Legislature(2017 - 2018)BELTZ 105 (TSBldg)


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Moved HB 78 Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
           SB  64-UNIFORM ENVIRONMENTAL COVENANTS ACT                                                                       
3:35:34 PM                                                                                                                    
CHAIR  BISHOP called  the  meeting back  to  order and  announced                                                               
consideration of SB 64.                                                                                                         
SENATOR  PETER   MICCICHE,  sponsor   of  SB  64,   Alaska  State                                                               
Legislature,  Juneau, said  this  bill is  about taking  blighted                                                               
property  and  putting  it  back   into  productive  use  in  our                                                               
communities.  It's  something  lawmakers think  about  in  moving                                                               
policy  forward. They  want to  streamline  and remove  obstacles                                                               
that  inhibit business,  commerce, or  the transfer  of property,                                                               
but they are unwilling to  reduce expectations for public health,                                                               
safety,  and a  healthy environment.  He  said SB  64 blends  all                                                               
those objectives.                                                                                                               
By  way  of  background,  he   explained  that  the  Uniform  Law                                                               
Commission  created the  Uniform Environmental  Covenants Act  in                                                               
2003 to overcome  inadequate common law rules. It  allows for the                                                               
sale of  property with use  limitations to mitigate  risk. Alaska                                                               
is one of  only seven states that does not  have an environmental                                                               
covenant law  at this time.  It protects  both the buyer  and the                                                               
seller of  contaminated property  while allowing the  fullest and                                                               
best use  of the  property until  the contamination  reaches safe                                                               
levels. The  covenant is  specific to the  risks at  a particular                                                               
site  and  restricts activities  that  result  in exposure  while                                                               
allowing other  uses to occur. Such  a process is often  all that                                                               
is   necessary  to   make  property   transferable  as   well  as                                                               
economically and functionally viable.                                                                                           
3:37:51 PM                                                                                                                    
SENATOR MICCICHE  gave an example of  what used to be  a gasoline                                                               
station with  some contamination on  the site. Perhaps  it's gone                                                               
into an estate and is becoming  blighted. It's in a valuable part                                                               
of  town. The  seller now  could  record the  contamination on  a                                                               
covenant if  somebody is  willing to invest  in the  property and                                                               
want to  open an  auto parts  store that  is appropriate  on that                                                               
site and  is willing  to take on  that contamination  level. Then                                                               
some day  when the contamination  is removed it would  be removed                                                               
from  the covenant.  It's voluntary,  but  the covenant  provides                                                               
transparency  throughout the  life of  the property.  It provides                                                               
assurances  to  buyers and  sellers  that  risks will  be  safely                                                               
managed. It is a simple process  and would not supplant or impose                                                               
current contamination  removal standards  which will  continue to                                                               
be managed  as they are currently.  The act would not  affect the                                                               
liability  of  the  principally responsible  parties,  but  would                                                               
provide a method to reduce exposure to third parties.                                                                           
3:39:15 PM                                                                                                                    
RACHEL  HANKE,  Staff to  Senator  Peter  Micciche, Alaska  State                                                               
Legislature,  Juneau, Alaska,  reviewed  the following  sectional                                                               
analysis for SB 64:                                                                                                             
     Section 1                                                                                                                
     Adds a new article to AS 46.04 that                                                                                        
     ·  AS 46.04.300  -  establishes  when an  environmental                                                                    
        covenant is  necessary, who  is  a holder  (multiple                                                                    
        holders are allowed), who is bound  by the covenant,                                                                    
        subordination, rules for commonly-held property, and                                                                    
        states that  the  covenant has  no  interest in  the                                                                    
     ·  AS 46.04.305 - provides which documents are required                                                                    
        for the record and additional documents  that may be                                                                    
     ·  AS 46.04.310  -  provides  situations in  which  the                                                                    
        covenant is  still  valid  and  enforceable  and  is                                                                    
        priority over common law;                                                                                               
     · AS 46.04.315 - outlines procedure for notice;                                                                            
     ·  AS 46.04.320 - establishes  guidelines for recording                                                                    
        the covenant in property records;                                                                                       
     ·  AS 46.04.325 -  defines terms  for termination  of a                                                                    
