BILL ANALYSIS
SB 555
Page 1
Date of Hearing: June 30, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 555 (Kehoe) - As Amended: June 24, 2009
SENATE VOTE : 22-14
SUBJECT : EMINENT DOMAIN LAW: CONSERVATION EASEMENT
KEY ISSUE : SHOULD A PERSON OR ENTITY SEEKING TO use eminent
domain to acquire PROPERTY SUBJECT TO A CONSERVATION EASEMENT BE
REQUIRED TO GIVE THE HOLDER OF THE CONSERVATION EASEMENT
APPROPRIATE NOTICE AND A REASONABLE OPPORTUNITY TO BE HEARD IN
CONDEMNATION PROCEEDINGS?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This bill would create new requirements for a person or entity
seeking through the use of eminent domain to acquire property
that is subject to a "conservation easement." Authorized by
statute in 1979 in order to help preserve more land in its
natural, scenic, historic, agricultural, and open-space
conditions, "conservation easements" are essentially agreements
between public or private entities, on the one hand, and
landowners, on the other hand, whereby the landowner agrees to
preserve the land in some specified condition and the easement
holder has the right and responsibility to monitor and enforce
the easement conditions. Prior to the creation of these
easements, non-profit land trusts and conservancies, as well as
government agencies, had to purchase land if they wished to set
it aside and protect it from environmentally destructive
developments. However, in the case of a conservation easement,
the easement holder only buys a right to keep the land in the
specified condition, while the owner continues to legally
possess and hold title to the land. Obviously, buying only an
easement is a more cost effective way of achieving the
conservation objectives than buying the land outright.
According to the author, as our communities move outward and
demand public services, lands once protected by conservation
easements have been threatened by entities exercising the power
of eminent domain, which effectively destroys the easement.
While the author does not wish to cease all development or
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prohibit the use of eminent domain in appropriate circumstances,
she does wish to ensure that holders of conservation easements,
and public entities that may have funded or otherwise helped to
create those easements, should receive adequate notice of all
preliminary eminent domain hearings and an opportunity to be
heard at those hearings. In addition, the acquiring public
entity should have more responsibility to show if the proposed
public use is consistent with the conditions of the conservation
easement and, if not, why the proposed public use is preferable
to maintaining the conservation easement. This bill is
supported by several environmental land trusts and nature
conservancies; it is opposed by business and professional
associations and local government entities who claim that the
bill has an anti-developmental bias that will impose new
obstacles in the way of needed infrastructure projects and lead
to increased litigation between local governments, developers,
and easement holders.
SUMMARY : Requires a person seeking to acquire, by eminent
domain, a property subject to a conservation easement to give
the holder of the conservation easement a notice containing
specified information and an opportunity to comment on the
acquisition. Specifically, this bill :
1)Defines "conservation easement" to mean 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 owners of such
land, and the purpose of which is to retain land predominantly
in its natural, scenic, historical, agricultural, forested, or
open-space condition.
2)Specifies that a person or public entity authorized to acquire
property for public use by eminent domain shall exercise the
power of eminent domain to acquire property that is subject to
a conservation easement only as provided in this bill.
3)Provides that not later than 105 days prior to a hearing on a
resolution of necessity, or at the time that an offer is made
to an owner or owners, whichever occurs earlier, a person
seeking to acquire property subject to a conservation easement
shall send a notice by first-class mail to the holder of the
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conservation easement and shall state all of the following:
a) A general description of the property subject to a
conservation easement;
b) A description of the public use or improvement that is
being considered for property;
c) That written comments on the acquisition may be
submitted no later than 45 days from the date that the
notice was mailed to the holder of the conservation
easement;
d) That the holder of the conservation easement, within 15
days of receipt of the notice, must send copies of the
notice to any public entity that provided funds or
otherwise contributed to the creation of the easement, as
specified.
4)Requires the holder of the conservation movement, within 15
days of receipt of the notice, to send copies of the notice to
any public entity that (a) provided funds for the acquisition
of the property; or (b) imposed conditions on approval of a
project satisfied in whole or in part by the conservation
easement.
5)Requires the holder of the conservation easement or any public
entity that provided funds for the purchase of the easement,
or both, to provide the person seeking to acquire the property
with written comments on the proposed acquisition, including
identifying any potential conflict between the proposed public
use and the terms of the conservation easement. Written
comments may be submitted no later than 45 days from the date
the person seeking to acquire the property mailed the notice
to the holder of the conservation easement.
6)Requires the person seeking to acquire the property, within 30
days after receipt of the written comments described in 5)
above, to respond in writing to the comments, as specified.
