Copyright © 2009 Holland & Knight LLP All Rights Reserved Uniform Environmental Covenants Act November 18, 2009 Amy L. Edwards, Esq. (202) Brownfields 2009

1 UECA Implementation in the States  Ways in which some of the states have deviated from the model law to date  Whether the state may be a “Holder” –Three states (Nebraska, Minnesota, and Mississippi) have special language re whether the state may be a “Holder”  Ability to amend the covenant –Four states (Delaware, Iowa, Minnesota, Mississippi) have given the state environmental agency the right to amend a covenant when the covenant no longer serves its intended purpose (the NCCUSL drafting committee does not think this is a good idea)

2 UECA Implementation in the States  Prior Interests  One state (Maine) was silent about the impact upon prior interests (such as the interest of mortgagees and mineral interest holders)  Notice  Three states (Kentucky, Nevada, and Washington) have special provisions regarding notice  Signature  Two states (Maine, South Dakota) have special language regarding signatures  Federal Facilities  Two states (Pennsylvania, D.C.) have special language regarding impact on federal facilities/federal land

3 UECA Implementation in the States  Most of the states that have adopted UECA have not required previously adopted AULs to be converted into environmental covenants  Exception: Pennsylvania  Some of the states that have adopted UECA have not required property owners to utilize UECA covenants  Example: Maryland

4 UECA Implementation in the States  So, in identifying and evaluating AULs, it is important to know whether your AUL is an environmental covenant adopted under State’s version of UECA, or an AUL adopted under another state law or property law

5 Activity and Use Limitations (AULs) in Transactions  Growing Role of Land Records/Registries/ Tracking Systems  Most states require AULS to be recorded in the local land title records as part of their VCP programs  Some states have their own registries, and others have adopted the registry provision under UECA  At least one state (New Jersey) has started to issue fines for failure to file biennial certifications  EPA has placed all Superfund sites into its IC Tracking System

6 Activity and Use Limitations (AULs) in Transactions  EPA’s All Appropriate Inquiries (AAI) Rule Requires a Search for AULS During Environmental Due Diligence  Need to request Title Report showing Restrictions of Record on Title  NOT a chain of title report, and  NOT title insurance

7 Activity and Use Limitations (AULs) in Transactions  Continuing Obligations Under Brownfields Amendments of 2002  Need to be “in compliance with any land use restrictions established or relied on in connection with the response action”  Need to not impede “the effectiveness or integrity of any institutional control employed in connection with a response action”  The Scope of These Obligations is Unclear, and Guidance is Lacking

8 Activity and Use Limitations (AULs) in Transactions  Several entities are organized and able to perform this function, but the market has not yet fully developed  Recent EPA pilot study report supported the preventative role that monitoring systems can play (“soft” ICs)  Estimated costs of ICs – further work has been done  Financial assurances – are they needed?

9 Activity and Use Limitations (AULs) in Transactions  Important role that local government can play  New York City’s e-designation process, linking zoning, building permits, and evaluation of residual contamination  City of Emeryville’s One Stop Permitting System  Municipal Setting Designations in Texas

10 Next Steps  Many of the states that have adopted UECA are working on model forms and agreements – no need to recreate the wheel

11 Sample Form Pennsylvania UECA Key Provisions This Environmental Covenant is executed pursuant to the Pennsylvania Uniform Environmental Covenants Act, Act No. 68 of 2007, 27 Pa. C.S. §§ 6501 – 6517 (UECA). This Environmental Covenant subjects the Property identified in Paragraph 1 to the activity and/or use limitations in this document. As indicated earlier in this document, this Environmental Covenant has been approved by the Pennsylvania Department of Environmental Protection (Department).

12 Sample Form Pennsylvania UECA Key Provisions Property Affected. The property affected (Property) by this Environmental Covenant is located in __________ (name of municipality), __________ County. The postal street address of the Property [if any] is: ________ The County Parcel Identification No. of the Property is: ________ The latitude and longitude of the center of the Property affected by this Environmental Covenant is: _________ The Property has been known by the following name(s): ________ A complete description of the Property is attached to this Environmental Covenant as Exhibit A. A map of the Property is attached to this Environmental Covenant as Exhibit B.

