Is Mining a Nuisance after Lucas?

Lawrence V. Albert
Anchorage, Alaska
albertl@alaska.net

Introduction
Takings law has long recognized that landowners do not have unlimited property rights. Governmental exercise of police power to protect public health, safety, and welfare was traditionally seen as an implied limitation on an owner’s title. See Mugler v. State of Kansas, 123 U.S. 623, 665 (1887). Common law nuisance was one area where the exercise of police power was justified as protecting public health and safety while not altering customary tort law limitations upon landowners. Id. at 669; accord, e.g., Keystone Bituminous Coal Ass’n v. deBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 1245-46 & n.22 (1987) (citing cases).

The Supreme Court’s decision in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), reviewed its precedent on “noxious use logic.” Lucas developed an expanded rule of decision regarding land uses proscribed under “background principles of state law” and therefore not qualifying as protected property rights. While the traditional nuisance exception survived Lucas, its specification has arguably expanded due to environmental regulation. Currently, the Lucas nuisance exception functions as a threshold defense in takings law although determination of this issue is not necessarily dispositive.

The mining industry has been subject of substantial litigation involving the nuisance exception, including both the traditional formulation as well as Lucas’ restatement. This article provides an abbreviated review of the case law and compares mining operations that lose or retain protection according to the nuisance exception. A complete treatment is beyond the purview of this newsletter. Readers are hopefully apprised of issues and authorities addressing the problem for their further reference.

References treating the nuisance exception in takings law include: R. Epstein, TAKINGS: PRIVATE PROPERTY AND THE POWER OF EMINENT DOMAIN at 112-131, 198-199 (1987); J. Laitos, LAW OF PROPERTY RIGHTS PROTECTION—LIMITATIONS ON GOVERNMENTAL POWERS § 11.07 (2003); R. Glicksman, Making a Nuisance of Takings Law, 3 WASH. U. J. L. & POLICY 149 (2000); and, G. Sugameli, Threshold Statutory and Common Law Background Principles of Property and Nuisance Law Define if There Is a Protected Property Interest, in T. Roberts, ed., TAKING SIDES ON TAKINGS ISSUES: PUBLIC AND PRIVATE PERSPECTIVES, Ch. 7 (2002).

Mining Pursuant to the Nuisance Exception
Two Supreme Court decisions concerning underground coal mining illustrate evolution of the nuisance exception. In 1922, Justice Holmes decided the seminal case Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). Mahon first established a rule of constitutional limitation on government regulation without compensation. Mahon struck down a 1921 Pennsylvania statute that protected private surface estate against underground coal mining. A half century later, the Supreme Court sustained a 1966 Pennsylvania statute that required underground coal mining to leave support for the surface estate. Keystone, supra.

Mahon addressed Pennsylvania’s 1921 Kohler Act. This legislation prohibited mining that caused subsidence under certain structures and authorized an injunction against such activity. The property in question consisted of severed surface and subsurface estates and the coal company had acquired the previously severed “support estate” recognized in Pennsylvania property law. The legislation did not include a statement of public purposes nor any findings that public health, safety or welfare was advanced through the property regulation.

On this record, Justice Holmes determined “a source of damage to such a house is not a public nuisance even if similar damage is inflicted on others in different places. The damage is not common to the public.” Mahon, 260 U.S. at 413. Furthermore, Holmes found, the legislation “is not justified as a protection of personal safety” and the public interest shown by the statute was limited. Id. Regarding the regulatory effects of the Kohler Act, Holmes stated “[i]t purports to abolish what is recognized in Pennsylvania as an estate in land – a very valuable estate,” id. at 414, and rendered coal mining in certain areas commercially impracticable. Id. at 414-15.

By comparison, the legislation reviewed in Keystone included declaration of public purposes. These were to provide for conservation of surface land areas affected by coal mining other than the surface method, to aid in preservation of surface water drainage and public water supplies, to enhance property value for taxation purposes, and to aid in protection of public safety, among other purposes. Keystone, 107 S.Ct. at 1242.

Keystone found these public purposes legitimate and further determined the regulatory provisions of the statute to effectuate the stated purposes. Id. at 1243 n.16.

