Bureau of Mines v. George's Creek Coal and Land Co.

Murphy, C. J., delivered the opinion of the Court. Whether the State of Maryland, by legislative enactment, has taken private property for public use without the payment of just compensation is the central issue presented by this appeal. In 1931, George’s Creek Coal Company, Inc. conveyed a tract of land located in Garrett County, Maryland, consisting of 8,621 3 A acres, to T. H. and F. B. McMillen. The deed excepted from its operation and reserved to the grantor company “all the coal, clay and other minerals, and all the oil and gas . . . [underlying the property], together with the right to enter in, upon and under said land and to mine, excavate and remove all said coal, clay and other minerals, and said oil and gas” [the mineral rights].

The deed also reserved to the grantor company the right to construct designated facilities and erect specified structures on the land in connection with its mineral rights, and provided that the grantor would not be liable “for the breaking or subsidence of the surface of said land or for any injury or damage done to the overlying surface thereby or to anything therein or thereon, by the exercise of the rights hereby excepted and reserved, whether or not the same be ¹⁴⁶ caused by or due to the negligent manner in which said mining operations are conducted or said rights are exercised.” In 1937, the McMillens conveyed 5,685 acres of their land (the McMillen tract) to the United States, subject to the mineral rights exception and reservation in favor of George’s Creek Coal Company. In 1952, George’s Creek Coal Company conveyed all its property in Allegany and Garrett Counties, including all mineral rights excepted and reserved under its 1931 deed to the McMillens, to The George’s Creek Coal and Land Company (George’s Creek). In 1954, the United States conveyed the McMillen tract to the State of Maryland, subject to the exception and reservation of mineral rights; that property is now a part of the Savage River State Forest (the State Forest). In 1968, in Department of Forests and Parks v. George’s Creek Coal & Land Co., 250 Md. 125 , 242 A.2d 165 (1968), we held that the reservation of mineral rights in the McMillen tract included the right to remove the coal by the open-pit or strip mining method — a method then defined by Maryland Code (1957, 1967 Repl.

Vol.) Art. 66C, § 658 (a) to include auger mining and to mean “the mining or recovery of bituminous coal by removing the strata or material which overlies or is above the coal deposit or seam in its natural condition.” On July 1, 1969 George’s Creek leased to the Buffalo Coal Company (Buffalo) “all the coal [which it owned in Allegany and Garrett Counties] together with mining and surface rights necessary for the removal of said coal.. . except such parts thereof from which coal cannot be removed economically by the strip mining method, auger mining method or deep mining method, together with the right to mine coal herein leased by the strip mining method, auger mining method or deep mining method.” In order to mine coal by the open-pit or strip method, Buffalo was required by the provisions of Article 66C, § 661 (a) to first obtain a license from the Bureau of Mines for a prescribed fee and to renew that license annually on January 1 of the next succeeding year. In addition to the license requirement, open-pit mining operators were required by the provisions of ¹⁴⁷ Article 66C, § 662 (a), then in effect, to obtain from the Bureau of Mines: “.. . a permit for each separate operation, which permit when issued is valid until the operation is completed or abandoned, unless it is sooner suspended by the Director of Bureau of Mines.” Consistent with this latter requirement, Buffalo applied for a permit to the Maryland Bureau of Mines to strip mine 50 acres of land in the State Forest, included within which was part of the McMillen tract; the permit (No. 161) was issued on July 2, 1969, and was thereafter amended a number of times prior to July 1, 1973 to authorize strip mining on a total of 275 acres in the State Forest. At the 1972 Session of the General Assembly of Maryland, Senate Bill 261 was introduced for the purpose, as expressed in its original title, “to ban strip mining on land owned by the State . . .The Bill added a new subsection to Article 66C, § 662 (“Permit Generally”) to follow immediately after § 662 (a). As originally introduced, the Bill was to take effect on July 1, 1972, and prohibited the issuance, extension or renewal of any permit to mine coal by the open-pit or strip method on any land owned by the State.

