Minn. Sands, LLC v. Cnty. of Winona
Minn. Sands, LLC v. Cnty. of Winona
Opinion of the Court
In this appeal from the district court's dismissal of its declaratory-judgment action challenging a land-use ordinance prohibiting all mining of industrial minerals, including silica sand, appellant argues that the district court erred in concluding that the ordinance does not violate the dormant Commerce Clause and does not constitute a regulatory taking. We affirm.
FACTS
Between 2011 and 2012, Richard Frick, president of appellant Minnesota Sands, LLC (Minnesota Sands), entered into several leases with various landowners in Winona County to use the properties to mine silica sand to be processed and used in hydraulic fracturing for oil and natural gas (fracking). Frick then assigned the leases to Minnesota Sands. At that time, this type of industrial mining was a conditional use requiring a conditional use permit (CUP) prior to excavation. In 2011, respondent Winona County (the county) received three applications for CUPs to engage in industrial mining for silica sand. None of the applications were for the parcels leased by Minnesota Sands.
On January 10, 2012, the county denied the pending applications and enacted a three-month moratorium to allow its board of commissioners to study the issue more closely. After the moratorium expired, a company that is not a party in this litigation, Nisbit operation, submitted a second CUP application to engage in silica-sand mining, which the county granted.
In 2016, a local non-profit asked the county to renew discussions about amending the county's zoning ordinance governing sand mining. The county engaged in an eight-month-long process, during which it investigated the environmental concerns related to industrial mineral operations in particular, and received comments from over 200 county residents through public hearings and written submissions. On November 22, 2016, the county board formally adopted an amendment to the zoning ordinance.
The amendment prohibits all industrial mineral operations within the county and permits construction mineral operations, which remains a conditional use. Winona County, Minn., Zoning Ordinance (WCZO), *778Ch. 10, § 11 (2016). It defines and distinguishes two groups of minerals:
Construction Minerals: The term "construction minerals" includes natural common rock, stone, aggregate, gravel and sand that is produced and used for local construction purposes, including road pavement, unpaved road gravel or cover, concrete, asphalt, building and dimension stone, railroad ballast, decorative stone, retaining walls, revetment stone, riprap, mortar sand, construction lime, agricultural lime and bedding sand for livestock operations, sewer and septic systems, landfills, and sand blasting. The term "construction minerals" does not include "industrial minerals" as defined below.
Industrial Minerals: The term "industrial minerals" includes naturally existing high quartz level stone, silica sand, quartz, graphite, diamonds, gemstones, kaolin, and other similar materials used in industrial applications, but excluding construction minerals as defined above.
Silica sand is categorized as an industrial mineral by the Minnesota Department of Natural Resources and the North American Classification System under classification no. 212322.
"Silica sand" has the meaning given in Minnesota Statutes, section 116C.99, subd. 1(d) : " 'Silica sand' means well-rounded, sand-sized grains of quartz (silicon dioxide), with very little impurities in terms of other minerals. Specifically, the silica sand for the purposes of this section is commercially valuable for use in the hydraulic fracturing of shale to obtain oil and natural gas. Silica sand does not include common rock, stone, aggregate, gravel, sand with a low quartz level, or silica compounds recovered as a by-product of metallic mining." Minn. Stat. Section 116C.99, subd. 1(d).
Id. , Ch. 4, § 2. Industrial mineral operations include the following activities: (1) acquiring industrial minerals through all digging, excavating, and mining of any sort; (2) processing, filtering, cleaning, and refining industrial minerals; (3) storing or stockpiling said industrial minerals; and (4) hauling or transporting any industrial minerals mined in the county. Id.
Southeast Minnesota Property Owners (SMPO) sued the county in March 2017, alleging that the ordinance is arbitrary and capricious; violates the Due Process, Equal Protection, and Takings Clauses of the Minnesota and United States Constitutions; and violates the Interstate Commerce Clause of the United States Constitution. In April 2017, Minnesota Sands sued and alleged the same.
After the district court consolidated the two actions, Minnesota Sands and SMPO each filed a motion for summary judgment on all claims against the county. Specifically, each requested declaratory and injunctive relief to invalidate the amendment and enjoin its enforcement, as well as summary judgment as to all other claims set forth in the complaints. The county filed a motion to dismiss, or in the alternative, for summary judgment. The district court granted the county's summary judgment motion, affirming the validity of the ordinance. This appeal by Minnesota Sands follows.
