Pennsylvania Coal Co. v. Mahon: Brandeis, in dissent

Previously, I wrote about the majority opinion in Mahon, authored by Justice Oliver Wendell Holmes, Jr. In short, Justice Holmes wrote that private property could be regulated to a “certain extent”, but that if that regulation went “too far” it would constitute a taking. Subsequent history has taught us that the Supreme Court has read this to mean that all value has to be taken through regulation in order for a taking to exist. We’ll revisit this point when we move into later twentieth century regulatory takings cases. Today, though, I will discuss Justice Brandeis’s response to Justice Holmes’s opinion.

Brandeis was the lone dissenter in this case. His decision has two elements that I find particularly interesting: first, instead of discussing specific “estates” in the land (an “estate” meaning, a legal interest), Brandeis was interested in the way owners “use” the land and how those uses could be regulated; and second, he was interested in the way the state’s police powers should apply in the case. The two go hand-in-hand in his view.

Use of land, he points out, is something the government (in this case, the Commonwealth of Pennsylvania) has always been able to regulate. Use by an owner is never absolute. That is to say, because you own land does not mean you can use it however you want. For example, an owner may not create a public nuisance with his land. An example of this would be someone placing a ton of scrap metal on their land or dumping chemicals on it so that the water table is poisoned, and all the land adjacent to their tract was devalued or damaged because of their activities. Brandeis also notes that “uses, once harmless, may, owing to changed conditions, seriously threaten the public welfare.” I think contemporary examples of this would include believing that a chemical was harmless and then learning that it is linked to cancer or some other disease. Brandeis argues, in essence, that when new information (including new science) comes to light the government can step in for the good of the public and create regulations addressing the problems.

Now, keep in mind that this is a case about a state level statute, so Justice Brandeis’s remarks are focused on the state police power. His argument is that if the state is legitimately exercising its powers to legislate on behalf of the health, safety and morals of its citizen (which are powers given the states in the federal constitution), then they do so without having to pay compensation. The only time they would be required to compensate is if the state were to exercise their power in such an arbitrary manner as to violate the 14th Amendment’s due process clause and, through it, the Takings Clause of the Fifth Amendment. Brandeis explains that all restrictions on the use of property ultimately deprive an owner of something he or she may have enjoyed before the restriction was written. He writes,

“deprives the owner of some right theretofore enjoyed, and is, in that sense, an abridgment of the State of rights in property without making compensation. But restriction imposed to protect the public health, safety or morals from dangers threatened is not a taking. The restriction here in question is merely the prohibition of a noxious use…”

Such a restriction must have the purpose of protecting the public for it to be a legitimate exercise of police powers, wrote Justice Brandeis. This point is important because the statute that was in question in Mahon had included provisions that restricted undermining in areas used by the public even though this case involved private owners. Brandeis believed that just became the Mahons were private owners, the statute should apply to their land just as it did to public lands.

Justice Holmes, in his majority opinion, seems to have mostly ignored the portions of the statutes that dealt with public areas, paying more attention to the fact that in this specific case the land was privately held and not used by the public. Moreover, the Mahons had been given notice by Pennsylvania Coal to expect their land to be undermined. Holmes believed that, because of the terms of the deed, notice was all that was necessary for the company to do if it wanted to mine the coal. If more needed to occur, in Holmes’s view the state should have exercise eminent domain and acquired the land rather than regulating it in such a way that caused the diminution of its value.

Brandeis, however, argued that “…a restriction imposed through exercise of the police power [is not] inappropriate as a means, merely because the same end might be affected through exercise of the power of eminent domain, or otherwise at public expense.” In his view, if this were the case, every restriction placed on property would be unconstitutional. Later in the opinion, he points out that Holmes’s theory that notice by the coal company was all that was required to ensure the safety of the Mahons (or anyone else living or working not the surface of land being undermined) was problematic. Brandeis believed that the state legislature, which possessed local knowledge concerning local conditions, had determined that such notice was not adequate to the protect the public safety. It was because local decision makers and tribunals would possess local knowledge that the police powers reside in the states, he said. Had they believed that notice by the coal company was enough, there would have been no need for the statute at all and the state supreme court would not have decided in favor of the Mahons.