During its progress through the General Assembly, the Bill was amended by adding thereto the language appearing in capital letters: “662. (a-1) (1) The Bureau of Mines shall not issue, extend or renew any permit to mine coal by the open-pit or strip method on any land owned by the State of Maryland whether the ownership includes the mineral rights incident to the land or not, EXCEPT IF THE FAILURE OF THE BUREAU TO ISSUE, EXTEND OR RENEW A PERMIT WILL INVOLVE THE TAKING OF A PROPERTY RIGHT WITHOUT JUST COMPENSATION IN VIOLATION OF THE CONSTITUTION OF THE UNITED STATES OR THE CONSTITUTION OF MARYLAND AND SUFFICIENT FUNDS HAVE NOT BEEN APPROPRIATED BY THE GENERAL AS ¹⁴⁸ SEMBLY TO PAY SUCH COMPENSATION. FUNDS AVAILABLE UNDER PROGRAM OPEN SPACE MAY BE USED BY THE STATE TO PURCHASE OR OTHERWISE PAY FOR SUCH PROPERTY RIGHTS. “(2) Any person who mines coal by the open-pit or strip method without a permit issued by the Bureau of Mines shall be guilty of a misdemeanor punishable by a fine of not less than $1000 nor more than $10,000 or by imprisonment for not more than two years, or by both fine and imprisonment. Each day a violation hereunder exists shall be a separate offense. “(3) In addition to any fine imposed by a violation of this section, every person convicted hereunder shall pay to the Director a sum sufficient to reclaim the area mined.” The Bill’s title was also amended to conform with the amendment to the body of the Bill; the title amendment appears in capital letters: “ ... to ban strip mining on land owned by the State IN CERTAIN INSTANCES, TO PROVIDE THAT CERTAIN FUNDS MAY BE USED FOR THE PURCHASE OF PROPERTY RIGHTS and providing penalties for the violation thereof.” Senate Bill 261, as amended, was enacted as Chapter 355 of the Acts of 1972, and originally codified as Code, Article 66C, § 662 (a-1).

Significantly, the Bill’s effective date was also amended from July 1,1972 to July 1,1973. On June 1, 1973, Buffalo sought a further amendment of its strip mining permit (No. 161) to encompass additional acreage in the State Forest. By letter dated June 19, 1973, the Bureau of Mines informed Buffalo that the provisions of Chapter 355 required “the stoppage of all open-pit mining of State-owned land as of July 1, 1973” and directed Buffalo to terminate its strip mining operations in the State Forest. On June 28, 1973, George’s Creek and Buffalo filed a Bill ¹⁴⁹ of Complaint for Declaratory Relief in the Circuit Court for Garrett County; they sought a declaration, among others, (a) that Chapter 355 did not require that all strip mining operations cease as of July 1,1973; (b) that Buffalo’s right to strip mine on land covered by Permit No. 161 prior to July 1, 1973 was not affected by the Act; (c) that Chapter 355 provided an exception to its proscription of the issuance of strip mining permits where the failure to issue such permits would result in an unconstitutional taking of property, and that since the prohibition of strip mining on the McMillen tract would constitute such a taking, Chapter 355 permitted such operations to continue until and unless just compensation had been paid; and (d) that if Chapter 355 was interpreted so as not to provide such an exception, but required either the prohibition of strip mining operations on land covered by Permit No. 161 as of July 1, 1973, or the denial of amendments to that permit to allow strip mining on other areas of the McMillen tract after that date, it would constitute a taking of property without payment of just compensation in violation of the state and federal constitutions.

