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California Capitol Hill Bulletin

                Volume 8, Bulletin 23 — July 19, 2001    [or see pdf version]

Senate Energy Panel Takes Up CALFED Reauthorization; Senate Fights Off Reduction In CALFED Funds

Senate Appropriations Reports Commerce, Justice Approps; SCAAP Funded at $265 Million; House Passes Its Bill

House Appropriators Critical of FEMA Disaster Insurance Requirements; Senate Language Better Than in Past Bills

Energy & Commerce Rejects California Oxygenate Waiver

House & Senate Committees Consider Mexican Truck Issue

Senate Passes Energy and Water Appropriations

House Votes For Annual Normal Trade Relations Extension For China

UCLA Anderson Forecasters Predict California and U.S. Recession

House Holds Hearing On Administration’s Principles to Strengthen and Modernize Medicare

Senate Appropriations Committee Approves Agriculture Bill

Education Conference Begins

PPIC Releases Survey: Residents Still Concerned About Energy Crisis

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 IBM Corp.

Senate Energy Panel Takes Up CALFED Reauthorization; Senate Fights Off Reduction In CALFED Funds

On Thursday, July 19, the Water and Power Subcommittee of the Senate Energy and Natural Resources Committee held a hearing on S. 976 to reauthorize the CALFED Bay-Delta restoration project. Senator Dianne Feinstein is the bill’s author. It would authorize a wide range of environmental and water projects over seven years to protect and restore endangered habitats and ecosystems; reauthorize the CALFED federal-state partnership; and create additional off-stream water storage so that more water from wet years can be used during dry years.

The Subcommittee, chaired by Sen. Feinstein, heard from numerous witnesses, including: Senator Barbara Boxer, and Reps. George Miller (Martinez) and Ellen Tauscher (Alamo). In her opening remarks, Sen. Feinstein explained two major changes she intends to make to S. 976. The first would amend the "assurances" language in her bill to delete the mandate that the south of the Delta agricultural users receive 65-70 percent of their contractual water allocations in normal water years. Instead, the language provides that it is the intention that these water delivery percentages are met. The second deletes the pre-authorization provisions for three specific projects (the Delta wetlands, Shasta Dam, and Los Vaqueros Reservoir) and instead establishes an expedited congressional consideration process to approve the projects. All three members complimented Senator Feinstein on her efforts to continue to refine the provisions of S. 976. Rep. Tauscher supported the proposed changes on the assurances language and expedited procedure language. Sen. Boxer and Rep. Miller, however, expressed concerns that the two changes needed further clarification. Both were worried that the assurances language was not sufficiently clear enough to prevent future litigation over its meaning, and that the expedited procedure for project approval did not allow for amendments during House and Senate consideration.

U.S. Secretary of the Interior Gale Norton and California Resources Agency Secretary Mary Nichols also testified. Sec. Norton testified that Interior has some concerns with the Feinstein bill, but because staffing at the agency was still ongoing, she was unable at this time to specify changes the Administration would like to see. She pledged to delineate the agency’s proposed changes as soon as possible. Sec. Nichols testified that the state supports the Feinstein bill and will continue working with all parties to ensure support for a reauthorization bill this year.

Other witnesses included Steve Hall of the Association of California Water Agencies, and Philip Pace of the Metropolitan Water District of Southern California, who stressed the critical need for a CALFED reauthorization bill and urged the Committee to expeditiously consider the bill.

For the testimony of other witnesses, contact the Subcommittee at 202-224-4103.

On a related issue, during consideration of the FY02 Energy and Water Appropriations by the Senate on Wednesday, July 18, Senators Dianne Feinstein and Barbara Boxer led the fight to defeat an amendment to reduce the CALFED funding in the bill. The bill contains $40 million for CALFED projects. See, Bulletin, Vol. 8, No. 22 (7/12/01). Senator Frank Murkowski (AK) was unsuccessful in offering an amendment to strip $10 million from that funding.


Senate Appropriations Reports Commerce, Justice Approps; SCAAP Funded at $265 Million; House Passes Its Bill

On Thursday, July 19, the Senate Appropriations Committee approved its version of the FY02 Commerce, Justice, State Appropriations bill. The bill included $265 million in funding for the State Criminal Alien Assistance Program (SCAAP) to partially reimburse the states for the costs of incarcerating illegal criminal aliens. This is the same funding level requested by the Administration in its budget, and is $300 million less than the FY01 appropriation and this year’s FY02 House funding proposal of $565 million.

