Legislature(1999 - 2000)
05/12/1999 01:40 PM House RES
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
May 12, 1999
1:40 p.m.
MEMBERS PRESENT
Representative Scott Ogan, Co-Chair
Representative Jerry Sanders, Co-Chair
Representative Beverly Masek, Vice Chair
Representative John Harris
Representative Carl Morgan
Representative Ramona Barnes
Representative Reggie Joule
Representative Mary Kapsner
MEMBERS ABSENT
Representative Jim Whitaker
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 128(FIN) am
"An Act moving the termination date of the Board of Storage Tank
Assistance to June 30, 1999; relating to the storage tank
assistance fund, to financial assistance for owners and operators
of underground petroleum storage tank systems, and to discharges
from underground petroleum storage tank systems; and providing for
an effective date."
- HEARD AND HELD
CS FOR SENATE BILL NO. 7(FIN) am
"An Act relating to the University of Alaska and university land,
and authorizing the University of Alaska to select additional state
land."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 128
SHORT TITLE: STORAGE TANK ASSISTANCE FUND
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
3/31/99 752 (S) READ THE FIRST TIME - REFERRAL(S)
3/31/99 753 (S) RES, FIN
4/07/99 (S) RES AT 3:00 PM BUTROVICH 205
4/07/99 (S) MOVED CS (RES) OUT OF COMMITTEE
4/07/99 (S) MINUTE(RES)
4/09/99 844 (S) RES RPT CS 1DP 3NR NEW TITLE
4/09/99 845 (S) DP: HALFORD; NR: GREEN, PETE KELLY,
4/09/99 845 (S) TAYLOR
4/09/99 845 (S) FISCAL NOTE TO CS (LAW)
4/09/99 845 (S) FISCAL NOTE TO BILL (DEC)
4/12/99 (S) FIN AT 9:00 AM SENATE FINANCE 532
4/12/99 (S) MINUTE(FIN)
4/12/99 875 (S) FISCAL NOTE TO CS (DEC)
4/19/99 (S) FIN AT 9:00 AM SENATE FINANCE 532
4/19/99 (S) HEARD AND HELD
4/27/99 (S) FIN AT 9:00 AM SENATE FINANCE 532
4/27/99 (S) HEARD AND HELD
4/30/99 (S) FIN AT 9:00 AM SENATE FINANCE 532
4/30/99 (S) MOVED CS(FIN) OUT OF COMMITTEE
4/30/99 1184 (S) FIN RPT CS 3DP 4NR NEW TITLE
5/03/99 (S) RLS AT 11:20 AM FAHRENKAMP 203
5/03/99 1202 (S) FIN CS RECEIVED
4/30/99 1184 (S) DP: TORGERSON, PHILLIPS, DONLEY;
4/30/99 1184 (S) NR: GREEN, PETE KELLY, ADAMS, WILKEN
5/04/99 (S) RLS AT 11:30 AM FAHRENKAMP 203
5/04/99 (S) MINUTE(RLS)
5/04/99 1220 (S) FISCAL NOTE (S.FIN/DEC)
5/04/99 1222 (S) RULES TO CALENDAR AND 1 OR 5/4/99
5/04/99 1226 (S) READ THE SECOND TIME
5/04/99 1226 (S) FIN CS ADOPTED UNAN CONSENT
5/04/99 1226 (S) HELD IN SECOND READING TO 5/5 CAL
5/05/99 1255 (S) AM NO 1 ADOPTED UNAN CONSENT
5/05/99 1255 (S) ADVANCED TO THIRD READING
UNAN CONSENT
5/05/99 1255 (S) READ THE THIRD TIME CSSB 128(FIN) AM
5/05/99 1256 (S) PASSED Y18 N2
5/05/99 1256 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
5/05/99 1262 (S) TRANSMITTED TO (H)
5/06/99 1193 (H) READ THE FIRST TIME - REFERRAL(S)
5/06/99 1193 (H) RESOURCES, FINANCE
5/12/99 (H) RES AT 1:30 PM CAPITOL 124
BILL: SB 7
SHORT TITLE: INCREASE LAND GRANT TO UNIV. OF ALASKA
SPONSOR(S): SENATOR(S) TAYLOR, Kelly Tim, Donley, Wilken, Leman,
Pearce, Mackie, Ward; REPRESENTATIVE(S) Halcro
Jrn-Date Jrn-Page Action
1/08/99 14 (S) PREFILE RELEASED - 1/8/99
1/19/99 15 (S) READ THE FIRST TIME - REFERRAL(S)
1/19/99 15 (S) RES, FIN
1/25/99 (S) RES AT 3:00 PM BUTROVICH ROOM 205
1/25/99 (S) HEARD AND HELD
1/25/99 (S) MINUTE(RES)
2/01/99 (S) RES AT 3:00 PM BUTROVICH ROOM 205
2/01/99 (S) SCHEDULED BUT NOT HEARD
2/01/99 (S) MINUTE(RES)
2/03/99 (S) RES AT 3:00 PM BUTROVICH ROOM 205
2/03/99 (S) MOVED CS OUT OF COMMITTEE
2/03/99 (S) MINUTE(RES)
2/05/99 165 (S) RES RPT CS 4DP 3NR SAME TITLE
2/05/99 165 (S) DP: MACKIE,TAYLOR, GREEN, PETE KELLY;
2/05/99 165 (S) NR: HALFORD, PARNELL, LINCOLN
2/05/99 165 (S) FN TO SB (DNR), FNS TO SB & CS
(UA, F&G)
2/05/99 165 (S) FN TO CS (DNR)
2/25/99 (S) FIN AT 9:00 AM SENATE FINANCE 532
3/04/99 (S) FIN AT 8:00 AM SENATE FINANCE 532
3/04/99 (S) HEARD AND HELD
3/04/99 (S) MINUTE(FIN)
4/23/99 (S) FIN AT 8:00 AM SENATE FINANCE 532
4/23/99 (S) MOVED CS(FIN) OUT OF COMMITTEE
4/24/99 (S) FIN AT 10:00 AM SENATE FINANCE 532
4/26/99 (S) RLS AT 12:00 PM FAHRENKAMP 203
4/26/99 (S) MINUTE(RLS)
4/26/99 (S) MINUTE(RLS)
4/26/99 1085 (S) FIN RPT CS 5DP 2NR SAME TITLE
4/26/99 1086 (S) DP: TORGERSON, WILKEN, LEMAN, DONLEY,
4/26/99 1086 (S) PETE KELLY; NR: PHILLIPS, ADAMS
4/26/99 1086 (S) PREVIOUS FNS (DNR, UA, F&G)
5/03/99 1202 (S) RULES TO CALENDAR AND 1 OR 5/3/99
5/03/99 1203 (S) READ THE SECOND TIME
5/03/99 1203 (S) FIN CS ADOPTED UNAN CONSENT
5/03/99 1203 (S) AM NO 1 OFFERED BY TAYLOR
5/03/99 1203 (S) AM NO 1 ADOPTED Y11 N9
5/03/99 1204 (S) AM NO 2 OFFERED BY TAYLOR
5/03/99 1204 (S) AM NO 2 ADOPTED UNAN CONSENT
5/03/99 1204 (S) AM NO 3 OFFERED BY TAYLOR
5/03/99 1204 (S) AM NO 3 ADOPTED UNAN CONSENT
5/03/99 1205 (S) ADVANCED TO THIRD READING
UNAN CONSENT
5/03/99 1205 (S) READ THE THIRD TIME CSSB 7(FIN) AM
5/03/99 1205 (S) COSPONSOR(S): PEARCE, MACKIE, WARD
5/03/99 1206 (S) PASSED Y15 N5
5/03/99 1206 (S) ELLIS NOTICE OF RECONSIDERATION
5/04/99 1239 (S) RECONSIDERATION NOT TAKEN UP
5/04/99 1239 (S) TRANSMITTED TO (H)
5/05/99 1175 (H) READ THE FIRST TIME - REFERRAL(S)
5/05/99 1175 (H) RESOURCES, FINANCE
5/05/99 1187 (H) CROSS SPONSOR(S): HALCRO
5/12/99 (H) RES AT 1:30 PM CAPITOL 124
WITNESS REGISTER
DARWIN PETERSON, Legislative Administrative Assistant
and Senate Finance Committee Aide
to Senator John Torgerson
Alaska State Legislature
Capitol Building, Room 516
Juneau, Alaska 99801
Telephone: (907) 465-2138
POSITION STATEMENT: Presented CSSB 128(FIN) am on behalf of
Senator Torgerson, Co-Chairman, Senate
Finance Committee (sponsor).
