Supreme Court considers frac ban


(4/17/2019)

by CHRIS ROGERS

Last week, Minnesota Supreme Court justices listened to and picked apart arguments from Winona County and frac sand mining company Minnesota Sands in a lawsuit challenging the constitutionality of the county’s ban on new frac sand mines. The hearing gave a glimpse into how justices may be thinking about the key legal questions in the case.

Minnesota Sands sued the county after the County Board voted 3-2 in late 2016 to ban new frac sand mines. The county ordinance prohibits mining “industrial minerals” — including silica sand used for fracking — while allowing the mining of “construction minerals” — including silica sand used for construction and livestock bedding. Minnesota Sands’ attorneys argue that the county’s ordinance effectively discriminates against out-of-state uses of sand — fracking wells — while favoring local uses of sand, and therefore violates the U.S. Constitution’s prohibition against local governments regulating interstate commerce. They also argue that the ban is a “regulatory taking” — a rule that takes away Minnesota Sands’ ability to use its property without paying the company fair compensation for that loss. The company holds leases to mine frac sand deposits in Winona County it says are worth $62 million. Attorneys for the county argue that the ban applies evenly to industrial uses of sand, whether they are local or out-of-state, and that Minnesota Sands never secured a right to mine frac sand deposits in Winona County and therefore isn’t owed any compensation. Lower courts have upheld the ban and the county’s arguments. The Supreme Court could have let those rulings stand, but instead opted to hear the case.

Whether frac sand mining and plain-old sand mining are the same thing or inherently different remains a central issue in the case. The county argues and lower courts held that they are different. Minnesota Sands argues they are not necessarily. “It’s apples and oranges,” attorney for the county Jay Squires told the court. “Industrial operations are completely different in terms of the nature of activity: blasting, large withdrawals of groundwater, the use of chemical flocculants,” he added. Likening frac sand to apples and construction sand to oranges, Chief Justice Lorie Gildea asked Squires, “So this ordinance prohibits everyone from taking apples, but it lets you take oranges, so there’s no [interstate] commerce clause impact?” That is right, Squires responded. Gildea was not so sure. “It’s not clear to me that we’re talking about apples versus oranges, as opposed to one kind of apple and another kind of apple,” she stated. If blasting and chemical processing was the concern, couldn’t the county have just adopted an ordinance that regulated those issues? Justice Paul Thissen asked.

“I think the better analogy is apples used for pie versus apples used for applesauce,” attorney for Minnesota Sands Chris Dolan argued. “It’s the same apples, it’s just that the ultimate use of the product is different.” As evidence that frac sand mining and plain-old sand mining are not inherently different, he pointed to the fact that the county’s only permitted frac sand mine — the Nisbit mine — decided to sell its sand for local livestock bedding instead of fracking. “But it didn’t have to change its permitting. It didn’t change its mining process. Nothing really changed, but its decision on who to sell the product to,” Dolan stated.

During the hearing, Thissen and Justice David Lillehaug had tough questions for both Dolan and Squires. Lillehaug quizzed Dolan on whether Minnesota Sands would use toxic flocculants in its processing operations; Dolan said he did not know, but the processing could occur outside the county. With Squires, Lillehaug raised the possibility that something other than local environmental impacts was the true rationale for the ban. “Your client made a record about pollution, and karst, and trucks bothering people, and dust, and so on. Let’s say it had been a little more straight forward and said, ‘We’re opposed to climate change. If you frac, that’s making us an accomplice to climate change. We’re banning frac sand mining to help the climate change effort.’ Would that violate the [interstate] commerce clause?” Squires responded, “If it was a philosophical opposition to the practice of fracking, in this particular case, maybe that’s a closer circumstance. But the underlying environmental motivation for the ordinance, in my judgement, is not relevant to the fundamental commerce clause analysis, which is: do these regulations discriminate against interstate commerce?” The regulations are not discriminatory, Squires argued.

Justice Margaret Chutich focused her inquiries on Dolan. “When you’re talking about discriminating against interstate commerce … you could have Minnesota companies like Minnesota Sands doing this mining and you could have out-of-state companies doing the mining, and Winona County has prohibited both. So in that sense it’s an even-handed ban on who’s going to be mining industrial minerals, right?” Chutich asked. The question gave Dolan a chance to lay out his argument for why the ban was still discriminatory. Later, Chutich challenged Dolan’s interpretation of case law, stating, “They found purposeful discrimination [in that case], which is very different, I think, from the case we have here. You haven’t really made a showing of discriminatory intent here, have you? I mean, you are recognizing that these are very legitimate purposes that Winona is citing: the water quality, safety of its residents because of silica dust.”

Gildea and Justice Barry Anderson focused on the takings claim in several of their comments. After Squires and Lillehaug compared Minnesota Sands’ takings claim to landowners complaining about a city outlawing nuclear power or uranium mining in a residential neighborhood, Gildea asked Squires, “But, counsel, what if it was gold? Let’s just take it out of the rhetoric of, ‘Oh my goodness, this is harmful to the environmental.’ Let’s just say it’s gold. You find gold under your land, and then the city of St. Paul says, ‘Nope.’ I mean, come on, now. Really? You’re going to say that’s not a taking?”

To claim that its right to mine was taken away, Minnesota Sands would need to have had a right to mine in the first place, Squires responded. It did not because there were many regulatory hurdles in the company’s way before the ban was enacted, including a state-mandated environmental impact statement that, for years, the company never completed and a local conditional use permit, which the company never applied for much less received, he explained. “Can a right to mine be taken when one has no right to mine?” Squires asked.

Anderson said he was concerned that such a legal theory could create a situation where landowners have no fundamental right to do anything with their property because local zoning rules control every possible use. “My concern is that a governmental unit can adopt zoning regulations, and then point to those zoning regulations. Their argument becomes almost circular— that you’re just not permitted to use your property because the government says you’re not permitted to use your property,” Anderson said. “That seems to me to be what’s happening here. Why am I wrong about that?” Squires defended his position, and Thissen countered Anderson, asking, “But isn’t the flip-side of that argument that you can’t ever pass any regulations that protect health and safety?” Gildea said of Squires’ position, “It is a pretty amazingly slippery slope.”

The seven-member court’s other two justices were relatively quiet during the hearing.

 

The Land Stewardship Project (LSP) led a citizen campaign urging the County Board to pass the ban in the first place and filed arguments in the Supreme Court case defending the ban. LSP Policy Organizer Johanna Rupprecht attended last week’s hearing. She said the justices treated both sides’ arguments very seriously, but, in her opinion, the county’s argument held up better under their scrutiny. “In the last two levels of court, the ban was upheld, and I think it will be again, but obviously we won’t know until the opinion comes out,” Rupprecht stated. While she would have preferred that Minnesota Sands just accepted the County Board’s decision and never filed suit to begin with, Rupprecht continued, “The prospect of Minnesota Supreme Court case law coming out of this and strengthening the power of local communities to protect their communities is pretty exciting.”

“We believe, after reviewing the unfounded ban and the commerce clause of the U.S. Constitution, the court will strike down what we continue to believe is an unconstitutional ban,” Minnesota Sands representatives wrote in a statement. “We also believe that Minnesota Sands is entitled to compensation from the county for the taking of the company’s property interests without compensation.” The firm’s statement added, “We have never opposed reasonable regulations on land use, but this ordinance clearly goes too far.”

Squires was not immediately available for comment.

It may be several months before the Supreme Court makes its decision.

Chris@winonapost.com

 

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