BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 555
Senator Kehoe
As Amended April 13, 2009
Hearing Date: April 21, 2009
Code of Civil Procedure
BCP:jd
SUBJECT
Eminent Domain: Conservation Easements
DESCRIPTION
This bill would prohibit a person authorized to acquire property
for a particular use by eminent domain from exercising that
power to acquire property that is subject to a conservation
easement, except as provided. Specifically, this bill would
require:
notice to the holder of the conservation easement, an
opportunity for that holder to comment, and a response to
those comments; and
notice to the public entity that provided funds for the
purchase of the easement, or that required the easement as a
condition of project approval.
This bill would prohibit a person from initiating eminent domain
proceedings against property subject to a conservation easement
unless: (1) the location was not chosen based primarily on the
lower cost of the property; and (2) that there is no other land
in the vicinity on which it is reasonably feasible to locate the
public improvement.
This bill would further state that the holder of a conservation
easement is an owner of property entitled to compensation if
that property is taken, and define compensation.
This bill would additionally state that "property appropriated
to public use" includes a conservation easement, thus triggering
the application of specific requirements that apply when a
person seeks to acquire property already appropriated for public
(more)
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use.
BACKGROUND
In 1979, the Legislature declared that the preservation of land
in its natural, scenic, agricultural, historical, forested, or
open-space condition is among the most important environmental
assets of California. In conjunction with that declaration, the
Legislature broadly defined a "conservation easement," and
codified that those easements are an interest in real property,
perpetual in duration, not personal in nature, and having the
characteristics granted or specified in the instrument created
in the easement.
Generally speaking, a conservation easement is a legal contract
between a property owner and a third party (often a land trust)
that restricts the use of the land for the purpose of
conservation (retaining the land predominantly in its natural,
scenic, historical, agricultural, forested, or open-space
condition). Those easements typically restrict development and
subdivision of the property, run with the land (ie. bind the
original and subsequent owners), and are recorded with the
county recorder to provide public notice of the easement. Since
the property owner retains ownership of the property,
conservation easements also represent a less expensive
alternative to outright purchase of the property for nonprofits
seeking to protect land, and may result in a tax advantage to
the property owner. The easement itself is held by the third
party (nonprofit 501(c)(3), Native American Tribe, or government
entity, as specified). The sponsor, California Council of Land
Trusts, provides the following two examples of recent
conservation easement donations to the Land Trust of Santa
Barbara County:
[The first donation was] a 195-acre avocado farm that
protects farmland, wildlife habitat and a creek, and
provides scenic views from a public trail. The second
donation was appraised at $42 million on a 3,100-acre
property. It contains extensive watershed lands and
farmland, and because the property abuts a very popular
public hiking trail, it also provides scenic views to the
public.
In response to prior concerns about the condemnation of
conservation easements, AB 910 (Wayne, Chapter 863, Statutes of
2001) prohibited a governmental entity from condemning wildlife
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conservation easements acquired by a state agency, or the
property under those easements, unless certain procedures were
complied with, including giving notice of the proposed
condemnation to the holder of the easement, and allowing that
holder to state its objections and to receive a response. (Fish
& G. Code Sec. 1348.3.) The sponsor of that bill, the
California Waterfowl Association, argued that the ease with
which conservation easements could be condemned under California
law, at that time, "threaten[ed] to undermine one of
California's most successful and economically prudent natural
resource conservation strategies."
This bill, sponsored by the California Council of Land Trusts,
similarly seeks to restrict the ability of a person to condemn a
conservation easement by imposing additional notices, responses,
findings, and clarifying the compensation to be paid if land is
taken.
CHANGES TO EXISTING LAW
Existing federal law provides that "private property [shall not]
be taken for public use, without just compensation." (U.S.
Const. Am. V.)
Existing state law provides that private property "may be taken
or damaged for public use only when just compensation,
ascertained by a jury unless waived, has first been paid to, or
into court for, the owner." (Cal. Const. art. I, Sec. 19.)
Existing state law defines "just compensation" as a property's
fair market value "as determined by any method of valuation that
is just and equitable." (Code Civ. Proc. Secs.
1263.310-1263.320.)
