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SF 1051

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

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A bill for an act
relating to environment; adopting the Uniform Environmental Covenants Act;
amending Minnesota Statutes 2006, sections 115.072; 115B.17, subdivision 15;
proposing coding for new law as Minnesota Statutes, chapter 114E.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [114E.01] SHORT TITLE.
new text end

new text begin This chapter may be cited as the Uniform Environmental Covenants Act.
new text end

Sec. 2.

new text begin [114E.05] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of this chapter, the definitions in this
subdivision have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Activity and use limitations. new text end

new text begin "Activity and use limitations" means
restrictions or obligations with respect to real property that are associated with an
environmental response project.
new text end

new text begin Subd. 3. new text end

new text begin Common interest community. new text end

new text begin "Common interest community" means a
common interest community as defined in chapter 515B.
new text end

new text begin Subd. 4. new text end

new text begin Environmental agency. new text end

new text begin "Environmental agency" means the Pollution
Control Agency, Agriculture Department, or another state or federal agency that
determines or approves the environmental response project pursuant to which the
environmental covenant is created.
new text end

new text begin Subd. 5. new text end

new text begin Environmental covenant. new text end

new text begin "Environmental covenant" means a servitude
created under this chapter that imposes activity and use limitations.
new text end

new text begin Subd. 6. new text end

new text begin Environmental response project. new text end

new text begin "Environmental response project"
means a plan or work performed to clean up, eliminate, investigate, minimize, mitigate, or
prevent the release or threatened release of contaminants affecting real property in order to
protect public health or welfare or the environment, including:
new text end

new text begin (1) response or corrective actions under federal or state law, including chapters 115B,
115C, 115E, and 116, and the Comprehensive Environmental Response, Compensation
and Liability Act, United States Code, title 44, section 9601, et seq.;
new text end

new text begin (2) corrective actions or response to agricultural chemical incidents under chapters
18B, 18C, 18D, and 18E; and
new text end

new text begin (3) closure, contingency, or corrective actions required under rules or regulations
applicable to waste treatment, storage, or disposal facilities or to above or below ground
tanks.
new text end

new text begin Subd. 7. new text end

new text begin Holder. new text end

new text begin "Holder" means any person identified as a holder of an
environmental covenant as specified in section 114E.10, paragraph (a).
new text end

new text begin Subd. 8. new text end

new text begin Person. new text end

new text begin "Person" means an individual, corporation, business trust, estate,
trust, partnership, limited liability company, association, joint venture, public corporation,
political subdivision or special purpose unit of government, agency, or instrumentality of
the state or federal government, or any other legal or commercial entity.
new text end

new text begin Subd. 9. new text end

new text begin Record. new text end

new text begin "Record," used as a noun, means information that is inscribed on
a tangible medium or that is stored in an electronic or other medium and is retrievable
in perceivable form.
new text end

new text begin Subd. 10. new text end

new text begin Recorded. new text end

new text begin "Recorded" means recorded with the county recorder or
registrar of title, as applicable, in each county where the real property is located.
new text end

new text begin Subd. 11. new text end

new text begin State. new text end

new text begin "State" means a state of the United States, the District of Columbia,
Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject
to the jurisdiction of the United States.
new text end

Sec. 3.

new text begin [114E.10] NATURE OF RIGHTS; ROLE OF ENVIRONMENTAL
AGENCY; SUBORDINATION OF INTERESTS.
new text end

new text begin (a) Any person, including a person that owns an interest in the real property subject to
the environmental convenant, the environmental agency, or any other political subdivision
or unit of local government, may be a holder. An environmental covenant may identify
more than one holder. The interest of a holder is an interest in real property. The holder is
the grantee of the real property interest conveyed under an environmental covenant.
new text end

new text begin (b) Unless an environmental agency is a holder, any right that the agency may have
with respect to an environmental covenant does not constitute an interest in real property.
Approval of an environmental covenant does not make the environmental agency a holder
unless it has authority under law other than this chapter to acquire an interest in real
property for purposes related to an environmental response project and it is expressly
identified as a holder in the environmental covenant.
new text end

