  United States Court of Appeals
      for the Federal Circuit
                ______________________

      LOST TREE VILLAGE CORPORATION,
               Plaintiff-Appellee

                          v.

                  UNITED STATES,
                 Defendant-Appellant
                ______________________

                      2014-5093
                ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:08-cv-00117-CFL, Judge Charles F.
Lettow.
               ______________________

                 Decided: June 1, 2015
                ______________________

   JERRY STOUCK, Greenberg Traurig LLP, Washington
DC, argued for plaintiff-appellee.

    MATTHEW LITTLETON, Environment and Natural Re-
sources Division, United States Department of Justice,
argued for defendant-appellant. Also represented by
KATHERINE J. BARTON, SAM HIRSCH.

    MARK MILLER, Pacific Legal Foundation. Palm Beach
Gardens, FL, for amici curiae Pacific Legal Foundation,
National Association of Home Builders. Also represented
by CHRISTINA M. MARTIN.
2                     LOST TREE VILLAGE CORPORATION   v. US



                 ______________________

Before PROST, Chief Judge, NEWMAN, and REYNA, Circuit
                       Judges.
REYNA, Circuit Judge.
     On remand from Lost Tree Village Corp. v. United
States (“Lost Tree I”), 707 F.3d 1286 (Fed. Cir. 2013), the
Court of Federal Claims held that the government’s
denial of Lost Tree Village Corporation’s application for a
permit to fill wetlands on a 4.99 acre plat (“Plat 57”)
constituted a per se regulatory taking under Lucas v.
South Carolina Coastal, 505 U.S. 1003 (1992), and, alter-
natively, a regulatory taking under Penn Central Trans-
portation Co. v. New York City, 438 U.S. 104 (1978). We
affirm that a Lucas taking occurred because the govern-
ment’s permit denial eliminated all value stemming from
Plat 57’s possible economic uses. We do not reach the
trial court’s alternate holding under Penn Central.
                        BACKGROUND
    In 1968, Lost Tree entered into an option agreement
to purchase approximately 2,750 acres of property on the
mid-Atlantic coast of Florida. 1 The agreement gave Lost
Tree the option to purchase various parcels of land, in-
cluding a barrier island on the Atlantic coast, a peninsula
west of the barrier island bordering the Indian River
(known as the “Island of John’s Island”), and other islands
in the Indian River, including Gem Island and McCuller’s
Point. From 1969 to 1974, Lost Tree purchased most of
the land covered by the option agreement, including half
of McCuller’s Point, the Island of John’s Island, and Gem


    1   Lost Tree I contains a thorough description of the
significant volume of facts giving rise to this dispute. 707
F.3d at 1288–91. We include only facts necessary for this
opinion.
LOST TREE VILLAGE CORPORATION   v. US                    3



Island. The Island of John’s Island and Gem Island
include the 4.99 acres now known as Plat 57.
    Beginning in 1969 and continuing through the mid-
1990s, Lost Tree developed approximately 1,300 acres of
the property purchased under the option agreement into
the gated residential community of John’s Island. The
John’s Island community includes property on the barrier
island, Gem Island, and the Island of John’s Island. The
community includes single family homes, a private hotel,
condominiums, two golf courses, and a beach club.
    Plat 57 is an undeveloped plat that lies on Stingaree
Point, a small southerly peninsula on the Island of John’s
Island and Gem Island. Plat 57 consists of submerged
lands and wetlands that have been disturbed by upland
mounds vegetated by an invasive pepper species and by
ditches installed for mosquito control. Though Lost Tree
developed Stingaree Point and land bordering Plat 57,
Lost Tree had no plans of developing Plat 57 until 2002.
    In early 2002, Lost Tree learned that a developer ap-
plied for a wetlands fill permit for land south of Plat 57.
As mitigation for the permit, the developer proposed
improvements to a mosquito control impoundment on
McCuller’s Point. Because Lost Tree owned land on
McCuller’s Point, permitting authorities required Lost
Tree’s consent to the proposed mitigation. Lost Tree
withheld approval and instead sought permitting credits
in exchange for the developer’s proposed improvements.
    To take advantage of the potential permitting credits,
Lost Tree sought permits and approvals required to
develop Plat 57. In August 2002, Lost Tree submitted an
application to the Town of Indian River Shores requesting
approval for a preliminary plat and permission to fill
some of the wetland on Plat 57. Lost Tree filed a corre-
sponding application for a wetlands fill permit under
§ 404 of the Clean Water Act, 33 U.S.C. § 1344. The town
approved Lost Tree’s application, and Lost Tree obtained
4                    LOST TREE VILLAGE CORPORATION   v. US



