USA v. State of California et al

Filing 28

ORDER signed by Senior Judge William B. Shubb on 11/1/2018 GRANTING 20 Motion for Summary Judgment and DENYING 24 Cross-Motion for Summary Judgment.The court DECLARES that SB 50 is unconstitutional because it violates the doctrine of intergovernmental immunity, and PERMANENTLY ENJOINS defendants from enforcing SB 50. CASE CLOSED. (Donati, J)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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UNITED STATES OF AMERICA,

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2:18-cv-721-WBS-DB

Plaintiff,

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No.

v.

MEMORANDUM AND ORDER RE:
CROSS-MOTIONS FOR SUMMARY
JUDGMENT

STATE OF CALIFORNIA; and
CALIFORNIA STATE LANDS
COMMISSION, an agency of
the State of California,
Defendants.

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----oo0oo---Plaintiff United States of America initiated this

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action against defendants State of California and California

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State Lands Commission (“Lands Commission”).

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2017 California law regulating the recording of conveyances of

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federal public lands in California (“SB 50”) is invalid because

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it violates the United States Constitution’s Supremacy Clause.

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Specifically, plaintiff argues both that the law runs afoul of

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the doctrine of intergovernmental immunity and that it is

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preempted by federal law.

It argues that a

Defendants maintain that SB 50 is a
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proper exercise of the state’s right to regulate conveyances of

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land within its borders.

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Currently before this court are plaintiff’s and

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defendants’ cross-motions for summary judgment.

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& 24.)

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I.

(Docket Nos. 20

Factual and Procedural Background

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California’s SB 50 states that it is the policy of the

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State of California to “discourage conveyances that transfer

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ownership of federal public lands in California from the federal

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government.”

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Governor Edmund G. Brown Jr. signed SB 50 on October 6, 2017.

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(McVeigh Decl. Ex. 1 (Docket No. 20-2).)

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effect on January 1, 2018.

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Cal. Pub. Res. Code § 8560(b)(1).

California’s

The law went into

(Id.)

A central mechanism through which SB 50 seeks to

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discourage conveyances of federal land is the requirement that,

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in order to record a deed or other documents related to the

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conveyance of federal land with a California county recorder, a

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grantee of federal lands must present a certificate of compliance

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from the Lands Commission.

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penalty of up to $5000 to be levied against any person who

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knowingly presents for filing with a county recorder a document

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related to the conveyance of federal land unaccompanied by a

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Lands Commission certificate of compliance.

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6223(a).

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SB 50 also provides for a civil

Cal. Gov’t Code §

SB 50 defines “conveyance” broadly to encompass “any

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method, including sale, donation, or exchange, by which all or a

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portion of the right, title, and interest of the United States in

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and to federal lands located in California is transferred to
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another entity.”

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not, however, apply uniformly to all conveyances of federal

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lands.

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Lands Commission is required to waive its right of refusal and

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automatically issue a certificate of compliance.

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Code §§ 8560(b)(2)(D)(ii) & (f).

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Cal. Pub. Res. Code §

8560(a)(2).

It does

There are six categories of conveyances for which the

Cal. Pub. Res.

Four of these categories were included in Section

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8560(f) of SB 50, as originally enacted.

They are: conveyances

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of federal public lands which the Lands Commission deems to be

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“routine;” conveyances of federal public lands pursuant to a

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conservation plan; the renewal of a lease that was in existence

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as of January 1, 2017; and the “conveyance of federal public

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lands to a federally recognized Native American tribe or lands

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taken into or out of trust for a Native American tribe or

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individual Native American.”

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Id. § 8560(f)(3).

In June 2018, following the plaintiff’s initiation of

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this action, California amended SB 50 with Senate Bill 854.

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amendment established two new categories of conveyances for which

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the Lands Commission must automatically issue certificates of

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compliance.

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the State of California.

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That

The first is conveyances of federal public lands to
Id. § 8560(f)(5).

The second is:

The conveyance of any federal public lands not
managed by the federal National Forest Service,
the federal Bureau of Reclamation, the federal
Bureau of Land Management, the United States Fish
and Wildlife Service, or the federal National
Park Service unless the land conveyed satisfies
any of the following:
a. Is part of a national monument or
national marine sanctuary.
b. Contains national conservation lands.
c. Is land placed in the National Register
of Historic Places.
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d. Is designated for preservation or
conservation uses.
Id. § 8560(f)(4).

