Legislature(1999 - 2000)
04/19/1999 09:04 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 128(RES)
"An Act moving the termination date of the Board of
Storage Tank Assistance to June 30, 1999; relating to
the storage tank assistance fund; relating to
financial assistance for owners and operators of
underground petroleum storage tank systems; relating
to discharges from underground petroleum storage tank
systems; and providing for an effective date."
This was the second hearing for this bill.
Senator Sean Parnell moved for adoption of CS Version "I"
as a Workdraft. Senator Al Adams objected. He wanted to
know what the bill would do and how this would affect the
state.
Co-Chair John Torgerson spoke to the motion. The bill that
came to the committee from the Senate Resources Committee
converted the grant program to a straight loan program. In
discussion in this committee, there was concern that some
of the "mom and pop" businesses would suffer. This CS would
establish an income limit on the tank closure and upgrade.
Current statute granted up to $60,000. This version would
continue that but add a ratio of four-to-one of assets. He
detailed the formula. In order to qualify for the tank
upgrade grant, an owner's assets would have to be less than
$240,000. For the tank clean-up grant, the current grant of
$1 million would be lowered to $250,000 and the same
formula applied. Assets for this grant would therefore have
to be under $1 million.
Senator Al Adams maintained his objection. He realized the
goal to change from a grant to a loan program. However, he
was unable to determine who would and who would not
benefit. He also wondered how the enabling regulations
could be adopted by the time the legislation went into
effect. Co-Chair John Torgerson noted there would be more
testimony from the department.
Senator Gary Wilken referred to the sheet in the packet
that showed the upgrades. He questioned which companies
would qualify for the grants. Co-Chair John Torgerson noted
that SeaLand assets were presumably higher than the four-
to-one formula for the project they requested and they
would not qualify. Senator Gary Wilken asked if there
would be another column on the spreadsheet to show the
assets of the business. Co-Chair John Torgerson affirmed
and reminded there were two different categories, the tank
upgrade and closure and the tank cleanup.
Senator Pete Kelly asked if the assets were corporate or
individual assets. Co-Chair John Torgerson said it would
depend if the company was corporate or individually owned.
He qualified that should be clarified.
Senator Gary Wilken asked if the assets would be net. Co-
Chair John Torgerson said that should also be discussed. He
noted that it was not his intention to do detailed audits
to determine eligibility. He spoke to the value of
contaminated lands.
The CS was adopted as a workdraft by a vote of 6-1-2.
Senator Al Adams cast the nay vote. Senator Dave Donley and
Senator Randy Phillips were absent.
JOHN BARNETT, Executive Director, Storage Tank Assistance
Board, Division of Spill Prevention and Response,
Department of Environmental Conservation, testified. He
commended the co-chair on the progress this CS made. He
did have concerns about the assets figuring that the
amounts listed in the bill could be too low. He spoke of a
lodge-owner's total assets of over $1 million.
He proposed rewording the language to consider the net
assets or raise the gross assets allowed. He offered to
work with the committee to prepare new language.
He then commented on the effective date saying this would
take effect in the height of the construction season and
would cause work stoppages. He suggested changing the
effective date to July 1, 2000.
Co-Chair John Torgerson pointed out that the board would
have one year after the effective date before it sunset. He
asked if the board needed to operate into 2001. John
Barnett explained that the board would sunset in the middle
of the construction season. He offered that the board
could implement the program in phases.
Co-Chair John Torgerson wanted to know if the multi-million
dollar corporations would still be eligible for grants
while the effective date was delayed. Barnett admitted
that would be the case. He suggested implementing the
insurance clause immediately, which would eliminate the
large companies from the closure list.
Co-Chair John Torgerson did not think it would eliminate
all the large corporations. He did say that the committee
should look at the effective date of the grant portion.
The loan program would be delayed until the department
adopted regulations.
Senator Al Adams asked the percentage of income allowed
under the current program. John Barnett answered that the
original program had no income limits. He listed the
maximum amounts available. The department was in support
of the committee's efforts.
