Regional Rail Reorganization Act Cases
419 U.S. 102 (1974)

Annotate this Case

U.S. Supreme Court

Regional Rail Reorganization Act Cases, 419 U.S. 102 (1974)

Regional Rail Reorganization Act Cases*

Argued October 23, 1974

Decided December 16, 1974

419 U.S. 102

Syllabus

As a comprehensive solution to a national rail crisis precipitated by the entry into reorganization proceedings under § 77 of the Bankruptcy Act of eight major railroads in the northeast and midwest region of the country, Congress supplemented § 77 with the Regional Rail Reorganization Act of 1973 (Rail Act). Each railroad under a § 77 reorganization must proceed under the Rail Act unless its reorganization court within specified times finds (a) that the railroad is reorganizable on an income basis within a reasonable time under § 77 and that the public interest would be better served by a § 77, rather than a Rail Act reorganization or (b) that the Rail Act does not provide a process that is fair and equitable to the estate of the railroad in reorganization (hereafter railroad). § 207(b) of the Rail Act. Appeals from § 207(b) orders are provided to a Special Court, whose decision is final. The Rail Act establishes a Government corporation, the United States Railway Association (USRA), which is directed to formulate a "Final System Plan" (Plan) by July 26, 1975, for restructuring the railroads into a "financially self-sustaining rail service system." The Plan must provide for transfer of designated railroad properties to the Consolidated Rail Corp. (Conrail), a private state-incorporated corporation, in return for Conrail securities, plus up to $500 million of federally guaranteed USRA obligations and the other benefits accruing to the railroad from the transfer. The Plan, which becomes effective if neither House of Congress disapproves it within 60 days, must be transmitted to the Special Court, which has exclusive jurisdiction of all proceedings concerning the Plan. § 209. Within 10 days after deposit

Page 419 U. S. 103

with it of Conrail securities and USRA obligations, the Special Court must order the railroad trustee to convey forthwith to Conrail the railroad's properties designated in the Plan. § 303(b). The Special Court then determines under § 303(c), with an appeal extending to this Court, whether the conveyance is fair and equitable to the railroad's estate under § 77 standards, or whether the transfer is more fair and equitable than a constitutional minimum requires (in which case necessary adjustments must be made). If the Special Court finds the conveyance not fair and equitable, the court must reallocate, or order issuance of additional Conrail securities and USRA obligations, enter a judgment against Conrail, or combine such remedies. Railroads may discontinue service and abandon properties not designated for transfer under the Plan, but, until the Plan becomes effective, may only discontinue service or abandon any line with USRA consent and absent reasonable state opposition. § 304(f). Parties with interests in Penn Central Transportation Co. (Penn Central) brought suits attacking the constitutionality of the Rail Act, contending that the Act violates the Fifth Amendment by taking Penn Central property without just compensation, on the grounds (1) that the Conrail securities and USRA obligations and other benefits would not be the constitutionally required equivalent of the rail properties whose transfer is compelled by § 303(b) (the "conveyance taking" issue), and (2) that § 304(f) compels continuation of rail operations pending the Plan's implementation even if erosion, beyond constitutional limits, of Penn Central's estate occurs during the interim period (the "erosion taking" issue). While rejecting the "conveyance taking" issue as premature in view of a number of decisional steps required before the final conveyance, the District Court held that the "erosion taking" issue was not premature, and rejected the contention of the United States, USRA, and the Penn Central Trustees that, if the constitutional limit of permissible uncompensated erosion should be passed, the plaintiffs would have an adequate remedy at law under the Tucker Act, which gives the Court of Claims jurisdiction to render judgment "upon any claim against the United States founded either upon the Constitution, or any Act of Congress . . . ," the District Court finding that the Rail Act precluded a Tucker Act remedy. The court therefore declared § 304(f) invalid as violating the Fifth Amendment

"to the extent that it would require continued operation of rail services at a loss in violation of the constitutional rights of the owners and creditors of a railroad,"

and the court declared § 303 invalid to the extent

Page 419 U. S. 104

it failed to compensate for interim erosion pending final implementation of the Plan. In addition to other injunctive relief, the District Court enjoined USRA from certifying the Plan to the Special Court under § 209(c). The court further determined that the provision of § 207(b) requiring dismissal of certain reorganization proceedings is constitutionally invalid as a geographically nonuniform law on the subject of bankruptcies.

Held:

1. The issue of the availability of a Tucker Act remedy if the Rail Act effects an "erosion taking" is ripe for adjudication in view of the distinct possibility that compelled continued rail operations by Penn Central, which in the past several years has sustained great losses and is not "reorganizable on an income basis within a reasonable time under [§ 77]," would injure plaintiffs below without any assurance before the Plan is implemented of their being compensated. Pp. 419 U. S. 122-125.

2. The Tucker Act remedy is not barred by the Rail Act, but is available to provide just compensation for any "erosion taking" effected by the Rail Act. Pp. 419 U. S. 125-136.

(a) The correct issue is whether Congress intended to prevent recourse to the Tucker Act, and not, as the District Court held, whether the Rail Act affirmatively manifests a congressional intent to permit such recourse. Pp. 419 U. S. 126-127.

(b) Rail Act provisions relied on as evincing a congressional determination that no federal funds beyond those expressly committed by the Act were to be paid for the rail properties, equally support the inference that Congress felt that the Rail Act provided at least the minimum compensation and gave no consideration to withdrawal of the Tucker Act remedy. Pp. 419 U. S. 127-129.

(c) Section 601 of the Rail Act, which specifically deals with other statutes inconsistent with the Rail Act, does not mention the Tucker Act. P. 419 U. S. 129.

(d) There is no legislative history supporting the argument that the Rail Act should be construed to withdraw the Tucker Act remedy. Pp. 419 U. S. 129-133.

(e) Applicable canons of construction fortify the conclusion that the Rail Act does not withdraw the Tucker Act remedy. Pp. 419 U. S. 133-136.

