Court Opinion

ID: 35386
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:27:33+00
Date Added: 2024-06-11T09:02:34.994449
License: Public Domain

United States Court of Appeals
                                                                       Fifth Circuit
                                                                    F I L E D
                         REVISED June 4, 2004
                                                                      May 21, 2004
              IN THE UNITED STATES COURT OF APPEALS
                                                                Charles R. Fulbruge III
                         FOR THE FIFTH CIRCUIT                          Clerk
                         _____________________

                              No. 02-51182
                         _____________________

VULCAN MATERIALS COMPANY,

                                                  Plaintiff - Appellant,

                                  versus

THE CITY OF TEHUACANA,

                                                      Defendant - Appellee.

__________________________________________________________________

          Appeals from the United States District Court
                for the Western District of Texas
_________________________________________________________________

Before JOLLY and WIENER, Circuit Judges, and WALTER, District
Judge.1

E. GRADY JOLLY, Circuit Judge:

     Vulcan Materials Company (“Vulcan”) owns a land lease with the

right to mine limestone.      The problem is that a substantial part of

the land and the mining is within the boundaries of the City of

Tehuacana (“the City”) in Limestone County, Texas. The City passed

an Ordinance in 1998 forbidding quarrying or mining activities

within the   City   limits.      Vulcan    contends    that   the   Ordinance

constitutes a public taking and violates its rights under both the

     1
      District Judge of the Western District of Louisiana sitting
by designation
United States and Texas Constitutions.           All that remains to be

decided in this appeal, however, is the propriety of the district

court’s grant of the City’s Motion for Summary Judgment dismissing

Vulcan’s takings claim under the Texas Constitution. We ultimately

hold that the case turns on whether the quarry mining constitutes

a public nuisance and consequently remand for a jury determination

on this issue.

                                    I

     The City of Tehuacana has a population of approximately 300 to

350 people and occupies a small geographical area in Limestone

County, Texas.

     In 1993, Smith Crushed Stone, Inc. (“SCS”) leased limestone

quarry rights on three contiguous tracts of land (Tracts 1-3)

adjacent to Tehuacana’s City limits and also leased four additional

contiguous tracts of land within the City limits.             It did no

mining,   however,   on   these   tracts.   In    October   1997,   Vulcan

purchased the assets of SCS in Limestone County, including the

limestone quarry rights leased by SCS.       This leasehold interest

allows Vulcan to prospect, explore, mine, operate for and produce

“by strip mining or open pit mining all rock, stone, limestone and

similar rock like materials” and grants Vulcan the right to exclude

all other uses of the Tracts as necessary to enable the quarrying.

     Before its acquisition of SCS’s assets, Vulcan hired local

attorney Bobby Reed to determine whether any ordinances would

prevent Vulcan from quarrying, including those tracts located

                                    2
within the City.       Reed attested that both the Mayor and City

Secretary advised him that no ordinances existed nor were in the

planning stages that would prevent Vulcan from pursuing quarrying

operations within the City.

     The leases cover land both within and outside the Tehuacana

City limits.    Vulcan sought to mine approximately 48 acres located

inside City limits, described as Tracts 4-7.               This     property   is

2/3 to 3/4 of a mile wide and abutted by several public roads that

access several homes, some of which are located just across the

street from the property.          Outside Tehuacana City limits, Vulcan

currently    mines   and   operates    a    rock   crushing   facility    on   an

approximate    additional    250    acres    of    land   located    immediately

adjacent to Tracts 4-7.

     In early 1998, Vulcan began planning active quarrying on

Tracts 4-7.     Vulcan determined access points and ramp sites,

determined where in that area it wanted to quarry, cleared land,

stripped overburden, and otherwise prepared the tracts for physical

use. There has been no recent mining on these tracts.

     In October 1998, Vulcan sought and obtained permission from

the Texas Railroad Commission to construct berms on Tracts 4-7.

Vulcan also prepared the quarry floor and removed overburden on

Tract 6 to prepare for a blast (“shot”) to loosen limestone in the

quarry.     The City residents began to express opposition to the

proposed operations and soon the City Council began to consider

adopting an ordinance to regulate Vulcan’s quarrying activities.

                                       3
      Vulcan conducted a test shot on Tract 6 on October 25, 1998,

in   an   abandoned     pit.   Another    shot   and   similar   preparatory

activities were conducted on Tract 6 on November 25 and 26, 1998.

Although approximately 400-500 tons of limestone were processed

through Vulcan’s plant as a result of these two blasts, this amount

was only a small percentage of what Vulcan normally retrieved and

processed during one day in its regular operations.              Some of the

finished product was tested, and some was put into inventory and

sold in the ordinary course of business.

      Before it passed the contested ordinance, the City held public

hearings.    Numerous citizens complained about Vulcan’s operations

outside the City as well as the two blasts conducted inside the

City limits.    Specifically, the citizens complained that Vulcan’s

activities caused shaking of houses, lifting furniture off the

floor, rattling windows, shaking and jostling people in their

homes, noise, dust, smoke, property damage, fear, interference with

enjoyment of property and life, interference with the use of public

roads and streets, and exposure to fly and throw rock.             The City,

and the district court, cite one flyrock incident in particular

that had occurred when SCS was conducting quarrying activities on

the tracts outside of the City in which a 500-pound boulder was

propelled    into   a   Tehuacana   resident’s    yard.    Residents    also

complained that the mining activities caused springs and wells in

the area to dry up.

