Petition for Writ of Certiorari — Machipongo Land & Coal Co. v. Pennsylvania
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O02 321 aus 27 2002
No. 02- OFFICE OF THE CLR
IN THE
Supreme Court of the United States
MACHIPONGO LAND AND COAL CO., INC., VICTOR E.
ERICKSON TRUST and JOSEPH NAUGHTON,
Petitioners,
V.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF
ENVIRONMENTAL RESOURCES, THE ENVIRONMENTAL
QUALITY BOARD and ARTHUR A. DAVIS,
Secretary of Environmental Resources,
Respondents.
On PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF PENNSYLVANIA
PETITION FOR A WRIT OF CERTIORARI
JoeL R. Burcat CarLA. BELIN, JR.
CHRISTINE STEIB STICKLER Counsel of Record
SAUL Ewinc LLP BELIN & KUBISTA
Two North Second Street P.O. Box 1
7" Floor 15 North Front Street
Harrisburg, PA 17101 Clearfield, PA 16830
(717) 257-7506 (814) 765-8972
Counsel for Petitioners
175310 ce)
COUNSEL PRESS \
(800) 274-3321 * (800) 359-6859
i
QUESTIONS PRESENTED
In this regulatory takings case, the trial court found a taking
of the Petitioners’ coal estates in an area in Clearfield County,
Pennsylvania. The Pennsylvania Supreme Court reversed and
determined that, for purposes of the takings analysis,
Pennsylvania property law providing for the unique status of
the coal estate was abolished by this Court in Keystone
Bituminous Coal Ass'n v. DeBenedictis. The Pennsylvania
Supreme Court also refused to find that the regulated parcel
was the proper denominator in the takings fraction in a manner
contrary to Penn Central Transportation Co. v. City of New
York, Keystone Bituminous Coal Ass'n v. DeBenedictis and the
trial court’s findings. Furthermore, it decided that the
Respondents could present the defense of a nuisance even though
the record established the state had permitted mining throughout
the area both before and after the promulgation of the regulation,
and even though Respondents admitted they did not present
any evidence at trial that Petitioners would not receive a mining
permit. Finally, the Pennsylvania Supreme Court refused to
review a clearly erroneous factual determination made
by the Commonwealth Court in dismissing one of the takings
claims, even though there was no intermediate appellate court.
The questions presented for review are:
1. Is the proper denominator in the takings fraction from a
vertical perspective the coal estate where the regulation prohibits
all mining of coal in a 555 acre tract and the state’s property
law recognizes the coal estate as a separate and unique interest
in land?
2. Is the proper denominator in the takings fraction from a
horizontal perspective the coal estate in the regulated parcel
where it has independent economic viability as it can be mined
profitably as a separate and independent unit?
il
3. May a state avoid the payment of just compensation for
a regulatory taking resulting from the adoption of a regulation
that prohibits the mining of coal, based upon purported
background principles of its nuisance law, where the state has
permitted others to mine coal in the same area both before and
after the adoption of the regulation?
4. Where there was no intermediate appellate court, should
the lower court have used the standard of review set forth in
Easley v. Cromartie to evaluate the trial court’s factual findings
in its dismissal of one of the regulatory takings claims under
the Fifth Amendment?
iii
STATEMENT PURSUANT TO RULE 29.6
Petitioner Machipongo Land and Coal Co., Inc. states that
it has no corporate parents and that it has no publicly-traded
stock.
iv
TABLE OF CONTENTS
8 ee
Staterrent Pursuant to Rule 29.6 ...............
THRO OE BOGIES nooo gk ivwckc he cenvcsenees
Petition for Writ of Certiorari ..................
Opinions Below ............... aed ei dea a he
Statement of Jurisdiction .....................
A.
B.
Factual Background ............ceee00:
Judicial Proceedings ce ecb k ee acre ae ee
Reasons for Granting the Writ .................
I.
The Proper Denominator In The Takings
Fraction From A Vertical Perspective Is The
Coal Estate Where A Regulation Prohibits All
Mining Of Coal In A555 Acre Tract And The
State’s Property Law Recognizes The Coal
Estate As A Separate And Unique Interest In
SAE: «-bccecncee cen akesegenanaveeeaee
10
Contents
A. The Issue And The are 12
B. The Appropriateness Of Resolving The
Issue Here ....----eeeceererrreeees 19
Il. The Proper Denominator In The Takings
Fraction From A Horizontal Perspective Is
The Coal Estate In The Regulated Parcel
Where It Has Independent Economic Viability
As It Can Be Mined Profitably As A Separate
And Independent Unit. ...------sser00'? 19
Ill. A State May Not Avoid The Payrnent Of Just
Compensation For A Regulatory Taking
Resulting From The Adoption Of A
Regulation That Prohibits The Mining Of
Coal, Based Upon Purported Background
Principles Of Its Nuisance Law, Where The
State Has Permitted Others To Mine Coal In
The Same Area Both Before And After The
Adoption Of The Regulation ......-----: 25
IV. Where There Was No Intermediate Appellate
Court, The Lower Court Should Have Used
The Standard Of Review Set Forth In Easley
y. Cromartie To Evaluate The Trial Court’s
Factual Findings In Its Dismissal OfA
Regulatory Takings Claim Under The Fifth
Amendment ......---sseceresrerreee 27
COmeIROR ..n cc ce cccsccussoeuvsessereserees 30
vi
Page
TABLE OF CITED AUTHORITIES
FEDERAL CASES
Andrus v. Allard, 444 U.S. 51, 100 S. Ct. 318,
G2 En. Wes EOP LEO TED ia Ve cenancieehaeeeus 18
Armstrong v. United States, 364 U.S. 40, 80 S. Ct.
13565, 4 ©. BG. BB oer Cee vcs hkeh caceees 20
ASARCO Inc. v. Kadish, 490 U.S. 605, 109 S. Ct.
2037, 104 L. BG. 26 GIG CIGGF) 2. cc ccessvess 7
Board of Regents of State Colleges v. Roth, 408 U.S.
564, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972) ... 12
Bush v. Gore, 531 U.S. 98, 121 S. Ct. 525, 148
L, BG. 26 SOS LOOSE! cv iccnkccctcusuneeveses 16
Cox Broad. Corp. v. Cohn, 420 U.S. 469, 95 S. Ct.
1029, 43 L. BG. DE Fae Geer ee «6 cscdecsarneen 6
District Intown Properties Ltd. P ship v. District of
Columbia, 198 F.3d 874 (D.C. Cir. 1999) ...... 8
Easely v. Cromartie, 532 U.S. 234, 121 S. Ct. 1452,
149 L. Ed. 2d 430, rehearing denied, 532 U.S.
1076, 121 S. Ct. 2239, 150 L. Ed. 2d 228 (2001)
re ee ee ce ii, 9, 27, 28, 29, 30
Florida Rock Indus., Inc. v. United States, 791 F.2d
893 (Fed. Cir. 1986) cert. denied, 479 U.S. 1053,
107 S. Ct. 926, 93 L. Ed. 2d 978 (1997) ....... 8
vii
Cited Authorities
Page
Johnson v. Muelberger, 340 U.S. 581, 71S. Ct. 474,
95 L. Ed. 552 (1951) ..---eeeerrrrrr 6
Keystone Bituminous Coal Ass'n. v. DeBenedictis,
480 U.S. 470, 107 S. Ct. 1232, 94 L. Ed. 2d 472
PN cen xed vans coevns ees sr eres ey)? passim
Loveladies Harbor, Inc. Vv. United States, 28 F.3d
1171 (Fed. Cir. IDOE) .nccccccvcccesevcccces 8
Lucas v. South Carolina Coastal Council, 505 USS.
1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798
OMEN, pricsnacebactaueresaee teeNets yeh passim
Palazzolo v. Rhode Island, 533 U.S. 606, 121 S. Ct.
2448, 150 L. Ed. 2d 592 (2001) ...- 10, 11, 20, 24, 26
Penn Central Transp. Co. v. City of New York, 438
U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631
SOUND Sis a eeinn ch aees verese eects passim
Pennsylvania Coal Co. V. Mahon, ‘260 U.S. 393,
43 S. Ct. 158, 67 L. Ed. 322 (1922) ....---- 11, 14, 17
Plymouth Coal Co. ¥. Commonwealth of
Pennsylvania, 232 U.S. 531, 34 S. Ce. 359,
58 L. Ed 713 (1914) .----ee errr 11, 14, 15
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104
S. Ct. 2862, 81 L. Ed. 2d 815 (1984) ....---+-> 12, 16
Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l
Planning Agency, 122 S. Ct. 1465, 152 L. Ed. 2d
SUF CEES ca nx sc cneercevceesoessenseo® 10, 11, 20
Vili
Cited Authorities
Page
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449
U.S. 155, 101 S. Ct. 446, 66 L. Ed. 2d 358
SEED sas 0c Wh a Ss s waren we les eae ew oe 12, 16,17
Whitney Benefits, Inc. v. United States, 926 F.2d 1169
(Fed. Cir.), cert. denied, 502 U.S. 952, 112 S. Ct.
406, 116 L. Ed. 2d 354(1991) ..... 12, 15, 16, 19, 26
STATE CASES
Bannard v. New York State Natural Gas Corp.,
448 Pa. 239, 293 A.2d 41 (1972) ............. 17
Chartiers Block Coal Co. v. Mellon, 152 Pa. 286,
BP re EO bh cdSbne uc hediatcweunereee 17
Commonwealth ex. rel. Keator v. Clearview Coal
Co., 256 Pa. 328, 100 A. 820 (1917) .......... 17
Delaware & Hudson Canal Co. v. Hughes, 183 Pa.
Ss Oe A PP EE 85 ove nkkodusas eeneee ee 17
Machipongo Land & Coal Co. v. Commonwealth,
FOR ee FOE Gs 0k 0 ccadbkseoreunnes passim
Machipongo Land & Coal Co. v. Commonwealth,
719 A.2d 19 (Pa. Cmwith. 1998) ........ 1, 22, 28, 29
Machipongo Land & Coal Co. v. Commonwealth,
544 Pa. 271, 676 A.2d 199 (1996) ............ 6-7
McClimans v. Board of Supervisors of Shanango
Township, 107 Pa. Cmwlth. 542, 529 A.2d 562
GROPTS 65 ses 00dkeenen esandeesscdasaeuneeces 18
ix
Cited Authorities
Page
Miller & Son Paving, Inc. v. Plumstead Township,
552 Pa. 652, 717 A.2d 483 (1998) ...-.e seers 17-18
Smith v. Glen Alden Coal Co., 347 Pa. 290, 32 A.2d
227 (1943) oc cccvcnccdovcscressseseroreres 17
UNITED STATES CONSTITUTION
U.S. Const. Amend. V ...-----ssssrrrrrr passim
U.S. Const. Amend. XIV, | Greer 2
FEDERAL STATUTE
SOUS IGG cases dzcsesstocesrorsrersss 1,6
STATE STATUTE
$2 PS. § 1396 ....ccerccccccrererrrrrrrrr ne’ 5
STATE REGULATION
25 Pa. Code § 86.130(b)(14) ..--- eee reer 3,5
Cited Authorities
Page
OTHER AUTHORITIES
Richard A. Epstein, Jakings: Descent and
Resurrection, 1987 Sup.Ct. Rev. 1 (1987) ..... 24
John E. Fee, Unearthing the Demoninator in
Regulatory Takings Claims, 61 U. Chi. L.Rev.
Soo ae re errr es err ee 22, 24
Frank I. Michelman, Property, Utility and Fairness:
Comments on the Ethical Foundations of ‘Just
Compensation” Law, 80 Harv. L. Rev. 1165
bo re rere er mr re erie 16, 21-22, 24
xi
TABLE OFAPPENDICES
Appendix A — Opinion Of The Supreme Court Of
Pennsylvania, Middle District, Decided May 39,
OO. ccc cs unndey pene eeea eee eo oe
Appendix B — Notice Of The Commonwealth Court
Of Pennsylvania Dated October 19, 2000 ....--
Appendix C — Order Of The Commonwealth Court
Of Pennsylvania Dated September 25, 2000 ....
Appendix D — Adjudication And Decree Nisi
And Order Of The Commonwealth Court Of
Pennsylvania Dated August 21, / <n e
Appendix E — Order Of The Commonwealth Court
Of Pennsylvania Denying Motion In Limine Dated
Tecember 28, 1999 .---0<--eeere rrr
Appendix F — Memorandum Opinion And Order
Of The Commonwealth Court Of Pennsylvania
Dated And Filed October 28, 1999 --------°°:
Appendix G — Opinion And Order And Dissenting
Opinion Of The Commonwealth Court Of
Pennsylvania Dated And Filed September 30,
OR ee ees nat ac cael
Page
la
52a
53a
55a
98a
99a
1
PETITION FOR WRIT OF CERTIORARI
Machipongo Land and Coal Co., Inc., Victor E. Erickson
Trust and Joseph Naughton respectfully petition for a wnt of
certiorari to review the judgment of the Supreme Court of
Pennsylvania.
OPINIONS BELOW
The opinion of the Supreme Court of Pennsylvania is
reported at 799 A.2d 751 (Pa. 2002); it appears at Appendix A
to the petition. Petitioners’ Appendix (Pet. App.) la— 51a. Except
as noted below, the opinions and rulings of the
trial court (Pennsylvania Commonwealth Court) were not
published. The entry of judgment in the Commonwealth Court,
appears at Appendix B. Pet. App. 52a. A revision
to the Commonwealth Court’s Adjudication and Decree
Nisi, appears at Appendix C. Pet. App. 53a — 54a.
The Commonwealth Court’s Adjudication and Decree Nisi,
is at Appendix D. Pet. App. 55a — 97a. The Commonwealth
Court’s order denying a motion in limine is at Appendix E.
Pet. App. 98a. The Commonwealth Court’s memorandum
opinion regarding nuisance is at Appendix F. Pet. App. 99a —
108a. Commonwealth Court’s opinion and order regarding
summary judgment is reported at 719 A.2d 19 (Pa. Cmwith.
1998) and appears at Appendix G Pet. App. 109a — 14 1a.
STATEMENT OF JURISDICTION
The judgment of the Pennsylvania Supreme Court was
entered on May 30, 2002. Pet. App. 51a. This Court has
jurisdiction under 28 U.S.C. § 1257(a).
CONSTITUTIONAL PROVISIONS AT ISSUE
The Fifth Amendment to the United States Constitution
provides in pertinent part: “nor shall private property be
taken for public use, without just compensation.” U.S. Const.
Amend. V.
Section 1 of the Fourteenth Amendment to the United States
Constitution provides in pertinent part: “nor shall any State
2
deprive any person of life, liberty, or property, without due
process of law; nor deny to any person within its jurisdiction
the equal protection of the laws.” U.S. Const. Amend. XIV, § 1.
STATEMENT OF THE CASE
Since as early as 1915, Petitioners Machipongo Land and
Coal Co., Inc., the Victor E. Erickson Trust and Joseph Naughton
(collectively, Petitioners or the Coal Owners) have owned land
in Clearfield County, Pennsylvania, for the express purpose of
mining their coal estates. In 1992, the Commonwealth of
Pennsylvania, Department of Environmental Resources
(Commonwealth of Pennsylvania or DER), Environmental
Quality Board (EQB), and Arthur A. Davis, Secretary of
Environmental Resources (Secretary Davis) purportedly to
protect a small stream, promulgated a regulation that declared
all land within a 555 acre area as “unsuitable for mining.” Under
the regulation, the Coal Owners cannot surface mine any of
their coal within the regulated area, nor can they deep mine the
coal as it is not accessible except from within the regulated
area. The effect of the regulation is to completely deprive the
Petitioners of the value of their coal estates in the 555 acre area.
The Coal Owners filed this regulatory takings action against
the Commonwealth, the EQB and Secretary Davis in the
Commonwealth Court of Pennsylvania alleging that the
Respondents’ actions effected a compensable taking of their
property for public use within the meaning of the Fifth
Amendment to the United States Constitution. A trial was held
to determine the effect of this regulation on Petitioners’ coal
estates. After trial, the Pennsylvania Commonwealth Court
determined that the regulation effected a taking of Petitioners’
coal estates and overturned the regulation because it violated
the Fifth Amendment to the Constitution. Following an appeal,
the Pennsylvania Supreme Court reversed and remanded.
The Petitioners now seek relief from this Court for the federal
constitutional errors committed by the court below.
A. Factual Background
On May 23, 1992, Respondent the EQB, in coordination
“vith Respondents DER and Secretary Davis, promulgated a
regulation, 25 Pa. Code § 86.130(b)(14) (the Regulation).
Pet. App. 142a— 143a. The Regulation designated 555 acres of
the Goss Run watershed, located in Woodward Township,
Clearfield County, Pennsylvania, as “Unsuitable for Mining”
(UFM). Excepted from the Regulation’s designation were two
pre-existing surface coal mines located within the Goss Run
watershed (the regulated area is referred to as the Goss Run
UFM Area). Jd. Goss Run is a narrow stream, 0.9 miles in length
and barely a foot or two wide in places. R. 260a. Goss Run
discharges into the Brisbin Dam, a 2.5 acre man-made
impoundment located at the southern border of the Goss Run
UFM Area. Jd. At least ten abandoned deep mine entries are
located within the Goss Run UFM Area and, in fact, a significant
portion of the water in Goss Run begins as mine discharges
from many of these abandoned mines. R. 260a-261a. The Goss
Run UFM Area is surrounded on three sides — west, north
and east — by existing surface mines. See Map, Pet. App. 144a.
Two of those surface mines, the Cowfer and Bonita mines, are
actually located within the Goss Run Watershed. The effect of
the Regulation was to prohibit the removal of any coal within
the area delineated by the Regulation. .
Petitioner Machipongo owns approximately 373 acres of
coal estate, as well as the surface estate, within in the UFM
Area. R. 260a. Outside the UFM Area, Machipongo also owns
200 acres in fee simple (i.e. the surface estate and the coal estate)
and over 1000 acres of coal estate in tracts thoughout Clearfield
County. R. 260a, 405a, 413a. Erickson/Naughton own
approximately 52 acres of coal estate within the UFM Area.
R. 260a, 265a. Outside the UFM Area, Erickson/N aughton also
own approximately 1150 acres in fee simple (i.e. the surface
estate and coal estate) and 250 acres of the coal estate in
Clearfield County. R. 260a, 405a, 413a. There was no evidence
in the record that these lands comprised single parcels.
