Legislature(2003 - 2004)
04/29/2003 09:01 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 187
"An Act extending the termination date of the Board of Storage
Tank Assistance; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this legislation "extends the Board of
Storage Tank Assistance until June 30, 2007, as recommended by
LB&A."
AT EASE 9:11 AM / 9:12 AM
PAT DAVIDSON, Director, Division of Legislative Audit, stated that
the Division performed an audit of the Board of Storage Tank
Assistance resulting in a recommendation for an extension of the
Board for four years.
LAURA ACHEE, staff to the Legislative Budget and Audit Committee,
deferred to storage tank program staff.
JOHN BARNETT, Executive Director, Board of Storage Tank Assistance,
and private sector contractor, spoke about the seven-member Board
formed in 1990 with members appointed by the governor and who serve
without compensation.
Mr. Barnett listed the three principle roles of the Board, all
related to underground storage tanks, the first of which is to
provide a certain level of regulatory oversight of the Department
of Environmental Conservation to ensure that regulations imposed by
the Department are practical and are not financially onerous or
more stringent than the federal requirements. The second role, he
stated is to resolve disputes, both formally and informally, in
mediating between the Department and regulated tank owners and
operators. He exampled disputes including financial assistance
disagreements related to eligibility for loans and grants;
expedition of "no further action" letters on contaminated sites;
disagreements related to cleanup plans; and ensuring communication
between tank owners and the Department. He noted that prior to the
Board's inception, disputes were handled through attorneys and the
Department of Law, with legal expenditures significantly higher
than actual cleanup expenditures. He concluded with the third role
of the Board to allocate funds appropriated by the Department to
projects based first on public health, then according to other
priorities as established by the Board.
Senator Olson clarified this legislation only pertains to
underground storage tanks.
Mr. Barnett informed that the financial assistance program
addresses those tanks regulated under federal law established in
1988 and that the State underground storage tank program began in
1990. He stated that the "strict and onerous" requirements
instituted by the federal Environmental Protection Agency to
upgrade tanks and clean sites resulted in costs "extremely
prohibitive" in Alaska. Therefore, he stated only underground
storage tanks are included in the program.
Senator Olson asked about cleanup of a pipeline or above ground
storage tank and whether the Board could become involved in
resolving disputes relating to these facilities.
Mr. Barnett replied the Board has no authority, although it has
served as a mediator in past instances involving above ground
storage tanks.
Senator Taylor referenced a section on Page 8 of the audit titled,
"Demand for cleanup loan program is still unknown" and asked the
basis for the prediction that participation would increase in the
loan program after June 30, 2004.
Mr. Barnett explained the cleanup program began as a 100 percent
grant program and was amended in 1999 to award grants on a
financial need basis with a $250,000 maximum amount. He added that
in 2002, a termination date for the grant program was enacted
through SB 153 and that in 13 months from this date no further
grants would be issued. He noted that cleanup is underway at
approximately 50 active sites and that the owners and operators of
those sites would need to secure additional funding through the
loan program, which would not terminate. He explained that because
grants are currently available, there is no need for these owners
and operators to utilize the loan program and subsequently accrue
interest debt on loans. He predicted an increase in loan
applications would occur the upcoming winter, as opportunity to
utilize grant funds would conclude with the end of the summer 2003
construction season.
Senator Taylor anticipated the revolving loan program activity
would increase with the termination of the grant program.
Mr. Barnett commented that "it took several years to… debug the
grant program" to determine acceptable eligible costs. He stated
that administering the loan program would be relatively new for the
Board and shared with the Committee the argument that because these
funds are the tank owners, additional allowances for eligible costs
would be requested. Therefore, he foresaw an increase of disputes
over eligible expenditures and subsequent increased workload for
the Board.
Senator Taylor asked if all eligible parties are participating in
the grant program.
Mr. Barnett agreed and noted the larger number of loan applicants
than grant recipients because the financial needs criteria is less
stringent for the loan program than for the grant program.
Senator Taylor commented he was concerned about the grant program
and spoke to efforts to "kill" or modify the program "to the extent
that it was rational". He was concerned that as the termination
date nears, interested parties would attempt to continue the
program.
Co-Chair Wilken expressed it "heartening" to see a solution to an
issue that had been predicted as unworkable. He accredited this
significantly to the former Senator Torgerson's efforts on this
matter.
GARY WEBER, Owner, Wasilla Chevron, and President, Underground Tank
Owners Association of the State of Alaska, testified via
teleconference from Mat-Su to exalt success of the Board and the
program, characterizing it as the best program in the nation. He
asserted this was the result of a "total partnership" between the
Department, the Board, and the tank owners.
Mr. Weber told of the expectation that the cleanup program would be
too expensive to operate, but noted that a tank fee procedure was
implemented to pay the operating costs of the Board.
Mr. Weber expressed that the tank owners "desperately want to keep
this Board" explaining the need for regulatory oversight and the
ability to change regulations as necessary to "make them workable
in both directions". He told of the benefits of the Board as a
mediation function, which saves legal expenses. He urged the
Committee to pass this bill.
Senator Taylor offered a motion to report HB 187 from Committee.
There was no objection and HB 187 MOVED from Committee with
individual recommendations and fiscal note #1 from the Department
of Community and Economic Development.
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