The Uniform Environmental Covenants Act: What Does It Mean for Your State?
A solution is on the horizon, however. A national body, the National Conference of Commissioners on Uniform State Laws (NCCUSL), has enacted a uniform model law that will provide a better tool for implementing and enforcing land use restrictions in the future. This tool, called an environmental covenant in the act, is one type of legal tool that can be used to restrict activities and impose affirmative obligations when contamination has been allowed to remain in place. Similar land use restrictions are sometimes called institutional controls, land use controls, environmental easements, proprietary controls, and activity and use limitations. These tools are necessary to protect human health and the environment against inadvertent exposures to residual contamination while encouraging economic redevelopment.
Risk-based cleanups (reflecting the fact that the level of cleanup is determined by the environmental risks posed by the current or future anticipated use of the site, rather than an assumption that unrestricted use of the site will be permitted) are an important tool in the nation’s efforts to clean up contaminated property and return that property to economic use. While the general goal of most cleanups is to return the site to a condition where it can be safely used for any purpose, this is not always technically possible or economically practical. When a site is not cleaned up completely, land use restrictions may be used to supplement affirmative cleanup measures. However, many states do not have laws providing them with power to create, enforce, or modify these legal restrictions, and other states have laws that may not be adequate to ensure that these restrictions will last as long as they are needed.
In those instances where there are no state laws, parties are forced to rely on what is known as the “common law” – property law that has been developed and interpreted by the courts over a very long period of time. The common law has substantial limitations in terms of who may enforce the restrictions, how long the restrictions may last, and the formalities that must be followed in order to create the restrictions in the first place.
Beginning in 2001, a task group in NCCUSL1 began to develop a model law, fondly known as UECA (Uniform Environmental Covenant Act), that would strengthen practices in an area that involves elements of both real estate and environmental law. The model law would establish a process for creating, modifying and enforcing environmental covenants and thereby eliminate some of the common law barriers that have prevented land use restrictions from enduring over time.
Why Do We Need a Uniform Environmental Covenant Act?
Very few states have enacted laws that allow them to impose restrictions on land when contamination remains. Even in those states where some legal authority exists, the laws are frequently limited to a specific area (such as underground storage tanks) and do not anticipate other issues that may arise under the law. For example, assume the following: a local government wants to condemn industrial property in order to build a day care center. This former manufacturing site has been restricted to industrial uses only in a voluntary cleanup action, and the regulatory agency has determined that the residual contamination will not be harmful to humans as long as it is used for industrial purposes. Will those restrictions be eliminated when the condemnation action has been completed? Without the benefit of a statute like UECA, that is precisely what would happen.
In states that have not passed any legislation to address land use restrictions, the parties to a transaction are forced to rely on the common law to try to impose the restrictions. Using the common law is a difficult way to impose these restrictions, because only a limited number of parties may become a party to the restriction (“dominant and servient estates”), the restrictions lapse after a certain period of time (the Marketable Title Act), and it is difficult to impose affirmative obligations (sometimes referred to as “spurious” easements), such as the duty to operate a pump and treat system or to inspect an engineering cap. In many states, environmental agencies do not currently have a direct right to enter, inspect and enforce compliance with environmental covenants, particularly after land has been sold.
What Would the Uniform Environmental Covenants Act Do?
Under the common law, land use restrictions are subject to specific, and albeit confusing, legal requirements stemming from hundreds of years of property law. Also under the common law, environmental agencies cannot typically become involved in creating or enforcing an environmental covenant because they have no legal interest in the property itself or in an adjoining property (“appurtenant interest”). This makes it difficult to promote economic development and protect the community because the environmental agency has no way to ensure that the restrictions will remain in place and be enforced as long as the restrictions are needed.
If a state adopts the model law, many of these archaic common law rules will be overcome by statute. UECA would create a statutory mechanism for creating, modifying, enforcing and terminating environmental covenants. The environmental covenants created under UECA would be based upon traditional property law principles and would be recorded in the local land records and bind successive owners of the property. State and local governments, and potentially others, would have clear rights to enforce the land use restrictions and thereby ensure with greater certainty the protection of human health and the environment throughout the life of the land use restriction and through various real estate transactions or legal snags.
