03/23/1993 01:30 PM House ARR

  REPRESENTATIVE BRICE asked about specific recommendations.                   
  He noted that he introduced HB 132 and co-sponsored HB 213,                  
  which dealt with these problems, and asked if the task force                 
  would be available to write a letter of recommendation.                      
                                                                               
  MS. WILLIAMS stated that Charlie Boddy was the member of the                 
  task force that would be most suited to write that letter.                   
                                                                               
  CHAIRMAN DAVIS acknowledged the presence of Senator Leman at                 
  2:05 p.m.                                                                    
                                                                               
  MS. WILLIAMS said many types of businesses contacted them                    
  about underground storage tanks.  There is a problem                         
  regarding these tanks.  The state has a fund through which                   
  they collect money for clean up.  There does not seem to be                  
  an understanding by the tank owners, big and small, why they                 
  pay this fee.  Another problem involves the procedure for                    
  getting final closure on an underground storage tank.                        
  Apparently someone will jump through the hoops and go                        
  through the process to get their tank closed.  However,                      
  instead of closing the tank it will be put on inactive                       
  status, which results in a cloud on the property's                           
  marketability.                                                               
                                                                               
  REPRESENTATIVE HUDSON asked why that was.                                    
                                                                               
  MS. WILLIAMS did not know why.  She said that agency                         
  officials did not testify at the hearings.  She also said                    
  that it did not make any sense to expend the time and money                  
  to solve the problem, if it never gets resolved.                             
                                                                               
  CHAIRMAN DAVIS commented that the committee would                            
  investigate this problem.                                                    
                                                                               
  SENATOR LINCOLN asked if any agencies testified or were                      
  invited to testify.  She wanted to know if it was the task                   
  force's choice not to have agency people at the hearings.                    
                                                                               
  MS. WILLIAMS stated that was not the intent.  She said that                  
  the time restraints and the governor's approach, allowed the                 
  task force to go directly to the affected parties and review                 
  their testimony and then draft recommendations.  She said                    
  that the agencies may not have had invitations to the                        
  hearings, but they had the opportunity to show up.                           
                                                                               
  MS. WILLIAMS mentioned that there were some recommendations                  
  that would catch the eye of environmental groups.  And that                  
  they showed up at some of the hearings with copies of the                    
  drafts of regulations.                                                       
                                                                               
  SENATOR LINCOLN asked if the agencies knew they had the                      
  opportunity to testify.                                                      
                                                                               
  MS. WILLIAMS said they may or may not have known.                            
                                                                               
  SENATOR LOREN LEMAN said they were not invited or excluded.                  
                                                                               
  SENATOR LINCOLN asked it the task force considered above                     
  ground storage tanks as well as those underground.                           
                                                                               
  MS. WILLIAMS was not sure if some of the regulations applied                 
  to above and underground storage tanks.                                      
                                                                               
  REPRESENTATIVE HUDSON commented that the Federal EPA UST                     
  (Environmental Protection Agency, Underground Storage Tank)                  
  program applies to underground storage tanks, while Alaska's                 
  LUST (Leaking Underground Storage Tank) program applies to                   
  underground storage tanks.  Our LUST program was put into                    
  place to comply with federal law so the state would not lose                 
  federal money, he said.                                                      
                                                                               
  SENATOR LINCOLN mentioned that since the task force was                      
  focusing on economic opportunity, they should consider above                 
  ground storage tanks.  Approximately 95% of the storage                      
  tanks in rural Alaska are above ground.  The Coast Guard has                 
  threatened to close all the tanks down this year, she noted.                 
                                                                               
  MS. WILLIAMS pointed out Specific Industry Recommendation                    
  No. 8, which suggests eliminating the DEC's requirement of                   
  an annual fee for an underground storage tank.  Owners of                    
  large numbers of tanks are being charged thousands of                        
  dollars a year in annual fees.  This has a serious negative                  
  impact and is basically a hidden tax, she stated.                            
                                                                               
  REPRESENTATIVE BRICE asked where the fee went.                               
                                                                               
  MS. WILLIAMS said the fee is supposed to cover registering                   
  the tank.  There is some rather extensive paperwork involved                 
  to register an underground tank.  However, she questioned                    
  the necessity to re-register next year.  There is a process                  
  already mentioned for digging up a tank, but if the same                     
  tank is still underground in the same place, she wondered                    
  why it should be re-registered.  "The agency is looking for                  
  additional revenue.  Call it a tax.  It is an unfair and                     
  unnecessary tax," she said.  She commented that these                        
  underground tanks have already closed down many small                        
  businesses.                                                                  
                                                                               
