1 BILL AS INTRODUCED S.184 2 2007 Page 1 3 4 1 S.184
2 Introduced by Senator Illuzzi of Essex-Orleans District, Senator Carris of
3 Rutland District, Senator Condos of Chittenden District,
4 Senator Miller of Chittenden District, and Senator Racine of
5 Chittenden District
6 Referred to Committee on
7 Date:
8 Subject: Conservation; Uniform Environmental Covenants Act
9 Statement of purpose: This bill proposes to adopt the Uniform Environmental
10 Covenants Act, which establishes a process to be used when contaminated real
11 property is to be remedied to a level that is consistent with the potential
12 environmental risks posed by a particular use. The covenant manages the
13 potential risks presented by the residual contamination, and it assures that
14 controls designed to manage the potential environmental risk of residual
15 contamination will be reflected on the land records and effectively enforced
16 over time as a valid real property servitude.
17 AN ACT RELATING TO THE UNIFORM ENVIRONMENTAL 18 COVENANTS ACT
19 It is hereby enacted by the General Assembly of the State of Vermont:
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 2 3 4 1 Sec. 1. LEGISLATIVE FINDINGS
2 The Uniform Environmental Covenants Act allows for the long-term
3 enforcement of remediation measures to be contained in a statutorily defined
4 agreement known as an “environmental covenant,” which will be binding on
5 subsequent purchasers of the property and be listed in the local land records.
6 The fundamental purpose of this act is to remove various legal impediments to
7 the use of such restrictions and to thereby lessen liability concerns of sellers
8 and lenders associated with the redevelopment and sale of contaminated
9 property while at the same time requiring state approval of the remediation and
10 control plan as well as notice to surrounding landowners, local governments,
11 and other parties in interest. By ensuring these “institutional controls” are
12 maintained and enforced, the act helps fulfill the dual purposes of such
13 restrictions: the protection of human health and the economically viable reuse
14 of the property in question. Specifically, the act:
15 (1) helps to return previously contaminated property to the stream of
16 commerce, by allowing the owners of that property to engage in responsible
17 risk-based remediation and then transfer or sell the property subject to
18 state-approved controls on its use.
19 (2) gives a broad array of interested parties the ability to enforce the use
20 and activity restrictions contained in an environmental covenant, thereby
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 3 3 4 1 helping to ensure those controls will remain in place and prevent secondary
2 harms.
3 (3) protects valid environmental covenants from being inadvertently
4 extinguished by application of various common law doctrines, adverse
5 possession, tax lien foreclosures, less-restrictive zoning changes, and
6 marketable title statutes.
7 (4) requires the agency of natural resources to be a signatory to the
8 covenant, thereby ensuring that risk assessments and control mechanisms are
9 based on sound science and adequately protect human health and surrounding
10 properties, and that notice of the covenant and associated controls is provided
11 to affected third parties.
12 (5) does not supplant or impose substantive cleanup standards or
13 liability; rather it validates approved site-specific controls resulting from an
14 environmental response project, and makes sure those controls are maintained
15 as long as necessary to meet the objective for which they were approved.
16 Sec. 2. 10 V.S.A. chapter 166 is added to read:
17 CHAPTER 166. UNIFORM ENVIRONMENTAL COVENANTS ACT
18 § 7201. SHORT TITLE
19 This chapter may be cited as the Uniform Environmental Covenants Act.
20 § 7202. DEFINITIONS
21 In this chapter:
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 4 3 4 1 (1) “Activity and use limitations” means restrictions or obligations
2 created under this chapter with respect to real property.
3 (2) “Agency” means the agency of natural resources or any other
4 federal agency that determines or approves the environmental response project
5 pursuant to which the environmental covenant is created.
6 (3) “Common interest community” means a condominium, cooperative,
7 or other real property with respect to which a person, by virtue of the person’s
8 ownership of a parcel of real property, is obligated to pay property taxes or
9 insurance premiums, or for maintenance, or improvement of other real
10 property described in a recorded covenant that creates the common interest
11 community.