JOHN BARNETT, Executive Director
Board of Storage Tank Assistance
P.O. Box 240651
Douglas, Alaska 99824
Telephone: (907) 364-2848
POSITION STATEMENT: Testified that CSSB 128(FIN) am is a big
improvement over original version but still
has problems.
JOHN COOK
Sterling Tesoro
P.O. Box 49
Sterling, Alaska 99672
Telephone: (907) 262-9028
POSITION STATEMENT: Testified on SB 128.
GARY WEBER
Wasilla Chevron
P.O. Box 871216
Wasilla, Alaska 99687
Telephone: (907) 376-5900
POSITION STATEMENT: Testified that CSSB 128 (FIN) am is
basically a good bill but suggested three
amendments to address major problems.
ANNETTE KREITZER, Legislative Assistant
to Senator Loren Leman
Alaska State Legislature
Capitol Building, Room 115
Juneau, Alaska 99801
Telephone: (907) 465-5149
POSITION STATEMENT: Answered questions about CSSB 128(FIN) am.
MEL KROGSENG, Legislative Assistant
to Senator Robin Taylor
Alaska State Legislature
Capitol Building, Room 30
Juneau, Alaska 99801
Telephone: (907) 465-3873
POSITION STATEMENT: Testified on behalf of sponsor of SB 7.
KEVIN TRITT
3408 Lois Drive
Anchorage, Alaska 99517
Telephone: (907) 277-4265
POSITION STATEMENT: Testified in opposition to SB 7.
JOHN EASTON
Bristol Bay Coastal Resource Service Area
P.O. Box 798
Dillingham, Alaska 99576
Telephone: (907) 842-2667
POSITION STATEMENT: Testified on behalf of board in
opposition to SB 7.
RUSSELL NELSON, Land Manager
Choggiung Limited
P.O. Box 330
Dillingham, Alaska 99576
Telephone: (907) 842-5218
POSITION STATEMENT: Testified on SB 7; expressed concerns.
TOM ARMOUR, Manager
City and Borough of Yakutat
P.O. Box 160
Yakutat, Alaska 99689
Telephone: (907) 784-3323
POSITION STATEMENT: Testified on SB 7; commended CSSB 7(FIN) am
as an improvement but proposed amendments.
ROSS COEN
P.O. Box 82718
Fairbanks, Alaska 99708
Telephone: (907) 479-6946
POSITION STATEMENT: Testified in opposition to SB 7,
requesting funding of university through
appropriations.
CHOW TAYLOR
Alaska Municipal League (AML)
217 Second Street (Winter)
Juneau, Alaska 99801
Telephone: (907) 586-1325
POSITION STATEMENT: Testified that the AML doesn't oppose SB 7
but has some concerns.
ACTION NARRATIVE
TAPE 99-33, SIDE A
Number 0001
CO-CHAIR SCOTT OGAN called the House Resources Standing Committee
meeting to order at 1:40 p.m. Members present at the call to order
were Representatives Ogan, Sanders, Masek, Harris, Morgan, Barnes,
Joule and Kapsner. Representative Whitaker was excused.
SB 128 - STORAGE TANK ASSISTANCE FUND
CO-CHAIR OGAN announced that the first item of business would be CS
for Senate Bill No. 128(FIN) am, "An Act moving the termination
date of the Board of Storage Tank Assistance to June 30, 1999;
relating to the storage tank assistance fund, to financial
assistance for owners and operators of underground petroleum
storage tank systems, and to discharges from underground petroleum
storage tank systems; and providing for an effective date."
Number 0125
DARWIN PETERSON, Legislative Administrative Assistant and Senate
Finance Committee Aide to Senator John Torgerson, Alaska State
Legislature, came forward on behalf of Senator Torgerson, who
co-chairs the Senate Finance Committee. Mr. Peterson explained
that SB 128 was introduced by the Senate Finance Committee in an
effort to restructure some of the programs in the Board of Storage
Tank Assistance. He presented the Sectional Analysis for CSSB
128(FIN) am, provided in packets, as follows:
Section 1 ... puts the Board of Storage Tank Assistance
in its "wind-down" year beginning June 30, 1999.
Section 2 of the bill removes a reference to the tank
tightness and site assessment incentive program repealed
in Section 14 of the bill, and adds a reference to the
tank cleanup loan program enacted in Section 10.
Section 3 adds a reference to the tank cleanup loan
program.
Section 4 amends the storage tank assistance fund section
in Title 46 by adding two statements about potential
appropriations of money in the storage tank assistance
fund. This section also clarifies that a pending
application is not considered to be an encumbrance of the
fund.
Section 5 deletes a reference to the repealed tank
tightness and site assessment incentive program; adds a
reference to the newly enacted tank cleanup loan program.
Sections 6-9 convert the loan program for cleanup
relating to underground petroleum storage tank systems to
a grant program for tanks whose owners have $1 million or
less in tangible net worth. Section 9 contains
limitations on total grants and loans. Grants may not
exceed $250,000, and a combination of grants and loans
may not exceed $500,000.
Section 10 establishes a new tank cleanup loan program.
Section 11 limits grants for upgrading and closure of
underground petroleum storage tanks to those whose owner
has a tangible net worth of $250,000 or less. This adds
the same limitations on total grants and loans
established in Section 9.
Section 12 defines "tangible net worth" as the total
value of tangible assets minus liabilities associated
with bringing underground petroleum storage tanks into
compliance with state and federal laws.
Section 13 adds a reference to the newly enacted tank
cleanup loan program.
Section 14 repeals the program currently under AS
46.03.415, the tank tightness and site assessment
program, and repeals references to that program. It also
repeals a reimbursement program established in 1990.
Section 15 specifies that limitations on grants, loans,
and total financial assistance enacted by this Act apply
to money received on or after July 1, 1999.
Sections 16-17 [allow] the board's regulations process to
begin immediately and [make] the change in the
termination date of the board effective immediately.
Section 18 makes most of the bill take effect on July 1,
1999.
Number 0409
REPRESENTATIVE MASEK asked what the changes are between the old
program and that proposed under the bill.
MR. PETERSON deferred to John Barnett.
Number 0495
JOHN BARNETT, Executive Director, Board of Storage Tank Assistance,
explained that the board provides oversight to the department,
which actually administers this program. The board is composed of
industry members, including owners of large and small tanks,
contractors, insurance representatives and consultants. Mr.
Barnett commended Mr. Peterson and Senator Torgerson for their
efforts, stating that CSSB 128(FIN) am is a big improvement over
the first version introduced into the Senate Finance Committee.
