Sunday, January 30, 2011
Earlier this month, the Environmental Protection Agency (EPA) issued its 99 page final determination regarding the mining permit for Arch Coal, Inc.’s Spruce No. 1 mine, located in southern West Virginia (pictured below). The EPA rescinded the Clean Water Act approval for what would have been one of the largest surface mining sites in Appalachia. The EPA's action is controversial. There are sure to be challenges, just as there are challenges to the recently issued guidance protocols that increase scrutiny on mountaintop coal operations. Indeed, there is a lawsuit filed on behalf of the State of West Virginia filed by the then-Governor of West Virginia, the recently elected United States Senator Manchin. While such litigation typically raises administrative law claims, the denial of a mining permit may also raise the specter of possible constitutional challenges.
The Fifth Amendment's takings clause may provide the constitutional grounding for asserting claims of regulatory takings, especially for those coal and mineral interest owners whose coal cannot be economically mined by more traditional below ground methods.
Professor Patrick McGinley at the West Virginia College of Law analyzes such challenges in his recent work Bundled Rights and Reasonable Expectations: Applying the Lucas Categorical Taking Rule to Severed Mineral Property Interests, 11 Vermont Journal of Environmental Law 525 (2010), available on the journal website. In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), the Supreme Court held that the government must pay just compensation for takings that deprive an owner of “all economically beneficial use” of the owner’s property. The rule is often referred to as the “categorical” or “total takings” rule because the reviewing court need not examine the owner’s expectations in the property.
McGinley argues that “the expectations of owners of less-than-fee interests in one mineral–coal–do not deserve the additional protection of Lucas’s categorical rule.” Id. at 529. He arrives at this conclusion “based upon the consideration of the historic limited expectations of severed coal interest ownership.” Id. Professor McGinley explains:
[W]hen the property owned is a severed coal interest or a more ephemeral interest such as [a] fractional royalty interest . . . , the bundle of rights metaphor seems an inappropriate way to describe the owner’s rights. While there are exceptions, as a general rule, one who owns a possessory interest in coal has, at most, the “right” to sell the coal in place if she can find a buyer; to use the surface to access the reserve; to extract the fuel from the land; and to transport it to market for sale. . . . For owners of non-possessory or non-executory interests in minerals . . . , their “bundle of rights” is sparse indeed. Their rights are narrowly limited to entitlement to a small percentage of the sale price of a mineral extracted from the land and carried to market–such owners do not even possess the right to walk freely upon the land from whence the mineral may be mined. Such ownership “right” is illusory unless and until the mineral is actually mined.
Id. at 571 (citations omitted).
While he disclaims the application of the Lucas categorical rule, McGinley concludes that “Penn Central’s examination of takings claimant’s distinct investment-backed expectations should continue to be applied to claims of regulatory takings of coal property interests severed from fee simple estates in land.” Id. at 529.
Thus, McGinley argues that coal operators and mineral rights owners will find no satisfaction in regulatory takings under the Lucas categorical rule. Nevertheless, the recent EPA action regarding the Spruce No. 1 mine and the 2009 announcement by the EPA that the Obama Administration is taking "unprecedented steps to reduce environmental impacts of mountaintop coal mining" will most likely raise regulatory taking issues under the Fifth Amendment.
(with J. Zak Ritchie)
[image: from cover of EPA final determination on mining permit for Arch Coal, Inc.’s Spruce No. 1 mine]