Editor’s note: This is the first in a three-part series of articles. Agricultural operations are increasingly subject to local land use regulations. In the past, agriculture operated in rural areas where land use regulations were rare.

Jesse J. Richardson

However, the expansion of suburban development, diversification of agricultural operations to include activities like festivals, weddings and other events, and increased intensity of some production systems combine to make agricultural operations the target
of regulations.

A recent court case (Golden Sands Dairy LLC v. Town of Saratoga), one I’ll call “Golden Sands II,” highlights some of the pitfalls agricultural operations may encounter due to the complexities of land use law.

Golden Sands II involves the vested rights doctrine. In this case, a central Wisconsin farm was allowed to build several buildings for the operation of a new dairy but was then denied the right to operate on acreage surrounding the buildings.

The case, and an expanded discussion of development rights, will serve as the foundation for a three-part discussion of development rights in Progressive Dairyman. In this article, we’ll explore a general explanation of the vested rights doctrine and review the Golden Sands II court decision.

We’ll conclude with lessons learned from the case as well as steps agricultural producers and their attorneys can take to ensure their operations will be considered vested – and thus protected against changes in land use regulations. (See page 55 for a schedule of upcoming installments in this series.)

‘Vested rights doctrine’ explained

The vested rights doctrine addresses situations where a landowner has begun to develop land pursuant to existing regulations, but zoning rules are changed, blocking the project’s completion and operation as intended.

At what point in the development process must local governments allow the landowner to complete the development and engage in the contemplated use?

The rule for vested rights differs from state to state, but a majority of states find when a building permit or other significant local government approval has been issued, and the landowner has acted in good faith and invested significant money or made significant commitments in reliance on the government action, the right to continue the project “vests,” and the project may be completed.

Some states do not require actual issuance of a permit but examine whether the issuance of the permit is probable in determining the time of vesting. Some states allow vesting even earlier. In these early vesting states, once the landowner applies for the permit, the landowner may proceed under the rules existing at the time of the application if the permit is issued.

‘Golden Sands’ reviewed

In the Golden Sands situation, an operation applied for a permit to build seven farm buildings for a new dairy. The permit application described very generally “100 acres of [building] site and 6,338 acres total” for the operation. No specific legal description was given, nor did the application reveal whether Golden Sands owned, rented or otherwise had a legal right to use the acreage.

Although the dairy operation was allowed at the time of the application, the Town of Saratoga was in the process of adopting a zoning ordinance that would prohibit the dairy operation on the site. After the permit was applied for, but prior to any action on the application, the zoning ordinance was adopted.

In 2014, a court found the town must issue the building permit and allow the buildings to be constructed (Golden Sands v. Fuehrer).

Golden Sands then asserted the right to use the over 6,000 acres surrounding the proposed buildings to grow crops and engage in other agricultural operations to support the use of the buildings. The town protested, claiming the right to construct the seven farm buildings did not include the right to use the 6,000 acres in agricultural production, now prohibited under the new zoning ordinance.

Golden Sands responded by arguing the vested rights acquired in applying for the building permit included the use of the 6,000 acres.

The court distinguished vested rights in a building and vested rights in a use. The production of crops, according to the court, was a use. For a use to become vested, the landowner must actually begin using the property in that manner before the regulation changes.

The application for the building permit allowed construction of the buildings (and presumably use of the buildings as dairy facilities) but did not give any right to use any land beyond the buildings. Therefore, Golden Sands had no right to engage in agricultural production on the 6,000 acres, even though that production is presumably necessary for the seven buildings to be used profitably.

The Golden Sands II decision seems odd. How could the law allow buildings to be constructed but not allow necessary associated land uses? Although the court never described its decision in this way, this case involved determining the scope of the vested right.

How far does the vested right extend? Normal vested rights cases involve construction of buildings or projects relatively self-contained. Dairy buildings with associated (and perhaps far-flung) crop production on other land present a unique question.

Tips to ensure ‘vested rights’ will attach to your agricultural operation

Given the increasing application of land use regulations and the differences in agricultural operations and traditional development, more cases like Golden Sands II may arise in the future. The decision in Golden Sands II shows why agricultural operations and their attorneys must be proactive and either ensure the unique nature of the agricultural operation can fit into traditional land use law tools or educate the courts and regulators to the differences so exceptions or new tools can be crafted.

The following list (not exhaustive) describes things agricultural producers and their attorneys should keep in mind to ensure their rights to agricultural operations vest.

1. Check local zoning and other land use regulations to ensure the proposed operation is allowed.

2. Inquire with local government officials and staff as to whether changes to the regulations that may affect your operation are being contemplated.

3. Since local government approvals are required for vesting, explore whether any local government permits or approvals are required or even optional. Optional approvals should be sought to ensure vesting.

4. When applying for local government permits or approvals, list the entire operation, in detail, in the application. The more detailed the application is, the more broad that vesting is likely to be.

5. Consider the use of a development agreement to lock in rights to the project.

6. Maintain a working relationship with local land use officials and staff. Express the willingness to work with the local government and the community to craft solutions that work for all involved.

7. Be proactive.  

The author is past president of the American Agricultural Law Association (AALA) and will present information on vested rights and development agreements at the 38th Annual Agricultural Law Symposium, Oct. 26-28, 2017 in Louisville, Kentucky. Read more on vested rights online (Planners Web - Vested Rights).

• Jesse J. Richardson Jr.

• Professor of Law
• West Virginia University College of Law
• Email Jesse J. Richardson Jr.

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