Legislature(2017 - 2018)BARNES 124

04/17/2017 03:15 PM LABOR & COMMERCE

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Heard & Held
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+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved HB 195 Out of Committee
           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                                                               
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.                                                                                                     

Document Name Date/Time Subjects
HB222 Fiscal Note DCCED-DCBPL 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222
HB222 Supporting Document Bev Harper 04.10.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222
HB222 Supporting Documents-DCCED Letter to Manicurists 4.10.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222
HB222 Supporting Documents-Fortier and Mikko Letter 4.10.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222
HB222 Supporting Documents-HLAC 4.10.15 Minutes 4.10.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222
SB064 Sectional Analysis version J 4.11.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Fiscal Note DNR-MLW 2.24.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Fiscal Note DEC-SPAR 2.24.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Sponsor Statement 4.11.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Supporting Documents - DEC Fact Sheet 4.11.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Supporting Documents - DOD Response 4.11.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Supporting Documents - Uniform Law Commission 4.11.17.PDF HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Supporting Documents-Letter of Opposition 4.11.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Supporting Documents-Letters of Support 4.11.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB093 Sponsor Statement version O 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 93
SB093 Fiscal Note DOL-CIV 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 93
SB093 Sectional Analysis version O 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 93
SB093 Supporting Documents-CDIA Summary Statutes of Select States 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 93
SB093 Supporting Documents-Letters of Support 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 93
SB093 Supporting Documents-Power Point 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 93
SB064 Supporting Documents-DEC Response to DoD Supplemental 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
SB064 Supporting Documents-DoD Supplemental 4.14.17.pdf HL&C 4/17/2017 3:15:00 PM
SB 64
HB222 Supporting Documents-HB131 29th Legislature 4.17.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222
HB222 Sponsor Statement 4.16.17.pdf HL&C 4/17/2017 3:15:00 PM
HB 222