Senator Dianne Feinstein is expected to engage in a colloquy with Appropriations’ Chair Robert Byrd (WVA) on the floor during full Senate consideration to elicit support for accepting the House funding level during conference.

The bill also contains $67 million for the Immigration and Naturalization Service to reduce its backlog, and $75 million for new Border Patrol Agents.

In the meantime, on Wednesday, July 18, the House passed its version of the CJS Appropriations, H.R. 2500, by a vote of 408-19. During floor consideration, the House defeated an amendment that would have required a Census Bureau study on how it counts Hispanics. The amendment failed in a tie vote of 215-215. The $38.5 billion bill is about $600 million more than the President’s request. The Justice Department is funded at $21.5 billion, $623 million more than the President’s request and $672 million than in FY01. See, Bulletin, Vol. 8, No. 22 (7/12/01).

The Institute will provide detailed analyses of the House and Senate versions of the CJS appropriations in the near future.


House Appropriators Critical of FEMA Disaster Insurance Requirements; Senate Language Better Than in Past Bills

The House Appropriations Committee report on the VA-HUD-Independent Agencies funding bill, approved by the Committee on Tuesday, July 17, expresses the Committee’s concern about the Federal Emergency Management Agency’s (FEMA) "ill conceived" proposal to require public buildings to obtain disaster insurance for such hazards as earthquakes. FEMA has been unable to show that earthquake insurance would be available in California and, even if so, that the cost to public entities would be fair and reasonable. The bipartisan California Congressional Delegation has expressed their overwhelming opposition to the FEMA plan.

The House appropriators’ report opines that, "a requirement for state, local, and private non-profit entities to carry building insurance, is also of dubious merit. The Committee remains concerned that requiring insurance as a condition of receiving public assistance exceeds the direction provided to FEMA under the Stafford Act, discourages attempts to mitigate damage before it occurs, assumes an unproven premise regarding the insurance market’s treatment of disasters and the availability, affordability and adequacy of coverage for such insurance. The Committee strongly believes that imposing additional disaster cost burdens on states, municipalities, and private non-profit hospitals and universities is ill-conceived."

The House report added its concern that, "FEMA has not conducted a thorough cost-benefit analysis or conducted extensive outreach with potentially affected entities, particularly those entities that are susceptible to catastrophic earthquakes. The Committee directs FEMA not to initiate a rulemaking process until a comprehensive analysis has been conducted which concludes that insurance is available and affordable for all types of perils."

Importantly, the Senate version of the bill has language which is much more neutral than in prior years. In past Congresses, the Senate had pushed FEMA to adopt a disaster insurance rule while the House had opposed it, so the Senate language is a significant victory for California. This year’s Senate report language states, "The Committee directs FEMA to prepare a thorough cost-benefit analysis and conduct extensive outreach to potentially affected communities prior to issuing any rule or regulation relating to insuring public buildings. The Committee expects this matter to be a priority within the Agency."

The California Institute will review this and other California components of the House and Senate VA-HUD reports once they are made available publicly.


Energy & Commerce Rejects California Oxygenate Waiver

During consideration of the "Energy Advancement and Conservation Act of 2001" on July 18, the House Energy and Commerce declined to allow California an exemption from the EPA’s requirement that oxygenates be added to fuels in areas with high levels of air pollution. The vote against the amendment was 22-33. California is phasing out the use of MTBE due to contamination of water supplies, and the continued presence of an oxygenate requirement will force California to acquire ethanol as an alternative. Californians have expressed concern that ethanol may not be available in adequate supplies for the state. The entire 52-member 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). See, Bulletin, Vol. 8, No. 22 (7/12/01).

California members are expected to offer a similar amendment when the energy measure comes before the House of Representatives.


House & Senate Committees Consider Mexican Truck Issue

Both the Senate Commerce, Science, and Transportation Committee and the House Transportation Subcommittee on Highways and Transit held hearings on July 18 to consider the issue of Mexican-registered trucks operating in the United States. Under NAFTA, the U.S. will open the border to Mexican trucks, beyond the currently allowed 20-mile border zone, by January 1, 2002.

Secretary of Transportation Norman Mineta testified before both the House and Senate panels. He outlined the Department’s plan to implement inspections of Mexican trucks at U.S. border crossings. He stressed that every Mexican firm, vehicle, and driver seeking "authority to operate in the U.S. – at the border or beyond – must meet the identical safety and operating standards that apply to U.S. and Canadian carriers." He also testified that if the United States was unable to adequately inspect Mexican trucks by January of 2002, DOT would delay allowing the trucks to operate beyond the 20-mile border zone.

