Pennsylvania Coal v. Mahon: The Erratic Takings Jurisprudence of Justic Holmes

Georgetown Law Journal, Feb 1998 by Epstein, Richard A

RICHARD A. EPTEI*

INTRODUCTION

It has been said on more than one occasion that the single most important pronouncement on the law of takings is contained in Justice Holmes's cryptic opinion in Pennsylvania Coal Co. v. Mahon.' Exactly what Holmes stands for in Mahon has been addressed in numerous articles, many of which are referred to in Professor William Treanor's recent article on this subject, Jam for Justice Holmes: Reassessing the Significance of Mahon.2 The revived search for Holmes's meaning, moreover, is for Treanor no disinterested quest of historical scholarship. Rather, he is intent on showing that Mahon cannot serve as a credible cornerstone for any revival of the Takings Clause, such as that evidenced, however imperfectly, in recent cases of the United States Supreme Court.3 In Treanor's view, "Mahon is uniformly held to stand for the proposition that the judiciary should closely scrutinize economic legislation for potential unconstitutionality."4 Taking issue with the conventional wisdom, Treanor argues that in Mahon Holmes had rejected the various "categorical" rules that could govern takings cases-that is, rules that looked to one single element (e.g., physical invasion)-as a litmus test for whether compensation is required. In place of that rigid conception, he claims, Holmes consciously adopted a balancing approach featuring a fair measure of judicial deference to both federal and state regulation.5

From that observation, Treanor posits that two points follow. First, descriptively, the resurgence of judicial activism in takings cases cannot rely on Holmes's short opinion in Mahon, which shows "both a high degree of deference to majoritarian decisionmaking and a rejection of the various formalist, categorical rules for a balancing test weighted in favor of the government."6 Second, normatively, the new discordant notes in the takings debate should be muffled, and the business of government regulation, be it of land use or public utility rates, should continue as before, as a series of protracted political struggles, judicially constrained only in extreme cases, when process itself is suspect.' Some readers might think that my outspoken position in Takings8 should oblige me to defend the conventional wisdom against Professor Treanor's attack by reading Mahon as an antideferential decision on property rights. But I do not conceive my task along such partisan lines. In this context, the fundamental objective of academic inquiry is to develop a sound framework for determining what forms of government regulation of private property are permissible under the Constitution and why. Accordingly, Part I of this comment outlines my approach to meeting this challenge. The subsequent task, taken up in Part II, is to examine the extent to which Mahon, with its well-publicized disagreement between Holmes and Brandeis, is consistent with the sound theoretical formulation of the issues. Theory comes first; case law interpretation and practical politics only after the conceptual underbrush is cleared away.

I. THE THEORETICAL FRAMEWORK: COMPETITION, AGGRESSION, AND MONOPOLY

Before defending my theory of the Takings Clause, it will be helpful to clarify its general contours. The correct interpretation of the Takings Clause begins with a proper respect for the primacy of private property and liberty of action, but allows the government to respond by regulation to two major forms of private misbehavior. The first of these, aggression, is the chief form of behavior condemned by standard libertarian theorists.9 To be sure, if aggression were the only source of genuine social dangers, then constitutional law would be far simpler than it presently is. But, of course, it is not. Private property does not always lead to open competition. Unfortunately, monopoly power creates social losses and thus requires separate treatment precisely because force and fraud play no part in its creation and use. It too is a proper subject of regulation. lo

Aggression and monopoly are similar in that both drive a wedge between individual and social welfare. In both cases, individuals prosper as a result of behavior that injures society as a whole. This is not to say, however, that these two dangers are of equal magnitude, for the dangers of mass murder exceed those of monopoly pricing and exclusion. But we cannot ignore monopoly power simply because it is less potent than the unbridled use of force and fraud. Both risks require some social response, and in neither case is the sensible range of responses blocked by the Takings Clause.

This interpretive framework relies heavily on modern (but hardly novel) insights of social welfare theory that were not fully formalized, or at least widely disseminated, when Holmes and Brandeis voiced their disagreements in Mahon. Nevertheless, both men, along with their contemporaries on the bench, showed a strong intuitive appreciation of the basic framework articulated here. Treanor, ironically, has lost sight of this basic structure, even as he recounts with great vigor the key cases that marked its rise and fall. He is so anxious to limit the role of the Takings Clause in future Supreme Court jurisprudence that he fails to examine its interpretive foundations. But it is best to start by explaining and defending this basic framework, before moving back to Mahon.