NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS NOV 27 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

SADDLE MOUNTAIN MINERALS, LLC, No. 23-35622

Plaintiff-Appellant, D.C. No. 4:22-cv-05055-TOR

v.

MEMORANDUM*

CITY OF RICHLAND, a municipal corporation of the State of Washington,

Defendant-Appellee.

Appeal from the United States District Court for the Eastern District of Washington Thomas O. Rice, District Judge, Presiding

Argued and Submitted November 19, 2024 Seattle, Washington

Before: McKEOWN, H.A. THOMAS, and DESAI, Circuit Judges.

Saddle Mountain Minerals, L.L.C. (“Saddle Mountain”) appeals the district

court’s grant of summary judgment for the City of Richland (“the City”) and its

exclusion of the expert testimony of Edward Greeno. We have jurisdiction under 28

U.S.C. § 1291. We review the district court’s summary judgment ruling de novo,

Lowry v. City of San Diego, 858 F.3d 1248, 1254 (9th Cir. 2017) (en banc), and its

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. decision to exclude expert testimony for abuse of discretion, Fortune Dynamic, Inc.

v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1036 (9th Cir. 2010).

We affirm.

Saddle Mountain owns the mineral rights to 808 acres of land within the City

and alleges that the City’s zoning ordinances, which prohibit mining, and two

residential building permits, which authorize construction atop Saddle Mountain’s

mineral rights, amount to unconstitutional takings. Saddle Mountain further alleges

that the City violated its procedural due process rights by failing to notify Saddle

Mountain when the City issued building permits to surface owners.

1. Saddle Mountain failed to present evidence that the City’s zoning

ordinances or building permits amount to a regulatory taking.1 We recognize three

types of regulatory takings: a Loretto taking, a Lucas taking, and a Penn Central

taking. See Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 538 (2005).

A Loretto taking occurs when the “government requires an owner to suffer a

permanent physical invasion of her property.” Id. (citing Loretto v. Teleprompter

1 The City argues that Saddle Mountain’s takings claims are untimely, but we disagree. A takings claim accrues when it is ripe. Ventura Mobilehome Cmtys. Owners Ass’n v. City of San Buenaventura, 371 F.3d 1046, 1051–52 (9th Cir. 2004). And a claim is ripe when the plaintiff applies for and is denied a variance. Lai v. City & Cnty. of Honolulu, 841 F.2d 301, 303 (9th Cir. 1988). Saddle Mountain applied for and was denied a variance on March 24, 2022, and filed this lawsuit shortly thereafter, well within Washington’s three-year statute of limitations for § 1983 claims. See Rose v. Rinaldi, 654 F.2d 546, 547 (9th Cir. 1981).

2 Manhattan CATV Corp., 458 U.S. 419 (1982)). Only “if the government authorizes

a compelled physical invasion of property” is a taking effectuated and compensation

required. Yee v. City of Escondido, 503 U.S. 519, 527 (1992).

Saddle Mountain argues that the City “authorized others to build on top of

[its] rights” by issuing Type I building permits. But to constitute a Loretto taking,

the City’s action must require Saddle Mountain to “submit to the physical

occupation of [its] land.” Yee, 503 U.S. at 530. The City’s building permits may

allow the surface owner to build, but the permits do not require that Saddle Mountain

“submit to the physical occupation of [its mineral rights].” See id. Thus, the City’s

permits do not authorize a “compelled physical invasion of property.” Id. at 527.

Nor can Saddle Mountain establish a Lucas taking. A Lucas taking occurs

when regulations completely deprive an owner of “all economically beneficial uses”

of its property. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019

(1992). Since 1988, Saddle Mountain has made over $675,000 by selling its mineral

rights to surface owners. Given that Saddle Mountain originally purchased the

mineral rights for $1 per acre and now sells them for $2,500–$5,000 per acre, the

value of its mineral rights has increased significantly despite the City’s zoning

ordinances. “[V]alue is determinative,” and “any residual value after the regulation’s

application” compels not a Lucas analysis, but a Penn Central analysis. Bridge Aina

Le‘a, LLC v. Hawaii Land Use Comm’n, 950 F.3d 610, 627–28 (9th Cir. 2020). The

3 significant residual value of Saddle Mountain’s mineral rights precludes a Lucas

taking.

Saddle Mountain’s Penn Central takings claim also fails. To assess whether

a Penn Central taking occurred, we examine three factors: (1) “[t]he economic

impact of the regulation on the claimant,” (2) “the extent to which the regulation has

interfered with distinct investment-backed expectations,” and (3) “the character of

the governmental action.” Penn Cent. Transp. Co. v. City of New York, 438 U.S.

104, 124 (1978). “[E]conomic impact is determined by comparing the total value of

the affected property before and after the government action.” Colony Cove Props.

v. City of Carson, 888 F.3d 445, 451 (9th Cir. 2018). Determining the reasonable

investment-backed expectations requires an “objective analysis,” the focus of which

is the “interference with reasonable expectations.” Bridge Aina Le‘a, 950 F.3d at

633; see also Guggenheim v. City of Goleta, 638 F.3d 1111, 1120 (9th Cir. 2010).

