By Mark Easter and Greg Snarr, Best Best & Krieger.
For the first time in 38 years, a court has declared part of California’s statutory eminent domain law unconstitutional. The ruling, if upheld, will create additional hurdles for public agencies and may have unintended consequences for those the lawsuit sought to protect – property owners.
On March 13, 2014, the Third Appellate District Court of Appeal, in Property Reserve, Inc. v. Super. Ct. of San Joaquin County, found that the pre-condemnation entry statutes violate the takings provisions of article I, section 19 of the California Constitution. The Appellate Court ruled that any entity wishing to conduct statutory pre-condemnation studies must do so in a direct condemnation action.
The term “condemnation” is used to describe the formal act of the exercise of the power of eminent domain to transfer title to the property from its private owner to the government. Condemnation via eminent domain indicates the government is taking ownership of the property or some lesser interest in it, such as an easement.
The State of California has begun a divisive project to build a tunnel through the Sacramento-San Joaquin River Delta to transfer water from north to south. As part of the project development, the State requires access to hundreds of parcels of property to determine if the parcels are environmentally and geologically suitable for the project.
The entry statutes, enacted in 1976, permit a condemning agency to enter a property “to make photographs, studies, surveys, examinations, tests, soundings, borings, samplings, or appraisals” prior to actually condemning the property to be studied. While the entry statutes allow an entity to conduct these surveys prior to and without resorting to condemnation, they do provide the affected property owner with safeguards.
For example, the entry statutes provide that any such agency must get the property owner’s consent to conduct these studies, or, if consent is refused, get an order from a court. The entry statutes further provide a mechanism for the court to decide the probable compensation that the agency must make in order to have the access rights it requests.
The water authorities also wanted to enter the properties to determine each parcel’s botany and hydrology; the presence of sensitive plant and animal species; the existence of vernal pools, wetlands and other animal habitat; the extent of cultural resources and utilities; and potential for recreational uses.
According to published reports, some of the owners challenged the proposed testing and investigation, claiming that the testing and inspections the State wanted to conduct constituted a taking, for which the owners were entitled to just compensation, along with the full panoply of procedural protections that California law affords to condemnees.
In Property Reserve, the State of California petitioned for an order for entry to conduct two general categories of pre-condemnation activities: (1) geological activities (soil testing, boring and backfilling any holes with a cement grout mixture), and (2) environmental activities (take surveys, mapping, minor soil samples, and observe wildlife).
On appeal, the Court ruled that the proposed geological activities constitute a taking per se. The Appellate Court further ruled that the environmental activities constitute a taking of a compensable property interest similar to an easement. Thus, the Appellate Court found that the pre-condemnation entry statutes were unconstitutional.
This ruling apparently allows property owners to deny access unless, or until, the public agency files a condemnation action and follows the acquisition procedures of eminent domain law. However, this decision does not prevent a public agency and a property owner from entering into a voluntary agreement allowing for access and testing.
Based on this ruling, an entity would have to condemn prior to conducting minimally invasive tests. As the dissenting opinion of Judge Blease states, the majority’s opinion finding the entry statutes unconstitutional “does so without according the statutes the simplest presumption of constitutionality.”
The California Supreme Court will likely review this case. It remains to be seen how courts will handle agencies’ access needs in the interim. If the Supreme Court does not overturn it, the ruling will inflict more work on condemning agencies and the courts. This decision could also negatively impact property owners because they may now need to defend against an eminent domain action instead of a less expensive, less time consuming petition under the entry statutes.
The Court advised that the dilemma it found with the right of entry statutes does not necessarily mean that inspections must be preceded by a complete eminent domain action. Instead, the Court held that the Legislature could change the right of entry measures to ensure that the owner is given the necessary minimal constitutional protections. If efforts to obtain Supreme Court review are unsuccessful, the next dispute over this issue may take place in the Legislature.
Mark Easter is a partner with Best Best & Krieger LLP in the Riverside office and is the firms’ Eminent Domain practice group leader. His practice focuses on public agency acquisitions, including eminent domain and inverse condemnation litigation for public agencies throughout California. He can reached at email@example.com
Greg Snarr is an associate in Best Best & Krieger LLP’s Eminent Domain, Business Services and Litigation practice groups and is based in the firm’s Riverside office.. His practice broadly encompasses pre-litigation real-property acquisitions as well as all aspects and stages of complex, commercial litigation in state and federal courts. He can be reached at firstname.lastname@example.org.