[the Coal Owners’) title Subject to obtaining a permit from the
Department [of Environmental Resources].” R. 259.
Machipongo acquired its Property as early as 1915.
R. 1037a. In 1999, the Commonwealth Respondents also
Coal was taken by virtue of the Regulation:
Reserves Tons of Coal Record Reference
Machipongo Surface 355,800 tons = R. 665a
Machipongo
Underground 1,287,300 tons R. 1007a
Erickson/Naughton
Surface 359,100 tons R. 663a
B. Judicial Proceedings
On April 3, 1989, the Brisbin Recreational Board and the
Locust Grove Sportsmen Club filed a petition with DER
seeking to have a certain area of Woodward and Decatur
Townships, Clearfield County, declared UFM under the authority
of Section 4.5(b) of the Surface Mining Conservation
and Reclamation Act (“PaSMCRA”), Act of May 31, 1945,
P.L. 1198, as amended, 52 P.S. § 1396.4e(b). R. 257a. After
DER conducted its study, DER recommended to the EQB that
the Goss Run Watershed be designated as UFM. This was a
smaller area than that which was originally requested for
designation as UFM in the petition. R. 258a-259a. On May 23,
1992, the EQB published notice, 22 Pa. Bull. 2719 (May 23,
1992) and the designation was finally effectuated by
an amendment to the Regulation set forth in 25 Pa. Code
§ 86.130(b)(14). See Pet. App. 142a-143a.
As a result of the regulatory taking of their property, the
- Coal Owners filed a timely Complaint (called a Petition for
Review) to the Pennsylvania Commonwealth Court (the tnal
court) alleging that they suffered a compensable taking of their
property. See Amended Petition for Review, § 29 (“That Section
8 of [PaSMCRA] violates the Pennsylvania and United States
Constitutions in that it does not provide for just compensation
for land owners whose coal reserves are taken as a result
of a designation of an area as unsuitable for mining.”) and ¥ 30
(“That the regulations adopted to implement Section 8 are, or
have become by application . . . contrary to the. . . constitutions
of the United States and Pennsylvania.”).
From 1992 through 1999, the Coal Owners and
Respondents engaged in extensive preliminary litigation in the
courts of Pennsylvania. Finally, on August 21, 2000, following
a trial, the Commonwealth Court issued an Adjudication and
Decree Nisi which invalidated 25 Pa. Code § 86.130(b)(14)
as applied to the proposed Erickson/Naughton surface mine and
the proposed Machipongo underground mine, but not as applied
to the proposed Machipongo surface mine. Pet. App. 95a.
6
In rendering its decision, the Commonwealth Court found that
the Erickson/Naughton surface reserves and the Machipongo
underground reserves were economically viable as stand-alone
mines and struck the Regulation as applied to those mines.
Pet. App. 79a-80a, 93a, 95a. Despite clear evidence to the
contrary, the court, however, found that the Machipongo surface
reserves were insufficient in quantity to sustain mining.
Pet. App. 80a. The court then stated that any damages for a
temporary taking would be recoverable “through the normal
emi ent domain process.” Pet. App. 96a. Following post-trial
moticns, see Pet. App. 53a — 54a, final judgment was entered
October 19, 2000. Pet. App. 52a.
On May 30, 2002, the Pennsylvania Supreme Court (lower
court) largely reversed the Commonwealth Court and remanded
the case for an additional trial consistent with the tests
established by the Pennsylvania Supreme Court. Pet. _ la-
51a; 799 A.2d 751 (2000).'
1. This Court has appellate jurisdiction under 28 U.S.C. § 1257.
The Pennsylvania Supreme Court has interpreted the decisions of this
Court and issued a final determination establishing tests for determining
the relevant parcel for the purposes of a Fifth Amendment takings
analysis. Even though further proceedings are contemplated, the decision
is a final determination within the meaning of section 1257 because all
federal legal questions have been conclusively decided and cannot be
affected by the further state court proceedings. See ASARCO Inc. v.
Kadish, 490 U.S. 605, 109 S. Ct. 2037, 104 L. Ed. 2d 696 (1989);
see also Johnson v. Muelberger, 340 U.S. 581, 71 S. Ct. 474, 95 L. Ed.
552 (1951). Regardless of the outcome of the state court’s future
_ determinations on the factual issues, the federal issues already and finally
decided by the Pennsylvania Supreme Court “will survive and require
decision.” Cox Broad. Corp. v. Cohn, 420 U.S. 469, 480, 95 S. Ct. 1029,
1038, 43 L. Ed. 2d 328 (1975). We are aware that this Court has
previously stated that eminent domain proceedings are not final unless
the state judgment addresses both a taking and the payment of just
compensation. /d. at 479 n.6, 95 S. Ct. at 1038 n.6. However, in this
case, the Pennsylvania Supreme Court specifically ruled that its
jurisdiction was based on the state’s police power and not the power of
eminent domain. Machipongo Land & Coal Co. v. Commonwealth, 544
(Cont'd)
cern ia neces aaa
7
The Pennsylvania Supreme Court acknowledged the two
tests used to assess regulatory takings claims — i.e. the
categorical takings analysis of Lucas v. South Carolina Coastal
Council, 505 U.S. 1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798
(1992) and the partial takings analysis of Penn Central Transp.
Co. v. City of New York, 438 U.S. 104, 98S. Ct. 2646, 57 L. Ed.
2d 631 (1978). It noted that under either test, identifying the
relevant parcel was the critical threshold issue. Pet. App. 28a;
799 A.2d at 765.
The Commonwealth Court, relying on over 100 years of
Pennsylvania common law and precedent, recognized that the
coal estate is a separate and unique estate in land and found that
estate to be the relevant parcel from a vertical perspective. The
Pennsylvania Supreme Court, however, held that this Court had
abolished Pennsylvania’s separate recognition of estates in
Keystone Bituminous Coal Ass 'n. v. DeBenedictis, 480 U.S. 470,
107 S. Ct. 1232, 94 L. Ed. 2d 472 (1987). Thus, even though
the Coal Owners were only claiming a loss as to their coal estates,
the Pennsylvania Supreme Court ignored its background
principles of Pennsylvania law and based upon DeBenedictis
ruled that “‘in this case, the relevant parcel cannot be vertically
segmented and must be defined to include both the surface and
mineral rights.” Pet. App. 34a; 799 A.2d at 768.
.
Next, the Pennsylvania Supreme Court addressed the
relevant parcel from a horizontal perspective and rejected the
approach of the Commonwealth Court and the Coal Owners
(that had defined the relevant parcel as the coal estate in the
regulated area) as “overly restrictive” and the approach of the
Commonwealth (that had suggested that the relevant parcel be
defined as all of the Coal Owners’ property in Clearfield County)
as “overly inclusive.” Id. Instead, the Pennsylvania Supreme
(Cont'd)
Pa. 271, 276, 676 A.2d 199, 202 (1996). Moreover, the lower court has
refused to consider the remedy for just compensation, relegating the
Petitioners to bringing 2 separate and new action for any such damages.
See Pet. App. 51a; 799 A.2d at 775-76.
a
8
Court adopted a third approach, a so-called “flexible approach,
designed to account for factual nuances,’ consisting of several]
Central analyses.” Pet. App. 35a; 799 A.2d at 769.
After addressing the denominator issue, the Pennsylvania
Supreme Court determined that, notwithstanding its decision
9
in the UFM area to predict the likely results of mining this land.”
Pet. App. 49a; 799 A.2d at 775. It ignored the record that the
area was being mined by others both before and after the
adoption of the Regulation and that the Petitioners’ experts had
concluded the mining could be conducted without any adverse
impact on Goss Run (which was not contradicted by the
Commonwealth).
Finally, the Pennsylvania Supreme Court did not review
the factual determinations of the trial court (Commonwealth
Court) and, therefore, also employed the wrong standard of
review in this regulatory takings case. See Easely v. Cromartie,
532 U.S. 234, 121 S. Ct. 1452, 149 L. Ed. 2d 430, rehearing
denied, 532 U.S. 1076, 121 S. Ct. 2239, 150 L. Ed. 2d 228
(2001). Without any analysis, the Pennsylvania Supreme Court
adopted the legal reasoning of the trial court and did not further
inquire into the facts. Pet. App. 50-51la; 799 A.2d at 775.
This determination of the Pennsylvania Supreme Court is in
direct opposition to this Court’s determination in Easel).
As a result of these rulings by the Pennsylvania Supreme
Court, the Coal Owners’ have been deprived of the right to have
the confiscation of their coal estates evaluated under the
categorical taking test. Lucas, supra. Furthermore, the
Pennsylvania Supreme Court’s interpretation of the “background
principles of state law” defense turns that defense on its head,
allowing a state to avoid paying just compensation on the basis
of ex post facto “background principles.”
The Coal Owners timely file this Petition for a Writ of
Certiorari.
REASONS FOR GRANTING THE WRIT
The court below issued decisions that are in conflict with
the decisions of this Court or other lower courts on three
important questions for regulatory takings law. Furthermore,
the court below employed the improper standard of review in a
regulatory takings claim. All of those conflicts or errors warrant
resolution by this Court.
10
I. THE PROPER DENOMINATOR IN THE TAKINGS
FRACTION FROM A VERTICAL PERSPECTIVE IS THE
COAL ESTATE WHERE A REGULATION PROHIBITS
ALL MINING OF COAL IN A 555 ACRE TRACT AND
THE STATE’S PROPERTY LAW RECOGNIZES THE
COAL ESTATE AS A SEPARATE AND UNIQUE
INTEREST IN LAND.
A significant open and unresolved issue of nationwide
significance remains following this Court’s numerous
determinations on regulatory takings. That is the question of
the extent of the owner’s property to be considered when
conducting the takings analysis. The characterization of the
relevant parcel has been referred as the “denominator” issue or
sometimes the “parcel as a whole” issue. See Tahoe-Sierra Pres.
Council, Inc. v. Tahoe Reg’! Planning Agency, _U.S. __,122
S. Ct. 1465, 1469, 152 L. Ed. 2d 517 (2002); Palazzolo v. Rhode
Island, 533 U.S. 606, 631, 121 S. Ct. 2448, 2465, 150 L. Ed. 2d
592 (2001); Lucas, 505 U.S. at 1016 n.7, 112 S. Ct. at 2894 n.7;
DeBenedictis, 480 U.S. at 497, 107 S. Ct. at 1248; Penn Central,
438 U.S. at 130-31, 98 S. Ct. at 2662.
Recently, the Court has referred to this as the “difficult,
persisting question of what is the proper denominator in the
takings fraction.” Palazzolo, 533 U.S. at 631, 121 S. Ct. at 2465.
In Palazzolo, this Court noted that the issue is not settled:
Some of our cases indicate that the extent of
deprivation effected by a regulatory action is
measured against the value of the parcel as a whole,
see, e.g., Keystone Bituminous Coal Ass'n. v.
DeBenedictis, 480 U.S. 470, 497, 107 S. Ct. 1232,
94 L. Ed. 2d 472 (1987); but we have at times
expressed discomfort with the logic of this rule, see
Lucas, supra, at 1016-1017, n.7, 112 S. Ct. 2886, a
sentiment echoed by some commentators, see, e.g.,
Epstein, Takings: Descent and Resurrection, 1987
—_
11
Sup.Ct. Rev. 1, 16-17 (1987); Fee, Unearthing the
Denominator in Regulatory Takings Claims, 61 U.
Chi. L.Rev. 1535 (1994).
Id. at 631, 121 S. Ct. at 2465. Despite a number of cases in
which the parcel is a factor, the important, nationally significant
question of how the Court and litigants should define the relevant
“parcel” remains unanswered.
The attempts to define the relevant parcel, or the proper
denominator in the takings fraction, has been confusing because
a relevant parcel can be viewed from different perspectives:
the horizontal parcel which refers to the land area to be
considered, the vertical parcel which refers to the property
interest (the so-called “bundle of rights”) to be considered,
and as discussed by Tahoe-Sierra, the temporal parcel which is
the time limit on enjoyment of the property interest.
The considerations as to each perspective are different and while
fairness and justice should be the basis for any analysis to
determine the parcel from each perspective, attempts to develop
a common rationale that applies to all the different perspectives
have produced confusing and conflicting results. For this reason
the analysis as to each perspective should be conducted
separately.
In Machipongo, the Pennsylvania Supreme Court attempted
to predict this Court’s answer as to the relevant parcel from a
vertical perspective, however, the court was mistaken in its
analysis. That court misinterpreted this Court’s rulings in no
less than the following cases: Tahoe-Sierra, supra, Palazzolo,
supra; Lucas, supra, DeBenedictis, supra; Penn Central, supra,
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S. Ct. 158,
67 L. Ed. 322 (1922); Plymouth Coal Co. v. Commonwealth of
Pennsylvania, 232 US. 531, 34S. Ct. 359, $8 L. Ed 713 (1914).
2. In Tahoe-Sierra, a case involving the denominator from a
-amneral perspective only, this Court identified the parcel question as
the “starting point for the court’s analysis.” 122 S. Ct. at 1483.
_—_—
S24... _____'e . : :™:™
12
The Pennsylvania Supreme Court is also at odds with at
least one circuit court: Whitney Benefits, Inc. v. United States,
926 F.2d 1169 (Fed. Cir.), cert. denied, 502 U.S. 952, 112 S. Ct.
406, 116 L. Ed. 2d 354 (1991). Because the Pennsylvania court’s
decision cannot be reconciled with the determinations of this
Court or the Federal Circuit and because the Pennsylvania
Supreme Court seeks to deny the Coal Owners an important
federal right, this Court should intervene and review the
determination of the Pennsylvania Supreme Court.
A. The Issue and the Conflict
- The sweep of the law of regulatory takings makes it evident
that a court must evaluate a case in which a Pennsylvania coal
estate has been taken solely on the basis of the coal estate.
Takings claims are and should be evaluated only by reference
to the property interest impacted as defined by state law. Reliance
on state property law is necessitated by the fact that ““[p]roperty
interests . . . are not created by the Constitution. Rather, they
are created and their dimensions are defined by existing rules
or understandings that stem from an independent source such
as state law. .. .”” Webb’s Fabulous Pharmacies, Inc. v. Beckwith,
449 U.S. 155, 161, 101 S. Ct. 446, 451, 66 L. Ed. 2d 358 (1980)
(quoting Board of Regents of State Colleges v. Roth, 408 U.S.
564, 577, 92S. Ct. 2701, 2709, 33 L. Ed. 2d 548 (1972)). Indeed,
this Court has rejected the claim that the Supremacy Clause
allowed Congress to dictate that the effect of its regulation
“not vary depending on the property law of the State in which
the submitter [of trade-secret information] is located ...
If Congress can ‘pre-empt’ state property law in the manner
advocated ..., then the Taking Clause has lost all vitality.”
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1012, 104 S. Ct.
2862, 2878, 81 L. Ed. 2d 815 (1984).
In Lucas, this Court described the import of state law in
defining the property interest to be analyzed for purposes of the
takings analysis:
13
Regrettably, the rhetorical force of our ‘deprivation
of all economically feasible use’ rule is greater than
its precision, since the rule does not make clear the
‘property interest’ against which the loss of value is
to be measured. . .. The answer to this difficult
question may lie in how the owner's reasonable
expectations have been shaped by the State ’s law of
property —1é., whether and to what degree the
State’s law has accorded legal recognition and
protection to the particular interest in land with
respect to which the takings claimant alleges a
diminution in (or elimination of value.
505 U.S. at 1016 n.7, 112 S. Ct. at 2894 n.7 (emphasis added).
In this context, the Pennsylvania Supreme Court
misinterpreted this Court’s ruling in DeBenedictis as “ha[ving]
expressly rejected Pennsylvania’s division of estates within a
single parcel of land for the purposes of takings analysis.
Keystone, 480 U.S. at 479-480, 500, 107 S. Ct. 1232
(citing Andrus).” Pet. App. 30a; 799 A.2d at 766.2 In fact, this
Court did not reject the division of estates represented by
Pennsylvania property law but concluded that one of the estates
(the support estate) was an adjunct to either the surface estate
or the coal estate:
In rejecting the [petitioners’ ] argument that the
support estate had been entirely destroyed, the Court
of Appeals did not rely on the fact that the support
estate itself constitutes a bundle of many rights, but
rather considered the > support estate as just one
3. The lower court held:
However, [the United States Supreme Court] has refused
to allow: vertical severance of the mineral estate in
Keystone... - Thus, in this case, the relevant parcel cannot
be vertically segmented and must be defined to include both
the surface and mineral rights.
Pet. App. 34a, 799 A.2d at 768. Simply stated, this Court has never so
ruled.
|4
segment of a larger bundle of rights that invariably
includes either the surface estate or the mineral
estate.
DeBenedictis, 480 U.S. at 480, 107 S. Ct. at 1239.
Nowhere in DeBenedictis has this Court rejected
Pennsylvania’s coal estate as a viable, independent estate in land
for purposes of the takings analysis. The lower court has misread
this Court’s ruling in DeBenedictis. The effect is to eviscerate
Pennsylvania property law and to establish misguided precedent
that other courts may follow in ruling on regulatory takings cases.
The Pennsylvania Supreme Court also misreads this Court’s
ruling in an early — pre-Mahon — decision, Plymouth Coal. In
Plymouth Coal, the Pennsylvania Supreme Court ruled that a
state law that required coal to be left in place between two mines
did not constitute a taking of the coal. 232 US.
at 547, 34 S. Ct. at 364. This Court affirmed. Jd. As Justice
Holmes explained a few years later in Mahon, the requirement
in Plymouth Coal Co. of leaving the coal barrier in the ground
did not constitute a taking because leaving the coal barrier
provided for:
the safety of the employees of either mine in case
the other should be abandoned and allowed to fill
with water. But that was a requirement for the safety
of employees invited into the mine, and secured an
average reciprocity of advantage that has been
recognized as a justification of various laws.
Mahon, 260 U.S. at 415, 43 S. Ct. at 160 (emphasis added).
