Legislature(2017 - 2018)ADAMS ROOM 519

03/29/2018 01:30 PM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Canceled>
-- Public Testimony --
Heard & Held
-- Public Testimony --
<Companion Bill to HB 305>
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    

Document Name Date/Time Subjects
CSHB 322 (RES) Sectional PPT_TA.pdf HFIN 3/29/2018 1:30:00 PM
HB 322