Recently, in Northstar Aggregates, LLC v. Watson Township, unpublished per curiam opinion of the Court of Appeals, issued July 27, 2023 (Docket No. 363567), the Michigan Court of Appeals pointedly rejected a lower court’s denial for a zoning special-use permit. In Northstar Aggregates, the appellant Northstar sought a special-use permit from Watson Township, the defendant, in order to operate a sand and gravel mining business on certain real property located in the Township. Northstar applied for a special-use permit because the property at issue was zoned as low density residential; whereas Northstar’s use of the land would qualify as commercial.
After several routine meetings or hearings, and numerous submissions of professional studies by Northstar, the Watson Township Planning Commission (WTPC) ultimately denied the permit. Northstar filed in circuit court to appeal the decision as is its right. The circuit court however also denied Northstar’s application, bringing the matter ultimately before the Michigan Court of Appeals.
Generally speaking, when it comes to appealing zoning decisions, the extraction of natural resources falls under its own special zoning treatment. Michigan courts review these cases under a certain test first set forth in Silva v. Ada Township, 416 Mich. 153, 330 NW2d 663 (1982), which was later codified in MCL 125.3205. Pursuant to the established law, a claimant challenging a zoning denial or regulation that prevents mining of natural resources has the burden of showing that:
- There are existing valuable natural resources located on the relevant property,
- There is a need by the claimant or in the market served by the claimant and,
- That no very serious consequences would result from the extraction.
There are existing valuable natural resources located on the relevant property.
With respect to the first factor, under MCL 125.3205(3), natural resources shall be considered valuable if a person, through extracting natural resources, “can receive revenue and reasonably expect to operate at a profit.” This factor was undisputed in Northstar Aggregates, as sand and gravel minerals were located on Northstar’s property. Moreover, the Court found that these minerals were valuable for the reason that they are a constant resource needed in Northstar’s area of business.
There is a need by the claimant or in the market served by the claimant.
On the issue of “need”, subsection (3) requires either a showing of need by the person or in the market served by the person. For a need shown in the market served, generally one must establish the resources would first be sold in the marketplace and second, there is an insufficient supply of resources in order to adequately meet market demand. With respect to “need by the person” however, there is less of a uniform standard. In Northstar Aggregates, the Court of Appeals determined the standard for “need by the person” by ruling, “in order for sand and gravel or aggregate to be needed by Northstar, it had to be requisite, desirable, or useful, and there had to be a lack of aggregate such that a supply was required.”
In applying such standard, the Court found Northstar’s ability to mine and use the sand and gravel on its own property would certainly be requisite, desireful, and useful for purposes of remaining competitive in the marketplace in relation to its construction business. In that same application the Court dismissed the lower court and WTPC’s position that the mere presence of other gravel pits in the county defeats Northstar’s argument of “need.” The primary reason for dismissal was that both the WTPC and circuit court ignored the main point of Northstar’s case here—being USA Earthworks (general contractor associated with Northstar and co-appellant), needs its own supply of aggregate to remain competitive and stay in business. This finding was coupled by credibility issues the Court took with some of WTPC’s evidence used to argue the relevance and accessibility of other gravel pits. Lastly, the Court determined Northstar needs to access sand and gravel “at a cost that makes USA Earthworks able to compete in the marketplace, and this assertedly can only be accomplished by the company having its own source of aggregate, which assertion the WTPC never disapproved.”
That no very serious consequences would result from the extraction.
With respect to the third factor, as provided under MCL 125.3205(5), the Legislature dictated that standards set forth in Silva v. Ada Township, 416 Mich. 153, 330 NW2d 663 (1982), would control. For “no very serious consequences,” Silva provided the significance of public interest in those who do not reside in the community where natural resources are located, and how development and use of such resources requires closer scrutiny to local zoning regulations which prevent development.
Additional considerations courts may take into account if applicable include the relationship between mining and existing land uses, the impact of extracting minerals on property value, pedestrian and on traffic safety, impacts on health and safety, along with welfare interests held by local government, and the overall public interest. MCL 125.3205(5)(a)-(f).
In Northstar Aggregates, the lower court largely focused its ruling under this section on the impact to property values. On appeal however, the Court found this ruling to be wholly inadequate based on a lack of analysis. The Court of Appeals determined this ruling did not go far enough after finding extraction on this property would impact property values. Importantly, it found the lower court’s ruling “failed to take the necessary next step in the analysis. The circuit court had to evaluate whether there was competent, material, and substantial evidence showing that the decrease in value would constitute a very serious consequence, which analysis would rationally entail a determination regarding the extent of any decrease value and the number of properties that would actually or likely suffer a decline in value due to a gravel pit.” The Court of Appeals also had concern with whether one sole consideration (i.e., impact on property values) was enough to amount to very serious consequences.
In all, the Court reversed and remanded the case for further proceedings. Whether appealing a zoning decision under MCL 125.3205 or in relation to another type of regulation, the attorneys at Dalton & Tomich, PLC, have significant experience in this field. If you wish to speak with an attorney today, please call (313) 859-6000.