MR. BARNETT addressed Representative Masek's question about how the
bill affects the original program. In 1988, the federal government
set out national requirements for underground petroleum storage
tank owners. In addition to a federal mandate that owners upgrade
tanks to Environmental Protection Agency (EPA) requirements, owners
had to demonstrate financial responsibility, either by having
insurance against leaks or contamination, or by being
"self-insurable." However, many owners were unable to obtain
insurance because they had contaminated sites. Furthermore, the
leaking tanks that caused the contamination prevented these
properties from being sold.
MR. BARNETT recounted that at the time, rather than offering
assistance, the EPA was undertaking "big stick" enforcement,
levying fines of $10,000 per day, per tank, for every violation.
Some people couldn't pay these huge fines. In many cases, the
state took over cleanup of these sites, and sometimes legal costs
exceeded the cost of the cleanup. Therefore, in 1990 the state
legislature determined that a relief program was needed to provide
owners both technical and financial assistance. The initial intent
was to provide grants to every registered tank owner who paid a
registration fee to the state; they didn't want it to be based on
financial need, which would be too complex and would require too
much information.
Number 0748
MR. BARNETT noted that the program started about nine years ago.
Over 1,500 applications came in for assistance, and they've worked
down that list. Currently, there are 158 upgrade and closure
applications on file, for which they provide grants of up to 60
percent of the cost, to a maximum of $60,000, combined, for upgrade
and closure. In practice, that represents 20 to 25 percent of the
overall cost to upgrade tanks. The balance of the expense for
upgrades comes from the Small Business Administration, bank loans
and other sources.
MR. BARNETT next addressed cleanups. He believes there are 220
cleanup applications on file. The cleanup program covers 90
percent of their cost up to $1 million per facility; the tank owner
is required to pay 10 percent of those costs, up to a maximum of
$25,000. Therefore, the maximum cleanup assistance a person can
obtain from the state is $975,000 in grants and $25,000 in loans.
MR. BARNETT explained that all applications were ranked by a system
established by the board, placing a priority on sites with the
greatest threat to public health. Also, the smaller businesses
were placed at the top of the list. At the bottom of the list,
which they've reached now, are large companies that have waited
nine years to receive funds; that was the intent, to make those
larger businesses wait until the smaller owners were covered. This
really shows true in the upgrade and closure list, Mr. Barnett
noted. For the cleanup list, however, well over half of those
still awaiting funding are what he considers small businesses.
They have no alternative for cleanup financing. They cannot go to
conventional banking institutions because of site contamination.
In addition, there is also a liability issue: Banks won't provide
financing to clean up a contaminated site, because if there is a
default, the bank ends up assuming the liability. That was also
why the original program was not a fairly comprehensive loan
program.
MR. BARNETT commented that the current bill, a combined minimized
grant program and expanded loan program, is actually a very good
concept. The board sees problems, however. First, people have
waited nine years for financing, and now, in the final year of the
upgrade and closure program, they are being told, "We were just
kidding." Second, for sites for which owners would be trying to
obtain a cleanup loan, owners may not have sufficient collateral to
actually obtain that loan from the state. For any loans that are
defaulted on, or which the state will have to assume, the state
also assumes liability and will therefore have to pay cleanup
costs. Subsequently, the state would end up having to do that
cleanup.
Number 1031
MR. BARNETT called attention to page 8, Section 12. He pointed out
that the definition of "tangible net worth" doesn't allow tank
owners to deduct normal liabilities. Whereas a definition of "net
worth" in generalized accounting procedures is "assets minus
liabilities," this definition only allows tank owners to subtract
liabilities associated with the cleanup. A typical facility in
Alaska, even a small one, might easily have $1.5 million in assets,
however, including the tanks, pumps, service bays and inventory.
In many cases, a business might be a contractor or small rental car
agency, for example, and assets will exceed $1 million.
MR. BARNETT cited an example where cleanup has been ongoing for
years. There, only $60,000 remains in cleanup costs; that is all
that could be subtracted from their assets under this bill.
Another scenario might be a road house on a large, homesteaded
acreage, with perhaps a small lodge and a gas pump; total assets
may easily exceed $1.5 million or $2 million. However, the only
deduction would be the cleanup cost, perhaps $50,000 to $250,000,
and, therefore, that owner wouldn't qualify. Mr. Barnett proposed
that the solution is to make the "tangible net worth" definition
consistent with generally accepted accounting principles by
including language about subtracting liabilities.
Number 1167
MR. BARNETT pointed out that in the past, municipalities, school
districts and villages were also eligible for financial assistance
through this program; under this bill, they couldn't obtain loans.
Mr. Barnett noted that as the board's only employee, he has a
partial conflict of interest. He then explained that the board -
both now and under the bill - can write and adopt regulations for
financial assistance. After those are adopted and put into
practice, the board mediates disputes and addresses appeals by tank
owners who disagree with decisions of the Department of
Environmental Conservation (DEC). The board has sufficient
authority to overturn decisions of the DEC, which they have done
throughout the last nine years. Furthermore, the board mediates
cleanup plan disputes between owners and the DEC, so that those
cases don't have to go to court.
MR. BARNETT discussed problems with sunsetting the board a year
early. If this bill went into effect July 1, 1999, all work,
including ongoing cleanups, would cease. The balance of the
construction season would be used to draft the new program, loan
language and loan regulations; it would be late fall or early
winter before regulations could be adopted. Furthermore, it would
be mid-May of 2000 before the program could be implemented in the
field, during the construction season. The first loan
applications, receipts and actual eligible costs that would be
reviewed by the DEC wouldn't occur until mid-summer of 2000, in the
middle of the construction season. Therefore, the first disputes
would not occur on these new regulations until August or September
of 2000, after the board had already departed. To prevent current
activities from stopping right now, in the middle of the
construction season, the board desires a "phase end" transition
date or effective date either in the winter or as late as July 1,
2000.
Number 1402
REPRESENTATIVE KAPSNER asked if Mr. Barnett was saying that a
village or municipality couldn't get a loan if there was a leak.
MR. BARNETT affirmed that, restating that under the existing
program, municipalities are eligible for financial assistance. A
large number are on the waiting list for funds. Under the bill,
however, because eligibility is defined as a net worth of $1
million, the board doesn't believe that any municipalities or
villages will qualify.
Number 1439
REPRESENTATIVE KAPSNER expressed her understanding that a bank
wouldn't give a village or municipality a loan, in most cases.
MR. BARNETT indicated that is why this whole program exists. It
isn't a problem for an upgrade, to get new tanks to meet EPA
standards, for example. However, banks won't finance cleanups,
because if the owner defaults, then the bank would own contaminated
property. The state didn't want to start assuming properties,
either. Mr. Barnett noted that owners are liable under strict
liability laws.
REPRESENTATIVE KAPSNER inquired what a community would do if no
help could be received from the state but the community couldn't
receive a loan.
MR. BARNETT replied that the community would have to utilize its
own resources to cover the cleanup. He noted that for many
villages in the Interior, the problem is above-ground tanks, some
of which a program in place addresses.
REPRESENTATIVE OGAN mentioned federal money available for
"Superfund cleanup." He asked if this is the only program.
Number 1550
MR. BARNETT clarified that this is the only assistance program.
This program is funded through the prevention account of the Oil
and Hazardous Substance Response Fund. Any money spent out of
those funds to which Representative Ogan is referring, such as the
"Superfund" and the federal Leaking Underground Storage Tank Trust
Fund, also known as the federal LUST Trust Fund, must be
cost-recovered. Mr. Barnett noted that those funds have - as does
the state's response fund - a cost recovery clause. He informed
the committee that the last underground tank situation was at
Cooks(ph) Tesoro in Sterling. In that case, the state stepped in
with response funds, and the state was mandated by law to
cost-recover those funds. The state spent $300,000 to clean up,
and that bill was passed to the owner. If the owner can't pay, a
lien is placed against the property and penalties begin to be
assigned.
