BILL REQ. #:  S-3577.3 

Read first time 01/13/2006.   Referred to Committee on Water, Energy & Environment.

     AN ACT Relating to the uniform environmental covenants act; amending RCW 70.105D.060, 70.105D.050, and 70.105D.020; adding a new chapter to Title 64 RCW; and providing an effective date.

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

NEW SECTION.  Sec. 1   The legislature finds that the national conference of commissioners on uniform state laws has developed model legislation called the uniform environmental covenants act. The act ensures that environmental covenants, recorded use restrictions negotiated in connection with hazardous waste site cleanups, and other environmental response projects are legally valid and enforceable. The uniform environmental covenants act achieves this objective by providing clear statutory standards that override court-made doctrines that do not fit such land cleanup and reuse contexts. The legislature further finds that nothing in this chapter will amend or modify any local or state laws that determine when environmental covenants are required, when a particular contaminated site must be cleaned up, or the standards for a cleanup.
     Adoption of the uniform environmental covenants act in Washington will provide all participants in a cleanup with greater confidence that environmental covenants and other institutional controls will be effective over the life of the cleanup. This will speed cleanups of many sites and assist in the recycling of urban brownfield properties into new economic uses for the benefit of the citizens of Washington.
     This chapter adopts most provisions of the model legislation while making modifications to integrate the uniform environmental covenants act with Washington's environmental cleanup programs.

NEW SECTION.  Sec. 2   This chapter may be cited as the uniform environmental covenants act.

NEW SECTION.  Sec. 3   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Activity and use limitations" means restrictions or obligations created under this chapter with respect to real property.
     (2) "Agency" means the department of ecology or any other local government or state agency or the United States environmental protection agency that determines or approves the environmental response project pursuant to which the environmental covenant is created.
     (3)(a) "Common interest community" means a condominium, cooperative, or other real property with respect to which a person, by virtue of the person's ownership of a parcel of real property, is obligated to pay property taxes or insurance premiums, or for maintenance, or improvement of other real property described in a recorded covenant that creates the common interest community.
     (b) "Common interest community" includes but is not limited to:
     (i) An association of apartment owners as defined in RCW 64.32.010;
     (ii) A unit owners' association as defined in RCW 64.34.020 and organized under RCW 64.34.300;
     (iii) A master association as provided in RCW 64.34.276;
     (iv) A subassociation as provided in RCW 64.34.278; and
     (v) A homeowners' association as defined in RCW 64.38.010.
     (4) "Environmental covenant" means a servitude arising under an environmental response project that imposes activity and use limitations and includes institutional controls consisting of restrictive covenants under chapter 70.105D RCW.
     (5) "Environmental response project" means a plan or work performed for environmental remediation of real property and conducted:
     (a) Under a federal or state program governing environmental remediation of real property, including chapters 43.21C, 64.44, 70.95, 70.98, 70.105, 70.105D, 90.48, and 90.52 RCW;
     (b) Incident to closure of a solid or hazardous waste management unit, if the closure is conducted with approval of an agency; or
     (c) Under the state voluntary clean-up program authorized under chapter 70.105D RCW.
     (6) "Holder" means the grantee of an environmental covenant as specified in section 4(1) of this act.
     (7) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
     (8) "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.
     (9) "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 SECTION.  Sec. 4   (1) Any person, including a person that owns an interest in the real property, the agency, or a municipality or other 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.
     (2) A right of an agency under this chapter or under an environmental covenant, other than a right as a holder, is not an interest in real property.
     (3) An agency is bound by any obligation it assumes in an environmental covenant, but an agency does not assume obligations merely by signing an environmental covenant. Any other person that signs an environmental covenant is bound by the obligations the person 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.
     (4) The following rules apply to interests in real property in existence at the time an environmental covenant is created or amended:
     (a) 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.
     (b) 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.
     (c) A subordination agreement may be contained in an environmental covenant covering real property or in a separate record. If the environmental covenant covers commonly owned property in a common interest community, the record may be signed by any person authorized by the governing board of the owners' association.
     (d) 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 SECTION.  Sec. 5   (1) An environmental covenant must:
     (a) State that the instrument is an environmental covenant executed pursuant to this chapter;
     (b) Contain a legally sufficient description of the real property subject to the covenant;
     (c) Describe the activity and use limitations on the real property;
     (d) Identify every holder;
     (e) Be signed by the agency, every holder, and unless waived by the agency every owner of the fee simple of the real property subject to the covenant; and
     (f) Identify the name and location of any administrative record for the environmental response project reflected in the environmental covenant.
     (2) In addition to the information required by subsection (1) of this section, an environmental covenant may contain other information, restrictions, and requirements agreed to by the persons who signed it, including any:
     (a) Requirements for notice following 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 on, the property subject to the covenant;
     (b) Requirements for periodic reporting describing compliance with the covenant;
     (c) Rights of access to the property granted in connection with implementation or enforcement of the covenant;
     (d) Brief narrative description of the contamination and remedy, including the contaminants of concern, the pathways of exposure, limits on exposure, and the location and extent of the contamination;
     (e) Limitation on amendment or termination of the covenant in addition to those contained in sections 10 and 11 of this act;
     (f) Rights of the holder in addition to its right to enforce the covenant pursuant to section 12 of this act;
     (g) Other information, restrictions, or requirements required by the agency, including the department of ecology where the covenant is executed as an institutional control under the authority of RCW 70.105D.030.
     (3) In addition to other conditions for its approval of an environmental covenant, the agency may require those persons specified by the agency who have interests in the real property to sign the covenant.
     (4) The agency may also require notice and opportunity to comment upon an environmental covenant as part of public participation efforts related to the environmental response project.
     (5) The lead agency for environmental response shall coordinate and collaborate with local land use planning authorities in the development of the land use and activity restrictions in the environmental covenant. The agencies involved in developing the restrictions shall consider potential redevelopment and revitalization opportunities and obtain information regarding present and proposed land and resource uses, and the applicable comprehensive land use plan and zoning provisions applicable to the property to be subject to the environmental covenant.