ISSUES
I. Does the zoning ordinance violate the dormant Commerce Clause?
II. Is the zoning ordinance a regulatory taking of Minnesota Sands' compensable property interest?
ANALYSIS
Minnesota Sands challenges the district court's grant of summary judgment in favor of the county. On appeal from summary judgment, we determine whether there are any genuine issues of material *779fact and whether a party is entitled to judgment as a matter of law. Laymon v. Minnesota Premier Properties, LLC ,
This appeal presents two issues. The first is whether the county may ban all silica-sand mining within its boundaries without transgressing Congress' authority under the Commerce Clause of the United States Constitution. The second is whether the ordinance prohibiting all silica-sand mining constitutes a regulatory taking of Minnesota Sands' compensable property interest for which it is owed just compensation pursuant to Article I, Section 13 of the Minnesota Constitution and the Takings Clause of the United States Constitution. We address each argument in turn.
I. Dormant Commerce Clause
The Commerce Clause of the United States Constitution grants Congress the power to regulate commerce among the states. U.S. Const. art I, § 8, cl. 3. The Commerce Clause refers to an affirmative grant of power to Congress, but it has long been interpreted to contain an implied negative command, the dormant Commerce Clause, that states may not unduly burden or discriminate against interstate commerce. Chapman v. Comm'r of Revenue ,
Our precedent prescribes that we first determine whether the challenged law implicates the Commerce Clause. Chapman ,
Next, if the challenged law implicates commerce, we evaluate whether the government action violates the Commerce Clause. Id. at 832. This may occur in two ways. Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality ,
First, a law may violate the Commerce Clause by discriminating against interstate commerce, either on its face or in its effect. Oregon Waste Sys., Inc. v. Dep't of Envtl.Quality ,
Wyoming v. Oklahoma ,
Second, a law that is non-discriminatory, regulates even-handedly to effectuate a legitimate local purpose, and has only an incidental effect on interstate commerce, may violate the Commerce Clause if "the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, Inc. ,
A. The ordinance does not discriminate against interstate commerce on its face by banning all silica-sand mining.
Minnesota Sands argues that the ordinance is a per se violation of the dormant Commerce Clause because it is facially discriminatory against out-of-state interests and is a ban on the exportation of industrial minerals mined in the county. We disagree.
Assuming that the ordinance implicates commerce, it nonetheless does not discriminate against interstate commerce on its face because it does not favor in-state interests over out-of-state interests. On the contrary, it even-handedly bans all industrial-mineral mining, which includes silica-sand mining, within the county. Indeed, the company challenging the county's ban in this litigation is a Minnesota company with a registered address in Winona County. See Minnesota v. Clover Leaf Creamery Co. ,
Minnesota Sands also argues that the ordinance is facially discriminatory because it singles out the end-use of the industrial minerals; specifically, silica sand to be processed and used in fracking. In 2014, the Minnesota Environmental Quality Board (EQB) set forth model standards and criteria for local government use in developing local ordinances regarding the mining, processing, and transporting of silica sand. MINN. ENVTL. QUALITY BD. , Tools to Assist Local Governments in Planning for and Regulating Silica Sand Projects (2014). The report noted that "silica sand is highly desirable because it can be processed into a product called frac sand , which is used in [the] hydraulic fracturing method of producing oil and gas." Id. at 13 (emphasis added). It is evident that not all silica sand is frac sand. Rather, mined silica sand becomes frac sand after it undergoes *781a specific process of crushing, cleaning, screening, washing, filtering, drying, sorting, and refining. But the ordinance outlaws all silica-sand mining-not just silica sand to be processed and used in fracking.
The ordinance amendment defines silica sand as that which "is commercially valuable for use in the hydraulic fracturing of shale to obtain oil and natural gas." WCZO, Ch. 4, § 2. Minnesota Sands argues that this amounts to facial discrimination against interstate commerce because Minnesota has no oil or natural gas reserves, and any silica sand processed into frac sand would be transported interstate and used elsewhere. But the ordinance does not discriminate against interstate commerce on its face by merely stating that silica sand is commercially valuable for use in fracking. Nor does it mean that silica sand has no other commercial uses; it simply describes one commercially valuable use.
This reasoning is consistent with the affidavit of a registered professional geologist retained by Minnesota Sands as an expert, certifying that silica sand may be used for fracking operations, as well as in the manufacture of glass, filter media, and as a construction material or animal bedding. We do note, however, that the expert's comment about the use of silica sand as a construction material does not alter our conclusion that the ordinance does not discriminate against interstate commerce on its face. The use of silica sand as a construction material in other counties has no bearing on the plain language of the ordinance itself, which specifies that silica sand is an industrial mineral and bans all industrial-mineral mining regardless of its end use. Additionally, the ordinance's definition of "construction minerals" specifies that "[t]he term 'construction minerals' does not include 'industrial minerals' as defined below" and the definition of industrial minerals states the same relating to construction minerals. Id.