3. Certain basic "conveyance taking" issues are now ripe for adjudication. Pp. 419 U. S. 136-148.

(a) Since, after the District Court's opinion, the Special Court reversed the Penn Central reorganization court's determination that the Rail Act did not provide a process that would be fair

Page 419 U. S. 105

and equitable to the estate, some of the "conveyance taking" issues must now be decided. Pp. 419 U. S. 138-140.

(b) Implementation of the Rail Act will now lead inexorably to the final conveyance, though the exact date cannot now be determined, and the Special Court must order the conveyance of rail properties included in the Plan; since the conveyance is inevitable it is not relevant to the justiciable controversy issue that there will be a delay before the transfer occurs. Pp. 419 U. S. 140-143.

(c) Several factors militate against the Court's deferring resolution of the constitutional issues here until a time closer to the occurrence of the disputed event and the Court will be in no better position later than it is now to determine the validity of basic final conveyance issues. However, resolution of other issues, such as those involving valuation, should be postponed. Pp. 419 U. S. 143-148.

4. For the same reasons as obtained with respect to the "erosion taking" issue, a suit in the Court of Claims is available under the Tucker Act for a cash award to cover any shortfall between the consideration that the railroads receive for their rail properties finally conveyed under the Rail Act and the constitutional minimum. P. 419 U. S. 148.

5. The Tucker Act guarantees an adequate remedy at law for any taking that might occur as a result of the final conveyance provisions of the Rail.Act. Pp. 419 U. S. 148-156.

(a) Plaintiffs' argument that the Tucker Act remedy is inadequate because the "conveyance taking" is an exercise of the eminent domain power and requires full cash payment for the rail properties is without merit. The Rail Act, coupled with the Tucker Act, is valid as a reorganization statute, and does not constitute an eminent domain statute by virtue of its provisions for federal representation on Conrail's board of directors (which does not constitute Conrail a federal instrumentality) and the provisions for conveyance and continuation of services pending the Plan's formulation; or because of any defects in the Act's provisions for judicial review. Pp. 419 U. S. 152-155.

(b) Though the Rail Act differs from other reorganization statutes by mandating conveyance without any prior judicial finding that there will be adequate resources in the reorganized company to compensate the debtor estates and, eventually, their creditors, recourse to a Tucker Act suit for any shortfall provides adequate assurance that any taking will be compensated. Pp. 419 U. S. 155-156.

Page 419 U. S. 106

(c) The Tucker Act also assures that the railroad estates and their creditors will eventually be made whole for the assets conveyed, and thus the Rail Act doe not deprive plaintiffs of procedural due process. P. 419 U. S. 156.

6. The Rail Act does not contravene the uniformity requirement of the Bankruptcy Clause. Pp. 419 U. S. 156-161.

(a) This Court's holding that the Tucker Act remedy is available for any uncompensated taking under the Rail Act obviates the possibility that the Penn Central reorganization court will ever confront the provision for dismissal of a § 77 proceeding under § 207(b) of the Rail Act, which the District Court held violative of the bankruptcy uniformity requirement. Pp. 419 U. S. 156-158.

(b) Plaintiffs' argument that constitutional bankruptcy uniformity is violated because the Rail Act is restricted to a single statutorily defined region lacks merit, since the uniformity requirement does not preclude Congress from fashioning legislation to resolve geographically isolated problems, and here Congress acted consistently with that requirement when it dealt with the national rail crisis centering in the problems of rail carriers in the region defined by the Rail Act and applied the Rail Act to every railroad in reorganization throughout the United States. Pp. 419 U. S. 158-161.

383 F.Supp. 510, reversed.

BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and WHITE, MARSHALL, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. DOUGLAS, J., filed a dissenting opinion, post, p. 419 U. S. 161. STEWART, J., filed a dissenting statement, post, p. 419 U. S. 161.

Page 419 U. S. 107

MR. JUSTICE BRENNAN delivered the opinion of the Court.

These direct appeals and the cross-appeal are from a judgment of a three-judge District Court for the Eastern District of Pennsylvania that declared the Regional Rail Reorganization Act of 1973 (Rail Act), 87 Stat. 985, 45 U.S.C. § 701 et seq. (1970 ed., Supp. III), unconstitutional in part and enjoined its enforcement. [Footnote 1] 383 F.Supp.

Page 419 U. S. 108

510 (1974). We noted probable jurisdiction, post, p. 801. We reverse.

I

Introduction

A rail transportation crisis seriously threatening the national welfare was precipitated when eight major railroads in the northeast and midwest region of the country [Footnote 2] entered reorganization proceedings under § 77 of the Bankruptcy Act, 11 U.S.C. § 205. [Footnote 3] After interim measures

Page 419 U. S. 109

proved to be insufficient, [Footnote 4] Congress concluded that solution of the crisis required reorganization of the railroads, stripped of excess facilities, into a single, viable system operated by a private, for-profit corporation. Since such a system cannot be created under § 77 rail reorganization law, and since significant federal financing would be necessary to make such a plan workable, Congress supplemented § 77 with the Rail Act, which became effective on January 2, 1974. The salient features of the Rail Act are:

1. Reorganization of each railroad in § 77 reorganization must proceed pursuant to the Rail Act unless the district court having jurisdiction over its reorganization (a) finds, within 120 days after January 2, 1974, "that the railroad is reorganizable on an income basis within a reasonable time under section [77] and that the public interest would be better served by such a reorganization

Page 419 U. S. 110

than by a reorganization under this chapter," [Footnote 5] or (b) within 180 day after January 2, 1974, "finds that this chapter does not provide a process which would be fair and equitable to the estate of the railroad in reorganization. . . ." § 207(b), 45 U.S.C. § 717(b) (1970 ed. . Supp. III). [Footnote 6] Appeals from § 207(b) orders may be taken within 10 days of entry to a Special Court constituted under § 209(b), 45 U.S.C. § 719(b) (1970 ed., Supp. III), and must be decided by the Special Court within 80 days after the appeal is taken. Section 207(b) expressly provides that "[t]here shall be no review of the decision of the special court." [Footnote 7]