This language was echoed in Lucas. 505 U.S. at 1018, 112
S. Ct. at 2894.
Clearly, the Supreme Court understood the rule of Plymouth
Coal as applying only in takings cases where there is an “average
reciprocity of advantage.” See Lucas, 505 U.S. at 1017-18, 112
S. Ct. at 2894. Here, the Coal Owners’ coal has been taken
with no reciprocal advantage having been provided. As a result,
the Commonwealth of Pennsylvania has obtained the equivalent
15
ofa state park without having to pay for it. Unlike the Supreme
Court, however, the lower court has misconstrued Plymouth
Coal as standing for the unsupportable dichotomy that since
“(t]he coal itself is not taken” all that is lost is the use, rather
than ownership. Pet. App. 23a-24a; 799 A.2d at 763. The lower
court has misinterpreted Plymouth Coal by ruling that this
important precedent justified the Respondents’ actions.
In attempting to draw an analogy between Pennsylvania’s
law regarding surface rights and mineral rights, on the one hand
and New York’s law regarding surface rights and air rights on
the other, the Pennsylvania Supreme Court relied improperly
on this Court’s rule in Penn Central that, ““Taking’ jurisprudence
does not divide a single property into discrete segments and
attempt to determine whether rights in a particular segment have
been entirely abrogated.” Pet. App. 31a; 799 A.2d at 767 (quoting
Penn Central, 438 US. at 130, 98 S. Ct. at 2662). The problem
with the lower court’s inapt analogy is that New York does not
recognize a separate “air” estate, whereas Pennsylvania has a
long history of recognizing a separate coal estate. See infra at
16-19.
Additionally, the lower court’s holding in Machipongo
is at odds with another lower court. In Whitney Benefits, a
pre-Lucas case involving a federally designated UFM area, the
Claims Court and the Court of Appeals fer the Federal Circuit
evaluated the claim solely in terms of the coal estate taken
because the state in which the claim arose (Wyoming) reco gnized
separate estates in the minerals and the surface. 926 F.2d at
1174. As the Federal Circuit explained, the destruction of the
coal estate is the equivalent of the loss of the entire value of
that estate:
[As] the Claims Court correctly found, the only property
here involved is the right to surface mine a particular
deposit of coal. The only possible use of that right is to
- surface mine that coal. When Congress prohibited that
mining of that coal, it did not merely regulate, it took,
all the property involved in this case.
16
Id. at 1172 (emphasis in original). The Federal Circuit, in
analyzing the takings claim specified that when dealing with a
coal estate recognized by the state as a separate estate in land,
the court should examine the impact of the regulation only on
the coal estate and not on the surface estate also owned by the
claimants. Jd. at 1174.4
As this Court has required in Webbs Fabulous Pharmacies
and Ruckelshaus, a determinative issue in this case is
Pennsylvania’s law of property as it relates to coal estates.
Indeed, Pennsylvania property law ought to control, since
property rights are created by the states, not the Federal
Constitution. ° See Webb’ Fabulous Pharmacies, 449 U.S. at
4. The focus of the court in Whitney Benefits is more consistent
with the investment backed expectations of these Petitioners and is the
fairest relevant parcel under such circumstances. Further support is found
in Professor Michelman’s seminal article on takings:
Inasmuch as mining rights are well recognized, divisible
interests in land, and inasmuch as ‘rights’ to particular
surface uses have come to be recognized as species of
‘property’ under the label of ‘easement’ or ‘servitude,’ why
not say that any land consists of two ‘things’ — mining
rights and surface rights, or foundry rights and residue —
and that the relevant denominator in testing a regulation
which impinges only on mining rights or foundry rights is
the value of those rights — which the regulation totally
destroys? Why, in other words should a regulation’s own
scope sometimes define the geographical, but not the
functional, extent of the ‘thing’ said to be regulated?
Frank I. Michelman, Property, Utility, and Fairness: Comments on the
Ethical Foundations of “Just Compensation” Law, 80 Harv. L. Rev. 1165,
1193 (1967).
5. Indeed, this Court has recently cautioned that it will closely
monitor the states in their application of federal constitutional rights.
Bush v. Gore, 531 U.S. 98, 115 n.1, 121 S. Ct. 525, 535 n.1, 148
L. Ed. 2d 388 n.1 (2000) (Rehnquist, J., concurring) (citing Lucas, 505
U.S. 1003, 112 S. Ct. 2886); Jd., 531 U.S. at 138 n.1, 121 S. Ct. at 547
n.1 (Ginsburg, J., dissenting) (citing Lucas, 505 U.S. at 1032 n.18, 112
S. Ct. at 2902 n.18).
SEC
17
161, 101 U.S. at 451. The Pennsylvania Supreme Court has
recognized, that the coal estate under Pennsylvania law is in
and of itself a separate estate in real property. Smith v. Glen
Alden Coal Co., 347 Pa. 290, 304, 32 A.2d 227, 234-35 (1943);
Commonwealth ex. rel. Keator V. Clearview Coal Co., 256 Pa.
328, 331, 100A. 820 (1917). The separateness of the coal estate
in land has been recognized for many years in Pennsylvania.
See Glen Alden Coal Co., 347 Pa. at 304, 32 A.2d at 234-35
(“one person may own the coal, another the surface, and the
third the right of support”). The coal estate may be, and is, taxed
separately. Bannard v. New York State Natural Gas Corp.,
448 Pa. 239, 254, 293 A.2d 41, 50 (1972). A deed may convey
an estate in fee simple in the coal. Delaware & Hudson Canal
Co. v. Hughes, 183 Pa. 66, 69, 38 A. 568, 569 (1897).
The Pennsylvania Supreme Court has ruled that, unlike a
surface estate, there is no divisibility or segmentation of a coal
estate. See Chartiers Block Coal Co. v. Mellon, 152 Pa. 286,
296, 25 A. 597, 599 (1893) (“The grantee of the coal owns the
coal, but nothing else, save the right of access to it, and the
right to take it away.”) This uniqueness was recognized by this
Court in Mahon:
[The Kohler Act] purports to abolish what is
recognized in Pennsylvania as an estate in land — a
very valuable estate [the coal estate] — and what is
declared by the Court below to be a contract hitherto
binding the plaintiffs. If we were called upon to deal
with the plaintiffs’ position alone we should think it
clear that the statute does not disclose a public
interest sufficient to warrant so extensive a
destruction of the defendant’s constitutionally
protected rights.
260 U.S. at 414, 43 S. Ct. at 159.
The result-oriented determination of the lower court is
further evidenced by language found in a recent decision of
that court that supports the Coal Owners’ position with respect .
to a taking of the coal estate. See Miller & Son Paving, Inc. v.
18
Plumstead Township, 552 Pa. 652, 717 A.2d 483 (1998). Miller
& Son determined that there was no taking of the plaintiff’s
non-coal quarry as a result of the defendant township’s zoning
ordinance restricting quarrying activity.° In doing so, however,
the court acknowledged with approval a determination in the
case of McClimans v. Board of Supervisors of Shanango
Township, 107 Pa. Cmwlth. 542, 529 A.2d 562 (1987), in which
an ordinance that prevented coal mining was held to constitute
a taking of the coal owner’s property. The Pennsylvania Supreme
Court noted that the ordinance in McClimans “precluded the
single use the property possessed.” Miller, 552 Pa. at 658 n.7,
717 A.2d at 487 n.7. What was that single use? It was the right
to mine the coal even though the owners owned both the surface
and the coal. See McClimans, 107 Pa. Cmwlth. at 556 n.4,
529 A.2d at 569 n.4.
Over 100 years of Pennsylvania Supreme Court precedent
has firmly established that the coal estate is to be treated as a
separate estate in land; it is but a single strand — the right to
mine. This is the background principle of state law in
Pennsylvania that determines the denominator for the takings
fraction in this case. Unlike the air rights in Penn Central, which
were not recognized as a separate estate under the relevant
state law, the coal estate in Pennsylvania property law does
enjoy that status. From the relevant perspective — that of the
property owner — the interest in the coal estate has been
destroyed by the UFM designation every-bit as much as if the
Commonwealth had mined the coal for its own use and hauled
it away. The Regulation, then, does not merely inhibit one strand
in a bundle consisting of multiple strands, but destroys
completely the one and only strand held.’ The Coal Owners
6. Petitioners acknowledge that non-coal mineral estates are treated
differently than coal estates in Pennsylvania.
7. Cf. Andrus v. Allard, 444 U.S. 51, 65-66, 100 S. Ct. 318, 327,
62 L. Ed. 2d 210 (1979) (“At least where an owner possesses a full
‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle
is not a taking, because the aggregate must be viewed in its entirety.”).
19
had a Constitutional right to rely on this bedrock principle of
Pennsylvania law.
This Court should establish a principle, as suggested in Penn
Central, DeBenedictis, and Lucas, that State property law
determines the vertical component of the regulated parcel.
Consequently, this Court should analyze the Coal Owners’
vertical property rights only with respect to the coal estate.
B. The Appropriateness of Resolving the Issue Here
The Pennsylvania Supreme Court has misread and
misinterpreted important Supreme Court cases that define the
parameters of the denominator issue and has failed to predict
the direction of this Court. The lower court is also in conflict
with the Federal Circuit in Whitney Benefits.
Pennsylvania property law has shaped the reasonable
investment backed expectations of the Petitioners. The selection
of the denominator by the Pennsylvania Supreme Court that
allows for the destruction of the coal estate, frustrates their
legitimate constitutionally-based expectations. The lower court’s
effort to abolish the value of the coal estate is an example of the
type of “newly decreed” ruling rejected by Lucas. 505 US. at
1029, 112 S. Ct. at 2900. The selection of a denominator should
never result in such an unfair and unjust result. This Court should
reject the newly-decreed denominator proposed by the
Pennsylvania Supreme Court that would thwart the Fifth
Amendment. This case merits immediate review and reversal
by this Court.
VIABILITY AS IT CAN BE MINED PROFITABLY AS A
SEPARATE AND INDEPENDENT UNIT.
Despite this Court’s repeated admonitions that fairness and
justice should guide the courts in making determinations
regarding takings, the Pennsylvania Supreme Court has devised
20
a test for determining the relevant parcel from a horizontal
perspective that is inherently unfair and unjust. The test, which
the lower court believed has been adopted by two other lower
courts (the Federal Circuit and District of Columbia Circuit)
should be reviewed by this Court and, ultimately, reversed.
Over four decades ago, this Court recognized that the
Takings Clause was animated by the concepts of fairness and
justice: “The Fifth Amendment’s guarantee that private property
shall not be taken for a public use without just compensation
was designed to bar Government from forcing some people alone
to bear public burdens which, in all fairness and justice, should
be bore by the public as a whole.” Armstrong v. United States,
364 US. 40, 49, 80S. Ct. 1563, 1569, 4 L. Ed. 2d 1554 (1960)
(extinguishment of lien constituted a taking which required
compensation). As this Court has recently reiterated,
“(t]he concepts of ‘fairness and justice’. . . underlie the Takings
Clause[].” Zahoe-Sierra, 122 S. Ct. at 1486 (quoting Palazzolo,
533 U.S. at 633, 121 S. Ct. at 2466 (O’Connor, J., concurring)).
At the same time, the Court acknowledges that the notion of
fairness and justice is “less than fully determinate.” Jd.
The analysis of the relevant parcel from a horizontal
perspective must begin with the land area regulated. How else
can the impact of the Regulation be analyzed? The record in
this case established that all of Petitioners’ proposed mines
within the regulated area had independent economic
significance, i.e. that each could have been mined independently
of other coal reserves as profitable, stand alone mines. R. 697a-
698a, 980a-981a, 1529a-1531a; see also Pet. App. 79a-80a, 93a.
These considerations were part of the test of the Commonwealth
Court to determine whether a discrete loss had occurred that
warranted Fifth Amendment protection:
[W]e believe the property interest by regulation
approach is the best [test] to determine the
denominator, but with some important modifications
to take into consideration the need for governmental
regulation in the public interest. Although this
Pet. App. 128a-
21
proach tilts in the landowner’s favor, ‘historically
the Takings Clause was designed to protect private
citizens from governmental interference with
property rights. Therefore, it makes sense for courts,
at least initially, to tip the scales slightly in the
plaintiff's favor.’ However, while the regulated land
would first be considered under this approach, to
determine whether it actually would be the
denominator would depend on the answers the courts
received to the following questions:
- whether the regulated land had value prior to the
regulation,
«whether the regulated land has a separate use from
the non-regulated contiguous parcel(s) — i.é.,
whether it may be profitably used if it is the only
parcel; and
* ifthe regulated land has value separate from the
contiguous land, whether all of its economic
benefit is gone.
129a; 719 A.2d at 28 (footnotes omitted).
Professor Michelman stressed this issue:
The difficulty is aggravated when the question is
raised of how to define the ‘particular thing’ whose
value is to furnish the denominator of the fraction.
Let us suppose that lown a tract of unimproved land.
Is the land necessarily one ‘thing’ for this purpose,
or might it be several? Can it, for example, ever be
regarded as geographically divided into more than
one thing? Evidently, it can be; for, if we imagine
government's practically forb
a geographically determined quarter of my farm, it
is not likely that the obligation to compensate can
be escaped by the argument that only a quarter of
the value of the ‘thing’ has been destroyed.
idding me any use of
22
Michelman, 80 Harv. L. Rev. at 1192-93.° This analysis comports
with reality. If land can be used profitably as units, and thus
create investment backed expectations for such units, surely such
units are entitled to Fifth Amendment protection.
However, the lower court rejected the trial court’s test as to
the denominator from a horizontal perspective by characterizing
it as “overly restrictive” without any explanation for its
characterization. Pet. App. 34a-35a; 799 A.2d 768. The lower
court adopted what it called a “flexible approach, designed to
account for factual nuances.” Jd. (citation omitted). It ignored
the implicit holdings of Penn Central and DeBenedictis which
were consistent with the Commonwealth Court’s test.
In Penn Central, this Court started from the characterization
of the regulated area by the New York Commission that the
terminal and the city tax block it occupied was the “landmark
site.” Penn Central, 438 U.S. at 115-116, 98 S. Ct. at 2655.
When this Court defined the relevant parcel it referred only to
the regulated area. /d. at 130-131, 98 S. Ct. at 2662-63. This
Court rejected the more expansive notion advanced by the New
York Court of Appeals which included other properties in
8. See also John E. Fee, Unearthing the Denominator in Regulatory
Takings Claims, 61 U. Chi. L. Rev. 1535 (1994). Fee explains the logic
of compensating independent economic units within the regulated area:
Similarly, the fact that an owner holds adjacent property
which may still be developed, or considered his property
as part of a larger parcel, should not bar his compensation
for the lost property any more than if the state had taken
the title to his lands. The standard of independent economic
viability restores this basic intuition to the law. It also
significantly improves the clarity and predictability of
regulatory takings law. Finally, it provides a rational basis
for assessing whether a citizen has been called upon to
sacrifice too much in the interests of society, and for
correcting those costs through just compensation.
Id. at 1563; see also Machipongo, Pet. App. 126a; 719 A.2d at 1927
(for an example of the “facial unfairness in th{e] approach” of considering
more than the regulated land).
2894 n.7 (calling the New York Court of Appeals’ effort to
consider all of the claimant’s holdings in the vicinity “an extreme
— and, we think, unsupportable — view of the relevant
calculus”).
A reading of DeBenedictis also leads to the conclusion that
the regulated parcel was selected as the denominator from a
horizontal perspective in that case. DeBenedictis involved a
facial challenge to 4 regulation. Consequently the record did
not establish the effect of the regulation on any particular area
of petitioners’ properties. 480 US. at 493, 107 S. Ct. at 1246.
As a result, the Court had no alternative but to treat all of
petitioners’ properties (which included much of Western
Pennsylvania) as the relevant parcel because it could not identify
any particular parcel where the regulation applied. Even though
the regulation required fifty percent of the coal seams to remain
in place, it was impossible to establish the effect of the regulation
on any particular area of the petitioners’ holdings. Jd.
Consequently, the Court was relegated to analyzing the effect
of the regulation on petitioners’ entire holdings as the relevant
parcel as that was the way the case was presented. Under such
circumstances, the Court reached the conclusion a partial taking
had occurred as the fifty percent claimed as lost was never
identified as a discrete parcel, unlike the present case.
The lower court has ignored the impact of the Regulation
on the Coal Owners’ land within the regulated area and has
looked to other factors to determine the relevant parcel:
These factors would include, but would not be limited
to: unity and contiguity of ownership, the dates of
acquisition, the extent to which the proposed parcel
has been treated as a single unit, the extent to which
the regulated holding benefits the unregulated holdings;
the timing of transfers, if any, in light of the developing
reguiatory environment; the owner’s investment
backed-expectations, and, the landowner’s plans for
development.
24
Pet. App. 35a; 799 A.2d at 768-769 (citations omitted).
The lower court’s test is designed to draw attention away from
the impact of the Regulation and to focus on the landowner’s
status before the Regulation was adopted. This approach ignores
the focal point of the entire inquiry: whether the effect of the
Regulation constitutes a taking. Its test is transparently unfair
because it ignores the consequences of the government action.
It is “open ended” and allows the trial court to introduce
additional, yet undefined requirements, into the takings mix.
It creates a moving target for the landowner which implicates
equal protection and due process concerns. In essence, it seeks
to reintroduce the focus of the New York Court of Appeals in
Penn Central, to the surrounding properties as well as other
factors. Under the lower court’s test, the landowner would never
know when he had been “called upon to sacrifice too much
in the interests of society.” Fee, 61 U. Chi. L. Rev. at 1563.
The lower court’s test has already been rejected by this Court as
an extreme and unsupportable calculus. Lucas, 505 U.S. at 1016
n.7, 112 S. Ct. at 2894 n.7.
This Court has never explicitly defined what constitutes
the “parcel” from a horizontal perspective. This is a question
that has not been addressed directly by this Court, although the
Court has recently indicated its “discomfort with the logic of
[the parcel as a whole ] rule.” Palazzolo, 533 U.S. at 631, 121
S. Ct. at 2465.° The Pennsylvania Supreme Court has attempted
to predict the direction of this Court in its determination and
has utterly failed. The issue is one of nationwide significance
and merits review by this Court.
9. See also Richard A. Epstein, Takings: Descent and Resurrection,
1987 Sup. Ct. Rev. 1 (1987); Fee, supra; Michelman, supra.
25
{I]. A STATE MAY NOT AVOID THE PAYMENT OF
JUST COMPENSATION FOR A REGULATORY
TAKING RESULTING FROM THE ADOPTION OF A
REGULATION THAT PROHIBITS THE MINING OF
COAL, BASED UPON PURPORTED BACKGROUND
PRINCIPLES OF ITS NUISANCE LAW, WHERE THE
STATE HAS PERMITTED OTHERS TO MINE COAL
IN THE SAME AREA BOTH BEFORE AND AFTER
THE ADOPTION OF THE REGULATION.