MR. BARNETT noted that the federal LUST Trust Fund does the same:
the owner receives the bill. However, that program doesn't cut
corners. Mr. Barnett pointed out that the state's program is
audited in detail, which he indicated keeps the costs down.
Cleanup costs have decreased dramatically in the first two years of
the program; many new types of remediation have been utilized and
have decreased the overall costs considerably. Mr. Barnett felt
that if the federal government takes over these cleanups, the cost
will increase and owners will not be able to pay back those bills.
REPRESENTATIVE KAPSNER asked if the funding for this comes out of
the oil spill money.
MR. BARNETT stated that the funds do not come from the oil spill
settlement. He explained that there is a five-cent surcharge per
barrel collected from the flow through on the pipeline. Two cents
of the five cents goes to the response fund, which has a $50
million cap. When the response fund reaches $50 million, the two
cents is not collected. He noted that three cents of the five
cents goes to the prevention account, which is used to cover the
expenses of the DEC's Division of Spill Prevention and Response.
It covers a lot of emergency operations within Alaska, he said.
Many agencies and organizations utilize funds in the prevention
account.
REPRESENTATIVE KAPSNER asked if the sponsor wants to take that
money and appropriate it elsewhere.
MR. PETERSON pointed out that Annette Kreitzer, staff to Senator
Leman, was present. Senator Leman's office, which dealt with the
subcommittee budget for the DEC, had worked closely with Senator
Torgerson on the financing aspects of SB 128. In response to
Representative Kapsner's question regarding municipalities and
municipal assistance for underground petroleum storage tanks, Mr.
Peterson referred to page 2, Section 4, the bold language; he said
it provides the legislature authority to appropriate money to
municipalities that are in dire need of assistance. Therefore,
that can be done on a case-by-case basis.
Number 1870
MR. BARNETT, in response to a query by Representative Joule,
corrected an earlier statement. He clarified that there is
language that allows municipalities and political subdivisions to
obtain funding; there is an existing program for which a
municipality can apply. He noted that those applications are on
file, and municipalities that have applied are on a waiting list
for assistance. Although municipalities on the list would be taken
off, they could request funds directly from the legislature.
REPRESENTATIVE JOULE asked what recourse is available, both
currently and under the bill, for communities that are not
incorporated.
Number 1951
MR. BARNETT said he didn't know of any currently on the list. He
pointed out that the list is closed; however, such municipalities
would have been able to apply if they had a corporate designation
or a community organization. Churches have applied and are on the
waiting list, for example. If the municipality was previously on
the list, that municipality might qualify. Under this language,
however, Mr. Barnett said he wasn't sure. He offered to research
that and provide the committee with the information.
REPRESENTATIVE KAPSNER asked whether a co-op under a council-led
village could apply.
MR. BARNETT indicated that would be correct if the co-op had
already applied. He emphasized that the application period is
closed; the deadline was in 1994. This applies to a finite list,
and no new applications can come through this program, either
currently or under this legislation. He reiterated that
municipalities could request funds directly from the legislature.
REPRESENTATIVE JOULE asked if there was ever a problem with the
structure of this program or audit problems regarding how the
program was run.
MR. BARNETT replied that there were never any paramount concerns.
However, there was always concern that it was state money being
invested in these municipalities, and that every dime should be
accounted for. The funding should go towards specific costs
related to the intent of the original program, he noted.
Therefore, there was a strict auditing of all expenses.
Number 2118
REPRESENTATIVE JOULE inquired if there had been any misuse of
funds.
MR. BARNETT answered that there is no problem related to misuse of
state funds, and the last audit of the program was "very, very
good." Rather, it is more of a philosophical problem as to who
gets those funds. Some very large companies certainly could pay
for this cleanup themselves, and in fact, in many cases have paid
for it; there is a strong desire not to pay them, even though the
companies have paid registration fees and the money has been
promised. However, the board believes the threshold in SB 128
should be higher. Possibly more information should be gathered, as
well, to determine whom this bill will impact; the number is
arbitrary now, and they don't know how many people would fall under
that threshold or not qualify.
Number 2210
REPRESENTATIVE BARNES suggested that everyone who applied prior to
1994 had a clear understanding that one legislature cannot bind
another, and that this program was subject to change at any time.
She asked if Mr. Barnett agrees.
MR. BARNETT said he does agree.
Number 2239
REPRESENTATIVE JOULE mentioned Mr. Barnett's testimony that if this
went away at the end of the fiscal year, nothing would get done
until there were regulations. He indicated a belief that if the
program continued to the scheduled sunset date in 2000, they could
move in that direction.
MR. BARNETT specified that the upgrade and closure program, which
involves 158 people, could be completed in one year. In contrast,
the cleanup program, with more than 220 facilities on the list, is
one of the biggest concerns. It is very expensive and will take
many years to resolve. Cleanup takes four to five years, at a
minimum, to complete; it must be done in stages, doing work,
waiting for results and then going on to the next stage. There is
definitely a need to address the program, especially in the long
term. He stated his understanding that the Senate had been
concerned about having this go on forever, and therefore had set
controls on it.
Number 2327
REPRESENTATIVE HARRIS read from item 6) of a document distributed
by the Board of Storage Tank Assistance, titled, "Impact of SB
128," which stated: "Small 'Mom & Pops' and road houses with large
acreage and prime locations will not qualify for cleanup assistance
under this definition of net worth." Representative Harris said it
seems that most of those small operations would be valued at less
than $1 million.
MR. BARNETT disagreed. He pointed out that if someone has a
significant amount of acreage in Alaska, especially at a prime
location, the property value will be high. He had used the example
of a road house because it might also have a lodge, small cafe,
small gas station and service bays, he said. In looking at that,
and from the few conversations he had with tank owners out there,
$1 million in assets is not a lot of money. Most of those owners
had $1.5 million to $2 million or more in assets. However, their
net worth, under the generally accepted accounting procedures, was
much lower, after subtracting mortgages, inventory and operating
costs. For some, their net worth was a negative number. That is
why the board wants to include liabilities in the definition of net
worth, to make it consistent with the banking industry and everyone
else.
Number 2453
CO-CHAIR OGAN asked if members had questions of Steven Daugherty of
the Department of Law or Jim Hayden of the Department of
Environmental Conservation (DEC); there were none. He also noted
that former state Senator Jay Kerttula had been in attendance.
Number 2513
JOHN COOK, Sterling Tesoro, testified via teleconference from
Kenai, noting that he has a family and has lived here almost all
his life. Mr. Cook indicated he'd put almost all his money into a
service station that was approved by the state, after going through
their regulations and laying it out professionally with Tesoro, who
had loaned the tank dispenser to put him into business. To get
started, he also had a $100,000 Alaska veterans' loan from the
state. However, the state had no regulations then regarding
spills. For example, people would rinse out a gas can and throw it
on the ground, for which someone could go to jail today.
MR. COOK expressed concern on behalf of "mom and pop" operations
that if the board is terminated, the "big boys" will run all the
stations and take over. He told members, "In 1985, they deserted
like rats in the ship because they knew this pollution law was
coming up. They gave their stations away to individuals that went
broke. And some committed suicide. We've had heartbreaks and
divorces, all because somebody's trying to save a buck down there
in Juneau." Mr. Cook requested protection. He suggested getting
rid of the DEC and hiring professionals who will ask what they can
do to help, rather than trying to destroy the owners.
