Legislature(1999 - 2000)

05/14/1999 02:15 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CS for SENATE BILL 110(RLS) am                                                                                                  
"An Act relating to liability for the release of                                                                                
hazardous substances involving certain property                                                                                 
acquired by a governmental entity; relating to making a                                                                         
determination as to when a hazardous substance release                                                                          
has occurred; relating to liability of a party other                                                                            
than the party responsible for the initial release of a                                                                         
hazardous substance; and providing for an effective                                                                             
BETH HAVEGIG, STAFF, SENATOR WILKENS testified on behalf of                                                                     
the sponsor in support on SB 110. She read the sponsor                                                                          
"This bill will assist municipalities in performing their                                                                       
statutory duty to enforce liens for delinquent real                                                                             
property taxes. Tax foreclosure is a mandatory process                                                                          
leading to the taking of a tax deed that places the title                                                                       
to a tax delinquent property in the municipality's name.                                                                        
Some properties with delinquent taxes are contaminated.                                                                         
Municipalities are concerned that they may be held liable                                                                       
for pre-existing contamination of foreclosed land with                                                                          
significant environmental remediation costs.                                                                                    
The federal Comprehensive Environmental Response,                                                                               
Compensation, and Liability Act (CERCLA) exempts by                                                                             
definition state and local governments who acquire                                                                              
property through "bankruptcy, foreclosure, tax                                                                                  
delinquency, abandonment, or similar means." However, the                                                                       
state law which addresses liability for damage caused by                                                                        
the release of hazardous substances, AS 46.03.822, does                                                                         
not precisely mirror the federal law. SB 110 will amend AS                                                                      
46.03.822 to ensure that federal and state laws are                                                                             
similar in this respect. The municipality may therefore                                                                         
have title to the contaminated property without                                                                                 
involuntary exposure to cleanup.                                                                                                
Changes in the Senate also recognized the need to extend                                                                        
this courtesy to innocent third parties, which are not                                                                          
directly responsible for contaminating the property they                                                                        
have acquired. Subsection (m) clarifies state law to say                                                                        
that a person who acquires a facility without knowledge of                                                                      
prior existing contamination is not liable under AS                                                                             
46.03.822 so long as they follow due diligence steps to                                                                         
begin operations to contain and clean up the hazardous                                                                          
Ms. Havegig responded to questions by Co-Chair Therriault.                                                                      
She noted that section (m) only works if the person                                                                             
undertakes "all reasonable inquiries into the previous                                                                          
ownership and uses of the property consistent with good                                                                         
commercial or customary practice in an effort to minimize                                                                       
liability." The new owners must take steps of due diligence                                                                     
at the time of purchase.                                                                                                        
Representative Foster noted that a common citizen is not                                                                        
liable as long as they follow due diligence. He questioned                                                                      
if municipalities need to follow due diligence. Ms. Havegig                                                                     
responded that municipalities would be responsible for due                                                                      
diligence. Steps would have to be taken to assure that the                                                                      
spill doesn't get any worse. The new owner would not be                                                                         
responsible for passive leaching.                                                                                               
Representative Austerman asked if there was discussion on                                                                       
making the provisions retroactive. Ms. Havegig stated that                                                                      
there had not been discussion on providing a retroactive                                                                        
ARDITH LYNCH, ATTORNEY, FAIRBANKS NORTH STAR BOROUGH                                                                            
testified via teleconference. She explained that the                                                                            
legislation addresses municipal ownership in two different                                                                      
ways. In section (m) the municipality is in the same                                                                            
situation that a private person would be in if they purchase                                                                    
a piece of property. The municipality would still have to                                                                       
use due diligence to clean up a hazardous substance.                                                                            
Subsection (l) on page 2 deals with the limited issue of                                                                        
when a municipality acquires a piece of property through                                                                        
foreclosure. Foreclosure is a mandatory process that the                                                                        
borough must conduct when someone is delinquent in his or                                                                       
her real property taxes. In those cases the borough takes                                                                       
title to the property and puts it on the market for sale.                                                                       
The municipality is forced into the chain of title. The                                                                         