                                      4
     On December 8, 1998, the City Council passed the “Ordinance

Forbidding Quarrying or Blasting Operations within the City Limits”

(the “1998 Ordinance”) and on December 15, 1998, Vulcan filed its

complaint in federal district court, under both the United States

and Texas Constitutions.2    As mentioned above, the only claim

     2
      The 1998 Ordinance states, in pertinent part:

          AN ORDINANCE FORBIDDING QUARRYING OR BLASTING
          OPERATIONS WITHIN THE CITY LIMITS

               WHEREAS, the City of Tehuacana is
          predominantly a residential city, with little
          of no industry inside city limits; and

               WHEREAS, a rock quarry operating near the
          city limits has indicated its intention to
          begin quarrying and blasting operations within
          the city limits of the City of Tehuacana; and

               WHEREAS, the quarrying and blasting
          operations would constitute a public nuisance
          and result in excessive noise and vibration to
          city residents; and

               WHEREAS, the quarrying and blasting
          operations could constitute a physical danger
          to residents of the city due to the
          possibility of overfly of rock or other
          materials from blasting onto residents of the
          city or property of residents of the city; and

               WHEREAS, the blasting and quarrying
          operations would have a detrimental effect on
          the quality of residential life in the city
          due to vibration, excessive noise from
          blasting, excessive noise from the operation
          of heavy equipment, the potential for injury
          or death from overfly of rock, (flyrock), air
          blast damage, ground motion damage, and
          excessive dust from operations.

               NOW THEREFORE, BE IT ORDAINED BY THE CITY
          COUNCIL OF THE CITY OF TEHUACANA:
                                5
remaining in this appeal is Vulcan’s takings claim under the Texas

Constitution.

     In its September 25, 2002 Memorandum Opinion and Order, the

district court granted the City’s Motion for Summary Judgment,

holding that the 1998 Ordinance is not an unconstitutional taking

or an inverse condemnation under Texas law.     The district court

held, as a matter of law, that the 1998 Ordinance substantially

advances a legitimate state interest.     The court also made the

following determinations with regard to Vulcan’s regulatory takings

claims:

               SECTION I.     It shall be unlawful for
          any person, company, entity, or corporation to
          engage in the following activities within the
          city limits of the City of Tehuacana,
          Limestone County, Texas:

                A.   the quarrying or mining of rock
                     utilizing blasting operations or use
                     of explosives, or surface mining;
                B.   the use of explosives for the
                     purpose of blasting rock, or in
                     connection with mining or quarrying
                     operations;
                C.   the use of heavy equipment in
                     connection with quarrying or mining
                     operations within the city limits of
                     Tehuacana, Limestone County, Texas;
                D.   the use of explosives for any
                     commercial or industrial activity or
                     for any other reason except the use
                     of fireworks in connection with
                     celebrations as may be allowed by
                     law from time to time.

Tehuacana, Tex., Ordinance 12898 (Dec. 8, 1998).
                                 6
          [T]he activities the 1998 Ordinance seeks to
          regulate constitute a nuisance under Texas
          law. The 1998 Ordinance therefore restricts
          no legitimately owned property right. Even if
          the Court were to assume that the 1998
          Ordinance did somehow restrict a recognized
          property right, a taking under Texas law would
          not occur because Vulcan has not been deprived
          of all economically viable use of its
          property.    Only a small portion of its
          property is affected by the Ordinance, and the
          property still has an economically viable use.
          Although Vulcan argues that high explosives
          and heavy equipment are required to extract
          the limestone from the ground, the Court notes
          that neither were required to extract the
          stone used to build the pyramids. Obviously,
          while extraction of the limestone without
          explosives and heavy equipment may be more
          expensive and labor intensive, it is not
          impossible to operate such a quarry without
          violating the 1998 Ordinance.     Accordingly,
          judgment will be entered to the effect that
          the   1981   Ordinance   does   not   prohibit
          quarrying, and that the 1998 Ordinance is not
          an unconstitutional taking or an inverse
          condemnation under Texas law.

Mem. Opin., p. 20.   Vulcan appeals.   We vacate the district court’s

grant of summary judgment to the City and remand.

                                 II

     This Court reviews the granting of summary judgment de novo,

applying the same standards used by the district court.    Thomas v.

Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th Cir. 1999); Norman v.

Apache Corp., 19 F.3d 1017, 1021 (5th Cir. 1994). Summary judgment

is proper when no genuine issue of material fact exists and the

moving party is entitled to judgment as a matter of law. FED. R.

CIV. P. 56(c).       Summary judgment is only appropriate if no

reasonable jury could differ in weighing the evidence.     Peel & Co.

                                 7
v. Rug Mkt., 238 F.3d 391, 398 n.37 (5th Cir. 2001).               The Court

views the evidence in the light most favorable to the nonmoving

party.   Gillis v. Louisiana, 294 F.3d 755, 758 (5th Cir. 2002).

     Under Texas law, although determining whether a property

regulation is unconstitutional requires consideration of a number

of factual issues, the ultimate question of whether there has been

a regulatory taking is a question of law.               Mayhew v. Town of

Sunnyvale, 964 S.W.2d 922, 932-33 n.3 (Tex. 1998).

                                     III

     Before we evaluate whether the Ordinance constitutes a taking

under the Texas Constitution, we must first address the City’s

arguments   that   the   Ordinance    is   not   a   land   use   regulation.