MR. COOK recounted how he'd had an argument with the DEC, who came
to his station with the state troopers like the Gestapo, he said,
while he was away in Ohio picking up a new truck for his septic
business. "These guys tore me out completely," he stated. "I had
nothing. They took the dispensers that didn't belong to me; they
belonged to Tesoro. They left the tanks in the ground. They used
470 funds and say, 'You've got to pay it back at 10 percent
interest' - $321,000, and the professional engineer standing there
said they could have done it for $85,000? Then the DEC had that
dirt removed and put up on the back of my RV [recreational vehicle]
park, and ... completely destroyed my RV park."
MR. COOK reported that 25 people who work for him during a year are
affected by this "mom and pop" store into which he has put his life
savings. He indicated the state has wasted over $2 million in
attorney fees trying to put him under, spending $325,000 for a
cleanup, even though Quality Asphalt (ph) wanted to buy it for
$39,000. Emphasizing the waste, Mr. Cook proposed that the DEC be
investigated. "The Division of Investments should be handling that
money, and professional-type people," he added. "An agricultural
engineer took care of my cleanup; he was the head man. These guys
were not qualified."
MR. COOK concluded that without the board, he wouldn't be here
today. He still faces $331,000, however, and he didn't even own
the tanks. The state is into it for over $3 million, he said,
"from negligence and using the powers of their office to get even
with an individual." He suggested those are the kinds of
investigations that need to made. Mr. Cook commended the board and
John Barnett, in particular. He reiterated concerns about large
companies taking over if the board is sunsetted, warning that it
will cause gas prices to rise.
Number 2807
CO-CHAIR OGAN expressed appreciation for the testimony, suggesting
it is a vivid example of why the legislature needs to thoughtfully
consider these issues.
Number 2846
GARY WEBER, Wasilla Chevron, testified via teleconference from the
Mat-Su Legislative Information Office (LIO), saying he can relate
to Mr. Cook's testimony. In his own case, Mr. Weber said, Senators
Leman and Torgerson have opened up a Pandora's box by introducing
this bill. Although he believes the bill is basically good, three
major problems will either cause headaches for tank owners or put
them under.
MR. WEBER reported that he has been going through this since 1991.
As of last month, he'd received $484,000 in state grants and spent
$368,000 of his personal money, totally draining his private
resources. For every $1.30 spent by the state, he has spent $1.
He came into 1999 expecting to spend no more than another $40,000,
the cost of his final risk assessment; if that had showed that the
facility was cleaned up within tolerance, it would result in a "no
further action" letter from the DEC, the final step.
MR. WEBER recalled that prior to HB 225 and the tank assistance
program, fund and board, tank owners were treated like criminals.
TAPE 99-33, SIDE B
[Numbers run backwards because of tape machine]
MR. WEBER said John Cook had been treated like a criminal in
Sterling, as well. However, with HB 225, the board established
gave tank owners a buffer against the DEC, which has toned down
tremendously in the last nine years.
Number 2837
MR. WEBER returned to the three problems in SB 128. First, the
board is already scheduled to sunset next year, and he doesn't know
why it must be put forward a year. He believes the big companies
will drag it out; although this bill will eliminate that problem,
the other tank owners need the board. Second, the "net worth"
definition will cut him out. In that case, the DEC or, more
likely, the EPA - because 15 positions have been cut from the DEC
- will take over Mr. Weber's station, incurring expenses far beyond
what it would cost a private engineer to do the job, and then
turning to Mr. Weber for the bill, which he cannot pay. He would
also have to tell his own engineer to stop working because he
couldn't pay. Third is the effective date.
MR. WEBER proposed that establishing the bill's effective date as
July 1, 2000, would enable all these problems to be resolved;
transitions would be smooth, and nobody would be hurt. He noted
that tank owners' pleas to the Senate had fallen on deaf ears.
However, with the three areas corrected, those who had spent all
this money wouldn't be abandoned and reneged upon, right when
they're about the finish up the programs.
Number 2707
CO-CHAIR OGAN asked if Mr. Weber had his suggestions in writing.
MR. WEBER replied that he'd faxed to members what he'd sent to
Senator Green a couple of weeks ago, including an article from the
March issue of the Alaska News Monthly. However, he had not
submitted this day's testimony in writing. Mr. Weber emphasized
the human impact, saying he'd lost his own family, as others had;
he also knows of people who've had heart attacks and nervous
breakdowns, and he knows of at least one suicide. He has suffered
from depression the past nine years, he said, and has been scared.
He again expressed concern about losing the board's help.
Number 2601
REPRESENTATIVE KAPSNER commended Mr. Weber for his tenacity. She
asked if he recommends that the definition of "net worth" be
changed to conform to generally accepted accounting principles, or
if he means for it to apply to both the owner and operator.
MR. WEBER replied that in 40 years in the petroleum business, and
having an accounting background, "net worth" has always been
"assets less liabilities," the generally accepted accounting
definition. He expounded on his own situation. If the estimated
cost of cleanup were subtracted from his assets of $1,400,000, he
probably wouldn't come under this program. His business has a
negative net worth of $15,000, and his personal net worth is
$950,000, including the value of his business; however, if the
value of his business is subtracted, which he can't sell for a "red
nickel" right now, he has zero net worth. Although he just spent
$35,000, he couldn't get a bank loan and therefore leased the
equipment for five years. If he asked the bank for $50,000
desperately needed to upgrade with an additional 600-amp electrical
service, he can't get the money, although his system is overtaxed
and transformers are almost ready to blow. "I can't go out and
borrow another $50,000-100,000 to finish this cleanup," he added.
MR. WEBER noted that the money he has received comes from the
nickel a barrel from the pipeline, which is for the specific
purpose of cleaning up petroleum contamination. He told members he
hasn't spilled a drop of gas at his station, and when he upgraded,
there wasn't a single leak, which he documented with pictures of
every joint, pipe and connection. However, a plume over the fill
stem, where his suppliers had overfilled his tanks for years, is
the pollution he is cleaning up. He emphasized the importance of
changing the definition of "net worth" to conform with the
generally accepted accounting definition.
Number 2363
REPRESENTATIVE HARRIS asked for clarification about what the three
amendments would be.
Number 2353
MR. WEBER specified that the first amendment would let the board
sunset at its normal date, scheduled for next year, allowing two
years of board service. He noted that following the sunset date,
the board would have one year to finish its business; if it sunsets
June 30, 1999, they couldn't possibly finish everything that needs
to be done. Second would be changing the definition of "net
worth." And third, he proposes an effective date of July 1, 2000.
Mr. Weber informed the committee that it took three or four years
to set up the program, with numerous meetings, statewide travel and
talking to many people, and it has worked well. He concluded, "I'm
not saying that this bill is not timely, but ... those three things
have to be fixed in order for us to make the last nine years
effective, and not just ruin it and have us all walk down the road
talking to ourselves."
Number 2259
CO-CHAIR OGAN pointed out that the title states that this Act moves
the termination date to June 30, 1999. A title change requires a
two-thirds' vote of the House, he said, which can be difficult to
get. Co-Chair Ogan said he would figure out what was required.
Noting that it will affect people, he said he'd hold the bill over
and recess to the call of the chair.
Number 2200
REPRESENTATIVE KAPSNER expressed a desire to hear from the
sponsors' representatives regarding the possibility of a title
change.
Number 2177
MR. PETERSON explained that the definition of "tangible net worth"
was established in the Senate Finance Committee and agreed to by
the full Senate. It isn't the generally accepted accounting
procedure; rather, it is "tangible assets minus liabilities
associated with the contamination." The intent was to decrease the
size of the grant list; people with more than $1 million in
tangible net worth minus liabilities associated with the
contamination would not be eligible for a grant. Mr. Peterson said
the Senate Finance Committee thinks that is a fair cap. That limit
has to be set somewhere, and that is what was decided by the
Senate.