12 (4) “Environmental covenant” means a servitude arising under an
13 environmental response project that imposes activity and use limitations.
14 (5) “Environmental response project” means a plan or work performed
15 for environmental remediation of real property and conducted:
16 (A) under a federal or state program governing environmental
17 remediation of real property, including that under chapter 159 of this title;
18 (B) incident to closure or post-closure of a solid or hazardous waste
19 management unit, if the closure is conducted with approval of an agency; or
20 (C) by a person voluntarily complying with requirements to
21 remediate a site under this title.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 5 3 4 1 (6) “Holder” means the grantee of an environmental covenant as
2 specified in subsection 7203(a) of this title.
3 (7) “Person” means an individual, corporation, business trust, estate,
4 trust, partnership, limited liability company, association, joint venture, public
5 corporation, government, governmental subdivision, agency, or
6 instrumentality, or any other legal or commercial entity.
7 (8) “Record,” used as a noun, means information that is inscribed on a
8 tangible medium or that is stored in an electronic or other medium and is
9 retrievable in perceivable form.
10 (9) “State” means the state of Vermont.
11 § 7203. NATURE OF RIGHTS; SUBORDINATION OF INTERESTS
12 (a) Any person, including a person that owns an interest in the real
13 property, the agency, or a municipality or other unit of local government, may
14 be a holder. An environmental covenant may identify more than one holder.
15 The interest of a holder is an interest in real property.
16 (b) A right of an agency under this chapter or under an environmental
17 covenant, other than a right as a holder, is not an interest in real property.
18 (c) An agency is bound by any obligation it assumes in an environmental
19 covenant, but an agency does not assume obligations merely by signing an
20 environmental covenant. Any other person that signs an environmental
21 covenant is bound by the obligations the person assumes in the covenant, but
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 6 3 4 1 signing the covenant does not change obligations, rights, or protections granted
2 or imposed under law other than this chapter, except as provided in the
3 covenant.
4 (d) The following requirements apply to interests in real property in
5 existence at the time an environmental covenant is created or amended:
6 (1) An interest that has priority under other law is not affected by an
7 environmental covenant unless the person that owns the interest subordinates
8 that interest to the covenant.
9 (2) This chapter does not require a person that owns a prior interest to
10 subordinate that interest to an environmental covenant or to agree to be bound
11 by the covenant.
12 (3) A subordination agreement may be contained in an environmental
13 covenant covering real property or in a separate record. If the environmental
14 covenant covers commonly owned property in a common interest community,
15 the record may be signed by any person authorized by the governing board of
16 the owners’ association.
17 (4) An agreement by a person to subordinate a prior interest to an
18 environmental covenant affects the priority of that person’s interest but does
19 not by itself impose any affirmative obligation on the person with respect to
20 the environmental covenant.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 7 3 4 1 § 7204. CONTENTS OF ENVIRONMENTAL COVENANT
2 (a) An environmental covenant must:
3 (1) state that the instrument is an environmental covenant executed
4 pursuant to this chapter;
5 (2) contain a legally sufficient description of the real property subject to
6 the covenant;
7 (3) describe the activity and use limitations on the real property;
8 (4) identify every holder;
9 (5) be signed by the agency, every holder, and, unless waived by the
10 agency, every owner of the fee simple of the real property subject to the
11 covenant; and
12 (6) identify the name and location of any administrative record for the
13 environmental response project reflected in the environmental covenant.
