Legislature(1995 - 1996)
02/14/1996 03:13 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 456 - BOARD OF STORAGE TANK ASSISTANCE Number 952 CHAIRMAN KOTT announced the next order of business was HB 456, "An Act relating to the Board of Storage Tank Assistance; and providing for an effective date." GEORGE DOZIER, Committee Aide, House Labor and Commerce Committee, Alaska State Legislature, came before the committee. He explained HB 456 is a sunset bill which addresses the Board of Storage Tank Assistance. That board is due to sunset on June 30, 1996. The bill accomplishes two things. First, it extends the date of the board to June 30, 2000. It also adds another individual that doesn't have a financial or other vested type interest in the industry. He noted both portions of the bill are recommended by the legislative auditors. Number 1039 JOHN BARNETT, Executive Director, Board of Storage Tank Assistance, Division of Spill Prevention and Response, Department of Environmental Conservation (DEC), pointed out the board has one employee, himself, and seven volunteer members. He informed the committee that the board has issued about 650 grants and loans to date and has close to 1,000 applications still pending. Mr. Barnett said there is quite a few more years of work left in getting lot of the sites cleaned up. He encouraged the passage of HB 456. Number 1074 REPRESENTATIVE PORTER asked Mr. Barnett if he has ever been associated with a board or a group that has an even number rather than an odd number. MR. BARNETT said this will be a new experience. He said they will probably have to enact bylaws whereby the chairman would only vote in the case of a tie. Number 1105 REPRESENTATIVE ELTON asked how the chairperson is picked. MR. BARNETT explained the chairperson is chosen by a vote. He said should HB 456 become law, the board will probably have to enact bylaws prior to electing a new chair. Representative Elton said he sees a problem with an even amount of members on a board. He said if he were on the board, he wouldn't want to be a chair. Number 1135 REPRESENTATIVE KUBINA pointed out that the bill didn't have a fiscal note. He said if someone is going to be added to the board, there would be travel expenses. He noted the bill probably needs a small fiscal note. Representative Kubina questioned adding two people to the board. REPRESENTATIVE KOTT said they only want one additional person. He also said the committee members didn't have a fiscal note. Before the bill is forwarded to the next committee of referral, a fiscal note will be contained in the packet. Number 1175 MR. BARNETT said he believes a fiscal note was faxed to the committee earlier in the day. CHAIRMAN KOTT asked if the fiscal note was revenue neutral. Number 1188 JIM HAYDEN, Program Manager, Storage Tank Program, Division of Spill Prevention and Response, DEC, came before the committee. He said a fiscal note was prepared and apologized for not getting it to the committee sooner. Mr. Hayden said an analysis was done on the required travel for the new position and found it could be absorbed into the travel budget as it currently exists. Mr. Hayden said the department sees the fiscal note as a zero fiscal note. CHAIRMAN KOTT questioned the extent of the problems, statewide, that still need to be addressed. MR. HAYDEN explained they have about 800 applications currently ranked and on a waiting list. He also said somewhere between $50 million and $60 million is needed. Over the last couple of years, they have received appropriations for about $2 million each year. It will take many many years to take care of the problem. He noted they are also taking another approach to this problem in that the department is modifying their regulations to allow for a risk assessment in determining alternative cleanup levels. Mr. Hayden said currently, they are limited to a specific cleanup matrix and value. In the future, they'll be able to, by risk assessment, set another value if there is minimal risk. That should significantly reduce the costs of cleanup. He said they expect that estimate to come down as they implement the new regulations. It could be cut in half or maybe more. CHAIRMAN KOTT asked if there are new problems being identified on an annual bases that is going to add to the current problems. MR. HAYDEN said the deadline has come and gone in terms of submitting applications. There is one other route that can be used to submit an application and that is if someone is already on the waiting list for an upgrade or closure grant for a tank system. He explained there were standards due, in 1998, for upgrading all tanks. There is a program and a waiting list for that. When people do eventually get their grant to upgrade their tanks, if they find contamination when digging up their tanks, then they can submit a cleanup application. He noted the department does expect some additional need when the tanks are upgraded. CHAIRMAN KOTT asked if there is some kind of a strategy that has a time certain as to when all the tanks are going to be upgraded. MR. HAYDEN explained the upgrade schedule is set by law. The facilities have to comply by the 1998 deadline either through a system served by their own resources or by a combination of the two. He said the department feels fairly certain that will happen. It is more difficult to estimate the time required for cleanup. He said realistically, he would expect beyond the year 2000, 2005 perhaps. Number 1406 CHAIRMAN KOTT asked if there are federal monies associated with this cleanup process. MR. HAYDEN informed the committee the federal government hasn't released and money for this. There are monies in what is called the leaking underground storage tank (LUST) trust fund in Washington, D.C. Currently, there is a $700 million