Legislature(2003 - 2004)

04/07/2003 01:42 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 07, 2003                                                                                           
                         1:42 P.M.                                                                                              
TAPE HFC 03 - 54, Side A                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:42 P.M.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Laura  Achee,  Staff, Representative  Ralph  Samuels;  Phelan                                                                   
Straube, Staff, Senator Ben Stevens;  Jonh Barnett, Executive                                                                   
Director, Board  of Storage Tank Assistance;  Neil MacKinnon,                                                                   
Chairman, Alaska Minerals Commission                                                                                            
PRESENT VIA TELECONFERENCE                                                                                                    
Gary Weber,  President, Alaska Underground  Tank Association,                                                                   
HB 187    An Act extending the  termination date of the Board                                                                   
          of Storage Tank Assistance; and providing for an                                                                      
          effective date.                                                                                                       
          HB 187 was reported out of Committee with a "do                                                                       
          pass" recommendation and with fiscal note #1 by                                                                       
         Department of Environmental Conservation.                                                                              
SB 79     An Act extending the termination date of the                                                                          
          Alaska Minerals Commission.                                                                                           
          SB 79 was reported out of Committee with a "do                                                                        
          pass" recommendation and with fiscal note #1 by                                                                       
          Department of Community & Economic Development.                                                                       
HOUSE BILL NO. 187                                                                                                            
     An Act extending the termination date of the Board of                                                                      
     Storage Tank Assistance; and providing for an effective                                                                    
LAURA  ACHEE,  STAFF, REPERSENTATIVE  RALPH  SAMUELS,  stated                                                                   
that  under  AS  46.03.010(18),  the Board  of  Storage  Tank                                                                   
Assistance (BSTA)  will sunset on  June 30, 2003,  unless the                                                                   
Legislature acts  to extend the  Board.  HB 187  would extend                                                                   
that Board to June 30, 2007.                                                                                                    
The  Board  was  created  in 1990  to  help  the  owners  and                                                                   
operators of underground  storage tanks (UST)  to comply with                                                                   
the  State and  federal regulations  enacted  in response  to                                                                   
nationwide  concern over possible  contamination of  drinking                                                                   
water from  leaking tanks.   The new regulations  cover areas                                                                   
of design,  construction and installation  of new  tanks, and                                                                   
tighten standards for retrofitting existing tanks.                                                                              
Ms. Achee  discussed that  Board members  have extensive  UST                                                                   
knowledge  and experience,  allowing the  Board to  act as  a                                                                   
valuable  liaison  between the  Department  of  Environmental                                                                   
Conservation  and  UST  owner/operators.    BSTA  helped  the                                                                   
Department of Environmental Conservation  to draft reasonable                                                                   
regulations  and  has helped  owner/operators  interpret  and                                                                   
comply  with  regulations,  saving  the  State  the  cost  of                                                                   
seizing  and cleaning-up  contaminated sites  caused by  non-                                                                   
The   Department  provides   financial   assistance  to   UST                                                                   
owner/operators,  previously through  grant programs  and the                                                                   
Storage Tank Assistance Loan Fund  revolving loan fund.  BSTA                                                                   
has  been  instrumental  in mediating  disputes  between  the                                                                   
Department and UST owner/operators  over financial assistance                                                                   
determinations  and allowable costs,  helping avoid  the need                                                                   
for formal appeals in some cases.                                                                                               
The Board of Storage Tank Assistance  has a proven value, and                                                                   
it is in the best interest of  UST owner/operators, the State                                                                   
and the general public to extend  the Board's sunset date for                                                                   
four years.                                                                                                                     
JOHN BARNETT, DIRECTOR, EXECUTIVE  DIRECTOR, BOARD OF STORAGE                                                                   
TANK  ASSISTANCE,   testified  that  the  Board   of  Storage                                                                   
Assistance  was  stated in  1990  as an  all-volunteer  board                                                                   
consisting of  regulated tank owners, operators,  contractors                                                                   
and engineering representatives.   The group acts  as a forum                                                                   
for the mediation  of disputes between regulated  tank owners                                                                   
and   the    Department   of   Environmental    Conservation.                                                                   
Additionally,  they  act  as a  regulatory  oversight  Board,                                                                   
assuring that  regulations in  regard to underground  storage                                                                   