zoning and other local and state permits necessary to
begin developing Plat 57 into a residential lot. In August
2004, however, the Army Corps of Engineers denied Lost
Tree’s § 404 fill permit because the Corps determined that
Lost Tree could have pursued less environmentally dam-
aging alternatives and because Lost Tree had adequately
realized its development purpose through the develop-
ment of the John’s Island community.
    Lost Tree sued the government in the Court of Feder-
al Claims, alleging that the government’s permit denial
constituted a taking under the Fifth Amendment. Lost
Tree’s appraiser opined that Plat 57 would be worth
$25,000 without the fill permit and $4,800,000 with the
permit after being developed into a residential lot. The
government’s appraiser opined that Plat 57 would be
worth $30,000 without the permit and $4,720,000 with
the permit and developed. The trial court did not deter-
mine Plat 57’s loss in value because it held that the
relevant parcel included Plat 57, Plat 55 (a nearby devel-
oped plat), and scattered wetlands within the John’s
Island community. Relying on the government’s unrebut-
ted testimony regarding the value of the relevant parcel
as a whole, the trial court determined that the govern-
ment’s permit denial diminished the parcel’s value by
approximately 58.4%. Lost Tree Vill. Corp. v. United
States (“Lost Tree CFC I”), 100 Fed. Cl. 412, 437 (2011). A
58.4% loss in value, while not insignificant, was not
sufficient to maintain a takings claim according to the
trial court. Id.
    Lost Tree appealed that decision, and we reversed.
The relevant parcel, according to the court, is Plat 57
alone because Lost Tree did not treat Plat 57 as part of
the same “economic unit” as Plat 55 and the scattered
wetlands included in the trial court’s relevant parcel
definition. Lost Tree I, 707 F.3d at 1293–94. We remand-
ed to the trial court with instructions to apply the appro-
LOST TREE VILLAGE CORPORATION   v. US                   5



priate takings framework after determining the loss in
economic value to Plat 57. Id. at 1295.
    On remand, the trial court found that the govern-
ment’s permit denial diminished Plat 57’s value by ap-
proximately 99.4%. Lost Tree Vill. Corp. v. United States
(“Lost Tree CFC II”), 115 Fed. Cl. 219, 231 (2014). Be-
cause Lost Tree and the government valued Plat 57
similarly in Lost Tree CFC I, the trial court averaged the
parties’ original estimates to determine Plat 57’s loss in
value. Id. at 228. Without a permit, the parties’ estimat-
ed values averaged to $27,500. Id. Plat 57’s with permit
value, after being developed into a residential lot, aver-
aged to $4,760,000. 2 Id. at 231. After subtracting devel-
opment costs from Plat 57’s averaged developed value, the
trial court found that Plat 57’s undeveloped, with permit
value would be $4,245,387.93. Id.
    The trial court held that Plat 57’s loss in value was
sufficient to maintain a takings claim. Because Plat 57
lost 99.4% of its value, the court held that the govern-
ment’s permit denial constituted a per se taking under
Lucas. Id. In large part because of the economic impact
to Plat 57, the trial court alternatively held that the
government’s permit denial constituted a taking under
Penn Central. Id. at 233. The court awarded Lost Tree
$4,217,887.93 (Plat 57’s as permitted value minus Plat
57’s nominal value) plus interest. Id. The government
appealed, contesting the trial court’s holding under Lucas


   2    The government argued for the first time in Lost
Tree CFC II that Plat 57’s highest value should be its
value before the government denied the permit. The court
allowed the government to file an evidentiary proffer to
explain its new theory but ultimately rejected the proffer
because the government failed to provide enough specifici-
ty regarding Plat 57’s value before the permit denial. Id.
at 230.
6                     LOST TREE VILLAGE CORPORATION   v. US