Page 419 U. S. 111

2. Appellant United States Railway Association (USRA) is established as a new Government corporation. § 201(a), 45 U.S.C. § 711(a) (1970 ed., Supp. III). USRA must prepare a "Final System Plan" for restructuring the railroads in reorganization into a "financially self-sustaining rail service system." § 206(a)(1), 45 U.S.C. § 716(a)(1) (1970 ed., Supp. III). See §§ 201, 202, 204-206, 45 U.S.C. §§ 711, 712, 714716 (1970 ed., Supp. III). The Final System Plan must provide for transfer of designated rail properties by the railroads in reorganization to a private state-incorporated corporation, Consolidated Rail Corporation (Conrail), § 301(a), 45 U.S.C. § 741(a) (1970 ed., Supp. III), in return for securities of Conrail, plus up to $500 million of USRA obligations guaranteed by the United States, and "the other benefits accruing to such railroad by reason of such transfer." § 206(d)(1), 45 U.S.C. § 716(d)(1) (1970 ed., Supp. III); see also § 210, 45 U.S.C. § 720 (1970 ed., Supp. III). [Footnote 8]

Page 419 U. S. 112

3. USRA must submit a proposed Final System Plan to Congress within 570 days after January 2, 1974, §§ 207(c), 207(d), 208(a), 45 U.S.C. §§ 717(c), 717(d), 718(a)

Page 419 U. S. 113

(1970 ed., Supp. III), that is, by July 26, 1975. [Footnote 9] The Plan becomes "effective" if neither House of Congress disapproves it within 60 continuous session days

Page 419 U. S. 114

after submission. §§ 102(4), 208(a), 45 U.S.C. §§ 702(4), 718(a) (1970 ed., Supp. III). [Footnote 10] USRA is required to transmit the Plan within 90 days after its effective

Page 419 U. S. 115

date to the Special Court which, under § 209(b), is given exclusive jurisdiction of all "proceedings with respect to the final system plan." 45 U.S.C. § 719(b) (1970 ed., Supp. III). The Special Court, "within 10 days after deposit . . . of" Conrail securities and USRA obligations, "shall . . . order the trustee or trustees of each railroad in reorganization . . . to convey forthwith" to Conrail "all right, title, and interest in the rail properties of such railroad in reorganization . . ." designated in the Final System Plan. § 303(b), 45 U.S.C. § 743(b) (1970 ed., Supp. III).

4. The Special Court next determines whether the conveyances of the rail properties to Conrail

"(A). . . are in the public interest and are fair and equitable to the estate of each railroad in reorganization in accordance with the standard of fairness and equity applicable to the approval of a plan of reorganization . . . under section [77] . . . [or](b) whether the transfers or conveyances are more fair and equitable than is required as a constitutional minimum."

§ 303(c), 45 U.S.C. § 743(c)

Page 419 U. S. 116

(1970 ed., Supp. III). If the Special Court finds that the transfer is not fair and equitable, the Special Court must reallocate, or order issuance of additional, Conrail securities and USRA obligations (subject to the overall $500 million limitation on USRA obligations for this purpose), or enter a judgment against Conrail, or decree a combination of these remedies. § 303(c)(2). The Special Court is not authorized to enter a judgment against the United States. Section 303 provides also that, if the Special Court decides that the consideration exchanged for the rail properties is "more fair and equitable than is required as a constitutional minimum," § 303(c)(1)(B), it shall make necessary adjustments so that the "constitutional minimum" is not exceeded. 303(c)(3). Appeal from 303(c) determinations is to this Court. § 303(d). [Footnote 11]

5. Although railroads in reorganization subject to the Act are free to abandon service and dispose as they wish of any rail properties not designated for transfer under the Final System Plan, § 304(a)-(c), 45 U.S.C. §§ 744(a)-(c)

Page 419 U. S. 117

(1970 ed., Supp. III), until that Plan becomes effective, none

"may discontinue service or abandon any line of railroad . . . unless . . . authorized to do so by [USRA] and unless no affected State or local or regional transportation authority reasonably opposes such action . . . ."

§ 304(f)

II

Proceedings in the District Court

Constitutional questions concerning the Act are raised in this litigation by parties with interests in the Penn Central Transportation Co. (Penn Central), the largest of the eight railroads in reorganization. [Footnote 12] The principal

Page 419 U. S. 118

contention of the plaintiffs in the District Court was that the Rail Act in two respects effects a taking of rail properties of Penn Central without payment of just compensation, in violation of the Fifth Amendment. They contended, first, that the Conrail securities and USRA obligations and other benefits to be received would not be the constitutionally required equivalent of the rail properties compelled by § 303(b) to be transferred. This is the "conveyance taking" issue. This claim was rejected by the District Court as premature. 383 F.Supp. at 517-518. They contended, second, that a taking of their property without just compensation will result from the severe inhibitions imposed upon discontinuance of service and abandonment of lines. In particular, they claimed that § 304(f) compels continuation of rail operations pending implementation of the Final System Plan even if erosion of the Penn Central estate beyond constitutional limits occurs during this period. This is the "erosion taking" issue. The District Court agreed that § 304(f) required continued operations to this extent, and viewed the huge operating losses already incurred by Penn Central as making this contention ripe for determination, saying:

"[W]e are persuaded that a significant possibility exists that a point of erosion either has been or may soon be reached so that it can be said that [the contention of plaintiffs below] of interim unconstitutional

Page 419 U. S. 119

taking by continued loss operations is ripe for adjudication."

