Legislature(1997 - 1998)

03/11/1997 01:14 PM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 138 - BOARD OF STORAGE TANK ASSISTANCE                                   
 Number 0476                                                                   
 CO-CHAIRMAN OGAN said the next order of business was House Bill No.           
 138, "An Act relating to the Board of Storage Tank Assistance; and            
 providing for an effective date."                                             
 Number 0493                                                                   
 RANDY WELKER, Legislative Auditor, Legislative Audit Division,                
 Legislative Agencies and Offices, came forward to present the bill.           
 He said HB 138 is sunset legislation requested by the chairman of             
 the Legislative Budget and Audit Committee, which introduced all              
 the sunset legislation this year.                                             
 MR. WELKER said HB 138 is the final version of the previous                   
 session's bill.  The Board of Storage Tank Assistance is in its               
 final year of wind-down, with a statutory expiration date of June             
 30, 1996.  However, statute provides the board one year from that             
 date to complete its affairs.                                                 
 MR. WELKER said the audit report issued in 1995 addressed the                 
 original sunset.  It recommended continuation to the year 2000,               
 reflected in Section 1 of the bill.                                           
 Number 0558                                                                   
 MR. WELKER said Section 2 implements a recommendation to change the           
 make-up of the board.  They saw a need for a public member without            
 a financial interest in the storage tank business.  Section 2                 
 places a public member on the board and removes the commissioner of           
 the Department of Public Transportation and Public Facilities, thus           
 maintaining the same size of board.                                           
 MR. WELKER said significant issues face the state relating to                 
 underground storage tanks.  There are federal deadlines coming up             
 that will be critical to deal with in the next few years.  A sunset           
 date of the year 2000 will allow another look at the board                    
 operations after some of those dates have passed, to determine                
 whether there is a continued need.                                            
 Number 0621                                                                   
 CO-CHAIRMAN OGAN asked about the board composition.                           
 MR. WELKER said statute requires that all the other members of the            
 board have some knowledge of, or relationship with, the storage               
 tank industry.  They believe a public member is important as well.            
 Number 0653                                                                   
 CO-CHAIRMAN OGAN asked what would happen if the board were                    
 MR. WELKER said the need for funding to bring storage tanks into              
 compliance with federal standards far outstrips appropriations                
 available to date.  The board prioritizes funding decisions when an           
 appropriation is made, allocating between loan programs, for                  
 example, which had participated in establishing a rating system to            
 prioritize the need for assistance.  In that way, more serious                
 needs are met first.                                                          
 MR. WELKER said as they approach the deadline for complying with              
 federal requirements, which he believes is December 1998, it is               
 uncertain what enforcement actions the Environmental Protection               
 Agency (EPA) envisions.  The board could play a hands-on policy               
 role in dealing with implementation of the EPA deadlines.  Without            
 the board itself, some of those responsibilities would probably               
 fall back on the department.                                                  
 Number 0730                                                                   
 CO-CHAIRMAN OGAN inquired about the zero fiscal note and asked who            
 is paying for this.                                                           
 MR. WELKER said he would defer to the department.                             
 Number 0789                                                                   
 CYNTHIA PRING-HAM, Environmental Specialist III, Storage Tank                 
 Program, Division of Spill Prevention and Response, Department of             
 Environmental Conservation (ADEC), came forward to testify.  She              
 said if the board were abolished, the ADEC would have to accomplish           
 all the tasks itself.  The ADEC already had funding in its FY 98              
 budget and would not incur additional cost.                                   
 CO-CHAIRMAN OGAN suggested there should be a cost associated with             
 extending the board five more years.                                          
 MS. PRING-HAM said the ADEC collects registration fees of $500 per            
 tank, which is incorporated into the storage tank assistant funds             
 allocated yearly by the legislature.                                          
 CO-CHAIRMAN OGAN asked if that is a dedicated fund.                           
 MS. PRING-HAM said no.                                                        
 CO-CHAIRMAN OGAN asked if this is paid through program receipts.              
 MS. PRING-HAM said yes, but they do not get the fees directly.  The           
 fees go into a fund and are appropriated later into the storage               
 tank assistance funds.                                                        
 CO-CHAIRMAN OGAN noted that the bill has no House Finance Committee           
 Number 0877                                                                   
 REPRESENTATIVE GREEN asked whether the 470 fund provides the                  
 MS. PRING-HAM said no, it is part of the general fund.                        
