Developments. Environmental, Health & Safety. Environmental Property Transfer Requirements. An Overview of ISRA

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1 November 2002 Environmental, Health & Safety Developments Environmental Property Transfer Requirements A number of states have enacted property transfer laws that affect industrial property transactions. New Jersey has led the charge in this area with the Industrial Site Recovery Act ( ISRA ) N.J.S.A. 13:K and its implementing regulations N.J.A.C. 7:26B, which regulate the sale/transfer or closure of industrial property in New Jersey. Prior to the signing of a transaction in New Jersey, ISRA requires the seller to obtain approval from the New Jersey Department of Environmental Protection ( NJDEP ). ISRA was introduced by the New Jersey legislature in 1983 in response to public concern about the cleanup of historic contamination from discharges of toxic chemicals and the potential cleanup costs to the state from abandoned contaminated sites. In essence, ISRA ensures that businesses apportion potential environmental concerns by imposing preconditions on business transactions involving the transfer of industrial properties engaged in the generation, manufacture, refining, transportation, treatment, storage, handling, or disposal of hazardous substances or waste. The purpose of this commentary is to help the reader become cognizant of the issues that might arise when selling or purchasing industrial property in New Jersey. This commentary provides an overview of the industrial property transfer laws in New Jersey affecting commercial transactions. A state-by-state summary of transactions regulated by environmental laws is provided in the attached chart. As the chart makes clear, many states have transfer requirements that only apply to specific situations, i.e., hazardous waste disposal. There are only four states that have general transfer requirements for transactions: New Jersey, Connecticut, Indiana, and Ohio. Of the four states listed above, New Jersey s requirement for prior approval is the most stringent. An Overview of ISRA ISRA is triggered by the transfer or closure of an industrial establishment. A facility is considered an industrial establishment if it meets each of the three following criteria: 1. The facility must have a primary Standard Industrial Classification ( SIC ) major group number within inclusive, inclusive, 51, or 76; 2. The facility must have been engaged in operations on or after December 31, 1983; and 3. The facility must be involved in the generation, manufacture, storage, or disposal of hazardous substances or wastes. ISRA is triggered by either the closure or transfer of an industrial establishment or bankruptcy, all of which are referred to as triggering events and include: 1. The transferring of ownership or operations, which means: a) a transaction through which the industrial establishment undergoes a change in ownership ; b) the sale or transfer of more than 50 percent of the assets of an industrial establishment (including but not limited to machinery, good will, inventory, customer lists, and intellectual property) within any five-year period; 2002 Jones, Day, Reavis & Pogue. All rights reserved.

2 c) the execution of a lease for an industrial establishment for 99 years or longer (a lease of this duration is considered to be a sale of property under ISRA); or d) the dissolution of an entity that is the direct owner or operator or indirect owner of an industrial establishment, except for the dissolution of an indirect owner whose assets would have been unavailable for the remediation of the industrial establishment. 2. Change in ownership, which means: a) the sale or transfer of the business of an industrial establishment; b) the sale or transfer of stock in a corporation resulting in a merger or consolidation involving the direct owner or operator or indirect owner of an industrial establishment; c) the sale or transfer of stock in a corporation, or the transfer of a partnership interest, resulting in a change in the person holding the controlling interest in the direct owner or operator or indirect owner of an industrial establishment; d) the sale or transfer of title to an industrial establishment or the real property of an industrial establishment by exercising an option to purchase; or e) the sale or transfer of a partnership interest in a partnership that owns or operates an industrial establishment that would reduce by 10 percent or more the assets available for the remediation of the industrial establishment. However, the definition of change in ownership does not include, among other exceptions, a transaction or series of transactions involving the transfer of stock, assets, or both, resulting in the merger or de facto merger or consolidation of the indirect owner with another entity. In addition, the definition does not include a change in the person holding the controlling interest of the indirect owner of an industrial establishment, when the indirect owner s assets would have been unavailable for cleanup if the transaction or transactions had not occurred. The property transfer process of an industrial establishment is initiated by the seller, and a transaction may not be completed until the seller: 1. Proves to the NJDEP that there has not been a discharge of hazardous substances or waste at the property; 2. Demonstrates that any past discharges have been cleaned up; or 3. Obtains approval from the NJDEP for a cleanup plan if he cannot prove either of (1) or (2) above. To ensure that transactions are not delayed due to ISRA, the statute provides a variety of mechanisms to move the process forward. Parties to transactions that trigger ISRA may: 1. Seek a Letter of Non-Applicability from the NJDEP to have the state determine if ISRA is inapplicable to a particular transaction; 2. Seek an NJDEP-approved Negative Declaration that there has not been a discharge of hazardous substances or wastes at the site or that such discharge has been cleaned up; or 3. Seek an Administrative Consent Order or voluntarily apply for a Remediation Agreement with the NJDEP to remediate the site. ISRA places an obligation on the seller of the property to notify the state (the seller and its operator are strictly liable without regard to fault for compliance with ISRA) in the event of such a transfer. Noncompliance with ISRA can result in civil penalties to the seller and its operator of not more than $25,000 for each offense. If the violation continues, each day is considered an additional and separate offense. Furthermore, any officer or management official who knowingly directs or authorizes the violation of ISRA may be held personally liable for any civil penalties. And lastly, 2

