Legislature(1999 - 2000)

05/12/1999 01:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         HOUSE RESOURCES STANDING COMMITTEE                                                                                     
                    May 12, 1999                                                                                                
                     1:40 p.m.                                                                                                  
MEMBERS PRESENT                                                                                                                 
Representative Scott Ogan, Co-Chair                                                                                             
Representative Jerry Sanders, Co-Chair                                                                                          
Representative Beverly Masek, Vice Chair                                                                                        
Representative John Harris                                                                                                      
Representative Carl Morgan                                                                                                      
Representative Ramona Barnes                                                                                                    
Representative Reggie Joule                                                                                                     
Representative Mary Kapsner                                                                                                     
MEMBERS ABSENT                                                                                                                  
Representative Jim Whitaker                                                                                                     
COMMITTEE CALENDAR                                                                                                              
CS FOR SENATE BILL NO. 128(FIN) am                                                                                              
"An Act moving the termination date of the Board of Storage Tank                                                                
Assistance to June 30, 1999; relating to the storage tank                                                                       
assistance fund, to financial assistance for owners and operators                                                               
of underground petroleum storage tank systems, and to discharges                                                                
from underground petroleum storage tank systems; and providing for                                                              
an effective date."                                                                                                             
     - HEARD AND HELD                                                                                                           
CS FOR SENATE BILL NO. 7(FIN) am                                                                                                
"An Act relating to the University of Alaska and university land,                                                               
and authorizing the University of Alaska to select additional state                                                             
     - HEARD AND HELD                                                                                                           
(* First public hearing)                                                                                                        
PREVIOUS ACTION                                                                                                                 
BILL: SB 128                                                                                                                    
SHORT TITLE: STORAGE TANK ASSISTANCE FUND                                                                                       
SPONSOR(S): FINANCE                                                                                                             
Jrn-Date    Jrn-Page           Action                                                                                           
 3/31/99       752     (S)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/31/99       753     (S)  RES, FIN                                                                                            
 4/07/99               (S)  RES AT  3:00 PM BUTROVICH 205                                                                       
 4/07/99               (S)  MOVED CS (RES) OUT OF COMMITTEE                                                                     
 4/07/99               (S)  MINUTE(RES)                                                                                         
 4/09/99       844     (S)  RES RPT  CS  1DP 3NR      NEW TITLE                                                                 
 4/09/99       845     (S)  DP: HALFORD; NR: GREEN, PETE KELLY,                                                                 
 4/09/99       845     (S)  TAYLOR                                                                                              
 4/09/99       845     (S)  FISCAL NOTE TO CS (LAW)                                                                             
 4/09/99       845     (S)  FISCAL NOTE TO BILL (DEC)                                                                           
 4/12/99               (S)  FIN AT  9:00 AM SENATE FINANCE 532                                                                  
 4/12/99               (S)  MINUTE(FIN)                                                                                         
 4/12/99       875     (S)  FISCAL NOTE TO CS (DEC)                                                                             
 4/19/99               (S)  FIN AT  9:00 AM SENATE FINANCE 532                                                                  
 4/19/99               (S)  HEARD AND HELD                                                                                      
 4/27/99               (S)  FIN AT  9:00 AM SENATE FINANCE 532                                                                  
 4/27/99               (S)  HEARD AND HELD                                                                                      
 4/30/99               (S)  FIN AT  9:00 AM SENATE FINANCE 532                                                                  
 4/30/99               (S)  MOVED CS(FIN) OUT OF COMMITTEE                                                                      
 4/30/99      1184     (S)  FIN RPT  CS  3DP 4NR      NEW TITLE                                                                 
 5/03/99               (S)  RLS AT 11:20 AM FAHRENKAMP 203                                                                      
 5/03/99      1202     (S)  FIN CS RECEIVED                                                                                     
 4/30/99      1184     (S)  DP: TORGERSON, PHILLIPS, DONLEY;                                                                    
 4/30/99      1184     (S)  NR: GREEN, PETE KELLY, ADAMS, WILKEN                                                                
 5/04/99               (S)  RLS AT 11:30 AM FAHRENKAMP 203                                                                      
 5/04/99               (S)  MINUTE(RLS)                                                                                         
 5/04/99      1220     (S)  FISCAL NOTE (S.FIN/DEC)                                                                             
 5/04/99      1222     (S)  RULES TO CALENDAR AND 1 OR 5/4/99                                                                   
 5/04/99      1226     (S)  READ THE SECOND TIME                                                                                
 5/04/99      1226     (S)  FIN CS ADOPTED UNAN CONSENT                                                                         
 5/04/99      1226     (S)  HELD IN SECOND READING TO 5/5 CAL                                                                   
 5/05/99      1255     (S)  AM NO 1      ADOPTED UNAN CONSENT                                                                   
 5/05/99      1255     (S)  ADVANCED TO THIRD READING                                                                           
                            UNAN CONSENT                                                                                        
 5/05/99      1255     (S)  READ THE THIRD TIME  CSSB 128(FIN) AM                                                               
 5/05/99      1256     (S)  PASSED Y18 N2                                                                                       
 5/05/99      1256     (S)  EFFECTIVE DATE(S) SAME AS PASSAGE                                                                   
 5/05/99      1262     (S)  TRANSMITTED TO (H)                                                                                  
 5/06/99      1193     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 5/06/99      1193     (H)  RESOURCES, FINANCE                                                                                  
 5/12/99               (H)  RES AT  1:30 PM CAPITOL 124                                                                         
BILL: SB 7                                                                                                                      
SHORT TITLE: INCREASE LAND GRANT TO UNIV. OF ALASKA                                                                             
SPONSOR(S): SENATOR(S) TAYLOR, Kelly Tim, Donley, Wilken, Leman,                                                                
Pearce, Mackie, Ward; REPRESENTATIVE(S) Halcro                                                                                  
Jrn-Date    Jrn-Page           Action                                                                                           
 1/08/99        14     (S)  PREFILE RELEASED - 1/8/99                                                                           
 1/19/99        15     (S)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 1/19/99        15     (S)  RES, FIN                                                                                            
 1/25/99               (S)  RES AT  3:00 PM BUTROVICH ROOM 205                                                                  
 1/25/99               (S)  HEARD AND HELD                                                                                      
 1/25/99               (S)  MINUTE(RES)                                                                                         
 2/01/99               (S)  RES AT  3:00 PM BUTROVICH ROOM 205                                                                  
 2/01/99               (S)  SCHEDULED BUT NOT HEARD                                                                             
 2/01/99               (S)  MINUTE(RES)                                                                                         
 2/03/99               (S)  RES AT  3:00 PM BUTROVICH ROOM 205                                                                  
 2/03/99               (S)  MOVED CS OUT OF COMMITTEE                                                                           
 2/03/99               (S)  MINUTE(RES)                                                                                         
 2/05/99       165     (S)  RES RPT  CS  4DP 3NR      SAME TITLE                                                                
 2/05/99       165     (S)  DP: MACKIE,TAYLOR, GREEN, PETE KELLY;                                                               
 2/05/99       165     (S)  NR: HALFORD, PARNELL, LINCOLN                                                                       
 2/05/99       165     (S)  FN TO SB (DNR), FNS TO SB & CS                                                                      
                            (UA, F&G)                                                                                           
 2/05/99       165     (S)  FN TO CS (DNR)                                                                                      
 2/25/99               (S)  FIN AT  9:00 AM SENATE FINANCE 532                                                                  
 3/04/99               (S)  FIN AT  8:00 AM SENATE FINANCE 532                                                                  
 3/04/99               (S)  HEARD AND HELD                                                                                      
 3/04/99               (S)  MINUTE(FIN)                                                                                         
 4/23/99               (S)  FIN AT  8:00 AM SENATE FINANCE 532                                                                  
 4/23/99               (S)  MOVED CS(FIN) OUT OF COMMITTEE                                                                      
 4/24/99               (S)  FIN AT 10:00 AM SENATE FINANCE 532                                                                  
 4/26/99               (S)  RLS AT 12:00 PM FAHRENKAMP 203                                                                      
 4/26/99               (S)  MINUTE(RLS)                                                                                         
 4/26/99               (S)  MINUTE(RLS)                                                                                         
 4/26/99      1085     (S)  FIN RPT  CS  5DP 2NR      SAME TITLE                                                                
 4/26/99      1086     (S)  DP: TORGERSON, WILKEN, LEMAN, DONLEY,                                                               
 4/26/99      1086     (S)  PETE KELLY; NR: PHILLIPS, ADAMS                                                                     
 4/26/99      1086     (S)  PREVIOUS FNS (DNR, UA, F&G)                                                                         
 5/03/99      1202     (S)  RULES TO CALENDAR AND 1 OR 5/3/99                                                                   
 5/03/99      1203     (S)  READ THE SECOND TIME                                                                                
 5/03/99      1203     (S)  FIN  CS ADOPTED UNAN CONSENT                                                                        
 5/03/99      1203     (S)  AM NO 1 OFFERED BY TAYLOR                                                                           
 5/03/99      1203     (S)  AM NO 1      ADOPTED Y11 N9                                                                         
 5/03/99      1204     (S)  AM NO 2 OFFERED BY TAYLOR                                                                           
 5/03/99      1204     (S)  AM NO 2      ADOPTED UNAN CONSENT                                                                   
 5/03/99      1204     (S)  AM NO 3 OFFERED BY TAYLOR                                                                           
 5/03/99      1204     (S)  AM NO 3      ADOPTED UNAN CONSENT                                                                   
 5/03/99      1205     (S)  ADVANCED TO THIRD READING                                                                           
                            UNAN CONSENT                                                                                        
 5/03/99      1205     (S)  READ THE THIRD TIME  CSSB 7(FIN) AM                                                                 
 5/03/99      1205     (S)  COSPONSOR(S): PEARCE, MACKIE, WARD                                                                  
 5/03/99      1206     (S)  PASSED Y15 N5                                                                                       
 5/03/99      1206     (S)  ELLIS  NOTICE OF RECONSIDERATION                                                                    
 5/04/99      1239     (S)  RECONSIDERATION NOT TAKEN UP                                                                        
 5/04/99      1239     (S)  TRANSMITTED TO (H)                                                                                  
 5/05/99      1175     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 5/05/99      1175     (H)  RESOURCES, FINANCE                                                                                  
 5/05/99      1187     (H)  CROSS SPONSOR(S): HALCRO                                                                            
 5/12/99               (H)  RES AT  1:30 PM CAPITOL 124                                                                         
WITNESS REGISTER                                                                                                                
DARWIN PETERSON, Legislative Administrative Assistant                                                                           
   and Senate Finance Committee Aide                                                                                            
   to Senator John Torgerson                                                                                                    
Alaska State Legislature                                                                                                        
Capitol Building, Room 516                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2138                                                                                                      
POSITION STATEMENT: Presented CSSB 128(FIN) am on behalf of                                                                     
                    Senator Torgerson, Co-Chairman, Senate                                                                      
                    Finance Committee (sponsor).                                                                                
JOHN BARNETT, Executive Director                                                                                                
Board of Storage Tank Assistance                                                                                                
P.O. Box 240651                                                                                                                 
Douglas, Alaska  99824                                                                                                          
Telephone:  (907) 364-2848                                                                                                      
POSITION STATEMENT: Testified that CSSB 128(FIN) am is a big                                                                    
                    improvement over original version but still                                                                 
                    has problems.                                                                                               
JOHN COOK                                                                                                                       
Sterling Tesoro                                                                                                                 
P.O. Box 49                                                                                                                     
Sterling, Alaska  99672                                                                                                         
Telephone:  (907) 262-9028                                                                                                      
POSITION STATEMENT:  Testified on SB 128.                                                                                       
GARY WEBER                                                                                                                      
Wasilla Chevron                                                                                                                 