Existing law further provides that the power of eminent domain
may be exercised to acquire property only for a public use, and
only if all of the following are established: (1) the public
interest and necessity require the project; (2) the project is
planned or located in the manner that will be most compatible
with the greatest public good and the least private injury; and
(3) the property sought to be acquired is necessary for the
project. (Code Civ. Proc. Secs.1240.010, 1240.030.)
Existing law states that any person authorized to acquire
property for a particular use by eminent domain may exercise the
power of eminent domain to acquire property appropriated to
public use: (1) if the proposed use will not unreasonably
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interfere with or impair the continuance of the public use as it
then exists or may reasonably be expected to exist in the
future; or (2) if the use for which the property is sought to be
taken is a more necessary public use than the use to which the
property is appropriated. (Code Civ. Proc. Secs. 1240.510,
1240.610.)
Existing law finds and declares that the preservation of land in
its natural, scenic, agricultural, historical, forested, or
open-space condition is one of the most important environmental
assets of California, and states that it is to be the public
policy and in the public interest of this state to encourage the
voluntary conveyance of conservation easements to qualified
nonprofit organizations. (Civ. Code Sec. 815.)
Existing law defines a "conservation easement" as any limitation
in a deed, will, or other instrument in the form of an easement,
restriction, covenant, or condition, which is or has been
executed by or on behalf of the owner of the land subject to
such easement and is binding upon successive orders of such
land, and the purpose of which is to retain land predominantly
in its natural, scenic, historical, agricultural, forested, or
open-space condition. (Civ. Code Sec. 815.1.) A conservation
easement has the following characteristics:
voluntarily created interest in real property that is freely
transferable;
perpetual in duration;
not deemed to be personal in nature, but shall constitute an
interest in real property; and
the particular characteristics shall be those granted or
specified in the instrument creating or transferring the
easement. (Civ. Code Sec. 815.2.)
Existing law only allows the following entities or organizations
to acquire and hold conservation easements: (a) tax-exempt
nonprofit 501(c)(3) organizations with a primary purpose of
preserving, protecting, or enhancing land in its natural,
scenic, historical, agricultural, forested, or open-space
condition or use; (b) the state or any city, county, city and
county, district, or other state or local government entity, as
specified; and (c) a California Native American tribe, as
specified. (Civ. Code Sec. 815.3.) Existing law also requires
the recordation of instruments creating, assigning, or otherwise
transferring conservation easements, and provides for the
creation of a conservation easement registry. (Civ. Code Sec.
815.5; Pub. Res. Code Sec. 5096.520.)
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Existing law provides that no governmental entity may condemn
any wildlife conservation easement, as defined, unless, prior to
the initiation of condemnation proceedings by a governmental
entity, the entity: (a) gives notice to the holder of the
easement; (b) provides an opportunity for the holder of the
easement to consult with the governmental agency; and (c)
provides a response to objections. In the condemnation
proceedings, the condemning governmental entity shall be
required to prove by clear and convincing evidence that its
proposed use satisfies specified requirements under the Eminent
Domain Law. (Fish & G. Code Sec. 1348.3; Code Civ. Proc. Sec.
1240.610 et seq.)
This bill would similarly provide that a person authorized to
acquire property for a particular use by eminent domain shall
not exercise that power to acquire for public use property that
is subject to a conservation easement, except as specified.
This bill would state that when it appears that property subject
to a conservation easement may be required for a public use, the
person seeking to acquire the property shall, not less than 30
days prior to the date it intends to initiate eminent domain
proceedings, provide written notice to the entity or
organization that holds the conservation easement of its
intention to initiate eminent domain proceedings to acquire
property that is subject to a conservation easement. That
notice shall provide:
a general description of the property subject to a
conservation easement that is proposed for acquisition;
a description of the public use or improvement that the person
is considering for the property; and
provide an opportunity for the holder of the conservation
easement to consult with the person seeking to acquire the
property prior to commencement of eminent domain proceedings.
This bill would provide that the person intending to acquire the
property subject to a conservation easement shall, within 30
days after receipt of comments from the holder of the
conservation easement, respond in writing to the comments.