Conveyances of federal land that fall

into any of the six above categories are automatically
entitled to a certificate of conveyance from the Lands
Commission.

No timeframe is prescribed by statute within

which the Lands Commission must complete these automatic
certificate issuances.
(Docket No. 20).)

(Pl.’s Mot. for Summ. J. at 21

Lands Commission staff have never

refused to issue a certificate of compliance when requested
to do so.

(Lucchesi Decl. ¶ 12 (Docket No. 24-3).)
Certificates of compliance are not automatically issued

for conveyances of federal land that fall outside the categories
enumerated above.

Prospective purchasers in these conveyances

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 (“refusal rights”).
Additionally, under SB 50, conveyances of federal public land
subject to this requirement are “void ab initio” unless the Lands
Commission was provided with these refusal rights.

Cal. Pub.

Res. Code § 8560(b)(2)(A).
SB 50 requires the Lands Commission to evaluate its
right of first refusal at a public hearing.

Id. § 8560(b)(2)(C).

These meetings occur approximately every other month.
Decl. ¶ 4.)

(Lucchesi

To date, the Commission has declined to exercise its

putative right of first refusal to purchase any federal public
lands or arrange for their transfer to a third party.

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(Id. ¶

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10.)

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II.

Legal Standard

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Summary judgment is proper “if the movant shows that

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there is no genuine dispute as to any material fact and the

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movant is entitled to judgment as a matter of law.”

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P. 56(a).

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of the suit, and a genuine issue is one that could permit a

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reasonable jury to enter a verdict in the non-moving party’s

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favor.

Fed. R. Civ.

A material fact is one that could affect the outcome

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

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(1986).

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III. Analysis

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A.

Supremacy Clause
The Supremacy Clause of the United States Constitution

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governs conflicts between state and federal laws.

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that the “Constitution, and the Laws of the United States which

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shall be made in Pursuance thereof . . . shall be the supreme Law

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of the Land; and the Judges in every State shall be bound

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thereby[.]”

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interpreted the Supremacy Clause as meaning that, “the states

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have no power, by taxation or otherwise, to retard, impede,

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burden, or in any manner control, the operations of the

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constitutional laws enacted by congress to carry into execution

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the powers vested in the general government.”

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Maryland, 17 U.S. 316, 317 (1819).

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U.S. Const. Art. VI, cl. 2.

It provides

The Supreme Court has

McCulloch v.

This principle is known as the doctrine of

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intergovernmental immunity.

Under this doctrine, a state law is

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invalid if it “regulates the United States directly or

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discriminates against the Federal Government or those with whom
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it deals.”

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(1990).

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North Dakota v. United States, 495 U.S. 423, 435

Under the Supremacy Clause, state laws are also invalid

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if they are preempted by federal law.

“There are two types of

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implied preemption: field preemption and conflict preemption.”

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Whistler Invs., Inc. v. Depository Trust & Clearing Corp., 539

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F.3d 1159, 1164 (9th Cir. 2008).

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when Congress “‘so thoroughly occupies a legislative field’ that

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it effectively leaves no room for states to regulate conduct in

Field preemption is implied

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that field.”

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U.S. 504, 516 (1992)).

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compliance with both federal and state law is impossible or when

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state law frustrates Congress’s purpose in enacting a given

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federal statute.

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(Conflict preemption analysis looks to “whether a party’s

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compliance with both federal and state requirements is impossible

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or whether, in light of the federal statute’s purpose and

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intended effects, state law poses an obstacle to the

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accomplishment of Congress’s objectives.”).

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Id. (quoting Cipollone v. Liggett Group, Inc., 505

1.

See Whistler Invs., Inc., 539 F.3d at 1164

Intergovernmental Immunity

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Conflict preemption occurs when

a.

Direct Regulation of the Federal Government

Defendants’ argument that SB 50 does not directly

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regulate the United States’ operations or property rests on a

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purported distinction between the conveyance of a given piece of

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real property and the recordation of a document related to that

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conveyance.

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not the former.

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account, SB 50 is merely an expansion of existing California law

SB 50, defendants argue, regulates the latter but
(Defs.’ Cross-Mot. for Summ. J. at 9.)

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In this

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governing all aspects of the title recording process.

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Gov’t Code §§ 27201 et seq.; Id. §§ 27279 et seq.; Id. §§ 27320

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et seq.; Id. §§ 27360 et seq.