Keystone did not turn on public purposes supporting the legislation. Rather, the Court analyzed the purposes within the rubric of character of governmental action. This topic became one of three factors reviewed in the Court’s takings analysis following the 1978 decision in Penn Central Railroad v. City of New York, 438 U.S. 103 (1978). Keystone indicates the nature of the 1966 legislation abated a public nuisance by reference to its precedent on the matter, including Mugler. Keystone, supra, at 1243-44. Keystone also commented that time can change circumstances once considered private concerns to a public interest. Id. at 1243. Aside from nuisance classification, Keystone can be further distinguished from Mahon because the 1966 legislation was found not to render coal mining unprofitable. Id. at 1246.

Between Mahon and Keystone, the Court nominally addressed the nuisance exception in review of a quarry operation. In Goldbatt v. Town of Hempstead, 369 U.S. 590 (1962), the court sustained a local ordinance that prohibited sand and gravel extraction within two feet of the watertable. Goldblatt is pre Penn Central and the record is sparse regarding the impacts of the quarry operation on the public interest and affected community. Id. at 591, 595. The ordinance was justified as a safety regulation and the Court sustained the regulation as a valid police power measure, quoting Mugler. Id. at 593-95.

Goldblatt noted without discussion that police power regulation need not be limited to a common law nuisance. Id. at 593. In this respect Goldblatt resonates with Justice Holmes’ statement “the legislature may change the common law as to nuisances . . . although by so doing it affects the use or value of property.” See Commonwealth v. Parks, 20 N.E. 174, 174 (Mass. 1892). This maxim is further illustrated in Goldblatt because the property in question had been quarrying since 1927 while the regulatory activity culminated in a 1959 ordinance prohibiting excavation into the watertable.

If mining activity in the latter part of the nineteenth century is reflective of the common law, then a variety of operations working different deposit types did not qualify as nuisances. In Lindley’s treatise on mining, the author surveyed the law in both the public land and eastern states on drainage of mines, pollution impacts, lateral and subadjacent support, and nuisance associated with mining operations. See III C. Lindley, A Treatise on the American Law Relating to Mines and Mineral Lands, Title IX, §§ 814, 818-22, 838-41 (3d ed. 1914). Lindley generally found mining to be compatible with the common law unless particular operations violated the maxim sic utero tuo ut alienum non laedus (“Use your own property in such a manner as not to injure that of another”).

Regarding surface support, Lindley stated that the owner of surface estate had a right of support unless there was a severance of title to the minerals and the right of surface support had been expressly waived or released. The surface owner only had a right to support of the natural surface and not support of structures. Lindley noted legislation abrogating the common law, however there had been no challenges at the time of his treatise. He questioned the constitutionality of such statutes in a manner anticipating Mahon. Lindley, supra, §§ 814, 818-22.

Regarding pollution from mining operations in riparian jurisdictions, Lindley surveyed the decisions and found no general rule. A reasonable use of water depended upon the circumstances, and this was a question of fact to be determined in each case. Id. § 240 at 2063 (citing cases from several jurisdictions).

According to Lindley, the common law adapted in almost all American jurisdictions was that mining could be abated as a public nuisance “[i]f the use of the stream by the miner or upper appropriator is fraught with such detrimental consequences to the waters thereof.” Id. § 241, at 2074 (citing cases). The weight of the authority also recognized that a nuisance could be enjoined by private persons claiming special injury. Id. §§ 241-42.

As with the question of reasonable use of waters, Lindley stated that enjoinable nuisances associated with mining operations turned on the circumstances. Factors to be considered in the equitable proceeding were the permanence of the injury, the consequences flowing from the injury, the economic impact the parties respectively of relief being granted or denied, and the collective interests of the community in the competing water uses. Id. § 242. This discussion focused on tailings, solids, and debris as the injury rather than pollution or other fouling of water quality. See id.

Examining only the issue of water use in mining, Lindley’s analysis of the common law accords with the Restatement (Second) Torts §§ 821A- 832 (1977) on the subject of nuisance. Section 832 of the Restatement states a conditional rule in regard to water pollution:

An invasion of one’s interest in the use and enjoyment of land or water resulting from another’s pollution of surface waters, ground waters or water in watercourses and lakes may constitute a nuisance under the rules stated in §§ 821A- 831 of this Chapter (emphasis added).

