SENATE BILL NO. 158 "An Act relating to oil and hazardous substances and waiver of cost recovery for containment and cleanup of certain releases; and providing for an effective date." 1:35:56 PM Co-Chair Foster invited testifiers to the table. 1:36:08 PM KRISTIN RYAN, DIRECTOR, DIVISION OF SPILL PREVENTION AND RESPONSE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, explained that there were 2 versions of the same bill: SB 158 and HB 322 (which had been slightly amended in the House Resources Committee). The governor had proposed the legislation because of problematic heating oil spills at homes. Ms. Ryan explained that spills of heating oil at home had negative impacts on the homeowner and the environment, and were costly to clean up. The Department of Environmental Conservation (DEC) came into the home to provide assistance with addressing a spill. It was a benefit to the homeowner. The problem was when the homeowner received a bill. Current law required DEC to recover all costs for responding to a fuel spill. The bill was automatically generated by the Division of Spill Prevention and Response (SPAR) accounting system several weeks after the spill. Ms. Ryan continued describing the process of assisting home owners with heating oil spills. Once the bill was given to the homeowner, the homeowner often became unwilling to communicate further (to avoid further charges) which then would inhibit the ability of the division to help clean up the contamination. The division wanted to provide technical assistance without sending homeowners a bill. The legislation would allow for free technical assistance (with limitations) for homeowners or small apartment buildings with four or fewer units. Co-Chair Foster reviewed the available testifiers online. 1:41:02 PM Representative Wilson referred to page 2, lines 25-26, which referred to retroactivity. She asked why the retroactive date was only back until January 1, 2018. Ms. Ryan explained that the retroactive clause would allow for the department to cease billing current homeowners that were being assisted. She furthered that there were approximately 150 homeowners being assisted with active spills. The department was not interested in going further back and reimbursing homeowners that had been billed in previous years. Representative Wilson asked if the 150 actively engaged homeowners would be billed if the bill were to pass. Ms. Ryan replied that the division has placed a pause on billing of the 150 active cases. Representative Wilson asked about when billing would stop. Ms. Ryan responded that billing would cease when the bill went into law. Representative Kawasaki asked about the liability of a homeowner. He wondered if home owner's insurance covered spills. Ms. Ryan responded that there was typically an exclusion clause for the cost from home heating oil spills. Representative Kawasaki asked why the bill would be limited to homes or small apartment buildings. Ms. Ryan was not sure why 4 units was chosen as a limit for apartment buildings. She pondered that a facility with more units would be more commercial and have more resources available. She stated that many of the spills the department encountered were on the smaller end of the spectrum. It had seemed a reasonable place to draw a line. Representative Kawasaki asked if the concept was only for residential properties. Ms. Ryan responded in the affirmative. 1:45:50 PM Representative Ortiz relayed that under the current status DEC was forced to bill homeowners when the department took up their case. It was also his understanding that if time was spent over the phone, home owners would be billed as well. Ms. Ryan replied that any activity related to the case would be billed to the homeowner. Ms. Ryan answered in the affirmative and elaborated that activities such as transferring the case file and writing a letter would engender charges. Representative Ortiz asked how long the department had been forced to bill homeowners. Ms. Ryan recalled that the enacting statute was put in place in the early 1990s. She stated that most of the division's statutes were enacted after the Exxon-Valdez Oil Spill. She predicted that the impetus for the statute was wanting large corporations like ExxonMobil to recover costs associated with a large corporation spilling oil. Representative Tilton asked who had the burden of proof to get a waiver. Ms. Ryan would be reliant on her staff to make a determination in the field as to whether an incident was a home heating oil spill or not. She thought in most cases it would be obvious. The decision would be made by the department and would be appealable. She stated that the division had an informal and well-defined appeals process. Representative Tilton indicated that the fiscal note stated regulation would be adopted in 2020. She thought the timeframe was lengthy. Ms. Ryan assumed the time period would be much shorter. She reiterated that the division was eager to implement the bill. Co-Chair Foster noted that Representative Pruitt had joined the meeting. 