This Court concluded in Lucas that where a “total taking”
has occurred that the state can avoid the payment of just
compensation only ifthe proscribed use interests were not part
of his title to begin with.” 505 USS. at 1027, 112 S. Ct. at 2899.
In this case, the lower court readily admitted that mining is not
a nuisance per se in Pennsylvania. Pet. App. 49a; 799 A.2d 775.
If the Pennsylvania Supreme Court had followed the
analysis set out in Lucas, its inquiry should have begun
with whether there was other mining in the vicinity of the
regulated area and the effects of that mining. See Lucas, 505
US. at 1030-31, 112 S. Ct. at 2901. Had the lower court looked
to the record, it would have found uncontroverted evidence
that: 1) there was extensive mining within the Goss Run
Watershed both before and after the adoption of the Regulation.
See R. 260a-261a; Map, Pet. App. 144a; 2) there was extensive
mining immediately outside the Goss Run Watershed both
before and after the designation, R. 261a, 3) there were at least
ten deep mine openings within the Goss Run UFM area,
R. 261a; 4) the existing surface mines had never been cited for
polluting Goss Run, R. 543a, or shut down as a result of the
designation, R. 261a, and 5) that Petitioners’ experts had testified
that the areas covered by Petitioners’ proposed mines would be
permitted and mined without polluting Goss Run, and this
testimony was never controverted by the Commonwealth.
R. 701a-702a, 710a-7 lla, 967a; see also Pet. App. 93a. The
ineluctable conclusion that would have followed would have
awit :
26
been that the Coal Owners’ right to mine was a part of their
property rights and entitled to Fifth Amendment protection.
Rather than following the Lucas “total taking inquiry” for
determining whether the right to mine was a part of Petitioners’
title, the lower court adopted a rule purportedly based upon its
background principles of nuisance law that the proscribed use
interest was not mining but the potential pollution of Goss Run
as a defense to the taking. This test ignores the permitting process
of PaSMCRA under which the Petitioners develop geological
background data and a mining plan to demonstrate, as the other
miners had done in the area, that mining can be accomplished
without presumptive eviderice of polluting Goss Run. Rather,
its test preempts such a process and prevents the gathering of
evidence to determine “the relative ease with which the alleged
harm can be avoided through measures taken by the claimant.”
Lucas, 505 U.S. at 1031, 112 S. Ct. at 2901.!° It ignored
the traditional balancing test set forth in Lucas and adopted a
per se test as a defense to the taking.
The lower court’s rule is inherently unfair and is an example
of the “noxious use logic” that has been rejected by this Court.
A close reading of the Regulation shows the state excepted the
active mines within the watershed from the Regulation’s effect
— “hardly the action of one out to abate a ‘nuisance’ or anything
‘injurious to the health, morals, or safety of the community.””
Whitney Benefits, 926 F.2d at 1177 (quoting DeBenedictis,
480 U.S. at 489, 107 S. Ct. at 1244). The test is a transparent
attempt to revitalize this Regulation in spite of the failure of the
Commonwealth to establish any basis in the record to prevent
permitting and consequently mining by these Petitioners.
As this Court has recently held, “[a] regulation or common-
law rule cannot be a background principle for some owners but
not for others.” Palazzolo, 533 U.S. at 630, 121 S. Ct. at 2464.
10. The Commonwealth Court recognized that the Commonwealth
was seeking to deprive the Petitioners of a “full blown due process .
hearing” by preempting the process through a “legislative act.” Pet. App.
106a n.3.
27
The lower court has attempted to create a per sé rule that would
apply to the Petitioners, but not to neighboring mine operators,
in direct violation of this and the aforementioned principles.
It is clear that mining is a property right that “‘inhere[s] in the
title” to the land. Lucas, 505 U.S. at 1029, 112 S. Ct. at 2900.
In fact, with respect to the coal estate, the only right that “‘inheres”
in Coal Owners’ title 1s the right to mine.
The Pennsylvania Supreme Court has attempted to fashion
a new per se rule regarding background principles on the pretext
that the Commonwealth has aright to prevent nuisances before
they occur. In reality, the lower court is attempting to deny the
Coal Owners their due process rights to obtain a permit and
mine the coal. Moreover, the lower court’s effort at creating a
new tule is directly at odds with the background principles of
IV. WHERE THERE WAS NO INTERMEDIATE
APPELLATE COURT, THE LOWER COURT SHOULD
HAVE USED THE STANDARD OF REVIEW SET FORTH
IN EASLEY v. CROMAR TIE TO EVALUATE THE TRIAL
COURT’S FACTUAL FINDINGS IN ITS DISMISSAL OF
A REGULATORY TAKINGS CLAIM UNDER THE
FIFTH AMENDMENT. ;
In a case involving the enforcement of important
constitutional rights, this Court has ruled that in the absence of
an intermediate appellate court, the role of the Supreme Court
‘5 to review the findings of the trial court, for clear error, and, if
necessary, to overturn the trial court. Easely, 532 US. at 242,
121 S. Ct. at 1458. The Pennsylvania Supreme Court, which
did not have the benefit of an intermediate appellate court, yet
which was ruling on important Constitutional rights, utterly
28
Easely involved a challenge, under the Equal Protection
Clause, of the petitioners’ voting rights relative to a redistricting
plan. Jd. at 237, 121 S.Ct at 1456. A trial was held before a
three judge panel and the appeal was a direct appeal to this
Court. As it relates to Machipongo, this Court held:
Where an intermediate court reviews, and affirms, a
trial court’s factual findings, this Court will not
‘lightly overturn’ the concurrent findings of the two
lower courts. But in this instance there is no
intermediate court, and we are the only court of
review. Moreover, the trial here at issue was not
lengthy and the key evidence consisted primarily of
documents and expert testimony. Credibility
evaluations played a minor role. Accordingly, we
find that an extensive review of the District Court’s
findings, for clear error, is warranted.
Easely, 532 U.S. at 242-43, 121 S. Ct. at 1458-59 (citations
omitted).
In Machipongo, the Pennsylvania Supreme Court in
reviewing the Commonwealth Court’s findings of fact as they
related to Petitioner Machipongo’s important Fifth Amendment
rights, “accept[ed]” the Commonwealth Court’s factual
determination regarding the economic viability of the proposed ©
mining operation. Pet. App. 50a-51a; 799 A.2d at 775.
In particular, the Pennsylvania Supreme Court noted that
“(t]he Commonwealth Court considered detailed scientific
evidence of the economic viability of mining coal in the
UFM area and determined that ‘the Machipongo Surface Mine
... Was not economically feasible.” Jd. (citation omitted).
Significantly, the Pennsylvania Supreme Court held that “[t}he
Commonwealth Court’s legal reasoning on the issue is sound
and there is no basis here to alter its factual findings. Accordingly,
29
the Property Owners are not entitled to compensation with regard
to the Machipongo Surface Mine.” Jd."
The Coal Owners documented in their brief to the
Pennsylvania Supreme Court two significant areas of “clear
error” committed by the Commonwealth Court relating to this
proposed mine, which had it reversed would have required a
finding of mineabity of the proposed Machipongo surface mine.
These included: the failure of Commonwealth Court to consider
the total thickness of the coal reserve, See Petitioners’
Pennsylvania Supreme Court Brief at 51-56; and, the failure to
consider that both the Coal Owners and the Commonwealth’s
experts had testified that Machipongo’s surface mineable coal
was economically mineable, See id. at 56-62. Had the
Pennsylvania Supreme Court reviewed the record, that court
would have reached the conclusion that the Commonwealth
Court committed clear error.
The Pennsylvania Supreme Court, however, made no effort
(at least, none which it documented) to review the
Commonwealth Court’s findings for clear error. Even though
the majority of the evidence in Machipongo, like the evidence
in Easely, consisted of expert testimony and documents, and a
review could have been readily accomplished, the Pennsylvania
Supreme Court neglected this role. This failure of the
Pennsylvania Supreme Court is particularly egregious in view
of the fact that the Petitioners were seeking the protection of
their Fifth Amendment property rights and no intermediate
appellate court had reviewed the record to determine whether
Commonwealth Court had acted properly.
11. Inaddition to the faulty reasoning of the Pennsylvania Supreme
Court with respect to its failure to review the factual recor’, the court’s
affirmation of the Commonwealth Court's “legal reasoning on this issue”
is logically inconsistent with the remainder of its opinion. Relative to
the regulatory taking, the Pennsylvania Supreme Court does not affirm
the legal reasoning of the Commonwealth Court. In fact, the Pennsylvania
Supreme Court explicitly reversed the Commonwealth Court on the legal
test it employed to make its determination regarding the taking of the
coal. Pet. App. 33a-39a; 799 A.2d at 768-71.
The standard of review
30
employed by the Pennsylvania
Supreme Court is in conflict with the recent determination of
this Court in Easely. This case merits immediate review.
CONCLUSION
The petition for writ of certiorari should be granted.
JoEL R. BuRCAT |
CHRISTINE STEIB STICKLER
SAUL Ewinc LLP
Two North Second Street
7* Floor
Harrisburg, PA 17101
(717) 257-7506
Respectfully submitted,
CarLA. BEL, JR.
Counsel of Record
BELIN & KUBISTA
P.O. Box 1
15 North Front Street
Clearfield, PA 16830
(814) 765-8972
Counsel for Petitioners
PO ee ee Pek ee
APPENDIX
la
APPENDIX A — OPINION OF THE SUPREME
COURT OF PENNSYLVANIA, MIDDLE DISTRICT,
- DECIDED MAY 30, 2002
[J-172-2001]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
Nos. 112 MAP 2000 and 119 MAP 2000
ARGUED: November 13, 2001
MACHIPONGO LAND AND COAL COMPANY, INC. AND
THE VICTOR E. ERICKSON TRUST AND JOSEPH
NAUGHTON,
Appellees,
V.
COMMONWEALTH OF PENNSYLVANIA, DEPART-
MENT OF ENVIRONMENTAL PROTECTION,
THE ENVIRONMENTAL QUALITY BOARD AND
ARTHUR A. DAVIS, SECRETARY OF ENVIRONMENTAL
PROTECTION,
Appellants.
Appeal from Decree Nisi of Commonwealth Court entered
as final judgment on October 19, 2000 at No. 248MD1992.
2a
Appendix A
OPINION
MADAME JUSTICE NEWMAN DECIDED May 30, 2002
When state government determines that an intended use
of private property conflicts with legitimate public purposes,
there can be no doubt concerning the power of the
government to prohibit the private use. Penn Central Transp.
Co. v. City of New York, 438 U.S. 104, 124-125 (1978);
Machipongo Land and Coal Co., Inc. v. Commonwealth, 676
A.2d 199, 202 (1996). Indeed, “[l]ong ago it was recognized
that ‘all property in this country is held under the implied
obligation that the owner’s use of it shall not be injurious to
the community.’ ” Keystone Bituminous Coal Assn. v.
DeBenedictis, 480 U.S. 470, 491-492 (1987) (quoting Mugler
v. Kansas, 123 U.S. 623 (1887)). However, in our
constitutional democracy, government’s power to protect the
public is tempered by the level of intrusion upon individual
property rights. The United States Constitution provides:
No person shall be . . . deprived of . . . property,
without due process of law; nor shall private
property be taken for public use, without just
compensation.
U.S. CONST. amend. V. Similarly, the takings clause in the
Pennsylvania Constitution provides:
[NJor shall private property betaken or applied to
public use, without authority of law and without
just compensation being first made or secured.
3a
Appendix A
0. On the other hand, the responsibility
PA. CONST. art. I, § 1
of government to protect the environment from private injury
is also clear. PA. CONST. art. I, § 10 provides that:
ave a right to clean air, pure water,
f the natural, scenic,
the environment.
The people h
and to the preservation 0
historic and esthetic values of
Pennsylvania's public natural resources are the
common property of all the people, including
generations yet to come. As trustee of these
resources, the Commonwealth shall conserve and
maintain them for the benefit of all the people.
In this case, we are required to weigh the governmental
obligation to protect the environment against the individual
right to do as one wishes with property one owns.
Specifically, this case asks us to determine whether the
earfield County Goss Run Watershed
designation of the Cl
as unsuitable for mining (“UFM”), pursuant to Section 4.5
of the Pennsylvania Surface Mining Conservation and
Reclamation Act (“PaSMCRA”), Act ‘of May 31, 1945, P.L.
1198, as amended, 52 PS. § 1396.4e(b), was So unduly
oppressive so as to constitute a taking.
The Regulation, its Origins, and Purposes
In 1980, the General Assembly amended the PaSMCRA
to comply with the Federal Surface Mining Control and
Reclamation Act (FSMCRA), 30 U.S.C. § 1201, which
required states that wished to regulate mining to meet specific
federal requirements. Among those requirements, was one
4a
Appendix A
directing states to create a mechanism to designate certain
lands as UFM. 30 U.S.C. § 1272. In Section 1201(c),
Congress explained that FSMCRA was necessary to protect
the environment, its water and its streams from pollution
caused by mining. Section 1201(c) provides:
[M]any surface mining operations result in
disturbances of surface areas that burden and
adversely affect commerce and the public welfare
by destroying or diminishing the utility of
land for commercial, industrial, residential,
recreational, agricultural, and forestry purposes,
by causing erosion and landslides, by contributing
to floods, by polluting the water, by destroying
fish and wildlife habitats, by impairing natural
beauty, by damaging the property of citizens, by
creating hazards dangerous to life and property
by degrading the quality of life in local
communities, and by counteracting government
programs and efforts to conserve soil, water, and
other natural resources.
30 U.S.C. § 1201(c).
| In Hodel v. Virginia Surface Mining and Reclamation
| Ass'n, 452 U.S. 264 (1981), where the U.S. Supreme Court
rejected a claim that the FMCRA was facially
unconstitutional, the Court also explained the purposes of
the FMCRA by quoting U.S. Senate and House Committee
reports. Those reports detailed the need for legislation to
protect the environment from the “adverse effects of surface
coal mining.” Jd. at 279. The Senate Report concluded that:
5a
Appendix A
[Surface] coal mining activities have imposed
large social costs on the public . . . in many areas
of the country in the form of unreclaimed lands,
water pollution, erosion, floods, slope failures,
loss of fish and wildlife resources, and a decline
in natural beauty.
Hodel, 452 U.S. at 279 (quoting S.Rep. No. 95-128, p. 50
(1977)). The House Report noted the effect on streams. It
stated:
Acid drainage which has ruined an estimated
11,000 miles of streams; the loss of prime
hardwood forest and the destruction of wildlife
habitat by strip mining; the degrading of
productive farmland; recurrent landslides;
siltation and sedimentation of river systems. ...
Hodel, 452 U.S. at 279-280 (quoting H.R.Rep. No. 95- 218,
p. 58 (1977), 1977 U.S.C.C.A.N. 596, (quoting H.R.Rep. No.
94-1445, p. 19 (1976)).
Pennsylvania codified the federal criteria to be used to
determine whether land should be deemed unsuitable for
mining. 52 P.S. § 1396.4e(b). 52 P.S. § 1396.4e(b) provides:
(b) Pursuant to the procedures set forth in this
subsection, the department may designate an area
as unsuitable for all or certain types of surface
mining operations if such operations will:
van ie
6a
Appendix A
(1) be incompatible with existing State or local
land use plans or programs;
(2) affect fragile or historic lands in which such
operations could result in significant damage to
important historic, cultural, scientific and esthetic
values and natural systems;
(3) affect renewable resources lands in which such
operations could result in a substantial loss or
reduction of long-range productivity of water
supply or of food or fiber products and such lands
to include aquifers and aquifer recharge areas; or
(4) affect natural hazard lands in which such
operations could substantially endanger life and
property, such lands to include areas subject to
frequent flooding and areas of unstable geology.
The General Assembly recited that the purpose of the
PaSMCRA is to “prevent ... the pollution of rivers and
streams,” protect wildlife and the environment generally, and
to maintain jurisdiction over in-state mining activities.
52 P.S. § 1396.1. Additionally, the regulation sought to “strike
a balance” between the environment and ensuring a ready
supply of coal. Jd.
Ta
Appendix A
The UFM Designation and the Property of Machipongo
Land and Coal Co., Inc., the Victor E. Erickson Trust
and Joseph Naughton
Pursuant to 52 P.S. § 1396.4e(b), in May of 1989, the
Brisbin Recreation Board and the Locust Grove Sportsmen
Club filed a petition with the Pennsylvania Department of
Environmental Resources! (“DER”) requesting that the Goss
Run Watershed (the “Watershed”) be declared unsuitable for
mining. The Petition sought a UFM designation for the entire
area of the Goss Run stream extending to a point below the
Brisbin Dam.
The regulation, which would have the effect of
prohibiting the mining of coal in a large portion of the
Watershed, affected the rights of the owners of property in
the UFM area. Those property owners included Appellees,
Machipongo Land and Coal Co., Inc., the Victor E. Erickson
Trust and Joseph Naughton (Collectively, the “Property
Owners’’).
Machipongo Land and Coal Co., Inc. (““Machipongo”)
is a Pennsylvania corporation, doing business in Clearfield
County, Pennsylvania. Machipongo owns in fee simple
373 acres within the UFM area and 200 acres outside of the
area. (R. 260a, 403a-405a, 414a). It also owns a coal estate
of 1000 acres in Clearfield County outside of the UFM area.
(R. 260a). Arthur Minds, a Machipongo Vice President,
testified at trial that sometime around 1915 or 1917 his
1. Effective July 1, 1995, the General Assembly renamed the
Department of Environmental Resources the Department of
Environmental Protection. 71 PS. § 1340.101.
8a
Appendix A
grandparents acquired the Machipongo property. (R. 1037a).
He said that his grandfather was in the coal business and
that Machipongo now holds the property for future coal
development. Jd. Machipongo stipulated that it did not know
what its predecessors in title paid for the property (R. 263a)
and the record does not disclose whether Machipongo paid
anything for its interest.
