Legislature(2003 - 2004)

04/09/2003 03:34 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SB 164-EXTEND BOARD OF STORAGE TANK ASSISTANCE                                                                     
                                                                                                                                
MS. LAURA  ACHEE, staff to  Representative Samuels,  explained to                                                               
members that SB 164 was  introduced by the Senate Rules Committee                                                               
at  the   request  of  Representative   Samuels,  Chair   of  the                                                               
Legislative Budget and  Audit (LBA) Committee.   She told members                                                               
that John  Barnett, Gary Webber  and LBA staff were  available to                                                               
testify and answer questions.                                                                                                   
                                                                                                                                
MR.  JOHN BARNETT,  a private  contractor hired  by the  Board of                                                               
Storage Tank  Assistance to act  as its executive  director, told                                                               
members  the  seven-member board  was  established  in 1990.  All                                                               
members  serve without  compensation  and he  is  the only  staff                                                               
person. The  board was established  at the request of  the Alaska                                                               
Tank  Owners and  Operators Association  to  act as  a forum,  to                                                               
mediate  disputes  between  tank  owners and  operators  and  the                                                               
Department  of  Environmental   Conservation  (DEC),  to  oversee                                                               
proposed  regulations, and  to review  corrective clean-up  plans                                                               
and assist in  expediting no further action letters  on sites. In                                                               
addition to  those duties,  the board  is empowered  with certain                                                               
authorities  related to  eligible cost  for financial  assistance                                                               
for the Underground Storage Tank Revolving Loan Fund.                                                                           
                                                                                                                                
MR. BARNETT said  this board keeps attorneys out  of the picture.                                                               
Historically, when disputes between  the regulated tank community                                                               
and DEC arose, a lot of money  was spent by the Department of Law                                                               
(DOL) rather  than on  clean up to  protect public  health. Since                                                               
the board was  established, disputes are mediated,  clean ups are                                                               
expedited and the funds are used  where they do the most good: to                                                               
protect the public health.                                                                                                      
                                                                                                                                
CHAIR OGAN asked  Mr. Barnett if his  executive director position                                                               
is full time.                                                                                                                   
                                                                                                                                
MR. BARNETT said it is part time.                                                                                               
                                                                                                                                
CHAIR OGAN  asked how  many disputes are  resolved each  year for                                                               
$50,000.                                                                                                                        
                                                                                                                                
MR. BARNETT  said the number  varies from year to  year depending                                                               
upon the  level of  involvement, the  number of  sites, location,                                                               
and the  condition of the  sites. Some years, dozens  of disputes                                                               
that resulted  in formal  appeal hearings  were resolved.  He now                                                               
resolves most cases  by contacting DEC and  the owner. Typically,                                                               
the  problem  is caused  by  a  communication breakdown.  At  the                                                               
present time, the board has  a grant program that terminates June                                                               
30, 2004. It  provides grants for up to $250,000  per facility to                                                               
eligible applicants. When the program  began, grants for up to $1                                                               
million  were available.  He expects  an increased  workload when                                                               
the new  loan program  comes on line.  He expects  more questions                                                               
about what  repairs are eligible  because the tank owner  will be                                                               
paying  for  those  costs. In  addition,  an  applicant's  credit                                                               
worthiness will  be considered.  The state  will be  fronting the                                                               
loan because the banks will  not. The board's authorities will be                                                               
slightly expanded  under the loan  program due to the  fact there                                                               
will be financial records involved with credit applications.                                                                    
                                                                                                                                
SENATOR WAGONER  asked if  DEC gave tank  owners and  operators a                                                               
specific date by which buried tanks had to be reported.                                                                         
                                                                                                                                
MR. BARNETT explained that on  December 22, 1988, EPA regulations                                                               
took effect. The  state program began on September  5, 1990. Tank                                                               
owners had  until March of 1991  to register with DEC.  The board                                                               
believes that  97 or 98 percent  of all known tanks  in the state                                                               
are listed  in the DEC  database. Some  of those tanks  have been                                                               
closed in place in the ground.  A great number have been removed.                                                               
However, of the over 1,000  active facilities in the state, about                                                               
50  sites are  undergoing clean  up. The  program originally  had                                                               
about 2,000 applicants; over 1,000 have  been funded at a cost of                                                               
over  $40  million.  Because  of   different  amounts  of  annual                                                               
appropriations, funding  levels varied from  $3 to $5  million so                                                               
the sites were  prioritized based on facility  size and location.                                                               
For example, a  roadhouse with no other fueling  facility for 200                                                               
miles  in  all  directions  was   ranked  higher  than  an  urban                                                               
facility. That ranking  system will be used for  the loan program                                                               
as well.                                                                                                                        
                                                                                                                                
MR.  BARNETT told  members that  about  5 to  15 facilities  were                                                               
provided with  clean up funds each  year. Some of them  have just                                                               
received their initial  grants but they will  not have sufficient                                                               
time to receive  additional grants. Some of the  sites have taken                                                               
over 13 years to clean. Aside  from the grant program, DEC had an                                                               
upgrade and  closure program  that sunsetted  this past  June. In                                                               
1999  and 2000  DEC found  some sites  to be  contaminated. Those                                                               
contaminated  facilities were  unable to  undertake the  clean up                                                               
activities through the grant program.  The board essentially acts                                                               
as an ombudsman  in those cases. He said  he expects improvements                                                               
in the  future due to  a new administration  at DEC. Many  of the                                                               
disputes were  related to administrative policies.  The board has                                                               
more flexibility to resolve issues.                                                                                             
                                                                                                                                