        covenant  and  amendment   by  court   action  i.e.,                                                                    
        consent,  foreclosure   with  another   interest  as                                                                    
        priority, or eminent domain;                                                                                            
     ·  AS 46.04.330 - defines procedure  for termination of                                                                    
        a covenant and amendment by consent;                                                                                    
     ·  AS 46.04.335 - states  the department has  the power                                                                    
        to enforce  and  bring  civil  action  if  there  is                                                                    
        failure to comply;                                                                                                      
     ·  AS 46.04.340  - creates  the ability  to enforce  an                                                                    
        environmental covenant on federal lands;                                                                                
     ·  AS 46.04.345  - places  covenant restrictions  above                                                                    
        other land-use laws;                                                                                                    
     ·  AS 46.04.350  - provides  that the  department shall                                                                    
        maintain a registry for covenants;                                                                                      
     · AS 46.04.355 - states that this Act is uniform law;                                                                      
     · AS 46.04.390 - provides definitions used in the Act.                                                                     
     Section  2  is uncodified  law  and  provides that  the                                                                    
     Department  of   Environmental  Conservation   and  the                                                                    
     Department  of Natural  Resources  may adopt  necessary                                                                    
     regulations to implement this Act.                                                                                         
     Section  3 provides  an  immediate  effective date  for                                                                    
     Section 2 of this Act.                                                                                                     
3:41:24 PM                                                                                                                    
SENATOR  GARDNER  asked  what the  differences  are  between  the                                                               
original bill and version J.                                                                                                    
JENNIFER  CURRIE, Department  of  Law  (DOL), Anchorage,  Alaska,                                                               
answered that one  small change adds a list of  items that may be                                                               
included in a covenant but are not required in section 305(b).                                                                  
Another  addition was  made to  the  number of  signatories of  a                                                               
covenant.  The  Department  of   Natural  Resources  (DNR)  is  a                                                               
required signatory  for any  piece of property  the state  has an                                                               
interest in and the bill  specifies that the DNR signature cannot                                                               
be waived.                                                                                                                      
3:43:28 PM                                                                                                                    
SENATOR MACKINNON asked what an environmental covenant is.                                                                      
SENATOR  MICCICHE  answered  that  it is  a  specific  recordable                                                               
interest in  real estate that  will be tracked to  the Department                                                               
of  Environmental   Conservation  (DEC)  on  its   database.  The                                                               
department's database is  already in place, so  they don't expect                                                               
a fiscal  note. The  covenant is  specific to  the risks  of that                                                               
particular  site and  restricts activities  that could  result in                                                               
exposure  while allowing  other  uses to  occur. Essentially,  he                                                               
said it  travels with  the property  until the  removal standards                                                               
are met for that particular contaminant.                                                                                        
He added that it  protects the buyer as much as  the seller for a                                                               
couple of  reasons and was  prompted by an incident  in Anchorage                                                               
where a  buyer was  unaware of  the contamination  on a  piece of                                                               
property and  spread a bunch  of dirt  around it for  the current                                                               
use of that  property, and in doing so,  he contaminated adjacent                                                               
sites, and  then became liable  for that contamination,  too. So,                                                               
it really  does protect both,  and it allows  greater flexibility                                                               
for the  department on  a timeline  of dealing  with contaminated                                                               
property   while  allowing   blighted  property   to  return   to                                                               
3:45:21 PM                                                                                                                    
SENATOR MACKINNON said  she wanted it on  the record specifically                                                               
that it's a "recordable interest on a piece of property."                                                                       
3:46:40 PM                                                                                                                    
At ease                                                                                                                         
3:47:25 PM                                                                                                                    
CHAIR  BISHOP  called  the  meeting back  to  order  and  invited                                                               
Kristin Ryan to comment on  his following hypothetical: say there                                                               
is a  business here and there's  a fire, and the  fire department                                                               
comes in  and puts  the fire  out. There  are different  types of                                                               
hazardous   materials  once   they   are   released  from   their                                                               
