"The foundation of our 'regulatory takings' jurisprudence": the myth and meaning of Justice Holmes's opinion in Pennsylvania Coal Co. v. Mahon.

• Author: Brauneis, Robert

CONTENTS

1. THE JURISPRUDENCE OF THE HOLMES OPINION IN MAHON 619 A. A Noncategorical Historical Framework for Constitutional Property Rights: Framing the Question Presented 621 1. The Alternatives Holmes Rejected 624 2. Holmes's Reasons for Embracing a Noncategorical Historical Approach 631 a. Law as Jurisdictionally Regularized Coercion 632 b. Moral Skepticism 636 c. The Rejection of Large-Scale Deductive Ordering 637 d. The Psychological Basis of Property and the Limits of Law as a Human Institution 639 B. Measuring Degrees of Legal Change from "Structural Habits " in Positive Law 642 1. Analogy and the Organization of Bodies of Law 643 2. Measuring Legal Change from Structural Habits 647 3. The Assessment of Legal Change in Mahon 650 4. The Place of Diminution in Value 657 C. The Historical Process of Constitutional Specification 660 11. THE MYTHS OF MODERN MAHON 664 A. The Court's Original Understanding 666

   1. The Textual Basis 666 2. Regulation and Just Compensation 670 3. Traditional Legal Categories 675 B. Mahon Lost and Found 680 C. Mahon in the Last Two Decades 685 1. Mahon and the Constitutional Text 686 2. Mahon and Methods of Takings Analysis 689 D. A Role for Rediscovered Mahon? 694 1. Feasibility 694 2. Desirability 697 III. CONCLUSION 701

      Robert Brauneis

      Judges and scholars alike laud Justice Holmes's opinion in Pennsylvania Coal v. Mahon as the origin of regulatory takings jurisprudence and the source of the diminution in value and balancing tests. Yet many also blame his discussion in Mahon for creating the confusion in regulatory takings doctrine. In this Article, Professor Brauneis argues that both the commendations and accusations have been largely misplaced Mahon was neither decided under the Takings Clause, nor the first case to hold that the Constitution protected property as abstract rights or economic value, nor the first decision to hold that the constitutionality of a use regulation might turn on the provision of just compensation.

      At the same time, Justice Holmes developed and applied in Mahon a theory of constitutional property far more sophisticated than a diminution in value or balancing test. Holmes concluded that the property " the Constitution protected was the set of advantages an owner enjoyed under existing positive law, and thus rejected the police power " tradition in American constitutional property jurisprudence. He also determined that there was no qualitatively separate category of positive law advantages that the Constitution protected as property, thereby rejecting the vested rights" tradition. Rather, he maintained that the Constitution allowed incremental change in principles embedded in a body of positive law, but required indemnification for radical alterations. This account was grounded in Holmes's views on law and its organization and development, morality, and human psychology. Although other Justices on the* Mahon Court did not accept all of those views, they shared with Holmes common points of understanding that have since been forgotten or ignored. Mr. Justice Holmes's opinion, for the Supreme Court, in Pennsylvania Coal v. Mahon, [is] both the most important and most mysterious writing in takings law.(1)

      Nine cases and four findings of constitutional infirmity over the last decade would not amount to a trend in, say, First Amendment jurisprudence. But it does in Takings Clause jurisprudence. Before 1986, the Supreme Court's two-hundred-year history arguably reveals no more than four occasions on which the Court found laws to be regulatory takings, triggering the obligation to pay just compensation under the Federal Constitution's Takings Clause(2) although they involved no physical appropriation or destruction of property.(3) Yet the Rehnquist Court has found four regulatory takings in its first ten years.(4) The Court also heard three other regulatory taking cases,(5) and has agreed to hear two more.(6)

      Genealogists of this regulatory takings jurisprudence have found their Adam in Pennsylvania Coal Co. v. Mahon,(7) a 1922 Supreme Court decision with a majority opinion by Justice Oliver Wendell Holmes. The Mahon Court concluded that a Pennsylvania statute prohibiting mining of coal so as to cause surface subsidence was unconstitutional.(8) "The general rule at least," Holmes wrote, "is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."(9) The Holmes opinion, Chief Justice Rehnquist concludes, was "the foundation of our `regulatory takings' jurisprudence."(10) Holmes, echoes Justice Scalia, invented the idea of the regulatory taking because he recognized that "if the protection against physical appropriations of private property was to be meaningfully enforced, the government's power to redefine the range of interests included in the ownership of property was necessarily constrained by constitutional limits."(11) A bevy of scholars has come to the same conclusion.(12)