new text begin (c) An environmental agency is bound by any obligation it assumes in an
environmental covenant, but an environmental agency does not assume obligations merely
by signing an environmental covenant. As provided in section 114E.15, an environmental
covenant is not valid unless signed by the environmental agency and the environmental
agency may set reasonable conditions for its approval of an environmental covenant.
When the environmental agency is a federal agency, the covenant must also be approved
and signed by the state environmental agency that has authority under state law to address
the release or threatened release involved in the environmental response project. Any
other person that signs an environmental covenant is bound by the obligations the person
expressly assumes in the covenant, but signing the covenant does not change obligations,
rights, or protections granted or imposed under law other than this chapter except as
provided in the covenant.
new text end

new text begin (d) The following rules apply to interests in real property in existence at the time an
environmental covenant is created or amended:
new text end

new text begin (1) an interest that has priority under other law is not affected by an environmental
covenant unless the person that owns the interest subordinates that interest to the covenant;
new text end

new text begin (2) this chapter does not require a person that owns a prior interest to subordinate
that interest to an environmental covenant or to agree to be bound by the covenant;
new text end

new text begin (3) a subordination agreement may be contained in an environmental covenant or
in a separate record that is recorded. If the environmental covenant covers commonly
owned property in a common interest community, the environmental covenant or the
subordination agreement may be signed by any person authorized by the governing board
of the owners' association; and
new text end

new text begin (4) an agreement by a person to subordinate a prior interest to an environmental
covenant affects the priority of that person's interest but does not by itself impose any
affirmative obligation on the person with respect to the environmental covenant.
new text end

Sec. 4.

new text begin [114E.15] CONTENTS OF ENVIRONMENTAL COVENANT.
new text end

new text begin (a) An environmental covenant must:
new text end

new text begin (1) state on its first page that the instrument is an environmental covenant executed
pursuant to this chapter;
new text end

new text begin (2) contain a legally sufficient description of the real property subject to the covenant;
new text end

new text begin (3) describe the activity and use limitations on the real property;
new text end

new text begin (4) identify every holder;
new text end

new text begin (5) be signed and acknowledged by the environmental agency, every holder, and
every owner of the fee simple title to the real property subject to the covenant; and
new text end

new text begin (6) identify the name and location of any administrative record for the environmental
response project reflected in the environmental covenant.
new text end

new text begin (b) In addition to the information required by paragraph (a), an environmental
covenant may contain other information, restrictions, and requirements agreed to by
the persons who signed it, including any:
new text end

new text begin (1) requirements for notice of any transfer of a specified interest in, or concerning
proposed changes in use of, applications for building permits for, or proposals for any
site work affecting the contamination or the environmental response project on, the real
property subject to the covenant;
new text end

new text begin (2) requirements for periodic reporting describing compliance with the covenant;
new text end

new text begin (3) rights of access to the real property granted in connection with implementation
or enforcement of the covenant;
new text end

new text begin (4) a brief narrative description of the contamination and environmental response
project, including the contaminants of concern, the pathways of exposure, limits on
exposure, and the location and extent of the contamination;
new text end

new text begin (5) limitation on amendment or termination of the covenant in addition to those
contained in sections 114E.40 and 114E.45;
new text end

new text begin (6) rights of the holder in addition to its right to enforce the covenant pursuant
to section 114E.50; and
new text end

new text begin (7) waiver of a party's right to consent to the amendment or termination of a
covenant under section 114E.45, paragraph (a), clause (3).
new text end

new text begin (c) The environmental agency may set reasonable conditions for its approval of an
environmental covenant, including:
new text end

new text begin (1) requiring that persons specified by the agency that have interests in the real
property also sign the covenant;
new text end

new text begin (2) requiring that a person who holds a prior interest in the real property subject to
the covenant agree to subordinate that interest where applicable; and
new text end

new text begin (3) requiring the inclusion within the text of the covenant information, restrictions,
or requirements as described in paragraph (b).
new text end

Sec. 5.

new text begin [114E.20] VALIDITY; EFFECT ON OTHER INSTRUMENTS.
new text end

new text begin (a) An environmental covenant created under this chapter runs with the land.
new text end

new text begin (b) An environmental covenant that is otherwise effective is valid and enforceable
even if:
new text end

new text begin (1) it is not appurtenant to an interest in real property;
new text end

new text begin (2) it can be or has been assigned to a person other than the original holder;
new text end

new text begin (3) it is not of a character that has been recognized traditionally at common law;
new text end

new text begin (4) it imposes a negative burden;
new text end

new text begin (5) it imposes an affirmative obligation on a person having an interest in the real
property or on the holder;
new text end

new text begin (6) the benefit or burden does not touch or concern real property;
new text end

