  United States Court of Appeals
      for the Federal Circuit
              __________________________

      LOST TREE VILLAGE CORPORATION,
              Plaintiff-Appellant,
                           v.
                  UNITED STATES,
                  Defendant-Appellee.
              __________________________

                      2012-5008
              __________________________

    Appeal from the United States Court of Federal
Claims in Case No. 08-CV-117, Judge Charles F. Lettow.
              ___________________________

               Decided: January 10, 2013
              ___________________________

    JERRY STOUCK, Greenberg Traurig LLP, of Washing-
ton, DC, argued for plaintiff-appellant.

    MATTHEW LITTLETON, Attorney, Appellate Section,
Environment & Natural Resources Division, United
States Department of Justice, of Washington, DC, argued
for defendant-appellee. With him on the brief was IGNACIA
S. MORENO, Assistant Attorney General.

   PAUL J. BEARD, II, Pacific Legal Foundation, of Sac-
ramento, California, for amicus curiae Pacific Legal
Foundation.
LOST TREE VILLAGE CORP   v. US                          2




   MARY V. DICRESCENZO, National Association of Home
Builders, of Washington, DC, for amicus curiae National
Association of Home Builders.
               __________________________

Before RADER, Chief Judge, NEWMAN and REYNA, Circuit
                       Judges.
RADER, Chief Judge.
    The United States Court of Federal Claims deter-
mined that the Army Corps of Engineers did not effect a
regulatory taking compensable under the Fifth Amend-
ment when it denied Lost Tree Village Corporation’s
application for a permit to fill wetlands on its 4.99 acre
plat (Plat 57). In reaching this conclusion, the Court of
Federal Claims found Lost Tree’s parcel as a whole in-
cludes Plat 57, a neighboring upland plat (Plat 55), and
scattered wetlands in the vicinity owned by Lost Tree at
the time the permit was denied. Because the Court of
Federal Claims erred in its determination of the relevant
parcel, this court reverses and remands for further pro-
ceedings.
                                 I
    In 1968, Lost Tree Village Corporation (Lost Tree) en-
tered an Option Agreement to purchase approximately
2,750 acres of property on Florida’s mid-Atlantic coast,
near the City of Vero Beach. The property covered by the
Option Agreement encompasses a barrier island on the
Atlantic Ocean, which is bisected by the A-1-A Highway,
and stretches westward to interior land and islands on
the Indian River. Lost Tree purchased substantially all of
the land covered by the Option Agreement in a series of
transactions during the period 1969–1974. In 1974, Lost
Tree purchased the 4.99 acres now known as Plat 57 as
3                             LOST TREE VILLAGE CORP   v. US


part of a transaction in which it acquired the entire
peninsula on which Plat 57 is located (known as the
Island of John’s Island), Gem Island, and other parcels in
and along the Indian River.
    Beginning in 1969 and continuing through the mid-
1990s, Lost Tree developed approximately 1,300 acres of
the property purchased under the 1968 Option Agreement
into the upscale gated residential community of John’s
Island. The John’s Island community includes most of
Lost Tree’s holdings on the barrier island, Gem Island,
and the Island of John’s Island. The John’s Island com-
munity also includes some property that was not covered
by the 1968 Option Agreement and was never owned by
Lost Tree. Lost Tree built the infrastructure for the
community, including utilities, sewage systems, and the
majority of the roads and bridges within the community.
The community includes two golf courses, a beach club, a
private hotel, condominiums, and single family homes.
The map below shows the borders of the John’s Island
community outlined in red; Lost Tree’s original holdings
in the vicinity are shaded green. Appellee Br. at 8 (modi-
fied from trial exhibit).
LOST TREE VILLAGE CORP   v. US                         4




    Lost Tree’s development of the John’s Island commu-
nity began on the Atlantic coast and eventually moved to
the Island of John’s Island and Gem Island in the early
1980s. The trial court found development of the commu-
nity proceeded in a “piecemeal” manner, by “opportunistic
progression,” rather than strictly following any master
development plan. Lost Tree Village Corp. v. United
5                               LOST TREE VILLAGE CORP   v. US


