California Capitol Hill Bulletin

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1 California Capitol Hill Bulletin, 4/30/97 Page 1 THE CALIFORNIA INSTITUTE FOR FEDERAL POLICY RESEARCH 419 New Jersey Avenue, SE, Washington, D.C Voice: Fax: ransdell@calinst.org California Capitol Hill Bulletin Volume 4, Bulletin April 24, 1997 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 edition is made possible in part by a computer server donation from Sun Microsystems. CALIFORNIA STATE LEGISLATORS & MEMBERS OF CONGRESS TO MEET IN D.C. On Tuesday, April 29, 47 members of the California State Legislature will meet in a historic session on Capitol Hill with the bipartisan California Congressional delegation. After a breakfast meeting hosted by Reps. Jerry Lewis and Lucille Roybal-Allard, respective chairs of the California House Republicans and Democrats, the state and federal legislators will meet for much of the day to discuss various issues of common state-wide concern. The session is part of the state legislature s annual visit to Washington from April 27 to 30. During their trip, the state legislators will also meet with various Administration officials to discuss such issues as ISTEA and highway funding, Medicaid and health care, immigrants and immigration, disaster relief, trade, water projects, and justice matters, among others. On Monday, April 27, from 8:00 to 9:15 a.m., the California Institute will host a breakfast briefing at Washington s Mayflower Hotel which will offer an overview of some of the federal issues that impact the state. For further information, contact the Institute. INSTITUTE LAUNCHES WEB PAGE ( & 97 ECONOMIC FACT BOOK In our ongoing effort to provide reliable and up-to-date resources on issues pertaining to the health and well-being of the California economy, the California Institute and its Economic Advisory

2 California Capitol Hill Bulletin, 4/30/97 Page 2 Council has published the California Institute Economic Fact Book, Spring 1997 edition, and has launched a new web page ( The Economic Fact Book is a 24-page desk reference with information on California's economy and other issues. We hope that the Economic Fact Book will provide answers for a few frequently-asked questions about California's economy including job growth, housing prices, average wages, employment, and balance of payments. The Institute s Economic Advisory Council (EAC) includes 21 of the state s top economists. EAC Director Joe Nation was the primary developer of the book, which will be updated periodically. The California Institute web page contains word-searchable versions of all publications from the Institute, including the weekly California Capitol Hill Bulletin, policy papers, special issue reports, and economic assessments. From the web page, users can access a unique searchable database with varied data on population, employment and labor, construction and real estate, prices, wages and income. In addition, the Institute's web page provides links to members of Congress, Institute advisors and sponsors, California state and local government sources, and other Californiaoriented public policy organizations. The web page can be accessed at URL address To receive a free copy of the Economic Fact Book by mail, or for further information about the Institute s web page, call In addition, the Economic Fact Book is available in Adobe Acrobat format on the Institute's web page. Copies of the Economic Fact Book are being delivered to the California Congressional delegation and to all California Institute Advisory Board members. DELEGATION LETTER URGING THE DEFENSE LOGISTICS AGENCY TO MAINTAIN STOCKTON FACILITY In response to the Defense Logistics Agency's (DLA) proposal to downsize and consolidate its regional distribution centers, Representatives Gary Condit (Ceres) and Richard Pombo (Stockton) have begun circulating a "Dear Colleague" letter urging the DLA to site its proposed single Defense Distribution Center at the Defense Distribution Region West (DDRW) center in Stockton. Closure of the Stockton facility would mark the 18th military installation in California to be closed and would translate into the loss of as many as 800 jobs in the area. "California has already been the victim of the most military facility closures in the country, suffering the loss of seventeen facilities," the letter states. (California suffered 60% of the nation s net job cuts during the four base closure rounds.) "Maintaining a credible core distribution depot on our western coast is critical to our military readiness and is clearly essential to preserving the vital interests of the United States, as well as the Pacific region," the letter adds. For more information, or if a member would like to sign the letter, contact either Randy Groves in Rep. Condit's office at x56131 or Jon Garcia in Rep. Pombo's office at x The deadline for signing the