Instead, the City contends that the Ordinance is a health and

safety regulation that redresses an activity under its police power

and is not subject to the public takings law of Texas.3                   The

district court was obviously unpersuaded by the City’s argument

because it addressed the takings issue presented in this case.

     3
      The district court refrained from holding that the Ordinance
is not a land use regulation and went on to evaluate Vulcan’s
claims under Texas takings law. However, the court indicated its
doubt that this was a taking and commented that the Ordinance did
not prohibit the mining of limestone; instead, according to the
district court, the ordinance merely prohibited the mining of
limestone by using blasting and heavy machinery.      The district
court noted that the Egyptian Pyramids were built without the use
of explosives or heavy machinery. However, we hesitate to compare
Vulcan’s land use activities to those of the ancient Egyptians.
See U.S. CONST. amend. XIII.

                                      8
       No   one     doubts   that   a   municipality    may   enact   reasonable

regulations to promote the health, safety, and general welfare of

its people.       College Station v. Turtle Rock Corp., 680 S.W.2d 802,

805 (Tex. 1984)(citing Ellis v. City of West University Place, 141

Tex. 608, 175 S.W.2d 396 (1943)).             However, “if a governing body,

in the exercise of its police power, enacts a regulation that goes

too far in the regulation of private property, that governing body

may be held to have taken the property, thus requiring it to pay

compensation to the owner.”              32 TEX. JUR. 3D Eminent Domain § 9

(1998).      The following factors are relevant in determining if the

Ordinance has “gone too far” and effected a taking of Vulcan’s

property: “(1) whether the property was rendered wholly useless;

(2) whether the governmental burden created a disproportionate

diminution in economic value or caused a total destruction of the

value; and (3) whether the government’s action against an economic

interest of an owner was for its own advantage.”               Id.

       In the instant case, we think that the Tehuacana Ordinance

goes too far to be considered a mere exercise of the City’s police

power.      The only property interest at issue here is Vulcan’s lease

of the right to mine limestone from these tracts and Tehuacana’s

Ordinance effectively prohibits any and all mining of limestone

within City limits.

       The Ordinance makes clear that its purpose is to prohibit the

very   activity       that   Vulcan’s     leasehold    permits.       First,   the

Ordinance      is    entitled   “AN     ORDINANCE   FORBIDDING    QUARRYING     OR
                                          9
BLASTING OPERATIONS WITHIN THE CITY LIMITS.” Second, the Ordinance

makes clear that it is targeting “a rock quarry operating near the

city limits [that] has indicated its intention to begin quarrying

and blasting operations within the city limits.”                Finally, the

Ordinance expressly prohibits “the quarrying or mining of rock

utilizing blasting operations or use of explosives” and “the use of

heavy equipment in connection with quarrying or mining operations.”

     In    sum,    it    is   simply   undeniable     that   the   Ordinance

specifically      was   adopted   to   completely    prohibit   Vulcan   from

engaging in mining on Tracts 4-7, and that the only right possessed

by Vulcan in Tracts 4-7 was the right to mine limestone.                   We

therefore hold that the Ordinance is a land use regulation.

                                       IV

     We now turn to address the district court’s holding that the

Ordinance does not constitute a public taking of Vulcan’s leasehold

interest under the Texas Constitution.              The Texas Constitution

provides that “[n]o person’s property shall be taken, damaged or

destroyed for ... public use without adequate compensation being

made[.]”   TEX. CONST. art. I, § 17.4       Texas classifies takings into

     4
      Vulcan disputes the applicability of federal takings
standards in evaluating whether a taking has occurred under the
Texas Constitution. Generally, Texas constitutional standards have
been considered more protective of property owners than federal
standards. City of Glenn Heights v. Sheffield Development Co.,
Inc., 61 S.W.3d 634, 644 (Tex.App.-Waco 2001, pet. granted).
However, in Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998)
the Texas Supreme Court assumed, without specifically holding, that
the Texas and federal takings standards are coextensive. Mayhew,
964 S.W.2d at 932. Like the Mayhew court, in the absence of clear
                                       10
one of two categories:        physical takings or regulatory takings.

Mayhew, 964 S.W.2d at 933.           A physical taking occurs when “the

government authorizes an unwarranted physical occupation of an

individual’s property.”       Id.    Because there is no allegation that

Tehuacana has physically occupied Vulcan’s property, if Vulcan is

to be compensated the Ordinance must constitute a regulatory

taking.   Id.

     A regulatory taking can occur in two ways: (1) when the

regulation      does   not   substantially   advance    legitimate     state

interests, id. at 933-34, or (2) when the regulation either denies

the owner of all economically viable use of his property -- a

categorical taking -- or unreasonably interferes with a property

owner’s rights to use and enjoy his property -- a partial taking.

Id. at 935 (citing, inter alia, Lucas v. South Carolina Coastal

Council, 505 U.S. 1003, 1015-19 & n.8 (1992)).

     “The ‘substantial advancement’ requirement examines the nexus

between the effect of the ordinance and the legitimate state

interest it is supposed to advance.”            Id. at 934.       Numerous

governmental      purposes     and     regulations     may   satisfy    the

“substantially advance” prong including enhancing the quality of

Texas authority, we will evaluate Vulcan’s claims under the more
established federal standards, keeping in mind that greater
protection of property rights generally may be afforded under the
Texas constitution.