3 if a property transfer does not comply with ISRA, the purchaser may void the transaction. Compliance with ISRA New Jersey s intent when it created ISRA was to ensure that a buyer would not be held responsible for the seller s remediation obligations. In order to comply with ISRA, the seller must notify the state within five days of any triggering event by filing a General Information Notice ( GIN ) with the NJDEP. The purpose of the GIN is two-fold: (i) to inform the state of the transfer and (ii) to document who is ultimately responsible for any necessary cleanup. As a result, the state requires that the person signing the GIN have knowledge about the site. Thus, the most appropriate person to sign a GIN is usually the direct owner of the site (which is often a subsidiary that is being sold) because the direct owner has day-to-day knowledge of the operations. In such an instance, the subsidiary would sign the GIN as an agent for the parent. Consequently, in a situation where the buyer is purchasing the stock of the subsidiary of the seller, the NJDEP will still consider the seller liable for compliance with ISRA. Once the GIN has been submitted, if the facility does not qualify for any waivers, exemptions, or expedited review processes, the seller must conduct a Preliminary Assessment to identify potential areas of concern. If the Preliminary Assessment identifies any potentially contaminated areas of concern, a Site Investigation must be performed. The Site Investigation is used to determine if any contaminants are present at the site above any of the applicable unrestricted use remediation standards or if no further remediation is required. If the Site Investigation does not document any contamination, the seller must file a Negative Declaration with the NJDEP certifying that there has not been a discharge of hazardous substances or hazardous wastes on or at the industrial establishment. However, if the Site Investigation does document contamination, a Remedial Investigation must be done to delineate the extent of the contamination. Once the extent of the contamination has been delineated, a Remedial Action Workplan must be prepared that details the actions necessary to remediate the property. Once the contamination has been cleaned up to the satisfaction of the NJDEP, the seller (or the person assuming responsibility for the cleanup) must file a Negative Declaration that such discharge on the industrial establishment, or the discharge that has migrated from the industrial establishment, has been remediated in accordance with the procedures approved by the NJDEP and in accordance with ISRA. The NJDEP will approve the Negative Declaration by issuing a No Further Action Letter/ Covenant Not to Sue Letter ( NFA ). Once the NFA has been issued, the property is considered to be in compliance with ISRA, and the transaction may proceed. Consummation of the Transaction Prior to Full ISRA Compliance As the section above makes clear, compliance with ISRA can be a time-consuming process even if the property is not contaminated and in need of remediation. As a result, the state allows for the consummation of transactions prior to full ISRA compliance in three instances, the first two of which are described below: 1. Prior to closing, the seller must file with the NJDEP a Negative Declaration stating that there has not been any contamination or if there had been contamination, it has been cleaned up to NJDEP approved standards; or 2. Prior to closing, the seller must file a Remedial Action Workplan detailing the proposed remediation of the property. Both of these options assume that the seller has undertaken some of the steps described in the section 3

4 above prior to the triggering events. Under either circumstance, the transaction will be allowed to proceed without full ISRA compliance. However, an NFA will not be issued until the NJDEP grants its approval as described in the previous section. The transaction will not be considered in compliance with ISRA until the NFA has been issued. It is often difficult to get as far as a Negative Declaration or a Remedial Action Workplan in the ISRA process prior to the sale of an industrial establishment due to the fast-paced nature of most transactions. To aid companies that find themselves in such circumstances, the NJDEP has agreed to enter into written agreements with sellers (or whomever has agreed to take on the responsibility for complying with ISRA) where the seller essentially promises to investigate and remediate the property pursuant to ISRA, subsequent to the transaction. These agreements are called Remediation Agreements; the name is misleading because Remediation Agreements do not propose a course of action to remediate the property, they merely ensure that after proper investigation, the signatory is responsible to the NJDEP for any remediation that may be necessary. A Remediation Agreement: (1) stipulates the party responsible for the remediation; (2) sets out specific time frames for completing the ISRA requirements; (3) states that there has been a posting of a remediation funding source equal to the estimated cost of remediation (typically, the cost of the remediation has not been estimated, and in such instances the NJDEP requires a $100,000 remediation funding source in the form of either a self-guarantee, a remediation trust fund, an environmental insurance policy, or a line of credit); and (4) sets out a list of penalties for failure to comply with ISRA s requirements. The signatory on the Remediation Agreement and the person/ company posting the remediation funding source must be the same. To enter into a Remediation Agreement with the NJDEP, the seller (or the party taking responsibility for the remediation) must submit a Remediation Agreement application to the NJDEP. It generally takes the NJDEP two to four weeks to either approve or deny a Remediation Agreement application. If approval is granted, the transaction may close and the party responsible for the remediation must follow the schedule set out in the Remediation Agreement for completing ISRA s requirements and obtaining an NFA. The Remediation Agreement binds the seller to the NJDEP; it in no way imputes responsibility to the buyer for any necessary remediation under ISRA. If remediation is necessary and the seller fails to comply with ISRA, the NJDEP will use the remediation funding source to complete the cleanup itself or hire a contractor to finish the remediation. If the remediation funding source runs out, the NJDEP will use public funds to complete the cleanup and then go after the seller for reimbursement of the public funds. Expedited Processes, Exemptions, and Waivers The procedures described below attempt to ensure that ISRA will not delay the sale of an industrial establishment. Certificate of Limited Conveyance. As the name implies, an owner may transfer up to one third of the appraised value of the real value of the property of an industrial establishment without having to remediate the entire parcel of land. However, before the sale is completed, a GIN must be filed, the portion of the property that is being conveyed must be remediated, and an NFA approval must be obtained for the portion of the industrial establishment being transferred. The certificate is valid for three years. De Minimis Quantity Exemption. An owner may cease operations or sell an industrial establishment without going through the 4

