American Aggregates Corp. v. Highland Tp.

• Decision Date: 04 August 1986
• Docket Number: 80713 and 82054,Nos. 78133,s. 78133
• Citation: 151 Mich.App. 37,390 N.W.2d 192
• Parties: AMERICAN AGGREGATES CORPORATION, an Ohio corporation, Plaintiff-Appellant, v. HIGHLAND TOWNSHIP, a Michigan Municipal corporation, Defendant-Appellee, and Michigan Mineral Resources Association, East Michigan Environmental Action Council, and Michigan Townships Association, the Charter Township of Milford, the Township of Orion, Oakland Township and the Township of Rose, Amicus Curiae.
• Court: Court of Appeal of Michigan — District of US

Page 192

390 N.W.2d 192

151 Mich.App. 37

AMERICAN AGGREGATES CORPORATION, an Ohio corporation Plaintiff-Appellant, v. HIGHLAND TOWNSHIP, a Michigan Municipal corporation Defendant-Appellee and Michigan Mineral Resources Association, East Michigan Environmental Action Council, and Michigan Townships Association, the Charter Township of Milford, the Township of Orion, Oakland Township and the Township of Rose, Amicus Curiae.

Nos. 78133, 80713 and 82054.

Court of Appeals of Michigan.

Submitted Feb. 5, 1986.

Decided April 21, 1986.

Release for Publication Aug. 4, 1986.

Milmet, Vecchio, Ward & Carnago, P.C. by James Wynne, Detroit, for plaintiff-appellant.

Dickinson, Wright, Moon, Van Dusen & Freeman by Charles T. Harris, Erik J. Stone, and Sara Zivian Zwickl, Bloomfield Hills, for defendant-appellee.

Before BEASLEY, P.J., and GRIBBS and CHERRY, ^* JJ.

BEASLEY, Presiding Judge.

Plaintiff, American Aggregates Corporation, an Ohio corporation, owns an 824-acre tract of land located in the defendant Township of Highland in Oakland County. On February 27, 1975, plaintiff submitted a written application to the Highland Township Board for rezoning of its property from "A-1 General Agriculture" to "M-E Extractive Industrial" in order to allow mining of sand and gravel. After plaintiff resubmitted an alternative rezoning application for only 400 acres of its property, defendant township board voted to deny the applications. On August 25, 1977, plaintiff filed suit claiming that the zoning classification of its land was invalid and unconstitutional. Following extensive litigation, which included a 14-day bench trial, the trial judge filed a conscientiously prepared opinion holding that plaintiff had failed to meet its burden of proof and entered a judgment for defendant township on September 13, 1984. In his opinion, the able and experienced trial judge has carefully weighed the evidence and furnished us findings which could be a model for trial judges to follow.

Plaintiff appeals as of right. Also on appeal is defendant's cross-appeal as of right from the trial court's denial of its petition for the actual costs of the litigation.

The parties and the trial judge appeared to agree that the decision herein is controlled by the application of the standards set out in Silva v. Ada Twp. ¹ In Silva, the Michigan Supreme Court stated that because of the important public interest involved in extracting and using natural resources, a more rigorous standard of reasonableness applies when reviewing zoning regulations that would prevent the extraction of natural resources. The Court did note that, even in the context of limits on the extraction of natural resources, zoning ordinances are presumed to be reasonable under the requirements of substantive due process. A person challenging the ordinance has the burden of proving otherwise. ² In meeting this burden, the person attacking a zoning ordinance that prevents the extraction of natural resources must show that there are valuable natural resources located on the land and that no "very serious consequences" would result from the extraction of the resources. ³

Here, the trial judge first found that the gravel and sand located on plaintiff's land was a valuable natural resource. This finding was supported by extensive evidence which revealed the value of the sand and gravel located on plaintiff's land. Expert testimony revealed that plaintiff's property would yield 45 million tons of high quality sand and gravel. Although evidence indicated that the demand for sand and gravel in southeastern Michigan had declined sharply over the last 10 years, defendant township did not allege or present any evidence showing that plaintiff could not sell the sand and gravel or fail to operate at a profit.