                                      11
life   and     protecting    the   community    from   the    ill   effects   of

urbanization.       Id. at 934-35.

       Even    assuming,    however,    that   the   Ordinance   substantially

advances Tehuacana’s legitimate interests, a taking can still occur

if the Ordinance denies Vulcan all economically viable use of its

property or unreasonably interferes with its right to use and enjoy

the property.       Id. at 935 (citing, inter alia, Lucas, 505 U.S. at

1015-19 & n.8).

       Determining whether a regulation unreasonably interferes with

the landowner’s right to use and enjoy his property requires a

court to consider “the economic impact of the regulation and the

extent to which the regulation interferes with distinct investment-

backed expectations.”         Id. at 935 (citing, inter alia, Lucas, 505

U.S. at 1019 n.8).         “The first factor, the economic impact of the

regulation, merely compares the value that has been taken from the

property with the value that remains in the property.”              Id. at 935-

36.      The    second     factor,     the   landowner’s     investment-backed

expectations, considers the “existing and permitted uses of the

property” as the “primary expectation” of the landowner.                Id. at

936 (citing, inter alia, Lucas, 505 U.S. at                   1017 n.7).      In

contrast, “[d]etermining whether all economically viable use of a

property has been denied entails a relatively simple analysis of

whether value remains in the property after the governmental

action.”      Id.

                                        12
     Given the facts of this case and the limited nature of

Vulcan’s property interest, i.e., a lease for the sole purpose of

mining limestone, it is clear that the “denial of all economically

viable use” inquiry will be dispositive for the reasons set forth

below.

     In resolving whether “value remains” in Vulcan’s lease, we

must first examine which particular limestone mining rights are

relevant   to   this   determination    --   all   of    Vulcan’s   leasehold

interests or only Tracts 4-7.5         The district court held that the

relevant parcel in this case included not only the small acreage

leased within the City limits (48 acres), but also the adjacent 250

acres that is also part of the lease.6                  Vulcan attacks this

     5
      The City argues that the right to mine limestone possessed by
Vulcan is merely one of a “bundle of sticks” and that the value of
the entire bundle of sticks, as opposed to just one stick --
Vulcan’s leasehold interest -- must be totally diminished before a
categorical taking has taken place. This argument is misplaced in
this case.

     Clearly, “where an owner possesses a full ‘bundle’ of property
rights, the destruction of one ‘strand’ of the bundle is not a
[categorical] taking because the aggregate must be viewed in its
entirety” -- i.e., the relevant parcel includes all of the rights
possessed by the owner.       Keystone Bituminous Coal Assn. v.
DeBenedictis, 480 U.S. 470, 497 (1987) (quoting Andrus v. Allard,
444 U.S. 51, 65-66 (1979)). Vulcan, however, does not possess a
“full ‘bundle’ of property rights” and, therefore, the relevant
parcel for the purposes of its takings claim is the only estate in
which it has an interest -- the limestone lease -- and the value of
other interests -- i.e., surface agricultural uses -- cannot be
considered in determining whether all economically viable use of
the property has been destroyed. See generally The City of Whitney
Benefits, Inc. v. United States, 926 F.2d 1169 (Fed. Cir. 1991).
     6
      This issue has been referred to as the “denominator problem”
and has been described as follows:
                                   13
characterization of the relevant parcel and contends that the court

should consider only those tracts that the City had the authority

to regulate -- Tracts 4-7.

     Neither party has cited a Texas case directly on point and we

therefore must make an Erie "guess" and follow the rule that we

conclude the Texas Supreme Court would adopt.      American Indem.

Lloyds v. Travelers Property & Cas. Co.,   335 F.3d 429, 435 (5th

Cir. 2003).

     The City is correct that, under federal takings jurisprudence,

when the owner of property intends to use a parcel of property as

an integrated part of the whole of a larger tract, the entirety of

          Essentially, the denominator factor works as
          follows: if the amount of Blackacre owned by
          Landowner is 2 acres, and the amount of
          Blackacre   affected    by   the    government
          regulation is 1 acre, the denominator is 2 and
          the numerator is 1; thus, the property's use
          is diminished by fifty percent.      The Lucas
          rationale relied on a one hundred percent
          deprivation of all economically viable use of
          the property.     If a one hundred percent
          deprivation is required, then the regulation
          of property in the above example is not a
          taking because Landowner may continue to use
          one-half of Blackacre.

Stephanie E. Hayes Lusk, COMMENT: Texas Groundwater: Reconciling
the Rule of Capture With Environmental and Community Demands, 30
ST. MARY'S L.J. 305, 339 (1998). In this case the numerator would
be the tracts of land affected by the regulation -- Tracts 4-7. If
the denominator is limited to Tracts 4-7, then Vulcan has been
deprived of one hundred percent of its property.      On the other
hand, if the denominator includes the land outside Tehuacana City
limits in addition to Tracts 4-7, then Vulcan’s leasehold interests
retain value even after the regulation, and consequently no
categorical taking has occurred.
                                14
the property is treated as one tract for purposes of a takings

analysis.     Keystone Bituminous Coal Assn. v. DeBenedictis, 480

U.S. 470, 497, 500-01 (1987); Penn Central Transp. Co. v. New York

City, 438 U.S. 104, 130-31 (1978).              The Supreme Court explained

this rule in Concrete Pipe, in which it stated:

            [A] claimant’s parcel of property [can] not
            first be divided into what [is] taken and what
            [is] left for the purpose of demonstrating the
            taking of the former to be complete and hence
            compensable. To the extent that any portion
            of property is taken, that portion is always
            taken in its entirety; the relevant question,
            however, is whether the property taken is all,
            or only a portion of, the parcel in question.

Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508

U.S. 602, 644 (citing Penn Central, 438 U.S. at 130-31, and

Keystone, 480 U.S. at 497).

     Although   these    cases    require       the   court   to    look    at    the

integrated whole of the landowner’s property, they do not extend to

support the City’s contentions; although each case held that the

relevant    parcel   included    the    entirety      of   the     property,     the

regulating   authority    had    the    power    to   regulate      all    of    that

property.    For instance, in Penn Central the New York Landmarks

Preservation Commission designated Grand Central Station as a

“landmark” and the landmark site was designated as the tax block

occupied by the Station.         Penn Central, 438 U.S. at 115-16.                 In

conducting its analysis, the Supreme Court only considered other

holdings of Penn Central in the Station’s tax block -- not its

other holdings in the City.            Penn Central, 438 U.S. at 130-31.

                                       15
Similarly, in Keystone, the Pennsylvania Subsistence Act only

regulated a small fraction of Keystone’s property -- the support

coal -- but all of its interests -- mineral and support estates --

in Pennsylvania were subject to the Act.   Keystone, 480 U.S. at 499

n.27 (stating that “[t]he question here is whether there has been

any taking at all when no coal has been physically appropriated,

and the regulatory program places a burden on the use of only a

small fraction of the property that is subjected to the regulation”

(emphasis added)).

     Thus in each of these cases the Supreme Court rejected the

plaintiff’s attempts to segregate the adversely affected property

from the regulated whole, and to claim it is the only relevant

parcel.   See Penn Central, 438 U.S. at 130-31; Keystone, 480 U.S.

at 499.   Vulcan, unlike the property owners in Penn Central and

Keystone, however, is not arguing that the takings analysis should

segregate only the adversely affected parcel from the regulated

whole; it contends that the relevant parcel should include only the

property “subject to” the regulation and not its remaining property

outside the City limits, which is beyond the regulator’s reach.7

     The City cites Appolo Fuels, Inc. v. United States, 54 Fed.

Cl. 717 (2002), and argues that the court in that case considered,

as part of the relevant parcel, property beyond the reach of the

     7
      Indeed we would be presented with a different question if
Vulcan owned other adjacent land in the City which, although
subject to the Ordinance, would be unaffected by it.
                                16
regulating body’s jurisdiction.                Appolo owned several adjacent

tracts of land, some of which were in the Little Yellow Creek

watershed and others that were not.                  The City of Middlesboro,

Kentucky and the National Parks Conservation Association filed a

petition   with      the   Office    of    Surface     Mining    Reclamation    and

Enforcement (“OSM”) seeking to have the area within the watershed

designated as unsuitable for mining under the Surface Mining

Control and Reclamation Act (“SMCRA”), 30 U.S.C. §§ 1201 et seq.

The    Director designated the entire petition area -- all of

Appolo’s leases within the watershed -- as unsuitable for surface

mining but agreed to allow underground mining from outside the

watershed.      In    response      to    this    designation    Appolo    filed   a

regulatory takings claim.

      Appolo,     contending     that      a     categorical    taking    had   been

effected, argued that the relevant parcel, or denominator, should

include only those areas within the watershed -- those areas where

mining was prohibited.         Appolo, 54 Fed. Cl. at 724.               The court,

however, rejected Appolo’s argument and held that the relevant

parcel included other holdings of Appolo outside the watershed

area, on which mining was allowed.                Id. at 728-30.

      Contrary to the City’s argument, the court does not appear to

have included property over which the regulating authority had no

jurisdiction; all of Appolo’s property was subject to the SMCRA, an

Act of nationwide force.             See Hodel v. Va. Surface Mining &

Reclamation Ass’n, 452 U.S. 264, 268 (1981) (noting that the SMCRA

                                          17
was intended to establish a nationwide program to protect society

and the environment from the adverse effects of strip mining). In

any event, even if the City’s interpretation of Appolo is correct,

we hesitate to conclude that the Texas Supreme Court would be

persuaded by a single Federal Court of Claims case.

      Because    the       City    has   not    cited    any   authority,     Texas   or

federal,     that      considers         property       outside      the    regulator’s

jurisdiction in determining a taking, we cannot conclude that the

Texas Supreme Court would adopt that position.                    Indeed, it appears

self-evident        that    when    a    regulator      exercises     its   regulatory

jurisdiction to the fullest extent possible -- stripping all value

from the property within its reach -- it has acted categorically --

i.e.,     absolute    or    unqualified.          WEBSTER’S THIRD NEW INTERNATIONAL

DICTIONARY   352 (1993).          Furthermore, it would seem incongruous to

say that when the regulating body has “seized” through regulation

all value possessed by the owner it has acted non-categorically;

instead,     when    the    regulating         body   takes    all   that    the   owner

possesses there is perforce a categorical, not a partial, taking by

that body.8     Accordingly, we hold that the relevant parcel in this

case is Vulcan’s leasehold interest on the property within the City

limits -- Tracts 4-7.

