Stearns Co. v. United States

34 Fed. Cl. 264, 1995 U.S. Claims LEXIS 197, 1995 WL 624681
CourtUnited States Court of Federal Claims
DecidedOctober 20, 1995
DocketNo. 594-89L
StatusPublished
Cited by11 cases

This text of 34 Fed. Cl. 264 (Stearns Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stearns Co. v. United States, 34 Fed. Cl. 264, 1995 U.S. Claims LEXIS 197, 1995 WL 624681 (uscfc 1995).

Opinion

OPINION

SMITH, Chief Judge.

Plaintiff has asserted a claim for compensation under the Fifth Amendment to the United States Constitution. Its claim is based upon the operation of § 522(e)(2) of the Surface Mining Control and Reclamation Act of 1977 on plaintiffs subsurface mineral rights in land located in the State of Kentucky. This action is before the court on the parties’ cross-motions for summary judgment, and defendant’s motions to dismiss and to strike the affidavit of plaintiffs mining engineer. At oral argument, the court granted defense counsel’s request to allow the parties to file post-hearing briefs on the effect of several recent opinions on plaintiffs core taking claims: Florida Rock Indus., Inc. v. United States, 18 F.3d 1560 (Fed.Cir. 1994), cert. denied, — U.S.-, 115 S.Ct. 898, 130 L.Ed.2d 783 (1995); Shelden v. United States, 7 F.3d 1022 (Fed.Cir.1993); and Bowles v. United States, 31 Fed.Cl. 37 (1994).

The parties cross-motions for summary judgment, and defendant’s motions to dismiss and to strike the affidavit of plaintiffs mining engineer hereby are DENIED. A trial must be held in this case to resolve the remaining issues.

FACTS

In 1937, plaintiff Steams Company (Stearns) divided the surface and mineral estate of some 47,000 acres of coal-rich land in McCreary County, Kentucky by selling the surface estate to the federal government.1 The surface estate became part of the Daniel Boone National Forest. In the 1937 deed, Steams reserved an easement to allow access to its mineral estate, subject to certain atypical restrictions.2 The nature of Steams’ easement through the federally-owned surface has been the subject of litigation in the Supreme Court of Kentucky and the United States Court of Appeals for the Sixth Circuit.

In 1978, the Supreme Court of Kentucky held that Steams’ right-of-way was not “public property” within the meaning of a Kentucky statute merely because the United States owned the surface estate. Department of Natural Resources and Envtl. Protection v. Stearns Coal & Lumber Co., 563 S.W.2d 471, 472 n. 3 (Ky.1978). In reaching its conclusion, the Supreme Court of Kentucky expressed the view that any effort by the State of Kentucky to deny Steams a permit to strip mine premised solely on the fact that the United States held the surface interest would “take[ ] the property of Steams without compensation and [violate] [267]*267both the federal and state constitutions.” Id. at 473.3

Although the foregoing statements by the Kentucky Supreme Court cast doubt on any state effort to limit Stearns’ right-to-mine, Stearns, nevertheless, was not exempt from federal regulation. In August 1977, President Carter signed the Surface Mining Control and Reclamation Act (SMCRA), 30 U.S.C. §§ 1201-1328, § 522(e)(2) of which governs mining on “lands within the boundaries of any national forest.” 30 U.S.C. § 1272(e)(2). SMCRA establishes a different, and more rigorous, regulatory regime for land “within the boundaries of [a] national forest” than for land outside. Id. According to § 522(e)(2), unless a company seeking to mine has valid existing rights, the company must obtain a finding by the Secretary of Interior that the proposal to mine is not “incompatible” with “significant recreational, timber, economic, or other values.” Id.4 This requirement is known as a “compatibility determination.”

Prior to and after the enactment of SMCRA, Steams attempted to obtain permission from the federal government to extract coal by strip mining, but each time the federal government denied Steams’ permit applications.5 Finally, in 1980, Steams entered into a lease with Ramex Mining Corporation (Ramex) to extract coal by underground mining. Ramex planned to disturb 2.62 acres of the surface to reach the coal below. Before Ramex could break ground, however, on December 3, 1980, the Department of Interior, Office of Surface Mining (OSM), informed Ramex in writing that its operation was “on federal lands” within the meaning of SMCRA § 522(e)(2) and that Ra-mex must seek a valid existing rights determination or a compatibility determination prior to commencing its mining operation.

Stearns and Ramex at this point filed a declaratory judgment action in the United States District Court for the Eastern District of Kentucky seeking a determination that Steams’ pre-existing easement through the surface was not “on federal lands,” and, consequently, § 522(e)(2) should not apply. Steams and Ramex argued that if the court found that Steams’ easement was “on federal lands” within the meaning of the statute, then § 522(e)(2) amounted to an unconstitutional taking. The district court denied both claims, and Steams appealed to the Sixth Circuit. In upholding the lower court’s opinion, the Sixth Circuit concluded that the site of the proposed mining operation “fits squarely within the common sense meaning of the phrase ‘on federal lands’ as used in [268]*268[SMCRA § 522(e)(2)].” Ramex Mining Corp. v. Watt, 753 F.2d 521, 523 (6th Cir. 1985), cert. denied, 474 U.S. 900, 106 S.Ct. 271, 88 L.Ed.2d 225 (1985).

Turning to Steams’ Fifth Amendment taking argument, the Sixth Circuit concluded that Hodel v. Virginia Surface Mining & Reclamation Ass’n, Inc., 452 U.S. 264, 101 S. Ct. 2352, 69 L.Ed.2d 1 (1981), controlled. The petitioners in Hodel argued that the federal government took its property without compensation merely by enacting SMCRA, and the Supreme Court rejected this claim on ripeness grounds. Id. at 297. As the Court observed, “the potential for ... administrative solutions confirms the conclusion that the taking issue ... simply is not ripe for judicial resolution.” Id. Interpreting Stearns’ claim as a closely related facial challenge to § 522(e)(2) of SMCRA, the Sixth Circuit concluded in Steams:

Until an administrative disposition is made of this question [whether Stearns has valid existing rights to engage in underground coal mining], we will not know the nature of the restraint imposed by the government. Thus the District Court correctly ruled that plaintiffs claim was not ripe----

Id at 524.

On December 19, 1986, OSM determined that Steams lacked valid existing rights to mine and found that Steams must seek a compatibility determination before commencing mining. On September 14,1989, Steams exhausted its administrative appeals, and on October 31, 1989, Steams filed in the Claims Court.6 Stearns has not applied for a compatibility determination.7 The substance of Stearns’ claim is that the requirement to seek a compatibility determination has eviscerated the easement it reserved in the 1937 deed and that this amounts to either a physical invasion or a regulatory taking without just compensation in violation of the Fifth Amendment.

DISCUSSION

I. Defendant’s Motion to Strike

A preliminary motion to strike evidence must be addressed before discussing the dis-positive motions.

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Cite This Page — Counsel Stack

Bluebook (online)
34 Fed. Cl. 264, 1995 U.S. Claims LEXIS 197, 1995 WL 624681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stearns-co-v-united-states-uscfc-1995.