Reflections on a Century of “Regulatory Takings” Law
A Century Ago, the Supreme Court Created a Transformative Legal Doctrine Out of Whole Cloth
100 years ago this month, the U.S. Supreme Court issued a radical constitutional decision that during the last century has proven enormously consequential in a bunch of environmental, natural resources and public health contexts. Within the December 1922 decision Pennsylvania Coal Company v. Mahon, a divided Supreme Court created the constitutional doctrine of “regulatory takings.”
A little bit of background is required to grasp the importance of the Pennsylvania Coal decision, the constitutional principle it announced, and the profound legal and societal impact of the case a century later.
The “Takings Clause” of the Fifth Amendment to the U.S. Structure–a part of the Bill of Rights–provides in pertinent part: “[Nor] shall private property be taken for public use without just compensation.” Historians have established that the Takings Clause was the Founders’ response to the actions of British troops in the course of the Revolutionary War seizing American colonists’ land and private property to support the Crown’s war efforts.
For the primary 130 years of the American nation’s history, the Takings Clause was widely understood to use only to government’s physical seizure of personal property. Such seizures could take the shape of formal government proceedings to accumulate private property for presidency use corresponding to a city hall, highway, post office or public school–what lawyers check with as “eminent domain” or “condemnation” actions. And the Takings Clause was also understood from the beginning to use to government’s occupation of or damage to personal property even where formal eminent domain actions had not first been commenced by the federal government. (Examples of the latter include razing a non-public constructing to limit fire damage to a community and the collapse of a government dam that floods and damages private property.)
And there things just about stood until Pennsylvania Coal. In that case, the coal company owned a parcel of land within the Commonwealth of Pennsylvania that contained substantial amounts of underground coal deposits. In 1878 the corporate sold the surface rights to the parcel to Mahon, who built a non-public home on the parcel, while the corporate retained the precise to mine the underground coal. In 1921, nevertheless, the Pennsylvania Legislature passed a law–the Kohler Act–prohibiting the mining of underground coal in a fashion that will cause subsidence of the property leading to wreck or destruction of a surface dwelling. Counting on the statute, Mahon filed a lawsuit against the Pennsylvania Coal Company, claiming that the corporate was required to go away sufficient columns of coal in place to supply support for his surface structure and avoid dangerous land subsidence.
The Pennsylvania Supreme Court upheld the Kohler Act against the corporate’s claim that its application to the parcel in query would trigger a compensable taking of its mining rights, in violation of the Takings Clause of the Fifth Amendment. On review, nevertheless, the U.S. Supreme Court disagreed, ruling in favor of the corporate. In the method, the Court announced the then-novel principle that a law–even one enacted to guard public health and safety–could end in a “regulatory taking” of personal property for which compensation is required to be paid by the federal government.
The bulk opinion in Pennsylvania Coal was authored by Justice Oliver Wendell Holmes. Justice Holmes began by acknowledging that “[g]overnment hardly could go on if, to some extent, values incident to property couldn’t be diminished without paying for each such change in the final law.” But, Holmes continued, the query is considered one of degree: “if regulation goes too far, it would be recognized as a taking.” Ultimately, he concluded that the Kohler Act crossed the constitutional line and violated the Takings Clause.
One other legal giant on the Court, Justice Louis Brandeis, wrote an impassioned dissent. Brandeis opined that the Kohler Act represented an affordable exercise of presidency’s police power, and that the statute properly sought to avoid a possible health and safety hazard to people and surface dwellings alike. Allowing the coal company to proceed under these circumstances “can be a public nuisance,” Brandeis maintained. Accordingly, he concluded, no unconstitutional taking of the corporate’s mining rights had occurred.
In a single sense, the Brandeis dissent in Pennsylvania Coal ultimately prevailed. 65 years later, the Supreme Court considered one other “regulatory takings” coal mining case from Pennsylvania involving virtually the identical factual circumstances. In its 1987 Keystone Bituminous Coal v. DeBenedictis decision, the Court ruled that one other Pennsylvania statute requiring sufficient underground columns of coal to stay in the bottom with a purpose to protect surface structures from subsiding was a sound measure designed to guard public health and safety–and due to this fact not an unconstitutional taking of the coal industry’s property rights within the un-mined coal. Justice John Paul Stevens, writing for the Court, opined that “the Act is meant to serve real, substantial, and bonafide public interests in health, the environment, and the fiscal integrity of the world by minimizing damage to surface areas.”
Fair enough. But by that point, the “regulatory takings” genie had long since been set free of the bottle.
Justice Holmes’ decision within the Pennsylvania Coal case provided no real guidance to lower courts, private parties or government regulators as to when a challenged law “goes too far” and due to this fact constitutes a regulatory taking of personal property. Sadly, a full century later, federal and state courts remain unable to fashion any bright-line standards to find out when a regulatory taking has occurred.
But that constitutional uncertainty hasn’t prevented members of the regulated community and personal property rights advocates from asserting countless regulatory takings claims of their efforts to fend off a wide selection of presidency statutes and regulatory programs. Land use regulation, pollution control laws, regulatory programs to guard wildlife (including endangered species), rent control laws, and the administration of state water rights systems have all been challenged on regulatory takings grounds. And lately the Takings Clause has been invoked in ever more exotic legal contexts: for instance, to challenge government-imposed quarantines and temporary business closures in the course of the height of the COVID epidemic; and banking and securities regulatory programs.
Many a whole bunch of regulatory takings cases have been filed and decided within the century because the Supreme Court decided the Pennsylvania Coal case. And a whole bunch of law review articles have been written analyzing regulatory takings doctrine and principles. In recent a long time, regulatory takings claims have turn out to be the constitutional weapon of alternative for regulated industries and businesses to challenge a wide selection of environmental, natural resources, public health and other regulatory programs. Reasonable minds can differ as as to whether the regulatory takings doctrine is a superb or bad one. But close evaluation of the Pennsylvania Coal decision reveals that it strayed dramatically from the plain language of the Takings Clause and runs counter to the intent of the drafters of the Bill of Rights.
