Legislature(1999 - 2000)
05/12/1999 01:40 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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 Section 2 of the bill removes a reference to the tank tightness and site assessment incentive program repealed in Section 14 of the bill, and adds a reference to the tank cleanup loan program enacted in Section 10.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 Section 5 deletes a reference to the repealed tank tightness and site assessment incentive program; adds a reference to the newly enacted tank cleanup loan program.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.
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