Legislature(2003 - 2004)

04/29/2003 09:01 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     HOUSE BILL NO. 187                                                                                                         
     "An Act extending the termination date of the Board of Storage                                                             
      Tank Assistance; and providing for an effective date."                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this legislation  "extends  the  Board  of                                                            
Storage  Tank Assistance  until  June 30,  2007,  as recommended  by                                                            
LB&A."                                                                                                                          
                                                                                                                                
AT EASE 9:11 AM / 9:12 AM                                                                                                       
                                                                                                                                
PAT DAVIDSON,  Director, Division of Legislative Audit,  stated that                                                            
the  Division  performed  an audit  of  the Board  of  Storage  Tank                                                            
Assistance  resulting in a  recommendation  for an extension  of the                                                            
Board for four years.                                                                                                           
                                                                                                                                
LAURA ACHEE,  staff to the Legislative  Budget and Audit  Committee,                                                            
deferred to storage tank program staff.                                                                                         
                                                                                                                                
JOHN BARNETT, Executive  Director, Board of Storage Tank Assistance,                                                            
and private  sector contractor, spoke  about the seven-member  Board                                                            
formed in 1990 with members  appointed by the governor and who serve                                                            
without compensation.                                                                                                           
                                                                                                                                
Mr. Barnett  listed  the three  principle  roles of  the Board,  all                                                            
related  to underground  storage  tanks, the  first of  which is  to                                                            
provide a certain  level of regulatory  oversight of the  Department                                                            
of Environmental Conservation  to ensure that regulations imposed by                                                            
the Department  are  practical and  are not  financially onerous  or                                                            
more stringent  than the federal requirements.  The second  role, he                                                            
stated  is to resolve  disputes,  both formally  and informally,  in                                                            
mediating  between  the Department  and  regulated  tank owners  and                                                            
operators.  He  exampled  disputes  including  financial  assistance                                                            
disagreements   related  to  eligibility   for  loans  and   grants;                                                            
expedition  of "no further  action" letters  on contaminated  sites;                                                            
disagreements  related to cleanup plans; and ensuring  communication                                                            
between tank owners  and the Department. He noted  that prior to the                                                            
Board's inception,  disputes were handled through  attorneys and the                                                            
Department  of Law,  with legal  expenditures  significantly  higher                                                            
than actual cleanup  expenditures. He concluded with  the third role                                                            
of the  Board to allocate  funds appropriated  by the Department  to                                                            
projects  based first  on  public health,  then according  to  other                                                            
priorities as established by the Board.                                                                                         
                                                                                                                                
Senator   Olson  clarified   this  legislation   only  pertains   to                                                            
underground storage tanks.                                                                                                      
                                                                                                                                
Mr.  Barnett   informed  that  the   financial  assistance   program                                                            
addresses  those tanks regulated  under federal  law established  in                                                            
1988 and that  the State underground  storage tank program  began in                                                            
1990.  He  stated   that  the  "strict  and  onerous"  requirements                                                             
instituted  by  the  federal  Environmental   Protection  Agency  to                                                            
upgrade  tanks  and   clean  sites  resulted  in  costs   "extremely                                                            
prohibitive"  in  Alaska.  Therefore,  he  stated  only underground                                                             
storage tanks are included in the program.                                                                                      
                                                                                                                                
Senator  Olson asked  about cleanup  of a pipeline  or above  ground                                                            
storage  tank  and  whether  the  Board  could  become  involved  in                                                            
resolving disputes relating to these facilities.                                                                                
                                                                                                                                
Mr. Barnett  replied  the Board has  no authority,  although  it has                                                            
served  as a  mediator  in past  instances  involving  above  ground                                                            
storage tanks.                                                                                                                  
                                                                                                                                
Senator Taylor  referenced a section on Page 8 of  the audit titled,                                                            
"Demand for  cleanup loan  program is still  unknown" and asked  the                                                            
basis for the  prediction that participation  would increase  in the                                                            
loan program after June 30, 2004.                                                                                               
                                                                                                                                