On the issue of diminution of value, Justice Brandeis also disagreed with Justice Holmes. He explained that “values are relative”.  Relative to what? To whatever you’re comparing it to, he said. Brandeis argued that Justice Holmes had compared the value of what was lost (i.e., enough coal left in place to keep the surface from collapsing) by the Company against the wrong thing: “If we are to consider the value of the coal kept in place by the restriction, we should compare it with the value of all the parts of the land. That is, with the value not of the coal alone, but with the value of the whole property. The rights of an owner as against the public are not increased by dividing the interests in his property into surface and subsoil. The sum of the rights in the parts cannot be greater than the rights in the whole.” Here he points out that state governments were already regulating what occurred above ground to protect adjacent property owners. For example, buildings could not be higher than a certain number of stories in some cities so that those in lower buildings still had access to sunlight and fresh air. Brandeis, rather pointedly inquires why, given the constitutionality of such restrictions, should rights underground bar the State’s power to set regulations for public safety purposes?

In many ways, the disagreement between these two justices had to do with whether they trusted states to exercise their police power. For Brandeis, regulations for the health, safety and morality of the citizens were not only acceptable, but required in order for a society to evolve and function well. In 1922, Holmes’s skepticism of state regulation predominated his thinking. His view that eminent domain was the appropriate vehicle for accomplishing the goals of the state meant that Pennsylvania would have to condemn all the land that the mining companies wanted to undermine in order to accomplish the protection of individuals living on the surface. Even if the state could afford to do so, Holmes’s intention was to make the decision to end land subsidence a purely economic calculation rather than an issue of morality and safety.

Despite this disagreement, these two justices would, eventually, be united in many of their views, joining one another in dissent after dissent when their colleagues struck down federal level regulations in the 1930s. That said, in 1922, their arguments in Mahon — and the confusing tension in Holmes’s majority opinion — was indicative of the changing perspectives during the early part of the the century concerning police powers and regulation that would eventually lead to the 1930s battles between the US Supreme Court and President Roosevelt concerning New Deal legislation.

Today, this case may well be at the heart of the tension in regulatory takings cases, or at least its indicative of how that tension developed. The questions regulatory cases pose again and again include what land use regulations can government create without compensation, when must they compensate, and when should they use eminent domain to accomplish their goals? The answers the Court gives have never been fully satisfactory to anyone, but that may partly be due to the very different regulatory situations in which takings cases occur and the way a case-by-case analysis can make consistency in the law (and we like law to be consistent internally) all but impossible. In that regard, the most important insight in this case may well have been Justice Brandeis’s observation that regulation depends upon context and what was once viewed as a safe use may become unsafe (and therefore open to regulation), depending upon changing conditions. The value of the land, in other words, may not be the only thing that is relative.

Reading Pennsylvania Coal Company v. Mahon reminded me that building skyscrapers was not only a technologically awe-inspiring when they were first constructed, but also one that had ramifications for owners of property adjacent to the skyscrapers. One of these days, I will write a post about those cases and the connection between regulatory takings and public nuisance law.

Regulatory Takings: Pennsylvania Coal Co. v. Mahon

Why, precisely, did I have so much trouble with takings cases, particularly regulatory takings all those years ago? Why do I still heave a heavy sigh whenever I am faced with a new one? Well, back in the 1980s, when property movements were really getting their litigative feet under them, Carol Rose of Yale Law School wrote a wonderful essay titled, “Mahon Reconstructed: Why the Takings Issue is Still a Muddle.” (52 S. Cal. L. rev. 561, 1983-1984). After I reading this essay I ended up reading a lot of Professor Rose’s work. This essay, and one of her books in particular, Property and Persuasion: Essays on the History, Theory, and Rhetoric of Ownership, shaped my thinking about takings quite a lot. It was published by Westview Press, 1994 — it’s out of print now, but if you can find a used copy, I recommend it!

Since I am not a lawyer, I have never been particularly interested in making arguments about what I think a particular litigant deserves as relief or why they should receive it. I am interested, as a social scientist, in the way law develops over time; and in particular, how society is shaped by whatever the law says. I’m curious to know the degree to which the identity of actors such as property owners, lawyers, or administrative agency officials, is formed (sometimes impacted, sometimes indirectly influenced) by the law. Sometimes all this becomes very focused on whether the development of the law provides not only opportunities for making claims but also actually constructs the interests and issues that individuals (most likely owners in my research) are confronted with in their day-to-day experience with the government. The interest in government is the political scientist coming out, but the rest is all thanks to my training in sociolegal studies.

