Iowa Coal Mining Co. v. Monroe County Iowa, 00-2880SI

• Decision Date: 12 March 2001
• Docket Number: No. 00-2880SI,00-2880SI
• Citation: 257 F.3d 846
• Parties: (8th Cir. 2001) IOWA COAL MINING CO., INC., STAR COAL COMPANY, INC., AND JAMES HUYSER, APPELLANTS, v. MONROE COUNTY, IOWA; JUANITA L. MURPHY; MONROE COUNTY BOARD OF ADJUSTMENT; ARTHUR W. SIMS, MEMBER; NATALIE LATHROP, MEMBER; JOSEPH E. PEARSON, MEMBER; ROBERT LEE PUTNAM, MEMBER; AND WILLIAM H. YATES, MEMBER, APPELLEES. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 846

257 F.3d 846 (8th Cir. 2001)

IOWA COAL MINING CO., INC., STAR COAL COMPANY, INC., AND JAMES HUYSER, APPELLANTS, v. MONROE COUNTY, IOWA; JUANITA L. MURPHY; MONROE COUNTY BOARD OF ADJUSTMENT; ARTHUR W. SIMS, MEMBER; NATALIE LATHROP, MEMBER; JOSEPH E. PEARSON, MEMBER; ROBERT LEE PUTNAM, MEMBER; AND WILLIAM H. YATES, MEMBER, APPELLEES.

No. 00-2880SI

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: March 12, 2001

Filed: July 23, 2001

On Appeal from the United States District Court for the Southern District of Iowa.

Before Richard S. Arnold and Morris Sheppard Arnold, Circuit Judges, and Montgomery,¹ District Judge.

Richard S. Arnold, Circuit Judge.

These consolidated cases involve a mining concern's efforts to combine a strip mine and a solid-waste landfill on property it leased in Monroe County, Iowa. The County opposed the landfilling operation and enacted zoning ordinances to prohibit this use of the property. The parties litigated their dispute in the state courts for over ten years, resulting in two decisions by the Iowa Supreme Court. Thereafter, the County denied the mining concern's application for a certificate permitting landfilling as an existing nonconforming use. In the actions underlying this appeal, the mining concern claimed that the County's conduct violated its due-process and equal-protection rights, constituted a taking without just compensation, and was illegal under state law. The District Court² entered summary judgment in favor of the County, and this appeal followed. We affirm.

I.

Iowa Coal Mining Co., its wholly owned subsidiary, Star Mining Co., and its sole shareholder, Jim Huyser (collectively referred to as Iowa Coal) leased several sites in Monroe County for coal strip-mining. Two of these sites, designated as Star 6 (120 acres) and Star 14 (340 acres), were located in an A-2 district, a classification which allowed both mining and landfilling as conditional uses.

In the mid-1980's, the decline of the price of coal and the rise in operation costs made strip mining at these sites less and less economically feasible. Iowa Coal determined that it could increase profitability by combining strip-mining and landfilling at the same site. When these two operations are synchronized, special strip-mining techniques are used to create the space for the landfill. These techniques are more expensive than traditional methods of strip mining and are undertaken with the anticipation that the additional costs would be more than offset by the profits from the landfill.

In 1984, Iowa Coal obtained a landfill permit from the Iowa Department of Natural Resources (DNR) for 10.3 acres of Star 6 and began using this site as a landfill on a limited basis in conjunction with the strip mine. In 1987, Iowa Coal hired an engineering firm to design and develop a plan for the operation of a large landfill at Star 14. When County officials learned of this plan, they made it clear that they were opposed to locating a landfill at Star 14. Iowa Coal, however, continued with its plans and expended significant time and money to prepare its request for a landfill permit from the DNR. For example, water wells were drilled to monitor the groundwater. Iowa Coal also expended resources to market its planned Star 14 landfill to potential users.

Meanwhile, the County began developing a county-wide zoning ordinance that would prohibit landfilling in an A-2 district. In January 1988, Iowa Coal submitted its request to the DNR for the Star 14 landfill permit. The County was able to delay issuance of the Star 14 landfilling permit by various contacts with the DNR. On May 12, 1988, one day before Iowa Coal obtained the permit from the DNR, the County enacted its new comprehensive zoning ordinance, Ordinance No. 6, which did not allow landfilling in an A-2 district. The ordinance did allow existing nonconforming uses to continue, so long as they remained "otherwise lawful" and were not enlarged, moved to any part of the land not occupied by the use on the effective date of the ordinance, or abandoned for a period of six months. Ordinance No. 6, § 9 B.1-3.