The ordinance's differentiation between silica sand-an industrial mineral-and other types of sand-construction minerals-is consistent with the record. Silica sand has a high quartz level, whereas sand within the definition of construction minerals includes many different rock types. Silica sand that is sought for industrial purposes is small, consistently-sized, round sand, which, after processing, becomes frac sand. Sand classified as a construction mineral is not dependent on the uniformity or silica quartz makeup of the mineral, and may have mineral and rock compositions that vary in makeup and size.
Minnesota Sands argues that the ordinance violates the dormant Commerce Clause because the county permits the Nisbit operation to mine silica sand that is sold for various purposes, including animal bedding. Before the county amended the ordinance, all sand mining was a conditional use in Winona County. WCZO, Ch. 10.4.6 (2011) (CUP required for mining); Id. , Ch. 4.2 (mining includes "the extraction of sand"). On July 4, 2013, the county granted a CUP to the Nisbits to mine silica sand under this version of the zoning ordinance in effect prior to its amendment on November 22, 2016. The previous version of the ordinance, like the amendment at issue, did not distinguish between the end use of the mined product. In addition, the previous zoning ordinance did not distinguish between silica sand and other types of sand as the amendment does. One limitation imposed on the right of a governmental body to enact zoning restrictions is that such restrictions are subject to the preexisting uses already established within the zoning district. Hawkins v. Talbot ,
*782Minnesota Sands contends that the ordinance is discriminatory because "industrial mineral operations" includes "hauling or transport, including, but not limited to, the loading, unloading, transfer, hauling, moving and transporting of industrial minerals extracted from a mine located in Winona County." WCZO, Ch. 4, § 2. But this provision of the amendment's definition of "industrial mineral operations" is rendered superfluous by the corresponding provision of the "industrial mineral operations" definition that prohibits all silica-sand mining. We interpret laws so that, when possible, their provisions will not be deemed superfluous. ILHC of Eagan, LLC v. County of Dakota ,
For these reasons, the ordinance's ban on silica-sand mining does not discriminate against interstate commerce on its face. It is even-handed in its application, burdens both in-state and out-of-state interests, and does not violate the dormant Commerce Clause.
B. Minnesota Sands does not have standing to challenge, and we decline to address, the constitutionality of the ordinance's use of the word "local."
Minnesota Sands also argues that the use of the word "local" in the ordinance's definition of "construction minerals" discriminates against interstate commerce. While the parties do not raise the issue of justiciability on appeal, "the existence of a justiciable controversy is essential to our exercise of jurisdiction, so we can raise the issue on our own." In re Guardianship of Tschumy ,
Minnesota Sands itself contends that it has no interest in mining construction minerals. Striking down this provision of the ordinance will not redress its asserted injuries because industrial-mineral mining will continue to be unlawful and the zoning ordinance amendment will continue to prohibit Minnesota Sands from mining industrial minerals. See generally Back v. State ,
*783Minnesota Sands does not have standing, which bars us from addressing this issue for lack of jurisdiction. See Seiz v. Citizens Pure Ice Co. ,
C. We also decline to address whether the ordinance excessively burdens interstate commerce because Minnesota Sands did not make this argument in its briefing.
An ordinance that is even-handed in its application may nonetheless violate the dormant Commerce Clause by excessively burdening interstate commerce. See generally Pike ,
II. Regulatory Taking
Minnesota Sands also argues that it is entitled to compensation because the zoning ordinance amendment is a regulatory taking of its property. We are not persuaded.
The Minnesota Constitution provides that "[p]rivate property shall not be taken, destroyed or damaged for public use without just compensation." Minn. Const. art. I, § 13. The language in the Takings Clause of the Minnesota Constitution is similar to the language of the United States Constitution. Wensmann ,
Prior to analyzing whether the zoning ordinance amendment constituted a regulatory taking of the mineral interest in the parcels of real property, we must determine whether Minnesota Sands has a compensable property interest for which it is owed just compensation. Hall v. State ,
Lease rights are compensable property rights to which the Takings Clause applies. See Lynch v. United States ,
Minnesota Sands failed to fulfill a condition precedent before its leasehold interest accrued. See Carl Bolander & Sons Co. v. United Stockyards Corp. ,
Minnesota Sands entered into its remaining leases in November 2011 and amended each lease in November 2015. The county amended the zoning ordinance one year later, in November 2016. Prior to its amendment, silica-sand mining was a conditional use. Minnesota Sands lost its leasehold interests because it failed to apply for a CUP in the five-year period between the lease executions and the amendment of the zoning ordinance.
