Pennsylvania Enacts Uniform Environmental Covenants Act

The recent enactment of the Pennsylvania Uniform Environmental Covenants Act (UECA) is part of a larger effort to create a uniform, national law regarding the requirements, effectiveness and recording of "environmental covenants" affecting the clean-up or remediation of environmentally contaminated real estate. The UECA went into effect on February 16, 2008. Enactment of the UECA is part of a national effort to create a uniform, national law regarding the requirements, effectiveness, and recording of "environmental covenants" affecting the clean-up or remediation of environmentally contaminated real estate. Some version of the UECA has been enacted in 20 states. Among other things, the act requires current deed restrictions or limitations establishing institutional and/or engineering controls on contaminated properties to be converted to environmental covenants within five years from the effective date of the act.

The UECA addresses both engineering controls and institutional controls, and establishes "environmental covenants" to memorialize, and for the enforcement of, such controls. Generally speaking, engineering controls and institutional controls are physical controls and/or best management practices or use limitations that may allow certain levels of environmental contamination to safely remain on a site after remedial activities are completed as long as such controls are enforced and maintained. The act defines engineering controls as remedial actions directed exclusively toward containing or controlling the migration of regulated substances through the environment, including slurry walls, liner systems, caps, leachate collection systems and groundwater recovery trenches. The act defines institutional controls as measures undertaken to limit or prohibit certain activities that may interfere with the integrity of a remedial action or result in exposure to regulated substances at a site, including fencing and restrictions on the future use of the site, such as, for example, a prohibition on the use of groundwater located on a site or a limitation to non-residential use. As such, using and maintaining institutional and/or engineering controls may substantially reduce the cost of environmental remediation at a site.

Under the UECA, environmental covenants will run with the land and will be perpetual unless terminated pursuant to the act. Additionally, environmental covenants will be enforceable by the Pennsylvania Department of Environmental Protection and the political subdivision where the affected property is located.

The UECA specifically requires that engineering controls or institutional controls required to demonstrate attainment of an environmental remediation standard under the Pennsylvania Land Recycling and Environmental Remediation Standards Act or the Pennsylvania Storage Tank and Spill Prevention Act must be in the form of an environmental covenant under the act. The act sets forth detailed requirements regarding the required content of an environmental covenant, including that it (1) state that the instrument is an environmental covenant executed pursuant to the act; (2) contain a legally sufficient description of the real property subject to the environmental covenant; (3) contain a brief narrative description of the contamination and the remedy; and (4) describe the engineering and institutional controls placed on the property as part of the environmental remediation. The act also provides recording and notice requirements for environmental covenants, including recording the environmental covenant in the real estate records of the county where the property is located. The Pennsylvania Department of Environmental Protection is required to review and approve proposed environmental covenants and to establish and maintain a registry containing all environmental covenants.

As noted above, the act also addresses prior deed restrictions or other instruments setting forth engineering and institutional controls that were placed upon property prior to the effective date of the act. For instruments that created restrictions or obligations regarding real property that would, except for the fact that the instrument was recorded before the effective date of the act, qualify as engineering controls or institutional controls, the act provides that such instruments are not invalid or unenforceable. However, the act also requires that any instruments that were created prior to the effective date of the act in order to demonstrate attainment or maintenance of a remedial standard under the Pennsylvania Land Recycling and Environmental Remediation Standards Act or to demonstrate satisfaction of a corrective action requirements under the Storage Tank and Spill Prevention Act must be converted to an environmental covenant within 60 months of the effective date of the act. However, the act also provides that failure to convert existing restrictions does not invalidate the existing engineering controls and institutional controls.

Although existing controls may not be invalidated by the act, the specific effect of a failure to convert is not otherwise addressed in the UECA (also not addressed is which party should make the conversion, how and why the Department of Environmental Protection might waive a conversion, whether failure to convert would affect the availability of any statutory protections under other acts, etc.). As such, the owners of real property currently subject to engineering and/or institutional controls implemented outside of the format of an environmental covenant should consider the issues raised by the UECA and its potential effect on any previously remediated property in their real estate portfolio. Additionally, given the newly enacted scheme for the department's review and registration of new environmental covenants, owners currently pursuing or considering environmental remediation on their properties should act early to make sure that they are addressing any issues raised by the UECA's requirements.