Bill addressing contaminated property moves fast in Senate

JUNEAU — A bill easing transfers of contaminated properties is moving fast in the state Senate.

Senate Bill 64, related to environmental covenants, was introduced Feb. 17, moved out of the Senate Community and Regional Affairs committee March 7 and out of Senate Labor and Commerce March 16.

The bill is now in the Senate Rules Committee awaiting placement on the calendar for floor action in the Senate. That’s lightning speed for the Legislature.

SB 64 is sponsored by Sen. Peter Micciche, R-Soldotna. Micciche is Senate Majority Leader and is in a position to get his bills moved along.

Contamination, usually from fuel spills, is a major headache for property owners trying to sell land or buyers seeking financing to pay for it.

Other states are dealing with the problem, but Alaska has not, Micciche said.

“Alaska is one of seven states that do not have an environmental covenant law. Such a process is often all that is necessary to make property transferable as well as economically and functionally viable,” the senator said in a statement.

“Other states have found that covenants help communities transform blighted property into marketable assets.”

The bill eases the sale or transfer of property with identified contamination by establishing a mechanism, an environmental covenant, to identify the contamination and, through agreement with environmental agencies, assure buyers that risks will be managed.

The environmental covenant allows for the sale of property and protects the buyer and seller while allowing the use of the property until the contamination reaches safe levels, Micciche said in the statement.

A covenant is a recordable interest in real estate that would be tracked through the state Department of Environmental Conservation’s database.

“It is specific to particular risks at a site and would restrict activities that could result in exposure while allowing other activities to occur,” Micciche said.

There are typically certain restrictions on uses to reduce risk. The restrictions would be negotiated by the responsible party, typically the landowner, and the DEC.

The process would be exactly that now used by DEC for its Institutional Controls agreements for contaminated sites. Risk assessment procedures and scientific principles will also be used, Micciche said.

“The covenant would not supplant current contamination removal standards or impose new ones. They would also not affect the liability of the principal responsible parties, but would minimize exposure for third parties,” he said.

Examples of use restrictions could include no residential land use; restricted residential land use; no disturbance of soil; engineered controls for soil; no drilling into or use of groundwater, and notices to construction workers.

Other requirements of a covenant could include construction of buildings in ways that prevent vapor intrusion. Kristin Ryan, director of DEC’s spill prevention group, said the agency is working on a proposed standard working for the covenants.

In a white paper given to legislators, DEC cited examples of how the use of covenants could have warned property buyers of contamination. One was at a residential community, Moose Creek near North Pole, east of Fairbanks, when a long-running leak from fuel pipeline serving Eielson Air Force Base was discovered in 2003.

Investigations found that gasoline and diesel contamination spread off the pipeline right-of-way onto eight residential land parcels, some with water wells drawing drinking water. At least one of the houses was sold to a buyer who had no knowledge of the contamination of the soil or drinking water.

Another example was with a gasoline station in Anchorage that was sold and where the buyer discovered significant additional contamination than originally believed to be the case. Had environmental covenants been in place the buyers would have been better informed, according to the DEC paper.

The problem is also a real concern for Alaska Native corporations working to acquire land on or around former defense sites, and where there is often contamination.

Ryan said DEC’s records indicate that there are currently 2,258 active contaminated sites in the state, with 1,148 federally owned and 1,100 under state or private ownership.

The agency estimates that 835 of these are of the type where a change of ownership could occur, and where the ability to establish environmental covenants would help.

So far there is no opposition to SB 64 and the only concern voiced so far has come from the Department of Defense, which is concerned about erosion of sovereignty on federal lands. A March 3 letter to Micciche from the Air Force regional environmental office, at Travis Air Force Base in California, cited federal laws that restrict covenants or notices to be posted on federal land.

Ryan said she believes procedures can be put in place to protect federal government interests. SB 64 is modeled on Colorado’s environmental covenant law, and federal agencies in that state have been able to comply with it.

Tim Bradner is co-publisher of Alaska Legislative Digest and a contributor to the Journal of Commerce. He can be reached at [email protected].

03/22/2017 - 12:22pm