P.O. Box 871216                                                                                                                 
Wasilla, Alaska  99687                                                                                                          
Telephone:  (907) 376-5900                                                                                                      
POSITION STATEMENT:  Testified that CSSB 128 (FIN) am is                                                                        
                      basically a good bill but suggested three                                                                 
                     amendments to address major problems.                                                                      
ANNETTE KREITZER, Legislative Assistant                                                                                         
   to Senator Loren Leman                                                                                                       
Alaska State Legislature                                                                                                        
Capitol Building, Room 115                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-5149                                                                                                      
POSITION STATEMENT:  Answered questions about CSSB 128(FIN) am.                                                                 
MEL KROGSENG, Legislative Assistant                                                                                             
     to Senator Robin Taylor                                                                                                    
Alaska State Legislature                                                                                                        
Capitol Building, Room 30                                                                                                       
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-3873                                                                                                      
POSITION STATEMENT:  Testified on behalf of sponsor of SB 7.                                                                    
KEVIN TRITT                                                                                                                     
3408 Lois Drive                                                                                                                 
Anchorage, Alaska  99517                                                                                                        
Telephone:  (907) 277-4265                                                                                                      
POSITION STATEMENT:  Testified in opposition to SB 7.                                                                           
JOHN EASTON                                                                                                                     
Bristol Bay Coastal Resource Service Area                                                                                       
P.O. Box 798                                                                                                                    
Dillingham, Alaska  99576                                                                                                       
Telephone:  (907) 842-2667                                                                                                      
POSITION STATEMENT:  Testified on behalf of board in                                                                            
                     opposition to SB 7.                                                                                        
RUSSELL NELSON, Land Manager                                                                                                    
Choggiung Limited                                                                                                               
P.O. Box 330                                                                                                                    
Dillingham, Alaska  99576                                                                                                       
Telephone:  (907) 842-5218                                                                                                      
POSITION STATEMENT:  Testified on SB 7; expressed concerns.                                                                     
TOM ARMOUR, Manager                                                                                                             
City and Borough of Yakutat                                                                                                     
P.O. Box 160                                                                                                                    
Yakutat, Alaska  99689                                                                                                          
Telephone:  (907) 784-3323                                                                                                      
POSITION STATEMENT:  Testified on SB 7; commended CSSB 7(FIN) am                                                                
                     as an improvement but proposed amendments.                                                                 
ROSS COEN                                                                                                                       
P.O. Box 82718                                                                                                                  
Fairbanks, Alaska  99708                                                                                                        
Telephone:  (907) 479-6946                                                                                                      
POSITION STATEMENT:  Testified in opposition to SB 7,                                                                           
                     requesting funding of university through                                                                   
CHOW TAYLOR                                                                                                                     
Alaska Municipal League (AML)                                                                                                   
217 Second Street (Winter)                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 586-1325                                                                                                      
POSITION STATEMENT:  Testified that the AML doesn't oppose SB 7                                                                 
                     but has some concerns.                                                                                     
ACTION NARRATIVE                                                                                                                
TAPE 99-33, SIDE A                                                                                                              
Number 0001                                                                                                                     
CO-CHAIR SCOTT OGAN called the House Resources Standing Committee                                                               
meeting to order at 1:40 p.m.  Members present at the call to order                                                             
were Representatives Ogan, Sanders, Masek, Harris, Morgan, Barnes,                                                              
Joule and Kapsner.  Representative Whitaker was excused.                                                                        
SB 128 - STORAGE TANK ASSISTANCE FUND                                                                                           
CO-CHAIR OGAN announced that the first item of business would be CS                                                             
for Senate Bill No. 128(FIN) am, "An Act moving the termination                                                                 
date of the Board of Storage Tank Assistance to June 30, 1999;                                                                  
relating to the storage tank assistance fund, to financial                                                                      
assistance for owners and operators of underground petroleum                                                                    
storage tank systems, and to discharges from underground petroleum                                                              
storage tank systems; and providing for an effective date."                                                                     
Number 0125                                                                                                                     
DARWIN PETERSON, Legislative Administrative Assistant and Senate                                                                
Finance Committee Aide to Senator John Torgerson, Alaska State                                                                  
Legislature, came forward on behalf of Senator Torgerson, who                                                                   
co-chairs the Senate Finance Committee.  Mr. Peterson explained                                                                 
that SB 128 was introduced by the Senate Finance Committee in an                                                                
effort to restructure some of the programs in the Board of Storage                                                              
Tank Assistance.  He presented the Sectional Analysis for CSSB
128(FIN) am, provided in packets, as follows:                                                                                   
     Section 1 ... puts the Board of Storage Tank Assistance                                                                    
     in its "wind-down" year beginning June 30, 1999.                                                                           
     Section 2 of the bill removes a reference to the tank                                                                      
     tightness and site assessment incentive program repealed                                                                   
     in Section 14 of the bill, and adds a reference to the                                                                     
     tank cleanup loan program enacted in Section 10.                                                                           
     Section 3 adds a reference to the tank cleanup loan                                                                        
     Section 4 amends the storage tank assistance fund section                                                                  
     in Title 46 by adding two statements about potential                                                                       
     appropriations of money in the storage tank assistance                                                                     
     fund.  This section also clarifies that a pending                                                                          
     application is not considered to be an encumbrance of the                                                                  
     Section 5 deletes a reference to the repealed tank                                                                         
     tightness and site assessment incentive program; adds a                                                                    
     reference to the newly enacted tank cleanup loan program.                                                                  
     Sections 6-9 convert the loan program for cleanup                                                                          
     relating to underground petroleum storage tank systems to                                                                  
     a grant program for tanks whose owners have $1 million or                                                                  
     less in tangible net worth.  Section 9 contains                                                                            
     limitations on total grants and loans.  Grants may not                                                                     
     exceed $250,000, and a combination of grants and loans                                                                     
     may not exceed $500,000.                                                                                                   
     Section 10 establishes a new tank cleanup loan program.                                                                    
     Section 11 limits grants for upgrading and closure of                                                                      
     underground petroleum storage tanks to those whose owner                                                                   
     has a tangible net worth of $250,000 or less.  This adds                                                                   
     the same limitations on total grants and loans                                                                             
     established in Section 9.                                                                                                  
     Section 12 defines "tangible net worth" as the total                                                                       
     value of tangible assets minus liabilities associated                                                                      
     with bringing underground petroleum storage tanks into                                                                     
     compliance with state and federal laws.                                                                                    
     Section 13 adds a reference to the newly enacted tank                                                                      
     cleanup loan program.                                                                                                      
     Section 14 repeals the program currently under AS                                                                          
     46.03.415, the tank tightness and site assessment                                                                          
     program, and repeals references to that program.  It also                                                                  
     repeals a reimbursement program established in 1990.                                                                       
     Section 15 specifies that limitations on grants, loans,                                                                    
     and total financial assistance enacted by this Act apply                                                                   
     to money received on or after July 1, 1999.                                                                                
     Sections 16-17 [allow] the board's regulations process to                                                                  
     begin immediately and [make] the change in the                                                                             
     termination date of the board effective immediately.                                                                       
     Section 18 makes most of the bill take effect on July 1,                                                                   
Number 0409                                                                                                                     
REPRESENTATIVE MASEK asked what the changes are between the old                                                                 
program and that proposed under the bill.                                                                                       
MR. PETERSON deferred to John Barnett.                                                                                          
Number 0495                                                                                                                     
JOHN BARNETT, Executive Director, Board of Storage Tank Assistance,                                                             
explained that the board provides oversight to the department,                                                                  
which actually administers this program.  The board is composed of                                                              
industry members, including owners of large and small tanks,                                                                    
contractors, insurance representatives and consultants.  Mr.                                                                    
Barnett commended Mr. Peterson and Senator Torgerson for their                                                                  
efforts, stating that CSSB 128(FIN) am is a big improvement over                                                                
the first version introduced into the Senate Finance Committee.                                                                 
MR. BARNETT addressed Representative Masek's question about how the                                                             
bill affects the original program.  In 1988, the federal government                                                             
set out national requirements for underground petroleum storage                                                                 
tank owners.  In addition to a federal mandate that owners upgrade                                                              
tanks to Environmental Protection Agency (EPA) requirements, owners                                                             
had to demonstrate financial responsibility, either by having                                                                   
insurance against leaks or contamination, or by being                                                                           
"self-insurable."  However, many owners were unable to obtain                                                                   
insurance because they had contaminated sites.  Furthermore, the                                                                
leaking tanks that caused the contamination prevented these                                                                     
properties from being sold.                                                                                                     
MR. BARNETT recounted that at the time, rather than offering                                                                    
assistance, the EPA was undertaking "big stick" enforcement,                                                                    
levying fines of $10,000 per day, per tank, for every violation.                                                                
Some people couldn't pay these huge fines.  In many cases, the                                                                  
state took over cleanup of these sites, and sometimes legal costs                                                               
exceeded the cost of the cleanup.  Therefore, in 1990 the state                                                                 
legislature determined that a relief program was needed to provide                                                              
owners both technical and financial assistance.  The initial intent                                                             
was to provide grants to every registered tank owner who paid a                                                                 
registration fee to the state; they didn't want it to be based on                                                               
