CS FOR SENATE BILL NO. 128(RES) "An Act moving the termination date of the Board of Storage Tank Assistance to June 30, 1999; relating to the storage tank assistance fund; relating to financial assistance for owners and operators of underground petroleum storage tank systems; relating to discharges from underground petroleum storage tank systems; and providing for an effective date." The last hearing ended with debate over the amount of the grant programs. Senator Al Adams reminded members that the committee planned to look at the net assets of the storage tank owners. Co-Chair John Torgerson affirmed but in his opinion, the net assets should not be considered. Senator Al Adams wanted to know how the "mom and pop" operations would be protected. It was noted that the qualifications had nothing to do with the size of the tank, just the amount of assets of the owner. AT EASE 10:06AM / 10:09AM There was discussion as to appropriate drafted language that was close to the committee's intent. Senator Dave Donley moved to adopt Amendment #1 with the intent that the drafters could conform to fit the current CS. This would expand the allowable expenditures from the state from the fund to include legal and regulatory expenses. There was no objection and it was adopted. Senator Gary Wilken was concerned with the million-dollar cap. In the fuel business, it didn't take long to accrue one million dollars in gross assets. Co-Chair John Torgerson noted the struggle was with how strong the cap should be. There was debate. Senator Al Adams referred to Section 10 page 5 lines 14-16. It stated that the department might not approve for a grant, a project that was less than twenty-five percent of the owner's assets. He wanted the department to speak to this. STEVEN DAUGHERETY, Assistant Attorney General, Natural Resources Section, Civil Division, Department of Law came to the table. He stated that the tank owner with assets over $1 million who only wanted a grant for $150,000 would not qualify. Senator Al Adams wanted to make sure the smaller operators would be helped. This language would not do that. He felt that if the project cost under twenty-five percent, the owner should still qualify. Steve Daugherety stated the current language. Senator Dave Donley noted this matter should not be hard to fix. He suggested a provision to allow a grant for an amount below the twenty-five percent if the total assets were under $1 million. Steve Daugherety commented that if the committee wanted to do that, the provision could limit to $1 million in assets and remove the four-to-one ratio language. Senator Al Adams noted the problem was that the co-chair wanted to keep the twenty five-percent. Co-Chair John Torgerson understood and agreed the drafters could address the issue. He would have an amendment drafted to reflect this. [Pause on the record] JOHN BARNETT, Executive Director, Board of Storage Tank Facilities, Department of Environmental Conservation testified. He gave the board's perspective that the net worth was the true determination of the wealth of the operators. He agreed with Senator Gary Wilken that the value of almost all the small operators would surpass the $1 million cap. He detailed the types of business this would affect, noting that many roadside stations housed the owner and including the buildings and equipment was easily valued at over $1 million. The $60,000 limit restrictions for the tank upgrades program would essentially eliminate the grants since no owner with assets over $250,000 would qualify. He asked for language to deny requests for loans if the work had already been completed or if the loan was for reimbursement of expenses already paid. He gave a scenario of an owner getting a low-interest loan for a project already paid-for then opening a bar down the street. If the loan were defaulted, the state would end up owning a bar. Co-Chair John Torgerson interrupted and asked if the assumption was that every loan application would be approved. John Barnett said it was not. Co-Chair John Torgerson questioned why the department would approve such a loan. John Barnett stated that the department had to have authority to deny a loan. Unless there was specific language to address it, the department would be required to loan the funds for any projects that qualified. Senator Dave Donley said that common sense dictated that the co- chair was correct. However, with the administrative process, appeals hearings and court rulings, that assumption could not be relied upon. John Barnett continued that there needed to be language to authorize the department to put the legislation into affect. John Barnett suggested transitional language. The original recommendation was to delete the upgrade and closure program. This was because there were only 158 applicants on the list. Under the current language, all of the applicants would be eliminated from qualification. Another concern was with the effective dates. They recommended inserting the income criteria into the language with a July 1, 2000 for the loan program. The board recommended $1 million in net worth. He concluded by sharing his experiences as a mining geologist and more recently with the board. He commended the department for not issuing any fines since the inception of this program. He noted however, that the federal Environmental Protection Agency had imposed fines. He had prepared his suggestions in the form of amendments if the committee was interested. Senator Pete Kelly wanted to know if any problems had been encountered for sites that had been cleaned up. He referred to a "Letter of no further action." It seemed to him that had been a problem. John Barnett said it had been a problem more so in the past than currently. The hesitation was because of the potential liability of the state in giving the assurance to future buyers that there was no further contamination on the site. JIM HAYDEN, Program Manager, Storage Tank Program, Department of Environmental Conservation came to the table. Senator Pete Kelly asked him how many "letters" had been issued. Jim Hayden responded that of 1700 sites that had participated in the program and of those, 700 had been given No Further Action letters. Senator Pete Kelly wanted to know if some of the remaining might never qualify for the letter. Jim Hayden said some had minimal release and others were very contaminated. Senator Pete Kelly wanted to know how many sites had tested clean but did not have the letter yet. Jim Hayden knew there were some would have to research to find the number. Senator Gary Wilken referred to Closure one, two and three. Closure one was Upgrades Grants Pending Issue for 1999. Was this covered under current legislation and would proceed with no changes if this legislation passed? Jim Hayden noted the list was for FY00 and would be affected by whatever legislation was passed. He said that was the first part of the closure and the grants were issued. There was clarification on the categories that would be affected by this legislation. Closure two would be affected. Senator Lyda Green noted the other committee members did not have the closure information. Senator Gary Wilken wanted comment on the million-dollar income limit. Jim Hayden said originally the department opposed the legislation on a general fairness issue. They did have a waiting list and no applications had been accepted since 1986. The department had no position on the financial cap since they had no financial information. Co-Chair John Torgerson ordered the bill held and said he would have amendments drafted to address the concerns discussed. AT EASE 10:36AM / 10:37AM