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Cf. Cal.

This argument is colorable with respect to those

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conveyances for which the Commission must automatically issue

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certificates of compliance.

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certificates will be issued in these cases (Lucchesi Decl. ¶ 12.)

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Given this, the regulation as it pertains to these conveyances is

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not categorically dissimilar from the preexisting requirements

There is certainty that the

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for title recordation under the California Government Code.

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Thus, with respect to conveyances automatically entitled to

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certificates of compliance, SB 50 is not an unconstitutional

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“direct regulation” of the federal government.

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Defendants’ argument that SB 50’s title recordation

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requirements do not constitute a direct regulation of the United

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States’ operations or property fails, however, with respect to

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those conveyances which are not automatically entitled to a

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certificate of compliance from the Lands Commission.

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conveyances, the issuance of a certificate of compliance is

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conditioned on the extension of refusal rights to the Lands

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Commission.

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For these

Importantly, the question before the court is not

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whether defendants have, or will ever, in fact, directly regulate

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the United States via SB 50’s refusal rights.

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whether the law, as written, seeks to directly regulate the

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United States.

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this reason, it is of no moment that the Lands Commission has yet

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to use the power delegated to it by SB 50 in a manner that

Rather, it is

The court’s analysis is legal, not factual.

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For

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directly regulates the United States.

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of Arcata, 629 F.3d 986 (9th Cir. 2010)(holding that two cities’

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promise that they would only enforce ordinances banning federal

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agents or employees from engaging in military recruitment to the

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extent the ordinances were consistent with federal law was

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irrelevant to the analysis of whether the ordinance violated the

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doctrine of intergovernmental immunity).

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See United States v. City

Defendants argue that their track record of
implementing SB 50 in a manner that does not directly regulate

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the United States is relevant because, on its face, the law

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regulates purchasers of federal land, not the government itself.

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(Defs.’ Reply Br. in Supp. of Cross-Mot. for Summ. J. at 3

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(Docket No. 26).)

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certificate of compliance from the Lands Commission before

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recording a conveyance and it is the purchasers who must, in

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certain circumstances, offer the Lands Commission refusal rights

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in order to get a certificate of compliance.

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for Summ. J at 9.)

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that “nothing prevents the legislature from structuring a right

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of refusal so that it primarily regulates the purchasers, rather

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than the United States.”

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It is the purchasers who must secure a

(Defs.’ Cross-Mot.

In support of this claim, defendants argue

(Id.)

Defendants are correct that a right of refusal may be

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imposed by statute.

It does not follow, however, that the

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legislature can structure a statutory right of refusal such that

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it can be exercised against a party that lacks an interest in the

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property at issue.

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clarify how a purchaser of federal public lands could grant the

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Lands Commission a right of first refusal to buy or arrange for

Nowhere in their briefing do defendants

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the transfer of land owned by the federal government.
Even if it were possible for the legislature to craft

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such a right of first refusal, there is no evidence that the

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California legislature has done so in this case.

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of the statute lends no credence to this reading, and the Lands

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Commission’s own interpretations of SB 50 have placed the onus on

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plaintiff, not on purchasers, to provide the refusal rights.

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example, in a February 12, 2018 letter to the Bureau of Land

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Management regarding the conveyance of a parcel of land in Santa

The plain text

For

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Barbara County, the Lands Commission wrote that “[t]o comply with

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state law and validly transfer the parcel, BLM must provide the

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Commission with the right of first refusal or right to arrange

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for the transfer of the parcel to another entity.” (McVeigh Decl.

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Ex. 9 (Docket No. 20-2).)

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recognized what it now asks this court to deny: rights of first

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refusal, even those created by statute, are exercised against the

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owner of the real property at issue.

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In this letter, the Lands Commission

SB 50 may not expressly name the federal government as

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its intended object of regulation, but that does not mean the law

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does not directly regulate the United States.

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regulation is most immediately evident in section 8560(b)(2)(A),

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which declares “void ab initio” certain conveyances of federal

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land if the Lands Commission is not first offered refusal rights

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to that land.

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impose direct and intrusive, though perhaps less proximate,

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regulations on the federal government.

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This direct

The law’s title recordation requirements also

Title recordation is a significant and almost

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inextricable component of the process of land conveyance.1

As a

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result, conditioning purchasers’ ability to record a title to

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recently acquired federal public lands on whether the government

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provided the Lands Commission with refusal rights in those lands

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trespasses on the federal government’s ability to convey land to

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whomever it wants.

