Legislature(2001 - 2002)

01/31/2002 09:45 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR SENATE BILL NO. 153(RES)                                                                                            
     "An  Act replacing the  storage tank  assistance fund  with the                                                            
     underground  storage tank revolving  loan fund and relating  to                                                            
     that revolving  loan fund; repealing  the tank cleanup  program                                                            
     and the tank  upgrading and closure program;  and providing for                                                            
     an effective date."                                                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Senator Leman  stated this bill proposes to "phase  out" the current                                                            
clean up grant program  by the year 2004 because "the expectation is                                                            
these grants would  be accomplished by that time."  He continued the                                                            
proposed  committee substitute  would  change the  underground  tank                                                            
assistance  fund  into a  "revolving  loan  fund supported  by  loan                                                            
repayments and income earned on the money in the fund."                                                                         
Senator Leman moved for  adoption of CS SB 153, 22-LS0696\L, Cook as                                                            
a working draft.                                                                                                                
There being no objections, the working draft was ADOPTED.                                                                       
Co-Chair  Kelly  commented   that  Senator  Leman  has  supplied  an                                                            
"excellent sectional analysis." [Copy on file]                                                                                  
JOHN   BARNETT,  Executive   Director,   Board   of  Storage   Tanks                                                            
Assistance,  informed  the  Committee  he  supports  this  committee                                                            
substitute and  feels the proposed changes are warranted.  He stated                                                            
the Board of  Storage Tank Assistance  "urges passage" of  this bill                                                            
as it  has language  that  specifies "who  is eligible  for a  loan,                                                            
based on the  federal requirement  of self-insurance." He  stated if                                                            
"someone  is self-insurable,  they are  not eligible  to get  a loan                                                            
from the state."                                                                                                                
Mr. Barnett  stated the self-insurable  language of this  bill would                                                            
disqualify  fourteen of the companies  that have expressed  interest                                                            
in  getting a  loan.  He continued  of  these  fourteen applicants,                                                             
"thirteen  are Chevron corporate  owned facilities."  He voiced  the                                                            
Board  supported  this  bill  because  "it  would  reduce  the  loan                                                            
application  list."  He stated  that the  Board and  the  Department                                                            
concur the grants could be "wrapped up by 2004."                                                                                
Senator Olson asked how  many "applications are being considered" at                                                            
present and how recently they were submitted.                                                                                   
Mr. Barnett stated  currently there are four completed  applications                                                            
for the loan program, and  approximately "fifty-seven have expressed                                                            
interest"  in  applying  for a  loan.  He detailed  the  process  of                                                            
applying for  the loan, and speculated  this would result  in "forty                                                            
to forty-five  applicants  and the loans  could reach  as high  as a                                                            
quarter of a million dollars  depending upon the size of the cleanup                                                            
and the level of contamination at the site."                                                                                    
Senator  Hoffman asked  how  much funding  would  be made  available                                                            
annually under the revolving loan program.                                                                                      
Mr. Barnett responded  that the "amount of funds available  would be                                                            
dictated  by the  number of  applications  and the  amount of  money                                                            
currently  in  the fund."  He  stated "there  are  sufficient  funds                                                            
available in the  storage tank assistance fund that  would roll-over                                                            
into this revolving loan  fund to handle all of our initial expected                                                            
needs" unless  some site "turns out to be very, very  contaminated."                                                            
He noted that  a lump sum is not given out for cleanup  in this loan                                                            
process,  but  would  be  phased over  time,  in  order  to  prevent                                                            
overpayment. He  informed "sometimes the estimates  are pretty high,                                                            
and  the  cleanups  will  come  in a  lot  lower  due  to  basically                                                            
technology improvements and such like that."                                                                                    
Senator Hoffman  commented in a revolving  loan system, a  specified                                                            
amount of money  would be loaned out and the returns  on those loans                                                            
would give back an "estimated  amount of funds to be available to be                                                            
reissued."  He asked, once the revolving  loan fund is established,                                                             
how much money would be available on an annual basis.                                                                           
LARRY DIETRICK,  Director, Division of Spill Prevention  & Response,                                                            
Department  of  Environmental  Conservation,   replied  an  "initial                                                            
capitalization" of $5 million  was passed in SB 128 in FY 00 and the                                                            
Department  is working  off that  balance" currently.  He  informed,                                                            
based the  prospect of  fifty-seven loan  applicants with only  four                                                            
completed  loans in  the door,  the projection  of  the "the  amount                                                            
available for  both the loans and  the grants" is anticipated  to be                                                            
$3.4 million  at  the end of  FY 02.  He continued  if the  clean-up                                                            
grants  are  completed  in  FY 03  as  projected  in  the  committee                                                            
substitute,  and  these  grant  costs are  deducted  from  the  $3.4                                                            
million balance,  approximately $2.1 million would  be available for                                                            
the revolving loan fund at the end of FY 03.                                                                                    
Mr. Dietrick  stated the Department  does not have a rate  of return                                                            
"experience  yet with just  four applications  in the door,"  but is                                                            
working  with the Division  of Insurance  to determine  the rate  of                                                            
return as well  as what the terms and length of the  loans might be.                                                            
He stressed  the Department feels  it is "adequately capitalized  to                                                            
get started" and then "see what that trend will be."                                                                            
Mr. Barnett  stated one problem that  might be experienced  would be                                                            
that some  of the  applications coming  in under  the current  grant                                                            
program may reach their  cap, and if a site "is quite contaminated,"                                                            
the cost  of cleanup might  exceed the grant.  In this scenario,  he                                                            
stated, the applicant  might have to come for a revolving  loan that                                                            
they would  be responsible  for paying back.  As the "sunset  of the                                                            
grant  program" gets  closer," he  stated, the  Department would  be                                                            
able to  see "the level of  interest in the  loan program,  as right                                                            
now it is kind of hard to gauge."                                                                                               
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              

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