The Act addresses a number of circumstances where the restrictions might otherwise be accidentally eliminated, including
- foreclosure and bankruptcy
- eminent domain
- adverse possession
- Marketable Title Act
The Act also addresses important legal issues, such as:
- third-party enforcement
- recording and tracking
Additionally, the model law would apply to cleanups conducted under a state voluntary cleanup program, as well as to cleanups conducted under the direct supervision of a federal or state environmental agency.
What Will the Model Law Mean for Communities?
UECA provides a viable structure for creating and maintaining environmental land use restrictions as long as they may be needed. Having a viable mechanism for creating these legal restrictions will reduce the risk that people will be inadvertently exposed to contamination that has been left in place. With confidence that the restrictions can be properly created and maintained over time, environmental regulators, property owners, local governments, environmental groups, developers, lenders and title companies will be more willing to rely on, and have confidence in, environmental covenants as part of the cleanup. Creating viable state laws to create these restrictions will encourage the reuse of property that might otherwise lie underutilized or abandoned, thereby providing a benefit to all parties involved.
The public would have notice of the existence of the environmental covenant, either through the local land records, where the covenant must be recorded, or through a registry to be maintained by the state environmental agency. Thus, the community can become involved in monitoring these environmental covenants over time – sometimes called “long-term stewardship” of the land.
Can UECA Be Used Now?
The benefits of UECA would not automatically apply to land use restrictions adopted under current state laws or the common law. The passage of the model law would similarly not invalidate any of those existing land use restrictions. However, adoption of the model law in any given state would give that state clear authority to implement, monitor, modify and enforce environmental covenants. It would also give third parties the right to monitor and enforce these controls. Given the importance of these controls to the success of the brownfields movement, it is critically important to fill this gap in the current law.
UECA Status as of May 6, 2005
|Ohio||ENACTED 12/22/04||HB 516|
|Connecticut||Introduced||HB 5612 (Stone)|
|District of Columbia||Introduced||B16-0147 (Mendelson)|
|Hawaii||Introduced||SB 1167 (Hee); HB 1706 (Morita)|
|Nebraska||ENACTED 3/22/05||LB 298 (Landis)|
|South Dakota||ENACTED 3/9/05||HB 1195 (O’Brien); SB 143 (Knudson)|
|Iowa||ENACTED 5/4/05||SF 375|
|Kentucky||ENACTED 3/16/05||HB 472|
|Maryland||ENACTED 4/26/05||HB 679 (McIntosh)|
|Minnesota||Introduced||HF 1154 (Emmer); SF 1426 (Hottinger)|
|Introduced||SB 263 (Care, Titus, Ohrenschall)|
|New Jersey Bill||being drafted|
|New Mexico||Introduced||HB 889 (Heaton)|
|Oregon||Introduced||HB 3286 (Scott)|
|U.S. Virgin Islands Bill||being drafted|
|West Virginia||ENACTED 4/28/05||SB 406 (Dempsey and Unger)|
* The text of this article is based upon a brochure developed by Amy L. Edwards, David Borak, and others for the National IC Coalition (NICC). Members of the Coalition include the International City/County Management Association (ICMA), the American Chemistry Council (ACC), the American Petroleum Institute (API), Holland & Knight LLP, the U.S. Navy, the National Governors Association (NGA), the National Brownfields Association (NBA), the Environmental Bankers Association (EBA), the Environmental Law Institute (ELI), and Energy Communities Alliance (ECA). For further information about NICC, please contact David Borak at ICMA (202.962.3506) or Lorraine Krupa-Gershman at ACC (703.741.5219).
1 NCCUSL is a body of legal professionals that represent all 50 states. In drafting uniform laws like the UECA, NCCUSL considers feedback from federal and state regulators, parties legally responsible for environmental cleanup, property owners, environmental groups, real estate and environmental lawyers, title companies, potential property buyers, banks, and municipalities. In August 2003, the UECA was adopted by the entire Conference as a model law to be recommended to state legislatures in order to improve current practices and procedures in this area of environmental law.