Iowa Coal Min. Co., Inc. v. Monroe County

• Citation: 494 N.W.2d 664
• Decision Date: 20 January 1993
• Docket Number: No. 91-1237,91-1237
• Parties: IOWA COAL MINING COMPANY, INC., Star Coal Mining Company, Inc., and Jim Huyser, Appellees, v. MONROE COUNTY, Iowa, Appellant.
• Court: Iowa Supreme Court

Page 664

494 N.W.2d 664

IOWA COAL MINING COMPANY, INC., Star Coal Mining Company, Inc., and Jim Huyser, Appellees, v. MONROE COUNTY, Iowa, Appellant.

No. 91-1237.

Supreme Court of Iowa.

Jan. 20, 1993.

Rehearing Denied Feb. 18, 1993.

Lee H. Gaudineer of Austin, Gaudineer, Austin, Salmons & Swanson, Des Moines, and Annette J. Scieszinski, Sp. Asst. County Atty., Albia, for appellants.

R. Jeffrey Lewis, Joseph G. Van Winkle, and S.P. DeVolder of Gamble & Davis, P.C., Des Moines, for appellees Iowa Coal Min. Co., Inc. and Star Coal Min. Co., Inc.

James Q. Blomgren and Randall C. Stravers of Pothoven, Blomgren & Stravers, Oskaloosa, for appellee Jim Huyser.

Considered by LARSON, P.J., and SCHULTZ, CARTER, LAVORATO, and NEUMAN, JJ.

NEUMAN, Justice.

This case concerns a coal company's attempt to increase its profitability by merging its strip mining operation with a solid waste landfill. The company's zeal in pursuing the venture was exceeded only by the county's speed in enacting a zoning ordinance to restrict it. The question is whether the county thereby violated statutory zoning laws or so burdened the coal company with a regulatory taking that it is entitled to just compensation under our state and federal constitutions.

Focusing solely on the statutory claim, the district court invalidated the county's zoning ordinance and entered multimillion dollar judgments for the company and its owner. We now reverse those awards on the county's appeal.

I. Background facts and proceedings. Plaintiff Iowa Coal Company, and its wholly owned subsidiary, plaintiff Star Coal, are corporations having their principal place of business in Monroe County, Iowa. Plaintiff Jim Huyser is president and sole shareholder of both corporations. He also owns the leasehold interests in the mining properties. Those leases have been assigned to Star Coal in exchange for royalties paid to Huyser on the basis of tonnage mined and sold. Throughout this opinion these plaintiffs shall be collectively referred to as "Iowa Coal."

Iowa Coal is engaged in strip mining. This process, in contrast to underground mining, removes the coal closest to the surface, proceeding deeper until the cost of removing the coal (plus the "overburden") exceeds its value. Although the company had enjoyed a decade of sizable profits, by early 1987 the mining operation was only breaking even; that is, the cost of obtaining the coal product for sale was roughly equal to the sales achieved.

To counteract the impact of fluctuating coal prices and to increase its profitability, Iowa Coal embarked on a plan to merge its coal mining with a solid waste disposal operation. Iowa Coal was already engaged in the landfill business, to a limited extent, at one of its mines known as Star 6. Although relatively small (10.3 acres) and never fully developed, Star 6 held a state permit to accept coal by-products, such as fly ash. It also had a permit to accept tires.

Iowa Coal identified one of its other and much larger (350 acres) coal leases, known as Star 14, as a potential landfill site which would complement strip mining, but only if the two operations were synchronized. Traditional strip mining techniques destroy a site's usefulness for landfilling because the mine proceeds in a circular fashion around the coal outcrop, removing all the shallow coal first. To combine strip mining with a landfill, the operator must make straight cuts and remove both the shallow and deep coal to create an air space or "physical cell" where waste may be deposited. The idea is that the additional cost of excavating the deeper coal will be more than offset by fees generated upon the creation of a new resource: the large cell in which to deposit waste. Additionally the potential cost of this diversification is minimized by the fact that both processes (mining and landfilling) employ similar earthmoving equipment and expertise.

In January 1988, Iowa Coal sought a landfill permit from the Iowa Department of Natural Resources for Star 14. Although the proposed landfill was designed to meet or exceed existing regulatory rules, swift approval of the permit was desired to avoid compliance with the more stringent requirements of the Iowa Groundwater Act of 1987 to take effect in July 1988. Thus at the time Iowa Coal submitted its application, leachate collection and treatment systems were not required to be planned or in place before the permit could be granted. Nor did the application need to contain a plan for methane gas collection. Financial assurance plans were not yet required, nor were any plans for closure or postclosure maintenance. Iowa Coal's ability to proceed unburdened by these restrictions would not only reduce its expenses but also enhance the landfill's attractiveness to potential users.