Nevertheless, Senator Barbara Boxer at the Senate hearing questioned DOT’s ability to protect public safety and environmental standards, pointing out the laxness of Mexican operating standards on such issues as hours of driving, vehicle emissions, hazardous materials transport, and cargo weight. Senator Boxer had asked the Committee to hold the hearing, because of her concerns. At the House hearing Rep. Bob Filner (San Diego) also argued that DOT would not be able to enforce U.S. requirements, and asserted that some truckers would use fraudulent insurance and inspection documents to thwart U.S. enforcement.

Both the House and Senate Transportation Appropriations bills contain language restricting the ability of Mexican-registered trucks to operate in the United States, with the House language being the most restrictive. See, Bulletin, Vol. 8, Nos. 21 (6/29/01) & 22 (7/12/01). Secretary Mineta testified that senior Administration officials would recommend that the President veto the House bill if its language survived conference, but may be willing to accept the less restrictive Senate language.

Others testifying at the hearings included: Peter F. Allgeier, Deputy United States Trade Representative; James Hoffa, General President, International Brotherhood of Teamsters; and Duane Acklie, Chairman, American Trucking Association. The testimony of all the witnesses can be obtained through the Committees’ websites at: and .


Senate Passes Energy and Water Appropriations

The Senate passed its version of the FY02 Energy and Water Appropriations on Thursday, July 19. Included in the bill is $135 million for California water resources, of which $40 million is targeted to CALFED Bay-Delta related projects. See, Bulletin, Vol. 8, No. 22 (7/12/01).

The bill also contains $22.13 million for Oakland Harbor renovation and dredging and $22.5 million for Sacramento Flood Control in the Army Corps of Engineers budget. Lake Tahoe is slated to receive $2 million in funding for wetlands development in South Lake Tahoe and the Salton Sea and All-American Canal received $800,000.

The bill provided $14 million for cleanup of the Lawrence Livermore National Laboratory Superfund sites. Additionally, $435 million was included for renewable energy research and development, which is $160 million above the President’s request.

The Institute will review California aspects of the Senate bill once the report is available.


House Votes For Annual Normal Trade Relations Extension For China

On Thursday, July 19, the House voted down a resolution that would have prevented the Bush Administration from extending Normal Trade Relations (NTR) to China for an additional year. The vote was 169-259. Even though Congress approved permanent NTR for China last year, the annual extension is needed because China has not acceded to the World Trade Organization, a condition of the PNTR approval. The resolution of disapproval was sponsored by Rep. Dana Rohrabacher (Huntington Beach).

The House Ways and Means Committee had reported the bill adversely by voice vote on July 12, following a hearing on the bill on July 10. See, Bulletin, Vol. 8, No. 22 (7/12/01).


UCLA Anderson Forecasters Predict California and U.S. Recession

Economists with the UCLA Anderson Forecast predict an 80% chance the U.S. will be faced with a recession by the first quarter of 2002. Economists expect sluggish growth nationally and warn of a possible technology sector recession with two consecutive quarters of negative growth. This national economic forecast and reports on the California economy and the energy crisis were presented during the UCLA Anderson Forecast conference on June 28.

California, according to economists, can expect a serious slowdown which will come very close to negative growth in real personal income and gross state product for the remainder of 2001. Much weaker growth in jobs through 2002 is expected and a rising unemployment rate will follow. According to Tom Lieser, a Senior Economist at Anderson, the state’s economy is entering its "most troublesome period" since the beginning of the 1990s. He indicated the downturn in information technology and the electric power crisis are particularly troublesome.

Economists also examined the impact on the energy crisis on the state’s economy, in it’s report Will the California Energy Crisis Derail the State’s Economy? The report offers an alternative view of the future of the state’s economy as a result of the energy crisis. Economists in the report consider the implications of the two solutions to the crisis: the "market-based scenario" in which retail rates of electricity are immediately increased to cover electricity wholesale costs; and the "state-takes-charge scenario"in which electricity users are insulated temporarily from the problem by low retail rates but end up paying for today’s electricity with higher future rates. The report describes the energy crisis as being a key factor in pushing the state into a recession.

For more information on the UCLA Anderson economic forecast for the State and the U.S. visit the Anderson website at .


House Holds Hearing On Administration’s Principles to Strengthen and Modernize Medicare

On Thursday, July 20, the House Ways and Mean Committee, chaired by Rep. Bill Thomas (Bakersfield), held a hearing on the Bush Administration’s principles to strengthen and modernize Medicare. The Administration unveiled its set of principles on July 12 and included a prescription drug benefit program. Secretary of Health and Human Services, the Hon. Tommy Thompson testified before the committee, providing greater detail on the Administration’s principles.