financial need, which would be too complex and would require too                                                                
much information.                                                                                                               
Number 0748                                                                                                                     
MR. BARNETT noted that the program started about nine years ago.                                                                
Over 1,500 applications came in for assistance, and they've worked                                                              
down that list.  Currently, there are 158 upgrade and closure                                                                   
applications on file, for which they provide grants of up to 60                                                                 
percent of the cost, to a maximum of $60,000, combined, for upgrade                                                             
and closure.  In practice, that represents 20 to 25 percent of the                                                              
overall cost to upgrade tanks.  The balance of the expense for                                                                  
upgrades comes from the Small Business Administration, bank loans                                                               
and other sources.                                                                                                              
MR. BARNETT next addressed cleanups.  He believes there are 220                                                                 
cleanup applications on file.  The cleanup program covers 90                                                                    
percent of their cost up to $1 million per facility; the tank owner                                                             
is required to pay 10 percent of those costs, up to a maximum of                                                                
$25,000.  Therefore, the maximum cleanup assistance a person can                                                                
obtain from the state is $975,000 in grants and $25,000 in loans.                                                               
MR. BARNETT explained that all applications were ranked by a system                                                             
established by the board, placing a priority on sites with the                                                                  
greatest threat to public health.  Also, the smaller businesses                                                                 
were placed at the top of the list.  At the bottom of the list,                                                                 
which they've reached now, are large companies that have waited                                                                 
nine years to receive funds; that was the intent, to make those                                                                 
larger businesses wait until the smaller owners were covered.  This                                                             
really shows true in the upgrade and closure list, Mr. Barnett                                                                  
noted.  For the cleanup list, however, well over half of those                                                                  
still awaiting funding are what he considers small businesses.                                                                  
They have no alternative for cleanup financing.  They cannot go to                                                              
conventional banking institutions because of site contamination.                                                                
In addition, there is also a liability issue:  Banks won't provide                                                              
financing to clean up a contaminated site, because if there is a                                                                
default, the bank ends up assuming the liability.  That was also                                                                
why the original program was not a fairly comprehensive loan                                                                    
MR. BARNETT commented that the current bill, a combined minimized                                                               
grant program and expanded loan program, is actually a very good                                                                
concept.  The board sees problems, however.  First, people have                                                                 
waited nine years for financing, and now, in the final year of the                                                              
upgrade and closure program, they are being told, "We were just                                                                 
kidding."  Second, for sites for which owners would be trying to                                                                
obtain a cleanup loan, owners may not have sufficient collateral to                                                             
actually obtain that loan from the state.  For any loans that are                                                               
defaulted on, or which the state will have to assume, the state                                                                 
also assumes liability and will therefore have to pay cleanup                                                                   
costs.  Subsequently, the state would end up having to do that                                                                  
Number 1031                                                                                                                     
MR. BARNETT called attention to page 8, Section 12.  He pointed out                                                             
that the definition of "tangible net worth" doesn't allow tank                                                                  
owners to deduct normal liabilities.  Whereas a definition of "net                                                              
worth" in generalized accounting procedures is "assets minus                                                                    
liabilities," this definition only allows tank owners to subtract                                                               
liabilities associated with the cleanup.  A typical facility in                                                                 
Alaska, even a small one, might easily have $1.5 million in assets,                                                             
however, including the tanks, pumps, service bays and inventory.                                                                
In many cases, a business might be a contractor or small rental car                                                             
agency, for example, and assets will exceed $1 million.                                                                         
MR. BARNETT cited an example where cleanup has been ongoing for                                                                 
years.  There, only $60,000 remains in cleanup costs; that is all                                                               
that could be subtracted from their assets under this bill.                                                                     
Another scenario might be a road house on a large, homesteaded                                                                  
acreage, with perhaps a small lodge and a gas pump; total assets                                                                
may easily exceed $1.5 million or $2 million.  However, the only                                                                
deduction would be the cleanup cost, perhaps $50,000 to $250,000,                                                               
and, therefore, that owner wouldn't qualify.  Mr. Barnett proposed                                                              
that the solution is to make the "tangible net worth" definition                                                                
consistent with generally accepted accounting principles by                                                                     
including language about subtracting liabilities.                                                                               
Number 1167                                                                                                                     
MR. BARNETT pointed out that in the past, municipalities, school                                                                
districts and villages were also eligible for financial assistance                                                              
through this program; under this bill, they couldn't obtain loans.                                                              
Mr. Barnett noted that as the board's only employee, he has a                                                                   
partial conflict of interest.  He then explained that the board -                                                               
both now and under the bill - can write and adopt regulations for                                                               
financial assistance.  After those are adopted and put into                                                                     
practice, the board mediates disputes and addresses appeals by tank                                                             
owners who disagree with decisions of the Department of                                                                         
Environmental Conservation (DEC).  The board has sufficient                                                                     
authority to overturn decisions of the DEC, which they have done                                                                
throughout the last nine years.  Furthermore, the board mediates                                                                
cleanup plan disputes between owners and the DEC, so that those                                                                 
cases don't have to go to court.                                                                                                
MR. BARNETT discussed problems with sunsetting the board a year                                                                 
early.  If this bill went into effect July 1, 1999, all work,                                                                   
including ongoing cleanups, would cease.  The balance of the                                                                    
construction season would be used to draft the new program, loan                                                                
language and loan regulations; it would be late fall or early                                                                   
winter before regulations could be adopted.  Furthermore, it would                                                              
be mid-May of 2000 before the program could be implemented in the                                                               
field, during the construction season.  The first loan                                                                          
applications, receipts and actual eligible costs that would be                                                                  
reviewed by the DEC wouldn't occur until mid-summer of 2000, in the                                                             
middle of the construction season.  Therefore, the first disputes                                                               
would not occur on these new regulations until August or September                                                              
of 2000, after the board had already departed.  To prevent current                                                              
activities from stopping right now, in the middle of the                                                                        
construction season, the board desires a "phase end" transition                                                                 
date or effective date either in the winter or as late as July 1,                                                               
Number 1402                                                                                                                     
REPRESENTATIVE KAPSNER asked if Mr. Barnett was saying that a                                                                   
village or municipality couldn't get a loan if there was a leak.                                                                
MR. BARNETT affirmed that, restating that under the existing                                                                    
program, municipalities are eligible for financial assistance.  A                                                               
large number are on the waiting list for funds.  Under the bill,                                                                
however, because eligibility is defined as a net worth of $1                                                                    
million, the board doesn't believe that any municipalities or                                                                   
villages will qualify.                                                                                                          
Number 1439                                                                                                                     
REPRESENTATIVE KAPSNER expressed her understanding that a bank                                                                  
wouldn't give a village or municipality a loan, in most cases.                                                                  
MR. BARNETT indicated that is why this whole program exists.  It                                                                
isn't a problem for an upgrade, to get new tanks to meet EPA                                                                    
standards, for example.  However, banks won't finance cleanups,                                                                 
because if the owner defaults, then the bank would own contaminated                                                             
property.  The state didn't want to start assuming properties,                                                                  
either.  Mr. Barnett noted that owners are liable under strict                                                                  
liability laws.                                                                                                                 
REPRESENTATIVE KAPSNER inquired what a community would do if no                                                                 
help could be received from the state but the community couldn't                                                                
receive a loan.                                                                                                                 
MR. BARNETT replied that the community would have to utilize its                                                                
own resources to cover the cleanup.  He noted that for many                                                                     
villages in the Interior, the problem is above-ground tanks, some                                                               
of which a program in place addresses.                                                                                          
REPRESENTATIVE OGAN mentioned federal money available for                                                                       
"Superfund cleanup."  He asked if this is the only program.                                                                     
Number 1550                                                                                                                     
MR. BARNETT clarified that this is the only assistance program.                                                                 
This program is funded through the prevention account of the Oil                                                                
and Hazardous Substance Response Fund.  Any money spent out of                                                                  
those funds to which Representative Ogan is referring, such as the                                                              
"Superfund" and the federal Leaking Underground Storage Tank Trust                                                              
Fund, also known as the federal LUST Trust Fund, must be                                                                        
cost-recovered.  Mr. Barnett noted that those funds have - as does                                                              
the state's response fund - a cost recovery clause.  He informed                                                                
the committee that the last underground tank situation was at                                                                   
Cooks(ph) Tesoro in Sterling.  In that case, the state stepped in                                                               
with response funds, and the state was mandated by law to                                                                       
cost-recover those funds.  The  state spent $300,000 to clean up,                                                               
and that bill was passed to the owner.  If the owner can't pay, a                                                               
lien is placed against the property and penalties begin to be                                                                   
MR. BARNETT noted that the federal LUST Trust Fund does the same:                                                               
the owner receives the bill.  However, that program doesn't cut                                                                 
corners.  Mr. Barnett pointed out that the state's program is                                                                   
audited in detail, which he indicated keeps the costs down.                                                                     
Cleanup costs have decreased dramatically in the first two years of                                                             
the program; many new types of remediation have been utilized and                                                               
have decreased the overall costs considerably.  Mr. Barnett felt                                                                
that if the federal government takes over these cleanups, the cost                                                              
will increase and owners will not be able to pay back those bills.                                                              
REPRESENTATIVE KAPSNER asked if the funding for this comes out of                                                               
the oil spill money.                                                                                                            
MR. BARNETT stated that the funds do not come from the oil spill                                                                
settlement.  He explained that there is a five-cent surcharge per                                                               
barrel collected from the flow through on the pipeline.  Two cents                                                              
of the five cents goes to the response fund, which has a $50                                                                    
million cap.  When the response fund reaches $50 million, the two                                                               