  SENATOR LEMAN commented that he wasn't trying to justify the                 
  program, but rather providing some names of people with whom                 
  to follow up.                                                                
                                                                               
  CHAIRMAN DAVIS mentioned that he planned on adjourning the                   
  meeting around 2:30 p.m.                                                     
                                                                               
  MS. WILLIAMS referred committee members to page 14, Specific                 
  Industry Recommendation No. 9.  The man that brought it to                   
  the task force's attention is the man who would be able to                   
  produce the oil and create the jobs, she said.  One of the                   
  products out of a refinery is heavy bunker oil.  In 1972, a                  
  set of taxes was imposed on refinery products.  A tax of                     
  $2.10 per barrel was imposed on bunker oil.  This priced                     
  Alaska's heavy bunker oil right out of the market, she                       
  alleged.  Bunker oil is a low grade oil that doesn't create                  
  much of a price, she explained.  No heavy bunker oil has                     
  been sold in Alaska since, and no tax has been collected.                    
                                                                               
  MS. WILLIAMS claimed Princess Tours has considered                           
  purchasing heavy bunker oil from the Kenai refinery, but                     
  only if the price is lowered by lowering the tax to become                   
  competitive with the price of bunker oil from British                        
  Columbia.  Ms. Williams also mentioned that taxes are rising                 
  in British Columbia and that it may not be very difficult to                 
  create a simple little industry in Alaska by reducing or                     
  deleting the tax.                                                            
                                                                               
  CHAIRMAN DAVIS mentioned that bunker oil is a byproduct of                   
  the North Slope oil that Tesoro refines and it is a                          
  residual.  There is nothing they can do with it.  It gets                    
  hauled out of the state, he added.                                           
                                                                               
  MS. WILLIAMS said it is getting sold out of state so Alaska                  
  is not collecting any tax on it either.                                      
                                                                               
  REPRESENTATIVE BRICE commented that many of the regulations                  
  were good legislation ideas.  He was concerned that there                    
  were no recommendations addressing procurement practices.                    
  During the campaign he was told by many people about                         
  problems with state procurement procedures, which are                        
  generally not favorable to small businesses.  They can be                    
  difficult to compete with and he cited [the Department of]                   
  Corrections as an example.                                                   
                                                                               
  MS. WILLIAMS stated that several people testified on                         
  procurement, especially relating to the graphic services of                  
  the University of Alaska Fairbanks and other general                         
  comments about [the Department of] Corrections.  She                         
  recalled concluding that the University was at fault in its                  
  procurement practices, though it was not included in the                     
  task force's recommendations.  Apparently the problem is not                 
  with the regulations, but how they are being carried out,                    
  she declared.                                                                
                                                                               
  REPRESENTATIVE BRICE said procurement laws are written so                    
  that there is generally a tendency to help bigger and larger                 
  out of state businesses.                                                     
                                                                               
  MS. WILLIAMS said she went to a presentation of the Alaska                   
  Manufacturers Association, where one of the individuals was                  
  complaining about competition under procurement.  He claimed                 
  that they weren't getting a preference.  She said that, in                   
  fact, the state is underwriting a lot of Alaska businesses                   
  with its bidder preferences.                                                 
                                                                               
  REPRESENTATIVE HUDSON suggested that in many cases a law is                  
  enacted that gets passed from the governor to a                              
  commissioner, then a director, and so on.  Unfortunately,                    
  the legislature does not follow up on the laws to see that                   
  the intent is being met.  He said, "We need to make sure                     
  what we are doing is serving the public's interest."  The                    
  task force has maybe touched the tip of the iceberg in its                   
  initial investigations.  He was interested in suggestions of                 
  how to get the big picture in sifting through these                          
  regulations.  Governor Lamm of Colorado put out a very good                  
  paper that suggested society is constantly confronted with                   
  affordable risks, he said.                                                   
                                                                               
  REPRESENTATIVE HUDSON claimed we take a risk walking across                  
  the street.  If the government is going to implement laws                    
  and regulations, they should be because the public can't                     
  afford the risk of not doing so.  Unfortunately, they keep                   
  costing and costing even though the public can afford the                    
  risk.  Basically there needs to be a much more thorough                      
  analysis of the cost benefit ratio, he concluded.