ELR Citation: ELR 20610
No(s). 499-83L (Cl. Ct. Oct 13, 1989)

The court holds that the Surface Mining Control and Reclamation Act's (SMCRA's) prohibition of surface mining constitutes a taking of plaintiffs' right to mine coal, and that plaintiffs are entitled to just compensation of $60 million. The court first holds that SMCRA's prohibitions totally eliminated the economic value of plaintiffs' coal rights. Plaintiffs' coal is economically, legally, and technologically mineable. There were two major markets for plaintiffs' coal when SMCRA was enacted in 1977: utility producers and specialized industrial users. The court holds that SMCRA's restrictions interfere with plaintiffs' reasonable investment-backed expectations. The court holds that there are no economically viable alternative uses for plaintiffs' property. Underground mining is not economically or technologically feasible. Although plaintiffs own the rights to mine minerals other than coal, there is no evidence of other valuable minerals on the property. The government's argument that plaintiffs still have valuable farming and ranching rights is irrelevant, since plaintiffs are only claiming that the government took their coal rights and not their surface rights.

The court holds that the taking occurred when SMCRA was enacted in 1977, not when plaintiffs' mining application was denied. When a statute is enacted specifically to prevent the only economically viable use of a property, an official determination that the statute applies to the property in question is not necessary. The court adopts plaintiffs' Boyd Plan as the method for determining the fair market value of plaintiffs' coal rights. The Boyd Plan uses the discounted cash flow approach, which values the property based on the discounted stream of income it is capable of producing over its useful economic life. The court declines to use the comparable sales approach to valuation, since there are no comparable sales that were not made out of necessity or compulsion. The court calculates the annual production rate and price of plaintiffs' coal, adopts an 11 percent discount rate, calculates capital costs, and determines that the total value of plaintiffs' recoverable coal is $60,296,000. The court holds that plaintiffs are also entitled to prejudgment interest on this sum.

[A previous decision in this litigation is published at 15 ELR 20124.]

Counsel for Plaintiffs
George W. Miller
Hogan & Hartson
Columbia Sq., 555 13th St. NW, Washington DC 20004-1109
(202) 637-5600

Counsel for Defendant
Alfred T. Ghiorzi
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 272-6959