containers.  Another person  owns another  piece of  property and                                                               
the retardant ran over onto it.  Now this person can't sell their                                                               
property  because  the  department  has identified  some  of  the                                                               
material as  a real problem. Does  this bill help that  person be                                                               
able to make a sale of this property?                                                                                           
KRISTIN  RYAN,   Director,  Division  of  Spill   Prevention  and                                                               
Response,   Department  of   Environmental  Conservation   (DEC),                                                               
Anchorage, Alaska,  replied in that  scenario they  would require                                                               
the responsible  party to address  the contamination  they caused                                                               
on  their property  and their  neighbor's property.  If for  some                                                               
reason - there  are many reasons this could occur  - it's okay to                                                               
leave some  of that  contamination on  either property  above the                                                               
cleanup level,  a covenant would come  into play. It would  say -                                                               
for example,  a flame retardant  contaminated the ground  water -                                                               
you would not be allowed to put  a well on this property, but all                                                               
other uses can go forward.                                                                                                      
3:49:04 PM                                                                                                                    
SENATOR STEDMAN joined the committee.                                                                                           
SENATOR GARDNER  asked if  a person considers  buying a  piece of                                                               
property and  needs to  work with  DEC to  transfer it,  what the                                                               
timeline is for this process to be resolved.                                                                                    
MS. RYAN replied the department  already does this with what they                                                               
call  "institutional controls;"  it is  put on  a property  where                                                               
contamination  has  been left  above  cleanup  levels. This  bill                                                               
communicates those controls to future  buyers by staying with the                                                               
land.  Right  now  those  controls   remain  on  a  database  the                                                               
department   maintains;  sometimes   they   are  referenced   and                                                               
sometimes  they're not.  This bill  doesn't change  anything they                                                               
are currently doing; it just records  that action on the title of                                                               
the property so  that future buyers know about it.  It won't have                                                               
any impact on the timeline of the transfer of a property.                                                                       
CHAIR BISHOP  said this  bill is  just a  full disclosure  on the                                                               
property title.                                                                                                                 
MS. RYAN said that was right.                                                                                                   
CHAIR BISHOP asked  how AS 46.04.340 that creates  the ability to                                                               
enforce environmental covenant on federal lands works.                                                                          
MS. RYAN replied  that over 68 percent of  contaminated sites are                                                               
on federal property  and the department is not allowed  to put an                                                               
environmental covenant on federal  property. This bill will allow                                                               
them  to put  a notice  of use  restriction on  federal property,                                                               
which is  about as  good as  it can get.  It is  a tool  that the                                                               
State  of   Colorado  developed   in  conjunction   with  federal                                                               
agencies, and it has been working there.                                                                                        
CHAIR  BISHOP said  so they  can  make a  public notification  of                                                               
federal contaminated property.                                                                                                  
MS. RYAN  answered yes, because  there are many cases  where that                                                               
property is  transferred either into  state ownership  or private                                                               
ownership,   they  want   to  make   sure  that   restriction  is                                                               
communicated  to  future  buyers (Native  corporations),  because                                                               
there  have  been many  cases  of  the transfer  of  contaminated                                                               
federal property and the new purchaser  may or may not know about                                                               
it.  The old  transfers can't  be fixed,  but going  forward this                                                               
legislation would stop that from occurring.                                                                                     
3:52:43 PM                                                                                                                    
SENATOR HOFFMAN asked how  contaminated properties are identified                                                               
particularly those that are on state and private lands.                                                                         
MS. RYAN answered  they are identified in a variety  of ways, but                                                               
usually someone  discovers a release and  contacts the department                                                               
about it.                                                                                                                       
SENATOR HOFFMAN  said some  people from Bristol  Bay came  to his                                                               
office  last week  and were  concerned about  some contaminations                                                               
that  may  have  occurred  during  the  Pebble  Mine  search  for                                                               
minerals and asked if those had been identified.                                                                                
MS. RYAN  said that  activity occurred under  DNR permits  and no                                                               
