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