COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF TRANSPORTATION OFFICE OF CHIEF COUNSEL REAL PROPERTY DIVISION

PENNDOT COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF TRANSPORTATION OFFICE OF CHIEF COUNSEL REAL PROPERTY DIVISION POST OFFICE Box 8212 HARRISBURG, PA 17105-8212 TELEPHONE: (717) 787-3128 FACSIMILE: (717) 772-2741 GOVERNOR'S OFFICE OF GENERAL COUNSEL Date: February 15, 2006 Subject: Acquisitions for Environmental Mitigation To: File From: William J. Cressler Assistant Chief Counsel Introduction My understanding is that the issue on acquisition of private property for environmental mitigation came to the forefront in the mid-1980s. Initially, the acquisitions were for wetland replacement as required by Section 404 of the Clean Water Act, 33 U.S.C. 1311(a) and 23 C.F.R. 777.1 et. al. Subsequently, other environmental statutes, such as the Endangered Species Act, gave rise to acquisitions for terrestrial habitat, stream mitigation, upland mitigation, etc. Sometimes the Department (DOT) would acquire fee simple title to the areas and at other times it would acquire an easement allowing certain measures and prohibiting certain uses of the land. The issue has become a continuing source of disagreement between DOT and the Corp of Engineers (Corp). Presently, the Corp appears to prefer acquisition of fee title subject to deed restrictions rather than an appropriate conservation easement. I understand this preference may be based upon the following concerns: that any restrictions on the land are in place forever; that there is some mechanism to allow enforcement of the restrictions placed on the land; and that the owner of the land is aware of the restrictions. DOT and the Corp have come to a tentative agreement on the form of a declaration of restrictions that can be placed on land acquired by DOT in fee simple. This would not, however, solve the issue of easement acquisitions, which DOT believes are appropriate in certain situations. The purpose of this memorandum is to explain DOT's authority to acquire land for mitigation purposes, the condemnation process in Pennsylvania, restrictive covenant and easement law in Pennsylvania, and DOT's past, current and proposed procedures for acquiring land for mitigation purposes. Samples of DOT' s condemnation documents will also be discussed. COMMONWEALTH KEYSTONE BUILDING 9 TH FLOOR - 400 NORTH STREET HARRISBURG, PA 17120-0096

DOT's Authority to Acquire/Condemn for Environmental Mitigation DOT is empowered "to acquire, by gift, purchase, condemnation or otherwise, land in fee simple or such lesser estate or interest it shall determine, in the name of the Commonwealth, for all transportation purposes..." 71 P.S. 513(e)(1). In addition, DOT is empowered to acquire "land abutting a highway or other transportation facility if the secretary determined that such land... is required for the purpose of mitigating adverse effects on other land adversely affected by its proximity to such highway or other transportation facility." 71 P.S. 513(e)(2)(ii). In order to acquire land, a description or plan thereof must be prepared, containing the names of the owners or reputed owners, an indication of the estate or interest to be acquired and such other information as DOT shall deem necessary. 71 P.S. 513(e)(6). DOT sets forth the information it deems necessary for inclusion in a right of way acquisition plan in its Design Manual at Part 3, Chapter 3 (entitled Right of Way Plans). Execution by the secretary of a right of way plan constitutes authority for the filing of a declaration of taking in accordance with the Pennsylvania Eminent Domain Code. The plan is filed as a public record in DOT. 71 P.S. 513(e)(6). DOT procedure under the Design Manual is also to file a copy of the right of way acquisition plan in the recorder of deeds office of the county in which the properties to be condemned are located. In the late 1980s a landowner filed preliminary objections to a DOT taking in fee simple for wetland replacement purposes. The trial court's decision that the taking was within DOT's authority was affirmed on appeal to the Commonwealth Court. Appeal of Gaster, 556 A.2d 473 (Pa. Cmwlth. 1989). The Court approved the condemnation under both the specific mitigation provision at 71 P.S. 513(e)(2)(ii) and the general authority of 71 P.S. 513(e)(1). The Pennsylvania Supreme Court refused to accept allowance of appeal. 574 A.2d 73 (1989). The Commonwealth Court in Gaster relied upon the fact that DOT was required to mitigate wetlands damaged in order to receive federal funds necessary to construct the highway project as supplying the appropriate nexus between the condemnation and the highway project to bring the condemnation within the "all transportation purposes" requirement of 71 P.S. 513(e)(1). 556 A.2d at 477. The Court also noted that DOT's authority under 71 P.S. 513(e)(2)(ii) was subject to the provisions of that section. 556 A.2d at 476. One of those provisions is that the land acquired abuts the highway project. 71 P.S. 513(e)(2)(ii). This is not a requirement for land taken under the more general 71 P.S. 513(e)(1). In the early 1990s a landowner filed preliminary objections to a DOT taking in fee simple for terrestrial mitigation purposes. The trial court's decision that the taking was within DOT's authority was also affirmed on appeal to the Commonwealth Court in this case. Appeal of Probst, No. 1663 C.D. 1997 (Pa. Commonwealth Court, filed January 22, 1998, Memorandum Opinion). Citing Gaster, the Court approved the taking under 2