7)Requires that notice of a hearing on the resolution of
necessity shall be sent to any holder of the conservation
easement or public entity noticed under 4) above to inform the
noticed parties of their right to appear and be heard on
matters relating to the acquisition and planned public use.
8)Provides that in any eminent domain proceeding to acquire
property subject to a conservation easement, the holder of the
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conservation easement shall be named as a defendant in the
condemnation proceeding; may appear at the proceedings; and
shall have the same rights and obligations as any other
defendant in the condemnation proceeding.
9)Provides that the holder of a conservation easement is an
owner of property entitled to compensation. Specifies that
compensation for the acquisition of property subject to a
conservation easement shall not be less than the fair market
value of the property, as if it were not encumbered by the
easement.
EXISTING LAW :
1)Provides that private property may be taken or damaged for
public use only when just compensation is paid. Defines "just
compensation" as a property's fair market value as determined
by any method of valuation that is just and equitable.
(California Constitution Art. I, Sec. 19; Code of Civil
Procedure Sections 1263.310 to 1263.320.)
2)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 a 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.
(Id. Sections 1240.010, 1240.030.)
3)Provides that any person authorized to acquire by eminent
domain property that is already devoted to a public use may
exercise that power if (1) the proposed use will not
unreasonably 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) the use for which the property is
sought to be taken is a more necessary public use than the use
to which the property was originally appropriated. (Id.
Sections 1240.510, 1240.610.)
4)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 declares it to be the
public policy of this state to encourage the voluntary
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conveyance of conservation easements to qualified nonprofit
organizations. (Civil Code Sec. 815.)
5)Permits 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. (Civil Code Sec. 815.3.)
6)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 & Game Code Section 1348.3 and Code
of Civil Procedure Sections 1240.610 et seq.)
COMMENTS : This bill seeks to establish an opportunity for
thoughtful review whenever properties subject to conservation
easements are targeted for condemnation under eminent domain
law. In 1979, California statutorily created a "conservation
easement" to permit various government entities and non-profit
organizations to acquire and hold conservation easements. While
governmental and non-profit entities could always acquire
absolute title to land to ensure it remained in a natural and
relatively undisturbed state, a "conservation easement" allows
entities to acquire a conservation easement - one stick in the
bundle of property rights - while the original owner continued
to use, possess, and hold transferable title to the land. In
this way, the conservationist land trust does not own the land,
but simply monitors the easement. The conservation easement is
essentially an agreement between the holder of the easement and
the property owner to the effect that the land will not be used
in certain ways, so that it may remain, for example, in its
natural, scenic, agricultural, historical, or open-space
condition. The easement is generally perpetual and runs with
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the land, so that if the property is sold the new owner takes it
subject to the conservation easement.
However, competing development, transportation, or
infrastructure needs have sometimes led public and private
utilities authorized to exercise the power of eminent domain to
use that power to acquire property subject to a conservation
easement. If the public use for which the property is required
is not consistent with the uses permitted by the conservation
easement, then the easement is effectively destroyed. Although,
as noted above, conservation easements generally run with the
land and bind subsequent owners, this is usually not the case
when the land is acquired by eminent domain. Although an
acquiring entity may elect to maintain the easement, it does not
have to, since the "condemnation" in theory terminates the
existing title and, with it, the conservation easement.
According to the author and supporters, the use of eminent
domain in these instances not only threatens to destroy the
environmental value created by the conservation easement, it
also represents a considerable waste of public and private
investment. That is, government entities, as well as non-profit
agencies, purchased those conservation easements, and their
subsequent elimination means that government funds were spent
for naught. This bill does not, despite what some of the
opponents contend, seek to stop public entities from using the
power of eminent domain to acquire property subject to
conservation easement, nor does it necessarily seek to ensure
that when such properties are acquired the conditions of the
easement remain. Rather, the purpose of this bill, according to
the author, is simply to ensure that whenever an entity seeks to
acquire property subject to a conservation easement that the
easement holder, and any other entities that contributed to
acquisition of that easement, are given ample notice and
opportunity to be heard in any condemnation proceedings.
Specifically, this bill amends existing eminent domain law in
the following ways:
Existing law requires, as a precursor to an eminent domain
taking, that the entity taking the property conduct a hearing
on a "resolution of necessity," which sets forth the
significant reasons that justify taking the property for
public use, and the nature of that public use. Existing law
only requires, at this initial stage, that the entity seeking
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to acquire the property notify the property owner, but not
necessarily the holder of an easement or any other public
entity that may have contributed to the creation of the
easement. This bill would require that notice be sent to any
holder of a conservation easement at least 105 day prior to
hearing on the resolution of necessity, and it would require
the easement holder, in turn, to notify any public entities
that contributed to the acquisition or creation of the
easement. In short, these provisions seek to ensure that all
major stakeholders, not just the owner, have advance knowledge
of the plan.