5 remediation process if the total quantity of hazardous substances and hazardous wastes generated, manufactured, refined, transported, treated, stored, handled, or disposed of at the industrial establishment at any one time during the owner s period of ownership: 1. Does not exceed 500 pounds or 55 gallons; or 2. If a hazardous substance or hazardous waste is mixed with nonhazardous substances and the total quantity of the mixture does not exceed 500 pounds or 55 gallons; or 3. If, in the aggregate, hydraulic or lubricating oil does not exceed 220 gallons. Limited Site Review. If there is a discharge at an industrial establishment after the property has been remediated and received NFA approval, the owner may submit a Limited Site Review application certifying that the discharge was not remediated previously or that it was remediated previously but not reviewed and approved by the NJDEP. The NJDEP will take approximately 45 days to review the Limited Site Review application. Regulated Underground Storage Tank Only Waiver. If the only Area of Concern ( AOC ) is a regulated underground storage tank ( UST ) or the only discharges at the site are from regulated USTs, and the owner is remediating the AOCs under BUST, the owner may apply for an UST Waiver application (which requires the submission of a Preliminary Assessment). If the UST Waiver is approved (the NJDEP will take approximately 15 days to review), the owner may cease operations or transfer its industrial establishment without remediating the AOCs under ISRA. Once the remediation is completed, an NFA letter will be issued. Area of Concern Waiver. If an Area of Concern at an industrial establishment has received an NFA and no new discharges have occurred since the NFA was issued, the owner may submit an Area of Concern Waiver application (which includes the submission of a Preliminary Assessment and a Site Investigation). It will take the NJDEP approximately 15 days to review this application. Minimal Environmental Concern Waiver. If there are no more than two AOCs requiring remediation that are not a threat to the drinking water and do not pose an immediate environmental concern, an owner or operator may close the industrial establishment or transfer its ownership if it receives approval of its Minimal Environmental Concern Waiver. The waiver application includes a Preliminary Assessment, Site Investigation Report, and Remedial Investigation Report. The NJDEP estimates that it will take 30 days to review completed applications. Once the waiver is approved, the transaction may take place, although the NJDEP will not have approved the Remedial Action Work plan or the Remediation Agreement. Six months after the waiver approval, the owner or operator must implement the remedial action and submit the Remedial Action Report to the NJDEP. Expedited Review. If an industrial establishment has previously received a No Further Action letter, the expedited review process allows an owner or operator to close operations or transfer ownership of operations, when the owner or operator can prove that there has been no further discharge subsequent to the No Further Action letter. To facilitate this mode of review, the owner or operator must submit an Expedited Review application and a Negative Declaration. Processing time is estimated at 15 days. Remediation in Progress Waiver. Entering into a transaction that is considered a triggering event under ISRA can be daunting for purchasers who hope to sell their new facility shortly after acquiring it. In order to make such purchasers comfortable, the state has created something called a Remediation in Progress Waiver that allows the new owner of an industrial establishment to sell the industrial establishment while the old owner 5

