  United States Court of Appeals
      for the Federal Circuit
                 ______________________

  LOVE TERMINAL PARTNERS, L.P., VIRGINIA
            AEROSPACE, LLC,
             Plaintiffs-Appellees

                            v.

                   UNITED STATES,
                  Defendant-Appellant
                 ______________________

                       2016-2276
                 ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:08-cv-00536-MMS, Judge Margaret M.
Sweeney.
               ______________________

                  Decided: May 7, 2018
                 ______________________

    ROGER J. MARZULLA, Marzulla Law, LLC, Washing-
ton, DC, argued for plaintiffs-appellees. Also represented
by NANCIE GAIL MARZULLA.

    ROBERT J. LUNDMAN, Environment and Natural
Resources Division, United States Department of Justice,
Washington, DC, argued for defendant-appellant. Also
represented by JOHN C. CRUDEN.
                 ______________________
2             LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



    Before PROST, Chief Judge, CLEVENGER and DYK, Cir-
                      cuit Judges.
DYK, Circuit Judge.
     Plaintiffs 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 plaintiffs’ terminal.
    The 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 terminal
itself.
    We conclude that WARA did not constitute a regula-
tory or physical taking. We therefore reverse.
                       BACKGROUND
    This 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 leaseholds.
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES            3



                               I
    The 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.
     The use 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 unre-
stricted 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, commer-
cial air passenger service from Love Field was significant-
ly limited by the Wright Amendment’s provisions for most
of the airport’s modern history.
    In 1999, LTP, one the plaintiffs in this case, was as-
signed 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
4            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



of Love Field in cooperation with Legend Airlines (“Leg-
end”). 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.
    LTP 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 gates.
     In 2003, plaintiff VA, an entity having common own-
ership 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 dealer-
ships, an aviation reservation service, and several wire-
less telecommunications companies. But, as before, no
airline was willing to lease the gates at the Lemmon
Avenue Terminal.
     Throughout 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 South-
west had long lobbied Congress to loosen restrictions on
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES           5



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.
    In 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,” recom-
mended 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 “Agree-
ment”) setting out their “local solution.”
    The 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 alloca-
tion of those 20 gates among the three airlines currently
flying out of Love Field (all based out of the main termi-
nal). Id. And the City of Dallas agreed to acquire and
6             LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



demolish the Lemmon Avenue Terminal, so as to consoli-
date 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 por-
    tion 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 pas-
    senger service.
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. Final-
ly, 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 Con-
tract, 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.” J.A. 3095.
    In October 2006, Congress enacted WARA, which im-
mediately 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 in-
structed Dallas to reduce the total number of gates avail-
able 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
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES            7



   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 number of
   gates as required under this Act . . . .
Id. § 5(a)–(b). Finally, WARA included a provision that
prohibited the Secretary of Transportation and the Ad-
ministrator of the Federal Aviation Administration from
taking actions inconsistent with the Five-Party Agree-
ment. Id. § 5(d)(1)(A)–(B).
    In April 2008, VA stopped paying rent to Dallas on
the Master Lease. Dallas instituted eviction proceedings
and regained possession of the 26.8 acres of leased proper-
ty later that year. Between July and September 2009,
Dallas demolished the Lemmon Avenue Terminal.
                               II
    In 2008, LTP and VA filed this suit in the Claims
Court, alleging that WARA effected regulatory takings of
the Master Lease and the sublease, and a physical taking
of the Lemmon Avenue Terminal. On February 11, 2011,
the Claims Court held on summary judgment that WARA
incorporated the entire Five-Party Agreement into federal
law, including the portions reducing the number of gates
and committing Dallas to acquire and demolish the Lem-
8             LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



mon Avenue gates. Love Terminal Partners v. United
States, 97 Fed. Cl. 355, 424 (2011) (“Love Terminal Part-
ners I”). Because the Claims Court concluded that WARA
required Dallas to acquire and demolish the gates, it held
that WARA effected a physical taking of the Lemmon
Avenue Terminal. Id. at 424–25.
    After fact and expert discovery, a seven-day trial was
held to address the remaining issues concerning regulato-
ry takings of the Master Lease and sublease. On April 19,
2016, the Claims Court resolved the regulatory-takings
issues by holding that WARA limited plaintiffs’ use of
their leasehold in such a way as to render it without
economic value, creating liability for a taking of plaintiffs’
leasehold under both the categorical theory set forth in
Lucas v. South Carolina Coastal, 505 U.S. 1003 (1992),
and a taking under the analysis in Penn Central Trans-
portation Co. v. New York City, 438 U.S. 104 (1978). Love
Terminal Partners v. United States, 126 Fed. Cl. 389, 424,
430 (2016) (“Love Terminal Partners II”). The Claims
Court awarded plaintiffs $133.5 million in just compensa-
tion for the regulatory and physical takings of their
property, plus interest compounded annually starting on
the date WARA was enacted into law. Id. at 440.
   On April 22, 2016, the Claims Court entered judge-
ment in favor of plaintiffs pursuant to Rule 54(b) of the
Rules of the Court of Federal Claims. J.A. 161.
   The United States appealed. We have jurisdiction
under 28 U.S.C. § 1295(a)(3).
                        DISCUSSION
    As a threshold matter, “the existence of a valid prop-
erty interest is necessary in all takings claims.” Wyatt v.
United States, 271 F.3d 1090, 1097 (Fed. Cir. 2001). Here,
it is undisputed that the property interests allegedly
taken by WARA are cognizable property interests for
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES          9