This bill would provide that if a conservation easement was
purchased with state or local public funds or if a public entity
required the conservation easement as a condition of project
approval, the easement holder upon receipt of the above notice
shall inform the person intending to initiate eminent domain
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proceedings of the name and address of any public entity that
provided funds for the purchase of the easement or required it
as a condition of approval. The easement holder shall provide
to the public entity that provided funds or required the
easement the same notice and the public entity shall have 30
days after receipt of the notice from the easement holder to
state in writing its objections to the acquisition. This
requirement shall not apply if there are no recorded documents
that evidence, and the easement holder has no record or
independent knowledge of, the identity of the public entity that
provided funds to purchase the conservation easement or that
required the conservation easement as a condition of approval.
This bill would provide that in any eminent domain proceeding to
acquire property subject to a conservation easement, that:
provisions in existing law regarding the characteristics of
conservation easements shall apply; and
the holder of the easement be named as a defendant, and have
all the same rights and obligations as any other defendant in
the eminent domain proceeding;
This bill would further state that no person shall initiate
eminent domain proceedings against property subject to a
conservation easement unless the following findings are made:
the location is not based primarily on a consideration of the
lower cost of acquiring the property; and
there is no other land within the vicinity on which it is
reasonably feasible to locate the public improvement.
This bill would state that "property appropriated to public use"
as used in Article 6 (commencing with Section 1240.510) and
Article 7 (commencing with Section 1240.610) includes a
conservation easement, and define "person" and "conservation
easement."
This bill would provide that the holder of a conservation
easement is an owner of property entitled to compensation if
that property is taken. Compensation for the taking of all
interests in the property subject to a conservation easement
shall be no less than the compensation paid for the property if
it were unencumbered by that conservation easement.
COMMENT
1. Stated need for the bill
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According to the author:
Tremendous public and charitable assets have been invested
in the acquisition of conservation easements in California.
Yet, with the narrow exception created for a relatively
small number of easements in Fish and Game Code section
1348.3, conservation easements are as vulnerable to
condemnation as any other property in private ownership.
The fact that a conservation easement exists, that sometimes
millions of dollars in public dollars have been expended to
conserve it, or that a public agency has said that the
property's conservation advances certain public goals are
all irrelevant to a potential condemnation proceeding. In
spite of the implicit recognition of the public value of
conservation easements as evidenced in law and public
funding, they are not recognized as having any public use
for the purposes of eminent domain law.
Further, the easement holder - who holds a real property
interest - does not have to be notified of the proposed
condemnation. Nonprofit easement holders report that
governmental entities with the power of eminent domain often
fail to recognize a conservation easement as a separate and
distinct property right. In numerous instances, the entity
has refused to acknowledge the easement holder until the
holder of the fee title land refuses to talk with the entity
about the condemnation without the easement holder or the
easement holder has retained counsel to force discussion.
The conservation community is facing an increasing number of
condemnations of conservation easements, and it expects this
trend to increase as development pressure continues and
communities are built out. The conservation community is
not trying to eliminate the power of eminent domain - it
recognizes that other societal needs will sometimes require
the condemnation of a conservation easement. However, it is
seeking to ensure that easement holders receive notice and
have the right to object, and to create a high standard for
condemning easements to help ensure that public use and
investment is not lightly lost.
The California Outdoor Heritage Alliance (COHA), in support,
notes that:
. . . urban growth increasingly threatens easements in cases
where public agencies attempt to use their condemnation
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powers to construct roads and other infrastructure. If
successful, this action not only compromises the wildlife
values of the conservation easement, but also wastes
valuable public funding that was typically used initially to
acquire the easement. In addition, it threatens the future
use of easements as conservation tools by undermining the
landowner trust that easements, in fact, protect land in
perpetuity.
2. Requirements that must be satisfied prior to the initiation
of eminent domain proceedings
The sponsor states that this bill is the result of their study
of condemnation actions against conservation easements and lands
protected for conservation purposes and: "The lack of notice
provisions was identified as a common problem which this bill
would address. Further, the fact that the conservation easement
had been created for public purposes and with public support was
not viewed by the condemning agencies as a public use of the
property that could conceivably outweigh the purpose for which
they wanted the property."
This bill seeks to address those issues, by, among other things,
imposing detailed notice requirements and findings that must be
made prior to initiation of eminent domain proceedings on the
property for which there is a conservation easement.
a) Timing of notice
As noted above, AB 910 (Wayne, 2001) imposed notice
requirements prior to the condemnation of a wildlife
conservation easement that had been acquired by a state
agency. While this bill would impose similar notice
requirements on a broader range of conservation easements,
this bill requires additional notices and specific timing
requirements (AB 910 did not specify timing in terms of days).
