Industrial, commercial, and residential property are all subject to various types of regulation. The regulations can be federal, state, or municipal in nature. Environmental land use is a subject covered by all three of these types of regulations. A good example is the federal Land Policy and Management Act (“FLPMA”), which was passed in 1976.
The Bureau of Land Management and Environmental Site Assessment
The U.S. Department of the Interior’s Bureau of Land Management (“BLM”) oversees the FLPMA. Since 1976, the BLM has been managing public lands and subsurface resources. One of the procedures required of the BLM for conveyance of real property owned by the federal government is called an Environmental Site Assessment (“ESA”). Commercial property owners are likely familiar with this environmental land use process.
The ESA is meant to identify properties that carry a recognized environmental condition, early on in the transaction. The assessment answers the questions of whether a property is contaminated and whether hazardous substances issues need to be listed in the deed. Also, the ESA establishes a baseline of environmental land use conditions. Customarily, the parties to the transaction can also allocate the risk of environmental liability. Contracts, indemnifications, warranties, and covenants are the usual tools and legal mechanisms used to deal with environmental liability.
For property transactions where the federal government is selling property where any hazardous substance was stored, released, or disposed of, there are certain elements that must be contained in the deed. Under the FLPMA, these environmental land use elements are as follows:
- The type and quantity of the hazardous substances;
- The time that the storage, release, or disposal took place;
- A description of the remedial action taken, if any;
- A covenant that all remedial action necessary to protect human health and the environment was taken before the date of the transfer, and that any additional remedial action necessary after the date of the transfer shall be conducted by the federal government;
- A clause granting the federal government access to the property for future corrective action.
Under the FLPMA, the BLM also seeks to include indemnification language in any conveyance document where the buyer agrees to hold harmless the federal government from actions taken by the buyer at the property after sale. Indemnity language protects the BLM from potential liability in any future actions based on hazardous substances. The language also protects the federal government from claims arising from physical hazards, claims for Natural Resource Damages, judgments, future releases at the property.
In terms of environmental land use, this type of indemnity is common and often necessary. The indemnification language, as a legal policy, runs with the real property. Without indemnification language, contaminated property transactions would often result in litigation. There are many other environmental land use considerations that result in litigation, but indemnity is meant to deal with issues at the outset and prior to the conveyance.
The attorneys at Desautel Law understand the nuances of environmental land use. Our clients rely on our attorneys’ advice to answer all of their legal questions. Call today to find out more about how we can help you: 401.477.0023.