"The Foundation of Our 'Regulatory Takings' Jurisprudence": The Myth and Meaning of Justice Holmes's Opinion in Pennsylvania Coal Co. v. Mahon

Abstract

Justice Oliver Wendell Holmes’ opinion in Pennsylvania Coal v. Mahon has been lauded as the seminal regulatory takings case, and as the source of the diminution in value and balancing tests used to determine whether a regulation effects a taking. It has also been blamed for the confusion in regulatory takings doctrine. This article explores both the meaning of Holmes’s opinion in Mahon, and the myths that have grown up around it. Part I reconstructs the distinctive constitutional theory of property that Holmes developed in Mahon and in other writings, against the background of previously developed property theories, and in the context of Holmes’s positivism, moral skepticism, anti-formalism, and views of human psychology. It argues that Holmes took an historical view of constitutional property, seeing it as defined by historically contingent positive law. It also argues that Holmes took a non-categorical view of takings, seeing them as legal changes that “went too far,” but not as different in kind from smaller legal changes that destroy some existing property rights without giving rise to a right of compensation. Part I then considers how Holmes applied that theory to the facts of Mahon, and what role he gave to diminution in value and other tests. Part II traces the myths of the Holmes opinion in Mahon – the meanings that others have come to give it, from the other members of the Mahon Court to recent judges and commentators. It argues that the Mahon decision was originally understood as grounded in the substantive due process guaranteed by the Fourteenth Amendment, which applied to the states without incorporating the Bill of Rights. After the mid-1930s, it demonstrates, Mahon was forgotten by courts for decades, only to be reborn as a Fifth Amendment Takings Clause case. Part II also contends that although there are a number of other possible ways in which one might define what would count as the first regulatory takings case, Mahon does not fit any of those definitions.