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The Fifth Amendment Takings Clause forbids the government from taking private property for public use without just compensation. For example, the government might exercise its eminent-domain authority to take a private landowner’s property for the purpose of building a public road. In that situation, the Fifth Amendment obligates the government to pay a fair price to the landowner. Things grow more complex, however, when the government passes a law that devalues the property or prevents the owner from using it or profiting from it.
The United States Supreme Court considered the constitutionality of these “regulatory takings” in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922).
The Pennsylvania Coal Company owned some land for mining, but it deeded the surface rights to Mahon. Mahon built a house on the land. The deed made clear that Pennsylvania Coal Company retained the right to mine the coal beneath the surface and that Mahon accepted any risks associated with the mining.
Years later, Pennsylvania banned coal mining that threatened nearby residences. Mahon sued for an injunction to block the company from mining beneath his house. The question wound up before the United States Supreme Court.
Justice Oliver Wendell Holmes, Jr., writing for the majority, concluded that regulations that reduce property value too much require just compensation. The opinion was not unanimous, but it did set the stage for the extensive jurisprudence on regulatory takings that would follow.