BILL ANALYSIS Ó 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 (more) SB 110 (Rubio) Page 2 of ? 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 SB 110 (Rubio) Page 3 of ? 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. SB 110 (Rubio) Page 4 of ? 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 reclamationÝ,] 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 SB 110 (Rubio) Page 5 of ? 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, SB 110 (Rubio) Page 6 of ? 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. **************