MINUTES OF THE SENATE COMMITTEE ON NATURAL RESOURCES Sixty-eighth Session June 21, 1995 The Senate Committee on Natural Resources was called to order by Chairman Dean A. Rhoads, at 2:37 p.m., on Wednesday, June 21, 1995, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Dean A. Rhoads, Chairman Senator Lawrence E. Jacobsen, Vice Chairman Senator Mark A. James Senator Mike McGinness Senator Ernest E. Adler Senator John B. (Jack) Regan Senator O. C. Lee GUEST LEGISLATORS PRESENT: Senator Raymond C. Shaffer, Senatorial District No. 2 Assemblywoman Marcia de Braga, Assembly District No. 35 STAFF MEMBERS PRESENT: Fred Welden, Chief Deputy Research Analyst, Legislative Counsel Bureau Billie Brinkman, Committee Secretary OTHERS PRESENT: Peter D. Krueger, Lobbyist, Nevada Petroleum Marketers Association Nat Lommori, Superintendent, Lyon County School District John D. Cooper, Distributor, Allied Petroleum Company, Reno Stephanie Licht, Lobbyist, Elko County Board of Commissioners Jolaine A. Johnson, Chief, Bureau of Air Quality, Division of En vi ro nm en ta l Protection John Sande, III, Lobbyist, Western States Petroleum Association Rose McKinney-James, Director, Department of Business and Industry George Ross, Representative, Atlantic Richfield Company Helen A. Foley, Lobbyist, Western Ethanol Company Chairman Rhoads informed the committee there is an amendment to Senate Bill (S.B.) 103 and he asked for a motion to concur. SENATE BILL 103: Makes various changes concerning irrigation districts. SENATOR McGINNESS MOVED TO CONCUR ON AMENDMENT NO. 885 TO S.B. 103. SENATOR JAMES SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR ADLER WAS ABSENT FOR THE VOTE.) ***** Chairman Rhoads opened the hearing on Senate Bill (S.B.) 121. SENATE BILL 121: Revises provisions governing distribution of inspection fee for gasoline or lubricating oil brought into Nevada for sale or consignment. Peter D. Krueger, Lobbyist, Nevada Petroleum Marketers Association, explained this measure is needed to sustain the operation of the Nevada Petroleum Fund. He gave a brief history of the fund created by the 1989 Legislature because the federal government required (fuel) tank owners to demonstrate "financial responsibility" for at least $1 million per tank. The 1989 legislation created a fund that allows not only business and tank owners, but home heating oil customers, to clean up sites that, over the years, may have been inadvertently contaminated. Mr. Krueger stated this fund only addresses those inadvertent contamination sites. It does not provide monies for willful discharges, neglect, etc. The fund simply collects about $600,000 per month from a fee on gasoline and diesel fuel and some other petroleum products, and that money goes to the Nevada Petroleum Fund which is managed by the Division of Environmental Protection. Mr. Krueger used a large chart to demonstrate the need for S.B. 121. He explained the fund did well through 1991, but then it was depleted by claims for cleanup purposes, and revenues became flat. In referring to the large chart, Mr. Krueger pointed out the expected case load through 1998, and explained the current level of funding is status quo so the fund will be operating at a deficit. He remarked because of the way the fund was crafted, it will not go broke. He said S.B. 121 asks for a raise of four-tenths of a cent increase, which would take the inspection fee to a penny, the maximum level. He emphasized this is the first increase requested since the fund was created. He said S.B. 121 also asks for a doubling of the annual tank registration fee, the fee that each owner and operator, with exception of home remedial tanks, pays for their tanks. The fee would be raised from $50 to $100. Mr. Krueger continued his presentation referring to the large chart he was displaying for the committee. Chairman Rhoads stated he had heard comments that contractors were really "ripping people off" when replacing tanks. He wondered if there could be available language to prevent such charges. Mr. Krueger said that had been the subject of debates with other legislators and that he "just does not have an answer for the concern." Chairman Rhoads told the committee that Amendment No. 1067 (Exhibit C) to S.B. 121 amends the bill as a whole. Nat