6 is in the process of remediating the land under ISRA. NJAC 7:26B-5.4. The sale of the new owner s industrial property is considered a triggering event under ISRA. However, the old owner s responsibility for the cleanup it is currently performing under ISRA is not extinguished because the old owner has an obligation to the NJDEP to remediate the property as per its Remediation Agreement or Remedial Action Workplan. The NJDEP views the cleanup of the property as a benefit to the state (because the NJDEP does not have to clean it up) and as an ancillary benefit to the current property owner. The NJDEP s expectation regarding responsibility for the cleanup makes it impossible for the old owner to disclaim its obligation of remediating the property. To apply for a Remediation in Progress Waiver, the current or new owner must submit the following: 1. A GIN; 2. Evidence that the property is already in the process of remediation pursuant to ISRA; 3. A certification by the current owner that it has not discharged any hazardous substance or waste during its period of operation (this may involve doing a Preliminary Assessment; it will depend on how long the current owner has been operating at the site); 4. A certification by the current owner that the buyer knows the property is undergoing an ISRA remediation; and 5. A certification by the current owner that the funding source is in place and is adequate. The NJDEP will approve the Remediation in Progress Waiver by issuing an authorization letter to proceed with the transaction. In theory, Remediation in Progress Waivers appear to be straightforward, but when one company steps into the shoes of another and continues the same operations, it is often difficult to determine who has caused what portion of the contamination if the second sale takes place prior to a full delineation of the contamination. Responsibility Post ISRA Compliance As this commentary makes clear, the onus for the cleanup under ISRA is on the seller. However, once the cleanup under ISRA has been completed and if an institutional/engineering control has been used, any subsequent owner during his period of ownership is responsible for maintaining any institutional/ engineering controls that were placed on the property during the cleanup. NJSA 58:10B-13.1a. If the institutional/engineering control is not properly maintained, the NJDEP may go after the parties charged with maintaining the control and require them to do whatever is necessary to properly maintain it. NJSA 58:10B-13.1a(2)(b) and 13.1c. Further Information This Environmental, Health & Safety Developments is a publication of Jones, Day, Reavis & Pogue and should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general informational purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at its discretion. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have any questions about ISRA or would like more information on the statute and its implementing regulations, consult your regular contacts at Jones Day or the principal author of this publication, Kalyn Johnson (telephone: ; kjjohnson@jonesday.com), concerning your own situation or any specific legal questions you may have. General messages may be sent to counsel@jonesday.com. We invite you to visit our Web site at 6

7 Alabama Alaska Arizona Ariz. Rev. Stat Property that has been subject to soil remediation Any owner with actual knowledge that property has been subject to soil remediation must provide written notice of the remediation to the purchaser prior to the transfer. Ariz. Rev. Stat Property for which soil remediation attains residential use standards is not subject to Prior to transfer Civil actions Arkansas

8 California Cal. Health & Safety Code Hazardous substance has been released on or beneath nonresidential real property Any owner or lessor of nonresidential real property who knows or has reasonable cause to believe that a hazardous substance has been released on or beneath the property must give written notice of the condition prior to sale, lease, or rental to each purchaser, lessee, or renter. Cal. Health & Safety Code (a). Failure to give such notice may result in liability for actual damages, and knowing or willful failure to provide such notice to the buyer may subject the owner to civil penalties. In addition, the lessee or renter of real property who knows or has reasonable cause to believe that a hazardous substance release has occurred on the property must give written notice of the condition to the owner or lessor within a reasonable period of time, either prior to the release or following the discovery of the release. Cal. Health & Safety Code (b). A lessee or renter who fails to provide written notice may be subject to actual damages. Knowing and willful failure to provide such notice to the buyer may result in the termination of the lease or rental agreement (except in the case of property used exclusively for residential purposes) and may subject a lessee or renter to civil penalties. A lessee or renter may cure the resulting default under its lease by completing removal or remedial action in accordance with applicable laws. However, such action does not release the lessee or renter from liability for civil penalties. Cal. Haz. Substances Act (b)(B)(3) Prior to sale, lease, or rental If there is a release, notice of such release must be given within a reasonable time Failure to give notice of hazardous substance release may result in liability for actual damages, and knowing or willful failure to provide such notice may result in the termination of the lease or rental agreement (except in the case of property used exclusively for residential purposes), and may result in civil penalties. The Environmental Responsibility Acceptance Act requires that owners of a parcel of commercial, industrial, or agricultural real property upon which a release of hazardous materials has been discovered identify and notify parties who are potentially responsible. Cal. Civil Code 851. If property has been designated as hazardous waste property or border zone property by the state DTSC, California law also requires that a written instrument prepared by the owner or lessor of the property must accompany all purchase, lease, or rental agreements relating to the land (specific statement required). Cal. Health & Safety Code 25230(a)(2). An environmental lien for costs incurred by the state in a removal or remedial action attaches to affected property and has the priority of a judgment lien after being recorded in the county where the property is located. Cal. Health &Safety Code (d).

9 Colorado State Hazardous Waste Siting Act Colo. Rev. Stat to 220 Hazardous Waste Management Program Colo. Rev. Stat to 316 Closure or transfer of property used as a hazardous waste disposal facility Colorado law does not require the disclosure of the environmental condition of property in a transaction, unless it was used as a hazardous waste disposal facility. Within 60 days after the closure of a hazardous waste disposal facility, the owner or operator of the facility must record a statement notifying potential purchasers that the property was used to manage hazardous waste. Colo. Rev. Stat (4)(a). The notation must also indicate that use of the land is restricted and that the survey plat and record of the location, type, and quantity of the hazardous wastes have been filed with the proper authorities. Within 60 days after the closure of a hazardous waste disposal facility Civil penalties of up to $10,000 per day of violation. In addition, a violation is a class 3 misdemeanor punishable by imprisonment for up to six months or a fine of up to $750 or both per day of violation. In addition, the board of county commissioners or the governing body of the municipality must be notified of and approve a substantial change in the ownership, design, or operation of a hazardous waste disposal site before such change becomes effective. Colo. Rev. Stat Colorado also requires similar approval for a substantial change in the ownership, design, or operation of a hazardous waste incinerator or incinerator site. Colo. Rev. Stat Connecticut Connecticut Transfer Act Conn. Gen. Stat Ch a-134 Transfer of property on which operations involving hazardous substances were located Connecticut has a disclosure statute for the transfer of property on which operations involving hazardous substances were located. Conn. Gen. Stat 22a-134 et seq. Before transferring a hazardous waste establishment, Connecticut requires a negative declaration that no spill has occurred or that any spill of hazardous substances has been cleaned up and managed in accordance with law. Conn. Gen. Stat 22a-134 Failure to comply makes the transferor liable to the transferee for actual damages and strictly liable for remediation costs and all direct and indirect damages. Conn. Gen. Stat 22a-134b Prior to transferring a hazardous waste establishment Failure to comply makes the transferor liable to the transferee for actual damages and strictly liable for remediation costs and all direct and indirect damages. Connecticut law provides for a lien against real estate as security for state funds paid to clean up hazardous waste. Conn. Gen. Stat 22a-452a. This is a super-priority lien (when attached to nonresidential real estate). The lien attaches to all real property included in the property description of the real estate that is contiguous to the affected property for the preceding three years.

