Stearns Co., Ltd. v. United States

The Stearns Company, Ltd. (plaintiff) sold a tract of land in Kentucky to the United States (defendant) in the 1930s. The land was to contribute to a national forest. Under the terms of the deed, Stearns retained the mineral rights to the materials underlying the land, and the United States gained the surface rights. Under Kentucky law (which controlled the deed), Stearns had an implied right of surface access for mineral-removal purposes. Decades after the conveyance, Congress passed the Surface Mining Control and Reclamation Act of 1977 (SMCRA), which had the purpose of protecting the environment against the effects of surface mining. The SMCRA prohibited surface mining (which included underground mining if related to the surface) on federal forest land, subject to limited exceptions. An exception could be granted if a party had made a good-faith application for a mining permit before the passage of the SMCRA. Stearns leased its mineral interest to another party after passage of the SMCRA. That party needed to disturb the national forest land to engage in underground mining. The government determined that there was no good-faith application before the passage of the SMCRA. Although Stearns might have been able to obtain mining rights through an alternative administrative procedure, Stearns sued the government, claiming that there was a taking. The Court of Federal Claims sided with Stearns, concluding that there was a physical taking. The government appealed.