Lommori, Superintendent, Lyon County School District, testified that 11 underground storage tanks within the Lyon County School District, had all been removed. He said four of those tanks had problems. Mr. Lommori stated the school district has benefitted from the Nevada Petroleum Fund in the amount of about one-half million dollars. He said the school district is experiencing a problem of not receiving a payment since the first of the year because the fund has dried up. He indicated about $190,000 is still owed to the school district by the Nevada Petroleum Fund. John D. Cooper, Distributor, Allied Petroleum Company, Reno, commented about the chairman's question concerning the control of the costs of the cleanup sites. He said that is one of the issues that the industry should deal with through their association and he thought it could be dealt with easily. Chairman Rhoads called for a motion on S.B. 121. SENATOR REGAN MOVED TO AMEND AND DO PASS S.B. 121. SENATOR LEE SECONDED THE MOTION. Senator James said he would not be voting on this measure due to a conflict. Chairman Rhoads called for the vote. THE MOTION CARRIED. (SENATOR JAMES ABSTAINED FROM VOTING.) ***** Chairman Rhoads opened the hearing on Assembly Joint Resolution (A.J.R.) 40. ASSEMBLY JOINT RESOLUTION 40: Urges Congress, United States Environmental Protection Agency and Division of Environmental Protection of Nevada to resolve problems of small landfills with environmental regulations. Stephanie Licht, Lobbyist, Elko County Board of Commissioners, said that Elko County is in the middle of a major problem with landfills, which has been alleviated to some extent by the Environmental Protection Agency (EPA) extending the time frame for complying with Resource Conservation and Recovery Act requirements for small landfills. Ms. Licht said Elko County goes on record in support of A.J.R. 40 which asks that some of the regulations be mitigated to some extent, that the time frame be given an extension, and that consideration be given for the arid kind of climate in Nevada, in creating the solid waste management plans and the ground water levels, etc. Jolaine A. Johnson, Chief, Bureau of Air Quality, Division of Environmental Protection (DEP), testified the division supports A.J.R. 40. She informed the committee that on the day before, the state environmental commission heard and adopted a 2-year extension for small landfills in the State of Nevada. She said her agency has not yet seen a Federal Register notice for federal extension which takes the deadline to October, 1997, for "Class II" landfills. She stated her agency has adopted that extension on a temporary basis for temporary regulations. Senator Adler told the committee he had visited with the EPA officials during a recent trip to Washington, D.C., and they generally are aware of the problem in the western states and realize the regulations were not drafted for small communities in western states. He indicated the EPA is not oblivious to the problems, they just have not come up with a solution. Ms. Johnson said she thought the 2-year extension would give the federal government some time to cope with the problems facing the small landfills in the arid states. Chairman Rhoads asked for a motion on A.J.R. 40. SENATOR LEE MOVED TO DO PASS A.J.R. 40. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Rhoads opened the hearing on Assembly Bill (A.B.) 673. ASSEMBLY BILL 673: Revises provisions governing inspection of livestock. Assemblywoman Marcia de Braga, Assembly District No. 35, explained A.B. 673 authorizes the Division of Agriculture to establish regulations regarding the issuance of permits covering the movement of livestock without a brand inspection. She further stated this measure allows rodeo stock companies to transport bucking stock only, around the state with a yearly permit. Ms. de Braga indicated the rodeo stock contractor would have to be based within Nevada. Chairman Rhoads asked for a motion on A.B. 673. SENATOR McGINNESS MOVED TO DO PASS A.B. 673. