Legislature(2017 - 2018)GRUENBERG 120
04/09/2018 01:00 PM House JUDICIARY
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SB 202-NATIVE CORP. LIABILITY FOR CONTAMINATION 2:12:47 PM CHAIR CLAMAN announced that the first order of business would be HOUSE CS FOR SENATE BILL NO. 202(JUD), "An Act relating to the liability of a Native corporation for the release or threatened release of hazardous substances present on certain lands." CHAIR CLAMAN reminded the committee that it previously heard HB 67 [companion bill to SB 202] and his plan is to pass SB 202 out of committee today. 2:13:42 PM CHAIR CLAMAN moved to adopt Amendment 1, labeled 30-LS1422\A.4, which read as follows: Page 1, line 6: Delete "and (n)" Delete "exception set out in (i)" Insert "exceptions [EXCEPTION] set out in (i) and (n)" Page 2, line 27, through page 3, line 1: Delete all material and insert: "(n) A Native corporation that acquired land under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) is not liable under this section for a release or threatened release of a hazardous substance on the land unless the Native corporation, by an act or omission, caused or contributed to the release or threatened release of the hazardous substance." REPRESENTATIVE STUTES objected for purposes of discussion. 2:14:06 PM MARIDON BOARIO, Staff, Senator Lyman Hoffman, Alaska State Legislature, explained that Amendment 1 creates an exception to strict liability under AS 46.03.822. Under this amendment, she advised, strict liability does not apply to Native Corporations for any release or threatened release of a hazardous substance on land granted under the Alaska Native Claims Settlement Act (ANCSA) unless the Native Corporation, by an act or omission, caused or contributed to the release or threatened release. The amendment also removes the burden of proof from the Native Corporation, and she added that Senator Hoffman fully supports Amendment 1. 2:14:51 PM CHAIR CLAMAN surmised that the intention of Amendment 1 is that the Senate bill will track the language passed on a recent federal law within an appropriations bill (Indisc.). MS. BOARIO responded that Chair Claman was correct because when this bill was introduced there was pending federal legislation, which has since passed. When that law was passed, she advised, it came to light that possibly Alaska's statute was not tracking as closely as it should have, and this language makes state law compatible with the federal law. 2:15:52 PM REPRESENTATIVE EASTMAN offered a scenario of someone finding a hazardous substance on another person's property and surmised that under this amendment, if someone goes to that property and finds "something, in order for them to be liable, we have to prove that they were to blame for the substance." MS. BOARIO answered that the burden of proof is on the person who caused the contamination. 2:16:53 PM REPRESENTATIVE EASTMAN asked whether the burden of proof is on the Native Corporation to prove that it did not cause the problem, or must someone, possibly the government, prove that they did cause the contamination. MS. BOARIO replied that Representative Eastman was correct. 2:17:14 PM REPRESENTATIVE EASTMAN surmised that that scenario would be different for the Native Corporation than it is for everyone else because in other property situations the burden of proof would be on the person to prove that they did not contaminate the property. MS. BOARIO deferred to Chair Claman, and said that this is a specific situation for Alaska Native Corporations on transferred land. 2:18:10 PM REPRESENTATIVE KOPP commented that it appears Amendment 1 simply makes clear that the Native Corporation owned lands were not conveyed liability in the Alaska Native Settlement Act. In other words, he explained, as SB 202 currently reads, the onus is on the Native Corporation to prove it is not liable. Wherein, under this amendment the Native Corporations are basically moved to a neutral position, and the assumption is that the Native Corporations were not conveyed any liability when lands were conveyed to the Native Corporations. MS. BOARIO replied that Representative Kopp was correct. 2:19:01 PM REPRESENTATIVE STUTES withdrew her objection. There being no objection, Amendment 1 was adopted. 2:19:16 PM REPRESENTATIVE LEDOUX moved to adopt Amendment 2, labeled 30- LS1422\A/1, which read as follows: Page 1, line 1: Delete "Native corporation" Insert "person" Page 2, line 24, through page 3, line 2: Delete all material and insert: "* Sec. 2. AS 46.03.822(d) is amended to read: (d) To establish that a person had no reason to know that the hazardous substance was disposed of on, in, or at the facility, as provided in (c)(1) and (l) of this section, or to establish that a person had no reason to know that the hazardous substance was present on the land at the time the ownership of the land was transferred to the person, as provided in (n) of this section, the person must have undertaken, at the time of voluntary acquisition, 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. For purposes of this subsection a court shall take into account all relevant facts, including (1) any specialized knowledge or experience