Machipongo has owned the property for approximately
forty-eight years and owned it on May 23, 1992, the effective
date of the UFM designation. (R. 263a). The parties also
stipulated that Machiongo has used land within the UFM
area for purposes other than coal mining. Specifically,
Machipongo has sold timber and entered into leases for gas
development. Jd. at R. 262a-263a.
The Naughton/Erickson Property Owners also own
property in the UFM area. They own a coal estate of fifty-
two acres within the UFM area and a fee simple title to 1,150
acres and 250 acres of coal estate situated outside of the UFM
area. (R. 260a). The parties also stipulated that the Naughton/
Erickson Property Owners have used their land for purposes
other than coal mining, including entering into leases for gas
development. (R.263a).
The Naughton/Erickson property is owned jointly.
Specifically, Joseph Naughton owned a 1/5 interest and Victor
E. Erickson owned the remaining 4/5 interest. (R. 256a, 260a,
263a). Joseph Naughton obtained his interest through a series
of deeds dated February 17, 1961 as a distribution from the
Estate of William Henry Naughton, who obtained his interest
pursuant to deeds dated April 26, 1945. (R. 260a).
9a
s
Appendix A
Victor E. Erickson was one of four people who obtained
an interest in the land in the 1940s from the Elk River Coal
Co. (“Elk River”). Elk River was affiliated with the Berwin
& White Coal Co., where Victor E. Erickson had been a
long-time employee responsible for closing mines and
disposing of company property. (R. 104a-105a). Victor E.
Erickson then purchased the interests of the other three for
an unknown sum. (R. 105a). In 1984, Victor E. Erickson
transferred his interest to the Victor E. Erickson Trust,
retaining a life estate for himself, followed by a life estate in
his wife. (R. 288a-303a). Upon the death of Victor E.
Erickson and his wife on August 23, 1985 and March 26,
1991 respectively, the beneficiaries of the Victor E. Erickson
Trust were the sole owners of their interest in the property.
(R. 1077a). The Victor E. Erickson Trust was the owner of
the Erickson interest on the date DER designated the property
UFM. Id. On December 16, 1994, the beneficiaries of that
trust created a new trust, the Erickson Family Trust, to
which they transferred their interest in the land. (R. 256a).
The beneficiaries of the Erickson Family Trust were the same
people who, in 1992, originally commenced this lawsuit, in
their capacity as remainder beneficiaries of the Victor E.
Erickson Trust. (R. 1077a).
On January 5, 1990, Property Owners requested and were
granted leave to intervene in the DER administrative
proceedings. (R. 257a). At the public hearing, Property
Owners presented fact and expert witnesses. (R. 258a-259a).
After the hearing, DER conducted a technical study to
determine whether to designate the Watershed as UFM
pursuant to the criteria set forth in 52 PS. § 1396.4e.
(R. 258a). According to the Commonwealth Court, the study
10a
Appendix A
concluded that surface mining of coal within the Watershed
had a “high potential to cause increases in dissolved solid
and metal concentrations in Goss Run that would
adversely affect the use of the stream as an auxiliary water
supply” and “a significant potential to disrupt the
hydrologic balance causing decreases in the net alkalinity
of discharges ... destroying the habitat for wild trout
populations.” Machipongo Land and Coal Co., Inc. v.
Commonwealth, No. 248 M.D.1992, slip op. at 3 (Pa.Cmwlth.
August 21, 2000) (emphasis added).
Consequently, DER recommended that the
Environmental Quality Board (“EQB”) approve a regulation
designating the surface mineable coals located within the
Watershed upstream of the Brisbin Dam as UFM.? The EQB
approved the proposed regulation. The regulation provides:
The surface mineable coal reserves within the
Goss Run Watershed upstream of the Brisbin
Dam, including a small tract of land within the
watershed of the West Tributary to Goss Run, a
total of approximately 555 acres, are designated
unsuitable for all types of surface mining
activities.
25 Pa.Code § 86.130(h)(14).
2. The final regulation was substantially more limited than the
proposal. Specifically, the UFM designation did not extend past the
Brisbin Dam. The regulation also provided that it did not apply to
areas within the UFM area where DER had previously permitted
mining, including the Bonita and Cowfer permit areas. 25 Pa.Code
§ 86.130(h)(14).
lla
Appendix A
Procedural History
In 1992, Property Owners sued the Commonwealth of
Pennsylvania, DER, EQB and DER Secretary Arthur A. Davis
(collectively, the “Commonwealth”). Property Owners
claimed that the regulation took their property without
compensation. They requested that the Commonwealth Court
declare the regulation invalid and refer the case to the
Common Pleas Court for a determination of damages
pursuant to the Eminent Domain Code. Machipongo Land
and Coal Co., Inc. V. Commonwealth, 624 A.2d 742, 746
(1993) (Machipongo I).
In response to the 1992 complaint, the Commonwealth
filed preliminary objections and a demurrer. Id. at 745.
The court considered the arguments of the parties and
determined that the section of the PaSMCRA at issue was
not facially unconstitutional; Id. at 750, but that the
Environmental Hearing Board (“EHB”) should determine
whether its application to the Property Owners constituted a
taking. Jd. at 753-755. The court also held that because it
would have been futile to seek further administrative relief,
Property Owners did not fail to exhaust their administrative
remedies. Id. at 751.
Property Owners appealed to this Court. Machipongo
Land and Coal Co., Inc. v. Commonwealth, 648 A.2d 767
(Pa. 1994) (Machipongo II). We affirmed the Commonwealth
Court’s determination that Property Owners need not have
pursued further administrative relief before seeking redress
from the courts. Jd. at 769. However, we disagreed with the
holding of the court to the extent that it stated that the EHB
12a
Appendix A
stated that the EHB was the proper forum in which the
case should proceed. Instead, we determined that the Court
of Common Pleas of Clearfield County had jurisdiction.
Id. at 770.
Thereafter, we granted reargument to consider whether
the Commonwealth Court or the Court of Common Pleas
should have jurisdiction over further proceedings to resolve
the issue of whether the “state action taken pursuant to its
police powers [had] gone too far and constitute[d] a de facto
taking requiring the state to provide just compensation.”
Machipongo Land and Coal Co., Inc. v. Commonwealth,
676 A.2d 199, 203, n.3 (1996) (Machipongo III).
We observed that the Judicial Code provides that the
Commonwealth Court shall have jurisdiction over all civil
actions against the Commonwealth, but shall not have
jurisdiction in eminent domain proceedings. /d. (citing 42
Pa.C.S. § 761). We then examined the nature of the action
against the Commonwealth to determine whether it fell within
the eminent domain exception to the jurisdiction of the
Commonwealth Court. Machipongo III, 676 A.2d at 202.
Because the PaSMCRA, the basis for the regulation the
Property Owners challenged, was promulgated pursuant to
the police power’ and not the power of eminent domain, we
3. Section 1 of the PASMCRA provides, in pertinent part, that:
“[the] act shall be deemed to be an exercise of the police powers of
the Commonwealth for the general welfare of the people of the
Commonwealth [.]” 52 P.S. § 1396.1.
Regulations promulgated pursuant to the police power are
distinguishable from those issued pursuant to the eminent domain
(Cont'd)
13a
Appendix A
determined that the exception to jurisdiction did not apply.
Id. at 202-203. Consequently, we vacated our prior Order
only to the extent that it had remanded the case to the Court
of Common Pleas. Instead, we returned the matter to the
Commonwealth Court to consider whether the regulation
constituted a taking.
Property Owners then filed a petition for review with
the Commonwealth Court. They challenged the designation
of their property as UFM. Machipongo Land and Coal Co.,
Inc. v. Commonwealth, 719 A.2d 19 (Pa.Cmwlth. 1998)
(Machipongo IV). The Commonwealth moved for summary
judgment, asserting that the designation was a proper exercise
of police power and was not unduly oppressive. Jd. at 23.
Property Owners argued that the regulation had deprived
them of the right to mine their coal and that it was a taking
because it denied them all economic use of their property.
Id. The Commonwealth Court recited factors that the
U.S. Supreme Court has identified as relevant to the
determination of whether a categorical taking had occurred: -
(Cont'd)
power of the Commonwealth. In Machipongo III, 676 A.2d at 202,
this Court quoted its decision in Appeal of White, 134 A. 409 (1926),
where we stated that:
[Plolice power should not be confused with that of
eminent domain. Police power controls the use of
property by the owner, for the public good, its use
otherwise being harmful, while eminent domain and
taxation take property for public use. ...
Id. at 411.
14a
Appendix A
¢ whether the public interest requires regulatory
interference with the property right;
¢ whether the regulation is reasonably related to
that goal;
¢ whether the amount of property taken deprives
an owner of all economical viable uses of
the property, measured by what is taken
(the numerator) against what was left (the
denominator);
whether the property owner’s actions or
proposed actions would cause a nuisance.
Id. at 26 (citing Lucas v. South Carolina Coastal Council,
505 U.S. 1003 (1992)). The Court then discussed the
problems courts have had in determining what parcel of land
to use as the denominator in the third factor articulated above.
Machipongo IV, 719 A.2d at 26. Citing John E. Fee,
Unearthing the Denominator in Regulatory Takings Claims,
61 U. CHI. L. REV. 1535 (1996), the Commonwealth Court
decided to use the coal estates within the UFM area as the
denominator.‘ Machipongo IV, 719 A.2d at 29. Because the
4. However, the approach of the law review article was never
intended to apply in vertical segmentation cases. Specifically, the
article explained that:
[uJnder a rule of substantiality, however, the ability of
the owner to define the parcel would be limited in two
important ways. First the rule would apply only to
horizontal divisions of land. Under clear Supreme Court
(Cont’d)
15a
Appendix A
takings equation compares the use taken away by the
regulation with all the possible uses, the decision to use the
coal estates as the denominator guaranteed a taking unless
application of the following three considerations, listed by
the Commonwealth Court, made the property valueless.
Those considerations were:
1. whether the regulated land had value prior to
the regulation;
2. whether the regulated land has a separate use
from the non regulated contiguous parcel(s);
and
3. if the regulated land has value separate from
the contiguous land, whether all of its
economic benefit is gone.
Id. at 28. The Commonwealth Court explained that the
purpose of the considerations was to ensure that it did
not find a taking if the subject land did hot have any value.
That is, if the land did not have value before the regulation,
there is no taking because the government should not
be deemed to take property that has no independent value.
(Cont'd)
precedent, a property owner would have no authority to
divide property rights into uses, easements, servitudes
or the like. In addition, under the authority of [Penn
Central, 438 U.S. 104] and Keystone, courts must
consider all air, surface, and subsurface rights of a
particular parcel as a single bundle of property rights.
Fee, 61 U. CHI. L.REV. at 1558 (emphasis added).
l6a
Appendix A
On the other hand, if the land had value separate from
unregulated contiguous land, and the regulation made the
land valueless, the regulation would constitute a taking.
Id.
The Commonwealth Court then cited to Pennsylvania
cases that have held that Pennsylvania recognizes separate
estates in the same piece of land including: surface; coal/
mineral; and support. The court reasoned that because the
estates in land may be separated for purposes of ownership,
the coal estate should be used as the parcel to determine
whether a taking has occurred. Because it found that issues
of fact existed; though, as to whether the coal estate had any
independent value, the court denied the summary judgement
motion. /d. at 30.
Senior Judge Rodgers dissented. He would have granted
summary judgment in favor of the Commonwealth because
he believed that the majority improperly used the coal estates
as the denominator in the takings equation. Machipongo IV,
719 A.2d at 30. He explained that:
[the Commonwealth Court] has acknowledged
that for the purpose of deciding taking issues
under the federal constitution, the vertical division
recognized in Pennsylvania law that coal, surface,
and the right to support are three separate estates
is without significance.
Id. In his view, the alternative uses of the property and the
fact that the regulation affected a relatively small portion of
their property foreclosed the finding of a taking.
17a
Appendix A
It is undisputed that the petitioners in this case
have other uses for their properties, including the
sale of oil and gas rights, the sale of timber,
and the sale of land for residential and other uses.
The petitioners have therefore failed to adduce any
evidence of a taking under federal law.
Id. Consequently, Senior Judge Rodgers would have held that
the regulation was not a taking. Id. at 31.
After denying the summary judgment motion, the
Commonwealth Court addressed the question of whether the
Commonwealth would be allowed to introduce evidence at
trial that the proposed mining activities would constitute a
public nuisance. Machipongo Land and Coal Co., Inc. v.
Commonwealth, No. 248 M.D.1992, slip Op. at 2 (Pa.Cmwith.
October 28, 1999) (Machipongo V). The Commonwealth
argued, pursuant to Lucas, supra., that ifthe Property Owners’
proposed actions constituted a nuisance, the regulation could
not be a taking. Rejecting that argument, the Commonwealth
Court declined to permit the Commonwealth to present
evidence of nuisance because it held, as a matter of law, that
the proposed actions of Property Owners could not rise to
the level of a public nuisance. Machipongo Land and Coal
Co., Inc. v. Commonwealth, No. 248 M.D.1992, slip op. at 8
(Pa.Cmwith. August 21, 2000) (Machipongo VI).
The case proceeded to trial where Property Owners
claimed that the regulation was @ taking with regard to their
coal rights as to three separate sections of the UFM area.’
5. Erickson Surface Reserves: a 27-acre area west of the Bonita
Surface Mining Pit; Machipongo Surface Reserves: a 35-acre area
(Cont’d)
18a
Appendix A
Because the Commonwealth Court had already determined
that the coal estates (as spposed to the property as a whole)
were to be used as the takings denominator, the only fact
that the Commonwealth Court deemed to be at issue was
“whether there. . . [was] sufficient mineable coa!, in amount
and quality, for . . . [Property Owners] to economically mine
each of those reserves.” Jd. at 12-13.
The Commonwealth Court did not address the issue of
compensation. Instead, it explained that “if any and all of
the reserves are economically mineable, then the UFM
designation for that portion of the coal reserves deemed
mineable will be stricken.” Jd. After consideration of detailed
scientific evidence of the economic viability of mining coal
in the UFM area, the Commonwealth Court determined that
“because ... the proposed [Naughton/Erickson] Surface
Mine and the Machipongo Underground mine [we]re
economically viable, ... the . . . designation [as UFM with
regard to those areas] is stricken from the regulation.” /d. at
37-38. However, “because the Machipongo Surface Mine. . .
[is] not economically feasible, nothing was taken and the
designation for that area remains in place.” Jd. at 38.
Therefore, the Commonwealth Court struck the regulation
with regard to part of the UFM area but not with regard to
the entire area.
(Cont'd)
within the Watershed east of Goss Run and southeast of the Bonita
Surface Mining Pit; and, Machipongo Underground Reserves:
a 96-acre area west of Goss Run within the Goss Run UFM
designation.
19a
Appendix A
The parties appealed the Order of the Commonwealth
Court. On September 26, 2001, we directed the parties to
file supplemental briefs to address the following additional
issues:
(1) whether the regulatory desi gnation of certain
areas as unsuitable for mining amounted to a
regulatory taking;
(2) ifsucha taking has occurred, by what means
may damages be sought, and;
(3) whether such a taking constitutes a personal
right that passes to a successor in interest.
Machipongo Land and Coal Co., Inc. Vv. Commonwealth,
Nos. 112 and 119 MAP 2000, Per Curiam Order at 1
(Pa. September 26, 2001).
Discussion
The Commonwealth contends that Erickson, a Property
Owner, lacks standing to pursue its takings claim because
the beneficiaries of the Victor E. Erickson Trust, the owner
of the Erickson interest on the date DER designated the
property UFM, transferred their interest in the Erickson
property to the Erickson Family Trust. (R. 256a).
The question is whether the transfer to the Erickson Family
Trust divests Erickson of its standing to pursue a takings
claim.
20a
Appendix A
The U.S. Supreme Court has recently addressed the
issue of standing in the context of another takings case.
See Palazzolo v. Rhode Island, 533 U.S. 606, 121 S.Ct. 2448,
(2001). Palazzolo is instructive in this case because it sets
forth the position of the U.S. Supreme Court on the issue of
whether a party who does not own regulated property on the
effective date of a regulation, but later acquires it, has
standing to assert a takings claim.® Therefore, we turn to the
facts of Palazzolo. In 1957, Shore Gardens Inc., a corporation
that Mr. Palazzolo formed with some associates, purchased
land in Westerly, Rhode Island. After the purchase,
Mr. Palazzolo bought out the other investors and became the
sole shareholder. In 1971, Rhode Island created the Rhode
Island Coastal Resources Management Council, which
enacted regulations that prohibited building in wetlands
unless there was a compelling public purpose for an
exception. Jd., 121 S.Ct. at 2456. In 1978, the corporation
was dissolved for failing to pay its taxes. As a result, by
operation of Rhode Island Law, Mr. Palazzolo became the
owner.
Mr. Palazzolo submitted a proposal to the Coastal
Council for permission:to fill eleven of his remaining
eighteen acres to build a beach club. Jd. The Coastal Council
denied his application and the lower courts upheld the denial.
On appeal, the Rhode Island Supreme Court held, among
other things, that he lacked standing to raise an objection to
the regulation because he became the owner of the property
after the enactment of the regulations.
6. Although we are not bound by the decisions of the U.S.
Supreme Court on issues of standing (see ASARCO Inc. v. Kadish,
109 S.Ct. 2037, 2045, 104 L.Ed.2d 696 (1989)), we find the reasoning
of that Court persuasive.
21a
Appendix A
The U.S. Supreme Court reversed. Although the justices
addressed the standing issue in several separate Opinions, a
majority held that Mr. Palazzolo had standing to raise the
takings claim notwithstanding that ownership of the property
was transferred to him after the effective date of the
regulation. 121 S.Ct. at 2457. In regulatory taking cases that
do not involve a physical invasion of private property, Justice
Kennedy, Justice Thomas, and Chief Justice Rehnquist
declined to adopt a “blanket rule” that would prevent a
subsequent owner from asserting a taking claim. 121 S.Ct.
at 2463. Justice O’Connor concurred and explained that
the time of ownership should inform the Court’s investment-
backed expectation analysis and should not bar the claim
of Mr. Palazzolo even though his corporation (and not
Mr. Palazzolo) was the owner of the property on the effective
date of the regulation. 121 S.Ct. at 2465- 2466. J ustice Scalia
would go even further. In his “view, the fact that a restriction
existed at the time the purchaser took title .. . should have
no bearing upon the determination of whether the restriction
is so substantial as to constitute a taking. ... [He further
stated that a]. . . taking. . - is not absolved by the transfer of
title.” 121 S.Ct. at 2468. He reasoned that a taking is a
constitutional claim that affects owners of land, and would
not let the passage of title bar that claim.