Iowa Coal's plans did not proceed unnoticed by Monroe County residents and its board of supervisors. In October 1987, the county hired Alan Heuton, senior planner for the Area XV Regional Planning Commission, to update the county land use map. Heuton's contract expressed the county's expectation that the new map and its accompanying text "when legally adopted in accordance with chapter 358A of the Code of Iowa, shall become the Monroe County Zoning Ordinance." Heuton proceeded to make a physical inspection of Monroe County and its current land use, and studied documents previously prepared by the Regional Planning Commission. He then drafted a sixty-two page ordinance proposing permitted and conditional uses in each district, and the administration of the zoning scheme. This draft was considered by the newly appointed zoning commission at its first meeting in March 1988.

As initially drafted, the ordinance allowed both landfilling and mining as conditional uses in an A-2 agricultural district. Star 6 and Star 14 are located in an A-2 district. After meeting with Heuton, the zoning commission revised the draft ordinance to permit landfilling as a conditional use on I-2 (heavy industrial) land only. The commission believed that the heavy traffic and equipment associated with a landfill presented environmental, safety, and road maintenance concerns best accommodated by the I-2 classification.

Several public meetings were held at which Huyser and others objected to and commented upon the proposed ordinance. Because the proposed ordinance permitted strip mining as a conditional use in both A-2 and I-2 districts, but confined landfills to I-2, Iowa Coal could continue strip mining but could not combine the operation with a landfill.

Upon vote of the commission on April 21, 1988, it forwarded the proposed ordinance to the board of supervisors for adoption. By May 12, 1988, it had been formally read by the board at three consecutive meetings and enacted into law. We shall refer to it in this opinion as "Ordinance 6."

Meanwhile, the Department of Natural Resources held public hearings on Iowa Coal's landfill permit application. The permit was not approved until May 13, 1988. Iowa Coal subsequently applied for rezoning to accommodate its planned landfill/mining operations at Star 6 and 14. The Monroe County Board of Supervisors denied the request and this suit followed.

Iowa Coal's suit against Monroe County, as amended, sought relief by way of certiorari and declaratory judgment. The petition alleged the illegality of the county's enforcement of Ordinance 6, claimed the ordinance deprived Iowa Coal of the only legitimate use of its property without providing just compensation, and sought damages. The court conducted two trials on the issues raised; the first addressed the county's alleged "liability," and the second covered damages.

Based on the facts outlined above, the district court concluded that the county violated Iowa Code section 358A.5 because it "failed to develop a Comprehensive Plan prior to the enactment of a Zoning Ordinance." (Emphasis added.) Without this statutory compliance, the court ruled, the county exceeded its jurisdiction thereby rendering the ordinance void and unenforceable. The court then authorized a second trial on the damages sustained by Iowa Coal as a result of the county's "illegal and unconstitutional" acts.

In its ruling following a lengthy trial on damages, the court rested its award on plaintiff's loss of business opportunity, measured "by proof of the present value of lost profits and lost royalties that Plaintiffs would have received absent the illegal acts of the Defendants." By this standard, the court calculated Iowa Coal's loss at $10,319,526 and Jim Huyser's loss at $5,047,972, and entered judgment accordingly. This appeal by Monroe County followed.

II. Issues on appeal. The thrust of the county's appeal is, like the district court opinion, directed solely at the alleged statutory invalidity of Monroe County's zoning ordinance. Thus the county claims the court committed legal error when it found a statutory violation, and magnified the mistake by sustaining a private cause of action in damages for its breach. The county also attacks the size and scope of the award on other grounds, including the sufficiency of the evidence to support it and the measure by which it was calculated. Finally the county claims the award cannot stand because it violates the constitutional debt limit imposed on counties.

Iowa Coal responds by urging affirmance on constitutional as well as statutory grounds. We have recognized that a party for whom a favorable judgment has been rendered may attempt to save the judgment by urging any ground asserted in the trial court. Scott v. City of Sioux City, 432 N.W.2d 144, 147 (Iowa 1988); Citizens Against the Lewis & Clark (Mowery) Landfill v. Pottawattamie County Bd. of Adjustment, 277 N.W.2d 921, 926 (Iowa 1979). Thus the controlling issues as we see them are (1) whether the county violated Iowa Code section 358A.5 and, if not, then (2) whether Ordinance 6, as enacted, amounted to a taking of Iowa Coal's property entitling it to...