Answering the Bill of Complaint, the State maintained that Chapter 355 was a proper exercise of its police powers, that it required that all strip mining on State-owned land cease on July 1, 1973, and that such a prohibition did not constitute a taking of the property of George’s Creek and Buffalo, requiring monetary compensation. Evidence was adduced at the trial which showed that strip mining operations necessarily involve the disturbance of large amounts of land; that Buffalo utilizes bulldozers, draglines, shovels, and front-end loaders in its strip mining operations; that when stripping a new area, Buffalo clears the surface to the base soil, removing all trees and vegetation; that the cleared surface material is bulldozed to the out-slope of the toe of the soil; that the topsoil is saved and is usually pushed off with the bulldozer to the high wall side after this area is cleared of vegetation; that following removal of the topsoil, the dragline will begin a cut and the rock and overburden above the coal is stripped and cast off ¹⁵⁰ on the low side; that after the overburden is stripped, the coal is loaded either with a shovel or a front-end loader and hauled to a railroad car at the shipping point. 1 The evidence showed that George’s Creek, a holding company, did not directly engage in any mining operations. Its lease with Buffalo provided for royalty payments based on the method employed to mine the coal and the tonnage removed. The lease was for an initial two-year term — from July 1, 1969 to June 30, 1971 — and was renewable at Buffalo’s option.

From July 1, 1971 to October 5, 1972, Buffalo operated under an oral lease with George’s Creek; by an “Amendment of Lease” dated October 5, 1972, Buffalo renewed the lease for a two-year period, beginning July 1, 1972 and ending June 30, 1974. As of July 1,1973, 94 acres of land covered by Buffalo’s Permit No. 161, including part of the McMillen tract, had not been mined and considerable acreage underlying the McMillen tract had never been placed under permit. Since initiating its operation in the State Forest in 1969, Buffalo strip mined 692,000 tons of coal and paid George’s Creek approximately $190,000 in royalties. Carl DelSignore, Buffalo’s president, testified that while Buffalo operated the largest deep mine in Maryland, it was not economically feasible to deep mine coal underlying the State Forest and McMillen tract unless it could first strip mine the coal.

He said that because of federal safety laws governing the extraction of deep mine coal and the marginal quality of such coal, “the economics are not there” and Buffalo “couldn’t make any money.” He testified that although clay had been located on the property, it was not commercial clay and could not be reached without strip mining. DelSignore testified that to his knowledge there had been no exploration for gas or oil or other minerals on the ¹⁵¹ property, and he did not know of the existence of any minerals of value other than coal. Frank Zachar, a mining engineer and the expert produced on behalf of Buffalo and George’s Creek, testified that approximately 3,356,000 tons of recoverable coal are contained on the McMillen tract — 1,976,000 tons recoverable by strip and auger mining methods and 1,380,000 tons recoverable by deep mining methods. The State’s expert, James Coffroth, a mining geologist employed by the Maryland Geological Survey, testified that 3,533,875 tons of coal exist on the McMillen tract; he stated that the majority of the strippable seams had been removed and estimated that only 346,375 tons could be extracted by strip and auger mining methods, while 3,187,500 tons could be recovered by deep mining methods.

Zachar testified that it was within his area of expertise to examine mineral properties to determine if minerals existed thereon that could be economically mined. He said that to be “economically mined,” minerals must be capable of being mined “so that the cost of mining and preparing for shipment is less than the realization and that a profit can be made from the product. He stated his opinion that without the right to strip mine or auger mine the coal the deep mine coal could not be economically recovered and therefore the right to mine it had no value. Zachar testified that, in his opinion, there were no minerals of value on the McMillen tract other than coal; that there were no stones suitable for building purposes; and that the clay underlying the coal was never proven and could not be recovered without strip mining methods.

Zachar was not familiar with gas and oil leases on the property and had done no work to determine the existence of gas and oil reserves on the McMillen tract. The evidence revealed that George’s Creek had leased its 7/8ths interest in gas and oil on the McMillen tract at a rate of $1 per acre, totaling 7/8ths of $5,685 per year; that the leases were subject to cancellation by the lessee at any time; and that such leases were common in the area. Fred A. Thayer, a realtor, lawyer, and banker in Garrett County, testified that while much acreage in Garrett County was ¹⁵² subject to oil and gas leases “as a result of the exploration and finding of gas fields in the area,” his bank would not accept such a lease as collateral for a loan. The testimony revealed that no other leases of the rights to gas, oil or any other minerals had been previously made by George’s Creek.