Mr. Barnett  explained the  cleanup program  began as a 100  percent                                                            
grant  program  and  was  amended  in  1999 to  award  grants  on  a                                                            
financial need  basis with a $250,000 maximum amount.  He added that                                                            
in  2002, a  termination  date for  the  grant program  was  enacted                                                            
through  SB 153 and  that in  13 months  from this  date no  further                                                            
grants  would  be issued.  He  noted  that cleanup  is  underway  at                                                            
approximately  50 active sites and that the owners  and operators of                                                            
those  sites would  need to secure  additional  funding through  the                                                            
loan program,  which would not terminate. He explained  that because                                                            
grants are  currently available, there  is no need for these  owners                                                            
and operators  to utilize the loan  program and subsequently  accrue                                                            
interest  debt   on  loans.  He  predicted   an  increase   in  loan                                                            
applications  would occur  the upcoming  winter,  as opportunity  to                                                            
utilize grant  funds would conclude with the end of  the summer 2003                                                            
construction season.                                                                                                            
                                                                                                                                
Senator  Taylor  anticipated  the revolving  loan  program  activity                                                            
would increase with the termination of the grant program.                                                                       
                                                                                                                                
Mr. Barnett  commented  that "it took  several years  to… debug  the                                                            
grant program"  to determine  acceptable eligible  costs. He  stated                                                            
that administering the  loan program would be relatively new for the                                                            
Board and shared with the  Committee the argument that because these                                                            
funds are the tank owners,  additional allowances for eligible costs                                                            
would be requested.  Therefore, he  foresaw an increase of  disputes                                                            
over eligible  expenditures  and subsequent  increased workload  for                                                            
the Board.                                                                                                                      
                                                                                                                                
Senator Taylor  asked if all eligible  parties are participating  in                                                            
the grant program.                                                                                                              
                                                                                                                                
Mr. Barnett  agreed and noted the  larger number of loan  applicants                                                            
than grant recipients  because the financial needs  criteria is less                                                            
stringent for the loan program than for the grant program.                                                                      
                                                                                                                                
Senator Taylor  commented he was concerned  about the grant  program                                                            
and spoke to efforts to  "kill" or modify the program "to the extent                                                            
that it  was rational".  He was  concerned that  as the termination                                                             
date  nears,  interested  parties  would  attempt  to  continue  the                                                            
program.                                                                                                                        
                                                                                                                                
Co-Chair Wilken  expressed it "heartening"  to see a solution  to an                                                            
issue  that had been  predicted  as unworkable.  He accredited  this                                                            
significantly  to the  former Senator  Torgerson's  efforts on  this                                                            
matter.                                                                                                                         
                                                                                                                                
GARY WEBER, Owner, Wasilla  Chevron, and President, Underground Tank                                                            
Owners   Association  of   the  State  of   Alaska,  testified   via                                                            
teleconference  from Mat-Su  to exalt success  of the Board  and the                                                            
program,  characterizing it  as the best program  in the nation.  He                                                            
asserted this  was the result of a  "total partnership" between  the                                                            
Department, the Board, and the tank owners.                                                                                     
                                                                                                                                
Mr. Weber told of the expectation  that the cleanup program would be                                                            
too expensive  to operate, but noted  that a tank fee procedure  was                                                            
implemented to pay the operating costs of the Board.                                                                            
                                                                                                                                
Mr. Weber expressed  that the tank owners "desperately  want to keep                                                            
this Board"  explaining the  need for regulatory  oversight  and the                                                            
ability to  change regulations as  necessary to "make them  workable                                                            
in both  directions".  He told  of the benefits  of  the Board  as a                                                            
mediation  function,  which  saves  legal  expenses.  He  urged  the                                                            
Committee to pass this bill.                                                                                                    
                                                                                                                                
Senator Taylor offered a motion to report HB 187 from Committee.                                                                
                                                                                                                                
There  was  no objection   and HB  187  MOVED  from  Committee  with                                                            
individual  recommendations and fiscal  note #1 from the  Department                                                            
of Community and Economic Development.                                                                                          
                                                                                                                                

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