This paper is the best single summary of current law and the issues that surround CA vested rights that we know of.

PRESENTATION FOR THE CONSTRUCTION MATERIALS ASSOCIATION OF CALIFORNIA
HOLIDAY INN CAPITOL PLAZA, SACRAMENTO, CA
FEBRUARY 5, 1998

 MARK D. HARRISON, ESQ.
 THE DIEPENBROCK LAW FIRM
 400 CAPITOL MALL,  SUITE 1800
 SACRAMENTO, CA 95814
 (916) 446-4469-telephone
 (916) 446-4535-facsimile
 
 VESTED MINING RIGHTS AND

THE RIGHT TO EXPAND OPERATIONS

 
 BY  MARK D. HARRISON, ESQ.
 
 

1. VESTED MINING RIGHTS---WHAT ARE THEY?

 - Property right to continue operating in a certain location and in a certain way without being required to conform to all current land use restrictions.

 - Legally, a vested mining right is a "nonconforming use" of land. The California Supreme Court has defined a nonconforming use this way:

   A legal nonconforming use is one that existed lawfully before a zoning restriction became effective  and that is not in conformity with the ordinance when it continues thereafter.  [Citations omitted] The use of the land, not its ownership, at the time the use becomes nonconforming determines the right to continue the use. Transfer of title does not affect the right to continue a lawful nonconforming use which runs with the land [Citations omitted]...

  Hansen Brothers Enterprises v. Board of Supervisors, 12 Cal. 4th 533, 540 fn.1 (1996)("Hansen").
 

2. FOR WHOM ARE VESTED RIGHTS IMPORTANT?

 - Owners and operators of vested, nonconforming operations.

 - Companies who are considering purchasing or leasing such operations.

 - Owners and operators who are doing business under older, open-ended use permits.
3. WHY IS IT IMPORTANT TO KNOW YOUR LEGAL RIGHTS?

 - Vested, nonconforming uses of all kinds are disfavored by the law and by planning agencies.

 - The public (including many local planners, state regulators and the judiciary) have an ingrained, negative attitude towards mining uses. When asserting your rights to continue or expand a vested operation, you can expect, and must prepare for, opposition.

4. HOW IS THE SCOPE AND EXTENT OF A VESTED MINING RIGHT DEFINED?

 A. Geographical Scope.

  - Land use agencies will often argue that a use permit is required when a vested mining use seeks to expand operations into areas of the property not previously mined.

  - In 1996, the California Supreme Court in Hansen Brothers Enterprises v. Board of Supervisors, 12 Cal. 4th 533 (1996), rejected this argument. The Supreme Court established the rule that a vested mining right ordinarily includes the right to complete mineral extraction from the entire mining property. The miner, however, must have "objectively manifested" its intent to mine the entire tract at the time the use first became nonconforming (usually at the time a use permit was first required).

  - Hansen did not discuss what facts are sufficient to show  the required "objective manifestation" of intent to mine the entire tract  Law from other states, however, suggests that all operational factors are considered, such as 1) the physical nature of the mining parcel; 2) whether the mine consists of one or more parcels; 3) the steady continuation of mining (including the stockpiling) over time; 4) the existence of roads on the property; 5) where processing facilities are located on the property; and 6) the type of mining equipment used on the site.

  - Based on these factors, it is usually the case that a typical commercial mining operation can show that it "objectively manifested" the intent to mine the entire tract. The vested right, therefore, would include the right to enlarge operations to harvest all areas of the mine. It is improper for a local agency to limit the geographical scope of the mining operation to less than the entire tract.

 B. Operational Scope (Production Volumes).

  - Even in cases where the local land use authority recognizes the geographical scope of the vested use, attempts are sometimes  made to limit the miner's production volumes. Vested operators will face the argument that they can not produce at a level above their past annual maximum, or at a level above the average of past years production or that their increases in production (if allowed at all) should be restricted.

  - Hansen, the only California legal authority that has addressed the question of whether an increase in production volumes impermissibly intensify or enlarge a vested mining use, rejected this argument.

  - The evidence in Hansen was that, at unspecified times in the operation's history, aggregate production from the mine sometimes reached 200,000 tons (or 133,000 cubic yards) per year, although average annual production was far less.  Hansen, supra, 12 Cal. 4th at 546.   Hansen Brothers' reclamation plan application forecast a minimum yearly production of 5000 cubic  yards and a maximum yearly production of 250,000 cubic yards per year. Id. at 574.

  - The County of Nevada argued that under SMARA section 2776 (prohibiting "substantial changes" in vested mining operations without first securing a use  permit) and its local nonconforming use ordinance (which prohibited "intensification" of a nonconforming use), the miner's future operations, as described in the reclamation plan, would  impermissibly intensify the operation through an increase in production volumes.

  - The Court began its analysis by stating that "...the natural and reasonable expansion of a quarry business to meet increased demand is not an impermissible enlargement or change in the use of the property." Id. at 572.  The Court treated this conclusion as a corollary to the general rule that "an increase in business volume alone is not an expansion of a nonconforming use..."  Id. at 573. The Court  found that neither the County's nonconforming use ordinance nor SMARA section 2776 contained a "prohibition against a gradual and natural increase in a lawful, nonconforming use of a property, including quarry property...[W]here increased population created an increased demand for the aggregate used in road construction, an increase to meet that demand would not be construed as an enlargement or intensification of the use..." Id. Based on these legal principles, the Court held: "Unless Hansen Brothers proposes immediate removal of quantities of rock which substantially exceed the amount of aggregate materials extracted in past years, there is no impermissible intensification of use..." Id. at 575.

