When vapor intrusion is identified as a concern and mitigation systems are installed in buildings, the Minnesota Pollution Control Agency (MPCA) is now often requiring that the property owner record an environmental covenant. The covenants ensure that future owners are aware of vapor conditions. Covenants also require the owner to operate and maintain installed systems to prevent vapors from entering into the structure.
Where Are Covenants Used?
Environmental covenants are a type of institutional control used at Brownfield sites where:
- soil or groundwater contamination remains in place
- there are soil vapors concerns
- operations and maintenance obligations will be required into the future for an unspecified length of time
How Does a Covenant Affect Property?
An environmental covenant, which is recorded on county property records, can be used as a tool to restrict activities. Land use may be restricted to industrial or commercial use only. Soil disturbance may be be banned in certain areas. The installation of wells or use of groundwater may be prohibited. Affirmative obligations may also be mandated through a covenant. For example, an asphalt or cement cap over areas of impacts may be required to be maintained. An owner may need to to operate, maintain and monitor remedial actions. Also, continuous operation of a pumping system may be required to prevent migration of contaminated groundwater. Furthermore, a sub-slab depressurization system may need to be operated without interruption to ensure building occupants are not exposed to potentially harmful vapors.
Why Use A Covenant?
At many polluted sites a comprehensive cleanup is not possible. Contamination may be present deep underground. Removing soil impacts or contaminants from groundwater may be technically infeasible or cost prohibitive. When contaminants remain at a site or if a property is located near a disposal site or source of a release, structures on a property may be impacted from harmful soil vapors.
Regulatory authorities review the risks associated with documented contamination on a site-by-site basis. Also, a determination is made whether industrial, commercial or residential end uses are appropriate. In addition, at sites where impacts are not fully remediated, precautions are often required to ensure that risks are properly managed and the health and safety of occupants is not threatened.
An environmental covenant supplements remedial or cleanup measures. Finally, with a covenant in place, property owners, prospective purchasers, tenants, lenders, community members and state and local officials all may have a higher measure of confidence that the affected property can be safely occupied and used productively into the future.
In Use In Minnesota and Across the Country
Environmental covenants are in use in states that have enacted the Uniform Environmental Covenants Act. Minnesota is one of 23 states that have adopted the law[i]. The law was enacted in 2007. Minnesota’s law can be found at: https://www.revisor.mn.gov/statutes/?id=114E In states where the uniform law has not been adopted, state regulatory agencies may use other legal tools to attempt to restrict property use. However, often there are legal impediments to placing restrictions on impaired property. As a result, activity or use restrictions which regulators seek to place on impaired property may not be enforceable.
What Are The Key Terms?
An environmental covenant contains a number of provisions that affect the current and future use of real property. The template for the environmental covenant currently used by the MPCA can be found at: https://www.pca.state.mn.us/sites/default/files/c-rem4-03.pdf
- Once it is recorded, an environmental covenant “runs with the land.” The provisions of a covenant govern the use of the property and generally are in force in perpetuity. Terms can be changed, but only with the agreement of the state regulatory agency and the owner.
- A property may be subject to activity and use restrictions. For example, soil disturbance in certain areas or interference with remedial measures may be prohibited.
- A property owner may also have to perform affirmative obligations. A property owner may be required to maintain, operate and monitor response actions such as the equipment designed to remove tainted groundwater or exhaust harmful soil vapors from beneath a building.
- State and local authorities must be provided with notice. Authorities are typically granted an easement and will enter the property to inspect systems and safeguards.
- The environmental covenant must be disclosed when property is sold or transferred.
- The state agency, in Minnesota, the MPCA, may enforce the environmental covenant by filing a civil action and seeking an injunction. The MPCA may also seek civil penalties under its enforcement authority for violations of the terms of an environmental covenant.
- Moreover, the MPCA requires that an owner (and any successive owner) annually certify compliance with the terms of the Environmental Covenant.
- An environmental covenant needs to be recorded with the Recorder’s Office in the county where the property is located. A correct legal description is required. Also, a description of the background, past investigation and cleanup actions, any ongoing requirements and the location and type of remaining contamination must be included and should be carefully drafted.
Careful Review Recommended
Recording an environmental covenant on property has long-term implications. If the property is subject to a mortgage or financing, notification, consent and further action may be required. Therefore, it is prudent for a property owner to review the terms of an environmental covenant carefully with counsel before it is executed.
Please see the disclaimer at the bottom of this page that relates to limitations on this blog and to legal advice. Thanks to associate Joseph Reutiman for his assistance in preparing this blog. Finally, for information on environmental covenants and how a covenant may affect property, please contact:
Joseph G. Maternowski
Hessian & McKasy, PA
3700 RBC Plaza
60 South Sixth Street
Minneapolis, MN 55402-4437
T: (612) 746-5754
[i] Alabama, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Minnesota, Mississippi, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, South Dakota, U.S. Virgin Islands, Utah, Virginia, Washington, West Virginia