4.6.4.1. Taking Plus Damages (the “State Rule”).Many appraisers may be familiar with an alternative taking plus damages (or taking + damages) method for valuing partial acquisitions, also referred to as the state rule. Because the taking plus damages method is apt to “arrive at something else, either more or less, than compensation” under the Fifth Amendment,852 it is generally improper in valuations for federal acquisition purposes, and cannot be used without legal instruction from the acquiring agency or the U.S. Department of Justice.853 

The taking plus damages method lacks the “effectiveness of the before and after method in clearly and simply dealing with . . . damages” and benefits in partial acquisitions.854 Moreover, as recognized by the federal courts, the taking plus damages method is subject to error and apt to result in improper duplication or double damage.855 As a result, the taking plus damages method is generally improper in valuations for federal acquisitions: “It is not compensation but more than compensation to twice give the owner severance damage.”856 For example, the Fourth Circuit857 was forced to vacate a compensation award based on a taking plus damages calculation that was nearly four times greater than the landowners’ actual loss revealed by applying the before and after method to the same facts.858 The court remanded for new proceedings “to the end that duplications in just compensation are eliminated.”859 

The taking plus damages method may be appropriate or even mandated in nonfederal acquisitions, as certain state laws offset benefits against “severance damage” to the remainder but not against the value of the part acquired, necessitating separate findings of “severance damage” and the value of the part acquired.860 But federal law makes no such distinction,861 recognizing that under the U.S. Constitution, just compensation turns on the question, “What has the owner lost? not, What has the taker gained?”862 Based on this principle, under federal law, compensation must reflect “the effect of the appropriation of a part of a single parcel upon the remaining interest of the owner, by taking into account both the benefits which accrue and the depreciation which results to the remainder in its use and value.”863 The taking plus damages method was developed to measure a different question, and thus generally has no place in valuations for federal acquisition purposes.864 

Still, there may be “persuasive reason[s] why the before and after method would be unfair in assessing the value” of a specific partial acquisition.865 Whether the taking plus damages method can be relied on for federal just compensation purposes in a specific valuation assignment is a legal determination, not one that can be made by an appraiser.866 For example, partial acquisitions affected by the federal navigational servitude may require use of a taking plus damages method due to the unique constitutional and statutory requirements governing compensation for such acquisitions.867 The taking plus damages method may also be appropriate in certain minor partial acquisitions, such as acquisitions of easements or other minor interests for flowage or road purposes from large ranches or industrial complexes.868 Whether a partial acquisition is sufficiently “minor” to make the taking plus damages method a fair and practical alternative to the before and after rule depends on the acquisition’s impact on the owner’s property.869 As a result, use of the taking plus damages method is generally limited to acquisitions that cause no damage to the remainder. If the “usefulness and value of the remainder” are or may be affected, however, 

[t]o say that such an owner would be compensated by paying him only for the narrow strip actually appropriated, and leaving out of consideration the depreciation to the remaining land by the manner in which the part was taken, and the use to which it was put, would be a travesty upon justice.870