Accordingly, a majority of the U.S. Supreme Court has
held that the Palazzolo transfer of ownership, which occurred
as a matter of law and transferred ownership from 4
corporation to an individual after the effective date of the
regulation, did not prevent the individual from asserting 4
takings claim. A similar result should follow in this case.
Consequently, we hold that where ownership of the Erickson
22a
Appendix A
property transferred from one trust to another with no new
beneficiaries and where the regulation did not authorize a
physical invasion of private property, the change in ownership
does not divest Erickson of standing to assert its takings
claim.
Takings Analysis
The problem of balancing governmental power to
regulate the permissible uses of private property with
individual property rights is not a new one, but it is a problem
that has not been solved despite multiple attempts to
formulate a rule that would apply in all situations. The U.S.
Supreme Court recognized that it has:
quite simply ... been unable to develop any
“set formula” for determining when “justice and
fairness” require that economic injuries caused
by public action be compensated by the
government, rather than remain disproportionately
concentrated on a few persons.
Penn Central, 438 U.S. at 124. Nevertheless, our Opinions
and the Opinions of the U.S. Supreme Court have set forth
some guiding principles.’
7. This Court has consistently relied upon the decisions of the
U.S. Supreme Court when considering takings issues. We have stated:
[a]n examination of our caselaw reveals that this Court
has continually turned to federal precedent for guidance
in its “taking” jurisprudence, and indeed has adopted
the analysis used by the federal courts.
(Cont’d)
23a
Appendix A
If a regulation authorizes a physical invasion of private
property, no matter how slight, the U.S. Supreme Court has
- consistently concluded that a taking has occurred. Loretto Vv.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 422
(1982) (holding that a New York law requiring building
owners to permit cable companies to install cable facilities
on their premises constituted a taking). Clearly, “[a] taking
may more readily be found when the interference with
property can be characterized as a physical invasion by
government[.]” Penn Central, 438 U.S. at 124.
In this case, we are not unsympathetic to the claim of
Property Owners that the regulation “had the same effect as
if the Commonwealth had mined the coal and hauled it away.”
Property Owners’ Main Brief at 13. The reality is, however,
that the regulation did not authorize the removal of any coal
or any physical invasion 0
f or access to their land. Indeed, as
this Court explained in Commonwealth v. Plymouth Coal Co.,
g1 A. 148 (1911), aff'd, 232 U.S. 531 (1914), requiring
landowners to leave coal in the ground is not the equivalent
of an appropriation of that coal. Plymouth Coal, 81 A. at
151. In holding that the statute at issue in Plymouth Coal did
not constitute a taking, we said:
(Cont’d)
United Artists’ Theater Circuit, Inc.
612, 616 (1993) (upholding 4 Philadel
ordinance, this Court applied Commonwealth
887 (1991) test and held that, with regard to a landmark designation,
the takings clause in the Pennsylvania Constitution does not provide
more extensive protections than those offered by the U.S.
Constitution).
y. City of Philadelphia, 635 A.2d
phia historic landmark
y. Edmunds, 586 A.2d
24a
Appendix A
The coal itself is not taken. The property right
affected by the statute is not ownership, but use,
of the material thing — the right to mine it out.
Nor does the state take that right for public use.
The act does not transfer the right to mine out the
coal from the owner to some one else, for the
public benefit, but prohibits that right from being
exercised by anyone. ...
Id.*
Furthermore, not all regulations that affect private
property require the government to purchase the land in order
to regulate its permissible uses. Indeed, the government
would quickly bankrupt itself if, every time it made a rule
that affected private property rights, it had to purchase the
property. Keystone Bituminous Coal Assn. v. DeBenedictis,
480 U.S. 470, 491 (1987). The U.S. Supreme Court has
explained the utilitarian philosophical basis for permitting
government to enact legislation that affects private property
rights as follows: ;
Under our system of government, one of the
State’s primary ways of preserving the public weal
is restricting the uses individuals can make of
their property. While each of us is burdened
8. At issue in Plymouth Coal was the Anthracite Mining
Act, Act of June 2, 1981, P.L. 183, as amended, 52 P.S. § 264
(repealed 1965), which required owners of adjoining mines to
maintain a coal barrier between the mines. We held that the statute
did not violate the takings clause of the Pennsylvania Constitution.
Id. 81 A. at 151, 152.
25a
Appendix A
somewhat by such restrictions, we, in turn, benefit
greatly from the restrictions that are placed on
others. These restrictions are properly treated as
part of the burden of common citizenship. .. -
[T]he Takings Clause did not transform that
principle to one that requires compensation
whenever the State asserts its power to enforce it.
Id. (internal citations omitted). Indeed, in this case we are
mindful of the potential for extended litigation and
extraordinary cost to the Commonwealth if compensation is
required for all UFM designations.” The often repeated
maxim that “[glovernment 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”
rings truer today than ever. Pennsylvania Coal Co. v. Mahon,
260 U.S. 393, 413 (1922).
We have also recognized that the government may enact
laws that have significant impact on private property rights
without the need to compensate the affected landowner.
Miller & Son Paving, Inc. Vv. Plumstead Township, 717 A.2d
483 (1998), cert. denied, 525 U.S. 1121 (1999). In Miller,
we held that a landowner was not entitled to payment from
the township that had prevented the operation of a quarry
because “other viable uses [uf the land] existed.” Id. at 486.
We explained, “that a taking does not result merely because
a regulation ... deprive[s] the owner of the most profitable
use of his propeity. Otherwise all zoning regulations could
9. In addition to the instant UFM designation,
the Commonwealth has designated sixteen other areas as UFM.
See 25 Pa.Code § 86.130 b(1)- (17).
26a
Appendix A
be categorized as ‘takings’ in the sense that the owner is
not completely free to use his property as he chooses.”
Id. at 486. Our view is consistent with repeated holdings of
the U.S. Supreme Court:
It is, to be sure, undeniable that the regulations
here prevent the most profitable use of appellees’
property. Again, however, that is not dispositive.
When we review regulation[s], a reduction in the
value of property is not necessarily equated with
a taking.
Andrus v. Allard, 444 U.S. 51, 66 (1979) (reviewing federal
statute prohibiting the sale of products derived from
eagles even if obtained before the statute’s enactment);
Penn Central, 438 U.S. at 124 (discussing landmark
designation that prohibited construction of building over New
York’s Grand Central Station); Goldblatt v. Town of
Hempstead, 369 U.S. 590 (1962) (examining application of
town ordinance that prohibited a land owner from operating
a sand and gravel pit notwithstanding that he had, for thirty-
five years prior to the ordinance, used the land for that
purpose); and Miller v. Schoene, 276 U.S. 272 (1928)
(reviewing order requiring the removal of cedar trees to
protect neighboring apple orchards from disease).
Although none of the foregoing governmental actions
were found to constitute a taking, at some point, a regulation
“goes too far.” Pennsylvania Coal Co., 260 U.S. at 415.
A regulation goes too far when it forces “some people alone
to bear public burdens which in all fairness and justice should
be borne by the public as a whole.” Palazzolo, 121 S.Ct. at
27a
Appendix A
2458 (quoting Armstrong v. United States, 364 U.S. 40, 49
(1960)). This fairness and justice standard, although
amorphous, necessarily guides our analysis.
The Standards: the Lucas Test and the
Traditional Takings Analysis
In non-appropriation/non-physical invasion cases, the
U.S. Supreme Court applies two tests to determine whether
a taking has occurred. Palazzolo, 121 S.Ct. at 2457. The first
test addresses the “relatively rare” situation in which a land
use regulation deprives the owner of all use of his or her
property. Lucas v. South Carolina Coastal Council, 505 U.S.
1003, 1017 (1992). The second “test” is the more traditional
takings analysis, which becomes applicable if the regulation
does not rise to the level of a Lucas taking. The U.S. Supreme
Court explained that:
[A] regulation which “denies all economically
beneficial or productive use of land”: will require
compensation under the Takings Clause. Lucas,
505 U.S. at 1015.... Where, [however] a
regulation places limitations on land that fall short
of eliminating all economically beneficial use, a
taking nonetheless may have occurred, depending
upon a complex of factors including the
regulation’s economic effect on the landowner, the
extent to which the regulation interferes
with reasonable investment-backed expectations,
and the character of the government action.
Penn Central, [438 U.S.] at 124.
28a
Appendix A
Palazzolo, 121 S.Ct. at 2457. The U.S. Supreme Court has
recently described this second test as an analysis pursuant to
“the principles set forth in Penn Central.” Palazzolo, 121
S.Ct. at 2457 (internal citation omitted) (remanding
consideration of a land use regulation — that did not rise to
the level of a Lucas taking — to the Rhode Island Supreme
Court for further proceedings consistent with Penn Central).
We will analyze this case based on the foregoing
framework. First, we ask whether the regulatory action
“ “denies [the Property Owners of] all economically
beneficial or productive use of land.’ ” Palazzolo, 121 S.Ct.
at 2457 (quoting Lucas, 505 U.S. at 1015). If it does, unless
the use constitutes a nuisance, we will find that a taking has
occurred. If not, we will consider whether, at this juncture, it
is appropriate for this Court to undertake the Penn Central
analysis.
Takings Denominator
Pursuant to either analysis, there is a threshold question,
frequently referred to as the “denominator problem,” which
must be answered: what is the parcel against which the
takings tests are applied? See Keystone, 480 U.S. 470 at 479.
For if we define the area broadly, almost no government
action — no matter how intrusive — will be found to be a
taking. See John E. Fee, Unearthing the Denominator in
Regulatory Takings Claims, 61 U. CHI. L. REV. 1535, 1536
(1996). Similarly, if we define the land too narrowly, virtually
all government action that affects private property will be a
taking that requires compensation and government will be
inhibited from enacting necessary legislation. Jd.
29a
Appendix A
Because property is conceptualized as a “bundle” of
“property rights”, see Loretto v. Teleprompter Manhattan
CATV, Corp., 458 U.S. 419, 435 (1982), courts have had to
struggle with what has been referred to as “severance” issues
in defining the relevant parcel. See Marc R. Lisker,
Regulatory Takings and the Denominator Problem,
27 RUTGERS L.J. 663 (Spring 1966) (“the Lisker Article”).
In other words, the courts have been called upon to consider
whether some of the property rights in the bundle may be
severed from the others and viewed separately as the relevant
parcel. Severance issues have involved the following:
(1) the horizontal, physical division of property — is the
relevant parcel all the land in a given geographic area that
one owns or some smaller portion of that acreage, Florida
Rock Industries v. United States, 791 F.2d 893 (Fed.Cir.1986);
(2) the vertical division of property — can the parcel be
divided among air rights, surface rights, and mineral rights,
Penn Central, 438 U.S. at 130 and Keystone, 480 U.S.
at 470 or (3) the temporal division of property — can
the property be viewed in discrete temporal units, Tahoe-
Sierra Pres. Council Inc. v. Tahoe Reg. Planning Agency,
535 U.S. _, WL 654431 (2002).
Resolving the denominator problem profoundly
influences the outcome of a takings analysis. Again, the more
narrowly the relevant parcel is defined, the more likely is
the finding of a taking under either test, and vice versa. See
Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1180
(Fed.Cir.1994). In this case, defining the relevant parcel raises
horizontal and vertical severance issues.
30a
Appendix A
Vertical Conceptualization of Property
The U.S. Supreme Court has expressly rejected
Pennsylvania’s division of estates within a single parcel of
land for the purposes of takings analysis. Keystone, 480 U.S.
at 479-480, 500 (citing Andrus). Specifically, the Court
stated:
Pennsylvania property law is apparently unique
in regarding the support estate as a separate
interest in land that can be conveyed apart from
either the mineral estate or the surface estate.
Petitioners therefore argue that even if comparable
legislation in another State would not constitute
a taking, the Subsidence Act has that consequence
because it entirely destroys the value of their
unique support estate. It is clear, however, that
our takings jurisprudence forecloses reliance
on such legalistic distinctions within a bundle
of property rights.
Keystone, 480 U.S. at 500 (emphasis added).'° Accordingly,
the U.S. Supreme Court held that the property as a whole
was the unit of inquiry.
10. The Supreme Court affirmed the Third Circuit’s
determination that:
To focus upon the support estate separately when
addressing the diminution of the value of plaintiffs’
property caused by the Subsidence Act therefore would
serve little purpose. The support estate is more properly
viewed as only one “strand” in the plaintiff’s “bundle”
of property rights, which also includes the mineral estate.
Keystone, 480 U.S. at 480.
3la
Appendix A
Similarly, in Penn Central, where the city’s landmark
ordinance prohibited Grand Central Station from constructing
an office building over the station, the Court refused to
separate surface rights from air rights. The Court explained:
“Taking” jurisprudence does not divide a
single property into discrete segments and
attempt to determine whether rights in a
particular segment have been entirely
abrogated. In deciding whether a particular
governmental action has effected a taking, this
Court focuses ... on the nature and extent of
the interference with rights in the parcel as a
whole — here the city tax block designated as the
landmark site.
Penn Central, 438 U.S. at 130-131 (emphasis added; internal
quotations omitted).
Notwithstanding the clear rejection by the federal high
court of Pennsylvania’s division of estates, the U.S. Supreme
Court, until recently, has left room for doubt as to whether
the Court would always apply the “property as a whole” rule.
In a footnote, and admittedly in dictum, the Lucas court
observed that when a regulation’s interference with the use
of property approaches, but does not reach, the level where
100% of a portion of property is made valueless, “it is
unclear” whether the Court would view the regulation as an
impermissible deprivation of the portion or an appropriate
“diminution in the property as a whole.” Lucas, 505 U.S. at
1016-1017, n.7.
32a
Appendix A
While the holdings of the U.S. Supreme Court have
consistently supported the use of the “property as a whole”
rule, the footnote in Lucas and the following statement in
Palazzolo demonstrate that at least some members of the
Court have misgivings about whether to apply that test in all
situations. The Court recently addressed the issue of the
appropriate property for takings analysis as follows:
[Petitioner] argues, for the first time, that the
upland parcel is distinct from the wetlands
portions, so he should be permitted to assert a
deprivation limited to the latter. This contention
asks us to examine the difficult, persisting
question of what is that proper denominator in
the takings fraction. ... Some of our cases
indicate that the extent of deprivation effected by
a regulatory action is measured against the value
of the parcel as a whole, see, e.g. Keystone, 480
U.S. at 497; but we have at times expressed
discomfort with the logic of this rule, see Lucas,
505 U.S. at 1016-1017, n.7 a sentiment echoed
by some commentators, see, e.g., Epstein,
Takings: Descent and Resurrection, 1987 SUP.CT.
REV. 1, 16-17 (1987); Fee, Unearthing the
Denominator in Regulatory Takings Claims,
61 U.CHI. L. REV. 1535 (1994). Whatever the
merits of these criticisms, we will not explore the
point here. Petitioner did not press the argument
in the state courts, and the issue was not presented
in the petition for certiorari. The case comes to us
on the premise that petitioner’s entire parcel serves
as the basis for this takings claim, and, so framed,
the total deprivation argument fails.
33a
Appendix A
Palazzolo, 121 S.Ct. at 2465 (internal citations modified
and/or omitted). Notwithstanding the Court’s misgivings,
it declined to accept the invitation of Palazzolo to overrule
the “property as a whole” rule. Jd., 121 S.Ct. at 2448.
While the Court explained that it viewed the property as a
whole because, at all times before the briefing of the case
the parties discussed the property as a single parcel; the Court
also did not overrule Keystone or Penn Central. Instead, the
Court viewed the property as a whole and determined that
there had been no Lucas taking. Palazzolo, 121 S.Ct. at 2465.
Nevertheless, the Lucas footnote and the statement in
Palazzolo have made clear that some members of the Court
have retreated from the absolute application of the “property
as a whole” rule. Lucas, 505 U.S. at 1016-1017, n.7.
Notwithstanding the foregoing misgivings of some
members of the U.S. Supreme Court, that Court recently
reaffirmed the validity of the property as 4 whole rule. Tahoe-
Sierra Preservation Council v. Tahoe Reg. Planning Agency,
535 U.S. __, 2002 WL 654431, *12 (2002). In Tahoe-Sierra,
Petitioners sought to divide their interests in land into
temporal parts to claim that the statute, which imposed a
temporary moratorium on development of private property
surrounding Lake Tahoe, caused the restricted temporal
portion of their property to become valueless. Jd. at *14. The
Court declined to allow Petitioners to so divide their property.
Id. It held that the moratorium did not constitute a Lucas
taking because a fee simple interest in property may not be
temporally divided for the purpose of takings analysis.
Id. at *14-15. The Court held that, when viewed as a whole
the properties at issue retained value and that the temporary
development prohibition did not rise to the level of a Lucas
taking. The Court explained:
34a
Appendix A
Petitioners’ “conceptual severance” argument is
unavailing because it ignores Penn Central's
admonition that in regulatory takings cases we
must focus on “the parcel as a whole.” We have
consistently rejected such an approach to the
“denominator” question. ... Thus, the District
Court erred when it disaggregated petitioners’
property into temporal segments corresponding to
the regulations at issue and then analyzed whether
petitioners were deprived of all economically
viable use during each period. ...
Id. at *14-15 (internal citations omitted). Following Tahoe-
Sierra, there can be no dispute that the “property as a whole”
rule remains controlling.
As we have noted above, the U.S. Supreme Court has
not instructed conclusively how the denominator problem
should be resolved. However, that Court has refused to allow:
vertical severance of the mineral estate in Keystone; vertical
segmentation of air and surface rights in Penn Central;
or temporal division of property in Jahoe-Sierra. Thus, in
this case, the relevant parcel cannot be vertically segmented
and must be defined to include both the surface and mineral
rights.
Horizontal Conceptualization of Property
We now address the manner in which the property of
the Property Owners is to be horizontally defined.