letter is Wednesday, April 30. Both Senators and 30 Representatives have already signed the letter. BOXER CIRCULATING DELEGATION LETTER URGING ACTION AGAINST COUNTRIES PIRATING VIDEO GAMES Sen. Barbara Boxer is circulating a letter to U. S. Trade Representative Charlene Barshefsky among the California delegation for signatures. The letter urges Ambassador Barshefsky to place five countries on the "Special 301" list as actively involved in video game product piracy. The five countries are: China, Taiwan, Hong Kong, Paraguay, and Venezuela. These countries were identified by the video game industry as major piracy countries. Under the Special 301 provisions of the Trade Act of 1974, the USTR reviews intellectual property protections in various countries annually. If a country does not protect these rights sufficiently, it can be placed on a "Priority," "Priority Watch," or "Watch" list, and the U.S. will focus

3 California Capitol Hill Bulletin, 4/30/97 Page 3 its efforts on exacting greater protection and enforcement for U.S. rights. The USTR will complete its compilation of the Special 301 lists by April 30. Piracy of video game products, according to Sen. Boxer, cost the industry $2.6 billion last year. Because of the importance of this industry to California, it is especially hard-hit by these losses. Any member wishing to sign the letter should contact either Karen Day, x48134, or Dorothy Patton, x48123, in Sen. Boxer's office. HOUSE PASSES PATENT REFORM BILL, BUT WATERS DOWN PUBLICATION PROVISION On Wednesday, the House by voice vote approved H.R. 400, the 21st Century Patent System Improvement Act of The bill will bring U.S. patent laws into harmony with other industrialized countries. Before the final vote, the House approved an amendment by Rep. Marcy Kaptur (Ohio) to strip the bill of its requirement that in most instances patent applications be published 18 months after the original filing date. Instead, the Kaptur amendment, adopted , provides that if a patent is not granted within five years, the application will be published if the Patent and Trademark Office determines it is in the national interest to do so. Proponents of the amendment argue that it is needed to protect small inventors, but opponents, especially high tecnology companies, insist that it will open the door again to submarine patents (see Bulletin Vol. 4, No. 7). The bill also converts the U.S. Patent and Trademark Office into a government corporation and ensures that all fees collected will be retained for use by the PTO, rather than diverted to the general treasury. The bill, without the Kaptur amendment, is widely supported by the high technology industry, and Rep. Zoe Lofgren (San Jose) has been one of its strongest advocates in the House. It is expected that the high technology industry will seek to reinsert the 18 month patent publication term when the bill is considered in the Senate. HOUSE PASSES NASA, NSF AND NIST AUTHORIZATIONS; MORE NEXT WEEK The first of several major authorizations originating in the House Science Committee were passed today with relatively little opposition. H.R (reauthorizing the National Science Foundation at $7.1 billion over two fiscal years) and H.R (reauthorizing the National Institutes of Standards and Technology at $1.24 billion over two years) were each passed by voice vote this afternoon. In 1993, 15.2% of NSF research and development funds were spent in California. Next, the House took up the H.R. 1275, a $13.9 billion authorization bill for the National Aeronautics and Space Administration. On a vote of , the House resoundingly defeated an amendment by Tim Roemer (Indiana) to delete funds for the space station. Like NIST and NSF, the NASA authorization bill was passed by voice vote. More than half of NASA funds are spent on research and development activities. In 1993, nearly one third of those R&D funds were spent in California. More science bills will be considered next week, including EPA (H.R. 1276), DOE (H.R. 1277), and NOAA (H.R. 1278). California concerns during deliberations on the Department of Energy bill will include high energy physics, fusion energy, basic sciences, and solar & renewables. ISTEA TASK FORCE HOLDS CALIFORNIA SUMMITS; WILSON AND OTHERS ENDORSE TASK FORCE PROPOSAL In an effort to provide local transportation officials and members of the California ISTEA Task Force an opportunity to discuss how to protect and advance California's interests during the Intermodal Surface Transportation reauthorization process, several members of the Task Force hosted California town hall meetings over the past two weeks. In addition to a meeting with the California Association of Governments, summits were held in San Diego and Diamond Bar to discuss the Task Force s goals and guiding principles for the upcoming transportation reauthorization as well as local transportation needs and priorities.

