Notice & Comment

A Landmark Centennial From a Land Marked By the Past, by Sam Spiegelman

December 11, 2022, marked the centennial of the U.S. Supreme Court’s landmark regulatory takings decision—Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). Readers familiar with land-use law are likely well-acquainted with the case most often identified as the beginning of the “regulatory takings” doctrine. But it takes some digging to fully appreciate Pennsylvania Coal’s consequential—though complicated—legacy, a product of its legendary author Oliver Wendell Holmes Jr.’s failure to explain what he meant when he cautioned that a regulation that “goes too far” will effect a taking. Despite its flaws, the decision has withstood the test of time because its core argument is correct—even if it took the Supreme Court decades longer to realize what “goes too far” really means. 

In 1878, the Pennsylvania Coal Company conveyed the surface estate of land in Pittston, Pennsylvania, a small town midway between the regional hubs of Scranton and Wilkes-Barre, to Alexander Craig, the Company’s chief engineer. Pittston is in an area that once served as one of the hearts of American coal country. These days, anthracite coal mining is mostly gone, though the industry’s influence still resonates in the fading signs, abandoned mines, and old tales, proudly passed from generation to generation, about a time when their little corner of the northeastern Pennsylvania mountains was at the center of the world. While conveying the surface to Craig, the Company also expressly retained the right to mine beneath the property, even if doing so would collapse the surface. Pennsylvania law recognizes a separate property interest in the surface, and a distinct interest in the support estate.  

In 1921, the Company informed the property’s then-owners, lawyer H.J. Mahon and his wife, Margaret, that it would begin mining beneath their home. The Mahons sought an injunction in the Pennsylvania Court of Common Pleas, asking the court to prohibit the Company from mining and causing subsidence and damage to their home, citing a recently adopted statute as the basis for their argument. A year earlier, the Pennsylvania legislature had adopted the Kohler Act, prohibiting anthracite coal mining beneath certain properties if doing so would cause subsidence and surface collapse. In response, the Company asserted that because the Kohler Act wiped out its contractual and property rights, it was an unconstitutional taking in violation of the Fourteenth Amendment (applying the Fifth Amendment’s Takings Clause against state action). The Pennsylvania Supreme Court rejected the Company’s argument, concluding that the problems addressed by the Act were genuine and the statute did not result in an actual seizure of property.  

The U.S. Supreme Court disagreed. Justice Holmes wrote that a regulation violates the Takings Clause of the Fifth Amendment, prohibiting government from “tak[ing]” private property “for public use, without just compensation,” when it “goes too far.” Here, the law had gone “too far” because “the act cannot be sustained as an exercise of the police power, so far as it affects the mining of coal under streets or cities in places where the right to mine such coal has been reserved.” Translation: If the new law prohibited the Company from exercising its contractual and property rights without compensating it for the loss, it was a taking. 

The majority acknowledged that regulations may affect the uses and value of property without working a taking. After all, “[g]overnment hardly could go on if, to some extent, values incident to property could not be diminished without paying for every such change in the general law.” Pennsylvania Coal, 260 U.S. at 413. But when a regulation reaches a “certain magnitude” and “destroy[s] previously existing rights of property and contract,” compensation must be provided. Id. This depends on the “particular facts” of a case; a taking will be found when a regulation makes it “commercially impracticable” to use or exercise a property or contract right.  

For property-rights advocates, Pennsylvania Coal has become both a blessing and a curse. Though it subjects governmental abuses and overregulation to constitutional scrutiny, in practice it has proven too easy to manipulate in favor of government overreach. Why is this? Because Holmes’s “too far” formula focused on the extent of the of harm to the aggrieved individual. But without his saying more, the Supreme Court ran in the opposite direction, measuring whether the government had abused its power—a black-and-white approach that does not fit the fact-intensity of takings cases. Had Holmes emphasized the loss to the owner rather than the character of the governmental action, future courts would have had an easier time justifying the latter approach. It was not until Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005), that the Supreme Court held a taking is measured by the damage it inflicts and not whether it substantially advances a legitimate governmental interest. 

Until Lingle, the Supreme Court ran with the old interpretation of Holmes’s “too far” proviso. Here, the Kohler Act went too far because it abrogated the Pennsylvania Coal Company’s property and contract rights—and not in a way that stopped the Company from externalizing the costs to neighbors of a nuisance use on their part. Justice Holmes and the majority did not view coal extraction beneath a residential property to be a public or private nuisance to that one property, even up to the point of destruction—at least not without something more. Pennsylvania Coal, 260 U.S. at 413. 

A few years after deciding Pennsylvania Coal, the Supreme Court returned to regulatory takings with Miller v. Schoene, 276 U.S. 272 (1928). There, Virginia enacted a law ordering the destruction of blighted trees that, while no danger to themselves, were a threat to their unblighted neighbors. This case showed how easy it is to manipulate the Holmesian “formula.” In Miller, it was enough for the Court that the Virginia legislature determined “the destruction of one class of property”—unhealthy trees—to be “of greater value to the public” than the dollar-value the unhealthy tree owners lost in consequence. Id. at 279. Other treatments of Pennsylvania Coal have relied on similarly shaky legislative claims of police-power authority. Subsequent courts have offered more bright-line language to elucidate Holmes’s signature mushiness. Seee.g., Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992).  

Pennsylvania Coal continues today to serve as the intellectual and moral basis for regulatory takings theory, and thus an essential entry into the Supreme Court Hall of Fame. Beyond its legal resilience, Pennsylvania Coal also serves as a reminder of the tremendous changes to constitutional thinking jurists were forced to contend with as the post-Civil War United States gradually evolved into an industrial force beyond the Founders’ imagining. The broader lesson for today is that our Constitution as written is remarkably resilient in the face of new technologies or social mores. Its centuries-old words can be applied to new realities without sacrificing the doctrinal truths at the Constitution’s core.  

But it also testifies to the genius of our Constitution. Our great charter provides categories of protected rights—“property,” “liberty”—that attach as well to the regulation of new technologies as they did to those in existence when the Constitution was first ratified. The Framers knew that human progress creates new meanings for things, but that new definitions need not compromise transcendent principles. So it is that the value of a property interest can be unconstitutionally “taken.” 

Of course, it was a matter of time before the increase in overregulation in the 20th century  created more cases like Pennsylvania Coal, whereby states might take the use and value of private property through regulatory use restrictions, instead of outright condemnations. This is exactly what the Supreme Court warned against when Holmes wrote, “a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”  

In other words, Pennsylvania Coal demonstrates why it is so important for courts to keep in mind the principle the Supreme Court articulated in Armstrong v. United States 364 U.S. 40 (1960), that the Takings Clause “was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”  

Sam Spiegelman is an attorney at Pacific Legal Foundation, a nonprofit legal organization that defends Americans’ liberties when threatened by government overreach and abuse.

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