This is a longer post, but we think it's worthy of your time. That's because even though there's a lot going on in the opinion by the California Court of Appeal in Property Reserve, Inc. v. Superior Court, No. C067758 (Mar. 13, 2014), it cuts through much of the unnecessary doctrinal fog surrounding takings law, especially the U.S. Supreme Court's bizarre ripeness requirement first enunciated in Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985).
The Bottom Line
Although the entire thing is worth reading (44 pages of majority opinion, followed by 46 pages of dissent), if we had to pick out one passage as the takeaway, here it is:
Eminent domain authority must be exercised in strict conformity to the constitutional protections and procedures that limit its operation. If a condemnor intends to take private property or intends to perform actions that will result in the acquisition of a property interest, permanent or temporary, large or small, it must directly condemn those interests, and pay for them, in a condemnation suit that provides the affected landowner with all of his constitutional protections against the state’s authority.
Slip op. at 5. With that seemingly simple premise established (and who can argue with that?), let's go.
The New-Old Delta Workaround
The case arose because of several property owners objecting to one piece of California's most recent efforts to get water to the dry Southland. Perhaps the most famous -- or infamous -- earlier proposal was the "Peripheral Canal" in the 1970's and early 1980's, an effort that ended up being rejected by California voters in 1982. Rejection by the people, however, didn't hamper the dreaming -- we're currently witnessing the involvement of the second generation of Brown governors (Edmund and his son Jerry), and even the second time the latter has been governor when the project seemed to be underway. And the big plan hasn't changed: transport the water from the wet north to the dry south, somehow avoiding the big delta in the middle. Back in the day, it was a canal circumventing the delta; today, it's tunnels under it. But these are just details. It's still just a "water grab," as one report put it.
Prep Work and California's "Entry Statutes"
As part of its planning, the state needs to do surveys, tests, borings, and what not. It filed several actions under the "entry statutes" (Cal. Civ. Pro. Code § 1245.010 et seq.), to allow it entry to private land to undertake said activities, which fell into two general categories, "environmental activities" (surveys about hydrology, botany, wildlife, and culture), and "geological activities" (soil testing and boring). On each of the approximately 150 properties affected, these activities would require entry for 60 intermittent 24-hour days over a two-year period.
Trial Court: A Taking
The trial court considered each category separately, eventually granting the state permission to enter for the environmental activities, conditioned on the state's deposit of de minimus probable compensation for the damages or loss of use that would result (between $1k to $6k per owner). However, the court denied the state permission to enter to undertake the geological activities. It concluded that these activities would be a taking, and that the entry statute therefore did not comport with the California Constitution's Takings Clause (art. I, § 19). The entry and use was a taking, and in order to take property, the state had to follow the eminent domain procedures, "including the right to a jury determination of just compensation." Slip op. at 8.
The Court of Appeal: A Per Se Taking
Everyone appealed. The state asserted the geological activities were not takings, and that the entry statutes were constitutional. The property owners, on the other hand, objected to the ruling about the environmental activities, aguing that it too was a taking and subject to the same analysis as the geological activities.
The Court of Appeal held for the property owners on both arguments.
The geological activities were a taking per se, which in addition to being a point the state conceded, was a question of law which the court held went against the state even if it had not admitted it.
We conclude, as the State earlier conceded, the geological activities will work a taking per se, as they will result in a permanent occupancy of private property. As a result, the State must exercise its eminent domain authority before it can perform the geological activities.
Slip op. at 9. The court rejected the state's argument that the entry statutes fit the bill, because the California Constitution requires that a landowner have the opportunity for a jury to determine compensation, something not accounted for in the entry statutes. The opinion takes a few pages starting at page 9 of the slip opinion, to detail how entering onto the land, installing permanent structures, and boring holes is the type of "taking" or "damaging" which triggers the obligation of the state to follow eminent domain procedures.
It's no surprise that these activities, even if they were minor (which the details provided by the court remind us they were not), were held a taking, a point the state conceded, as noted earlier. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), the case in which the Court concluded that New York City's requirement that building owners allow the cable company to install a small box on the roof was a taking, even if the invasion was minor. Any permanent physical invasion "is a taking with out regard to the public interest that it may serve," as that case reminded us. See slip op. at 11-13.
No Substitute For Eminent Domain
But what about the state's claim that the entry statutes were an acceptable substitute for the usual eminent domain procedures, and thus it was okay because the entry statutes provided the property owners the same protections as did the eminent domain code? We won't go into the details of the state's argument, but let's just say that it changed quite a bit between courts, and frequently. Check out pages 14 and 15 for the details of how the state's argument shifted from the trial court, in its appellate court briefs, and then finally during oral argument, a fact of which the court took "a dim view." Slip op. at 15 n.3.
The court rejected the state's final position, disagreeing that "the entry statues may not be used to authorize precondemnation activities that result in a compensable taking of private property." The court concluded, "[b]ecause we have determined the geological activities will work a taking per se, just as the State conceded in the trial court, the State’s latest concession, that the entry statutes may not be used to authorize a taking, ends the State’s appeal." Slip op. at 15.
The court reached the same result as a matter of law, concluding that the entry statutes are facially unconstitutional, because under California's Takings Clause the state is required to affirmatively condemn and pay for property it wants to take, and the property owner is entitled to a jury trial to determine compensation (and other procedures in the eminent domain code). The entry statutes require neither.
The Good Part
Thus, the court concluded -- and take note here, this is the important part -- that in order to enter the land and undertake the geological activities, the state must first have condemned it and paid for it by following the eminent domain procedures:
The only legal procedure provided by the constitution and statutes of this state for the taking of private property for a public use is that of a condemnation suit which the constitution expressly provides must first be brought before private property can be taken or damaged for a public use.