the person has; (2) the relationship of the purchase price to the value of the property if it were uncontaminated; (3) commonly known or reasonably ascertainable information about the property; (4) the obviousness of the presence or likely presence of contamination at the property; and (5) the ability to detect contamination by appropriate inspection. * Sec. 3. AS 46.03.822 is amended by adding a new subsection to read: (n) In an action to recover damages or costs, a person otherwise liable under this section for a release or threatened release of a hazardous substance on the person's land is relieved from liability under this section if the person proves that the (1) person did not know and had no reason to know that the hazardous substance was present on the land at the time the ownership of the land was transferred to the person; and (2) hazardous substance was present on the land at the time the ownership of the land was transferred to the person." REPRESENTATIVE STUTES objected for purposes of discussion. 2:19:27 PM REPRESENTATIVE LEDOUX commented that "this is a very good bill," except it brings out a problem in Alaska's laws in general. There is the problem that someone could be a good faith purchaser or grantee of a property and end up getting stuck on a strict liability standard for a hazard on the property. She opined that that situation is not fair, which has been pointed out in the context of Native Corporations. Amendment 2, she explained, basically "changes our law, period, so that no good faith person ends up to be liable." She acknowledged that this is a huge change in Alaska law and she does not want to impede this bill because it will help the Native Corporations with its contaminated lands. Representative LeDoux advised that Amendment 2 was drafted to shed light on this existing problem in the Department of Environmental Conservation (DEC) and environmental law wherein a future legislature may possibly change this law for everyone. She advised that she withdraws Amendment 2. 2:21:18 PM REPRESENTATIVE EASTMAN moved to adopt Amendment 3, labeled 30- LS1422\A.2, which read as follows: Page 2, line 29, following the first occurrence of "the": Insert "(1)" Page 2, line 31: Delete "and the" Insert "; (2)" Page 3, line 1, following "granted": Insert "; and (3) Native corporation did not have control of the land at the time the hazardous substance was disposed of or placed on the land" REPRESENTATIVE KREISS-TOMKINS objected. 2:21:24 PM REPRESENTATIVE EASTMAN referred to [SB 202, Sec. 3. AS 46.03.822, page 3, line 1], and explained that Amendment 3 adds the language after the word "granted." as follows: (3) Native corporation did not have control of the land at the time the hazardous substance was disposed of or placed on the land. REPRESENTATIVE EASTMAN explained that the language clarifies that a Native Corporation managed its land prior to the granting of land, and if the corporation is already responsible for the land "and there's things being done to it," this would not inadvertently absolve those responsible parties of their responsibility to make certain the hazardous substances were appropriately disposed. 2:22:12 PM CHAIR CLAMAN asked the sponsor of the bill, in light of the passage of Amendment 1, whether the sponsor supports Amendment 3. MS. BOARIO opined that Senator Hoffman would not support Amendment 3. 2:22:49 PM CHAIR CLAMAN noted that [within the committee packet] are letters from Daniel Cheyette, Vice President for Lands and Natural Resources, Bristol Bay Native Corporation; and Jaeleen Kookesh, Vice President, General Counsel & Corporate Secretary. He referred to the last sentence of paragraph 3, of the 4/9/18 letter from the Sealaska Corporation which read as follows [original punctuation provided]: Representative Eastman's amendment would be moot if your amendment is adopted by the Committee and the legislature. CHAIR CLAMAN asked Representative Eastman whether the passage of Amendment 1 moots his motion to adopt Amendment 3. 2:23:33 PM [CHAIR CLAMAN and Representative Eastman discussed receipt of the letter and its content.] CHAIR CLAMAN again asked whether Representative Eastman had an argument that the passage of Amendment 1 did not moot his motion for the adoption of Amendment 3. REPRESENTATIVE EASTMAN commented that it is hard for him to understand why Amendment 3 is now moot. 2:24:20 PM CHAIR CLAMAN directed Representative Eastman's attention to the 4/9/18 letter from the Bristol Bay Native Corporation [contained within the committee packet] and asked that he read paragraph 4 as it explains why Amendment 3 is moot. He requested that Representative Eastman offer a basis within which Chair Claman should not rule Amendment 3 out-of-order. REPRESENTATIVE EASTMAN opined that "this actually gets to the substance" of the matter and Amendment 3 is important to discuss. 2:24:59 PM CHAIR CLAMAN ruled Amendment 3 out-of-order because he agreed with the analysis provided by the Sealaska Corporation that the adoption of Amendment 1 takes out the burdens "that you are actually talking about." CHAIR CLAMAN advised that even though the committee passed Amendment 1, it raised a fiscal note issue that John Halverson of the Department of Environmental Conservation would address. 