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Clifton H. Mcmillan, Iii et al v. County of Siskiyou

May 21, 2012


(Super. Ct. No. SCSCCVPT081404)

The opinion of the court was delivered by: Duarte , J.

McMillan v. County of Siskiyou



California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Butte Creek Minerals, Ltd. (BCM) and its owner Clifton McMillan (McMillan) challenge the Order to Comply (Order) issued by the Siskiyou County Planning Department (the Department) with respect to a surface mining operation. The Order cites violations of both state mining law and the conditions of the use permit, and requires certain actions with 30 days.

BCM and McMillan contend that they have a vested right to mine that, under the diminishing asset doctrine, extends to the entire property, not just the portion previously mined. They argue that because the mine is vested, no use permit is required (although they obtained a use permit), thus they need not comply with the conditions of the use permit, some of which are cited in the Order.

The trial court denied plaintiffs' petition for a writ of mandate to vacate the Order and to remand for a vesting determination; plaintiffs appealed.

As we will explain, although under Public Resources Code section 2776, one "who has obtained a vested right to conduct surface mining operations prior to January 1, 1976" is exempt from the permit requirement, in this case no one obtained a vested right. The corporation that mined before 1976 did not assert a vested right, but instead obtained a use permit, which was renewed three times. Nor can plaintiffs properly claim a vested right based on the conduct of a predecessor corporation. Accordingly, we shall affirm.



The Mine

The property at issue is known as the Timberhitch Quarry or Timberhitch Pit and is located in the Butte Valley in eastern Siskiyou County. The property consists of about 1700 acres. The Timberhitch Quarry has two separate open-pit quarries within one-quarter mile of each other. The western pit was mined before 1976 and has mostly been reclaimed for agricultural uses. More recent mining has occurred in the eastern pit, which is about 20 acres in size and six to eight-feet deep.

McMillan acquired the property in 1967. He established a corporation, Timberhitch, Inc., and transferred the property to it. Timberhitch mined the property for sand, gravel and rock.

In 1971, Timberhitch entered into a Land Conservation Contract (a Williamson Act contract) with Siskiyou County (the County).*fn1 A second contract was executed the following year, adding additional land. In the County, surface mining was considered a compatible use with agricultural preservation and not subject to a use permit.

In 1989, McMillan partnered with Theodore Thom, M.D., who held title to the land as security for his investment. In 2003, McMillan established a new corporation for the mining business, BCM, and Thom deeded the mineral rights of the property to BCM.*fn2 Eventually, in May 2006, the Williamson brothers (Jack and Jim) acquired the surface rights to the property.


Regulation of Mining Activity

In the mid-1970's, the government began regulating surface mining. In 1974, the Siskiyou County Board of Supervisors adopted an ordinance that required a use permit for mining.*fn3 (Siskiyou Ord. No. 623, adding § 10-6.1502, subd. (d) to Siskiyou County Code (SCC).)

The next year, the Legislature enacted the Surface Mining and Reclamation Act (SMARA) (Pub. Resources Code, § 2770 et seq.). SMARA requires that every surface mining operation have a permit, a reclamation plan, and financial assurances to implement the planned reclamation. (Pub. Resources Code, § 2770, subd. (a).) Those with a vested right to conduct surface mining prior to 1976 are exempt from the permit requirement. (Pub. Resources Code, § 2776, subd. (a).) Regardless of vested status, all operations conducted after January 1, 1976, require a reclamation plan. (Pub. Resources Code, subd. (b).)

In response to SMARA, the Siskiyou County Board of Supervisors adopted chapter 5 of Title 10 of the SCC (SCC), entitled "Surface Mining and Reclamation." (SCC, § 10-5.101 et seq.) "The purpose of this chapter is to implement and supplement" SMARA. (SCC, § 10-5.101, subd. (a).))

In 1979, the Siskiyou County Planning Commission (Planning Commission) issued Timberhitch a five-year, renewable use permit, UP-31-79, to operate three gravel excavation sites. A reclamation plan was a condition of the permit and no bond was required. The permit noted its automatic termination if not used for the stated purpose for a period in excess of one year. The use permit was renewed in 1984 and 1989. The renewals required a $10,000 security bond and public liability and property damage insurance in the amount of $500,000.