Slip op. at 20. In case that wasn't clear enough, the court said it again:
If the State desires to enter private property to conduct tests in a manner that will cause actual damage to the property or result in a taking, it can do so only by first filing a condemnation suit for that purpose and which provides in that suit all constitutional rights granted to a property owner against the State’s power of eminent domain.
Slip op. at 21 (footnote omitted). Finally, the court rejected the argument that the entry statutes authorize the property owner to file a new action to recover compensation, and thus the statutes did not violate the California Takings Clause. Slip op. at 28.
No matter how small the interest, if the government wants to take property, it must condemn and pay for it first.
What About Ripeness?
About now, you takings mavens should be asking "what about the U.S. Supreme Court's ripeness doctrine, which theorizes that there's been no action offensive to the Takings Clause until the government has denied compensation, which also means the state courts have rejected the property owner's inverse condemnation claim?" (Williamson County's ripeness doctrine.)
The court did not reject the rule directly, but instead concluded that California's Takings Clause provides more rights than the Fifth Amendment. So bah humbug! to Williamson County and ripeness, we don't follow that rule in California! See slip op. at 28 n.10. This seems about right to us on both levels: state courts are free, of course, to interpret their state constitutional protections more broadly than the "floor" of the U.S. Constitution, and as a substantive ruling the court of appeals' rationale makes more sense than Williamson County's tortured rationale. It also dovetails nicely with the U.S. Supreme Court's recent ruling in Horne, which concluded that a property owner was not limited to an inverse condemnation or regulatory taking compensation remedy, but could actually raise the takings issues as a defense to the complained-about government conduct. Interesting stuff, for sure, and even though we believe that Williamson County is simply a misreading of the Fifth Amendment and that a correct application would follow the court of appeals' logic here, it appears that footnote 10 reserves that fight for another case.
A Penn Central Taking, Even
The court undertook a similar analysis of the state's environmental activities, and held that they worked a taking of a temporary easement, "an interest in property that cannot be acquired directly under the entry statutes." Slip op. at 20. Even though the property owners did not show any actual damage, the environmental activities disrupted their quiet enjoyment of their land, and although not a per se taking because they were not permanent, application of the multi-factor Penn Central test got the court to the same result. See pages 37 - 43 for the court's analysis.
The bottom line is that the court concluded there was a taking, because the environmental activities were really like a temporary easement, something the state can condemn, and therefore must take via eminent domain:
Thus, in this matter, all the factors weigh in favor of finding a temporary taking. The invasion and its consequences are intended by the State similar to a direct condemnation for a temporary easement. The invasion is a physical invasion, “a government intrusion of an unusually serious character.” (Loretto, supra, 458 U.S. at p. 433, fn. omitted.) The invasion will take place over a significant period of time, providing a one-year blanket easement to private property for entry by up to eight people for up to 66 days. These characteristics outweigh the preliminary lack of evidence on the invasions’ economic impact. In short, if the State intends to take and use a temporary easement, it must directly condemn it.
Slip op. at 42.
But Won't This Inconvenience The Takers?
The majority opinion concluded by rejecting the state's claim that the property owner's constitutional rights made it "inconvenient" for the state to undertake big projects, and that alone warranted the shortcut the state was advocating:
No doubt our ruling imposes more work on condemning agencies and the courts. However, constitutional rights against the exercise of eminent domain authority are not subject to the convenience of the government.
Slip op. at 43.
Again, that seems right to us. We're not sure how the government can argue that actually complying with the eminent domain law is a nuisance, given that the role of the government here is to do justice and not just grab land as it pleases, and try to get away as cheaply as it possibly can. (What's next, an argument that actually condemning and paying fair value might, heaven forbid, stop the project? Oh wait, that one's already been argued, and has repeatedly been slammed by the U.S. Supreme Court, most recently in Arkansas Game and Horne.)
Besides, at worst, complying with eminent domain procedure makes it mission difficult, not mission impossible, and as we pointed out in a recent post, the requirement to actually go through the eminent domain process -- "difficult" as it might be -- is in itself a public good. It forces the public to ask the right questions ("can we afford this?"), it assuages owners who are being involuntarily deprived of their property than it is being done for a good reason and with due respect for their interests, and it insures that the constitutional principles are followed. This is true for other constitutional rights, and as the Supreme Court pointed out, a person's property rights should not be a "poor relation" to her other rights.
As the court of appeal concluded, merely being difficult is no excuse.
One justice filed a lengthy dissent (two pages longer than the majority opinion), arguing that the entry statutes are not unconstitutional on their face, that the owners have not yet proven that they are unconstitutional as applied, and that the statutes are "a procedure within the Eminent Domain Law and provide for a deposit of just compensation priior to possession." Dissent at 11.
More analysis on the case from our Pacific Legal Foundation colleague Dave Breemer here: ("Court to California: Entering Private Land for Water Tunnel Studies Is a Taking").
Given that this decision was met with a strident dissent, and is being labeled "a bomb," "a blow for the state's water tunnel plan" that will "cause substantial delay," it seems that there's a good chance the state will seek review by the California Supreme Court. Also, the state has apparently told the press that it so intends. But does that square with the statement issued after the decision that the ruling is "not expected to delay" its plans? See also this report, and this story ("Governor Brown's Giant Water Tunnels Plan Loses Two Big Court Rulings") for more.
So stay tuned, folks, this interesting case may get more interesting.