Legislature(2017 - 2018)BARNES 124
04/17/2017 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB195 | |
| HB222 | |
| SB93 | |
| SB64 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 222 | TELECONFERENCED | |
| + | SB 93 | TELECONFERENCED | |
| + | SB 64 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 195 | TELECONFERENCED | |
SB 64-UNIFORM ENVIRONMENTAL COVENANTS ACT
4:19:56 PM
CHAIR KITO announced that the final order of business would be
SENATE BILL NO. 64, "An Act adopting the Uniform Environmental
Covenants Act; relating to environmental real property covenants
and notices of activity and use limitation at contaminated sites
to ensure the protection of human health, safety, and welfare,
and the environment; and providing for an effective date."
4:20:11 PM
SENATOR PETER MICCICHE, Alaska State Legislature, as prime
sponsor introduced SB 64. He said the goal of the bill is to
return unused brownfields to the stream of commerce. In 2003
the Uniform Law Commission created a Uniform Environmental
Covenants Act. The bill, he explained, would allow a
challenged piece of property that is contaminated to transfer
the liability for that contamination to the next owner. It
protects the buyer and the seller of the contaminated property
while allowing the fullest and best use until the contamination
reaches safe levels. The bill creates a legal mechanism to
safely transfer contaminated property through an environmental
covenant. The covenant has no financial interest; it is just a
recordable interest on the property that travels with the
property until the contamination no longer exists.
SENATOR MICCICHE, to provide an understanding of the value of
the bill's provisions, related the story of a contaminated
property in his community. He said this multi-acre property on
the river had at one point a dry-cleaning facility. The "mom
and pop" property owners cannot afford the cleanup, but there
are interested developers that want that property and can afford
the cleanup. This allows the contamination to be recorded on
the deed, the new owners can come in and clean up the property,
the contamination can be erased from the deed, and the new
owners can go about their business. It provides transparency
throughout the life of the property, he pointed out, and
provides assurances to buyers and sellers that the risks will be
managed. It is voluntary. Other states, he added, have found
that the covenants help communities transform blighted property
into marketable assets.
SENATOR MICCICHE stated that there is support for SB 64 except
from the federal government. About 51 percent of the currently
contaminated properties are on federal lands, he noted, and a
letter is expected from the federal government stating that it
doesn't support the bill. However, he continued, [the bill's
sponsors] feel that the federal government should meet the same
requirements as Alaskans in the cleaning up of contaminated
property. Alaska presently has 2,258 active contaminated sites
and 1,048 of them are federally owned. Based on current trends,
he said, the Department of Environmental Conservation (DEC)
projects that about 835 of the current sites would be impacted
and likely to have the benefit of environmental covenant if the
bill is passed.
4:23:34 PM
REPRESENTATIVE JOSEPHSON surmised that the previous owner would
be essentially immunized from any litigation. He questioned
whether this could be done given the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA).
SENATOR MICCICHE replied that his understanding is that there
can be an agreement between [the seller] and the buyer for a
negotiated proportion of responsibility. He added, "I'm not
saying it has to transfer; I'm saying what has to happen in this
voluntary program is that it is recorded on the deed." How the
seller and buyer decide to negotiate the proportion of
responsibility is a secondary process that can certainly occur.
He said he thinks in the vast majority of the cases it is going
to be someone wanting [to buy] that filling station on the
corner and is willing to take on the responsibility of that
contamination and cleanup.
REPRESENTATIVE JOSEPHSON referenced the situation of the sulfa
line leak with nine square miles of contamination in which
[Williams Alaska Petroleum, Inc. ("Williams")] is one of two
likely responsible parties. He inquired whether SB 64 would
allow Williams to push off its liability to someone willing to
accept it.
SENATOR MICCICHE deferred to Ms. Kristin Ryan of DEC for an
answer. However, he continued, he doesn't believe that would be
the case.
4:25:58 PM
KRISTIN RYAN, Director, Division of Spill Prevention & Response,
Department of Environmental Conservation (DEC), on behalf of DEC
testified in support of SB 64. She said the department thinks
this is something that would help Alaska and help Alaska
transfer land that has been contaminated back into commerce.
