On July 21, 2016, in a lengthy 73-page opinion in Property Reserve, Inc. v. Superior Court, Case No. S217738, the California Supreme Court opened the door for the Department of Water Resources (DWR) to enter private properties in the Sacramento-San Joaquin Delta to perform environmental and geological testing for feasibility and impact studies of the proposed Delta water conveyance tunnels.  In reaching its opinion, the Court upheld California’s precondemnation entry and testing statutes as valid under the California takings clause, added a requirement that landowners have the option of a jury trial for determination of damages, but limited damages recovery to the actual damage resulting from entry and testing.

In 2008 and 2009, DWR filed over 150 petitions in superior courts seeking entry onto properties in five counties to conduct environmental and geological studies to support the contemplated Delta tunnels project.  In 2010, the petitions were coordinated into a single case in San Joaquin County.  The proposed environmental activities included mapping and surveys relating to plants, animals, habitat, soils, hydrology, cultural resources, and other uses.  The proposed geological testing included drilling deep boreholes to assess subsurface conditions.  The trial court issued an order allowing the environmental testing with very specific limitations, but denied DWR’s petition for geological testing.  The court relied on the Supreme Court’s decision in Jacobsen v. Superior Court (1923) 192 Cal. 319 (Jacobsen), which denied a public water agency’s request to conduct similar testing for a reservoir project under a prior version of the precondemnation entry and testing statutes.  The Court of Appeal affirmed the trial court’s denial of the geological testing, and also overruled the trial court’s allowance of the environmental testing as a too lengthy period of time of entry on the grounds that Jacobsen only permits “innocuous” and “superficial” entry and testing.

The Supreme Court overruled the Court of Appeal, in part due to its faulty reliance on Jacobsen, which interpreted a prior version of the entry and testing statute.  The current statutes allow for entry and testing that may result in actual damage or substantial interference with (1) the property owner’s permission or (2) by petition for a properly limited court order prior to any entry or testing, including the deposit into the court of funds to cover the likely loss that the property owner will sustain as a result of the entry and testing, and the condition that the governmental entity pay damages to the property owner to compensate for any injury or substantial interference with the property from the entry and testing.  The procedures differ from a more elaborate classic condemnation action where a public entity seeks to obtain legal title or a permanent property interest in private party.

In this case, for both the environmental and geological testing, the Supreme Court found that DWR is not seeking to obtain title or exclusive possession of property for a significant amount of time.  As a result, DWR may properly use the precondemnation statutes to gain entry for testing.  Landowners are entitled to compensation for actual damages from the monies deposited by DWR with the trial court prior to entry.  The Supreme Court reformed the precondemnation entry and testing statutes to provide landowners the opportunity to request a jury trial for the determination of actual damages from the entry and testing.  However, actual damages are limited to the amount the property owner has lost, and do not include the rental value for time spent on the property.

The Supreme Court’s decision ends the over half-decade dispute, and will allow DWR to file petitions for entry and both environmental and geological testing of the subject properties.

A copy of the Supreme Court decision may be found here.

For more information on this case, please contact Rich Deitchman at (916) 446-7979 or rdeitchman@somachlaw.com.

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