In Air Pegasus of D.C. v. United States the U.S. Court of Appeals for the Federal Circuit has affirmed the U.S. Court of Federal Claims’ dismissal of a lawsuit alleging that the post-9/11 NOTAMS prohibiting flight operations over the D.C. area constituted a compensable taking of property. Air Pegasus operated the South Capitol Street heliport in Washington D.C. from February, 1992 through September, 2002. Although it did not own or operate any helicopters, it provided services and maintenance to other helicopte operators. Following the 9/11 terrorist attacks, the FAA issued NOTAMS that effectively prohibited most, if not all, of the helicopter operations in the D.C. airspace. As a result of the NOTAMS, Air Pegasus’ business was adversely affected and forced to close.
Subsequently, Air Pegasus filed a lawsuit against the United States alleging that “the various NOTAMs issued by the FAA after September 11, 2001, resulted in a regulatory taking of its heliport business located at 1724 South Capitol Street, S.E., Washington, D.C.” because “[t]he NOTAMs had the immediate and intended effect of shutting down virtually all air traffic at the Heliport . . . [which,] in turn, made it economically nonviable to continue to operate the business under the Lease” and that as a result “the economic value of [its] business and its leasehold interest in the Property ha[d] been destroyed.”
The U.S. Court of Federal Claims dismissed the action on summary judgment holding that Air Pegasus voluntarily chose to operate a business in a highly regulated industry, and that the government has a pre-existing servitude over the navigable airspace. The court further found that Air Pegasus did not have a property right in the public navigable airspace above its leased premises and “[a]s a result, the court concluded that ‘although the FAA’s regulatory activity may have had an adverse impact on [Air Pegasus’s] heliport business,’ there was not a taking of any cognizable property interest of Air Pegasus.”
The Court of Appeals affirmed the Federal Claims Court holding that because Air Pegasus did not actually own or operate any helicopters, its economic injury not the result of the government taking Air Pegasus’s property, but was the result of the government’s purported taking of other people’s property, which cannot form the basis for a viable takings claim. The Court went on to note that since a private party does not have a private property right in the navigable airspace of the United States, “Air Pegasus does not have a cognizable property interest in its alleged right to access the navigable airspace from the South Capitol Street Heliport.”
Judge Newman dissented, providing a detailed analysis which concludes that “[t]he Court of Federal Claims and my colleagues appear to have been diverted by the government’s concentration on the concept of who “owns” the air, thus ignoring the effect of the government action on the heliport leasehold. The result negates the basic rights and protections secured by the Fifth Amendment, and places the financial burden of emergency government action for national security, on the property owner whose property became valueless. Precedent makes clear that Air Pegasus indeed possessed a compensable property interest in Fifth Amendment terms.”