cents is not collected.  He noted that three cents of the five                                                                  
cents goes to the prevention account, which is used to cover the                                                                
expenses of the DEC's Division of Spill Prevention and Response.                                                                
It covers a lot of emergency operations within Alaska, he said.                                                                 
Many agencies and organizations utilize funds in the prevention                                                                 
REPRESENTATIVE KAPSNER asked if the sponsor wants to take that                                                                  
money and appropriate it elsewhere.                                                                                             
MR. PETERSON pointed out that Annette Kreitzer, staff to Senator                                                                
Leman, was present.  Senator Leman's office, which dealt with the                                                               
subcommittee budget for the DEC, had worked closely with Senator                                                                
Torgerson on the financing aspects of SB 128.  In response to                                                                   
Representative Kapsner's question regarding municipalities and                                                                  
municipal assistance for underground petroleum storage tanks, Mr.                                                               
Peterson referred to page 2, Section 4, the bold language; he said                                                              
it provides the legislature authority to appropriate money to                                                                   
municipalities that are in dire need of assistance.  Therefore,                                                                 
that can be done on a case-by-case basis.                                                                                       
Number 1870                                                                                                                     
MR. BARNETT, in response to a query by Representative Joule,                                                                    
corrected an earlier statement.  He clarified that there is                                                                     
language that allows municipalities and political subdivisions to                                                               
obtain funding; there is an existing program for which a                                                                        
municipality can apply.  He noted that those applications are on                                                                
file, and municipalities that have applied are on a waiting list                                                                
for assistance.  Although municipalities on the list would be taken                                                             
off, they could request funds directly from the legislature.                                                                    
REPRESENTATIVE JOULE asked what recourse is available, both                                                                     
currently and under the bill, for communities that are not                                                                      
Number 1951                                                                                                                     
MR. BARNETT said he didn't know of any currently on the list.  He                                                               
pointed out that the list is closed; however, such municipalities                                                               
would have been able to apply if they had a corporate designation                                                               
or a community organization.  Churches have applied and are on the                                                              
waiting list, for example.  If the municipality was previously on                                                               
the list, that municipality might qualify.  Under this language,                                                                
however, Mr. Barnett said he wasn't sure.  He offered to research                                                               
that and provide the committee with the information.                                                                            
REPRESENTATIVE KAPSNER asked whether a co-op under a council-led                                                                
village could apply.                                                                                                            
MR. BARNETT indicated that would be correct if the co-op had                                                                    
already applied.  He emphasized that the application period is                                                                  
closed; the deadline was in 1994.  This applies to a finite list,                                                               
and no new applications can come through this program, either                                                                   
currently or under this legislation.  He reiterated that                                                                        
municipalities could request funds directly from the legislature.                                                               
REPRESENTATIVE JOULE asked if there was ever a problem with the                                                                 
structure of this program or audit problems regarding how the                                                                   
program was run.                                                                                                                
MR. BARNETT replied that there were never any paramount concerns.                                                               
However, there was always concern that it was state money being                                                                 
invested in these municipalities, and that every dime should be                                                                 
accounted for.  The funding should go towards specific costs                                                                    
related to the intent of the original program, he noted.                                                                        
Therefore, there was a strict auditing of all expenses.                                                                         
Number 2118                                                                                                                     
REPRESENTATIVE JOULE inquired if there had been any misuse of                                                                   
MR. BARNETT answered that there is no problem related to misuse of                                                              
state funds, and the last audit of the program was "very, very                                                                  
good."  Rather, it is more of a philosophical problem as to who                                                                 
gets those funds.  Some very large companies certainly could pay                                                                
for this cleanup themselves, and in fact, in many cases have paid                                                               
for it; there is a strong desire not to pay them, even though the                                                               
companies have paid registration fees and the money has been                                                                    
promised.  However, the board believes the threshold in SB 128                                                                  
should be higher.  Possibly more information should be gathered, as                                                             
well, to determine whom this bill will impact; the number is                                                                    
arbitrary now, and they don't know how many people would fall under                                                             
that threshold or not qualify.                                                                                                  
Number 2210                                                                                                                     
REPRESENTATIVE BARNES suggested that everyone who applied prior to                                                              
1994 had a clear understanding that one legislature cannot bind                                                                 
another, and that this program was subject to change at any time.                                                               
She asked if Mr. Barnett agrees.                                                                                                
MR. BARNETT said he does agree.                                                                                                 
Number 2239                                                                                                                     
REPRESENTATIVE JOULE mentioned Mr. Barnett's testimony that if this                                                             
went away at the end of the fiscal year, nothing would get done                                                                 
until there were regulations.  He indicated a belief that if the                                                                
program continued to the scheduled sunset date in 2000, they could                                                              
move in that direction.                                                                                                         
MR. BARNETT specified that the upgrade and closure program, which                                                               
involves 158 people, could be completed in one year.  In contrast,                                                              
the cleanup program, with more than 220 facilities on the list, is                                                              
one of the biggest concerns.  It is very expensive and will take                                                                
many years to resolve.  Cleanup takes four to five years, at a                                                                  
minimum, to complete; it must be done in stages, doing work,                                                                    
waiting for results and then going on to the next stage.  There is                                                              
definitely a need to address the program, especially in the long                                                                
term.  He stated his understanding that the Senate had been                                                                     
concerned about having this go on forever, and therefore had set                                                                
controls on it.                                                                                                                 
Number 2327                                                                                                                     
REPRESENTATIVE HARRIS read from item 6) of a document distributed                                                               
by the Board of Storage Tank Assistance, titled, "Impact of SB
128," which stated:  "Small 'Mom & Pops' and road houses with large                                                             
acreage and prime locations will not qualify for cleanup assistance                                                             
under this definition of net worth."  Representative Harris said it                                                             
seems that most of those small operations would be valued at less                                                               
than $1 million.                                                                                                                
MR. BARNETT disagreed.  He pointed out that if someone has a                                                                    
significant amount of acreage in Alaska, especially at a prime                                                                  
location, the property value will be high.  He had used the example                                                             
of a road house because it might also have a lodge, small cafe,                                                                 
small gas station and service bays, he said.  In looking at that,                                                               
and from the few conversations he had with tank owners out there,                                                               
$1 million in assets is not a lot of money.  Most of those owners                                                               
had $1.5 million to $2 million or more in assets.  However, their                                                               
net worth, under the generally accepted accounting procedures, was                                                              
much lower, after subtracting mortgages, inventory and operating                                                                
costs.  For some, their net worth was a negative number.  That is                                                               
why the board wants to include liabilities in the definition of net                                                             
worth, to make it consistent with the banking industry and everyone                                                             
Number 2453                                                                                                                     
CO-CHAIR OGAN asked if members had questions of Steven Daugherty of                                                             
the Department of Law or Jim Hayden of the Department of                                                                        
Environmental Conservation (DEC); there were none.  He also noted                                                               
that former state Senator Jay Kerttula had been in attendance.                                                                  
Number 2513                                                                                                                     
JOHN COOK, Sterling Tesoro, testified via teleconference from                                                                   
Kenai, noting that he has a family and has lived here almost all                                                                
his life.  Mr. Cook indicated he'd put almost all his money into a                                                              
service station that was approved by the state, after going through                                                             
their regulations and laying it out professionally with Tesoro, who                                                             
had loaned the tank dispenser to put him into business.  To get                                                                 
started, he also had a $100,000 Alaska veterans' loan from the                                                                  
state.  However, the state had no regulations then regarding                                                                    
spills.  For example, people would rinse out a gas can and throw it                                                             
on the ground, for which someone could go to jail today.                                                                        
MR. COOK expressed concern on behalf of "mom and pop" operations                                                                
that if the board is terminated, the "big boys" will run all the                                                                
stations and take over.  He told members, "In 1985, they deserted                                                               
like rats in the ship because they knew this pollution law was                                                                  
coming up.  They gave their stations away to individuals that went                                                              
broke.  And some committed suicide.  We've had heartbreaks and                                                                  
divorces, all because somebody's trying to save a buck down there                                                               
in Juneau."  Mr. Cook requested protection.  He suggested getting                                                               
rid of the DEC and hiring professionals who will ask what they can                                                              
do to help, rather than trying to destroy the owners.                                                                           
MR. COOK recounted how he'd had an argument with the DEC, who came                                                              
to his station with the state troopers like the Gestapo, he said,                                                               
while he was away in Ohio picking up a new truck for his septic                                                                 
business.  "These guys tore me out completely," he stated.  "I had                                                              
nothing.  They took the dispensers that didn't belong to me; they                                                               
belonged to Tesoro.  They left the tanks in the ground.  They used                                                              
470 funds and say, 'You've got to pay it back at 10 percent                                                                     
interest' - $321,000, and the professional engineer standing there                                                              
said they could have done it for $85,000?  Then the DEC had that                                                                
dirt removed and put up on the back of my RV [recreational vehicle]                                                             
park, and ... completely destroyed my RV park."                                                                                 
MR. COOK reported that 25 people who work for him during a year are                                                             
affected by this "mom and pop" store into which he has put his life                                                             
savings.  He indicated the state has wasted over $2 million in                                                                  
attorney fees trying to put him under, spending $325,000 for a                                                                  
cleanup, even though Quality Asphalt (ph) wanted to buy it for                                                                  
$39,000.  Emphasizing the waste, Mr. Cook proposed that the DEC be                                                              
investigated.  "The Division of Investments should be handling that                                                             
money, and professional-type people," he added.  "An agricultural                                                               
engineer took care of my cleanup; he was the head man.  These guys                                                              