In 1990, the Department wrote McMillan requesting the certificate of insurance and performance bond. In response, McMillan questioned the County's right to impose subsequent conditions on mining sites that were in existence before the requirement of a use permit was imposed. When McMillan provided a certificate of insurance, the Department wrote him that it did not meet the County's requirements.*fn4 Timberhitch's corporate powers were suspended in 1990 for failure to file the annual information statement and pay taxes.*fn5

A new use permit, UP-79-31, was approved in 1993, but not issued to Timberhitch until 1998. This permit required security of $2,600, insurance in the amount of $500,000, and submission of a Hazardous Materials Business Plan. Just prior to issuance of the use permit, the County Department of Public Health wrote the Department that it had not received a Hazardous Materials Business Plan. A site visit indicated the mine was not operating, but if it recommenced operation, the plan would be required if the site contained specified amounts of solid, liquid or gas, or if it generated any waste.

The mine was inspected in 2003, 2004, and 2005. The inspection reports note the mine appeared to have been idle since 2002 and the site remained compliant with the use permit and the reclamation plan. The quarried area was stable. Although the site had not been reclaimed, considerable vegetation had established itself naturally.

The status of the mine as compliant changed in 2006. At the request of the Williamson brothers, the new owners of the surface rights of the property, an inspection was conducted in August 2006. At this inspection, several violations were noted, including the presence of hazardous material. The 2006 inspection found the site was not in compliance with the use permit. The financial assurances were inadequate to complete reclamation of the quarry site. The mine had been idle since 2002; no reclamation had been conducted and about 23 acres remained disturbed and contained inoperative equipment and junk materials. An interim management plan (IMP) was requested for the idle mine.*fn6 A draft IMP had been submitted, but it was returned for revisions. An updated Financial Assurance Cost Estimate (FACE) and proof of insurance were also requested; the operator indicated he was unwilling to provide them. If the requested documents were not received, a public hearing would be set for revocation of the use permit.

After this inspection, there was a meeting between the Department and McMillan about the deficiencies at the site and considerable correspondence. The Williamson family also wrote the County about what they perceived as problems; they were particularly concerned about hazardous material on the property and the lack of insurance. The Department sent McMillan notice of the problems and the steps he needed to take.

McMillan submitted a draft IMP in November of 2006 and a revised draft in April 2007. In November 2007, the Department rejected McMillan's draft IMP, requiring significant revisions, including obtaining liability insurance in the amount of $500,000 and providing a FACE for areas disturbed after 1976. In addition, the Department of Public Health required a Hazardous Material Business Plan.

The State soon became involved.*fn7 The Office of Mine Reclamation (OMR) in the Department of Conservation threatened to remove the mine from the list of approved mines (the AB 3098 list) if a revised FACE was not submitted. The OMR inspected the mine in July 2007. A few weeks later, the OMR sent the Department a 15-day SMARA enforcement notice. The notice set forth the SMARA violations at the mine, which included the need for an amended reclamation plan, adjusted financial assurances, and an IMP. Unless the County took appropriate actions to remedy the violations, the Department of Conservation would step in to enforce SMARA. In September of 2007, the OMR removed the mine from the AB 3098 list.


The Order to Comply

These regulatory actions lead to the Department issuing an Order on August 21, 2007. This order is the subject of this appeal. The order stated that the Timberhitch Quarry was in violation of SMARA as well as the conditions of the use permit. The order directed BCM to provide, within 30 days, an updated reclamation plan, an IMP, an updated FACE, a Hazardous Materials Business Plan, and proof of liability insurance in the amount of $500,000. The draft IMP that had been submitted was inadequate due to the failure to include a Hazardous Materials Business Plan, proof of $500,000 of liability insurance, and an updated FACE.

The Planning Commission held a public hearing to consider affirming the Notice to Comply. McMillan appeared as CFO of BCM. He argued that the information he had provided, including the Williamson Act contracts covering the land, established that he had a vested right to mine. He claimed that with a vested right that arose before 1976, he did not need a use permit. He noted that a list of mines in Siskiyou County showed no vested mines. He argued no one wanted to recognize vested rights.

The hearing was continued.*fn8 A supplemental staff report stated that even though mining, or natural resource development, was permitted in agricultural areas of Siskiyou County under the Williamson Act, a use permit was still required to mine. A use permit was not required only for mines in production prior to 1974, as those mines were vested. In the case of Timberhitch ...

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