Lucas Restatement of the Nuisance Exception
In Lucas, supra, at 1020-26, the South Carolina Coastal Council sought to protect coastal dunes through a police power prohibition on residential construction. Writing for the Court, id. at 1026, Justice Scalia determined the traditional harm prevention rationale was no longer tenable where property was being sacrificed for conservation and there was no showing of nuisance. Lucas therefore discarded “noxious use” logic as the principal justification for police power regulation:

When it is understood that “prevention of harmful use” was merely our early formulation of the police power justification necessary to sustain (without compensation) any regulatory diminution in value; and that the distinction between regulation that “prevents harmful use” and that which “confers benefits” is difficult, if not possible, to discern on an objective, value-free basis; it becomes self-evident that noxious-use logic cannot serve as a touchstone to distinguish regulatory “takings” – which require compensation – from regulatory deprivations that do not require compensation.

Lucas, supra, at 1026.

Justice Scalia then constructed a separate justification for limitations on property use. According to Scalia, “a logically antecedent inquiry into the nature of the owner’s estate” is necessary to ascertain whether a total use prohibition burdened the title acquired. Id. at 1027. At this juncture, Lucas identified “background principles of the State’s law of property and nuisance” as legitimate restrictions on property use. Even where regulatory action is found to eliminate all beneficial use, Lucas held the action will be sustained against a takings challenge where the land use was “proscribe[d] . . . under relevant property and nuisance principles.” Id. at 1029-30.

Justice Scalia then set forth guidance for a “total taking inquiry.” Lucas, supra, at 1030-31. The Court drew upon the Restatement (Second) Torts, supra, at §§ 821- 830 in regard to factors appropriate to the nuisance analysis. The Court noted that prior use is relevant in ascertaining property protection, and that common law principles rarely supported prohibition of the essential use of land. Lucas, supra, at 1030-31. With this guidance, Justice Scalia questioned whether construction of a residence on the coastal dunes of South Carolina amounted to a nuisance under that state’s law.

Post Lucas Decisions Holding Mining to Be a Nuisance
A number of decisions have justified regulation or denial of mining operations on grounds of Lucas’ restatement of the nuisance exception. See Appolo Fuels, Inc. v. U. S. 54 Fed.Cl. 717 (2002); Rith Energy v. United States, 44 Fed. Cl. 108, 114-15 (1999) (Rith I), order denying reconsideration, 44 Fed. Cl. 366 (1999), aff’d, 247 F.3d 1355 (Fed. Cir. 2001), rehr’g en banc denied, 270 F.3d 1347 (Fed. Cir. 2001); M & J Coal Co. v. United States, 30 Fed.Cl. 360 (1994), aff’d, 47 F.3d 1148 (Fed.Cir. 1995); State v. The Mill, 887 P.2d 993 (Colo. 1994); Aztec Minerals Corporation v. Romer, 940 P.2d 1025 (Colo. App. 1996). See also Atlas Corp. v. U.S., 895 F.2d 745 (Fed. Cir. 1900) (pre Lucas decision).

Three of these decisions arose under the Surface Mining Control and Reclamation Act (SMCRA). The nuisance activities were identified as threats to public health and safety and were deemed enjoinable. See Appolo Fuels, supra, at 720, 735 (municipal water supply and water quality would be adversely affected and water treatment costs would increase; operations would constitute a “condition of pollution” under Tennessee law and qualified as public nuisance); Rith I, supra, at 114-15 (toxic materials handling plan was insufficient to prevent acid mine drainage into aquifer; Tennessee water pollution law also applied to find a public nuisance); M & J Coal, supra, at 1151-52 (surface subsidence occurred over a four-year period with damage to municipal water tank foundation, state highway, and risk of electrical and gas utility line rupture; cease & desist order issue pursuant to SMCRA § 521(a)(2) analogous to nuisance injunction).

Three additional cases addressed waste contamination consequential of mining operations or disposal of contaminated tailings pursuant to environmental remediation statutes. In these cases, the regulatory authorities required remediation actions and the owners unsuccessfully challenged the requirements as a taking. The decisions consistently ruled that waste generation activities posed health hazards and fell within the traditional “noxious use” regulation or were akin to common law nuisances.

See Atlas Corp., supra, at 757-58 (uranium tailings were radioactive and required stabilization under federal statute; operator’s reclamation and stabilization of uranium tailings was not compensable taking according to Keystone and Mugler because regulation protected public health and safety); The Mill, supra, at 1001-02 (purchaser of uranium tailings site was prevented from leasing site for commercial use pending reclamation and stabilization; loss of commercial property use not compensable because radioactive wastes were a health hazard and were enjoinable nuisance under Colorado law); Aztec Minerals, supra, at 1031-32 (cyanide solution from mining operation leached into ground waters and discharged into local stream; environmental remediation requirements were not a compensable taking because contamination was a threat to public health and safety under CERCLA; generation of hazardous wastes was an enjoinable nuisance under Colorado law).