14 (b) In addition to the information required by subsection (a) of this section,
15 an environmental covenant may contain other information, restrictions, and
16 requirements agreed to by the persons who signed it, including any:
17 (1) requirements for notice following transfer of a specified interest in,
18 or concerning proposed changes in use of, applications for building permits
19 for, or proposals for any site work affecting the contamination on, the property
20 subject to the covenant;
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 8 3 4 1 (2) requirements for periodic reporting describing compliance with the
2 covenant;
3 (3) rights of access to the property granted in connection with
4 implementation or enforcement of the covenant;
5 (4) a brief narrative description of the contamination and remedy,
6 including the contaminants of concern, the pathways of exposure, limits on
7 exposure, and the location and extent of the contamination;
8 (5) limitation on amendment or termination of the covenant in addition
9 to those contained in sections 7209 and 7210 of this title; and
10 (6) rights of the holder in addition to its right to enforce the covenant
11 pursuant to section 7211 of this title.
12 (c) In addition to other conditions for its approval of an environmental
13 covenant, the agency may require those persons specified by the agency who
14 have interests in the real property to sign the covenant.
15 § 7205. VALIDITY; EFFECT ON OTHER INSTRUMENTS
16 (a) An environmental covenant that complies with this chapter runs
17 with the land.
18 (b) An environmental covenant that is otherwise effective is valid
19 and enforceable even if:
20 (1) it is not appurtenant to an interest in real property;
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 9 3 4 1 (2) it can be or has been assigned to a person other than the
2 original holder;
3 (3) it is not of a character that has been recognized traditionally
4 at common law;
5 (4) it imposes a negative burden;
6 (5) it imposes an affirmative obligation on a person having an
7 interest in the real property or on the holder;
8 (6) the benefit or burden does not touch or concern real property;
9 (7) there is no privity of estate or contract;
10 (8) the holder dies, ceases to exist, resigns, or is replaced; or
11 (9) the owner of an interest subject to the environmental
12 covenant and the holder are the same person.
13 (c) An instrument that creates restrictions or obligations with
14 respect to real property that would qualify as activity and use
15 limitations except for the fact that the instrument was recorded before
16 the effective date of this chapter is not invalid or unenforceable because
17 of any of the limitations on enforcement of interests described in
18 subsection (b) of this section or because it was identified as an
19 easement, servitude, deed restriction, or other interest. This chapter
20 does not apply in any other respect to such an instrument.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 10 3 4 1 (d) This chapter does not invalidate or render unenforceable any
2 interest, whether designated as an environmental covenant or other
3 interest, that is otherwise enforceable under the law of this state.
4 § 7206. RELATIONSHIP TO OTHER LAND-USE LAW
5 This chapter does not authorize a use of real property that is
6 otherwise prohibited by zoning, by law other than this chapter
7 regulating use of real property, or by a recorded instrument that has
8 priority over the environmental covenant. An environmental covenant
9 may prohibit or restrict uses of real property which are authorized by
10 zoning or by law other than this chapter.
11 § 7207. NOTICE
12 (a) A copy of an environmental covenant shall be provided by the
13 persons and in the manner required by the agency to:
14 (1) each person that signed the covenant;
15 (2) each person holding a recorded interest in the real property
16 subject to the covenant;
17 (3) each person in possession of the real property subject to the
18 covenant;
19 (4) each municipality or other unit of local government in which
20 real property subject to the covenant is located; and
21 (5) any other person the agency requires.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 11 3 4 1 (b) The validity of a covenant is not affected by failure to provide a
2 copy of the covenant as required under this section.
3 § 7208. RECORDING
4 (a) An environmental covenant and any amendment or termination
5 of the covenant must be recorded in every municipality in which any
6 portion of the real property subject to the covenant is located. For
7 purposes of indexing, a holder shall be treated as a grantee.
8 (b) Except as otherwise provided in subsection 7209(c) of this title,
9 an environmental covenant is subject to the laws of this state governing
10 recording and priority of interests in real property.