1:49:54 PM Representative Guttenberg considered a letter from Al-Chem Engineering (copy on file). He mentioned that more aggressive clean-up activities created more harmful situations through exposing the soil and had the potential to be expensive. He wondered if there were any less aggressive measures that could be used. He provided a hypothetical scenario. He wondered about containment versus clean-up. Ms. Ryan replied that every clean-up was different. It was very common to leave contamination in place. She referenced a bill pertaining to contamination. The decision to leave the contamination required consideration of many factors. The author of the letter disagreed with the division on many cases, and actively participated in the regulatory drafting process where clean-up standards were established. She could not provide a definitive answer. For example, if there was contamination around the foundation of a building, often it would be left so as to not de-stabilize the building. The first goal of the division was clean-up. There was active monitoring to determine if in-place contamination was not causing more problems. 1:53:17 PM Representative Guttenberg asked how different the new regulations might be. Ms. Ryan responded that she did not anticipate the bill changing how the division processed clean-ups. She thought the bill would only impact billing. It would not impact the advice the division provided to homeowners and commercial operators. Representative Guttenberg did not think it seemed like the department would be doing more extensive remediation. He was concerned about lack of opportunity for cost recovery affecting the final solutions for homeowners. Ms. Ryan understood his question. She did not see the bill change how the division conducted cleanup. The money did not go into the operating budget. The billing funds went into the spill prevention account, which was used by the legislature to fund the work of the division. 1:56:27 PM Representative Kawasaki asked about the cost recovery issue. He recognized that some individual homeowners could not afford to do spill cleanup. He wondered about the percentage of spill response for homeowners. He mentioned the Spill Prevention and Response Fund, and wanted to make sure that the state engaged in cost recovery when it could. Ms. Ryan wondered if he was asking for the cost a homeowner would experience for a cleanup. Representative Kawasaki wanted to know about how many of the homeowners that could not pay after a spill. He asked how DEC would spread the message that the state was no longer billing for spill response. Ms. Ryan stated that there were two costs associated with a spill: the cost for cleanup (which could run as much as $60,000), and the cost to the state to monitor the cleanup of the spill. She would provide him a letter to inform which homeowners were not reimbursing the state for costs. Ms. Ryan continued to address Representative Kawasaki's question. The department tried to participate in home shows and reached out to builders and handy-people. She relayed that most homeowners were unaware that DEC would bill them for their service until after it had occurred. Most often homeowners stopped communicating when the process was already underway. Representative Kawasaki referenced insurance liability and wondered if the division worked with a homeowner when there was insurance to cover the incident. Ms. Ryan relayed that it was a major point of frustration for the division that insurance companies were not required to provide the rider for individuals to purchase the insurance for spills. Co-Chair Foster OPENED Public Testimony. 2:01:21 PM ANDY RAUWOLF, SELF, KETCHIKAN (via teleconference), spoke in support of the legislation. He was a retired contractor. He had a rental where an oil spill had occurred while he was out of town. At the time, he was not familiar with the subject, and he did not realize the extent of the problem. He had hired an environmental consultant and had worked with DEC. The department was very helpful and responsive. He received a letter from DEC that mentioned there would be associated charges. Since the issue arose, he had no oil heating available. He discussed the onerous process of testing the site. He had not been able to rent or to sell the property. He had spent $12,000 thus far and still had contaminated soil. Mr. Rauwolf continued his testimony. He still had all of the containment in the ground. He reported that some of the samples he had sent to anchorage showed excessive contamination. He was not sure how long the process would take but thought it would cost $35,000 to $40,000. He had been directly impacted and was shocked to receive a bill from DEC for phone calls for just under $500. He was unsure how DEC came up with the amount to charge. He did not want to talk to here anymore. He thought homeowners should be given information on the potential for spills. 2:08:26 PM Representative Ortiz thanked Mr. Rauwof for taking the time to call in. Co-Chair Foster CLOSED public testimony. Representative Wilson asked about DEC putting a covenant on a property that had been contaminated and not cleaned up. Ms. Ryan responded that she had been referencing SB 64, a piece of legislation that would give the department the authority to put a covenant on a property if contamination remained above clean-up levels. The authority did not currently exist. Representative Wilson asked if the department had the authority to place a lien on the property if the homeowner could not pay. Ms. Ryan answered in the affirmative. She stated that the cost-recovery authority had other mechanisms. There was an "inability-to-pay" and the bar was extremely low. The department had the ability to place liens on properties to recover costs. Co-Chair Foster conveyed that amendments were due the following Monday at 5:00pm. SB 158 was HEARD and HELD in committee for further consideration.