NEW SECTION.  Sec. 6   (1) An environmental covenant that complies with this chapter runs with the land.
     (2) An environmental covenant that is otherwise effective is valid and enforceable even if:
     (a) It is not appurtenant to an interest in real property;
     (b) It can be or has been assigned to a person other than the original holder;
     (c) It is not of a character that has been recognized traditionally at common law;
     (d) It imposes a negative burden;
     (e) It imposes an affirmative obligation on a person having an interest in the real property or on the holder;
     (f) The benefit or burden does not touch or concern real property;
     (g) There is no privity of estate or contract;
     (h) The holder dies, ceases to exist, resigns, or is replaced; or
     (i) The owner of an interest subject to the environmental covenant and the holder are the same person.
     (3) An instrument that creates restrictions or obligations with respect to real property that would qualify as activity and use limitations except for the fact that the instrument was recorded before the effective date of this section is not invalid or unenforceable because of any of the limitations on enforcement of interests described in subsection (2) of this section or because it was identified as an easement, servitude, deed restriction, or other interest. This chapter does not apply in any other respect to such an instrument.
     (4) 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 SECTION.  Sec. 7   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. An environmental covenant may prohibit or restrict uses of real property that are authorized by zoning or by law other than this chapter.

NEW SECTION.  Sec. 8   (1) A copy of an environmental covenant shall be provided by the persons and in the manner required by the agency to:
     (a) Each person that signed the covenant;
     (b) Each person holding a recorded interest in the real property subject to the covenant;
     (c) Each person in possession of the real property subject to the covenant;
     (d) Each municipality or other unit of local government in which real property subject to the covenant is located;
     (e) The department of ecology; and
     (f) Any other person the agency requires.
     (2) The validity of an environmental covenant is not affected by failure to provide a copy of the covenant as required under this section.

NEW SECTION.  Sec. 9   (1) An environmental covenant and any amendment or termination of the covenant must be recorded 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.
     (2) Except as otherwise provided in section 10(3) of this act, an environmental covenant is subject to the laws of this state governing recording and priority of interests in real property.

NEW SECTION.  Sec. 10   (1) An environmental covenant is perpetual unless it is:
     (a) By its terms limited to a specific duration or terminated by the occurrence of a specific event;
     (b) Terminated by consent pursuant to section 11 of this act;
     (c) Terminated pursuant to subsection (2) of this section;
     (d) Terminated by foreclosure of an interest that has priority over the environmental covenant; or
     (e) Terminated or modified in an eminent domain proceeding, but only if:
     (i) The agency that signed the covenant is a party to the proceeding;
     (ii) All persons identified in section 11 (1) and (2) of this act are given notice of the pendency of the proceeding; and
     (iii) The court determines, after hearing, that the termination or modification will not adversely affect human health or the environment.
     (2) If the agency that signed an environmental covenant has determined that the intended benefits of the covenant can no longer be realized, a court, under the doctrine of changed circumstances, in an action in which all persons identified in section 11 (1) and (2) of this act have been given notice, may terminate the covenant or reduce its burden on the real property subject to the covenant. The agency's determination or its failure to make a determination upon request is subject to review pursuant to chapter 34.05 RCW.
     (3) Except as otherwise provided in subsections (1) and (2) of this section, 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.
     (4) An environmental covenant may not be extinguished, limited, or impaired by the extinguishment of a mineral interest under chapter 78.22 RCW.