4 California Capitol Hill Bulletin, 4/30/97 Page 4 On a related note, the ISTEA reauthorization agenda fashioned by the Task Force, and signed by all 52 California members, is already receiving widespread support outside the delegation. In a letter to Rep. Jay Kim sent earlier this week, Governor Wilson expressed his support for the Task Force s proposals and their efforts to maximize California s return on our federal contributions. The following California organizations have also endorsed the Task Force s ISTEA plan: SANDAL, SFMTC, LAMTA, SCAG, Sacramento COG, Los Angeles County, Orange County, OCTA, RCTC, the Cities of Anaheim, Chino, Chino Hills, Diamond Bar, Claremont, Ontario, and Yorba Linda, the Anaheim Chamber of Commerce, the Chino Valley Chamber of Commerce and the Gateway Cities Council of Governments. HORN INTRODUCES VOTER ELIGIBILITY VERIFICATION ACT Rep. Steve Horn (Long Beach) has introduced a bill intended to limit voter fraud. The bill would allow local election officials to contact the Social Security Administration and the Immigration and Naturalization Act to verify the citizenship of an individual submitting a voter registration application. The bill does not require that election officials use the verification process, and contains restrictions aimed at preventing discrimination and privacy violations. Members interested in cosponsoring the bill should contact Matthew Phillips at x HOUSE APPROPRIATIONS AGREES ON DISASTER ASSISTANCE PLAN Today the House Appropriations Committee passed, by voice vote, the fiscal 1997 supplemental appropriations bill to pay for military activities in Bosnia as well as needed natural disaster relief. The Disaster Recovery Act of 1997 now totals $8.4 billion, including $5.5 billion in emergency natural disaster spending, $2 billion for overseas peacekeeping and restoration of military readiness accounts depleted by the Bosnia mission, and $103.5 million in non-emergency supplemental appropriations. Spending for the measure will be paid for with rescissions and offsets included in the bill. Early estimates indicate that California would receive just over $2 billion to cover cleanup costs, government reconstruction loans, and emergency levee maintenance and repair required after its recent floods. Specifically, California would receive the following: $274 million for the activities in California undertaken by the Federal Emergency Management Agency (FEMA); $208 million for repair work by the Department of Transportation; $320 million for Army Corps of Engineers emergency repairs; $201 million for Department of Interior repairs, most of which will go to Yosemite National Park; $21 million to the Agriculture Department's Natural Resources Conservation Service; and $5.5 million to the Department of Commerce's fish hatcheries programs in California. Additionally, due to efforts by Reps. Vic Fazio (West Sacramento) and Gary Condit (Ceres), the measure contains $9 million for tree assistance programs which will assist California fruit and nut growers in rehabilitating and replanting their orchards. IMMIGRATION SUBCOMMITTEE HOLDS BORDER ENFORCEMENT OVERSIGHT HEARING The Immigration Subcommittee of the House Judiciary Committee held a hearing on Wednesday to examine efforts to halt the flow of drugs and illegal immigrants at the souther border of the U.S. In his opening statement, Chairman Lamar Smith (TX) pointed out that for the first time apprehensions of illegal immigrants along the Texas border exceeded those in California during the first five months of Fiscal Year He stated, however, that the Clinton Administration's budget requested only enough funding for 500 new Border Patrol Agents, rather than the 1,000 authorized by Congress in last year's immigration bill. He also was concerned that funding for drug interdiction has decreased by 39 percent in inflation-adjusted dollars over the last four years. Rep. Mel Watt (N.C.), ranking member of the Subcommittee, expressed concern that if Congress tried to micromanage the INS it would become counterproductive and harm effective border control.

