Legislature(2001 - 2002)
01/31/2002 09:45 AM Senate FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Committee. 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.