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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 Testifies On Environment Budget  Posted: February 11, 2004

Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428 phone (502) 875-2845 fax

e-mail fitzKRC@aol.com

WRITTEN STATEMENT OF TOM FITZGERALD, DIRECTOR,

KENTUCKY RESOURCES COUNCIL, INC. CONCERNING

ENVIRONMENTAL AND PUBLIC PROTECTION CABINET

BUDGET

Chairman Damron, members of the House Budget Review Subcommittee for Economic Development and Tourism, Natural Resources and Environmental Protection, thank you for this opportunity to submit these comments regarding the proposed budget for the Environmental and Public Protection Cabinet.

The environmental programs of this state are at times not the most popular, since in order to protect the interests of the public, and to safeguard for our children and theirs the air, water and land resources, the toes of some powerful interests get stepped on. We tend not to think a lot about environmental quality until a crisis directly affects us, yet the business of protecting our state's environment is a 24/7 job, carried out with a small fraction of our state budget by a staff more dedicated than we have any right to expect.

KRC has these specific recommendations concerning the budget for the Cabinet:

1. Authorize the Cabinet to adjust Permit Fees To Fully Capture Costs Of Permit Review And Compliance

I encourage you to include language in the budget resolution directing the Cabinet to adjust permit fees in order to fully capture the actual costs of processing permit applications for water, waste, and mining permits and of the periodic compliance evaluation inspections required to be conducted during the permit term.

Currently, most permit fees, which are set by statute, capture only a small fraction of the real costs of processing, reviewing, and issuing or denying the applications. This gap between the real costs of the government service and the assessed costs amounts to a pollution subsidy that the state can ill-afford, and which acts to distort the economic costs in that part of the costs of pollution are borne by the public rather than being internalized and distributed among consumers of the products. Those funds should be returned to the agency to help offset the negative effects of past budget cuts.

2. Fully Fund EQC and KNPC

The Environmental Quality Commission, an advisory body attached to the Natural Resources Cabinet, has been an important sounding-board for environmental issues – providing a public forum on major environmental issues; and producing the only barometer of environmental progress in its State of the Environment reports. The Commission has been subject to periodic assaults on its budget by special interests, and in fact the Senate-passed budget during the last session fails to provide funding for the Commission. The compromise budget restored authority for funding the Commission yet did not include an appropriation for that purpose. KRC appreciates the partial restoration of funding in the Governor’s budget but would ask that the Commission funding be restored by this subcommittee to the full historic level prior to the 03-04 Budget. Whatever minute gain might be achieved in the overall budget from a reduced funding level would be offset by the significant and lasting damage that would be done to the public's interest by removing a multi-interest panel that has for a quarter of a century provided an important forum on current and emerging issues and given the state a periodic report card on environmental performance that we need even though we may not be thrilled sometimes to be reminded of the grades we've earned.

I would also ask that you review the funding for the Kentucky Nature Preserves Commission and assure that the funding level is adequate to allow the Commission to continue its important job of research, information and management of our state’s natural areas. The KNPC budget is short by some $70,000 in the first year of the biennium and $140,000 in the second, of that necessary to allow continuation of staffing levels at state nature preserves and to allow continuation of inventory work.

Part of the benefit that permit applicants for air, land, waste and water permits receive but don't pay full value for is the review performed by the Nature Preserves Commission of the potential impact of activities on protected species and their habitat. The important work of inventorying the remnant natural areas of the state, of managing those nature preserves that you have established, and of facilitating the permitting of industrial and commercial activity by advising on permit reviews, is managed with a very small budget and staff. Cuts that a larger agency might be able to absorb without significant curtailment of services are disproportionately felt by smaller agencies such as the KNPC. I ask your careful consideration of the important role served by KNPC and their budgetary needs.

3. Maintain Ownership and Control Language

KRC appreciates the inclusion by the Administration of language in the budget regarding the blocking of new mining permits for outlaw coal companies with links to current permit applicants. Permit blocking based on ownership and control links has been an important tool in preventing those who would violate the law from gaining benefit through corporate artifice, by barring new permits for those who are owned or controlled by those who have outstanding violations of the law. Given the long history of abuse of the mining laws by a small segment of the industry, continuation of this permit blocking mechanism is essential for both the public and the industry.

KRC has had discussions with the industry and the Cabinet and proposes that the language be continued in this budget cycle, with a sunset clause that would replace the language with a permanent regulation adopting the final federal rules on ownership and control once the current proposed Office of Surface Mining rulemaking is finalized.

We appreciate the retention of the language as budget resolution language until that time.

4. Staffing Authorization for Division of Mines and Minerals

During the 2003 Session, the General Assembly directed the then-Department for Mines and Minerals to develop regulations governing the environmental and property impacts of locating “gathering lines,” those lines that transport oil and gas from wellhead to transmission lines. With the approval of that regulation later this month, the Division will begin permitting gathering lines and charging a fee intended to cover the cost of permitting and inspecting these facilities. Authorization is needed to allow hiring of staff with those funds to allow for implementation of the legislative mandate.

5. Support for Extension of Hazardous Waste Assessment Fund

KRC supports the inclusion in the Governor’s recommended budget, of language authorizing continued assessment and collection of fees on hazardous waste generation to support the state superfund and state matching shares on federal superfund sites.

6. Extension of Registration Deadline for State UST Fund

Finally, KRC believes that consideration needs to be given to a one-year extension of the current deadline for registering leaking underground storage tanks with the Petroleum Storage Tank Environmental Assurance Fund. In order for individuals who own property with old gas storage tanks to receive reimbursement for removal and remediating the old tanks, they must register the tanks by June 2004. KRC is concerned that absent a significant effort to publicize this deadline, coupled with a one-year extension on registration, many former small-business owners and others who own former gas station properties may miss the deadline and become ineligible for the reimbursements.

Thank you for your consideration of these concerns.



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