new text begin (7) there is no privity of estate or contract;
new text end

new text begin (8) the holder dies, ceases to exist, resigns, or is replaced; or
new text end

new text begin (9) the owner of an interest in the real property subject to the environmental
covenant and the holder are the same person.
new text end

new text begin (c) Any instrument that imposes activity and use limitations, including any
conservation easement, declaration, restrictive covenant, or similar instrument created
before the effective date of this chapter remains valid and enforceable as provided in
the law under which it was created. This chapter does not apply in any other respect to
such an instrument.
new text end

new text begin (d) This chapter does not invalidate or render unenforceable any interest, whether
designated as an environmental covenant or other interest, that is otherwise enforceable
under the law of this state.
new text end

Sec. 6.

new text begin [114E.25] RELATIONSHIP TO OTHER LAND USE LAW.
new text end

new text begin (a) This chapter does not authorize a use of real property that is otherwise prohibited
by zoning, by law other than this chapter regulating use of real property, or by a recorded
instrument that has priority over the environmental covenant.
new text end

new text begin (b) An environmental covenant may prohibit or restrict uses of real property which
are authorized by zoning or by law other than this chapter.
new text end

new text begin (c) An environmental agency that exercises authority under law other than this
chapter to require as part of an environmental response project the performance of a
response or corrective action that would not otherwise be an authorized use of real
property under zoning or other real property law or prior recorded instruments may
include such requirement as an affirmative obligation in an environmental covenant.
new text end

Sec. 7.

new text begin [114E.30] NOTICE.
new text end

new text begin (a) A copy of an environmental covenant, and any amendments or notices of
termination thereof, must be provided by the persons and in the manner required by the
environmental agency to:
new text end

new text begin (1) each person that signed the covenant or their successor or assign;
new text end

new text begin (2) each person holding a recorded interest in the real property subject to the
covenant;
new text end

new text begin (3) each person in possession of the real property subject to the covenant;
new text end

new text begin (4) each political subdivision in which real property subject to the covenant is
located; and
new text end

new text begin (5) any other person the environmental agency requires.
new text end

new text begin (b) The validity of a covenant is not affected by failure to provide a copy of the
covenant as required under this section.
new text end

Sec. 8.

new text begin [114E.35] RECORDING.
new text end

new text begin (a) An environmental covenant and any amendment or termination of the covenant
must be recorded with the county recorder or registrar of titles, as applicable, in every
county in which any portion of the real property subject to the covenant is located. For
purposes of indexing, a holder shall be treated as a grantee.
new text end

new text begin (b) Except as otherwise provided in section 114E.40, paragraph (f), an environmental
covenant is subject to the laws of this state governing recording and priority of interests in
real property.
new text end

Sec. 9.

new text begin [114E.40] DURATION; MODIFICATION OR TERMINATION BY
ADMINISTRATIVE OR COURT ACTION.
new text end

new text begin (a) An environmental covenant is perpetual unless it is:
new text end

new text begin (1) by its terms limited to a specific duration or terminated by the occurrence of a
specific event;
new text end

new text begin (2) terminated by consent pursuant to section 114E.45;
new text end

new text begin (3) terminated pursuant to paragraph (b) or (e);
new text end

new text begin (4) terminated by foreclosure of an interest that has priority over the environmental
covenant; or
new text end

new text begin (5) terminated or modified in an eminent domain proceeding, but only if:
new text end

new text begin (i) the environmental agency that signed the covenant is a party to the proceeding;
new text end

new text begin (ii) all persons identified in paragraph (c) are given notice of the pendency of the
proceeding; and
new text end

new text begin (iii) the court determines, after hearing, that the activity and use limitations subject
to termination or modification are no longer required to protect public health or welfare
or the environment.
new text end

new text begin (b) The environmental agency that approved an environmental covenant may
determine whether to terminate or reduce the burden on the real property of the covenant
if the agency determines that some or all of the activity and use limitations under the
covenant are no longer required to protect public health or welfare or the environment or
modify the covenant if the agency determines that modification is required to adequately
protect public health or welfare or the environment.
new text end

