United States v. California, 2018 U.S. Dist. LEXIS 188306 (E.D.Ca., Nov. 1, 2018, case no. 2:18-cv-721
The federal government owns 45.8 million acres of land in California, which is roughly 46 percent of the state’s total landmass. A large portion of that federal land is made up of natural areas, such as national parks, monuments, wilderness and wildlife reserves. According to the California Legislature, “[s]hould the federal government decide to sell off this land or the rights to use it for mining, development, timber harvest or other extractive purposes, California’s landscape would be permanently altered. California’s residents and environment could be deprived of access to, and the benefits from, this land in its current condition.” (Senate Judiciary Committee, Analysis for SB 50, March 20, 2017 (“Committee Analysis”), pp. 1-2.) Accordingly, the Legislature passed Senate Bill 50 (“SB50”), which Governor Brown signed on October 6, 2017. That legislation added a “Conveyance of Federal Lands” provision in the Public Resources Code, the purpose of which was to implement the “policy of the State of California to discourage conveyances that transfer ownership of federal public lands in California from the federal government.” (Pub. Res. Code §8560, subd. (b)(1).) A “large environmental coalition” supported the bill “because it establishes a new policy to discourage conveyances of federal lands to private developers for resource extraction.” (Senate Floor Analysis for SB50, September 14, 2017 (“Floor Analysis”), p. 6.)
To accomplish that policy, Public Resources Code section 8560 requires that, in order to record a deed or other documents related to the conveyance of federal land with a California county recorder, a grantee of federal lands must present a certificate of compliance from the Lands Commission. SB 50 also provides for a civil penalty of up to $5000 to be levied against any person who knowingly presents for filing with a county recorder a document related to the conveyance of federal land unaccompanied by a Lands Commission certificate of compliance. There are six categories of conveyances for which the Lands Commission is required to waive its right of refusal and automatically issue a certificate of compliance. As to conveyances that fall outside of those categories, prospective purchasers may only secure a certificate of compliance from the Lands Commission if the commission is first provided with a right of first refusal or the right to arrange for the transfer of the federal public land to another entity. The latter conveyances are “void ab initio” unless the Lands Commission was provided with these refusal rights.
In its early analysis of SB50, the Senate Judiciary Committee staff asked “Can the State of California, exercising its authority over property law and the recording of documents reflecting property ownership, declare the conveyance of federal public lands void ab initio, and refuse to record evidence of it unless the State Lands Commission was provided with a right of first refusal or the option to arrange transfer the property to another entity? … However, the question is close enough that the constitutionality of SB 50 might well be challenged in court.” (Committee Analysis, p. 7.) Even on the eve of passing the legislation, the Senate Rules Committee staff noted that the County Recorders Association of California believed that “aspects of this bill may be preempted by federal law.” (Floor Analysis, p. 7.) Not surprisingly, U.S. Attorney General Jeff Sessions called SB50 “a stunning assertion of constitutional power by California” and the United States immediately sued the State of California in federal court on the basis that SB50 violated the Supremacy Clause of the U.S. Constitution.
On November 1, 2018, District Judge William Shubb of the Eastern District of California agreed with the U.S. on cross-motions for summary judgment. The court found that the title recordation requirements of SB50 violated the doctrine of intergovernmental immunity because it directly regulated the federal government’s operations as to those conveyances which are not automatically entitled to a certificate of compliance from the Lands Commission, but which are conditioned on the extension of refusal rights to the Lands Commission. The court held that the State’s argument that it regulates purchasers rather that the United States was unpersuasive because (1) the State required the federal government to provide the purported first refusal rights to the State; and (2) the law’s title recordation requirements “impose direct and intrusive, though perhaps less proximate, regulations on the federal government” and “trespasses on the federal government’s ability to convey land to whomever it wants.” The court further held that SB50’s requirements “impermissibly discriminate against those who deal with the federal government by singling them out for discriminatory, if not particularly burdensome, regulation.” Purchasers from the federal government “face a level of uncertainty and potential delay that all others are spared from.”
Judge Shubb also considered the U.S.’s second argument that SB50 is unconstitutional because it is preempted by federal law. The court stated that the Property Clause of the U.S. Constitution, in addition to the language in the Admission Act of 1850 (under which California was admitted as a state) that explicitly prohibits California from interfering with Congress’s ability to dispose of federal lands, demonstrate that the U.S.’s preemption arguments “appear compelling.” Nevertheless, the court did not reach the question of whether federal law preempts SB50 because the court found that SB50 “unconstitutionally violates the doctrine of intergovernmental immunity.”
The Legislature inserted a severability provision into SB 50 because the Senate Judiciary Committee recognized that “it is possible that the federal government may challenge the provisions of this bill and might prevail as to some public land conveyances.” (Analysis, p. 9.) However, despite that provision, the District Court declined to sever any part of SB50 because each part was functionally and volitionally inseparable from the remainder of the statute. Judge Shubb then permanently enjoined the state from enforcing SB50.
Although a spokesperson for the State Lands Commission stated that the commission would make a decision about a possible appeal before the end of 2018, to date it appears that no such appeal has been made to the Ninth Circuit Court of Appeals.
Glen Hansen is Senior Counsel at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.