Legislature(1997 - 1998)
03/11/1997 01:14 PM House RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 discontinued. 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 referral. Number 0877 REPRESENTATIVE GREEN asked whether the 470 fund provides the funding. 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 Alaska. 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 costs?" 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 applications. 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 operations. 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 appropriation. 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 diesel. 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, however. 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 million.