DECISION
The county's zoning ordinance amendment does not violate the dormant Commerce Clause because it even-handedly bans both in-state and out-of-state interests from mining all silica sand in Winona County. In addition, Minnesota Sands does not have a compensable property interest for which it is owed just compensation. We affirm the district court's grant of summary judgment to respondent Winona County because there are no genuine issues of material fact and the district court did not err in its application of the law.
Affirmed.
Concurring in part, dissenting in part, Johnson, Judge
JOHNSON, Judge (concurring in part, dissenting in part)
*785The first issue in this appeal is whether a ban on the mining of silica sand for sale to consumers in other states may be imposed by a state or a political subdivision of a state or, on the other hand, only by Congress. I respectfully disagree with the majority opinion insofar as it concludes that the county is entitled to summary judgment on Minnesota Sands's claim that the November 22, 2016, amendments to the county's zoning ordinance violate the Commerce Clause of the United States Constitution.
The second issue in this appeal is whether, assuming the county's regulation of silica-sand mining is valid, the county must compensate Minnesota Sands for the elimination of or diminution in the value of its property. I respectfully disagree with the majority opinion insofar as it concludes that the county is entitled to summary judgment on Minnesota Sands's claim that the county's enforcement of its zoning ordinance results in a partial regulatory taking. But I agree with the majority insofar as it concludes that Minnesota Sands cannot prove a total regulatory taking, although I reach that conclusion for different reasons.
Therefore, I concur in part and dissent in part.
I.
The Commerce Clause of the United States Constitution provides, "The Congress shall have Power ... To regulate Commerce ... among the several States...." U.S. Const. art. I, § 8, cl. 3. The Commerce Clause confers on Congress "plenary authority over interstate commerce." Oregon Waste Sys., Inc. v. Department of Envtl. Quality ,
Accordingly, "the first step in analyzing any law subject to judicial scrutiny under the negative Commerce Clause is to determine whether it [either] 'regulates evenhandedly with only "incidental" effects on interstate commerce, or discriminates against interstate commerce.' " Oregon Waste Sys. ,
A.
Before applying these principles to the facts of this case, it is important to identify the significant factual issues.
The county's arguments generally are based on the premise that silica sand (and only silica sand) is used for "industrial" purposes such as hydraulic fracturing and that ordinary sand (and only ordinary sand) is used for "local construction purposes." This premise corresponds to the county's zoning ordinance, which defines "industrial minerals" and "construction minerals" accordingly and imposes different consequences based on the distinction between the two types.
The appellate record confirms that silica sand (and not ordinary sand) may be used in hydraulic fracturing. But the record does not confirm that only ordinary sand is used for "local construction purposes." Rather, the record indicates that, both before and after the 2016 amendments to the zoning ordinance, silica sand has been and continues to be used for both "local construction purposes" and "industrial" purposes.
For example, a report prepared by the state department of natural resources in 2014 describes the uses of silica sand:
Silica sand has been mined in the Upper Midwest for over a century. Uses for this resource include a variety of products and applications like glass-making, abrasives, bedding for livestock, golf course sand traps , and frac sand. Over the past decade, a sharp increase in demand for silica sand corresponded with a rapid expansion of shale oil and gas development. ...
Silica sand is found in the southeastern portion of the state. Five mines are currently known to extract silica sand for industrial applications. An unknown number of silica sand mines produce silica sand for construction and agricultural uses.
(Emphasis added.)
In addition, evidence was presented to the county planning commission that "there is no geological difference between the industrial mineral 'silica sand' and construction mineral 'sand' " and that "the only distinction in the Proposed Ordinance between 'construction minerals' and 'industrial minerals' is how they are used." There also is evidence that the "mining, processing, storage and transportation operations" related to the two categories of minerals in the draft ordinance "are essentially the same," with the differences limited to "the final stages of production when silica sand is washed and sorted." This evidence is consistent with an affidavit of a registered professional geologist, who stated *787that silica sand is used both "as a proppant in hydraulic fracturing" and "in the manufacture of glass, filter media, or a construction or bedding material" and that the process of mining silica sand for its various purposes "does not differ in any material way."
Furthermore, the county's own zoning administrator executed an affidavit in which he stated that " 'sand and gravel' considered [by the zoning ordinance as] a construction mineral may include 'silica sand,' as silica sand is found throughout the County and used for construction purposes and animal bedding." Moreover, there is evidence in the record that the Nisbit mine (the only Winona County mine that received a conditional-use permit before the 2016 amendments to the county's zoning ordinance) produces silica sand that meets the specifications for hydraulic fracturing but is sold for use as animal bedding.