      8
      The situation would be different, of course, if the City of
Tehuacana were unincorporated without a governing authority, and it
were Limestone County that prohibited all quarrying on Tracts 4-7,
while allowing quarrying on the remainder of Vulcan’s property.
The county would have exercised its authority in a non-categorical
manner.
                                            18
       In sum, the only property interest possessed by Vulcan is the

right to mine limestone on the land.           Further, the only portion of

this property interest that is relevant to our takings analysis is

the quarrying right within the City.           Finally, in accordance with

our discussion above, we find that the Ordinance effectively

prohibits all mining of limestone on Tracts 4-7. Consequently, the

Ordinance deprives Vulcan of all value of its property interest --

quarrying rights -- in the relevant parcel -- Tracts 4-7.            We thus

hold that the Ordinance constitutes a categorical taking, which

renders Vulcan’s relevant leasehold interest valueless.9

                                        V

       Finally, the City argues that, under Texas law, Vulcan’s

proposed activities would constitute a nuisance precluding Vulcan’s

recovery of compensation. This argument finds its origins in Lucas

v. South Carolina Coastal Council, 505 U.S. 1003 (1992).             There,

with       respect   to   regulations   that   prohibit   all   economically

beneficial use of property, Justice Scalia states:

               Any limitation so severe cannot be newly
               legislated or decreed (without compensation),
               but must inhere in the title itself, in the
               restrictions that background principles of the

       9
      Because we have found that the Ordinance constitutes a
categorical taking, it is not necessary to address Vulcan’s
argument that the Ordinance constitutes a partial taking. Although
Vulcan’s interests outside the City are not part of the denominator
when determining whether a categorical taking has occurred, this is
not to conclude that these interests are irrelevant in the
calculation of the value of the taken property interests when
determining just compensation. Such matters are reserved for a
later time if and when such a determination is necessary.
                                        19
             State’s law of property and nuisance already
             place upon land ownership. A law or decree
             with such an effect must, in other words, do
             no more than duplicate the result that could
             have been achieved in the courts--by adjacent
             landowners   (or    other  uniquely    affected
             persons) under the State’s law of private
             nuisance,   or   by    the State    under   its
             complementary power to abate nuisances that
             affect the public generally, or otherwise.

Lucas, 505 U.S. at 1029.        Thus, under federal law, even if the

current value of the claimant’s property has been destroyed, the

claimant cannot recover if the “background principles of the

State’s law of property and nuisance” would have prohibited that

activity as a nuisance (the “nuisance exception”).

     The City contends that under the Lucas “nuisance exception”

the Ordinance is not a taking because the City could abate Vulcan’s

activities as a nuisance and such a property restriction “inhered

in the title itself” because “background principles” of Texas

property law allow the state, or adjacent landowners, to abate

nuisances.      Thus,   we   must   first   decide   whether   the   nuisance

exception -- found in federal law -- would be applied by the Texas

Supreme Court; if so, we must then decide whether the district

court properly held that the exception barred Vulcan’s recovery in

this case.

                                      A

     Neither party has cited a case in which the Lucas nuisance

exception has been adopted by the Texas Supreme Court; nor have we

found one.    So, once again, we are required to predict whether the

                                      20
principles set forth in Lucas would be adopted by the Texas Supreme

Court.    American Indem. Lloyds, 335 F.3d at 435.   We conclude the

Texas Supreme Court would adopt such a rule in the proper case.10

     First, although Mayhew does not cite the specific “nuisance

exception” discussed in Lucas, it is evident in the court’s own

application of Lucas that the Mayhew court found the reasoning of

Lucas to be uniformly persuasive.     The Mayhew court cited Lucas

multiple times for various propositions.     Moreover, other Texas

courts have looked to Lucas when evaluating takings claims under

the Texas Constitution.    See County Line Joint Venture v. City of

Grand Prairie, 2001 Tex. App. LEXIS 6000, *4 (Tex. App.--Dallas,

Aug. 31, 2001, writ denied); Texas Natural Resource Conservation

Comm'n v. Accord Agric., Inc., 1999 Tex. App. LEXIS 6898, *12-13

(Tex. App. 3d Dis.--Austin Sept. 10, 1999).11         Although this

     10
      Although we make this particular determination, we recognize
that it is speculative.      However, because Texas courts have
repeatedly relied on Lucas in numerous cases, and heavily so in
Mayhew, and because we consider it to be the better rule, we
conclude that Texas courts would apply the Lucas nuisance
exception. We are fully aware of statements by Texas courts that
the Texas Constitution provides more protections to property owners
than the United States Constitution -- protecting against both the
taking and damaging of property. Even so, we do not see how the
application of this rule categorically negates such generalized
favorable treatment of property rights in takings cases.
     11
       We acknowledge that this court has previously held that Lucas
is of doubtful relevance when considering a takings claim under the
Texas Constitution. Hidden Oaks v. City of Austin, 138 F.3d 1036,
1042 (5th Cir. 1998).     However, although Hidden Oaks cites the
Texas Court of Appeals opinion in Town of Sunnyvale v. Mayhew, 905
S.W.2d 234, 259 (Tex. App.–Dallas 1995, writ granted) (reversed by
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998)), it does
not cite the Texas Supreme Court’s opinion, Mayhew v. Town of
                                 21
uncritical reliance on Lucas by the Texas Supreme Court is not

conclusive of whether the Texas Supreme Court would have looked

favorably on the “nuisance exception,” it does impress us when

making an Erie guess.