States, 100 Fed. Cl. 412, 431–32 (2011). The Island of
John’s Island and Gem Island were developed over a
period of many years, and involved numerous distinct plat
recordings and government permits. Id.
    In 1980, Lost Tree submitted to the Army Corps of
Engineers (Corps) an application for a permit under § 404
of the Clean Water Act, 33 U.S.C. § 1344, to make numer-
ous infrastructure improvements including construction
of causeways connecting the barrier island, Gem Island,
and the Island of John’s Island. The application also
sought approval to dredge canals and fill some wetland
areas to create developable lots. Lost Tree’s application
was accompanied by plans and drawings for its proposed
development of the Island of John’s Island and Gem
Island (the 1980 Development Plan). A drawing in the
1980 Development Plan depicts a substantial portion of
Plat 57, as well as other areas, shaded in green and
labeled “wildlife preserve.” Lost Tree, 100 Fed. Cl. at 416.
    The Corps did not act on Lost Tree’s 1980 permit ap-
plication as submitted because the State of Florida re-
quired numerous changes to Lost Tree’s plans. Lost Tree
submitted a revised proposal to the Corps in 1982. The
proposal stated that “all originally proposed project fea-
tures are being deleted from this application except the
bridge from John[’]s [Island] to Gem Island and its ap-
proaches.” Id. at 417 (alterations in original). The Corps
approved a modified version of the 1982 application, and
development of the Island of John’s Island and Gem
Island proceeded throughout the 1980s and 1990s “in a
manner that diverged in significant ways from the 1980
Application.” Id. at 431. During development, Lost Tree
sought and received two additional § 404 permits for
infrastructure improvements and construction of canals,
and reserved various parcels as conservation easements
by deed restrictions recorded in favor of the local, state, or
LOST TREE VILLAGE CORP   v. US                            6


federal government. Plat 57 was not among the land
dedicated for conservation.
    Plat 57 lies on Stingaree Point, a small peninsula lo-
cated on the southwestern portion of the Island of John’s
Island. Lost Tree developed Stingaree Point in 1985–
1986. At that time, the company built Stingaree Point
Road, installed water and sewer lines, and recorded Plat
40, which is comprised of six lots to the south and west of
the road. Also in 1985, Lost Tree “stubbed out” water and
sewer lines to Plat 40 and to unplatted land on the east-
ern end of the Point that was later recorded as Plat 55.
Lost Tree sold the six lots on Plat 40 within a few years
after the plat was recorded. Homes have been built on
those properties.
    To east of Plat 40, on the north side of Stingaree Point
Road, is the 4.99 acre tract eventually recorded as Plat 57.
Plat 57 consists of 1.41 acres of submerged lands and 3.58
acres of wetlands with some upland mounds installed by
Florida’s “Mosquito Control” authority. To the east of
Plat 57 is a mosquito control impoundment, a narrow, 323
foot long shoulder along the north side of the road, and
then Plat 55. Although Lost Tree neither “stubbed out”
nor recorded Plat 57 when it developed the rest of Stinga-
ree Point, an April 1986 appraisal stated that “Stingaree
Point development is substantially completed, with the
exception of the entrance area, landscaping, and a final
layer of asphalt on the road.” Id. at 418.
     As the trial court found, Plat 57 was “ignored en-
tirely” during Lost Tree’s development of Stingaree Point
and the rest of John’s Island. Id. at 433. In 1994, when
“most knowledgeable people considered development of
the community of John’s Island to have been completed,
the property constituting Plat 57 had not been platted,
utilities had not been extended to it, nor had it been
7                                 LOST TREE VILLAGE CORP   v. US


dedicated to any use such as mitigation for a project on
other plats.” Id.
     Lost Tree did not consider Plat 57 for development
until approximately 2002, when the company learned it
would obtain “mitigation credits” as a result of improve-
ments a neighboring landowner had agreed to make as
part of a development project. Lost Tree identified Plat
57 as a property that could be developed profitably to
exploit the mitigation credits. In August 2002, Lost Tree
filed an application with the Town of Indian River Shores
requesting approval for a preliminary plat and permission
to fill 2.13 acres of wetland on the property. The company
then filed a corresponding application for a § 404 wet-
lands fill permit from the Corps. Lost Tree obtained all
state and local approvals to develop Plat 57 into a site for
one residential home. The Corps, however, denied Lost
Tree’s § 404 permit application in August 2004, stating
that less environmentally damaging alternatives were
available, and that Lost Tree “has had very reasonable
use of its land at John’s Island.” Id. at 425.
                             II
    The Court of Federal Claims held a seven-day trial,
after which it denied Lost Tree’s takings claim. The trial
court rejected the government’s argument that the entire
John’s Island community is the relevant parcel for the
takings analysis, finding Lost Tree’s development of Plat
57 was “physically and temporally remote from” its devel-
opment of the rest of the community. Id. at 433 (quoting
Palm Beach Isles Assocs. v. United States, 208 F.3d 1374,
1381 (Fed. Cir. 2000)). The court also rejected Lost Tree’s
argument that the relevant parcel was Plat 57 alone.
Instead, the court determined that the relevant parcel is
“Plat 57 and Plat 55, plus those scattered wetlands still
owned by Lost Tree within the community of John’s
LOST TREE VILLAGE CORP   v. US                             8