10 Delaware Del. Regs Delaware Hazardous Substance Cleanup Act; Del. Code Ann. Tit. 7, Closure of a hazardous waste disposal facility When a hazardous waste disposal facility is closed, the owner or operator must, within 60 days of certification of the closure, record a notation on the deed that the land was used to manage hazardous waste, and that the use is restricted. Del. Regs There is also a detailed remedial process when the state determines that release of a hazardous substance has occurred on the property that presents a threat to public health or the environment. Del. Code Ann. Tit. 7, Within 60 days of certification of the closure A civil penalty of up to $10,000 per day for each day a person fails to comply. Florida Florida Radiation Protection Act; Fla. Stat et. seq. Sale for any building or execution of any rental agreement for any building A radon notice must be provided on at least one document at or before the time of sale for any building or execution of any rental agreement for any building. Such document must describe what radon gas is and its potential health effects. Fla. Stat et. seq. At or before the time of sale Failure to provide the notice is subject to civil penalty of up to $10,000 per day and is a felony of the third degree punishable by up to five years of incarceration. Georgia Ga. Code Ann (a) Georgia Hazardous Site Response Act; Ga. Code Ann to 97 Knowledge of a qualifying release of listed regulated substances Owners of property with knowledge of a qualifying release of listed regulated substances must give notice of that release to the state s Environmental Protection Department. The duty to give such notice is triggered by the discovery of concentrations of regulated substances in excess of levels set forth in the regulations, regardless of the total quantity of regulated substances that may have been released. Upon receipt of the notice, EPD will evaluate the release and determine whether the site will be added to the state s Hazardous Site Inventory. Ga. Comp. Regs. r (3). Within 45 days of discovering that the property has been placed on the Hazardous Site Inventory Civil penalties of up to $25,000 per day, and possible criminal penalties. If a site is placed on the state s hazardous site inventory, and the site is designated as having a known release designated as needing corrective action, the property owner must include notice in any deed, mortgage, lease, or other instrument of transfer. Ga. Code Ann to 97. If a site is placed on the state s Hazardous Site Inventory and is designated as having a known release needing corrective action, the owner must include notice of the hazardous site in any deed, mortgage, deed to secure debt, lease, rental agreement, or other instrument of transfer within 45 days of discovering that the property has been placed on the inventory. Ga. Code Ann (a). In the event of any discharge or threatened discharge from a UST, the state may impose a lien on the property on which the UST is located. Ga. Code Ann (a). A lien may also be imposed on property remediated with funds from the state s hazardous state trust fund. Ga. Code Ann (e).

11 Hawaii Idaho Illinois 415 ILCS 5/21.3 The Illinois Responsible Property Transfer Act of 1988, 415 ILCS 135/60, was repealed on August 9, The state may impose an environmental reclamation lien for the recovery of state funds spent to remediate property. 415 ILCS 5/21.3. Indiana Indiana Responsible Property Transfer Law Ind. Code to Conveyance of an interest in real property that: (i) is subject to reporting requirements under Section 312 of EPCRA; (ii) contains underground storage tanks; or (iii) is listed on the CERCLIS list pursuant to Section 116 of CERCLA. Ind. Code to Indiana has a Responsible Property Transfer Law, which applies to a conveyance of an interest in real property that: (i) is subject to reporting requirements under Section 312 of EPCRA; (ii) contains underground storage tanks; or (iii) is listed on the CERCLIS list pursuant to Section 116 of CERCLA. Ind. Code to The statute requires that a transferor provide a disclosure document about the condition of the property to all parties to the transfer, including both the transferee and the lender, 30 days before the transfer of property or, if the parties waive the 30-day period, before or at closing. The statute provides the exact format of the disclosure document. The transferor and transferee are jointly responsible for filing the disclosure document with the county recorder and for sending a copy of the disclosure document to the Indiana Department of Environmental Management within 30 days after the transfer. If the disclosure document is not delivered or reveals a previously unknown environmental defect, the transferee(s) and lender(s) may avoid their obligations under the contract before the transfer occurs. If the transferor fails to file a disclosure document with IDEM, the transferor may be fined a civil penalty of up to $1,000. If the transferor fails to record the disclosure document, he may be fined up to $10,000. Id. 30 days before the transfer of property or, if the parties waive the 30-day period, before or at closing If the transferor fails to file a disclosure document with IDEM, the transferor may be fined a civil penalty of up to $1,000. If the transferor fails to record the disclosure document, he may be fined up to $10,000. Indiana may impose a lien on property for removal or remedial action costs incurred by the state. Ind. Code