Number 2122
CO-CHAIR OGAN noted that the termination date is June 30, 1999,
only a short while. He asked Mr. Peterson to state what the
termination date was prior to this bill.
MR. PETERSON answered that on page 1, lines 8 and 9, the original
language was "June 30, 2000". He pointed out that there is a
one-year wind-down period for the board, during which it can
continue its work. Also, if the legislature believes this new
legislation has hindered the storage tank owners a great deal, it
can be revisited in the next session, and the board can be extended
then.
Number 2063
CO-CHAIR OGAN asked whether Mr. Peterson believes it is fair to
people like Mr. Weber to suddenly move the date up a year.
Number 2024
ANNETTE KREITZER, Legislative Assistant to Senator Loren Leman,
Alaska State Legislature, came forward, noting that it had been
Senator Leman's amendment. She stated: "The intent of the
amendment to put the board on notice and in its wind-down year with
the '99 date is to keep everybody focused on this program. Senator
Leman supports the Board of Storage Tank Assistance, understands
very clearly how helpful they have been to the owners and operators
of the storage tanks. What he has pledged to do is - if, in fact,
the board still needs to operate beyond the year 2000 - to sponsor
that legislation and then reintroduce it in January. The board
will be six months into its wind-down year when the legislature
meets again." As to fairness, Ms. Kreitzer said, she hadn't asked
Senator Leman that and couldn't represent his position on it.
Number 1961
REPRESENTATIVE JOULE expressed his understanding that the Senate is
happy with the definition of "tangible net worth," even though it
isn't consistent with standard accounting practices. He noted that
the board seems to have been a buffer from what sounds like the
heavy hand of the state, especially for small operators, yet the
small operators appear most heavily impacted by this legislation.
MS. KREITZER concurred, stating that Senator Leman's intent is to
keep people focused. She believes there is broad support for the
Board of Storage Tank Assistance, she added, and broad knowledge as
to how they act as a buffer regarding the DEC.
REPRESENTATIVE JOULE asked if there is a reason to think they
haven't been focused.
MS. KREITZER indicated she was talking not only about the board's
focus, but also about the focus of everyone else concerned with the
board, to ensure that the DEC treats people differently from here
on out. "It's just one minor way of keeping it before the
legislature," she added.
REPRESENTATIVE JOULE pointed out that for being a "minor way," it
is giving people a lot of heartburn.
Number 1750
CO-CHAIR SANDERS said he doesn't see how doing away with the board
will help control the DEC.
MS. KREITZER replied, "We haven't done away with the board. This
is a one-year wind-down period. The legislature meets again in
January."
Number 1678
REPRESENTATIVE HARRIS questioned how this isn't terminating the
board, when the title states that the board is terminating on June
30, 1999. If this passes, the board will be terminated this year.
MS. KREITZER replied that the termination date will be June 30,
1999, but before that date, the legislature has the opportunity to
reconsider whether it wants to extend the board again.
Number 1631
REPRESENTATIVE BARNES noted that many boards come up for
reconsideration under a sunset clause. This board would sunset
prior to the time that the legislature comes back in session,
however, and would have to be reauthorized after the sunset date.
She then recounted how she was on the House Finance Committee when
this issue first came before the legislature. The original concept
was to add money to every gallon of gasoline to pay for this, she
said, but then they decided to soak the oil companies for it, with
the nickel-a-barrel surcharge. She contended then, as she does
now, that some of the profit from selling gasoline should have gone
into taking care of the storage tanks and so forth.
Number 1430
MR. COOK spoke again, saying the "little guy" doesn't make a profit
anymore. He said the oil companies control prices, as they supply
the gas and are in direct competition with the small owners. "The
answer I got from them was to sell more cookies," he added.
REPRESENTATIVE BARNES said it is beyond her why people would stay
in business if they didn't make a profit.
CO-CHAIR OGAN commented that sometimes things change from the time
one gets into business, including government regulations. What was
once an acceptable practice regarding oil could result in a jail
sentence now. Although rules have changed for the good, some
people have been caught in the transition or, in Mr. Weber's case,
the problem was caused by the guys who filled up his tank.
Co-Chair Ogan concluded the hearing on SB 128, noting that it would
be held over.
Number 1268
CO-CHAIR OGAN called an at-ease at 3:01 p.m. and turned the gavel
over to Co-Chair Sanders.
CO-CHAIR SANDERS called the meeting back to order at 3:03 p.m.
SB 7 - INCREASE LAND GRANT TO UNIV. OF ALASKA
CO-CHAIR SANDERS announced that the final order of business before
the committee would be CS for Senate Bill No. 7(FIN) am, "An Act
relating to the University of Alaska and university land, and
authorizing the University of Alaska to select additional state
land." Acknowledging the shortage of time, Co-Chair Sanders said
he would take as much testimony as possible in the remaining time
and then recess to the call of the chair.
Number 1198
MEL KROGSENG, Legislative Assistant to Senator Robin Taylor, Alaska
State Legislature, noted that although CSSB 7(FIN) am is similar to
previous legislation on this subject, it is a new bill. Amendments
from various committees were tacked onto last year's bill, which
resulted in conflicting and confusing sections. That bill, cleaned
up by Legislative Legal and Research Services, is before the
committee currently.
MS. KROGSENG explained that CSSB 7(FIN) am provides the university
with 250,000 acres of state land. The university was created as a
land grant college by the federal government. It was created as an
agricultural and mining school. Although promised vast amounts of
land by the federal government, the university only received
111,000 acres. The remaining entitlement was extinguished at
statehood when the state was given some 103 million acres of land.
There are many restriction regarding which lands can and cannot be
selected. She noted that the committee should have a sectional
analysis of CSSB 7(FIN) am.
Number 1079
MS. KROGSENG continued with highlights of the bill. She informed
the committee that lands not available for selection are the
following: land reserved for the public domain; land included in
a five-year proposed oil and gas leasing program; leased land or
land for which a lease is pending for other purposes; land subject
to an oil, gas, or coal lease or coal prospecting permit; land
subject to a mining claim, prospecting site, upland mining lease,
or mining leasehold location; land necessary to carry out the
purposes of an inter-agency land management agreement; and land
subject to conveyance under a land exchange or settlement
agreement. Land selected by a municipality is not an option.
Furthermore, land that a commissioner may believe will be selected
by a municipality can be withheld by the commissioner for three
years.
MS. KROGSENG noted that CSSB 7(FIN) am includes the new provision
allowing the municipalities the first right of refusal. She
pointed out that the following land also may not be conveyed: land
subject to an oil and gas exploration license, and land which the
commissioner believes may be part of an oil and gas exploration
lease. Any land conveyed is subject to a possessory interest.
Furthermore, the Department of Natural Resources (DNR) shall
provide public notice of intent to convey the land. She informed
the committee that the university shall pay all survey and transfer
associated costs, except the recording of the title transfer.
MS. KROGSENG pointed out some transfer conditions. Coal, ores,
minerals, fissionable material, geothermal resources, and fossils
transfer when the title to the land transfers. Oil and gas
resources, however, only transfer for land selected after the
effective date of the Act, and then only five years after the
effective date. Therefore, if the state develops or sells an oil
lease and gets revenue from the oil lease prior to selection by the
university, the state will continue to get that money in
perpetuity, even if the oil is discovered three years after the
effective date of the Act. The university would only receive oil
and gas revenues for oil discovered five years or later than the
effective date of the Act. That was of concern in the prior
legislation, Ms. Krogseng noted. The current legislation also
increases the size of the acreage that the university must select
to 640 acres or more, unless the commissioner believes it to be in
the best interest of the state for the university to select a
smaller parcel.