NEW SECTION.  Sec. 11   (1) An environmental covenant may be amended or terminated by consent only if the amendment or termination is signed by:
     (a) The agency;
     (b) Unless waived by the agency, the current owner of the fee simple of the real property subject to the covenant;
     (c) Each person that originally signed the covenant, unless the person waived in a signed record the right to consent or a court finds that the person no longer exists or cannot be located or identified with the exercise of reasonable diligence; and
     (d) Except as otherwise provided in subsection (4)(b) of this section, the holder.
     (2) 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 a signed record the right to consent to amendments.
     (3) Except for an assignment undertaken pursuant to a governmental reorganization, assignment of an environmental covenant to a new holder is an amendment.
     (4) Except as otherwise provided in an environmental covenant:
     (a) A holder may not assign its interest without consent of the other parties;
     (b) A holder may be removed and replaced by agreement of the other parties specified in subsection (1) of this section; and
     (c) A court of competent jurisdiction may fill a vacancy in the position of holder.

NEW SECTION.  Sec. 12   (1) A civil action for injunctive or other equitable relief for violation of an environmental covenant may be maintained by:
     (a) A party to the covenant;
     (b) The agency or, if it is not the agency, the department of ecology;
     (c) Any person to whom the covenant expressly grants power to enforce;
     (d) A person whose interest in the real property or whose collateral or liability may be affected by the alleged violation of the covenant;
     (e) A municipality or other unit of local government in which the real property subject to the covenant is located;
     (f) An owner of real property that directly abuts the real property subject to the environmental covenant; or
     (g) An owner of property affected by a hazardous substance release addressed in the environmental covenant.
     (2) This chapter does not limit the regulatory authority of the agency or the department of ecology under law other than this chapter with respect to an environmental response project.
     (3) A person is not responsible for or subject to liability for environmental remediation solely because it has the right to enforce an environmental covenant.

NEW SECTION.  Sec. 13   (1) The department of ecology shall establish and maintain a registry that contains the complete text of all environmental covenants and any amendment or termination of those covenants. The registry may also contain any other information concerning environmental covenants and the real property subject to them that the department of ecology considers appropriate. The registry is a public record for purposes of chapter 42.56 RCW, but the department shall maintain electronic access to the registry without requiring a public records request for any information included in the registry.
     (2) After an environmental covenant or an amendment or termination of a covenant is filed in the registry established pursuant to subsection (1) of this section, a notice of the covenant, amendment, or termination that complies with this section may be recorded in the land records in lieu of recording the entire covenant. Any such notice must contain:
     (a) A legally sufficient description and any available street address of the real property subject to the covenant;
     (b) The name and address of the owner of the fee simple interest in the real property, the agency, and the holder if other than the agency;
     (c) A statement that the covenant, amendment, or termination is available in a registry at the department of ecology, which discloses the method of any electronic access; and
     (d) A statement that the notice is notification of an environmental covenant executed pursuant to this chapter.
     (3) A statement in substantially the following form, executed with the same formalities as a deed in this state, satisfies the requirements of subsection (2) of this section:
     "1. This notice is filed in the land records of the [political subdivision] of [insert name of jurisdiction in which the real property is located] pursuant to section 13 of this act.
     2. This notice and the covenant, amendment, or termination to which it refers may impose significant obligations with respect to the property described below.
     3. A legal description of the property is attached as Exhibit A to this notice. The address of the property that is subject to the environmental covenant is [insert address of property] or [not available].
     4. The name and address of the owner of the fee simple interest in the real property on the date of this notice is [insert name of current owner of the property and the owner's current address as shown on the tax records of the jurisdiction in which the property is located].
     5. The environmental covenant, amendment, or termination was signed by [insert name and address of the agency].
     6. The environmental covenant, amendment, or termination was filed in the registry on [insert date of filing].
     7. The full text of the covenant, amendment, or termination and any other information required by the agency is on file and available for inspection and copying in the registry maintained for that purpose by the department of ecology."
     (4) Failure to file a notice in the registry does not invalidate or limit the application or enforceability of the covenant.