At any rate, takings proved especially complicated in this regard because property exists at such a very deep and fundamental level in our society. What I found so interesting about Carol Rose’s work was that, at least in this essay, she did not try to expound a new theory of takings that if adopted would solve all takings woes. Instead, she took a step back and asked why “takings” in law had become difficult to define. Put in her own words: she wondered the “possible reasons for the elusiveness of the meaning of ‘taking’ in our law” (p. 561). Instead of following a worn route through a law review article, one that would involve making an argument about what the courts “should” do, Professor Rose raised a question that was much more empirical in nature: how? How does the confusion concerning what a “takings” is actually arise out of the law? In formulating an answer, she had to take a look at the doctrine around what we today call regulatory takings to see when and where the “muddle” began. Her answer began with a case decided in 1922, Pennsylvania Coal Company v. Mahon (260 US 393, 1922).

Mahon is a case I love to teach, not least of all because my undergraduates and graduate students come to have a much better understanding of the term “undermine” after they become familiar with the facts of the case. Let me explain…

The decision in the court case, authored by the eminent Justice Oliver Wendell Holmes, came to the Supreme Court on appeal from the Supreme Court of the Commonwealth of Pennsylvania. Pennsylvania had passed the Kohler Act in 1921. The Act was designed to address a problem the state had long had: soil subsidence from mining coal. Large stretches of Pennsylvania are rich in anthracite coal deposits and so mining companies, including Pennsylvania Coal, had long been mining these areas. However, mining practices at the time often involved mining under (or undermining) roads, towns, and other areas, creating what some would call “surface support problems,” or what others might see as big, giant holes. The surface of the land when it lost too much of its support below would fall into the ground creating big holes. If a house, for example, were sitting on the pocket that collapsed then the house would fall, crashing into the hole. Whole towns, in fact, had been subject to subsidence — that is to say, they had begun to fall into holes created by undermining the surface to such an extent that there was not enough earth to hold it up anymore. If you’re trying to picture this, here’s a link that may help.

Mrs. Mahon’s father had purchased the surface of a residential lot in 1878 from Pennsylvania Coal. The company had retained the subsurface mineral rights. In the deed her father had waived all claims against Pennsylvania Coal due to subsidence of the surface. This meant that the coal company had retained both the subsurface mineral rights as well as the support rights to the land. This was perfectly acceptable in Pennsylvania law because the common law recognized three “estates” in mining property. An “estate” in land law means, in essence, an interest you can own. In Pennsylvania, as Professor Rose explains what the three interests were in Pennsylvania law: “first, an estate in the surface, second, an estate in the minerals below, and finally an estate in the support of the surface (the third estate)” (p. 563). In other words, if you purchased land from a mining company, you purchased only an interest in the surface, while the interests in the minerals and support of the surface remained with the original owner, i.e., mining company. This was intended to enable mining to continue, even as use of the surface was given to a new owner.

After a few decades of undermining (and watching citizens and local governments suffer its consequences) the state legislature attempted a remedy through legislation. The Kohler Act addressed the danger of subsidence by making it impossible to sever the surface estate from the estate in the support. Thus, the act passed by the state legislature was attempting to change a common law right in property that had long been recognized in Pennsylvania law.

Though Professor Rose does not make much of this, the political scientist in me is always fascinated by attempts made by one branch of government to change something another branch of government has maintained for a long time. The fact that the subsidence problem was widespread and was a major social and economic problem in Pennsylvania strikes me as clear from the court records, particularly given that the trial court had found that the act was likely unconstitutional, while the commonwealth’s Supreme Court found that the statute was “a legitimate exercise of the police power.” Again, the political scientist in me perks up: not only is one branch of state government attempting to change a longstanding position of another, but we have economic interests in mining going toe-to-toe with reformist attempts in the state legislature to exercise a power that is clearly given to the states in the federal constitution.

Wanna guess what happens? Here’s a hint, based on my anecdotal observations (not empirical research and data collection): when you have major economic interests doing battle with the police power in a state, the economic interests tend to win. Not always, but most of the time.