purposes of the Fifth Amendment. After identifying a
valid property interest, the court must determine whether
the governmental action at issue amounts to a compensa-
ble taking of that property interest. First English Evan-
gelical Lutheran Church of Glendale v. Los Angeles
County, California, 482 U.S. 304, 315 (1987).
    This case alleges both physical takings and regulatory
takings. A physical taking is the “paradigmatic taking”
and occurs by “a direct government appropriation or [a]
physical invasion of private property.” Lingle v. Chevron
U.S.A., Inc., 544 U.S. 528, 537 (2005). A regulatory taking
occurs “when government actions do not encroach upon or
occupy the property yet still affect and limit its use to
such an extent that a taking occurs.” Palazzolo v. Rhode
Island, 533 U.S. 606, 617 (2001).
    Whether a taking has occurred is a question of law
based on factual underpinnings. Wyatt, 271 F.3d at 1096.
We review the Claims Court’s legal conclusions de novo,
while reviewing its factual findings for clear error. Rose
Acre Farms, Inc. v. United States, 559 F.3d 1260, 1266
(Fed. Cir. 2009).
                               I
    We first consider the regulatory-takings issue. The
Supreme Court has recognized that a “categorical” regula-
tory taking occurs in the “extraordinary circumstance”
where governmental action deprives a property owner of
“all economically beneficial uses” of his property. Lucas,
505 U.S. at 1017–18. Outside of this situation—that is,
where the property is not rendered totally valueless—the
Supreme Court has “generally eschewed any set formula”
for identifying the presence of a regulatory taking, “in-
stead preferring to engage in essentially ad hoc, factual
inquiries.” Id. at 1015. In Penn Central, the Supreme
Court recognized three factors of “particular significance”
to this ad hoc analysis: (i) the “economic impact of the
10            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



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. at 124.
    Plaintiffs’ regulatory-takings theory is that they had a
right under the leases to use their property for commer-
cial air passenger service. While plaintiffs acknowledge
that they had no right to construct or use any particular
number of gates, the only way to use the property for
commercial air passenger service was to erect gates and
lease those gates to airlines.
    WARA required Dallas to reduce the total number of
gates at Love Field from 32 to 20. Plaintiffs argue that
their gates were not among those to be retained. This was
so because WARA incorporated portions of the Five-Party
Agreement in which the city agreed to demolish plaintiffs’
existing gates and to redevelop Love Field “consistent
with a revised Love Field Master Plan.” Love Terminal
Partners I, 97 Fed. Cl. at 412; see also J.A. 3091; WARA
§ 5(a). Under the Master Plan, all gates were to be located
in the main terminal. J.A. 3091. WARA also directed
Dallas to “manage Love Field” and “determine the alloca-
tion of leased gates” in accordance with “contractual
rights and obligations existing as of the effective date of
this Act for certificated air carriers.” WARA § 5(a). One of
these “rights and obligations” was a provision in the Five-
Party Agreement that guaranteed Southwest, American,
and ExpressJet Airlines the continued use of gates under
their existing leases—all of which were located in the
main terminal. Love Terminal Partners I, 97 Fed. Cl. at
409–11; J.A. 3091. Finally, the Agreement required
acquisition and demolition of the Lemmon Avenue Termi-
nal. J.A. 3092.
    We assume, without deciding, that plaintiffs’ theory
as to the effect of the 2006 legislation is correct and that
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES          11