Sec. 14   RCW 70.105D.060 and 2005 c 211 s 3 are each amended to read as follows:
     The department's investigative and remedial decisions under RCW 70.105D.030 and 70.105D.050, its decisions regarding filing a lien under RCW 70.105D.055, and its decisions regarding liable persons under RCW 70.105D.020(16), 70.105D.040, 70.105D.050, and 70.105D.055 shall be reviewable exclusively in superior court and only at the following times: (1) In a cost recovery suit under RCW 70.105D.050(3); (2) in a suit by the department to enforce an order or an agreed order, or seek a civil penalty under this chapter; (3) in a suit for reimbursement under RCW 70.105D.050(2); (4) in a suit by the department to compel investigative or remedial action; (5) in a citizen's suit under RCW 70.105D.050(5); ((and)) (6) in a suit for removal or reduction of a lien under RCW 70.105D.050(7); and (7) in a review of a determination or failure to make a determination whether to seek a judicial termination or modification of an environmental covenant under section 10 of this act. Except in suits for reduction or removal of a lien under RCW 70.105D.050(7), the court shall uphold the department's actions unless they were arbitrary and capricious. In suits for reduction or removal of a lien under RCW 70.105D.050(7), the court shall review such suits pursuant to the standards set forth in RCW 70.105D.050(7).

Sec. 15   RCW 70.105D.050 and 2005 c 211 s 2 are each amended to read as follows:
     (1) With respect to:
     (a) Any release, or threatened release, for which the department does not conduct or contract for conducting remedial action and for which the department believes remedial action is in the public interest((,)); and
     (b) Any violation of an environmental covenant executed as an element of a remedial action, the director shall issue orders or agreed orders requiring potentially liable persons to provide the remedial action or comply with the terms of the environmental covenant. Any liable person who refuses, without sufficient cause, to comply with an order or agreed order of the director is liable in an action brought by the attorney general for:
     (((a))) (i) Up to three times the amount of any costs incurred by the state as a result of the party's refusal to comply; and
     (((b))) (ii) A civil penalty of up to twenty-five thousand dollars for each day the party refuses to comply.
The treble damages and civil penalty under this subsection apply to all recovery actions filed on or after March 1, 1989.
     (2) Any person who incurs costs complying with an order issued under subsection (1) of this section may petition the department for reimbursement of those costs. If the department refuses to grant reimbursement, the person may within thirty days thereafter file suit and recover costs by proving that he or she was not a liable person under RCW 70.105D.040 and that the costs incurred were reasonable.
     (3) The attorney general shall seek, by filing an action if necessary, to recover the amounts spent by the department for investigative and remedial actions and orders, and agreed orders, including amounts spent prior to March 1, 1989.
     (4) The attorney general may bring an action to secure such relief as is necessary to protect human health and the environment under this chapter.
     (5)(a) Any person may commence a civil action to compel the department to perform any nondiscretionary duty under this chapter. At least thirty days before commencing the action, the person must give notice of intent to sue, unless a substantial endangerment exists. The court may award attorneys' fees and other costs to the prevailing party in the action.
     (b) Civil actions under this section and RCW 70.105D.060 may be brought in the superior court of Thurston county or of the county in which the release or threatened release exists.
     (6) Any person who fails to provide notification of releases consistent with RCW 70.105D.110 or who submits false information is liable in an action brought by the attorney general for a civil penalty of up to five thousand dollars per day for each day the party refuses to comply.
     (7) Any person who owns real property or lender holding a mortgage on real property that is subject to a lien filed under RCW 70.105D.055 may petition the department to have the lien removed or the amount of the lien reduced. If, after consideration of the petition and the information supporting the petition, the department decides to deny the request, the person may, within ninety days after receipt of the department's denial, file suit for removal or reduction of the lien. The person is entitled to removal of a lien filed under RCW 70.105D.055(2)(a) if they can prove by a preponderance of the evidence that the person is not a liable party under RCW 70.105D.040. The person is entitled to a reduction of the amount of the lien if they can prove by a preponderance of the evidence:
     (a) For liens filed under RCW 70.105D.055(2)(a), the amount of the lien exceeds the remedial action costs the department incurred related to cleanup of the real property; and
     (b) For liens filed under RCW 70.105D.055(2)(c), the amount of the lien exceeds the remedial action costs the department incurred related to cleanup of the real property or exceeds the increase of the fair market value of the real property solely attributable to the remedial action conducted by the department.