11 § 7209. DURATION; AMENDMENT BY COURT ACTION
12 (a) An environmental covenant is perpetual unless it is:
13 (1) by its terms limited to a specific duration or terminated by
14 the occurrence of a specific event;
15 (2) terminated by consent pursuant to section 7210 of this title;
16 (3) terminated pursuant to subsection (b) of this section;
17 (4) terminated by foreclosure of an interest that has priority over
18 the environmental covenant; or
19 (5) terminated or modified in an eminent domain proceeding, but
20 only if:
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 12 3 4 1 (A) the agency that signed the covenant is a party to the
2 proceeding;
3 (B) all persons identified in subsections 7210(a) and (b) of
4 this title are given notice of the pendency of the proceeding; and
5 (C) the court determines, after hearing, that the termination or
6 modification will not adversely affect human health or the
7 environment.
8 (b) If the agency that signed an environmental covenant has
9 determined that the intended benefits of the covenant can no longer be
10 realized, a court, under the doctrine of changed circumstances, in an
11 action in which all persons identified in subsections 7210(a) and (b) of
12 this title have been given notice, may terminate the covenant or reduce
13 its burden on the real property subject to the covenant. The agency’s
14 determination or its failure to make a determination upon request is
15 subject to review pursuant to chapter 220 of this title.
16 (c) Except as otherwise provided in subsections (a) and (b) of this
17 section, an environmental covenant may not be extinguished, limited,
18 or impaired through issuance of a tax deed, foreclosure of a tax lien, or
19 application of the doctrine of adverse possession, prescription,
20 abandonment, waiver, lack of enforcement, or acquiescence, or a
21 similar doctrine.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 13 3 4 1 (d) An environmental covenant may not be extinguished, limited, or
2 impaired by application of subchapter 7 of chapter 5 of Title 27, relating to
3 marketable record title.
4 § 7210. AMENDMENT OR TERMINATION BY CONSENT
5 (a) An environmental covenant may be amended or terminated by
6 consent only if the amendment or termination is signed by:
7 (1) the agency;
8 (2) unless waived by the agency, the current owner of the fee
9 simple of the real property subject to the covenant;
10 (3) each person that originally signed the covenant, unless the
11 person waived in a signed record the right to consent or a court finds
12 that the person no longer exists or cannot be located or identified with
13 the exercise of reasonable diligence; and
14 (4) except as otherwise provided in subdivision (d)(2) of this
15 section, the holder.
16 (b) If an interest in real property is subject to an environmental
17 covenant, the interest is not affected by an amendment of the covenant
18 unless the current owner of the interest consents to the amendment or
19 has waived in a signed record the right to consent to amendments.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 14 3 4 1 (c) Except for an assignment undertaken pursuant to a
2 governmental reorganization, assignment of an environmental covenant
3 to a new holder is an amendment.
4 (d) Except as otherwise provided in an environmental covenant:
5 (1) a holder may not assign its interest without consent of the
6 other parties;
7 (2) a holder may be removed and replaced by agreement of the
8 other parties specified in subsection (a) of this section; and
9 (3) a court of competent jurisdiction may fill a vacancy in the
10 position of holder.
11 § 7211. ENFORCEMENT OF ENVIRONMENTAL COVENANT
12 (a) A civil action for injunctive or other equitable relief for
13 violation of an environmental covenant may be maintained by:
14 (1) a party to the covenant;
15 (2) the agency;
16 (3) any person to whom the covenant expressly grants power to
17 enforce;
18 (4) a person whose interest in the real property or whose
19 collateral or liability may be affected by the alleged violation of the
20 covenant; or
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 15 3 4 1 (5) a municipality or other unit of local government in which the
2 real property subject to the covenant is located.
3 (b) This chapter does not limit the regulatory authority of any state
4 or federal agency charged with enforcement of environmental laws
5 other than this chapter with respect to an environmental response
6 project.
7 (c) A person is not responsible for or subject to liability for
8 environmental remediation solely because it has the right to enforce an
9 environmental covenant.