tanks  are  more  stringent  than federal  law  and  not  too                                                                   
economically  costly.   Also,  the role  of the  Board is  to                                                                   
mediate disputes and clean up plans.                                                                                            
The underground  tank owners and  operators requested  that a                                                                   
Board be  put in place when  the State program  was initially                                                                   
enabled in 1990.  They pay a registration  fee, which goes to                                                                   
support the Board's activities.                                                                                                 
Representative   Stoltze  asked   about  previous   extension                                                                   
Mr. Barnett  replied that  the Board  has gone through  major                                                                   
changes,  beginning as  an exclusive  grant program  in which                                                                   
all applicants  were eligible.   After that, it  went through                                                                   
changes  identifying fiscal  responsibility issues  regarding                                                                   
who could  receive the funds.   The Board's renewal  then was                                                                   
limited to  a couple years.   A Legislative Budget  and Audit                                                                   
(LBA) review recommended extending  the Board for four years.                                                                   
Co-Chair Harris  asked how many commercial  underground tanks                                                                   
would  qualify for  the program.   Mr.  Barrett replied  that                                                                   
there are  over 1000 tanks  still underground  throughout the                                                                   
State.   The  eligible  number  at  this time  for  financial                                                                   
assistance   is  limited.     There   are  approximately   50                                                                   
facilities that qualify for the  grant program and around 200                                                                   
facilities eligible for the loan  program.  The grant program                                                                   
ends June 2003.                                                                                                                 
Co-Chair   Harris  questioned   the   inclusion  of   service                                                                   
stations.    Mr.  Barnett responded  that  the  program  does                                                                   
address the cost of clean up.   The program helps to clean up                                                                   
the sites  and help  to keep  the business  in business.   He                                                                   
pointed  out that  some  of the  operations  are very  small,                                                                   
adding that only  about 30% are service stations.   There are                                                                   
countless contractors  throughout the  State that  have their                                                                   
own refueling tanks.  The program provides assistance.                                                                          
Co-Chair Harris  inquired if there were any  additional tanks                                                                   
the State  that need  to be  replaced.   Mr. Barnett  advised                                                                   
that the  State has close to  a 70% compliance rate  with the                                                                   
original  federal requirements  for upgrading  tanks.   There                                                                   
are a number  of tanks, which  have not been upgraded  and do                                                                   
not participate  in  the program.   He added  that there  are                                                                   
sites that have  just begun to clean up and that  work can be                                                                   
quite extensive.                                                                                                                
Co-Chair  Harris interjected  that the  legislation does  not                                                                   
deal  with the  residential clean  up.   Mr. Barnett  replied                                                                   
that the  concern is  with predominately  gasoline tanks  and                                                                   
the tanks  regulated by  the Environmental Protection  Agency                                                                   
Representative Whitaker  commented that in 1999,  the Oil and                                                                   
Gas Committee  looked at  this concern.   He understood  that                                                                   
the  loan  and grant  program  was  intended to  be  complete                                                                   
within  a couple years  from that  date.   He questioned  the                                                                   
renewal request.                                                                                                                
Mr.  Burnett   explained  that  the  program   Representative                                                                   
Whitaker referenced  was the  grant program.   The  Board has                                                                   
the authority to  review eligible costs and  to establish the                                                                   
ranking criteria  to priority  rank applications based on the                                                                   
availability of funds.  The grant  program is a small portion                                                                   
of the work  being done by  the Board.  The  primary function                                                                   
of the Board is regulatory oversight.                                                                                           
The  other  aspect  of  the  Board   is  "no  further  action                                                                   
letters",  mediating disputes  between  tank  owners and  the                                                                   
Department of  Environmental Conservation in regard  to clean                                                                   
up plans.   The  Board also acts  as a  body for disputes  in                                                                   
order to keep the attorneys out.   The Board assures that the                                                                   
clean ups are done without the  involvement of the Department                                                                   
of Law.  Another  change that took place happened  in SB 153,                                                                   
which  last  year  clarified  the loan  program.    The  loan                                                                   