Sec. 16   RCW 70.105D.020 and 2005 c 191 s 1 are each amended to read as follows:
     (1) "Agreed order" means an order issued by the department under this chapter with which the potentially liable person receiving the order agrees to comply. An agreed order may be used to require or approve any cleanup or other remedial actions but it is not a settlement under RCW 70.105D.040(4) and shall not contain a covenant not to sue, or provide protection from claims for contribution, or provide eligibility for public funding of remedial actions under RCW 70.105D.070(2)(d)(xi).
     (2) "Department" means the department of ecology.
     (3) "Director" means the director of ecology or the director's designee.
     (4) "Environmental covenant" has the same meaning as defined in section 3 of this act.
     (5) "Facility" means (a) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, vessel, or aircraft, or (b) any site or area where a hazardous substance, other than a consumer product in consumer use, has been deposited, stored, disposed of, or placed, or otherwise come to be located.
     (((5))) (6) "Federal cleanup law" means the federal comprehensive environmental response, compensation, and liability act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended by Public Law 99-499.
     (((6))) (7) "Foreclosure and its equivalents" means purchase at a foreclosure sale, acquisition, or assignment of title in lieu of foreclosure, termination of a lease, or other repossession, acquisition of a right to title or possession, an agreement in satisfaction of the obligation, or any other comparable formal or informal manner, whether pursuant to law or under warranties, covenants, conditions, representations, or promises from the borrower, by which the holder acquires title to or possession of a facility securing a loan or other obligation.
     (((7))) (8) "Hazardous substance" means:
     (a) Any dangerous or extremely hazardous waste as defined in RCW 70.105.010 (5) and (6), or any dangerous or extremely dangerous waste designated by rule pursuant to chapter 70.105 RCW;
     (b) Any hazardous substance as defined in RCW 70.105.010(14) or any hazardous substance as defined by rule pursuant to chapter 70.105 RCW;
     (c) Any substance that, on March 1, 1989, is a hazardous substance under section 101(14) of the federal cleanup law, 42 U.S.C. Sec. 9601(14);
     (d) Petroleum or petroleum products; and
     (e) Any substance or category of substances, including solid waste decomposition products, determined by the director by rule to present a threat to human health or the environment if released into the environment.
     The term hazardous substance does not include any of the following when contained in an underground storage tank from which there is not a release: Crude oil or any fraction thereof or petroleum, if the tank is in compliance with all applicable federal, state, and local law.
     (((8))) (9) "Independent remedial actions" means remedial actions conducted without department oversight or approval, and not under an order, agreed order, or consent decree.
     (((9))) (10) "Holder" means a person who holds indicia of ownership primarily to protect a security interest. A holder includes the initial holder such as the loan originator, any subsequent holder such as a successor-in-interest or subsequent purchaser of the security interest on the secondary market, a guarantor of an obligation, surety, or any other person who holds indicia of ownership primarily to protect a security interest, or a receiver, court-appointed trustee, or other person who acts on behalf or for the benefit of a holder. A holder can be a public or privately owned financial institution, receiver, conservator, loan guarantor, or other similar persons that loan money or guarantee repayment of a loan. Holders typically are banks or savings and loan institutions but may also include others such as insurance companies, pension funds, or private individuals that engage in loaning of money or credit.
     (((10))) (11) "Indicia of ownership" means evidence of a security interest, evidence of an interest in a security interest, or evidence of an interest in a facility securing a loan or other obligation, including any legal or equitable title to a facility acquired incident to foreclosure and its equivalents. Evidence of such interests includes, mortgages, deeds of trust, sellers interest in a real estate contract, liens, surety bonds, and guarantees of obligations, title held pursuant to a lease financing transaction in which the lessor does not select initially the leased facility, or legal or equitable title obtained pursuant to foreclosure and their equivalents. Evidence of such interests also includes assignments, pledges, or other rights to or other forms of encumbrance against the facility that are held primarily to protect a security interest.
     (((11))) (12) "Operating a facility primarily to protect a security interest" occurs when all of the following are met: (a) Operating the facility where the borrower has defaulted on the loan or otherwise breached the security agreement; (b) operating the facility to preserve the value of the facility as an ongoing business; (c) the operation is being done in anticipation of a sale, transfer, or assignment of the facility; and (d) the operation is being done primarily to protect a security interest. Operating a facility for longer than one year prior to foreclosure or its equivalents shall be presumed to be operating the facility for other than to protect a security interest.
     (((12))) (13) "Owner or operator" means:
     (a) Any person with any ownership interest in the facility or who exercises any control over the facility; or
     (b) In the case of an abandoned facility, any person who had owned, or operated, or exercised control over the facility any time before its abandonment;
     The term does not include:
     (i) An agency of the state or unit of local government which acquired ownership or control through a drug forfeiture action under RCW 69.50.505, or involuntarily through bankruptcy, tax delinquency, abandonment, or other circumstances in which the government involuntarily acquires title. This exclusion does not apply to an agency of the state or unit of local government which has caused or contributed to the release or threatened release of a hazardous substance from the facility;
     (ii) A person who, without participating in the management of a facility, holds indicia of ownership primarily to protect the person's security interest in the facility. Holders after foreclosure and its equivalent and holders who engage in any of the activities identified in subsection (((13))) (14)(e) through (g) of this section shall not lose this exemption provided the holder complies with all of the following:
     (A) The holder properly maintains the environmental compliance measures already in place at the facility;
     (B) The holder complies with the reporting requirements in the rules adopted under this chapter;
     (C) The holder complies with any order issued to the holder by the department to abate an imminent or substantial endangerment;
     (D) The holder allows the department or potentially liable persons under an order, agreed order, or settlement agreement under this chapter access to the facility to conduct remedial actions and does not impede the conduct of such remedial actions;
     (E) Any remedial actions conducted by the holder are in compliance with any preexisting requirements identified by the department, or, if the department has not identified such requirements for the facility, the remedial actions are conducted consistent with the rules adopted under this chapter; and
     (F) The holder does not exacerbate an existing release. The exemption in this subsection (((12))) (13)(b)(ii) does not apply to holders who cause or contribute to a new release or threatened release or who are otherwise liable under RCW 70.105D.040(1) (b), (c), (d), and (e); provided, however, that a holder shall not lose this exemption if it establishes that any such new release has been remediated according to the requirements of this chapter and that any hazardous substances remaining at the facility after remediation of the new release are divisible from such new release;
     (iii) A fiduciary in his, her, or its personal or individual capacity. This exemption does not preclude a claim against the assets of the estate or trust administered by the fiduciary or against a nonemployee agent or independent contractor retained by a fiduciary. This exemption also does not apply to the extent that a person is liable under this chapter independently of the person's ownership as a fiduciary or for actions taken in a fiduciary capacity which cause or contribute to a new release or exacerbate an existing release of hazardous substances. This exemption applies provided that, to the extent of the fiduciary's powers granted by law or by the applicable governing instrument granting fiduciary powers, the fiduciary complies with all of the following:
     (A) The fiduciary properly maintains the environmental compliance measures already in place at the facility;
     (B) The fiduciary complies with the reporting requirements in the rules adopted under this chapter;
     (C) The fiduciary complies with any order issued to the fiduciary by the department to abate an imminent or substantial endangerment;
     (D) The fiduciary allows the department or potentially liable persons under an order, agreed order, or settlement agreement under this chapter access to the facility to conduct remedial actions and does not impede the conduct of such remedial actions;
     (E) Any remedial actions conducted by the fiduciary are in compliance with any preexisting requirements identified by the department, or, if the department has not identified such requirements for the facility, the remedial actions are conducted consistent with the rules adopted under this chapter; and
     (F) The fiduciary does not exacerbate an existing release.
     The exemption in this subsection (((12))) (13)(b)(iii) does not apply to fiduciaries who cause or contribute to a new release or threatened release or who are otherwise liable under RCW 70.105D.040(1) (b), (c), (d), and (e); provided however, that a fiduciary shall not lose this exemption if it establishes that any such new release has been remediated according to the requirements of this chapter and that any hazardous substances remaining at the facility after remediation of the new release are divisible from such new release. The exemption in this subsection (((12))) (13)(b)(iii) also does not apply where the fiduciary's powers to comply with this subsection (((12))) (13)(b)(iii) are limited by a governing instrument created with the objective purpose of avoiding liability under this chapter or of avoiding compliance with this chapter; or
     (iv) Any person who has any ownership interest in, operates, or exercises control over real property where a hazardous substance has come to be located solely as a result of migration of the hazardous substance to the real property through the ground water from a source off the property, if:
     (A) The person can demonstrate that the hazardous substance has not been used, placed, managed, or otherwise handled on the property in a manner likely to cause or contribute to a release of the hazardous substance that has migrated onto the property;
     (B) The person has not caused or contributed to the release of the hazardous substance;
     (C) The person does not engage in activities that damage or interfere with the operation of remedial actions installed on the person's property or engage in activities that result in exposure of humans or the environment to the contaminated ground water that has migrated onto the property;
     (D) If requested, the person allows the department, potentially liable persons who are subject to an order, agreed order, or consent decree, and the authorized employees, agents, or contractors of each, access to the property to conduct remedial actions required by the department. The person may attempt to negotiate an access agreement before allowing access; and