surplus in that fund. We each pay 1/10 of a cent into the fund each time we fill up our gas tanks in our cars, but the federal government has chosen not to release any of those monies to the states in terms of cleanup for assistance to facilities. CHAIRMAN KOTT referred to the 800 applications currently on file and asked how the department determines priority. MR. HAYDEN said they have a ranking system that has been developed over the last four years. The last time the ranking system was revised was in August, 1994, and it has numerous criteria. The most significant would be their system of what they call the Alaska hazard ranking model which takes into account a risk posed by a site. This is in terms of cleanup. So risk factors into this heavily in terms of who gets the grant first. In terms of upgrade and closure, there are various criteria such as access to fuel and number of sites in an area would be another. There are about ten criteria for each program. He noted the cleanup waiting list is about 250 and the upgrade and closure is about 600. Number 1518 REPRESENTATIVE KUBINA asked how much money the legislature funded last year for dealing with this issue. MR. HAYDEN said approximately $2 million. Representative Kubina asked what is in the Governor's budget this year. Mr. Hayden said they have asked for a continuation amount. Number 1533 REPRESENTATIVE ELTON referred to the audit report recommending adding a public member and asked what the effect would be of substituting a public member for one of the two owners or operators of underground storage tank systems. MR. HAYDEN said he hasn't thought about that. When he read the legislative audit report, he felt the recommendation was a good one in terms of adding a disinterested party because it would broaden the perspective. He referred to the issue of having an even member board and said he would like to get back to committee on the issue. Representative Elton said it would be helpful to have that information and also information on when the terms are completed of two members who represent owners or operators of underground storage tanks. Number 1622 MR. BARNETT explained there has always been a large and a small tank owner on the board. That has provided an excellent balance over the last few years. He said he wouldn't recommend removing either of the two tank owners on the seven member board. The small tank owner has always been sort of chosen from the small mom and pop type facilities. He referred to the large tank owner, and indicated the board has focused on large bulk fuel facility owners who also owned underground tanks that met the criteria. The large tank owner has been providing a lot of insight into trying to resolve some of the rural tank and above ground tank problems that the state is now (indisc.). At this time, removing one of the tank owners from the board would probably not be a recommended action. It is a fairly well balanced board. Mr. Barnett noted he believes the board is flexible enough in its authorities that it could handel working with an even numbered board. REPRESENTATIVE ELTON asked Mr. Barnett if he feels that a public member could be substituted for the engineer, the general contractor or the insurance industry representative. MR. BARNETT said all the members of the board were chosen for their technical expertise. It would be very had to sacrifice any of those member's skills, it would hurt the board from a technical aspect on some of the issues they have to resolve. He referred to there being many issues that might be related to laboratory methods or cleanup techniques and said the board tends to lean on the engineer representative for feedback and input. Mr. Barnett said because the board is involved with the certification of tank workers, the certified worker on the board, who is a tank contractor, also provides input. He referred to the insurance representative, who is currently the chair, and said it would be very difficult to lose her because of the fact that they are dealing with major liability issues related to environmental liability. Part of the reason for this cleanup program is to address pollution liability by having a program in place that takes the liability away from the state and puts it in the hands of the tank owner. Mr. Barnett said the members that would probably be better replaced would possibly be the government members. There are two government members, Department of Environmental Conservation and Department of Transportation and Public Facilities (DOT/PF). Since the program is housed within DEC, it would not be wise to remove that member. He said if he had to make a choice, he would suggest the DOT/PF representative. Number 1777 REPRESENTATIVE NORMAN ROKEBERG referred to the $2 million appropriation and asked if that is general funds. MR. BARNETT explained that comes from the prevention account. The prevention account evolved from the oil and hazardous substance fund. There is a 5 cent a barrel surcharge that comes off the pipeline. He said 3 cents goes into the prevention account and 2 cents goes into the response account. The prevention account funds DEC's pollution prevention operations and spill response office within the Spill Prevention and Response Division of DEC. Mr. Barnett said his program is funded out of that prevention account. There are sufficient funds to fund the budget for this year out of that prevention account. He noted it used to be called the 470 fund. Number 1819 REPRESENTATIVE SANDERS questioned that adding a person is revenue neutral. MR. BARNETT said over the last couple of years, they have tried to reduce the overall travel and budget costs by increasing the number of teleconferences. During the early days of the program, they had higher travel costs because they were drafting and