new text begin (c) The environmental agency shall provide notice of any proposed action under
paragraph (b) to each person with a current recorded interest in the real property subject
to the environmental covenant, each holder, all other persons who originally signed the
environmental covenant, or their successors or assigns, and any other person with rights
or obligations under the covenant. The environmental agency shall provide 30 days for
comment on the proposed action by parties entitled to notice. Any person entitled to notice
under this paragraph may request a contested case under chapter 14 by making the request
in writing within the 30-day comment period. A determination by an environmental
agency under this paragraph is a final agency decision subject to judicial review in the
same manner as provided in sections 14.63 to 14.68 or under applicable federal law.
new text end

new text begin (d) Any person entitled to notice under paragraph (c) may apply in writing to the
environmental agency for a determination under paragraph (b) that an existing covenant
be terminated, that the burden of a covenant be reduced, or that covenant be modified.
The application must specify the determination sought by the applicant, the reasons why
the environmental agency should make the determination, and the information which
would support it. If the environmental agency fails to commence a proceeding under
paragraph (b) within 60 days of receipt of the application, the applicant may bring a de
novo action in the district court for termination, reduction of burden, or modification of
the environmental covenant pursuant to paragraph (e).
new text end

new text begin (e) The district court for the county in which the real property subject to an
environmental covenant is located may, under the doctrine of changed circumstances,
terminate the covenant, reduce its burden on the real property, or modify its terms in a de
novo action if an environmental agency fails to commence a proceeding within 60 days
as provided under paragraph (d). The applicant under paragraph (d), any party to the
environmental covenant, or any other person identified in paragraph (c) may commence an
action under this paragraph. The person commencing the action shall serve notice of the
action on the environmental agency and any person entitled to notice under paragraph (c).
The court shall terminate, reduce the burden of, or modify the environmental covenant
if the court determines that the person bringing the action shows that some or all of the
activity and use limitations under the covenant do not, or are no longer required to, protect
public health or welfare or the environment.
new text end

new text begin (f) An environmental covenant may not be extinguished, limited, or impaired
through issuance of a tax deed, foreclosure of a tax lien, or application of the doctrine
of adverse possession, prescription, abandonment, waiver, lack of enforcement, or
acquiescence, or a similar doctrine.
new text end

new text begin (g) An environmental covenant may not be extinguished, limited, or impaired by
application of section 500.20 or 541.023.
new text end

Sec. 10.

new text begin [114E.45] AMENDMENT OR TERMINATION BY CONSENT.
new text end

new text begin (a) An environmental covenant may be amended or terminated by consent only if
the amendment or termination is signed by:
new text end

new text begin (1) the environmental agency;
new text end

new text begin (2) the current owner of the fee simple title to the real property subject to the
covenant;
new text end

new text begin (3) every other original signatory to the covenant, or their successor or assign, unless:
new text end

new text begin (i) the person waived the right to consent to termination or modification in the
environmental covenant or another signed and acknowledged record that is recorded;
new text end

new text begin (ii) the person fails to object to the amendment or termination within 60 days after
a notice requesting the person's consent to amendment or termination was mailed by
certified mail, return receipt requested, to the person's last known address, as obtained
from the United States Postal Service; or
new text end

new text begin (iii) a court finds that the person no longer exists or cannot be located or identified
with the exercise of reasonable diligence; and
new text end

new text begin (4) each holder, except as otherwise provided in paragraph (d).
new text end

new text begin Any person may establish that the notice described in clause (3), item (ii), was properly
mailed by recording an affidavit to that effect from a person having knowledge of the
facts, and a certified copy of the recorded affidavit shall be prima facie evidence of the
facts stated therein.
new text end

new text begin (b) If an interest in real property is subject to an environmental covenant, the interest
is not affected by an amendment of the covenant unless the current owner of the interest
consents to the amendment or has waived in the environmental covenant or other signed
record the right to consent to amendments.
new text end

new text begin (c) Except for an assignment undertaken pursuant to a governmental reorganization,
or as otherwise provided in the environmental covenant, assignment of an environmental
covenant to a new holder is an amendment.
new text end

new text begin (d) Except as otherwise provided in paragraph (c) or in an environmental covenant:
new text end

new text begin (1) a holder may not assign its interest without consent of the other parties specified
in paragraph (a);
new text end

new text begin (2) a holder may be removed and replaced by agreement of the other parties
specified in paragraph (a); and
new text end

new text begin (3) a court of competent jurisdiction may fill a vacancy in the position of holder.
new text end

Sec. 11.