program has no  sunset date.  That program  exists to address                                                                   
the clean  ups that are  on going.   He noted that  the grant                                                                   
program had been  terminated in June.  The role  of the Board                                                                   
does not change with the loss of the grant program.                                                                             
Representative Whitaker  asked how the function  of the Board                                                                   
could be differentiated from a "lobbying effort".                                                                               
Mr. Barnett  advised that  the role of  the Board is  to hold                                                                   
hearings  when  a  tank owner  cannot  reach  a  satisfactory                                                                   
decision on a clean  up plan, they come to the  Board and the                                                                   
Board   holds   a   hearing  to   deal   with   the   issues.                                                                   
Communication barriers  are then eliminated.   The Board acts                                                                   
as  an "Ombudsman"  in  mediating  the  spill disputes.    He                                                                   
claimed that the  "no further action" letters  are dealt with                                                                   
through  the Board.   The  Department is  reluctant to  issue                                                                   
those  letters  indicating  timelines   for  getting  certain                                                                   
action  accomplished to  produce enough  information so  that                                                                   
the Department  is satisfied.   When the Department  proposes                                                                   
regulations,  they  must  run  them  through  the  Board  for                                                                   
review.    That   allows  public  input  from   the  in-house                                                                   
stakeholders  to  insure  that   the  regulations  are  okay.                                                                   
Because of  that, the program  has been very successful.   He                                                                   
submitted  that any  type lobbying  effort  would take  place                                                                   
through  the  Alaska  Underground  Tank  Owners  &  Operators                                                                   
Representative Whitaker concluded  that the Board works in an                                                                   
"arbitration and advisory function".  Mr. Barnett agreed.                                                                       
Co-Chair Harris  referenced the  fiscal note and  asked about                                                                   
the  contractual   line.    Mr.  Barnett  replied   that  the                                                                   
contractual line  covers his salary as a paid  contractor and                                                                   
the  travel   of  the  Board   members  and  the   Department                                                                   
representatives to the Board meetings.                                                                                          
Co-Chair  Harris asked  how  the Underground  Revolving  Loan                                                                   
Fund got  funded.  Mr. Barnett  explained that the  fund came                                                                   
through  a  capital  appropriation   out  of  the  Prevention                                                                   
Account.    The only  general  funds  that  are used  in  the                                                                   
Underground  Storage  Tank  Loan  Fund  are  the  tank  owner                                                                   
registration  fees.   Those  fees are  rolled  over into  the                                                                   
Storage Tank Assistance  Fund and authorized to  be paid from                                                                   
that source.                                                                                                                    
GARY WEBER,  PRESIDENT, ALASKA UNDERGROUND  TANK ASSOCIATION,                                                                   
MAT-SU, testified  in support of the legislation.   He stated                                                                   
that the most  important work of the Board  is the regulatory                                                                   
oversight  and mediation of  disputes.   He pointed  out that                                                                   
the State of Alaska has one of  the best operating tank plans                                                                   
in the entire nation.   He urged that the bill  be moved from                                                                   
Representative  Stoltze asked  if Mr.  Weber currently  owned                                                                   
the Chevron  Station in Wasilla.   Mr. Weber replied  that he                                                                   
does own that station.                                                                                                          
Representative  Foster   MOVED  to  report  HB   187  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal note.                                                                                                       
There being NO OBJECTION, it was so ordered.                                                                                    
HB  187  was reported  out  of  Committee  with a  "do  pass"                                                                   
recommendation and  with fiscal note #1 by  the Department of                                                                   
Environmental Conservation.                                                                                                     
SENATE BILL NO. 79                                                                                                            
     An Act extending the termination date of the Alaska                                                                        
     Minerals Commission.                                                                                                       
PHELAN STRAUBE, STAFF, SENATOR  BEN STEVENS, advised that the                                                                   
Alaska Minerals  Commission is set  to expire on  February 1,                                                                   
2004.   SB  79 would  extend the  Commission  until the  year                                                                   
He noted that  the Alaska Minerals Commission  was created in                                                                   
1986   by   the   Legislature   and   charged   with   making                                                                   
recommendations  to the Governor  and Legislature on  ways to                                                                   
mitigate  constraints  on  the  development  of  minerals  in                                                                   