5 California Capitol Hill Bulletin, 4/30/97 Page 5 Rep. Silvestre Reyes (TX), a 26-year Border Patrol veteran before being elected to Congress in 1996, testified on his recommendations for increasing the effectiveness of the Border Patrol. Primarily, Rep. Reyes recommended that the Border Patrol be moved from the INS into a separate agency. He cited the inherent conflict between the INS's mission to facilitate services to immigrants on the one hand, and on the other the Border Patrol's mission of apprehending, detaining, and deporting immigrants. He also recommended that the responsibilities of agencies, such as Customs, INS, and the U.S. Department of Agriculture, with various border control missions be consolidated to increase effectiveness. Alan Bersin, U. S. Attorney for the Southern District of California and the Attorney General's representative to the Southwest Border, also testified. He stressed that unless the various push-pull factors that draw illegal immigrants to the United States can be controlled, no amount of money or personnel can successfully close the border. He stated that the border can be managed, as Operation Gatekeeper in California and Hold the Line in Texas have shown, but the solution to stopping illegal drug and immigrant flows lies in the internal economics of Mexico and the draw of employment in the U.S. Others testifying included representatives from the INS, Customs Service, and Departments of State and Agriculture, as well as private citizens and scholars. The testimony from the hearing can be obtained through the Committee's Internet website at SUBCOMMITTEE HEARING ON FDA REFORM AND PRESCRIPTION DRUG USER FEE The House Commerce Committee's Health and Environment Subcommittee held a hearing on Wednesday on reauthorizing the Prescription Drug User Fee Act (PDUFA) and Food and Drug Administration Reform. FDA reform has been a top priority for the nation s biotechnology and biomedical firms, one-third of which are located in California. The Subcommittee heard from several panels of witnesses, including Michael Friedman, the Lead Deputy Commissioner of the FDA, and Gordon Binder, Chairman & CEO of Amgen, Inc., representing the Pharmaceutical Research & Manufacturers of America and the Biotechnology Industry Organization. Mr. Binder is also Chairman of the Board of the California Healthcare Institute. Dr. Friedman testified that the additional resources provided by PDUFA have allowed the FDA to make decisions on breakthrough drugs in six months or less, and on all other drugs in 12 months or less. As compared to the Agency's performance in the number of drugs approved and the time to approval before PDUFA was enacted, he stated that FDA last year approved twice as many drugs in half the time. He noted that reauthorization of PDUFA, which will expire in October, is a major priority for the Agency. Dr. Friedman also argued that the FDA has made advances recently in streamlining and improving its management and regulatory systems, and pointed out other areas where the Agency is working with the drugs and biologics industry, as well as patient and consumer groups to continue to improve its performance. For instance, Dr. Friedman cited as an example that FDA is evaluating its drug application requirements to see if certain parts that require the submission of unnecessary or duplicative data can be eliminated. FDA is also working with interested parties on reforming requirements on when a manufacturer must get Agency approval of manufacturing changes, dispute resolution, the use of advisory committees, and other issues. Dr. Friedman stated that some of the proposed changes being discussed would require only administrative changes, while other would require legislation. Mr. Binder testified in strong support for the reauthorization of PDUFA. He stated that the $327 million in user fees paid by industry from enabled FDA to hire 600 new reviewers and cut review times from 29.2 months in 1992 to 15.5 months in 1996, allowing safe and effective new medicines to reach patients 14 months earlier. Mr. Binder also stressed that FDA's funding levels must at least remain level, or it will negate the progress that has been made under PDUFA.