Rather than the land being considered blighted and unusable, SB
64 would allow [DEC] to say the land is completely usable except
for certain purposes such as a daycare, well, or whatever the
restriction needs to be. The bill provides a process for
amending a covenant in the future, she noted, so when it gets to
a point where the contamination is no longer a problem the
current holder of the property can ask DEC to remove the
covenant. If the department agrees, it would remove the
covenant. If the department doesn't agree, there would be an
administrative appeal process for the property holder to appeal
DEC's decision. There is no fiscal note, she noted, because the
department is already performing this work.
MS. RYAN explained that DEC puts restrictions on property all
the time, but that it is not necessarily communicated to buyers.
The department maintains a database that can be found in its
office and on its website. The public can look on the website.
Some realtors do, and some title companies do, but not
everybody. This bill would just ensure that that's communicated
on the title, so the title search company would be guaranteed to
find that information when it does a title search. There is no
fiscal impact to DEC, she added, it is just a transparency and a
communication about restrictions that DEC is placing on a
property.
MS. RYAN addressed Representative Josephson's question regarding
liability, stating that Alaska's statutes mimic CERCLA. Alaska
has CERCLA-like statutes and, yes, the current owner is the
responsible party that DEC would first approach like it did in
the Flint Hills situation [with Williams]. She explained that
DEC was working with Flint Hills and the Koch brothers because
they owned the property and DEC settled with them. But, she
continued, DEC is pursuing litigation against Williams as the
other responsible party to contribute to that remedy. So, she
advised, the state would still have the capacity to pursue all
responsible parties for a release as this bill does not have any
impact on Alaska's liability statutes.
REPRESENTATIVE JOSEPHSON requested further confirmation on Ms.
Ryan's statement that SB 64 would have absolutely no impact on
Alaska's liability statutes.
MS. RYAN responded correct.
4:28:14 PM
REPRESENTATIVE BIRCH said SB 64 is heading in the right
direction and is good legislation. He noted that a home seller
must provide a disclosure document regarding any problems with
the home. He asked whether disclosure for a home with some sort
of an environmental concern would tie in with the title rather
than the real estate disclosure. He further asked whether there
is any overlap of those two things.
MS. RYAN answered that Alaska has a disclosure law that requires
disclosure of contamination on a property when it is being sold,
but DEC has found that that doesn't always happen. The property
may have been contaminated several owners back and it gets lost
in the shuffle and it isn't communicated as people move forward.
She related a situation with a gas station in Anchorage where
the tanks were pulled. Fuel that was left in the dirt around
the tanks spread and went around the foundation of the building.
Because the only way to remove the fuel around the foundation
would be to remove the foundation, DEC agreed to leaving it
until the foundation could be removed as the property was
transferred from person to person. However, she continued, that
restriction was not communicated, and the current owner pulled
that building out and spread the dirt everywhere. Had he known
he would have managed the dirt appropriately when he removed the
foundation. Now there is contamination on his neighbor's
property that would have been avoided had he understood that
restriction was in place. The restriction was in DEC's
database, but he didn't know it was there.
4:30:14 PM
REPRESENTATIVE STUTES noted that regarding contaminated
properties, the federal government is one of the worst
offenders, and one of the worst contaminated areas in the
country is on the U.S. Coast Guard base at Kodiak. She offered
her understanding that SB 64 would have no effect in requiring
any kind of cleanup; it would only apply if the federal
government chose to transfer that property to another owner.
MS. RYAN replied that DEC's first goal is cleanup; the
department wants people to clean up things to DEC's cleanup
levels. She said the Environmental Protection Agency (EPA) is
also involved because of the way that site is regulated.
Sometimes there are legitimate reasons for leaving contamination
in place, she pointed out, such as the previously mentioned gas
station. This would only come into play when contamination is
left above a cleanup level and that is a decision that the
responsible party and DEC would make together. If it were
decided to leave the contamination, then the responsible party
would need to do a covenant. The party always has the option to
clean it all the way up and then this becomes a moot point.
SENATOR MICCICHE added that just because a site is contaminated
doesn't mean it can't be used for other things. The covenant
would be specific to the risks at a particular site and would
restrict certain activities. For example, an ex-filling station
may be a great site for an auto parts store but may not be a
great site for a daycare center. The transfer can still take
place even though it remains contaminated and remains in
commerce, he said. If at some point it is decided to use it for
one of the restricted activities, then the responsible party
would have to clean it up to that level.