were not qualified."                                                                                                            
MR. COOK concluded that without the board, he wouldn't be here                                                                  
today.  He still faces $331,000, however, and he didn't even own                                                                
the tanks.  The state is into it for over $3 million, he said,                                                                  
"from negligence and using the powers of their office to get even                                                               
with an individual."  He suggested those are the kinds of                                                                       
investigations that need to made.  Mr. Cook commended the board and                                                             
John Barnett, in particular.  He reiterated concerns about large                                                                
companies taking over if the board is sunsetted, warning that it                                                                
will cause gas prices to rise.                                                                                                  
Number 2807                                                                                                                     
CO-CHAIR OGAN expressed appreciation for the testimony, suggesting                                                              
it is a vivid example of why the legislature needs to thoughtfully                                                              
consider these issues.                                                                                                          
Number 2846                                                                                                                     
GARY WEBER, Wasilla Chevron, testified via teleconference from the                                                              
Mat-Su Legislative Information Office (LIO), saying he can relate                                                               
to Mr. Cook's testimony.  In his own case, Mr. Weber said, Senators                                                             
Leman and Torgerson have opened up a Pandora's box by introducing                                                               
this bill.  Although he believes the bill is basically good, three                                                              
major problems will either cause headaches for tank owners or put                                                               
them under.                                                                                                                     
MR. WEBER reported that he has been going through this since 1991.                                                              
As of last month, he'd received $484,000 in state grants and spent                                                              
$368,000 of his personal money, totally draining his private                                                                    
resources.  For every $1.30 spent by the state, he has spent $1.                                                                
He came into 1999 expecting to spend no more than another $40,000,                                                              
the cost of his final risk assessment; if that had showed that the                                                              
facility was cleaned up within tolerance, it would result in a "no                                                              
further action" letter from the DEC, the final step.                                                                            
MR. WEBER recalled that prior to HB 225 and the tank assistance                                                                 
program, fund and board, tank owners were treated like criminals.                                                               
TAPE 99-33, SIDE B                                                                                                              
[Numbers run backwards because of tape machine]                                                                                 
MR. WEBER said John Cook had been treated like a criminal in                                                                    
Sterling, as well.  However, with HB 225, the board established                                                                 
gave tank owners a buffer against the DEC, which has toned down                                                                 
tremendously in the last nine years.                                                                                            
Number 2837                                                                                                                     
MR. WEBER returned to the three problems in SB 128.  First, the                                                                 
board is already scheduled to sunset next year, and he doesn't know                                                             
why it must be put forward a year.  He believes the big companies                                                               
will drag it out; although this bill will eliminate that problem,                                                               
the other tank owners need the board.  Second, the "net worth"                                                                  
definition will cut him out.  In that case, the DEC or, more                                                                    
likely, the EPA - because 15 positions have been cut from the DEC                                                               
- will take over Mr. Weber's station, incurring expenses far beyond                                                             
what it would cost a private engineer to do the job, and then                                                                   
turning to Mr. Weber for the bill, which he cannot pay.  He would                                                               
also have to tell his own engineer to stop working because he                                                                   
couldn't pay.  Third is the effective date.                                                                                     
MR. WEBER proposed that establishing the bill's effective date as                                                               
July 1, 2000, would enable all these problems to be resolved;                                                                   
transitions would be smooth, and nobody would be hurt.  He noted                                                                
that tank owners' pleas to the Senate had fallen on deaf ears.                                                                  
However, with the three areas corrected, those who had spent all                                                                
this money wouldn't be abandoned and reneged upon, right when                                                                   
they're about the finish up the programs.                                                                                       
Number 2707                                                                                                                     
CO-CHAIR OGAN asked if Mr. Weber had his suggestions in writing.                                                                
MR. WEBER replied that he'd faxed to members what he'd sent to                                                                  
Senator Green a couple of weeks ago, including an article from the                                                              
March issue of the Alaska News Monthly.  However, he had not                                                                    
submitted this day's testimony in writing.  Mr. Weber emphasized                                                                
the human impact, saying he'd lost his own family, as others had;                                                               
he also knows of people who've had heart attacks and nervous                                                                    
breakdowns, and he knows of at least one suicide.  He has suffered                                                              
from depression the past nine years, he said, and has been scared.                                                              
He again expressed concern about losing the board's help.                                                                       
Number 2601                                                                                                                     
REPRESENTATIVE KAPSNER commended Mr. Weber for his tenacity.  She                                                               
asked if he recommends that the definition of "net worth" be                                                                    
changed to conform to generally accepted accounting principles, or                                                              
if he means for it to apply to both the owner and operator.                                                                     
MR. WEBER replied that in 40 years in the petroleum business, and                                                               
having an accounting background, "net worth" has always been                                                                    
"assets less liabilities," the generally accepted accounting                                                                    
definition.  He expounded on his own situation.  If the estimated                                                               
cost of cleanup were subtracted from his assets of $1,400,000, he                                                               
probably wouldn't come under this program.  His business has a                                                                  
negative net worth of $15,000, and his personal net worth is                                                                    
$950,000, including the value of his business; however, if the                                                                  
value of his business is subtracted, which he can't sell for a "red                                                             
nickel" right now, he has zero net worth.  Although he just spent                                                               
$35,000, he couldn't get a bank loan and therefore leased the                                                                   
equipment for five years.  If he asked the bank for $50,000                                                                     
desperately needed to upgrade with an additional 600-amp electrical                                                             
service, he can't get the money, although his system is overtaxed                                                               
and transformers are almost ready to blow.  "I can't go out and                                                                 
borrow another $50,000-100,000 to finish this cleanup," he added.                                                               
MR. WEBER noted that the money he has received comes from the                                                                   
nickel a barrel from the pipeline, which is for the specific                                                                    
purpose of cleaning up petroleum contamination.  He told members he                                                             
hasn't spilled a drop of gas at his station, and when he upgraded,                                                              
there wasn't a single leak, which he documented with pictures of                                                                
every joint, pipe and connection.  However, a plume over the fill                                                               
stem, where his suppliers had overfilled his tanks for years, is                                                                
the pollution he is cleaning up.  He emphasized the importance of                                                               
changing the definition of "net worth" to conform with the                                                                      
generally accepted accounting definition.                                                                                       
Number 2363                                                                                                                     
REPRESENTATIVE HARRIS asked for clarification about what the three                                                              
amendments would be.                                                                                                            
Number 2353                                                                                                                     
MR. WEBER specified that the first amendment would let the board                                                                
sunset at its normal date, scheduled for next year, allowing two                                                                
years of board service.  He noted that following the sunset date,                                                               
the board would have one year to finish its business; if it sunsets                                                             
June 30, 1999, they couldn't possibly finish everything that needs                                                              
to be done.  Second would be changing the definition of "net                                                                    
worth."  And third, he proposes an effective date of July 1, 2000.                                                              
Mr. Weber informed the committee that it took three or four years                                                               
to set up the program, with numerous meetings, statewide travel and                                                             
talking to many people, and it has worked well.  He concluded, "I'm                                                             
not saying that this bill is not timely, but ... those three things                                                             
have to be fixed in order for us to make the last nine years                                                                    
effective, and not just ruin it and have us all walk down the road                                                              
talking to ourselves."                                                                                                          
Number 2259                                                                                                                     
CO-CHAIR OGAN pointed out that the title states that this Act moves                                                             
the termination date to June 30, 1999.  A title change requires a                                                               
two-thirds' vote of the House, he said, which can be difficult to                                                               
get.  Co-Chair Ogan said he would figure out what was required.                                                                 
Noting that it will affect people, he said he'd hold the bill over                                                              
and recess to the call of the chair.                                                                                            
Number 2200                                                                                                                     
REPRESENTATIVE KAPSNER expressed a desire to hear from the                                                                      
sponsors' representatives regarding the possibility of a title                                                                  
Number 2177                                                                                                                     
MR. PETERSON explained that the definition of "tangible net worth"                                                              
was established in the Senate Finance Committee and agreed to by                                                                
the full Senate.  It isn't the generally accepted accounting                                                                    
procedure; rather, it is "tangible assets minus liabilities                                                                     
associated with the contamination."  The intent was to decrease the                                                             
size of the grant list; people with more than $1 million in                                                                     
tangible net worth minus liabilities associated with the                                                                        
contamination would not be eligible for a grant.  Mr. Peterson said                                                             
the Senate Finance Committee thinks that is a fair cap.  That limit                                                             
has to be set somewhere, and that is what was decided by the                                                                    
Number 2122                                                                                                                     
CO-CHAIR OGAN noted that the termination date is June 30, 1999,                                                                 
only a short while.  He asked Mr. Peterson to state what the                                                                    
termination date was prior to this bill.                                                                                        
MR. PETERSON answered that on page 1, lines 8 and 9, the original                                                               
language was "June 30, 2000".   He pointed out that there is a                                                                  
one-year wind-down period for the board, during which it can                                                                    
continue its work.  Also, if the legislature believes this new                                                                  
legislation has hindered the storage tank owners a great deal, it                                                               
can be revisited in the next session, and the board can be extended                                                             
Number 2063                                                                                                                     
CO-CHAIR OGAN asked whether Mr. Peterson believes it is fair to                                                                 
people like Mr. Weber to suddenly move the date up a year.                                                                      
Number 2024                                                                                                                     
ANNETTE KREITZER, Legislative Assistant to Senator Loren Leman,                                                                 
Alaska State Legislature, came forward, noting that it had been                                                                 
Senator Leman's amendment.  She stated:  "The intent of the                                                                     
amendment to put the board on notice and in its wind-down year with                                                             
