Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/14/2017 01:30 PM LABOR & COMMERCE
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SB 64-UNIFORM ENVIRONMENTAL COVENANTS ACT 1:49:09 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SB 64. She noted it is the first hearing of the bill. The intent is to hear from the sponsor, take members' questions, take public testimony, and hold the bill for further consideration. She noted those available for questions. 1:49:48 PM RACHEL HANKE, Staff, Senator Peter Micciche, Alaska State Legislature, presented an overview of SB 64. She said the primary goal of the bill is to return [contaminated] fields back to commerce, resolve liability, and protect future owners. She explained that an environmental covenant is a recordable interest in real property with no financial interest. SB 64 allows manageable contamination to remain with certain use and activity restrictions. It formalizes an existing practice - Institutional Controls - and allows for covenants to be placed on federal land. The database that is required already exists. 1:50:52 PM MS. HANKE reviewed the following sectional analysis for SB 64: Section 1 adds a new article to AS 46.04 that establishes all necessary guidelines and procedures for environmental covenants for holders who are bound by the covenant, subordination, required documents, common law protections, notice procedures, recording rules, termination procedures, and creates a process for placing use restrictions on federal property, and a database. It also provides definitions used in the Act. Section 2 [provides] that DCCED and DNR [may] adopt necessary regulations [necessary to implement this Act.] Section 3 provides for an immediate effective date for Section 2. 1:51:59 PM CHAIR COSTELLO asked what the Uniform Environmental Covenants Act addresses. MS. HANKE explained that it is uniform law that has been used all over the U.S. to return contaminated properties back to the market. CHAIR COSTELLO asked if other states have passed similar legislation. MS. HANKE said yes. She deferred to Ms. Ryan to provide more information. CHAIR COSTELLO welcomed Ms. Ryan and asked her to respond to both questions. 1:52:56 PM KRISTIN RYAN, Director, Division of Spill Prevention and Response, Department of Environmental Conservation (DEC), explained that her job involves cleanup of contaminated sites in Alaska. MS. RYAN related that SB 64 is a transparency law to communicate when DEC puts restrictions on properties. The problem is that sometimes restrictions are not communicated to future buyers. It allows DEC to place a covenant that would run with the property so that future owners are aware of restricted uses placed on their land. It is a legal mechanism to safely transfer contaminated property, and it removes a lot of the stigma associated with contaminated property. She provided examples of restrictions. 1:54:46 PM SENATOR MEYER asked if it includes federal lands. MS. RYAN said yes, and the majority of contaminated sites in the state are federal properties. DEC can't put a covenant on federal property, but can impose a use restriction. She used Colorado as an example. 1:55:40 PM SENATOR HUGHES asked how many contaminated sites this impacts. MS. RYAN said DEC is currently monitoring about 2,000 contaminated sites; over 1,000 are allowed to remain above cleanup levels under institutional control. DEC intends to apply covenants to about 1,000 sites going forward. 1:56:20 PM SENATOR HUGHES observed that the bill is not retroactive. She asked how the mechanism works going forward. MS. RYAN explained the process of working with the responsible party that has contaminated property. The department and property owner would make a joint decision to leave the contamination in place for a variety of reasons. Next, they would establish a covenant on the title that includes a future mechanism for removing the covenant and an appeal process. SENATOR HUGHES asked how long it would take before all contaminated sites would have covenants. MS. RYAN said DEC does not project a timeframe. A large percentage of the 1,000 contaminated sites will be cleaned up and not need covenants. A covenant is a transparency tool for future buyers. 1:58:53 PM CHAIR COSTELLO asked if Alaska should take an approach that is similar to the Colorado law. MS. RYAN explained that SB 64 is a uniform law from the National Conference of Commissioners on Uniform State Laws (NCCUSL) which proposed model legislation ten years ago. Colorado has adapted the law to fit its situation of having a large amount of contaminated federal land. They created a mechanism for noting restrictions on federal property. She said DEC has worked closely with NCCUSL and their testimony is included in members' packets. NCCUSL agreed that Alaska's changes to their model law are improvements and they have accepted Alaska's better version. Currently, Alaska is only one of seven states that has not adopted a procedure for an environmental covenant. 2:00:08 PM CHAIR COSTELLO asked if the public access page is the transparency aspect of the bill. MS. RYAN said she envisions DEC working with the records office to put the restrictions on the title, as well as having a database of contaminated sites. The database is currently in place. CHAIR COSTELLO asked if other states have experienced opposition to this type of legislation. MS. RYAN said DEC has talked to many stakeholders and all are supportive of the concept. She pointed out that there is one letter from the Department of Defense (DOD) requesting an amendment. DEC disagrees with that request related to concerns about the state setting any standards on federal property, a long-standing debate. No other states have encountered problems doing what SB 64 proposes. 2:02:46 PM CHAIR COSTELLO asked if the bill would apply to "Travesty Wells" [in the National Petroleum Reserve-Alaska (NPR-A)] on federal lands. MS. RYAN said yes, and it would also apply to the legacy wells on [Bureau of Land Management (BLM)] land [within and adjacent to NPR-A], if BLM decides, with DEC's involvement, to lease contaminated sites above cleanup levels so future owners are aware of the contamination. 2:03:14 PM CHAIR COSTELLO asked how DEC can have a zero fiscal note if they plan to investigate properties and handle communication. MS. RYAN responded they are already putting restrictions on properties. The bill allows DEC to put restrictions on land titles and this will not increase workloads. The database is in place and they will absorb costs to write regulations. 2:04:13 PM CHAIR HUGHES asked if Alaska is using the same mechanism as other states. She voiced concern about DOD's opposition. MS. RYAN said the federal property aspect of SB 64 is identical to Colorado's legislation. It was implemented several years ago, and DOD and the Air Force have been in compliance. 2:04:56 PM SENATOR STEVENS asks if SB 64 exonerates a bad actor that abandons the contaminated property. MS. RYAN said no. That person is still liable and would be pursued for cleanup. The covenant is a mechanism to communicate to future owners if the owner leaves contamination above cleanup levels. SENATOR STEVENS asked if the financial cost to the owner is taken into consideration. MS. RYAN said that is a factor DEC considers and one of the reasons why contamination remains. DEC tries to minimize the risks and can allow the contamination to remain in place by imposing restrictions. Their goal is to limit exposure pathways. 2:06:30 PM SENATOR MEYER asked how DEC determines whether land is contaminated. He provided an example of buried batteries that no one knew about. 2:06:54 PM MS. RYAN said DEC needs to be notified to become involved in the process. They often find out about those kinds of contaminations. She gave an example of lead acid batteries discovered in Wrangell after several iterations of ownership. They use the Department of Law to help find the responsible party. SENATOR MEYER asked if realtors have a position on SB 64. MS. RYAN said they agree with the concept, but don't want it to be overly cumbersome. DEC has agreed to work with them during the drafting of regulations. 2:08:09 PM CHAIR HUGHES asked what types of things might be in a covenant. MS. RYAN referred to a flyer in members' packets that describes a covenant. She provided examples of restrictions: no digging, no wells, and no day care, depending on the contamination. SENATOR HUGHES added - no residential land use, no disturbance of soil, construction worker notice, engineer-controlled for soil, no drilling, and no use of groundwater. MS. RYAN said those are some examples. She provided another example of no allowed vapor intrusion. 2:10:13 PM CHAIR COSTELLO closed public testimony on SB 64 and held the bill in committee.