20140727 Ver 1_Vested Rights Diminishing Assets_20141220

To: Craig Bromby, Assistant General Counsel
Katie Mills, Legal Intern
From: Mary Permy Kelley, Attorney at Lam
Date: December 30, 2,014
1101 1faynes Street, Suite 101 -C
Wafeigfr, Yorth Carofina 27604
(919) 600 -6277
1409 'Frazier Road
Spring .lfope, Ar©rth Carolina 27882
919- 539 -0707
w ww. mpkeffeyfaw. corn
RE: Vested bights Under Doctrine of Diminishing Assets for Crabtree Quarry
Thank you for considering the unique circumstances surrounding the Crabtree Quarry and
considering whether buffer mitigation should apply to the streams located on the property. At
this stage, a comparison of the quarry's circumstances with the vested rights factors outlined in
the agency's guidance document should be helpful to your further review.
The guidance document was issued on June 25, 2003 and entitled, "Vested Rights and
Development: Guidance for Division of Water Quality Staff' (hereinafter, "Guidance "). Since
its publication, the Division of Water Quality merged into the Division of Water Resources, but
otherwise the regulations and legal context remain generally the same so the guidance remains
relevant. As a general overview, the guidance states,
The vested rights doctrine is a test of fairness to determine whether a project has
proceeded to such a degree that it would be unreasonable to impose new changes
in the law upon it. Although it may be applied generally to any change in law, it
has most often been applied to zoning law which has steadily defined its criteria
through statutes, ordinances and case law. The vested rights concept has been
explicitly incorporated into State law through subject- specific session laws and
State rules.
Guidance, p. 1. 1 bring this opening paragraph to your attention because it recognizes that the
vested rights doctrine arises out of zoning law. One of our unique circumstances is that the
quarry was the subject of zoning litigation with the City of Raleigh for approximately 20 years.
In the 2014 settlement agreement, the City of Raleigh recognized that the expansion of mining to
the north could proceed as a nonconforming use and utilized language that closely parallels the
vested rights doctrine.
In addition, mining activity presents certain business practices that set it apart from other
activities regulated by zoning such as residential construction. In particular, the doctrine of
diminishing assets acknowledges that mining contemplates a larger scope that extends beyond.

Craig Bromby, Assistant General Counsel
Katie Mills, Legal Intern
December 30, 2014
Vested Rights in Crabtree Quarry
Page 2 of 6
the current area of excavation. When combined with vested rights analysis, the doctrine of
diminishing assets protects the anticipated use of the entire mine site so that a new regulation
adopted during the life of the mine would not frustrate the intended uses. Although not yet
addressed in North Carolina, several other states have recognized the doctrine of diminishing
assets.
• Alaska: "[C]ourts have allowed uses involving the extraction of minerals to extend
beyond the area where excavation has been completed under the "diminishing asset"
doctrine. The rationale for the "diminishing asset" doctrine is that the very nature of an
excavating business is the continuing use of the land, and that this use is what is endorsed
by the nonconforming use concept. Thus, the doctrine holds that "an owner of a
nonconforming use may sometimes be found to have a vested right to use an entire tract
even though only a portion of the tract was used when the restrictive ordinance was
enacted." The determining factor is "whether the nature of the initial nonconforming use,
in the light of the character and adaptability to such use of the entire parcel, manifestly
implies that the entire property was appropriated to such use prior to adoption of the
restrictive zoning ordinance." Stephan & Sons v. Municipality of Anchorage, 56 A.L.R.
4th 761, 685 P.2d 98, 101 -102 (Alaska 1984) (internal citations omitted)
• California: "When a mining or quarrying operation is a lawful nonconforming use,
progression of the mining or quarrying activity into other areas of the property is not
necessarily a prohibited expansion or change of location of the nonconforming use.
When there is objective evidence of the owner's intent to expand a mining operation, and
that intent existed at the time of the zoning change, the use may expand into the
contemplated area. The very nature and use of an extractive business contemplates the
continuance of such use of the entire parcel of land as a whole, without limitation or
restriction to the immediate area excavated at the time the ordinance was passed."
Hansen Bros. Enterprises, Inc. v. Bd. Of Supervisors, 48 Cal.Reptr.2d 778, 790, 12
Cal.01 533, 553 (Cal. 1996) (internal citations omitted).
• Illinois: "This is not the usual case of a business conducted within buildings, nor is the
land held merely as a site or location whereon the enterprise can be conducted
indefinitely with existing facilities. In a quarrying business the land itself is a material or
resource. It constitutes a diminishing asset and is consumed in the very process of use.
Under such facts the ordinary concept of use, as applied in determining the existence of a
nonconforming use, must yield to the realities of the business in question and the nature
of its operations. We think that in cases of a diminishing asset the enterprise is `using' all
that land which contains the particular asset and which constitutes an integral part of the
operation, notwithstanding the fact that a particular portion may not yet be under actual
excavation. It is in the very nature of such business that reserve areas be maintained
which are left vacant or devoted to incidental uses until they are needed. Obviously it
cannot operate over an entire tract at once." County of Du Page v. Elmhurst- Chicago
Stone Co., 18 111.2d 479, 165 N.E.2d 310, 313 (Ill., 1960)