13 Sample Form Pennsylvania UECA Key Provisions Property Owner/GRANTOR. __________ is/are the owner(s) of the Property. The mailing address(es) of the Owner(s) is/are: _________________________. Holders [if any other than Owner]/GRANTEE: The following is/are a “holder,” as that term is defined in 27 Pa. C.S. §§ 6501, of this Environmental Covenant: _________________________________ (name and address information)

14 Sample Form Pennsylvania UECA Key Provisions Description of Contamination & Remedy. [as required by 27 Pa. C.S. § 6504(b)(6), briefly describe the contamination of the Property before remedy implementation; the remedy/corrective action undertaken; any administrative record for the environmental response project relating to the Environmental Covenant, the Land Recycling and Remediation Standards Act (Act 2) standard(s) attained; and any other important information, including the name and date of the Final Act 2 or Remedial Action Completion Report approved by the Department. Reference Act 2 and UECA definitions as necessary; e.g., “nonresidential property” excludes schools, nursing homes or other residential-style facilities or recreational areas.]

15 Sample Form Pennsylvania UECA Key Provisions Activity and Use Limitations. The Property is subject to the following activity and use limitations, which the Owner and each subsequent Owner of the Property shall abide by: [describe each specific restriction on land use, such as whether the property can be used only for non-residential purposes, or whether the groundwater may be used as potable water; describe each obligation, such as groundwater monitoring, maintenance of a fence or cap.]

16 Sample Form Pennsylvania UECA Key Provisions Notice of Limitations in Future Conveyances. Each instrument hereafter conveying any interest in the Property subject to this Environmental Covenant shall contain a notice of the activity and use limitations set forth in this Environmental Covenant and shall provide the recorded location of this Environmental Covenant.

17 Sample Form Pennsylvania UECA Key Provisions Compliance Reporting. By the end of [insert interval for reporting determined to be necessary by the Department; e.g., “every January following the effective date of this Environmental Covenant”], the Owner and each subsequent owner shall submit, to the Department and any Holder listed in Paragraph 3, written documentation stating whether or not the activity and use limitations in this Environmental Covenant are being abided by. The Owner and each subsequent owner shall submit, to the Department and any Holder listed in Paragraph 3, written documentation following transfer of the Property, concerning proposed changes in use of the property or proposals for any site work affecting the contamination on the property subject to this Environmental Covenant.

18 Sample Form Pennsylvania UECA Key Provisions Access by the Department. In addition to any rights already possessed by the Department, this Environmental Covenant grants to the Department a right of access of the Property in connection with implementation or enforcement of this Environmental Covenant.

19 Sample Form Pennsylvania UECA Key Provisions Recordation & Proof & Notification. Within 30 days after the date of the Department’s approval, the Owner(s) shall file this Environmental Covenant with the Recorder of Deeds for each County in which the Property is located, and send a file-stamped copy of this Environmental Covenant to the Department within 60 days of recordation. Within that time period, the Owner(s) also shall send a file-stamped copy to each of the following: each Municipality and County in which the Property is located; any Holder identified in this Environmental Covenant; each person holding a recorded interest in the Property; each person in possession of the Property, and ____ (other persons as required by the Department).

20 Sample Form Pennsylvania UECA Key Provisions Termination or Modification. This Environmental Covenant may only be terminated or modified in accordance with Section 9 of UECA, 27 Pa. C.S. § 6509, including as follows: [In some circumstances, it may be appropriate for the covenant to be limited to a specific duration or the occurrence of a specific event. If so, specify those conditions which must occur for the covenant to be terminated, and also indicate that the Department must approve, in writing, the termination.]

21 Questions? Contact: Amy L. Edwards Holland & Knight LLP (202) #