383 F.Supp. at 525.

The District Court rejected the argument of the United States, USRA, and the Penn Central Trustees that, if, in fact, the constitutional limit of permissible uncompensated erosion should be passed, plaintiffs would have an adequate remedy at law in the Court of Claims under the Tucker Act, 28 U.S.C. § 1491. The District Court construed the Rail Act as precluding a Tucker Act remedy, stating:

"We are persuaded that the legislative history supports the conclusion that Congress intended that financial obligations be limited to the express terms of the Act. Article I, Section 9, Clause 7 [of the Constitution] provides that no money shall be drawn from the Treasury of the United States except in consequence of an appropriation made by law. Section 213(b) [of the Rail Act], and section 214 entitled 'Authorization for Appropriations' place an express ceiling on expenditures. Section 210 describes the maximum obligational authority of [USRA], and the authorization for appropriation is limited to 'such amounts as are necessary to discharge the obligations of the United States arising under this section.' (Emphasis supplied.) Judicial review is delineated with specificity in Sections 209(a) and 303 with no mention of the Court of Claims."

383 F.Supp. at 528-529.

The District Court therefore declared § 304(f) governing interim abandonments

"null and void as violative of the Fifth Amendment of the United States Constitution, to the extent that it would require continued operation of rail services at a loss in violation of the constitutional rights of the owners and creditors of a railroad. "

Page 419 U. S. 120

It consequently enjoined defendants below

"from taking any action to enforce the provisions of Section 304(f). . . with respect to any abandonment, cessation, or reduction of service which has been or may hereafter be determined by a court of competent jurisdiction to be necessary for the preservation of rights guaranteed by the United States Constitution."

The District Court also declared that § 303 relating to the final conveyance of rail properties pursuant to the Final System Plan is

"null and void as contravening the Fifth Amendment . . . insofar as it fails to provide compensation for interim erosion pending final implementation of the Final System Plan. . . ."

Finally, the District Court enjoined USRA "from certifying a Final System Plan to the Special Court pursuant to Section 20(c)." 383 F.Supp. at 530.

The Rail Act was also challenged in the District Court as not "uniform" within the requirement of Art. I, § 8, cl. 4, of the Constitution, which provides that Congress shall have the power to enact "uniform Laws on the subject of Bankruptcies throughout the United States." The District Court dismissed this contention as without merit except as to one provision of § 207(b). The section provides that, if any reorganization court determines in the 180-day proceedings under § 207(b) that the Act does not provide a fair and equitable process for the reorganization of a debtor, the debtor shall not be reorganized pursuant to the Act, and the reorganization court "shall dismiss the reorganization proceeding." The District Court declared this part of § 207(b) "null and void, as violative of Article I, Section 8, Clause 4 . . . ," [Footnote 13] and enjoined

Page 419 U. S. 121

"all parties . . . from enforcing, or taking any action to implement, so much of Section 207(b). . . as purports to require dismissal of pending proceedings for reorganization under Section 77 of the Bankruptcy Act."

III

The Issues for Decision

The major issues dividing the parties are (1) whether an action at law in the Court of Claims under the Tucker Act, 28 U.S.C. § 1491, will be available to recover any deficiency of constitutional dimension in the compensation provided under the Rail Act for either the alleged "erosion taking" or the alleged "conveyance taking," and (2) if the Tucker Act remedy is available, whether it is an adequate remedy. The United States, USRA, and the Penn Central Trustees contend that, if resort to a supplemental remedy under the Tucker Act is necessary, it is both available and adequate. The plaintiffs below contend that the Rail Act precludes resort to the Tucker Act remedy, and if it does not, that the remedy is inadequate.

The Special Court, speaking through Judge Friendly, comprehensively canvassed both issues, and, in a thorough opinion, concluded that the Rail Act does not bar any necessary resort to the Tucker Act remedy, and that the remedy is adequate. Our independent examination of the issues brings us to the same conclusion, substantially for the reasons stated by Judge Friendly in Parts VII and VIII-A of the Special Court opinion. 384 F.Supp. 895, 938-951 (1974). [Footnote 14]

Page 419 U. S. 122

Also disputed is the District Court's ruling on the uniformity of the Rail Act under the Bankruptcy Clause. We hold that the currently operable portions of the Act are uniform.

IV

A

The Alleged "Erosion Taking"

In its opening brief, the United States, speaking for all federal parties except USRA, argued that the case involved no "erosion taking" because, as a matter of law, compelled-loss operations pending implementation of the Final System Plan would not constitute a taking of the property of the claimants against the bankrupt railroad estates. The argument was that the general rule that, if the railroad

"be taken to have granted to the public an interest in the use of the railroad, it may withdraw its grant by discontinuing the use when that use can be kept up only at a loss,"

Brooks-Scanlon Co. v. Railroad Comm'n of Louisiana,251 U. S. 396, 251 U. S. 399 (1920); see also Bullock v. Florida ex rel. Railroad Comm'n,254 U. S. 513 (1921); Railroad Comm'n of Texas v. Eastern Texas R. Co.,264 U. S. 79 (1924), is qualified by the requirement that a railroad estate suffer interim losses for a reasonable period pending good faith efforts to develop a feasible reorganization plan if the public interest in continued

Page 419 U. S. 123

rail service justifies the requirement. Continental Illinois Nat. Bank & Trust Co. v. Chicago, R.I. & P. R. Co.,294 U. S. 648, 294 U. S. 677 (1935); see also RFC v. Denver & R. G. W. R. Co.,328 U. S. 495, 328 U. S. 535-536 (1946); New Haven Inclusion Cases,399 U. S. 392, 399 U. S. 493 (1970). The United States maintained that the Rail Act represented just such a good faith effort. In its Reply Brief 3-4, however, it abandoned the position that the Final System Plan was sure to be implemented within a reasonable period:

"Difficulties now unforeseen and unanticipated could, in fact, delay final implementation of the final system plan. For example, Congress could, in theory, successively disapprove several proposed final system plans. Thus, whatever the probabilities, the parties and this Court have no absolute assurance that the plan will, in fact, be implemented within a reasonable time. For that reason, we have determined that a taking of property through interim erosion, although extremely unlikely, remains a theoretical possibility under the Rail Act."