In addition, this bill creates a process that allows the
easement holder and interested public entities to be heard at
various points in the eminent domain proceedings, in order to
ensure a more robust public debate about whether the public
use for which the property is being required is consistent
with the policy objectives that prompted the creation of the
conservation easement in the first place. If the proposed
public use is not consistent with the conservation easement,
then, the author believes, there should be an opportunity for
public discussion about the merits of abandoning the
conservation easement in favor of the new proposed public use.
ARGUMENTS IN SUPPORT : According to the author, this bill will
not only potentially protect the state's natural bounty; it will
ensure that considerable public investments in conservation
easements are not needlessly squandered when other government
entities seek to acquire the subject property for some other
public use. The author states that the "conservation community
is facing an increasing number of condemnations of conservation
easements, and it expects this trend to continue as development
pressure continues and communities are built out." The author
stresses that the conservation community is not trying to block
development or the use of eminent domain, for it recognizes that
"other societal needs will sometimes require the condemnation of
a conservation easement." Rather, the author merely seeks to
ensure that easement holders and public funders receive early
notice of proposed condemnation.
The California Council on Land Trusts (CCLT), the bill's
sponsor, agues that this bill will protect both public
investments and conservation easements "by requiring condemning
agencies to provide notice to the easement holder and
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demonstrate that the public value of their project warrants the
condemnation of a property with a conservation easement on it."
CCLT contends that, as communities grow outward, land subject to
conservation easements is sometimes seen as an easy target
because it appears to be "empty" or represents the "path of
least resistance." CCLT believes that this bill, by providing
more timely notice to all interested parties, will create a more
"thoughtful process" in which the condemning agency will engage
in dialogue with easement holders and other entities that have
contributed to or otherwise have a stake in the easement. A
broad coalition of environmentalists, land trusts, and
conservancies strongly support this bill for substantially the
same reasons as those set forth by CCLT.
The San Diego County Water Authority (SCWA) supports this bill,
claiming that it is the product of very productive discussions
addressing the needs of all stakeholders, including utilities
like SCWA. The final approach, SCWA claims, "addresses the
problem that Senator Kehoe is attempting to correct while
balancing the needs of public agencies that deal with these
types of easement issues on a regular basis."
SUPPORT IF AMENDED: Two public utilities - the East Bay
Municipal Utility District (EBMUD) and the Association of
California Water Agencies (ACWA) - would support this bill if it
were amended to clarify that an easement holder should not be
eligible to compensation if the taking does not eliminate the
conservation easement. That is, the bill in print states that
an easement holder would be entitled to just compensation, as
determined, in any eminent domain proceeding "to acquire
property subject to a conservation easement." Both EBMUD and
ACWA state that they would support this measure if this were
changed to only permit compensation in eminent domain
proceedings " that will eliminate a conservation easement." For
example, EBMUD and ACWA concede that acquisitions by eminent
domain often result in development or infrastructure projects
that are inconsistent with, and therefore destroy, the
conservation easement. However, in other cases, it may be
possible for the condemning entity to acquire the property while
still respecting the conditions of the conservation easement.
For example, a utility company may install a pipeline beneath a
protected habitat in a manner that causes minimal disruption and
restores the property to its original state once the project is
complete. In those cases, EBMUD and ACWA contend, the easement
holder should not be entitled to compensation.
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Sponsor Response to SBMUD and ACWA concerns : The CCLT has
communicated to Committee staff that it agrees that an easement
holder should not be entitled to compensation if the taking does
not destroy the conditions of the easement. However, CCLT is
uncomfortable with language that states that the holder would
only be entitled to compensation if the easement were
"eliminated." In the real world - the one that is arguably
growing hotter every day due to too few conservation easements -
a taking may substantially frustrate the purposes of a
conservation easement without actually "eliminating" it. At the
time of this writing, both sides were engaged in discussions on
how to draft language that reflects their basic consensus:
conservation easement holders should only be compensated to the
extent that the taking reduces the value of the easement. If
the stakeholders reach an accord on such an approach by the time
of hearing, the revision could be adopted by this Committee.