and its alternate holding under Penn Central. We have
jurisdiction under 28 U.S.C. § 1295(a)(3).
                       DISCUSSION
    Whether a government action constitutes a taking is a
question of law based on underlying facts. Bass Enters.,
133 F.3d at 895. We review the trial court’s conclusions of
law de novo and underlying facts for clear error. Id.
      Private property cannot “be taken for public use,
without just compensation.” U.S. Const. amend. V. A
government regulation constitutes a taking under the
Fifth Amendment if it “goes too far.” Pa. Coal Co. v.
Mahon, 260 U.S. 393, 412–13 (1922). The seminal regula-
tory takings case, Penn Central Transportation Co. v. New
York City, identifies three factors of particular signifi-
cance in determining whether a regulation goes too far: (i)
the “economic impact of the regulation on the claimant,”
(ii) the “extent to which the regulation has interfered with
distinct investment-backed expectations,” and (iii) “the
character of the governmental action.” 438 U.S. 104, 124
(1978).
    In contrast to takings evaluated under Penn Central’s
balancing test, two types of regulatory takings require
just compensation “without case-specific inquiry into the
public interest advanced in support of the restraint,”
Lucas, 505 U.S. at 1015, and without consideration of the
landowner’s investment-backed expectations, Palm Beach
Isles Assocs. v. United States, 231 F.3d 1354, 1357 (Fed.
Cir. 2000). The first is a physical invasion. Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 438
(1982). The second is a regulation depriving a landowner
of “all economically beneficial uses in the name of the
common good,” leaving the landowner with “economically
idle” property. Lucas, 505 U.S. at 1019.
LOST TREE VILLAGE CORPORATION   v. US                     7



                        I.   Lucas
    The question presented in this appeal is whether re-
sidual value arising from noneconomic uses precludes
application of Lucas and requires application of Penn
Central’s balancing test. Confined to its facts, Lucas does
not answer the question. In Lucas, the South Carolina
legislature enacted a statute that prohibited a landowner
from erecting any permanent habitable structures on his
land. 505 U.S. at 1009. The state trial court found that
the prohibition left the property valueless. Id. The Su-
preme Court emphasized that the prohibition denied the
landowner all “economically beneficial uses” of his land.
Id. at 1019 (emphasis added). Yet the Court used the
term “use” synonymously with the term “value.” See id.
at 1019 n.8. The question of whether residual value
attributable to noneconomic uses precludes Lucas’s per se
treatment was not squarely answered, however, because
the affected parcel in Lucas retained no value of any kind.
Id. at 1009. Subsequent Supreme Court cases emphasize
that a Lucas taking requires a total loss in economic
value, see Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l
Planning Agency, 535 U.S. 302, 330 (2002), but Supreme
Court precedent does not address the precise facts before
us, in particular, the existence of residual land value
derived solely from noneconomic uses.
                    A. Residual Value
    The trial court held that because the government’s
permit denial deprived Lost Tree of 99.4% of Plat 57’s
value, a Lucas taking had occurred. Lost Tree CFC II, 115
Fed. Cl. at 231. Recognizing that Lucas requires a total
loss in economic value, id. at 228 (citing Tahoe-Sierra, 535
U.S. at 330), the trial court explained that Plat 57’s
residual value “does not reflect any economic use.” Id. at
231 (emphasis added). Plat 57’s residual value stems
from environmental value as wetland. Id. at 231 n.9.
8                    LOST TREE VILLAGE CORPORATION   v. US



Thus, Plat 57’s residual value is not economic value, and
hence Lucas applies.
    The government argues that Lucas is about value, no
matter its source. According to the government, if a
regulated parcel retains any value, including environmen-
tal value, the landowner cannot maintain a Lucas claim.
Lost Tree and Amicus Curiae respond that Lucas is about
use. If a regulation deprives a landowner of all land use,
Lucas’s per se treatment is appropriate.
     We agree with the trial court that a Lucas claim falls
somewhere between the parties’ interpretations. While
Lucas itself does not squarely address the issue, this
court’s precedent does. In Loveladies Harbor, Inc. v.
United States, the government denied plaintiffs a § 404
fill permit. 28 F.3d 1171, 1173 (Fed. Cir. 1994). The fair
market value of the affected parcel prior to the permit
denial was over $2 million. Id. at 1174. After the permit
denial, the parcel was worth $12,500, less than one per-
cent of its original value. Id. at 1175. Because the re-
maining value was “de minimis,” the relevant parcel was
“deprived of all economically feasible use,” and Lucas’s
per se treatment was appropriate. Id. at 1181–82.
    The government argues that subsequent doctrinal de-
velopments at the Supreme Court conflict with Loveladies
Harbor. We agree that subsequent decisions have ex-
plained that a Lucas taking is rare. In Palazzolo v. Rhode
Island, the plaintiff argued that wetlands regulations
reduced his land value by more than 93%. 533 U.S. 606,
616 (2001). That decrease in value was not sufficient to
trigger Lucas’s per se treatment. Id. at 631. The Su-
preme Court more recently clarified in Tahoe-Sierra that
Lucas “was limited to ‘the extraordinary circumstance
when no productive or economically beneficial use of land
is permitted.’” 535 U.S. 302, 330 (2002) (emphasis in
original) (quoting Lucas, 505 U.S. at 1017).
LOST TREE VILLAGE CORPORATION   v. US                     9