"Accordingly, we believe that an injunction preventing [USRA] from denying applications for discontinuance of service under Section 304(f) in those circumstances might be appropriate unless, as we contend, a remedy for any otherwise uncompensated taking will be available under the Tucker Act. We are therefore persuaded that this Court must reach and decide the 'Tucker Act question' presented by these appeals."

(Footnote omitted.)

We conclude, in any event, that the availability of a Tucker Act remedy if the Rail Act effects an "erosion taking" is ripe for adjudication. It is true that there has been no definitive determination that erosion of the Penn Central estate has reached unconstitutional dimensions --

Page 419 U. S. 124

that is, that the estate has suffered losses unreasonable even in light of the public interest in continued rail service pending reorganization. But the Penn Central Reorganization Court found that Penn Central is not "reorganizable on an income basis within a reasonable time under § 77 of the Bankruptcy Act." 382 F.Supp. 831, 842 (ED Pa.1974). And it was stipulated in the District Court that Penn Central sustained ordinary net losses from mid-1970 through 1973 aggregating approximately $851 million, and that, in the two months following enactment of the Rail Act on January 2, 1974, Penn Central had deficits in net railway operating income, total income, net income, and income available for fixed charges. It is therefore reasonable to conclude that compelled continued rail operations under these conditions pending implementation of the Final System Plan may accelerate erosion of the interests of plaintiffs below through accrual of post-bankruptcy claims having priority over their claims. Thus, failure to decide the availability of the Tucker Act would raise the distinct possibility that those plaintiffs would suffer an "erosion taking" without adequate assurance that compensation will ever be provided. [Footnote 15] Yet there must be at the time of

Page 419 U. S. 125

taking "reasonable, certain and adequate provision for obtaining compensation." Cherokee Nation v. Southern Kansas R. Co.,135 U. S. 641, 135 U. S. 659 (1890); see also Joslin Mfg. Co. v. City of Providence,262 U. S. 668, 262 U. S. 677 (1923); United States v. Dow,357 U. S. 17, 357 U. S. 21 (1958). Therefore we must determine if the Tucker Act is available.

B

Availability of the Tucker Act Remedy for Any "Erosion Taking"

The Tucker Act, 28 U.S.C. § 1491, provides in pertinent part:

"The Court of Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract

Page 419 U. S. 126

with the United States, or for liquidated or unliquidated damages in cases not sounding in tort."

A claim founded upon a taking of property for public use by operation of the Rail Act without just compensation in violation of the Fifth Amendment plainly would fall within the literal words of "any claim against the United States founded . . . upon the Constitution. . . ." The District Court, however, inquired whether the Rail Act affirmatively provided the Tucker Act remedy, and held that to "read a Tucker Act remedy into the [Rail] Act" would be "judicial legislation on a grand, if not arrogant, scale." 383 F.Supp. at 529.

The District Court made the wrong inquiry. The question is not whether the Rail Act expresses an affirmative showing of congressional intent to permit recourse to a Tucker Act remedy. Rather, it is whether Congress has in the Rail Act withdrawn the Tucker Act grant of jurisdiction to the Court of Claims to hear a suit involving the Rail Act "founded . . . upon the Constitution." For we agree with the Special Court that

"the true issue is whether there is sufficient proof that Congress intended to prevent such recourse. The [Rail] Act being admittedly silent on the point, the issue becomes whether the scheme of the [Rail] Act, supplemented by the legislative history, sufficiently evidences a Congressional intention to withdraw a remedy that would otherwise exist."

384 F.Supp. at 939.

Our decisions affirm that this is the correct inquiry. The general rule is that whether or not the United States so intended, "[i]f there is a taking, the claim is founded upon the Constitution' and within the jurisdiction of the Court of Claims to hear and determine." United States v. Causby,328 U. S. 256, 328 U. S. 267 (1946).

"[I]f the authorized action . . . does constitute a taking of property for

Page 419 U. S. 127

which there must be just compensation under the Fifth Amendment, the Government has impliedly promised to pay that compensation and has afforded a remedy for its recovery by a suit in the Court of Claims."

Yearsley v. Ross Construction Co.,309 U. S. 18, 309 U. S. 21 (1940). [Footnote 16] See also Hurley v. Kincaid,285 U. S. 95 (1932). In Yearsley, the Court, speaking through Mr. Chief Justice Hughes, went on to hold that

"it cannot be doubted that the remedy to obtain compensation from the Government is as comprehensive as the requirement of the Constitution. . . ."

309 U.S. at 309 U. S. 22. (Emphasis supplied.)

We turn then to the inquiry whether the Rail Act withdrew the Tucker Act remedy "that would otherwise exist." 384 F.Supp. at 939. The argument that it should be so read rests on provisions of the Rail Act said plainly to evince Congress' determination that no federal funds beyond those expressly committed by the Act were to be paid for the rail properties.

The first provision referred to is § 209, which provides for the impaneling of the Special Court and the consolidation before it of "all judicial proceedings with respect to the final system plan." The argument attaches significance to the omission in § 303 of any authority in the Special Court to enter a judgment against the United States. Reliance is also placed on two of the Act's funding provisions. Section 210(b), captioned "Maximum

Page 419 U. S. 128

obligational authority," provides that the

"aggregate amount of [USRA] obligations . . . which may be outstanding at any one time shall not exceed $1,500,000,000 of which the aggregate amount issued to [Conrail] shall not exceed $1,000,000,000 . . . ,"

and that "[a]ny modification to [these] limitations . . . shall be made by joint resolution adopted by the Congress." Section 214 explicitly appropriates up to $12,500,000 to the Secretary of Transportation, to pay the expenses of "preparing the reports and exercising other functions to be performed by him under this chapter," appropriates up to $5,000,000 to the Interstate Commerce Commission for its use in carrying out its functions, and appropriates up to $26,000,000 to USRA "for purposes of carrying out its administrative expenses. . . ."