The sponsor notes that there is a problem in the proposed
timing requirements because those requirements do not provide
enough time between the initial notice and the filing of the
eminent domain proceeding. Specifically, the detailed notice
would be required not less than 30 days prior to the date the
person intends to initiate eminent domain proceedings. The
holder of the easement then has 30 days to state its
objections in writing - the person intending to acquire the
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property then has 30 days to respond in writing to the
comments. As a result, the action could be filed well before
completion of the notice and comment requirements.
In response to that timing issue, the sponsor suggests that
the original notice be provided not less than 90 days (instead
of 30) prior to the date the action is commenced. That
modification to the timing requirement would ensure that all
communication takes places prior to the commencement of
proceedings, and would replace the word "intent" with
"initiate" in order to provide a firm timeframe.
Amendments :
On page 2, lines 18 through 19, strike out "30 days prior
to the date it intends to initiate eminent domain
proceedings" and insert:
90 days prior to the initiation of eminent domain
proceedings
b) Notice to public entity when public funds used to purchase
easement
To ensure that the public entity that expended funds, or
required the easement as a condition of project approval, is
aware of the eminent domain action, this bill would require
that those public entities receive notice of the action, as
specified, and have 30 days to respond.
While the present language requires the easement holder to
notify the public entity themselves of the pending action, the
sponsor notes that that requirement is a drafting error, and
it should be the person who seeks to initiate eminent domain
proceedings who should provide notice to the public entity.
The following amendment is suggested to correct the drafting
problem:
Amendments:
1) On page 3, line 29, strike out "easement holder" and
insert:
person intending to initiate eminent domain proceedings
2) On page 3, line 32, strike out "easement holder" and
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insert:
person intending to initiate eminent domain proceedings
Furthermore, the notice to the public entity is conditioned
upon the easement holder knowing that they must inform the
person seeking to initiate eminent domain of the public
entity's involvement. To ensure that the easement holder is
aware of that requirement, the initial notice to the easement
holder should include a statement that they are obligated to
provide information about the involvement of a public entity.
The following amendment is suggested to address this issue:
Suggested amendment :
On page 3, line 11 after the period, insert:
(D) Inform the easement holder that, upon receipt of the
notice, the easement holder shall inform the person
intending to initiate eminent domain proceedings of the
name and address of any public entity that provided funds
for the purchase of the easement or required it as a
condition of approval.
The sponsor, in support of the above provisions, contends that
they are seeking to protect the public's investment in
conservation easements, and that it is reasonable that the
person seeking to condemn an easement should have certain
notice and consultation requirements.
c) Findings prior to the initiation of eminent domain
proceedings - clarification needed
In order to further protect conservation easements and ensure
that the easement is not condemned merely because it is the
least expensive plot of land, this bill would require two
findings to be made prior to the initiation of proceedings.
The first required finding is that the location is not based
primarily on a consideration of the lower cost of acquiring
the property; second, that there is no other land in the
vicinity on which it is reasonably feasible to locate public
improvements.
Although the bill would require those findings to be made
prior to the initiation of eminent domain proceedings, it is
unclear whether a separate action for declaratory relief must
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be brought prior to the initiation of proceedings, or even if
those findings must be made by a court. The sponsor states
that the intent was to require those findings to be made by
the court prior to a plaintiff prevailing in the eminent
domain proceeding. The following amendment is suggested to
clarify the findings provision:
Suggested amendment:
On page 4, line 7, strike out "initiate eminent domain
proceedings against" and insert:
prevail in an eminent domain proceeding concerning
d) Application of restriction on condemning property
appropriated for public use
The Eminent Domain Law additionally contains procedures for
the condemnation of property already appropriated to public
use. Under those provisions, a person may exercise their
power of eminent domain only if the proposed use will not
unreasonably interfere with or impair the public use as it
exists, or if the use for which the property is sought to be
taken is a more necessary public use than the use to which the
property is appropriated. This bill would apply those
provisions to eminent domain actions that condemn a property
with a conservation easement. It should be noted that
although those easements would be treated as a public use,
some may be held by non-profit organizations and Native
American tribes (neither of which are state entities), and
would not necessarily be accessible for use by the public.
