The opinion of the court was delivered by: Read, J.
This opinion is uncorrected and subject to revision before publication in the New York Reports.
New York Construction Materials Association, Inc., amicus curiae.
Glacial Aggregates LLC (Glacial or the company) was formed in 1996 to conduct sand and gravel mining after John M. Clarey, one of its principals, learned that the Buffalo area needed additional sources of sand and aggregates. At the time, Clarey had 20 years of experience in oil and gas drilling in Western New York.
Glacial scouted out potential mining sites along Route 16 in Cattaraugus County, where receding glaciers had deposited vast amounts of aggregate materials, and ultimately settled on property within the Town of Yorkshire (the Town). The Town had no zoning law. As a result, a mining permit from the New York State Department of Environmental Conservation (DEC) was the only governmental permission required to mine sand and gravel in the Town. Glacial purchased or acquired options to purchase 375 acres of land (the property) in the Town for $250,000. Ninety-five acres were to be mined; the remaining land was intended as a buffer to shield the neighbors from the mining operation.
By the fall of 1996, Glacial had begun the time-consuming and costly process of fulfilling the requirements for a DEC mining permit (see ECL, article 23, title 27, the Mined Land Reclamation Law). This entailed preparing a full environmental impact statement to comply with the State Environmental Quality Review Act (SEQRA); undertaking a hydrogeologic study of groundwater flow, a soil testing study, a traffic study, a wetlands analysis, and a human impact analysis to address issues such as noise and visual impacts; and developing a reclamation plan. The company ultimately spent about $500,000 in engineering and environmental expert fees to conduct these studies and create these plans.
In 1998, the Town Board (the Board) adopted a resolution declaring a moratorium on gravel mining, cell towers and automobile repair shops in the Town. Meanwhile, in September 1999, DEC handed down its SEQRA findings statement, and issued a five-year mining permit to Glacial. Among other things, the permit required the company to build and pave the last 500 feet of a haul road and install a bridge over a creek on the property before starting up commercial mining. On March 13, 2000, Glacial advised the Board of the issuance of the DEC permit. In response, the Board lifted the moratorium on gravel mining that same day.
In May 2000, Glacial excavated 20 truckloads of sand and gravel from the property, and sold this material to a potential purchaser and joint venturer for testing; the company excavated an additional 20 truckloads in October 2000, which was sold to another possible industry customer and business partner. In 2000 and 2001, Glacial dug approximately 40 pits on the property with an excavator, and 30 to 40 holes with a drill rig to figure out where the aggregate deposits were concentrated. Glacial also cut and cleared four acres of trees in preparation for extraction of materials and road construction.
With the exception of completing the bridge and haul road, then, Glacial had readied the property for commercial mining by the end of 2000. Over the next few years, the company continued to clear trees, monitor wells, submit quarterly reports to DEC, and make various required annual payments. Glacial designed and obtained steel for but did not finish either the bridge, estimated to cost $80,000-$100,000, or the haul road, estimated to cost $10,000.
On June 11, 2001, the Town adopted its first zoning law, which generally prohibited gravel mining absent a special use permit. Section 10.1 expressly exempted prior nonconforming uses, though, by providing that "[e]xcept as otherwise provided herein, any lawfully established use of a building or land existing at the time of the enactment of this law, or any amendments thereto, may be continued although such use does not conform to the provisions of this law." Clarey at first considered the new zoning law to be "good for [Glacial] because no new mines could have been established near . . . or next to [it], and further, [the law] didn't apply to [Glacial which] spent all this money and got the permit and the moratorium was lifted before the zoning was passed."
In late 2003 or early 2004, Glacial updated the Board about its activities, advising that it had attracted additional investors to supply capital, and that a new limited liability company headed by Clarey would acquire Glacial's assets (the property and the permit) for $1,250,000. By June of that year, the company's principals had invested roughly $840,000 in the business, and Clarey had secured a $2.9 million loan commitment from a Buffalo bank to finance full-scale mining operations.
Before closing on the loan, the bank required a letter from the Town confirming that local zoning restrictions did not prevent Glacial from mining the property. Accordingly, the Town Supervisor, at the company's request, sent Clarey a letter dated July, 8, 2004 verifying that "it is the position of the Town . . . that Glacial has the right to operate the sand and gravel mine in the [Town], provided that actual mining operations are commenced prior to the expiration of the initial 5 year term of the New York State Department of Environmental Conservation Mining Permit."
The original DEC permit, which was renewable for additional five-year periods, was set to expire in September 2004.
On July 12, 2004, the Town reversed field; specifically, the Board passed a motion "authorizing [the Supervisor] to mail a new letter . . . [revoking] a letter dated July 8, 2004 . . . stating that the [Board] supported [Glacial's] proposed mining operations in the town, and in the new letter stating that NYS DEC issued Mining Permits that were issued ...