But these provisions at least equally support the inference that Congress was so convinced that the huge sums provided would surely equal or exceed the required constitutional minimum that it never focused upon the possible need for a suit in the Court of Claims. That this may very well have been the case is evident in a statement in the House Report:

"The timely implementation of the Final System Plan cannot be obstructed by controversy over the payment for the properties. The Committee is of the opinion that provisions of this title of the [Rail] Act, and especially the provision for deficiency judgment and payment of obligations of [USRA] . . . are more than adequate to guarantee that the creditors of the bankrupt railroad will receive all that they may Constitutionally claim. In view of these extraordinary protections, no litigation should be permitted to delay the Final System Plan."

H.Rep. 55. That inference also finds support in the provision of

Page 419 U. S. 129

§ 303(c)(3) that authorizes the Special Court to reduce payments to bankrupt estates if they "are fairer and more equitable than is required as a constitutional minimum." That provision suggests that Congress thought the compensation made possible by the Rail Act could well exceed that required by the Constitution, and gave no consideration to withdrawal of the Tucker Act remedy because it was sure the Rail Act itself provided at least the constitutional minimum compensation.

Finally, the manner in which Congress in § 601, 45 U.S.C. § 791 (1970 ed., Supp. III), expressly addressed the Rail Act's "Relationship to other laws" plainly implies that Congress gave no thought to consideration of withdrawal of the Tucker Act remedy. Section 601(a)(2) provides that the "antitrust laws are inapplicable with respect to any action taken to formulate or implement the final system plan . . ."; § 601(b) provides that

"[t]he provisions of the Interstate Commerce Act and the Bankruptcy Act are inapplicable to transactions under this chapter to the extent necessary to formulate and implement the final system plan whenever a provision of any such Act is inconsistent with this chapter;"

§ 601(c) provides that,

"[t]he provisions of section 4332(2)(C) of Title 42 [National Environmental Policy Act of 1969] shall not apply with respect to any action taken under authority of this chapter before the effective date of the final system plan."

Yet despite this clear evidence that Congress was aware of the necessity to deal expressly with inconsistent laws, Congress nowhere addresses the Tucker Act question.

It is argued that any uncertainty in the scheme and text of the Rail Act is cleared up by legislative history from the House and the Senate that discloses that Congress meant the Rail Act to withdraw the jurisdiction of the Court of Claims under the Tucker Act. To the contrary,

Page 419 U. S. 130

we read the legislative history as disclosing no more than a repeatedly emphasized belief that the Rail Act's provisions for compensation for the rail properties assured payment of the constitutional minimum. This is plainly the import of the oft-stated view that the taxpayers would not be unduly burdened by the sums provided, see, e.g., 119 Cong.Rec. 36354 (1973) (remarks of Rep. Metcalfe); id. at 36359 (remarks of Rep. Conte); and also of Senator Hartke's explanation of the Conference Report to the Senate, id. at 43094-43095, which included the statement:

"If we did nothing while continuing to mandate rail service, there is the distinct possibility in view of the prior action of Congress that a number of these people could make a claim against the Government which could be sustained in the Court of Claims. [Footnote 17] "

Page 419 U. S. 131

As the Special Court remarked, and we agree, this statement in context is

"not inconsistent with the view that the Senator was so convinced that the bill, as amended in conference, contained such adequate compensation provisions that a suit in the Court of Claims could not prevail, particularly in view of what he had characterized as a 'rather slim' chance of the creditors getting their money through liquidation, rather than as meaning that such a claim could not be maintained."

384 F.Supp. at 941.

We do not think that the argument in support of reading the Rail Act to withdraw the Tucker Act remedy is aided by the colloquy on the House side between the House managers of the bill, 119 Cong.Rec. 42947 (1973). [Footnote 18] That colloquy does not even concern the withdrawal

Page 419 U. S. 132

of Court of Claims jurisdiction. It concerns only the deficiency judgment against Conrail and the powers of the Special Court.

Finally, reliance is put upon what is referred to as "subsequent legislative history" in the form of statements by Congressmen during Oversight Hearings of the House Subcommittee on Transportation and Aeronautics on June 14, 1974, and on an amicus brief filed in this Court on behalf of 36 Congressmen. But post-passage remarks of legislators, however explicit, cannot serve to change the legislative intent of Congress expressed before the Act's passage. See, e.g., United States v. Mine Workers of America,330 U. S. 258, 330 U. S. 282 (1947). Such statements "represent only the personal views of these legislators, since the statements were made after passage of the Act." National Woodwork Manufacturers Assn. v. NLRB,386 U. S. 612, 386 U. S. 639 n. 34 (1967). Moreover, during oral argument before this Court, Representative Adams, spokesman for the congressional group, expressly conceded that circumstances might arise when the Tucker Act remedy would be available:

"QUESTION: So you do anticipate a situation where the Tucker Act would be available?"

"MR. ADAMS: Oh, yes. Let's say, for example, that, after this is all over -- and this is the three-judge court's problem -- that, if a party comes in and says,

Page 419 U. S. 133

you held us beyond the constitutional limit on erosion and at that point we are of the opinion that it went just too long, it was unreasonable, but that is a specific individual case at that point."

"QUESTION: And so the Tucker Act, you think, would be available in that situation?"

"MR. ADAMS: Of course. We did not repeal the Tucker Act. [Footnote 19]"

(Emphasis supplied.)

In sum, we cannot find that the legislative history supports the argument that the Rail Act should be construed to withdraw the Tucker Act remedy. The most that can be aid is that the Rail Act is ambiguous on the question. In that circumstance, applicable canons of statutory construction require us to conclude that the Rail Act is not to be read to withdraw the remedy under the Tucker Act.