10 § 72 12. REGISTRY; SUBSTITUTE NOTICE
11 (a) The agency of natural resources shall establish and maintain a
12 registry that contains all environmental covenants and any amendment
13 or termination of those covenants. The registry may also contain any
14 other information concerning environmental covenants and the real
15 property subject to them which the agency of natural resources
16 considers appropriate. The registry is a public record for purposes of
17 subchapter 3 of chapter 5 of Title 1, pertaining to access to public
18 records.
19 (b) After an environmental covenant or an amendment or
20 termination of a covenant is filed in the registry established pursuant to
21 subsection (a) of this section, a notice of the covenant, amendment, or
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 16 3 4 1 termination that complies with this section may be recorded in the land
2 records in lieu of recording the entire covenant. Any such notice must
3 contain:
4 (1) a legally sufficient description and any available street
5 address of the real property subject to the covenant;
6 (2) the name and address of the owner of the fee simple interest
7 in the real property, the agency, and the holder if other than the agency;
8 (3) a statement that the covenant, amendment, or termination is
9 available in a registry at the agency of natural resources, which
10 discloses the method of any electronic access; and
11 (4) a statement that the notice is notification of an environmental
12 covenant executed pursuant to this chapter.
13 (c) A statement in substantially the following form, executed with
14 the same formalities as a deed in this state, satisfies the requirements of
15 subsection (b) of this section:
16 “ 1. This notice is filed in the land records of the Town of [insert
17 name of jurisdiction in which the real property is located] pursuant to
18 10 V.S.A. § 7212.
19 2. This notice and the covenant, amendment, or termination to
20 which it refers may impose significant obligations with respect to the
21 property described below.
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 17 3 4 1 3. A legal description of the property is attached as Exhibit A to
2 this notice. The address of the property that is subject to the
3 environmental covenant is [insert address of property][not available].
4 4. The name and address of the owner of the fee simple interest
5 in the real property on the date of this notice is [insert name of current
6 owner of the property and the owner’s current address as shown on the
7 tax records of the municipality in which the property is located].
8 5. The environmental covenant, amendment, or termination was
9 signed by [insert name and address of the agency].
10 6. The environmental covenant, amendment, or termination was
11 filed in the registry on [insert date of filing].
12 7. The full text of the covenant, amendment, or termination and
13 any other information required by the agency is on file and available
14 for inspection and copying in the registry maintained for that purpose
15 by the agency of natural resources at [insert address and room of
16 building in which the registry is maintained]. The covenant,
17 amendment, or termination may be found electronically at [insert web
18 address for covenant].”
5 www.leg.state.vt.us 1 BILL AS INTRODUCED S.184 2 2007 Page 18 3 4 1 § 72 13. UNIFORMITY OF APPLICATION AND CONSTRUCTION
2 In applying and construing this uniform act, consideration must be
3 given to the advantages of promoting uniformity of the law, where
4 appropriate, with respect to its subject matter among states that enact it.
5 § 72 14. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL
6 AND NATIONAL COMMERCE ACT
7 This chapter modifies, limits, or supersedes the federal Electronic
8 Signatures in Global and National Commerce Act (15 U.S.C. § 7001
9 et seq.) but does not modify, limit, or supersede Section 101 of that act
10 (15 U.S.C. § 7001(a)) or authorize electronic delivery of any of the
11 notices described in Section 103 of that Act (15 U.S.C. § 7003(b)).
12 Sec. 3. 27 V.S.A. § 606 is amended to read:
13 § 606. LIMITATION OF ACTIONS
14 Nothing in this subchapter shall extend the periods for the bringing
15 of an action or suit or for the doing of any act required under existing
16 statutes of limitation, nor affect the operation of existing statutes
17 governing the effect of the recording of or of the failure to record
18 instruments affecting real estate. Nothing in this subchapter shall affect
19 environmental covenants entered under the Uniform Environmental
20 Covenants Act established in 10 V.S.A. chapter 166.
5 www.leg.state.vt.us