At the request of the Committee, the sponsor provided the
following response to this issue:
Although some conservation easements are held by
nonprofit organizations and Native American tribes, they
were created to serve a public purpose(s). Conservation
easements are fulfilling public uses recognized in local,
state and federal law and significant public funds are
expended in furtherance of these uses. Public use does
not necessitate public access, and in fact, may preclude
public access in order to achieve the public use and
benefit. For example, conservation easements have been
created to protect water quality and public access is not
allowed in order to achieve the public use and benefit.
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Further, this bill only declares that conservation
easements are property appropriated to public use; it
does not recognize conservation easements as enjoying the
presumption that they are the best and most necessary
public use of the land.
3. Compensation requirements
Pursuant to the federal and state Constitutions, property cannot
be taken for public use without just compensation. The Eminent
Domain law further states that the owner of property acquired by
eminent domain is entitled to compensation, that compensation
shall be awarded for any property taken, and that the measure of
that compensation is fair market value, as specified. This bill
would additionally provide that: (1) the holder of a
conservation easement is an owner entitled to compensation; and
(2) that compensation for the taking of all interests in the
property shall be no less than the compensation paid for the
property if it were unencumbered by that easement.
The sponsor maintains that it is necessary to specify that the
easement holder is entitled to compensation because situations
have arisen where public agencies have argued that no
compensation should be paid to the easement holder because the
property is actually worth less after the easement was put in
place. Although conservation easements are negative rights (ie.
restrictions on the use of the property), significant funds may
have been expended to purchase that easement, and those
easements are arguably worth the amount the encumbrance
diminishes the value of the underlying parcel of land.
The second provision is intended to clarify how land that is
subject to a conservation easement is valued. The sponsor
provides the following example: If a property that has an
appraised value of $1 million dollars and the easement is valued
at $400,000, the condemning agency may want to use an appraisal
based on the encumbered value of the property, $600,000
($1,000,000 - $400,000), and contend that that fee title holder
and easement holder should split the $600,000. The sponsor
asserts that, instead, the compensation should reflect the total
unencumbered value of the property ($1,000,000), with the fee
title holder and easement holder splitting that amount according
to the relative values of their property rights. Accordingly,
the bill seeks to ensure that, in the above situation, the
compensation would be $1,000,000, not $600,000.
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4. Additional requirements
The remaining provisions of this bill would, among other things,
require the holder of the easement to appear as a defendant and
have all the same rights and obligations as any other defendant
in the eminent domain proceedings. That provision appears
consistent with existing law requiring the plaintiff to name
persons who have or claim an interest in the property described
in the complaint, and the allowance for any person who claims a
legal or equitable interest in the property to appear in the
proceeding. (Code Civ. Proc. Secs. 1250.220, 1250.230.)
5. Opposition
The American Council of Engineering Companies of California,
California Business Properties Association, California Chamber
of Commerce, and California Forestry Association, in opposition,
contend that this bill "would be used to further block jobs and
construction of infrastructure projects in California." Those
groups contend, among other things, that: (1) this bill would
greatly expand the scope of easements protected from
condemnation; (2) property could be immunized from condemnation
by having a conservation easement placed on it; and (3) "if SB
555 were to become law, conservation easements can be expected
to quickly become a favorite weapon in the arsenal of those
opposed to a particular condemnation effort or, more generally,
of those opposed to an infrastructure or other public project."
The Orange Chamber of Commerce raises similar concerns about the
bill. While the above opposition was based on a prior version
of the bill, the Committee did not receive any letter removing
opposition by any of the above parties. The author and sponsor
should continue to work with those parties, and committee staff,
to ensure that this bill's new protections are not abused.
The Orange County Taxpayers Association (OCTax), in opposition,
further contends that this bill would delay construction of
projects, and that the intent seems to be to delay the
completion of the SR-241 Toll Road. The Orange County Board of
Supervisors similarly argues:
SB 555 is intended to stop the ability of governmental
agencies to add and adjust conservation easement boundaries.