     Moreover, although it is true that the analysis and holding of

Lucas now advocated by the City was not expressly adopted by

Mayhew, this failure certainly cannot be construed as a rejection

of the nuisance exception by the Texas Supreme Court.       Mayhew

involved a takings claim against the Town of Sunnyvale based on

Sunnyvale’s refusal to approve Mayhew’s development plan and to

rezone property to accommodate his proposed subdivision.   Mayhew,

964 S.W.2d at 926.   It was not necessary for the court to address

the effect of the nuisance exception upon a categorical taking,

however, because the court found that Mayhew had not been denied

all economically viable use -- his property retained a value of

over $2 million. Mayhew, 964 S.W.2d at 937.12

Sunnyvale, 964 S.W.2d 922 (Tex. 1998), which heavily relies on
Lucas. Accordingly, it is now clear that Texas courts attribute
significant relevance to Lucas.

     12
      Although Mayhew did not consider the Lucas “nuisance
exception” with respect to a categorical taking, it did discuss a
similar principle with respect to Mayhew’s investment-backed
expectations. The Mayhew court noted the "primary expectation" of
the property owner is shaped by the existing and permitted uses of
the property. Mayhew, 964 S.W.2d at 936 (citing Penn Central, 438
U.S. at 136 and Lucas, 505 U.S. at 1017 n.7 (owner’s reasonable
expectations shaped by uses permitted by state law)).

                                22
     Second, we are persuaded that the “nuisance exception” is

simply a sound rule.    All property in Texas is held subject to the

valid exercise of the police power and the City is not required to

compensate Vulcan if its exercise of police power is reasonable.

City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804

(Tex. 1984).      “Although it is fundamental that the government

cannot destroy the property of private citizens at will and without

justification, the government is given, through its police powers,

the ability to abate public nuisances.”          LJD Properties, Inc. v.

City of Greenville, 753 S.W.2d 204, 207 (Tex.App. - Dallas 1988).

     Third, courts should be cautious in finding a taking where the

claimant’s     activities   “are    tantamount   to   public   nuisances.”

Keystone, 480 U.S. at 491.         This approach is consistent with the

concept of reciprocity of advantage as described by Justice Stevens

in Keystone:

          Under our system of government, one of the
          State’s primary ways of preserving the public
          weal is restricting the uses individuals can
          make of their property. While each of us is
          burdened somewhat by such restrictions, we, in
          turn, benefit greatly from the restrictions
          that are placed on others. These restrictions
          are properly treated as part of the burden of
          common   citizenship.     Long   ago  it   was
          recognized that all property in this country
          is held under the implied obligation that the
          owner’s use of it shall not be injurious to
          the community, and the Takings Clause did not
          transform that principle to one that requires
          compensation whenever the State asserts its
          power to enforce it.

Id. at 491-92 (citations and quotations omitted).

                                      23
     Justice Stevens only recognizes that all property owners are

required to use their property in a manner that does not constitute

a public nuisance.

     Finally, it seems evident to us that the question whether the

Texas    Supreme    Court    would     formally      incorporate      the    nuisance

exception      as   part    of   a   takings       analysis   has     no    practical

significance:       the    existence    of     a    nuisance,    vel       non,   will

nevertheless be injected in this takings case at some point.                        We

arrive    at   this   conclusion       because      “a   right   of    recovery     is

established by proof of injury to some right of the property, and

the damages are measured by the extent of the injury to that

right.”    32 TEX. JUR. 3D Eminent Domain § 161 (1998).                Thus, Vulcan

cannot establish damages unless it has a property right to mine

limestone; if it has no such right it can suffer no injury and,

consequently, has not been denied “just compensation” by the public

taking.    See Holly Doremus, Takings and Transitions, 19 J. LAND USE

& ENVTL. L. 1, 12 (2003) (stating that “[t]he term ‘taking’ implies

the loss of something once held, which means a change in one’s

property rights.      There can be no taking without change.”).                   It is

only a matter of what point this element is introduced into the

case -- no taking has occurred because of the “nuisance exception”

or, assuming a taking, no damages were sustained because the

activity would be an abatable public nuisance. See LJD Properties,

                                         24
753 S.W.2d at 207 (stating that the “the government is given,

through its police powers, the ability to abate public nuisances”).

     Thus, we hold that if the effect of the Ordinance challenged

here -- the prohibition of Vulcan’s quarrying activities -- could

have been achieved through the courts via a nuisance action, no

property rights of Vulcan have been taken because Vulcan’s use of

its property was limited by the background principles of the Texas

police power right to abate a nuisance.

                                B

     Having determined that the Texas Supreme Court would apply the

Lucas nuisance exception in the proper case, we now address the

district court’s holding that Vulcan’s proposed activities inside

Tehuacana City limits would constitute a nuisance under Texas law.

We believe that its grant of summary judgment on this issue was

error.

     First, Texas law seems clear that the activities in which

Vulcan seeks to engage -- those incident to the quarrying of

limestone -- are not nuisances per se.    City of Dallas v. Newberg,

116 S.W.2d 476, 478-79 (Tex. App.--Dallas, 1938, no writ); Stone v.

Kendall, 268 S.W. 759, 761 (Tex. App.--Waco, 1925, no writ).