the general language of 71 P.S. 513(e)(1). Allowance of appeal to the Pennsylvania Supreme Court was denied. The Commonwealth Court in Probst relied upon the fact that replacement of the terrestrial habitat (in this case that of the snowshoe rabbit) was required by the environmental document for the highway project and thus a prerequisite for the receipt of federal funding. This requirement supplied the appropriate nexus between the condemnation and the highway project to bring the condemnation within the "all transportation purposes" language of 71 P.S. 513(e)(1). The Court noted that 71 P.S. 513(e)(2)(ii) did not apply because the condemned land did not abut the highway project, and held the condemnation was not arbitrary or capricious because DOT followed an established mitigation plan. The Probst case was not a reported opinion. For this reason, the case cannot be cited in future cases. Internal Operating Procedures, Pa. Commonwealth Court, 414. That is, although DOT won the issue of non-wetland replacement takings in this case, the case cannot be used to win future challenges. DOT will be required to litigate again that it can acquire replacement lands even when not directly required by federal regulation where the mitigation is a requirement of the environmental document. Although DOT feels it can prevail again on this argument, there is no guarantee of a like result. Procedure to Condemn/Acquire in Pennsylvania The Pennsylvania Eminent Domain Code, 26 P.S. 1-101 et seq. (Code), provides a complete and exclusive procedure and law governing condemnation of property for public purposes in Pennsylvania. 26 P.S. 1-303. Condemnation is effected by filing a declaration of taking in the county court in which the property is located. 26 P.S. 1-401 and 402(a). Title passes to the condemnor on the date the declaration of taking (DT) is filed, subject to divestiture only in the event the condemnee files preliminary objections to the DT that result in an order revesting title in the condemnee. 26 P.S. 1-402(a) and 406(e). That is, the Code is a quick take law that does not require court approval before condemnation. Among other things, the DT filed under Section 402 of the Code must include a statement of the nature of the title acquired, 26 P.S. 1-402(b)(6), a statement specifying where a plan showing the condemned property may be inspected in the county in which the property is located, 26 P.S. 1-402(b)(7), and: A description of the property condemned sufficient for the identification thereof, specifying the city, borough, township or town and the county or counties wherein the property taken is located, a reference to the place of recording in the office of the recorder of deeds of plans showing the property condemned or a statement that plans showing the property condemned are on the same day being lodged for record or 3

