Because the courts have placed such a high degree of
importance on how much of a piece of property has been affected in its takings
determinations, defining the property to be analyzed in that determination is
critical. If the relevant property is only the portion affected by the
regulation, the impact of the regulation will seem much greater than if the
court looks at that portion as only part of a larger relevant whole. The key
question in current takings jurisprudence is whether the affected portion
constitutes a separate segment of property. Thus, defining the relevant parcel
of property for determining whether or not a taking occurred is central to a
judge’s analysis in a takings claim.
The courts have consistently held
that, as between the entire property and the portion of property subject to
regulation, the appropriate parcel for takings analysis is the entire property.
In Penn Central Transportation Co. v. New York, the U.S. Supreme Court
stated that, " ‘Taking’ jurisprudence does not divide a single parcel into discrete segments
and attempt to determine whether rights in a particular segment have been
In Andrus v. Allard, the Court found that, "At least where an owner
possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of
the bundle is not a taking, because the aggregate must be viewed in its
Similar to the argument that a taking does not occur if only one "use" of
property is restricted and other "strands" of "use" remain, one physical portion
of a property cannot be considered in isolation from an owner’s entire holding.
Take the example of a logger
restricted from cutting down a portion of his tree lot because of an Endangered
Species Act regulation protecting the spotted owl. Though 100 percent of the
logging "use" of the land has been prevented, the court will find that other
uses such as hiking, camping, etc. may remain. Therefore, only ten percent of
all economically viable uses are restricted and the owner is not entitled to
compensation. Similarly, if the logger is only prevented from cutting down 30
percent of his entire tree lot, the court will generally consider only 30
percent of his entire parcel of land to be affected by the regulation though 100
percent of the southwest corner which constitutes that 30 percent cannot be cut
down. This parcel determination is critical, for if the court were to determine
that the southwest corner constituted the relevant parcel, the impact of the
regulation would necessarily appear much greater.
In Keystone Bituminous Coal
Ass’n v. DeBenedictus, the plaintiff coal mining company was required to
leave dormant a support estate of coal, resulting in the inability to mine 27
million tons of coal.
The U.S. Supreme Court found that those 27 million tons were not a separate
segment for takings law purposes. Subsequently, the court found no taking
because, though large, 27 million tons was only a small portion of the entire
The Keystone decision
followed Andrus and Penn Central in refusing to consider anything
but the whole property when deciding if a taking had occurred.
It even argued that separate deeds or tax identification numbers were
"artificial" and therefore not controlling in takings analysis. The Keystone
decision also underscored the importance of the relevant parcel determination to
today’s takings jurisprudence:
Because our test for regulatory
taking requires us to compare the value that has been taken from the property
with the value that remains in the property, one of the critical questions in
determining how to define the unit of property "whose value is to furnish the
denominator of the fraction."
Though the Court has argued that an exact standard does not exist, as the
controlling precedent, Keystone indicates a hostility towards considering
individual portions of property separately from their surroundings.
Michigan has followed a
similar analysis. For example, in Bevan v. Township of Brandon, the
Michigan Supreme Court found that two contiguous residential lots, purchased and
taxed separately, which had been subdivided by the plaintiff’s predecessor,
consisted of one parcel for the purpose of the takings analysis.
The local zoning ordinance, and resulting easement problems, limited the Bevans
to building only one single family residence on the two lots.
The Bevan decision held that, "As a general rule, a person’s property
should be considered as a whole when deciding whether a regulatory taking has
The key considerations of the court in finding the two lots to be one parcel
were contiguity, unity of ownership and unity of purpose (both were zoned for
residential use). The court explained that, "contiguous lots under the same
ownership are to be considered as a whole for determining the reasonableness of
zoning ordinances, despite the owner’s division of the property into separate
The court was following the analysis of Keystone in finding that the
Bevans did not have separate property interests in each of the two segments.