the legislation effectively barred plaintiffs from using the
Lemmon Avenue Terminal for commercial air passenger
service. Nevertheless, we conclude that there was no
regulatory taking.
    Before beginning our regulatory-takings analysis, we
must first identify “the precise action that [plaintiff]
contends constituted conduct the government could not
engage in without paying compensation.” Acceptance Ins.
Cos., Inc. v. United States, 583 F.3d 849, 855 (Fed. Cir.
2009). Here, plaintiffs’ regulatory-takings theory rests at
the confluence of at least three separate government
actions, each of which we must examine separately. See
Branch v. United States, 69 F.3d 1571, 1575 (Fed. Cir.
1995) (rejecting the plaintiff's characterization of an
alleged taking as “too broad” when it involved several
distinct government actions and failed to “pinpoint what
step in the sequence of events” constituted a taking for
which compensation was due).
    Notably, plaintiffs have not alleged that enactment of
the Wright Amendment itself constituted a taking. To be
sure, a takings claim could, in theory, rest on the Wright
Amendment’s restrictions, which limited the allowable
uses of the Master Leasehold when the statute was enact-
ed in 1980. But any Wright Amendment-based claim
would have accrued at the time of the statute’s enactment
and would therefore be barred by the Tucker Act’s six-
year statute of limitations. See 28 U.S.C. § 2501; see also
Fallini v. United States, 56 F.3d 1378, 1380–82 (Fed. Cir.
1995) (explaining that a taking accomplished by legisla-
tion accrues at the time the legislation is enacted); Whit-
ney Benefits, Inc. v. United States, 752 F.2d 1554, 1558
(Fed. Cir. 1985) (same). Moreover, it is likely that any
such claim would be unavailable to plaintiffs, who ac-
quired their leaseholds in 1999 and 2003 and thus had no
valid property interest at the time the Wright Amend-
ment was enacted into law. See Cienega Gardens v. Unit-
12            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



ed States, 331 F.3d 1319, 1328 (Fed. Cir. 2003) (explain-
ing that “the complaining party must show it owned a
distinct property interest at the time [the property inter-
est] was allegedly taken, even for regulatory takings”). In
any event, plaintiffs do not argue that the enactment of
the Wright Amendment constituted a taking.
    Instead of relying on enactment of the Wright
Amendment, plaintiffs’ regulatory takings claim seems to
be premised on three distinct government actions and
inactions. The first of these is Congress’ failure to repeal
the Wright Amendment. But it is clear that this kind of
government inaction cannot be the basis for takings
liability. In United States v. Sponenbarger, 308 U.S. 256
(1939), for instance, the Supreme Court found that there
was no taking when the government built a flood-
protection system but failed to include features that
would protect Sponenbarger’s property. Id. at 265. Simi-
larly, Georgia Power Co. v. United States, 633 F.2d 554
(Ct. Cl. 1980), held that there was no taking based on the
government’s decision not to regulate sailboat heights in a
public reservoir. Id. at 557. This same principle underlies
our recent decision in St. Bernard Parish Government v.
United States, in which we held that “[o]n a takings
theory, the government cannot be liable for failure to act,
but only for affirmative acts.” No. 16-2301, slip op. at 9
(Fed. Cir. Apr. 20, 2018). The principle that government
inaction cannot be a basis for takings liability is equally
relevant in the regulatory-takings context. Indeed, every
situation in which the Supreme Court has identified a
regulatory taking has involved some kind of affirmative
government action. 1 And we are aware of no case that has



     1  Early examples of government action resulting in
regulatory takings liability include: enactment of a state
statute that limited the extent to which coal can be mined
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES        13



imposed regulatory takings liability based on the govern-
ment’s failure to repeal an existing statute.
    Second, Plaintiffs suggest that a taking occurred be-
cause WARA provided a benefit to Dallas by liberalizing
the Wright Amendment without providing plaintiffs with
the same benefit. Here again, plaintiffs’ theory rests on
government inaction. In any event, takings liability does
not arise simply because government action helps some
parties but not others. In Sponenbarger, for instance, the
Supreme Court held that the government did not effect a
physical taking when it implemented a flood-control
program that only protected certain property owners. 308
U.S. at 265. The same approach governs in the regulato-



under homes, Penn. Coal Co. v. Mahon, 260 U.S. 393
(1922), and enactment of a federal statute that eliminated
certain rights of mortgagees in property held as security,
Louisville Joint Stock Land Bank v. Radford, 295 U.S.
555 (1935). More recently, the Supreme Court has found
regulatory takings based on an order by the Army Corps
of Engineers that the public be allowed access to an
exclusive private marina, Kaiser Aetna v. United States,
444 U.S. 164 (1979); a federal statute giving the govern-
ment title to lands that had been set aside for the Sioux
Nation in a previous treaty, United States v. Sioux Nation
of Indians, 448 U.S. 371 (1980); a state statute which
appropriated the interest on a court-held interpleader
fund, Webb’s Fabulous Pharmacies, Inc., v. Beckwith, 449
U.S. 155 (1980); a federal statute that required public
disclosure of trade secret data, Ruckelshaus v. Monsanto
Co., 467 U.S. 986 (1984); a federal statute declaring that
small interests in allotted Indian land may not descend by
intestacy or devise, but rather must escheat to the tribe,
Hodel v. Irving, 481 U.S. 704 (1987); and a state statute
that barred erection of permanent habitable structures on
vacant beachfront lots, Lucas, 505 U.S. at 1007.
14            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



