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Court to hear challenge of Winona County’s sand-mining ban

A truck dumps a load of silica sand Feb. 13, 2012, at Modern Transport Rail loading terminal in Winona, Minn. Minnesota is expected to release a draft set of model standards Friday to help communities struggling to regulate the boom in mining for silica sand, which oil and gas drillers use for hydraulic fracturing. (AP file photo by Andrew Link/The Winona Daily News)

A truck dumps a load of silica sand in February 2012 at Modern Transport Rail’s loading terminal in Winona, Minn. Oil and gas drillers use the sand in hydraulic fracturing. (AP file photo by Andrew Link/The Winona Daily News)

By STEVE KARNOWSKI
Associated Press

MINNEAPOLIS (AP) — Winona County, Minnesota’s only county to ban the mining of silica sand for use by the oil and gas industry in hydraulic fracturing, goes to court on Thursday to defend the ban.

Minnesota Sands, which holds extensive mineral rights in southeastern Minnesota, is challenging the ban before the Minnesota Court of Appeals. Here’s a look at the ban and the main questions that will be put to the three-judge panel:

THE BAN

The Winona County Board adopted the ban in 2016 after public hearings that drew large crowds. The Land Stewardship Project led a 17-month-long grassroots campaign, citing risks to public health, air and water; possible damage to southeastern Minnesota’s scenic landscape; the harm heavy trucks might do to local roads and the possible loss of farmland.

Minnesota Sands sued, arguing the ban amounted to an unconstitutional restraint on interstate commerce and it made worthless the company’s mineral rights leases on nearly 2,000 acres of land in the county. The company says the silica sand there is worth between $3.6 billion and $5.8 billion. Winona County District Judge Mary Leahy rejected those arguments in November, so the company appealed.

THE SAND

Southern Minnesota and western Wisconsin have rich deposits of a form of silica that’s useful in hydraulic fracturing. The pure quartz sand from the region’s soft sandstone is strong enough to prop open cracks without being crushed, and the round grains are ideal to let oil and gas flow through.

Minnesota has a few active mines. There are over 90 in Wisconsin, the country’s top producer, where companies have taken advantage of that state’s laxer regulatory schemes, as well as the close proximity of its sand deposits to railroad lines that can make cheap trips to shale-oil fields in North Dakota, Texas, eastern states and Canada.

Demand for the sand fell in 2015 and 2016 with the slump in oil prices. It wasn’t until last year that the demand bounced back. Now supplies are strained and prices are going up.. Midwest producers are starting to face increasing competition from mines in Texas, where the sand isn’t necessarily as good but it’s cheaper.

THE COMPANY’S ARGUMENTS

Minnesota Sands says the ban violates the Commerce Clause of the U.S. Constitution, which gives Congress the power to regulate interstate commerce. The clause historically has been viewed as a restriction on state laws that discriminate against interstate trade or unduly burden it. Company lawyers note that Winona County’s ordinance allows sand mining for local use in construction, landscaping and agriculture, but not for uses outside the local area.

“The federal Constitution creates a nationwide free-trade zone: state and local governments may not ban exports of goods produced within their boundaries. Unfortunately, Winona County has done that. … That cannot stand,” they wrote in their brief.

They also wrote that the ban has devalued the company’s leases and amounts to a “taking” that entitles the company to compensation.

Minnesota Sands wants the appeals court to declare the ordinance unconstitutional and send the case back to the lower court to award compensation.

THE COUNTY’S RESPONSE

Attorneys for Winona County say Leahy correctly concluded that Minnesota Sands failed to prove that the ordinance violates the Commerce Clause and that it doesn’t constitute a taking.

They wrote that the ordinance doesn’t discriminate against anyone, arguing that it draws a valid distinction between smaller-scale sand mining for local purposes such as construction and large-scale industrial sand mining for hydraulic fracturing. The effects related to the environment, public health, economic matters and other matters are different, they said.

They also argue the ordinance doesn’t give rise to a taking because Minnesota Sands never had the right to mine; because the company hadn’t gone through the permitting process when the new restrictions were put in place, the ban didn’t take away any property rights the company already held.

They also said the company’s mineral leases still have value because sand at the sites it is leasing can be mined for local use. The company disputes that, saying its leases allow mining only for hydraulic fracturing.

Editor’s note: This story has been corrected to state that Winona County will go to court to defend its ban on frac-sand mining on Thursday, not Monday. We regret the error.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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