SB  86-REFINED FUEL SURCHARGE; MOTOR FUEL TAX                                                                      
                                                                                                                                
1:49:23 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of SB  86.  "An  Act Relating  to  a refined  fuel                                                               
surcharge;  relating  to  the  motor  fuel  tax;  relating  to  a                                                               
qualified dealer  license; and providing for  an effective date."                                                               
She  asked  for  a  motion  to adopt  the  work  draft  committee                                                               
substitute (CS)). She noted that  this was the second hearing and                                                               
public testimony was closed. She asked  for a motion to adopt the                                                               
proposed committee substitute (CS).                                                                                             
                                                                                                                                
1:49:52 PM                                                                                                                    
SENATOR  GIESSEL moved  to adopt  the CS  to SB  86, labeled  29-                                                               
LS0675\S, as the working document.                                                                                              
                                                                                                                                
CHAIR COSTELLO objected for discussion purposes.                                                                                
                                                                                                                                
1:50:18 PM                                                                                                                    
LARRY SEMMONS,  Staff, Senator Peter Micciche,  stated that there                                                               
are three main changes  in the CS for SB 86: 1)  fuel sold to the                                                               
state  for official  use will  be exempt  from the  surcharge; 2)                                                               
statutory  language  related  to  alcohol  in  fuel  was  deleted                                                               
because it is no longer applicable  due to a five year limitation                                                               
and 3) the term "surcharge" was added in Section 6.                                                                             
                                                                                                                                
CHAIR COSTELLO  removed her  objection and  version S  was before                                                               
the committee.                                                                                                                  
                                                                                                                                
SENATOR  GIESSEL commented  that this  is a  great solution  to a                                                               
long-standing problem.                                                                                                          
                                                                                                                                
CHAIR COSTELLO  asked Mr.  Alper to review  the fiscal  note from                                                               
the Department of Revenue.                                                                                                      
                                                                                                                                
1:51:46 PM                                                                                                                    
KEN ALPER,  Director, Tax Division, Department  of Revenue (DOR),                                                               
explained  that the  DOR fiscal  note is  the calculated  amount,                                                               
based on past  motor fuel filings less exemptions,  that would be                                                               
subject to  this surcharge.  The estimate  is that  the surcharge                                                               
will apply  to about 950 million  gallons of refined fuel  in the                                                               
first  year. At  0.8  cents per  gallon,  this represents  annual                                                               
revenue  of  about $7.7  million,  with  an estimated  2  percent                                                               
increase each year thereafter.                                                                                                  
                                                                                                                                
SENATOR MEYER  expressed hope that this  additional revenue would                                                               
not serve  as a disincentive  for DEC  to pursue those  who cause                                                               
spills. He asked  Ms. Ryan to state on the  record that she would                                                               
aggressively go after the "cost causers."                                                                                       
                                                                                                                                
KRISTIN  RYAN,   Director,  Division  of  Spill   Prevention  and                                                               
Response, Department  of Environmental Conservation  (DEC) stated                                                               
that this  legislation does not change  the statutory requirement                                                               
for  DEC to  do cost  recovery so  there will  continue to  be an                                                               
expectation  that  DEC will  pursue  people  who are  capable  of                                                               
paying the costs of spill prevention and response.                                                                              
                                                                                                                                
SENATOR MEYER recalled  seeing documentation that the  state is a                                                               
polluter.                                                                                                                       
                                                                                                                                
MS.  RYAN  agreed  that  state-owned  contaminated  sites  are  a                                                               
problem. DEC  has tried to  address the  problem in a  variety of                                                               
ways in  the past and  some are off  the table. For  example, the                                                               
most recent  solution was to use  general funds to work  on those                                                               
sits but  that won't  work anymore.  DEC is  trying to  develop a                                                               
plan  that will  work for  the department  and other  agencies to                                                               
make sure  that state sites  are meeting the same  standards that                                                               
the private entities are expected to achieve.                                                                                   
                                                                                                                                
SENATOR  MEYER said  he  wants to  make sure  that  the State  of                                                               
Alaska doesn't  follow the  same path  as the  federal government                                                               
with  the "travesty  wells" [in  the National  Petroleum Reserve-                                                               
Alaska.]                                                                                                                        
                                                                                                                                
MS. RYAN replied, "Understood."                                                                                                 
                                                                                                                                
CHAIR COSTELLO  thanked the sponsor for  bringing the legislation                                                               
forward.                                                                                                                        
                                                                                                                                
1:56:25 PM                                                                                                                    
SENATOR  GIESSEL  moved to  report  CS  for  SB 86,  labeled  29-                                                               
LS0675\S,  from  committee  with individual  recommendations  and                                                               
attached fiscal notes.                                                                                                          
                                                                                                                                
CHAIR COSTELLO announced that without  objection, CSSB 86(L&C) is                                                               
reported from the Senate Labor and Commerce Standing Committee.