ry-takings context, where the Supreme Court has noted
that “the Takings Clause [is] . . . more than a particular-
ized restatement of the Equal Protection Clause.” Lucas,
505 U.S. at 1027 n.14; see also Nollan v. California
Coastal Commission, 483 U.S. 825, 834 n.3 (1987) (distin-
guishing between takings claims based on regulation of
property and equal-protection claims based on regulation
of property). Indeed, Plaintiffs concede that “Congress
may . . . favor one party over another legislatively.” Appel-
lee Br. 54. Congress’ failure to extend the benefits of
WARA to these plaintiffs is government inaction that
cannot support a takings claim.
     Finally, plaintiffs argue that WARA constituted a
regulatory taking because it prevented use of their prop-
erty for commercial air passenger service—as had been
permitted under the pre-WARA regulatory regime. This is
the kind of government action that, in theory, might
amount to a regulatory taking, but to establish regulato-
ry-takings liability, a plaintiff must show that a particu-
lar government action significantly diminished the value
of its property. There cannot be a regulatory taking in the
absence of economic injury. A & D Auto Sales, Inc. v.
United States, 748 F.3d 1142, 1157 (Fed. Cir. 2014);
Cienega Gardens, 331 F.3d at 1340.
    Under both the Penn Central framework, which looks
for the presence of “serious” financial loss, Cienega Gar-
dens, 331 F.3d at 1340, and the Lucas framework, which
asks whether the property has been left without any
“economically beneficial use”, 505 U.S. at 1017–19, there
is no regulatory taking unless the government action has
caused a decline in the value of the property. Importantly,
both the Penn Central and Lucas frameworks require the
economic injury to be caused by the government action at
issue, not by some other factor. A & D Auto Sales, 748
F.3d at 1157. To assess the severity of a regulation’s
economic impact, the court must compare the value of the
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES          15



property immediately before the governmental action that
is alleged to cause the taking with the value of the same
property immediately after that governmental action. Id.;
see also Keystone Bituminous Coal Ass’n v. DeBenedictis,
480 U.S. 470, 496–97 (1987); Forest Properties, Inc. v.
United States, 177 F.3d 1360, 1367 (Fed. Cir. 1999). This
economic impact inquiry relates not to the amount of
compensation, but to whether a taking has occurred at all.
    Proving economic loss requires a plaintiff to “show
what use or value its property would have but for the
government action.” A & D Auto Sales, 748 F.3d at 1157.
Thus, a showing that property is valueless after a gov-
ernment action only suggests that a taking has occurred if
there is evidence showing that the property would have
had value absent the government action. This was the
issue in A & D Auto Sales, where we found that General
Motors Corporation and Chrysler LLC dealers had failed
to state a regulatory-takings claim based on the impact of
a federal program that aimed to keep failing automakers
afloat using government funds. The program offered
federal assistance to automakers on the condition that
they took certain steps to improve financial viability,
including termination of plaintiffs’ franchise agreements.
We held that the dealers failed to state a regulatory-
takings claim because they did not allege that their
franchises would have had value if the government had
not intervened at all. “Absent an allegation that GM and
Chrysler would have avoided bankruptcy but for the
government’s intervention and that the franchises would
have had value in that scenario, or that such bankrupt-
cies would have preserved some value for the plaintiffs’
franchises,” we explained, “the terminations actually had
no net negative economic impact on the plaintiffs because
their franchises would have lost all value regardless of the
government action.” Id. at 1158.
16           LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



     Here there can be no regulatory taking because plain-
tiffs have not demonstrated, or even attempted to demon-
strate, that their ability to use their property for
commercial air passenger service under the pre-WARA
regulatory regime had any value.
     The Claims Court’s determination that WARA de-
stroyed all economically beneficial use and value of plain-
tiffs’ property was entirely based on testimony from
plaintiffs’ experts that the property had value, not under
the regulatory regime that existed before WARA, but
under a regime in which the Wright Amendment was
repealed or modified. 2 Love Terminal Partners II, 126
Fed. Cl. at 415, 425, 433. None of plaintiffs’ experts as-
sessed the use or value of plaintiffs’ leaseholds with the
Wright Amendment in effect—despite the fact that the
Wright Amendment was the governing law at the time of
the alleged taking and had been for over a quarter centu-
ry before then.