Thompson indicated the Administration believes Medicare reform should be guided by the following eight principles: 1. all seniors should have the option of a subsidized prescription drug benefit; 2. modernized Medicare should provide better coverage for preventive care and serious illness; 3. today’s beneficiaries and those approaching retirement should have the option of keeping the traditional plan with no changes; 4. Medicare should provide better health insurance options like those available to federal employees; 5. legislation should strengthen the program’s long-term financial security; 6. the management of Medicare should be strengthened; 7. regulations and administrative procedures should be updated and streamlined while an effort is made to reduce fraud; and 8. Medicare should encourage high quality health care for all seniors.

Thompson also discussed recent administrative actions including the creation of the Medicare prescription drug discount care program. Starting in the fall, under this program, beneficiaries will be able to chose among Medicare-endorsed prescription discount cards offered by competing programs and use the cards to buy prescriptions at discounts between 10-25% off retail prices. Other administrative actions discussed include the Secretary’s top to bottom review of the agencies within the department to find opportunities to streamline regulations.

To view Secretary Thompson’s testimony in its entirety visit the committee website at .


Senate Appropriations Committee Approves Agriculture Bill

On Tuesday, July 17, the Senate Appropriations Committee approved the Agriculture Appropriations bill for Fiscal Year 2002. The bill contains $12.2 million in funding for research and containment of Pierce’s Disease, including a $1.5 million competitive grant program for research into the disease. The bill also includes $36 million for the Fruit Fly Exclusion and Detection Program, of which $4 million is specifically for the detection and eradication of fruit flies in California .

Other California specific funding outlined in the bill includes:

— $1.5 million to U.C. Center for Exotic Pest Research;

— $2 million for the CA/NY Viticultural Consortium, which supports East and West Coast competitive grant programs;

— $550,000 for Binational Agricultural Research and Development (BARD); BARD was established as a cooperative program between Israel and the U.S. and concentrates its research on a variety of agricultural issues, including irrigated agriculture, disease with fruit tree crops, and viticultural practices;

— $2.5 million to conduct research into alternatives to Methyl Bromide, which is widely used to protect California’s high value crops and is scheduled to be phased out by 2005;

— $3.1 million for the management of Red Importe fire ants;

— $5 million to complete funding for the Western Human Nutrition facility at UC Davis;

— $2 million for Technology Transfer to Rural Areas, a way to provide information to farmers and other rural users on a variety of sustainable agriculture practices;

— $25 million to allow low-income citizens to purchase fresh fruits and vegetables at farmer’s markets; and

— $500,000 for the Central California Ozone Study (CCOS), which collects extensive meteorological data as part of a field study to improve the USDA’s meteorological forecasting ability.

The Institute recently released its analysis of the House Agriculture Appropriations bill and it is now posted on the California Institute website at . An analysis of the Senate Agriculture Appropriation’s bill will be prepared in the near future.

Education Conference Begins

On Thursday, July 19, a House-Senate conference committee convened for the first time to begin to negotiate differences between the respective versions of a bill to reauthorize most federal K-12 education programs. The negotiations are expected to continue throughout the upcoming August recess and into September. Rep. John Boehner (VA) will chair the conference, with Sen. Edward Kennedy (MA) serving as the lead Senate counterpart. The Senate bill authorizes $8.5 billion more in funding than the House bill, and funding differences will be a key negotiation point. For details regarding bill elements, see Bulletin, Vol. 8, No 19 (6/14/2001) & No. 15 (5/10/2001).


PPIC Releases Survey: Residents Still Concerned About Energy Crisis

On Thursday, July 19, the Public Policy Institute of California (PPIC) released its most recent survey of California residents. The results find Californians are more concerned than ever about the energy situation with 94% of residents indicating they view electricity as a problem for the state, and 56% listing it as the most important issue facing the state today. Nearly four in ten residents say that rising gasoline prices and higher electric bills have been a major problem for them economically.

Despite concern about energy, 57% of Californians surveyed urged environmental protection even if it means higher prices for gasoline and electricity. The survey also shows that Californians are conserving energy in large numbers, whether or not they report being affected by higher energy prices. Among the 2000 respondents, 39% would like to see more power plants, 25% prefer re-regulating the industry, 18% favor conservation, and 10% support federal price controls. The survey also showed, however, that 56% of residents supported Governor Davis on the issue of federal price controls.

Along with the energy crisis, the survey also examined the public’s opinions on federal and state leadership, education and the economy. To view the report on the survey in its entirety, visit the PPIC website; .

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