Legislature(2017 - 2018)BUTROVICH 205
02/02/2018 03:30 PM RESOURCES
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SB 158-OIL/HAZARDOUS SUB.:CLEANUP/REIMBURSEMENT 4:26:37 PM CHAIR GIESSEL announced consideration of SB 158. She said when homeowners discover an oil spill on their property, usually a heating oil tank that spills, the Department of Environmental Conservation (DEC) has the authority and is tasked with managing that spill. Current law requires the department to pass its clean-up costs to the homeowners without exceptions. This discourages property owners from reporting the spills in the first place. SB 158 aims to make it easier for homeowners to come forward, spills to be identified and cleaned up, and the department to reward those who promptly report a spill. 4:27:14 PM KRISTIN RYAN, Director, Division of Spill Prevention and Response (SPAR), Department of Environmental Conservation (DEC), said that people are rarely equipped to address a release on their property. Homeowners are usually unequipped technically and financially to know what to do and insurance companies are unwilling to cover the costs that can go from $6,000 to $80,000 for a full tank. Home owners are stuck, and it can be a huge hardship. Knowing that inhibits people from contacting DEC if they know they can't afford to ask for help. DEC's goal is to help them with their problem and reduce the environmental contamination. They can provide that technical service now but must bill the property owner for it. SB 158 will allow DEC to waive their billing. The revenue generated by cost recovery in these situations is minimal and not worth the cost of homeowners not notifying them. MS. RYAN said this problem is more common in Fairbanks, Juneau, and rural communities because oil is used for home heating primarily. 4:30:29 PM She reviewed the steps in a home heating spill, which are controlling the source, recovering the free product before it seeps into the ground, and removing contaminated soil. MS. RYAN explained that usually the leak is discovered after a tank has been filled, so not only does the homeowner have to deal with the spill, they have to pay for all the fuel they just bought. If it's winter they must get a mobile storage tank, so they can stay warm. It can be overwhelming. Then adding insult to injury, they get a bill from DEC when all DEC wants to do is help them. She said DEC thought about proposing standards to limit who would get this free service, but the people it usually happens to don't generate much revenue anyhow, and they have found that the cost of getting paid isn't worth the time it takes. Plus, it has the consequence of inhibiting compliance. CHAIR GIESSEL said SB 158 is a two-page bill and the content is actually in section (e) and asked her to talk through criteria, rationale and implications. 4:32:46 PM MS. RYAN said they spent quite a bit of time trying to figure out how to craft this bill to help the people they are most wanting to help and decided on a limitation of four units since those are a small housing complex that are relatively common in Alaska and a large building would be more of a commercial operation. That is why language is restricted to piping, tankage, and equipment used to generate power for the home - not a commercial operation. They tried to capture the residential need. The department wants the home owners to take measures to contain a release as soon as possible - a bucket to catch the leak, for instance - and address the problem with prevention and early reporting. DEC needs the cooperation of the home owner, too. Sometimes they are refused access, because the owner knows they will get billed. The sooner DEC can respond the better the outcome will be and it's critical to not wait three months to call. 4:34:59 PM SENATOR WIELECHOWSKI asked if language- single family homes - on page 2, line 6, applies to trailers. He has a lot of trailers in his district to which, "This happens all the time." MS. RYAN answered yes. SENATOR WIELECHOWSKI said that language on page 2, line 2, says the department "may" waive a portion of those costs and asked if that is totally discretionary. MS. RYAN answered that their process for cost recovery is through an automated timekeeping billing system to which staff charges their time to certain codes. The cost recovery option would be turned off in the situations that meet these criteria. So, there is no discretion. SENATOR WIELECHOWSKI asked if there is a reason to not use "shall waive" instead of "may waive." The same question for "all or a portion:" how would that be decided? MR. RYAN answered they wanted some flexibility for unforeseen situations and she prefers to keep the flexibility, because another bill with a capital appropriation would allow them to also provide financial resources to home owners who meet hardship criteria (that is already in regulation) to do some clean up. In one home it might be monitoring vapor that might be going into a child's room and another home might need more extreme measures. SENATOR WIELECHOWSKI asked if this should be needs-based, because a millionaire