In analyzing the effect of the county's zoning ordinance on interstate commerce, this court should not confine its review to the language of the ordinance. Rather, we should consider the realities of the marketplace. In reality, Winona County silica sand is used both for "local construction purposes" and for "industrial" purposes, such as hydraulic fracturing, even though the county's zoning ordinance deems silica sand to be an "industrial mineral" and defines "industrial minerals" to be mutually exclusive with "construction minerals." Consequently, the county's zoning ordinance effectively allows the mining of silica sand for some uses, which are common in the Winona County area, but prohibits the mining of silica sand for other uses, which occur solely outside the state of Minnesota.
In resolving the issues raised by the parties' arguments, we must be mindful of the procedural posture of the case. This is not a case in which the district court conducted a trial, resolved factual disputes arising from conflicting evidence, and made findings of fact. See Minn. R. Civ. P. 52.01. Rather, the district court decided the case on cross-motions for summary judgment. A district court may not grant a motion for summary judgment unless "there is no genuine issue as to any material fact." Minn. R. Civ. P. 56.03 (2017). A district court must view the evidence in the light most favorable to the non-moving party. Commerce Bank v. West Bend Mut. Ins. Co. ,
B.
As stated above, "the first step in analyzing any law subject to judicial scrutiny under the negative Commerce Clause is to determine whether it 'regulates evenhandedly with only "incidental" effects on interstate commerce, or discriminates against interstate commerce.' " Oregon Waste Sys. ,
1.
Minnesota Sands contends that the county's zoning ordinance is discriminatory. In this context, a state law is "discriminatory" if it provides for "differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter."
A state law is discriminatory on its face if it expressly provides for different treatment based on whether commerce is interstate or intrastate. For example, in Oregon Waste Systems , an Oregon statute charged $0.85 per ton for the disposal of solid waste and a "surcharge" of $2.25 per ton for the disposal of "solid waste generated out-of-state ."
A state law may be facially discriminatory for purposes of the Commerce Clause, even if it does not expressly distinguish between interstate commerce and intrastate commerce, if the circumstances make clear that the law discriminates against interstate commerce. For example, in Bacchus Imports, Ltd. v. Dias ,
Furthermore, a state law may discriminate against interstate commerce "either on its face or in practical effect ." Hughes ,
In this case, the ordinance and the factual record, in combination, make clear that the county's zoning ordinance is both facially discriminatory and discriminatory in practical effect. The ordinance allows the mining of sand that will be "used for local construction purposes" but prohibits the mining of sand that will be used for other purposes, such as hydraulic fracturing. Winona County, Minn., Zoning Ordinance (WCZO) §§ 4.2, 9.10.2, 10.11.1.a (2016) (emphasis added). The record reveals that silica sand has been and continues to be mined and sold to consumers for purposes that are deemed by the ordinance to be "local construction purposes." The record also reveals that hydraulic fracturing is utilized in other states (such as North Dakota and Texas) but is not utilized in Minnesota and cannot be utilized in Minnesota because Minnesota does not have any significant reserves of oil or natural gas. The ordinance effectively allows silica sand to be mined and sold to local consumers but does not allow it to be mined and sold to consumers in other states. Thus, the ordinance suppresses interstate commerce, to the detriment of (among others) consumers of silica sand in other states, but the ordinance preserves local commerce, to the benefit of local consumers of silica sand, who are insulated from the effects of unrestricted trade in silica sand. For these reasons, the ordinance is discriminatory on its face because it favors "local" commerce over interstate commerce. See Oregon Waste Sys. ,
2.