developing the regulatory framework for the program. They drafted regulations and held workshops throughout all portions and regions of the state. Mr. Barnett said they are now at an efficiency point where they have three formal board meetings a year in Juneau, Anchorage and Fairbanks. He noted the board rotates between those communities. There are usually only three or four board members that travel to any one meeting. Operating costs are now at the point where everything can be absorbed as their office and computer equipment has been paid for. Mr. Barnett said he feels they can stay at the same level for the next few years without increasing their budget. REPRESENTATIVE SANDERS asked Mr. Bennett's thought about adding two additional people to the board. MR. BENNETT said there wouldn't be an objection by the board members, nor the Administration he suspects, to having an additional two members added. He said he didn't expect the travel would still increase proportionately as they have teleconferencing abilities. He believes they could stay within their existing budget. Number 1947 REPRESENTATIVE KUBINA said he probably needs to talk to his board about the additional people. He suggested talking to DOT/PF about losing their seat. MR. BENNETT said he believes the board can handle seven or eight members. Obviously, it would be easier to deal with a seven member board from a voting and conflict standpoint. With enacted bylaws and a rotating chairman program, they could probably work with eight members. Number 7004 REPRESENTATIVE ROKEBERG asked if the commissioners of DEC and DOT/PF have designees that represent them on the board. MR. BENNETT said they do. The designee for DEC is the division director for the Spill Prevention Response Division. The designee for DOT/PF is environmental right-of-way director. Number 2029 REPRESENTATIVE KUBINA referred to the $2 million appropriation and said he recalls that there were some problems with some very large companies using up all the limited resources. He asked if that is still a problem. MR. BENNETT said that was actually resolved early on in their priority ranking system. That was one of the board's first objectives which was to create a ranking system that was constitutionally correct and still fair to all the eligible tank owners in the state. One thing they used as a tool was the financial responsibility requirement of the federal government which required tank owners to demonstrate financial responsibility by having pollution liability insurance. The larger companies, such as Tesoro, Alaska Airlines, Mapco, etc., are all self insurable and met the financial responsibility requirement. If the small tank owner, who almost always was the independent businessman, usually got the higher ranking points if they couldn't demonstrate financial responsibility. Mr. Bennett said there is also other ranking criteria which relates to the area served, the community they're in. He said they find most of the larger companies are in the larger urban areas and the smaller tank owners are in outlying areas in some of the smaller communities throughout the state. Mr. Bennett explained they tend to have a rural preference, small facility preference, where if they only have one facility and only four tanks, they get a higher number of points than they would if they had multiple facilities. So, they have a ranking system that considers the size and the insurability of the business and that puts the larger companies at the bottom. Number 2114 CHAIRMAN KOTT asked if the board is the body that determines the priorities. MR. BENNETT explained the board sets the priority ranking. The board also acts as an appeal board for mediating disputes in determining priority ranking disputes. He said the board writes the regulations and the ranking systems. The department administers the program. When a tank owner has a problem with DEC, they can come to the board and the board then hears their concern and acts as an intermediary between DEC and the tank owner. The board then can adjust the ranking accordingly if the arguments are sound. Number 2158 REPRESENTATIVE ROKEBERG indicated concern about increasing the number of members on the board and suggested eliminating the DOT/PF member. Number 2181 REPRESENTATIVE ELTON said if it the desire of the chairman to move the bill today, he would probably vote to substitute. It may be a good idea, however, to hold the bill over until the next meeting to give the board's staff person a chance to see if the board has a preferred option. Number 2203 REPRESENTATIVE KUBINA said he tends to agree with Representative Rokeberg. The DOT/PF should have a chance to comment as they may have a very good argument why they should remain on the board. Number 2223 REPRESENTATIVE PORTER said the issue should be dealt with in the Labor and Commerce Committee. He pointed out there is a Finance Committee referral, but the co-chair of that committee might not want to hear the bill as there is a zero fiscal note. CHAIRMAN KOTT said there seems to be some motivation not to hear bills in the Finance Committee that do not have a fiscal impact. He said it would be better to hold HB 456 until the committee's hearing on Monday. REPRESENTATIVE ROKEBERG said he would like the department to provide two fiscal notes, one for adding a member and one showing an amount if the commissioner were to be removed. MR. BENNETT said the fiscal note would be zero either way. There are some items in their budget that don't get used each year such as some of their legal costs, which would be used for the additional person. He noted there is about $2,000 in their legal fund. Number 2331 CHAIRMAN KOTT said the bill would be held over until the Monday meeting.
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