municipality would be responsible for taking steps to                                                                           
prevent additional obvious contamination.                                                                                       
Representative J. Davies noted that the municipality                                                                            
effectively removes control of the land from the potentially                                                                    
liable person when it forecloses. He questioned if the                                                                          
municipality takes on liability to resolve the issue when it                                                                    
removes the responsible person. Ms. Lynch acknowledged that                                                                     
the municipality would have responsibility to take steps to                                                                     
address leakage that is discovered after the borough took                                                                       
possession of the title.                                                                                                        
Ms. Havegig stated that "person" is defined to mean "any                                                                        
individual, public or private corporation, political                                                                            
subdivision, government agency, municipality, industry, co-                                                                     
partnership, association, firm, trust, estate, or any other                                                                     
entity whatsoever." She concluded that subsections (m) and                                                                      
(l) could apply to municipalities. The issue is voluntary                                                                       
vs. involuntary ownership.                                                                                                      
In response to a question by Representative J. Davies, Ms.                                                                      
Lynch acknowledged that there are property owners that feel                                                                     
that the borough will not foreclose on property due to the                                                                      
risk of liability. In some cases private businesses are                                                                         
being operated on property without paying the property tax.                                                                     
This puts their competitors at a disadvantage. She                                                                              
reiterated that in the case of a foreclosure that the                                                                           
borough is not voluntarily taking on the burden. The borough                                                                    
should be liable for obvious problems such as leaking                                                                           
Representative Austerman questioned the definition of                                                                           
"vessel" on page 2, line 17. Ms. Havegig noted that "vessel"                                                                    
means every description of water craft or other artificial                                                                      
contrivance that is used or is capable of being used as a                                                                       
means of transportation on water, or that carries hazardous                                                                     
substance for the purpose of incineration of the hazardous                                                                      
CRAIG TILLERY, ASSISTANT ATTORNEY GENERAL, ENVIRONMENTAL                                                                        
SECTION, DEPARTMENT OF LAW, ANCHORAGE testified via                                                                             
teleconference. He clarified that vessel would also apply to                                                                    
vehicles that have leaking batteries. He noted that the                                                                         
legislation provides a municipality with immunity for                                                                           
contaminates that are leaking on the property at the time                                                                       
the property is acquired. Municipalities would be                                                                               
responsible for addressing containers that are actively                                                                         
leaking at the time the property is acquired.                                                                                   
VIRGIL NORTON, KENAI testified via teleconference. He                                                                           
provided information on the legislation. He noted that he                                                                       
worked with the Senate Judiciary Committee to add section                                                                       
(m). He maintained that AS 46.03.822 imposes obligations on                                                                     
property owners that discover contamination. He emphasized                                                                      
that cost recovery liability should be directed toward the                                                                      
person or the party that actually committed the act of                                                                          
pollution.  The responsible party is the party that first                                                                       
released the contaminate into the environment. He observed                                                                      
that the average person does not have the resources to                                                                          
battle the Department of Environmental Conservation or the                                                                      
Department of Law. He maintained that if the property owner                                                                     
has incurred costs in acting responsibly that he should be                                                                      
able to recover from the guilty party.                                                                                          
Co-Chair Therriault observed that there is a zero fiscal                                                                        
note from the Department of Transportation and Public                                                                           
Representative Foster MOVED to report HCS CSSB110 (JUD) out                                                                     
of Committee with the accompanying fiscal note. There being                                                                     
NO OBJECTION, it was so ordered.                                                                                                
HCS CSSB110 (JUD) was REPORTED out of Committee with a "do                                                                      
pass" recommendation and with a zero fiscal note by the                                                                         
Department of Transportation and Public Facilities,                                                                             
published date 4/29/99.                                                                                                         
NOMINATIONS TO THE ALCOHOL BEVERAGE CONTROL BOARD                                                                               
Co-Chair Therriault handed out information pertaining to                                                                        
nominations to the Alcohol Beverage Control Board. He                                                                           
observed that there would be a joint session to address                                                                         
confirmations. He noted that members did not indicate a                                                                         
desire to hold a meeting on the nominations.                                                                                    

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