12 Iowa Iowa Code 455B.430; 455B.411; Sale of real property Sale, conveyance, or transfer of a site registered by the state as an abandoned or uncontrolled disposal site The Iowa code prohibits a person from selling, conveying, or transferring a site registered by the state as an abandoned or uncontrolled disposal site, unless there is written approval from DNR. Iowa Code 455B.430. This includes real property that has been used for the disposal of hazardous wastes or hazardous substances either illegally or prior to state regulation. Iowa Code 455B.411(4). Prior to transfer Civil penalty of up to $1,000 per day for each day of violation. Iowa requires the seller of real property to file a real estate transfer statement with the county recorder and give a copy to the buyer. The statement must provide information concerning wells, solid waste disposal, hazardous waste disposal, and USTs. Iowa Code Kansas Kan. Stat Ann (r) Kansas Admin. Regs (b); (d) Assignment, sale, conveyance, or transfer of all or any part of the property upon which a PCB facility, solid waste disposal areas, or solid waste processing facility is located At least 30 days in advance of the assignment, sale, conveyance, or transfer of all or any part of the property upon which a PCB facility is located, and before any change in responsibility for operation of the facility is made, written notice must be given to the state. Kan. Stat Ann (r); Kansas Admin. Regs (b). This notice requirement also applies to solid waste disposal areas and solid waste processing facilities. Kansas Admin. Regs (d). 30 days in advance of the assignment, sale, conveyance, or transfer Actual damages, and civil penalties of up to $5,000 per violation. Kentucky 401 Ky. Admin. Regs. 34: Disposal of hazardous waste has occurred at the site If disposal of hazardous waste has occurred at a site, the state must give written notice of that fact in the county clerk s office as a warning to potential purchasers. 401 Ky. Admin. Regs. 34: The owner of property upon which a hazardous waste disposal facility is located must record the type, quantity, and location of the waste and state that the property is restricted on the deed to the property or some other instrument normally examined during atitle search. Id. The state may attach a lien against the property of a person liable for actual costs expended in response to a release or threatened release. Ky. Rev. Stat. Ann (23)(a). Upon disposal Louisiana La. Rev. Stat. Ann. 30:2039 Actual or constructive knowledge that property has been used for the disposal of hazardous waste or as a solid waste landfill, with waste remaining on the property, subject to notice recording requirements Landowners that have actual or constructive knowledge that their property has been used for the disposal of hazardous waste or as a solid waste landfill, with waste remaining on the property, subject to notice recording requirements, must identify and record the location of the waste site in the property s mortgage document and conveyance records of the parish in which the property is located. La. Rev. Stat. Ann. 30:2039. Time of knowledge Subsequent innocent purchaser or transferee has an action in redhibition.

13 Maine Me. Rev. Stat. Ann. Tit (6) Sale or transfer of any real estate containing a UST Prior to the sale or transfer of any real estate containing aust, the owner must file a written notice with the purchaser. Me. Rev. Stat. Ann. Tit (6). This is an absolute duty; lack of knowledge is not a defense. The state may attach a lien against the real estate of a responsible party, including real estate unaffected by the cleanup, for the state s costs of cleanup, interest, and penalties. Me. Rev. Stat. Ann. Tit. 38, Prior to the sale or transfer of any real estate containing a UST Criminal fine of not less than $100 nor more than $25,000 per violation per day. Maryland Hazardous Materials or Hazardous Substances Act. Md. Env. Code Ann (b)(5) Md.Regs. Code, Tit. 26, Closure of a hazardous waste facility At closure, the owner/operator of a hazardous waste facility must submit a survey plat to the local zoning authority and must record the type, location, and quantity of hazardous waste disposed of in each hazardous waste disposal unit. In addition, the owner or operator must record in the deed that the land has been used to manage hazardous waste, and that the survey plat is on file. Md. Regs. Code, Tit. 26, At closure A lien may be placed on a violator s property for any fine, interest, or cost imposed under the civil penalties section of the Hazardous Materials or Hazardous Substances Act. Md. Env. Code Ann (b)(5). Massachussetts Massachusetts Hazardous Waste Management Act Mass. Ann. Laws. ch. 21C 1-30 Mass. Gen. Laws ch. 21E 6 Conveyance or lease of property that is or was a disposal site The DEP is authorized to restrict the use of property that is or was a disposal site. DEP may record, or may require the owner/operator to record, notice of the restrictions in the registry of deeds or in the district where the property is located. Mass. Gen. Laws ch. 21E 6. A person must give notice if he or she records a hazardous waste license in the registry of deeds before beginning to operate a hazardous waste site. Conveyances of or leases of such property are prohibited until the license is recorded in the deed. If the transferor fails to provide such notice, he can face criminal penalties and civil penalties up to $25,000. Mass. Ann. Laws. ch. 21C 7. Prior to operation of ahazardous waste site Up to $25,000 for each violation and imprisonment for up to two years. A knowing violation may result in fines of up to $100,000 and imprisonment for up to 20 years. The state may place a lien against property if the state incurs response costs. Mass. Gen. Laws ch. 21E, 13.

