BILL ANALYSIS                                                                                                                                                                                                    ”






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          SB 110 (Rubio)
          As Amended May 2, 2011
          Hearing Date: May 10, 2011
          Fiscal: No
          Urgency: No
          BCP
                    

                                        SUBJECT
                                           
                    Real Property Disclosures: Mining Operations

                                      DESCRIPTION  

          This bill would require expert reports used to fulfill natural 
          hazard disclosure requirements in residential property sales to 
          include a "Notice of Mining Operations" if the property is 
          within 1,000 feet of specified mining operations.

                                      BACKGROUND  

          In 1998, the Legislature enacted AB 1195 (Torlakson), Chapter 
          65, Statutes of 1998, to require sellers and their agents to 
          issue a Natural Hazard Disclosure Statement to buyers in real 
          property transactions.  The statement requires the seller or 
          agent to indicate whether a property is within specified natural 
          hazard zones, such as high fire hazard severity zones and 
          earthquake fault zones.  The seller may make the disclosure 
          statement personally or by using a third-party expert report.  
          When using an expert to satisfy the disclosure requirement, 
          existing law requires the expert to disclose whether the 
          property is within an airport influence area, the jurisdiction 
          of the San Francisco Bay Conservation and Development 
          Commission, or one mile of specified farm properties.

          This bill, sponsored by the California Construction and 
          Industrial Materials Association (CalCIMA), would additionally 
          require the expert to disclose whether the property is within 
          1,000 feet of real property subject to mine operations 
          identified in a Notice of Reclamation Plan Approval.  Similar to 
          an airport or farming operation, those mining operations 
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          arguably impact the surrounding property and prospective 
          homeowners should be aware of the potential impact on the 
          property from those operations.

                                CHANGES TO EXISTING LAW
           
           Existing law  requires a real property seller, or the seller's 
          agent, to disclose to buyers any material facts that would have 
          a significant and measurable effect on the value or desirability 
          of the property (if the buyer does not know, and would not 
          reasonably discover, those facts).  (Karoutas v. Homefed Bank 
          (1991) 232 Cal.App.3d 767; Reed v. King (1983) 145 Cal.App.3d 
          261.)

           Existing law  requires a seller's real estate broker to conduct a 
          reasonably competent and diligent visual inspection of a 
          property offered for sale, and to disclose to potential buyers 
          any facts revealed that would materially affect the value or 
          desirability of the property.  (Civ. Code Sec. 2079.)

           Existing law  requires a seller of real property to make the 
          following disclosures, among others, if the seller has actual 
          knowledge of the information disclosed:
                 Environmentally hazardous substances, materials, or 
               products are on the property.  (Civ. Code Sec. 1102.6.)
                 The property is either adjacent to an industrial use or 
               affected by a nuisance created by such a use.  (Civ. Code 
               Sec. 1102.17.)
           
          Existing law  requires a seller, or the seller's agent in certain 
          cases, to disclose to a buyer when a property is in a specified 
          natural hazard zone.  (Civ. Code Sec. 1103.2.)  Such disclosures 
          are necessary: (1) if the seller or agent has actual knowledge; 
          (2) in some cases, if the local jurisdiction has compiled a 
          list, by parcel, of properties within the zone; or (3) in other 
          cases, if the local jurisdiction has posted a map that includes 
          the property.  (Civ. Code Sec. 1103.)

           Existing law  permits a seller to use an expert report or opinion 
          from an engineer, land surveyor, geologist, or expert in natural 
          hazard discovery to fulfill his or her natural hazard 
          notification requirements.  (Civ. Code Sec. 1103.4.)  

           This bill  would require an expert who produces a natural hazard 
          disclosure report to determine whether the property is located 
          within 1,000 feet of a parcel of real property subject to mine 
                                                                      



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          operations identified in a Notice of Reclamation Plan Approval, 
          as specified.  If the residential property is within 1,000 feet, 
          the report shall contain the following notice:

            NOTICE OF MINING OPERATIONS

            This property is located within 1000 feet of a mine 
            operation that has been identified in a Notice of 
            Reclamation Plan Approval recorded with the county recorder 
            pursuant to Section 2772.7 of the Public Resources Code. 
            Accordingly, the property may be subject to inconveniences 
            resulting from mining operations. You may wish to consider 
            the impacts of these practices before you complete your 
            transaction.
