     We disagree that post-Lucas Supreme Court develop-
ments conflict with our holding in Loveladies Harbor. In
Palazzolo, the 93% loss in value was insufficient to trigger
Lucas because the landowner was left with value at-
tributable to economic uses. As the Court explained, “[a]
regulation permitting a landowner to build a substantial
residence on an 18-acre parcel does not leave the property
‘economically idle.’” Palazzolo, 533 U.S. at 631. The
Court also indicated that the “State may not evade the
duty to compensate on the premise that the landowner is
left with a token interest[,]” implying that residual value
does not defeat a categorical takings claim at least when
residual value is not attributable to economic uses. See
id. at 629. In Tahoe-Sierra, the Court addressed a “tem-
porary” takings claim. The Court explained that 32-
month moratoria on development do not deprive a land-
owner of all economically beneficial use because economic
use can resume at the end of the moratoria. See Tahoe-
Sierra, 535 U.S. 302, 332 (“Logically, a fee simple estate
cannot be rendered valueless by a temporary prohibition
on economic use, because the property will recover value
as soon as the prohibition is lifted.”).
    The government argues that this court’s precedent
characterizes Lucas as applying only in the narrow cir-
cumstance in which all value, regardless of its source, has
been lost. We disagree. After Tahoe-Sierra, our cases
have characterized the Lucas inquiry in terms of “value.”
See, e.g., Cienega Gardens v. United States, 331 F.3d
1319, 1344 (Fed. Cir. 2003) (Lucas requires loss of “100%
of a property interest’s value”). Aside from Loveladies
Harbor, however, our takings jurisprudence addresses
circumstances such as those in Tahoe-Sierra and Palazzo-
lo in which economic use (and hence economic value) was
merely suspended, permitted on an unaffected portion of
the parcel, or not entirely destroyed. See, e.g., Seiber v.
United States, 364 F.3d 1356 (Fed. Cir. 2004); Bass En-
10                   LOST TREE VILLAGE CORPORATION   v. US



ters. Prod. Co. v. United States, 381 F.3d 1360 (Fed. Cir.
2004).
           B. Land Sale as an “Economic Use”
    The government argues that a landowner’s ability to
sell an affected parcel is an economic use that precludes
Lucas’s per se treatment. According to the government,
Lucas classifies a sale as an economic use. The govern-
ment cites this court’s decision in Conti v. United States
for the same proposition. See 291 F.3d 1334 (Fed. Cir.
2002). Because Plat 57 has residual value, the govern-
ment argues Lost Tree’s ability to sell Plat 57 precludes
Lucas’s application.
    We disagree. The government’s argument incorrectly
assumes that negligible noneconomic appraisal value
enables a landowner to sell a regulated parcel. As the
trial court found, Plat 57’s residual environmental value
has been reduced by mosquito abatement measures,
which left isolated hummocks and stagnant eutrophic
pools. Lost Tree CFC II, 115 Fed. Cl. at 231 n.9. The
government did not produce evidence indicating that Lost
Tree could sell Plat 57 in such a condition. Speculative
land uses are not considered as part of a takings inquiry.
See Olson v. United States, 292 U.S. 246, 257 (1934).
    Even if we assume that Plat 57’s value necessarily
enables Lost Tree to sell the parcel, we disagree that all
sales qualify as economic uses. When there are no under-
lying economic uses, it is unreasonable to define land use
as including the sale of the land. Typical economic uses
enable a landowner to derive benefits from land owner-
ship rather than requiring a landowner to sell the affected
parcel. See, e.g., Kirby Forest Indus., Inc. v. United
States, 467 U.S. 1 (1984) (logging); United States v. 50
Acres of Land, 469 U.S. 24 (1984) (landfilling); United
States v. Fuller, 409 U.S. 488 (1973) (livestock grazing).
LOST TREE VILLAGE CORPORATION   v. US                     11