14 Michigan Michigan Environmental Response Act Mich. Comp. Laws Transfer of real property at which there has been a release of a hazardous substance. The owner of real property with actual or constructive knowledge that the property is a facility where there has been a release may not transfer an interest in the property unless he or she provides written notice to the purchaser or transferee that the property is such a facility and discloses the general nature and extent of the release. In addition, a person may not transfer an interest in real property unless the person fully discloses any land-use restrictions required by a state-approved cleanup plan. If a site is the subject of acleanup plan that authorizes standards less stringent than residential standards (e.g., commercial or industrial), a notice of remediation must be recorded with the deed. Mich. Comp. Laws (1). New owners and operators of USTs after 3/6/96 are not liable for the costs associated with a release of a hazardous substance or petroleum from aust if they conduct a baseline environmental assessment and disclose the results to DEQ. Mich. Comp. Laws (1)(c). Owners of UST property must also comply with disclosure requirements prior to the transfer of property. Id. at Prior to transfer Civil penalties of up to $10,000 for each day of violation. The state will impose a lien for unpaid costs and damages on a facility that has been the subject of response activity by the state. Mich. Comp. Laws (1). Minnesota Minnesota Environmental Response and Liability Act (MERLA) Minn. Stat. 115B B.24 Property used as a hazardous waste disposal facility An owner who knows or should have known of the property s use as a hazardous waste disposal facility or that the property has extensive hazardous substance contamination due to a release must file an affidavit with the county recorder. The affidavit must: (i) state that the land was contaminated or used to store hazardous waste; (ii) provide information on the quantity and location of the substances; and (iii) indicate that the use of the land may be limited under Minnesota law. Minn. Stat. 115B B.24. Upon discovery Any person who knowingly fails to record the required affidavit is liable for any release or threatened release of any hazardous substances. A lien may be filed against the property for state-incurred cleanup expenses. Minn. Stat Mississippi

15 Missouri Mo. Stat. Ann. Title Transfer of an abandoned or uncontrolled hazardous waste disposal site listed on the Missouri Registry of Hazardous Sites If the property is an abandoned or uncontrolled hazardous waste disposal site listed on the Missouri Registry of Hazardous Sites, the transferor must: (i) notify the transferee early in the negotiation process that the site is listed on the registry; (ii) provide all information in the registry on the site to the transferee; (iii) notify the transferee that he may be assuming liability for any remedial action at the property; and (iv) notify the state regulatory agency of the transfer of ownership within 30 days of the transfer. Civil penalties for a violation of the statute may not exceed $1,000 per day of violation. Mo. Stat. Ann. Title Notify transferee early in the negotiation process Notify the state regulatory agency of the transfer of ownership within 30 days of the transfer Civil penalties for a violation of the statute may not exceed $1,000 per day of violation. Montana Nebraska Neb. Rev. Stat Low-level radioactive waste site The waste history of a site used as a low-level radioactive waste site must be recorded in state permanent land records. Neb. Rev. Stat Nevada New Hampshire N.H. Rev. Stat. Ann. 146-C:6 N.H. Rev. Stat. Ann. 147-B:10-b Transfer of a UST to a new owner Prior to transferring a UST to a new owner, the transferor must notify the new owner of the transferor s compliance with the state s rules. The new owner must notify the state of the transfer and assume the previous owner s permit. N.H. Rev. Stat. Ann. 146-C:6. Prior to transferring a UST to a new owner State has a first-priority lien to the extent of its response costs against the real property where the material is or was located. N.H. Rev. Stat. Ann. 147-B:10-b.