 REPRESENTATIVE GREEN asked whether she knew the loan default rate.            
 MS. PRING-HAM said she could try to get that information.  She                
 advised that she was acting on behalf of someone else.                        
 REPRESENTATIVE GREEN agreed with Co-Chairman Ogan that it seemed a            
 fiscal note should be attached.                                               
 Number 0931                                                                   
 REPRESENTATIVE JOULE asked what the board does in rural areas of              
 MS. PRING-HAM said the board has two main responsibilities.  First,           
 they determine and allocate grant funds available for cleanups of             
 underground storage tanks, closures and upgrades at those                     
 facilities.  "So if they were on our list of applicants for those             
 three series of funds, then the board would ... develop a priority            
 listing," she said.  Second, the board settles disputes between               
 owners and operators.  They act as a liaison between owners and               
 operators and the ADEC.                                                       
 Number 0997                                                                   
 REPRESENTATIVE JOULE asked whether the ADEC has someone monitoring            
 tanks on a routine basis.                                                     
 MS. PRING-HAM said no.  Owners and operators submit an application            
 for grant money to do closures, upgrades or cleanups.  They fill              
 out a preliminary risk evaluation form which has a point system               
 relating to certain criteria.  From that, a yearly ranking is                 
 determined.  Whoever has the most points gets the money first.                
 Number 1073                                                                   
 CO-CHAIRMAN OGAN reiterated his concerns about the fiscal note.  He           
 asked how often the board meets.                                              
 MS. PRING-HAM said four times.                                                
 CO-CHAIRMAN OGAN asked whether they provided their own                        
 transportation, hotel costs and so forth.                                     
 MS. PRING-HAM said it is in the program's budget as part of the               
 storage tank assistance fund's operating cost.                                
 Number 1125                                                                   
 CO-CHAIRMAN OGAN called for an at-ease at 2:29 p.m.  He called the            
 meeting back to order at 2:30 p.m.  He asked Randy Welker to                  
 address the fiscal note.                                                      
 MR. WELKER said he did not believe the department's fiscal note was           
 accurate because the cost of travel and meetings had a fiscal                 
 impact on the state.                                                          
 Number 1193                                                                   
 REPRESENTATIVE GREEN said they had been told the 470 fund was not             
 the funding mechanism.  However, a letter in the committee packet             
 dated September 19, 1995, part of the Audit Report for the                    
 department and signed by Mr. Welker, stated on page 3 that                    
 appropriations are made from the mitigation account fund and from             
 tank registration receipts.  He suggested the 470 fund therefore              
 came into play here.                                                          
 MR. WELKER said he did not know "which part of the nickel it is"              
 but that it is partially funded through that, as well as through              
 program receipts from some of the fees.                                       
 Number 1240                                                                   
 REPRESENTATIVE referred to page 7 of the same letter, which                   
 indicated some $54 million is needed for eligible applicants.  He             
 said at the low funding level of the previous year, that was a 19-            
 year program.  He asked, "Is it your understanding that if this               
 sort of thing does not continue, either at 1.9 or some other                  
 funding mechanism rate, that the state will be having to bear these           
 MR. WELKER said the uncertainty was that nobody was sure what                 
 action the EPA might take when the deadline comes about for                   
 compliance with those federal regulations.  He did not believe                
 anyone could say yet what the ramifications might be.  The $54                
 million was what the board struggled to prioritize from the                   
 Number 1306                                                                   
 REPRESENTATIVE GREEN said it could then even be worse than that.              
 MR. WELKER believed most of the programs had a deadline for                   
 application and that all those deadlines had passed.  He did not              
 believe anything had been extended that would broaden those                   
 application periods.  The $54 million was the need identified                 
 through that application process at the time.                                 
 Number 1325                                                                   
 REPRESENTATIVE GREEN indicated the remaining work would take a                
 number of years.  He asked what was happening to leaks now.  He               
 also asked whether Mr. Welker had a feel for how much might be                
 defaulted or repaid on loans.                                                 
 MR. WELKER suggested those would be better answered by ADEC                   
 personnel.  He is the "outside auditor" looking in at the board's             
 Number 1479                                                                   
 TERRY RENNER, Past President, Alaska Underground Tank Owners and              
 Operators (AUTOO), came forward to testify.  The AUTOO had worked             
 on the bill with representatives beginning in 1989.  Through a two-           
 year process, the legislature had come up with HB 220, which put              
 the board in statute.                                                         
 MR. RENNER said tank registration fees throughout the United States           
 are $50 to $100.  In Alaska, they are up to $500 per tank, which              
 the AUTOO believes shows a willingness to contribute.  At the time            
 of the original bill, owners faced a deadline for mandated                    
 insurance requiring a $1 million policy.  However, with a polluted            
 site, no policy could be obtained at any cost.  Owners had hoped              
 this would "appease some of these federal mandates" on insurance.             
