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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

KRC Testimony Before House Budget Review Subcommittee  Posted: February 21, 2002

Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428 phone

(502) 875-2845 fax

e-mail FitzKRC@aol.com

February 20, 2002

WRITTEN TESTIMONY OF THE KENTUCKY RESOURCES COUNCIL

BEFORE THE HOUSE BUDGET REVIEW SUBCOMMITTEE ON ECONOMIC, DEVELOPMENT, NATURAL RESOURCES AND TOURISM

(REVISED)

Mr. Chairman, respected members of the Subcommittee and staff, my name is Tom FitzGerald, and I am Director of the Kentucky Resources Council, a non-profit environmental advocacy organization dedicated to prudent use and conservation of our natural resources.

I appreciate this opportunity to testify briefly concerning the Executive Branch Budget. There are some areas of concern in the budget that I would like to highlight and ask for your consideration.

* The first relates to the hazardous waste fee that is assessed on hazardous wastes generated in the state, in order to provide a fund for our matching share of federal monies for federal superfund sites, and also to fund those thousands of sites where wastes have been dumped or discharged in the past, and for which the responsible party cannot be found or is insolvent.

The budget language currently contains a two-year extension of the fund, mirroring House Bill 244, for which you are the prime sponsor, Mr. Chairman.

I understand that Senate leadership has indicated that there will be an effort to amend HB 244 to include an exemption for certain hazardous wastes generated by the steel industry. I would urge you not to support any further exemptions to that program at this time, since such exemptions shift the costs of fee assessment to other industries. The rate of assessment on various waste streams was crafted in part based on the target level of the fund and on the relative amounts of waste generated in the state at the time. Any changes which would create new exemptions should occur only in the context of a more broad and comprehensive review of the funding mechanism and needs in the Commonwealth, including a comparative assessment of funding levels for other states, and the demographics of hazardous waste generation.

The Council believes that, ideally, HB 244 with no sunset provision should be enacted, in order to assure that the "polluter-pays" principle which has been the law in this Commonwealth since the fund was first created, remains intact. Those responsible for generating hazardous wastes, and who benefited from the disposal of those wastes in a manner which has shifted costs along to this generation and to other property owners, should fund the cleanup of areas contaminated by past industrial activity. It should not be a general fund expense.

In the interim, however, it is essential that a clean version of the waste fund reauthorization remain in the budget, with no new exemptions.

* A second concern is the retention of the language regarding surface mine permit blocking. This subcommittee and the General Assembly have included in the budget bill over the past four years, language that authorizes the Natural Resources Cabinet to block new permits for outlaw coal companies who own or control permit applicants, and who have left unreclaimed mines in the past. The language was included in the budget by leadership in 1998 in response to a federal court decision restricting permit blocking under federal law, necessitating action at the state level to assure that the state could look up the corporate chain of control and ownership to block a new permit owned or controlled by a company in current violation of law.

I appreciate the language being carried forward into this budget bill. No one benefits when irresponsible coal companies that have stripped and left coalfield communities and the public saddled with abandoned, unreclaimed mines, are allowed through corporate subterfuge, back into the business. The inclusion of language in the budget assures that the legitimate coal industry does not have to compete with those who would flout the law and their reclamation responsibility, and that no one can abuse the corporate form of business association to get new permits until they clean up their current messes.

* A third concern is the reprogramming of underground storage tank fund monies. While the Council understands the exigencies of the current budget situation and does not oppose the one-time utilization of some fund monies to assist in balancing the state budget, we urge the Subcommittee not to support any efforts to permanently reprogram any or all of these funds to road funds or to the general fund. The population of sites remaining unremedied, and the costs that may be associated with remediation of contamination at those sites, is not known with any precision, making any estimates of what funds are needed and what are "surplus," a matter of conjecture. If funds are removed that later prove needed, the result can be delay or interference with the pace of necessary remediation.

The reprogramming of funds on a more permanent or recurring basis is of concern for a second reason. The current matrix for remediation does not consider the costs and effects of contamination with MTBE, an additive present in gas and at higher levels in reformulated gas, that is of environmental and human health concern. There is a suggestion that MTBE contamination should not be addressed, monitored or remedied; resulting in

the possibility that we will have, at public expense, inadequately remediated soil and groundwater contamination at hundreds of sites around the state.

MTBE contamination should be considered in approving UST remediation plans, and reprogramming of funds from the UST fund on any but an emergency basis, as is proposed here and was the case in the 2000 budget, should be avoided lest the fund be incapable of serving the intended purpose.

The proposal in Senate Bill 193 to permanently reprogram these fee receipts is of concern also because the fee was imposed for two specific purposes, those being the provision of a blanket insurance policy for current UST owners in order to satisfy federal requirements while recognizing the lack of a market for individual insurance policies insuring these risks; and funding remediation. The public obligation to fund underground storage tank remediation was necessitated in the first instance because the oil industry was able to avoid, by federal law and by the artifice of selling the leaking tanks to the gas station owners, their responsibility for contamination caused by their product leaking from tanks that they had installed and owned for most of the useful life of the tanks. The public has a reasonable expectation that those funds will be used for the intended purpose of remedying contamination from USTs, rather than to support the road fund.

* There is one additional issue that I would ask the Subcommittee to consider beyond those that were raised in my testimony today. The Environmental Quality Commission has served an important role in documenting and tracking environmental trends in the Commonwealth. The "State of the Environment" report has provided hard information to assist in better decisionmaking on environmental issues, and has served as a resource for the public, for local and for state government.

The Executive Budget has removed the funding that has been provided in prior years to support the "State of Kentucky's Environment Report." While the cuts in the EQC budget are not out of line relative to other agency budget reductions, the cut in the already austere Commission budget has a more drastic effect on delivery of this important service. I would ask that you restore both the mandate to develop the report, and additional funding to support the development and publication of the report. While prior language directed the "printing" of the report, I would recommend that the word "publication" be used instead in order to allow increased use of CD-ROM format for libraries and schools without internet access. I would ask that the budget modification report include "General Fund support for maintenance of current services to include $16,500 in FY 2002-3 and $2000 in FY 2003-4 to publish and distribute the State of Kentucky's Environment Report - a biennial report on environmental trends and conditions in the state."

Thank you for the opportunity to testify concerning the Executive Branch budget.



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