ALABAMA JOINS OTHER STATES IN ENACTING UNIFORM ENVIRONMENTAL COVENANTS ACT
Alabama joined a number of other states dealing with environmental covenants when it enacted the Alabama Uniform Environmental Covenants Act, effective January 1, 2008. Ala. Code§35-19-1 et seq. (“Act”).The Alabama Department of Environmental Management (“ADEM”) has been working on implementing regulations, which are expected to mimic the Act and be released in the next few months. ADEM will also charge a fee for implementation and oversight of the program and covenants.
For those not familiar with the concept, in many situations environmental contamination cannot be completely addressed by total removal (clean closure) of the offending soil or remediation of the groundwater to a level allowed for unrestricted use. Some amount or concentration of contamination must be left behind. In those situations, EPA and ADEM will require additional measures, such as land use controls or continuing monitoring and maintenance. The idea is that if property has contamination on it unsuitable for a residential housing development or the construction of a school, those interested in buying or developing the property are put on notice of the limit of the property to commercial or industrial use. These controls and obligations are often embodied in deed restrictions or recorded declarations which could be terminated by various common law mechanisms; therefore, the Uniform Environmental Covenants Act was created to provide a mechanism by which environmental covenants and land use restrictions survive the potential fatal operations of the common law. States were encouraged to adopt the uniform act, and Alabama has now done so.
An “Environmental Covenant” is defined as “[a] servitude arising under an environmental response project that imposes activity and use limitations.” Ala. Code § 35-19-2(5). Such “environmental response projects” can arise under state or federal hazardous waste cleanup laws, such as CERCLA, RCRA, or Alabama’s version of brownfields.
Before the Act was passed, ADEM still required a restrictive covenant or deed of some kind when contaminants were being left behind, but it was never sure what might happen to the restriction upon a subsequent sale of the property because it had no enforcement authority. If the property changed hands several times, there was no manner by which ADEM could require the Seller and the Buyer to maintain that restriction as a part of the sale. With the Act, there is a “holder” of the covenant which can enforce the covenant, and ADEM has enforcement power even if it is not a holder. A holder can be any person, a governmental agency (such as ADEM), an environmental group, or a unit of local government. The interest of a holder is considered to be an interest in real property; however, the Department’s interest in a covenant, unless it becomes a holder, will not be considered to be an interest in real property. There are certain elements that each covenant must meet in order to be effective, and those are clearly set out in the Act. Importantly, each environmental covenant requires at least one holder, and a holder can be the fee simple owner and/or the grantor of the covenant.
If, at the time an environmental covenant is recorded or registered, the Act does not abrogate the common-law doctrine of “first in time, first in right” as it relates to prior and valid property interests. If there are other interests in the subject real property with priority over the covenant, unless the prior interest in the property is made subordinate to the covenant by the owner of such interest, then the prior interest is not affected.
The grantor of an environmental covenant has a statutory responsibility to notify certain persons or entities of the covenant. Specifically, the grantor must provide a copy of the covenant to (i) each person signing the covenant; (ii) each person with a “recorded interest” in the subject property; (iii) each tenant or person in possession of the subject property; and (iv) each county or municipality in which the real property is located (normally the county or municipal office where deeds are recorded, such as the probate office). You also have the option of filing the covenant with ADEM (it keeps a registry), and then filing a notice with the county probate office in lieu of the entire covenant.
Environmental covenants are perpetual although there are exceptions set out in the Act, such as if the covenant itself has a specified length of time, a condition allowing termination is satisfied, or a court is petitioned for its modification. Of course, one always has the option of conducting additional remediation of the property to reach unrestricted use standards, which would then allow for termination of the covenant.
The author wishes to acknowledge the contributions made to this article by Bryan Nichols of Maynard, Cooper & Gale, P.C.