The Commonwealth Court selected the coal estates in the
UFM area as the property at issue and disregarded surface
35a
Appendix A
rights and all other geographic areas. In contrast, the
Commonwealth parties argued in favor of using all of the
Property Owners’ property in Clearfield County. It seems that
the selection of the Commonwealth is overly inclusive and
the selection of Property Owners and the Commonwealth
Court is overly restrictive. It is difficult to imagine that either
rule would prove satisfactory in all cases. Instead, we adopt
a “flexible approach, designed to account for factual
nuances”. Loveladies Harbor, 28 F.3d at 1181. Pursuant to
this approach, a variety of factors for defining the relevant
parcel should be considered, without making one factor more
important than any other. These factors would include, but
would not be limited to: unity and contiguity of ownership,
the dates of acquisition, the extent to which the proposed
parcel has been treated as a single unit, the extent to which
the regulated holding benefits the unregulated holdings; the
timing of transfers, if any, in light of the developing
regulatory environment; the owner’s investment backed-
expectations; and, the landowner’s plans for development.
Id. See also Florida Rock Industries, 791 F.2d at 893; District
Intown Properties Ltd. Partnership v. District of Columbia,
198 F.3d 874 (D.C. Cir. 1999). However, because all of these
factors are not part of the record, we remand to the
Commonwealth Court for it to have the responsibility of
considering the relevant facts and identifying the appropriate
horizontal conceptualization of the property to use in both
the Lucas and Penn Central analyses.
Lucas Analysis
We now turn to the Lucas test and a consideration of the
issue concerning whether Lucas requires a finding that a
stil
36a
Appendix A
taking has occurred. Lucas stands for the proposition that
regulations that deprive an owner of “all economically
beneficial or productive use of land” are takings unless the
use constitutes a public nuisance or are caused by the nature
of the use and the owner could have expected that the
government might prohibit it. Lucas, 505 U.S. at 1027-1029.
Therefore, to conduct a Lucas analysis, we need to determine
whether the subject regulation “deprives a landowner of all
economically beneficial” use of his or her property. If so, the
regulation will constitute a taking unless state property law
independently prohibits the use. /d. at 1027.
Property Owners conceptualize this case as a Lucas
categorical taking. They claim that because they own coal
estates in the UFM area and are not permitted to mine that
coal, all of their interest in the land has been taken. The
Commonwealth Court implicitly agreed when it decided to
use the coal estates within the UFM area as the property
affected by the regulation. Machipongo IV, 719 A.2d at 29.
That court explained that it used the coal estate because
Pennsylvania recognizes three separate estates in the same
piece of land: surface, coal/mineral, and support. It reasoned
that because the estates in land may be separated for purposes
of ownership, the coal estate could be separated from the
whole to determine whether a taking had occurred.
As we have stated, though, the relevant parcel must be
defined to include both the surface and mineral rights of the
parties. We also have remanded the determination of the
appropriate horizontal extent of the properties to the
Commonwealth Court. Nevertheless, and notwithstanding the
limited information available, we can perform the Lucas
37a
Appendix A
analysis with regard to the Machipongo property and identify
the relevant Lucas issues concerning the property of the
Naughton/Erickson property owners.
To do so,we return to a consideration of the property
owned by the Property Owners. Machipongo owns 373 acres
in fee simple within the UFM area and 1000 acres outside of
the UFM area. (R. 260). Within the UFM area, Machipongo
owns surface rights as well as mineral rights. The regulation,
therefore, does not “deprive ... [it] of all economically
beneficial” use of its property (Lucas, 505 U.S. at 1027)
because Machipongo admits that it benefits from its surface
rights by selling timber (R. 262a) and entering into leases
for gas development. (R. 263a). Further evidence of the value
of the Machipongo surface estate is clear from the record.
Specifically, in 1994, in what Machipongo contends was a
“forced sale”, Machipongo received $60,000 for 35.93 acres
of its property. (R. 47a). It, therefore, appears that if
Machipongo sold the remaining 373 acres of undeveloped
land within the UFM area, at the same price per acre as the
1994 sale. it would earn, in 1994 dollars, at least $622,878.
Clearly, the regulation does not deny Machipongo
“all economically beneficial” use of its property. Accordingly,
we find that the regulation, as it relates to Machipongo, passes
the Lucas test. Lucas, 505 USS. at 1027.
Incorsistent factual information regarding the property
of the Neughton/Erickson Property Owners requires us to
remand the case for the Lucas analysis regarding their
property. As far as we are able to determine, their property
includes 2 coal estate of fifty-two acres within the UFM area
and fee simple title to 1,1 50 acres and 250 acres of coal estate
38a
Appendix A
situated outside of the UFM area. (R. 260a). Based on the
briefs and the record, it appears that within the UFM area
the Naughton/Erickson Property Owners own only coal
estates and do not own surface rights in the UFM area. This
would appear to distinguish them from the Machipongo
Property Owners. However, contrary to that understanding,
the Commonwealth Court refers to the Property Owners’
surface rights in the UFM area. Specifically, it explains:
Because we have determined that only the
regulated land is to be considered in determining
the denominator, we must next determine how
to treat [Property] Owners’ coal estate in the
UFM designated area. The Commonwealth
suggests we should calculate the denominator
based on finding [Property] Owners’ rights in
the coal estate are just part of the bundle of
rights they own in land. If we were to do so,
there would be no taking because [Property]
Owners do not dispute that they still have
surface rights that can be used and they would
not be deprived of all economical beneficial use
of their land. If, however, we were to agree with
[Property] Owners that it did not matter what other
estates in land they owned because the coal estate
was treated as a separate estate, then there would
be a taking because they would be deprived of
their right to mine that land.
Machipongo IV, 719 A.2d at 28 (emphasis added). Because
we are unsure whether the Naughton/Erickson Property
Owners own surface rights within the UFM area, and because
39a
Appendix A
the Commonwealth Court has not yet defined the limits of
the horizontal extent of the property of the Naughton/
Erickson Property Owners, which may or may not be greater
than the UFM area, we are unable to properly conduct a
Lucas analysis with regard to them. We, therefore, remand
the Lucas determination to the Commonwealth Court to
render a decision consistent with this Opinion.
Traditional Takings Analysis
Because the regulation, as to Machipongo (and possibly
to Naughton/Erickson Property Owners as well) survives
Lucas, a traditional takings analysis must be performed.
See Palazzolo, 121 S.Ct. at 2457. The traditional analysis
focuses on several criteria designed to balance public interest
against private rights. In Penn Central, the U.S. Supreme
Court set forth the factors as follows:
The economic impact of the regulation on the
claimant and, particularly, the extent to which the
regulation has interfered with distinct investment-
backed expectations[;""]
11. We note with approval that Justice O’Connor, in her
Palazzolo Concurring Opinion, observed that an evaluation of the
reasonableness of a claimant’s investment-backed expectations should
take into consideration whether the land owner owned the property
on the effective date of the regulation as well as the “regulatory regime
in place at the time the claimant acquires the property... [that is,
the extent of previous government regulation of the area.” Palazzolo,
121 S.Ct. at 2466.
Consistent with the observation that the regulatory regime at
the time the claimant acquires property is relevant to the inquiry, we
have observed that:
(Cont'd)
40a
Appendix A
* * ke *
The character of the governmental action ...
[whether there is a] physical invasion ...
[or whether the regulation is reasonably related
to the promotion of the general welfare; and, ]
* * * *
[Whether] the health, safety, morals, or general
welfare would be promoted by prohibiting
particular contemplated uses of land.
Penn Central, 438 U.S. at 124, 125. It is the task of a
court performing a traditional takings analysis to
determine whether the regulation, based on the foregoing
considerations, is unduly oppressive and forces “some people
alone to bear public burdens which in all fairness and justice
should be borne by the public as a whole.” Palazzolo,
121 S.Ct. at 2458 (quoting —— v. United States,
364 US. at 49 (1960)).
In the context of the summary judgment motion, the
Commonwealth Court did not conduct a full Penn Central
(Cont’d)
The Legislature has long regulated the quality of the
waters in the Commonwealth. ... In addition, ...
Congress, ha[s] ... made extensive efforts to remove
the pollution from our nation’s waters.
National Wood Preservers, Inc. v. Commonwealth, 414 A.2d 37,
44 (1980) (citations omitted).
4la
Appendix A
takings analysis. Machipongo IV, 719 A.2d at 29. Instead,
it focused on the coal estates in the UFM area and
relied predominantly on the takings equation. Indeed, the
purpose of the trial was limited to the issue of whether
the coal estates could be profitably mined. Machipongo VI,
719 A.2d at 25-26.
The U.S. Supreme Court determined that although the
regulation at issue in Palazzolo did not rise to the level of a
Lucas taking (because the property, when viewed as a whole,
retained value), it remanded the case to the Rhode Island
Supreme Court for a determination of whether a Penn Central
taking had occurred. Palazzolo, 121 S.Ct. at 2457.” While
some evidence relevant to the traditional takings analysis was
adduced during the trial in the instant case, to determine
whether the UFM area could be economically mined, the
relevant facts were never presented to the Commonwealth
Court for the purpose of conducting a traditional takings
analysis. Subject to the issue of nuisance, which we address
in the next section, we believe that the Commonwealth Court
should conduct a trial to consider the facts relevant to the
determination of whether the regulation is a taking pursuant
to the traditional takings analysis.
Nuisance
The Commonwealth Court prevented the Commonwealth
from presenting evidence regarding whether the proposed
12. Upon the U.S. Supreme Court’s remand of the Penn Central
takings analysis, the Rhode Island Supreme Court, in turn, remanded
the case to its Superior Court to conduct the analysis. Palazzolo v.
State ex rel. Tavares, 785 A.2d 561 (R.I. 2001).
42a
Appendix A
use of the land would constitute a nuisance. Machipongo V,
slip op. at 2. Notwithstanding that the Commonwealth Court
recognized that “polluting the waters of the Commonwealth
is a public nuisance[,]” it declined to consider the
Commonwealth’s evidence that the proposed use would
constitute a nuisance. /d. at 7. The Commonwealth Court
explained that the water was adequately protected by
PaSMCRA regulations that require applicants for permits to
show that there is no presumptive evidence that mining would
pollute surrounding waters. Jd. However, regardless of the
protections offered in those regulations, there is nothing that
prevents the state from enacting a law that makes explicit its
right to prohibit activity, which would already be contrary to
existing law. See Lucas, 505 U.S. at 1030.
Furthermore, it is clear that if a regulation prohibits
behavior that could be abated or prohibited by general
principles of state property law, there is no need for the state
to provide compensation to prevent the use. Jd. at 1027-1029.
In Lucas, the U.S. Supreme Court explained that even
where the regulation prohibits “all economically beneficial
use of land,” there is no taking if the use could be abated
or prohibited by general principles of state property law.
Id. at 1029. That is to state,
[i]n light of our traditional resort to “existing rules
or understandings that stem from an independent
source such as state law” to define the range of
interests that qualify for protection as “property”
under the Fifth and Fourteenth Amendments, this
recognition that the Takings Clause does not
require compensation when an owner is barred
43a
Appendix A
from putting land to a use that is proscribed by
those “existing rules or understandings” is surely
unexceptional.
Id. at 1030 (internal citations omitted). In fact, the U.S.
Supreme Court remanded Lucas to the South Carolina
Supreme Court and directed it to determine whether, pursuant
to state law, the prohibited use constituted a nuisance or
violated state property law. Id.
The rules and understandings as to the uses of land
that are acceptable and unacceptable have changed over time.
The fact that sewage was once strewn into city streets does
not give rise to a permanent reasonable expectation that such
behavior can continue indefinitely. In another takings case,
the U.S. Supreme Court explained this concept as follows:
It is true, when the defendants - .. purchased or
erected their breweries, the laws of the state did
not forbid the manufacture of intoxicating liquors.
But the state did not thereby give any assurance,
or come under an obligation, that its legislation
upon that subject would remain unchanged.
Indeed, ... the supervision of the public health
and the public morals is a governmental power,
continuing in its nature, and to be dealt with as
the special exigencies of the moment may require;
and that, for this purpose, the largest legislative
discretion is allowed, and the discretion cannot
be parted with any more than the power itself.
44a
Appendix A
Mugler v. Kansas, 123 U.S. 623, 669 (1887) (internal
citations and quotations omitted) (holding that a state statute
that prohibited manufacture of alcoholic beverages was not
a taking even though such manufacture was legal before the
statute). While the owner of land might once have been
permitted to mine his land without regard to the effect that it
had on public streams, as evidenced by the spoilage of
“11,000 miles of streams” in this country,’ that expectation
is, and has been for some time, no longer reasonable. Despite
the fact that one may have purchased property with the
expectation to use it in such a manner that was acceptable
before the purchase, there may come a point in time when
the original owner’s expectations may no longer be
reasonable.
The Commonwealth Court has repeatedly applied Section
821B of the Restatement (Second) of Torts to guide its
determinations as to whether a use of property constitutes a
public nuisance. See, e.g., Muehlieb v. City of Philadelphia,
574 A.2d 1208 (Pa. Cmwith. 1990). That Restatement section
provides as follows:
(1) A public nuisance is an unreasonable
interference with a right common to the general
public.
(2) Circumstances that may sustain a holding that
an interference with a public right is unreasonable
include the following:
13. Hodel v. Virginia Surface Mining and Reclamation
Association, Inc., 452 U.S. 264, 279-280 (1981) (quoting 1976 &
1977 U.S. House of Representatives reports, discussed infra.)
45a
Appendix A
(a) Whether the conduct involves a
significant interference with the public
health, the public safety, the public
peace, the public comfort or the public
convenience, Or
(b) whether the conduct is proscribed by
a statute, ordinance or administrative
regulation, or
(c) whether the conduct is of a
continuing nature or has produced a
permanent or long-lasting effect, and, as
the actor knows or has reason to know,
has a significant effect upon the public
right.
Restatement (Second) of Torts § 821B. Therefore, the issue
is whether the proposed mining would unreasonably interfere
with a right of the general public.
Reasonableness is essentially a factual inquiry, which
we will not address, but whether there is public right, is an
issue of law. This Court has expressly held that the public
has a right not to suffer acid mine discharge into its public
waters, and that such discharges constitute a public nuisance
as a matter of statutory and common law. Commonwealth v.
Barnes & Tucker Co., 319 A.2d 871, 880 (1974) (Barnes &
Tucker I). In Barnes & Tucker I, we reversed a decision of
the Commonwealth Court that rejected the Commonwealth’s
nuisance causes of action. We held that common law
authorized the abatement of acid mine drainage that pollutes
46a
Appendix A
public waters. Jd. at 881-882. We also observed that The
Clean Stream Law, 35 P.S. § 691.1 et seq., provides a statutory
basis for the finding that acid mine discharge may rise to the
level of a public nuisance.
The discharge of sewage or industrial waste or
any substance into the waters of this
Commonwealth, which causes or contributes to
pollution as herein defined or creates a danger of
such pollution is hereby declared not to be a
reasonable or natural use of such waters, to be
against public policy and to be a public nuisance.
Barnes & Tucker I, 319 A.2d at 880 (quoting section 3 of
The Clean Streams Law, Act of June 22, 1937, P.L. 1987,
as amended, 35 P.S. § 691.3). In reaching that conclusion,
we relied on Pennsylvania R.R. Co. v. Sagamore Coal Co.,
126 A. 386 (1924), where we granted an injunction to prevent
mine owners from discharging acid mine water into a
stream used by the railroad and the public as a water supply.
Id. at 387. We stated: “[i]t has always been under our law, a
nuisance to pollute a stream from which the public gets its
supply of water.” Jd. at 391. The General Assembly’s
definition of pollution, although circular for our purposes in
that it uses the word nuisance, provides useful guidance.
Section 1 of The Clean Streams Law, 35 P.S. § 691.1. The
Section defines pollution as follows:
“Pollution” shall be construed to mean
contamination of any waters of the
Commonwealth such as will create or is likely to
create a nuisance or to render such waters harmful,
47a
Appendix A
detrimental or injurious to public health, safety
or welfare, or to domestic, municipal, commercial,
industrial, agricultural, recreational, or other
legitimate beneficial uses, or to livestock, wild
animals, birds, fish or other aquatic life, including
but not limited to such contamination by alteration
of the physical, chemical or biological properties
of such waters, or change in temperature, taste,
color or odor thereof, or the discharge of any
liquid, gaseous, radioactive, solid or other
substances into such waters. ...
35 PS. § 691.1.
There is further statutory support for a finding that it is
against the law of this Commonwealth and a nuisance to
pollute public waters in section 401 of the Clean Streams
Law, 35 PS. § 691.401, which provides that:
It shall be unlawful for any person or municipality
to put or place into any of the waters of the
Commonwealth, or allow or permit to be
discharged from property owned or occupied by
such person or municipality into any of the waters
of the Commonwealth, any substance of any kind
or character resulting in pollution as herein
defined. Any such discharge is hereby declared to
be a nuisance.
In Barnes & Tucker I, we repeated that “corruption of water
which affects the public use of a stream or menaces the public
48a
Appendix A
health becomes a public nuisance which the Commonwealth
may seek to abate.” Barnes & Tucker I, 319 A.2d at 882."
The Commonwealth Court, therefore, incorrectly held
that there was no authority that would permit the
Commonwealth to prohibit a property owner from mining
just because it would destroy the population of trout in Goss
Run. Machipongo V, slip op. at 7. While the Commonwealth
contends that mining would, in addition to destroying the
trout population, adversely affect the use of the stream as a
water supply (R.3a) the nature of the public use of the water
should not be the focus of our inquiry. To the contrary, we
have explained that “we believe that the public has a
sufficient interest in clean streams alone regardless of any
specific use thereof. . . [to warrant] injunctive relief.” Barnes
& Tucker I, 319 A.2d at 882 (preserving the water from acid
mine runoff despite the fact that the only use of the water
was recreational). Accordingly, if the Commonwealth is able
to show that the Property Owners’ proposed use of the stream
would unreasonably interfere with the public right to
unpolluted water, the use, as a nuisance, may be prohibited
without compensation.
14. Similarly, upon our review of the Commonwealth Court’s
abatement order we held,
[G]iven our determination that the Commonwealth is
validly employing its police power in a reasonable
manner to abate the immediate public nuisance, there
can be no finding of an unconstitutional “taking” by the
imposition of the present abatement order. . . .
Commonwealth v. Barnes & Tucker Co., 371 A.2d 461, 467 (1977)
(Barnes & Tucker II).