    Contrary to the government’s assertion, Lucas does
not suggest that a land sale qualifies as an economic use.
The Court in Lucas referred to a “sale” as an economic use
in the context of personal property whose “only economi-
cally productive use is sale or manufacture for sale.” 505
U.S. at 1028 (citing Andrus v. Allard, 444 U.S. 51, 66–67
(1979) (a case dealing with a prohibition on the sale of
eagle feathers)). The Court explained that a personal
property owner should be aware of the possibility that a
regulation could render personal property worthless
because of the State’s “traditionally high degree of control
over commercial dealings.” Id. By contrast, in the con-
text of real property, focusing Lucas “solely on market
value” allows “external economic forces,” such as inflation,
to artificially skew the takings inquiry. Del Monte Dunes
at Monterey v. City of Monterey, 95 F.3d 1422, 1433
(9th Cir. 1996).
    The government cites this court’s decision in Conti v.
United States for the proposition that a sale qualifies as
an economic use. See 291 F.3d 1334 (Fed. Cir. 2002). In
Conti, a regulation banned drift gillnet fishing in the
Atlantic Swordfish Fishery. Id. at 1344. The plaintiff
alleged a taking because the regulation prevented him
from using his gillnet fishing gear. The Court did not
apply Lucas in part because the claimant could offer for
sale or sell his gillnet fishing gear. Id. Conti, however,
deals with personal property. Aside from that distinction,
the claimant’s ability to sell the commercial gillnet fishing
gear stemmed from a potential buyer’s ability to use that
gear to fish somewhere other than in the Atlantic Sword-
fish Fishery. See id. The economic use, i.e., the owner’s
ability to sell, stemmed from a separate economically
productive use. The same cannot be said of Lost Tree’s
alleged ability to sell Plat 57.
    The government argues that the trial court’s holding
will allow speculators to purchase regulated property
cheaply, apply for a development permit, and, if the
12                    LOST TREE VILLAGE CORPORATION    v. US



permit is denied, succeed on a Lucas claim. We disagree.
Lost Tree persuasively argues that “[i]n the real world,
real estate investors do not commit capital either to
undevelopable property or to long, drawn-out, expensive
and uncertain takings lawsuits.” Appellee Br. 21, n.7.
Even if the government’s hypothetical was plausible, this
court considered and rejected a similar argument in
Loveladies Harbor. 28 F.3d 1171, 1181 (Fed. Cir. 1994).
The court explained that if such strategic behavior pre-
sented itself, “[o]ur precedent displays a flexible approach,
designed to account for factual nuances.” Id.
    Framed differently—in the context of existing land
ownership—the government’s hypothetical lends support
to the trial court’s holding. To establish a per se claim
under the government’s reading of Lucas, a landowner
would have to demonstrate that a regulation destroyed all
land value, regardless of its source. Yet the fact that the
landowner could make such a showing, according to the
government’s hypothetical, would prompt speculation
giving rise to post-regulation land value. In other words,
speculators would value otherwise valueless land based
solely on the possibility that a Lucas taking could be
maintained and that a takings judgment could be won.
Land value resulting from such speculation would defeat
the very Lucas claim on which the speculation was based.
                 II. Loss in Market Value
    Because the trial court calculated Plat 57’s loss in
value by subtracting Plat 57’s value without a permit
from Plat 57’s value with a permit, the government ar-
gues that the trial court overstated the economic impact
to Plat 57. The government contends that the trial court
should have subtracted Plat 57’s value without a permit
from Plat 57’s demonstrated value before the permit
denial (i.e., Plat 57’s purchase price).
    We disagree. Plat 57’s value with a permit reflects
Plat 57’s “highest and best use.” The highest and best use
LOST TREE VILLAGE CORPORATION   v. US                   13



of a parcel is “the reasonably probable and legal use of
vacant land or improved property, which is physically
possible, appropriately supported, financially feasible,
and that results in the highest value.” Olson, 292 U.S. at
255. As the trial court understood, the government
cannot rely on the regulatory taking at issue to reduce the
fair market value of an affected parcel. See Fla. Rock
Indus., Inc. v. United States, 791 F.2d 893, 905 (Fed. Cir.
1986).
                       CONCLUSION
    We affirm the trial court’s holding that the govern-
ment’s permit denial constituted a per se regulatory
taking under Lucas because Plat 57’s residual value is not
attributable to any economic uses. Lucas does not require
a balancing of the Penn Central factors, and thus we do
not address the trial court’s alternate holding under Penn
Central.
                      AFFIRMED