Saddle Mountain argues that its mineral rights are worth $2.8 million. But this

figure estimates the value of the rights to surface owners for the purpose of clearing

title, not the value of the minerals themselves. Because Saddle Mountain’s claim

rests on the theory that it has been deprived of the value of its physical minerals, the

$2.8 million estimate is irrelevant to the economic impact of the City’s zoning

ordinances.

4 Even if this estimate were relevant to Saddle Mountain’s claim, Saddle

Mountain does not offer evidence of the change in value, if any, of the mineral rights

after the zoning ordinances went into effect. Nor does it offer evidence of the change

in value of the mineral rights, if any, after the variance was denied. Absent pre- and

post-deprivation values, it is impossible to determine whether the zoning ordinances

had any impact at all on the value of Saddle Mountain’s mineral rights.2 See Colony

Cove, 888 F.3d at 451.

Further, the general impression that the mineral rights would be “a good real

estate investment” does not amount to a “distinct investment-backed expectation”

that Saddle Mountain would be able to mine, excavate, or otherwise profit from the

minerals. Bridge Aina Le‘a, 950 F.3d at 633–34 (“Unilateral expectations or abstract

needs cannot form the basis of a claim that the government has interfered with

property rights.”) (cleaned up). Here, this is particularly true because most of the

zoning ordinances at issue were in effect at the time Saddle Mountain purchased the

mineral rights. See id. at 634 (“What is relevant and important in judging reasonable

expectations is the regulatory environment at the time of the acquisition of the

property.” (quoting Love Terminal Partners, L.P. v. United States, 889 F.3d 1331,

2 At oral argument, Saddle Mountain maintained that the “pre-deprivation” value was $2.8 million, and that the “post-deprivation” value was zero. But there is no evidence in the record that the minerals’ value decreased to zero either when the zoning ordinances went into effect or upon denial of the variance.

5 1345 (Fed. Cir. 2018)) (cleaned up)). Because Saddle Mountain has not offered

evidence of “economic impact” or “distinct investment-backed expectations,” it

cannot establish a Penn Central taking.

2. The district court did not abuse its discretion in excluding as irrelevant

the expert testimony of appraiser Edward Greeno. Evidence is relevant if “(a) it has

any tendency to make a fact more or less probable than it would be without the

evidence; and (b) the fact is of consequence in determining the action.” Fed. R. Evid.

401. Greeno assessed the market value of the mineral rights to surface owners

motivated to clear title, not the value of the minerals themselves. Because Saddle

Mountain advanced the theory that the City’s zoning ordinances deprived it of the

right to mine and excavate its raw minerals, Greeno’s testimony regarding the value

of the rights for consolidating a severed estate is not relevant to Saddle Mountain’s

takings claims.

3. Saddle Mountain also failed to establish that the City violated its

procedural due process rights. “To obtain relief on a procedural due process claim,

the plaintiff must establish the existence of ‘(1) a liberty or property interest

protected by the Constitution; (2) a deprivation of the interest by the government;

[and] (3) lack of process.’” Shanks v. Dressel, 540 F.3d 1082, 1090 (9th Cir. 2008)

(quoting Portman v. Cnty. of Santa Clara, 995 F.2d 898, 904 (9th Cir. 1993)).

6 There is no evidence that the City’s building permits “deprive” Saddle

Mountain of any interest, let alone a protected property interest. To be sure, Saddle

Mountain has a property interest in its minerals, which include sand, gravel, and

clay. But under Washington law, surface development by the surface owner does not

“deprive” the mineral rightsholder of any compensable property interest so long as

the minerals remain on the property. See Saddle Mountain Minerals, L.L.C. v. Joshi,

95 P.3d 1236 (Wash. 2004); Saddle Mountain Minerals, L.L.C. v. Santiago Homes,

Inc., 189 P.3d 821 (Wash. App. 2008). To the extent that the City’s building permits

allow the surface owner to burden Saddle Mountain’s mineral rights, it is a burden

inherent in the rights themselves. See id.

In any event, even assuming the City’s building permits deprive Saddle

Mountain of its mineral rights, “‘mere approval of or acquiescence in’” construction

by issuing a building permit “is ‘not sufficient to justify holding [the City]

responsible for that construction under the terms of the Fourteenth Amendment.’”

Shanks, 540 F.3d at 1088 (quoting Blum v. Yaretsky, 457 U.S. 991, 1004 (1982))

(cleaned up). The City’s building permits merely allow surface owners to exercise

rights to which they are already entitled under Washington law. The decision to

build, and to impact Saddle Mountain’s mineral interests in the process, is made by

the surface owner, not the City. See Blum, 457 U.S. at 1004 (“[A] State normally can

be held responsible for a private decision only when it has exercised coercive power

7 or has provided such significant encouragement, either overt or covert, that the

choice must in law be deemed to be that of the State.”). Saddle Mountain’s due

process claim fails.

AFFIRMED.

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