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Rhoads opened the hearing on Senate Bill (S.B.) 565. SENATE BILL 565: Requires development of state plan for vehicles that operate on alternative fuel. Senator Raymond C. Shaffer, Senatorial District No. 2, sponsor of S.B. 565, said a proposed amendment (Exhibit D) to this measure changes it in its entirety. John Sande, III, Lobbyist, Western States Petroleum Association, explained S.B. 565 provides for a study to be conducted soliciting input from all interested parties, including affected industries, to specifically do a cost benefit analysis to determine what the cost and the benefit would be from various types of alternative fuels vehicles. Rose McKinney-James, Director, Department of Business and Industry, came forward in support of S.B. 565 with the proposed amendments. She pointed out there is a potential for a minor fiscal impact connected to the measure. Ms. McKinney-James said, for the record, she has discussed with Mr. Sande the proposal that the industry would be willing to underwrite some of the costs and reimburse the department for those expenses. Jolaine A. Johnson, Chief, Bureau of Air Quality, Division of Environmental Protection, read an informational paper (Exhibit E) on alternative fuels as related to S.B. 565. Further explanations were furnished by Mr. Sande in reply to questions from committee members. George Ross, Representative, Atlantic Richfield Company (ARCO), came forward to reply to a question posed by Senator Jacobsen concerning the major oil companies coming forth with anything new for fuel. Mr. Ross said in March 1996, there will be implemented something called "phase 2 reformulated gasoline" in California, which is a severely more refined gasoline than is currently being sold. He said it will reduce, by about 37 percent, the ozone producing potential of the gasoline sold in Southern California. Senator Jacobsen inquired about the foreign markets. Mr. Ross replied the gasoline made by foreign markets will be the cleanest gasoline made in the world by a significant margin. He said it will cost between 12 cents and 16 cents more per gallon to make. He commented ARCO has put about $500 million in the Los Angeles refinery in order to make the same gasoline. He added ARCO's competitors have put in similar amounts of investment. Mr. Ross indicated ARCO supports S.B. 565 with the amendment (Exhibit D). Mr. Ross said, for the record, ARCO is willing to spend as much time and energy as is necessary and to help fund the proposed study outlined in Exhibit D. Mr. Ross expressed ARCO has spent a tremendous amount of time and effort in California where it is a major policy issue, and ARCO will share its vast amount of research with Nevada on that subject. Ms. McKinney-James came forward to indicate that, based on the testimony offered during this meeting, she does not believe there is a need for a formal fiscal note on S.B. 565. Between the director's office and the energy office, she thought any costs could be absorbed, then any supplemental funds made available by the industry ought to allow the study to be achieved. SENATOR REGAN MOVED TO AMEND AND DO PASS S.B. 565. SENATOR JACOBSEN SECONDED THE MOTION. Senator James said he did not believe he had a conflict with this measure, so he will be voting on S.B. 565. THE MOTION CARRIED UNANIMOUSLY. ****** Chairman Rhoads belatedly invited Helen Foley, Lobbyist, Western Ethanol Company, for comments. She urged support of S.B. 565 as amended. She informed the committee that in May an announcement was made by General Motors (GM) of the largest single model alternative fuel vehicle production program of any manufacturer. She said, according to the announcement, all GM 1997, 4- cylinder light-duty pickup trucks will be flexible-fuel to permit them to run on gasoline, ethanol or a combination of the two. Chairman Rhoads opened the hearing on Assembly Bill (A.B.) 549. ASSEMBLY BILL 549: Requires certain documents containing results of assay to include warning concerning use of results. There being no comments on A.B. 549, the chairman called for a motion on the bill. SENATOR REGAN MOVED TO DO PASS A.B. 549. SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR JAMES WAS ABSENT FOR THE VOTE.) ***** There being no further business to come before the committee, the Chairman adjourned the meeting at 3:25 p.m. RESPECTFULLY SUBMITTED, Billie Brinkman, Committee Secretary APPROVED BY: Senator Dean A. Rhoads, Chairman DATE: Senate Committee on Natural Resources June 21, 1995 Page