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Use and Enforceability of Institutional Controls in Risk-Based Environmental Cleanups —They’re Cheap and Good Looking, But Will They Last? Patricia J. Winmill and Hal J. Pos Parsons Behle & Latimer Salt Lake City, Utah . For More Information.

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  1. Use and Enforceability of Institutional Controls in Risk-Based Environmental Cleanups—They’re Cheap and Good Looking, But Will They Last? Patricia J. Winmill and Hal J. PosParsons Behle & LatimerSalt Lake City, Utah

  2. For More Information • A paper of the same name, authored by these presenters, can be found at 49 Rocky Mtn. Min. L. Inst. 23-1 (2003).

  3. Pure Polymers (“PURE”) Plant Site Evaporation Pond

  4. = Homes Commercial Park (Former PURE Plant Site) Evaporation Pond Equestrian Park = Golf Course Little Lost Creek

  5. Why Develop This Property? • Brownfields Amendment – Liability Exemptions • Federal • State • Pristine Land Used Up

  6. Little Lost Creek The Selected Remedy:A Risk-Based Cleanup • Excavate Pond Area • Demolition of Operational Facilities • Soil Excavation and Disposal • Action Levels Based on Commercial Land Use Scenario • Groundwater Pumping and Treating • Institutional Controls or Restrictions

  7. The Old Cleanup Paradigm • Cleanup Level: No Known Risk to Human Health or the Environment • Remediated Sites Available for Unrestricted Land Use

  8. Criticisms of the Old Paradigm • Costly and Wasteful • Not Necessary to Cleanup to Residential Standard When Property Won’t Be Used That Way

  9. The New Cleanup Paradigm:“Risk-Based Cleanups” • Cleanup Only to Level Required to Support the Probable Future Use of the Site • Engineered Controls to Limit the Exposure • Institutional Controls to Ensure the Future Use is Consistent with the Level of Cleanup

  10. Advantages of a Risk Based Cleanup • Cheaper • Faster • Human Health and the Environment Protected by Restricting Land Use and Limiting Human Exposure to the Contamination

  11. What Are Institutional Controls? • Legal and Administrative Measures to • Limit Exposure to the Contamination • Protect the Engineered Controls

  12. Types of Institutional Controls • Proprietary Controls • Informational Devices • Governmental Controls

  13. Proprietary Controls • Easements • Real Covenants • Sometimes • Conservation Easements

  14. Informational Devices • Deed Notices • State Registries

  15. Governmental Controls • Most common: • Zoning • Groundwater Use Restrictions

  16. Proprietary Controls Implemented at the Site

  17. Deed Restrictions • Residential Use Prohibition • Excavation Restriction • Well Prohibition • Deeds to Include Notice • EPA Right to Access Site

  18. Governmental Controls Implemented at the Site • Zoning Prohibiting Residential Use • Deed Restriction: Owners Cannot Seek Zoning Change • State Engineer Restrictions on Well Drilling

  19. Risks of a Risk Based Cleanup • Predicting Future Use • Consent Decree • Stipulated Penalties • Additional Remediation • Threat of Toxic Tort/Property Damage Claims

  20. Can the Deed Restrictions be Enforced Against Subsequent Purchasers?Covenants Running With the Land (“Real Covenants”), Equitable Servitudes and Negative Easements

  21. The Law of Real Covenants and Equitable Servitudes — “An Unspeakable Quagmire”

  22. The Real Covenant • Touch and Concern Land • Horizontal and Vertical Privity • Intent that the Covenant Run

  23. The Equitable Servitude • Touch and Concern Land • Intent that the Covenant Run • Successor Must Have Taken with Notice

  24. Vertical Horizontal B A Enforcement C D Privity

  25. Consequences of No Privity • Damages Not an Available Remedy • Can Still be Enforced as an Equitable Servitude

  26. The Primary Issue: Touch and Concern • Most Common Test: Economic Impact • Enhances Land’s Value on the Benefit Side • Diminishes Land’s Value on the Burden Side • Flying Diamond Oil Corp. v. Newton

  27. Tests Are Not a Predictable Gauge • Incoherently Applied • Result Oriented Jurisprudence • Influenced by the Social Utility of the Covenant • Increasingly Lenient, But Still Incoherent

  28. Benefit Burden B A Enforcement D C The Benefited and Burdened Sides of a Covenant

  29. Differing Views on the Running of a Burden • T & C Must be Satisfied on Both Sides • No Need for T&C on the Benefited Side • If No T&C on the Benefited Side, Can’t Run at Law, but Can in Equity • In Utah, Who Knows?

  30. Negative Easements • Gives the Holder the Right to Preclude an Activity From Being Conducted on Another’s Land • Not favored

  31. Easements in Gross • Easements that Do Not Benefit Land • Not Favored

  32. Negative Easements in Gross • Typically Not Enforced Against Subsequent Landowners

  33. So Whether Characterized as a Real Covenant, an Equitable Servitude or a Negative Easement,

  34. To be Enforceable Against Subsequent Owners,

  35. The Restriction Must Benefit Land

  36. Where is the Benefited Land? • EPA Doesn’t Own Any • Pure Won’t Own Any If It Transfers the Entire Parcel

  37. Most Environmental Use Restrictions Do Not Benefit Land • No Residential Use • No Excavation • No Wells • No Zoning Changes • Include Notice of CD and IC’s in All Deeds

  38. Servitudes Are Not Forever • Abandonment, Estoppel, Prescription, Laches • Frustration of Purpose and Changed Conditions • Relative Hardship • Condemnation, Tax Sales, Marketable Record Title Acts

  39. The Law is Changing • The New Restatement • Utah’s Environmental Institutional Control Act • The Uniform Environmental Covenants Act

  40. Restatement Third of Servitudes • No Distinction Between Covenants, Equitable Servitudes and Easements • All Are “Servitudes” and Governed by the Same Rules

  41. Abolishes • The Privity Requirement • The Touch & Concern Requirement of Covenant Law • The Benefited Land Requirement for Negative Easements

  42. Servitudes Enforceable If: • The Covenant is Valid and Does Not Violate Public Policy • The Parties Intended to Bind Subsequent Owners • Subsequent Owner Took With Notice

  43. This is Not Current Law • “The [Restatement] is designed to restate the law of servitudes for the future, rather than to document the past”

  44. And it Has Been Criticized • The Restatement Approach “has quite limited academic and judicial support.” D. Tarlock

  45. Utah’s 2003 Environmental Institutional Control Act§ 19-10-101 et seq.

  46. Problems • Not Retroactive • Only Controls Imposed in a “Cleanup or Risk Assessment” Administered by DEQ • Current Owner and DEQ Can Terminate • Does Not Expressly Say Enforceable Against Successors • Injunctive Relief Only

  47. The Uniform Environmental Covenants Act • Environmental Covenants Run With the Land • Comprehensive Treatment of the Issues

  48. Important Features of the Uniform Act • Only Where an Agency is Involved in the Cleanup • But Not to Be Read As Suggesting Other Covenants Are Unenforceable • Retroactive

  49. More Features • Subordination Agreements • Can Be Enforced by Any Interested Party • Perpetual: Extinguishment Doctrines and Statutes Don’t Apply • No Amendment or Termination without Consent of All Interested Parties

  50. Advice to the ClientOutside of the Regulatory Setting • Advise of the Risk • Careful Drafting

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