One canon of construction is that repeals by implication are disfavored. See, e.g., Mercantile National Bank v. Langdeau,371 U. S. 555, 371 U. S. 565 (1963); United States v. Borden Co.,308 U. S. 188, 308 U. S. 198-199 (1939); Amell v. United States,384 U. S. 158, 384 U. S. 165-166 (1966). Rather, since the Tucker Act and the Rail Act are

"capable of coexistence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard

Page 419 U. S. 134

each as effective."

Morton v. Mancari,417 U. S. 535, 417 U. S. 551 (1974). Moreover, the Rail Act is the later of the two statutes and we agree with the Special Court:

"A new statute will not be read as wholly or even partially amending a prior one unless there exists a 'positive repugnancy' between the provisions of the new and those of the old that cannot be reconciled. . . . This principle rests on a sound foundation. Presumably Congress had given serious thought to the earlier statute, here the broadly based jurisdiction of the Court of Claims. Before holding that the result of the earlier consideration has been repealed or qualified, it is reasonable for a court to insist on the legislature's using language showing that it has made a considered determination to that end. . . ."

384 F.Supp. at 943.

The other relevant canon of construction that comes into play is that, when a statute is ambiguous, "construction should go in the direction of constitutional policy." United States v. Johnson,323 U. S. 273, 323 U. S. 276 (1944). There are clearly grave doubts whether the Rail Act would be constitutional if a Tucker Act remedy were not available as compensation for any unconstitutional erosion not compensated under the Act itself. In such case, as the Special Court observed,

"[w]hen one admissible construction will preserve a statute from unconstitutionality and another will condemn it, the former is favored even if language, . . . and arguably the legislative history, point somewhat more strongly in another way."

384 F.Supp. at 944. In other words, our

"task is not to destroy the Act if we can, but to construe it, if consistent with the will of Congress, so as to comport with constitutional limitations."

CSC v. Letter Carriers,413 U. S. 548, 413 U. S. 571 (1973). Lynch v. United States,292 U. S. 571 (1934), fully supports

Page 419 U. S. 135

our conclusion. Lynch presented a situation requiring this Court to determine whether a statute that effected an unconstitutional taking was also to be construed to withdraw a cause of action created by an earlier statute. The Economy Act of 1933, 48 Stat. 11, provided in § 17 that "all laws granting or pertaining to yearly renewable term insurance are hereby repealed. . . ." District Courts, affirmed by the Courts of Appeals for the Fifth Circuit, 67 F.2d 490 (1933), and the Seventh Circuit, Wilner v. United States, 68 F.2d 442 (1934), dismissed, on the basis of this provision, suits by beneficiaries of yearly renewable term policies brought under § 405 of the War Risk Insurance Act of 1917, 40 Stat. 410, expressly authorizing suits in the district courts respecting any "disagreement as to a claim under the contract of insurance." The beneficiaries' claim was that there was an actionable "disagreement" within the meaning of § 405 because the Government had violated the terms of the policies by failing to pay the premiums when the insureds became totally and permanently disabled and had refused payment of benefits after the insureds died. This Court unanimously reversed the dismissals. Section 17 of the Economy Act was held to effect an unconstitutional taking of vested property rights in the beneficiaries created by the insurance contracts. The question then became whether § 17 had repealed the remedy of a suit in the district court provided by § 405 of the Insurance Act. The Court held, speaking through Mr. Justice Brandeis, that § 17 would not be read as depriving the beneficiaries of that remedy in the absence of a clear indication from Congress that the remedy was taken away. The Court said:

"Fifth. There is a suggestion that, although, in repealing all laws 'granting or pertaining to yearly renewable term insurance,' Congress intended to take

Page 419 U. S. 136

away the contractual right, it also intended to take away the remedy; that, since it had power to take away the remedy, the statute should be given effect to that extent, even if void insofar as it purported to take away the contractual right. The suggestion is at war with settled rules of construction. It is true that a statute bad in part is not necessarily void in its entirety. A provision within the legislative power may be allowed to stand if it is separable from the bad. But no provision however unobjectionable in itself, can stand unless it appears both that, standing alone, the provision can be given legal effect, and that the legislature intended the unobjectionable provision to stand in case other provisions held bad should fall. Dorchy v. Kansas,264 U. S. 286, 264 U. S. 288, 264 U. S. 290. Here, both those essentials are absent. There is no separate provision in § 17 dealing with the remedy; and it does not appear that Congress wished to deny the remedy if the repeal of the contractual right was held void under the Fifth Amendment."

292 U.S. at 292 U. S. 586.

Similarly,

"[t]here is no separate provision in [the Rail Act] dealing with the [Tucker Act] remedy; and it does not appear [from the statute or its legislative history] that Congress wished to deny the remedy"

if the Rail Act should cause an "erosion taking" that would require the payment of just compensation.

We accordingly hold that the Tucker Act remedy is not barred by the Rail Act, but is available to provide just compensation for any "erosion taking" effected by the Rail Act.

V

A

The Alleged "Conveyance Taking"

The District Court declined to decide whether the provisions governing the procedures for and terms of the

Page 419 U. S. 137

final conveyance of rail properties to Conrail (the "conveyance taking" issue) violate the Fifth Amendment, thus rendering the Rail Act invalid in its entirety. [Footnote 20] The District Court was "persuaded that these issues are premature." 383 F.Supp. at 517.

