LOVE TERMINAL PARTNERS, L.P., VIRGINIA AEROSPACE, LLC, Plaintiffs-Appellees
UNITED STATES, Defendant-Appellant
from the United States Court of Federal Claims in No.
1:08-cv-00536-MMS, Judge Margaret M. Sweeney.
J. Marzulla, Marzulla Law, LLC, Washington, DC, argued
for plaintiffs-appellees. Also represented by Nancie Gail
J. Lundman, Environment and Natural Resources Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellant. Also represented by John C. Cruden.
Prost, Chief Judge, Clevenger and Dyk, Circuit Judges.
Love Terminal Partners, L.P. ("LTP") and Virginia
Aerospace, LLC ("VA") leased a portion of Love
Field airport from the City of Dallas, Texas
("Dallas"), and constructed a six-gate airline
terminal on the property. Plaintiffs claim that the Wright
Amendment Reform Act of 2006 ("WARA"), Pub. L. No.
109-352, 120 Stat. 2011, effected a regulatory taking of
their leases and a physical taking of the terminal because,
in their view, the statute codified a private agreement in
which Dallas agreed (1) to bar use of plaintiffs' gates
for commercial air transit and (2) to acquire and demolish
Court of Federal Claims ("Claims Court") agreed and
found that the enactment of WARA constituted a per se
regulatory taking of plaintiffs' leaseholds under
Lucas v. South Carolina Coastal Council, 505 U.S.
1003 (1992), and a regulatory taking of the leaseholds under
Penn Central Transportation Co. v. New York City,
438 U.S. 104 (1978), as well as a physical taking of the
conclude that WARA did not constitute a regulatory or
physical taking. We therefore reverse.
case is about the development of Love Field, an airport
located in and owned by Dallas. Since the airport's
founding, most air traffic has been accommodated by a main
terminal owned and operated by the city. In 2000, plaintiffs
constructed a smaller terminal (the "Lemmon Avenue
Terminal") on a portion of Love Field that they had
leased from the city. This case concerns an alleged taking of
the Lemmon Avenue Terminal and plaintiffs' underlying
genesis of the present dispute goes back several decades. In
1955, Dallas entered into a long-term lease with Braniff
Airways, Inc. (the "Master Lease"), granting
Braniff the exclusive use of a 36-acre portion of Love Field
(subsequently reduced to 26.8 acres) located northeast of the
two runways, near Lemmon Avenue. The Master Lease guaranteed
Braniff non-exclusive access to the runways, taxiways, and
other aviation-related facilities at Love Field, and stated
that the leased premises must be used for "purposes
related or incidental to the primary aviation-related
business conducted by Lessee." J.A. 2256.
of Love Field for commercial air passenger service has been
restricted under federal law since 1980, when Congress passed
the Wright Amendment in an effort to promote growth of nearby
Dallas/Fort Worth International Airport. The Wright Amendment
limited use of Love Field to servicing final destinations
within Texas and its four contiguous neighboring states. Pub.
L. No. 96-192, § 29, 94 Stat. 35, 48–49 (1980).
Its restrictions applied to commercial flights on planes
designed to hold over 56 passengers. Id. Over the
next 25 years, federal legislation was enacted that added
four additional states to the list of permissible
destinations, and allowed unrestricted flights on larger
planes that had been retrofitted to hold fewer than 56
passengers. Pub. L. No. 105-66, § 337, 111 Stat. 1425,
1447 (1997); Pub. L. No. 109-115, § 181, 119 Stat. 2396,
2430 (2005). Nonetheless, commercial air passenger
service from Love Field was significantly limited by the
Wright Amendment's provisions for most of the
airport's modern history.
1999, LTP, one the plaintiffs in this case, was assigned
an existing sublease for a 9.3-acre portion of the Master
Leasehold (the "sublease"). LTP's goal was to
offer Wright Amendment-compliant air passenger service out of
Love Field in cooperation with Legend Airlines
("Legend"). LTP would construct a six-gate
Lemmon Avenue Terminal and a parking garage on its 9.3-acre
parcel, and would license the six gates to Legend.
completed construction of the Lemmon Avenue Terminal by early
2000, and Legend began offering scheduled passenger service
from the terminal later that year. The operations were not
profitable. After eight months, in December 2000, Legend
stopped flying and entered bankruptcy proceedings. Another
airline, Atlantic Southeast Airlines, offered scheduled
passenger service from the Lemmon Avenue Terminal between
July 2000 and May 2001, but ultimately moved its operations
to the 26-gate main terminal owned and operated by Dallas.
