KEYSTONE BITUMINOUS COAL ASSN. ET AL. v. DeBENEDICTIS, SECRETARY,
PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL RESOURCES, ET AL.
No. 85-1092
SUPREME COURT OF THE UNITED STATES
480 U.S. 470; 107 S. Ct. 1232; 94 L. Ed. 2d 472; 1987 U.S. LEXIS 2880; 55 U.S.L.W. 4326;
25 ERC (BNA) 1649; 93 Oil & Gas Rep. 300
November 10, 1986, Argued
March 9, 1987, Decided
PRIOR HISTORY: CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD
CIRCUIT.
DISPOSITION: 771 F.2d 707, affirmed.
DECISION: Pennsylvania statute restricting mining operations in order to prevent
subsidence damage held neither to constitute "taking" of property under Fifth
Amendment nor to violate contracts clause.
SUMMARY: In order to control subsidence damage caused by mining operations, a
Pennsylvania statute and implementing regulations required coal mine operators (1) to
leave a certain amount of coal in the ground for support under certain surface structures,
including publicly used buildings, cemeteries, and perennial streams, and (2) to repair or
pay for the repair of subsidence damage to such structures, on pain of losing their mining
permits, even if the surface owners or their predecessors had waived any claim to such
damages. Individual coal companies and an industry association filed an action in the
United States District Court for the Western District of Pennsylvania in which they
claimed that the statute was invalid on its face and sought to enjoin its enforcement, on
the grounds that these provisions (1) constituted an impairment of contract obligations,
in violation of the contract clause of the Federal Constitution (Art I, 10, cl 1), by not
allowing mine operators to enforce the damage waivers, and (2) constituted a
"taking" of property without just compensation, in violation of the Fifth
Amendment, because they deprived the mine operators of the "support estate"
which state law recognized as a property interest separate from surface and mineral
rights. The District Court granted summary judgment in favor of the defendant state
officials, as it held that the statute (1) did not violate the contract clause, though it
did impair contractual relations, because it was reasonably related to a legitimate public
purpose, and (2) did not effect a "taking" within the meaning of the takings
clause because it did not destroy the entire bundle of rights in the "support
estate" and, unlike the similar statute invalidated in Pennsylvania Coal Co. v Mahon
(1922) 260 US 393, had the expressed purpose of protecting public health and safety (581 F
Supp 511). In affirming that judgment, the United States Court of Appeals for the Third
Circuit (1) agreed that the Pennsylvania Coal case was not controlling, and (2) ruled that
the "support estate" was only part of a broader bundle of rights which
invariably included either surface or mineral rights and which had not been entirely
taken.
On certiorari, the United States Supreme Court affirmed. In an opinion by Stevens, J.,
joined by Brennan, White, Marshall, and Blackmun, JJ., it was held (1) that the mine
operators had not sustained their heavy burden of showing that the statute on its face
effects a "taking" of property within the meaning of the takings clause, since
the record in this case, unlike that in Pennsylvania Coal Co. v Mahon, supra, (a) showed
that the state had acted to arrest what it perceived to be a significant threat to the
common welfare, similar to a public nuisance, and not merely to balance the private
economic interests of coal companies against the private interests of the surface owners,
and (b) did not support a finding that the statute makes it impossible for the mine
operators to profitably engage in their business or unduly interferes with their
investment-backed expectations; (2) that neither the "support estate" nor the
small percentage of the available coal which the statute requires to be kept in the ground
constitutes a separate segment of property for purposes of takings clause analysis; and
(3) that the statute does not violate the contracts clause, despite its impairment of the
waiver contracts, because (a) the state has a strong public interest in preventing
subsidence damage, and (b) the court will not second-guess the state's determination that
imposing liability on mine operators is the most appropriate way of dealing with the
problem.
Rehnquist, Ch. J., joined by Powell, O'Connor, and Scalia, JJ., dissented, expressing the
view that the statute effects a taking of the mine operators' property without just
compensation, since (1) the public purposes supporting this statute do not distinguish it
from the statute in Pennsylvania Coal Co. v Mahon, supra, which also served public
interests; (2) the statute is not within the proper scope of a nuisance exception to
takings analysis, as it prevents a legal and essential use of the property, reflects
primarily economic rather than safety concerns, and completely extinguishes the value of
discrete parcels of property; and (3) both the coal which the statute requires to be left
in place and the "support estate" recognized by state law constitute
identifiable and separable property interests which are "taken" as a result of
the statute.***
SYLLABUS: Section 4 of Pennsylvania's Bituminous Mine Subsidence and Land
Conservation Act (Act) prohibits coal mining that causes subsidence damage to pre-existing
public buildings, dwellings, and cemeteries. Implementing regulations issued by
Pennsylvania's Department of Environmental Resources (DER) require 50% of the coal beneath
§ 4-protected structures to be kept in place to provide surface support, and extend §
4's protection to water courses. Section 6 of the Act authorizes the DER to revoke a
mining permit if the removal of coal causes damage to a § 4-protected structure or area
and the operator has not within six months repaired the damage, satisfied any claim
arising therefrom, or deposited the sum that repairs will reasonably cost as security.
