Tuesday, January 30, 2007, 9:18 AM

NC SCT: Town Can't Use Amended Zoning Ordinance To Deny Application That Was Pending Before The Amendment

On Friday the SCT handed down its decision in Robins v. Town of Hillsborough, a case dealing with the power of local government to change the rules of the game (zoning rules) and apply the new rules to a pending application for site plan approval. I did a post on this case in October to preview the oral argument. The SCT affirmed the Court of Appeals (COA), but on a different rationale.

Most businesses will sympathize with Robins. He wanted to construct an asphalt plant in the Town of Hillsborough. He bought property for the facility and applied for site plan approval. At the time Robins filed his application, the zoning ordinance permitted an asphalt plant there, and in reliance on that zoning ordinance, he spent about $100,000 to comply with the ordinance and prepare for the required public hearings. The Town held several public hearings but reached no decision. A fourth hearing was scheduled, but a week before the hearing, the Town adopted a new zoning ordinance imposing an 8-month moratorium on manufacturing and processing facilities involving the use of petroleum products, including, specifically, asphalt plants. The moratorium applied to Robins's pending application. The Town then made the moratorium permanent, amending its zoning ordinance to ban such facilities within the limits of the Town. The ban applied to all pending applications, including Robins's. Robins sued.

The trial court granted summary judgment to the Town, but the COA reversed in a split decision, handing Robbins a victory. Judge Tyson wrote the majority opinion, joined by Judge John. Judge Jackson dissented. The majority opinion had two holdings. First, on the basis of a common law "vested rights" theory, the majority held that Robins was entitled to rely on, and have his application considered on the basis of, the language of the zoning ordinance that was in effect at the time he applied for the permit. "To hold otherwise would allow compliance with regulations and permitting to become a moving target to ever changing revisions and amendments." In short, the majority essentially recognized a vested right to have a zoning ordinance remain unchanged while an application is pending. The majority thus reversed the grant of summary judgment to the Town.

Having held that Robins was entitled to have his permit application considered (grandfathered) under the zoning ordinance in effect at the time he applied for site approval, unaffected by the later ban, it is unclear why the majority went any further. But it did. The majority proceeded to address a facial challenge to the constitutionality of the Town's ban on manufacturing and processing facilities using petroleum products, a challenge under the "Law of the Land Clause." (The Law of the Land Clause, which is in Article I, Section 19 of the State's Constitution, is analogous to the federal Due Process Clause.) Ruling against the Town, the majority held that a trial is needed on the constitutionality of the ban. The majority began its constitutional analysis by observing that due process prohibits arbitrary governmental action or action that doesn't reasonably serve a legitimate governmental objective. While this bespeaks rational basis review (where governmental action is presumed constitutional, and the burden falls on the challenger to establish the absence of a rational basis), the majority actually applied heightened scrutiny to this economic regulation. Seizing on the distinction between a zoning ordinance that imposes a total ban on lawful activity and one that imposes a more limited regulation (e.g., confining an activity to a particular location in the community), the majority concluded that the Town's ban was not entitled to a presumption of constitutionality; instead, the burden was on the Town to prove constitutionality - a burden to demonstrate a "substantial relationship" between its ban and a legitimate governmental interest. (The only support cited for this standard consisted of language from Michigan and Pennsylvania cases decided more than 30 years ago.) Having so held, the majority remanded for a trial because, the majority concluded, a genuine issue of material fact exists as to whether "the public purpose [the Town] sought to accomplish by a total and permanent ban on asphalt plants is legitimate and whether [the Town's] decision to place a permanent ban on asphalt plants was not arbitrary and capricious." "The burden of proof," the majority held, "rests upon defendant [the Town]." By shifting the burden of proof to the Town to demonstrate a "substantial relationship" between its new regulation and public health, safety, or welfare, the majority essentially created a standard of intermediate scrutiny for substantive due process and equal protection challenges to exclusionary zoning laws.

Judge Jackson's dissent contended, among other things, that had Robins received a permit he would've had a vested right, but he never received a permit, and therefore he had no vested right. And, consequently, he had no property interest protected by the Constitution.

The SCT held that the COA majority erred in even addressing the constitutionality of the Town's ban, and thus the SCT vacated that portion of the COA majority's decision.

As for the vested rights theory on which the COA and Robins relied, the SCT said the vested rights doctrine was distinguishable: "Although the parties have presented arguments as to whether plaintiff may assert a vested right, either by operation of statute or common law principles, these arguments are inapposite because our vested rights decisions have considered whether a plaintiff has a right to complete a project despite changes in the applicable zoning ordinances, an issue distinct from the one before us today."

But while distancing itself from the vested rights doctrine, the SCT proceeded to adopt something strikingly similar in ruling for Robins. The SCT held that an "applicant is entitled to have his application reviewed under the ordinances and procedural rules in effect as of the time he filed his application." The SCT based its decision on case law holding that a town board must follow its own procedures. The SCT concluded that the Town, to follow its procedures, would've had to render a decision on Robins's application (approve or deny) based on the ordinance in effect at the time his application was submitted.

I agree that the Town was required by its procedures to render a decision on Robins's application. But I'm not sure why the procedures forbade the Town from making that decision on the basis of the amendment passed while his application was pending. Wouldn't the Town be following its procedures if, based on the amended zoning ordinance, it were to deny Robins's application? This makes me wonder: was the problem that troubled the SCT less a procedural one and more a substantive one wrought by the perceived retroactive use of a new regulation? Frankly I'm having difficulty understanding how the SCT's decision is not a "vested rights" decision.

1 Comments:

Anonymous Anonymous said...

Interesting post. There is another similar asphalt plant case up in Ashe County with Maymead Materials. I don't have all the details, but, the town/county tried pulling this zoning restriction. Superior Ct judge ruled in favor of Maymead, although I don't think an order has been issued yet.

11:00 AM  

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