The county argues that the ordinance is not facially discriminatory because the term "local" may be interpreted to include construction projects in Wisconsin that are near Winona County. For this purpose, the county relies on the affidavit of its zoning administrator, who stated, "If I were asked to enforce the Zoning Ordinance with respect to sand being used for a construction project across the river in Wisconsin, the fact that sand was used in Wisconsin would not necessarily make it a non-local use." This argument fails for at least four reasons. First, the county's argument is inconsistent with the common definition of the word local, which means "[o]f or relating to a city, town, or district rather than a larger area." The American Heritage Dictionary 1029 (5th ed. 2011). Second, there is no evidence in the record that Winona County sand actually is sold *790in Wisconsin. The zoning administrator did not say so; he considered it to be a hypothetical. It appears unlikely that sand actually is sold in Wisconsin because the record indicates that operating sand mines are far more numerous in the Wisconsin counties that are immediately across the Mississippi River. Third, the zoning administrator did not commit to the interpretation on which the county relies in its brief. He merely stated that the out-of-state location of such use "would not necessarily make it a non-local use." Fourth, and most importantly, any sale of Winona County sand in Wisconsin for "local construction purposes" likely would be in relatively small quantities and would not alter the fact that the ordinance disrupts a substantial amount of interstate commerce in silica sand while preserving commerce in silica sand within Winona County. In any event, even if the ordinance is not facially discriminatory because of the word "local," it is discriminatory "in practical effect." See Washington State Apple Advertising Comm'n ,
The majority opinion reasons that Minnesota Sands does not have standing to argue that the ordinance is facially discriminatory based on the ordinance's use of the word "local." See supra at 782-83. "Standing is a legal requirement that a party have a sufficient stake in a justiciable controversy to seek relief from a court." Enright v. Lehmann ,
The majority opinion also reasons that the ordinance is not discriminatory simply because Minnesota Sands is a Minnesota-based company. See supra at 780. Such reasoning would nullify the dormant Commerce Clause doctrine in practically every case because a state or local law that discriminates against interstate commerce inevitably affects at least one resident of the state or locale from which the law originates. In addition, the majority's reasoning is contrary to Oregon Waste Systems , in which an Oregon-based company successfully challenged an Oregon statute that discriminated against interstate commerce. See
*791C.
As stated above, if a state law is discriminatory, "it is virtually per se invalid." Oregon Waste Sys. ,
In this case, the county's zoning ordinance is motivated by concerns about public health, local infrastructure, and the environment. On appeal, Minnesota Sands does not challenge the legitimacy of the county's purposes. Rather, Minnesota Sands contends that the county could have achieved its purposes with "reasonable regulations directly targeted at" the county's concerns. Accordingly, the question is whether the county has shown that its "legitimate local purpose ... cannot be adequately served by reasonable nondiscriminatory alternatives." See id. at 100-01,
The county does not attempt to argue that its purposes cannot be adequately served by reasonable non-discriminatory alternatives. The county would be hard-pressed to make such an argument because alternatives are readily apparent in the record. For example, the March 2014 report of the state environmental quality board contains an extensive list of recommendations, standards, and criteria for the regulation of silica-sand mining with respect to air quality, water quality, transportation, reclamation, and numerous other issues.
The record also contains a March 2016 memorandum from the county attorney to the county board, the county planning commission, and others, in which the county attorney concluded that "Winona County has the authority and ability to regulate the size of sand-mining operations" and that "the county board not only has the ability to deny conditional-use permits that do not meet the criteria for issuance, but also has the ability to impose conditions on such permits that address the issues a particular proposal raises."
The record also contains an October 2016 memorandum from the county attorney to the county board in which the county attorney provided the board with four options. The second option would have limited the number of mines and the acreage of each mine, which was the recommendation of the county's planning commission. The third option was a "hybrid" of the planning commission's recommendation and certain recommendations of the county attorney. The fourth option was to "take no action" and to continue to rely on conditional-use permits. The record provides details concerning the fourth option: the conditional-use permit that was issued for the Nisbit mine includes numerous provisions to reduce and limit the effects of sand mining. The permit, among other things, requires an erosion-control plan, limits the hours of operation, requires setbacks from residences and wells, requires air-quality and water-quality monitoring, requires a fugitive-dust plan, prohibits stockpiles higher than 24 feet, prohibits any effect on wetlands, restricts noise and lighting levels, requires a road-use agreement that imposes responsibility on the mine for maintenance and replacement costs, limits truck traffic to a certain number of trips per day, requires a "systematic approach to land reclamation," and requires a performance bond of 110 percent of the estimated *792costs that might be borne by the mine.
The United States Supreme Court considered an analogous situation in Chemical Waste Management, Inc. v. Hunt ,
Ultimately, the State's concern focuses on the volume of the waste entering the [hazardous-waste] facility. Less discriminatory alternatives, however, are available to alleviate this concern, not the least of which are a generally applicable per-ton additional fee on all hazardous waste disposed of within Alabama, or a per-mile tax on all vehicles transporting hazardous waste across Alabama roads, or an evenhanded cap on the total tonnage landfilled at [the facility]. To the extent Alabama's concern touches environmental conservation and the health and safety of its citizens, such concern does not vary with the point of origin of the waste, and it remains within the State's power to monitor and regulate more closely the transportation and disposal of all hazardous waste within its borders. Even with the possible future financial and environmental risks to be borne by Alabama, such risks likewise do not vary with the waste's State of origin in a way allowing foreign, but not local, waste to be burdened. In sum, we find the additional fee to be an obvious effort to saddle those outside the State with most of the burden of slowing the flow of waste into the ... facility. That legislative effort is clearly impermissible under the Commerce Clause of the Constitution.