26 P.S. 1-402(b)(5). filed in the office of the recorder of deeds in such county in accordance with section 404 of this act. Section 404 of the Code provides that a condemnor, upon the filing of a DT, shall on the same day lodge for record a notice thereof in the office of the recorder of deeds of the county in which the property is located. The notice is to specify the court term and number to which the DT was filed, the date the DT was filed, a description or plan of the property condemned sufficient of the identification thereof, and is indexed in the deed indices showing the condemnee as grantor and the condemnor as grantee. 26 P.S. 1-404. Section 405 of the Code provides that within thirty days of filing the DT, the condemnor shall give written notice of the filing to the condemnee. 26 P.S. 1-405(a). Among other things, the notice must include a statement of the nature of the title acquired and a statement specifying where a plan showing the condemned property may be inspected in the county in which the property is located. 26 P.S. 1-405(b)(9) and (10). As part of its declaration of taking, DOT includes a schedule of property condemned. Among other things, this schedule designates the property in question and denotes where the right of way acquisition plan showing the property condemned can be found in the county courthouse. These procedures only apply when DOT is forced to condemn land. Approximately 80% of DOT's acquisitions are amicable. In these situations, DOT obtains a deed from the landowner that is duly recorded in the county courthouse. DOT has deed forms for fee simple and easement acquisitions. Both types of forms incorporate the right of way acquisition plans by reference in describing the extent of the taking. The right of way acquisition plans show the property condemned and include survey information sufficient to establish the extent of the acquisition. Neither the plans nor the deeds include metes and bounds descriptions of the land acquired. Restrictive Covenants and Easements in Pennsylvania Restrictive Covenants Restrictive covenants are lawful in Pennsylvania, but are not favored because they interfere with the fee owner's free and full enjoyment of his property. Jones v. Park Lane for Convalescents, Inc., 384 Pa. 268, 120 A.2d 535 (1956). Thus, they are to be construed narrowly and may not be extended by implication beyond their plain and necessary intent. Id. Moreover, restrictive covenants are divided into two categories building restrictions and use restrictions. Appeal of Richman, 704 A.2d 655 (Pa. Super. 1997). 4

Building restrictions are concerned with the type and number of buildings that may be erected and their physical or external appearance; while use restrictions involve the purposes for which the buildings are used, the nature of their occupancy, and the operations conducted therein. This distinction is a basic rule of construction. A building restriction and a use restriction are wholly independent of one another; one may not be extended to include the other unless the intention to do so is expressly and plainly stated. Id. Easements in General Easements are, of course, also recognized under Pennsylvania law. An easement is an interest in land owned by another person, consisting of the right to use or control the land for a specific limited purpose. Black's Law Dictionary, 8th e a (2004), at 1108; Stanton v. Lackawanna Energy, Ltd., 886 A.2d 667, 676 n. 7 (Pa., 2005). One who purchases land expressly subject to an easement or with notice that it is burdened with an existing easement takes the land subject to the easement by operation of law, even if the deeds to the burdened land do not expressly grant the easement, i.e. easements run with the land. Brady v. Yodanza, 493 Pa. 186, 425 A.2d 726 (1981). Easements are of two types: easements appurtenant and easements in gross. An easement appurtenant is a liberty, privilege or advantage without profit that the owner of one piece of land has in the land of another. The land enjoying the privilege is referred to as the "dominant tenement" and the land subject to the privilege is known as the "servient tenement." An easement in gross, on the other hand, is a mere personal right in the real estate of another because it is not appurtenant to other land owned by the grantee. An easement in gross benefits a particular entity rather than a particular piece of land; there is a servient estate but no dominant estate. Ephrata Area School District v. County of Lancaster, 2005 Pa. Commw. LEXIS 691 (filed November 17, 2005). Easements are also classified as affirmative or negative. Affirmative easements convey privileges on the part of one person or owner of land to use the land of another in a particular manner or for a particular purpose. Negative easements, on the other hand, convey rights to demand the servient owner refrain from certain otherwise permissible used of his own land. Id. And finally, easements can be classified as exclusive or non-exclusive. An exclusive easement deprives a servient owner of all beneficial use and enjoyment of his land; the fee is in one person but the exclusive right to use the land is in another. Absent an express provision in a grant or reservation, an easement is not an exclusive interest in the burdened land. That is, the servient owner may make any use of the land, including the grant of additional easements, which does not unreasonably interfere with the use and enjoyment of the easement. Id. (where the court found an access easement could be granted over the servient estate because the open space easement held by the county was not exclusive). 5