contamination has  been left  that is  above the  cleanup levels.                                                               
Residual drilling  muds remain,  but they  are not  designated as                                                               
contaminated   sites,  which   would  trigger   her  department's                                                               
SENATOR HOFFMAN asked  if it's DNR's responsibility  to make that                                                               
determination  or  DEC's  if  the   people  of  the  region  have                                                               
MS. RYAN  replied that they  can contact her department  and they                                                               
can talk about  the results if they have data  that indicates the                                                               
contamination is above the cleanup levels.                                                                                      
3:54:38 PM                                                                                                                    
SENATOR MACKINNON asked  if she is familiar with  the Legacy Well                                                               
issue on  federal land  and if those  are listed  as contaminated                                                               
MS.  RYAN  answered yes,  they  are  known.  And if  the  federal                                                               
government  chose  to  leave   contamination  above  the  cleanup                                                               
levels, which has been decided for  some of the sites, they would                                                               
issue a notice of restricted use  because of the inability to use                                                               
an environmental covenant on federal property.                                                                                  
3:55:26 PM                                                                                                                    
BEN  ORZESKE, Uniform  Law  Commission,  Chicago, Illinois,  said                                                               
they are  a non-profit  organization that  has been  around since                                                               
1982, and  their job is  to draft nonpartisan,  model legislation                                                               
in  areas  of  state  law  for  which  there  is  some  need  for                                                               
uniformity  between  the states.  Alaska  has  enacted dozens  of                                                               
uniform  laws  including  the Uniform  Commercial  Code  and  the                                                               
Uniform Anatomical Gift  Act. This is another uniform  act and it                                                               
was completed  in 2003. It has  since been enacted in  23 states,                                                               
plus  the  District  of  Columbia  (D.C.)  and  the  U.S.  Virgin                                                               
Islands. Another 20 states have  their own environmental covenant                                                               
law that is not  a version of the uniform act,  but Alaska is one                                                               
of  only  seven states  that  doesn't  have  some version  of  an                                                               
environmental covenant law.                                                                                                     
3:56:49 PM                                                                                                                    
He agreed  with all  of the previous  testimonies and  provided a                                                               
couple  of examples  of how  the environmental  covenants can  be                                                               
used which  will help illustrate  how flexible it is.  One common                                                               
use is when a land fill is  closed. Often a place where trash has                                                               
been  dumped  will  be  capped   with  a  concrete  cap  and  the                                                               
environmental   covenant  in   that  case   might  prohibit   any                                                               
excavation that  would penetrate that  cap and allow  moisture to                                                               
seep in.   They might be  familiar with the Love  Canal dump site                                                               
in  upstate  New  York  that  was capped  and  later  sold  to  a                                                               
developer who punched  through the containment measure  on top of                                                               
the  dump releasing  hazard substances  to people  who had  built                                                               
homes on top  of it. That could have been  avoided had there been                                                               
some sort of covenant in place.                                                                                                 
MR.  ORZESKE said  covenants often  have some  sort of  reporting                                                               
requirement, one  can't dig a  new well  or pump ground  water to                                                               
the surface without a monitoring  requirement where the owner has                                                               
to  do some  sort of  test monthly  or quarterly  and report  the                                                               
result  to the  DEC.  An environmental  covenant  might say  that                                                               
requirement  remains  in  place  until  the  contamination  level                                                               
reaches a certain level for  six months consecutively and at that                                                               
point it  can be removed,  and title  cleared, and that  land put                                                               
back into fully productive use.                                                                                                 
He said  it's as flexible as  the department chooses to  make it:                                                               
whatever  parties  agree  to. It  is  completely  voluntary,  and                                                               
people  will generally  get into  these things  because they  are                                                               
trying to make the  best of a bad situation and  make the land as                                                               
productive as it can be.                                                                                                        
CHAIR  BISHOP announced  he would  hold  SB 64  in committee  for                                                               
future consideration.                                                                                                           

Document Name Date/Time Subjects
SB 64 Support Document - Fact Sheet 2.pdf SCRA 2/28/2017 3:30:00 PM
SB 64
SB 64 Hearing Request Memo.pdf SCRA 2/28/2017 3:30:00 PM
SB 64
SB 64 Sectional Analysis Ver. J.pdf SCRA 2/28/2017 3:30:00 PM
SB 64
SB 64 Sponsor Statement.pdf SCRA 2/28/2017 3:30:00 PM
SB 64
SB 64 Support Doc - Uniform Law Commission.PDF SCRA 2/28/2017 3:30:00 PM
SB 64
SB 64 Support Document - Fact Sheet.pdf SCRA 2/28/2017 3:30:00 PM
SB 64
SB 64 Ver. J.PDF SCRA 2/28/2017 3:30:00 PM
SB 64