Craig Bromby, Assistant General Counsel
Katie Mills, Legal Intern
December 30, 2014
Vested Rights in Crabtree Quarry
Page 3 of 6
• New Jersey: "It is quite obvious that an owner intending to carry on a quarrying
operation acquires more land than he thinks he will need so that he will not be a source of
nuisance to his neighbors. For practical and economical reasons he must begin
operations at one given point and continue from there to a point on his lands where his
natural resource ends or at his boundary line." Moore v. Bridgewater Tp., 69 N.J.Super.
1, 15, 173 A.2d 430,437 (N.J. Super. A.D., 1961)
• New York: `By its very nature, quarrying involves a unique use of land. As opposed to
other nonconforming uses in which the land is merely incidental to the activities
conducted upon it ... quarrying contemplates the excavation and sale of the corpus of the
land itself as a resource. Depending on customer needs, the land will be gradually
excavated in order to supply the various grades of sand and gravel demanded. Thus as a
matter of practicality as well as economic necessity, a quarry operator will not excavate
his entire parcel of land at once, but will leave areas in reserve, virtually untouched until
they are actually needed." Syracuse Aggregate Corp. y. Weise, 51 N.Y.2d 278, 434
N.Y.2d. 150,414 N.E.2d 651 (N.Y. 1980).
• Tennessee: "While the treatment of diminishing assets doctrine has variations, most of
the cases from other jurisdictions demonstrate that courts have, under appropriate
circumstances, permitted mining and quarrying companies not only to continue, but to
expand operations after a zoning change which would have otherwise prohibited their
activities." Ready Mix, USA, LLC v. Jefferson County, Tennessee, 380 S.W.3d 52, 71
(Tenn., 2012)
• Utah: "The very nature and use of an extractive business contemplates the continuance
of such use of the entire parcel of land without limitation or restriction of the immediate
area excavated at the time the ordinance was passed." Gibbons & Reed Co. y. North Salt
Lake City, 19 Utah 2d 329, 336, 431 P.2d 559, 564 (Utah, 1967) (internal citations
omitted)
• Wisconsin: "[W]hen a single owner has contiguous parcels on which an excavation
operation is in existence, all land which constitutes an integral part of the operation is
deemed 'in use,' notwithstanding the fact that a particular portion may not yet be under
actual excavation." Smart v. Dane County Bd. Of Adjustments, 177 Wis.2d 445, 453-
454, 501 N.W.2d 782, 785 (Wis., 1993) (internal citations omitted)
Crabtree Quarry fits the parameters of the doctrine of diminishing assets, not only in the
extractive nature of the business, but the prior contemplation of full use of the mining site before
the buffer rules adoption in 1997. First, a mine existed and continuously operated since the
1940's. Further, the mining permit and its renewals depict the mining boundary well beyond the
active excavation, including the renewal in 1992 issued 5 years prior to the buffer rule adoption.
In addition, several statements made in connection with zoning issues indicated an intent to
expand mining throughout the site prior to 1997 (discussed further in Governmental Permit
section below).

Craig Bromby, Assistant General Counsel
Katie Mills, Legal Intern
December 30, 2014
Vested Rights in Crabtree Quarry
Page 4 of 6
Returning to the Department's perspective on common law vested rights, the guidance outlines
four factors that build upon one another. "The four basic criteria (all of which must be met to
make a determination on vested rights applicability) are: (1) substantial expenditures, (2) made in
good faith, (3) in reliance on a governmental permit and (4) a detriment resulting from changing
the project to comply with new rules." Guidance, p. 2; see also Browning- Ferris Industries of
South Atlantic, Inc. v. Guilford County Board of Adjustment, 126 N.C. App. 168, 484 S.E.2d
411 (1997). 1 will analyze each factor in turn.
Substantial Expenditures
The Crabtree Quarry can demonstrate substantial expenditures made to continue the life of the
mining operation. As the City of Raleigh recognized in its legal opinion interpreting application
of the zoning code to the quarry, "expenses include not only the acquisition of contiguous
parcels, but also the excavation of the pit; the construction of berms, settling ponds and stockpile
areas; landscaping and buffering; and the installation and maintenance of the primary crusher,
processing facility, entrance driveway, weigh station and other accessory structures and
equipment on the mining property. These are long -term investments." See City of Raleigh
Official Zoning Code Interpretation issued on 6 February 2014 (hereinafter referred to as
"Zoning Interpretation"), P. 10.
Made in Good Faith
The Crabtree Quarry can also show that expenditures were made in good faith. The mining
operation predates the enactment of the Mining Act in 1972 and has continuously operated as a
mine since the 1940's until the present day. As the City of Raleigh recognized, "It is not unusual
for the projected life of a modern quarry to be 100 years or more at the same location and for the
quarry owner to continue mining the area purchased for reserves for that entire period." Zoning
Interpretation, p. 10.
In Reliance on a Governmental Perini
The Crabtree Quarry has also relied on its properly issued governmental permits and approvals.
Once the Mining Act became law in 1972, a Department of Environment and Natural Resources
permit was obtained for the Crabtree Quarry and has been renewed every 10 years thereafter
with the most recent renewal occurring in 2012. The permit covers an active mining pit and
reveals a boundary that extends beyond the current excavation. In 1992, as it renewed its mining
permit, the owners of Crabtree Quarry explicitly expressed their continued intent to mine the full
property.' Similarly, the owner's representative was quoted as saying, "[The Crabtree Quarry
owner's] plans are no different than they have been — to mine the full extent of mineral resources
on the site. "2
1 Cover letter dated January 16, 1992 submitting Mining Permit Renewal and Update --- Crabtree Quarry Wake Co.,
NC. Received by Land Quality Section Jan 22, 1992 and maintained in permit file #92 -03.
2 "Plans for new quarry pit Teer against city" by Wade Rawlins, News & Observer, December 1, 1992. News
clipping maintained in permit file 992 -03.