Conservation Easements Conservation easements are expressly recognized under Pennsylvania law. These are easements designed to preserve the servient land in an undeveloped or natural state. Id. See also 32 P.S. 5053 (supplying an extensive statutory definition indicating that it is a nonpossessory interest in real property, whether appurtenant or in gross, imposing limitations or affirmative obligations for a variety of stated purposes). Traditional servitudes doctrine raises potential difficulties for the creation of conservation restrictions and easements. The primary problem is caused by the rule prohibiting equitable enforcement of restrictive-covenant benefits in gross. Because most conservation servitudes are granted to governmental bodies and charitable entities, the benefits will usually be in gross. The uncertainty and difficulties imposed by the common law of servitudes led to creation of the Uniform Conservation Easement Act, which, if enacted by a state, would validate conservation servitudes without regard to common law rules. Restatement (Third) of Property, Servitudes 1.6 (2000). Conservation and Preservation Easement Act Pennsylvania joined 48 other states when it enacted the Conservation and Preservation Easement Act in 2001. 32 P.S. 5051 et seq. The purpose of the Act is to recognize the importance and significant public and economic benefit of conservation and preservation easements in ongoing efforts to protect, conserve or manage the use of the natural, historic, agricultural, open space and scenic resources of the Commonwealth. 32 P.S. 5052. The holder of a conservation easement can be a governmental body or a charitable corporation, trust or association. 32 P.S. 5053. The Act recognizes thirdparty rights of enforcement provided in a conservation easement to a governmental body or charitable corporation, trust or association. Id. The Act applies whether the interest is designated a conservation or preservation easement or as a covenant, equitable servitude, restriction, easement or otherwise. 32 P.S. 5057(a). A conservation easement may be created in the same manner as other easements, 32 P.S. 5054(a), and is valid even though it, inter alia, is not appurtenant to an interest in real property and imposes a negative burden. 32 P.S. 5056. The rights created by a conservation easement may be enforced by a legal or equitable action, in which the easement is to be liberally construed in favor of the grants contained therein to affect the purposes of the easement and the policy and purposes of the Act. 32 P.S. 5055. The Act does not invalidate any interest, whether designated an easement, covenant, servitude or restriction, enforceable under another law of the Commonwealth or the common law. 6

DOT Environmental Mitigation Procedures Historic Procedures As noted above, DOT initially purchased fee simple title for mitigation purposes without any further explanation on the right of way acquisition plan or subsequent creation of restrictive conditions. In response to Corp permit conditions, DOT starting acquiring conservation easements in certain situations, defining the scope of the easement by explanatory note on the right of way acquisition plan. This was done extensively in the Interstate 99 project, but also in other DOT projects. The 1-99 acquisitions were all amicable. This office is not aware of any easement acquisitions that have required condemnation. At some point, DOT began placing restrictive covenants on land previously acquired in fee simple. In some of these circumstances, the land had not been initially acquired specifically for environmental mitigation purposes. DOT placed the restrictive covenants of record by recording deeds from itself to itself incorporating the required restrictions. More recently, DOT has in certain situations placed restrictive covenants on its fee simple title initially acquired for mitigation purposes. This has been done by placing the restrictions on the right of way acquisition plan. DOT's Design Manual does not currently include any guidance on when acquisitions for mitigation purposes should be in fee simple and when in easement. There is no standard definition of conservation easements to be acquired or what restrictive covenants, if any, should be placed on fee simple acquisitions. In view of this, the definitions used to acquire conservation easements and to restrict fee simple title has been inconsistent. However, there is typical language that has been shared by DOT's district offices, sometimes in coordination with the legal office, which has created some degree of consistency. The typical language used for both conservation easements and restrictive covenants is both affirmative and negative. It provides the right to construct wetland or other mitigation and to permanently protect and preserve the natural character or environmental values of the site in accordance with the applicable Corp permit. Specific building and use restrictions are imposed on the land depending on the nature of the mitigation, as well as a general prohibition on any other activity or use inconsistent with the purpose of the easement or covenants. Some definitions include a statement that the easement does not prevent the property owner from making uses not expressly prohibited and not inconsistent with the purpose of the acquisition. The definitions typically include a specific statement that DOT, its agents and assigns may enter the mitigation area for monitoring purposes and reserves the right to require restoration if necessary. More recent plan notes have provided that the Corp has entry and enforcement rights and specifically state that the rights run with the land and are binding on successors in title. 7