George H. Bortz, President of George’s Creek, stated that the company had never conducted any surveys to establish the existence of oil or gas reserves or fire-clay on the McMillen tract. After summarizing the evidence adduced before it, and reviewing the provisions of Chapter 355, the court (Hamill, J.) stated in an opinion filed on November 25, 1973 that the statute: “. . . does not indicate or say that existing permits are to be canceled and that coal stripping operations are to cease on that date [July 1, 1973], If the Legislature had intended that permits and strip mining operations were to cease on that date, it would have been a simple enough matter to have so stated that in the law. . . .” Operating upon this premise, the court held that the Bureau of Mines “should not have ordered the shutdown of . . . Buffalo ... on July 1, 1973, who was then operating under an existing Permit No. 161, and that such order should not issue until the operation of the acreage under that permit was completed or abandoned .. . [after which] Chapter 355 would apply and no further issuance, extensions or renewals (amendments) to Permit No. 161 would be granted.” The court next concluded that the State, acting under its police powers, could constitutionally enact legislation to abolish strip mining on State-owned property where the mineral rights were in the ownership of another. But it noted that Chapter 355 “provides an exception to the requirement that the Bureau of Mines not issue, extend or renew (amend) any permit where there is the taking of a property right without just compensation which would be in violation of the Constitution of the United States and the Constitution of Maryland.” The court said: ¹⁵³ . .

This would indicate that the intention of the Legislature is that the Bureau of Mines shall not refuse to issue, extend or renew (amend) any permit in any case where there is a property taking and just compensation has not been paid. It would appear, therefore, that the Bureau of Mines must issue, extend or renew (amend) any such permit up to the time that the State has paid just compensation for the taking.” The court concluded with these observations: “The evidence and testimony in this case shows that the clay underlying the coal on this property has no known value whatsoever, and with regard to the gas and oil lease, the testimony shows that, when compared with the value of coal, it has no significant value whatsoever, except delayed rental payments in the amount of $1.00 per year per acre. This is especially true considering that under the terms of said lease, which is in evidence in this case, the lessee has the absolute right to cancel same at any time. The testimony, and particularly the testimony of Mr. Frank Zachar, clearly shows that there is a substantial property right involved and one of considerable value in the coal underlying the land in question.

His testimony, which the Court gave considerable weight, further reveals that the principal value is the strippable coal and that the deep mine coal could not be practically or economically mined until after the stripping was done. “Since there has been no compensation paid by the State for this property taking, the Bureau of Mines, under Chapter 355 (1972) will be required to continue the issuance, extension or renewal (amendments) of the right of Buffalo Coal Company to continue its strip mine operations until the Plaintiffs are paid just compensation for the taking.” ¹⁵⁴ From the court’s decree so declaring the rights of the parties, the State has appealed. I At the time Chapter 355 was enacted, Buffalo’s operation in the State Forest and on the McMillen tract was the only strip mining operation being conducted on State-owned land and had been the only such operation on State land in over fifteen years. We think the Legislature, by enacting Chapter 355 at its 1972 Session, but delaying its effective date until July 1, 1973, intended this result: (a) to prohibit strip mining on State-owned land after July 1, 1973 by forbidding the issuance, extension or renewal of permits after that date; (b) that if the prohibition of strip mining on State-owned land was not a valid exercise of the State’s police power but rather constituted a taking of private property for public' use, just compensation would have to be paid; (c) that the General Assembly would appropriate funds to pay such compensation and make them available by July 1, 1973; and that if no such appropriation was made, funds available under the State’s open space program could be used. This interpretation is consistent with the recodification of Chapter 355 accomplished by Chapter 4 of the Acts of the First Extraordinary Session of 1973, which became effective on January 1, 1974.