     2  Mr. Robert Massey, whose testimony the Claims
Court relied on in its economic impact analysis, assessed
the property’s pre-WARA value based on the assumption
that Congress was expected to repeal the Wright Amend-
ment after eight years without restricting plaintiffs’
ability to use their property for air passenger service.
Love Terminal Partners II, 126 Fed. Cl. at 415 n.20.
Plaintiffs’ other experts, whose opinions informed the
Claims Court’s just compensation decision, calculated the
pre-WARA value of plaintiffs’ property based on an even
more aggressive version of Mr. Massey’s assumption: that
the Wright Amendment would be totally and immediately
repealed on October 13, 2006, thereby allowing plaintiffs
to construct a 16-gate terminal that could offer nation-
wide flights on large planes by mid-2008. Id. at 433, 437.
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES           17



     In summary, plaintiffs must show that their property
had value in the regulatory environment that existed
before the government action, and that this value was
diminished by the government action that prevented
them from operating under the existing regime. They
presented no such testimony. Nor is there any indication
that they could have done so. Plaintiffs’ historical finan-
cial performance suggests that their property was not
valuable for air passenger service with the Wright
Amendment in place. Legend, the tenant for which the
Lemmon Avenue Terminal was designed, went bankrupt
in December 2000, eight months after beginning opera-
tions. Atlantic Southeast Airlines, the terminal’s only
other airline tenant, moved its operations to Love Field’s
main terminal a few months later. Plaintiffs tried to
market their property to other airlines, but never received
an actual offer, so by the time of WARA’s enactment no
airline had used the Lemmon Avenue Terminal or paid
any rent to plaintiffs for more than five years. Indeed,
between their acquisition of the sublease in 1999 and the
enactment of WARA in 2006, plaintiffs suffered a net
income loss of roughly $13 million. And at no point during
that time, including during the period when Legend was
operational, did revenue exceed plaintiffs’ carrying costs
so as to meet plaintiffs’ expert’s definition for an “econom-
ically beneficial use.” Since there was no adverse econom-
ic impact, there can be no taking.
     Instead of analyzing the government’s actions and in-
actions individually, as we have done above, the Claims
Court conflated the three, treating them as a single
government action. But even under that approach, plain-
tiffs have failed to demonstrate a taking.
    In its Penn Central analysis, the Claims Court found
that plaintiffs, at the time they acquired the leases in
1999 and 2003, had a reasonable, investment-backed
expectation in the outright repeal of the Wright Amend-
18            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



ment. 3 Love Terminal Partners II, 126 Fed. Cl. at 428–29.
As a factual matter, we question the Claims Court’s
finding that plaintiffs had such an expectation at the time
they acquired the leases, 4 and we also question the
Claims Court’s determination that an expectation of
complete Wright Amendment repeal would have been
reasonable. 5 But in any event, the Claims Court’s ap-
proach is unsound.



     3   Plaintiffs’ reasonable investment-backed expecta-
tions are judged as of the time they acquired the leases.
Cienega Gardens v. United States, 503 F.3d 1266, 1288
(Fed. Cir. 2007) (“[T]he burden is on the [plaintiff] to
establish a reasonable investment-backed expectation in
the property at the time it made the investment.”); Appolo
Fuels, Inc. v. United States, 381 F.3d 1338, 1349 (Fed. Cir.
2004).
     4   Indeed, plaintiffs’ business plan, which was sent
to investors, indicated that they specifically intended to
operate within—and even take advantage of—the Wright
Amendment’s plane size and destination restrictions. An
accompanying memorandum, which the leader of plain-
tiffs’ due diligence team testified to be “a very good sum-
mary of all the things that we considered . . . both the
risks and the positives”, J.A. 396, affirmatively character-
ized Love Field’s “complex legal and regulatory status” as
an asset because it would “significantly limit competition
for the real estate . . . and the airline,” J.A. 2649.
     5   Any expectation of Wright Amendment repeal in
1999 or 2003 was speculative. The Wright Amendment
had been in effect for two decades and, during that time,
the only legislative movement towards total repeal was a
bill, first introduced by Congressman Dan Glickman of
Kansas in 1989 and reintroduced in 1991, on which no
action was ever taken. See Love Terminal Partners II, 126
Fed. Cl. at 426 n.34. Plaintiffs also point to a 1992 De-
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES         19