Iowa Coal applied for rezoning to accommodate its planned landfill and mining operations at both sites. The County Board of Supervisors denied the request and Iowa Coal filed a state-court action against the County for certiorari review and declaratory judgment, under Iowa Code § 335.18,³ claiming that Ordinance No. 6 was illegal and deprived Iowa Coal of the only legitimate use of its property without providing just compensation, and seeking damages. It is undisputed that no coal was ever removed from, and no waste was ever deposited at, Star 14. The Court concluded that the County exceeded its statutory authority in enacting Ordinance No. 6, and, following a lengthy trial on damages, awarded Iowa Coal over $18 million for lost profits and royalties. The Court did not address Iowa Coal's takings claims.

The Iowa Supreme Court reversed this decision. The Court first held that Ordinance No. 6 was validly enacted. The Court next addressed the takings claims and held with regard to Star 14, that the County did not "substantially deprive" Iowa Coal of the use and enjoyment of this site because strip mining was still permitted there. The Court reasoned as follows:

Iowa Coal's initial investment in Star 14 was not for the purpose of developing a solid waste disposal site. Thus the majority of its resources were already invested in expectation of strip mining. In fact, Iowa Coal's own proof suggests that its capital investment in any landfill operation would be minimized because of the similarity in equipment and essential personnel involved in both industries. See Stone, 331 N.W. 2d at 404 (where no material is placed on site and no construction work begun, plaintiff's efforts and expenditures prior to rezoning not so substantial as to create vested right in particular land use). It also appears that the cost expended in planning and promoting this proposed landfill project paralleled, rather than predated, the county's action, further weakening Iowa Coal's claim.

Iowa Coal Mining Co. v. Monroe County, 494 N.W.2d 664, 671 (Iowa) (Iowa Coal I), cert. denied, 508 U.S. 940 (1993). Thus, the Court concluded, there was no taking of Star 14 upon which to base a damages award. The Court determined that Iowa Coal's takings claim with regard to Star 6 failed for a different reason -- it was not ripe for adjudication because Iowa Coal had not exhausted administrative remedies by attempting to take advantage of the existing-nonconforming-use provision of Ordinance No. 6. Id. at 671-72.

On May 7, 1993, Iowa Coal filed another action against the County in the state court. It sought declaratory judgment that Iowa Coal possessed nonconforming-use rights for strip mining and landfilling at both Star 6 and Star 14, and that the sections of Ordinance No. 6 and its materially identical successor, Ordinance No. 7, prohibiting landfilling on these sites, were unconstitutional because they were arbitrary and unreasonable. The complaint asked the Court to state what actions were necessary to make the Star 6 takings claim ripe for adjudication. Iowa Coal also asserted a claim for tortious interference with a contract between Iowa Coal and a waste operator for deposit of waste material at Star 6.

The trial court again ruled in Iowa Coal's favor. It held that the Star 6 takings claim was ripe because the ordinances provided no administrative remedy for establishing a nonconforming use. Alternatively, the Court held that if the ordinance could be read to provide an administrative remedy, the remedy was "fruitless and inadequate." The Court also held that at the time the County adopted the ordinances, mining and landfilling were existing nonconforming uses at both sites, that these uses had not expired, and that adoption of the ordinances constituted a regulatory taking of Star 6. The Court awarded Iowa Coal approximately $3 million for a taking of Star 6 and $850,000 on the business-interference claim.

Once again, the Iowa Supreme Court reversed. The Court read the ordinances as providing the following administrative remedy for establishing an existing nonconforming use. Before land can be used for any purpose, including a nonconforming one, the zoning administrator must issue a zoning certificate stating that the use complies with the ordinance. The landowner must file a written application with the zoning administrator for the certificate. If the zoning administrator refuses to grant the certificate, the landowner may appeal to the five-member board of adjustment created by the ordinance. Finally, Iowa Code §§ 335.18-25 allow a party aggrieved by a decision of the board of adjustment to seek judicial relief by means of a petition for certiorari. If the courts overturn a decision denying the certificate and thereby establish the use, the exhaustion requirement would be met and a takings or inverse-condemnation claim could be brought. Iowa Coal Mining Co. v. Monroe County, 555 N.W. 2d 418, 435-36 (1996) (Iowa Coal II).

The state Supreme Court rejected the holding that this remedy was fruitless. "[A]ny bias or preconceived disposition the County may have had against Iowa Coal did not relieve Iowa Coal of the requirement to pursue the zoning certificate remedy." Id. at 436. Thus, the Court determined, Iowa Coal's takings claims were premature, and the trial court lacked jurisdiction to hear them. The Supreme Court accordingly remanded for dismissal of Iowa Coal's takings claim regarding Star 6 and its nonconforming-use claim for Star 6 and Star 14.

The Court also ruled that its decision in Iowa Coal I did not preclude Iowa Coal's claim that the nonconforming use of landfilling existed at Star 14, as well as at Star 6, at the time the ordinances were passed. The Court noted that the relevant evidence on the nonconforming-use claim would be whether Iowa Coal "was...