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the conveyance of federal land to review by the Lands Commission;

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its refusal rights requirement and declaration that certain

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conveyances of federal land are “void ab initio” unless that

The law subjects federal determinations about

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requirement has been complied with appropriate for California the

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power to “directly obstruct the activities of the

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Federal Government.”

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North Dakota, 495 U.S. at 437–38.

For these reasons, the court agrees with plaintiff that

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SB 50 unconstitutionally directly regulates the federal

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government with respect to the federal public lands managed by

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the federal National Forest Service, the federal Bureau of

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Reclamation, the federal Bureau of Land Management, the United

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States Fish and Wildlife Service, and the federal National Park

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Service, as well as with respect to those federal lands that meet

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the conditions enumerated in Section 8560(f)(4)(A)-(D).

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Accordingly, these portions of SB 50 unconstitutionally violate

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the doctrine of intergovernmental immunity.

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b.
Discrimination against the United States and
those with whom it deals

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In California, nearly all grantees of real property
record the deed instrument in the county in which the property is
located. (Haase Decl. ¶ 23 (Docket No. 20-7).) Moreover, title
recordation is often required by financial institutions and
insurance companies considering providing financing or insurance
coverage to a land owner with respect to a given property. Id.
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Even if a regulation does not directly regulate the

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United States, it may still violate the doctrine of

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intergovernmental immunity if it discriminates against the United

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States or those with whom it deals.

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are those that are not imposed on “similarly situated

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constituents of the State” and which have no “basis unrelated to

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the object’s status as a Government contractor or supplier.”

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North Dakota v. United States, 495 U.S. 423, 438 (1990).

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Importantly, even regulations that discriminate against those

Discriminatory regulations

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with whom the government deals may nonetheless survive if, “the

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inconsistency is directly related to and justified by significant

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differences between the two classes.” Davis v. Mich. Dep’t of

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Treasury, 489 U.S. 803, 804 (1989)(citation and quotation marks

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omitted).

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The statutory language of SB 50 makes clear that it

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applies only to purchasers and grantees of federal public lands:

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only those trying to record documents related to conveyances of

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federal public lands must present a certificate of compliance

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from the Lands Commission, and only they are subject to monetary

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penalties if they fail to do so.

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In United States v. California, 314 F. Supp. 3d 1077 (E.D. Cal.

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2018)(Mendez J.), Judge Mendez considered the constitutionality

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of a California law that, among other things, imposed civil

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penalties on California employers that allowed federal

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immigration enforcement officials into nonpublic areas of their

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places of business.

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impermissibly discriminatory.

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attempt to meddle with federal government activities indirectly

See Cal. Gov’t Code § 6223(a).

Judge Mendez found the penalties
They were, he ruled, a “clear

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by singling out for regulation those who deal with the

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government.”

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Id. at 1096 (quotations and citation omitted).

Requesting a Lands Commission certificate of compliance

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to which one is automatically entitled may be a relatively minor

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inconvenience.

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monetary penalty for attempting to record a document without a

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Lands Commission certificate of compliance -- a burden born

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exclusively by those who deal with the federal government.

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aspects of SB 50 apply to all conveyances of federal public lands

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in California except those acquired by a federal agency through a

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foreclosure proceeding.

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8560(a)(3), with id. at § 8561.

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in United States v. California, 314 F. Supp. 3d 1077, these

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recording requirements impermissibly discriminate against those

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who deal with the federal government by singling them out for

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discriminatory, if not particularly burdensome, regulation.

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It is, however -- like SB 50’s threat of a $5,000

These

Compare Cal. Pub. Res. Code §
Like the monetary fine at issue

Defendants advance no argument that these aspects of SB

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50 are constitutional.

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as it applies to the categories of conveyances listed in §

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8560(f), violates the doctrine of intergovernmental immunity by

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discriminating against the land purchasers who deal with the

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United States.

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Accordingly, the court holds that SB 50,

Under SB 50, purchasers of federal lands to which

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California asserts refusal rights face an even greater burden

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than grantees in conveyances encompassed by § 8560(f).

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California may exercise a right of first refusal over the real

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property these purchasers seek to acquire, they face a level of

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uncertainty and potential delay that all others are spared from.
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Because

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Defendants claim that the lands subject to SB 50’s

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right of first refusal are of an especially sensitive nature and

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that they are therefore “not similarly situated to properties

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that might be sold by non-federal parties in California.”