    The reasonable, investment-backed expectation anal-
ysis is designed to account for property owners’ expecta-
tion that the regulatory regime in existence at the time of
their acquisition will remain in place, and that new, more
restrictive legislation or regulations will not be adopted.
As we said in Cienega Gardens, “[t]he purpose of consid-
eration of plaintiffs’ investment-backed expectations is to
limit recoveries to property owners who can demonstrate
that ‘they bought their property in reliance on a state of
affairs that did not include the challenged regulatory
regime.’” 331 F.3d at 1346.
     This expectations analysis is not designed to protect
private predictions of regulatory change. To the contrary,
what is “relevant and important in judging reasonable
expectations” is “the regulatory environment at the time
of the acquisition of the property.” Commonwealth Edison
Co. v. United States, 271 F.3d 1327, 1350 n.22 (Fed. Cir.
2001) (en banc). Neither the Claims Court nor the plain-
tiffs have cited any cases that find a reasonable, invest-
ment-backed expectation in any beneficial future
regulatory change, and the Supreme Court has rejected
the theory that there can be reasonable, investment-


partment of Transportation study, which found that
repeal of the Wright Amendment would benefit consum-
ers without harming Dallas/Fort Worth International
Airport. But this study came seven years before plaintiffs’
investment and in no way suggested that repeal was
imminent. The only regulatory movement in the interven-
ing period was the Shelby Amendment, which relaxed the
Wright Amendment’s restrictions but fell far short of the
kind of deregulation that would allow plaintiffs to operate
a terminal with nationwide flights on large planes. And
concrete proposals to modify the Wright Amendment did
not become significant until 2004, after plaintiffs had
acquired the property.
20            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



backed expectations in the absence of a current regulatory
regime. In Ruckelshaus, for instance, the Supreme Court
concluded that plaintiffs only had a reasonable expecta-
tion in the confidentiality of trade secrets disclosed to the
EPA in pesticide registration applications to the extent
that the relevant statute explicitly guaranteed confidenti-
ality at the time of submission. 467 U.S. at 1005–06. The
Court explained that plaintiffs could not have had a
reasonable expectation of trade secret confidentiality
prior to 1972, when the statute was silent as to how the
EPA could use and disclose data, or after 1978, when the
statute explicitly allowed disclosure of all data after ten
years. Id. at 1006–10. Only between the 1972 and 1978
amendments did the statute “explicitly guarantee[] . . . an
extensive measure of confidentiality” for any data desig-
nated as a trade secret at the time of submission, and
only during that period could the plaintiffs have reasona-
ble expectations of confidentiality. Id. at 1011.
    LTP and VA’s reasonable, investment-backed expecta-
tions are similarly limited by the regulatory regime in
place at the time they acquired the leases, which included
the Wright Amendment. The failure to establish “reason-
able, investment-backed expectations,” at least under the
Penn Central analysis, “defeats [a regulatory] takings
claim as a matter of law.” Good v. United States, 189 F.3d
1355, 1363 (Fed. Cir. 1999); see also Ruckelshaus, 467
U.S. at 1005. 6



     6   We note that there appears to be conflict between
circuits as to whether reasonable, investment-backed
expectations are relevant to the Lucas analysis. Compare
Palm Beach Isles Assocs. v. United States, 231 F.3d 1354,
1364 (Fed. Cir. 2000) (holding that, if a land use re-
striction amounts to a categorical taking under Lucas, the
property owner is entitled to a recovery “without regard to
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES         21



    On appeal, plaintiffs largely abandon the Claims
Court’s theory of reasonable investment-backed expecta-
tions, and argue instead that, under Lucas, a showing of
reasonable, investment-backed expectations is not re-
quired, and that, under Penn Central, a mere expectation
that they could use the property for air passenger service
is sufficient. Plaintiffs’ problem, as described above, is
that, under both the Penn Central and Lucas analyses, a
showing of economic harm is essential. Plaintiffs argue
that anticipated legal changes should be taken into ac-
count in valuing the property, citing a number of condem-
nation cases which suggest that “reasonably probable”
zoning changes can be considered when assessing a
property’s fair market value if the landowner can demon-
strate that “just prior to the time of taking, a knowledge-
able buyer would have taken into account the reasonable
probability that the land in question would be rezoned.” H
& R Corp. v. District of Columbia, 351 F.2d 740, 742 (D.C.
Cir. 1965); see also Bd. of Cty. Supervisors of Prince
William Cty., VA v. United States, 276 F.3d 1359, 1365–66
(Fed. Cir. 2002); United States v. 480.00 Acres of Land,
557 F.3d 1297, 1300, 1313 (11th Cir. 2009); United States
v. 320.0 Acres of Land, More or Less in Monroe Cty., State
of Fla., 605 F.2d 762, 818 (5th Cir. 1979); Gov’t of Virgin
Islands v. 2.7420 Acres of Land, 411 F.2d 785, 786 (3d Cir.
1969).



the nature of the owner's initial investment-backed expec-
tations.”), with Reahard v. Lee County, 968 F.2d 1131,
1136 (11th Cir. 1992) (holding that “to resolve the ques-
tion of whether the landowner has been denied all or
substantially all economically viable use of his property,
the factfinder must analyze, at the very least: (1) the
economic impact of the regulation on the claimant; and (2)
the extent to which the regulation has interfered with
investment-backed expectations.”).
22           LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