Back to the case: Mrs. Mahon and her husband took up residence on the lot her father had purchased, claiming title through the 1878 deed. When, in September 1921, the Mahons were informed that the company intended to undermine their land the Mahons sued under the recently passed Kohler Act. They were hoping to keep the company from mining in such a way that would cause their residence to fall into a hole created through soil subsidence. Here we have an attempt by individual owners to call directly upon a newly passed state statute in order to claim a brand new version of property rights in Pennsylvania in order to save a home from the damaging effects of behavior acted out by a corporate entity exercising its common law right. This is the sort of legal drama we make movies out of — if only we could understand the case…

So what happened? Justice Holmes wrote for the majority. He was a writer of some of the most cogent, eloquent, and interesting decisions of all time at the Supreme Court level, but in this case he wrote one of the most muddled, farcical and complicated decisions that has plagued us ever since. I recently told a student that all writers have a bad day from time to time. Frankly, I think Justice Holmes was having a very bad writing day (and his good friend, Justice Louis Brandeis, seemed to think so as well given his dissent — which will be subject of my post in two weeks).

Justice Holmes came up with what we call today the “diminution of value” test for regulatory takings of property. He said that exercises of the police power could devalue property without being a takings under the Fifth Amendment. Some diminution was okay, he said, but when that value is diminished too greatly it triggers the takings clause and that requires there be some sort of just compensation. How much is too much? Well, here is his sense of the situation:

“When it reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation to sustain the act.” It’s my favorite line in the whole case. In her essay, Professor Rose also quotes a second restatement of the rule as it occurs at the end of the same paragraph: “[W]hile property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”

Pausing for a minute, let’s recap Justice Holmes’s views: how much of value must be taken to trigger the takings clause? “A certain magnitude”. Must there be compensation in every case? No… But more often than not since “in most if not all” suggests that it might be most, but it may well not be all cases that trigger the takings clause. And in the second restatement of this rule, how much regulation is allowable? The answer is “to a certain extent”. When is there a taking? “if regulation goes too far”.

Clear as mud!

But let’s look at the full passage from the case where Justice Holmes makes these statements — it’s the last paragraph of the case, and the most important one:

“The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. It may be doubted how far exceptional cases, like the blowing up of a house to stop a conflagration, go — and if they go beyond the general rule, whether they do not stand as much upon tradition as upon principle. In general it is not plain that a man’s misfortune or necessities will justify his shifting the damages to his neighbor’s shoulders. We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change. As we already said, this is a question of degree — and therefore cannot be disposed of by general propositions.”

If we parse that paragraph a little, it’s easy to conclude that Justice Holmes, while determining to strike down the Pennsylvania statute was also intentionally vague. It’s really the only explanation for a writer — any writer, let alone one so eminent — to be so very ambiguous. He steps away from creating a “general proposition” that can guide us in understanding “to what extent” a regulation must diminish value; and, he also steps away from saying “when” compensation may be required. He really only says that if it goes “too far”, then it triggers the takings clause and just compensation. The question arises, of course, who gets to decide what constitutes “too far” if we have no clear understanding of it from this decision? Clearly not the state legislature since their law was just struck down. It appears as though J. Holmes, intentionally or unintentionally, made this a question for the courts.

In her essay Professor Rose also pointed out something that is easily missed in this discussion: “what property is relevant in a takings discussion?” (566-567). Remember that we have, here, mineral rights, support rights and surface rights. Three different parts of the land that could be used and sold as separate bits of property. For Holmes, the only property that seemed to matter was the right to the support, which under the Kohler Act became part of the surface rights the Mahons possessed. In his view, the Kohler Act worked a takings of all the rights the company had — a complete diminution of value, as Professor Rose points out. That the act was designed to protect the surface rights of individuals living, working, and using the land in various ways what mattered to the Court was only the reduction in value to the mining company of its rights under the act. This meant that the changing value of the house on top of the land when it fell into the hole caused by subsidence was not really a part of his calculation.

Justice Holmes’ good friend, Justice Louis Brandeis dissented in this case. In my next post, I’ll give you a sense of what divided these two good friends on this particular issue. Mahon, however, became the basis for a long list of regulatory takings cases in the twentieth century, and if you look back at my discussion of Annicelli, you can see it lurking there in the background. But as you can see in Annicelli in the late twentieth century, as courts sought a principle that was easier to apply, they considered a complete diminution of value (which Holmes believed had occurred for the mining company) key to determining when a regulatory takings had occurred. That he left the door open to something less than complete becomes increasingly less important as the century wears on. After I’ve written about the dissent in this case, and as we move forward in time in regulatory takings cases, I’ll show you how this developed.