ST. PAUL — A sand mining company is asking the Minnesota Supreme Court to review an appeals ruling that upheld Winona County’s ban on mining frack sand.
Minnesota Sands, which filed a petition with the high court Thursday, has argued the county’s ban is unconstitutional because it singles out sand used for industrial purposes, while allowing mining for local construction uses. The sand is used to fracture shale rock in order to extract oil and natural gas.
The Winona County Board passed the ban in November 2016. The board has allowed mining to continue for construction sand, a cheaper, less pure material used on roadways and for other commercial purposes.
A Minnesota Court of Appeals rejected a lawsuit filed by Minnesota Sand and a group of landowners in July.
The ordinance does not violate the federal Commerce Clause “because it does not favor in-state interests over out-of-state interests,” the appeals panel wrote. “On the contrary, it even-handedly bans all industrial mineral mining, which includes silica-sand mining, within the county.”
The court further ruled that the ordinance does not constitute a “taking” because Minnesota Sands did not apply for conditional use permits in the years leading up to its adoption.
The decision affirmed a ruling by Winona County Judge Mary Leahy issued in November.
In a July statement, Minnesota Sands said a dissenting opinion from Judge Matthew Johnson recognizes its concerns about the discriminatory nature of the ban.
Johnson wrote that the court should look at the “realities of the marketplace” when evaluating the ban. Because Minnesota doesn’t have significant oil and gas reserves, there is no in-state fracking.
“The ordinance effectively allows silica sand to be mined and sold to local consumers but does not allow it to be mined and sold to consumers in other states,” he wrote. “Thus, the ordinance suppresses interstate commerce.”
According to court documents, Minnesota Sands has mining leases to 1,946 acres of land in Winona County that contain silica sand worth between $3.6 and $5.8 billion. Company president Rick Frick of Dakota, Minn., claims to have rights to another 1,700 acres of land though he has yet to mine any sand.
Winona County Administrator Ken Fritz said in July the county’s legal costs have largely been covered by the Minnesota Counties Insurance Trust.
The Land Stewardship Project, which spearheaded a grassroots campaign that led to the ban, said in a release that it was confident the ban will be upheld if the state Supreme Court decides to hear the case.
“This last-minute, desperate attack on the ban is further proof that wealthy corporate interests are deeply threatened by the power of organized people working together through our local governments to protect the common good for people and the land,” the statement said.
“The right of local governments to protect their communities from harmful, extractive corporate activities, such as frac sand operations, is very clear.”
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 friendlier regulatory climate, as well as the close proximity of its sand deposits to railroad lines that can carry it economically to the shale oil fields in North Dakota, Texas, eastern states and Canada.
A recent report from IHS market said domestic drilling for oil and natural gas is expected to drive “extreme” demand for the frac sand in the coming years.
The value of proppant sand will exceed $4 billion this year and is expected to grow to nearly $6 billion over the next five years, according to the report. That’s more than 4.5 times the market value for sand in 2016.
The report said continued exploration for oil and gas as well as the use of more sand per well are driving demand for the silica sand.
The U.S. Energy Information Administration predicted last Thursday that domestic crude oil production will reach new record levels in 2018 and 2019, with more than half of the growth coming from the Permian basin.
EIA forecasts that U.S. natural gas production, consumption, and exports will grow through 2019.
In efforts to avoid transportation charges — which account for more than 65 percent of sand costs — and shipping bottlenecks, oil producers are turning to lower-quality sand that can be mined near the well sites.
More recently, geologists are looking into whether North Dakota sand reserves could be used for fracking.
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