    It is undoubtedly true that, when assessing the eco-
nomic impact of a particular government action alleged to
constitute a taking, a court can consider the extent to
which other, unrelated, reasonably probable zoning or
regulatory changes may have influenced the property’s
fair market value. But this principle does not remotely
authorize the economic impact analysis undertaken here
by the Claims Court. To the contrary, the cases plaintiffs
cite in support of their valuation theory emphasize that
plaintiffs cannot seek compensation for economic value
attributable to the project for which the property was
taken.
    This principle, known as the “scope of the project”
rule, was announced in United States v. Miller, 317 U.S.
369, 370 (1943), a case involving a federal reservoir
project that flooded an existing railroad right-of-way,
thereby making it necessary for the government to ac-
quire additional land to relocate the railroad tracks. In
implementing the reservoir project, the government
designated Miller’s property for condemnation for track
relocation. But before Miller’s property was condemned,
the reservoir project itself prompted development in the
area, making Miller’s property more valuable. Id. at 371.
Miller argued that he was entitled to the fair market
value of his land—including the increase in value at-
tributable to the reservoir project. The government ar-
gued that just compensation should not include any
enhanced value attributable to the federal project for
which the land was taken, and the Supreme Court agreed.
Id. at 376–77; see also 480.00 Acres of Land, 557 F.3d at
1307 (“[W]hen deciding the market value of [a] property
the fact-finding body does not consider the positive or the
negative impact of any decision the Government makes
within the scope of the project which prompted the tak-
ing.”); 320.0 Acres of Land, 605 F.2d at 784; 3-8A Nichols
on Eminent Domain § 8A.01 (rev. 3d ed. 2006).
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES            23



    We have also found that the Miller rule applies to the
question of whether property has been taken in the first
place. John B. Hardwicke Co. v. United States, 467 F.2d
488, 490–91 (Ct. Cl. 1972) (finding that “plaintiffs cannot
base a taking claim on the hypothesis that they can
garner the benefit conferred by [one part of the Rio
Grande water-control program], without deduction for the
probable detriment when [another part of the Rio Grande
water-control program] comes into being too”).
    Here, the government action that allegedly effected a
taking, WARA, is the same action that liberalized the
Wright Amendment. Plaintiffs, like Miller, argue that
they deserve compensation because WARA’s deregulatory
aspects would have made their property more valuable—if
only it had not restricted use of the property for commer-
cial air passenger service. The Supreme Court rejected
this reasoning in Miller, explaining that “owners were not
entitled, if [their lands] were ultimately taken, to an
increment of value calculated on the theory that if they
had not been taken they would have been more valuable.”
317 U.S. at 379.
    In short, the plaintiffs have not shown a decrease in
the value of their property as a result of government
regulation. Even assuming that WARA barred the use of
plaintiffs’ property for air passenger service, there is still
no regulatory taking under the Penn Central or Lucas
analyses because plaintiffs failed to demonstrate that
their property would have had value (with the Wright
Amendment in effect) that was adversely affected by
government action. As the Supreme Court said in Brown
v. Legal Foundation of Washington, “just compensation
for a net loss of zero is zero.” 538 U.S. 216, 240 n.11
(2003); see also A & D Auto Sales, 748 F.3d at 1157;
Cienega Gardens, 331 F.3d at 1340.
24            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



                             II
    The Claims Court also held that WARA effected a
physical taking of plaintiffs’ terminal because, by incorpo-
rating the entire Five-Party Agreement, it required
Dallas to demolish plaintiffs’ gates. Love Terminal Part-
ners I, 97 Fed. Cl. at 424. It is well established that the
government may incur takings liability based on the
actions of a third party when that third party is acting
pursuant to a federal mandate—as plaintiffs allege Dallas
was here. Loretto v. Teleprompter Manhattan CATV
Corp., 458 U.S. 419, 421 (1982); Preseault v. United
States, 100 F.3d 1525, 1551 (Fed. Cir. 1996); see also A &
D Auto Sales, 748 F.3d at 1153–56. We find, however,
that WARA did not codify the Five-Party Agreement in its
entirety and specifically did not codify the portions of the
Agreement in which Dallas agreed to acquire and demol-
ish plaintiffs’ gates.
    The Claims Court’s determination that WARA incor-
porated the entire Five-Party Agreement was based
largely on the fact that the statute mirrors many of the
Agreement’s key provisions, and on the fact that WARA’s
language “borrows from or is virtually identical to lan-
guage” in the Agreement itself. 7 Love Terminal Partners I,