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(Defs.’ Cross-Mot. for Summ. J. at 13.)

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first refusal is related to and justified by this significant

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difference, defendants argue, it is constitutional.

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14.)

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Because SB 50’s right of

(Id. at 13-

This argument assumes that some categories of federal

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land, e.g. those designated for conservation use or managed by

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the National Park Service, are categorically different from all

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other real property in California.

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defendants implicitly argue that if a given piece of real

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property is part of a national monument or is managed by the

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Bureau of Land Management, its sensitivity and uniqueness are

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intrinsically greater than those of all other real property in

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California.

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defendants’ arguments about the constitutionality of SB 50’s

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right of refusal requirement.

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In other words, the

The court rejects this supposition and, with it,

Defendants may be correct that much of the real

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property encompassed by SB 50’s refusal rights is qualitatively

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different from a typical residential or commercial real estate

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transaction.

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proven, however, is that there are categorical differences

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between the lands SB 50 subjects to a right of refusal and all

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other lands within California, including those of special

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historical, cultural, or natural value not owned by the federal

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government.

What they do not argue, and what they have not

Defendants come closest to making this argument with
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the claim that federal lands are dissimilarly situated from all

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other lands in California because they are “preserved for the

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public’s benefit, while privately held lands are not.”

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Reply Brief in Supp. Of Cross-Mot. for Summ. J at 6.)

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quality of federal public lands, however, is so directly linked

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to their federal status that it cannot serve as the basis for

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non-discriminatory differentiation.

(Defs.’
This

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Defendants’ argument also fails because they have not

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shown that SB 50’s right of refusal requirement is “related to”

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any distinguishing characteristics of the regulated lands as a

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class.

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characteristics associated with “sensitive” or “unique” lands and

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then subject some federal lands to a right of first refusal

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because they meet the relevant statutory definition of

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“uniqueness.”

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sensitive or unique lands preserved for the benefit of the public

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by any public or private entity, e.g., a trust or foundation.

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Rather, SB 50 uncritically uses federal administrative and

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institutional categories to target the federal government and

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those with whom it deals for regulation.

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50’s right of first refusal requirement violates the Supremacy

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Clause by discriminating against purchasers of land who deal with

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the federal government.

The law does not, for example, enumerate a set of

The law does not even apply broadly to all

For this reason, SB

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2.

Preemption

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Plaintiff also argues that SB 50 is unconstitutional

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because it is preempted by federal law.

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argues that SB 50 both intrudes into a field reserved exclusively

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to Congress, i.e. the disposal of federal property, and directly
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Specifically, plaintiff

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conflicts with federal laws authorizing the disposal of federal

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lands.

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cite the Property Clause of the U.S. Constitution2 and the Act

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for the Admission of the State of California (“Admission Act”),

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ch. 50 9 Stat. 452 (1850).

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in its circumscription of California’s ability to legislate in

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the field of federal lands disposal.

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of California is admitted to the Union:

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Both plaintiff’s field and conflict preemption arguments

The latter is particularly explicit

It provides that the state

upon the express condition that the people of said
state, through their legislature or otherwise, shall
never interfere with the primary disposal of the public
lands within its limits, and shall pass no law and do
no act whereby the title of the United States to, and
right to dispose of, the same shall be impaired or
questioned.

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9 Stat. at 452.

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presumption against preemption, given the express language of the

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Property Clause reserving for Congress the power to dispose of

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federal lands and the Admission Act’s explicit prohibition on

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California interfering with Congress’s ability to dispose of

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federal lands, both of plaintiff’s preemption arguments appear

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compelling.

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unconstitutionally violates the doctrine of intergovernmental

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immunity, it need not reach the question of whether federal law

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preempts SB 50.

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B.

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Regardless of whether or not there is a

However, because the court finds that SB 50

Remedy
1.

Injunctive Relief

The Property Clause of the Constitution states that,
“Congress shall have power to dispose of and make all needful
rules and regulations respecting the territory or other property
belonging to the United States.” U.S. Cons. Art IV § 3, cl. 2.
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2

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Plaintiff’s claim that SB 50 unconstitutionally

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regulates the United States is more than just speculation.

The

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record before this court makes clear that SB 50, as implemented

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by defendant SLC, both directly regulates the United States by

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obstructing its operations, and discriminates against the United

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States and those with whom it deals.