Island.” Id. at 435. The court found that, while Plats 55
and 57 are “distinct legal parcels, they are undoubtedly
contiguous.” Id. at 434. Further, it found Lost Tree has
comparable usage objectives for the two plats, because it
hopes to sell for profit the lots on each plat.
    Based on its relevant parcel determination, the trial
court found the Corps’ denial of the § 404 permit applica-
tion for Plat 57 “diminished the value of Lost Tree’s
property by approximately 58.4%.” Id. at 437. After
analyzing the factors set forth in Penn Central Transpor-
tation Co. v. City of New York, 438 U.S. 104 (1978), the
court found the diminution in value insufficient support a
takings claim. Lost Tree appeals, and this court has
jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
                                 III
    “Whether a taking compensable under the Fifth
Amendment has occurred is a question of law based on
factual underpinnings.” Bass Enters. Prod. Co. v. United
States, 133 F.3d 893, 895 (Fed. Cir. 1998). This court
reviews the Court of Federal Claims’ conclusions of law
without deference and reviews its findings of fact for clear
error. Id.
    Lost Tree asserts the denial of a § 404 permit to fill
wetlands on Plat 57 by the Corps effectively deprived Lost
Tree of its property such that it is entitled to just compen-
sation under the Fifth Amendment. While the Govern-
ment’s authority to “prevent a property owner from filling
or otherwise injuring or destroying vital wetlands” is
unquestioned, the issue is whether the denial of a fill
permit for a particular project imposes a disproportionate
loss on the affected landowner. Loveladies Harbor, Inc. v.
United States, 28 F.3d 1171, 1175 (Fed. Cir. 1994); see
Palazzolo v. Rhode Island, 533 U.S. 606, 617–18 (2001)
(holding regulatory takings inquiries are “informed by the
9                                LOST TREE VILLAGE CORP    v. US


purpose of the Takings Clause, which is to prevent the
government from ‘forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne
by the public as a whole.’” (quoting Armstrong v. United
States, 364 U.S. 40, 49 (1960))).
     Regulations requiring land to be left substantially in
its natural state—such as when a wetlands fill permit is
denied—may sometimes “leave the owner of land without
economically beneficial or productive options for its use.”
Lucas v. S. Carolina Coastal Council, 505 U.S. 1003, 1018
(1992). In the “relatively rare situations where the gov-
ernment has deprived a landowner of all economically
beneficial uses,” the regulatory action is recognized as a
“categorical taking” that must be compensated. Id.; see
Florida Rock Indus., Inc. v. United States, 18 F.3d 1560,
1564–65 (Fed. Cir. 1994). The only exception to compen-
sation for such categorical takings is where the regula-
tions prohibit a use that was not part of the landowner’s
title to begin with; that is, a limitation that inheres “in
the restrictions that background principles of the State’s
law of property and nuisance already place upon land
ownership.” Lucas, 505 U.S. at 1029.
    Most regulatory takings cases, however, are analyzed
under the framework set out in Penn Central Transporta-
tion Co. v. New York City, 438 U.S. 104 (1978). Tahoe-
Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency,
535 U.S. 302, 330 (2002) (“Anything less than a ‘complete
elimination of value,’ or a ‘total loss’ . . . would require the
kind of analysis applied in Penn Central.” (quoting Lucas,
505 U.S. at 1019–20 n.8)). Penn Central recognizes that
the regulatory takings analysis is an “essentially ad hoc,
factual inquiry,” which requires courts to evaluate (1) the
character of the governmental action, (2) the economic
impact of the regulation on the claimant, and (3) the
extent to which the regulation interfered with distinct
LOST TREE VILLAGE CORP   v. US                         10