  - Hansen, and its discussion of increased production, appears to stand for the proposition that  a 100% increase in production volumes from a mine (133,000 cubic yards to 250,000 cubic yards) is not impermissible intensification of the use. This assumes that the mine production in question, like the mine involved  in the Hansen case, is market driven and the increase is in response to market forces. The increase , to some degree, must be a "gradual and natural" expansion of the use and not an increase associated with the addition of massive new industrial instrumentalities or a fundamental change in the way the business operates.

  - The significant point to take away from the  Hansen case on the question of volume is that production increases (even relatively aggressive increases) are clearly allowable as part of a nonconforming mining use.

 C. Operational Scope (Adding and Modernizing Equipment).

  - Another argument made to limit a vested mining operation is that the vested operation is not permitted change or modernize mining methods and equipment.

  - Although no California case has ever directly addressed the issue, Hansen does provide assistance in how to frame the general analysis.

  - In Hansen, the California Supreme Court addressed Nevada County's claims that an aggregate production operation should be compartmentalized into separate "uses" (such as riverbed extraction, hillside extraction, storage and processing).  The Court expressly rejected this type of cramped, definitional approach.  The Court held that:

    In determining the use to which the land was being put at the time the use became nonconforming, the overall business operation must be considered.  '[O]ne entitled to a nonconforming use has a right to.  .  .  engage in uses normally incidental and auxiliary to the nonconforming use.  .  .  Furthermore, open areas in connection with an improvement existing at the time of the adoption of zoning regulations are exempt from such regulations as a nonconforming use if such open areas were in use or partially used in connection with the use existing when the regulations were adopted.  '  The mining uses of the Hansen Brothers property are incidental aspects of the aggregate production business.

   Hansen, supra, 12 Cal.  4th at 565-566 (quoting 8A McQuillin at section 25.  200, p.  89).

  - Hansen clearly sanctions a unitary use theory in which the overall business operation is used as the vested rights benchmark.  As a result, Hansen necessarily expands the existing use baseline, and arguably expands the range of allowable changes that can be made to a mining operation while maintaining overall similarity with the pre- existing use.  Therefore, mine operators can, and should always, define the baseline operation as one that produces rock and aggregate products.  All operations at the mine occur as ancillary components supporting this overall use.

  - Cases from other jurisdictions are uniform in holding that the adding and modernizing of equipment is not a prohibited change, provided that the new equipment does not change the fundamental nature of the use.  For example:

  - In Cheswick Borough v. Bechman 352 Pa. 79, 82-83 (1945), the court held:

    That modern and more effective instrumentalities are used in the business will not bring it within the prohibition of the Ordinance if in fact there was an existing use, provided these are ordinarily and reasonably adapted to the carrying on of the existing business...

  - Similarly, in Moore, v. Bridgewater Township, 173 A.2d 430, 442 (1961) the Superior Court of New Jersey specifically rejected the claim that the miner should be prevented from adding a rock crusher on the basis that such a machine was not in use at the time the use became nonconforming.  The court held:

    Let us assume an extreme situation where an owner is quarrying with only a pick and shovel, when an ordinance is passed making his operation nonconforming.  Should we decide that thereafter the owner, his heirs, or assigns, may only quarry with a pick and shovel?  We have decided in the instant case that the right to quarry extends to the owner's entire tract because not to permit it would, in effect, end the operation.  The same reasoning is applicable to the problem of structures.  We are of the opinion that in a "diminishing asset" case the holder of the nonconforming use should be permitted to modernize his operation; and change, add to, or increase the size of his equipment (though deemed to be structures), even though this increases his output and intensifies the use; provided that by such action he does not change the original protected nonconforming use.

  - As with all aspects of a nonconforming use, however, each case must ultimately stand on its own facts.  There will come a point where the addition of new machinery will be considered fundamental change, rather than modernization. This usually occurs due to the fact that either the change in equipment is so massive so as to constitute a "new" use or the original use was clearly different from the use to be accomplished by employing the added equipment.  For example:

  - In DeFelice v. Zoning Board of Appeals,  32 A.2d 635 (1943), the Connecticut appeals court, while acknowledging the basic rule allowing modernization of equipment, nonetheless prohibited the miner's attempt to install a wet sand classifier.  The wet sand classifier was 106 feet long, 85 feet wide and 40 feet in height.  The floor area was 2,000 square feet.  The structure was made mostly of steel with several concrete footings.  The classifier also required a standing body of water sufficient to sustain a float 15 feet long and 10 feet wide equipped with a diesel suction dredge.  This machinery would eventually convert the entire property into a permanent lake covering the entire mine acreage.  The De Felice court found that this additional equipment would be a substantial departure from the original nature and purpose of the use which had been limited to sand excavation using, first picks and shovels, and later a steam shovel.  Id. at 638.
 
  - Similarly, Paramount Rock Co. v. County of San Diego, 180 Cal. App. 2d 217 (1960) the court held that the addition of a large, rock-crushing unit consisting of "a system of crushers, vibrating screens, washing devices, electric motors and conveyor belts. . .[using] 576,000 gallons of water per day and [requiring] 250 horsepower to operate. . .and [occupying] an area about twice that occupied. . .", Id. at 222, by the preexisting concrete premix plant was not "substantially similar", Id. at 228, to the preexisting use.
 

5. CLOSING REMARKS