Post Lucas Decisions Holding Mining Not to Be a Nuisance
A partial compilation of additional court decisions indicates that mining or pollution discharges will not necessarily constitute an abatable nuisance, and hence, the Lucas nuisance exception will not insulate against takings liability. See Tahoe Sierra Preservation Council, Inc. v. Tahoe Sierra Regional Planning Agency, 34 F.Supp.2d 1226, 1251-55 (D.Nev. 1999), aff’d in part, rev’d in part, 216 F.3d 764 (9th Cir. 2000), rehr’g en banc denied, 228 F.3d 998 (9th Cir. 20000, aff’d, 535 U.S. 302 (2002); Florida Rock Industries, Inc. v. United States, 8 Cl.Ct. 160 (1985) (Florida Rock I), rev’d and remanded, 791 F.2d 793 (Fed. Cir. 1986), on remand, 21 Cl.Ct. 161 (1990), vacated and remanded, 18 F.3d 1560 (Fed. Cir. 1994), on remand, 45 Fed.Cl. 21 (1999); Laguna Gatuna, Inc. v. United States, 50 Fed.Cl. 336 (2001); see also Whitney Benefits, Inc. v. U.S., 18 Cl.Ct. 394, 406 (1989), aff’d., 926 F.2d 1169, 1177 (Fed. Cir. 1991) (pre Lucas).

Florida Rock is usually characterized as a wetlands case because the property was regulated under the Clean Water Act (CWA) § 404 dredge and fill requirements. However, the proposed activity was limestone mining beneath the vegetative cover and saturated waters that comprise wetlands. Although the mining operation constituted a “discharge” and generated “pollutants” within the meaning of the CWA, the reviewing courts determined wetlands removal without more did not pollute surface or ground waters. The courts rejected the Corps’ defense that wetlands destruction was a nuisance under Florida law and noted that the mining activity had been historically undertaken in the area without incident.

Florida Rock I was auspicious in ruling that the mere presence of pollution should not insulate the government from takings liability under traditional nuisance doctrine:

Defendant suggests that Mugler continues to have force in the circumstances of this case because the proposed use of the property would cause pollution. Defendant argues that there is no right to use one’s property so as to harm others and government may therefore prohibit such uses without compensation.

. . . . [S]imple invocation of the term pollution cannot foreclose a plaintiff’s right to compensation under the fifth amendment. . . . Government may not circumvent the takings clause by defining an activity as pollution and rendering noxious by fiat. Pollution, as that term is normally understood, involves serious adverse physical effects upon the health, welfare or property of others. To avoid the payment of compensation on this theory, the government must show that the prohibited activity in fact causes such harm.

Florida Rock I, supra, at 171.

Laguna Gatuna was a successful takings case although the government did not assert the nuisance defense. The owner had leases and permits for produced brine water disposal from oil and gas wells in the Permian Basin. The EPA noticed birdkills at the dry lake bed in New Mexico where the produced waters were disposed. EPA asserted jurisdiction under the CWA, issued a cease and desist order, and basically shut the operation down. While the takings case was pending, the SWANCC decision issued, and EPA withdrew its authority. See Solid Waste Management Agency of Northern Cook County v. U.S. Army Corps Engineers, 531 U.S. 159 (2001). EPA decided the discharges were isolated waters beyond CWA jurisdiction. Because the agency exercised its regulatory authority over the operation, the court determined a taking had occurred. Laguna Gatuna is interesting because the federal government made no attempt to classify the brine disposal as pollution or a nuisance under state law when wildlife losses were observed.

Whitney Benefits, supra, rejected the nuisance exception. Though the litigation occurred prior to Lucas, the government argued the nuisance exception according to Keystone and earlier cases. Id. The record in Whitney Benefits did not indicate any discharges threatening the public health or safety. See id. The regulation confronting the operator was a prohibition of mining alluvial valley floors by the surface method. See Whitney Benefits, supra, 926 F.2d at 1169 (citing 30 U.S.C. § 1260 (b)(5)(A)). The reviewing courts determined Congress strived to balance the public interest in agriculture on alluvial valley floors with the need for energy production from coal mining. The courts could not infer from SMCRA’s statement of purposes that mining was a nuisance especially since certain operations were grand fathered according to a “valid existing rights” provision. The owner eventually obtained a 61 million dollar damage award (before interest) for permanent taking of mineral property.

