Eagle Addresses California Coastal Commissioners: Urges Restraint on Adopting Single Economic Parcel Theory

Professor Steven J. Eagle spoke at an unusual workshop for members of the California Coastal Commission in Santa Rosa, CA, on May 11. The Commission is a powerful agency regulating development along the entire California coast, up to five miles inland. Members of the staff had suggested that the Commission consolidate adjoining parcels for purposes of regulatory takings law if their separate owners engaged in some unspecified degree of coordination of land acquisition, financing, development, or use, or had other unenumerated economic and social relationships that might justify the agency to find unification of the parcels in one ownership. Under this theory, for instance, only one residence might be built on five parcels, as opposed to the five separate homes that the various separate owners otherwise would be entitled to construct.

The Commission invited four experts, including two in corporate and partnership law, Eagle and another takings scholar, to address the legal basis and policy implications of the "Single Economic Parcel" theory.

Eagle noted that, under the Federal and California Constitutions, regulations which go too far in depriving landowners of rights to use their parcels are considered takings, entitling the owners for just compensation for their losses. He reviewed the case law, under which some courts had consolidated separate legal parcels belonging to the same owner for takings purposes. However, he explained, no court has has consolidated parcels where their legal ownership was separate.

Eagle added that adoption of a "single economic parcel" policy would result in a reduction of socially beneficial cooperation among neighbors, such as the granting of typical easements and covenants, and cooperation in building common roads and utilities. It also would result in premature development, as individual owners would attempt to be the first to build, thus avoiding the possibility that the Commission would find their land, for takings purposes, to be part of another parcel on which the one permitted structure already had been built. Furthermore, such a policy would create considerable confusion in real estate markets, resulting in potential buyers refusing to purchase possibly affected lands, or being unable to obtain financing.

Eagle urged that the Commission consider a threshold test, under which it would refrain from investigating possible relationships among separate owners of land unless it could be shown that their coordination exceeded that normally existing among neighboring owners.

Although not extensively addressing corporate and partnership law questions, he noted that state law required "clear and convincing," and "compelling" evidence before a legal ownership entity could be disregarded, and that this buttressed his property and takings law concerns.

Eagle is the author of a comprehensive treatise on the relationship between legitimate government regulation and property owner rights, "Regulatory Takings" (4th ed. 2009) (Lexis Publishing), and has written numerous law review articles and spoken widely on takings issues.