4:32:36 PM
REPRESENTATIVE WOOL stated he supports the legislation and that
it looks like it is solving a problem. He asked what the
situation is regarding the dry-cleaning property in Soldotna
that was mentioned by the sponsor and whether the property can
be sold under current law.
SENATOR MICCICHE deferred to Ms. Ryan for an answer and
requested that Representative Wool pose a hypothetical scenario.
REPRESENTATIVE WOOL posed a hypothetical scenario in which a
property is contaminated and asked what must happen under
current law if someone wants to purchase the property.
MS. RYAN responded that under current law if someone knows the
property is contaminated and wants to purchase it, there is
something that is called prospective purchaser agreement, which
is an arrangement made between the seller and the buyer where
they negotiate those risks and agree on who is responsible for
what. It provides some protection for liability and is an
upfront negotiation between a buyer and a seller.
SENATOR MICCICHE noted that the aforementioned doesn't allow for
that to be placed on a deed and recorded. So, if it changes
hands in the future, then an unwary buyer may not be aware of
the previous contamination and could be buying into a nightmare
that may be well above the costs that the buyer can afford to
develop the property. The bill would just clean it all up, he
said, and protect the seller so that the seller can transfer a
property with the knowledge of contamination by both the seller
and buyer on that piece of property. The bill would also
protect the buyer in having full knowledge of what is on that
piece of property. It would remain on the deed until that
contamination no longer exists.
4:34:49 PM
REPRESENTATIVE JOSEPHSON referenced the negotiations mentioned
by Ms. Ryan and said his main concern with SB 64 is whether
someone could shift liability.
MS. RYAN offered her understanding that SB 64 would not change
Alaska's liability statutes in any way. An example would be the
gas station in Anchorage that she discussed. The person the
department is asking to clean it up is the person who moved the
dirt around, but that person has the capacity to go after the
original person who caused the contamination and DEC would still
have the statutory authority to go after the original person.
She deferred to DEC's attorney with the Department of Law to
provide an answer in legal terms.
JENNIFER CURRIE, Senior Assistant Attorney General,
Environmental Section, Civil Division (Anchorage), Department of
Law (DOL), in response to Representative Josephson's question
explained that private parties to a sale of either a residence
or industrial piece of property could negotiate on their own to
shift liability. But, she continued, those private contracts
are not valid when looking at Alaska's liability statutes for
Alaska's mini-CERCLA statute that is just like CERCLA. So, it
would not affect the liability for which the state could pursue
the buyer and the seller.
REPRESENTATIVE JOSEPHSON assumed that the disclosure would have
to be comprehensive and complete so that the purchaser would be
fully informed of a toxic leak or other form of contamination.
MS. CURRIE replied yes. The goal of the covenant, she said, is
to have details about the past contamination that is located at
the site, whatever cleanup took place, and the current
restrictions that are placed on the property, and those are
intended to be comprehensive.
4:37:27 PM
REPRESENTATIVE JOSEPHSON recalled two notorious leaks in Alaska.
One was some sort of gas leak along the rail corridor at Crown
Point near Moose Pass and one was a railroad leak in Gold Creek
near Curry in the Talkeetna area. He asked whether situations
like those are lost to history or whether DEC flags and monitors
them as areas of concern such that they are not just footnoted.
MS. RYAN answered that before the time of the railroad situation
in Talkeetna, DEC did not have contingency plans for the
railroad. A big change resulting from that was that DEC added
the railroad as now an organization that is required to have
contingency plans when hauling fuel, meaning the railroad must
have the capacity to clean up an accident like that. Learning
from larger spills usually results in changes to Alaska's
statutes. Additionally, all contaminated sites, even if they
are cleaned up, remain in DEC's database and are accessible by
anybody as closed. So, she said, that information is out there
and is often utilized by individuals doing research.
4:39:16 PM
SENATOR MICCICHE noted that the shift of liability does not
formally occur. Through capture in a deed, SB 64 allows the
voluntary acceptance of the cost of the cleanup by the person
purchasing the property. That is probably less likely with
commercial and industrial spills, he said, and he is thinking
more of a "mom and pop" where a $40,000-$100,000 cleanup may be
well outside of their budget, but someone who really wants to
develop a piece of property may be more than willing and able to
afford that cost of cleanup. So, he continued, he sees some
real benefits and can think of many pieces of property. There
is likely property in each district in the state where SB 64
would help bring that property back into productive condition.
4:40:19 PM
CHAIR KITO held over SB 64.