LTP attempted to market its gates to other potential users,
but no commercial airline was interested in leasing the
2003, plaintiff VA, an entity having common ownership
with LTP, invested $6.5 million to acquire the entire
26.8-acre Master Lease. LTP and VA continued their efforts to
attract another airline to use the Lemmon Avenue Terminal.
They were able to earn some income (though not enough to
cover the monthly payments on the Master Lease) through
rentals of the parking garage and other portions of their
property to an aviation freight company, a limousine company,
two automobile dealerships, an aviation reservation
service, and several wireless telecommunications
companies. But, as before, no airline was willing to lease
the gates at the Lemmon Avenue Terminal.
this period, Southwest Airlines and other airlines offered
Wright Amendment-compliant passenger service out of the main
terminal. Love Field had been a Southwest hub since the
airline's founding, and Southwest had long lobbied
Congress to loosen restrictions on Love Field-ideally by
repealing the Wright Amendment. In 2004, Southwest resumed
its efforts with a campaign entitled "Wright is
Wrong." In 2005, Congress responded by adding Missouri
to the list of permitted destinations, but otherwise left the
restrictions on Love Field in place.
March 2006, members of Congress, recognizing "decades of
litigation and contentious debate among local communities,
airports and airlines over the establishment and development
of [Dallas/Fort Worth International Airport], the subsequent
use of Love Field, and proposed legislative changes to the
Wright Amendment," recommended that Dallas and Fort
Worth jointly propose a solution. H.R. Rep. No. 109-600, pt.
1, at 3. On July 11, 2006, Dallas and Fort Worth, along with
Southwest Airlines, American Airlines (an airline with a hub
at Dallas/Fort Worth International Airport), and the
Dallas-Fort Worth Airport Authority, responded by entering
into an agreement (the "Five-Party Agreement" or
"Agreement") setting out their "local
Five-Party Agreement stated that the parties would petition
Congress for immediate allowance of through-ticketing from
Love Field (i.e., permitting airlines to sell
tickets from Love Field to any other destination, so long as
the flight first stopped at a destination authorized by the
Wright Amendment) and for total repeal of the Wright
Amendment after eight years. It also stated that the parties
would redevelop Love Field consistent with a revised
"Love Field Master Plan," which would, among other
things, reduce the total number of gates to 20 from the
current total of 32 (26 in the main terminal and six in the
Lemmon Avenue Terminal), and required that Love Field
"thereafter be limited permanently to a maximum of 20
gates." J.A. 3091. The parties also agreed to an
allocation of those 20 gates among the three airlines
currently flying out of Love Field (all based out of the main
terminal). Id. And the City of Dallas agreed to
acquire and demolish the Lemmon Avenue Terminal, so as to
consolidate the 20 gates in the main terminal, as shown
in the revised Master Plan. The Agreement provided that:
[T]he City agrees that it will acquire all or a portion
of the lease on the Lemmon Avenue facility, up to and
including condemnation, necessary to fulfill its obligations
under this Contract. The City of Dallas further agrees to the
demolition of the gates at the Lemmon Avenue facility
immediately upon acquisition of the current lease to ensure
that that facility can never again be used for passenger
J.A. 3092. The Agreement made clear that the costs for the
acquisition and demolition of the Lemmon Avenue gates were to
be recovered from "airport users." Id.
Finally, it stated that "[i]f the U.S. Congress
does not enact legislation by December 31, 2006, that would
allow the Parties to implement the terms and spirit of this
Contract, including, but not limited to, the 20 gate
restriction at Love Field, then this Contract is null and
void unless all parties agree to extend this Contract."
October 2006, Congress enacted WARA, which immediately
allowed through-ticketing to and from Love Field and provided
for the total repeal of the Wright Amendment in eight years.
WARA § 2. WARA also instructed Dallas to reduce the
total number of gates available for passenger air
service at Love Field to no more than 20. Id. §
5(a). It further stated that no federal funds could be used
to remove gates at the Lemmon Avenue Terminal. Id.
§ 5(b). The legislation provided that:
(a) IN GENERAL. – The city of Dallas, Texas, shall
reduce as soon as practicable, the number of gates available
for passenger air service at Love Field to no more than 20
gates. Thereafter, the number of gates available for such
service shall not exceed a maximum of 20 gates. The city of
Dallas . . . shall determine the allocation of leased gates
and manage Love Field in accordance with contractual rights
and obligations existing as of the effective date of this Act
for certificated air carriers providing scheduled passenger
service at Love Field on July 11, 2006. To accommodate new
entrant air carriers, the city of Dallas shall honor the
scarce resource provision of the existing Love Field leases.
(b) REMOVAL OF GATES AT LOVE FIELD. – No Federal funds
or passenger facility charges may be used to remove gates at
the Lemmon Avenue facility, Love Field, in reducing the