Id. at 344-46, 112 S. Ct. at 2015-16 (quotations and citations omitted). Just as Alabama's concern for "environmental conservation and the health and safety of its citizens" did "not vary with the point of origin of the waste," Winona County's concerns also do not vary with the destination of the silica sand that is mined within the county. See id. ; see also Hughes ,
Therefore, I would conclude that the district court erred by granting the county's motion for summary judgment on Minnesota Sands's claim that the county's zoning ordinance violates the dormant Commerce Clause.
II.
The Takings Clause of the Fifth Amendment to the United States Constitution provides that private property shall not "be taken for public use, without just compensation." U.S. Const. amend. V. The Takings Clause requires just compensation if a state or political subdivision regulates the use of real property to such an extent that the regulation effectively is a taking. See generally Murr v. Wisconsin , --- U.S. ----,
*793Pennsylvania Coal Co. v. Mahon ,
The United States Supreme Court has recognized two types of regulatory takings. First, a total (or categorical) regulatory taking may occur if a land-use regulation "denies all economically beneficial or productive use of [the] land" and thereby results in the "complete elimination of value" to the property. Lucas v. South Carolina Coastal Council ,
Second, a partial regulatory taking may occur if a land-use regulation "goes too far." Mahon ,
A partial regulatory taking also may be established under the Minnesota Constitution, which contains a similar but somewhat broader takings clause: "Private property shall not be taken, destroyed or damaged for public use without just compensation." Minn. Const. art. I, § 13 (emphasis added). According to the Minnesota Statutes, a "taking" includes "every interference, under the power of eminent domain, with the possession, enjoyment, or value of private property."
*794In this case, both Minnesota Sands and the county sought summary judgment on both types of regulatory takings claims. The district court rejected Minnesota Sands's regulatory takings claims for two reasons.
A.
The district court's first reason for rejecting Minnesota Sands's regulatory takings claims is that Minnesota Sands did not "ever possess[ ] any right to engage in industrial mineral mining" because it had not obtained a conditional-use permit. The district court based this reasoning on the premise that, "for a party to allege a taking, there must first be a previously existing right to engage in the restricted activity" and that if "no existing right to perform an activity ever existed, there is no taking." As legal authority for this reasoning, the district court cited the supreme court's Wensmann Realty opinion.
The district court misread the Wensmann Realty opinion. The portion of the Wensmann Realty opinion that was cited by the district court is concerned only with the first factor of the Penn Central test, "[t]he economic impact of the regulation on the claimant." Wensmann Realty ,
State law concerning property rights may be relevant in a regulatory takings case to the extent that "background principles of the State's law of property and nuisance already place [restrictions] upon land ownership." Lucas ,
The majority opinion upholds the district court's reasoning on slightly different grounds. The majority opinion reasons that Minnesota Sands does not have a compensable property interest on the ground that it has lost its leasehold interests.
*795See supra at 783-84. There is nothing in the record to suggest that Minnesota Sands has lost its leasehold interests. A simple review of the six leases indicates that each lease remains in effect. Three leases have an original term that ends "five years after the issuance of a conditional-use permit." Two leases had an original term ending in October 2016 but were amended in 2015 to terminate either five years after all regulatory approvals or in 2023, whichever is earlier. The sixth lease was executed in 2015 and terminates either five years after all regulatory approvals or in 2023, whichever is earlier. None of the six leases has expired. The majority opinion relies on a lease provision stating that Minnesota Sands's "obligations under this Agreement are conditioned upon [Minnesota Sands] obtaining any zoning or governmental approvals required" for the mining of silica sand. See supra at 784. Minnesota Sands's principal obligation toward the six lessors is to pay royalties based on the volume of silica sand that is mined. The clause concerning Minnesota Sands's obligations under each lease does not affect Minnesota Sands's rights under each lease, which have not expired.
In essence, the majority opinion reasons that Minnesota Sands does not have a compensable property interest because it does not have a conditional-use permit. But of course, Minnesota Sands cannot obtain a conditional-use permit because the county will not grant one because of the ordinance that is being challenged in this case. As described above, the majority's reasoning is inconsistent with the supreme court's opinion in Wensmann Realty , in which the property owner's desire to develop its property was forbidden by the city's comprehensive plan, yet the supreme court ruled in the property owner's favor and reversed and remanded for further consideration of the property owner's takings claim. See
Thus, the district court's first reason for rejecting Minnesota Sands's regulatory takings claims is erroneous.
B.