Number 0834
MS. KROGSENG reiterated that oil and gas revenues go to the state
for five years after the effective date of the Act even if the land
is conveyed. "Well actually, the oil and gas continue on," she
then stated. "All other revenues transfer to the university fund
conveyance as title. So, if they were a mining or a grazing lease,
... that lease revenue would transfer to the university fund
conveyance." She pointed out that the bill includes a provision
for the Board of Regents to give up 20 percent of the revenue
derived from the resource sales in the area closest to a campus,
provided the local municipality provides a match. Without that
match, the Board of Regents would not be required to provide that
revenue to the campus.
MS. KROGSENG directed the committee to page 9, lines 27-30, which
attempts to address the concern regarding continued use by the
public of the land to be conveyed. She noted that an issue had
arisen today regarding the potential access, if the land was later
sold to a third party. Land placed on the list must come before
the legislature for approval similar to the Local Boundary
Commission's land. The legislature has the ability to eliminate
proposed land from the list or to approve the land with certain
access conditions.
MS. KROGSENG expressed her belief that CSSB 7(FIN) am meets the
requirements of legislation introduced by U.S. Senator Murkowski,
which would provide Alaska with 250,000 acres with no strings
attached, as well as an additional 250,000 acres if the state
matches with an additional 250,000 acres. This would go far in
making the University of Alaska a truly land-based college, she
said. The University of Alaska is second-to-last in the amount of
land it currently has. She mentioned a map and an overlay which
the committee reviewed during the meeting.
Number 0502
REPRESENTATIVE JOULE asked if CSSB 7(FIN) am discusses the types of
lands the university would select. For example, would some land
classifications be off-limits?
MS. KROGSENG said there is a list of lands unavailable for
selection, but that list is not done by classification; the
commissioner provides a list of available lands. The bill does
specify the lands that may not be selected.
REPRESENTATIVE JOULE inquired how that selection compares with the
pending selections of municipalities.
MS. KROGSENG replied that the municipalities, under current law,
are more restricted; the lands available for selection under this
legislation are more far-reaching. She noted that she had
discussed that issue with the Alaska Municipal League (AML), but it
could not be addressed in this legislation due to the
single-subject title rule.
REPRESENTATIVE JOULE suggested that the university would be bumped
ahead, in terms of the types of classifications to which they have
access.
MS. KROGSENG said yes; according to her understanding of the
legislation, certain lands that the university could select would
not be available to a municipality.
Number 0294
REPRESENTATIVE JOULE asked if the AML is supportive of this
legislation.
MS. KROGSENG replied, "What we did in the legislation was ... if
the university selects land within municipal boundaries and that
municipality has a remaining entitlement, then the municipality has
the first right of refusal." She did not have a letter of support
from the AML, she said, but doesn't believe they oppose the
legislation.
Number 0222
REPRESENTATIVE BARNES requested that Ms. Krogseng provide the
committee with the use of the acreage presently held by the
university.
MS. KROGSENG agreed to that, but noted that Ms. Redman was present
and may have that information.
CO-CHAIR SANDERS requested that Ms. Krogseng also provide the
committee with the income stream coming from that land, at present.
MS. KROGSENG agreed to that, as well.
CO-CHAIR SANDERS asked if the university would pay start-up
expenses from the income generated from the land or from general
fund monies.
MS. KROGSENG expressed her understanding that income from the land
which the university currently manages is placed in the land trust.
The interest from the land trust pays start-up expenses.
CO-CHAIR SANDERS inquired as to the provisions regarding the
state's oil rights.
MS. KROGSENG explained that if oil was found within five years of
the effective date of this Act, the revenue stays with the state in
perpetuity. If oil is found after five years of the effective date
of this Act, the revenue stream goes to the university.
CO-CHAIR SANDERS said he found that to be counterproductive, if the
goal is to support the university. He added, "We're going to give
them some land, as long it doesn't make much money. If it makes a
little money, they can have it. But if it makes very much money,
we want it."
MS. KROGSENG said she believes that provision was placed in the
legislation some time ago.
TAPE 99-34, SIDE A
Number 0001
MS. KROGSENG commented that there was some concern regarding
speculation and taking the state's revenue streams. She understood
that there have been many compromises over the years, in attempting
to develop a program and a document that works for the university
as well as the state.
CO-CHAIR SANDERS said he understood Ms. Krogseng to say that the
university could sell the land.
MS. KROGSENG said that is correct. She further explained that the
university would have to go through the public process, as does the
DNR. She requested that Ms. Redman come forward to answer some of
these questions.
Number 0196
WENDY REDMAN, Vice President, Statewide University of Alaska
System, commented that she "really loved" this bill six years ago,
but she "likes" this bill now. Ms. Redman said that the
university, as a land grant university, has a long history and
tradition of managing land. Other than the DNR, the university is
the only state agency set up to manage land. She believes that the
university's record illustrates the phenomenal job it has done
managing its 100,000 acres.
MS. REDMAN informed the committee that although the university was
originally allotted 350,000 acres from the federal government, it
only received 100,000 acres. At statehood, the original lands had
not been surveyed and so were given up. Those lands were managed
by the state and mingled with other state lands for the good of all
Alaskans, which was the intent. In the first 30 years of state
management, those lands generated $590,000 total. The university
sued the state to have management of those lands returned to the
university. By the time the university won that suit, however, the
university's original lands were not available because the land had
been given away. Therefore, the university received lands of
similar value.
MS. REDMAN pointed out that in the ten years that the university
has had active management of the lands, it has generated $32
million from the 100,000 acres. She said the university is an
aggressive land manager, which she acknowledged did cause some
problems. For example, the university has engaged in timber
cutting, which caused some difficulties.
Number 0452
MS. REDMAN reported that the university believes it is in the
state's interest and its own interest to generate new revenue for
the state. She pointed out that when land is put into the
university, it generates revenue that wouldn't otherwise be
available to the state or to the university to use; that is the
idea of getting these lands into development, which she believes
the university can do more effectively than the state can. Ms.
Redman clarified that she was not speaking negatively about the
DNR, which has done a great job with oil and gas because it has the
resources and staff to do it. However, outside of oil and gas, the
DNR has not had the staff to get land out into the private sector.
MS. REDMAN informed the committee that she would provide copies of
the recent land management report that lists all of the
university's properties and the activity, pending and ongoing, on
those properties, as well as the financial statements from the land
grant trust fund. [Before the end of the meeting, members received
copies of a lengthy document titled, "Statewide Office of Land
Management Annual Report," dated February 1999.] She echoed Ms.
Krogseng's comment that this legislation encompasses many
compromises.
MS. REDMAN addressed Co-Chair Sanders' question regarding oil and
gas. Under CSSB 7(FIN) am, it would be very difficult to determine
how to obtain any oil and gas lands. There has been some support
from the oil and gas industry for some joint projects; for those,
it is easier for that industry to be involved with the university,
rather than the state. There has been some opposition to this from
various groups, however, such as the environmental community,
hunters and fishermen, who are concerned with limited access to the
lands acquired by the university. This legislation attempts to
address that concern with language indicating the continuance of
the customary utilization and access to the land, to the maximum
extent the university could. Also, prior to transfer of land into
third-party hands, such entry would be allowed on university land.
Beyond that, however, the university cannot make any commitments
regarding use.
MS. REDMAN emphasized that she would prefer a bill with specific
acres designated. In conclusion, she pointed out that this
legislation will not solve any financial problems for the
university. Land development takes much time, and potential income
is in the future. Therefore, no immediate or short-term financial
problems of the university would be solved.
Number 0829
REPRESENTATIVE BARNES inquired as to the location of the
university's land that was logged.