Connecticut Department of Environmental Protection Submits RGGI Regulations for Legislative Approval
The Connecticut Department of Environmental Protection (“DEP”) has submitted for legislative approval regulations to control carbon dioxide (CO2) emissions and establish a CO2 emissions credit program.[i] The controversial regulations are designed to fulfill Connecticut’s commitment to the Regional Greenhouse Gas Initiative (“RGGI”), which establishes a CO2 emissions cap and trade program for power plants in nine Northeastern and Mid-Atlantic states.[ii] RGGI is designed to be a model for a broader, national market-driven program to establish a market value for greenhouse gas (“GHG”) emissions to provide incentives for reducing GHG emissions over the long term.
Carbon dioxide is the most significant GHG by volume. Unlike many other pollutants emitted by the combustion of fossil fuels, there are no commercially available control technologies to limit CO2 emissions. Therefore, programs to reduce GHG emissions focus on improving energy efficiency, reducing the use of fossil fuels through conservation efforts, and using renewable and alternative fuels.
[i] Proposed Conn. Agencies Regs. § 22a-174-31 and 31a.
[ii] Information about RGGI can be found at http://rggi.org.
Delaware Environmental Law Update
On May 15, 2008, Delaware enacted legislation that will affect the transfer or closing of facilities in Delaware where chemical or hazardous substances have been or are located. The legislation establishes three principal requirements for affected facilities. First, prior to the transfer of a facility, the parties to the transaction must conduct "All Appropriate Inquiry" as defined in Delaware's Hazardous Substances Cleanup Act, and all documents prepared or identified pursuant to such inquiry must be submitted to the Department of Natural Resources and Environmental Control (DNREC). Second, if an affected facility terminates its operations or files for bankruptcy, certain requirements must be completed no later than 90 days after termination of all business or activities at the facility, including certification of the removal of the chemicals or hazardous substances from the facility. Third, financial assurance will be required for transferred facilities or new facilities, in an amount to ensure that, upon termination, abandonment or liquidation of activities at the facility, all appropriate means will be taken to stabilize and secure the facility.
The legislation will become effective upon the promulgation by DNREC of facility transfer regulations. DNREC will begin the development of regulations to implement this legislation in late summer or early fall and is expected to promulgate regulations in early 2009.
If you have any questions about this Delaware Corporate Update , or other legal issues, please contact a Richards, Layton & Finger attorney.
Evans v. Walter Industries, Inc. - The Heightened Pleading Standards Announced In Bell Atlantic v. Twombly Apply To Toxic Tort Cases
I. Introduction
On May 21, 2007, the U.S. Supreme Court, in Bell Atlantic Corporation v. Twombly, 127 S.Ct. 1955; 167 L.Ed. 2d 929, announced a new standard for testing the sufficiency of pleadings in the face of a motion to dismiss. The Court set aside the rule in Conley v. Gibson, 355 US 41; 78 S.Ct. 99; 2 L.Ed. 80 (1957), which held that a complaint should not be dismissed unless it could be shown that it was not possible, pursuant to the pleadings, to demonstrate any set of facts which would support recovery; instead, the Court said that the appropriate test was whether the allegations of the complaint, if taken as true, would support the conclusion that recovery was “plausible.” In overruling Conley, the Court said, of the “possible” standard, “*** after puzzling the profession for 50 years, this famous observation has earned its retirement. The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard ****.”
Bell Atlantic was an anti-trust case based on the Sherman Anti-Trust Act. Many commentators suggested that the Bell Atlantic standard would only apply to matters (such as anti-trust) where the requirements of a statute dictated specific pleading requirements, that the Court had not intended to completely change the standards for testing the sufficiency of complaints.
Shortly after the Bell Atlantic decision, the U.S. District Court for the Northern District of Alabama was faced with the question in Evans v. Walter Industries, case no. 1:05-CV-01017-KOB. The Alabama court held the “plausible” standard applicable to a putative class action toxic tort case and it dismissed the case, with prejudice, against one of the Defendants.
As noted below, this decision could have significant implications in other Superfund cases if the federal courts, generally, reach the same conclusion.
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