UCD School of Law Vol. 10 No. 2 Environmental Law Society May 1987 From Pennsylvania Coal to Keystone: The Supreme Court's Evolving View of "Regulatory Takings" by Richard M. Frank Over the past decade, no issue could run afoul of the Takings of environmental law has so cap- Clause of the Fifth Amendment. tured the attention of the United Justice Holmes wrote in Penn- States Supreme Court as has sylvania Coal Co. v. Mahon, "regulatory 260 takings." The Court U.S. 393, 415 (1922) that "If regula- has issued over a dozen opinions tion goes too far it will be during that period which seek to recognized as a taking." In Penn- clarify the slippery concept of sylvania Coal, the Court struck when a regulation becomes so down as such a taking a Penn- excessive as to result in an un- sylvania statute which had pro- compensated taking of private hibited coal mining in a manner property in violation of the Fifth which caused subsidence of land and Fourteenth Amendments to on which certain structures were the U.S. Constitution. The results located. Three generations later, of that judicial effort have been Pennsylvania Coal was still decidedly mixed. But with the characterized as the Court's recent decision in "cornerstone" of federal takings Keystone Bituminous Coal Ass'n jurisprudence-at least until v. DeBenedictis, - U.S. Keystone. __, 55 U.S.L.W. 4326 (March 9, The other crucial Supreme 1987), some much-needed Court precedent in this field is clarification may be at hand. At a Penn Central Transportation Co. minimum, Keystone provides v. City of New York, 438 U.S. 104 government with welcome legal (1978). Penn Central provided for support in its efforts to contain the first time an analytical some of the more dramatic framework in which to view threats to our environment. claims that governmental regula- tion effect an unconstitutional The Origins of "Regulatory taking. There the Court identified Takings" as the relevant factors "[tihe economic impact of the regula- It was 65 years ago that the tion on the claimant .... the ex- U.S. Supreme Court first ar- tent to which the regulation has ticulated the notion that ex- interfered with investment- cessive government restrictions backed expectations, [and] the character of the governmental ac- beneath such structures or areas as a party. While the Penn- tion." 438 U.S. at 124. In Penn to remain in place as a means of sylvania Coal decision contains Central the Court upheld a providing surface support.) The language concerning the alleged municipal landmark ordinance second provision requires a coal public purpose of the statute in- that precluded the owners of company to forfeit its mining per- volved, Keystone characterizes Grand Central Station from mit if its removal of coal causes this "uncharacteristic . ad- building a modern office building damage to these protected sites visory opinion" by Justice atop that venerable site. for which the company has not Holmes. 55 U.S.L.W. at 4330. The criteria identified in Penn promptly compensated the sur- Relying on the stated public pur- Central seems fairly straightfor- face owner. pose of the 1966 Act to ward. Yet they have done little to If this statute sounds vaguely distinguish it from the private clarify that illusory line which familiar, it should. The 1966 Act is controversy at the heart of Penn- separates legitimate exercises of very similar to the Pennsylvania sylvania Coal, Justice Stevens the police power from un- statute invalidated by the concluded that "the similarities constitutional "takings" of Supreme Court decades earlier in [between the two cases] are far private property. Attesting to that the Pennsylvania Coal decision. less significant than the dif- fact are the plethora of regulatory Relying on that precedent, major ferences, and that Pennsylvania takings cases finding their way to bituminous coal operators filed Coal does not control this case." the Supreme Court docket (four suit in federal court in 1982. They 55 U.S.L.W. at 4329. Thus Justice in the 1986-87 term alone), as well mounted a facial challenge to the Stevens effectively transforms as the growing number of such Act, claiming that it violated both the "cornerstone" of takings disputes clogging the state and the Takings Clause and the Con- jurisprudence into mere dictum. lower federal courts. tracts Clause of the U.S. Con- The Keystone decision next The Supreme Court's decision stitution. The stipulated facts in proceeded to apply the Penn Cen- in Keystone represents the latest the case revealed that the Act re- tral criteria to the stated facts. It chapter in this complex tale. quired plaintiff companies to is here that Keystone takes on its leave an aggregate 27 million greatest significance. Whereas Keystone-The Factual tons of coal in the ground, but property owners (and some Background that figure averaged only 2 per- courts) had generally considered cent of the available coal the economic impact of the con- In 1966, the Pennsylvania deposits in individual mines. tested regulation on the property Legislature enactecd the Understandably, plaintiffs owner to be the key variable, the Bituminous Mine Subsidence based their constitutional claim Court for the first time in and Land Conservation Act. The first and foremost upon Penn- Keystone elevated the "character Act was a reaction to a rather sylvania Coal. Nevertheless, both of the governmental action" dramatic environmental and safe- the District Court and the Court criterion to primary significance. ty hazard emanating from the of Appeals upheld the Act, fin- The Court pointed out that the bituminous coal fields of western ding that case distinguishable. 