      The Holmes opinion in Mahon is lauded, not just as the common ancestor of all regulatory takings decisions, but also as the progenitor of particular features of current regulatory takings doctrine. The Supreme Court(13) and Congress(14) have both embraced a tradition of looking to Mahon for a diminution in value test; scholarly recognition has preceded and accompanied

      that embrace.(15) At other times, the Court has cited Mahon for a balancing test, a view of the case also apparently endorsed by the two most recent Supreme Court nominees.(16) Academic acknowledgment of a balancing test in Mahon runs a close second to acknowledgment of a diminution in value test.(17)

      But if Mahon is celebrated for its originality and fecundity, it is also blamed for the muddled state of regulatory takings doctrine. The decision in Mahon, charges Justice Scalia, "offered little insight into when, and under what circumstances, a given regulation would be seen as going `too far' for purposes of the Fifth Amendment,"(18) a point echoed by supporters of recent takings legislation(19) and by Justices Ginsburg and Breyer in their nomination hearings.(20) Scholars have been even less charitable. Mahon, Carol Rose finds, "seems to have generated most of the current confusion about takings."(21) Bruce Ackerman's conclusion best sums up the conventional praise and criticism of Justice Holmes's opinion in Mahon: It is "both the most important and most mysterious writing in takings law."(22)

      My goal in this Article is to unveil the mystery. (23) The Mahon opinion, I will argue, is best understood as a terse expression of Justice Holmes's theory of the constitutional protection of property, and of his views about the textual basis for that protection, both of which he had developed over decades. Much of that theory and those views was unique to Holmes; other Supreme Court Justices agreed with him at most in part. There was, however, broader agreement on the Court about several features of the Mahon opinion. In the modern campaign to force Mahon into the role of a seminal regulatory takings case, most of its original meaning - to Holmes and to the other members of the

      Mahon Court - has been obscured. The opinion has come simultaneously to mean more, and less, than -it did as written and handed down.

      I unveil Mahon in two Parts, addressing four tasks. First and most importantly, Part I constructs an account of Justice Holmes's constitutional property jurisprudence, using the relevant portions of his enormous judicial output and his substantial nonjudicial work, and shows how Mahon fits into that jurisprudence. The remaining three tasks are my goals in Part II, which tracks the shifting meanings of Mahon. First, I distinguish those portions of Mahon that were idiosyncratically Holmesian from those shared by enough of the other Justices to become part of the contemporary constitutional property jurisprudence. Next, I demonstrate how the latter-day use of Mahon has obscured its original meanings and has rendered inexplicable much of the analysis and language in Justice Holmes's opinion. Lastly, I suggest a number of issues to be considered before deciding whether and how the rediscovered Mahon should affect the further development of the regulatory takings doctrine.

   1. The Jurisprudence of the Holmes Opinion in Mahon

      All that can be expected from modem improvements is that legislation should easily and quickly, yet not too quickly, modify itself in accordance with the will of the de facto supreme power in the community .... (24)

      The jurisprudence of Mahon requires extended discussion, but a succinct summary of its facts will suffice. The law at issue in Mahon was the Kohler Act,(25) a 1921 Pennsylvania statute that prohibited underground mining of anthracite coal that caused the surface above to collapse. The prohibition applied only to surfaces that were not owned by the miner and that supported specified uses including streets, hospitals, schools, factories, and houses.(26) When the Pennsylvania Coal Company notified Mr. and Mrs. Mahon of its intention to mine underneath their house, the Mahons sued under the Kohler Act to enjoin the company from mining in such a way as to cause their house to sink.(27) The company's defense was that the Act was unconstitutional. The company noted that when it had originally sold the surface rights to the Mahons' lot, it had not only retained the mineral rights, but had also specifically obtained a waiver of all claims against the company due to subsidence to the surface. By effectively nullifying the waiver, argued the company, the Kohler Act deprived it of property without due process of law, took its property without just compensation, and impaired the obligation of a contract.(28) The company won in the Pennsylvania trial court, but lost on the Mahons' appeal to the Pennsylvania Supreme Court, and persuaded the United States Supreme Court to hear the case on writ of error. Of the eight Supreme Court...