Tahoe Sierra is not a mining case but post Lucas. Tahoe Sierra concerned a management plan directed at preservation of Lake Tahoe, including aesthetic value of clear water. The management plan controlled surface runoff of organic material attributable to land development. The government defended the takings challenge inter alia on grounds of the nuisance exception. Tahoe Sierra,supra, 34 F.Supp. 2d at 1251. The trial court found that construction on the regulated lots would generate the targeted runoff, and that such activity constituted “pollution” under state pollution control statutes. Id. at 1254.

The trial court carefully reviewed California’s statutory scheme for pollution control, including injunctions for nuisance pollution activity, along with California’s common law of public nuisance. Id. at 1252-54. The trial court determined that surface runoff associated with residential construction and resulting eutrophication of Lake Tahoe did not qualify as a common law nuisance. Id. at 1253-54. Whereas the trial court held a Lucas taking had occurred, The Ninth Circuit and the Supreme Court reversed and held the regional planning agency was not liable for temporary moratoria on building development.

Comments on the Lucas Nuisance Exception
The following comments are offered regarding the Lucas nuisance exception:

1) Mining operations that cannot be permitted in compliance with either state or federal requirements for pollution control, landscape stability, or remediation of contaminants – and which pose a threat to public health or safety – will not survive a takings challenge. Such operations will be classified as nuisance under Lucas’ nuisance exception. Notwithstanding these difficulties, mining has never been considered a nuisance per se. Lindley’s treatise demonstrates the common law accepted mining in the nineteenth century and that mining was free from the extensive governmental interference of today.

2) The law of nuisance is evolutionary. Lucas acknowledges that permissible uses of land may change with times, citing Restatement (Second) Torts § 827, comment g. Lucas, supra, at 1031. This principle is illustrated by Goldblatt where the quarrying operation over a thirty plus year period became harmful to the town’s interests in groundwater preservation. The corollary proposition is that property rights limited by “background principles of the State’s law of . . . nuisance” also change. See id. at 1026. The normative approach to property is controversial, fills the academic journals, and is beyond the scope here. Lucas suggests a conservative position with the statement “[t]he State, by ipse dixit, may not transform private property into public property without compensation.” Id. at 1031.

3) The Lucas nuisance exception is not dispositive of takings cases. The analysis arises under character of governmental action or investment backed expectations prongs of the Penn Central analysis. Typically, the courts make other findings either supporting no takings liability or in determining takings liability. Most importantly, following Justice O’Conner’s concurrence in Palazollo v. Rhode Island, 121 S.Ct. 2448, 2465 (2001), the “notice exception” may provide an effective defense to takings liability regardless of whether the property use amounts to a common law nuisance.

4) The nuisance exception in Lucas was evaluated for a total prohibition on beneficial use of property. However, post Lucas courts have expanded the exception to apply to any takings case wherein the nature of the property use colorably violates the traditional “noxious use” prohibition. Thus, the nuisance exception has been applied in Penn Central type cases where a diminution in value is asserted rather than a total deprivation of beneficial use.

5) Compliance with regulatory standards is a factor for determining public nuisance according to Restatement (Second) Torts § 821B, comment f. Typically, the takings decisions approach the nuisance problem from the standpoint of non-compliance with statutory regulation. E.g., Appolo Fuels, supra; Rith Energy, supra; M & J Coal, supra. However, statutory non-compliance should not be dispositive of a nuisance determination. In this regard, Lucas’ guidance for evaluating the nuisance exception included common law equities and balancing considerations set forth in the Restatement (Second) Torts. The post Lucas decisions applying the nuisance exception consistently disregard this guidance. As a rationalization, the record in the decisions finding a nuisance may be reconciled with the common law equities and balancing requirements.

6) A defensible argument can be made the Lucas nuisance exception should be limited to property uses that pose genuine threats to public health or safety, or otherwise strictly construed as common law nuisances. The nuisance exception should not extend to regulatory violations or permitting denials directed at resources conservation and protection. After all, this was the context in which Justice Scalia discarded “noxious use logic.” Tahoe Sierra, Florida Rock and Whitney Benefits support such limitation. Future proceedings in Palazollo may test the issue.