2:25:44 PM JOHN HALVERSON, Environmental Program Manager, Contaminated Sites Program, Department of Environmental Conservation (DEC), advised that there would likely be a need for a fiscal note with Amendment 1. CHAIR CLAMAN requested more clarity as to whether it would be an increased fiscal note and whether there was a fiscal note previously. MR. HALVERSON responded that there was a zero fiscal note previously and with Amendment 1 there would likely be an increase in state costs because the burden of proof will have to fall to the state. 2:26:41 PM REPRESENTATIVE KOPP asked whether the burden is normally with the state when it comes to DEC litigated claims on land transfers that move from the state to private ownership, or is the burden of proof normally with the person to whom the land was transferred to, and whether there is a standard that applies here. MR. HALVERSON responded that normally it would be through the parties to the transaction rather than to the state. 2:27:31 PM REPRESENTATIVE KOPP said (Indisc.) transaction happened to be the state and the person to whom the land was conveyed to, he asked whether it would be the state's job to prove the liability. MR. HALVERSON answered that the burden would be on the party who previously owned the property. This case deals with properties that were under federal ownership and conveyed to the corporations. 2:28:17 PM REPRESENTATIVE KREISS-TOMKINS noted that many of these conveyances are from the federal government to the Native Corporations under the Alaska Native Claims Settlement Act (ANCSA), and asked where the State of Alaska and DEC fit into that equation, and why DEC would have any obligation if this is a transaction between two parties that are not the State of Alaska. MR. HALVERSON opined that if there is a disagreement between the current landowner and the federal government over responsibility for contamination on the land, the state would typically look to those parties to sort it out and it would provide oversight on any necessary cleanup. Under adopted Amendment 1, the state may incur some additional expenses in trying to research the history on when contamination occurred and whether the Native Corporation had caused or contributed to existing problems at the site. CHAIR CLAMAN added that one of the key concepts to recognize in SB 202, page 1, lines 9-11, read as follows: damages, for the costs of response, containment, removal, or remedial action incurred by the state, a municipality, or a village, and for the additional costs of a function or service, including administrative expenses for the incremental costs of providing the CHAIR CLAMAN advised the if there is contamination, typically the state or municipality engages costs and then looks to the landowner for reimbursement. The above provision essentially says that if there is an effort by the state to try to recoup those costs, it would have to be able to show that the Native Corporation had caused the contamination. 2:30:26 PM REPRESENTATIVE KOPP stated that this comes down to a fundamental due process issue because Native Corporations are a corporation, but they are also Alaskans and have been given land under ANSCA. Without this amendment, they would be required to wage legal war with the federal government, who has limitless resources. He opined that this puts the Native Corporations on a more equal footing wherein they are not presumed guilty until they prove otherwise. He said that it introduces a due process protection, which is "very important." 2:31:11 PM CHAIR CLAMAN pointed out that no motion had been introduced to change the committee's action on Amendment 1, and moved on to committee discussion. 2:31:17 PM REPRESENTATIVE EASTMAN noted that Amendment 2 was not discussed because its sponsor withdrew the amendment. He commented that the sponsors of this bill make a strong point that liability ought not be placed where it does not belong, and Amendment 2 makes that same point. He said that he looks forward to being able to support that amendment or other language at the first opportunity. 2:32:16 PM REPRESENTATIVE STUTES commented that she is happy to see SB 202 because her district contains some contaminated areas that have absolutely crippled the Native Corporation from developing the areas. She opined that possibly with SB 202, it will allow the Native Corporations some recourse to move forward because in her area as well, as many other rural areas, housing is a huge problem and the Native Corporations are unable to develop their lands for housing due to these types of issues. 2:32:56 PM CHAIR CLAMAN commented that he is particularly pleased with Amendment 1 because it puts state law and federal law on the same path, which is a positive step. Thereby, he advised, the Native Corporations would not have to look at two different rules for two different jurisdictions as they move forward. 2:33:18 PM REPRESENTATIVE KREISS-TOMKINS REPRESENTATIVE moved to report SB 202, labeled 30-LS1422\A, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 202(JUD) passed out of the House Judiciary Standing Committee.