SENATOR WAGONER said most of the  tanks in the City of Kenai were                                                               
above  ground  storage  tanks.   The  city  passed  an  ordinance                                                               
requiring all  tanks to  be buried underground,  a case  of being                                                               
your own worst enemy.                                                                                                           
                                                                                                                                
CHAIR OGAN said although $50,000  is a relatively small amount of                                                               
money, the  legislature has  to look at  what services  the state                                                               
can continue  to provide. He said  there is a process  within the                                                               
bureaucracy to try to resolve  disputes using hearing officers so                                                               
he  questions  the  need  to spend  another  $50,000  to  resolve                                                               
disputes when DEC  employees are paid to do that.  He asked for a                                                               
more accurate description of the disputes the board resolves.                                                                   
                                                                                                                                
MR.  BARNETT told  Chair Ogan  that the  tank owners  have always                                                               
felt the registration fees they  pay were intended to support the                                                               
board. Language was included in  SB 153 last year that authorized                                                               
those registration fees  to go into the  Underground Storage Tank                                                               
Revolving  Loan Fund  and to  pay for  the cost  of the  Board of                                                               
Storage  Tank Assistance.  He said  regarding board  oversight of                                                               
regulations,  an  example  of  the  most  recent  problem  was  a                                                               
regulation that required  the tank owner to be onsite  24 hours a                                                               
day. This regulation  required the tank owner to  be available at                                                               
all times  a fuel delivery  might take  place. He said  that fuel                                                               
deliveries often  happen in the  wee hours  of the morning  on an                                                               
intermittent  schedule. That  regulation was  far more  stringent                                                               
than the federal  requirement. The original intent of  DEC was to                                                               
ensure  that  deliveries  were made  properly  and  no  overflows                                                               
occurred.  The board  worked  with DEC  to come  up  with a  more                                                               
favorable  regulation  that  involved   working  with  their  own                                                               
employees to ensure that delivery was made properly.                                                                            
                                                                                                                                
CHAIR  OGAN  said  a  whole   process  for  drafting  regulations                                                               
provides  for public  comment.  He said  the  legislature can  no                                                               
longer rubber  stamp programs or  job descriptions and he  is not                                                               
sure whether this  one needs to continue. He said  the state will                                                               
see  major changes  in  the  next three  or  four years.  British                                                               
Columbia  cut  its budget  by  35  percent  in one  year.  States                                                               
everywhere have  to cut huge amounts.  He said that since  SB 164                                                               
has a  fiscal note,  he will  defer to  the Finance  Committee on                                                               
whether to fund this. He then took public testimony.                                                                            
                                                                                                                                
MR.  GARY  WEBBER,  President  of   the  Board  of  Storage  Tank                                                               
Assistance, told  members that when  HB 220 was drafted  in 1990,                                                               
the  tank   owners  volunteered   to  pay   a  $1,000   per  tank                                                               
registration  fee  to  fund  this  board.  When  the  tanks  were                                                               
upgraded, the registration fee was  reduced to $75 per tank. Tank                                                               
owners feel they  have been paying for this board  all along. The                                                               
funds  were   previously  appropriated  out  of   the  prevention                                                               
account.  Since  the  enactment  of  the  1999  legislation,  the                                                               
appropriation now  comes from  the general  fund but  tank owners                                                               
put money into  the general fund to offset that  expense. He said                                                               
$75 is not  much but there are enough tank  owners to support the                                                               
cost of the board.                                                                                                              
                                                                                                                                
MR.  WEBBER said  the tri-annual  inspection is  a good  one. The                                                               
board, tank owners and DEC  were involved in putting that program                                                               
together; it  is one of  the best  in the country.  Regarding the                                                               
regulation  Mr. Barnett  discussed,  he said  an insurance  agent                                                               
told him  that title to product  is not passed to  the tank owner                                                               
until it  has been put  in the ground. Prior  to that, it  is the                                                               
truck driver's responsibility to  verify the tank contains enough                                                               
room to hold  the amount to be filled. To  require the tank owner                                                               
to  be  there  24  hours  per  day  would  make  the  tank  owner                                                               
responsible  for  the  delivery,  tank truck  and  equipment.  He                                                               
emphasized that  a third party,  seven-person oversight  board is                                                               
invaluable  to tank  owners and,  since they  are paying  for it,                                                               
they are entitled  to have it. He said tank  owners no longer run                                                               
to their attorneys when they have trouble complying with laws.                                                                  
                                                                                                                                
CHAIR OGAN announced that Senator Lincoln had arrived.                                                                          
                                                                                                                                
SENATOR  WAGONER  moved SB  164  from  committee with  individual                                                               
recommendations and its accompanying fiscal note.                                                                               
                                                                                                                                
CHAIR  OGAN said  he would  let  the Finance  Committee make  the                                                               
policy call on  this legislation. He then  announced that without                                                               
objection, the motion carried.                                                                                                  

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