The most recent statement of law by the Michigan Court of Appeals on this
subject indicates a continued adherence to the Bevan standard. In
October of 1995, that court decided the case of Volkema v. Department of
A Michigan wetland regulation passed years after the purchase of their land
prevented Russell and Lois Volkema from developing six acres, destroying
$212,000 of their land’s worth. Because these six acres, now valueless, are
only a part of a 24.6 acre parcel, the Michigan Court of Appeals refused to find
a compensable taking. Even after finding that the regulation interfered with
the Volkemas’ investment-backed expectations, part of the Volkemas’ retirement
investment was destroyed on the basis that some value remained in the parcel as
a whole. The Volkemas have applied to the Michigan Supreme Court for appellate
Out of a number of cases conducting ad hoc inquiries on the relevant parcel, a
list of factors can be compiled which are weighed by judges in making their
determinations: degree of contiguity, dates of acquisition, unity of ownership,
unity of use, extent to which the protected lands contribute to the value of the
remaining lands, value of affected parcel, and countless others. There is no
doubt that the lack of an established formula for deciding the importance of
these various factors creates a great deal of confusion and makes the
determination of the relevant parcel a difficult task for any judge.
Although the result of weighing these factors has almost always resulted in an
owner’s entire property being deemed the relevant parcel, one notable exception
emerged in Loveladies Harbor, Inc. v. United States.
The U.S. Court of Claims was faced with 12.5 acres of wetlands affected by
regulation. These 12.5 acres were originally part of a 250-acre parcel formerly
owned by the plaintiff. The court of claims here found that the 12.5 acres was
the only parcel at issue.
Similarly, in the 1994 case of Miller Brothers v. Department of Natural
Resources, The State of Michigan, the Michigan Court of Appeals made a distinction from
its Bevan standard.
The director of the Department of Natural Resources had designated a 4,500-acre
area in Mason County as the Nordhouse Dunes Area. That designation resulted in
the prohibition of oil and gas development in the area. The court rejected the
argument that the adjoining property must necessarily be included in its taking
analysis and found a compensable taking of the segment.
The Miller Brothers decision did not, however, clearly announce the
reasoning for this distinction. It stated, "This case is not similar to the
cases defendants cite wherein development of a portion of a parcel of land was
limited or restricted. In this case, development of thousands of acres of
property was totally prohibited."
The distinction seems to lie in the fact that the court found the plaintiff’s
mineral interests to have one, and only one, economically viable use. This lone
use was prohibited by the DNR’s designation. This more liberal approach to
defining the relevant parcel is encouraging; but its impact is limited, for the
decision comes out of Michigan’s appellate division, and the weight of Michigan
and U.S. Supreme Court precedents falls against it.
Given the importance of the relevant parcel determination to the outcome of a
takings case, confusion resulting from the lack of a clear standard has a
tremendous impact on property owners. Judge Sawyer’s dissent in the Volkema
case provides valuable guidance as to the standard that should be applied:
[I]n light of the strong
historical protection of private property in this country and the constitutional
mandate that the government may put private property to public use only after
compensating the owner of that property, I believe that the question posed in
Lucas is best answered by concluding that a taking occurs where a regulation
precludes the use of an identifiable, discreet piece of property, even if that
property forms only a portion of a larger parcel. I do not find it relevant how
large a portion of property the owner possesses. What is relevant is that the
government has determined that a public purpose would be served by denying the
rightful owner of the property, the use of that property and requiring it to be
used, or in this case not used, in accordance with that public purpose. While
the government is permitted to do this, it must compensate the property owner
for putting the property to public use. Our historical protection of private
property in the constitution allows no less.
courts should embrace a standard similar to the one posed by Judge Sawyer in
order to prevent a large number of affected owners from being disabled by the
current government-favoring standard. A legislative response which alleviates
the problems in this area will also go a long way toward simplifying the takings
law system and, if properly crafted, toward protecting private property rights.