     7  In further support of the incorporation theory,
both Plaintiffs and the Claims Court point to cases
brought in other jurisdictions on antitrust and state-law
claims. City of Dallas v. Delta Air Lines Inc., 847 F.3d
279, 282 (5th Cir. 2017); Love Terminal Partners v. City of
Dallas, 256 S.W.3d 893, 896 (Tex. App. 2008); Love Ter-
minal Partners, L.P. v. City of Dallas, 527 F. Supp. 2d
538, 547, 560 (N.D. Tex. 2007). Most of these cases con-
cluded that WARA incorporated only some of the Five-
Party Agreement. And, in any event, they are not control-
ling here.
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES           25



97 Fed. Cl. at 404. The Claims Court pointed out, for
instance, that § 5(d)(1) of WARA explicitly referenced the
Five-Party Agreement. That section provides that the
Secretary of Transportation and the Administrator of the
Federal Aviation Administration may not take actions
“inconsistent with the contract dated July 11, 2006 en-
tered into by the city of Dallas, the city of Fort Worth, the
DFW International Airport Board, and others regarding
the resolution of the Wright Amendment issues” or “that
challenge the legality of any provision of such contract.”
The Claims Court determined that “the explicit references
to the Contract in the language of the statute demon-
strate Congress’s intent to incorporate the Contract into []
WARA.” Love Terminal Partners I, 97 Fed. Cl. at 406.
    It is true that WARA incorporates portions of the
Agreement, makes a number of specific changes to federal
law contemplated in the Agreement, and directly refer-
ences the Agreement. But we think that the Claims Court
misread the statute. WARA does not incorporate Dallas’
commitment to “demoli[sh] the gates at the Lemmon
Avenue facility immediately upon acquisition of the
current lease to ensure that the facility can never again
be used for passenger service.” J.A. 3092. Indeed, the
requirement that federal funds not be used for removal of
Lemmon Avenue gates explicitly distances the federal
government from Dallas’ intended action.
    Even if WARA had codified the portion of the Five-
Party Agreement in which Dallas agreed to “acquire all or
a portion of the lease on the Lemmon Avenue facility, up
to and including condemnation” and to then “demoli[sh]
the gates at the Lemmon Avenue facility immediately
upon acquisition of the current lease,” id., it still would
not constitute a physical taking. Incorporation of these
provisions, at most, required Dallas to negotiate with
plaintiffs and then, if negotiation proved unsuccessful,
bring a condemnation proceeding pursuant to which
26            LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES



plaintiffs would receive just compensation. See Tex. Prop.
Code § 21.0113 (requiring the government to negotiate
before filing a condemnation suit).
    Acquisition of plaintiffs’ property through negotiation
could not constitute a taking because any property trans-
fer would be voluntary. A physical taking only occurs
where the government “requires the landowner to submit
to the physical occupation of his land.” Yee v. City of
Escondido, 503 U.S. 519, 527 (1992); FCC v. Florida
Power Corp., 480 U.S. 245, 252 (1987) (“This element of
required acquiescence is at the heart of the concept of
occupation.”).
    So too, the requirement that Dallas acquire plaintiffs’
property through the exercise of eminent domain would
not be a taking by the United States. Plaintiffs could have
chosen to retain their leases, thereby compelling Dallas to
take the property through a condemnation proceeding. It
is axiomatic that property is not taken without just com-
pensation in violation of the Fifth Amendment when the
act that allegedly effects a taking incorporates a provision
to receive just compensation. Williamson County Regional
Planning Comm’n v. Hamilton Bank of Johnson City, 473
U.S. 172, 194–95 (1985) (“If the government has provided
an adequate process for obtaining compensation, and if
resort to that process ‘yield[s] just compensation,’ then the
property owner ‘has no claim against the Government’ for
a taking.”). Because WARA, at most, directs Dallas to
acquire plaintiffs’ gates through negotiation or eminent
domain, it could not constitute a taking without just
compensation.
    Ultimately, of course, Dallas gained possession of
plaintiffs’ leasehold through an eviction proceeding, which
was brought after plaintiffs stopped paying rent. This is a
course of action that Dallas was entitled to pursue as a
LOVE TERMINAL PARTNERS, L.P.   v. UNITED STATES        27



lessor and for which no just compensation is due, even if
directed by the United States.
                      CONCLUSION
    We find that there was no regulatory taking under ei-
ther Penn Central’s three-factor analysis or the categori-
cal approach described in Lucas. There was no physical
taking because WARA did not “codify” the relevant por-
tions of the Five-Party Agreement or otherwise require
destruction of the Lemmon Avenue gates without com-
pensation. We therefore reverse.
                      REVERSED