Proposed Procedures This Division and the General Law Division of the Office of Chief Counsel have been working on standardizing the procedures used in this area. The General Law Division is coordinating this effort with the Corp of Engineers. Although no definitive determinations have been made, certain parameters are in discussion. The goal is to include the procedures and applicable plan notes in the Design Manual. The thought is that there are three general areas of mitigation: wetland; stream; and terrestrial. Different procedures are being considered for wetland replacement as opposed to stream and terrestrial mitigation. For wetland mitigation, the general rule would be the acquisition of fee simple title, with the recording of a declaration of restrictions following acquisition. The right of way acquisition plan could merely state that fee simple title is being acquired or could further indicate that restrictive covenants will be placed on the fee simple title following acquisition. The restrictions would not be set forth on the plan because they will be fully set forth in the subsequently recorded declaration of restrictions. I understand the terms of such a declaration of restrictions have been generally negotiation with the Corp. In certain circumstances, the acquisition of an easement for wetland mitigation is appropriate. The most prominent situation is when the replacement site is located within a publicly-owned park. The other public entity often does not oppose creation or enhancement of wetlands, but does not want to reduce the area of its public park. Moreover, transferring ownership of public park land acquired under the Project 70 program is restricted by statute to recreation, conservation and historical purposes. 72 P.S. 3946.20(b) and 3946.18(c). This legal restriction, applicable to many parks in Pennsylvania, may not be violated by a fee simple transfer for wetland purposes, but local governments are more comfortable granting an easement and retaining fee title even so. Another circumstance that may warrant an easement acquisition is where the wetlands are located adjacent to wetlands previously acquired in easement. Doing so in this situation may help define the nature of the easement in the entire area if the initial easement was not defined. For stream and terrestrial mitigation, the general rule would be the acquisition of an easement for stream mitigation or an easement for terrestrial mitigation setting forth the restrictions applicable to the land. This is thought appropriate because there is no apparent reason why DOT requires fee simple title to the exclusion of the landowner in these situations. If taken in fee simple, a stream or mitigation area may bisect a property, thereby increasing damages and causing more difficulty in attaining an amicable acquisition. The landowner would be trespassing if he entered the fee simple area. An easement running with the land that legally restricts use of the land and can be enforced by DOT and the Corp would appear sufficient. If deemed appropriate in a particular situation, fee simple title could be acquired in a stream or terrestrial mitigation site. An example of where this exception would be 8

appropriate is when DOT plans on transferring jurisdiction and control of the area to another State agency. That was the case in the Probst acquisition, where DOT had agreed to transfer the terrestrial mitigation site to the Pennsylvania Game Commission by interagency transfer of jurisdiction. A declaration of restrictions would be recorded after acquisition and before transfer of jurisdiction in this type of situation. Fee simple acquisition may also be appropriate where the entire property owned by the owner is being acquired, where the acquisition will not bisect the owner's remaining land, or where the landowner expresses an desire for DOT to acquire fee simple title. The format of the declarations of restrictions and definitions of the easements should be coordinated with the Corp before being incorporated into the Design Manual. All would be recorded in the chain of title either directly in the case of a declaration of restrictions or by inclusion in an amicable acquisition deed or a declaration of taking in the case of an easement. All would also include language that the restrictions run with the land and can be enforced by DOT and the Corp. Whether fee simple title is acquired and then subjected to a declaration of restrictions or an easement is acquired, the end result is the same. The restrictions are recorded; the landowner is aware of the restrictions; the land is subject to restrictions that run with the land; and the restrictions can be enforced by DOT and the Corp. Indeed, the Conservation and Preservations Easement Act applies whether the restrictions are in the form of an easement or restrictive covenants. Some of the procedures historically utilized and proposed are based on the nature of DOT's program. By virtue of the size of its acquisition program, DOT uses standard forms and formats applicable to a variety of situations. Moreover, because it cannot guarantee an amicable acquisition, DOT must presume a condemnation will be necessary. Condemnation by its very nature is not an amicable procedure and the landowner cannot be forced to execute a declaration of restrictions or some type of acceptance of easement restrictions. Where fee simple title is acquired, DOT becomes the landowner and can record a declaration of restrictions. Where an easement is acquired, the rights and restrictions are recorded as part of the acquisition itself, but the end result is the same. cc: Kenda J. Gardner, Assistant Counsel in Charge, Environmental Section Christopher J. Clements, Assistant Counsel in Charge, Right of Way Section 9