can afford it and if there should be requirements for a homeowner to go through their homeowner's policy or file a negligence case against the prior owner or something like that. 4:39:16 PM MS. RYAN replied that current language inherently captures needs-based homeowners and repeated that they are only looking to provide this to small home owners not commercial operators. MS. RYAN said a lot of costs are associated with these events and she assumed a homeowner would be contacting insurance companies and the responsible party for the release already. She said a lot of things are actually discovered during sales transactions and that is when previous owners can be pursued through court mechanisms. This proposal in no way hampers a homeowner from doing that. They have found that no homeowners insurance covers the costs associated with this unless the contamination leaves their property and impacts other people's property. SENATOR WIELECHOWSKI said language on page 2, lines 8-10, requires a written finding that the person did not willfully or negligently fail to comply with spill prevention and he could envision someone who had a spill and sells his property to someone else for a dollar and then the state picks up the cost, because, then, technically the person who owns the property isn't negligent; it's the person before them. MS. RYAN said that reminded her of their other bill, SB 64, which is a uniform criminal covenants act, so that there is full disclosure when contaminated property is transferred. If a purchaser receives contaminated property and they didn't know it, they would pursue that individual through the judicial system. 4:42:22 PM SENATOR VON IMHOF asked if everyone will automatically be granted the waiver initially, at least for a certain threshold amount. MS. RYAN answered yes; their billing will stop automatically. Staff won't even know when bills are going out. 4:43:32 PM SENATOR VON IMHOF noted that this bill is retroactive to January 1, 2018, and a DEC document says in 2017 there were 50 of these types of spills, but there are currently 150 active sites that would be eligible. So, she wanted to know if they are going back earlier or if these are ongoing sites for the last couple years. MS. RYAN replied they have been ongoing and that these sites usually take quite a long time to resolve. The sites that happened several years will not get reimbursed. SENATOR VON IMHOF said but starting from now they will not be charged. MS. RYAN said that was correct. SENATOR VON IMHOF said the fiscal note says the regulations won't be written until 2020 and asked why so long from now. MS. RYAN replied that they will be written as soon as the bill becomes law if it becomes law. They needed a window of time, but it won't take that long. CHAIR GIESSEL noted that regulations will be adopted by 2020 and the process takes a while because of public comment once they are written. 4:45:25 PM SENATOR MEYER recalled that their operating budget is small and asked if they can absorb a $60,000 reduction. MS. RYAN replied the way their budget works, the revenue collected through cost recovery goes into the fund, and the legislature allocates a certain percentage of that fund every year for the division's operations. It will not impact their annual operating budget, but it will reduce what goes into the overall account they draw from over the years. SENATOR MEYER said he may be thinking more on the commercial side of things, but typically whoever caused the spill should be paying the cost of cleanup. It could be a half-million-dollar home or a hundred-thousand-dollar home. "We want them to be responsible homeowners and take care of their heating oil tanks, etc." He asked if the bill is taking some of that responsibility away from homeowners by offering this program. MS. RYAN didn't agree and said homeowners are usually caught off-guard when this occurs. A lot of times it is out of their control; if it's an underground storage tank they may not have even been aware of it. They are still taking the bulk of the burden on by cleaning up the spill. Helping them figure out how to do that is a minimal "give" from the department. SENATOR MEYER asked how much a typical clean-up costs. MS. RYAN replied the lowest she has seen is $6,000 for a cleanup, but it can get up to over $80,000. SENATOR MEYER asked if it cost $80,000 would DEC share that responsibility with the homeowner. MS. RYAN replied that the homeowner still has to pay all of that. This bill would say that DEC doesn't have to ask the homeowner to reimburse it for their time to just help them figure it out. Her part of that $80,000 might be $2,000 or $4,000 of staff time helping them respond. She said that several years ago the legislature passed a bill adding a tax for refined fuels and she feels they are now contributing to pay their costs when they purchase that fuel. 4:49:49 PM SENATOR MEYER said whenever the legislature starts a new constituency, it tends to grow, and asked if this would apply to septic tanks or water-well contamination. Does DEC garnish the Permanent Fund dividend if people can't pay? MS. RYAN answered no. The department doesn't bill for providing technical assistance for other things like septic tanks and well contamination. SPAR is the only division that charges for cost recovery; all other divisions in the department don't bill for providing technical assistance. 