The case is about the repeal of the Wright Amendment, which severely limited the use of Dallas’s Love Field Airport. More importantly, it is about public-private collusion for the benefit of powerful special interests. The Constitution mandates that private property cannot be taken without just compensation. In this case the government and well-connected businesses colluded to take what didn’t belong to them, and a small group of Texas property owners were left empty-handed.
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The Wright Amendment, a federal law passed in 1979, was a protectionist measure designed to promote growth of the new DFW airport in North Texas and suffocate Love Field. This law was the work of the House Majority Leader, Jim Wright, who represented Ft. Worth at the time, near DFW.
When Congress was set to end the Wright Amendment in the mid 2000s, it faced a battle between Southwest Airlines (whose main hub is at Love Field) and American Airlines (whose area hub is located at DFW).
Executives at Southwest and American, along with officials for the cities of Dallas and Ft. Worth, agreed to reduce the number of available gates at Love Field from 32 to 20, in exchange for all parties agreeing to the repeal of the Wright Amendment. But this decision would have a catastrophic financial impact on a group of savvy investors who owned a small auxiliary terminal at Love Field.
Love Field’s main terminal is owned by the City of Dallas. Love Field’s smaller Lemmon Avenue Terminal is owned by private investors through the company Love Terminal Partners, L.P. They were in negotiations with JetBlue and other airlines about offering service once the Wright Amendment was lifted.
Southwest and American, however, lobbied Congress to codify their agreement into a law known as the Wright Amendment Reform Act (WARA). WARA instructed Dallas to condemn the Lemmon Avenue Terminal and mandated by law that the terminal and property could never again be used for air passenger service.
This completely destroyed the value of the privately-owned terminal, which would have been extremely profitable had the Wright Amendment been repealed without this special deal. Because Congress codified the antitrust violation into law, the parties got off scot free.
The Petitioners went to the trial court (Court of Federal Claims) and won just compensation of $133 million. But the U.S. Court of Appeals for the Federal Circuit reversed the decision.
This case, like Kelo v. City of New London, concerns the power of the government to take private property and turn it over the private parties for “economic development.”
Governments and rent-seeking private parties must not be allowed to steal property and remove competition.