Chapter 4 recodified the natural resources law of the State previously codified in Article 66C of the Code, Chapter 355 being recodified therein, in part, as § 7-505 (b) of the Natural Resources Article, as follows: “§ 7-505 (b) Bureau prohibited to issue, extend or renew permit for state-owned land. — The bureau may not issue, extend or renew any permit to mine coal by the open-pit or strip method on any land the state owns whether or not the ownership includes mineral rights incident to the land. If the bureau’s failure to issue, extend or renew a permit involves taking a property right without just compensation in violation of the Constitution of the United States or the Constitution of Maryland and the General Assembly has not appropriated ¹⁵⁵ sufficient funds to pay the compensation, the state may use available funds under Program Open Space to purchase or otherwise pay for the property rights.” The revisor’s note to § 7-505 states that only changes of style were made in the recodification of Chapter 355. While § 10 of Chapter 4 provides that the revisor’s notes shall not become law or be deemed to have been enacted as part of the recodification, it is well settled that because “the principal function of a Code is to reorganize the statutes and state them in simpler form, changes are presumed to be for the purpose of clarity rather than for a change in meaning.” Welsh v. Kuntz, 196 Md. 86, 97 , 75 A. 2d 343 (1950). Even a change in the phraseology of a statute in a codification will not as a general rule modify the law, unless the change is so radical or material that the intention of the Legislature to modify the law appears unmistakably from the language of the Code.

Welch v. Humphrey, 200 Md. 410, 417 , 90 A. 2d 686 (1952). While Chapter 355, as codified in § 7-505, more clearly indicates the legislative purpose and intent than does the original wording contained in the Act, we conclude that the Legislature intended no substantive change in Chapter 355 when it adopted § 7-505. We thus conclude, consistent with the view taken by the lower court, that Chapter 355 did not circumscribe Buffalo’s right to continue, after July 1,1973, to operate under Permit No. 161 until the balance of the acreage therein described and placed under permit prior to July 1, 1973 was strip mined. We disagree, however, with the lower court’s conclusion that the Bureau of Mines was empowered, after July 1, 1973, to issue, extend, renew, or amend strip mining permits on State-owned land.

We think Chapter 355 flatly mandates termination of all strip mining on State land on and after July 1, 1973, with the singular exception of that acreage covered by Permit No. 161 prior to that date — some 94 acres as of July 1, 1973 according to the evidence in the case. The question remains whether, as applied to the property of Buffalo and George’s Creek, the prohibition mandated by Chapter 355 was a valid exercise of the State’s ¹⁵⁶ police power not requiring the payment of compensation or whether, absent the payment of compensation, it would constitute a deprivation of property without due process of law under the Fourteenth Amendment, Article 23 of the Maryland Declaration of Rights, 2 and Article III, § 40 of the Constitution of Maryland. 3 That these constitutional provisions have the same meaning and effect in reference to an exaction of property, and that the decisions of the Supreme Court on the Fourteenth Amendment are practically direct authorities, was settled in Allied American Co. v. Comm 'r, 219 Md. 607 , 150 A. 2d 421 (1959). The question of when governmental action amounts to a compensable taking of private property has frequently been before the Supreme Court. In United States v. General Motors Corp., 323 U. S. 373 , 65 S. Ct. 357 , 89 L. Ed. 311 (1945), the Government sought, through condemnation, to acquire use for one year of premises for military purposes during World War II from a long-term lessee of that property.

Addressing itself to the question of the proper method of determining compensation, the Court offered the following analysis: “The critical terms are ‘property,’ ‘taken’ and ‘just compensation’. It. is conceivable that the first was used in its .. . untechnical sense of the physical thing with respect to which the citizen exercises rights recognized by law. On the other hand, it may have been employed in a more accurate sense to denote the group of rights inhering in the citizen’s relation to the physical thing, as the right to ¹⁵⁷ possess, use and dispose of it. In point of fact, the construction given the phrase has been the latter.

When the sovereign exercises the power of eminent domain it substitutes itself in relation to the physical thing in question in place of him who formerly bore the relation to that thing, which we denominate ownership. In other words, it deals with what lawyers term the individual’s ‘interest’ in the thing in question. That interest may comprise the group of rights for which the shorthand term is ‘a fee simple’ or it may be the interest known as an ‘estate or tenancy for years’, as in the present instance. The constitutional provision is addressed to every sort of interest the citizen may possess. “In its primary meaning, the term ‘taken’ would seem to signify something more than destruction, for it might well be claimed that one does not take what he destroys.

