• April 15, 2019

Update (April 15, 2019): The Minnesota heard oral argument in this case, described below, this past week. We predict Minnesota Sands will lose. Attorney Chris H. Dolan argued for Minnesota Sands and was peppered by questions from Justices Lillehaug, Thissen, Chutich, McKeig, and Hudson. Assuming all of these justices are unpersuaded by Minnesota Sands, Minnesota Sands obviously loses. Even if one of these justices favors Minnesota Sands, Minnesota Sands still loses.

Jay T. Squires argued for the County of Winona.

Mr. Squires distilled the question before the Court as (we paraphrase): “Can a right to mine on one’s property be taken away by the government when one has no right to mine?” It sounds quite obvious that the answer to this question would be, “No.” How can one object to someone taking away a right one does not have? But, under established Minnesota law, a right to build residential homes on a property can be an unconstitutional taking when one has no right to build residential homes on the property. (See Wensmann Realty Inc. v. City of Eagan.)

Chief Justice Gildea seemed quite concerned about Minnesota Sands’ claimed economic loss of more than $50 million in the value of its property interest due to the regulatory action. Justice Anderson seemed generally troubled by the government’s regulatory power over the use of private property and seemed to wonder what the limits are. Expect a dissent.

Original post (November 2, 2018): The petition for review of Minnesota Sands and the response on behalf of Winona County are classic examples of lawyering where each side’s arguments seem quite persuasive but they are impossible to reconcile. (The Minnesota Supreme Court recently granted the petition for review.)

Minnesota Sands argues that it bought certain lease rights in Winona county to mine silica sand for use in fracking, a controversial means of mining for oil, and Winona imposed a rule saying that silica sand mined in Winona could only be for “local use,” not for use in fracking and not, Minnesota Sands suggests, not for out-of-state use.

If this were so, it would appear to pose an obvious threat to what is known as “the dormant commerce clause” (the idea that the U.S. Constitution’s Commerce Clause giving the federal government the task of regulating interstate commerce implicitly bars states from regulating interstate commerce (or discriminating in interstate commerce)).

But have a look at Winona county’s opposition to Minnesota Sands’ petition for review and you will see an entirely different (and, we would suggest, inconsistent) argument. There is no mention of any prohibition of sales to out-of-state buyers. The ordinance, Winona argues, simply restricts “industrial mineral operations, while continuing to allow construction mineral operations.” In other words, the challenged regulation “does not favor in-state economic interests over out-of-state economic interests because no entity, whether in-state or out-of-state, is permitted to mine industrial minerals.”

The “tell,” the signal, of who’s right might be in the wiggle words in Minnesota Sands’ opening salvo, “Winona County banned, in effect, all mining, processing, and transportation of minerals to be used outside its ‘local’ area when it passed a zoning ordinance amendment in November 2016. The legislation wiped out almost all mineral rights within its borders.” The underlined words negate the arguments being made. Winona County did not ban mining of minerals to be used outside its local area. The legislation did not wipe out all mineral rights within its borders.

Nevertheless, it is clear that the County’s zoning ordinance amendment hurt Minnesota Sands badly and disappointed its commercial expectations. It remains to be seen whether the action rises to the level of a “taking” entitling Minnesota Sands compensation as a matter of constitutional law.

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