California Passenger Rail Summit

Last week I attended the 2014 California Passenger Rail Summit where industry leaders met to discuss the modernization and integration of passenger rail service in California. While the California High Speed Rail train was an important element, to me the main takeaway was the vision of statewide rail connectivity benefiting all of California’s communities.

Several regional government representatives spoke about the success of existing corridors, such as the Capitol Corridor and the expanding LOSSAN corridor, as well as emerging corridors such as the Salinas Rail extension planned by the Transportation Agency for Monterey County. 

Of course, a discussion of rail in California would be incomplete without discussing High Speed Rail. But this summit put high speed rail in context with the vision of a modern, complete rail system in California. I also gained a better sense of why it makes sense to start in the Central Valley, and how the project is part of that much larger vision. While much has been said in criticism of the project, it was not surprising to learn that other major infrastructure improvements faced similar hurdles. (Did you know over 2,000 lawsuits were filed to stop construction of the Golden Gate Bridge?) California has always been a leader when it comes to game-changing projects, and I think if we can make the investment now, future generations will look back and applaud our vision.

As I learned, rail will be key to keeping California’s economy strong, whether it is getting tourists where they need to be, or connecting citizens to the major job centers. I came away from the summit excited about the coming future and I look forward to opportunities to be part of that future.

Smoother Pavement and Safer Bridges are Coming Soon to a Road Near You

On March 20, 2014, the California Transportation Commission allocated $334 Million to 53 projects around the state.  As one Caltrans press release puts it, "Californians will be driving on smoother roads, safer bridges, and enjoying the benefits of enhanced transit."

According to Caltrans' director Malcolm Dougherty:

Every $1 spent on preventive pavement maintenance saves Californians $11 that would have been spent on future pavement repairs.

And we can all hope Caltrans is targeting those dollars in the right places.  Some areas that will be seeing significant funds include:

  • $59 Million to widen SR 138 in San Bernardino
  • $50 Million to repair pavement, improve barriers and guardrails along I-5 and I-605 in Los Angeles County
  • $48 Million to ACE for the Puente Avenue Grade Separation
  • $7 Million for pavement improvements on Highway 46 along the Central Coast
  • $3 Million on US 101 in San Luis Obispo County
  • $5.8 Million for the Horsecreek Bridge in San Bernardino County
  • $2.7 Million for improvements and upgrades to the Caldecott Tunnel

For a full list of projects receiving funds, click here.

Court Decision Raises Questions About Viability of Precondemnation "Right of Entry" Efforts

Last week, the Court of Appeal issued a decision that may be one of the ones we look back on as among the most significant of 2014 (at least in the world of eminent domain).  For years (and certainly for the entire 20 years I've been doing this), public agencies have utilized a statutory "right of entry" procedure to gain access to private property to conduct investigations and testing before deciding whether to move forward with a condemnation action.  (See Code of Civil Procedure section 1245.010 et seq.)  Often, this happens during the CEQA process, as agencies try to assess the environmental impact a proposed project may have.  Sometimes, the "entry" involves little more than someone wandering around a property for a few hours.  But in other cases, the investigation is more far-reaching, including things such as soil borings and animal traps. 

Rarely does anyone question these activities.  So long as the government acts reasonably and provides for compensation to the owner if the investigation causes any damage, these entries go off without a hitch.  But that may all change.

On March 13, 2014, the Court of Appeal issued its decision in Property Reserve, Inc. v. Superior Court.  There, the Court struck down an agency’s efforts to conduct precondemnation investigation and testing pursuant to the right of entry statutes. The key to the decision was that the Court held that any significant physical intrusion onto private property constituted a taking for which just compensation must be paid.

This meant that the agency was required to proceed with an “eminent domain proceeding,” which, in turn requires that the property owner be provided with certain protections, including the right to a jury trial – something the “right of entry” statutes do not provide.

While not striking down all efforts to enter onto property for precondemnation investigation and testing, the decision calls into doubt the viability of California’s right of entry statutes, which could have significant implications for agencies.  The holding indicates that there is no "bright-line rules for determining whether a temporary physical invasion constitutes a taking."  Rather, entries must be evaluated based on four criteria:

  • The degree to which the invasions are intended.  The court noted that as to this factor, a right of entry always qualifies as an "intended" invasion.
  • The character of the invasions.  Here, the court contrasted regulatory "invasions" (which are less likely to qualify as a taking) from true physical invasions.  Again, as to a right of entry, the character of the invasion is a physical invasion (i.e., suggesting they qualify as takings).
  • The amount of time the invasions will last.  This is where the court left an opening to allow routine entries, since the "takings" at issue in that case involved the potential for 66 days of physical invasion spread over an entire year -- a far cry from a typical inspection that might last a few hours.
  • The invasions' economic impact on the landowners and interference with their distinct investment-backed expectations.  This factor derives from the famous Penn Central test for evaluating regulatory takings claims.   The court acknowledged that no evidence existed that the investigations at issue would cause any economic impact.  Still, the court downplayed this factor, explaining that it played little role in situations of an actual physical invasion.  "This is because if the government intentionally and physically invades private property to the extent it requires a permanent or temporary interest in that property to accomplish its public purposes, it must pay for that interest, no matter how small the interest may be."

