Object as Obligation in Property

In Texaco Inc. v. Short, Justice Stevens quoted: “Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state laws or rules that secure certain benefits and that support claims of entitlement to those benefits.” Justice Stevens and the Supreme Court went on to uphold the constitutionality of Indiana’s Mineral Lapse Act, or Dormant Mineral Interest Act (collectively or separately as “DMIA”), which transferred unused or unrecorded, severed mineral interests to the surface owner upon a surface owner’s implementing a termination proceeding.

Despite coming out in 1982, the Court did not enlist the “usual” regulatory-takings inquiry articulated in Penn Cent. Transp. Co. v. New York. The Court did not apply that inquiry because it held that the regulation fell within the realm of “recordation acts.” Recordation, or recording, acts have been accepted as part of the plenary power of the state since the end of the 18th and beginning of the 19th century.

One major distinction between Penn Central and its progeny and Texaco is the nature of the government action. In Texaco, the government created a statutory abandonment provision that required a de minimis notice to the county recorder; conversely, in Penn Central and cases of its ilk, the government restricted what could be done with the property. The only restriction in Indiana was that it required the mineral-estate owners to file a notice of claim if they had not already leased, rented, or used the mineral estate in any other way.

This Note analyzes the particular distinction between regulatory statutes that trigger a compensable taking and the Court’s holding in Texaco to parse out why a statute would avoid a Takings Clause analysis. Particularly, this Note focuses on the functional conflict between the surface and mineral estates that requires the “government as mediator” to step in and redefine the rights of each entitlement. In this context, I suggest that when regulations adhere to the practical application of providing both negative and positive rights to distinct estate claimants, a taking will not occur.

By analyzing state-law creation in this way, it allows a legislature to determine, with some clarity, if a DMIA—or another piece of “regulatory state action” involving property—would trigger a Takings Clause claim. Secondly, this Note proposes a DMIA for the State of Arizona and offers an additional rationale as to why a DMIA would be in the best interest of the State’s economy and its citizens’ self- determination and development of autonomous personhood.