the '99 date is to keep everybody focused on this program.  Senator                                                             
Leman supports the Board of Storage Tank Assistance, understands                                                                
very clearly how helpful they have been to the owners and operators                                                             
of the storage tanks.  What he has pledged to do is - if, in fact,                                                              
the board still needs to operate beyond the year 2000 - to sponsor                                                              
that legislation and then reintroduce it in January.  The board                                                                 
will be six months into its wind-down year when the legislature                                                                 
meets again."  As to fairness, Ms. Kreitzer said, she hadn't asked                                                              
Senator Leman that and couldn't represent his position on it.                                                                   
Number 1961                                                                                                                     
REPRESENTATIVE JOULE expressed his understanding that the Senate is                                                             
happy with the definition of "tangible net worth," even though it                                                               
isn't consistent with standard accounting practices.  He noted that                                                             
the board seems to have been a buffer from what sounds like the                                                                 
heavy hand of the state, especially for small operators, yet the                                                                
small operators appear most heavily impacted by this legislation.                                                               
MS. KREITZER concurred, stating that Senator Leman's intent is to                                                               
keep people focused.  She believes there is broad support for the                                                               
Board of Storage Tank Assistance, she added, and broad knowledge as                                                             
to how they act as a buffer regarding the DEC.                                                                                  
REPRESENTATIVE JOULE asked if there is a reason to think they                                                                   
haven't been focused.                                                                                                           
MS. KREITZER indicated she was talking not only about the board's                                                               
focus, but also about the focus of everyone else concerned with the                                                             
board, to ensure that the DEC treats people differently from here                                                               
on out. "It's just one minor way of keeping it before the                                                                       
legislature," she added.                                                                                                        
REPRESENTATIVE JOULE pointed out that for being a "minor way," it                                                               
is giving people a lot of heartburn.                                                                                            
Number 1750                                                                                                                     
CO-CHAIR SANDERS said he doesn't see how doing away with the board                                                              
will help control the DEC.                                                                                                      
MS. KREITZER replied, "We haven't done away with the board.  This                                                               
is a one-year wind-down period.  The legislature meets again in                                                                 
Number 1678                                                                                                                     
REPRESENTATIVE HARRIS questioned how this isn't terminating the                                                                 
board, when the title states that the board is terminating on June                                                              
30, 1999.  If this passes, the board will be terminated this year.                                                              
MS. KREITZER replied that the termination date will be June 30,                                                                 
1999, but before that date, the legislature has the opportunity to                                                              
reconsider whether it wants to extend the board again.                                                                          
Number 1631                                                                                                                     
REPRESENTATIVE BARNES noted that many boards come up for                                                                        
reconsideration under a sunset clause.  This board would sunset                                                                 
prior to the time that the legislature comes back in session,                                                                   
however, and would have to be reauthorized after the sunset date.                                                               
She then recounted how she was on the House Finance Committee when                                                              
this issue first came before the legislature.  The original concept                                                             
was to add money to every gallon of gasoline to pay for this, she                                                               
said, but then they decided to soak the oil companies for it, with                                                              
the nickel-a-barrel surcharge.  She contended then, as she does                                                                 
now, that some of the profit from selling gasoline should have gone                                                             
into taking care of the storage tanks and so forth.                                                                             
Number 1430                                                                                                                     
MR. COOK spoke again, saying the "little guy" doesn't make a profit                                                             
anymore.  He said the oil companies control prices, as they supply                                                              
the gas and are in direct competition with the small owners.  "The                                                              
answer I got from them was to sell more cookies," he added.                                                                     
REPRESENTATIVE BARNES said it is beyond her why people would stay                                                               
in business if they didn't make a profit.                                                                                       
CO-CHAIR OGAN commented that sometimes things change from the time                                                              
one gets into business, including government regulations.  What was                                                             
once an acceptable practice regarding oil could result in a jail                                                                
sentence now.  Although rules have changed for the good, some                                                                   
people have been caught in the transition or, in Mr. Weber's case,                                                              
the problem was caused by the guys who filled up his tank.                                                                      
Co-Chair Ogan concluded the hearing on SB 128, noting that it would                                                             
be held over.                                                                                                                   
Number 1268                                                                                                                     
CO-CHAIR OGAN called an at-ease at 3:01 p.m. and turned the gavel                                                               
over to Co-Chair Sanders.                                                                                                       
CO-CHAIR SANDERS called the meeting back to order at 3:03 p.m.                                                                  
SB 7 - INCREASE LAND GRANT TO UNIV. OF ALASKA                                                                                   
CO-CHAIR SANDERS announced that the final order of business before                                                              
the committee would be CS for Senate Bill No. 7(FIN) am, "An Act                                                                
relating to the University of Alaska and university land, and                                                                   
authorizing the University of Alaska to select additional state                                                                 
land."  Acknowledging the shortage of time, Co-Chair Sanders said                                                               
he would take as much testimony as possible in the remaining time                                                               
and then recess to the call of the chair.                                                                                       
Number 1198                                                                                                                     
MEL KROGSENG, Legislative Assistant to Senator Robin Taylor, Alaska                                                             
State Legislature, noted that although CSSB 7(FIN) am is similar to                                                             
previous legislation on this subject, it is a new bill.  Amendments                                                             
from various committees were tacked onto last year's bill, which                                                                
resulted in conflicting and confusing sections.  That bill, cleaned                                                             
up by Legislative Legal and Research Services, is before the                                                                    
committee currently.                                                                                                            
MS. KROGSENG explained that CSSB 7(FIN) am provides the university                                                              
with 250,000 acres of state land.  The university was created as a                                                              
land grant college by the federal government.  It was created as an                                                             
agricultural and mining school.  Although promised vast amounts of                                                              
land by the federal government, the university only received                                                                    
111,000 acres.  The remaining entitlement was extinguished at                                                                   
statehood when the state was given some 103 million acres of land.                                                              
There are many restriction regarding which lands can and cannot be                                                              
selected.  She noted that the committee should have a sectional                                                                 
analysis of CSSB 7(FIN) am.                                                                                                     
Number 1079                                                                                                                     
MS. KROGSENG continued with highlights of the bill.  She informed                                                               
the committee that lands not available for selection are the                                                                    
following:  land reserved for the public domain; land included in                                                               
a five-year proposed oil and gas leasing program; leased land or                                                                
land for which a lease is pending for other purposes; land subject                                                              
to an oil, gas, or coal lease or coal prospecting permit; land                                                                  
subject to a mining claim, prospecting site, upland mining lease,                                                               
or mining leasehold location; land necessary to carry out the                                                                   
purposes of an inter-agency land management agreement; and land                                                                 
subject to conveyance under a land exchange or settlement                                                                       
agreement.  Land selected by a municipality is not an option.                                                                   
Furthermore, land that a commissioner may believe will be selected                                                              
by a municipality can be withheld by the commissioner for three                                                                 
MS. KROGSENG noted that CSSB 7(FIN) am includes the new provision                                                               
allowing the municipalities the first right of refusal.  She                                                                    
pointed out that the following land also may not be conveyed:  land                                                             
subject to an oil and gas exploration license, and land which the                                                               
commissioner believes may be part of an oil and gas exploration                                                                 
lease.  Any land conveyed is subject to a possessory interest.                                                                  
Furthermore, the Department of Natural Resources (DNR) shall                                                                    
provide public notice of intent to convey the land.  She informed                                                               
the committee that the university shall pay all survey and transfer                                                             
associated costs, except the recording of the title transfer.                                                                   
MS. KROGSENG pointed out some transfer conditions.  Coal, ores,                                                                 
minerals, fissionable material, geothermal resources, and fossils                                                               
transfer when the title to the land transfers.  Oil and gas                                                                     
resources, however, only transfer for land selected after the                                                                   
effective date of the Act, and then only five years after the                                                                   
effective date.  Therefore, if the state develops or sells an oil                                                               
lease and gets revenue from the oil lease prior to selection by the                                                             
university, the state will continue to get that money in                                                                        
perpetuity, even if the oil is discovered three years after the                                                                 
effective date of the Act.  The university would only receive oil                                                               
and gas revenues for oil discovered five years or later than the                                                                
effective date of the Act.  That was of concern in the prior                                                                    
legislation, Ms. Krogseng noted.  The current legislation also                                                                  
increases the size of the acreage that the university must select                                                               
to 640 acres or more, unless the commissioner believes it to be in                                                              
the best interest of the state for the university to select a                                                                   
smaller parcel.                                                                                                                 
Number 0834                                                                                                                     
MS. KROGSENG reiterated that oil and gas revenues go to the state                                                               
for five years after the effective date of the Act even if the land                                                             
is conveyed.  "Well actually, the oil and gas continue on," she                                                                 
then stated.  "All other revenues transfer to the university fund                                                               
conveyance as title.  So, if they were a mining or a grazing lease,                                                             
... that lease revenue would transfer to the university fund                                                                    
conveyance."  She pointed out that the bill includes a provision                                                                
for the Board of Regents to give up 20 percent of the revenue                                                                   
derived from the resource sales in the area closest to a campus,                                                                
provided the local municipality provides a match.  Without that                                                                 
match, the Board of Regents would not be required to provide that                                                               
revenue to the campus.                                                                                                          
MS. KROGSENG directed the committee to page 9, lines 27-30, which                                                               
attempts to address the concern regarding continued use by the                                                                  
public of the land to be conveyed.  She noted that an issue had                                                                 
arisen today regarding the potential access, if the land was later                                                              
sold to a third party.  Land placed on the list must come before                                                                