investment-backed expectations. 438 U.S. at 124. If the
court determines that the regulation “goes too far” such
that it should be recognized as a taking of private prop-
erty for public use, then the government must provide just
compensation. Pa. Coal Co. v. Mahon, 260 U.S. 393, 415
(1922).
    In many cases, as here, the definition of the relevant
parcel of land is a crucial antecedent that determines the
extent of the economic impact wrought by the regulation.
Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S.
470, 496 (1987) (“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 is determining how
to define the unit of property ‘whose value is to furnish
the denominator of the fraction.’”) (quoting Frank I.
Michelman, Property, Utility, and Fairness: Comments on
the Ethical Foundations of “Just Compensation” Law, 80
Harv. L. Rev. 1165, 1192 (1967)); Palm Beach Isles, 208
F.3d at 1380 (discussing the “denominator problem”).
Definition of the relevant parcel affects not only whether
a particular regulation is a categorical taking under
Lucas, but also affects the Penn Central inquiry into the
economic impact of the regulation on the claimant and on
investment-backed expectations. The relevant parcel
determination is a question of law based on underlying
facts. Palm Beach Isles, 208 F.3d at 1380.
    The Supreme Court has not settled the question of
how to determine the relevant parcel in regulatory tak-
ings cases, but it has provided some helpful guideposts.
See Lucas, 505 U.S. at 1016 n.7. First, the property
interest taken is not defined in terms of the regulation
being challenged; the takings analysis must focus on “the
parcel as a whole.” Tahoe-Sierra, 535 U.S. at 331 (quot-
ing Penn Central, 438 U.S. at 130-131). Second, the
11                             LOST TREE VILLAGE CORP   v. US


“parcel as a whole” does not extend to all of a landowner’s
disparate holdings in the vicinity of the regulated prop-
erty. Lucas, 505 U.S. 1003, 1017 n.7 (characterizing as
“extreme” and “unsupportable” the state court’s analysis
in Penn Central Transportation Co. v. New York City, 42
N.Y.2d 324, 333–34 (1977), aff’d, 438 U.S. 104 (1978),
which examined the diminution in a particular parcel’s
value in light of the total value of the takings claimant’s
other holdings in the vicinity).
    This court has taken a “flexible approach, designed to
account for factual nuances,” in determining the relevant
parcel where the landowner holds (or has previously held)
other property in the vicinity. Loveladies, 28 F.3d at
1181. In this inquiry, the “critical issue is ‘the economic
expectations of the claimant with regard to the property.’”
Norman v. United States, 429 F.3d 1081, 1091 (Fed. Cir.
2005) (quoting Forest Props., Inc. v. United States, 177
F.3d 1360, 1365 (Fed. Cir. 1999)). When a “developer
treats several legally distinct parcels as a single economic
unit, together they may constitute the relevant parcel.”
Forest Props., 177 F.3d at 1365 (holding relevant parcel
included 53 upland acres and 9 acres of lake bottom
where tracts were acquired at different times but “eco-
nomic reality” was that owner treated the property as
single integrated project).
    Conversely, even when contiguous land is purchased
in a single transaction, the relevant parcel may be a
subset of the original purchase where the owner develops
distinct parcels at different times and treats the parcels
as distinct economic units. Palm Beach Isles, 208 F.3d at
1381 (holding relevant parcel consisted of 50.7 acre wet-
land portion of original 311.7 acre purchase where land-
owner “never planned to develop the parcels as a single
unit,” and sold 261 acres of upland, oceanfront property
prior to enactment of relevant regulatory scheme); Love-
LOST TREE VILLAGE CORP   v. US                            12


ladies, 28 F.3d at 1181 (holding relevant parcel consisted
of 12.5 acres from original 250 acre purchase where
landowner developed and sold 199 acres before regulatory
scheme was enacted and deeded remaining 38.5 acres to
state in exchange for development permits).
    Here, Lost Tree did not treat Plat 57 as part of the
same economic unit as other land it developed into the
John’s Island community. The trial court correctly found
that Lost Tree did not include Plat 57 in its formal or
informal development plans for the community. Lost
Tree, 100 Fed. Cl. at 431–32. The only proposal that ever
addressed Plat 57 was the unapproved 1980 Permit
Application. While the 1980 application proposed dedicat-
ing Plat 57 as a wildlife preserve to mitigate other devel-
opment, Lost Tree withdrew that application. Thus, when
the Corps eventually granted Lost Tree’s permit applica-
tion, Plat 57 had no designated use.
     The government argues Plat 57 was informally part of
the John’s Island development because Lost Tree inten-
tionally included undeveloped land within the perimeter
of its gated community. Lost Tree advertised such “open
spaces” as part of the unique environment offered by
John’s Island. However, Lost Tree expressly planned
open spaces in its development of the community, through
the use of large lots for single family homes, and inclusion
of golf courses and dedicated conservation wetlands. Lost
Tree’s failure to plan for Plat 57 even as open space
supports the trial court’s conclusion that the parcel was
“ignored”—rather than intentionally left undeveloped—
when the company carried out the John’s Island project.
Id. at 433.
    Lost Tree’s actual course of development further dem-
onstrates that it did not treat Plat 57 as part of the John’s
Island community. Lost Tree did not seek a fill permit or
13                             LOST TREE VILLAGE CORP   v. US


