PA Brownfields and Environmental Covenants
Well, it took a long time, but Pennsylvania has now adopted the Uniform Environmental Covenants Act (UECA). The Act was signed on December 18, 2007 by Governor Rendell and it will be effective on February 16, 2008, so you need to be ready.
Right off the bat, I'll say that everyone who deals with brownfield properties in Pennsylvania -- lawyers, consultants, developers, municipalities -- needs to understand that this Act fundamentally changes the manner in which institutional and engineering controls will be handled in the Commonwealth. Up until now, when a property has environmental contamination and a deed notice or deed restriction is required under Pennsylvania law (for example, by the Solid Waste Management Act or the Hazardous Sites Cleanup Act), a notice or restriction would have to be placed in the deed at the time of conveyance. Under certain statutes (Act 2, Storage Tank Act), the deed notice or deed restriction would be included in the deed in conjunction with the remediation. The deed notice or deed restriction generally described the contamination, identified the location on the property, and also noted whether there were any limitations on the future use of the property. For example, the deed notice could state that the groundwater at the property was contaminated with TCE, that the PADEP had approved a final report that demonstrated that the property had attained the Site Specific Standard under PA's Land Recycling Act, and that the groundwater was not to be used for drinking water purposes unless the residential statewide health standard was attained in the future. That language placed in the deed was all that was required to be a valid institutional control and acceptable under PA law. That is no longer the case.
I'm not going to summarize every provision in the Act. My goal is to make you aware of the most significant changes brought about by the adoption of the Uniform Environmental Covenants Act. Here are the most significant points as I see them:
- Instead of preparing a deed notice or deed restriction and putting it in the deed, you will now have to draft an environmental covenant and get it approved by PADEP. A covenant will be required for any remediation done under a federal or state program governing environmental remediation of property, specifically including remediation done under Act 2 and the PA Storage Tank Act. PADEP will actually have to sign the covenant (but it would be deemed approved if PADEP doesn't sign it within 90 days of receipt).
- A copy of the environmental covenant will need to be provided to all persons owning or occupying the property and who have a recorded interest in the property. A copy of the covenant also needs to be sent to each political subdivision in which the property is located. It has to be recorded in every county in which a portion of the property subject to the environmental covenant is located.
- The environmental covenant is perpetual, unless certain conditions are met that allow it to be terminated.
- A civil action can be brought for injunctive or other equitable relief to enforce an environmental covenant.
- PADEP and the political subdivision in which the real property is located both have the right to sue to enforce the environmental covenant.
- The Act requires PADEP to establish and maintain a registry for all of the environmental covenants, and people can reference the availability of the covenant in the registry when preparing deed notices.
- Going forward, every cleanup under Act 2 and the PA Storage Tank Act that uses engineering and institutional controls to attain one of the standards, will need to have an environmental covenant.
- All deed notice and deed restrictions that are currently in place that establish activity and use limitations (for all practical purposes any engineering and institutional controls) will need to be converted to an environmental covenant within 60 months of the Effective Date (by February 16, 2013).
I told you this would mean big changes. It will no longer be business as usual when it comes to engineering and institutional controls. The biggest change is that PADEP will now be reviewing, approving and signing the actual document that imposes the institutional and engineering controls. While PADEP did review and approve proposed deed notice language, in reviewing and approving final reports, they never signed the instrument that was recorded. We'll have to see how PADEP handles that new administrative responsibility. For example, who on PADEP's staff will be responsible for reviewing and signing the covenant? Will it be the project manager, the program manager, or an attorney? Will they be reviewed and signed at the regional level or will all the covenants be reviewed and signed in Central Office? None of those things are spelled out in the Act, but it does give the EQB the authority to develop regulations for the proper performance of the work of the Department. Clearly, the question is whether the Department has the resources necessary to review all of the covenants that could be filed under the Act. The second biggest change is giving PADEP and the municipality the right to enforce the covenants. There has always been concern that there was little anyone could do if institutional and engineering controls weren't being followed. For example, if a final report was approved with an engineering control that said a fence was to be placed around a waste area or an asphalt cap had to be maintained on top of some remaining contamination, there was very little that was being done to police those things. Now, I could see the Department or the municipality going back to sites and bringing action to enforce the covenants, and remediators have to understand that is exactly what is contemplated by the statute. It's possible that the Department might decide to perform routine, random audits of the covenants and take action based on those results. One thing they need to avoid is the perception of selective enforcement. Whether and how municipalities would enforce the covenants is another matter. I guess we'll just have to wait and see what transpires on that front. The other thing for people out there to think about is the process of converting existing deed notices and deed restrictions that contain institutional and engineering controls into covenants. While I don't expect anyone to run out and do that, it would probably be prudent for landowners that have large portfolios of property to start looking at how the UECA will effect those properties, and think about inventorying the instruments that will need to be converted to covenants and start to put in a long term procedure for doing that. It may make sense, however, for those entities to wait and see if the EQB and PADEP put together new regulations. After all, five years is a very generous transition period.
I didn't see anything on PADEP's website acknowledging that the Act was adopted. Maybe they are planning on rolling out some instructions between now and February 16, 2008 when the Act becomes effective. If I see anything, I'll include that in future posts.