Generally, a lawful business is not a nuisance per se; instead, “a

lawful business or other activity may become a nuisance in fact

because of the locality in which it is carried on, or because it is

conducted in an improper manner.”    54 TEX. JUR., Nuisances § 32

(2003); see also Storey v. Central Hide & Rendering Co., 226 S.W.2d
                                25
615, 618 (Tex. 1950).       Accordingly, if the City is to avoid payment

of   just    compensation    under    the    “nuisance   exception”    Vulcan’s

activities must constitute a nuisance in fact.

      A     nuisance   in   fact   exists    when   an   act,   occupation,   or

structure becomes a nuisance as a result of its circumstances or

surroundings.     54 TEX. JUR. 3D, Nuisances § 5 (2003).          There is some

confusion in Texas whether the determination of a nuisance is a

question of fact or law:           “Whether a given act or condition is a

nuisance has been variously held to be a question of fact, a mixed

question of law and fact, or a question of law.”                54 TEX. JUR. 3D,

Nuisances § 73 (2003).        However, there is authority holding that,

if the complained of activity -- here quarrying -- is not a

nuisance per se, “it is for the jury to determine whether a

particular thing, act, omission, or use of property ... is a

nuisance in fact.”      Id.; see also Domengeaux v. Kirkwood & Co., 297

S.W.2d 748, 749 (Tex. App.--San Antonio, 1956, no writ) (stating

that “[t]he fact finder must determine whether a particular thing,

act, omission, or use of property is a nuisance in fact”); accord

Gulf Oil Corp. v. Vestal, 231 S.W.2d 523, 526 (Tex. App.--Fort

Worth, 1950), aff’d, 149 Tex. 487, 235 S.W.2d 440 (Tex. 1951).                The

weight of authority is in agreement.            See 58 AM. JUR. 2D Nuisances

§ 236 (2003)(stating that “it is the function of the trier of fact

or jury to determine whether a nuisance exists, that is, whether a

particular act, structure, or use of property which is not a

                                        26
nuisance per se is one in fact, unless reasonable minds cannot

differ on the issue”); 66 C.J.S. Nuisances § 143 (2003)(stating

that “it is for the jury to decide whether a particular act or

structure or use of property, which is not a nuisance per se, is a

nuisance in fact”).13

     As discussed above, summary judgment is proper when, viewing

the evidence in the light most favorable to Vulcan, no genuine

issue of material fact exists and the City is entitled to judgment

as a matter of law.     FED. R. CIV. P. 56(c); Gillis, 294 F.3d at 758.

In this case, we conclude that summary judgment was inappropriate

because a reasonable jury could differ as to whether Vulcan’s

activities would constitute a nuisance under Texas law.         Peel &

Co., 238 at 398 n.37.

     Initially, we acknowledge that there is persuasive evidence

put forth by the City describing the negative impact quarrying has

had on the City of Tehuacana -- i.e., concussion, noise, dust,

vibration, shaking of houses and furniture, fly rock, depletion of

groundwater, etc.     We also recognize that these activities are

occurring adjacent to public streets and near several homes.

     13
      Our holding that whether Vulcan’s quarrying activities would
constitute a nuisance is a question of fact for the jury, does not
conflict with our discussion supra that the ultimate question of
whether there has been a regulatory taking is a question of law.
Mayhew, 964 S.W.2d at 932-33 n.3. The existence of a nuisance is
simply one of the factual issues that must be made in resolving the
ultimate issue of whether a taking has occurred. Id.
                                   27
     Vulcan, however, challenges much of this evidence.                           For

instance,    Vulcan       disputes    the    consideration         of   flyrock    as

contributing to the nuisance because the flyrock incident cited by

the district court occurred while Smith Crushed Stone was operating

the quarry.        Instead, Vulcan contends that it has never had a

flyrock incident during its operations at the Tehuacana quarry.

     Second, Vulcan also discusses proactive measures it has taken

to alleviate any adverse effects caused to Tehuacana residents as

a result of its quarrying activities.               These include implementing

measures    to     effectively     control     dust,     notifying      neighboring

landowners    of    impending      blasts    and    only       conducting   drilling

operations during regular weekday business hours, presumably when

neighboring residents are at work.            Moreover, Vulcan contends that

it operates numerous quarries at other locations without complaint

and, in one instance, less than 500 feet from a school.                      Further

Vulcan contends that it has never been sued by anyone regarding its

operations at the Tehuacana quarry nor has it ever been found to be

in excess of state limits for vibration and noise.

     For these reasons, we must conclude that summary judgment was

error in this case.             As compelling as the City’s evidence of

nuisance    may    seem    to   be,   the    fact   of     a    nuisance    was   also

contradicted by Vulcan’s proffer. Accordingly, a jury question was

presented on whether Vulcan’s quarrying activities on Tracts 4-7

constitute a nuisance under Texas law.

                                        VI

                                        28
     In sum, the district court’s ultimate holding on summary

judgment that the Tehuacana Ordinance was not a regulatory taking

of Vulcan’s property is VACATED and the case is REMANDED to the

district court for a trial on whether Vulcan’s proposed operation

of the quarry on Tracts 4-7 constitutes a nuisance under Texas law,

and such other issues as in the district court’s judgment may

become appropriate including, if necessary, a determination of

Vulcan’s damages.14

                                              VACATED and REMANDED.

     14
      We make clear that we are deciding this case under Texas law
and, because many of the issues discussed herein have not been
decided by the Texas Supreme Court, we are making an Erie guess.
Consequently, our holding here is likely to have limited
precedential value.
                                29