     (E) Legal withdrawal of ground water does not disqualify a person from the exemption in this subsection (((12))) (13)(b)(iv).
     (((13))) (14) "Participation in management" means exercising decision-making control over the borrower's operation of the facility, environmental compliance, or assuming or manifesting responsibility for the overall management of the enterprise encompassing the day-to-day decision making of the enterprise.
     The term does not include any of the following: (a) A holder with the mere capacity or ability to influence, or the unexercised right to control facility operations; (b) a holder who conducts or requires a borrower to conduct an environmental audit or an environmental site assessment at the facility for which indicia of ownership is held; (c) a holder who requires a borrower to come into compliance with any applicable laws or regulations at the facility for which indicia of ownership is held; (d) a holder who requires a borrower to conduct remedial actions including setting minimum requirements, but does not otherwise control or manage the borrower's remedial actions or the scope of the borrower's remedial actions except to prepare a facility for sale, transfer, or assignment; (e) a holder who engages in workout or policing activities primarily to protect the holder's security interest in the facility; (f) a holder who prepares a facility for sale, transfer, or assignment or requires a borrower to prepare a facility for sale, transfer, or assignment; (g) a holder who operates a facility primarily to protect a security interest, or requires a borrower to continue to operate, a facility primarily to protect a security interest; and (h) a prospective holder who, as a condition of becoming a holder, requires an owner or operator to conduct an environmental audit, conduct an environmental site assessment, come into compliance with any applicable laws or regulations, or conduct remedial actions prior to holding a security interest is not participating in the management of the facility.
     (((14))) (15) "Person" means an individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, state government agency, unit of local government, federal government agency, or Indian tribe.
     (((15))) (16) "Policing activities" means actions the holder takes to ((insure)) ensure that the borrower complies with the terms of the loan or security interest or actions the holder takes or requires the borrower to take to maintain the value of the security. Policing activities include: Requiring the borrower to conduct remedial actions at the facility during the term of the security interest; requiring the borrower to comply or come into compliance with applicable federal, state, and local environmental and other laws, regulations, and permits during the term of the security interest; securing or exercising authority to monitor or inspect the facility including on-site inspections, or to monitor or inspect the borrower's business or financial condition during the term of the security interest; or taking other actions necessary to adequately police the loan or security interest such as requiring a borrower to comply with any warranties, covenants, conditions, representations, or promises from the borrower.
     (((16))) (17) "Potentially liable person" means any person whom the department finds, based on credible evidence, to be liable under RCW 70.105D.040. The department shall give notice to any such person and allow an opportunity for comment before making the finding, unless an emergency requires otherwise.
     (((17))) (18) "Prepare a facility for sale, transfer, or assignment" means to secure access to the facility; perform routine maintenance on the facility; remove inventory, equipment, or structures; properly maintain environmental compliance measures already in place at the facility; conduct remedial actions to clean up releases at the facility; or to perform other similar activities intended to preserve the value of the facility where the borrower has defaulted on the loan or otherwise breached the security agreement or after foreclosure and its equivalents and in anticipation of a pending sale, transfer, or assignment, primarily to protect the holder's security interest in the facility. A holder can prepare a facility for sale, transfer, or assignment for up to one year prior to foreclosure and its equivalents and still stay within the security interest exemption in subsection (((12))) (13)(b)(ii) of this section.
     (((18))) (19) "Primarily to protect a security interest" means the indicia of ownership is held primarily for the purpose of securing payment or performance of an obligation. The term does not include indicia of ownership held primarily for investment purposes nor indicia of ownership held primarily for purposes other than as protection for a security interest. A holder may have other, secondary reasons, for maintaining indicia of ownership, but the primary reason must be for protection of a security interest. Holding indicia of ownership after foreclosure or its equivalents for longer than five years shall be considered to be holding the indicia of ownership for purposes other than primarily to protect a security interest. For facilities that have been acquired through foreclosure or its equivalents prior to July 23, 1995, this five-year period shall begin as of July 23, 1995.
     (((19))) (20) "Public notice" means, at a minimum, adequate notice mailed to all persons who have made timely request of the department and to persons residing in the potentially affected vicinity of the proposed action; mailed to appropriate news media; published in the newspaper of largest circulation in the city or county of the proposed action; and opportunity for interested persons to comment.
     (((20))) (21) "Release" means any intentional or unintentional entry of any hazardous substance into the environment, including but not limited to the abandonment or disposal of containers of hazardous substances.