Reading between the lines, the real inquiry in future cases may revolve around the "time" factor, since the other three factors will almost always weigh in favor of a taking finding for a right of entry. 

The decisions following Property Reserve will garner significant attention.  Moreover, we have heard that an effort is already underway to get the opinion depublished (meaning it would not be citable in the future), and it would not be surprising if the agency seeks Supreme Court review given the stakes involved in the decision.

Note that the case also included a long, 46-page dissent (two pages longer than the 44-page majority decision).  The length of the opinions alone suggests the significance of the issue, and I expect we will hear more on this issue in the near future. 

Note also that the court suggested some legislative changes that could solve the constitutional problems the court identified.  Thus, if efforts to depublish and obtain Supreme Court review are unsuccessful, the next battle over this issue may take place in the legislature. 

Finally, a really important caveat.  The case impacts only those situations in which the government seeks a court order allowing a right of entry.  It has no impact on voluntary agreements reached between agencies and owners.  Thus, for the immediate future, expect to see a lot more effort by agencies to reach negotiated rights of entry to allow precondemnation work.  

As for the rest of it, stay tuned.  In the meantime, if you want to read another take on the case, take a look at Robert Thomas' post, Cal App States The Inconvenient Truth: There's No Substitute For Eminent Domain - Gov't Must Condemn First If It Wants To Enter Land.

The Uniform Relocation Act Does Not Provide a Private Right of Action to Property Owners

On March 7th, a U.S. District Court sided with the Federal Aviation Administration (FAA) on whether the Uniform Relocation Act (URA) provides private property owners with a private right of action: it does not.  The Pacific Shores Property Owners Association sued the FAA over improvements the Border Coast Regional Airport Authority is required to make to a regional airport, Del Norte County Regional Airport, also known as Jack McNamera Field.  To meet the FAA's runway safety standards, the Authority had to close roads and acquire nearby lots to make up for the wetlands lost as a result of the improvements.  Congress had previously allocated federal funds to assist local airports with the required improvements. 

Pacific Shores wanted the FAA to "administer and monitor" the Authority and its use of the federal funds pursuant to section 4655 of the URA.  However, the FAA argued, and the court agreed, that the FAA's only responsibility under that provision is to receive satisfactory assurances from the acquiring agency that the agency will be guided by the land acquisition policies in the URA.  The URA does not provide a private right of action or remedy by which property owners can hold the FAA liable for not receiving satisfactory assurances.  The court goes on to say that even if there was some violation of a federal statute, it does not automatically give that person a private cause of action.

The Court dismissed three of Pacific Shores' causes of action for inverse condemnation, CEQA violations and violations of the California Constitution saying it did not have jurisdiction over those causes of action and that they can be filed again in state court.

Supreme Court Strikes Blow to "Rail-to-Trails" Program

In the latest in a string of recent U.S. Supreme Court cases that impact right of way issues, on Monday the Court issued its opinion in Marvin M. Brandt Revocable Trust v. United States (Case No. 12-1173, March 10, 2014).  The issue in Brandt involved whether the U.S. Government retained a reversionary interest in the easements it granted to railroads pursuant to the General Railroad Right-of-Way Act of 1875. 

The decision would impact, in particular, the "rails-to-trails" program, designed to convert old, abandoned railroad rights of way to bike trails.  Under the program, the Government has contributed right of way that it claimed reverted to its ownership once the railroads abandoned them.  But some of the people who owned the underlying fee interests felt that the railroad easements were extinguished when the railroads abandoned them, meaning the owners now owned an unencumbered fee, rather than a fee with an easement held by the Federal Government. 

In Brandt, the Court held that the Government possessed no reversionary interest and that, as a result, the abandoned easements were extinguished in favor of the underlying fee owners

Justice Sotomayor, in a lone dissent, argued that the Government did possess reversionary rights, and that the decision could "cost American taxpayers hundreds of millions of dollars."  For more on the decision, see our article, Rails-to-Trails Decision: Supreme Court Holds that Government Does Not Retain Reversionary Interest.  If you want even more details, there has been ample press coverage, including:


President Obama Touts $302 Billion for Nation's Infrastructure

In hopes of modernizing the nation's infrastructure, President Obama revealed a plan to invest $302 billion in transportation over the next four years.  As reported in Politico , the President hopes the additional funds will not only keep the Highway Trust Fund solvent in the short term, but provide a true long-term vision for a modern infrastructure.  But it is not just highways that will be improved.  The President's plan should also give a boost local agencies that are investing in light rail, street cars, and bus rapid transit. 

The President will need support from both parties to implement his vision.  But it appears that at least some Republicans support the President's vision.  The House Committee on Transportation and Infrastructure Chair Bill Shuster released a statement  that was generally supportive of the Federal government's commitment to improving the nation's infrastructure.  Of course, it remains to be seen if both parties can agree on the best approach to achieve those goals.