But the construction of the phrase has not been so narrow. The courts have held that the deprivation of the former owner rather than the accretion of a right or interest to the sovereign constitutes the taking. Governmental action short of acquisition of title or occupancy has been held, if its effects are so complete as to deprive the owner of all or most of his interest in the subject matter, to amount to a taking.” 4 (Emphasis supplied.) 323 U. S. at 377-78 . The question of when governmental regulation of the use ¹⁵⁸ of private property amounts to a taking requiring payment of compensation has proved troublesome; though the protection afforded by the Fifth Amendment — that private property not be taken for public use without compensation — has been made applicable to the States by its incorporation through the due process clause of the Fourteenth Amendment, Chicago, B. & Q. R.R. v. Chicago, 166 U. S. 226 , 17 S. Ct. 581 , 41 L. Ed. 979 (1897), that protection is qualified by the rightful exercise of the police power.

The extent of that qualification has long provided a source of difficulty. In Mugler v. Kansas, 123 U. S. 623 , 8 S. Ct. 273 , 31 L. Ed. 205 (1887), a Kansas statute prohibited the sale and manufacture of liquor for purposes other than medical, scientific and mechanical uses, and declared all property used for the sale and manufacture of liquor for purposes not so exempted, to be nuisances subject to abatement. The petitioners, manufacturers of liquor for general consumption, argued that their breweries, which were erected prior to the passage of the statute when it was lawful to engage in the manufacture and sale of liquor for any purpose, would have no value or would at least be materially diminished in value by the operation of the statute. They contended that the statute could not be enforced against those “who, at the time, happen to own property, the chief value of which consists in its fitness for such manufacturing purposes, unless compensation is first made for the diminution in the value of their property, resulting from such prohibitory enactments.” The Court rejected that argument, distinguishing the State’s exercise of the police power from its exercise of the power of eminent domain.

The Court noted: “It cannot be supposed that the states intended, by adopting that amendment, [the Fourteenth Amendment] to impose restraints upon the exercise of their powers for the protection of the safety, health, or morals of the community.. . .” ¹⁵⁹ “The principle that no person shall be deprived of life, liberty, or property without due process of law, was embodied, in substance, in the constitutions of nearly all, if not all, of the states at the time of the adoption of the fourteenth amendment; and it has never been regarded as incompatible with the principle, equally vital, because essential to the peace and safety of society, 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.” 8 S. Ct. at 298-99 . The Court continued: “[T]he present case must be governed by principles that do not involve the power of eminent domain, in the exercise of which property may not be taken for public use without compensation. A prohibition simply upon the use of property for purposes that are declared, by valid legislation, to be injurious to the health, morals, or safety of the community, cannot, in any just sense, be deemed a taking or an appropriation of property for the public benefit. . . . The power which the states have of prohibiting . . . use by individuals of their property, as will be prejudicial to the health, the morals, or the safety of the public, is not, and, consistently with the existence and safety of organized society, cannot be, burdened with the condition that the state must compensate such individual owners for pecuniary losses they may sustain, by reason of their not being permitted, by a noxious use of their property, to inflict injury upon the community.

The exercise of the police power by the destruction of property which is itself a public nuisance, or the prohibition of its use in a particular way, whereby its value becomes depreciated, is very different from taking property for public use, or from depriving a person of his property without due process of law. In the ¹⁶⁰ one case, a nuisance only is abated; in the other, unoffending property is taken away from an innocent owner.” (Emphasis added.) 8 S. Ct. at 301 . Thus the Supreme Court recognized a distinction in kind between regulation under the police power and the exercise of eminent domain — so long as the regulation constitutes a valid exercise of the police power, bearing a substantial relation to the protection of the public welfare, due process is afforded and no compensable taking has occurred even though the exercise of that power may often extend to the destruction of property. In Hadacheck v. Sebastian, 239 U. S. 394 , 36 S. Ct. 143 , 60 L. Ed. 348 (1915), the Supreme Court again considered the question of a taking of private property in the context of state regulation under the police power.