the legislature for approval similar to the Local Boundary                                                                      
Commission's land.  The legislature has the ability to eliminate                                                                
proposed land from the list or to approve the land with certain                                                                 
access conditions.                                                                                                              
MS. KROGSENG expressed her belief that CSSB 7(FIN) am meets the                                                                 
requirements of legislation introduced by U.S. Senator Murkowski,                                                               
which would provide Alaska with 250,000 acres with no strings                                                                   
attached, as well as an additional 250,000 acres if the state                                                                   
matches with an additional 250,000 acres.  This would go far in                                                                 
making the University of Alaska a truly land-based college, she                                                                 
said.  The University of Alaska is second-to-last in the amount of                                                              
land it currently has.  She mentioned a map and an overlay which                                                                
the committee reviewed during the meeting.                                                                                      
Number 0502                                                                                                                     
REPRESENTATIVE JOULE asked if CSSB 7(FIN) am discusses the types of                                                             
lands the university would select.  For example, would some land                                                                
classifications be off-limits?                                                                                                  
MS. KROGSENG said there is a list of lands unavailable for                                                                      
selection, but that list is not done by classification; the                                                                     
commissioner provides a list of available lands. The bill does                                                                  
specify the lands that may not be selected.                                                                                     
REPRESENTATIVE JOULE inquired how that selection compares with the                                                              
pending selections of municipalities.                                                                                           
MS. KROGSENG replied that the municipalities, under current law,                                                                
are more restricted; the lands available for selection under this                                                               
legislation are more far-reaching.  She noted that she had                                                                      
discussed that issue with the Alaska Municipal League (AML), but it                                                             
could not be addressed in this legislation due to the                                                                           
single-subject title rule.                                                                                                      
REPRESENTATIVE JOULE suggested that the university would be bumped                                                              
ahead, in terms of the types of classifications to which they have                                                              
MS. KROGSENG said yes; according to her understanding of the                                                                    
legislation, certain lands that the university could select would                                                               
not be available to a municipality.                                                                                             
Number 0294                                                                                                                     
REPRESENTATIVE JOULE asked if the AML is supportive of this                                                                     
MS. KROGSENG replied, "What we did in the legislation was ... if                                                                
the university selects land within municipal boundaries and that                                                                
municipality has a remaining entitlement, then the municipality has                                                             
the first right of refusal."  She did not have a letter of support                                                              
from the AML, she said, but doesn't believe they oppose the                                                                     
Number 0222                                                                                                                     
REPRESENTATIVE BARNES requested that Ms. Krogseng provide the                                                                   
committee with the use of the acreage presently held by the                                                                     
MS. KROGSENG agreed to that, but noted that Ms. Redman was present                                                              
and may have that information.                                                                                                  
CO-CHAIR SANDERS requested that Ms. Krogseng also provide the                                                                   
committee with the income stream coming from that land, at present.                                                             
MS. KROGSENG agreed to that, as well.                                                                                           
CO-CHAIR SANDERS asked if the university would pay start-up                                                                     
expenses from the income generated from the land or from general                                                                
fund monies.                                                                                                                    
MS. KROGSENG expressed her understanding that income from the land                                                              
which the university currently manages is placed in the land trust.                                                             
The interest from the land trust pays start-up expenses.                                                                        
CO-CHAIR SANDERS inquired as to the provisions regarding the                                                                    
state's oil rights.                                                                                                             
MS. KROGSENG explained that if oil was found within five years of                                                               
the effective date of this Act, the revenue stays with the state in                                                             
perpetuity.  If oil is found after five years of the effective date                                                             
of this Act, the revenue stream goes to the university.                                                                         
CO-CHAIR SANDERS said he found that to be counterproductive, if the                                                             
goal is to support the university.  He added, "We're going to give                                                              
them some land, as long it doesn't make much money.  If it makes a                                                              
little money, they can have it.  But if it makes very much money,                                                               
we want it."                                                                                                                    
MS. KROGSENG said she believes that provision was placed in the                                                                 
legislation some time ago.                                                                                                      
TAPE 99-34, SIDE A                                                                                                              
Number 0001                                                                                                                     
MS. KROGSENG commented that there was some concern regarding                                                                    
speculation and taking the state's revenue streams.  She understood                                                             
that there have been many compromises over the years, in attempting                                                             
to develop a program and a document that works for the university                                                               
as well as the state.                                                                                                           
CO-CHAIR SANDERS said he understood Ms. Krogseng to say that the                                                                
university could sell the land.                                                                                                 
MS. KROGSENG said that is correct.  She further explained that the                                                              
university would have to go through the public process, as does the                                                             
DNR.  She requested that Ms. Redman come forward to answer some of                                                              
these questions.                                                                                                                
Number 0196                                                                                                                     
WENDY REDMAN, Vice President, Statewide University of Alaska                                                                    
System, commented that she "really loved" this bill six years ago,                                                              
but she "likes" this bill now.  Ms. Redman said that the                                                                        
university, as a land grant university, has a long history and                                                                  
tradition of managing land.  Other than the DNR, the university is                                                              
the only state agency set up to manage land.  She believes that the                                                             
university's record illustrates the phenomenal job it has done                                                                  
managing its 100,000 acres.                                                                                                     
MS. REDMAN informed the committee that although the university was                                                              
originally allotted 350,000 acres from the federal government, it                                                               
only received 100,000 acres.  At statehood, the original lands had                                                              
not been surveyed and so were given up.  Those lands were managed                                                               
by the state and mingled with other state lands for the good of all                                                             
Alaskans, which was the intent.  In the first 30 years of state                                                                 
management, those lands generated $590,000 total. The university                                                                
sued the state to have management of those lands returned to the                                                                
university.  By the time the university won that suit, however, the                                                             
university's original lands were not available because the land had                                                             
been given away.  Therefore, the university received lands of                                                                   
similar value.                                                                                                                  
MS. REDMAN pointed out that in the ten years that the university                                                                
has had active management of the lands, it has generated $32                                                                    
million from the 100,000 acres.  She said the university is an                                                                  
aggressive land manager, which she acknowledged did cause some                                                                  
problems.  For example, the university has engaged in timber                                                                    
cutting, which caused some difficulties.                                                                                        
Number 0452                                                                                                                     
MS. REDMAN reported that the university believes it is in the                                                                   
state's interest and its own interest to generate new revenue for                                                               
the state.  She pointed out that when land is put into the                                                                      
university, it generates revenue that wouldn't otherwise be                                                                     
available to the state or to the university to use; that is the                                                                 
idea of getting these lands into development, which she believes                                                                
the university can do more effectively than the state can.  Ms.                                                                 
Redman clarified that she was not speaking negatively about the                                                                 
DNR, which has done a great job with oil and gas because it has the                                                             
resources and staff to do it.  However, outside of oil and gas, the                                                             
DNR has not had the staff to get land out into the private sector.                                                              
MS. REDMAN informed the committee that she would provide copies of                                                              
the recent land management report that lists all of the                                                                         
university's properties and the activity, pending and ongoing, on                                                               
those properties, as well as the financial statements from the land                                                             
grant trust fund.  [Before the end of the meeting, members received                                                             
copies of a lengthy document titled, "Statewide Office of Land                                                                  
Management Annual Report," dated February 1999.]  She echoed Ms.                                                                
Krogseng's comment that this legislation encompasses many                                                                       
MS. REDMAN addressed Co-Chair Sanders' question regarding oil and                                                               
gas.  Under CSSB 7(FIN) am, it would be very difficult to determine                                                             
how to obtain any oil and gas lands.  There has been some support                                                               
from the oil and gas industry for some joint projects; for those,                                                               
it is easier for that industry to be involved with the university,                                                              
rather than the state.  There has been some opposition to this from                                                             
various groups, however, such as the environmental community,                                                                   
hunters and fishermen, who are concerned with limited access to the                                                             
lands acquired by the university.  This legislation attempts to                                                                 
address that concern with language indicating the continuance of                                                                
the customary utilization and access to the land, to the maximum                                                                
extent the university could.  Also, prior to transfer of land into                                                              
third-party hands, such entry would be allowed on university land.                                                              
Beyond that, however, the university cannot make any commitments                                                                
regarding use.                                                                                                                  
MS. REDMAN emphasized that she would prefer a bill with specific                                                                
acres designated.  In conclusion, she pointed out that this                                                                     
legislation will not solve any financial problems for the                                                                       
university.  Land development takes much time, and potential income                                                             
is in the future.  Therefore, no immediate or short-term financial                                                              
problems of the university would be solved.                                                                                     
Number 0829                                                                                                                     
REPRESENTATIVE BARNES inquired as to the location of the                                                                        
university's land that was logged.                                                                                              
MS. REDMAN replied that the logging is occurring in the Yakataga                                                                
region, Cape Suckling.  Furthermore, the university had land in                                                                 
Southeast Alaska, in the Ketchikan region, that was logged.  She                                                                
also recalled some land on Afognak Island that is part of the                                                                   
original settlement with the state.                                                                                             