The White House also released a fact sheet that describes some of the highlights of the President's vision.  You can also find information on Nossaman's Infra Insight blog.

We anticipate more details of the transportation plan will be revealed in the President's 2015 Budget Request, due out next week.

Redevelopment 2.0 -- Infrastructure Financing Districts Approved for Redevelopment Project Areas

Despite being destroyed and dismantled, redevelopment in California has been born once again, this time reincarnated under the name of "Infrastructure Financing Districts."  Last week, Governor Brown signed into law AB 471, which amends section 53395.4 of the California Government Code to allow infrastructure financing districts to finance a project or portion of a project located within a redevelopment project area or former redevelopment project area.

Infrastructure financing district law now provides a mechanism to finance projects that would have otherwise been financed by redevelopment agencies but for their elimination.  Local agencies can now form an infrastructure financing district over a redevelopment project area to finance redevelopment projects that were not yet completed prior to the dissolution of redevelopment agencies.  The newly formed infrastructure financing district can issue bonds to pay for real or other intangible property and certain public capital facilities of communitywide significance, and such bonds will be secured by any increase in property tax revenue over the assessed value of the property within the infrastructure financing district.

The new law also encourages local agencies to wrap up their redevelopment affairs, as a redevelopment project cannot be financed until the successor agency to the former redevelopment agency receives a finding of completion.  Similarly, the law makes clear that any new debt or obligation created under infrastructure financing district mechanism will be subordinate to enforceable obligations of the former redevelopment agency.  In other words, the new law may accelerate the redevelopment wind-down process.

The question now is whether or not infrastructure financing districts will be successful to re-invent redevelopment projects.  The infrastructure financing district idea passed the Legislature in the early 1990s as an alternative to redevelopment, permitting the use of tax-increment financing for infrastructure without requiring a finding of blight. But the idea has rarely been used, primarily because they require two-thirds voter approval to be created or issue bonds.  While there was discussion about reducing this requirement, as part of the new law the the two-thirds vote requirement was not changed. 


City of Bakersfield Secures Early Release of $180 million in Federal Funding for Centennial Corridor and 24th Street Widening Projects

The City of Bakersfield can now purchase property in the path of the Centennial Corridor Project between the Westside Parkway and Highway 58.  Under the early acquisition federal program, the City of Bakersfield may purchase properties from homeowners willing to voluntarily sell their property.  Approval for early acquisition of the sites will be requested at the next City Council meeting on March 5th.

On the other hand, the City may begin eminent domain proceedings for the 24th Street Widening Project to acquire the 23 homes in the project’s path.  The EIR for the project was approved earlier this month.

Keystone XL Pipeline Project Halted in Nebraska

On Wednesday, a Nebraska District Court dealt the Keystone XL pipeline project a heavy blow.  The court invalidated a law that allowed the state's governor to approve the pipeline's passage through Nebraska.  The court ruled that the state's legislature circumvented the Public Service Commission (PSC), which regulates pipelines and other utilities, by allowing the governor to approve the route the pipeline would take through Nebraska.  The law also improperly granted TransCanada the power of eminent domain to acquire property within Nebraska, another decision that should have been made by the PSC.

The governor and attorney general for Nebraska have already appealed the decision to the state appeals court.  This decision could delay the project for several months if the PSC has to be consulted.  The application to the PSC itself could take up to six months to complete, and the PSC would have seven months to review it, and could extend the review for an additional year.  And the legislature would have to pass additional legislation allowing the PSC to act.  To make matters more difficult, TransCanada is still waiting for approval from the U.S. State Department to build the pipeline, a decision which is in the hands of the president and is expected in May.

The project is a 1,179 mile pipeline that would run from Alberta, Canada to Steele City, Nebraska, and connect with an existing line that runs to the Gulf of Mexico. The entire pipeline could move more than 800,000 barrels of crude oil each day. The cost of the project is estimated to be $5.3 billion.

Court Sides With Federal Government Over Santa Monica Airport

As we reported last month, the United States of America and the Federal Aviation Administration had filed a motion to dismiss a lawsuit brought by the City of Santa Monica in federal court seeking to confirm its alleged right to control the fate of the Santa Monica Airport.  Yesterday, the federal court threw out the City's lawsuit, holding that:

  • The Quiet Title Claim was time-barred;
  • The takings claim had to be brought before the United States Court of Federal Claims pursuant to the Tucker Act; and
  • The Tenth Amendment and Fifth Amendment Due Process Claims were not ripe.  

The federal court found that the Tenth Amendment and Due Process Claims were not ripe because the City had not finally decided or declared its intention to cease operations at the Santa Monica Airport.  This City must now decide whether to appeal the ruling, make a formal declaration of intent, pursue its takings claim in the Court of Federal Claims, or sit with the loss.  As Yogi Berra said, "It ain't over til it's over."  

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