new text begin [114E.50] ENFORCEMENT OF ENVIRONMENTAL COVENANT.
new text end

new text begin (a) A civil action for injunctive or other equitable relief for violation of an
environmental covenant may be maintained by:
new text end

new text begin (1) a party to the covenant, including all holders;
new text end

new text begin (2) the environmental agency that signed the covenant;
new text end

new text begin (3) any person to whom the covenant expressly grants power to enforce;
new text end

new text begin (4) a person whose interest in the real property or whose collateral or liability may
be affected by the alleged violation of the covenant; or
new text end

new text begin (5) a political subdivision in which the real property subject to the covenant is
located.
new text end

new text begin (b) The state environmental agency that signed the covenant may use any remedy
or enforcement measure provided in section 115.071, subdivisions 3 to 5, or 116.072 to
remedy violations of a covenant. This paragraph does not limit the state environmental
agency from taking action to enforce the terms of a covenant against a person required to
comply with the covenant in connection with that person's obligation to perform response
actions or as a condition of receiving a liability assurance with respect to a release or
threatened release of contaminants.
new text end

new text begin (c) This chapter does not limit the regulatory authority of the environmental agency
under law other than this chapter with respect to an environmental response project.
new text end

new text begin (d) A person is not responsible for or subject to liability arising from a release
or threatened release of contamination into the environment, or for remediation costs
attendant thereto, solely because it has signed, holds rights to, or otherwise has the right to
enforce an environmental covenant.
new text end

Sec. 12.

new text begin [114E.60] UNIFORMITY OF APPLICATION AND CONSTRUCTION.
new text end

new text begin In applying and construing this chapter, consideration must be given to the need to
promote uniformity of the law with respect to its subject matter among states that enact it.
new text end

Sec. 13.

new text begin [114E.65] RELATION TO ELECTRONIC SIGNATURES IN GLOBAL
AND NATIONAL COMMERCE ACT.
new text end

new text begin This chapter modifies, limits, or supersedes the federal Electronic Signatures in
Global and National Commerce Act, United States Code, title 15, section 7001 et seq., but
does not modify, limit, or supersede section 101 of that act, United States Code, title 15,
section 7001(a), or authorize electronic delivery of any of the notices described in section
103 of that act, United States Code, title 15, section 7003(b).
new text end

Sec. 14.

Minnesota Statutes 2006, section 115.072, is amended to read:


115.072 RECOVERY OF LITIGATION COSTS AND EXPENSES.

In any action brought by the attorney general, in the name of the state, pursuant
to the provisions of this chapter and chapters 114Cnew text begin, 114E,new text end and 116, for civil penalties,
injunctive relief, or in an action to compel compliance, if the state shall finally prevail,
and if the proven violation was willful, the state, in addition to other penalties provided
in this chapter, may be allowed an amount determined by the court to be the reasonable
value of all or a part of the litigation expenses incurred by the state. In determining the
amount of such litigation expenses to be allowed, the court shall give consideration to the
economic circumstances of the defendant.

Amounts recovered under the provisions of this section and section 115.071,
subdivisions 3 to 5
, shall be paid into the environmental fund in the state treasury to the
extent provided in section 115.073.

Sec. 15.

Minnesota Statutes 2006, section 115B.17, subdivision 15, is amended to read:


Subd. 15.

Acquisition of property.

The agency may acquire, by purchase
or donation, deleted text beginan interestdeleted text endnew text begin interestsnew text end in real property, including easements, deleted text beginrestrictivedeleted text endnew text begin
environmental
new text end covenantsnew text begin under chapter 114Enew text end, and leases, that the agency determines
deleted text begin isdeleted text endnew text begin arenew text end necessary for response action. deleted text beginThe validity and duration of a restrictive covenant
or nonpossessory easement acquired under this subdivision shall be determined in the
same manner as the validity and duration of a conservation easement under chapter 84C,
unless the duration is otherwise provided in the agreement.
deleted text end The agency may acquire
an easement by condemnation only if the agency is unable, after reasonable efforts, to
acquire an interest in real property by purchase or donation. The provisions of chapter 117
govern condemnation proceedings by the agency under this subdivision. A donation of an
interest in real property to the agency is not effective until the agency executes a certificate
of acceptance. The state is not liable under this chapter solely as a result of acquiring an
interest in real property under this subdivision.new text begin Agency approval of an environmental
convenant under chapter 114E is sufficient evidence of acceptance of an interest in real
property where the agency is expressly identified as a holder in the covenant.
new text end