The district court's second reason for rejecting Minnesota Sands's regulatory takings claims is that Minnesota Sands "fail[ed] to show that the property ... leased is deprived of 'all economic value.' " The district court explained that, even though the county's zoning ordinance prohibits Minnesota Sands from mining "industrial minerals," the ordinance would allow Minnesota Sands to mine "construction minerals," so long as it satisfied the requirements of a conditional-use permit. The district court concluded, "While Minnesota Sands would not obtain as much money as they would have preferred from their leases through this process, their argument that their lease is now deprived of 'all economic value' is disingenuous given these facts."
To establish a total regulatory taking, Minnesota Sands must prove that the county's zoning ordinance caused the *796"complete elimination of value" to its property. See Lucas ,
"Taking" jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole ....
Minnesota Sands contends that the county's zoning ordinance completely eliminates the value of its leasehold interests in six parcels of Winona County property. In each lease, Minnesota Sands acquired a portion of the mineral interests in the property, specifically, the right to mine silica sand to be used in hydraulic fracturing. Minnesota Sands essentially asks this court to determine the relevant parcel of property by severing each of the six properties in which Minnesota Sands has a leasehold interest in two different ways: first, by severing the mineral interests from the non-mineral interests, and, second, by severing the mineral interest in mining silica sand for hydraulic fracturing from the mineral interest in mining silica sand for other purposes.
Minnesota Sands's contention concerning the relevant parcels is inconsistent with the Supreme Court's application of the parcel-as-a-whole rule in Keystone Bituminous Coal Association , which concerned a Pennsylvania law that allowed the mining of no more than half of the coal underneath public buildings and dwellings to ensure that those buildings had structural support.
Accordingly, the relevant parcels for purposes of Minnesota Sands's regulatory takings claims are the entireties of the six properties in which Minnesota Sands has leased mineral interests. Given that definition of the relevant parcels, Minnesota Sands cannot establish a total regulatory takings claim because it cannot prove that the county's zoning ordinance caused the "complete elimination of value" of any of the six parcels of property. See Lucas ,
Thus, the district court's second reason for rejecting Minnesota Sands's regulatory takings claims is not erroneous with respect to Minnesota Sands's total regulatory takings claim.
C.
The district court's second reason for rejecting Minnesota Sands's regulatory takings claims does not resolve the partial regulatory takings claim. Whether the relevant parcels are defined narrowly or broadly, it is necessary to apply the three-factor Penn Central test to determine whether the county's zoning ordinance amounts to a partial regulatory taking of Minnesota Sands's property rights. The district court did not apply the three-factor Penn Central test to the facts and circumstances of this case. Thus, I would reverse in part and remand to the district court with instructions to apply the three-factor Penn Central test and to resolve the parties' arguments concerning Minnesota Sands's partial regulatory takings claim, based on the premise that the relevant parcels are the entire properties in which Minnesota Sands has leasehold interests. See Palazzolo ,
Therefore, I would conclude that the district court did not err by granting the county's motion for summary judgment on Minnesota Sands's total regulatory takings claim, but I would conclude that the district court erred by granting the county's motion on Minnesota Sands's partial regulatory takings claim.
The dissent argues that this quotation is not applicable to a facial-discrimination analysis because it is taken from the analysis under the Pike -balancing test. But this quotation regarding the burden imposed on the parties, is applicable to our initial discrimination determination, as the word "discrimination" is defined as "differential treatment of in-state and out-of-state interests that benefits the former and burdens the latter." Oregon Waste Sys. ,
The transportation provision of the zoning-ordinance amendment does not apply to the Nisbit operation either, which is instead governed by the numerous transportation provisions detailed in its CUP.
Minnesota Sands' argument relates only to facial discrimination under the dormant Commerce Clause and does not offer argument regarding discriminatory effects. See generally Hunt ,
And since July 1, 2013, entities seeking to mine silica sand in Minnesota must complete an environmental-impact statement before submitting a CUP application if the project seeks to excavate 20 or more acres of land, as Minnesota Sands sought to. See Minn. Stat. § 116C.991, subd. (a)(1) (2016). Minnesota Sands also failed to meet this requirement.
The majority opinion assumes without deciding that the county's zoning ordinance "implicates" interstate commerce. See supra at 779. The ordinance plainly implicates interstate commerce because the threshold for such a determination is quite low. See Gonzales v. Raich ,
The majority opinion does not consider whether the county's zoning ordinance is discriminatory in practical effect. See supra at 782 n.3. The court should do so because Minnesota Sands does not limit its argument to the issue of facial discrimination. At oral argument, Minnesota Sands clearly argued that the county's zoning ordinance is both facially discriminatory and discriminatory in practical effect.
Reference
- Full Case Name
- MINNESOTA SANDS, LLC v. COUNTY OF WINONA, Minnesota
- Status
- Published