ARGUMENTS IN OPPOSITION : This bill is opposed by several
business, trade, and property associations, as well as a few
local governments and districts. They argue that this bill
would "erect new and substantial barriers to the condemnation of
conservation easements by governmental agencies." They add
that, by blocking the construction of new infrastructure, the
bill will also lead to a reduction in jobs.
Several of the opponents contend that are too few limitations on
the creation of conservation easements to begin with, and "no
front-end protections that ensure that when these easements are
created they will not conflict with planned or future
infrastructure necessary to serve the regional or state
population." In sum, opponents claim that conservation
easements are created without any regard to their effect on
future infrastructure needs, and that when the infrastructure
needs do arise, this bill will have effectively immunized the
conservation easements from challenges by governmental agencies.
In addition, opponents claim that the broad definition of
"conservation easement" - which protects not only environmental
but "scenic, historical, and agricultural" purposes as well -
will greatly expand the scope of the bill's protections beyond
what people usually think of as a "conservation" easement.
The Orange County Transportation Authority (OCTA) asserts that
this bill will create delays in project delivery and increase
the costs associated with acquiring land subject to a
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conservation easement. OCTA notes that the 105-day notice
period is longer than any existing notice requirements in this
area of law. Project delivery would be further delayed, OCTA
contends, because of the greater possibility of litigation over
the adequacy of notice under the new requirements. "These
requirements," OCTA contends, "go above and beyond what is
already required under existing eminent domain law, with the
existing process already being fraught with high costs and
lengthy procedures."
Some opposition arguments have less to do with the provisions
with in this bill and more to do with value of conservation
easements more generally. For example, OCTA contends that "a
conservation easement often decreases the value of land by
placing restrictions on how the land can be built and used."
This may be an argument against creating easements in the first
place, but it has little to do with how much notice a holder of
property rights deserves before those rights are taken away by
eminent domain.
Some of the opponents, including the Orange County Board of
Supervisors (usually a staunch critic of eminent domain and an
advocate of imposing limits on its use), suggests that this bill
is targeted at a specific project: "completion of the final
segment of the Foothill South toll road by eliminating
exploration of any and all potential routes and increasing
construction costs." The City of Lake Forrest makes the same
allegation in its letter of opposition.
PRIOR LEGISLATION : AB 910 (Chapter 863, Stats. of 2001)
requires that before commencing condemnation proceedings on a
property that contains a wildlife conservation easement held by
a state agency, the condemning entity must give notice to the
easement holder, provide a consultation opportunity, accept the
easement holder's objections to the condemnation, and provide a
response to the objections. Finally, this law created a
presumption that wildlife conservation easements are the "best
and most necessary use" of the property and would require that
the governmental entity prove by "clear and convincing evidence"
that its proposed public use is of greater necessity.
REGISTERED SUPPORT / OPPOSITION :
Support
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California Council of Land Trusts (sponsor)
American Land Conservancy
Amigos de los Rios
Association of California Water Agencies (if amended)
Audubon California
Bay Area Open Space Council
Big Sur Land Trust
Bolsa Chica Land Trust
CalCoast
California League of Conservation Voters
California Outdoor Heritage Alliance
California Rangeland Trust
California State Parks Foundation
Catalina Island Conservancy
Central Valley Land Trust Council
Defenders of Wildlife
East Bay Municipal Utility District (if amended)
Eastern Sierra Land Trust
Feather River Land Trust
Lake County Land Trust
Land Conservancy of San Luis Obispo County
Land Trust for Santa Barbara County
Land Trust of Napa County
Land Trust of Santa Cruz County
Lassen land and Trails Trust
Marin Agricultural Land Trust
Mendocino Land Trust
Mountain Meadows Conservancy
Muir Heritage Land Trust
Natural Resources Defense Council
Peninsula Open Space Trust
Placer Land Trust
Planning and Conservation League
Preserve Calaveras
San Joaquin River Parkway and Conservation Trust, Inc.
Sanctuary Forest
Save Mount Diablo
Sempervirens Fund
Sequoia Riverlands Trust
Shasta Land Trust
Sierra-Cascade Land Trust Council
Sierra Club - California
Sierra Foothill Conservancy
Solano Land Trust
Sonoma Land Trust
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Tri-Valley Conservancy
Truckee Donner Land Trust
Trust for Public Land
Opposition
American Council of Engineering Companies of California
California Business Properties Association
California Chamber of Commerce
California Forestry Association
Orange County Board of Supervisors
Orange County Chamber of Commerce
Orange County Taxpayers Association
Analysis Prepared by : Thomas Clark/ JUD. / (916) 319-2334