Defendant township argues that a trial judge must consider whether the natural resource is valuable to the public at large by considering all the social costs related to the proposed mining operation. Such a broad consideration of social costs is inappropriate at this stage of the Silva test and is more appropriately applicable to the "very serious consequences" analysis. The proper focus in determining whether the natural resource is valuable is on whether the landowner, by extracting the resource, can raise revenues and reasonably hope to operate at a personal profit. Therefore, viewed in the light of the evidence presented at trial, the trial judge did not clearly err in finding that the sand and gravel located on plaintiff's land is a valuable natural resource. In reaching this conclusion, we note that sand and gravel is used extensively in construction and that Michigan courts have often recognized the value of this natural resource. ⁴

The trial judge then found that plaintiff had failed to show that no "very serious consequences" would result from the extraction of the sand and gravel from the subject land. He based his conclusion on four consequences that he found would result if plaintiff strip-mined the sand and gravel on its land. The first consequence involved the impact of truck traffic generated by plaintiff's mining operations upon traffic safety over the proposed haul route. The second consequence was the substantial increase in traffic noise that would result from the truck traffic hauling sand and gravel from plaintiff's land. The third consequence was the predicted decrease in property values in the residential and agricultural area surrounding plaintiff's land and the proposed haul route. The fourth consequence was the impact plaintiff's mining operation would have on the contemplated residential development and tax base of Highland Township.

Prior to reaching his conclusion that plaintiff had failed to show that these four consequences did not constitute "very serious consequences" to the community, the trial judge made several findings indicating that plaintiff had failed to establish that southeastern Michigan needed another sand and gravel extraction operation. Plaintiff argues that the evidence admitted on this issue, and the trial judge's conclusion, are irrelevant in assessing whether "very serious consequences" would result from plaintiff's mining operations under the Silva analysis. We disagree.

In reaching our conclusion on this issue, we first note that in Silva the Supreme Court did not determine whether "very serious consequences" would result from the extraction of sand and gravel from plaintiff's land in that case. The Court merely remanded the case to this Court for application of the "very serious consequences" analysis. In Silva, the Supreme Court did not specifically address whether the need for sand and gravel on plaintiff landowner's land was a relevant factor in the analysis. However, the entire foundation of the stricter test of reasonableness referred to in Silva rests on the important public interest involved in extracting and using natural resources. ⁵ Therefore, the degree and extent of public interest in the extraction of the specific natural resources located on the landowner's land is a relevant factor in reviewing the reasonableness of the zoning regulation.

This factor is relevant because the degree of public interest in natural resources varies greatly depending on the type of resource involved and on the market demand and supply conditions that exist as to the resource sought to be extracted. We do not believe that the Silva analysis requires us to blindly assume that all "valuable" natural resources involve a constant high degree of public interest. For example, certainly a sand and gravel extraction operation in an area where no adequate supply of sand and gravel currently exists for necessary construction activity involves a higher degree of public interest than would a sand and gravel operation located in an area where there was an ample supply of sand and gravel or where there was little construction activity. Although an added extraction operation in the latter area might reduce the price of sand and gravel, the public interest is less in such an operation than in the former area where there is a strong public need for an available source of supply for sand and gravel.

The problem presented in recognizing the degree of public interest in the extraction of a landowner's specific natural resource as a relevant factor is where to fit this factor into the Silva analysis. As indicated, we do not believe that this factor should be considered in determining whether the natural resource is "valuable". However, we believe that the degree of public interest in the landowner's specific natural resource should be considered when analyzing whether "very serious consequences" to the community will result from the extraction of the natural resource. This will result in a sliding scale determination of whether "very serious consequences" exist in the landowner's specific situation. If public interest in the specific landowner's resource is very high, the consequences resulting from the extraction of the resource will not reach the level of "very serious" as readily as in the case where public interest in the specific resource is relatively low.

This type of sliding scale approach based on the public interest in the landowner's specific resource results in an appropriate cost/benefit analysis in applying the Silva standard for determining the reasonableness of zoning regulations preventing the extraction of natural resources. The "very serious consequences" test is not viable unless it is applied in this way, since it essentially involves an internalizing of costs imposed on the public by the extraction operation that the landowner is not aware of in making his private decision to extract the resources (externalities). For such an internalizing of public costs to make any sense, these costs must be compared to the benefits of the extraction operation as measured by the degree of public interest in the specific resources. As...