49a
Appendix A
Property Owners correctly point out that in the past we
have held that if a nuisance is only anticipated and not a
nuisance per se, the party seeking to prevent the use must
show that the nuisance is “practically certain [to occur], not
merely probable.” Ranck v. Bonal Enterprises, Inc., 359 A.2d
748, 752 (Pa. 1976). However, although mining is not a
nuisance per se, pollution of public waterways is. The key to
protecting our water is to prevent pollution from occurring.
The General Assembly has expressly stated that not only is
its desire to restore polluted waters but “[i]t is the objective
of the Clean Streams Law ... to prevent further pollution
of the waters of the Commonwealth.” 35 PS. § 691.4(3)
(emphasis added). It is beyond dispute that the resources
needed to correct pollution once it has occurred are far greater
than those needed to prevent it. While it is true that mining
per se is not a nuisance, experts need not wait until acid
mine water flows out of mines in the UFM area to predict
the likely results of mining this land. If the Property Owners
are correct that additional mining would not pollute the
Watershed, then there is no nuisance. Then again, if the
Commonwealth can prove that mining the UFM area would
pollute Goss Run, the cause of the nuisancé can be prohibited.
We see no reason to require the Commonwealth to prove
that the alleged poilution is practically certain to occur. It is
enough if the Commonwealth can prove what its technical
study found, that further mining in the UFM area had a
“high potential to cause increases in dissolved solid and metal
concentrations in Goss Run that would adversely affect the
use of the stream as an auxiliary water supply” or had
“a significant potential to disrupt the hydrologic balance
causing decreases in the net alkalinity of discharges . - - and
destroying the habitat for wild trout populations.”
Machipongo VI, slip op. at d
50a
Appendix A
Therefore, we remand this case to the Commonwealth
Court to consider evidence that the proposed use would
constitute a nuisance. If, after a factual inquiry that court
determines that the Property Owners’ activities would
unreasonably interfere with the public right to unpolluted
water, the ruling of the court based upon decisions of this
Court and the U.S. Supreme Court should be clear. Lucas,
505 U.S. at 1027-1029; Barnes & Tucker I, 319 A.2d at 881-
882. The government is not required to pay Property Owners -
to refrain from taking action on their land that would have
the effect of polluting public waters. Indeed, despite our
conviction that private property rights are to be strongly
protected, we are struck by the impropriety of taking action
that would require the General Assembly to pay someone
not to pollute public water or destroy public fisheries.
Conclusion
We, therefore, reverse the Commonwealth Court’s
determination that a taking occurred and remand this case to
the Commonwealth Court to: (1) horizontally define the
relevant property: (2) conduct the Lucas analysis with regard
to the property of the Naughton/Erickson Property Owners;
(3) conduct the Penn Central analysis with regard to the
property of both Property Owners; and, if necessary,
(4) determine whether the proposed use would constitute a
nuisance or would otherwise violate state property law.
We do accept, however, the Commonwealth Court’s
determination that property without value cannot be taken.
The Commonwealth Court considered detailed scientific
evidence of the economic viability of mining coal in the UFM
5la
Appendix A
area and determined that “the Machipongo Surface Mine. . .
[was] not economically feasible.” Machipongo VI, slip op.
at 38. Therefore, the Commonwealth Court declined to find
a taking with regard to the Machipongo Surface Mine. The
Commonwealth Court’s legal reasoning on this issue is sound
and there is no basis here to alter its factual findings.
Accordingly, the Property Owners are not entitled to
compensation with regard to the Machipongo Surface Mine.
Finally, Property Owners have requested that we identify
the appropriate forum for a hearing on damages. However,
because we have reversed the determination of the
Commonwealth Court that a taking occurred and because it
is not clear, at this juncture, whether a taking will be found,
we decline to render an advisory opinion as to the appropriate
forum to consider damages.
Former Chief Justice Flaherty did not participate in the
decision of this case.
JUDGMENT ENTERED:
May 30, 2002
s/ Shirley Bailey
Shirley Bailey,
Chief Clerk
52a
APPENDIX B — NOTICE OF THE COMMON-
WEALTH COURT OF PENNSYLVANIA DATED
OCTOBER 19, 2000
IN THE COMMONWEALTH COURT
OF PENNSYLVANIA
No. 248 M.D. 1992
MACHIPONGO LAND AND COAL COMPANY, INC. and
the VICTOR E. ERICKSON TRUST and JOSEPH
NAUGHTON,
Petitioners
V.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT
OF ENVIRONMENTAL RESOURCES, THE ENVIRON-
MENTAL QUALITY BOARD, and ARTHUR A. DAVIS,
SECRETARY OF ENVIRONMENTAL RESOURCES,
Respondents
NOTICE
NOW, October 19, 2000, pursuant to a praecipe for entry
of final judgment and decree filed in the above matter, this
court’s adjudication and decree nisi of August 21, 2000 as
modified by the order of September 25, 2000 is hereby
entered as a final judgment of the court.
s/ C.R. Hostutler
C.R. Hostutler
Deputy Prothonotary/Chief Clerk
53a
APPENDIX C — ORDER OF THE COMMONWEALTH
COURT OF PENNSYLVANIA DATED
SEPTEMBER 25, 2000
IN THE COMMONWEALTH COURT
OF PENNSYLVANIA
NO. 248 M.D. 1992
MACHIPONGO LAND AND COAL COMPANY, INC. and
the VICTOR E. ERICKSON TRUST and JOSEPH
NAUGHTON,
Petitioners
v.
COMMONWEALTH OF PENNSYLVANIA, DEPART-
MENT OF ENVIRONMENTAL RESOURCES, the
ENVIRONMENTAL QUALITY BOARD and ARTHUR A.
DAVIS, Secretary of ENVIRONMENTAL RESOURCES,
Respondents
ORDER
AND NOW, this 25" day of September, 2000, upon
consideration of both Petitioners’ and Respondents’ Motions
for Post-Trial Relief, the following changes are made to our
Adjudication and Decree Nisi issued August 21, 2000:
1. The amount of coal that Thaddeus Sobek,
Respondents expert testified as the amount of
recoverable coal for the Middle Kittanning
54a
Appendix C
Seam at the proposed Erickson/Naughton
Surface mine is 39,000 tons, not the 49,000
tons listed in the opinion. This change does
not change the finding that the coal at this site
is mineable.
2. David Cerulla’s testimony is that the Middle
Kittanning coal seam at the Machipongo
Surface Mine is 36 inches in width, not the
thirty inches set forth in the Adjudication and
Decree Nisi. The Commonwealth’s witness is
more credible on this issue and the finding
remains that the average size of the coal seam
is thirty inches.
All of the other Post-Trial Motions filed by Petitioners
and Respondents are denied.
s/ Dan Pellegrini
DAN PELLEGRINI, Judge
55a
APPENDIX D — ADJUDICATION AND DECREE NISI
AND ORDER OF THE COMMONWEALTH COURT OF
PENNSYLVANIA DATED AUGUST 21, 2000
IN THE COMMONWEALTH COURT
OF PENNSYLVANIA
NO. 248 M.D. 1992
MACHIPONGO LAND AND COAL COMPANY, INC. and
the VICTOR E. ERICKSON TRUST and JOSEPH
NAUGHTON,
Petitioners
v.
COMMONWEALTH OF PENNSYLVANIA, DEPART-
MENT OF ENVIRONMENTAL RESOURCES, the
ENVIRONMENTAL QUALITY BOARD and ARTHUR A.
DAVIS, Secretary of ENVIRONMENTAL RESOURCES,
Respondents
BEFORE: HONORABLE DAN PELLEGRINI, Judge
ADJUDICATION AND DECREE NISI
Machipongo Land and Coal Company, Inc., the
Victor E. Erickson Trust (Erickson) and Joseph Naughton
(collectively, Coal Owners), instituted this action in 1992
against the Commonwealth of Pennsylvania, Department of
Environmental Resources (DER), the Environmental Quality
Board (EQB) and Arthur A. Davis, Secretary of the
56a
Appendix D
Department of Environmental Resources (collectively, the
Commonwealth) claiming that the Commonwealth had
“taken” their interest in coal underlying their property in the
Goss Run Watershed (Watershed) by designating those lands
“unsuitable for mining”’ under the Pennsylvania Surface
Mining Conservation and Reclamation Act (PaSMCRA), Act
of May 31, 1945, P.L. 1198, as amended, 52 P.S. § 1396.4e(g).
On May 26, 1989, the Commonwealth received from the
Brisbin Recreation Board and the Locust Grove Sportsmen
Club a “Petition To Declare Areas Unsuitable For Mining”
in which they requested that the entire 2.86 square mile
Watershed be protected from coal mining so as to protect
the quality of the water of the Goss Run Stream and the
Brisbin Dam and Recreational Park.? Coal Owners requested
and were granted intervenor status because they owned
surface and mineral rights in the Watershed that could
potentially be affected. Specifically, Machipongo owned
2,037 acres of land in Clearfield County of which 157 acres
had mineral rights in the Watershed, and Erickson and
Naughton owned 1,350 acres in Clearfield County of which
27 acres had mineral rights in the Watershed.
1. 25 Pa. Code § 86.130(b)(14), which took effect May 23, 1992,
designated their land as unsuitable for mining.
2. More specifically, the petition alleged that surface mining
within the Watershed would adversely affect the Goss Run stream
water quality and the Brisbin Dam and Recreational Park; would
adversely affect a recreational stocked trout fishery maintained by
the Pennsylvania Game Commission; and would adversely affect
wildlife habitat in the Watershed reducing its values for hunters,
hikers and others who used the Watershed because of its aesthetic
woodlands.
57a
Appendix D
After public hearings were held, the DER conducted a
detailed study of the proposed designated area as required
by Section 4.5(g) of the PaSMCRA, 52 P.S. § 1396.4e(g).
Essentially, the results of the study indicated that surface coal
mining of the Watershed, upstream of the Brisbin Dam, had
significant potential to disrupt the hydrologic balance causing
decreases in the net alkalinity of discharges from abandoned
Lower Freeport underground mines and destroying the habitat
for wild trout populations. It also had a high potential to cause
increases in dissolved solid and metal concentrations in Goss
Run that would adversely affect the use of the stream as an
auxiliary water supply. The DER recommended that the EQB
approve a proposed regulation designating the surface
mineable coals located within the Watershed upstream of the
Brisbin Dam as unsuitable for surface mining of coal and
submitted that recommendation to the General Assembly. The
EQB approved the proposed regulation, and after a period of
public comment, the General Assembly also approved the
notice of proposed rulemaking and adopted a final regulation
designating a portion of the Watershed unsuitable for mining
(UFM) as set forth at 25 Pa. Code § 86.130(h)(14).’ That
designation was made pursuant to Section 4.5(b) of the
3. That section provides:
The surface mineable coal reserves within the Goss Run
Watershed upstream of the Brisbin Dam, including a
small tract of land within the Watershed of the West
Tributary to Goss Run, a total of approximately
555 acres, are designated unsuitable for all types of
surface mining operations.
The regulation was published as final in the Pennsylvania
Bulletin on May 3, 1992. See 22 Pa. Bull. 2715.
58a
Appendix D
PaSMCRA, 52 P.S. § 1396-4e(b), which permits the
Commonwealth to designate an area as unsuitable for surface
mining. If underground mining was proposed, none of the
mine opening, including ventilation shafts, could be located
within the designated area.
Subsequently, on July 1, 1992, Coal Owners filed a
petition for review against the Commonwealth in our original
jurisdiction seeking equitable and declaratory relief
challenging the regulation designating that certain portions
of land they owned in the Watershed were unsuitabie for
surface mining. They alleged that 157 acres of the 2,037 acres
of land owned by Machipongo in the south reserves of the
Watershed had mineral rights that were within the UFM
designated area and could not be mined, resulting in a taking
of at least 1,344,800 tons of its coal valued at $2,846,550.
Similarly, 27 acres of the 1,350 acres owned by Erickson
and Naughton in the north reserves of the Watershed could
not be mined, resulting in a taking of at least 377,900 tons of
their coal valued at $566,850. Based on Coal Owners’
inability to mine any of their coal located within the
UFM-designated area, they alleged that the regulation
implementing the designation constituted a taking without
just compensation and a violation of their due process rights.
They requested, among other things, that this Court enjoin
the enforcement of the regulation as an unconstitutional
taking of their property or remand the case to the trial court
to determine the value of the property taken as a result of the
adoption of the regulation.‘
4. Coal Owners also requested that we order the Commonwealth
to adopt regulations containing constitutional safeguards for affected
landowners and to declare the regulation void, or order the
(Cont’d)
59a
Appendix D
After much litigation as to the proper forum to hear this
case, our Supreme Court remanded it to us for resolution.*
(Cont’d)
Commonwealth to hold a hearing with constitutional guarantees to
determine whether the regulation should be adopted.
5. In response to Coal Owners’ petition, the Commonwealth
filed preliminary objections alleging, inter alia, that this Court lacked
jurisdiction to hear the case. While holding that we had jurisdiction,
we granted the preliminary objections and transferred the matter to
the Environmental Hearing Board (EHB) for disposition under
the doctrine of primary jurisdiction because it had the expertise
to rule on the validity of the surface mining taking claims.
See Machipongo Land and Coal Co., Inc. v. Commonwealth,
Department of Environmental Resources, 624 A.2d 742 (Pa. Cmwith.
1993) (Machipongo I).
Both the Commonwealth and Coal Owners filed appeals with
the Supreme Court arguing that the transfer of the case to the EHB
was erroneous. Coal Owners argued that their taking claims should
be addressed by the courts while the Commonwealth argued they
should be addressed by the DER. By order dated October 11, 1994,
the Supreme Court reversed our decision and referred the case to the
Court of Common Pleas of Clearfield County for further proceedings
under the Eminent Domain Code, Act of June 22, 1964, Special Sess.,
PL. 84, as amended, 26 PS. §§ 1-101 - 1-903. See Machipongo Land
and Coal Co., Inc. v. Commonwealth, Department of Environmental
Resources, 538 Pa. 361, 648 A.2d 767 (1994) (Machipongo II). The
Commonwealth filed an application for reargument alleging that this
Court, rather than the trial court, had jurisdiction to hear this matter.
The Supreme Court granted reargument and by order dated May 21,
1996, vacated its earlier decision. See Machipongo Land and Coal
Co., Inc. v. Commonwealth, Department of Environmental Resources,
544 Pa. 271, 676 A.2d 199 (1996) (Machipongo III). It then remanded
the case to this Court for further proceedings on the basis that the
, (Cont'd)
60a
Appendix D
The Commonwealth filed a motion for summary judgment
which was denied by this Court in Machipongo Land and
Coal Company v. Department of Environmental Resources,
719 A.2d 19 (Pa. Cmwith. 1998) (Machipongo IV). There
we denominated the following factors would have to be
considered to determine whether a regulatory taking had
occurred:
¢ whether the public interest requires regulatory
interference with the property right;
¢ whether the regulation is reasonably related to
that goal;
¢ whether the amount of property taken deprives
an owner of all economical viable uses of the
property, measured by what was taken (the
numerator) against what was left (the
denominator); and
¢ whether property owner’s actions or proposed
actions would cause a nuisance.
See Lucas v. South Carolina Coastal Council, 505 U.S. 1003
(1992).
(Cont'd)
regulation upon which the Coal Owners were making their challenges
was promulgated under the Commonwealth’s police power
rather than the Eminent Domain Code and did not fall within an
enumerated exception to Section 761(a)(1) of the Judicial Code,
42 Pa. C.S. § 761(a)(1).
6la
Appendix D
In order to address the third factor listed above, in the
fraction of property lost to property unaffected, we were
forced to define the relevant property interest. In Machipongo
IV, we established a modified regulated land test to define
that interest. Under our test, whether the regulated land will
actually be the denominator depends on the answers to the
following three questions:
1) whether the regulated land had value prior to the
regulation;
2) whether the regulated land has a separate use from
the non-regulated contiguous parcel(s) — i.e.,
whether it may be profitably used if it is the only
parcel; and
3) if the regulated land has value separate from the
contiguous land, whether all of its economic benefit
is gone.
719 A.2d at 28. “If the regulated land had an economically
viable use separate and apart from any other contiguous land
that was owned and became valueless after the regulation, it
would become the denominator in the fraction and there
would be a taking.” Jd. The following fraction would
ultimately determine whether a taking had occurred:
the interest in the coal taken (numerator)
the regulated land (denominator)
We stated that, “[i]f the result of the fraction is 1, then a
taking has occurred; conversely if the fraction is anything
less than 1, no compensatory taking has occurred.” /d. at 29.
62a
Appendix D
We then went on to address what was the appropriate
denominator to be used when it was alleged that the property
taken was coal. Because Pennsylvania law recognizes three
separate estates in land (surface, coal/mineral and the right
to support), we concluded that “the appropriate denominator
by which to determine whether Coal Owners have lost all
viable economic use of their land is solely the coal estate in
the UFM-designated area.” /d. To find that a taking of the
coal estate had occurred, a finding had to be made that:
The coal estate had value prior to the UFM
designation, whether it had a separate use from
the non-regulated contiguous land Coal Owners
owned, and whether all of its economic benefit
was gone as a result of the regulation. If, after
that determination is made, the result of the
fraction is less than 1, then a taking has not
occurred. In this case, specific evidence would
have to be adduced as to whether the coal can be
extracted by subsurface mining; whether the land
in the regulated area cannot. be surface mined
without using the contiguous parcel; and whether
the grade of coal is insufficient in amount or
quality to economically mine. With that evidence,
the denominator can be fixed and we can then
determine whether the regulation has resulted in
an unconstitutional taking...
Id. (Emphasis added.) To strike down the regulation, the Coal
Owners then had to prove that their coal reserves were
economically mineable.
63a
Appendix D
After we issued our opinion in Machipongo IV, the
Commonwealth filed a “motion in limine” seeking
permission to introduce evidence at trial that Coal Owners’
proposed mining activities would constitute a public
nuisance. In making this nuisance-related argument, the
Commonwealth invoked the so-called Lucas nuisance
exception. This exception was recognized by the Supreme
Court when it held that if the regulation prohibited the use
under nuisance law, there would be no taking even if it had
the effect of totally depriving the landowner of all beneficial
use because the public’s interest prevailed regardless of what
the landowner had lost. See Lucas, 505 U.S. at 1029-30.
The Commonwealth contended that any coal mining could
be considered a nuisance. In rejecting that argument, we held
that the type of nuisance envisioned in Lucas was not coal
mining, which has never
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