Alaska.   The  Commission  consists of  11  members and  each                                                                   
member  must  have at  least  five  years experience  in  the                                                                   
minerals  industry.    Five  members  are  appointed  by  the                                                                   
Governor, three by the President  of the Senate, and three by                                                                   
the Speaker  of the House.   At least one member  must reside                                                                   
in a rural community.                                                                                                           
Mr.  Straube  noted  that  the  Commission  must  report  its                                                                   
recommendations to the Governor  during the first ten days of                                                                   
the regular session.  The Alaska  Minerals Commission has had                                                                   
numerous   recommendations   put   in   place   since   1987.                                                                   
Implemented recommendations include:                                                                                            
 · Passage of Alaska Minerals Policy Act (1988)                                                                                 
 · Funding for airborne geophysical surveys (1992-2002)                                                                         
 · Creation of a task force for RS2477 trail inventory                                                                          
     (1993) Assertion of RS2477 rights-of-way (1997)                                                                            
 · Legislative Resolution 31 passed opposing International                                                                      
     Parks, World Heritage Sites, and Marine Biosphere                                                                          
     Reserves in Western Alaska, and supporting the federal                                                                     
     American Lands Sovereignty Protection Act (1997)                                                                           
 · Extending terms of permits when legal impediments                                                                            
     prevent use (1994)                                                                                                         
Mr.  Straube indicated  that previously,  the Commission  had                                                                   
been  extended  for five  years;  however,  this  legislation                                                                   
extends  it for  ten years.    He suggested  that a  ten-year                                                                   
extension  could be the  State's way  of showing a  long-term                                                                   
commitment for that industry.                                                                                                   
Co-Chair Harris pointed  out that some of the  fiscal note is                                                                   
designated for travel.                                                                                                          
NEIL   MACKINNON,  CHAIRMAN,   ALASKA  MINERALS   COMMISSION,                                                                   
JUNEAU, advised that  there are usually two  meetings a year,                                                                   
one in the early fall in Fairbanks  and the other just before                                                                   
the report is presented to the Legislature.                                                                                     
Co-Chair Harris  asked what  part of the  State does  most of                                                                   
the mining take place.  Mr. MacKinnon  replied that primarily                                                                   
in the  Fairbanks area.   He  noted that  there are  two full                                                                   
time  staff employees  that  support the  Mining  Commission.                                                                   
That staff  is charged  with carrying out  the wishes  of the                                                                   
Commission and in finalizing the report.                                                                                        
Co-Chair  Harris asked  about  the future  of  mining in  the                                                                   
State.   Mr. MacKinnon  commented that  it is the  "brightest                                                                   
star  in the  horizon" in  the  terms of  providing jobs  and                                                                   
economic activity,  mainly in  rural areas.  He  acknowledged                                                                   
that the prices  for many years have not been  good, however,                                                                   
there are indications of the industry turning around.                                                                           
Co-Chair Harris asked if the State  was attempting to develop                                                                   
the coal in  Representative Joule's district.   Mr. MacKinnon                                                                   
replied   that  the   potential   in  that   area  could   be                                                                   
Representative Foster MOVED to  report SB 79 out of Committee                                                                   
with  individual recommendations  and  with the  accompanying                                                                   
fiscal note.                                                                                                                    
Representative Croft OBJECTED.                                                                                                  
Representative  Croft pointed out  that the House  version of                                                                   
the bill  had been  introduced February 19.    He  noted that                                                                   
the House version  of the bill had been sitting  in the House                                                                   
Finance Committee for a month.   He maintained that there was                                                                   
nothing  wrong  with that  bill.    He recommended  that  the                                                                   
Committee  should  have  moved   the  House  version  of  the                                                                   
Representative Croft WITHDREW  his OBJECTION.  There being NO                                                                   
further OBJECTION, it was so ordered.                                                                                           
SB  79  was  reported  out of  Committee  with  a  "do  pass"                                                                   
recommendation and  with fiscal note #1 by  the Department of                                                                   
Community & Economic Development.                                                                                               
The meeting was adjourned at 2:15 P.M.                                                                                          

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