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or imminent, not ‘conjectural’ or ‘hypothetical.’” Lujan v. Defs.

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of Wildlife, 504 U.S. 555, 560 (1992)(citing Whitmore v.

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Arkansas, 495 U.S. 149, 155 (1990)).

These injuries are “actual

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While some of plaintiff’s arguments about SB 50’s

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unconstitutional direct regulation of the United States are

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largely speculative,3 others speak to immediate and ongoing

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constitutional injuries suffered by plaintiff because of SB 50.

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Even where the United States has not conveyed or attempted to

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convey title to its lands, that property is still impermissibly

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regulated by SB 50’s assignment of refusal rights in it to the

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SLC.

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land by clouding the United States’ marketable title.

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24-25.)

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Code voids “ab initio” some conveyances of federal lands unless

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the SLC was provided with refusal rights in those lands.

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that the federal government has never provided the SLC with

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refusal rights, all conveyances of federal lands subject to SB

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50’s refusal rights requirement are arguably void ab initio under

Moreover, SB 50 directly regulates the disposal of federal
(Id. at

Section 8560(b)(2)(A) of the California Public Resources

Given

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For example, plaintiff notes that “[i]f Congress were
to authorize agencies to dispose of rights of first refusal,
there would be apparently competing rights—thus impairing the
federal agency’s ability to carry out authorized activities.”
(Pl.’s Mot. for Summ. J. at 24.)
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3

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SB 50.

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conveyances is of no moment here since the statute expressly

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conditions a conveyance’s validity on the provision of refusal

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rights to the SLC, not on the issuance of a compliance

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certificate by the SLC.

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That the SLC issued certificates of compliance for these

As implemented to date, SB 50 has also actually

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discriminated against the United States and those with whom it

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deals.

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California real estate transaction has ever received a letter

For example, other than the plaintiff, no seller in a

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like the one the SLC sent the Department of the Interior,

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explaining that under SB 50 in order to “validly transfer [a 5.9

12

acre parcel of lands in Santa Barbara county], BLM must provide

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the [SLC] with the right of first refusal or right to arrange for

14

the transfer of the parcel to another entity.”

15

Ex. 9.)

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deal with the hassle of requesting a certificate of compliance

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from the SLC or the threat of a $5,000 fine if they attempt to

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record a deed to their land without an accompanying certificate

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of compliance from the SLC.

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(McVeigh Decl.

Similarly, only grantees of federal land have had to

Though the defendant SLC has never exercised its

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putative refusal rights, plaintiff has already been injured

22

through the enforcement of SB 50: the statute’s direct regulation

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of federal lands and their disposal, and its discrimination

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against the federal government and its grantees are ongoing.

25

These unconstitutional harms to plaintiff are likely to persist

26

as long as SB 50 is in force.

27

concludes that declaratory and injunctive relief are the

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appropriate remedies.

For these reasons, the court

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1

2.

Severability

2

Section 8560(g) of the California Public Resources Code

3

states that “[i]f any provision of this section or its

4

application is held invalid, that invalidity shall not affect

5

other provisions or applications that can be given effect without

6

the invalid provision or application.”

7

such a clause, there is a presumption in favor of severability.

8

Santa Barbara Sch. Dist. v. Superior Court, 13 Cal. 3d 315, 331

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(1975).

Given the presence of

That presumption can be overcome, however, if the

10

invalid provision is grammatically, functionally, and

11

volitionally inseparable from the remainder of the statute.

12

Redevelopment Ass’n. v. Matosantos, 53 Cal. 4th 231, 271 (2011).

13

Here, Section 8560(b)(2)(A) of the Public Resources Code and

14

Sections 223 and 27338 of the Government Code may be

15

grammatically separable from the remainder of the law, but

16

functionally and volitionally they are not.

17

favor of severability is overcome and the court declines to sever

18

any part of SB 50.

19

Cal.

The presumption in

IT IS THEREFORE ORDERED that plaintiff’s motion for

20

summary judgment (Docket No. 20) be, and the hereby same is,

21

GRANTED.

22

No. 24) be, and the hereby same is, DENIED.

23

Defendants’ cross-motion for summary judgment (Docket

The court DECLARES that SB 50 is unconstitutional

24

because it violates the doctrine of intergovernmental immunity,

25

and PERMANENTLY ENJOINS defendants from enforcing SB 50.

26

Dated:

November 1, 2018

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