run utility service to the area that became Plat 57 when it
developed the rest of Stingaree Point. Plat 55, by con-
trast, was brought to grade and water and sewer lines
were stubbed out to that area. Although the company did
not immediately plat the land that became Plat 55, it
developed it in the mid-1980s in preparation for eventual
sale as part of the John’s Island community. Plat 57, by
contrast, was absent from Lost Tree’s development plans
until 2002—at least seven years after the development of
the John’s Island community was considered complete.
Id.
    Indeed, the record shows that after 1982, Lost Tree
was essentially unaware of its ownership of Plat 57 until
the company prepared an inventory of its residual proper-
ties in 1995. At that time, Lost Tree had already transi-
tioned its business from real estate development to focus
on investment in commercial properties. The company
also was working to divest itself of remaining real estate
holdings in the vicinity of John’s Island. When the Corps
denied Lost Tree’s § 404 permit application in 2002, the
company held only the “West Acreage,” which lies well
outside the John’s Island community, Plat 55, Plat 57,
and scattered wetlands within John’s Island. The objec-
tive evidence of Lost Tree’s actions demonstrates that the
company considered the John’s Island community com-
pleted long before it proposed to fill wetlands on Plat 57.
The company’s long hiatus from development efforts
reinforces the conclusion that Lost Tree did not consider
Plat 57 part of the same economic unit as the John’s
Island community.
    In short, this court sees no error in the trial court’s
factual findings that “Lost Tree’s belated decision to
develop Plat 57 was not part of its planned actual or
projected use of the property constituting the community
of John’s Island.” Id. This finding, however, conflicts
LOST TREE VILLAGE CORP   v. US                              14


with the court’s conclusion that the relevant parcel com-
prises not just Plat 57, but also Plat 55 and “scattered
wetlands still owned by Lost Tree within the community
of John’s Island.” Id. at 435. Unlike Plat 57, Lost Tree
treated Plat 55 as part of the John’s Island community,
developing it for eventual sale as three single family home
sites at the same time that it developed Plat 40 on Stinga-
ree Point.
    The Court of Federal Claims erred by aggregating
Plat 57, Plat 55, and the scattered wetlands as the rele-
vant parcel. The only links between the two plats identi-
fied by the trial court are: 1) they are connected by the
323 foot strip of land owned by Lost Tree and therefore
“undoubtedly contiguous,” and 2) both currently are held
with the “usage objective[ ] . . . to sell for profit the lots”
on each plat. Id. at 434. Similarly, the scattered wet-
lands are only linked to Plat 57 by their geographic loca-
tion within the gated community of John’s Island. Here,
the mere fact that the properties are commonly owned
and located in the same vicinity is an insufficient basis on
which to find they constitute a single parcel for purposes
of the takings analysis. Lucas, 505 U.S. 1003, 1017 n.7;
Loveladies, 28 F.3d at 1180 (holding relevant parcel
excludes 6.4 acres of previously-developed uplands pur-
chased in same transaction as regulated parcel and owned
by claimant when § 404 permit was denied).
    After a careful review of the entire record, this court
determines that the relevant parcel is Plat 57 alone. The
trial court’s factual findings support the conclusion that
Lost Tree had distinct economic expectations for each of
Plat 57, Plat 55, and its scattered wetland holdings in the
vicinity. Because the Court of Federal Claims erred in its
determination of the relevant parcel, this court reverses
the judgment and remands for further proceedings. On
remand, the court first should determine the loss in
15                               LOST TREE VILLAGE CORP   v. US


economic value to Plat 57 suffered by Lost Tree as a result
of the Corps’ denial of the § 404 permit, and then apply
the appropriate framework to determine whether a com-
pensable taking occurred. In determining the loss in
value to Plat 57, the court may revisit the property values
it adopted in the course of determining the impact of the
Plat 57 permit denial on Lost Tree under its definition of
the relevant parcel. See Lost Tree, 100 Fed. Cl. at 437–38.
                           IV.
    For the reasons set forth above, the judgment of the
Court of Federal Claims is reversed and remanded for
further proceedings.
            REVERSED AND REMANDED