Petitioners, who own or control substantial coal reserves under Act-protected property,
filed suit in Federal District Court seeking to enjoin the DER from enforcing the Act and
regulations. The complaint alleged, inter alia, that Pennsylvania recognizes a
separate "support estate" in addition to the surface and mineral estates in
land; that approximately 90% of the coal petitioners will mine was severed from surface
estates between 1890 and 1920; that petitioners typically acquired waivers of any damages
claims that might result from coal removal; that § 4, as implemented by the 50% rule, and
§ 6 violate the Fifth Amendment's Takings Clause; and that § 6 violates Article I's
Contracts Clause. Because petitioners had not yet alleged or proved any specific injury
caused by the enforcement of §§ 4 and 6 or the regulations, the only question before the
District Court was whether the mere enactment of §§ 4 and 6 and the regulations
constituted a taking. The District Court granted DER's motion for summary judgment on this
facial challenge. The Court of Appeals affirmed, holding that Pennsylvania Coal Co.
v. Mahon, 260 U.S. 393, does not control; that the Act does not effect a taking;
and that the impairment of private contracts effectuated by the Act was justified by the
public interests protected by the Act.
Held:
1. Petitioners have not satisfied their burden of showing that §§ 4 and 6 and the
regulations' 50% rule constitute a taking of private property without compensation in
violation of the Fifth and Fourteenth Amendments. Pennsylvania Coal does not
control this case because the two factors there considered relevant -- the Commonwealth's
interest in enacting the law and the extent of the alleged taking -- here support the
Act's constitutionality.
(a) Unlike the statute considered in Pennsylvania Coal, the Act is intended to
serve genuine, substantial, and legitimate public interests in health, the environment,
and the fiscal integrity of the area by minimizing damage to surface areas. None of the
indicia of a statute enacted solely for the benefit of private parties identified in Pennsylvania
Coal are present here. Petitioners' argument that § 6's remedies are unnecessary to
satisfy the Act's public purposes because of the Commonwealth's insurance program that
reimburses repair costs is not persuasive, since the public purpose is served by deterring
mine operators from causing damage in the first place by making them assume financial
responsibility. Thus, the Commonwealth has merely exercised its police power to prevent
activities that are tantamount to public nuisances. The character of this governmental
action leans heavily against finding a taking.
(b) The record in this case does not support a finding similar to the one in Pennsylvania
Coal that the Act makes it impossible for petitioners to profitably engage in their
business, or that there has been undue interference with their investment-backed
expectations. Because this case involves only a facial constitutional challenge, such a
finding is necessary to establish a taking. However, petitioners have never claimed that
their mining operations, or even specific mines, have been unprofitable since the Act was
passed; nor is there evidence that mining in any specific location affected by the 50%
rule has been unprofitable. In fact, the only relevant evidence is testimony indicating
that § 4 requires petitioners to leave 27 million tons (less than 2%) of their coal in
place. Petitioners' argument that the Commonwealth has effectively appropriated this coal
since it has no other useful purpose if not mined fails because the 27 million tons do not
constitute a separate segment of property for taking law purposes. The record indicates
that only 75% of petitioners' underground coal can be profitably mined in any event, and
there is no showing that their reasonable "investment-backed expectations" have
been materially affected by the § 4-imposed duty. Petitioners' argument that the Act
constitutes a taking because it entirely destroys the value of their unique support estate
also fails. As a practical matter, the support estate has value only insofar as it is used
to exploit another estate. Thus, the support estate is not a separate segment of property
for takings law purposes since it constitutes just one part of the mine operators' bundle
of property rights. Because petitioners retain the right to mine virtually all the coal in
their mineral estates, the burden the Act places on the support estate does not constitute
a taking. Moreover, since there is no evidence as to what percentage of petitioners'
support estates, either in the aggregate or with respect to any individual estate, has
been affected by the Act, their Takings Clause facial challenge fails.
2. Section 6 does not impair petitioners' contractual agreements in violation of Article
I, § 10, of the Constitution by denying petitioners their right to hold surface owners to
their contractual waivers of liability for surface damage. The Contracts Clause has not
been read literally to obliterate valid exercises of the States' police power to protect
the public health and welfare. Here, the Commonwealth has a significant and legitimate
public interest in preventing subsidence damage to the § 4-protected buildings,
cemeteries, and water courses, and has determined that the imposition of liability on coal
companies is necessary to protect that interest. This determination is entitled to
deference because the Commonwealth is not a party to the contracts in question. Thus, the
impairment of petitioners' right to enforce the generations-old damages waivers is amply
justified by the public purposes served by the Act.***