Court of Appeal Clarifies Limits on Pre-Condemnation Activities Without Condemnation Action

Water Law  

March 18, 2014

On March 13, 2014, California’s Third District Court of Appeal ruled in Property Reserve, Inc. v. Superior Court, Case No. C067758, that the California Department of Water Resources must commence a formal condemnation proceeding before conducting environmental and geological pre-condemnation activities on private property for the Bay-Delta Conservation Plan.  The decision clarifies the type and extent of pre-condemnation activities that are authorized without a condemnation proceeding under the California Constitution’s eminent domain provisions.  Scott McElhern of Downey Brand represented the owners of Mandeville Island in this case.

Legal and Factual Background

Article I, Section 19(a) of the California Constitution limits State and local governments’ authority to take private property through eminent domain.  That provision prevents a government entity from taking or damaging private property without first filing a condemnation action.

Code of Civil Procedure sections 1245.010 et seq., referred to as the “entry statutes,” provide procedures for the government to enter private property that it intends to acquire by eminent domain for the purpose of surveying or studying the property.  The primary purpose of the entry statutes is to allow the governmental agency to evaluate the property and determine whether it needed for the public project.  If these pre-condemnation activities will damage the property or interfere with the owner’s use, the entry statutes allow the government to obtain an order from the superior court authorizing entry.  That order will require the government to deposit funds representing the “probable” compensation owed for the actual damage to the property and interference with its possession and use, but a jury determination of just compensation is not required.

In 2009, the State of California—acting through the Department of Water Resources—sought entry orders to conduct environmental and geological activities in connection with the Bay-Delta Conservation Plan on more than 240 parcels in San Joaquin, Contra Costa, Solano, Yolo, and Sacramento Counties.  The environmental activities would consist of intermittent visits to the property to conduct surveys of sensitive plant and animal species and their habitat.  The geological studies would involve the boring of holes approximately 200 feet deep, the removal of soil, and the filling of the holes with columns of permanent cement/bentonite grout.  For some of the  affected parcels, the environmental and geological activities together would require entry by up to eight personnel for up to 66 days spread over a period of one year.

Affected landowners challenged the State’s petitions for entry orders.  They argued that both the environmental and geological activities interfered enough with their property that they amounted to a “taking,” and that the State therefore could not conduct the activities until it had filed formal condemnation actions with all of Section 19(a)’s procedural protections.  The State argued that none of the activities were a taking, but that even if they were, the entry statutes provided landowners with all of the protections required by the California Constitution.  On appeal, the court considered first whether the activities amounted to a taking, and if so, whether the entry statutes afford the protections required by Section 19(a).

Both Sets of Activities Ruled a Taking

The Court of Appeal found that the geological activities were a taking because they left 200-foot cement columns in the ground that would permanently occupy the property.  The court reasoned that permanent physical occupation of private property, no matter how small, always effects a taking. 

The environmental activities also worked a taking because of how often the State would be intentionally entering the properties in question.  Though there is no bright-line rule for when a temporary physical invasion amounts to a taking, here the entry orders authorized entry on certain properties by up to eight people for 66 days spread out over the course of one year. The court reasoned that the duration of this intentional invasion significantly encroached on the landowners’ right to exclude and effectively amounted to an uncompensated temporary easement.  The court ruled that the State could only acquire such a substantial property right through eminent domain.  The court also affirmed that, although the economic impact on a landowner is relevant to the court’s analysis, the government’s inconvenience and expense should not be factored in when considering whether a temporary occupation rises to the level of a taking.  As the court made clear, “constitutional rights against the exercise of eminent domain authority are not subject to the convenience of the government.”

Entry Statutes Cannot Authorize a Taking

The State had argued that the entry statutes provided all required constitutional protections to landowners, but the court found two such protections lacking.  First, the entry statutes do not provide for the acquisition and transfer of a property interest when the entry is an intentional, direct taking.  The entry order procedure only requires a determination of probable compensation if the landowner first shows that the entry will cause actual damage to the property.  In contrast, a direct condemnation suit does not require the landowner to show causation, and compensation is calculated as the fair market value of the property right being acquired.  Second, the entry order procedure does not provide the landowner with the right to a hearing or to have a jury fix just compensation.  Rather, the landowner must commence a new suit to obtain a jury determination, a burden that Section 19(a) does not allow.  In sum, even though the entry statutes provide a remedy for damage to private property from pre-condemnation activities, that remedy is inadequate under the California Constitution if those activities work a taking.

Conclusions and Implications

Property Reserve, Inc. v. Superior Court provides helpful guidance for landowners and public agencies alike on how extensive pre-condemnation activities can be before a direct condemnation action is required.  The Legislature enacted the entry statutes with the expectation that the pre-condemnation activities they authorized—studies, surveys and the like—would be innocuous enough to avoid a taking.  Nonetheless, this case illustrates how those same activities can, in fact, amount to a taking if they permanently occupy the property or are sufficiently invasive.  Under those circumstances, the California Constitution requires the government to file a condemnation action, even though the entry statutes purport to authorize a less burdensome remedy.

For more information, please contact Scott McElhern.