REPRESENTATIVE BARNES asked about Ms. Redman's statement that if                                                                
the university developed lands, it would be well into the future                                                                
before the university could derive any income from it.                                                                          
MS. REDMAN reiterated that land development is a long-term process;                                                             
therefore, it will not solve financial problems next year or the                                                                
following year.  Money generated from land development is placed                                                                
into the natural resources trust fund, which was established by the                                                             
legislature.  The university only utilizes the earnings of the                                                                  
fund, minus inflation-proofing, in order that an income stream is                                                               
generated.  Ms. Redman informed the committee that the operating                                                                
budget is $160 million a year.                                                                                                  
REPRESENTATIVE BARNES emphasized that state land cannot be disposed                                                             
of to anyone for a quick solution.                                                                                              
MS. REDMAN clarified, regarding a previous question from                                                                        
Representative Joule, that the state cannot transfer any public                                                                 
domain land to the university.  This is because the university is                                                               
not public domain land.  Therefore, any lands already legislatively                                                             
designated as park land cannot be transferred to the university.                                                                
CO-CHAIR SANDERS, in the interest of time, asked that testifiers                                                                
limit testimony to three minutes.                                                                                               
Number 1137                                                                                                                     
KEVIN TRITT testified via teleconference from Anchorage, voicing                                                                
opposition to SB 7 as it currently stands.  He has followed the                                                                 
university land grant as legislation, and as a student, he said,                                                                
for a few years.  Some practices implemented by the university as                                                               
land managers, particularly in the Cape Yakataga region, have                                                                   
caused him to oppose this bill.  The university wasn't put into the                                                             
best of situations with Cape Yakataga, as they were given the                                                                   
timber rights only, he noted.  This bill doesn't adequately appease                                                             
his concerns that the university may select further timber lands.                                                               
He agrees with Wendy Redman that it would be better to have a bill                                                              
which specifies the exact lands to be given to the university.                                                                  
MR. TRITT mentioned that a number of Southeast Alaska communities                                                               
have opposed the university's land grant because of its practices                                                               
at Cape Yakataga.  He offered a copy of a documentary film prepared                                                             
by university students from the Environmental Education Club, who                                                               
felt that the university's procedures at Cape Yakataga aren't sound                                                             
ecological management practices and don't represent the type of                                                                 
university that they wish to attend.                                                                                            
Number 1304                                                                                                                     
CO-CHAIR SANDERS accepted Mr. Tritt's offer of the tape, asking him                                                             
to send it through the Anchorage LIO.                                                                                           
Number 1344                                                                                                                     
JOHN EASTON, Bristol Bay Coastal Resource Service Area (Bristol Bay                                                             
CRSA), testified via teleconference from Dillingham, specifying                                                                 
that he was speaking on behalf of their elected board, which                                                                    
represents 11 communities.  They oppose SB 7.  Although strong                                                                  
supporters of the university system, they believe indiscriminately                                                              
giving public land to the university in a period of declining                                                                   
revenues is not the answer.  Rather, a more reliable way to fund                                                                
the university is needed, now and in the future.                                                                                
MR. EASTON informed the committee that the majority of land within                                                              
his coastal district is owned by the state and managed by the DNR.                                                              
Two major adopted land use plans are in effect:  the Bristol Bay                                                                
Area Plan and the Nushagak/Mulchatna Rivers Recreational Management                                                             
Plan.  These plans, representing years of hard work, provide an                                                                 
outline for resource developers on state land and allow the coastal                                                             
district involvement in the public planning process.  However, SB
7 doesn't account for future uses of these lands, and it will                                                                   
eliminate guidelines for how the university manages these lands.                                                                
Mr. Easton cautioned that there are highly valued public resources                                                              
at risk here.  He asked the committee to not support this bill but                                                              
to reevaluate other options to fund the university.                                                                             
Number 1465                                                                                                                     
RUSSELL NELSON, Land Manager, Choggiung Limited (village                                                                        
corporation), testified via teleconference from Dillingham.  He                                                                 
expressed strong concerns about SB 7 and potential land selection                                                               
in the Nushagak/Mulchatna drainage.  Choggiung Limited is a major                                                               
land owner along the Nushagak River; their lands, surrounded by                                                                 
state lands, are managed under the guidelines of the                                                                            
Nushagak/Mulchatna Recreation Management Plan.  This bill creates                                                               
the potential for developing lands in the Nushagak/Mulchatna area,                                                              
removing those lands from the public planning process.                                                                          
CO-CHAIR SANDERS called upon Jane Angvik, Director, Division of                                                                 
Land, DNR, who reserved her comments for a later time.                                                                          
Number 1550                                                                                                                     
TOM ARMOUR, Manager, City and Borough of Yakutat, testified via                                                                 
teleconference, specifying that he was speaking as a professional                                                               
municipal manager, not reiterating the assembly's position.  He                                                                 
indicated the City and Borough of Yakutat supports the concept of                                                               
first rights for, and protection of, a priority for municipal lands                                                             
selections.  This first right of refusal, as it is now, is much                                                                 
appreciated, and he believes this bill version is far better than                                                               
what they've dealt with in the past.                                                                                            
MR. ARMOUR recommended a simple amendment stating that "municipal                                                               
land selections shall receive first priority in selections,                                                                     
adjudications and/or conflicts."  Second, on page 8, lines 27 and                                                               
28, he suggested adding that the university wouldn't be able to                                                                 
proceed with selections under this bill until January 1, 2000.                                                                  
This simple protective device recognizes the proliferation of                                                                   
borough annexations and creations either underway or being                                                                      
considered, in view of other declining state assistance.  Finally,                                                              
Mr. Armour reiterated a suggestion of March 4 that some portion of                                                              
the income stream to the nearest university branch instead go to                                                                
the nearest municipal government.  Noting that many selections take                                                             
place in areas lacking university branches, he said these                                                                       
selections remove local revenue generation possibilities.  He                                                                   
believes that would also benefit newly forming local governments.                                                               
Mr. Armour concluded by commending the current version.                                                                         
Number 1780                                                                                                                     
ROSS COEN came forward on his own behalf, informing members that                                                                
he'd just graduated from the University of Alaska Fairbanks.  He                                                                
spoke in opposition to SB 7; although the university requires                                                                   
adequate funding, he believes this is little more than a                                                                        
short-sighted land giveaway.  He reported that a now-retired                                                                    
philosophy professor at the university, Dr. Walter Benish (ph),                                                                 
still teaches classes on a volunteer basis because otherwise the                                                                
philosophy department would fold.  Revenue from SB 7 won't come in                                                              
for at least ten years, and Dr. Benish cannot teach on a volunteer                                                              
basis until money starts coming in.  This bill doesn't solve the                                                                
university's funding problems, he concluded, imploring the                                                                      
committee to instead fund the university through the regular                                                                    
appropriations process.                                                                                                         
Number 1865                                                                                                                     
CHOW TAYLOR, Alaska Municipal League (AML), came forward,                                                                       
specifying that the AML doesn't oppose the bill but has some                                                                    
concerns.  She expressed appreciation for inclusion of the first                                                                
right of refusal but also voiced concern that it only applies to                                                                
the VUU [vacant, unappropriated, unreserved] lands that                                                                         
municipalities are entitled to select under Title 29.  The AML                                                                  
doesn't believes that other lands which the university would be                                                                 
eligible to take under Title 14 would be subject to objections by                                                               
the municipalities, which aren't able to select those lands.  Many                                                              
municipalities are trying to complete their land conveyances, and                                                               
the state currently owes municipalities more than 600,000 acres.                                                                
MS. TAYLOR restated that under current law, municipalities are only                                                             
entitled to select vacant, unappropriated, unreserved lands.  If                                                                
some of those selections are denied by the state, they would have                                                               
the opportunity to ask the state to reclassify some of those lands,                                                             
so that they might select them at a later date.  If the university,                                                             
in the meantime, can come in and select lands other than VUU lands,                                                             
those would be taken out of consideration for municipalities.                                                                   
MS. TAYLOR informed the committee of some suggestions by the AML:                                                               
1) that the university not be allowed to select lands within                                                                    
municipalities until their land selections are completed, or 2)                                                                 
that the university be limited to selecting VUU lands within                                                                    
municipal boundaries, or 3) that municipalities be allowed to                                                                   
select all classifications of lands within their boundaries, as                                                                 
would be the university.                                                                                                        
CO-CHAIR SANDERS requested that Ms. Taylor provide those                                                                        
suggestions in writing, to which she agreed.                                                                                    
Number 1992                                                                                                                     
MS. KROGSENG emphasized that first, Senator Taylor doesn't believe                                                              
this is an immediate solution for the university's financial woes.                                                              
However, if they don't start working on a long-range fiscal plan                                                                
for the university, they will be in the same situation in five,                                                                 
ten, fifteen or twenty years.  This bill isn't trying to address                                                                
the immediate financial needs of the university.  Second, regarding                                                             
municipal entitlements, it is her understanding that 90-some                                                                    
percent of the lands due to municipalities have already been                                                                    
selected, although they have yet to be conveyed.  Once selected,                                                                
lands are totally off the table.                                                                                                
Number 2065                                                                                                                     
CO-CHAIR SANDERS recessed the House Resources Standing Committee                                                                
meeting at 3:47 p.m., to the call of the chair.  [A new meeting was                                                             
subsequently called for May 7, 1999, at which time CSSB 7(FIN) am                                                               
was heard again.]                                                                                                               

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