16 New Jersey New Jersey s Industrial Sites Recovery Act ( ISRA ) N.J. Rev. Stat. 13:1K-6 to 14, amended by P.L. 1993, c (1993) Spill Compensation and Control Act N.J. Rev. Stat. 58: f Transfer of an industrial establishment New Jersey s Industrial Sites Recovery Act ( ISRA ) governs the transfer of industrial establishments. N.J. Rev. Stat. 13:1K-6 to 14, amended by P.L. 1993, c (1993). Under ISRA, an industrial establishment is a facility that is engaged in operations that involve the generation, manufacture, refining, transportation, treatment, storage, handling or disposal of hazardous substances or hazardous wastes on site, above or below ground. Id. ISRA requires that the owner or operator of an industrial establishment who plans to close operations or transfer ownership notify the Department of Environmental Protection in writing within five days of closing operations or execution of an agreement to transfer ownership or operations (General Information Notice GIN ). The transferor must also file asite Evaluation Submission ( SES ) N.J. Rev. Stat. 13:1k-9. Before transferring ownership, the owner or operator must also submit either a proposed negative declaration or a proposed remedial action plan to the state. Id. A transferor may be fined $25,000 per day for noncompliance. Within five days of closing operations or execution of an agreement to transfer ownership or operations A transferor may be fined $25,000 per day for noncompliance. Also, failure of the transferor to remediate the industrial establishment and obtain NJDEP approval is grounds for voiding the transfer and entitles the transferee to recover direct and indirect damages from the transferor. To qualify for ISRA s innocent purchaser defense, a company must establish that it had no reason to know that a hazardous substance had been discharged by undertaking a Preliminary Assessment and Site Investigation (if necessary) in accordance with DEP regulations. N.J. Rev. Stat. 58: g(d). Any expenditures made by the state pursuant to the Spill Compensation and Control Act create a lien in favor of the state. N.J. Rev. Stat. 58: f(f). New Mexico New York N.Y. Env. Conserv. Law to 1321 NOTE: There is pending legislation in New York (as of 7/10/02) that may change the applicable law Substantial change in the use of a site on the state s registry of hazardous sites If there is a substantial change in the use of a site on the state s registry of hazardous sites, the owner of such site must notify the state, adjacent property owners, and all other persons listed as interested in the site, 60 days before any physical alteration, construction, or change of use of the site. N.Y. Env. Conserv. Law to 1321; 6 NYCRR NOTE: There is pending legislation in New York (as of 7/10/02) that may change the applicable law. 60 days before any physical alteration, construction, or change of use of the site Administrative or civil penalties.

17 North Carolina North Carolina Waste Management Act N.C. Gen. Stat. Ann. 130A- 290 et seq. Sale, lease, conveyance, or transfer of property used, or once used as ahazardous waste disposal site The owner must notify the N.C. Department of Environment, Health and Natural Resources of the existence and location of an inactive or active hazardous waste site. Hazardous waste permits must be recorded in the register of deeds office as notice that land is being or has been used in connection with hazardous waste. N.C. Gen. Stat. Ann. 130A-310.8(e). More specifically, the owner must submit to DEHNR a survey plat of the designated areas containing detailed information about the type and location of the hazardous substances disposed of on the site. After the owner obtains DEHNR s approval of the plat, he must file a certified copy of the notice from DEHNR with the register of deeds. Additionally, whenever an owner wishes to sell, lease, convey, or transfer an inactive site, any deed or other instrument of transfer must contain a statement notifying the purchaser of the property s prior use as a hazardous waste disposal site and must reference the recordation of the required notice. Id Within 180 days after official notice from DEHNR, owner must file notice with the register of deeds Administrative penalty of up to $25,000 or up to two years imprisonment. North Dakota N.D. Cent. Code Closure of a hazardous waste disposal site When a waste disposal site is closed (containing any listed waste), the owner or operator must file a survey plat of the disposal site with the register of deeds of each county in which the facility is located, together with a description of the waste placed therein. N.D. Cent. Code Upon closure Any person who violates this provision is subject to a civil penalty not to exceed $25,000 per day of violation. Each day of non-compliance constitutes a separate violation for purposes of penalty assessments. Any person who knowingly violates this provision is subject to a fine not to exceed $25,000 per day of violation, to imprisonment for a period not to exceed one year, or both. And any person who knowingly violates this provision in a manner so as to manifest extreme indifference to human life, and whose conduct thereby places another person in imminent danger of death or serious bodily injury, is subject to a fine not to exceed $50,000 per day of violation, to imprisonment for a period not to exceed two years, or both.

18 Ohio Ohio Clean Closure Law Ohio Rev. Code Ann et. seq. Cessation of operations or a change in ownership where operations will cease or where a new operation will be started at facilities that use, store, or handle hazardous substances, flammable substances, or petroleum and are required to submit Tier I or Tier II inventory forms Ohio s property transfer requirements are triggered by cessation of regulated operations or a change in ownership where operations will cease or where a new operation will be started. The owner/operator must send notice to the Ohio EPA, the local emergency planning committee, and the fire department having jurisdiction within 30 days after cessation of operations. Within 90 days of cessation of operations, the owner or operator must submit a hazardous chemical inventory form, an OSHA hazardous chemical list, and a list of every tank, vat, transformer, and vessel that is contaminated with a hazardous substance; drain and remove all regulated substances; and submit a certification to Ohio EPA. Civil and criminal penalties may apply for each day of violation. Ohio Rev. Code Ann et. seq. Ohio law imposes a lien upon property if a property owner fails to undertake remedial action and the state expends money to clean up hazardous waste at the site. The state may impose a restrictive covenant on such land. Ohio Rev. code Notice to the Ohio EPA, the planning committee, and fire department within 30 days after cessation Within 90 days, submit an inventory form, hazardous chemical list, list of contaminated tanks, etc., drain and remove regulated substances, and submit certification to Ohio EPA Civil and criminal penalties of no less than $10,000 and up to $25,000 and no less than two years in jail and up to four years in jail per each day of violation. Oklahoma