1966 Subsidence Act was Pennsylvania. Underground coal The coal companies were suc- predicated upon detailed mining often causes ground sub- cessful in obtaining Supreme legislative findings, and that the sidence of devastating propor- Court review, with former U.S. legislative purposes involved tions. It results in structural Solicitor General Rex Lee serving "were genuine, substantial and damage to buildings, makes va- as their counsel of record. legitimate . ." The majority opi- cant land impossible to develop, nion notes: destroys groundwater and sur- The Supreme Court's Decision [T]he Commonwealth is acting face ponds and-given its un- in Keystone to protect the public interest in predictable nature-can even health, the environment, and threaten human life. Recognizing In a 5-4 decision authored by the fiscal integrity of the area. the potential for such damage, Justice Stevens, the Supreme That private individuals [who coal companies purchased ac- Court sustained the lower court previously contracted away cess and mining rights from rulings and upheld the Act. The their surface rights to the coal thousands of Pennsylvania sur- manner in which the majority companies] erred in taking a face owners many years ago. reached that result suggests that risk cannot estop the State The Pennsylvania statute at- Keystone may be the most impor- from exercising its police tempts to minimize the threat of tant takings precedent since power to abate activity akin to subsidence in a variety of ways. Penn Central. It also calls into a public nuisance. Most important are two re- serious question the primacy of 55 U.S.L.W. at 4331. Keystone quirements: the first prohibits the Pennsylvania Coal decision. relies on several pre- mining that causes subsidence Justice Stevens first treated Pennsylvania Coal cases that damage to public buildings, and distinguished Pennsylvania upheld government's power to private dwellings and cemetaries Coal. He noted that the earlier terminate commercial operations that were in place when the Act case involved a private property found to be offensive, e.g., was passed. (Pennsylvania has dispute between a coal company breweries, brothels, etc. Many interpreted this provision to re- and a surface landowner; no property owners and commercial quire 50 percent of the coal governmental entity was named interests had argued that this line of cases had been effectively had chosen to mount a facial to consider the 27 tons of unex- overruled by Pennsylvania Coal challenge to the statute rather ploited coal in isolation; instead, and Penn Central. The Supreme than an "as applied" attack. The he opined, it had to be viewed in Court expressly rejected this in- Supreme Court in recent years conjunction with the companies' terpretation in Keystone: has repeatedly spurned such property interest as a whole: Under our system of govern- facial takings challenges as lack- Because our test for regulatory ment, one of the state's ing a concrete set of facts taking requires us to compare primary ways of preserving the against which the Court can ap- the value that has been taken public wealth is restricting the ply the Penn Central analysis from the property with the uses individuals can make of with precision. "[W]e have value that remains in the pro- their property . These recognized an important distinc- perty, one of the critical ques- restrictions are "properly tion between a claim that the tions is determining how to treated as part of the burden of mere enactment of a statute con- define the unit of property common citizenship" . stitutes a taking and a claim that "whose value is to furnish the Long ago it was recognized the particular impact of govern- denominator of the fraction." that "all property in this coun- mental action on a specific piece Id. try is held under the implied of property requires the payment Having construed the obligation that the owner's use of just compensation." 55 "denominator" in the broadest of it shall not be injurious to U.S.L.W. at 4333. Stating what by possible manner, Justice the community" ....[T]he Tak- now should be obvious to proper- Stevens' conclusion was not sur- ings Clause did not transform ty owners, the Court concluded prising: that principle to one that re- this portion of its analysis by The 27 tons of coal do not con- quires compensation when- stating that property owners stitute a separate segment of ever the State asserts its "face an uphill battle in making a property for takings law pur- power to enforce it." facial attack on [statutes] as a poses ....There is no basis for 55 U.S.L.W.