Company loses inverse condemnation claim

The 17-month period beginning when a Terre Haute Board of Zoning Appeals ordered a company seeking a special exception to provide public water to surrounding homes and ending when that condition was overturned by a judge did not constitute inverse condemnation, the Indiana Court of Appeals held Wednesday.

In Midwest Minerals, Inc. v. Fred L. Wilson, Rick Jenkins, Joseph Kenworthy, Michael Tewell, and James Clayton, et al., 84A04-1205-MI-258, Midwest Minerals Inc. argued that the trial court erred when it applied the doctrine of collateral estoppel to support a conclusion of law, and it claimed that a regulatory taking occurred with respect to real property owned by the company. Midwest Minerals’ efforts to build a molecular gas processing unit on property zoned for heavy industrial use in West Terre Haute has been litigated several times since 2002.

In 2005, Midwest sought the special exception that the Board of Zoning Appeals of the Area Plan Commission of Vigo County said it needed to build the plant, which the BZA granted under certain conditions in February 2006. At issue in this appeal is the public water condition, requiring Midwest to provide public water to any residential use within ½ mile of any wells associated with coal mine methane processing.

Seventeen months later, a judge overturned that decision, removing the public water condition. The BZA didn’t appeal that decision and Midwest has been free to begin construction on the processing unit, but has not. Instead, it sued the BZA and the Board of Commissioners of Vigo County, alleging the public water condition constituted a taking without compensation under Article I, Section 21 of the Indiana Constitution and sought damages.

The trial court ruled in favor of the boards, finding the doctrine of collateral estoppel applied with respect to an issue determined in a prior declaratory judgment action – whether Midwest proved the boards prevented Midwest’s “complete” use of a mineral resource outside of an urban area. The judge also found there was no inverse condemnation.

The Court of Appeals affirmed, pointing out that while the question of whether a taking occurred wasn’t raised in the previous declaratory judgment action, whether the boards prevented the complete use of the gas found on the property had been fully litigated and determined, so it cannot be relitigated here.

Regarding the inverse condemnation claim, the boards’ actions did not constitute a taking. During those 17 months, evidence showed that Midwest could have removed the gas from the land by pumping it into trucks and taking it to another area to purify, Judge Edward Najam pointed out. In addition, Midwest didn’t purchase the property with the intent of harvesting and processing the gas, but had it for years before entering into a contract with another company to explore and develop the gas interests in the land.

Finally, Midwest and the company it contracted with have yet to start construction on the processing unit, even though it’s been more than five years since the court struck down the public water condition.