizen children, 31% citizen children of non-citizen parents, 19% citizen children of naturalized parents, and 10% of citizen children with U.S. born parents being uninsured.

In the area of employment based insurance, researchers found job-based insurance is lower for nearly all demographic and employment groups in California than nationally. California employees are 1/3 more likely to work for an employer that does not offer health benefits. To address California’s uninsured problem, the UCLA Center for Health Policy Research recommends Congress restore Medicaid and S-CHIP benefits to legal immigrants who arrived after August 22, 1996 and expand Medicaid and S-CHIP coverage for low-income working parents and adults without children in the home.

To obtain copies of the reports discussed in the briefing or to obtain information on the uninsured in a particular Congressional District, see http://www.healthpolicy.ucla.edu .

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