     (((21))) (22) "Remedy" or "remedial action" means any action or expenditure consistent with the purposes of this chapter to identify, eliminate, or minimize any threat or potential threat posed by hazardous substances to human health or the environment including any investigative and monitoring activities with respect to any release or threatened release of a hazardous substance and any health assessments or health effects studies conducted in order to determine the risk or potential risk to human health.
     (((22))) (23) "Security interest" means an interest in a facility created or established for the purpose of securing a loan or other obligation. Security interests include deeds of trusts, sellers interest in a real estate contract, liens, legal, or equitable title to a facility acquired incident to foreclosure and its equivalents, and title pursuant to lease financing transactions. Security interests may also arise from transactions such as sale and leasebacks, conditional sales, installment sales, trust receipt transactions, certain assignments, factoring agreements, accounts receivable financing arrangements, easements, and consignments, if the transaction creates or establishes an interest in a facility for the purpose of securing a loan or other obligation.
     (((23))) (24) "Industrial properties" means properties that are or have been characterized by, or are to be committed to, traditional industrial uses such as processing or manufacturing of materials, marine terminal and transportation areas and facilities, fabrication, assembly, treatment, or distribution of manufactured products, or storage of bulk materials, that are either:
     (a) Zoned for industrial use by a city or county conducting land use planning under chapter 36.70A RCW; or
     (b) For counties not planning under chapter 36.70A RCW and the cities within them, zoned for industrial use and adjacent to properties currently used or designated for industrial purposes.
     (((24))) (25) "Workout activities" means those actions by which a holder, at any time prior to foreclosure and its equivalents, seeks to prevent, cure, or mitigate a default by the borrower or obligor; or to preserve, or prevent the diminution of, the value of the security. Workout activities include: Restructuring or renegotiating the terms of the security interest; requiring payment of additional rent or interest; exercising forbearance; requiring or exercising rights pursuant to an assignment of accounts or other amounts owed to an obligor; requiring or exercising rights pursuant to an escrow agreement pertaining to amounts owed to an obligor; providing specific or general financial or other advice, suggestions, counseling, or guidance; and exercising any right or remedy the holder is entitled to by law or under any warranties, covenants, conditions, representations, or promises from the borrower.
     (((25))) (26)(a) "Fiduciary" means a person acting for the benefit of another party as a bona fide trustee; executor; administrator; custodian; guardian of estates or guardian ad litem; receiver; conservator; committee of estates of incapacitated persons; trustee in bankruptcy; trustee, under an indenture agreement, trust agreement, lease, or similar financing agreement, for debt securities, certificates of interest or certificates of participation in debt securities, or other forms of indebtedness as to which the trustee is not, in the capacity of trustee, the lender. Except as provided in subsection (((12))) (13)(b)(iii) of this section, the liability of a fiduciary under this chapter shall not exceed the assets held in the fiduciary capacity.
     (b) "Fiduciary" does not mean:
     (i) A person acting as a fiduciary with respect to a trust or other fiduciary estate that was organized for the primary purpose of, or is engaged in, actively carrying on a trade or business for profit, unless the trust or other fiduciary estate was created as part of, or to facilitate, one or more estate plans or because of the incapacity of a natural person;
     (ii) A person who acquires ownership or control of a facility with the objective purpose of avoiding liability of the person or any other person. It is prima facie evidence that the fiduciary acquired ownership or control of the facility to avoid liability if the facility is the only substantial asset in the fiduciary estate at the time the facility became subject to the fiduciary estate;
     (iii) A person who acts in a capacity other than that of a fiduciary or in a beneficiary capacity and in that capacity directly or indirectly benefits from a trust or fiduciary relationship;
     (iv) A person who is a beneficiary and fiduciary with respect to the same fiduciary estate, and who while acting as a fiduciary receives benefits that exceed customary or reasonable compensation, and incidental benefits permitted under applicable law;
     (v) A person who is a fiduciary and receives benefits that substantially exceed customary or reasonable compensation, and incidental benefits permitted under applicable law; or
     (vi) A person who acts in the capacity of trustee of state or federal lands or resources.
     (((26))) (27) "Fiduciary capacity" means the capacity of a person holding title to a facility, or otherwise having control of an interest in the facility pursuant to the exercise of the responsibilities of the person as a fiduciary.

NEW SECTION.  Sec. 17   This chapter modifies, limits, or supersedes the federal electronic signatures in global and national commerce act (15 U.S.C. Sec. 7001 et seq.) but does not modify, limit, or supersede section 101 of that act (15 U.S.C. Sec. 7001(a)) or authorize electronic delivery of any of the notices described in section 103 of that act (15 U.S.C. Sec. 7003(b)).

NEW SECTION.  Sec. 18   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 19   Sections 1 through 13, 16, and 17 of this act constitute a new chapter in Title 64 RCW.

NEW SECTION.  Sec. 20   This act takes effect July 1, 2006.