Craig Bromby, Assistant General Counsel
Katie Mills, Legal Intern
December 30, 2014
Vested Rights in Crabtree Quarry
Page 5 of 6
As the Crabtree Quarry continued its mining activities within the permitted boundary, the City of
Raleigh began to oppose activity on the area south of Crabtree Creek. In 1985, the City Council
passed a resolution stating that such mining constituted a violation of the City's zoning
ordinances and instituted enforcement proceedings. Adverse proceedings over the Crabtree
Quarry continued until all matters were settled recently in February 2014.
If the mining activities had not been held up by zoning proceedings with the City, the Crabtree
Quarry northern expansion could have been permitted without imposition of the Neuse River
Basin riparian buffer rules. The controversy began in 1985, more than a decade before the buffer
rules were adopted in 1997. Although the City initially opposed the south -side expansion, it
went on to examine the zoning for the entire site. While the question of whether they could
expand the mining operations was open, the owners of Crabtree Quarry could not proceed with
permitting expanded mining on the north side. Ultimately, the City reached a settlement on the
Crabtree Quarry and explicitly recognized that continued and expanded mining on the north side
of the property was a lawful nonconforming use.
Since the City did not change the zoning application to the north side of the property, merely
confirmed that expanded mining operations on the north side were lawful, the equities of the
circumstances allow for vested rights. If this confirmation had occurred anytime between 1985
and 1997, Crabtree Quarry could have proceeded with its intended and now confirmed mining
rights on the property without imposition of the new buffer rules. To impose the buffer rules
now, after the Crabtree Quarry confirmed its ability to mine the north side, would be imminently
unfair to a company that merely pursued its due process rights to continue its mining operation.
_A Detriment Resulting from Changing the Project to Comply with the New Rules
A detriment arises as a result of the application of the new rules to the quarry. The new rules
restrict the ability to impact stream buffers. There are several significant streams in the area that
will be actively excavated. The topography and geology of the site severely limit the alternative
designs that can be considered in relocating and re- establishing buffers. The quarry is used to
mine granite, a particularly hard material. In addition, relocating the stream along either side of
the future pit requires stream channels to be cut through overburden of up to 52 feet deep in one
alternative and up to 75 feet deep in the other. Further, setbacks for non - disturbance and non -
excavation exist along the property boundary and a busy road, Duraleigh Road, runs along the
east side. These constraints make it impossible to re- establish 50 -foot buffers with diffuse flow
along the relocated streams.
Conclusion
I trust this memorandum will assist you in preparing an opinion that vested rights apply to the
Crabtree Quarry so that the Neuse River Basin buffer rules will not apply to the site. Crabtree
Quarry has received a substantial amount of investment in establishing and continuing a mine
until the natural resources can be fully excavated. The expenditures and plans for fully mining
the site existed well before the buffer rules were adopted. Those expenditures and plans were

Craig Bromby, Assistant General Counsel
Katie Mills, Legal Intern
December 30, 2014
Vested Rights in Crabtree Quarry
Page 6 of 6
permitted through the Department's mining permit since the inception of the mining program
until today. The expansion of mining activities was held up by zoning litigation with the City of
Raleigh and but for that litigation, the mining activities would have proceeded prior to the buffer
rules adoption. To impose the requirements of the buffer rules now creates a detriment to the
mining operation. For these reasons, principles of equity allow for a vested right to continue the
intended use.
If you have any questions or need additional illustrative materials, please do not hesitate to
contact me.