Senator Gary Wilken had a question about the branding
agents. He noted that some stations were owned and
operated by the corporations. Others were independently
owned and had a brand name agreement to sell the
corporation's product. John Barnett spoke to the
contractual relationships.
Senator Gary Wilken wanted to know if there was a better
way to determine the net assets. He wondered if setting a
formula on the amount of gas pumped or by some other
method. John Barnett said something similar had been
considered.
John Barnett suggested the best way to determine assets
would be to require the owner to submit a certified
statement of their assets.
Senator Gary Wilken said the reason he asked those
questions was due to a friend of his who had about $20
million in airplanes but only one fuel tank. He felt this
operator should be given the grant. Co-Chair John
Torgerson said it was his intent that a person who could
afford it should pay for it.
Co-Chair John Torgerson then asked again for explanations
of the three programs. John Barnett explained there were
really only two programs.
Co-Chair John Torgerson broke down the amounts available
for grants and the intent of the income limitations. He
asked if the four to one assets formula was adequate. John
Barnett said he felt it was too low. Co-Chair John
Torgerson asked what was the average grant. John Barnett
said the closure and cleanup programs were usually tied
together and gave the figures.
Co-Chair John Torgerson asked John Barnett for his
definition of net assets. He asked the witness to focus on
the $60,000 grant portion requirement. The other program
could then be addressed under the same method later.
Barnett had conferred with Steven Daugherety of the
Department of Law. They used the proposed four-to-one
formula and drafted language to read, "the owner/operator
does not have tangible net assets that exceed the product
of multiplying the estimated cost of cleanup by four."
John Barnett defined the $60,000 program qualifications as
tangible net assets after deducting liability not over $1
million at any time.
STEVEN DAUGHERETY, Assistant Attorney General, Natural
Resources Section, Civil Division, Department of Law came
to the table at the request of the co-chair. Co-Chair John
Torgerson asked if it was his recommendation to use
tangible net worth in place of assets. Steven Daugherety
described how this was taken from federal language.
Co-Chair John Torgerson asked if it was his recommendation
to raise the four-to-one ratio. Steven Daugherety
responded that the ratio would probably work using the net
asset definition. The liabilities would be removed. He
detailed the liabilities involved in operating a business.
John Barnett referred to earlier discussions about net
worth and liability. He and Steven Daugherety had worked to
draft language to remove that liability.
Co-Chair John Torgerson then worked to define tangible net
assets. There was discussion on corporate and personal
assets. He stressed that the committee did not want to
grant funds to the tank owners who could afford the
cleanup. The legislation needed to be clear about that.
Co-Chair John Torgerson asked how many of the pending
closures or upgrades were corporations. John Barnett did
not know specifically because that information was not
required in the application process. He made estimates
based on other information he had. He guessed that about
half of the owners were incorporated.
Co-Chair John Torgerson felt the tangible net assets
provision was too broad. He admitted the four to one ratio
he proposed might be too narrow.
Co-Chair John Torgerson turned to the tank cleanup program
and asked if the department wanted to use the same tangible
net asset provision. John Barnett responded he did.
Co-Chair John Torgerson then wanted to know if the four-to-
one ratio was acceptable as well. John Barnett noted that
the current ranking system worked well. The department
placed most of the larger companies at the end of the list
and most of the corporate projects would then drop off and
not be funded by the state.
Co-Chair John Torgerson clarified that the assets limit and
the effective date were the only problems the department
had with the bill.
Steven Daugherety pointed out that with corporate entities,
it might not be possible to require them to cover the cost
of the cleanup.
Co-Chair John Torgerson noted that the tangible net assets
provision could be a giant loophole.
Senator Al Adams suggested using the federal language along
with a cap of $1 million. Another option would be to use
the capacity of the tank as a guideline. Co-Chair John
Torgerson did not have information to use as guidelines for
any of the suggestions since the department did not require
income as a requirement for the grants.
Senator Al Adams had a question about the effective dates.
Co-Chair John Torgerson did not want to leave a loophole
for large corporations to receive the grants while waiting
for the effective date. It was also not his intention to
bankrupt "mom and pop" operations.
Co-Chair John Torgerson ordered the bill held in committee.
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