On July 1, 2001, Colorado Senate Bill 01-145 (SB 145) took effect. The statute creates an "environmental covenant" as a mechanism for enforcing use restrictions imposed in connection with the remediation of contaminated sites. The environmental covenants contain use restrictions that were relied upon in the remedial decision. Such restrictions are commonly known as "institutional controls." Colorado enacted this law because it was not clear whether existing mechanisms (such as common-law covenants and easements) would be legally enforceable in relevant circumstances. During the drafting of SB 145, the Colorado Attorney General's Office and the Colorado Department of Public Health and Environment (DPHE) solicited input from a variety of interested parties on the scope, content, and wording of the proposed bill. Representatives from a number of federal agencies participated in discussions on various drafts of the legislation. In the course of these discussions, the federal agency representatives argued that the state does not have the authority to require a federal agency to grant an environmental covenant, at least in cases where the federal agency is not otherwise transferring the land out of federal ownership. This Dialogue contends that the agencies are mistaken.

The federal agencies' position may be summarized as follows. They contend that the waiver of federal sovereign immunity in §6001 of the Resource Conservation and Recovery Act (RCRA) does not encompass state laws that mandate disposal of federal property rights. It appears that this argument rests on alternate theories. The first is that the requirement to grant an environmental covenant (which they characterize as a property interest) is not a "requirement respecting control and abatement of . . . solid waste or hazardous waste disposal and management." The second theory is based on the fact that RCRA waives the federal government's immunity from state law only to the extent that the state law treats federal agencies the same as private parties. The federal agencies contend that Colorado's law discriminates against federal agencies. Colorado's law requires environmental covenants for cleanups that do not allow unrestricted use, or that do incorporate engineered structures, such as a cap. Typically, such cleanups are less expensive than those that allow unrestricted use of the property, at least in the short run. Because federal agencies believe that they cannot grant covenants due to the Property Act, they contend that the statute essentially precludes them from taking advantage of these less expensive cleanup options.