County District Court File Nos. 85-CV-17-771; 85-CV-17-516
Bethany M. Gullman, Faegre Baker Daniels, L.L.P., Washington,
D.C., and Christopher H. Dolan, Nicholas J. Nelson, Delmar R.
Ehrich, Faegre Baker Daniels, L.L.P., Minneapolis, Minnesota
Squires, Elizabeth J. Vieira, Kristin C. Nierengarten, Rupp,
Anderson, Squires & Waldspurger, PA, Minneapolis,
Minnesota (for respondent)
Considered and decided by Johnson, Presiding Judge; Worke,
Judge; and Jesson, Judge.
county ordinance that even-handedly bans all
industrial-mineral mining, including silica-sand mining,
within the county does not discriminate against interstate
commerce in violation of the dormant Commerce Clause.
must have a compensable property interest to assert a viable
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.
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.
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
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.
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), Ch. 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
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.
"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.
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.
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.
Does the zoning ordinance violate the dormant Commerce
Is the zoning ordinance a regulatory taking of Minnesota
Sands' compensable property interest?
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 fact and whether a party is entitled to judgment
as a matter of law. Laymon v. Minnesota Premier
Properties, LLC, 913 N.W.2d 449, 452 (Minn. 2018). Where
the material facts are not in dispute, as in this case, we
review the district court's application of the law de
novo. Wensmann Realty, Inc. v. City of Eagan, 734
N.W.2d 623, 630 (Minn. 2007).
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.
Dormant Commerce Clause
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, 651 N.W.2d 825,
832 (Minn. 2002). The dormant Commerce Clause "is driven
by a concern about 'economic protectionism-that is,
regulatory measures designed to benefit in-state economic
interests by burdening out-of-state competitors."
Swanson v. Integrity Advance, LLC, 870 N.W.2d 90, 93
(Minn. 2015) (quoting McBurney v. Young, 569 U.S.
221, 235, 133 S.Ct. 1709, 1719 (2013)).
precedent prescribes that we first determine whether the
challenged law implicates the Commerce Clause.
Chapman, 651 N.W.2d at 832. Congressional
Commerce-Clause authority extends to three broad categories
of activity: "(1) the use of the channels of interstate
commerce, (2) the instrumentalities of interstate commerce,
or persons or things in interstate commerce, and (3)
activities having a substantial effect on interstate
commerce." Id. at 832-33 (citing United
States v. Lopez, 514 U.S. 549, 558-59, 115 S.Ct. 1624,
1629-30 (1995)) (noting types of interstate commerce that the
dormant Commerce Clause may implicate).
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, 511
U.S. 93, 99, 114 S.Ct. 1345, 1350 (1994).
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, 511 U.S. 93, 99, 114 S.Ct. 1345, 1350 (1994);
Hunt v. Washington State Apple Advertising
Comm'n, 432 U.S. 333, 350-51, 97 S.Ct. 2434, 2446
v. Oklahoma, 502 U.S. 437, 455, 112 S.Ct. 789, 800
(1992). Discrimination occurs if a law prescribes
"differential treatment of in-state and out-of-state
interests that benefits the former and burdens the
latter." Oregon Waste Sys., 511 U.S. at 99, 114
S.Ct. at 1350. A law that discriminates against interstate
commerce in its purpose or effect is a virtually per se rule
of invalidity subject to "the strictest scrutiny."
Id. at 101, 114 S.Ct. at 1351 (quoting Hughes v.
Oklahoma, 441 U.S. 322, 337, 99 S.Ct. 1727, 1737
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., 397 U.S.
137, 142, 90 S.Ct. 844, 847 (1970). We analyze the
Pike balancing test by using "a less strict
scrutiny." Wyoming v. Oklahoma, 502 U.S. 437,
455 n.12, 112 S.Ct. 789, 800 n.12 (1992).
The ordinance does not discriminate against
interstate commerce on its face by banning
all silica-sand mining.
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
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., 449 U.S.
456, 473, 101 S.Ct. 715, 728 (1981) ("[T]here is no
reason to suspect that the gainers will be Minnesota firms,
or the losers out-of-state firms. Indeed, two of the three
dairies, the sole milk retailer, and the sole milk container
producer challenging the statute in this litigation are
Minnesota firms."). "The existence of major in-state
interests adversely affected by the [ordinance] is a powerful
safeguard against legislative abuse." Id. at
473 n.17, 101 S.Ct. at 728 n.17. We have no reason to believe
that the ordinance benefits instate interests and burdens
those out-of-state. The across-the-board application of the
ordinance is detrimental to both in-state interests, such as
those of Minnesota Sands, as well as out-of-state interests,
which indicates that the ordinance does not discriminate on
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 a 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.
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
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 ...