The 3rd meeting of the Subcommittee on Natural Resources of the Interim Joint Committee on Agriculture and Natural Resources was held on Thursday, December 7, 2006, at 10:00 AM, in Room 169 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Ernie Harris, Co-Chair; Senators David E Boswell and Dorsey Ridley; Representatives Hubert Collins, Reginald K Meeks, and Robin L Webb.
Guests: Bruce Scott and Rob Daniell, Environmental and Public Protection Cabinet; Peggy Willhite, Finance and Administration Cabinet; Eric Gregory, East Kentucky Power; Mike Helton, Kentucky Petroleum Marketers Association; Bill Erwin; and Bruce Williams, Kentucky Conservation Committee.
LRC Staff: Hank Marks, Tanya Monsanto, and Kelly Blevins.
The meeting was called to order. A quorum was not present. Chairman Harris called upon Mr. Bruce Scott, Director of the Division of waste Management and Mr. Robert Daniell, Manager of the Underground Storage Tank (UST) Branch to make a presentation.
They presented a report on the UST program consisting of an update on the financial status of the accounts; the need for changes to program operations, procedures and priorities; the goals and content of regulatory amendments and consolidations involving many separate regulations; and a discussion of the impacts of the recent federal energy bill. Finally, they provided information about the impacts to environment and small businesses of the limited funds. Their presentation ended with the following recommendations:
Avoid future diversion of PSTEAF funding.
Fully fund the PSTEAF in order to address the 2500 known and future UST sites with contamination.
Proceed with the implementation of the new UST regulations in order to establish a more streamlined and cost-effective UST program
ddress mandates from recently enacted Federal Energy Bill.
Re-evaluate existing statuatory deadlines (Jan. 15, 2008) for participation in the Petroleum Storage Tank Account.
During the course of the presentation they were asked several questions by committee members. Senator Boswell asked if there is an obligation to restore funds transferred from the UST fund to the General Fund and what is the federal government's position on this. He was told that the federal energy bill addresses this somewhat and that this would be discussed later in the presentation.
Representative Collins asked if the surpluses that have been transferred are due to the slowness of the process that allowed apparent surplus to develop. He was told, yes. Representative Collins asked about the average age of projects outstanding and was told that several are as many as 10 years old. Mr. Daniell talked about the new prioritization and ranking system that may still not complete some sites if funding is not available and the threat to the environment is not comparatively great. Representative Collins stated that while the process is much improved he hopes that the people are not left for years with their property torn up. He stated that the people need to be considered as well as environmental concerns.
Chairman Harris stated that the General Assembly's decision to combine all UST offices in one agency should have helped with the problems faced by the program. He was told, yes, it has helped financially, administratively, and programmatically. Examples and details were provided.
Representative Webb stated that this has been a "contractor driven" program subject to abuse, and apparently without adequate monitoring. She stated that we need to stop transferring money each year from the UST fund and look at what is needed to monitor sites technically with field personnel to ensure that the funds are been used well, and the work done properly.
Representative Collins asked about the relationship of fund transfers and over-obligation of the UST fund and the program. Mr. Daniell explained how the obligations are determined on the basis of anticipated revenue that is not necessarily realized due to UST fund surpluses being transferred.
Chairman Harris asked about current monitoring of UST program work. Mr. Daniell explained the new process. Liability coverage was discussed, and the small owner program. Also discussed at this time was the "red flag" sanction, by which fuel deliveries are denied to UST operators who are found in non-compliance.
Chairman Harris asked about federal energy bill impacts on the UST program and Representative Collins asked if the federal requirements of the UST program were an unfunded mandate. He was told, yes. Representative Collins also asked how project priorities were determined. Mr. Daniell explained the process. There was a discussion of the costs of double-wall tank construction. Representative Webb asked if a list of sites and contractors is available and was told, yes. She asked about the recent relaxation of lead standards and suggested that a distinction between tanks exposed to ground water and tanks not exposed is not adequate, because almost all tanks are potentially exposed due to leaching and the KARST topography of Kentucky. She requested a legal interpretation of the authority to require double-wall tank construction. She suggested a tiering approach to the "red flag" sanction for tank non-compliance, and asked that the committee be informed as the agency learns more about the impact of the federal energy bill on the UST program.
Representative Meeks asked for UST program information relating to Jefferson County. He asked how many contractors lost contracts because of poor work or program violations. He was told, only one, and none have lost certification. Representative Meeks then asked about incentives that might be used to promote private funding by owners of their tank removal and cleanup. Mr. Daniell provided some ideas related to reduced deductible as an incentive and other incentives that might be used. Representative Meeks asked for a list of such incentives. Rep Meeks expressed concern about relaxed lead standards. Mr. Daniell discussed the reasoning behind the new standard. There followed another discussion of the impact of the Federal Energy Bill on UST program funding.
Chairman Harris thanked Mr. Scott and Mr. Daniell for an excellent presentation and stated that this was the first good news about the UST program in a long time.
Next, Mr. Mike Helton, of the Kentucky Petroleum Marketers Association addressed the committee. He discussed the UST program, its regulations, and its history from the perspective of his Association. He stated that many of the problems of the UST program can be traced to the annual fund transfers.
Bill Erwin of Lexington spoke next. He discussed the impact of UST program and regulatory changes on his business and his unsuccessful efforts to get work completed on his property. Mr. Daniell responded, explaining why it has not been possible so far to complete the project.
Chairman Harris asked why "grandfathering in" of projects that that have been bumped down into priority categories cannot be done. This and other possibilities were discussed. The sense of the committee was that this was an untenable situation and that the agency would find a way to deal with it and like problems and report back to that legislature during the upcoming Session.
There being no further business, the meeting was adjourned.