 Passage of the bill had helped in that regard.                                
 MR. RENNER advised that when that bill passed the House, it carried           
 a user fee, a one-cent tax.  Later, the Senate made that a straight           
 $10 million appropriation, lowered by the governor to $6 million.             
 Since then, it has gone before the legislature yearly for a general           
 Number 1599                                                                   
 CO-CHAIRMAN OGAN asked whether the board acts as a mediator between           
 tank owners and the ADEC.                                                     
 MR. RENNER said yes.  If disagreement remains, the matter could be            
 brought to the legislature or the Governor's office.  However, he             
 did not believe that had ever been necessary.                                 
 Number 1667                                                                   
 REPRESENTATIVE BEVERLY MASEK asked Mr. Renner's opinion about                 
 adding a public member.                                                       
 MR. RENNER said he thought it would be better.                                
 Number 1750                                                                   
 REPRESENTATIVE GREEN asked whether Mr. Renner had a feel for the              
 board's expenses.                                                             
 MR. RENNER said he had heard it was somewhere just over $100,000.             
 He believed tank registration fees brought in about $300,000, which           
 went into the general fund.                                                   
 REPRESENTATIVE GREEN suggested the fiscal note should probably show           
 both amounts.                                                                 
 Number 1833                                                                   
 CO-CHAIRMAN OGAN announced he would hold the bill and research the            
 fiscal note question.                                                         
 REPRESENTATIVE GREEN referred to the $54 million required.  He                
 asked whether Mr. Renner had a feel, from his past position, about            
 loan failure rates related to fixing tanks.                                   
 MR. RENNER said loans in the program were for upgrading tanks.  A             
 large part is grants because of high loan failure rates, such as              
 those in the Matanuska-Susitna area.  It is cheaper for the state             
 to make grants than to watch over those loans.  The legislature had           
 decided to assist tank owners because the alternative was having              
 tank owners go out of business, with the state cleaning up anyway.            
 At least this employed people throughout the state.                           
 MR. RENNER said there are better cleanup methods all the time.                
 Already, there is a site-specific assessment relating to drinking             
 water sources.  He expects the $54 million figure to be cut by more           
 than a third right now, and possibly more in the future.                      
 REPRESENTATIVE GREEN suggested there are alternative methods such             
 as aeration, use of "bugs" and so forth.                                      
 MR. RENNER agreed.  Referring to the $54 million, he indicated                
 people had overstated the amounts required because "you couldn't go           
 back to the well twice."                                                      
 Number 2042                                                                   
 CO-CHAIRMAN BILL HUDSON asked about new technology to neutralize              
 spills, for example.                                                          
 MR. RENNER said there are chemical washes, depending on the area              
 and the pollutants in the soil.  He said he is not an expert.                 
 There are also "bugs that will start eating these hydrocarbons and            
 such."  He said people with more expertise could be brought in for            
 a future meeting.                                                             
 CO-CHAIRMAN HUDSON noted that Larry Dinneen had informed him of a             
 new process.  He suggested Mr. Dinneen speak to the committee.  He            
 himself was involved when the federal law first came out.  With the           
 tremendous number of tanks in the state, he believes it is                    
 important to ensure they are all cleaned up.                                  
 Number 2210                                                                   
 REPRESENTATIVE GREEN asked whether this covers village tanks for              
 MR. RENNER said it is an underground storage tank program that                
 includes tanks in Nome, Kotzebue and other sites throughout the               
 state.  In the Interior, there are many above-ground tanks,                   
 Number 2287                                                                   
 CO-CHAIRMAN HUDSON believed there exists a comprehensive study on             
 major fuel storage facilities throughout Alaska.  Estimates to                
 upgrade and repair existing above-ground storage tanks exceed $200            
 million.  Much of that is for fuel storage in villages, as well as            
 for fuel tanks at airports with Arctic conditions.                            
 CO-CHAIRMAN OGAN said he believed that estimate is for upgrading              
 tanks, with the environmental mitigation another $200-to-300                  

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