MS. REDMAN replied that the logging is occurring in the Yakataga
region, Cape Suckling. Furthermore, the university had land in
Southeast Alaska, in the Ketchikan region, that was logged. She
also recalled some land on Afognak Island that is part of the
original settlement with the state.
REPRESENTATIVE BARNES asked about Ms. Redman's statement that if
the university developed lands, it would be well into the future
before the university could derive any income from it.
MS. REDMAN reiterated that land development is a long-term process;
therefore, it will not solve financial problems next year or the
following year. Money generated from land development is placed
into the natural resources trust fund, which was established by the
legislature. The university only utilizes the earnings of the
fund, minus inflation-proofing, in order that an income stream is
generated. Ms. Redman informed the committee that the operating
budget is $160 million a year.
REPRESENTATIVE BARNES emphasized that state land cannot be disposed
of to anyone for a quick solution.
MS. REDMAN clarified, regarding a previous question from
Representative Joule, that the state cannot transfer any public
domain land to the university. This is because the university is
not public domain land. Therefore, any lands already legislatively
designated as park land cannot be transferred to the university.
CO-CHAIR SANDERS, in the interest of time, asked that testifiers
limit testimony to three minutes.
Number 1137
KEVIN TRITT testified via teleconference from Anchorage, voicing
opposition to SB 7 as it currently stands. He has followed the
university land grant as legislation, and as a student, he said,
for a few years. Some practices implemented by the university as
land managers, particularly in the Cape Yakataga region, have
caused him to oppose this bill. The university wasn't put into the
best of situations with Cape Yakataga, as they were given the
timber rights only, he noted. This bill doesn't adequately appease
his concerns that the university may select further timber lands.
He agrees with Wendy Redman that it would be better to have a bill
which specifies the exact lands to be given to the university.
MR. TRITT mentioned that a number of Southeast Alaska communities
have opposed the university's land grant because of its practices
at Cape Yakataga. He offered a copy of a documentary film prepared
by university students from the Environmental Education Club, who
felt that the university's procedures at Cape Yakataga aren't sound
ecological management practices and don't represent the type of
university that they wish to attend.
Number 1304
CO-CHAIR SANDERS accepted Mr. Tritt's offer of the tape, asking him
to send it through the Anchorage LIO.
Number 1344
JOHN EASTON, Bristol Bay Coastal Resource Service Area (Bristol Bay
CRSA), testified via teleconference from Dillingham, specifying
that he was speaking on behalf of their elected board, which
represents 11 communities. They oppose SB 7. Although strong
supporters of the university system, they believe indiscriminately
giving public land to the university in a period of declining
revenues is not the answer. Rather, a more reliable way to fund
the university is needed, now and in the future.
MR. EASTON informed the committee that the majority of land within
his coastal district is owned by the state and managed by the DNR.
Two major adopted land use plans are in effect: the Bristol Bay
Area Plan and the Nushagak/Mulchatna Rivers Recreational Management
Plan. These plans, representing years of hard work, provide an
outline for resource developers on state land and allow the coastal
district involvement in the public planning process. However, SB
7 doesn't account for future uses of these lands, and it will
eliminate guidelines for how the university manages these lands.
Mr. Easton cautioned that there are highly valued public resources
at risk here. He asked the committee to not support this bill but
to reevaluate other options to fund the university.
Number 1465
RUSSELL NELSON, Land Manager, Choggiung Limited (village
corporation), testified via teleconference from Dillingham. He
expressed strong concerns about SB 7 and potential land selection
in the Nushagak/Mulchatna drainage. Choggiung Limited is a major
land owner along the Nushagak River; their lands, surrounded by
state lands, are managed under the guidelines of the
Nushagak/Mulchatna Recreation Management Plan. This bill creates
the potential for developing lands in the Nushagak/Mulchatna area,
removing those lands from the public planning process.
CO-CHAIR SANDERS called upon Jane Angvik, Director, Division of
Land, DNR, who reserved her comments for a later time.
Number 1550
TOM ARMOUR, Manager, City and Borough of Yakutat, testified via
teleconference, specifying that he was speaking as a professional
municipal manager, not reiterating the assembly's position. He
indicated the City and Borough of Yakutat supports the concept of
first rights for, and protection of, a priority for municipal lands
selections. This first right of refusal, as it is now, is much
appreciated, and he believes this bill version is far better than
what they've dealt with in the past.
MR. ARMOUR recommended a simple amendment stating that "municipal
land selections shall receive first priority in selections,
adjudications and/or conflicts." Second, on page 8, lines 27 and
28, he suggested adding that the university wouldn't be able to
proceed with selections under this bill until January 1, 2000.
This simple protective device recognizes the proliferation of
borough annexations and creations either underway or being
considered, in view of other declining state assistance. Finally,
Mr. Armour reiterated a suggestion of March 4 that some portion of
the income stream to the nearest university branch instead go to
the nearest municipal government. Noting that many selections take
place in areas lacking university branches, he said these
selections remove local revenue generation possibilities. He
believes that would also benefit newly forming local governments.
Mr. Armour concluded by commending the current version.
Number 1780
ROSS COEN came forward on his own behalf, informing members that
he'd just graduated from the University of Alaska Fairbanks. He
spoke in opposition to SB 7; although the university requires
adequate funding, he believes this is little more than a
short-sighted land giveaway. He reported that a now-retired
philosophy professor at the university, Dr. Walter Benish (ph),
still teaches classes on a volunteer basis because otherwise the
philosophy department would fold. Revenue from SB 7 won't come in
for at least ten years, and Dr. Benish cannot teach on a volunteer
basis until money starts coming in. This bill doesn't solve the
university's funding problems, he concluded, imploring the
committee to instead fund the university through the regular
appropriations process.
Number 1865
CHOW TAYLOR, Alaska Municipal League (AML), came forward,
specifying that the AML doesn't oppose the bill but has some
concerns. She expressed appreciation for inclusion of the first
right of refusal but also voiced concern that it only applies to
the VUU [vacant, unappropriated, unreserved] lands that
municipalities are entitled to select under Title 29. The AML
doesn't believes that other lands which the university would be
eligible to take under Title 14 would be subject to objections by
the municipalities, which aren't able to select those lands. Many
municipalities are trying to complete their land conveyances, and
the state currently owes municipalities more than 600,000 acres.
MS. TAYLOR restated that under current law, municipalities are only
entitled to select vacant, unappropriated, unreserved lands. If
some of those selections are denied by the state, they would have
the opportunity to ask the state to reclassify some of those lands,
so that they might select them at a later date. If the university,
in the meantime, can come in and select lands other than VUU lands,
those would be taken out of consideration for municipalities.
MS. TAYLOR informed the committee of some suggestions by the AML:
1) that the university not be allowed to select lands within
municipalities until their land selections are completed, or 2)
that the university be limited to selecting VUU lands within
municipal boundaries, or 3) that municipalities be allowed to
select all classifications of lands within their boundaries, as
would be the university.
CO-CHAIR SANDERS requested that Ms. Taylor provide those
suggestions in writing, to which she agreed.
Number 1992
MS. KROGSENG emphasized that first, Senator Taylor doesn't believe
this is an immediate solution for the university's financial woes.
However, if they don't start working on a long-range fiscal plan
for the university, they will be in the same situation in five,
ten, fifteen or twenty years. This bill isn't trying to address
the immediate financial needs of the university. Second, regarding
municipal entitlements, it is her understanding that 90-some
percent of the lands due to municipalities have already been
selected, although they have yet to be conveyed. Once selected,
lands are totally off the table.
Number 2065
CO-CHAIR SANDERS recessed the House Resources Standing Committee
meeting at 3:47 p.m., to the call of the chair. [A new meeting was
subsequently called for May 7, 1999, at which time CSSB 7(FIN) am
was heard again.]
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