Stearns Co., Ltd. v. United States

The Stearns Coal and Lumber Company (Stearns) (plaintiff) transferred the surface rights in property to the United States (defendant). This transfer involved tens of thousands of acres of land for national forest purposes. Stearns, however, reserved mining rights subject to federal rules and regulations. Under Kentucky law, this gave Stearns a dominant estate in the mineral rights, which came with an implied easement to use the subservient land estate to access the minerals. In the decades following the transfer, Stearns engaged in mining operations consistent with the federal rules and regulations. Congress then passed the Surface Mining Control and Reclamation Act (SMCRA), which regulated surface mining operations (this included not only strip mining but also underground mining that had incidental surface operations). Following passage of the SMCRA, Stearns sought to have a lessee engage in underground mining operations that would require going across the surface of the now-United States land. The government later determined that because Stearns sought the permits for the operation after passage of the SMCRA, Stearns (and its lessee) did not have valid existing rights that allowed for mining operations under the SMCRA. However, the government could, in its sole discretion, allow Stearns to continue mining. Stearns sued in Federal Claims Court, claiming that this constituted a taking of property that required compensation.