Legislature(1999 - 2000)

04/12/1999 01:40 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
            SB 110-PROPERTY ACQUIRED BY GOVT. ENTITY                                                                            
SENATOR GARY WILKEN, sponsor of SB 110, explained the bill deals                                                                
with a municipality's responsibility for contaminated property it                                                               
receives as a result of tax delinquency. SENATOR WILKEN said he was                                                             
asked to bring the bill forward on behalf of the Fairbanks North                                                                
Star Borough (FNSB) which is faced with liability for "dirty                                                                    
SENATOR WILKEN stated federal law exempts state and local                                                                       
government entities from liability for cleaning up contaminated                                                                 
property when the property has been acquired by escheat, tax                                                                    
delinquency, or foreclosure.  He explained that tax foreclosure is                                                              
an obligatory action for a municipality faced with tax delinquent                                                               
property. Due to strict liability, municipalities are concerned                                                                 
they may be held liable for preexisting contamination of foreclosed                                                             
lands and the significant environmental remediation costs those                                                                 
properties incur.                                                                                                               
SENATOR WILKEN stated SB 110 will change state law to mirror                                                                    
federal law, and allow municipalities, in certain instances, to                                                                 
hold title to contaminated land without liability for clean up.                                                                 
Number 061                                                                                                                      
SENATOR HALFORD asked how the term "government entity" is defined.                                                              
He suggested the term be changed to "state governmental entity" so                                                              
the federal government would not be able to walk away from any                                                                  
liability. SENATOR WILKEN said he is open to any change that                                                                    
improves the bill, and stated it is not his intent to let the                                                                   
federal government off the hook for contaminated federal lands.                                                                 
CHAIRMAN TAYLOR asked if the federal government exempted themselves                                                             
from liability in these cases.                                                                                                  
Number 110                                                                                                                      
MR. VIRGIL NORTON, testifying from Kenai, stated he does not oppose                                                             
the intent of SB 110. He said there is a lot of work that could be                                                              
done to strengthen the "innocent landowner" affirmative defense                                                                 
against the current strict liability standard for property owners.                                                              
MR. NORTON said, in the case of dirty property, someone is going to                                                             
have to pay to clean it up.  He suggested that the Environmental                                                                
Protection Agency (EPA) is a more appropriate agency to clean up                                                                
contaminated sites. MR. NORTON asked if SB 110 will result in                                                                   
different treatment for governmental and commercial property                                                                    
MR. NORTON concluded that SB 110 will have far-reaching                                                                         
implications for all property owners in Alaska. He believes when a                                                              
land owner who comes into possession of contaminated property acts                                                              
responsibly, the state should assist him or her in finding the                                                                  
person responsible for the release of toxins into the environment,                                                              
and hold that person responsible.                                                                                               
CHAIRMAN TAYLOR asked MR. NORTON if he has any specific amendments                                                              
to the bill. MR. NORTON said he had "a whole table full." CHAIRMAN                                                              
TAYLOR asked him to forward his suggestions to the committee.                                                                   
Number 308                                                                                                                      
MR. NORTON said he would do that, and also come to Juneau and help                                                              
with SB 110.                                                                                                                    
MR. PAUL COSTELLO, from Fairbanks, indicated that Senator Wilken's                                                              
testimony accurately represented the concerns of the FNSB. He said                                                              
the FNSB hopes to extend liability protection to tax foreclosed                                                                 
land acquired, so that it will not be responsible for the                                                                       
preexisting condition of this land. MR. COSTELLO said the FNSB is                                                               
currently in possession of 14 pieces of contaminated property with                                                              
an estimated liability of 1.5 million dollars. He urged passage of                                                              
SB 110.                                                                                                                         
Number 352                                                                                                                      
CHAIRMAN TAYLOR asked MR. BRECK TOSTEVIN, the representative from                                                               
the Department of Law testifying from Anchorage, if the federal                                                                 
government had exempted itself from liability. MR. TOSTEVIN said                                                                
the federal government held itself liable; the exemption from                                                                   
liability exists only for state and local governments when property                                                             
is acquired through tax delinquency.                                                                                            
CHAIRMAN TAYLOR asked if the federal government is liable for                                                                   
existing federal lands such as military bases.  MR. TOSTEVIN                                                                    
replied that is correct. The federal government waived its                                                                      
sovereign immunity and assumed liability for military land.                                                                     
Number 372                                                                                                                      
MR. FRANK MIELKE, chief right-of-way agent for the Department of                                                                
Transportation (DOT), proposed that the Department would like the                                                               
committee to broaden Subsection 5 of the  bill to include any land                                                              
acquired by the state. He recounted laws other than the Statehood                                                               
Act under which the state has acquired land, including the Alaska                                                               
Native Claims Settlement Act, the Omnibus Act, and School Lands                                                                 
Act, as well as other donated lands. He asked that the state not be                                                             
held to the strict liability standard for those lands.                                                                          
SENATOR HALFORD said he has no problem granting immunity to a                                                                   
municipality for land that is involuntarily transferred to it.                                                                  
However, the strict liability standard was created by state law and                                                             
to exempt the state from it would be unfair to the private sector.                                                              
Number 410                                                                                                                      
MR. MIEKLE said that strict liability for the state denotes                                                                     
ultimate liability, meaning the state ends up paying for the entire                                                             
cleanup even when the state can find fault with the previous owner.                                                             
SENATOR HALFORD asked why the state would not go after the guilty                                                               
party for damages. MR. MIELKE said it is difficult to find the                                                                  
responsible party. Additionally, sometimes these parties, when                                                                  
found, are "judgment proof."  MR. MIELKE concluded that sometimes                                                               
"the cost of pursuing all of the various people to get the ultimate                                                             
liability on somebody else, was more than the cost of the cleanup."                                                             
SENATOR HALFORD asked Mr. Mielke what effect the exemption he                                                                   
requested would have.  MR. MIELKE replied, "We probably would have                                                              
gone to DEC . . . or to EPA and said 'This is a cleanup problem,                                                                
please clean it up. Instead, we were stuck with the cleanup on                                                                  
SENATOR HALFORD replied, "So you're asking us for a change that                                                                 
would stop the state from cleaning up the mess?" He said that is                                                                
what other property owners are faced with, because the state                                                                    
decided the cleanup was so important it had to be done.                                                                         
Number 443                                                                                                                      
MR. MIELKE said DOT explored the option of taking the cleanup fee                                                               
out of the condemnation proceeds, but the Alaska Superior Court                                                                 
denied that. SENATOR HALFORD said he does not disagree with MR.                                                                 
MIELKE's point; it is simply contrary to the principle of strict                                                                
CHAIRMAN TAYLOR asked MR. TOSTEVIN if he could comment on some                                                                  
points made by MR. NORTON.  MR. TOSTEVIN informed the committee                                                                 
that MR. NORTON represents a client currently in litigation with                                                                
the state.  Though unable to address MR. NORTON's comments                                                                      
directly, MR. TOSTEVIN spoke generally about the statute and                                                                    
explained that the law casts a wide net of liability for                                                                        
contaminated property which encompasses everyone who has obtained                                                               
an economic benefit from the land in question. MR. TOSTEVIN said                                                                
this law was purposefully drawn broadly in order to find all                                                                    
responsible parties and relieve the state from the burden of                                                                    
cleanup costs.                                                                                                                  
Number 495                                                                                                                      
SENATOR HALFORD repeated his suggestion to add the word "state"                                                                 
before "government" on page 2, line 2.                                                                                          

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