917 N.W.2d 775
Minn. Ct. App.2018Background
- Winona County amended its zoning ordinance (Nov. 22, 2016) to ban all "industrial minerals" mining (defined to include silica sand) while continuing to permit "construction minerals" as a conditional use.
- Minnesota Sands acquired six leases (2011–2015) to mine silica sand in Winona County for use as frac sand; most leases were conditioned on obtaining required zoning approvals/CUPs and no CUPs were obtained before the 2016 amendment.
- The county undertook an extensive public process (meetings, comments, studies) and had previously issued a CUP (2013) to a different operator (Nisbit) under the pre-amendment rules.
- Minnesota Sands (and Southeast Minnesota Property Owners) sued, seeking declaratory and injunctive relief, alleging dormant Commerce Clause violation and regulatory taking among other claims; district court granted summary judgment for the county.
- The court of appeals affirmed: it held the ordinance is not facially discriminatory under the dormant Commerce Clause and that Minnesota Sands lacks a compensable property interest entitling it to just compensation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ordinance violates the dormant Commerce Clause (facial discrimination) | The ban targets silica sand used as frac sand and effectively blocks export to other states, discriminating against interstate commerce | The ordinance is even‑handed: it bans all industrial‑mineral mining (including in‑state actors) and does not favor in‑state over out‑of‑state interests | Affirmed for county: ordinance is not facially discriminatory; plaintiff lacked standing to challenge some "local" language and forfeited Pike argument on appeal |
| Whether the ordinance is discriminatory in practical effect under dormant Commerce Clause | (Alternate) The ordinance permits local uses but prohibits mining for out‑of‑state industrial end uses, which in practice burdens interstate commerce | County: ordinance regulates evenly and addresses local concerns; prior CUPs and distinctions reflect legitimate local zoning judgments | Majority declined to reach practical‑effect analysis (plaintiff did not brief Pike); dissent would find triable discrimination in effect |
| Whether Minnesota Sands holds a compensable property interest (prerequisite to takings claim) | Leases granted a mineral/leasehold interest entitling compensation when regulation eliminates value | County: most leases conditioned on obtaining CUPs; Minnesota Sands never secured approvals and thus never accrued a compensable interest | Affirmed for county: leases required CUPs and Minnesota Sands failed to meet conditions, so no compensable interest |
| Whether the amendment constitutes a regulatory taking (total or partial) | The ban eliminated the value of Minnesota Sands’ contractual mineral interest (total or partial taking) | County: sand may still be mined as construction minerals under CUPs; no total taking; plaintiff cannot show parcel‑as‑a‑whole lost all value; plaintiff failed to meet prerequisite (CUP requirement) | Affirmed as to total taking; majority ends analysis on no compensable interest; concurring/dissenting judge would remand partial‑taking claim for Penn Central analysis |
Key Cases Cited
- United States v. Lopez, 514 U.S. 549 (Sup. Ct. 1995) (scope of Commerce Clause categories)
- Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 U.S. 93 (Sup. Ct. 1994) (facial discrimination doctrine under dormant Commerce Clause)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (Sup. Ct. 1970) (balancing test for non‑discriminatory laws with incidental burdens)
- Hughes v. Oklahoma, 441 U.S. 322 (Sup. Ct. 1979) (state laws that block interstate flow of natural resources facially discriminatory)
- Lynch v. United States, 292 U.S. 571 (Sup. Ct. 1934) (contracts and lease rights are property for Fifth Amendment purposes)
- Penn Central Transp. Co. v. New York, 438 U.S. 104 (Sup. Ct. 1978) (three‑factor test for partial regulatory takings)
- Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (Sup. Ct. 1992) (categorical total takings when regulation deprives all economically beneficial use)
- Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (Sup. Ct. 1987) (rejecting narrow parcel‑segmentation in takings analysis)
- Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264 (Sup. Ct. 1981) (federal regulation of mining under Commerce Clause/National interest)
- Palazzolo v. Rhode Island, 533 U.S. 606 (Sup. Ct. 2001) (state cannot use land‑use permit prerequisites to defeat takings claims)