Briefly, the challenges to the final conveyance provisions assert that the Rail Act is basically an eminent domain statute and, because compensation is not in cash, but largely in stock of an unproved entity, will necessarily work an unconstitutional taking. [Footnote 21] A variant of the argument is that, even if a reorganization statute, the Rail Act would be unconstitutional unless the Tucker Act remedy is now held to assure payment of any amount by which the market value of stocks and securities awarded by the Special Court is less than the value of the rail properties conveyed. The New Haven Trustee goes further; he argues that, even if a reorganization statute, the Rail Act violates substantive due process by failing to assure the "fair and equitable equivalent" of the rail properties valued at their "highest and best use." The New Haven Trustee also contends that the conveyance provisions constitute a taking such as that threatened by interim erosion: they require operations of the railroad to continue, albeit in a different form, even if the liquidation value for "highest and best use" is greater than the value of the railroad as a going concern. Finally, the

Page 419 U. S. 138

New Haven Trustee and the creditor parties contend that the conveyance provisions deny procedural due process, because they mandate the final conveyance before any meaningful determination of its fairness, and because no provision is made for creditor or stockholder consideration of or voting upon the Final System Plan.

All of the parties now urge that the "conveyance taking" issues are ripe for adjudication. However, because issues of ripeness involve, at least in part, the existence of a live "Case or Controversy," [Footnote 22] we cannot rely upon concessions of the parties, and must determine whether the issues are ripe for decision in the "Case or Controversy" sense. Further, to the extent that questions of ripeness involve the exercise of judicial restraint from unnecessary decision of constitutional issues, [Footnote 23] the Court must determine whether to exercise that restraint and cannot be bound by the wishes of the parties.

The District Court's holding of prematurity was influenced by the statutory scheme that requires several decisional steps before the final conveyance. The possibility that the reorganization court might determine under § 207(b) that the Rail Act process is not fair and equitable to the railroad estate, or that Congress might disapprove the Final System Plan, § 208(a), or that the Special Court would not order the final conveyance pursuant to § 303(b), led the District Court to conclude that the question whether the final conveyance provisions are constitutional was "too speculative to warrant anticipatory

Page 419 U. S. 139

judicial determinations." Eccles v. Peoples Bank,333 U. S. 426, 333 U. S. 432 (1948). [Footnote 24]

But subsequent to the District Court's opinion, the Penn Central Reorganization Court determined that the Rail Act did not provide a process that would be fair and equitable to the estate, In re Penn Central Trans. Co., 382 F.Supp. 856 (ED Pa.1974). On appeal to the Special Court under § 207(b), that determination has been reversed, although the Special Court has not rendered its judgment, pending our decision of this case. 384 F.Supp. at 955. Seen 14, supra.

We agree with the parties that this change in circumstance has substantially altered the posture of the case as

Page 419 U. S. 140

regards the maturity of the final conveyance issues. Whatever may have been the case at the time of the District Court decision, there can be little doubt, for reasons to be detailed, that some of the "conveyance baking" issues can and must be decided at this time. And, since ripeness is peculiarly a question of timing, it is the situation now, rather than the situation at the time of the District Court's decision, that must govern. [Footnote 25]

First, the implementation of the Rail Act will now lead inexorably to the final conveyance, although the exact date of that conveyance cannot be presently determined. It is true that Congress can reject the first plan presented to it by the USRA, § 208(a), and that the Rail Act, while prescribing with precision the timing of the presentation of that plan, §§ 207(e) and (d), does not mandate the presentation of successive plans at any particular time. The Rail Act does, however, contemplate that USRA will continue to present plans, § 208(b), until one becomes "effective," § 209(a). Thus, we must assume there will be compliance with the Rail Act's mandatory terms in this respect and that a Final System Plan will at some time be certified to the Special Court. § 209(c). [Footnote 26]

Page 419 U. S. 141

Second, the Special Court is mandated to order the conveyance of rail properties included in the Final System Plan and is granted no discretion not to order the transfer. [Footnote 27] While mandatory language does not necessarily deny a court of equity flexibility, Hecht Co. v. Bowles,

Page 419 U. S. 142

321 U. S. 321, 321 U. S. 329 (1944), the central scheme of the Rail Act defers decision of any controversies over the terms of the transfer of rail properties until after the transfer has occurred. H.Rep. 55; S.Rep. No. 93-601, p 34 (1973) (hereinafter S.Rep.). [Footnote 28] The Special Court's opinion suggests that the mandatory order to convey probably could not prevent the Special Court from refusing to order the conveyance, indirectly if not by a direct injunction, if it were convinced that appellees' constitutional rights were certain to be violated. 384 F.Supp. at 931; Marbury v. Madison, 1 Cranch 137 (1803). But the possibility that a court may later decline to enforce the Rail Act as written because of its unconstitutionality cannot constitute a contingency itself pretermitting earlier consideration of the constitutionality of the Act. Cf. Albertson v. SACB,382 U. S. 70, 382 U. S. 76-77 (1965).

It appears, then, that the conveyance of Penn Central's rail properties to Conrail cannot be prevented by the debtor or its creditors or stockholder; and, while the exact terms of the conveyance remain to be decided, an order of the Special Court directing the conveyance is

Page 419 U. S. 143

virtually a certainty. The Rail Act empowers no court, including this Court, to prevent it.

Thus, occurrence of the conveyance allegedly violative of Fifth Amendment rights is in no way hypothetical or speculative. Where the inevitability of the operation of a statute against certain individuals is patent, it is irrelevant to the existence of a justiciable controversy that there will be a time delay before the disputed provisions will come into effect. Pennsylvania v. West Virginia,262 U. S. 553, 262 U. S. 592-593 (1923); Pierce v. Society of Sisters,268 U. S. 510, 268 U. S. 536 (1925); Carter v. Carter Coal Co.,298 U. S. 238, 298 U. S. 287 (1936).

"One does not have to await the consummation of threatened injury to obtain preventive relief. If the injury is certainly impending, that is enough."

Pennsylvania v. West Virginia, supra, at 262 U. S. 593. [Footnote 29]

True, there are situations where, even though an allegedly injurious event is certain to occur, the Court may delay resolution of constitutional questions until a time closer to the actual occurrence of the disputed event, when a better factual record might be available. Cf. 369 U. S. S. 144

Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.