This measure interferes with state and local decision
making authority and the ability to protect the public
interest in the management of conservation easements by
creating new rights of action for parties to litigate
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against governmental entities. Clearly, this bill is an
attempt to impede completion of the final segment of the
Foothill South toll road by eliminating exploration of any
and all potential routes and increasing construction costs.
In addition, letters were submitted by individuals who contended
that this bill would add additional burdensome and costly
regulations. It should be noted that if this bill were to be
approved by this Committee, it will be referred to the Senate
Appropriations Committee for evaluation of its fiscal effect.
6. Conflict with Fish and Game Code Section 1348.3 (enacted by
AB 910)
As discussed above, existing Fish and Game Code Section 1348.3
imposes similar requirements with regards to wildlife
conservation easements acquired by a state agency. While that
bill requires a higher burden of proof, this bill would apply to
all conservation easements (not just wildlife), to all easements
regardless of whether they were acquired by a state agency
(thus, including specified non-profits and Native American
tribes), and to all persons authorized to acquire property by
eminent domain (instead of governmental entities). Although SB
555 imposes similar notice requirements, AB 910 did not specify
the timeframes that are included in this bill, thus making it
unclear which procedures must be complied with in actions to
condemn wildlife conservation easements. (See Comment 2(a).)
To resolve this conflict, the bill should be amended to,
instead, state that the requirements added by SB 555 shall apply
only if those contained in Fish and Game Code Section 1348.3 are
not applicable. That amendment would preserve the steps
required under existing law for condemnation of wildlife
conservation easements, including the heightened burden of
proof.
Suggested amendment:
On page 4, line 19 after the period, insert:
(h) This section shall not apply if the requirements of
Section 1348.3 of the Fish and Game Code apply.
In addition, to provide conformity between sections, and reduce
confusion for the condemning entity, the author should continue
to work with committee staff to either amend the notice
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requirements of this bill to be consistent with AB 910, or, in
the alternative, amend the notice requirements of Fish and Game
Code Section 1348.3 to be consistent with those proposed by this
bill.
Furthermore, the following technical amendments are required to
improve the readability of proposed subdivision (b) of Section
1240.055 of the Code of Civil Procedure, and correct an
incorrect cross-reference.
Suggested technical amendments:
1) On page 2, line 14, strike out "acquire for public use
property" and insert:
acquire, for public use, property
2) On page 2, line 10, strike out "410" and insert:
510
Support : California Outdoor Heritage Alliance; Planning and
Conservation League; California Coastal Coalition; Defenders of
Wildlife; California State Parks Foundation; Trust for Public
Land; CLCV; Sierra Club California; NRDC; Audubon California;
Trust for Public Land; American Land Conservancy; Peninsula Open
Space Trust; Sempervirens Fund; California Rangeland Trust;
Truckee Donner Land Trust; Big Sur Land Trust; Sequoia
Riverlands Trust; Land Trust of Napa County; Tri-Valley
Conservancy; Lassen Land & Trails Trust; Bay Area Open Space
Council; Mendocino Land Trust; Catalina Island Conservancy; Land
Trust of Santa Cruz County; Bolsa Chica Land Trust; Sierra
Foothill Conservancy; Feather River Land Trust; Placer Land
Trust; Marin Agricultural Land Trust; Eastern Sierra Land Trust;
Save Mt. Diablo; Muir Heritage Land Trust; Mountain Meadows
Conservancy; Solano Land Trust; Sierra-Cascade Land Trust
Council; Land Trust Council; Santa Barbara County; Shasta Land
Trust; Lake County Land Trust; Preserve Calavera; Sanctuary
Forest, Inc.; Sonoma Land Trust; Amigos de los Rios; San Joaquin
River Parkway and Conservation Trust; Land Conservancy of San
Luis Obispo County
Opposition : American Council of Engineering Companies of
California; California Business Properties Association;
California Chamber of Commerce; California Forestry Association;
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Orange County Board of Supervisors, Orange County Taxpayers
Association (OCTax); Orange Chamber of Commerce; ten individuals
HISTORY
Source : California Council of Land Trusts
Related Pending Legislation : None Known
Prior Legislation :
AB 910 (Wayne, Chapter 863, Statutes of 2001), prohibited a
governmental entity from condemning any wildlife conservation
easement acquired by another state agency, except as provided.
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