                                                                      



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                                        COMMENT
           
          1.   Stated need for the bill  

          According to the author:

            Historically, aggregate operations were located in areas where 
            they had few neighbors.  However, urbanization has resulted in 
            the encroachment of existing operations by other land uses.  
            SB 110 would ensure people who move adjacent to mine 
            facilities are aware of their existence and activities, 
            reducing misunderstandings by:
                     Ensuring that new property purchasers are informed 
                 of an adjacent industrial use prior to purchasing 
                 property.
                     Ensuring that property owners are aware of the 
                 location of information on reclamation plans governing 
                 the end use configuration of adjacent mining property is 
                 located.
                     Enhancing knowledge of adjacent industrial uses and 
                 approved reclamation›,] SB 110 would help reduce 
                 misunderstandings between preexisting vital industries 
                 and new property owners.

          2.   Proposed disclosure aimed at informing individuals of nearby 
            mining operations  

          Under existing law, sellers and their agents are required to 
          disclose any fact that would have a significant or measurable 
          effect on the value or desirability of the property. (Karoutas, 
          232 Cal.App.3d 767; Reed, 145 Cal.App.3d 261.)  Cities and 
          counties are also arguably permitted to adopt ordinances that 
          allow notification to a prospective homeowner that the dwelling 
          is in close proximity to mining activity.  (Civ. Code Sec. 
          1102.6a.)  This bill would augment those disclosures by 
          requiring expert reports used to fulfill the natural hazard 
          disclosure requirements to include a "Notice of Mining 
          Operations" if the property is within 1,000 feet of a mine 
          operation identified in a Notice of Reclamation Plan Approval 
          recorded with the county recorder.  

          As background, surface mining operations are prohibited unless a 
          reclamation plan has been filed, and approved, by the lead 
          agency.   Upon approval, the "Notice of Reclamation Plan 
          Approval" must be filed with the county recorder and state: 
          "Mining operations conducted on the hereinafter described real 
                                                                      



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          property are subject to a reclamation plan approved by the ____ 
          (lead agency), a copy of which is on file with the ____."  (Pub. 
          Res. Code Sec. 2272.7(a).)  As a result, this bill would 
          arguably require the expert hired to fulfill the disclosure 
          requirements to examine the public record to see if there is, in 
          fact, a mining operation within 1,000 feet of the subject 
          property.

          Considering that 1,000 feet is relatively close to what could be 
          a significant mining operation, the proposed notice would appear 
          to appropriately put the prospective purchaser on notice of the 
          nearby activity.  If that activity does, in fact, have a 
          significant or measurable effect on the property, the seller 
          would arguably already have to disclose the nearby mining 
          activity.  (See Karoutas, 232 Cal.App.3d 767; Reed, 145 
          Cal.App.3d 261.)  

          3.   Distance  

          To trigger the requirement for the expert to disclose, the 
          mining operation must be within 1,000 feet of the property 
          at-issue.  That distance is important because it must balance 
          the importance of notifying prospective homeowners of the 
          potential disruptive effects of the mine and, also, not be so 
          broad as to artificially deflate the value of properties that 
          are not affected by the mining activity.  Although the distance 
          is substantially less than the one-mile radius for notification 
          of nearby farms, it is unclear whether the byproducts of mining 
          activity would, in fact, travel as far as those from certain 
          farming operations.  On the other hand, certain effects of 
          mining, such as trucks carrying gravel along roads may stretch 
          far beyond the 1,000 foot radius.

          As noted above, from a policy standpoint it is important to have 
          as narrow a radius as possible so as not to create a bright-line 
          rule that requires homeowners to notify prospective purchasers 
          of mining operations that do not actually impact the property.  

          4.   Interaction with nuisance  

          While the introduced version of this bill would have provided 
          mining operations with broad protection from nuisance lawsuits, 
          the present version of the bill seeks to address that issue by 
          requiring the above disclosure when the NHDS is performed by an 
          expert.  That disclosure could put the prospective owner on 
          notice of the potential impact of the mining activity, and thus, 
                                                                      



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          potentially reduce the likelihood that the owner will be caught 
          by surprise by the activities of the mining operation.  If the 
          homeowner subsequently sought to bring a nuisance action against 
          the mine, that notice might be enough to show that the homeowner 
          knew of the potential nuisance and nevertheless elected to move 
          near the mine.  Despite that potential impact, the notice would 
          appear to serve the policy goal of warning individuals prior to 
          moving - that notice may allow a prospective purchaser to make 
          an educated decision about whether he or she is willing to 
          endure the nuisance in exchange for the price of the property.

           Support  :  None Known

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  California Construction and Industrial Materials 
          Association 

           Related Pending Legislation  :  None Known

           Prior Legislation  :  See Background.

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