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Environmental Transactions and Brownfields Committee Newsletter – March 2005

The imposition of institutional controls on significant acreage which is only a part of the burdened owner’s property often results in a conflict between achieving sufficient certainty in delineating the boundary of the area subject to institutional controls and avoiding excessive costs to achieve that precision.

Consider as an example an Environmental Land Usage Restriction (ELUR) imposing institutional controls on two hundred acres of a property owner’s fifteen hundred undeveloped acres. Such institutional controls may contain significant restrictions which are designed, inter alia, to prevent human exposure to contaminants. The existence or threatened migration of such contaminants, and the restrictions imposed on the property, can materially impair the value of the impacted property. The owner therefore wants to be sure that this impacted property is clearly identified so no more acreage than necessary is deemed to be under the institutional control cloud.

Furthermore, the property owner holding undeveloped acreage wants to know precisely where the institutional control boundaries are so it does not inadvertently violate the restrictions of the ELUR, such as limitations on use of surface water or access to groundwater.

On the other hand, the potentially responsible parties (“PRPs”) who may be initially required by regulatory authorities to seek imposition of the institutional controls may understandably want to avoid or limit expenses involved in field surveying those boundaries, which would be in addition to compensation which may be payable to the landowner for the impact of the institutional controls on its property.

And while the PRP Group initially responsible for seeking voluntary imposition of the ELUR institutional control plan would understandably be reluctant to incur the expense of obtaining a full field survey to delineate the institutional control boundaries over such large acreage, such expenses are a double-edged sword. The property owner should also reasonably expect that a PRP Group may seek to negotiate downward the compensation it would be willing to offer the property owner in compensation for imposing the institutional controls if the property owner was insisting upon a full field survey to delineate the boundaries, even though this quid pro quo may be unspoken.

We recently encountered a property owner’s concern for a clear demarcation of institutional control boundaries in representing a property owner who owned significant undeveloped acreage adjacent to a Superfund site in Rhode Island. The institutional controls burdened approximately 37 acres of property, mostly heavily wooded with ponds, out of a total of approximately 1,000 acres. The property owner was particularly concerned about the delineation of the institutional control boundaries, because it did not want to inadvertently engage in impermissible activities in the restricted area, and because portions of its acreage which were intended to be outside the institutional control boundaries could potentially be used for residential subdivision development. The property owner did not want a title company to take exception to these valuable potential lots as impacted by an institutional control plan because of the imprecision of the delineation of the institutional control boundaries.

These considerations of the precision of institutional control boundaries under circumstances where only portions of larger parcels are impacted is particularly important when one understands that title examiners may be required to include the institutional control restrictions as an exception in a title insurance policy insuring acreage remote from the institutional control area if the institutional control boundaries are sufficiently vague so as to implicate abutting property.

These concerns were resolved by a compromise in our particular situation. Rather than a Rhode Island Class I Survey, which requires full field engineering, a Class IV Survey was utilized. A Class IV Survey involves a plan compiled from maps, deeds, and other sources of information, which may or may not be a product of limited field investigations. Under surveying standards adopted in Rhode Island, a Class IV Survey is subject to such changes as an accurate field survey may disclose. Accordingly, Class IV Surveys are not used as an accurate boundary survey, as is a Class I, by comparison. A Class I Survey is performed to a high degree of what surveyors call “positional accuracy”, and this is the type of survey that is used for urban surveys or subdivisions, etc.

While the survey standards adopted by the American Land Title Association (“ALTA”) and the American Congress on Surveying and Mapping (“ACSM”) do not provide for compilation plans as surveys, ALTA/ACSM does recognize that states may set differing standards. And a number of states, such as Rhode Island, do recognize compilation plans as a category of survey. Accordingly, local guidelines should be consulted.

While a compilation plan survey would not provide precision, it may well provide sufficient guidance to title counsel to allow them to avoid taking exception for the ELUR on acreage of the owner not intended for institutional control restrictions. This may often involve negotiation with local title counsel, and title counsel may agree to release much of the area indicated by the compilation plan survey as outside the institutional control area, and may even issue affirmative insurance in this regard.

In our situation, to address the property owner’s concern about its understanding of the location of the institutional control boundaries as it translated to its undeveloped acreage, the parties agreed to delineation of the approximate boundaries of the institutional control area on the ground by tree blazing, a standard forestry technique for marking boundaries. This technique involves scraping off some bark, perhaps 6″x8″, and painting the scraped area with high visibility, durable paint. This was possible without detailed engineering work because many of the boundaries keyed off a specified distance from the banks of ponds, wetland edges or even monitoring wells. This allowed a field measurement of the distance from these features and the blazing of trees with paint. This provided sufficient guidance to the property owner to prevent inadvertent violation of the institutional control plan by engaging in prohibited activities, such as use of ground water, or construction of subsurface structures.

Accordingly, the combination of a Class IV Survey (i.e., a compilation plan) and a direct “on the ground” delineation of the boundary area, which was subject to verification by the PRP Group’s consultants, provided sufficient certainty as to the institutional control boundaries without undue expense. The parties also agreed that in the event greater accuracy was required for a proposed property transfer or to more accurately determine a particular boundary point, the PRP Group would provide field engineering services at its expense to the extent necessary. This further compromise ensured the property owner that additional clarification would be provided if needed and it allowed the PRP Group to avoid the cost of more extensive engineering services until, and unless, it was actually required.

The net result was a compromise which met the requirements of establishing an institutional control plan on acreage sufficiently defined at reasonable expense to prevent inadvertently clouding title to adjacent acreage.

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