4:51:19 PM SENATOR BISHOP asked of the 60 annual releases were any caused by the fuel carrier. MS. RYAN said she didn't know, but that is a potential scenario. She added that they probably don't know about 30 percent of releases. SENATOR BISHOP asked if they trying to encourage more reporting. MS. RYAN answered yes. SENATOR BISHOP said so the department can use its mitigation expertise with the homeowner to properly clean up the oil. MS. RYAN said yes. She gave him credit for asking the department to focus more on prevention when they talked about the refined fuel tax bill. This is one thing they think would help mitigate the effects when spills occur for these homeowners. She said they would like to adopt standards for home heating oil tanks, but it is harder than anticipated because of the variation in our climates and communities. However, she would still like to adopt some siting standards for home heating oil tanks, so that banks can use that for home inspections. Right now, one can get an inspection for a drinking water system and a waste water system, but there is no equivalent in the heating oil tank world. 4:54:04 PM SENATOR VON IMHOF asked if a homeowner calls DEC about a leak, and decides it's way too costly to do it, does she have an obligation to report them to some authority. MS. RYAN replied it varies a lot. If there is a serious or imminent threat to the environment they are obligated by statute to fix it, but they use all their powers to get the homeowner to at least stop the release and minimize the impacts to the environment. If they cannot, which is not very often, SPAR will step in to do it using the Response Account which is separate from the prevention account. The department's obligation is to recover its costs, so they will pursue for cost recovery if they know the homeowner has the resources. CHAIR GIESSEL said the fiscal note is a negative $60,000, whereas another bill in another committee proposes to raise fees on industrial spills by another $75,000. She asked if it is coincidental that it would fill this gap. MS. RYAN answered yes. The other bill is not about fees; it is a penalty for non-compliance. 4:57:17 PM FABBIENNE PETER CONTESSE, representing herself, Juneau, Alaska, supported SB 158. She related a personal story about an underground oil tank leak at her home in Juneau. She immediately called DEC and staff came out with the information on what to do in order to move forward. After mitigating the tank, they started cleanup spending tens of thousands of dollars as well as several thousand dollars on soil testing. None of these expenditures are covered by homeowner's insurance. In 2017, they started to receive bills from DEC for reviewing their case and every time they responded to a DEC inquiry or asked for clarity on any guidance they were given, they received a bill for that contact. MS. CONTESSE said she understands the state's financial situation, but the current statute discourages homeowners from reaching out to DEC. Regarding Senator Wielechowski's comments about needs based, she personally is in a very fortunate situation and can afford to spend thousands of dollars to clean up this oil spill, but being billed by DEC every time they looked at her case kept her from reaching out to get the guidance she needed and to work collaboratively. She said homeowners already pay a surcharge on heating fuel for this fund and really believe in what DEC does. The people they have worked with have been "top notch." Everyone's goal is the same: to make sure that the environment is cleaned up. 5:01:43 PM SENATOR STEDMAN asked how many gallons were involved in her spill. MS. CONTESSE replied that they had a 1200-gallon underground oil tank and the house was built in 1981. She didn't know how many gallons were spilled, maybe several hundred. Her property is large and steep, and the seepage was moving downhill. 5:02:37 PM SENATOR WIELECHOWSKI said he appreciated her testimony and he didn't realize DEC was charging for making calls; that doesn't seem right. He thought it might be related to how "response costs" on page 2, line 2, was defined. He thought DEC was doing the actual cleanup. MS. CONTESSE responded that DEC came out to the house and advised on the cleanup, which was basically slogging through their property with oil absorbent boom and pads. They also came out to the house and advised them on where to dig test holes after eliminating all "free product." DEC staff came out to the house but weren't doing the cleanup, and when they called or when she sent emails, she was billed for it. But that is in the statute; it wasn't the individuals at DEC deciding to do that. That was frustrating for her, but also of the DEC staff. 5:04:39 PM CHAIR GIESSEL thanked her and opened public testimony. Seeing none, she closed it and held SB 158 in committee.