Opinion ID: 2622558
Heading Depth: 1
Heading Rank: 4

Heading: Diminishing Asset

Text: Whether Washington State recognizes the doctrine of diminishing asset is a question of first impression, and will be reviewed de novo. The term likely derives from the amortization calculation used by accountants to determine the worth of an asset at a particular time whose value will be exhausted by usfor example, a mine, which has a finite useable term as a mine. See generally Edwin Hood et al., Valuation of Closely Held Business Interests, 65 UMKC L.Rev. 399, 420 (1997). It is especially applicable to mining operations: [C]ourts have observed that the very nature of the excavating business contemplates the use of land as a whole, not a use limited to a portion of the land already excavated. Such a diminishing-asset enterprise is using all of the land contained in a particular asset; as a practical matter it must begin digging at one spot and continue from there to the boundary of its land. The entire tract of a diminishing-assets operation must be regarded as a lot within the meaning of an ordinance which permits a nonconforming use to continue on such lot, for to hold otherwise would be to deny the excavator his use. 1 Robert M. Anderson, American Law of Zoning § 6.52, at 604-05 (3d ed.1986) (footnotes omitted). Most courts that have considered the proper scope of a legal nonconforming mining activity have adopted the diminishing asset doctrine to protect the owner's expectation for the use of the land which otherwise would be severely disrupted by a later enacted zoning system. It can be seen as either an exception to the general principle that a nonconforming use will be restricted to its original site or as a substantive adaptation of the nonconforming use doctrine to recognize the realities of extractive industries. The Supreme Court of California observed: 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. A mineral extractive operation is susceptible of use and has value only in the place where the resources are found, and once the minerals are extracted it cannot again be used for that purpose. Quarry property is generally a one-use property. The rock must be quarried at the site where it exists, or not at all. An absolute prohibition, therefore, practically amounts to a taking of the property since it denies the owner the right to engage in the only business for which the land is fitted. Hansen Bros. Enters., Inc. v. Bd. of Supervisors, 12 Cal.4th 533, 907 P.2d 1324, 1336-37, 48 Cal.Rptr.2d 778 (1996) (quoting Morton v. Superior Court, 124 Cal.App.2d 577, 582, 269 P.2d 81 (1954)). Similarly, the Supreme Court of Illinois held a lawful nonconforming use of land as a mine could be extended to the boundaries of that parcel of land: 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. Du Page County v. Elmhurst Chicago Stone Co., 18 Ill.2d 479, 484, 165 N.E.2d 310, 313 (1960). [4] We agree with the overwhelming number of jurisdictions considering the issue. The proper scope of a lawful nonconforming use in an exhaustible resource is the whole parcel of land owned and intended to be used by the owner at the time the zoning ordinance was promulgated. We therefore adopt the doctrine of diminishing asset to determine the lawful scope of the nonconforming use in mining operations. We note that potential damage to zoning schemes may be ameliorated through reasonable amortization periods. We also conclude that Holroyd had a legal nonconforming use and had a right to mine gravel from the entire acreage, based on the hearing examiner's findings. Holroyd's right vested in his successor, McGuire. The hearing examiner properly found the entire parcel of land could be mined under the diminishing asset doctrine. [5]