6 California Capitol Hill Bulletin, 4/30/97 Page 6 On FDA reform, Mr. Binder outlined several proposals supported by the industry that emerged during the 104th Congress. A principal proposal called for eliminating the unjustifiable difference between Phase III clinical trials for biological products and for drugs. Because the requirements were enacted in two different laws, the FDA requires only one Phase III clinical trial to demonstrate effectiveness for biological products, but two trials for drug products. The industry's proposal would eliminate the need for a second trial for drug products. Another proposal would partially deregulate the requirement that all but the most minor manufacturing changes receive FDA approval. Under the proposal, as recommended by the Clinton Administration in its "Reinventing Government" initiative, FDA would determine the types of changes that must be pre-approved, those that could be communicated to the agency without prior approval, and those that would only have to be reported as part of a company's annual report. Copies of the testimony of all witnesses are available from the Commerce Committee in Room 2125 Rayburn House Office Building, or through the Committee's website at CALIFORNIA LEGAL IMMIGRATION JUMPS 20% IN 1996; NATION EXPERIENCES LARGE RISE AS WELL The Immigration and Naturalization Service released a report this week showing dramatic increases in the number of legal immigrants entering the U.S. last year. According to INS statistics, the U.S. admitted approximately 916,000 legal immigrants in fiscal year 1996, an increase of over 35,000, or 27%, over the previous year. As expected, California again tops the list as the area of intended residence for the immigrants. In 1996, California was home to 201,529 (or 22%) of the new legal immigrants, an increase of 21.1% over the prior year s admissions. The Los Angeles- Long Beach area alone accommodated 7% of the immigrants. The nine other California metropolitan areas which placed in the top 25 for intended residence included: San Diego (8th with 18,226); San Francisco (9th with 18,171); Orange County (11th with 17,580); Oakland (13th with 15,759); San Jose (15th with 13,854); and Riverside-San Bernardino (21st with 10,314). Of those immigrants choosing California residence, the largest number (64,238 or 32%) come from Mexico. Other countries well represented in California s legal immigrant population were: the Philippines (23, %); Vietnam (13, %); and, China (10, %). For a copy of the INS report, contact the Institute at STATE BILLS PROPOSE TAX INCENTIVES FOR MILITARY BASES, FIGHTER WORK In an effort to maintain defense production and to attract new businesses to California's deserted military facilities, Assemblymembers and Governor Wilson have formed task forces and supported legislation aimed at expediting base clean-up and creating tax-incentive focused "military enterprise zones," and one would provide state tax incentives for California-based jet fighter work. Governor Wilson, in April 8 letters to California delegation members, seeks assistance in any way possible to help ensure that the presence of toxic contamination at all base closure sites in California is neutralized in a timely fashion so that the land can be leased back to the state and local communities. In a letter to Secretary of Defense William Cohen, Wilson notes that to date only three percent of Base Realignment and Closure (BRAC) property has been transferred by deed from federal ownership and only 19 percent leased to local communities pending clean-up of toxic contamination. Wilson also makes note of the importance of adopting the California Defense Conversion Council's recommendation that uniform, expedited procedures be used by all services to ensure the swift execution of interim leases. In the California Assembly, Barbara Alby (Sacramento) recently introduced legislation that would provide tax incentives for McClellan Air Force Base in an effort to help diffuse the potential loss of over 2,000-plus jobs when the base is slated to close in The bill would establish a "military services privatization zone" on the portion of McClellan where those 2,000 jobs are

7 California Capitol Hill Bulletin, 4/30/97 Page 7 centered. Although the base will close in four years, the Air Force has allowed two private contractors -- Boeing Corp. and AAI Corp. -- to bid on a major portion of McClellan's workload that generates an estimated 2,000 jobs. The third bidder is Hill Air Force Base in Ogden, Utah. If Hill were to win, the work and the jobs would move to Utah. If Boeing or AAI wins, the work will stay in Sacramento. The bill is designed to give the private bidders a competitive edge over the Utah bid. And finally, in an effort to facilitate the Joint Strike Fighter (JSF) program, Assemblyman George Runner (Lancaster) has proposed to provide tax credits on gross sales to California contractors and subcontractors on the JSF program. The proposed credit would begin at 15 percent during the concept demonstration phase -- which includes the "fly-off" starting in 2000 at Edwards Air Force base between the Boeing and Lockheed Martin planes. The credit would drop to 12.5 percent during the manufacturing development phase -- the period when the winning design is refined and verified through flight tests -- and eventually to 10 percent during the production phase.