There, the petitioner was convicted for violating a statute prohibiting the establishment of a place of manufacture or burning of bricks within the City of Los Angeles. The petitioner owned land in the city, containing a valuable bed of clay; the value of his property was $800,000 for brickmaking purposes but did not exceed $60,000 for residential purposes. He claimed that due to excavation on the property, it could not be used for residential purposes and that the statute, if valid, completely deprived him of the use of his property. The State made no specific denial as to the value of the petitioner’s property, but generally denied that the statute entirely deprived him of the use of his property.

The Court noted that the lower court based its holding upon the proposition that “the business [was] one which could be regulated, and that regulation was not precluded by the fact ‘that the value of investments made in the business prior to . . . [the] legislative action . . . [was] greatly diminished.’ ” The Court upheld that judgment and the regulation under the police power of a lawful business not deemed a public nuisance, characterizing that power as “one of the most essential powers of government, — one that is the least limitable.... A vested interest cannot be asserted against it because of conditions once obtaining.... To so hold would ¹⁶¹ preclude development and fix a city forever in its primitive conditions.” 239 U. S. at 410 . The Court further noted the petitioner’s allegation that the manufacture of brick must necessarily be- carried on where suitable clay is found, and that the clay on his property could not be transported to some other locality.

The Court stated: “This is not urged as a physical impossibility, but only, counsel say, that such transportation and the transportation of the bricks to places where they could be used in construction work would be prohibitive ‘from a financial standpoint. ’ But upon the evidence the supreme court considered the case, as we understand its opinion, from the standpoint of the offensive effects of the operation of a brickyard, and not from the deprivation of the deposits of clay . . . .” (Emphasis added.) 239 U. S. at 411 . Thus the Court continued to recognize a basic distinction between the exercise of the police power and that of eminent domain, but characterized the case as one in which the police power justified a substantial diminution in the value of the property rather than the total destruction of such value or prohibition of its every use. The Court rejected the argument that the statute constituted a taking because it made such use of the clay “financially prohibitive,” and distinguished the regulation from one which completely prohibited owners of real property from extracting minerals therefrom. In Pennsylvania Coal Co. v. Mahon, 260 U. S. 393 , 43 S. Ct. 158 , 67 L. Ed. 322 (1922), the Supreme Court articulated a different approach to the question of “takings” and regulation of the use of property under the police power.

In that case, the plaintiffs brought an action to enjoin the coal company from mining under their residence in such a way as to cause a subsidence of its surface. The company had conveyed the tract to the plaintiffs, reserving the right to remove all the coal under that tract, and the grantees agreed to take the risk and waive all claims for damage that might arise from the mining of the coal. The plaintiffs maintained ¹⁶² that because a Pennsylvania statute subsequently enacted prohibited the mining of coal in any manner that would cause subsidence of any structure used for human habitation, any public structure, public street or passageway, the coal company’s right to mine under their residence had been nullified. The Pennsylvania court held that the statute as applied to the company’s right to mine coal was a valid exercise of the police power.

The Supreme Court reversed that judgment, holding that the statute amounted to an unconstitutional taking of the company’s property without payment of compensation in violation of the Fourteenth Amendment. Justice Holmes, speaking for the Court, noted: . “Government 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. As long recognized some values are enjoyed under an implied limitation and must yield to the police power. But obviously the implied limitation must have its limits or the contract and due process clauses are gone.

One fact for consideration in determining such limits is the extent of the diminution. 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.” 260 U. S. at 413 . Turning to the particular case before it, the Court said: “This is the case of a single private house. . . . [U]sually in ordinary private affairs the public interest does not warrant much of this kind of interference. . . . The damage is not common or public. ...

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.” Id. at 413-14 . ¹⁶³ The